<PAGE>
As filed with the Securities and Exchange Commission on June 28, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[_]
Registration Statement No. 33-8372
Pre-Effective Amendment No.--- [_]
[X]
Post-Effective Amendment No. 19
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
Registration No. 811-4821
Amendment No. 20 [X]
NUVEEN INSURED 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 [_] on (date) pursuant to paragraph
pursuant to paragraph (b) (a)(1)
[_] 75 days after filing pursuantto para-
graph (a)(2)
[X] on July 1, 1996 pursuant to
paragraph (b)
[_] on (date) pursuant to paragraph
(a)(2) ofRule 485.
[_] 60 days after filing pursuant
to paragraph (a)(1)
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS
REGISTERED AN INDEFINITE NUMBER OF SHARES (DESIGNATED AS CLASS A SHARES, CLASS
C SHARES AND CLASS R SHARES) OF THE FOLLOWING SERIES: NUVEEN INSURED MUNICIPAL
BOND FUND, NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND AND NUVEEN NEW
YORK INSURED TAX-FREE VALUE FUND. A RULE 24F-2 NOTICE FOR THE REGISTRANT'S
FISCAL YEAR ENDED FEBRUARY 29, 1996, WAS FILED ON OR ABOUT APRIL 23, 1996.
CALCULATION OF REGISTRATION FEE FOR SHARES OF
NEW YORK INSURED TAX-FREE VALUE FUND
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value.. 2,353,307 $10.15 $23,886,070 $100.00
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
*Registrant has elected to calculate its filing fee in the manner described in
Rule 24e-2 under the Investment Company Act of 1940. The total amount of secu-
rities redeemed during the previous fiscal year was $47,225,300. The total
amount of redeemed securities used for reduction pursuant to Rule 24e-2(a) or
Rule 24f-2(c) was $23,629,230. The amount of redeemed securities being used
for reduction of the registration fee in this Amendment is $23,596,070.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 19
TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-8372
AND
AMENDMENT NO. 20
TO
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-4821
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 INSURED 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 Information Financial Highlights
4 General Description of General Information; What Are The Funds'
Registrant Investment Objectives and Policies
5 Management of the Fund Summary of Fund Expenses; Who Is
Responsible for the Operation of the Funds;
Management of the Funds; General
Information
5A Management's Discussion of Fund Incorporated by Reference to Annual Report
Performance to Shareholders; Distributions and Taxes
6 Capital Stock and Other General Information; Distributions and
Securities Taxes
7 Purchase of Securities Being Flexible Pricing Program; How to Buy Fund
Offered Shares; Distribution and Service Plan;
Management of the Funds; Net Asset Value
8 Redemption or Repurchase How to Redeem Fund Shares
9 Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
TEM IN PART BI LOCATION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
- -------------- -------------------------
<S> <C>
10 Cover Page Cover Page
11 Table of Contents Cover Page
12 General Information and History Not Applicable
13 Investment Objectives and Fundamental Policies and Investment
Policies Portfolio
14 Management of the Fund Management
15 Control Persons and Principal Management
Holders of Securities
16 Investment Advisory and Other Investment Adviser and Investment
Services Management Agreement; Distribution and
Service Plan; Independent Public
Accountants and Custodian
17 Brokerage Allocation and Other Portfolio Transactions
Practices
18 Capital Stock and Other See "General Information" in the Prospectus
Securities
19 Purchase, Redemption and Pricing Additional Information on the Purchase and
of Securities Redemption of Fund Shares; Distribution and
Service Plan; Net Asset Value
20 Tax Status Tax Matters
21 Underwriters Additional Information on the Purchase and
Redemption of Fund Shares; See "How to Buy
Fund Shares" and "Management of the Funds"
in the Prospectus
22 Calculation of Performance Data Performance Information
23 Financial Statements Incorporated by Reference to Annual Report
to Shareholders
</TABLE>
<PAGE>
[LOGO]
Nuveen Tax-Free
Mutual Funds
Dependable tax-free
income for generations
INSURED MUNICIPAL BOND
MASSACHUSETTS INSURED
NEW YORK INSURED
[PHOTO APPEARS HERE]
Prospectus/July 1, 1996
<PAGE>
NUVEEN FAMILY OF TAX-FREE MUTUAL FUNDS
Nuveen offers individual investors 16 different long-term
tax-free mutual fundsto choose from, including
NATIONAL LONG-TERM FUNDS
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
STATE LONG-TERM FUNDS
Arizona
Nuveen Arizona Tax-Free Value Fund
California
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
Florida
Nuveen Florida Tax-Free Value Fund
Maryland
Nuveen Maryland Tax-Free Value Fund
Massachusetts
Nuveen Massachusetts Tax-Free Value Fund
Nuveen Massachusetts Insured Tax-Free Value Fund
Michigan
Nuveen Michigan Tax-Free Value Fund
New Jersey
Nuveen New Jersey Tax-Free Value Fund
New York
Nuveen New York Tax-Free Value Fund
Nuveen New York Insured Tax-Free Value Fund
Ohio
Nuveen Ohio Tax-Free Value Fund
Pennsylvania
Nuveen Pennsylvania Tax-Free Value Fund
Virginia
Nuveen Virginia Tax-Free Value Fund
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Nuveen Insured Tax-Free Bond Fund, Inc.
Prospectus
July 1, 1996
NUVEEN INSURED MUNICIPAL BOND FUND
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND
Nuveen Insured 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 applicable state personal income tax as is consistent, in the view of the
Fund's management, with preservation of capital. Each Fund invests in long-term
Municipal Obligations which are either covered by insurance guaranteeing the
timely payment of principal and interest or backed by an escrow or trust
account containing sufficient U.S. Government or U.S. Government agency
securities to ensure timely payment of principal and interest. SEE PAGE 19 FOR
FURTHER INFORMATION ABOUT MUNICIPAL BOND INSURANCE. Each Fund invests in
Municipal Obligations judged by the Fund's investment adviser to offer the best
values among Municipal Obligations of similar credit quality. Nuveen Insured
Municipal Bond Fund (the "National Fund") purchases Municipal Obligations
issued within the 50 states and certain U.S. possessions or territories, while
Nuveen Massachusetts Insured Tax-Free Value Fund (the "Massachusetts Fund") and
Nuveen New York Insured Tax-Free Value Fund (the "New York Fund") purchase
Municipal Obligations issued within their respective states.
Each Fund has adopted a Flexible Pricing Program designed to permit you and
your financial adviser to choose the method of purchasing shares that you
believe is most beneficial given the amount of your purchase and any current
holdings of Fund shares, the length of time you expect to hold your investment,
and other relevant circumstances. The Program features three alternative ways
to purchase Fund shares (Classes A, C and R), each with a different combination
of sales charges, ongoing fees, eligibility requirements, and other features.
See "Flexible Pricing Program," "How to Buy Fund Shares" and "Summary of Fund
Expenses."
This Prospectus contains information you should know before investing in the
Funds. Please retain it for future reference. You can find more detailed
information about the Funds in the "Statement of Additional Information" dated
July 1, 1996. For a free copy of this Statement, write to the Funds, c/o John
Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, IL 60606, or call
Nuveen toll-free at 800.621.7227. The Statement has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus.
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. Shares
of the Funds involve investment risks, including the possible loss of
principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
John Nuveen & Co. Incorporated
For information, call toll-free 800.621.7227
<PAGE>
<TABLE>
<C> <S>
CONTENTS
3 Summary of Fund expenses
5 How to determine if one of the Funds is right for
you
10 Financial highlights
16 Who is responsible for the operation of the Funds?
17 What are the Funds' investment objectives and
policies?
25 Flexible pricing program
28 How to buy Fund shares
41 Distribution and service plan
42 How to redeem Fund shares
46 Management of the Funds
49 How the Funds show performance
52 Distributions and taxes
56 Net asset value
57 General information
Appendix A--Special state factors and state tax
treatment
Appendix B--Taxable equivalent yield tables
</TABLE>
<PAGE>
SUMMARY OF FUND EXPENSES
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
<TABLE>
<CAPTION>
Shareholder transaction
expenses
(as a percent of offering
price)(1) Each fund
------------------------------------
Class A Class C Class R (2)
<S> <C> <C> <C>
Maximum sales charge imposed on
purchases 4.50%(3) None None
Maximum sales charge imposed on
reinvested dividends None None None
Deferred sales charge None(4) 1.00%(5) None
Redemption fees None None None
Exchange fees None None None
</TABLE>
<TABLE>
<CAPTION>
Annual operating
expenses,
after fee waivers
and Total
expense expenses,
reimbursements without fee
(as a percent of Rule Other waivers and
average net Management 12b-1 operating Total expense re-
assets)(6) fees fees (7) expenses expenses imbursements
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NATIONAL FUND
Class A .48% .25% .18% .91% .92%
Class C .48% 1.00% .15% 1.63% 1.63%
Class R .48% None .15% .63% .63%
MASSACHUSETTS FUND
Class A .55% .25% .27% 1.07% 1.09%
Class C .55% 1.00% .26% 1.81% 1.81%
Class R .55% None .26% .81% .81%
NEW YORK FUND
Class A .54% .25% .14% .93% .93%
Class C .54% 1.00% .15% 1.69% 1.69%
Class R .54% None .13% .67% .67%
</TABLE>
(1) Authorized Dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details.
(2) Class R Shares are available for purchase only under certain limited
circumstances, or by specified investors, as described below under "How to Buy
Fund Shares--Class R Shares."
(3) Reduced sales charges apply to purchases of $50,000 or more. See "How to
Buy Fund Shares--Class A Shares."
(4) Class A purchases at net asset value of $1 million or more may be subject
to a 1% contingent deferred sales charge if redeemed within 18 months of
purchase. See "How to Buy Fund Shares--Class A Shares."
(5) Class C Shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(6) In order to prevent total operating expenses (excluding any distribution or
service fees) from exceeding .975 of 1% of the average daily net asset value of
any class of shares of a Fund, Nuveen Advisory has agreed to waive all or a
portion of its management fees or reimburse certain expenses of each Fund.
Nuveen Advisory may also voluntarily agree to reimburse additional expenses
from time to time, which voluntary reimbursements, may be terminated at any
time in its discretion.
(7) Class C Shares are subject to an annual distribution fee of .75 of 1% of
average daily net assets to reimburse Nuveen for costs in connection with the
sale of Fund shares. Both Class A Shares and Class C Shares of each Fund are
subject to an annual service fee of .25 of 1% of average daily net assets to
compensate Authorized Dealers for ongoing account services. See "Distribution
and Service Plan." Long-term holders of Class C Shares may pay more in Rule
12b-1 distribution fees than the economic equivalent of the maximum front-end
sales charge permitted under the National Association of Securities Dealers
Rules of Fair Practice.
The purpose of the tables above is to help you understand all
expenses and fees that you would bear directly or indirectly
as a Fund shareholder. The expenses and fees shown are for
the fiscal year ended February 29, 1996.
3
<PAGE>
EXAMPLE*
You would pay the following expenses on a $1,000 investment
over various time periods, assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NATIONAL FUND
Class A $54 $73 $ 93 $152
Class C $17** $51 $ 89 $155
Class R $ 6 $20 $ 35 $ 79
MASSACHUSETTS FUND
Class A $55 $78 $101 $170
Class C $18** $57 $ 98 $175
Class R $ 8 $26 $ 45 $100
NEW YORK FUND
Class A $54 $73 $ 94 $154
Class C $17** $53 $ 92 $162
Class R $ 7 $21 $ 37 $ 83
</TABLE>
*This example does not represent past or future expenses.
Actual expenses may be greater or less than those shown.
Moreover, a Fund's actual rate of return may be greater or
less than the hypothetical 5% return shown in this example.
This example assumes that the percentage amounts listed under
Annual Operating Expenses remain the same in each of the
periods. The ten-year figure for Class C Shares reflects the
automatic conversion of Class C Shares into Class A Shares
six years after purchase. Based on the foregoing assumptions,
the expenses incurred on an investment in Class C Shares will
exceed the expenses incurred on an investment in Class A
Shares sometime in the sixth year after purchase. You should
also note that Class R Shares are available for purchase only
under certain limited circumstances, or by specified
investors. For additional information about each Fund's fees
and expenses, see "Distribution and Service Plan" and
"Management of the Funds."
**Assumes that shareholder redeemed on the first day of the
second year and the contingent deferred sales charge was not
applicable for any of the periods shown. If the shareholder
had redeemed on the last day of the first year, the expenses
in the first year would have been $27 for the National and
New York Funds and $28 for the Massachusetts Fund.
4
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
HOW TO DETERMINE IF ONE OF THE FUNDS IS RIGHT FOR YOU
JULY 1, 1996
There are many reasons why you might invest in one of the
Funds. These can include:
. lowering the tax burden on your investment income
. earning regular monthly dividends
. seeking to preserve your investment capital
. systematically setting money aside for retirement, college
funding or estate planning purposes
While there can be no assurance that the Funds will enable
you to achieve your individual investment goals, they have
been designed for investors who have these kinds of
investment goals in mind.
In addition, each Fund incorporates the following features
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, TAX-FREE INCOME
Each Fund provides monthly dividends exempt from regular
federal income tax, and in the case of the Massachussetts and
New York Funds, from applicable state personal income taxes
for in-state residents.
5
<PAGE>
DIVERSIFIED, INSURED PORTFOLIO
Each Fund purchases Municipal Obligations which are either
covered by insurance guaranteeing the timely payment of
principal and interest or backed by an escrow or trust
account containing sufficient U.S. Government or U.S.
Government agency securities to ensure timely payment of
principal and interest. The National Fund purchases Municipal
Obligations issued within the 50 states and certain U.S.
possessions or territories. The Massachusetts Fund and the
New York Fund purchase Municipal Obligations issued within
their respective states. Each Fund is diversified and
maintains diversity within its portfolio by selecting
Municipal Obligations of different issuers. Each Fund further
enhances its portfolio mix by purchasing Municipal
Obligations of different types and purposes, and the National
Fund also purchases Municipal Obligations from different
geographic regions across the country.
EXPERIENCED MANAGEMENT
Each Fund is managed by Nuveen Advisory Corp. ("Nuveen
Advisory"), a wholly-owned subsidiary of John Nuveen & Co.
Incorporated ("Nuveen"). Founded in 1898, Nuveen is the
oldest and largest investment banking firm in the country
devoted exclusively to tax-exempt securities. Nuveen Advisory
currently manages 74 different tax-free portfolios
representing approximately $30 billion in assets.
VALUE INVESTING
As a guiding policy, Nuveen Advisory's portfolio managers
seek undervalued, insured 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 objective of as high a level of current interest
income exempt from both regular federal income tax and
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. Each
Fund's policy of investing in insured Municipal Obligations
may limit the extent to which it will achieve its value
investing strategy.
6
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
NUVEEN RESEARCH
Nuveen Advisory's portfolio managers call upon the resources
of Nuveen's Research Department, the largest in the
investment banking industry devoted exclusively to tax-exempt
securities. Nuveen research analysts reviewed in 1995 more
than $100 billion of tax-exempt securities sold in new issue
and secondary markets.
LOW MINIMUMS
You can start earning tax-free income with a low initial
investment of $1,000 in a particular class. See "How to Buy
Fund Shares."
FLEXIBILITY IN PURCHASING FUND SHARES
Each Fund has adopted a Flexible Pricing Program which is
designed to permit you and your financial adviser to choose
the method of purchasing shares that you believe is most
beneficial given the amount of your investment and any
current holdings of Fund shares, the length of time you
expect to hold your investment, and other relevant
circumstances. The Program features three alternative ways to
purchase Fund shares (Classes A, C and R), each with a
different combination of sales charges, ongoing fees,
eligibility requirements, and other features. Please refer to
"Flexible Pricing Program," "How to Buy Fund Shares" and "How
to Redeem Fund Shares" for a discussion of the Program's
features and additional information about these three classes
of shares.
AUTOMATIC DEPOSIT PLANS
The Funds offer a number of investment options, including
automatic deposit, direct deposit and payroll deduction, to
help you add to your account on a regular basis.
AUTOMATIC REINVESTMENT
All monthly dividends or capital gains paid by your Fund on
each class of shares will be reinvested automatically into
additional shares of the same class without a sales charge
unless you elect to receive them in cash. Separately,
distributions from any Nuveen unit trust (a "Nuveen UIT") may
be used to buy Class A Shares and, under certain
circumstances, Class R Shares of a Fund, in either case
without a sales charge at net asset value.
7
<PAGE>
EXCHANGE PRIVILEGE
Shares of a class may be quickly and easily exchanged by
telephone, without a sales charge, for shares of the same or
equivalent class of another Nuveen Mutual Fund or for shares
of certain Nuveen money market funds. Class R Shares of a
Fund may be exchanged for Class A Shares of the same Fund at
any time, provided that the current net asset value of those
Class R Shares is at least $1,000 or you already own Class A
Shares of that Fund.
LIQUIDITY
You may redeem all or a portion of your Fund shares on any
business day at the net asset value for the class of shares
you are redeeming. Class C Shares, as well as Class A
purchases of $1 million or more at net asset value, may be
subject to a contingent deferred sales charge ("CDSC") of 1%
upon redemption. Remember that share prices will fluctuate
with market conditions and upon redemption may be worth more
or less than their original cost. See "How to Redeem Fund
Shares."
AUTOMATIC WITHDRAWAL
If you own shares totalling $10,000 or more, you can arrange
to have $50 or more sent to you from your account either
monthly or quarterly.
TELEPHONE REDEMPTIONS
You may establish free telephone redemption privileges for
your account.
RISKS AND SPECIAL CONSIDERATIONS
You should consider certain other factors about the Funds
before investing. As with other bond mutual funds or any
long-term fixed-income investment, the value of a Fund's
portfolio will tend to vary inversely with changes in
prevailing interest rates. Accordingly, each Fund should be
considered a long-term investment, designed to provide the
best results when held for a multi-year period. A Fund may
not be suitable if you have a short-term investment horizon.
Additionally, the portfolio of the Massachusetts Fund and the
New York Fund may each 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
8
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
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. The National Fund to date has not invested in
Municipal Obligations that pay interest subject to the
federal alternative minimum tax and has no present intention
of doing so. As described elsewhere in this Prospectus, the
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 Insured 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 Nuveen Insured Tax-Free Bond Fund, Inc.
Selected data for a Class A Share, Class C Share or
Class R Share outstanding throughout each period is as
follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment operations Less distributions
---------------------------------------------------------------------
Net
Net asset realized and Dividends
value Net unrealized gain from net Distributions Net asset
beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NATIONAL
- ----------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.400 $.542* $ .568 $(.540) $ -- $10.970
9/6/94 to
2/28/95 10.310 .264* .115 (.273) (.016) 10.400
CLASS C
Year ended
2/29/96 10.310 .461 .540 (.461) -- 10.850
9/7/94 to
2/28/95 10.290 .227* .075 (.266) (.016) 10.310
CLASS R
Year ended
2/29/96 10.380 .570 .540 (.570) -- 10.920
Year ended 2/28,
1995 10.810 .573 (.407) (.580) (.016) 10.380
1994 10.850 .574 .012 (.565) (.061) 10.810
1993 10.030 .591 .880 (.589) (.062) 10.850
Year ended
2/29/92 9.690 .612 .425 (.617) (.080) 10.030
Year ended 2/28,
1991 9.520 .617 .198 (.611) (.034) 9.690
1990 9.350 .627 .262 (.630) (.089) 9.520
1989 9.300 .629 .050 (.629) -- 9.350
Year ended
2/29/88 9.790 .637* (.490) (.637) -- 9.300
12/10/86 to
2/28/87 9.600 .127* .190 (.127) -- 9.790
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 14.
10
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------------------------------------------
Ratio of Ratio of
Ratio of net investment net investment
expenses to income to Ratio of income to
average average expenses average
Total return Net assets net assets net assets to average net net assets Portfolio
on net asset end of period before before assets after after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
10.90% $ 46,943 .92% 5.00% .91% 5.01% 27%
3.84 14,097 1.27+ 5.28+ 1.00+ 5.55+ 25
9.88 5,151 1.63 4.34 1.63 4.34 27
3.09 3,979 1.75+ 4.83+ 1.75+ 4.83+ 25
10.94 761,956 .63 5.33 .63 5.33 27
1.85 736,702 .64 5.67 .64 5.67 25
5.47 745,914 .65 5.21 .65 5.21 11
15.24 567,232 .72 5.68 .72 5.68 20
11.03 306,853 .73 6.12 .73 6.12 45
8.94 178,931 .80 6.45 .80 6.45 53
9.73 111,806 .83 6.49 .83 6.49 78
7.63 66,049 .87 6.83 .87 6.83 106
2.00 41,330 .88 6.65 .60 6.93 88
3.31 13,160 3.50+ .50+ -- 4.00+ --
- -------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Income from investment operations Less distributions
---------------------------------------------------------------------
Net
Net asset realized and Dividends
value Net unrealized gain from net Distributions Net asset
beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MA
- ---------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.060 $.512* $.433 $(.515) $ -- $10.490
9/6/94 to
2/28/95 10.030 .249* .039 (.258) -- 10.060
CLASS C
Year ended
2/29/96 10.040 .434 .435 (.439) -- 10.470
9/14/94 to
2/28/95 9.910 .202* .137 (.209) -- 10.040
CLASS R
Year ended
2/29/96 10.060 .538 .445 (.543) -- 10.500
Year ended 2/28,
1995 10.450 .545 (.386) (.549) -- 10.060
1994 10.440 .537 -- (.527) -- 10.450
1993 9.650 .551 .784 (.545) -- 10.440
Year ended
2/29/92 9.360 .570 .301 (.581) -- 9.650
Year ended 2/28,
1991 9.140 .568 .219 (.567) -- 9.360
1990 8.960 .571* .178 (.569) -- 9.140
1989 9.030 .576* (.070) (.576) -- 8.960
Year ended
2/29/88 9.540 .582* (.510) (.582) -- 9.030
12/10/86 to
2/28/87 9.600 .131* (.060) (.131) -- 9.540
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 14.
12
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------------------------------------------
Ratio of Ratio of
Ratio of net investment net investment
expenses to income to Ratio of income to
average average expenses average
Total return Net assets net assets net assets to average net net assets Portfolio
on net asset end of period before before assets after after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
9.59% 5,291 1.09% 4.92% 1.07% 4.94% 1%
2.99 1,956 1.36+ 5.13+ 1.15+ 5.34+ 10
8.80 706 1.81 4.20 1.81 4.20 1
3.52 338 2.07+ 4.41+ 1.90+ 4.58+ 10
9.99 60,102 .81 5.21 .81 5.21 1
1.77 57,137 .79 5.54 .79 5.54 10
5.22 58,255 .84 5.09 .84 5.09 3
14.28 47,098 .86 5.47 .86 5.47 2
9.57 28,189 .72 5.93 .72 5.93 5
8.95 15,625 .85 6.19 .85 6.19 6
8.52 8,649 1.20 5.94 .97 6.17 15
5.84 5,404 1.87 5.54 .97 6.44 41
1.14 4,895 1.75 5.37 .59 6.53 42
.75 2,312 5.18+ .64+ -- 5.82+ --
- -------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from investment operations Less distributions
---------------------------------------------------------------------
Net
Net asset realized and Dividends
value Net unrealized gain from net Distributions Net asset
beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NY
- ---------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.150 $.521 $ .492 $(.524) $(.029)** $10.610
9/6/94 to
2/28/95 10.160 .253* .037 (.260) (.040)** 10.150
CLASS C
Year ended
2/29/96 10.120 .442 .524 (.447) (.029)** 10.610
9/13/94 to
2/28/95 10.030 .207* .133 (.210) (.040)** 10.120
CLASS R
Year ended
2/29/96 10.150 .548 .495 (.554) (.029)** 10.610
Year ended 2/28,
1995 10.630 .555 (.440) (.555) (.040)** 10.150
1994 10.620 .550 .035 (.543) (.032) 10.630
1993 9.780 .566 .849 (.562) (.013) 10.620
Year ended
2/29/92 9.320 .590 .467 (.597) -- 9.780
Year ended 2/28,
1991 9.250 .598 .068 (.596) -- 9.320
1990 9.060 .596 .190 (.596) -- 9.250
1989 9.100 .593* (.040) (.593) -- 9.060
Year ended
2/29/88 9.830 .606* (.730) (.606) -- 9.100
12/10/86 to
2/28/87 9.600 .130* .230 (.130) -- 9.830
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
*Reflects the waiver of certain management fees and reimbursement of certain
other expenses by the Adviser. See Notes to Financial Statements in the Annual
Report to Shareholders.
**The amounts shown include distributions in excess of capital gains of $.0024
per share for the year ended 2/29/96 and $.0015 per share for the period ended
2/28/95.
+Annualized.
++Total Return on Net Asset Value is the combination of reinvested dividend
income, reinvested capital gain distributions, if any, and changes in net asset
value per share.
+++Net of taxes, if applicable. See Notes to Financial Statements in Annual
Report to Shareholders.
14
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
--------------------------------------------------------------------------------
Ratio of Ratio of
Ratio of net investment net investment
expenses to income to Ratio of income to
average average expenses to average
Total return Net assets net assets net assets average net net assets Portfolio
on net asset end of period before before assets after after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
10.19% $ 24,747 .93% 4.97% .93% 4.97% 17%
3.01 7,258 1.13+ 5.33+ 1.05+ 5.41+ 11
9.71 1,369 1.69 4.21 1.69 4.21 17
3.53 285 2.32+ 4.13+ 1.80+ 4.65+ 11
10.51 343,348 .67 5.26 .67 5.26 17
1.37 345,121 .65 5.57 .65 5.57 11
5.57 388,176 .68 5.11 .68 5.11 5
14.96 314,877 .73 5.56 .73 5.56 6
11.66 167,048 .69 6.08 .69 6.08 4
7.61 80,484 .73 6.46 .73 6.46 13
8.75 40,372 .85 6.35 .85 6.35 30
6.37 20,206 1.05 6.50 .97 6.58 62
(.85) 14,078 1.12 6.22 .61 6.73 36
3.76 5,177 3.19+ 1.78+ -- 4.97+ --
- -------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
WHO IS RESPONSIBLE FOR THE OPERATION OF THE FUNDS?
The following organizations work together to provide the
services and features offered by the Funds:
<TABLE>
<CAPTION>
ORGANIZATION FUNCTION DUTIES
--------------------------------------------------------------
<S> <C> <C>
John Nuveen & Co. Fund Sponsor and Sponsors and manages
Incorporated Principal the offering of Fund
("Nuveen") Underwriter shares; provides
certain
administrative
services
Nuveen Advisory Corp. Investment Adviser Manages the Funds'
("Nuveen Advisory") investment portfolios
and provides day-to-
day administrative
services to the Funds
Shareholder Services, Transfer Agent; Maintains shareholder
Inc. Shareholder accounts, handles
("SSI") Services Agent; share redemptions and
Dividend exchanges and
Paying Agent dividend payments
Chase Manhattan Bank, Custodian Maintains custody of
N.A. ("Chase") the Funds'
investments and
provides certain
accounting services
to the Funds
</TABLE>
16
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES?
JULY 1, 1996
INVESTMENT OBJECTIVE
Each Fund is
designed to The investment objective of each Fund is to provide you with
provide income as high a level of current interest income exempt from both
free from regular federal income tax and applicable state personal
federal and income tax as is consistent, in the view of the Fund's
applicable management, with preservation of capital. There can be no
state personal assurance that the investment objective of any Fund will be
income taxes achieved. The investment objective is a fundamental policy of
each Fund and may not be changed without the approval of the
holders of a majority of the shares of that Fund. Other
investment restrictions that may be changed only with
shareholder approval are contained in the Statement of
Additional Information. [/R]
HOW THE FUNDS PURSUE THEIR OBJECTIVES
The Funds seek Nuveen Advisory believes that in any market environment there
insured are quality Municipal Obligations whose current price, yield,
Municipal credit quality and future prospects make them seem
Obligations underpriced or exceptionally attractive when compared with
considered to other Municipal Obligations in the market. Value investing
be undervalued for the Funds will ordinarily involve purchases of
undervalued or underrated uninsured Municipal Obligations
which would then be covered by insurance, or undervalued
insured Municipal Obligations. In selecting investments for
the Funds, Nuveen Advisory will attempt to identify and
purchase those undervalued, insured Municipal Obligations
that offer the best values among Municipal Obligations of
similar credit quality. By selecting these Municipal
Obligations, each Fund will seek to provide attractive
current tax-free income and to protect the Fund's net asset
value in both rising and declining markets. In this way,
regardless of the direction the market may move, value
investing, if successful, will better position each Fund to
achieve its investment objective of as high a level of
current interest income exempt from both regular federal
income tax and applicable state personal income tax as is
consistent, in the view of the Fund's management, with
preservation of capital. Each Fund's policy of investing in
insured Municipal Obligations may limit the extent to which
it will achieve its value investing strategy. Any net capital
appreciation realized by a Fund will generally result in the
distribution of taxable capital gains to Fund shareholders.
See "Distributions and Taxes." [/R]
Successful value investing depends on identifying and
Thorough purchasing undervalued securities before the rest of the
research can marketplace finds them. Nuveen Advisory believes the
help identify municipal market provides these opportunities, in part
values because of the relatively large number of issuers of tax-
exempt securities and the relatively small number of full-
time, professional municipal market analysts. For example,
there are currently
17
<PAGE>
about 7,500 common stocks that are followed by about 23,000
analysts. By contrast, there are about 60,000 entities that
issue tax-exempt securities and less than 1,000 professional
municipal market analysts.
Nuveen and Nuveen Advisory believe that together they employ
the largest number of research analysts in the investment
banking industry devoted exclusively to the review and
surveillance of tax-exempt securities. Their team of more
than 40 individuals has over 350 years of combined municipal
market experience. Nuveen and Nuveen Advisory have access to
information on approximately 60,000 municipal issuers, and
review annually more than $100 billion of tax-exempt
securities sold in new issue and secondary markets.
The National Fund will invest primarily in Municipal
Obligations issued within the 50 states and certain U.S.
Which possessions or territories so that the interest income on the
Municipal Municipal Obligations will be exempt from regular federal
Obligations income tax, although this income may be subject to applicable
are selected state personal income taxes. The Massachusetts Fund and the
as New York Fund will invest primarily in Municipal Obligations
investments? issued within their respective states so that the interest
income on the Municipal Obligations will be exempt from both
regular federal and applicable state personal income taxes.
Because of the different credit characteristics of
governmental authorities in a state and because of differing
supply and demand factors for a 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.
Under ordinary circumstances, each Fund will invest (1)
Each Fund will substantially all (at least 80%) of its net assets in
seek to Municipal Obligations which are either covered by insurance
purchase guaranteeing the timely payment of principal and interest or
insured backed by an escrow or trust account containing sufficient
Municipal U.S. Government or U.S. Government agency securities to
Obligations ensure timely payment of principal and interest, and (2) not
more than 20% of its net assets in "temporary investments,"
within the limitations and for the purposes described below,
provided that temporary investments subject to regular
federal income tax and Municipal Obligations that pay
interest subject to the federal alternative minimum tax ("AMT
Bonds") may not comprise more than 20% of each Fund's net
assets.
Each Fund may only invest in Municipal Obligations rated
investment-grade at the time of purchase (Baa or BBB or
better) by Moody's Investors Service, Inc. ("Moody's") or
Standard and Poor's Corporation ("S&P"), or in unrated
Municipal Obligations of investment grade quality in the
opinion of Nuveen Advisory, with no
18
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
fixed percentage limitations on these unrated securities.
Municipal Obligations rated Baa are considered by Moody's to
be medium grade obligations which lack outstanding investment
characteristics and in fact have speculative characteristics
as well, while Municipal Obligations rated BBB are regarded
by S&P as having an adequate capacity to pay principal and
interest. The Funds may invest up to 20% of their net assets
in AMT Bonds, although the National Fund to date has not done
so and has no present intention of doing so. All of 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 maturity
may be shortened from time to time depending on market
conditions in order to help limit each Fund's exposure to
market risk. As a result, each Fund's portfolio at any given
time may include both long-term and intermediate-term
Municipal Obligations.
The foregoing investment policies are fundamental policies of
each Fund and may not be changed without the approval of the
holders of a majority of the shares of that Fund.
Municipal Obligations
can be insured
in one of
three ways
Each insured Municipal Obligation held by a Fund will either
be (1) covered by an insurance policy applicable to a
specific security and obtained by the issuer of the security
or a third party at the time of original issuance ("Original
Issue Insurance"), (2) covered by an insurance policy
applicable to a specific security and obtained by the Fund or
a third party subsequent to the time of original issuance
("Secondary Market Insurance"), or (3) covered by a master
municipal insurance policy purchased by the Fund ("Portfolio
Insurance"). Each Fund currently maintains policies of
Portfolio Insurance with MBIA Insurance Corporation, AMBAC
Indemnity Corporation, Financial Security Assurance, Inc.,
and Financial Guaranty Insurance Company, and may in the
future obtain other policies of Portfolio Insurance depending
on the availability of these policies on terms favorable to
the Fund. However, a Fund may determine not to obtain these
policies and to emphasize investments in Municipal
Obligations insured under Original Issue Insurance or
Secondary Market Insurance. In any event, a Fund will only
obtain policies of Portfolio Insurance issued by mono-line
insurers specializing in insuring municipal debt, whose
claims-paying ability is rated Aaa by Moody's or AAA by S&P.
In determining whether to insure Municipal Obligations held
by a Fund, an insurer will apply its own standards, which
correspond generally to the standards it has established for
determining the insurability of new issues of Municipal
Obligations. See the Statement of Additional Information for
further information about each type of insurance described
above.
19
<PAGE>
In addition to insured Municipal Obligations, a Fund may
invest in Municipal Obligations that are entitled to the
benefit of an escrow or trust account which contains
securities issued or guaranteed by the U.S. Government or
U.S. Government agencies, backed by the full faith and credit
of the United States, and sufficient in amount to ensure the
payment of interest and principal on the original interest
payment and maturity dates ("collateralized obligations").
Collateralized obligations generally will not be insured and
are regarded as having the credit characteristics of the
underlying U.S. Government or U.S. Government agency
securities. Uninsured collateralized obligations will not
constitute more than 20% of each Fund's net assets.
The Funds may
insure
permanently
Municipal Obligations
covered by
Portfolio
Insurance
One or more policies of Portfolio Insurance may provide a
Fund, pursuant to an irrevocable commitment of the insurer,
with the option to exercise the right to obtain permanent
insurance ("Permanent Insurance") with respect to a Municipal
Obligation that is to be sold by the Fund. A Fund would
exercise the right to obtain Permanent Insurance upon payment
of a single, predetermined insurance premium payable from the
proceeds of the sale of that Municipal Obligation. It is
expected that a Fund will exercise the right to obtain
Permanent Insurance for a Municipal Obligation only if, in
the opinion of Nuveen Advisory, upon exercise the net
proceeds from the sale by the Fund of that obligation, as
insured, would exceed the proceeds from the sale of that
obligation without insurance.
Premiums for a Portfolio Insurance policy are paid by the
Funds monthly, and are adjusted for purchases and sales of
Municipal Obligations covered by the policy during the month.
The yield on each of the Funds is reduced to the extent of
the insurance premiums allocated to it. Depending upon the
characteristics of the Municipal Obligations held by the
Funds, the annual premium rate for the policies of Portfolio
Insurance is estimated to range from .15% to .30% of the
value of the Municipal Obligations covered under the
policies. Because the majority of the Municipal Obligations
in each Fund were not covered by policies of Portfolio
Insurance during the fiscal year ended February 29, 1996,
total premiums as a percentage of the value of Municipal
Obligations held by each Fund (.00%, .01% and .00%) for the
National Fund, the Massachusetts Fund and the New York Fund,
respectively, were significantly less than the estimated
rate.
20
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
DESCRIPTION OF THE FUNDS' INVESTMENTS
Municipal Obligations, as the term is used in this
Municipal Prospectus, are federally tax-exempt debt obligations issued
Obligations by states, cities and local authorities and by certain U.S.
are issued by possessions or territories to obtain funds for various public
states, cities purposes, such as the construction of public facilities, the
and local payment of general operating expenses and the refunding of
authorities to outstanding debts. They may also be issued to obtain funding
support a for various private activities, including loans to finance
variety of the construction of housing, educational and medical
public facilities or privately owned industrial development and
activities pollution control projects.
The two principal classifications of Municipal Obligations
are general obligation and revenue bonds. GENERAL OBLIGATION
bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and
interest. REVENUE bonds are payable only from the revenues
derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise or other
specific revenue source. Industrial development and pollution
control bonds are in most cases revenue bonds and do not
generally constitute the pledge of the credit or taxing power
of the issuer of these bonds.
Municipal Obligations may also include participations in
lease obligations or installment purchase contract
obligations (collectively, "lease obligations") of municipal
authorities or entities. Certain "non-appropriation" lease
obligations may present special risks because the
municipality's obligation to make future lease or installment
payments depends on money being appropriated each year for
this purpose. Each Fund will seek to minimize these risks by
not investing more than 10% of its assets in non-
appropriation lease obligations, and by only investing in
those non-appropriation lease obligations that meet certain
criteria of the Fund. See the Statement of Additional
Information for further information about lease obligations.
The yields on Municipal Obligations depend on a variety of
factors, including the condition of financial markets in
general and the municipal market in particular, as well as
the size of a particular offering, the maturity of the
obligation and the rating of the issue. Certain Municipal
Obligations may pay variable or floating rates of interest
based upon certain market rates or indexes such as a bank
prime rate or a tax-exempt money market index. The ratings of
Moody's and S&P represent their opinions as to the quality of
the Municipal Obligations that they undertake to rate. It
should be emphasized, however, that ratings are general and
are not absolute standards of quality. Consequently,
Municipal Obligations with the same maturity,
21
<PAGE>
coupon and rating may have different yields, while those
having the same maturity and coupon with different ratings
may have the same yield. The market value of Municipal
Obligations will vary with changes in prevailing interest
rate levels and as a result of changing evaluations of the
ability of their issuers to meet interest and principal
payments. Similarly, the market value and net asset value of
shares of the Funds will change in response to interest rate
changes; they will tend to decrease when interest rates rise
and increase when interest rates fall.
Temporary As described above, each Fund under ordinary circumstances
investments may invest up to 20% of its net assets in "temporary
will be U.S. investments," but may invest without limit in temporary
Government or investments during temporary defensive periods in order to
high quality limit the exposure of its portfolio to market risk from
securities temporary imbalances of supply and demand or other temporary
circumstances affecting the municipal market. Each Fund will
seek to make temporary investments in short-term securities
the interest on which is exempt from regular federal income
tax, but may be subject to state income tax in a Fund's
respective state. If suitable federally tax-exempt temporary
investments are not available at reasonable prices and
yields, a Fund may make temporary investments in taxable
securities whose interest is subject to both state and
federal income taxes. A Fund will invest only in those
taxable temporary investments that are either U.S. Government
securities or are rated within the highest grade by Moody's
or S&P, and mature within one year from the date of purchase
or carry a variable or floating rate of interest. A Fund will
not be in a position to achieve its investment objective of
tax-exempt income to the extent it invests in taxable
temporary investments. See the Statement of Additional
Information for further information about the temporary
investments in which the Funds may invest. [/R]
SPECIAL FACTORS PERTAINING TO STATE FUNDS
Because the Massachusetts Fund and the New York Fund will
concentrate their investments in Municipal Obligations issued
within their respective states, they may be affected by
political, economic or regulatory factors that may impair the
ability of issuers in their states to pay interest on or to
repay the principal of their debt obligations. These special
factors for each state are briefly described in Appendix A to
this Prospectus. See the Statement of Additional Information
for further information about these factors.
22
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
CERTAIN INVESTMENT STRATEGIES AND LIMITATIONS
Each Fund will make changes in its investment portfolio from
Portfolio time to time in order to take advantage of opportunities in
Trading and the municipal market and to limit exposure to market risk. A
turnover: Fund may engage to a limited extent in short-term trading
consistent with its investment objective, but a Fund will not
Each Fund will trade securities solely to realize a profit. Changes in a
engage in Fund's investments are known as "portfolio turnover." While
short-term each Fund's annual portfolio turnover rate is not expected to
trading only exceed 50%, actual portfolio turnover rates are impossible to
to a limited predict, and may exceed 50% in particular years depending
extent upon market conditions.
A Fund may purchase and sell Municipal Obligations on a when-
When-issued or issued or delayed delivery basis, which calls for the Fund to
delayed make payment or take delivery at a future date, normally 15-
delivery 45 days after the trade date. The commitment to purchase
transactions securities on a when-issued or delayed delivery basis may
involve an element of risk because the value of the
securities is subject to market fluctuation, no interest
accrues to the purchaser prior to settlement of the
transaction, and at the time of delivery the market value may
be less than cost. A Fund commonly engages in when-issued
transactions in order to purchase or sell newly-issued
Municipal Obligations, and may engage in delayed delivery
transactions in order to manage its operations more
effectively. See the Statement of Additional Information for
further information about when-issued and delayed delivery
transactions.
Although the Funds have no present intent to do so, each Fund
Financial reserves the right to engage in certain hedging transactions
futures and involving the use of financial futures contracts, options on
options financial futures or options based on either an index of
transactions: long-term tax-exempt securities or on debt securities whose
prices, in the opinion of Nuveen Advisory, correlate with the
prices of the Fund's investments. These hedging transactions
The Funds do are designed to limit the risk of fluctuations in the prices
not presently of a Fund's investments. See the Statement of Additional
intend to use Information for further information on futures and options
futures or and associated risks.
options
Each Fund has adopted certain fundamental policies intended
Other to limit the risk of its investment portfolio. In accordance
Investment with these policies, each Fund may not:
policies and
restrictions: . invest more than 5% of its total assets in securities of
any one issuer, except that this limitation shall not apply
to securities of the U.S. Government, its agencies and
Each Fund will instrumentalities or to the investment of 25% of the Fund's
take steps to assets;
ensure that . invest more than 5% of its total assets in securities of
its assets are unseasoned issuers which, together with their predecessors,
not have been in operation for less than three years;
concentrated
in just a few
holdings [/R]
23
<PAGE>
. invest more than 10% of its total assets in illiquid
municipal lease obligations and other securities that are
unmarketable, illiquid or not readily marketable
(securities that cannot reasonably be sold within seven
days, including repurchase agreements maturing in more than
seven days);
. invest more than 25% of its total assets in securities of
issuers in any one industry, provided, however, that such
limitation shall not be applicable to Municipal Obligations
issued by governments or political subdivisions of
governments, and obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities;
. borrow money, except from banks for temporary or emergency
purposes and then only in an amount not exceeding (a) 10%
of the value of its total assets at the time of borrowing
or (b) one-third of the value of its total assets,
including the amount borrowed, in order to meet redemption
requests which might otherwise require the untimely
disposition of securities; or
. hold securities of a single bank, including securities
backed by a letter of credit of that bank, if these
holdings would exceed 10% of the total assets of the Fund.
In applying these policies, the "issuer" of a security is
deemed to be the entity whose assets and revenues are
committed to the payment of principal and interest on that
security, provided that the guarantee of an instrument will
generally be considered a separate security.
Except as specifically noted above or in the Statement of
Additional Information, the Fund's investment policies are
not fundamental and may be changed without shareholder
approval. For a more complete description of investment
restrictions that may be changed without a shareholder vote,
see the Statement of Additional Information.
24
<PAGE>
FLEXIBLE PRICING PROGRAM NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS [/R]
JULY 1, 1996
Each Fund The Fund has adopted a Flexible Pricing Program that offers
offers various you three alternative ways to purchase Fund shares (Classes
methods of A, C and R), each with a different combination of sales
purchasing charges, ongoing fees, eligibility requirements, and other
shares which features. The Program is designed to permit you and your
are designed financial adviser to choose the method of purchasing shares
to meet your that you believe is most beneficial given the amount of your
individual investment and current holdings of Fund shares, the length of
investment time you expect to hold your investment, and other relevant
needs and circumstances. A summary of the three alternatives is set
preferences forth below:
[/R]
<TABLE>
<CAPTION>
Fund Up-front Contingent deferred Annual 12b-1 Annual 12b-1
shares sales charge sales charge ("CDSC") distribution fee service fee
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 4.50% (1) None (2) None .25%
Class C None 1.00% (3) .75% .25%
Class R None None None None
</TABLE>
(1) Maximum up-front sales charge, which is reduced for
purchases of $50,000 or more. The up-front sales charge may
be reduced or waived for certain purchases.
(2) Certain Class A purchases at net asset value of $1
million or more may be subject to a 1% CDSC if redeemed
within 18 months of purchase.
(3) The CDSC is applicable to Class C Shares redeemed within
12 months of purchase. Class C Shares convert to Class A
Shares after six years, which reduces the ongoing expenses
borne by an investor.
For more information regarding features of each class, see
"How to Buy Fund Shares," "How to Redeem Fund Shares" and
"Distribution and Service Plan" below.
Which option is When you purchase Class A Shares of a Fund, you will normally
right for you? 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 invested at the time of purchase.
However, Class C Shares are subject to an annual distribution
fee which constitutes an asset-based sales charge whose
purpose is the same as an up-front sales charge. Class C
Shares automatically convert to Class A Shares six years
after purchase, which reduces the annual expenses you would
bear. This automatic conversion is designed to ensure that
holders of Class C Shares would pay over the six-year period
a distribution fee that is approximately the economic
equivalent of the one-time, up-front sales charge paid by
holders of Class A Shares on purchases of up to $50,000.
Class C Shares are subject to a CDSC of 1% if redeemed within
12 months of purchase. Class A Shares and Class C Shares are
also subject to annual service fees which are identical in
amount and are used to compensate Authorized [/R]
25
<PAGE>
Dealers for providing you with ongoing account services. You
may qualify for a reduced sales charge or a sales charge
waiver on a purchase of Class A Shares, as described below
under "How the Sales Charge on Class A Shares May Be Reduced
or Waived." Class R Shares are available for purchase at a
price equal to their net asset value, but only under certain
circumstances or for certain categories of investors, as
described below under "How to Buy Fund Shares--Class R
Shares."
In deciding whether to purchase Class A Shares, Class C
Shares or Class R Shares of a Fund, you should consider all
relevant factors, including the dollar amount of your
purchase, the length of time you expect to hold the shares
and whether a CDSC would apply, the amount of any applicable
up-front sales charge, the amount of any applicable
distribution or service fee that may be incurred while you
own the shares, and whether or not you will be reinvesting
income or capital gain distributions in additional shares,
whether or not you meet applicable eligibility requirements
or qualify for a sales charge waiver or reduction, and the
relative level of services that your financial adviser may
provide to different classes. Authorized Dealers and other
persons distributing a Fund's shares may receive different
compensation for selling different classes of shares.
Differences Each class of shares of a Fund represents an interest in the
between the same portfolio of investments. Each class of shares of a Fund
classes of is identical in all respects except that each class has its
shares own sales charge structure, each class bears its own class
expenses, including service and distribution fees, and each
class has exclusive voting rights with respect to any
distribution or service plan applicable to its shares. In
addition, the Class C Shares are subject to a conversion
feature and a CDSC of 1% if purchased on or after June 13,
1995 and redeemed within 12 months of purchase, as described
below. As a result of the differences in the expenses borne
by each class of shares, and differences in the purchase and
redemption activity for each class, net income per share,
dividends per share and net asset value per share will vary
among each Fund's classes of shares. [/R]
Dealer
Incentives Upon notice to all Authorized Dealers, Nuveen may reallow to
Authorized Dealers electing to participate up to the full
applicable Class A Share up-front sales charge during periods
and for transactions specified in the notice. The
reallowances made during these periods may be based upon
attainment of minimum sales levels. Further, Nuveen may from
time to time make additional reallowances only to certain
Authorized Dealers who sell or are expected to sell certain
minimum amounts of the Funds or other Nuveen Mutual Funds and
Nuveen UITs during
26
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
specified time periods. The staff of the Securities and
Exchange Commission takes the position that dealers who
receive 90% or more of the applicable sales charge may be
deemed underwriters under the Securities Act of 1933, as
amended.
Nuveen may also from time to time provide additional
promotional support to certain Authorized Dealers who sell or
are expected to sell certain minimum amounts of Nuveen Mutual
Funds and Nuveen UITs during specified time periods. Such
promotional support may include providing sales literature to
and holding informational or educational programs for the
benefit of such Authorized Dealers' representatives, seminars
for the public, and advertising and sales campaigns.
Specifically, Nuveen offers a program of advertising support
to Authorized Dealers under which Nuveen will pay or
reimburse the Authorized Dealer for up to one-half of
specified media costs incurred in the placement of
advertisements which jointly feature the Authorized Dealer
and Nuveen Funds and Nuveen UITs. Reimbursement to the
Authorized Dealer will be based on the number of its
financial advisers who have sold Nuveen Fund shares and UIT
units during the prior calendar year according to an
established schedule. Any such support would be provided by
Nuveen out of its own assets, and not out of the assets of
the Funds, and will not change the price an investor pays for
sales or the amount that a Fund will receive from such a
sale.
27
<PAGE>
HOW TO BUY FUND SHARES
CLASS A SHARES
Class A Shares You may purchase Class A Shares of any Fund at a public
are normally offering price equal to the applicable net asset value per
offered at share plus an up-front sales charge imposed at the time of
their net purchase as set forth below. You may qualify for a reduced
asset value sales charge, or the sales charge may be waived in its
plus an up- entirety, as described below under "How the Up-Front Sales
front sales Charge on Class A Shares May Be Reduced or Waived." Class A
charge Shares are also subject to an annual service fee of .25%. See
"Flexible Pricing Program" and "Distribution and Service
Plan." [/R]
The up-front sales charge schedule for each Fund's Class A
Shares is as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS REALLOWANCE AS
% OF PUBLIC % OF NET AMOUNT % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE INVESTED OFFERING PRICE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
$50,000 but less than
$100,000 4.25% 4.44% 3.75%
$100,000 but less than
$250,000 3.50% 3.63% 3.25%
$250,000 but less than
$500,000 2.75% 2.83% 2.50%
$500,000 but less than
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 but less than $2,500,000 0.00% 0.00% 1.00%
$2,500,000 but less than $5,000,000 0.00% 0.00% 0.50%
$5,000,000 and over 0.00% 0.00% 0.25%
</TABLE>
Class A Share Class A Share purchases of $1 million or more will be sold at
purchases of net asset value without an up-front sales charge. Nuveen will
$1 million and pay Authorized Dealers of record on such Class A Share
over may be purchases a commission of up to 1% of the amount of the
effected purchase. The investor agrees to pay to Nuveen a CDSC of 1%
without an of the purchase price or the redemption proceeds, whichever
up-front sales is less, if such shares are redeemed within 18 months of
charge but be purchase. Shares purchased by investors investing $1 million
subject to a or more who have made arrangements with Nuveen and whose
CDSC dealer of record waived the commission will not be subject to
the CDSC. See "How to Redeem Fund Shares--Contingent Deferred
Sales Charge." [/R]
The Funds receive the entire net asset value of all Class A
Shares that are sold. Nuveen retains the full applicable
sales charge from which it pays the uniform reallowances
shown above to Authorized Dealers. See "Flexible Pricing
Program--Dealer Incentives" above for more information about
reallowances and other compensation to Authorized Dealers.
28
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Certain commercial banks may make Class A Shares of the Funds
available to their customers on an agency basis. Pursuant to
the agreements between Nuveen and these banks, some or all of
the sales charge paid by a bank customer in connection with a
purchase of Class A Shares may be retained by or paid to the
bank. Certain banks and other financial institutions may be
required to register as securities dealers in certain states.
HOW THE UP-FRONT SALES CHARGE ON CLASS A SHARES MAY BE
REDUCED OR WAIVED
There are several ways to reduce or eliminate the sales
There are charge:
several ways . cumulative discount;
to reduce or .letter of intent;
eliminate the
sales charge .purchases with monies representing distributions from
Nuveen-sponsored UITs; [/R]
.group purchase programs;
.reinvestment of redemption proceeds from non-affiliated
funds; and
.special sales charge waivers for certain categories of
investors.
You may qualify for a reduced sales charge as shown above on
Cumulative a purchase of Class A Shares of any Fund if the amount of
Discount 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 adviser must notify Nuveen or SSI of any cumulative
discount whenever you plan to purchase Class A Shares of a
Fund that you wish to qualify for a reduced sales charge.
Letter of You may qualify for a reduced sales charge on a purchase of
Intent Class A Shares 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
complete the applicable section of the Application Form or
sign and deliver either to an Authorized Dealer or to SSI a
written Letter of Intent in a form acceptable to Nuveen. A
Letter of Intent states that you intend, but are not
obligated, to purchase over the next 13 months a stated total
amount of Class A Shares that would qualify you for a reduced
sales charge shown above. You may count shares of a Nuveen
Mutual Fund that you already own on which you paid an up-
front sales charge or an ongoing distribution fee and any
Class C Shares of a Nuveen Mutual Fund that you purchase over
the next 13 months towards completion of your investment
program, but you will receive a reduced sales charge only on
new Class A Shares you purchase with a sales charge over the
[/R]
29
<PAGE>
13 months. You cannot count towards completion of your
investment program Class A Shares that you purchase without a
sales charge through investment of distributions from a
Nuveen Mutual Fund or a Nuveen UIT, or otherwise.
By establishing a Letter of Intent, you agree that your first
purchase of Class A Shares of a Fund following execution of
the Letter of Intent will be at least 5% of the total amount
of your intended purchases. You further agree that shares
representing 5% of the total amount of your intended
purchases will be held in escrow pending completion of these
purchases. All dividends and capital gains distributions on
Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the
expiration of the 13 month period equal or exceed the amount
specified in your Letter of Intent, the Class A Shares held
in escrow will be transferred to your account. If the total
purchases, less redemptions, exceed the amount specified in
your Letter of Intent and thereby qualify for a lower sales
charge than the sales charge specified in your Letter of
Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher
sales charge paid will be used to purchase additional Class A
Shares on your behalf. If the total purchases, less
redemptions, are less than the amount specified, you must pay
Nuveen an amount equal to the difference between the amounts
paid for these purchases and the amounts which would have
been paid if the higher sales charge had been applied. If you
do not pay the additional amount within 20 days after written
request by Nuveen or your financial adviser, Nuveen will
redeem an appropriate number of your escrowed Class A Shares
to meet the required payment. By establishing a Letter of
Intent, you irrevocably appoint Nuveen as attorney to give
instructions to redeem any or all of your escrowed shares,
with full power of substitution in the premises.
You or your financial adviser must notify Nuveen or SSI
whenever you make a purchase of Fund shares that you wish to
be covered under the Letter of Intent option.
Reinvestment You may purchase Class A Shares without an up-front sales
of Nuveen Unit charge by reinvestment of distributions from any of the
Trust various unit investment trusts sponsored by Nuveen. There is
Distributions no initial or subsequent minimum investment requirement for
such reinvestment purchases. [/R]
If you are a member of a qualified group, you may purchase
Group Purchase Class A Shares of any Fund or of another Nuveen Mutual Fund
Programs at the reduced sales charge applicable to the group's
purchases taken as a whole. A "qualified group" is one which
has been
30
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
in existence for more than six months, has a purpose other
than investment, has five or more participating members, has
agreed to include Fund sales publications in mailings to
members and has agreed to comply with certain administrative
requirements relating to its group purchases.
Under any group purchase program, the minimum monthly
investment in Class A Shares of any particular Fund or
portfolio by each participant is $25, and the minimum monthly
investment in Class A Shares of any particular Fund or
portfolio for all participants in the program combined is
$1,000. No certificates will be issued for any participant's
account. All dividends and other distributions by a Fund will
be reinvested in additional Class A Shares of the same Fund.
No participant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself
and each participant must fill out special application
materials, which the group administrator may obtain from the
group's financial adviser, by checking the applicable box on
the enclosed Application Form or by calling Nuveen toll-free
at 800-621-7227. See the Statement of Additional Information
for more complete information about "qualified groups" and
group purchase programs.
Reinvestment You may also purchase Class A Shares at net asset value
of Redemption without a sales charge if the purchase takes place through a
Proceeds from broker-dealer and represents the reinvestment of the proceeds
Unaffiliated of the redemption of shares of one or more registered
Funds investment companies not affiliated with Nuveen. You must
provide appropriate documentation that the redemption
occurred not more than 60 days prior to the reinvestment of
the proceeds in Class A Shares, and that you either paid an
up-front sales charge or were subject to a contingent
deferred sales charge in respect of the redemption of such
shares of such other investment company. [/R]
Special Sales Class A Shares of any Fund may be purchased at net asset
Charge Waivers value without a sales charge and in any amount by officers,
directors and retired directors of the Funds; bona fide,
full-time and retired employees of Nuveen or its affiliates,
any parent company of Nuveen, and subsidiaries thereof, or
their immediate family members (as defined below); any person
who, for at least 90 days, has been an officer, director or
bona fide employee of any Authorized Dealer, or their
immediate family members; officers and directors of bank
holding companies that make Fund shares available directly or
through subsidiaries or bank affiliates; bank or broker-
affiliated trust departments; investors who purchase through
broker-dealer sponsored mutual fund purchase programs offered
on a periodic fee, asset-based fee or no transaction [/R]
31
<PAGE>
fee basis; and clients of investment advisers, financial
planners or other financial intermediaries that charge
periodic or asset-based fees for their services. For further
details about these special categories and their eligibility
requirements, please consult your financial adviser or the
Statement of Additional Information, or call Nuveen at
800.621.7227.
Any Class A Shares purchased pursuant to a special sales
charge waiver must be acquired for investment purposes and on
the condition that they will not be transferred or resold
except through redemption by the Funds. You or your 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."
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 minimum
purchase requirements as established by the Funds.
In General In determining the amount of your purchases of Class A Shares
of any Fund that may qualify for a reduced sales charge, the
following purchases may be combined: (1) all purchases by a
trustee or other fiduciary for a single trust, estate or
fiduciary account; (2) all purchases by individuals and their
immediate family members (i.e., their spouses and their
children under 21 years of age); or (3) all purchases made
through a group purchase program as described above. [/R]
The reduced sales charge programs may be modified or
discontinued by the Funds at any time upon prior written
notice to shareholders of the Funds.
FOR MORE INFORMATION ABOUT THE PURCHASE OF CLASS A SHARES OR
REDUCED SALES CHARGE PROGRAMS, OR TO OBTAIN THE REQUIRED
APPLICATION FORMS, CALL NUVEEN TOLL-FREE AT 800. 621.7227.
CLASS C SHARES
Class C Shares You may purchase Class C Shares of any Fund at a public
may be offering price equal to the applicable net asset value per
purchased at share without any up-front sales charge. Class C Shares are
their net subject to an annual distribution fee to reimburse Nuveen for
asset value, costs incurred in connection with the sale of C Shares. Class
and are C Shares are also subject to an annual service fee to
subject to an compensate Authorized Dealers for providing you with ongoing
annual financial advice and other services. See "Distribution and
distribution Service Plan."
fee [/R]
32
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
An investor purchasing Class C Shares agrees to pay a CDSC of
1% if Class C Shares are redeemed within 12 months of
purchase. See "How to Redeem Fund Shares." The Class C shares
of the applicable Fund will effectively retain the CDSC; the
Fund will pay the amount of the CDSC to Nuveen, but will be
reimbursed by Nuveen in an equal amount by a reduction in the
distribution fees payable to Nuveen.
Class C Shares will automatically convert to Class A Shares
six years after purchase. All such conversions will be done
at net asset value without the imposition of any sales
charge, fee, or other charge, so that the value of each
shareholder's account immediately before conversion will be
the same as the value of the account immediately after
conversion. Class C Shares acquired through reinvestment of
distributions will convert into Class A Shares based on the
date of the initial purchase to which such shares relate. For
this purpose, Class C Shares acquired through reinvestment of
distributions will be attributed to particular purchases of
Class C Shares in accordance with such procedures as the
Board of Directors may determine from time to time. The
automatic conversion of Class C Shares to Class A Shares six
years after purchase was designed to ensure that holders of
Class C Shares would pay over the six-year period a
distribution fee that is approximately the economic
equivalent of the one-time, up-front sales charge paid by
holders of Class A Shares on purchases of up to $50,000.
Class C Shares that are converted to Class A Shares will no
longer be subject to an annual distribution fee, but they
will remain subject to an annual service fee which is
identical in amount for both Class C Shares and Class A
Shares. Since net asset value per share of the Class C Shares
and the Class A Shares may differ at the time of conversion,
a shareholder may receive more or fewer Class A Shares than
the number of Class C Shares converted. Any conversion of
Class C Shares into Class A Shares will be subject to the
continuing availability of an opinion of counsel or a private
letter ruling from the Internal Revenue Service to the effect
that the conversion of shares would not constitute a taxable
event under federal income tax law. Conversion of Class C
Shares into Class A Shares might be suspended if such an
opinion or ruling were no longer available.
33
<PAGE>
CLASS R SHARES
Class R Shares If you own Fund shares as of September 6, 1994, those shares
are offered at have been designated as Class R Shares. Purchases of
their net additional Class R Shares of any Fund, which will not be
asset value subject to any sales charge or any distribution or service
fee, will be limited to the following circumstances. You may
purchase Class R Shares with monies representing
distributions from Nuveen-sponsored UITs if, prior to
September 6, 1994, you had purchased such UITs and elected to
reinvest distributions from such UITs in shares of a Fund.
You may also purchase Class R Shares with monies representing
dividends and capital gain distributions on Class R Shares of
a Fund. You may purchase Class R Shares if you are making a
purchase of $1 million or more of Fund shares in a single
transaction. Finally, you may purchase Class R Shares if you
are within the following specified categories of investors
who are also eligible to purchase Class A Shares at net asset
value without an up-front sales charge: officers, directors
and retired directors of the Funds; bona fide, full-time and
retired employees of Nuveen, any parent company of Nuveen,
and subsidiaries thereof, or their immediate family members;
any person who, for at least 90 days, has been an officer,
director or bona fide employee of any Authorized Dealer, or
their immediate family members; officers and directors of
bank holding companies that make Fund shares available
directly or through subsidiaries or bank affiliates; bank or
broker-affiliated trust departments; investors who purchase
through broker-dealer sponsored mutual fund purchase programs
offered on a periodic fee, asset-based fee or no transaction
fee basis; and clients of investment advisers, financial
planners or other financial intermediaries that charge
periodic or asset-based fees for their services. [/R]
If you are eligible to purchase either Class R Shares or
Class A Shares of a Fund without a sales charge at net asset
value, you should be aware of the differences between these
two classes of shares. Class A Shares are subject to an
annual service fee to compensate Authorized Dealers for
providing you with ongoing account services. Class R Shares
are not subject to a service fee and consequently holders of
Class R Shares may not receive the same types or levels of
services from Authorized Dealers. In choosing between Class A
Shares and Class R Shares, you should weigh the benefits of
the services to be provided by Authorized Dealers against the
annual service fee imposed upon the Class A Shares.
34
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
INITIAL AND SUBSEQUENT PURCHASES OF SHARES
The Funds You may buy Fund shares through Authorized Dealers or by
offer a number directing your financial adviser to call Nuveen toll-free at
of convenient 800.843.6765. You may pay for your purchase by Federal
ways to Reserve draft or by check made payable to "Nuveen [ ]
purchase Fund, Class [A], [C], [R]," delivered to the financial
shares adviser through whom the investment is to be made for
forwarding to the Funds' shareholder services agent, SSI.
When making your initial investment, you must also furnish
the information necessary to establish your Fund account by
completing and enclosing with your payment the attached
Application Form. After your initial investment, you may make
subsequent purchases at any time by forwarding to SSI a check
in the amount of your purchase made payable to "Nuveen
[ ] Fund, Class [A], [C], [R]," and indicating on the
check your account number. All payments must be in U.S.
dollars and should be sent directly to SSI at its address
listed on the back cover of this Prospectus. A check drawn on
a foreign bank or payable other than to the order of a Fund
generally will not be acceptable. You may also wire Federal
Funds directly to SSI, but you may be charged a fee for this.
For instructions on how to make Fund purchases by wire
transfer, call Nuveen toll-free at 800.621.7227, between the
hours of 8:30 a.m. and 8:00 p.m. Eastern Time.
MINIMUM INVESTMENT REQUIREMENTS
Generally, your first purchase of any class of a Fund's
shares must be for $1,000 or more. Additional purchases may
be in amounts of $100 or more. These minimums may be changed
at any time by the Funds. There are exceptions to these
minimums for shareholders who qualify under one or more of
the Funds' automatic deposit, group purchase or reinvestment
programs.
PURCHASE PRICE
The price at which the purchase of Fund shares is effected is
based on the next calculation of the Fund's net asset value
after the order is placed. The Fund's net asset value per
share is determined as of 4:00 p.m. Eastern Time on each day
the New York Stock Exchange is open for business. See "Net
Asset Value," below for a description of how net asset value
is calculated.
SYSTEMATIC INVESTMENT PROGRAMS
The Funds offer you several opportunities to capture the
benefits of "dollar cost averaging" through systematic
investment programs. In a regularly followed dollar cost
averaging program, you would purchase more shares when Fund
share prices are lower and fewer shares when Fund share
prices are higher, so that the average price paid for Fund
shares is less than the average price of Fund shares over the
same time
35
<PAGE>
period. Dollar cost averaging does not assure profits or
protect against losses in a steadily declining market. Since
dollar cost averaging involves continuous investment
regardless of fluctuating price levels, you should consider
your financial ability to continue investing in declining as
well as rising markets before deciding to invest in this way.
The chart below shows the cumulative effect that compound
interest can have on a systematic investment program.
The Power of a
Systematic
Investment
Program
LOGO
SOURCE: NUVEEN MARKETING RESEARCH DEPARTMENT
36
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
In the above example, it is assumed that $100 is added to an
investment account every month for 20 years. From the same
$1,000 beginning, the chart shows the amount that would be in
the account after 20 years, assuming no interest and interest
compounded annually at the rates of 4%, 5% and 6%.
This chart is designed to illustrate the effects of compound
interest, and is not intended to predict the results of an
actual investment in a Fund. There are several important
differences between the Funds and the hypothetical investment
program shown. This example assumes no gain or loss in the
net asset value of the investment over the entire 20-year
period, whereas the net asset value of each of the Funds will
rise and fall due to market conditions or other factors,
which could have a significant impact on the total value of
your investment. Similarly, this example shows four steady
interest rates over the entire 20-year period, whereas the
dividend rates of the Funds can be expected to fluctuate over
time. The Funds may provide additional information to
investors and advisers illustrating the benefits of
systematic investment programs and dollar cost averaging.
THE FUNDS OFFER TWO DIFFERENT TYPES OF SYSTEMATIC INVESTMENT
PROGRAMS:
Automatic
Deposit Plan Once you have established a Fund account in one of the Funds,
you may make regular investments in an amount of $25 or more
each month by authorizing SSI to draw preauthorized checks on
your bank account. There is no obligation to continue
payments and you may terminate your participation at any time
at your discretion. No charge in addition to the applicable
sales charge is made in connection with this Plan, and there
is no cost to the Funds. To obtain an application form for
the Automatic Deposit Plan, check the applicable box on the
enclosed Application Form or call Nuveen toll-free at
800.621.7227. [/R]
Payroll Direct Once you have established a Fund account in one of the Funds,
Deposit Plan you may, with your employer's consent, make regular
investments in Fund shares of $25 or more per pay period by
authorizing your employer to deduct this amount automatically
from your paycheck. There is no obligation to continue
payments and you may terminate your participation at any time
at your discretion. No charge in addition to the applicable
sales charge is made for this Plan, and there is no cost to
the Funds. To obtain an application form for the Payroll
Direct Deposit Plan, check the applicable box on the enclosed
Application Form or call Nuveen toll-free at 800.621.7227.
[/R]
37
<PAGE>
OTHER SHAREHOLDER PROGRAMS
Exchange You may exchange shares of a class of any Fund for shares of
Privilege the same or equivalent class of another Nuveen Mutual Fund
with reciprocal exchange privileges, at net asset value
without a sales charge, by sending a written request to the
applicable Fund, c/o Shareholder Services, Inc., P.O. Box
5330, Denver, CO 80217-5330. Similarly, Class A Shares, Class
C Shares and Class R Shares of another Nuveen Mutual Fund
purchased subject to a sales charge may be exchanged for the
same class of shares of any Fund at net asset value without a
sales charge. Exchanges of shares from any Nuveen money
market fund will be made into Class A Shares, Class C Shares
or Class R Shares of any Fund at the public offering price,
which includes an up-front sales charge in the case of Class
A Shares. If, however, a sales charge has previously been
paid on the investment represented by the exchanged shares
(i.e., the shares to be exchanged originally were issued in
exchange for shares on which a sales charge was paid), the
exchange of shares from a Nuveen money market fund will be
made into Class A Shares at net asset value without any up-
front sales charge. Shares of any class of a Fund may be
exchanged for shares of any Nuveen money market fund. [/R]
No CDSC will be charged on the exchange of Class C Shares of
any Fund for Class C Shares of any other Nuveen Mutual fund
or shares of any Nuveen money market fund. The 12 month
holding period for purposes of the CDSC applicable to Class C
Shares will continue to run during any period in which Class
C Shares of the Fund, Class C Shares of any other Nuveen
Mutual Fund or shares of a Nuveen money market fund are held.
The shares to be purchased must be offered in your state of
residence and you must have held the shares you are
exchanging for at least 15 days. The total value of exchanged
shares must at least equal the minimum investment requirement
of the Nuveen Mutual Fund being purchased. For federal income
tax purposes, any exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before making
any exchange, you should obtain the Prospectus for the Nuveen
Mutual Fund you are purchasing and read it carefully. If the
registration of the account for the Fund you are purchasing
is not exactly the same as that of the fund account from
which the exchange is made, written instructions from all
holders of the account from which the exchange is being made
must be received, with signatures guaranteed by a member of
an approved Medallion Guarantee Program or in such other
manner as may be acceptable to the Fund. You may also
exchange shares by telephone if you authorize telephone
exchanges by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at
38
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
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.
The exchange privilege is not intended to permit the Funds to
be used as vehicles for short-term trading. Excessive
exchange activity may interfere with portfolio management,
raise expenses, and otherwise have an adverse effect on all
shareholders. In order to limit excessive exchange activity
and in other circumstances where Fund management believes
doing so would be in the best interest of a Fund, the Funds
reserve the right to revise or terminate the exchange
privilege, or limit the amount or number of exchanges or
reject any exchange. Shareholders would be notified of any
such action to the extent required by law.
Reinstatement If you have redeemed Class A Shares of the Funds or Class A
Privilege Shares of any other Nuveen Mutual Fund that were subject to a
sales charge or a CDSC, you have up to one year to reinvest
all or part of the full amount of the redemption in the same
class of shares of the Fund at net asset value. This
reinvestment privilege can be exercised only once for any
redemption, and reinvestment will be made at the net asset
value of the appropriate class of Fund shares next calculated
after reinstatement. If you reinstate shares that were
subject to a CDSC, your holding period as of the redemption
date will also be reinstated. The tax consequences of any
capital gain realized on a redemption will not be affected by
reinstatement, but a capital loss may be disallowed in whole
or in part depending on the timing and amount of the
reinvestment. [/R]
Fund Direct You can use Fund Direct to link your Fund account to your
account at your bank or other financial institution to enable
you to send money electronically between those accounts to
perform a variety of account transactions. These include
purchases of shares by telephone, investments under Automatic
Deposit Plan, and sending dividends and distributions,
redemption payments or Automatic Withdrawal Plan payments
directly to your bank account. Please refer to the
Application for details or call SSI for more information.
[/R]
Fund Direct privileges must be requested via a Fund Direct
Application you obtain by calling 800.621.7227. Fund Direct
privileges will apply to each shareholder
39
<PAGE>
listed in the registration on your account as well as to your
Authorized Dealer representative of record unless and until
SSI receives written instructions terminating or changing
those privileges. After you establish Fund Direct for your
account, any change of bank account information must be made
by signature-guaranteed instructions to SSI signed by all
shareholders who own the account.
Purchases may be made by telephone only after your account
has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call SSI at
800.621.7227. The purchase payment will be debited from your
bank account.
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM, CALL
NUVEEN TOLL-FREE AT 800.621.7227.
ADDITIONAL INFORMATION
If you choose to invest in a Fund, an account will be opened
and maintained for you by SSI, the Funds' shareholder
services agent. Share certificates will be issued to you only
upon written request to SSI, and no certificates will be
issued for fractional shares. Each Fund reserves the right to
reject any purchase order and to waive or increase minimum
investment requirements. A change in registration or transfer
of shares held in the name of your financial adviser's firm
can only be made by an order in good form from the financial
adviser acting on your behalf.
Authorized Dealers are encouraged to open single master
accounts. However, some Authorized Dealers may wish to use
SSI's sub-accounting system to minimize their internal
recordkeeping requirements. An Authorized Dealer or other
investor requesting shareholder servicing or accounting other
than the master account or sub-accounting service offered by
SSI will be required to enter into a separate agreement with
another agent for these services for a fee that will depend
upon the level of services to be provided.
Subject to the rules and regulations of the Securities and
Exchange Commission, Nuveen Insured 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 suspension
shall affect your right of redemption as described below.
40
<PAGE>
DISTRIBUTION AND SERVICE PLAN NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS [/R]
JULY 1, 1996
Each Fund has adopted a plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, which
provides that Class C Shares will be subject to an annual
distribution fee, and that both Class A Shares and Class C
Shares will be subject to an annual service fee. Class R
Shares will not be subject to either distribution or service
fees.
The distribution fee applicable to Class C Shares under each
Fund's Plan will be payable to reimburse Nuveen for services
and expenses incurred in connection with the distribution of
Class C Shares. The distribution fee primarily reimburses
Nuveen for providing compensation to Authorized Dealers,
including Nuveen, either at the time of sale or on an ongoing
basis. The other expenses for which Nuveen may be reimbursed
include, without limitation, expenses of printing and
distributing prospectuses to persons other than shareholders
of the Fund, expenses of preparing, printing and distributing
advertising and sales literature and reports to shareholders
used in connection with the sale of Class C Shares, certain
other expenses associated with the distribution of Class C
Shares, and any other distribution-related expenses that may
be authorized from time to time by the Board of Directors.
The service fee applicable to Class A Shares and Class C
Shares under each Fund's Plan will be payable to Nuveen, to
be used to compensate Authorized Dealers, including Nuveen,
in connection with the provision of ongoing account services
to shareholders. These services may include establishing and
maintaining shareholder accounts, answering shareholder
inquiries and providing other personal services to
shareholders.
Each Fund may spend up to .25 of 1% per year of the average
daily net assets of Class A Shares as a service fee under the
Plan applicable to Class A Shares. Each Fund may spend up to
.75 of 1% per year of the average daily net assets of Class C
Shares less the amount of any CDSC received by Nuveen as to
which no reinstatement privilege has been exercised, as a
distribution fee and up to .25 of 1% per year of the average
daily net assets of Class C Shares as a service fee under the
Plan applicable to Class C Shares.
41
<PAGE>
HOW TO REDEEM FUND SHARES
You may require a Fund at any time to redeem for cash your
shares of that Fund. All shares will be redeemed at the net
asset value next computed after instructions and required
documents and certificates, if any, are received in proper
form, as described below. However, with respect to certain
Class A and Class C shares, as further described below, any
applicable contingent deferred sales charge will be deducted
from the proceeds of the redemption. There is no charge for
redemption of Class R Shares.
Contingent Class A Shares are normally redeemed at net asset value,
Deferred Sales without any CDSC. However, in the case of Class A Shares
Charge purchased at net asset value because the purchase amount
exceeded $1 million, where the Authorized Dealer did not
waive the sales commission, a CDSC of 1% is imposed on any
redemption within 18 months of purchase. Class C Shares are
redeemed at net asset value, without any CDSC, except that a
CDSC of 1% is imposed upon redemption of Class C Shares that
are redeemed within 12 months of purchase. See "How to Buy
Fund Shares." The CDSC will be the lower of (i) the net asset
value of shares at the time of purchase or (ii) the net asset
value of shares at the time of redemption. [/R]
In determining whether a CDSC is payable, a Fund will first
redeem shares not subject to any charge, and then in the
reverse order in which the shares were purchased, except if
another order of redemption would result in a lower charge or
you specify another order. No CDSC is charged on shares
purchased as a result of automatic reinvestment of dividends
or capital gains paid. In addition, no CDSC will be charged
on exchanges of shares into another Nuveen Mutual Fund or
money market fund. Your holding period is calculated on a
monthly basis and begins the first day of the month in which
the order for investment is received. The CDSC is calculated
based on the lower of the redeemed shares' cost or net asset
value at the time of the redemption and is deducted from the
redemption proceeds. Nuveen receives the amount of any CDSC
you pay on Class A Shares. The CDSC may be waived under
certain special circumstances, as described in the Statement
of Additional Information.
THE FUNDS OFFER A VARIETY OF REDEMPTION OPTIONS
By Written
Request You may redeem shares by sending a written request for
redemption directly to the applicable Fund, c/o Shareholder
Services, Inc., P.O. Box 5330, Denver, CO 80217-5330,
accompanied by duly endorsed certificates, if issued.
Requests for redemption and share certificates, if issued,
must be signed by each shareholder and, if the redemption
proceeds exceed $50,000 or are payable other than to the
shareholder of record at the address of record (which address
may not have been changed in the [/R]
42
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
preceding 30 days), the signature must be guaranteed by a
member of an approved Medallion Guarantee Program or in such
other manner as may be acceptable to the Fund. You will
receive payment equal to the net asset value per share next
determined after receipt by the Fund of a properly executed
redemption request in proper form. A check for the redemption
proceeds will be mailed to you within seven days after
receipt of your redemption request. For accounts registered
in the name of a broker-dealer, payment will be forwarded
within three business days. However, if any shares to be
redeemed were purchased by check within 15 days prior to the
date the redemption request is received, a Fund will not mail
the redemption proceeds until the check received for the
purchase of shares has cleared, which may take up to 15 days.
By TEL-A-CHECK If you have authorized telephone redemption and your account
address has not changed within the last 30 days, you can
redeem shares that are held in non-certificate form and that
are worth $50,000 or less by calling Nuveen at 800.621.7227.
While you or anyone authorized by you may make telephone
redemption requests, redemption checks will be issued only in
the name of the shareholder of record and will be mailed to
the address of record. If your telephone request is received
prior to 4:00 p.m. Eastern Time, the redemption check will
normally be mailed the next business day. For requests
received after 4:00 p.m. Eastern Time, the redemption will be
effected at 4:00 p.m. Eastern Time the next business day, the
shares redeemed earn income through the next business day and
the check will normally be mailed on the second business day
after the request. [/R]
By TEL-A-WIRE If you have authorized TEL-A-WIRE redemption or establish
or Fund Direct Fund Direct privileges, you can take advantage of the
following expedited redemption procedures to redeem shares
held in non-certificate form that are worth at least $1,000.
You may make TEL-A-WIRE redemption requests by calling Nuveen
at 800.621.7227. If a redemption request is received by 4:00
p.m. Eastern Time, the shares redeemed will earn income
through the day the request is made and the redemption will
be made as of 4:00 p.m. that day. If the redemption request
is received after 4:00 p.m. Eastern Time, the redemption will
be effected at 4:00 p.m. the following business day and the
shares redeemed earn income through that day. Redemption
proceeds will normally be wired on the second business day
following the redemption, but may be delayed one additional
business day if the Federal Reserve Bank of Boston or the
Federal Reserve Bank of New York is closed on the day
redemption proceeds would ordinarily be wired. The Funds
reserve the right to charge a fee for TEL-A-WIRE. Proceeds of
redemptions through Fund Direct will normally be wired to
your Fund Direct bank account on the second or third business
day after the redemption. [/R]
43
<PAGE>
Before you may redeem shares by TEL-A-CHECK, TEL-A-WIRE or
Fund Direct, you must complete the appropriate authorization
section of the enclosed Application Form or the Fund Direct
Application Form and return it to Nuveen or SSI. If you did
not authorize one or more of these redemption methods when
you opened your account, you may obtain a redemption
authorization form by writing the Funds or by calling Nuveen
toll-free at 800.621.7227. Proceeds of share redemptions made
by TEL-A-WIRE will be transferred by Federal Reserve wire
only to the commercial bank account specified by the
shareholder on the application form. You must send a written
request to Nuveen or SSI in order to establish multiple
accounts, or to change the account or accounts designated to
receive redemption proceeds. These requests must be signed by
each account owner with signatures guaranteed by a member of
an approved Medallion Guarantee Program or in such 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
authorized Nuveen as their agent to accept orders from
financial advisers by wire or telephone for the redemption of
Fund shares. The redemption price is the net asset value next
determined following receipt of an order placed by the
financial adviser. A Fund makes payment for the redeemed
shares to the financial adviser who placed the order promptly
upon presentation of required documents with signatures
guaranteed as described above. Neither the Funds nor Nuveen
charge any redemption fees other than the CDSC as described
above. However, your financial adviser may charge you for
serving as agent in the redemption of shares.
The Funds reserve the right to refuse telephone redemptions
and, at their option, may limit the timing, amount or
frequency of these redemptions. Telephone redemption
procedures may be modified or terminated at any time, on 30
days' notice, by the Funds. The Funds, SSI and Nuveen will
not be liable for following telephone instructions reasonably
believed to be genuine. The Funds employ procedures
reasonably designed to confirm that telephone instructions
are genuine. These procedures include recording all telephone
instructions and requiring up to three forms of
identification prior to acting upon a caller's instructions.
If a Fund does not follow reasonable procedures for
protecting shareholders against loss on telephone
transactions, it may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
44
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
If you own Fund shares currently worth at least $10,000, you
Automatic may establish an Automatic Withdrawal Plan by completing an
Withdrawal application form for the Plan. You may obtain an application
Plan form by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at
800.621.7227.
The Plan permits you to request periodic withdrawals on a
monthly, quarterly, semi-annual or annual basis in an amount
of $50 or more. Depending upon the size of the withdrawals
requested under the Plan and fluctuations in the net asset
value of Fund shares, these withdrawals may reduce or even
exhaust your account.
The purchase of Class A Shares, other than through
reinvestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usually
be disadvantageous because you will be paying a sales charge
on any Class A Shares you purchase at the same time you are
redeeming shares. Similarly, use of the Automatic Withdrawal
Plan for Class C Shares held less than 12 months or certain
Class A Shares held less than 18 months may be
disadvantageous because the newly-purchased Shares may be
subject to the 1% CDSC.
Each Fund may suspend the right of redemption of Fund shares
General or delay payment more than seven days (a) during any period
when the New York Stock Exchange is closed (other than
customary weekend and holiday closings), (b) when trading in
the markets the Fund normally utilizes is restricted, or an
emergency exists as determined by the Securities and Exchange
Commission so that trading of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for any other periods that the Securities
and Exchange Commission by order may permit for protection of
Fund shareholders.
Each Fund may, from time to time, establish a minimum total
investment for Fund shareholders, and each Fund reserves the
right to redeem your shares if your investment is less than
the minimum after giving you at least 30 days' notice. If any
minimum total investment is established, and if your account
is below the minimum, you will be allowed 30 days following
the notice in which to purchase sufficient shares to meet the
minimum. So long as a Fund continues to offer shares at net
asset value to holders of Nuveen UITs who are investing their
Nuveen UIT distributions, no minimum total investment will be
established for that Fund.
45
<PAGE>
MANAGEMENT OF THE FUNDS
The management of Nuveen Insured Tax-Free Bond Fund, Inc.,
Board of including general supervision of the duties performed for
Directors each Fund by Nuveen Advisory under the Investment Management
Agreement, is the responsibility of its Board of Directors.
Nuveen Advisory acts as the investment adviser for and
Investment manages the investment and reinvestment of the assets of each
Adviser of the Funds. Its address is Nuveen Advisory Corp., 333 West
Wacker Drive, Chicago, Illinois 60606. Nuveen Advisory also
administers the Funds' business affairs, provides office
facilities and equipment and certain clerical, bookkeeping
and administrative services, and permits any of its officers
or employees to serve without compensation as directors or
officers of Nuveen Insured 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 53 exchange-traded municipal securities funds
(the "Nuveen Exchange-Traded Funds"). Each of these invests
substantially all of its assets in investment grade quality,
tax-free municipal securities, and except for money-market
funds, adheres to the value investing strategy described
previously. As of the date of this Prospectus, Nuveen
Advisory manages approximately $30 billion in assets held by
the Nuveen Mutual Funds and the Nuveen Exchange-Traded Funds.
Nuveen Advisory is a wholly-owned subsidiary of John Nuveen &
Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois
60606, the oldest and largest investment banking firm (based
on number of employees) specializing in the underwriting and
distribution of tax-exempt securities. Nuveen, the principal
underwriter of the Funds' shares, is sponsor of the Nuveen
Tax-Exempt Unit Trust, a registered unit investment trust. It
is also the principal underwriter for the Nuveen Mutual
Funds, and served as co-managing underwriter for the shares
of the Nuveen Exchange-Traded Funds. Over 1,000,000
individuals have invested to date in Nuveen's tax-exempt
funds and trusts. Founded in 1898, Nuveen is a subsidiary of
The John Nuveen Company which, in turn, is approximately 80%
owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul
is located in St. Paul, Minnesota, and is principally engaged
in providing property-liability insurance through
subsidiaries.
46
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS [/R]
JULY 1, 1996
For the services and facilities furnished by Nuveen Advisory,
the Funds have agreed to pay annual management fees as
follows:
<TABLE>
<CAPTION>
MANAGEMENT FEE
FOR THE
MANAGEMENT FEE MASSACHUSETTS
FOR THE FUND AND THE
AVERAGE DAILY NET ASSET VALUE NATIONAL FUND NEW YORK FUND
---------------------------------------------------------------
<S> <C> <C>
For the first $125 million .5000 of 1% .5500 of 1%
For the next $125 million .4875 of 1% .5375 of 1%
For the next $250 million .4750 of 1% .5250 of 1%
For the next $500 million .4625 of 1% .5125 of 1%
For the next $1 billion .4500 of 1% .5000 of 1%
For assets over $2 billion .4250 of 1% .4750 of 1%
</TABLE>
All fees and expenses are accrued daily and deducted before
payment of dividends to investors. In addition to the
management fee of Nuveen Advisory, each Fund pays all its
other costs and expenses and a portion of Nuveen Insured Tax-
Free Bond Fund, Inc.'s general administrative expenses
allocated in proportion to the net assets of each Fund. In
order to prevent total operating expenses (excluding any
distribution or service fees) in any fiscal year from
exceeding .975 of 1% of the average daily net asset value of
any class of shares of each Fund, Nuveen Advisory has agreed
to waive all or a portion of its management fees or reimburse
certain expenses of each Fund. Nuveen Advisory may also
voluntarily agree to reimburse additional expenses from time
to time, which voluntary reimbursements may be terminated at
any time in its discretion. For information regarding the
management fees and total operating expenses of each class of
shares of each of the Funds for the year ended February 29,
1996, see the table under "Summary of Fund Expenses" on page
3 of this Prospectus.
Overall portfolio management strategy for the Funds is
Portfolio determined by Nuveen Advisory under the general supervision
Management and direction of Thomas C. Spalding, Jr., a Vice President of
the Nuveen Advisory and of the Funds. Mr. Spalding has been
employed by Nuveen since 1976 and by Nuveen Advisory since
1978 and has responsibility with respect to the portfolio
management of all Nuveen open-end and exchange-traded funds
managed by Nuveen Advisory. See the Statement of Additional
Information for further information about Mr. Spalding.
The day-to-day management of the National Fund is the
responsibility of Steven J. Krupa, a Vice President of Nuveen
Advisory since October 1990. He currently manages eight
Nuveen-sponsored investment companies.
47
<PAGE>
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 of the Massachusetts Fund since May 1993. Prior to
joining Nuveen Advisory, he was an analyst in Nuveen's
Research Department. Mr. Peterson currently manages nine
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. He currently manages nine Nuveen-
sponsored investment companies.
Consistent with the Funds' investment objective, the day-to-
day management of each Fund is characterized by an emphasis
on value investing, a process which 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 Insured
Tax-Free Bond Fund, Inc.
48
<PAGE>
HOW THE FUNDS SHOW PERFORMANCE
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Each Fund from time to time may quote various performance
measures in order to illustrate the historical returns
available from an investment in the Fund. These performance
measures, which are determined for each class of shares of a
Fund, include:
Yield YIELD is a standardized measure of the net investment income
Information earned over a specified 30-day period, expressed as a
percentage of the offering price per share at the end of the
period. Yield is an annualized figure, which means that it is
assumed that the same level of net investment income is
generated over a one-year period.
TAXABLE EQUIVALENT YIELD is the yield that a taxable
investment would need to generate in order to equal the yield
on an after-tax basis for an investor in a stated tax
bracket. Taxable equivalent yield will consequently be higher
than its yield. See the chart below and Appendix B for
examples of taxable equivalent yields and how you can use
them to compare other investments with investments in the
Funds.
HISTORICAL YIELDS
LOGO
49
<PAGE>
As this chart shows, interest rates on various long- and
short-term investments will fluctuate over time, and not
always in the same direction or to the same degree. For
convenience, the taxable equivalent yield of the Bond Buyer
20 Index shown here was calculated using a 36% federal income
tax rate. Other federal income tax rates, both higher and
lower, were in existence for all or part of the period shown
in the chart. This chart is not intended to predict the
future direction of interest rates. See the discussion below
under the subcaption "General" for a description of the
indices and investments shown in the chart.
DISTRIBUTION RATE is determined based upon the latest
dividend, annualized, expressed as a percentage of the
offering price per share at the end of the measurement
period. Distribution rate may sometimes be different from
yield because it may not reflect amortization of bond
premiums to the extent such premiums arise after the bonds
were purchased.
AVERAGE ANNUAL TOTAL RETURN and CUMULATIVE TOTAL RETURN
Total return figures for a specified period measure both the net
information investment income generated by, and the effect of any
realized and unrealized appreciation or depreciation of, an
investment in a Fund, assuming the reinvestment of all
dividends and capital gain distributions. Average annual
total return figures generally are quoted for at least one-,
five- and ten-year (or life-of-fund, if shorter) periods and
represent the average annual percentage change over those
periods. Cumulative total return figures are not annualized
and represent the cumulative percentage or dollar value
change over the period specified.
TAXABLE EQUIVALENT TOTAL RETURN represents the total return
that would be generated by a taxable income fund that
produced the same amount of net asset value appreciation or
depreciation and after-tax income as a Fund in each year,
assuming a specified tax rate. The taxable equivalent total
return of a Fund will therefore be higher than its total
return over the same period.
From time to time, a Fund may compare its risk-adjusted
performance with other investments that may provide different
levels of risk and return. For example, a Fund may compare
its risk level, as measured by the variability of its
periodic returns, or its RISK-ADJUSTED TOTAL RETURN, with
those of other funds or groups of funds. Risk-adjusted total
return would be calculated by adjusting each investment's
total return to account for the risk level of the investment.
A Fund may also compare its TAX-ADJUSTED TOTAL RETURN with
that of other funds or groups of funds. This measure would
take into account the tax-exempt nature of
50
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
exempt-interest dividends and the payment of income taxes on
a Fund's distributions of net realized capital gains and
ordinary income.
Any given performance quotation or performance comparison for
General a Fund is based on historical earnings and should not be
considered as representative of the performance of the Fund
for any future period. See the Statement of Additional
Information for further information concerning the Funds'
performance. For information as to current yield and other
performance information regarding the Funds, call Nuveen
toll-free at 800.621.7227.
A comparison of the current yield or historic performance of
a Fund to those of other investments is one element to
consider in making an informed investment decision. Each Fund
may from time to time in its advertising and sales materials
compare its current yield or total return with the yield or
total return on taxable investments such as corporate or U.S.
Government bonds, bank certificates of deposit (CDs) or money
market funds. These taxable investments have investment
characteristics that differ from those of the Funds. U.S.
Government bonds, for example, are long-term investments
backed by the full faith and credit of the U.S. Government,
and bank CDs are generally short-term, FDIC-insured
investments, which pay fixed principal and interest but are
subject to fluctuating rollover rates. Money market funds are
short-term investments with stable net asset values,
fluctuating yields and special features enhancing liquidity.
Additionally, each Fund may compare its current yield or
total return history with a widely-followed, unmanaged
municipal market index such as the Bond Buyer 20 Index, the
Merrill Lynch 500 Municipal Market Index or the Lehman
Brothers Municipal Bond Index. Comparative performance
information may also be used from time to time in advertising
or marketing a Fund's shares, including data from Lipper
Analytical Services, Inc., Morningstar, Inc. and other
industry publications.
51
<PAGE>
DISTRIBUTIONS AND TAXES
HOW THE FUNDS PAY DIVIDENDS
Each Fund will pay monthly dividends to shareholders at a
Each Fund pays level rate that reflects the past and projected net income of
monthly the Fund and that results, over time, in the distribution of
dividends substantially all of the Fund's net income. Net income of
each Fund consists of all interest income accrued on its
portfolio less all expenses of Nuveen Insured 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
distributions, which might otherwise have been reduced by a
decrease in a Fund's monthly net income due to fluctuations
in investment income or expenses. As a result, the
distributions paid by a Fund for any particular monthly
period may be more or less than the amount of net income
actually earned by a Fund during such period. Undistributed
net income is included in a Fund's net asset value and,
correspondingly, distributions from previously undistributed
net income are deducted from a Fund's net asset value. It is
not expected that this dividend policy will impact the
management of the Fund's portfolios.
Dividends paid by a Fund with respect to each class of shares
will be calculated in the same manner and at the same time,
and will be paid in the same amount except that different
distribution and service fees and any other expense relating
to a specific class of shares will be borne exclusively by
that class. As a result, dividends per share will vary among
a Fund's classes of shares.
Each Fund will declare dividends on the 9th of each month (or
if the 9th is not a business day, on the immediately
preceding business day), payable to shareholders of record as
of the close of business on that day. This distribution
policy is subject to change, however, by the Board of
Directors without prior notice to or approval by
shareholders. Dividends will be paid on the first business
day of the following month and are reinvested in additional
shares of a Fund at net asset value unless you have elected
that your dividends be paid in cash. Net realized capital
gains, if any, will be paid not less frequently than annually
and will be reinvested at net asset value in additional
shares of the Fund unless you have elected to receive capital
gains distributions in cash.
TAX MATTERS
The following federal and state tax discussion, together with
the additional information on state taxes in Appendix A, is
intended to provide you with an overview of the impact on the
Funds or their shareholders of federal as well as state and
local income tax provisions. These tax provisions are subject
to change by
52
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
legislative or administrative action, and any changes may be
applied retroactively. Because the Funds' taxes are a complex
matter, you should consult your tax adviser for more detailed
information concerning the taxation of the Funds and the
federal, state and local tax consequences to Fund
shareholders.
Each Fund intends to qualify, as it has in prior years, under
Federal Income Subchapter M of the Internal Revenue Code of 1986, as amended
Tax: (the "Code") for tax treatment as a regulated investment
company. In order to qualify for treatment as a regulated
Income investment company, a Fund must satisfy certain requirements
dividends are relating to the sources of its income, diversification of its
free from assets and distribution of its income to shareholders. As a
regular regulated investment company, a Fund will not be subject to
federal income federal income tax on the portion of its net investment
tax income and net realized capital gains that is currently
distributed to shareholders. Each Fund also intends to
satisfy conditions that will enable it to pay "exempt-
interest dividends" to its shareholders. This means that you
will not be subject to regular federal income tax on Fund
dividends you receive from income on Municipal Obligations.
Your share of a Fund's taxable income, if any, from income on
taxable temporary investments and net short-term capital
gains, will be taxable to you as ordinary income. If a Fund
purchases a Municipal Obligation at a market discount, any
gain realized by the Fund upon sale or redemption of the
Municipal Obligation will be treated as taxable ordinary
income to the extent such gain does not exceed the market
discount, and any gain realized in excess of the market
discount will be treated as capital gains. Distributions, if
any, of net long-term capital gains are taxable as long-term
capital gains, regardless of the length of time you have
owned shares of a Fund. You are required to pay tax on all
taxable distributions even if these distributions are
automatically reinvested in additional Fund shares. Certain
distributions paid by a Fund in January of a given year may
be taxable to shareholders as if received the prior December
31. As long as a Fund qualifies as a regulated investment
company under the Code, distributions will not qualify for
the dividends received deduction for corporate shareholders.
Investors should consider the tax implications of buying
shares immediately prior to a distribution. Investors who
purchase shares shortly before the record date for a
distribution will pay a per share price that includes the
value of the anticipated distribution and will be taxed on
the distribution (unless it is exempt from tax) even though
the distribution represents a return of a portion of the
purchase price.
If in any year a Fund should fail to qualify under Subchapter
M for tax treatment as a regulated investment company, the
Fund would incur a regular corporate federal
53
<PAGE>
income tax upon its taxable income for that year, and the
entire amount of your distributions would be taxable as
ordinary income.
The Code does not permit you to deduct the interest on
borrowed monies used to purchase or carry tax-free
investments, such as shares of a Fund. Under Internal Revenue
Service rules, the purchase of Fund shares may be considered
to have been made with borrowed monies even though those
monies are not directly traceable to the purchase of those
shares.
Because the net asset value of each Fund's shares includes
net tax-exempt interest earned by the Fund but not yet
declared as an exempt-interest dividend, each time an exempt-
interest dividend is declared, the net asset value of the
Fund's shares will decrease in an amount equal to the amount
of the dividend. Accordingly, if you redeem shares of a Fund
immediately prior to or on the record date of a monthly
exempt-interest dividend, you may realize a taxable gain even
though a portion of the redemption proceeds may represent
your pro rata share of undistributed tax-exempt interest
earned by the Fund.
The redemption or exchange of Fund shares normally will
result in capital 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 disallowed to the extent
of any distribution of exempt-interest dividends received on
these shares and will be treated as a long-term capital loss
to the extent of any distribution of long-term capital gain
received on these shares.
If you receive social security or railroad retirement
benefits you should note that tax-exempt income is taken into
account in calculating the amount of these benefits that may
be subject to federal income tax.
The Funds may invest in private activity bonds, the interest
on which is not exempt from federal income tax to
"substantial users" of the facilities financed by these bonds
or "related persons" of such substantial users. Therefore,
the Funds may not be appropriate investments for you if you
are considered either a substantial user or a related person.
Each Fund may invest up to 20% of its net assets in AMT
Bonds, the interest on which is a specific tax preference
item for purposes of computing the alternative minimum tax on
corporations and individuals. However, the National Fund to
date has not invested in AMT Bonds and has no present
intention of doing so. If your tax
54
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
liability is determined under the alternative minimum tax,
you will be taxed on your share of a Fund's exempt-interest
dividends that were paid from income earned on AMT Bonds. In
addition, the alternative minimum taxable income for
corporations is increased by 75% of the difference between an
alternative measure of income ("adjusted current earnings")
and the amount otherwise determined to be the alternative
minimum taxable income. Interest on all Municipal
Obligations, and therefore all distributions by the Fund that
would otherwise be tax exempt, is included in calculating a
corporation's adjusted current earnings.
Each Fund is required in certain circumstances to withhold
31% of taxable dividends and certain other payments paid to
non-corporate holders of shares who have not furnished to the
Fund their correct taxpayer identification number (in the
case of individuals, their social security number) and
certain certifications, or who are otherwise subject to back-
up withholding.
Each January, your Fund will notify you of the amount and tax
status of Fund distributions for the preceding year.
Under the laws of the respective state of each Fund, exempt-
State Income interest dividends (as determined for federal income tax
Tax Matters: purposes) you receive from income earned by the Massachusetts
and New York Funds on Municipal Obligations issued by their
respective states or a political subdivision thereof
Dividends are generally will be exempt from that state's (or political
free from subdivision's) applicable personal income tax. The exemption
applicable from state personal income tax applies whether you receive a
state personal Fund's dividends in cash or reinvest them in additional
income tax shares of the Fund.
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.
55
<PAGE>
NET ASSET VALUE
Net asset Net asset value of the shares of a Fund will be determined
value is separately for each class of shares. The net asset value per
calculated share of a class of shares will be computed by dividing the
daily value of a Fund's assets attributable to the class, less the
liabilities attributable to the class, by the total number of
shares of the class outstanding. The net asset value per
share is expected to vary among a Fund's Class A Shares,
Class C Shares and Class R Shares, principally due to the
differences in sales charges, distribution and service fees
and other class expenses borne by each class. [/R]
Net asset value of the shares of each Fund will be determined
by The Chase Manhattan Bank, N.A., the Funds' custodian, as
of 4:00 p.m. Eastern Time on each day the New York Stock
Exchange is normally open for trading. In determining the net
asset value, the custodian uses the valuations of portfolio
securities furnished by a pricing service approved by the
Board of Directors. The pricing service values portfolio
securities at the mean between the quoted bid and asked
prices or the yield equivalent when quotations are readily
available. Securities for which quotations are not readily
available (which are expected to constitute a majority of the
securities held by the Funds) are valued at fair value as
determined by the pricing service using methods that include
consideration of the following: yields or prices of municipal
bonds of comparable quality, type of issue, coupon, maturity
and rating; indications as to value from securities dealers;
and general market conditions. The pricing service may employ
electronic data processing techniques and/or a matrix system
to determine valuations. The procedures of the pricing
service and its valuations are reviewed by the officers of
Nuveen Insured Tax-Free Bond Fund, Inc. under the general
supervision of its Board of Directors.
56
<PAGE>
GENERAL INFORMATION
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
If you have any questions about the Funds or other Nuveen
Mutual Funds, call Nuveen toll-free at 800.621.7227.
Custodian and The Custodian of the assets of the Funds is The Chase
Transfer and Manhattan Bank, N.A., 770 Broadway, New York, NY 10003. The
Shareholder custodian performs custodial fund accounting and portfolio
Services Agent accounting services. Shareholder Services, Inc., P.O. Box
5330, Denver, CO 80217-5330, performs bookkeeping, data
processing and administrative services for the maintenance of
shareholder accounts. [/R]
Nuveen Insured Tax-Free Bond Fund, Inc. is an open-end
Organization diversified management series investment company under the
Investment Company Act of 1940. Each Fund constitutes a
separate series of Nuveen Insured Tax-Free Bond Fund, Inc.,
and is itself an open-end diversified management mutual fund.
Nuveen Insured Tax-Free Bond Fund, Inc. was incorporated in
Minnesota on July 14, 1986. Nuveen Insured Tax-Free Bond
Fund, Inc. is currently authorized to issue an aggregate of
2,500,000,000 shares of common stock, $.01 par value,
consisting of 500,000,000 shares of the Nuveen Massachusetts
Insured Tax-Free Value Fund, 500,000,000 shares of the Nuveen
New York Insured Tax-Free Value Fund, 1,000,000,000 shares of
the Nuveen Insured Municipal Bond Fund and 500,000,000 shares
to be issued in such classes or series as the Board of
Directors 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 portfolio of
investments and has equal rights as to voting, redemption,
dividends and liquidation, except that each bears different
class expenses, including different distribution and service
fees, and each has exclusive voting rights with respect to
any distribution or service plan applicable to its shares.
There are no conversion, preemptive or other subscription
rights, except that Class C Shares of a Fund automatically
convert into Class A Shares of the same Fund, as described
above. The Board of Directors has the right to establish
additional series and classes of shares in the future, to
change the series or classes and to determine the
preferences, voting powers, rights and privileges thereof.
The Funds are not required and do not intend to hold annual
meetings of shareholders. Shareholders owning more than 10%
of the outstanding shares of a Fund have the right to call a
special meeting to remove directors or for any other purpose.
57
<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 the states of Massachusetts and New
York. This information 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 contained in
these statements and documents. See the Statement 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 financial position.
MASSACHUSETTS
In recent years, the Commonwealth of Massachusetts and
certain of its public bodies and municipalities, particularly
the City of Boston, have faced serious financial difficulties
which have affected the credit standing and borrowing
abilities of Massachusetts and these respective entities and
may have contributed to higher interest rates on debt
obligations. As a result of these difficulties, the rating
agencies lowered the credit ratings 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 expenditures for
state government programs exceeded current revenues, and
although fiscal 1992, 1993, 1994 and 1995 results indicate
that revenues exceeded expenditures, no assurance can be
given that lower than expected tax revenues 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
Massachusetts Fund. 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
conditions, many of which are not within the control of the
Commonwealth.
A-1
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
NEW YORK
New York State has historically been one of the wealthiest
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 relative economic
affluence. Statewide, urban centers have experienced
significant changes involving migration of the more affluent
to the suburbs and an influx of generally less affluent
residents. Regionally, the older Northeast cities have
suffered because of the relative success that the South and
the West have had in attracting 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 recovery.
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.
The State's economic growth continues to lag behind the
nation's, 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
during 1996 reflecting continued moderate expansion of the
national economy.
The Governor announced on April 3, 1996 that the State ended
its 1995-96 fiscal year with an operating surplus of
approximately $445 million. The State Legislature enacted the
State's 1995-96 fiscal year budget on June 7, 1995, more than
two months after the start of that fiscal year.
As of January 19, 1996, the updated 1995-96 State Financial
Plan (the "Plan") projected total general fund receipts and
disbursements each of $32.7 billion, representing reductions
in receipts and disbursements of $144 million and $103
million, respectively, from the amounts set forth in the
1995-96 State budget, as adopted by the legislature. The Plan
projected a General Fund balance of approximately $172
million at the close of the 1995-96 fiscal year.
The Governor issued a proposed State budget for the 1996-97
fiscal year on December 15, 1995, which projected a balanced
general fund and receipts and disbursements of $31.3 billion
and $31.2 billion, respectively. As of June 10, 1996, the
State legislature had not yet enacted, nor had the Governor
and the legislature reached an agreement on, the budget for
the 1996-97 fiscal year commencing on
A-2
<PAGE>
April 1, 1996. Due to continuing uncertainties as to the
amount of federal aid and proposed changes to the Medicaid
program resulting from the federal budget impasse, the
Governor proposed an alternate budget for fiscal year 1996-97
to replace over $1 billion of Medicaid reimbursement which
might not be forthcoming. The Governor and the State's
legislature have agreed on or proposed a series of short-term
stopgap spending measures to fund State payrolls and advances
to certain municipalities and certain State programs. The
delay in the enactment of the budget may negatively affect
certain proposed actions and reduce projected savings.
Following enactment of the State's 1995-96 fiscal year
budget, New York City adopted a 1996 fiscal year budget in
June 1995, which provided for $31.4 billion in spending.
However, in January 1996, unexpected budget gaps totalling
approximately $760 million for the 1996 fiscal year were
identified and the Mayor called for additional spending cuts.
On March 1, 1996, Moody's indicated that its Baa1 rating of
New York City's general obligation bonds was under review
pending adoption of the City's budget for fiscal year 1997.
S&P placed the City on negative credit watch in January 1995.
On January 30, 1996, the Mayor outlined his proposed $31
billion budget for the 1997 fiscal year which included $2.0
billion of deficit reduction measures, more than half of
which were dependent upon State actions in the 1996 fiscal
year. On May 9, 1996, the Mayor issued a substantially
revised fiscal year 1997 budget of $32.7 billion that would
reduce spending from the prior year and would include $1.1
billion in budget cuts affecting City agencies. The revised
budget would restore approximately $300 million in tax cuts
and seek a four year extension of the surcharge on the City's
personal income tax. The Governor and the legislature have
not agreed upon the level of State aid to the City during the
1997 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. In addition, due to the
continuing federal government impasse, the City is uncertain
as to the level of federal aid it will receive and the impact
of changes in federal law upon its operations and tax
receipts. If State or Federal aid in later years is less than
the levels projected in the Mayor's proposal, projected
savings may be negatively impacted and the Mayor may be
required to propose significant additional spending
reductions or tax increases to balance the City's budget for
the 1997 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 entities could
be adversely affected.
A-3
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Absent appropriate legislative relief, the City may also face
limitations on its borrowing capacity after 1998 under the
State's Constitution that will prevent it from borrowing
additional funds, as a result of the decrease in real estate
values within the City. The inability to finance capital
improvements would increase the City's budget gaps in later
years.
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 summary 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 qualifies as a regulated investment company
for federal income 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
attributable 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 Massachusetts gross income capital
gain dividends designated by the Massachusetts Fund to the
extent such dividends are attributable to gains derived from
Municipal Obligations 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
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, provided such dividends are identified in a
timely written notice mailed to shareholders of the
Massachusetts Fund. Individual shareholders of the
Massachusetts Fund will be required to include all remaining
dividends in their Massachusetts income.
A-4
<PAGE>
With respect to corporate shareholders of the Massachusetts
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 deducted 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 income taxation
will not be required to include in their New York adjusted
gross income that portion of their exempt-interest dividends
(as determined for federal income tax purposes) which the New
York Fund clearly identifies 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 federal law. Distributions to individual
shareholders of dividends derived from interest that does not
qualify as exempt-interest dividends (as determined for
federal income tax purposes), distributions of exempt-
interest dividends (as determined for federal income tax
purposes) which are derived from interest on Municipal
Obligations issued by governmental authorities in states
other than New York State, and distributions derived from
interest 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 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.
For purposes of New York State franchise taxation (or New
York City general corporation taxation), 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, 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,
A-5
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
income and gains derived from the New York Fund will be
subject to such tax, except for exempt-interest dividends (as
determined for federal income tax purposes) which the New
York Fund clearly identifies as directly attributable to
interest earned on New York Municipal Obligations.
A-6
<PAGE>
APPENDIX B--TAXABLE EQUIVALENT YIELD TABLES
TAXABLE EQUIVALENT YIELD TABLES AND THE EFFECT OF TAXES AND
INTEREST RATES ON INVESTMENTS
The following tables show the effects for individuals of
federal income taxes or the combined effects of federal,
state, and local (if applicable) income taxes on:
. what you would have to earn on a taxable investment to
equal a given tax-free yield; and
. the amount that those subject to a given combined tax rate
would have to put into a tax-free investment in order to
generate the same after-tax income as a taxable investment.
These tables are for illustrative purposes only and are not
intended to predict the actual return you might earn on a
Fund investment. The Funds occasionally may advertise their
performance in similar tables using other current combined
tax rates than those shown here. The combined tax rates used
in these tables have been rounded to the nearest one-half of
one percent. They are based upon published 1996 marginal
federal tax rates and marginal state tax rates currently
available and scheduled to be in effect, and do not take into
account changes in tax rates that are proposed from time to
time. A taxpayer's marginal tax rate is affected by both his
taxable income and his adjusted gross income. The table
assumes that federal taxable income is equal to state income
subject to tax, and for cases in which more than one state
rate falls within a federal bracket, the highest state rate
corresponding to the highest income within that federal
bracket is used. The tables assume taxpayers are not subject
to any alternative minimum taxes and deduct any state income
taxes paid on their federal income tax returns. Unless noted
otherwise, the tables do not reflect any local taxes or any
taxes other than personal income taxes. They also reflect the
effect of the current federal tax limitations on itemized
deductions and personal exemptions, which were designed to
phase out certain benefits of these deductions for higher
income taxpayers. These limitations are subject to certain
maximums, which depend on the number of exemptions claimed
and the total amount of the taxpayer's itemized deductions.
For example, the limitation on itemized deductions will not
cause a taxpayer to lose more than 80% of his allowable
itemized deductions, with certain exceptions. The combined
tax rates shown here may be higher or lower than your actual
combined tax rate. A higher combined tax rate would tend to
make the dollar amounts in the third table lower, while a
lower combined tax rate would make the amounts higher. You
should consult your tax adviser to determine your actual
combined tax rate.
B-1
<PAGE>
NUVEEN INSURED MUNICIPAL BOND FUND
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Marginal federal tax rates for joint taxpayers with four
personal exemptions
<TABLE>
<CAPTION>
Tax-free yield
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
--------------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted
Taxable Gross
Income Income Federal
(1,000's) (1,000's) Tax Rate Taxable equivalent yield
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 $ 0 -
- 40.1 118.0 15.0% 4.12 4.71 5.29 5.88 6.47 7.06 7.65
40.1
- 96.9 0 - 118.0 28.0 4.86 5.56 6.25 6.94 7.64 8.33 9.03
118.0 -
177.0 29.0 4.93 5.63 6.34 7.04 7.75 8.45 9.15
96.9 - 147.7 0 - 118.0 31.0 5.07 5.80 6.52 7.25 7.97 8.70 9.42
118.0 -
177.0 32.0 5.15 5.88 6.62 7.35 8.09 8.82 9.56
177.0 -
299.5 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
118.0 -
147.7 - 263.8 177.0 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
177.0 -
299.5 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
Over 299.5 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
177.0 -
Over 263.8 299.5 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
Over 299.5 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
</TABLE>
B-2
<PAGE>
NUVEEN INSURED MUNICIPAL BOND FUND-CONTINUED
Marginal federal tax rates for single taxpayers with one
personal exemption
<TABLE>
<CAPTION>
Tax-free yield
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
---------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted
Taxable Gross
Income Income Federal
(1,000's) (1,000's) Tax Rate Taxable equivalent yield
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 24.0 $ 0 - 118.0 15.0% 4.12 4.71 5.29 5.88 6.47 7.06 7.65
24.0 - 58.2 0 - 118.0 28.0 4.86 5.56 6.25 6.94 7.64 8.33 9.03
58.2 - 121.3 0 - 118.0 31.0 5.07 5.80 6.52 7.25 7.97 8.70 9.42
118.0 - 240.5 32.5 5.19 5.93 6.67 7.41 8.15 8.89 9.63
121.3 - 263.8 118.0 - 240.5 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
Over 240.5 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
Over 263.8 Over 240.5 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
</TABLE>
For an equal after-tax return, your tax-free investment may
be less
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
For an after-tax return
equal to that provided
by a 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 4% taxable
investment $39,429 $34,500 $30,667 $27,600 $25,091 $23,000 $21,231
$50,000 in a 5% taxable
investment 49,286 43,125 38,333 34,500 31,364 28,750 26,538
$50,000 in a 6% taxable
investment 59,143 51,750 46,000 41,400 37,636 34,500 31,846
$50,000 in a 7% taxable
investment 69,000 60,375 53,667 48,300 43,909 40,250 37,154
$50,000 in a 8% taxable
investment 78,857 69,000 61,333 55,200 50,182 46,000 42,462
</TABLE>
*Dollar amounts in the table reflect a 31.0% combined federal
and state tax rate.
For example, $50,000 in a 6% taxable investment earns the
same after-tax return as $41,400 in a 5% tax-free Nuveen
investment.
B-3
<PAGE>
MASSACHUSETTS
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Combined marginal tax rates for Massachusetts joint taxpayers
with four personal exemptions
<TABLE>
<CAPTION>
Tax-free yield
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
---------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 40.1 $ 0 - 118.0 25.0% 4.67 5.33 6.00 6.67 7.33 8.00 8.67
40.1 -
96.9 0 - 118.0 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
118.0 - 177.0 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
96.9 - 147.7 0 - 118.0 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
118.0 - 177.0 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
177.0 - 299.5 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
147.7 - 263.8 118.0 - 177.0 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
177.0 - 299.5 47.0 6.60 7.55 8.49 9.43 10.38 11.32 12.26
Over 299.5 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
Over 263.8 177.0 - 299.5 50.5 7.07 8.08 9.09 10.10 11.11 12.12 13.13
Over 299.5 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
</TABLE>
**The Massachusetts state tax rate shown is the rate at which
interest is taxed. Certain other types of income are taxed at
other rates.
B-4
<PAGE>
MASSACHUSETTS-CONTINUED
Combined marginal tax rates for Massachusetts single
taxpayers with one personal exemption
<TABLE>
<CAPTION>
Tax-free yield
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
-------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 -
$ 0 - 24.0 118.0 25.0% 4.67 5.33 6.00 6.67 7.33 8.00 8.67
24.0 -
58.2 0 - 118.0 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
58.2 - 121.3 0 - 118.0 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
118.0 -
240.5 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
121.3- 118.0 -
263.8 240.5 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
Over 240.5 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
Over 263.8 Over 240.5 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
</TABLE>
For an equal after-tax return, your tax-free investment may
be less
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
For an after-tax return
equal to that provided
by a 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 4% taxable
investment $ 34,571 $30,250 $26,889 $24,200 $22,000 $20,167 $18,615
$50,000 in a 5% taxable
investment 43,214 37,813 33,611 30,250 27,500 25,208 23,269
$50,000 in a 6% taxable
investment 51,857 45,375 40,333 36,300 33,000 30,250 27,923
$50,000 in a 7% taxable
investment 60,500 52,938 47,056 42,350 38,500 35,292 32,577
$50,000 in a 8% taxable
investment 69,143 60,500 53,778 48,400 44,000 40,333 37,231
</TABLE>
*The dollar amounts in the table reflect a 39.5% combined
federal and state tax rate.
**The Massachusetts state tax rate shown is the rate at which
interest is taxed. Certain other types of income are taxed at
other rates.
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.
B-5
<PAGE>
NEW YORK STATE
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Combined federal and New York State marginal tax rates for
joint taxpayerswith four personal exemptions
<TABLE>
<CAPTION>
Tax-free yield
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
----------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 0 -
40.1 100.0 21.00% 4.43 5.06 5.70 6.33 6.96 7.59 8.23
100.0 -
118.0 22.00 4.49 5.13 5.77 6.41 7.05 7.69 8.33
40.1 -
96.9 0 - 100.0 33.00 5.22 5.97 6.72 7.46 8.21 8.96 9.70
100.0 -
118.0 34.00 5.30 6.06 6.82 7.58 8.33 9.09 9.85
118.0 -
150.0 35.00 5.38 6.15 6.92 7.69 8.46 9.23 10.00
150.0 -
177.0 34.00 5.30 6.06 6.82 7.58 8.33 9.09 9.85
96.9 -
147.7 0 - 100.0 36.00 5.47 6.25 7.03 7.81 8.59 9.38 10.16
100.0 -
118.0 36.50 5.51 6.30 7.09 7.87 8.66 9.45 10.24
118.0 -
150.0 37.50 5.60 6.40 7.20 8.00 8.80 9.60 10.40
150.0 -
177.0 37.00 5.56 6.35 7.14 7.94 8.73 9.52 10.32
177.0 -
299.5 39.50 5.79 6.61 7.44 8.26 9.09 9.92 10.74
147.7 - 118.0 -
263.8 150.0 42.50 6.09 6.96 7.83 8.70 9.57 10.43 11.30
150.0 -
177.0 41.50 5.98 6.84 7.69 8.55 9.40 10.26 11.11
177.0 -
299.5 44.50 6.31 7.21 8.11 9.01 9.91 10.81 11.71
Over 299.5 41.50 5.98 6.84 7.69 8.55 9.40 10.26 11.11
177.0 -
Over 263.8 229.5 48.00 6.73 7.69 8.65 9.62 10.58 11.54 12.50
Over 229.5 45.00 6.36 7.27 8.18 9.09 10.00 10.91 11.82
</TABLE>
B-6
<PAGE>
NEW YORK STATE-CONTINUED
Combined federal and New York State marginal tax rates for
single taxpayers with one personal exemption
<TABLE>
<CAPTION>
Tax-free yield
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
----------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 0 -
24.0 100.0 21.0% 4.43 5.06 5.70 6.33 6.96 7.59 8.23
100.0 -
118.0 21.5 4.46 5.10 5.73 6.37 7.01 7.64 8.28
24.0 -
58.2 0 - 100.0 33.0 5.22 5.97 6.72 7.46 8.21 8.96 9.70
100.0 -
118.0 33.5 5.26 6.02 6.77 7.52 8.27 9.02 9.77
58.2 -
121.3 0 - 100.0 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
100.0 -
118.0 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
118.0 -
150.0 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
150.0 -
240.5 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
121.3 - 118.0 -
263.8 150.0 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
150.0 -
240.5 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
Over 240.5 41.5 5.98 6.84 7.69 8.55 9.40 10.26 11.11
Over 263.8 Over 240.5 45.0 6.36 7.27 8.18 9.09 10.00 10.91 11.82
</TABLE>
B-7
<PAGE>
NEW YORK STATE NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS [/R]
JULY 1, 1996 [/R]
For an equal after-tax return, your tax-free investment may
be less*
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
$50,000 Investment 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
- --------------------------------------------------------------------------------------------------------------------
<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>
*Dollar amounts in the table reflect a 36.0% combined federal
and state tax rate.
**The table also reflects the New York State supplemental
income tax based upon a taxpayer's New York State taxable
income and New York State adjusted gross income. This
supplemental tax results in an increased marginal state
income tax rate to the extent a taxpayer's New York State
adjusted gross income ranges between $100,000 and $150,000.
Although the table does reflect the effect of the state
limitation on itemized deductions that corresponds to the
federal limitation, it does not reflect additional
limitations under which a New York taxpayer could lose up to
an additional 50 percent of his otherwise allowable itemized
deductions, because the effect of this limitation varies
according to the particular amount of his itemized
deductions. The application of this limit may result in a
higher tax rate than indicated in the table for joint
taxpayers with a New York adjusted gross income of $150,000
to $200,000 or $475,000 to $525,000 or single taxpayers with
a New York adjusted gross income of $100,000 to $150,000 or
$475,000 to $525,000. The table assumes that a taxpayer's New
York adjusted gross income equals his federal adjusted gross
income. The table does not reflect the treatment of various
state and city tax credits that could affect the tax rate of
particular New York taxpayers.
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.
B-8
<PAGE>
NEW YORK STATE AND NEW YORK CITY
Combined federal, New York State and New York City marginal
tax rates for joint taxpayers with four personal exemptions
<TABLE>
<CAPTION>
Tax-free yield
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
------------------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 40.1 $ 0 - 100.0 25.0% 4.67 5.33 6.00 6.67 7.33 8.00 8.67
100.0 - 118.0 25.5 4.70 5.37 6.04 6.71 7.38 8.05 8.72
40.1 - 96.9 0 - 100.0 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
100.0 - 118.0 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
118.0 - 150.0 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
150.0 - 177.0 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
96.9 -
147.7 0 - 100.0 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
100.0 - 118.0 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
118.0 - 150.0 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
150.0 - 177.0 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
177.0 - 299.5 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
147.7 - 263.8 118.0 - 150.0 45.0 6.36 7.27 8.18 9.09 10.00 10.91 11.82
150.0 - 177.0 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
177.0 - 299.5 47.0 6.60 7.55 8.49 9.43 10.38 11.32 12.26
Over 299.5 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
Over 263.8 177.0 - 299.5 50.5 7.07 8.08 9.09 10.10 11.11 12.12 13.13
Over 299.5 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
</TABLE>
B-9
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS PROSPECTUS
JULY 1, 1996
Combined federal, New York State and New York City marginal
tax rates for single taxpayers with one personal exemption
<TABLE>
<CAPTION>
Tax-free yield
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
-----------------------------------------------------------------------------------
<CAPTION>
Federal
Federal Adjusted Combined
Taxable Gross State and
Income Income Federal
(1,000's) (1,000's) Tax Rate** Taxable equivalent yield
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 0 -
24.0 100.0 25.0% 4.67 5.33 6.00 6.67 7.33 8.00 8.67
100.0 -
118.0 25.0 4.67 5.33 6.00 6.67 7.33 8.00 8.67
24.0 -
58.2 0 - 100.0 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
100.0 -
118.0 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
58.2 -
121.3 0 - 100.0 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
100.0 -
118.0 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
118.0 -
150.0 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
150.0 -
240.5 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
121.3 - 118.0 -
263.8 150.0 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
150.0 -
240.5 45.0 6.36 7.27 8.18 9.09 10.00 10.91 11.82
Over 240.5 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
Over 263.8 Over 240.5 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
</TABLE>
B-10
<PAGE>
NEW YORK STATE AND NEW YORK CITY-CONTINUED
For an equal after-tax return, your tax-free investment may
be less
<TABLE>
<CAPTION>
Your tax-free investment may be less*
------------------------------------------------------------------------------------
$50,000 Investment 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 in a 4% taxable
investment $34,571 $30,250 $26,889 $24,200 $22,000 $20,167 $18,615
$50,000 in a 5% taxable
investment $43,214 $37,813 $33,611 $30,250 $27,500 $25,208 $23,269
$50,000 in a 6% taxable
investment $51,857 $45,375 $40,333 $36,300 $33,000 $30,250 $27,923
$50,000 in a 7% taxable
investment $60,500 $52,938 $47,056 $42,350 $38,500 $35,292 $32,577
$50,000 in a 8% taxable
investment $69,143 $60,500 $53,778 $48,400 $44,000 $40,333 $37,231
</TABLE>
*The dollar amounts in the table reflect a 39.5% combined
federal, state and New York City tax rate.
**The table also reflects the New York State supplemental
income tax based upon a taxpayer's New York State taxable
income and New York State adjusted gross income. This
supplemental tax results in an increased marginal state
income tax rate to the extent a taxpayer's New York State
adjusted gross income ranges between $100,000 and $150,000.
Although the table does reflect the effect of the state
limitation on itemized deductions that corresponds to the
federal limitation, it does not reflect additional
limitations under which a New York taxpayer could lose up to
an additional 50 percent of his otherwise allowable itemized
decutions, because the effect of this limitation varies
according to the particular amount of his itemized
deductions. The application of this limit may result in a
higher tax rate than indicated in the table for joint
taxpayers with a New York adjusted gross income of $150,000
to $200,000 or $475,000 to $525,000 or single taxpayers with
a New York adjusted gross income of $100,000 to $150,000 or
$475,000 to $525,000. The table assumes that a taxpayer's New
York adjusted gross income equals his federal adjusted gross
income. The table does not reflect the treatment of various
state and city tax credits that could affect the tax rate of
particular New York taxpayers.
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.
B-11
<PAGE>
Nuveen
Tax-Free
Mutual Funds
Application
Form
<TABLE>
<CAPTION>
<S> <C>
Nuveen Tax-Free Mutual Funds Application Form
Note: The application form may not be used for all types of accounts and certain optional
fund services. Please obtain special application materials by checking the boxes in
application item 7 or by calling Nuveen toll-free at 800.621.7227.
1 ACCOUNT REGISTRATION AND INFORMATION
Please check the box that [_] Individual
describes the type of
account you are opening, Last name, first, initial Social security number
and complete all the
information which applies -------------------------------------------------------------------------------------------------
to your account type.
[_] Joint tenant (if any)
Registration for two or more
persons will be as joint tenants Last name, first, initial
with right of survivorship
unless noted otherwise. -------------------------------------------------------------------------------------------------
[_] Gift to a minor
Name of trustee State name under the Uniform Gift to Minors Act
-------------------------------------------------------------------------------------------------
Minor's name (only one minor may be named) Minor's social security number
--------------------------------------------------------------------------------------------------
[_] Trust [_] Custodian [_] Service organization
Trustee's or custodian's name Trust's agreement date (mandatory)
-------------------------------------------------------------------------------------------------
Trust's name Trust's taxpayer I.D. number
-------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
Street address City, state, zip code
--------------------------------------------------------------------------------------------------
Daytime telephone number (include area code) Evening telephone number (include area code)
--------------------------------------------------------------------------------------------------
3 FUND SELECTION
Please indicate in which National Tax-Free Value Funds
Nuveen Fund(s) you would $________[_]A [_] C Municipal Bond Fund ________[_] A [_] C Insured Municipal Bond Fund
like to open an account
by writing the amount and State Tax-Free Value Funds
the class of shares in Free from federal, state and, in some cases, local income taxes for residents of that state
which you would like to
invest ($1,000 minimum $____[_]A [_] C Arizona $____[_]A [_] C California $____[_]A [_] C California Ins.
initial investment per $____[_]A [_] C Florida $____[_]A [_] C Maryland $____[_]A [_] C Massachusetts
class of any fund). $____[_]A [_] C Massachusetts Ins. $____[_]A [_] C Michigan $____[_]A [_] C New Jersey
$____[_]A [_] C New York $____[_]A [_] C New York Ins. $____[_]A [_] C Ohio
State funds may not be $____[_]A [_] C Pennsylvania $____[_]A [_] C Virginia
registered for sale in
all states. [_] Check this box if you qualify for Class R share purchases as described in the Fund
Prospectus. Class R shares are not available unless you meet certain eligibility requirements.
Please enclose a separate check made payable to each fund/class in which you are investing. If
more than one fund is selected, any optional features chosen will apply to all fund accounts. If
you prefer to wire funds to an open account, or need any assistance in completing this form, call
Nuveen toll-free at 1.800.621.7227.
4 DISTRIBUTION OPTIONS
Please check only one. [_] Dividends are to be paid by check [_] Capital gains are to be paid by check
If no box is checked, all distributions from a Fund will be reinvested into the same Fund.
5 INFORMATION ABOUT YOUR FINANCIAL ADVISER
Please supply the name Financial adviser's name Firm name
and address of your
financial adviser so --------------------------------------------------------------------------------------------------
that they will receive
duplicate copies of Street address City, state, zip code
your fund statements.
--------------------------------------------------------------------------------------------------
6 CERTIFICATION AND SIGNATURE(S)
Sign in ink exactly as the I certify that I have power and authority to establish this account and select the options
name (or names) appear requested. I also release the fund(s), Shareholder Services, Inc. (SSI), John Nuveen & Co.
above in section 1, Account Incorporated, United Missouri Bank of Kansas City, N.A., First Interstate Bank of Denver, N.A. and
registration. their agents and representatives from all liability and agree to indemnify each of them from any
and all losses, damages or costs for acting in good faith in accordance with instructions believed
to be genuine. With respect to the options identified on items #8, #9 and #10 of this application,
I understand that the Fund(s), SSI and Nuveen will not be liable for following telephone
instructions reasonably believed to be genuine. I also understand that the Fund(s) employ
procedures reasonably designed to confirm that telephone instructions are genuine and if these
procedures are not followed, the Fund(s) may be liable for any losses due to unauthorized or
fraudulent telephone instructions. I agree that the authorizations herein shall continue until SSI
receives written notice of a change or modification signed by all account owners. I understand
that each account is subject to the terms of the prospectus of the Nuveen fund selected, as
amended from time to time, and subject to acceptance by that fund in Chicago, Illinois and to the
laws of Illinois. All terms shall be binding upon my heirs, representatives and assigns. I certify
that I have received and read the current prospectus for each fund I have selected. Under
penalties of perjury, I certify (1) that the number shown on this Application Form is my correct
Social Security of Taxpayer Identification Number, and (2) that the IRS has not notified me that I
am subject to backup withholding (Line out clause (2) if you are subject to backup withholding.)
Individual's signature Date Joint tenant's signature (if applicable) Date
--------------------------------------------------------------------------------------------------
Custodian/Trustee signature (if applicable)
-----------------------------------------------------
See reverse side for additional optional fund services.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Optional Fund Services
7 OPTIONAL FUND SERVICES
Please send me application materials for these optional fund services which are described in the
prospectus:
[_] Automatic Deposit Plan [_] Automatic Withdrawal Plan
[_] Payroll Direct Deposit Plan [_] UIT Reinvestment
[_] Fund Direct
8 TEL-A-WIRE AUTHORIZATION
Select only one of the By electing this option, I authorize SSI and Nuveen to honor telephone instructions to redeem my
following, Option A or B. fund shares (minimum $1,000), subject to the terms and conditions described in the prospectus.
[_] OPTION A
By completing this section, I elect to have all redemption proceeds wired to my personal checking,
NOW or money market account at a commercial bank. (Attach a check marked "void" and complete only
the Option A section.)
Name of bank Bank's street address
--------------------------------------------------------------------------------------------------
Your bank account name Bank's city, state and zip code
--------------------------------------------------------------------------------------------------
Your bank account number Bank's routing code Bank's telephone number (include area code)
--------------------------------------------------------------------------------------------------
[_] OPTION B
By completing this section, I elect to have all redemption proceeds wired in my name to the
commercial bank account of my financial adviser's firm. (A representative of that firm must
complete and sign the second part of the Option B section.)
Name of financial advisor's firm Firm's telephone number (include area code)
--------------------------------------------------------------------------------------------------
Firm's street address Firm's city, state and zip code
--------------------------------------------------------------------------------------------------
Your account name Your account number
--------------------------------------------------------------------------------------------------
Bank's telephone number
This section is to be Name of bank of financial advisor's firm (include area code) Bank's routing code
completed by your financial
adviser if Option B is --------------------------------------------------------------------------------------------------
selected.
Bank's street address Bank's city, state and zip code
--------------------------------------------------------------------------------------------------
Bank's account number Financial adviser's signature Date
--------------------------------------------------------------------------------------------------
9 TEL-A-CHECK AUTHORIZATION
You must check the box [_] I hereby authorize the fund and its agents to honor telephone instructions to redeem shares
to elect this option. worth $50,000 or less from my account and send those proceeds by check payable to me to my address
of record, subject to the terms and conditions described in the prospectus.
10 TELEPHONE EXCHANGE AUTHORIZATION
You must check the box [_] I hereby authorize the fund and its agents to honor telephone instructions to invest
to elect this option. redemption proceeds from the fund into other Nuveen Mutual Funds, subject to the terms and
conditions described in the prospectus.
11 LETTER OF INTENT
You must complete this [_] By electing this option, I indicate my intention, but am under no obligation, to purchase
section to elect this option. additional Class A shares in the fund(s) and amount(s) indicated over the next 13 months in order
to qualify for reduced sales charges, subject to the terms and conditions described in the
prospectus. I understand that I or my financial adviser must notify Nuveen or SSI when I make a
purchase of fund shares that I wish to be covered under the Letter of Intent option.
I intend to purchase at least:
[_] $50,000 [_] $100,000 [_] $250,000 [_] $500,000 [_] $1,000,000
[_] $2,500,000 [_] $5,000,000 [_] $7,500,000 or more
worth of shares of ______________________________________________ Fund(s) over the next 13 months.
Mail the completed application form to:
Nuveen Tax-Free Mutual Funds
P.O. Box 5330
Denver, Colorado 80217-5330
</TABLE>
<PAGE>
PRINCIPAL UNDERWRITER
John Nuveen & Co. Incorporated
Investment Bankers
333 West Wacker Drive
Chicago, Illinois 60606
312.917.7700
INVESTMENT ADVISER
Nuveen Advisory Corp.
Subsidiary of John Nuveen & Co.
Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
CUSTODIAN
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003
TRANSFER AND SHAREHOLDER SERVICES
AGENT
Shareholder Services, Inc.
P.O. Box 5330
Denver, Colorado 80217
INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FUNDS
Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
LOGO
Pro-1 6.6
LOGO
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN INSURED TAX-FREE BOND FUND, INC.
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
Statement of Additional Information July 1, 1996
Nuveen Insured Tax-Free Bond Fund, Inc.
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN INSURED MUNICIPAL BOND FUND
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
NUVEEN NEW YORK INSURED 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 July
1, 1996.
<TABLE>
<S> <C>
Table of Contents Page
- --------------------------------------------------------------------------
Fundamental Policies and Investment Portfolio 2
- --------------------------------------------------------------------------
Management 40
- --------------------------------------------------------------------------
Investment Adviser and Investment Management Agreement 46
- --------------------------------------------------------------------------
Portfolio Transactions 48
- --------------------------------------------------------------------------
Net Asset Value 49
- --------------------------------------------------------------------------
Tax Matters 49
- --------------------------------------------------------------------------
Performance Information 56
- --------------------------------------------------------------------------
Additional Information on the Purchase and Redemption of Fund Shares 63
- --------------------------------------------------------------------------
Distribution and Service Plan 67
- --------------------------------------------------------------------------
Independent Public Accountants and Custodian 68
- --------------------------------------------------------------------------
</TABLE>
The audited financial statements for the fiscal year ended February 29, 1996,
appearing in the Annual Report of Nuveen Insured Tax-Free Bond Fund, Inc. are
incorporated herein by reference. The Annual Report accompanies this Statement
of Additional Information.
<PAGE>
FUNDAMENTAL POLICIES AND INVESTMENT PORTFOLIO
FUNDAMENTAL POLICIES
The investment objective and certain fundamental investment policies of each
Fund are described in the Prospectus. Each of the Funds, as a fundamental poli-
cy, may not, without the approval of the holders of a majority of the shares of
that Fund:
(1) Invest in securities other than Municipal Obligations and temporary invest-
ments, as those terms are defined in the 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 disposition
of securities. While any such borrowings exceed 5% of such Fund's total assets,
no additional purchases of investment securities will be made by such Fund. If
due to market fluctuations or other reasons, the value of the Fund's assets
falls below 300% of its borrowings, the Fund will reduce its borrowings within
3 business days. To do this, the Fund may have to sell a portion of its invest-
ments at a time when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities having
a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940,
except to the extent such issuance might be involved with respect to borrowings
described under item (3) above or with respect to transactions involving
futures contracts or the writing of options within the limits described in the
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 State-
ment of Additional Information;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
2
<PAGE>
(10) Make short sales of securities or purchase any securities on margin, ex-
cept for such short-term credits as are necessary for the clearance of transac-
tions;
(11) Write or purchase put or call options, except to the extent that the pur-
chase of a stand-by commitment may be considered the purchase of a put, and ex-
cept for transactions involving options within the limits described in the Pro-
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 Insured 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.
3
<PAGE>
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
unless an excess or deficiency occurs or exists immediately after and as a re-
sult of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment
objective of each Fund, cannot be changed without approval by holders of a
"majority of the Fund's outstanding voting shares." As defined in the Invest-
ment Company Act of 1940, this means the vote of (i) 67% or more of the Fund's
shares present at a meeting, if the holders of more than 50% of the Fund's
shares are present or represented by proxy, or (ii) more than 50% of the
Fund's shares, whichever is less.
Nuveen Insured Tax-Free Bond Fund, Inc. is a series company under SEC Rule
18f-2 and each Fund is a separate series issuing its own shares. Nuveen In-
sured Tax-Free Bond Fund, Inc. currently has three authorized series: the
Nuveen Insured Municipal Bond Fund (the "National Fund"), the Nuveen Massachu-
setts Insured Tax-Free Value Fund (the "Massachusetts Fund") and the Nuveen
New York Insured Tax-Free Value Fund (the "New York Fund"). Certain matters
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 holders
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. In the case of the Massachusetts Fund and
the New York Fund, the Municipal Obligations are issued within their respec-
tive states or certain U.S. possessions and territories and, in the case of
the National Fund, the Municipal Obligations are issued within the 50 states
and certain U.S. possessions and 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 the
Massachusetts Fund and the New York Fund will primarily invest are issued by
that Fund's respective state and cities and local authorities in that state,
and bear interest that, in the opinion of bond counsel to the issuer, is ex-
empt from federal income tax and from personal income tax imposed by the re-
spective state. The National Fund will primarily invest in Municipal Obliga-
tions that are issued by governmental authorities within the 50 states and
certain U.S. possessions or territories, and bear interest which in the opin-
ion of bond counsel to the issuer, is exempt from federal income tax.
Each Fund will, under normal circumstances, invest substantially all (at least
80%) of its net assets in Municipal Obligations which are either 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 timely payment of principal and
interest.
4
<PAGE>
Each insured Municipal Obligation held by a Fund will either be (1) covered by
an insurance policy applicable to a specific security and obtained by the is-
suer of the security or a third party at the time of original issuance ("Origi-
nal Issue Insurance"), (2) covered by an insurance policy applicable to a spe-
cific security and obtained by the Fund or a third party subsequent to the time
of original issuance ("Secondary Market Insurance"), or (3) covered by a master
municipal insurance policy purchased by the Fund ("Portfolio Insurance"). Each
Fund currently maintains a policy of Portfolio Insurance with MBIA Insurance
Corporation, AMBAC Indemnity Corporation, Financial Security Assurance, Inc.,
and Financial Guaranty Insurance Company, and may in the future obtain other
policies of Portfolio Insurance, depending on the availability of such policies
on terms favorable to the Fund. However, a Fund may determine not to obtain
such policies and to emphasize investments in Municipal Obligations insured un-
der Original Issue Insurance or Secondary Market Insurance. In any event, a
Fund will only obtain policies of Portfolio Insurance issued by insurers whose
claims-paying ability is rated Aaa by Moody's Investors Service, Inc.
("Moody's") or AAA by Standard & Poor's Corporation ("S&P"). Each Fund cur-
rently intends to obtain insurance policies only from mono-line insurers spe-
cializing in insuring municipal debt. Municipal Obligations covered by Original
Issue Insurance or Secondary Market Insurance are themselves typically assigned
a rating of Aaa or AAA, as the case may be, by virtue of the Aaa or AAA claims-
paying ability of the insurer and would generally be assigned a lower rating if
the rating were based primarily upon the credit characteristics of the issuer
without regard to the insurance feature. By way of contrast, the ratings, if
any, assigned to Municipal Obligations insured under Portfolio Insurance will
be based primarily upon the credit characteristics of the issuers without re-
gard to the insurance feature, and will generally carry a rating that is below
Aaa or AAA. While in the portfolio of a Fund, however, a Municipal Obligation
backed by Portfolio Insurance will effectively be of the same quality as a Mu-
nicipal Obligation issued by an issuer of comparable credit characteristics
that is backed by Original Issue Insurance or Secondary Market Insurance.
Each Fund's policy of investing in Municipal Obligations insured by insurers
whose claims-paying ability is rated Aaa or AAA will apply only at the time of
the purchase of a security, and a Fund will not be required to dispose of secu-
rities in the event Moody's or S&P, as the case may be, downgrades its assess-
ment of the claims-paying ability of a particular insurer or the credit charac-
teristics of a particular issuer. In this connection, it should be noted that
in the event Moody's or S&P or both should downgrade its assessment of the
claims-paying ability of a particular insurer, it could also be expected to
downgrade the ratings assigned to Municipal Obligations insured under Original
Issue Insurance or Secondary Market Insurance issued by such insurer, and Mu-
nicipal Obligations insured under Portfolio Insurance issued by such insurer
would also be of reduced quality in the portfolio of a Fund. Moody's and S&P
continually assess the claims-paying ability of insurers and the credit charac-
teristics of issuers, and there can be no assurance that they will not down-
grade their assessments subsequent to the time a Fund purchases securities.
In addition to insured Municipal Obligations, a Fund may invest in Municipal
Obligations that are entitled to the benefit of an escrow or trust account
which contains securities issued or guaranteed by the U.S. Government or U.S.
Government agencies, backed by the full faith and credit of the United States,
and sufficient in amount to ensure the payment of interest and principal on the
original interest payment and maturity dates ("collateralized obligations").
These collateralized obligations generally
5
<PAGE>
will not be insured and will include, but are not limited to, Municipal Obli-
gations that have been (1) advance refunded where the proceeds of the re-
funding have been used to purchase U.S. Government or U.S. Government agency
securities that are placed in escrow and whose interest or maturing principal
payments, or both, are sufficient to cover the remaining scheduled debt serv-
ice on the Municipal Obligations, and (2) issued under state or local housing
finance programs which use the issuance proceeds to fund mortgages that are
then exchanged for U.S. Government or U.S. Government agency securities and
deposited with a trustee as security for the Municipal Obligations. These col-
lateralized obligations are normally regarded as having the credit charac-
teristics of the underlying U.S. Government or U.S. Government agency securi-
ties. Collateralized obligations will not constitute more than 20% of each
Fund's assets.
Each insured Municipal Obligation in which a Fund invests will be covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio Insurance.
There is no limitation on the percentage of the Fund's assets that may be in-
vested in Municipal Obligations insured by any given insurer.
Original Issue Insurance. Original Issue Insurance is purchased with respect
to a particular issue of Municipal Obligations by the issuer thereof or a
third party in conjunction with the original issuance of such Municipal Obli-
gations. Under such insurance, the insurer unconditionally guarantees to the
holder of the Municipal Obligation the timely payment of principal and inter-
est on such obligation when and as such payments shall become due but shall
not be paid by the issuer, except that in the event of any acceleration of the
due date of the principal by reason of mandatory or optional redemption (other
than acceleration by reason of a mandatory sinking fund payment), default or
otherwise, the payments guaranteed may be made in such amounts and at such
times as payments of principal would have been due had there not been such ac-
celeration. The insurer is responsible for such payments less any amounts re-
ceived by the holder from any trustee for the Municipal Obligation issuers or
from any other source. Original Issue Insurance does not guarantee payment on
an accelerated basis, the payment of any redemption premium (except with re-
spect to certain premium payments in the case of certain small issue indus-
trial development and pollution control Municipal Obligations), the value of
the shares of the Fund, the market value of Municipal Obligations, or payments
of any tender purchase price upon the tender of the Municipal Obligations.
Original Issue Insurance also does not insure against nonpayment of principal
of or interest on Municipal Obligations resulting from the insolvency, negli-
gence or any other act or omission of the trustee or other paying agent for
such obligations.
In the event that interest on or principal of a Municipal Obligation covered
by insurance is due for payment but is unpaid by the issuer thereof, the ap-
plicable insurer will make payments to its fiscal agent (the "Fiscal Agent")
equal to such unpaid amounts of principal and interest not later than one
business day after the insurer has been notified that such nonpayment has oc-
curred (but not earlier than the date such payment is due). The Fiscal Agent
will disburse to the Fund the amount of principal and interest which is then
due for payment but is unpaid upon receipt by the Fiscal Agent of (i) evidence
of the Fund's right to receive payment of such principal and interest and (ii)
evidence, including any appropriate instruments of assignment, that all of the
rights to payment of such principal or interest then due for payment shall
thereupon vest in the insurer. Upon payment by the insurer of any principal or
interest payments with respect to any Municipal Obligations, the insurer shall
succeed to the rights of the Fund with respect to such payment.
6
<PAGE>
Original Issue Insurance remains in effect as long as the Municipal Obliga-
tions covered thereby remain outstanding and the insurer remains in business,
regardless of whether a Fund ultimately disposes of such Municipal Obliga-
tions. Consequently, Original Issue Insurance may be considered to represent
an element of market value with respect to the Municipal Obligations so in-
sured, but the exact effect, if any, of this insurance on such market value
cannot be estimated.
Secondary Market Insurance. Subsequent to the time of original issuance of a
Municipal Obligation, the Fund or a third party may, upon the payment of a
single premium, purchase insurance on such Municipal Obligation. Secondary
Market Insurance generally provides the same type of coverage as is provided
by Original Issue Insurance and remains in effect as long as the Municipal Ob-
ligation covered thereby remain outstanding, the holder of such Municipal Ob-
ligation does not voluntarily relinquish the Secondary Market Insurance and
the insurer remains in business, regardless of whether the Fund ultimately
disposes of such Municipal Obligation.
One of the purposes of acquiring Secondary Market Insurance with respect to a
particular Municipal Obligation would be to enable a Fund to enhance the value
of such Municipal Obligation. A Fund, for example, might seek to purchase a
particular Municipal Obligation and obtain Secondary Market Insurance with re-
spect thereto if, in the opinion of Nuveen Advisory, the market value of such
Municipal Obligation, as insured, would exceed the current value of the Munic-
ipal Obligation without insurance plus the cost of the Secondary Market Insur-
ance. Similarly, if a Fund owns but wishes to sell a Municipal Obligation that
is then covered by Portfolio Insurance, the Fund might seek to obtain Second-
ary Market Insurance with respect thereto if, in the opinion of Nuveen Adviso-
ry, the net proceeds of a sale by the Fund of such obligation, as insured,
would exceed the current value of such obligation plus the cost of the Second-
ary Market Insurance.
Portfolio Insurance. Portfolio Insurance guarantees the payment of principal
and interest on specified eligible Municipal Obligations purchased by a Fund.
Except as described below, Portfolio Insurance generally provides the same
type of coverage as is provided by Original Issue Insurance or Secondary Mar-
ket Insurance. Municipal Obligations insured under one Portfolio Insurance
policy would generally not be insured under any other policy purchased by the
Fund. A Municipal Obligation is eligible for coverage under a policy if it
meets certain requirements of the insurer. Portfolio Insurance is intended to
reduce financial risk, but the cost thereof and compliance with investment re-
strictions imposed under the policy will reduce the yield to shareholders of a
Fund.
If a Municipal Obligation is already covered by Original Issue Insurance or
Secondary Market Insurance, then such Municipal Obligation is not required to
be additionally insured under any policy of Portfolio Insurance that a Fund
may purchase. All premiums respecting Municipal Obligations covered by Origi-
nal Issue Insurance or Secondary Market Insurance are paid in advance by the
issuer or other party obtaining the insurance.
Portfolio Insurance policies are effective only as to Municipal Obligations
owned by and held by a Fund, and do not cover Municipal Obligations for which
the contract for purchase fails. A "when-issued" Municipal Obligation will be
covered under a Portfolio Insurance policy upon the settlement date of the is-
sue of such "when-issued" Municipal Obligation. In determining whether to in-
sure Municipal Obliga-
7
<PAGE>
tions held by a Fund, an insurer will apply its own standards, which correspond
generally to the standards it has established for determining the insurability
of new issues of Municipal Obligations. See "Original Issue Insurance" above.
Each Portfolio Insurance policy will be noncancellable and will remain in ef-
fect so long as the Funds are in existence, the Municipal Obligations covered
by the policy continue to be held by the Funds, and the Funds pay the premiums
for the policy. Each insurer will generally reserve the right at any time upon
90 days' written notice to the Funds to refuse to insure any additional securi-
ties purchased by the Funds after the effective date of such notice. The Board
of Directors will generally reserve the right to terminate each policy upon
seven days' written notice to an insurer if it determines that the cost of such
policy is not reasonable in relation to the value of the insurance to a Fund.
Each Portfolio Insurance policy will terminate as to any Municipal Obligation
that has been redeemed from or sold by a Fund on the date of such redemption or
the settlement date of such sale, and an insurer shall not have any liability
thereafter under a policy as to any such Municipal Obligation, except that if
the date of such redemption or the settlement date of such sale occurs after a
record date and before the related payment date with respect to any such Munic-
ipal Obligation, the policy will terminate as to such Municipal Obligation on
the business day immediately following such payment date. Each policy will ter-
minate as to all Municipal Obligations covered thereby on the date on which the
last of the covered Municipal Obligations mature, are redeemed or are sold by a
Fund.
One or more policies of Portfolio Insurance may provide a Fund, pursuant to an
irrevocable commitment of the insurer, with the option to exercise the right to
obtain permanent insurance ("Permanent Insurance") with respect to a Municipal
Obligation that is to be sold by the Fund. A Fund would exercise the right to
obtain Permanent Insurance upon payment of a single, predetermined insurance
premium payable from the proceeds of the sale of such Municipal Obligation. It
is expected that a Fund will exercise the right to obtain Permanent Insurance
for a Municipal Obligation only if, in the opinion of Nuveen Advisory, upon
such exercise the net proceeds from the sale by the Fund of such obligation, as
insured, would exceed the proceeds from the sale of such obligation without in-
surance.
The Permanent Insurance premium with respect to each such obligation is deter-
mined based upon the insurability of each such obligation as of the date of
purchase by a Fund and will not be increased or decreased for any change in the
creditworthiness of such obligation unless such obligation is in default as to
payment of principal or interest, or both. In such event, the Permanent Insur-
ance premium shall be subject to an increase predetermined at the date of pur-
chase by a Fund.
The Funds generally intend to retain any insured securities covered by Portfo-
lio Insurance that are in default or in significant risk of default and to
place a value on the insurance, which ordinarily will be the difference between
the market value of the defaulted security and the market value of similar se-
curities of minimum investment grade (i.e., rated BBB) that are not in default.
In certain circumstances, however, Nuveen Advisory may determine that an alter-
native value for the insurance, such as the difference between the market value
of the defaulted security and either its par value or the market value of secu-
rities of a similar nature that are not in default or in significant risk of
default, is more appropriate. To the extent that a Fund holds such defaulted
securities, it may be limited in its ability to manage its
8
<PAGE>
investment portfolio and to purchase other Municipal Obligations. Except as de-
scribed above with respect to securities covered by Portfolio Insurance that
are in default or subject to significant risk of default, the Funds will not
place any value on the insurance in valuing the Municipal Obligations that it
holds.
Because each Portfolio Insurance policy will terminate as to Municipal Obliga-
tions sold by a Fund on the date of sale, in which event the insurer will be
liable only for those payments of principal and interest that are then due and
owing (unless Permanent Insurance is obtained by a Fund), the provision for
this insurance will not enhance the marketability of securities held by a Fund,
whether or not the securities are in default or in significant risk of default.
On the other hand, since Original Issue Insurance and Secondary Market Insur-
ance generally will remain in effect as long as Municipal Obligations covered
thereby are outstanding, such insurance may enhance the marketability of such
securities, even when such securities are in default or in significant risk of
default, but the exact effect, if any, on marketability cannot be estimated.
Accordingly, the Funds may determine to retain or, alternatively, to sell Mu-
nicipal Obligations covered by Original Issue Insurance or Secondary Market In-
surance that are in default or in significant risk of default.
Premiums for a Portfolio Insurance policy are paid monthly, and are adjusted
for purchases and sales of Municipal Obligations covered by the policy during
the month. The yield on each of the Funds is reduced to the extent of the in-
surance premiums allocated to it. Depending upon the characteristics of the Mu-
nicipal Obligations held by a Fund, the annual premium rate for policies of
Portfolio Insurance is estimated to range from .15% to .30% of the value of the
Municipal Obligations covered under the policy. Because the majority of the Mu-
nicipal Obligations in each Fund were not covered by policies of Portfolio In-
surance during the year ended February 29, 1996, premium expenses as a percent-
age of the value of Municipal Obligations held by each Fund for such period
were .00%, .01% and .00% for the National Fund, the Massachusetts Fund and the
New York Fund, respectively.
Set forth below is information about the various municipal bond insurers with
whom the Insured Tax-Free Bond Fund, Inc. currently maintains policies of Port-
folio Insurance.
AMBAC INDEMNITY CORPORATION ("AMBAC INDEMNITY")
AMBAC Indemnity is a Wisconsin-domiciled stock insurance corporation regulated
by the Office of the Commissioner of Insurance of the State of Wisconsin and
licensed to do business in 50 states, the District of Columbia, the Territory
of Guam and the Commonwealth of Puerto Rico, with admitted assets of approxi-
mately $2,440,000,000 (unaudited) and statutory capital of approximately
$1,387,000,000 (unaudited) as of March 31, 1996. Statutory capital consists of
AMBAC Indemnity's policyholders' surplus and statutory contingency reserve.
AMBAC Indemnity is a wholly-owned subsidiary of AMBAC, Inc., a 100% publicly-
held company. Moody's, S&P and Fitch Investors Service, L.P. each have assigned
a triple-A claims-paying ability rating to AMBAC Indemnity.
AMBAC Indemnity has obtained a ruling from the Internal Revenue Service to the
effect that the insuring of an obligation by AMBAC Indemnity will not affect
the treatment for federal income tax purposes of interest on such obligation
and that insurance proceeds representing maturing interest paid
9
<PAGE>
by AMBAC Indemnity under policy provisions substantially identical to those
contained in its municipal bond insurance policy shall be treated for federal
income tax purposes in the same manner as if such payments were made by the is-
suer of the bonds.
Copies of AMBAC Indemnity's financial statements prepared in accordance with
statutory accounting standards are available from AMBAC Indemnity. The address
of AMBAC Indemnity's administrative offices and its telephone number are One
State Street Plaza, 17th Floor, New York, New York 10004 and (212) 668-0340.
FINANCIAL SECURITY ASSURANCE INC. ("FINANCIAL SECURITY")
Financial Security is a monoline insurance company incorporated under the laws
of the State of New York. Financial Security is licensed to engage in the fi-
nancial guaranty insurance business in all 50 states, the District of Columbia
and Puerto Rico.
Financial Security is a wholly owned subsidiary of Financial Security Assurance
Holdings Ltd. ("Holdings"), a New York Stock Exchange listed company. Major
shareholders of Holdings include Fund American Enterprise Holdings, Inc., U.S.
West Capital Corporation and the Tokio Marine and Fire Insurance Co., Ltd. No
shareholder is obligated to pay any debts of or any claims against Financial
Security. Financial Security is domiciled in the State of New York and is sub-
ject to regulation by the State of New York Insurance Department. As of March
31, 1996, the total policyholders' surplus and contingency reserves and the to-
tal unearned premium reserve, respectively, of Financial Security and its con-
solidated subsidiaries were, in accordance with statutory accounting princi-
ples, approximately $650,052,000 (unaudited) and $387,239,000 (unaudited), and
the total shareholders' equity and the total unearned premium reserve, respec-
tively, of Financial Security and its consolidated subsidiaries were, in accor-
dance with generally accepted accounting principles, approximately $779,177,000
(unaudited) and $340,226,000 (unaudited). Copies of Financial Security's finan-
cial statements may be obtained by writing to Financial Security at 350 Park
Avenue, New York, New York 10022, Attention: Communications Department, Finan-
cial Security's telephone number is (212) 826-0100.
MBIA INSURANCE CORPORATION ("MBIA")
MBIA, formerly known as Municipal Bond Investors Assurance Corporation, is the
principal operating subsidiary of MBIA Inc., A New York Stock Exchange listed
company. MBIA Inc. is not obligated to pay the debts of or claims against MBIA.
MBIA is a limited liability corporation rather than a several liability associ-
ation. MBIA is domiciled in the State of New York and licensed to do business
to all 50 states, the District of Columbia, the Commonwealth of Puerto Rico,
the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the
United States and the Territory of Guam.
As of December 31, 1994, MBIA had admitted assets of $3.4 billion (audited),
total liabilities of $2.3 billion (audited), and total capital and surplus of
$1.1 billion (audited) determined in accordance with statutory accounting prac-
tices prescribed or permitted by insurance regulatory authorities. As of Decem-
ber 31, 1995, MBIA had admitted assets of $3.8 billion (audited), total liabil-
ities of $2.5 billion (audited), and total capital and surplus of $1.3 billion
(audited), determined in accordance with statutory
10
<PAGE>
accounting practices prescribed or permitted by insurance regulatory authori-
ties. Copies of MBIA's year end financial statements prepared in accordance
with statutory accounting practices are available from MBIA. The address of
MBIA is 113 King Street, Armonk, New York 10504.
MBIA's policy unconditionally and irrevocably guarantees to the Insured Tax-
Free Bond Fund the full and complete payment required to be made by or on be-
half of the issuer to the applicable paying agent or its successor of an amount
equal to (i) the principal of (either at the stated maturity or by advancement
of maturity pursuant to a mandatory sinking fund payment) and interest on, the
Municipal Obligations as such payments shall become due but shall not be so
paid (except that in the event of any acceleration of the due date of such
principal by reason of mandatory or optional redemption or acceleration result-
ing from default or otherwise, other than any advancement of maturity pursuant
to a mandatory sinking fund payment, the payments guaranteed by MBIA's policy
shall be made in such amounts and at such times as such payments of principal
would have been due had there not been any such acceleration) and (ii) the re-
imbursement of any such payment which is subsequently recovered from the Fund
pursuant to a final judgment by a court of competent jurisdiction that such
payment constitutes an avoidable preference to the Fund within the meaning of
any applicable bankruptcy law (a "Preference").
MBIA's policy does not insure against loss of any prepayment premium which may
at any time be payable with respect to any Municipal Obligation. MBIA's policy
does not, under any circumstance, insure against loss relating to: (i) optional
or mandatory redemptions (other than mandatory sinking fund redemptions); (ii)
any payments to be made on an accelerated basis; (iii) payments of the purchase
price of Municipal Obligations upon tender thereof; or (iv) any Preference re-
lating to (i) through (iii) above. MBIA's policy also does not insure against
nonpayment of principal of or interest on the Municipal Obligations resulting
from the insolvency, negligence or any other act or omission of any paying
agent for the Municipal Obligations.
With respect to small issue industrial development bonds and pollution control
revenue bonds covered by the policy, MBIA guarantees the full and complete pay-
ments required to be made by or on behalf of an issuer of such bonds if there
occurs pursuant to the terms of the bonds an event which results in the loss of
the tax-exempt status of interest on such bonds, including principal, interest
or premium payments payable thereon, if any, as and when required to be made by
or on behalf of the issuer pursuant to the terms of such bonds.
Upon receipt of telephonic or telegraphic notice, such notice subsequently con-
firmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail, by MBIA from the paying agent or the
Fund that a required payment of any insured amount which is then due, that such
required payment has not been made, MBIA on the due date of such payment or
within one business day after receipt of notice of such nonpayment, whichever
is later, will make a deposit of funds, in an account with State Street Bank
and Trust Company, N.A., in New York, New York, or its successor, sufficient
for the payment of any such insured amounts which are then due. Upon present-
ment and surrender of such Municipal Obligations or presentment of such other
proof of ownership of the Municipal Obligations, together with any appropriate
instruments of assignment to evidence the assignment of the insured amounts due
on the Municipal Obligations as are paid by MBIA, and appro-
11
<PAGE>
priate instruments to effect the appointment of MBIA as agent for the Fund in
any legal proceeding related to payment of insured amounts on Municipal Obliga-
tions, such instruments being in a form satisfactory to State Street Bank and
Trust Company, N.A., State Street Bank and Trust Company, N.A. shall disburse
to the Fund or the paying agent payment of the insured amounts due on such Mu-
nicipal Obligations, less any amount held by the paying agent for the payment
of such insured amounts and legally available therefor.
FINANCIAL GUARANTY INSURANCE COMPANY ("FINANCIAL GUARANTY")
The Portfolio Insurance Policy is non-cancellable except for failure to pay the
premium. The premium rate for each purchase of a security covered by the Port-
folio Insurance Policy is fixed for the life of the Insured Bond. The insurance
premiums are payable monthly by the Fund and are adjusted for purchases, sales
and payments prior to maturity of Insured Bonds during the month. In the event
of a sale of any Insured Bond by the Fund or payment thereof prior to maturity,
the Portfolio Insurance policy terminates as to such Insured Bond.
Under the provisions of the Portfolio Insurance Policy, Financial Guaranty un-
conditionally and irrevocably agrees to pay to State Street Bank and Trust Com-
pany, or its successor, as its agent (the "Fiscal Agent"), that portion of the
principal of and interest on the Insured Bonds which shall become due for pay-
ment but shall be unpaid by reason of nonpayment by the issuer of the Insured
Bonds. The term "due for payment" means, when referring to the principal of an
Insured Bond, its stated maturity date or the date on which it shall have been
called for mandatory sinking fund redemption and does not refer to any earlier
date on which payment is due by reason of call for redemption (other than by
mandatory sinking fund redemption), acceleration or other advancement of matu-
rity and means, when referring to interest on an Insured Bond, the stated date
for payment of interest. In addition, the Portfolio Insurance Policy covers
nonpayment by the issuer that results from any payment of principal or interest
made by such issuer on the Insured Bond to the Fund which has been recovered
from the Fund or its shareholders pursuant to the United States Bankruptcy Code
by a trustee in bankruptcy in accordance with a final, nonappealable order of a
court having competent jurisdiction.
Financial Guaranty will make such payments to the Fiscal Agent on the date such
principal or interest becomes due for payment or on the business day next fol-
lowing the day on which Financial Guaranty shall have received notice of non-
payment, whichever is later. The Fiscal Agent will disburse to the Trustee the
face amount of principal and interest which is then due for payment but is un-
paid by reason of nonpayment by the issuer, but only upon receipt by the Fiscal
Agent of (i) evidence of the Trustee's right to receive payment of the princi-
pal or interest due for payment and (ii) evidence, including any appropriate
instruments of assignment, that all of the rights to payment of such principal
or interest due for payment thereupon shall vest in Financial Guaranty. Upon
such disbursement, Financial Guaranty shall become the owner of the Insured
Bond, appurtenant coupon or right to payment of principal or interest on such
Insured Bond and shall be fully subrogated to all of the Trustee's rights
thereunder, including the right to payment, thereof.
In determining whether to insure municipal securities held in the Fund, Finan-
cial Guaranty will apply its own standards which are not necessarily the same
as the criteria used in regard to the selection of securities by the Funds.
12
<PAGE>
Certain of the municipal securities insured under the Portfolio Insurance Pol-
icy may also be insured under an insurance policy obtained by the issuer of
such municipal securities. The premium for any insurance policy or policies
obtained by an issuer or Insured Bonds has been paid in advance by such issuer
and any such policy or policies are non-cancellable and will continue in force
so long as the Insured Bonds so insured are outstanding. Financial Guaranty
has also agreed, if requested by the Funds on or before the fifth day preced-
ing the 1st day of any month, to insure to maturity Insured Bonds sold by the
Trustee during the month immediately following such request of the Funds. The
premium for any such insurance to maturity provided by Financial Guaranty is
paid by the Fund and any such insurance is non-cancellable and will continue
in force so long as the Bonds so insured are outstanding.
Financial Guaranty is a wholly-owned subsidiary of FGIC Corporation (the "Cor-
poration"), a Delaware holding company. The Corporation is a subsidiary of
General Electric Capital Corporation. Financial Guaranty is a monoline finan-
cial guaranty insurer domiciled in the State of New York and subject to regu-
lation by the State of New York Insurance Department. As of March 31, 1996,
the total capital and surplus of Financial Guaranty was approximately
$1,032,675,000. Financial Guaranty prepares financial statements on the basis
of both statutory accounting principles and generally accepted accounting
principles. Copies of such financial statements may be obtained by writing to
Financial Guaranty at 115 Broadway, New York, New York 10006, Attention: Com-
munications Department (telephone number: (212) 312-3000) or to the New York
State Insurance Department at 160 West Broadway, 18th Floor, New York, New
York 10013, Attention: Property Companies Bureau (telephone number: (212) 602-
0389).
The policies of insurance obtained by the Funds from Financial Guaranty and
the negotiations in respect thereof represent the only relationship between
Financial Guaranty and the Funds. Otherwise neither Financial Guaranty nor its
parent, FGIC Corporation, or any affiliate thereof has any significant rela-
tionship, direct or indirect, with the Funds or the Board of Directors.
The above municipal bond insurers have insurance claims-paying ability ratings
of AAA from S&P and Aaa from Moody's. Financial Guaranty also has an insurance
claims-paying ability rating of AAA from Fitch.
An S&P insurance claims-paying ability rating is an assessment of an operating
insurance company's financial capacity to meet obligations under an insurance
policy in accordance with its terms. An insurer with an insurance claims-pay-
ing ability rating of AAA has the highest rating assigned by S&P. Capacity to
honor insurance contracts is adjudged by S&P to be extremely strong and highly
likely to remain so over a long period of time. A Moody's insurance claims-
paying ability rating is an opinion of the ability of an insurance company to
repay punctually senior policyholder obligations and claims. An insurer with
an insurance claims-paying ability rating of Aaa is adjudged by Moody's to be
of the best quality. In the opinion of Moody's, the policy obligations of an
insurance company with an insurance claims-paying ability rating of Aaa carry
the smallest degree of credit risk and, while the financial strength of these
companies is likely to change, such changes as can be visualized are most un-
likely to impair the company's fundamentally strong position.
An insurance claims-paying ability rating by S&P or Moody's does not consti-
tute an opinion on any specific contract in that such an opinion can only be
rendered upon the review of the specific insurance
13
<PAGE>
contract. Furthermore, an insurance claims-paying ability rating does not take
into account deductibles, surrender or cancellation penalties or the timeliness
of payment, nor does it address the ability of a company to meet nonpolicy ob-
ligations (i.e., debt contracts).
The assignment of ratings by S&P or Moody's to debt issues that are fully or
partially supported by insurance policies, contracts or guarantees is a sepa-
rate process from the determination of claims-paying ability ratings. The like-
lihood of a timely flow of funds from the insurer to the trustee for the bond-
holders is a key element in the rating determination for such debt issues.
S&P's and Moody's ratings are not recommendations to buy, sell or hold the Mu-
nicipal Obligations insured by policies issued by AMBAC Indemnity, Financial
Security, MBIA or Financial Guaranty and such ratings may be subject to revi-
sion or withdrawal at any time by the rating agencies. Any downward revision or
withdrawal of either or both ratings may have an adverse effect on the market
price of the Municipal Obligations insured by policies issued by AMBAC Indemni-
ty, Financial Security, MBIA or Financial Guaranty.
S&P's ratings of AMBAC Indemnity, Financial Security, MBIA and Financial Guar-
anty should be evaluated independently of Moody's ratings. Any further explana-
tion as to the significance of the ratings may be obtained only from the appli-
cable rating agency.
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 or S&P, (2) unrated Municipal Obligations of invest-
ment grade quality in the opinion of Nuveen Advisory, with no fixed percentage
limitations on these unrated Municipal Obligations, and (3) temporary invest-
ments 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-appropriation"
clauses which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. Although 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 as-
sets 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 gov-
ernmental 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 investment is of
a size that will be attractive to institutional investors, and (6) the under-
14
<PAGE>
lying 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, but a Fund will not
trade securities solely to realize a profit. Securities may be sold in antici-
pation 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 ad-
dition, a security may be sold and another of comparable quality purchased at
approximately the same time to take advantage of what Nuveen Advisory believes
to be a temporary disparity in the normal yield relationship between the two
securities. A Fund may make changes in its investment portfolio in order to
limit its exposure to changing market conditions. Changes in a Fund's invest-
ments are known as "portfolio turnover." While it is impossible to predict fu-
ture portfolio turnover rates, each Fund's annual portfolio turnover rate is
generally not expected to exceed 50%. However, each Fund reserves the right to
make changes in its investments whenever it deems such action advisable, and
therefore, a Fund's annual portfolio turnover rate may exceed 50% in particular
years depending upon market conditions. The portfolio turnover rates for the
National, Massachusetts and New York Funds for the fiscal year ended February
29, 1996 were 27%, 1% and 17%, respectively, and for the fiscal year ended Feb-
ruary 28, 1995, were 25%, 10% and 11%, respectively.
WHEN-ISSUED SECURITIES
As described in the Prospectus, each Fund may purchase and sell Municipal Obli-
gations on a when-issued or delayed delivery basis. When-issued and delayed de-
livery transactions arise when securities are purchased or sold with payment
and delivery beyond the regular settlement date. (When-issued transactions nor-
mally settle within 15-45 days.) On such transactions the payment obligation
and the interest rate are fixed at the time the buyer enters into the commit-
ment. The commitment to purchase securities on a when-issued or delayed deliv-
ery basis may involve an element of risk because the value of the securities is
subject to market fluctuation, no interest accrues to the purchaser prior to
settlement of the transaction, and at the time of delivery the market value may
be less than cost. At the time a Fund
15
<PAGE>
makes the commitment to purchase a Municipal Bond 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 basis, 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 com-
mitment are ignored in calculating net asset value so long as the commitment
remains in effect. The Funds will maintain designated readily marketable assets
at least equal in value to commitments to purchase when-issued or delayed de-
livery securities, 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 intention of actually acquiring the securities, but each Fund reserves the
right to sell these securities before the settlement date if it is deemed ad-
visable. If a when-issued security is sold before delivery any gain or loss
would not be tax-exempt. A Fund commonly engages in when-issued transactions in
order to purchase or sell newly-issued Municipal Obligations, and may engage in
delayed delivery transactions in order to manage its operations more effective-
ly.
SPECIAL CONSIDERATIONS RELATING TO MUNICIPAL OBLIGATIONS OF DESIGNATED STATES
As described in the Prospectus, except for investments in temporary invest-
ments, the Massachusetts and New York Funds will, at all times, invest all of
their net assets in their respective state's Municipal Obligations. These Funds
are therefore more susceptible to political, economic or regulatory factors ad-
versely affecting issuers of Municipal Obligations in their states. Brief sum-
maries of these factors are contained in the Prospectus. Set forth below is ad-
ditional information that bears upon the risk of investing in Municipal Obliga-
tions issued by public authorities in these states. This information was ob-
tained 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 tem-
porary 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 affecting
issuers of Massachusetts Municipal Obligations. Without intending to be com-
plete, 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 sources
that are generally available to investors and is based in part on information
obtained from various agencies in Massachusetts. No independent verification
has been made of the accuracy or completeness of the following information.
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.
16
<PAGE>
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. Since fiscal 1991, the Commonwealth's
revenues for state government programs have exceeded expenditures however, no
assurance can be given that lower than expected tax revenues will not resume
and continue.
1996 Fiscal Year Budget. On July 21, 1995, the Governor signed the Common-
wealth's budget for fiscal 1996. The fiscal 1996 budget is based on estimated
budgeted revenues and other sources of approximately $16.778 billion, which
includes fiscal 1996 tax revenues of $11.653 billion. Estimated fiscal 1996
tax revenues are approximately $490 million, or 4.3%, higher than estimated
fiscal 1995 tax revenues.
Fiscal 1996 non-tax revenues are projected to total $5.58 billion, approxi-
mately $66 million, or 1.3%, less than fiscal 1995 non-tax revenues of approx-
imately $5.224 billion. Federal reimbursements are projected to decrease by
approximately $1 million from approximately $2.970 billion in fiscal 1995 to
approximately $2.969 billion in fiscal 1996, primarily as a result of in-
creased reimbursements for Medicare spending, offset by a reduction in reim-
bursements received in 1995 for one-time Medicare expenses incurred in fiscal
1994 and fiscal 1995. Fiscal 1996 departmental revenues are projected to de-
cline by approximately $94 million, or 7.4%, from approximately $1.273 billion
in fiscal 1995 to approximately $1.179 billion in fiscal 1996. Major changes
in projected non-tax received for fiscal 1996 include a decline in motor vehi-
cle license and registration fees, reduction of abandoned property revenues
and a decrease due to non-recurring revenues received in fiscal 1995 from hos-
pitals and nursing homes as part of Medicare fiscal rate settlements and other
reimbursements by municipal hospitals to the state.
Fiscal 1996 appropriations in the Annual Appropriations Act total approxi-
mately $16.847 billion, including approximately $25 million in gubernatorial
vetoes overridden by the legislature. In the final supplemental budget for
fiscal 1995, approved on August 24, 1995, another $71.1 million of appropria-
tions were continued for use in for 1996.
As of February 1, 1996, the Governor had signed into law fiscal 1996 supple-
mental appropriations totalling approximately $23.5 million, including approx-
imately $12.6 million to fund higher education collective bargaining contracts
and $5.6 million for the Department of Social Services. These appropriations
were offset by approximately $10.4 million in line item reductions, including
a reduction of $9.8 million for the state's debt service contract assistance
to the MBTA. Both the House and Senate have passed supplemental appropriation
bills totalling $64.8 million primarily relating to snow and ice removal costs
incurred by both the Commonwealth and cities and towns. The bills are cur-
rently awaiting resolution by a conference committee of the House and Senate.
On January 26, 1996 and February 9, 1996, the Governor filed additional sup-
plemental appropriation bills totalling approximately $7.3 million for costs
relating to prison overcrowding relief as well as reimbursement costs associ-
ated with a court settlement. No action has been taken on these bills by ei-
ther branch of the Legislature.
As of May 28, 1996, fiscal 1996 projected spending is approximately $16.963
billion, including approximately $153.2 million reserved for contingencies.
Projected revenues are approximately $16.851 billion.
17
<PAGE>
The fiscal 1996 tax revenue projection is $11.684 billion, which represents an
increase of approximately $80 million from the earlier estimate, based upon tax
revenue collections through April 1996.
The fiscal 1996 budget is based on numerous spending and revenue estimates the
achievement of which cannot be assured.
1995 Fiscal Year. Budgeted revenues and other sources, including non-tax reve-
nues, collected in fiscal 1995 were approximately $16.387 billion, approxi-
mately $837 million, or 5.4%, above fiscal 1994 revenues of $15.550 billion.
Fiscal 1995 tax revenues collections were approximately $11.163 billion, ap-
proximately $12 million above the Department of Revenue's revised fiscal year
1995 tax revenue estimate of $10.151 billion and $556 million, or 5.2%, above
fiscal year tax revenues of $10.607 billion.
Budgeted expenditures and other uses of funds in fiscal 1995 were approximately
$16.251 billion, approximately $728 million, or 4.7%, above fiscal 1994 bud-
geted expenditures and uses of $15.523 billion. The Commonwealth ended fiscal
1995 with an operating gain of $137 million and an ending fund balance of $726
million.
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
approximately 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 recipients who have children between the ages of two and six to partici-
pate in an education or training program or perform community service. The plan
also establishes 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 benefits for up to one year. The plan mandates paternal identification,
expands funding for anti-fraud initiatives, and requires parents on AFDC to im-
munize 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 attend-
ing high school, will continue to receive cash assistance. Since most provi-
sions of the new law do not take effect until July 1, 1995, the Executive Of-
fice for Administration projects that the reforms will not materially affect
fiscal 1995 public assistance spending. The fiscal 1995 expenditure estimate of
$16.449 billion includes $247.8 million appropriated to fund the Commonwealth's
public assistance programs for the last four months of fiscal 1995. The Common-
wealth is currently evaluating the new law's impact on fiscal 1996 projected
spending for public assistance programs.
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 Admin-
18
<PAGE>
istration and Finance is analyzing the effect, if any, this initiative peti-
tion, 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 petition, appro-
priate 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.
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
19
<PAGE>
estimates of budgetary 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 million 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), reflect-
ing an increase of approximately 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 Common-
wealth's outstanding commercial paper (except for approximately $50 million of
bond anticipation notes) and certain other short term borrowings, as of June
30, 1992, the end of fiscal 1992, the Commonwealth showed a year-end cash po-
sition of approximately $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 approx-
imately $21.2 million. Application of the adjusted fiscal 1990 fund balances
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 threat-
ens the health, safety or welfare of the people or the fiscal stability of the
Commonwealth 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 approxi-
mately $8.8 billion, $903 million less than was estimated at the time the fis-
cal 1991 budget was adopted. The Legislature adopted a number of the Gover-
nor's recommendations and the Governor took certain administrative actions not
requiring legislative approval, including the adoption of a state employee
furlough program. It is estimated by the Commonwealth that spending reductions
achieved through savings initiatives and withholding of allotments total ap-
proximately $484.3 million in aggregate for fiscal 1991. However, these sav-
ings and reductions may be impacted negatively by litigation pursued by third
parties concerning 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
result, in fiscal 1991, the Commonwealth obtained additional non-tax revenues
in the form of federal reimbursements equal to approximately $513 million on
account of uncompensated care payments. This reimbursement claim was based
upon recent amendments of federal law contained in the Omnibus Budget Recon-
ciliation Act of 1990 and, consequently, on relatively
20
<PAGE>
undeveloped federal laws, regulations and guidelines. At the request of the
federal Health Care Financing Administration, 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 reimburse-
ment, believes that the Commonwealth will prevail in the audit. If the Common-
wealth 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 pay-
ments.
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 February 1996 was 5.0%, as compared with the
United States unemployment rate of 5.5% 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. Should there be
21
<PAGE>
during the term of the Fund a financial crisis relating to Massachusetts, its
public bodies or municipalities, the market value and marketability of all
outstanding bonds issued by the Commonwealth and its public authorities or mu-
nicipalities 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 indebted-
ness of the Commonwealth (including Dedicated Income Tax Debt and Special Ob-
ligation Debt) as of April 1, 1996 was approximately $10.093 billion. There
were also outstanding approximately $240 million in general obligation notes
and other short term general obligation debt. The total bond and note liabili-
ties of the Commonwealth as of April 1, 1996, including guaranteed bond and
contingent liabilities was approximately $13.818 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 Common-
wealth and also accounts for a significant rise in debt service during that
period. In November, 1988, the Executive Office for Administration and Finance
established an administrative limit on state-financed capital spending in the
Capital Projects Fund of $925 million per fiscal year. Capital expenditures
were $847.0 million, $694.1 million, $575.9 million, $760.6 million and $902.2
million in fiscal 1991, fiscal 1992, fiscal 1993, fiscal 1994 and fiscal 1995,
respectively. Commonwealth-financed capital expenditures are projected to be
approximately $898.0 million in fiscal 1996. Debt service expenditures for
fiscal 1991, fiscal 1992, fiscal 1993, fiscal 1994 and fiscal 1995 were $942.3
million, $898.3 million, $1.140 billion, $1.149 billion, and $1.231 billion,
respectively, and are projected to be approximately $1.199 billion for fiscal
1996. The amounts represented do not include debt service on notes issued to
finance certain Medicare-related liabilities, certain debt service contract
assistance payment to Massachusetts Bay Transportation Authority ($205.5 mil-
lion projected in fiscal 1996), the Massachusetts Convention Center ($24.6
million projected in fiscal 1996), the Massachusetts Government Land Bank ($6
million projected in fiscal 1996), the Massachusetts Water Pollution Abatement
Trust ($16.6 million projected in fiscal 1996) and grants to municipalities
under the school building assistance program to defray a portion of the debt
service costs on local school bonds ($174.5 million projected in fiscal 1996).
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 appropri-
ations in any fiscal year may be expended for payment of interest and princi-
pal on general obligation debt (excluding the Fiscal Recovery Bonds). The per-
centage 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
Commonwealth began assuming full financial responsibility for all costs of the
administration of justice within the Commonwealth; continuing demands to raise
aggregate aid to cities, towns, schools and other districts and transit au-
thorities above current levels; and Medicaid 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
22
<PAGE>
order to meet federal standards, including those governing receipt of federal
reimbursements under various programs, 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 funding schedule must provide for annual payments in each of the ten
years ending fiscal 1998 which are at least equal to the total estimated pay-
as-you-go pension costs in each year. As a result of this requirement, the
funding requirements for fiscal 1996, 1997 and 1998 are estimates to be in-
creased to approximately $1.007 billion, $1.061 billion and $1.128 billion, re-
spectively.
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
$3.557 billion in current dollars, with approximately $1.046 billion to be
spent on or after June 30, 1995. On October 18, 1995, the court entered an or-
der which reduced the MWRA's obligation to build certain additional secondary
treatment facilities, which is estimated by the MWRA will save ratepayers ap-
proximately $165 million.
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. The Department of Public Welfare 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.
In 1995, the Spaulding Rehabilitation Hospital ("Spaulding") filed an action to
enforce an agreement to acquire its property by eminent domain in connection
with the Central Artery/Third Harbor Tunnel Project. If successful, Spaulding
could recover the fair market value of its property in addition to its
23
<PAGE>
relocation costs with respect to its personal property. The Commonwealth esti-
mates its potential liability at approximately $50 million.
The Commonwealth faces an additional potential liability of approximately $40
million in connection with a taking by the Massachusetts Highway Department re-
lated to the relocation of Northern Avenue in Boston.
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 challenge the inclusion of income from tax exempt obliga-
tions 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 Sep-
tember 30, 1993. The case is pending before the Supreme Judicial Court. The po-
tential liability is approximately $55 million, including similarly situated
banks and tax years after 1990.
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. In June, 1995, the United States Supreme Court denied the plaintiff's
writ of certiorari. Several other unions have filed a companion suit asserting
that the premium increase similarly violated other collective bargaining agree-
ments. The latter suit is in its initial stages. Prior to the Supreme Judicial
Court's decision, the Commonwealth's aggregate liability is estimated to be ap-
proximately $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.
On March 22, 1995, the Supreme Judicial Court held in Perini Corporation v.
Commission of Revenues that certain deductions from the net worth measure of
the Massachusetts corporate excise tax violate the Commerce Clause of the
United States Constitution. On October 2, 1995, the United States Supreme Court
denied the Commonwealth's petition for writ of certiorari. The Department of
Revenue estimates that tax revenues in the amount of $40 to $55 million may be
abated as a result of the Supreme Judicial Court's decision.
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.
24
<PAGE>
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 significant im-
provements to property. Legislation has also been enacted providing for certain
local option taxes. A voter initiative petition approved at the statewide gen-
eral 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 lottery fund. If
implemented in accordance with its terms (including appropriation of the neces-
sary funds), the petition as approved would shift several hundred million dol-
lars 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
25
<PAGE>
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 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 var-
ious public bodies (the "Agencies"), and by other entities located within the
State, including the City of New York (the "City"), in connection with the is-
suance 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. Economic growth slowed within New York during
1995 as the expansion of the national economy moderated. The State has fore-
casted a slowdown in the expansion of the State's economy in 1996. The State's
economic growth continues to lag behind the nation's due in part to a signifi-
cant retrenchment in the banking and financial services industries, downsizing
by major
26
<PAGE>
corporations, cutbacks in defense spending, and an oversupply of office build-
ings. Many uncertainties 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 sufficient to meet the State's projections of receipts and disburse-
ments.
1996-97 Fiscal Year. The Governor issued a proposed Executive Budget for the
1996-97 fiscal year (the "Proposed Budget") on December 15, 1995, which pro-
jected a balanced general fund and receipts and disbursements of $31.3 billion
and $31.2 billion, respectively. As of June 10, 1996, the State legislature had
not yet enacted, nor had the Governor and the legislature reached an agreement
on, the budget for the 1996-97 fiscal year which commenced on April 1, 1996.
The Governor and the State's legislature have agreed on or proposed a series of
short-term stopgap spending measures to fund state payrolls and advances to
certain municipalities and certain state programs. The delay in the enactment
of the budget may negatively affect certain proposed actions and reduce pro-
jected savings.
The Proposed Budget and the 1996-97 Financial Plan provide for the closing of a
projected $3.9 billion budget gap in the 1996-97 fiscal year by cost-contain-
ment savings in social welfare programs, savings from State agency
restructurings, decreasing the level of some categories of local aid, new reve-
nue measures and a reduction in the number of state employees. Up to $1.3 bil-
lion of gap closing measures by the State are dependent upon federal actions
with respect to the Medicaid program that have not been enacted due to the fed-
eral budget impact. The Governor has proposed that, depending upon the ultimate
form of Medicaid relief provided to the states, any resulting gap would be
filled through a combination of increased revenues, additional cuts in spending
for social services, and so-called "one shot" sources of revenue or cost sav-
ings.
The Proposed Budget and the 1996-97 Financial Plan may be impacted negatively
by uncertainties relating to the economy and tax collections. In particular,
should the national economy grow more slowly than forecasted by the State, rev-
enues received by the State would be adversely affected. In addition, proposed
retroactive changes to the federal tax treatment of capital gains would flow
through to the State and could significantly reduce tax receipts.
1995-96 Fiscal Year. The Governor announced on April 3, 1996 that the State
ended its 1994-95 fiscal year with an operating surplus of approximately $445
million. The State Legislature enacted the State's 1995-96 fiscal year budget
on June 7, 1995, more than two months after the start of that fiscal year. As
of January 19, 1996, the updated 1995-96 State Financial Plan (the "Plan") pro-
jected total general fund receipts and disbursements each of $32.7 billion,
representing reductions in receipts and disbursements of $144 million and $103
million, respectively, from the amount set forth in the 1995-96 budget. The
Plan projected for a General Fund balance of approximately $172 million at the
close of the 1995-96 fiscal year.
1994-95 Fiscal Year. The State ended the 1994-95 fiscal year with a General
Fund balance of approximately $158 million.
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
27
<PAGE>
address any potential budgetary imbalance, the State may need to take signifi-
cant actions to align recurring receipts and disbursements. The Governor's bud-
get for fiscal year 1996-97 projects that budget gaps of $1.4 billion and $2.5
billion may need to be closed for fiscal years 1997-98 and 1998-99, respective-
ly.
Indebtedness. As of March 31, 1995, the total amount of long-term State general
obligation debt authorized but unissued stood at $1.8 billion. As of the same
date, the State had approximately $5.2 billion in general obligation bonds, in-
cluding $149 million in bond anticipation notes outstanding.
The State originally projected that its borrowings for capital purposes during
the State's 1995-96 fiscal year would consist of $248 million in general obli-
gation bonds and bond anticipation notes and $186 million in general obligation
commercial paper. The Legislature authorized the issuance of up to $33 million
in certificates of participation in pools of leases for equipment and real
property to be utilized by State agencies in fiscal year 1995-96. The Gover-
nor's budget for fiscal year 1996-97 projects approximately $400 million of
borrowings by the state for capital purposes. The projections of the State re-
garding its borrowings for any fiscal year are subject to change if actual re-
ceipts 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 June 30,
1995, LGAC has issued its bonds to provide net proceeds of $4.7 billion com-
pleting the program.
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,
1995, there were $18 billion of such other financing arrangements outstanding
and additional financings of this nature by public authorities. In addition,
certain agencies had issued and outstanding approximately $7.0 billion of
"moral obligation financings" as of March 31, 1995, 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. Moody's rating of the State's general obligation bonds stood at A on
January 24, 1996, and S&P's rating stood at A- with a positive outlook, on Jan-
uary 24, 1996, 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 $116 million of general obligation bonds in Janu-
ary 1996.
28
<PAGE>
(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
City's economy may be ending, but there is little prospect of any significant
improvement in the near term.
Fiscal Year 1997 and the 1996-1999 Financial Plan. On January 31, 1996, the
Mayor released his preliminary $31 billion budget for fiscal year 1997, which
included $2.0 billion of deficit reduction measures and relied upon a $750 mil-
lion reduction in mandated welfare and Medicaid expenditures from the State and
a $643 million reduction in expenditures by City agencies and the Board of Edu-
cation ("BOE") budget. The Mayor has also received from MAC for $125 million in
fiscal year 1996 in return for a commitment by the City to cut projected City
spending by $125 million in fiscal year 1997 and each of the next three fiscal
years. On May 9, 1996, the Mayor released a revised fiscal year 1997 budget of
$32.7 billion that would reduce overall spending from fiscal year 1996 and im-
pose $1.1 billion in budget cuts on City agencies. The revised budget reduces
reliance on savings in welfare and Medicaid expenditures by $250 million and
restores $300 million of proposed tax cuts, including a recommended four year
extension of the City surcharge on personal income taxes.
The City Council has not yet approved the Mayor's revised fiscal year 1997 bud-
get, although a tentative agreement on the budget was announced on June 10,
1996.
The 1996-1999 Financial Plan (the "Plan"), as revised in May 1996 by the Mayor,
projected budget gaps of $1.4 and $2.3 billion for fiscal years 1998 and 1999,
respectively. The forecasted budget shortfall in fiscal year 2000 could be as
much as $2.9 million. The City Comptroller and State Comptroller have each
warned that the fiscal year 1997 budget includes significant revenue risks. The
State Comptroller has expressed concern that projected budget gaps for fiscal
years 1999 and 2000 are each in excess of $2 billion despite the City's signif-
icant cost-cutting efforts.
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. Due to the continuing federal budget impasse, the City cannot
be assured that its assumptions regarding the amount of federal aid or the im-
pact of changes in federal law upon its operations or tax receipts. An extended
delay by the
29
<PAGE>
State in adopting its 1996-97 fiscal year budget or in the adoption of the fed-
eral budget would negatively impact upon the City's financial condition and
ability to close budget gaps for fiscal years 1997 and thereafter.
The Mayor was required to submit an executive budget for fiscal year 1997 to
the City Council in late April 1996. Due to continuing uncertainties related to
the amount of State and federal aid, the City Council extended the date by
which the Mayor was to submit such executive budget.
Given the foregoing, there can be no assurance that the City will continue to
maintain a balanced budget during fiscal year 1997 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
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 1996-97 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 1997-98 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, approval by
the Governor or the State Legislature and the cooperation of MAC with respect
to various other actions proposed in the Plan and changes in federal tax law.
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 1997 and thereafter. Any such proposed expenditure reductions will be dif-
ficult to implement
30
<PAGE>
because of their size and the substantial expenditure reductions already im-
posed on City operations in recent years.
Attaining a balanced budget is also dependent upon the City's ability to mar-
ket its securities successfully in the public credit markets. On May 3, 1996,
the Mayor announced a $1 billion reduction in City capital spending over a
five year period through fiscal year 2000. The City's financing program for
fiscal years 1996 through 2000 contemplates capital spending of $14 billion,
which will be financed through issuance of general obligation bonds, Water Au-
thority Revenue Bonds and Covered Organization obligations, and will be used
primarily to reconstruct and rehabilitate the City's infrastructure and physi-
cal assets and to make capital investments. The City's financing program as-
sumes the receipt of approximately $1 billion from the sale of City's sewer
and water systems. However, the City Comptroller has obtained a court order
blocking such sale, which the City is appealing. In the event such appeal is
unsuccessful the City would be required to reduce capital spending during the
next four years or find additional sources of funds in such amount. A signifi-
cant 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 re-
quirements. 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 develop-
ments, the City's future financial needs and other issues may affect the mar-
ket for outstanding City general obligation 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.
Absent appropriate legislative relief, the City may also face limitations on
its borrowing capacity after 1998 under the State's Constitution that will
prevent it from borrowing additional funds, as a result of the decrease in
real estate values within the City. The inability to finance capital improve-
ments would increase the City's budget gaps in later years or require it to
significantly curtail capital spending which would lead to a deterioration in
the City's infrastructure and ability to deliver services.
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
commenced and claims asserted against the City arising out of alleged consti-
tutional 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, 1995, the City
estimated its potential future liability on outstanding claims to be $2.5
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
permanent injunction would have a negative impact on the City's financial con-
dition and its ability to fund its operations.
31
<PAGE>
Fiscal Year 1996. New York City adopted its 1996 fiscal year budget in June
1995, and submitted its Financial Plan for the 1996 fiscal year to the Control
Board on July 11, 1995. The fiscal 1996 budget and Financial Plan originally
provided for spending of $31.4 billion and a closed budget gap of $3.1 billion.
However, in January 1996 additional unexpected budget gaps totaling approxi-
mately $760 million were identified in the fiscal 1996 budget. The widening of
the budget gap for fiscal year 1996 resulted from shortfalls in tax revenues
and State and federal aid and the failure to achieve Medicaid, welfare and
other savings at the levels projected. The City has undertaken a number of ac-
tions to close the recently discovered gap, including additional agency cuts,
refinancing of MAC debt, the proposed sale of the City's parking meters and the
proposed sale of approximately $250 million of uncollected tax liens. The City
Comptroller has questioned whether the City will be able to close the remaining
budget gap for fiscal year 1996 prior to fiscal year-end on June 30, 1996 and
has criticized certain gap-closing measures as being at the expense of future
revenues.
Fiscal Years 1991 through 1995. The City achieved balanced operating results in
accordance with generally accepted accounting principles for fiscal years 1991
through 1995. 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 BBB+. On February
11, 1991, Moody's had lowered its rating from A.
On March 1, 1996, Moody's confirmed its Baa1 rating in connection with a sched-
uled March 1996 sale of $1.3 billion of the City's general obligation bonds but
indicated that it would review such rating for a possible downgrade following
adoption of the City's 1997 fiscal year budget. S&P also confirmed its rating
of the City's general obligation bonds in connection with such general obliga-
tion bond issue in March 1996.
In January 1995, in response to the City's plan to borrow $120 million to re-
fund debt due in February without imposing additional cuts in the fiscal 1995
budget, S&P placed the City on negative credit watch. In late May 1996, S&P
confirmed the City's rating citing improvements in the revised fiscal year 1997
budget. Any rating decrease would negatively affect 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 Oc-
tober 1993 TANs issue increased 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, 1995, the City and MAC had, respectively, $24.4 billion and
$4.0 billion of outstanding net long-term indebtedness.
32
<PAGE>
(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, 1994, the State reported that eighteen Agencies each had
outstanding debt of $100 million or more and an aggregate of $70.3 billion of
outstanding debt, some of which was state-supported, state-related 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
mental hygiene programs. Adverse judgments in these matters generally could
result 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
significant amounts of land were unconstitutionally taken from the Indians in
violation of various treaties and agreements during the eighteenth and nine-
teenth centuries. The claimants seek recovery of approximately six million
acres of land, as well as compensatory and punitive damages.
(5) Other Municipalities: Certain localities in addition to New York City
could have financial problems leading to requests for additional State assis-
tance. 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
33
<PAGE>
the State Legislature to assist Yonkers could result in allocation of State re-
sources in amounts that cannot yet be determined.
Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1993, the total indebtedness of all localities in the
State (other than New York City) was approximately $17.7 billion. State law re-
quires the Comptroller to review and make recommendations concerning the bud-
gets of those local 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 outstanding. Fifteen localities had outstanding indebtedness for
State financing at the close of their fiscal year ending in 1993. In December
1995, in reaction to continuing financial problems, the Troy Municipal Assis-
tance Corp., which was created in 1995, imposed a 1996 budget plan upon Troy,
New York. Troy MAC had been expected to refinance $35 million of revenue bonds
issued by Troy, for which Troy lacks resources to fund debt service. Such reve-
nue bonds have not to date been refinanced. A similar municipal assistance cor-
poration has also been established for Newburgh. In addition, several other New
York cities, including Utica, Rome, Schenectady, Syracuse and Niagara Falls
have faced continuing budget deficits, as federal and state aid and local tax
revenues have declined while government expenses have increased. The financial
problems being experienced by the State's smaller urban centers place addi-
tional strains upon the State's financial condition at a time when the State is
struggling with its own budget gaps.
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. In addition, proposed
changes in the treatment of capital gains for federal income tax purposes could
reduce the receipts of the State and City. If the State, New York City or any
of the Agencies were to suffer serious financial difficulties jeopardizing
their respective access to the public credit markets, the marketability of
notes and bonds issued by localities within the State, including notes or bonds
in the Fund, could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial deci-
sions, and long-range economic trends. The longer-range potential problems of
declining urban population, increasing expenditures, and other economic trends
could adversely affect certain localities and require increasing State assis-
tance 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.
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
34
<PAGE>
contract or in an option which is expected to move in the opposite direction
from the position being hedged. Futures or options utilized for hedging pur-
poses 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 securi-
ties or indexes is a means of hedging against the risk that the value of secu-
rities 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 financial 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 securi-
ties or indexes may serve as a hedge against a modest decline in prices of Mu-
nicipal 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 ac-
quire. The writing of such options provides a hedge to the extent of the pre-
mium received in the writing transaction. Regulations of the Commodity Futures
Trading Commission ("CFTC") applicable to the Funds require that transactions
in futures and options on futures be engaged in only for bona-fide hedging pur-
poses, and that no such transactions may be entered into by a Fund if the ag-
gregate initial margin deposits and premiums paid by that Fund exceeds 5% of
the market value of the Fund's assets. A Fund will not purchase futures unless
it has segregated cash, government securities or high grade liquid debt equal
to the contract price of the futures less any margin on deposit, or unless the
long futures position is covered by the sale of a put option. A Fund will not
sell futures unless the Fund owns the instruments 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 instruments or index
underlying the futures. In addition, each Fund is subject to the tax require-
ment 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 op-
tions on debt securities or indexes, a Fund will not purchase such options if
more than 5% of its assets would be invested in the premiums for such options,
and it will only write "covered" or "secured" options, wherein the securities
or cash required to be delivered upon exercise are held by a Fund, with such
cash being maintained in a segregated account. These requirements and limita-
tions 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
35
<PAGE>
instruments covered by the contracts, in most cases positions in these con-
tracts are closed out in cash by entering into offsetting, liquidating or clos-
ing transactions. Index futures and options are designed for cash settlement
only.
Risks of Futures and Options Transactions. There are risks associated with the
use of futures contracts and options for hedging purposes. Investment in
futures contracts and options involves the risk of imperfect correlation be-
tween movements in the price of the futures contract and options and the price
of the security being hedged. The hedge will not be fully effective where there
is imperfect correlation between the movements in the two financial instru-
ments. For example, if the price of the futures contract moves more than the
price of the hedged security, a Fund will experience either a loss or gain on
the future which is not completely offset by movements in the price of the
hedged securities. Further, even where perfect correlation between the price
movements does occur, a Fund will sustain a loss at least equal to the commis-
sions on the financial futures transaction. To compensate for imperfect correc-
tions, the Funds may purchase or sell futures contracts in a greater dollar
amount than the hedged securities if the volatility of the hedged securities is
historically greater than the volatility of the futures contracts. Conversely,
the Funds may purchase or sell fewer futures contracts if the volatility of the
price of the hedged securities is historically less than that of the futures
contracts.
Because of low initial margin deposits made upon the opening of a futures posi-
tion, futures transactions involve substantial leverage. As a result, rela-
tively small movements in the price of the futures contract can result in sub-
stantial unrealized gains or losses. Because the Funds will engage in the pur-
chase and sale of financial futures contracts solely for hedging purposes, how-
ever, any losses incurred in connection therewith should, if the hedging strat-
egy is successful, be offset in whole or in part by increases in the value of
securities held by the Funds or decreases in the price of securities the Funds
intend to acquire.
The Funds expect to liquidate a majority of the financial futures contracts
they enter into through offsetting transactions on the applicable contract mar-
ket. There can be no assurance, however, that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may
not be possible to close a futures position. In the event of adverse price
movements, the Funds would continue to be required to make daily cash payments
of variation margin. In such situations, if a Fund has sufficient cash, it may
be required to sell portfolio securities to meet daily variation margin re-
quirements at a time when it may be disadvantageous to do so. The inability to
close out futures positions also could have an adverse impact on a Fund's abil-
ity 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 sin-
gle trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing the
liquidation of open futures positions. Prices have in the past moved the daily
limit on a number of consecutive trading days.
The successful use of transactions in futures also depends on the ability of
Nuveen Advisory to forecast the direction and extent of interest rate movements
within a given time frame. To the extent these
36
<PAGE>
prices remain stable during the period in which a futures contract is held by a
Fund or moves in a direction opposite to that anticipated, the Fund may realize
a loss on the hedging transaction which is not fully or partially offset by an
increase in the value of portfolio securities. As a result, the Fund's total
return for such period may be less than if it had not engaged in the hedging
transaction.
The ability of each of the Funds to engage in transactions in futures 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.
37
<PAGE>
Bank Notes are notes issued by local government bodies and agencies as those
described above to commercial banks as evidence of borrowings. The purposes for
which the notes are issued are varied but they are frequently issued to meet
short-term working capital or capital-project needs. These notes may have risks
similar to the risks associated with TANs and RANs.
Tax-Exempt Commercial Paper (Municipal Paper) represents very short-term
unsecured, negotiable promissory notes, issued by states, municipalities and
their agencies. Payment of principal and interest on issues of municipal paper
may be made from various sources, to the extent the funds are available there-
from. Maturities of municipal paper generally will be shorter than the maturi-
ties of TANs, BANs or RANs. There is a limited secondary market for issues of
municipal paper.
While these various types of notes as a group represent the major portion of
the tax-exempt note market, other types of notes are occasionally available in
the marketplace and each Fund may invest in such other types of notes to the
extent permitted under its investment objective, policies and limitations. Such
notes may be issued for different purposes and may be secured differently from
those mentioned above.
The Funds may also invest in the following taxable temporary investments:
U.S. Government Direct Obligations are issued by the United States Treasury and
include bills, notes and bonds.
- --Treasury bills are issued with maturities of up to one year. They are issued
in bearer form, are sold on a discount basis and are payable at par value at
maturity.
- --Treasury notes are longer-term interest bearing obligations with original ma-
turities of one to seven years.
- --Treasury bonds are longer-term interest-bearing obligations with original ma-
turities 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.
38
<PAGE>
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few days to nine months. Commercial paper may be purchased from
U.S. corporations.
Other Corporate Obligations--The Funds may purchase notes, bonds and debentures
issued by corporations if at the time of purchase there is less than 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 declines, and might incur disposition costs
or experience delays in connection with liquidating the collateral. In addi-
tion, if bankruptcy proceedings are commenced with respect to the seller of the
security, realization upon the collateral by the Funds may be delayed or limit-
ed. Nuveen Advisory will monitor the value of collateral at the time the trans-
action is entered into and at all times subsequent during the term of the re-
purchase 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 de-
clined below the repurchase price, Nuveen Advisory will demand additional col-
lateral 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 as-
sets 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 to principal and interest of
A rated Municipal Obligations are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Municipal Obligations rated Baa by Moody's are considered medium grade obliga-
tions (i.e., they are neither highly protected nor poorly secured). Such bonds
lack outstanding investment characteristics and in fact have speculative char-
acteristics as well. Moody's bond rating symbols may contain numerical modifi-
ers of a generic rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end of
its general rating category.
39
<PAGE>
The four highest ratings of S&P for Municipal Obligations are AAA, AA, A and
BBB. Municipal Obligations rated AAA have an extremely strong capacity to pay
principal and interest. The rating of AA indicates that capacity to pay prin-
cipal and interest is very strong and such bonds differ from AAA issues only
in small degree. The category of A describes bonds which have a strong capac-
ity to pay principal and interest, although such bonds are somewhat more sus-
ceptible to the adverse effects of changes in circumstances and economic con-
ditions. The BBB rating is the lowest "investment grade" security rating by
S&P. Municipal Obligations rated BBB are regarded as having an adequate capac-
ity to pay principal and interest. Whereas such bonds normally exhibit ade-
quate protection parameters, adverse economic conditions are more likely to
lead to a weakened capacity 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
portfolio, but Nuveen Advisory will consider such an event in its determina-
tion of whether the Fund should continue to hold such obligation.
MANAGEMENT
The management of Nuveen Insured Tax-Free Bond Fund, Inc., including general
supervision of the duties performed for the Funds under the Investment Manage-
ment Agreement, is the responsibility of its Board of Directors. Nuveen In-
sured Tax-Free Bond Fund, Inc. currently has six directors, two of whom are
"interested persons" (as the term "interested persons" is defined in the In-
vestment Company Act of 1940) and four of whom are "disinterested persons."
The names and business addresses of the directors and officers of Nuveen In-
sured Tax-Free Bond Fund, Inc. and their principal occupations and other af-
filiations during the past five years are set forth below, with those direc-
tors who are "interested persons" indicated by an asterisk.
<TABLE>
- --------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. 47 Chairman of the Chairman (since July 1, 1996) and Director,
Schwertfeger* Board and Di- formerly Executive Vice President of The
333 West Wacker rector John Nuveen Company (since March 1992) and
Drive of John Nuveen & Co. Incorporated; Chairman
Chicago, IL 60606 (since July 1, 1996) and Director (since
October 1, 1992) of Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.
</TABLE>
- -------------------------------------------------------------------------------
40
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------
<C> <C> <C> <S>
Anthony T. Dean* 51 President and President (since July 1, 1996) and Direc-
333 West Wacker Director tor, formerly Executive Vice President of
Drive The John Nuveen Company (since March 1992)
Chicago, IL 60606 and of John Nuveen & Co. Incorporated;
President (since July 1, 1996) and Director
(since October 1, 1992) of Nuveen Advisory
Corp. and Nuveen Institutional Advisory
Corp.
- --------------------------------------------------------------------------------------
Lawrence H. Brown 61 Director Retired (August 1989) as Senior Vice Presi-
201 Michigan Avenue dent of The Northern Trust Company.
Highwood, IL 60040
- --------------------------------------------------------------------------------------
Anne E. Impellizzeri 63 Director President and Chief Executive Officer of
3 West 29th Street Blanton-Peale Institute of Religion and
New York, NY 10001 Health (since December 1990); prior there-
to, Vice President of New York City Part-
nership (from 1987 to 1990).
- --------------------------------------------------------------------------------------
Margaret K. Rosen- 69 Director Helen Ross Professor of Social Welfare Pol-
heim icy, School of Social Service Administra-
969 East 60th Street tion, University of Chicago.
Chicago, IL 60637
- --------------------------------------------------------------------------------------
Peter R. Sawers 63 Director Adjunct Professor of Business and Econom-
22 The Landmark ics, University of Dubuque, Iowa; Adjunct
Northfield, IL 60093 Professor, Lake Forest Graduate School of
Management, Lake Forest, Illinois (since
January 1992); prior thereto, Executive Di-
rector, Towers Perrin Australia (management
consultant); Chartered Financial Analyst;
Certified Management Consultant.
- --------------------------------------------------------------------------------------
William M. Fitzger- 32 Vice President Vice President of Nuveen Advisory Corp.
ald (since December 1995); Assistant Vice Pres-
333 West Wacker ident of Nuveen Advisory Corp. (from Sep-
Drive tember 1992 to December 1995); prior
Chicago, IL 60606 thereto Assistant Portfolio Manager of
Nuveen Advisory Corp. (from June 1988 to
September 1992).
- --------------------------------------------------------------------------------------
Kathleen M. Flanagan 49 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
J. Thomas Futrell 40 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker
Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------------
Steven J. Krupa 38 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker
Drive
Chicago, IL 60606
</TABLE>
- --------------------------------------------------------------------------------
41
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE FUNDS DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------
<C> <C> <C> <S>
Anna R. Kucinskis 50 Vice President Vice President of John Nuveen & Co.
333 West Wacker Incorporated.
Drive
Chicago, IL 60606
- -------------------------------------------------------------------------------
Larry W. Martin 44 Vice President Vice President (since September
333 West Wacker and Assistant 1992), Assistant Secretary and As-
Drive Secretary sistant General Counsel of John
Chicago, IL 60606 Nuveen & Co. Incorporated; Vice
President (since May 1993) and As-
sistant Secretary of Nuveen Advisory
Corp; Vice President (since May
1993) and Assistant Secretary (since
January 1992) of Nuveen Institu-
tional Advisory Corp.; Assistant
Secretary of The John Nuveen Company
(since February 1993).
- -------------------------------------------------------------------------------
O. Walter Renfftlen 56 Vice President Vice President and Controller of The
333 West Wacker and Controller John Nuveen Company (since March
Drive 1992), John Nuveen & Co. Incorporat-
Chicago, IL 60606 ed, Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp. (since
April 1990).
- -------------------------------------------------------------------------------
Thomas C. Spalding, 44 Vice President Vice President of Nuveen Advisory
Jr. Corp. and Nuveen Institutional Advi-
333 West Wacker sory Corp.; Chartered Financial Ana-
Drive lyst.
Chicago, IL 60606
- -------------------------------------------------------------------------------
H. William Stabenow 61 Vice President Vice President and Treasurer of The
333 West Wacker and Treasurer John Nuveen Company (since March
Drive 1992), John Nuveen & Co. Incorporat-
Chicago, IL 60606 ed, Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp, (since
January 1992).
- -------------------------------------------------------------------------------
James J. Wesolowski 45 Vice President Vice President, General Counsel and
333 West Wacker and Secretary Secretary of The John Nuveen Company
Drive (since March 1992), John Nuveen &
Chicago, IL 60606 Co. Incorporated, Nuveen Advisory
Corp. and Nuveen Institutional Advi-
sory Corp. (since April 1990).
- -------------------------------------------------------------------------------
Gifford R. Zimmerman 39 Vice President Vice President (since September
333 West Wacker and Assistant 1992), Assistant Secretary and As-
Drive Secretary sistant General Counsel of John
Chicago, IL 60606 Nuveen & Co. Incorporated; Vice
President (since May 1993) and As-
sistant Secretary of Nuveen Advisory
Corp.; Vice President (since May
1993) and Assistant Secretary (since
January 1992) of Nuveen Institu-
tional Advisory Corp.
</TABLE>
- --------------------------------------------------------------------------------
Timothy R. Schwertfeger and Margaret K. Rosenheim serve as members of the Exec-
utive Committee of the Board of Directors. The Executive Committee, which meets
between regular meetings of the Board of Directors, is authorized to exercise
all of the powers of the Board of Directors.
The directors of Nuveen Insured Tax-Free Bond Fund, Inc. are also directors or
trustees, as the case may be, of 18 other Nuveen open-end fund portfolios and
53 Nuveen closed-end funds.
42
<PAGE>
The following table sets forth compensation paid by the Nuveen Insured Tax-Free
Bond Fund, Inc. during the fiscal year ended February 29, 1996 to each of the
directors. The Nuveen Insured Tax-Free Bond Fund, Inc. has no retirement or
pension plans. The officers and directors affiliated with Nuveen serve without
any compensation from the Nuveen Insured Tax-Free Bond Fund, Inc.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM THE FUND AND
AGGREGATE FUND COMPLEX
COMPENSATION PAID TO
NAME OF DIRECTOR FROM THE FUND DIRECTORS(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke*............................. $ 0 $ 0
Timothy R. Schwertfeger........................ 0 0
Lawrence H. Brown.............................. 2,590 55,500
Anne E. Impellizzeri........................... 2,590 63,000
John E. O'Toole................................ 1,932 47,000
Margaret K. Rosenheim.......................... 3,130(2) 62,322(3)
Peter R. Sawers................................ 2,590 55,500
</TABLE>
- --------
*Mr. Franke retired as of June 30, 1996.
(1) The directors of the Nuveen Insured Tax-Free Bond Fund, Inc. are directors
or trustees, as the case may be, of 21 Nuveen open-end funds and 53 Nuveen
closed-end funds.
(2) Includes $178 in interest earned on deferred compensation from prior years.
(3) Include $1,572 in interest earned on deferred compensation from prior
years.
Each director who is not affiliated with Nuveen or Nuveen Advisory receives a
$45,000 annual retainer for serving as a director or trustee of all funds for
which Nuveen Advisory serves as investment adviser and a $1,000 fee per day
plus expenses for attendance at all meetings held on a day on which a regularly
scheduled Board meeting is held, a $1,000 fee per day plus expenses for atten-
dance in person or a $500 fee per day plus expenses for attendance by telephone
at a meeting held on a day on which no regular Board meeting is held, and a
$250 fee per day plus expenses for attendance in person or by telephone at a
meeting of the Executive Committee held solely to declare dividends. The annual
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 their officers, all of whom are com-
pensated by Nuveen.
43
<PAGE>
On June 5, 1996, the officers and directors of Nuveen Insured 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 June 5, 1996, owned of record or was known by Nuveen Insured 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>
National Fund 12.07%
Class C Shares.................... Norman J. Younker &
Mary Katherine Younker
JT TEN WROS NOT TC
1029 S. 1200 E
Salt Lake City, UT 84105-1524
Oregon Waste Technology, Inc. 6.69%
P.O. Box 4008
Brookings, OR 97415-0081
Treasa A. Silva & 5.78%
Don O. Silva Jr.
JT TEN WROS NOT TC
355 E. Clark St.
Grantsville, UT 84029-9357
Melinda L. White 5.54%
3230 Cross Timbers
Garland, TX 75044
Massachusetts Fund 7.22%
Class A Shares.................... Gerald W. Mahoney &
Elaine Mahoney TR
UA AUG 18 94
The Bagley Family Rev. Trust
162 Oakland St.
Fall River, MA 02720-6114
NFSC FEBO #DKR-016039 6.66%
Allen Wrightington
Mary Ann Wrightington
93 Micajah Pono
Plymouth, MA 02360
Massachusetts Fund 13.81%
Class C Shares.................... Raymond James & Assoc., Inc.
For Elite Account #50099466
FAO George A. D'Auteuil Sr. &
Pauline T. D'Auteuil JT/WROS
9 Church St.
Millbury, MA 01527-3134
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
NAME OF FUND AND CLASS OWNER OWNERSHIP
- -------------------------------------------------------------------------------
<S> <C> <C>
Ruth Biller 13.55%
51 Oak Rd.
Canton, MA 02021-2625
Rose E. Frisch 12.47%
3 Hillside Pl
Cambridge, MA 02140-
3617
Daniel N. Flynn & 12.19%
Kathleen F. Flynn
JT TEN WROS NOT TC
232 North Rd
Hampton, MA 01036-9659
John Sullivan 12.17%
6 Margaret St.
Boston, MA 02113-2523
New York Fund 16.33%
Class A Shares......................... BHC Securities, Inc.
ATTN: Mutual Funds
One Commerce Square
2005 Market St., Ste.
1200
Philadelphia, PA 19103-
7042
New York Fund 10.54%
Class C Shares......................... Donaldson Lufkin
Jenrette
Securities Corporation,
Inc.
P.O. Box 2052
Jersey City, NJ 07303-
9998
Ruth Preston & 7.42%
Sara P. Costello &
Patricia M. Kohl
JT TEN WROS NOT TC
2 Middleton Rd.
Greenport, NY 11944-
1115
Prudential Securities 6.98%
FBO
Laurie D. Wax TTEE,
Irrevocable Trust of
1995
UA OTD 05/02/95, Via
D [Monterinald] 14 6N
Debra Arizzi 6.79%
9725 92nd St
Ozone Park, NY 11416-
2214
Paula Gelender 6.78%
1177 E 98th St Apt. 5d
Brooklyn, NY 11236-4000
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
NAME OF FUND AND CLASS OWNER OWNERSHIP
- -------------------------------------------------------------------------------
<S> <C> <C>
Gerald Fantel TR UA 6.54%
Feb 7 96 Gerald I Fantel
Rev Trust 326 Kigwood Rd
Woodmere, Ny 11598-1608
New York Fund 23.36%
Class R Shares......................... BHC Securities, Inc.
ATTN: Mutual Funds
One Commerce Square
2005 Market St., Ste.
1200
Philadelphia, PA 19103-
7042
</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 Insured Tax-Free Bond Fund's business affairs, provides office
facilities and equipment and certain clerical, bookkeeping and administrative
services, and permits any of its officers or employees to serve without compen-
sation as directors or officers of the Nuveen Insured Tax-Free Bond Fund, Inc.
if elected to such positions. See "Management of the Funds" in the Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and
Nuveen Insured Tax-Free Bond Fund, Inc., the Funds have agreed to pay annual
management fees at the rates set forth below:
<TABLE>
<CAPTION>
MANAGEMENT FEE
FOR THE
MANAGEMENT FEE MASSACHUSETTS FUND
AVERAGE DAILY NET ASSET FOR THE AND THE
VALUE NATIONAL FUND NEW YORK FUND
- -------------------------------------------------------------
<S> <C> <C>
For the first $125 million .5000 of 1% .5500 of 1%
For the next $125 million .4875 of 1% .5375 of 1%
For the next $250 million .4750 of 1% .5250 of 1%
For the next $500 million .4625 of 1% .5125 of 1%
For the next $1 billion .4500 of 1% .5000 of 1%
For assets over $2 billion .4250 of 1% .4750 of 1%
</TABLE>
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 .975 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 volun-
tary 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:
46
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT FEES NET OF EXPENSE FEE WAIVERS AND EXPENSE
REIMBURSEMENT PAID TO NUVEEN REIMBURSEMENTS
ADVISORY FOR THE YEAR ENDED FOR THE YEAR ENDED
-------------------------------- -----------------------
2/28/94 2/28/95 2/29/96 2/28/94 2/28/95 2/29/96
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Fund......... $3,265,386 $3,439,021 $3,756,793 $ 0 $10,570 $1,303
Massachusetts Fund.... 295,357 308,241 346,952 0 1,148 788
New York Fund......... 1,968,122 1,921,472 1,940,010 0 1,767 0
Total For All Funds... 5,528,865 5,668,734 6,043,755 0 13,485 2,091
</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 Insured Tax-Free Bond Fund'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 de-
partment in the investment banking community devoted exclusively to the analy-
sis of municipal securities. In 1961, Nuveen began sponsoring the Nuveen Tax-
Exempt Unit Trust and since that time has issued more than $36 billion in tax-
exempt unit trusts, including over $12 billion in tax-exempt insured unit
trusts. In addition, Nuveen open-end and closed-end funds held approximately
$31 billion in tax-exempt securities under management as of the date of this
Statement. Over 1,000,000 individuals have invested to date in Nuveen's tax-ex-
empt funds and trusts. Nuveen is a subsidiary of The John Nuveen Company which,
in turn, is approximately 80% owned by The St. Paul
Companies, Inc. ("St. Paul"). St. Paul is located in St. Paul, Minnesota, and
is principally engaged in providing property-liability insurance through sub-
sidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department, the largest in the investment banking industry devoted ex-
clusively to tax-exempt securities. Nuveen's Research Department was selected
in 1994 by Research & Ratings Review, a municipal industry publication, as one
of the leading research teams in the municipal industry, based on an extensive
industry-wide poll of portfolio managers, department heads and bond buyers. The
Nuveen Research Department 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 attempt to take advan-
tage of, a Fund's anticipated or actual portfolio transactions, and is designed
to assure that the interest of Fund shareholders are placed before the interest
of Nuveen personnel in connection with personal investment transactions.
47
<PAGE>
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of each Fund, will place orders in such manner as, in the opinion
of management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be ob-
tained elsewhere. Portfolio securities will not be purchased from Nuveen or its
affiliates except in compliance with the Investment Company Act of 1940.
The Funds expect that all portfolio transactions will be effected on a princi-
pal (as opposed to an agency) basis and, accordingly, do not expect to pay any
brokerage commissions. Purchases from underwriters will include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
will include the spread between the bid and asked price. Given the best price
and execution obtainable, it will be the practice of the Funds to select deal-
ers which, in addition, furnish research information (primarily credit analyses
of issuers and general economic reports) and statistical and other services to
Nuveen Advisory. It is not possible to place a dollar value on information and
statistical and other services received from dealers. Since it is only supple-
mentary to Nuveen Advisory's own research efforts, the receipt of research in-
formation is not expected to reduce significantly Nuveen Advisory's expenses.
While Nuveen Advisory will be primarily responsible for the placement of the
business of the Funds, the policies and practices of Nuveen Advisory in this
regard must be consistent with the foregoing and will, at all times, be subject
to review by the Board of Directors.
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies for other clients, which may have investment
objectives similar to the Funds. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Funds and the portfolios of its other clients purchasing or selling securi-
ties whenever
decisions are made to purchase or sell securities by a Fund and one or more of
such other clients simultaneously. In making such allocations the main factors
to be considered will be the respective investment objectives of the Fund and
such other clients, the relative size of portfolio holdings of the same or com-
parable 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 recom-
mending investments to the Fund and such other clients. While this procedure
could have a detrimental effect on the price or amount of the securities avail-
able to a Fund from time to time, it is the opinion of the Board of Directors
that the benefits available from Nuveen Advisory's organization will outweigh
any disadvantage that may arise from exposure to simultaneous transactions.
Under the Investment Company Act of 1940, the Funds may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of an issue of Munici-
pal Obligations purchased by a Fund, the amount of Municipal Obligations which
may be purchased in any one issue and the assets of a Fund which may be in-
vested in a particular issue. In addition, purchases of securities made pursu-
ant to the terms of the Rule must be approved at least quarterly by the Board
of Directors, including a majority of the directors who are not interested per-
sons of the Funds.
48
<PAGE>
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 The Chase
Manhattan Bank, N.A., the Funds' Custodian, as of 4:00 p.m. Eastern Time on
each day on which the New York Stock Exchange (the "Exchange") is normally open
for trading. The Exchange is not open for trading on New Year's Day, Washing-
ton's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanks-
giving 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 liabilities attributable to the class, by the
number of shares of the class outstanding.
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.
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Fried, Frank, Harris, Shriver & Jacobson, Washington, D.C., counsel to the
Funds.
As described in the Prospectus, each Fund intends to qualify, as it has in
prior years, under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") for tax treatment as a regulated investment company. In
order to qualify as a regulated investment company, a Fund must satisfy certain
requirements relating to the source of its income, diversification of its as-
sets, and distributions of its income to shareholders. First, a Fund must de-
rive at least 90% of its annual gross income (including tax-exempt interest)
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock or securities, foreign currencies or
other income (including but not limited to gains from options and futures) de-
rived with respect to its business of investing in such stock or securities
(the "90% gross income test"). Second, a Fund must derive less than 30% of its
annual gross income from the sale or other disposition of any of the following
which was held for less 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
49
<PAGE>
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 federal income
tax in any taxable year for which it distributes at least 90% of the sum of (i)
its "investment company taxable income" (which includes dividends, taxable in-
terest, taxable original issue discount and market discount income, income from
securities lending, net short-term capital gain in excess of long-term capital
loss, and any other taxable income other than "net capital gain" (as defined
below) and is reduced by deductible expenses) and (ii) its net tax-exempt in-
terest (the excess of its gross tax-exempt interest income over certain disal-
lowed deductions). A Fund may retain for investment its net capital gain (which
consists of the excess of its net long-term capital gain over its short-term
capital loss). However, if a Fund retains any net capital gain or any invest-
ment company taxable income, it will be subject to tax at regular corporate
rates on the amount retained. If a Fund retains any capital gain, such Fund may
designate the retained amount as undistributed capital gains in a notice to its
shareholders who, if subject to federal income tax on long-term capital gains,
(i) will be required to include in income for federal income tax purposes, as
long-term capital gain, their shares of such undistributed amount, and (ii)
will be entitled to credit their proportionate shares of the tax paid by such
Fund against their federal income tax liabilities, if any, and to claim refunds
to the extent the credit exceeds such liabilities. For federal income tax pur-
poses, the tax basis of shares owned by a shareholder of the Fund will be in-
creased by an amount equal under current law to 65% of the amount of undistrib-
uted capital gains included in the shareholder's gross income. Each Fund in-
tends 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 purposes as
discussed below) to treat all or part of any net capital loss, any net long-
term capital loss or any net foreign currency loss incurred after October 31 as
if they had been incurred in the succeeding year.
Each Fund also intends to satisfy conditions (including requirements as to the
proportion of its assets invested in Municipal Obligations) that will enable it
to designate distributions from the interest income generated by investments in
Municipal Obligations, which are exempt from regular federal income tax when
received by such Fund, as exempt-interest dividends. Shareholders receiving ex-
empt-interest dividends will not be subject to regular federal income tax on
the amount of such dividends. Insurance proceeds received by a Fund under any
insurance policies in respect of scheduled interest payments on defaulted Mu-
nicipal Obligations will be excludable from federal gross income under Section
103(a) of the Code. In the case of non-appropriation by a political subdivi-
sion, however, there can be no assurance that payments made by the insurer rep-
resenting interest on "non-appropriation" lease obligations will be excludable
from gross income for federal income tax purposes. See "Fundamental Policies
and Investment Portfolio--Portfolio Securities."
50
<PAGE>
Distributions by each Fund of net interest received from certain taxable tempo-
rary investments (such as certificates of deposit, commercial paper and obliga-
tions of the United States Government, its agencies and instrumentalities) and
net short-term capital gains realized by a Fund, if any, will be taxable to
shareholders as ordinary income whether received in cash or additional
shares./1/ If a Fund purchases a Municipal Obligation at a market discount, any
gain realized by the Fund upon sale or redemption of the Municipal Obligation
will be treated as taxable interest income to the extent such gain does not ex-
ceed the market discount, and any gain realized in excess of the market dis-
count will be treated as capital gains. Any net long-term capital gains real-
ized by a Fund and distributed to shareholders in cash or in additional shares
will be taxable to shareholders as long-term capital gains regardless of the
length of time investors have owned shares of a Fund. Distributions by a Fund
that do not constitute ordinary income dividends, exempt-interest dividends, or
capital gain dividends will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in his or her shares. Any ex-
cess will be treated as gain from the sale of his or her shares, as discussed
below.
If any of the Funds engages in hedging transactions involving financial futures
and options, these transactions will be subject to special tax rules, the ef-
fect of which may be to accelerate income to a Fund, defer a Fund's losses,
cause adjustments in the holding periods of a Fund's securities, convert long-
term capital gains into short-term capital gains and convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
Because the taxable portion of each Fund's investment income consists primarily
of interest, none of its dividends, whether or not treated as exempt-interest
dividends, is expected to qualify under the Internal Revenue Code for the divi-
dends received deductions for corporations.
Prior to purchasing shares in one of the Funds, the impact of dividends or dis-
tributions which are expected to be or have been declared, but not paid, should
be carefully considered. Any dividend or distribution declared shortly after a
purchase of such shares prior to the record date will have the effect of reduc-
ing the per share net asset value by the per share amount of the dividend or
distribution.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by 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 corpora-
- --------
/1/If a Fund has both tax-exempt and taxable income, it will use the "average
annual" method for determining the designated percentage that is taxable in-
come and designate the use of such method within 60 days after the end of
the Fund's taxable year. Under this method, one designated percentage is ap-
plied uniformly to all distributions made during the Fund's taxable year.
The percentage of income designated as tax-exempt for any particular distri-
bution may be substantially different from the percentage of the Fund's in-
come that was tax-exempt during the period covered by the distribution.
51
<PAGE>
tions at the rates applicable to ordinary income. For non-corporate taxpayers,
however, net capital gains (i.e., the excess of net long-term capital gain over
net short-term capital loss) will be taxed at a maximum marginal rate of 28%,
while short-term capital gains and other ordinary income will be taxed at a
maximum marginal rate of 39.6%. Because of the limitations on itemized deduc-
tions and the deduction for personal exemptions applicable to higher income
taxpayers, the effective rate of tax may be higher in certain circumstances.
All or a portion of a sales load paid in purchasing shares of a Fund cannot be
taken into account for purposes of determining gain or loss on the redemption
or exchange of such shares within 90 days after their purchase to the extent
shares of a Fund or another fund are subsequently acquired without payment of a
sales load pursuant to the reinvestment or exchange privilege. Any disregarded
portion of such load will result in an increase in the shareholder's tax basis
in the shares subsequently acquired. Moreover, losses recognized by a share-
holder on the redemption or exchange of shares of a Fund held for six months or
less are disallowed to the extent of any distribution of exempt-interest divi-
dends received 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 share-
holder purchases other shares of such Fund (whether through reinvestment of
distributions or otherwise) or the shareholder acquires or enters into a con-
tract or option to acquire securities that are substantially identical to
shares of a Fund within a period of 61 days beginning 30 days before and ending
30 days after such redemption or exchange. If disallowed, the loss will be re-
flected in an adjustment to the basis of the shares acquired.
It may not be advantageous from a tax perspective for shareholders to redeem or
exchange shares after tax-exempt income has accrued but before the record date
for the exempt-interest dividend representing the distribution of such income.
Because such accrued tax-exempt income is included in the net asset value per
share (which equals the redemption or exchange value), such a redemption could
result in 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 reduce its capital gain net income
(but not below its net capital gain) by the amount of any net ordinary loss for
the calendar year in determining the amount of ordinary taxable income for the
current calendar year (and, instead, include such gains and losses in determin-
ing ordinary taxable income for the succeeding calendar year). The Funds intend
to make timely distributions in compliance with these requirements and conse-
quently it is anticipated that they generally will not be required to pay the
excise tax.
52
<PAGE>
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, is taxable to shareholders to the extent that their tax lia-
bility is determined under the alternative minimum tax regime. The Funds will
annually supply shareholders with a report indicating the percentage of Fund
income attributable to Municipal Obligations subject to the federal alternative
minimum tax.
In addition, the alternative minimum taxable income for corporations is in-
creased by 75% of the difference between an alternative measure of income ("ad-
justed current earnings") and the amount otherwise 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.
53
<PAGE>
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 respective
shareholders is based upon the advice of Edwards & Angell, special state tax
counsel to each Fund, and represents a summary of certain provisions of each
state's tax laws presently in effect. The state tax information below assumes
that each Fund qualifies as a regulated investment company for federal income
tax purposes under Subchapter M of the Code, and that amounts so designated by
each Fund to its shareholders qualify as "exempt-interest dividends" under Sec-
tion 852(b)(5) of the Code. These state tax 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.
NUVEEN MASSACHUSETTS INSURED 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
54
<PAGE>
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 sharehold-
ers within sixty days after the close of the Massachusetts Fund's tax year.
Massachusetts shareholders will be required to include all remaining dividends
in their Massachusetts income.
To the extent not otherwise exempted from Massachusetts income taxation as
provided above, the Massachusetts Fund's long-term capital gains for federal
income 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 corpo-
ration or any foreign business corporation which exercises its charter, quali-
fies 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
Massachusetts excise taxation either as a tangible property corporation or as
an intangible property corporation. If the corporate shareholder is a tangible
property corporation, it will be taxed upon its net income allocated to Massa-
chusetts 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 allo-
cated 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 gener-
ally may not be deducted by a corporate shareholder in computing its net in-
come. The corporation's shares in the Massachusetts Fund are not includable in
the computation of the tangible property base of a tangible property corpora-
tion, but are includable in the computation of the net worth base of an intan-
gible property corporation.
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
dividends (as determined for federal income tax purposes) which the New York
Fund clearly identifies as directly attributable to interest earned on Munici-
pal Obligations issued by governmental authorities in New York ("New York Mu-
nicipal Obligations") and which are specifically exempted from personal income
taxation in New York State (or New York City), or interest earned on obliga-
tions 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. Distributions to individual shareholders of dividends derived
from interest that does not qualify as an exempt-interest dividend (as deter-
mined for federal income tax purposes), distributions of exempt-interest divi-
dends (as determined for federal income tax purposes) which are derived from
interest earned on Municipal Obligations issued by governmental authorities in
states other than New York State, and distributions derived from inter-
55
<PAGE>
est 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 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.
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.
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," "average
annual total return," "cumulative total return" and "taxable equivalent total
return" figures, each of which will be calculated separately for each class of
shares.
In accordance with a standardized method prescribed by rules of the Securities
and Exchange Commission ("SEC"), yield is computed by dividing the net invest-
ment income per share earned during the
56
<PAGE>
specified one month or 30-day period by the maximum offering price per share on
the last day of the period, according to the following formula:
<TABLE>
<C> <C> <C> <C> <S>
Yield = 2[(a-b+1)/6/-1]
</TABLE>
cd
In the above formula, a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursements); c = the average daily
number of shares outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share on the last day of the
period. In the 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 a
Fund's financial statements. Yield for each class of shares of each Fund as of
February 29, 1996 are set forth below.
Taxable equivalent yield is computed by dividing that portion of the yield
which is tax-exempt by the remainder of (1 minus the stated combined federal
and state income tax rate, taking into account the deductibility of state in-
come taxes for federal income tax purposes), and adding the product to that
portion, if any, of the yield that is not tax exempt. The taxable equivalent
yields quoted below are based upon (1) the stated combined federal and state
income tax rates and (2) the yields for the 30-day period ended February 29,
1996, quoted in the left-hand column.
<TABLE>
<CAPTION>
COMBINED
FEDERAL TAXABLE
AS OF FEBRUARY 29, AND STATE EQUIVALENT
1996 YIELD TAX RATE* YIELD
- ----------------------------------------------
<S> <C> <C> <C>
NATIONAL FUND
Class A Shares 4.53% 39.6% 7.50%
Class C Shares 3.99% 39.6% 6.61%
Class R Shares 5.00% 39.6% 8.28%
MASSACHUSETTS FUND
Class A Shares 3.79% 47.0% 7.15%
Class C Shares 3.21% 47.0% 6.06%
Class R Shares 4.21% 47.0% 7.94%
NEW YORK FUND**
Class A Shares 3.95% 46.5% 7.38%
Class C Shares 3.38% 46.5% 6.32%
Class R Shares 4.39% 46.5% 8.21%
</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.
57
<PAGE>
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
taking the most recent monthly tax-free income dividend per share, multiplying
it by 12 to annualize it, and dividing by the appropriate price per share
(e.g., net asset value for purchases to be made without a load such as 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 29, 1996, based on the maximum public offer-
ing price then in effect for the Funds were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION RATES
------------------------
CLASS A* CLASS C CLASS R
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
National Fund.......................................... 4.65% 4.15% 5.11%
Massachusetts Fund..................................... 4.70% 4.18% 5.14%
New York Fund.......................................... 4.75% 4.24% 5.20%
</TABLE>
- --------
*Assumes imposition of the maximum sales charge for Class A shares of 4.50%.
Average annual total return quotation is computed in accordance with a stan-
dardized method prescribed by SEC rules. The average annual total return for a
specific period is found by taking a hypothetical, $1,000 investment ("initial
investment") in Fund shares on the first day of the period, reducing the amount
to reflect the maximum sales charge, and computing the "redeemable value" of
that investment at the end of the period. The redeemable value is then divided
by the initial investment, and this quotient is taken to the Nth root (N repre-
senting the number of years in the period) and 1 is subtracted from the result,
which is then expressed as a percentage. The calculation assumes that all in-
come and capital gains distributions have been reinvested in Fund shares at net
asset value on the reinvestment dates during the period. The average annual to-
tal return figures, including the effect of the current maximum sales charge
for the Class A Shares, for the one- and five-year periods ended February 29,
1996, and for the period from inception (on December 10, 1986 with respect to
the Class R Shares and
58
<PAGE>
on or after September 6, 1994 with respect to the Class A Shares and Class C
Shares), through February 29, 1996, respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
--------------------------------------
FROM
ONE YEAR FIVE YEARS INCEPTION
ENDED ENDED THROUGH
FEBRUARY 29, FEBRUARY 29, FEBRUARY 29,
1996 1996 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
NATIONAL FUND
Class A Shares.......................... 5.91% N/A 6.62%
Class C Shares.......................... 9.88% N/A 8.80%
Class R Shares.......................... 10.94% 8.80% 8.22%
MASSACHUSETTS FUND
Class A Shares.......................... 4.65% N/A 5.19%
Class C Shares.......................... 8.80% N/A 8.49%
Class R Shares.......................... 9.99% 8.08% 7.11%
NEW YORK FUND
Class A Shares.......................... 5.23% N/A 5.59%
Class C Shares.......................... 9.71% N/A 9.10%
Class R Shares.......................... 10.51% 8.70% 7.50%
</TABLE>
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.
59
<PAGE>
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-year periods
ended February 29, 1996, and for the period from inception (on December 10,
1986 with respect to the Class R Shares and on or after September 6, 1994 with
respect to the Class A Shares and Class C Shares) through February 29, 1996,
respectively, were as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------------------------
ONE YEAR FIVE YEARS FROM INCEPTION
ENDED ENDED THROUGH
FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
National Fund
Class A Shares........... 5.91% N/A 9.97%
Class C Shares........... 9.88% N/A 13.28%
Class R Shares........... 10.94% 52.48% 106.69%
Massachusetts Fund
Class A Shares........... 4.65% N/A 7.78%
Class C Shares........... 8.80% N/A 12.63%
Class R Shares........... 9.99% 47.48% 88.04%
New York Fund
Class A Shares........... 5.23% N/A 8.39%
Class C Shares........... 9.71% N/A 13.57%
Class R Shares........... 10.51% 51.80% 94.39%
</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 1996, the annual taxable
equivalent total returns for each Fund's Shares for the one- and five-year pe-
riods ended February
60
<PAGE>
29, 1996, and for the period from inception (on December 10, 1986 with respect
to the Class R Shares and on or after September 6, 1994 with respect to the
Class A and Class C Shares), through February 29, 1996, respectively, were as
follows:
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS FROM INCEPTION
ENDED ENDED THROUGH ASSUMED
FEBRUARY 29, 1996 FEBRUARY 29, 1996 FEBRUARY 29, 1996 COMBINED
------------------ ------------------ ------------------ FEDERAL
WITH WITH WITH AND
MAXIMUM AT NET MAXIMUM AT NET MAXIMUM AT NET STATE
4.50% SALES ASSET 4.50% SALES ASSET 4.50% SALES ASSET TAX
CHARGE VALUE CHARGE VALUE CHARGE VALUE RATE*
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
National Fund
Class A Shares......... 9.23% 14.38% N/A N/A 10.11% 13.59% 39.6%
Class C Shares......... N/A 12.87% N/A N/A N/A 12.04% 39.6%
Class R Shares......... N/A 14.62% N/A 12.61% N/A 12.35% 39.6%
Massachusetts Fund
Class A Shares......... 9.09% 14.23% N/A N/A 9.81% 13.28% 47.0%
Class C Shares......... N/A 12.75% N/A N/A N/A 12.56% 47.0%
Class R Shares......... N/A 14.89% N/A 13.08% N/A 12.47% 47.0%
New York Fund**
Class A Shares......... 9.61% 14.78% N/A N/A 10.14% 13.61% 46.5%
Class C Shares......... N/A 13.62% N/A N/A N/A 13.10% 46.5%
Class R Shares......... N/A 15.37% N/A 13.68% N/A 12.87% 46.5%
</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.
From time to time, a Fund may compare its risk-adjusted performance with other
investments that may provide different levels of risk and return. For example,
a Fund may compare its risk level, as measured by the variability of its peri-
odic returns, or its RISK-ADJUSTED TOTAL RETURN, with those of other funds or
groups of funds. Risk-adjusted total return would be calculated by adjusting
each investment's total return to account for the risk level of the investment.
A Fund may also compare its TAX-ADJUSTED TOTAL RETURN with that of other funds
or groups of funds. This measure would take into account the tax-exempt nature
of exempt-interest dividends and the payment of income taxes on a fund's dis-
tributions of net realized capital gains and ordinary income.
The risk level for a class of shares of a Fund, and any of the other invest-
ments used for comparison, would be evaluated by measuring the variability of
the investment's return, as indicated by the annualized standard deviation of
the investment's monthly returns over a specified measurement period (e.g.,
three years). An investment with a higher annualized STANDARD DEVIATION OF
MONTHLY RETURNS would indicate that a fund had greater price variability, and
therefore greater risk, than an investment with a lower annualized standard de-
viation.
61
<PAGE>
The annualized standard deviation of monthly returns for the three years ended
February 29, 1996, for the Class R Shares of each of the Funds, was as follows:
<TABLE>
<CAPTION>
ANNUALIZED
STANDARD
DEVIATION
OF RETURN
- --------------------------------------------------------------------------------
<S> <C>
National Fund........................................................ 6.76%
Massachusetts Fund................................................... 5.65%
New York Fund........................................................ 6.16%
</TABLE>
THE RISK-ADJUSTED TOTAL RETURN for a class of shares of a Fund and for other
investments over a specified period would be evaluated by dividing (a) the re-
mainder of the investment's annualized three-year total return minus the
annualized total return of an investment in short-term tax-exempt securities
(essentially a risk-free return) over that period, by (b) the annualized stan-
dard deviation of the investment's monthly returns for the period. This ratio
is sometimes referred to as the "Sharpe measure" of return. An investment with
a higher Sharpe measure would be regarded as producing a higher return for the
amount of risk assumed during the measurement period than an investment with a
lower Sharpe measure. The Sharpe measure for the three-year period ended Febru-
ary 29, 1996, for the Class R Shares of each of the Funds, was as follows:
<TABLE>
<CAPTION>
SHARPE
MEASURE
- --------------------------------------------------------------------------------
<S> <C>
National Fund........................................................... 0.426
Massachusetts Fund...................................................... 0.435
New York Fund........................................................... 0.408
</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 typically be 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 con-
ditions, 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 redeemable at
net asset value, which may be more or less than original cost.
In reports or other communications to shareholders or in advertising and sales
literature, the Funds may also compare their performance with that of: (1) the
Consumer Price Index or various unmanaged bond indexes such as the Lehman
Brothers Municipal Bond Index and the Salomon Brothers High
Grade Corporate Bond Index and (2) other fixed income or municipal bond mutual
funds or mutual fund indexes as reported by Lipper Analytical Services, Inc.
("Lipper"), Morningstar, Inc. ("Morningstar"), Wiesenberger Investment Compa-
nies Service ("Wiesenberger") and CDA Investment Technologies, Inc. ("CDA") or
similar independent services which monitor the performance of mutual funds, or
other industry or financial publications such as Barron's, Changing Times,
Forbes and Money Magazine. Performance comparisons by these indexes, services
or publications may rank mutual funds over different periods of time by means
of aggregate, average, year-by-year, or other types of total return and perfor-
mance figures. Any given performance quotation or performance comparison should
not be considered as representative of the performance of the Funds for any fu-
ture period.
62
<PAGE>
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 considered to be a measure of inflation. The
CDA Mutual Fund-Municipal Bond Index is a weighted performance average of
other mutual funds with a federally tax-exempt income objective. The Salomon
Brothers High Grade Corporate Bond Index is an unmanaged index that generally
represents the performance of high grade long-term taxable bonds during vari-
ous market conditions. The Lehman Brothers Municipal Bond Index is an unman-
aged index that generally represents the performance of high grade intermedi-
ate 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 invest in investment grade Municipal Obli-
gations in pursuing their objective of as high a level of current interest in-
come 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 secu-
rities 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 munic-
ipal bonds to market interest rate changes and general credit changes is simi-
lar. High yield bonds are subject to a greater degree of price volatility than
municipal bonds resulting from changes in market interest rates and are par-
ticularly susceptible to volatility from credit changes. Ginnie Mae bonds are
generally subject to less price volatility than municipal bonds from credit
concerns, due primarily to the fact that the timely payment of monthly in-
stallments 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 in-
terest 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 expe-
rience to change in interest rates.
ADDITIONAL INFORMATION ON THE PURCHASEAND REDEMPTION OF FUND SHARES
As described in the Prospectus, each Fund has adopted a Flexible Pricing Pro-
gram which provides you with alternative ways of purchasing Fund shares based
upon your individual investment needs and preferences. You may purchase Class
A Shares at a price equal to their net asset value plus an up-front sales
charge.
For information regarding the up-front sales charge on Class A shares, see the
table under "How to Buy Fund Shares" of the Prospectus. Set forth is an exam-
ple of the method of computing the offering price
63
<PAGE>
of the Class A shares of each of the Funds. The example assumes a purchase on
February 29, 1996 of Class A shares from the National Fund aggregating less
than $50,000 subject to the schedule of sales charges set forth in the Prospec-
tus at a price based upon the net asset value of the Class A shares.
<TABLE>
<S> <C>
Net Asset Value per share........................................ $ 10.97
Per Share Sales Charge--4.50% of public offering price (4.71% of
net asset value per share)...................................... $ 0.517
Per Share Offering Price to the Public........................... $11.487
</TABLE>
You may purchase Class C Shares without any up-front sales charge at a price
equal to their net asset value, but subject to an annual distribution fee de-
signed to compensate Authorized Dealers over time for the sale of Fund shares.
Class C Shares are subject to a contingent deferred sales charge for redemption
within 12 months of purchase. Class C Shares automatically convert to Class A
Shares six years after purchase. Both Class A Shares and Class C Shares are
subject to annual service fees, which are used to compensate Authorized Dealers
for providing you with ongoing account services.
Under the Flexible Pricing Program, all Fund shares outstanding as of September
6, 1994, have been designated as Class R Shares. Class R Shares are available
for purchase at a price equal to their net asset value only under certain lim-
ited circumstances, or by specified investors, as described herein.
Each class of shares 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 distribution and administration
expenses, and each class has exclusive voting rights with respect to any dis-
tribution or service plan applicable to its shares. In addition, the Class C
Shares are subject to a conversion feature, as described below. As a result of
the differences in the expenses borne by each class of shares, net income per
share, dividends per share and net asset value per share will vary among a
Fund's classes of shares.
Shareholders of each class will share expenses proportionately for services
that are received equally by all shareholders. A particular class of shares
will bear only those expenses that are directly attributable to that class,
where the type or amount of services received by a class varies from one class
to another. For example, class-specific expenses generally will include distri-
bution and service fees.
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 respect to which a sales charge
is imposed), at the reduced sales charge applicable to the group taken as a
whole. A "qualified group" is one which (i) has been in existence for more than
six months; (ii) has a purpose other than investment; (iii) has five or more
participating members; (iv) has agreed to include sales literature and other
materials related to the Fund in publications and mailings to members; (v) has
agreed to have its group administrator submit a single bulk order and make pay-
ment with a single remittance for all investments in the Fund during each in-
vestment period by all participants who choose to invest in the Fund; and (vi)
has agreed to provide the Fund's transfer
64
<PAGE>
agent with appropriate backup data for each participant of the group in a for-
mat fully compatible with the transfer agent's processing system.
The "amount" of a share purchase by a participant in a group purchase program
for purposes of determining the applicable sales charge is (i) the aggregate
value of all shares of the Fund (and all other Nuveen Funds with respect to
which a sales charge is imposed) currently held by participants of the group,
plus (ii) the amount of shares currently being purchased.
Special Sales Charge Waivers. Class A Shares of the Funds may be purchased at
net asset value without a sales charge, and Class R Shares may be purchased,
by the following categories of investors:
. officers, directors and retired directors of the Fund;
. bona fide, full-time and retired employees of Nuveen or its affiliates, any
parent company of Nuveen, and subsidiaries thereof, or their immediate fam-
ily members (as defined below);
. any person who, for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate family members;
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates;
. bank or broker-affiliated trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in
a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing through a mutual fund purchase program sponsored by a
broker-dealer that offers a selected group of mutual funds either without a
transaction fee or with an asset-based fee or a fixed fee that does not
vary with the amount of the purchase. In order to qualify, such purchase
program must offer a full range of mutual fund related services and share-
holder account servicing capabilities, including establishment and mainte-
nance of shareholder accounts, addressing investor inquiries regarding ac-
count activity and investment performances, processing of trading and divi-
dend activity and generation of monthly account statements and year-end tax
reporting; and
. registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees to their cus-
tomers for financial planning, investment advisory or asset management
services, or provide such services in connection with the establishment of
an investment account for which a comprehensive "wrap fee" charge is im-
posed.
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 soft-
ware or additional sales literature to promote the advantages of using the
Funds to meet these and other specific investor needs.
65
<PAGE>
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 the Nuveen Insured Tax-Free Bond Fund, Inc., dated April 27, 1992 and
last renewed on July 27, 1995 ("Distribution Agreement"). Pursuant to the Dis-
tribution Agreement, the Nuveen Insured Tax-Free Bond Fund, Inc. appointed
Nuveen to be its agent for the distribution of the Funds' shares on a continu-
ous offering basis. Nuveen sells shares to or through brokers, dealers, banks
or other qualified financial intermediaries (collectively referred to as "Deal-
ers"), or others, in a manner consistent with the then effective registration
statement of the Nuveen Insured Tax-Free Bond Fund, Inc. Pursuant to the Dis-
tribution Agreement, Nuveen, at its own expense, finances certain activities
incident to the sale and distribution of the Funds' shares, including printing
and distributing of prospectuses and statements of additional information to
other than existing shareholders, the printing and distributing of sales liter-
ature, advertising and payment of compensation and giving of concessions to
Dealers. Nuveen receives for its services the excess, if any, of the sales
price of the Funds' shares less the net asset value of those shares, and
reallows a majority or all of such amounts to the Dealers who sold the shares;
Nuveen may act as such a Dealer. Nuveen also receives compensation pursuant to
a distribution plan adopted by the Nuveen Insured Tax-Free Bond Fund, Inc. pur-
suant to Rule 12b-1 and described herein under "Distribution and Service Plan."
Nuveen receives any CDSCs imposed on redemptions of Class C Shares redeemed
within 12 months of purchase, but any such amounts as to which a reinstatement
privilege is not exercised are set off against and reduce amounts otherwise
payable to Nuveen pursuant to the distribution plan. Nuveen also receives any
CDSCs imposed on redemptions of certain Class A Shares redeemed within 18
months of purchase.
The following table sets forth the aggregate amount of underwriting commissions
with respect to the sale of Fund shares and the amount thereof retained by
Nuveen for each of the Funds for the last three fiscal years. All figures are
to the nearest thousand.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 29, 1996 FEBRUARY 28, 1995 FEBRUARY 28, 1994
------------------------ ------------------------ ------------------------
AMOUNT OF AMOUNT AMOUNT OF AMOUNT AMOUNT OF AMOUNT
UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY UNDERWRITING RETAINED BY
FUND COMMISSIONS NUVEEN COMMISSIONS NUVEEN COMMISSIONS NUVEEN
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
National Fund........... 880 97 1,554 296 4,490 707
Massachusetts Fund...... 113 14 147 24 435 66
New York Fund........... 450 71 850 126 3,018 411
</TABLE>
66
<PAGE>
DISTRIBUTION AND SERVICE PLAN
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 account services to shareholders. These services may include
establishing and maintaining shareholder accounts, answering shareholder inqui-
ries and providing other personal services to shareholders.
Each Fund may spend up to .25 of 1% per year of the average daily net assets of
Class A Shares as a service fee under the Plan applicable to Class A Shares.
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 Shares. The .75 of 1% distribution fee will be reduced by the
amount of any CDSC imposed on the redemption of Class C Shares within 12 months
of purchase as to which a reinstatement privilege has not been exercised. For
the fiscal year ended February 29, 1996, 100% of service fees and distribution
fees were paid out as compensation to Authorized Dealers. The amount of compen-
sation paid to Authorized Dealers for the fiscal year ended February 29, 1996
for each Fund per class of shares was as follows:
<TABLE>
<CAPTION>
COMPENSATION PAID TO
AUTHORIZED DEALERS FOR YEAR
ENDED FEBRUARY 29, 1996
- --------------------------------------------------------------------------------
<S> <C>
National Fund
Class A........................................... $82,072
Class C........................................... 44,297
Class R........................................... N/A
Massachusetts Fund
Class A........................................... $ 8,932
Class C........................................... 5,438
Class R........................................... N/A
New York Fund
Class A........................................... $42,326
Class C........................................... 8,893
Class R........................................... N/A
</TABLE>
67
<PAGE>
Under each Fund's Plan, the Fund will report quarterly to the Board of Direc-
tors for its review of all amounts expended per class of shares under the Plan.
The Plan may be terminated at any time with respect to any class of shares,
without the payment of any penalty, by a vote of a majority of the directors
who are not "interested persons" and who have no direct or indirect financial
interest in the Plan or by vote of a majority of the outstanding voting securi-
ties of such class. The Plan may be renewed from year to year if approved by a
vote of the Board of Directors and a vote of the non-interested directors who
have no direct or indirect financial interest in the Plan cast in person at a
meeting called for the purpose of voting on the Plan. The Plan may be continued
only if the directors who vote to approve such continuance conclude, in the ex-
ercise of reasonable business judgment and in light of their fiduciary duties
under applicable law, that there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders. The Plan may not be amended to increase
materially the cost which a class of shares may bear under the Plan without the
approval of the shareholders of the affected class, and any other material
amendments of the Plan must be approved by the non-interested directors
by a vote cast in person at a meeting called for the purpose of considering
such amendments. During the continuance of the Plan, the selection and nomina-
tion of the non-interested directors of the Fund will be committed to the dis-
cretion of the non-interested directors then in office.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 W. Monroe Street, Chi-
cago, Illinois 60603 have been selected as auditors for 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 The Chase Manhattan Bank, N.A., 770
Broadway, New York, NY 10003. The custodian performs custodial, fund accounting
and portfolio accounting services.
68
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
[NUVEEN LOGO]
Nuveen Tax-Free
Mutual Funds
Dependable tax-free
income for generations
MUNI BOND
INSURED MUNI BOND
ANNUAL REPORT/FEBRUARY 29, 1996
[PHOTO OF COUPLE APPEARS HERE]
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
9 Fund performance
11 Portfolio of investments
36 Statement of net assets
37 Statement of operations
38 Statement of changes in net assets
39 Notes to financial statements
48 Financial highlights
52 Report of independent public accountants
<PAGE>
Dear
shareholder
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
"Over time, municipal bonds have proven to be a valuable and dependable
component of successful investment programs."
Since the beginning of the recovery in early 1995, we've enjoyed a welcome
rebound in the bond markets-a sharp contrast to 1994, which was one of the most
volatile periods in bond market history. In fact, 1995 unfolded as one of the
best years for bonds in a decade, as the bond market responded to a climate of
slowing economic growth and diminished inflationary pressure.
The changing profile of the bond markets over the past two years reminds us
that weathering the ups and downs of the markets is a normal part of the
investment process. By maintaining a long-term perspective on your investments,
you can minimize the impact of short-term fluctuations and keep the focus on
achieving your goals. Municipal bond funds continue to play an integral role in
helping investors reach those goals, offering the attractive tax-free income and
solid total returns that they seek.
Over the past year, we have kept our sights focused on successfully meeting
your fund's objectives. As of February 29, 1996, the current annual SEC yields
on offering price for R Shares were 4.93% for the Municipal Bond Fund and 5.00%
for the Insured Municipal Bond Fund. To match these yields, an investor in the
36% federal income tax bracket would have had to earn at least 7.70% and 7.81%,
respectively, on taxable alternatives.
3
<PAGE>
Reflecting the rebound in the bond markets, both of these funds reported gains
in portfolio value since February 28, 1995. The 12-month total returns on net
asset value for R Shares, reflecting portfolio gains plus reinvested dividend
income and capital gains distributions, if any, were 9.31% for the Municipal
Bond Fund and 10.94% for the Insured Municipal Bond Fund. These returns
translate to 12.59% and 14.10%, respectively, on a taxable-equivalent basis.
This strong performance rewarded investors who weathered the volatility of 1994,
and reminds us again of the importance of municipal bonds to a well-rounded,
long-term investment plan.
As some of you may know, on June 30, 1996, I will be retiring as the Chairman
and Chief Executive Officer of John Nuveen & Co. Incorporated, and as Chairman
of the Board of the Nuveen Funds. As I look back over the 41 years I have spent
at Nuveen, I'm proud to have been associated with a firm that holds integrity,
honesty, and value as the cornerstones of its business. I'm confident that these
traditions will continue to be the hallmarks of Nuveen.
Over the past few years, I have been working closely with other Nuveen
managers to ensure that the company and the funds continue to be guided by
strong and talented management following my retirement. Timothy Schwertfeger,
who has been with Nuveen since 1977, will succeed me as Chief Executive Officer
and Chairman of Nuveen. He currently serves as Executive Vice President of
Nuveen and President of the Nuveen Funds. I am very confident in his abilities
and the abilities of the entire Nuveen management team.
The management transition has been well planned, and it will have no effect on
portfolio management or the way dividends are set. Our management team is
committed to continuing Nuveen's successful tradition of value investing and
prudent management, helping our shareholders meet their need for tax-free
investment income with a full range of investment choices.
Our focus will continue to be on building shareholder value, providing
research-oriented management, and maintaining our leadership role in the
municipal bond market. With this focus, we anticipate many more years of
accomplishment for our shareholders and our firm.
I'd like to take this occasion to thank you for selecting Nuveen mutual fund
investments.
Sincerely,
/s/ Richard J. Franke
Richard J. Franke
Chairman of the Board
April 15, 1996
4
<PAGE>
Answering your
questions
Tom Spalding, head of Nuveen's portfolio management team, discusses factors
affecting the municipal market and efforts made to provide value for
shareholders.
How did the investment climate over the past year affect municipal bonds?
In 1995, the combination of slow economic growth and low inflation created the
ideal environment for the bond markets, which responded with a sustained rally.
Citing the lack of significant inflation, the Federal Reserve Board moved to cut
interest rates in July and December 1995, and again at the end of January 1996.
This succession of rate cuts helped to bring down long-term municipal bond
yields by almost 130 basis points over the year and to increase net asset
values. The rebound of the municipal bond market was not as great as that of the
taxable market due to the much-publicized discussion of major tax reform
legislation and concern about its potential impact on tax-free investments. Yet,
in 1995, most Nuveen mutual funds enjoyed taxable-equivalent total returns of
14% or better.
5
<PAGE>
[PHOTO OF TOM SPALDING APPEARS HERE]
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market.
What was Nuveen's approach to investing during this period?
During 1995, we continued to pursue our philosophy of value investing, a
disciplined approach designed to deliver above-market performance by emphasizing
securities that offer good intrinsic value and that are underpriced or
undervalued by the market. This approach has been rewarded over the past year,
as we saw many of our portfolio holdings upgraded by the rating agencies,
confirming our Research Department's judgments about credit quality. We also
moved to protect current income by investing more of our portfolio in non-
callable bonds when possible. These bonds are less likely to be redeemed before
maturity so that their yield is assured for the long term in the event of
falling interest rates. As is our policy, we continue to invest only in
investment-grade quality securities.
Has Nuveen made any major investment changes over the past year?
No. In the search for income and total return, our value investing approach
continues to concentrate on individual bonds with current yields, prices, credit
quality, and future prospects that are exceptionally attractive relative to
other bonds in the market. Because attractive issues may appear any time over
the course of the year, we are constantly vigilant for new opportunities, with
the goal of ensuring that the funds are always positioned to meet their
objectives: as high a level of current tax-free income as is consistent with
preservation of capital. This means that our analysts continuously assess
investment
6
<PAGE>
possibilities across the entire spectrum of geographical and sector
opportunities nationwide. Currently, we favor revenue bonds for essential
services, such as those issued by water and sewer facilities and utilities,
especially public power authorities providing electricity at competitive rates.
We have reduced our positions in general obligation bonds issued by counties and
cities, which have suffered financial strains as the result of spending cuts at
the state and federal levels.
What does Nuveen see as the impact of the flat tax proposals on the municipal
market?
Because of the implications for tax-free investments such as municipal bonds and
bond funds, we have been closely monitoring the various flat tax proposals
currently being debated in Congress. While the presidential primaries
spotlighted the debate, it is important to note that none of the proposals
currently under discussion has gained a strong consensus. In addition,
implementation of any measure that manages to pass both houses is at least two
years away. As the election year progresses, focus seems to be shifting from tax
reform to other economic matters. However, the high-profile discussion-and the
attendant concern about the potential impact of tax reform on tax-free
investments-did affect the market for municipal bonds in 1995, causing these
bonds to underperform their taxable counterparts for the year.
7
<PAGE>
Given the low likelihood that the tax preference on municipal bonds will be
eliminated or dramatically reduced in the near future, Nuveen believes that it
is inadvisable to manage our funds toward one specific outcome. Instead, we will
continue to follow our value investing philosophy as the optimal way to pursue
our investors' objectives. In our view, this approach offers investors greater
price stability in the event of volatile markets. Once the tax issue is
resolved, we're confident that municipal bonds-because of their high credit
quality and attractive yields-will continue to hold a strategic place in the
prudent investor's portfolio. We will continue to monitor developments in the
tax debate as well as changes in other economic and political conditions while
keeping our focus on achieving the objectives of your fund.
What is Nuveen's market outlook for 1996?
Although inflation currently remains low and economic growth remains moderate,
we continue to watch these factors for potential changes and impact on the bond
market. During this election year, we are also closely monitoring any changes in
economic and tax policy that may affect the municipal market. The fundamentals
in the long term are sound, with the supply of municipal bonds down from past
years, and with a growing number of individual investors seeking to diversify
their portfolios and to increase their tax-free income.
8
<PAGE>
NUVEEN MUNICIPAL BOND FUND
Muni Bond
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Municipal Bond
Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 2/86 2/87 2/88 2/89 2/90 2/91 2/92 2/93 2/94 2/95 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lehman Brothers
Municipal Bond Index
-Total $21,997 10,000 11,219 11,513 12,227 13,480 14,723 16,194 18,423 19,441 19,808 21,997
Nuveen Municipal Bond Fund
-Total $20,379 9,525 10,674 11,032 11,854 12,976 14,075 15,466 17,173 17,994 18,644 20,380
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -------------------------------------------------------------
1 year 5 years 10 years
- -------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 9.31% 7.68% 7.90%
A Shares on NAV N/A N/A 5.33%+
A Shares on offering price** N/A N/A 0.59%+
C Shares on NAV N/A N/A 4.59%+
- -------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.15 cents per share for Class R Shares
translated into a distribution yield of 5.37% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 36% federal
income tax bracket would have to earn 8.39% on a taxable investment to match
this tax-free yield.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 3.11% from a year ago. The average annual total return on NAV for
this class was 9.31%, which translated into a taxable-equivalent total return of
12.59%.
The fund's Class R Share SEC yield of 4.93% on February 29, 1996, translated
into 7.70% on a taxable-equivalent basis.
* One-year, 5-year and 10-year total return figures for Class R Shares are not
representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued on June 13,
1995.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
9
<PAGE>
NUVEEN INSURED
MUNICIPAL BOND FUND
Insured Muni Bond
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Insured
Municipal Bond Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen Insured Municipal Bond
Fund-Total $19,688 9,525 9,168 10,497 11,787 12,564 13,911 15,411 17,366 16,028 19,688
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- ------------------------------------------------------------------
1 year 5 years Since inception
- ------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 10.94% 8.80% 8.22%
A Shares on NAV 10.90% N/A 9.99%+
A Shares on offering price** 5.91% N/A 6.62%+
C Shares on NAV 9.88% N/A 8.80%+
- ------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.65 cents per share for Class R Shares
translated into a distribution yield of 5.11% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 36% federal
income tax bracket would have to earn 7.98% on a taxable investment to match
this tax-free yield.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 5.20% from a year ago. The average annual total return on NAV for
this class was 10.94%, which translated into a taxable-equivalent total return
of 14.10%.
The fund's Class R Share SEC yield of 5.00% on February 29, 1996, translated
into 7.81% on a taxable-equivalent basis.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
10
<PAGE>
PORTFOLIO OF INVESTMENTS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALASKA - 0.9%
Alaska Housing Finance Corporation, Insured
Mortgage Program:
$ 4,085,000 6.375%, 12/01/07 6/96 at 101 Aa $ 4,134,714
3,290,000 7.650%, 12/01/10 12/00 at 102 Aa 3,482,399
10,885,000 7.800%, 12/01/30 12/00 at 102 Aa 11,555,189
Alaska State Housing Finance Corporation:
3,675,000 6.375%, 12/01/12 (Pre-refunded to 12/01/02) 12/02 at 102 Aa 4,028,645
2,250,000 6.600%, 12/01/23 (Pre-refunded to 12/01/02) 12/02 at 102 Aa 2,487,623
- ----------------------------------------------------------------------------------------------------------------------------
ARIZONA - 2.4%
7,750,000 Arizona State University, 5.750%, 7/01/12 7/02 at 101 AA 7,876,713
Salt River Project, Agricultural Improvement
and Power District:
5,000,000 4.900%, 1/01/08 1/04 at 102 Aa 4,966,400
9,145,000 5.000%, 1/01/10 7/96 at 100 Aa 8,917,015
26,200,000 4.750%, 1/01/17 1/04 at 100 Aa 23,643,404
20,350,000 5.500%, 1/01/28 1/02 at 100 Aa 19,681,096
4,570,000 Scottsdale Industrial Development Authority
(Scottsdale Memorial Hospital),
8.500%, 9/01/07 9/97 at 102 Aaa 4,939,987
- ----------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.4%
11,210,000 Jefferson County Hospital, 6.000%, 7/01/06 7/03 at 102 A 11,895,716
- ----------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 15.2%
California Department of Water Resources
(Central Valley Project):
15,515,000 5.700%, 12/01/16 6/03 at 101 1/2 Aa 15,593,040
9,500,000 5.750%, 12/01/19 6/03 at 101 1/2 Aa 9,573,720
12,250,000 5.500%, 12/01/23 12/03 at 101 1/2 Aa 11,934,318
20,000,000 4.875%, 12/01/27 12/03 at 101 Aa 17,736,000
13,025,000 California Health Facilities Financing Authority
(Catholic Healthcare West), 5.000%, 7/01/14 7/04 at 102 Aaa 12,142,426
12,000,000 California State Public Works Board,
Department of Corrections (California State
Prison, Monterey), 7.000%, 11/01/19 11/04 at 102 A 13,532,520
34,795,000 California Statewide Communities Development
Authority (St. Joseph Health System),
5.500%, 7/01/23 7/03 at 102 Aa 33,346,484
California Statewide Communities Development
Authority (Unihealth America):
11,500,000 5.500%, 10/01/14 10/03 at 102 Aaa 11,308,870
20,000,000 5.750%, 10/01/25 10/03 at 102 Aaa 20,050,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 11,725,000 Central California Joint Powers Health Finance
Authority, Certificates of Participation,
5.250%, 2/01/13 2/03 at 102 A $10,803,532
9,000,000 East Bay Municipal Utility District,
5.000%, 6/01/21 6/03 at 102 Aaa 8,313,930
Foothill/Eastern Transportation Corridor Agency:
45,000,000 0.000%, 1/01/23 No Opt. Call BBB-- 8,147,250
15,000,000 6.000%, 1/01/34 1/05 at 102 BBB-- 14,342,100
9,040,000 Los Angeles Convention and Exhibition
Center Authority, 5.125%, 8/15/13 8/03 at 102 Aaa 8,657,518
Los Angeles Department of Water and Power:
17,575,000 6.500%, 4/15/32 4/02 at 102 Aa 18,800,681
13,100,000 6.125%, 1/15/33 1/03 at 102 Aa 13,682,033
Los Angeles Wastewater System:
7,000,000 5.700%, 6/01/20 6/03 at 102 Aaa 7,001,820
15,615,000 5.200%, 11/01/21 11/03 at 102 Aaa 14,637,501
21,000,000 5.700%, 6/01/23 6/03 at 102 Aaa 21,080,220
Los Angeles County Metropolitan Transit
Authority:
15,750,000 5.500%, 7/01/13 7/03 at 102 AA-- 15,328,530
14,935,000 4.750%, 7/01/18 7/03 at 102 Aaa 13,388,481
8,000,000 5.250%, 7/01/23 7/03 at 102 Aaa 7,530,000
Los Angeles County Sanitation Districts
Financing Authority:
6,500,000 5.375%, 10/01/13 10/03 at 102 Aa 6,340,880
19,500,000 5.000%, 10/01/23 10/03 at 100 Aa 17,700,150
31,360,000 Los Angeles County Transportation Commission,
6.750%, 7/01/19 (Pre-refunded to 7/01/02) 7/02 at 102 Aaa 36,041,107
Metropolitan Water District of Southern California:
4,670,000 5.500%, 1/01/10 7/96 at 101 AA+ 4,725,620
5,000,000 5.500%, 7/01/19 7/02 at 102 Aa 4,874,550
12,750,000 Modesto Irrigation District (Geysers Geothermal
Power Project), Certificates of Participation,
7.250%, 10/01/15 10/96 at 102 A1 13,239,983
22,575,000 Northern California Power Agency,
7.150%, 7/01/24 7/98 at 102 A 24,355,942
12,600,000 Sacramento Sanitation District Finance
Authority, 4.750%, 12/01/23 12/03 at 102 Aa 11,043,270
7,600,000 Santa Clara County (Capital Project No. 1),
Certificates of Participation,
8.000%, 10/01/06 (Pre-refunded to 10/01/96) 10/96 at 102 AAA 7,960,012
8,050,000 University of California, 6.875%, 9/01/16
(Pre-refunded to 9/01/02) 9/02 at 102 A-- 9,302,741
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
COLORADO - 1.3%
$31,750,000 Colorado Housing Finance Authority,
7.250%, 11/01/31 11/01 at 102 Aa $33,558,798
4,250,000 Denver City and County Airport System,
7.250%, 11/15/25 11/02 at 102 Baa 4,864,508
- -------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 0.3%
5,745,000 Connecticut Housing Finance Authority,
7.550%, 11/15/08 11/00 at 102 Aa 5,908,847
2,970,000 Connecticut Resources Recovery Authority,
8.625%, 1/01/04 7/96 at 102 A 3,040,092
- -------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 0.3%
7,560,000 CHT Housing, Inc., FHA-Insured,
8.500%, 1/01/22 7/96 at 103 N/R 7,813,940
- -------------------------------------------------------------------------------------------------------------------------
FLORIDA - 2.5%
4,500,000 Dade County Health Facilities Authority
(Mt. Sinai Medical Center),
8.400%, 12/01/07 (Pre-refunded to
12/01/99) 12/99 at 102 Aaa 4,951,665
31,000,000 Hillsborough County Industrial Development
Authority, Pollution Control (Tampa Electric),
8.000%, 5/01/22 5/02 at 103 Aa2 36,898,990
7,000,000 Jacksonville Electric Authority (St. John's
River Power Park System), 6.500%, 10/01/14 10/99 at 101 1/2 Aa1 7,455,980
15,000,000 Orlando Utilities Commission, 5.000%, 10/01/23 10/99 at 100 Aa 13,557,450
8,005,000 Pensacola Health Facilities Authority
(Daughters of Charity), 7.750%, 1/01/03
(Pre-refunded to 1/01/98) 1/98 at 101 1/2 Aaa 8,691,189
1,485,000 Sarasota Elderly Housing Corporation,
7.500%, 7/01/09 7/96 at 104 A 1,548,588
- -------------------------------------------------------------------------------------------------------------------------
HAWAII - 0.3%
8,000,000 Hawaii Department of Budget and Finance
(Kapiolani Health Care System),
7.650%, 7/01/19 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 9,401,600
- -------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 15.9%
8,500,000 Illinois Development Finance Authority
(Columbus-Cuneo-Cabrini Medical Center),
8.500%, 2/01/15 (Pre-refunded to 2/01/00) 2/00 at 102 Baa 9,909,300
8,500,000 Illinois Educational Facilities Authority
(The University of Chicago), 5.600%, 7/01/24 7/03 at 102 Aaa 8,258,430
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Illinois General Obligation:
$ 15,100,000 6.200%, 10/01/04 10/02 at 102 AA- $ 16,637,482
14,750,000 5.875%, 6/01/10 6/02 at 102 AA- 15,146,038
5,000,000 5.875%, 6/01/11 6/02 at 102 AA- 5,114,250
10,000,000 5.700%, 4/01/18 4/03 at 102 AA- 9,845,200
4,770,000 Illinois Health Facilities Authority
(Rush Presbyterian), 6.900%, 10/01/02 4/96 at 100 A1 4,778,204
12,420,000 Illinois Health Facilities Authority
(LaGrange Hospital), 7.625%, 7/01/13
(Pre-refunded to 7/01/96) 7/96 at 102 A 12,833,089
10,000,000 Illinois Health Facilities Authority (Highland
Park Hospital), 6.200%, 10/01/22 10/02 at 102 Aaa 10,470,000
6,115,000 Illinois Health Facilities Authority (Illinois
Masonic Medical Center), 5.500%, 10/01/19 10/03 at 102 A 5,641,026
34,120,000 Illinois Health Facilities Authority,
(Rush-Presbyterian-St. Luke's Medical Center),
5.500%, 11/15/25 11/03 at 102 Aaa 32,791,367
10,425,000 Illinois Independent Higher Education Loan
Authority (Northwestern University),
8.000%, 12/01/07 12/96 at 102 Aa1 10,923,628
Illinois Sales Tax:
21,670,000 6.000%, 6/15/18 6/01 at 100 AAA 21,966,229
14,200,000 5.250%, 6/15/18 6/03 at 102 AAA 13,554,610
Illinois State Toll Highway Authority:
20,000,000 6.450%, 1/01/13 1/03 at 102 A1 20,866,200
8,655,000 6.200%, 1/01/16 1/03 at 102 Aaa 9,120,293
Chicago General Obligation:
5,800,000 5.250%, 1/01/18 1/04 at 102 Aaa 5,507,042
16,270,000 5.625%, 1/01/23 1/03 at 102 Aaa 16,046,938
22,335,000 Chicago Metropolitan Housing Development
Corporation, 6.900%, 7/01/22 7/02 at 102 AA 23,309,029
7,965,000 Chicago Motor Fuel Tax, 5.000%, 1/01/16 1/03 at 101 Aaa 7,391,759
Chicago O'Hare International Airport:
46,750,000 5.000%, 1/01/16 1/04 at 102 A1 44,133,870
18,710,000 5.000%, 1/01/18 1/04 at 102 Aaa 17,160,625
15,905,000 Cook County General Obligation,
5.000%, 11/15/23 11/03 at 100 Aaa 14,454,305
Dupage Water Commission, General Obligation:
39,040,000 7.875%, 3/01/11 (Pre-refunded to 3/01/96) 3/96 at 102 Aaa 39,830,560
16,800,000 5.750%, 3/01/11 3/02 at 100 Aaa 17,042,256
9,500,000 5.250%, 5/01/14 5/03 at 102 Aa 9,362,630
2,000,000 Hazel Crest (South Suburban Hospital),
9.125%, 7/01/17 (Pre-refunded to 7/01/97) 7/97 at 102 AAA 2,183,480
- --------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 56,180,000 Metropolitan Pier & Exposition Authority
(McCormick Place Expansion Project),
6.500%, 6/15/27 6/03 at 102 A+ $ 58,538,436
Zion Elderly Housing Corporation:
240,000 7.250%, 3/01/98 3/96 at 102 A 244,795
1,705,000 7.750%, 3/01/10 3/96 at 102 A 1,741,555
- -------------------------------------------------------------------------------------------------------------
INDIANA - 2.7%
47,100,000 Indiana Health Facilities Financing Authority
(Daughters of Charity), 5.750%, 11/15/22 11/03 at 102 Aa 45,996,447
10,500,000 Indiana Health Facilities Financing Authority
(Methodist Hospital), 5.750%, 9/01/11 9/02 at 102 Aaa 10,712,100
12,550,000 Indiana Office Building Commission,
8.750%, 7/01/12 (Pre-refunded to 7/01/97) 7/97 at 102 Aaa 13,641,348
2,500,000 Indianapolis Local Public Improvement,
Bond Bank, 6.750%, 2/01/20 2/03 at 102 + 2,712,850
3,135,000 Indianapolis Resource Recovery (Ogden Martin),
7.900%, 12/01/08 12/96 at 103 A 3,307,300
2,470,000 Southwind Housing, Inc., 7.125%, 11/15/21 No Opt. Call AA 3,058,231
- -------------------------------------------------------------------------------------------------------------
IOWA - 0.3%
4,035,000 Iowa Housing Finance Authority,
5.875%, 8/01/08 8/96 at 101 Aa1 4,071,840
3,815,000 Davenport (Mercy Hospital), 6.625%, 7/01/14 7/02 at 102 Aaa 4,222,404
- -------------------------------------------------------------------------------------------------------------
KENTUCKY - 3.2%
Kentucky Housing Corporation:
17,600,000 5.300%, 7/01/10 1/04 at 102 Aaa 17,269,648
14,400,000 5.400%, 7/01/14 1/04 at 102 Aaa 14,087,520
3,925,000 7.250%, 1/01/17 7/01 at 102 Aaa 4,188,250
Kentucky Turnpike Authority:
9,860,000 8.000%, 7/01/03 7/97 at 102 A+ 10,540,636
8,980,000 5.000%, 7/01/08 7/97 at 100 A+ 8,829,316
34,500,000 Carroll County Pollution Control (Kentucky
Utilities Company), 7.450%, 9/15/16 9/02 at 102 Aa2 39,604,275
- -------------------------------------------------------------------------------------------------------------
MAINE - 0.3%
10,000,000 Maine State Housing Authority,
5.700%, 1/15/26 2/04 at 102 AA- 9,719,600
- -------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.3%
15,000,000 Massachusetts Bay Transportation Authority,
Certificates of Participation,
7.650%, 8/01/15 (Pre-refunded to 8/01/00) 8/00 at 102 Aaa 17,330,850
- ------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
$ 19,670,000 Massachusetts General Obligation,
4.700%, 8/01/02 No Opt. Call A1 $ 19,990,818
Massachusetts Water Resources Authority:
14,765,000 5.250%, 3/01/13 3/03 at 102 A 14,202,896
6,500,000 7.500%, 4/01/16 (Pre-refunded to 4/01/00) 4/00 at 102 Aaa 7,412,795
9,500,000 6.000%, 4/01/20 4/00 at 100 A 9,538,570
24,650,000 5.250%, 12/01/20 12/04 at 102 A 23,201,320
5,795,000 5.000%, 3/01/22 3/03 at 100 A 5,208,546
- -------------------------------------------------------------------------------------------------------------
MICHIGAN - 4.5%
3,000,000 Michigan Hospital Finance Authority (Genesys
Health System), 7.500%, 10/01/27 10/05 at 100 Baa 3,162,090
Michigan Housing Development Authority:
3,950,000 6.750%, 7/01/05 7/96 at 100 Aa1 3,960,073
12,080,000 5.700%, 4/01/12 4/04 at 102 Aaa 12,208,531
10,000,000 Michigan Housing Development Authority,
Rental Housing, 6.600%, 4/01/12 10/02 at 102 A+ 10,377,100
4,000,000 Michigan State Hospital Finance Authority
(Henry Ford Hospital), 7.500%, 7/01/13
(Pre-refunded to 1/01/97) 1/97 at 102 Aaa 4,217,040
Michigan State Hospital Finance Authority
(The Detroit Medical Center):
19,585,000 5.750%, 8/15/13 8/04 at 102 A 19,069,327
54,000,000 5.500%, 8/15/23 8/04 at 102 A 50,558,040
5,000,000 Detroit Sewage Disposal System, 8.250%, 7/01/05
(Pre-refunded to 7/01/97) 7/97 at 102 A 5,396,900
16,805,000 St. Joseph Hospital Finance Authority (Mercy
Memorial Medical Center Obligated Group),
5.250%, 1/01/16 1/04 at 102 Aaa 15,979,034
5,000,000 University of Michigan Hospital,
6.625%, 12/01/10 12/96 at 100 Aa 5,051,400
- -------------------------------------------------------------------------------------------------------------
MINNESOTA - 0.9%
Minnesota Housing Finance Agency:
8,600,000 5.800%, 8/01/11 2/05 at 102 Aaa 8,703,630
2,520,000 6.250%, 2/01/20 8/96 at 102 A1 2,555,986
14,420,000 Minneapolis Convention Center,
7.750%, 4/01/11 (Pre-refunded to 4/01/96) 4/96 at 102 Aaa 14,763,773
- -------------------------------------------------------------------------------------------------------------
MISSOURI - 0.9%
2,740,000 Missouri Environmental Improvement and
Energy Resource Authority, Pollution Control
(Associated Electric Cooperative, Inc.),
7.900%, 11/15/14 5/96 at 103 Aa3 2,842,147
------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI (CONTINUED)
$ 15,750,000 Missouri Health and Educational Facilities
Authority (Heartland Health), 8.125%, 10/01/10 10/99 at 102 1/2 BBB+ $ 18,042,413
6,195,000 Missouri Housing Development Commission,
7.000%, 9/15/22 3/96 at 101 3/4 AA+ 6,318,776
- ---------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 1.4%
37,895,000 Consumers Public Power District, 5.100%, 1/01/03 7/96 at 100 A1 37,934,411
2,475,000 Hall County Hospital Authority (Sisters of Charity),
6.750%, 12/01/07 6/96 at 103 Aa 2,549,572
- ---------------------------------------------------------------------------------------------------------------------------
NEVADA - 0.2%
7,130,000 Reno, Insured Hospital Revenue (St. Mary's
Regional Medical Center), 5.800%, 5/15/13 5/03 at 102 Aaa 7,293,634
- ---------------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE - 0.3%
8,500,000 New Hampshire Industrial Development
Authority, Pollution Control (Central
Maine Power Company), 7.375%, 5/01/14 12/01 at 103 Baa3 9,093,555
- ---------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 0.4%
10,750,000 New Jersey Housing and Mortgage Finance
Agency, 6.950%, 11/01/13 5/02 at 102 A+ 11,393,818
- ---------------------------------------------------------------------------------------------------------------------------
NEW YORK - 7.9%
8,000,000 New York Local Government Assistance
Corporation, 7.000%, 4/01/18 (Pre-refunded
to 4/01/02) 4/02 at 102 Aaa 9,260,080
19,490,000 New York State Housing Finance Agency, Health
Facilities (New York City), 8.000%, 11/01/08 11/00 at 102 BBB+ 22,002,066
11,490,000 New York State Mortgage Agency, 6.875%, 4/01/17 10/96 at 102 Aa 11,810,226
10,725,000 Battery Park City Authority, 5.000%, 11/01/13 11/03 at 102 AA 9,866,893
New York Municipal Assistance Corporation:
16,270,000 7.750%, 7/01/06 7/97 at 102 Aa 17,350,653
18,565,000 6.750%, 7/01/06 7/97 at 102 Aa 19,498,820
23,535,000 7.250%, 7/01/08 7/96 at 102 Aa 24,251,170
14,250,000 6.000%, 7/01/08 7/97 at 100 Aa 14,465,318
New York City General Obligation:
16,500,000 4.875%, 10/01/01 No Opt. Call Baa1 16,183,365
2,350,000 6.000%, 8/15/04 No Opt. Call Baa1 2,412,604
7,500,000 5.900%, 2/01/05 No Opt. Call Baa1 7,598,175
5,000,000 8.125%, 11/01/06 (Pre-refunded to 11/01/97) 11/97 at 101 1/2 Aaa 5,437,700
8,000,000 5.750%, 8/15/11 8/03 at 102 Baa1 7,702,640
8,525,000 6.625%, 8/01/12 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 Aaa 9,734,271
12,655,000 5.750%, 2/01/17 2/06 at 101 1/2 Baa1 11,942,270
14,000,000 6.625%, 2/15/25 2/05 at 101 Baa1 14,716,520
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
New York City Municipal Water Finance
Authority, Water and Sewer System:
$ 8,600,000 6.000%, 6/15/17 6/02 at 101 1/2 A $ 8,764,948
10,000,000 7.750%, 6/15/20 (Pre-refunded to 6/15/01) 6/01 at 101 1/2 Aaa 11,778,600
5,000,000 Triborough Bridge and Tunnel Authority,
General Purpose, 4.750%, 1/01/19 1/04 at 100 Aa 4,512,300
- -------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 3.0%
North Carolina Eastern Municipal Power Agency:
63,160,000 6.250%, 1/01/12 1/03 at 102 A 64,900,058
17,290,000 8.000%, 1/01/21 (Pre-refunded to 1/01/98) 1/98 at 102 Aaa 18,929,092
5,545,000 North Carolina Municipal Power Agency
No. 1, (Catawba), 7.625%, 1/01/14 1/98 at 102 Aaa 5,973,296
Housing Authority of Wilmington:
165,000 7.750%, 6/01/98 6/96 at 100 AA 171,125
1,195,000 7.750%, 6/01/10 6/96 at 100 AA 1,279,295
- -------------------------------------------------------------------------------------------------------------
OHIO - 0.1%
500,000 Ohio Building Authority (Toledo Center),
9.100%, 10/01/04 4/96 at 103 A1 517,205
- -------------------------------------------------------------------------------------------------------------
OKLAHOMA - 0.2%
5,375,000 Comanche County Hospital Authority,
8.050%, 7/01/16 (Pre-refunded to 7/01/99) 7/99 at 102 AAA 6,137,390
2,970,000 Midwest City Memorial Hospital Authority,
7.375%, 4/01/12 4/02 at 102 BBB+ 3,096,195
- -------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 4.8%
Pennsylvania Housing Finance Agency:
4,025,000 8.100%, 7/01/13 7/02 at 102 AAA 4,459,338
16,830,000 8.200%, 7/01/24 7/02 at 102 AAA 18,639,730
22,500,000 Pennsylvania Housing Finance Agency, Rental
Housing (FNMA), 5.750%, 7/01/14 7/03 at 102 Aaa 22,610,925
15,000,000 Pennsylvania Intergovernmental Cooperative
Authority (Philadelphia Funding Program),
5.000%, 6/15/22 6/03 at 100 Aaa 13,719,600
5,000,000 Allegheny County Hospital Development
Authority (St. Francis Medical Center),
8.125%, 6/01/13 (Pre-refunded to 6/01/96) 6/96 to 102 Aaa 5,160,150
10,000,000 Lehigh County Industrial Development
Authority, Pollution Control (Pennsylvania
Power and Light Company), 6.400%, 9/01/29 9/04 at 102 Aaa 10,839,700
9,300,000 Philadelphia Airport, 6.200%, 6/15/06 6/96 at 100 A-- 9,305,487
- -------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Philadelphia Water and Sewer:
$ 10,000,000 7.500%, 8/01/10 (Pre-refunded to 8/01/01) 8/01 at 102 AAA $ 11,702,000
5,890,000 7.250%, 7/01/14 (Pre-refunded to 7/01/96) 7/96 at 102 AAA 6,026,471
7,000,000 7.000%, 8/01/18 (Pre-refunded to 8/01/01) 8/01 at 100 AAA 7,912,380
28,075,000 Philadelphia Hospitals and Higher Educational
Facilities Authority (Pennsylvania Hospital),
7.250%, 7/01/14 7/96 at 101 A 28,392,809
- -------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 0.2%
7,595,000 Rhode Island Convention Center Authority,
5.000%, 5/15/20 5/03 at 100 Aaa 6,886,994
- -------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 0.8%
20,750,000 Piedmont Municipal Power Agency,
7.400%, 1/01/18 1/98 at 102 Aaa 22,274,918
- -------------------------------------------------------------------------------------------------------------
TEXAS - 4.3%
Austin Water, Sewer and Electric:
300,000 14.000%, 11/15/01 (Pre-refunded to 5/15/99) 5/99 at 100 A 387,408
18,415,000 14.000%, 11/15/01 No Opt. Call A 25,251,341
4,000,000 11.000%, 11/15/02 (Pre-refunded to 5/15/97) 5/97 at 100 AAA 4,355,880
28,500,000 Brazos River Authority, 5.800%, 8/01/15 8/00 at 102 Aaa 28,779,585
24,800,000 Harris County Toll Road, 5.300%, 8/15/13 8/04 at 102 Aaa 24,513,064
7,000,000 Harris County Health Facilities Development
Corporation (St. Luke's Episcopal Hospital),
6.750%, 2/15/21 2/01 at 102 Aa 7,531,230
3,345,000 Houston Water and Sewer System, 8.200%, 12/01/15
(Pre-refunded to 12/01/96) 12/96 at 102 AAA 3,532,588
San Antonio Electric and Gas Systems:
5,000,000 8.000%, 2/01/09 (Pre-refunded to 2/01/98) 2/98 at 102 Aaa 5,486,400
3,500,000 8.000%, 2/01/16 (Pre-refunded to 2/01/98) 2/98 at 102 Aaa 3,840,480
16,000,000 San Antonio Electric and Gas System,
5.000%, 2/01/17 2/02 at 101 Aa1 14,704,640
5,615,000 San Antonio Sewer System, 7.900%, 5/01/14
(Pre-refunded to 5/01/97) 5/97 at 101 1/2 Aaa 5,986,769
- -------------------------------------------------------------------------------------------------------------
UTAH - 3.0%
Intermountain Power Agency:
6,300,000 5.500%, 7/01/13 7/03 at 103 Aa 6,254,325
32,080,000 7.875%, 7/01/14 7/96 at 102 Aa 33,168,795
16,260,000 7.200%, 7/01/19 7/97 at 102 Aa 17,152,186
31,990,000 5.000%, 7/01/23 7/03 at 100 Aa 28,559,712
1,730,000 Layton Industrial Development (K-Mart),
8.750%, 6/01/05 6/96 at 100 Baa3 1,615,889
- -------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VERMONT - 0.1%
$ 255,000 University of Vermont, Housing, Dining and
Student Services, 6.300%, 7/01/06 7/96 at 101 A1 $ 258,583
- -------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 3.8%
Virginia Housing Development Authority:
3,275,000 6.700%, 11/01/21 11/96 at 101 AA+ 3,309,027
50,000,000 7.150%, 1/01/33 1/02 at 102 Aa1 52,781,500
Virginia Housing Development Authority,
Multi-Family Housing:
19,080,000 5.550%, 5/01/08 5/03 at 102 AA+ 18,994,903
28,075,000 5.900%, 5/01/14 5/03 at 102 AA+ 27,948,382
6,240,000 Chesapeake Hospital Authority (Chesapeake
General Hospital), 7.625%, 7/01/18
(Pre-refunded to 7/01/98) 7/98 at 102 Aaa 6,887,587
1,035,000 Chesapeake Industrial Development Authority
(Camelot Hall Nursing Home),
7.500%, 9/01/01 No Opt. Call N/R 1,039,016
- -------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 7.0%
Washington Public Power Supply System,
Nuclear Project No. 1:
14,260,000 7.000%, 7/01/07 No Opt. Call Aa 16,383,884
7,805,000 7.000%, 7/01/09 No Opt. Call Aa 8,980,667
18,500,000 5.750%, 7/01/13 7/03 at 102 Aa 18,268,750
10,000,000 5.375%, 7/01/15 7/03 at 102 Aa 9,369,900
5,000,000 7.125%, 7/01/16 No Opt. Call Aa 5,807,700
10,000,000 5.700%, 7/01/17 7/03 at 102 Aaa 9,993,000
Washington Public Power Supply, Nuclear
Project No. 3:
9,180,000 5.300%, 7/01/10 7/03 at 102 Aa 8,904,967
51,070,000 5.375%, 7/01/15 7/03 at 102 Aa 47,635,032
2,095,000 15.000%, 7/01/18 (Pre-refunded to 7/01/96) 7/96 at 103 Aaa 2,238,738
8,835,000 5.700%, 7/01/18 7/03 at 102 Aa 8,568,448
11,545,000 5.500%, 7/01/18 7/03 at 102 Aa 10,899,635
6,635,000 Chelan County Public Utility District No. 1,
5.125%, 7/01/23 7/96 at 100 A1 6,044,286
31,482,000 Chelan County Public Utility District No. 1
(Rocky Reach Hydro-Electric System),
5.000%, 7/01/13 7/96 at 100 A1 30,608,375
6,805,000 Columbia Storage Power Exchange, 3.875%, 4/01/03 4/96 at 100 Aa 6,790,165
15,600,000 Douglas County Public Utility District No. 1
(Wells Hydroelectric), 4.000%, 9/01/18 9/96 at 101 A+ 13,139,256
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WISCONSIN - 3.7%
$ 13,700,000 Wisconsin Health and Educational Facilities
Authority (Columbia Hospital), 6.250%, 11/15/21 11/01 at 102 Aaa $ 14,385,548
6,000,000 Wisconsin Health and Educational Facilities
Authority (Meriter Health Services),
6.000%, 12/01/22 12/02 at 102 Aaa 6,186,720
13,500,000 Wisconsin Health and Educational Facilities
Authority (Aurora Health Care Obligated Group),
5.250%, 8/15/23 8/03 at 102 Aaa 12,560,940
3,250,000 Wisconsin Health and Educational Facilities
Authority (Froedtert Memorial Lutheran Hospital),
5.875%, 10/01/13 10/04 at 102 Aaa 3,332,225
32,000,000 Wisconsin Health and Educational Facilities
Authority (Aurora Medical Group),
5.750%, 11/15/25 5/06 at 102 Aaa 31,659,520
Wisconsin Housing and Economic
Development Authority:
28,200,000 5.800%, 11/01/13 12/03 at 102 A1 28,073,943
4,500,000 5.800%, 6/01/17 No Opt. Call A 4,719,642
8,500,000 7.050%, 11/01/22 4/02 at 102 A1 9,039,580
- -------------------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.3%
8,000,000 Puerto Rico Aqueduct and Sewer Authority,
7.875%, 7/01/17 (Pre-refunded to 7/01/98) 7/98 at 102 AAA 8,888,000
- -------------------------------------------------------------------------------------------------------------------------
$2,830,552,000 Total Investments - (Cost $2,668,395,087) - 97.2% 2,835,978,201
================---------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 1.1%
$ 15,000,000 Harris County Health Facilities Development
Corporation (The Methodist Hospital),
Variable Rate Demand Bonds, 3.450%, 12/01/25+ A-1+ 15,000,000
3,400,000 Hillsborough County Industrial Development
Authority (Tampa Electric Company),
Variable Rate Demand Bonds, 3.450%, 9/01/25+ Aa-2 3,400,000
7,200,000 Metropolitan Nashville Airport Authority, Special
Facilities (American Airlines), Variable Rate
Demand Bonds, 3.500%, 10/01/12+ A-1+ 7,200,000
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES (CONTINUED)
$ 2,800,000 Monroe County Economic Development Corporation,
Pollution Control (The Detroit Edison Company),
Variable Rate Demand Bonds, 3.350%, 10/01/24+ VMIG-1 $ 2,800,000
3,200,000 New York City General Obligation, Fiscal 1995B-B6,
Insured, Adjustable Rate Demand Bonds,
3.450%, 8/15/05+ VMIG-1 3,200,000
- -----------------------------------------------------------------------------------------------------------------------------------
$ 31,600,000 Total Temporary Investments - 1.1% 31,600,000
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.7% 50,067,106
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 2,917,645,307
===================================================================================================================================
</TABLE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 78 $ 934,014,456 32%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 74 1,037,562,805 37
PORTFOLIO OF A+ A1 20 333,572,856 12
INVESTMENTS A, A-- A, A2, A3 26 367,144,188 13
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 16 154,830,940 5
TEMPORARY Non-rated Non-rated 2 8,852,956 1
INVESTMENTS):
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 216 $ 2,835,978,201 100%
====================================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
22
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN INSURED MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA - 5.5%
$ 2,120,000 Albertville Water Supply Board, 6.700%, 3/01/11 3/02 at 102 Aaa $ 2,354,599
3,500,000 Athens Electric, 6.000%, 6/01/25 6/05 at 102 Aaa 3,649,555
4,795,000 Auburn Government Utility Services Corporation,
Wastewater Treatment, 7.300%, 1/01/21 12/99 at 102 Aaa 5,283,227
1,875,000 Birmingham Special Care Facilities Financing
Authority (Baptist Medical Center),
7.000%, 1/01/21 1/01 at 102 Aaa 2,070,169
Daphne Utilities Board, Water, Gas and Sewer:
1,255,000 7.350%, 6/01/20 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 1,429,571
1,225,000 7.350%, 6/01/20 6/00 at 102 Aaa 1,377,219
Madison General Obligation:
3,000,000 6.250%, 2/01/19 2/04 at 102 Aaa 3,192,570
5,500,000 6.000%, 4/01/23 4/05 at 102 Aaa 5,751,295
3,000,000 Mobile County General Obligation,
6.700%, 2/01/11 (Pre-refunded to 2/01/00) 2/00 at 102 Aaa 3,321,780
3,000,000 Oneanta Utilities Board, 6.900%, 11/01/24 11/04 at 102 Aaa 3,409,740
Orange Beach Water and Sewer and Fire Authority:
3,000,000 5.375%, 5/15/15 5/05 at 102 Aaa 2,919,180
4,500,000 5.400%, 5/15/20 5/05 at 102 Aaa 4,360,815
West Morgan-East Lawrence Water Authority:
2,200,000 6.800%, 8/15/19 8/04 at 102 Aaa 2,487,166
3,000,000 6.850%, 8/15/25 8/04 at 102 Aaa 3,410,700
- -----------------------------------------------------------------------------------------------------------------------------------
ALASKA - 0.6%
5,000,000 Anchorage General Obligation, 5.600%, 1/01/14 1/04 at 100 Aaa 4,935,800
- -----------------------------------------------------------------------------------------------------------------------------------
ARIZONA - 1.2%
3,180,000 Maricopa County Industrial Development
Authority (Baptist Hospital), 5.500%, 9/01/13 9/05 at 101 Aaa 3,197,490
6,000,000 Tempe Union High School District No. 213,
General Obligation, 6.000%, 7/01/10 7/04 at 101 Aaa 6,412,560
- -----------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.3%
2,000,000 Saline County (Saline Memorial Hospital),
6.000%, 9/01/19 9/05 at 102 AAA 2,062,900
- ------------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA - 9.5%
3,525,000 Brea Public Financing Authority, Tax Allocation,
7.000%, 8/01/15 (Pre-refunded to 8/01/01) 8/01 at 102 Aaa 4,053,433
5,000,000 Brea Redevelopment Agency, Tax Allocation,
5.750%, 8/01/23 8/03 at 102 Aaa 5,037,700
4,150,000 Fairfield Public Finance Authority,
5.500%, 8/01/23 8/03 at 102 Aaa 4,072,022
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 2,500,000 Los Angeles Community Redevelopment Agency
(Bunker Hill Project), 5.600%, 12/01/28 12/03 at 102 Aaa $ 2,450,125
14,740,000 Los Angeles Convention and Exhibition Center
Authority, 5.375%, 8/15/18 8/03 at 102 Aaa 14,218,351
4,500,000 M-S-R Public Power Agency, San Juan Project,
6.000%, 7/01/20 7/03 at 102 Aaa 4,687,245
13,750,000 Ontario Redevelopment Financing Authority,
5.800%, 8/01/23 8/03 at 102 Aaa 14,470,638
5,295,000 Riverside County Desert Justice Facility
Corporation, Certificates of Participation,
6.000%, 12/01/12 12/04 at 101 Aaa 5,530,945
2,250,000 Sacramento Municipal Utility District,
Electric System, 6.500%, 9/01/21
(Pre-refunded to 9/01/01) 9/01 at 102 Aaa 2,536,628
7,500,000 San Bernardino, Joint Powers Finance Authority,
Tax Allocation, 5.750%, 10/01/25 10/05 at 102 Aaa 7,483,650
1,750,000 San Bernadino, Certificates of Participation,
5.500%, 8/01/22 8/05 at 102 Aaa 1,705,918
10,000,000 University of California, 6.375%, 9/01/24 9/02 at 102 Aaa 10,696,600
- -------------------------------------------------------------------------------------------------------------
COLORADO - 2.3%
6,000,000 Colorado Health Facilities Authority
(Children's Hospital Association),
5.250%, 10/01/26 10/06 at 101 Aaa 5,714,940
4,000,000 Colorado Springs (Memorial Hospital),
6.000%, 12/15/24 12/05 at 102 Aaa 4,155,640
4,500,000 Denver Board of Water Commissioners,
Certificates of Participation, 6.625%, 11/15/11 11/01 at 101 Aaa 4,952,925
3,500,000 Jefferson County Equipment Lease, Certificates
of Participation, 6.650%, 12/01/08 12/02 at 102 Aaa 3,927,875
- -------------------------------------------------------------------------------------------------------------
DELAWARE - 0.5%
3,600,000 Delaware Economic Development Authority,
Pollution Control (Delmarva Power and
Light Company), 6.750%, 5/01/19 5/02 at 102 Aaa 4,005,144
- -------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 1.1%
District of Columbia General Obligation:
2,500,000 7.500%, 6/01/10 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 2,862,225
6,000,000 6.100%, 6/01/11 6/04 at 102 Aaa 6,245,280
- -------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA - 1.5%
Florida Keys Aqueduct Authority:
$ 920,000 6.750%, 9/01/21 (Pre-refunded to 9/01/01) 9/01 at 101 Aaa $ 1,040,603
80,000 6.750%, 9/01/21 9/01 at 101 Aaa 88,391
Brevard County Utility System:
1,520,000 7.375%, 3/01/14 (Pre-refunded to 3/01/98) 3/98 at 102 Aaa 1,656,131
295,000 7.375%, 3/01/14 3/98 at 102 Aaa 317,995
2,750,000 Lakeland (Lakeland Regional Medical
Center), 5.250% 11/15/25 (WI) 11/06 at 102 Aaa 2,624,573
3,500,000 Sarasota County Utility System,
5.250%, 10/01/25 (WI) 10/06 at 102 Aaa 3,360,350
2,405,000 South Broward Hospital District,
7.500%, 5/01/08 5/03 at 102 Aaa 2,852,522
- ---------------------------------------------------------------------------------------------------------------------------
GEORGIA - 2.8%
1,000,000 Georgia Municipal Electric Authority,
6.500%, 1/01/26 1/04 at 102 Aaa 1,086,310
5,000,000 Albany Sewerage System, 6.625%, 7/01/17 7/02 at 102 Aaa 5,548,400
5,000,000 Appling County Development Authority
(Oglethorpe Power Corporation), 7.150%, 1/01/21 1/04 at 101 Aaa 5,718,350
1,000,000 Atlanta Board of Education, Certificates of
Participation, 7.125%, 6/01/12
(Pre-refunded to 6/01/00) 6/00 at 102 Aaa 1,130,410
2,250,000 Chatham County Hospital Authority
(Savannah Memorial Medical Center),
7.000%, 1/01/21 1/01 at 102 Aaa 2,513,115
Marietta Development Authority (Life College):
2,590,000 5.950%, 9/01/19 9/05 at 102 Aaa 2,755,113
3,770,000 6.250%, 9/01/25 9/05 at 102 Aaa 3,869,528
- ---------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 16.3%
Illinois General Obligation:
3,065,000 6.100%, 2/01/19 2/05 at 102 Aaa 3,218,189
5,000,000 5.875%, 8/01/19 8/04 at 102 AA-- 5,054,100
5,545,000 6.100%, 2/01/20 2/05 at 102 Aaa 5,822,139
6,750,000 Illinois Health Facilities Authority
(Methodist Health Services), 8.000%, 8/01/15 2/99 at 103 Aaa 7,568,573
4,500,000 Illinois Health Facilities Authority
(The Children's Memorial Hospital),
5.000%, 8/15/22 8/03 at 102 Aaa 4,074,975
3,000,000 Illinois Health Facilities Authority
(The University of Chicago Hospitals),
6.125%, 8/15/24 8/04 at 102 Aaa 3,134,220
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Illinois Health Facilities Authority (Ingalls Health
System):
$ 7,000,000 6.250%, 5/15/14 5/04 at 102 Aaa $ 7,402,500
2,100,000 7.000%, 1/01/19 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,355,675
4,500,000 6.250%, 5/15/24 5/04 at 102 Aaa 4,712,175
4,000,000 Illinois Health Facilities Authority
(Northwestern Medical Faculty
Foundation), 6.500%, 11/15/15 11/04 at 102 Aaa 4,377,360
Illinois Health Facilities Authority (Community
Provider Pooled Loan):
33,000 7.900%, 8/15/03 (Pre-refunded to 8/15/96) 8/96 at 102 Aaa 34,346
162,000 7.900%, 8/15/03 No Opt. Call Aaa 190,732
1,268,000 7.900%, 8/15/03 8/99 at 100 Aaa 1,297,912
5,000,000 Illinois Participations--Department of Central
Management Services--Public Aid,
5.650%, 7/01/17 7/06 at 102 Aaa 4,953,700
7,705,000 Illinois State Toll Highway Authority,
6.200%, 1/01/16 1/03 at 102 Aaa 8,119,221
1,910,000 Berwyn (MacNeal Memorial Hospital),
5.500%, 6/01/15 6/06 at 102 Aaa 1,866,605
2,500,000 Chicago General Obligation (Central Public
Library Project), 6.850%, 1/01/17
(Pre-refunded to 7/01/02) 7/02 at 101 1/2 Aaa 2,866,875
Chicago General Obligation:
5,000,000 6.250%, 1/01/12 1/02 at 102 Aaa 5,292,800
5,800,000 5.875%, 1/01/22 1/02 at 102 Aaa 5,846,516
1,500,000 Chicago Public Building Commission
(Community College District No. 508),
7.700%, 1/01/08 1/98 at 102 Aaa 1,657,335
23,300,000 Chicago Public Building Commission
(Board of Education), 5.750%, 12/01/18 12/03 at 102 Aaa 23,195,150
6,540,000 Cicero General Obligation, 6.400%, 12/01/14 12/04 at 102 Aaa 6,998,716
Cook County School District No. 25
(Arlington Heights), Certificates of Participation:
1,400,000 5.300%, 5/01/06 No Opt. Call Aaa 1,439,816
4,200,000 5.700%, 5/01/13 5/06 at 102 Aaa 4,245,948
2,500,000 Community College District No. 508, Cook County,
8.750%, 1/01/07 No Opt. Call Aaa 3,302,925
2,370,000 Eastern Illinois University, 6.375%, 4/01/16 4/04 at 102 Aaa 2,533,530
7,570,000 Franklin Park General Obligation, 5.500%, 7/01/22 7/04 at 102 Aaa 7,369,244
4,000,000 Regional Transportation Authority, General
Obligation, 5.850%, 6/01/23 6/03 at 102 Aaa 4,038,000
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDIANA - 5.2%
Indiana Health Facilities Financing Authority
(Community Hospitals Project):
$ 5,000,000 6.400%, 5/01/12 5/02 at 102 Aaa $ 5,331,500
3,000,000 5.600%, 5/15/14 5/06 at 102 Aaa 2,971,020
Indiana Municipal Power Agency,
Power Supply System:
1,000,000 7.100%, 1/01/15 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 1,121,460
5,000,000 6.125%, 1/01/19 1/03 at 102 Aaa 5,168,250
3,750,000 Indianapolis Gas Utility System, 6.200%, 6/01/23 6/02 at 102 Aaa 3,915,600
5,350,000 Jasper County Pollution Control (Northern Indiana
Public Service Company), 7.100%, 7/01/17 7/01 at 102 Aaa 5,969,851
2,000,000 Lawrence Central High School Building
Corporation, First Mortgage,
7.250%, 7/01/08 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 2,274,620
3,300,000 Marion County Convention and Recreational
Facilities Authority, 7.000%, 6/01/21
(Pre-refunded to 6/01/01) 6/01 at 102 Aaa 3,771,009
2,250,000 Monroe County Hospital Authority (Bloomington
Hospital), 7.125%, 5/01/11 5/99 at 101 Aaa 2,440,395
1,000,000 Princeton Pollution Control (Public Service
Company of Indiana), 7.375%, 3/15/12 3/00 at 102 Aaa 1,119,730
2,000,000 St. Joseph County Hospital Authority (Memorial
Hospital of South Bend), 7.000%, 8/15/20 8/01 at 102 Aaa 2,225,180
2,190,000 Shelby County Jail Building Corporation, First
Mortgage, 6.500%, 7/15/09 7/02 at 102 Aaa 2,411,321
1,380,000 South Bend Community School Corporation,
Edison School Building Corporation, First
Mortgage, 6.650%, 1/15/14 7/00 at 100 Aaa 1,514,992
2,265,000 Southwest Allen Multi-School Building Corporation,
6.375%, 1/15/09 1/02 at 101 Aaa 2,419,043
- ---------------------------------------------------------------------------------------------------------------------------
KENTUCKY - 0.1%
1,000,000 Louisville and Jefferson County Metropolitan
Sewer District, 7.350%, 5/01/19
(Pre-refunded to 5/01/00) 5/00 at 102 Aaa 1,136,970
- ---------------------------------------------------------------------------------------------------------------------------
LOUISIANA - 2.9%
Louisiana General Obligation:
5,000,000 6.500%, 5/01/09 5/02 at 102 Aaa 5,519,400
2,000,000 6.500%, 5/01/12 5/02 at 102 Aaa 2,199,860
7,000,000 Louisiana Public Facilities Authority
(Southern Baptist Hospital),
6.800%, 5/15/12 (Pre-refunded to 5/15/02) 5/02 at 102 Aaa 8,018,850
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOUISIANA (CONTINUED)
$ 1,635,000 Louisiana Public Facilities Authority
(West Jefferson Medical Center), 7.900%, 12/01/15 12/98 at 102 Aaa $ 1,813,297
Tangipahoa Parish Hospital Service District No. 1:
4,750,000 6.250%, 2/01/24 2/04 at 102 Aaa 5,017,520
1,250,000 6.125%, 2/01/14 2/04 at 102 Aaa 1,315,413
- ---------------------------------------------------------------------------------------------------------------------------
MAINE - 2.1%
Maine Health and Higher Educational Facilities
Authority:
3,175,000 7.000%, 7/01/24 7/04 at 102 Aaa 3,616,230
11,500,000 5.875%, 7/01/25 7/05 at 102 Aaa 11,756,910
Old Orchard Beach General Obligation:
750,000 6.650%, 9/01/09 9/02 at 103 Aaa 842,145
500,000 6.650%, 9/01/10 9/02 at 103 Aaa 560,235
- ---------------------------------------------------------------------------------------------------------------------------
MARYLAND - 0.1%
1,000,000 Morgan State University, Academic and Auxiliary
Fees, 7.000%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 1,127,480
- ---------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS - 3.8%
1,250,000 Massachusetts Bay Transportation Authority,
Certificates of Participation, 7.650%, 8/01/15
(Pre-refunded to 8/01/00) 8/00 at 102 Aaa 1,444,238
2,000,000 Massachusetts Health and Educational Facilities
Authority (Capital Asset Program),
7.300%, 10/01/18 4/00 at 102 Aaa 2,224,760
3,400,000 Massachusetts Health and Educational Facilities
Authority (New England Medical Center),
6.625%, 7/01/25 7/02 at 102 Aaa 3,770,940
4,000,000 Massachusetts Health and Educational Facilities
Authority (South Shore Hospital),
6.500%, 7/01/22 7/02 at 102 Aaa 4,384,120
1,000,000 Massachusetts Health and Educational Facilities
Authority (Falmouth Hospital),
5.625%, 7/01/11 7/03 at 102 Aaa 1,015,890
2,800,000 Massachusetts Health and Educational Facilities
Authority (Lahey Clinic Medical Center),
5.625%, 7/01/15 7/03 at 102 Aaa 2,770,488
5,875,000 Massachusetts Health and Educational Facilities
Authority (Cape Cod Health System),
5.250%, 11/15/21 11/03 at 102 AAA 5,516,214
4,000,000 Massachusetts Health and Educational Facilities
Authority (Berkshire Health System),
6.000%, 10/01/19 10/05 at 102 Aaa 4,150,400
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
$ 3,500,000 Boston City Hospital (FHA-Insured Mortgage),
7.625%, 2/15/21 (Pre-refunded to 8/15/00) 8/00 at 102 Aaa $ 3,997,980
1,150,000 Haverville General Obligation, 7.000%, 6/15/12 6/02 at 102 Aaa 1,295,291
- ---------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 5.8%
2,400,000 Michigan State Hospital Finance Authority
(Henry Ford Health System), 5.750%, 9/01/17 9/02 at 102 Aaa 2,398,512
5,475,000 Michigan State Trunk Line, 5.500%, 10/01/21 10/02 at 100 Aaa 5,382,473
2,000,000 Michigan Strategic Fund (The Detroit Edison
Company), 6.875%, 12/01/21 12/01 at 102 Aaa 2,244,860
12,130,000 Bay City General Obligation, Unlimited Tax,
0.000%, 6/01/21 No Opt. Call Aaa 2,848,488
5,000,000 Caledonia Community Schools General
Obligation, 6.700%, 5/01/22
(Pre-refunded to 5/01/02) 5/02 at 102 Aaa 5,697,600
2,500,000 Chelsea School District, Counties of Washtenaw and
Jackson, General Obligation,
6.000%, 5/01/19 5/05 at 101 Aaa 2,595,175
2,000,000 Detroit Sewage Disposal System,
6.625%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 2,253,500
6,905,000 Detroit Water Supply System, 5.500%, 7/01/25 7/05 at 101 Aaa 6,781,124
8,000,000 Livonia Public School District, General
Obligation, 5.500%, 5/01/21 5/03 at 102 Aaa 7,865,520
3,405,000 Oakland University, 5.750%, 5/15/26 5/05 at 102 Aaa 3,436,905
6,085,000 River Rouge School District, Unlimited Tax,
5.625%, 5/01/22 5/03 at 101 1/2 Aaa 6,059,686
- ---------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 0.8%
6,400,000 Medical Center Educational Building Corporation
(University of Mississippi Medical Center Project),
5.900%, 12/01/23 12/04 at 102 Aaa 6,545,152
- ---------------------------------------------------------------------------------------------------------------------------
NEVADA - 0.8%
2,500,000 Churchill County (Western Health Network),
6.000%, 1/01/24 1/04 at 102 Aaa 2,587,075
2,000,000 Clark County Industrial Development (Nevada
Power Company), 7.200%, 10/01/22 10/02 at 102 Aaa 2,273,800
1,160,000 University of Nevada System, 7.125%, 7/01/16
(Pre-refunded to 7/01/00) 7/00 at 102 Aaa 1,313,584
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW HAMPSHIRE - 0.4%
$ 2,850,000 New Hampshire Higher Education and
Health Facilities Authority, University System
6.250%, 7/01/20 7/02 at 102 Aaa $ 3,019,518
- ---------------------------------------------------------------------------------------------------------------------------
NEW JERSEY - 0.4%
1,480,000 New Jersey Housing and Mortgage Finance Agency,
Home Mortgage Purchase, 8.100%, 10/01/07 4/98 at 103 Aaa 1,573,654
1,955,000 Pennsauken Township Housing Finance
Corporation, 8.000%, 4/01/11 4/05 at 100 Aaa 2,065,712
- ---------------------------------------------------------------------------------------------------------------------------
NEW MEXICO - 1.0%
3,000,000 Albuquerque Hospital System (Presbyterian
Healthcare Services), 6.600%, 8/01/07 8/97 at 102 Aaa 3,167,910
4,445,000 Farmington Pollution Control (Public Service
Company of New Mexico), 6.375%, 12/15/22 12/02 at 102 Aaa 4,777,842
- ---------------------------------------------------------------------------------------------------------------------------
NEW YORK - 12.2%
6,530,000 New York State Medical Care Facilities
Finance Agency, Mental Health Services,
Facilities Improvement, 5.900%, 8/15/22 8/02 at 102 Aaa 6,662,624
3,255,000 New York State Thruway Authority,
5.500%, 1/01/23 1/02 at 100 Aaa 3,189,900
3,000,000 Dormitory Authority of the State of New York
(City University), 5.750%, 7/01/18 No Opt. Call Aaa 3,113,220
8,375,000 Dormitory Authority of the State of New York
(Mount Sinai School of Medicine), 5.000%, 7/01/21 7/04 at 102 Aaa 7,800,140
Metropolitan Transportation Authority, Commuter
Facilities:
4,955,000 6.250%. 7/01/17 7/02 at 102 Aaa 5,273,706
5,000,000 6.375%, 7/01/18 7/04 at 101 1/2 Aaa 5,387,250
6,925,000 6.250%, 7/01/22 7/02 at 102 Aaa 7,332,121
New York City General Obligation:
5,715,000 6.625%, 8/01/12 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 Aaa 6,525,673
285,000 6.625%, 8/01/12 8/02 at 101 1/2 Aaa 315,344
3,010,000 6.000%, 5/15/16 5/03 at 101 1/2 Aaa 3,131,664
3,750,000 7.000%, 2/01/18 2/02 at 101 1/2 Aaa 4,197,750
6,795,000 New York City Health and Hospitals
Corporation, Health System, 5.750%, 2/15/22 2/03 at 102 Aaa 6,781,138
6,330,000 New York City Municipal Water Finance Authority,
6.750%, 6/15/16 6/01 at 101 Aaa 7,016,256
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York City Municipal Water Finance
Authority, Water and Sewer System:
$ 4,155,000 6.750%, 6/15/14 (Pre-refunded to 6/15/99) 6/99 at 101 1/2 Aaa $ 4,562,855
2,025,000 6.750%, 6/15/14 6/99 at 101 1/2 Aaa 2,196,578
4,470,000 5.750%, 6/15/18 6/02 at 101 1/2 Aaa 4,509,157
1,000,000 New York City Transit Authority, Transit
Facilities (Livingston Plaza Project),
7.500%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 1,137,820
3,900,000 New York City Transit Authority, Transit Facilities,
5.400%, 1/01/18 No Opt. Call Aaa 3,872,505
New York City Industrial Development Agency,
Civic Facility (USTA National Tennis Center
Incorporated Project):
3,500,000 6.500%, 11/15/10 11/04 at 102 Aaa 3,884,685
3,000,000 6.600%, 11/15/11 11/04 at 102 Aaa 3,364,140
Triborough Bridge and Tunnel Authority,
Special Obligation:
5,240,000 6.875%, 1/01/15 1/01 at 102 Aaa 5,819,858
3,015,000 5.500%, 1/01/17 1/02 at 100 Aaa 2,961,574
- ---------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA - 0.4%
3,500,000 Randolph County Certificate of Participation,
5.300%, 6/01/15 6/05 at 102 Aaa 3,394,965
- ---------------------------------------------------------------------------------------------------------------------------
OHIO - 0.5%
1,000,000 Columbus City School District, General Obligation,
Unlimited Tax, 7.000%, 12/01/11 (Pre-refunded
to 12/01/00) 12/00 at 102 Aaa 1,136,820
2,500,000 Dublin City School District, General
Obligation, 6.200%, 12/01/19 12/02 at 102 Aaa 2,656,650
- ---------------------------------------------------------------------------------------------------------------------------
OKLAHOMA - 0.7%
5,000,000 Oklahoma Industries Authority (Baptist
Center-South Oklahoma City Hospital),
6.250%, 8/15/12 8/05 at 102 Aaa 5,383,950
375,000 Muskogee County Home Finance Authority,
Single Family Mortgage, 7.600%, 12/01/10 6/00 at 102 Aaa 397,718
- ---------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 3.1%
3,550,000 Berks County General Obligation,
5.850%, 11/15/18 11/05 at 100 Aaa 3,643,507
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
$ 5,000,000 Lehigh County General Purpose Authority
(St. Luke's Hospital of Bethlehem),
6.250%, 7/01/22 7/02 at 102 Aaa $ 5,290,500
3,000,000 North Pennsylvania Water Authority,
7.000%, 11/01/24 (Pre-refunded to 11/01/04) 11/04 at 101 Aaa 3,534,810
7,500,000 Philadelphia Water and Wastewater System,
5.500%, 6/15/14 6/03 at 102 Aaa 7,292,925
3,900,000 Philadelphia Municipal Authority, Justice
Lease, 7.125%, 11/15/18 (Pre-refunded to
11/15/01) 11/01 at 102 Aaa 4,517,799
1,000,000 Washington County Hospital Authority,
Hospital Refunding, 7.150%, 7/01/17 7/00 at 102 Aaa 1,107,460
- ---------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 2.7%
Rhode Island Depositors Economic
Protection Corporation, Special Obligation:
7,950,000 6.000%, 8/01/17 8/03 at 102 Aaa 8,188,739
2,250,000 6.625%, 8/01/19 (Pre-refunded to 8/01/02) 8/02 at 102 Aaa 2,564,078
2,500,000 Rhode Island Health and Educational
Building Corporation, Higher
Education, Auxiliary Enterprise,
5.250%, 9/15/23 9/03 at 102 Aaa 2,372,775
4,000,000 Cranston General Obligation, 7.200%, 7/15/11
(Pre-refunded to 7/15/01) 7/01 at 101 1/2 Aaa 4,603,320
3,130,000 Kent County Water Authority, 6.350%, 7/15/14 7/04 at 102 Aaa 3,372,669
1,000,000 Providence Housing Development Corporation,
FHA-Insured (Barbara Jordan Apartments),
6.650%, 7/01/15 7/04 at 102 Aaa 1,060,510
- ---------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 2.9%
1,000,000 Aiken Water and Sewer System, 7.250%, 1/01/14 1/00 at 102 Aaa 1,111,430
7,000,000 Berkeley County School District, Certificates of
Participation, 5.250%, 2/01/16 2/06 at 101 Aaa 6,703,690
Charleston County Public Facilities Corporation,
Certificates of Participation:
1,500,000 6.875%, 6/01/14 6/04 at 102 Aaa 1,702,125
2,500,000 7.000%, 6/01/19 6/04 at 102 Aaa 2,854,100
7,000,000 5.500%, 12/01/20 6/05 at 101 Aaa 6,828,430
Rock Hill Combined Utility System:
2,000,000 6.375%, 1/01/15 1/01 at 102 Aaa 2,123,800
2,000,000 7.000%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,235,880
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH DAKOTA - 0.1%
$ 1,000,000 South Dakota Health and Educational Facilities
Authority (McKennan Hospital), 7.250%, 7/01/15 7/00 at 102 Aaa $ 1,112,170
- --------------------------------------------------------------------------------------------------------------------
TENNESSEE - 0.1%
1,000,000 White House Utility District of Robertson and
Sumner Counties, 6.375%, 1/01/22 1/02 at 102 Aaa 1,073,510
- --------------------------------------------------------------------------------------------------------------------
TEXAS - 4.8%
6,080,000 Texas Health Facilities Development Corporation
(All Saints Episcopal Hospitals of Fort Worth),
6.250%, 8/15/22 8/03 at 102 Aaa 6,475,018
655,000 Texas Housing Agency, Single Family Mortgage,
7.875%, 9/01/17 9/96 at 102 Aa 673,340
10,000,000 Texas Turnpike Authority, 5.250%, 1/01/23 1/06 at 102 Aaa 9,509,500
3,000,000 Bexar County Health Facilities Development
Corporation (Baptist Memorial Hospital
System Project), 6.750%, 8/15/19 8/04 at 102 Aaa 3,379,170
5,000,000 Bexar Metropolitan Water District,
5.000%, 5/01/19 (Pre-refunded to 5/01/15) 5/15 at 100 Aaa 4,711,350
4,575,000 Harris County Toll Road, Senior Lien,
6.500%, 8/15/17 (Pre-refunded to 8/15/02) 8/02 at 102 Aaa 5,184,756
1,000,000 Harris County Hospital District, 7.400%, 2/15/10 No Opt. Call Aaa 1,228,250
500,000 Houston Hotel Occupancy Tax and Parking Facilities,
7.000%, 7/01/15 (Pre-refunded to 7/01/01) 7/01 at 100 Aaa 564,260
825,000 Lower Colorado River Authority, Priority Refunding,
7.000%, 1/01/11 1/01 at 102 Aaa 921,476
1,250,000 Sabine River Authority of Texas, Pollution Control
(Texas Utilities Electric Company),
5.550%, 5/01/22 11/03 at 102 Aaa 1,215,450
5,000,000 Tarrant County Health Facilities Development
Corporation (Fort Worth Osteopathic Hospital),
6.000%, 5/15/21 No Opt. Call Aaa 5,349,000
- --------------------------------------------------------------------------------------------------------------------
UTAH - 1.4%
280,000 Utah Housing Finance Agency, Single Family
Mortgage, 8.375%, 7/01/19 1/09 at 100 AA 293,840
4,500,000 Utah State Building Ownership Authority,
5.750%, 5/15/18 11/05 at 100 Aaa 4,541,220
Provo City Energy System:
2,300,000 5.500%, 11/15/11 5/03 at 102 Aaa 2,325,461
500,000 5.750%, 5/15/14 5/03 at 102 Aaa 507,990
3,500,000 White City Water System, 6.600%, 2/01/25 2/05 at 100 Aaa 3,834,285
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN INSURED MUNICIPAL BOND FUND-CONTINUED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
VIRGINIA - 0.5%
$ 3,000,000 Loudoun County Industrial Development
Authority (Loudoun Hospital Centre),
5.800%, 6/01/26 6/05 at 102 Aaa $ 3,058,080
1,050,000 Roanoke County Water System,
6.000%, 7/01/31 (Pre-refunded to 7/01/01) 7/01 at 100 Aaa 1,135,313
- -------------------------------------------------------------------------------------------------------------
WASHINGTON - 2.3%
6,500,000 Washington Public Power Supply System,
Nuclear Project No. 1, 5.700%, 7/01/17 7/03 at 102 Aaa 6,495,450
5,000,000 Washington Public Power Supply System,
Nuclear Project No. 2, 5.400%, 7/01/05 No Opt. Call Aaa 5,234,800
2,500,000 Washington Public Power Supply System,
Nuclear Project No. 3, 7.250%, 7/01/16
(Pre-refunded to 7/01/99) 7/99 at 102 Aaa 2,792,700
1,500,000 Marysville Water and Sewer System,
7.000%, 12/01/11 (Pre-refunded to 12/01/03) 12/03 at 100 Aaa 1,745,220
2,000,000 Whatcom County School District No. 501,
General Obligation, 6.125%, 12/01/13 12/04 at 100 Aaa 2,100,620
- -------------------------------------------------------------------------------------------------------------
WEST VIRGINIA - 0.1%
1,000,000 West Virginia School Building Authority,
Capital Improvement, 7.250%, 7/01/15
(Pre-refunded to 7/01/00) 7/00 at 102 Aaa 1,137,310
- -------------------------------------------------------------------------------------------------------------
WISCONSIN - 1.5%
7,020,000 Wisconsin Health and Educational Facilities
Authority (Sisters of the Sorrowful
Mother-Ministry Corporation), 6.125%, 8/15/22 2/03 at 102 Aaa 7,299,256
1,000,000 Wisconsin Municipal Insurance Commission,
8.700%, 4/01/07 4/97 at 102 Aaa 1,066,960
2,000,000 Superior Limited Obligation (Detroit Edison
Company), 6.900%, 8/01/21 No Opt. Call Aaa 2,394,800
1,000,000 Three Lakes School District, General Obligation,
6.750%, 4/01/12 (Pre-refunded to 4/01/03) 4/03 at 100 Aaa 1,136,520
- -------------------------------------------------------------------------------------------------------------
WYOMING - 0.3%
2,000,000 University of Wyoming Facilities, 7.100%, 6/01/10 6/00 at 101 Aaa 2,211,210
- -------------------------------------------------------------------------------------------------------------
PUERTO RICO - 0.5%
3,750,000 Commonwealth of Puerto Rico, General Obligation,
6.600%, 7/01/13 (Pre-refunded to 7/01/02) 7/02 at 101 1/2 Aaa 4,266,788
- -------------------------------------------------------------------------------------------------------------
$777,888,000 Total Investments - (Cost $750,787,594) - 99.1% 807,091,061
- -------------------------------------------------------------------------------------------------------------
</TABLE>\
34
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 0.5%
$ 1,700,000 Chicago O'Hare International Airport (American
Airlines), Variable Rate Demand Bonds,
3.450%, 12/01/17+ P-1 $ 1,700,000
2,300,000 Massachusetts Dedicated Income Tax, Variable
Rate Demand Bonds, 3.350%, 12/01/97+ VMIG-1 2,300,000
- -------------------------------------------------------------------------------------------------------------
$ 4,000,000 Total Temporary Investments - 0.5% 4,000,000
============-------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.4% 2,958,926
- -------------------------------------------------------------------------------------------------------------
Net Assets - 100% $814,049,987
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 210 $801,069,781 99%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 3 6,021,280 1
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- -------------------------------------------------------------------------------------------------------------
TOTAL 213 $807,091,061 100%
=============================================================================================================
</TABLE>
All of the bonds in the portfolio, excluding temporary investments in short-term
municipal securities, are either covered by Original Issue Insurance, Secondary
Market Insurance or Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government agency securities, any
of which ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
(WI) Security purchased on a when-issued basis (note 1).
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate changes
periodically based on market conditions of a specified market index.
See accompanying notes to financial statements.
35
<PAGE>
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in municipal securities, at market value (note 1) $2,835,978,201 $807,091,061
Temporary investments in short-term municipal securities,
at amortized cost (note 1) 31,600,000 4,000,000
Cash 197,730 1,249,406
Receivables:
Interest 42,085,690 10,123,776
Shares sold 328,101 290,007
Investments sold 28,152,000 5,000
Other assets 113,742 35,592
-------------- ------------
Total assets 2,938,455,464 822,794,842
-------------- ------------
LIABILITIES
Payables:
Investments purchased 8,595,574 6,032,048
Shares reacquired 406,847 5,000
Accrued expenses:
Management fees (note 7) 1,054,674 311,384
Other 594,408 151,138
Dividends payable 10,158,654 2,245,285
-------------- ------------
Total liabilities 20,810,157 8,744,855
-------------- ------------
Net assets (note 8) $2,917,645,307 $814,049,987
============== ============
Class A Shares (note 1)
Net assets $ 37,089,044 $ 46,942,915
============== ============
Shares outstanding 3,998,797 4,279,685
============== ============
Net asset value and redemption price per share $ 9.28 $ 10.97
============== ============
Offering price per share (net asset value per share plus
maximum sales charge of 4.50% of offering price) $ 9.72 $ 11.49
============== ============
Class C Shares (note 1)
Net assets $ 1,915,296 $ 5,150,609
============== ============
Shares outstanding 206,744 474,546
============== ============
Net asset value, offering and redemption price per share $ 9.26 $ 10.85
============== ============
Class R Shares (note 1)
Net assets $2,878,640,967 $761,956,463
============== ============
Shares outstanding 310,263,529 69,753,639
============== ============
Net asset value and redemption price per share $ 9.28 $ 10.92
============== ============
- ------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
36
<PAGE>
STATEMENT OF OPERATIONS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
Year ended February 29, 1996 FEBRUARY 29, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $173,591,010 $47,026,810
------------ -----------
Expenses (note 2):
Management fees (note 7) 12,801,685 3,758,096
12b-1 distribution and service fees (note 1) 43,166 126,369
Shareholders' servicing agent fees and expenses 2,425,718 691,770
Custodians' fees and expenses 313,243 144,251
Directors'/Trustees' fees and expenses (note 7) 27,187 10,438
Professional fees 115,740 67,222
Shareholders reports-printing and mailing expenses 623,740 155,664
Federal and state registration fees 166,260 113,549
Portfolio insurance expenses -- 1,915
Other expenses 166,738 44,998
------------ -----------
Total expenses before expense reimbursement 16,683,477 5,114,272
Expense reimbursement from investment adviser (note 7) (4,313) (1,303)
------------ -----------
Net expenses 16,679,164 5,112,969
------------ -----------
Net investment income 156,911,846 41,913,841
------------ -----------
REALIZED AND UNREALIZED GAIN
FROM INVESTMENTS
Net realized gain from investment transactions, net of taxes,
if applicable (notes 1 and 5) 10,618,706 4,402,500
Net change in unrealized appreciation or depreciation of
investments 84,862,109 36,885,934
------------ -----------
Net gain from investments 95,480,815 41,288,434
------------ -----------
Net increase in net assets from operations $252,392,661 $83,202,275
------------ -----------
- -------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
MUNI BOND INS. MUNI BOND
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 156,911,846 $ 152,460,727 $ 41,913,841 $ 40,930,291
Net realized gain (loss) from investment transactions, net
of taxes, if applicable 10,618,706 9,508,194 4,402,500 (1,781,054)
Net change in unrealized appreciation or depreciation of
investments 84,862,109 (67,140,015) 36,885,934 (25,968,067)
-------------- -------------- ------------- -------------
Net increase in net assets from operations 252,392,661 94,828,906 83,202,275 13,181,170
-------------- -------------- ------------- -------------
DISTRIBUTION TO SHAREHOLDERS (note 1)
From undistributed net invest income:
Class A (707,943) N/A (1,614,782) (204,455)
Class C (30,677) N/A (192,149) (45,156)
Class R (157,137,272) (151,297,051) (40,071,660) (41,157,453)
From accumulated net realized gains from investment
transactions:
Class A (63,661) N/A - (6,709)
Class C (3,523) N/A - (1,121)
Class R (8,354,729) (22,411,997) - (1,157,602)
-------------- -------------- ------------- -------------
Decrease in net assets from distributions to shareholders (166,297,805) (173,709,048) (41,878,591) (42,572,496)
-------------- -------------- ------------- -------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 93,033,904 N/A 108,423,277 15,273,227
Class C 1,925,249 N/A 7,075,313 4,686,336
Class R 397,491,029 469,226,165 143,237,499 158,370,453
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment income
and from net realized gains from investment transactions:
Class A 453,018 N/A 951,544 105,479
Class C 19,887 N/A 161,275 25,888
Class R 123,742,206 141,568,061 26,577,682 28,508,956
-------------- -------------- ------------- -------------
616,665,293 610,794,226 286,426,590 206,970,339
-------------- -------------- ------------- -------------
Cost of shares redeemed:
Class A (56,994,434) N/A (78,678,465) (1,930,617)
Class C (40,390) N/A (6,281,962) (893,066)
Class R (469,258,117) (490,742,684) (183,518,067) (165,891,052)
-------------- -------------- ------------- -------------
(526,292,941) (490,742,684) (268,478,494) (168,714,735)
-------------- -------------- ------------- -------------
Net increase in net assets derived from Fund share
transactions 90,372,352 120,051,542 17,948,096 38,255,604
-------------- -------------- ------------- -------------
Net increase in net assets 176,467,208 41,171,400 59,271,780 8,864,278
Net assets at the beginning of year 2,741,178,099 2,700,006,699 754,778,207 745,913,929
-------------- -------------- ------------- -------------
Net assets at the end of year $2,917,645,307 $2,741,178,099 $ 814,049,987 $ 754,778,207
============== ============== ============= =============
Balance of undistributed net investment income at end of year $ 1,169,597 $ 2,133,643 $ 225,040 $ 189,790
============== ============== ============= =============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
N/A - Muni Bond was not authorized to issue Class "A" Shares or Class "C" Shares
before June 13, 1995.
See accompanying notes to financial statements.
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
1. GENERAL INFORMATION AND SIGNIFICANT
ACCOUNTING POLICIES
At February 29, 1996, the nationally diversified Funds covered in this report
(the "Funds") are Nuveen Municipal Bond Fund and Nuveen Insured Tax-Free Bond
Fund, Inc. (comprising the Nuveen Insured Municipal Bond Fund). Each Fund
invests primarily in a diversified portfolio of municipal obligations issued by
state and local government authorities.
Municipal Bond was originally incorporated in Maryland on October 8, 1976 and
reorganized as a Massachusetts Business Trust at the close of business on June
12, 1995. Insured Municipal Bond was incorporated in Minnesota on July 11, 1986.
The Funds are registered under the Investment Company Act of 1940 as open-end,
diversified management investment companies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities valuation
Portfolio securities for which market quotations are readily available are
valued at the mean between the quoted bid and asked prices or the yield
equivalent. Portfolio securities for which market quotations are not readily
available are valued at fair value by consistent application of methods
determined in good faith by the Board of Directors/Trustees. Temporary
investments in securities that have variable rate and demand features qualifying
them as short-term securities are traded and valued at amortized cost.
Securities transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may be settled a month or more after the transaction date. Any securities so
purchased are subject to market fluctuation during this period. The Funds have
instructed the custodian to segregate assets in a separate account with a
current value at least equal to the amount of their purchase commitments. At
February 29, 1996, Insured Municipal Bond had purchase commitments of
$6,032,048. Municipal Bond had no such purchase commitments.
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Interest income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Dividends and distributions to shareholders
Net investment income is declared as a dividend monthly and payment is made or
reinvestment is credited to shareholder accounts after month-end. Net realized
gains from securities transactions are distributed to shareholders not less
frequently than annually only to the extent they exceed available capital loss
carryovers. Distributions to shareholders of net investment income and net
realized gains from investment transactions are recorded on the ex-dividend
date. The amount and timing of such distributions are determined in accordance
with federal income tax regulations, which may differ from generally accepted
accounting principles. Accordingly, temporary over-distributions as a result of
these differences may result and will be classified as either distributions in
excess of net investment income or distributions in excess of net realized gains
from investment transactions, if applicable.
Federal income taxes
Each Fund is a separate taxpayer for federal income tax purposes and intends to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies by distributing all of its net investment income,
in addition to any significant amounts of net realized gains from investments,
to shareholders. The Funds currently consider significant net realized gains as
amounts in excess of $.001 per share. Furthermore, each Fund intends to satisfy
conditions which will enable interest from municipal securities, which is exempt
from regular federal income tax, to retain such tax exempt status when
distributed to the shareholders of the Funds. All income dividends paid during
the year ended February 29, 1996, have been designated Exempt Interest
Dividends.
Insurance
Insured Municipal Bond invests in municipal securities which are either covered
by insurance or backed by an escrow or trust account containing sufficient U.S.
Government or U.S. Government agency securities, both of which ensure the timely
payment of principal and interest. Each insured municipal security is covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio Insurance.
Such insurance does not guarantee the market value of the municipal securities
or the value of the Fund's shares. Original Issued Insurance and Secondary
Market Insurance remain in effect as long as the municipal securities covered
thereby remain outstanding and the insurer remains in business, regardless of
whether the Fund ultimately disposes of such municipal securities. Consequently,
the market value of the municipal securities covered by Original Issue Insurance
or Secondary Market Insurance may reflect value attributable to the insurance.
Portfolio Insurance is effective only
40
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
while the municipal securities are held by the Fund. Accordingly, neither the
prices used in determining the market value of the underlying municipal
securities nor the net asset value of the Fund's shares include value, if any,
attributable to the Portfolio Insurance. Each policy of the Portfolio Insurance
does, however, give the Fund the right to obtain permanent insurance with
respect to the municipal security covered by the Portfolio Insurance policy at
the time of its sale.
Flexible sales charge program
Effective September 6, 1994, for Insured Municipal Bond and June 13, 1995, for
Municipal Bond, both Funds commenced offering Class "A" Shares and Class "C"
Shares. Class "A" Shares incur a front-end sales charge and an annual 12b-1
service fee. Class "C" Shares are sold without a sales charge but incur annual
12b-1 distribution and service fees. Effective June 13, 1995, for both Funds, an
investor purchasing Class "C" Shares agrees to pay a contingent deferred sales
charge ("CDSC") of 1% if Class "C" Shares are redeemed within 12 months of
purchase.
Prior to the offering of Class "A" Shares and Class "C" Shares, the shares
outstanding for both Funds were renamed Class "R" and are not subject to any
12b-1 distribution or service fees. Effective with the offering of the new
classes, Class "R" Shares are generally available only for reinvestment of
dividends by current "R" shareholders and for already established Nuveen Unit
Investment Trust reinvestment accounts.
Derivative financial instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain derivative financial
instruments including future, forward, swap, and option contracts, and other
financial instruments with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may do so in the future,
they did not make any such investments during the year ended February 29, 1996,
other than occasional purchases of high quality synthetic money market
securities, if applicable.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. EXPENSE ALLOCATION
Expenses of the Funds that are not directly attributable to any class of shares
are prorated among the classes based on the relative net assets of each class.
Expenses directly attributable to a class of shares are recorded to the specific
class. Effective August 1, 1995, the Funds adopted a multiple class plan
pursuant to Rule 18f-3 under the Investment Company Act of 1940 and now
designate class specific expenses to include Rule 12b-1 distribution and service
fees, and other expenses incurred for services received by a class that differ
in either amount or kind. A breakdown of the class specific expenses during the
year ended February 29, 1996, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- --------------------------------------------------------------------------------
<S> <C> <C>
12b-1 distribution and service fees:
Class A $ 36,112 $ 82,071
Class C 7,054 44,298
Shareholders' servicing agent fees and expenses:
Class A 729 18,022
Class C 82 1,093
Class R 914,407 247,643
Shareholders' reports--printing and mailing expenses:
Class A 1,275 1,019
Class C 119 66
Class R 374,135 123,497
Federal and state registration fees:
Class A 2,483 3,958
Class C 276 1,109
Class R 89,323 23,054
Professional fees--Class R 46,688 --
- --------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
3. FUND SHARES
Transactions in shares were as follows:
- ---------------------------------------------------------------------------------------------------------------------------
MUNI BOND INS. MUNI BOND
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 10,085,967 N/A 10,080,588 1,538,119
Class C 208,938 N/A 661,711 474,253
Class R 43,438,989 52,970,376 13,451,112 15,709,700
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from
net realized gains from investment transactions:
Class A 48,593 N/A 88,109 10,686
Class C 2,138 N/A 15,241 2,644
Class R 13,470,516 15,973,465 2,491,979 2,822,384
----------- ----------- ----------- -----------
67,255,141 68,943,841 26,788,740 20,557,786
----------- ----------- ----------- -----------
Shares redeemed:
Class A (6,135,763) N/A (7,244,524) (193,293)
Class C (4,332) N/A (588,441) (90,862)
Class R (51,218,535) (55,355,782) (17,181,722) (16,561,539)
----------- ----------- ----------- -----------
(57,358,630) (55,355,782) (25,014,687) (16,845,694)
----------- ----------- ----------- -----------
Net increase 9,896,511 13,588,059 1,774,053 3,712,092
=========== =========== =========== ===========
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
N/A - Muni Bond was not authorized to issue Class "A" Shares or Class "C" Shares
before June 13, 1995.
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. DISTRIBUTIONS TO SHAREHOLDERS
On March 8, 1996, the Funds declared dividend distributions from their ordinary
income which were paid on April 1, 1996, to shareholders of record on March 8,
1996, as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- ----------------------------------------------------------------
<S> <C> <C>
Dividend per share:
Class A $.0395 $.0445
Class C .0340 .0375
Class R .0415 .0465
===== =====
- ----------------------------------------------------------------
</TABLE>
5. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the year ended February 29,
1996, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- ----------------------------------------------------------------------
<S> <C> <C>
PURCHASES
Investments in municipal securities $517,451,834 $227,340,258
Temporary municipal investments 602,095,000 291,525,000
SALES
Investments in municipal securities 475,094,406 208,113,881
Temporary municipal investments 573,195,000 287,525,000
=========== ===========
- ----------------------------------------------------------------------
</TABLE>
At February 29, 1996, the identified cost of investments owned for federal
income tax purposes was the same as the cost for financial reporting purposes
for each Fund.
44
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
6. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 29, 1996, were as follow:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- -------------------------------------------------------------------------
<S> <C> <C>
Gross unrealized: $171,847,948 $57,249,197
Appreciation (4,264,834) (945,730)
Depreciation ------------ -----------
Net unrealized appreciation $167,583,114 $56,303,467
============ ===========
-----------------------------------------------------------------------
</TABLE>
7. MANAGEMENT FEE AND OTHER TRANSACTIONS
WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays to the Adviser an annual management fee, payable monthly, at the rates set
forth below which are based upon the average daily net asset value of each Fund:
- ----------------------------------------------------------------------
Average daily net asset value Management fee
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
For the first $125,000,000 .5 of 1%
For the next $125,000,000 .4875 of 1
For the next $250,000,000 .475 of 1
For the next $500,000,000 .4625 of 1
For the next $1,000,000,000 .45 of 1
For net assets over $2,000,000,000 .425 of 1
- ----------------------------------------------------------------------
</TABLE>
The management fee is reduced by, or the Adviser assumes certain expenses of
each Fund, in an amount necessary to prevent the total expense of each Fund
(including the management fee, but excluding interest, taxes, fees incurred in
acquiring and disposing of portfolio securities, 12b-1 Service and Distribution
fees, if applicable, and to the extent permitted, extraordinary expenses) in any
fiscal year from exceeding .75 of 1% of the average daily net asset value of
Municipal Bond and .975 of 1% of the average daily net asset value of Insured
Municipal Bond. The Adviser may also voluntarily agree to reimburse additional
expenses from time to time, which may be voluntarily terminated at any time at
its discretion.
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Funds pay no
compensation directly to their directors/trustees who are affiliated with the
Adviser or to its officers, all of whom receive remuneration for their services
to the Funds from the Adviser.
8. COMPOSITION OF NET ASSETS
At February 29, 1996, the Funds had common stock authorized of $.10 par value
per share for Municipal Bond and $.01 par value per share for Insured Municipal
Bond. The composition of net assets as well as the number of authorized shares
is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
MUNI INS. MUNI
BOND BOND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital paid-in $2,744,976,758 $754,899,010
Balance of undistributed net investment income 1,169,597 225,040
Accumulated net realized gain from investment transactions 3,915,838 2,622,470
Net unrealized appreciation of investments 167,583,114 56,303,467
-------------- ------------
Net assets $2,917,645,307 $814,049,987
============== ============
Authorized Shares:
Class A Unlimited 340,000,000
Class C Unlimited 460,000,000
Class R Unlimited 200,000,000
============== ============
- ------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
9. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At February 29, 1996, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------
MUNI INS. MUNI
BOND BOND
- ----------------------------------------------
<S> <C> <C>
Revenue Bonds:
Electric Utilities 21% 6%
Health Care Facilities 16 20
Housing Facilities 14 1
Water/Sewer Facilities 8 8
Lease Rental Facilities 2 8
Educational Facilities 1 7
Transportation 6 5
Pollution Control 5 4
Other 8 6
General Obligation Bonds 6 19
Escrowed Bonds 13 16
- ----------------------------------------------
100% 100%
- ----------------------------------------------
</TABLE>
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. Government or U.S. Government agency
securities, both of which ensure the timely payment of principal and interest in
the event of default (30% for Municipal Bond and 100% for Insured Municipal
Bond). Such insurance or escrow, however, does not guarantee the market value of
the municipal securities or the value of the Funds' shares.
All of the temporary investments in short-term municipal securities have credit
enhancements (letters of credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
47
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distribution Net asset
value beginning investment (loss) from investment from value end of
of period income investments** income capital gains period
- --------------------------------------------------------------------------------------------------------------------------------
MUNI BOND
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
6/13/95 to
2/29/96 $9.150 $.340+ $ .141 $(.324) $(.027) $9.280
CLASS C
6/13/95 to
2/29/96 9.150 .290+ .126 (.279) (.027) 9.260
CLASS R
Year ended
2/29/96 9.000 .506 .313 (.512) (.027) 9.280
Year ended 2/28,
1995 9.280 .515 (.209) (.511) (.075) 9.000
1994 9.450 .519 (.075) (.516) (.098) 9.280
1993 9.080 .555 .414 (.544) (.055) 9.450
5 mos. ended
2/29/92 9.040 .239 .080 (.239) (.040) 9.080
Year ended 9/30,
1991 8.650 .579 .438 (.589) (.038) 9.040
1990 8.730 .596 (.080) (.596) - 8.650
1989 8.520 .597 .239 (.597) (.029) 8.730
1988 8.020 .596 .536 (.596) (.036) 8.520
1987 8.780 .598 (.614) (.598) (.146) 8.020
1986 7.830 .595 1.162 (.595) (.212) 8.780
1985 7.180 .586 .650 (.586) - 7.830
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 50.
48
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement+ reimbursement+ rate
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
5.33% $ 37,089 .86%* 5.11%* .83%* 5.14%* 17%
4.59 1,915 1.64* 4.33* 1.58* 4.39* 17
9.31 2,878,641 .59 5.53 .59 5.53 17
3.60 2,741,178 .59 5.79 .59 5.79 17
4.79 2,700,007 .62 5.49 .62 5.49 15
11.04 2,371,669 .61 5.95 .61 5.95 14
3.56 1,835,708 .62* 6.24* .62* 6.24* 6
12.15 1,661,420 .60 6.48 .60 6.48 10
6.04 1,323,623 .62 6.78 .62 6.78 8
10.07 1,119,833 .64 6.85 .64 6.85 12
14.50 945,361 .65 7.11 .65 7.11 8
(.39) 764,092 .68 6.85 .68 6.85 16
23.02 668,416 .71 6.95 .71 6.95 39
17.73 459,627 .73 7.68 .73 7.68 28
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distribution Net asset
value beginning investment (loss) from investment from value end of
of period income investments** income capital gains period
- --------------------------------------------------------------------------------------------------------------------------------
INS. MUNI BOND
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Year ended
2/29/96 $10.400 $.542+ $ .568 $(.540) $ - $10.970
9/6/94 to
2/28/95 10.310 .264+ .115 (.273) (.016) 10.400
CLASS C
Year ended
2/29/96 10.310 .461 .540 (.461) - 10.850
9/7/94 to
2/28/95 10.290 .227+ .075 (.266) (.016) 10.310
CLASS R
Year ended
2/29/96 10.380 .570 .540 (.570) - 10.920
Year ended 2/28,
1995 10.810 .573 (.407) (.580) (.016) 10.380
1994 10.850 .574 (.012) (.565) (.061) 10.810
1993 10.030 .591 .880 (.589) (.062) 10.850
Year ended
2/29/92 9.690 .612 .425 (.617) (.080) 10.030
Year ended 2/28,
1991 9.520 .617 .198 (.611) (.034) 9.690
1990 9.350 .627 .262 (.630) (.089) 9.520
1989 9.300 .629 .050 (.629) - 9.350
Year ended
2/29/88 9.790 .637+ (.490) (.637) - 9.300
12/10/86 to
2/28/87 9.600 .127+ .190 (.127) - 9.790
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Net of taxes, if applicable (see note 1).
+ Reflects the waiver of certain management fees or reimbursement of certain
other expenses by the Adviser, if applicable (see note 7).
++ Total Return on Net Asset Value is the combination of reinvested dividend
income, reinvested capital gains distributions, if any, and changes in stock
price per share.
50
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement+ reimbursement+ rate
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10.90% $ 46,943 .92% 5.00% .91% 5.01% 27%
3.84 14,097 1.27* 5.28* 1.00* 5.55* 25
9.88 5,151 1.63 4.34 1.63 4.34 27
3.09 3,979 1.75* 4.83* 1.75* 4.83* 25
10.94 761,956 .63 5.33 .63 5.33 27
1.85 736,702 .64 5.67 .64 5.67 25
5.47 745,914 .65 5.21 .65 5.21 11
15.24 567,232 .72 5.68 .72 5.68 20
11.03 306,853 .73 6.12 .73 6.12 45
8.94 178,931 .80 6.45 .80 6.45 53
9.73 111,806 .83 6.49 .83 6.49 78
7.63 66,049 .87 6.83 .87 6.83 106
2.00 41,330 .88 6.65 .60 6.93+ 88
3.31 13,160 3.50* .50* - 4.00* -
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors, Trustees and Shareholders of
Nuveen Municipal Bond Fund
Nuveen Insured Tax-Free Bond Fund, Inc.:
We have audited the accompanying statements of net assets of NUVEEN MUNICIPAL
BOND FUND (a Massachusetts Business Trust), and NUVEEN INSURED TAX-FREE BOND
FUND, INC. (comprising the Nuveen Insured Municipal Bond Fund) (a Minnesota
corporation), including the portfolios of investments, as of February 29, 1996,
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 29, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of each of the
respective funds constituting Nuveen Municipal Bond Fund and Nuveen Insured Tax-
Free Bond Fund, Inc. as of February 29, 1996, the results of their operations
for the year then ended, the changes in their net assets for each of the two
years in the period then ended and the financial highlights for the periods
indicated thereon in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 8, 1996
52
<PAGE>
[PHOTO OF PAINTING APPEARS HERE]
For nearly 100 years, Nuveen has earned its reputation as a tax-free income
specialist by focusing on municipal bonds
Your investment partners
Since 1898, John Nuveen & Co. Incorporated has worked to bring together the
various participants in the municipal bond industry and build strong
partnerships that benefit all concerned. Investors, financial advisers,
municipal officials, investment bankers--Nuveen believes that forging
relationships within these groups based on trust and value is the key to
successful investing.
As the oldest and largest municipal bond specialist in the United States,
Nuveen's investment bankers work with issuers to understand and meet their needs
in structuring and selling their bond issues.
Nuveen also works closely with financial advisers around the country,
including brokerage firms, banks, insurance companies, and independent financial
planners, to bring the benefits of tax-free investing to you. These advisers are
experts at identifying your needs and recommending the best solutions for your
situation. Together we make a powerful team, helping you create a successful
investment plan that meets your needs today and in the future.
[LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
Nuveen Tax-Free [PHOTO APPEARS HERE]
Mutual Funds
Dependable tax-free
income for generations
CALIFORNIA
CALIFORNIA INSURED
MASSACHUSETTS
MASSACHUSETTS INSURED
NEW YORK
NEW YORK INSURED
OHIO
ANNUAL REPORT/FEBRUARY 29, 1996
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
9 Fund performance
16 Report of independent public accountants
17 Portfolio of investments
58 Statement of net assets
60 Statement of operations
62 Statement of changes in net assets
66 Notes to financial statements
82 Financial highlights
<PAGE>
Dear
shareholder
Since the beginning of the recovery in early 1995, we've enjoyed a welcome
rebound in the bond markets--a sharp contrast to 1994, which was one of the most
volatile periods in bond market history. In fact, 1995 unfolded as one of the
best years for bonds in a decade, as the bond market responded to a climate of
slowing economic growth and diminished inflationary pressure.
The changing profile of the bond markets over the past two years reminds us
that weathering the ups and downs of the markets is a normal part of the
investment process. By maintaining a long-term perspective on your investments,
you can minimize the impact of short-term fluctuations and keep the focus on
achieving your goals. Municipal bond funds continue to play an integral role in
helping investors reach those goals, offering the attractive tax-free income and
solid total returns that they seek.
Over the past year, we have kept our sights focused on successfully meeting
your fund's objectives. As of February 29, 1996, the current annual SEC yield on
offering price for R shares for the mutual funds covered in this report ranged
from 4.21% to 4.99%. To match these yields, an investor in the 36% federal
income tax bracket would have had to earn between 6.58% to 7.80% on taxable
alternatives. The effect of state taxes further enhances the after-tax yield
advantage provided by municipal bonds.
[PHOTO OF RICHARD J. FRANKE APPEARS HERE]
"Over time,
municipal bonds
have proven to
be a valuable
and dependable
component of
successful invest-
ment programs."
3
<PAGE>
Reflecting the rebound in the bond markets, each of these funds reported gains
in portfolio value since February 28, 1995. The 12-month total returns on net
asset value for R Shares, reflecting portfolio gains plus reinvested dividend
income and capital gains distributions, if any, ranged from 9.70% to 10.80%,
which translate to 13.66% to 14.81% on a taxable-equivalent basis. This strong
performance rewarded investors who weathered the volatility of 1994, and reminds
us again of the importance of municipal bonds to a well-rounded, long-term
investment plan.
As some of you may know, on June 30, 1996, I will be retiring as the Chairman
and Chief Executive Officer of John Nuveen & Co. Incorporated and as Chairman of
the Board of the Nuveen Funds. As I look back over the 41 years I have spent at
Nuveen, I'm proud to have been associated with a firm that holds integrity,
honesty, and value as the cornerstones of its business. I'm confident that these
traditions will continue to be the hallmarks of Nuveen.
Over the past few years, I have been working closely with other Nuveen
managers to ensure that the company and the funds continue to be guided by
strong and talented management following my retirement. Timothy Schwertfeger,
who has been with Nuveen since 1977, will succeed me as Chief Executive Officer
and Chairman of Nuveen. He currently serves as Executive Vice President of
Nuveen and President of the Nuveen Funds. I am very confident in his abilities
and the abilities of the entire Nuveen management team.
The management transition has been well planned, and it will have no effect on
portfolio management or the way dividends are set. Our management team is
committed to continuing Nuveen's successful tradition of value investing and
prudent management, helping our shareholders meet their need for tax-free
investment income with a full range of investment choices.
Our focus will continue to be on building shareholder value, providing
research-oriented management, and maintaining our leadership role in the
municipal bond market. With this focus, we anticipate many more years of
accomplishment for our shareholders and our firm.
I'd like to take this occasion to thank you for selecting Nuveen mutual fund
investments.
Sincerely,
/s/ Richard J. Franke
Richard J. Franke
Chairman of the Board
April 15, 1996
4
<PAGE>
Answering your
questions
Tom Spalding, head of Nuveen's portfolio management team, discusses factors
affecting the municipal market and efforts made to provide value for
shareholders.
How did the investment climate over the past year affect municipal bonds?
In 1995, the combination of slow economic growth and low inflation created the
ideal environment for the bond markets, which responded with a sustained rally.
Citing the lack of significant inflation, the Federal Reserve Board moved to cut
interest rates in July and December 1995, and again at the end of January 1996.
This succession of rate cuts helped to bring down long-term municipal bond
yields by almost 130 basis points over the year and to increase net asset
values. The rebound of the municipal bond market was not as great as that of the
taxable market due to the much-publicized discussion of major tax reform
legislation and concern about its potential impact on tax-free investments. Yet,
in 1995, most Nuveen mutual funds enjoyed taxable-equivalent total returns of
14% or better.
5
<PAGE>
[PHOTO OF TOM SPALDING APPEARS HERE]
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market.
What was Nuveen's approach to investing during this period?
During 1995, we continued to pursue our philosophy of value investing, a
disciplined approach designed to deliver above-market performance by emphasizing
securities that offer good intrinsic value and that are underpriced or
undervalued by the market. This approach has been rewarded over the past year,
as we saw many of our portfolio holdings upgraded by the ratings agencies,
confirming our Research Department's judgments about credit quality. We also
moved to protect current income by investing more of our portfolio in non-
callable bonds when possible. These bonds are less likely to be redeemed before
maturity so that their yield is assured for the long term in the event of
falling interest rates. As is our policy, we continue to invest only in
investment-grade quality securities.
Has Nuveen made any major investment changes over the past year?
No. In the search for income and total return, our value investing approach
continues to concentrate on individual bonds with current yields, prices, credit
quality, and future prospects that are exceptionally attractive relative to
other bonds in the market. Because attractive issues may appear any time over
the course of the year, we are constantly vigilant for new opportunities, with
the goal of ensuring that the funds are always positioned to meet their
objectives: as high a level of current tax-free income as is consistent with
preservation of capital. This means that our analysts continuously assess
investment
6
<PAGE>
possibilities across the entire spectrum of geographical and sector
opportunities nationwide. Currently, we favor revenue bonds for essential
services, such as those issued by water and sewer facilities and utilities,
especially public power authorities providing electricity at competitive rates.
We have reduced our positions in general obligation bonds issued by counties and
cities, which have suffered financial strains as the result of spending cuts at
the state and federal levels.
What does Nuveen see as the impact of the flat tax proposals on the municipal
market?
Because of the implications for tax-free investments such as municipal bonds and
bond funds, we have been closely monitoring the various flat tax proposals
currently being debated in Congress. While the presidential primaries
spotlighted the debate, it is important to note that none of the proposals
currently under discussion has gained a strong consensus. In addition,
implementation of any measure that manages to pass both houses is at least two
years away. As the election year progresses, focus seems to be shifting from tax
reform to other economic matters. However, the high profile discussion--and the
attendant concern about the potential impact of tax reform on tax-free
investments--did affect the market for municipal bonds in 1995, causing these
bonds to underperform their taxable counterparts for the year.
7
<PAGE>
Given the low likelihood that the tax preference on municipal bonds will be
eliminated or dramatically reduced in the near future, Nuveen believes that it
is inadvisable to manage our funds toward one specific outcome. Instead, we will
continue to follow our value investing philosophy as the optimal way to pursue
our investors' objectives. In our view, this approach offers investors greater
price stability in the event of volatile markets. Once the tax issue is
resolved, we're confident that municipal bonds--because of their high credit
quality and attractive yields--will continue to hold a strategic place in the
prudent investor's portfolio. We will continue to monitor developments in the
tax debate as well as changes in other economic and political conditions while
keeping our focus on achieving the objectives of your fund.
What is Nuveen's market outlook for 1996?
Although inflation currently remains low and economic growth remains moderate,
we continue to watch these factors for potential changes and impact on the bond
market. During this election year, we are also closely monitoring any changes in
economic and tax policy that may affect the municipal market. The fundamentals
in the long term are sound, with the supply of municipal bonds down from past
years, and with a growing number of individual investors seeking to diversify
their portfolios and to increase their tax-free income.
8
<PAGE>
NUVEEN CALIFORNIA
TAX-FREE VALUE FUND
California
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen California Tax-
Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 6/86 6/87 6/88 6/89 6/90 6/91 6/92 6/93 6/94 6/95 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $21,255 10,000 10,838 11,590 12,849 13,663 14,826 16,500 18,393 18,357 19,898 21,255
Lehman Brothers Municipal Bond
Index-Total $22,127 10,000 10,862 11,668 12,996 13,881 15,131 16,913 18,935 18,968 20,641 22,127
Nuveen CA Tax-Free Value
Fund-Total $19,538 9,525 9,838 10,513 11,998 12,735 13,775 15,317 17,049 16,801 18,155 19,538
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 10.54% 7.77% 7.72%
A Shares on NAV 10.36% N/A 8.69%
A Shares on offering price** 5.39% N/A 5.36%
C Shares on NAV 9.53% N/A 9.17%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.65 cents per share for Class R Shares
translated into a distribution yield of 5.26% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 42%
combined state and federal income tax bracket would have to earn 9.07% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.99% on February 29, 1996, translated
into 8.60% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.64% from a year ago. The average annual total return on NAV for
this class was 10.54%, which translated into a taxable-equivalent total return
of 14.73%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
9
<PAGE>
NUVEEN CALIFORNIA INSURED
TAX-FREE VALUE FUND
California Insured
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen California
Insured Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 6/86 6/87 6/88 6/89 6/90 6/91 6/92 6/93 6/94 6/95 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $21,255 10,000 10,838 11,590 12,849 13,663 14,826 16,500 18,393 18,357 19,898 21,255
Lehman Brothers Municipal Bond
Index-Total $22,127 10,000 10,862 11,668 12,996 13,881 15,131 16,913 18,935 18,968 20,641 22,127
Nuveen CA Insured Tax-Free Value
Fund-Total $19,313 9,525 9,513 10,220 11,648 12,223 13,252 14,929 16,752 16,501 17,911 19,313
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 10.63% 8.20% 7.59%
A Shares on NAV 10.32% N/A 9.24%
A Shares on offering price** 5.35% N/A 5.89%
C Shares on NAV 9.67% N/A 8.99%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.60 cents per share for Class R Shares
translated into a distribution yield of 5.14% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 42%
combined state and federal income tax bracket would have to earn 8.86% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.93% on February 29, 1996, translated
into 8.50% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.99% from a year ago. The average annual total return on NAV for
this class was 10.63%, which translated into a taxable-equivalent total return
of 14.64%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
10
<PAGE>
NUVEEN MASSACHUSETTS
TAX-FREE VALUE FUND
Massachusetts
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Massachusetts
Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,316 10,000 9,973 10,980 12,127 12,997 14,247 15,587 17,219 16,236 19,316
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen MA Tax-Free Value
Fund-Total $17,466 9,525 8,745 9,756 10,793 11,355 12,626 13,969 15,603 14,627 17,466
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 9.80% 8.32% 6.82%
A Shares on NAV 9.62% N/A 8.57%
A Shares on offering price** 4.69% N/A 5.25%
C Shares on NAV 8.87% N/A 9.91%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.50 cents per share for Class R Shares
translated into a distribution yield of 5.45% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 43.5%
combined state and federal income tax bracket would have to earn 9.65% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.61% on February 29, 1996, translated
into 8.16% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 3.88% from a year ago. The average annual total return on NAV for
this class was 9.80%, which translated into a taxable-equivalent total return of
14.31%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
11
<PAGE>
NUVEEN MASSACHUSETTS INSURED
TAX-FREE VALUE FUND
Massachusetts Insured
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Massachusetts
Insured Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,316 10,000 9,973 10,980 12,127 12,997 14,247 15,587 17,219 16,236 19,316
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen MA Insured Tax-Free Value
Fund-Total $17,911 9,525 8,940 10,086 11,109 11,793 12,976 14,284 15,940 14,959 17,911
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 9.99% 8.08% 7.11%
A Shares on NAV 9.59% N/A 8.51%
A Shares on offering price** 4.65% N/A 5.19%
C Shares on NAV 8.80% N/A 8.49%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.50 cents per share for Class R Shares
translated into a distribution yield of 5.14% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 43.5%
combined state and federal income tax bracket would have to earn 9.10% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.21% on February 29, 1996, translated
into 7.45% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.37% from a year ago. The average annual total return on NAV for
this class was 9.99%, which translated into a taxable-equivalent total return of
14.24%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
12
<PAGE>
NUVEEN NEW YORK
TAX-FREE VALUE FUND
New York
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen New York Tax-
Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,581 10,000 9,972 10,985 12,143 13,027 14,309 15,687 17,362 16,400 19,581
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen NY Tax-Free Value
Fund-Total $19,096 9,525 9,293 10,427 11,609 12,181 13,617 15,070 16,944 15,747 19,096
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 10.80% 8.97% 7.86%
A Shares on NAV 10.52% N/A 8.58%
A Shares on offering price** 5.55% N/A 5.25%
C Shares on NAV 10.13% N/A 8.86%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.85 cents per share for Class R Shares
translated into a distribution yield of 5.47% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 40.5%
combined state and federal income tax bracket would have to earn 9.19% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.75% on February 29, 1996, translated
into 7.98% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.83% from a year ago. The average annual total return on NAV for
this class was 10.80%, which translated into a taxable-equivalent total return
of 14.81%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
13
<PAGE>
NUVEEN NEW YORK INSURED
TAX-FREE VALUE FUND
New York Insured
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen New York Insured
Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,581 10,000 9,972 10,985 12,143 13,028 14,311 15,689 17,367 16,405 19,590
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen NY Insured Tax-Free Value
Fund-Total $18,516 9,525 9,025 10,152 11,263 11,888 13,254 14,634 16,468 15,284 18,516
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- --------------------------------------------------------------------
1 year 5 years Since inception+
- --------------------------------------------------------------------
<S> <C> <C> <C>
R Shares 10.51% 8.70% 7.50%
A Shares 10.19% N/A 8.93%
A Shares on offering price** 5.23% N/A 5.59%
C Shares 9.71% N/A 9.10%
- --------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.60 cents per share for Class R Shares
translated into a distribution yield of 5.20% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 40.5%
combined state and federal income tax bracket would have to earn 8.74% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.39% on February 29, 1996, translated
into 7.38% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 4.53% from a year ago. The average annual total return on NAV for
this class was 10.51%, which translated into a taxable-equivalent total return
of 14.32%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued on or after
September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
14
<PAGE>
NUVEEN OHIO
TAX-FREE VALUE FUND
Ohio
INDEX COMPARISON
Comparison of change in value of a $10,000 investment in Nuveen Ohio Tax-Free
Value Fund R Shares* and Lehman Brothers Municipal Bond Index
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
In thousands 11/86 11/87 11/88 11/89 11/90 11/91 11/92 11/93 11/94 2/96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Adjusted Lehman Brothers
Municipal Bond Index (reduced
by state tax effects)-Total $19,751 10,000 9,974 11,002 12,176 13,076 14,376 15,774 17,475 16,518 19,751
Lehman Brothers Municipal Bond
Index-Total $20,239 10,000 9,977 11,036 12,251 13,194 14,549 16,008 17,781 16,847 20,239
Nuveen OH Tax-Free Value
Fund-Total $18,992 9,525 9,135 10,281 11,615 12,411 13,632 15,035 16,923 15,861 18,992
Past performance is not predictive of future performance
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
ANNUALIZED TOTAL RETURN
- -------------------------------------------------------------------
1 year 5 years Since inception+
- -------------------------------------------------------------------
<S> <C> <C> <C>
R Shares on NAV 9.70% 8.34% 7.80%
A Shares on NAV 9.44% N/A 8.86%
A Shares on offering price** 4.51% N/A 5.53%
C Shares on NAV 8.55% N/A 8.41%
- -------------------------------------------------------------------
</TABLE>
The fund's current dividend of 4.70 cents per share for Class R Shares
translated into a distribution yield of 5.33% as of February 29, 1996. The
annual distribution yield is calculated by multiplying the dividend by 12, and
dividing this number by the current offering price. Investors in the 41%
combined state and federal income tax bracket would have to earn 9.03% on a
taxable investment to match this tax-free yield.
The fund's Class R Share SEC yield of 4.51% on February 29, 1996, translated
into 7.64% on a taxable-equivalent basis.
During the fiscal year, your fund's net asset value (for Class R Shares)
increased by 3.93% from a year ago. The average annual total return on NAV for
this class was 9.70%, which translated into a taxable-equivalent total return of
13.66%.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; Class A Shares and Class C Shares were first issued at
different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
15
<PAGE>
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Nuveen California Tax-Free Fund, Inc.
Nuveen Tax-Free Bond Fund, Inc.
Nuveen Insured Tax-Free Bond Fund, Inc.
We have audited the accompanying statements of net assets of NUVEEN CALIFORNIA
TAX-FREE FUND, INC. (comprising the Nuveen California and California Insured
Tax-Free Value Funds) (a Maryland corporation), NUVEEN TAX-FREE BOND FUND, INC.
(comprising the Nuveen Massachusetts, New York and Ohio Tax-Free Value Funds)
and NUVEEN INSURED TAX-FREE BOND FUND, INC. (comprising the Nuveen Massachusetts
and New York Insured Tax-Free Value Funds) (both Minnesota corporations),
including the portfolios of investments, as of February 29, 1996, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 29, 1996, by correspondence with the custodian and brokers. As to
securities purchased but not received, we requested confirmation from brokers
and, when replies were not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of each of the
respective funds constituting the Nuveen California Tax-Free Fund, Inc., Nuveen
Tax-Free Bond Fund, Inc. and Nuveen Insured Tax-Free Bond Fund, Inc., as of
February 29, 1996, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for the periods indicated thereon in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 8, 1996
16
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,150,000 California Educational Facilities Authority
(University of Southern California),
7.200%, 10/01/15 10/97 at 102 Aa $ 3,350,340
California Health Facilities Financing Authority
(Small Facilities Pooled Loan Program):
3,000,000 7.400%, 4/01/14 4/05 at 102 A 3,408,600
3,635,000 7.500%, 4/01/22 4/05 at 102 A 4,155,641
1,700,000 California Health Facilities Authority (Sutter Health
System), 7.00%, 1/01/09 1/99 at 102 A1 1,829,846
2,000,000 California Health Facilities Financing Authority
(Health Dimensions, Inc.), 7.500%, 5/01/15
(Pre-refunded to 5/01/00) 5/00 at 102 Ba 2,291,120
2,000,000 California Health Facilities Financing Authority
(Sisters of Providence), 7.500%, 10/01/10 10/00 at 102 AA- 2,308,540
3,380,000 California Health Facilities Financing Authority
(Kaiser Permanente), 7.000%, 12/01/10 12/00 at 102 Aa3 3,764,036
2,425,000 California Housing Finance Agency, Home
Mortgage, 8.100%, 8/01/16 8/96 at 102 Aa 2,504,104
4,000,000 California Housing Finance Agency,
5.900%, 8/01/17 2/06 at 102 Aaa 4,023,600
California Public Works Board (California State
University Project),
8,470,000 6.700% 10/01/17 10/02 at 102 A 9,278,970
5,000,000 5.500%, 12/01/18 12/03 at 102 A 4,790,000
1,060,000 California State Public Works Board, High
Technology Facilities Lease (The Regents of
the University of California-San Diego Facility),
7.375%, 4/01/06 No Opt. Call A1 1,143,062
2,250,000 California State Public Works Board (Department of
Corrections-State Prisons-Susanville),
5.375%, 6/01/18 6/02 at 102 A1 2,140,538
2,500,000 California Statewide Communities Development
Corporation (Solheim Lutheran Home),
Certificates of Participation, 6.500%, 11/01/17 11/04 at 102 A 2,598,200
3,000,000 California Statewide Communities Development
Authority (St. Joseph Health System),
Certificates of Participation, 6.500%, 7/01/15 7/04 at 102 Aa 3,237,570
1,500,000 ABAG Finance Authority for Nonprofit
Corporations (Channing House), Certificates of
Participation, 7.125%, 1/01/21 1/01 at 102 A 1,626,915
2,035,000 Bella Vista Water District, Certificates of
Participation, 7.375%, 10/01/17 10/01 at 102 Baa 2,168,801
7,000,000 Brea Redevelopment Agency, Tax Allocation,
5.500%, 8/01/17 8/03 at 102 Aaa 6,865,880
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carson Redevelopment Agency Tax Allocation:
$ 1,000,000 6.000%, 10/01/13 10/03 at 102 Baa $ 999,400
2,000,000 6.000%, 10/01/16 10/03 at 102 Baa1 1,961,680
2,000,000 Chico Redevelopment Agency, Certificates of
Participation (Sierra Sunrise Lodge),
6.750%, 2/01/21 2/01 at 102 A 2,098,240
6,500,000 Contra Costa County, FHA Insured Mortgage (Cedar
Pointe Apartments), 6.150%, 9/01/25 9/03 at 103 AAA 6,600,425
2,000,000 Desert Hospital District, Certificates of Participation,
8.100%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 102 AAA 2,347,540
3,200,000 Desert Sands Unified School District Certificates of
Participation, 5.750%, 3/01/20 3/05 at 102 Aaa 3,232,480
East Bay Municipal Utility District, Water System:
1,950,000 7.500%, 6/01/18 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 2,238,308
4,000,000 6.375%, 6/01/21 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 4,501,200
2,500,000 Fontana Public Financing Authority, Tax Allocation
(North Fontana Redevelopment Project),
7.250%, 9/01/20 9/00 at 102 A 2,694,600
3,000,000 Fresno Health Facilities, Refunding Bonds (Holy
Cross Health Systems Corporation),
5.625%, 12/01/15 12/03 at 102 Aaa 2,978,490
2,475,000 Loma Linda University Medical Center,
6.000%, 12/01/06 12/03 at 102 BBB 2,553,086
5,000,000 Los Angeles Community Redevelopment Agency,
Multi-Family Housing (Angelus Plaza),
7.400%, 6/15/10 6/05 at 105 AAA 5,586,850
3,505,000 Los Angeles Harbor, 7.600%, 10/01/18 10/98 at 102 AAA 3,930,157
255,000 Los Angeles Home Mortgage (GNMA),
8.100%, 5/01/17 No Opt. Call Aaa 273,472
2,400,000 Los Angeles State Building Authority,
7.500%, 3/01/11 (Pre-refunded to 3/01/98) 3/98 at 102 AAA 2,621,184
4,595,000 Los Angeles County Public Works Finance Authority
(Los Angeles County Regional Park and Open
Space), 6.125%, 10/01/10 10/04 at 102 Aa 4,895,099
195,000 Los Angeles County, Single Family Mortgage,
(GNMA), 8.000%, 3/01/17 No Opt. Call Aaa 208,001
2,000,000 Los Angeles County Transportation Commission,
Sales Tax, 7.400%, 7/01/15 7/99 at 102 AA- 2,221,160
Los Angeles County Transportation Commission:
2,300,000 6.250%, 7/01/13 7/02 at 102 Aaa 2,449,523
4,445,000 6.000%, 7/01/23 7/02 at 102 Aaa 4,614,221
1,260,000 Marysville Community Development Agency,
Tax Allocation, 7.250%, 3/01/21 3/02 at 102 Baa 1,352,484
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 740,000 Menlo Park Community Development Agency,
FHA Insured, Multi-Family Housing,
8.250%, 12/01/28 6/97 at 103 Aa $ 784,444
875,000 Monterey Hospital Revenue, 7.375%, 7/01/14 7/96 at 102 A+ 901,556
2,165,000 Napa County, Certificates of Participation,
5.250%, 5/15/13 5/03 at 102 A1 2,059,998
1,500,000 North City West School Facilities Authority,
Community Facilities District No. 1,
7.850%, 9/01/19 (Pre-refunded to 9/01/99) 9/99 at 102 N/R 1,715,385
2,950,000 Northern California Power Agency,
7.150%, 7/01/24 7/98 at 102 A 3,182,726
Northridge Water District, Certificates of
Participation:
1,780,000 5.250%, 2/01/14 2/06 at 102 Aaa 1,709,031
1,105,000 5.250%, 2/01/18 2/06 at 102 Aaa 1,051,783
2,120,000 Ontario Assessment District No. 100C,
Limited Obligation, 8.000%, 9/02/11 3/96 at 103 N/R 2,197,783
3,270,000 Palmdale Elementary School District,
5.400%, 8/01/25 8/05 at 102 Aaa 3,182,953
2,920,000 Rancho Mirage Redevelopment Agency, Tax
Allocation, 5.500%, 4/01/29 4/04 at 102 A 2,658,514
1,450,000 Redding Joint Powers Financing Authority,
6.250%, 6/01/23 6/03 at 102 A 1,439,502
Riverside Multi-Family Housing:
3,285,000 6.500%, 1/01/18 7/02 at 100 AAA 3,377,177
4,005,000 6.500%, 1/01/18 7/02 at 100 AAA 4,117,380
Sacramento Area Flood Control Agency, Capital
Assessment District 2:
3,000,000 5.375%, 10/01/15 10/05 at 102 Aaa 2,948,160
3,000,000 5.375%, 10/01/25 10/05 at 102 Aaa 2,904,930
205,000 Sacramento Municipal Utility District,
Subordinated Electric Revenue,
8.000%, 11/15/10 No Opt. Call Baa1 205,642
4,000,000 Sacramento Municipal Utility District,
7.875%, 8/15/16 (Pre-refunded to 8/15/98) 8/98 at 102 Aaa 4,461,400
2,315,000 Salinas Tax Allocation, 7.400%, 9/02/09 3/96 at 103 N/R 2,407,762
2,080,000 Salinas, (Villa Sierra-GNMA), 6.500%, 7/20/17 7/04 at 102 AAA 2,162,659
4,000,000 San Bernadino, Certificates of Participation,
5.500%, 8/01/15 8/05 at 102 Aaa 3,931,920
10,240,000 San Francisco Airports Commission,
6.100%, 5/01/25 5/04 at 101 Aaa 10,710,733
5,000,000 San Francisco City and County Redevelopment
Financing Authority, Tax Allocation,
5.125%, 8/01/18 8/03 at 103 A 4,535,700
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,070,000 San Leandro, Certificates of Participation,
5.900%, 6/01/13 6/03 at 102 A $ 3,083,784
1,000,000 San Mateo County Board of Education,
Certificates of Participation, 7.100%, 5/01/21 5/99 at 102 A+ 1,063,180
Santa Barbara, Certificates of Participation
(Fact Retirement Services):
1,750,000 5.850%, 8/01/15 8/06 at 102 A 1,738,870
2,975,000 5.750%, 8/01/20 8/06 at 102 A 2,911,841
3,000,000 Santa Cruz Housing Authority, Multi-Family
Housing, FNMA, 7.750%, 7/01/23 7/00 at 102 AAA 3,225,660
2,000,000 Sonoma County Office of Education, Certificates
of Participation, 7.375%, 7/01/20
(Pre-refunded to 7/01/00) 7/00 at 102 A+ 2,283,580
Southern California Public Power Authority:
4,760,000 7.000%, 7/01/22 7/96 at 102 1/2 Aa 4,924,172
740,000 5.500%, 7/01/23 7/96 at 100 Aa 719,058
2,825,000 Stockton Hospitals (St. Joseph Hospital),
6.700%, 6/01/15 12/98 at 100 A 2,912,745
3,000,000 Thousand Oaks Redevelopment Agency,Tax
Allocation, 5.375%, 12/01/25 12/05 at 102 Aaa 2,904,600
1,100,000 Tulare County, Certificates of Participation,
6.875%, 11/15/12 11/02 at 102 Baa1 1,157,519
University of California (UCLA Center Chiller/
Cogeneration), Certificates of Participation:
3,500,000 5.600%, 11/01/20 11/03 at 102 Aa 3,379,530
4,335,000 6.000%, 11/01/21 11/03 at 102 Aa 4,431,886
3,335,000 University of California Research Facilities,
5.800%, 9/01/23 9/01 at 102 A- 3,296,580
4,000,000 Walnut Creek (John Muir Medical Center),
Certificates of Participation, 5.000%, 2/15/16 2/04 at 102 Aaa 3,715,920
- ---------------------------------------------------------------------------------------------------------------------------
$ 218,080,000 Total Investments - (Cost $214,125,831) - 98.5% 226,239,426
==============-------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 0.2%
$ 400,000 California Pollution Control Finance Authority
============== (Shell Oil Company), Variable Rate Demand
Bonds, 3.150%, 11/01/00+ VMIG-1 400,000
- ---------------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 3,143,863
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 229,783,289
===========================================================================================================================
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 29 $102,875,637 45%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 12 36,519,939 16
PORTFOLIO OF A+ A1 7 11,421,760 5
INVESTMENTS A, A-- A, A2, A3 17 56,411,428 25
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 7 10,398,612 5
TEMPORARY BB+, BB, BB-- Ba1, Ba, Ba2, Ba3 1 2,291,120 1
INVESTMENTS): Non-rated Non-rated 3 6,320,930 3
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 76 $226,239,426 100%
===========================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
21
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,000,000 California Education Facilities Authority
(Pepperdine University), 7,200%, 11/01/15
(Pre-refunded to 11/01/00) 11/00 at 102 Aaa $ 1,143,840
6,000,000 California Health Facilities Authority (Kaiser
Permanente), 5.450%, 10/01/13 10/01 at 101 Aa3 5,798,880
6,340,000 California Housing Finance Agency,
6.850%, 8/01/23 2/02 at 102 Aaa 6,663,213
240,000 California Public Capital Improvement Finance
Authority (Pooled Projects), 8.100%, 3/01/18 3/98 at 102 Aaa 258,067
5,000,000 California Public Works Board, Department of
Corrections--State Prisons, 7.000%, 9/01/09
(Pre-refunded to 9/01/00) 9/00 at 102 Aaa 5,672,050
8,500,000 California Statewide Community Development
Authority (Sutter Health), 6.125%, 8/15/22 8/02 at 102 Aaa 8,899,245
9,000,000 California Statewide Communities Development
Authority (Sutter Health), Certificates of
Participation, 5.500%, 8/15/13 8/03 at 102 Aaa 8,979,750
1,225,000 Barstow Redevelopment Agency, Tax Allocation,
7.000%, 9/01/14 No Opt. Call Aaa 1,463,005
7,005,000 Big Bear Lake Financing Authority,
6.300%, 8/01/25 8/05 at 102 Aaa 7,488,415
7,000,000 Big Bear Lake Water System, 6.375%, 4/01/22 4/02 at 102 Aaa 7,468,090
3,525,000 Brea Public Financing Authority, Tax Allocation,
7.000%, 8/01/15 (Pre-refunded to 8/01/01) 8/01 at 102 Aaa 4,053,433
2,000,000 Burbank Wastewater System, 5.500%, 6/01/25 6/05 at 102 Aaa 1,961,320
3,000,000 Calaveras County Water District, Certificates of
Participation, 6.900%, 5/01/16 (Pre-refunded to
5/01/01) 5/01 at 102 Aaa 3,419,730
2,000,000 Castaic Lake Water Agency, Certificates of
Participation, 7.125%, 8/01/16 (Pre-refunded
to 8/01/00) 8/00 at 102 Aaa 2,274,900
7,000,000 Chino Unified School District, Certificates of
Participation, 6.125%, 9/01/26 9/05 at 102 Aaa 7,366,310
850,000 Concord Redevelopment Agency, Tax Allocation
(Central Concord Project), 7.875%, 7/01/07 7/98 at 102 Aaa 931,549
500,000 Cotati-Rohnert Park Unified School District,
9.000%, 8/01/06 8/99 at 102 Aaa 579,100
4,050,000 Cucamonga County Water District, Certificates of
Participation, 5.450%, 9/01/23 3/04 at 102 Aaa 3,918,375
2,000,000 East Bay Municipal Utility District, Water System,
7.500%, 6/01/18 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 2,295,700
2,000,000 Eastern Municipal Water District, Water and
Sewer, Certificates of Participation,
6.500%, 7/01/20 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 2,248,840
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 3,865,000 Fallbrook Sanitary District, Certificates
of Participation, 6.600%, 2/01/13 2/01 at 100 Aaa $ 4,158,701
2,500,000 Fontana Public Financing Authority, Tax
Allocation (North Fontana Redevelopment
Project), 7.000%, 9/01/10 9/00 at 102 Aaa 2,781,850
3,000,000 Gilroy Unified School District, Certificates of
Participation, 6.250%, 9/01/12 9/04 at 102 Aaa 3,208,620
7,000,000 Glendale Memorial Hospital and Health Center,
5.600%, 11/15/25 11/05 at 102 AAA 6,778,030
1,000,000 LaQuinta Redevelopment Agency, Tax
Allocation, 7.300%, 9/01/12 No Opt. Call Aaa 1,235,200
5,000,000 Lancaster Redevelopment Agency, Tax
Allocation, 5.800%, 8/01/23 8/03 at 102 Aaa 5,070,350
5,000,000 Los Angeles Community Redevelopment Agency,
Multi-Family Housing (Angelus Plaza),
7.400%, 6/15/10 6/05 at 105 AAA 5,586,850
2,000,000 Los Angeles Convention and Exhibition Center,
Certificates of Participation, 7.000%, 8/15/21
(Pre-refunded to 8/15/00) 8/00 at 102 Aaa 2,266,720
Los Angeles Department of Water and Power:
5,000,000 5.400%, 11/15/31 11/03 at 102 Aa 4,739,000
6,000,000 5.400%, 11/15/31 11/03 at 102 Aaa 5,739,300
260,000 Los Angeles Home Mortgage (GNMA),
8.100%, 5/01/17 No Opt. Call Aaa 278,834
Los Angeles Wastewater System:
800,000 5.700% 6/01/20 6/03 at 102 Aaa 800,208
5,000,000 5.700% 6/01/23 6/03 at 102 Aaa 5,019,100
5,000,000 Los Angeles County Transportation Commission,
6.250%, 7/01/13 7/02 at 102 Aaa 5,325,050
Modesto Irrigation District Financing Authority,
Domestic Water Project:
4,500,000 6.125%, 9/01/19 9/02 at 102 Aaa 4,721,715
5,750,000 5.500%, 9/01/22 9/02 at 100 Aaa 5,636,035
2,500,000 Mt. Diablo Hospital District, 8.000%, 12/01/11
(Pre-refunded to 12/01/00) 12/00 at 102 Aaa 2,957,175
2,000,000 Mt. Diablo Unified School District, Special Tax,
7.050%, 8/01/20 8/00 at 102 Aaa 2,227,960
Napa FHA-Insured (Creekside Apartments):
2,555,000 6.625%, 7/01/24 7/02 at 102 Aaa 2,661,722
2,000,000 6.625%, 7/01/25 7/04 at 101 Aaa 2,091,080
7,040,000 Norwalk Community Facilities Financing
Authority, Tax Allocation, 6.050%, 9/01/25 9/05 at 102 Aaa 7,395,379
2,500,000 Oakland Pension Financing, 7.600%, 8/01/21 8/98 at 102 Aaa 2,730,725
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,250,000 Palm Desert Redevelopment Agency,
Tax Allocation, 7.400%, 5/01/09 5/97 at 101 Aaa $ 1,306,575
2,000,000 Pittsburgh Redevelopment Agency
(Los Medanos Community Project),
Tax Allocation, 7.150%, 8/01/21 8/01 at 103 Aaa 2,330,180
1,500,000 Port of Oakland, 7.250%, 11/01/16 5/97 at 102 Aaa 1,580,160
1,270,000 Rancho Cucamonga Redevelopment Agency,
Tax Allocation, 7.125%, 9/01/19
(Pre-refunded to 9/01/99) 9/99 at 102 Aaa 1,422,502
Riverside County Desert Justice Facility
Corporation, Certificates of Participation:
3,600,000 6.000%, 12/01/17 12/04 at 101 Aaa 3,738,276
2,500,000 6.250%, 12/01/21 12/04 at 101 Aaa 2,638,875
3,000,000 Sacramento Municipal Utility District, Electric
System, 6.500%, 9/01/21
(Pre-refunded to 9/01/01) 9/01 at 102 Aaa 3,382,170
4,240,000 Saddleback Unified School District Public
Financing Authority, 5.650%, 9/01/17 9/05 at 102 Aaa 4,221,683
6,030,000 San Bernardino Certificates of Participation,
5.500%, 8/01/15 8/05 at 102 Aaa 5,927,369
2,500,000 San Bernardino County Transportation
Authority, Sales Tax, 6.000%, 3/01/10 3/02 at 102 Aaa 2,623,775
2,000,000 San Diego Regional Building Authority
(San Miguel Fire Protection District),
7.250%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,258,800
San Francisco City and County Redevelopment
Agency (George R. Moscone Convention Center):
2,250,000 6.800%, 7/01/19 7/04 at 102 Aaa 2,532,443
1,000,000 6.750%, 7/01/24 7/04 at 102 Aaa 1,122,180
2,250,000 San Jose Redevelopment Agency, Tax Allocation,
4.750%, 8/01/24 2/04 at 102 Aaa 1,989,630
2,000,000 San Marcos Public Facilities Authority, Tax
Allocation, 5.500%, 8/01/23 8/03 at 102 Aaa 1,962,420
4,750,000 Southern California Public Power Authority,
5.000%, 7/01/22 7/03 at 100 Aaa 4,350,383
2,000,000 Southern California Rapid Transit Finance
Authority, Certificates of Participation,
7.500%, 7/01/05 1/01 at 102 1/2 Aaa 2,275,880
3,040,000 Sulphur Springs Union School District,
0.000%, 9/01/15 No Opt. Call Aaa 1,021,501
125,000 Thousand Oaks Redevelopment Agency,
Single Family Mortgage, 7.900%, 1/01/16 1/97 at 102 Aaa 129,780
5,250,000 Tracy Area Public Facilities Financing Agency,
5.500%, 10/01/21 (WI) 10/06 at 102 Aaa 5,078,378
- ---------------------------------------------------------------------------------------------------------------------------
$ 211,060,000 Total Investments - (Cost $203,867,092) - 97.4% 218,186,376
==============-------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 3.5%
$ 1,000,000 California Health Facilities Financing Authority
(St. Joseph Health System), Series A,
Variable Rate Demand Bonds,
3.150%, 7/01/13+ VMIG-1 $ 1,000,000
500,000 California Health Facilities Financing Authority
(St. Joseph Health System) Series B,
Variable Rate Demand Bonds,
3.100%, 7/01/13+ VMIG-1 500,000
700,000 California Health Facilities Financing Authority
(St. Joseph Health System), Series 1991 B,
Variable Rate Demand Bonds,
3.100%, 7/01/09+ VMIG-1 700,000
3,200,000 California Statewide Communities Development
Authority (St. Joseph Health System), Certificates
of Participation, Variable Rate Demand Bonds,
3.100%, 7/01/24+ VMIG-1 3,200,000
California Pollution Control Finance Authority
(Shell Oil Company), Variable Rate
Demand Bonds:
800,000 3.150%, 10/01/07+ VMIG-1 800,000
200,000 3.150%, 10/01/11+ VMIG-1 200,000
1,500,000 Santa Ana Health Facilities Authority
(Town and Country),
Variable Rate Demand Bonds,
3.250%, 10/01/20+ A-1 1,500,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 7,900,000 Total Temporary Investments - 3.5% 7,900,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.9)% (2,153,889)
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 223,932,487
===========================================================================================================================
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 60 $207,648,496 95%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 2 10,537,880 5
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 62 $218,186,376 100%
===========================================================================================================================
</TABLE>
All of the bonds in the portfolio, excluding temporary investments in short-term
municipal securities, are either covered by Original Issue Insurance, Secondary
Market Insurance or Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government agency securities, any
of which ensure the timely payment of principal and interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating. (WI) Security purchased
on a when-issued basis (note 1).
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts General Obligation,
$ 165,000 7.250%, 3/01/09 (Pre-refunded to 3/01/00) 3/00 at 102 Aaa $ 186,302
715,000 5.500%, 2/01/11 2/03 at 102 A 720,734
Massachusetts Bay Transportation Authority:
250,000 7.750%, 3/01/10 (Pre-refunded to 3/01/98) 3/98 at 102 Aaa 273,940
1,000,000 7.000%, 3/01/11 (Pre-refunded to 3/01/01) 3/01 at 102 Aaa 1,137,570
250,000 Massachusetts Bay Transportation Authority,
Certificates of Participation, 7.800%, 1/15/14 12/06 at 100 BBB 291,145
160,000 Massachusetts Educational Loan Authority,
7.875%, 6/01/03 6/97 at 102 AAA 170,426
1,345,000 Massachusetts Health and Educational Facilities
Authority (Emerson Hospital),
8.000%, 7/01/18 (Pre-refunded to 7/01/00) 7/00 at 102 N/R 1,560,577
250,000 Massachusetts Health and Educational Facilities
Authority (Mount Auburn Hospital),
7.875%, 7/01/18 (Pre-refunded to 7/01/98) 7/98 at 102 Aaa 277,333
350,000 Massachusetts Health and Educational Facilities
Authority (Salem Hospital), 7.250%, 7/01/09
(Pre-refunded to 7/01/97) 7/97 at 100 Aaa 366,951
500,000 Massachusetts Health and Educational Facilities
Authority (Cardinal Cushing General Hospital),
8.875%, 7/01/18 7/99 at 102 1/2 N/R 542,560
Massachusetts Health and Educational Facilities
Authority (Suffolk University):
1,180,000 8.125%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 101 1/2 Baa 1,362,393
1,000,000 6.350%, 7/01/22 7/02 at 102 AAA 1,046,960
500,000 Massachusetts Health and Educational Facilities
Authority (Newton-Wellesley Hospital),
8.000%, 7/01/18 7/98 at 102 Aaa 556,050
500,000 Massachusetts Health and Educational Facilities
Authority, FHA-Insured (St. Elizabeth's
Hospital of Boston), 7.750%, 8/01/27
(Pre-refunded to 8/01/97) 8/97 at 102 Aaa 538,510
750,000 Massachusetts Health and Educational Facilities
Authority, (Baystate Medical Center),
7.500%, 7/01/20 (Pre-refunded to 7/01/99) 7/99 at 102 A+ 836,115
1,000,000 Massachusetts Health and Educational Facilities
Authority (Boston College), 6.625%, 7/01/21 7/01 at 102 Aaa 1,096,280
500,000 Massachusetts Health and Educational Facilities
Authority (Worcester Polytechnic Institute),
6.625%, 9/01/17 9/02 at 102 A+ 541,300
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 495,000 Massachusetts Health and Educational Facilities
Authority (Brockton Hospital),
8.000%, 7/01/07 7/97 at 102 A $ 521,992
250,000 Massachusetts Health and Educational Facilities
Authority (University Hospital),
7.250%, 7/01/10 7/00 at 102 Aaa 278,668
750,000 Massachusetts Health and Educational Facilities
Authority (New England Medical Center),
6.625%, 7/01/25 7/02 at 102 Aaa 831,825
1,750,000 Massachusetts Health and Educational Facilities
Authority (New England Deaconess Hospital),
6.875%, 4/01/22 4/02 at 102 A 1,849,750
1,000,000 Massachusetts Health and Educational Facilities
Authority (Metrowest Health),
6.500%, 11/15/18 11/02 at 102 A 986,450
885,000 Massachusetts Health and Educational Facilities
Authority (Cable Housing and Health Services),
5.625%, 7/01/13 7/03 at 102 Aaa 893,239
Massachusetts Health and Educational Facilities
Authority (Lahey Clinic Medical Center):
1,000,000 5.625%, 7/01/15 7/03 at 102 Aaa 989,460
2,000,000 5.375%, 7/01/23 7/03 at 102 Aaa 1,911,660
700,000 Massachusetts Health and Educational Facilities
Authority (Daughters of Charity),
6.100%, 7/01/14 7/04 at 102 Aa 719,103
Massachusetts Health and Educational Facilities
Authority (Youville Hospital):
2,500,000 6.000%, 2/15/25 2/04 at 102 Aa 2,534,525
2,000,000 6.000%, 2/15/34 2/04 at 102 Aa 2,012,600
1,950,000 Massachusetts Housing Finance Agency,
Housing Project, 6.375%, 4/01/21 4/03 at 102 A1 1,967,921
Massachusetts Housing Finance Agency,
Residential Development:
1,000,000 6.250%, 11/15/14 11/02 at 102 Aaa 1,026,200
1,000,000 6.875%, 11/15/21 5/02 at 102 Aaa 1,049,350
Massachusetts Housing Finance Agency, Single
Family Housing:
500,000 7.350%, 12/01/16 6/01 at 102 Aa 533,245
1,250,000 7.700%, 6/01/17 6/98 at 102 Aa 1,333,513
1,440,000 Massachusetts Industrial Finance Agency,
Pollution Control (Eastern Edison),
5.875%, 8/01/08 8/03 at 102 Baa2 1,434,154
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 975,000 Massachusetts Industrial Finance Authority
(Malden Public Library Project),
7.250%, 1/01/15 1/05 at 102 Aaa $ 1,141,550
1,000,000 Massachusetts Industrial Finance Agency
(Semass Project), 9.000%, 7/01/15 7/01 at 103 N/R 1,098,090
250,000 Massachusetts Industrial Finance Agency
(College of the Holy Cross), 6.450%, 1/01/12 1/02 at 102 A1 267,743
475,000 Massachusetts Industrial Finance Agency (Sturdy
Memorial Hospital), 7.900%, 6/01/09 6/99 at 102 BBB+ 513,428
500,000 Massachusetts Industrial Finance Agency
(Springfield College), 7.800%, 10/01/09 10/99 at 103 A 575,375
1,380,000 Massachusetts Industrial Finance Agency
(Merrimack College), 7.125%, 7/01/12 7/02 at 102 BBB- 1,483,845
1,600,000 Massachusetts Industrial Finance Agency
(Phillips Academy), 5.375%, 9/01/23 9/08 at 102 Aa1 1,550,864
500,000 Massachusetts Industrial Finance Agency
(Whitehead Institute for Biomedical Research),
5.125%, 7/01/26 7/03 at 102 Aa 458,355
2,290,000 Massachusetts Industrial Finance Agency
(Lesley College), 6.300%, 7/01/25 7/05 at 102 AAA 2,412,194
1,750,000 Massachusetts Industrial Finance Agency (Harvard
Community Health), 8.125%, 10/01/17 10/98 at 102 A 1,907,605
1,000,000 Massachusetts Municipal Wholesale
Electric Company, 5.000%, 7/01/17 7/04 at 102 Aaa 932,230
Massachusetts Port Authority:
500,000 7.125%, 7/01/12 7/98 at 100 Aa 506,290
635,000 13.000%, 7/01/13 No Opt. Call Aaa 1,099,839
Massachusetts Turnpike Authority:
500,000 5.000%, 1/01/13 1/03 at 100 A1 470,905
1,000,000 5.125%, 1/01/23 1/03 at 102 Aaa 933,710
Attleboro General Obligation:
450,000 6.250%, 1/15/10 1/03 at 102 Baa1 475,362
450,000 6.250%, 1/15/11 1/03 at 102 Baa1 472,131
Barnstable General Obligation:
880,000 5.750%, 9/15/13 9/04 at 102 Aa 904,842
490,000 5.750%, 9/15/14 9/04 at 102 Aa 501,853
Boston General Obligation:
250,000 7.700%, 2/01/09 (Pre-refunded to 2/01/99) 2/99 at 102 A 279,715
1,000,000 6.750%, 7/01/11 7/01 at 102 Aaa 1,132,660
1,500,000 Boston City Hospital, FHA Insured Mortgage,
7.625%, 2/15/21 (Pre-refunded to 8/15/00) 8/00 at 102 Aaa 1,713,420
Boston Water and Sewer Commission:
180,000 7.875%, 11/01/13 (Pre-refunded to 11/01/96) 11/96 at 102 A 188,901
320,000 7.875%, 11/01/13 11/96 at 102 A 335,120
500,000 7.000%, 11/01/18 (Pre-refunded to 11/01/01) 11/01 at 102 Aaa 575,675
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Boston-Mount Pleasant Housing
Development Corporation, Multi-Family
Housing, 6.750%, 8/01/23 8/02 at 102 AAA $1,042,250
1,000,000 Dartmouth Housing Development Corporation
Multi-Family Housing, 7.375%, 7/01/24 1/98 at 103 AAA 1,043,270
Deerfield General Obligation:
420,000 6.200%, 6/15/09 6/02 at 102 A1 459,136
415,000 6.250%, 6/15/10 6/02 at 102 A1 452,176
525,000 Haverhill General Obligation, 7.500%, 10/15/11 10/01 at 102 Baa 580,099
Holyoke General Obligation:
685,000 8.000%, 6/01/01 No Opt. Call Baa 743,636
250,000 8.150%, 6/15/06 6/02 at 103 Aaa 302,635
750,000 7.000%, 11/01/08 11/02 at 102 Baa 840,615
500,000 7.650%, 8/01/09 8/01 at 102 Baa 560,110
Lowell General Obligation:
545,000 8.300%, 2/15/05 No Opt. Call Baa1 654,164
445,000 8.400%, 1/15/09 (Pre-refunded to 1/15/01) 1/01 at 102 Aaa 531,277
1,000,000 Lynn General Obligation, 7.850%, 1/15/11
(Pre-refunded to 1/15/02) 1/02 at 104 Aaa 1,209,040
500,000 Monson General Obligation School Project,
7.700%, 10/15/10 (Pre-refunded to 10/15/00) 10/00 at 102 Aaa 581,585
Palmer General Obligation:
500,000 7.700%, 10/01/10 (Pre-refunded to 10/01/00) 10/00 at 102 Aaa 581,045
500,000 5.500%, 10/01/10 10/03 at 102 Aaa 512,135
1,130,000 Peabody General Obligation, 6.950%, 8/01/09 8/00 at 100 Aaa 1,245,362
550,000 Quincy Hospital, FHA-Insured, 7.875%, 1/15/16 7/96 at 102 AAA 570,295
250,000 Sandwich General Obligation,
7.100%, 11/01/07 (Pre-refunded to 11/01/98) 11/98 at 102 1/2 Aaa 276,613
1,250,000 Somerville Housing Authority (GNMA),
7.950%, 11/20/30 5/00 at 102 AAA 1,343,074
425,000 South Essex Sewerage District, General
Obligation, 9.000%, 12/01/00 No Opt. Call A 508,622
250,000 Southeastern Massachusetts University
Building Authority, 7.800%, 5/01/16
(Pre-refunded to 5/01/96) 5/96 at 102 A 256,847
1,000,000 Springfield General Obligation, 7.100%, 9/01/11 9/02 at 102 Baa 1,099,700
Taunton General Obligation:
1,465,000 8.000%, 2/01/02 No Opt. Call A 1,727,234
1,005,000 8.000%, 2/01/03 No Opt. Call A 1,204,240
250,000 University of Lowell Building Authority,
7.400%, 11/01/07 11/97 at 102 A 269,634
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 500,000 University of Massachusetts Building Authority,
7.500%, 5/01/14 5/98 at 102 A $ 546,740
1,000,000 Worcester General Obligation, 6.000%, 8/01/04 8/02 at 102 BBB+ 1,070,840
1,000,000 Puerto Rico Aqueduct and Sewer Authority,
7.875%, 7/01/17 (Pre-refunded to 7/01/98) 7/98 at 102 AAA 1,111,000
2,250,000 Puerto Rico Electric Power Authority,
7.000%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 2,584,394
- ---------------------------------------------------------------------------------------------------------------------------
$ 72,620,000 Total Investments (Cost $72,713,663) - 95.7% 78,218,271
===============------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 3.2%
$ 2,600,000 Massachusetts Dedicated Income Tax Variable Rate
Demand Bonds, 3.350%, 12/01/97+ VMIG-1 2,600,000
===============------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.1% 882,885
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 81,701,156
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 39 $35,505,977 46%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 10 11,055,190 14
PORTFOLIO OF A+ A1 7 4,995,296 6
INVESTMENTS A, A-- A, A2, A3 15 11,878,959 15
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 14 11,581,622 15
TEMPORARY Non-rated Non-rated 3 3,201,227 4
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 88 $78,218,271 100%
===========================================================================================================================
</TABLE>
* Optional call provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
31
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts General Obligation:
$ 500,000 6.500%, 6/01/08 6/02 at 101 Aaa $ 548,990
250,000 7.250%, 3/01/09 (Pre-refunded to 3/01/00) 3/00 at 102 Aaa 282,275
1,200,000 6.000%, 6/01/13 6/02 at 100 Aaa 1,237,356
Massachusetts Bay Transportation Authority,
General Transportation System:
250,000 7.250%, 3/01/03 3/00 at 102 Aaa 278,590
250,000 7.100%, 3/01/13 (Pre-refunded to 3/01/99) 3/99 at 102 Aaa 276,333
1,000,000 5.750%, 3/01/22 3/02 at 100 Aaa 1,004,780
250,000 Massachusetts Bay Transportation Authority,
Certificates of Participation, 7.650%, 8/01/15
(Pre-refunded to 8/01/00) 8/00 at 102 Aaa 288,848
750,000 Massachusetts College Building Authority,
7.250%, 5/01/16 5/96 at 102 Aaa 769,958
450,000 Massachusetts Health and Educational Facilities
Authority (St. Luke's Hospital of New Bedford),
7.750%, 7/01/13 (Pre-refunded to 7/01/97) 7/97 at 102 Aaa 483,300
Massachusetts Health and Educational Facilities
Authority (South Shore Hospital):
200,000 8.125%, 7/01/17 (Pre-refunded to 7/01/97) 7/97 at 102 Aaa 215,772
250,000 7.500%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 286,783
1,000,000 6.500%, 7/01/22 7/02 at 102 Aaa 1,096,030
300,000 Massachusetts Health and Educational Facilities
Authority (Mount Auburn Hospital),
7.875%, 7/01/18 (Pre-refunded to 7/01/98) 7/98 at 102 Aaa 332,799
Massachusetts Health and Educational Facilities
Authority (Lahey Clinic Medical Center):
750,000 7.600%, 7/01/08 (Pre-refunded to 7/01/98) 7/98 at 102 Aaa 827,423
1,700,000 5.625%, 7/01/15 7/03 at 102 Aaa 1,682,082
2,500,000 5.375%, 7/01/23 7/03 at 102 Aaa 2,389,575
800,000 Massachusetts Health and Educational Facilities
Authority (Berkshire Health Systems),
7.600%, 10/01/14 (Pre-refunded to 10/01/98) 10/98 at 102 Aaa 889,392
750,000 Massachusetts Health and Educational Facilities
Authority (Salem Hospital), 7.250%, 7/01/09
(Pre-refunded to 7/01/97) 7/97 at 100 Aaa 786,323
250,000 Massachusetts Health and Educational Facilities
Authority (Capital Asset Program),
7.200%, 7/01/09 7/99 at 102 Aaa 274,795
500,000 Massachusetts Health and Educational Facilities
Authority (University Hospital), 7.250%, 7/01/19 7/00 at 102 Aaa 556,920
250,000 Massachusetts Health and Educational Facilities
Authority (Newton-Wellesley Hospital),
8.000%, 7/01/18 7/98 at 102 Aaa 278,025
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts Health and Educational Facilities
Authority (Northeastern University):
$ 250,000 7.600%, 10/01/10 10/98 at 102 Aaa $ 274,570
1,600,000 6.550%, 10/01/22 10/02 at 102 Aaa 1,762,208
500,000 Massachusetts Health and Educational Facilities
Authority (Baystate Medical Center),
7.500%, 7/01/20 (Pre-refunded to 7/01/99) 7/99 at 102 A+ 557,410
500,000 Massachusetts Health and Educational Facilities
Authority (Stonehill College), 7.700%, 7/01/20
(Pre-refunded to 7/01/00) 7/00 at 102 Aaa 577,495
1,000,000 Massachusetts Health and Educational Facilities
Authority (Boston College), 6.625%, 7/01/21 7/01 at 102 Aaa 1,096,280
500,000 Massachusetts Health and Educational Facilities
Authority (Berklee College of Music),
6.875%, 10/01/21 10/01 at 102 Aaa 559,940
1,000,000 Massachusetts Health and Educational Facilities
Authority (Brigham and Women's Hospital),
6.750%, 7/01/24 7/01 at 102 Aa 1,053,890
250,000 Massachusetts Health and Educational Facilities
Authority (Beverly Hospital), 7.300%, 7/01/19
(Pre-refunded to 7/01/99) 7/99 at 102 Aaa 279,658
1,500,000 Massachusetts Health and Educational Facilities
Authority (New England Medical Center),
6.625%, 7/01/25 7/02 at 102 Aaa 1,663,650
1,450,000 Massachusetts Health and Educational Facilities
Authority (Boston University), 6.000%, 10/01/22 10/02 at 100 Aaa 1,494,776
2,000,000 Massachusetts Health and Educational Facilities
Authority (Bentley College), 6.125%, 7/01/17 7/02 at 102 Aaa 2,096,840
350,000 Massachusetts Housing Finance Agency,
7.600%, 12/01/16 12/99 at 103 Aaa 372,257
Massachusetts Housing Finance Agency, Single
Family Housing:
500,000 7.350%, 12/01/16 6/01 at 102 Aa 533,245
250,000 7.700%, 6/01/17 6/98 at 102 Aa 266,703
1,590,000 Massachusetts Industrial Finance Authority (Malden
Public Library Project), 7.250%, 1/01/15 1/05 at 102 Aaa 1,861,604
500,000 Massachusetts Industrial Finance Agency,
(Brandeis University), 6.800%, 10/01/19 10/99 at 102 Aaa 548,405
200,000 Massachusetts Industrial Finance Agency
(Harvard Community Health Plan),
7.750%, 10/01/08 10/98 at 102 Aaa 219,918
250,000 Massachusetts Industrial Finance Agency,
(Milton Academy), 7.250%, 9/01/19
(Pre-refunded to 9/01/99) 9/99 at 102 Aaa 280,420
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 375,000 Massachusetts Industrial Finance Agency
(Museum of Science), 7.300%, 11/01/09
(Pre-refunded to 11/01/99) 11/99 at 102 Aaa $ 422,918
1,000,000 Massachusetts Industrial Finance Agency
(Mount Holyoke College), 6.300%, 7/01/13 7/01 at 102 Aaa 1,065,590
420,000 Massachusetts Industrial Finance Agency
(Babson College), 5.800%, 10/01/10 10/05 at 102 Aaa 441,521
2,000,000 Massachusetts Municipal Wholesale Electric
Company, 5.000%, 7/01/10 7/03 at 102 Aaa 1,937,200
1,000,000 Massachusetts Port Authority, 13.000%, 7/01/13 No Opt. Call Aaa 1,732,030
1,000,000 Massachusetts Turnpike Authority, 5.125%, 1/01/23 1/03 at 102 Aaa 933,710
1,000,000 Boston General Obligation, 6.750%, 7/01/11 7/01 at 102 Aaa 1,132,660
500,000 Boston City Hospital (FHA-Insured Mortgage),
7.625%, 2/15/21 (Pre-refunded to 8/15/00) 8/00 at 102 Aaa 571,140
Boston Water and Sewer Commission:
500,000 7.250%, 11/01/06 11/98 at 100 Aaa 537,015
500,000 7.000%, 11/01/18 (Pre-refunded to 11/01/01) 11/01 at 102 Aaa 575,675
500,000 Fall River General Obligation, 7.200%, 6/01/10 6/01 at 102 Aaa 566,775
250,000 Town of Groveland Unlimited Tax, 6.900%, 6/15/07 6/01 at 102 Aaa 280,090
1,000,000 Haverhill General Obligation, 6.700%, 9/01/10 9/01 at 102 Aaa 1,107,140
250,000 Holyoke General Obligation, 8.150%, 6/15/06 6/02 at 103 Aaa 302,635
450,000 Leominster General Obligation, 7.500%, 4/01/09 4/00 at 102 Aaa 513,194
2,625,000 Lowell General Obligation, 5.600%, 11/01/12 11/03 at 102 Aaa 2,652,116
1,025,000 Lynn General Obligation, 6.750%, 1/15/02 No Opt. Call Aaa 1,146,534
250,000 Lynn Water and Sewer Commission,
7.250%, 12/01/10 (Pre-refunded to 12/01/00) 12/00 at 102 Aaa 286,875
1,000,000 Mansfield General Obligation, 6.700%, 1/15/11 1/02 at 102 Aaa 1,108,920
250,000 Methuen General Obligation, 7.400%, 5/15/04 5/00 at 102 Aaa 281,088
500,000 Monson General Obligation School Project,
7.700%, 10/15/10 (Pre-refunded to 10/15/00) 10/00 at 102 Aaa 581,585
1,500,000 Monson General Obligation, 5.500%, 10/15/10 No Opt. Call Aaa 1,557,300
300,000 North Andover General Obligation, 7.400%, 9/15/10 9/00 at 103 Aaa 342,006
North Middlesex Region School District,
General Obligation:
270,000 7.200%, 6/15/08 6/00 at 103 Aaa 304,223
245,000 7.200%, 6/15/09 6/00 at 103 Aaa 276,054
250,000 Northampton General Obligation, 5.300%, 3/01/10 3/03 at 102 Aaa 250,475
190,000 Northfield General Obligation, 6.350%, 10/15/09 10/01 at 102 Aaa 204,389
Palmer General Obligation:
270,000 7.300%, 3/01/10 (Pre-refunded to 3/01/00) 3/00 at 102 Aaa 305,348
250,000 7.700%, 10/01/10 (Pre-refunded to 10/01/00) 10/00 at 102 Aaa 290,523
1,000,000 5.500%, 10/01/10 10/03 at 102 Aaa 1,024,270
440,000 Quaboag Regional School District, General
Obligation, 6.250%, 6/15/08 6/02 at 102 Aaa 475,424
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salem General Obligation:
$ 500,000 6.800%, 8/15/09 8/01 at 102 Aaa $ 555,885
900,000 6.000%, 7/15/10 7/02 at 102 Aaa 954,288
250,000 Sandwich General Obligation, 7.100%, 11/01/07
(Pre-refunded to 11/01/98) 11/98 at 102 1/2 Aaa 276,613
Southern Berkshire Regional School District,
General Obligation:
515,000 7.500%, 4/15/07 (Pre-refunded to 4/15/02) 4/02 at 102 Aaa 608,400
1,145,000 7.000%, 4/15/11 4/02 at 102 Aaa 1,319,326
250,000 Springfield Geneal Obligation, 7.000%, 11/01/07 11/98 at 103 Aaa 273,643
220,000 Taunton General Obligation, 6.800%, 9/01/09 9/01 at 103 Aaa 246,435
455,000 Wareham School Project General Obligation,
7.050%, 1/15/07 1/01 at 103 Aaa 513,148
250,000 Westfield General Obligation, 7.100%, 12/15/08
(Pre-refunded to 12/15/00) 12/00 at 102 Aaa 285,497
215,000 Whately General Obligation, 6.350%, 1/15/09 1/02 at 102 Aaa 232,540
1,210,000 Winchendon General Obligation, 6.050%, 3/15/10 3/03 at 102 Aaa 1,296,500
160,000 Worcester General Obligation, 6.900% 5/15/07 5/02 at 102 Aaa 184,150
1,000,000 Puerto Rico Commonwealth, General Obligation,
5.750%, 7/01/24 7/05 at 101 1/2 Aaa 1,016,160
2,290,000 Puerto Rico Industrial Medical and Environmental
Authority, 6.250%, 7/01/16 1/05 at 102 Aaa 2,460,580
- ---------------------------------------------------------------------------------------------------------------------------
$ 58,810,000 Total Investments - (Cost $58,764,889) - 96.4% 63,715,206
==============-------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-
TERM MUNICIPAL SECURITIES - 2.3%
$ 1,200,000 Massachusetts Dedicated Income Tax, Variable
Rate Demand Bonds, 3.350%, 12/01/97+ VMIG-1 1,200,000
300,000 Massachusetts Industrial Finance Agency (Showa
Women's Institute Boston), Variable Rate
Demand Bonds, 3.600%, 3/15/04+ VMIG-1 300,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 1,500,000 Total Temporary Investments - 2.3% 1,500,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.3% 884,502
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 66,099,708
===========================================================================================================================
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 80 $61,303,958 96%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 3 1,853,838 3
PORTFOLIO OF A+ A1 1 557,410 1
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 84 $63,715,206 100%
===========================================================================================================================
</TABLE>
All of the bonds in the portfolio, exluding temporary investments in short-term
municipal securities, are either covered by Original Issue Insurance,
Secondary Market Insurance or Portfolio Insurance, or are backed by an escrow or
trust containing sufficient U.S. Government or U.S. Government
agency securities, any of which ensure the timely payment of principal and
interest.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional
call or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed
is that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
36
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN NEW YORK TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 4,000,000 New York Local Government Assistance Corporation,
5.500%, 4/01/21 4/03 at 102 A $ 3,844,720
500,000 New York State (Commissioner of Office of Mental
Health), Certificates of Participation,
8.300%, 9/01/12 9/97 at 102 Baal 536,065
3,000,000 New York State Energy Research and Development
Authority, 6.100%, 8/15/20 7/05 at 102 A1 3,106,530
1,545,000 New York State Environmental Facilities Corporation
(State Park Infrastructure), 5.750%, 3/15/13 3/03 at 101 Baal 1,535,823
3,000,000 New York State General Obligation,
5.625%, 10/01/20 10/05 at 101 A 3,004,890
200,000 New York State Housing Finance Agency, State
University Construction, 8.000%, 5/01/11 No Opt. Calls Aaa 255,060
1,650,000 New York State Housing Finance Agency, Insured
Multi-Family Mortgage Housing,
6.950%, 8/15/12 8/02 at 102 Aa 1,770,104
2,000,000 New York State Housing Finance Agency, Health
Facilities (New York City), 8.000%, 11/01/08 11/00 at 102 BBB+ 2,257,780
New York State Housing Finance Agency, Service
Contract Obligation:
500,000 6.125%, 3/15/20 9/03 at 102 Baal 511,215
3,750,000 5.500%, 9/15/22 9/03 at 102 Baal 3,528,450
3,000,000 6.500%, 3/15/25 9/05 at 102 Baal 3,170,940
1,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, Insured
Mortgage (St. Vincent's Hospital),
8.000%, 2/15/27 (Pre-refunded to 8/15/97) 8/97 at 102 Aaa 1,065,830
995,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, Insured
Mortgage (Albany Medical Center),
8.000%, 2/15/28 8/98 at 102 AAA 1,085,396
1,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home,
FHA-Insured, 7.350%, 2/15/29 8/99 at 102 Aa 1,083,640
1,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, FHA-Insured
(Buffalo General Hospital), 7.700%, 2/15/22
(Pre-refunded to 8/15/98) 8/98 at 102 AAA 1,111,020
1,250,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, FHA-
Insured (Catholic Medical Center),
8.300%, 2/15/22 (Pre-refunded to 2/15/98) 2/98 at 102 AAA 1,381,725
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,250,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Columbia-Presbyterian),
8.000%, 2/15/25 (Pre-refunded to 8/15/97) 8/97 at 102 Aaa $ 2,430,315
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Mental Health Services):
1,460,000 7.500%, 2/15/21 2/01 at 102 AAA 1,696,038
2,000,000 5.500%, 8/15/21 2/02 at 100 AAA 1,947,860
1,500,000 6.500%, 8/15/24 8/04 at 102 Baal 1,583,250
2,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
FHA-Insured, 6.200%, 8/15/22 8/02 at 102 AAA 2,087,460
1,520,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, FHA-
Insured (Bayley Seton/St. Joseph's Hospital),
6.450%, 2/15/09 2/03 at 102 AAA 1,662,698
2,500,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, FHA-
Insured (St. Vincent's Medical Center),
6.200%, 2/15/21 2/04 at 102 AAA 2,581,475
1,250,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(New York Downtown Hospital),
6.700%, 2/15/12 2/05 at 102 Baa 1,298,638
2,480,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home,
6.400%, 8/15/14 8/04 at 102 AAA 2,622,327
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, FHA-
Insured New York Hospital:
1,000,000 6.750%, 8/15/14 2/05 at 102 Aaa 1,125,190
1,000,000 6.800%, 8/15/24 2/05 at 102 Aaa 1,134,930
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Brookdale Hospital Medical Center):
1,000,000 6.400%, 2/15/01 No Opt. Call Baa 1,035,520
2,700,000 6.800%, 8/15/12 2/05 at 102 Baa 2,826,306
1,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Health Care Center),
6.375%, 11/15/19 11/05 at 102 Aa 1,048,710
380,000 New York State Mortgage Agency,
8.100%, 10/01/17 4/98 at 102 Aa 404,768
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,000,000 New York State Urban Development Corporation,
6.750%, 1/01/26 1/02 at 102 Aaa $ 1,106,060
1,100,000 New York State Urban Development Corporation
(Syracuse University Center for Science and
Technology), 7.875%, 1/01/17
(Pre-refunded to 1/01/98) 1/98 at 102 Baal 1,200,573
New York State Urban Development Corporation,
Correctional Capitol Facilities:
1,000,000 5.625%, 1/01/07 1/03 at 102 Baal 1,002,330
2,490,000 5.750%, 1/01/13 1/03 at 102 Baal 2,421,799
1,250,000 5.500%, 1/01/15 1/03 at 102 Baal 1,195,538
1,000,000 7.500%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 AAA 1,137,820
2,000,000 New York State Urban Development Corporation
(Clarkson Center for Advanced Materials
Processing), 7.800%, 1/01/20 (Pre-refunded to
1/01/01) 1/01 at 102 Baal 2,335,260
2,900,000 New York State Urban Development Corporation,
State Facilities, 7.500%, 4/01/20 (Pre-refunded
to 4/01/01) 4/01 at 102 Aaa 3,378,268
1,000,000 New York State Urban Development Corporation
(Cornell Center for Theory and Simulation),
6.00%, 1/01/14 1/03 at 102 Baa 1,005,010
2,615,000 New York State Urban Development Corporation
(Pine Barrens), 5.375%, 4/01/17 4/05 at 102 Baal 2,391,574
2,100,000 Babylon Industrial Development Agency,
Resource Recovery, 8.500%, 1/01/19 7/98 at 103 Baal 2,376,927
1,000,000 Batavia Housing Authority, FHA-Insured
(Washington Towers), 6.500%, 1/01/23 7/01 at 102 Aaa 1,025,060
1,000,000 Brookhaven Industrial Development Agency, Civic
Facility (Dowling College/National Aviation
Center), 6.750%, 3/01/23 3/03 at 102 BBB 1,041,710
2,000,000 New York State, Certificates of Participation
(John Jay College of Criminal Justice),
6.000%, 8/15/06 No Opt. Call Baal 2,077,080
500,000 Dormitory Authority of the State of New York
(Long Island Jewish Medical Center),
FHA-Insured, 7.750%, 8/15/27 2/98 at 102 AAA 536,535
Dormitory Authority of the State of New York
(City University):
1,500,000 5.750%, 7/01/07 No Opt. Call Baal 1,522,980
750,000 7.500%, 7/01/10 No Opt. Call Baal 886,005
2,225,000 5.750%, 7/01/12 No Opt. Call Baal 2,244,780
1,500,000 5.500%, 7/01/12 7/03 at 102 Baal 1,440,540
500,000 8.200%, 7/01/13 7/98 at 102 Baal 553,735
1,000,000 7.625%, 7/01/20 7/00 at 102 AAA 1,154,640
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* ATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 750,000 Dormitory Authority of the State of New York,
GNMA (Park Ridge Housing, Inc),
7.850%, 2/01/29 2/99 at 102 AAA $ 819,203
1,985,000 Dormitory Authority of the State of New York
(United Health Services), 7.350%, 8/01/29 2/00 at 102 AAA 2,165,159
3,500,000 Dormitory Authority of the State of New York
(Nursing Homes), 5.750%, 7/01/17 7/05 at 102 Aa3 3,438,505
Dormitory Authority of the State of New York
(State University):
2,000,000 7.400%, 5/15/01 5/00 at 102 Baal 2,187,740
2,000,000 5.500%, 5/15/08 No Opt. Call Baal 1,998,060
1,125,000 5.250%, 5/15/09 No Opt. Call Baal 1,086,446
2,000,000 5.500%, 5/15/13 No Opt. Call Baal 1,964,900
2,250,000 Dormitory Authority of the State of New York,
Judicial Facilities (Suffolk County),
9.500%, 4/15/14 4/96 at 116 3/32 Baa1 2,625,480
1,375,000 Dormitory Authority of the State of New York
(University of Rochester, Strong Memorial
Hospital), 5.500%, 7/01/21 7/04 at 102 A1 1,337,353
4,000,000 Dormitory Authority of the State of New
York, Court Facilities, 5.625%, 5/15/13 5/03 at 101 1/2 Baal 3,835,840
2,195,000 Dormitory Authority of the State of New York
(Upstate Community Colleges),
6.500%, 7/01/07 No Opt. Call Baal 2,362,786
2,470,000 Dutchess County Industrial Development
Authority, Civic Facilities (Bard College),
7.000%, 11/01/17 11/03 at 102 A 2,643,369
1,000,000 Franklin County Industrial Development Agency
(County Correctional Facility),
6.750%, 11/01/12 11/02 at 102 BBB 1,068,490
750,000 Hempstead Industrial Development Authority,
Civic Facility (United Cerebral Palsy Association
of Nassau County) 7.500%, 10/01/09 10/99 at 102 Aa2 797,168
2,500,000 Housing New York Corporation, 5.00%, 11/01/13 11/03 at 102 AA 2,298,650
1,000,000 Metropolitan Transportation Authority,
Commuter Facilities, 6.250%, 7/01/17 7/02 at 102 Aaa 1,064,320
1,000,000 Metropolitan Transportation Authority,
Commuter Facilities Service Contract,
7.500%, 7/01/16 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 1,149,720
1,025,000 Metropolitan Transportation Authority, Transit
Facilities, 6.500%, 7/01/18 7/02 at 102 Aaa 1,130,503
1,055,000 Monroe County Water Authority, Water System,
6.000%, 8/01/17 8/02 at 102 AA 1,076,944
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City General Obligation:
$ 2,500,000 7.000%, 8/01/04 No Opt. Call Baal $ 2,732,325
2,000,000 7.500%, 2/01/06 2/02 at 101 1/2 Baal 2,236,000
45,000 6.625%, 8/01/13 8/02 at 101 1/2 Aaa 49,738
2,500,000 6.000%, 2/15/20 2/05 at 101 Baal 2,424,300
New York City Housing Development Corporation,
Multi-Family Mortgage (FHA Insured):
2,000,000 6.550%, 10/01/15 4/03 at 102 AAA 2,093,180
2,500,000 5.850%, 5/01/26 5/03 at 102 AA 2,492,724
1,000,000 New York City Housing Development Corporation,
Multi-Unit Mortgage (FHA Insured),
7.350%, 6/01/19 6/01 at 102 AAA 1,073,680
New York City Municipal Water Finance Authority,
Water and Sewer System:
3,000,000 5.375%, 6/15/19 6/04 at 101 AAA 2,899,230
1,500,000 7.750%, 6/15/20 (Pre-refunded to 6/15/01) 6/01 at 101 1/2 Aaa 1,766,790
2,000,000 5.500%, 6/15/20 6/02 at 100 A 1,910,880
3,500,000 New York City Industrial Development Agency,
Civic Facility (The Lighthouse Project),
6.500%, 7/01/22 7/02 at 102 Aa2 3,642,240
New York City Industrial Development Agency
(College of New Rochelle):
1,000,000 6.200%, 9/01/10 9/05 at 102 Baa 1,010,320
1,000,000 6.300%, 9/01/15 9/05 at 102 Baa 1,006,090
2,405,000 Newark-Wayne Community Hospital,
7.600%, 9/01/15 9/03 at 102 N/R 2,429,242
1,000,000 Orangetown Housing Authority, Housing Facilities,
(Orangetown Guaranty), 7.600%, 4/01/30
(Pre-refunded to 10/01/00) 10/00 at 102 A 1,157,040
South Orangetown Central School District, General
Obligation:
390,000 6.875%, 10/01/08 No Opt. Call A 454,697
390,000 6.875%, 10/01/09 No Opt. Call A 454,939
3,015,000 Suffolk County Industrial Development Agency
(Dowling College Civic Facility), 6.625%, 6/01/24 6/04 at 102 BBB 3,191,769
2,000,000 34th Street Partnership Business Improvement
District, Capital Improvement,
5.500%, 1/01/23 1/03 at 102 A1 1,904,340
Triborough Bridge and Tunnel Authority:
2,000,000 7.100%, 1/01/10 1/01 at 102 A1 2,214,880
2,000,000 7.100%, 1/01/10 1/01 at 102 Aaa 2,242,460
2,100,000 UFA Development Corporation, FHA-Insured
(Loretto-Utica Project), 5.950%, 7/01/35 7/04 at 102 Aa 2,105,418
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,000,000 Westchester County Industrial Development Agency,
Civic Facility (Jewish Board of Family and
Children Services), 6.750%, 12/15/12 12/02 at 102 BBB- $ 2,066,620
- ---------------------------------------------------------------------------------------------------------------------------
$ 158,685,000 Total Investments - (Cost $156,315,155) - 96.6% 165,378,435
==============-------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 2.2%
New York City General Obligation,
Variable Rate Demand Bonds:
$ 900,000 3.450%, 8/15/05+ VMIG-1 900,000
800,000 3.400%, 8/15/20+ VMIG-1 800,000
1,500,000 3.300%, 8/01/22+ VMIG-1 1,500,000
600,000 3.450%, 8/15/22+ VMIG-1 600,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 3,800,000 Total Temporary Investments - 2.2% 3,800,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.2% 1,974,808
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 171,153,243
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 31 $ 46,979,690 28%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 11 20,158,871 12
PORTFOLIO OF A+ A1 4 8,563,103 5
INVESTMENTS A, A-- A, A2, A3 7 13,470,535 8
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 40 73,776,994 45
TEMPORARY Non-rated Non-rated 1 2,429,242 2
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 94 $165,378,435 100%
===========================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
42
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 8,000,000 New York State Energy Research and Development
Authority (The Brooklyn Union Gas Company),
5.500%, 1/01/21 1/06 at 102 Aaa $ 7,866,400
2,500,000 New York State Energy Research and Development
Authority, Pollution Control (Central Hudson Gas
& Electric Corporation), 7.375%, 10/01/14 10/99 at 103 Aaa 2,802,650
1,450,000 New York State Environmental Facilities Corporation,
Water Pollution Control, Pooled Loan,
7.200%, 3/15/11 6/00 at 102 Aaa 1,614,343
2,200,000 New York State Housing Finance Agency, Multi-
Family Housing, 7.450%, 11/01/28 11/99 at 102 Aaa 2,338,886
995,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, Insured
Mortgage (Albany Medical Center),
8.000%, 2/15/28 8/98 at 102 AAA 1,085,396
895,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(St. Francis Hospital), 7.625%, 11/01/21 11/98 at 102 Aaa 984,187
4,765,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Bronx Lebanon), 7.100%, 2/15/27 2/97 at 102 Aaa 4,969,371
2,000,000 New York State Medical Care Facilities
Agency, Hospital and Nursing Home, FHA-
Insured, 7.350%, 2/15/29 8/99 at 102 Aa 2,167,280
1,500,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home, FHA-
Insured (Catholic Medical Center),
8.300%, 2/15/22 (Pre-refunded to 2/15/98) 2/98 at 102 AAA 1,658,070
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home,
FHA-Insured (Montefiore Medical Center):
1,500,000 7.250%, 2/15/24 2/99 at 102 Aa 1,621,800
2,000,000 7.250%, 2/15/24 2/99 at 102 Aaa 2,167,600
1,300,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(St. Luke's-Roosevelt Hospital Center),
7.450%, 2/15/29 (Pre-refunded to 2/15/00) 2/00 at 102 Aaa 1,478,815
1,865,000 New York State Medical Care Facilities Finance
Agency, Long-Term Health Care (Capital
Guaranty Insured Program), 6.450%, 11/01/14 5/02 at 102 Aaa 2,001,966
3,200,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(North Shore University Hospital),
7.200%, 11/01/20 11/00 at 102 Aaa 3,581,184
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,670,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Our Lady of Victory),
6.625%, 11/01/16 11/01 at 102 Aaa $ 1,842,962
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Sisters of Charity of Buffalo):
500,000 6.600%, 11/01/10 11/01 at 102 Aaa 552,220
1,550,000 6.625%, 11/01/18 11/01 at 102 Aaa 1,710,534
1,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Aurelia Osborn Fox Memorial Hospital),
6.500%, 11/01/19 11/01 at 102 Aaa 1,097,430
3,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(South Nassau Communities Hospital),
6.125%, 11/01/11 11/02 at 102 Aaa 3,162,570
New York State Medical Care Facilities Finance
Agency, Mental Health Services, Facilities
Improvement Revenue:
1,415,000 5.750%, 2/15/14 8/03 at 102 Aaa 1,426,773
4,000,000 5.375%, 2/15/14 2/04 at 102 Aaa 3,905,400
3,250,000 5.700%, 8/15/14 2/03 at 102 Aaa 3,265,080
6,150,000 6.375%, 8/15/17 12/02 at 102 Aaa 6,556,208
2,815,000 6.250%, 8/15/18 2/02 at 102 Aaa 2,974,611
2,500,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(St. Mary's Hospital--Rochester Project),
6.200%, 11/01/14 11/03 at 102 Aaa 2,649,900
7,000,000 New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home,
FHA-Insured, 6.800%, 8/15/24 2/05 at 102 Aaa 7,944,510
New York State Medical Care Facilities Finance
Agency, Hospital and Nursing Home
(Montefiore Medical Center):
3,390,000 5.750%, 2/15/15 2/05 at 102 Aaa 3,413,188
4,175,000 5.750%, 2/15/25 2/05 at 102 Aaa 4,179,927
New York State Mortgage Agency:
225,000 8.375%, 10/01/17 1/98 at 102 Aa 239,810
390,000 8.100%, 10/01/17 4/98 at 102 Aa 415,420
3,500,000 New York State Mortgage Agency, Homeowner
Mortgage, 5.650%, 4/01/15 10/03 at 102 Aaa 3,520,370
New York State Thruway Authority:
2,000,000 5.750%, 4/01/13 4/04 at 102 Aaa 2,054,580
7,300,000 5.750%, 1/01/19 1/02 at 102 Aaa 7,342,778
3,950,000 5.500%, 1/01/23 1/02 at 100 Aaa 3,871,000
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York State Urban Development Corporation:
$ 3,850,000 6.700%, 1/01/12 1/02 at 102 Aaa $ 4,256,945
9,650,000 6.750%, 1/01/26 1/02 at 102 Aaa 10,673,479
New York State Urban Development Corporation,
Correctional Facilities:
1,500,000 7.250%, 1/01/14 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 1,693,530
1,000,000 5.250%, 1/01/14 No Opt. Call Aaa 982,320
575,000 7.000%, 1/01/17 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 644,127
2,000,000 7.500%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 2,275,640
2,000,000 Power Authority of the State of New York, General
Purpose, 6.500%, 1/01/19 1/02 at 102 Aaa 2,194,520
280,000 Albany Municipal Water Finance Authority,
Water and Sewer System, 7.500%, 12/01/17 12/98 at 102 Aaa 308,350
1,795,000 Albany Municipal Water Finance Authority
5.500%, 12/01/22 12/03 at 102 Aaa 1,763,982
1,250,000 Broome County, Certificates of Participation,
5.250%, 4/01/22 4/04 at 102 Aaa 1,179,688
2,250,000 Buffalo and Fort Erie Public Bridge Authority,
5.750%, 1/01/25 1/05 at 101 Aaa 2,279,700
1,000,000 Buffalo General Obligation, 6.150%, 2/01/04 1/01 at 101 Aaa 1,077,130
8,385,000 Buffalo Municipal Water Finance Authority,
Water System, 5.750%, 7/01/19 7/03 at 102 Aaa 8,441,431
2,000,000 Buffalo Sewer Authority, Sewer System,
5.000%, 7/01/12 7/03 at 100 Aaa 1,898,120
Camden Central School District,
General Obligation:
500,000 7.100%, 6/15/07 No Opt. Call Aaa 602,965
600,000 7.100%, 6/15/08 No Opt. Call Aaa 727,914
600,000 7.100%, 6/15/09 No Opt. Call Aaa 728,772
275,000 7.100%, 6/15/10 No Opt. Call Aaa 333,614
1,560,000 Dormitory Authority of the State of New York,
College and University (Pooled Capital Program),
7.800%, 12/01/05 12/98 at 102 Aaa 1,711,850
1,490,000 Dormitory Authority of the State of New York
(United Health Services), 7.350%, 8/01/29 2/00 at 102 AAA 1,625,232
1,490,000 Dormitory Authority of the State of New York
(Iona College), 7.625%, 7/01/09 7/98 at 102 Aaa 1,626,499
1,200,000 Dormitory Authority of the State of New York,
Educational Facilities (State University),
7.250%, 5/15/15 (Pre-refunded to 5/15/00) 5/00 at 102 Aaa 1,363,956
1,000,000 Dormitory Authority of the State of New York
(United Cerebral Palsey Association of
Westchester County), 6.200%, 7/01/12 7/02 at 102 Aaa 1,056,150
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,000,000 Dormitory Authority of the State of New York
(Manhattanville College), 7.500%, 7/01/22
(Pre-refunded to 7/01/00) 7/00 at 102 Aaa $ 1,149,720
Dormitory Authority of the State of New
York (City University System):
2,500,000 7.000%, 7/01/14 7/00 at 102 Aaa 2,772,850
1,000,000 6.500%, 7/01/14 7/96 at 100 Aaa 1,010,850
1,800,000 5.750%, 7/01/18 No Opt. Call Aaa 1,867,932
6,295,000 7.500%, 7/01/20 (Pre-refunded to 7/01/00) 7/00 at 102 Aaa 7,237,487
2,500,000 Dormitory Authority of the State of New
York (Cooper Union), 7.200%, 7/01/20 7/01 at 102 Aaa 2,835,325
Dormitory Authority of the State of New York,
Educational Facilities (State University):
2,500,000 5.250%, 5/15/15 No Opt. Call Aaa 2,447,975
1,200,000 7.000%, 5/15/18 (Pre-refunded to 5/15/00) 5/00 at 102 Aaa 1,352,472
2,000,000 6.500%, 5/15/19 (Pre-refunded to 5/15/00) 5/00 at 100 Aaa 2,182,140
5,000,000 Dormitory Authority of the State of New York,
(New York University), 6.250%, 7/01/09 7/01 at 102 Aaa 5,394,250
1,000,000 Dormitory Authority of the State of New York
(Fordham University), 7.200%, 7/01/15
(Pre-refunded to 7/01/00) 7/00 at 102 Aaa 1,137,910
4,640,000 Dormitory Authority of the State of New York,
(Mount Sinai School of Medicine),
5.000%, 7/01/21 7/04 at 102 Aaa 4,321,510
1,500,000 Dormitory Authority of the State of New York
(Sarah Lawrence College), 6.000%, 7/01/24 7/05 at 102 Aaa 1,568,325
2,000,000 Dormitory Authority of the State of New York
(Ellis Hospital), 5.600%, 8/01/25 8/05 at 102 Aaa 1,961,740
2,015,000 Dormitory Authority of the State of New York
(St. Vincents Hospital and Medical Center),
5.800%, 8/01/25 8/05 at 102 Aaa 2,049,416
1,000,000 Erie County Water Authority, Water Works,
6.750%, 12/01/14 12/09 at 100 Aaa 1,141,190
Glen Cove General Obligation:
445,000 5.500%, 6/15/09 No Opt. Call Aaa 466,605
455,000 5.600%, 6/15/10 No Opt. Call Aaa 478,942
470,000 5.625%, 6/15/11 No Opt. Call Aaa 488,838
500,000 Greece Central School District, General
Obligation, 6.000%, 6/15/09 No Opt. Call Aaa 551,420
Half Moon General Obligation:
385,000 6.500%, 6/01/09 No Opt. Call Aaa 445,114
395,000 6.500%, 6/01/10 No Opt. Call Aaa 455,072
395,000 6.500%, 6/01/11 No Opt. Call Aaa 453,326
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 600,000 Jamesville-Dewitt Central School District,
General Obligation, 5.750%, 6/15/04 No Opt. Call Aaa $ 652,914
1,000,000 Metropolitan Transportation Authority, Transit
Facilities Service Contract, 7.500%, 7/01/17 7/98 at 102 Aaa 1,089,560
10,340,000 Metropolitan Transportation Authority, Transit
Facilities 6.500%, 7/01/18 7/02 at 102 Aaa 11,404,296
Middle Country Central School District at
Centereach (Town of Brookhaven),
General Obligation:
475,000 6.900%, 12/15/07 No Opt. Call Aaa 568,988
475,000 6.900%, 12/15/08 No Opt. Call Aaa 571,781
Monroe County General Obligation:
375,000 6.500%, 6/01/15 6/01 at 102 Aaa 410,756
375,000 6.500%, 6/01/16 6/01 at 102 Aaa 411,491
350,000 6.500%, 6/01/17 6/01 at 102 Aaa 384,059
3,725,000 Montgomery, Otsego, Schoharie County Solid
Waste Management Authority, Solid Waste System,
7.250%, 1/01/14 (Pre-refunded to 1/01/00) 1/00 at 103 Aaa 4,228,918
Mount Sinai Union Free School District General
Obligation:
1,000,000 7.250%, 2/15/15 (Pre-refunded to 2/15/00) 2/00 at 102 Aaa 1,130,310
500,000 6.200%, 2/15/15 No Opt. Call Aaa 551,180
1,035,000 6.200%, 2/15/16 No Opt. Call Aaa 1,144,110
1,000,000 7.250%, 2/15/17 (Pre-refunded to 2/15/00) 2/00 at 102 Aaa 1,130,310
1,500,000 Nassau County General Obligation,
5.700%, 8/01/13 8/04 at 103 Aaa 1,566,060
4,840,000 Nassau County Industrial Development Agency,
Civic Facilities (Hofstra University Project),
6.750%, 8/01/11 8/01 at 102 Aaa 5,369,109
1,020,000 New Rochelle General Obligation,
6.200%, 8/15/22 8/04 at 102 Aaa 1,089,166
New York City General Obligation:
500,000 8.250%, 11/01/02 (Pre-refunded to 11/01/97) 11/97 at 101 1/2 Aaa 544,775
3,000,000 6.250%, 8/01/10 (Pre-refunded to 8/01/02) 8/02 at 101 1/2 Aaa 3,355,770
1,000,000 6.250%, 8/01/10 8/02 at 101 1/2 Aaa 1,067,160
3,520,000 5.750%, 5/15/12 5/03 at 101 1/2 Aaa 3,622,326
75,000 6.625%, 8/01/12 8/02 at 101 1/2 Aaa 82,985
2,600,000 6.000%, 8/01/12 8/02 at 101 1/2 Aaa 2,721,342
1,300,000 7.000%, 10/01/15 No Opt. Call Aaa 1,405,859
2,000,000 7.000%, 10/01/16 10/99 at 100 Aaa 2,411,520
1,025,000 7.000%, 10/01/17 No Opt. Call Aaa 1,108,466
310,000 7.000%, 10/01/18 No Opt. Call Aaa 335,243
1,000,000 5.375%, 10/01/20 10/03 at 101 1/2 Aaa 957,880
1,000,000 New York City Educational Construction Fund
5.625%, 4/01/13 4/04 at 101 1/2 Aaa 1,016,100
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York City Health and Hospitals Corporation:
$ 2,500,000 5.625%, 2/15/13 2/03 at 102 Aaa $ 2,522,700
11,980,000 5.750%, 2/15/22 2/03 at 102 Aaa 11,955,561
5,000,000 New York City Housing Development Corporation
Pass-Through Certificates, Multi-Family Housing,
FHA Insured 6.500%, 2/20/19 7/97 at 105 Aaa 5,984,600
1,000,000 New York City Housing Development Corporation
Multi-Family, FHA Insured, 5.850%, 5/01/26 5/03 at 102 Aaa 1,004,840
3,250,000 New York City Municipal Water Financing,
6.750%, 6/15/16 6/01 at 101 Aaa 3,601,890
New York City Municipal Water Finance
Authority, Water and Sewer System:
1,000,000 7.250%, 6/15/15 (Pre-refunded to 6/15/00) 6/00 at 101 1/2 Aaa 1,134,550
6,765,000 5.750%, 6/15/18 6/02 at 101 1/2 Aaa 6,824,261
2,525,000 5.375%, 6/15/19 6/04 at 101 Aaa 2,440,185
4,650,000 5.500%, 6/15/20 6/02 at 100 Aaa 4,560,999
New York City Transit Authority Transit Facilities
(Livingston Plaza Project):
1,000,000 7.500%, 1/01/20 (Pre-refunded to 1/01/00) 1/00 at 102 Aaa 1,137,820
8,725,000 5.250%, 1/01/20 1/03 at 100 Aaa 8,188,849
2,200,000 New York City Trust for Cultural Resources
(American Museum of Natural History),
6.900%, 4/01/21 (Pre-refunded to 4/01/01) 4/01 at 102 Aaa 2,502,940
1,000,000 New York City Industrial Development Agency,
Civic Facility (USTA National Tennis Center
Incorporated Project), 6.375%, 11/15/14 11/04 at 102 Aaa 1,080,530
1,000,000 New York City Industrial Development Agency
(New School for Social Research),
5.750%, 9/01/15 9/05 at 102 Aaa 1,016,410
1,590,000 Niagara Falls General Obligation,
6.900%, 3/01/21 3/04 at 102 Aaa 1,807,019
5,725,000 Niagara Falls Bridge Commission, Toll Bridge
System Revenue, 6,125%, 10/01/19
(Pre-refunded to 10/01/02) 10/02 at 102 Aaa 6,398,203
North Hempstead General Obligation:
1,500,000 6.375%, 4/01/09 No Opt. Call Aaa 1,709,490
425,000 6.800%, 6/01/10 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 476,153
425,000 6.800%, 6/01/11 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 476,153
1,505,000 6.400%, 4/01/14 No Opt. Call Aaa 1,702,622
North Hempstead Solid Waste Management
Authority:
2,175,000 5.000%, 2/01/07 2/04 at 102 Aaa 2,192,705
1,825,000 5.000%, 2/01/12 2/04 at 102 Aaa 1,748,551
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nyack Union Free School District:
$ 625,000 6.500%, 4/01/12 4/02 at 102 Aaa $ 686,544
625,000 6.500%, 4/01/13 4/02 at 102 Aaa 686,894
625,000 6.500%, 4/01/14 4/02 at 102 Aaa 688,288
Rensselaer County General Obligation:
960,000 6.700%, 2/15/13 No Opt. Call Aaa 1,126,339
960,000 6.700%, 2/15/14 No Opt. Call Aaa 1,126,138
960,000 6.700%, 2/15/15 No Opt. Call Aaa 1,125,226
Rondout Valley Central School District,
General Obligation:
550,000 6.800%, 6/15/06 No Opt. Call Aaa 649,033
550,000 6.850%, 6/15/07 No Opt. Call Aaa 652,933
550,000 6.850%, 6/15/08 No Opt. Call Aaa 656,288
550,000 6.850%, 6/15/09 No Opt. Call Aaa 656,508
550,000 6.850%, 6/15/10 No Opt. Call Aaa 655,171
Suffolk County General Obligation:
1,000,000 6.900%, 4/01/01 4/00 at 102 Aaa 1,120,510
1,895,000 5.250%, 7/15/09 7/02 at 102 Aaa 1,913,419
600,000 6.150%, 5/01/10 5/03 at 102 Aaa 641,418
1,890,000 5.300%, 7/15/10 7/02 at 102 Aaa 1,901,699
1,630,000 5.400%, 4/01/11 4/02 at 102 Aaa 1,642,763
1,860,000 5.400%, 7/15/11 7/02 at 102 Aaa 1,874,954
1,000,000 5.400%, 7/15/12 7/02 at 102 Aaa 1,005,890
630,000 5.400%, 4/01/14 4/02 at 102 Aaa 628,595
625,000 5.400%, 4/01/15 4/02 at 102 Aaa 619,894
1,000,000 Suffolk County Industrial Development Agency,
Southwest Sewer System, 4.750%, 2/01/09 2/04 at 101 Aaa 963,010
Suffolk County Water Authority, Water System:
1,800,000 5.100%, 6/01/11 No Opt. Call Aaa 1,774,530
2,565,000 5.625%, 6/01/16 6/02 at 102 Aaa 2,558,613
3,700,000 5.000%, 6/01/17 6/03 at 102 Aaa 3,458,501
Triborough Bridge and Tunnel Authority, General
Purpose Revenue:
2,750,000 6.500%, 1/01/19 1/02 at 101 1/2 Aaa 3,007,095
2,000,000 7.000%, 1/01/20 (Pre-refunded to 1/01/01) 1/01 at 102 Aaa 2,273,580
1,175,000 7.000%, 1/01/21 (Pre-refunded to 1/01/01) 1/01 at 101 1/2 Aaa 1,330,934
8,650,000 Triborough Bridge and Tunnel Authority, Special
Obligation, 6.875%, 1/01/15 1/01 at 102 Aaa 9,607,205
1,750,000 Yonkers General Obligation, 7.375%, 12/01/09
(Pre-refunded to 12/01/00) 12/00 at 102 Aaa 2,022,405
- ---------------------------------------------------------------------------------------------------------------------------
$ 338,925,000 Total Investments - (Cost $333,979,266) - 97.3% 359,533,384
==============-------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND--CONTINUED
- --------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 1.9%
$ 3,500,000 New York City General Obligation Fiscal
1995B-B6 Insured, Adjustable Rate,
3.450%, 8/15/05+ VMIG-1 $ 3,500,000
1,500,000 New York City General Obligation, Variable Rate
Demand Bonds, 3.300%, 8/01/22+ VMIG-1 1,500,000
200,000 New York City General Obligation Bonds,
Adjustable Rate, 3.450%, 8/15/22+ VMIG-1 200,000
1,800,000 Port Authority of New York and New
Jersey, Versatile Structure Obligations,
3.050%, 5/01/19+ A-1+ 1,800,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 7,000,000 Total Temporary Investments - 1.9% 7,000,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.8% 2,930,866
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 369,464,250
===========================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 155 $355,089,074 99%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 4 4,444,310 1
PORTFOLIO OF
INVESTMENTS
(EXCLUDING
TEMPORARY
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 159 $359,533,384 100%
===========================================================================================================================
</TABLE>
All of the bonds in the portfolio, excluding temporary investments in short-term
municipal securities, are either covered by Original Issue Insurance, Secondary
Market Insurance or Portfolio Insurance, or are backed by an escrow or trust
containing sufficient U.S. Government or U.S. Government agency securities, any
of which ensure the timely payment of principal and interest.
* Optional call provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
50
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
NUVEEN OHIO TAX-FREE VALUE FUND
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio Air Quality Development Authority,
Pollution Control (Ohio Edison Company):
$ 2,000,000 7.450%, 3/01/16 3/00 at 102 Aaa $ 2,233,060
750,000 7.625%, 7/01/23 7/99 at 102 Baa3 803,318
3,000,000 5.625%, 11/15/29 11/03 at 102 Aaa 2,977,290
1,750,000 Ohio Air Quality Development Authority,
Pollution Control (Columbus Southern
Power Company), 6.375%, 12/01/20 12/02 at 102 Aaa 1,882,650
1,000,000 Ohio Air Quality Development Authority,
Pollution Control (Ohio Power Company),
7.400%, 8/01/09 8/99 at 102 Baa1 1,060,600
2,000,000 Ohio Air Quality Development Authority,
Pollution Control (Cleveland Electric
Illuminating Company), 8.000%, 12/01/13 6/02 at 103 Aaa 2,399,380
1,000,000 Ohio Building Authority (State Correctional
Facilities), 7.125%, 9/01/09 9/96 at 102 A1 1,033,980
1,250,000 Ohio Capital Corporation for Housing, Multi-
Family Housing, 7.600%, 11/01/23 11/97 at 105 AAA 1,333,663
Ohio General Obligation:
1,475,000 6.650%, 8/01/05 No Opt. Call Aa 1,710,764
1,000,000 6.000%, 8/01/10 No Opt. Call Aa 1,090,530
250,000 Ohio Higher Educational Facility Commission
(Ohio Dominican College), 8.500%, 12/01/07
(Pre-refunded to 12/01/97) 12/97 at 102 N/R 274,655
400,000 Ohio Higher Educational Facility Commission
(John Carroll University), 9.250%, 10/01/07
(Pre-refunded to 10/01/97) 10/97 at 102 A 442,048
1,000,000 Ohio Higher Educational Facility Commission
(Ohio Wesleyan University), 7.650%, 11/15/07 11/97 at 102 Aaa 1,085,360
1,000,000 Ohio Higher Educational Facility Commission
(Ohio Northern University), 7.300%, 5/15/10
(Pre-refunded to 5/15/00) 5/00 at 100 Aaa 1,119,240
1,750,000 Ohio Higher Educational Facility Commission
(University of Dayton), 5.800%, 12/01/19 12/04 at 102 Aaa 1,784,195
Ohio Housing Finance Agency, Single Family
Mortgage (GNMA):
695,000 7.500%, 9/01/13 9/00 at 102 AAA 742,295
850,000 7.400%, 9/01/15 3/00 at 102 AAA 906,168
350,000 7.050%, 9/01/16 9/01 at 102 Aaa 372,918
2,500,000 Ohio Turnpike Commission, 5.750%, 2/15/24 2/04 at 102 AA-- 2,557,975
1,750,000 Ohio Water Development Authority
(Dayton Power and Light Company),
6.400%, 8/15/27 8/02 at 102 AA-- 1,877,575
100,000 Ohio IOOF Home (FHA-Insured), 8.150%, 8/01/02 8/97 at 103 AAA 107,156
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Adams County/Ohio Valley School District,
General Obligation:
$ 2,000,000 7.000%, 12/01/15 No Opt. Call Aaa $ 2,397,860
3,865,000 5.250%, 12/01/21 12/05 at 102 Aaa 3,719,560
3,955,000 Akron General Obligation, Limited Tax,
6.750%, 12/01/14 12/04 at 102 Aaa 4,496,400
1,500,000 Akron Waterworks System, 6.550%, 3/01/12
(Pre-refunded to 3/01/01) 3/01 at 102 Aaa 1,676,235
3,350,000 Anthony Wayne Local School District, General
Obligation, 5.750%, 12/01/24 12/05 at 101 Aaa 3,393,919
1,000,000 Aurora City School District, General Obligation,
5.800%, 12/01/16 12/05 at 102 Aaa 1,025,190
1,475,000 Bedford Hospital (Community Hospital),
8.500%, 5/15/09 (Pre-refunded to 5/15/00) 5/00 at 102 N/R 1,667,960
Bellefontaine Sewer System:
1,000,000 6.800%, 12/01/07 12/02 at 101 Baa1 1,072,040
1,000,000 6.900%, 12/01/11 12/02 at 101 Baa1 1,072,360
2,500,000 Buckeye Valley Local School District, General
Obligation, 6.850%, 12/01/15 No Opt. Call Aaa 2,955,350
1,250,000 Butler County Hospital Facilities (Fort Hamilton-
Hughes Memorial Hospital), 7.500%, 1/01/10 1/02 at 102 Baa 1,340,863
1,000,000 Canal Winchester Local School District, General
Obligation, Unlimited Tax, 7.100%, 12/01/13
(Pre-refunded to 12/01/01) 12/01 at 102 Aaa 1,158,100
1,000,000 Centerville General Obligation, 5.625%, 12/01/26 12/05 at 101 Aaa 1,001,610
1,000,000 Clermont County, Road Improvement,
Limited Tax, 7.125%, 9/01/11
(Pre-refunded to 9/01/00) 9/00 at 102 Aaa 1,136,400
Clermont County Sewer System Revenue:
2,000,000 7.375%, 12/01/20 (Pre-refunded to 12/01/00) 12/00 at 102 Aaa 2,305,680
1,000,000 7.100%, 12/01/21 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 1,158,100
1,000,000 Clermont County Waterworks System,
6.625%, 12/01/13 (Pre-refunded to 12/01/01) 12/01 at 102 Aaa 1,134,100
2,000,000 Cleveland City School District, General Obligation,
Unlimited Tax, 5.875%, 12/01/11 12/02 at 102 Aaa 2,078,820
1,500,000 Cleveland Public Power System,
7.000%, 11/15/24 11/04 at 102 Aaa 1,728,555
Cleveland Waterworks Mortgage:
1,000,000 6.500%, 1/01/11 1/02 at 102 Aaa 1,100,490
1,750,000 6.500%, 1/01/21 (Pre-refunded to 1/01/02) 1/02 at 102 Aaa 1,966,370
1,000,000 Coldwater Exempted Village School District,
Unlimited Tax, 7.000%, 12/01/13
(Pre-refunded to 12/01/99) 12/99 at 102 Aaa 1,119,690
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,500,000 Columbus General Obligation, Unlimited Tax,
6.500%, 1/01/10 1/02 at 102 Aaa $ 1,625,145
2,050,000 Columbus General Obligation, 5.250%, 9/15/18 9/03 at 102 Aaa 2,006,212
1,500,000 Cuyahoga County General Obligation,
Unlimited Tax,
7.000%, 10/01/13 (Pre-refunded to 10/01/01) 10/01 at 102 N/R 1,722,885
1,000,000 Cuyahoga County General Obligation,
5.250%, 10/01/13 No Opt. Call AA 983,610
1,000,000 Cuyahoga County General Obligation, Public
Improvements, 5.250%, 11/15/15 11/05 at 102 Aa 972,990
1,250,000 Cuyahoga County, Hospital Improvement
(Deaconess Hospital), 7.450%, 10/01/18
(Pre-refunded to 10/01/00) 10/00 at 103 A1 1,448,888
2,750,000 Cuyahoga County Hospital (Meridia Health
System), 7.250%, 8/15/19 8/00 at 102 A1 2,993,155
2,000,000 Dayton Airport Refunding Bonds (James
M. Cox-Dayton International Airport),
5.250%, 12/01/15 12/05 at 101 Aaa 1,934,200
750,000 Defiance Waterworks System, General Obligation,
Unlimited Tax, 6.200%, 12/01/20 12/04 at 102 Aaa 806,955
1,110,000 Fairborn General Obligation, Limited Tax,
7.000%, 10/01/11 10/02 at 102 Aaa 1,265,777
2,790,000 Franklin County Limited Tax, 5.375%, 12/01/20 12/08 at 102 Aaa 2,806,712
Franklin County, Hospital Facilities (Ohio
Presbyterian Retirement Services):
1,350,000 8.750%, 7/01/21 7/01 at 103 N/R 1,448,064
1,500,000 6.500%, 7/01/23 7/03 at 102 N/R 1,423,830
500,000 Franklin County, Refunding and Improvement
Bonds (Riverside Hospital), 7.250%, 5/15/20 5/00 at 102 Aaa 555,865
705,000 Franklin County, FHA Insured (Worthington
Village Nursing Home), 7.000%, 8/01/16 8/00 at 102 N/R 732,107
1,000,000 Franklin County, Hospital Facilities
(Riverside United Methodist Hospital),
5.750%, 5/15/20 5/03 at 102 Aa 983,860
1,000,000 Franklin County, (OCLC Online Computer
Library Center Project), 7.200%, 7/15/06 7/01 at 100 N/R 1,079,340
250,000 Fremont Sewerage System, 8.100%, 12/01/07
(Pre-refunded to 12/01/97) 12/97 at 102 A-- 272,973
1,000,000 Gahanna-Jefferson School District, General
Obligation, Unlimited Tax, 7.125%, 12/01/14
(Pre-refunded to 12/01/00) 12/00 at 102 A1 1,138,440
3,000,000 Garfield Heights (Marymount Hospital),
6.650%, 11/15/11 11/02 at 102 A 3,156,420
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND-CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,000,000 Geauga County General Obligation,
5.625%, 12/01/15 12/05 at 102 Aa $ 1,009,330
Grandview Heights City School District, General
Obligation:
2,000,000 6.100%, 12/01/19 12/05 at 101 AA 2,102,060
1,020,000 5.550%, 12/01/19 No Opt. Call AA 1,036,820
250,000 Grandview Heights, Library Building Mortgage,
8.250%, 12/01/07 (Pre-refunded to 12/01/97) 12/97 at 102 N/R 273,918
1,000,000 Greenville Wastewater System, 6.350%, 12/01/17 10/02 at 102 Aaa 1,074,990
1,495,000 Hamilton County, FHA-Insured (Judson Care
Center), 7.800%, 8/01/19 8/00 at 101 5/16 A+ 1,615,168
400,000 Hubbard Sewer System, 8.800%, 11/15/17 5/98 at 102 N/R 437,992
1,000,000 Indian Lake Local School District,
General Obligation, 5.375%, 12/01/23 12/06 at 101 Aaa 975,970
1,000,000 Indian Valley Local School District, General
Obligation, 5.750%, 12/01/19 12/05 at 102 Aaa 1,018,300
1,000,000 Kent State University, General Receipts,
6.500%, 5/01/22 5/02 at 102 Aaa 1,101,050
1,000,000 Kettering City School District, General Obligation,
Unlimited Tax, 5.300%, 12/01/14 12/05 at 101 Aaa 978,410
3,630,000 Kings Local School District, General Obligation,
5.500%, 12/01/21 12/05 at 100 Aaa 3,602,485
500,000 Kirtland Local School District, General Obligation,
Unlimited Tax, 7.500%, 12/01/09 12/99 at 102 A1 552,840
1,500,000 Lakewood General Obligation, 6.500%, 12/01/12 12/02 at 102 Aa 1,657,650
1,000,000 Lakota Local School District, General Obligation,
Unlimited Tax, 6.125%, 12/01/17 12/05 at 100 Aaa 1,054,710
500,000 Lorain General Obligation, 5.650%, 12/01/15 12/05 at 102 Aaa 509,725
1,500,000 Lorain Hospital (Lakeland Community Hospital),
6.500%, 11/15/12 11/02 at 102 A1 1,558,890
500,000 Lorain Sewer System, 8.750%, 4/01/11 4/98 at 102 BBB-- 557,500
1,000,000 Lucas County General Obligation, Limited Tax,
6.650%, 12/01/12 12/02 at 102 A 1,046,070
1,500,000 Lucas County General Obligation,
5.400%, 12/01/15 12/05 at 102 Aaa 1,473,945
1,000,000 Mahoning County General Obligation,
Limited Tax, 7.200%, 12/01/09 12/99 at 102 Aaa 1,109,720
2,000,000 Mahoning County, Hospital Improvement
(St. Elizabeth Hospital Medical Center),
7.375%, 12/01/09 6/96 at 102 A1 2,052,260
2,355,000 Mahoning County, Hospital Improvement
(YHA Inc. Project), 7.000%, 10/15/14 10/00 at 102 Aaa 2,616,264
1,000,000 Marion County (United Church Homes, Inc. Project),
6.375%, 11/15/10 11/03 at 102 BBB-- 1,008,520
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marion County, Health Facilities (United Church
Homes, Inc.):
$ 1,150,000 8.875%, 12/01/12 (Pre-refunded to 12/01/99) 12/99 at 103 N/R $ 1,358,622
750,000 6.300%, 11/15/15 11/03 at 102 BBB-- 724,095
1,000,000 Marysville Exempted Village School District, General
Obligation, Unlimited Tax, 7.200%, 12/01/10
(Pre-refunded to 12/01/00) 12/00 at 102 Aaa 1,145,360
1,250,000 Marysville Water System, 7.050%, 12/01/21 2/01 at 101 Aaa 1,434,675
1,000,000 Mentor Village Exempted School District,
General Obligation, Unlimited Tax,
7.400%, 12/01/11 (Pre-refunded to 12/01/02) 12/02 at 100 Aaa 1,133,490
1,000,000 Montgomery County Water (Greater Moraine-Beaver
Creek Sewer District), 6.250%, 11/15/17 11/02 at 102 Aaa 1,067,300
3,000,000 Mount Vernon (Knox Community Hospital),
7.875%, 6/01/12 6/96 at 103 N/R 3,099,690
2,265,000 Napolean (Luthern Orphan's and Old Folks Home
Project), 6.875%, 8/01/23 9/04 at 102 Aa 2,449,915
1,000,000 North Olmstead, General Obligation, Limited Tax,
6.250%, 12/15/12 12/02 at 102 Aaa 1,080,350
1,000,000 Northeast Ohio Regional Sewer District, Wastewater
Improvement, 5.600%, 11/15/16 11/05 at 101 Aaa 1,001,180
500,000 Ottawa County General Obligation,
5.750%, 12/01/14 12/05 at 102 Aaa 512,630
1,000,000 Parma General Obligation, Limited Tax,
7.600%, 12/01/11 12/00 at 102 A 1,158,680
1,750,000 Pickerington Local School District, General
Obligation, Unlimited Tax, 6.750%, 12/01/16 12/01 at 102 A 1,875,808
1,000,000 Revere Local School District, General Obligation,
Unlimited Tax, 6.000%, 12/01/16 12/03 at 102 Aaa 1,044,560
1,500,000 Reynoldsburg City School District, General
Obligation, Unlimited Tax, 6.550%, 12/01/17 12/02 at 102 Aaa 1,661,925
1,200,000 Ridgemont Local School District, General
Obligation, Unlimited Tax, 7.250%, 12/01/14 12/02 at 102 N/R 1,286,472
735,000 Salem Sewer System, 7.500%, 11/01/11
(Pre-refunded to 11/01/96) 11/96 at 102 N/R 769,176
1,000,000 Springfield City School District, General Obligation,
Unlimited Tax, 6.600%, 12/01/12 12/01 at 102 Aaa 1,109,790
2,340,000 Stow General Obligation, 6.200%, 12/01/20 12/05 at 102 A1 2,464,651
3,080,000 Sylvania City School District, General Obligation,
5.750%, 12/01/22 12/05 at 101 Aaa 3,120,379
1,070,000 Trumbull County General Obligation,
7.000%, 12/01/04 No Opt. Call Aaa 1,260,449
1,000,000 Trumbull County Hospital (Trumbull Memorial
Hospital), 6.900%, 11/15/12 11/01 at 102 Aaa 1,120,840
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
PORTFOLIO OF INVESTMENTS
NUVEEN OHIO TAX-FREE VALUE FUND--CONTINUED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 750,000 Tuscarawas County, Hospital Facilities (Union
Hospital), 6.500%, 10/01/21 10/03 at 102 Baa $ 727,688
University of Cincinnati, General Receipts:
1,000,000 7.300%, 6/01/09 (Pre-refunded to 6/01/99) 6/99 at 100 AA-- 1,098,110
1,000,000 6.300%, 6/01/12 12/02 at 102 AA-- 1,077,520
1,600,000 5.500%, 6/01/15 6/05 at 101 AA-- 1,587,648
1,500,000 University of Toledo, General Receipts,
5.350%, 6/01/25 6/04 at 102 Aaa 1,430,670
2,650,000 Walnut Township Local School District, General
Obligation, 6.200%, 12/01/20 No Opt. Call Aaa 2,950,961
1,950,000 Warren County, Hospital Facilities, Otterbein Home
Project, 7.200%, 7/01/11 7/01 at 102 Aa1 2,125,363
Warren General Obligation, Limited Tax:
1,500,000 7.750%, 11/01/10 (Pre-refunded to 11/01/00) 11/00 at 102 BBB+ 1,756,740
250,000 8.625%, 11/15/13 (Pre-refunded to 11/15/98) 11/98 at 102 BBB+ 284,936
2,500,000 Washington Water System, 5.375%, 12/01/19 12/03 at 101 Aaa 2,408,900
750,000 West Geauga Local School District, General
Obligation, Unlimited Tax, 5.950%, 11/01/12 11/04 at 102 Aaa 786,480
500,000 Wooster City School District, General Obligation,
Unlimited Tax, 6.500%, 12/01/17 12/02 at 102 Aaa 552,243
3,000,000 Puerto Rico Electric Power Authority,
5.500%, 7/01/25 7/05 at 100 A-- 2,879,670
- ---------------------------------------------------------------------------------------------------------------------------
$ 168,710,000 Total Investments - (Cost $167,189,364) - 98.7% 179,829,453
===========================================================================================================================
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 0.4%
$ 500,000 Cuyahoga County, University Hospital of
Cleveland, Variable Rate Demand Bonds,
3.400%, 1/01/16+ VMIG-1 500,000
300,000 Ohio Air Quality Development Authority
(The Cincinnati Gas and Electric Company),
Variable Rate Demand Bonds, 3.450%, 9/01/30+ VMIG-1 300,000
- ---------------------------------------------------------------------------------------------------------------------------
$ 800,000 Total Temporary Investments - 0.4% 800,000
==============-------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.9% 1,530,461
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 182,159,914
===========================================================================================================================
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 66 $103,834,421 58%
RATINGS** AA+, AA, AA-- Aa1, Aa, Aa2, Aa3 16 24,321,720 13
PORTFOLIO OF A+ A1 9 14,858,272 8
INVESTMENTS A, A-- A, A2, A3 7 10,831,669 6
(EXCLUDING BBB+, BBB, BBB-- Baa1, Baa, Baa2, Baa3 11 10,408,660 6
TEMPORARY Non-rated Non-rated 13 15,574,711 9
INVESTMENTS):
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL 122 $179,829,453 100%
===========================================================================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using
the higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
+ The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate disclosed is
that currently in effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
57
<PAGE>
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in municipal securities, at market value (note 1) $226,239,426 $218,186,376 $ 78,218,271 $ 63,715,206
Temporary investments in short-term municipal securities,
at amortized cost (note 1) 400,000 7,900,000 2,600,000 1,500,000
Cash - 401,476 114,539 119,718
Receivables:
Interest 3,966,815 3,247,317 1,092,435 1,001,565
Shares sold 23,967 144,099 37,818 11,460
Investments sold - - - -
Other assets 12,536 9,831 4,176 2,806
------------ ------------ ------------ ------------
Total assets 230,642,744 229,889,099 82,067,239 66,350,755
------------ ------------ ------------ ------------
LIABILITIES
Payables:
Investments purchased - 5,215,642 - -
Shares reacquired 40,000 56,538 24,922 -
Cash overdraft 68,006 - - -
Accrued expenses:
Management fees (note 7) 100,051 97,484 35,880 29,076
Other 52,068 50,374 43,994 25,856
Dividends payable 599,330 536,574 261,287 196,115
------------ ------------ ------------ ------------
Total liabilities 859,455 5,956,612 366,083 251,047
------------ ------------ ------------ ------------
Net assets (note 8) $229,783,289 $223,932,487 $ 81,701,156 $ 66,099,708
============ ============ ============ ============
Class A Shares (note 1)
Net Assets $ 12,709,245 $ 17,250,452 $ 4,289,634 $ 5,290,906
============ ============ ============ ============
Shares outstanding 1,201,563 1,603,198 431,437 504,138
============ ============ ============ ============
Net asset value and redemption price per share $ 10.58 $ 10.76 $ 9.94 $ 10.49
============ ============ ============ ============
Offering price per share (net asset value per share plus
maximum sales charge of 4.50% of offering price) $ 11.08 $ 11.27 $ 10.41 $ 10.98
============ ============ ============ ============
Class C Shares (note 1)
Net Assets $ 684,050 $ 1,040,354 $ 638,184 $ 706,398
============ ============ ============ ============
Shares outstanding 64,678 97,466 64,525 67,455
============ ============ ============ ============
Net asset value, offering and redemption price per share $ 10.58 $ 10.67 $ 9.89 $ 10.47
============ ============ ============ ============
Class R Shares (note 1)
Net Assets $216,389,994 $205,641,681 $ 76,773,338 $ 60,102,404
============ ============ ============ ============
Shares outstanding 20,411,745 19,147,536 7,743,405 5,724,133
============ ============ ============ ============
Net asset value and redemption price per share $ 10.60 $ 10.74 $ 9.91 $ 10.50
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
58
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------
NY NY INS OH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in municipal securities, at market value (note 1) $165,378,435 $359,533,384 $179,829,453
Temporary investments in short-term municipal securities,
at amortized cost (note 1) 3,800,000 7,000,000 800,000
Cash 112,018 221,918 141,353
Receivables:
Interest 2,344,826 4,042,665 2,940,082
Shares sold 195,831 53,593 24,037
Investments sold - - 115,000
Other assets 5,854 23,239 7,506
------------ ------------ ------------
Total assets 171,836,964 370,874,799 183,857,431
------------ ------------ ------------
LIABILITIES
Payables:
Investments purchased - - 993,430
Shares reacquired 2,756 45,457 701
Cash overdraft - - -
Accrued expenses:
Management fees (note 7) 74,192 158,596 79,739
Other 68,252 90,386 75,057
Dividends payable 538,521 1,116,110 548,590
------------ ------------ ------------
Total liabilities 683,721 1,410,549 1,697,517
------------ ------------ ------------
Net assets (note 8) $171,153,243 $369,464,250 $182,159,914
============ ============ ============
Class A Shares (note 1)
Net Assets $ 15,731,737 $ 24,746,961 $ 12,904,370
============ ============ ============
Shares outstanding 1,483,039 2,332,442 1,217,784
============ ============ ============
Net asset value and redemption price per share $ 10.61 $ 10.61 $ 10.60
============ ============ ============
Offering price per share (net asset value per share plus
maximum sales charge of 4.50% of offering price) $ 11.11 $ 11.11 $ 11.10
============ ============ ============
Class C Shares (note 1)
Net Assets $ 645,881 $ 1,369,280 $ 2,163,317
============ ============ ============
Shares outstanding 60,727 129,089 205,074
============ ============ ============
Net asset value, offering and redemption price per share $ 10.64 $ 10.61 $ 10.55
============ ============ ============
Class R Shares (note 1)
Net Assets $154,775,625 $343,348,009 $167,092,227
============ ============ ============
Shares outstanding 14,548,997 32,374,299 15,788,804
============ ============ ============
Net asset value and redemption price per share $ 10.64 $ 10.61 $ 10.58
============ ============ ============
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
59
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended February 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 13,781,032 $ 12,733,263 $ 4,837,922 $ 3,805,611
------------ ------------ ------------ ------------
Expenses (note 2):
Management fees (note 7) 1,202,873 1,158,688 426,738 347,740
12b-1 distribution and service fees (note 1) 23,161 32,428 9,341 14,370
Shareholders' servicing agent fees and expenses 151,174 130,018 73,530 56,187
Custodian's fees and expenses 85,828 68,050 51,005 49,007
Directors' fees and expenses (note 7) 4,158 3,876 2,710 1,955
Professional fees 28,924 30,203 16,976 13,484
Shareholders' reports - printing and mailing expenses 76,149 70,338 56,416 31,903
Federal and state registration fees 3,918 2,763 9,534 1,469
Portfolio insurance expense - 17,622 - 4,854
Other expenses 9,757 14,743 4,937 7,918
------------ ------------ ------------ ------------
Total expenses before expense reimbursement 1,585,942 1,528,729 651,187 528,887
Expense reimbursement from investment adviser (note 7) (3,302) (1,695) (59,879) (788)
------------ ------------ ------------ ------------
Net expenses 1,582,640 1,527,034 591,308 528,099
------------ ------------ ------------ ------------
Net investment income 12,198,392 11,206,229 4,246,614 3,277,512
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS
Net realized gain (loss) from investment transactions, net
of taxes, if applicable (notes 1 and 5) 1,855,177 764,418 (217,900) 12,456
Net change in unrealized appreciation or depreciation of
investments 8,120,195 9,456,488 3,250,694 2,682,527
------------ ------------ ------------ ------------
Net gain from investments 9,975,372 10,220,906 3,032,794 2,694,983
------------ ------------ ------------ ------------
Net increase in net assets from operations $ 22,173,764 $ 21,427,135 $ 7,279,408 $ 5,972,495
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
60
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------
NY NY INS OH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Tax-exempt interest income (note 1) $ 10,173,134 $ 21,352,872 $ 10,738,180
------------ ------------ ------------
Expenses (note 2):
Management fees (note 7) 882,509 1,940,010 956,869
12b-1 distribution and service fees (note 1) 30,739 51,219 35,618
Shareholders' servicing agent fees and expenses 143,133 214,972 172,725
Custodian's fees and expenses 58,808 71,270 56,916
Directors' fees and expenses (note 7) 1,440 6,208 1,008
Professional fees 24,971 37,406 25,755
Shareholders' reports - printing and mailing expenses 99,517 102,967 105,217
Federal and state registration fees 2,874 7,586 3,245
Portfolio insurance expenses - 7,559 -
Other expenses 8,233 18,530 8,030
------------ ------------ ------------
Total expenses before expense reimbursement 1,252,224 2,457,727 1,365,383
Expense reimbursement from investment adviser (note 7) (29,700) - (42,592)
------------ ------------ ------------
Net expenses 1,222,524 2,457,727 1,322,791
------------ ------------ ------------
Net investment income 8,950,610 18,895,145 9,415,389
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS
Net realized gain (loss) from investment transactions,
net of taxes, if applicable (notes 1 and 5) 1,772,126 973,136 730,235
Net change in unrealized appreciation or depreciation of
investments 5,658,638 15,965,392 6,013,907
------------ ------------ ------------
Net gain from investments 7,430,764 16,938,528 6,744,142
------------ ------------ ------------
Net increase in net assets from operations $ 16,381,374 $ 35,833,673 $16,159,531
============ ============ ===========
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
61
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
CA CA INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 12,198,392 $ 12,056,682 $ 11,206,229 $ 11,038,593
Net realized gain (loss) from investment transactions,
net of taxes, if applicable 1,855,177 (2,621,487) 764,418 (1,106,384)
Net change in unrealized appreciation or depreciation
of investments 8,120,195 (8,272,724) 9,456,488 (6,870,030)
------------ ------------ ------------ ------------
Net increase in net assets from operations 22,173,764 1,162,471 21,427,135 3,062,179
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From net investment income:
Class A (388,705) (40,773) (496,274) (59,786)
Class C (18,278) (2,883) (28,991) (4,199)
Class R (11,713,501) (12,099,560) (10,613,497) (10,954,036)
From accumulated net realized gains from investment
transactions:
Class A - (6,186) - (2,542)
Class C - (231) - (317)
Class R - (1,542,643) - (545,843)
In excess of net realized gains from investment
transactions:
Class A - - - -
Class C - - - -
Class R - - - -
------------ ------------ ------------ ------------
Decrease in net assets from distributions to shareholders (12,120,484) (13,692,276) (11,138,762) (11,566,723)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 9,631,213 3,153,792 12,814,061 4,571,343
Class C 518,671 189,814 927,664 277,611
Class R 22,522,458 24,628,063 12,331,198 21,455,944
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions:
Class A 173,826 17,920 248,069 24,201
Class C 13,296 1,844 16,740 1,935
Class R 7,264,916 8,806,336 6,444,797 7,133,691
------------ ------------ ------------ ------------
40,124,380 36,797,769 32,782,529 33,464,725
------------ ------------ ------------ ------------
Cost of shares redeemed:
Class A (567,970) (117,370) (1,021,240) (71,333)
Class C (64,962) (1,036) (167,154) (68,234)
Class R (31,186,974) (31,154,367) (21,853,091) (29,032,260)
------------ ------------ ------------ ------------
(31,819,906) (31,272,773) (23,041,485) (29,171,827)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets derived from Fund
share transactions 8,304,474 5,524,996 9,741,044 4,292,898
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 18,357,754 (7,004,809) 20,029,417 (4,211,646)
Net assets at the beginning of year 211,425,535 218,430,344 203,903,070 208,114,716
------------ ------------ ------------ ------------
Net assets at the end of year $229,783,289 $211,425,535 $223,932,487 $203,903,070
============ ============ ============ ============
Balance of undistributed net investment income at end of year $ 142,955 $ 65,047 $ 134,147 $ 66,680
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
62
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 4,246,614 $ 4,066,454 $ 3,277,512 $ 3,106,605
Net realized gain (loss) from investment transactions,
net of taxes, if applicable (217,900) (558,617) 12,456 (212,554)
Net change in unrealized appreciation or depreciation
of investments 3,250,694 (2,393,115) 2,682,527 (1,878,784)
----------- ------------ ----------- -----------
Net increase in net assets from operations 7,279,408 1,114,722 5,972,495 1,015,267
----------- ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From net investment income:
Class A (139,213) (16,122) (174,644) (22,806)
Class C (11,360) (1,197) (22,692) (5,217)
Class R (4,149,329) (4,021,155) (3,106,193) (3,099,363)
From accumulated net realized gains from investment
transactions:
Class A - - - -
Class C - - - -
Class R - - - -
In excess of net realized gains from investment
transactions:
Class A - - - -
Class C - - - -
Class R - - - -
----------- ------------ ----------- -----------
Decrease in net assets from distributions to shareholders (4,299,902) (4,038,474) (3,303,529) (3,127,386)
----------- ------------ ----------- -----------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 3,487,963 1,057,696 3,509,564 1,906,377
Class C 510,754 144,012 359,914 324,825
Class R 7,760,983 10,510,784 3,473,819 7,040,265
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions:
Class A 75,540 8,778 104,279 11,338
Class C 7,603 594 20,520 2,330
Class R 2,962,447 2,815,745 2,184,979 2,160,636
----------- ------------ ----------- -----------
14,805,290 14,537,609 9,653,075 11,445,771
----------- ------------ ----------- -----------
Cost of shares redeemed:
Class A (436,265) (32,507) (415,735) (37,958)
Class C (33,924) - (32,222) -
Class R (8,395,795) (10,741,355) (5,205,452) (8,119,665)
----------- ------------ ----------- -----------
(8,865,984) (10,773,862) (5,653,409) (8,157,623)
----------- ------------ ----------- -----------
Net increase (decrease) in net assets derived from Fund
share transactions 5,939,306 3,763,747 3,999,666 3,288,148
----------- ------------ ----------- -----------
Net increase (decrease) in net assets 8,918,812 839,995 6,668,632 1,176,029
Net assets at the beginning of year 72,782,344 71,942,349 59,431,076 58,255,047
----------- ------------ ----------- -----------
Net assets at the end of year $81,701,156 $ 72,782,344 $66,099,708 $59,431,076
=========== ============ =========== ===========
Balance of undistributed net investment income at end of year $ 2,984 $ 56,272 $ 1,505 $ 27,522
=========== ============ =========== ===========
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
63
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
NY NY INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 8,950,610 $ 8,356,495 $ 18,895,145 $ 19,887,434
Net realized gain (loss) from investment transactions,
net of taxes, if applicable 1,772,126 (1,122,982) 973,136 691,691
Net change in unrealized appreciation or depreciation of
investments 5,658,638 (6,026,320) 15,965,392 (17,661,749)
------------ ------------ ------------ ------------
Net increase from net assets from operations 16,381,374 1,207,193 35,833,673 2,917,376
------------ ------------ ------------ ------------
DISTRIBUTION TO SHAREHOLDERS (note 1)
From net investment income:
Class A (551,771) (35,341) (834,291) (93,178)
Class C (18,002) (818) (36,998) (3,586)
Class R (8,358,840) (8,216,539) (18,227,897) (19,795,360)
From accumulated net realized gains from investment
transactions:
Class A - (2,464) (51,671) (11,988)
Class C - (28) (2,889) (504)
Class R - (697,769) (861,604) (1,367,629)
In excess of net realized gains from investment
transactions:
Class A - - (4,745) (483)
Class C - - (265) (20)
Class R - - (79,130) (55,065)
------------ ------------ ------------ ------------
Decrease in net assets from distributions to shareholders (8,928,613) (8,952,959) (20,099,490) (21,327,813)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 13,070,637 3,107,225 18,519,780 7,035,288
Class C 556,433 81,795 1,180,461 271,337
Class R 12,367,225 26,513,287 13,478,031 34,286,843
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions:
Class A 358,186 18,206 621,995 61,394
Class C 12,262 417 23,992 1,940
Class R 6,297,279 6,975,322 14,466,972 16,604,261
------------ ------------ ------------ ------------
32,662,022 36,696,252 48,291,231 58,261,063
------------ ------------ ------------ ------------
Cost of shares redeemed:
Class A (1,336,675) (51,915) (2,316,785) (99,736)
Class C (23,961) - (153,831) -
Class R (20,329,583) (22,466,951) (44,754,684) (75,263,107)
------------ ------------ ------------ ------------
(21,690,219) (22,518,866) (47,225,300) (75,362,843)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets derived from Fund
share transactions 10,971,803 14,177,386 1,065,931 (17,101,780)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 18,424,564 6,431,620 16,800,114 (35,512,217)
Net assets at the beginning of year 152,728,679 146,297,059 352,664,136 388,176,353
------------ ------------ ------------ ------------
Net assets at the end of year $171,153,243 $152,728,679 $369,464,250 $352,664,136
============ ============ ============ ============
Balance of undistributed net investment income at end of year $ 126,818 $ 104,821 $ 59,448 $ 263,489
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
64
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------
OH
- ---------------------------------------------------------------------------------------------
Year ended Year ended
2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 9,415,389 $ 9,142,413
Net realized gain (loss) from investment transactions,
net of taxes, if applicable 730,235 (967,375)
Net change in unrealized appreciation or depreciation
of investments 6,013,907 (5,055,416)
------------ ------------
Net increase in net assets from operations 16,159,531 3,119,622
------------ ------------
DISTRIBUTION TO SHAREHOLDERS (note 1)
From net investment income:
Class A (435,348) (58,833)
Class C (62,605) (9,333)
Class R (8,957,352) (9,076,904)
From accumulated net realized gains from investment
transactions:
Class A - (4,637)
Class C - (879)
Class R - (652,495)
In excess of net realized gains from investment
transactions:
Class A - -
Class C - -
Class R - -
------------ ------------
Decrease in net assets from distributions to shareholders (9,455,305) (9,803,081)
------------ ------------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares:
Class A 8,850,862 4,240,889
Class C 1,260,641 871,689
Class R 10,592,955 15,813,517
Net asset value of shares issued to shareholders due to
reinvestment of distributions from net investment
income and from net realized gains from investment
transactions:
Class A 253,231 28,946
Class C 49,706 6,902
Class R 6,293,847 6,935,311
------------ ------------
27,301,242 27,897,254
------------ ------------
Cost of shares redeemed:
Class A (809,723) (115,343)
Class C (95,567) (3,158)
Class R (18,392,616) (21,090,544)
------------ ------------
(19,297,906) (21,209,045)
------------ ------------
Net increase (decrease) in net assets derived from Fund
share transactions 8,003,336 6,688,209
------------ ------------
Net increase (decrease) in net assets 14,707,562 4,750
Net assets at the beginning of year 167,452,352 167,447,602
------------ ------------
Net assets at the end of year $182,159,914 $167,452,352
============ ============
Balance of undistributed net investment income at end of year $ 68,716 $ 108,632
============ ============
- ---------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
65
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT
ACCOUNTING POLICIES
At February 29, 1996, the state Funds (the "Funds") covered in this report are
Nuveen California Tax-Free Fund, Inc. (comprising the Nuveen California and
California Insured Tax-Free Value Funds), Nuveen Tax-Free Bond Fund, Inc.
(comprising the Nuveen Massachusetts, New York and Ohio Tax-Free Value Funds)
and Nuveen Insured Tax-Free Bond Fund, Inc. (comprising the Nuveen Massachusetts
and New York Insured Tax-Free Value Funds).
Additional state Funds covering other states may be established in the future.
Each Fund invests primarily in a diversified portfolio of municipal obligations
issued by state and local government authorities in a single state.
The Funds are registered under the Investment Company Act of 1940 as open-end,
diversified management investment companies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities valuation
Portfolio securities for which market quotations are readily available are
valued at the mean between the quoted bid and asked prices or the yield
equivalent. Portfolio securities for which market quotations are not readily
available are valued at fair value by consistent application of methods
determined in good faith by the Board of Directors. Temporary investments in
securities that have variable rate and demand features qualifying them as short-
term securities are traded and valued at amortized cost.
Securities transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined using the specific identification
method. Securities purchased on a when-issued or delayed delivery basis may be
settled a month or more after the transaction date. Any securities so purchased
are subject to market fluctuations during this period. The Funds have instructed
the custodian to segregate assets in a separate account with a current value at
least equal to the amount of their purchase commitments. At February 29, 1996,
such purchase commitments in California Insured amount to $5,215,642. There were
no such purchase commitments in any of the other Funds.
66
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
Interest income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt securities
when required for federal income tax purposes.
Dividends and distribution to shareholders
Net investment income is declared as a dividend monthly and payment is made or
reinvestment is credited to shareholder accounts after month-end. Net realized
gains from investment transactions are distributed to shareholders not less
frequently than annually only to extent they exceed available capital loss
carryovers.
Distributions to shareholders of net investment income and net realized gains
from investment transactions are recorded on the ex-dividend date. The amount
and timing of such distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. Accordingly, temporary over-distributions as a result of these
differences may result and will be classified as either distributions in excess
of net investment income or distributions in excess of net realized gains from
investment transactions, if applicable.
Income tax
Each Fund is a separate taxpayer for federal income tax purposes and intends to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies by distributing all of its net investment income,
in addition to any significant amounts of net realized gains from investments,
to shareholders. The Funds currently consider significant net realized gains as
amounts in excess of $.001 per share. Furthermore, each Fund intends to satisfy
conditions which will enable interest from municipal securities, which is exempt
from regular federal and designated state income taxes, to retain such tax
exempt status when distributed to the shareholders of the Funds. All income
dividends paid during the year ended February 29, 1996, have been designated
Exempt Interest Dividends.
Insurance
The California Insured, Massachusetts Insured and New York Insured Tax-Free
Value Funds invest in municipal securities which are either covered by insurance
or backed by an escrow or trust account containing sufficient U.S. Government or
U.S. Government agency securities, both of which ensure the timely payment of
principal and interest. Each insured municipal security is covered by Original
Issue Insurance, Secondary Market Insurance or Portfolio Insurance. Such
insurance does not guarantee the market value of the municipal securities or the
value of the Funds' shares. Original Issue Insurance and secondary Market
Insurance remain in effect as long as the municipal securities covered thereby
remain outstanding and the insurer remains in business, regardless of whether
the Funds ultimately dispose of such municipal securities. Consequently, the
market value of the municipal securities covered by Original Issue
67
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Insurance or Secondary Market Insurance may reflect value attributable to the
insurance. Portfolio Insurance is effective only while the municipal securities
are held by the Funds. Accordingly, neither the prices used in determining the
market value of the underlying municipal securities nor the net asset value of
the Funds' shares include value, if any, attributable to the Portfolio
Insurance. Each policy of the Portfolio Insurance does, however, give the Funds
the right to obtain permanent insurance with respect to the municipal security
covered by the Portfolio Insurance policy at the time of its sale.
Flexible sales charge program
Effective September 6, 1994, each Fund commenced offering Class "A" Shares and
Class "C" Shares. Class "A" Shares incur a front-end sales charge and an annual
12b-1 service fee. Class "C" Shares are sold without a sales charge but incur
annual 12b-1 distribution and service fees. Effective June 13, 1995, an investor
purchasing Class "C" Shares agrees to pay a contingent deferred sales charge
("CDSC") of 1% if Class "C" Shares are redeemed within 12 months of purchase.
Prior to the offering of Class "A" and Class "C" Shares, the shares outstanding
were renamed Class "R" and are not subject to any 12b-1 distribution or service
fees. Effective with the offering of the new classes, Class "R" Shares will
generally be available only for reinvestment of dividends by current "R"
shareholders and for already established Nuveen Unit Investment Trust
reinvestment accounts.
Derivative financial instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain derivative financial
instruments including future, forward, swap, and option contracts, and other
financial instruments with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may do so in the future,
they did not make any such investments during the year ended February 29, 1996,
other than occasional purchases of high quality synthetic money market
securities, if applicable.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
68
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
2. EXPENSE ALLOCATION
Expenses of the Funds that are not directly attributable to any class of shares
are prorated among the classes based on the relative net assets of each class.
Expenses directly attributable to a class of shares are recorded to the specific
class. Effective August 1, 1995, the Funds adopted a multiple class plan
pursuant to Rule 18f-3 under the investment Company Act of 1940 and now
designate class specific expenses to include Rule 12b-1 distribution and service
fees, and other expenses incurred for services received by a class that differ
in either amount or kind. A breakdown of the class specific expenses is as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12b-1 distribution and service fees (for the year ended
February 29, 1996):
Class A $19,006 $25,512 $ 6,732 $ 8,932
Class C 4,155 6,916 2,609 5,438
Shareholders' servicing agent fees and expenses
(for the five month period ended July 31, 1995):
Class A 3,235 4,044 2,378 2,346
Class C 205 227 209 215
Class R 62,876 57,527 29,261 19,878
Shareholders' reports-printing and mailing expenses
(for the five month period ended July 31, 1995):
Class A 1,525 1,808 988 520
Class C 201 190 23 44
Class R 40,490 36,738 37,136 33,910
Federal and state registration fees (for the five month period
ended July 31, 1995):
Class A 985 950 1,207 471
Class C 290 20 1,050 106
Class R 459 48 4,457 633
- --------------------------------------------------------------------------------------------------------
</TABLE>
69
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
NY NY INS OH
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12b-1 distribution and service fees (for the year ended
February 29, 1996):
Class A $26,638 $42,326 $21,336
Class C 4,101 8,893 14,282
Shareholders' servicing agent fees and expenses (for the
five month period ended July 31, 1995):
Class A 5,805 5,554 4,802
Class C 925 288 564
Class R 56,825 89,427 67,199
Shareholders' reports-printing and mailing expenses (for
the five month period ended July 31, 1995):
Class A 1,599 1,436 2,069
Class C 91 110 240
Class R 65,948 59,582 75,389
Federal and state registration fees (for the five month period
ended July 31, 1995):
Class A 821 1,324 1,207
Class C 194 27 207
Class R 448 525 456
- ----------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
3. FUND SHARES
Transactions in shares were as follows:
- --------------------------------------------------------------------------------------------------------------------------
CA CA INS
- --------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A $ 927,895 $ 321,777 $ 1,211,972 $ 468,407
Class C 50,026 19,666 89,705 28,545
Class R 2,165,620 2,433,649 1,177,751 2,136,079
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net
realized gains from investment transactions:
Class A 16,682 1,856 23,441 2,486
Class C 1,279 191 1,594 201
Class R 700,563 884,995 614,344 714,801
------------ ----------- ---------- ---------
3,862,065 3,662,134 3,118,807 3,350,519
------------ ----------- ---------- ----------
Shares redeemed:
Class A (54,537) (12,110) (95,872) (7,236)
Class C (6,378) (106) (15,721) (6,858)
Class R (2,990,150) (3,116,035) (2,088,697) (2,915,964)
------------ ----------- ---------- ----------
(3,051,065) (3,128,251) (2,200,290) (2,930,058)
------------ ----------- ---------- ----------
Net increase (decrease) 811,000 533,883 918,517 420,461
============ =========== ========== ==========
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------
MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 356,285 114,157 339,891 197,250
Class C 51,779 15,429 34,914 33,405
Class R 795,556 1,117,491 337,797 702,214
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net
realized gains from investment transactions:
Class A 7,663 956 10,031 1,171
Class C 775 65 1,987 244
Class R 303,251 277,942 211,766 225,446
------------ ------------ ------------ ------------
1,515,309 1,526,040 936,386 1,159,730
------------ ------------ ------------ ------------
Shares redeemed:
Class A (44,057) (3,567) (40,197) (4,008)
Class C (3,523) - (3,095) -
Class R (857,146) (1,130,507) (503,288) (823,516)
------------ ------------ ------------ ------------
(904,726) (1,134,074) (546,580) (827,524)
------------ ------------ ------------ ------------
Net increase (decrease) 610,583 391,966 389,806 332,206
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------
NY NY INS
- ---------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
2/29/96 2/28/95 2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,261,309 318,594 1,778,309 719,364
Class C 53,367 8,430 113,081 27,982
Class R 1,182,028 2,613,112 1,291,786 3,411,938
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net
realized gains from investment transactions:
Class A 34,236 1,882 59,314 6,336
Class C 1,167 43 2,279 200
Class R 603,620 701,622 1,387,801 1,652,628
------------ ------------ ------------ ------------
3,135,727 3,643,683 4,632,570 5,818,448
------------ ------------ ------------ ------------
Shares redeemed:
Class A (127,601) (5,381) (220,550) (10,331)
Class C (2,280) - (14,453) -
Class R (1,956,584) (2,245,562) (4,307,682) (7,580,245)
------------ ------------ ------------ ------------
(2,086,465) (2,250,943) (4,542,685) (7,590,576)
------------ ------------ ------------ ------------
Net increase (decrease) 1,049,262 1,392,740 89,885 (1,772,128)
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------
OH
- ---------------------------------------------------------------------------------------------
Year ended Year ended
2/29/96 2/28/95
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold:
Class A 846,644 432,196
Class C 120,707 88,344
Class R 1,015,491 1,586,702
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from net
realized gains from investment transactions:
Class A 24,156 2,972
Class C 4,767 711
Class R 604,197 696,759
------------ ------------
2,615,962 2,807,684
------------ ------------
Shares redeemed:
Class A (76,763) (11,421)
Class C (9,130) (325)
Class R (1,765,109) (2,131,282)
------------ ------------
(1,851,002) (2,143,028)
------------ ------------
Net increase (decrease) 764,960 664,656
============ ============
- ---------------------------------------------------------------------------------------------
</TABLE>
74
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
4. DISTRIBUTIONS TO SHAREHOLDERS
On March 8, 1996, the Funds declared dividend distributions from their ordinary
income which were paid on April 1, 1996, to shareholders of record on March 8,
1996, as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividend per share:
Class A $ .0440 $ .0440 $ .0420 $ .0430
Class C .0375 .0370 .0360 .0365
Class R .0465 .0460 .0440 .0450
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
NY NY INS OH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $ .0460 $ .0440 $ .0450
Class C .0395 .0375 .0380
Class R .0485 .0460 .0470
============ ============ ============
- ------------------------------------------------------------------------------------------------------------
</TABLE>
5. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the year ended February 29,
1996, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PURCHASES
Investments in municipal securities $ 86,931,529 $ 88,694,265 $ 8,378,588 $ 4,607,844
Temporary municipal investments 97,900,000 84,425,000 20,800,000 16,400,000
SALES
Investments in municipal securities 76,815,188 80,308,313 4,213,420 327,390
Temporary municipal investments 97,500,000 78,225,000 19,000,000 16,600,000
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
NY NY INS OH
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASES
Investments in municipal securities $ 78,935,027 $ 58,943,158 $ 65,139,819
Temporary municipal investments 30,250,000 39,200,000 27,400,000
SALES
Investments in municipal securities 73,742,136 65,415,317 55,993,586
Temporary municipal investments 27,650,000 33,600,000 27,400,000
============ ============ ============
- ------------------------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At February 29, 1996, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes for each Fund.
At February 29, 1996, the Funds had unused capital loss carryforwards available
for federal income tax purposes to be applied against future capital gains, if
any. If not applied, the carryovers will expire as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
CA CA INS MA MA INS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Expiration year:
1997 $ - $ - $ - $ 47,237
1999 - - - 18,885
2003 518,192 220,919 275,030 172,689
2004 247,114 121,012 507,247 39,865
-------- -------- -------- --------
Total $765,306 $341,931 $782,277 $278,676
======== ======== ======== ========
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------
OH
- -----------------------------
<S> <C>
Expiration year:
1997 $ -
1999 -
2003 -
2004 237,140
--------
Total $237,140
========
- -----------------------------
</TABLE>
76
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
6. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at February 29, 1996, were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
CA CA INS MA MA INS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Gross unrealized:
Appreciation $12,556,045 $14,643,216 $ 5,577,358 $5,000,960
Depreciation (442,450) (323,932) (72,750) (50,643)
----------- ----------- ----------- ----------
Net unrealized appreciation $12,113,595 $14,319,284 $ 5,504,608 $4,950,317
=========== =========== =========== ==========
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
NY NY INS OH
- -------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
Appreciation $ 9,487,337 $26,164,455 $12,797,421
Depreciation (424,057) (610,337) (157,332)
----------- ----------- -----------
Net unrealized appreciation $ 9,063,280 $25,554,118 $12,640,089
=========== =========== ===========
- -------------------------------------------------------------------
</TABLE>
77
<PAGE>
NOTES TO FINANCIAL STATEMENTS
7. MANAGEMENT FEE AND OTHER TRANSACTIONS
WITH AFFILIATES
Under the Funds' investment management agreements with Nuveen Advisory Corp.
(the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund
pays to the Adviser an annual management fee, payable monthly, at the rates set
forth below which are based upon the average daily net asset value of each Fund:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Average daily net asset value Management fee
- ------------------------------------------------------------
<S> <C>
For the first $125,000,000 .55 of 1%
For the next $125,000,000 .5375 of 1
For the next $250,000,000 .525 of 1
For the next $500,000,000 .5125 of 1
For the next $1,000,000,000 .5 of 1
For net assets over $2,000,000,000 .475 of 1
- ------------------------------------------------------------
</TABLE>
The management fee is reduced by, or the Adviser assumes certain expenses of
each Fund, in an amount necessary to prevent the total expenses of each Fund
(including the management fee, but excluding interest, taxes, fees incurred in
acquiring and disposing of portfolio securities, 12b-1 Service and Distribution
fees, and to the extent permitted, extraordinary expenses) in any fiscal year
from exceeding .75 of 1% of the average daily net asset value of the California,
Massachusetts, New York and Ohio Tax-Free Value Funds and .975 of 1% of the
average daily net asset value of the California Insured, Massachusetts Insured
and New York Insured Tax-Free Value Funds. The Adviser may also voluntarily
agree to reimburse additional expenses from time to time, which may be
voluntarily terminated at any time at its discretion.
The management fee referred to above compensates the Adviser for overall
investment advisory and administrative services, and general office facilities.
The Funds pay no compensation directly to their directors who are affiliated
with the Adviser or to their officers, all of whom receive remuneration for
their services to the Funds from the Adviser.
78
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
8. COMPOSITION OF NET ASSETS
At February 29, 1996, each Fund had common stock authorized at $.01 par value
per share. The composition of net assets as well as the number of authorized
shares were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid-in $218,292,045 $209,820,987 $ 76,982,089 $ 61,426,562
Balance of undistributed net investment income 142,955 134,147 2,984 1,505
Accumulated net realized gain (loss) from investment
transactions (765,306) (341,931) (788,525) (278,676)
Distributions in excess of net realized gains from investment
transactions - - - -
Net unrealized appreciation of investments 12,113,595 14,319,284 5,504,608 4,950,317
------------ ------------ ------------ ------------
Net assets $229,783,289 $223,932,487 $ 81,701,156 $ 66,099,708
============ ============ ============ ============
Authorized shares:
Class A 40,000,000 40,000,000 200,000,000 200,000,000
Class C 45,000,000 45,000,000 260,000,000 240,000,000
Class R 40,000,000 40,000,000 40,000,000 60,000,000
============ ============ ============ ============
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
NY NY INS OH
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid-in $161,313,710 $343,934,825 $169,688,249
Balance of undistributed net investment income 126,818 59,448 68,716
Accumulated net realized gain (loss) from investment
transactions 649,435 - (237,140)
Distributions in excess of net realized gains from investment
transactions - (84,141) -
Net unrealized appreciation of investments 9,063,280 25,554,118 12,640,089
------------ ------------ ------------
Net assets $171,153,243 $369,464,250 $182,159,914
============ ============ ============
Authorized shares:
Class A 200,000,000 200,000,000 200,000,000
Class C 220,000,000 200,000,000 220,000,000
Class R 80,000,000 100,000,000 80,000,000
============ ============ ============
-----------------------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
NOTES TO FINANCIAL STATEMENTS
9. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At February 29, 1996, the revenue sources by
municipal purpose for these investments, expressed as a percent of total
investments, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
CA CA INS MA MA INS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue Bonds:
Health Care Facilities 19% 14% 16% 18%
Housing Facilities 14 8 19 2
Lease Rental Facilities 8 14 - -
Educational Facilities 13 - 13 15
Water/Sewer Facilities 2 13 1 1
Transportation 5 1 2 1
Electric Utilities 2 7 1 3
Pollution Control - - 2 -
Other 25 26 1 1
General Obligation Bonds - 2 23 40
Escrowed Bonds 12 15 22 19
--- --- --- ---
100% 100% 100% 100%
=== === === ===
- ---------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
NY NY INS OH
- --------------------------------------------------------------------------------------------------------------
Revenue Bonds:
Health Care Facilities 4% 10% 15%
Housing Facilities 17 16 5
Lease Rental Facilities 19 1 1
Educational Facilities 16 9 4
Water/Sewer Facilities 4 11 6
Transportation 1 10 2
Electric Utilities - 1 3
Pollution Control 5 3 7
Other 9 4 1
General Obligation Bonds 12 19 41
Escrowed Bonds 13 16 15
--- --- ---
100% 100% 100%
=== === ===
- --------------------------------------------------------------------------------------------------------------
</TABLE>
80
<PAGE>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
Certain long-term and intermediate-term investments owned by the Funds are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. Government or U.S. Government agency
securities, both of which ensure the timely payment of principal and interest in
the event of default (39% for California, 100% for California Insured, 43% for
Massachusetts, 100% for Massachusetts Insured, 22% for New York, 100% for New
York Insured and 59% for Ohio). Such insurance, however, does not guarantee the
market value of the municipal securities or the value of the Fund's shares.
All of the temporary investments in short-term municipal securities have credit
enhancements (letters of credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
81
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------------------------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distribution Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
- --------------------------------------------------------------------------------------------------------------------------------
CA
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Year ended
2/29/96 $10.100 $.549* $ .473 $(.542) $ - $10.580
9/6/94 to
2/28/95 10.210 .270* (.031) (.275) (.074) 10.100
CLASS C
Year ended
2/29/96 10.100 .470* .474 (.464) - 10.580
9/16/94 to
2/28/95 10.040 .218* .139 (.223) (.074) 10.100
CLASS R
Year ended
2/29/96 10.130 .575 .467 (.572) - 10.600
Year ended 2/28,
1995 10.740 .582 (.531) (.587) (.074) 10.130
1994 10.850 .598 (.054) (.596) (.058) 10.740
1993 10.140 .633 .707 (.626) (.004) 10.850
8 months ended
2/29/92 9.920 .429 .218 (.427) - 10.140
Year ended 6/30,
1991 9.790 .639 .133 (.642) - 9.920
1990 9.850 .641 (.058) (.643) - 9.790
1989 9.240 .649* .610 (.649) - 9.850
1988 9.280 .647* (.040) (.647) - 9.240
1987** 9.600 .652* (.320) (.652) - 9.280
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
82
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10.36% $ 12,709 1.00% 5.23% .96% 5.27% 36%
2.52 3,146 1.41+ 5.40+ 1.00+ 5.81+ 32
9.53 684 1.84 4.39 1.71 4.52 36
3.71 200 2.41+ 4.37+ 1.75+ 5.03+ 32
10.54 216,390 .71 5.53 .71 5.53 36
0.78 208,080 .71 5.83 .71 5.83 32
5.08 218,430 .73 5.47 .73 5.47 19
13.66 183,215 .71 6.05 .71 6.05 5
6.61 133,377 .67+ 6.30+ .67+ 6.30+ -
8.16 107,508 .69 6.48 .69 6.48 15
6.14 78,704 .69 6.51 .69 6.51 8
14.12 52,048 .77 6.77 .75 6.79 22
6.87 29,640 .88 6.91 .70 7.09 48
3.28 19,094 1.19 5.61 .18 6.62 17
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
83
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
CA INS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.250 $.530* $.505 $(.525) $ -- $10.760
9/6/94 to
2/28/95 10.220 .255* .068 (.265) (.028) 10.250
CLASS C
Year ended
2/29/96 10.150 .448* .516 (.444) -- 10.670
9/12/94 to
2/28/95 10.060 .210* .123 (.215) (.028) 10.150
CLASS R
Year ended
2/29/96 10.230 .556 .507 (.553) -- 10.740
Year ended 2/28,
1995 10.670 .559 (.412) (.559) (.028) 10.230
1994 10.850 .560 (.101) (.556) (.083) 10.670
1993 10.010 .584 .871 (.579) (.036) 10.850
8 months ended
2/29/92 9.650 .401 .360 (.401) -- 10.010
Year ended 6/30,
1991 9.480 .600 .176 (.606) -- 9.650
1990 9.630 .608 (.151) (.607) -- 9.480
1989 9.020 .607 .610 (.607) -- 9.630
1988 8.980 .600* .040 (.600) -- 9.020
1987** 9.600 .630* (.620) (.630) -- 8.980
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
84
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
--------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
10.32% $ 17,250 .98% 4.99% .97% 5.00% 38%
3.33 4,753 1.24+ 5.26+ 1.05+ 5.45+ 25
9.67 1,040 1.74 4.23 1.71 4.26 38
3.45 222 2.44+ 4.05+ 1.80+ 4.69+ 25
10.63 205,642 .70 5.29 .70 5.29 38
1.68 198,928 .70 5.60 .70 5.60 25
4.27 208,115 .71 5.12 .71 5.12 14
15.05 168,852 .75 5.72 .75 5.72 9
7.99 100,933 .64+ 5.97+ .64+ 5.97+ 7
8.43 74,551 .68 6.26 .68 6.26 29
4.93 50,625 .70 6.36 .70 6.36 13
13.97 35,032 .82 6.52 .82 6.52 23
7.44 22,394 .99 6.60 .82 6.77 31
(.13) 16,192 1.06 5.59 .17 6.48 4
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
85
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MA
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $9.560 $.513* $.388 $(.521) $ -- $9.940
9/6/94 to
2/28/95 9.540 .254* .025 (.259) -- 9.560
CLASS C
Year ended
2/29/96 9.510 .437* .392 (.449) -- 9.890
10/5/94 to
2/28/95 9.280 .188* .254 (.212) -- 9.510
CLASS R
Year ended
2/29/96 9.540 .537* .378 (.545) -- 9.910
Year ended 2/28,
1995 9.940 .541* (.403) (.538) -- 9.540
1994 9.910 .543* .038 (.541) (.010) 9.940
1993 9.210 .563* .704 (.563) (.004) 9.910
3 months ended
2/29/92 9.130 .146 .077 (.143) -- 9.210
Year ended 11/30,
1991 8.760 .577* .375 (.582) -- 9.130
1990 8.900 .587* (.144) (.583) -- 8.760
1989 8.600 .587* .300 (.587) -- 8.900
1988 8.250 .581* .350 (.581) -- 8.600
12/10/86 to
11/30/87 9.600 .577* (1.350) (.577) -- 8.250
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
86
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
--------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
9.62% $ 4,290 1.17% 5.04% 1.00% 5.21% 6%
3.05 1,067 1.87+ 4.88+ 1.00+ 5.75+ 17
8.87 638 2.24 3.96 1.75 4.45 6
4.86 147 3.40+ 3.46+ 1.75+ 5.11+ 17
9.80 76,773 .82 5.42 .75 5.49 6
1.64 71,568 .77 5.75 .75 5.77 17
5.96 71,942 .81 5.32 .75 5.38 3
14.21 53,231 .87 5.79 .75 5.91 5
2.44 34,470 .71+ 6.31+ .71+ 6.31+ 5
11.19 31,150 .77 6.37 .75 6.39 19
5.21 20,829 .85 6.58 .75 6.68 23
10.62 15,513 1.09 6.30 .75 6.64 31
11.56 9,485 1.24 6.25 .75 6.74 55
(8.19) 5,681 1.54+ 5.30+ .37+ 6.47+ 34
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
87
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MA INS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.060 $.512* $.433 $(.515) $ -- $10.490
9/6/94 to
2/28/95 10.030 .249* .039 (.258) -- 10.060
CLASS C
Year ended
2/29/96 10.040 .434 .435 (.439) -- 10.470
9/14/94 to
2/28/95 9.910 .202* .137 (.209) -- 10.040
CLASS R
Year ended
2/29/96 10.060 .538 .445 (.543) -- 10.500
Year ended 2/28,
1995 10.450 .545 (.386) (.549) -- 10.060
1994 10.440 .537 -- (.527) -- 10.450
1993 9.650 .551 .784 (.545) -- 10.440
Year ended
2/29/92 9.360 .570 .301 (.581) -- 9.650
Year ended 2/28,
1991 9.140 .568 .219 (.567) -- 9.360
1990 8.960 .571* .178 (.569) -- 9.140
1989 9.030 .576* (.070) (.576) -- 8.960
Year ended
2/29/88 9.540 .582* (.510) (.582) -- 9.030
12/10/86 to
2/28/87 9.600 .131* (.060) (.131) -- 9.540
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
88
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
--------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
9.59% $ 5,291 1.09% 4.92% 1.07% 4.94% 1%
2.99 1,956 1.36+ 5.13+ 1.15+ 5.34+ 10
8.80 706 1.81 4.20 1.81 4.20 1
3.52 338 2.07+ 4.41+ 1.90+ 4.58+ 10
9.99 60,102 .81 5.21 .81 5.21 1
1.77 57,137 .79 5.54 .79 5.54 10
5.22 58,255 .84 5.09 .84 5.09 3
14.28 47,098 .86 5.47 .86 5.47 2
9.57 28,189 .72 5.93 .72 5.93 5
8.95 15,625 .85 6.19 .85 6.19 6
8.52 8,649 1.20 5.94 .97 6.17 15
5.84 5,404 1.87 5.54 .97 6.44 41
1.14 4,895 1.75 5.37 .59 6.53 42
.75 2,312 5.18+ .64+ -- 5.82+ --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
89
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NY
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.120 $.555* $.487 $(.552) $ -- $10.610
9/6/94 to
2/28/95 10.230 .277* (.067) (.273) (.047) 10.120
CLASS C
Year ended
2/29/96 10.110 .478* .528 (.476) -- 10.640
9/13/94 to
2/28/95 10.110 .231* .038 (.222) (.047) 10.110
CLASS R
Year ended
2/29/96 10.150 .582* .490 (.582) -- 10.640
Year ended 2/28,
1995 10.720 .579 (.529) (.573) (.047) 10.150
1994 10.610 .578* 161 (.580) (.049) 10.720
1993 9.880 .603* .806 (.598) (.081) 10.610
3 months ended
2/29/92 9.820 .163 .053 (.156) -- 9.880
Year ended 11/30,
1991 9.380 .629* .441 (.630) -- 9.820
1990 9.560 .631* (.181) (.630) -- 9.380
1989 9.180 .633* .380 (.633) -- 9.560
1988 8.760 .625* .420 (.625) -- 9.180
12/10/86 to
11/30/87 9.600 .612* (.840) (.612) -- 8.760
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
90
<PAGE>
<TABLE>
<CAPTION>
NUVEEN TAX-FREE MUTUAL FUNDS ANNUAL REPORT
FEBRUARY 29, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
--------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of Ratio of
expenses to net investment expenses net investment
Total return Net assets average income to average to average net income to average Portfolio
on net asset end of period net assets before net assets before assets after net assets after turnover
value++ (in thousands) reimbursement reimbursement reimbursement* reimbursement* rate
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
10.52% $15,732 1.02% 5.28% .99% 5.31% 47%
2.21 3,189 1.56+ 5.31+ 1.00+ 5.87+ 29
10.13 646 1.99 4.29 1.73 4.55 47
2.80 86 7.97+ (1.06)+ 1.75+ 5.16+ 29
10.80 154,776 .76 5.55 .74 5.57 47
75 149,454 .74 5.79 .74 5.79 29
7.10 146,297 .78 5.30 .75 5.33 15
14.79 107,146 .84 5.75 .75 5.84 12
2.21 66,491 .75+ 6.27+ .75+ 6.27+ 16
11.79 59,351 .79 6.46 .75 6.50 19
4.92 44,347 .81 6.59 .75 6.65 51
11.34 29,040 .98 6.40 .75 6.63 85
12.20 14,975 1.09 6.55 .75 6.89 71
(2.44) 8,239 1.38+ 5.45+ .37+ 6.46+ 20
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
91
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING
THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations Less distributions
--------------------------------- -----------------------------
Net
realized and Dividends
Net asset Net unrealized gain from net Distributions Net asset
value beginning investment (loss) from investment from value end of
of period income investments+++ income capital gains period
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NY INS
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
2/29/96 $10.150 $.521 $.492 $(.524) $(.029)*** $10.610
9/6/94 to
2/28/95 10.160 .253* .037 (.260) (.40)*** 10.150
CLASS C
Year ended
2/29/96 10.120 .442 .524 (.447) (.029)*** 10.610
9/13/94 to
2/28/95 10.030 .207* .133 (.210) (.040)*** 10.120
CLASS R
Year ended
2/29/96 10.150 .548 .495 (.554) (.029)*** 10.610
Year ended 2/28,
1995 10.630 .555 (.440) (.555) (.040)*** 10.150
1994 10.620 .550 .035 (.543) (.032) 10.630
1993 9.780 .566 .849 (.562) (.013) 10.620
Year ended
2/29/92 9.320 .590 .467 (.597) -- 9.780
Year ended 2/28,
1991 9.250 .598 .068 (.596) -- 9.320
1990 9.060 .596 .190 (.596) -- 9.250
1989 9.100 .593* (.040) (.593) -- 9.060
Year ended
2/29/88 9.830 .606* (.730) (.606) -- 9.100
12/10/86 to
2/28/87 9.600 .130* .230 (.130) -- 9.830
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 94.
92
<PAGE>
Your
investment
partners
Since 1898, John Nuveen & Co. Incorporated has worked to bring together the
various participants in the municipal bond industry and build strong
partnerships that benefit all concerned. Investors, financial advisers,
municipal officials, investment bankers--Nuveen believes that forging
relationships within these groups based on trust and value is the key to
successful investing.
As the oldest and largest municipal bond specialist in the United States,
Nuveen's investment bankers work with issuers to understand and meet their needs
in structuring and selling their bond issues.
Nuveen also works closely with financial advisers around the country,
including brokerage firms, banks, insurance companies, and independent
financial planners, to bring the benefits of tax-free investing to you. These
advisers are experts at identifying your needs and recommending the best
solutions for your situation. Together we make a powerful team, helping you
create a successful investment plan that meets your needs today and in the
future.
[PHOTO OF PAINTING APPEARS HERE]
For nearly 100 years,
Nuveen has earned its
reputation as a tax-free income
specialist by focusing on
municipal bonds
[LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
[RECYCLING LOGO]
<PAGE>
PART C--OTHER INFORMATION
NUVEEN INSURED 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 29, 1996
Statement of Net Assets, February 29, 1996
Statement of Operations, Year Ended February 29, 1996
Statement of Changes in Net Assets, Years Ended February 29, 1996, and
February 28, 1995
Report of Independent Public Accountants dated April 8, 1996
(b) Exhibits:
<TABLE>
<C> <S>
1(a). Articles of Incorporation of Registrant, as amended. Filed as Exhibit
1 to Post-Effective Amendment No. 10 to Registrant's Registration
Statement on Form N-1A (File No. 33-8372) and incorporated herein by
reference thereto.
1(b). Articles of Amendment, dated August 24, 1994. Filed as Exhibit 1(b) to
Post-Effective Amendment No. 15 to Registrant's Registration Statement
on Form N-1A (File No. 33-8372) and incorporated herein by reference
thereto.
1(c). Certificate of Designation Establishing New Series of Shares of
Registrant, dated August 30, 1994. Filed as Exhibit 1(c) to Post-
Effective Amendment No. 15 to Registrant's Registration Statement on
Form N-1A (File No. 33-8372) and incorporated herein by reference
thereto.
2. By-Laws of Registrant, as amended on July 28, 1994. Filed as Exhibit 2
to Registrant's Post-Effective Amendment No. 14 to Registrant's
Registration Statement on Form N-1A (File No. 33-8372) and
incorporated herein by reference thereto.
3. Not applicable.
4(a). Specimen certificates of Class R Shares of each Fund. Filed as Exhibit
4(a) to Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A (File No. 33-8372) and incorporated herein by
reference thereto.
4(b). Specimen certificates of Class A Shares of each Fund. Filed as Exhibit
4(b) to Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A (File No. 33-8372) and incorporated herein by
reference thereto.
4(c). Specimen certificates of Class C Shares of each Fund. Filed as Exhibit
4(c) to Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A (File No. 33-8372) and incorporated herein by
reference thereto.
5(a). Investment Management Agreement between Registrant and Nuveen Advisory
Corp., dated April 27, 1992. Filed as Exhibit 5 to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form N-1A
(File No. 33-8372) and incorporated herein by reference thereto.
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
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
Registration Statement on Form N-1A (File No.
33-8372) and is incorporated herein by reference thereto.
5(c). Renewal, dated May 7, 1996, of Investment Management Agreement.
6(a). Distribution Agreement between Registrant and John Nuveen & Co.
Incorporated, dated as of January 2, 1990. Filed as Exhibit 6 to Post-
Effective Amendment No. 4 to Registrant's Registration Statement on
Form N-1A (File No. 33-8372) and incorporated herein by reference
thereto.
6(b). Renewal, dated July 27, 1995, of Distribution Agreement.
7. Not applicable.
8. Custody Agreement, dated October 1, 1993, between Registrant and
United States Trust Company of New York. Filed as Exhibit No. 8 to
Post-Effective Amendment No. 12 to the Registrant's Registration
Statement on Form N-1A (File No. 33-8372) and incorporated herein by
reference thereto.
8(b). Letter evidencing assignment of U.S. Trust Company of New York's
rights and responsibilities under The Custody Agreement to The Chase
Manhattan Bank, N.A.
9. Transfer Agency Agreement between Registrant and Shareholder Services,
Inc. dated December 19, 1994. Filed as Exhibit 9 to Post-Effective
Amendment No. 16 to Registrant's Registration Statement on Form N-1A
(File No. 33-8370) and incorporated herein by reference thereto.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
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. 33-8372) and incorporated herein by reference thereto.
14. Not applicable.
15. Plan of Distribution and Service Pursuant to Rule 12b-1 for the Class
A Shares and Class C Shares of each Fund, dated September 6, 1994.
Filed as Exhibit to Registrant's Registration Statement on Form N-
1A (File No. ) and incorporated herein by reference thereto.
15(b). Renewal, dated July 26, 1995, of Plan of Distribution and Service
Pursuant to Rule 12b-1.
16. Schedule of Computation of Performance Figures. Filed as Exhibit 16 to
Post-Effective Amendment No. 16 to Registrant's Registration Statement
on Form N-1A (File No. 33-8370) and incorporated herein by reference
thereto.
17. Financial Data Schedule.
18. Multiple Class Plan Adopted Pursuant to Rule 18f-3, as amended.
</TABLE>
C-2
<PAGE>
<TABLE>
<C> <S>
99(a). Municipal Bond Guaranty Master Managed Fund Insurance Policies issued
to the Registrant by Municipal Bond Investors Assurance Corporation.
Filed as Exhibit 16(a) to Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on Form N-1A (File No. 33-8372)
and incorporated herein by reference thereto.
99(b). Insurance Agreement between Registrant and Municipal Bond Investors
Assurance Corporation. Filed as Exhibit 16(b) to Post-Effective
Amendment No. 1 to the Registrant's Registration Statement on Form N-
1A (File No. 33-8372) and incorporated herein by reference thereto.
99(c). Mutual Fund Insurance Policy issued to the Registrant by AMBAC
Indemnity Corporation. Filed as Exhibit 17(c) to Post-Effective
Amendment No. 10 to Registrant's Registration Statement on Form N-1A
(File No. 33-8372) and incorporated herein by reference thereto.
99(d). Financial Guaranty Insurance Policy issued to the Registrant by
Financial Security Assurance Inc. Filed as Exhibit 17(d) to Post-
Effective Amendment No. 10 to Registrant's Registration Statement on
Form N-1A (File No. 33-8372) and incorporated herein by reference
thereto.
99(e). Municipal Bond Mutual Fund Portfolio Insurance Policy issued to each
Fund by Financial Guaranty Insurance Company ("FGIC") and Mutual Fund
Agreement between Registrant and FGIC. Filed as Exhibit 17(e) to Post-
Effective Amendment No. 10 to Registrant's Registration Statement on
Form N-1A (File No. 33-8372) and incorporated herein by reference
thereto.
99(f). 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(g). 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. Filed as Exhibit
99(g) to Post-Effective Amendment No. 16 to Registrant's Registration
Statement on Form N-1A (File No. 33-8370) and incorporated herein by
reference thereto.
99(h). Code of Ethics and Reporting Requirements. Filed as Exhibit 99(h) to
Post-Effective Amendment No. 16 to Registrant's Registration Statement
on Form N-1A (File No. 33-8370) and incorporated herein by reference
thereto.
</TABLE>
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At June 5, 1996:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
<S> <C>
Nuveen Insured Municipal Bond Fund ("National Fund"),
Class A Shares........................................... 3,640
Class C Shares........................................... 192
Class R Shares........................................... 25,184
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
<S> <C>
Nuveen Massachusetts Insured Tax-Free Value Fund,
Class A Shares........................................... 382
Class C Shares........................................... 26
Class R Shares........................................... 2,029
Nuveen New York Insured Tax-Free Value Fund,
Class A Shares........................................... 1,378
Class C Shares........................................... 63
Class R Shares........................................... 9,705
</TABLE>
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 Corporation
Act, as from time to time amended, the Corporation shall indemnify its cur-
rently acting and its former directors, officers, employees and agents, and
those persons who, at the request of the Corporation serve or have served an-
other corporation, partnership, joint venture, trust or other enterprise in one
or more such capacities. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification may
otherwise be entitled.
Expenses (including attorneys' fees) incurred in defending a civil or criminal
action, suit or proceeding (including costs connected with the preparation 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 direc-
tor, officer, employee or agent to repay that amount of the advance which ex-
ceeds the amount which it is ultimately determined that he is entitled to re-
ceive from the Corporation by reason of indemnification as authorized herein;
provided, however, that prior to making 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 read-
ily available facts, that there is reason to believe that the indemnitee ulti-
mately 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 Corpora-
tion against any liability to the Corporation or to its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office ("disabling conduct"), and the Corporation shall not in-
demnify any of its officers or directors against any liability to the Corpora-
tion 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 of-
ficer's or director's disabling conduct. A determination that an officer or di-
rector 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 de-
termination, based upon a review of the facts,
C-4
<PAGE>
that the indemnitee was not liable by reason of disabling conduct, by (a) the
vote of a majority of a quorum of directors who are neither "interested per-
sons" of the Corporation as defined in the Investment Company Act of 1940 nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion.
-----------------
The directors and officers of the Registrant are covered by an Investment Trust
Errors and Omission policy in the aggregate amount of $60,000,000 (with a maxi-
mum deductible of $500,000) against liability and expenses of claims of wrong-
ful acts arising out of their position with the Registrant, except for matters
which involve willful acts, bad faith, gross negligence and willful disregard
of duty (i.e., where the insured did not act in good faith for a purpose he or
she reasonably believed to be in the best interest of Registrant or where he or
she had reasonable cause to believe this conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, directors or controlling persons of the
Registrant pursuant to the Articles of Incorporation of the Registrant or oth-
erwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as ex-
pressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by an officer or director or control-
ling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such officer, director or controlling persons in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling prece-
dent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Multistate Tax-Free Trust, Nuveen
Municipal Bond Fund, Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free
Reserves, Inc., Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free Bond
Fund, Inc., Nuveen Insured Tax-Free Bond Fund, Inc. and Nuveen Tax-Free Money
Market Fund, Inc. 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 Premium Income Municipal
Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen California
Performance Plus Municipal Fund, Inc., Nuveen New York Performance Plus Munici-
pal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market
Opportunity Fund, Inc., Nuveen California Municipal Market Opportunity Fund,
Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen California Invest-
ment Quality Municipal Fund, Inc., Nuveen New York Investment Quality Municipal
Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida Invest-
ment Quality Municipal Fund, Nuveen New Jersey Investment Quality Municipal
Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen Se-
lect Quality Municipal
C-5
<PAGE>
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
Municipal Fund, Nuveen California Quality Income Municipal Fund, Inc., Nuveen
New York Quality Income Municipal Fund, Inc., Nuveen Premier Municipal Income
Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc., Nuveen Premium
Income Municipal Fund 2, Inc., Nuveen Insured California Premium Income Munici-
pal Fund, Inc., Nuveen Insured New York Premium Income Municipal Fund, Inc.,
Nuveen Select Maturities Municipal Fund, Nuveen Arizona Premium Income Munici-
pal 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 Municipal Fund 2, Inc., Nuveen Pennsylvania Premium Income Municipal
Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen Massachusetts
Premium Income Municipal Fund, Nuveen Virginia Premium Income Municipal Fund,
Nuveen Washington Premium Income Municipal Fund, Nuveen Connecticut Premium In-
come Municipal Fund, Nuveen Georgia Premium Income Municipal Fund, Nuveen Mis-
souri Premium Income Municipal Fund, Nuveen North Carolina Premium Income Mu-
nicipal Fund, Nuveen California Premium Income Municipal Fund, and Nuveen In-
sured Premium Income Municipal Fund 2. Nuveen Advisory Corp. has no other cli-
ents or business at the present time. The principal business address for all
these investment companies is 333 West Wacker Drive, Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer of the investment adviser
has engaged during the last two years for his account or in the capacity of di-
rector, officer, employee, partner or trustee, see the descriptions under "Man-
agement" in the Statement of Additional Information.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Multistate
Tax-Free Trust, Nuveen Municipal Bond Fund, Nuveen Tax-Exempt Money Market
Fund, Inc., Nuveen Tax-Free Reserves, Inc., Nuveen California Tax-Free Fund,
Inc., Nuveen Tax-Free Bond Fund, Inc., Nuveen Insured Tax-Free Bond Fund, Inc.
and Nuveen Tax-Free Money Market Fund, Inc. 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 a co-managing under-
writer 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 Premium Income Municipal Fund, Inc., Nuveen Performance Plus
Municipal Fund, Inc., Nuveen California Performance Plus Municipal Fund, Inc.,
Nuveen New York Performance Plus Municipal Fund, Inc., Nuveen Municipal 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 Quality
Municipal Fund, Inc., Nuveen
Florida Investment Quality Municipal Fund, Nuveen New Jersey Investment Quality
Municipal Fund,
C-6
<PAGE>
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
Municipal Fund, Nuveen California Quality Income Municipal Fund, Inc., Nuveen
New York Quality Income Municipal Fund, Inc., Nuveen Premier Municipal Income
Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc., Nuveen Select
Tax-Free Income Portfolio, Nuveen Premium Income Municipal Fund 2, Inc., Nuveen
Insured California Premium Income Municipal Fund, Inc., Nuveen Insured New York
Premium Income Municipal Fund, Inc., Nuveen Select Maturities Municipal Fund,
Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen Insured Florida Pre-
mium 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 Municipal Fund 2, Inc., Nuveen
Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland Premium Income
Municipal Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen Vir-
ginia Premium Income Municipal Fund, Nuveen Washington Premium Income Municipal
Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia Premium
Income Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen
North Carolina Premium Income Municipal Fund, Nuveen California Premium Income
Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2, Nuveen Select
Tax-Free Income Portfolio 2, Nuveen Insured California Select Tax-Free Income
Portfolio, Nuveen Insured New York Select Tax-Free Income Portfolio and Nuveen
Select Tax-Free Income Portfolio 3.
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Schwertfeger Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chief Executive Officer and Director
Chicago, Illinois 60606 and Director
Anthony T. Dean President, Chief Operating President and Director
333 West Wacker Drive Officer and Director
Chicago, Illinois 60606
John P. Amboian Executive Vice President None
333 West Wacker Drive and Chief Financial Officer
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
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>
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, Illinois 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, Illinois 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Larry W. Martin Vice President Vice President
333 West Wacker Drive and Assistant Secretary and Assistant Secretary
Chicago, Illinois 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
O. Walter Renfftlen Vice President Vice President and Controller
333 West Wacker Drive and Controller
Chicago, Illinois 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Bradford W. Shaw, Jr Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -----------------------------------------------------------------------------
<S> <C> <C>
H. William Stabenow Vice President Vice President and Treasurer
333 West Wacker Drive and Treasurer
Chicago, Illinois 60606
James J. Wesolowski Vice President, General Vice President and Secretary
333 West Wacker Drive Counsel and Secretary
Chicago, Illinois 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, Illinois 60606
Gifford R. Zimmerman Vice President Vice President
333 West Wacker Drive and Assistant Secretary and Assistant Secretary
Chicago, Illinois 60606
</TABLE>
(c) Not applicable.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois, 60606, main-
tains Articles of Incorporation, By-Laws, minutes of directors and shareholder
meetings, contracts and all advisory material of the investment adviser.
The Chase Manhattan Bank, N.A., 770 Broadway, New York, New York 10003, main-
tains all general and subsidiary ledgers, journals, trial balances, records of
all portfolio purchases and sales, and all other required records not main-
tained by Nuveen Advisory Corp., or Shareholder Services, Inc.
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado 80217-5330, main-
tains all the required records in its capacity as transfer, dividend paying,
and shareholder services agent for the Registrant.
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest Annual Report to Share-
holders upon request and without charge.
C-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT THIS REGISTRATION STATEMENT
MEETS ALL THE REQUIREMENTS FOR EFFECTIVENESS UNDER PARAGRAPH (B) OF RULE 485
OF THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
THE CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 28TH DAY OF JUNE, 1996.
NUVEEN INSURED 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 June 28, 1996
Controller (Principal
Financial and
Accounting Officer)
Richard J. Franke Chairman of the Board
and Director (Principal
Executive Officer)
Lawrence H. Brown Director
Anne E. Impellizzeri Director
Margaret K. Rosenheim Director
Peter R. Sawers Director
Timothy R. Schwertfeger President and Director
/s/ Gifford R. Zimmerman
By__________________________
Gifford R. Zimmerman
Attorney-in-Fact
June 28, 1996
</TABLE>
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 IS INCORPO-
RATED BY REFERENCE TO THIS REGISTRATION STATEMENT.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
5(c). Renewal, dated May 7, 1996, of Investment Management
Agreement.
6(b). Renewal, dated July 27, 1995, of Distribution Agree-
ment.
8(b). Letter evidencing assignment of U.S. Trust Company of
New York's rights and responsibilities under the Cus-
tody Agreement to The Chase Manhattan Bank, N.A.
10. Opinion of Fried, Frank, Harris, Shriver & Jacobson.
11. Consent of Independent Public Accountants.
15(b). Renewal, dated July 26, 1995, of Plan of Distribution
and Service.
16. Schedule of Computation of Performance figures.
17. Financial Data Schedule.
18. Multiple Class Plan Adopted Pursuant to Rule 18f-3,
as amended.
99(f). Certified copy of resolution of Board of Directors
authorizing the signing of the names of directors and
officers on the Registrant's Registration Statement
pursuant to power of attorney.
</TABLE>
<PAGE>
Exhibit 5(c)
NUVEEN INSURED TAX-FREE BOND FUND, INC.
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
------------------------------------------
This Agreement made this 7th day of May, 1996 by and between Nuveen Insured
Tax-Free Bond Fund, Inc., a Minnesota corporation (the "Fund"), and Nuveen
Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Investment Management Agreement (the "Agreement") pursuant to which the Adviser
furnishes investment management and other services to the Fund; and
WHEREAS, the Agreement terminates August 1, 1996 unless continued in the
manner required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors, at a meeting called for the purpose of
reviewing the Agreement, have approved the Agreement and its continuance until
August 1, 1997 in the manner required by the Investment Company Act of 1940;
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect until
August 1, 1997 and ratify and confirm the Agreement in all respects.
NUVEEN INSURED
TAX-FREE BOND FUND, INC.
By: /s/ James J. Wesolowski
-----------------------
Vice President
ATTEST:
/s/ Karen L. Healy
-----------------------
Assistant Secretary
NUVEEN ADVISORY CORP.
By: /s/ Gifford R. Zimmerman
------------------------
Vice President
ATTEST:
/s/ Larry Martin
-----------------------
Assistant Secretary
<PAGE>
Exhibit 6(b)
Renewal of Distribution Agreement
---------------------------------
This Agreement made this 27th day of July, 1995 by and between Nuveen
Insured Tax-Free Bond Fund, Inc., a Minnesota corporation (the "Fund"), and
John Nuveen & Co. Incorporated, a Delaware corporation (the "Underwriter");
WHEREAS, the parties hereto are the contracting parties under that certain
Distribution Agreement (the "Agreement") pursuant to which the
Underwriter acts as agent for the distribution of shares of the Fund; and
WHEREAS, the Agreement terminates August 1, 1995 unless continued in the
manner required by the Investment Company Act of 1940; and
WHEREAS, the Board of Directors of the Fund, at a meeting called for the
purpose of reviewing the Agreement has approved the Agreement and its
continuance until August 1, 1996 in the manner required by the Investment
Company Act of 1940;
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement the parties hereto do hereby continue the Agreement in effect
until August 1, 1996 and ratify and confirm the Agreement in all respects.
NUVEEN INSURED TAX-FREE BOND FUND, INC.
By: /s/ Larry Martin
-------------------------
Vice President
ATTEST:
/s/ Morrison C. Warren
-----------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ Kenneth C. Dunn
-------------------------
Vice President
ATTEST:
/s/ Gifford R. Zimmerman
-----------------------------
Assistant Secretary
<PAGE>
EXHIBIT 8(B)
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003-9598
April 18, 1996
Mr. Giff Zimmerman
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606
Dear Giff:
On September 2, 1995, The United States Trust Company of New York (UST) was
merged into Chase Manhattan Bank, N.A. (Chase). As a result of this transac-
tion, Chase succeeded by operation of law, all rights and responsibilities of
UST under all Transfer Agency, Custodian and Fund Accounting agreements be-
tween US Trust and John Nuveen & Co.'s managed investment companies.
Sincerely,
/s/ Andrew M. Massa
_______________________________________
Andrew M. Massa
Vice President
1
<PAGE>
Exhibit 10
June 26, 1996
(202) 639-7065
Nuveen Insured 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. 33-8372)
--------------------------------------
Dear Ladies and Gentlemen:
We have acted as counsel to Nuveen Insured 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 Insured Municipal Bond Fund, Series A Shares;
Nuveen Insured Municipal Bond Fund, Series C Shares; Nuveen Insured Municipal
Bond Fund, Series R Shares; Nuveen Massachusetts Insured Tax-Free Value Fund,
Series A Shares; Nuveen Massachusetts Insured Tax-Free Value Fund, Series C
Shares; Nuveen Massachusetts Insured Tax-Free Value Fund, Series R Shares;
Nuveen New York Insured Tax-Free Value Fund, Series A Shares; Nuveen New York
Insured Tax-Free Value Fund, Series C Shares; and Nuveen New York Insured 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. 19 to the Registration Statement (the "Amendment")
with the Securities and Exchange Commission pursuant to Rule 485(a)(1) 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;
<PAGE>
Nuveen Insured Tax-Free Bond Fund, Inc.
June 26, 1996
Page 2
(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");
(c) a certificate executed by Karen L. Healy, an Assistant Secretary of
the Fund, certifying as to the Fund's Articles of Incorporation and
By-Laws, as amended (the "By-Laws"), and certain resolutions adopted
by the Board of Directors of the Fund authorizing the issuance of the
Shares; and
(d) a printer's proof, dated June 26, 1996, of the Amendment.
In our capacity as counsel to the Fund, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinion hereinafter expressed. In all such examinations, we have assumed
the legal capacity of all natural persons executing documents, the genuineness
of all signatures, the authenticity of all original or certified copies, and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduced copies. As to various questions of fact relevant to such
opinion, we have relied upon, and assume the accuracy of, certificates and oral
or written statements of public officials and officers or representatives of the
Fund. We have assumed that the Amendment, as filed with the Securities and
Exchange Commission, will be in substantially the form of the printer's proof
referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Fund's
Articles of Incorporation and for the consideration described in the
Registration Statement, will be legally issued, fully paid and nonassessable.
The opinion expressed herein is limited to the laws of the State of
Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Thomas S. Harman
__________________________________________
Thomas S. Harman
<PAGE>
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated April 8, 1996, and to all references to our firm included in or made a
part of this registration statement of Nuveen Insured Tax-Free Bond Fund, Inc.
/s/ ARTHUR ANDERSEN LLP
- --------------------------
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 24, 1996
<PAGE>
Exhibit 15(b)
NUVEEN INSURED TAX-FREE BOND FUND, INC.
---------------------------------------
RENEWAL OF PLAN OF DISTRIBUTION AND SERVICE PURSUANT TO RULE 12b-1
------------------------------------------------------------------
WHEREAS, Nuveen Insured Tax-Free Bond Fund, Inc. (the "Fund"), an open-end
investment management company registered under the Investment Company Act of
1940, as amended (the "Act") and John Nuveen & Co. Incorporated ("Nuveen"),
distributor of the common shares of the Fund pursuant to a Distribution
Agreement between the Fund and Nuveen, have previously entered into a Plan
of Distribution and Service in accordance with Rule 12b-1 under the Act (the
"Plan"); and
WHEREAS, the Plan terminates August 1, 1995 unless continued in the manner
provided for in paragraph 2 of the Plan; and
WHEREAS, the Board of Trustees, at a meeting called in part for the purpose
of reviewing the Plan, have approved the Plan and its continuance until
August 1, 1996 in the manner provided for in paragraph 2 of the Plan.
NOW THEREFORE, the parties hereto do hereby continue the Plan in effect
until August 1, 1996 and ratify and confirm the Plan in all respects.
Dated as of July 26, 1995
NUVEEN INSURED TAX-FREE BOND FUND, INC.
BY: /s/ Gifford R. Zimmerman
------------------------------
Vice President
JOHN NUVEEN & CO. INCORPORATED
By: /s/ James J. Wesolowski
-------------------------------
Vice President
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF PERFORMANCE FIGURES*
I. YIELD
A. Yield Formula
Yield is computed according to the following formula:
6
[ ( A - B ) ]
YIELD = 2 [ ( ----- + 1 ) - 1 ]
[ ( CD ) ]
Where: A = dividends and interest(degree symbol) 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%.
(degree symbol)Interest earned on tax-exempt obligations is determined as
follows:
A. In the case of a tax-exempt obligation (1) with a current market premium or
(2) issued at a discount where the current market discount is less than the
then-remaining portion of the original issue discount, it is necessary to
first compute the yield to maturity (YTM). The YTM is then divided by 360
and the quotient is multiplied by the market value of the obligation (plus
accrued interest).
B. In the case of a tax-exempt obligation issued at a discount where the cur-
rent market discount is in excess of the then-remaining portion of the orig-
inal issue discount, the adjusted original issue discount basis of the obli-
gation (plus accrued interest) is used in lieu of the market value of the
obligation (plus accrued interest) in computing the yield to maturity (YTM).
The YTM is then divided by 360 and the quotient is multiplied by the ad-
justed original issue basis of the obligation (plus accrued interest).
C. In the case of a tax-exempt obligation issued without original issue dis-
count and having a current market discount, the coupon rate of interest is
used in lieu of the yield to maturity. The coupon rate is then divided by
360 and the quotient is multiplied by the par value of the obligation.
1
<PAGE>
B. Yield Calculations
1. National Fund
The following is the 30-day yield as of February 29, 1996, for the Class A
Shares of the National Fund:
[$222,539.06 - $34,627.56] 6
Yield = 2 [ ( -------------------------- + 1 ) - 1 ]
[4,372,777.21 X $11.49]
= 4.53%
The following is the 30-day yield as of February 29, 1996, for the Class C
Shares of the National Fund:
Yield = 2 [$23,160.90 - $6,712.48] 6
[ ( ------------------------ + 1 ) - 1 ]
[459,830.35 X $10.85]
= 3.99%
The following is the 30-day yield as of February 29, 1996, for the Class R
Shares of the National Fund:
[$3,537,622.61 - $392,124.19] 6
Yield = 2 [ ( ----------------------------- + 1 ) - 1 ]
[69,795,732.00 X $10.92]
= 5.00%
2. Massachusetts Fund
The following is the 30-day yield as of February 29, 1996, for the Class A
Shares of the Massachusetts Fund:
$21,252.59 - $4,102.98] 6
Yield = 2
[ ( ----------------------- + 1 ) - 1 ]
[499,010.48 X $10.98]
= 3.79%
The following is the 30-day yield as of February 29, 1996, for the Class C
Shares of the Massachusetts Fund:
[$2,848.18 - $985.58] 6
Yield = 2 [ ( ---------------------- + 1 ) - 1 ]
[67,017.14 X $10.47]
= 3.21%
The following is the 30-day yield as of February 29, 1996, for the Class R
Shares of the Massachusetts Fund:
[$244,096.58 - $34,733.97] 6
Yield = 2 [ ( -------------------------- + 1 ) - 1 ]
[5,728,905.54 X $10.50]
= 4.21%
2
<PAGE>
3. New York Fund
The following is the 30-day yield as of February 29, 1996, for the Class A
Shares of the New York Fund:
[$99,475.71 - $18,063.04] 6
Yield = 2 [ ( ------------------------- + 1 ) - 1 ]
[2,245,927.56 X $11.11]
= 3.95%
The following is the 30-day yield as of February 29, 1996, for the Class C
Shares of the New York Fund:
[$5,722.52 - $1,890.74] 6
Yield = 2 [ ( ----------------------- + 1 ) - 1 ]
[129,210.83 X $10.61]
= 3.38%
The following is the 30-day yield as of February 29, 1996, for the Class R
Shares of the New York Fund:
[$1,432,300.94 - $189,009.96]
Yield = 2 [ ( ----------------------------- + 1 ) - 1 ]
[32,348,760.10 X $10.61]
= 4.39%
II. TAXABLE EQUIVALENT YIELD
A. Taxable Equivalent Yield Formula
The Taxable Equivalent Yield Formula is as follows:
Taxable Equivalent Tax Exempt Yield
Yield = ----------------------------------------------
(1 - federal or combined federal and state
income tax rate)
3
<PAGE>
B. Taxable Equivalent Yield Calculations
Based on combined federal income tax rate for the National Fund of 39.6% and
combined federal and state income tax rates for both Massachusetts of 47% and
for New York of 46.5%*, the Taxable Equivalent Yields for the Class A Shares,
Class C Shares and Class R Shares of each of the National Fund, Massachusetts
Fund and New York Fund for the 30-day period ended February 29, 1996, are as
follows:
CLASS A CLASS C CLASS R
SHARES SHARES SHARES
-------------- -------------- --------------
National Fund: 4.53% 3.99% > 5.00%
------- = 7.50% ------ = 6.61% ------ = 8.28%
1 - .396 1 - .396 1 - .396
3.79%
Massachusetts 3.79% 3.21% 4.21%
Fund: ------- = 7.15% ------ = 6.06% ------ = 7.94%
1 - .470 1 - .470 1 - .470
3.95% 3.38% 4.39%
New York Fund: ------- = 7.38% ------ = 6.32% ------ = 8.21%
1 - .465 1 - .465 1 - .465
*Reflects a combined federal, state and New York City tax rate.
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. National Fund
The following is the distribution rate as of February 29, 1996, based on max-
imum public offering price for the National Fund.
Class A Distribution Rate = 12 X $.0445
-----------
$11.49
= 4.65%
Class C Distribution Rate = 12 X $.0375
-----------
$10.85
= 4.15%
Class R Distribution Rate = 12 X $.0465
-----------
$10.92
= 5.11%
4
<PAGE>
2. Massachusetts Fund
The following is the distribution rate as of February 29, 1996, based on max-
imum public offering price for the Massachusetts Fund.
Class A Distribution Rate = 12 X $.0430
----------
$10.98
= 4.70%
Class C Distribution Rate = 12 X $.0365
----------
$10.47
= 4.18%
Class R Distribution Rate = 12 X $.0450
----------
$10.50
= 5.14%
3. New York Fund
The following is the distribution rate as of February 29, 1996, based on max-
imum public offering price for the New York Fund.
Class A Distribution Rate = 12 X $.0440
----------
$11.11
= 4.75%
Class C Distribution Rate = 12 X $.0375
----------
$10.61
= 4.24%
Class R Distribution Rate = 12 X $.0460
----------
$10.61
= 5.20%
5
<PAGE>
IV. AVERAGE ANNUAL TOTAL RETURN
A.Average Annual Total Return Formula
Average Annual Total Return is computed according to the following formula:
ERV 1/N
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 frac-
tional portion thereof) periods.
B. Average Annual Total Return Calculations
The following are the average annual total returns for Class A Shares of the
Funds for the one-year period ended February 29, 1996, and for the period from
inception through February 29, 1996, including the current maximum sales
charge:
1. National Fund:
1/1
$1,059.10
A. 1 year ended February 29, 1996 = (---------) -1 = 5.91%
$1000 =====
1/1.4812
$1,099.70
C. Inception through February 29, 1996 = (---------) -1 = 6.62%
$1000 =====
2. Massachusetts Fund:
1/1
$1,046.50
A. 1 year ended February 29, 1996 = (---------) -1 = 4.65%
$1000
1/1.4812
$1,077.80
C. Inception through February 29, 1996 = (---------) -1 = 5.19%
$1000
3. New York Fund:
1/1
$1,052.30
A. 1 year ended February 29, 1996 = (---------) -1 = 5.23%
$1000
1/1.4812
$1,083.90
C. Inception through February 29, 1996 = (---------) -1 = 5.59%
$1000
6
<PAGE>
The following are the average annual total returns for Class C Shares of the
Funds for the one-year period ended February 29, 1996, and for the period from
inception through February 29, 1996, assuming no imposition of sales charges:
1. National Fund:
$1,098.80 1/1
A. 1 year ended February 29, 1996 = (---------) -1 = 9.88%
$1000 =====
$1,132.80 1/1.4784
C. Inception through February 29, 1996 = (---------) -1 = 8.80%
$1000 =====
2. Massachusetts Fund:
1/1
$1,088.00
A. 1 year ended February 29, 1996 = (---------) -1 = 8.80%
$1000 =====
1/1.4593
$1,126.30
C. Inception through February 29, 1996 = (---------) -1 = 8.49%
$1000 =====
3. New York Fund:
1/1
$1,097.10
A. 1 year ended February 29, 1996 = (---------) -1 = 9.71%
$1000 =====
1/1.4620
$1,135.70
C. Inception through February 29, 1996 = (---------) -1 = 9.10%
$1000 =====
The following are the average annual total returns for Class R Shares of the
Funds for the one-year and five-year periods ended February 29, 1996, and for
the period from inception through February 29, 1996, assuming no imposition of
sales charges:
1. National Fund:
1/1
$1,109.40
A. 1 year ended February 29, 1996 = (---------) -1 = 10.94%
$1000 ======
1/5
$1,524.80
B. 5 years ended February 29, 1996 = (---------) -1 = 8.80%
$1000 =====
$2,066.90 1/9.1882
C. Inception through February 29, 1996 = (---------) -1 = 8.22%
$1000 =====
7
<PAGE>
2. Massachusetts Fund:
$1,099.90 1/1
A. 1 year ended February 29, 1996 = (------- -1 = 9.99%
$1000 =====
$1,474.80 1/5
B. 5 years ended February 29, 1996 = (---------) -1 = 8.08%
$1000 =====
$1,880.40 1/9.1882
C. Inception through February 29, 1996 = (---------) -1 = 7.11%
$1000 =====
3. New York Fund:
$1,105.10 1/1
A. 1 year ended February 29, 1996 = (---------) -1 = 10.51%
$1000 ======
$1,518.00 1/5
B. 5 years ended February 29, 1996 = (---------) -1 = 8.70%
$1000 =====
$1,943.90 1/9.1882
C. Inception through February 29, 1996 = (---------) -1 = 7.50%
$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.
8
<PAGE>
The following are the cumulative total returns for the Class A Shares of the
Funds for the period from inception and for the one-year period ended February
29, 1996, including the current maximum sales charge:
1. National Fund:
$1,059.10 - $1000
A. 1 year ended February 29, 1996 = (-----------------) = 5.91%
$1000 =====
$1,099.70 - $1000
C. Inception through February 29, 1996 = (-----------------) = 9.97%
$1000 =====
2. Massachusetts Fund:
$1,046.50 - $1000
A. 1 year ended February 29, 1996 = ----------------- = 4.65%
$1000 =====
$1,077.80 - $1000
C. Inception through February 29, 1996 = (-----------------) = 7.78%
$1000 =====
3. New York Fund:
$1,052.30 - $1000
A. 1 year ended February 29, 1996 = (-----------------) = 5.23%
$1000 =====
$1,083.90 - $1000
C. Inception through February 29, 1996 (-----------------) = 8.39%
$1000 =====
The following are the cumulative total returns for Class C Shares of the
Funds for the period from inception and for the one-year period ended February
29, 1996, assuming no imposition of sales charges:
1. National Fund:
$1,098.80 - $1000
A. 1 year ended February 29, 1996 = (-----------------) = 9.88%
$1000 =====
$1,132.80 - $1000
C. Inception through February 29, 1996 = (-----------------) = 13.28%
$1000 ======
2. Massachusetts Fund:
$1,088.00 - $1000
A. 1 year ended February 29, 1996 = (-----------------) = 8.80%
$1000 =====
$1,126.30 - $1000
C. Inception through February 29, 1996 = (-----------------) = 12.63%
$1000 ======
9
<PAGE>
3. New York Fund:
$1,097.10 - $1000
A. 1 year ended February 29, 1996 = (----------------) = 9.71%
$1000 =====
$1,135.70 - $1000
C. Inception through February 29, 1996 = (-----------------) = 13.57%
$1000 ======
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 period ended February
29, 1996, including the current maximum sales charge:
1. National Fund:
$1,109.40 - $1000
A. 1 year ended February 29, 1996 = (-----------------) = 10.94%
$1000 ======
$1,524.80 - $1000
B. 5 years ended February 29, 1996 = (-----------------) = 52.48%
$1000 ======
$2,066.90 - $1000
C. Inception through February 29, 1996 = (-----------------) = 106.69%
$1000 =======
2. Massachusetts Fund:
$1,099.90 - $1000
A. 1 year ended February 29, 1996 = (-----------------) = 9.99%
$1000 =====
$1,474.80 - $1000
B. 5 years ended February 29, 1996 = (-----------------) = 47.48%
$1000 ======
$1,880.40 - $1000
C. Inception through February 29, 1996 = (-----------------) = 88.04%
$1000 ======
3. New York Fund:
$1,105.10 - $1000
A. 1 year ended February 29, 1996 = (-----------------) = 10.51%
$1000 ======
$1,518.00 - $1000
B. 5 years ended February 29, 1996 = (-----------------) = 51.80%
$1000 ======
$1,943.90 - $1000
C. Inception through February 29, 1996 = (-----------------) = 94.39%
$1000 ======
10
<PAGE>
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 A Shares of
the National Fund for the one-year period ended February 29, 1996, and the pe-
riod from inception through February 29, 1996, are set forth on the following
pages. One set of calculations presents the Fund's taxable equivalent total re-
turn with the maximum 4.50% sales charge and the other set of calculations pre-
sents the taxable equivalent total return at the Fund's net asset value. Each
set of calculations assumes a 39.6% federal income tax rate based on 1996
rates.
FUND NAME: NUVEEN INS MUNI BOND FUND CLASS A
(SINCE 02/28/95)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 02/28/95 10.40 .04500 918 10,000 10.45
1 03/31/95 10.44 .04500 41.322 41.322 41.322 922 9,628 10.46
2 04/30/95 10.39 .04500 41.500 41.500 82.822 926 9,623 10.39
3 05/31/95 10.77 .04500 41.680 41.680 124.502 930 10,017 10.77
4 06/30/95 10.54 .04500 41.854 41.854 166.355 934 9,845 10.54
5 07/31/95 10.52 .04500 42.032 42.032 208.388 938 9,868 10.50
6 08/31/95 10.61 .04450 41.744 41.744 250.131 942 9,994 10.68
7 09/30/95 10.63 .04550 42.859 42.859 292.991 946 10,056 10.69
8 10/31/95 10.80 .04550 43.042 43.042 336.033 950 10,259 10.85
9 11/30/95 11.00 .04550 43.222 43.222 379.255 954 10,492 11.03
10 12/31/95 11.11 .04450 42.447 42.447 421.702 958 10,640 11.11
11 01/31/96 11.11 .04450 42.617 42.617 464.319 962 10,682 11.11
12 02/29/96 10.97 .04450 42.788 42.788 507.106 332.4 996 10,923 11.02
TAX RATE 39.60%
LOAD 4.50%
1.0021 YEARS: TOTAL RETURN 9.23%
ANNUALIZED 9.21%
</TABLE>
11
<PAGE>
FUND NAME: NUVEEN INS MUNI BOND FUND CLASS A
(SINCE 02/28/95)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 02/28/95 10.40 .04500 962 10,000 10.45
1 03/31/95 10.44 .04500 43.269 43.269 43.269 966 10,082 10.46
2 04/30/95 10.39 .04500 43.455 43.455 86.725 970 10,077 10.39
3 05/31/95 10.77 .04500 43.644 43.644 130.368 974 10,489 10.77
4 06/30/95 10.54 .04500 43.826 43.826 174.194 978 10,309 10.54
5 07/31/95 10.52 .04500 44.013 44.013 218.207 982 10,333 10.50
6 08/31/95 10.61 .04450 43.711 43.711 261.918 986 10,465 10.68
7 09/30/95 10.63 .04550 44.879 44.879 306.797 991 10,530 10.69
8 10/31/95 10.80 .04550 45.070 45.070 351.867 995 10,743 10.85
9 11/30/95 11.00 .04550 45.259 45.259 397.126 999 10,987 11.03
10 12/31/95 11.11 .04450 44.447 44.447 441.573 1,003 11,141 11.11
11 01/31/96 11.11 .04450 44.625 44.625 486.198 1,007 11,186 11.11
12 02/29/96 10.97 .04450 44.804 44.804 531.002 348.1 1,043 11,438 11.02
TAX RATE 39.60%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 14.38%
1.0021 YEARS: TOTAL RETURN 14.38%
ANNUALIZED 14.35%
</TABLE>
FUND NAME: NUVEEN INS MUNI BOND FUND CLASS A
(SINCE 09/06/94)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/06/94 10.31 926 10,000
09/30/94 10.08 .04550 42.146 42.146 42.146 930 9,379 10.07
10/31/94 9.80 .04550 .0161 42.336 14.981 57.317 84.482 936 9,176 9.76
11/30/94 9.52 .04550 42.604 42.604 127.086 941 8,956 9.59
12/31/94 9.82 .04550 42.806 42.806 169.892 945 9,281 9.82
01/31/95 10.10 .04550 43.004 43.004 212,896 949 9,589 10.16
0 02/28/95 10.40 .04500 42.722 42.722 255.618 167.5 970 10,084 10.45
1 03/31/95 10.44 .04500 43.631 43.631 43.631 974 10,166 10.46
2 04/30/95 10.39 .04500 43.819 43.819 87.450 978 10,161 10.39
3 05/31/95 10.77 .04500 44.009 44.009 131.458 982 10,577 10.77
4 06/30/95 10.54 .04500 44.192 44.192 175.651 986 10,395 10.54
5 07/31/95 10.52 .04500 44.381 44.381 220.032 990 10,420 10.50
6 08/31/95 10.61 .04450 44.076 44.076 264.108 995 10,553 10.68
7 09/30/95 10.63 .04550 45.254 45.254 309.363 999 10,618 10.69
8 10/31/95 10.80 .04550 45.447 45.447 354.810 1,003 10,833 10.85
9 11/30/95 11.00 .04550 45.638 45.638 400.447 1,007 10,079 11.03
10 12/31/95 11.11 .04450 44.819 44.819 445.266 1,011 11,234 11.11
11 01/31/96 11.11 .04450 44.998 44.998 490.264 1,015 11,279 11.11
12 02/29/96 10.97 .04450 45.178 45.178 535.442 351.0 1,051 11,533 11.02
TAX RATE 39.60%
LOAD 4.50%
1.4812 YEARS: TOTAL RETURN 15.33%
ANNUALIZED 10.11%
</TABLE>
12
<PAGE>
FUND NAME: NUVEEN INS MUNI BOND FUND CLASS A
(SINCE 09/06/94)
<TABLE>
<CAPTION>
NAV INCOM TOTAL PERIOD
PER PER FROM DOLLAR TO DATE TAX ENDING ENDING REINV
PER DATE SHARE SHARE CAP GAINS FROM INCOME GAINS DISTR T-E INC SAVINGS SHARES WEALTH NAV
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/06/94 10.31 970 10,000
09/30/94 10.08 .04550 44.132 44.132 44.132 974 9,821 10.07
10/31/94 9.80 .04550 .0161 44.331 15.686 60.018 88.463 980 9,609 9.76
11/30/94 9.52 .04550 44.611 44.611 133.074 985 9,378 9.59
12/31/94 9.82 .04550 44.823 44.823 177.897 990 9,719 9.82
01/31/95 10.10 .04550 45.030 44.030 222.928 994 10,041 10.16
0 02/28/95 10.40 .04500 44.735 44.735 267.663 175.4 1,015 10,559 10.45
1 03/31/95 10.44 .04500 45.687 45.687 45.687 1,020 10,645 10.46
2 04/30/95 10.39 .04500 45.884 45.884 91.571 1,024 10,640 10.39
3 05/31/95 10.77 .04500 46.082 46.082 137.653 1,028 11,075 10.77
4 06/30/95 10.54 .04500 46.275 46.275 183.928 1,033 10,885 10.54
5 07/31/95 10.52 .04500 46.472 46.472 230.400 1,037 10,911 10.50
6 08/31/95 10.61 .04450 46.153 46.153 276.553 1,041 11,050 10.68
7 09/30/95 10.63 .04550 47.387 47.387 323.940 1,046 11,118 10.69
8 10/31/95 10.80 .04550 47.588 47.588 371.528 1,050 11,343 10.85
9 11/30/95 11.00 .04550 47.788 47.788 419.316 1,055 11,601 11.03
10 12/31/95 11.11 .04450 46.931 46.931 466.247 1,059 11,764 11.11
11 01/31/96 11.11 .04450 47.119 47.119 513.365 1,063 11,811 11.11
12 02/29/96 10.97 .04450 47.307 47.307 560.673 367.5 1,101 12,077 11.02
TAX RATE 39.60%
LOAD 0.00%
PAST YEAR: TOTAL RETURN 14.38%
1.4812 YEARS: TOTAL RETURN 20.77%
ANNUALIZED 13.59%
</TABLE>
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 29, 1996, was calculated
as follows:
annualized -------------------------------------------------------
standard [S((Total return in month X) - (Average monthly total
deviation(s)= return))/2/]
------------------------------------------------------ X S 12
number of months (36)
The calculation of annualized standard deviation for Class R Shares of the
National Fund for the three years ended February 29, 1996 was as follows:
<TABLE>
<CAPTION>
MONTHLY (TOTAL RETURN IN MONTH X) -
NATIONAL FUND TOTAL RETURNS (AVERAGE MONTHLY TOTAL RETURN)/2/
- ------------- ------------- ---------------------------------
<S> <C> <C>
Mar-93.......................... -1.68% 4.7852%
Apr-93.......................... 1.38% 0.7613%
May-93.......................... 0.62% 0.0127%
Jun-93.......................... 1.92% 1.9952%
Jul-93.......................... 0.06% 0.2003%
Aug-93.......................... 2.64% 4.5476%
Sep-93.......................... 1.32% 0.6602%
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
MONTHLY (TOTAL RETURN IN MONTH X) -
NATIONAL FUND TOTAL RETURNS (AVERAGE MONTHLY TOTAL RETURN)/2/
- ------------- ------------- ---------------------------------
<S> <C> <C>
Oct-93.......................... 0.29% 0.0473%
Nov-93.......................... -1.46% 3.8711%
Dec-93.......................... 2.05% 2.3793%
Jan-94.......................... 1.42% 0.8327%
Feb-94.......................... -3.06% 12.7271%
Mar-94.......................... -4.74% 27.5363%
Apr-94.......................... 0.37% 0.0189%
May-94.......................... 1.16% 0.4258%
Jun-94.......................... -0.60% 1.2266%
Jul-94.......................... 1.95% 2.0808%
Aug-94.......................... -0.02% 0.2783%
Sep-94.......................... -1.86% 5.6051%
Oct-94.......................... -2.04% 6.4898%
Nov-94.......................... -2.37% 8.2800%
Dec-94.......................... 3.56% 9.3178%
Jan-95.......................... 3.35% 8.0798%
Feb-95.......................... 3.45% 8.6583%
Mar-95.......................... 0.65% 0.0203%
Apr-95.......................... -0.02% 0.2783%
May-95.......................... 4.04% 12.4786%
Jun-95.......................... -1.60% 4.4416%
Jul-95.......................... 0.27% 0.0564%
Aug-95.......................... 1.31% 0.6440%
Sep-95.......................... 0.64% 0.0176%
Oct-95.......................... 2.05% 2.3793%
Nov-95.......................... 2.30% 3.2131%
Dec-95.......................... 1.34% 0.6931%
Jan-96.......................... 0.52% 0.0002%
Feb-96.......................... -0.94% 2.0953%
Average monthly total return.... 0.51%
Sum of Column................... 137.1343%
Number of months................ 36
</TABLE>
----------- -
Annualized Standard Deviation = ^ ^
(137.1343%/36) X ^12 = 6.76%
14
<PAGE>
VIII. RISK-ADJUSTED TOTAL RETURN
The risk-adjusted total return for the Class R Shares of the National Fund
over the three years ended February 29, 1996, was calculated as follows:
Annualized total return of Fund - average total
return of Ponder Varifact Municipal Variable Rate
Demand Bond Index
Risk-Adjusted Total
Return = -----------------------------------------------------
Annualized standard deviation of return (s)
6.02% - 3.139%
---------------
= 6.76%
= 0.426
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> NUVEEN INSURED MUNICIPAL BOND FUND NATIONAL CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 754788
<INVESTMENTS-AT-VALUE> 811091
<RECEIVABLES> 10419
<ASSETS-OTHER> 1285
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 822795
<PAYABLE-FOR-SECURITIES> 6032
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2713
<TOTAL-LIABILITIES> 8745
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 754899
<SHARES-COMMON-STOCK> 4280
<SHARES-COMMON-PRIOR> 1356
<ACCUMULATED-NII-CURRENT> 225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2622
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 56303
<NET-ASSETS> 46943
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 47027
<OTHER-INCOME> 0
<EXPENSES-NET> 5113
<NET-INVESTMENT-INCOME> 41914
<REALIZED-GAINS-CURRENT> 4403
<APPREC-INCREASE-CURRENT> 36886
<NET-CHANGE-FROM-OPS> 83202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1615
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10081
<NUMBER-OF-SHARES-REDEEMED> 7245
<SHARES-REINVESTED> 88
<NET-CHANGE-IN-ASSETS> 59272
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (1781)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3758
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5114
<AVERAGE-NET-ASSETS> 28993
<PER-SHARE-NAV-BEGIN> 10.40
<PER-SHARE-NII> .542
<PER-SHARE-GAIN-APPREC> .568
<PER-SHARE-DIVIDEND> .540
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.97
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> NUVEEN INSURED MUNICIPAL BOND FUND NATIONAL CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 754788
<INVESTMENTS-AT-VALUE> 811091
<RECEIVABLES> 10419
<ASSETS-OTHER> 1285
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 822795
<PAYABLE-FOR-SECURITIES> 6032
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2713
<TOTAL-LIABILITIES> 8745
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 754899
<SHARES-COMMON-STOCK> 475
<SHARES-COMMON-PRIOR> 386
<ACCUMULATED-NII-CURRENT> 225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2622
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 56303
<NET-ASSETS> 5151
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 47027
<OTHER-INCOME> 0
<EXPENSES-NET> 5113
<NET-INVESTMENT-INCOME> 41914
<REALIZED-GAINS-CURRENT> 4403
<APPREC-INCREASE-CURRENT> 36886
<NET-CHANGE-FROM-OPS> 83202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 192
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 662
<NUMBER-OF-SHARES-REDEEMED> 588
<SHARES-REINVESTED> 15
<NET-CHANGE-IN-ASSETS> 59272
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (1781)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3758
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5114
<AVERAGE-NET-ASSETS> 4028
<PER-SHARE-NAV-BEGIN> 10.31
<PER-SHARE-NII> .461
<PER-SHARE-GAIN-APPREC> .540
<PER-SHARE-DIVIDEND> .461
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.85
<EXPENSE-RATIO> 1.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> NUVEEN INSURED MUNICIPAL BOND FUND NATIONAL CLASS R
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 754788
<INVESTMENTS-AT-VALUE> 811091
<RECEIVABLES> 10419
<ASSETS-OTHER> 1285
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 822795
<PAYABLE-FOR-SECURITIES> 6032
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2713
<TOTAL-LIABILITIES> 8745
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 754899
<SHARES-COMMON-STOCK> 69754
<SHARES-COMMON-PRIOR> 70992
<ACCUMULATED-NII-CURRENT> 225
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2622
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 56303
<NET-ASSETS> 761956
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 47027
<OTHER-INCOME> 0
<EXPENSES-NET> 5113
<NET-INVESTMENT-INCOME> 41914
<REALIZED-GAINS-CURRENT> 4403
<APPREC-INCREASE-CURRENT> 36886
<NET-CHANGE-FROM-OPS> 83202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 40072
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13451
<NUMBER-OF-SHARES-REDEEMED> 17182
<SHARES-REINVESTED> 2492
<NET-CHANGE-IN-ASSETS> 59272
<ACCUMULATED-NII-PRIOR> 190
<ACCUMULATED-GAINS-PRIOR> (1781)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3758
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5114
<AVERAGE-NET-ASSETS> 690549
<PER-SHARE-NAV-BEGIN> 10.38
<PER-SHARE-NII> .570
<PER-SHARE-GAIN-APPREC> .540
<PER-SHARE-DIVIDEND> .570
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.92
<EXPENSE-RATIO> .63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<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 to
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> NUVEEN MASS INS CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 60265
<INVESTMENTS-AT-VALUE> 65215
<RECEIVABLES> 1013
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66351
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 251
<TOTAL-LIABILITIES> 251
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61427
<SHARES-COMMON-STOCK> 504
<SHARES-COMMON-PRIOR> 194
<ACCUMULATED-NII-CURRENT> 2
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (279)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4950
<NET-ASSETS> 5291
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3806
<OTHER-INCOME> 0
<EXPENSES-NET> 528
<NET-INVESTMENT-INCOME> 3278
<REALIZED-GAINS-CURRENT> 12
<APPREC-INCREASE-CURRENT> 2683
<NET-CHANGE-FROM-OPS> 5972
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 175
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 340
<NUMBER-OF-SHARES-REDEEMED> 40
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 6669
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> (291)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 348
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 529
<AVERAGE-NET-ASSETS> 3574
<PER-SHARE-NAV-BEGIN> 10.06
<PER-SHARE-NII> .512
<PER-SHARE-GAIN-APPREC> .433
<PER-SHARE-DIVIDEND> .515
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.49
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> NUVEEN MASS INS CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 60265
<INVESTMENTS-AT-VALUE> 65215
<RECEIVABLES> 1013
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66351
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 251
<TOTAL-LIABILITIES> 251
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61427
<SHARES-COMMON-STOCK> 67
<SHARES-COMMON-PRIOR> 34
<ACCUMULATED-NII-CURRENT> 2
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (279)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4950
<NET-ASSETS> 706
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3806
<OTHER-INCOME> 0
<EXPENSES-NET> 528
<NET-INVESTMENT-INCOME> 3278
<REALIZED-GAINS-CURRENT> 12
<APPREC-INCREASE-CURRENT> 2683
<NET-CHANGE-FROM-OPS> 5972
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 23
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35
<NUMBER-OF-SHARES-REDEEMED> 3
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 6669
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> (291)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 348
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 529
<AVERAGE-NET-ASSETS> 544
<PER-SHARE-NAV-BEGIN> 10.04
<PER-SHARE-NII> .434
<PER-SHARE-GAIN-APPREC> .435
<PER-SHARE-DIVIDEND> .439
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.47
<EXPENSE-RATIO> 1.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> NUVEEN MASS INS CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 60265
<INVESTMENTS-AT-VALUE> 65215
<RECEIVABLES> 1013
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66351
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 251
<TOTAL-LIABILITIES> 251
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61427
<SHARES-COMMON-STOCK> 5724
<SHARES-COMMON-PRIOR> 5678
<ACCUMULATED-NII-CURRENT> 2
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (279)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4950
<NET-ASSETS> 60102
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3806
<OTHER-INCOME> 0
<EXPENSES-NET> 528
<NET-INVESTMENT-INCOME> 3278
<REALIZED-GAINS-CURRENT> 12
<APPREC-INCREASE-CURRENT> 2683
<NET-CHANGE-FROM-OPS> 5972
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3106
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 338
<NUMBER-OF-SHARES-REDEEMED> 503
<SHARES-REINVESTED> 212
<NET-CHANGE-IN-ASSETS> 6669
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> (291)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 348
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 529
<AVERAGE-NET-ASSETS> 59113
<PER-SHARE-NAV-BEGIN> 10.06
<PER-SHARE-NII> .538
<PER-SHARE-GAIN-APPREC> .445
<PER-SHARE-DIVIDEND> .543
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.50
<EXPENSE-RATIO> 0.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> NUVEEN NEW YORK INSURED CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 340979
<INVESTMENTS-AT-VALUE> 366533
<RECEIVABLES> 4096
<ASSETS-OTHER> 246
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 370875
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1411
<TOTAL-LIABILITIES> 1411
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 343935
<SHARES-COMMON-STOCK> 2332
<SHARES-COMMON-PRIOR> 715
<ACCUMULATED-NII-CURRENT> 59
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (84)
<ACCUM-APPREC-OR-DEPREC> 25554
<NET-ASSETS> 24747
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21353
<OTHER-INCOME> 0
<EXPENSES-NET> 2458
<NET-INVESTMENT-INCOME> 18895
<REALIZED-GAINS-CURRENT> 973
<APPREC-INCREASE-CURRENT> 15965
<NET-CHANGE-FROM-OPS> 35834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 834
<DISTRIBUTIONS-OF-GAINS> 56
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1778
<NUMBER-OF-SHARES-REDEEMED> 221
<SHARES-REINVESTED> 59
<NET-CHANGE-IN-ASSETS> 16800
<ACCUMULATED-NII-PRIOR> 263
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (56)
<GROSS-ADVISORY-FEES> 1940
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2458
<AVERAGE-NET-ASSETS> 15021
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> .521
<PER-SHARE-GAIN-APPREC> .492
<PER-SHARE-DIVIDEND> .524
<PER-SHARE-DISTRIBUTIONS> .029
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.61
<EXPENSE-RATIO> .93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> NUVEEN NEW YORK INSURED CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 340979
<INVESTMENTS-AT-VALUE> 366533
<RECEIVABLES> 4096
<ASSETS-OTHER> 246
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 370875
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1411
<TOTAL-LIABILITIES> 1411
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 343935
<SHARES-COMMON-STOCK> 129
<SHARES-COMMON-PRIOR> 28
<ACCUMULATED-NII-CURRENT> 59
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (84)
<ACCUM-APPREC-OR-DEPREC> 25554
<NET-ASSETS> 1369
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21353
<OTHER-INCOME> 0
<EXPENSES-NET> 2458
<NET-INVESTMENT-INCOME> 18895
<REALIZED-GAINS-CURRENT> 973
<APPREC-INCREASE-CURRENT> 15965
<NET-CHANGE-FROM-OPS> 35834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 37
<DISTRIBUTIONS-OF-GAINS> 3
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113
<NUMBER-OF-SHARES-REDEEMED> 14
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 16800
<ACCUMULATED-NII-PRIOR> 263
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (56)
<GROSS-ADVISORY-FEES> 1940
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2458
<AVERAGE-NET-ASSETS> 780
<PER-SHARE-NAV-BEGIN> 10.12
<PER-SHARE-NII> .442
<PER-SHARE-GAIN-APPREC> .524
<PER-SHARE-DIVIDEND> .447
<PER-SHARE-DISTRIBUTIONS> .029
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.61
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> NUVEEN NEW YORK INSURED CLASS R
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 340979
<INVESTMENTS-AT-VALUE> 366533
<RECEIVABLES> 4096
<ASSETS-OTHER> 246
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 370875
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1411
<TOTAL-LIABILITIES> 1411
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 343935
<SHARES-COMMON-STOCK> 32374
<SHARES-COMMON-PRIOR> 34002
<ACCUMULATED-NII-CURRENT> 59
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (84)
<ACCUM-APPREC-OR-DEPREC> 25554
<NET-ASSETS> 343348
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21353
<OTHER-INCOME> 0
<EXPENSES-NET> 2458
<NET-INVESTMENT-INCOME> 18895
<REALIZED-GAINS-CURRENT> 973
<APPREC-INCREASE-CURRENT> 15965
<NET-CHANGE-FROM-OPS> 35834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 18228
<DISTRIBUTIONS-OF-GAINS> 941
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1292
<NUMBER-OF-SHARES-REDEEMED> 4308
<SHARES-REINVESTED> 1388
<NET-CHANGE-IN-ASSETS> 16800
<ACCUMULATED-NII-PRIOR> 263
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (56)
<GROSS-ADVISORY-FEES> 1940
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2458
<AVERAGE-NET-ASSETS> 315329
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> .548
<PER-SHARE-GAIN-APPREC> .495
<PER-SHARE-DIVIDEND> .554
<PER-SHARE-DISTRIBUTIONS> .029
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.61
<EXPENSE-RATIO> .67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 18
NUVEEN MUNICIPAL BOND FUND
NUVEEN MULTISTATE TAX-FREE TRUST
NUVEEN INSURED TAX-FREE BOND FUND, INC.
NUVEEN TAX-FREE BOND FUND, INC.
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
Multiple Class Plan
Adopted Pursuant to Rule 18f-3
WHEREAS, Nuveen Municipal Bond Fund, a Massachusetts business trust, Nuveen
Multistate Tax-Free Trust, a Massachusetts business trust, Nuveen Insured Tax-
Free Bond Fund, Inc., a Minnesota corporation, Nuveen Tax-Free Bond Fund, Inc.,
a Minnesota corporation, and Nuveen California Tax-Free Fund, Inc., a Maryland
corporation (each a "Fund" and collectively the "Funds"), each engage in
business as an open-end management investment company and are each registered as
such under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, each Fund is authorized to and does issue shares of common stock
or shares of beneficial interest in separate series, with the shares
representing the interests in a separate portfolio of securities and other
assets (each Fund's series relating to long-term securities together with all
other such series subsequently established by a Fund being referred to herein
individually as a "Series" and collectively as the "Series");
WHEREAS, each Fund is authorized to and has divided the shares of each
Series into three classes, designated as Class A Shares, Class C Shares and
Class R Shares; and
WHEREAS, the Board of each Fund as a whole, and the Trustees or Directors,
as applicable, who are not interested persons of each such Fund (as defined in
the Act) (the "Non-Interested Members"), after having been furnished and having
evaluated information reasonably necessary to evaluate this Multiple Class Plan
(the "Plan"), have determined in the exercise of their reasonable business
judgment that the Plan is in the best interests of each class of each Series
individually, and each Series and the Fund as a whole.
WHEREAS, each Fund adopted this Plan in accordance with Rule 18f-3 under
the Act, effective August 1, 1995.
WHEREAS, each Fund's Board, as a whole, and the Non-Interested Members,
approved certain pricing enhancements that required amendments to this Plan.
NOW, THEREFORE, each Fund hereby adopts this amended Plan, effective July
1, 1996, in accordance with Rule 18f-3 under the Act:
1. Class Differences. Each class of shares of a Series shall represent
interests in the same portfolio of investments of that Series and, except as
otherwise set forth in this Plan, shall differ solely with respect to: (i)
distribution, service and other charges and expenses as provided for in
<PAGE>
Sections 2 and 3 of this Plan; (ii) the exclusive right of each class of shares
to vote on matters submitted to shareholders that relate solely to that class or
for which the interests of one class differ from the interests of another class
or classes; (iii) such differences relating to eligible investors as may be set
forth in the prospectus and statement of additional information of each Series,
as the same may be amended or supplemented from time to time (each a
"Prospectus" and "SAI" and collectively, the "Prospectus" and "SAI"); (iv) the
designation of each class of shares; and (v) conversion features.
2. DISTRIBUTION AND SERVICE ARRANGEMENTS; CONVERSION FEATURES. Class A
Shares, Class C Shares and Class R Shares of each Fund shall differ in the
manner in which such shares are distributed and in the services provided to
shareholders of each such class as follows:
a) Class A Shares:
(i) Class A Shares shall be sold at net asset value subject to
a front-end sales charge set forth in the Prospectus and
SAI;
(ii) Class A Shares shall be subject to an annual service fee
("Service Fee") pursuant to a Plan of Distribution and
Service Pursuant to Rule 12b-1 (the "12b-1 Plan") not to
exceed 0.25 of 1% of the average daily net assets of the
Series allocable to Class A Shares, which, as set forth in
the Prospectus, SAI and the 12b-1 Plan, may be used to
compensate certain authorized dealers for providing
ongoing account services to shareholders; and
(iii) Class A Shares shall not be subject to a Distribution Fee
(as hereinafter defined); and
(iv) As described in the Prospectus and SAI, certain Class A
shares redeemed within 18 months of purchase shall be
subject to a contingent deferred sales charge ("CDSC") of
1% of the lower of (a) the net asset value of Class A
Shares at the time of purchase or (b) the net asset value
of Class A Shares at the time of redemption, as set forth
in the Prospectus and SAI.
b) Class C Shares:
(i) Class C Shares shall be sold at net asset value without a
front-end sales charge;
(ii) Class C Shares shall be subject to a Service Fee pursuant
to the 12b-1 Plan not to exceed 0.25 of 1% of average
daily net assets of the Series allocable to Class C
Shares, which, as set forth in the Prospectus, SAI and the
12b-1 Plan, may be used to compensate certain authorized
dealers for providing ongoing account services to
shareholders;
2
<PAGE>
(iii) Class C Shares shall be subject to an annual distribution
fee ("Distribution Fee") pursuant to the 12b-1 Plan not to
exceed 0.75 of 1% of average daily net assets of the
Series allocable to Class C Shares less the amount of any
CDSC received by John Nuveen & Co. Incorporated, the
Funds' distributor, and for which any applicable
reinstatement period, as set forth in the Prospectus and
SAI, has expired, which, as set forth in the Prospectus,
SAI and the 12b-1 Plan, will be used to compensate certain
authorized dealers over time for the sale of Class C
Shares;
(iv) Class C Shares redeemed within 12 months of purchase shall
be subject to a CDSC of 1% of the lower of (a) the net
asset value of Class C Shares at the time of purchase or
(b) the net asset value of Class C Shares at the time of
redemption, as set forth in the Prospectus and SAI; and
(v) Class C Shares will automatically convert to Class A
Shares six years after purchase, as set forth in the
Prospectus and SAI.
c) Class R Shares:
(i) Class R Shares shall be sold at net asset value without a
front-end sales charge;
(ii) Class R Shares shall not be subject to a Service Fee; and
(iii) Class R Shares shall not be subject to a Distribution
Fee.
3. ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. a) Investment
Income, and Realized and Unrealized Gains and Losses. The daily investment
income, and realized and unrealized gains and losses, of a Series will be of
allocated to each class of shares based on each class' relative percentage of
the total value of shares outstanding of the Series at the beginning of the day,
after such net assets are adjusted for the prior day's capital share
transactions.
b) Series Level Expenses. Expenses that are attributable to a
Series, but not a particular class thereof ("Series level expenses"), will be
allocated to each class of shares based on each class' relative percentage of
the total value of shares outstanding of the Series at the beginning of the day,
after such net assets are adjusted for the prior day's capital share
transactions. Series level expenses include fees for services that are received
equally by the classes under the same fee arrangement. All expenses attributable
to a Series that are not "class level expenses" (as defined below) shall be
Series level expenses, including but not limited to transfer agency fees and
expenses, share registration expenses, and shareholder reporting expenses.
c) Class Level Expenses. Expenses that are directly attributable
to a particular class of shares, including the expenses relating to the
distribution of a class' shares, or to services provided to the shareholders of
a class, as set forth in Section 2 of this Plan, will be incurred by that
3
<PAGE>
class of shares. Class level expenses include expenses for services that are
unique to a class of shares in either form or amount. "Class level expenses"
shall include, but not be limited to, 12b-1 Service Fees, 12b-1 Distribution
Fees, expenses associated with the addition of share classes to a fund (to the
extent that the expenses were not fully accrued prior to the issuance of the new
classes of shares), expenses of administrative personnel and services required
to support the shareholders of a specific class, litigation or other legal
expenses relating to a specific class of shares, directors' fees or expenses
incurred as a result of issues relating to a specific class of shares, and
accounting expenses relating to a specific class of shares.
d) Fee Waivers and Expense Reimbursements. On a daily basis, if the
Series level expenses and the class level expenses (not including 12b-1 plan
payments) exceed the daily expense cap for the Series, an appropriate
waiver/reimbursement will be made to the Series. The amount of such
reimbursement to each class will be in an amount such that the expenses of the
class with the highest expense ratio (excluding Service Fees and Distribution
Fees) will be equal to the daily expense cap after reimbursement. The expense
reimbursement will be allocated to each class of shares based on each class'
relative percentage of the total value of shares outstanding of the Series at
the beginning of the day, after such net assets are adjusted for the prior day's
capital share transactions.
4. Exchange Privilege. Shares of a class of a Series may be exchanged
only for shares of the same class of another Series, except as otherwise set
forth in the Prospectus and SAI.
5. Term and Termination. a) The Series. This Plan shall become effective
with respect to each Series on August 1, 1995, and shall continue in effect with
respect to such Class A, Class C and Class R Shares of each such Series until
terminated in accordance with the provisions of Section 5(c) hereof.
b) Additional Series or Classes. This Plan shall become effective with
respect to any class of shares of a Series other than Class A, Class C or Class
R and with respect to each additional Series or class thereof established by a
Fund after the date hereof and made subject to this Plan upon commencement of
the initial public offering thereof (provided that the Plan has previously been
approved with respect to such additional Series or class by votes of a majority
of both (i) the members of the Board of a Fund, as a whole, and (ii) the
Non-Interested Members, cast at a meeting held before the initial public
offering of such additional Series or classes thereof), and shall continue in
effect with respect to each such additional Series or class until terminated in
accordance with provisions of Section 5(c) hereof. An addendum setting forth
such specific and different terms of such additional series or classes shall be
attached to or made part of this Plan.
c) Termination. This Plan may be terminated at any time with respect
to any Fund or any Series or class thereof, as the case may be, by vote of a
majority of both the members of the Board of a Fund, as a whole, and the
Non-Interested Members. The Plan may remain in effect with respect to a
particular Fund or any Series or class thereof even if it has been terminated in
accordance with this Section 5(c) with respect to any other Fund or Series or
class thereof.
4
<PAGE>
6. Subsequent Funds. The parties hereto intend that any open-end
investment company established subsequent to the date set forth below for which
Nuveen Advisory Corp. acts as investment adviser (each a "Future Fund"), will be
covered by the terms and conditions of this Plan, provided that the Board of
such Future Fund as a whole, and the Non-Interested Members of such Future Fund,
after having been furnished and having evaluated information reasonably
necessary to evaluate the Plan, have determined in the exercise of their
reasonable business judgment that the Plan is in the best interests of each
class of each Series of such Future Fund individually, and each Series of such
Future Fund and such Future Fund as a whole.
7. Amendments. a) General. Except as set forth below, any material
amendment to this Plan affecting a Fund or Series or class thereof shall require
the affirmative vote of a majority of both the members of the Board of that
Fund, as a whole, and the Non-Interested Members that the amendment is in the
best interests of each class of each Series individually and each Series as a
whole.
b) Future Funds. Any amendment to the Plan solely for the purpose of
adding a Future Fund as a party hereto in accordance with Section 6, will not
require any action by the Boards of the Funds.
Dated: April 23, 1996
5
<PAGE>
Exhibit 99(f)
Certified Resolution
--------------------
The undersigned, James J. Wesolowski, hereby certifies, on behalf of Nuveen
Insured 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 January 21, 1996, and (3) that
said resolution has not been amended or rescinded and remains in full force and
effect.
June 10, 1996
/s/ James J. Wesolowski
------------------------------
James J. Wesolowski, Secretary
<PAGE>
FURTHER RESOLVED, that each member of the Board and officer of the Fund who may
be required to execute the Registration Statement on Form N-1A, or any amendment
or amendments thereto, be, and each of them hereby is, authorized to execute a
power of attorney appointing Richard J. Franke, Timothy R. Schwertfeger, James
J. Wesolowski, Larry W. Martin, Gifford R. Zimmerman, and Thomas S. Harman, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign the Registration Statement and any and all
amendments thereto and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, and ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
