<PAGE>
As filed with the Securities and Exchange Commission on May 5, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
File No. 33-8370 [_]
Pre-Effective Amendment No. --- [_]
[X]
Post-Effective Amendment No. 16
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
File No. 811-4817
[X]^
Amendment No. 17
NUVEEN TAX-FREE BOND FUND, INC.
(Exact Name of Registrant as Specified in Charter)
333 West Wacker Drive, Chicago, 60606
Illinois (Zip Code)
(Address of Principal Executive
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)
[X]
on June 13, 1995 pursuant to para-
graph (a)(1)
[_]
[_]
75 days after filing pursuant to par-
agraph (a)(2)
on (date) pursuant to paragraph (b)
[_]
60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph
(a)(2) of Rule 485.
[_]
If appropriate, check the following box:
[_]
This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS
REGISTERED AN INDEFINITE NUMBER OF SHARES (DESIGNATED AS CLASS A SHARES, CLASS
C SHARES AND CLASS R SHARES) OF THE FOLLOWING SERIES: NUVEEN MASSACHUSETTS
TAX-FREE VALUE FUND, NEW YORK TAX-FREE VALUE FUND AND NUVEEN OHIO TAX-FREE
VALUE FUND. A RULE 24F-2 NOTICE FOR THE REGISTRANT'S FISCAL YEAR ENDING FEBRU-
ARY 28, 1995, WAS FILED ON OR ABOUT APRIL 25, 1995.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 16
TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-8370
AND
AMENDMENT NO. 17
TO
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-4817
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Cross-Reference Sheet
Part A-The Prospectus
Part B-The Statement of Additional Information
Copy of Annual Report to Shareholders (the financial
statements from which are incorporated by reference into the
Statement of Additional Information)
Part C-Other Information
Signatures
Index to Exhibits
Exhibits
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
TEM IN PART AI
OF FORM N-1A PROSPECTUS LOCATION
- -------------- -------------------
<S> <C>
1 Cover Page Cover Page
2 Synopsis Summary of Fund Expenses; How to Determine
If One of These Funds Is Right For You
3 Condensed Financial Financial Highlights
Information
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 Incorporated by Reference to Annual Report
Fund Performance to Shareholders; Distributions and Taxes
6 Capital Stock and Other General Information; Distributions and
Securities Taxes
7 Purchase of Securities Being Flexible Sales Charge Program; How to Buy
Offered Fund Shares; Distribution and Service
Plans; Management of the Funds; Net Asset
Value
8 Redemption or Repurchase How to Redeem Fund Shares
9 Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
TEM IN PART BI LOCATION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
- -------------- -------------------------
<S> <C>
10 Cover Page Cover Page
11 Table of Contents Cover Page
12 General Information and History Not Applicable
13 Investment Objectives and Fundamental Policies and Investment
Policies Portfolio
14 Management of the Fund Management
15 Control Persons and Principal Management
Holders of Securities
16 Investment Advisory and Other Investment Adviser and Investment
Services Management Agreement; Distribution and
Service Plans; Independent Public
Accountants and Custodian
17 Brokerage Allocation and Other Portfolio Transactions
Practices
18 Capital Stock and Other See "General Information" in the Prospectus
Securities
19 Purchase, Redemption and Pricing Additional Information on the Purchase and
of Securities Redemption of Fund Shares; Distribution and
Service Plans; Net Asset Value
20 Tax Status Tax Matters
21 Underwriters Additional Information on the Purchase and
Redemption of Fund Shares; See "How to Buy
Fund Shares" and "Management of the Funds"
in the Prospectus
22 Calculation of Performance Data Performance Information
23 Financial Statements Incorporated by Reference to Annual Report
to Shareholders
</TABLE>
<PAGE>
PART A--PROSPECTUS
NUVEEN TAX-FREE BOND FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
NUVEEN NEW YORK TAX-FREE VALUE FUND
NUVEEN OHIO TAX-FREE VALUE FUND
. PROSPECTUS
. APPLICATION
<PAGE>
THE NUVEEN FAMILY OF TAX-FREE VALUE FUNDS
Nuveen offers individual investors 16 different, long-
term tax-free mutual funds to choose from, including:
NATIONAL LONG- Nuveen Municipal Bond Fund
TERM FUNDS Nuveen Insured Municipal Bond Fund
STATE LONG-TERM Arizona
FUNDS Nuveen Arizona Tax-Free Value Fund
California
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
Florida
Nuveen Florida Tax-Free Value Fund
Maryland
Nuveen Maryland Tax-Free Value Fund
Massachusetts
Nuveen Massachusetts Tax-Free Value Fund
Nuveen Massachusetts Insured Tax-Free Value Fund
Michigan
Nuveen Michigan Tax-Free Value Fund
New Jersey
Nuveen New Jersey Tax-Free Value Fund
New York
Nuveen New York Tax-Free Value Fund
Nuveen New York Insured Tax-Free Value Fund
Ohio
Nuveen Ohio Tax-Free Value Fund
Pennsylvania
Nuveen Pennsylvania Tax-Free Value Fund
Virginia
Nuveen Virginia Tax-Free Value Fund
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
Prospectus
June 13, 1995
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
NUVEEN NEW YORK TAX-FREE VALUE FUND
NUVEEN OHIO TAX-FREE VALUE FUND
Nuveen Tax-Free Bond Fund, Inc. is an open-end investment company consisting of
the three tax-free mutual funds named above (the "Funds"). Each Fund represents
a separate portfolio, which is designed to provide as high a level of current
interest income exempt from both regular federal income tax and the applicable
state personal income tax as is consistent, in the view of the Fund's
management, with preservation of capital. Each Fund invests in investment grade
quality, long-term Municipal Obligations judged by the Fund's investment
adviser to offer the best values among Municipal Obligations of similar credit
quality.
Each Fund has adopted a Flexible Sales Charge Program which provides you with
alternative ways of purchasing Fund shares based upon your individual
investment needs and preferences. You may purchase Class A Shares at a price
equal to their net asset value plus an up-front sales charge. You may purchase
Class C Shares without any up-front sales charge at a price equal to their net
asset value, but subject to an annual distribution fee designed to compensate
securities dealers over time for the sale of Fund shares. Class C Shares issued
on or after June 13, 1995 are subject to a 1% contingent deferred sales charge
("CDSC") for redemptions within 12 months of purchase. Class C Shares
automatically convert to Class A Shares six years after purchase. Both Class A
Shares and Class C Shares are also subject to annual service fees, which are
used to compensate securities dealers for providing you with ongoing financial
advice and other services. Under the Flexible Sales Charge Program, all Fund
shares outstanding as of September 6, 1994, have been designated as Class R
Shares. Class R Shares are available for purchase at a price equal to their net
asset value only under certain limited circumstances, or by specified
investors, as described herein. See "How to Buy Fund Shares."
This Prospectus contains information you should know before investing in the
Funds. Please retain it for future reference. You can find more detailed
information about the Funds in the "Statement of Additional Information" dated
June 13, 1995. For a free copy of this Statement, write to the Funds, c/o John
Nuveen & Co. 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
1
<PAGE>
CONTENTS
3 Summary of Fund Expenses
- --------------------------------------------------------------------------------
5 How to Determine if One of the Funds Is Right for You
- --------------------------------------------------------------------------------
10 Financial Highlights
- --------------------------------------------------------------------------------
14 Who Is Responsible for the Operation of the Funds?
- --------------------------------------------------------------------------------
15 What are the Funds' Investment Objectives and Policies?
- --------------------------------------------------------------------------------
21 Flexible Sales Charge Program
- --------------------------------------------------------------------------------
23 How to Buy Fund Shares
- --------------------------------------------------------------------------------
35 Distribution and Service Plans
- --------------------------------------------------------------------------------
36 How to Redeem Fund Shares
- --------------------------------------------------------------------------------
39 Management of the Funds
- --------------------------------------------------------------------------------
How the Funds Show Performance
42
- --------------------------------------------------------------------------------
Distributions and Taxes
45
- --------------------------------------------------------------------------------
Net Asset Value
49
- --------------------------------------------------------------------------------
General Information
50
- --------------------------------------------------------------------------------
Appendix A--Special State Factors and State Tax Treatment
- --------------------------------------------------------------------------------
Appendix B--Taxable Equivalent Yield Tables
- --------------------------------------------------------------------------------
Application
- --------------------------------------------------------------------------------
2
<PAGE>
SUMMARY OF FUND EXPENSES
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EACH FUND
SHAREHOLDER TRANSACTION -----------------------
EXPENSES (AS A PERCENT OF OFFERING PRICE) CLASS A CLASS C CLASS R
----------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases 4.50% None None
Maximum Sales Load Imposed on Reinvested Dividends None None None
Deferred Sales Charge (for redemptions within 12
months of purchase) None 1.00% None
Redemption Fees None None None
Exchange Fees None None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES, AFTER
FEE WAIVERS AND TOTAL
EXPENSE EXPENSES,
REIMBURSEMENTS WITHOUT FEE
(AS A PERCENT OF OTHER WAIVERS AND
AVERAGE DAILY NET MANAGEMENT 12B-1 OPERATING TOTAL EXPENSE
ASSETS)(1) FEES FEES(2) EXPENSES EXPENSES REIMBURSEMENTS
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MASSACHUSETTS FUND
Class A None .25% .75% 1.00% 1.87%
Class C None 1.00% .75% 1.75% 3.40%
Class R .53% None .22% .75% .77%
NEW YORK FUND
Class A None .25% .75% 1.00% 1.56%
Class C None 1.00% .75% 1.75% 7.98%
Class R .55% None .19% .74% .74%
OHIO FUND
Class A .28% .25% .47% 1.00% 1.27%
Class C .21% 1.00% .54% 1.75% 2.09%
Class R .55% None .18% .73% .73%
</TABLE>
--------
(1) In order to prevent total operating expenses (ex-
cluding any distribution or service fees) from ex-
ceeding .75 of 1% of the average daily net asset
value of any class of shares of a Fund for any fis-
cal year, 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 ex-
penses from time to time, which voluntary reim-
bursements may be terminated at any time in its
discretion.
(2) Class C Shares are subject to an annual distribu-
tion fee of .75 of 1% of average daily net assets
to compensate Authorized Dealers over time for the
sale of Fund shares. Both Class A Shares and Class
C Shares of each Fund are subject to an annual
service fee of .25 of 1% of average daily net as-
sets to compensate Authorized Dealers for ongoing
financial advice and other services. See "Distribu-
tion and Service Plans." Long-term holders of Class
C Shares may pay more in Rule 12b-1 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 28, 1995.
3
<PAGE>
SUMMARY OF FUND EXPENSES (CONTINUED)
------------------------------------------------------------------------------
EXAMPLE*
The following example applies to each of the Funds. You
would pay the following expenses on a $1,000 investment
over various time periods, assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------
<S> <C> <C> <C> <C>
MASSACHUSETTS FUND
Class A $55 $75 $98 $162
Class C $28** $55 $95 $168
Class R $ 8 $24 $42 $ 93
NEW YORK FUND
Class A $55 $75 $98 $162
Class C $28** $55 $95 $168
Class R $ 8 $24 $41 $ 92
OHIO FUND
Class A $55 $75 $98 $162
Class C $28** $55 $95 $168
Class R $ 7 $23 $41 $ 91
</TABLE>
--------
*This example does not represent past or future ex-
penses. Actual expenses may be greater or less than
those shown. Moreover, a Fund's actual rate of return
may be greater or less than the hypothetical 5% return
shown in this example. This example assumes that the
percentage amounts listed under Annual Operating Ex-
penses remain the same in each of the periods. The ten-
year figure for Class C Shares reflects the automatic
conversion of Class C Shares into Class A Shares six
years after purchase. Based on the foregoing assump-
tions, the expenses incurred on an investment in Class C
Shares will exceed the expenses incurred on an invest-
ment 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 cir-
cumstances, or by specified investors. For additional
information about each Fund's fees and expenses, see
"Distribution and Service Plans" and "Management of the
Funds."
**If shares were purchased before June 13, 1995 or held
longer than 12 months, so that no CDSC is imposed, ex-
penses in the first year would be $18 for the Massachu-
setts, New York and Ohio Funds.
4
<PAGE>
HOW TO DETERMINE IF ONE OF THE FUNDS IS RIGHT FOR YOU
------------------------------------------------------------------------------
There are many reasons why you might invest in one of
the Funds.
These can include:
. lowering the tax burden on your investment income
. earning regular monthly dividends
. seeking to preserve your investment capital
. systematically setting money aside for retirement,
college funding or estate planning purposes
While there can be no assurance that the Funds will en-
able you to achieve your individual investment goals,
they have been designed for investors who have these
kinds of investment goals in mind.
In addition, each Fund incorporates the following fea-
tures and benefits. You should carefully review the
more detailed description of these features and
benefits elsewhere in the Prospectus to make sure they
serve your individual investment goals.
MONTHLY, DOUBLE Each Fund provides monthly dividends exempt from regu-
TAX-FREE INCOME lar federal and applicable state personal income taxes
for in-state residents.
DIVERSIFIED, Each Fund purchases investment grade quality Municipal
INVESTMENT Obligations issued within its respective state. Each
GRADE QUALITY Fund is diversified and maintains diversity within its
PORTFOLIO portfolio by selecting Municipal Obligations of
different issuers. Each Fund further enhances its
portfolio mix by purchasing 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 76 different tax-free
portfolios representing approximately $30 billion in
assets.
VALUE INVESTING As a guiding policy, Nuveen Advisory's portfolio
managers seek investment grade quality, undervalued or
underrated Municipal Obligations which offer the best
values among Municipal Obligations of similar credit
quality. By selecting these Municipal Obligations,
Nuveen Advisory seeks to position each Fund better to
achieve its investment
5
<PAGE>
------------------------------------------------------------------------------
objective of as high a level of current interest income
exempt from both regular federal income tax and the
applicable state personal income tax as is consistent,
in the view of the Fund's management, with preservation
of capital, regardless of which direction the market
may move.
NUVEEN RESEARCH
Nuveen Advisory's portfolio managers call upon the re-
sources of Nuveen's Research Department, the largest in
the investment banking industry devoted exclusively to
tax-exempt securities. Nuveen research analysts re-
viewed in 1994 more than $100 billion of tax-exempt se-
curities sold in new issue and secondary markets.
LOW MINIMUMS You can start earning tax-free income with a low ini-
tial investment of $1,000 in a particular class. See
"How to Buy Fund Shares."
FLEXIBLE SALES For many investors, working with a professional finan-
CHARGE PROGRAM cial adviser is an important part of their financial
strategy. Because Nuveen recognizes the value a finan-
cial adviser can provide in developing and implementing
a comprehensive plan for your financial future,
Nuveen's open-end, long-term bond funds ("Nuveen Mutual
Funds") are sold with a sales charge, either at the
time of purchase or over time in the form of a distri-
bution fee. This provides your financial adviser with
compensation for the professional advice and service
you receive in financial planning and investment selec-
tion.
Each Fund has adopted a Flexible Sales Charge Program
which provides you with alternative ways of purchasing
Fund shares based upon your individual investment needs
and preferences. As described below, each Fund offers
Class A Shares, Class C Shares and, under certain lim-
ited circumstances, Class R Shares. In deciding which
class of a Fund's shares to purchase, you should con-
sider all relevant factors, including the dollar amount
of your purchase, the length of time you expect to hold
the shares and whether a CDSC would apply, the amount
of any applicable up-front sales charge, the amount of
any applicable distribution or service fee that may be
incurred while you own the shares, and whether or not
you will be reinvesting income or capital gain distri-
butions in additional shares. For assistance with this
decision, please refer to the tables under "Summary of
Fund Expenses" on page 3 of this Prospectus which set
forth examples of the expenses applicable to each class
of shares, or consult your financial adviser. The fol-
lowing summary describes the three classes of shares
offered by each Fund:
6
<PAGE>
------------------------------------------------------------------------------
Class A Shares
. available at net asset value plus an up-front sales
charge
. certain purchasers qualify for a reduction or waiver
of the up-front sales charge
. annual service fee to compensate securities dealers
who have sales agreements with Nuveen ("Authorized
Dealers") for providing you with ongoing financial
advice and other services
Class C Shares
. available at net asset value without any up-front
sales charge
. annual distribution fee to compensate Authorized
Dealers over time for the sale of Fund shares
. automatic tax-free conversion to Class A Shares six
years after purchase
. annual service fee to compensate Authorized Dealers
for providing you with ongoing financial advice and
other services
. 1% CDSC on shares purchased on or after June 13, 1995
and redeemed within 12 months of purchase
Class R Shares
. if you owned Fund shares as of September 6, 1994,
those shares have been designated as Class R Shares
. available for purchase under certain limited circum-
stances, or by specified investors, at net asset
value without any sales charge or annual distribution
or service fees
See "Flexible Sales Charge Program" and "How to Buy
Fund Shares" for additional information about the three
classes of shares offered by each Fund.
AUTOMATIC The Funds offer a number of investment options, includ-
DEPOSIT PLANS ing automatic deposit, direct deposit and payroll de-
duction, to help you add to your account on a regular
basis.
AUTOMATIC All monthly dividends or capital gains paid by your
REINVESTMENT Fund on each class of shares will be reinvested
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 investment trust (a "Nuveen UIT") may be used to
buy Class A Shares and, under certain circumstances,
Class R Shares of a Fund, in either case without a
sales charge at net asset value.
7
<PAGE>
-
------------------------------------------------------------------------------
EXCHANGE Shares of a class may be quickly and easily exchanged
PRIVILEGE by telephone, without a sales charge, for shares of the
same or equivalent class of another Nuveen Mutual Fund
or for shares of certain Nuveen money market funds.
Class R Shares of a Fund may be exchanged for Class A
Shares of the same Fund at any time, provided that the
current net asset value of those Class R Shares is at
least $1,000 or you already own Class A Shares of that
Fund.
LIQUIDITY
You may redeem all or a portion of your Fund shares on
any business day at the net asset value next computed
for the class of shares you are redeeming. An investor
purchasing Class C Shares on or after June 13, 1995
agrees to pay a CDSC of 1% if Class C Shares are
redeemed within 12 months of purchase. Each Fund will
redeem Shares at net asset value and deduct the CDSC
from the proceeds of the redemption. Remember that
share prices will fluctuate with market conditions and
upon redemption may be worth more or less than their
original cost. See "How to Redeem Fund Shares."
AUTOMATIC If you own shares totalling $10,000 or more, you can
WITHDRAWAL arrange to have $50 or more sent to you from your ac-
count either monthly or quarterly.
TELEPHONE You may establish free telephone redemption privileges
REDEMPTIONS for your account.
NO REDEMPTION
FEES There are no fees imposed by the Funds for selling
shares when redeeming all or part of your holdings.
However, your financial adviser may charge you for
serving as agent in the redemption of shares.
8
<PAGE>
------------------------------------------------------------------------------
RISKS AND You should consider certain other factors about the
SPECIAL Funds before investing. As with other bond mutual funds
CONSIDERATIONS or any long-term, fixed income investment, the value of
a Fund's portfolio will tend to vary inversely with
changes in prevailing interest rates. Accordingly, each
Fund should be considered a long-term investment,
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 affecting issuers
of Municipal Obligations in its state. The Funds also
have the ability to engage in certain investment
practices, including the purchase of Municipal
Obligations that pay interest subject to the federal
alternative minimum tax, the purchase or sale of
securities on a when-issued or delayed delivery basis,
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.
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been derived from
Nuveen Tax-Free Bond 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 the Nuveen Tax-Free Bond Fund, Inc.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Operating performance Distributions
----------------------------------------------------------------------
Net realized
and
Net asset unrealized
value at Net gain (loss) Net
beginning investment from investment
of period income investments+++ income Capital gains
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MA
- ------------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $ 9.540 $.254* $ .025 $(.259) $ --
Class C
10/6/94 to 2/28/95 9.280 .188* .254 (.212) --
Class R
Year ended,
2/28/95 9.940 .541* (.403) (.538) --
2/28/94 9.910 .543* .038 (.541) (.010)
2/28/93 9.210 .563* .704 (.563) (.004)
3 Months
ended 2/29/92 9.130 .146 .077 (.143) --
Year ended,
11/30/91 8.760 .577* .375 (.582) --
11/30/90 8.900 .587* (.144) (.583) --
11/30/89 8.600 .587* .300 (.587) --
11/30/88 8.250 .581* .350 (.581) --
12/10/86 to
11/30/87 9.600 .577* (1.350) (.577) --
- ------------------------------------------------------------------------------------------------
</TABLE>
See notes on pages 12 and 13.
10
<PAGE>
On September 6, 1994, the Fund commenced selling Class A and
Class C shares. All Fund shares outstanding as of September
6, 1994, have been designated as Class R Shares.
Selected data for a Class A Share, Class C Share
or Class R Share outstanding throughout each pe-
riod is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
---------------------------------------------------------------
Net
asset
value Total return Ratio of net
at end on Net assets Ratio of investment income
of net assetend of period expenses to average to average Portfolio
period value+(in thousands)+ net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$ 9.560 3.05% $ 1,067 1.00%*+ 5.75%*+ 17%
9.510 4.86 147 1.75*+ 5.11*+ 17
9.540 1.64 71,568 .75* 5.77* 17
9.940 5.96 71,942 .75* 5.38* 3
9.910 14.21 53,231 .75* 5.91* 5
9.210 2.44 34,470 .71+ 6.31+ 5
9.130 11.19 31,150 .75* 6.39* 19
8.760 5.21 20,829 .75* 6.68* 23
8.900 10.62 15,513 .75* 6.64* 31
8.600 11.56 9,485 .75* 6.74* 55
8.250 (8.19) 5,681 .37*+ 6.47*+ 34
- --------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Operating performance Distributions
--------------------------------------------------------------------------
Net realized
and
Net asset unrealized
value at Net gain (loss) Net
beginning investment from investment
of period income investments+++ income Capital gains
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NY
- ----------------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $10.230 $.277* $(.067) $(.273) $(.047)
Class C
9/14/94 to 2/28/95 10.110 .231* .038 (.222) (.047)
Class R
Year ended,
2/28/95 10.720 .579 (.529) (.573) (.047)
2/28/94 10.610 .578* .161 (.580) (.049)
2/28/93 9.880 .603* .806 (.598) (.081)
3 Months ended
2/29/92 9.820 .163 .053 (.156) --
Year ended,
11/30/91 9.380 .629* .441 (.630) --
11/30/90 9.560 .631* (.181) (.630) --
11/30/89 9.180 .633* .380 (.633) --
11/30/88 8.760 .625* .420 (.625) --
12/10/86 to
11/30/87 9.600 .612* (.840) (.612) --
- ----------------------------------------------------------------------------------------------------
OH
- ----------------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $10.160 $.266* $ .087 $(.272) $(.041)
Class C
9/16/94 to 2/28/95 10.070 .219* .133 (.221) (.041)
Class R
Year ended,
2/28/95 10.610 .568 (.388) (.569) (.041)
2/28/94 10.580 .570* .087 (.565) (.062)
2/28/93 9.870 .595* .728 (.589) (.024)
3 Months ended
2/29/92 9.770 .154 .126 (.153) (.027)
Year ended,
11/30/91 9.530 .619 .287 (.624) (.042)
11/30/90 9.550 .624 .003 (.624) (.023)
11/30/89 9.040 .629* .510 (.629) --
11/30/88 8.610 .626* .430 (.626) --
12/10/86 to
11/30/87 9.600 .600* (.990) (.600) --
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Reflects the waiver of certain management fees and reimbursement of
certain other expenses by Nuveen Advisory. For additional informa-
tion about Nuveen Advisory's fee waivers and expense reimbursements,
see note 7 of Notes to Financial Statements in the Annual Report to
Shareholders.
+ Annualized.
12
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
---------------------------------------------------------------
Net
asset
value Total return Net assets Ratio of net
at end on at Ratio of investment income
of net assetend of period expenses to average to average Portfolio
period value+(in thousands)+ net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$10.120 2.21% $ 3,189 1.00%*+ 5.87%*+ 29%
10.110 2.80 86 1.75*+ 5.16*+ 29
10.150 .75 149,454 .74 5.79 29
10.720 7.10 146,297 .75* 5.33* 15
10.610 14.79 107,146 .75* 5.84* 12
9.880 2.21 66,491 .75+ 6.27+ 16
9.820 11.79 59,351 .75* 6.50* 19
9.380 4.92 44,347 .75* 6.65* 51
9.560 11.34 29,040 .75* 6.63* 85
9.180 12.20 14,975 .75* 6.89* 71
8.760 (2.44) 8,239 .37*+ 6.46*+ 20
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
$10.200 3.63% $ 4,320 1.00%*+ 5.67%*+ 28%
10.160 3.63 901 1.75*+ 4.92*+ 28
10.180 1.99 162,231 .73 5.70 28
10.610 6.30 167,448 .75* 5.28* 9
10.580 13.88 133,797 .75* 5.86* 13
9.870 2.87 90,121 .70+ 6.16+ 3
9.770 9.84 81,649 .71 6.37 16
9.530 6.86 56,887 .74 6.61 38
9.550 12.97 37,714 .75* 6.66* 66
9.040 12.56 20,144 .75* 6.94* 55
8.610 (4.10) 9,135 .39*+ 6.53*+ 26
- --------------------------------------------------------------------------------------------
</TABLE>
++ Total Return on Net Asset Value is the combination of reinvested
dividend income, reinvested capital gain distributions if any, and
changes in net asset value per share.
+++ Net of taxes, if applicable. See note 1 of Notes to Financial
Statements in the Annual Report to Shareholders.
13
<PAGE>
WHO IS RESPONSIBLE FOR THE OPERATION OF THE FUNDS?
The following organizations work together to provide the
services and features offered by the Funds:
<TABLE>
<CAPTION>
ORGANIZATION FUNCTION DUTIES
------------------------------------------------------------------------
<C> <C> <S>
John Nuveen & Co. Incorporated Fund Sponsor and Princi- Sponsors and manages the
("Nuveen") pal offering of Fund shares;
Underwriter provides certain
administrative services
Nuveen Advisory Corp. Investment Adviser Manages the Funds'
("Nuveen Advisory") investment portfolios
and provides day-to-day
administrative services
to the Funds
Shareholder Services, Inc. Transfer Agent; Share- Maintains shareholder
("SSI") holder accounts, handles share
Services Agent; Dividend redemptions and
Paying Agent exchanges and dividend
payments
United States Trust Company Custodian Maintains custody of the
of New York ("US Trust") Funds' investments and
provides certain
accounting services to
the Funds
</TABLE>
The Chase Manhattan Bank, N.A., has agreed to become
successor to U.S. Trust, as Custodian and Fund Accoun-
tant. The succession is presently scheduled for July 1,
1995. No changes in the Funds' administration or in the
amount of fees and expenses paid by the Funds for these
services will result, and no action by shareholders will
be required.
14
<PAGE>
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES?
INVESTMENT The investment objective of each Fund is to provide you
OBJECTIVES with as high a level of current interest income exempt
from both regular federal income tax and the applicable
state personal income tax as is consistent, in the view
of the Fund's management, with preservation of capital.
This 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.
There can be no assurance that the investment objective
of any Fund will be achieved.
Each Fund is
designed to
provide income
free from federal
and state
personal income
taxes.
HOW THE FUNDS Value Investing. Nuveen Advisory believes that in any
PURSUE THEIR market environment there are quality Municipal Obliga-
OBJECTIVES tions whose current price, yield, credit quality and fu-
ture prospects make them seem underpriced or exception-
ally attractive when compared with other Municipal Obli-
gations in the market. In selecting investments for the
Funds, Nuveen Advisory will attempt to identify and pur-
chase those investment grade quality, undervalued or un-
derrated Municipal Obligations that offer the best val-
ues among Municipal Obligations of similar credit quali-
ty. 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 suc-
cessful, will better position each Fund to achieve its
investment objective of as high a level of current in-
terest income exempt from both regular federal income
tax and the applicable state personal income tax as is
consistent, in the view of the Fund's management, with
preservation of capital. Any net capital appreciation
realized by a Fund will generally result in the distri-
bution of taxable capital gains to Fund shareholders.
See "Distributions and Taxes."
The Funds seek
Municipal Obligations
considered to be
undervalued.
Thorough research The Importance of Thorough Research. Successful value
can help identify investing depends on identifying and purchasing under-
values. valued or underrated securities before the rest of the
marketplace finds them. Nuveen Advisory believes the mu-
nicipal market provides these opportunities, in part be-
cause of the relatively large number of issuers of tax-
exempt securities and the relatively small number of
full-time, professional municipal market analysts. For
example, there are currently about 7,500 common stocks
that are followed by about 23,000 analysts. By contrast,
there are about 60,000 entities that issue tax-exempt
securities and less than 1,000 professional municipal
market analysts.
Nuveen and Nuveen Advisory believe that together they
employ the largest number of research analysts in the
investment banking industry de-
15
<PAGE>
voted exclusively to the review and surveillance of tax-
exempt securities. Their team of more than 40 individu-
als has over 350 years of combined municipal market ex-
perience. Nuveen and Nuveen Advisory have access to in-
formation on approximately 60,000 municipal issuers, and
review annually more than $100 billion of tax-exempt se-
curities sold in new issue and secondary markets.
Which Municipal Obligations Are Selected As Invest-
ments? Each Fund will invest primarily in Municipal Ob-
ligations issued within its respective state so that the
interest income on the Municipal Obligations will be ex-
empt from both regular federal and applicable state per-
sonal income taxes. Because of the different credit
characteristics of governmental authorities in each of
the states and because of differing supply and demand
factors for each state's Municipal Obligations, there
may be differences in the yields on each Fund's classes
of shares and in the degree of market and financial risk
to which each Fund is subject.
Each Fund will Each Fund's investment assets will consist of:
seek to purchase
investment grade
quality Municipal
Obligations
issued within its
respective state.
. Municipal Obligations rated investment grade at the
time of purchase (Baa or BBB or better by Moody's In-
vestors Service, Inc. ("Moody's") or Standard and
Poor's Corporation ("S&P"));
. unrated Municipal Obligations of investment grade
quality in the opinion of Nuveen Advisory, with no
fixed percentage limitations on these unrated Munici-
pal Obligations; and
. temporary investments within the limitations and for
the purposes described below.
Municipal Obligations rated Baa are considered by
Moody's to be medium grade obligations which lack out-
standing investment characteristics and in fact have
speculative characteristics as well, while Municipal Ob-
ligations rated BBB are regarded by S&P as having an ad-
equate capacity to pay principal and interest. Each Fund
may invest up to 20% of its net assets in Municipal Ob-
ligations that pay interest subject to the federal al-
ternative minimum tax ("AMT Bonds"). The Funds intend 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 matu-
rity may be shortened from time to time depending on
market conditions in order to help limit each Fund's ex-
posure to market risk. As a result, each Fund's portfo-
lio at any given time may include both long-term and in-
termediate-term Municipal Obligations.
Under ordinary circumstances, each Fund will invest sub-
stantially all
(at least 80%) of its net assets in its respective
state's Municipal Obliga-
16
<PAGE>
tions, and not more than 20% of its net assets in "tem-
porary investments," described below, provided that tem-
porary investments subject to regular federal income tax
and AMT Bonds may not comprise more than 20% of each
Fund's net assets. For defensive purposes, however, in
order to limit the exposure of its portfolio to market
risk from temporary imbalances of supply and demand or
other temporary circumstances affecting the municipal
market, each Fund may invest without limit in temporary
investments. A Fund will not be in a position to achieve
its investment objective of tax-exempt income to the ex-
tent it invests in taxable temporary investments.
The foregoing investment policies are fundamental poli-
cies of each Fund and may not be changed without the ap-
proval of the holders of a majority of the shares of
that Fund.
DESCRIPTION OF Municipal Obligations. Municipal Obligations, as the
THE FUNDS' term is used in this Prospectus, are federally tax-ex-
INVESTMENTS empt debt obligations issued by states, cities and local
authorities and by certain U.S. possessions or territo-
ries to obtain funds for various public purposes, such
as the construction of public facilities, the payment of
general operating expenses and the refunding of out-
standing debts. They may also be issued to obtain fund-
ing for various private activities, including loans to
finance the construction of housing, educational and
medical facilities or privately owned industrial devel-
opment and pollution control projects.
Municipal Obligations
are issued by
states, cities
and local
authorities to
support a variety
of public
activities.
The two principal classifications of Municipal Obliga-
tions are general obligation and revenue bonds. GENERAL
OBLIGATION bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment
of principal and interest. REVENUE bonds are payable
only from the revenues derived from a particular facil-
ity or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue
source. Industrial development and pollution control
bonds are in most cases revenue bonds and do not gener-
ally constitute the pledge of the credit or taxing power
of the issuer of these bonds.
Municipal Obligations may also include participations in
lease obligations or installment purchase contract obli-
gations (collectively, "lease obligations") of municipal
authorities or entities. Certain "non-appropriation"
lease obligations may present special risks because the
municipality's obligation to make future lease or in-
stallment payments depends on money being appropriated
each year for this purpose. Each Fund will seek to mini-
mize these risks by not investing more than 10% of its
assets in non-appropriation lease obligations, and by
only investing
17
<PAGE>
in those non-appropriation lease obligations that meet
certain criteria of the Fund. See the Statement of Addi-
tional Information for further information about lease
obligations.
The yields on Municipal Obligations depend on a variety
of factors, including the condition of financial markets
in general and the municipal market in particular, as
well as the size of a particular offering, the maturity
of the obligation and the rating of the issue. Certain
Municipal Obligations may pay variable or floating rates
of interest based upon certain market rates or indexes
such as a bank prime rate or a tax-exempt money market
index. The ratings of Moody's and S&P represent their
opinions as to the quality of the Municipal Obligations
that they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute
standards of quality. Consequently, Municipal Obliga-
tions with the same maturity, coupon and rating may have
different yields, while those having the same maturity
and coupon with different ratings may have the same
yield. The market value of Municipal Obligations will
vary with changes in prevailing interest rate levels and
as a result of changing evaluations of the ability of
their issuers to meet interest and principal payments.
Similarly, the market value and net asset value of
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.
All temporary Temporary Investments. As described above, each Fund un-
investments will der ordinary circumstances may invest up to 20% of its
be U.S. net assets in "temporary investments," but may invest
Government or without limit in temporary investments during temporary
high quality defensive periods. Each Fund will seek to make temporary
securities. investments in short-term securities the interest on
which is exempt from regular federal income tax, but may
be subject to state income tax in the Fund's respective
state. If suitable federally tax-exempt temporary in-
vestments are not available at reasonable prices and
yields, a Fund may make temporary investments in taxable
securities whose interest is subject to both state and
federal income tax. A Fund will invest only in those
taxable temporary investments that are either U.S. Gov-
ernment securities or are rated within the highest grade
by Moody's or S&P, and mature within one year from the
date of purchase or carry a variable or floating rate of
interest. See the Statement of Additional Information
for further information about the temporary investments
in which the Funds may invest.
18
<PAGE>
SPECIAL FACTORS Because each Fund will concentrate its investments in
PERTAINING TO Municipal Obligations issued within a single state, a
EACH FUND Fund may be affected by political, economic or regula-
tory 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 for each Fund's respective state in
Appendix A to this Prospectus. See the Statement of Ad-
ditional Information for further information about these
factors.
CERTAIN Portfolio Trading and Turnover. Each Fund will make
INVESTMENT changes in its investment portfolio from time to time in
STRATEGIES AND order to take advantage of opportunities in the munici-
LIMITATIONS pal market and to limit exposure to market risk. A Fund
may engage to a limited extent in short-term trading
consistent with its investment objective, but a Fund
will not trade securities solely to realize a profit.
Changes in a Fund's investments are known as "portfolio
turnover." While each Fund's annual portfolio turnover
rate is not expected to exceed 50%, actual portfolio
turnover rates are impossible to predict, and may exceed
50% in particular years depending upon market condi-
tions.
Each Fund will
focus on long-
term investment
strategies, and
will engage in
short-term
trading only when
consistent with
its stated
investment
objective.
When-issued or Delayed Delivery Transactions. A Fund may
purchase and sell Municipal Obligations on a when-issued
or delayed delivery basis, which calls for the Fund to
make payment or take delivery at a future date, normally
15-45 days after the trade date. The commitment to pur-
chase securities on a when-issued or delayed delivery
basis may involve an element of risk because the value
of the securities is subject to market fluctuation, no
interest accrues to the purchaser prior to settlement of
the transaction, and at the time of delivery the market
value may be less than cost. A Fund commonly engages in
when-issued transactions in order to purchase or sell
newly-issued Municipal Obligations, and may engage in
delayed delivery transactions in order to manage its op-
erations more effectively. See the Statement of Addi-
tional Information for further information about when-
issued and delayed delivery transactions.
The Funds do not Financial Futures and Options Transactions. Although the
presently intend Funds have no present intent to do so, each Fund re-
to use futures or serves the right to engage in certain hedging transac-
options. tions involving the use of financial futures contracts,
options on financial futures or options based on either
an index of long-term tax-exempt securities or on debt
securities whose prices, in the opinion of Nuveen Advi-
sory, correlate with the prices of the Fund's invest-
ments. These hedging transactions are designed to limit
the risk of fluctuations in the prices of a Fund's in-
vestments. See the Statement of Additional Information
for further information on futures and options and asso-
ciated risks.
19
<PAGE>
Each Fund will Other Investment Policies and Restrictions. Each Fund
take steps to has adopted certain fundamental policies intended to
ensure that its limit the risk of its investment portfolio. In accor-
assets are not dance with these policies, each Fund may not:
concentrated in
just a few
holdings.
. 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 U.S. government, its agencies
and instrumentalities or to the investment of 25% of the
Fund's assets;
. invest more than 5% of its total assets in securities of
unseasoned issuers which, together with their predeces-
sors, have been in operation for less than three years;
. invest more than 10% of its assets in illiquid municipal
lease obligations and other securities that are unmar-
ketable, illiquid or not readily marketable (securities
that cannot reasonably be sold within seven days, in-
cluding 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 Ob-
ligations issued by governments or political subdivi-
sions of governments, and obligations issued or guaran-
teed by the U.S. Government, its agencies or instrumen-
talities;
. borrow money, except from banks for temporary or emer-
gency 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 as-
sets, 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 instru-
ment will generally be considered a separate security.
See the Statement of Additional Information for a more
complete description of the fundamental investment
policies summarized above and the Funds' other fundamental
investment policies. Each Fund's fundamental investment
policies may not be changed without the approval of the
Fund's shareholders.
20
<PAGE>
FLEXIBLE SALES CHARGE PROGRAM
Each Fund offers
various sales For many investors, working with a professional finan-
charge options cial adviser is an important part of their financial
designed to meet strategy. Because Nuveen recognizes the value a finan-
your individual cial adviser can provide in developing and implementing
investment needs a comprehensive plan for your financial future, Nuveen
and preferences. Mutual Funds are sold with a sales charge, either at the
time of purchase or at the time of redemption (in the
case of Class C Shares purchased on or after June 13,
1995 and redeemed within 12 months of purchase), or over
time in the form of a distribution fee. This provides
your financial adviser with compensation for the profes-
sional advice and service you receive in financial plan-
ning and investment selection.
Each Fund has adopted a Flexible Sales Charge Program
which provides you with alternative ways of purchasing
Fund shares based upon your individual investment needs
and preferences. You may purchase Class A Shares at a
price equal to their net asset value plus an up-front
sales charge. You may purchase Class C Shares without
any up-front sales charge at a price equal to their net
asset value, but subject to an annual distribution fee
designed to compensate Authorized Dealers over time for
the sale of Fund shares and a 1% CDSC if Class C Shares
are purchased on or after June 13, 1995 and redeemed
within 12 months of purchase. See "How to Buy Fund
Shares--Class C Shares" and "How to Redeem Fund Shares."
Class C Shares automatically convert to Class A Shares
six years after purchase. Both Class A Shares and Class
C Shares are also subject to annual service fees, which
are used to compensate Authorized Dealers for providing
you with ongoing financial advice and other services.
Under the Flexible Sales Charge Program, all Fund shares
outstanding as of September 6, 1994, have been desig-
nated as Class R Shares. Class R Shares are available
for purchase at a price equal to their net asset value
only under certain limited circumstances, or by speci-
fied investors, as described herein. The price at which
the purchase of any Fund's shares is effected is based
on the next calculation of the Fund's net asset value
after the order is placed.
Which Option is
Right For You? When you purchase Class A Shares of a Fund, you will pay
an up-front sales charge. As a result, you will have
less money invested initially and you will own fewer
Class A Shares than you would in the absence of an up-
front sales charge. Alternatively, when you purchase
Class C Shares of a Fund, you will not pay an up-front
sales charge and all of your monies will be fully in-
vested at the time of purchase. However, Class C Shares
are subject to an annual distribution fee to compensate
Authorized Dealers over time for the sale of Fund shares
and a CDSC of 1% if purchased on or after June 13, 1995
and redeemed within 12 months of purchase. Class C
Shares automatically convert to Class A Shares six years
after purchase. This automatic conversion is designed to
ensure that holders of
21
<PAGE>
Class C Shares would pay over the six-year period a dis-
tribution fee that is approximately the economic equiva-
lent of the one-time, up-front sales charge paid by
holders of Class A Shares on purchases of up to $50,000.
Class A Shares and Class C Shares are also subject to
annual service fees which are identical in amount and
which are used to compensate Authorized Dealers for
providing you with ongoing financial advice and other
services. You may qualify for a 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 lim-
ited circumstances, Class R Shares are available for
purchase at a price equal to their net asset value.
In deciding whether to purchase Class A Shares, Class C
Shares or Class R Shares of a Fund, you should consider
all relevant factors, including the dollar amount of
your purchase, the length of time you expect to hold the
shares, the amount of any applicable up-front sales
charge, the amount of any applicable distribution or
service fee that may be incurred while you own the
shares, and whether or not you will be reinvesting in-
come or capital gain distributions in additional shares.
For assistance with this decision, please refer to the
tables under "Summary of Fund Expenses" on page 3 of
this Prospectus which set forth examples of the expenses
applicable to each class of shares, or consult your fi-
nancial adviser.
Differences
Between the Each class of shares of a Fund represents an interest in
Classes of Shares the same portfolio of investments. Each class of shares
of a Fund is identical in all respects except that each
class bears its own class expenses, including adminis-
tration and distribution expenses, and each class has
exclusive voting rights with respect to any distribution
or service plan applicable to its shares. In addition,
the Class C Shares are subject to a conversion feature
and a CDSC of 1% if purchased on or after June 13, 1995
and redeemed within 12 months of purchase, as described
below. As a result of the 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 each Fund's classes of shares.
Dealer Incentives Upon notice to all Authorized Dealers, Nuveen may
reallow to Authorized Dealers electing to participate up
to the full applicable sales charge during periods and
for transactions specified in the notice. The
reallowances made during these periods may be based upon
attainment of minimum sales levels. Further, Nuveen may
from time to time make additional reallowances only to
certain Authorized Dealers who sell or are expected to
sell certain minimum amounts of the Funds or other
Nuveen Mutual Funds and Nuveen UITs during specified
time periods. The staff of the Securities and Exchange
Commission takes the position that dealers
22
<PAGE>
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 pro-
viding sales literature to and holding informational or
educational programs for the benefit of such Authorized
Dealers' representatives, seminars for the public, and
advertising and sales campaigns. Any such support would
be provided by Nuveen out of its own assets, and not out
of the assets of the Funds, and will not change the
price an investor pays for shares or the amount that a
Fund will receive from such a sale.
HOW TO BUY FUND SHARES
CLASS A SHARES You may purchase Class A Shares of any Fund at a public
offering price equal to the applicable net asset value
per share plus an up-front sales charge imposed at the
time of purchase as set forth below. You may qualify for
a reduced sales charge, or the sales charge may be
waived in its entirety, as described below under "How
the Sales Charge on Class A Shares May Be Reduced or
Waived." Class A Shares are also subject to an annual
service fee to compensate Authorized Dealers for provid-
ing you with ongoing financial advice and other servic-
es. See "Distribution and Service Plans."
Class A Shares
are offered at
their net asset
value plus an up-
front sales
charge.
The sales charges for each Fund's Class A Shares are as
follows:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE REALLOWANCE
AS % OF PUBLIC AS % OF NET AS % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
--------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
$50,000 but less than $100,000 4.25% 4.44% 3.75%
$100,000 but less than $250,000 3.50% 3.63% 3.25%
$250,000 but less than $500,000 2.75% 2.83% 2.50%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 but less than $2,500,000 1.00% 1.01% 1.00%
$2,500,000 but less than $5,000,000 0.75% 0.76% 0.75%
$5,000,000 and over 0.50% 0.50% 0.50%
</TABLE>
The Funds receive the entire net asset value of all
Class A Shares that are sold. Nuveen retains the full
applicable sales charge from which it pays the uniform
reallowances shown above to Authorized Dealers. See
"Flexi-
23
<PAGE>
ble Sales Charge Program--Dealer Incentives" above for
more information about reallowances and other compensa-
tion to Authorized Dealers.
Certain commercial banks may make Class A Shares of the
Funds available to their customers on an agency basis.
Pursuant to the agreements between Nuveen and these
banks, some or all of the sales charge paid by a bank
customer in connection with a purchase of Class A Shares
may be retained by or paid to the bank. Certain banks
and other financial institutions may be required to reg-
ister as securities dealers in certain states.
HOW THE SALES Summary. These are several ways to reduce or eliminate
CHARGE ON CLASS A the sales charge:
SHARES MAY BE
REDUCED OR WAIVED
. cumulative discount;
. letter of intent;
. group purchase programs; and
. special sales charge waivers for certain categories of
There are several investors.
ways to reduce or
eliminate the
sales charge.
Cumulative Discount. You may qualify for a reduced sales
charge as shown above on a purchase of Class A Shares of
any Fund if the amount of your purchase, when added to
the value that day of all of your prior purchases of
shares of any 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 ad-
viser must notify Nuveen or SSI of any cumulative dis-
count 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 any Fund if
you plan to purchase Class A Shares of Nuveen Mutual
Funds over the next 13 months and the total amount of
your purchases would, if purchased at one time, qualify
you for one of the reduced sales charges shown above. In
order to take advantage of this option, you must com-
plete the applicable section of the Application Form or
sign and deliver either to an Authorized Dealer or to
SSI a written Letter of Intent in a form acceptable to
Nuveen. A Letter of Intent states that you intend, but
are not obligated, over the next 13 months to purchase a
stated total amount of Class A Shares that would qualify
you for a reduced sales charge shown above. You may
count shares of a Nuveen Mutual Fund that you already
own on which you paid an up-front sales charge or an on-
going distribution fee and any Class C Shares of a
Nuveen Mutual Fund that you purchase over the next 13
months towards completion of your investment program,
but you will receive a reduced sales charge only on new
Class A Shares you purchase with a
24
<PAGE>
sales charge over the 13 months. You cannot count to-
wards 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 ex-
ecution of the Letter of Intent will be at least 5% of
the total amount of your intended purchases. You further
agree that shares representing 5% of the total amount of
your intended purchases will be held in escrow pending
completion of these purchases. All dividends and capital
gains distributions on Class A Shares held in escrow
will be credited to your account. If total purchases,
less redemptions, prior to the expiration of the 13
month period equal or exceed the amount specified in
your Letter of Intent, the Class A Shares held in escrow
will be transferred to your account. If the total pur-
chases, less redemptions, exceed the amount specified in
your Letter of Intent and thereby qualify for a lower
sales charge than the sales charge specified in your
Letter of Intent, you will receive this lower sales
charge retroactively, and the difference between it and
the higher sales charge paid will be used to purchase
additional Class A Shares on your behalf. If the total
purchases, less redemptions, are less than the amount
specified, you must pay Nuveen an amount equal to the
difference between the amounts paid for these purchases
and the amounts which would have been paid if the higher
sales charge had been applied. If you do not pay the ad-
ditional amount within 20 days after written request by
Nuveen or your financial adviser, Nuveen will redeem an
appropriate number of your escrowed Class A Shares to
meet the required payment. By establishing a Letter of
Intent, you irrevocably appoint Nuveen as attorney to
give instructions to redeem any or all of your escrowed
shares, with full power of substitution in the premises.
You or your financial adviser must notify Nuveen or SSI
whenever you make a purchase of Fund shares that you
wish to be covered under the Letter of Intent option.
Group Purchase Programs. If you are a member of a quali-
fied group, you may purchase Class A Shares of any Fund
or of another Nuveen Mutual Fund at the reduced sales
charge applicable to the group's purchases taken as a
whole. A "qualified group" is one which has been in ex-
istence for more than six months, has a purpose other
than investment, has five or more participating members,
has agreed to include Fund sales publications in mail-
ings to members and has agreed to comply with certain
administrative requirements relating to its group pur-
chases.
25
<PAGE>
Under any group purchase program, the minimum monthly
investment in Class A Shares of any particular Fund or
portfolio by each participant is $25, and the minimum
monthly investment in Class A Shares of any particular
Fund or portfolio for all participants in the program
combined is $1,000. No certificates will be issued for
any participant's account. All dividends and other dis-
tributions by a Fund will be reinvested in additional
Class A Shares of the same Fund. No participant may uti-
lize a systematic withdrawal program.
To establish a group purchase program, both the group
itself and each participant must fill out special appli-
cation materials, which the group administrator may ob-
tain from the group's financial adviser, by checking the
applicable box on the enclosed Application Form or by
calling Nuveen toll-free at 800-621-7227. See the State-
ment of Additional Information for more complete infor-
mation about "qualified groups" and group purchase pro-
grams.
Special Sales Charge Waivers. Class A Shares of any Fund
may be purchased at net asset value without a sales
charge and in any amount by the following categories of
investors:
. officers, directors and retired directors of the Funds;
. bona fide, full-time and retired employees of Nuveen,
any parent company of Nuveen, and subsidiaries thereof,
or their immediate family members (as defined below);
. any person who, for at least 90 days, has been an offi-
cer, 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 subsidi-
aries or bank affiliates;
. bank or broker-affiliated trust departments investing
funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary,
agency, advisory, custodial or similar capacity; and
. registered investment advisers, certified financial
planners and registered broker-dealers who in each case
either charge periodic fees to their customers for fi-
nancial planning, investment advisory or asset manage-
ment services, or provide such services in connection
with the establishment of an investment account for
which a comprehensive "wrap fee" charge is imposed.
Any Class A Shares purchased pursuant to a special sales
charge waiver must be acquired for investment purposes
and on the condition that they will not be transferred
or resold except through redemption by the Funds.
26
<PAGE>
You or your financial adviser must notify Nuveen or SSI
whenever you make a purchase of Class A Shares of any
Fund that you wish to be covered under these special
sales charge waivers. The above categories of investors
are also eligible to purchase Class R Shares of any
Fund, as described below under "Class R Shares."
You may also purchase Class A Shares of any Fund at net
asset value without a sales charge if the purchase takes
place through a broker-dealer and represents the rein-
vestment of the proceeds of the redemption of shares of
one or more registered investment companies not affili-
ated with Nuveen. You must provide appropriate documen-
tation that the redemption occurred not more than 60
days prior to the reinvestment of the proceeds in Class
A Shares, and that you either paid an up-front sales
charge or were subject to a contingent deferred sales
charge in respect of the redemption of such shares of
such other investment company. Finally, Class A Shares
of any Fund may be issued at net asset value without a
sales charge in connection with the acquisition by a
Fund of another investment company. All purchases under
the special sales charge waivers will be subject to min-
imum purchase requirements as established by the Funds.
--------------------------------
In determining the amount of your purchases of Class A
Shares of any Fund that may qualify for a reduced sales
charge, the following purchases may be combined: (1) all
purchases by a trustee or other fiduciary for a single
trust estate or fiduciary account; (2) all purchases by
individuals and their immediate family members (i.e.,
their spouses and their children under 21 years of age);
or (3) all purchases made through a group purchase pro-
gram as described above.
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 RE-
QUIRED APPLICATION FORMS, CALL NUVEEN TOLL-FREE AT 800-
621-7227.
27
<PAGE>
CLASS C SHARES You may purchase Class C Shares of any Fund at a public
offering price equal to the applicable net asset value per
share without any up-front sales charge. Class C Shares
are subject to an annual distribution fee to compensate
Authorized Dealers over time for the sale of Fund shares.
See "Flexible Sales Charge Program--Dealer Incentives"
above for more information about compensation to Autho-
rized Dealers. Class C Shares are also subject to an an-
nual service fee to compensate Authorized Dealers for pro-
viding you with ongoing financial advice and other servic-
es. See "Distribution and Service Plans."
Class C Shares
may be purchased
at their net
asset value, and
are subject to an
annual
distribution fee.
An investor purchasing Class C Shares on or after June 13,
1995 agrees to pay a CDSC of 1% if Class C Shares are re-
deemed within 12 months of purchase. Each Fund will redeem
shares at net asset value and deduct the CDSC from the
proceeds of the redemption.
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.
The CDSC will be the lower of (i) the net asset value of
Class C Shares at the time of purchase or (ii) the net as-
set value of Class C Shares at the time of redemption and
will be charged for Class C Shares redeemed within 12
months of purchase. No CDSC will be charged on Class C
Shares purchased as a result of automatic reinvestment of
dividends or capital gains paid, or on exchanges for Class
C Shares of another Nuveen Mutual Fund or money market
fund. The CDSC will be calculated as if Class C Shares not
subject to a CDSC are redeemed first, except if another
order of redemption would result in a lower charge.
Class C Shares will automatically convert to Class A
Shares six years after purchase. All conversions will be
done at net asset value without the imposition of any
sales load, fee, or other charge, so that the value of
each shareholder's account immediately before conversion
will be the same as the value of the account immediately
after conversion. Class C Shares acquired through rein-
vestment of distributions will convert into Class A Shares
based on the date of the initial purchase to which such
shares relate. For this purpose, Class C Shares acquired
through reinvestment of distributions will be attributed
to particular purchases of Class C Shares in accordance
with such procedures as the Board of Directors may deter-
mine 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 con-
verted 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
28
<PAGE>
per share of the Class C Shares and the Class A Shares may
differ at the time of conversion, a shareholder may re-
ceive more or fewer Class A Shares than the number of
Class C Shares converted. Any conversion of Class C Shares
into Class A Shares will be subject to the 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 tax-
able 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.
If you owned Fund shares as of September 6, 1994, those
CLASS R SHARES shares have been designated as Class R Shares. Purchases
of additional Class R Shares of any Fund, which will not
be subject to any sales charge or any distribution or
service fee, will be limited to the following circumstanc-
es. You may purchase Class R Shares with monies represent-
ing distributions from Nuveen-sponsored UITs if, prior to
September 6, 1994, you had purchased such UITs and elected
to reinvest distributions from such UITs in shares of a
Fund. You may also purchase Class R Shares with monies
representing dividends and capital gain distributions on
Class R Shares of a Fund. Finally, you may purchase Class
R Shares if you are within the following specified catego-
ries of investors who are also eligible to purchase Class
A Shares at net asset value without an up-front sales
charge:
Class R Shares
are offered at
their net asset
value.
. 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 offi-
cer, 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 subsidi-
aries or bank affiliates;
. bank or broker-affiliated trust departments investing
funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary,
agency, custodial or similar capacity; and
. registered investment advisers, certified financial
planners and registered broker-dealers who in each case
either charge periodic fees for financial planning, in-
vestment advisory or asset management services, or pro-
vide such services in connection with the establishment
of an investment account for which a comprehensive "wrap
fee" charge is imposed.
Investors who are eligible to purchase either Class R
Shares or Class A Shares of a Fund without a sales charge
at net asset value should be aware of
29
<PAGE>
the differences between these two classes of shares. Class
A Shares are subject to an annual service fee to compen-
sate Authorized Dealers for providing you with ongoing fi-
nancial advice and other 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 serv-
ices 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 You may buy Fund shares through Authorized Dealers or by
PURCHASES OF directing your financial adviser to call Nuveen toll-free
SHARES at 800-843-6765. You may pay for your purchase by Federal
Reserve draft or by check made payable to "Nuveen [name of
state] Tax-Free Value Fund, Class [A], [C], [R]," deliv-
ered 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 estab-
lish your Fund account by completing and enclosing with
your payment the attached Application Form. After your
initial investment, you may make subsequent purchases at
any time by forwarding to SSI a check in the amount of
your purchase made payable to "Nuveen [name of state] 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 ad-
dress 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 pur-
chases by wire transfer, call Nuveen toll-free at 800-621-
7227. Authorized Dealers and other persons distributing
the Funds' shares may receive different compensation for
selling different classes of shares.
The Funds offer a
number of
convenient ways
to purchase
shares.
MINIMUM Generally, your first purchase of any class of a Fund's
INVESTMENT shares must be for $1,000 or more. Additional purchases
REQUIREMENTS may be in amounts of $100 or more. These minimums may be
changed at any time by the Funds. There are exceptions
to these minimums for shareholders who qualify under one
or more of the Funds' automatic deposit, group purchase
or reinvestment programs.
SYSTEMATIC The Funds offer you several opportunities to capture the
INVESTMENT benefits of "dollar cost averaging" through systematic
PROGRAMS investment programs. In a regularly followed dollar cost
averaging program, you would purchase more shares when
Fund share prices are lower and fewer shares when Fund
share prices are higher, so that the average price paid
for Fund shares is less than the average price of Fund
shares over the same time period. The chart below shows
the cumulative effect that compound interest can have on
a systematic investment program.
30
<PAGE>
The Power of a
Systematic
Investment
Program.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
YEAR 6% 5% 4% 0%
<S> <C> <C> <C> <C>
0 1,000 1,000 1,000 1,000
1 2,184 2,170 2,156 2,100
2 3,553 3,509 3,466 3,300
3 5,005 4,916 4,829 4,500
4 6,548 6,396 6,248 5,700
5 8,185 7,951 7,725 6,900
6 9,923 9,586 9,262 8,100
7 11,769 11,304 10,862 9,300
8 13,728 13,110 12,526 10,500
9 15,809 15,009 14,259 11,700
10 18,017 17,004 16,062 12,900
11 20,362 19,102 17,939 14,100
12 22,852 21,307 19,892 15,300
13 25,494 23,625 21,925 16,500
14 28,300 26,062 24,040 17,700
15 31,280 28,623 26,242 18,900
</TABLE>
- --- 6% Compound Interest
- --- 5% Compound Interest
- --- 4% Compound Interest
- --- No Interest
SOURCE: NUVEEN MARKETING RESEARCH DEPARTMENT
In the above example, it is assumed that $100 is added
to an investment account every month for 15 years. From
the same $1,000 beginning, the chart shows the amount
that would be in the account after 15 years, assuming no
interest and interest compounded annually at the rates
of 4%, 5% and 6%.
31
<PAGE>
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 as-
sumes no gain or loss in the net asset value of the in-
vestment over the entire 15-year period, whereas the
net asset value of each of the Funds will rise and fall
due to market conditions or other factors, which could
have a significant impact on the total value of your
investment. Similarly, this example shows four steady
interest rates over the entire 15-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 advisors illustrating the
benefits of systematic investment programs and dollar
cost averaging.
The Funds offer
automatic deposit
and payroll
deposit plans.
The Funds offer two different types of systematic in-
vestment programs:
Automatic Deposit Plan. Once you have established a
Class A Share account or Class C Share account, or if
you are eligible to purchase additional Class R Shares
in one of the Funds, you may make regular investments
in an amount of $25 or more each month by authorizing
SSI to draw preauthorized checks on your bank account.
There is no obligation to continue payments and you may
terminate your participation at any time at your dis-
cretion. 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 Class A Share or Class C Share account in one of the
Funds, you may, with your employer's consent, make reg-
ular 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.
32
<PAGE>
OTHER SHAREHOLDER
PROGRAMS Exchange Privilege. You may exchange shares of a class
of any Fund you own for shares of the same or equivalent
class of another Fund or for shares of another Nuveen
Mutual Fund with reciprocal exchange privileges by send-
ing a written request to the applicable Fund, c/o Share-
holder Services, Inc., P.O. Box 5330, Denver, CO 80217-
5330. 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. For example, Class
A Shares of a Fund may be exchanged for Class A Shares
of another Nuveen Mutual Fund at net asset value without
a sales charge. Similarly, Class A Shares of another
Nuveen Mutual Fund purchased subject to a sales charge
may be exchanged for Class A Shares of any Fund at net
asset value without a sales charge. Shares of any Nuveen
Mutual Fund purchased through dividend reinvestment or
through investment of Nuveen UIT distributions may be
exchanged for shares of a Fund or any other Nuveen Mu-
tual Fund without a sales charge. Exchanges of shares
from any Nuveen money market fund will be made into
Class A Shares or Class C Shares of any Fund at the pub-
lic offering price, which includes an up-front sales
charge in the case of Class A Shares, and will be sub-
ject to an annual distribution fee in the case of Class
C 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 as-
set value without any up-front sales charge. Shares of
any class of a Fund may be exchanged for shares of any
Nuveen money market fund that does not impose a sales
charge or have any distribution or service fees.
The Funds offer
no-charge
exchanges with
other Nuveen
Mutual Funds.
No CDSC will be charged on the exchange of Class C
Shares of a Fund for Class C Shares of any other Nuveen
Mutual Fund or shares of any Nuveen money market fund.
The 12 month holding period for purposes of the CDSC ap-
plicable to Class C Shares will continue to run during
any period in which Class C Shares of a Fund, Class C
Shares of any other Nuveen Mutual Fund or shares of a
Nuveen money market fund are held.
You must exchange shares whose total value at least
equals the minimum investment requirement of the Nuveen
Mutual Fund being purchased. For federal income tax pur-
poses, any exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before
making any exchange, you should obtain the Prospectus
for the Nuveen Mutual Fund you are purchasing and read
it carefully. If the registration of the account for the
Fund you are purchasing is not exactly the same as that
of the fund account from which the exchange is made,
written instructions from all holders of the account
from which the exchange is being made must
33
<PAGE>
be received, with signatures guaranteed by a member of
an approved Medallion Guarantee Program or in such other
manner as may be acceptable to the Fund. You may also
exchange shares by telephone if you authorize telephone
exchanges by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at 800-
621-7227 to obtain an authorization form. The exchange
privilege may be modified or
discontinued by 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 that Fund.
Reinstatement Privilege. If you have redeemed Class A
Shares of a Fund or Class A Shares of any other Nuveen
Mutual Fund that were subject to a sales charge, you may
reinvest without any added sales charge up to the full
amount of the redemption in Class A Shares of a Fund at
net asset value at the time of reinvestment. This rein-
statement privilege can be exercised only once for all
or a portion of the Class A Shares you redeemed and must
be exercised within 90 days of the date of the redemp-
tion. As applied to Class C Shares of any Fund or of any
other Nuveen Mutual Fund, this reinstatement privilege,
if exercised within 90 days of the date of the redemp-
tion, will preserve the number of years credited to your
ownership of Class C Shares for purposes of conversion
of these Class C Shares to Class A Shares. Any CDSC
charged if the shares were purchased on or after June
13, 1995 and redeemed within 12 months of purchase will
be refunded if ownership is reinstated within the 90 day
period. The tax consequences of any capital gain real-
ized on a redemption will not be affected by
reinstatement, but a capital loss may be disallowed in
whole or in part depending on the timing and amount of
the reinvestment.
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM,
CALL NUVEEN TOLL-FREE AT 800-621-7227.
ADDITIONAL If you choose to invest in a Fund, an account will be
INFORMATION opened and maintained for you by SSI, the Funds' share-
holder services agent. Share certificates will be issued
to you only upon written request to SSI, and no certifi-
cates will be issued for fractional shares. Each Fund
reserves the right to reject any purchase order and to
waive or increase minimum investment requirements. A
change in registration or transfer of shares
34
<PAGE>
held in the name of your financial adviser's firm can
only be made by an order in good form from the financial
adviser acting on your behalf.
Authorized Dealers are encouraged to open single master
accounts. However, some Authorized Dealers may wish to
use SSI's sub-accounting system to minimize their inter-
nal recordkeeping requirements. An Authorized Dealer or
other investor requesting shareholder servicing or ac-
counting other than the master account or sub-accounting
service offered by SSI will be required to enter into a
separate agreement with another agent for these services
for a fee that will depend upon the level of services to
be provided.
Subject to the rules and regulations of the Securities
and Exchange Commission, Nuveen Tax-Free Bond Fund, Inc.
reserves the right to suspend the continuous offering of
shares of any of its Funds at any time, but no suspen-
sion shall affect your right of redemption as described
below.
DISTRIBUTION AND SERVICE PLANS
Each Fund has adopted a plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940,
which provides that Class C Shares will be subject to an
annual distribution fee and that both Class A Shares and
Class C Shares will be subject to an annual service fee.
Class R Shares will not be subject to either distribu-
tion or service fees.
The distribution fee applicable to Class C Shares under
each Fund's Plan will be payable to reimburse Nuveen for
services and expenses incurred in connection with the
distribution of Class C Shares. These expenses include
payments to Authorized Dealers, including Nuveen, who
are brokers of record with respect to the Class C
Shares, as well as, without limitation, expenses of
printing and distributing prospectuses to persons other
than shareholders of the Fund, expenses of preparing,
printing and distributing advertising and sales litera-
ture and reports to shareholders used in connection with
the sale of Class C Shares, certain other expenses asso-
ciated with the distribution of Class C Shares, and any
distribution-related expenses that may be authorized
from time to time by the Board of Directors.
The service fee applicable to Class A Shares and Class C
Shares under each Fund's Plan will be payable to Autho-
rized Dealers in connection with the provision of ongo-
ing services to shareholders. These services may include
establishing and maintaining shareholder accounts, an-
swering
35
<PAGE>
shareholder inquiries and providing other personal serv-
ices to shareholders.
Each Fund may spend up to .25 of 1% per year of the av-
erage daily net assets of Class A Shares as a service
fee under the Plan applicable to Class A Shares. Each
Fund may spend up to .75 of 1% per year of the average
daily net assets of Class C Shares less the amount of
any CDSC received by Nuveen as to which no reinstatement
privilege has been exercised as a distribution fee and
up to .25 of 1% per year of the average daily net assets
of Class C Shares as a service fee under the Plan appli-
cable to Class C Shares.
HOW TO REDEEM FUND SHARES
You may require a Fund at any time to redeem for cash
your shares of that Fund at the net asset value next
computed after instructions and required documents and
certificates, if any, are received in proper form. There
is no charge for the redemption of Class A Shares or
Class R Shares. An investor purchasing Class C Shares on
or after June 13, 1995 agrees to pay a CDSC of 1% of the
lower of (i) the net asset value of Class C Shares at
the time of purchase or (ii) the net asset value of
Class C Shares at the time of redemption, if such Class
C Shares are redeemed within 12 months of purchase. Each
Fund will redeem shares at net asset value and deduct
any applicable CDSC from the proceeds of redemption. No
CDSC will be charged on Class C Shares purchased as a
result of automatic reinvestment of dividends or capital
gains paid. The CDSC will be calculated as if Class C
Shares not subject to a CDSC are redeemed first, except
if another order of redemption would result in a lower
charge. There is no CDSC on Class C Shares held more
than 12 months.
The Funds offer a
variety of By Written Request. You may redeem shares by sending a
redemption written request for redemption directly to the applica-
options. ble Fund, c/o Shareholder Services, Inc., P.O. Box 5330,
Denver, CO 80217-5330, accompanied by duly endorsed cer-
tificates, if issued. Requests for redemption and share
certificates, if issued, must be signed by each share-
holder and, if the redemption proceeds exceed $25,000 or
are payable other than to the shareholder of record at
the address of record (which address may not have been
changed in the preceding 60 days), the signature must be
guaranteed by a member of an approved Medallion Guaran-
tee 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 re
36
<PAGE>
ceipt by the Fund of a properly executed redemption re-
quest in proper form. A check for the redemption pro-
ceeds will be mailed to you within seven days after re-
ceipt of your redemption request. However, if any shares
to be redeemed were purchased by check within 15 days
prior to the date the redemption request is received, a
Fund will not mail the redemption proceeds until the
check received for the purchase of shares has cleared,
which may take up to 15 days.
By TEL-A-CHECK. If you have authorized telephone redemp-
tion and your account address has not changed within the
last 60 days, you can redeem shares that are held in
non-certificate form and that are worth $25,000 or less
by calling Nuveen at 800-621-7227. While you or anyone
authorized by you may make telephone redemption re-
quests, redemption checks will be issued only in the
name of the shareholder of record and will be mailed to
the address of record. If your telephone request is re-
ceived prior to 2:00 p.m. eastern time, the shares re-
deemed will earn income through the day the request is
made and the redemption check will be mailed the next
business day. For requests received after 2:00 p.m.
eastern time, the shares redeemed earn income through
the next business day and the check will be mailed on
the second business day after the request.
By TEL-A-WIRE. If you have authorized TEL-A-WIRE redemp-
tion, you can take advantage of the following expedited
redemption procedures to redeem shares held in non-cer-
tificate form that are worth at least $1,000. You may
make TEL-A-WIRE redemption requests by calling Nuveen at
800-621-7227. If a redemption request is received by
4:00 p.m. eastern time, the redemption will be made as
of 4:00 p.m. that day. If the redemption request is re-
ceived after 4:00 p.m. eastern time, the redemption will
be made as of 4:00 p.m. the following business day. Re-
demption proceeds will normally be wired on the second
business day following the redemption, but may be de-
layed one additional business day if the Federal Reserve
Bank of Boston or the Federal Reserve Bank of New York
is closed on the day redemption proceeds would ordinar-
ily be wired. The Funds reserve the right to charge a
fee for TEL-A-WIRE.
Before you may redeem shares by TEL-A-CHECK or TEL-A-
WIRE, you must complete the telephone redemption autho-
rization section of the enclosed Application Form and
return it to Nuveen or SSI. If you did not authorize
telephone redemption when you opened your account, you
may obtain a telephone redemption authorization form by
writing the Funds or by calling Nuveen toll-free at 800-
621-7227. Proceeds of share 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
37
<PAGE>
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 re-
ceive redemption proceeds. These requests must be signed
by each account owner with signatures guaranteed by a
member of an approved Medallion Guarantee Program or in
such other manner as may be acceptable to the Funds.
Further documentation may be required from corporations,
executors, trustees or personal representatives.
For the convenience of shareholders, the Funds have au-
thorized Nuveen as their agent to accept orders from fi-
nancial advisers by wire or telephone for the redemption
of Fund shares. The redemption price is the first net
asset value determined following receipt of an order
placed by the financial adviser. A Fund makes payment
for the redeemed shares to the financial adviser who
placed the order promptly upon presentation of required
documents with signatures guaranteed as described above.
Neither the Funds nor Nuveen charges any redemption
fees. However, your financial adviser may charge you for
serving as agent in the redemption of shares.
The Funds reserve the right to refuse telephone redemp-
tions and, at their option, may limit the timing, amount
or frequency of these redemptions. This procedure may be
modified or terminated at any time, on 30 days' notice,
by the Funds. The Funds, SSI and Nuveen will not be lia-
ble for following telephone instructions reasonably be-
lieved to be genuine. The Funds employ procedures rea-
sonably designed to confirm that telephone instructions
are genuine. These procedures include recording all tel-
ephone instructions and requiring up to three forms of
identification prior to acting upon a caller's instruc-
tions. If a Fund does not follow reasonable procedures
for protecting shareholders against loss on telephone
transactions, it may be liable for any losses due to un-
authorized or fraudulent telephone instructions.
Automatic Withdrawal Plan. If you own Fund shares cur-
rently worth at least $10,000, you may establish an Au-
tomatic Withdrawal Plan by completing an application
form for the Plan. You may obtain an application form by
checking the applicable box on the enclosed Application
Form or by calling Nuveen toll-free at 800-621-7227.
The Plan permits you to request periodic withdrawals on
a monthly, quarterly, semi-annual or annual basis in an
amount of $50 or more. Depending upon the size of the
withdrawals requested under the Plan and fluctuations in
the net asset value of Fund shares, these withdrawals
may reduce or even exhaust your account.
38
<PAGE>
The purchase of Class A Shares, other than through rein-
vestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usu-
ally be disadvantageous because you will be paying a
sales charge on any Class A Shares you purchase at the
same time you are redeeming shares. Similarly, use of
the Automatic Withdrawal Plan for Class C Shares pur-
chased on or after June 13, 1995 and held 12 months or
less will result in imposition of the 1% CDSC. Purchase
of new Class C Shares, other than through reinvestment,
while participating in the Automatic Investment Plan may
be disadvantageous because the newly-purchased Class C
Shares will be subject to the 1% CDSC until 12 months
after purchase.
General. Each Fund may suspend the right of redemption
of Fund shares or delay payment more than seven days (a)
during any period when the New York Stock Exchange is
closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund nor-
mally utilizes is restricted, or an emergency exists as
determined by the Securities and Exchange Commission so
that trading of the Fund's investments or determination
of its net asset value is not reasonably practicable, or
(c) for any other periods that the Securities and Ex-
change Commission by order may permit for protection of
Fund shareholders.
Each Fund may, from time to time, establish a minimum
total investment for Fund shareholders, and each Fund
reserves the right to redeem your shares if your invest-
ment is less than the minimum after giving you at least
30 days' notice. If any minimum total investment is es-
tablished, and if your account is below the minimum, you
will be allowed 30 days following the notice in which to
purchase sufficient shares to meet the minimum. So long
as a Fund continues to offer shares at net asset value
to holders of Nuveen UITs who are investing their Nuveen
UIT distributions, no minimum total investment will be
established for that Fund.
MANAGEMENT OF THE FUNDS
Nuveen Advisory Board of Directors. The management of Nuveen Tax-Free Bond
has been managing Fund, Inc., including general supervision of the duties
similar tax-free performed for each Fund by Nuveen Advisory under the
funds since 1976, Investment Management Agreement, is the responsibility of
and has its Board of Directors.
approximately $30
billion of assets
under management.
Investment Adviser. Nuveen Advisory acts as the investment
adviser for and 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,
39
<PAGE>
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 Tax-Free
Bond 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 55 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, Chica-
go, Illinois 60606, the oldest and largest investment
banking firm (based on number of employees) specializing
in the underwriting and distribution of tax-exempt secu-
rities. Nuveen, the principal underwriter of the Funds'
shares, is sponsor of the Nuveen Tax-Exempt Unit Trust,
a registered unit investment trust. It is also the prin-
cipal underwriter for the Nuveen Mutual Funds, and
served as co-managing underwriter for the shares of the
Nuveen Exchange-Traded Funds. Over 1,000,000 individuals
have invested to date in Nuveen's tax-exempt funds and
trusts. Founded in 1898, Nuveen is a subsidiary of The
John Nuveen Company which, in turn, is approximately 75%
owned by The St. Paul Companies, Inc. ("St. Paul"). St.
Paul is located in St. Paul, Minnesota, and is princi-
pally engaged in providing property-liability insurance
through subsidiaries.
For the services and facilities furnished by Nuveen Ad-
visory, each Fund has agreed to pay an annual management
fee as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE MANAGEMENT FEE
----------------------------------
<S> <C>
For the first $125 million .5500 of 1%
For the next $125 million .5375 of 1%
For the next $250 million .5250 of 1%
For the next $500 million .5125 of 1%
For the next $1 billion .5000 of 1%
For assets over $2 billion .4750 of 1%
</TABLE>
All fees and expenses are accrued daily and deducted be-
fore payment of dividends to investors. In addition to
the management fee of Nuveen Advisory, each Fund pays
all its other costs and expenses and a portion of Nuveen
Tax-Free Bond Fund, Inc.'s general administrative ex-
penses allo-
40
<PAGE>
cated in proportion to the net assets of each Fund. 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 each Fund for any fiscal year, 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 addi-
tional expenses from time to time, which voluntary reim-
bursements may be terminated at any time in its discre-
tion. For information regarding the management fees and
total operating expenses of each class of shares of each
of the Funds for the year ended February 28, 1995, see
the table under "Summary of Fund Expenses" on page 3 of
this Prospectus.
Portfolio Management. Overall portfolio management
strategy for the Funds is determined by Nuveen Advisory
under the general supervision of Thomas C. Spalding,
Jr., a Vice President of Nuveen Advisory and of the
Funds. Mr. Spalding has been employed by Nuveen since
1976 and by Nuveen Advisory since 1978 and has responsi-
bility with respect to the portfolio management of all
Nuveen open-end and exchange-traded funds managed by
Nuveen Advisory. See the Statement of Additional Infor-
mation for further information about Mr. Spalding.
The day-to-day management of the Massachusetts Fund is the
responsibility of Stephen S. Peterson, an Assistant
Portfolio Manager of Nuveen Advisory since October 1991
and portfolio manager for the Massachusetts Fund since May
1993. Prior to joining Nuveen Advisory, he was an analyst
in Nuveen's Research Department. Mr. Peterson currently
manages eight Nuveen sponsored investment companies.
The day-to-day management of the New York Fund is the
responsibility of Daniel S. Solender, an Assistant
Portfolio Manager of Nuveen Advisory since January 1992
and portfolio manager for the New York Fund since
September 1994. Prior to joining Nuveen Advisory, Mr.
Solender attended the University of Chicago (from
September 1990 to June 1992) where he received his M.B.A.
and worked part time in the Research Department of Nuveen.
From June 1989 to August 1990, Mr. Solender worked for
Citibank Investment Services in the areas of investment
research and product development. He currently manages
nine Nuveen-sponsored investment companies.
The day-to-day management of the Ohio Fund is the
responsibility of James W. Lumberg, an Assistant Portfolio
Manager of Nuveen Advisory since July 1993 and portfolio
manager for the Ohio Fund since September 1994. Mr.
Lumberg was Sector Manager, Municipal Leases and Pooled
Finance and a
41
<PAGE>
municipal analyst of Nuveen and, prior thereto, was a
professor of English in Liberia, West Africa. Mr. Lumberg
acts under the direct supervision of J. Thomas Futrell and
he currently manages five Nuveen-sponsored investment
companies. J. Thomas Futrell has been a Vice President of
Nuveen Advisory since February 1991. Prior thereto, he
served as Assistant Vice President of Nuveen Advisory. He
currently manages seven Nuveen-sponsored investment
companies.
Consistent with the Funds' investment objectives, the day-
to-day management of each Fund is characterized by an
emphasis on value investing, a process that involves the
search for Municipal Obligations with favorable
characteristics that, in Nuveen Advisory's judgment, have
not yet been recognized in the marketplace. The process of
searching for such undervalued or underrated securities is
an ongoing one that draws upon the 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 Tax-Free Bond Fund, Inc.
HOW THE FUNDS SHOW PERFORMANCE
The Funds may Each Fund from time to time may quote various performance
compare their measures in order to illustrate the historical returns
performance with available from an investment in the Fund. These
other tax-free performance measures, which are determined for each class
and taxable of shares of a Fund, include:
investments,
often on a
taxable
equivalent basis.
Yield Information. YIELD is a standardized measure of the
net investment income 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
42
<PAGE>
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
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
TAXABLE
EQUIVALENT 30 YEAR 6 MONTH TAXABLE
DATE BB 20 TREASURY CD MMF
<S> <C> <C> <C> <C>
1/86 12.63% 9.40% 7.54% 7.15%
1/87 10.41% 7.39% 5.60% 5.50%
1/88 12.08% 8.83% 6.75% 6.50%
1/89 11.48% 8.93% 8.12% 8.36%
1/90 11.09% 8.26% 7.62% 7.75%
1/91 11.06% 8.27% 6.75% 6.89%
1/92 10.18% 7.75% 3.72% 4.13%
1/93 9.62% 7.34% 2.87% 2.84%
1/94 8.29% 5.54% 2.72% 2.71%
1/95 10.21% 7.85% 5.43% 5.13%
</TABLE>
SOURCES: BOND BUYER, BANXQUOTE, IBC/DONOGHUE'S MONEY
FUND REPORT
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 de-
gree. 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 inter-
est rates. See the discussion below under the
subcaption "General" for a description of the indices
and investments shown in the chart.
DISTRIBUTION RATE is determined based upon the latest
dividend, annualized, expressed as a percentage of the
offering price per share at the end of the measurement
period. Distribution rate may sometimes be different
than yield because it may not include the effect of am-
ortization of bond premiums to the extent such premiums
arise after the bonds were purchased.
43
<PAGE>
Total Return Information. AVERAGE ANNUAL TOTAL RETURN
and CUMULATIVE TOTAL RETURN figures for a specified pe-
riod measure both the net investment income generated
by, and the effect of any realized and unrealized appre-
ciation or depreciation of, an investment in a Fund, as-
suming the reinvestment of all dividends and capital
gain distributions. Average annual total return figures
generally are quoted for at least 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 re-
turn that would be generated by a taxable income fund
that produced the same amount of net asset value appre-
ciation or depreciation and after-tax income as a Fund
in each year, assuming a specified tax rate. The taxable
equivalent total return of a Fund will therefore be
higher than its total return over the same period.
From time to time, a Fund may compare its risk-adjusted
performance with other investments that may provide dif-
ferent levels of risk and return. For example, a Fund may
compare its risk level, as measured by the variability of
its periodic returns, or its RISK-ADJUSTED TOTAL RETURN,
with those of other funds or groups of funds. Risk-ad-
justed 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 in-
come.
General. Any given performance quotation or performance
comparison for a Fund is based on historical earnings
and should not be considered as representative of the
performance of the Fund for any future period. See the
Statement of Additional Information for further informa-
tion concerning the Funds' performance. For information
as to current yield and other performance information
regarding the Funds, call Nuveen toll-free at 800-621-
7227.
A comparison of the current yield or historic perfor-
mance of a Fund to those of other investments is one el-
ement to consider in making an informed investment deci-
sion. Each Fund may from time to time in its
44
<PAGE>
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 mar-
ket funds. These taxable investments have investment
characteristics that differ from those of the Funds.
U.S. Government bonds, for example, are long-term in-
vestments 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 sta-
ble 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.
DISTRIBUTIONS AND TAXES
HOW THE FUNDS PAY
DIVIDENDS Each Fund will pay monthly dividends to shareholders at
a level rate that reflects the past and projected net
income of the Fund and that results, over time, in the
distribution of substantially all of the Fund's net in-
come. Net income of each Fund consists of all interest
income accrued on its portfolio less all expenses of
Nuveen Tax-Free Bond Fund, Inc. accrued daily that are
applicable to that Fund. To maintain a more stable
monthly distribution, each Fund may from time to time
distribute less than the entire amount of net income
earned in a particular period. This undistributed net
income would be available to supplement future distribu-
tions, which might otherwise have been reduced by a de-
crease in a Fund's monthly net income due to fluctua-
tions in investment income or expenses. As a result, the
distributions paid by a Fund for any particular monthly
period may be more or less than the amount of net income
actually earned by a Fund during such period. Undistrib-
uted net income is included in a Fund's net asset value
and, correspondingly, distributions from previously un-
distributed net income are deducted from a Fund's net
asset value. It is not expected that this dividend pol-
icy will impact the management of the Funds' portfolios.
Each Fund pays
monthly
dividends.
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 exclu
45
<PAGE>
sively by that class. As a result, dividends per share
will vary among a Fund's classes of shares.
Each Fund will declare dividends on the 9th of each
month (or if the 9th is not a business day, on the imme-
diately preceding business day), payable to shareholders
of record as of the close of business on that day. This
distribution policy is subject to change, however, by
the Board of Directors without prior notice to or ap-
proval by shareholders. Dividends will be paid on the
first business day of the following month and are rein-
vested in additional shares of a Fund at net asset value
unless you have elected that your dividends be paid in
cash. Net realized capital gains, if any, will be paid
not less frequently than annually and will be reinvested
at net asset value in additional shares of the Fund un-
less you have elected to receive capital gains distribu-
tions in cash.
TAX MATTERS
The following federal and state tax discussion, together
with the additional information on state taxes in Appen-
dix A, is intended to provide you with an overview of
the impact on the Funds and their shareholders of fed-
eral as well as state and local income tax provisions.
These tax provisions are subject to change by legisla-
tive 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.
Income dividends Federal Income Tax. Each Fund intends to qualify, as it
are free from has in prior years, under Subchapter M of the Internal
regular federal Revenue Code of 1986, as amended (the "Code") for tax
income tax. treatment as a regulated investment company. In order to
qualify for treatment as a regulated investment company,
a Fund must satisfy certain requirements relating to the
sources of its income, diversification of its assets and
distribution of its income to shareholders. As a regu-
lated investment company, a Fund will not be subject to
federal income tax on the portion of its net investment
income and net realized capital gains that is currently
distributed to shareholders. Each Fund also intends to
satisfy conditions that will enable it to pay "exempt-
interest dividends" to its shareholders. This means that
you will not be subject to regular federal income tax on
Fund dividends you receive from income on Municipal Ob-
ligations. [/R]
Your share of a Fund's taxable income, if any, from in-
come on taxable temporary investments and net short-term
capital gains, will be taxable to you as ordinary in-
come. If a Fund purchases a Municipal Obligation at a
market discount, any gain realized by the Fund upon sale
or redemp-
46
<PAGE>
tion of the Municipal Obligation will be treated as tax-
able ordinary income to the extent such gain does not
exceed the market discount, and any gain realized in ex-
cess 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 com-
pany under the Code, distributions will not qualify for
the dividends received deduction for corporate share-
holders. 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 re-
turn of a portion of the purchase price.
If in any year a Fund should fail to qualify under
Subchapter M for tax treatment as a regulated investment
company, the Fund would incur a regular corporate fed-
eral income tax upon its taxable income for that year,
and the entire amount of your distributions would be
taxable as ordinary income.
The Code does not permit you to deduct the interest on
borrowed monies used to purchase or carry tax-free in-
vestments, such as shares of a Fund. Under Internal Rev-
enue Service rules, the purchase of Fund shares may be
considered to have been made with borrowed monies even
though those monies are not directly traceable to the
purchase of those shares.
Because the net asset value of each Fund's shares in-
cludes net tax-exempt interest earned by the Fund but
not yet declared as an exempt-interest dividend, each
time an exempt-interest dividend is declared, the net
asset value of the Fund's shares will decrease in an
amount equal to the amount of the dividend. Accordingly,
if you redeem shares of a Fund immediately prior to or
on the record date of a monthly exempt-interest divi-
dend, you may realize a taxable gain even though a por-
tion of the redemption proceeds may represent your pro
rata share of undistributed tax-exempt interest earned
by the Fund.
The redemption or exchange of Fund shares normally will
result in capital gain 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
47
<PAGE>
disallowed to the extent of any distribution of exempt-
interest dividends received on these shares and will be
treated as a long-term capital loss to the extent of any
distribution of long-term capital gain received on these
shares.
If you receive social security or railroad retirement
benefits you should note that tax-exempt income is taken
into account in calculating the amount of these benefits
that may be subject to federal income tax.
The Funds may invest in private activity bonds, the in-
terest on which is not exempt from federal income tax to
"substantial users" of the facilities financed by these
bonds or "related persons" of such substantial users.
Therefore, the Funds may not be appropriate investments
for you if you are considered either a substantial user
or a related person.
Each Fund may invest up to 20% of its net assets in AMT
Bonds, the interest on which is a specific tax prefer-
ence item for purposes of computing the alternative min-
imum tax on corporations and individuals. If your tax
liability is determined under the alternative minimum
tax, you will 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 dif-
ference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise de-
termined 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 ad-
justed current earnings.
Each Fund is required in certain circumstances to with-
hold 31% of taxable dividends and certain other payments
paid to non-corporate holders of shares who have not
furnished to the Fund their correct taxpayer identifica-
tion number (in the case of individuals, their social
security number) and certain certifications, or who are
otherwise subject to back-up withholding.
Each January, your Fund will notify you of the amount
and tax status of Fund distributions for the preceding
year.
State Income Tax Matters. Under the laws of the respec-
Dividends are tive state of each Fund, exempt-interest dividends (as
free from determined for federal income tax purposes) you receive
applicable state from income earned by the Fund on Municipal Obligations
personal income issued by the Fund's respective state or a political
tax. subdivision thereof generally will be exempt from that
state's applicable personal income tax. The exemption
from state personal income tax applies whether you re-
ceive a Fund's dividends in cash or reinvest them in ad-
ditional
48
<PAGE>
shares of the Fund. Dividends paid by a Fund represent-
ing interest payments on particular categories of Munic-
ipal Obligations may, under some circumstances, also be
exempt from income taxes imposed by political subdivi-
sions of that Fund's respective state.
Because other special tax rules may apply, you are
encouraged to review Appendix A to this Prospectus and the
Statement of Additional Information for further
information concerning the effect of applicable state or
local taxes.
NET ASSET VALUE
Net asset value Net asset value of the shares of a Fund will be deter-
is calculated mined separately for each class of shares. The net asset
daily. value per share of a class of shares will be computed by
dividing the value of the Fund's assets attributable to
the class, less the liabilities attributable to the
class, by the total number of shares of the class out-
standing. The net asset value per share is expected to
vary among a Fund's Class A Shares, Class C Shares and
Class R Shares, principally due to the differences in
sales charges, distribution and service fees and other
class expenses borne by each class.
Net asset value of the shares of each Fund will be de-
termined by United States Trust Company of New York, the
Funds' custodian, as of 4:00 p.m. eastern time on each
day the New York Stock Exchange is normally open for
trading. In determining the net asset value, the custo-
dian uses the valuations of portfolio securities fur-
nished by a pricing service approved by the Board of Di-
rectors. The pricing service values portfolio securities
at the mean between the quoted bid and asked prices or
the yield equivalent when quotations are readily avail-
able. 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 condi-
tions. The pricing service may employ electronic data
processing techniques and/or a matrix system to deter-
mine valuations. The procedures of the pricing service
and its valuations are reviewed by the officers of
Nuveen Tax-Free Bond Fund, Inc. under the general super-
vision of its Board of Directors.
49
<PAGE>
GENERAL INFORMATION
If you have any questions about the Funds or other
Nuveen Mutual Funds, call Nuveen toll-free at 800-621-
7227.
Custodian and Transfer and Shareholder Services
Agent. The Custodian of the assets of the Funds is
United States Trust Company of New York, 114 West 47th
Street, New York, NY 10036. The Chase Manhattan Bank,
N.A., 1 Chase Manhattan Plaza, New York, NY 10081, has
agreed to become successor to U.S. Trust, as Custodian
and Fund Accountant. The succession is presently sched-
uled for July 1, 1995. No changes in the Funds' adminis-
tration or in the amount of fees and expenses paid by
the Funds for these services will result, and no action
by shareholders will be required. The Funds' transfer,
shareholder services and dividend paying agent, Share-
holder Services, Inc., P.O. Box 5330, Denver, CO 80217-
5330, performs bookkeeping, data processing and adminis-
trative services for the maintenance of shareholder ac-
counts.
Organization. Nuveen Tax-Free Bond Fund, Inc. is an
open-end diversified management series investment com-
pany under the Investment Company Act of 1940. Each Fund
constitutes a separate series of Nuveen Tax-Free Bond
Fund, Inc. and is itself an open-end diversified manage-
ment mutual fund. Nuveen Tax-Free Bond Fund, Inc. was
incorporated in Minnesota on July 11, 1986. It is cur-
rently authorized to issue an aggregate of 2,000,000,000
shares of common stock, $.01 par value, consisting of
500,000,000 shares of the Nuveen Massachusetts Tax-Free
Value Fund, 500,000,000 shares of the Nuveen New York
Tax-Free Value Fund, 500,000,000 shares of the Nuveen
Ohio Tax-Free Value Fund, and 500,000,000 shares to be
issued in such classes or series as the Board of Direc-
tors may determine. Each Fund's shares of common stock
are 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 port-
folio of investments and has equal rights as to voting,
redemption, dividends and liquidation, except that each
bears different class expenses, including different dis-
tribution and service fees, and each has exclusive vot-
ing 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
Board of Directors has the right to establish additional
series and classes of shares in the future, to change
those series or classes and to determine the prefer-
ences, voting powers, rights and privileges thereof.
The Funds are not required and do not intend to hold an-
nual meetings of shareholders. Shareholders owning more
than 10% of the outstanding shares of a Fund have the
right to call a special meeting to remove directors or
for any other purpose.
50
<PAGE>
APPENDIX A--SPECIAL STATE FACTORS AND STATE TAX TREATMENT
SPECIAL FACTORS PERTAINING TO EACH FUND
The following information is a brief summary of special
factors that affect the risk of investing in Municipal
Obligations issued within each Fund's state. This infor-
mation was obtained from official statements of issuers
located in these states 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 con-
tained in these statements and documents. See the State-
ment of Additional Information for further information
relating to current political, economic or regulatory
risk factors as well as information relating to legal
proceedings which may adversely affect a state's finan-
cial position.
MASSACHUSETTS
In recent years, the Commonwealth of Massachusetts and
certain of its public bodies and municipalities, partic-
ularly the City of Boston, have faced serious financial
difficulties which have affected the credit standing and
borrowing abilities of Massachusetts and these respec-
tive entities and may have contributed to higher inter-
est rates on debt obligations. As a result of these dif-
ficulties, the rating agencies lowered the credit rat-
ings on Massachusetts general obligation bonds several
times during 1989 and 1990. Since then, both S&P and
Moody's have upgraded Massachusetts general obligation
bonds several times. As of the date of this Prospectus,
the uninsured general obligation bonds carry a rating of
A+ by S&P and A1 by Moody's. Since 1988, there has been
a significant slowdown in the Commonwealth's economy, as
indicated by a rise in unemployment, a slowing of its
per capita income growth and a trend in declining state
revenues. In fiscal 1991, the Commonwealth's expendi-
tures for state government programs exceeded current
revenues, and although fiscal 1992, 1993 and 1994 re-
sults indicate that revenues exceeded expenditures, no
assurance can be given that lower than expected tax rev-
enues will not resume and continue. The continuation of,
or an increase in, the financial difficulties of the
Commonwealth and its public bodies and municipalities,
or the development of a financial crisis relating to
these entities, could result in declines in the market
value of, or default on, existing obligations issued by
governmental authorities in the state of Massachusetts,
including Municipal Obligations held by the Massachu-
setts Fund. Many factors, in addition to those cited
above do or may have a bearing upon the financial condi-
tion of the Commonwealth, including social and economic
conditions, many of which are not within the control of
the Commonwealth.
<PAGE>
NEW YORK New York State has historically been one of the wealthi-
est states in the nation. For decades, however, the
State's economy has grown more slowly than that of the
nation as a whole, gradually eroding the State's rela-
tive economic affluence. Statewide, urban centers have
experienced significant changes involving migration of
the more affluent to the suburbs and an influx of gener-
ally less affluent residents. Regionally, the older
Northeast cities have suffered because of the relative
success that the South and the West have had in at-
tracting people and business. New York City has faced
greater competition as other major cities have developed
financial and business resources which make them less
dependent on the specialized services traditionally
available almost exclusively in New York City, which has
had an additional negative impact on New York City's re-
covery. The State has for many years had a very high
State and local tax burden relative to other states. The
burden of State and local taxation, in combination with
the many other causes of regional economic dislocation,
has contributed to the decisions of some businesses and
individuals to relocate outside, or not locate within,
the State.
Economic recovery started considerably later in the
State than in the nation as a whole, due in part to a
significant retrenchment in the banking and financial
services industry, cutbacks in defense spending, and an
overbuilt real estate market. The State has projected
the rate of economic growth to slow within New York dur-
ing 1995 as the expansion of the national economy moder-
ates.
The State ended its 1993-94 fiscal year with an operat-
ing surplus of approximately $1.0 billion. The State
Legislature enacted the State's 1994-95 fiscal year bud-
get on June 7, 1994, more than two months after the
start of that fiscal year.
As of February 1, 1995, the updated 1994-95 State Finan-
cial Plan (the "Plan") projected total general fund re-
ceipts and disbursements of $33.3 billion and $33.5 bil-
lion, respectively, representing reductions in receipts
and disbursements of $1 billion and $743 million, re-
spectively, from the amounts set forth in the 1994-95
State budget, as adopted by the legislature. The Plan
projected a General Fund balance of approximately $157
million at the close of the 1994-95 fiscal year.
The Governor issued a proposed State budget for the
1995-96 fiscal year on February 1, 1995, which projected
a balanced general fund and receipts and disbursements
of $32.5 billion and $32.4 billion, respectively. As of
April 17, 1995, the State legislature had not yet en-
acted, nor had the Governor and the legislature reached
an agreement on, the budget for the 1995-96 fiscal year
commencing on April 1, 1995. The delay in the
A-2
<PAGE>
enactment of the budget may negatively affect certain
proposed actions and reduce projected savings.
Following enactment of the State's 1994-95 fiscal year
budget, New York City adopted a 1995 fiscal year budget
on June 21, 1994, which provided for $31.6 billion in
spending. However, following adoption of that New York
City budget, unexpected budget gaps totalling approxi-
mately $2.0 billion for the 1995 fiscal year were iden-
tified and the Mayor imposed additional spending cuts.
In January 1995, in response to the City's plan to bor-
row $120 million to refund debt due in February without
imposing additional cuts, S&P placed the City on nega-
tive credit watch and indicated that it would consider a
possible downgrade of the City's general obligation debt
in April 1995. On February 2, 1995, the Mayor outlined
his proposed $30.5 billion budget for the 1996 fiscal
year which included $2.7 billion of deficit reduction
measures, almost half of which are dependent upon State
actions in the 1996 fiscal year. The Governor and the
legislature have not agreed upon the level of State aid
to the City during the 1996 fiscal year and there can be
no assurances that further cuts will not be necessary to
close additional budget gaps once a State budget is
adopted. If State aid in later years is less than the
levels projected in the Mayor's proposal, projected sav-
ings may be negatively impacted and the Mayor may be re-
quired to propose significant additional spending reduc-
tions or tax increases to balance the City's budget for
the 1996 and later fiscal years. If the State, the State
agencies, New York City, other municipalities or school
districts were to suffer serious financial difficulties
jeopardizing their respective access to the public
credit markets, or increasing the risk of a default, the
market price of Municipal Obligations issued by such en-
tities could be adversely affected.
OHIO The Ohio economy, while diversifying more into the serv-
ice and other non-manufacturing areas, continues to rely
in part on durable goods manufacturing largely concen-
trated in motor vehicles and equipment, steel, rubber
products and household appliances. As a result, general
economic activity in Ohio, as in many other industrial-
ly-developed states, tends to be more cyclical than in
some other states and in the nation as a whole. Agricul-
ture is an important segment of the State's economy,
with over half the State's area devoted to farming and
approximately 15% of total employment in agribusiness.
In prior years, the State's overall unemployment rate
was usually somewhat higher than the national figure.
For example, the reported 1990 average monthly State
rate was 5.7%, compared to the 5.5% national figure.
However, for the last four years the State rates were
below the
A-3
<PAGE>
national rates (5.5% versus 6.1% in 1994, based on pre-
liminary figures). The unemployment rate, and its ef-
fects, vary among particular geographic areas of the
State.
There can be no assurance that future national, regional
or state-wide economic difficulties, and the resulting
impact on State or local government finances generally,
will not adversely affect the market value of Municipal
Obligations held in the portfolio of the Ohio Fund or
the ability of particular obligors to make timely pay-
ments of debt service on (or lease payments relating to)
those Municipal Obligations.
DESCRIPTION OF STATE TAX TREATMENT
The following state tax information applicable to a Fund
or its shareholders is based upon the advice of the
Fund's special state tax counsel, and represents a sum-
mary of certain provisions of each state's tax laws
presently in effect. These provisions are subject to
change by legislative or administrative action, which
may be applied retroactively to Fund transactions. The
state tax information below assumes that each Fund qual-
ifies as a regulated investment company for federal in-
come tax purposes under Subchapter M of the Internal
Revenue Code of 1986, as amended (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.
MASSACHUSETTS Individual shareholders of the Massachusetts Fund who
are subject to Massachusetts income taxation will not be
required to include that portion of their federally tax-
exempt dividends in Massachusetts gross income which the
Massachusetts Fund clearly identifies as directly at-
tributable to interest earned on Municipal Obligations
issued by governmental authorities in Massachusetts
which are specifically exempted from income taxation in
Massachusetts, provided such dividends are identified in
a timely written notice mailed to shareholders of the
Massachusetts Fund, or interest earned on obligations of
certain U.S. territories or possessions. Similarly, such
shareholders will not be required to include in Massa-
chusetts gross income capital gain dividends designated
by the Massachusetts Fund to the extent such dividends
are attributable to gains derived from Municipal Obliga-
tions issued by Massachusetts governmental authorities
and are specifically exempted from income taxation in
Massachusetts, provided such dividends are identified in
a timely written notice mailed to shareholders of the
Massachusetts Fund. Lastly, any dividends of the Massa-
chusetts Fund attributable to interest on U.S. obliga-
tions exempt from state
A-4
<PAGE>
taxation and included in Federal gross income will not
be included in Massachusetts gross income, provided such
dividends are identified in a timely written notice
mailed to shareholders of the Massachusetts Fund. Indi-
vidual shareholders of the Massachusetts Fund will be
required to include all remaining dividends in their
Massachusetts income.
With respect to corporate shareholders of the Massachu-
setts Fund that are subject to the Massachusetts excise
tax, dividends received from the Massachusetts Fund are
includable in gross income and generally may not be de-
ducted by corporate shareholders in computing their net
income, and the net worth base of an intangible property
corporation includes the corporate shareholders' shares
in the Massachusetts Fund.
NEW YORK Individual shareholders of the New York Fund who are
subject to New York State or New York City personal in-
come taxation will not be required to include in their
New York adjusted gross income that portion of their ex-
empt-interest dividends (as determined for federal in-
come tax purposes) which the New York Fund clearly iden-
tifies as directly attributable to interest earned on
Municipal Obligations issued by governmental authorities
in New York ("New York Municipal Obligations") and which
are specifically exempted from personal income taxation
in New York State or New York City, or interest earned
on obligations of U.S. territories or possessions that
is exempt from taxation by the states pursuant to fed-
eral law. Distributions to individual shareholders of
dividends derived from interest that does not qualify as
exempt-interest dividends (as determined for federal in-
come tax purposes), distributions of exempt-interest
dividends (as determined for federal income tax purpos-
es) which are derived from interest on Municipal Obliga-
tions issued by governmental authorities in states other
than New York State, and distributions derived from in-
terest earned on federal obligations will be included in
their New York adjusted gross income as ordinary income.
Distributions to individual shareholders of the New York
Fund of capital gain dividends (as determined for fed-
eral income tax purposes) will be included in their New
York adjusted gross income as long-term capital gains.
Distributions to individual shareholders of the New York
Fund of dividends derived from any net income received
from taxable temporary investments and any net short-
term capital gains realized by the New York Fund will be
included in their New York adjusted gross income as or-
dinary income.
For purposes of New York State franchise taxation (or
New York City general corporation taxation), entire in-
come will include dividends received from the New York
Fund (as determined for federal income tax purposes), as
well as any gain or loss recognized from an exchange or
redemption of shares of the New York Fund that is recog-
nized for federal
A-5
<PAGE>
income tax purposes, and investment capital will include
a corporate shareholder's shares of the New York Fund.
If a shareholder of the New York Fund is subject to the
New York City unincorporated business tax, income and
gains derived from the New York Fund will be subject to
such tax, except for exempt-interest dividends (as de-
termined for federal in-
come tax purposes) which the New York Fund clearly iden-
tifies as directly attributable to interest earned on
New York Municipal Obligations.
OHIO
Shareholders of the Ohio Fund who are otherwise subject
to the Ohio personal income tax will not be subject to
such tax on distributions with respect to shares of the
Ohio Fund to the extent that such distributions are
properly attributable to interest on or gain from the
sale of interest-bearing obligations issued by or on be-
half of the State of Ohio, political subdivisions
thereof and agencies and instrumentalities of the State
or its political subdivisions ("Ohio Obligations"), pro-
vided that the Ohio Fund continues to qualify as a regu-
lated investment company for federal income tax purposes
and that at all times at least 50% of the value of the
total assets of the Ohio Fund consists of Ohio Obliga-
tions or similar obligations of other states or their
subdivisions. It is assumed for purposes of this discus-
sion of Ohio taxation that these requirements are satis-
fied.
Shareholders that are otherwise subject to the Ohio cor-
poration franchise tax computed on the net income basis
will not be subject to such tax on distributions with
respect to shares of the Ohio Fund to the extent that
these distributions either (a) are properly attributable
to interest on or gain from the sale of Ohio Obliga-
tions, or (b) represent "exempt-interest dividends" for
federal income tax purposes. Shares of the Ohio Fund
will be included in a shareholder's tax base for pur-
poses of computing the Ohio corporation franchise tax on
the net worth basis.
Distributions by the Ohio Fund that are properly attrib-
utable to interest on obligations of the U.S. or the
governments of Puerto Rico, the Virgin Islands or Guam
or their authorities or municipalities are exempt from
the Ohio personal income tax and are excluded from the
net income base of the Ohio corporation franchise tax to
the same extent that such interest would be so exempt or
excluded if the obligations were held directly by the
shareholders.
A-6
<PAGE>
APPENDIX B--TAXABLE EQUIVALENT YIELD TABLES
TAXABLE The following tables show the combined effects for indi-
EQUIVALENT YIELD viduals of federal, state and local (if applicable) in-
TABLES AND THE come taxes on:
EFFECT OF TAXES
AND INTEREST
RATES ON
INVESTMENTS
. 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 tax-
able investment.
These tables are for illustrative purposes only and are
not intended to predict the actual return you might earn
on a Fund investment. The Funds occasionally may adver-
tise their performance in similar tables using other
current combined tax rates than those shown here. The
combined tax rates used in these tables have been
rounded to the nearest one-half of one percent. They are
based upon published 1995 marginal federal tax rates and
marginal state tax rates currently available and sched-
uled to be in effect, and do not take into account
changes in tax rates that are proposed from time to
time. They are calculated using the highest state tax
rate applicable within each federal bracket, and assume
taxpayers are not subject to any alternative minimum
taxes and deduct any state income taxes paid on their
federal income tax returns. They also reflect the cur-
rent federal tax limitations on itemized deductions and
personal exemptions, which may raise the effective tax
rate and taxable equivalent yield for taxpayers above
certain income levels. The combined tax rates shown here
may be higher or lower than your actual combined tax
rate. A higher combined tax rate would tend to make the
dollar amounts in the third table lower, while a lower
combined tax rate would make the amounts higher. You
should consult your tax adviser to determine your actual
combined tax rate.
<PAGE>
MASSACHUSETTS
COMBINED MARGINAL
TAX RATES FOR
JOINT TAXPAYERS
WITH FOUR
PERSONAL
EXEMPTIONS
<TABLE>
<CAPTION>
Federal Combined
Federal Adjusted State
Taxable Gross and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 25.0% 4.67 5.33 6.00 6.67 7.33 8.00 8.67
----------------------------------------------------------------------
39.0-94.3 0-114.7 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
----------------------------------------------------------------------
114.7-172.1 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
----------------------------------------------------------------------
94.3-143.6 0-114.7 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
----------------------------------------------------------------------
114.7-172.1 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
----------------------------------------------------------------------
172.1-294.6 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
----------------------------------------------------------------------
143.6-256.5 114.7-172.1 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
----------------------------------------------------------------------
172.1-294.6 47.0 6.60 7.55 8.49 9.43 10.38 11.32 12.26
----------------------------------------------------------------------
Over 294.6 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
----------------------------------------------------------------------
Over 256.5 172.1-294.6 50.5 7.07 8.08 9.09 10.10 11.11 12.12 13.13
----------------------------------------------------------------------
Over 294.6 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
</TABLE>
COMBINED MARGINAL
TAX RATES FOR
SINGLE TAXPAYERS
WITH ONE PERSONAL
EXEMPTION
<TABLE>
<CAPTION>
Federal Combined
Federal Adjusted State
Taxable Gross and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-
23.4 $ 0-114.7 25.0% 4.67 5.33 6.00 6.67 7.33 8.00 8.67
--------------------------------------------------------------------
23.4-
56.6 0-114.7 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
--------------------------------------------------------------------
56.6-
118.0 0-114.7 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
--------------------------------------------------------------------
114.7-237.2 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
--------------------------------------------------------------------
118.0-
256.5 114.7-237.2 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
--------------------------------------------------------------------
Over 237.2 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
--------------------------------------------------------------------
Over
256.5 Over 237.2 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
</TABLE>
-----------------------------------------------------------
FOR AN EQUAL
AFTER-TAX RETURN,
YOUR
<TABLE>
<CAPTION>
3.5%
$50,000 TAX- 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
INVESTMENT FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPARE
4% $18,615
TAXABLE $34,571 $30,250 $26,889 $24,200 $22,000 $20,167
-------------------------------------------------------------------
COMPARE
5% $23,269
TAXABLE $43,214 $37,813 $33,611 $30,250 $27,500 $25,208
-------------------------------------------------------------------
COMPARE
6% $27,923
TAXABLE $51,857 $45,375 $40,333 $36,300 $33,000 $30,250
-------------------------------------------------------------------
COMPARE
7% $32,577
TAXABLE $60,500 $52,938 $47,056 $42,350 $38,500 $35,292
-------------------------------------------------------------------
COMPARE
8% $37,231
TAXABLE $69,143 $60,500 $53,778 $48,400 $44,000 $40,333
</TABLE>
TAX-FREE
INVESTMENT MAY BE
LESS*
For example,
$50,000 in a 6%
taxable
investment earns
the same after-
tax return as
$36,300 in a 5%
tax-free Nuveen
investment.
-----------------------------------------------------------
*Dollar amounts in the table reflect a 39.5% combined
federal and state tax rate.
B-2
<PAGE>
NEW YORK STATE
COMBINED FEDERAL
AND NEW YORK
STATE MARGINAL
TAX RATES FOR
JOINT TAXPAYERS
WITH FOUR
PERSONAL
EXEMPTIONS
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-100.0 21.5% 4.46 5.10 5.73 6.37 7.01 7.64 8.28
----------------------------------------------------------------------
100.0-114.7 22.5 4.52 5.16 5.81 6.45 7.10 7.74 8.39
----------------------------------------------------------------------
39.0-94.3 0-100.0 33.5 5.26 6.02 6.77 7.52 8.27 9.02 9.77
----------------------------------------------------------------------
100.0-114.7 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
----------------------------------------------------------------------
114.7-150.0 35.0 5.38 6.15 6.92 7.69 8.46 9.23 10.00
----------------------------------------------------------------------
150.0-172.1 34.0 5.30 6.06 6.82 7.58 8.33 9.09 9.85
----------------------------------------------------------------------
94.3-143.6 0-100.0 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
----------------------------------------------------------------------
100.0-114.7 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
----------------------------------------------------------------------
114.7-150.0 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
----------------------------------------------------------------------
150.0-172.1 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
----------------------------------------------------------------------
172.1-294.6 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
----------------------------------------------------------------------
143.6-256.5 114.7-150.0 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
----------------------------------------------------------------------
150.0-172.1 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
----------------------------------------------------------------------
172.1-294.6 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
----------------------------------------------------------------------
Over 294.6 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
----------------------------------------------------------------------
Over 256.5 172.1-294.6 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
----------------------------------------------------------------------
Over 294.6 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
</TABLE>
COMBINED FEDERAL
AND NEW YORK
STATE MARGINAL
TAX RATES FOR
SINGLE TAXPAYERS
WITH ONE PERSONAL
EXEMPTION
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-100.0 21.5% 4.46 5.10 5.73 6.37 7.01 7.64 8.28
-----------------------------------------------------------------------
100.0-114.7 22.0 4.49 5.13 5.77 6.41 7.05 7.69 8.33
-----------------------------------------------------------------------
23.4-56.6 0-100.0 33.5 5.26 6.02 6.77 7.52 8.27 9.02 9.77
-----------------------------------------------------------------------
100.0-114.7 34.0 5.30 6.06 6.82 7.58 8.33 9.09 9.85
-----------------------------------------------------------------------
56.6-118.0 0-100.0 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
-----------------------------------------------------------------------
100.0-114.7 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
-----------------------------------------------------------------------
114.7-150.0 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
-----------------------------------------------------------------------
150.0-237.2 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
-----------------------------------------------------------------------
118.0-256.5 114.7-150.0 43.0 6.14 7.02 7.89 8.77 9.65 10.53 11.40
-----------------------------------------------------------------------
150.0-237.2 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
-----------------------------------------------------------------------
Over 237.2 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
-----------------------------------------------------------------------
Over 256.5 Over 237.2 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
</TABLE>
B-3
<PAGE>
FOR AN EQUAL
AFTER- -----------------------------------------------------------
<TABLE>
<CAPTION>
3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
TAX- TAX- TAX- TAX- TAX- TAX- TAX-
$50,000 INVESTMENT FREE FREE FREE FREE FREE FREE FREE
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPARE 4% TAXABLE $36,571 $32,000 $28,444 $25,600 $23,273 $21,333 $19,692
---------------------------------------------------------------------
COMPARE 5% TAXABLE $45,714 $40,000 $35,556 $32,000 $29,091 $26,667 $24,615
---------------------------------------------------------------------
COMPARE 6% TAXABLE $54,857 $48,000 $42,667 $38,400 $34,909 $32,000 $29,538
---------------------------------------------------------------------
COMPARE 7% TAXABLE $64,000 $56,000 $49,778 $44,800 $40,727 $37,333 $34,462
---------------------------------------------------------------------
COMPARE 8% TAXABLE $73,143 $64,000 $56,889 $51,200 $46,545 $42,667 $39,385
</TABLE>
TAX RETURN, YOUR
TAX-FREE INVESTMENT
MAY BE LESS*
For example,
$50,000 in a 6%
taxable
investment earns
the same after-
tax return as
$38,400 in a 5%
tax-free Nuveen
investment.
-----------------------------------------------------------
*The dollar amounts in the table reflect a 36.0% com-
bined federal and state tax rate.
B-4
<PAGE>
NEW YORK STATE AND NEW YORK CITY
COMBINED FEDERAL,
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-100.0 25.0% 4.67 5.33 6.00 6.67 7.33 8.00 8.67
-----------------------------------------------------------------------
100.0-114.7 26.0 4.73 5.41 6.08 6.76 7.43 8.11 8.78
-----------------------------------------------------------------------
39.0-94.3 0-100.0 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
-----------------------------------------------------------------------
100.0-114.7 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
-----------------------------------------------------------------------
114.7-150.0 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
-----------------------------------------------------------------------
150.0-172.1 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
-----------------------------------------------------------------------
94.3-143.6 0-100.0 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
-----------------------------------------------------------------------
100.0-114.7 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
-----------------------------------------------------------------------
114.7-150.0 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
-----------------------------------------------------------------------
150.0-172.1 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
-----------------------------------------------------------------------
172.1-294.6 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
-----------------------------------------------------------------------
143.6-256.5 114.7-150.0 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
-----------------------------------------------------------------------
150.0-172.1 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
-----------------------------------------------------------------------
172.1-294.6 47.0 6.60 7.55 8.49 9.43 10.38 11.32 12.26
-----------------------------------------------------------------------
Over 294.6 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
-----------------------------------------------------------------------
Over 256.5 172.1-294.6 50.5 7.07 8.08 9.09 10.10 11.11 12.12 13.13
-----------------------------------------------------------------------
Over 294.6 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
</TABLE>
NEW YORK STATE
AND NEW YORK CITY
MARGINAL TAX
RATES FOR JOINT
TAXPAYERS WITH
FOUR PERSONAL
EXEMPTIONS
COMBINED FEDERAL,
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-100.0 25.0% 4.67 5.33 6.00 6.67 7.33 8.00 8.67
-----------------------------------------------------------------------
100.0-114.7 25.5 4.70 5.37 6.04 6.71 7.38 8.05 8.72
-----------------------------------------------------------------------
23.4-56.6 0-100.0 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
-----------------------------------------------------------------------
100.0-114.7 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
-----------------------------------------------------------------------
56.6-118.0 0-100.0 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
-----------------------------------------------------------------------
100.0-114.7 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
-----------------------------------------------------------------------
114.7-150.0 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
-----------------------------------------------------------------------
150.0-237.2 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
-----------------------------------------------------------------------
118.0-256.5 114.7-150.0 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
-----------------------------------------------------------------------
150.0-237.2 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
-----------------------------------------------------------------------
Over 237.2 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
-----------------------------------------------------------------------
Over 256.5 Over 237.2 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
</TABLE>
NEW YORK STATE
AND NEW YORK CITY
MARGINAL TAX
RATES
FOR SINGLE
TAXPAYERS
WITH ONE PERSONAL
EXEMPTION
B-5
<PAGE>
FOR AN EQUAL -----------------------------------------------------------
AFTER- <TABLE>
<CAPTION>
3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
$50,000 TAX- TAX- TAX- TAX- TAX- TAX- TAX-
INVESTMENT FREE FREE FREE FREE FREE FREE FREE
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPARE 4%
TAXABLE $34,571 $30,250 $26,889 $24,200 $22,000 $20,167 $18,615
-------------------------------------------------------------
COMPARE 5%
TAXABLE $43,214 $37,813 $33,611 $30,250 $27,500 $25,208 $23,269
-------------------------------------------------------------
COMPARE 6%
TAXABLE $51,857 $45,375 $40,333 $36,300 $33,000 $30,250 $27,923
-------------------------------------------------------------
COMPARE 7%
TAXABLE $60,500 $52,938 $47,056 $42,350 $38,500 $35,292 $32,577
-------------------------------------------------------------
COMPARE 8%
TAXABLE $69,143 $60,500 $53,778 $48,400 $44,000 $40,333 $37,231
</TABLE>
TAX RETURN, YOUR
TAX-FREE
INVESTMENT
MAY BE LESS*
For example,
$50,000 in a 6%
taxable
investment earns
the same after-
tax return as
$36,300 in a 5%
tax-free Nuveen
investment.
-----------------------------------------------------------
*The dollar amounts in the table reflect a 39.5% combined
federal, state and New York City tax rate.
B-6
<PAGE>
OHIO
COMBINED MARGINAL
TAX RATES FOR
JOINT TAXPAYERS
WITH FOUR
PERSONAL
EXEMPTIONS
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 19.0% 4.32 4.94 5.56 6.17 6.79 7.41 8.02
-----------------------------------------------------------------------
39.0-94.3 0-114.7 32.5 5.19 5.93 6.67 7.41 8.15 8.89 9.63
-----------------------------------------------------------------------
114.7-167.7 33.0 5.22 5.97 6.72 7.46 8.21 8.96 9.70
-----------------------------------------------------------------------
94.3-143.6 0-114.7 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
-----------------------------------------------------------------------
114.7-172.1 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
-----------------------------------------------------------------------
172.1-294.6 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
-----------------------------------------------------------------------
143.6-256.5 114.7-172.1 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
-----------------------------------------------------------------------
172.1-294.6 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
-----------------------------------------------------------------------
Over 294.6 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
-----------------------------------------------------------------------
Over 256.5 172.1-294.6 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
-----------------------------------------------------------------------
Over 294.6 45.0 6.36 7.27 8.18 9.09 10.00 10.91 11.82
</TABLE>
COMBINED MARGINAL
TAX RATES FOR
SINGLE TAXPAYERS
WITH ONE PERSONAL
EXEMPTION
<TABLE>
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and TAX-FREE YIELD
Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 19.0% 4.32 4.94 5.56 6.17 6.79 7.41 8.02
-----------------------------------------------------------------------
23.4-56.6 0-114.7 31.5 5.11 5.84 6.57 7.30 8.03 8.76 9.49
-----------------------------------------------------------------------
56.6-118.0 0-114.7 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
-----------------------------------------------------------------------
114.7-237.2 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
-----------------------------------------------------------------------
118.0-256.5 114.7-237.2 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
-----------------------------------------------------------------------
Over 237.2 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
-----------------------------------------------------------------------
Over 256.5 Over 237.2 45.0 6.36 7.27 8.18 9.09 10.00 10.91 11.82
</TABLE>
FOR AN EQUAL -----------------------------------------------------------
AFTER- <TABLE>
<CAPTION>
3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
$50,000 INVESTMENT TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPARE 4% TAXABLE $36,571 $32,000 $28,444 $25,600 $23,273 $21,333 $19,692
----------------------------------------------------------------------------
COMPARE 5% TAXABLE $45,714 $40,000 $35,556 $32,000 $29,091 $26,667 $24,615
----------------------------------------------------------------------------
COMPARE 6% TAXABLE $54,857 $48,000 $42,667 $38,400 $34,909 $32,000 $29,538
----------------------------------------------------------------------------
COMPARE 7% TAXABLE $64,000 $56,000 $49,778 $44,800 $40,727 $37,333 $34,462
----------------------------------------------------------------------------
COMPARE 8% TAXABLE $73,143 $64,000 $56,889 $51,200 $46,545 $42,667 $39,385
----------------------------------------------------------------------------
</TABLE>
TAX RETURN, YOUR
TAX-FREE INVESTMENT
MAY BE LESS*
For example,
$50,000 in a 6%
taxable
investment earns
the same after-
tax return as
$38,400 in a 5%
tax-free Nuveen
investment.
*The dollar amounts in the table reflect a 36.0% com-
bined federal and state tax rate.
B-7
<PAGE>
Nuveen Tax-Free Mutual Funds Application Form
NOTE: THIS APPLICATION FORM MAY NOT BE USED FOR ALL TYPES OF
ACCOUNTS AND CERTAIN OPTIONAL FUND SERVICES. PLEASE OBTAIN SPE-
CIAL APPLICATION MATERIALS BY CHECKING THE BOXES IN APPLICATION
ITEM #7 OR BY CALLING NUVEEN TOLL-FREE AT 800-621-7227.
1 ACCOUNT REGISTRATION
CHECK THE BOX [_] Individual
THAT DESCRIBES
THE TYPE OF
ACCOUNT YOU
ARE OPENING,
AND COMPLETE
ALL THE
INFORMATION
WHICH APPLIES
TO YOUR AC-
COUNT TYPE.
Last Name, First, Initial Social Security Number
----------------------------------------------------------------
[_] Joint Tenant (if any)
Last Name, First, Initial
----------------------------------------------------------------
Registration [_] Gift to a Minor
for two or
more persons
will be as
joint tenants
with right of
survivorship
unless noted
otherwise.
Name of Trustee Minor's Name (only one minor
may be named)
----------------------------------------------------------------
Under the Uniform Gift to Minors Act of [Name of State]
Minor's Social Security Number
----------------------------------------------------------------
[_] Trust[_] Custodian
Trust's Agreement Date (mandatory)
Trustee's or Custodian's Name
----------------------------------------------------------------
Trust's Name Trust's Taxpayer I.D. Number
----------------------------------------------------------------
2 MAILING ADDRESS
Street Address City, State, Zip Code
----------------------------------------------------------------
Daytime Telephone Number (include area code)
Evening Telephone Number (in-
clude area code)
----------------------------------------------------------------
3 FUND SELECTION
PLEASE INDI-
CATE IN WHICH
NUVEEN FUND(S)
YOU WOULD
NUVEEN FUND
-----------
LIKE TO OPEN
AN ACCOUNT AND $
<TABLE>
<S> <C> <C>
Municipal Bond Fund CLASS A SHARES CLASS C SHARES
-------------- --------------
Insured Municipal Bond Fund [_] [_]
Arizona Tax-Free Value Fund [_] [_]
California Tax-Free Value Fund [_] [_]
California Insured Tax-Free Value Fund [_] [_]
Florida Tax-Free Value Fund [_] [_]
Maryland Tax-Free Value Fund [_] [_]
Massachusetts Tax-Free Value Fund [_] [_]
Massachusetts Insured Tax-Free Value Fund [_] [_]
Michigan Tax-Free Value Fund [_] [_]
New Jersey Tax-Free Value Fund [_] [_]
New York Tax-Free Value Fund [_] [_]
New York Insured Tax-Free Value Fund [_] [_]
Ohio Tax-Free Value Fund [_] [_]
Pennsylvania Tax-Free Value Fund [_] [_]
Virginia Tax-Free Value Fund [_] [_]
</TABLE>
THE AMOUNT AND
THE CLASS OF
SHARES IN
WHICH YOU
WOULD
LIKE TO INVEST
($1,000 MINI-
MUM INITIAL
INVESTMENT PER
CLASS
OF ANY FUND).
[_] Check this box if you qualify for Class R Share purchases
as described in the Fund Prospectus. Class R Shares are not
available unless you meet certain eligibility requirements.
NOTE: State funds may not be registered for sale in all states.
Please enclose a separate check made payable to each fund/class
in which you are investing. If more than one fund is selected,
any optional features chosen will apply to all fund accounts.
If you prefer to wire funds to open an account, or need any as-
sistance in completing this form, call Nuveen toll-free at 800-
621-7227.
4 DISTRIBUTION OPTIONS
IF NO BOX IS [_] Dividends are to be paid by check.
CHECKED, ALL
DISTRIBUTIONS
FROM A FUND
WILL BE
REINVESTED
INTO THE SAME
FUND.
[_] Capital gains are to be paid by check.
5 INFORMATION ABOUT YOUR FINANCIAL ADVISER
PLEASE SUPPLY Financial Adviser's Name Street Address
THE NAME AND
ADDRESS OF
YOUR FINANCIAL
ADVISER SO
THAT THEY WILL
RECEIVE
DUPLICATE
COPIES OF YOUR
FUND
STATEMENTS.
----------------------------------------------------------------
Firm Name City, State, Zip Code
----------------------------------------------------------------
6 SIGNATURE(S)
SIGN IN INK I certify that I have power and authority to establish this ac-
EXACTLY AS count and select the options requested. I also release the
NAME OR NAMES fund(s), Shareholder Services, Inc. (SSI), John Nuveen & Co.
APPEAR ABOVE Incorporated, United Missouri Bank of Kansas City, N.A., First
IN ACCOUNT Interstate Bank of Denver, N.A. and their agents and represent-
REGISTRATION atives from all liability and agree to indemnify each of them
SECTION. from any and all losses, damages or costs for acting in good
faith in accordance with instructions believed to be genuine.
With respect to the options identified on items #8, #9, and #10
of this application, I understand that the Fund(s), SSI and
Nuveen will not be liable for following telephone instructions
reasonably believed to be genuine. I also understand that the
Fund(s) employ procedures reasonably designed to confirm that
telephone instructions are genuine and, if these procedures are
not followed, the Fund(s) may be liable for any losses due to
unauthorized or fraudulent telephone instructions. I agree that
the authorizations herein shall continue until SSI receives
written notice of a change or modification signed by all ac-
count owners. I understand that each account is subject to the
terms of the prospectus of the Nuveen fund selected, as amended
from time to time, and subject to acceptance by that fund in
Chicago, Illinois, and to the laws of Illinois. All terms shall
be binding upon my heirs, representatives and assigns. I cer-
tify that I have received and read the current prospectus for
each fund I have selected. Under penalties of perjury, I cer-
tify (1) that the number shown on this Application Form is my
correct Social Security or Taxpayer Identification Number, and
(2) that the IRS has not notified me that I am subject to
backup withholding. (Line out clause (2) if you are subject to
backup withholding.)
Individual's Signature Date Joint Tenant's Signature (if
applicable)
Date
-------------------------------
-------------------------------
Custodian/Trustee Signature (if applicable)
Date
BY:
-------------------------------
SEE REVERSE SIDE FOR OPTIONAL FUND SERVICES.
<PAGE>
Optional Fund Services
7 OPTIONAL FUND SERVICES
Please send me application materials for these optional fund
services which are described in the prospectus:
[_] Automatic Deposit Plan
[_] Automatic Withdrawal Plan
[_] UIT Rein-
vestment
[_] Payroll Direct Deposit Plan
[_] Group Purchase Plans
8 TEL-A-WIRE AUTHORIZATION
By electing this option, I authorize SSI and Nuveen to honor
telephone instructions to redeem my fund shares (minimum
$1,000), subject to the terms and conditions described in the
prospectus.
SELECT ONLY [_] OPTION A
ONE OF THE By completing this section, I elect to have all redemption pro-
FOLLOWING, OP- ceeds wired to my personal checking, NOW or money market ac-
TION A OR B. count at a commercial bank. (Attach a check marked "void" and
complete only the Option A section.)
Name of Bank Bank's Street Address
----------------------------------------------------------------
Your Bank Account Name Bank's City, State, Zip Code
----------------------------------------------------------------
Your Bank Account Number
Bank's Routing Code
Bank's Telephone Number (in-
clude area code)
----------------------------------------------------------------
[_] OPTION B
By completing this section, I elect to have all redemption pro-
ceeds wired in my name to the commercial bank account of my fi-
nancial adviser's firm. (A representative of that firm must
complete and sign the second part of the Option B section.)
Name of Financial Adviser's Firm Firm's Street Address
----------------------------------------------------------------
Your Account Name Firm's City, State, Zip Code
----------------------------------------------------------------
Your Account Number Firm's Telephone Number (in-
clude area code)
----------------------------------------------------------------
Name of Bank of Financial Adviser's Firm
Bank's Street Address
TO BE COM-
PLETED BY YOUR
FINANCIAL AD-
VISER IF
OPTION B IS
SELECTED.
----------------------------------------------------------------
Name of Branch Bank's Routing Code
Bank's City, State, Zip Code
----------------------------------------------------------------
Bank's Account Number Financial Adviser's Signature
Date
----------------------------------------------------------------
9 TEL-A-CHECK AUTHORIZATION
CHECK THE BOX [_] I hereby authorize the fund and its agents to honor tele-
TO ELECT THIS phone instructions to redeem shares worth $25,000 or less from
OPTION my account and send those proceeds by check payable to me to my
address of record, subject to the terms and conditions de-
scribed in the prospectus.
10 TELEPHONE EXCHANGE AUTHORIZATION
CHECK THE BOX [_] I hereby authorize the fund and its agents to honor
TO ELECT THIS telephone instructions to invest redemption proceeds from the
OPTION. fund into other Nuveen Mutual Funds, subject to the terms and
conditions described in the prospectus.
11 LETTER OF INTENT
COMPLETE THIS [_] By electing this option, I indicate my intention, but am
SECTION TO under no obligation, to purchase additional Class A Shares in
ELECT THIS OP- the fund(s) and amount(s) indicated over the next 13 months in
TION. order to qualify for reduced sales charges, subject to the
terms and conditions described in the prospectus. I understand
that I or my financial adviser must notify Nuveen or SSI when I
make a purchase of fund shares that I wish to be covered under
the Letter of Intent option.
I intend to purchase at least:
[_] $50,000
[_] $100,000
[_] $250,000
[_] $500,000
[_] $1,000,000 or more
worth of shares of Fund(s) over the next 13 months.
MAIL COMPLETED APPLICATION FORM TO:
NUVEEN TAX-FREE VALUE FUNDS
P.O. BOX 5330
DENVER, CO 80217-5330
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN TAX-FREE BOND FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information June 13, 1995
Nuveen Tax-Free Bond Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
NUVEEN NEW YORK TAX-FREE VALUE FUND
NUVEEN OHIO TAX-FREE VALUE FUND
This Statement of Additional Information is not a prospectus. A prospectus may
be obtained from certain securities representatives, banks and other financial
institutions that have entered into sales agreements with John Nuveen & Co. In-
corporated, or from the 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 Prospectus dated June
13, 1995.
<TABLE>
<S> <C>
Table of Contents Page
- --------------------------------------------------------------------------
Fundamental Policies and Investment Portfolio 2
- --------------------------------------------------------------------------
Management 34
- --------------------------------------------------------------------------
Investment Adviser and Investment Management Agreement 40
- --------------------------------------------------------------------------
Portfolio Transactions 42
- --------------------------------------------------------------------------
Net Asset Value 43
- --------------------------------------------------------------------------
Tax Matters 44
- --------------------------------------------------------------------------
Performance Information 52
- --------------------------------------------------------------------------
Additional Information on the Purchase and Redemption of Fund Shares 58
- --------------------------------------------------------------------------
Distribution and Service Plans 61
- --------------------------------------------------------------------------
Independent Public Accountants and Custodian 63
- --------------------------------------------------------------------------
</TABLE>
The audited financial statements for the fiscal year ended February 28, 1995,
appearing in the
Annual Report of Nuveen Tax-Free Bond Fund, Inc. are incorporated herein by
reference. The Annual Report accompanies this Statement of Additional Informa-
tion.
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT PORTFOLIO
FUNDAMENTAL POLICIES
The investment objective and certain fundamental investment policies of each
Fund are described in the Prospectus. Each of the Funds, as a fundamental pol-
icy, may not, without the approval of the holders of a majority of the shares
of that Fund:
(1) Invest in securities other than Municipal Obligations and temporary in-
vestments, as those terms are defined in the Prospectus;
(2) Invest more than 5% of its total assets in securities of any one issuer,
except that this limitation shall not apply to securities of the United States
government, its agencies and instrumentalities or to the investment of 25% of
such Fund's assets;
(3) Borrow money, except from banks for temporary or emergency purposes and
not for investment purposes and then only in an amount not exceeding (a) 10%
of the value of its total assets at the time of borrowing or (b) one-third of
the value of the Fund's total assets including the amount borrowed, in order
to meet redemption requests which might otherwise require the untimely dispo-
sition of securities. While any such borrowings exceed 5% of such Fund's total
assets, no additional purchases of investment securities will be made by such
Fund. If due to market fluctuations or other reasons, the value of the Fund's
assets falls below 300% of its borrowings, the Fund will reduce its borrowings
within 3 business days. To do this, the Fund may have to sell a portion of its
investments at a time when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities hav-
ing a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940,
except to the extent such issuance might be involved with respect to
borrowings described under item (3) above or with respect to transactions in-
volving futures contracts or the writing of options within the limits de-
scribed in the Prospectus 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 Prospectus 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;
(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 trans-
actions;
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(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-
spectus 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 Tax-Free
Bond 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.
The foregoing restrictions and limitations, as well as the Funds' policies as
to ratings of portfolio investments, will apply only at the time of purchase of
securities, and the percentage limitations will not be considered violated un-
less an excess or deficiency occurs or exists immediately after and as a result
of an acquisition of securities, unless otherwise indicated.
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The foregoing fundamental investment policies, together with the investment ob-
jective of each Fund, cannot be changed without approval by holders of a "ma-
jority of the Fund's outstanding voting shares." As defined in the Investment
Company Act of 1940, this means the vote of (i) 67% or more of the Fund's
shares present at a meeting, if the holders of more than 50% of the Fund's
shares are present or represented by proxy, or (ii) more than 50% of the Fund's
shares, whichever is less.
Nuveen Tax-Free Bond Fund, Inc. is an open-end diversified management series
company under SEC Rule 18f-2. Each Fund is a separate series issuing its own
shares. Nuveen Tax-Free Bond Fund, Inc. currently has three authorized series
with shares outstanding: the Nuveen Massachusetts Tax-Free Value Fund (the
"Massachusetts Fund"), the Nuveen New York Tax-Free Value Fund (the "New York
Fund") and the Nuveen Ohio Tax-Free Value Fund (the "Ohio Fund"). Certain mat-
ters under 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 hold-
ers of a majority of the outstanding voting securities of each series affected
by such matter.
PORTFOLIO SECURITIES
As described in the Prospectus, each Fund invests primarily in a diversified
portfolio of Municipal Obligations that are issued within the Fund's respective
state or 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. Municipal Obligations in which each Fund will
primarily invest are issued by that Fund's respective state and cities and lo-
cal authorities in that state, and bear interest that, in the opinion of bond
counsel to the issuer, is exempt from federal income tax and from personal in-
come tax imposed by the respective state.
The investment assets of each Fund will consist of (1) Municipal Obligations
which are rated at the time of purchase within the four highest grades ( Baa or
BBB or better) by Moody's Investors Ser-
vice, Inc. ("Moody's") or Standard and Poor's Corporation ("S&P"), (2) unrated
Municipal Obligations which, in the opinion of Nuveen Advisory, have credit
characteristics equivalent to bonds rated within the four highest grades by
Moody's or S&P, with no fixed percentage limitations on these unrated Municipal
Obligations, and (3) temporary investments as described below, the income from
which may be subject to state income tax or to both federal and state income
taxes.
As described in the Prospectus, each Fund may invest in Municipal Obligations
that constitute participations in a lease obligation or installment purchase
contract obligation (hereafter collectively called "lease obligations") of a
municipal authority or entity. Although lease obligations do not constitute
general obligations of the municipality for which the municipality's taxing
power is pledged, a lease obligation is ordinarily backed by the municipality's
covenant to budget for, appropriate and make the payments due under the lease
obligation. However, certain lease obligations contain "non-appropria-
4
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tion" clauses which provide that the municipality has no obligation to make
lease or installment purchase payments in future years unless money is appro-
priated 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. Each Fund will seek to minimize
the special risks associated with such securities by not investing more than
10% of its assets in lease obligations that contain non-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 payments will
commence amortization of principal at an early date resulting in an average
life of seven years or less for the lease obligation, (3) appropriate covenants
will be obtained from the municipal obligor prohibiting the substitution 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 in-
vestment 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 Funds.
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.
PORTFOLIO TRADING AND TURNOVER
Each Fund will make changes in its investment portfolio from time to time in
order to take advantage of opportunities in the municipal market and to limit
exposure to market risk. A Fund may also engage to a limited extent in short-
term trading consistent with its investment objective. Securities may be sold
in anticipation of market decline or purchased in anticipation of market rise
and later sold, but a Fund will not engage in trading solely to recognize a
gain. In addition, a security may be sold and another of comparable quality
purchased at approximately the same time to take advantage of what Nuveen Advi-
sory believes to be a temporary disparity in the normal yield relationship be-
tween 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%. However, each Fund reserves the
right to make changes in its investments whenever it deems such action advis-
able, and therefore, a Fund's annual portfolio turnover rate may exceed 50% in
particular years depending upon market conditions. The portfolio turnover rates
for the Massachusetts Fund, the New York Fund and the Ohio Fund for the fiscal
year ended February 28, 1995, were 17%, 29% and 28%, respectively, and for the
fiscal year ended February 28, 1994, were 3%, 15% and 9%, respectively.
5
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WHEN-ISSUED SECURITIES
As described in the Prospectus, 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
normally settle within 15-45 days.) On such transactions the payment obliga-
tion and the interest rate are fixed at the time the buyer enters into the
commitment. The commitment to purchase securities on a when-issued or delayed
delivery basis may involve an element of risk because the value of the securi-
ties is subject to market fluctuation, no interest accrues to the purchaser
prior to settlement of the transaction, and at the time of delivery the market
value may be less than cost. At the time a Fund makes the commitment to pur-
chase a Municipal Obligation on a when-issued or delayed delivery basis, it
will record the transaction and reflect the amount due and the value of the
security in determining its net asset value. Likewise, at the time a Fund
makes the commitment to sell a Municipal Obligation on a delayed delivery ba-
sis, it will record the transaction and include the proceeds to be received in
determining its net asset value; accordingly, any fluctuations in the value of
the Municipal Obligation sold pursuant to a delayed delivery commitment are
ignored in calculating net asset value so long as the commitment remains in
effect. The Fund will maintain designated readily marketable assets at least
equal in value to commitments to purchase when-issued or delayed delivery se-
curities, such assets to be segregated by the Custodian specifically for the
settlement of such commitments. A Fund will only make commitments to purchase
Municipal Obligations on a when-issued or delayed delivery basis with the in-
tention of actually acquiring the securities, but each Fund reserves the right
to sell these securities before 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 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.
SPECIAL CONSIDERATIONS RELATING TO MUNICIPAL OBLIGATIONS OF DESIGNATED STATES
As described in the Prospectus, except for investments in temporary invest-
ments, each of the Funds will, at all times, invest all of its net assets in
its respective state's Municipal Obligations. Each Fund is therefore more sus-
ceptible to political, economic or regulatory factors adversely affecting is-
suers of Municipal Obligations in its respective state. Brief summaries of
these factors are contained in the Prospectus. Set forth below is additional
information that bears upon the risk of investing in Municipal Obligations is-
sued by public authorities in these states. This information was obtained from
official statements of issuers located in the respective states as well as
from other publicly available official documents and statements. The Funds
have not independently verified any of the information contained in such
statements and documents.
FACTORS PERTAINING TO MASSACHUSETTS
As described above, except to the extent the Massachusetts Fund invests in
temporary investments, the Massachusetts Fund will invest substantially all of
its net assets in Massachusetts Municipal Obligations. The Massachusetts Fund
is therefore susceptible to political, economic or regulatory factors affect-
ing issuers of Massachusetts Municipal Obligations. Without intending to be
complete, the following briefly summarizes the current financial situation, as
well as some of the complex factors affecting the financial situation, in the
Commonwealth of Massachusetts (the "Commonwealth"). It is derived from
6
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sources that are generally available to investors and is based in part on in-
formation obtained from various agencies in Massachusetts. No independent veri-
fication has been made of the accuracy or completeness of the following infor-
mation.
There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on Commonwealth or local governmental
finances generally, will not adversely affect the market value of Massachusetts
Obligations in the Fund or the ability of particular obligors to make timely
payments of debt service on (or relating to) those obligations.
Since 1988, there has been a significant slowdown in the Commonwealth's econo-
my, as indicated by a rise in unemployment, a slowing of its per capita income
growth and declining state revenues. In fiscal 1991, the Commonwealth's expen-
ditures for state government programs exceeded current revenues, and although
fiscal 1992, 1993 and 1994 revenues exceeded expenditures, no assurance can be
given that lower than expected tax revenues will not resume and continue.
1995 Fiscal Year Budget. On July 10, 1994, the Governor signed the Common-
wealth's budget for fiscal 1995. The fiscal 1995 budget is based on estimated
budgeted revenues and other sources of approximately $16.360 billion, which in-
cludes revised tax revenue estimates of approximately $11.179 billion. Tax rev-
enues for fiscal 1995 were originally estimated at $11.328 billion in May,
1994, however, due to the slowing of the rate of growth in certain tax revenue
categories in the months following the signing of the budget, particularly in-
come tax, the Secretary of the Administration on September 26, 1994, as re-
quired by law, reduced the fiscal 1995 tax revenue estimate by $75 million. On
January 25, 1995, the Secretary for Administration and Finance further revised
the fiscal 1995 tax revenue estimate to $11.179 billion, a reduction of approx-
imately $55 million from the September 26, 1994 estimate. The tax revenue esti-
mate includes $19.3 million of tax cuts signed by the Governor in the fiscal
1995 budget. Estimated fiscal 1995 tax revenues are approximately $572 million
higher than fiscal 1994 tax revenues of $10.607 billion.
As signed by the Governor, the budget authorizes approximately $16.482 billion
in fiscal 1995 expenditures. The Governor exercised his authority to veto and
reduce individual line items and reduced total expenditures by approximately
$298.2 million and vetoed certain other law changes contained in the fiscal
1995 budget. The $16.449 billion of fiscal 1995 expenditures includes a reserve
against certain contingencies currently in the amount of $98.6 million. On Jan-
uary 25, 1995, the Governor filed a supplemental appropriation recommendation
aggregating approximately $43.6 million, which expenditures are included in the
$98.6 million contingency reserve for fiscal 1995 expenditures. Included in the
approximately $298.2 million of vetoes noted above, the Governor vetoed approx-
imately $296.9 million in appropriations for the Executive Office of Human
Services and the Department of Public Welfare, representing the estimate, at
the time, of 4 months of funding for the Commonwealth's public assistance pro-
grams.
On February 10, 1995, the Governor signed into law certain reforms to the Com-
monwealth's program for Aid to Families with Dependent Children ("AFDC") which
take effect on July 1, 1995, subject to federal approval of certain waivers.
The revised program reduces AFDC benefits to able bodied recipients by 2.75%,
while allowing them to keep a larger portion of their earned wages, requires
approxi
7
<PAGE>
mately 22,000 able-bodied parents of school-aged children to work or perform
community service for 20 hours per week and requires approximately 16,000 re-
cipients who have children between the ages of two and six to participate in an
education or training program or perform community service. The plan also es-
tablishes a pilot program for up to 2,000 participants that offers tax credits
and wage subsidies to employers who hire welfare recipients. Parents who find
employment will be provided with extended medical benefits and day care bene-
fits for up to one year. The plan mandates paternal identification, expands
funding for anti-fraud initiatives, and requires parents on AFDC to immunize
their children. Parents who are disabled, caring for a disabled child, have a
child under the age of two, or are teen-agers living at home and attending high
school, will continue to receive cash assistance. Since most provisions of the
new law do not take effect until July 1, 1995, the Executive Office for Admin-
istration projects that the reforms will not materially affect fiscal 1995 pub-
lic assistance spending. The fiscal 1995 expenditure estimate of $16.449 bil-
lion includes $247.8 million appropriated to fund the Commonwealth's public as-
sistance programs for the last four months of fiscal 1995. The Commonwealth is
currently evaluating the new law's impact on fiscal 1996 projected spending for
public assistance programs.
The fiscal 1995 budget is based on numerous spending and revenue estimates the
achievement of which cannot be assured.
On November 8, 1994, the voters in the statewide general election approved an
initiative petition that would slightly increase the portion of the gasoline
tax revenue credited to the Highway Fund, one of the Commonwealth's three major
budgetary funds, prohibit the transfer of money from the Highway Fund to other
funds for non-highway purposes and not permit including the Highway Fund bal-
ance in the computation "consolidated net surplus" for purposes of state fi-
nance laws. The initiative petition also provides that no more than 15% of gas-
oline tax revenues may be used for mass transportation purposes, such as expen-
ditures related to the Massachusetts Bay Transit Authority. The Executive Of-
fice of Administration and Finance is analyzing the effect, if any, this ini-
tiative petition, which became law on December 8, 1994, may have on the fiscal
1995 budget and it currently does not expect it to have any materially adverse
impact. This is not a constitutional amendment and is subject to amendment or
repeal by the Legislature, which may also, notwithstanding the terms of the pe-
tition, appropriate moneys from the Highway Fund in such amounts and for such
purposes as it determines, subject only to a constitutional restriction that
such moneys be used for highways or mass transit purposes.
1994 Fiscal Year. Fiscal 1994 tax revenue collections were approximately
$10.607 billion, $87 million below the Department of Revenue's fiscal year 1994
tax revenue estimate of $10.694 billion and $677 million above fiscal 1993 tax
revenues of $9.930 billion. Budgeted revenues and other sources, including non-
tax revenues, collected in fiscal 1994 were approximately $15.550 billion. To-
tal revenues and other sources increased by approximately 5.7% from fiscal 1993
to fiscal 1994 while tax revenues increased by 6.8% for the same period. Bud-
geted expenditures and other uses of funds in fiscal 1994 were approximately
$15.523 billion, which is $826.5 million or approximately 5.6% higher than fis-
cal 1993 budgeted expenditures and other uses.
8
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As of June 30, 1994, the Commonwealth showed a year-end cash position of ap-
proximately $757 million, as compared to a projected position of $599 million.
In June, 1993, the Legislature adopted and the Governor signed into law compre-
hensive education reform legislation. This legislation required an increase in
expenditures for education purposes above fiscal 1993 base spending of $1.288
billion of approximately $175 million in fiscal 1994. The Executive Office for
Administration and Finance expects the annual increases in expenditures above
the fiscal 1993 base spending of $1.288 billion to be approximately $396 mil-
lion in fiscal 1995, $625 million in fiscal 1996 and $868 million in fiscal
1997. Additional annual increases are also expected in later fiscal years. The
fiscal 1995 budget as signed by the Governor includes $896 million in appropri-
ations to satisfy this legislation.
1993 Fiscal Year. The Commonwealth's budgeted expenditures and other uses were
approximately $14.696 billion in fiscal 1993, which is approximately $1.280
billion or 9.6% higher than fiscal 1992 expenditures and other uses. Final fis-
cal 1993 budgeted expenditures were $23 million lower than the initial July
1992 estimates of fiscal 1993 budgeted expenditures. Budgeted revenues and
other sources for fiscal 1993 totalled approximately $14.710 billion, including
tax revenues of $9.930 billion. Total revenues and other sources increased by
approximately 6.9% from fiscal 1992 to fiscal 1993, while tax revenues in-
creased by 4.7% for the same period. Overall, fiscal 1993 ended with a surplus
of revenues and other sources over expenditures and other uses of $13.1 million
and aggregate ending fund balances in the budgeted operating funds of the Com-
monwealth of approximately $562.5 million. After payment in full of the distri-
bution of local aid to the Commonwealth's cities and towns ("Local Aid") and
the retirement of short term debt, the Commonwealth showed a year end cash po-
sition of approximately $622.2 million, as compared to a projected position of
$485.1 million.
1992 Fiscal Year. The Commonwealth's budgeted expenditures and other uses were
approximately $13.4 billion in fiscal 1992, which is $238.7 million or 1.7%
lower than fiscal 1991 budgeted expenditures. Final fiscal 1992 budgeted expen-
ditures were $300 million more than the initial July 1991 estimates of budget-
ary expenditures, due in part to increases in certain human services programs,
including an increase of $268.7 million for the Medicaid program and $50.0 mil-
lion for mental retardation consent decree requirements. Budgeted revenues and
other sources for fiscal 1992 totalled approximately $13.7 billion (including
tax revenues of approximately $9.5 billion), reflecting an increase of approxi-
mately 0.7% from fiscal 1991 to 1992 and an increase of 5.4% in tax revenues
for the same period. Overall, fiscal 1992 is estimated to have ended with an
excess of revenues and other sources over expenditures and other uses of $312.3
million. After payment in full of Local Aid in the
amount of $514.0 million due on June 30, 1992, retirement of the Commonwealth's
outstanding commercial paper (except for approximately $50 million of bond an-
ticipation notes) and certain other short term borrowings, as of June 30, 1992,
the end of fiscal 1992, the Commonwealth showed a year-end cash position of ap-
proximately $731 million, as compared with the Commonwealth's cash balance of
$182.3 million at the end of fiscal 1991.
1991 Fiscal Year. Budgeted expenditures for fiscal 1991 were approximately
$13.659 billion, as against budgeted revenues and other sources of approxi-
mately $13.634 billion. The Commonwealth suffered an operating loss of approxi-
mately $21.2 million. Application of the adjusted fiscal 1990 fund balances
9
<PAGE>
of $258.3 million resulted in a fiscal 1991 budgetary surplus of $237.1 mil-
lion. State law requires that approximately $59.2 million of the fiscal year
ending balances of $237.1 million be placed in the Stabilization Fund, a re-
serve from which funds can be appropriated (i) to make up any difference be-
tween actual state revenues in any fiscal year in which actual revenues fall
below the allowable amount, (ii) to replace state and local losses by federal
funds or (iii) for any event, as determined by the legislature, which threatens
the health, safety or welfare of the people or the fiscal stability of the Com-
monwealth or any of its political subdivisions.
Upon taking office in January 1991, the new Governor proposed a series of leg-
islative and administrative actions, including withholding of allotments under
Section 9C of Chapter 29 of the General Laws, intended to eliminate the pro-
jected deficits. The new Governor's review of the Commonwealth's budget indi-
cated projected spending of approximately $14.1 billion with an estimated $850
million in budget balancing measures that would be needed prior to the close of
fiscal 1991. At that time, estimated tax revenues were revised to approximately
$8.8 billion, $903 million less than was estimated at the time the fiscal 1991
budget was adopted. The Legislature adopted a number of the Governor's recom-
mendations and the Governor took certain administrative actions not requiring
legislative approval, including the adoption of a state employee furlough pro-
gram. It is estimated by the Commonwealth that spending reductions achieved
through savings initiatives and withholding of allotments total approximately
$484.3 million in aggregate for fiscal 1991. However, these savings and reduc-
tions may be impacted negatively by litigation pursued by third parties con-
cerning the Governor's actions under Section 9C of Chapter 29 of the General
Laws and with regard to the state employee furlough program.
In addition, the new administration in May 1991 filed an amendment to its Med-
icaid state plan that enables it to claim 50% federal reimbursement on
uncompensated care payments for certain hospitals in the Commonwealth. As a re-
sult, in fiscal 1991, the Commonwealth obtained additional non-tax revenues in
the form of federal reimbursements equal to approximately $513 million on ac-
count of uncompensated care payments. This reimbursement claim was based upon
recent amendments of federal law contained in the Omnibus Budget Reconciliation
Act of 1990 and, consequently, on relatively undeveloped federal laws, regula-
tions and guidelines. At the request of the federal Health Care Financing Ad-
ministration, the Office of Inspector General of the United States Department
of Health and Human Services has commenced an audit of the reimbursement. The
administration, which had reviewed the matter with the Health Care Financing
Administration prior to claiming the reimbursement, believes that the Common-
wealth will prevail in the audit. If the Commonwealth does not prevail, the
Commonwealth would have the right to contest an appeal, but could be required
to pay all or part of Medicaid reimbursements with interest and to have such
amount deducted from future reimbursement payments.
1990 and 1989 Fiscal Years. In July 1989, the former Governor vetoed certain
provisions included in the budget legislation for fiscal 1990, including ap-
proximately $273 million of the fiscal 1990 appropriations, including $100 mil-
lion for Local Aid. One of the Governor's vetoes occasioned a default by the
Commonwealth on a September 1, 1989 payment of $2.5 million on a general obli-
gation contract with the Massachusetts Community Development Finance Corpora-
tion to which its full faith and credit had been pledged, which payment was
made on September 17, 1990 after a supplemental appro
10
<PAGE>
priation was proposed by the Governor and passed by the legislature. The legis-
lature overrode the Governor's veto of $100 million of Local Aid and the Gover-
nor then indicated that he was withholding the allotment for such expenditure.
The Supreme Judicial Court invalidated the Governor's withholding of $210 mil-
lion of appropriated funds for certain Local Aid purposes in May 1990.
Budgeted expenditures for fiscal 1989 and 1990 totalled approximately $12.6
billion and $13.3 billion, respectively. Budgeted revenues for fiscal 1989 and
1990 totalled approximately $12.0 billion and $12.0 billion, respectively.
Employment. Reversing a trend of relatively low unemployment during the early
and mid 1980's, the Massachusetts unemployment rate beginning in 1990 increased
significantly to where the Commonwealth's unemployment rate exceeded the na-
tional unemployment rate. During 1990, the Massachusetts unemployment rate in-
creased from 4.5% in January to 6.1% in July to 6.7% in August. During 1991,
the Massachusetts unemployment rate averaged 9.0% while the average United
States unemployment rate was 6.7%. The Massachusetts unemployment rate during
1992 averaged 8.5% while the average United States unemployment rate was 7.4%.
Since 1993, the average monthly unemployment rate has declined steadily. The
Massachusetts unemployment rate in December 1994 was 5.7%, as compared with the
United States unemployment rate of 5.4% for the same period. Other factors
which may significantly and adversely affect the employment rate in the Common-
wealth include reductions in federal government spending on defense-related in-
dustries. Due to this and other considerations, there can be no assurance that
unemployment in the Commonwealth will not increase in the future.
Debt Ratings. S&P currently rates the Commonwealth's uninsured general obliga-
tion bonds at A+. At the same time, S&P currently rates state and agency notes
at SP1. From 1989 through 1992, the Commonwealth had experienced a steady de-
cline in its S&P rating, with its decline beginning in May 1989, when S&P low-
ered its rating on the Commonwealth's general obligation bonds and other Com-
monwealth obligations from AA+ to AA and continuing a series of further reduc-
tions until March 1992, when the rating was affirmed at BBB.
Moody's currently rates the Commonwealth's uninsured general obligation bonds
at A1. From 1989 through 1992, the Commonwealth had experienced a steady de-
cline in its rating by Moody's since May 1989. In May 1989, Moody's lowered its
rating on the Commonwealth's notes from MIG-1 to MIG-2, and its rating on the
Commonwealth's commercial paper from P-1 to P-2. On June 21, 1989, Moody's re-
duced the Commonwealth's general obligation rating from Aa to A. On November
15, 1989, Moody's reduced the rating on the Commonwealth's general obligations
from A to Baa1, and on March 9, 1990, Moody's reduced the rating of the Common-
wealth's general obligation bonds from Baa1 to Baa. There can be no assurance
that these ratings will continue.
In recent years, the Commonwealth and certain of its public bodies and munici-
palities have faced serious financial difficulties which have affected the
credit standing and borrowing abilities of Massachusetts and its respective en-
tities and may have contributed to higher interest rates on debt obligations.
The continuation of, or an increase in, such financial difficulties could re-
sult in declines in the market values of, or default on, existing obligations
including Massachusetts Obligations in the Fund.
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Should there be during the term of the Fund a financial crisis relating to Mas-
sachusetts, its public bodies or municipalities, the market value and market-
ability of all outstanding bonds issued by the Commonwealth and its public au-
thorities or municipalities including the Massachusetts Obligations in the Fund
and interest income to the Fund could be adversely affected.
Total Bond and Note Liabilities. The total general obligation bond indebtedness
of the Commonwealth (including Fiscal Recovery Bonds) as of January 1, 1995 was
approximately $9.19 billion. There were also outstanding approximately $264
million in general obligation notes and other short term general obligation
debt. The total bond and note liabilities of the Commonwealth as of October 1,
1994, including guaranteed bond and contingent liabilities was approximately
$12.98 billion.
Debt Service. During the 1980s, capital expenditures were increased substan-
tially, which has had a short term impact on the cash needs of the Commonwealth
and also accounts for a significant rise in debt service during that period.
Payments for debt service on Commonwealth general obligation bonds and notes
have risen at an average annual rate of 22.2% from $770.9 million in fiscal
1990 to an estimated $942.3 million in fiscal 1991. Debt service payments in
fiscal 1992 were $898.3 million. Debt service payments for fiscal 1992 reflect
a $261 million one-time reduction achieved as a result of the Issuance of the
refunding bonds in September and October 1991. Debt service expenditures were
approximately $1.140 billion and $1.149 billion for fiscal 1993 and 1994, re-
spectively, and are projected to be approximately $1.242 billion for fiscal
1995 and $1.267 billion for fiscal 1996. The fiscal 1993 and fiscal 1994 debt
service expenditures reflect savings of $62.9 million and $57.3 million, re-
spectively, achieved through the issuance of refunding bonds in October 1992,
and March, May and August 1993. The amounts represented do not include debt
service on notes issued to finance the fiscal 1989 deficit and certain Medicaid
related liabilities, certain debt service contract assistance to the Massachu-
setts Bay Transportation Authority ($181.9 million projected in fiscal 1995),
the Massachusetts Convention Center Authority ($24.6 million projected in fis-
cal 1995), the Massachusetts Government Land Bank ($6.0 million projected in
fiscal 1995) and the Massachusetts Water Pollution Abatement Trust ($13.9 mil-
lion projected in fiscal 1995), as well as grants to municipalities under the
school building assistance program to defray a portion of the debt service
costs on local school bonds ($179.2 million projected in fiscal 1995).
In January 1990, legislation was passed to impose a limit on debt service be-
ginning in fiscal 1991, providing that no more than 10% of the total appropria-
tions in any fiscal year may be expended for payment of interest and principal
on general obligation debt (excluding the Fiscal Recovery Bonds). The percent-
age of total appropriations expended from the budgeted operating funds for debt
service (excluding debt service on Fiscal Recovery Bonds) for fiscal 1994 is
5.6% which is projected to increase to 5.9% in fiscal 1995.
Certain Liabilities. Among the material future liabilities of the Commonwealth
are significant unfunded general liabilities of its retirement systems and a
program to fund such liabilities; a program whereby, starting in 1978, the Com-
monwealth began assuming full financial responsibility for all costs of the ad-
ministration of justice within the Commonwealth; continuing demands to raise
aggregate aid to cities, towns, schools and other districts and transit author-
ities above current levels; and Medicaid
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expenditures which have increased each year since the program was initiated.
The Commonwealth has signed consent decrees to continue improving mental health
care and programs for the mentally retarded in order to meet federal standards,
including those governing receipt of federal reimbursements under various pro-
grams, and the parties in those cases have worked cooperatively to resolve the
disputed issues.
As a result of comprehensive legislation approved in January, 1988, the Common-
wealth is required, beginning in fiscal 1989 to fund future pension liabilities
currently and to amortize the Commonwealth's unfunded liabilities over 40
years. The estimated pension expenditures (inclusive of current benefits and
pension reserves) for fiscal 1996 are $1.044 billion, representing an increase
of 5.0% over estimated fiscal 1995 expenditures of $994.3 million.
Litigation. The Commonwealth is engaged in various lawsuits involving environ-
mental and related laws, including an action brought on behalf of the U.S. En-
vironmental Protection Agency alleging violations of the Clean Water Act and
seeking to enforce the clean-up of Boston Harbor. The MWRA, successor in lia-
bility to the Metropolitan District Commission, has assumed primary responsi-
bility for developing and implementing a court-approved plan for the construc-
tion of the treatment facilities necessary to achieve compliance with federal
requirements. Under the Clean Water Act, the Commonwealth may be liable for
costs of compliance in these or any other Clean Water cases if the MWRA or a
municipality is prevented from raising revenues necessary to comply with a
judgment. The MWRA currently projects that the total cost of construction of
the treatment facilities required under the court's order is approximately $3.5
billion in current dollars, with approximately $1.54 billion to be spent on or
after July 1, 1994.
The Department of Public Welfare has been sued for the alleged unlawful denial
of personal care attendant services to certain disabled Medicaid recipients.
The Superior Court has denied the plaintiff's motion for preliminary injunction
and has also denied the plaintiff's motion for class certification. If the
plaintiffs were to prevail on their claims and the Commonwealth were required
to provide all of the services sought by the plaintiffs to all similarly situa-
tion persons, it would substantially increase the annual cost to the Common-
wealth if these services are eventually required. The Department of Public Wel-
fare currently estimates this increase to be as much as $200 million per year.
There are also actions pending in which recipients of human services benefits,
such as welfare recipients, the mentally retarded, the elderly, the handi-
capped, children, residents of state hospitals and inmates of corrections in-
stitutions, seek expanded levels of services and benefits and in which provid-
ers of services to such recipients challenge the rates at which they are reim-
bursed by the Commonwealth. To the extent that such actions result in judgments
requiring the Commonwealth to provide expanded services or benefits or pay in-
creased rates, additional operating and capital expenditures might be needed to
implement such judgments.
The Massachusetts Hospital Association has brought an action challenging an el-
ement of the Medicaid rate setting methodologies for hospitals. On October 12,
1993, the case was settled with the hospital association and most acute hospi-
tals, thereby reducing the Commonwealth's potential liability in the pending
case or in related appeals to approximately $10 million.
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In addition there are several tax matters in litigation which could result in
significant refunds to taxpayers if decisions unfavorable to the Commonwealth
are rendered. In BayBank, et al. v. Commissioner of Revenue, the banks chal-
lenge the inclusion of income from tax exempt obligations in the measure of the
bank excise tax. The Appellate Tax Board issued findings of fact and a report
in favor of the Commissioner of Revenue on September 30, 1993. The case is
pending before the Supreme Judicial Court and is expected to be heard in March
1995. Taking into account all banks and all years at issue (1974 through 1986),
there are 142 appeals consolidated in this case. The amount at issue is esti-
mated to be approximately $1.2 billion, which amount includes interest of ap-
proximately $900 million and amounts involved in other related applications for
abatement pending with the Commissioner of Revenue or with the Appellate Tax
Board. The amount of taxes and interest at issue in other cases is approxi-
mately $150 million.
In National Association of Government Employees v. Commonwealth, the Superior
Court declared that a line item in the Commonwealth's general appropriations
act for fiscal 1994 that increased the state employees' percentage share of
their group health insurance premiums from 10% to 15% violated the terms of
several collective bargaining agreements, and therefore was invalid under the
United States Constitution as regards employees covered by the agreements. On
February 9, 1995, the Supreme Judicial Court vacated the Superior Court's deci-
sion and declared that the fiscal 1994 line item did not violate the contracts
clause. Several other unions have filed a companion suit asserting that the
premium increase similarly violated other collective bargaining agreements. The
latter suit is in its initial stages. If the Superior Court decision in favor
of the state employees is upheld, the Commonwealth's aggregate liability is es-
timated to be approximately $32 million.
A variety of other civil suits pending against the Commonwealth may also affect
its future liabilities. There include challenges to the Commonwealth's alloca-
tion of school aid under Section 9C of Chapter 29 of the General Laws and to
adopt a state employee furlough program. No prediction is possible as to the
ultimate outcome of these proceedings.
Many factors, in addition to those cited above, do or may have a bearing upon
the financial condition of the Commonwealth, including social and economic con-
ditions, many of which are not within the control of the Commonwealth.
Expenditure and Tax Limitation Measures. Limits have been established on state
tax revenues by legislation approved by the Governor on October 25, 1986 and by
an initiative petition approved by the voters on November 4, 1986. The Execu-
tive Office for Administration and Finance currently estimates that state tax
revenues will not reach the limit imposed by either the initiative petition or
the legislative enactment in fiscal 1992.
Proposition 2 1/2, passed by the voters in 1980, led to large reductions in
property taxes, the major source of income for cities and towns and large in-
creases in state aid to offset such revenue losses. According to the Executive
Office for Administration and Finance, all of the 351 cities and towns have now
achieved a property tax level of no more than 2.5% of full property values. Un-
der the terms of Proposition 2 1/2, the property tax levy can now be increased
annually for all cities and towns, almost all by 2.5% of the prior fiscal
year's tax levy plus 2.5% of the value of new properties and of signifi
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cant improvements to property. Legislation has also been enacted providing for
certain local option taxes. A voter initiative petition approved at the state-
wide general election in November, 1990 further regulates the distribution of
Local Aid of no less than 40% of collections from individual income taxes,
sales and use taxes, corporate excise taxes, and the balance of the state lot-
tery fund. If implemented in accordance with its terms (including appropriation
of the necessary funds), the petition as approved would shift several hundred
million dollars to direct Local Aid.
Other Tax Measures. To provide revenue to pay debt service on both the deficit
and Medicaid-related borrowings and to fund certain direct Medicaid expendi-
tures, legislation was enacted imposing an additional tax on certain types of
personal income for 1989 and 1990 taxable years at rates of 0.375% and 0.75%,
respectively, effectively raising the tax rate of 1989 from 5% to 5.375% and
for 1990 to 5.75%. Recent legislation has effectively further increased tax
rates to 5.95% for tax year 1990 to 6.25% for tax year 1991 and returning to
5.95% for tax year 1992 and subsequent tax years. The tax is applicable to all
personal income except income derived from dividends, capital gains, unemploy-
ment compensation, alimony, rent, interest, pensions, annuities and IRA/Keogh
distributions. The income tax rate on other interest (excluding interest on ob-
ligations of the United States and of the Commonwealth and its subdivisions),
dividends and net capital gains (after a 50% reduction) was increased from 10%
to 12% for tax year 1990 and subsequent years, by recently enacted legislation.
Estate Tax Revisions. The fiscal 1993 budget included legislation which gradu-
ally phases out the current Massachusetts estate tax and replaces it with a
"sponge tax" in 1997. The "sponge tax" is based on the maximum amount of the
credit for state taxes allowed for federal estate tax purposes. The estate tax
is phased out by means of annual increases in the basic exemption from the cur-
rent $200,000 level. The exemption is increased to $300,000 for 1993, $400,000
for 1994, $500,000 for 1995 and $600,000 for 1996. In addition, the legislation
includes a full marital deduction starting July 1, 1994. Currently the marital
deduction is limited to 50% of the Massachusetts adjusted gross estate. The
static fiscal impact of the phase out of the estate tax was estimated to be ap-
proximately $24.8 million in fiscal 1994 and is estimated to be approximately
$72.5 million in fiscal 1995.
Other Issuers of Massachusetts Obligations. There are a number of state agen-
cies, instrumentalities and political subdivisions of the Commonwealth that is-
sue Municipal Obligations, some of which may be conduit revenue obligations
payable from payments from private borrowers. These entities are subject to
various economic risks and uncertainties, and the credit quality of the securi-
ties issued by them may vary considerably from the credit quality of obliga-
tions backed by the full faith and credit of the Commonwealth. The brief sum-
mary above does not address, nor does it attempt to address, any difficulties
and the financial situations of those other issuers of Massachusetts Obliga-
tions.
FACTORS PERTAINING TO NEW YORK
As described above, except to the extent the New York Fund invests in temporary
investments, the New York Fund will invest substantially all of its assets in
New York Municipal Obligations. The New York Fund is therefore susceptible to
political, economic or regulatory factors affecting New York State and govern-
mental bodies within New York State. Some of the more significant events and
conditions relating to the financial situation in New York are summarized be-
low. The following information provides only a brief summary of the complex
factors affecting the financial situation in New York, is
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derived from sources that are generally available to investors and is believed
to be accurate. It is based on information drawn from official statements and
prospectuses issued by, and other information reported by, the State of New
York (the "State"), by its various public bodies (the "Agencies"), and by other
entities located within the State, including the City of New York (the "City"),
in connection with the issuance of their respective securities.
There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on State or local government finances
generally, will not adversely affect the market value of New York Municipal Ob-
ligations held in the portfolio of the New York Fund or the ability of particu-
lar obligors to make timely payments of debt service on (or relating to) those
obligations.
(1) The State: The State has historically been one of the wealthiest states in
the nation. For decades, however, the State economy has grown more slowly than
that of the nation as a whole, gradually eroding the State's relative economic
affluence. Statewide, urban centers have experienced significant changes in-
volving migration of the more affluent to the suburbs and an influx of gener-
ally less affluent residents. Regionally, the older Northeast cities have suf-
fered because of the relative success that the South and the West have had in
attracting people and business. The City has also had to face greater competi-
tion as other major cities have developed financial and business capabilities
which make them less dependent on the specialized services traditionally avail-
able almost exclusively in the City. The State has for many years had a very
high state and local tax burden relative to other states. The burden of State
and local taxation, in combination with the many other causes of regional eco-
nomic dislocation, has contributed to the decisions of some businesses and in-
dividuals to relocate outside, or not locate within, the State.
Slowdown of Regional Economy. A national recession commenced in mid-1990. The
downturn continued throughout the State's 1990-91 fiscal year and was followed
by a period of weak economic growth during the 1991 and 1992 calendar years.
For calendar year 1993, the economy grew faster than in 1992, but still at a
very moderate rate as compared to other recoveries. Moderate economic growth
continued in calendar year 1994. The State has projected the rate of economic
growth to slow within New York during 1995 as the expansion of the national
economy moderates. Economic recovery started considerably later in the State
than in the nation as a whole due in part to a significant retrenchment in the
banking and financial services industries, downsizing by major corporations,
cutbacks in defense spending, and an oversupply of office buildings. Many un-
certainties exist in forecasts of both the national and State economies and
there can be no assurance that the State's economy will perform at a level suf-
ficient to meet the State's projections of receipts and disbursements.
1995-96 Fiscal Year. The Governor issued a proposed Executive Budget for the
1995-96 fiscal year (the "Proposed Budget") on February 1, 1995, which pro-
jected a balanced general fund and receipts and disbursements of $32.5 billion
and $32.4 billion, respectively. As of April 17, 1995, the State legislature
had not yet enacted, nor had the Governor and the legislature reached an agree-
ment on, the budget for the 1995-96 fiscal year which commenced on April 1,
1995. The delay in the enactment of the budget may negatively affect certain
proposed actions and reduce projected savings.
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The Proposed Budget and the 1995-96 Financial Plan provide for the closing of a
projected $4.7 billion budget gap in the 1995-96 fiscal year by cost-contain-
ment savings in social welfare programs, savings from State agency
restructurings, freezing the level of some categories of local aid and new rev-
enue measures.
The proposed budget and the 1995-96 Financial Plan may be impacted negatively
by uncertainties relating to the economy and tax collections, although recent
signs of improvement in the national economy could lead to short-term increases
in State receipts.
1994-95 Fiscal Year. The State Legislature enacted the State's 1994-95 fiscal
year budget on June 7, 1994, more than two months after the start of that fis-
cal year. As of February 1, 1995, the updated 1994-95 State Financial Plan (the
"Plan") projected total general fund receipts and disbursements of $33.3 bil-
lion and $33.5 billion, respectively, representing reductions in receipts and
disbursements of $1 billion and $743 billion, respectively, from the amount set
forth in the 1994-95 budget. The Plan projected for a General Fund balance of
approximately $157 million at the close of the 1994-95 fiscal year.
1993-94 Fiscal Year. The State ended the 1993-94 fiscal year with an operat-
ing surplus of approximately $1.0 billion.
Future Fiscal Years. There can be no assurance that the State will not face
substantial potential budget gaps in the future resulting from a significant
disparity between tax revenues projected from a lower recurring receipts base
and the spending required to maintain State programs at current levels. To ad-
dress any potential budgetary imbalance, the State may need to take significant
actions to align recurring receipts and disbursements.
Indebtedness. As of March 31, 1994, the total amount of long-term State general
obligation debt authorized but unissued stood at $2.0 billion. As of the same
date, the State had approximately $5.4 billion in general obligation bonds, in-
cluding $224 million in bond anticipation notes outstanding.
The State originally projected that its borrowings for capital purposes during
the State's 1994-95 fiscal year would consist of $374 million in general obli-
gation bonds and bond anticipation notes and $140 million in general obligation
commercial paper. The Legislature has authorized the issuance of up to $69 mil-
lion in certificates of participation in pools of leases for equipment and real
property to be utilized by State agencies. Through March 15, 1995, the State
had issued in excess of $590 million of its general obligation bonds (including
$430 million of refunding bonds). The projections of the State regarding its
borrowings for any fiscal year are subject to change if actual receipts fall
short of State projections or if other circumstances require.
In June 1990, legislation was enacted creating the New York Local Government
Assistance Corporation ("LGAC"), a public benefit corporation empowered to is-
sue long-term obligations to fund certain payments to local governments tradi-
tionally funded through the State's annual seasonal borrowing. As of March 31,
1994, LGAC has issued its bonds to provide net proceeds of $4.5 billion. The
LGAC was
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authorized to provide net proceeds of $315 million, during the State's 1994-95
fiscal year. The LGAC issued $347 million of bonds on March 1, 1995 providing
the authorized net proceeds.
Financing of capital programs by other public authorities of the State is also
obtained from lease-purchase and contractual-obligation financing arrangements,
the debt service for which is paid from State appropriations. As of March 31,
1994, there were $16.6 billion of such other financing arrangements outstanding
and additional financings of this nature by public authorities are projected to
total $2.4 billion during the 1994-1995 fiscal year. In addition, certain agen-
cies had issued and outstanding approximately $7.3 billion of "moral obligation
financings" as of March 31, 1994, which are to be repaid from project revenues.
While there has never been a default on moral obligation debt of the State, the
State would be required to make up any shortfall in debt service.
Ratings. The $850 million in TRANs issued by the State in April 1993 were rated
SP-1 Plus by S&P and MIG-1 by Moody's, which represent the highest ratings
given by such agencies and the first time the State's TRANs have received these
ratings since its May 1989 TRANs issuance. Both agencies cited the State's im-
proved fiscal position as a significant factor in the upgrading of the April
1993 TRANs.
Moody's rating of the State's general obligation bonds stood at A on February
28, 1994, and S&P's rating stood at A- with a positive outlook, on February 28,
1994, an improvement from S&P's stable outlook from February 1994 through April
1993 and negative outlook prior to April 1993. Previously, Moody's lowered its
rating to A on June 6, 1990, its rating having been A1 since May 27, 1986. S&P
lowered its rating from A to A- on January 13, 1992. S&P's previous ratings
were A from March 1990 to January 1992, AA- from August 1987 to March 1990 and
A+ from November 1982 to August 1987.
Moody's maintained its A rating and S&P continued its A- rating in connection
with the State's issuance of $537 million of general obligation bonds in March
1995.
(2) The City and the Municipal Assistance Corporation ("MAC"): The City ac-
counts for approximately 40% of the State's population and personal income, and
the City's financial health affects the State in numerous ways.
In response to the City's fiscal crisis in 1975, the State took a number of
steps to assist the City in returning to fiscal stability. Among other actions,
the State Legislature (i) created MAC to assist with long-term financing for
the City's short-term debt and other cash requirements and (ii) created the
State Financial Control Board (the "Control Board") to review and approve the
City's budgets and four-year financial plans (the financial plans also apply to
certain City-related public agencies).
In recent years, the rate of economic growth in the City slowed substantially
as the City's economy entered a recession. While by some measures the City's
economy may have begun to recover, a number of factors, including poor perfor-
mance by the City's financial services companies, may prevent a significant im-
provement in the City's economy and may in fact negatively impact upon the
City's finances by reducing tax receipts. The City Comptroller has issued re-
ports concluding that the recession of the
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City's economy may be ending, but there is little prospect of any significant
improvement in the near term.
Fiscal Year 1996 and the 1995-1998 Financial Plan. On February 14, 1995, the
Mayor released his preliminary $30.5 billion budget for fiscal year 1996, which
included $2.7 billion of deficit reduction measures. The Mayor is seeking a
$1.2 billion reduction in mandated welfare and Medicaid expenditures from the
State, a $569 million reduction in expenditures by City agencies and the Board
of Education budget, $600 million in personnel related savings partly through
the elimination of 15,000 jobs within 18 months, and other measures.
The 1995-1998 Financial Plan (the "Plan"), which was submitted to the Control
Board on February 23, 1995, projected budget gaps of $3.2 billion and $3.8 bil-
lion for fiscal years 1997 and 1998, respectively. The City Comptroller warned
on March 7, 1995 that the budget gap for fiscal year 1996 could increase by
$500 million to as much as $3.2 billion. The Control Board reported on March
17, 1995 that the proposed budget for fiscal year 1996 relies heavily on risky
assumptions such as $600 million in savings to be negotiated with City unions
and $1.4 billion in savings dependent on State legislative approval.
The City successfully negotiated concessions with a number of unions in order
to ensure that the fiscal year 1995 budget remained in balance. The Mayor has
indicated that to avoid additional lay-offs, higher than the number referred to
above, reductions will be necessary in the benefit plans of City employees to
close the budget gaps for fiscal years 1996 and thereafter. Union leadership
has publicly opposed such "givebacks". With respect to fiscal year 1995 the
City was also successful in obtaining additional funds and relief from certain
mandated expenditures from the State for various programs, including Medicaid.
However, the amount of gap closing measures requiring State action set forth in
the Plan is well in excess of proposed assistance to the City outlined in the
Governor's Proposed Budget. The Mayor has directed City agencies to identify an
additional $300 million in cuts for fiscal year 1996 because of anticipated
shortfalls in State aid and budgetary actions. An extended delay by the State
in adopting its 1995-96 fiscal year budget would negatively impact upon the
City's financial condition and ability to close budget gaps for fiscal years
1996 and thereafter.
The Mayor is required to submit an executive budget for fiscal year 1996 to the
City Council by April 26, 1995. Due to continuing uncertainties related to the
amount of State aid, the Mayor has indicated that he may delay submission of
such executive budget.
Given the foregoing, there can be no assurance that the City will continue to
maintain a balanced budget during fiscal year 1996 or thereafter, or that it
can maintain a balanced budget without additional tax or other revenue in-
creases or reductions in City services, which could adversely affect the City's
economic base.
Pursuant to State law, the City prepares a four-year annual financial plan,
which is reviewed and revised on a quarterly basis and which includes the
City's capital, revenue and expense projections. The City is required to submit
its financial plans to review bodies, including the Control Board. If the City
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were to experience certain adverse financial circumstances, including the oc-
currence or the substantial likelihood and the imminence of the occurrence of
an annual operating deficit of more than $100 million or the loss of access to
the public credit markets to satisfy the City's capital and seasonal financial
requirements, the Control Board would be required by State law to exercise cer-
tain powers, including prior approval of City financial plans, proposed
borrowings and certain contracts.
The City depends on the State for State aid both to enable the City to balance
its budget and to meet its cash requirements. If the State experiences revenue
shortfalls or spending increases beyond its projections during its 1995-96 fis-
cal year or subsequent years, such developments could result in reductions in
projected State aid to the City. In addition, there can be no assurance that
State budgets for the 1996-97 or future fiscal years will be adopted by the
April 1 statutory deadline and that there will not be adverse effects on the
City's cashflow and additional City expenditures as a result of such delays.
The City projections set forth in the Plan are based on various assumptions and
contingencies which are uncertain and which may not materialize. Changes in ma-
jor assumptions could significantly affect the City's ability to balance its
budget as required by State law and to meet its annual cash flow and financing
requirements. Such assumptions and contingencies include the timing of any re-
gional and local economic recovery, the absence of wage increases in excess of
the increases assumed in its financial plan, employment growth, provision of
State and Federal aid and mandate relief, State legislative approval of future
State budgets, levels of education expenditures as may be required by State
law, adoption of future City budgets by the New York City Council, and approval
by the Governor or the State Legislature and the cooperation of MAC with re-
spect to various other actions proposed in the Plan.
The City's ability to maintain a balanced operating budget is dependent on
whether it can implement necessary service and personnel reduction programs
successfully. As discussed above, the City must identify additional expenditure
reductions and revenue sources to achieve balanced operating budgets for fiscal
year 1996 and thereafter. Any such proposed expenditure reductions will be dif-
ficult to implement because of their size and the substantial expenditure re-
ductions already imposed on City operations in recent years.
Attaining a balanced budget is also dependent upon the City's ability to market
its securities successfully in the public credit markets. The City's financing
program for fiscal years 1995 through 1998 contemplates capital spending of
$16.4 billion, which will be financed through issuance of $10.7 billion of gen-
eral obligation bonds and the balance through Water Authority Revenue Bonds and
Covered Organization obligations, and will be used primarily to reconstruct and
rehabilitate the City's infrastructure and physical assets and to make capital
investments. A significant portion of such bond financing is used to reimburse
the City's general fund for capital expenditures already incurred. In addition,
the City issues revenue and tax anticipation notes to finance its seasonal
working capital requirements. The terms and success of projected public sales
of City general obligation bonds and notes will be subject to prevailing market
conditions at the time of the sale, and no assurance can be given that the
credit markets will absorb the projected amounts of public bond and note sales.
In addition, future developments concerning the City and public discussion of
such developments, the City's future financial needs and other issues may af-
fect the market for outstanding City general obliga
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tion bonds and notes. If the City were unable to sell its general obligation
bonds and notes, it would be prevented from meeting its planned operating and
capital expenditures.
The City is a defendant in a significant number of lawsuits and is subject to
numerous claims and investigations, including, but not limited to, actions com-
menced and claims asserted against the City arising out of alleged constitu-
tional violations, torts, breaches of contracts, and other violations of law
and condemnation proceedings. While the ultimate outcome and fiscal impact, if
any, on the proceedings and claims are not currently predictable, adverse de-
terminations in certain of them might have a material adverse effect upon the
City's ability to carry out its financial plan. As of June 30, 1994, the City
estimated its potential future liability on outstanding claims to be $2.6
billion.
On January 30, 1995, Robert L. Schulz and other defendants commenced a federal
district court action seeking among other matters to cancel the issuance on
January 31, 1995 of $659 million of City bonds. While the federal courts have
rejected requests for temporary restraining orders and expedited appeals, the
case is still pending. The City has indicated that it believes the action to be
without merit as it relates to the City, but there can be no assurance as to
the outcome of the litigation and an adverse ruling or the granting of a perma-
nent injunction would have a negative impact on the City's financial condition
and its ability to fund its operations.
Fiscal Year 1995. New York City adopted its fiscal year 1995 budget on June 21,
1994, which provided for spending of $31.6 billion and closed a budget gap of
$2.3 billion. However, following adoption of the fiscal year 1995 budget, addi-
tional unexpected budget gaps totaling approximately $2.0 billion were identi-
fied. The widening of the budget gap for fiscal year 1995 resulted from
shortfalls in tax revenues and State and federal aid. The Mayor and the City
Council were unable to reach agreement on additional cuts proposed by the Mayor
in October 1994. The City Council passed its own budget cut proposal in Novem-
ber 1994. The Mayor vetoed the City Council version, the City Council overrode
his veto and the Mayor implemented his original plan. A state court held in De-
cember 1994 that neither budget cut proposal could be implemented. The Mayor
then elected not to spend certain funds in order to keep the budget in balance.
Fiscal Years 1990 through 1994. The City achieved balanced operating results in
accordance with generally accepted accounting principles for its fiscal years
1990 through 1994. The City was required to close substantial budget gaps in
these fiscal years in order to maintain balanced operating results.
Ratings. As of the date of this prospectus, Moody's rating of the City's gen-
eral obligation bonds stood at Baa1 and S&P's rating stood at A-. On February
11, 1991, Moody's had lowered its rating from A.
On March 13, 1995, Moody's confirmed its Baa1 rating in connection with a
scheduled March 1995 sale of $795 million of the City's general obligation
bonds.
S&P's confirmed its rating of the City's general obligation bonds in connection
with the City's $795 million general obligation bond issue in March 1995. In
January 1995, in response to the City's plan to borrow $120 million to refund
debt due in February without imposing additional cuts in the fiscal
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1995 budget, S&P's placed the City on negative credit watch and indicated that
in April 1995 it would consider a possible downgrade of the City's general ob-
ligation debt from A- to BBB. At the end of March 1995, concerned by published
reports that the Mayor might not produce his executive budget for fiscal year
1996, S&P's suggested that the Mayor should prepare "a budget-balancing con-
tingency plan" or face the possibility of downgrade of the City's general ob-
ligation bonds. As of April 17, 1995, S&P's had not announced any change in
its ratings of the City's debt. Any such rating decrease would negatively af-
fect the marketability of the City's bonds and significantly increase the
City's financing costs.
On October 12, 1993, Moody's increased its rating of the City's issuance of
$650 million of Tax Anticipation Notes ("TANs") to MIG-1 from MIG-2. Prior to
that date, on May 9, 1990, Moody's revised downward its rating on outstanding
City revenue anticipation notes from MIG-1 to MIG-2 and rated the $900 million
notes then being sold MIG-2. S&P's rating of the October 1993 TANs issue in-
creased to SP-1 from SP-2. Prior to that date, on April 29, 1991, S&P revised
downward its rating on City revenue anticipation notes from SP-1 to SP-2.
As of December 31, 1994, the City and MAC had, respectively, $22.5 billion and
$4.1 billion of outstanding net long-term indebtedness.
(3) The State Agencies: Certain Agencies of the State have faced substantial
financial difficulties which could adversely affect the ability of such Agen-
cies to make payments of interest on, and principal amounts of, their respec-
tive bonds. The difficulties have in certain instances caused the State (under
so-called "moral obligation" provisions, which are non-binding statutory pro-
visions for State appropriations to maintain various debt service reserve
funds) to appropriate funds on behalf of the Agencies. Moreover, it is ex-
pected that the problems faced by these Agencies will continue and will re-
quire increasing amounts of State assistance in future years. Failure of the
State to appropriate necessary amounts or to take other action to permit those
Agencies having financial difficulties to meet their obligations could result
in a default by one or more of the Agencies. Such default, if it were to oc-
cur, would be likely to have a significant adverse affect on investor confi-
dence in, and therefore the market price of, obligations of the defaulting
Agencies. In addition, any default in payment on any general obligation of any
Agency whose bonds contain a moral obligation provision could constitute a
failure of certain conditions that must be satisfied in connection with Fed-
eral guarantees of City and MAC obligations and could thus jeopardize the
City's long-term financing plans.
As of September 30, 1993, the State reported that eighteen Agencies each had
outstanding debt of $100 million or more and an aggregate of $63.5 billion of
outstanding debt, some of which was state-supported, state-relatd debt.
(4) State Litigation: The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental
operations. Such litigation includes, but is not limited to, claims asserted
against the State arising from alleged torts, alleged breaches of contracts,
condemnation proceedings and other alleged violations of State and Federal
laws. Included in the State's outstanding litigation are a number of cases
challenging the constitutionality or the adequacy and effectiveness of a vari-
ety of significant social welfare programs primarily involving the State's
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mental hygiene programs. Adverse judgments in these matters generally could re-
sult in injunctive relief coupled with prospective changes in patient care
which could require substantial increased financing of the litigated programs
in the future.
The State is also engaged in a variety of claims wherein significant monetary
damages are sought. Actions commenced by several Indian nations claim that sig-
nificant amounts of land were unconstitutionally taken from the Indians in vio-
lation of various treaties and agreements during the eighteenth and nineteenth
centuries. The claimants seek recovery of approximately six million acres of
land, as well as compensatory and punitive damages.
The State has entered into a settlement agreement with Delaware, Massachusetts
and all other parties with respect to State of Delaware v. State of New York,
an action by Delaware and other states to recover unclaimed property from New
York-based brokers, which had escheated to the State pursuant to its Abandoned
Property Law. Annual payments under this settlement will be made through the
State's 2002-03 fiscal year in amounts not exceeding $48.4 million in any fis-
cal year subsequent to the State's 1994-95 fiscal year.
In Schulz v. State of New York, commenced May 24, 1993 ("Schulz"), petitioners
challenged the constitutionality of mass transportation bonding programs of the
New York State Thruway Authority and the Metropolitan Transportation Authority.
On May 24, 1993, the Supreme Court, Albany County, temporarily enjoined the
State from implementing those bonding programs.
Petitioners in Schulz asserted that issuance of bonds by the two Authorities is
subject to approval by statewide referendum. By decision dated October 21,
1993, the Appellate Division, Third Department, affirmed the order of the Su-
preme Court, Albany County, granting the State's motion for summary judgment,
dismissing the complaint and vacating the temporary restraining order. On June
30, 1994, the Court of Appeals, the State's highest court, upheld the decisions
of the Supreme Court and Appellate Division in Schulz. Plaintiffs' motion for
reargument was denied by the Court of Appeals on September 1, 1994 and their
writ of certiorari to the U.S. Supreme Court was denied on January 23, 1995.
Adverse developments in the foregoing proceedings or new proceedings could ad-
versely affect the financial condition of the State in the future.
(5) Other Municipalities: Certain localities in addition to New York City could
have financial problems leading to requests for additional State assistance.
The potential impact on the State of such actions by localities is not included
in projections of State receipts and expenditures in the State's 1994-95 fiscal
year.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers") resulted in
the creation of the Financial Control Board for the City of Yonkers (the "Yon-
kers Board") by the State in 1984. The Yonkers Board is charged with oversight
of the fiscal affairs of Yonkers. Future actions taken by the Governor or the
State Legislature to assist Yonkers could result in allocation of State re-
sources in amounts that cannot yet be determined.
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Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1992, the total indebtedness of all localities in the
State was approximately $35.2 billion, of which $19.5 billion was debt of New
York City (excluding $5.9 billion in MAC debt). State law requires the Comp-
troller to review and make recommendations concerning the budgets of those lo-
cal government units other than New York City authorized by State law to issue
debt to finance deficits during the period that such deficit financing is out-
standing. Seventeen localities had outstanding indebtedness for State financing
at the close of their fiscal year ending in 1992.
Certain proposed Federal expenditure reductions could reduce, or in some cases
eliminate, Federal funding of some local programs and accordingly might impose
substantial increased expenditure requirements on affected localities to in-
crease local revenues to sustain those expenditures. If the State, New York
City or any of the Agencies were to suffer serious financial difficulties jeop-
ardizing their respective access to the public credit markets, the marketabil-
ity of notes and bonds issued by localities within the State, including notes
or bonds in the Fund, could be adversely affected. Localities also face antici-
pated and potential problems resulting from certain pending litigation, judi-
cial decisions, and long-range economic trends. The longer-range potential
problems of declining urban population, increasing expenditures, and other eco-
nomic trends could adversely affect certain localities and require increasing
State assistance in the future.
(6) Other Issuers of New York Municipal Obligations. There are a number of
other state agencies, instrumentalities and political subdivisions of the State
that issue Municipal Obligations, some of which may be conduit revenue obliga-
tions payable from payments from private borrowers. These entities are subject
to various economic risks and uncertainties, and the credit quality of the se-
curities issued by them may vary considerably from the credit quality of obli-
gations backed by the full faith and credit of the State.
FACTORS PERTAINING TO OHIO
As described above, the Ohio Fund will invest most of its net assets in securi-
ties issued by or on behalf of (or in certificates of participation in lease-
purchase obligations of) the State of Ohio, political subdivisions of the
State, or agencies or instrumentalities of the State or its political subdivi-
sions (Ohio Obligations). The Ohio Fund is therefore susceptible to general or
particular political, economic or regulatory factors that may affect issuers of
Ohio Obligations. The following information constitutes only a brief summary of
some of the many complex factors that may have an effect. The information does
not apply to "conduit" obligations on which the public issuer itself has no fi-
nancial responsibility. This information is derived from official statements of
certain Ohio issuers published in connection with their issuance of securities
and from other publicly available information, and is believed to be accurate.
No independent verification has been made of any of the following information.
Generally, the creditworthiness of Ohio Obligations of local issuers is unre-
lated to that of obligations of the State itself, and the State has no respon-
sibility to make payments on those local obligations. There may be specific
factors that at particular times apply in connection with investment in partic-
ular Ohio Obligations or in those obligations of particular Ohio issuers. It is
possible that the investment may be in particular Ohio Obligations, or in those
of particular issuers, as to which those factors apply.
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However, the information below is intended only as a general summary, and is
not intended as a discussion of any specific factor that may affect any partic-
ular obligation or issuer.
There can be no assurance that future national, regional or state-wide economic
difficulties, and the resulting impact on State or local government finances
generally, will not adversely affect the market value of Ohio Obligations held
in the Ohio Fund or the ability of particular obligors to make timely payments
of debt service on (or lease payments relating to) those Obligations.
General. Ohio is the seventh most populous state; the 1990 Census count of
10,847,000 indicated a 0.5% population increase from 1980. The Census estimate
for 1993 is 11,091,000.
While diversifying more into the service and other non-manufacturing areas, the
Ohio economy continues to rely in part on durable goods manufacturing largely
concentrated in motor vehicles and equipment, steel, rubber products and house-
hold appliances. As a result, general economic activity, as in many other in-
dustrially-developed states, tends to be more cyclical than in some other
states and in the nation as a whole. Agriculture is an important segment of the
economy, with over half the State's area devoted to farming and approximately
15% of total employment in agribusiness.
In prior years, the State's overall unemployment rate was commonly somewhat
higher than the national figure. For example, the reported 1990 average monthly
State rate was 5.7%, compared to the 5.5% national figure. However, for the
last four years the State rates were below the national rates (5.5% versus 6.1%
in 1994, based on preliminary figures). The unemployment rate and its effects
vary among geographic areas of the State.
State Finances. The State operates on the basis of a fiscal biennium for its
appropriations and expenditures, and is precluded by law from ending its July 1
to June 30 fiscal year (FY) or fiscal biennium in a deficit position. Most
State operations are financed through the General Revenue Fund (GRF), for which
the personal income and sales-use taxes are the major sources. Growth and de-
pletion of GRF ending fund balances show a consistent pattern related to na-
tional economic conditions, with the ending FY balance reduced during less fa-
vorable and increased during more favorable economic periods. The State has
well-established procedures for, and has timely taken, necessary actions to en-
sure resource/expenditure balances during less favorable economic periods.
Those procedures included general and selected reductions in appropriations
spending.
Key biennium-ending fund balances at June 30, 1989 were $475.1 million in the
GRF and $353 million in the Budget Stabilization Fund (BSF, a cash and budget-
ary management fund). In the next two fiscal years necessary corrective steps
were taken to respond to lower receipts and higher expenditures in certain cat-
egories than earlier estimated. Those steps included selected reductions in ap-
propriations spending and the transfer of $64 million from the BSF to the GRF.
Reported June 30, 1991 ending fund balances were $135.3 million (GRF) and $300
million (BSF).
To allow time to resolve certain budget differences for the latest complete bi-
ennium, an interim appropriations act was enacted effective July 1, 1991; it
included GRF debt service and lease rental appropriations for the entire 1992-
93 biennium, while continuing most other appropriations for a month.
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Pursuant to the general appropriations act for the entire biennium, passed on
July 11, 1991, $200 million was transferred from the BSF to the GRF in FY 1992.
Based on updated results and forecasts in the course of FY 1992, both in light
of a continuing uncertain nationwide economic situation, there was projected,
and then timely addressed, an FY 1992 imbalance in GRF resources and expendi-
tures. GRF receipts significantly below original forecasts resulted primarily
from lower collections of certain taxes, particularly sales-use and personal
income taxes. Higher expenditure levels came in certain areas, particularly hu-
man services including Medicaid. The Governor ordered most State agencies to
reduce GRF spending in the last six months of FY 1992 by a total of approxi-
mately $184 million. As authorized by the General Assembly, the $100.4 million
BSF balance and additional amounts from certain other funds were transferred
late in the FY to the GRF, and adjustments made in the timing of certain tax
payments. Other administrative revenue and spending actions resolved the re-
maining imbalance.
A significant GRF shortfall (approximately $520 million) was then projected for
the next year, FY 1993. It was addressed by appropriate legislative and admin-
istrative actions. The Governor ordered, effective July 1, 1992, $300 million
in selected GRF spending reductions. Subsequent executive and legislative ac-
tion in December 1992--a combination of tax revisions and additional spending
reductions--resulted in a balance of GRF resources and expenditures for the
1992-93 biennium. The June 30, 1993 ending GRF fund balance was approximately
$111 million, of which, as a first step to BSF replenishment, $21 million was
deposited in the BSF. (Based on June 30, 1994 balances, an additional $260 mil-
lion has been deposited in the BSF, which has a current balance of $288 mil-
lion.)
No spending reductions were applied to appropriations needed for debt service
on or lease rentals relating to any State obligations.
The GRF appropriations act for the current 1994-95 biennium was passed and
signed by the Governor on July 1, 1993. It included all necessary GRF appropri-
ations for State debt service and lease rental payments then projected for the
biennium.
Debt. The State's incurrence or assumption of debt without a vote of the people
is, with limited exceptions, prohibited by current State constitutional provi-
sions. The State may incur debt, limited in amount to $750,000, to cover casual
deficits or failures in revenues or to meet expenses not otherwise provided
for. The Constitution expressly precludes the State from assuming the debts of
any local government or corporation. (An exception is made in both cases for
any debt incurred to repel invasion, suppress insurrection or defend the State
in war.)
By 13 constitutional amendments, the last adopted in 1993, Ohio voters have au-
thorized the incurrence of State debt and the pledge of taxes or excises to its
payment. At March 24, 1995, $790.1 million (excluding certain highway bonds
payable primarily from highway use charges) of this debt was outstanding. The
only such State debt then still authorized to be incurred are portions of the
highway bonds, and the following: (a) up to $100 million of obligations for
coal research and development may be outstanding at any one time ($34.7 million
outstanding); (b) $360 million of obligations authorized for local infrastruc-
ture improvements, no more than $120 million of which may be issued
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in any calendar year ($728.2 million outstanding); and (c) up to $200 million
in general obligation bonds for parks, recreation and natural resources pur-
poses which may be outstanding at any one time ($20 million outstanding, with
no more than $50 million to be issued in any one year).
Resolutions have been introduced in both houses of the General Assembly that
would submit at the November 1995 election a constitutional amendment relating
to State debt. The amendment would authorize, among other things, the issuance
of State general obligation debt for a variety of purposes and without addi-
tional vote of the people to the extent that debt service on all State general
obligation debt and GRF-supported obligations would not exceed 5% of the pre-
ceding fiscal year's GRF expenditures. It cannot be predicted whether any such
amendment will in fact be submitted, or, if submitted, whether it would be ap-
proved by the electors.
The Constitution also authorizes the issuance of State obligations for certain
purposes, the owners of which do not have the right to have excises or taxes
levied to pay debt service. Those special obligations include obligations is-
sued by the Ohio Public Facilities Commission and the Ohio Building Authority,
and certain obligations issued by the State Treasurer, over $4.5 billion of
which were outstanding at March 24, 1995.
A 1990 constitutional amendment authorizes greater State and political subdivi-
sion participation (including financing) in the provision of housing. The Gen-
eral Assembly may for that purpose authorize the issuance of State obligations
secured by a pledge of all or such portion as it authorizes of State revenues
or receipts (but not by a pledge of the State's full faith and credit).
A 1994 constitutional amendment pledges the full faith and credit and taxing
power of the State to meeting certain guarantees under the State's tuition
credit program which provides for purchase of tuition credits, for the benefit
of State residents, guaranteed to cover a specified amount when applied to the
cost of higher education tuition. (A 1965 constitutional provision that autho-
rized student loan guarantees payable from available State moneys has never
been implemented, apart from a "guarantee fund" approach funded essentially
from program revenues.)
State and local agencies issue obligations that are payable from revenues from
or relating to certain facilities (but not from taxes). By judicial interpreta-
tion, these obligations are not "debt" within constitutional provisions. In
general, payment obligations under lease-purchase agreements of Ohio public
agencies (in which certificates of participation may be issued) are limited in
duration to the agency's fiscal period, and are renewable only upon appropria-
tions being made available for the subsequent fiscal period.
Debt Rating. The outstanding State tax supported bonds are currently rated "Aa"
by Moody's and "AAA" (highway obligations) and "AA" by S&P, and the outstanding
State bonds issued by the Ohio Public Facilities Commission and Ohio Building
Authority are rated "A1" by Moody's and "A+" by S&P.
Schools and Municipalities. Local school districts in Ohio receive a major por-
tion (state-wide aggregate in the range of 46% in recent years) of their oper-
ating moneys from State subsidies, but are dependent
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on local property taxes, and in 109 districts from voter-authorized income tax-
es, for significant portions of their budgets. Litigation, similar to that in
other states, is pending questioning the constitutionality of Ohio's system of
school funding. The trial court recently concluded that aspects of the system
(including basic operating assistance) are unconstitutional, and ordered the
State to provide for and fund a system complying with the Ohio Constitution.
The State has appealed. A small number of the State's 612 local school dis-
tricts have in any year required special assistance to avoid year-end deficits.
A current program provides for school district cash need borrowing directly
from commercial lenders, with diversion of State subsidy distributions to re-
payment if needed. Borrowings under this program totalled $68.6 million for 44
districts (including $46.6 million for one district) in FY 1992, $94.5 million
for 27 districts (including $75 million for one) in FY 1993, and $15.6 million
for 28 districts in FY 1994.
Ohio's 943 incorporated cities and villages rely primarily on property and mu-
nicipal income taxes for their operations. With other subdivisions, they also
receive local government support and property tax relief moneys distributed by
the State. For those few municipalities that on occasion have faced significant
financial problems, there are statutory procedures for a joint State/local com-
mission to monitor the municipality's fiscal affairs and for development of a
financial plan to eliminate deficits and cure any defaults. Since inception in
1979, these procedures have been applied to 23 cities and villages; for 18 of
them the fiscal situation was resolved and the procedures terminated.
Property Taxes. At present the State itself does not levy ad valorem taxes on
real or tangible personal property. Those taxes are levied by political subdi-
visions and other local taxing districts. The Constitution has since 1934 lim-
ited to 1% of true value in money the amount of the aggregate levy (including a
levy for unvoted general obligations) of property taxes by all overlapping sub-
divisions, without a vote of the electors or a municipal charter provision, and
statutes limit the amount of that aggregate levy to 10 mills per $1 of assessed
valuation (commonly referred to as the "ten-mill limitation"). Voted general
obligations of subdivisions are payable from property taxes that are unlimited
as to amount or rate.
Litigation. According to recent State official statements, the State is a party
to various legal proceedings seeking damages or injunctive or other relief and
generally incidental to its operations. The ultimate disposition of those pro-
ceedings is not determinable.
CONSIDERATIONS RELATING TO FINANCIAL FUTURES AND OPTION CONTRACTS
As described in the Prospectus, each of the Funds may purchase and sell finan-
cial futures contracts, options on financial futures or related options for the
purpose of hedging its portfolio securities against declines in the value of
such securities, and to hedge against increases in the cost of securities the
Fund intends to purchase. To accomplish such hedging, a Fund may take an 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
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value of securities owned by a Fund may decline on account of an increase in
interest rates, and the purchase of financial futures or of call options on fi-
nancial futures or on debt securities or indexes is a means of hedging 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 Obligations 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 Commod-
ity 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 un-
less 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 underlying 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 instru-
ments or index underlying the futures. In addition, each Fund is subject to the
tax requirement that less than 30% of its gross income may be derived 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 op-
tions if more than 5% of its assets would be invested in the premiums for such
options, and it will only write "covered" or "secured" options, wherein the se-
curities 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.
Description of Financial Futures and Options. A futures contract is a contract
between a seller and a buyer for the sale and purchase of specified property at
a specified future date for a specified price. An option is a contract that
gives the holder of the option the right, but not the obligation, to buy (in
the case of a call option) specified property from, or to sell (in the case of
a put option) specified property to, the writer of the option for a specified
price during a specified period prior to the option's expiration. Financial
futures contracts and options cover specified debt securities (such as U.S.
Treasury securities) or indexes designed to correlate with price movements in
certain categories of debt securities. At least one exchange trades futures
contracts on an index designed to correlate with the long-term municipal bond
market. Financial futures contracts and options on financial futures contracts
are traded on exchanges regulated by the CFTC. Options on certain financial in-
struments and financial indexes are traded in securities markets regulated by
the Securities and Exchange Commission. Although futures contracts and options
on specified financial instruments call for settlement by delivery of the fi-
nancial instruments covered by the contracts, in most cases positions in these
contracts are closed out in cash by entering into offsetting, liquidating or
closing transactions. Index futures and options are designed for cash settle-
ment only.
Risks of Futures and Options Transactions. There are risks associated with the
use of futures contracts and options for hedging purposes. Investment in
futures contracts and options involves the risk of
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imperfect correlation between 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 instruments. For example, if the price of the futures con-
tract 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 move-
ments in the price of the hedged securities. Further, even where perfect cor-
relation between the price movements does occur, a Fund will sustain a loss at
least equal to the commissions on the financial futures transaction. To com-
pensate for imperfect corrections, the Funds may purchase or sell futures con-
tracts 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 histori-
cally less than that of the futures contracts.
Because of low initial margin deposits made upon the opening of a futures po-
sition, 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,
however, any losses incurred in connection therewith should, if the hedging
strategy 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
market. 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 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 move-
ments within a given time frame. To the extent these prices remain stable dur-
ing the period in which a futures contract is held by a Fund or moves in a di-
rection opposite to that anticipated, the Fund may realize a loss on the hedg-
ing transaction which is not fully or partially offset by an increase in the
value of portfolio securities. As a result, the Fund's total return for such
period may be less than if it had not engaged in the hedging transaction.
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<PAGE>
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 a Fund's shareholders partially as short-term and partially as long-
term capital gain.
TEMPORARY INVESTMENTS
The Prospectus discusses 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 Funds will invest only in taxable temporary invest-
ments that are either U.S. Government securities or are rated within the high-
est grade by Moody's or S&P, and mature within one year from the date of pur-
chase or carry a variable or floating rate of interest.
The Funds may invest in the following federally tax-exempt temporary invest-
ments:
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. Tax anticipation notes are usually
general obligations of the issuer. A weakness in an issuer's capacity to raise
taxes due to, among other things, a decline in its tax base or a rise in delin-
quencies, could adversely affect the issuer's ability to meet its obligations
on outstanding TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general obliga-
tions of the issuer. A decline in the receipt of projected revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal and in-
terest on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local government bodies and agencies as those
described above to commercial banks as evidence of borrowings. The purposes for
which the notes are issued are varied but they are frequently issued to meet
short-term working capital or capital-project needs. These notes may have risks
similar to the risks associated with TANs and RANs.
31
<PAGE>
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.
- -- Treasury bonds are longer-term interest-bearing obligations with original
maturities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States Government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to, the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States, and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States Government, are either backed by the full
faith and credit of the United States or are guaranteed by the Treasury or sup-
ported by the issuing agencies' right to borrow from the Treasury. There can be
no assurance that the United States Government itself will pay interest and
principal on securities as to which it is not legally so obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable inter-
est bearing instrument with a specific maturity. CDs are issued by banks in ex-
change for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Funds will only invest in U.S. dollar denomi-
nated CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few days to nine months. Commercial paper may be purchased from
U.S. corporations.
32
<PAGE>
Other Corporate Obligations--The Funds may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than one year
remaining until maturity or if they carry a variable or floating rate of inter-
est.
Repurchase Agreements--A repurchase agreement is a contractual agreement
whereby the seller of securities (U.S. Government or Municipal Obligations)
agrees to repurchase the same security at a specified price on a future date
agreed upon by the parties. The agreed upon repurchase price determines the
yield during 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
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.
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 of 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.
33
<PAGE>
The four highest ratings of S&P for Municipal Obligations are AAA, AA, A and
BBB. Municipal Obligations rated AAA have a strong capacity to pay principal
and interest. The rating of AA indicates that capacity to pay principal and in-
terest is very strong and such bonds differ from AAA issues only in small de-
gree. The category of "A" describes bonds which have a strong capacity to pay
principal and interest, although such bonds are somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions. The
BBB rating is the lowest "investment grade" security rating by S&P. Municipal
Obligations rated BBB are regarded as having an adequate capacity to pay prin-
cipal and interest. Whereas such bonds normally exhibit adequate protection pa-
rameters, adverse economic conditions are more likely to lead to a weakened ca-
pacity to pay principal and interest for bonds in this category than for bonds
in the A category.
The "Other Corporate Obligations" category of temporary investments are corpo-
rate (as opposed to municipal) debt obligations rated AAA by S&P or Aaa by
Moody's. Corporate debt obligations rated AAA by S&P have an extremely strong
capacity to pay principal and interest. The Moody's corporate debt rating of
Aaa is comparable to that set forth above for Municipal Obligations.
Subsequent to its purchase by a Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by such Fund.
Neither event requires the elimination of such obligation from the Fund's port-
folio, but Nuveen Advisory will consider such an event in its determination of
whether the Fund should continue to hold such obligation.
MANAGEMENT
The management of Nuveen Tax-Free Bond Fund, Inc., including general supervi-
sion of the duties performed for the Funds under the Investment Management
Agreement, is the responsibility of its Board of Directors. There are seven di-
rectors, two of whom are "interested persons" (as the term "interested persons"
is defined in the Investment Company Act of 1940) and five of whom are "disin-
terested persons." The names and business addresses of the directors and offi-
cers of Nuveen Tax-Free Bond 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
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard J. Franke* 63 Chairman of the Chairman of the Board, Director and
333 West Wacker Board and Di- formerly President of John Nuveen & Co.
Drive rector Incorporated; Chairman of the Board and
Chicago, IL 60606 Director, formerly President, of Nuveen
Advisory Corp.; Chairman of the Board
and Director of Nuveen Institutional
Advisory Corp. (since April 1990); Cer-
tified Financial Planner.
</TABLE>
- --------------------------------------------------------------------------------
34
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Timothy R. 46 President and Executive Vice President and Director
Schwertfeger* Director of The John Nuveen Company (since March
333 West Wacker 1992) and John Nuveen & Co. Incorporat-
Drive ed; Director of Nuveen Advisory Corp.
Chicago, IL 60606 (since 1992) and Nuveen Institutional
Advisory Corp. (since 1992).
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence H. Brown 60 Director Retired (August 1989) as Senior Vice
201 Michigan Avenue President of The Northern Trust Compa-
Highwood, IL 60040 ny.
- ------------------------------------------------------------------------------------------------------------------------------------
Anne E. Impellizzeri 62 Director President and Chief Executive Officer
3 West 29th Street of Blanton-Peale, Institutes of Reli-
New York, NY 10001 gion and Health (since December 1990);
prior thereto, Vice President of New
York City Partnership (from 1987 to
1990).
- ------------------------------------------------------------------------------------------------------------------------------------
John E. O'Toole 66 Director Retired (January 1994) as President of
666 Third Avenue the American Association of Advertising
New York, NY 10017 Agencies, Inc.; retired (December 1985)
as Chairman of the Board of Foote, Cone
& Belding Communications, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Margaret K. Rosen- 68 Director Helen Ross Professor of Social Welfare
heim Policy, School of Social Service Admin-
969 East 60th Street istration, University of Chicago.
Chicago, IL 60637
- ------------------------------------------------------------------------------------------------------------------------------------
Peter R. Sawers 62 Director Adjunct Professor of Business and Eco-
22 The Landmark nomics, University of Dubuque, Iowa
Northfield, IL 60093 (since January 1991); Adjunct Profes-
sor, Lake Forest Graduate School of
Management, Lake Forest, Illinois
(since January 1992); prior thereto,
Executive Director, Towers Perrin Aus-
tralia (management consultant); Chart-
ered Financial Analyst; Certified Man-
agement Consultant.
- ------------------------------------------------------------------------------------------------------------------------------------
Kathleen M. Flanagan 48 Vice President Vice President of John Nuveen & Co. In-
333 West Wacker corporated.
Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
J. Thomas Futrell 39 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker (since February 1991); prior thereto,
Drive Assistant Vice President of Nuveen
Chicago, IL 60606 Advisory Corp. (from August 1988 to
February 1991); Chartered Financial
Analyst.
- ------------------------------------------------------------------------------------------------------------------------------------
Steven J. Krupa 37 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker (since October 1990); prior thereto,
Drive Vice President of John Nuveen & Co. In-
Chicago, IL 60606 corporated (from January 1989 to Octo-
ber 1990).
</TABLE>
- --------------------------------------------------------------------------------
35
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Anna R. Kucinskis 49 Vice President Vice President of John Nuveen & Co. In-
333 West Wacker corporated.
Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
Larry W. Martin 43 Vice President Vice President (since September 1992),
333 West Wacker and Assistant Assistant Secretary and Assistant Gen-
Drive Secretary eral Counsel of John Nuveen & Co. In-
Chicago, IL 60606 corporated; Vice President (since May
1993) and Assistant Secretary of Nuveen
Advisory Corp; Vice President (since
May 1993) and Assistant Secretary
(since January 1992) of Nuveen Institu-
tional Advisory Corp.; Assistant Secre-
tary of The John Nuveen Company (since
February 1993).
- ------------------------------------------------------------------------------------------------------------------------------------
O. Walter Renfftlen 55 Vice President Vice President and Controller of The
333 West Wacker and Controller John Nuveen Company (since March 1992),
Drive John Nuveen & Co. Incorporated, Nuveen
Chicago, IL 60606 Advisory Corp. and Nuveen Institutional
Advisory Corp. (since April 1990).
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas C. Spalding, 43 Vice President Vice President of Nuveen Advisory Corp.
Jr. and Nuveen Institutional Advisory Corp.
333 West Wacker (since April 1990); Chartered Financial
Drive Analyst.
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
H. William Stabenow 60 Vice President Vice President and Treasurer of The
333 West Wacker and Treasurer John Nuveen Company (since March 1992),
Drive John Nuveen & Co. Incorporated, Nuveen
Chicago, IL 60606 Advisory Corp. and Nuveen Institutional
Advisory Corp. (since January 1992).
- ------------------------------------------------------------------------------------------------------------------------------------
George P. Thermos 63 Vice President Vice President of John Nuveen & Co. In-
333 West Wacker corporated.
Drive
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------------------------------
James J. Wesolowski 44 Vice President Vice President, General Counsel and
333 West Wacker and Secretary Secretary of The John Nuveen Company
Drive (since March 1992), John Nuveen & Co.
Chicago, IL 60606 Incorporated, Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.
(since April 1990).
- ------------------------------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman 38 Vice President Vice President (since September 1992),
333 West Wacker and Assistant Assistant Secretary and Assistant Gen-
Drive Secretary eral Counsel of John Nuveen & Co. In-
Chicago, IL 60606 corporated; Vice President (since May
1993) and Assistant Secretary of Nuveen
Advisory Corp.; Vice President (since
May 1993) and Assistant Secretary
(since January 1992) of Nuveen Institu-
tional Advisory Corp.
</TABLE>
- --------------------------------------------------------------------------------
36
<PAGE>
Richard J. Franke, Timothy R. Schwertfeger and Margaret K. Rosenheim serve as
members of the Executive Committee of the Board of Directors. The Executive
Committee, which meets between regular meetings of the Board of Directors, is
authorized to exercise all of the powers of the Board of Directors.
The directors of Nuveen Tax-Free Bond Fund, Inc. are also directors or trust-
ees, as the case may be, of 18 other Nuveen open-end fund portfolios and 55
Nuveen closed-end funds.
The following table sets forth compensation paid by Nuveen Tax-Free Bond Fund,
Inc. during the fiscal year ended February 28, 1995 to each of the directors.
The Nuveen Tax-Free Bond Fund, Inc. has no retirement or pension plans. The of-
ficers and directors affiliated with Nuveen serve without any compensation from
the Nuveen Tax-Free Bond Fund, Inc.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM THE FUND
AGGREGATE AND FUND COMPLEX
COMPENSATION PAID TO
NAME OF DIRECTOR FROM THE FUND DIRECTORS(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke.............................. $ -- $ --
Timothy R. Schwertfeger........................ -- --
Lawrence H. Brown.............................. 1,149 56,500
Anne E. Impellizzeri........................... 884 48,750
John O'Toole................................... 1,149 56,000
Margaret K. Rosenheim.......................... 1,619(2) 64,404(3)
Peter R. Sawers................................ 1,149 56,000
</TABLE>
- --------
(1) The directors of the Nuveen Tax-Free Bond Fund, Inc. are directors or
trustees, as the case may be, of 21 Nuveen open-end funds and 55 Nuveen
closed-end funds.
(2) Includes $270 in interest earned on deferred compensation from prior years.
(3) Includes $1,404 in interest earned on deferred compensation from prior
years.
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
retainer, fees and expenses are allocated among the funds for which Nuveen Ad-
visory serves as investment adviser on the basis of relative net asset sizes.
The Funds require no employees other than its officers, all of whom are compen-
sated by Nuveen.
37
<PAGE>
On April 17, 1995, the officers and directors of Nuveen Tax-Free Bond 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
April 17, 1995, owned of record or was known by Nuveen Tax-Free Bond 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>
Massachusetts Fund
Class A Shares................... Prudential Securities FBO 6.54%
Edith Ferrera
138 Harbor View Rd
Milton, MA 02186-5256
Alfred Campanelli 6.41%
P.O. Box 850985
Braintree, MA 02185-0985
Massachusetts Fund
Class C Shares................... Emily Pelczarski Cust 19.00%
FBO Brian Pelczarski
UNIF TRANS MIN ACT MA
8 Coram St
Taunton, MA 02780-2512
Emily Pelczarski Cust 18.81%
FBO Laurie Pelczarski
UNIF TRANS MIN ACT MA
8 Coram St
Taunton, MA 02780-2512
Pauline H. Bates 7.87%
68 Brattle St
Worcester, MA 01606-2548
Pamela R. McKay 7.59%
174 Providence Rd., Apt. 604
Grafton, MA 01519-1542
Swatika Sengupta 5.51%
23 Loumar Dr., #2
Pittsfield, MA 01201-5932
Charles G. Allen, Jr. TR 5.28%
UA MAR 05 54
UW Flora A. Generess
FBO Charles G. Allen, Jr. et al
221 James St., #65
Barre, MA 01005-8805
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- --------------------------------------------------------------------------------
<S> <C> <C>
New York Fund
Class A Shares................... BHC Securities, Inc. 9.19%
ATTN: Mutual Funds
One Commerce Square
2005 Market St., Ste. 1200
Philadelphia, PA 19103-7042
New York Fund
Class C Shares................... Katherine C. Hinton & 20.80%
Lorin W. Lyle
JT TEN WROS NOT TC
100 LaSalle St., Apt. 11F
New York, NY 10027-4738
NFSC FEBO #OMY-319236 20.40%
Karen Takoushian
Special M & D Account
245 North Cottage Street
Valley Stream, NY 11580
NFSC FEBO #OMY-320641 20.40%
Steven Takoushian
41 Thompson Street
Valley Stream, NY 11580
Mary J. Pelosi 9.97%
1708 Hone Ave
Bronx, NY 10461-1403
Apolonia Rehill & 8.68%
Donald Rehill
JT TEN WROS NOT TC
43-60 Douglaston Pky., Apt. 511
Douglaston, NY 11363-1877
New York Fund
Class R Shares................... BHC Securities, Inc. 10.18%
ATTN: Mutual Funds
One Commerce Square
2005 Market St., Ste. 1200
Philadelphia, PA 19103-7042
Ohio Fund
Class A Shares................... Ann Zlatoper 12.70%
100 Windrush Dr
Chagrin Falls, OH 44022-6843
Ohio Fund
Class C Shares................... Tomothy L. Horn 21.22%
2109 Fishinger Rd
Columbus, OH 43221-1246
Jack C. Amato 11.07%
16687 Saint Clair Ave
East Liverpool, OH 43920-9401
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
NAME
OF
FUND
AND PERCENTAGE OF
CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- -----------------------------------------------
<S> <C> <C>
John T. Given & 8.53%
Deborah Given
JT TEN WROS NOT TC
5130 Parkhaven Ave., N.E.
Canton, OH 44705-3142
NFSC FEBO # A7D-559865 6.42%
ADCO Distributors, Inc.
ATTN: Barry Adelman
221 Cherry, N.E.
Canton, OH 44702
Amedeo Chiovitti & 5.48%
Pierina Chiovitti
JT TEN WROS NOT TC
1470 Tamarisk Trl
Youngstown, OH 44514-3630
ADCO Distributors, Inc. 5.40%
ATTN: Barry Adelman
221 Cherry Ave., N.E.
Canton, OH 44702-1138
Sandra J. Stefanko 5.19%
6020 S. Wheelock Rd
West Milton, OH 45383-9718
</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 Tax-Free Bond 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 compen-
sation as directors or officers if elected to such positions. See "Management
of the Funds" in the Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and
Nuveen Tax-Free Bond Fund, Inc., each Fund has agreed to pay an annual manage-
ment fee at the rates set forth below:
<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>
40
<PAGE>
In order to prevent total operating expenses (including Nuveen Advisory's fee,
but excluding interest, taxes, fees incurred in acquiring and disposing of
portfolio securities, any asset-based distribution or service fees and, to the
extent permitted, extraordinary expenses) from exceeding .75 of 1% of the av-
erage daily net asset value of any class of shares of each Fund for any fiscal
year, 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 vol-
untarily agree to reimburse additional expenses from time to time, which vol-
untary reimbursements may be terminated at any time in its discretion. For the
last three fiscal years, the Funds paid net management fees to Nuveen Advisory
as follows:
<TABLE>
<CAPTION>
NET MANAGEMENT FEES FEE WAIVERS AND
PAID TO NUVEEN ADVISORY FOR EXPENSE REIMBURSEMENTS FOR
THE YEAR ENDED FEBRUARY 28 THE YEAR ENDED FEBRUARY 28,
-------------------------------- ---------------------------
1993 1994 1995 1993 1994 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Massachusetts Fund...... $ 181,971 $ 320,135 $ 370,394 $ 55,314 $ 37,413 $ 17,319
New York Fund........... 383,947 688,156 786,847 75,609 34,007 4,556
Ohio Fund............... 493,664 831,787 873,409 94,194 6,228 3,524
Total For All Funds..... 1,059,582 1,840,078 2,030,650 225,117 77,648 25,399
</TABLE>
As discussed in the Prospectus, in addition to the management fees of Nuveen
Advisory, each Fund pays all other costs and expenses of its operations and a
portion of Nuveen Tax-Free Bond Fund Inc.'s general administrative expenses
allocated in proportion to the net assets of each Fund.
Nuveen Advisory is a wholly owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Funds' principal underwriter. Founded in 1898, Nuveen is the
oldest and largest investment banking firm specializing in the underwriting
and distribution of tax-exempt securities and maintains the largest research
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 issued more than $34 billion in
tax-exempt unit trusts, including over $12 billion in tax-exempt insured unit
trusts. In addition, Nuveen open-end and closed-end funds held approximately
$30 billion in tax-exempt securities under management as of the date of this
Statement. Over 1,000,000 individuals have invested to date in Nuveen's tax-
exempt funds and trusts. Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 75% owned by The St. Paul Companies, Inc.
("St. Paul"). St. Paul is located in St. Paul, Minnesota, and is principally
engaged in providing property-liability insurance through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department, the largest in the investment banking industry devoted ex-
clusively to tax-exempt securities. Nuveen's Research Department was selected
in 1994 by Research & Ratings Review, a municipal industry publication, as one
of the top four research teams in the municipal industry, based on an exten-
sive industry-wide poll of more than 1,000 portfolio managers, department
heads and bond buyers. The Nuveen Research Department reviews more than $100
billion in tax-exempt bonds every year.
The Funds, the other Nuveen funds, Nuveen Advisory, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund man-
agement personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or at
41
<PAGE>
tempt to take advantage of, a Fund's anticipated or actual portfolio transac-
tions, and is designed to assure that the interest of Fund shareholders are
placed before the interest of Nuveen personnel in connection with personal in-
vestment 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 obtained
elsewhere. Portfolio securities will not be purchased from Nuveen or its affil-
iates 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 securi-
ties available to a Fund from time to time, it is the opinion of the Board of
Directors that the benefits available from Nuveen Advisory's organization will
outweigh any disadvantage that may arise from exposure to simultaneous transac-
tions.
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Under the Investment Company Act of 1940, the Funds may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of an issue of Munici-
pal Obligations purchased by a Fund, the amount of Municipal Obligations which
may be purchased in any one issue and the assets of a Fund which may be in-
vested in a particular issue. In addition, purchases of securities made pursu-
ant to the terms of the Rule must be approved at least quarterly by the Board
of Directors, including a majority of the directors who are not interested per-
sons of the Funds.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of each Fund
will be determined separately for each class of a Fund's shares by United
States Trust Company of New York, the Funds' custodian, as of 4:00 p.m. eastern
time on each day on which the New York Stock Exchange (the "Exchange") is nor-
mally open for trading. The Exchange is not open for trading on New Year's Day,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The net asset value per share of a class of
shares 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. The annual distribution fee to
which Class C shares are subject is accrued each day as a liability of the Fund
with respect to the Class C shares, and accordingly reduces the net asset value
of those shares.
In determining net asset value for each of the Funds, the Funds' custodian
utilizes the valuations of portfolio securities furnished by a pricing service
approved by the directors. The pricing service values portfolio securities at
the mean between the quoted bid and asked price or the yield equivalent when
quotations are readily available. Securities for which quotations are not read-
ily 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 mu-
nicipal bonds of comparable quality, type of issue, coupon, maturity and rat-
ing; indications as to value from dealers; and general market conditions. The
pricing service may employ electronic data processing techniques and/or a ma-
trix system to determine valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of the Funds under the general su-
pervision of the Board of Directors.
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<PAGE>
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Fried, Frank, Harris, Shriver and 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 than three months: (i) stock or securities and (ii)
certain options, futures, or forward contracts (the "short-short test"). Third,
a Fund must diversify its holdings so that, at the close of each quarter of its
taxable year, (i) at least 50% of the value of its total assets is comprised of
cash, cash items, United States Government securities, securities of other reg-
ulated investment companies and other securities limited in respect of any one
issuer to an amount not greater in value than 5% of the value of a Fund's total
assets and to not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of the total assets is invested
in the securities of any one issuer (other than United States Government secu-
rities and securities of other regulated investment companies) or two or more
issuers controlled by a Fund and engaged in the same, similar or related trades
or businesses.
As a regulated investment company, a fund will not be subject to U.S. federal
income tax in any taxable year for which it distributes at least 90% of its
"investment company taxable income" (which includes dividends, taxable inter-
est, taxable original issue discount and market discount income, income from
securities lending, net short-term capital gain in excess of long-term capital
loss, and any other taxable income other than "net capital gain" (as defined
below) and is reduced by deductible expenses) and at least 90% of the excess of
its gross tax-exempt interest income over certain disallowed deductions ("net
tax-exempt interest"). A Fund may retain for investment its net capital gain
(which consists of the excess of its net long-term capital gain over its short-
term capital loss). However, if a Fund retains any net capital gain or any in-
vestment 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 amount as undistributed capital gains in a notice to its
shareholders who, if subject to U.S. federal income tax purposes on long-term
capital gains, (i) will be required to include in income for federal income tax
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 U.S. federal income tax liabilities if any, and to
claim refunds to the extent the credit exceeds such liabilities. For U.S. fed-
eral income tax purposes, the tax basis of shares owned by a shareholder of the
fund will be increased by an amount equal under current law to 65% of the
amount
44
<PAGE>
of undistributed capital gains included 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-exempt interest and any investment company
taxable income and net capital gain.
Treasury regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain, i.e., the excess of
net long-term capital gain over net short-term capital loss for any taxable
year, to elect (unless it has made a taxable year election for excise tax pur-
poses 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 Oc-
tober 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 investment
in Municipal Obligations, which is exempt from federal income tax when re-
ceived by such Fund, as exempt-interest dividends. Shareholders receiving ex-
empt-interest dividends will not be subject to federal income tax on the
amount of such dividends. Insurance proceeds received by a Fund under any in-
surance policies in respect of scheduled interest payments on defaulted Munic-
ipal Obligations will be excludable from federal gross income under Section
103(a) of the Code. In the case of non-appropriation by a political subdivi-
sion, however, there can be no assurance that payments made by the insurer
representing interest on "non-appropriation" lease obligations will be exclud-
able from gross income for federal income tax purposes. See "Fundamental Poli-
cies and Investment Portfolio--Portfolio Securities."
Distributions by each Fund of net interest received from certain taxable tem-
porary investments (such as certificates of deposit, commercial paper and ob-
ligations of the United States Government, its agencies and instrumentalities)
and net short-term capital gains realized by a Fund, if any, will be taxable
to shareholders as ordinary income whether received in cash or additional
shares./1/ If a Fund purchases a Municipal Obligation at a market discount,
any gain realized by the Fund upon sale or redemption of the Municipal Obliga-
tion will be treated as taxable interest income to the extent such gain does
not exceed the market discount, and any gain realized in excess of the market
discount will be treated as capital gains. Any net long-term capital gains re-
alized by a Fund and distributed to shareholders, in cash or in additional
shares will be taxable to shareholders as long-term capital gains regardless
of the length of time investors have owned shares of a Fund. Distributions by
a Fund that do not constitute ordinary income dividends, exempt-interest divi-
dends, or capital gain dividends will be treated as a return of capital to the
extent of (and in reduction of) the shareholder's tax basis in his or her
shares. Any excess will be treated as gain from the sale of his or her shares,
as discussed below.
- --------
/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 applied
uniformly to all distributions made during the Fund's taxable year. The per-
centage of income designated as tax-exempt for any particular distribution may
be substantially different from the percentage of the Fund's income that was
tax-exempt during the period covered by the distribution.
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<PAGE>
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. This may in-
crease the amount of short-term capital gains realized by that Fund.
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 deduction for corporations. Prior to purchasing shares in one of
the Funds, the impact of dividends or distributions which are expected to be or
have been declared, but not paid, should be carefully considered. Any dividend
or distribution declared shortly after a purchase of such shares prior to the
record date will have the effect of reducing the per share net asset value by
the per share amount of the dividend or distribution.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months
and paid during the following January, will be treated as having been distrib-
uted by each Fund (and received by the shareholders) on December 31.
The redemption or exchange of the shares of a Fund normally will result in cap-
ital gain or loss to the shareholders. Generally, a shareholder's gain or loss
will be long-term gain or loss if the shares have been held for more than one
year. Present law taxes both long- and short-term capital gains of corporations
at the rates applicable to ordinary income. For non-corporate taxpayers, howev-
er, net capital gains (i.e., the excess of net long-term capital gain over net
short-term capital loss) will be taxed at a maximum marginal rate of 28%, while
short-term capital gains and other ordinary income will be taxed at a maximum
marginal rate of 39.6%. Because of the limitations on itemized deductions and
the deduction for personal exemptions applicable to higher income taxpayers,
the effective rate of tax may be higher in certain circumstances. All or a por-
tion of a sales load paid in purchasing shares of a Fund cannot be taken into
account for purposes of determining gain or loss on the redemption or exchange
of such shares within 90 days after their purchase to the extent shares of a
Fund or another fund are subsequently acquired without payment of a sales load
pursuant to the reinvestment or exchange privilege. Any disregarded portion of
such load will result in an increase in the shareholder's tax basis in the
shares subsequently acquired. Moreover, losses recognized by a shareholder on
the 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 dividends re-
ceived 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 capital 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 distribu-
tions 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 af-
ter such redemption or exchange. If disallowed, the loss will be reflected in
an adjustment to the basis of the shares acquired.
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<PAGE>
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 than 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 prior year that was not distributed during such
year and on which such Fund paid no federal income tax. For purposes of the ex-
cise tax, a regulated investment company may (i) reduce its capital gain net
income (but not below its net capital gain) by the amount of any net ordinary
loss for the calendar year in determining the amount of ordinary taxable income
for the current calendar year (and, instead, include such gains and losses in
determining ordinary taxable income for the succeeding calendar year). The
Funds intend to make timely distributions in compliance with these requirements
and consequently it is anticipated that they generally will not be required to
pay the excise tax.
If in any year a Fund should fail to qualify under Subchapter M for tax treat-
ment as a regulated investment company, the Fund would incur a regular corpo-
rate federal income tax upon its income for that year (other than interest in-
come from Municipal Obligations), and distributions to its shareholders would
be taxable to shareholders as ordinary dividend income for federal income tax
purposes 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
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
47
<PAGE>
determined under the alternative minimum tax regime. The Funds will annually
supply shareholders with a report indicating the percentage of Fund income at-
tributable 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.
STATE TAX MATTERS
The following state tax information applicable to each Fund or its shareholders
is based upon the advice of each Fund's special state tax counsel, and repre-
sents a summary of certain provisions of each state's tax laws presently in ef-
fect. 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 the amounts so designated by each Fund to its sharehold-
ers qualify as "exempt-interest dividends" under Section 852(b)(5) of the Code.
These provisions are subject to change by legislative or administrative action,
which may be applied retroactively to Fund transactions. You should consult
your own tax adviser for more detailed information concerning state taxes to
which you may be subject.
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<PAGE>
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
Individual shareholders of the Massachusetts Fund who are subject to Massachu-
setts income taxation will not be required to include that portion of their
federally tax-exempt dividends in Massachusetts gross income which the Massa-
chusetts Fund clearly identifies as directly attributable to interest earned on
Municipal Obligations issued by governmental authorities in Massachusetts and
which are specifically exempted from income taxation in Massachusetts; provided
that such portion is identified in a written notice mailed to the shareholders
of the Massachusetts Fund not later than sixty days after the close of the Mas-
sachusetts Fund's tax year. Also, the individual shareholders of the Massachu-
setts Fund will not be required to include in gross income interest earned on
obligations of United States possessions and territories to the extent interest
earned on such obligations is exempt from taxation by the states pursuant to
federal law.
Similarly, such shareholders will not be required to include in Massachusetts
gross income capital gain dividends designated by the Massachusetts Fund to the
extent such dividends are attributable to gains derived from Municipal Obliga-
tions issued by Massachusetts governmental authorities and are specifically ex-
empted from income taxation in Massachusetts, provided that such dividends are
identified in a written notice mailed to the shareholders of the Massachusetts
Fund not later than sixty days after the close of the Massachusetts Fund's tax
year. Lastly, any dividends of the Massachusetts Fund attributable to interest
on U.S. obligations exempt from state taxation and included in Federal gross
income will not be included in Massachusetts gross income if identified by the
Massachusetts Fund in a written notice mailed to shareholders within sixty days
after the close of the Massachusetts Fund's tax year. Massachusetts sharehold-
ers will be required to include all remaining dividends in their Massachusetts
income.
To the extent not otherwise exempted from Massachusetts income taxation as pro-
vided above, the Massachusetts Fund's long-term capital gains for federal in-
come tax purposes will be taxed as long-term capital gains to the individual
shareholders of the Massachusetts Fund for purposes of Massachusetts income
taxation. Massachusetts shareholders will be required to recognize any taxable
gain or loss that is recognized for federal income tax purposes upon an ex-
change or redemption of their shares.
If a shareholder of the Massachusetts Fund is a Massachusetts business corpora-
tion or any foreign business corporation which exercises its charter, qualifies
to do business, actually does business or owns or uses any part of its capital,
plant or other property in Massachusetts, then it will be subject to Massachu-
setts excise taxation either as a tangible property corporation or as an intan-
gible property corporation. If the corporate shareholder is a tangible property
corporation, it will be taxed upon its net income allocated to Massachusetts
and the value of certain tangible property. If it is an intangible property
corporation, it will be taxed upon its net income and net worth allocated to
Massachusetts. Net income is gross income less allowable deductions for federal
income tax purposes, subject to specified modifications. Dividends received
from the Massachusetts Fund are includable in gross income and generally may
not be deducted by a corporate shareholder in computing its net income. The
corporation's shares in the Massachusetts Fund are not includable in the compu-
tation of the tangible property base of a tangible property corporation, but
are includable in the computation of the net worth base of an intangible prop-
erty corporation.
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<PAGE>
Shares of the Massachusetts Fund will be includable in the Massachusetts gross
estate of a deceased individual shareholder who is a resident of Massachusetts
for purposes of the Massachusetts Estate Tax.
Shares of the Massachusetts Fund will be exempt from local property taxes in
Massachusetts.
NUVEEN NEW YORK TAX-FREE VALUE FUND
Individual shareholders of the New York Fund who are subject to New York State
(or New York City) personal income taxation will not be required to include in
their New York adjusted gross income that portion of their exempt-interest div-
idends (as determined for federal income tax purposes) which the New York Fund
clearly identifies as directly attributable to interest earned on Municipal Ob-
ligations issued by governmental authorities in New York ("New York Municipal
Obligations") and which are specifically exempted from personal income taxation
in New York State (or New York City), or interest earned on obligations of
United States possessions or territories to the extent interest earned on such
obligations is exempt from taxation by the states pursuant to federal law. Dis-
tributions to individual shareholders of dividends derived from interest that
does not qualify as an exempt-interest dividend (as determined for federal in-
come tax purposes), distributions of exempt-interest dividends (as determined
for federal income tax purposes) which are derived from interest earned on Mu-
nicipal Obligations issued by governmental authorities in states other than New
York State, and distributions derived from interest earned on federal obliga-
tions will be included in their New York adjusted gross income as ordinary in-
come.
Distributions to individual shareholders of the New York Fund of capital gain
dividends (as determined for federal income tax purposes) will be included in
their New York adjusted gross income as long-term capital gains. Distributions
to individual shareholders of the New York Fund of dividends derived from any
net income received from taxable temporary investments and any net short-term
capital gains realized by the New York Fund will be included in their New York
adjusted gross income as ordinary income. Present New York law taxes long-term
capital gains at the rates applicable to ordinary income.
Gain or loss, if any, resulting from an exchange or redemption of shares of the
New York Fund that is recognized by individual shareholders of the New York
Fund for federal income tax purposes will be recognized for purposes of New
York State (or New York City) personal income taxation.
Generally, corporate shareholders of the New York Fund which are subject to New
York State franchise taxation (or New York City general corporation taxation)
will be taxed upon their entire net income, business and investment capital, or
at a flat rate minimum tax. Entire income will include dividends received from
the New York Fund (as determined for federal income tax purposes), as well as
any gain or loss recognized from an exchange or redemption of shares of the New
York Fund that is recognized for federal income tax purposes. Investment capi-
tal will include the corporate shareholder's shares of the New York Fund. Cor-
porate shareholders of the New York Fund, which are subject to the temporary
metropolitan transportation surcharge, will be required to pay a tax surcharge
on the franchise taxes imposed by New York State.
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<PAGE>
Shareholders of the New York Fund will not be subject to New York City unincor-
porated business taxation solely by reason of their ownership of shares of the
New York Fund. If a shareholder of the New York Fund is subject to the New York
City unincorporated business tax, income and gains derived from the New York
Fund will be subject to such tax, except for exempt-interest dividends (as de-
termined for federal income tax purposes) which the New York Fund clearly iden-
tifies as directly attributable to interest earned on New York Municipal Obli-
gations.
Shares of the New York Fund will be exempt from local property taxes in New
York State and New York City, but will be includible in the New York gross es-
tate of a deceased individual shareholder who is a resident of New York for
purposes of the New York Estate Tax.
NUVEEN OHIO TAX-FREE VALUE FUND
The Ohio Fund is not subject to the Ohio personal income tax, municipal or
school district income taxes in Ohio, the Ohio corporation franchise tax, or
the Ohio dealers in intangibles tax, provided that, with respect to the Ohio
corporation franchise tax and the Ohio dealers in intangibles tax, the Ohio
Fund timely files the annual report required by Section 5733.09 of the Ohio Re-
vised Code.
Shareholders of the Ohio Fund ("Shareholders") who are otherwise subject to the
Ohio personal income tax, or municipal or school district income taxes in Ohio
will not be subject to such taxes on distributions with respect to shares of
the Ohio Fund to the extent that such distributions are properly attributable
to interest on or gain from the sale of interest-bearing obligations issued by
or on behalf of the State of Ohio, political subdivisions thereof and agencies
or instrumentalities of the State or its political subdivisions ("Ohio Obliga-
tions") provided that the Ohio Fund continues to qualify as a regulated invest-
ment company for federal income tax purposes and that at all times at least 50%
of the value of the total assets of the Ohio Fund consists of Ohio Obligations
or similar obligations of other states or their subdivisions. It is assumed for
purposes of this discussion of Ohio taxation that these requirements are satis-
fied. Gain recognized by such individual shareholders on the exchange or re-
demption of shares of the Fund will be subject to the Ohio personal income tax
and school district income taxes in Ohio; such gain may be subjected to munici-
pal income tax only by those Ohio municipalities that are authorized by State
law to tax intangible income.
Shareholders that are otherwise subject to the Ohio corporation franchise tax
computed on the net income basis will not be subject to such tax on distribu-
tions with respect to shares of the Ohio Fund to the extent that such distribu-
tions either (a) are properly attributable to interest on or gain from the sale
of Ohio Obligations, or (b) represent "exempt-interest dividends" for federal
income tax purposes. Shares of the Ohio Fund will be included in a Sharehold-
er's tax base for purposes of computing the Ohio corporation franchise tax on
the net worth basis. Corporate Shareholders that are subject to Ohio municipal
income taxes will not be subject to such taxes on distributions received from
the Ohio Fund to the extent such distributions consist of interest on or gain
from the sale of Ohio Obligations.
Distributions by the Ohio Fund that consist of interest on obligations of the
United States or the governments of Puerto Rico, the Virgin Islands or Guam or
their authorities or municipalities are exempt from Ohio personal income tax,
and municipal and school district income taxes in Ohio, and
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<PAGE>
are excluded from the net income base of the Ohio corporation franchise tax to
the same extent that such interest would be so exempt or excluded if the obli-
gations were held directly by the Shareholders.
The value of shares of the Fund is included in the value of the gross estate
of decedents domiciled in Ohio for purposes of the Ohio estate tax. The value
of shares of the Fund may be included in the value of the gross estate of de-
cedents not domiciled in Ohio for such purposes only if the shares were em-
ployed in carrying on business in Ohio.
PERFORMANCE INFORMATION
As explained in the Prospectus, the historical investment performance of the
Funds may be shown in the form of "yield," "taxable equivalent yield," "aver-
age annual total return," "cumulative total return" and "taxable equivalent
total return" figures, each of which will be calculated separately for each
class of shares.
In accordance with a standardized method prescribed by rules of the Securities
and Exchange Commission ("SEC"), yield is computed by dividing the net invest-
ment income per share earned during the specified one month or 30-day period
by the maximum offering price per share on the last day of the period, accord-
ing to the following formula:
<TABLE>
<C> <C> <C> <C> <S>
Yield = 2[(a-b+1)/6/-1]
cd
</TABLE>
In the above formula, a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursements); c = the average daily
number of shares outstanding during
the period that were entitled to receive dividends; and d = the maximum offer-
ing price per share on the last day of the period. In the case of Class A
shares, the maximum offering price includes the current maximum sales charge
of 4.50%.
In computing yield, the Funds follow certain standardized accounting practices
specified by SEC rules. These practices are not necessarily consistent with
those that the Funds use to prepare their annual and interim financial state-
ments in conformity with generally accepted accounting principles. Thus, yield
may not equal the income paid to shareholders or the income reported in the
Fund's financial statements. Yields for each class of shares of each Fund as
of February 28, 1995 are set forth below.
Taxable equivalent yield is computed by dividing that portion of the yield
which is tax-exempt by remainder of (1 minus the stated combined federal and
state income tax rate, taking into account the deductibility of state income
taxes for federal income tax purposes) and adding the result to that portion,
if any, of the yield of that is not tax exempt. The taxable equivalent yields
quoted below are
52
<PAGE>
based upon (1) the stated combined federal and state income tax rates and (2)
the yields for the 30-day period ended February 28, 1995 quoted in the left-
hand column.
<TABLE>
<CAPTION>
COMBINED
FEDERAL TAXABLE
AND STATE EQUIVALENT
AS OF FEBRUARY 28, 1995 YIELD TAX RATE* YIELD
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts Fund
Class A Shares.................................... 5.12% 42.5% 8.90%
Class C Shares.................................... 4.62% 42.5% 8.03%
Class R Shares.................................... 5.62% 42.5% 9.77%
New York Fund**
Class A Shares.................................... 5.24% 42.5% 9.11%
Class C Shares.................................... 4.74% 42.5% 8.24%
Class R Shares.................................... 5.75% 42.5% 10.00%
Ohio Fund
Class A Shares.................................... 5.13% 44.0% 9.16%
Class C Shares.................................... 4.63% 44.0% 8.27%
Class R Shares.................................... 5.63% 44.0% 10.05%
</TABLE>
- --------
*The combined tax rates used in the table represent 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.
**Reflects a combined federal, state and New York City tax rate.
For additional information concerning taxable equivalent yields, see the Tax-
able Equivalent Yield Tables in the Prospectus.
Each Fund may from time to time in its sales materials report a quotation of
the current distribution rate. The distribution rate represents a measure of
dividends distributed for a specified period. Distribution rate is computed by
dividing the most recent monthly tax-free income dividend per share, multiply-
ing it by 12 to annualize it, and dividing by the appropriate price per share
(e.g., net asset value for purchases to be made without a load such as rein-
vestments from Nuveen UITs, or the maximum public offering price). The distri-
bution rate differs from yield and total return and therefore is not intended
to be a complete measure of performance. Distribution rate may sometimes be
higher than yield because it may not include the effect of amortization of bond
premiums to the extent such premiums arise after the bonds were purchased. The
distribution rates as of February 28, 1995, based on maximum public offering
price then in effect for the Funds were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION RATES
------------------------
CLASS A* CLASS C CLASS R
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts Fund..................................... 5.21% 4.73% 5.72%
New York Fund.......................................... 5.21% 4.75% 5.73%
Ohio Fund.............................................. 5.11% 4.61% 5.60%
</TABLE>
- --------
*Assumes imposition of the maximum sales charge for Class A shares of 4.50%.
53
<PAGE>
Average annual total return quotation is computed in accordance with a stan-
dardized method prescribed by SEC rules. The average annual total return for a
specific period is found by taking a hypothetical, $1,000 investment ("initial
investment") in Fund shares on the first day of the period, reducing the amount
to reflect the maximum sales charge, and computing the "redeemable value" of
that investment at the end of the period. The redeemable value is then divided
by the initial investment, and this quotient is taken to the Nth root (N repre-
senting the number of years in the period) and 1 is subtracted from the result,
which is then expressed as a percentage. The calculation assumes that all in-
come and capital gains distributions have been reinvested in Fund shares at net
asset value on the reinvestment dates during the period. The average annual to-
tal return figures, including the effect of the current maximum sales charge
for Class A Shares, for the one-year and five-year periods ended February 28,
1995, and for the period from inception (on December 10, 1986, with respect to
the Class R Shares and on September 6, 1994 with respect to the Class A Shares
and Class C Shares) through February 28, 1995, respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
-------------------------------------------------------
ONE YEAR FIVE YEARS FROM INCEPTION
ENDED ENDED THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995 FEBRUARY 28, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts Fund
Class A Shares........ N/A N/A -1.59%*
Class C Shares........ N/A N/A 4.86%*
Class R Shares........ 1.64% 7.98% 6.44%
New York Fund
Class A Shares........ N/A N/A -2.39%*
Class C Shares........ N/A N/A 2.80%*
Class R Shares........ 0.75% 8.19% 7.48%
Ohio Fund
Class A Shares........ N/A N/A -1.03%*
Class C Shares........ N/A N/A 3.63%*
Class R Shares........ 1.99% 8.18% 7.54%
</TABLE>
- --------
*Not annualized because it relates to period of less than one year.
Calculation of cumulative total return is not subject to a prescribed formula.
Cumulative total return for a specific period is calculated by first taking a
hypothetical initial investment in Fund shares on the first day of the period,
deducting (in some cases) the maximum sales charge, and computing the "redeem-
able value" of that investment at the end of the period. The cumulative total
return percentage is then determined by subtracting the initial investment from
the redeemable value and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
and capital gains distributions by the Fund have been reinvested at net asset
value on the reinvestment dates during the period. Cumulative total return may
also be shown as the increased dollar value of the hypothetical investment over
the period. Cumulative total return calculations that do not include the effect
of the sales charge would be reduced if such charge were included.
The cumulative total return figures, including the effect of the current maxi-
mum sales charge for the Class A Shares, for the one-year and five-years peri-
ods ended February 28, 1995, and for the period from inception (on December 10,
1986 with respect to the Class R Shares and on September 6, 1994
54
<PAGE>
with respect to the Class A Shares and Class C Shares) through February 28,
1995, respectively, were as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-------------------------------------------------------
ONE YEAR FIVE YEARS FROM INCEPTION
ENDED ENDED THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995 FEBRUARY 28, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts Fund
Class A Shares........ N/A N/A -1.59%
Class C Shares........ N/A N/A 4.86%
Class R Shares........ 1.64% 46.79% 67.03%
New York Fund
Class A Shares........ N/A N/A -2.39%
Class C Shares........ N/A N/A 2.80%
Class R Shares........ 0.75% 48.20% 80.96%
Ohio Fund
Class A Shares........ N/A N/A -1.03%
Class C Shares........ N/A N/A 3.63%
Class R Shares........ 1.99% 48.16% 81.78%
</TABLE>
Calculation of taxable equivalent total return is also not subject to a pre-
scribed formula. Taxable equivalent total return for a specific period is cal-
culated by first taking a hypothetical initial investment in Fund shares on the
first day of the period, computing the total return for each calendar year in
the period in the manner described above, and increasing the total return for
each such calendar year by the amount of additional income that a taxable fund
would need to have generated to equal the income on an after-tax basis, at a
specified income tax rate (usually the highest marginal federal tax rate), cal-
culated as described above under the discussion of "taxable equivalent yield."
The resulting amount for the calendar year is then divided by the initial in-
vestment amount to arrive at a "taxable equivalent total return factor" for the
calendar year. The taxable equivalent total return factors for all the calendar
years are then multiplied together and the result is then annualized by taking
its Nth root (N representing the number of years in the period) and subtracting
1, which provides a taxable equivalent total return expressed as a percentage.
Using the 39.6% maximum marginal federal tax rate for 1995, and assuming that
no front-end sales charge is imposed, the annualized taxable equivalent total
returns for each Fund's Class R Shares for the one-year and five-year periods
ended February 28, 1994, and for all classes for the period from inception (on
December 10, 1986 with respect to the Class R Shares and on September 6, 1994
with respect to the Class A Shares and Class C Shares), through February 28,
1995, respectively, were as follows:
55
<PAGE>
<TABLE>
<CAPTION>
ONE YEAR ENDED FIVE YEARS ENDED FROM INCEPTION THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995 FEBRUARY 28, 1995
------------------- ------------------- ------------------------------ COMBINED
WITH MAXIMUM AT NET WITH MAXIMUM AT NET WITH MAXIMUM AT NET FEDERAL
4.50% SALES ASSET 4.50% SALES ASSET 4.50% SALES ASSET AND STATE
CHARGE VALUE CHARGE VALUE CHARGE VALUE TAX RATE*
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Massachusetts Fund
Class A Shares......... N/A N/A N/A N/A 0.35%+ 5.08%+ 42.5%
Class C Shares......... N/A N/A N/A N/A N/A 6.56%+ 42.5%
Class R Shares......... N/A 5.75% N/A 12.55% N/A 11.18% 42.5%
New York Fund**
Class A Shares......... N/A N/A N/A N/A -0.48%+ 4.21%+ 42.5%
Class C Shares......... N/A N/A N/A N/A N/A 4.44%+ 42.5%
Class R Shares......... N/A 4.81% N/A 12.78% N/A 12.28% 42.5%
Ohio Fund
Class A Shares......... N/A N/A N/A N/A 1.00%+ 5.76%+ 44.0%
Class C Shares......... N/A N/A N/A N/A N/A 5.37%+ 44.0%
Class R Shares......... N/A 6.33% N/A 12.99% N/A 12.60% 44.0%
</TABLE>
- --------
*The combined tax rates used 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 income levels.
**Reflects a combined federal, state and New York City tax rate.
+Not annualized because it relates to period of less than one year.
From time to time, a Fund may compare its risk-adjusted performance with other
investments that may provide different levels of risk and return. For example,
a Fund may compare its risk level, as measured by the variability of its peri-
odic returns, or its RISK-ADJUSTED TOTAL RETURN, with those of other funds or
groups of funds. Risk-adjusted total return would be calculated by adjusting
each investment's total return to account for the risk level of the investment.
A Fund may also compare its TAX-ADJUSTED TOTAL RETURN with that of other funds
or groups of funds. This measure would take into account the tax-exempt nature
of exempt-interest dividends and the payment of income taxes on a fund's dis-
tributions of net realized capital gains and ordinary income.
The risk level for a class of shares of a Fund, and any of the other invest-
ments used for comparison, would be evaluated by measuring the variability of
the investment's return, as indicated by the standard deviation of the invest-
ment's monthly returns over a specified measurement period (e.g., two years).
An investment with a higher standard deviation of monthly returns would indi-
cate that a fund had greater price variability, and therefore greater risk,
than an investment with a lower standard deviation. The standard deviation of
monthly returns for the three years ended February 28, 1995, for the Class R
Shares of the Funds, were as follows:
<TABLE>
<CAPTION>
STANDARD
DEVIATION
OF RETURN
- -----------------------------
<S> <C>
Massachusetts Fund 1.75%
New York Fund 1.80%
Ohio Fund 1.82%
</TABLE>
56
<PAGE>
THE RISK-ADJUSTED TOTAL RETURN for a class of shares of a Fund and for other
investments over a specified period would be evaluated by dividing (a) the re-
mainder of the investment's annualized two-year total return minus the
annualized total return of an investment in short-term tax-exempt securities
(essentially a risk-free return) over that period, by (b) the standard devia-
tion of the investment's monthly returns for the period. This ratio is some-
times referred to as the "Sharpe measure" of return. An investment with a
higher Sharpe measure would be regarded as producing a higher return for the
amount of risk assumed during the measurement period than an investment with a
lower Sharpe measure. The Sharpe measure, for the three year period ended Feb-
ruary 28, 1995, for the Class R Shares of each of the Funds, was as follows:
<TABLE>
<CAPTION>
SHARPE
MEASURE
- ----------------------------
<S> <C>
Massachusetts Fund 1.777
New York Value Fund 1.888
Ohio Fund 1.791
</TABLE>
Class A Shares of the Funds are sold at net asset value plus a current maximum
sales charge of 4.50% of the offering price. This current maximum sales charge
will be typically used for purposes of calculating performance figures. Yield,
returns and net asset value of each class of shares of the Funds will fluctu-
ate. Factors affecting the performance of the Funds include general market
conditions, operating expenses and investment management fees. Any additional
fees charged by a securities representative or other financial services firm
would reduce returns described in this section. Shares of the Funds are re-
deemable 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
("Wiesenberger") and CDA Investment Technologies, Inc. ("CDA") or similar in-
dependent services which monitor the performance of mutual funds, or other in-
dustry or financial publications such as Barron's, Changing Times, Forbes and
Money Magazine. Performance comparisons by these indexes, services or publica-
tions may rank mutual funds over different periods of time by means of aggre-
gate, average, year-by-year, or other types of total return and performance
figures. Any given performance quotation or performance comparison should not
be considered as representative of the performance of the Funds for any future
period.
There are differences and similarities between the investments which the Funds
may purchase and the investments measured by the indexes and reporting serv-
ices which are described herein. The Consumer Price Index is generally consid-
ered to be a measure of inflation. The CDA Mutual Fund-Municipal Bond Index is
a weighted performance average of other mutual funds with a federally tax-ex-
empt income objective. The Salomon Brothers High Grade Corporate Bond Index is
an unmanaged index that generally represents the performance of high grade
long-term taxable bonds during various market conditions. The Lehman Brothers
Municipal Bond Index is an unmanaged index that generally repre-
57
<PAGE>
sents the performance of high grade intermediate and long-term municipal bonds
during various market conditions. Lipper, Morningstar, Wiesenberger and CDA are
widely recognized mutual fund reporting services whose performance calculations
are based upon changes in net asset value with all dividends reinvested and
which do not include the effect of any sales charges. The market prices and
yields of taxable and tax-exempt bonds will fluctuate. The Funds primarily in-
vest 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.
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
As described in the Prospectus, each Fund has adopted a Flexible Sales Charge
Program which provides you with alternative ways of purchasing Fund shares
based upon your individual investment needs and preferences. You may purchase
Class A Shares at a price equal to their net asset value plus an up-front sales
charge.
For information regarding the up-front sales charge on Class A shares, see the
table under "How to Buy Fund Shares" of the Prospectus. Set forth is an example
of the method of computing the offering price of the Class A shares of each of
the Funds. The example assumes a purchase on February 28, 1995 of Class A
shares from the Massachusetts 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.
58
<PAGE>
<TABLE>
<S> <C>
Net Asset Value per share........................................ $ 9.560
Per Share Sales Charge--4.50% of public offering price (4.71% of
net asset value per share)...................................... $ 0.450
Per Share Offering Price to the Public........................... $10.010
</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 automatically convert to Class A Shares six years after pur-
chase. Both Class A Shares and Class C Shares are subject to annual service
fees, which are used to compensate Authorized Dealers for providing you with
ongoing financial advice and other services.
Under the Flexible Sales Charge Program, all Fund shares outstanding as of Sep-
tember 6, 1994, have been designated as Class R Shares. Class R Shares are
available for purchase at a price equal to their net asset value only under
certain limited circumstances, or by specified investors, as described herein.
Each class of shares of a Fund represents an interest in the same portfolio of
investments. Each class of shares is identical in all respects except that each
class bears its own class expenses, including administration and distribution
expenses, and each class has exclusive voting rights with respect to any dis-
tribution or service plan applicable to its shares. In addition, the Class C
Shares are subject to a conversion feature, as described below. As a result of
the differences in the expenses borne by each class of shares, net income per
share, dividends per share and net asset value per share will vary among a
Fund's classes of shares.
The expenses to be borne by specific classes of shares may include (i) transfer
agency fees attributable to a specific class of shares, (ii) printing and post-
age expenses related to preparing and distributing materials such as share-
holder reports, prospectuses and proxy statements to current shareholders of a
specific class of shares, (iii) Securities and Exchange Commission ("SEC") and
state securities registration fees incurred by a specific class of shares, (iv)
the expense of administrative personnel and services required to support the
shareholders of a specific class of shares, (vi) litigation or other legal ex-
penses relating to a specific class of shares, (vi) directors' fees or expenses
incurred as a result of issues relating to a specific class of shares, (vii)
accounting expenses relating to a specific class of shares and (viii) any addi-
tional incremental expenses subsequently identified and determined to be prop-
erly allocated to one or more classes of shares that shall be approved by the
SEC pursuant to an amended exemptive order.
Each Fund has special purchase programs under which certain persons may pur-
chase 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 re-
spect to which a sales charge is imposed), at the reduced sales charge applica-
ble 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 in-
vestment; (iii) has five or more participating members; (iv) has agreed to in-
clude sales literature and other materials related to the Fund in publications
and mailings to members; (v) has agreed to have its group administrator submit
a single bulk order and make payment with a single remittance for all invest-
ments in the Fund during each investment period by all
59
<PAGE>
participants who choose to invest in the Fund; and (vi) has agreed to provide
the Fund's transfer agent with appropriate backup data for each participant of
the group in a format fully compatible with the transfer agent's processing
system.
The "amount" of a share purchase by a participant in a group purchase program
for purposes of determining the applicable sales charge is (i) the aggregate
value of all shares of the Fund (and all other Nuveen Funds with respect to
which a sales charge is imposed) currently held by participants of the group,
plus (ii) the amount of shares currently being purchased.
The Funds 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.
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 Nuveen Tax-Free Bond Fund, Inc., dated January 2, 1990, and last re-
newed on July 29, 1994 ("Distribution Agreement"). Pursuant to the Distribution
Agreement, Nuveen Tax-Free Bond Fund, Inc. appointed Nuveen to be its agent for
the distribution of the Funds' shares on a continuous offering basis. Nuveen
sells shares to or through brokers, dealers, banks or other qualified financial
intermediaries (collectively referred to as "Dealers"), or others, in a manner
consistent with the then effective registration statement of Nuveen Tax-Free
Bond Fund, Inc. Pursuant to the Distribution Agreement, Nuveen, at its own ex-
pense, finances certain activities incident to the sale and distribution of the
Funds' shares, including printing and distributing of prospectuses and state-
ments of additional information to other than existing shareholders, the print-
ing and distributing of sales literature, advertising and payment of compensa-
tion 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 re-
ceives compensation pursuant to
60
<PAGE>
a distribution plan adopted by Nuveen Tax-Free Bond Fund, Inc. pursuant to Rule
12b-1 and described herein under "Distribution and Service Plans." Nuveen re-
ceives any CDSCs imposed on redemptions of Class C Shares redeemed within 12
months of purchase, but any such amounts as to which a reinstatement privilege
is not exercised are set off against and reduce amounts otherwise payable to
Nuveen pursuant to the distribution plan.
The following table sets forth the aggregate amount of underwriting commissions
with respect to the sale of Fund shares and the amount thereof retained by
Nuveen for each of the Funds for the last three fiscal years. All figures are
to the nearest thousand.
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28, 1995 YEAR ENDED FEBRUARY 28, 1994
-------------------------------- ---------------------------------
AMOUNT OF AMOUNT AMOUNT OF AMOUNT
UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY
FUND COMMISSIONS NUVEEN COMMISSIONS NUVEEN
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Fund...... $170 $20 $430 $ 52
New York Fund........... $428 $64 $989 $146
Ohio Fund............... $471 $55 $980 $144
<CAPTION>
YEAR ENDED FEBRUARY 28, 1993
-------------------------------------
AMOUNT OF AMOUNT
UNDERWRITING RETAINED BY
FUND COMMISSIONS NUVEEN
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Massachusetts Fund...... $624 $ 76
New York Fund........... $860 $102
Ohio Fund............... $982 $125
</TABLE>
DISTRIBUTION AND SERVICE PLANS
Each Fund has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the In-
vestment Company Act of 1940, which provides that Class C Shares will be sub-
ject to an annual distribution fee, and that both Class A Shares and Class C
Shares will be subject to an annual service fee. Class R Shares will not be
subject to either distribution or service fees.
The distribution fee applicable to Class C Shares under 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 the 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 services to shareholders.
These services may include establishing and maintaining shareholder accounts,
answering shareholder inquiries and providing other personal services to share-
holders.
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 as a distribution fee and up to .25 of 1% per year of the aver-
age daily net assets of Class C Shares as a service fee under the Plan applica-
ble to Class C
61
<PAGE>
Shares. The .75 of 1% distribution fee will be reduced by the amount of any
CDSC imposed on the redemption of Class C Shares within 12 months of purchase
as to which a reinstatement privilege has not been exercised. For the fiscal
year ended February 28, 1995, 100% of service fees and distribution fees were
paid out as compensation to Authorized Dealers. The amount of compensation
paid to Authorized Dealers for the fiscal year ended February 28, 1995 for
each Fund per class of shares were as follows:
<TABLE>
<CAPTION>
COMPENSATION PAID TO
AUTHORIZED DEALERS FOR YEAR
ENDED FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<S> <C>
MASSACHUSETTS FUND
Class A............................................ $ 752
Class C............................................ $ 215
Class R............................................ $ N/A
NEW YORK FUND
Class A............................................ $1,620
Class C............................................ $ 152
Class R............................................ $ N/A
OHIO FUND
Class A............................................ $2,727
Class C............................................ $1,868
Class R............................................ $ N/A
</TABLE>
Under each Fund's Plan, the Fund will report quarterly to the Board of Direc-
tors for its review of all amounts expended per class of shares under the
Plan. The Plan may be terminated at any time with respect to any class of
shares, without the payment of any penalty, by a vote of a majority of the di-
rectors who are not "interested persons" and who have no direct or indirect
financial interest in the Plan or by vote of a majority of the outstanding
voting securities of such class. The Plan may be renewed from year to year if
approved by a vote of the Board of Directors and a vote of the non-interested
directors who have no direct or indirect financial interest in the Plan cast
in person at a meeting called for the purpose of voting on the Plan. The Plan
may be continued only if the directors who vote to approve such continuance
conclude, in the exercise of reasonable business judgment and in light of
their fiduciary duties under applicable law, that there is a reasonable like-
lihood 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 Fund will
be committed to the discretion of the non-interested directors then in office.
62
<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 Nuveen Tax-Free Bond
Fund, Inc. In addition to audit services, Arthur Andersen LLP will provide con-
sultation and assistance on accounting, internal control, tax and related mat-
ters. The financial statements incorporated by reference elsewhere in this
Statement of Additional Information and the information set forth under "Finan-
cial Highlights" in the Prospectus have been audited by Arthur Andersen LLP as
indicated in their report with respect thereto, and are included in reliance
upon the authority of said firm as experts in giving said report.
The custodian of the assets of the Funds is United States Trust Company of New
York, 114 West 47th Street, New York, NY 10036. The custodian performs custodi-
al, fund accounting and portfolio accounting services. The Chase Manhattan
Bank, N.A., 1 Chase Manhattan Plaza, New York, NY 10081 has agreed to become
successor to U.S. Trust, as custodian and fund accountant. The succession is
presently scheduled for July 1, 1995. No changes in the Funds' administration
or in the amount of fees and expenses paid by the Funds for those services will
result, and no action by shareholders will be required.
63
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
[NUVEEN LOGO APPEARS HERE]
Nuveen Tax-Free
Mutual Funds
Dependable tax-free
income for generations
NUVEEN CALIFORNIA
TAX-FREE VALUE FUND
NUVEEN CALIFORNIA INSURED
TAX-FREE VALUE FUND
NUVEEN MASSACHUSETTS
TAX-FREE VALUE FUND
NUVEEN MASSACHUSETTS INSURED
TAX-FREE VALUE FUND
NUVEEN NEW YORK
TAX-FREE VALUE FUND
NUVEEN NEW YORK INSURED
TAX-FREE VALUE FUND
NUVEEN OHIO
TAX-FREE VALUE FUND
[PHOTO OF COUPLE APPEARS HERE]
ANNUAL REPORT/FEBRUARY 28, 1995
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
9 Fund performance
16 Portfolio of investments
54 Statement of net assets
56 Statement of operations
58 Statement of changes in net assets
62 Notes to financial statements
76 Financial highlights
<PAGE>
Dear
shareholder
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
"Providing secure
income remains
our top priority"
The 12 months ended February 28, 1995, were one of the most difficult periods
the bond markets have experienced in decades. The Federal Reserve Board raised
interest rates seven times since the beginning of 1994 to fend off future
inflation. As a result, the prices of all bonds and bond funds declined.
The unusually high volatility of the past year has brought home a basic fact
about bonds: interest rates are subject to change, and sometimes the changes can
have marked effects on net asset values of bonds and bond funds.
At Nuveen, we believe that the best approach to tax-free investing in such
tumultuous times is to focus on quality and income dependability. By this
standard, in one of the most challenging periods the municipal market has seen
in years, your Fund continued to meet its objectives relatively well, providing
an attractive level of tax-free income while holding portfolio values in line
with or better than the market as a whole.
Looking first at income, at fiscal year end current yields on net asset values
for the Class R Shares of the funds covered in this report ranged from 5.34% to
5.77% on February 28. To equal these yields, an investor in the 36% federal
income tax bracket would need to earn at least 8.34% on taxable alternatives.
This yield is difficult to achieve on taxable investments of comparable credit
quality.
3
<PAGE>
Your Fund also maintained its value relatively well during the past year.
While the net asset values of the Class R Shares of the funds in this report
registered declines ranging from 3.73% to 5.68%, the Bond Buyer 40 index-a
measure of the value of newly issued municipal bonds-declined by even more,
slipping 8.5% over the past 12 months. And 30-year Treasury bonds declined by
10.0% during the year.
In this context, we believe that your Fund met the demands of the past year's
market well. And when we take a long-range view of the municipal market, we
believe the outlook for your Fund is positively supported by several
considerations.
First, from November of 1994 through February of 1995, municipal bond yields
declined by nearly a full percent and bond prices started to gain ground. This
development suggests that the underlying inflationary pressures that drove
interest rates higher and bond prices lower may be moderating.
Second, and as we have noted in past reports, the municipal market's supply
and demand fundamentals continue to be sound. To put these trends in
perspective, in 1994, the supply of new municipal bonds declined by
approximately 40% from 1993; and market projections for new issue volume in 1995
are down more than 20% from last year's already low level.
Once investors perceive that the interest rate environment has stabilized,
demand for municipal investments, which has been subdued over the last 12 months
as a result of the market's extraordinary volatility, should resume its long-
term upward trend.
At Nuveen we are taking steps to increase the value our funds provide to
shareholders-steps reflected in last year's introduction of two new share
classes with different sales charge structures and service fees. These new share
classes, designated A Shares and C Shares, give you and your investment adviser
added flexibility in designing a tax-free investment program that meets your
requirements. In addition, these classes also encourage fund growth, which
offsets redemptions and protects portfolio integrity.
We appreciate your trust in our family of funds, and we look forward to
helping you meet your tax-free investment objectives in the future.
Sincerely,
[SIGNATURE OF RICHARD J. FRANKE]
Richard J. Franke
Chairman of the Board
April 17, 1995
<PAGE>
Answering your
questions
We spoke recently with Tom
Spalding, head of Nuveen's portfo-
lio management team, and
asked him about developments in
the municipal market and the
outlook for Nuveen's Tax-Free
Mutual Funds.
Why did my Fund's
net asset value decline
over the past year?
The past 12 months have been a difficult period for all fixed-income investors.
The Federal Reserve raised interest rates seven times from February 1994 through
February 1995, and its actions drove the prices of all bonds and bond funds
lower. Of course, changing interest rates are a fact of life for fixed-income
investments. The important point is that shareholders in these funds were less
affected by rising interest rates than the market overall. In fact, the net
asset values of the funds covered in this report declined less than 6.0% while
the municipal market overall, as measured by the Bond Buyer 40 index, was down
8.5% and as measured by the Lehman Brothers Municipal Bond index, was off 3.97%.
The Bond Buyer 40 index reflects price movements of newly issued long-term
municipal bonds.
5
<PAGE>
[PHOTO OF TOM SPALDING APPEARS HERE] Tom Spalding, head
of Nuveen's portfolio
management team,
answers investors'
questions on develop-
ments in the
municipal market.
While the Lehman Brothers Municipal Bond index reflects the broader
municipal market.
This is one result of our conservative, value-oriented approach to investing;
our funds tend to hold their value better than the market as a whole when
interest rates are rising.
What steps did you
take to moderate
the impact of rising
interest rates
on the value of the
funds' portfolios?
As value investors, we don't manage our portfolios to any specific interest rate
environment. We feel that it's impossible to predict changes in the economy or
interest rates with any degree of accuracy. We try to buy bonds that will
perform well in any interest rate environment, focusing closely on relative
values in the market.
Because of that approach, we didn't need to make major changes in our
portfolios as interest rates rose. For a number of technical reasons, above all
the compression of yields between higher-rated and lower-rated issues that had
been taking place for some time-the best values, in our view, were to be found
in conservative bonds. For some time, we had been concentrating on higher-rated
bonds with maturities in the 15-to-20 year range, as well as bonds priced at
premiums to their par values and pre-refunded issues. We also benefited from an
increase in assets in many of our funds, driven by both higher demand for tax-
free investments and
6
<PAGE>
Nuveen's reinvestment programs. As a result, we weren't under pressure to sell
into difficult markets to meet redemptions.
A record amount of
municipal bonds were
called in 1993-1994.
How did these bond
calls affect my income
and the net asset
value of my shares?
In general, bond calls can mean some reduction in income for investors in both
individual bonds and bond funds, because bonds issued when interest rates were
higher need to be replaced with today's lower-yielding bonds. On the other hand,
the fact that your fund's portfolio contained callable bonds provided an
important NAV benefit. Callable bonds with higher-than-market coupons are priced
at premiums to their par value or call price. Callable, high-coupon long-term
bonds, sometimes called "cushion bonds," tend to experience the lower price
volatility of intermediate-term or even shorter-term bonds when rates are low
but rising, as was the case in early 1994. As we saw last year, the premium
coupons of these bonds essentially act as a "cushion" that softens the effect of
rising interest rates.
Of course, we manage all of our portfolios with calls in mind. As part of our
basic management process we continually evaluate opportunities to sell bonds
approaching their call dates and to reinvest the proceeds in bonds we think have
high potential to provide above-market returns.
7
<PAGE>
A number of fund
managers have
encountered problems
recently related to
the use of derivative
securities. Do you use
derivatives in your
portfolios?
Over the last year, participants in the financial services industry, including
securities dealers, underwriters and investment advisers, received much
attention in the press relating to the use of certain types of derivative
financial instruments in the management of portfolios, including those of mutual
funds. There are many different types of derivative investments available in the
market today, including those derivatives whose market values respond to
interest rate changes with greater volatility than do others. In general,
derivatives used to speculate on the future course of interest rates pose the
greatest risk, while derivatives used for hedging purposes present less risk
and, if used properly, can often reduce risk. Synthetic money market securities
generally present no greater risk to investors than ordinary money market
securities.
Although the Funds are authorized to invest in such financial instruments, and
may do so in the future, they did not make any such investments during the
fiscal year ended February 28, 1995, other than occasional purchases of high
quality synthetic money market securities, which were held temporarily pending
the reinvestment in long-term portfolio securities.
8
<PAGE>
NUVEEN CALIFORNIA
TAX-FREE VALUE FUND
California
INDEX COMPARISON
Nuveen California Tax-Free Value Fund R Shares*
and Lehman Brothers Municipal Bond Index Comparison
of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN CALIFORNIA TAX-FREE VALUE R SHARES*
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION> TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN CALIFORNIA
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- --------------------- -------------------- -------------------
<S> <C> <C> <C>
Measurement Pt-
6/86 $10,000 $10,000 $ 9,525
FYE 8/86 $10,512 $10,512 $ 9,829
FYE 2/87 $11,260 $11,285 $10,614
FYE 8/87 $10,974 $10,998 $ 9,918
FYE 2/88 $11,504 $11,580 $10,531
FYE 8/88 $11,676 $11,754 $10,604
FYE 2/89 $12,160 $12,299 $11,271
FYE 8/89 $12,896 $13,043 $12,043
FYE 2/90 $13,347 $13,559 $12,382
FYE 8/90 $13,662 $13,880 $12,626
FYE 2/91 $14,511 $14,810 $13,441
FYE 8/91 $15,205 $15,518 $14,105
FYE 2/92 $15,891 $16,290 $14,685
FYE 8/92 $16,829 $17,251 $15,618
FYE 2/93 $18,001 $18,532 $16,690
FYE 8/93 $18,800 $19,354 $17,457
FYE 2/94 $18,927 $19,556 $17,539
FYE 8/94 $18,759 $19,382 $17,148
FYE 2/95 $19,208 $19,925 $17,676
</TABLE>
==== Lehman Brothers Municipal Bond Index -- Total $19,925
==== Tax-adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $19,208
==== Nuveen California Tax-Free Value Fund -- Total $17,676
($18,557 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- --------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------
1 year Since Inception
- --------------------------------------------------------------
<S> <C> <C>
R shares on NAV .78% 7.40%
A shares on NAV 2.52%+
A shares on offering price** -2.10%+
C shares on NAV 3.71%+
- --------------------------------------------------------------
</TABLE>
Shareholders enjoyed a stable dividend for five months followed by a modest
reduction to 4.85 cents per share in August as called bonds were replaced at
lower rates. During the year, the Fund paid dividends totaling 58.70 cents per
share.
As yield differentials between higher and lower-rated bonds and longer-
and shorter- maturities narrowed, the Fund's manager focused attention on
higher-quality bonds with maturities in the 15-to-20 year range, as well
as on pre-refunded bonds.
Essential-purpose issues and tax-allocated bonds supported by strong revenue
streams were also emphasized. We continue to be selective about housing and
healthcare revenue issues and some new types of California bonds, such as
certificates of participation.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25 % annual 12b-1 service fee applicable to Class A and Class C
Shares: (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
9
<PAGE>
NUVEEN CALIFORNIA INSURED
TAX-FREE VALUE FUND
California Insured
INDEX COMPARISON
Nuveen California Ins. Tax-Free Value Fund R Shares* and Lehman Brothers
Municipal Bond Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN CALIFORNIA INS. TAX-FREE VALUE FUND R SHARES
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN CALIFORNIA INS.
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- --------------------- -------------------- ----------------------
<S> <C> <C> <C>
Measurement Pt-
6/86 $10,000 $10,000 $ 9,525
FYE 8/86 $10,512 $10,512 $ 9,763
FYE 2/87 $11,260 $11,285 $10,392
FYE 8/87 $10,974 $10,998 $ 9,662
FYE 2/88 $11,504 $11,580 $10,310
FYE 8/88 $11,676 $11,754 $10,289
FYE 2/89 $12,160 $12,299 $10,940
FYE 8/89 $12,896 $13,043 $11,613
FYE 2/90 $13,347 $13,559 $11,964
FYE 8/90 $13,662 $13,880 $12,158
FYE 2/91 $14,511 $14,810 $13,021
FYE 8/91 $15,205 $15,518 $13,627
FYE 2/92 $15,891 $16,290 $14,313
FYE 8/92 $16,829 $17,251 $15,174
FYE 2/93 $18,001 $18,532 $16,468
FYE 8/93 $18,800 $19,354 $17,194
FYE 2/94 $18,927 $19,556 $17,171
FYE 8/94 $18,759 $19,382 $16,884
FYE 2/95 $19,208 $19,925 $17,459
</TABLE>
Lehman Brothers Municipal Bond Index -- Total $19,925
Tax-adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $19,208
==== Nuveen California Insured Tax-Free Value Fund -- Total $17,459
($18,329 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.68% 7.24%
A shares on NAV 3.33%+
A shares on offering price** -1.32%+
C shares on NAV 3.45%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed two dividend increases during the period, bringing the
Fund's monthly dividend from 4.55 cents to 4.70 cents per share on
February 28, 1995. During the year, the Fund paid dividends totaling 55.85 cents
per share.
As interest rates rose and yield differentials between bonds of different
quality ratings and maturities continued to compress, the Fund's manager focused
on higher-quality bonds with maturities in the 15-to-20 year range. Otherwise,
reflecting the insured nature of the bonds in the portfolio, the basic
composition of the portfolio was little changed during the year.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25 % annual 12b-1 service fee applicable to Class A and Class C
Shares: (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
10
<PAGE>
NUVEEN MASSACHUSETTS
TAX-FREE VALUE FUND
Massachusetts
INDEX COMPARISON
Nuveen Massachusetts Tax-Free Value Fund R Shares* and Lehman Brothers Municipal
Bond Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN MASSACHUSETTS TAX-FREE VALUE R SHARES*
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION> TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN MASSACHUSETTS
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,313 $10,322 $ 9,623
FYE 8/87 $10,050 $10,060 $ 8,912
FYE 2/88 $10,533 $10,593 $ 9,327
FYE 8/88 $10,691 $10,751 $ 9,483
FYE 2/89 $11,130 $11,250 $ 9,980
FYE 8/89 $11,804 $11,931 $10,557
FYE 2/90 $12,211 $12,403 $10,838
FYE 8/90 $12,500 $12,696 $10,987
FYE 2/91 $13,260 $13,546 $11,714
FYE 8/91 $13,894 $14,194 $12,318
FYE 2/92 $14,502 $14,900 $12,934
FYE 8/92 $15,358 $15,779 $13,765
FYE 2/93 $16,412 $16,951 $14,773
FYE 8/93 $17,140 $17,703 $15,504
FYE 2/94 $17,234 $17,888 $15,653
FYE 8/94 $17,081 $17,729 $15,432
FYE 2/95 $17,473 $18,225 $15,910
</TABLE>
==== Lehman Brothers Municipal Bond Index -- Total $18,225
==== Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,473
==== Nuveen Massachusetts Tax-Free Value Fund -- Total $15,910
($16,703 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.64% 6.42%
A shares on NAV 3.05%+
A shares on offering price** -1.59%+
C shares on NAV 4.86%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed two dividend increases during the period, bringing the
Fund's monthly dividend from 4.40 cents to 4.55 cents per share on February 28,
1995. During the year, the Fund paid dividends totaling 53.80 cents per share.
As interest rates rose and yield differentials between bonds of different
quality ratings and maturities continued to compress, the Fund's manager focused
on higher-quality bonds with maturities in the 15-to-20 year range.
The improved economic and financial condition of the Commonwealth gave a boost
to the value of the bonds in the Fund's portfolio.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares: (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
11
<PAGE>
NUVEEN MASSACHUSETTS INSURED
TAX-FREE VALUE FUND
Massachusetts Insured
INDEX COMPARISON
Nuveen Mass. Ins. Tax-Free Value Fund R Shares* and Lehman Brothers Municipal
Bond Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN MASS. INS. TAX FREE VALUE FUND R
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN MASSACHUSETTS
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX INS. TAX-FREE VALUE FUND
- --------------------- ------------------- -------------------- ------------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,313 $10,322 $ 9,596
FYE 8/87 $10,050 $10,060 $ 9,133
FYE 2/88 $10,533 $10,593 $ 9,706
FYE 8/88 $10,691 $10,751 $ 9,794
FYE 2/89 $11,130 $11,250 $10,273
FYE 8/89 $11,804 $11,931 $10,869
FYE 2/90 $12,211 $12,403 $11,148
FYE 8/90 $12,500 $12,696 $11,335
FYE 2/91 $13,260 $13,546 $12,145
FYE 8/91 $13,894 $14,194 $12,687
FYE 2/92 $14,502 $14,900 $13,308
FYE 8/92 $15,358 $15,779 $14,162
FYE 2/93 $16,412 $16,951 $15,209
FYE 8/93 $17,140 $17,703 $15,906
FYE 2/94 $17,234 $17,888 $16,003
FYE 8/94 $17,081 $17,729 $15,769
FYE 2/95 $17,473 $18,225 $16,287
</TABLE>
Lehman Brothers Municipal Bond Index -- Total $18,225
Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,473
==== Nuveen Massachusetts Ins. Tax-Free Value Fund -- Total $16,287
($17,099 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.77% 6.72%
A shares on NAV 2.99%+
A shares on offering price** -1.64%+
C shares on NAV 3.52%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed a dividend increase during the period, bringing the Fund's
monthly dividend from 4.45 cents to 4.60 cents per share on February 28, 1995.
During the year, the Fund paid dividends totaling 54.90 cents per share.
Reflecting the insured nature of the bonds in the portfolio, the basic
composition of the portfolio was little changed during the year. The Fund's
manager continued to concentrate more attention on longer-maturity bonds than
would be the case in an uninsured portfolio. This approach combines an
attractive level of after-tax income with the greater credit protection inherent
in insured bonds under all types of market conditions.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
12
<PAGE>
NUVEEN NEW YORK
TAX-FREE VALUE FUND
New York
INDEX COMPARISON
Nuveen New York Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN NEW YORK TAX-FREE VALUE FUND R
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN NEW YORK
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- ------------------- -------------------- -------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,309 $10,322 $ 9,956
FYE 8/87 $10,047 $10,060 $ 9,377
FYE 2/88 $10,536 $10,593 $10,064
FYE 8/88 $10,694 $10,751 $10,094
FYE 2/89 $11,142 $11,250 $10,721
FYE 8/89 $11,817 $11,931 $11,358
FYE 2/90 $12,237 $12,403 $11,630
FYE 8/90 $12,526 $12,696 $11,861
FYE 2/91 $13,314 $13,546 $12,426
FYE 8/91 $13,951 $14,194 $13,264
FYE 2/92 $14,591 $14,900 $13,917
FYE 8/92 $15,452 $15,779 $14,897
FYE 2/93 $16,543 $16,951 $15,975
FYE 8/93 $17,277 $17,703 $16,819
FYE 2/94 $17,402 $17,888 $17,109
FYE 8/94 $17,248 $17,729 $16,789
FYE 2/95 $17,675 $18,225 $17,237
</TABLE>
Lehman Brothers Municipal Bond Index -- Total $18,225
Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,675
==== Nuveen New York Tax-Free Value Fund -- Total $17,237
($18,096 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV .75% 7.46%
A shares on NAV 2.21%+
A shares on offering price** -2.39%+
C shares on NAV 2.80%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed a dividend increase during the period, bringing the Fund's
monthly dividend from 4.75 cents to 4.85 cents per share on February 28, 1995.
During the year, the Fund paid dividends totaling 57.30 cents per share.
As interest rates rose, the Fund's manager concentrated on bonds maturing in
the 15-to-20 year range, believing that longer-term bonds were relatively
overvalued. The manager also focused on bonds trading at a premium to their par
values, which helped cushion the portfolio against interest-rates.
Reflecting Nuveen's value investing approach and research strengths, emphasis
continued on bonds with call provisions, which are difficult for less
experienced investors to value accurately and tend to trade at attractive
prices.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25 % annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
13
<PAGE>
NUVEEN NEW YORK INSURED
TAX-FREE VALUE FUND
New York Insured
INDEX COMPARISON
Nuveen New York Ins. Tax-Free Value Fund R Shares* and Lehman Brothers Municipal
Bond Index Comparison of Change in Value of a $10,000 Investment
[GRAPH APPEARS HERE]
COMPARISON OF NUVEEN NEW YORK INS. TAX-FREE VALUE FUND R
AND LEHMAN BROTHERS MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN NEW YORK INS.
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,309 $10,322 $ 9,883
FYE 8/87 $10,047 $10,060 $ 9,189
FYE 2/88 $10,536 $10,593 $ 9,799
FYE 8/88 $10,694 $10,751 $ 9,831
FYE 2/89 $11,143 $11,250 $10,424
FYE 8/89 $11,817 $11,931 $11,037
FYE 2/90 $12,238 $12,403 $11,335
FYE 8/90 $12,527 $12,696 $11,505
FYE 2/91 $13,316 $13,546 $12,199
FYE 8/91 $13,953 $14,194 $12,969
FYE 2/92 $14,594 $14,900 $13,620
FYE 8/92 $15,454 $15,779 $14,450
FYE 2/93 $16,547 $16,951 $15,658
FYE 8/93 $17,281 $17,703 $16,495
FYE 2/94 $17,408 $17,888 $16,530
FYE 8/94 $17,253 $17,729 $16,219
FYE 2/95 $17,682 $18,225 $16,757
</TABLE>
Lehman Brothers Municipal Bond Index -- Total $18,225
Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,682
==== Nuveen New York Insured Tax-Free Value Fund -- Total $16,757
($17,592 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.37% 7.09%
A shares on NAV 3.01%+
A shares on offering price** -1.62%+
C shares on NAV 3.53%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed a dividend increase during the period bringing the Fund's
monthly dividend from 4.60 cents to 4.65 cents per share on February 28, 1995.
During the year, the Fund paid dividends totaling 55.45 cents per share.
As interest rates rose during the year, the Fund's manager reduced the
duration of the portfolio--a technical measure of a fund's sensitivity to
interest-rate changes--focusing more attention on bonds with maturities in the
long-intermediate (15-to-20 year) range.
Reflecting the insured nature of the bonds in the portfolio, the basic
composition of the portfolio was little changed during the year. This approach
combines an attractive level of after-tax income with the greater credit
protection inherent in insured bonds under all types of market conditions.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
14
<PAGE>
NUVEEN OHIO
TAX-FREE VALUE FUND
Ohio
INDEX COMPARISON
Nuveen Ohio Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
<TABLE>
<CAPTION>
TAX-ADJUSTED LEHMAN
BROTHERS MUNICIPAL
Measurement Period BOND INDEX (REDUCED LEHMAN BROTHERS NUVEEN OHIO
(Fiscal Year Covered) BY STATE TAX EFFECTS) MUNICIPAL BOND INDEX TAX-FREE VALUE FUND
- --------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C>
Measurement Pt-
11/86 $10,000 $10,000 $ 9,525
FYE 2/87 $10,316 $10,322 $ 9,736
FYE 8/87 $10,053 $10,060 $ 9,209
FYE 2/88 $10,556 $10,593 $ 9,886
FYE 2/89 $11,130 $11,250 $10,273
FYE 8/88 $10,714 $10,751 $ 9,971
FYE 2/89 $11,177 $11,250 $10,612
FYE 8/89 $11,854 $11,931 $11,282
FYE 2/90 $12,287 $12,403 $11,686
FYE 8/90 $12,578 $12,696 $11,938
FYE 2/91 $13,382 $13,546 $12,724
FYE 8/91 $14,022 $14,194 $13,348
FYE 2/92 $14,678 $14,900 $14,023
FYE 8/92 $15,544 $15,779 $14,874
FYE 2/93 $16,655 $16,951 $15,970
FYE 8/93 $17,395 $17,703 $16,819
FYE 2/94 $17,534 $17,888 $16,976
FYE 8/94 $17,378 $17,729 $16,700
FYE 2/95 $17,823 $18,225 $17,314
</TABLE>
==== Lehman Brothers Municipal Bond Index -- Total $18,225
==== Adjusted Lehman Brother's Municipal Bond Index
(reduced by state tax effects) -- Total $17,823
==== Nuveen Ohio Tax-Free Value Fund -- Total $17,314
($18,177 at NAV)
Past performance is not predictive of future performance
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -----------------------------------------------------------------
1 year Since Inception
- -----------------------------------------------------------------
<S> <C> <C>
R shares on NAV 1.99% 7.52%
A shares on NAV 3.63%+
A shares on offering price** -1.03%+
C shares on NAV 3.63%+
- -----------------------------------------------------------------
</TABLE>
Shareholders enjoyed a dividend increase during the period, bringing the Fund's
monthly dividend from 4.70 cents to 4.75 cents on February 28, 1995. For the
year, the Fund's monthly dividends totaled 56.90 cents per share.
As interest rates rose during the year, the Fund's manager shortened the
maturity of the portfolio somewhat, focusing on bonds maturing in 15-to-20
years. Significant holdings of pre-refunded bonds also helped moderate the
impact of interest-rate changes on the portfolio's net asset value.
The managers placed more emphasis on general obligation bonds and bonds issued
to support the state's healthcare system. The fund continues to emphasize
education issues supporting state colleges and universities, and transportation
issues.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
15
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,150,000 California Educational
Facilities Authority
(University of Southern
California),
7.200%, 10/01/15 10/97 at 102 AA $ 3,322,022
California General
Obligation:
3,000,000 6.250%, 9/01/12 No Opt. Call A1 3,077,280
5,000,000 5.750%, 3/01/23 3/04 at 102 A1 4,690,100
California Health
Facilities Authority
(Small Facilities Pooled
Loan Program):
3,000,000 7.400%, 4/01/14 4/05 at 102 A 3,182,100
3,635,000 7.500%, 4/01/22 4/05 at 102 A 3,832,926
1,700,000 California Health
Facilities Authority
(Sutter Health System),
7.000%, 1/01/09 1/99 at 102 A1 1,738,080
2,000,000 California Health
Facilities Financing
Authority (Health
Dimensions, Inc.), 7.500%,
5/01/15 5/00 at 102 Baa1 2,057,620
2,000,000 California Health
Facilities Financing
Authority (Sisters of
Providence), 7.500%,
10/01/10 10/00 at 102 AA- 2,130,960
4,380,000 California Health
Facilities Authority
(Kaiser Permanente),
7.000%, 12/01/10 12/00 at 102 Aa2 4,557,127
65,000 California Housing Finance
Agency, Insured Housing,
8.450%, 2/01/04 2/00 at 100 Aaa 68,175
2,425,000 California Housing Finance
Agency, Home Mortgage,
8.100%, 8/01/16 8/96 at 102 Aa 2,528,814
8,470,000 California Public Works
Board
(California State
University Project),
6.700%, 10/01/17 10/02 at 102 A- 8,643,296
1,000,000 California Public Works
Board, High Technology
Facilities Lease (The
Regents of the University
of California-San Diego
Facility), 7.375%, 4/01/06 No Opt. Call A1 1,104,150
2,500,000 California Statewide
Communities Development
Corporation (Solheim
Lutheran Home),
Certificates of
Participation, 6.500%,
11/01/17 11/04 at 102 A 2,450,350
3,000,000 California Statewide
Communities Development
Authority (St. Joseph
Health System),
Certificates of
Participation, 6.500%,
7/01/15 7/04 at 102 AA 3,025,980
1,500,000 ABAG Finance Authority for
Nonprofit Corporations
(Channing House),
Certificates of
Participation, 7.125%,
1/01/21 1/01 at 102 A 1,546,485
6,400,000 Alameda County,
Certificates of
Participation, 6.000%,
6/01/22 6/02 at 102 A+ 6,086,848
Arcadia (Methodist Hospital
of Southern California):
1,000,000 6.500%, 11/15/12 11/02 at 102 A 1,005,590
1,500,000 6.625%, 11/15/22 11/02 at 102 A 1,470,900
2,035,000 Bella Vista Water District,
Certificates of
Participation, 7.375%,
10/01/17 10/01 at 102 Baa 2,109,685
</TABLE>
16
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORTFEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Carson Redevelopment
Agency, Tax Allocation:
$ 1,000,000 6.000%, 10/01/13 10/03 at 102 BBB $ 924,130
2,000,000 6.000%, 10/01/16 10/03 at 102 Baa1 1,822,180
2,000,000 Chico Redevelopment Agency
(Sierra Sunrise Lodge),
Certificates of
Participation,
6.750%, 2/01/21 2/01 at 102 A 2,009,580
2,835,000 Chico (Walker Senior
Housing Corporation),
5.700%, 11/01/23 11/03 at 102 A 2,459,391
6,500,000 Contra Costa County, FHA-
Insured (Cedar Pointe
Apartments), 6.150%,
9/01/25 9/03 at 103 AAA 6,304,350
2,000,000 Desert Hospital District,
Certificates of
Participation,
8.100%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 AAA 2,315,980
East Bay Municipal Utility
District, Water System:
1,950,000 7.500%, 6/01/18 (Pre-
refunded to 6/01/00) 6/00 at 102 Aaa 2,200,907
4,000,000 6.000%, 6/01/20 6/02 at 102 AA- 3,935,680
4,000,000 6.375%, 6/01/21 (Pre-
refunded to 12/01/01) 12/01 at 102 Aaa 4,349,800
2,500,000 Fontana Public Financing
Authority, Tax Allocation
(North Fontana
Redevelopment Project),
7.250%, 9/01/20 9/00 at 102 A 2,584,525
1,475,000 LaQuinta Redevelopment
Agency, Tax Allocation,
8.000%, 9/01/12 (Pre-
refunded to 9/01/98) 9/98 at 102 Baa1 1,653,283
2,475,000 Loma Linda University
Medical Center,
6.000%, 12/01/06 12/03 at 102 BBB 2,349,691
4,000,000 Los Angeles Convention and
Exhibition Center
Authority, 5.375%, 8/15/18 8/03 at 102 Aaa 3,645,160
2,505,000 Los Angeles Harbor, 7.600%,
10/01/18 No Opt. Call AAA 2,815,269
280,000 Los Angeles Home Mortgage
(GNMA), 8.100%, 5/01/17 No Opt. Call Aaa 338,974
2,400,000 Los Angeles State Building
Authority, 7.500%, 3/01/11
(Pre-refunded to 3/01/98) 3/98 at 102 AAA 2,620,416
5,000,000 Los Angeles Wastewater
System, 5.700%, 6/01/23 6/03 at 102 Aaa 4,738,000
3,350,000 Los Angeles County
Metropolitan
Transportation Authority,
5.000%, 7/01/21 7/03 at 100 Aaa 2,858,053
4,595,000 Los Angeles County Public
Works Finance Authority
(Los Angeles County
Regional Park and Open
Space), 6.125%, 10/01/10 10/04 at 102 AA 4,665,166
195,000 Los Angeles County, Single
Family Mortgage (GNMA),
8.000%, 3/01/17 No Opt. Call Aaa 220,299
2,000,000 Los Angeles County
Transportation Commission,
Sales Tax, 7.400%, 7/01/15 7/99 at 102 AA- 2,125,280
1,260,000 Marysville Community
Development Agency,
Tax Allocation, 7.250%,
3/01/21 3/02 at 102 Baa 1,300,282
740,000 Menlo Park Community
Development Agency, FHA-
Insured, Multi-Family
Housing,
8.250%, 12/01/28 6/97 at 103 Aa 790,712
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 895,000 Monterey Community
Hospital, 7.375%,
7/01/14 7/96 at 102 A+ $ 936,528
2,165,000 Napa County,
Certificates of
Participation,
5.250%, 5/15/13 5/03 at 102 A1 1,939,970
1,500,000 North City West School
Facilities Authority,
Community Facilities
District No. 1,
7.850%, 9/01/19 9/99 at 102 N/R 1,534,350
Northern California
Power Agency:
1,430,000 7.000%, 7/01/10 7/95 at 100 A- 1,443,499
2,970,000 7.150%, 7/01/24 7/98 at 102 A- 3,049,151
2,120,000 Ontario, Assessment
District No. 100C,
Limited Obligation,
8.000%, 9/02/11 No Opt. Call N/R 2,185,572
2,920,000 Rancho Mirage
Redevelopment Agency,
Tax Allocation, 5.500%,
4/01/29 4/04 at 102 A 2,486,322
1,470,000 Redding Joint Powers
Financing Authority,
6.250%, 6/01/23 6/03 at 102 A 1,424,386
7,290,000 Riverside Multi-Family
Housing,
6.500%, 1/01/18 7/02 at 100 AAA 7,365,306
205,000 Sacramento Municipal
Utility District,
Subordinated Electric,
8.000%, 11/15/10 3/95 at 100 Baa1 205,517
4,000,000 Sacramento Municipal
Utility District,
7.875%, 8/15/16 (Pre-
refunded to 8/15/98) 8/98 at 102 Aaa 4,453,280
2,335,000 Salinas Tax Allocation,
7.400%, 9/02/09 9/95 at 103 N/R 2,406,848
2,080,000 Salinas, GNMA (Villa
Sierra),
6.500%, 7/20/17 7/04 at 102 AAA 2,121,746
5,000,000 San Bernardino Single
Family (GNMA), 7.500%,
5/01/23 No Opt. Call Aaa 5,852,550
2,000,000 San Bernardino (West
Valley Detention
Center), Certificates
of Participation,
7.700%, 11/01/18 (Pre-
refunded to 11/01/98) 11/98 at 102 Aaa 2,225,240
5,000,000 San Francisco City and
County Redevelopment
Financing Authority,
Tax Allocation,
5.125%, 8/01/18 8/03 at 103 A 4,231,350
3,070,000 San Leandro,
Certificates of
Participation,
5.900%, 6/01/13 6/03 at 102 A 2,950,393
1,000,000 San Mateo County Board
of Education,
Certificates of
Participation, 7.100%,
5/01/21 5/99 at 102 A+ 1,033,570
1,420,000 Santa Ana Community
Redevelopment,
7.500%, 9/01/16 9/99 at 102 BBB+ 1,405,019
3,000,000 Santa Cruz Housing
Authority, Multi-Family
Housing (GNMA), 7.750%,
7/01/23 7/00 at 102 AAA 3,220,440
2,000,000 Sonoma County Office of
Education,
Certificates of
Participation,
7.375%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 A+ 2,247,780
Southern California
Public Power Authority:
4,760,000 7.000%, 7/01/22 7/96 at 102 1/2 AA 4,937,358
740,000 5.500%, 7/01/23 7/96 at 100 AA 670,277
</TABLE>
18
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORTFEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,825,000 Stockton Hospitals (St.
Joseph Hospital),
6.700%, 6/01/15 3/95 at 106 A- $ 2,829,238
2,330,000 Torrance Hospitals
(Little Company of Mary
Hospital), 6.875%,
7/01/15 7/02 at 102 A 2,364,134
1,100,000 Tulare County,
Certificates of
Participation, 6.875%,
11/15/12 11/02 at 102 N/R 1,125,156
University of California
(UCLA Central
Chiller/Cogeneration):
3,500,000 5.600%, 11/01/20 11/03 at 102 Aa 3,152,974
4,335,000 6.000%, 11/01/21 11/03 at 102 Aa 4,119,333
3,335,000 University of California
Research Facilities,
5.800%, 9/01/23 9/01 at 102 A- 3,057,927
3,420,000 Upland (San Antonio
Community Hospital),
Certificates of
Participation, 5.000%,
1/01/18 1/04 at 102 A 2,691,026
10,000,000 Walnut Creek (John Muir
Medical Center),
Certificates of
Participation, 5.000%,
2/15/16 2/04 at 102 Aaa 8,750,900
- -------------------------------------------------------------------------------
$207,035,000 Total Investments - (cost
$202,079,336) - 97.5% 206,072,736
- -------------------------------------------------------------------------------
- -----------------
----------------
Other Assets Less
Liabilities - 2.5% 5,352,799
- -------------------------------------------------------------------------------
Net Assets - 100% $211,425,535
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
STANDARD & POOR'S MOODY'S OF ISSUES MARKET VALUE PERCENT
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 19 $ 66,464,845 32%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 13 39,961,683 19
PORTFOLIO OF A+ A1 9 22,854,306 11
INVESTMENTS: A, A- A, A2, A3 20 55,712,569 27
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 9 13,827,407 7
Non-rated Non-rated 4 7,251,926 4
- --------------------------------------------------------------------------------------
TOTAL 74 $206,072,736 100%
</TABLE>
- --------------------------------------------------------------------------------
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
See accompanying notes to financial statements.
19
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 California Educational
Facilities Authority,
Pepperdine University,
7.200%, 11/01/15 (Pre-
refunded to 11/01/00) 11/00 at 102 Aaa $ 1,120,960
5,000,000 California General
Obligation, 5.125%,
10/01/17 10/03 at 102 Aaa 4,400,600
California Health
Facilities Authority
(Kaiser Permanente):
6,000,000 5.450%, 10/01/13 10/01 at 101 Aa2 5,457,780
2,650,000 5.550%, 8/15/25 2/02 at 101 Aaa 2,398,621
5,000,000 California Health
Facilities Financing
Authority (San Diego
Hospital Association),
6.125%, 8/01/22 8/02 at 102 Aaa 5,008,550
6,340,000 California Housing Finance
Agency, 6.850%, 8/01/23 2/02 at 102 Aaa 6,548,649
240,000 California Public Capital
Improvement Finance
Authority (Pooled
Projects), 8.100%, 3/01/18 3/98 at 102 Aaa 259,200
California Public School
District, Finance
Authority (Rescue Union):
1,115,000 6.250%, 9/01/15 9/04 at 102 Aaa 1,136,062
500,000 6.250%, 9/01/20 9/04 at 102 Aaa 505,100
California Public Works
Board, Department of
Corrections (State
Prisons):
5,000,000 7.000%, 9/01/09 (Pre-
refunded to 9/01/00) 9/00 at 102 Aaa 5,544,800
5,250,000 5.750%, 9/01/21 9/01 at 100 Aaa 4,993,433
8,500,000 California Statewide
Community Development
Authority (Sutter Health),
6.125%, 8/15/22 8/02 at 102 Aaa 8,514,790
5,000,000 Alameda County (Santa Rita
Jail Project),
Certificates of
Participation,
5.700%, 12/01/14 12/03 at 102 Aaa 4,755,100
1,225,000 Barstow Redevelopment
Agency, Tax Allocation,
7.000%, 9/01/14 No Opt. Call Aaa 1,392,249
7,000,000 Big Bear Lake Water System,
6.375%, 4/01/22 4/02 at 102 Aaa 7,147,000
Brea Public Financing
Authority, Tax Allocation:
3,525,000 7.000%, 8/01/15 (Pre-
refunded to 8/01/01) 8/01 at 102 Aaa 3,936,755
1,475,000 7.000%, 8/01/15 8/01 at 102 Aaa 1,576,362
3,000,000 Calaveras County Water
District,
Certificates of
Participation,
6.900%, 5/01/16 (Pre-
refunded to 5/01/01) 5/01 at 102 Aaa 3,311,490
2,000,000 Castaic Lake Water Agency,
Certificates of
Participation,
7.125%, 8/01/16 (Pre-
refunded to 8/01/00) 8/00 at 102 Aaa 2,228,220
850,000 Concord Redevelopment
Agency, Tax Allocation,
Central Concord Project,
7.875%, 7/01/07 7/98 at 102 Aaa 935,629
500,000 Cotati-Rohnert Park Unified
School District, 9.000%,
8/01/06 8/99 at 102 Aaa 580,235
4,050,000 Cucamonga County Water
District, Certificates of
Participation,
5.450%, 9/01/23 3/04 at 102 Aaa 3,670,961
2,000,000 East Bay Municipal Utility
District, Water System,
7.500%, 6/01/18 (Pre-
refunded to 6/01/00) 6/00 at 102 Aaa 2,257,340
</TABLE>
20
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,000,000 Eastern Municipal Water
District, Water and Sewer,
Certificates of
Participation,
6.500%, 7/01/20 (Pre-
refunded to 7/01/01) 7/01 at 102 Aaa $ 2,181,260
3,865,000 Fallbrook Sanitary
District, Certificates of
Participation, 6.600%,
2/01/13 2/01 at 100 Aaa 3,963,480
2,500,000 Fontana Public Financing
Authority, Tax Allocation
(North Fontana
Redevelopment Project),
7.000%, 9/01/10 9/00 at 102 Aaa 2,653,975
6,220,000 Fresno Water System,
5.300%, 6/01/20 6/03 at 101 Aaa 5,604,592
3,000,000 Gilroy Unified School
District, Certificates of
Participation,
6.250%, 9/01/12 9/04 at 102 Aaa 3,079,230
1,000,000 LaQuinta Redevelopment
Agency, Tax Allocation,
7.300%, 9/01/12 No Opt. Call Aaa 1,165,990
5,000,000 Lancaster Redevelopment
Agency, Tax Allocation,
5.800%, 8/01/23 8/03 at 102 Aaa 4,791,850
2,000,000 Los Angeles Convention and
Exhibition Center
Authority, Certificates of
Participation,
7.000%, 8/15/21 (Pre-
refunded to 8/15/00) 8/00 at 102 Aaa 2,217,640
Los Angeles Convention and
Exhibition Center
Authority:
5,500,000 5.375%, 8/15/18 8/03 at 102 Aaa 5,012,095
3,000,000 5.125%, 8/15/21 8/03 at 102 Aaa 2,607,570
285,000 Los Angeles Home Mortgage
(GNMA),
8.100%, 5/01/17 No Opt. Call Aaa 345,027
5,000,000 Los Angeles County
Transportation Commission,
6.250%, 7/01/13 7/02 at 102 Aaa 5,098,600
2,000,000 Marysville (Fremont-Rideout
Health Group), 6.300%,
1/01/22 1/02 at 102 Aaa 2,023,160
1,000,000 Modesto (Golf Course
Project), Certificates of
Participation,
7.300%, 11/01/20 (Pre-
refunded to 11/01/98) 11/98 at 102 Aaa 1,100,010
Modesto Irrigation District
Financing Authority,
Domestic Water Project:
4,500,000 6.125%, 9/01/19 9/02 at 102 Aaa 4,517,640
5,000,000 5.500%, 9/01/22 9/02 at 100 Aaa 4,571,350
2,500,000 Mt. Diablo Hospital
District,
8.000%, 12/01/11 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 2,905,850
2,000,000 Mt. Diablo Unified School
District, Special Tax,
7.050%, 8/01/20 8/00 at 102 Aaa 2,145,120
Napa FHA-Insured (Creekside
Apartments):
2,555,000 6.625%, 7/01/24 7/02 at 102 Aaa 2,524,417
2,000,000 6.625%, 7/01/25 7/04 at 101 Aaa 2,048,620
2,500,000 Oakland Pension Financing,
7.600%, 8/01/21 8/98 at 102 Aaa 2,725,350
4,000,000 Orange County Certificates
of Participation, 5.500%,
6/01/19 6/02 at 100 Aaa 3,622,800
1,250,000 Palm Desert Redevelopment
Agency,
Tax Allocation Project,
7.400%, 5/01/09 5/97 at 101 Aaa 1,318,488
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,000,000 Pittsburg Redevelopment
Agency (Los Medanos
Community Project), Tax
Allocation,
7.150%, 8/01/21 8/01 at 103 Aaa $ 2,269,080
1,500,000 Port of Oakland, 7.250%,
11/01/16 5/97 at 102 Aaa 1,578,975
Rancho Cucamonga
Redevelopment Agency:
1,270,000 7.125%, 9/01/19 (Pre-
refunded to 9/01/99) 9/99 at 102 Aaa 1,400,759
1,230,000 7.125%, 9/01/19 9/99 at 102 Aaa 1,317,908
5,000,000 5.500%, 9/01/23 3/04 at 102 Aaa 4,596,800
5,000,000 5.000%, 4/01/24 4/04 at 102 Aaa 4,231,150
Riverside County Desert
Justice Facility
Corporation,
Certificates of
Participation:
3,600,000 6.000%, 12/01/17 12/04 at 101 Aaa 3,551,256
2,500,000 6.250%, 12/01/21 12/04 at 101 Aaa 2,524,050
3,000,000 Sacramento Municipal
Utility District,
Electric System,
6.500%, 9/01/21 (Pre-
refunded to 9/01/01) 9/01 at 102 Aaa 3,275,100
4,150,000 Sacramento County
Airport System,
5.750%, 7/01/24 7/02 at 100 Aaa 3,930,673
2,500,000 San Bernardino County
Transportation
Authority, Sales Tax,
6.000%, 3/01/10 3/02 at 102 Aaa 2,531,175
2,000,000 San Diego Regional
Building Authority,
Lease Revenue (San
Miguel Fire Protection
District),
7.250%, 1/01/20 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 2,220,860
San Francisco City and
County Redevelopment
Agency (George R.
Moscone Convention
Center):
2,250,000 6.800%, 7/01/19 7/04 at 102 Aaa 2,386,800
1,000,000 6.750%, 7/01/24 7/04 at 102 Aaa 1,056,740
2,250,000 San Jose Redevelopment
Agency, Tax Allocation,
4.750%, 8/01/24 2/04 at 102 Aaa 1,816,088
4,000,000 San Marcos Public
Facilities Authority,
Tax Allocation, 5.500%,
8/01/23 8/03 at 102 Aaa 3,632,720
6,750,000 Southern California
Public Power Authority,
5.000%, 7/01/22 7/03 at 100 Aaa 5,743,912
2,000,000 Southern California
Rapid Transit Finance
Authority, Certificates
of Participation,
7.500%, 7/01/05 1/01 at 102 1/2 Aaa 2,230,540
3,040,000 Sulphur Springs Union
School District,
0.000%, 9/01/15 No Opt. Call Aaa 862,144
</TABLE>
22
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,230,000 Temecula Valley Unified
School District,
General Obligation:
6.000%, 9/01/12 9/02 at 102 Aaa $ 2,241,195
135,000 Thousand Oaks Redevelopment
Agency,
Single Family Mortgage,
7.900%, 1/01/16 1/97 at 102 Aaa 141,236
- -------------------------------------------------------------------------------
$203,300,000 Total Investments - (cost
$194,580,364) - 97.8% 199,443,161
- -------------------------------------------------------------------------------
- -------------------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 0.8%
$ 1,700,000 California Health Facilities
Financing Authority
(St. Joseph Health System),
Series A, Variable Rate
Demand Bonds, 3.700%,
7/01/13+ VMIG-1 1,700,000
- -------------------
- -------------------------------------------------------------------------------
Other Assets Less
Liabilities - 1.4% 2,759,909
- -------------------------------------------------------------------------------
Net Assets - 100% $203,903,070
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
STANDARD & POOR'S MOODY'S OF ISSUES MARKET VALUE PERCENT
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 66 $193,985,381 97%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 1 5,457,780 3
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- -----------------------------------------------------------------------------------
TOTAL 67 $199,443,161 100%
</TABLE>
- --------------------------------------------------------------------------------
All of the bonds in the portfolio, excluding temporary investments in short-
term municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance or Portfolio Insurance, or are backed by an escrow
or trust containing sufficient U.S. Government or U.S. Government agency
securities to ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
23
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Massachusetts General
Obligation:
$ 165,000 7.250%, 3/01/09 (Pre-
refunded to 3/01/00) 3/00 at 102 Aaa $ 182,759
715,000 5.500%, 2/01/11 2/03 at 102 A 680,022
Massachusetts Bay
Transportation Authority,
General Transportation
System:
250,000 7.750%, 3/01/10 (Pre-
refunded to 3/01/98) 3/98 at 102 Aaa 273,878
1,000,000 7.000%, 3/01/11 (Pre-
refunded to 3/01/01) 3/01 at 102 Aaa 1,106,550
2,000,000 5.500%, 3/01/22 3/03 at 102 Aaa 1,849,520
250,000 Massachusetts Bay
Transportation Authority,
Certificates of
Participation, 7.800%,
1/15/14 12/06 at 100 BBB 278,015
170,000 Massachusetts Educational
Loan Authority,
7.875%, 6/01/03 6/97 at 102 AAA 180,628
1,360,000 Massachusetts Health and
Educational Facilities
Authority (Emerson
Hospital), 8.000%,
7/01/18 7/00 at 102 Baa1 1,428,884
250,000 Massachusetts Health and
Educational Facilities
Authority (Mount Auburn
Hospital),
7.875%, 7/01/18 (Pre-
refunded to 7/01/98) 7/98 at 102 Aaa 276,733
350,000 Massachusetts Health and
Educational Facilities
Authority (Salem
Hospital), 7.250%,
7/01/09 7/97 at 100 Aaa 364,732
500,000 Massachusetts Health and
Educational Facilities
Authority (Cardinal
Cushing General
Hospital), 8.875%,
7/01/18 7/99 at 102 1/2 N/R 522,705
Massachusetts Health and
Educational Facilities
Authority (Suffolk
University):
1,180,000 8.125%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 101 1/2 BBB 1,357,873
1,000,000 6.350%, 7/01/22 7/02 at 102 AAA 1,007,590
500,000 Massachusetts Health and
Educational Facilities
Authority (Newton-
Wellesley Hospital),
8.000%, 7/01/18 7/98 at 102 Aaa 548,540
500,000 Massachusetts Health and
Educational Facilities
Authority, FHA-Insured
(St. Elizabeth's Hospital
of Boston),
7.750%, 8/01/27 (Pre-
refunded to 8/01/97) 8/97 at 102 Aaa 542,510
750,000 Massachusetts Health and
Educational Facilities
Authority (Baystate
Medical Center),
7.500%, 7/01/20 (Pre-
refunded to 7/01/99) 7/99 at 102 A+ 833,775
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Boston
College),
6.625%, 7/01/21 7/01 at 102 Aaa 1,038,450
500,000 Massachusetts Health and
Educational Facilities
Authority (Worcester
Polytechnic Institute),
6.625%, 9/01/17 9/02 at 102 A+ 512,925
495,000 Massachusetts Health and
Educational Facilities
Authority (Brockton
Hospital), 8.000%,
7/01/07 7/97 at 102 A 537,347
250,000 Massachusetts Health and
Educational Facilities
Authority (University
Hospital), 7.250%,
7/01/10 7/00 at 102 Aaa 270,703
</TABLE>
24
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 750,000 Massachusetts Health and
Educational Facilities
Authority (New England
Medical Center), 6.625%,
7/01/25 7/02 at 102 Aaa $ 773,333
1,750,000 Massachusetts Health and
Educational Facilities
Authority (New England
Deaconess Hospital), 6.875%,
4/01/22 4/02 at 102 A 1,764,525
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Metrowest
Health), 6.500%, 11/15/18 11/02 at 102 A 919,740
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Cable Housing and
Health Services), 5.625%,
7/01/13 7/03 at 102 Aaa 948,960
Massachusetts Health and
Educational Facilities
Authority (Lahey Clinic
Medical Center):
1,000,000 5.625%, 7/01/15 7/03 at 102 Aaa 944,970
2,000,000 5.375%, 7/01/23 7/03 at 102 Aaa 1,793,060
Massachusetts Health and
Educational Facilities
Authority (Youville
Hospital):
2,500,000 6.000%, 2/15/25 2/04 at 102 Aa 2,357,825
2,000,000 6.000%, 2/15/34 2/04 at 102 Aa 1,850,880
2,000,000 Massachusetts Housing Finance
Agency,
Housing Project,
6.375%, 4/01/21 4/03 at 102 A1 1,996,060
Massachusetts Housing Finance
Agency,
Residential Development:
1,000,000 6.250%, 11/15/14 11/02 at 102 Aaa 997,630
1,000,000 6.875%, 11/15/21 5/02 at 102 Aaa 1,038,180
Massachusetts Housing Finance
Agency, Single Family
Housing:
500,000 7.350%, 12/01/16 6/01 at 102 Aa 529,045
1,250,000 7.700%, 6/01/17 6/98 at 102 Aa 1,325,650
1,440,000 Massachusetts Industrial
Finance Agency, Pollution
Control (Eastern Edison),
5.875%, 8/01/08 8/03 at 102 Baa2 1,346,659
1,000,000 Massachusetts Industrial
Finance Agency
(Malden Public Library
Project),
7.250%, 1/01/15 1/05 to 102 Aaa 1,099,030
250,000 Massachusetts Industrial
Finance Agency
(College of the Holy Cross),
6.450%, 1/01/12 1/02 at 102 A1 257,605
500,000 Massachusetts Industrial
Finance Agency
(Sturdy Memorial Hospital),
7.900%, 6/01/09 6/99 at 102 BBB+ 522,150
500,000 Massachusetts Industrial
Finance Agency (Springfield
College), 7.800%, 10/01/09 10/99 at 103 A 568,060
1,480,000 Massachusetts Industrial
Finance Agency (Merrimack
College), 7.125%, 7/01/12 7/02 at 102 BBB- 1,527,108
1,600,000 Massachusetts Industrial
Finance Agency
(Phillips Academy), 5.375%,
9/01/23 9/08 at 102 Aa1 1,448,096
</TABLE>
25
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Massachusetts Industrial
Finance Agency
(Whitehead Institute for
Biomedical Research),
5.125%, 7/01/26 7/03 at 102 Aa $ 403,925
1,000,000 Massachusetts Municipal
Wholesale Electric Company,
5.000%, 7/01/17 7/04 at 102 Aaa 857,990
Massachusetts Port Authority:
500,000 7.125%, 7/01/12 7/98 at 100 AA 507,575
635,000 13.000%, 7/01/13 No Opt. Call Aaa 1,094,727
Massachusetts Turnpike
Authority:
500,000 5.000%, 1/01/13 1/03 at 100 A1 445,145
500,000 5.000%, 1/01/20 1/03 at 100 A1 428,355
1,000,000 5.125%, 1/01/23 1/03 at 102 Aaa 864,110
1,500,000 Massachusetts Water Pollution
Abatement, 5.100%, 8/01/08 No Opt. Call Aa 1,402,920
Attleboro General Obligation:
450,000 6.250%, 1/15/10 1/03 at 102 Baa1 450,945
450,000 6.250%, 1/15/11 1/03 at 102 Baa1 450,288
Barnstable General
Obligation:
880,000 5.750%, 9/15/13 9/04 at 102 Aa 847,924
490,000 5.750%, 9/15/14 9/04 at 102 Aa 469,204
Boston General Obligation:
250,000 7.700%, 2/01/09 (Pre-refunded
to 2/01/99) 2/99 at 102 A 277,608
1,000,000 6.750%, 7/01/11 7/01 at 102 Aaa 1,098,310
1,500,000 Boston City Hospital, FHA-
Insured Mortgage, 7.625%,
2/15/21 (Pre-refunded to
8/15/00) 8/00 at 102 Aaa 1,693,695
Boston Water and Sewer
Commission:
180,000 7.875%, 11/01/13 (Pre-
refunded to 11/01/96) 11/96 at 102 A- 192,776
320,000 7.875%, 11/01/13 11/96 at 102 A- 340,304
500,000 7.000%, 11/01/18 (Pre-
refunded to 11/01/01) 11/01 at 102 Aaa 557,860
1,000,000 Boston-Mount Pleasant Housing
Development Corporation,
Multi-Family Housing,
6.750%, 8/01/23 8/02 at 102 AAA 1,022,990
1,000,000 Dartmouth Housing Development
Corporation, Multi-Family
Housing, 7.375%, 7/01/24 1/98 at 103 AAA 1,043,810
Deerfield General Obligation:
420,000 6.200%, 6/15/09 6/02 at 102 A1 445,171
415,000 6.250%, 6/15/10 6/02 at 102 A1 439,045
635,000 Haverhill General Obligation,
7.500%, 10/15/11 10/01 at 102 BBB 676,802
Holyoke General Obligation:
775,000 8.000%, 6/01/01 No Opt. Call Baa 821,523
250,000 8.150%, 6/15/06 6/02 at 103 Aaa 296,735
750,000 7.000%, 11/01/08 11/02 at 102 Baa 795,315
500,000 7.650%, 8/01/09 8/01 at 102 Baa 540,510
Lowell General Obligation:
545,000 8.300%, 2/15/05 No Opt. Call Baa1 617,730
445,000 8.400%, 1/15/09 (Pre-refunded
to 1/15/01) 1/01 at 102 Aaa 524,384
</TABLE>
26
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Lynn General Obligation,
7.850%, 1/15/11 (Pre-
refunded to 1/15/02) 1/02 at 104 Aaa $ 1,174,520
500,000 Monson General Obligation
School Project, 7.700%,
10/15/10 (Pre-refunded
to 10/15/00) 10/00 at 102 Aaa 568,570
Palmer General
Obligation:
500,000 7.700%, 10/01/10 (Pre-
refunded to 10/01/00) 10/00 at 102 Aaa 568,755
500,000 5.500%, 10/01/10 10/03 at 102 Aaa 483,220
1,130,000 Peabody General
Obligation, 6.950%,
8/01/09 8/00 at 100 Aaa 1,211,304
550,000 Quincy Hospital, FHA-
Insured, 7.875%, 1/15/16 7/96 at 102 AAA 583,924
250,000 Sandwich General
Obligation,
7.100%, 11/01/07 (Pre-
refunded to 11/01/98) 11/98 at 102 1/2 Aaa 273,500
1,250,000 Somerville Housing
Authority (GNMA),
7.950%, 11/20/30 5/00 at 102 AAA 1,331,488
425,000 South Essex Sewerage
District, General
Obligation, 9.000%,
12/01/00 No Opt. Call A 504,654
250,000 Southeastern
Massachusetts University
Building Authority,
7.800%, 5/01/16 (Pre-
refunded to 5/01/96) 5/96 at 102 A 263,378
1,000,000 Springfield General
Obligation, 7.100%,
9/01/11 9/02 at 102 Baa 1,031,330
Taunton General
Obligation:
1,465,000 8.000% 2/01/02 No Opt. Call A 1,660,841
1,005,000 8.000% 2/01/03 No Opt. Call A 1,148,614
250,000 University of Lowell
Building Authority,
7.400%, 11/01/07 11/97 at 102 A 266,994
500,000 University of
Massachusetts Building
Authority, 7.500%,
5/01/14 5/98 at 102 A 536,524
1,000,000 Worcester General
Obligation, 6.000%,
8/01/04 8/02 at 102 BBB+ 1,002,980
1,000,000 Puerto Rico Aqueduct and
Sewer Authority, 7.875%,
7/01/17 7/98 at 102 A 1,096,530
- -------------------------------------------------------------------------------
$69,170,000 Total Investments - (Cost
$68,863,593) - 97.7% 71,117,507
- -------------------------------------------------------------------------------
- -------------------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 1.1%
$ 500,000 Massachusetts Dedicated
Income Tax, Variable
Rate Demand Bonds,
3.650%, 12/01/97+ VMIG-1 500,000
300,000 Massachusetts Dedicated
Income Tax, Series
1990E, Variable Rate
Demand Bonds,
3.650%, 12/01/97+ VMIG-1 300,000
- -------------------------------------------------------------------------------
$ 800,000 Total Temporary
Investments - 1.1% 800,000
- -------------------------------------------------------------------------------
- -------------------
Other Assets Less
Liabilities - 1.2% 864,837
- -------------------------------------------------------------------------------
Net Assets - 100% $72,782,344
</TABLE>
- --------------------------------------------------------------------------------
27
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 37 $30,487,648 43%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 10 11,143,044 16
PORTFOLIO OF A+ A1 8 5,358,081 7
INVESTMENTS A, A- A, A2, A3 15 10,757,917 15
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 15 12,848,112 18
TEMPORARY Non-rated Non-rated 1 522,705 1
INVESTMENTS):
- --------------------------------------------------------------------------------------
TOTAL 86 $71,117,507 100%
</TABLE>
- --------------------------------------------------------------------------------
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
28
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Massachusetts General
Obligation:
$ 500,000 6.500%, 6/01/08 6/02 at 101 Aaa $ 524,950
250,000 7.250%, 3/01/09 (Pre-refunded
to 3/01/00) 3/00 at 102 Aaa 277,028
1,200,000 6.000%, 6/01/13 6/02 at 100 Aaa 1,206,864
Massachusetts Bay
Transportation Authority,
General Transportation
System:
250,000 7.250%, 3/01/03 3/00 at 102 Aaa 276,440
250,000 7.100%, 3/01/13 (Pre-refunded
to 3/01/99) 3/99 at 102 Aaa 273,053
1,000,000 5.750%, 3/01/22 3/02 at 100 Aaa 952,660
250,000 Massachusetts Bay
Transportation Authority,
Certificates of
Participation, 7.650%,
8/01/15 8/00 at 102 Aaa 275,650
750,000 Massachusetts College
Building Authority,
7.250%, 5/01/16 5/96 at 102 Aaa 786,278
450,000 Massachusetts Health and
Educational Facilities
Authority (St. Luke's
Hospital of New Bedford),
7.750%, 7/01/13 (Pre-
refunded to 7/01/97) 7/97 at 102 Aaa 486,873
300,000 Massachusetts Health and
Educational Facilities
Authority (Mount Auburn
Hospital),
7.875%, 7/01/18 (Pre-
refunded to 7/01/98) 7/98 at 102 Aaa 332,079
Massachusetts Health and
Educational Facilities
Authority (South Shore
Hospital):
200,000 8.125%, 7/01/17 (Pre-refunded
to 7/01/97) 7/97 at 102 Aaa 218,168
250,000 7.500%, 7/01/20 (Pre-refunded
to 7/01/00) 7/00 at 102 Aaa 280,793
1,000,000 6.500%, 7/01/22 7/02 at 102 Aaa 1,018,790
800,000 Massachusetts Health and
Educational Facilities
Authority (Berkshire Health
Systems), 7.600%, 10/01/14 10/98 at 102 Aaa 858,784
750,000 Massachusetts Health and
Educational Facilities
Authority (Salem Hospital),
7.250%, 7/01/09 7/97 at 100 Aaa 781,568
250,000 Massachusetts Health and
Educational Facilities
Authority (Capital Asset
Program), 7.200%, 7/01/09 7/99 at 102 Aaa 267,238
500,000 Massachusetts Health and
Educational Facilities
Authority (University
Hospital), 7.250%, 7/01/19 7/00 at 102 Aaa 539,010
250,000 Massachusetts Health and
Educational Facilities
Authority (Newton-Wellesley
Hospital),
8.000%, 7/01/18 7/98 at 102 Aaa 274,270
Massachusetts Health and
Educational Facilities
Authority (Northeastern
University):
250,000 7.600%, 10/01/10 10/98 at 102 Aaa 272,020
1,600,000 6.550%, 10/01/22 10/02 at 100 Aaa 1,659,808
500,000 Massachusetts Health and
Educational Facilities
Authority (Baystate Medical
Center),
7.500%, 7/01/20 (Pre-
refunded to 7/01/99) 7/99 at 102 A+ 555,850
</TABLE>
29
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Massachusetts Health and
Educational Facilities
Authority (Stonehill
College),
7.700%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa $ 566,450
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Boston College),
6.625%, 7/01/21 7/01 at 102 Aaa 1,038,450
500,000 Massachusetts Health and
Educational Facilities
Authority (Berklee College
of Music),
6.875%, 10/01/21 10/01 at 102 Aaa 526,940
1,000,000 Massachusetts Health and
Educational Facilities
Authority (Brigham and
Women's Hospital),
6.750%, 7/01/24 7/01 at 102 Aa 1,013,220
250,000 Massachusetts Health and
Educational Facilities
Authority (Beverly
Hospital),
7.300%, 7/01/19 (Pre-
refunded to 7/01/99) 7/99 at 102 Aaa 275,688
1,500,000 Massachusetts Health and
Educational Facilities
Authority (New England
Medical Center), 6.625%,
7/01/25 7/02 at 102 Aaa 1,546,664
1,450,000 Massachusetts Health and
Educational Facilities
Authority (Boston
University), 6.000%,
10/01/22 10/02 at 100 Aaa 1,438,299
2,000,000 Massachusetts Health and
Educational Facilities
Authority (Bentley College),
6.125%, 7/01/17 7/02 at 102 Aaa 2,006,140
Massachusetts Health and
Educational Facilities
Authority (Lahey Clinic
Medical Center):
750,000 7.600%, 7/01/08 (Pre-refunded
to 7/01/98) 7/98 at 102 Aaa 823,920
2,000,000 5.625%, 7/01/15 7/03 at 102 Aaa 1,889,940
2,500,000 5.375%, 7/01/23 7/03 at 102 Aaa 2,241,325
355,000 Massachusetts Housing Finance
Agency,
7.600%, 12/01/16 12/99 at 103 Aaa 379,470
Massachusetts Housing Finance
Agency, Single Family
Housing:
500,000 7.350%, 12/01/16 6/01 at 102 Aa 529,045
250,000 7.700%, 6/01/17 6/98 at 102 Aa 265,130
1,630,000 Massachusetts Industrial
Finance Agency (Malden
Public Library Project),
7.250%, 1/01/15 1/05 at 102 Aaa 1,791,419
500,000 Massachusetts Industrial
Finance Agency
(Brandeis University),
6.800%, 10/01/19 10/99 at 102 Aaa 521,200
200,000 Massachusetts Industrial
Finance Agency (Harvard
Community Health Plan),
7.750%, 10/01/08 10/98 at 102 Aaa 218,860
250,000 Massachusetts Industrial
Finance Agency
(Milton Academy),
7.250%, 9/01/19 (Pre-
refunded to 9/01/99) 9/99 at 102 Aaa 276,668
375,000 Massachusetts Industrial
Finance Agency
(Museum of Science),
7.300%, 11/01/09 (Pre-
refunded to 11/01/99) 11/99 at 102 Aaa 416,809
</TABLE>
30
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Massachusetts Industrial
Finance Agency (Mount
Holyoke College), 6.300%,
7/01/13 7/01 at 102 Aaa $ 1,021,990
2,000,000 Massachusetts Municipal
Wholesale Electric Company,
5.000%, 7/01/10 7/03 at 102 Aaa 1,802,940
1,000,000 Massachusetts Port Authority,
13.000%, 7/01/13 No Opt. Call Aaa 1,723,980
1,000,000 Massachusetts Turnpike
Authority,
5.125%, 1/01/23 1/03 at 102 Aaa 864,110
1,000,000 Boston General Obligation,
6.750%, 7/01/11 7/01 at 102 Aaa 1,098,310
500,000 Boston City Hospital (FHA-
Insured),
7.625%, 2/15/21 (Pre-
refunded to 8/15/00) 8/00 at 102 Aaa 564,565
Boston Water and Sewer
Commission:
500,000 7.250%, 11/01/06 11/98 at 100 Aaa 532,975
500,000 7.000%, 11/01/18 (Pre-
refunded to 11/01/01) 11/01 at 102 Aaa 557,860
500,000 Fall River General
Obligation, 7.200%, 6/01/10 6/01 at 102 Aaa 543,230
250,000 Groveland Unlimited Tax,
6.900%, 6/15/07 6/01 at 102 Aaa 268,480
1,000,000 Haverhill General Obligation,
6.700%, 9/01/10 9/01 at 102 Aaa 1,056,330
250,000 Holyoke General Obligation,
8.150%, 6/15/06 6/02 at 103 Aaa 296,735
450,000 Leominster General
Obligation, 7.500%, 4/01/09 4/00 at 102 Aaa 493,551
1,625,000 Lowell General Obligation,
5.600%, 11/01/12 11/03 at 102 Aaa 1,549,503
1,025,000 Lynn General Obligation,
6.750%, 1/15/02 No Opt. Call Aaa 1,102,951
250,000 Lynn Water and Sewer
Commission,
7.250%, 12/01/10 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 279,710
1,000,000 Mansfield General Obligation,
6.700%, 1/15/11 1/02 at 102 Aaa 1,056,010
250,000 Methuen General Obligation,
7.400%, 5/15/04 5/00 at 102 Aaa 276,698
500,000 Monson General Obligation
School Project, 7.700%,
10/15/10 (Pre-refunded to
10/15/00) 10/00 at 102 Aaa 568,570
1,500,000 Monson General Obligation,
5.500%, 10/15/10 No Opt. Call Aaa 1,454,040
300,000 North Andover General
Obligation,
7.400%, 9/15/10 9/00 at 103 Aaa 328,281
North Middlesex Regional
School District, General
Obligation:
270,000 7.200%, 6/15/08 6/00 at 103 Aaa 294,146
245,000 7.200%, 6/15/09 6/00 at 103 Aaa 266,438
250,000 Northampton General
Obligation,
5.300%, 3/01/10 3/03 at 102 Aaa 237,103
190,000 Northfield General
Obligation, 6.350%, 10/15/09 10/01 at 102 Aaa 197,423
Palmer General Obligation:
270,000 7.300%, 3/01/10 (Pre-refunded
to 3/01/00) 3/00 at 102 Aaa 299,840
250,000 7.700%, 10/01/10 (Pre-
refunded to 10/01/00) 10/00 at 102 Aaa 284,378
1,000,000 5.500%, 10/01/10 10/03 at 102 Aaa 966,440
440,000 Quaboag Regional School
District, General
Obligation, 6.250%, 6/15/08 6/02 at 102 Aaa 457,552
Salem General Obligation:
500,000 6.800%, 8/15/09 8/01 at 102 Aaa 534,430
900,000 6.000%, 7/15/10 7/02 at 102 Aaa 906,984
</TABLE>
31
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 250,000 Sandwich General
Obligation,
7.100%, 11/01/07 (Pre-
refunded to 11/01/98) 11/98 at 102 1/2 Aaa $ 273,500
Southern Berkshire
Regional School
District, General
Obligation:
515,000 7.500%, 4/15/07 (Pre-
refunded to 4/15/02) 4/02 at 102 Aaa 587,275
1,145,000 7.000%, 4/15/11 4/02 at 102 Aaa 1,235,249
250,000 Springfield General
Obligation, 7.000%,
11/01/07 11/98 at 103 Aaa 270,360
220,000 Taunton General
Obligation, 6.800%,
9/01/09 9/01 at 103 Aaa 236,581
455,000 Wareham School Project,
General Obligation,
7.050%, 1/15/07 1/01 at 103 Aaa 494,853
250,000 Westfield General
Obligation,
7.100%, 12/15/08 (Pre-
refunded to 12/15/00) 12/00 at 102 Aaa 277,995
215,000 Whately General
Obligation, 6.350%,
1/15/09 1/02 at 102 Aaa 225,264
1,210,000 Winchendon General
Obligation, 6.050%,
3/15/10 3/03 at 102 Aaa 1,228,136
160,000 Worcester General
Obligation, 6.900%,
5/15/07 5/02 at 102 Aaa 174,332
- -------------------------------------------------------------------------------
$54,445,000 Total Investments - (Cost
$54,505,119) - 95.5% 56,772,909
- -------------------------------------------------------------------------------
- -------------------
-----------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 2.9%
$ 1,400,000 Massachusetts Dedicated
Income Tax, Variable
Rate Demand Bonds,
3.650%, 12/01/97+ VMIG-1 1,400,000
300,000 Massachusetts Dedicated
Income Tax, Series
1990E, Variable Rate
Demand Bonds,
3.650%, 12/01/97+ VMIG-1 300,000
- -------------------------------------------------------------------------------
$ 1,700,000 Total Temporary
Investments - 2.9% 1,700,000
- -------------------------------------------------------------------------------
- -------------------
Other Assets Less
Liabilities - 1.6% 958,167
- -------------------------------------------------------------------------------
Net Assets - 100% $59,431,076
</TABLE>
- --------------------------------------------------------------------------------
32
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 77 $54,409,664 96%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 3 1,807,395 3
PORTFOLIO OF A+ A1 1 555,850 1
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- ----------------------------------------------------------------------------------
TOTAL 81 $56,772,909 100%
</TABLE>
- --------------------------------------------------------------------------------
All of the bonds in the portfolio, excluding temporary investments in short-
term municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance or Portfolio Insurance, or are backed by an escrow
or trust containing sufficient U.S. Government or U.S. Government agency
securities to ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
33
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,900,000 New York State Local
Government Assistance
Corporation,
6.250%, 4/01/21 4/02 at 102 A $ 1,901,159
500,000 New York State
(Commissioner of Office of
Mental Health),
Certificates of
Participation,
8.300%, 9/01/12 9/97 at 102 Baa1 529,870
200,000 New York State Housing
Finance Agency, State
University Construction,
8.000%, 5/01/11 No Opt. Call Aaa 241,484
1,650,000 New York State Housing
Finance Agency, Insured
Multi-Family Mortgage,
6.950%, 8/15/12 8/02 at 102 AA 1,737,533
2,000,000 New York State Housing
Finance Agency, Health
Facilities (New York
City), 8.000%, 11/01/08 11/00 at 102 BBB+ 2,212,220
New York State Housing
Finance Agency, Service
Contract Obligation:
2,500,000 6.125%, 3/15/20 9/03 at 102 Baa1 2,411,625
1,650,000 5.500%, 9/15/22 9/03 at 102 Baa1 1,441,556
1,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
Insured Mortgage (St.
Vincent's Hospital),
8.000%, 2/15/27 (Pre-
refunded to 8/15/97) 8/97 at 102 Aaa 1,091,530
995,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
Insured Mortgage (Albany
Medical Center),
8.000%, 2/15/28 8/98 at 102 AAA 1,093,077
1,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home
(FHA-Insured),
7.350%, 2/15/29 8/99 at 102 AA 1,080,070
1,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Buffalo
General Hospital),
7.700%, 2/15/22 (Pre-
refunded to 8/15/98) 8/98 at 102 AAA 1,107,800
1,250,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Catholic
Medical Center),
8.300%, 2/15/22 (Pre-
refunded to 2/15/98) 2/98 at 102 AAA 1,390,113
2,250,000 New York State Medical Care
Facilities Finance Agency
(Columbia-Presbyterian),
8.000%, 2/15/25 (Pre-
refunded to 8/15/97) 8/97 at 102 Aaa 2,461,455
2,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home
(FHA-Insured),
6.200%, 8/15/22 8/02 at 102 AAA 1,994,700
New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Mt. Sinai
Hospital):
3,780,000 6.250%, 8/15/12 8/02 at 102 AAA 3,831,030
2,295,000 5.750%, 8/15/19 8/02 at 102 AAA 2,179,562
</TABLE>
34
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,570,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Bayley
Seton/St. Joseph's
Hospital), 6.450%, 2/15/09 2/03 at 102 AAA $ 1,624,730
New York State Medical Care
Facilities Finance Agency
(Mental Health Services):
680,000 7.875%, 8/15/15 (Pre-
refunded to 8/15/98) 8/98 at 102 AAA 756,364
320,000 7.875%, 8/15/15 8/98 at 102 Baa1 342,058
1,460,000 7.500%, 2/15/21 (Pre-
refunded to 2/15/01) 2/01 at 102 Aaa 1,648,544
1,795,000 5.250%, 8/15/23 8/03 at 102 Baa1 1,501,607
1,500,000 6.500%, 8/15/24 8/04 at 102 Baa1 1,507,155
500,000 New York State Medical Care
Facilities Finance Agency
(Central Suffolk
Hospital),
6.125%, 11/01/16 11/03 at 102 BBB 437,445
3,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital Insured Mortgage,
5.500%, 8/15/24 2/04 at 102 AAA 2,687,550
2,500,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (St. Vincent's
Medical Center), 6.200%,
2/15/21 2/04 at 102 AAA 2,493,500
New York State Medical Care
Facilities Finance Agency
(Hospital and Nursing
Home):
2,500,000 6.400%, 8/15/14 8/04 at 102 AAA 2,586,150
955,000 6.000%, 8/15/14 8/04 at 102 AAA 951,715
New York State Medical Care
Facilities Finance Agency,
New York Hospital, FHA-
Insured:
1,000,000 6.750%, 8/15/14 2/05 at 102 Aaa 1,057,210
1,000,000 6.800%, 8/15/24 2/05 at 102 Aaa 1,056,180
380,000 New York State Mortgage
Agency,
8.100%, 10/01/17 4/98 at 102 Aa 404,742
3,000,000 New York State Thruway
Authority,
6.000%, 1/01/25 1/05 at 102 Aaa 2,974,980
300,000 New York State Urban
Development Corporation
(Center for Industrial
Innovation),
7.000%, 1/01/13 1/96 at 102 Baa1 305,349
1,000,000 New York State Urban
Development Corporation,
6.750%, 1/01/26 1/02 at 102 Aaa 1,046,580
1,100,000 New York State Urban
Development Corporation
(Syracuse University
Center for Science and
Technology), 7.875%,
1/01/17 1/98 at 102 Baa1 1,164,504
New York State Urban
Development Corporation,
Correctional Capital
Facilities:
1,250,000 5.500%, 1/01/15 1/03 at 102 Baa1 1,114,175
2,500,000 5.500%, 1/01/16 1/04 at 102 Baa1 2,232,225
1,000,000 7.500%, 1/01/20 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 1,118,760
</TABLE>
35
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,000,000 New York State Urban
Development Corporation
(Clarkson Center for
Advanced Materials
Processing), 7.800%,
1/01/20 1/01 at 102 Baa1 $ 2,172,320
2,900,000 New York State Urban
Development
Corporation, State
Facilities, 7.500%
4/01/20 4/01 at 102 Baa1 3,105,697
1,000,000 New York State Urban
Development Corporation
(Cornell Center for
Theory and Simulation),
6.000%, 1/01/14 1/03 at 102 BBB 958,570
2,100,000 Babylon Industrial
Development Agency,
Resource Recovery,
8.500%, 1/01/19 7/98 at 103 Baa1 2,276,904
1,000,000 Batavia Housing
Authority, FHA-Insured
(Washington Towers),
6.500%, 1/01/23 7/01 at 102 Aaa 988,400
5,925,000 Battery Park City
Authority, Junior
Revenue, 5.800%,
11/01/22 11/03 at 102 A 5,359,874
1,000,000 Battery Park City
Authority,
7.700%, 5/01/15 (Pre-
refunded to 5/01/99) 5/99 at 102 Aaa 1,116,770
1,000,000 Brookhaven Industrial
Development Agency,
Civic Facility (Dowling
College/National
Aviation Center),
6.750%, 3/01/23 3/03 at 102 BBB 986,380
375,000 Buffalo General
Obligation,
8.100%, 2/01/14 (Pre-
refunded to 2/01/96) 2/96 at 101 N/R 390,675
500,000 Dormitory Authority of
the State of New York
(Long Island Jewish
Medical Center), FHA-
Insured, 7.750%,
8/15/27 2/98 at 102 AAA 537,315
Dormitory Authority of
the State of New York
(City University):
1,500,000 5.750%, 7/01/07 No Opt. Call Baa1 1,447,230
750,000 7.500%, 7/01/10 No Opt. Call Baa1 840,758
500,000 8.200%, 7/01/13 7/98 at 102 Baa1 555,465
1,000,000 7.625%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 1,135,980
750,000 Dormitory Authority of
the State of New York,
GNMA (Park Ridge
Housing, Inc.),
7.850%, 2/01/29 2/99 at 102 AAA 811,088
1,985,000 Dormitory Authority of
the State of New York
(United Health
Services), 7.350%,
8/01/29 2/00 at 102 Aaa 2,115,950
2,250,000 Dormitory Authority of
the State of New York,
Judicial Facilities
Lease (Suffolk County),
9.500%, 4/15/14 4/95 at 116 1/2 Baa1 2,625,930
Dormitory Authority of
the State of New York
(State University):
2,000,000 7.400%, 5/15/01 5/00 at 102 Baa1 2,165,700
1,125,000 5.250%, 5/15/09 No Opt. Call Baa1 1,016,989
2,000,000 5.500%, 5/15/13 No Opt. Call Baa1 1,823,840
2,000,000 6.375%, 5/15/14 5/03 at 102 Baa1 1,998,640
</TABLE>
36
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,375,000 Dormitory Authority of
the State of New York
(University of
Rochester, Strong
Memorial Hospital),
5.500%, 7/01/21 7/04 at 102 A1 $ 1,187,120
Dormitory Authority of
the State of New York,
Court Facilities:
1,000,000 5.375%, 5/15/16 5/03 at 101 1/2 Baa1 874,490
5,960,000 5.700%, 5/15/22 5/03 at 101 1/2 Baa1 5,382,416
2,470,000 Dutchess County
Industrial Development
Authority, Civic
Facilities (Bard
College), 7.000%,
11/01/17 11/03 at 102 A 2,519,869
1,000,000 Franklin County
Industrial Development
Agency (County
Correctional
Facility), 6.750%,
11/01/12 11/02 at 102 BBB 1,017,620
800,000 Hempstead Industrial
Development Authority,
Civic Facility (United
Cerebral Palsy
Association of Nassau
County), 7.500%,
10/01/09 10/99 at 102 Aa2 834,008
Metropolitan
Transportation
Authority, Commuter
Facilities:
2,000,000 5.625%, 7/01/16 7/03 at 102 Baa1 1,786,620
1,000,000 6.250%, 7/01/17 7/02 at 102 Aaa 1,014,720
1,000,000 Metropolitan
Transportation
Authority, Commuter
Facilities Service
Contract,
7.500%, 7/01/16 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 1,130,190
Metropolitan
Transportation
Authority, Transit
Facilities:
1,025,000 6.500%, 7/01/18 7/02 at 102 Aaa 1,059,655
3,095,000 4.750%, 7/01/19 7/03 at 100 Baa1 2,405,774
Monroe County Water
Authority, Water
System:
510,000 5.250%, 8/01/13 8/03 at 101 AA 466,609
1,900,000 5.250%, 8/01/16 8/03 at 101 AA 1,708,214
1,055,000 6.000%, 8/01/17 8/02 at 102 AA 1,019,647
New York City General
Obligation:
2,500,000 7.000%, 8/01/04 No Opt. Call A- 2,608,750
2,000,000 7.500%, 2/01/06 2/02 at 101 1/2 A- 2,125,760
45,000 6.625%, 8/01/13 8/02 at 101 1/2 Aaa 47,231
2,000,000 7.000%, 2/01/21 2/02 at 101 1/2 Aaa 2,124,740
2,500,000 New York City
Educational
Construction Fund,
5.625%, 4/01/13 4/04 at 101 1/2 Aaa 2,397,200
New York City Housing
Development
Corporation, Multi-
Family Mortgage (FHA-
Insured):
2,000,000 6.550%, 10/01/15 4/03 at 102 AAA 2,030,800
2,500,000 5.850%, 5/01/26 5/03 at 102 AA 2,318,200
1,000,000 New York City Housing
Development
Corporation, Multi-
Unit Mortgage (FHA-
Insured),
7.350%, 6/01/19 6/01 at 102 AAA 1,061,380
</TABLE>
37
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York City Municipal
Water Finance
Authority, Water and
Sewer System:
$ 500,000 7.375%, 6/15/09 (Pre-
refunded to 6/15/99) 6/99 at 101 1/2 AAA $ 551,830
1,000,000 5.375%, 6/15/19 6/04 at 101 Aaa 913,360
290,000 7.750%, 6/15/20 (Pre-
refunded to 6/15/00) 6/00 at 100 Aaa 301,818
1,500,000 6.600%, 6/15/20 (Pre-
refunded to 6/15/01) 6/01 at 101 1/2 Aaa 1,730,655
210,000 6.000%, 6/15/20 6/00 at 100 Aaa 205,960
1,000,000 New York City Industrial
Development Agency,
Civic Facility, The
American Society for
Prevention of Cruelty
to Animals,
7.700%, 10/15/19 10/99 at 102 Aa3 1,039,720
3,500,000 New York City Industrial
Development Agency,
Civic Facility (The
Lighthouse Project),
6.500%, 7/01/22 7/02 at 102 Aa2 3,499,580
2,440,000 Newark-Wayne Community
Hospital,
7.600%, 9/01/15 9/03 at 102 N/R 2,494,827
Newburgh General
Obligation:
435,000 5.875%, 6/15/10 6/02 at 102 A1 431,707
435,000 5.875%, 6/15/11 6/02 at 102 A1 430,237
1,000,000 Orangetown Housing
Authority, Housing
Facilities (Orangetown
Guaranty),
7.600%, 4/01/30 (Pre-
refunded to 10/01/00) 10/00 at 102 A 1,138,990
South Orangetown Central
School District,
General Obligation:
390,000 6.875%, 10/01/08 No Opt. Call A 430,186
390,000 6.875%, 10/01/09 No Opt. Call A 428,843
3,015,000 Suffolk County
Industrial Development
Agency (Dowling College
Civic Facility),
6.625%, 6/01/24 6/04 at 102 BBB 3,039,571
1,000,000 34th Street Partnership
Business Improvement
District, Capital
Improvement, 5.500%,
1/01/23 1/03 at 102 A1 878,930
Triborough Bridge and
Tunnel Authority:
2,000,000 7.100%, 1/01/10 1/01 at 102 A1 2,122,960
2,000,000 7.100%, 1/01/10 1/01 at 102 Aaa 2,176,480
1,800,000 UFA Development
Corporation, FHA-
Insured (Loretto-Utica
Project), 5.950%,
7/01/35 7/04 at 102 Aa 1,607,885
2,000,000 Westchester County
Industrial Development
Agency, Civic Facility
(Jewish Board of Family
and Children's
Services), 6.750%,
12/15/12 12/02 at 102 BBB- 1,997,660
- -------------------------------------------------------------------------------
$152,580,000 Total Investments -
(cost $149,284,352) -
100.0% $152,688,994
- -------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 0.8%
$ 500,000 New York City General
Obligation, Variable Rate
Demand Bonds, 3.600%,
8/01/21+ VMIG-1 $ 500,000
700,000 Dormitory Authority of the
State of New York
(St. Francis Center at
the Knolls, Inc.),
Variable Rate Demand
Bonds, 3.600%, 7/01/23+ VMIG-1 700,000
- ------------------------------------------------------------------------------
$ 1,200,000 Total Temporary
Investments - 0.8% 1,200,000
- ------------------------------------------------------------------------------
- -------------------
Other Assets Less
Liabilities - (0.8%) (1,160,315)
- ------------------------------------------------------------------------------
Net Assets - 100% $152,728,679
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
STANDARD & POOR'S MOODY'S ISSUES MARKET VALUE PERCENT
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 41 $ 58,844,536 39%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 11 15,716,208 10
PORTFOLIO OF A+ A1 5 5,050,954 3
INVESTMENTS A, A- A, A2, A3 8 16,513,431 11
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 32 53,678,363 35
TEMPORARY Non-rated Non-rated 2 2,885,502 2
INVESTMENTS):
- ---------------------------------------------------------------------------------------
TOTAL 99 $152,688,994 100%
</TABLE>
- --------------------------------------------------------------------------------
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
39
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,500,000 New York State Energy
Research and Development
Authority, Pollution
Control (Central Hudson
Gas and Electric
Corporation), 7.375%,
10/01/14 10/99 at 103 Aaa $ 2,715,275
5,500,000 New York State Energy
Research and Development
Authority, Electric
Facilities (Consolidated
Edison Company), 5.250%,
8/15/20 10/03 at 102 Aaa 4,912,380
1,450,000 New York State
Environmental Facilities
Corporation, Water
Pollution Control, Pooled
Loan, 7.200%, 3/15/11 6/00 at 102 Aaa 1,559,388
2,220,000 New York State Housing
Finance Agency,
Multi-Family Housing,
7.450%, 11/01/28 11/99 at 102 Aaa 2,343,499
995,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
Insured Mortgage (Albany
Medical Center),
8.000%, 2/15/28 8/98 at 102 AAA 1,093,077
895,000 New York State Medical Care
Facilities Finance Agency
(St. Francis Hospital),
7.625%, 11/01/21 11/98 at 102 Aaa 973,313
4,765,000 New York State Medical Care
Facilities Finance Agency,
Secured Hospital (Bronx
Lebanon), 7.100%, 2/15/27 2/97 at 102 Aaa 4,960,699
2,000,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured, 7.350%,
2/15/29 8/99 at 102 AA 2,160,140
1,500,000 New York State Medical Care
Facilities Finance Agency,
Hospital and Nursing Home,
FHA-Insured (Catholic
Medical Center),
8.300%, 2/15/22 (Pre-
refunded to 2/15/98) 2/98 at 102 AAA 1,668,135
New York State Medical Care
Facilities Finance Agency,
FHA-Insured (Montefiore
Medical Center)
1,500,000 7.250%, 2/15/24 2/99 at 102 AA 1,579,725
2,000,000 7.250%, 2/15/24 2/99 at 102 Aaa 2,141,280
6,600,000 New York State Medical Care
Facilities Finance Agency
(St. Luke's-Roosevelt
Hospital Center), 7.450%,
2/15/29 (Pre-refunded to
2/15/00) 2/00 at 102 Aaa 7,365,996
3,200,000 New York State Medical Care
Facilities Finance Agency,
Mortgage Project (North
Shore University
Hospital), 7.200%,
11/01/20 11/00 at 102 Aaa 3,427,776
1,670,000 New York State Medical Care
Facilities Finance Agency
(Our Lady of Victory),
6.625%, 11/01/16 11/01 at 102 Aaa 1,728,183
New York State Medical Care
Facilities Finance Agency
(Sisters of Charity of
Buffalo):
500,000 6.600%, 11/01/10 11/01 at 102 Aaa 525,175
1,550,000 6.625%, 11/01/18 11/01 at 102 Aaa 1,599,802
1,000,000 New York State Medical Care
Facilities Finance Agency
(Aurelia Osborn Fox
Memorial Hospital),
6.500%, 11/01/19 11/01 at 102 Aaa 1,021,120
</TABLE>
40
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,000,000 New York State Medical Care
Facilities Finance Agency
(South Nassau Communities
Hospital), 6.125%,
11/01/11 11/02 at 102 Aaa $ 3,037,890
New York State Medical Care
Facilities Finance Agency,
Mental Health Services,
Facilities Improvement
Revenue:
1,500,000 5.750%, 2/15/14 8/03 at 102 Aaa 1,444,680
3,250,000 5.700%, 8/15/14 2/03 at 102 Aaa 3,127,995
6,150,000 6.375%, 8/15/17 12/02 at 102 Aaa 6,265,251
2,890,000 6.250%, 8/15/18 2/02 at 102 Aaa 2,909,594
1,100,000 5.500%, 8/15/21 2/02 at 100 Aaa 1,019,249
2,500,000 New York State Medical Care
Facilities Finance Agency
(St. Mary's Hospital
Rochester Project),
6.200%, 11/01/14 11/03 at 102 Aaa 2,532,825
7,000,000 New York State Medical Care
Facilities Finance Agency,
New York Hospital, FHA-
Insured, 6.800%, 8/15/24 2/05 at 102 Aaa 7,393,260
New York State Mortgage
Agency:
225,000 8.375%, 10/01/17 1/98 at 102 Aa 238,448
390,000 8.100%, 10/01/17 4/98 at 102 Aa 415,393
3,500,000 New York State Mortgage
Agency, Homeowner
Mortgage, 5.650%, 4/01/15 10/03 at 102 Aaa 3,257,555
New York State Thruway
Authority:
7,300,000 5.750%, 1/01/19 1/02 at 102 Aaa 7,006,905
3,950,000 5.500%, 1/01/23 1/02 at 100 Aaa 3,643,915
5,000,000 6.000%, 1/01/25 1/05 at 102 Aaa 4,958,300
New York State Urban
Development Corporation:
3,850,000 6.700%, 1/01/12 1/02 at 102 Aaa 4,056,707
9,650,000 6.750%, 1/01/26 1/02 at 102 Aaa 10,099,497
New York State Urban
Development Corporation,
Correctional Facilities:
1,500,000 7.250%, 1/01/14 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 1,665,645
3,000,000 5.250%, 1/01/14 No Opt. Call Aaa 2,757,360
575,000 7.000%, 1/01/17 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 632,126
9,200,000 5.250%, 1/01/18 1/03 at 102 Aaa 8,262,980
2,000,000 7.500%, 1/01/20 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 2,237,520
2,000,000 New York State Power
Authority, General
Purpose, 6.500%, 1/01/19 1/02 at 102 Aaa 2,059,340
Albany Municipal Water
Finance Authority, Water
and Sewer System:
720,000 7.500%, 12/01/17 (Pre-
refunded to 12/01/98) 12/98 at 102 Aaa 795,211
280,000 7.500%, 12/01/17 12/98 at 102 Aaa 305,410
1,000,000 Buffalo General Obligation,
6.150%, 2/01/04 1/01 at 101 Aaa 1,045,870
8,385,000 Buffalo Municipal Water
Finance Authority, Water
System, 5.750%, 7/01/19 7/03 at 102 Aaa 8,035,010
</TABLE>
41
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Camden Central School
District, General
Obligation:
$ 500,000 7.100%, 6/15/07 No Opt. Call Aaa $ 574,145
600,000 7.100%, 6/15/08 No Opt. Call Aaa 689,022
600,000 7.100%, 6/15/09 No Opt. Call Aaa 688,956
275,000 7.100%, 6/15/10 No Opt. Call Aaa 315,139
1,690,000 Dormitory Authority of the
State of New York, College
and University (Pooled
Capital Program), 7.800%,
12/01/05 12/98 at 102 Aaa 1,858,611
1,490,000 Dormitory Authority of the
State of New York (United
Health Services), 7.350%,
8/01/29 2/00 at 102 AAA 1,588,295
1,490,000 Dormitory Authority of the
State of New York (Iona
College), 7.625%, 7/01/09 7/98 at 102 Aaa 1,625,441
1,000,000 Dormitory Authority of the
State of New York (United
Cerebral Palsy Association
of Westchester County),
6.200%, 7/01/12 7/02 at 102 Aaa 1,024,820
1,000,000 Dormitory Authority of the
State of New York
(Manhattanville College),
7.500%, 7/01/22 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 1,130,190
Dormitory Authority of the
State of New York (City
University System):
2,500,000 7.000%, 7/01/14 7/00 at 102 Aaa 2,663,175
1,000,000 6.500%, 7/01/14 7/96 at 100 Aaa 1,007,780
1,800,000 5.750%, 7/01/18 No Opt. Call Aaa 1,743,696
6,295,000 7.500%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 7,114,546
2,500,000 Dormitory Authority of the
State of New York (Cooper
Union), 7.200%, 7/01/20 7/01 at 102 Aaa 2,690,400
Dormitory Authority of the
State of New York,
Educational Facilities
(State University):
1,200,000 7.250%, 5/15/15 (Pre-
refunded to 5/15/00) 5/00 at 102 Aaa 1,339,824
2,500,000 5.250%, 5/15/15 No Opt. Call Aaa 2,292,800
1,200,000 7.000%, 5/15/18 (Pre-
refunded to 5/15/00) 5/00 at 102 Aaa 1,319,820
2,000,000 6.500%, 5/15/19 5/00 at 100 Aaa 2,126,580
1,000,000 6.000%, 5/15/22 5/03 at 102 Aaa 989,310
5,000,000 Dormitory Authority of the
State of New York (New
York University), 6.250%,
7/01/09 7/01 at 102 Aaa 5,173,350
1,000,000 Dormitory Authority of the
State of New York (Fordham
University),
7.200%, 7/01/15 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 1,116,290
5,000,000 Dormitory Authority of the
State of New York (Mount
Sinai School of Medicine),
5.000%, 7/01/21 7/04 at 102 Aaa 4,318,200
1,000,000 Erie County Water
Authority, Water Works
System, 6.750%, 12/01/14 No Opt. Call Aaa 1,105,730
500,000 Greece Central School
District, General
Obligation, 6.000%,
6/15/09 No Opt. Call Aaa 523,465
</TABLE>
42
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Half Moon General
Obligation:
$ 385,000 6.500%, 6/01/09 No Opt. Call Aaa $ 419,869
395,000 6.500%, 6/01/10 No Opt. Call Aaa 428,982
395,000 6.500%, 6/01/11 No Opt. Call Aaa 429,037
600,000 Jamesville-Dewitt
Central School
District,
General Obligation,
5.750%, 6/15/04 No Opt. Call Aaa 620,454
1,425,000 Metropolitan
Transportation
Authority,
Commuter Facilities,
5.500%, 7/01/17 7/02 at 100 Aaa 1,334,498
1,000,000 Metropolitan
Transportation
Authority, Transit
Facilities Service
Contract, 7.500%,
7/01/17 7/98 at 102 Aaa 1,081,970
Metropolitan
Transportation
Authority, Transit
Facilities:
2,000,000 6.000%, 7/01/16 7/02 at 101 1/2 Aaa 1,999,800
10,340,000 6.500%, 7/01/18 7/02 at 102 Aaa 10,689,595
Middle Country Central
School District at
Centereach (Town of
Brookhaven), General
Obligation:
475,000 6.900%, 12/15/07 No Opt. Call Aaa 537,814
475,000 6.900%, 12/15/08 No Opt. Call Aaa 536,194
Monroe County General
Obligation:
375,000 6.500%, 6/01/15 6/01 at 102 Aaa 392,603
375,000 6.500%, 6/01/16 6/01 at 102 Aaa 392,201
350,000 6.500%, 6/01/17 6/01 at 102 Aaa 365,306
3,725,000 Montgomery, Otsego,
Schoharie County Solid
Waste Management
Authority,
Solid Waste System,
7.250%, 1/01/14 (Pre-
refunded to 1/01/00) 1/00 at 103 Aaa 4,147,713
Mount Sinai Union Free
School District,
General Obligation:
1,000,000 7.250%, 2/15/15 (Pre-
refunded to 2/15/00) 2/00 at 102 Aaa 1,106,460
500,000 6.200%, 2/15/15 No Opt. Call Aaa 525,275
1,035,000 6.200%, 2/15/16 No Opt. Call Aaa 1,091,283
1,000,000 7.250%, 2/15/17 (Pre-
refunded to 2/15/00) 2/00 at 102 Aaa 1,106,460
1,500,000 Nassau County General
Obligation,
5.700%, 8/01/13 8/04 at 103 Aaa 1,469,775
4,840,000 Nassau County Industrial
Development Agency,
Civic Facilities
(Hofstra University
Project), 6.750%,
8/01/11 8/01 at 102 Aaa 5,109,733
1,020,000 New Rochelle General
Obligation,
6.200%, 8/15/22 8/04 at 102 Aaa 1,042,644
</TABLE>
43
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New York City General
Obligation:
$ 500,000 8.250%, 11/01/02 11/97 at 101 1/2 Aaa $ 546,600
4,000,000 6.250%, 8/01/10 (Pre-
refunded to 8/01/02) 8/02 at 101 1/2 Aaa 4,294,200
1,000,000 6.250%, 8/01/10 8/02 at 101 1/2 Aaa 1,030,800
3,520,000 5.750%, 5/15/12 5/03 at 101 1/2 Aaa 3,396,694
75,000 6.625%, 8/01/12 8/02 at 101 1/2 Aaa 78,662
2,600,000 6.000%, 8/01/12 8/02 at 101 1/2 Aaa 2,618,434
1,300,000 7.000%, 10/01/15 No Opt. Call Aaa 1,347,190
2,000,000 7.000%, 10/01/16 No Opt. Call Aaa 2,131,800
1,025,000 7.000%, 10/01/17 No Opt. Call Aaa 1,062,208
310,000 7.000%, 10/01/18 No Opt. Call Aaa 321,504
1,000,000 5.375%, 10/01/20 10/03 at 101 1/2 Aaa 898,290
1,000,000 5.375%, 10/01/21 10/03 at 101 1/2 Aaa 896,690
1,000,000 New York City
Educational
Construction Fund,
5.625%, 4/01/13 4/04 at 101 1/2 Aaa 958,880
11,980,000 New York City Health and
Hospitals Corporation,
5.750%, 2/15/22 2/03 at 102 Aaa 11,382,797
5,000,000 New York City Housing
Development
Corporation, Pass-
Through Certificates,
Multi-Family Housing,
6.500%, 2/20/19 7/97 at 105 Aaa 5,779,050
New York City Municipal
Water Finance
Authority, Water and
Sewer System:
1,000,000 7.250%, 6/15/15 (Pre-
refunded to 6/15/00) 6/00 at 101 1/2 Aaa 1,114,030
3,250,000 6.750%, 6/15/16 6/01 at 101 Aaa 3,412,930
9,265,000 5.750%, 6/15/18 6/02 at 101 1/2 Aaa 8,908,020
1,525,000 5.375%, 6/15/19 6/04 at 101 Aaa 1,392,874
585,000 6.000%, 6/15/20 (Pre-
refunded to 6/15/00) 6/00 at 100 Aaa 608,839
415,000 6.000%, 6/15/20 6/00 at 100 Aaa 407,015
New York City Transit
Authority, Transit
Facilities (Livingston
Plaza Project):
1,000,000 7.500%, 1/01/20 (Pre-
refunded to 1/01/00) 1/00 at 102 Aaa 1,123,360
12,225,000 5.250%, 1/01/20 1/03 at 100 Aaa 10,761,668
1,500,000 6.000%, 1/01/21 1/00 at 100 Aaa 1,470,900
2,200,000 New York City Trust for
Cultural Resources
(American Museum of
Natural History),
6.900%, 4/01/21 (Pre-
refunded to 4/01/01) 4/01 at 102 Aaa 2,441,032
1,000,000 New York City Industrial
Development Agency,
Civic Facility (USTA
National Tennis Center
Incorporated Project),
6.375%, 11/15/14 11/04 at 102 Aaa 1,025,180
1,590,000 Niagara Falls General
Obligation, 6.900%,
3/01/21 3/04 at 102 Aaa 1,700,108
5,725,000 Niagara Falls Bridge
Commission,
Toll Bridge System,
6.125%, 10/01/19 (Pre-
refunded to 10/01/02) 10/02 at 102 Aaa 6,138,345
</TABLE>
44
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
North Hempstead General
Obligation:
$ 1,500,000 6.375%, 4/01/09 No Opt. Call Aaa $ 1,601,580
425,000 6.800%, 6/01/10 (Pre-
refunded to 6/01/00) 6/00 at 102 Aaa 464,228
425,000 6.800%, 6/01/11 (Pre-
refunded to 6/01/00) 6/00 at 102 Aaa 464,228
1,505,000 6.400%, 4/01/14 No Opt. Call Aaa 1,622,842
North Hempstead Solid Waste
Management Authority:
2,175,000 5.000%, 2/01/07 2/04 at 102 Aaa 2,046,240
2,825,000 5.000%, 2/01/12 2/04 at 102 Aaa 2,527,132
Nyack Union Free School
District:
625,000 6.500%, 4/01/12 4/02 at 102 Aaa 656,881
625,000 6.500%, 4/01/13 4/02 at 102 Aaa 655,531
625,000 6.500%, 4/01/14 4/02 at 102 Aaa 654,181
Rensselaer County General
Obligation:
960,000 6.700%, 2/15/13 No Opt. Call Aaa 1,075,123
960,000 6.700%, 2/15/14 No Opt. Call Aaa 1,071,562
960,000 6.700%, 2/15/15 No Opt. Call Aaa 1,074,778
Rondout Valley Central
School District, General
Obligation:
550,000 6.800%, 6/15/06 No Opt. Call Aaa 616,902
550,000 6.850%, 6/15/07 No Opt. Call Aaa 618,288
550,000 6.850%, 6/15/08 No Opt. Call Aaa 618,211
550,000 6.850%, 6/15/09 No Opt. Call Aaa 618,706
550,000 6.850%, 6/15/10 No Opt. Call Aaa 618,448
Suffolk County General
Obligation:
1,000,000 6.900%, 4/01/01 4/00 at 102 Aaa 1,094,060
1,895,000 5.250%, 7/15/09 7/02 at 102 Aaa 1,787,080
600,000 6.150%, 5/01/10 5/03 at 102 Aaa 616,002
1,890,000 5.300%, 7/15/10 7/02 at 102 Aaa 1,783,536
1,630,000 5.400%, 4/01/11 4/02 at 102 Aaa 1,552,461
1,860,000 5.400%, 7/15/11 7/02 at 102 Aaa 1,757,440
1,000,000 5.400%, 7/15/12 7/02 at 102 Aaa 940,850
630,000 5.400%, 4/01/14 4/02 at 102 Aaa 593,473
625,000 5.400%, 4/01/15 4/02 at 102 Aaa 576,038
560,000 5.000%, 10/15/16 10/03 at 102 Aaa 487,105
Suffolk County Water
Authority:
1,800,000 5.100%, 6/01/11 No Opt. Call Aaa 1,643,562
1,500,000 7,125%, 6/01/15 (Pre-
refunded to 6/01/99) 6/99 at 102 Aaa 1,647,480
2,565,000 5.625%, 6/01/16 6/02 at 102 Aaa 2,447,061
3,700,000 5.000%, 6/01/17 6/03 at 102 Aaa 3,256,629
</TABLE>
45
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Triborough Bridge and
Tunnel Authority,
General Purpose:
$ 1,000,000 6.500%, 1/01/15 (Pre-
refunded to 1/01/99) 1/99 at 101 1/2 Aaa $ 1,066,330
2,750,000 6.500%, 1/01/19 1/02 at 101 1/2 Aaa 2,837,284
2,000,000 7.000%, 1/01/20 (Pre-
refunded to 1/01/01) 1/01 at 102 Aaa 2,221,660
1,175,000 7.000%, 1/01/21 (Pre-
refunded to 1/01/01) 1/01 at 101 1/2 Aaa 1,300,842
1,500,000 6.000%, 1/01/22 (Pre-
refunded to 1/01/01) 1/01 at 100 Aaa 1,565,414
Triborough Bridge and
Tunnel Authority,
Special Obligation:
8,650,000 6.875%, 1/01/15 1/01 at 102 Aaa 9,205,935
3,700,000 6.000%, 1/01/19 1/01 at 100 Aaa 3,701,442
1,750,000 Yonkers General
Obligation,
7.375%, 12/01/09 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 1,970,150
- -------------------------------------------------------------------------------
$343,840,000 Total Investments -
(cost $339,542,219) -
99.0% 349,130,945
- -------------------------------------------------------------------------------
- -------------------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 0.4%
$ 1,400,000 New York City General
Obligation, Variable
Rate
- -------------------
Demand Bonds, 3.950%,
2/01/22+ VMIG-1 1,400,000
- -------------------------------------------------------------------------------
Other Assets Less
Liabilities - 0.6% 2,133,191
- -------------------------------------------------------------------------------
Net Assets - 100% $352,664,136
</TABLE>
- --------------------------------------------------------------------------------
46
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NUMBER MARKET
STANDARD & POOR'S MOODY'S OF ISSUES MARKET VALUE PERCENT
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 151 $344,737,239 99%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 4 4,393,706 1
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- -----------------------------------------------------------------------------------
TOTAL 155 $349,130,945 100%
</TABLE>
- --------------------------------------------------------------------------------
All of the bonds in the portfolio, excluding temporary investments in short-
term municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance or Portfolio Insurance, or are backed by an escrow
or trust containing sufficient U.S. Government or U.S. Government agency
securities to ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
47
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Ohio Air Quality
Development Authority,
Pollution Control (Ohio
Edison Company):
$ 2,000,000 7.450%, 3/01/16 3/00 at 102 Aaa $ 2,172,600
750,000 7.625%, 7/01/23 7/99 at 102 Baa3 762,848
5,650,000 5.625%, 11/15/29 11/03 at 102 Aaa 5,279,417
1,750,000 Ohio Air Quality
Development Authority,
Pollution Control
(Columbus Southern Power
Company), 6.375%,
12/01/20 12/02 at 102 Aaa 1,801,643
1,000,000 Ohio Air Quality
Development Authority,
Pollution Control (Ohio
Power Company), 7.400%,
8/01/09 8/99 at 102 Baa1 1,035,460
2,000,000 Ohio Air Quality
Development Authority,
Pollution Control
(Cleveland Electric
Illuminating Company),
8.000%, 12/01/13 6/02 at 103 Aaa 2,303,460
Ohio Building Authority
(State Correctional
Facilities):
1,000,000 7.125%, 9/01/09 9/96 at 102 A1 1,045,630
1,000,000 5.500%, 10/01/12 10/03 at 102 A1 938,830
660,000 Ohio Building Authority
(Juvenile Correctional
Building), 6.600%,
10/01/14 10/04 at 102 Aaa 699,481
1,250,000 Ohio Capital Corporation
for Housing,
Multi-Family Housing,
7.600%, 11/01/23 11/97 at 105 AAA 1,330,338
1,935,000 Ohio General Obligation,
6.000%, 8/01/10 No Opt. Call AA 1,983,917
250,000 Ohio Higher Educational
Facility Commission (Ohio
Dominican College),
8.500%, 12/01/07 12/97 at 102 N/R 281,455
400,000 Ohio Higher Educational
Facility Commission (John
Carroll University),
9.250%, 10/01/07 (Pre-
refunded to 10/01/97) 10/97 at 102 A 450,356
1,000,000 Ohio Higher Educational
Facility Commission (Ohio
Wesleyan University),
7.650%, 11/15/07 11/97 at 102 Aaa 1,078,550
1,000,000 Ohio Higher Educational
Facility Commission (Ohio
Northern University),
7.300%, 5/15/10 (Pre-
refunded to 5/15/00) 5/00 at 100 Aaa 1,098,060
1,000,000 Ohio Higher Educational
Facility Commission
(Kenyon College), 5.375%,
12/01/16 12/03 at 102 A+ 897,680
1,500,000 Ohio Higher Educational
Facility Commission
(University of Dayton),
5.800%, 12/01/19 12/04 at 102 Aaa 1,472,775
Ohio Housing Finance
Agency, Single Family
Mortgage (GNMA):
765,000 7.500%, 9/01/13 9/00 at 102 AAA 818,030
990,000 7.400%, 9/01/15 3/00 at 102 AAA 1,044,054
370,000 7.050%, 9/01/16 9/01 at 102 Aaa 388,304
2,500,000 Ohio Turnpike Commission,
5.750%, 2/15/24 2/04 at 102 AA- 2,398,000
3,000,000 Ohio Water Development
Authority (Dayton Power
and Light Company),
6.400%, 8/15/27 8/02 at 102 AA- 3,044,490
</TABLE>
48
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,000,000 Ohio Water Development
Authority, Pollution
Control (Ohio Edison
Company),
5.950%, 5/15/29 11/03 at 102 Baa2 $ 2,561,700
155,000 Ohio IOOF Home (FHA-
Insured),
8.150%, 8/01/02 8/97 at 103 AAA 168,161
3,955,000 Akron General Obligation,
Limited Tax,
6.750%, 12/01/14 12/04 at 102 Aaa 4,250,597
1,500,000 Akron Waterworks System,
6.550%, 3/01/12 3/01 at 102 Aaa 1,568,310
500,000 Anthony Wayne Local School
District, General
Obligation, Unlimited Tax,
7.750%, 11/01/13 (Pre-
refunded to 11/01/99) 11/99 at 102 A 563,905
1,525,000 Bedford Hospital (Community
Hospital),
8.500%, 5/15/09 5/00 at 102 N/R 1,793,980
Bellefontaine Sewer System:
1,000,000 6.800%, 12/01/07 12/02 at 101 Baa1 1,048,900
1,000,000 6.900%, 12/01/11 12/02 at 101 Baa1 1,043,200
250,000 Bucyrus Sewer System,
8.500%, 12/01/12 (Pre-
refunded to 12/01/97) 12/97 at 103 N/R 280,528
1,250,000 Butler County Hospital
Facilities (Fort Hamilton-
Hughes Memorial Hospital),
7.500%, 1/01/10 1/02 at 102 BBB- 1,279,600
1,000,000 Canal Winchester Local
School District, General
Obligation, Unlimited Tax,
7.100%, 12/01/13 (Pre-
refunded to 12/01/01) 12/01 at 102 Aaa 1,122,350
1,000,000 Clermont County, Road
Improvement, Limited Tax,
7.125%, 9/01/11 (Pre-
refunded to 9/01/00) 9/00 at 102 Aaa 1,109,800
Clermont County Sewer
System:
2,000,000 7.375%, 12/01/20 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 2,250,000
1,000,000 7.100%, 12/01/21 (Pre-
refunded to 12/01/01) 12/01 at 102 Aaa 1,118,701
2,500,000 5.200%, 12/01/21 12/03 at 102 Aaa 2,250,250
Clermont County Waterworks
System:
1,000,000 6.625%, 12/01/13 (Pre-
refunded to 12/01/01) 12/01 at 102 Aaa 1,093,760
3,000,000 5.800%, 12/01/18 12/03 at 102 Aaa 2,950,320
1,345,000 Cleveland City School
District, 7.000%, 4/15/95 No Opt. Call N/R 1,342,902
2,000,000 Cleveland City School
District, General
Obligation, Unlimited Tax,
5.875%, 12/01/11 12/02 at 102 Aaa 2,019,740
1,500,000 Cleveland Public Power
System, 7.000%, 11/15/24 11/04 at 102 Aaa 1,644,570
Cleveland Waterworks:
1,000,000 6.500%, 1/01/11 1/02 at 102 Aaa 1,048,490
1,550,000 6.250%, 1/01/15 1/02 at 102 Aaa 1,582,519
1,750,000 6.500%, 1/01/21 (Pre-
refunded to 1/01/02) 1/02 at 102 Aaa 1,898,768
1,000,000 Coldwater Exempted Village
School District, Unlimited
Tax,
7.000%, 12/01/13 (Pre-
refunded to 12/01/99) 12/99 at 102 Aaa 1,098,570
1,000,000 Columbus General
Obligation, Unlimited Tax,
6.500%, 1/01/10 1/02 at 102 Aa1 1,047,790
2,050,000 Columbus General
Obligation, 5.250%,
9/15/18 9/03 at 102 Aa1 1,827,801
</TABLE>
49
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Columbus City School
District, General
Obligation, Unlimited
Tax,
6.650%, 12/01/12 (Pre-
refunded to 12/01/02) 12/02 at 102 Aaa $ 552,125
1,500,000 Cuyahoga County, General
Obligation,
Unlimited Tax,
7.000%, 10/01/13 (Pre-
refunded to 10/01/01) 10/01 at 102 N/R 1,672,125
1,000,000 Cuyahoga County, General
Obligation,
5.250%, 10/01/13 No Opt. Call A1 889,880
1,250,000 Cuyahoga County,
Hospital Improvement
(Deaconess Hospital),
7.450%, 10/01/18 (Pre-
refunded to 10/01/00) 10/00 at 103 A1 1,417,925
2,750,000 Cuyahoga County,
Hospital Improvement
(Meridia Health
System), 7.250%,
8/15/19 8/00 at 102 A1 2,886,895
750,000 Defiance Waterworks
System, General
Obligation, Unlimited
Tax, 6.200%, 12/01/20 12/04 at 102 Aaa 767,520
1,000,000 Edgewood City School
District, General
Obligation, Unlimited
Tax, 6.850%, 12/01/15 12/01 at 102 Aaa 1,066,940
1,000,000 Fairborn General
Obligation, Limited
Tax,
7.000%, 10/01/11 10/02 at 102 Aaa 1,095,440
Franklin County Hospital
Facilities
(Ohio Presbyterian
Retirement Services):
1,350,000 8.750%, 7/01/21 7/01 at 103 N/R 1,407,375
1,500,000 6.500%, 7/01/23 7/03 at 102 N/R 1,334,190
720,000 Franklin County, FHA-
Insured (Worthington
Village Nursing Home),
7.000%, 8/01/16 8/00 at 102 N/R 722,894
2,000,000 Franklin County,
Hospital Facilities
(Riverside United
Methodist Hospital),
5.750%, 5/15/20 5/03 at 102 Aa 1,833,460
1,000,000 Franklin County (Online
Computer Library Center
Project), 7.200%,
7/15/06 7/01 at 100 N/R 1,055,970
250,000 Fremont Sewerage System,
8.100%, 12/01/07 (Pre-
refunded to 12/01/97) 12/97 at 102 A- 274,888
1,000,000 Gahanna-Jefferson School
District,
General Obligation,
Unlimited Tax,
7.125%, 12/01/14 (Pre-
refunded to 12/01/00) 12/00 at 102 A1 1,111,620
3,000,000 Garfield Heights
Hospital (Marymount
Hospital), 6.650%,
11/15/11 11/02 at 102 A 3,066,300
250,000 Grandview Heights,
Library Building
Mortgage,
8.250%, 12/01/07 (Pre-
refunded to 12/01/97) 12/97 at 102 N/R 276,735
1,250,000 Green Local School
District, General
Obligation, Unlimited
Tax, 5.900%, 12/01/19 12/04 at 102 Aaa 1,245,025
1,000,000 Greene County Sewer
System, 5.500%,
12/01/18 12/03 at 102 Aaa 949,130
1,000,000 Greenville Wastewater
System, 6.350%,
12/01/17 10/02 at 102 Aaa 1,036,660
1,750,000 Hamilton County,
Hospital Facilities
(Bethesda Hospital),
6.250%, 1/01/12 1/03 at 102 A1 1,731,870
2,500,000 Hamilton Electric
System, 6.300%,
10/15/25 10/02 at 102 Aaa 2,566,900
1,495,000 Hamilton County, FHA-
Insured
(Judson Care Center),
7.800%, 8/01/19 8/00 at 101 5/16 A+ 1,601,399
</TABLE>
50
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Hamilton County Sewer
System (Metropolitan Sewer
District of Greater
Cincinnati),
5.250%, 12/01/16 12/03 at 100 Aaa $ 463,295
400,000 Hubbard Sewer System,
8.800%, 11/15/17 5/98 at 102 N/R 448,212
1,500,000 Hudson Local School
District,
General Obligation,
Unlimited Tax,
5.600%, 12/15/14 12/03 at 102 Aaa 1,451,100
1,000,000 Kent State University,
General Receipts,
6.500%, 5/01/22 5/02 at 102 Aaa 1,039,780
1,000,000 Kettering City School
District, General
Obligation, Unlimited Tax,
5.300%, 12/01/14 12/05 at 101 Aaa 933,200
500,000 Kirtland Local School
District, General
Obligation, Unlimited Tax,
7.500%, 12/01/09 12/99 at 102 A1 550,800
1,000,000 Lakota Local School
District, General
Obligation, Unlimited Tax,
6.125%, 12/01/17 12/05 at 100 Aaa 1,012,850
1,000,000 Lorain County Hospital
(Humility of Mary Health
Care System), 5.900%,
12/15/08 6/03 at 102 A1 972,340
1,500,000 Lorain Hospital (Lakeland
Community Hospital),
6.500%, 11/15/12 11/02 at 102 A+ 1,490,460
500,000 Lorain Sewer System,
8.750%, 4/01/11 4/98 at 102 BBB- 561,180
1,980,000 Lucas County Airport
Housing Development
Corporation, (Greenview
Gardens),
5.750%, 12/01/15 12/03 at 102 Aa 1,828,787
1,000,000 Lucas County General
Obligation, Limited Tax,
6.650%, 12/01/12 12/02 at 102 Baa1 1,030,240
1,000,000 Mahoning County General
Obligation,
Limited Tax, 7.200%,
12/01/09 12/99 at 102 Aaa 1,083,030
1,700,000 Mahoning County, Hospital
Improvement
(St. Elizabeth Hospital
Medical Center),
7.375%, 12/01/09 6/96 at 102 A1 1,766,606
2,355,000 Mahoning County, Hospital
Improvement
(YHA Inc. Project),
7.000%, 10/15/14 10/00 at 102 Aaa 2,518,319
Marion County (United
Church Homes, Inc.)
1,000,000 6.375%, 11/15/10 11/03 at 102 BBB- 929,630
1,150,000 8.875%, 12/01/12 (Pre-
refunded to 12/01/99) 12/99 at 103 N/R 1,362,681
750,000 Marion County, Health Care
Facilities (United Church
Homes Project), 6.300%,
11/15/15 11/03 at 102 BBB- 658,845
1,000,000 Marysville Exempted Village
School District, General
Obligation, Unlimited Tax,
7.200%, 12/01/10 (Pre-
refunded to 12/01/00) 12/00 at 102 Aaa 1,116,370
1,250,000 Marysville Water System,
7.050%, 12/01/21 12/01 at 101 Aaa 1,391,325
1,250,000 Maumee Hospital Facilities
(St. Luke's Hospital),
5.800%, 12/01/14 12/04 at 102 Aaa 1,238,263
1,000,000 Mentor Village Exempted
School District,
General Obligation,
Unlimited Tax,
7.400%, 12/01/11 (Pre-
refunded to 12/01/02) 12/02 at 100 Aaa 1,113,060
</TABLE>
51
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Montgomery County Water
(Greater
Moraine--Beavercreek Sewer
District),
6.250%, 11/15/17 11/02 at 102 Aaa $ 1,026,230
2,300,000 Napolean (Lutheran Orphan's
and Old Folks Home
Project), 6.875%, 08/01/23 9/04 at 102 Aa 2,372,864
1,000,000 North Olmstead, General
Obligation, Limited Tax,
6.250%, 12/15/12 12/02 at 102 Aaa 1,038,460
2,250,000 Oxford Water Supply System,
6.000%, 12/01/14 12/02 at 102 Aaa 2,270,408
1,000,000 Parma General Obligation,
Limited Tax,
7.600%, 12/01/11 12/00 at 102 A 1,129,670
1,750,000 Pickerington Local School
District, General
Obligation, Unlimited Tax,
6.750%, 12/01/16 12/01 at 102 A 1,818,863
1,000,000 Revere Local School
District, General
Obligation, Unlimited Tax,
6.000%, 12/01/16 12/03 at 102 Aaa 1,008,560
1,500,000 Reynoldsburg City School
District, General
Obligation, Unlimited Tax,
6.550%, 12/01/17 12/02 at 102 Aaa 1,578,195
1,200,000 Ridgemont Local School
District, General
Obligation, Unlimited Tax,
7.250%, 12/01/14 12/02 at 102 N/R 1,250,904
735,000 Salem Sewer System Mortgage,
7.500%, 11/01/11 (Pre-
refunded to 11/01/96) 11/96 at 102 N/R 782,223
1,000,000 Springfield City School
District, General
Obligation, Unlimited Tax,
6.600%, 12/01/12 12/01 at 102 Aaa 1,052,810
1,500,000 Steubenville City School
District, General
Obligation, Unlimited Tax,
6.200%, 12/01/17 12/03 at 102 Aaa 1,530,494
Toledo General Obligation,
Limited Tax:
1,000,000 6.500%, 12/01/11 12/02 at 102 Aaa 1,058,360
1,500,000 6.100%, 12/01/14 12/04 at 102 Aaa 1,526,280
1,000,000 Trumbull County Hospital
(Trumbull Memorial
Hospital), 6.900%, 11/15/12 11/01 at 102 Aaa 1,069,000
750,000 Tuscarawas County, Hospital
Facilities (Union
Hospital), 6.500%, 10/01/21 10/03 at 102 Baa 676,724
University of Cincinnati,
General Receipts:
1,000,000 7.300%, 6/01/09 (Pre-
refunded to 6/01/99) 6/99 at 100 AA- 1,087,130
1,000,000 6.300%, 6/01/12 12/02 at 102 AA- 1,032,230
3,250,000 University of Toledo,
General Receipts,
5.900%, 6/01/20 12/02 at 102 Aaa 3,236,934
1,950,000 Warren County, Hospital
Facilities, Otterbein Home
Project, 7.200%, 7/01/11 7/01 at 102 Aa1 2,063,510
Warren General Obligation,
Limited Tax:
1,500,000 7.750%, 11/01/10 (Pre-
refunded to 11/01/00) 11/00 at 102 BBB+ 1,710,524
250,000 8.625%, 11/15/13 (Pre-
refunded to 11/15/98) 11/98 at 102 BBB+ 285,417
1,000,000 Warren General Obligation,
5.200%, 11/15/13 11/03 at 102 Aaa 928,710
2,500,000 Washington Water System,
5.375%, 12/01/19 12/03 at 101 Aaa 2,326,950
750,000 West Geauga Local School
District, General
Obligation, 5.950%,
11/01/12 11/04 at 102 Aaa 760,004
</TABLE>
52
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Wooster City School
District, General
Obligation, Unlimited Tax,
6.500%, 12/01/17 12/02 at 102 Aaa $ 524,224
1,000,000 Worthington City School
District, General
Obligation, Unlimited Tax,
6.375%, 12/01/12 6/02 at 102 Aaa 1,039,900
- -------------------------------------------------------------------------------
$159,935,000 Total Investments - (cost
$157,373,625) - 97.9% 163,999,807
- -------------------------------------------------------------------------------
- -------------------
-----------
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 0.5%
$ 800,000 Cuyahoga County, University
Hospital of
- -------------------
Cleveland, Series 1985,
Variable Rate Demand
Bonds, 3.750%, 1/01/16+ VMIG-1 800,000
- -------------------------------------------------------------------------------
-----------
Other Assets Less
Liabilities - 1.6% 2,652,545
- -------------------------------------------------------------------------------
Net Assets - 100% $167,452,352
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
STANDARD & POOR'S MOODY'S OF ISSUES MARKET VALUE PERCENT
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 63 $ 91,277,469 56%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 11 20,519,979 13
PORTFOLIO OF A+ A1 13 17,301,935 11
INVESTMENTS A, A- A, A2, A3 6 7,303,982 4
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 13 13,584,268 8
TEMPORARY Non-rated Non-rated 14 14,012,174 8
INVESTMENTS):
- ---------------------------------------------------------------------------------------
TOTAL 120 $163,999,807 100%
</TABLE>
- --------------------------------------------------------------------------------
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
53
<PAGE>
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in municipal
securities, at market
value
(note 1) $206,072,736 $199,443,161 $71,117,507 $56,772,909
Temporary investments in
short-term municipal
securities, at amortized
cost (note 1) -- 1,700,000 800,000 1,700,000
Cash 2,149,535 7,685 103,690 189,333
Receivables:
Interest 3,932,758 3,306,810 1,033,508 946,488
Shares sold 16,975 38,500 30,000 52,156
Investments sold -- 105,000 -- --
Other assets 3,031 5,158 1,896 4,279
------------ ------------ ----------- -----------
Total assets 212,175,035 204,606,314 73,086,601 59,665,165
------------ ------------ ----------- -----------
LIABILITIES
Payables:
Investments purchased -- -- -- --
Shares reacquired 5,020 31,053 14,971 3,019
Accrued expenses:
Management fees (note 7) 87,392 84,240 30,412 24,672
Other 34,730 32,092 10,500 21,558
Dividends payable 622,358 555,859 248,374 184,840
------------ ------------ ----------- -----------
Total liabilities 749,500 703,244 304,257 234,089
------------ ------------ ----------- -----------
Net assets (note 8) $211,425,535 $203,903,070 $72,782,344 $59,431,076
------------ ------------ ----------- -----------
Class A Shares (note 1)
Net assets $ 3,146,425 $ 4,753,008 $ 1,066,757 $ 1,955,900
------------ ------------ ----------- -----------
Shares outstanding 311,523 463,657 111,546 194,413
------------ ------------ ----------- -----------
Net asset value and
redemption price per
share $ 10.10 $ 10.25 $ 9.56 $ 10.06
------------ ------------ ----------- -----------
Offering price per share
(net asset value per
share plus maximum sales
charge of 4.50% of
offering price) $ 10.58 $ 10.73 $ 10.01 $ 10.53
------------ ------------ ----------- -----------
Class C Shares (note 1)
Net assets $ 199,538 $ 222,103 $ 147,370 $ 337,710
------------ ------------ ----------- -----------
Shares outstanding 19,751 21,888 15,494 33,649
------------ ------------ ----------- -----------
Net asset value, offering
and redemption price per
share $ 10.10 $ 10.15 $ 9.51 $ 10.04
------------ ------------ ----------- -----------
Class R Shares (note 1)
Net assets $208,079,572 $198,927,959 $71,568,217 $57,137,466
------------ ------------ ----------- -----------
Shares outstanding 20,535,712 19,444,138 7,501,744 5,677,858
------------ ------------ ----------- -----------
Net asset value and
redemption price per
share $ 10.13 $ 10.23 $ 9.54 $ 10.06
------------ ------------ ----------- -----------
</TABLE>
See accompanying notes to financial statements.
54
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NY NY INS OH
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in municipal securities,
at market value
(note 1) $152,688,994 $349,130,945 $163,999,807
Temporary investments in short-term
municipal securities, at amortized
cost (note 1) 1,200,000 1,400,000 800,000
Cash 47,260 220,409 249,554
Receivables:
Interest 2,084,928 4,022,876 2,748,292
Shares sold 123,122 104,110 215,153
Investments sold 1,132,900 -- 90,000
Other assets 3,468 8,183 --
------------ ------------ ------------
Total assets 157,280,672 354,886,523 168,102,806
------------ ------------ ------------
LIABILITIES
Payables:
Investments purchased 3,793,781 618,454 --
Shares reacquired 117,206 158,220 10,379
Accrued expenses:
Management fees (note 7) 65,073 143,921 69,294
Other 22,714 82,173 28,089
Dividends payable 553,219 1,219,619 542,692
------------ ------------ ------------
Total liabilities 4,551,993 2,222,387 650,454
------------ ------------ ------------
Net assets (note 8) $152,728,679 $352,664,136 $167,452,352
------------ ------------ ------------
Class A Shares (note 1)
Net assets $ 3,188,706 $ 7,258,035 $ 4,320,297
------------ ------------ ------------
Shares outstanding 315,095 715,369 423,747
------------ ------------ ------------
Net asset value and redemption price
per share $ 10.12 $ 10.15 $ 10.20
------------ ------------ ------------
Offering price per share (net asset
value per share plus maximum sales
charge of 4.50% of offering price) $ 10.60 $ 10.63 $ 10.68
------------ ------------ ------------
Class C Shares (note 1)
Net assets $ 85,620 $ 285,193 $ 901,268
------------ ------------ ------------
Shares outstanding 8,473 28,182 88,730
------------ ------------ ------------
Net asset value, offering and
redemption price per share $ 10.11 $ 10.12 $ 10.16
------------ ------------ ------------
Class R Shares (note 1)
Net assets $149,454,353 $345,120,908 $162,230,787
------------ ------------ ------------
Shares outstanding 14,719,933 34,002,394 15,934,225
------------ ------------ ------------
Net asset value and redemption price
per share $ 10.15 $ 10.15 $ 10.18
------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
55
<PAGE>
STATEMENT OF OPERATIONS
Year Ended February 28, 1995
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $13,532,042 $12,414,386 $4,596,224 $3,551,606
Taxable market discount -- -- -- --
----------- ----------- ---------- ----------
Total income 13,532,042 12,414,386 4,596,224 3,551,606
----------- ----------- ---------- ----------
Expenses (note 2):
Management fees (note 7) 1,126,843 1,076,033 387,713 309,389
12b-1 distribution and
service fees (note 1) 2,433 3,695 967 2,229
Shareholders' servicing
agent fees and expenses 155,589 131,486 70,791 54,804
Custodian's fees and
expenses 66,016 54,195 42,031 35,294
Directors' fees and
expenses (note 7) 2,482 3,374 1,407 1,386
Professional fees 13,199 20,755 11,408 5,701
Shareholders' reports--
printing and mailing
expenses 100,917 68,543 27,276 28,438
Federal and state
registration fees 3,064 3,868 2,450 2,397
Portfolio insurance
expense -- 10,812 -- 3,796
Other expenses 8,300 5,729 3,046 2,715
----------- ----------- ---------- ----------
Total expenses before
expense reimbursement 1,478,843 1,378,490 547,089 446,149
Expense reimbursement
from investment adviser
(note 7) (3,483) (2,697) (17,319) (1,148)
----------- ----------- ---------- ----------
Net expenses 1,475,360 1,375,793 529,770 445,001
----------- ----------- ---------- ----------
Net investment income 12,056,682 11,038,593 4,066,454 3,106,605
----------- ----------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable
(notes 1 and 5) (2,621,487) (1,106,384) (558,617) (212,554)
Net change in unrealized
appreciation or
depreciation of
investments (8,272,724) (6,870,030) (2,393,115) (1,878,784)
----------- ----------- ---------- ----------
Net gain (loss) from
investments (10,894,211) (7,976,414) (2,951,732) (2,091,338)
----------- ----------- ---------- ----------
Net increase in net
assets from operations $ 1,162,471 $ 3,062,179 $1,114,722 $1,015,267
----------- ----------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
56
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $ 9,417,010 $ 22,226,034 $10,312,482
Taxable market discount 1,937 -- --
----------- ------------ -----------
Total income 9,418,947 22,226,034 10,312,482
----------- ------------ -----------
Expenses (note 2):
Management fees (note 7) 791,403 1,923,239 876,933
12b-1 distribution and service fees
(note 1) 1,772 5,343 4,595
Shareholders' servicing agent fees
and expenses 132,988 212,430 148,751
Custodian's fees and expenses 40,781 64,409 55,091
Directors' fees and expenses (note
7) 1,166 3,756 5,000
Professional fees 6,862 19,020 9,012
Shareholders' reports--printing and
mailing expenses 78,983 79,576 62,516
Federal and state registration fees 6,690 3,324 2,865
Portfolio insurance expense -- 16,881 --
Other expenses 6,363 12,389 8,830
----------- ------------ -----------
Total expenses before expense
reimbursement 1,067,008 2,340,367 1,173,593
Expense reimbursement from
investment adviser (note 7) (4,556) (1,767) (3,524)
----------- ------------ -----------
Net expenses 1,062,452 2,338,600 1,170,069
----------- ------------ -----------
Net investment income 8,356,495 19,887,434 9,142,413
----------- ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS
Net realized gain (loss) from
investment transactions, net
of taxes, if applicable (notes 1
and 5) (1,122,982) 691,691 (967,375)
Net change in unrealized
appreciation or depreciation of
investments (6,026,320) (17,661,749) (5,055,416)
----------- ------------ -----------
Net gain (loss) from investments (7,149,302) (16,970,058) (6,022,791)
----------- ------------ -----------
Net increase in net assets from
operations $ 1,207,193 $ 2,917,376 $ 3,119,622
----------- ------------ -----------
</TABLE>
57
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CA CA INS
---------------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 12,056,682 $ 11,312,317 $ 11,038,593 $ 9,871,976
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (2,621,487) 2,689,891 (1,106,384) 2,016,944
Net change in unrealized
appreciation or
depreciation of
investments (8,272,724) (3,820,153) (6,870,030) (4,135,051)
------------ ------------ ------------ ------------
Net increase in net
assets from operations 1,162,471 10,182,055 3,062,179 7,753,869
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (40,773) -- (59,786) --
Class C (2,883) -- (4,199) --
Class R (12,099,560) (11,249,792) (10,954,036) (9,798,122)
From accumulated net
realized gains from
investment
transactions:
Class A (6,186) -- (2,542) --
Class C (231) -- (317) --
Class R (1,542,643) (1,138,428) (545,843) (1,503,962)
In excess of accumulated
net realized gains from
investment
transactions:
Class A -- -- -- --
Class C -- -- -- --
Class R -- -- -- --
------------ ------------ ------------ ------------
Decrease in net assets
from distributions to
shareholders (13,692,276) (12,388,220) (11,566,723) (11,302,084)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sales
of shares:
Class A 3,153,792 -- 4,571,343 --
Class C 189,814 -- 277,611 --
Class R 24,628,063 61,356,606 21,455,944 60,508,374
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment income and
from net realized gains
from investment
transactions:
Class A 17,920 -- 24,201 --
Class C 1,844 -- 1,935 --
Class R 8,806,336 7,917,196 7,133,691 7,133,168
------------ ------------ ------------ ------------
36,797,769 69,273,802 33,464,725 67,641,542
------------ ------------ ------------ ------------
Cost of shares redeemed:
Class A (117,370) -- (71,333) --
Class C (1,036) -- (68,234) --
Class R (31,154,367) (31,852,039) (29,032,260) (24,830,822)
------------ ------------ ------------ ------------
(31,272,773) (31,852,039) (29,171,827) (24,830,822)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets derived
from Fund share
transactions 5,524,996 37,421,763 4,292,898 42,810,720
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets (7,004,809) 35,215,598 (4,211,646) 39,262,505
Net assets at beginning
of year 218,430,344 183,214,746 208,114,716 168,852,211
------------ ------------ ------------ ------------
Net assets at end of
year $211,425,535 $218,430,344 $203,903,070 $208,114,716
------------ ------------ ------------ ------------
Balance of undistributed
net investment income
at end of year $ 65,047 $ 151,581 $ 66,680 $ 46,108
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
58
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
MA MA INS
-----------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 4,066,454 $ 3,501,487 $ 3,106,605 $ 2,733,596
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (558,617) 28,787 (212,554) 48,780
Net change in unrealized
appreciation or
depreciation of
investments (2,393,115) 123,932 (1,878,784) (56,500)
----------- ----------- ----------- -----------
Net increase in net
assets from operations 1,114,722 3,654,206 1,015,267 2,725,876
----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (16,122) -- (22,806) --
Class C (1,197) -- (5,217) --
Class R (4,021,155) (3,482,145) (3,099,363) (2,676,524)
From accumulated net
realized gains from
investment
transactions:
Class A -- -- -- --
Class C -- -- -- --
Class R -- (68,840) -- --
In excess of accumulated
net realized gains from
investment
transactions:
Class A -- -- -- --
Class C -- -- -- --
Class R -- -- -- --
----------- ----------- ----------- -----------
Decrease in net assets
from distributions to
shareholders (4,038,474) (3,550,985) (3,127,386) (2,676,524)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sale
of shares:
Class A 1,057,696 -- 1,906,377 --
Class C 144,012 -- 324,825 --
Class R 10,510,784 23,323,692 7,040,265 16,098,587
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment income and
from net realized gains
from investment
transactions:
Class A 8,778 -- 11,338 --
Class C 594 -- 2,330 --
Class R 2,815,745 2,445,494 2,160,636 1,853,467
----------- ----------- ----------- -----------
14,537,609 25,769,186 11,445,771 17,952,054
----------- ----------- ----------- -----------
Cost of shares redeemed:
Class A (32,507) -- (37,958) --
Class C -- -- -- --
Class R (10,741,355) (7,160,909) (8,119,665) (6,844,378)
----------- ----------- ----------- -----------
(10,773,862) (7,160,909) (8,157,623) (6,844,378)
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets derived
from Fund share
transactions 3,763,747 18,608,277 3,288,148 11,107,676
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets 839,995 18,711,498 1,176,029 11,157,028
Net assets at beginning
of year 71,942,349 53,230,851 58,255,047 47,098,019
----------- ----------- ----------- -----------
Net assets at end of
year $72,782,344 $71,942,349 $59,431,076 $58,255,047
----------- ----------- ----------- -----------
Balance of undistributed
net investment income
at end of year $ 56,272 $ 28,292 $ 27,522 $ 48,303
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
59
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NY NY INS
---------------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 8,356,495 $ 6,821,122 $ 19,887,434 $ 18,541,555
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (1,122,982) 1,226,611 691,691 1,554,828
Net change in unrealized
appreciation or
depreciation of
investments (6,026,320) 391,832 (17,661,749) (1,038,061)
------------ ------------ ------------ ------------
Net increase in net
assets from operations 1,207,193 8,439,565 2,917,376 19,058,322
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (35,341) -- (93,178) --
Class C (818) -- (3,586) --
Class R (8,216,539) (6,838,081) (19,795,360) (18,272,088)
From accumulated net
realized gains from
investment
transactions:
Class A (2,464) -- (11,988) --
Class C (28) -- (504) --
Class R (697,769) (609,643) (1,367,629) (1,127,645)
In excess of accumulated
net realized gains from
investment
transactions:
Class A -- -- (483) --
Class C -- -- (20) --
Class R -- -- (55,065) --
------------ ------------ ------------ ------------
Decrease in net assets
from distributions to
shareholders (8,952,959) (7,447,724) (21,327,813) (19,399,733)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sale
of shares:
Class A 3,107,225 -- 7,035,288 --
Class C 81,795 -- 271,337 --
Class R 26,513,287 44,875,936 34,286,843 97,500,068
Net asset value of
shares issued to
shareholders due to
reinvestment of
distributions from net
investment income and
from net realized gains
from investment
transactions:
Class A 18,206 -- 61,394 --
Class C 417 -- 1,940 --
Class R 6,975,322 5,757,792 16,604,261 14,633,903
------------ ------------ ------------ ------------
36,696,252 50,633,728 58,261,063 112,133,971
------------ ------------ ------------ ------------
Cost of shares redeemed:
Class A (51,915) -- (99,736) --
Class C -- -- -- --
Class R (22,466,951) (12,474,166) (75,263,107) (38,492,791)
------------ ------------ ------------ ------------
(22,518,866) (12,474,166) (75,362,843) (38,492,791)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets derived
from Fund share
transactions 14,177,386 38,159,562 (17,101,780) 73,641,180
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets 6,431,620 39,151,403 (35,512,217) 73,299,769
Net assets at beginning
of year 146,297,059 107,145,656 388,176,353 314,876,584
------------ ------------ ------------ ------------
Net assets at end of
year $152,728,679 $146,297,059 $352,664,136 $388,176,353
------------ ------------ ------------ ------------
Balance of undistributed
net investment income
at end of year $ 104,821 $ 1,024 $ 263,489 $ 268,179
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements.
60
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
OH
---------------------------------
Year ended Year ended
2/28/95 2/28/94
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 9,142,413 $ 8,098,952
Net realized gain (loss) from investment
transactions, net of taxes, if applicable (967,375) 1,194,910
Net change in unrealized appreciation or
depreciation of investments (5,055,416) (333,655)
------------ ------------
Net increase in net assets from operations 3,119,622 8,960,207
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS(note 1)
From undistributed net investment income:
Class A (58,833) --
Class C (9,333) --
Class R (9,076,904) (8,011,756)
From accumulated net realized gains from
investment transactions:
Class A (4,637) --
Class C (879) --
Class R (652,495) (902,046)
In excess of accumulated net realized gains from
investment transactions:
Class A -- --
Class C -- --
Class R -- --
------------ ------------
Decrease in net assets from distributions to
shareholders (9,803,081) (8,913,802)
------------ ------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 4,240,889 --
Class C 871,689 --
Class R 15,813,517 39,536,568
Net asset value of shares issued to shareholders
due to reinvestment of distributions from net
investment income and from net realized gains
from investment transactions:
Class A 28,946 --
Class C 6,902 --
Class R 6,935,311 6,410,290
------------ ------------
27,897,254 45,946,858
------------ ------------
Cost of shares redeemed:
Class A (115,343) --
Class C (3,158) --
Class R (21,090,544) (12,342,805)
------------ ------------
(21,209,045) (12,342,805)
------------ ------------
Net increase (decrease) in net assets derived
from Fund share transactions 6,688,209 33,604,053
------------ ------------
Net increase (decrease) in net assets 4,750 33,650,458
Net assets at beginning of year 167,447,602 133,797,144
------------ ------------
Net assets at end of year $167,452,352 $167,447,602
------------ ------------
Balance of undistributed net investment income
at end of year $ 108,632 $ 111,289
------------ ------------
</TABLE>
See accompanying notes to financial statements.
61
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT
ACCOUNTING POLICIES
At February 28, 1995, the state Funds (the "Funds") covered
in this report are Nuveen California Tax-Free Fund, Inc.
(comprised of the Nuveen California and California Insured
Tax-Free Value Funds), Nuveen Tax-Free Bond Fund, Inc.
(comprised of the Nuveen Massachusetts, New York and Ohio
Tax-Free Value Funds) and Nuveen Insured Tax-Free Bond Fund,
Inc. (comprised of the Nuveen Massachusetts and New York
Insured Tax-Free Value Funds).
Additional state Funds covering other states may be
established in the future. Each Fund invests primarily in a
diversified portfolio of municipal obligations issued by
state and local government authorities in a single state.
Each Fund issues shares of each of its classes at a price
equal to net asset value of such class plus the appropriate
front-end sales charge, if any.
The Funds are registered under the Investment Company Act of
1940 as open-end, diversified management investment
companies.
The following is a summary of significant accounting policies
followed by each Fund in the preparation of their financial
statements in accordance with generally accepted accounting
principles.
Securities Valuation
Portfolio securities for which market quotations are readily
available are valued at the mean between the quoted bid and
asked prices or the yield equivalent. Portfolio securities
for which market quotations are not readily available are
valued at fair value by consistent application of methods
determined in good faith by the Board of Directors. Temporary
investments in securities that have variable rate and demand
features qualifying them as short-term securities are traded
and valued at amortized cost.
Securities Transactions
Securities transactions are recorded on a trade date basis.
Realized gains and losses from such transactions are
determined on the specific identification method. Securities
purchased or sold on a when-issued or delayed delivery basis
may be settled a month or more after the transaction date.
Any securities so purchased are subject to market fluctuation
during this period. The Funds have instructed the custodian
to segregate assets in a separate account with a current
value at least equal to the amount of its purchase
commitments. At February 28, 1995, there were no such
purchase commitments in any of the Funds.
62
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
Interest Income Interest income is determined on the basis of interest
accrued, adjusted for amortization of premiums or discounts
on long-term debt securities when required for federal income
tax purposes.
Dividends and Distributions to Shareholders
Net investment income is declared as a dividend monthly and
payment is made or reinvestment is credited to shareholder
accounts after month-end. Net realized gains from investment
transactions are distributed to shareholders not less
frequently than annually only to the extent they exceed
available capital loss carryovers.
Distributions to shareholders of net investment income and
net realized gains from investment transactions are recorded
on the ex-dividend date. The amount and timing of such
distributions are determined in accordance with federal
income tax regulations, which may differ from generally
accepted accounting principles. Accordingly, temporary over-
distributions as a result of these differences may result and
will be classified as either distributions in excess of net
investment income or distributions in excess of accumulated
net realized gains from investment transactions, if
applicable.
Income Tax Each Fund is a separate taxpayer for federal income tax
purposes and intends to comply with the requirements of the
Internal Revenue Code applicable to regulated investment
companies by distributing all of its net investment income,
in addition to any significant amounts of net realized gains
from investments, to shareholders. The Funds currently
consider significant net realized gains as amounts in excess
of $.001 per share. Futhermore, each Fund intends to satisfy
conditions which will enable interest from municipal
securities, which is exempt from regular federal and
designated state income taxes, to retain such tax exempt
status when distributed to the shareholders of the Funds. All
income dividends paid during the fiscal year ended February
28, 1995, have been designated Exempt Interest Dividends.
63
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Insurance The California Insured, Massachusetts Insured, and New York
Insured Tax-Free Value Funds invest in municipal securities
which are covered by insurance guaranteeing the timely
payment of principal and interest thereon or backed by an
escrow or trust account containing sufficient U.S. Government
or U.S. Government agency securities to ensure the timely
payment of principal and interest. Each insured municipal
security is covered by Original Issue Insurance, Secondary
Market Insurance or Portfolio Insurance. Such insurance does
not guarantee the market value of the municipal securities or
the value of the Funds' shares. Original Issue Insurance and
Secondary Market Insurance remain in effect as long as the
municipal securities covered thereby remain outstanding and
the insurer remains in business, regardless of whether the
Funds ultimately dispose of such municipal securities.
Consequently, the market value of the municipal securities
covered by Original Issue Insurance or Secondary Market
Insurance may reflect value attributable to the insurance.
Portfolio Insurance is effective only while the municipal
securities are held by the Funds. Accordingly, neither the
prices used in determining the market value of the underlying
municipal securities nor the net asset value of the Funds'
shares include value, if any, attributable to the Portfolio
Insurance. Each policy of the Portfolio Insurance does,
however, give the Funds the right to obtain permanent
insurance with respect to the municipal security covered by
the Portfolio Insurance policy at the time of its sale.
Flexible Sales Charge Program
Effective September 6, 1994, each Fund commenced offering
Class "A" Shares and Class "C" Shares. Class "A" Shares incur
a front-end sales charge and an annual 12b-1 service fee.
Class "C" Shares are sold without a sales charge but incur
annual 12b-1 distribution and service fees.
Prior to the offering of Class "A" and Class "C" Shares, the
shares outstanding were renamed Class "R" and are not subject
to any 12b-1 distribution or service fees. Effective with the
offering of the new classes, Class "R" Shares will generally
be available only for reinvestment of dividends by current
"R" shareholders and for already established Nuveen Unit
Investment Trust reinvestment accounts.
64
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
Derivative Financial Instruments
In October 1994, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No.
119 Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain
derivative financial instruments including futures, forward,
swap, and option contracts, and other financial instruments
with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may
do so in the future, they did not make any such investments
during the fiscal year ended February 28, 1995, other than
occasional purchases of high quality synthetic money market
securities which were held temporarily pending the re-
investment in long-term portfolio securities.
65
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. EXPENSE ALLOCATION
Expenses of the Funds that are not directly attributable to
any class of shares are prorated among the classes based on
the relative net assets of each class. Expenses directly
attributable to a class of shares are recorded to the
specific class. A breakdown of the class level expenses, as
well as the total fund level expenses, for the year ended
February 28, 1995, are as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
12b-1 service fees $ 1,868 $ 2,924 $ 752 $ 1,152
Shareholder servicing agent fees
and expenses 1,657 1,862 1,105 833
Shareholder reports-printing and
mailing expenses 1,549 1,664 1,404 923
Federal and state registration
fees 1,107 1,100 456 393
---------- ---------- -------- --------
Total class level expenses 6,181 7,550 3,717 3,301
Total fund level expenses 4,387 6,922 1,895 2,958
---------- ---------- -------- --------
Total expenses before expense
reimbursement 10,568 14,472 5,612 6,259
Less: Expense reimbursement from
investment adviser (3,104) (2,202) (2,612) (959)
---------- ---------- -------- --------
Net expenses--Class A $ 7,464 $ 12,270 $ 3,000 $ 5,300
---------- ---------- -------- --------
CLASS C
12b-1 service fees $ 141 $ 193 $ 54 $ 269
12b-1 distribution fees 424 578 161 808
Shareholder servicing agent fees
and expenses 120 305 126 77
Shareholder reports-printing and
mailing expenses 155 263 183 109
Federal and state registration
fees 195 88 71 280
---------- ---------- -------- --------
Total class level expenses 1,035 1,427 595 1,543
Total fund level expenses 331 457 135 693
---------- ---------- -------- --------
Total expenses before expense
reimbursement 1,366 1,884 730 2,236
Less: Expense reimbursement from
investment adviser (379) (495) (355) (189)
---------- ---------- -------- --------
Net expenses--Class C $ 987 $ 1,389 $ 375 $ 2,047
---------- ---------- -------- --------
CLASS R
Shareholder servicing agent fees
and expenses $ 153,812 $ 129,319 $ 69,560 $ 53,894
Shareholder reports-printing and
mailing expenses 99,213 66,616 25,689 27,406
Federal and state registration
fees 1,762 2,680 1,923 1,724
---------- ---------- -------- --------
Total class level expenses 254,787 198,615 97,172 83,024
Total fund level expenses 1,212,122 1,163,519 443,575 354,630
---------- ---------- -------- --------
Total expenses before expense
reimbursement 1,466,909 1,362,134 540,747 437,654
Less: Expense reimbursement from
investment adviser -- -- (14,352) --
---------- ---------- -------- --------
Net expenses--Class R $1,466,909 $1,362,134 $526,395 $437,654
---------- ---------- -------- --------
Net expenses--Fund $1,475,360 $1,375,793 $529,770 $445,001
---------- ---------- -------- --------
</TABLE>
66
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A
12b-1 service fees $ 1,620 $ 4,578 $ 2,727
Shareholder servicing agent fees and ex-
penses 1,706 2,053 1,914
Shareholder reports-printing and mailing
expenses 1,831 1,322 1,844
Federal and state registration fees 1,021 2,331 953
---------- ---------- ----------
Total class level expenses 6,178 10,284 7,438
Total fund level expenses 3,906 10,329 6,353
---------- ---------- ----------
Total expenses before expense reimburse-
ment 10,084 20,613 13,791
Less: Expense reimbursement from invest-
ment adviser (3,607) (1,368) (2,887)
---------- ---------- ----------
Net expenses--Class A $ 6,477 $ 19,245 $ 10,904
---------- ---------- ----------
CLASS C
12b-1 service fees $ 38 $ 191 $ 467
12b-1 distribution fees 114 574 1,401
Shareholder servicing agent fees and ex-
penses 137 75 352
Shareholder reports-printing and mailing
expenses 276 170 379
Federal and state registration fees 558 328 187
---------- ---------- ----------
Total class level expenses 1,123 1,338 2,786
Total fund level expenses 92 440 1,123
---------- ---------- ----------
Total expenses before expense reimburse-
ment 1,215 1,778 3,909
Less: Expense reimbursement from invest-
ment adviser (949) (399) (637)
---------- ---------- ----------
Net expenses--Class C $ 266 $ 1,379 $ 3,272
---------- ---------- ----------
CLASS R
Shareholder servicing agent fees and ex-
penses $ 131,145 $ 210,302 $ 146,485
Shareholder reports-printing and mailing
expenses 76,876 78,084 60,293
Federal and state registration fees 5,111 665 1,725
---------- ---------- ----------
Total class level expenses 213,132 289,051 208,503
Total fund level expenses 842,577 2,028,925 947,390
---------- ---------- ----------
Total expenses before expense reimburse-
ment 1,055,709 2,317,976 1,155,893
Less: Expense reimbursement from invest-
ment adviser -- -- --
---------- ---------- ----------
Net expenses--Class R $1,055,709 $2,317,976 $1,155,893
---------- ---------- ----------
Net expenses--Fund $1,062,452 $2,338,600 $1,170,069
---------- ---------- ----------
</TABLE>
67
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. FUND SHARES
Transactions in shares were as follows:
<TABLE>
<CAPTION>
CA CA INS
----------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 321,777 -- 468,407 --
Class C 19,666 -- 28,545 --
Class R 2,433,649 5,633,912 2,136,079 5,576,658
Shares issued to sharehold-
ers due to reinvestment of
distributions from net in-
vestment income and from
net realized gains from
investment transactions:
Class A 1,856 -- 2,486 --
Class C 191 -- 201 --
Class R 884,995 723,974 714,801 652,939
---------- ---------- ---------- ----------
3,662,134 6,357,886 3,350,519 6,229,597
---------- ---------- ---------- ----------
Shares redeemed:
Class A (12,110) -- (7,236) --
Class C (106) -- (6,858) --
Class R (3,116,035) (2,918,057) (2,915,964) (2,286,892)
---------- ---------- ---------- ----------
(3,128,251) (2,918,057) (2,930,058) (2,286,892)
---------- ---------- ---------- ----------
Net increase (decrease) 533,883 3,439,829 420,461 3,942,705
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
MA MA INS
-----------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 114,157 -- 197,250 --
Class C 15,429 -- 33,405 --
Class R 1,117,491 2,335,758 702,214 1,534,832
Shares issued to shareholders
due to reinvestment of
distributions from net in-
vestment income and from net
realized gains from invest-
ment transactions:
Class A 956 -- 1,171 --
Class C 65 -- 244 --
Class R 277,942 242,886 225,446 175,622
---------- --------- --------- ---------
1,526,040 2,578,644 1,159,730 1,710,454
---------- --------- --------- ---------
Shares redeemed:
Class A (3,567) -- (4,008) --
Class C -- -- -- --
Class R (1,130,507) (712,480) (823,516) (649,891)
---------- --------- --------- ---------
(1,134,074) (712,480) (827,524) (649,891)
---------- --------- --------- ---------
Net increase (decrease) 391,966 1,866,164 332,206 1,060,563
---------- --------- --------- ---------
</TABLE>
68
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NY NY INS
----------------------------------------
Year ended Year ended Year ended Year ended
2/28/95 2/28/94 2/28/95 2/28/94
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 318,594 -- 719,364 --
Class C 8,430 -- 27,982 --
Class R 2,613,112 3,833,510 3,411,938 9,088,885
Shares issued to sharehold-
ers due to reinvestment of
distributions from net in-
vestment income and from
net realized gains from
investment transactions:
Class A 1,882 -- 6,336 --
Class C 43 -- 200 --
Class R 701,622 874,183 1,652,628 1,356,500
---------- ---------- ---------- ----------
3,643,683 4,707,693 5,818,448 10,445,385
---------- ---------- ---------- ----------
Shares redeemed:
Class A (5,381) -- (10,331) --
Class C -- -- -- --
Class R (2,245,562) (1,159,235) (7,580,245) (3,579,980)
---------- ---------- ---------- ----------
(2,250,943) (1,159,235) (7,590,576) (3,579,980)
---------- ---------- ---------- ----------
Net increase (decrease) 1,392,740 3,548,458 (1,772,128) 6,865,405
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
OH
---------------------------------
Year ended Year ended
2/28/95 2/28/94
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 432,196 --
Class C 88,344 --
Class R 1,586,702 3,690,169
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net realized gains from investment
transactions:
Class A 2,972 --
Class C 711 --
Class R 696,759 595,538
---------- ---------- --- ---
2,807,684 4,285,707
---------- ----------
Shares redeemed:
Class A (11,421) --
Class C (325) --
Class R (2,131,282) (1,147,522)
---------- ---------- --- ---
(2,143,028) (1,147,522)
---------- ---------- --- ---
Net increase (decrease) 664,656 3,138,185
---------- ---------- --- ---
</TABLE>
69
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. DISTRIBUTIONS TO SHAREHOLDERS
On March 9, 1995, the Funds declared dividend distributions
from their ordinary income which were paid on April 3, 1995,
to shareholders of record on March 10, 1995, as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- --------------------------------------------------
<S> <C> <C> <C> <C>
Dividend per share:
Class A $.0460 $.0445 $.0435 $.0430
Class C .0395 .0380 .0375 .0370
Class R .0485 .0470 .0455 .0460
------ ------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $.0460 $.0435 $.0455
Class C .0400 .0370 .0390
Class R .0485 .0465 .0475
------ ------ ------
</TABLE>
5. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in
municipal securities and temporary municipal investments for
the year ended February 28, 1995, were as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PURCHASES
Investments in municipal se-
curities $68,894,120 $50,451,137 $13,363,407 $ 5,335,294
Temporary municipal invest-
ments 43,200,000 30,180,000 6,800,000 10,500,000
SALES
Investments in municipal se-
curities 66,559,948 48,631,129 11,517,581 5,226,905
Temporary municipal invest-
ments 43,200,000 28,480,000 6,000,000 8,800,000
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- --------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASES
Investments in municipal securities $58,175,026 $39,924,207 $49,521,108
Temporary municipal investments 26,200,000 38,100,000 19,500,000
SALES
Investments in municipal securities 40,595,994 58,979,554 44,955,689
Temporary municipal investments 30,000,000 41,900,000 20,000,000
----------- ----------- -----------
</TABLE>
70
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
At February 28, 1995, the cost of investments for federal
income tax purposes was the same as the cost for financial
reporting purposes for each Fund.
At February 28, 1995, the following Funds had unused capital
loss carryovers available for federal income tax purposes to
be applied against future security gains, if any. If not
applied, the carryovers will expire as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Expiration year:
1996 $ -- $ -- $ -- $ 6,372
1997 -- -- -- 72,205
2003 2,620,483 1,106,349 557,301 212,554
---------- ---------- ---------- ----------
Total $2,620,483 $1,106,349 $ 557,301 $ 291,131
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
NY OH
- -----------------------------------------
<S> <C> <C>
Expiration year:
1996 $ -- $ --
1997 -- --
2003 1,122,982 967,375
---------- ----------
Total $1,122,982 $ 967,375
---------- ----------
</TABLE>
6. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized
depreciation of investments at February 28, 1995, were as
follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized:
Appreciation $7,199,506 $8,299,708 $3,099,613 $2,768,020
Depreciation (3,206,106) (3,436,911) (845,699) (500,230)
---------- ---------- ---------- ----------
Net unrealized appreciation $3,993,400 $4,862,797 $2,253,914 $2,267,790
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
Appreciation $5,757,794 $14,819,638 $8,159,973
Depreciation (2,353,152) (5,230,912) (1,533,791)
---------- ----------- ----------
Net unrealized appreciation $3,404,642 $ 9,588,726 $6,626,182
---------- ----------- ----------
</TABLE>
71
<PAGE>
NOTES TO FINANCIAL STATEMENTS
7. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen
Advisory Corp. (the "Adviser"), a wholly owned subsidiary of
The John Nuveen Company, each Fund pays to the Adviser an
annual management fee, payable monthly, at the rates set
forth below which are based upon the average daily net asset
value of each Fund:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- ----------------------------------------------------
<S> <C>
For the first $125,000,000 .55 of 1%
For the next $125,000,000 .5375 of 1
For the next $250,000,000 .525 of 1
For the next $500,000,000 .5125 of 1
For the next $1,000,000,000 .5 of 1
For net assets over $2,000,000,000 .475 of 1
</TABLE>
The management fee is reduced by, or the Adviser assumes
certain expenses of each Fund, in an amount necessary to
prevent the total expenses of each Fund (including the
management fee, but excluding interest, taxes, fees incurred
in acquiring and disposing of portfolio securities, 12b-1
Service and Distribution fees, and to the extent permitted,
extraordinary expenses) in any fiscal year from exceeding .75
of 1% of the average daily net asset value of the California,
Massachusetts, New York and Ohio Tax-Free Value Funds, .80 of
1% of the average daily net asset value of the California
Insured and New York Insured Tax-Free Value Funds, and .90 of
1%
of the average daily net asset value of the Massachusetts
Insured Tax-Free Value Fund.
The management fee referred to above compensates the Adviser
for overall investment advisory and administrative services,
and general office facilities. The Funds pays no compensation
directly to their directors who are affiliated with the
Adviser or to its officers, all of whom receive remuneration
for their services to the Funds from the Adviser.
72
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
8. COMPOSITION OF NET ASSETS
At February 28, 1995, the Funds had common stock authorized
at $.01 par value per share. The composition of net assets as
well as the number of authorized shares were as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid-in $209,987,571 $200,079,942 $71,029,459 $57,426,895
Balance of undistributed
net investment income 65,047 66,680 56,272 27,522
Undistributed net real-
ized gain (loss) from
investment
transactions, net of
taxes, if applicable (2,620,483) (1,106,349) (557,301) (291,131)
Distributions in excess
of accumulated net re-
alized gains from in-
vestment transactions -- -- -- --
Net unrealized apprecia-
tion (depreciation) of
investments 3,993,400 4,862,797 2,253,914 2,267,790
------------ ------------ ----------- -----------
Net assets $211,425,535 $203,903,070 $72,782,344 $59,431,076
------------ ------------ ----------- -----------
Authorized shares:
Class A 40,000,000 40,000,000 200,000,000 200,000,000
Class C 45,000,000 45,000,000 260,000,000 240,000,000
Class R 40,000,000 40,000,000 40,000,000 60,000,000
------------ ------------ ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid-in $150,342,198 $342,867,489 $161,684,913
Balance of undistributed net in-
vestment income 104,821 263,489 108,632
Undistributed net realized gain
(loss) from investment
transactions, net of taxes, if
applicable (1,122,982) -- (967,375)
Distributions in excess of accumu-
lated net realized gains from in-
vestment transactions -- (55,568) --
Net unrealized appreciation (de-
preciation) of investments 3,404,642 9,588,726 6,626,182
------------ ------------ ------------
Net assets $152,728,679 $352,664,136 $167,452,352
------------ ------------ ------------
Authorized shares:
Class A 200,000,000 200,000,000 200,000,000
Class C 220,000,000 200,000,000 220,000,000
Class R 80,000,000 100,000,000 80,000,000
------------ ------------ ------------
</TABLE>
73
<PAGE>
NOTES TO FINANCIAL STATEMENTS
9. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include
general obligation, escrowed and revenue bonds. At February
28, 1995, the revenue sources by municipal purpose for these
investments, expressed as a percent of total investments,
were as follows:
<TABLE>
<CAPTION>
CA CA INS MA MA INS
- ---------------------------------------------------
<S> <C> <C> <C> <C>
Revenue bonds:
Health care facilities 25% 11% 16% 18%
Housing facilities 9 6 20 2
Lease rental facilities 13 20 -- 1
Educational facilities 7 -- 11 15
Water/Sewer facilities 5 13 4 1
Transportation -- 3 4 1
Pollution control -- -- 2 --
Electric utilities 2 3 1 3
Other 18 22 -- 1
General obligation bonds 6 5 26 40
Escrowed bonds 15 17 16 18
- ---------------------------------------------------
100% 100% 100% 100%
--- --- --- ---
</TABLE>
<TABLE>
<CAPTION>
NY NY INS OH
- --------------------------------------------
<S> <C> <C> <C>
Revenue bonds:
Health care facilities 3% 9% 18%
Housing facilities 24 12 6
Lease rental facilities 23 4 1
Educational facilities 11 8 5
Water/Sewer facilities 3 9 13
Transportation 3 13 1
Pollution control 4 2 12
Electric utilities -- 1 3
Other 8 6 1
General obligation bonds 10 17 25
Escrowed bonds 11 19 15
- --------------------------------------------
100% 100% 100%
--- --- ---
</TABLE>
74
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
Certain long-term and intermediate-term investments owned by
the Funds are covered by insurance issued by several private
insurers or are backed by an escrow or trust containing U.S.
Government or U.S. Government agency securities, either of
which ensure the timely payment of principal and interest in
the event of default (25% for California, 100% for California
Insured, 37% for Massachusetts, 100% for Massachusetts
Insured, 22% for New York, 100% for New York Insured and 60%
for Ohio). Such insurance, however, does not guarantee the
market value of the municipal securities or the value of the
Funds' shares.
All of the temporary investments in short-term municipal
securities have credit enhancements (letters of credit,
guarantees or insurance) issued by third party domestic or
foreign banks or other institutions.
For additional information regarding each investment
security, refer to the Portfolio of Investments of each Fund.
75
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
---------------------------------------------------------------------
Net realized
Net asset and unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments+++ income capital gains
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CA
- ----------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $10.210 $.270* $(.031) $(.275) $(.074)
Class C
9/19/94 to 2/28/95 10.040 .218* .139 (.223) (.074)
Class R
Year ended, 2/28/95 10.740 .582 (.531) (.587) (.074)
2/28/94 10.850 .598 (.054) (.596) (.058)
2/28/93 10.140 .633 .707 (.626) (.004)
8 months ended 2/29/92 9.920 .429 .218 (.427) --
Year ended 6/30/91 9.790 .639 .133 (.642) --
6/30/90 9.850 .641 (.058) (.643) --
6/30/89 9.240 .649* .610 (.649) --
6/30/88 9.280 .647* (.040) (.647) --
6/30/87** 9.600 .652* (.320) (.652) --
- ----------------------------------------------------------------------------------------------
CA INS
- ----------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 10.220 .255* .068 (.265) (.028)
Class C
9/13/94 to 2/28/95 10.060 .210* .123 (.215) (.028)
Class R
Year ended, 2/28/95 10.670 .559 (.412) (.559) (.028)
2/28/94 10.850 .560 (.101) (.556) (.083)
2/28/93 10.010 .584 .871 (.579) (.036)
8 months ended 2/29/92 9.650 .401 .360 (.401) --
Year ended 6/30/91 9.480 .600 .176 (.606) --
6/30/90 9.630 .608 (.151) (.607) --
6/30/89 9.020 .607 .610 (.607) --
6/30/88 8.980 .600* .040 (.600) --
6/30/87** 9.600 .630* (.620) (.630) --
- ----------------------------------------------------------------------------------------------
</TABLE>
See notes on page 82.
76
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$10.100 2.52% $ 3,146 1.00%+* 5.81%+* 32%
10.100 3.71 200 1.75+* 5.03+* 32
10.130 .78 208,080 .71 5.83 32
10.740 5.08 218,430 .73 5.47 19
10.850 13.66 183,215 .71 6.05 5
10.140 6.61 133,377 .67+ 6.30+ --
9.920 8.16 107,508 .69 6.48 15
9.790 6.14 78,704 .69 6.51 8
9.850 14.12 52,048 .75* 6.79* 22
9.240 6.87 29,640 .70* 7.09* 48
9.280 3.28 19,094 .18* 6.62* 17
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
10.250 3.33 4,753 1.05+* 5.45+* 25
10.150 3.45 222 1.80+* 4.69+* 25
10.230 1.68 198,928 .70 5.60 25
10.670 4.27 208,115 .71 5.12 14
10.850 15.05 168,852 .75 5.72 9
10.010 7.99 100,933 .64+ 5.97+ 7
9.650 8.43 74,551 .68 6.26 29
9.480 4.93 50,625 .70 6.36 13
9.630 13.97 35,032 .82 6.52 23
9.020 7.44 22,394 .82* 6.77* 31
8.980 (.13) 16,192 .17* 6.48* 4
- --------------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
------------------------------------------------------------------------
Net realized
Net asset and unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments+++ income capital gains
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MA
- -------------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $ 9.540 $.254* $ .025 $(.259) $ --
Class C
10/6/94 to 2/28/95 9.280 .188* .254 (.212) --
Class R
Year ended,
2/28/95 9.940 .541* (.403) (.538) --
2/28/94 9.910 .543* .038 (.541) (.010)
2/28/93 9.210 .563* .704 (.563) (.004)
3 months ended 2/29/92 9.130 .146 .077 (.143) --
Year ended,
11/30/91 8.760 .577* .375 (.582) --
11/30/90 8.900 .587* (.144) (.583) --
11/30/89 8.600 .587* .300 (.587) --
11/30/88 8.250 .581* .350 (.581) --
12/10/86 to 11/30/87 9.600 .577* (1.350) (.577) --
- -------------------------------------------------------------------------------------------------
MA INS
- -------------------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 10.030 .249* .039 (.258) --
Class C
9/15/94 to 1/31/95 9.910 .202* .137 (.209) --
Class R
Year ended,
2/28/95 10.450 .545 (.386) (.549) --
2/28/94 10.440 .537 -- (.527) --
2/28/93 9.650 .551 .784 (.545) --
2/29/92 9.360 .570 .301 (.581) --
2/28/91 9.140 .568 .219 (.567) --
2/28/90 8.960 .571* .178 (.569) --
2/28/89 9.030 .576* (.070) (.576) --
2/29/88 9.540 .582* (.510) (.582) --
12/10/86 to 2/28/87 9.600 .131* (.060) (.131) --
- -------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 82.
78
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$ 9.560 3.05% $ 1,067 1.00%*+ 5.75%*+ 17%
9.510 4.86 147 1.75*+ 5.11*+ 17
9.540 1.64 71,568 .75* 5.77* 17
9.940 5.96 71,942 .75* 5.38* 3
9.910 14.21 53,231 .75* 5.91* 5
9.210 2.44 34,470 .71+ 6.31+ 5
9.130 11.19 31,150 .75* 6.39* 19
8.760 5.21 20,829 .75* 6.68* 23
8.900 10.62 15,513 .75* 6.64* 31
8.600 11.56 9,485 .75* 6.74* 55
8.250 (8.19) 5,681 .37*+ 6.47*+ 34
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
10.060 2.99 1,956 1.15*+ 5.34*+ 10
10.040 3.52 338 1.90*+ 4.58*+ 10
10.060 1.77 57,137 .79 5.54 10
10.450 5.22 58,255 .84 5.09 3
10.440 14.28 47,098 .86 5.47 2
9.650 9.57 28,189 .72 5.93 5
9.360 8.95 15,625 .85 6.19 6
9.140 8.52 8,649 .97* 6.17* 15
8.960 5.84 5,404 .97* 6.44* 41
9.030 1.14 4,895 .59* 6.53* 42
9.540 .75 2,312 --*+ 5.82*+ --
- --------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
----------------------------------------------------------------
Net realized
and
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income+++ investments income capital gains
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NY
- -----------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $10.230 $.277* $(.067) $(.273) $(.047)
Class C
9/14/94 to 2/28/95 10.110 .231* .038 (.222) (.047)
Class R
Year ended,
2/28/95 10.720 .579 (.529) (.573) (.047)
2/28/94 10.610 .578* .161 (.580) (.049)
2/28/93 9.880 .603* .806 (.598) (.081)
3 months ended 2/29/92 9.820 .163 .053 (.156) --
Year ended,
11/30/91 9.380 .629* .441 (.630) --
11/30/90 9.560 .631* (.181) (.630) --
11/30/89 9.180 .633* .380 (.633) --
11/30/88 8.760 .625* .420 (.625) --
12/10/86 to 11/30/87 9.600 .612* (.840) (.612) --
- -----------------------------------------------------------------------------------------
NY INS
- -----------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 10.160 .253* .037 (.260) (.040)***
Class C
9/14/94 to 1/31/95 10.030 .207* .133 (.210) (.040)***
Class R
Year ended,
2/28/95 10.630 .555 (.440) (.555) (.040)***
2/28/94 10.620 .550 .035 (.543) (.032)
2/28/93 9.780 .566 .849 (.562) (.013)
2/29/92 9.320 .590 .467 (.597) --
2/28/91 9.250 .598 .068 (.596) --
2/28/90 9.060 .596 .190 (.596) --
2/29/89 9.100 .593* (.040) (.593) --
2/29/88 9.830 .606* (.730) (.606) --
12/10/86 to
2/28/87 9.600 .130* .230 (.130) --
- -----------------------------------------------------------------------------------------
</TABLE>
See notes on page 82.
80
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$10.120 2.21% $ 3,189 1.00%*+ $5.87%*+ 29%
10.110 2.80 86 1.75*+ 5.16*+ 29
10.150 .75 149,454 .74 5.79 29
10.720 7.10 146,297 .75* 5.33* 15
10.610 14.79 107,146 .75* 5.84* 12
9.880 2.21 66,491 .75+ 6.27+ 16
9.820 11.79 59,351 .75* 6.50* 19
9.380 4.92 44,347 .75* 6.65* 51
9.560 11.34 29,040 .75* 6.63* 85
9.180 12.20 14,975 .75* 6.89* 71
8.760 (2.44) 8,239 .37*+ 6.46*+ 20
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
10.150 3.01 7,258 1.05*+ 5.41*+ 11
10.120 3.53 285 1.80*+ 4.65*+ 11
10.150 1.37 345,121 .65 5.57 11
10.630 5.57 388,176 .68 5.11 5
10.620 14.96 314,877 .73 5.56 6
9.780 11.66 167,048 .69 6.08 4
9.320 7.61 80,484 .73 6.46 13
9.250 8.75 40,372 .85 6.35 30
9.060 6.37 20,206 .97* 6.58* 62
9.100 (.85) 14,078 .61* 6.73* 36
9.830 3.76 5,177 -- 4.97*+ --
- --------------------------------------------------------------------------------------------
</TABLE>
81
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment
operations Less distributions
---------------------------------------------------------------------
Net realized
Net asset and unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income investments+++ income capital gains
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OH
- ----------------------------------------------------------------------------------------------
Class A
9/7/94 to 2/28/95 $10.160 $.266 $ .087 $(.272) $(.041)
Class C
9/16/94 to 2/28/95 10.070 .219* .133 (.221) (.041)
Class R
Year ended,
2/28/95 10.610 .568 (.388) (.569) (.041)
2/28/94 10.580 .570* .087 (.565) (.062)
2/28/93 9.870 .595* .728 (.589) (.024)
3 months ended 2/29/92 9.770 .154 .126 (.153) (.027)
Year ended,
11/30/91 9.530 .619 .287 (.624) (.042)
11/30/90 9.550 .624 .003 (.624) (.023)
11/30/89 9.040 .629* .510 (.629) --
11/30/88 8.610 .626* .430 (.626) --
12/10/86 to 11/30/87 9.600 .600* (.990) (.600) --
- ----------------------------------------------------------------------------------------------
</TABLE>
* Reflects the waiver of certain management fees and reimbursement of certain
other expenses by the Adviser. See note 7 of Notes to Financial Statements.
** Shares in the California and California Insured Funds were first offered for
sale on July 1, 1986.
*** The amounts shown include distributions in excess of capital gains of
$.0015 per share.
+ Annualized.
++ Total Return on Net Asset Value is the combination of reinvested dividend
income, reinvested capital gain distributions if any, and changes in net asset
value per share.
+++ Net of taxes, if applicable. See note 1 of Notes to Financial Statements.
82
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value++ (in thousands) net assets net assets turnover rate
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
$10.200 3.63% 4,320 1.00%+* 5.67%+* 28%
10.160 3.63 901 1.75+* 4.92+* 28
10.180 1.99 162,231 .73 5.70 28
10.610 6.30 167,448 .75* 5.28* 9
10.580 13.88 133,797 .75* 5.86* 13
9.870 2.87 90,121 .70+ 6.16+ 3
9.770 9.84 81,649 .71 6.37 16
9.530 6.86 56,887 .74 6.61 38
9.550 12.97 37,714 .75* 6.66* 66
9.040 12.56 20,144 .75* 6.94* 55
8.610 (4.10) 9,135 .39+* 6.53+* 26
- --------------------------------------------------------------------------------------------
</TABLE>
83
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Nuveen California Tax-Free Fund, Inc.
Nuveen Tax-Free Bond Fund, Inc.
Nuveen Insured Tax-Free Bond Fund, Inc.:
We have audited the accompanying statements of net assets of
NUVEEN CALIFORNIA TAX-FREE FUND, INC. (comprised of the
Nuveen California and California Insured Tax-Free Value
Funds) (a Maryland corporation), NUVEEN TAX-FREE BOND FUND,
INC. (comprised of the Nuveen Massachusetts, New York and
Ohio Tax-Free Value Funds) and NUVEEN INSURED TAX-FREE BOND
FUND, INC, (comprised of the Nuveen Massachusetts and New
York Insured Tax-Free Value Funds) (both Minnesota
corporations), including the portfolios of investments, as of
February 28, 1995, and the related statements of operations
for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and
the financial highlights for the periods indicated thereon.
These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
February 28, 1995, by correspondence with the custodian and
brokers. As to securities purchased but not received, we
requested confirmation from brokers and, when replies were
not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the net assets of each of the respective funds
constituting the Nuveen California Tax-Free Fund, Inc.,
Nuveen Tax-Free Bond Fund, Inc. and Nuveen Insured Tax-Free
Bond Fund, Inc. as of February 28, 1995, the results of their
operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended,
and the financial highlights for the periods indicated
thereon in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
April 3, 1995
84
<PAGE>
The
human bond
[PHOTO OF BOOK APPEARS HERE]
At John Nuveen & Co.
Incorporated, where our
tax-free municipal bonds have
helped people live their
dreams for nearly 100 years,
we still believe our strongest
bond is human.(TM)
For almost a century, John Nuveen & Company has concentrated its resources and
expertise on one area: municipal bonds. We are the oldest and largest investment
banking firm specializing exclusively in municipal securities, and we strive to
be the best.
We maintain a sharp focus on the needs of prudent investors and their
families, offer investments of quality, and then work to make them better by
seeking out opportunity. We hold to a dedicated belief in the importance of
research. And we sustain a commitment to sound financial management through
value investing.
Our hope is that by providing quality investments we may foster opportunity
for our investors. Through careful research, attention to detail, and our
philosophy of managing for long-term value, we hope to provide our shareholders
with the attractive level of income they need to achieve their personal goals
and aspirations.
These are the things that matter most, and it's why we say that, at Nuveen,
our strongest bond is human.
[LOGO OF JOHN NUVEEN]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
PART C--OTHER INFORMATION
NUVEEN TAX-FREE BOND 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:
Financial Highlights
Included in the Statement of Additional Information through incorporation
by reference to the Registrant's Annual Report:
Portfolio of Investments, February 28, 1995
Statement of Net Assets, February 28, 1995
Statement of Operations, Year Ended February 28, 1995
Statement of Changes in Net Assets, Years Ended February 28, 1995, and
February 28, 1994
Report of Independent Public Accountants dated April 3, 1995
(b) Exhibits:
1(a). Articles of Incorporation of Registrant, as amended. Filed as Ex-
hibit 1 to Post- Effective Amendment No. 10 to Registrant's Regis-
tration Statement on Form N-1A (File No. 33-8370) and are incorpo-
rated herein by reference thereto.
1(b). Articles of Amendment, dated August 24, 1994. Filed as Exhibit 1(b)
to Post-effective Amendment No. 15 on Form N-1A (File No. 33-8370)
and incorporated herein by reference thereto.
1(c). Certificate of Designation Establishing New Series of Shares of Reg-
istrant, dated August 30, 1994. Filed as Exhibit 1(c) to Post-effec-
tive Amendment No. 15 on Form N-1A (File No. 33-8370) and incorpo-
rated herein by reference thereto.
2. By-Laws of Registrant, as amended on July 28, 1994. Filed as Exhibit
2 to Post-Effective Amendment No. 14 to Registrant's Registration on
Form N-1A (File No. 33-8370) and incorporated herein by reference
thereto.
3. Not applicable.
4(a). Specimen certificates of Class R Shares of each Fund. Filed as Ex-
hibit 4(a) to Post-effective Amendment No. 15 on Form N-1A (File No.
33-8370) and incorporated herein by reference thereto.
4(b). Specimen certificates of Class A Shares of each Fund. Filed as Ex-
hibit 4(b) to Post-effective Amendment No. 15 on Form N-1A (File No.
33-8370) and incorporated herein by reference thereto.
C-1
<PAGE>
4(c). Specimen certificates of Class C Shares of each Fund. Filed as Ex-
hibit 4(c) to Post-effective Amendment No. 15 on Form N-1A (File No.
33-8370) and incorporated herein by reference thereto.
5(a). Investment Management Agreement between Registrant and Nuveen Advi-
sory Corp., dated April 27, 1992. Filed as Exhibit 5(a) to Post-Ef-
fective Amendment No. 9 to Registrant's Registration Statement on
Form N-1A (File No. 33-8370) 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. 12 to Registrant's Reg-
istration Statement on Form N-1A (File No. 33-8370) and incorporated
herein by reference thereto.
5(c). Renewal, dated July 14, 1994, of Investment Management Agreement.
Filed as Exhibit 5(b) to Post-Effective Amendment No. 14 to Regis-
trant's Registration Statement on Form N-1A (File No. 33-8370) and
incorporated herein by reference thereto.
6(a). Distribution Agreement between Registrant and John Nuveen & Co. In-
corporated, dated January 2, 1990. Filed as Exhibit 5(b) to Post-Ef-
fective Amendment No. 4 to Registrant's Registration Statement on
Form N-1A (File No. 33-8370) and incorporated herein by reference
thereto.
6(b). Renewal, dated July 29, 1994, of Distribution Agreement. Filed as
Exhibit 6(b) to Post-Effective Amendment No. 14 to Registrant's Reg-
istration Statement on Form N-1A (File No. 33-8370) and incorporated
herein by reference thereto.
7. Not applicable.
8. Custody Agreement, dated October 1, 1993, between Registrant and
United States Trust Company of New York. Filed as Exhibit 8 to Post-
Effective Amendment No. 12 to Registrant's Registration Statement on
Form N-1A (File No. 33-8370) and incorporated herein by reference
thereto.
9. Transfer Agency Agreement between Registrant and Shareholder Servic-
es, Inc., dated December 19, 1994.
10(a). Form of opinion of Fried, Frank, Harris, Shriver & Jacobson.
10(b). Form of opinion of Dorsey & Whitney P.L.L.P.
11. Consent of Independent Public Accountants.
12. Not applicable.
13. Subscription Agreement of Nuveen Advisory Corp., dated July 30,
1986. Filed as Exhibit 13 to Registrant's Registration Statement on
Form N-1A (File No. 33-8370) and incorporated herein by this refer-
ence thereto.
14. Not applicable.
C-2
<PAGE>
15. Form of Plan of Distribution and Service for the Class A Shares and
Class C Shares of each Fund. Filed as Exhibit 15 to Post-Effective
Amendment No. 14 to Registrant's Registration Statement on Form N-1A
(File No. 33-8370) and incorporated herein by reference thereto.
16. Schedule of Computation of Performance Figures.
17. Financial Data Schedule.
99(a). 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(b). Original Powers of Attorney for all of Registrant's Directors autho-
rizing, among others, James J. Wesolowski and Gifford R. Zimmerman
to execute the Registration Statement.
99(c). Code of Ethics and Reporting Requirements.
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At April 17, 1995:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
<S> <C>
Nuveen Massachusetts Tax-Free Value Fund,
Class A Shares........................................... 207
Class C Shares........................................... 10
Class R Shares........................................... 2,873
Nuveen New York Tax-Free Value Fund,
Class A Shares........................................... 421
Class C Shares........................................... 16
Class R Shares........................................... 5,416
Nuveen Ohio Tax-Free Value Fund,
Class A Shares........................................... 482
Class C Shares........................................... 59
Class R Shares........................................... 6,324
</TABLE>
C-3
<PAGE>
ITEM 27: INDEMNIFICATION
Article EIGHTH of the Registrant's Articles of Incorporation provides as fol-
lows:
EIGHTH: To the maximum extent permitted by the Minnesota Business Corpora-
tion Act, as from time to time amended, the Corporation shall indemnify its
currently acting and its former directors, officers, employees and agents,
and those persons who, at the request of the Corporation serve or have
served another corporation, partnership, joint venture, trust or other en-
terprise 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 it is based upon (1) a final decision on
the merits by a court or other body before whom the proceeding was brought
that the indemnitee was not liable by reason of disabling conduct or, (2)
in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the indemnitee was not liable by reason of disa-
bling conduct, by (a) the vote of a majority of a quorum of directors who
are neither "interested persons" of the Corporation as defined in the In-
vestment Company Act of 1940 nor parties to the proceeding, or (b) an inde-
pendent legal counsel in a written opinion.
-----------------
The directors and officers of the Registrant are covered by an Investment
Trust Errors and Omission policy in the aggregate amount of $20,000,000 (with
a maximum deductible of $500,000) against
C-4
<PAGE>
liability and expenses of claims of wrongful acts arising out of their posi-
tion with the Registrant, 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 be-
lieve this conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, directors or controlling persons of the
Registrant pursuant to the Articles of Incorporation of the Registrant or oth-
erwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as ex-
pressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by an officer or director or control-
ling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such officer, director or controlling persons in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling pre-
cedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Municipal Bond Fund, Inc., Nuveen
Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen
California Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund, Inc., Nuveen In-
sured 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
following closed-end management type investment companies: Nuveen Municipal
Value Fund, Inc., Nuveen California Municipal Value Fund, Inc., Nuveen New
York Municipal Value Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen
California Municipal Income Fund, Inc., Nuveen New York Municipal Income Fund,
Inc., Nuveen Premium Income Municipal Fund, Inc., Nuveen Performance Plus Mu-
nicipal Fund, Inc., Nuveen California Performance Plus Municipal Fund, Inc.,
Nuveen New York Performance Plus Municipal Fund, Inc., Nuveen Municipal Advan-
tage Fund, Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen Cali-
fornia Municipal Market Opportunity Fund, Inc., Nuveen Investment Quality Mu-
nicipal Fund, Inc., Nuveen California Investment Quality Municipal Fund, Inc.,
Nuveen New York Investment Quality Municipal Fund, Inc.; Nuveen Insured Qual-
ity Municipal Fund, Inc., Nuveen Florida Investment Quality Municipal Fund,
Nuveen New Jersey Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania
Investment Quality Municipal Fund, Nuveen Select Quality Municipal Fund, Inc.,
Nuveen California Select Quality Municipal Fund, Inc., Nuveen New York Select
Quality Municipal Fund, Inc., Nuveen Quality Income 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 Munici-
pal 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 Premium
Income Munici
C-5
<PAGE>
pal Fund 2, Inc., Nuveen Insured California Premium Income Municipal Fund,
Inc., Nuveen Insured New York Premium Income Municipal Fund, Inc., Nuveen Se-
lect 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 California Premium Income Munici-
pal Fund 2, Inc., Nuveen Pennsylvania Premium Income Municipal Fund 2, Nuveen
Maryland Premium Income Municipal Fund, Nuveen Massachusetts Premium Income Mu-
nicipal 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 In-
come Municipal Fund, Nuveen North Carolina Premium Income Municipal Fund,
Nuveen California Premium Income Municipal Fund and Nuveen Insured Premium In-
come Municipal Fund 2. Nuveen Advisory Corp. has no other clients or business
at the present time. The principal business address for all of these investment
companies is 333 West Wacker Drive, Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer, other than Donald E. Sveen
and Anthony T. Dean, of the investment adviser has engaged during the last two
years for his account or in the capacity of director, officer, employee, part-
ner or trustee, see the descriptions under "Management" in the Statement of Ad-
ditional Information.
Donald E. Sveen is President and Director, formerly Executive Vice President,
of Nuveen Advisory Corp., the investment adviser. Mr. Sveen has, during the
last two years, been President, Director and formerly Executive Vice President
of John Nuveen & Co. Incorporated; and President and Director of Nuveen Insti-
tutional Advisory Corp. Anthony T. Dean is Director of Nuveen Advisory Corp.,
the investment adviser. Mr. Dean has, during the last two years, been Executive
Vice President and Director of John Nuveen Company and John Nuveen & Co. Incor-
porated; and Director of Nuveen Institutional Advisory Corp.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Municipal
Bond Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free 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 has also served or is serving as co-managing un-
derwriter of the shares of the following closed-end management type investment
companies: Nuveen Municipal Value Fund, Inc., Nuveen California Municipal Value
Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen Municipal Income
Fund, Inc., Nuveen California Municipal Income Fund, Inc., Nuveen New York Mu-
nicipal Income Fund, Inc., Nuveen Premium Income Municipal Fund, Inc., Nuveen
Performance Plus Municipal Fund, Inc., Nuveen California Performance Plus Mu-
nicipal Fund, Inc., Nuveen New York Performance
C-6
<PAGE>
Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Mu-
nicipal Market Opportunity Fund, Inc., Nuveen California Municipal Market Op-
portunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen
California Investment Quality Municipal Fund, Inc., Nuveen New York Investment
Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc.,
Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey Investment
Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal
Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California Select
Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal Fund,
Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Municipal Op-
portunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund, Nuveen
Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income Mu-
nicipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen Select Tax-Free Income Portfolio,
Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Insured California Pre-
mium Income Municipal Fund, Inc., Nuveen Insured New York Premium Income Mu-
nicipal Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen Arizona
Premium Income Municipal Fund, Inc., Nuveen Insured Florida Premium Income Mu-
nicipal Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New
Jersey Premium Income Municipal Fund, Inc., Nuveen Insured Premium Income Mu-
nicipal Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen In-
sured California Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania
Premium Income Municipal Fund 2, Nuveen Maryland Premium Income Municipal
Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen Virginia Pre-
mium Income Municipal Fund, Nuveen Washington Premium Income Municipal Fund,
Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia Premium In-
come Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen
North Carolina Premium Income Municipal Fund, Nuveen California Premium Income
Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2, Nuveen Select
Tax-Free Income Portfolio 2, Nuveen Select Tax-Free Income Portfolio 3, Nuveen
Insured California Select Tax-Free Income Portfolio and Nuveen Insured New
York Select Tax-Free Income Portfolio.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive Officer and Director
Chicago, Illinois 60606 and Director
Donald E. Sveen President, Chief None
333 West Wacker Drive Operating Officer and
Chicago, Illinois 60606 Director
Anthony T. Dean Executive Vice President None
333 West Wacker Drive and Director
Chicago, Illinois 60606
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Schwertfeger Executive Vice President President and Director
333 West Wacker Drive and Director
Chicago, Illinois 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, Illinois 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
James W. Gratehouse Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Paul E. Greenawalt Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
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 Vice President and
333 West Wacker Drive and Assistant Secretary Assistant Secretary
Chicago, Illinois 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES POSITIONS AND OFFICES
ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -----------------------------------------------------------------------------
<S> <C> <C>
O. Walter Renfftlen Vice President Vice President and
333 West Wacker Drive Chicago, and Controller Controller
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,
Illinois 60606
H. William Stabenow Vice President Vice President and
333 West Wacker Drive Chicago, and Treasurer Treasurer
Illlinois 60606
George P. Thermos Vice President Vice President
333 West Wacker Drive Chicago,
Illinois 60606
James J. Wesolowski Vice President, Vice President and
333 West Wacker Drive Chicago, General Counsel Secretary
Illinois 60606 and Secretary
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and 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.
United States Trust Company of New York, 114 West 47th Street, New York, New
York 10036, maintains all general and subsidiary ledgers, journals, trial bal-
ances, records of all portfolio purchases and sales, and all other required
records not maintained by Nuveen Advisory Corp., or Shareholder Services, Inc.
C-9
<PAGE>
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 HAS DULY CAUSED THIS REGISTRATION STATE-
MENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED,
IN THE CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 5TH DAY OF MAY 1995.
NUVEEN TAX-FREE BOND 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 May 5, 1995
Controller (Principal
Financial and
Accounting Officer)
/s/ Gifford R. Zimmerman
Richard J. Franke Chairman of the Board
and Director (Principal
Executive Officer)
Lawrence H. Brown Director
Anne E. Impellizzeri Director
John E. O'Toole Director
Margaret K. Rosenheim Director
Peter R. Sawers Director
Timothy R. Schwertfeger President and Director
</TABLE>[/R]
By___________________________
Gifford R. Zimmerman
Attorney-in-Fact
May 5, 1995
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, JAMES J. WESOLOWSKI
AND GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMEND-
MENTS THERETO, FOR EACH OF THE OFFICERS AND DIRECTORS OF REGISTRANT ON WHOSE
BEHALF THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
C-11
<PAGE>
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
9. Transfer Agency Agreement between Registrant and
Shareholder Services, Inc., dated December 19, 1994.
10(a). Form of opinion of Fried, Frank, Harris, Shriver &
Jacobson.
10(b). Form of opinion of Dorsey & Whitney P.L.L.P.
11. Consent of Independent Public Accountants.
16. Schedule of Computation of Performance Figures.
17. Financial Data Schedule.
99(a). 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(b). Original Powers of Attorney for all of Registrant's
Directors authorizing, among others, James J.
Wesolowski and Gifford R. Zimmerman to execute the
Registration Statement.
99(c). Code of Ethics and Reporting Requirements.
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
TRANSFER AGENCY AGREEMENT
-------------------------
This agreement is made as of the 19th day of December, 1994, between
Nuveen Tax-Free Bond Fund, Inc., a corporation organized and existing under
the laws of the State of Minnesota having its principal office and place
of business at 333 West Wacker Drive, Chicago, Illinois 60606 (hereinafter
referred to as the "Fund"), and SHAREHOLDER SERVICES, INC., a Colorado
corporation having its place of business at 3410 South Galena Street, Denver,
Colorado 80231 (hereinafter referred to as the "Transfer Agent").
In consideration of the mutual promises hereinafter set forth, the
parties hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall
have the following meanings:
1.1 "Approved Institution" shall mean a broker-dealer, broker, bank
or other entity named in a Certificate, as hereinafter defined, and having
account(s) in the Fund, or the Distributor or an agent it appoints, in each
case acting on behalf of the Fund for the benefit of its clients. From time
to time the Fund may amend a previously delivered Certificate by delivering
to the Transfer Agent a Certificate naming an additional entity as an Approved
Institution or deleting any entity named as an Approved Institution in a
previously delivered Certificate.
1.2 "Business Day" shall mean each day on which the New York Stock
Exchange is open for trading.
1.3 "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given
to the Transfer Agent by the Fund and which is signed by any Officer, as
hereinafter defined, and actually received by the Transfer Agent.
"Certificate" shall also include any notice submitted to the Transfer
Agent by electronic or telephone transmission, reasonably believed by the
Transfer Agent to be genuine and to have been properly made, signed or
authorized by an Officer.
1.4 "Computer Tape" shall mean any computer/electromagnetic tape
or transmission transmitted by an Approved Institution, via a remote terminal
or other similar link, into a data processing, storage, or collection system
or similar system (the "System"), located on the Transfer Agent's premises.
For purposes of Section 5.1, such Computer Tape shall be deemed to have
been furnished at such times as are agreed upon from time to time by the
Transfer Agent and Fund only if the information reflected thereon was input
into the system at such times as are agreed upon from time to time by the
Transfer Agent and the Fund.
1.5 "Custodian" shall mean, with respect to the Fund, U.S. Trust
Company of New York, as custodian under the terms and conditions of the
Custody Agreement between the Custodian and the Fund, or any successor(s)
to such Custodian performing similar functions for or on behalf of the Fund.
1.6 "Direct Accounts" means accounts registered in the name(s) of
shareholders other than Approved Institutions.
1.7 "Distributor" shall mean John Nuveen & Co. Incorporated (hereinafter
referred to as "Nuveen & Co.") as distributor under the terms and conditions
of the Distributor's Contract between the Fund and Nuveen & Co., wherein
Nuveen & Co. has the right to sell shares of the Fund to investors against
orders therefor at net asset value, or any successor(s) to Nuveen & Co.
performing a similar function for or on behalf of the Fund.
<PAGE>
1.8 "Effective Date" shall mean December 19, 1994.
1.9 "Series" shall mean each individual portfolio of the Fund, each
being a separate portfolio of securities and other assets, interests in
which are represented by a separate series of the Fund's shares, and such
terms shall include any other such portfolio that may be created for which
the Transfer Agent agrees to act as transfer agent pursuant to Article 10
of this Agreement.
1.10 "Officer" shall mean the Fund's Chairman of the Board, President,
Secretary, Treasurer, and any other person duly authorized by the Board
of Directors of the Fund to execute or give any Certificate on behalf of
the Fund and named in the Certificate annexed hereto as Appendix A, as
such Certificate may be amended from time to time.
1.11 "Prospectus" shall mean the most current fund prospectus and
statement of additional information relating to the Shares, actually received
by the Transfer Agent from the Fund.
1.12 "Shares" shall mean full or fractional shares comprising all
or any part of each series representing the beneficial interest in the Fund
and shall include, to the extent applicable, shares designated as comprising
any and all classes of any series of the Fund.
ARTICLE 2
APPOINTMENT OF TRANSFER AGENT
2.1 The Fund hereby constitutes and appoints the Transfer Agent as
transfer agent of all the Shares of the Fund and as dividend disbursing agent
for the Fund during the term of this Agreement.
2.2 The Transfer Agent hereby accepts appointment as transfer agent
and dividend disbursing agent and agrees on and after the Effective Date
to perform the duties hereinafter set forth.
2.3 In connection with such appointment, upon or prior to executing
this Agreement the Fund shall deliver to the Transfer Agent such of the
following as have not already been furnished to the Transfer Agent:
(a) A copy of the Articles of Incorporation of the Fund and all
Amendments thereto certified by the Secretary of the Fund;
(b) A copy of the By-Laws of the Fund certified by the Secretary of
the Fund;
(c) A Certificate signed by the Secretary of the Fund specifying the
names and specimen signatures of the Officers of the Fund;
(d) Specimen Share certificate for Shares of each series of the Fund
in the forms approved by the Board of Directors of the Fund together with
a certificate signed by the Secretary of the Fund as to such approval;
(e) Copies of the most recently filed Post-Effective Amendment to
the Fund's Registration Statement, filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and under the
Investment Company Act of 1940, as amended, together with any applications
for exemptive relief from any of the provisions of such laws filed by the
Fund and the record of any formal action of the Securities and Exchange
commission with respect to all such applications; and
(f) Opinion of Counsel for the Fund to the effect that (1) the authorized
shares of the Fund consists of shares of common stock of $0.01 par
---------
value, divided into multiple classes, (2) the issue and sale of the Fund's
authorized but unissued Shares have been duly authorized under Minnesota
law, (3) the outstanding Shares are validly issued, fully paid and
non-assessable and (4) upon the issue and sale of any authorized and unissued
shares and upon receipt of the authorized consideration therefor in an amount
not less than either the Shares' net asset value or par
-2-
<PAGE>
value, if any, established and in force at the time of their sale, the Fund
Shares so issued will be validly issued, fully paid and non-assessable.
2.4 The Fund shall either (a) furnish the Transfer Agent with sufficient
supplies of blank Share certificates in the form approved from time to time
by Board of Directors of the Fund, and from time to time will renew such
supplies upon request of the Transfer Agent, or (b) authorize the Transfer
Agent to itself create laser-printed Share certificates in the form approved
by the Board of Directors of the Fund. Any such blank Share certificates
shall be properly signed, by facsimile or otherwise, by authorized Officers
and, if required, shall bear the seal of the Fund or a facsimile thereof.
Notwithstanding the death, resignation or removal of any Officer authorized
to sign such Share certificates, the Transfer Agent may continue to
countersign and issue Share certificates bearing such Officer's signature
until otherwise directed by the Fund. The Fund agrees to indemnify and
exonerate, save and hold the Transfer Agent harmless, from and against any
and all claims or demands that may be asserted against the Transfer Agent
with respect to the genuineness of any Share certificate supplied to the
Transfer Agent by the Fund pursuant to this Agreement.
ARTICLE 3
AUTHORIZATION AND ISSUANCE OF SHARES
3.1 The Transfer Agent shall maintain records of accounts evidencing
ownership of Shares as provided in this Agreement and in the Fund's Prospectus
and, subject to the terms and conditions of this Agreement, when requested
shall countersign, record, issue, and deliver certificates for Shares both
upon original issue and transfer. Evidence of the ownership of Shares shall
be maintained on the Transfer Agent's records in book (uncertificated) form,
or, if requested by an Approved Institution (or the Distributor or its agent
acting on behalf of such Approved Institution) or shareholder. Share
certificates shall be issued, subject to the provisions of Article 5 hereof,
to evidence the ownership of Shares.
3.2 Prior to the issuance of any Shares pursuant to Share splits and
prior to any reduction in the number of Shares outstanding, the Fund shall
deliver the following documents to the Transfer Agent:
(a) A copy of the resolution(s) adopted by the Board of Directors
of the Fund and/or the shareholders of the relevant Fund, certified by the
Secretary of the Fund, authorizing such issuance of additional Shares of
such Fund or such reduction, as the case may be:
(b) In the case of the issuance of Shares, an opinion of counsel for
the Fund with respect to matters set forth in Section 2.3(f) hereof as to
such shares; and
(c) Such additional documents as the Transfer Agent may reasonably
request.
ARTICLE 4
RECAPITALIZATION OR CAPITAL ADJUSTMENT
4.1 In the case of any Share split, recapitalization or other capital
adjustment, the Transfer Agent will, in the case of accounts represented
by uncertificated Shares, cause the account records to be adjusted, as
necessary, to reflect the number of Shares held for the account of each such
shareholder as a result of such adjustment, or, in the case of Shares
represented by certificates, will, if so instructed by the Fund, issue revised
Share certificates in exchange for, or upon transfer of, outstanding share
certificates in the old form, in either case upon receiving:
(a) A Certificate authorizing the issuance of revised Share certificates
and any other action required to be taken by the Transfer Agent in connection
with any such split, recapitalization or other capital adjustment;
(b) A copy of any amendment to the Articles of Incorporation of the
Fund, certified by the Secretary of the Fund, with respect to the adjustment;
-3-
<PAGE>
(c) Specimen Share certificates in the revised form approved by the
Board of Directors of the Fund;
(d) An opinion of counsel for the Fund with respect to the matters
set forth in Article 2, Section 2.3(f) hereof as to such Shares; and
(e) Such additional documents as the Transfer Agent may reasonably
request.
4.2 The Fund shall either(a) furnish the Transfer Agent with a sufficient
supply of blank Share certificates in any new form authorized in connection
with any such Share split, recapitalization or other capital adjustment,
and from time to time will replenish such supply upon the request of
the Transfer Agent, or (b) authorize the Transfer Agent to itself create
laser-printed Share certificates in the form approved by the Board of Directors
of the Fund. Any such blank Share certificates shall be properly signed by
authorized Officers and, if required, shall bear the Fund's seal or facsimile
thereof.
ARTICLE 5
ISSUANCE, REDEMPTION, AND TRANSFER OF SHARES
5.1 (a) On each Business Day, the Transfer Agent shall accept, at
such times as are agreed upon from time to time by the Transfer Agent and
the Fund, (i) purchase orders received by the Transfer Agent directly from
an Approved Institution (or the Distributor or its agent acting on behalf
of such Approved Institution) or an individual investor, (ii) redemption
requests either received from a shareholder, whether or not an Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution), or contained in a Certificate, and (iii) request for exchanges
of Shares of the Fund for Shares of another fund received from a shareholder,
whether or not an Approved Institution (or the Distributor or its agent
acting on behalf of such Approved Institution), or contained in a Certificate,
provided that (1) such purchase order, exchange request or redemption request,
as the case may be, is in conformity with the Fund's purchase, exchange,
and redemption procedures, as applicable, described in the Prospectus, and
(2) if such type of purchase order, exchange request, or redemption request
is not described in the Prospectus in effect upon the commencement date of
the Agreement, the Transfer Agent has agreed to accept and act as to such
order or request. Upon receipt on any Business Day of any check drawn or
endorsed to the Transfer Agent, the Fund, or the Distributor for the purchase
of Shares, or any payment made by Automated Clearing House or Federal Funds
wire, the Transfer Agent shall deposit such check or payment in the bank
account established by the Fund or the Distributor for the collection of
such amounts and shall wire such amounts to the Fund's Custodian on the
next Business Day. The Transfer Agent shall have have no responsibility
hereunder for the Fund's compliance with state securities registration laws
("Blue Sky laws") relating to such purchase orders, except to the extent
that the Transfer Agent will maintain records in a manner that will enable
the Fund to monitor the total number of Shares of the Fund sold in each state
and shall provide the Fund reports as to such sales as specified in Appendix
B to this Agreement.
(b) On each Business Day, the Transfer Agent shall also accept, at
such times as are agreed upon from time to time by the Transfer Agent and
the Fund, a Computer Tape consistent in all respects with the Transfer Agent's
tape layout package, as amended from time to time, which is reasonably believed
by the Transfer Agent to be furnished by or on behalf of any Approved
Institution, setting forth data as to purchases, redemptions and exchanges
of Shares irrespective of whether payment of the purchase price accompanies
such Computer Tape. The Transfer Agent may rely on the data on such Computer
Tapes as accurate, and shall not be responsible hereunder for errors in such
Computer Tapes furnished to it hereunder, unless caused solely by the Transfer
Agent's own negligence, bad faith or willful misconduct.
(c) On each Business Day, the Fund shall provide or cause to be provided
to the Transfer Agent, at such time as the parties hereto shall agree, the
net asset value per share for the Fund and such other information as the
Transfer Agent may reasonably request.
5.2 On the Business Day following each Business Day, at such times
as the Transfer Agent and the Fund shall agree, an authorized employee of
the Transfer Agent shall confirm the following information by summary sheet
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transmitted by electronic or other electromagnetic means to an authorized
employee or agent of the Fund (or by such other form as shall be agreed
upon from time to time by the Fund and the Transfer Agent):
(a) The total dollar amount to be applied toward the purchase of Shares of
the Fund and the number of Shares of the Fund purchased on such prior Business
Day, computed by aggregating the amounts so specified in (i) the purchase orders
received by the Transfer Agent on such prior Business Day from individual
investors and (ii) all Computer Tapes described in Section 5.1(b) timely
received by the Transfer Agent with respect to such prior Business Day:
(b) The total dollar value and number of Shares of the Fund redeemed
on such prior Business Day, computed by aggregating the amounts so specified
in (i) the redemption requests received by the Transfer Agent directly on
the preceding Business Day from shareholders, and (ii) all Computer Tapes
described in Section 5.1(b) relating to such prior Business Day; and
(c) The total dollar value and number of Shares of the Fund to be exchanged
for Shares of another fund and the number of shares of such other fund to be
issued in such exchanges on such prior Business Day, and the total dollar value
and number of shares of the Fund to be issued in exchange for shares of another
fund on such prior business day (if not included in 5.2(a) above), all computed
by aggregating the amounts represented by any exchange requests received
directly by the Transfer Agent from shareholders and the amounts specified in
all Computer Tapes described in Section 5.1(b) relating to such prior Business
Day.
5.3 As to each Business Day, the Transfer Agent will (on a day on
which banks in Chicago, Illinois, and New York, New York are open for business
but in any event on or prior to the fifth Business Day following such Business
Day) advise the Distributor of the amount of cash necessary to be wired
to the appropriate Custodian, representing purchase orders for the Fund's
Shares received by the Transfer Agent as to such Business Day, as set forth
in Section 5.1 above. As to each Business Day, the Transfer Agent will advise
the Fund of the amount of cash representing exchange orders received by
the Transfer Agent as to such Business Day, such advice to be given on the
next Business Day.
5.4 As to each Business Day, the Transfer Agent shall issue to, and
redeem from, the accounts specified in a purchase order, redemption request,
or exchange request received by the Transfer Agent in proper form in accordance
with the Prospectus and, when required by the Prospectus, properly endorsed
by the record owner thereof with the record owner's or owners' signature(s)
guaranteed by a U.S. commercial bank or U.S. trust company, a member of
a national securities exchange, or shall issue to, and/or redeem from, the
accounts specified in a Computer Tape received by the Transfer Agent from
an Approved Institution, the appropriate number of full and fractional Shares
based on the net asset value per Share of the relevant series of the Fund
specified in an advice received as to such Business Day from the Fund.
Notwithstanding the foregoing, if a redemption specified in a redemption
request received directly by the Transfer Agent or in a Computer Tape is
for a dollar value of Shares in excess of the dollar value of uncertificated
Shares in the specified account plus the dollar value of certificated Shares
in the specified account for which the Transfer Agent has received the tender
of a Share certificate or certificates in proper form as described above,
the Transfer Agent shall not effect such redemption in whole or part. In
such case involving a Computer Tape, the Transfer Agent shall orally or by
electronic or other electromagnetic means advise both the Fund and the Approved
Institution (or the Distributor or its agent if acting on behalf of such
Approved Institution) which supplied such Computer Tape of such discrepancy.
In such case involving a direct shareholder, the Transfer Agent shall, within
five (5) business days, notify such shareholder directly, orally, or in
writing.
5.5 The Transfer Agent shall, as of each Business Day specified in
a certificate described in Section 6.1, issue Shares of the Fund, based on
the net asset value per Share of the Fund specified in an advice received
from the Fund as to such Business Day, in connection with a reinvestment
of a dividend or distribution on Shares of the Fund.
5.6 On each Business Day, the Transfer Agent shall advise the Fund
by computer/electromagnetic tape specifying, with respect to the immediately
preceding Business Day; the total number of Shares of the Fund (including
fractional Shares) issued and outstanding at the opening of business on
such day; the total number of Shares of the Fund
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sold on such day, pursuant to Section 5.2; the total number of Shares in the
Fund redeemed or exchanged on such day; the total number of Shares of the Fund,
if any, sold on such day pursuant to preceding Section 5.4, and the total number
of Shares of the Fund issued and outstanding at the close of business on such
day. Unless the Fund or its agent shall advise the Transfer Agent of any error
in the information contained in such computer/electromagnetic tape (the "Initial
Tape") prior to the transmission of the next computer/electromagnetic tape by
the Transfer Agent, the Transfer Agent shall be deemed to have fulfilled its
responsibilities hereunder with respect to the accuracy of the data on
subsequent computer/electromagnetic tapes submitted to the Fund that are based
in whole or in part upon any inaccurate data from the Initial Tape.
5.7. In connection with each purchase, exchange and redemption of
Shares other than pursuant to a Computer Tape submitted by an Approved
Institution (or by the Distributor or its agent acting on behalf of such
Approved Institution), the Transfer Agent shall send to the shareholder
such statements as are described in the Prospectus or as otherwise reasonably
instructed in writing by the Fund. If the Prospectus indicates that
certificates for Shares are available, and if specifically requested in
writing by any shareholder, or if otherwise required hereunder, the Transfer
Agent will countersign, issue and mail to such shareholder, at the address
set forth in the records of the Transfer Agent, a Share certificate for
any full Shares requested.
5.8. In computing the redemption proceeds to be paid to any shareholder
or to an account for an Approved Institution, the Transfer Agent shall first
compute the amount of any withholding for federal income taxes for which
the Transfer Agent has the responsibility under this Agreement to calculate
such withholding, in such manner as the Fund and the Transfer Agent shall
agree from time to time in conformity with instructions provided by the
Fund to the Transfer Agent. The Transfer Agent shall also compute any
withholding for federal income taxes for which the Transfer Agent has such
responsibility at the time of any exchange of a Fund's shares for another
fund's shares. In the case of a redemption of Shares directly by a shareholder
of record and not by means of a Computer Tape submitted by an Approved
Institution (or by the Distributor or its agent acting on behalf of such
Approved Institution), upon deposit of moneys in a redemption account by
the relevant Custodian against which the Transfer Agent is authorized by
the Fund to draw checks in connection with a redemption of Shares of the
Fund, the Transfer Agent shall cancel the redeemed Shares and after making
appropriate deduction for any withholding of taxes required of it by this
Agreement or applicable law, make payment of (i) the redemption proceeds
to the order of the shareholder, and (ii) any tax withheld to the Internal
Revenue Service, in accordance with the Fund's redemption and payment
procedures described in the Prospectus or as otherwise reasonably described
in a written instruction from the Fund. In the case of an exchange of Shares
directly by a shareholder of record and not by means of a Computer Tape
submitted by an Approved Institution (or by the Distributor or its agent
acting on behalf of such Approved Institution), upon deposit of moneys in
an account by the relevant Custodian against which the Transfer Agent is
authorized by the Fund to draw checks in connection with an exchange of
Shares of the Fund, the Transfer Agent shall cancel the exchanged Shares,
and withhold and pay taxes required under this Agreement and applicable law.
In the case of a redemption of Shares pursuant to a Computer Tape, the Transfer
Agent shall, on the next Business Day, send the Fund a computer Tape setting
forth the amount of redemption proceeds due each Approved Institution. If
such Approved Institution (or the Distributor or its agent acting on behalf
of such Approved Institution) has previously furnished the Transfer Agent
withholding instructions with respect to such redemption or any exchange
of Shares pursuant to a Computer Tape, the Transfer Agent shall include
in the Computer Tape furnished to the Fund information as to the amount
of such withholding.
5.9. The Transfer Agent shall not be required to issue Shares of any
Portfolio of the Fund (other than with respect to the reinvestment of dividends
or distributions on shares owned by an existing shareholder if so stated
in the certificate) after it has received a Certificate stating that the
sale of Shares of that Portfolio of the Fund has been suspended or
discontinued.
5.10. The Transfer Agent shall not be responsible for the payment of
the original issue or other taxes required to be paid by the Fund in connection
with the issuance of any Share.
5.11. The Transfer Agent shall not be responsible for issuing or effecting
any "stop transfer" or other similar order or restriction on any Shares
held in the name of an Approved Institution. In the case of Shares registered
in the name of a shareholder other than an Approved Institution as to which
a "stop transfer" or other similar order or
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restriction applies, the Transfer Agent will adhere to the terms of such
stop transfer or similar order, except that is may rely on a Certificate
to effect a redemption, exchange or transfer of such Shares, notwithstanding
such stop order or restriction.
5.12. The Transfer Agent shall accept (a) a Computer Tape which is
furnished by or on behalf of any Approved Institution (or the Distributor
or its agent acting on behalf of such Approved Institution) and represented
to be instructions with respect to the transfer of Shares from one account
of such Approved Institution to another such account, and (b) as to Shares
standing directly in the name of a shareholder other than an Approved
Institution, transfer instructions in proper form in accordance with the
Fund's Prospectus and the Transfer Agent's rules described herein, and shall
effect the transfer specified in said Computer Tape or transfer instructions,
provided that any necessary documents or Share certificates have been tendered
to the Transfer Agent.
5.13. (a) Except as otherwise provided in sub-paragraph (b) of this
Section 5.13 and in Section 5.14, Shares will be transferred, exchanged
or redeemed other than pursuant to Computer Tapes from an Approved Institution
(or the Distributor or its agent acting on behalf of such Approved Institution)
upon presentation to the Transfer Agent of endorsed Share certificates or,
in the case of uncertificated Shares, instructions endorsed in proper form
in accordance with the Prospectus as stated in Section 5.4, accompanied
by such documents as the Transfer Agent reasonably deems necessary to evidence
the authority of the person making such transfer, exchange or redemption,
and bearing satisfactory evidence of the payment of transfer taxes. In the
case of small estates, where no administration is contemplated, the
Transfer agent may, when furnished with an appropriate small estates affidavit
under applicable law or with a surety bond, and without further approval of the
Fund, transfer or redeem Shares registered in the name of a decedent if the
current market value of the Shares being redeemed or transferred does not exceed
such amount as may from time to time be prescribed by the applicable state
statutes and regulations. The Transfer Agent reserves the right to refuse to
transfer, exchange or redeem Shares until it is reasonably satisfied that the
endorsement on the Share certificate or instructions is valid and genuine, and
for that purpose it will require, unless otherwise instructed by an Officer, a
signature guarantee as stated in Section 5.4 of this Agreement. The Transfer
Agent also reserves the right to refuse to transfer, exchange or redeem Shares
until it is reasonably satisfied that the requested transfer, exchange, or
redemption is legally authorized, or until it is reasonably satisfied that there
is no basis to any claims adverse to such transfer, exchange or redemption. The
Transfer Agent may, in effecting transfers, exchanges and redemptions of Shares,
rely upon those provisions of the Uniform Act for the Simplification of
Fiduciary Security Transfers or the Uniform Commercial Code, as the same may be
amended from time to time, applicable to the transfer of securities.
(b) Notwithstanding the foregoing or any other provision contained
in this Agreement to the contrary, the Transfer Agent shall be fully protected
by the Fund in requiring any instructions, documents, assurances, endorsements
or guarantees, including, without limitation, any signature guarantees, in
connection with a redemption, exchange or transfer of Shares whenever the
Transfer Agent reasonably believes that requiring the same would be consistent
with the transfer, exchange and redemption procedures described in the
Prospectus, or in any instructions or certificates provided to the Transfer
Agent by the Fund.
5.14. Notwithstanding any provision contained in this Agreement to
the contrary, the Transfer Agent shall not be expected to require, as a
condition to any transfer, redemption or exchange of any Shares pursuant
to a Computer Tape, any documents, including, without limitation, any documents
of the kind described in Section 5.13(a) to evidence the authority of the
person requesting the transfer, exchange or redemption and/or the payment
of any transfer taxes, and shall be fully protected in acting in accordance
with the applicable provisions of this Agreement.
5.15. Nothing contained in this Agreement shall constitute any agreement
or representation by the Transfer Agent to permit, or to agree to permit,
any Approved Institution to input information into the System, although
the Transfer Agent may, with the Fund's written permission, permit access
to the System by an Approved Institution to retrieve data or information
as to such Approved Institution's accounts.
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ARTICLE 6
DIVIDENDS AND DISTRIBUTIONS
6.1. The Fund shall furnish to the Transfer Agent a Certificate either
(i) setting forth with respect to the Fund the date of the declaration of
a dividend or distribution, the date of accrual or payment thereof, as the
case may be, the record date as of which shareholders entitled to payment
or accrual, as the case may be, shall be determined, the amount per Share
of such dividend or distribution for the Fund, the payment date on which
all previously accrued and unpaid dividends are to be paid, and the total
amount, if any, payable by the Transfer Agent with respect to such dividend
or distribution on such payment date, or (ii) stating that the declaration
of dividends and distributions shall be on a daily or other periodic basis
and containing information of the type set forth in subsection (i) hereof.
6.2. Upon the payment date specified in the relevant Certificate,
the Transfer Agent shall, in the case of a cash dividend or distribution,
adviser the Fund (by telephone or other electronic transmission) of the
amount of cash necessary to make the payment of the dividend or distribution
to the shareholders of record as of such payment date, including the amounts
to be paid to Approved Institutions. The Fund shall be responsible for having
the appropriate Custodian transfer a sufficient amount of cash to a dividend
disbursement account maintained by the Fund against which the Transfer Agent
shall cause checks to be drawn to the order of such shareholders or Approved
Institutions in payment of the dividend. The Transfer Agent shall not be
liable for any improper payments made in accordance with a Certificate
described in Section 6.1. If the Transfer Agent shall not receive from the
appropriate Custodian sufficient cash to make payments of any cash dividend
or distribution to shareholders of the Fund as of the record date, the Transfer
Agent may, upon notifying the Fund, withhold payment to all shareholders
of record as of the record date until sufficient cash is provided to the
Transfer Agent unless otherwise instructed by the Fund by a Certificate
and acceptable to the Transfer Agent. In the case of dividends or distributions
reinvested in additional Shares of series of the Fund, the Transfer Agent
shall follow the procedures set forth in Section 5.5.
6.3. The Transfer Agent shall in no way be responsible for the
determination of the rate or form of dividends or capital gain distributions
due shareholders.
6.4. The Transfer Agent shall upon request of the Fund file such
appropriate information returns concerning the payment of dividends and
capital gain distributions and redemptions with the proper Federal, state
and local authorities as are required by law to be filed by the Fund but
shall in no way be responsible for the collection or withholding of taxes
due on such dividends or distributions or on redemption proceeds due
shareholders, except and only to the extent required of it by applicable
law for accounts of shareholders other than Approved Institutions. If any
amount is to be withheld from any dividend or distribution paid to, or exchange
or redemption proceeds or other cash distribution from, the account of an
Approved Institution, such Approved Institution (or the Distributor or its
agent acting on behalf of such Approved Institution) may advise the Transfer
Agent of the amount to be withheld therefrom, and if such advice is provided
in a timely manner to the Transfer Agent, the Transfer Agent will provide
a separate check for such amount to the Approved Institution, which shall
be responsible for the proper application of such withheld amounts.
ARTICLE 7
CONCERNING THE FUND
7.1. The Fund shall promptly deliver to the Transfer Agent written
notice of any change in the Officers authorized to sign or give Share
certificates or Certificates, together with a specimen signature of each
new Officer.
7.2. It shall be the sole responsibility of the Fund to deliver to
the Transfer Agent in a timely manner the Fund's currently effective
Prospectus, copies of any exemptive relief obtained by the Fund under
applicable securities laws and copies of any amendments to the Fund's Articles
of Incorporation, By-Laws and any other documents to be furnished by the
Fund under this Agreement to enable the Transfer Agent to carry out its
duties hereunder, and, for purposes of this Agreement, the Transfer Agent
shall not be deemed to have notice of any information contained in such
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Prospectus, exemptive relief or other document until it is actually received
by the Transfer Agent.
ARTICLE 8
CONCERNING THE TRANSFER AGENT
8.1. Subject to the standard of care set forth in Section 8.4, the
Transfer Agent shall not be liable and shall be fully protected in acting
upon and in compliance with any Computer Tape, Certificate, oral instructions,
writing or document reasonably believed by it to be genuine and to have
been signed (in the case of written instructions or documents) or made by
the proper person or persons and shall not be held to have any notice of
any change of authority of any person until receipt of written notice thereof
from the Fund or such person. Subject to the standard of care set forth
in Section 8.4, the Transfer Agent shall be similarly protected in processing
Share certificates which it reasonably believes to bear the proper manual
or facsimile signatures of the Officers of the Fund and the proper
countersignature of the Transfer Agent or any prior transfer agent.
8.2. The Transfer Agent covenants that it shall carry out its
responsibilities under this Agreement in accordance and compliance with
the provisions of applicable laws and regulations governing its operation
as a transfer agent.
8.3. The Transfer Agent shall keep and maintain on behalf of the Fund
such records which the Fund or the Transfer Agent is, or may be, required
to keep and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rule 31a-1 under the Investment Company Act
of 1940, relating to the maintenance of records in connection with the
services to be provided hereunder. The Transfer Agent agrees to make such
records available for inspection by the Fund at reasonable times and otherwise
to keep confidential all records and other information relative to the Fund
and its shareholders, except when the Transfer Agent reasonably believes
it has been (i) requested to divulge such information by duly-constituted
authorities or court process; (ii) or requested by a shareholder with respect
to information concerning an account as to which such shareholder has either
a legal or beneficial interest; or (iii) when requested by the Fund, the
shareholder, or the dealer of record as to such account.
8.4. (a) The Transfer Agent shall not be liable for any loss or damage,
including, without limitation, attorneys' fees, expenses and court costs,
resulting from the Transfer Agent's actions or omissions to act under or
in connection with this Agreement and its duties and responsibilities hereunder,
except for any loss or damage arising out of its own failure to act in good
faith, or its negligence or willful misfeasance.
(b) The Transfer Agent shall, provided such coverage is readily
available to the Transfer Agent at reasonable rates and upon reasonable
terms and conditions, maintain an insurance policy or surety bond, in the
face amount of $10 million per covered transaction against losses suffered
by the Transfer Agent in excess of the policy deductibles arising from errors
or omissions on the part of the Transfer Agent in carrying out its
responsibilities under this Agreement and other agreements. The Transfer
Agent shall upon request, furnish promptly to the Fund copies of all insurance
policies maintained pursuant to this Section 8.4(b) that have not previously
been furnished to the Fund.
(c) Any costs or losses incurred by the Fund for the processing
of any purchase, redemption, exchange or other share transactions at a price
per share other than the price per share applicable to the effective date
of the transaction (the foregoing being generally referred to herein as
as "as of" transactions) will be handled in the following manner:
1. For each calendar year, if all "as of" transactions for
the year, taken in the aggregate, result in a net loss to
the Fund ("net loss"), Transfer Agent will reimburse the
Fund for such net loss, except to the extent that such net
loss may be offset by application of a "net benefit" to the
Fund carried over from prior calendar years pursuant to
sub-paragraph 2 immediately below.
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2. For each calendar year, if all "as of" transactions for the
year, taken in the aggregate, result in a net benefit to the
Fund ("net benefit"), the Fund shall not reimburse the
Transfer Agent for the amount of such net benefit; however,
any "net benefit" for any calendar year may be used to
offset, in whole or in part, any "net loss" suffered by the
Fund in any future calendar year so as to reduce the amount
by which the Transfer Agent shall be required to reimburse
the Fund for such "net loss" in such year pursuant to sub-
paragraph 1 immediately above.
3. Any "net loss" for which the Transfer Agent reimburses the
Fund in any calendar year shall not be carried over into
future years so as to offset any "net benefit" in such
future years.
8.5. The Fund shall indemnify and exonerate, save and hold harmless
the Transfer Agent and its officers, directors, employees and agents
(hereinafter the Transfer Agent and such persons are referred to as
"Indemnitees") from and against any and all liabilities or losses arising
from claims or demands (whether with or without basis in fact or law), and
from any and all expenses (including, without limitation, reasonable
attorney's fees, expenses and court costs associated with defending against
such claims and demands,) of any nature which any Indemnitee may sustain
or incur or which may be asserted against any Indemnitee by any person
arising out of or in any manner related to any action taken or omitted to
be taken by the Transfer Agent in good faith and without negligence or willful
misconduct in reasonable reliance upon (i) any provision of this Agreement;
(ii) the Prospectus; (iii) any instruction or order including, without
limitation, any Computer Tape reasonably believed by the Transfer Agent
to have been received from an Approved Institution (or the Distributor or
its agent acting on behalf of such Approved Institution); (iv) any instrument
or order reasonably believed by the Transfer Agent to be genuine and to
be signed, countersigned or executed by any duly authorized Officer, (v) any
Certificate or other instructions of an Officer, (vi) any opinion of legal
counsel for the Fund; (vii) any records or data supplied by the Fund's prior
transfer agent; or (viii) any order or any court, arbitration panel or other
judicial entity.
8.6. At any time the Transfer Agent may apply to an Officer of the
Fund for written instructions with respect to any matters arising in connection
with the Transfer Agent's duties and obligations under this Agreement,
and the Transfer Agent shall not be liable for any action taken or omitted
by it in good faith and without negligence or willful misconduct in accordance
with such written instructions. The Transfer Agent may consult with counsel
to the Fund, at the expense of the Fund and shall be fully protected with
respect to anything done or omitted by it in good faith and without negligence
or willful misfeasance in accordance with the advice or opinion of counsel
of the Fund. Such application by the Transfer Agent for written instructions
from an Officer of the Fund may, at the option of the Transfer Agent, set
forth in writing any action proposed to be taken or omitted by the Transfer
Agent with respect to its duties or obligations under this Agreement and
the date on and/or after which such action shall be taken, and the Transfer
Agent shall not be liable (other than for its bad faith, negligence or willful
misfeasance) for any action taken or omitted in accordance with a proposal
included in any such application on or after the date specified therein
unless, prior to taking or omitting any such action, the Transfer Agent
has received written instructions in response to such application specifying
the action to be taken or omitted.
8.7. Any report, confirmation or other document furnished to the
Fund or to an Approved Institution as part of the Transfer Agent's
responsibilities under this Agreement shall be deemed final and conclusive
on the 8th Business Day after such report, confirmation or document has
been furnished to the Fund or Approved Institution, as the case may be,
and the Transfer Agent shall not be liable to the Fund or such Approved
Institution under this Agreement as to any error or omission in such report,
confirmation or document that is not reported to the Transfer Agent within
such 7-day period.
8.8. The Transfer Agent shall deliver Share certificates by courier
or by certified or registered mail to the shareholder's address in the records
of the Transfer Agent. The Transfer Agent shall advise the Fund of any Share
certificates returned as undeliverable after being transmitted by courier
or mailed as herein provided for.
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<PAGE>
8.9. The Transfer Agent may issue new Share certificates in place of
Share certificates represented to have been lost, stolen, or destroyed upon
receiving instructions satisfactory to the Transfer Agent. If the Transfer
Agent receives written notification from the owner of the lost, destroyed,
or stolen Share certificate within a reasonable time after the owner has
notice of such loss, destruction or theft, the Transfer Agent shall issue
a replacement Share certificate upon receipt of an affidavit or affidavits
of loss or nonreceipt and an indemnity agreement executed by the registered
owner or his legal representative, and supported (a) in the case of a
certificate having a value at the time of replacement of less than $100,
by a fixed penalty surety bond for twice the then-current market value of
Shares represented by said certificate, (b) in the case of a certificate
having a value at time of replacement of $100 or more, by an open penalty
bond, in form satisfactory to the Transfer Agent, or (c) by such other
documentation or reasonable assurances in a particular case as may be set
forth in a Certificate. If the Fund receives such written notification from
the owner of the lost, destroyed or stolen Share certificate within a
reasonable time after the owner has notice of it, the Fund shall promptly
notify the Transfer Agent. The Transfer Agent may issue new Share certificates
in exchange for, and upon surrender of, mutilated Share certificates.
8.10. The Transfer Agent will supply shareholder lists to the Fund
from time to time upon receiving a request therefor from an Officer of the
Fund.
8.11. At the request of an Officer, the Transfer Agent will address
and mail such appropriate notices to shareholders as the Fund may direct,
at the Fund's expense.
8.12. Notwithstanding any of the foregoing provisions of this Agreement,
the Transfer Agent shall be under no duty or obligation to inquire into,
and shall not be liable for:
(a) The legality of the issue or sale of any Shares, the sufficiency
of the amount to be received therefor, or the authority of an Approved
Institution or of the Fund, as the case may be, to request such sale or
issuance;
(b) The legality of a transfer, exchange or redemption of any
Shares by an Approved Institution, the propriety of the amount to be paid
therefor, or the authority of an Approved Institution to request such transfer,
exchange or redemption;
(c) The legality of the declaration of any dividend or capital
gains distribution by the Fund, or the legality of the issue of any Shares
in payment of any Share dividend or distribution; or
(d) The legality of any recapitalization or readjustment of the
Shares.
8.13. The Transfer Agent shall be entitled to receive, and the Fund
hereby agrees to pay to the Transfer Agent for its performance hereunder,
including its performance of the duties and functions set forth in Appendix
B hereto, (i) its reasonable out-of-pocket expenses (including without
limitation legal expenses, court costs, and attorney's fees, associated
with litigation or arbitration,) incurred in connection with this Agreement
and its performance hereunder and (ii) such compensation as is specified
in Appendix C hereto as such fees may be amended from time to time by agreement
in writing by the Transfer Agent and the Fund.
8.14. The Transfer Agent shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set
forth in this Agreement, and no covenant or obligation shall be implied
in this Agreement against the Transfer Agent.
8.15. The Transfer Agent shall indemnify and exonerate, save and
hold harmless the Fund, and its officers, directors, employees and agents,
from and against any and all liabilities or losses arising from claims and
demands (whether with or without basis in fact or law), and from any and
all expenses (including, without limitation, reasonable attorney's fees,
expenses and court costs), of any nature which the Fund or any officer,
director, employee or agent may sustain or incur or which may be asserted
against them by any person arising out of or in any manner related to the
Transfer Agent's failure to comply with the terms of this Agreement or which
arise out of the Transfer Agent's negligence or willful misconduct provided,
however, that the Transfer Agent shall not indemnify and exonerate, save
and
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hold harmless, the Fund, its officers, directors, employees, and agents
for anything arising out of or in any manner related to the Fund's failure
to comply with the terms of this Agreement or which arises out of the Fund's,
or any officer's, director's, employee's or agent's (other than the Transfer
Agent) negligence or willful misconduct.
ARTICLE 9
TERMINATION
9.1. The initial term of this Agreement shall commence on the Effective
Date and shall continue through June 30, 1996 (which period shall be referred
to herein as the "Initial Term"), unless earlier terminated pursuant to
Section 9.2. Thereafter, unless terminated by either party at the end of
the Initial Term upon at least 90 days' prior written notice, this Agreement
shall continue from day to day thereafter (such period shall be referred
to as the "Renewal Term"), until either of the parties hereto terminates
this Agreement by giving at least 6 months' prior written notice to the
other party, whereupon this Agreement shall terminate automatically upon
the expiration of the 6-month period specified in the written notice. In
the event such notice of termination is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Directors of the Fund,
certified by the Secretary or any Assistant Secretary, electing to terminate
this Agreement. The Fund shall, on or before the termination date, deliver
to the Transfer Agent a copy of a resolution of the Board of Directors of
the Fund certified by the Secretary or any Assistant Secretary designating
a successor transfer agent or transfer agents. In the absence of such
designation by the Fund, the Transfer Agent may designate a successor transfer
agent. If the Fund fails to designate a successor transfer agent and if
the Transfer Agent is unable to find a successor transfer agent, the Fund
shall, upon the date specified for termination of this Agreement and delivery
of the records maintained hereunder, be deemed to be its own transfer agent
and the Transfer Agent shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement.
9.2 Notwithstanding Section 9.1 hereof, this Agreement may be terminated
at any time by the Fund upon not less than 60 days' written notice from
the Fund to the Transfer Agent notifying the Transfer Agent: (i) if the
Fund's Board of Directors, including a majority of the Directors who are
not "interested persons" (as that term is defined in the Investment Company
Act of 1940), upon completion of the procedures set forth below have reasonably
made a specific finding that the Transfer Agent has failed on a continuing
basis to perform its duties pursuant to this Agreement in a satisfactory
manner consistent with then current industry standards and practices or
(ii) if there is instituted or pending any action or proceeding by or before
any court or governmental, administrative or regulatory agency against or
involving the parties hereto, their affiliates, the Directors of the Fund
or any of them and challenging the making of this Agreement or alleging
that any material term of the Agreement is contrary to law or any governmental
agency has threatened in writing to commence such an action or proceeding.
Prior to any termination pursuant to clause (i), the Board of Directors
of the Fund shall provide the Transfer Agent with a written statement of
the specific aspects of the Transfer Agent's performance of its duties that
are unsatisfactory, the specific incident or incidents giving rise to the
Board of Directors' conclusion and any written material that the Board of
Directors relied upon in making such a determination. The Transfer Agent
shall have 30 days to respond to such written statement. If no response
is made, or if, after reasonable consideration of the response of the Transfer
agent, such response is unsatisfactory to the Board of Directors of the
Fund, then the Board of Directors of the Fund may terminate the Agreement
pursuant to clause (i) hereof. For purposes of making a finding as contemplated
by clause (i) above, and without limiting the generality of such clause
(i), the Transfer Agent shall, absent unusual circumstances, be presumed
to have failed on a continuing basis to perform its duties pursuant to this
Agreement in a satisfactory manner consistent with the industry standards
and practices prevailing on the date of this Agreement if any of the following
should occur:
(1) The Transfer Agent, through its fault, is unable (more than
once in a twelve-month period) to process daily activity for any two successive
Business Days and to confirm information generated by such activity by the
fourth Business Day following the later of such two Business Days. (For
example, assuming no holidays, daily activity on a Monday and Tuesday is
not confirmed by the following Monday.)
(2) The Transfer Agent, through its fault, is unable (more than
two times in any twelve-month period) to provide system access to personnel
of an Approved Institution for six hours between 9:00 a.m. and 5:00 p.m.
Chicago time on three successive Business Days.
-12-
<PAGE>
(3) The Transfer Agent, through its fault, is unable (more than
twice in any one year) to create and mail dividend checks within four Business
Days after the Fund's payable date (assuming that the required information
has been furnished to the Transfer Agent on the record date).
(4) The Transfer Agent, through its fault, is unable to instruct
various financial institutions on daily money movements from and to the
Fund's Custodian for two successive Business Days by the fourth Business
Day following the later of such two Business Days. (For this purpose,
instructions based on reasonable estimates are treated as fulfilling the
Transfer Agent's obligations hereunder.)
(5) The Transfer Agent, through its fault, is unable (more than
twice in any twelve-month period) to transmit dividend activity to an Approved
Institution within five Business Days from the Fund's payable date.
For purposes of the foregoing, an event described in any of the
foregoing clauses 1 through 5 shall be deemed not to have occurred if the
Transfer Agent's inability to perform is a result directly or indirectly
of faulty or inadequate performance by service providers including but not
limited to telephone companies, pricing services, John Nuveen & Co.
Incorporated, Approved Institutions, and banks other than the Transfer Agent
and its agents and employees or a result directly or indirectly of other
events out of the Transfer Agent's reasonable control. Also for the purpose
of the foregoing, if the Transfer Agent processes transactions or instructions
(as the case may be) as required hereunder within the time periods indicated
but more than 10% of the transactions, checks or instructions, as the case
may be, are inaccurate in any material respect and are not corrected within
the requisite time, then the Transfer Agent shall be deemed to have been
unable to perform the relevant service within the requisite time.
9.3. In the event of termination of this Agreement, the Transfer Agent
will facilitate transfer of the records maintained by it hereunder and
cooperate with such successor transfer agent as may be designated pursuant
to the provisions of Section 9.1 hereof with respect to delivery of such
records and assumption by such successor transfer agent of its duties. In
the event the Fund or Transfer Agent terminates the Transfer Agency Agreement
at any time, the Fund shall be responsible for the payment of fees and expenses
of the Transfer Agent relating to the conversion to the new Transfer Agent.
ARTICLE 10
ADDITIONAL SERIES
10.1. In the event that the Fund establishes one or more series in
addition to any series named herein with respect to which it desires to
have the Transfer Agent render services as Transfer Agent under the terms
hereof, it shall so notify the Transfer Agent in writing at least 60 days
in advance of the sale of Shares of such series and shall deliver to the
Transfer Agent the documents listed in Section 2.3 with respect to such
series. Unless the Transfer Agent declines in writing within a reasonable
time to provide such services, the Shares of such series shall be subject
to this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1. The Fund agrees that prior to effecting any change in the Prospectus
which would increase or alter the duties or obligations of the Transfer
Agent hereunder, it shall advise the Transfer Agent of such proposed change
at least 30 days prior to the intended date of the same, and shall proceed
with such change only if it shall have received the written consent of the
Transfer Agent thereto, and shall have received and agreed to the schedule
of charges, if any, specified by the Transfer Agent as necessary to effect
such change.
-13-
<PAGE>
11.2 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its office at 333
West Wacker Drive, Chicago, Illinois 60606, Attention: Mr. Stuart W. Rogers,
or at such other place as the Fund may from time to time designate in writing.
11.3 Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Transfer Agent shall be sufficiently
given if addressed to the Transfer Agent, Attention: President, and mailed
or delivered to it at its office at 3410 South Galena Street, Denver, Colorado
80231, with a copy to be sent to Andrew J. Donohue at Oppenheimer Management
Corporation, Two World Trade Center, New York, New York 10048, or at such
other place as the Transfer Agent may from time to time designate in writing.
11.4 This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties.
11.5 This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund or the Transfer
Agent without the written consent of the other party. A change in ownership
of the Transfer Agent as a result of an internal reorganization of the Transfer
Agent, its parent corporation or affiliates shall not be deemed to be an
"assignment" hereunder. A change in "control" (as defined under the Investment
Company Act of 1940) of the Transfer Agent's parent corporation shall not
be deemed an "assignment" hereunder. A sale of a controlling interest in the
capital stock or of all or substantially all of the assets of the Transfer
Agent to a third party unaffiliated with the Transfer Agent or its parent
corporation shall be deemed an "assignment" hereunder.
11.6 This Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado as applicable to agreements to be
wholly performed in that state.
11.7 This Agreement may be executed in any number of counterparts
each of which shall be deemed to be an original; but such counterparts shall,
together, constitute only one instrument.
11.8 The provisions of this Agreement are intended to benefit only
the Transfer Agent and the Fund, and no rights shall be granted to any other
person by virtue of this Agreement.
11.9 Neither the Fund nor the Transfer Agent will be liable or
responsible hereunder for delays or errors by reason of circumstances
reasonably beyond its control, including, without limitation, acts of civil
or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, flood, catastrophe, acts of God, insurrection, war,
riots, or failure of transportation, communication or power supply.
11.10 The Fund shall establish and maintain such bank accounts, with
such bank or banks as are selected by the Fund, as are necessary so that
the Transfer Agent may perform the services to be provided hereunder. To
the extent that performance of such services shall require the Transfer Agent
directly to disburse amounts for payments of dividends, redemption proceeds
or other purposes, the Fund shall provide such bank or banks with all
instructions and authorizations necessary to evidence the Transfer Agent's
authority to effect such transactions.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as
of the day and year first above written.
Attest: NUVEEN TAX-FREE BOND FUND, INC.
/s/ P. R. Zimmerman VP /s/ Anna Kuciwsbis VP
- -------------------------------- By: --------------------------------
Name Title Name Title
Attest: SHAREHOLDER SERVICES, INC.
/s/ Rhonda Dixon Granner VP /s/ Barbara Hennigar
- -------------------------------- By: --------------------------------
Name Title Barbara Hennigar
President
-15-
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
TRANSFER AGENCY AGREEMENT
APPENDIX A
OFFICER'S CERTIFICATE
I, the Secretary of Nuveen Tax-Free Bond
--------------------------
Fund, Inc., a Minnesota corporation (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Directors
of the Fund in conformity with the Fund's Articles of Incorporation and
By-Laws to execute any Certificate, instruction, notice or other instrument,
including an amendment to Appendix B to this Agreement, or to give oral
instructions on behalf of the Fund, and the signatures set forth opposite
their respective names are their true and correct signatures.
Name Title Signature
- ---- ----- ---------
- ---------------------------- Chairman -------------------------
- ---------------------------- President -------------------------
- ---------------------------- Secretary -------------------------
- ---------------------------- Trustee -------------------------
- ---------------------------- Vice President -------------------------
- ---------------------------- ----------------- -------------------------
- ---------------------------- ----------------- -------------------------
- ---------------------------- ----------------- -------------------------
- ---------------------------- ----------------- -------------------------
- ---------------------------- ----------------- -------------------------
- ---------------------------- ----------------- -------------------------
, Secretary
-------------
Name
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
TRANSFER AGENCY AGREEMENT
APPENDIX B
TRANSFER AGENT SERVICES
<TABLE>
<CAPTION>
Service: SSI will:
- -------- ---------
<S> <C>
New Account Set-Ups Process new sales applications. Place telephone calls to account
representatives as needed to clarify instructions for new account
set-ups.
Purchases - New and Subsequent Process mailed-in, lockbox, bank wire, list billing, ACH, and
telephone payments as received. Coordinate and balance UIT
reinvestment payments.
Transfers Negotiate and process all transfer requests.
Exchanges - Mail and Telephone Negotiate and process exchange requests. Record telephone
exchange requests.
Redemptions - Mail and Telephone Negotiate and process redemption requests. Record telephone
redemption requests.
Wire Order Purchases and Redemptions Process wire order purchases and redemptions for 5-day
delayed settlement accepted on recorded telephone lines and via
NSCC FUND/SERV. Process purchases and redemptions for
same-day wire settlement.
Account Maintenance Process all written and telephone maintenance.
(Address Changes, Dividend For address changes, prepare and mail a notice
Option Changes, Name Changes, of the address change to the former address.
Broker or Dealer Changes, etc.)
Certificate Issuances Issue certificates as requested by shareholders.
Telephone Services Provide efficient handling of all incoming shareholder and
broker/dealer telephone calls. Provide timely problem
resolution for all servicing calls.
Correspondence with Shareholders Respond to all shareholder and broker/dealer written
and Broker/Dealers inquiries. Document all correspondence affecting
shareholder accounts on the Shareholder Accounting
System.
Shareholder Confirms Prepare and mail confirmations of daily account activity.
(Daily/Monthly/Quarterly Prepare and mail monthly, quarterly, and annual
Annual) confirmations as directed by the fund.
Dealer Confirms Prepare and mail weekly dealer confirmations listing activity
on client accounts.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Service: SSI will:
- -------- ---------
<S> <C>
Distribution Disbursements Prepare and mail cash distribution checks. Process reinvested
distributions.
Commission Statements Provide bimonthly commission statements listing each purchase
and the portion of the sales charge paid to the broker/dealer.
Commission Checks Provide bimonthly commission checks to broker/dealers.
Daily Transmission of Reports Transmit daily transaction activity reports, balancing reports,
and sales informatioin via telephone lines to a printer at Nuveen.
Fund Summary Sheets Prepare daily reports that summarize by type of transaction all
capital stock activity for each fund.
Sales Reporting Provide daily, weekly, monthly, quarterly, and annual reports of
sales information.
12b-1 Reporting Complete 12b-1 processing including calculating the 12b-1
payment amounts and sending checks to the broker/dealer home
offices. Provide a listing broken down by sales representative
within each branch.
Invalid Taxpayer Identification Mail Forms W-9 as required to validate taxpayer identification
Number Solicitation and numbers; institute backup withholding as required by IRS
Backup Withholding regulations, and timely send all notices.
Regulatory Reporting Compute, prepare, and mail all necessary reports to
shareholders, federal, and/or state authorities (Forms 1099-DIV,
1099-B, and 1042S).
Front-End Microfilming of Documents Front-end film all incoming documents.
Cost Basis Reporting Provide cost basis information to shareholders annually for use
in determining capital gains and losses.
Blue Sky Reporting Provide monthly report of purchases and redemptions by state.
Financial Report Mailings Provide mail handling for 2 financial reports per fund per year to
Nuveen shareholders.
Prospectus Mailings Provide mail handling for 1 prospectus per fund per year to
Nuveen shareholders.
Proxy Solicitation and Tabulation Perform 1 proxy solicitation and tabulation per fund per year.
</TABLE>
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
TRANSFER AGENCY AGREEMENT
APPENDIX C
FEE SCHEDULE
The Transfer Agent will provide the transfer agent services listed on Appendix
B for the Fund at the rates set forth below.
Annual Transfer Agent Fees:
- ---------------------------
Annual-Per-Account Fees*
First 150,000 Accounts** $17.50 per account
Next 100,000 Accounts** $17.00 per account
Over 250,000 Accounts** $16.50 per account
Out-of-Pocket Expenses:
- -----------------------
Out-of-pocket expenses may be incurred by either the Fund or the Transfer
Agent and are not included in the annual Transfer Agent Fees. Those
out-of-pocket expenses directly incurred by the Transfer Agent will be billed
to the Fund on a monthly basis. These out-of-pocket expenses include, but
are not limited to, the printing of forms, envelopes, postage for the
shareholder mailings, equipment and system access costs, microfilm, telephone
line and usage charges, overnight express mail charges, check signature
plates and stamps, and programmer/analyst and testing technician time beyond
that agreed to in writing. Bank charges and earnings credit will be billed
directly to the Fund by United Missouri Bank (or other banks). The Transfer
Agent may require the prior payment of anticipated out-of-pocket expenses,
from time to time.
*Payable on a monthly basis for each account in existence at the end of
the month.
**The determination of the number of accounts for purposes of determining
the per account fee shall be based on all Nuveen Funds using the same fee
schedule and shall be allocated on a Fund by Fund basis in a manner determined
by the Transfer Agent based on the number of accounts in each fund.
These fees are valid for eighteen months after which they are subject to
change, from time to time.
The Transfer Agent shall, from time to time, but no more frequently than
monthly, send an invoice to the Fund itemizing the compensation and expense
reimbursement. The fund shall pay such invoice (except to the extent that
the amount thereof is in dispute) by wire not later than 30 days after
receipt of the invoice.
<PAGE>
Exhibit 10(a)
______,__ 1995
(202) 639-7065
Nuveen Tax-Free Bond Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
RE: Registration Statement on Form N-1A
Under the Securities Act of 1933
(File No. 33-8370)
------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Nuveen Tax-Free Bond Fund, Inc., a Minnesota
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 Massachusetts Tax-Free Value Fund, Series A Shares; Nuveen
Massachusetts Tax-Free Value Fund, Series C Shares; Nuveen Massachusetts Tax-
Free Value Fund, Series R Shares; Nuveen New York Tax-Free Value Fund, Series A
Shares; Nuveen New York Tax-Free Value Fund, Series C Shares; Nuveen New York
Tax-Free Value Fund, Series R Shares; Nuveen Ohio Tax-Free Value Fund, Series A
Shares; Nuveen Ohio Tax-Free Value Fund, Series C Shares; and Nuveen Ohio Tax-
Free Value Fund, Series R 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. 16 to the Registration Statement (the "Amendment")
with the Securities and Exchange Commission pursuant to Rule 485(b) of the
Securities Act of 1933 (the "1933 Act"). With your permission, all assumptions
and statements of reliance herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and we express no opinion with respect to the subject matter
or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have reviewed, among other things,
executed copies of the following documents:
(a) a certificate of the Secretary of State of the State of Minnesota as to
the existence and good standing of the Fund;
(b) copies, certified by the Secretary of State of the State of Minnesota,
of the Fund's Articles of Incorporation and of all amendments and all
supplements thereto (the "Articles of Incorporation");
<PAGE>
Nuveen Tax-Free Bond Fund, Inc.
______ __, 1995
Page 2
(c) a certificate executed by Karen L. Healy, the Assistant Secretary of the
Fund, certifying as to, and attaching copies of, the Fund's 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 covered by the Notice; and
(d) a printer's proof, dated ______ __, 1995, of the Amendment.
In our capacity as counsel to the Fund, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinion hereinafter expressed. In all such examinations, we have assumed
the legal capacity of all natural persons executing documents, the genuineness
of all signatures, the authenticity of all original or certified copies, and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduced copies. As to various questions of fact relevant to such
opinion, we have relied upon, and assume the accuracy of, certificates and oral
or written statements of public officials and officers or representatives of the
Fund. We have assumed that the Amendment, as filed with the Securities and
Exchange Commission, will be in substantially the form of the printer's proof
referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Fund's
Charter and for the consideration described in the Registration Statement, will
be legally issued, fully paid and nonassessable.
The opinion expressed herein is limited to the laws of the State of
Minnesota. As to matters of Minnesota law covered thereby, we have relied solely
upon the opinion of Dorsey & Whitney P.L.L.P., addressed to us and dated ______
__, 1995.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: ____________________________________
Thomas S. Harman
<PAGE>
Exhibit 10(b)
________, 1995
Fried, Frank, Harris, Shriver & Jacobson
1001 Pennsylvania Avenue N.W.
Suite 800
Washington, D.C. 20004-2505
Re: Nuveen Tax-Free Bond Fund, Inc.
1995 Legality Opinion
Ladies and Gentlemen:
We have acted as special Minnesota counsel to Nuveen Tax-Free Bond
Fund, Inc., a Minnesota corporation (the "Company"), in rendering the opinions
hereinafter set forth with respect to:
(i) the Company's "Nuveen Massachusetts Tax-Free Value Fund, Series A
Shares," its "Nuveen Massachusetts Tax-Free Value Fund, Series C
Shares," and its "Nuveen Massachusetts Tax-Free Value Fund, Series
R Shares" (known prior to August 30, 1994 as its "Class A Shares");
(ii) the Company's "Nuveen New York Tax-Free Value Fund, Series A
Shares," its "Nuveen New York Tax-Free Value Fund, Series C Shares,"
and its "Nuveen New York Tax-Free Value Fund, Series R Shares"
(known prior to August 30, 1994 as its "Class B Shares"); and
(iii) the Company's "Nuveen Ohio Tax-Free Value Fund, Series A Shares,"
its "Nuveen Ohio Tax-Free Value Fund, Series C Shares," and its
"Nuveen Ohio Tax-Free Value Fund, Series R Shares" (known prior to
August 30, 1994 as its "Class C Shares").
The series of shares of the Company referred to above are referred to herein
collectively as the "Shares."
We understand that the Shares are being registered under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
<PAGE>
Fried, Frank, Harris, Shriver & Jacobson
__________, 1995
Page 2
amended, pursuant to Post-Effective Amendment No. 16 to the Company's
Registration Statement on Form N-1A (1933 Act File No. 33-8370), relating to
such shares. Such Registration Statement, as amended by said Post-Effective
Amendment No. 16, is referred to herein as the "Registration Statement."
In rendering the opinions hereinafter expressed, we have reviewed the
corporate proceedings taken by the Company in connection with the authorization
and issuance of the Shares, and we have reviewed such questions of law and
examined copies of such corporate records of the Company, certificates of public
officials and of responsible officers of the Company, and other documents as we
have deemed necessary as a basis for such opinions. As to the various matters of
fact material to such opinions, we have, when such facts were not independently
established, relied to the extent we deem proper on certificates of public
officials and of responsible officers of the Company. In connection with such
review and examination, we have assumed that all copies of documents provided to
us conform to the originals and that all signatures are genuine.
In addition, in rendering the opinions hereinafter expressed, we have
assumed, with the concurrence of the Company, that all of the Shares issued and
sold by the Funds will be issued and sold upon the terms and in the manner set
forth in the Registration Statement; that the Company will not issue Shares of
any series in excess of the numbers authorized in the Company's Article of
Incorporation as in effect at the respective dates of issuance; that the Company
will not issue Shares for consideration less than the amount specified by
Article FIFTH(f) of such Articles; and that the Company will maintain its
corporate existence and good standing under the laws of the State of Minnesota
in effect at all times after the date of this opinion.
Based on the foregoing, it is our opinion that:
1. The Company is validly existing as a corporation in good standing
under the laws of the State of Minnesota.
2. The Shares issued from and after the date hereof, when issued and
delivered by the Company as described in the Registration Statement, will be
legally issued and fully paid and non-assessable; and the issuance of such
Shares is not subject to preemptive rights.
In rendering the foregoing opinions, we express no opinion as to the
laws of any jurisdiction other than the State of Minnesota. You are hereby
authorized to rely on the foregoing opinions in rendering your opinion to the
Company to be filed as an exhibit to the Registration Statement. In addition, we
<PAGE>
Fried, Frank, Harris, Shriver & Jacobson
________, 1995
Page 3
hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement. Except as aforesaid, the foregoing opinions are not to
be relied upon by any other person without our prior written authorization.
Very truly yours,
Dorsey & Whitney P.L.L.P.
JDA
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
dated April 3, 1995 and to all references to our firm included in or made a part
of this registration statement of Nuveen Tax-Free Bond Fund, Inc.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
April 27, 1995
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF PERFORMANCE FIGURES*
I. YIELD
A. Yield Formula
Yield is computed according the following formula:
A - B 6
YIELD = 2 [(----- +1) -1]
CD
Where:
A = dividends and interest(degrees) earned during the period.
B = expenses accrued for the period (net of reimbursements).
C = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
D = the maximum offering price per share on the last day of the period.
- --------
*The maximum sales charge in effect during the periods shown was 4.50%.
(degrees)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
current market discount is in excess of the then-remaining portion of the
original issue discount, the adjusted original issue discount basis of the
obligation (plus accrued interest) is used in lieu of the market value of
the obligation (plus accrued interest) in computing the yield to maturity
(YTM). The YTM is then divided by 360 and the quotient is multiplied by
the adjusted original issue basis of the obligation (plus accrued
interest).
C. In the case of a tax-exempt obligation issued without original issue
discount and having a current market discount, the coupon rate of 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.
1
<PAGE>
B. Yield Calculations
1. Massachusetts Fund
The following is the 30-day yield as of February 28, 1995, for the Class A
Shares of the Massachusetts Fund:
[$ 5,407 - $ 839] 6
Yield = 2 [ ( ----------------------- + 1 ) - 1 ]
[ 108,004 X $ 10.01]
= 5.12%
The following is the 30-day yield as of February 28, 1995 for the Class C
Shares of the Massachusetts Fund:
[$ 495 - $ 135] 6
Yield = 2 [ ( -------------------- + 1 ) - 1 ]
[ 9,931 X $ 9.51]
= 4.62%
The following is the 30-day yield as of February 28, 1995 for the Class R
Shares of the Massachusetts Fund:
[$ 375,554 - $ 43,716] 6
Yield = 2 [ ( -------------------------- + 1 ) - 1 ]
[ 7,520,196 X $ 9.54]
= 5.62%
2. New York Fund
The following is the 30-day yield as of February 28, 1995 for the Class A
Shares of the New York Fund:
[$ 15,629 - $ 2,377] 6
Yield = 2 [ ( ------------------------- + 1 ) - 1 ]
[ 289,580 X $ 10.60]
= 5.24%
The following is the 30-day yield as of February 28, 1995 for the Class C
Shares of the New York Fund:
[$ 340 - $ 91] 6
Yield = 2 [ ( --------------------- + 1 ) - 1 ]
[ 6,309 X $ 10.11]
= 4.74%
The following is the 30-day yield as of February 28, 1995 for the Class R
Shares of the New York Fund:
[$ 794,745 - $ 88,992] 6
Yield = 2 [ ( ---------------------------- + 1 ) - 1 ]
[ 14,673,279 X $ 10.15]
= 5.75%
2
<PAGE>
3. Ohio Fund
The following is the 30-day yield as of February 28, 1995, for the Class A
Shares of the Ohio Fund:
[$ 21,336 - $3,305] 6
Yield = 2 [ ( ----------------------- + 1 ) - 1 ]
[ 399,289 X $ 10.68]
= 5.13%
The following is the 30-day yield as of February 28, 1995, for the Class C
Shares of the Ohio Fund:
[$ 3,828 - $1,037] 6
Yield = 2 [ ( ----------------------- + 1 ) - 1 ]
[ 71,895 X $ 10.16]
= 4.63%
The following is the 30-day yield as of February 28, 1995, for the Class R
Shares of the Ohio Fund:
[$ 850,768 - $ 98,782] 6
Yield = 2 [ ( ----------------------- + 1 ) - 1 ]
[ 15,941,388 X $ 10.18]
= 5.63%
II. TAXABLE EQUIVALENT YIELD
A. Taxable Equivalent Yield Formula
The Taxable Equivalent Yield Formula is as follows:
Tax Exempt Yield
Taxable Equivalent Yield = --------------------------------------
(1 - combined federal and state in-
come tax rate)
B. Taxable Equivalent Yield Calculations
Based on combined federal and state income tax rates for Massachusetts, New
York and Ohio, respectively, of 42.5%, 42.5%* and 44%, the Taxable Equivalent
Yields for the Class A Shares, Class C Shares and Class R Shares of each of the
Massachusetts Fund, New York Fund and Ohio Fund for the 30-day period ended
February 28, 1995, are as follows:
Class A Shares Class C Shares Class R Shares
--------------- --------------- ---------------
5.12% 4.62% 5.62%
-------- ------- --------
Massachusetts Fund: 1 - .425 = 8.90% 1 -.425 = 8.03% 1 - .425 = 9.77%
5.24% 4.74% 5.75%
-------- ------- --------
New York Fund: 1 - .425 = 9.11% 1 -.425 = 8.24% 1 - .425 = 10.00%
5.13% 4.63% 5.63%
-------- ------- --------
Ohio Fund: 1 - .440 = 9.16% 1 -.440 = 8.27% 1 - .440 = 10.05%
- ----------
*Reflects a combined federal, state and New York City tax rate.
3
<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. Massachusetts Fund
The following is the distribution rate as of February 28, 1995, based on max-
imum public offering price for the Massachusetts Fund:
Class A Distribution Rate = 12 X $.0435
-----------
$10.01
= 5.21%
Class C Distribution Rate = 12 X $.0375
-----------
$9.51
= 4.73%
Class R Distribution Rate = 12 X $.0455
-----------
$9.54
= 5.72%
2. New York Fund
The following is the distribution rate as of February 28, 1995, based on max-
imum public offering price for the New York Fund:
Class A Distribution Rate = 12 X $.0460
-----------
$10.60
= 5.21%
Class C Distribution Rate = 12 X $.0400
-----------
$10.11
= 4.75%
Class R Distribution Rate = 12 X $.0485
-----------
$10.15
= 5.73%
4
<PAGE>
3. Ohio Fund
The following is the distribution rate as of February 28, 1995, based on
maximum public offering price for the Ohio Fund:
Class A Distribution Rate = 12 X $.0455
-----------
$10.68
= 5.11%
Class C Distribution Rate = 12 X $.0390
-----------
$10.16
= 4.61%
Class R Distribution Rate = 12 X $.0475
-----------
$10.18
= 5.60%
5
<PAGE>
IV. AVERAGE ANNUAL TOTAL RETURN
A. Average Annual Total Return Formula
Average Annual Total Return is computed according to the following formula:
1/N
ERV
T = --- -1
P
Where: T = average annual total return.
P = a hypothetical initial payment of $1,000.
N = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10-year (or fractional portion thereof)
periods at the end of such 1, 5 or 10-year (or fractional portion
thereof) periods.
B. Average Annual Total Return Calculations
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 28, 1995, and
for the period from inception through February 28, 1995, assuming no imposition
of sales charges:
1. Massachusetts Fund:
1/1
($1,016.40) - 1 = 1.64%
A. 1 year ended February 28, 1995 = (---------) =====
( $1000 )
1/5
($1,467.90) - 1 = 7.98%
B. 5 years ended February 28, 1995 = (---------) =====
( $1000 )
1/8.2190
($1,670.3 ) - 1 = 6.44%
C. Inception through February 28, 1995 = (---------) =====
( $1000 )
2. New York Fund:
1/1
($1,007.50) - 1 = .75%
A. 1 year ended February 28, 1995 = (---------) =====
( $1000 )
1/5
($1,482.00) - 1 = 8.19%
B. 5 years ended February 28, 1995 = (---------) =====
( $1000 )
1/8.2190
($1,809.60) - 1 = 7.48%
C. Inception through February 28, 1995 = (---------) =====
( $1000 )
6
<PAGE>
3. Ohio Fund:
1/1
( $1,019.90 )
A. 1 year ended February 28, 1995 = ( --------- ) - 1 = 1.99%
( $1000 ) =====
1/5
( $1,481.60 )
B. 5 years ended February 28, 1995 = ( --------- ) - 1 = 8.18%
( $1000 ) =====
1/8.2190
( $1,817.80 )
C. Inception through February 28, 1995 = ( --------- ) - 1 = 7.54%
( $1000 ) =====
V. CUMULATIVE TOTAL RETURN
A. Cumulative Total Return Formula
Cumulative Total Return is computed according to the following formula:
ERV - P
T = -------
P
Where: T = cumulative total return.
P = a hypothetical initial payment of $1,000.
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
inception of the Fund or at the first day of a specified 1-year,
5-year or 10-year period.
B. Cumulative Total Return Calculation
The following are the cumulative total returns for the Class R Shares of the
Funds for the period from inception and for the one-year and five-year periods
ended February 28, 1995, assuming no imposition of sales charges:
1. Massachusetts Fund:
( $1,016.40 - $1000 )
A. 1 year ended February 28, 1995 = ( ----------------- ) = 1.64%
( $1000 ) =====
( $1,467.90 - $1000 )
B. 5 years ended February 28, 1995 = ( ----------------- ) = 46.79%
( $1000 ) ======
( $1,670.30 - $1000 )
C. Inception through February 28, 1995 = ( ----------------- ) = 67.03%
( $1000 ) ======
2. New York Fund:
( $1,007.50 - $1000 )
A. 1 year ended February 28, 1995 = ( ----------------- ) = .75%
( $1000 ) ====
( $1,482.00 - $1000 )
B. 5 years ended February 28, 1995 = ( ----------------- ) = 48.20%
( $1000 ) ======
7
<PAGE>
( $1,809.60 - $1000 )
C. Inception through February 28, 1995 = ( ----------------- ) = 80.96%
( $1000 ) ======
3. Ohio Fund:
( $1,019.90 - $1000 )
A. 1 year ended February 28, 1995 = ( ----------------- ) = 1.99%
( $1000 ) =====
( $1,481.60 - $1000 )
B. 5 years ended February 28, 1995 = ( ----------------- ) = 48.16%
( $1000 ) ======
( $1,817.80 - $1000 )
C. Inception through February 28, 1995 = ( ----------------- ) = 81.78%
( $1000 ) ======
VI. TAXABLE EQUIVALENT TOTAL RETURN
A. Taxable Equivalent Total Return Formula
Each Fund's taxable equivalent total return for a specific period is calcu-
lated by first taking a hypothetical initial investment in the Fund's shares on
the first day of the period, computing the Fund's total return for each calen-
dar year in the period according to the above formula, and increasing the total
return for each such calendar year by the amount of additional income that a
taxable fund would need to have generated to equal the income of the Fund on an
after-tax basis, at a specified tax rate (usually the highest marginal federal
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 1,
which provides a taxable equivalent total return expressed as a percentage.
B. Taxable Equivalent Total Return Calculations
The taxable equivalent total return calculations for the Class R Shares of
the Massachusetts Fund for the one-year and five-year periods ended February 28,
1995, and the period from inception through February 28, 1995, are set forth on
the following pages. These calculations present the Fund's taxable equivalent
total return at the Fund's net asset value, and assume a 42.5% combined federal
and Massachusetts tax rate.
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 NOV 86 9.60 1,042 10,000
31 DEC 86 9.35 .02283 23.781 23.781 23.781 1,044 9,763
31 JAN 87 9.52 .05377 56.147 56.147 79.928 1,050 9,997
28 FEB 87 9.57 .05050 53.030 53.030 132.959 98.2 1,066 10,201
31 MAR 87 9.40 .05049 53.818 53.818 53.818 1,072 10,073
30 APR 87 8.72 .05192 55.640 55.640 109.458 1,078 9,400
31 MAY 87 8.44 .05255 56.650 56.650 166.108 1,085 9,155
30 JUN 87 8.63 .05004 54.280 54.280 220.388 1,091 9,416
31 JUL 87 8.60 .04933 53.820 53.820 274.209 1,097 9,437
31 AUG 87 8.56 .05016 55.040 55.040 329.248 1,104 9,448
30 SEP 87 7.99 .04862 53.663 53.663 382.911 1,110 8,872
31 OCT 87 8.03 .04778 53.056 53.056 435.967 1,117 8,970
30 NOV 87 8.25 .04920 54.958 54.958 490.926 1,124 9,271
31 DEC 87 8.40 .04938 55.488 55.488 546.414 1,130 9,495
31 JAN 88 8.61 .05031 56.866 56.866 603.280 1,137 9,789
29 FEB 88 8.65 .04686 53.276 53.276 656.555 485.2 1,199 10,373
31 MAR 88 8.47 .04667 55.965 55.965 55.965 1,206 10,213
30 APR 88 8.39 .04754 57.323 57.323 113.288 1,213 10,174
31 MAY 88 8.38 .04861 58.945 58.945 172.233 1,220 10,221
30 JUN 88 8.52 .04839 59.019 59.019 231.252 1,227 10,450
31 JUL 88 8.53 .04908 60.200 60.200 291.452 1,234 10,523
31 AUG 88 8.50 .04921 60.707 60.707 352.158 1,241 10,547
30 SEP 88 8.60 .04738 58.788 58.788 410.946 1,248 10,729
31 OCT 88 8.74 .04812 60.035 60.035 470.981 1,254 10,964
30 NOV 88 8.60 .04920 61.720 61.720 532.701 1,262 10,850
31 DEC 88 8.64 .04915 62.010 62.010 594.711 1,269 10,963
31 JAN 89 8.83 .04884 61.970 61.970 656.681 1,276 11,266
28 FEB 89 8.65 .04911 62.657 62.657 719.338 531.6 1,345 11,630
31 MAR 89 8.57 .05012 67.389 67.389 67.389 1,352 11,590
30 APR 89 8.79 .04876 65.944 65.944 133.333 1,360 11,954
31 MAY 89 8.95 .04914 66.827 66.827 200.160 1,367 12,238
30 JUN 89 8.97 .04934 67.467 67.467 267.627 1,375 12,333
31 JUL 89 9.01 .04923 67.687 67.687 335.314 1,382 12,456
31 AUG 89 8.85 .04917 67.974 67.974 403.287 1,390 12,302
30 SEP 89 8.76 .04881 67.851 67.851 471.138 1,398 12,245
31 OCT 89 8.85 .04885 68.285 68.285 539.423 1,406 12,439
30 NOV 89 8.90 .04868 68.423 68.423 607.846 1,413 12,578
31 DEC 89 8.90 .04987 70.479 70.479 678.325 1,421 12,648
01 FEB 90 8.75 .04850 68.927 68.927 747.252 1,429 12,504 8.73 12,476
01 MAR 90 8.79 .04850 69.309 69.309 816.561 603.5 1,506 13,234 8.81 12,659
02 APR 90 8.76 .04850 73.021 73.021 73.021 1,514 13,262 8.76 13,262 8.76
01 MAY 90 8.61 .04850 73.426 73.426 146.447 1,522 13,108 8.61 13,108 8.61
01 JUN 90 8.79 .04850 73.839 73.839 220.287 1,531 13,456 8.79 13,456 8.81
02 JUL 90 8.83 .04850 74.247 74.247 294.533 1,539 13,592 8.83 13,592 8.83
01 AUG 90 8.88 .04850 74.655 74.655 369.188 1,548 13,743 8.88 13,743 8.90
04 SEP 90 8.62 .04850 75.062 75.062 444.250 1,556 13,416 8.62 13,416 8.63
01 OCT 90 8.56 .04850 75.485 75.485 519.735 1,565 13,398 8.56 13,398 8.58
01 NOV 90 8.52 .04850 75.912 75.912 595.647 1,574 13,411 8.52 13,411 8.56
03 DEC 90 8.76 .04850 76.344 76.344 671.992 1,583 13,866 8.76 13,866 8.79
31 DEC 90 8.78 .04850 76.767 76.767 748.759 1,592 13,974 8.78 13,974 8.78
01 FEB 91 8.87 .04850 77.191 77.191 825.950 1,600 14,194 8.87 14,194 8.91
01 MAR 91 8.89 .04850 77.613 77.613 903.563 667.8 1,684 14,972 8.89 14,304 8.88
01 APR 91 8.85 .04850 81.680 81.680 81.680 1,693 14,986 8.85 14,986 8.85
01 MAY 91 8.93 .04850 82.128 82.128 163.808 1,703 15,204 8.93 15,204 8.95
03 JUN 91 8.97 .04850 82.574 82.574 246.382 1,712 15,354 8.97 15,354 8.96
01 JUL 91 8.92 .04850 83.020 83.020 329.402 1,721 15,352 8.92 15,352 8.93
01 AUG 91 9.00 .04850 83.472 83.472 412.874 1,730 15,573 9.00 15,573 9.00
03 SEP 91 9.05 .04850 83.922 83.922 496.796 1,740 15,744 9.05 15,744 9.06
01 OCT 91 9.11 .04850 84.371 84.371 581.167 1,749 15,932 9.11 15,932 9.13
01 NOV 91 9.16 .04850 84.821 84.821 665.988 1,758 16,105 9.16 16,105 9.17
02 DEC 91 9.13 .04850 85.270 85.270 751.257 1,767 16,137 9.13 16,137 9.14
31 DEC 91 9.26 .04750 83.955 83.955 835.212 1,777 16,451 9.26 16,451 9.26
03 FEB 92 9.22 .04750 84.386 84.386 919.598 1,786 16,464 9.22 16,464 9.22
02 MAR 92 9.21 .04750 84.821 84.821 1004.419 742.4 1,876 17,273 9.21 16,531 9.21
01 APR 92 9.19 .04750 89.087 89.087 89.087 1,885 17,325 9.19 17,325 9.21
01 MAY 92 9.23 .04750 89.547 89.547 178.634 1,895 17,490 9.23 17,490 9.24
01 JUN 92 9.29 .04750 90.008 90.008 268.642 1,905 17,694 9.29 17,694 9.29
01 JUL 92 9.40 .04750 90.468 90.468 359.111 1,914 17,994 9.40 17,994 9.41
03 AUG 92 9.69 .04750 90.925 90.925 450.036 1,924 18,640 9.69 18,640 9.66
01 SEP 92 9.51 .04650 89.448 89.448 539.484 1,933 18,383 9.51 18,383 9.52
01 OCT 92 9.54 .04650 89.885 89.885 629.369 1,942 18,531 9.54 18,531 9.55
02 NOV 92 9.34 .04650 90.323 90.323 719.692 1,952 18,233 9.34 18,233 9.35
01 DEC 92 9.51 .04650 90.773 90.773 810.464 1,962 18,655 9.51 18,655 9.51
31 DEC 92 9.58 .04650 .0039 91.217 7.650 98.867 901.681 1,972 18,891 9.58 18,891 9.59
01 FEB 93 9.62 .04650 91.696 91.696 993.377 1,981 19,062 9.62 19,062 9.63
01 MAR 93 9.91 .04650 92.140 92.140 1085.517 802.3 2,072 20,531 9.91 19,729 9.92
01 APR 93 9.73 .04650 96.337 96.337 96.337 2,082 20,255 9.73 20,255 9.74
03 MAY 93 9.80 .04500 93.675 93.675 190.012 2,091 20,494 9.80 20,494 9.81
01 JUN 93 9.83 .04500 94.105 94.105 284.116 2,101 20,651 9.83 20,651 9.83
01 JUL 93 9.97 .04500 94.536 94.536 378.652 2,110 21,039 9.97 21,039 9.97
02 AUG 93 9.94 .04500 94.962 94.962 473.614 2,120 21,071 9.94 21,071 9.94
01 SEP 93 10.12 .04500 95.392 95.392 569.007 2,129 21,548 10.12 21,548 10.13
01 OCT 93 10.20 .04500 95.816 95.816 664.823 2,139 21,814 10.20 21,814 10.21
01 NOV 93 10.18 .04500 .0102 96.239 21.814 118.053 761.062 2,150 21,889 10.18 21,889 10.20
01 DEC 93 10.04 .04500 96.761 96.761 857.823 2,160 21,685 10.04 21,685 10.05
31 DEC 93 10.16 .04500 97.195 97.195 955.018 2,169 22,042 10.16 22,042 10.16
01 FEB 94 10.26 .04500 97.625 97.625 1052.643 2,179 22,356 10.26 22,356 10.25
0 01 MAR 94 9.94 .04400 95.874 95.874 1148.517 848.9 2,274 22,604 9.94 21,755 9.93
1 04 APR 94 9.51 .04400 100.057 100.057 100.057 2,285 21,726 9.51 21,726 9.35
2 02 MAY 94 9.49 .04400 100.519 100.519 200.576 2,295 21,781 9.49 21,781 9.46
3 01 JUN 94 9.54 .04450 102.133 102.133 302.709 2,306 21,998 9.54 21,998 9.53
4 01 JUL 94 9.46 .04450 102.609 102.609 405.318 2,317 21,916 9.46 21,916 9.46
5 01 AUG 94 9.55 .04450 103.092 103.092 508.411 2,327 22,227 9.55 22,227 9.58
6 01 SEP 94 9.53 .04450 103.573 103.573 611.983 2,338 22,284 9.53 22,284 9.54
7 03 OCT 94 9.33 .04450 104.056 104.056 716.039 2,349 21,921 9.33 21,921 9.33
8 01 NOV 94 9.13 .04550 106.902 106.902 822.941 2,361 21,558 9.13 21,558 9.11
9 01 DEC 94 8.90 .04550 107.435 107.435 930.376 2,373 21,122 8.90 21,122 8.94
10 31 DEC 94 9.12 .04550 107.984 107.984 1038.360 2,385 21,752 9.12 21,752 9.12
11 01 FEB 95 9.32 .04550 108.523 108.523 1146.883 2,397 22,338 9.32 22,338 9.36
12 01 MAR 95 9.54 .04550 109.052 109.052 1255.935 928.3 2,505 23,902 9.54 22,974 9.58
TAX RATE 42.50%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 5.75%
8.2190 YEARS: TOTAL RETURN 139.02%
ANNUALIZED 11.18%
</TABLE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01 MAR 90 8.79 .04850 1,138 10,000 8.81
02 APR 90 8.76 .04850 55.176 55.176 55.176 1,144 10,021 8.76 10,021 8.76
01 MAY 90 8.61 .04850 55.482 55.482 110.658 1,150 9,905 8.61 9,905 8.61
01 JUN 90 8.79 .04850 55.794 55.794 166.453 1,157 10,168 8.79 10,168 8.81
02 JUL 90 8.83 .04850 56.102 56.102 222.555 1,163 10,270 8.83 10,270 8.83
01 AUG 90 8.88 .04850 56.410 56.410 278.965 1,169 10,385 8.88 10,385 8.90
04 SEP 90 8.62 .04850 56.718 56.718 335.684 1,176 10,137 8.62 10,137 8.63
01 OCT 90 8.56 .04850 57.038 57.038 392.721 1,183 10,124 8.56 10,124 8.58
01 NOV 90 8.52 .04850 57.361 57.361 450.082 1,189 10,134 8.52 10,134 8.56
03 DEC 90 8.76 .04850 57.687 57.687 507.769 1,196 10,477 8.76 10,477 8.79
31 DEC 90 8.78 .04850 58.007 58.007 565.776 1,203 10,559 8.78 10,559 8.78
01 FEB 91 8.87 .04850 58.327 58.327 624.103 1,209 10,726 8.87 10,726 8.91
01 MAR 91 8.89 .04850 58.646 58.646 682.749 504.6 1,273 11,313 8.89 10,808 8.88
01 APR 91 8.85 .04850 61.719 61.719 61.719 1,280 11,324 8.85 11,324 8.85
01 MAY 91 8.93 .04850 62.057 62.057 123.776 1,286 11,488 8.93 11,488 8.95
03 JUN 91 8.97 .04850 62.394 62.394 186.171 1,293 11,602 8.97 11,602 8.96
01 JUL 91 8.92 .04850 62.732 62.732 248.902 1,300 11,600 8.92 11,600 8.93
01 AUG 91 9.00 .04850 63.073 63.073 311.975 1,307 11,767 9.00 11,767 9.00
03 SEP 91 9.05 .04850 63.413 63.413 375.388 1,314 11,896 9.05 11,896 9.06
01 OCT 91 9.11 .04850 63.753 63.753 439.140 1,321 12,039 9.11 12,039 9.13
01 NOV 91 9.16 .04850 64.092 64.092 503.232 1,328 12,169 9.16 12,169 9.17
02 DEC 91 9.13 .04850 64.431 64.431 567.663 1,336 12,193 9.13 12,193 9.14
31 DEC 91 9.26 .04750 63.438 63.438 631.101 1,342 12,431 9.26 12,431 9.26
03 FEB 92 9.22 .04750 63.763 63.763 694.865 1,349 12,441 9.22 12,441 9.22
02 MAR 92 9.21 .04750 64.092 64.092 758.957 560.9 1,417 13,052 9.21 12,491 9.21
01 APR 92 9.19 .04750 67.316 67.316 67.316 1,424 13,091 9.19 13,091 9.21
01 MAY 92 9.23 .04750 67.664 67.664 134.979 1,432 13,216 9.23 13,216 9.24
01 JUN 92 9.29 .04750 68.012 68.012 202.991 1,439 13,370 9.29 13,370 9.29
01 JUL 92 9.40 .04750 68.360 68.360 271.350 1,446 13,596 9.40 13,596 9.41
03 AUG 92 9.69 .04750 68.705 68.705 340.055 1,454 14,085 9.69 14,085 9.66
01 SEP 92 9.51 .04650 67.588 67.588 407.644 1,461 13,890 9.51 13,890 9.52
01 OCT 92 9.54 .04650 67.919 67.919 475.562 1,468 14,002 9.54 14,002 9.55
02 NOV 92 9.34 .04650 68.250 68.250 543.812 1,475 13,777 9.34 13,777 9.35
01 DEC 92 9.51 .04650 68.590 68.590 612.402 1,482 14,096 9.51 14,096 9.51
31 DEC 92 9.58 .04650 .0039 68.925 5.781 74.706 681.326 1,490 14,275 9.58 14,275 9.59
01 FEB 93 9.62 .04650 69.288 69.288 750.614 1,497 14,404 9.62 14,404 9.63
01 MAR 93 9.91 .04650 69.622 69.622 820.236 606.2 1,565 15,514 9.91 14,907 9.92
01 APR 93 9.73 .04650 72.794 72.794 72.794 1,573 15,305 9.73 15,305 9.74
03 MAY 93 9.80 .04500 70.782 70.782 143.576 1,580 15,486 9.80 15,486 9.81
01 JUN 93 9.83 .04500 71.107 71.107 214.683 1,587 15,604 9.83 15,604 9.83
01 JUL 93 9.97 .04500 71.433 71.433 286.116 1,595 15,898 9.97 15,898 9.97
02 AUG 93 9.94 .04500 71.755 71.755 357.872 1,602 15,922 9.94 15,922 9.94
01 SEP 93 10.12 .04500 72.080 72.080 429.952 1,609 16,282 10.12 16,282 10.13
01 OCT 93 10.20 .04500 72.401 72.401 502.352 1,616 16,483 10.20 16,483 10.21
01 NOV 93 10.18 .04500 .0102 72.720 16.483 89.203 575.072 1,625 16,540 10.18 16,540 10.20
01 DEC 93 10.04 .04500 73.114 73.114 648.187 1,632 16,386 10.04 16,386 10.05
31 DEC 93 10.16 .04500 73.442 73.442 721.629 1,639 16,655 10.16 16,655 10.16
01 FEB 94 10.26 .04500 73.767 73.767 795.396 1,646 16,893 10.26 16,893 10.25
0 01 MAR 94 9.94 .04400 72.444 72.444 867.840 641.4 1,718 17,080 9.94 16,438 9.93
1 04 APR 94 9.51 .04400 75.605 75.605 75.605 1,726 16,416 9.51 16,416 9.35
2 02 MAY 94 9.49 .04400 75.954 75.954 151.559 1,734 16,458 9.49 16,458 9.46
3 01 JUN 94 9.54 .04450 77.174 77.174 228.732 1,742 16,622 9.54 16,622 9.53
4 01 JUL 94 9.46 .04450 77.534 77.534 306.266 1,751 16,560 9.46 16,560 9.46
5 01 AUG 94 9.55 .04450 77.898 77.898 384.164 1,759 16,795 9.55 16,795 9.58
6 01 SEP 94 9.53 .04450 78.261 78.261 462.425 1,767 16,838 9.53 16,838 9.54
7 03 OCT 94 9.33 .04450 78.627 78.627 541.052 1,775 16,564 9.33 16,564 9.33
8 01 NOV 94 9.13 .04550 80.777 80.777 621.829 1,784 16,289 9.13 16,289 9.11
9 01 DEC 94 8.90 .04550 81.180 81.180 703.009 1,793 15,960 8.90 15,960 8.94
10 31 DEC 94 9.12 .04550 81.595 81.595 784.603 1,802 16,436 9.12 16,436 9.12
11 01 FEB 95 9.32 .04550 82.002 82.002 866.605 1,811 16,879 9.32 16,879 9.36
12 01 MAR 95 9.54 .04550 82.402 82.402 949.007 701.4 1,893 18,061 9.54 17,360 9.58
TAX RATE 42.50%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 5.75%
4.9993 YEARS: TOTAL RETURN 80.61%
ANNUALIZED 12.55%
</TABLE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 01 MAR 94 9.94 .04400 1,006 10,000 9.94 9.93
1 04 APR 94 9.51 .04400 44.266 44.266 44.266 1,011 9,612 9.51 9,612 9.35
2 02 MAY 94 9.49 .04400 44.470 44.470 88.736 1,015 9,636 9.49 9,636 9.46
3 01 JUN 94 9.54 .04450 45.184 45.184 133.920 1,020 9,732 9.54 9,732 9.53
4 01 JUL 94 9.46 .04450 45.395 45.395 179.315 1,025 9,696 9.46 9,696 9.46
5 01 AUG 94 9.55 .04450 45.609 45.609 224.924 1,030 9,834 9.55 9,834 9.58
6 01 SEP 94 9.53 .04450 45.821 45.821 270.745 1,034 9,859 9.53 9,859 9.54
7 03 OCT 94 9.33 .04450 46.035 46.035 316.780 1,039 9,698 9.33 9,698 9.33
8 01 NOV 94 9.13 .04550 47.294 47.294 364.074 1,045 9,537 9.13 9,537 9.11
9 01 DEC 94 8.90 .04550 47.530 47.530 411.604 1,050 9,345 8.90 9,345 8.94
10 31 DEC 94 9.12 .04550 47.773 47.773 459.377 1,055 9,623 9.12 9,623 9.12
11 01 FEB 95 9.32 .04550 48.011 48.011 507.388 1,060 9,882 9.32 9,882 9.36
12 01 MAR 95 9.54 .04550 48.245 48.245 555.633 410.6 1,108 10,575 9.54 10,164 9.58
TAX RATE 42.50%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 5.75%
0.9993 YEARS: TOTAL RETURN 5.75%
ANNUALIZED 5.75%
</TABLE>
The taxable equivalent total return calculations for the Class R Shares of
the New York Fund for the one-year and five-year periods ended February 28,
1995, and the period from inception through February 28, 1995, are set forth on
the following pages. These calculations present the Fund's taxable equivalent
total return at the Fund's net asset value, and assume a 42.5% combined federal
and New York tax rate.
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 NOV 86 9.60 1,042 10,000
31 DEC 86 9.81 .02331 24.281 24.281 24.281 1,044 10,243
31 JAN 87 9.87 .05578 58.242 58.242 82.523 1,050 10,364
28 FEB 87 9.90 .05483 57.574 57.574 140.097 103.5 1,066 10,557
31 MAR 87 9.76 .05278 56.280 56.280 56.280 1,072 10,464
30 APR 87 9.09 .05436 58.279 58.279 114.559 1,078 9,804
31 MAY 87 8.89 .05453 58.810 58.810 173.369 1,085 9,647
30 JUN 87 9.04 .05368 58.249 58.249 231.618 1,092 9,868
31 JUL 87 9.04 .05418 59.140 59.140 290.758 1,098 9,927
31 AUG 87 9.00 .05371 58.979 58.979 349.737 1,105 9,942
30 SEP 87 8.44 .05159 56.989 56.989 406.726 1,111 9,380
31 OCT 87 8.49 .05156 57.304 57.304 464.030 1,118 9,493
30 NOV 87 8.76 .05172 57.831 57.831 521.861 1,125 9,853
31 DEC 87 9.04 .05140 57.812 57.812 579.673 1,131 10,226
31 JAN 88 9.29 .05118 57.892 57.892 637.565 1,137 10,566
29 FEB 88 9.33 .05171 58.814 58.814 696.379 514.7 1,199 11,185
31 MAR 88 9.04 .05128 61.477 61.477 61.477 1,206 10,899
30 APR 88 8.96 .05072 61.151 61.151 122.628 1,212 10,864
31 MAY 88 8.93 .05202 63.073 63.073 185.701 1,220 10,890
30 JUN 88 9.05 .05354 65.294 65.294 250.995 1,227 11,102
31 JUL 88 9.07 .05221 64.049 64.049 315.044 1,234 11,191
31 AUG 88 9.04 .05225 64.467 64.467 379.511 1,241 11,218
30 SEP 88 9.20 .05285 65.584 65.584 445.095 1,248 11,482
31 OCT 88 9.35 .05262 65.674 65.674 510.769 1,255 11,735
30 NOV 88 9.18 .05301 66.533 66.533 577.301 1,262 11,588
31 DEC 88 9.23 .05316 67.106 67.106 644.408 1,270 11,719
31 JAN 89 9.44 .05186 65.842 65.842 710.250 1,277 12,051
28 FEB 89 9.28 .05365 68.489 68.489 778.740 575.5 1,346 12,491
31 MAR 89 9.19 .05333 71.782 71.782 71.782 1,354 12,442
30 APR 89 9.41 .05297 71.711 71.711 143.493 1,361 12,811
31 MAY 89 9.55 .05304 72.210 72.210 215.704 1,369 13,074
30 JUN 89 9.59 .05196 71.133 71.133 286.836 1,376 13,200
31 JUL 89 9.65 .05177 71.257 71.257 358.093 1,384 13,354
31 AUG 89 9.51 .05286 73.147 73.147 431.240 1,391 13,233
30 SEP 89 9.42 .05289 73.596 73.596 504.836 1,399 13,181
31 OCT 89 9.48 .05276 73.827 73.827 578.663 1,407 13,339
30 NOV 89 9.56 .05255 73.942 73.942 652.605 1,415 13,526
31 DEC 89 9.57 .05232 74.023 74.023 726.629 1,423 13,614
01 FEB 90 9.39 .05250 74.684 74.684 801.313 1,431 13,432 9.36 13,390
01 MAR 90 9.42 .05250 75.102 75.102 876.414 647.7 1,507 14,198 9.43 13,565
02 APR 90 9.34 .05250 79.130 79.130 79.130 1,516 14,157 9.34 14,157 9.34
01 MAY 90 9.14 .05250 79.575 79.575 158.706 1,524 13,933 9.14 13,933 9.14
01 JUN 90 9.39 .05250 80.032 80.032 238.738 1,533 14,394 9.39 14,394 9.41
02 JUL 90 9.45 .05250 80.480 80.480 319.218 1,541 14,567 9.45 14,567 9.46
01 AUG 90 9.53 .05250 80.927 80.927 400.145 1,550 14,771 9.53 14,771 9.55
04 SEP 90 9.29 .05250 81.373 81.373 481.518 1,559 14,480 9.29 14,480 9.30
01 OCT 90 9.22 .05250 81.833 81.833 563.350 1,568 14,453 9.22 14,453 9.24
01 NOV 90 9.25 .05250 82.299 82.299 645.649 1,576 14,583 9.25 14,583 9.28
03 DEC 90 9.38 .05250 82.766 82.766 728.414 1,585 14,870 9.38 14,870 9.40
31 DEC 90 9.31 .05250 83.229 83.229 811.643 1,594 14,842 9.31 14,842 9.31
01 FEB 91 9.43 .05250 83.698 83.698 895.342 1,603 15,117 9.43 15,117 9.47
01 MAR 91 9.41 .05250 84.164 84.164 979.506 723.9 1,689 15,894 9.41 15,170 9.40
01 APR 91 9.40 .05250 88.673 88.673 88.673 1,698 15,965 9.40 15,965 9.41
01 MAY 91 9.52 .05250 89.168 89.168 177.841 1,708 16,258 9.52 16,258 9.54
03 JUN 91 9.56 .05250 89.660 89.660 267.501 1,717 16,416 9.56 16,416 9.56
01 JUL 91 9.49 .05250 90.152 90.152 357.654 1,727 16,386 9.49 16,386 9.51
01 AUG 91 9.64 .05250 90.651 90.651 448.305 1,736 16,736 9.64 16,736 9.64
03 SEP 91 9.72 .05250 91.145 91.145 539.450 1,745 16,966 9.72 16,966 9.72
01 OCT 91 9.81 .05250 91.637 91.637 631.087 1,755 17,215 9.81 17,215 9.82
01 NOV 91 9.86 .05250 92.128 92.128 723.214 1,764 17,395 9.86 17,395 9.88
02 DEC 91 9.82 .05250 92.618 92.618 815.832 1,774 17,417 9.82 17,417 9.83
31 DEC 91 9.93 .05200 92.226 92.226 908.059 1,783 17,704 9.93 17,704 9.93
03 FEB 92 9.87 .05200 92.709 92.709 1000.768 1,792 17,690 9.87 17,690 9.86
02 MAR 92 9.88 .05200 93.198 93.198 1093.966 808.5 1,884 18,609 9.88 17,801 9.88
01 APR 92 9.87 .05200 97.944 97.944 97.944 1,893 18,688 9.87 18,688 9.89
01 MAY 92 9.93 .05200 98.460 98.460 196.404 1,903 18,901 9.93 18,901 9.94
01 JUN 92 9.99 .05200 98.976 98.976 295.380 1,913 19,114 9.99 19,114 9.99
01 JUL 92 10.14 .05100 97.578 97.578 392.957 1,923 19,498 10.14 19,498 10.16
03 AUG 92 10.44 .05100 98.068 98.068 491.026 1,932 20,173 10.44 20,173 10.41
01 SEP 92 10.26 .04850 93.717 93.717 584.742 1,941 19,919 10.26 19,919 10.27
01 OCT 92 10.26 .04850 94.160 94.160 678.902 1,951 20,013 10.26 20,013 10.27
02 NOV 92 9.97 .04850 .0809 94.605 157.805 252.409 773.507 1,976 19,700 9.97 19,700 10.00
01 DEC 92 10.15 .04850 95.833 95.833 869.339 1,985 20,152 10.15 20,152 10.16
31 DEC 92 10.24 .04850 96.291 96.291 965.630 1,995 20,426 10.24 20,426 10.25
01 FEB 93 10.28 .04850 96.747 96.747 1062.376 2,004 20,603 10.28 20,603 10.29
01 MAR 93 10.61 .04850 97.203 97.203 1159.579 857.0 2,094 22,219 10.61 21,362 10.62
01 APR 93 10.50 .04850 101.565 101.565 101.565 2,104 22,090 10.50 22,090 10.50
03 MAY 93 10.57 .04850 102.034 102.034 203.600 2,113 22,339 10.57 22,339 10.59
01 JUN 93 10.61 .04850 102.503 102.503 306.102 2,123 22,526 10.61 22,526 10.62
01 JUL 93 10.72 .04850 102.971 102.971 409.073 2,133 22,863 10.72 22,863 10.72
02 AUG 93 10.70 .04850 103.437 103.437 512.510 2,142 22,924 10.70 22,924 10.70
01 SEP 93 10.87 .04850 103.906 103.906 616.416 2,152 23,392 10.87 23,392 10.88
01 OCT 93 10.94 .04850 104.369 104.369 720.785 2,161 23,647 10.94 23,647 10.95
01 NOV 93 10.90 .04850 .0366 104.832 79.110 183.943 825.618 2,178 23,744 10.90 23,744 10.92
01 DEC 93 10.77 .04850 105.651 105.651 931.268 2,188 23,567 10.77 23,567 10.79
31 DEC 93 10.91 .04850 .0127 106.126 27.790 133.916 1037.394 2,200 24,007 10.91 24,007 10.91
01 FEB 94 11.00 .04750 104.521 104.521 1141.916 2,210 24,309 11.00 24,309 10.99
0 01 MAR 94 10.72 .04750 104.973 104.973 1246.888 921.6 2,306 24,717 10.72 23,796 10.70
1 04 APR 94 10.21 .04750 109.521 109.521 109.521 2,316 23,651 10.21 23,651 10.00
2 02 MAY 94 10.14 .04750 110.031 110.031 219.552 2,327 23,599 10.14 23,599 10.12
3 01 JUN 94 10.21 .04750 110.546 110.546 330.098 2,338 23,872 10.21 23,872 10.19
4 01 JUL 94 10.13 .04750 111.061 111.061 441.159 2,349 23,796 10.13 23,796 10.12
5 01 AUG 94 10.23 .04750 111.581 111.581 552.740 2,360 24,143 10.23 24,143 10.25
6 01 SEP 94 10.23 .04750 112.099 112.099 664.840 2,371 24,255 10.23 24,255 10.24
7 03 OCT 94 10.01 .04750 112.620 112.620 777.460 2,382 23,846 10.01 23,846 10.01
8 01 NOV 94 9.73 .04750 .0474 113.154 112.916 226.070 890.614 2,405 23,405 9.73 23,405 9.69
9 01 DEC 94 9.41 .04750 114.258 114.258 1004.872 2,418 22,749 9.41 22,749 9.46
10 31 DEC 94 9.65 .04850 117.252 117.252 1122.124 2,430 23,447 9.65 23,447 9.65
11 01 FEB 95 9.86 .04850 117.842 117.842 1239.966 2,442 24,075 9.86 24,075 9.91
12 01 MAR 95 10.15 .04850 118.421 118.421 1358.387 1,004.0 2,552 25,905 10.15 24,901 10.19
TAX RATE 42.50%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 4.81%
8.2190 YEARS: TOTAL RETURN 159.05%
ANNUALIZED 12.28%
</TABLE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01 MAR 90 9.42 .05250 1,062 10,000 9.43
02 APR 90 9.34 .05250 55.732 55.732 55.732 1,068 9,971 9.34 9,971 9.34
01 MAY 90 9.14 .05250 56.046 56.046 111.778 1,074 9,813 9.14 9,813 9.14
01 JUN 90 9.39 .05250 56.368 56.368 168.146 1,080 10,138 9.39 10,138 9.41
02 JUL 90 9.45 .05250 56.683 56.683 224.829 1,086 10,260 9.45 10,260 9.46
01 AUG 90 9.53 .05250 56.998 56.998 281.826 1,092 10,403 9.53 10,403 9.55
04 SEP 90 9.29 .05250 57.312 57.312 339.138 1,098 10,199 9.29 10,199 9.30
01 OCT 90 9.22 .05250 57.636 57.636 396.774 1,104 10,180 9.22 10,180 9.24
01 NOV 90 9.25 .05250 57.964 57.964 454.738 1,110 10,271 9.25 10,271 9.28
03 DEC 90 9.38 .05250 58.293 58.293 513.030 1,117 10,473 9.38 10,473 9.40
31 DEC 90 9.31 .05250 58.619 58.619 571.650 1,123 10,454 9.31 10,454 9.31
01 FEB 91 9.43 .05250 58.950 58.950 630.599 1,129 10,647 9.43 10,647 9.47
01 MAR 91 9.41 .05250 59.278 59.278 689.877 509.9 1,190 11,194 9.41 10,684 9.40
01 APR 91 9.40 .05250 62.453 62.453 62.453 1,196 11,245 9.40 11,245 9.41
01 MAY 91 9.52 .05250 62.802 62.802 125.256 1,203 11,451 9.52 11,451 9.54
03 JUN 91 9.56 .05250 63.149 63.149 188.404 1,209 11,562 9.56 11,562 9.56
01 JUL 91 9.49 .05250 63.495 63.495 251.899 1,216 11,541 9.49 11,541 9.51
01 AUG 91 9.64 .05250 63.847 63.847 315.746 1,223 11,787 9.64 11,787 9.64
03 SEP 91 9.72 .05250 64.194 64.194 379.940 1,229 11,949 9.72 11,949 9.72
01 OCT 91 9.81 .05250 64.541 64.541 444.481 1,236 12,124 9.81 12,124 9.82
01 NOV 91 9.86 .05250 64.886 64.886 509.368 1,243 12,251 9.86 12,251 9.88
02 DEC 91 9.82 .05250 65.232 65.232 574.600 1,249 12,267 9.82 12,267 9.83
31 DEC 91 9.93 .05200 64.956 64.956 639.556 1,256 12,469 9.93 12,469 9.93
03 FEB 92 9.87 .05200 65.296 65.296 704.852 1,262 12,459 9.87 12,459 9.86
02 MAR 92 9.88 .05200 65.640 65.640 770.492 569.4 1,327 13,107 9.88 12,537 9.88
01 APR 92 9.87 .05200 68.983 68.983 68.983 1,334 13,163 9.87 13,163 9.89
01 MAY 92 9.93 .05200 69.347 69.347 138.330 1,341 13,312 9.93 13,312 9.94
01 JUN 92 9.99 .05200 69.710 69.710 208.039 1,348 13,462 9.99 13,462 9.99
01 JUL 92 10.14 .05100 68.725 68.725 276.764 1,354 13,733 10.14 13,733 10.16
03 AUG 92 10.44 .05100 69.071 69.071 345.835 1,361 14,208 10.44 14,208 10.41
01 SEP 92 10.26 .04850 66.006 66.006 411.840 1,367 14,029 10.26 14,029 10.27
01 OCT 92 10.26 .04850 66.318 66.318 478.158 1,374 14,096 10.26 14,096 10.27
02 NOV 92 9.97 .04850 .0809 66.631 111.144 177.775 544.789 1,392 13,875 9.97 13,875 10.00
01 DEC 92 10.15 .04850 67.496 67.496 612.285 1,398 14,193 10.15 14,193 10.16
31 DEC 92 10.24 .04850 67.819 67.819 680.104 1,405 14,387 10.24 14,387 10.25
01 FEB 93 10.28 .04850 68.140 68.140 748.244 1,412 14,511 10.28 14,511 10.29
01 MAR 93 10.61 .04850 68.461 68.461 816.705 603.6 1,475 15,649 10.61 15,045 10.62
01 APR 93 10.50 .04850 71.534 71.534 71.534 1,482 15,558 10.50 15,558 10.50
03 MAY 93 10.57 .04850 71.864 71.864 143.397 1,489 15,734 10.57 15,734 10.59
01 JUN 93 10.61 .04850 72.194 72.194 215.591 1,495 15,865 10.61 15,865 10.62
01 JUL 93 10.72 .04850 72.524 72.524 288.115 1,502 16,103 10.72 16,103 10.72
02 AUG 93 10.70 .04850 72.852 72.852 360.967 1,509 16,145 10.70 16,145 10.70
01 SEP 93 10.87 .04850 73.182 73.182 434.149 1,516 16,475 10.87 16,475 10.88
01 OCT 93 10.94 .04850 73.509 73.509 507.657 1,522 16,655 10.94 16,655 10.95
01 NOV 93 10.90 .04850 .0366 73.834 55.718 129.553 581.492 1,534 16,723 10.90 16,723 10.92
01 DEC 93 10.77 .04850 74.411 74.411 655.903 1,541 16,598 10.77 16,598 10.79
31 DEC 93 10.91 .04850 .0127 74.746 19.573 94.319 730.649 1,550 16,908 10.91 16,908 10.91
01 FEB 94 11.00 .04750 73.615 73.615 804.264 1,556 17,121 11.00 17,121 10.99
0 01 MAR 94 10.72 .04750 73.933 73.933 878.197 649.1 1,624 17,409 10.72 16,760 10.70
1 04 APR 94 10.21 .04750 77.137 77.137 77.137 1,631 16,658 10.21 16,658 10.00
2 02 MAY 94 10.14 .04750 77.496 77.496 154.633 1,639 16,621 10.14 16,621 10.12
3 01 JUN 94 10.21 .04750 77.859 77.859 232.492 1,647 16,813 10.21 16,813 10.19
4 01 JUL 94 10.13 .04750 78.221 78.221 310.713 1,654 16,760 10.13 16,760 10.12
5 01 AUG 94 10.23 .04750 78.588 78.588 389.301 1,662 17,004 10.23 17,004 10.25
6 01 SEP 94 10.23 .04750 78.953 78.953 468.254 1,670 17,083 10.23 17,083 10.24
7 03 OCT 94 10.01 .04750 79.319 79.319 547.574 1,678 16,795 10.01 16,795 10.01
8 01 NOV 94 9.73 .04750 .0474 79.696 79.528 159.224 627.270 1,694 16,484 9.73 16,484 9.69
9 01 DEC 94 9.41 .04750 80.473 80.473 707.743 1,703 16,023 9.41 16,023 9.46
10 31 DEC 94 9.65 .04850 82.582 82.582 790.325 1,711 16,514 9.65 16,514 9.65
11 01 FEB 95 9.86 .04850 82.997 82.997 873.322 1,720 16,956 9.86 16,956 9.91
12 01 MAR 95 10.15 .04850 83.405 83.405 956.727 707.1 1,798 18,246 10.15 17,538 10.19
TAX RATE 42.50%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 4.81%
4.9993 YEARS: TOTAL RETURN 82.46%
ANNUALIZED 12.78%
</TABLE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 01 MAR 94 10.72 .04750 933 10,000 10.72 10.70
1 04 APR 94 10.21 .04750 44.310 44.310 44.310 937 9,569 10.21 9,569 10.00
2 02 MAY 94 10.14 .04750 44.516 44.516 88.826 942 9,547 10.14 9,547 10.12
3 01 JUN 94 10.21 .04750 44.724 44.724 133.550 946 9,658 10.21 9,658 10.19
4 01 JUL 94 10.13 .04750 44.932 44.932 178.482 950 9,627 10.13 9,627 10.12
5 01 AUG 94 10.23 .04750 45.143 45.143 223.626 955 9,768 10.23 9,768 10.25
6 01 SEP 94 10.23 .04750 45.353 45.353 268.978 959 9,813 10.23 9,813 10.24
7 03 OCT 94 10.01 .04750 45.563 45.563 314.542 964 9,647 10.01 9,647 10.01
8 01 NOV 94 9.73 .04750 .0474 45.780 45.683 91.463 360.321 973 9,469 9.73 9,469 9.69
9 01 DEC 94 9.41 .04750 46.226 46.226 406.547 978 9,204 9.41 9,204 9.46
10 31 DEC 94 9.65 .04850 47.437 47.437 453.985 983 9,486 9.65 9,486 9.65
11 01 FEB 95 9.86 .04850 47.676 47.676 501.661 988 9,740 9.86 9,740 9.91
12 01 MAR 95 10.15 .04850 47.910 47.910 549.571 406.2 1,033 10,481 10.15 10,075 10.19
TAX RATE 42.50%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 4.81%
0.9993 YEARS: TOTAL RETURN 4.81%
ANNUALIZED 4.81%
</TABLE>
The taxable equivalent total return calculations for the Class R Shares of
the Ohio Fund for the one-year and five-year periods ended February 28, 1995,
and the period from inception through February 28, 1995, are set forth on the
following pages. These calculations present the Fund's taxable equivalent total
return at the Fund's net asset value, and assume a 44% combined federal and Ohio
tax rate.
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 NOV 86 9.60 1,042 10,000
31 DEC 86 9.50 .02263 23.573 23.573 23.573 1,044 9,919
31 JAN 87 9.66 .05522 57.658 57.658 81.231 1,050 10,144
28 FEB 87 9.68 .05357 56.255 56.255 137.486 108.0 1,067 10,329
31 MAR 87 9.51 .05014 53.504 53.504 53.504 1,073 10,202
30 APR 87 8.88 .05310 56.961 56.961 110.465 1,079 9,583
31 MAY 87 8.66 .05327 57.485 57.485 167.950 1,086 9,403
30 JUN 87 8.87 .05267 57.187 57.187 225.137 1,092 9,688
31 JUL 87 8.88 .05308 57.975 57.975 283.112 1,099 9,757
31 AUG 87 8.84 .05238 57.552 57.552 340.664 1,105 9,770
30 SEP 87 8.32 .05114 56.523 56.523 397.187 1,112 9,252
31 OCT 87 8.34 .05106 56.781 56.781 453.968 1,119 9,331
30 NOV 87 8.61 .05188 58.046 58.046 512.014 1,126 9,691
31 DEC 87 8.88 .05239 58.970 58.970 570.984 1,132 10,054
31 JAN 88 9.13 .05187 58.729 58.729 629.713 1,139 10,396
29 FEB 88 9.16 .05130 58.414 58.414 688.127 540.6 1,204 11,029
31 MAR 88 8.90 .05244 63.142 63.142 63.142 1,211 10,779
30 APR 88 8.83 .05096 61.721 61.721 124.863 1,218 10,756
31 MAY 88 8.83 .05180 63.100 63.100 187.963 1,225 10,819
30 JUN 88 8.94 .05273 64.610 64.610 252.573 1,233 11,019
31 JUL 88 8.95 .05249 64.695 64.695 317.269 1,240 11,096
31 AUG 88 8.92 .05301 65.720 65.720 382.988 1,247 11,124
30 SEP 88 9.04 .05217 65.063 65.063 448.051 1,254 11,339
31 OCT 88 9.19 .05273 66.140 66.140 514.191 1,262 11,593
30 NOV 88 9.04 .05255 66.293 66.293 580.484 1,269 11,470
31 DEC 88 9.11 .05344 67.808 67.808 648.292 1,276 11,627
31 JAN 89 9.35 .05361 68.422 68.422 716.714 1,284 12,002
28 FEB 89 9.17 .05351 68.686 68.686 785.400 617.1 1,358 12,457
31 MAR 89 9.09 .05263 71.493 71.493 71.493 1,366 12,419
30 APR 89 9.32 .05256 71.811 71.811 143.304 1,374 12,805
31 MAY 89 9.51 .05240 71.996 71.996 215.300 1,382 13,138
30 JUN 89 9.53 .05239 72.379 72.379 287.678 1,389 13,238
31 JUL 89 9.59 .05210 72.374 72.374 360.052 1,397 13,394
31 AUG 89 9.43 .05175 72.278 72.278 432.331 1,404 13,243
30 SEP 89 9.31 .05209 73.152 73.152 505.483 1,412 13,148
31 OCT 89 9.44 .05116 72.248 72.248 577.732 1,420 13,403
30 NOV 89 9.55 .05186 73.634 73.634 651.365 1,428 13,633
31 DEC 89 9.56 .05206 .0228 74.319 32.549 106.868 725.685 1,439 13,754
01 FEB 90 9.40 .05200 74.815 74.815 800.499 1,447 13,599 9.38 13,570
01 MAR 90 9.43 .05200 75.229 75.229 875.728 688.0 1,528 14,406 9.44 13,732
02 APR 90 9.40 .05200 79.438 79.438 79.438 1,536 14,439 9.40 14,439 9.40
01 MAY 90 9.27 .05200 79.877 79.877 159.315 1,545 14,320 9.27 14,320 9.28
01 JUN 90 9.45 .05200 80.325 80.325 239.640 1,553 14,678 9.45 14,678 9.47
02 JUL 90 9.49 .05200 80.767 80.767 320.408 1,562 14,821 9.49 14,821 9.49
01 AUG 90 9.57 .05200 81.210 81.210 401.618 1,570 15,027 9.57 15,027 9.59
04 SEP 90 9.32 .05200 81.651 81.651 483.269 1,579 14,716 9.32 14,716 9.32
01 OCT 90 9.29 .05200 82.107 82.107 565.375 1,588 14,751 9.29 14,751 9.31
01 NOV 90 9.39 .05200 82.566 82.566 647.942 1,597 14,992 9.39 14,992 9.42
03 DEC 90 9.53 .05200 83.024 83.024 730.965 1,605 15,299 9.53 15,299 9.56
31 DEC 90 9.46 .05200 .0421 83.477 67.584 151.060 814.442 1,621 15,337 9.46 15,337 9.46
01 FEB 91 9.54 .05200 84.307 84.307 898.749 1,630 15,551 9.54 15,551 9.58
01 MAR 91 9.57 .05200 84.766 84.766 983.515 772.7 1,720 16,458 9.57 15,685 9.55
01 APR 91 9.52 .05200 89.426 89.426 89.426 1,729 16,461 9.52 16,461 9.53
01 MAY 91 9.61 .05200 89.914 89.914 179.340 1,738 16,707 9.61 16,707 9.63
03 JUN 91 9.66 .05200 90.401 90.401 269.741 1,748 16,884 9.66 16,884 9.66
01 JUL 91 9.58 .05200 90.888 90.888 360.629 1,757 16,835 9.58 16,835 9.59
01 AUG 91 9.66 .05200 91.381 91.381 452.010 1,767 17,067 9.66 17,067 9.67
03 SEP 91 9.72 .05200 91.873 91.873 543.882 1,776 17,265 9.72 17,265 9.72
01 OCT 91 9.80 .05200 92.364 92.364 636.247 1,786 17,499 9.80 17,499 9.81
01 NOV 91 9.82 .05200 92.854 92.854 729.101 1,795 17,628 9.82 17,628 9.84
02 DEC 91 9.77 .05200 93.346 93.346 822.447 1,805 17,632 9.77 17,632 9.78
31 DEC 91 9.91 .05100 .0266 92.038 48.004 140.042 914.485 1,819 18,024 9.91 18,024 9.91
03 FEB 92 9.88 .05100 92.759 92.759 1007.244 1,828 18,063 9.88 18,063 9.88
02 MAR 92 9.87 .05100 93.238 93.238 1100.482 864.6 1,925 19,002 9.87 18,137 9.87
01 APR 92 9.82 .05100 98.187 98.187 98.187 1,935 19,004 9.82 19,004 9.84
01 MAY 92 9.87 .05100 98.697 98.697 196.885 1,945 19,200 9.87 19,200 9.87
01 JUN 92 9.94 .05100 99.207 99.207 296.092 1,955 19,435 9.94 19,435 9.93
01 JUL 92 10.07 .05000 97.761 97.761 393.853 1,965 19,787 10.07 19,787 10.09
03 AUG 92 10.37 .05000 98.247 98.247 492.100 1,974 20,475 10.37 20,475 10.33
01 SEP 92 10.16 .04800 94.771 94.771 586.871 1,984 20,155 10.16 20,155 10.15
01 OCT 92 10.14 .04800 95.219 95.219 682.090 1,993 20,210 10.14 20,210 10.17
02 NOV 92 9.90 .04800 .0240 95.670 47.835 143.505 777.760 2,008 19,875 9.90 19,875 9.93
01 DEC 92 10.10 .04800 96.366 96.366 874.126 2,017 20,373 10.10 20,373 10.11
31 DEC 92 10.19 .04800 96.824 96.824 970.950 2,027 20,652 10.19 20,652 10.20
01 FEB 93 10.23 .04800 97.280 97.280 1068.229 2,036 20,830 10.23 20,830 10.23
01 MAR 93 10.58 .04800 97.736 97.736 1165.965 916.1 2,132 22,557 10.58 21,640 10.59
01 APR 93 10.42 .04800 102.336 102.336 102.336 2,142 22,318 10.42 22,318 10.42
03 MAY 93 10.53 .04700 100.665 100.665 203.001 2,151 22,654 10.53 22,654 10.54
01 JUN 93 10.55 .04700 101.115 101.115 304.116 2,161 22,798 10.55 22,798 10.56
01 JUL 93 10.69 .04700 101.565 101.565 405.681 2,170 23,202 10.69 23,202 10.70
02 AUG 93 10.65 .04700 102.012 102.012 507.693 2,180 23,217 10.65 23,217 10.65
01 SEP 93 10.85 .04700 102.462 102.462 610.155 2,189 23,756 10.85 23,756 10.86
01 OCT 93 10.95 .04700 102.906 102.906 713.061 2,199 24,078 10.95 24,078 10.96
01 NOV 93 10.87 .04700 .0571 103.348 125.556 228.904 816.409 2,220 24,131 10.87 24,131 10.90
01 DEC 93 10.72 .04700 104.337 104.337 920.746 2,230 23,902 10.72 23,902 10.73
31 DEC 93 10.86 .04700 .0046 104.795 10.257 115.051 1025.541 2,240 24,329 10.86 24,329 10.86
01 FEB 94 10.96 .04700 105.293 105.293 1130.833 2,250 24,659 10.96 24,659 10.95
0 01 MAR 94 10.61 .04700 105.744 105.744 1236.578 971.6 2,351 24,949 10.61 23,977 10.60
1 04 APR 94 10.12 .04700 110.517 110.517 110.517 2,362 23,907 10.12 23,907 9.93
2 02 MAY 94 10.08 .04700 111.030 111.030 221.546 2,373 23,923 10.08 23,923 10.06
3 01 JUN 94 10.16 .04750 112.734 112.734 334.281 2,384 24,226 10.16 24,226 10.14
4 01 JUL 94 10.06 .04750 113.261 113.261 447.542 2,396 24,101 10.06 24,101 10.06
5 01 AUG 94 10.18 .04750 113.796 113.796 561.338 2,407 24,502 10.18 24,502 10.20
6 01 SEP 94 10.15 .04750 114.327 114.327 675.665 2,418 24,544 10.15 24,544 10.16
7 03 OCT 94 9.95 .04750 114.862 114.862 790.527 2,430 24,175 9.95 24,175 9.94
8 01 NOV 94 9.69 .04750 .0406 115.410 98.646 214.056 905.937 2,452 23,758 9.69 23,758 9.65
9 01 DEC 94 9.46 .04750 116.460 116.460 1022.397 2,464 23,310 9.46 23,310 9.51
10 31 DEC 94 9.69 .04750 117.044 117.044 1139.442 2,476 23,994 9.69 23,994 9.69
11 01 FEB 95 9.93 .04750 117.618 117.618 1257.060 2,488 24,706 9.93 24,706 9.98
12 01 MAR 95 10.18 .04750 118.181 118.181 1375.241 1,080.5 2,606 26,527 10.18 25,446 10.22
TAX RATE 44.00%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 6.33%
8.2190 YEARS: TOTAL RETURN 165.27%
ANNUALIZED 12.60%
</TABLE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01 MAR 90 9.43 .05200 1,060 10,000 9.44
02 APR 90 9.40 .05200 55.143 55.143 55.143 1,066 10,023 9.40 10,023 9.40
01 MAY 90 9.27 .05200 55.448 55.448 110.591 1,072 9,940 9.27 9,940 9.28
01 JUN 90 9.45 .05200 55.759 55.759 166.351 1,078 10,189 9.45 10,189 9.47
02 JUL 90 9.49 .05200 56.066 56.066 222.417 1,084 10,288 9.49 10,288 9.49
01 AUG 90 9.57 .05200 56.373 56.373 278.790 1,090 10,431 9.57 10,431 9.59
04 SEP 90 9.32 .05200 56.680 56.680 335.470 1,096 10,215 9.32 10,215 9.32
01 OCT 90 9.29 .05200 56.996 56.996 392.465 1,102 10,240 9.29 10,240 9.31
01 NOV 90 9.39 .05200 57.315 57.315 449.780 1,108 10,407 9.39 10,407 9.42
03 DEC 90 9.53 .05200 57.632 57.632 507.412 1,114 10,620 9.53 10,620 9.56
31 DEC 90 9.46 .05200 .0421 57.947 46.915 104.861 565.359 1,125 10,647 9.46 10,647 9.46
01 FEB 91 9.54 .05200 58.523 58.523 623.882 1,132 10,795 9.54 10,795 9.58
01 MAR 91 9.57 .05200 58.842 58.842 682.724 536.4 1,194 11,424 9.57 10,888 9.55
01 APR 91 9.52 .05200 62.077 62.077 62.077 1,200 11,427 9.52 11,427 9.53
01 MAY 91 9.61 .05200 62.416 62.416 124.492 1,207 11,597 9.61 11,597 9.63
03 JUN 91 9.66 .05200 62.753 62.753 187.246 1,213 11,720 9.66 11,720 9.66
01 JUL 91 9.58 .05200 63.091 63.091 250.337 1,220 11,686 9.58 11,686 9.59
01 AUG 91 9.66 .05200 63.434 63.434 313.771 1,226 11,847 9.66 11,847 9.67
03 SEP 91 9.72 .05200 63.775 63.775 377.546 1,233 11,985 9.72 11,985 9.72
01 OCT 91 9.80 .05200 64.116 64.116 441.662 1,240 12,148 9.80 12,148 9.81
01 NOV 91 9.82 .05200 64.457 64.457 506.119 1,246 12,237 9.82 12,237 9.84
02 DEC 91 9.77 .05200 64.798 64.798 570.916 1,253 12,239 9.77 12,239 9.78
31 DEC 91 9.91 .05100 .0266 63.890 33.323 97.213 634.806 1,263 12,512 9.91 12,512 9.91
03 FEB 92 9.88 .05100 64.390 64.390 699.197 1,269 12,538 9.88 12,538 9.88
02 MAR 92 9.87 .05100 64.723 64.723 763.919 600.2 1,336 13,191 9.87 12,590 9.87
01 APR 92 9.82 .05100 68.159 68.159 68.159 1,343 13,192 9.82 13,192 9.84
01 MAY 92 9.87 .05100 68.513 68.513 136.671 1,350 13,328 9.87 13,328 9.87
01 JUN 92 9.94 .05100 68.867 68.867 205.538 1,357 13,491 9.94 13,491 9.93
01 JUL 92 10.07 .05000 67.863 67.863 273.400 1,364 13,735 10.07 13,735 10.09
03 AUG 92 10.37 .05000 68.200 68.200 341.600 1,371 14,213 10.37 14,213 10.33
01 SEP 92 10.16 .04800 65.787 65.787 407.387 1,377 13,991 10.16 13,991 10.15
01 OCT 92 10.14 .04800 66.098 66.098 473.485 1,384 14,029 10.14 14,029 10.17
02 NOV 92 9.90 .04800 .0240 66.411 33.205 99.616 539.896 1,394 13,797 9.90 13,797 9.93
01 DEC 92 10.10 .04800 66.894 66.894 606.790 1,400 14,142 10.10 14,142 10.11
31 DEC 92 10.19 .04800 67.212 67.212 674.002 1,407 14,336 10.19 14,336 10.20
01 FEB 93 10.23 .04800 67.528 67.528 741.530 1,413 14,460 10.23 14,460 10.23
01 MAR 93 10.58 .04800 67.845 67.845 809.376 635.9 1,480 15,658 10.58 15,022 10.59
01 APR 93 10.42 .04800 71.038 71.038 71.038 1,487 15,492 10.42 15,492 10.42
03 MAY 93 10.53 .04700 69.879 69.879 140.917 1,493 15,726 10.53 15,726 10.54
01 JUN 93 10.55 .04700 70.191 70.191 211.108 1,500 15,826 10.55 15,826 10.56
01 JUL 93 10.69 .04700 70.503 70.503 281.611 1,507 16,106 10.69 16,106 10.70
02 AUG 93 10.65 .04700 70.813 70.813 352.424 1,513 16,117 10.65 16,117 10.65
01 SEP 93 10.85 .04700 71.126 71.126 423.550 1,520 16,491 10.85 16,491 10.86
01 OCT 93 10.95 .04700 71.434 71.434 494.984 1,526 16,714 10.95 16,714 10.96
01 NOV 93 10.87 .04700 .0571 71.741 87.157 158.898 566.725 1,541 16,751 10.87 16,751 10.90
01 DEC 93 10.72 .04700 72.428 72.428 639.152 1,548 16,592 10.72 16,592 10.73
31 DEC 93 10.86 .04700 .0046 72.745 7.120 79.865 711.897 1,555 16,889 10.86 16,889 10.86
01 FEB 94 10.96 .04700 73.091 73.091 784.988 1,562 17,117 10.96 17,117 10.95
0 01 MAR 94 10.61 .04700 73.404 73.404 858.392 674.4 1,632 17,318 10.61 16,644 10.60
1 04 APR 94 10.12 .04700 76.717 76.717 76.717 1,640 16,595 10.12 16,595 9.93
2 02 MAY 94 10.08 .04700 77.073 77.073 153.790 1,648 16,607 10.08 16,607 10.06
3 01 JUN 94 10.16 .04750 78.256 78.256 232.047 1,655 16,817 10.16 16,817 10.14
4 01 JUL 94 10.06 .04750 78.622 78.622 310.669 1,663 16,730 10.06 16,730 10.06
5 01 AUG 94 10.18 .04750 78.994 78.994 389.663 1,671 17,009 10.18 17,009 10.20
6 01 SEP 94 10.15 .04750 79.362 79.362 469.025 1,679 17,038 10.15 17,038 10.16
7 03 OCT 94 9.95 .04750 79.734 79.734 548.758 1,687 16,782 9.95 16,782 9.94
8 01 NOV 94 9.69 .04750 .0406 80.114 68.477 148.591 628.873 1,702 16,492 9.69 16,492 9.65
9 01 DEC 94 9.46 .04750 80.843 80.843 709.715 1,710 16,181 9.46 16,181 9.51
10 31 DEC 94 9.69 .04750 81.248 81.248 790.964 1,719 16,656 9.69 16,656 9.69
11 01 FEB 95 9.93 .04750 81.647 81.647 872.610 1,727 17,150 9.93 17,150 9.98
12 01 MAR 95 10.18 .04750 82.037 82.037 954.648 750.0 1,809 18,414 10.18 17,664 10.22
TAX RATE 44.00%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 6.33%
4.9993 YEARS: TOTAL RETURN 84.14%
ANNUALIZED 12.99%
</TABLE>
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD PREVIOUS ADJUSTED
PER PER CAP FROM FROM DOLLAR TO DATE TAX ENDING ENDING MONTH END ENDING REINV
PER DATE SHARE SHARE GAINS INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV WEALTH NAV
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 01 MAR 94 10.61 .04700 943 10,000 10.61 10.60
1 04 APR 94 10.12 .04700 44.298 44.298 44.298 947 9,582 10.12 9,582 9.93
2 02 MAY 94 10.08 .04700 44.504 44.504 88.801 951 9,589 10.08 9,589 10.06
3 01 JUN 94 10.16 .04750 45.187 45.187 133.988 956 9,710 10.16 9,710 10.14
4 01 JUL 94 10.06 .04750 45.398 45.398 179.386 960 9,660 10.06 9,660 10.06
5 01 AUG 94 10.18 .04750 45.612 45.612 224.998 965 9,821 10.18 9,821 10.20
6 01 SEP 94 10.15 .04750 45.825 45.825 270.824 969 9,838 10.15 9,838 10.16
7 03 OCT 94 9.95 .04750 46.040 46.040 316.863 974 9,690 9.95 9,690 9.94
8 01 NOV 94 9.69 .04750 .0406 46.259 39.540 85.799 363.123 983 9,523 9.69 9,523 9.65
9 01 DEC 94 9.46 .04750 46.680 46.680 409.803 988 9,343 9.46 9,343 9.51
10 31 DEC 94 9.69 .04750 46.914 46.914 456.717 993 9,617 9.69 9,617 9.69
11 01 FEB 95 9.93 .04750 47.144 47.144 503.861 997 9,903 9.93 9,903 9.98
12 01 MAR 95 10.18 .04750 47.370 47.370 551.231 433.1 1,044 10,633 10.18 10,199 10.22
TAX RATE 44.00%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 6.33%
0.9993 YEARS: TOTAL RETURN 6.33%
ANNUALIZED 6.33%
</TABLE>
8
<PAGE>
VII. MEASUREMENT OF RISK
The annualized standard deviation of monthly returns for Class R shares of
each of the Funds over the three years ended February 28, 1995, was calculated
as follows:
annualized ------------------------------------------------------
standard / [Sigma((Total return in month X) - (Average monthly
deviation / total return))/2/]/1/
(sigma) = \ / ---------------------------------------------------
\/ number of months (36)
The calculation of annualized standard deviation for the Massachusetts Fund
for the three years ended February 28, 1995 was as follows:
<TABLE>
<CAPTION>
MONTHLY (TOTAL RETURN IN MONTH X) -
MASSACHUSETTS FUND TOTAL RETURNS AVERAGE MONTHLY TOTAL RETURN)/2/
- ------------------ ------------- --------------------------------
<S> <C> <C>
Mar-92......................... 0.30% 0.0008%
Apr-92......................... 0.95% 0.0013%
May-92......................... 1.16% 0.0032%
Jun-92......................... 1.69% 0.0121%
Jul-92......................... 3.59% 0.0900%
Aug-92......................... -1.37% 0.0384%
Sep-92......................... 0.80% 0.0004%
Oct-92......................... -1.61% 0.0484%
Nov-92......................... 2.32% 0.0299%
Dec-92......................... 1.27% 0.0046%
Jan-93......................... 0.90% 0.0010%
Feb-93......................... 3.51% 0.0852%
Mar-93......................... -1.35% 0.0376%
Apr-93......................... 1.18% 0.0035%
May-93......................... 0.76% 0.0003%
Jun-93......................... 1.89% 0.0169%
Jul-93......................... 0.15% 0.0019%
Aug-93......................... 2.27% 0.0282%
Sep-93......................... 1.24% 0.0042%
Oct-93......................... 0.34% 0.0006%
Nov-93......................... -0.93% 0.0231%
Dec-93......................... 1.64% 0.0110%
Jan-94......................... 1.43% 0.0071%
Feb-94......................... -2.70% 0.1083%
Mar-94......................... -3.89% 0.2007%
Apr-94......................... 0.25% 0.0012%
May-94......................... 1.00% 0.0017%
Jun-94......................... -0.38% 0.0094%
Jul-94......................... 1.43% 0.0071%
Aug-94......................... 0.26% 0.0011%
Sep-94......................... -1.64% 0.0497%
Oct-94......................... -1.66% 0.0506%
Nov-94......................... -2.05% 0.0697%
Dec-94......................... 2.99% 0.0576%
Jan-95......................... 2.70% 0.0445%
Feb-95......................... 2.81% 0.0493%
Average monthly total return... 0.59%
Sum of Column C................ 1.1008%
Number of months............... 36
</TABLE>
-------------
Annualized Std. Dev. = \/ (1.1008%/36) = 1.75%
9
<PAGE>
VIII. RISK-ADJUSTED TOTAL RETURN
The risk-adjusted total return for the Class R Shares of the Massachusetts
Fund over the three years ended February 28, 1995, was calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Annualized total return of Fund - annualized total return of
Risk-Adjusted Total Return = Ponder Varifact Municipal Variable Rate Demand Bond Index
------------------------------------------------------------
Annualized standard deviation of return (s)
</TABLE>
7.12% - 4.01%
= -------------
1.75%
3.11%
= -----
1.75%
= 1.777
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM N-SAR AND THE FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> NUVEEN MASS SPECIAL CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 69664
<INVESTMENTS-AT-VALUE> 71918
<RECEIVABLES> 1064
<ASSETS-OTHER> 105
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 73087
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 305
<TOTAL-LIABILITIES> 305
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71029
<SHARES-COMMON-STOCK> 7502
<SHARES-COMMON-PRIOR> 7237
<ACCUMULATED-NII-CURRENT> 56
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (557)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2254
<NET-ASSETS> 71568
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4596
<OTHER-INCOME> 0
<EXPENSES-NET> 530
<NET-INVESTMENT-INCOME> 4066
<REALIZED-GAINS-CURRENT> (559)
<APPREC-INCREASE-CURRENT> (2392)
<NET-CHANGE-FROM-OPS> 1115
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4021
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1117
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<TABLE> <S> <C>
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<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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<SERIES>
<NUMBER> 012
<NAME> NUVEEN MASS SPECIAL CLASS A
<MULTIPLIER> 1,000
<S> <C>
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<PERIOD-START> MAR-01-1994
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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<SERIES>
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<NAME> NUVEEN MASS SPECIAL CLASS C
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<S> <C>
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<PERIOD-START> MAR-01-1994
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<SERIES>
<NUMBER> 021
<NAME> NUVEEN NEW YORK SPECIAL CLASS R
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<S> <C>
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<PERIOD-START> MAR-01-1994
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<REALIZED-GAINS-CURRENT> (1123)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM N-SAR AND THE FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> NUVEEN NEW YORK SPECIAL CLASS A
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<S> <C>
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<REALIZED-GAINS-CURRENT> (1123)
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<NUMBER-OF-SHARES-REDEEMED> 5
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<OVERDIST-NET-GAINS-PRIOR> 0
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<SERIES>
<NUMBER> 023
<NAME> NUVEEN NEW YORK SPECIAL CLASS C
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<S> <C>
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<PER-SHARE-NAV-BEGIN> 10.11
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM N-SAR AND THE FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> NUVEEN OHIO SPECIAL CLASS R
<MULTIPLIER> 1,000
<S> <C>
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<SENIOR-EQUITY> 0
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<SHARES-COMMON-STOCK> 15934
<SHARES-COMMON-PRIOR> 15782
<ACCUMULATED-NII-CURRENT> 109
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (967)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6626
<NET-ASSETS> 162231
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10312
<OTHER-INCOME> 0
<EXPENSES-NET> 1170
<NET-INVESTMENT-INCOME> 9142
<REALIZED-GAINS-CURRENT> (967)
<APPREC-INCREASE-CURRENT> (5055)
<NET-CHANGE-FROM-OPS> 3120
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9077
<DISTRIBUTIONS-OF-GAINS> 652
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1587
<NUMBER-OF-SHARES-REDEEMED> 2131
<SHARES-REINVESTED> 696
<NET-CHANGE-IN-ASSETS> 5
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<OVERDISTRIB-NII-PRIOR> 0
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<AVERAGE-NET-ASSETS> 159121
<PER-SHARE-NAV-BEGIN> 10.61
<PER-SHARE-NII> .568
<PER-SHARE-GAIN-APPREC> (.388)
<PER-SHARE-DIVIDEND> (.569)
<PER-SHARE-DISTRIBUTIONS> (.041)
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<PER-SHARE-NAV-END> 10.18
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM N-SAR AND THE FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> NUVEEN OHIO SPECIAL CLASS A
<MULTIPLIER> 1,000
<S> <C>
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<PERIOD-START> MAR-01-1994
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<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (967)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6626
<NET-ASSETS> 4320
<DIVIDEND-INCOME> 00000
<INTEREST-INCOME> 10312
<OTHER-INCOME> 0
<EXPENSES-NET> 1170
<NET-INVESTMENT-INCOME> 9142
<REALIZED-GAINS-CURRENT> (967)
<APPREC-INCREASE-CURRENT> (5055)
<NET-CHANGE-FROM-OPS> 3120
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 5
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 432
<NUMBER-OF-SHARES-REDEEMED> 11
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 5
<ACCUMULATED-NII-PRIOR> 111
<ACCUMULATED-GAINS-PRIOR> 657
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 877
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<GROSS-EXPENSE> 1174
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<PER-SHARE-NAV-BEGIN> 10.16
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM N-SAR AND THE FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> NUVEEN OHIO SPECIAL CLASS C
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1994
<PERIOD-END> FEB-28-1995
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<RECEIVABLES> 3053
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<TOTAL-ASSETS> 168103
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 651
<TOTAL-LIABILITIES> 651
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 161685
<SHARES-COMMON-STOCK> 89
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 109
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (967)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6626
<NET-ASSETS> 901
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10312
<OTHER-INCOME> 0
<EXPENSES-NET> 1170
<NET-INVESTMENT-INCOME> 9142
<REALIZED-GAINS-CURRENT> (967)
<APPREC-INCREASE-CURRENT> (5055)
<NET-CHANGE-FROM-OPS> 3120
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9
<DISTRIBUTIONS-OF-GAINS> 1
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<NUMBER-OF-SHARES-SOLD> 88
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<SHARES-REINVESTED> 1
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<ACCUMULATED-GAINS-PRIOR> 657
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 877
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1174
<AVERAGE-NET-ASSETS> 405
<PER-SHARE-NAV-BEGIN> 10.07
<PER-SHARE-NII> .219
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<EXPENSE-RATIO> 1.75
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</TABLE>
<PAGE>
EXHIBIT 99(a)
Certified Resolution
--------------------
The undersigned, James J. Wesolowski, hereby certifies, on behalf of Nuveen
Tax-Free Bond 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 Directors of the Fund at a meeting held on February 14, 1995, and (3) that
said resolution has not been amended or rescinded and remains in full force and
effect.
April 25, 1995
/s/ James J. Wesolowski
------------------------------
James J. Wesolowski, Secretary
<PAGE>
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.
<PAGE>
Exhibit 99(b)
NUVEEN TAX-FREE BOND FUND, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ Richard J. Franke
---------------------
Richard J. Franke
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ Lawrence H. Brown
---------------------
Lawrence H. Brown
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) her true and lawful attorney-in-fact and agent, for him on
her behalf and in her name, place and stead, in any and all capacities, to sign,
execute and affix her seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set her hand this 14th day of February, 1995.
/s/ Anne E. Impellizerri
------------------------
Anne E. Impellizerri
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be her voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ John E. O'Toole
------------------------
John E. O'Toole
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) her true and lawful attorney-in-fact and agent, for him on
her behalf and in her name, place and stead, in any and all capacities, to sign,
execute and affix her seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set her hand this 14th day of February, 1995.
/s/ Margaret K. Rosenheim
-------------------------
Margaret K. Rosenheim
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be her voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ Peter R. Sawers
------------------------
Peter R. Sawers
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN TAX-FREE BOND FUND, INC.
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned director of the above-referenced
organization has hereunto set his hand this 14th day of February, 1995.
/s/ Timothy R. Schwertfeger
---------------------------
Timothy R. Schwertfeger
STATE OF ILLINOIS )
)SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
-------------------------------
"OFFICIAL SEAL"
Virginia L. Corcoran
(SEAL) Notary Public, State of /s/ Virginia L. Corcoran
Illinois -------------------------
My Commission Expires 10/26/97 Notary Public
-------------------------------
My Commission Expires: 10/26/97
<PAGE>
EXHIBIT 99(c)
NUVEEN TAX-EXEMPT UNIT TRUSTS
NUVEEN TAX-EXEMPT MUTUAL FUNDS
NUVEEN MUNICIPAL EXCHANGE-TRADED FUNDS
NUVEEN ADVISORY CORP.
NUVEEN INSTITUTIONAL ADVISORY CORP.
JOHN NUVEEN & CO. INCORPORATED
THE JOHN NUVEEN COMPANY
______________________________
Standards and Procedures
Regarding
Conflicts of Interest
______________________________
Code of Ethics
And
Reporting Requirements
The Securities and Exchange Commission, in Investment Company Act Release No.
ll42l, has adopted Rule l7j-l "to provide guidance to investment companies as to
the minimum standards of conduct appropriate for persons who have access to
information regarding the purchase and sale of portfolio securities by
investment companies." The Rule requires registered investment companies, their
investment advisers and their principal underwriters to adopt codes of ethics
and reporting requirements to guard against violations of the standards set
forth in the Rule and the principles provided below and to establish guidelines
for the conduct of persons who (1) may obtain information concerning securities
held by or considered for purchase or sale by any series of the Nuveen Tax-
Exempt Unit Trusts (the "Trusts") or by any of the registered management
investment companies (the "Funds") or non-management investment company clients
("Clients") to which Nuveen Advisory Corp. or Nuveen Institutional Advisory
Corp. act as investment advisers or (2) who may make any recommendation or
participate in the determination of which recommendation shall be made
concerning the purchase or sale of any securities by a Trust, Fund or Client.
This Code of Ethics (the "Code") consists of six sections -- 1. Statement of
General Principles; 2. Definitions; 3. Exempted Transactions; 4. Prohibitions;
5. Reporting Requirements; and 6. Sanctions.
I. Statement of General Principles
The Code is based upon the principle that the officers, directors and
employees of a Fund, Nuveen Advisory Corp., Nuveen Institutional Advisory
Corp., John Nuveen & Co. Incorporated and The John Nuveen Company owe a
fiduciary duty to, among others, the unitholders and shareholders of the
Trusts and Funds and the Clients, to conduct their personal securities
transactions in a manner which does not interfere with Trust, Fund or
Client portfolio transactions or otherwise take unfair advantage of their
relationship to the Trusts, Funds or Clients. In accordance with this
general principle, persons covered by the Code must: (1) place the
interests of unitholders and shareholders of the Trusts and Funds and the
<PAGE>
2
Clients first; (2) execute personal securities transactions in compliance
with the Code; (3) avoid any actual or potential conflict of interest and
any abuse of their positions of trust and responsibility; and (4) not take
inappropriate advantage of their positions. It bears emphasis that
technical compliance with the Code's procedures will not automatically
insulate from scrutiny trades which show a pattern of abuse of the
individual's fiduciary duties to the Trust, Fund or Client.
II. Definitions
As used herein:
(l) "Access person" shall mean any director, officer or advisory person of
any Fund or of Nuveen Advisory Corp. or Nuveen Institutional Advisory
Corp.
A list of persons deemed to be access persons is attached as Exhibit
A.
(2) "Advisory person" shall mean:
(a) Any employee of a Fund, of Nuveen Advisory Corp., of Nuveen
Institutional Advisory Corp. or of John Nuveen & Co. Incorporated
who, in connection with his or her regular functions or duties,
makes, participates in, or obtains information regarding the
purchase or sale of securities by a Trust, Fund or Client or whose
functions relate to the making of any recommendations with respect
to such purchases or sales; and
(b) Any director or officer of John Nuveen & Co. Incorporated or The
John Nuveen Company who in the ordinary course of business makes,
participates in or obtains information regarding the purchase or
sale of securities for a Trust, Fund or Client or recommendations
made with regard to the purchase or sale of a security by a Trust,
Fund or Client, or whose functions or duties relate to the making
of any recommendation to a Trust, Fund or Client regarding the
purchase or sale of securities.
(3) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the
recommendation, when such person considers making such recommendation.
<PAGE>
3
(4) A person will be deemed to be the "beneficial owner" of securities:
(a) held in his or her own name or the name of his or her spouse and
their minor children;
(b) held in a trust
(i) of which such person is trustee and the trustee or members
of his or her immediate family have a vested interest in
the income of the trust,
(ii) in which such person has a vested beneficial interest, or
(iii) of which such person is settlor and which the settlor has
the power to revoke without consent of the beneficiaries; a
person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment
company solely by reason of his or her ownership of shares
or units of such registered investment company;
(c) held in any other name if by reason of any contract,
understanding, relationship, agreement or other arrangement such
person obtains benefits substantially equivalent to those of
ownership (e.g. the right to income from and the right to
exercise a controlling influence over the purchase or sale of
such securities) or would otherwise be deemed to beneficially own
such security for purposes of determining whether such person
would be subject to the provisions of Section l6 of the
Securities Exchange Act of l934 and the rules and regulations
thereunder, except that the determination of direct or indirect
beneficial ownership shall apply to all securities which an
access person has or acquires.
A person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment
company solely by reason of his or her ownership of shares or
units of such registered investment company.
(5) "Security" shall mean any stock, bond, debenture, evidence of
indebtedness or in general any other instrument defined to be a
security in Section 2(a)(36) of the Investment Company Act of l940
except that it shall not include securities issued by the Government
of the United States, short term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of registered open-end investment
companies.
<PAGE>
4
(6) "Purchase or sale of a security" shall include any transaction in
which a beneficial interest in a security is acquired or disposed of,
including but not limited to the writing of an option to purchase or
sell a security.
(7) "Control" shall have the same meaning as set forth in Section 2(a) (9)
of the Investment Company Act of 1940.
(8) "Investment personnel" shall mean any employee of a Fund, Nuveen
Advisory Corp. or Nuveen Institutional Advisory Corp. who acts as a
portfolio manager or as an analyst or trader who provides information
or advice to the portfolio manager or who helps execute the portfolio
manager's decisions. A list of investment personnel is attached as
Exhibit B.
(9) "Portfolio manager" shall mean any employee of a Fund, Nuveen Advisory
Corp. or Nuveen Institutional Advisory Corp. who is entrusted with the
direct responsibility and authority to make investment decisions
affecting a Trust, Fund or Client. A list of portfolio managers is
attached as Exhibit C.
III. Exempted Transactions
The prohibitions of Section IV of this Code shall not apply to:
(1) Purchases or sales affecting any account over which the party involved
has no direct or indirect influence or control;
(2) Purchases or sales of securities which are not:
(a) acquired in a private placement;
(b) shares of The John Nuveen Company;
(c) municipal securities; or
(d) shares of Nuveen-sponsored exchange-traded funds.
(3) Purchases or sales which are non-volitional on the part of either the
party involved or a Trust, Fund or Client;
(4) Purchases which are part of an automatic dividend reinvestment plan.
<PAGE>
5
(5) Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
IV. Prohibitions
(l) Unless such transaction is exempted above or is previously cleared in
the manner described in paragraph (9) below, no access person shall
purchase or sell the following securities for his or her own account
or for any account in which he or she has any beneficial ownership:
(a) securities offered in a private placement;
(b) shares of The John Nuveen Company;
(c) municipal securities; or
(d) shares of a Nuveen-sponsored exchange-traded fund.
The purchase of securities identified in paragraph (1)(a) by
investment personnel must also comply with paragraph (4) below.
(2) No access person shall execute a securities transaction on a day
during which a Trust, Fund or Client has a pending "buy" or "sell"
order in that same security until that order is executed or withdrawn.
Trades made in violation of this prohibition should be unwound or, if
that is impractical, any profits realized must be disgorged to a
charitable organization.
(3) Investment personnel shall not purchase any securities in an initial
public offering except an offering of securities issued by municipal
or United States government entities.
(4) Unless such transaction is previously approved in the manner described
in paragraph (10) below and the criteria set forth in that paragraph
are followed, investment personnel shall not purchase any security in
a private placement.
(5) Investment personnel shall not profit in the purchase and sale, or
sale and purchase, of the same (or equivalent) security within 60
calendar days if such security is a municipal security or shares
issued by a Nuveen-sponsored exchange-traded fund. Trades made in
violation of this prohibition should be unwound or, if that is
impractical, any profits realized must be disgorged to a charitable
organization.
<PAGE>
6
(6) Investment personnel shall not accept any gift or other thing of more
than de minimis value from any person or entity that does business
with or on behalf of a Trust, Fund or Client. For purposes of this
prohibition the term "de minimis value" shall have the same meaning
expressed in the National Association of Securities Dealers, Inc.
Rules of Fair Practice.
(7) Unless such service is previously cleared in the manner described in
paragraph (11) below and the criteria set forth in that paragraph are
followed, investment personnel shall not serve as board members or
other decision-makers for entities that issue municipal securities.
(8) No portfolio manager of a Trust, Fund or Client shall purchase or sell
any security within seven calendar days before or after the Fund or
Client he surveys or manages trades or considers to purchase or sell
such security. Trades made in violation of this prohibition should be
unwound or, if that is impractical, any profits realized must be
disgorged to a charitable organization.
(9) An access person may request clearance of a transaction otherwise
prohibited by paragraph (1) above prior to the placement of any order
in connection therewith by submitting a written request for clearance
to the Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the title and principal amount of the security proposed to be
purchased or sold, the nature of the transaction, the price at which
the transaction is proposed to be effected, and the name of the
broker, dealer or bank with or through whom the transaction is
proposed to be effected. No such transaction may be effected without
the prior clearance of the transaction and the price by the Chairman
or President or his designee. Employee transaction tickets must bear
initials showing such clearance before processing. Preclearance shall
be valid for three days. Transactions may be cleared by the Chairman
or President or his designee only if such officer determines that the
potential harm to any Trust, Fund or Client is highly remote or non-
existent because such transaction would be very unlikely to affect a
highly institutional market, or because it clearly is not related
economically to the securities to be purchased, sold or held by any
Trust, Fund or Client.
(10) Investment personnel may request approval of a transaction otherwise
prohibited by paragraph (4) above prior to the placement of any order
in connection therewith by submitting a written request for approval
to the Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the title and principal amount of the security proposed to be
purchased or sold, the nature of the transaction, the price at which
the transaction is proposed to be effected, and the name of the
broker, dealer or bank with or through
<PAGE>
7
whom the transaction is proposed to be effected. No such transaction
may be effected without the prior approval of the transaction and the
price by the Chairman or President or his designee. Employee
transaction tickets must bear initials showing such approval before
processing. Any approval shall be valid for three days. Transactions
may be approved by the Chairman or President or his designee only if
such officer takes into account, among other factors, whether the
investment opportunity should be reserved for a Trust, Fund or Client
and any shareholders or unitholders affected, and whether the
opportunity is being offered to an individual by virtue of his or her
position. In addition, Investment personnel who receive authorization
to purchase securities in a private placement have an affirmative duty
to disclose that position to the Chairman or President or his designee
if he or she plays a role in a Trust's, Fund's or Client's subsequent
investment decision regarding the same issuer. Once such disclosure is
made, the Chairman or President or his designee shall assemble a
commission of investment personnel with no personal interest in the
issuer involved to independently review the Trust's, Fund's or
Client's investment decision.
(11) Investment Personnel may request clearance of service otherwise
prohibited by paragraph (7) above, prior to acceptance of any such
position, by submitting a written request for clearance to the
Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the position sought, the reason service is desired and any
possible conflicts of interest known at the time of the request. No
such position may be accepted without the prior clearance by the
Chairman or President or his designee. Service may be cleared by the
Chairman or President or his designee only if such officer determines
that service in that capacity would be consistent with the interests
of the Trusts, Funds or Clients and any shareholders or unitholders
affected. In addition, Investment personnel who receive authorization
to serve in such a capacity must be isolated through "Chinese Wall"
procedures from those making investment decisions regarding securities
issued by the entity involved.
V. Reporting Requirements
(l) Every access person (other than directors of a Fund who are not
"interested persons" of such Fund) shall report to the Legal
Department of John Nuveen & Co. Incorporated details of each
transaction by reason of which he or she acquires any direct or
indirect beneficial ownership of any security. Notwithstanding the
foregoing, an access person need not make a report pursuant hereto
where such report would duplicate information recorded pursuant to
Rules 204-2(a)(l2) or 204-2(a)(l3) under the Investment Advisers Act
of l940. In addition to the reporting requirement expressed above,
every access person (including directors who are not "interested
<PAGE>
8
persons") shall direct his or her broker or brokers to supply to the
Legal Department, on a timely basis, duplicate copies of confirmations
of all securities transactions and copies of periodic statements for
all securities accounts involving securities in which such access
person acquires or foregoes direct or indirect beneficial ownership.
(2) Every director of a Fund who is not an "interested person" of such
Fund shall be required to report the details of each transaction with
respect to which such director knew or, in the ordinary course of
fulfilling his or her official duties as a director of the Fund,
should have known that during the 15 day period immediately preceding
or after the date of the transaction in a security by the director
such security is or was purchased or sold by the Fund or such purchase
or sale by the Fund is or was considered by the Fund or its investment
adviser.
(3) Every report required to be made pursuant to paragraphs 1 and 2 of
this Section (other than duplicate copies of confirmations and
periodic statements) shall be made not later than l0 days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:
(a) the date of the transaction, the title and the number of shares,
or principal amount of each security involved;
(b) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(c) the price at which the transaction was effected; and
(d) the name of the broker, dealer or bank with or through whom the
transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or
she has any direct or indirect beneficial ownership in the security to
which the report relates.
(4) The reporting requirements established pursuant to paragraphs 1 and 2
of this Section (other than duplicate copies of confirmations and
periodic statements) shall apply only to transactions by an access
person in securities in which such access person has, or by reason of
such transaction acquires, any direct or indirect beneficial ownership
in the security.
(5) Investment personnel shall disclose to the General Counsel of John
Nuveen & Co. Incorporated all personal securities holdings within 10
days of commencement of employment as an investment person and shall
continue to disclose such holdings on an annual basis.
<PAGE>
9
VI. Sanctions
Upon discovery of a violation of this Code, any Fund, Nuveen Advisory
Corp., Nuveen Institutional Advisory Corp., John Nuveen & Co.
Incorporated or The John Nuveen Company may impose such sanctions as
it deems appropriate, including, inter alia, a letter of censure or
suspension or termination of the employment of the violator. All
material violations of this Code and any sanctions imposed with
respect thereto shall be reported periodically to the board of
directors of the management investment company with respect to
securities of which the violation occurred, or to the Executive
Committee of John Nuveen & Co. Incorporated if the violation was with
respect to securities of any series of the Nuveen Tax-Exempt Unit
Trusts, or to the board of directors of Nuveen Institutional Advisory
Corp. or Nuveen Advisory Corp. with respect to securities of non-
management investment company clients advised by these entities.
Revised October 1994
