<PAGE>
As filed with the Securities and Exchange Commission on March 31, 1995
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[_]
Registration No. 33-43285 [_]
Pre-Effective Amendment No.--- [_]
Post-Effective Amendment No. 8
--- [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
Registration No. 811-6435 [_]
Amendment No. 11
--- [X]
NUVEEN MULTISTATE TAX-FREE TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)
333 West Wacker Drive, Chicago, 60606
Illinois (Zip Code)
(Address of Principal Executive
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
James J. Wesolowski, Esq.-Vice President and Secretary
333 West Wacker Drive
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[_] Immediately upon filing pursuant [X] on March 31, 1995 pursuant to para-
to paragraph (b), or graph (b), or
[_] 60 days after pursuant [_] on (Date) pursuant to paragraph (a)
to paragraph (a), or of Rule 485 and request for
acceleration.
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) FOR THE FOLLOWING SERIES: NUVEEN ARIZONA TAX-FREE
VALUE FUND, NUVEEN FLORIDA TAX-FREE VALUE FUND, NUVEEN MARYLAND TAX-FREE VALUE
FUND, NUVEEN MICHIGAN TAX-FREE VALUE FUND, NUVEEN NEW JERSEY TAX-FREE VALUE
FUND, NUVEEN PENNSYLVANIA TAX-FREE VALUE FUND, AND NUVEEN VIRGINIA TAX-FREE
VALUE FUND. A RULE 24F-2 NOTICE FOR THE REGISTRANT'S FISCAL YEAR ENDED JANUARY
31, 1995, WAS FILED ON MARCH 22, 1995.
CALCULATION OF REGISTRATION FEE FOR SHARES OF
MARYLAND TAX-FREE VALUE FUND
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES BEING OFFERING PRICE OFFERING REGISTRATION
BEING REGISTERED REGISTERED PER UNIT* PRICE* FEE**
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class R Shares, $.01 par value. 55,089 $9.91 $545,932 $100.00
-------------------------------------------------------------------------------------------
</TABLE>
-------------------------------------------------------------------------------
*Estimated pursuant to Rule 457(d) of the Securities Act of 1933, based upon
net asset value per share on March 22, 1995.
** Registrant has elected to calculate its filing fee in the manner described
in Rule 24e-2 under the Investment Company Act of 1940. The total amount of
securities redeemed during the previous fiscal year was $10,757,200. The
total amount of redeemed securities used for reduction pursuant to Rule
24c-2(a) or Rule 24f-2(c) was $10,501,266. The amount of redeemed securi-
ties being used for reduction of the registration fee in this Amendment is
$255,934.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 8
TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FILE NO. 33-43285
AND
AMENDMENT NO. 11
TO
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 811-6435
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 MULTISTATE TAX-FREE TRUST
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
ITEM IN PART A
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 Sales Charge Program; How to Buy
Offered Fund Shares; Distribution and Service
Plans; Management of the Funds; Net Asset
Value
8 Redemption or Repurchase How to Redeem Fund Shares
9 Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM IN PART B LOCATION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
-------------- -------------------------
<S> <C>
10 Cover Page Cover Page
11 Table of Contents Cover Page
12 General Information and History Not Applicable
13 Investment Objectives and Fundamental Policies and Investment
Policies Portfolio
14 Management of the Fund Management
15 Control Persons and Principal Management
Holders of Securities
16 Investment Advisory and Other Investment Adviser and Investment
Services Management Agreement; Distribution and
Service Plans; Independent Public
Accountants and Custodian
17 Brokerage Allocation and Other Portfolio Transactions
Practices
18 Capital Stock and Other See "General Information" in the Prospectus
Securities
19 Purchase, Redemption and Pricing Additional Information on the Purchase and
of Securities Redemption of Fund Shares; Distribution and
Service Plans; Net Asset Value
20 Tax Status Tax Matters
21 Underwriters Additional Information on the Purchase and
Redemption of Fund Shares; See "How to Buy
Fund Shares" and "Management of the Funds"
in the Prospectus
22 Calculation of Performance Data Performance Information
23 Financial Statements Incorporated by Reference to Annual Report
to Shareholders
</TABLE>
<PAGE>
PART A--PROSPECTUS
NUVEEN MULTISTATE TAX-FREE TRUST
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
NUVEEN MULTISTATE TAX-FREE TRUST
NUVEEN ARIZONA TAX-FREE VALUE FUND
NUVEEN FLORIDA TAX-FREE VALUE FUND
NUVEEN MARYLAND TAX-FREE VALUE FUND
NUVEEN MICHIGAN TAX-FREE VALUE FUND
NUVEEN NEW JERSEY TAX-FREE VALUE FUND
NUVEEN PENNSYLVANIA TAX-FREE VALUE FUND
NUVEEN VIRGINIA TAX-FREE VALUE FUND
. PROSPECTUS
. APPLICATION
<PAGE>
THE NUVEEN FAMILY OF TAX-FREE VALUE FUNDS
Nuveen offers individual investors 16 different long-
term tax-free mutual funds to choose from, including:
NATIONAL LONG- Nuveen Municipal Bond Fund
TERM FUNDS Nuveen Insured Municipal Bond Fund
STATE LONG-TERM Arizona
FUNDS Nuveen Arizona Tax-Free Value Fund
California
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
Florida
Nuveen Florida Tax-Free Value Fund
Maryland
Nuveen Maryland Tax-Free Value Fund
Massachusetts
Nuveen Massachusetts Tax-Free Value Fund
Nuveen Massachusetts Insured Tax-Free Value Fund
Michigan
Nuveen Michigan Tax-Free Value Fund
New Jersey
Nuveen New Jersey Tax-Free Value Fund
New York
Nuveen New York Tax-Free Value Fund
Nuveen New York Insured Tax-Free Value Fund
Ohio
Nuveen Ohio Tax-Free Value Fund
Pennsylvania
Nuveen Pennsylvania Tax-Free Value Fund
Virginia
Nuveen Virginia Tax-Free Value Fund
<PAGE>
NUVEEN MULTISTATE TAX-FREE TRUST
Prospectus
March 31, 1995
NUVEEN ARIZONA TAX-FREE VALUE FUND
NUVEEN FLORIDA TAX-FREE VALUE FUND
NUVEEN MARYLAND TAX-FREE VALUE FUND
NUVEEN MICHIGAN TAX-FREE VALUE FUND
NUVEEN NEW JERSEY TAX-FREE VALUE FUND
NUVEEN PENNSYLVANIA TAX-FREE VALUE FUND
NUVEEN VIRGINIA TAX-FREE VALUE FUND
Nuveen Multistate Tax-Free Trust (the "Trust") is a family of single-state tax-
free mutual funds (the "Funds"), each designed to provide as high a level of
current interest income exempt from both regular federal income tax and the ap-
plicable state personal income tax as is consistent, in the view of the Fund's
management, with preservation of capital. Each Fund invests in investment grade
quality, long-term Municipal Obligations judged by the Fund's investment ad-
viser to offer the best values among Municipal Obligations of similar credit
quality.
Each Fund has adopted a Flexible Sales Charge Program which provides you with
alternative ways of purchasing Fund shares based upon your individual invest-
ment needs and preferences. You may purchase Class A Shares at a price equal to
their net asset value plus an up-front sales charge. You may purchase Class C
Shares without any up-front sales charge at a price equal to their net asset
value, but subject to an annual distribution fee designed to compensate securi-
ties dealers over time for the sale of Fund shares. Class C Shares automati-
cally convert to Class A Shares six years after purchase. Both Class A Shares
and Class C Shares are also subject to annual service fees, which are used to
compensate securities dealers for providing you with ongoing financial advice
and other services. Under the Flexible Sales Charge Program, all Fund shares
outstanding as of September 6, 1994, have been designated as Class R Shares.
Class R Shares are available for purchase at a price equal to their net asset
value only under certain limited circumstances, or by specified investors, as
described herein. See "How to Buy Fund Shares."
This Prospectus contains information you should know before investing in the
Funds. Please retain it for future reference. You can find more detailed infor-
mation about the Funds in the "Statement of Additional Information" dated March
31, 1995. For a free copy of this Statement, write to the Funds, c/o John
Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, IL 60606, or call
Nuveen toll-free at 800-621-7227. The Statement has been filed with the Securi-
ties and Exchange Commission and is incorporated by reference into this Pro-
spectus.
Shares of the Funds are not deposits or obligations of, or guaranteed or en-
dorsed by, any bank and are not federally insured by the Federal Deposit Insur-
ance 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 AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
JOHN NUVEEN & CO. INCORPORATED
FOR INFORMATION, CALL TOLL-FREE 800-621-7227
<PAGE>
CONTENTS
3 Summary of Fund Expenses
--------------------------------------------------------------------------------
5 How to Determine if One of the Funds Is Right for You
--------------------------------------------------------------------------------
Financial Highlights
10
--------------------------------------------------------------------------------
Who Is Responsible for the Operation of the Funds?
18
--------------------------------------------------------------------------------
What are the Funds' Investment Objectives and Policies?
19
--------------------------------------------------------------------------------
Flexible Sales Charge Program
25
--------------------------------------------------------------------------------
How to Buy Fund Shares
27
--------------------------------------------------------------------------------
Distribution and Service Plans
39
--------------------------------------------------------------------------------
How to Redeem Fund Shares
40
--------------------------------------------------------------------------------
Management of the Funds
43
--------------------------------------------------------------------------------
How the Funds Show Performance
47
--------------------------------------------------------------------------------
Distributions and Taxes
49
--------------------------------------------------------------------------------
Net Asset Value
53
--------------------------------------------------------------------------------
General Information
54
--------------------------------------------------------------------------------
Appendix A--Special State Factors and State Tax Treatment
--------------------------------------------------------------------------------
Appendix B--Taxable Equivalent Yield Tables
--------------------------------------------------------------------------------
Application
--------------------------------------------------------------------------------
2
<PAGE>
SUMMARY OF FUND EXPENSES
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EACH FUND
SHAREHOLDER TRANSACTION -----------------------
EXPENSES (AS A PERCENT OF OFFERING PRICE) CLASS A CLASS C CLASS R
----------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases 4.50% None None
Maximum Sales Load Imposed on Reinvested Dividends None None None
Redemption Fees None None None
Exchange Fees None None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES, AFTER
FEE WAIVERS AND TOTAL
EXPENSE EXPENSES,
REIMBURSEMENTS WITHOUT FEE
(AS A PERCENT OF OTHER WAIVERS AND
AVERAGE NET MANAGEMENT 12B-1 OPERATING TOTAL EXPENSE
ASSETS)(1) FEES FEES(2) EXPENSES EXPENSES REIMBURSEMENTS
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ARIZONA FUND
Class A None .25% .75% 1.00% 1.60%
Class C None 1.00% .75% 1.75% 3.52%
Class R .24% None .51% .75% 1.06%
FLORIDA FUND
Class A None .25% .75% 1.00% 1.56%
Class C None 1.00% .75% 1.75% 2.85%
Class R .46% None .29% .75% .84%
MARYLAND FUND
Class A None .25% .75% 1.00% 1.59%
Class C .44% 1.00% .31% 1.75% 1.86%
Class R .41% None .34% .75% .89%
MICHIGAN FUND
Class A None .25% .75% 1.00% 2.61%
Class C None 1.00% .75% 1.75% 3.52%
Class R .34% None .41% .75% .96%
NEW JERSEY FUND
Class A .24% .25% .51% 1.00% 1.31%
Class C .30% 1.00% .45% 1.75% 2.00%
Class R .41% None .34% .75% .89%
PENNSYLVANIA FUND
Class A None .25% .75% 1.00% 1.87%
Class C None 1.00% .75% 1.75% 2.52%
Class R .39% None .36% .75% .91%
VIRGINIA FUND
Class A None .25% .75% 1.00% 1.57%
Class C .09% 1.00% .66% 1.75% 2.21%
Class R .48% None .27% .75% .82%
</TABLE>
--------
(1) In order to prevent total operating expenses (ex-
cluding any distribution or service fees) from ex-
ceeding .75 of 1% of the average daily net asset
value of any class of shares of a Fund for the fis-
cal year ended January 31, 1995, Nuveen Advisory
agreed to waive all or a portion of its management
fees or reimburse certain expenses of each Fund.
Nuveen Advisory has agreed to continue its fee
waivers and expense reimbursements through July 31,
1995, and it is anticipated that Nuveen Advisory
will continue its fee waivers and expense reim-
bursements for some length of time thereafter.
3
<PAGE>
SUMMARY OF FUND EXPENSES (CONTINUED)
------------------------------------------------------------------------------
(2) Class C Shares are subject to an annual distribu-
tion fee of .75 of 1% of average daily net assets
to compensate Authorized Dealers over time for the
sale of Fund shares. Both Class A Shares and Class
C Shares of each Fund are subject to an annual
service fee of .25 of 1% of average daily net as-
sets to compensate Authorized Dealers for ongoing
financial advice and other services. See "Distribu-
tion and Service Plans." Long-term holders of Class
C Shares may pay more in Rule 12b-1 fees than the
economic equivalent of the maximum front-end sales
charge permitted under the National Association of
Securities Dealers Rules of Fair Practice.
The purpose of the tables above is to help you under-
stand all expenses and fees that you would bear di-
rectly or indirectly as a Fund shareholder. The ex-
penses and fees shown are for the fiscal year ended
January 31, 1995.
EXAMPLE*
The following example applies to each of the Funds. You
would pay the following expenses on a $1,000 investment
over various time periods, assuming (1) a 5% annual
rate of return and (2) redemption at the end of each
time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $55 $75 $98 $162
Class C $18 $55 $95 $168
Class R $ 8 $24 $42 $ 93
</TABLE>
--------
*This example does not represent past or future ex-
penses. Actual expenses may be greater or less than
those shown. Moreover, a Fund's actual rate of return
may be greater or less than the hypothetical 5% return
shown in this example. This example assumes that the
percentage amounts listed under Annual Operating Ex-
penses remain the same in each of the periods. The ten-
year figure for Class C Shares reflects the automatic
conversion of Class C Shares into Class A Shares six
years after purchase. Based on the foregoing assump-
tions, the expenses incurred on an investment in Class
C Shares will exceed the expenses incurred on an in-
vestment in Class A Shares sometime in the sixth year
after purchase. You should also note that Class R
Shares are available for purchase only under certain
limited circumstances, or by specified investors. For
additional information about each Fund's fees and ex-
penses, see "Distribution and Service Plans" and "Man-
agement of the Funds."
4
<PAGE>
HOW TO DETERMINE IF ONE OF THE FUNDS IS RIGHT FOR YOU
------------------------------------------------------------------------------
There are many reasons why you might invest in one of
the Funds. These can include:
. lowering the tax burden on your investment income
. earning regular monthly dividends
. seeking to preserve your investment capital
. systematically setting money aside for retirement,
college funding or estate planning purposes
While there can be no assurance that the Funds will en-
able you to achieve your individual investment goals,
they have been designed for investors who have these
kinds of investment goals in mind.
In addition, each Fund incorporates the following fea-
tures and benefits. You should carefully review the
more detailed description of these features and bene-
fits elsewhere in the Prospectus to make sure they
serve your individual investment goals.
MONTHLY, DOUBLE Each Fund provides monthly dividends exempt from regu-
TAX-FREE INCOME lar federal and applicable state personal income taxes
for in-state residents. In Florida, which presently has
no state personal income tax, Florida Fund shares are
exempt from the Florida intangible personal property
tax.
DIVERSIFIED, Each Fund purchases investment grade quality Municipal
INVESTMENT Obligations issued within its respective state. Each
GRADE QUALITY Fund is diversified and maintains diversity within its
PORTFOLIO portfolio by selecting Municipal Obligations of differ-
ent issuers. Each Fund further enhances its portfolio
mix by purchasing Municipal Obligations of different
types and purposes.
EXPERIENCED
MANAGEMENT Each Fund is managed by Nuveen Advisory Corp. ("Nuveen
Advisory"), a wholly-owned subsidiary of John Nuveen &
Co. Incorporated ("Nuveen"). Founded in 1898, Nuveen is
the oldest and largest investment banking firm in the
country devoted exclusively to tax-exempt securities.
Nuveen Advisory currently manages 76 different tax-free
portfolios representing approximately $30 billion in
assets.
5
<PAGE>
------------------------------------------------------------------------------
VALUE INVESTING As a guiding policy, Nuveen Advisory's portfolio manag-
ers seek investment grade quality, undervalued or un-
derrated 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 fed-
eral income tax and the applicable state personal in-
come tax as is consistent, in the view of the Fund's
management, with preservation of capital, regardless of
which direction the market may move.
NUVEEN RESEARCH
Nuveen Advisory's portfolio managers call upon the re-
sources of Nuveen's Research Department, the largest in
the investment banking industry devoted exclusively to
tax-exempt securities. Nuveen research analysts
reviewed in 1994 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 ini-
tial investment of $1,000 in a particular class. See
"How to Buy Fund Shares."
FLEXIBLE SALES For many investors, working with a professional finan-
CHARGE PROGRAM cial adviser is an important part of their financial
strategy. Because Nuveen recognizes the value a finan-
cial adviser can provide in developing and implementing
a comprehensive plan for your financial future,
Nuveen's open-end, long-term bond funds ("Nuveen Mutual
Funds") are sold with a sales charge, either at the
time of purchase or over time in the form of a distri-
bution fee. This provides your financial adviser with
compensation for the professional advice and service
you receive in financial planning and investment selec-
tion.
6
<PAGE>
------------------------------------------------------------------------------
Each Fund has adopted a Flexible Sales Charge Program
which provides you with alternative ways of purchasing
Fund shares based upon your individual investment needs
and preferences. As described below, each Fund offers
Class A Shares, Class C Shares and, under certain lim-
ited circumstances, Class R Shares. In deciding which
class of a Fund's shares to purchase, you should con-
sider all relevant factors, including the dollar amount
of your purchase, the length of time you expect to hold
the shares, the amount of any applicable up-front sales
charge, the amount of any applicable distribution or
service fee that may be incurred while you own the
shares, and whether or not you will be reinvesting in-
come or capital gain distributions in additional
shares. For assistance with this decision, please refer
to the tables under "Summary of Fund Expenses" on page
3 of this Prospectus which set forth examples of the
expenses applicable to each class of shares, or consult
your financial adviser. The following summary describes
the three classes of shares offered by each Fund:
Class A Shares
. available at net asset value plus an up-front sales
charge
. certain purchasers qualify for a reduction or waiver
of the up-front sales charge
. annual service fee to compensate securities dealers
who have sales agreements with Nuveen ("Authorized
Dealers") for providing you with ongoing financial
advice and other services
Class C Shares
. available at net asset value without any up-front
sales charge
. annual distribution fee to compensate Authorized
Dealers over time for the sale of Fund shares
. automatic tax-free conversion to Class A Shares six
years after purchase
. annual service fee to compensate Authorized Dealers
for providing you with ongoing financial advice and
other services
Class R Shares
. if you owned Fund shares as of September 6, 1994,
those shares have been designated as Class R Shares
. available for purchase under certain limited circum-
stances, or by specified investors, at net asset
value without any sales charge or annual distribution
or service fees
See "Flexible Sales Charge Program" and "How to Buy
Fund Shares" for additional information about the three
classes of shares offered by each Fund.
7
<PAGE>
------------------------------------------------------------------------------
AUTOMATIC The Funds offer a number of investment options, includ-
DEPOSIT PLANS ing automatic deposit, direct deposit and payroll de-
duction, to help you add to your account on a regular
basis.
AUTOMATIC All monthly dividends or capital gains paid by your
REINVESTMENT Fund on each class of shares will be reinvested auto-
matically into additional shares of the same class
without a sales charge, unless you elect to receive
them in cash. Separately, distributions from any Nuveen
unit investment trust 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 as-
set value.
EXCHANGE Shares of a class may be quickly and easily exchanged
PRIVILEGE by telephone, without a sales charge, for shares of the
same or equivalent class of another Nuveen Mutual Fund
or for shares of certain Nuveen money market funds.
Class R Shares of a Fund may be exchanged for Class A
Shares of the same Fund at any time, provided that the
current net asset value of those Class R Shares is at
least $1,000 or you already own Class A Shares of that
Fund.
LIQUIDITY You may redeem all or a portion of your Fund shares on
any business day at that day's net asset value for the
class of shares you are redeeming. Remember that share
prices will fluctuate with market conditions and upon
redemption may be worth more or less than their origi-
nal cost. See "How to Redeem Fund Shares."
AUTOMATIC If you own shares totalling $10,000 or more, you can
WITHDRAWAL arrange to have $50 or more sent to you from your ac-
count either monthly or quarterly.
TELEPHONE You may establish free telephone redemption privileges
REDEMPTIONS for your account.
NO REDEMPTION There are no charges imposed by the Funds or Nuveen for
FEES selling shares when redeeming all or part of your hold-
ings. However, your financial adviser may charge you
for serving as agent in the redemption of shares.
8
<PAGE>
-----------------------------------------------------------------------
RISKS AND You should consider certain other factors about
SPECIAL the Funds before investing. As with other bond mu-
CONSIDERATIONS tual funds or any long-term, fixed income invest-
ment, the value of a Fund's portfolio will tend to
vary inversely with changes in prevailing interest
rates. Accordingly, each Fund should be considered
a long-term investment, designed to provide the
best results when held for a multi-year period. A
Fund may not be suitable if you have a short-term
investment horizon. Additionally, each Fund's
portfolio may be susceptible to political, eco-
nomic or regulatory developments affecting issuers
of Municipal Obligations in its state. The Funds
also have the ability to engage in certain invest-
ment practices, including the purchase of Munici-
pal Obligations that pay interest subject to the
federal alternative minimum tax, the purchase or
sale of securities on a when-issued or delayed de-
livery basis, the purchase or sale of municipal
lease and installment purchase obligations, and
the purchase or sale of futures or options for
hedging purposes. As described elsewhere in this
Prospectus, the Funds have no present intention of
purchasing or selling futures or options, and may
engage in the other investment practices listed
above only under strict limits.
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial information has been de-
rived from the Funds' financial statements, which
have been audited by Arthur Andersen LLP, indepen-
dent public accountants, as indicated in their re-
port appearing in the Annual Report to Sharehold-
ers, and should be read in conjunction with the fi-
nancial statements and related notes appearing in
the Annual Report. A copy of the Annual Report to
Shareholders which contains additional unaudited
performance information can be obtained without
charge by writing to the Trust.
On September 6, 1994, the Fund commenced selling
Class A and Class C shares. All Fund shares out-
standing as of September 6, 1994, have been desig-
nated as Class R Shares.
Selected data for a Class A Share, Class C Share or
Class R Share outstanding throughout each period is
as follows:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Operating Performance Distributions
-------------------------------------------------------
Net realized
Net asset and unrealized
value at Net gain (loss) Net
beginning investment from investment Capital
of period income++ investments** income gains
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AZ
-------------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 $10.030 $.203 $ (.086) $(.217) $ --
Class C
9/12/94 to
1/31/95 9.940 .169 (.052) (.217) --
Class R
Year Ended 1/31,
1995 10.880 .536 (1.026) (.540) --
1994 10.050 .531 .853 (.522) (.032)
1993 9.525 .438 .563 (.435) (.041)
12/13/91 to
1/31/92 9.525 -- -- -- --
-------------------------------------------------------------------------------------
</TABLE>
See notes on page 16.
10
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Ratios/Supplemental data
------------------------------------------------------------------------
Net asset Ratio of net
value at Total Return Net assets Ratio of investment income
end of on net asset end of period expenses to average to average Portfolio
period value+ (in thousands) net assets++ net assets++ turnover rate
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
$ 9.930 1.24% $ 1,124 1.00%* 5.28%* 29%
9.840 1.25 43 1.75* 4.55* 29
9.850 (4.39) 16,554 .75 5.43 29
10.880 14.07 16,140 .75 4.98 11
10.050 10.71 8,026 .75* 4.94* 43
9.525 -- 15 -- -- --
-----------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Operating Performance Distributions
----------------------------------------------------------
Net
realized
and
Net asset unrealized
value at Net gain (loss) Net
beginning investment from investment Capital
of period income++ investments** income gains
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FL
------------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 $ 9.890 $.193 $ (.148) $(.202) $(.003)
Class C
9/19/94 to
1/31/95 9.720 .152 .021 (.163) --
Class R
Year Ended 1/31,
1995 10.740 .508 (.985) (.510) (.003)
1994 9.960 .511 .779 (.510) --
1993 9.525 .440 .431 (.436) --
12/13/91 to
1/31/92 9.525 -- -- -- --
------------------------------------------------------------------------------------
MD
------------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 9.840 .198 (.229) (.207) (.002)
Class C
9/16/94 to
1/31/95 9.750 .160 (.153) (.167) --
Class R
Year Ended 1/31,
1995 10.620 .513 (1.008) (.513) (.002)
1994 9.910 .509 .727 (.503) (.023)
1993 9.525 .442 .395 (.442) (.010)
12/13/91 to
1/31/92 9.525 -- -- -- --
------------------------------------------------------------------------------------
</TABLE>
See notes on page 16.
12
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Ratios/Supplemental data
-----------------------------------------------------------------------------
Ratio of net
Net asset Total return Net assets Ratio of investment income
value at end on net at end of period expenses to average to average Portfolio
of period asset value+ (in thousands) net assets++ net assets++ turnover rate
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------
$ 9.730 .52% $ 1,392 1.00%* 5.08%* 4%
9.730 1.84 78 1.75* 4.35* 4
9.750 (4.33) 52,538 .75 5.21 4
10.740 13.22 48,254 .75 4.83 3
9.960 9.33 23,727 .75* 4.84* 1
9.525 -- 15 -- -- --
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
9.600 (.26) 1,605 1.00* 5.26* 35
9.590 .12 860 1.75* 4.55* 35
9.610 (4.58) 42,741 .75 5.28 35
10.620 12.71 47,822 .75 4.85 4
9.910 8.96 28,283 .75* 4.96* 20
9.525 -- 15 -- -- --
-----------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Operating Performance Distributions
----------------------------------------------------
Net
realized
and
Net asset unrealized
value at Net gain (loss) Net
beginning investment from investment Capital
of period income++ investments** income gains
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MI
---------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 $10.090 $.204 $(.209) $(.212) $(.003)
Class C
9/19/94 to
1/31/95 9.910 .161 (.050) (.171) --
Class R
Year ended 1/31,
1995 10.860 .529 (.972) (.534) (.003)
1994 10.060 .531 .808 (.528) (.011)
1993 9.525 .456 .554 (.449) (.026)
12/13/91 to
1/31/92 9.525 -- -- -- --
---------------------------------------------------------------------------------
NJ
---------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 10.030 .205 (.209) (.210) (.086)
Class C
9/22/94 to
1/31/95 9.770 .159 (.050) (.169) --
Class R
Year ended 1/31,
1995 10.710 .524 (.886) (.522) (.086)
1994 9.960 .513 .810 (.513) (.060)
1993 9.525 .445 .431 (.441) --
12/13/91 to
1/31/92 9.525 -- -- -- --
---------------------------------------------------------------------------------
</TABLE>
See notes on page 16.
14
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Ratios/Supplemental data
-------------------------------------------------------
Net asset Ratio of net
value Total Net assets Ratio of investment
at end return on at end expenses income Portfolio
of net asset of period to average to average turnover
period value+ (in thousands) net assets++ net assets++ rate
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
$ 9.870 .02% $ 897 1.00%* 5.30%* 35%
9.850 1.18 75 1.75* 4.53* 35
9.880 (3.98) 26,644 .75 5.33 35
10.860 13.58 25,085 .75 4.99 3
10.060 10.80 14,684 .75* 5.06* 32
9.525 -- 15 -- -- --
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
9.730 .02 2,741 1.00* 5.34* 32
9.710 1.16 464 1.75* 4.62* 32
9.740 (3.27) 39,582 .75 5.32 32
10.710 13.60 36,462 .75 4.84 52
9.960 9.36 16,208 .75* 4.96* 9
9.525 -- 15 -- -- --
--------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Operating Performance Distributions
-----------------------------------------------
Net
realized
and
Net asset unrealized
value at Net gain (loss) Net
beginning investment from investment Capital
of period income++ investments** income gains
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PA
-------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 $ 9.920 $.206 $ (.164) $(.212) $ --
Class C
9/7/94 to
1/31/95 9.920 .176 (.235) (.211) --
Class R
Year ended 1/31,
1995 10.810 .531 (1.077) (.534) --
1994 10.010 .533 .807 (.534) (.006)
1993 9.525 .451 .481 (.443) (.004)
12/13/91 to
1/31/92 9.525 -- -- -- --
-------------------------------------------------------------------------------
VA
-------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 9.980 .201 (.207) (.214) --
Class C
9/9/94 to
1/31/95 9.950 .171 (.167) (.214) --
Class R
Year Ended 1/31,
1995 10.740 .531 (.964) (.537) --
1994 10.030 .529 .726 (.527) (.018)
1993 9.525 .439 .499 (.433) --
12/13/91 to
1/31/92 9.525 -- -- -- --
-------------------------------------------------------------------------------
</TABLE>
* Annualized. For year ending 1/31/93, the information is based on the period
beginning 2/28/92, commencement of operations.
** Net of taxes, if applicable. See note 1 of Notes to Financial Statements in
Annual Report to Shareholders.
+ Total Return on Net Asset Value is the combination of reinvested dividend in-
come, reinvested capital gains distributions, if any, and changes in stock
price per share.
++ Reflects the waiver of certain management fees and reimbursement of certain
other expenses by Nuveen Advisory. See note 7 of Notes to Financial
Statements in Annual Report to Shareholders.
16
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-------------------------------------------------------------
Net
asset
value Total return Net assets Ratio of net
at end on at Ratio of investment income Portfolio
of net asset end of period expenses to average to average turnover
period value+(in thousands) net assets++ net assets++ rate
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
$ 9.750 .49% $ 1,483 1.00%* 5.43%* 74%
9.650 (.53) 494 1.75* 4.67* 74
9.730 (4.94) 51,499 .75 5.43 74
10.810 13.67 48,720 .75 5.01 5
10.010 9.97 23,680 .75* 5.03* 15
9.525 -- 15 -- -- --
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
9.760 .01 2,215 1.00* 5.27* 40
9.740 .10 378 1.75* 4.57* 40
9.770 (3.92) 54,791 .75 5.40 40
10.740 12.78 55,773 .75 5.03 7
10.030 10.04 37,196 .75* 4.92* 12
9.525 -- 15 -- -- --
------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
WHO IS RESPONSIBLE FOR THE OPERATION OF THE FUNDS?
The following organizations work together to provide the
services and features offered by the Funds:
<TABLE>
<CAPTION>
ORGANIZATION FUNCTION DUTIES
--------------------------------------------------------------------------------
<C> <C> <S>
John Nuveen & Co. Incorporated Fund Sponsor and Princi- Sponsors and manages
("Nuveen") pal Underwriter Fund share offerings;
provides certain
administrative services
Nuveen Advisory Corp. Investment Adviser Manages the Funds'
("Nuveen Advisory") investment portfolios
and provides day-to-day
administrative services
to the Funds
Shareholder Services, Inc. Transfer Agent; Share- Maintains shareholder
("SSI") holder Services accounts, handles share
Agent; Dividend redemptions and
Paying Agent exchanges and dividend
payments
United States Trust Company Custodian Maintains custody of the
of New York ("US Trust") Funds' investments and
provides certain
accounting services to
the Funds
</TABLE>
The Chase Manhattan Bank, N.A., has agreed to become
successor to U.S. Trust, as Custodian and Fund Accoun-
tant. The succession is presently scheduled for July 1,
1995. No changes in the Funds' administration or in the
amount of fees and expenses paid by the Funds for these
services will result, and no action by shareholders will
be required.
18
<PAGE>
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES?
INVESTMENT The investment objective of each Fund is to provide you
OBJECTIVES with as high a level of current interest income exempt
from both regular federal income tax and the applicable
Each Fund is state personal income tax as is consistent, in the view
designed to of the Fund's management, with preservation of capital.
provide income In Florida, which presently has no state personal income
free from federal tax, Florida Fund shares are exempt from the Florida in-
and state personal tangible personal property tax. The investment objective
income taxes. is a fundamental policy of each Fund and may not be
changed without the approval of the holders of a major-
ity of the shares of that Fund. There can be no assur-
ance that the investment objective of any Fund will be
achieved.
HOW THE FUNDS Value Investing. Nuveen Advisory believes that in any
PURSUE THEIR market environment there are quality Municipal Obliga-
OBJECTIVES tions whose current price, yield, credit quality and fu-
ture prospects make them seem underpriced or exception-
The Funds seek ally attractive when compared with other Municipal Obli-
Municipal gations in the market. In selecting investments for the
Obligations Funds, Nuveen Advisory will attempt to identify and pur-
considered to be chase those investment grade quality, undervalued or un-
undervalued. derrated Municipal Obligations that offer the best val-
ues among Municipal Obligations of similar credit quali-
ty. By selecting these Municipal Obligations, each Fund
will seek to provide attractive current tax-free income
and to protect the Fund's net asset value in both rising
and declining markets. In this way, regardless of the
direction the market may move, value investing, if suc-
cessful, will better position each Fund to achieve its
investment objective of as high a level of current in-
terest income exempt from both regular federal income
tax and the applicable state personal income tax as is
consistent, in the view of the Fund's management, with
preservation of capital. Any net capital appreciation
realized by a Fund will generally result in the distri-
bution of taxable capital gains to Fund shareholders.
See "Distributions and Taxes."
Thorough research The Importance of Thorough Research. Successful value
can help identify investing depends on identifying and purchasing under-
values. valued or underrated securities before the rest of the
marketplace finds them. Nuveen Advisory believes the mu-
nicipal market provides these opportunities, in part be-
cause of the relatively large number of issuers of tax-
exempt securities and the relatively small number of
full-time, professional municipal market analysts. For
example, there are currently about 7,500 common stocks
that are followed by about 23,000 analysts. By contrast,
there are about 60,000 entities that issue tax-exempt
securities and less than 1,000 professional municipal
market analysts.
19
<PAGE>
Nuveen and Nuveen Advisory believe that together they
employ the largest number of research analysts in the
investment banking industry devoted exclusively to the
review and surveillance of tax-exempt securities. Their
team of more than 40 individuals has over 350 years of
combined municipal market experience. Nuveen and Nuveen
Advisory have access to information on approximately
60,000 municipal issuers, and review annually more than
$100 billion of tax-exempt securities sold in new issue
and secondary markets.
Which Municipal Obligations Are Selected As Invest-
ments? Each Fund will invest primarily in Municipal Ob-
ligations issued within its respective state so that the
interest income on the Municipal Obligations will be ex-
empt from both regular federal and applicable state per-
sonal income taxes. Because of the different credit
characteristics of governmental authorities in each of
the states and because of differing supply and demand
factors for each state's Municipal Obligations, there
may be differences in the yields on each Fund's classes
of shares and in the degree of market and financial risk
to which each Fund is subject.
Each Fund will Each Fund's investment assets will consist of:
seek to purchase
investment grade . Municipal Obligations rated investment grade at the
quality Municipal time of purchase (Baa or BBB or better by Moody's In-
Obligations vestors Service, Inc. ("Moody's") or Standard and
issued within its Poor's Corporation ("S&P"));
respective state.
. unrated Municipal Obligations of investment grade
quality in the opinion of Nuveen Advisory, limited to
no more than 20% of the Fund's net assets; and
. temporary investments within the limitations and for
the purposes described below.
Municipal Obligations rated Baa are considered by
Moody's to be medium grade obligations which lack out-
standing investment characteristics and in fact have
speculative characteristics as well, while Municipal Ob-
ligations rated BBB are regarded by S&P as having an ad-
equate capacity to pay principal and interest. Each Fund
may invest up to 20% of its net assets in Municipal Ob-
ligations that pay interest subject to the federal al-
ternative minimum tax ("AMT Bonds"). The Funds intend to
emphasize investments in Municipal Obligations with
long-term maturities in order to maintain an average
portfolio maturity of 20-30 years, but the average matu-
rity may be shortened from time to time depending on
market conditions in order to help limit each Fund's ex-
posure to market risk. As a result, each Fund's portfo-
lio at any given time may include both long-term and in-
termediate-term Municipal Obligations.
20
<PAGE>
Under ordinary circumstances, each Fund will invest sub-
stantially all (at least 80%) of its net assets in its
respective state's Municipal Obligations, and not more than
20% of its net assets in "temporary investments," described
below, provided that temporary investments subject to reg-
ular federal income tax and AMT Bonds may not comprise more
than 20% of each Fund's net assets. For defensive purposes,
however, in order to limit the exposure of its portfolio to
market risk from temporary imbalances of supply and demand
or other temporary circumstances affecting the municipal
market, each Fund may invest without limit in temporary
investments. A Fund will not be in a position to achieve its
investment objective of tax-exempt income to the extent it
invests in taxable temporary investments.
The foregoing investment policies are fundamental poli-
cies of each Fund and may not be changed without the ap-
proval of the holders of a majority of the shares of
that Fund.
DESCRIPTION OF Municipal Obligations. Municipal Obligations, as the
THE FUNDS' term is used in this Prospectus, are federally tax-ex-
INVESTMENTS empt debt obligations issued by states, cities and local
authorities and by certain U.S. possessions or territo-
Municipal ries to obtain funds for various public purposes, such
Obligations as the construction of public facilities, the payment of
are issued by general operating expenses and the refunding of out-
states, cities standing debts. They may also be issued to obtain fund-
and local ing for various private activities, including loans to
authorities to finance the construction of housing, educational and
support a variety medical facilities or privately owned industrial devel-
of public opment and pollution control projects.
activities.
The two principal classifications of Municipal Obliga-
tions are general obligation and revenue bonds. GENERAL
OBLIGATION bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment
of principal and interest. REVENUE bonds are payable
only from the revenues derived from a particular facil-
ity or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue
source. Industrial development and pollution control
bonds are in most cases revenue bonds and do not gener-
ally constitute the pledge of the credit or taxing power
of the issuer of these bonds.
Municipal Obligations may also include participations in
lease obligations or installment purchase contract obli-
gations (collectively, "lease obligations") of municipal
authorities or entities. Certain "non-appropriation"
lease obligations may present special risks because the
municipality's obligation to make future lease or in-
stallment payments depends on money being appropriated
each year for this purpose. Each
21
<PAGE>
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-appro-
priation 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 Obliga-
tions with the same maturity, coupon and rating may have
different yields, while those having the same maturity
and coupon with different ratings may have the same
yield. The market value of Municipal Obligations will
vary with changes in prevailing interest rate levels and
as a result of changing evaluations of the ability of
their issuers to meet interest and principal payments.
Similarly, the market value and net asset value of
shares of the Funds will change in response to interest
rate changes; they will tend to decrease when interest
rates rise and increase when interest rates fall.
All temporary Temporary Investments. As described above, each Fund un-
investments will der ordinary circumstances may invest up to 20% of its
be U.S. net assets in "temporary investments," but may invest
Government or without limit in temporary investments during temporary
high quality defensive periods. Each Fund will seek to make temporary
securities. investments in short-term securities the interest on
which is exempt from regular federal income tax, but may
be subject to state income tax in the Fund's respective
state. If suitable federally tax-exempt temporary in-
vestments are not available at reasonable prices and
yields, a Fund may make temporary investments in taxable
securities whose interest is subject to both state and
federal income tax. A Fund will invest only in those
taxable temporary investments that are either U.S. Gov-
ernment securities or are rated within the highest grade
by Moody's or S&P, and mature within one year from the
date of purchase or carry a variable or floating rate of
interest. See the Statement of Additional Information
for further information about the temporary investments
in which the Funds may invest.
22
<PAGE>
SPECIAL FACTORS Because each Fund will concentrate its investments in
PERTAINING TO Municipal Obligations issued within a single state, a
EACH FUND Fund may be affected by political, economic or regula-
tory factors that may impair the ability of issuers in
that state to pay interest on or to repay the principal
of their debt obligations. These special factors are
briefly described for each Fund's respective state in
Appendix A to this Prospectus. See the Statement of Ad-
ditional Information for further information about these
factors.
CERTAIN Portfolio Trading and Turnover. Each Fund will make
INVESTMENT changes in its investment portfolio from time to time in
STRATEGIES AND order to take advantage of opportunities in the munici-
LIMITATIONS pal market and to limit exposure to market risk. A Fund
may engage to a limited extent in short-term trading
Each Fund will consistent with its investment objective, but a Fund
focus on long- will not trade securities solely to realize a profit.
term investment Changes in a Fund's investments are known as "portfolio
strategies, and turnover." While each Fund's annual portfolio turnover
will engage in rate is not expected to exceed 50%, actual portfolio
short-term turnover rates are impossible to predict, and may exceed
trading only when 50% in particular years depending upon market condi-
consistent with tions.
its stated
investment
objective.
When-issued or Delayed Delivery Transactions. A Fund may
purchase and sell Municipal Obligations on a when-issued
or delayed delivery basis, which calls for the Fund to
make payment or take delivery at a future date, normally
15-45 days after the trade date. The commitment to pur-
chase securities on a when-issued or delayed delivery
basis may involve an element of risk because the value
of the securities is subject to market fluctuation, no
interest accrues to the purchaser prior to settlement of
the transaction, and at the time of delivery the market
value may be less than cost. A Fund commonly engages in
when-issued transactions in order to purchase or sell
newly-issued Municipal Obligations, and may engage in
delayed delivery transactions in order to manage its op-
erations more effectively. See the Statement of Addi-
tional Information for further information about when-
issued and delayed delivery transactions.
The Funds do not Financial Futures and Options Transactions. Although the
presently intend Funds have no present intent to do so, each Fund re-
to use futures or serves the right to engage in certain hedging transac-
options. tions involving the use of financial futures contracts,
options on financial futures or options based on either
an index of long-term tax-exempt securities or on debt
securities whose prices, in the opinion of Nuveen Advi-
sory, correlate with the prices of the Fund's invest-
ments. These hedging transactions are designed to limit
the risk of fluctuations in the prices of a Fund's in-
vestments. See the Statement of Additional Information
for further information on futures and options and asso-
ciated risks.
23
<PAGE>
Each Fund will Other Investment Policies and Restrictions. Each of the
take steps to Funds has adopted certain fundamental policies intended
ensure that its to limit the risk of its investment portfolio. In accor-
assets are not dance with these policies, each Fund may not:
concentrated in
just a few
holdings.
. invest more than 5% of its total assets in securities
of any one issuer, except that this limitation shall
not apply to securities of the U.S. government, its
agencies and instrumentalities or to the investment of
25% of the Fund's assets;
. invest more than 5% of its total assets in securities
of unseasoned issuers which, together with their prede-
cessors, have been in operation for less than three
years;
. invest more than 10% of its assets in illiquid munici-
pal lease obligations and other securities that are un-
marketable, illiquid or not readily marketable (securi-
ties 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 limitations shall not be applicable to Municipal
Obligations issued by governments or political subdivi-
sions of governments, and obligations issued or guaran-
teed by the U.S. Government, its agencies or instrumen-
talities;
. borrow money, except from banks for temporary or emer-
gency purposes and then only in an amount not exceeding
(a) 10% of the value of its total assets at the time of
borrowing or (b) one-third of the value of its total
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 instru-
ment will generally be considered a separate security.
See the Statement of Additional Information for a more
complete description of the fundamental investment poli-
cies summarized above and the Funds' other fundamental
investment policies. Each Fund's fundamental investment
policies may not be changed without the approval of the
Fund's shareholders.
24
<PAGE>
FLEXIBLE SALES CHARGE PROGRAM
Each Fund offers For many investors, working with a professional finan-
various sales cial adviser is an important part of their financial
charge options strategy. Because Nuveen recognizes the value a finan-
designed to meet cial adviser can provide in developing and implementing
your individual a comprehensive plan for your financial future, Nuveen
investment needs Mutual Funds are sold with a sales charge, either at the
and preferences. time of purchase or over time in the form of a distribu-
tion fee. This provides your financial adviser with com-
pensation for the professional advice and service you
receive in financial planning and investment selection.
Each Fund has adopted a Flexible Sales Charge Program
which provides you with alternative ways of purchasing
Fund shares based upon your individual investment needs
and preferences. You may purchase Class A Shares at a
price equal to their net asset value plus an up-front
sales charge. You may purchase Class C Shares without
any up-front sales charge at a price equal to their net
asset value, but subject to an annual distribution fee
designed to compensate Authorized Dealers over time for
the sale of Fund shares. Class C Shares automatically
convert to Class A Shares six years after purchase. Both
Class A Shares and Class C Shares are also subject to
annual service fees, which are used to compensate Autho-
rized Dealers for providing you with ongoing financial
advice and other services. Under the Flexible Sales
Charge Program, all Fund shares outstanding as of Sep-
tember 6, 1994, have been designated as Class R Shares.
Class R Shares are available for purchase at a price
equal to their net asset value only under certain lim-
ited circumstances, or by specified investors, as de-
scribed herein. The price at which the purchase of any
Fund's shares is effected is based on the next calcula-
tion of the Fund's net asset value after the order is
placed.
Which Option is When you purchase Class A Shares of a Fund, you will pay
Right For You? an up-front sales charge. As a result, you will have
less money invested initially and you will own fewer
Class A Shares than you would in the absence of an up-
front sales charge. Alternatively, when you purchase
Class C Shares of a Fund, you will not pay an up-front
sales charge and all of your monies will be fully in-
vested at the time of purchase. However, Class C Shares
are subject to an annual distribution fee to compensate
Authorized Dealers over time for the sale of Fund
shares. Class C Shares automatically convert to Class A
Shares six years after purchase. This automatic conver-
sion is designed to ensure that holders of Class C
Shares would pay over the six-year period a distribution
fee that is approximately the economic equivalent of the
one-time, up-front sales charge paid by holders of Class
A Shares on purchases of up to $50,000. Class A Shares
and Class C Shares are also subject to annual service
fees which are identical in
25
<PAGE>
amount and which are used to compensate Authorized Deal-
ers for providing you with ongoing financial advice and
other services. You may qualify for a reduced sales
charge or a sales charge waiver on a purchase of Class A
Shares, as described below under "How the Sales Charge
on Class A Shares May Be Reduced or Waived." Under cer-
tain limited circumstances, Class R Shares are available
for purchase at a price equal to their net asset value.
In deciding whether to purchase Class A Shares, Class C
Shares or Class R Shares of a Fund, you should consider
all relevant factors, including the dollar amount of
your purchase, the length of time you expect to hold the
shares, the amount of any applicable up-front sales
charge, the amount of any applicable distribution or
service fee that may be incurred while you own the
shares, and whether or not you will be reinvesting in-
come or capital gain distributions in additional shares.
For assistance with this decision, please refer to the
tables under "Summary of Fund Expenses" on page 3 of
this Prospectus which sets forth examples of the ex-
penses applicable to each class of shares, or consult
your financial adviser.
Differences Each class of shares of a Fund represents an interest in
Between the the same portfolio of investments. Each class of shares
Classes of Shares of a Fund is identical in all respects except that each
class bears its own class expenses, including adminis-
tration and distribution expenses, and each class has
exclusive voting rights with respect to any distribution
or service plan applicable to its shares. In addition,
the Class C Shares are subject to a conversion feature,
as described below. As a result of the differences in
the expenses borne by each class of shares, net income
per share, dividends per share and net asset value per
share will vary among each Fund's classes of shares.
Dealer Incentives
Upon notice to all Authorized Dealers, Nuveen may
reallow to Authorized Dealers electing to participate up
to the full applicable sales charge during periods and
for transactions specified in the notice. The
reallowances made during these periods may be based upon
attainment of minimum sales levels. Further, Nuveen may
from time to time make additional reallowances only to
certain Authorized Dealers who sell or are expected to
sell certain minimum amounts of the Funds or other
Nuveen Mutual Funds and Nuveen Unit Investment Trusts
("UITs") during specified time periods. The staff of the
Securities and Exchange Commission takes the position
that dealers who receive 90% or more of the applicable
sales charge may be deemed underwriters under the Secu-
rities 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
26
<PAGE>
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. Any
such support would be provided by Nuveen out of its own
assets, and not out of the assets of the Funds, and will
not change the price an investor pays for shares or the
amount that a Fund will receive from such a sale.
HOW TO BUY FUND SHARES
CLASS A SHARES You may purchase Class A Shares of any Fund at a public
offering price equal to the applicable net asset value
Class A Shares per share plus an up-front sales charge imposed at the
are offered at time of purchase as set forth below. You may qualify for
their net asset a reduced sales charge, or the sales charge may be
value plus an up- waived in its entirety, as described below under "How
front sales the Sales Charge on Class A Shares May Be Reduced or
charge. Waived." Class A Shares are also subject to an annual
service fee to compensate Authorized Dealers for provid-
ing you with ongoing financial advice and other servic-
es. See "Distribution and Service Plans."
The sales charges for each Fund's Class A Shares are as
follows:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE REALLOWANCE
AS % OF PUBLIC AS % OF NET AS % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
$50,000 but less than $100,000 4.25% 4.44% 3.75%
$100,000 but less than $250,000 3.50% 3.63% 3.25%
$250,000 but less than $500,000 2.75% 2.83% 2.50%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 but less than $2,500,000 1.00% 1.01% 1.00%
$2,500,000 but less than $5,000,000 0.75% 0.76% 0.75%
$5,000,000 and over 0.50% 0.50% 0.50%
</TABLE>
The Funds receive the entire net asset value of all
Class A Shares that are sold. Nuveen retains the full
applicable sales charge from which it pays the uniform
reallowances shown above to Authorized Dealers. See
"Flexible Sales Charge Program--Dealer Incentives" above
for more information about reallowances and other com-
pensation to Authorized Dealers.
Certain commercial banks may make Class A Shares of the
Funds available to their customers on an agency basis.
Pursuant to the agreements between Nuveen and these
banks, some or all of the sales charge paid by a bank
customer in connection with a purchase of Class A Shares
may be
27
<PAGE>
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 SALES Summary. There are several ways to reduce or eliminate
CHARGE ON CLASS A the sales charge:
SHARES MAY BE
REDUCED OR WAIVED . cumulative discount;
There are several . letter of intent;
ways to reduce or
eliminate the . group purchase programs; and
sales charge.
. special sales charge waivers for certain categories of
investors.
Cumulative Discount. You may qualify for a reduced sales
charge as shown above on a purchase of Class A Shares of
any Fund if the amount of your purchase, when added to
the value that day of all of your prior purchases of
shares of any Fund or of another Nuveen Mutual Fund, or
units of a Nuveen UIT, on which an up-front sales charge
or ongoing distribution fee is imposed, falls within the
amounts stated in the table. You or your financial ad-
viser must notify Nuveen or SSI of any cumulative dis-
count whenever you plan to purchase Class A Shares of a
Fund that you wish to qualify for a reduced sales
charge.
Letter of Intent. You may qualify for a reduced sales
charge on a purchase of Class A Shares of any Fund if
you plan to purchase Class A Shares of Nuveen Mutual
Funds over the next 13 months and the total amount of
your purchases would, if purchased at one time, qualify
you for one of the reduced sales charges shown above. In
order to take advantage of this option, you must com-
plete the applicable section of the Application Form or
sign and deliver either to an Authorized Dealer or to
SSI a written Letter of Intent in a form acceptable to
Nuveen. A Letter of Intent states that you intend, but
are not obligated, over the next 13 months to purchase a
stated total amount of Class A Shares that would qualify
you for a reduced sales charge shown above. You may
count shares of a Nuveen Mutual Fund that you already
own on which you paid an up-front sales charge or an on-
going distribution fee and any Class C Shares of a
Nuveen Mutual Fund that you purchase over the next 13
months towards completion of your investment program,
but you will receive a reduced sales charge only on new
Class A Shares you purchase with a sales charge over the
13 months. You cannot count towards completion of your
investment program Class A Shares that you purchase
without a sales charge through investment of distribu-
tions from a Nuveen Mutual Fund or a Nuveen UIT, or oth-
erwise.
28
<PAGE>
By establishing a Letter of Intent, you agree that your
first purchase of Class A Shares of a Fund following ex-
ecution of the Letter of Intent will be at least 5% of
the total amount of your intended purchases. You further
agree that shares representing 5% of the total amount of
your intended purchases will be held in escrow pending
completion of these purchases. All dividends and capital
gains distributions on Class A Shares held in escrow
will be credited to your account. If total purchases,
less redemptions, prior to the expiration of the 13
month period equal or exceed the amount specified in
your Letter of Intent, the Class A Shares held in escrow
will be transferred to your account. If the total pur-
chases, less redemptions, exceed the amount specified in
your Letter of Intent and thereby qualify for a lower
sales charge than the sales charge specified in your
Letter of Intent, you will receive this lower sales
charge retroactively, and the difference between it and
the higher sales charge paid will be used to purchase
additional Class A Shares on your behalf. If the total
purchases, less redemptions, are less than the amount
specified, you must pay Nuveen an amount equal to the
difference between the amounts paid for these purchases
and the amounts which would have been paid if the higher
sales charge had been applied. If you do not pay the ad-
ditional amount within 20 days after written request by
Nuveen or your financial adviser, Nuveen will redeem an
appropriate number of your escrowed Class A Shares to
meet the required payment. By establishing a Letter of
Intent, you irrevocably appoint Nuveen as attorney to
give instructions to redeem any or all of your escrowed
shares, with full power of substitution in the premises.
You or your financial adviser must notify Nuveen or SSI
whenever you make a purchase of Fund shares that you
wish to be covered under the Letter of Intent option.
Group Purchase Programs. If you are a member of a quali-
fied group, you may purchase Class A Shares of any Fund
or of another Nuveen Mutual Fund at the reduced sales
charge applicable to the group's purchases taken as a
whole. A "qualified group" is one which has been in ex-
istence for more than six months, has a purpose other
than investment, has five or more participating members,
has agreed to include Fund sales publications in mail-
ings to members and has agreed to comply with certain
administrative requirements relating to its group pur-
chases.
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
29
<PAGE>
dividends and other distributions by a Fund will be re-
invested in additional Class A Shares of the same Fund.
No participant may utilize a systematic withdrawal pro-
gram.
To establish a group purchase program, both the group
itself and each participant must fill out special appli-
cation materials, which the group administrator may ob-
tain from the group's financial adviser, by checking the
applicable box on the enclosed Application Form or by
calling Nuveen toll-free at 800-621-7227. See the State-
ment of Additional Information for more complete infor-
mation about "qualified groups" and group purchase pro-
grams.
Special Sales Charge Waivers. Class A Shares of any Fund
may be purchased at net asset value without a sales
charge and in any amount by the following categories of
investors:
. officers, trustees and retired trustees of the Funds;
. bona fide, full-time and retired employees of Nuveen,
any parent company of Nuveen, and subsidiaries there-
of, or their immediate family members (as defined be-
low);
. any person who, for at least 90 days, has been an of-
ficer, director or bona fide employee of any Autho-
rized Dealer, or their immediate family members;
. officers and directors of bank holding companies that
make Fund shares available directly or through subsid-
iaries or bank affiliates;
. bank or broker-affiliated trust departments investing
funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary,
agency, advisory, custodial or similar capacity; and
. registered investment advisers, certified financial
planners and registered broker-dealers who in each
case either charge periodic fees to their customers
for financial planning, investment advisory or asset
management services, or provide such services in con-
nection with the establishment of an investment ac-
count for which a comprehensive "wrap fee" charge is
imposed.
Any Class A Shares purchased pursuant to a special sales
charge waiver must be acquired for investment purposes
and on the condition that they will not be transferred
or resold except through redemption by the Funds. You or
your financial adviser must notify Nuveen or SSI when-
ever 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
30
<PAGE>
investors are also eligible to purchase Class R Shares
of any Fund, as described below under "Class R Shares."
You may also purchase Class A Shares of any Fund at net
asset value without a sales charge if the purchase takes
place through a broker-dealer and represents the rein-
vestment of the proceeds of the redemption of shares of
one or more registered investment companies not affili-
ated with Nuveen. You must provide appropriate documen-
tation that the redemption occurred not more than 60
days prior to the reinvestment of the proceeds in Class
A Shares, and that you either paid an up-front sales
charge or were subject to a contingent deferred sales
charge in respect of the redemption of such shares of
such other investment company. Finally, Class A Shares
of any Fund may be issued at net asset value without a
sales charge in connection with the acquisition by a
Fund of another investment company. All purchases under
the special sales charge waivers will be subject to min-
imum purchase requirements as established by the Funds.
--------------------------------
In determining the amount of your purchases of Class A
Shares of any Fund that may qualify for a reduced sales
charge, the following purchases may be combined: (1) all
purchases by a trustee or other fiduciary for a single
trust estate or fiduciary account; (2) all purchases by
individuals and their immediate family members (i.e.,
their spouses and their children under 21 years of age);
or (3) all purchases made through a group purchase pro-
gram as described above.
The reduced sales charge programs may be modified or
discontinued by the Funds at any time upon prior written
notice to shareholders of the Funds.
FOR MORE INFORMATION ABOUT THE PURCHASE OF CLASS A
SHARES OR REDUCED SALES CHARGE PROGRAMS, OR TO OBTAIN
THE REQUIRED APPLICATION FORMS, CALL NUVEEN TOLL-FREE AT
800-621-7227.
CLASS C SHARES You may purchase Class C Shares of any Fund at a public
offering price equal to the applicable net asset value
Class C Shares per share without any up-front sales charge. Class C
may be purchased Shares are subject to an annual distribution fee to com-
at their net pensate Authorized Dealers over time for the sale of
asset value, and Fund shares. See "Flexible Sales Charge Program--Dealer
are subject to an Incentives" above for more information about compensa-
annual tion to Authorized Dealers. Class C Shares are also sub-
distribution fee. ject to an annual service fee to compensate Authorized
Dealers for providing you with ongoing financial advice
and other services. See "Distribution and Service
Plans."
31
<PAGE>
Class C Shares will automatically convert to Class A
Shares six years after purchase. All conversions will be
done at net asset value without the imposition of any
sales load, fee, or other charge, so that the value of
each shareholder's account immediately before conversion
will be the same as the value of the account immediately
after conversion. Class C Shares acquired through rein-
vestment of distributions will convert into Class A
Shares based on the date of the initial purchase to
which such shares relate. For this purpose, Class C
Shares acquired through reinvestment of distributions
will be attributed to particular purchases of Class C
Shares in accordance with such procedures as the Board
of Trustees may determine from time to time. The auto-
matic conversion of Class C Shares to Class A Shares six
years after purchase was designed to ensure that holders
of Class C Shares would pay over the six-year period a
distribution fee that is approximately the economic
equivalent of the one-time, up-front sales charge paid
by holders of Class A Shares on purchases of up to
$50,000. Class C Shares that are converted to Class A
Shares will no longer be subject to an annual distribu-
tion fee, but they will remain subject to an annual
service fee which is identical in amount for both Class
C Shares and Class A Shares. Since net asset value per
share of the Class C Shares and the Class A Shares may
differ at the time of conversion, a shareholder may re-
ceive more or fewer Class A Shares than the number of
Class C Shares converted. Any conversion of Class C
Shares into Class A Shares will be subject to the con-
tinuing availability of an opinion of counsel or a pri-
vate letter ruling from the Internal Revenue Service to
the effect that the conversion of shares would not con-
stitute a taxable event under federal income tax law.
Conversion of Class C Shares into Class A Shares might
be suspended if such an opinion or ruling were no longer
available.
CLASS R SHARES If you owned Fund shares as of September 6, 1994, those
shares have been designated as Class R Shares. Purchases
Class R Shares of additional Class R Shares of any Fund, which will not
are offered at be subject to any sales charge or any distribution or
their net asset service fee, will be limited to the following circum-
value. stances. You may purchase Class R Shares with monies
representing distributions from Nuveen-sponsored UITs
if, prior to September 6, 1994, you had purchased such
UITs and elected to reinvest distributions from such
UITs in shares of a Fund. You may also purchase Class R
Shares with monies representing dividends and capital
gain distributions on Class R Shares of a Fund. Finally,
you may purchase Class R Shares if you are within the
following specified categories of investors who are also
eligible to purchase Class A Shares at net asset value
without an up-front sales charge:
. officers, trustees and retired trustees of the Funds;
32
<PAGE>
. bona fide, full-time and retired employees of Nuveen,
any parent company of Nuveen, and subsidiaries there-
of, or their immediate family members;
. any person who, for at least 90 days, has been an of-
ficer, director or bona fide employee of any Autho-
rized Dealer, or their immediate family members;
. officers and directors of bank holding companies that
make Fund shares available directly or through subsid-
iaries or bank affiliates;
. bank or broker-affiliated trust departments investing
funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary,
agency, custodial or similar capacity; and
. registered investment advisers, certified financial
planners and registered broker-dealers who in each
case either charge periodic fees for financial plan-
ning, investment advisory or asset management servic-
es, or provide such services in connection with the
establishment of an investment account for which a
comprehensive "wrap fee" charge is imposed.
Investors who are eligible to purchase either Class R
Shares or Class A Shares of a Fund without a sales
charge at net asset value should be aware of the differ-
ences between these two classes of shares. Class A
Shares are subject to an annual service fee to compen-
sate Authorized Dealers for providing you with ongoing
financial advice and other services. Class R Shares are
not subject to a service fee and consequently holders of
Class R Shares may not receive the same types or levels
of services from Authorized Dealers. In choosing between
Class A Shares and Class R Shares, you should weigh the
benefits of the services to be provided by Authorized
Dealers against the annual service fee imposed upon the
Class A Shares.
INITIAL AND
SUBSEQUENT You may buy Fund shares through Authorized Dealers or by
PURCHASES OF directing your financial adviser to call Nuveen toll-
SHARES free at 800-843-6765. You may pay for your purchase by
Federal Reserve draft or by check made payable to
"Nuveen [name of state] Tax-Free Value Fund, Class [A],
The Funds offer a [C], [R]," delivered to the financial adviser through
number of whom the investment is to be made for forwarding to the
convenient ways Funds' shareholder services agent, SSI. When making your
to purchase initial investment, you must also furnish the informa-
shares. tion 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
33
<PAGE>
[name of state] Tax-Free Value Fund, Class [A], [C],
[R]," and indicating on the check your account number.
All payments must be in U.S. dollars and should be sent
directly to SSI at its 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 di-
rectly 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. Autho-
rized Dealers and other persons distributing the Funds'
shares may receive different compensation for selling
different classes of shares.
MINIMUM Generally, your first purchase of any class of a Fund's
INVESTMENT shares must be for $1,000 or more. Additional purchases
REQUIREMENTS may be in amounts of $100 or more. These minimums may be
changed at any time by the Funds. There are exceptions
to these minimums for shareholders who qualify under one
or more of the Funds' automatic deposit, group purchase
or reinvestment programs.
SYSTEMATIC The Funds offer you several opportunities to capture the
INVESTMENT benefits of "dollar cost averaging" through systematic
PROGRAMS investment programs. In a regularly followed dollar cost
averaging program, you would purchase more shares when
Fund share prices are lower and fewer shares when Fund
share prices are higher, so that the average price paid
for Fund shares is less than the average price of Fund
shares over the same time period. The chart below shows
the cumulative effect that compound interest can have on
a systematic investment program.
34
<PAGE>
The Power of a
Systematic
Investment
Program.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
YEAR 6% 5% 4% 0%
<S> <C> <C> <C> <C>
0 1,000 1,000 1,000 1,000
1 2,184 2,170 2,156 2,100
2 3,553 3,509 3,466 3,300
3 5,005 4,916 4,829 4,500
4 6,548 6,396 6,248 5,700
5 8,185 7,951 7,725 6,900
6 9,923 9,586 9,262 8,100
7 11,769 11,304 10,862 9,300
8 13,728 13,110 12,526 10,500
9 15,809 15,009 14,259 11,700
10 18,017 17,004 16,062 12,900
11 20,362 19,102 17,939 14,100
12 22,852 21,307 19,892 15,300
13 25,494 23,625 21,925 16,500
14 28,300 26,062 24,040 17,700
15 31,280 28,623 26,242 18,900
</TABLE>
SOURCE: NUVEEN MARKETING RESEARCH DEPARTMENT
In the above example, it is assumed that $100 is added
to an investment account every month for 15 years. From
the same $1,000 beginning, the chart shows the amount
that would be in the account after 15 years, assuming no
interest and interest compounded annually at the rates
of 4%, 5% and 6%.
35
<PAGE>
This chart is designed to illustrate the effects of com-
pound interest, and is not intended to predict the re-
sults of an actual investment in a Fund. There are sev-
eral important differences between the Funds and the
hypothetical investment program shown. This example as-
sumes no gain or loss in the net asset value of the in-
vestment over the entire 15-year period, whereas the net
asset value of each of the Funds will rise and fall due
to market conditions or other factors, which could have
a significant impact on the total value of your invest-
ment. Similarly, this example shows four steady interest
rates over the entire 15-year period, whereas the divi-
dend rates of the Funds can be expected to fluctuate
over time. The Funds may provide additional information
to investors and advisers illustrating the benefits of
systematic investment programs and dollar cost averag-
ing.
The Funds offer The Funds offer two different types of systematic in-
automatic deposit vestment programs:
and payroll
deposit plans.
Automatic Deposit Plan. Once you have established a
Class A Share account or Class C Share account, or if
you are eligible to purchase additional Class R Shares,
in one of the Funds, you may make regular investments in
an amount of $25 or more each month by authorizing SSI
to draw preauthorized checks on your bank account. There
is no obligation to continue payments and you may termi-
nate your participation at any time at your discretion.
No charge in addition to the applicable sales charge is
made in connection with this Plan, and there is no cost
to the Funds. To obtain an application form for the Au-
tomatic Deposit Plan, check the applicable box on the
enclosed Application Form or call Nuveen toll-free at
800-621-7227.
Payroll Direct Deposit Plan. Once you have established a
Class A Share or Class C Share account in one of the
Funds, you may, with your employer's consent, make regu-
lar investments in Fund shares of $25 or more per pay
period by authorizing your employer to deduct this
amount automatically from your paycheck. There is no ob-
ligation to continue payments and you may terminate your
participation at any time at your discretion. No charge
in addition to the applicable sales charge is made for
this Plan, and there is no cost to the Funds. To obtain
an application form for the Payroll Direct Deposit Plan,
check the applicable box on the enclosed Application
Form or call Nuveen toll-free at 800-621-7227.
36
<PAGE>
OTHER SHAREHOLDER Exchange Privilege. You may exchange shares of a class
PROGRAMS of any Fund you own for shares of the same or equivalent
class of another Fund or for shares of another Nuveen
The Funds offer Mutual Fund with reciprocal exchange privileges by send-
no-charge ing a written request to the applicable Fund, c/o Share-
exchanges with holder Services, Inc., P.O. Box 5330, Denver, CO 80217-
other Nuveen 5330. The shares to be purchased must be offered in your
Mutual Funds. state of residence and you must have held the shares you
are exchanging for at least 15 days. For example, Class
A Shares of a Fund may be exchanged for Class A Shares
of another Nuveen Mutual Fund at net asset value without
a sales charge. Similarly, Class A Shares of another
Nuveen Mutual Fund purchased subject to a sales charge
may be exchanged for Class A Shares of any Fund at net
asset value without a sales charge. Shares of any Nuveen
Mutual Fund purchased through dividend reinvestment or
through investment of Nuveen UIT distributions may be
exchanged for shares of a Fund or any other Nuveen Mu-
tual Fund without a sales charge. Exchanges of shares
from any Nuveen money market fund will be made into
Class A Shares or Class C Shares of any Fund at the pub-
lic offering price, which includes an up-front sales
charge in the case of Class A Shares, and will be sub-
ject to an annual distribution fee in the case of Class
C Shares. If, however, a sales charge has previously
been paid on the investment represented by the exchanged
shares (i.e., the shares to be exchanged were originally
issued in exchange for shares on which a sales charge
was paid), the exchange of shares from a Nuveen money
market fund will be made into Class A Shares at net as-
set value without any up-front sales charge. Shares of
any class of a Fund may be exchanged for shares of any
Nuveen money market fund that does not impose a sales
charge or have any distribution or service fees.
You must exchange shares whose total value at least
equals the minimum investment requirement of the Nuveen
Mutual Fund being purchased. For federal income tax pur-
poses, any exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before
making any exchange, you should obtain the Prospectus
for the Nuveen Mutual Fund you are purchasing and read
it carefully. If the registration of the account for the
Fund you are purchasing is not exactly the same as that
of the fund account from which the exchange is made,
written instructions from all holders of the account
from which the exchange is being made must 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 Applica-
tion Form or by calling Nuveen toll-free at 800-621-7227
to obtain an authorization form. The exchange privilege
may be modified or discon-
37
<PAGE>
tinued by any Fund at any time upon prior written notice
to shareholders of that Fund.
In addition, you may exchange Class R Shares of any Fund
for Class A Shares of the same Fund without a sales
charge if the current net asset value of those Class R
Shares is at least $1,000 or you already own Class A
Shares of that Fund.
Reinstatement Privilege. If you have redeemed Class A
Shares of a Fund or Class A Shares of any other Nuveen
Mutual Fund that were subject to a sales charge, you may
reinvest without any added sales charge up to the full
amount of the redemption in Class A Shares of a Fund at
net asset value at the time of reinvestment. This rein-
statement privilege can be exercised only once for all
or a portion of the Class A Shares you redeemed and must
be exercised within 90 days of the date of the redemp-
tion. As applied to Class C Shares of any Fund or of any
other Nuveen Mutual Fund, this reinstatement privilege,
if exercised within 90 days of the date of the redemp-
tion, will preserve the number of years credited to your
ownership of Class C Shares for purposes of conversion
of these Class C Shares to Class A Shares. The tax con-
sequences 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.
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM,
CALL NUVEEN TOLL-FREE AT 800-621-7227.
ADDITIONAL If you choose to invest in a Fund, an account will be
INFORMATION opened and maintained for you by SSI, the Funds' share-
holder services agent. Share certificates will be issued
to you only upon written request to SSI, and no certifi-
cates will be issued for fractional shares. Each Fund
reserves the right to reject any purchase order and to
waive or increase minimum investment requirements. A
change in registration or transfer of shares held in the
name of your financial adviser's firm can only be made
by an order in good form from the financial adviser act-
ing on your behalf.
Authorized Dealers are encouraged to open single master
accounts. However, some Authorized Dealers may wish to
use SSI's sub-accounting system to minimize their inter-
nal recordkeeping requirements. An Authorized Dealer or
other investor requesting shareholder servicing or
accounting other than the master account or sub-account-
ing service offered by SSI will be required to enter
into a separate agreement with
38
<PAGE>
another agent for these services for a fee that will de-
pend upon the level of services to be provided.
Subject to the rules and regulations of the Securities
and Exchange Commission, the Nuveen Multistate Tax-Free
Trust reserves the right to suspend the continuous of-
fering of shares of any of its Funds at any time, but no
suspension shall affect your right of redemption as de-
scribed below.
DISTRIBUTION AND SERVICE PLANS
Each Fund has adopted a plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940,
which provides that Class C Shares will be subject to an
annual distribution fee, and that both Class A Shares
and Class C Shares will be subject to an annual service
fee. Class R Shares will not be subject to either dis-
tribution or service fees.
The distribution fee applicable to Class C Shares under
each Fund's Plan will be payable to reimburse Nuveen for
services and expenses incurred in connection with the
distribution of Class C Shares. These expenses include
payments to Authorized Dealers, including Nuveen, who
are brokers of record with respect to the Class C
Shares, as well as, without limitation, expenses of
printing and distributing prospectuses to persons other
than shareholders of the Fund, expenses of preparing,
printing and distributing advertising and sales litera-
ture and reports to shareholders used in connection with
the sale of Class C Shares, certain other expenses asso-
ciated with the distribution of Class C Shares, and any
distribution-related expenses that may be authorized
from time to time by the Board of Trustees.
The service fee applicable to Class A Shares and Class C
Shares under each Fund's Plan will be payable to Autho-
rized Dealers in connection with the provision of ongo-
ing services to shareholders. These services may include
establishing and maintaining shareholder accounts, an-
swering shareholder inquiries and providing other per-
sonal services to shareholders.
Each Fund may spend up to .25 of 1% per year of the av-
erage daily net assets of Class A Shares as a service
fee under the Plan applicable to Class A Shares. Each
Fund may spend up to .75 of 1% per year of the average
daily net assets of Class C Shares 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.
39
<PAGE>
HOW TO REDEEM FUND SHARES
You may require a Fund at any time to redeem for cash
your shares of that Fund at the net asset value next
computed after instructions and required documents and
certificates, if any, are received in proper form. There
is no charge for the redemption of shares.
The Funds offer a By Written Request. You may redeem shares by sending a
variety of written request for redemption directly to the applica-
redemption ble Fund, c/o Shareholder Services, Inc., P.O. Box 5330,
options. Denver, CO 80217-5330, accompanied by duly endorsed cer-
tificates, if issued. Requests for redemption and share
certificates, if issued, must be signed by each share-
holder and, if the redemption proceeds exceed $25,000 or
are payable other than to the shareholder of record at
the address of record (which address may not have been
changed in the preceding 60 days), the signature must be
guaranteed by a member of an approved Medallion Guaran-
tee Program or in such other manner as may be acceptable
to the Fund. You will receive payment equal to the net
asset value per share next determined after receipt by
the Fund of a properly executed redemption request in
proper form. A check for the redemption proceeds will be
mailed to you within seven days after receipt of your
redemption request. However, if any shares to be re-
deemed 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 re-
ceived for the purchase of shares has cleared, which may
take up to 15 days.
By TEL-A-CHECK. If you have authorized telephone redemp-
tion and your account address has not changed within the
last 60 days, you can redeem shares that are held in
non-certificate form and that are worth $25,000 or less
by calling Nuveen at 800-621-7227. While you or anyone
authorized by you may make telephone redemption re-
quests, redemption checks will be issued only in the
name of the shareholder of record and will be mailed to
the address of record. If your telephone request is re-
ceived prior to 2:00 p.m. eastern time, the shares re-
deemed will earn income through the day the request is
made and the redemption check will be mailed the next
business day. For requests received after 2:00 p.m.
eastern time, the shares redeemed earn income through
the next business day and the check will be mailed on
the second business day after the request.
By TEL-A-WIRE. If you have authorized TEL-A-WIRE redemp-
tion, you can take advantage of the following expedited
redemption procedures to redeem shares held in non-cer-
tificate form that are worth at least $1,000. You may
make TEL-A-WIRE redemption requests by calling
40
<PAGE>
Nuveen at 800-621-7227. If a redemption request is re-
ceived by 4:00 p.m. eastern time, the redemption will be
made as of 4:00 p.m. that day. If the redemption request
is received after 4:00 p.m. eastern time, the redemption
will be made as of 4:00 p.m. the following business day.
Redemption proceeds will normally be wired on the second
business day following the redemption, but may be de-
layed one additional business day if the Federal Reserve
Bank of Boston or the Federal Reserve Bank of New York
is closed on the day redemption proceeds would ordinar-
ily be wired. The Funds reserve the right to charge a
fee for TEL-A-WIRE.
Before you may redeem shares by TEL-A-CHECK or TEL-A-
WIRE, you must complete the telephone redemption autho-
rization section of the enclosed Application Form and
return it to Nuveen or SSI. If you did not authorize
telephone redemption when you opened your account, you
may obtain a telephone redemption authorization form by
writing the Funds or by calling Nuveen toll-free at 800-
621-7227. Proceeds of share redemptions made by TEL-A-
WIRE will be transferred by Federal Reserve wire only to
the commercial bank account specified by the shareholder
on the application form. You must send a written request
to Nuveen or SSI in order to establish multiple ac-
counts, 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
Fund. Further documentation may be required from corpo-
rations, executors, trustees or personal representa-
tives.
For the convenience of shareholders, the Funds have au-
thorized Nuveen as their agent to accept orders from fi-
nancial advisers by wire or telephone for the redemption
of Fund shares. The redemption price is the first net
asset value determined following receipt of an order
placed by the financial adviser. A Fund makes payment
for the redeemed shares to the financial adviser who
placed the order promptly upon presentation of required
documents with signatures guaranteed as described above.
Neither the Funds nor Nuveen charges any redemption
fees. However, your financial adviser may charge you for
serving as agent in the redemption of shares.
The Funds reserve the right to refuse telephone redemp-
tions and, at their option, may limit the timing, amount
or frequency of these redemptions. This procedure may be
modified or terminated at any time, on 30 days' notice,
by the Funds. The Funds, SSI and Nuveen will not be lia-
ble for following telephone instructions reasonably be-
lieved to be genuine. The Funds employ procedures rea-
sonably designed to confirm that telephone instructions
are genuine. These procedures include recording all tel-
ephone
41
<PAGE>
instructions and requiring up to three forms of identi-
fication prior to acting upon a caller's instructions.
If a Fund does not follow reasonable procedures for pro-
tecting shareholders against loss on telephone transac-
tions, it may be liable for any losses due to unautho-
rized or fraudulent telephone instructions.
Automatic Withdrawal Plan. If you own Fund shares cur-
rently worth at least $10,000, you may establish an Au-
tomatic Withdrawal Plan by completing an application
form for the Plan. You may obtain an application form by
checking the applicable box on the enclosed Application
Form or by calling Nuveen toll-free at 800-621-7227.
The Plan permits you to request periodic withdrawals on
a monthly, quarterly, semi-annual or annual basis in an
amount of $50 or more. Depending upon the size of the
withdrawals requested under the Plan and fluctuations in
the net asset value of Fund shares, these withdrawals
may reduce or even exhaust your account.
The purchase of Class A Shares, other than through rein-
vestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usu-
ally be disadvantageous because you will be paying a
sales charge on any Class A Shares you purchase at the
same time you are redeeming shares.
General. Each Fund may suspend the right of redemption
of Fund shares or delay payment more than seven days (a)
during any period when the New York Stock Exchange is
closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Fund nor-
mally utilizes is restricted, or an emergency exists as
determined by the Securities and Exchange Commission so
that trading of the Fund's investments or determination
of its net asset value is not reasonably practicable, or
(c) for any other periods that the Securities and Ex-
change Commission by order may permit for protection of
Fund shareholders.
Each Fund may, from time to time, establish a minimum
total investment for Fund shareholders, and each Fund
reserves the right to redeem your shares if your invest-
ment is less than the minimum after giving you at least
30 days' notice. If any minimum total investment is es-
tablished, and if your account is below the minimum, you
will be allowed 30 days following the notice in which to
purchase sufficient shares to meet the minimum. So long
as a Fund continues to offer shares at net asset value
to holders of Nuveen UITs who are investing their Nuveen
UIT distributions, no minimum total investment will be
established for that Fund.
42
<PAGE>
MANAGEMENT OF THE FUNDS
Nuveen Advisory Board of Trustees. The management of the Trust, includ-
has been managing ing general supervision of the duties performed for each
similar tax-free Fund by Nuveen Advisory under the Investment Management
funds since 1976, Agreement, is the responsibility of its Board of Trust-
and has ees.
approximately $30
billion of assets
under management.
Investment Adviser. Nuveen Advisory acts as the invest-
ment adviser for and manages the investment and rein-
vestment of the assets of each of the Funds. Its address
is Nuveen Advisory Corp., 333 West Wacker Drive, Chica-
go, Illinois 60606. Nuveen Advisory also administers the
Funds' business affairs, provides office facilities and
equipment and certain clerical, bookkeeping and adminis-
trative services, and permits any of its officers or em-
ployees to serve without compensation as trustees or of-
ficers of the Nuveen Multistate Tax-Free Trust if
elected to such positions.
Nuveen Advisory was organized in 1976 and since then has
exclusively engaged in the management of municipal secu-
rities portfolios. It currently serves as investment ad-
viser to 21 open-end municipal securities portfolios
(the "Nuveen Mutual Funds") and 55 exchange-traded mu-
nicipal securities funds (the "Nuveen Exchange-Traded
Funds"). Each of these invests substantially all of its
assets in investment grade quality, tax-free municipal
securities, and except for money-market funds, adheres
to the value investing strategy described previously. As
of the date of this Prospectus, Nuveen Advisory manages
approximately $30 billion in assets held by the Nuveen
Mutual Funds and the Nuveen Exchange-Traded Funds.
Nuveen Advisory is a wholly-owned subsidiary of John
Nuveen & Co. Incorporated, 333 West Wacker Drive, Chica-
go, Illinois 60606, the oldest and largest investment
banking firm (based on number of employees) specializing
in the underwriting and distribution of tax-exempt secu-
rities. Nuveen, the principal underwriter of the Funds'
shares, is sponsor of the Nuveen Tax-Exempt Unit Trust,
a registered unit investment trust. It is also the prin-
cipal underwriter for the Nuveen Mutual Funds, and
served as co-managing underwriter for the shares of the
Nuveen Exchange-Traded Funds. Over 1,000,000 individuals
have invested to date in Nuveen's tax-exempt funds and
trusts. Founded in 1898, Nuveen is a subsidiary of The
John Nuveen Company which, in turn, is approximately 75%
owned by The St. Paul Companies, Inc. ("St. Paul"). St.
Paul is located in St. Paul, Minnesota and is princi-
pally engaged in providing property-liability insurance
through subsidiaries.
43
<PAGE>
For the services and facilities furnished by Nuveen Ad-
visory, each Fund has agreed to pay an annual management
fee as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
-------------------------------------------------
<S> <C>
For the first $125 million .5500 of 1%
For the next $125 million .5375 of 1%
For the next $250 million .5250 of 1%
For the next $500 million .5125 of 1%
For the next $1 billion .5000 of 1%
On assets of $2 billion and over .4750 of 1%
</TABLE>
All fees and expenses are accrued daily and deducted be-
fore payment of dividends to investors. In addition to
the fee of Nuveen Advisory, each Fund pays all its other
costs and expenses and a portion of the Nuveen
Multistate Tax-Free Trust's general administrative ex-
penses allocated in proportion to the net assets of each
Fund. In order to prevent total operating expenses (ex-
cluding any distribution or service fees) from exceeding
.75 of 1% of the average daily net asset value of any
class of shares of each Fund for the fiscal year ended
January 31, 1995, Nuveen Advisory agreed to waive all or
a portion of its management fees or reimburse certain
expenses of each Fund. Nuveen Advisory has agreed to
continue its fee waivers and expense reimbursements
through July 31, 1995, and it is anticipated that Nuveen
Advisory will continue its fee waivers and expense reim-
bursements for some length of time thereafter. For in-
formation regarding the management fees and total oper-
ating expenses of each class of shares of each of the
Funds for the year ended January 31, 1995, see the ta-
bles under "Summary of Fund Expenses" on page 3 of this
Prospectus.
Portfolio Management. Overall portfolio management
strategy for the Funds is determined by Nuveen Advisory
under the general supervision 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 manage-
ment of all Nuveen open-end and exchange-traded funds
managed by Nuveen Advisory. See the Statement of Addi-
tional Information for further information about Mr.
Spalding.
The day-to-day management of the Arizona Fund is the re-
sponsibility of Steven J. Krupa, a Vice President of
Nuveen Advisory since October 1990 and portfolio manager
of the Arizona Fund since its inception on December 13,
1991. Prior to joining Nuveen Advisory he worked in
Nuveen's Municipal Trading Department as a Vice Presi-
dent. He currently manages 9 Nuveen-sponsored investment
companies. See the Statement of Additional Information
for further information about Mr. Krupa.
44
<PAGE>
The day-to-day management of the Florida Fund is the re-
sponsibility of J. Thomas Futrell, a Vice President of
Nuveen Advisory since February 1991 and portfolio man-
ager of the Florida Fund since its inception on December
13, 1991. Prior thereto he served as Assistant Vice
President of Nuveen Advisory. He currently manages 7
Nuveen-sponsored investment companies. See the Statement
of Additional Information for further information about
Mr. Futrell.
The day-to-day management of the Maryland and Michigan
Funds is the responsibility of Edward F. Neild IV, an
Assistant Vice President of Nuveen Advisory since 1993
and portfolio manager of the Maryland and Michigan Funds
since their commencement of operations on February 28,
1992. Mr. Neild joined Nuveen Advisory in February 1992
and was an Assistant Portfolio Manager until December
1993. Prior to joining Nuveen Advisory he was an Associ-
ate with Nuveen Institutional Advisory Corp. from May
1991 to February 1992, and prior thereto he was an ana-
lyst in Nuveen's Municipal Securities Department. Mr.
Neild currently manages 6 Nuveen-sponsored investment
companies.
The day-to-day management of the New Jersey Fund is the
responsibility of Stephen S. Peterson, an Assistant
Portfolio Manager of Nuveen Advisory since October 1991
and portfolio manager of the New Jersey Fund since its
inception on December 13, 1991. Prior to joining Nuveen
Advisory, he was an analyst in Nuveen's Research Depart-
ment. Mr. Peterson currently manages 8 Nuveen-sponsored
investment companies.
The day-to-day management of the Pennsylvania Fund is
the responsibility of Thomas J. O'Shaughnessy, an Assis-
tant Portfolio Manager of Nuveen Advisory since 1991 and
portfolio manager of the Pennsylvania Fund since its in-
ception on December 13, 1991. Prior to joining Nuveen
Advisory in 1991, Mr. O'Shaughnessy was employed by
Nuveen as an underwriter in the Municipal Underwriting
Department, and prior thereto as a pricing analyst in
the Unit Investment Trust Pricing Department. Mr.
O'Shaughnessy currently manages 7 Nuveen-sponsored in-
vestment companies.
The day-to-day management of the Virginia Fund is the
responsibility of William M. Fitzgerald, an Assistant
Vice President of Nuveen Advisory since July 1993 and
portfolio manager of the Virginia Fund since its incep-
tion on December 13, 1991. Prior thereto, he was em-
ployed by Nuveen Advisory as an Assistant Portfolio Man-
ager. Mr. Fitzgerald currently manages 9 Nuveen-spon-
sored investment companies.
45
<PAGE>
Consistent with the Funds' investment objectives, 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 re-
sources of the portfolio managers of the various Nuveen
funds and senior management of Nuveen Advisory. All
portfolio management decisions are subject to weekly re-
view by Nuveen Advisory's management and to quarterly
review by the Trust's Board of Trustees.
46
<PAGE>
HOW THE FUNDS SHOW PERFORMANCE
The Funds may Each Fund from time to time may quote various perfor-
compare their mance measures in order to illustrate the historical
performance with returns available from an investment in the Fund. These
other tax-free performance measures, which are determined for each
and taxable class of shares of a Fund, include:
investments,
often on a
taxable
equivalent basis.
Yield Information. YIELD is a standardized measure of
the net investment income earned over a specified 30-day
period, expressed as a percentage of the offering price
per share at the end of the period. Yield is an
annualized figure, which means that it is assumed that
the same level of net investment income is generated
over a one-year period.
TAXABLE EQUIVALENT YIELD is the yield that a taxable
investment would need to generate in order to equal the
yield on an after-tax basis for an investor in a stated
tax bracket. Taxable equivalent yield will consequently
be higher than its yield. See the chart below and Appen-
dix B for examples of taxable equivalent yields and how
you can use them to compare other investments with in-
vestments in the Funds.
HISTORICAL YIELDS
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
TAXABLE
EQUIVALENT 30 YEAR 6 MONTH TAXABLE
DATE BB 20 TREASURY CD MMF
<S> <C> <C> <C> <C>
1/86 12.63% 9.40% 7.54% 7.15%
1/87 10.41% 7.39% 5.60% 5.50%
1/88 12.08% 8.83% 6.75% 6.50%
1/89 11.48% 8.93% 8.12% 8.36%
1/90 11.09% 8.26% 7.62% 7.75%
1/91 11.06% 8.27% 6.75% 6.89%
1/92 10.18% 7.75% 3.72% 4.13%
1/93 9.62% 7.34% 2.87% 2.84%
1/94 8.29% 5.54% 2.72% 2.71%
1/95 10.21% 7.85% 5.43% 5.13%
</TABLE>
SOURCES: BOND BUYER, BANXQUOTE, IBC/DONOGHUE'S MONEY
FUND REPORT
47
<PAGE>
As this chart shows, interest rates on various long- and
short-term investments will fluctuate over time, and not
always in the same direction or to the same degree. For
convenience, the taxable equivalent yield of the Bond
Buyer 20 Index shown here was calculated using a 36%
federal income tax rate. Other federal income tax rates,
both higher and lower, were in existence for all or part
of the period shown in the chart. This chart is not in-
tended to predict the future direction of interest
rates. See the discussion below under the subcaption
"General" for a description of the indices and invest-
ments shown in the chart.
DISTRIBUTION RATE is determined based upon the latest
dividend, annualized, expressed as a percentage of the
offering price per share at the end of the measurement
period. Distribution rate may sometimes be different
than yield because it may not include the effect of am-
ortization of bond premiums to the extent such premiums
arise after the bonds were purchased.
Total Return Information. AVERAGE ANNUAL TOTAL RETURN
and CUMULATIVE TOTAL RETURN figures for a specified pe-
riod measure both the net investment income generated
by, and the effect of any realized and unrealized appre-
ciation or depreciation of, an investment in a Fund, as-
suming the reinvestment of all dividends and capital
gain distributions. Average annual total return figures
generally are quoted for at least one-, five- and ten-
year (or life-of-fund, if shorter) periods and represent
the average annual percentage change over those periods.
Cumulative total return figures are not annualized and
represent the cumulative percentage or dollar value
change over the period specified.
TAXABLE EQUIVALENT TOTAL RETURN represents the total re-
turn that would be generated by a taxable income fund
that produced the same amount of net asset value appre-
ciation or depreciation and after-tax income as a Fund
in each year, assuming a specified tax rate. The taxable
equivalent total return of a Fund will therefore be
higher than its total return over the same period.
From time to time, a Fund may compare its risk-adjusted
performance with other investments that may provide dif-
ferent levels of risk and return. For example, a Fund
may compare its risk level, as measured by the variabil-
ity of its periodic returns, or its RISK-ADJUSTED TOTAL
RETURN, with those of other funds or groups of funds.
Risk-adjusted total return would be calculated by ad-
justing each investment's total return to account for
the risk level of the investment.
48
<PAGE>
A Fund may also compare its TAX-ADJUSTED TOTAL RETURN
with that of other funds or groups of funds. This meas-
ure would take into account the tax-exempt nature of ex-
empt-interest dividends and the payment of income taxes
on a fund's distributions of net realized capital gains
and ordinary income.
General. Any given performance quotation or performance
comparison for a Fund is based on historical earnings
and should not be considered as representative of the
performance of the Fund for any future period. See the
Statement of Additional Information for further informa-
tion concerning the Funds' performance. For information
as to current yield and other performance information
regarding the Funds, call Nuveen toll-free at 800-621-
7227.
A comparison of the current yield or historic perfor-
mance of a Fund to those of other investments is one el-
ement to consider in making an informed investment deci-
sion. Each Fund may from time to time in its advertising
and sales materials compare its current yield or total
return with the yield or total return on taxable invest-
ments such as corporate or U.S. Government bonds, bank
certificates of deposit (CDs) or money market funds.
These taxable investments have investment characteris-
tics that differ from those of the Funds. U.S. Govern-
ment bonds, for example, are long-term investments
backed by the full faith and credit of the U.S. Govern-
ment, and bank CDs are generally short-term, FDIC-in-
sured investments, which pay fixed principal and inter-
est 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 In-
dex. Comparative performance information may also be
used from time to time in advertising or marketing a
Fund's shares, including data from Lipper Analytical
Services, Inc., Morningstar, Inc. and other industry
publications.
DISTRIBUTIONS AND TAXES
HOW THE FUNDS PAY
DIVIDENDS Each Fund will pay monthly dividends to shareholders at
a level rate that reflects the past and projected net
income of the Fund and that results, over time, in the
Each Fund pays distribution of substantially all of the Fund's net in-
monthly dividends. come. Net income of each Fund consists of all interest
income accrued on its portfolio less all expenses of the
Trust accrued daily that are applicable
49
<PAGE>
to that Fund. To maintain a more stable monthly distri-
bution, each Fund may from time to time distribute less
than the entire amount of net income earned in a partic-
ular 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 invest-
ment 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, cor-
respondingly, distributions from previously undistrib-
uted 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 Funds' portfolios.
Dividends paid by a Fund with respect to each class of
shares will be calculated in the same manner and at the
same time, and will be paid in the same amount except
that different distribution and service fees and any
other expense, relating to a specific class of shares
will be borne exclusively by that class. As a result,
dividends per share will vary among a Fund's classes of
shares.
Each Fund will declare dividends on the 9th of each
month (or if the 9th is not a business day, on the imme-
diately preceding business day), payable to shareholders
of record as of the close of business on that day. This
distribution policy is subject to change, however, by
the Board of Trustees of the Trust 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 Appen-
dix A, is intended to provide you with an overview of
the impact on the Funds and their shareholders of fed-
eral as well as state and local income tax provisions.
These tax provisions are subject to change by legisla-
tive or administrative action, and any changes may be
applied retroactively. Because the Funds' taxes are a
complex matter, you should consult your tax adviser for
more detailed information concerning the taxation of the
Funds and the federal, state and local tax consequences
to Fund shareholders.
50
<PAGE>
Income dividends Federal Income Tax. Each Fund intends to qualify under
are free from Subchapter M of the Internal Revenue Code of 1986, as
regular federal amended (the "Code"), for tax treatment as a regulated
income tax. investment company. In order to qualify for treatment as
a regulated investment company, a Fund must satisfy cer-
tain requirements relating to the sources of its income,
diversification of its assets and distribution of its
income to shareholders. As a regulated investment compa-
ny, a Fund will not be subject to federal income tax on
the portion of its net investment income and net real-
ized capital gains that is currently distributed to
shareholders. Each Fund also intends to satisfy condi-
tions that will enable it to pay "exempt-interest divi-
dends" to its shareholders. This means that you will not
be subject to regular federal income tax on Fund divi-
dends you receive from income on Municipal Obligations.
Your share of a Fund's taxable income, if any, from in-
come on taxable temporary investments and net short-term
capital gains, will be taxable to you as ordinary in-
come. 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 will be required to pay tax on all taxable distribu-
tions even if these distributions are automatically re-
invested in additional Fund shares. Certain distribu-
tions paid by a Fund in January of a given year may be
taxable to shareholders as if received the prior Decem-
ber 31. As long as a Fund qualifies as a regulated in-
vestment company under the Code, taxable distributions
will not qualify for the dividends received deduction
for corporate shareholders. Investors should consider
the tax implications of buying shares immediately prior
to a distribution. Investors who purchase shares shortly
before the record date for a distribution will pay a per
share price that includes the value of the anticipated
distribution and will be taxed on the distribution (un-
less it is exempt from tax) even though the distribution
represents a return of a portion of the purchase price.
If in any year a Fund should fail to qualify under Sub-
chapter M for tax treatment as a regulated investment
company, the Fund would incur a regular corporate fed-
eral income tax upon its taxable income for that year,
and the entire amount of your distributions would be
taxable as ordinary income.
The Code does not permit you to deduct the interest on
borrowed monies used to purchase or carry tax-free in-
vestments, such as shares of a Fund. Under Internal Rev-
enue Service rules, the purchase of Fund shares may be
considered to have been made with borrowed monies even
though those monies are not directly traceable to the
purchase of those shares.
51
<PAGE>
Because the net asset value of each Fund's shares in-
cludes net tax-exempt interest earned by the Fund but
not yet declared as an exempt-interest dividend, each
time an exempt-interest dividend is declared, the net
asset value of the Fund's shares will decrease in an
amount equal to the amount of the dividend. Accordingly,
if you redeem shares of a Fund immediately prior to or
on the record date of a monthly exempt-interest divi-
dend, you may realize a taxable gain even though a por-
tion of the redemption proceeds may represent your pro
rata share of undistributed tax-exempt interest earned
by the Fund.
The redemption or exchange of Fund shares normally will
result in capital gain or loss to shareholders. Any loss
you may realize on the redemption or exchange of shares
of a Fund held for six months or less will be 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 distri-
bution of long-term capital gain received on these
shares.
If you receive social security or railroad retirement
benefits, you should note that tax-exempt income is
taken into account in calculating the amount of these
benefits that may be subject to federal income tax.
The Funds may invest in private activity bonds, the in-
terest on which is not exempt from federal income tax to
"substantial users" of the facilities financed by these
bonds or "related persons" of such substantial users.
Therefore, the Funds may not be appropriate investments
for you if you are considered either a substantial user
or a related person.
Each Fund may invest up to 20% of its net assets in AMT
Bonds, the interest on which is a specific tax prefer-
ence item for purposes of computing the alternative min-
imum tax on corporations and individuals. If your tax
liability is determined under the alternative minimum
tax, you will be taxed on your share of the Fund's ex-
empt-interest dividends that were paid from income
earned on AMT Bonds. In addition, the alternative mini-
mum taxable income for corporations is increased by 75%
of the difference between an alternative measure of in-
come ("adjusted current earnings") and the amount other-
wise determined to be alternative minimum taxable in-
come. Interest on all Municipal Obligations, and there-
fore all distributions by the Fund that would otherwise
be tax exempt, is included in calculating a corpora-
tion's adjusted current earnings.
52
<PAGE>
Each Fund is required in certain circumstances to with-
hold 31% of taxable dividends and certain other payments
paid to non-corporate holders of shares who have not
furnished to the Fund their correct taxpayer identifica-
tion number (in the case of individuals, their social
security number) and certain certifications, or who are
otherwise subject to back-up withholding.
Each January, your Fund will notify you of the amount
and tax status of Fund distributions for the preceding
year.
Dividends are State Income Tax Matters. Under the laws of the respec-
free from tive state of each Fund, dividends you receive from in-
applicable state come earned by the Fund on Municipal Obligations issued
personal income by the Fund's respective state or a political subdivi-
tax. sion thereof will be exempt from that state's applicable
personal income tax. The exemption from state personal
income tax applies whether you receive a Fund's divi-
dends in cash or reinvest them in additional shares of
the Fund. Dividends paid by a Fund representing interest
payments on particular categories of Municipal Obliga-
tions may, under some circumstances, also be exempt from
income taxes imposed by political subdivisions of that
Fund's respective state. In Florida, which presently has
no state personal income tax, Florida Fund shares are
exempt from the Florida intangible personal property
tax.
See Appendix A to this Prospectus and the Statement of
Additional Information for further information concern-
ing the effect of applicable state personal income tax-
es, state intangibles taxes and state corporate income
taxes.
NET ASSET VALUE
Net asset value Net asset value of the shares of a Fund will be deter-
is calculated mined separately for each class of shares. The net asset
daily. value per share of a class of shares will be computed by
dividing the value of the Fund's assets attributable to
the class, less the liabilities attributable to the
class, by the total number of shares of the class out-
standing. The net asset value per share is expected to
vary among a Fund's Class A Shares, Class C Shares and
Class R Shares, principally due to the differences in
sales charges, distribution and service fees and other
class expenses borne by each class.
Net asset value of the shares of each Fund will be de-
termined by United States Trust Company of New York, the
Funds' custodian, as of 4:00 p.m. eastern time on each
day the New York Stock Exchange is normally
53
<PAGE>
open for trading. In determining the net asset value,
the custodian uses the valuations of portfolio securi-
ties furnished by a pricing service approved by the
Board of Trustees. The pricing service values portfolio
securities at the mean between the quoted bid and asked
prices or the yield equivalent when quotations are read-
ily 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 quali-
ty, type of issue, coupon, maturity and rating; indica-
tions as to value from securities dealers; and general
market conditions. The pricing service may employ elec-
tronic 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 the Trust under the general supervision of its Board
of Trustees.
GENERAL INFORMATION
If you have any questions about the Trust, the Funds or
other Nuveen Mutual Funds, call Nuveen toll-free at 800-
621-7227.
Custodian and Transfer and Shareholder Services
Agent. The Custodian of the assets of the Funds is
United States Trust Company of New York, 114 West 47th
Street, New York, NY 10036. The Chase Manhattan Bank,
N.A., 1 Chase Manhattan Plaza, New York, NY 10081, has
agreed to become successor to U.S. Trust, as Custodian
and Fund Accountant. The succession is presently sched-
uled for July 1, 1995. No changes in the Funds' adminis-
tration or in the amount of fees and expenses paid by
the Funds for these services will result, and no action
by shareholders will be required. The Funds' transfer,
shareholder services and dividend paying agent, Share-
holder Services, Inc., P.O. Box 5330, Denver, CO 80217-
5330, performs bookkeeping, data processing and adminis-
trative services for the maintenance of shareholder ac-
counts.
Organization. The Trust is an open-end diversified man-
agement series investment company under the Investment
Company Act of 1940. Each Fund constitutes a separate
series of the Trust and is itself an open-end diversi-
fied management mutual fund. The Trust was organized as
a Massachusetts business trust on July 26, 1991, pursu-
ant to a Declaration of Trust. The Board of Trustees of
the Trust is authorized to issue an unlimited number of
shares, $.01 par value, representing interests in sepa-
rate series of the Trust. The Trust currently has seven
authorized series: the
54
<PAGE>
Nuveen Arizona Tax-Free Value Fund, the Nuveen Florida
Tax-Free Value Fund, the Nuveen Maryland Tax-Free Value
Fund, the Nuveen Michigan Tax-Free Value Fund, the
Nuveen New Jersey Tax-Free Value Fund, the Nuveen Penn-
sylvania Tax-Free Value Fund and the Nuveen Virginia
Tax-Free Value Fund. The shares of each series of the
Trust are divided into three classes of shares desig-
nated as Class A Shares, Class C Shares and Class R
Shares. Each class of shares represents an interest in
the same portfolio of investments and has equal rights
as to voting, redemption, dividends and liquidation, ex-
cept that each bears different class expenses, including
different distribution and service fees, and each has
exclusive voting rights with respect to any distribution
or service plan applicable to its shares. These are no
conversion, preemptive or other subscription rights, ex-
cept that Class C Shares of a Fund automatically convert
to Class A Shares of the same Fund, as described above.
The Board of Trustees has the right to establish addi-
tional series and classes of shares in the future, to
change those series or classes and to determine the
preferences, voting powers, rights and privileges there-
of.
The Funds are not required and do not intend to hold an-
nual meetings of shareholders. Shareholders owning more
than 10% of the outstanding shares of a Fund have the
right to call a special meeting to remove Trustees or
for any other purpose.
The Trust is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for
its obligations. However, the Declaration of Trust con-
tains an express disclaimer of shareholder liability for
acts or obligations of the Trust and requires that no-
tice of this disclaimer be given in each agreement, ob-
ligation or instrument entered into or executed by the
Trust or the Trustees. The Declaration of Trust further
provides for indemnification out of the assets and prop-
erty of the Trust for all loss and expense of any share-
holder held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder incurring finan-
cial loss on account of shareholder liability is limited
to circumstances in which both inadequate insurance ex-
isted and the Trust itself was unable to meet its obli-
gations. The Trust believes the likelihood of these cir-
cumstances is remote.
55
<PAGE>
APPENDIX A--SPECIAL STATE FACTORS AND
STATE TAX TREATMENT
SPECIAL FACTORS PERTAINING TO EACH FUND
The following information is a brief summary of special
factors that affect the risk of investing in Municipal
Obligations issued within each Fund's state. This infor-
mation was obtained from official statements of issuers
located in these states as well as from other publicly
available official documents and statements and is not
intended to be a complete description. The Funds have
not independently verified any of the information con-
tained in these statements and documents. See the State-
ment of Additional Information for further information
relating to current political, economic or regulatory
risk factors as well as information relating tolegal
proceedings which may adversely affect a state's
financialposition.
ARIZONA
Arizona is the nation's sixth largest state in terms of
area. Arizona's main economic sectors are services,
tourism and manufacturing. The unemployment rate in Ari-
zona for 1994 was 6.3% and for 1993 was 6.2%. Slower
construction and real estate activity is at the heart of
the current weakness in the State's financial sector. In
recent years, revenue and budgeted expenditures for the
State and its political subdivisions have been limited
due to reduced federal funds for states, by Constitu-
tional restrictions on ad valorem taxes and by adverse
economic conditions.
FLORIDA
Florida's economy continues to recover from the recent
national recession. Tourism is currently in a slight de-
cline, and is expected to increase by only 1.7% in 1995-
96. Florida's unemployment rate is currently projected
to be 6.1% in 1994-95 and in 1995-96. The State's Con-
stitution mandates a balanced budget. Florida retains a
bond rating of Aa and "AA" from Moody's and S&P, respec-
tively, on the majority of its general obligation bonds.
<PAGE>
MARYLAND
The State's total expenditures for the fiscal years end-
ing June 30, 1992, June 30, 1993 and June 30, 1994 were
approximately $11.6 billion, $11.8 billion and $12.9
billion, respectively. As of October 5, 1994, it was es-
timated that total expenditures for fiscal year 1995
would be approximately $13.4 billion. The original ap-
propriation for expenditures in fiscal year 1995 is ap-
proximately $13.3 billion. The State's General Fund,
representing approximately 55%-60% of each year's total
budget, had a surplus on a budgetary basis of $55 thou-
sand in fiscal year 1991, a deficit of $56 million in
fiscal year 1992 and a surplus of $11 million in fiscal
year 1993. As of October 5, 1994 it was estimated that
the general fund surplus for fiscal year 1994 would be
approximately $49.5 million. The Governor of Maryland
reduced fiscal year 1993 appropriations by approximately
$56 million to offset the fiscal year 1992 deficit. The
State Constitution mandates a balanced budget. Maryland
maintains a bond rating of Aaa and "AAA" from Moody's
and S&P, respectively, on its general obligation bonds.
MICHIGAN
Michigan ended fiscal year 1993-94, which ended Septem-
ber 30, 1994, with a $464 million surplus which was
transferred to the State's Budget and Economic Stabili-
zation Fund giving that fund a $779.3 million year-end
balance. Currently, Michigan's general obligation bonds
are rated A1 by Moody's and "AA" by S&P and Fitch In-
vestors Service, Inc.
NEW JERSEY
New Jersey is the ninth largest state in population and
the fifth smallest in land area. In 1993 New Jersey
ranked second among all states in per capita personal
income. New Jersey's economic base is diversified, con-
sisting of a variety of manufacturing, construction and
service industries. The national recession adversely af-
fected employment in New Jersey; the unemployment rate
increased from 3.6% in early 1989 to 6.1% in February
1995. There was a surplus in the general fund of $1 mil-
lion at the end of fiscal year 1990, $1.4 million at the
end of fiscal year 1991, $760.8 million at the end of
fiscal year 1992, and it is estimated that New Jersey
closed its fiscal year 1993 with a surplus of approxi-
mately $937.4 million. In 1990 and 1991, increases in
New Jersey sales and use tax and income tax took effect
in order to increase revenue from those sources, al-
though there have been recent reductions in both the
sales and use tax and the income tax. Currently, Moody's
rates New Jersey general obligation bonds Aa1, and S&P
rates them "AA+." See the Statement of Additional Infor-
mation for further information relating to fiscal and
revenue matters affecting the State.
A-2
<PAGE>
PENNSYLVANIA
The Commonwealth of Pennsylvania and certain of its mu-
nicipal subdivisions, including the City of Philadel-
phia, have undergone the financial difficulties and
pressures that accompany a decline in economic condi-
tions. As the heavy industries historically associated
with Pennsylvania have declined with increasing competi-
tion from foreign producers, the services sector, in-
cluding trade, medical and health services, education
and financial institutions, has provided major new
sources of growth. Agriculture related industries con-
tinue to be an important part of Pennsylvania's economy.
Both the Commonwealth and the City of Philadelphia have
historically experienced significant revenue shortfalls.
On the other hand, rising demands on state programs,
particularly for medical assistance and cash assistance
programs, and the increased cost of special education
programs and correction facilities and programs, have
contributed to increased expenditures. In response, the
Commonwealth and the City of Philadelphia have, in re-
cent years, sought to balance budgets with a combination
of tax increases and expenditure restraints. Although
there can be no assurance that such conditions will con-
tinue, all outstanding general obligation bonds of the
Commonwealth are currently rated at "AA-" by S&P and
"A1" by Moody's.
VIRGINIA
The Commonwealth's financial condition is supported by a
broad-based economy, including manufacturing, tourism,
agriculture, ports, mining and fisheries. Manufacturing
continues to be a major source of employment, ranking
behind only services, wholesale and retail trade, and
government (federal, state and local). The federal gov-
ernment is a major employer in Virginia; however, civil-
ian employment has been affected by the retrenchment of
the military sector and is likely to decrease further.
Virginia's economy has experienced a gradual recovery
since the end of the recession in March 1991, and pro-
vided reason for restrained optimism in fiscal year
1994. State unemployment rates dropped to 4.9% for fis-
cal year 1994, compared to 6.4% nationally, and
Virginia's personal income growth rate for the first
quarter of fiscal year 1994 was 6.1%, compared to 3.9%
nationally. Virginia appears to have fully participated
in the national economic recovery, although the state
has not yet returned to pre-recession growth rates for
several measures and the uncertain duration of the eco-
nomic recovery is a source of concern. Although there
can be no assurance that such will continue, the Common-
wealth of Virginia has consistently maintained ratings
of "AAA" by S&P and Aaa by Moody's on its general obli-
gation indebtedness, reflecting in part its sound fiscal
management, diversified economic base and low debt ra-
tios.
A-3
<PAGE>
DESCRIPTION OF STATE TAX TREATMENT
The following state tax information applicable to each
Fund and its shareholders is based upon the advice of
each 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 qual-
ifies as a regulated investment company for federal in-
come tax purposes under 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.
ARIZONA Exempt-interest dividends attributable to Arizona Munic-
ipal Obligations will be exempt from Arizona income tax
when received by a shareholder of the Arizona Fund to
the same extent as if interest on such Obligations were
received directly by the shareholder. Other dividends by
the Arizona Fund, including capital gain distributions,
if any, or additional amounts includable in the gross
income of the shareholders for federal income tax pur-
poses (including gains realized upon the redemption or
exchange of shares of the Arizona Fund) will be subject
to Arizona income tax.
FLORIDA Florida does not impose an income tax on individuals.
Neither the Florida Fund nor its shareholders will be
subject to the Florida intangible personal property tax
on the Florida Municipal Obligations or the shares of
the Florida Fund, respectively, with respect to any cal-
endar year so long as at the close of the preceding cal-
endar year and on January 1 of the then current year,
the Florida Fund's portfolio assets consist solely of
Florida Municipal Obligations or other assets exempt
from the Florida intangible personal property tax. Cor-
porate shareholders may be subject to corporate income
tax.
A-4
<PAGE>
MARYLAND
Exempt-interest dividends that are derived from interest
received by the Maryland Fund on obligations (a) of
Maryland or its political subdivisions and authorities
or (b) of the United States or an authority, commission,
instrumentality, possession or territory of the United
States will be exempt from Maryland state and local in-
come taxes when allocated or distributed to a share-
holder of the Maryland Fund. Likewise, gain realized
from the sale or exchange of bonds issued by Maryland or
its political subdivisions will be exempt from Maryland
income taxes. Income from any other sources, such as in-
terest received by the Maryland Fund on obligations is-
sued by states other than Maryland, income earned on
repurchase contracts and gain realized by a shareholder
from a redemption or exchange of Maryland Fund shares
will be subject to Maryland state and local income tax-
es.
MICHIGAN Under the Michigan income tax act, the Michigan single
business tax act, the Michigan intangibles tax act, the
Michigan city income tax act (which authorizes the only
income tax ordinance that may be adopted by cities in
Michigan), and under the law which authorizes a "first
class" school district to levy an excise tax upon in-
come, the Michigan Fund is not subject to tax. Distribu-
tions received by shareholders with respect to Michigan
Fund shares that are derived from interest on Michigan
Municipal Obligations will be exempt from Michigan state
and local income taxes and Michigan intangibles tax. For
Michigan income and intangible tax purposes, the propor-
tionate share of distributions from the Michigan Fund's
net investment income derived from other than Michigan
Municipal Obligations and from any short-term or long-
term capital gains, together with any gain or loss real-
ized when a shareholder redeems or exchanges shares of
the Michigan Fund, will be included in Michigan taxable
income and will be included in the taxable income base
of the Michigan intangibles tax, except that distribu-
tions from net investment income or capital gains rein-
vested in Michigan Fund shares are exempt from such tax.
A-5
<PAGE>
NEW JERSEY Individual shareholders of the New Jersey Fund, includ-
ing trusts and estates, who are subject to the New Jer-
sey Gross Income Tax will not be required to include in
their New Jersey gross income (1) distributions from the
New Jersey Fund which the New Jersey Fund clearly iden-
tifies as directly attributable to interest or gains
from New Jersey Municipal Obligations, obligations of
the United States or any other obligations the interest
and gain on which is exempt from New Jersey Gross Income
Tax under New Jersey law or Federal law, and (2) net
gains attributable to the redemption or exchange of New
Jersey Fund shares, provided that the New Jersey Fund
qualifies as a "qualified investment fund." Qualified
investment funds include, among others, any registered
investment company or series thereof (such as the New
Jersey Fund), which invests at least 80% of its assets,
excluding cash and certain hedging transactions, in the
obligations described above, and which has no invest-
ments other than interest-bearing or discounted obliga-
tions, cash and certain hedging transactions. A corpo-
rate shareholder, including an S corporation, subject to
the New Jersey Corporation Business Tax or the New Jer-
sey Corporation Income Tax will be required to include
in its entire net income distributions of interest or
gain, or both, from the New Jersey Fund, less any inter-
est expense incurred to carry such investment to the ex-
tent such interest expense has not been deducted in com-
puting Federal taxable income, and net gain derived on
the redemption or exchange of New Jersey Fund shares.
PENNSYLVANIA Shares of the Pennsylvania Fund are not subject to any
of the personal property taxes presently in effect in
Pennsylvania to the extent of that portion of the Penn-
sylvania Fund represented by Pennsylvania Municipal Ob-
ligations. The portion of interest income representing
interest income from Pennsylvania Municipal Obligations
received by the Fund and distributed to shareholders of
the Pennsylvania Fund is not taxable under the Pennsyl-
vania Personal Income Tax or under the Corporate Net In-
come Tax, nor will such interest be taxable under the
Philadelphia School District Investment Income Tax im-
posed on Philadelphia resident individuals. The disposi-
tion by the Pennsylvania Fund of a Pennsylvania Munici-
pal Obligation (whether by sale, exchange, redemption or
payment at maturity), as well as the distribution of the
proceeds of such disposition, will not constitute a tax-
able event to a shareholder under the Pennsylvania Per-
sonal Income Tax if the Pennsylvania Municipal Obliga-
tion was issued prior to February 1, 1994. Further, al-
though there is no published authority on the subject,
special Pennsylvania counsel is of the opinion that an
individual shareholder of the Pennsylvania Fund will not
have a taxable event under the Pennsylvania state and
local income taxes referred to above upon the redemption
or exchange of his shares to the extent that
A-6
<PAGE>
the Pennsylvania Fund is then composed of Pennsylvania
Municipal Obligations issued prior to February 1, 1994.
VIRGINIA
Shareholders who are subject to income tax in Virginia
will not be taxed on that portion of any distribution
that is attributable to the interest earned by the Vir-
ginia Fund on Virginia Municipal Obligations; however,
these shareholders will generally have taxable income
for Virginia income tax purposes to the extent of any
portion of a distribution that is taxable for federal
income tax purposes, except as it relates to interest or
dividends on obligations of the United States or instru-
mentalities thereof exempt from state income taxation
under the laws of the United States. To the extent dis-
tributions to shareholders are attributable to interest
on Municipal Obligations other than Virginia Municipal
Obligations, such distributions will be included in the
shareholder's Virginia taxable income. Virginia income
tax exemption is also independently provided for inter-
est on certain obligations. Where an independent exemp-
tion is provided, interest on those obligations is ex-
empt from Virginia income taxation without regard to any
exemption from federal income taxes. As a general rule,
to the extent that any gain realized (whether as a re-
sult of the redemption or exchange of Virginia Municipal
Obligations by the Virginia Fund or as a result of the
sale of shares by the shareholder) is subject to federal
income taxation, this gain will be included in the
shareholder's Virginia taxable income. Under the lan-
guage of certain enabling legislation, however, gain re-
alized on the sale of obligations issued thereunder is
expressly exempt from Virginia income taxation.
A-7
<PAGE>
APPENDIX B--TAXABLE EQUIVALENT YIELD TABLES
TAXABLE The following tables show the combined effects for indi-
EQUIVALENT YIELD viduals of federal, state and local (if applicable) in-
TABLES AND THE come taxes on:
EFFECT OF TAXES
AND INTEREST . what you would have to earn on a taxable investment to
RATES ON equal a given tax-free yield; and
INVESTMENTS . the amount that those subject to a given combined tax
rate would have to put into a tax-free investment in
order to generate the same after-tax income as a tax-
able investment.
These tables are for illustrative purposes only and are
not intended to predict the actual return you might earn
on a Fund investment. The Funds occasionally may adver-
tise their performance in similar tables using other
current combined tax rates than those shown here. The
combined tax rates used in these tables have been
rounded to the nearest one-half of one percent. They are
based upon published 1995 marginal federal tax rates and
marginal state tax rates currently available and sched-
uled to be in effect, and do not take into account
changes in tax rates that are proposed from time to
time. They are calculated using the highest state tax
rate applicable within each federal bracket, and assume
taxpayers are not subject to any alternative minimum
taxes and deduct any state income taxes paid on their
federal income tax returns. They also reflect the cur-
rent federal tax limitations on itemized deductions and
personal exemptions, which may raise the effective tax
rate and taxable equivalent yield for taxpayers above
certain income levels. The combined tax rates shown here
may be higher or lower than your actual combined tax
rate. A higher combined tax rate would tend to make the
dollar amounts in the third table lower, while a lower
combined tax rate would make the amounts higher. You
should consult your tax adviser to determine your actual
combined tax rate.
<PAGE>
ARIZONA
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
COMBINED MARGINAL Federal
TAX RATES FOR JOINT Federal Adjusted Combined
TAXPAYERS WITH Taxable Gross State and TAX-FREE YIELD
FOUR PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTIONS (1,000's) (1,000's) Tax Rate Taxable Equivalent Yield
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 18.5% 4.29 4.91 5.52 6.13 6.75 7.36 7.98
---------------------------------------------------------------------------------------------------
39.0-94.3 0-114.7 31.5 5.11 5.84 6.57 7.30 8.03 8.76 9.49
---------------------------------------------------------------------------------------------------
114.7-172.1 32.5 5.19 5.93 6.67 7.41 8.15 8.89 9.63
---------------------------------------------------------------------------------------------------
94.3-143.6 0-114.7 35.5 5.43 6.20 6.98 7.75 8.53 9.30 10.08
---------------------------------------------------------------------------------------------------
114.7-172.1 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
---------------------------------------------------------------------------------------------------
172.1-294.6 38.5 5.69 6.50 7.32 8.13 8.94 9.76 10.57
---------------------------------------------------------------------------------------------------
143.6-256.5 114.7-172.1 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
---------------------------------------------------------------------------------------------------
172.1-294.6 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
---------------------------------------------------------------------------------------------------
Over 294.6 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
---------------------------------------------------------------------------------------------------
Over 256.5 172.1-294.6 48.0 6.73 7.69 8.65 9.62 10.58 11.54 12.50
---------------------------------------------------------------------------------------------------
Over 294.6 45.0 6.36 7.27 8.18 9.09 10.00 10.91 11.82
---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
COMBINED MARGINAL Federal
TAX RATES FOR Federal Adjusted Combined
SINGLE TAXPAYERS Taxable Gross State and TAX-FREE YIELD
WITH ONE PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTION (1,000's) (1,000's) Tax Rate Taxable Equivalent Yield
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 18.5% 4.29 4.91 5.52 6.13 6.75 7.36 7.98
---------------------------------------------------------------------------------------------------
23.4-56.6 0-114.7 32.5 5.19 5.93 6.67 7.41 8.15 8.89 9.63
---------------------------------------------------------------------------------------------------
56.6-118.0 0-114.7 35.5 5.43 6.20 6.98 7.75 8.53 9.30 10.08
---------------------------------------------------------------------------------------------------
114.7-237.2 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
---------------------------------------------------------------------------------------------------
118.0-256.5 114.7-237.2 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
---------------------------------------------------------------------------------------------------
Over 237.2 41.5 5.98 6.84 7.69 8.55 9.40 10.26 11.11
---------------------------------------------------------------------------------------------------
Over 256.5 Over 237.2 45.0 6.36 7.27 8.18 9.09 10.00 10.91 11.82
---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
FOR AN EQUAL AFTER- 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
TAX RETURN, YOUR $50,000 Investment tax-free tax-free tax-free tax-free tax-free tax-free tax-free
TAX-FREE INVESTMENT ---------------------------------------------------------------------------------------------------
MAY BE LESS* <S> <C> <C> <C> <C> <C> <C> <C>
Compare 4% taxable $36,857 $32,250 $28,667 $25,800 $23,455 $21,500 $19,846
---------------------------------------------------------------------------------------------------
For example, $50,000 Compare 5% taxable $46,071 $40,313 $35,833 $32,250 $29,318 $26,875 $24,808
in a 6% taxable ---------------------------------------------------------------------------------------------------
investment earns the Compare 6% taxable $55,286 $48,375 $43,000 $38,700 $35,182 $32,250 $29,769
same after-tax return as ---------------------------------------------------------------------------------------------------
$38,700 in a 5% tax- Compare 7% taxable $64,500 $56,438 $50,167 $45,150 $41,045 $37,625 $34,731
free Nuveen investment. ---------------------------------------------------------------------------------------------------
Compare 8% taxable $73,714 $64,500 $57,333 $51,600 $46,909 $43,000 $39,692
---------------------------------------------------------------------------------------------------
*The dollar amounts in the table reflect a 35.5% combined federal and state tax rate.
</TABLE>
B-2
<PAGE>
FLORIDA
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
MARGINAL TAX RATES Federal
FOR JOINT TAXPAYERS Federal Adjusted
WITH FOUR PERSONAL Taxable Gross TAX-FREE YIELD
EXEMPTIONS Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate Taxable Equivalent Yield
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 15.0% 4.12 4.71 5.29 5.88 6.47 7.06 7.65
---------------------------------------------------------------------------------------------------
39.0-94.3 0-114.7 28.0 4.86 5.56 6.25 6.94 7.64 8.33 9.03
---------------------------------------------------------------------------------------------------
114.7-172.1 29.0 4.93 5.63 6.34 7.04 7.75 8.45 9.15
---------------------------------------------------------------------------------------------------
94.3-143.6 0-114.7 31.0 5.07 5.80 6.52 7.25 7.97 8.70 9.42
---------------------------------------------------------------------------------------------------
114.7-172.1 32.0 5.15 5.88 6.62 7.35 8.09 8.82 9.56
---------------------------------------------------------------------------------------------------
172.1-294.6 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
---------------------------------------------------------------------------------------------------
143.6-256.5 114.7-172.1 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
---------------------------------------------------------------------------------------------------
172.1-294.6 40.0 5.83 6.67 7.50 8.33 9.17 10.00 10.83
---------------------------------------------------------------------------------------------------
Over 294.6 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
---------------------------------------------------------------------------------------------------
Over 256.5 172.1-294.6 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
---------------------------------------------------------------------------------------------------
Over 294.6 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
MARGINAL TAX RATES Federal
FOR SINGLE Federal Adjusted
TAXPAYERS WITH Taxable Gross TAX-FREE YIELD
ONE PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTION (1,000's) (1,000's) Tax Rate Taxable Equivalent Yield
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 15.0% 4.12 4.71 5.29 5.88 6.47 7.06 7.65
---------------------------------------------------------------------------------------------------
23.4-56.6 0-114.7 28.0 4.86 5.56 6.25 6.94 7.64 8.33 9.03
---------------------------------------------------------------------------------------------------
56.6-118.0 0-114.7 31.0 5.07 5.80 6.52 7.25 7.97 8.70 9.42
---------------------------------------------------------------------------------------------------
114.7-237.2 32.5 5.19 5.93 6.67 7.41 8.15 8.89 9.63
---------------------------------------------------------------------------------------------------
118.0-256.5 114.7-237.2 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
---------------------------------------------------------------------------------------------------
Over 237.2 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
---------------------------------------------------------------------------------------------------
Over 256.5 Over 237.2 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
FOR AN EQUAL AFTER- 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
TAX RETURN, YOUR $50,000 Investment tax-free tax-free tax-free tax-free tax-free tax-free tax-free
TAX-FREE INVESTMENT ---------------------------------------------------------------------------------------------------
MAY BE LESS* <S> <C> <C> <C> <C> <C> <C> <C>
Compare 4% taxable $39,429 $34,500 $30,667 $27,600 $25,091 $23,000 $21,231
---------------------------------------------------------------------------------------------------
For example, $50,000 Compare 5% taxable $49,286 $43,125 $38,333 $34,500 $31,364 $28,750 $26,538
in a 6% taxable ---------------------------------------------------------------------------------------------------
investment earns the Compare 6% taxable $59,143 $51,750 $46,000 $41,400 $37,636 $34,500 $31,846
same after-tax return as ---------------------------------------------------------------------------------------------------
$41,400 in a 5% tax- Compare 7% taxable $69,000 $60,375 $53,667 $48,300 $43,909 $40,250 $37,154
free Nuveen investment. ---------------------------------------------------------------------------------------------------
Compare 8% taxable $78,857 $69,000 $61,333 $55,200 $50,182 $46,000 $42,462
---------------------------------------------------------------------------------------------------
*The dollar amounts in the table reflect a 31.0% federal tax rate.
</TABLE>
B-3
<PAGE>
MARYLAND
<TABLE>
<CAPTION>
COMBINED MARGINAL Federal Combined
TAX RATES FOR Federal Adjusted County,
JOINT TAXPAYERS Taxable Gross State and TAX-FREE YIELD
WITH FOUR Income Income Federal 3.0% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
PERSONAL (1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
EXEMPTIONS -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 21.5% 4.46 5.10 5.73 6.37 7.01 7.64 8.28
-------------------------------------------------------------------------------------
39.0-94.3 0-114.7 33.5 5.26 6.02 6.77 7.52 8.27 9.02 9.77
-------------------------------------------------------------------------------------
114.7-172.1 34.0 5.30 6.06 6.82 7.58 8.33 9.09 9.85
-------------------------------------------------------------------------------------
94.3-143.6 0-114.7 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
-------------------------------------------------------------------------------------
114.7-172.1 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
-------------------------------------------------------------------------------------
172.1-294.6 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
-------------------------------------------------------------------------------------
143.6-150.0 114.7-172.1 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
-------------------------------------------------------------------------------------
172.1-294.6 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
-------------------------------------------------------------------------------------
150.0-256.5 114.7-172.1 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
-------------------------------------------------------------------------------------
172.1-294.6 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
-------------------------------------------------------------------------------------
Over 294.6 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
-------------------------------------------------------------------------------------
Over 256.5 172.1-294.6 49.0 6.86 7.84 8.82 9.80 10.78 11.76 12.75
-------------------------------------------------------------------------------------
Over 294.6 46.0 6.48 7.41 8.33 9.26 10.19 11.11 12.04
-------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COMBINED MARGINAL Federal Combined
TAX RATES FOR Federal Adjusted County,
SINGLE TAXPAYERS Taxable Gross State and TAX-FREE YIELD
WITH ONE PERSONAL Income Income Federal 3.0% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTION (1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 21.5% 4.46 5.10 5.73 6.37 7.01 7.64 8.28
-------------------------------------------------------------------------------------
23.4-56.6 0-114.7 33.5 5.26 6.02 6.77 7.52 8.27 9.02 9.77
-------------------------------------------------------------------------------------
56.6-100.0 0-114.7 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
-------------------------------------------------------------------------------------
114.7-237.2 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
-------------------------------------------------------------------------------------
100.0-118.0 114.7-237.2 38.5 5.69 6.50 7.32 8.13 8.94 9.76 10.57
-------------------------------------------------------------------------------------
118.0-256.5 114.7-237.2 43.5 6.19 7.08 7.96 8.85 9.73 10.62 11.50
-------------------------------------------------------------------------------------
Over 237.2 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
-------------------------------------------------------------------------------------
Over 256.5 Over 237.2 46.0 6.48 7.41 8.33 9.26 10.19 11.11 12.04
-------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR AN EQUAL 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
AFTER-TAX $50,000 INVESTMENT TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
RETURN, YOUR -----------------------------------------------------------------------------------
TAX-FREE <S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT COMPARE 4% TAXABLE $36,571 $32,000 $28,444 $25,600 $23,273 $21,333 $19,692
MAY BE LESS* -----------------------------------------------------------------------------------
COMPARE 5% TAXABLE $45,714 $40,000 $35,556 $32,000 $29,091 $26,667 $24,615
For example, -----------------------------------------------------------------------------------
$50,000 in a 6% COMPARE 6% TAXABLE $54,857 $48,000 $42,667 $38,400 $34,909 $32,000 $29,538
taxable -----------------------------------------------------------------------------------
investment earns COMPARE 7% TAXABLE $64,000 $56,000 $49,778 $44,800 $40,727 $37,333 $34,462
the same after- -----------------------------------------------------------------------------------
tax return as COMPARE 8% TAXABLE $73,143 $64,000 $56,889 $51,200 $46,545 $42,667 $39,385
$38,400 in a 5% -----------------------------------------------------------------------------------
tax-free Nuveen
investment. *The dollar amounts in the table reflect a 36.0% combined
federal, state and local tax rate.
</TABLE>
B-4
<PAGE>
MICHIGAN
<TABLE>
<CAPTION>
COMBINED MARGINAL -----------------------------------------------------------------------------
TAX RATES FOR JOINT Federal
TAXPAYERS WITH Federal Adjusted Combined
FOUR PERSONAL Taxable Gross State and TAX-FREE YIELD
EXEMPTIONS Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 21.5% 4.46 5.10 5.73 6.37 7.01 7.64 8.28
-----------------------------------------------------------------------------
39.0-94.3 0-114.7 33.5 5.26 6.02 6.77 7.52 8.27 9.02 9.77
-----------------------------------------------------------------------------
114.7-172.1 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
-----------------------------------------------------------------------------
94.3-143.6 0-114.7 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
-----------------------------------------------------------------------------
114.7-172.1 37.5 5.60 6.40 7.20 8.00 8.80 9.60 10.40
-----------------------------------------------------------------------------
172.1-294.6 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
-----------------------------------------------------------------------------
143.6-256.5 114.7-172.1 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
-----------------------------------------------------------------------------
172.1-294.6 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
-----------------------------------------------------------------------------
Over 294.6 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
-----------------------------------------------------------------------------
Over 256.5 172.1-294.6 48.5 6.80 7.77 8.74 9.71 10.68 11.65 12.62
-----------------------------------------------------------------------------
Over 294.6 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COMBINED MARGINAL -----------------------------------------------------------------------------
TAX RATES FOR Federal
SINGLE TAXPAYERS Federal Adjusted Combined
WITH ONE PERSONAL Taxable Gross State and TAX-FREE YIELD
EXEMPTION Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
(1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 21.5% 4.46 5.10 5.73 6.37 7.01 7.64 8.28
-----------------------------------------------------------------------------
23.4-56.6 0-114.7 33.5 5.26 6.02 6.77 7.52 8.27 9.02 9.77
-----------------------------------------------------------------------------
56.6-118.0 0-114.7 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
-----------------------------------------------------------------------------
114.7-237.2 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
-----------------------------------------------------------------------------
118.0-256.5 114.7-237.2 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
-----------------------------------------------------------------------------
Over 237.2 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
-----------------------------------------------------------------------------
Over 256.5 Over 237.2 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR AN EQUAL AFTER- -----------------------------------------------------------------------------------------
TAX RETURN, YOUR 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
TAX-FREE INVESTMENT $50,000 INVESTMENT TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
MAY BE LESS* -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPARE 4% TAXABLE 36,286 $31,750 $28,222 $25,400 $23,091 $21,167 $19,538
For example, $50,000 -----------------------------------------------------------------------------------------
in a 6% taxable COMPARE 5% TAXABLE 45,357 $39,688 $35,278 $31,750 $28,864 $26,458 $24,423
investment earns the -----------------------------------------------------------------------------------------
same after-tax return as COMPARE 6% TAXABLE 54,429 $47,625 $42,333 $38,100 $34,636 $31,750 $29,308
$38,100 in a 5% tax- -----------------------------------------------------------------------------------------
free Nuveen investment. COMPARE 7% TAXABLE 63,500 $55,563 $49,389 $44,450 $40,409 $37,042 $34,192
-----------------------------------------------------------------------------------------
COMPARE 8% TAXABLE 72,571 $63,500 $56,444 $50,800 $46,182 $42,333 $39,077
-----------------------------------------------------------------------------------------
*The dollar amounts in the table reflect a 36.5% combined federal and state tax rate.
</TABLE>
B-5
<PAGE>
NEW JERSEY
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
COMBINED MARGINAL Federal
TAX RATES FOR JOINT Federal Adjusted Combined
TAXPAYERS WITH Taxable Gross State and TAX-FREE YIELD
FOUR PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTIONS (1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 17.0% 4.22 4.82 5.42 6.02 6.63 7.23 7.83
------------------------------------------------------------------------------
39.0-94.3 0-114.7 32.5 5.19 5.93 6.67 7.41 8.15 8.89 9.63
------------------------------------------------------------------------------
114.7-172.1 33.0 5.22 5.97 6.72 7.46 8.21 8.96 9.70
------------------------------------------------------------------------------
94.3-143.6 0-114.7 35.0 5.38 6.15 6.92 7.69 8.46 9.23 10.00
------------------------------------------------------------------------------
114.7-172.1 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
------------------------------------------------------------------------------
172.1-294.6 38.5 5.69 6.50 7.32 8.13 8.94 9.76 10.57
------------------------------------------------------------------------------
143.6-256.5 114.7-172.1 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
------------------------------------------------------------------------------
172.1-294.6 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
------------------------------------------------------------------------------
Over 294.6 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
------------------------------------------------------------------------------
Over 256.5 172.1-294.6 47.5 6.67 7.62 8.57 9.52 10.48 11.43 12.38
------------------------------------------------------------------------------
Over 294.6 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
COMBINED MARGINAL Federal
TAX RATES FOR Federal Adjusted Combined
SINGLE TAXPAYERS Taxable Gross State and TAX-FREE YIELD
WITH ONE PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTION (1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 17.0% 4.22 4.82 5.42 6.02 6.63 7.23 7.83
------------------------------------------------------------------------------
23.4-56.6 0-114.7 32.5 5.19 5.93 6.67 7.41 8.15 8.89 9.63
------------------------------------------------------------------------------
56.6-118.0 0-114.7 35.5 5.43 6.20 6.98 7.75 8.53 9.30 10.08
------------------------------------------------------------------------------
114.7-237.2 37.0 5.56 6.35 7.14 7.94 8.73 9.52 10.32
------------------------------------------------------------------------------
118.0-256.5 114.7-237.2 42.0 6.03 6.90 7.76 8.62 9.48 10.34 11.21
------------------------------------------------------------------------------
Over 237.2 41.0 5.93 6.78 7.63 8.47 9.32 10.17 11.02
------------------------------------------------------------------------------
Over 256.5 Over 237.2 44.5 6.31 7.21 8.11 9.01 9.91 10.81 11.71
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR AN EQUAL AFTER- -------------------------------------------------------------------------------------
TAX RETURN, YOUR 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
TAX-FREE INVESTMENT $50,000 INVESTMENT TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
MAY BE LESS* -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
For example, $50,000 COMPARE 4% TAXABLE $37,143 $32,500 $28,889 $26,000 $23,636 $21,667 $20,000
in a 6% taxable -------------------------------------------------------------------------------------
investment earns the COMPARE 5% TAXABLE $46,429 $40,625 $36,111 $32,500 $29,545 $27,083 $25,000
same after-tax return as -------------------------------------------------------------------------------------
$39,000 tax-free COMPARE 6% TAXABLE $55,714 $48,750 $43,333 $39,000 $35,455 $32,500 $30,000
Nuveen investment. -------------------------------------------------------------------------------------
COMPARE 7% TAXABLE $65,000 $56,875 $50,556 $45,500 $41,364 $37,917 $35,000
-------------------------------------------------------------------------------------
COMPARE 8% TAXABLE $74,286 $65,000 $57,778 $52,000 $47,273 $43,333 $40,000
-------------------------------------------------------------------------------------
*The dollar amounts in the table reflect a 35.0% combined federal and state tax rate.
</TABLE>
B-6
<PAGE>
PENNSYLVANIA
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
COMBINED MARGINAL Federal
TAX RATES FOR JOINT Federal Adjusted Combined
TAXPAYERS WITH Taxable Gross State and TAX-FREE YIELD
FOUR PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTIONS (1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 17.5% 4.24 4.85 5.45 6.06 6.67 7.27 7.88
---------------------------------------------------------------------------
39.0-94.3 0-114.7 30.0 5.00 5.71 6.43 7.14 7.86 8.57 9.29
---------------------------------------------------------------------------
114.7-172.1 31.0 5.07 5.80 6.52 7.25 7.97 8.70 9.42
---------------------------------------------------------------------------
94.3-143.6 0-114.7 33.0 5.22 5.97 6.72 7.46 8.21 8.96 9.70
---------------------------------------------------------------------------
114.7-172.1 34.0 5.30 6.06 6.82 7.58 8.33 9.09 9.85
---------------------------------------------------------------------------
172.1-294.6 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
---------------------------------------------------------------------------
143.6-256.5 114.7-172.1 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
---------------------------------------------------------------------------
172.1-294.6 41.5 5.98 6.84 7.69 8.55 9.40 10.26 11.11
---------------------------------------------------------------------------
Over 294.6 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
---------------------------------------------------------------------------
Over 256.5 172.1-294.6 45.5 6.42 7.34 8.26 9.17 10.09 11.01 11.93
---------------------------------------------------------------------------
Over 294.6 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
COMBINED MARGINAL Federal
TAX RATES FOR Federal Adjusted Combined
SINGLE TAXPAYERS Taxable Gross State and TAX-FREE YIELD
WITH ONE PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTION (1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 17.5% 4.24 4.85 5.45 6.06 6.67 7.27 7.88
----------------------------------------------------------------------------
23.4-56.6 0-114.7 30.0 5.00 5.71 6.43 7.14 7.86 8.57 9.29
----------------------------------------------------------------------------
56.6-118.0 0-114.7 33.0 5.22 5.97 6.72 7.46 8.21 8.96 9.70
----------------------------------------------------------------------------
114.7-237.2 34.5 5.34 6.11 6.87 7.63 8.40 9.16 9.92
----------------------------------------------------------------------------
118.0-256.5 114.7-237.2 39.5 5.79 6.61 7.44 8.26 9.09 9.92 10.74
----------------------------------------------------------------------------
Over 237.2 39.0 5.74 6.56 7.38 8.20 9.02 9.84 10.66
----------------------------------------------------------------------------
Over 256.5 Over 237.2 42.5 6.09 6.96 7.83 8.70 9.57 10.43 11.30
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
FOR AN EQUAL AFTER- 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
TAX RETURN, YOUR $50,000 INVESTMENT TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
TAX-FREE INVESTMENT ------------------------------------------------------------------------------------
MAY BE LESS* <S> <C> <C> <C> <C> <C> <C> <C>
COMPARE 4% TAXABLE $38,286 $33,500 $29,778 $26,800 $24,364 $22,333 $20,615
For example, $50,000 ------------------------------------------------------------------------------------
in a 6% taxable COMPARE 5% TAXABLE $47,857 $41,875 $37,222 $33,500 $30,455 $27,917 $25,769
investment earns the ------------------------------------------------------------------------------------
same after-tax return as COMPARE 6% TAXABLE $57,429 $50,250 $44,667 $40,200 $36,545 $33,500 $30,923
$40,200 in a 5% tax- ------------------------------------------------------------------------------------
free Nuveen investment. COMPARE 7% TAXABLE $67,000 $58,625 $52,111 $46,900 $42,636 $39,083 $36,077
------------------------------------------------------------------------------------
COMPARE 8% TAXABLE $76,571 $67,000 $59,556 $53,600 $48,727 $44,667 $41,231
------------------------------------------------------------------------------------
*The dollar amounts in the table assume a 33.0% combined federal and state tax rate.
</TABLE>
B-7
<PAGE>
VIRGINIA
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
COMBINED MARGINAL Federal
TAX RATES FOR JOINT Federal Adjusted Combined
TAXPAYERS WITH Taxable Gross State and TAX-FREE YIELD
FOUR PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTIONS (1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-39.0 $ 0-114.7 20.0% 4.38 5.00 5.63 6.25 6.88 7.50 8.13
-----------------------------------------------------------------------------
39.0-94.3 0-114.7 32.0 5.15 5.88 6.62 7.35 8.09 8.82 9.56
-----------------------------------------------------------------------------
114.7-172.1 33.0 5.22 5.97 6.72 7.46 8.21 8.96 9.70
-----------------------------------------------------------------------------
94.3-143.6 0-114.7 35.0 5.38 6.15 6.92 7.69 8.46 9.23 10.00
-----------------------------------------------------------------------------
114.7-172.1 36.0 5.47 6.25 7.03 7.81 8.59 9.38 10.16
-----------------------------------------------------------------------------
172.1-294.6 38.0 5.65 6.45 7.26 8.06 8.87 9.68 10.48
-----------------------------------------------------------------------------
143.6-256.5 114.7-172.1 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
-----------------------------------------------------------------------------
172.1-294.6 43.5 6.19 7.08 7.96 8.85 9.73 10.62 11.50
-----------------------------------------------------------------------------
Over 294.6 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
-----------------------------------------------------------------------------
Over 256.5 172.1-294.6 47.0 6.60 7.55 8.49 9.43 10.38 11.32 12.26
-----------------------------------------------------------------------------
Over 294.6 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
COMBINED MARGINAL Federal
TAX RATES FOR Federal Adjusted Combined
SINGLE TAXPAYERS Taxable Gross State and TAX-FREE YIELD
WITH ONE PERSONAL Income Income Federal 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
EXEMPTION (1,000's) (1,000's) Tax Rate TAXABLE EQUIVALENT YIELD
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-23.4 $ 0-114.7 20.0% 4.38 5.00 5.63 6.25 6.88 7.50 8.13
-----------------------------------------------------------------------------
23.4-56.6 0-114.7 32.0 5.15 5.88 6.62 7.35 8.09 8.82 9.56
-----------------------------------------------------------------------------
56.6-118.0 0-114.7 35.0 5.38 6.15 6.92 7.69 8.46 9.23 10.00
-----------------------------------------------------------------------------
114.7-237.2 36.5 5.51 6.30 7.09 7.87 8.66 9.45 10.24
-----------------------------------------------------------------------------
118.0-256.5 114.7-237.2 41.5 5.98 6.84 7.69 8.55 9.40 10.26 11.11
-----------------------------------------------------------------------------
Over 237.2 40.5 5.88 6.72 7.56 8.40 9.24 10.08 10.92
-----------------------------------------------------------------------------
Over 256.5 Over 237.2 44.0 6.25 7.14 8.04 8.93 9.82 10.71 11.61
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
FOR AN EQUAL AFTER- 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
TAX RETURN, YOUR $50,000 INVESTMENT TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE TAX-FREE
TAX-FREE INVESTMENT -----------------------------------------------------------------------------------
MAY BE LESS* <S> <C> <C> <C> <C> <C> <C> <C>
COMPARE 4% TAXABLE $37,143 $32,500 $28,889 $26,000 $23,636 $21,667 $20,000
For example, $50,000 -----------------------------------------------------------------------------------
in a 6% taxable COMPARE 5% TAXABLE $46,429 $40,625 $36,111 $32,500 $29,545 $27,083 $25,000
investment earns the -----------------------------------------------------------------------------------
same after-tax return as COMPARE 6% TAXABLE $55,714 $48,750 $43,333 $39,000 $35,455 $32,500 $30,000
$39,000 in a 5% tax- -----------------------------------------------------------------------------------
free Nuveen investment. COMPARE 7% TAXABLE $65,000 $56,875 $50,556 $45,500 $41,364 $37,917 $35,000
-----------------------------------------------------------------------------------
COMPARE 8% TAXABLE $74,286 $65,000 $57,778 $52,000 $47,273 $43,333 $40,000
-----------------------------------------------------------------------------------
*The dollar amounts in the table reflect a 35.0% combined federal and state tax rate.
</TABLE>
B-8
<PAGE>
Nuveen Tax-Free Mutual Funds Application Form
NOTE: THIS APPLICATION FORM MAY NOT BE USED FOR ALL TYPES OF
ACCOUNTS AND CERTAIN OPTIONAL FUND SERVICES. PLEASE OBTAIN SPE-
CIAL APPLICATION MATERIALS BY CHECKING THE BOXES IN APPLICATION
ITEM #7 OR BY CALLING NUVEEN TOLL-FREE AT 800-621-7227.
1 ACCOUNT REGISTRATION
CHECK THE BOX [_] Individual
THAT DESCRIBES
THE TYPE OF Last Name, First, Initial Social Security Number
ACCOUNT YOU
ARE OPENING, ----------------------------------------------------------------
AND COMPLETE
ALL THE [_] Joint Tenant (if any)
INFORMATION
WHICH APPLIES Last Name, First, Initial
TO YOUR AC-
COUNT TYPE. ----------------------------------------------------------------
Registration [_] Gift to a Minor
for two or
more persons Name of Trustee Minor's Name (only one minor
will be as may be named)
joint tenants
with right of ----------------------------------------------------------------
survivorship Under the Uniform Gift to Minor's Social Security Number
unless noted Minors Act of [Name of State]
otherwise.
----------------------------------------------------------------
[_] Trust [_] Custodian
Trust's Agreement Date
(mandatory) Trustee's or Custodian's Name
----------------------------------------------------------------
Trust's Name Trust's Taxpayer I.D. Number
----------------------------------------------------------------
2 MAILING ADDRESS
Street Address City, State, Zip Code
----------------------------------------------------------------
Daytime Telephone Number Evening Telephone Number
(include area code) (include area code)
----------------------------------------------------------------
3 FUND SELECTION
<TABLE>
<CAPTION>
PLEASE INDI- $
CATE IN WHICH ------ Municipal Bond Fund
NUVEEN FUND(S) CLASS A SHARES CLASS C SHARES
YOU WOULD -------------- --------------
LIKE TO OPEN <S> <C> <C>
AN ACCOUNT AND ------ Insured Municipal Bond Fund [_] [_]
THE AMOUNT AND ------ Arizona Tax-Free Value Fund [_] [_]
THE CLASS OF ------ California Tax-Free Value Fund [_] [_]
SHARES IN ------ California Insured Tax-Free Value Fund [_] [_]
WHICH YOU ------ Florida Tax-Free Value Fund [_] [_]
WOULD ------ Maryland Tax-Free Value Fund [_] [_]
LIKE TO INVEST ------ Massachusetts Tax-Free Value Fund [_] [_]
($1,000 MINI- ------ Massachusetts Insured Tax-Free Value Fund [_] [_]
MUM INITIAL ------ Michigan Tax-Free Value Fund [_] [_]
INVESTMENT PER ------ New Jersey Tax-Free Value Fund [_] [_]
CLASS ------ New York Tax-Free Value Fund [_] [_]
OF ANY FUND). ------ New York Insured Tax-Free Value Fund [_] [_]
------ Ohio Tax-Free Value Fund [_] [_]
------ Pennsylvania Tax-Free Value Fund [_] [_]
------ Virginia Tax-Free Value Fund [_] [_]
</TABLE>
[_] Check this box if you qualify for Class R Share purchases
as described in the Fund Prospectus. Class R Shares are not
available unless you meet certain eligibility requirements.
NOTE: State funds may not be registered for sale in all states.
Please enclose a separate check made payable to each fund/class
in which you are investing. If more than one fund is selected,
any optional features chosen will apply to all fund accounts.
If you prefer to wire funds to open an account, or need any as-
sistance in completing this form, call Nuveen toll-free at 800-
621-7227.
4 DISTRIBUTION OPTIONS
IF NO BOX IS [_] Dividends are to be paid by check.
CHECKED, ALL
DISTRIBUTIONS
FROM A FUND [_] Capital gains are to be paid by check.
WILL BE REIN-
VESTED INTO
THE SAME FUND.
5 INFORMATION ABOUT YOUR FINANCIAL ADVISER
PLEASE SUPPLY
THE NAME AND Financial Adviser's Name Street Address
ADDRESS OF
YOUR FINANCIAL ----------------------------------------------------------------
ADVISER SO Firm Name City, State, Zip Code
THAT THEY WILL
RECEIVE ----------------------------------------------------------------
DUPLICATE
COPIES OF YOUR
FUND
STATEMENTS.
6 SIGNATURE(S)
SIGN IN INK I certify that I have power and authority to establish this ac-
EXACTLY AS count and select the options requested. I also release the
NAME OR NAMES fund(s), Shareholder Services, Inc. (SSI), John Nuveen & Co.
APPEAR ABOVE Incorporated, United Missouri Bank of Kansas City, N.A., First
IN ACCOUNT Interstate Bank of Denver, N.A. and their agents and represent-
REGISTRATION atives from all liability and agree to indemnify each of them
SECTION. from any and all losses, damages or costs for acting in good
faith in accordance with instructions believed to be genuine.
With respect to the options identified on items #8, #9, and #10
of this application, I understand that the Fund(s), SSI and
Nuveen will not be liable for following telephone instructions
reasonably believed to be genuine. I also understand that the
Fund(s) employ procedures reasonably designed to confirm that
telephone instructions are genuine and, if these procedures are
not followed, the Fund(s) may be liable for any losses due to
unauthorized or fraudulent telephone instructions. I agree that
the authorizations herein shall continue until SSI receives
written notice of a change or modification signed by all ac-
count owners. I understand that each account is subject to the
terms of the prospectus of the Nuveen fund selected, as amended
from time to time, and subject to acceptance by that fund in
Chicago, Illinois, and to the laws of Illinois. All terms shall
be binding upon my heirs, representatives and assigns. I cer-
tify that I have received and read the current prospectus for
each fund I have selected. Under penalties of perjury, I cer-
tify (1) that the number shown on this Application Form is my
correct Social Security or Taxpayer Identification Number, and
(2) that the IRS has not notified me that I am subject to
backup withholding. (Line out clause (2) if you are subject to
backup withholding.)
Individual's Signature Date Joint Tenant's Signa- Date
ture (if applicable)
----------------------------- -----------------------------
Custodian/Trustee Signature (if applicable) Date
BY:
-------------------------------
SEE REVERSE SIDE FOR OPTIONAL FUND SERVICES.
<PAGE>
Optional Fund Services
7 OPTIONAL FUND SERVICES
Please send me application materials for these optional fund
services which are described in the prospectus:
[_] Automatic Deposit Plan [_] Automatic Withdrawal Plan
[_] UIT Reinvestment [_] Payroll Direct Deposit Plan
[_] Group Purchase Plans
8 TEL-A-WIRE AUTHORIZATION
By electing this option, I authorize SSI and Nuveen to honor
telephone instructions to redeem my fund shares (minimum
$1,000), subject to the terms and conditions described in the
prospectus.
SELECT ONLY [_] OPTION A
ONE OF THE By completing this section, I elect to have all redemption pro-
FOLLOWING, OP- ceeds wired to my personal checking, NOW or money market ac-
TION A OR B. count at a commercial bank. (Attach a check marked "void" and
complete only the Option A section.)
Name of Bank Bank's Street Address
----------------------------------------------------------------
Your Bank Account Name Bank's City, State, Zip Code
----------------------------------------------------------------
Your Bank Bank's Routing Code Bank's Telephone Number
Account Number (include area code)
----------------------------------------------------------------
[_] OPTION B
By completing this section, I elect to have all redemption pro-
ceeds wired in my name to the commercial bank account of my fi-
nancial adviser's firm. (A representative of that firm must
complete and sign the second part of the Option B section.)
Name of Financial Adviser's Firm Firm's Street Address
----------------------------------------------------------------
Your Account Name Firm's City, State, Zip Code
----------------------------------------------------------------
Your Account Number Firm's Telephone Number (in-
clude area code)
----------------------------------------------------------------
TO BE COM- Name of Bank of Bank's Street Address
PLETED BY YOUR Financial Adviser's Firm
FINANCIAL AD-
VISER IF ----------------------------------------------------------------
OPTION B Name of Branch Bank's Routing Code Bank's City, State,
IS SELECTED. Zip Code
----------------------------------------------------------------
Bank's Account Number Financial Adviser's Date
Signature
----------------------------------------------------------------
9 TEL-A-CHECK AUTHORIZATION
CHECK THE BOX [_] I hereby authorize the fund and its agents to honor tele-
TO ELECT THIS phone instructions to redeem shares worth $25,000 or less from
OPTION. my account and send those proceeds by check payable to me to my
address of record, subject to the terms and conditions de-
scribed in the prospectus.
10 TELEPHONE EXCHANGE AUTHORIZATION
CHECK THE BOX [_] I hereby authorize the fund and its agents to honor
TO ELECT THIS telephone instructions to invest redemption proceeds from the
OPTION. fund into other Nuveen Mutual Funds, subject to the terms and
conditions described in the prospectus.
11 LETTER OF INTENT
COMPLETE THIS [_] By electing this option, I indicate my intention, but am
SECTION TO under no obligation, to purchase additional Class A Shares in
ELECT THIS OP- the fund(s) and amount(s) indicated over the next 13 months in
TION. order to qualify for reduced sales charges, subject to the
terms and conditions described in the prospectus. I understand
that I or my financial adviser must notify Nuveen or SSI when I
make a purchase of fund shares that I wish to be covered under
the Letter of Intent option.
I intend to purchase at least:
[_] $50,000 [_] $100,000 [_] $250,000
[_] $500,000 [_] $1,000,000 or more
worth of shares of _____________________________________ Fund(s)
over the next 13 months.
MAIL COMPLETED APPLICATION FORM TO:
NUVEEN TAX-FREE VALUE FUNDS
P.O. BOX 5330
DENVER, CO 80217-5330
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
NUVEEN MULTISTATE TAX-FREE TRUST
333 West Wacker Drive
Chicago, Illinois 60606
<PAGE>
SUBJECT TO COMPLETION--DATED MARCH 31, 1995
Statement of Additional Information March 31, 1995
Nuveen Multistate Tax-Free Trust
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN ARIZONA TAX-FREE VALUE FUND
NUVEEN FLORIDA TAX-FREE VALUE FUND
NUVEEN MARYLAND TAX-FREE VALUE FUND
NUVEEN MICHIGAN TAX-FREE VALUE FUND
NUVEEN NEW JERSEY TAX-FREE VALUE FUND
NUVEEN PENNSYLVANIA TAX-FREE VALUE FUND
NUVEEN VIRGINIA 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 March
31, 1995.
<TABLE>
<S> <C>
Table of Contents Page
--------------------------------------------------------------------------
Fundamental Policies and Investment Portfolio 2
--------------------------------------------------------------------------
Management 37
--------------------------------------------------------------------------
Investment Adviser and Investment Management Agreement 47
--------------------------------------------------------------------------
Portfolio Transactions 48
--------------------------------------------------------------------------
Net Asset Value 49
--------------------------------------------------------------------------
Tax Matters 50
--------------------------------------------------------------------------
Performance Information 61
--------------------------------------------------------------------------
Additional Information on the Purchase and Redemption of Fund Shares 71
--------------------------------------------------------------------------
Distribution and Service Plans 73
--------------------------------------------------------------------------
Independent Public Accountants and Custodian 75
--------------------------------------------------------------------------
</TABLE>
The audited financial statements for the fiscal year ended January 31, 1995,
appearing in the Annual Report of Nuveen Multistate Tax-Free Trust are incorpo-
rated herein by reference. The Annual Report accompanies this Statement of Ad-
ditional 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 pol-
icy, may not, without the approval of the holders of a majority of the shares
of that Fund:
(1) Invest in securities other than Municipal Obligations and temporary in-
vestments, as those terms are defined in the Prospectus;
(2) Invest more than 5% of its total assets in securities of any one issuer,
except that this limitation shall not apply to securities of the United States
government, its agencies and instrumentalities or to the investment of 25% of
such Fund's assets;
(3) Borrow money, except from banks for temporary or emergency purposes and
not for investment purposes and then only in an amount not exceeding (a) 10%
of the value of its total assets at the time of borrowing or (b) one-third of
the value of the Fund's total assets including the amount borrowed, in order
to meet redemption requests which might otherwise require the untimely dispo-
sition of securities. While any such borrowings exceed 5% of such Fund's total
assets, no additional purchases of investment securities will be made by such
Fund. If due to market fluctuations or other reasons, the value of the Fund's
assets falls below 300% of its borrowings, the Fund will reduce its borrowings
within 3 business days. To do this, the Fund may have to sell a portion of its
investments at a time when it may be disadvantageous to do so;
(4) Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph (3) above, it may pledge securities hav-
ing a market value at the time of pledge not exceeding 10% of the value of the
Fund's total assets;
(5) Issue senior securities as defined in the Investment Company Act of 1940,
except to the extent such issuance might be involved with respect to
borrowings described under item (3) above or with respect to transactions in-
volving futures contracts or the writing of options within the limits de-
scribed in the Prospectus and this Statement of Additional Information;
(6) Underwrite any issue of securities, except to the extent that the purchase
of Municipal Obligations in accordance with its investment objective, policies
and limitations, may be deemed to be an underwriting;
(7) Purchase or sell real estate, but this shall not prevent any Fund from in-
vesting in Municipal Obligations secured by real estate or interests therein
or foreclosing upon and selling such security;
(8) Purchase or sell commodities or commodities contracts or oil, gas or other
mineral exploration or development programs, except for transactions involving
futures contracts within the limits described in the Prospectus and this
Statement of Additional Information;
(9) Make loans, other than by entering into repurchase agreements and through
the purchase of Municipal Obligations or temporary investments in accordance
with its investment objective, policies and limitations;
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 trustees of the Trust, or those
officers and directors of Nuveen Advisory Corp. ("Nuveen Advisory"), who indi-
vidually own beneficially more than 1/2 of 1% of the outstanding securities of
such issuer, together own beneficially more than 5% of such outstanding securi-
ties.
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 un-
less an excess or deficiency occurs or exists immediately after and as a result
of an acquisition of securities, unless otherwise indicated.
The foregoing fundamental investment policies, together with the investment ob-
jective of each Fund, cannot be changed without approval by holders of a "ma-
jority of the Fund's outstanding voting shares." As defined in the Investment
Company Act of 1940, this means the vote of (i) 67% or more of the Fund's
shares present at a meeting, if the holders of more than 50% of the Fund's
shares are present or represented by proxy, or (ii) more than 50% of the Fund's
shares, whichever is less.
Nuveen Multistate Tax-Free Trust (the "Trust") is an open-end diversified man-
agement series company under SEC Rule 18f-2. Each Fund is a separate series is-
suing its own shares. Certain matters under the Investment Company Act of 1940
which must be submitted to a vote of the holders of the outstanding voting se-
curities 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 se-
curities of each series affected by such matter.
PORTFOLIO SECURITIES
As described in the Prospectus, each Fund invests primarily in a diversified
portfolio of Municipal Obligations that are issued within the Fund's respective
state. In general, Municipal Obligations include debt obligations issued by
states, cities and local authorities to obtain funds for various public purpos-
es, including construction of a wide range of public facilities such as air-
ports, bridges, highways, hospitals, housing, mass transportation, schools,
streets and water and sewer works. Industrial 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 Obli-
gations if the interest paid thereon is exempt from federal income tax. Munici-
pal Obligations in which each Fund will primarily invest are issued by that
Fund's respective state and local authorities in that state, and bear interest
that, in the opinion of bond counsel to the issuer, is exempt from federal in-
come tax and from personal income tax imposed by the respective state.
The investment assets of each Fund will consist of (1) Municipal Obligations
which are rated at the time of purchase within the four highest grades (Baa or
BBB or better) by Moody's Investors Service, Inc. ("Moody's") or Standard and
Poor's Corporation ("S&P"), (2) unrated Municipal Obligations which, in the
opinion of Nuveen Advisory, have credit characteristics equivalent to bonds
rated within the four highest grades by Moody's or S&P, except that a Fund may
not invest more than 20% of its net assets in unrated bonds and (3) temporary
investments as described below, the income from which may be subject to state
income tax or to both federal and state income taxes.
As described in the Prospectus, each Fund may invest in Municipal Obligations
that constitute participations in a lease obligation or installment purchase
contract obligation (hereafter collectively called "lease obligations") of a
municipal authority or entity. Although lease obligations do not constitute
general obligations of the municipality for which the municipality's taxing
power is pledged, a lease
4
<PAGE>
obligation is ordinarily backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However, cer-
tain lease obligations contain "non-appropriation" clauses which provide that
the municipality has no obligation to make lease or installment purchase pay-
ments 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 assets in lease obliga-
tions that contain non-appropriation clauses, and by only investing in those
nonappropriation leases where (1) the nature of the leased equipment or prop-
erty is such that its ownership or use is essential to a governmental function
of the municipality, (2) the lease payments will commence amortization of prin-
cipal 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 mu-
nicipal 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 underlying leased
equipment has elements of portability and/or use that enhance its marketability
in the event foreclosure on the underlying equipment were ever required. Lease
obligations provide a premium interest rate which along with regular amortiza-
tion 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
fiscal years
5
<PAGE>
ended January 31, 1995 and 1994, respectively, were 29% and 11% for the Arizona
Fund, 4% and 3% for the Florida Fund, 35% and 4% for the Maryland Fund, 35% and
3% for the Michigan Fund, 32% and 52% for the New Jersey Fund, 74% and 5% for
the Pennsylvania Fund and 40% and 7% for the Virginia Fund. The portfolio turn-
over rate for the Pennsylvania Fund rose to 74% for the fiscal year ended Janu-
ary 31, 1995, because the portfolio manager, as interest rates rose throughout
the year, took advantage of opportunities to replace lower yielding bonds with
bonds that would generate higher income. Many of the other Funds also experi-
enced somewhat higher than normal portfolio turnover during the year, for the
same reason.
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 makes the commitment to purchase a Munic-
ipal Obligation on a when-issued or delayed delivery basis, it will record the
transaction and reflect the amount due and the value of the security in deter-
mining its net asset value. Likewise, at the time a Fund makes the commitment
to sell a Municipal Obligation on a delayed delivery basis, it will record the
transaction and include the proceeds to be received in determining its net as-
set value; accordingly, any fluctuations in the value of the Municipal Obliga-
tion sold pursuant to a delayed delivery commitment are ignored in calculating
net asset value so long as the commitment remains in effect. The Fund will
maintain designated readily marketable assets at least equal in value to com-
mitments to purchase when-issued or delayed delivery securities, such assets to
be segregated by the Custodian specifically for the settlement of such commit-
ments. A Fund will only make commitments to purchase Municipal Obligations on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but each Fund reserves the right to sell these securities be-
fore the settlement date if it is deemed advisable. If a when-issued security
is sold before delivery any gain or loss would not be tax-exempt. A Fund com-
monly engages in when-issued transactions in order to purchase or sell newly-
issued Municipal Obligations, and may engage in delayed delivery transactions
in order to manage its operations more effectively.
SPECIAL CONSIDERATIONS RELATING TO MUNICIPAL OBLIGATIONS OF DESIGNATED STATES
As described in the Prospectus, except for investments in temporary invest-
ments, each of the Funds will, at all times, invest all of its net assets in
its respective state's Municipal Obligations. Each Fund is therefore more sus-
ceptible to political, economic or regulatory factors adversely affecting is-
suers of Municipal Obligations in its state. Brief summaries of these factors
are contained in the Prospectus. Set forth below is additional information that
bears upon the risk of investing in Municipal Obligations issued by public au-
thorities in the states of currently offered Funds. 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.
6
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FACTORS PERTAINING TO ARIZONA
As described above, except to the extent the Arizona Fund invests in temporary
investments, the Arizona Fund will invest substantially all of its net assets
in Arizona Municipal Obligations. The Arizona Fund is therefore susceptible to
political, economic or regulatory factors affecting issuers of Arizona Munici-
pal Obligations. The information set forth below is derived from official
statements prepared in connection with the issuance of Arizona Municipal Obli-
gations and other sources that are generally available to investors. The infor-
mation is provided as general information intended to give a recent historical
description and is not intended to indicate future or continuing trends in the
financial or other positions of The State of Arizona (the "State"). This infor-
mation has not been independently verified.
There can be no assurance that future statewide or regional economic difficul-
ties, and the resulting impact on State or local governmental finances general-
ly, will not adversely affect the market value of Arizona Municipal Obligations
held in the portfolio of the Arizona Fund or the ability of particular obligors
to make timely payments of debt service on (or relating to) those obligations.
General Economic Conditions. Arizona is the nation's sixth largest state in
terms of area. Arizona's main economic/employment sectors include services,
tourism and manufacturing. Mining and agriculture are also significant, al-
though they tend to be more capital than labor intensive. Services is the sin-
gle largest economic sector. Many of these jobs are directly related to tour-
ism.
The unemployment rate in Arizona for 1994 was 6.3% and for 1993 was 6.2% com-
pared to a national rate of 6.1% in 1994 and 6.8% in 1993. Job growth may be
adversely affected by the closing of a major air force base near Phoenix.
Budgetary Process. Arizona operates on a fiscal year beginning July 1 and end-
ing June 30. Fiscal year 1995 refers to the year ending June 30, 1995.
Total General Fund revenues of $4.3 billion are expected during fiscal year
1995. Approximately 44.5% of this budgeted revenue comes from sales and use
taxes, 44.4% from income taxes (both individual and corporate) and 4.4% from
property taxes. All taxes total approximately $4.0 billion, or 93% of the Gen-
eral Fund revenues. Non-tax revenue includes items such as income from the
state lottery, licenses, fees and permits, and interest.
For fiscal year 1994, the budget called for expenditures of approximately $4.1
billion. These expenditures fell into the following major categories: education
(47.4%), health and welfare (26.3%), protection and safety (4.0%), general gov-
ernment (15.5%) and inspection and regulation, natural resources, transporta-
tion and other (6.8%). The State's general fund expenditures for fiscal year
1995 are budgeted at approximately $4.7 billion. Fiscal year 1995's proposed
expenditures fall into the following major categories: education (51.5%),
health and welfare (24.1%), protection and safety (3.6%), general government
(14.5%) and inspection and regulation, natural resources, transportation and
other (6.3%).
On Thursday, March 16, 1995, the Arizona Legislature approved and Governor Sy-
mington signed into law a fiscal year 1996 budget of $4.5 billion.
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Most or all of the Arizona Municipal Obligations are not obligations of the
State of Arizona and are not supported by the State's taxing powers. The par-
ticular source of payment and security for each of the Arizona Municipal Obli-
gations is detailed in the instruments themselves and in related offering mate-
rials. There can be no assurances with respect to whether the market value or
marketability of any of the Arizona Municipal Obligations issued by an entity
other than the State of Arizona will be affected by financial or other condi-
tions of the State or of any entity located within the State. In addition, it
should be noted that the State of Arizona, as well as counties, municipalities,
political subdivisions and other public authorities of the State, are subject
to limitations imposed by Arizona's Constitution with respect to ad valorem
taxation, bonded indebtedness and other matters. For example, the State legis-
lature cannot appropriate revenues in excess of 7% of the total personal income
of the State in any fiscal year. These limitations may affect the ability of
the issuers to generate revenues to satisfy their debt obligations.
Local governments have experienced many of the same fiscal difficulties for
many of the same reasons and, in several cases, have been prevented by Consti-
tutional limitations on bonded indebtedness and declining assessed property
values from securing necessary funds to undertake street, utility and other in-
frastructure expansions, improvements and renovations in order to meet the need
of rapidly increasing populations. Maricopa County, Arizona has encountered fi-
nancial difficulties related to declines in assessed property values and bud-
getary deficits and its general obligation bonds have received rating down-
grades. Maricopa County, Arizona is analyzing various budget options to deal
with its existing deficit.
Although most of the Arizona Municipal Obligations are revenue obligations of
local governments or authorities in the State, there can be no assurance that
the fiscal and economic conditions referred to above will not affect the market
value or marketability of the Arizona Municipal Obligations or the ability of
the respective obligors to pay principal of and interest on the Arizona Munici-
pal Obligations when due.
On July 21, 1994, the Arizona Supreme Court rendered its opinion in Roosevelt
Elementary School District Number 66, et al v.c. Dianne Bishop, et al (the
"Roosevelt Opinion"). In this opinion, the Arizona Supreme Court held that the
present statutory financing scheme for public education in the State of Arizona
does not comply with the Arizona constitution. Subsequently, the Arizona School
Boards Association, with the approval of the appellants and the appellees to
the Roosevelt Opinion, and certain Arizona school districts, filed with the Ar-
izona Supreme Court motions for clarification of the Roosevelt Opinion, specif-
ically with respect to seeking prospective application of the Roosevelt Opin-
ion. On July 29, 1994, the Arizona Supreme Court clarified the Roosevelt Opin-
ion to hold that such opinion will have prospective effect only. The impact of
the Roosevelt Opinion on Arizona school finances or budgets cannot be deter-
mined at this time.
Certain other circumstances are relevant to the market value, marketability and
payment of any hospital and health care revenue bonds in the Fund. The Arizona
Legislature has in the past sought to enact health care cost control legisla-
tion. Certain other health care regulatory laws have expired. It is expected
that the Arizona Legislature will at future sessions continue to attempt to
adopt legislation concerning health care cost control and related regulatory
matters. The effect of any such legislation or
8
<PAGE>
of the continued absence of any legislation restricting hospital bed increases
and limiting new hospital construction on the ability of Arizona hospitals and
other health care providers to pay debt service on their revenue bonds cannot
be determined at this time.
Arizona does not participate in the federally administered Medicaid program.
Instead, the State administers an alternative program, AHCCCS, which provides
health care to indigent persons meeting certain financial eligibility require-
ments through managed care programs. In fiscal year 1994, AHCCCS was financed
approximately 60% by Federal funds, 29% by State funds and 11% by county funds.
Under State law, hospitals retain the authority to raise rates with notifica-
tion and review by, but not approval from, the Department of Health Services.
Hospitals in Arizona have experienced profitability problems along with those
in other states. At least two Phoenix based hospitals have defaulted on or re-
ported difficulties in meeting their bond obligations during the past five
years.
Insofar as tax-exempt Arizona investor-owned public utility pollution control
revenue bonds are concerned, the issuance of such bonds and the periodic rate
increases needed to cover operating costs and debt service are generally sub-
ject to regulation by the Arizona Corporation Commission. On July 15, 1991,
several creditors of Tucson Electric Power Company ("Tucson Electric") filed
involuntary petitions under Chapter 11 of the U.S. Bankruptcy Code to force
Tucson Electric to reorganize under the supervision of the bankruptcy court. On
December 31, 1991, the Bankruptcy Court approved the utility's motion to dis-
miss the July petition after five months of negotiations between Tucson Elec-
tric and its creditors to restructure the utility's debt and other obligations.
In December 1992, Tucson Electric announced that it had completed financial re-
structuring. In January 1993 Tucson Electric asked the Arizona Corporation Com-
mission for a 9.3% average rate increase. The Arizona Corporation Commission
approved a rate increase of 4.2%. Tucson Electric serves approximately 270,000
customers, primarily in the Tucson area. Inability of any regulated public
utility to secure necessary rate increases could adversely affect, to an inde-
terminable extent, its ability to pay debt service on its pollution control
revenue bonds.
FACTORS PERTAINING TO FLORIDA
As described above, except to the extent the Florida Fund invests in temporary
investments, the Florida Fund will invest substantially all of its net assets
in Florida Municipal Obligations. The Florida Fund is therefore susceptible to
political, economic or regulatory factors affecting issuers of Florida Munici-
pal Obligations. The following information provides only a brief summary of
some of the complex factors affecting the financial situation in Florida (the
"State"). This information is derived from sources that are generally available
to investors and is believed to be accurate. It is based in part on information
obtained from various State and local agencies in Florida, some of which infor-
mation is related to periods prior to the onset of the recent national reces-
sion, the effects of which are not necessarily reflected in the information. 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 State or local governmental finances
generally, will not adversely affect the market value of Florida Municipal Ob-
ligations held in the portfolio of the Florida Fund or the ability of particu-
lar obligors to make timely payments of debt service on (or relating to) those
obligations.
9
<PAGE>
State Economy. Florida's economy has tracked the national economy through the
recent national recession and subsequent recovery. Continued modest growth is
forecast for 1995, driven by the service and trade sectors.
Since 1980, the State's job creation rate was well over twice the rate for the
nation as a whole. While the State's historically strong job growth rate weak-
ened somewhat earlier in the decade, the non-farm growth rate is projected at
3.6% in 1994-95, and 3.3% in 1995-96. Trade and services account for more than
half of total non-farm employment. The State's unemployment rate is currently
projected to be 6.1% in 1994-95, and in 1995-96.
The State's economy has in the past been highly dependent on the construction
industry and construction-related manufacturing. While this dependence has de-
clined, construction remains an important sector. In 1994-95, single and multi-
family housing starts are projected to reach a combined level of 118,700 units,
increasing to 121,500 in 1995-96. However, recent interest rate hikes are ex-
pected to restrict growth in the near future.
The important tourism sector experienced a decline of 4.0% in 1993-94 with zero
growth projected for 1994-95. In addition to lingering crime concerns, analysts
point to "product maturity" of a Florida vacation package, higher prices, and
increasing competition from other resort areas.
For 1993, the State's per capita personal income of $20,857 was slightly above
the national average of $20,817, but significantly ahead of that for the south-
eastern United States, which was $18,753. Real personal income growth is ex-
pected to increase 4.5% in 1994-1995 and 4.2% in 1995-96. By the end of 1995-
96, real personal income per capita is projected to average 4.5% higher than
the 1993-94 level.
State Budget. In fiscal year 1993-94, approximately 66% of the State's total
direct revenue to its operating funds was derived from State taxes, with Fed-
eral grants and other special revenue accounting for the balance. State sales
and use tax, corporate income tax, intangible personal property tax and bever-
age tax amounted to 66%, 8%, 4% and 4%, respectively, of total receipts by the
General Revenue Fund during fiscal 1993-94. In that same year, expenditures for
education, health and welfare and public safety amounted to 49%, 32% and 12%,
respectively, of total expenditures from the General Revenue Fund. At the end
of fiscal 1993, $5.6 billion in principal amount of debt secured by the full
faith and credit of the State was outstanding. As of February 10, 1995,
Florida's outstanding full faith and credit obligations totalled approximately
$7.2 billion.
1994-95 Fiscal Year. Currently estimated available revenues (estimated reve-
nues, plus the balance forwarded from 1993-94, transfers from other accounts
and other miscellaneous amounts) are approximately $14.6 billion, an increase
of 5.7% over comparable 1993-94 figures. This amount reflects a transfer of
$159 million to the Hurricane Andrew relief trust fund. Estimated revenues of
approximately $13.9 billion (excluding Hurricane Andrew impacts) represent an
increase of 7.9% over comparable 1993-94 figures. Total effective appropria-
tions for 1994-95 are $14.3 billion, an increase of 7.5% over comparable 1993-
94 figures.
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<PAGE>
1995-96 Fiscal Year. Preliminary estimated available revenues are now set at
$15.1 billion, an increase of 3.6% over comparable 1994-95 figures. Governor
Chiles has proposed his fiscal 1995-96 budget at $39.9 billion, without new tax
revenue. This represents a 2.8% increase over 1994-95.
Revenue Generating Measures. Florida's Constitution allows the issuance of full
faith and credit bonds generally only upon approval of the electorate and in an
aggregate amount not exceeding 50% of the State's total tax revenues for the
preceding two years. A number of exceptions to the election requirement have
been enacted, allowing the issuance of full faith and credit bonds in addition
to a primary pledge of a separately identifiable revenue source for certain
uses such as road and bridge projects, education and environmental facilities
and projects.
In 1987, the State Legislature passed a major revenue enhancement bill result-
ing in the largest tax increase in State history. In order to balance the bud-
get, as required by the State's Constitution, a 5% sales tax was imposed on
nearly all services sold or used in the State. However, the tax was challenged
by numerous national groups and repealed, effective January 1, 1988. At the
same time the tax was replaced by a one cent ($.01) increase, from 5% to 6%, in
the general sales tax on goods and rentals. The one cent ($.01) increase became
effective February 1, 1988. The sales and use tax currently accounts for the
State's single largest source of tax receipts. For the fiscal year ended June
30, 1994, sales and use tax receipts (exclusive of the tax on gasoline and spe-
cial fuels) totalled approximately $10 billion, an increase of approximately
6.9% from fiscal year 1992-93.
In 1992, Florida voters approved a new constitutional amendment that limits
homestead (residential) property tax increases to the lower of 3% per year or
the increase in the consumer price index, until the next transfer of ownership
of the property. The cap took effect January 1, 1994, and could have an adverse
effect on local revenues, which are largely dependent on the property tax for
operating funds. Whether this measure will have any adverse effect on municipal
obligations is not known at this time.
In 1994, Florida voters approved another amendment to the Florida Constitution
which will limit the rate of growth of general state revenues beginning in 1995
to the growth rate of personal income in Florida. If more revenue is collected
than permitted by the limit, the excess will be placed in the "Budget Stabili-
zation Fund" unless, the Legislature decides otherwise by a two-thirds vote of
both houses. The revenue limit is determined by multiplying the average annual
growth rate in Florida personal income over the previous five years by the max-
imum amount permitted under the cap of the previous year. The amendment does
not limit the imposition of any tax nor does it repeal any existing tax levy.
It also has no direct impact on local taxation, but it may affect the sharing
of state revenues with local governments.
Another 1994 Florida constitutional amendment limits the application of the
"single subject" requirement used by the courts to test citizen initiative con-
stitutional proposals. Under the amendment, citizens' initiatives seeking to
limit the ability of government to increase taxes or otherwise raise revenue
are exempt from the single-subject restriction of the Florida Constitution.
This amendment will probably encourage further efforts to limit and cap the
government's revenue generating power.
11
<PAGE>
In 1988, the State began its own lottery. State law requires that lottery reve-
nues be distributed 50% to the public in prizes, 38% for use in enhancing edu-
cation, and the balance, 12%, to retailers as commission for their services and
for administration of the lottery. Lottery ticket sales rose slightly in 1993-
94 to approximately $2.15 billion. Education has been receiving in excess of
$800 million per year from lottery sales.
Litigation. Currently under litigation are several issues relating to State ac-
tions or State taxes that put at risk substantial amounts of General Revenue
Fund monies. Accordingly, there is no assurance that the resolution of any of
such matters, individually or in the aggregate, will not have a material ad-
verse effect on the State's financial position.
The Florida Supreme Court recently declared unconstitutional the $295 "impact
fee" on cars purchased out of state and registered in Florida. Void from its
inception in 1990, the total cost to the state is estimated to be in excess of
$180 million in real dollars being refunded plus losses of estimated revenue
collections through the next fiscal year.
The State recently settled virtually all pending lawsuits challenging certain
premium taxes imposed on certain motor vehicle service agreement companies. The
one remaining case is estimated to have a potential refund exposure of approxi-
mately $150 million.
A challenge to the Florida intangible tax law, which currently raises over $783
million per year, was recently resolved by a per curiam affirmance by the
United States Supreme Court of a Florida court decision upholding the tax.
Other challenges to that tax, involving refund claims in excess of $25 million
for later years, are now proceeding.
The State is a defendant in an inverse condemnation action alleging that com-
pensation is due for taking of certain oil leases. The trial court granted sum-
mary judgment to the State, and the plaintiff has appealed. In the meantime,
the plaintiff's application for a drilling permit was denied. The State previ-
ously estimated that the potential liability could be as much as several mil-
lion dollars, but that the likelihood of the plaintiff recovering is very
small, in that the State estimates that the plaintiff cannot prove damages.
State Bond Rating. The State maintains a bond rating of Aa and "AA" from
Moody's and S&P, respectively, on the majority of its general obligation bonds,
although the rating of a particular series of revenue bonds relates primarily
to the project, facility or other revenue source from which such series derives
funds for repayment. See "Investment Objectives and Policies--Municipal Obliga-
tions." It should also be noted that the creditworthiness of obligations issued
by local Florida issuers may be unrelated to the creditworthiness of obliga-
tions issued by the State of Florida, and that there is no obligation on the
part of the State to make payment on such local obligations in the event of de-
fault.
Other Issuers of Florida Municipal Obligations. There are a number of state
agencies, instrumentalities and political subdivisions of the State that issue
Municipal Obligations, some of which may be conduit revenue obligations payable
from payments from private borrowers. These entities are subject to vari-
12
<PAGE>
ous economic risks and uncertainties, and the credit quality of the securities
issued by them may vary considerably from the credit quality of obligations
backed by the full faith and credit of the State.
FACTORS PERTAINING TO MARYLAND
As described above, except to the extent the Maryland Fund invests in temporary
investments, the Maryland Fund will invest substantially all of its net assets
in Maryland Municipal Obligations. The Maryland Fund is therefore susceptible
to political, economic or regulatory factors affecting issuers of Maryland Mu-
nicipal Obligations. The following information provides only a brief summary of
some of the complex factors affecting the financial situation in Maryland (the
"State") and is derived principally from official statements released on or be-
fore October 5, 1994, relating to issues of State obligations and does not pur-
port to be a complete description generally available to investors. No indepen-
dent verification has been made of the accuracy or completeness of any of the
following information.
There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on State or local governmental finances
generally, will not adversely affect the market value of Maryland Municipal Ob-
ligations held in the portfolio of the Maryland Fund or the ability of particu-
lar obligors to make timely payments of debt service on (or relating to) those
obligations.
The State and Its Economy. Maryland encompasses a geographic land area of 9,837
square miles and ranks 42nd among the 50 states in size. According to 1990 Cen-
sus reports, Maryland's population in that year was 4,781,468, reflecting an
increase of 13.4% from the 1980 Census. Maryland's population is concentrated
in urban areas; the eight counties and Baltimore City located in the Baltimore
and Washington Corridor contain 37.4% of the State's land area and 82.3% of its
population.
After enjoying rapid economic growth in the 1980's, Maryland has experienced
declining rates of growth in the 1990's. Total personal income in Maryland grew
at annual rates between 6.2% and 9.3% in each of the years 1985 through 1990,
but grew at a rate of 3.2% in 1991, 4.6% in 1992 and 4.3% in 1993. Similarly,
per capita income, which had grown at rates no lower than 4.7% for the period
from 1972 to 1990, grew at a rate of 1.8% in 1991, 3.2% in 1992 and 3.1% in
1993. Unemployment in Maryland peaked in 1982 at 8.5%, then decreased steadily
to a low of 3.7% in 1989. In 1990, unemployment increased to 4.7%, and in-
creased further to 5.9%, 6.6% and 6.2% in 1991, 1992 and 1993, respectively.
Retail sales in Maryland grew by 5.6% in 1990, decreased by 1.7% in 1991, re-
bounded mildly by 0.5% in 1992 and further increased by 4.9% in 1993, versus
nationwide growth of 5.0%, 0.8%, 4.8% and 6.5% in such years, respectively.
Services (including mining), wholesale and retail trade, government, and manu-
facturing (primarily printing and publishing, food and kindred products, in-
struments and related products, industrial machinery, electronic equipment, and
chemical and allied products) are the leading areas of employment in the State
of Maryland. In contrast to the nation as a whole, more people in Maryland are
employed in government than in manufacturing (19.9% versus 8.5% in 1993). Be-
tween 1973 and 1993, total manufacturing wages and salary employment decreased
30.2%, while total non-manufacturing wages and salary employment increased
58.1%.
13
<PAGE>
The State's total expenditures for the fiscal years ending June 30, 1992, June
30, 1993 and June 30, 1994 were approximately $11.6 billion, $11.8 billion and
$12.4 billion, respectively. As of October 5, 1994, it was estimated that total
expenditures for fiscal year 1995 would be approximately $13.4 billion. The
original appropriation for expenditures in fiscal year 1995 is approximately
$13.3 billion. The State's General Fund, representing approximately 55%-60% of
each year's total budget, had a surplus on a budgetary basis of $55 thousand in
fiscal year 1991, a deficit of $56 million in fiscal year 1992 and a surplus of
$11 million in fiscal year 1993. The Governor of Maryland reduced fiscal year
1993 appropriations by approximately $56 million to offset the fiscal year 1992
deficit. The State Constitution mandates a balanced budget.
In April 1994, the General Assembly approved the $13.3 billion 1995 fiscal year
budget. The Budget includes $2.6 billion in aid to local governments (reflect-
ing a $102.4 million increase in funding over 1994 that provides for substan-
tial increases in education, health, and police aid), and $104.8 million in
general fund deficiency appropriations for fiscal year 1994, of which $60.5
million is a legislatively mandated appropriation to the Revenue Stabilization
Account of the State Reserve Fund. When the 1995 Budget was enacted, it was es-
timated that the general fund surplus on a budgetary basis at June 30, 1995
would be approximately $9.7 million; as of October 5, 1994 that estimate had
risen to $49.5 million. In addition, it was estimated that the balance in the
Revenue Stabilization Account of the State Reserve Fund at June 30, 1995 would
be $219 million; as of October 5, 1994 that estimate had risen to $223.6 mil-
lion.
State-level Municipal Obligations. The State of Maryland and its various polit-
ical subdivisions issue a number of different kinds of Municipal Obligations,
including general obligation bonds supported by tax collections, revenue bonds
payable from certain identified tax levies or revenue streams, conduit revenue
bonds payable from the repayment of certain loans to authorized entities such
as hospitals and universities, and certificates of participation in tax-exempt
municipal leases.
The State of Maryland issues general obligation bonds, which are payable from
ad valorem property taxes. The State Constitution prohibits the contracting of
State debt unless the debt is authorized by a law levying an annual tax or
taxes sufficient to pay the debt service within 15 years and prohibiting the
repeal of the tax or taxes or their use for another purpose until the debt has
been paid. The State also enters into lease-purchase agreements, participation
interests in which are often sold publicly as individual securities. These ob-
ligations are subject to annual appropriation by the General Assembly.
As of July, 1994, the State's general obligation bonds were rated "Aaa" by
Moody's, "AAA" by S&P, and "AAA" by Fitch Investors Service, Inc. ("Fitch").
There can be no assurance that these ratings will continue.
The Maryland Department of Transportation issues Consolidated Transportation
Bonds, which are payable out of specific excise taxes, motor vehicle taxes and
corporate income taxes, and from the general revenues of the Department. Issued
to finance highway, port, transit, rail or aviation facilities, as of July,
1994, these bonds were rated "Aa" by Moody's, "AA" by S&P and "AA" by Fitch.
The Maryland Transportation Authority, a unit of the Department, issues its own
revenue bonds for transportation facilities, which are payable from certain
highway, bridge and tunnel tolls. These bonds were rated
14
<PAGE>
"A1" by Moody's and "A+" by S&P as of October, 1994. There can be no assurance
that these ratings will continue.
Other State agencies which issue Municipal Obligations include the Maryland
Stadium Authority, which has issued bonds payable from sports facility lease
revenues and certain lottery revenues, the Maryland Water Quality Financing Ad-
ministration, which issues bonds to provide loans to local governments for
wastewater control projects, the Community Development Administration of the
Department of Housing and Community Development, which issues mortgage revenue
bonds for housing, the Maryland Environmental Service, which issues bonds se-
cured by the revenues from its various water supply, wastewater treatment and
waste management projects, and the various public institutions of higher educa-
tion in Maryland (which include the University of Maryland System, Morgan State
University, Baltimore City Community College and St. Mary's College of Mary-
land) which issue their own revenue bonds. None of these bonds constitute debts
or pledges of the full faith and credit of the State of Maryland. The issuers
of these obligations are subject to various economic risks and uncertainties,
and the credit quality of the securities issued by them may vary considerably
from the credit quality of obligations backed by the full faith and credit of
the State.
In addition, the Maryland Health and Higher Educational Facilities Authority
and the Maryland Industrial Development Financing Authority issue conduit reve-
nue bonds, the proceeds of which are lent to borrowers eligible under relevant
state and federal law. These bonds are payable solely from the loan payments
made by borrowers, and their credit quality varies with the financial strengths
of the respective borrowers.
Municipal Obligations of Maryland Local Governments. Maryland has 24 geographi-
cal subdivisions, comprised of 23 counties plus the independent City of Balti-
more, which functions much like a county. Some of the counties and the City of
Baltimore operate pursuant to the provisions of codes of their own adoption,
while others operate pursuant to State-approved charters and State statutes.
Maryland counties and the City of Baltimore receive most of their revenues from
ad valorem taxes on real and personal property, individual income taxes, trans-
fer taxes, miscellaneous taxes and aid from the State. Their expenditures in-
clude public safety, public works, health, public welfare, court and
correctional services, education and general governmental costs.
The economic factors affecting the State, as discussed above, also have af-
fected the counties and the City of Baltimore. In addition, reductions in State
aid caused by State budget deficits have caused the local governments to trim
expenditures and, in some cases, raise taxes.
According to recent available ratings, general obligation bonds of Montgomery
County (abutting Washington, D.C.) are rated "Aaa" by Moody's and "AAA" by S&P.
Prince George's County, also in the Washington, D.C. suburbs, issues general
obligation bonds rated "Aa" by Moody's and "AA-" by S&P, while Baltimore Coun-
ty, a separate political subdivision surrounding the City of Baltimore, issues
general obligation bonds rated "Aaa" by Moody's and "AA+" by S&P. The City of
Baltimore's general obligation bonds are rated "A1" by Moody's and "A" by S&P.
The other counties in Maryland which are rated by Moody's all have general ob-
ligation bond ratings of "A" or better from Moody's, except for Allegany Coun-
ty, the bonds of which are rated "Baa" by Moody's. The Washington Subur-
15
<PAGE>
ban Sanitary District, a bi-county agency providing water and sewerage services
in Montgomery and Prince George's Counties, issues general obligation bonds
rated "Aa1" by Moody's and "AA" by S&P as of October, 1994. Additionally, some
of the large municipal corporations in Maryland (such as the cities of Rock-
ville and Annapolis) have issued general obligation bonds. There can be no as-
surance that these ratings will continue.
Other Issuers of Maryland Municipal Obligations. Many of Maryland's counties
have established subsidiary agencies with bond issuing powers, such as housing
authorities, parking revenue authorities and industrial development authori-
ties. In addition, all Maryland municipalities have the authority under State
law to issue conduit revenue bonds payable from payments from private borrow-
ers. These entities are subject to various economic risks and uncertainties,
and the credit quality of the securities issued by them may vary considerably
from the credit quality of obligations backed by the full faith and credit of
the State.
FACTORS PERTAINING TO MICHIGAN
As described above, except to the extent the Michigan Fund invests in temporary
investments, the Michigan Fund will invest substantially all of its net assets
in Michigan Municipal Obligations. The Michigan Fund is therefore susceptible
to political, economic or regulatory factors affecting issuers of Michigan Mu-
nicipal Obligations. The information set forth below is derived from official
statements prepared in connection with the issuance of Michigan Municipal Obli-
gations and other sources that are generally available to investors. The infor-
mation is provided as general information intended to give a recent historical
description and is not intended to indicate future or continuing trends in the
financial or other positions of The State of Michigan (the "State"). This in-
formation has not been independently verified.
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 Michigan Municipal Ob-
ligations held in the portfolio of the Michigan Fund or the ability of particu-
lar obligors to make timely payments of debt service on (or relating to) those
obligations.
Economy. The principal sectors of the State's economy are manufacturing of du-
rable goods (including automobile and office equipment manufacturing), tourism
and agriculture. As reflected in historical employment figures, the State's
economy has lessened its dependence upon durable goods manufacturing. In 1960,
employment in such industry accounted for 33% of the State's workforce. This
figure fell to 17% by 1994. However, manufacturing (including auto-related man-
ufacturing) continues to be an important part of the State's economy. These in-
dustries are highly cyclical. This factor could adversely affect the revenue
streams of the State and its political subdivisions because of its impact on
tax sources, particularly sales taxes, income taxes and single business taxes.
Recently, as well as historically, the average monthly unemployment rate in the
State has been higher than the average figures for the United States. For exam-
ple, for 1993 the average monthly unemployment rate in the State was 7% as com-
pared to a national average of 6.8%. For 1994, however, the average annual un-
employment rate in the State was 5.9% as compared to a national average of
6.1%.
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Budget. The budget of the State is a complete financial plan and encompasses
the revenues and expenditures, both operating and capital outlay, of the
State's General Fund and special revenue funds. The budget is prepared on a ba-
sis consistent with generally accepted accounting principles (GAAP). The
State's Fiscal Year begins on October 1 and ends September 30 of the following
year. Under State law, the executive budget recommendations for any fund may
not exceed the estimated revenue thereof, and an itemized statement of esti-
mated revenues in each operating fund must be contained in an appropriation
bill as passed by the State Legislature, the total of which may not be less
than the total of all appropriations made from the fund for that fiscal year.
The State Constitution provides that proposed expenditures from and revenues of
any fund must be in balance and that any prior year's surplus or deficit in any
fund must be included in the succeeding year's budget for that fund.
The State Constitution limits the amount of total State revenues that may be
raised from taxes and other sources. State revenues (excluding federal aid and
revenues used for payment of principal and interest on general obligation
bonds) in any fiscal year are limited to a specified percentage of State per-
sonal income in the prior calendar year or average of the prior three calendar
years, whichever is greater. The State may raise taxes in excess of the limit
in emergency situations.
The State finances its operations through the State's General Fund and special
revenue funds. The General Fund receives revenues of the State that are not
specifically required to be included in the special revenue funds. General Fund
revenues are obtained approximately 59 percent from the payment of State taxes
and 41 percent from federal and non-tax revenue sources. Tax revenues credited
to the General Fund includes the State's personal income tax, single business
tax, use tax, and approximately 15% of sales tax collections. In addition the
State levies various other taxes. Approximately one-half of total General Fund
expenditures are made by the State's Department of Education and Department of
Social Services. Other significant expenditures from the General Fund provide
funds for law enforcement, general State government, debt service and capital
outlays.
Despite modest surplus in the three preceding fiscal years, the State ended
fiscal years 1989-90 and 1990-91 with negative balances of $310.3 million and
$169.4 million, respectively. This negative balance had been eliminated as of
the end of fiscal year 1991-92 which ended September 30, 1992. The State ended
fiscal year 1992-93 with a balance of $26 million after transfer of $282.6 mil-
lion to the Counter-Cyclical Budget and Economic Stabilization Fund described
below. The State ended fiscal year 1993- 94 with a preliminary $464 million
surplus which was transferred to the Counter-Cyclical Budget and Economic Sta-
bilization Fund described below.
The State budget for the 1994-95 fiscal year, which began on October 1, 1994,
was passed by the State Legislature in July 1994. This budget passed by the
State Legislature totaled $8,030.8 million from General Fund/general purpose
revenues. The Governor vetoed $6.5 million of these appropriations.
The State also maintains the Counter-Cyclical Budget and Economic Stabilization
Fund ("BSF") which accumulates balances during years of significant economic
growth and which may be utilized during periods of budgetary shortfalls. The
unreserved balance for the BSF for the 1990-91 fiscal year end was $182.2 mil-
lion, for the 1991-92 fiscal year end was $20.1 million, and for the 1992-93
fiscal year end
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was $303.4 million. The accrued balance of the BSF as of September 30, 1994 is
estimated to be $779.3 million.
Debt. The State Constitution limits State general obligation debt to (i) short-
term debt for State operating purposes which must be repaid in the same fiscal
year in which it is issued and which cannot exceed 15% of the undedicated reve-
nues received by the State during the preceding fiscal year, (ii) short and
long term debt unlimited in amount for the purpose of making loans to school
districts and (iii) long term debt for voter-approved purposes.
The State has issued and has outstanding general obligation full faith and
credit bonds for water resources, environmental protection program and recre-
ation program purposes totalling, as of September 30, 1994, approximately $382
million. In November 1988 the State's voters approved the issuance of $800 mil-
lion of general obligation bonds for environmental protection and recreational
purposes; of this amount approximately $423 million remains to be issued. The
State issued $500 million in general obligation notes on March 6, 1995 which
will mature on September 29, 1995. The State issued $65 million in general ob-
ligation school loan notes on October 11, 1994 which will mature on April 11,
1995.
Other Issuers of Michigan Municipal Obligations. There are a number of agen-
cies, instrumentalities and political subdivisions of the State that issue Mu-
nicipal Obligations, some of which may be conduit revenue obligations payable
from payments from private borrowers. These entities are subject to various
economic risks and uncertainties, and the credit quality of the securities is-
sued by them may vary considerably from obligations backed by the full faith
and credit of the State.
Ratings. Currently the State's general obligation bonds are rated "A1" by
Moody's, "AA" by S&P and "AA" by Fitch Investors Service, Inc.
Litigation. The State is a party to various legal proceedings seeking damages
or injunctive or other relief. In addition to routine litigation, certain of
these proceedings could, if unfavorably resolved from the point of view of the
State, substantially affect State programs or finances. These lawsuits involve
programs generally in the areas of corrections, highway maintenance, social
services, tax collection, commerce and budgetary reductions to school districts
and governmental units and court funding. The ultimate disposition of these
proceedings is not determinable.
Property Tax and School Finance Reform. The State Constitution limits the ex-
tent to which municipalities or political subdivisions may levy taxes upon real
and personal property through a process that regulates assessments.
On August 19, 1993, the Governor signed into law Act 145, Public Acts of Michi-
gan, 1993 ("Act 145"), a measure which would have significantly impacted fi-
nancing of primary and secondary school operations and which has resulted in
additional property tax and school finance reform legislation. Act 145 would
have exempted all property in the State of Michigan from millage levied for lo-
cal and intermediate school districts operating purposes, other than millage
levied for community colleges, effective July 1, 1994. In order to replace lo-
cal property tax revenues lost as a result of Act 145, the
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State Legislature, in December 1993, enacted several statutes which address
property tax and school finance reform.
The property tax and school finance reform measures included a ballot proposal
which was approved by the voters on March 15, 1994. Effective May 1, 1994, the
State sales and use tax was increased from 4% to 6%, the State income tax was
decreased from 4.6% to 4.4%, the cigarette tax was increased from $.25 to $.75
per pack and an additional tax of 16% of the wholesale price was imposed on
certain other tobacco products. A 0.75% real estate transfer tax became effec-
tive January 1, 1995. Beginning in 1994, a state property tax of 6 mills began
to be imposed on all real and personal property currently subject to the gen-
eral property tax. The ability of school districts to levy property taxes for
school operating purposes has been partially restored. A school board will,
with voter approval, be able to levy up to the lesser of 18 mills or the number
of mills levied in 1993 for school operating purposes, on non-homestead proper-
ty. The adopted ballot proposal contained additional provisions regarding the
ability of local school districts to levy taxes as well as a limit on assess-
ment increases for each parcel of property, beginning in 1995 to the lesser of
5% or the rate of inflation. When property is subsequently sold, its assessed
value will revert to the current assessment level of 50% of true cash value.
Under the adopted ballot proposal, much of the additional revenue generated by
the new taxes will be dedicated to the State School Aid Fund.
The adopted ballot proposal contained a system of financing local school oper-
ating costs relying upon a foundation allowance amount which may vary by dis-
trict based upon historical spending levels. State funding will provide each
school district an amount equal to the difference between its foundation allow-
ance and the revenues generated by its local property tax levy. Local school
districts will also be entitled to levy supplemental property taxes to generate
additional revenues if their foundation allowance is less than their historical
per pupil expenditures. The adopted ballot proposal also contained provisions
which allow for the levy of a limited number of enhancement mills on regional
and local school district bases.
The adopted ballot proposal shifts significant portions of the cost of local
school operations from local school districts to the State and raises addi-
tional State revenues to fund these additional State expenses. These additional
revenues will be included within the State's constitutional revenue limitations
and may impact the State's ability to raise additional revenues in the future.
FACTORS PERTAINING TO NEW JERSEY
As described above, except to the extent the New Jersey Fund invests in tempo-
rary investments, the New Jersey Fund will invest substantially all of its net
assets in New Jersey Municipal Obligations. The New Jersey Fund is therefore
susceptible to political, economic or regulatory factors affecting issuers of
New Jersey Municipal Obligations. The following information provides only a
brief summary of some of the complex factors affecting the financial situation
in New Jersey (the "State") and is derived from sources that are generally
available to investors and is believed to be accurate. It is based in part on
information obtained from various State and local agencies in New Jersey. No
independent verification has been made of the accuracy or completeness of any
of the following information.
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There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on State or local governmental finances
generally, will not adversely affect the market value of New Jersey Municipal
Obligations held in the portfolio of the New Jersey Fund or the ability of par-
ticular obligors to make timely payments of debt service on (or relating to)
those obligations.
The State and Its Economy. The State is the ninth largest state in population
and the fifth smallest in land area. With an average of 1,062 people per square
mile, it is the most densely populated of all the states. The State's economic
base is diversified, consisting of a variety of manufacturing, construction and
service industries, supplemented by rural areas with selective commercial agri-
culture. Historically, New Jersey's average per capita income has been well
above the national average, and in 1993 the State ranked second among the
states in per capita personal income ($26,967).
The New Jersey Economic Policy Council, a statutory arm of the New Jersey De-
partment of Commerce and Economic Development, has reported in New Jersey Eco-
nomic Indicators, a monthly publication of the New Jersey Department of Labor,
Division of Labor Market and Demographic Research, that in 1988 and 1989 em-
ployment in New Jersey's manufacturing sector failed to benefit from the export
boom experienced by many Midwest states and the State's service sectors, which
had fueled the State's prosperity since 1982, lost momentum. In the meantime,
the prolonged fast growth in the State in the mid 1980s resulted in a tight la-
bor market situation, which has led to relatively high wages and housing pric-
es. This means that, while the incomes of New Jersey residents are relatively
high, the State's business sector has become more vulnerable to competitive
pressures.
The onset of the national recession (which officially began in July 1990 ac-
cording to the National Bureau of Economic Research) caused an acceleration of
New Jersey's job losses in construction and manufacturing. In addition, the na-
tional recession caused an employment downturn in such previously growing sec-
tors as wholesale trade, retail trade, finance, utilities and trucking and
warehousing. Reflecting the downturn, the rate of unemployment in the State
rose from a low of 3.6% during the first quarter of 1989 to an estimated 6.1%
in February 1995, which is greater than the national average of 5.4% in Febru-
ary 1995.
Because some sectors will lag due to continued excess capacity, employers even
in rebounding sectors can be expected to remain cautious about hiring until
they become convinced that improved business will be sustained, and certain
firms will continue to merge or downsize to increase profitability. Economic
recovery is likely to be slow and uneven in New Jersey, with unemployment re-
ceding at a correspondingly slow pace.
Debt Service. The primary method for State financing of capital projects is
through the sale of the general obligation bonds of the State. These bonds are
backed by the full faith and credit of the State tax revenues and certain other
fees are pledged to meet the principal and interest payments and if provided,
redemption premium payments, if any, required to repay the bonds. As of June
30, 1993, there was a total authorized bond indebtedness of approximately $9.0
billion, of which $3.6 billion was issued and outstanding, $4.0 billion was re-
tired (including bonds for which provision for payment has been made through
the sale and issuance of refunding bonds) and $1.4 billion was unissued. The
debt service obligation for such outstanding indebtedness is $103.5 million for
Fiscal Year 1995.
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New Jersey's Budget and Appropriation System. The State operates on a fiscal
year beginning July 1 and ending June 30. At the end of Fiscal Year 1989, there
was a surplus in the State's general fund (the fund into which all State reve-
nues not otherwise restricted by statute are deposited and from which appropri-
ations are made) of $411.2 million. At the end of Fiscal Year 1990, there was a
surplus in the general fund of $1.0 million. At the end of Fiscal Year 1991,
there was a surplus in the general fund of $1.4 million. At the end of Fiscal
Year 1992, there was a surplus in the general fund of $760.8 million. It is es-
timated that New Jersey closed its Fiscal Year 1993 with a surplus of $937.4
million.
In order to provide additional revenues to balance future budgets, to redis-
tribute school aid and to contain real property taxes, on June 27, 1990, and
July 12, 1990, Governor Florio signed into law legislation which was estimated
to raise approximately $2.8 billion in additional taxes (consisting of $1.5
billion in sales and use taxes and $1.3 billion in income taxes), the biggest
tax hike in New Jersey history. There can be no assurance that receipts and
collections of such taxes will meet such estimates.
The first part of the tax hike took effect on July 1, 1990, with the increase
in the State's sales and use tax rate from 6.0% to 7.0% and the elimination of
exemptions for certain products and services not previously subject to the tax,
such as telephone calls, disposable paper products (which has since been rein-
stated), soaps and detergents, janitorial services, alcoholic beverages and
cigarettes. At the time of enactment, it was projected that these taxes would
raise approximately $1.5 billion in additional revenue. Projections and esti-
mates of receipts from sales and use taxes, however, have been subject to vari-
ance in recent fiscal years.
The second part of the tax hike took effect on January 1, 1991, in the form of
an increased state income tax on individuals. At the time of enactment, it was
projected that this increase would raise approximately $1.3 billion in addi-
tional income taxes to fund a new school aid formula, a new homestead rebate
program and state assumption of welfare and social services costs. Projections
and estimates of receipts from income taxes, however, have also been subject to
variance in recent fiscal years. Under the legislation, income tax rates in-
creased from their previous range of 2.0% to 3.5% to a new range of 2.0% to
7.0%, with the higher rates applying to married couples with incomes exceeding
$70,000 who file joint returns, and to individuals filing single returns with
incomes of more than $35,000.
The Florio administration had contended that the income tax package would help
reduce local property tax increases by providing more state aid to municipali-
ties. Under the income tax legislation the State assumed approximately $289.0
million in social services costs that previously were paid by counties and mu-
nicipalities and funded by property taxes. In addition, under the new formula
for funding school aid, an extra $1.1 billion was proposed to be sent by the
State to school districts beginning in 1991, thus reducing the need for prop-
erty tax increases to support education programs.
Effective July 1, 1992, the State's sales and use tax rate decreased from 7% to
6%. Effective January 1, 1994, an across-the-board 5% reduction in the income
tax rates was enacted and effective January 1, 1995, further reductions ranging
from 1% up to 10% in income tax rates took effect.
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On June 30, 1994, Governor Whitman signed the New Jersey Legislature's $15.7
billion budget for Fiscal Year 1995. The balanced budget, which includes $455
million in surplus, is $141 million less than the 1994 budget. Whether the
State can achieve a balanced budget depends on its ability to enact and imple-
ment expenditure reductions and to collect estimated tax revenues.
Litigation. The State is a party 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 pro-
ceedings and other alleged violations of State and Federal laws. Included in
the State's outstanding litigation are cases challenging the following: the
formula relating to State aid to public schools, the method by which the State
shares with its counties maintenance recoveries and costs for residents in
State institutions, unreasonably low Medicaid payment rates for long-term fa-
cilities in New Jersey, the obligation of counties to maintain Medicaid or
Medicare eligible residents of institutions and facilities for the developmen-
tally disabled, taxes paid into the Spill Compensation Fund (a fund estab-
lished to provide money for use by the State to remediate hazardous waste
sites and to compensate other persons for damages incurred as a result of haz-
ardous waste discharge) based on Federal preemption, various provisions, and
the constitutionality, of the Fair Automobile Insurance Reform Act of 1990,
the State's role in a consent order concerning the construction of a resource
facility in Passaic County, actions taken by the Bureau of Securities against
an individual, the State's actions regarding alleged chromium contamination of
State-owned property in Hudson County, the issuance of emergency redirection
orders and a draft permit by the Department of Environmental Protection and
Energy, the adequacy of Medicaid reimbursement for services rendered by doc-
tors and dentists to Medicaid eligible children, the Commissioner of Health's
calculation of the hospital assessment required by the Health Care Cost Reduc-
tion Act of 1991, refusal of the State to share with Camden County federal
funding the State recently received for disproportionate share hospital pay-
ments made to county psychiatric facilities, and the constitutionality of an-
nual A-901 hazardous and solid waste licensure renewal fees collected by the
Department of Environmental Protection and Energy. Adverse judgments in these
and other matters could have the potential for either a significant loss of
revenue or a significant unanticipated expenditure by the State.
At any given time, there are various numbers of claims and cases pending
against the State, State agencies and employees seeking recovery of monetary
damages that are primarily paid out of the fund created pursuant to the New
Jersey Tort Claims Act. In addition, at any given time, there are various num-
bers of contract claims against the State and State agencies seeking recovery
of monetary damages. The State is unable to estimate its exposure for these
claims.
Debt Ratings. For many years prior to 1991, both Moody's and S&P had rated New
Jersey general obligation bonds "Aaa" and "AAA," respectively. On July 3,
1991, however, S&P downgraded New Jersey general obligation bonds to "AA+." On
June 4, 1992, S&P placed New Jersey general obligation bonds on CreditWatch
with negative implications, citing as its principal reason for its caution the
denial by the federal government of New Jersey's request for $450 million in
retroactive Medicaid payments for psychiatric hospitals. These funds were
critical to closing a $1 billion gap in the State's $15 billion budget for
Fiscal Year 1992 which ended on June 30, 1992. Under New Jersey state law, the
gap in the budget must be closed before the new budget year began on July 1,
1992. S&P
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suggested the State could close Fiscal Year 1992's budget gap and help fill
Fiscal Year 1993's hole by a reversion of $700 million of pension contributions
to its general fund under a proposal to change the way the State calculates its
pension liability.
On July 6, 1992, S&P reaffirmed its "AA+" rating for New Jersey general obliga-
tion bonds and removed the debt from its CreditWatch list, although it stated
that New Jersey's long-term financial outlook was negative. S&P was concerned
that the State was entering Fiscal Year 1993 with only a $26 million surplus
and remained concerned about whether the State economy would recover quickly
enough to meet lawmakers' revenue projections. It also remained concerned about
the recent federal ruling leaving in doubt how much the State was due in retro-
active Medicaid reimbursements and a ruling by a federal judge, now on appeal,
of the State's method for paying for uninsured hospital patients. However, on
July 27, 1994, S&P announced that it was changing the State's outlook from neg-
ative to stable due to a brightening of the State's prospects as a result of
Governor Whitman's effort to trim spending and cut taxes, coupled with an im-
proving economy. S&P reaffirmed its "AA+" rating at the same time.
On August 24, 1992, Moody's downgraded New Jersey general obligation bonds to
"Aa1", stating that the reduction reflected a developing pattern of reliance on
nonrecurring measures to achieve budgetary balance, four years of financial op-
erations marked by revenue shortfalls and operating deficits, and the likeli-
hood that serious financial pressures would persist. On August 5, 1994, Moody's
reaffirmed its "Aa1" rating, citing on the positive side New Jersey's broad-
based economy, high income levels, history of maintaining a positive financial
position and moderate (albeit rising) debt ratios, and, on the negative side, a
continued reliance on one-time revenues and a dependence on pension-related
savings to achieve budgetary balance.
There can be no assurance that these ratings will continue.
Other Issuers of New Jersey Municipal Obligations. There are a number of state
agencies, instrumentalities and political subdivisions of the State that issue
Municipal Obligations, some of which may be conduit revenue obligations payable
from payments from private borrowers. These entities are subject to various
economic risks and uncertainties, and the credit quality of the securities is-
sued by them may vary considerably from the credit quality of obligations
backed by the full faith and credit of the State.
FACTORS PERTAINING TO PENNSYLVANIA
As described above, except to the extent the Pennsylvania Fund invests in tem-
porary investments, the Pennsylvania Fund will invest substantially all of its
net assets in Pennsylvania Municipal Obligations. The Pennsylvania Fund is
therefore susceptible to political, economic or regulatory factors affecting
issuers of Pennsylvania Municipal Obligations. Without intending to be com-
plete, the following briefly summarizes some of these difficulties and the cur-
rent financial situation, as well as some of the complex factors affecting the
financial situation in the Commonwealth of Pennsylvania (the "Commonwealth" or
"Pennsylvania"). It is derived from sources that are generally available to in-
vestors and is based in part on information obtained from various agencies in
the Commonwealth. No independent verification has been made of the accuracy or
completeness of the following information.
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Prospective investors should consider the financial difficulties and pressures
which the Commonwealth and certain of its municipal subdivisions have under-
gone. Both the Commonwealth and the City of Philadelphia have recently experi-
enced significant revenue shortfalls. There can be no assurance that current or
future statewide or regional economic difficulties, and the resulting impact on
State or local governmental finances generally, will not adversely affect the
market value of Pennsylvania Municipal Obligations held in the portfolio of the
Pennsylvania Fund or the ability of particular obligors to make timely payments
of debt service on (or relating to) those obligations.
State Economy. Pennsylvania has been historically identified as a heavy-indus-
try state although that reputation has changed recently as the industrial com-
position of the Commonwealth diversified when the coal, steel and railroad in-
dustries began to decline. The major new sources of growth in Pennsylvania are
in the service sector, including trade, medical and the health services, educa-
tion and financial institutions. Pennsylvania's agricultural industries are
also an important component of the Commonwealth's economic structure, account-
ing for more than $3.6 billion in crop and livestock products annually while
agribusiness and food related industries support $39 billion in economic activ-
ity annually.
Employment within the Commonwealth increased steadily from 1984 to 1990. From
1991 to 1994, employment in the Commonwealth declined 1.2%. The change in em-
ployment experienced in the Commonwealth during such periods is comparable to
the change in employment in the Middle Atlantic region of the United States.
Non-manufacturing employment in the Commonwealth has increased steadily since
1980 to its 1993 level of 81.6% of total Commonwealth employment. Manufactur-
ing, which contributed 18.4% of 1993 non-agricultural employment, has fallen
behind both the services sector and the trade sector as the largest single
source of employment within the Commonwealth. In 1993, the services sector ac-
counted for 29.9% of all non-agricultural employment in the Commonwealth while
the trade sector accounted for 22.4%.
The Commonwealth recently experienced a slowdown in its economy. Moreover, eco-
nomic strengths and weaknesses vary in different parts of the Commonwealth. In
general, heavy industry and manufacturing have been facing increasing competi-
tion from foreign producers. During 1993, the annual average unemployment rate
in Pennsylvania was 7.0% compared to 6.8% for the United States. For February
1995 the unadjusted unemployment rate was 6.4% in the Commonwealth and 5.9% in
the United States, while the seasonally adjusted unemployment rate for the Com-
monwealth was 5.6% and for the United States was 5.4%.
State Budget. The Commonwealth operates under an annual budget that is formu-
lated and submitted for legislative approval by the Governor each February. The
Pennsylvania Constitution requires that the Governor's budget proposal consist
of three parts: (i) a balanced operating budget setting forth proposed expendi-
tures and estimated revenues from all sources and, if estimated revenues and
available surplus are less than proposed expenditures, recommending specific
additional sources of revenue sufficient to pay the deficiency; (ii) a capital
budget setting forth proposed expenditures to be financed from the proceeds of
obligations of the Commonwealth or its agencies or from operating funds; and
(iii) a financial plan for not less than the succeeding five fiscal years, in-
cluding for each year projected operating expenditures and estimated revenues
and projected expenditures for capital projects.
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The General Assembly may add, change or delete any items in the budget pre-
pared by the Governor, but the Governor retains veto power over the individual
appropriations passed by the legislature. The Commonwealth's fiscal year be-
gins on July 1 and ends on June 30.
All funds received by the Commonwealth are subject to appropriation in spe-
cific amounts by the General Assembly or by executive authorization by the
Governor. Total appropriations enacted by the General Assembly may not exceed
the ensuing year's estimated revenues, plus (less) the unappropriated fund
balance (deficit) of the preceding year, except for constitutionally autho-
rized debt service payments. Appropriations from the principal operating funds
of the Commonwealth (the General Fund, the Motor License Fund and the State
Lottery Fund) are generally made for one fiscal year and are returned to the
unappropriated surplus of the fund if not spent or encumbered by the end of
the fiscal year. The Constitution specifies that a surplus of operating funds
at the end of a fiscal year must be appropriated for the ensuing year.
Pennsylvania uses the "fund" method of accounting for receipts and disburse-
ments. In the Commonwealth, over 120 funds have been established by legisla-
tive enactment or in certain cases by administrative action for the purpose of
recording the receipt and disbursement of monies received by the Commonwealth.
Annual budgets are adopted each fiscal year for the principal operating funds
of the Commonwealth and several other special revenue funds. Expenditures and
encumbrances against these funds may only be made pursuant to appropriation
measures enacted by the General Assembly and approved by the Governor. The
General Fund, the Commonwealth's largest fund, receives all tax revenues, non-
tax revenues and federal grants and entitlements that are not specified by law
to be deposited elsewhere. The majority of the Commonwealth's operating and
administrative expenses are payable from the General Fund. Debt service on all
bond indebtedness of the Commonwealth, except that issued for highway purposes
or for the benefit of other special revenue funds, is payable from the General
Fund.
Financial information for the principal operating funds of the Commonwealth
are maintained on a budgetary basis of accounting, which is used for the pur-
pose of ensuring compliance with the enacted operating budget. The Common-
wealth also prepares annual financial statements in accordance with generally
accepted accounting principles ("GAAP"). Budgetary basis financial reports are
based on a modified cash basis of accounting as opposed to a modified accrual
basis of accounting prescribed by GAAP. Financial information is adjusted at
fiscal year-end to reflect appropriate accruals for financial reporting in
conformity with GAAP.
Recent Financial Results. From fiscal 1984, when the Commonwealth first pre-
pared its financial statements on a GAAP basis, through fiscal 1989, the Com-
monwealth reported a positive unreserved-undesignated fund balance for its
governmental fund types at each fiscal year end. Slowing economic growth dur-
ing 1990, leading to a national economic recession beginning in fiscal 1991,
reduced revenue growth and increased expenditures and contributed to negative
unreserved-undesignated fund balances at the end of the 1990 and 1991 fiscal
years. The negative unreserved-undesignated fund balance was due largely to
operating deficits in the General Fund and the State Lottery Fund during those
fiscal years. Actions taken during fiscal 1992 to bring the General Fund back
into balance, including tax increases and expenditure restraints, resulted in
a $1.1 billion reduction to the unreserved-undesig
25
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nated fund deficit for combined governmental fund types at June 30, 1993, as a
result of a $420.4 million increase in the balance. These gains were produced
by continued efforts to control expenditure growth.
The Commonwealth experienced a $454 million General Fund deficit as of the end
of its 1991 fiscal year. The deficit reflected higher than budgeted expendi-
tures, below-estimate economic activity and growth rates of economic indicators
and total tax revenue shortfalls below those assumed in the enacted budget.
Rising demands on state programs caused by the economic recession, particularly
for medical assistance and cash assistance programs, and the increased costs of
special education programs and correction facilities and programs, contributed
to increased expenditures in fiscal 1991, while tax revenues for the 1991 fis-
cal year were severely affected by the economic recession. Total corporation
tax receipts and sales and use tax receipts during fiscal 1991 were, respec-
tively, 7.3 percent and 0.9 percent below amounts collected during fiscal 1990.
Personal income tax receipts also were affected by the recession but not to the
extent of the other major General Fund taxes, increasing only 2.0 percent over
fiscal 1990 collections. A number of actions were taken throughout the fiscal
year by the Commonwealth to mitigate the effects of the recession on budget
revenues and expenditures. The Commonwealth initiated a number of cost-saving
measures, including the firing of 2,000 state employees, deferral of paychecks
and reduction of funds to state universities, which resulted in approximately
$871 million cost savings.
Actions taken during fiscal 1992 to bring the General Fund budget back into
balance, including tax increases and expenditure restraints, resulted in a $1.1
billion reduction for the unreserved-undesignated fund deficit for combined
governmental fund types and a return to a positive fund balance. Total general
fund revenues for fiscal 1992 were $14,516.8 million which is approximately 22
percent higher than fiscal 1991 revenues of $11,877.3 million due in large part
to tax increases. The increased revenues funded substantial increases in educa-
tion, social services and corrections programs. As a result of the tax in-
creases and certain appropriation lapses, fiscal 1992 ended with an $8.8 mil-
lion surplus after having started the year with an unappropriated balance defi-
cit of $454 million.
Fiscal 1993 closed with revenues higher than anticipated and expenditures ap-
proximately as projected, resulting in an ending unappropriated balance surplus
of $242.3 million. A deduction in the personal income tax rate in July 1992 and
the one-time receipt of revenues from retroactive corporate tax increases in
fiscal 1992 were responsible, in part, for the low growth in fiscal 1993.
Financial performance continued to improve during fiscal 1994. Commonwealth
revenues during the 1994 fiscal year totaled $15,210.7 million, $38.6 million
above the fiscal year estimate, and 3.9 percent over Commonwealth revenues dur-
ing the 1993 fiscal year. The sales tax was an important contributor to the
higher than estimated revenues. The strength of collections from the sales tax
offset the lower than budgeted performance of the personal income tax that
ended the 1994 fiscal year $74.4 million below estimate. The shortfall in the
personal income tax was largely due to shortfalls in income not subject to
withholding such as interest, dividends and other income. Expenditures, exclud-
ing pooled financing expenditures and net of all fiscal 1994 appropriation
lapses, totaled $14,934.4 million representing a 7.2 percent increase over fis-
cal 1993 expenditures. Medical assistance and prisons spending contributed to
the rate of spending growth for the 1994 fiscal year. The Commonwealth
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maintained an operating balance on a budgetary basis for fiscal 1994 producing
a fiscal year ending unappropriated surplus of $335.8 million.
Fiscal 1995 Budget. On June 16, 1994, the Governor signed a $15.7 billion Gen-
eral Fund budget, an increase of over 3.9 percent from the fiscal 1994 budget.
A substantial amount of the increase is targeted for medical assistance expen-
ditures, reform of the state-funded public assistance program and education
subsidies to local school districts. The budget also includes tax reductions
totaling an estimated $166.4 million benefiting principally low income fami-
lies and corporations. The fiscal 1995 budget projects a $4 million fiscal
year-end unappropriated surplus.
Debt Limits and Outstanding Debt. The Constitution of Pennsylvania permits the
issuance of the following types of debt: (i) debt to suppress insurrection or
rehabilitate areas affected by disaster; (ii) electorate approved debt; (iii)
debt for capital projects subject to an aggregate outstanding debt limit of
1.75 times the annual average tax revenues of the preceding five fiscal years;
and (iv) tax anticipation notes payable in the fiscal year of issuance.
Under the Pennsylvania Fiscal Code, the Auditor General is required annually
to certify to the Governor and the General Assembly certain information re-
garding the Commonwealth's indebtedness. According to the August 31, 1994 Au-
ditor General certificate, the average annual tax revenues deposited in all
funds in the five fiscal years ended June 30, 1994 was approximately $16.5
billion, and, therefore, the net debt limitation for the 1995 fiscal year is
$28.8 billion. Outstanding net debt totaled $4.0 billion at June 30, 1994, ap-
proximately equal to the net debt at June 30, 1993. At August 31, 1994, the
amount of debt authorized to be issued, but not yet incurred was $15.0 bil-
lion.
Debt Ratings. All outstanding general obligation bonds of the Commonwealth are
rated "AA-" by S&P and "A1" by Moody's.
City of Philadelphia. The City of Philadelphia is the largest city in the Com-
monwealth. Philadelphia experienced a series of general fund deficits for fis-
cal years 1988 through 1992 which have culminated in the City's present seri-
ous financial difficulties. In its 1992 Comprehensive Annual Financial Report,
the City reported a cumulative general fund deficit of $71.4 million for fis-
cal year 1992.
In June 1991, the Pennsylvania legislature established the Pennsylvania Inter-
governmental Cooperation Authority ("PICA"), a five-member board which
oversees the fiscal affairs of the City of Philadelphia. The Legislation em-
powers PICA to issue notes and bonds on behalf of Philadelphia, and also au-
thorizes Philadelphia to levy a one-percent sales tax the proceeds of which
would be used to pay off the bonds. In return for PICA's fiscal assistance,
Philadelphia is required, among other things, to establish five-year financial
plans that include balanced annual budgets. Under the legislation, if Phila-
delphia does not comply with such requirements, PICA may withhold bond reve-
nues and certain state funding.
At this time, the City is operating under a five-year fiscal plan approved by
PICA on April 6, 1992. Full implementation of the five-year plan was delayed
due to labor negotiations that were not completed until October 1992, three
months after the expiration of the old labor contracts. The terms of
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the new labor contracts are estimated to cost approximately $144.4 million
more than what was budgeted in the original five-year plan. An amended five-
year plan was approved by PICA in May 1993. The Mayor's latest update of the
five-year financial plan was approved by PICA on May 2, 1994.
As of November 17, 1994, PICA has issued $1,296.7 million of its Special Tax
Revenue Bonds. In accordance with the enabling legislation, PICA was guaran-
teed a percentage of the wage tax revenue expected to be collected from Phila-
delphia residents to permit repayment of the bonds.
In January 1993, Philadelphia anticipated a cumulative general fund budget
deficit of $57 million for the 1993 fiscal year. In response to the antici-
pated deficit, the Mayor unveiled a financial plan eliminating the budget def-
icit for the 1993 budget year through significant service cuts that included a
plan to privatize certain city-provided services. Due to an upsurge in tax re-
ceipts, cost-cutting and additional PICA borrowings, Philadelphia completed
the 1993 fiscal year with a balanced general fund budget. The audit findings
for fiscal year 1993 show a surplus of approximately $3 million for the fiscal
year ended June 30, 1993.
In January 1994, the Mayor proposed a $2.3 billion city general fund budget
that included no tax increases, no significant service cuts and a series of
modest health and welfare program increases. At that time, the Mayor also un-
veiled a $2.2 billion program (the "Philadelphia Economic Stimulus Program")
designed to stimulate Philadelphia's economy and stop the loss of 1,000 jobs a
month. The unaudited preliminary General Fund balance as of June 30, 1994 es-
timates a surplus of approximately $15.4 million.
S&P's rating on Philadelphia's general obligation bonds is "BB." Moody's rat-
ing is currently "Baa."
Litigation. The Commonwealth is a party to numerous lawsuits in which an ad-
verse final decision could materially affect the Commonwealth's governmental
operations and consequently its ability to pay debt service on its obliga-
tions. The Commonwealth also faces tort claims made possible by the limited
waiver of sovereign immunity effected by Act 152, approved September 28, 1978.
Other Issuers of Pennsylvania Municipal Obligations. There are a number of
state agencies, instrumentalities and political subdivisions of the Common-
wealth that issue Municipal Obligations, some of which may be conduit revenue
obligations payable from payments from private borrowers. These entities are
subject to various economic risks and uncertainties, and the credit quality of
the securities issued by them may vary considerably from the credit quality of
obligations backed by the full faith and credit of the Commonwealth.
FACTORS PERTAINING TO VIRGINIA
As described above, except to the extent the Virginia Fund invests in tempo-
rary investments, the Virginia Fund will invest substantially all of its net
assets in Virginia Municipal Obligations. The Virginia Fund is therefore sus-
ceptible to political, economic or regulatory factors affecting issuers of
Virginia Municipal Obligations. Without intending to be complete, the follow-
ing briefly summarizes some of these difficulties and the current financial
situation, as well as some of the complex factors affecting the financial sit-
uation, in the Commonwealth of Virginia (the "Commonwealth" or
28
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"Virginia"). It is derived from sources that are generally available to invest-
ors and is based in part on information obtained from various agencies in Vir-
ginia. No independent verification has been made of the accuracy or complete-
ness of the following information.
There can be no assurance that current or future statewide or regional economic
difficulties, and the resulting impact on State or local governmental finances
generally, will not adversely affect the market value of Virginia Municipal Ob-
ligations held in the portfolio of the Virginia Fund or the ability of particu-
lar obligors to make timely payments of debt service on (or relating to) those
obligations.
The Commonwealth's financial condition is supported by a broad-based economy,
including manufacturing, tourism, agriculture, ports, mining and fisheries.
Manufacturing continues to be a major source of employment, ranking behind only
services, wholesale and retail trade, and government (federal, state and lo-
cal). The federal government is a major employer in Virginia due to the heavy
concentration of federal employees in the metropolitan Washington, D.C., seg-
ment of Northern Virginia and the military employment in the Hampton Roads ar-
ea, which houses the nation's largest concentration of military installations,
although civilian defense employment has been affected by the retrenchment of
the military sector and is likely to decrease further.
Although the Commonwealth enjoyed an economic boom in the mid-1980's, the Com-
monwealth's economy began to slow toward the end of the decade, and went into a
recession with the rest of the nation after July, 1990. Gradual recovery has
continued since the recession's end in March, 1991, with the Virginia economy
providing reason for restrained optimism in fiscal year 1994. Employment fig-
ures furnished more encouragement than did income data. The state unemployment
rates continued to be a bright spot, dropping to 4.9% for fiscal year 1994,
compared to 6.4% nationally. However, the possibility of more defense cutbacks
and additional plant downsizings provided two cautionary notes. Real taxable
sales have nearly reached the pre-recession level of fiscal year 1990.
The impact of national trends on the Commonwealth is clearly seen in personal
income figures. While year-to-year percentage changes in the Commonwealth per-
sonal income generally parallel those at the national level, the Commonwealth
figures were higher during the first half of the 1980's. The differential has
narrowed since 1988. In the first quarter of 1994, the most recent available,
Virginia's growth rate was 6.1% compared to 3.9% for the nation. While
Virginia's real per capita personal income surpassed the national figure in
1982 and has continued to exceed it, the relative differential has been narrow-
ing since 1989 and is now the smallest since 1985. Virginia's 1989 maximum was
106% of national per capita income while the 1993 figure was 104%. In compari-
son with the South Atlantic region, Virginia's real per capita income has de-
clined from a peak of 108% in 1989 to 106% in 1993.
Virginia's nonagricultural employment has also mirrored the national economy.
For fiscal year 1994 Virginia's nonagricultural employment rose 2.9%, compara-
ble to the pre-recession rate. Total nonagricultural employment for Virginia in
June 1994 was a record high. During the period 1983-1990, the Commonwealth sub-
stantially outpaced the nation in growth of nonagricultural employment, with
4.1% average annual growth compared to 2.8% nationally; however, the trend
lines for both have been
29
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nearly parallel since 1990. For the period 1985-1990, the Commonwealth went
ahead of the South Atlantic region, but was hit harder by the recession in
1990 and the defense adjustment. Since then, the region has outperformed the
Commonwealth.
With respect to unemployment, Virginia's unemployment rate has consistently
been below that of the nation. For the decade of 1980 to 1990, the differen-
tial has been two percentage points, although it decreased to below one per-
centage point in 1991 and 1992. For the first six months of fiscal year 1994,
the Commonwealth's unemployment rate was 4.9%, compared to the national rate
of 6.4%.
Employment trends in Virginia have varied from sector to sector and from re-
gion to region. Most sectors showed dramatic improvement compared to the ane-
mic performance in fiscal year 1993. Employment grew in seven of ten catego-
ries. This past fiscal year's growth was led by a 5.4% employment jump in the
construction sector and 5.3% in services. Federal civilian employment slipped
3%, the result of continued defense cutbacks and an effort to downsize. Once
again, the greatest percentage loss was in mining, which suffered a 7.7% drop,
a 40% greater loss than the previous year. The service sector continued to
grow and mining and manufacturing are now at lower levels than in 1980. Em-
ployment trends also varied among regions. All of the Commonwealth's metropol-
itan statistical areas showed increased employment from fiscal year 1993 to
fiscal year 1994, ranging from 1.1% to 4.3%, with most employment increases
being experienced in metropolitan areas.
Highest rates of unemployment were found in southwest Virginia where mining
jobs have been lost and the lowest unemployment rates were seen in Northern
Virginia where much federally related employment is concentrated. As would be
expected, there was great overlap between areas of lowest unemployment and
those of highest per capita income.
Virginia appears to have fully participated in the national economic recovery,
which has been slow by historic standards. The state has not yet returned to
pre-recession growth rates for several measures, particularly real per capita
personal income. The next round of defense cutbacks and the uncertain duration
of the economic recovery are continuing sources of concern. A growing diversi-
fication of the state's export base is encouraging for the long-term but will
not insulate the state from vulnerability to increased competition against its
major products and to economic conditions abroad.
The Commonwealth of Virginia has historically operated on a fiscally conserva-
tive basis and is required by its Constitution to have a balanced biennial
budget. At the end of the June 30, 1994 fiscal year, the General Fund had an
ending fund balance, computed on a budgetary cash basis, of $518.7 million, of
which $81 million was in required reserves. $430.1 million of the general fund
balance was designated for expenditure during the next fiscal year, leaving an
undesignated, unreserved fund balance of $7.6 million, the third consecutive
such undesignated fund balance. Computed on a modified accrual basis in accor-
dance with generally accepted accounting principles, the General Fund balance
at the end of the fiscal year ended June 30, 1994, was $185.3 million, com-
pared with a General Fund balance of $78.8 million at the end of the fiscal
year ended June 30, 1993. This is the second consecutive year that the General
Fund, measured on a modified accrual basis, has shown a positive fund balance.
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As of June 30, 1994, total debt of the Commonwealth aggregated $8.4 billion. Of
that amount, $2.5 billion was tax-supported. Outstanding general obligation
debt backed by the full faith and credit of the Commonwealth was $792 million
at June 30, 1994. Of that amount, $500 million was also secured by revenue pro-
ducing capital projects.
The Virginia Constitution contains limits on the amount of general obligation
bonds which the Commonwealth can issue. These limits are substantially in ex-
cess of current levels of outstanding bonds, and at June 30, 1994 would permit
an additional total of approximately $5.6 billion of bonds secured by revenue-
producing projects and approximately $5.8 billion of unsecured general obliga-
tion bonds for capital projects, with not more than approximately $921 million
of the latter to be issued in any four-year period. Bonds which are not secured
by revenue-producing projects must be approved in a state-wide election.
The Commonwealth of Virginia maintains a "AAA" bond rating from Standard &
Poor's Corporation, Moody's Investors Service and Fitch Investors Service on
its general obligation indebtedness, reflecting in part its sound fiscal man-
agement, diversified economic base and low debt ratios. There can be no assur-
ances that these conditions will continue. Nor are these same conditions neces-
sarily applicable to securities which are not general obligations of the Com-
monwealth. Securities issued by specific municipalities, governmental authori-
ties or similar issuers may be subject to economic risks or uncertainties pecu-
liar to the issuers of such securities or the sources from which they are to be
paid, and the credit quality of the securities issued by them may vary consid-
erably from the credit quality of obligations backed by the full faith and
credit of the Commonwealth.
CONSIDERATIONS RELATING TO FINANCIAL FUTURES AND OPTION CONTRACTS
As described in the Prospectus, each of the Funds may purchase and sell finan-
cial futures contracts, options on financial futures or related options for the
purpose of hedging its portfolio securities against declines in the value of
such securities, and to hedge against increases in the cost of securities the
Fund intends to purchase. To accomplish such hedging, a Fund may take an in-
vestment position in a futures contract or in an option which is expected to
move in the opposite direction from the position being hedged. Futures or op-
tions utilized for hedging purposes would either be based on an index of long-
term Municipal Obligations (i.e., those with remaining maturities averaging 20-
30 years) or relate to debt securities whose prices are anticipated by Nuveen
Advisory to correlate with the prices of the Municipal Obligations owned by a
Fund. The sale of financial futures or the purchase of put options on financial
futures or on debt securities or indexes is a means of hedging against the risk
that the value of securities owned by a Fund may decline on account of an in-
crease in interest rates, and the purchase of financial futures or of call op-
tions on financial futures or on debt securities or indexes is a means of hedg-
ing against increases in the cost of the securities a Fund intends to purchase
as a result of a decline in interest rates. Writing a call option on a futures
contract or on debt securities or indexes may serve as a hedge against a modest
decline in prices of Municipal Obligations held in a Fund's portfolio, and
writing a put option on a futures contract or on debt securities or indexes may
serve as a partial hedge against an increase in the value of Municipal Obliga-
tions a Fund intends to acquire. The writing of such options provides a hedge
to the extent of the premium received in the writing transaction. Regulations
of the Commodity Futures Trading Commission ("CFTC") applicable
31
<PAGE>
to the Funds require that transactions in futures and options on futures be en-
gaged in only for bona-fide hedging purposes, and that no such transactions may
be entered into by a Fund if the aggregate initial margin deposits and premiums
paid by that Fund exceeds 5% of the market value of the Fund's assets. A Fund
will not purchase futures unless it has segregated cash, government securities
or high grade liquid debt equal to the contract price of the futures less any
margin on deposit, or unless the long futures position is covered by the sale
of a put option. A Fund will not sell futures unless the Fund owns the instru-
ments 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 requirement that less than 30% of its gross income
may be derived from the sale or disposition of securities held for less than
three months. With respect to its engaging in transactions involving the pur-
chase or writing of put and call options on debt securities or indexes, a Fund
will not purchase such options if more than 5% of its assets would be invested
in the premiums for such options, and it will only write "covered" or "secured"
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 limitations may limit a Fund's ability to engage in
hedging transactions.
Description of Financial Futures and Options. A futures contract is a contract
between a seller and a buyer for the sale and purchase of specified property at
a specified future date for a specified price. An option is a contract that
gives the holder of the option the right, but not the obligation, to buy (in
the case of a call option) specified property from, or to sell (in the case of
a put option) specified property to, the writer of the option for a specified
price during a specified period prior to the option's expiration. Financial
futures contracts and options cover specified debt securities (such as U.S.
Treasury securities) or indexes designed to correlate with price movements in
certain categories of debt securities. At least one exchange trades futures
contracts on an index designed to correlate with the long-term municipal bond
market. Financial futures contracts and options on financial futures contracts
are traded on exchanges regulated by the CFTC. Options on certain financial in-
struments and financial indexes are traded in securities markets regulated by
the Securities and Exchange Commission. Although futures contracts and options
on specified financial instruments call for settlement by delivery of the fi-
nancial instruments covered by the contracts, in most cases positions in these
contracts are closed out in cash by entering into offsetting, liquidating or
closing transactions. Index futures and options are designed for cash settle-
ment only.
Risks of Futures and Options Transactions. There are risks associated with the
use of futures contracts and options for hedging purposes. Investment in
futures contracts and options involves the risk of imperfect correlation be-
tween movements in the price of the futures contract and options and the price
of the security being hedged. The hedge will not be fully effective where there
is imperfect correlation between the movements in the two financial instru-
ments. For example, if the price of the futures contract moves more than the
price of the hedged security, a Fund will experience either a loss or gain on
the future which is not completely offset by movements in the price of the
hedged securities. Further, even where perfect correlation between the price
movements does occur, a Fund will sustain a loss at least equal to the commis-
sions on the financial futures transaction. To compensate for imperfect correc-
tions, the Funds may purchase or sell futures contracts in a greater dollar
amount than the hedged securities if the volatility of the hedged securities is
historically greater than the volatility of
32
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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 po-
sition, futures transactions involve substantial leverage. As a result, rela-
tively small movements in the price of the futures contract can result in sub-
stantial unrealized gains or losses. Because the Funds will engage in the pur-
chase and sale of financial futures contracts solely for hedging purposes,
however, any losses incurred in connection therewith should, if the hedging
strategy is successful, be offset in whole or in part by increases in the
value of securities held by the Funds or decreases in the price of securities
the Funds intend to acquire.
The Funds expect to liquidate a majority of the financial futures contracts
they enter into through offsetting transactions on the applicable contract
market. There can be no assurance, however, that a liquid secondary market
will exist for any particular futures contract at any specific time. Thus, it
may not be possible to close a futures position. In the event of adverse price
movements, the Funds would continue to be required to make daily cash payments
of variation margin. In such situations, if a Fund has sufficient cash, it may
be required to sell portfolio securities to meet daily variation margin re-
quirements at a time when it may be disadvantageous to do so. The inability to
close out futures positions also could have an adverse impact on a Fund's
ability to hedge its portfolio effectively and may expose the Fund to risk of
loss. The Funds will enter into a futures position only if, in the judgment of
Nuveen Advisory, there appears to be an actively traded secondary market for
such futures contracts.
The liquidity of a secondary market in a futures contract may be adversely af-
fected by "daily price fluctuation limits" established by commodity exchanges
which limit the amount of fluctuation in a futures contract price during a
single trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing the
liquidation of open futures positions. Prices have in the past moved the daily
limit on a number of consecutive trading days.
The successful use of transactions in futures also depends on the ability of
Nuveen Advisory to forecast the direction and extent of interest rate move-
ments within a given time frame. To the extent these prices remain stable dur-
ing the period in which a futures contract is held by a Fund or moves in a di-
rection opposite to that anticipated, the Fund may realize a loss on the hedg-
ing transaction which is not fully or partially offset by an increase in the
value of portfolio securities. As a result, the Fund's total return for such
period may be less than if it had not engaged in the hedging transaction.
The ability of each of the Funds to engage in transactions in futures con-
tracts may be limited by the tax requirement that it have less than 30% of its
gross income derived from the sale or other disposition of stock or securities
held for less than three months. Gain from transactions in futures contracts
will be taxable to 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
33
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Fund's assets except when made for defensive purposes. The Funds will invest
only in taxable temporary investments that are either U.S. Government securi-
ties 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 in-
terest.
The Funds may invest in the following federally tax-exempt temporary invest-
ments:
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. Tax anticipation notes are usually
general obligations of the issuer. A weakness in an issuer's capacity to raise
taxes due to, among other things, a decline in its tax base or a rise in delin-
quencies, could adversely affect the issuer's ability to meet its obligations
on outstanding TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general obliga-
tions of the issuer. A decline in the receipt of projected revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal and in-
terest on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local government bodies and agencies as those
described above to commercial banks as evidence of borrowings. The purposes for
which the notes are issued are varied but they are frequently issued to meet
short-term working capital or capital-project needs. These notes may have risks
similar to the risks associated with TANs and RANs.
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.
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The Funds may also invest in the following taxable temporary investments:
U.S. Government Direct Obligations are issued by the United States Treasury and
include bills, notes and bonds.
-- Treasury bills are issued with maturities of up to one year. They are issued
in bearer form, are sold on a discount basis and are payable at par value at
maturity.
-- Treasury notes are longer-term interest bearing obligations with original
maturities of one to seven years.
-- Treasury bonds are longer-term interest-bearing obligations with original
maturities from five to thirty years.
U.S. Government Agencies Securities--Certain federal agencies have been estab-
lished as instrumentalities of the United States Government to supervise and
finance certain types of activities. These agencies include, but are not lim-
ited to, the Bank for Cooperatives, Federal Land Banks, Federal Intermediate
Credit Banks, Federal Home Loan Banks, Federal National Mortgage Association,
Government National Mortgage Association, Export-Import Bank of the United
States, and Tennessee Valley Authority. Issues of these agencies, while not di-
rect obligations of the United States Government, are either backed by the full
faith and credit of the United States or are guaranteed by the Treasury or sup-
ported by the issuing agencies' right to borrow from the Treasury. There can be
no assurance that the United States Government itself will pay interest and
principal on securities as to which it is not legally so obligated.
Certificates of Deposit (CDs)--A certificate of deposit is a negotiable inter-
est bearing instrument with a specific maturity. CDs are issued by banks in ex-
change for the deposit of funds and normally can be traded in the secondary
market, prior to maturity. The Funds will only invest in U.S. dollar denomi-
nated CDs issued by U.S. banks with assets of $1 billion or more.
Commercial Paper--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations. Maturities on these issues
vary from a few days to nine months. Commercial paper may be purchased from
U.S. corporations.
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
35
<PAGE>
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 in-
terest. 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 col-
lateral. In addition, if bankruptcy proceedings are commenced with respect to
the seller of the security, realization upon the collateral by the Funds may
be delayed or limited. Nuveen Advisory will monitor the value of collateral at
the time the transaction is entered into and at all times subsequent during
the term of the repurchase agreement in an effort to determine that the value
always equals or exceeds the agreed upon price. In the event the value of the
collateral declined below the repurchase price, Nuveen Advisory will demand
additional collateral from the issuer to increase the value of the collateral
to at least that of the repurchase price. A Fund will not invest more than 10%
of its assets in repurchase agreements maturing in more than seven days.
RATINGS OF INVESTMENTS
The four highest ratings of Moody's for Municipal Obligations are "Aaa," "Aa,"
"A" and "Baa." Municipal Obligations rated "Aaa" are judged to be of the "best
quality." 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 elements make long-term risks appear somewhat larger than in "Aaa" rated
Municipal Obligations. The "Aaa" and "Aa" rated Municipal Obligations comprise
what are generally known as "high grade bonds." Municipal Obligations that are
rated "A" by Moody's possess many favorable investment attributes and are con-
sidered 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 me-
dium grade obligations (i.e., they are neither highly protected nor poorly se-
cured). Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well. Moody's bond rating symbols may con-
tain numerical modifiers of a generic rating classification. The modifier 1
indicates that the bond ranks at the high end of its category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue
ranks in the lower end of its general rating category.
The four highest ratings of S&P for Municipal Obligations are "AAA," "AA," "A"
and "BBB." Municipal Obligations rated "AAA" have a strong capacity to pay
principal and interest. The rating of "AA" indicates that capacity to pay
principal and interest is very strong and such bonds differ from "AAA" issues
only in small degree. The category of "A" describes bonds which have a strong
capacity to pay principal and interest, although such bonds are somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions. The "BBB" rating is the lowest "investment grade" security rating
by S&P. Municipal Obligations rated "BBB" are regarded as having an adequate
capacity to pay principal and interest. Whereas such bonds normally exhibit
adequate 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
36
<PAGE>
rated "AAA" by S&P have an extremely strong capacity to pay principal and in-
terest. The Moody's corporate debt rating of "Aaa" is comparable to that set
forth above for Municipal Obligations.
Subsequent to its purchase by a Fund, an issue may cease to be rated or its
rating may be reduced below the minimum required for purchase by such Fund.
Neither event requires the elimination of such obligation from the Fund's port-
folio, but Nuveen Advisory will consider such an event in its determination of
whether the Fund should continue to hold such obligation.
MANAGEMENT
The management of the Trust, including general supervision of the duties per-
formed for the Funds under the Investment Management Agreement, is the respon-
sibility of its Board of Trustees. There are seven trustees of the Trust, two
of whom are "interested persons" (as the term "interested persons" is defined
in the Investment Company Act of 1940) and five of whom are "disinterested per-
sons." The names and business addresses of the trustees and officers of the
Trust and their principal occupations and other affiliations during the past
five years are set forth below, with those trustees who are "interested per-
sons" of the Trust indicated by an asterisk.
<TABLE>
--------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE TRUST DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard J. Franke* 63 Chairman of the Chairman of the Board, Director and for-
333 West Wacker Board and merly President of John Nuveen & Co. Incor-
Drive Trustee porated; Chairman of the Board and Direc-
Chicago, IL 60606 tor, formerly President, of Nuveen Advisory
Corp.; Chairman of the Board and Director
of Nuveen Institutional Advisory Corp.
(since April 1990); Certified Financial
Planner.
--------------------------------------------------------------------------------------
Timothy R. 46 President and Executive Vice President and Director of
Schwertfeger* Trustee The John Nuveen Company (since March 1992)
333 West Wacker and John Nuveen & Co. Incorporated; Direc-
Drive tor of Nuveen Advisory Corp. (since 1992)
Chicago, IL 60606 and Nuveen Institutional Advisory Corp.
(since 1992).
--------------------------------------------------------------------------------------
Lawrence H. Brown 60 Trustee Retired (August 1989) as Senior Vice Presi-
201 Michigan Avenue dent of The Northern Trust Company.
Highwood, IL 60040
--------------------------------------------------------------------------------------
Anne E. Impellizzeri 62 Trustee President and Chief Executive Officer of
3 West 29th Street Blanton-Peale, Institutes of Religion and
New York, NY 10001 Health (since December 1990); prior there-
to, Vice President of New York City Part-
nership (from 1987 to 1990).
--------------------------------------------------------------------------------------
John E. O'Toole 66 Trustee Retired (January 1994) as President of the
666 Third Avenue American Association of Advertising Agen-
New York, NY 10017 cies, Inc.; retired (December 1985) as
Chairman of the Board of Foote, Cone &
Belding Communications, Inc.
</TABLE>
--------------------------------------------------------------------------------
37
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE TRUST DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Margaret K. Rosen- 68 Trustee 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 61 Trustee Adjunct Professor of Business and Econom-
22 The Landmark ics, University of Dubuque, Iowa (since
Northfield, IL 60093 January 1991); Adjunct Professor, Lake For-
est Graduate School of Management, Lake
Forest, Illinois (since January 1992);
prior thereto, Executive Director, Towers
Perrin Australia (management consultant);
Chartered Financial Analyst; Certified Man-
agement Consultant.
--------------------------------------------------------------------------------------
Kathleen M. Flanagan 47 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
--------------------------------------------------------------------------------------
J. Thomas Futrell 39 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker (since February 1991); prior thereto, As-
Drive sistant Vice President of Nuveen Advisory
Chicago, IL 60606 Corp. (from August 1988 to February 1991);
Chartered Financial Analyst.
--------------------------------------------------------------------------------------
Steven J. Krupa 37 Vice President Vice President of Nuveen Advisory Corp.
333 West Wacker (since October 1990); prior thereto, Vice
Drive President of John Nuveen & Co. Incorporated
Chicago, IL 60606 (from January 1989 to October 1990).
--------------------------------------------------------------------------------------
Anna R. Kucinskis 49 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
--------------------------------------------------------------------------------------
Larry W. Martin 43 Vice President Vice President (since September 1992), As-
333 West Wacker and Assistant sistant Secretary and Assistant General
Drive Secretary Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.; Assis-
tant Secretary of The John Nuveen Company
(since February 1993).
--------------------------------------------------------------------------------------
O. Walter Renfftlen 55 Vice President Vice President and Controller of The John
333 West Wacker and Controller Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp. (since April 1990).
--------------------------------------------------------------------------------------
Thomas C. Spalding, 43 Vice President Vice President of Nuveen Advisory Corp. and
Jr. Nuveen Institutional Advisory Corp. (since
333 West Wacker April 1990); Chartered Financial Analyst.
Drive
Chicago, IL 60606
--------------------------------------------------------------------------------------
H. William Stabenow 60 Vice President Vice President and Treasurer of The John
333 West Wacker and Treasurer Nuveen Company (since March 1992), John
Drive Nuveen & Co. Incorporated, Nuveen Advisory
Chicago, IL 60606 Corp. and Nuveen Institutional Advisory
Corp, (since January 1992).
</TABLE>
--------------------------------------------------------------------------------
38
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------
<CAPTION>
POSITIONS AND
OFFICES WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE TRUST DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
George P. Thermos 63 Vice President Vice President of John Nuveen & Co. Incor-
333 West Wacker porated.
Drive
Chicago, IL 60606
--------------------------------------------------------------------------------------
James J. Wesolowski 44 Vice President Vice President, General Counsel and Secre-
333 West Wacker and Secretary tary of The John Nuveen Company (since
Drive March 1992), John Nuveen & Co. Incorporat-
Chicago, IL 60606 ed, Nuveen Advisory Corp. and Nuveen Insti-
tutional Advisory Corp. (since April 1990).
--------------------------------------------------------------------------------------
Gifford R. Zimmerman 38 Vice President Vice President (since September 1992), As-
333 West Wacker and Assistant sistant Secretary and Assistant General
Drive Secretary Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since May 1993) and Assis-
tant Secretary of Nuveen Advisory Corp.;
Vice President (since May 1993) and Assis-
tant Secretary (since January 1992) of
Nuveen Institutional Advisory Corp.
--------------------------------------------------------------------------------
</TABLE>
Richard J. Franke, Timothy R. Schwertfeger and Margaret K. Rosenheim serve as
members of the Executive Committee of the Board of Trustees. The Executive Com-
mittee, which meets between regular meetings of the Board of Trustees, is au-
thorized to exercise all of the powers of the Board of Trustees.
The trustees of the Trust are also directors or trustees, as the case may be,
of 14 other Nuveen open-end fund portfolios and 55 Nuveen closed-end funds.
The following table sets forth compensation paid by the Trust during the fiscal
year ended January 31, 1995 to each of the trustees of the Trust. The Trust has
no retirement or pension plans. The officers and trustees affiliated with
Nuveen serve without any compensation from the Trust.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM TRUST
COMPENSATION AND FUND COMPLEX
NAME OF TRUSTEE FROM THE TRUST PAID TO TRUSTEES
--------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke............................. $ 0 $ 0
Timothy R. Schwertfeger....................... 0 0
Lawrence H. Brown............................. 1,607 56,500
Anne E. Impellizzeri.......................... 1,226 48,750
John O'Toole.................................. 1,607 56,000
Margaret K. Rosenheim......................... 1,753(1) 64,404(2)
Peter R. Sawers............................... 1,607 56,000
</TABLE>
--------
(1) Includes $270 in interest earned on deferred compensation from prior years.
(2) Includes $1,404 in interest earned on deferred compensation from prior
years.
39
<PAGE>
Each trustee 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 Trust requires no employees other than its officers, all of whom are com-
pensated by Nuveen.
The following table sets forth the percentage ownership of each person who owns
of record or is known by the Registrant to own of record or beneficially 5% or
more of any class of each Fund's shares of the Trust.
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
--------------------------------------------------------------------------------
<S> <C> <C>
Arizona Fund
Class A Shares......... Prudential Securities FBO 10.52
Mrs. Edrey J. Hagerstrom
18626 Spanish Garden Drive
Madison 320
Sun City West, AZ 85375-1149
William C. Phillips & 7.02
Andrea F. Phillips
JT TEN WROS NOT TC
3610 N 40th Pl.
Phoenix, AZ 85018-5926
Gilbert P. & Gladys Tarleton & 5.70
Serena T. Astlett TR
US JAN 12 95
Gilbert & Gladys Tarleton Trust
393 E Los Rincones
Green Valley, AZ 85614-2908
Edna S. Gullett TR 5.54
UA SEP 22 80
Edna S. Gullett Trust
18170 N 91st Ave., Apt. 2284
Peoria, AZ 85382-0876
Smith Barney, Inc. 5.50
00153921936
388 Greenwich Street
New York, NY 10013
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
-----------------------------------------------------------------------------
<S> <C> <C>
Arizona Fund
Class C Shares....... Evans Robert Woodhouse & 53.19
Elizabeth Woodhouse
JT TEN WROS NOT TC
3138 N 17th Dr.
Phoenix, AZ 85015-5807
W. John Copeland 22.23
8560 E Lariat Ln.
Scottsdale, AZ 85255-1453
Ronald R. Nelson & 12.03
Patricia J. Nelson
JT TEN WROS NOT TC
4236 W Ironwood Dr.
Phoenix, AZ 85051-1051
NFSC FEBO # X34-073326 6.69
McKernan Family Trust
Paul D. McKernan TTEE
6241 W Lone Cactus Dr.
Glendale, AZ 85308
James A. Dumek & 5.38
Tina L. Dumek
JT TEN WROS NOT TC
3117 N Ellis St.
Chandler, AZ 85224-1048
Arizona Fund
Class R Shares....... Merrill Lynch Pierce Fenner & 7.73
Smith Inc. 979D4
Attn: Book Entry Dept.
4800 Deer Lake Dr. E Fl 3
Jacksonville, FL 32246-6484
Florida Fund
Class A Shares....... Merrill Lynch Pierce Fenner & 13.31
Smith Inc. 97E80
Attn: Book Entry Dept.
4800 Deer Lake Dr. E Fl 3
Jacksonville, FL 32246-6484
William R. Spear 7.94
1211 Gasparilla Dr.
Fort Myers, FL 33901-7709
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
-------------------------------------------------------------------------------
<S> <C> <C>
Florida Fund
Class C Shares ........ Robert J. Hart & 60.25
Monica Hart TR
UA MAR 23 83
Robert J. Hart Trust
251 Algiers Ave.
Fort Lauderdale, FL 33308-
4434
PaineWebber For The Benefit Of 21.97
Clarence W. Hebert
11 Hunthurst Circle
Worcester, MA 01602-2830
PaineWebber For The Benefit Of 10.82
Mary Rogers
3070 Wedgewood Blvd.
Delray Beach, FL 33445-5748
Maryland Fund
Class A Shares........ Merrill Lynch Pierce Fenner & 9.64
Smith Inc. 97E83
Attn: Book Entry Dept.
4800 Deer Lake Dr. E F1 3
Jacksonville, FL 32246-6484
Eleanor J. Hockham 7.82
P.O. Box 98
Morganza, MD 20660-0098
Maryland Fund
Class C Shares........ Victor L. Crawford & 24.18
Linda P. Crawford
TEN ENT
7601 Connecticut Ave.
Chevy Chase, MD 20815-4923
Joyce Dubow 11.38
9 Sedgwick Ln.
Rockville, MD 20852-3636
Murray Fisher & 6.61
Lee Fisher
JT TEN WROS NOT TC
12702 Eldrid Pl.
Silver Spring, MD 20904-3513
Naomi H. Brosey & 6.19
Bonnie K. Adkins
JT TEN WROS NOT TC
1326 Mt. Hermon Rd.
Salisbury, MD 21801-5220
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
-----------------------------------------------------------------------------
<S> <C> <C>
Myron V. Wotring & 6.11
Letty M. Wotring
JT TEN WROS NOT TC
921 Topmast Way
Annapolis, MD 21401-6849
Charlotte A. Ellis 6.01
112 Montleau Ave.
Salisbury, MD 21801-4534
Frances Caruso 5.37
5306 Cedar Ln.
Columbia, MD 21044-1200
Maryland Fund 6.55
Class R Shares....... Merrill Lynch Pierce Fenner &
Smith Inc. 979D5
Attn: Book Entry Dept.
4800 Deer Lake Dr. E Fl 3
Jacksonville, FL 32246-6484
Michigan Fund
Class A Shares....... OLDE Discount Corp. 13.85
751 Griswold St.
Detroit, MI 48226-3224
Maurice C. Higgins TR 10.42
UA APR 21 93
Maurice C. Higgins Revocable
Living Trust
1689 Lakeside Dr.
Harbor Beach, MI 48441-8963
Gwenola B. Reppen TR 7.69
UA JUN 27 89
Gwenola B. Reppen Trust
15809 Sussex St.
Detroit, MI 48227-2660
Cecil E. Coedy TR 6.15
UA SEP 19 88
Cecil E. Coedy Trust
15101 Ford Rd Pt 505
Dearborn, MI 48126-4641
Michigan Fund
Class C Shares....... Mildred T. Barkalow 33.91
7171 Camino Del Ray
Rockford, MI 49341
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Mary L. Evans & 25.42
Leamon Evans &
Noah Shumpert
JT TEN WROS NOT TC
1163 Peachtree Dr.
Mount Morris, MI 48458-2833
Nicholas & Melody Liscomb TR 25.17
UA JUN 13 91
Liscomb Family Living Trust
434 W Westwood Dr.
Adrian, MI 49221-1349
Janet B. Wagner CUST 6.77
FBO Kathleen A. Wagner
UNIF GIFT MIN ACT MI
11541 Jenny Dr.
Warren, MI 48093-1164
Janet B. Wagner CUST 6.77
FBO Jennifer L. Wagner
UNIF GIFT MIN ACT MI
11541 Jenny Dr.
Warren, MI 48093-1164
New Jersey Fund
Class A Shares......... Aurora Steig 7.20
73 Monterey Cir.
Lakewood, NJ 08701-3066
Marie L. Sirio 6.34
1058 Anderson Ave
Fort Lee, NJ 07024-4224
Thelma J. Davenport 5.04
126 N 19th St.
Kenilworth, NJ 07033-1241
New Jersey Fund
Class C Shares......... Alvin H. Frankel Agent for 32.13
Louise I. Grill
U/POA DTD JUN 17 94
601 Haddon Ave.
Collingswood, NJ 08108-3703
Donaldson Lufkin Jenrette 21.75
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
NFSC FEBO # A7D-004987 15.38
Doris Sicora
103 W. Spray Way
Lavallette, NJ 08735
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
-------------------------------------------------------------------------------
<S> <C> <C>
Norma D. Mayers 8.53
226 Ridge Rd.
Watchung, NJ 07060-5420
Marketing One Securities, Inc. 7.54
FBO 147030031
851 Southwest 6th Avenue
Portland, OR 97204-1346
Marco A. Scardina 5.29
Silver Ridge Park
18 Edgewater Dr.
Toms River, NJ 08757-5654
Pennsylvania Fund
Class A Shares......... Dorothy M. Cossitor & 8.03
Peter P. Cossitor
JT TEN WROS NOT TC
209 Brewer Ave.
Patton, PA 16665-1701
Pennsylvania Fund
Class C Shares......... Thomas O. Pizor 14.21
211 Meridian Rd.
Butler, PA 16001-2823
Anne M. Ricchuito 9.88
2295 Salem Dr.
Pittsburgh, PA 15237-1556
Richard R. Blough 8.75
9111 Marshall Rd.
Cranberry Twp, PA 16066-3611
Denise M. Drudy 6.21
203 W Main St.
Mountville, PA 17554-1903
James E. Alexander 5.99
633 Rock Springs Rd.
Pittsburgh, PA 15228-2634
Joanne D. Young 5.83
6024 Claridge Rd.
Export, PA 15632-8916
Richard J. Hajnosz 5.83
6026 Claridge Rd.
Export, PA 15632-8916
Richard K. Small & 5.19
Marilyn G. Small
JT TEN WROS NOT TC
11370 N Garfield Street Ext
Waynesboro, PA 17268-9659
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER PERCENTAGE OF OWNERSHIP
--------------------------------------------------------------------------------
<S> <C> <C>
Virginia Fund
Class C Shares......... Robert D. Bohn & 16.65
Anne M. Bohn
JT TEN WROS NOT TC
107 Gresham Pl.
Falls Church, VA 22046-3440
Gladys H. Swift TR 12.30
UA AUG 21 84
Gladys H. Shift Revocable Trust
1311 Branchlands Dr.
Charlottesville, VA 22901-1753
Raymond James & Assoc Inc. 12.20
For Margin Acct. #84291379
FAO Andrew W. Stephenson
4050 41st St. N.
McLean, VA 22101-5805
NFSC FEBO # A1F-435902 10.99
Richard U. Cogswell
350 S Vandorn St., Apt. Q 216
Alexandria, VA 22304
John T. E. Cribb, Jr. & 7.18
Kirsten Brandt Cribb
JT TEN WROS NOT TC
712 N Oakland St.
Arlington, VA 22203-2223
James W. Gunn & 5.92
Roberta M. Gunn
JT TEN WROS NOT TC
8834 Camfield Dr.
Alexandria, VA 22308-2816
Virginia Fund
Class R Shares......... Merrill Lynch Pierce Fenner & 7.00
Smith Inc. 979D8
Attn: Book Entry Dept.
4800 Deer Lake Dr. E Fl 3
Jacksonville, FL 32246-6484
</TABLE>
46
<PAGE>
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 the Trust's business affairs, provides office facilities and equip-
ment and certain clerical, bookkeeping and administrative services, and permits
any of its officers or employees to serve without compensation as trustees or
officers of the Trust if elected to such positions. See "Management of the
Funds" in the Prospectus.
Pursuant to an investment management agreement between Nuveen Advisory and the
Trust, each Fund has agreed to pay an annual management fee at the rates set
forth below:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
------------------------------------------------
<S> <C>
For the first $125 million .5500 of 1%
For the next $125 million .5375 of 1%
For the next $250 million .5250 of 1%
For the next $500 million .5125 of 1%
For the next $1 billion .5000 of 1%
On assets of $2 billion and over .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 .75 of 1% of the aver-
age daily net asset value of any class of shares of each Fund for the fiscal
year ended January 31, 1995, Nuveen Advisory agreed to waive all or a portion
of its management fees or reimburse certain expenses of each Fund. For the last
three fiscal years, the Funds paid net management fees to Nuveen Advisory as
follows:
<TABLE>
<CAPTION>
NET MANAGEMENT FEES FEE WAIVERS AND
PAID TO NUVEEN ADVISORY FOR EXPENSE REIMBURSEMENTS FOR
THE YEAR ENDED JANUARY 31, THE YEAR ENDED JANUARY 31,
---------------------------- --------------------------
1993* 1994 1995 1993* 1994 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Arizona Fund........... $ 0 $ 5,394 $ 37,557 $ 51,167 $ 60,783 $ 51,152
Florida Fund........... 7,221 143,759 226,883 57,090 50,646 44,113
Maryland Fund.......... 48,063 172,693 189,022 47,696 42,288 65,460
Michigan Fund.......... 0 46,875 86,293 73,551 63,717 58,458
New Jersey Fund........ 0 85,065 156,717 58,296 61,303 54,105
Pennsylvania Fund...... 5,319 132,557 191,299 62,826 67,989 83,798
Virginia Fund.......... 82,352 214,913 261,196 52,251 42,776 40,815
Total for all Funds.... 142,955 801,256 1,148,967 402,877 389,502 397,901
</TABLE>
--------
*Reflects amounts in respect of the period from February 28, 1992 (commencement
of operations) through January 31, 1993.
Nuveen Advisory has agreed to continue its fee waivers and expense reimburse-
ments through July 31, 1995, and it is anticipated that Nuveen Advisory will
continue its fee waivers and expense reimbursements for some length of time
thereafter. As discussed in the Prospectus, in addition to the management fee
of Nuveen Advisory, each Fund pays all other costs and expenses of its opera-
tions and a
47
<PAGE>
portion of the Trust's general administrative expenses allocated in proportion
to the net assets of each Fund.
Nuveen Advisory is a wholly owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"), the Funds' principal underwriter. Founded in 1898, Nuveen is the
oldest and largest investment banking firm specializing in the underwriting
and distribution of tax-exempt securities and maintains the largest research
department in the investment banking community devoted exclusively to the
analysis of municipal securities. In 1961, Nuveen began sponsoring the Nuveen
Tax-Exempt Unit Trust and since that time has issued more than $34 billion in
tax-exempt unit trusts, including over $12 billion in tax-exempt insured unit
trusts. In addition, Nuveen open-end and closed-end funds held approximately
$30 billion in tax-exempt securities under management as of the date of this
Statement. Over 1,000,000 individuals have invested to date in Nuveen's tax-
exempt funds and trusts. Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 75% owned by The St. Paul Companies, Inc.
("St Paul"). St. Paul is located in St. Paul, Minnesota and is principally en-
gaged in providing property-liability insurance through subsidiaries.
Nuveen Advisory's portfolio managers call upon the resources of Nuveen's Re-
search Department, the largest in the investment banking industry devoted ex-
clusively to tax-exempt securities. Nuveen's Research Department was selected
in 1994 by Research & Ratings Review, a municipal industry publication, as one
of the top four research teams in the municipal industry, based on an exten-
sive industry-wide poll of more than 1,000 portfolio managers, department
heads and bond buyers. The Nuveen Research Department reviews more than $100
billion in tax-exempt bonds every year.
The Funds, the other Nuveen funds, the Adviser, and other related entities
have adopted a code of ethics which essentially prohibits all Nuveen fund man-
agement personnel, including Nuveen fund portfolio managers, from engaging in
personal investments which compete or interfere with, or attempt to take ad-
vantage of, a Fund's anticipated or actual portfolio transactions, and is de-
signed to assure that the interests of Fund shareholders are placed before the
interests of Nuveen personnel in connection with personal investment transac-
tions.
PORTFOLIO TRANSACTIONS
Nuveen Advisory, in effecting purchases and sales of portfolio securities for
the account of each Fund, will place orders in such manner as, in the opinion
of management, will offer the best price and market for the execution of each
transaction. Portfolio securities will normally be purchased directly from an
underwriter or in the over-the-counter market from the principal dealers in
such securities, unless it appears that a better price or execution may be ob-
tained elsewhere. Portfolio securities will not be purchased from Nuveen or
its affiliates except in compliance with the Investment Company Act of 1940.
The Funds expect that all portfolio transactions will be effected on a princi-
pal (as opposed to an agency) basis and, accordingly, do not expect to pay any
brokerage commissions. Purchases from underwriters will include a commission
or concession paid by the issuer to the underwriter, and purchases
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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 dealers which, in addition, furnish research information (primarily
credit analyses of issuers and general economic reports) and statistical and
other services to Nuveen Advisory. It is not possible to place a dollar value
on information and statistical and other services received from dealers. Since
it is only supplementary to Nuveen Advisory's own research efforts, the receipt
of research information is not expected to reduce significantly Nuveen
Advisory's expenses. While Nuveen Advisory will be primarily responsible for
the placement of the business of the Funds, the policies and practices of
Nuveen Advisory in this regard must be consistent with the foregoing and will,
at all times, be subject to review by the Board of Trustees.
Nuveen Advisory reserves the right to, and does, manage other investment ac-
counts and investment companies for other clients, which may have investment
objectives similar to the Funds. Subject to applicable laws and regulations,
Nuveen Advisory will attempt to allocate equitably portfolio transactions among
the Funds and the portfolios of its other clients purchasing or selling securi-
ties whenever decisions are made to purchase or sell securities by a Fund and
one or more of such other clients simultaneously. In making such allocations
the main factors to be considered will be the respective investment objectives
of the Fund and such other clients, the relative size of portfolio holdings of
the same or comparable securities, the availability of cash for investment by
the Fund and such other clients, the size of investment commitments generally
held by the Fund and such other clients and opinions of the persons responsible
for recommending investments to the Fund and such other clients. While this
procedure could have a detrimental effect on the price or amount of the securi-
ties available to a Fund from time to time, it is the opinion of the Board of
Trustees that the benefits available from Nuveen Advisory's organization will
outweigh any disadvantage that may arise from exposure to simultaneous transac-
tions.
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 Trustees, including a majority of the trustees who are not interested per-
sons of the Trust.
NET ASSET VALUE
As stated in the Prospectus, the net asset value of the shares of each Fund
will be determined separately for each class of a Fund's shares by United
States Trust Company of New York, the Trust's custodian, as of 4:00 p.m. east-
ern 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, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. The net asset value per share of a
class of shares of a Fund will be computed
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by dividing the value of the Fund's assets attributable to the class, less the
liabilities attributable to the class, by the number of shares of the class
outstanding.
In determining net asset value for each of the Funds, the Trust's custodian
utilizes the valuations of portfolio securities furnished by a pricing service
approved by the trustees. 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 Trust under the general su-
pervision of the Board of Trustees.
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
Trust.
As described in the Prospectus, each Fund intends to qualify 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 invest-
ment company, a Fund must satisfy certain requirements relating to the source
of its income, diversification of its assets, and distributions of its income
to shareholders. First, a Fund must derive at least 90% of its annual gross in-
come (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) derived with respect to its business of invest-
ing 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 se-
curities, securities of other regulated investment companies and other securi-
ties limited in respect of any one issuer to an amount not greater in value
than 5% of the value of a Fund's total assets and to not more than 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of the total assets is invested in the securities of any one issuer
(other than United States Government securities and securities of other regu-
lated investment companies) or two or more issuers controlled by a Fund and en-
gaged 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 its "invest-
ment company taxable income" (which includes
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dividends, taxable interest, taxable original issue discount and market dis-
count income, income from securities lending, net short-term capital gain in
excess of long-term capital loss, and any other taxable income other than "net
capital gain" (as defined below) and is reduced by deductible expenses) and at
least 90% of the excess of its gross tax-exempt interest income over certain
disallowed deductions ("net tax-exempt interest"). A Fund may retain for in-
vestment its net capital gain (which consists of the excess of its net long-
term capital gain over its short-term capital loss). However, if a Fund retains
any net capital gain or any investment company taxable income, it will be sub-
ject to tax at regular corporate rates on the amount retained. If a Fund re-
tains any capital gain, such Fund may designate the retained amount as undis-
tributed capital gains in a notice to its shareholders who, if subject to fed-
eral income tax purposes on long-term capital gains, (i) will be required to
include in income for federal income tax purposes, as long-term capital gain,
their shares of such undistributed amount, and (ii) will be entitled to credit
their proportionate shares of the tax paid by such Fund against their federal
income tax liabilities if any, and to claim refunds to the extent the credit
exceeds such liabilities. For federal income tax purposes, the tax basis of
shares owned by a shareholder of the fund will be increased by an amount equal
under current law to 65% of the amount of undistributed capital gains included
in the shareholder's gross income. Each Fund intends to distribute at least an-
nually to its shareholders all or substantially all of its net tax-exempt in-
terest 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 is exempt from regular federal income tax when re-
ceived by such Fund, as exempt-interest dividends. Shareholders receiving ex-
empt-interest dividends will not be subject to regular federal income tax on
the amount of such dividends. Insurance proceeds received by a Fund under any
insurance policies in respect of scheduled interest payments on defaulted Mu-
nicipal Obligations will be excludable from federal gross income under Section
103(a) of the Code. In the case of non-appropriation by a political subdivi-
sion, however, there can be no assurance that payments made by the insurer rep-
resenting interest on "non-appropriation" lease obligations will be excludable
from gross income for federal income tax purposes. See "Fundamental Policies
and Investment Portfolio; Portfolio Securities."
Distributions by each Fund of net interest received from certain taxable tempo-
rary investments (such as certificates of deposit, commercial paper and obliga-
tions of the U.S. 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
--------
/1/If a Fund has both tax-exempt and taxable interest income, it will use the
"actual earned method" for determining the designated percentage that is
taxable income and designate the use of such method within 60 days after the
end of the Fund's taxable year. Under this method the ratio of (a) taxable
income earned during the period for which a distribution was made, to (b)
total income earned during the period, determines the percentage of the dis-
tribution designated taxable. The percentage of income, if any, designated
as taxable under this method will vary from distribution to distribution.
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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 in-
terest income to the extent such gain does not exceed the market discount, and
any gain realized in excess of the market discount will be treated as capital
gains. Any net long-term capital gains realized by a Fund and distributed to
shareholders in cash or 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 in-
come dividends, exempt-interest dividends, or capital gain dividends will be
treated as a return of capital to the extent of (and in reduction of) the
shareholder's tax basis in his or her shares. Any excess will be treated as
gain from the sale of his or her shares, as discussed below.
If any of the Funds engages in hedging transactions involving financial futures
and options, these transactions will be subject to special tax rules, the ef-
fect of which may be to accelerate income to a Fund, defer a Fund's losses,
cause adjustments in the holding periods of a Fund's securities, convert long-
term capital gains into short-term capital gains and convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
Because the taxable portion of each Fund's investment income consists primarily
of interest, none of its dividends, whether or not treated as exempt-interest
dividends, is expected to qualify under the Internal Revenue Code for the divi-
dends received deductions for corporations.
Prior to purchasing shares in one of the Funds, the impact of dividends or dis-
tributions which are expected to be or have been declared, but not paid, should
be carefully considered. Any dividend or distribution declared shortly after a
purchase of 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 corporations
at the rates applicable to ordinary income. For non-corporate taxpayers, howev-
er, net capital gains (i.e., the excess of net long-term capital gain over net
short-term capital loss) will be taxed at a maximum marginal rate of 28%, while
short-term capital gains and other ordinary income will be taxed at a maximum
marginal rate of 39.6%. Because of the limitations on itemized deductions and
the deduction for personal exemptions applicable to higher income taxpayers,
the effective tax rate may be higher in certain circumstances.
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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 disre-
garded portion of such load will result in an increase in the shareholder's
tax basis in the shares subsequently acquired. Moreover, losses recognized by
a shareholder on the redemption or exchange of shares of a Fund held for six
months or less are disallowed to the extent of any distribution of exempt-
interest dividends received with respect to such shares and, if not disal-
lowed, such losses are treated as long-term capital losses to the extent of
any distributions of long-term capital gains made with respect to such shares.
In addition, no loss will be allowed on the redemption or exchange of shares
of a Fund if the shareholder purchases other shares of such Fund (whether
through reinvestment of distributions or otherwise) or the shareholder ac-
quires or enters into a contract or option to acquire securities that are sub-
stantially 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 disal-
lowed, the loss will be reflected 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 re-
demption 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 ex-
tent 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 com-
puted 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 realized capital losses for the prior year that was not distributed
during such year and on which such Fund paid no federal income tax. For pur-
poses of the excise 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. The Funds intend to make timely distribu-
tions in compliance with these requirements and consequently it is anticipated
that they generally will not be required to pay the excise tax.
If in any year a Fund should fail to qualify under Subchapter M for tax treat-
ment as a regulated investment company, the Fund would incur a regular corpo-
rate federal income tax upon its income for that year (other than interest in-
come from Municipal Obligations), and distributions to its shareholders would
be taxable to shareholders as ordinary dividend income for federal income tax
purposes to the extent of the Fund's available earnings and profits.
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Among the requirements that a Fund must meet in order to qualify under
Subchapter M in any year is that less than 30% of its gross income must be de-
rived from the sale or other disposition of securities and certain other assets
held for less than three months.
Because the Funds may invest in private activity bonds, the interest on which
is not federally tax-exempt to persons who are "substantial users" of the fa-
cilities financed by such bonds or "related persons" of such "substantial us-
ers," the Funds may not be an appropriate investment for shareholders who are
considered either a "substantial user" or a "related person" within the meaning
of the Code. For additional information, investors should consult their tax ad-
visers before investing in one of the Funds.
Federal tax law imposes an alternative minimum tax with respect to both corpo-
rations and individuals. Interest on certain Municipal Obligations, such as
bonds issued to make loans for housing purposes or to private entities (but not
for certain tax-exempt organizations such as universities and non-profit hospi-
tals), is included as an item of tax preference in determining the amount of a
taxpayer's alternative minimum taxable income. To the extent that a Fund re-
ceives income from Municipal Obligations subject to the alternative minimum
tax, a portion of the dividends paid by it, although otherwise exempt from fed-
eral income tax, will be taxable to shareholders to the extent that their tax
liability is 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 alter-
native 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,
are included in calculating a corporation's adjusted current earnings.
Tax-exempt income, including exempt-interest dividends paid by the Fund, will
be added to the taxable income of individuals receiving social security or
railroad retirement benefits in determining whether a portion of that benefit
will be subject to federal income tax.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of any Fund is not deductible. Under rules used by the
IRS for determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares of a Fund may
be considered to have been made with borrowed funds even though such funds are
not directly traceable to the purchase of shares.
The Funds are required in certain circumstances to withhold 31% of taxable div-
idends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Funds their correct taxpayer identification number
(in the case of individuals, their social security number) and certain certifi-
cations, or who are otherwise subject to backup 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
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<PAGE>
complete provisions, reference should be made to the pertinent Code sections
and Treasury Regulations. The Code and Treasury Regulations are subject to
change by legislative or administrative action, and any such change may be ret-
roactive with respect to Fund transactions. Shareholders are advised to consult
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 and its sharehold-
ers is based upon the advice of each Fund's special state tax counsel, and rep-
resents 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. You should
consult your own tax adviser for more detailed information concerning state
taxes to which you may be subject.
NUVEEN ARIZONA TAX-FREE VALUE FUND
The following is based upon the advice of Chapman and Cutler, special state tax
counsel to the Arizona Fund.
Assuming that the Arizona Fund qualifies as a "regulated investment company"
for federal income tax purposes under Subchapter M of the Code and that amounts
so designated by the Arizona Fund to its shareholders qualify as "exempt-inter-
est dividends" under Section 852(b)(5) of the Code, such exempt-interest divi-
dends attributable to Arizona Municipal Obligations will be exempt from Arizona
income tax when received by a shareholder of the Arizona Fund to the same ex-
tent as interest on the Arizona Municipal Obligations would be exempt from Ari-
zona income tax if received directly by such shareholder. Other dividends by
the Arizona Fund, including capital gain distributions, if any, or additional
amounts includable in the gross income of the shareholders for federal income
tax purposes (including gains realized upon the redemption or exchange of
shares of the Fund) will be subject to Arizona income tax.
Assuming that the Arizona Fund will be classified as a "diversified management
company" under Section 5(b)(1) of the Investment Company Act of 1940 and regis-
tered as such thereunder, the Arizona Fund will be exempt from Arizona income
tax.
Interest on indebtedness incurred or continued by a shareholder in connection
with the purchase or carrying of shares in the Arizona Fund will not be deduct-
ible for Arizona income tax purposes. Neither the Arizona Municipal Obligations
purchased by the Arizona Fund nor the shares in the Arizona Fund owned by a
shareholder will be subject to Arizona property taxes, sales or use taxes.
NUVEEN FLORIDA TAX-FREE VALUE FUND
The following is based upon the advice of Fowler, White, Burnett, Hurley,
Banick & Strickroot, P.A., special state tax counsel to the Florida Fund.
Florida does not impose an income tax on individuals. All corporate sharehold-
ers will be subject to Florida income taxation on (a) their apportioned share
of the income characterized as business income of such shareholders under the
Florida Income Tax Code ("Florida Code") realized by the Florida Fund
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<PAGE>
and distributed to them notwithstanding the tax exempt character of the inter-
est received from Florida Municipal Obligations under Section 103(a) of the
Code or any other federal law and (b) on gains realized from a redemption or
exchange of the Florida Fund shares to the extent characterized as business in-
come. Only a corporate shareholder that has its commercial domicile in Florida
will be taxable under the Florida Code on its respective share of the Florida
Fund's capital gains and interest income that constitute nonbusiness income of
such shareholder and that is distributed to it, and on gains realized from a
redemption or exchange of the Florida Fund shares that constitute nonbusiness
income. Certain trusts, excluding private and testamentary trusts, may be sub-
ject to the Florida corporate income tax.
Neither the Florida Fund nor its shareholders will be subject to the Florida
intangible personal property tax on Florida Municipal Obligations or the Shares
of the Florida Fund, respectively, with respect to any calendar year so long as
at the close of the preceding calendar year and on January 1 of the then cur-
rent year, the Florida Fund's portfolio of assets consisted solely of Florida
Municipal Obligations or other assets exempt from the Florida intangible per-
sonal property tax. If the Florida Fund holds any other types of assets on that
date, then the entire value of the Fund's shares (except for the portion of the
value of the shares attributable to U.S. Government Obligations) will be sub-
ject to the intangible personal property tax.
Shares of the Florida Fund will be subject to Florida estate tax only if owned
by Florida residents, certain natural persons not residents of Florida, or cer-
tain natural persons not residents of the United States. The Florida estate tax
is limited, however, to the amount of the credit allowable under the applicable
Federal Revenue Act (currently Section 2011 and in some cases Section 2102 of
the Code) for state death taxes actually paid to the several states.
For Florida state income tax purposes, the Florida Fund should not be liable
for Florida corporate income tax imposed by the Florida Code so long as the
Florida Fund does not have taxable nexus
with Florida. Assuming that the Fund will not have an office or other place of
business in Florida, nor any employees or salespersons in Florida, nor any tan-
gible property in Florida, nor any private loans secured by a mortgage, deed of
trust or other lien on real or tangible personal property there should be no
taxable nexus with Florida for corporate income tax purposes. If there is tax-
able nexus with Florida, the Florida Fund's "taxable income" will be its in-
vestment company taxable income, increased by the excess of net long-term capi-
tal gains for the year over the amount of capital gain dividends attributable
to the year.
Shares of the Florida Fund will not be subject to the Florida ad valorem prop-
erty tax or Florida sales and use tax, assuming the Florida Fund owns no Flor-
ida tangible property. The transfer of the Fund Shares will not be subject to
the Florida Documentary Stamp Tax.
NUVEEN MARYLAND TAX-FREE VALUE FUND
The following is based upon the advice of Venable, Baetjer and Howard, LLP,
special state tax counsel to the Maryland Fund.
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As long as dividends paid by the Maryland Fund qualify as interest excludable
under Section 103 of the Code and the Maryland Fund qualifies as a "regulated
investment company" under the Code, the portion of exempt-interest dividends
that represents interest received by the Maryland Fund on obligations (a) of
Maryland or its political subdivisions and authorities, or (b) of the United
States or an authority, commission, instrumentality, possession or
territory,will be exempt from Maryland state and local income taxes when allo-
cated or distributed to a shareholder of the Maryland Fund.
Income earned on certain private activity bonds (which might be held by the
Maryland Fund) will constitute a Maryland tax preference for individual share-
holders.
Interest received by the Maryland Fund on obligations issued by states other
than Maryland, as well as any income earned on repurchase contracts, will be
subject to Maryland state and local income taxes.
Gain realized by the Maryland Fund from the sale or exchange of a bond issued
by Maryland or a political subdivision of Maryland, will not be subject to
Maryland state and local income taxes.
Maryland has no general exemption provisions for capital gain which would be
available to a shareholder of the Maryland Fund. Thus, capital gain dividends
paid by the Maryland Fund to a shareholder (except for gain on bonds issued by
Maryland or its political subdivisions), or gains realized by a shareholder
from a redemption or exchange of these shares, will be subject to Maryland
state and local income taxes.
Interest on indebtedness incurred or continued (directly or indirectly) by a
shareholder of the Maryland Fund to purchase or carry shares of the Maryland
Fund will not be deductible for Maryland state and local income tax purposes to
the extent such interest is allocable to exempt-interest dividends.
Any interest in the Fund owned by a Maryland resident upon death will be sub-
ject to Maryland estate tax and Maryland inheritance tax, subject to any avail-
able exemptions or credits allowed by law.
NUVEEN MICHIGAN TAX-FREE VALUE FUND
The following is based upon the advice of Dickinson, Wright, Moon, Van Dusen &
Freeman, special state tax counsel to the Michigan Fund. In rendering such ad-
vice, counsel has assumed that the Fund will qualify under Subchapter M of the
Code as a regulated investment company and will satisfy the conditions which
will cause Fund distributions to qualify as exempt-interest dividends to share-
holders when distributed as intended.
The Michigan Fund is not subject to tax under the Michigan income tax act, the
Michigan single business tax act, the Michigan intangibles tax act, the Michi-
gan city income tax act (which authorizes the only income tax ordinance that
may be adopted by cities in Michigan), and under the law which authorizes a
"first class" school district to levy an excise tax upon income.
To the extent that an individual (and certain other Michigan Fund shareholders)
receives distributions with respect to Michigan Fund shares that are derived
from interest on Michigan Municipal Obligations, such distributions will be ex-
empt from Michigan state and local income taxes and excluded from
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<PAGE>
the taxable income base of the Michigan intangibles tax. Corporations and fi-
nancial institutions are not subject to Michigan income tax and business corpo-
rations subject to the Michigan single business tax are not subject to the
Michigan intangibles tax.
For Michigan income tax purposes, the proportionate share of distributions from
the Michigan Fund's net investment income derived from other than Michigan Mu-
nicipal Obligations and from any short-term or long-term capital gains (whether
received in cash or additional shares), together with any gain or loss realized
when the shareholder redeems or exchanges shares of the Fund, will be included
in Michigan taxable income.
For Michigan intangibles tax purposes, the proportionate share of distributions
from the Michigan Fund's net investment income derived from other than Michigan
Municipal Obligations and from any short-term or long-term capital gains, will
be included in the taxable income base of the Michigan intangibles tax, except
that distributions from net investment income or capital gains reinvested in
Michigan Fund shares are exempt from such tax.
If the shareholder is subject to the Michigan single business tax (i.e., is en-
gaged in a "business activity" and receives distributions derived from interest
on Michigan Municipal Obligations) or the shareholder sells or exchanges shares
of the Michigan Fund, such event may affect the adjusted tax base upon which
the single business tax is computed. The taxation of business activities sub-
ject to the Michigan single business tax is complex and shareholders who re-
ceive distributions with respect to shares of the Michigan Fund held in connec-
tion with such individual, corporate or partnership business activities should
consult with their tax advisors.
To the extent a shareholder receives distributions from the Michigan Fund which
are derived from interest on obligations of the United States or its agencies,
possessions, or instrumentalities that are exempt from state taxation under
federal law, such distributions will also be exempt from the Michigan income
tax, the Michigan intangibles tax, the Michigan single business tax, and the
Michigan city income tax act.
Shares of the Michigan Fund will be subject to the Michigan estate tax if owned
by a Michigan decedent at the date of death.
The foregoing is a general, abbreviated summary of certain of the provisions of
the applicable Michigan tax law as presently in effect as it directly governs
the taxation of shareholders of the Michigan Fund. These provisions are subject
to change by legislative or administrative action, and any such change may be
retroactive with respect to Michigan Fund transactions. Shareholders are ad-
vised to consult with their own tax advisers for more detailed information con-
cerning Michigan tax matters.
NUVEEN NEW JERSEY TAX-FREE VALUE FUND
The following is based upon the advice of Pitney, Hardin, Kipp & Szuch, special
state tax counsel to the New Jersey Fund.
58
<PAGE>
The New Jersey Fund will qualify as a "qualified investment fund" if, for any
calendar year in which a distribution is paid: (1) the New Jersey Fund has no
investments, other than interest-bearing obligations, obligations issued at a
discount, and cash and cash items, including receivables, and financial op-
tions, futures, forward contracts, or other similar financial instruments re-
lated to interest-bearing obligations, obligations issued at a discount or
bond indexes related thereto; (2) at the close of each calendar quarter the
New Jersey Fund has not less than 80% of the aggregate principal amount of all
of its investments (excluding financial options, futures, forward contracts,
or other similar financial instruments related to interest-bearing obliga-
tions, obligations issued at a discount or bond indexes related thereto to the
extent such instruments are authorized by Section 851(b) of the Code, cash and
cash items, which cash items shall include receivables) in New Jersey Munici-
pal Obligations, United States obligations, or any other obligations the in-
terest or gains on which is exempt from New Jersey Gross Income Tax pursuant
to New Jersey law or federal law; and (3) the New Jersey Fund satisfies the
certification and reporting requirements imposed by regulations promulgated by
the New Jersey Division of Taxation. The New Jersey Fund intends to so
qualify.
Individual shareholders of the New Jersey Fund, including trusts and estates,
who are subject to the New Jersey Gross Income Tax, will not be required to
include in their New Jersey gross income distributions from the New Jersey
Fund which the New Jersey Fund clearly identifies as directly attributable to
interest or gains from New Jersey Municipal Obligations, obligations of the
United States or any other obligations the interest or gains on which is ex-
empt from New Jersey Gross Income Tax under New Jersey law or federal law,
provided that the New Jersey Fund qualifies as a "qualified investment fund."
Distributions to individual shareholders, including trusts and estates, who
are subject to the New Jersey Gross Income Tax, attributable to interest or
gains on municipal obligations issued by states other than New Jersey, includ-
ing municipalities or authorities in such other states, or any other obliga-
tions the interest on which is not exempt from New Jersey Gross Income Tax
pursuant to New Jersey law or federal law, will be included in the New Jersey
Gross Income Tax as New Jersey gross income.
Individual shareholders of the New Jersey Fund, including trusts and estates,
who are subject to the New Jersey Gross Income Tax, will not be required to
include in gross income net gains attributable to the redemption or exchange
of New Jersey Fund shares provided that the New Jersey Fund qualifies as a
"qualified investment fund." Any loss realized on such redemption or exchange
may not be utilized to offset gains realized by such shareholder on the sale
of assets the gain on which is subject to the New Jersey Gross Income Tax.
Shares of the New Jersey Fund may be taxable upon the death of a shareholder
who dies domiciled in New Jersey under the New Jersey Inheritance Tax Law or
the New Jersey Estate Tax Law.
If a shareholder is a corporation (including an S corporation) subject to the
New Jersey Corporation Business Tax or the New Jersey Corporation Income Tax,
distributions of interest or gains, or both, from the New Jersey Fund will be
includable in its entire net income for purposes of the New Jersey Corporation
Business Tax or New Jersey Corporation Income Tax, less any interest expense
incurred to
59
<PAGE>
carry such investment to the extent such interest expense has not been deducted
in computing federal taxable income. Net gains derived by such corporation on
the redemption or exchange of New Jersey Fund shares will be included in its
entire net income for purposes of the New Jersey Corporation Business Tax or
New Jersey Corporation Income Tax.
NUVEEN PENNSYLVANIA TAX-FREE VALUE FUND
The following is based upon the advice of Dechert Price & Rhoads, special state
tax counsel to the Pennsylvania Fund.
Shares of the Pennsylvania Fund are not subject to any of the personal property
taxes presently in effect in Pennsylvania to the extent of that proportion of
the Pennsylvania Fund represented by Pennsylvania Municipal Obligations. The
taxes referred to above include the County Personal Property Tax, the addi-
tional personal property taxes imposed on Pittsburgh residents by the School
District of Pittsburgh and by the City of Pittsburgh. Shares of the Pennsylva-
nia Fund may be taxable under the Pennsylvania inheritance and estate taxes.
The proportion of interest income representing interest income from Pennsylva-
nia Municipal Obligations received by the Fund and distributed to shareholders
of the Pennsylvania Fund is not taxable under the Pennsylvania Personal Income
Tax or under the Corporate Net Income Tax, nor will such interest be taxable
under the Philadelphia School District Investment Income Tax imposed on Phila-
delphia resident individuals.
The disposition by the Pennsylvania Fund of a Pennsylvania Municipal Obligation
(whether by sale, exchange, redemption or payment at maturity), as well as the
distribution of the proceeds of such disposition, will not constitute a taxable
event to a shareholder under the Pennsylvania Personal Income Tax if the Penn-
sylvania Municipal Obligation was issued prior to February 1, 1994. Further,
although there is no published authority on the subject, special Pennsylvania
counsel is of the opinion that (i) a shareholder of the Pennsylvania Fund will
not have a taxable event under the Pennsylvania state and local income taxes
referred to in the preceding paragraph (other than the Corporate Net Income
Tax) upon the redemption or exchange of his or her shares to the extent that
the Pennsylvania Fund is then composed of Pennsylvania Municipal Obligations
issued prior to February 1, 1994 and (ii) the dispositions by the Pennsylvania
Fund of a Pennsylvania Municipal Obligations (whether by sale, exchange, re-
demption or payment at maturity), as well as the distribution of the proceeds
of such disposition, will not constitute a taxable event to a shareholder under
the Philadelphia School District Investment Income Tax if the Pennsylvania Mu-
nicipal Obligation was issued prior to February 1, 1994. (The School District
tax has no application to gain on the disposition of property held by the tax-
payer for more than six months.)
The Pennsylvania Fund is not subject to the Pennsylvania Corporate Net Income
Tax or Capital Stock-Franchise Tax.
If a shareholder is a corporation subject to the Pennsylvania Capital Stock-
Franchise Tax, the value of the Pennsylvania Fund shares owned by such share-
holder and income derived from their ownership may be taken into account in de-
termining the "capital stock value" of such shareholder.
60
<PAGE>
NUVEEN VIRGINIA TAX-FREE VALUE FUND
The following is based upon the advice of Christian, Barton, Epps, Brent &
Chappell, special state tax counsel to the Virginia Fund. It assumes that the
Virginia Fund qualifies for treatment as a regulated investment company under
Subchapter M of the Code, that it will satisfy conditions that will enable it
to avoid liability for federal income taxation on its investment income, that
it will designate distributions from the income generated by the Virginia Mu-
nicipal Obligations as exempt-interest dividends and that amounts so designated
qualify as exempt-interest dividends under the Code.
Under existing Virginia law, as long as the Virginia Fund qualifies as a regu-
lated investment company under the Code, it will be exempt from Virginia income
taxation and dividends received from the Virginia Fund that are allocable to
interest received by the Virginia Fund on Virginia Municipal Obligations will
be exempt from Virginia income taxes.
In this regard, notwithstanding the fact that income on certain of the obliga-
tions in the Virginia Fund may be subject to Federal income taxes, interest on
certain federal obligations is exempt from Virginia income taxation. Distribu-
tions to shareholders that are attributable to interest on federal obligations
that are exempt from Virginia income taxation would be exempt from Virginia in-
come taxes. Further, to the extent distributions to shareholders are attribut-
able to interest on Municipal Obligations other than Virginia Municipal Obliga-
tions, such distributions will be included in the shareholder's Virginia tax-
able income.
As a general rule, to the extent that gain (whether as a result of the sale of
Virginia Municipal Obligations by the Virginia Fund or as a result of the re-
demption or exchange of a share by the shareholder) is subject to federal in-
come tax, such gain will be included in the shareholder's Virginia taxable in-
come. Under the language of certain enabling legislation, however, such as the
Virginia Industrial Development and Revenue Bond Act, the Virginia Resources
Authority Act and the Virginia Housing Development Authority Act, gain made on
the sale of obligations issued thereunder is expressly exempt from Virginia in-
come taxation. Distributions to shareholders that are attributable to such gain
would be exempt from Virginia income taxes.
Although certain counties and cities in the Commonwealth are authorized to levy
a local income tax upon Virginia taxable income, to date, none has undertaken
to do so.
The Commonwealth does not impose a gift tax. The Commonwealth imposes an estate
tax on the transfer of a resident's federal taxable estate and a non-resident's
federal taxable estate located in the Commonwealth.
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.
61
<PAGE>
In accordance with a standardized method prescribed by rules of the Securities
and Exchange Commission ("SEC"), yield is computed by dividing the net invest-
ment income per share earned during the specified one month or 30-day period by
the maximum offering price per share on the last day of the period, according
to the following formula:
<TABLE>
<C> <C> <C> <C> <S>
Yield = 2[(a-b+1)/6/-1]
cd
</TABLE>
In the above formula, a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursements); c = the average daily
number of shares outstanding during the period that were entitled to receive
dividends; and d = the maximum 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. Yields for each class of shares of each Fund as of
January 31, 1995 are set forth below.
62
<PAGE>
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 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 January 31, 1995 quoted in the
left-hand column.
<TABLE>
<CAPTION>
COMBINED
FEDERAL
AND
STATE TAXABLE
TAX EQUIVALENT
AS OF JANUARY 31, 1995 YIELD RATE* YIELD
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona Fund
Class A Shares....................................... 5.05% 43.0% 8.86%
Class C Shares....................................... 4.56% 43.0% 8.00%
Class R Shares....................................... 5.55% 43.0% 9.74%
Florida Fund
Class A Shares....................................... 4.99% 39.6% 8.26%
Class C Shares....................................... 4.48% 39.6% 7.42%
Class R Shares....................................... 5.47% 39.6% 9.06%
Maryland Fund**
Class A Shares....................................... 5.08% 45.0% 9.24%
Class C Shares....................................... 4.58% 45.0% 8.33%
Class R Shares....................................... 5.56% 45.0% 10.11%
Michigan Fund
Class A Shares....................................... 5.12% 44.5% 9.23%
Class C Shares....................................... 4.63% 44.5% 8.34%
Class R Shares....................................... 5.62% 44.5% 10.13%
New Jersey Fund
Class A Shares....................................... 5.32% 43.5% 9.42%
Class C Shares....................................... 4.82% 43.5% 8.53%
Class R Shares....................................... 5.82% 43.5% 10.30%
Pennsylvania Fund
Class A Shares....................................... 5.42% 41.5% 9.26%
Class C Shares....................................... 4.94% 41.5% 8.44%
Class R Shares....................................... 5.93% 41.5% 10.14%
Virginia Fund
Class A Shares....................................... 5.09% 43.0% 8.93%
Class C Shares....................................... 4.60% 43.0% 8.07%
Class R Shares....................................... 5.58% 43.0% 9.79%
</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 local tax rate.
63
<PAGE>
For additional information concerning taxable equivalent yields, see the Tax-
able Equivalent Yield Tables in the Prospectus.
Each Fund may from time to time in its advertising and sales materials report a
quotation of the current distribution rate. The distribution rate represents a
measure of dividends distributed for a specified period. Distribution rate is
computed by dividing the most recent monthly tax-free income dividend per
share, 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 reinvestments from Nuveen UITs, or the maximum public offering price).
The distribution rate differs from yield and total return and therefore is not
intended to be a complete measure of performance. Distribution rate may some-
times be higher than yield because it may not include the effect of amortiza-
tion of bond premiums to the extent such premiums arise after the bonds were
purchased. The distribution rates as of January 31, 1995, based on the maximum
public offering price then in effect for the Funds were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION RATES
--------------------------
CLASS A* CLASS C** CLASS R
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona Fund......................................... 5.08% 5.30% 5.54%
Florida Fund......................................... 4.83% 5.06% 5.29%
Maryland Fund........................................ 5.01% 5.26% 5.49%
Michigan Fund........................................ 4.99% 5.24% 5.47%
New Jersey Fund...................................... 5.06% 5.31% 5.54%
Pennsylvania Fund.................................... 5.05% 5.28% 5.49%
Virginia Fund........................................ 5.05% 5.30% 5.53%
--------------------------------------------------------------------------------
</TABLE>
*Assumes imposition of the maximum sales charge for Class A shares of 4.50%.
**Dividends used in calculating Class C distribution rates do not reflect
change in policy, first made effective with respect to the February 1995 divi-
dend, of deducting Class C distribution fees from income instead of from capi-
tal, in conformance with a recent IRS revenue ruling.
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
64
<PAGE>
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 annual total re-
turn figures, including the effect of the current maximum sales charge for
Class A shares, for the one-year period ended January 31, 1995 and for the pe-
riod from inception (on December 13, 1991 with respect to the Class R Shares
and on September 6, 1994 with respect to the Class A Shares and Class C Shares)
through January 31, 1995, respectively, were as follows:
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURN
---------------------------------
FOR THE YEAR FROM INCEPTION
ENDED THROUGH
JANUARY 31, 1995 JANUARY 31, 1995
--------------------------------------------------------------------------------
<S> <C> <C>
Arizona Fund
Class A Shares............................... N/A (3.31)*%
Class C Shares............................... N/A 1.25*%
Class R Shares............................... (4.39)% 6.66%
Florida Fund
Class A Shares............................... N/A (4.00)*%
Class C Shares............................... N/A 1.84*%
Class R Shares............................... (4.33)% 5.96%
Maryland Fund
Class A Shares............................... N/A (4.75)*%
Class C Shares............................... N/A 0.12*%
Class R Shares............................... (4.58)% 5.57%
Michigan Fund
Class A Shares............................... N/A (4.48)*%
Class C Shares............................... N/A 1.18*%
Class R Shares............................... (3.98)% 6.69%
New Jersey Fund
Class A Shares............................... N/A (4.48)*%
Class C Shares............................... N/A 1.16*%
Class R Shares............................... (3.27)% 6.48%
Pennsylvania Fund
Class A Shares............................... N/A (4.03)*%
Class C Shares............................... N/A (0.53)*%
Class R Shares............................... (4.94)% 6.08%
Virginia Fund
Class A Shares............................... N/A (4.50)*%
Class C Shares............................... N/A 0.10*%
Class R Shares............................... (3.92)% 6.20%
--------------------------------------------------------------------------------
</TABLE>
*Not annualized because it relates to period of less than one year.
Calculation of cumulative total return is not subject to a prescribed formula.
Cumulative total return for a specific period is calculated by first taking a
hypothetical initial investment in Fund shares on the first day of the period,
deducting (in some cases) the maximum sales charge, and computing the "redeem-
able value" of that investment at the end of the period. The cumulative total
return percentage is then determined by subtracting the initial investment from
the redeemable value and dividing the
65
<PAGE>
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 re-
duced if such charge were included. The cumulative total returns, including the
effect of the maximum sales charge for Class A Shares, for the one-year period
ended January 31, 1995, and for the period from inception (on December 13, 1991
with respect to the Class R Shares and on September 6, 1994 with respect to the
Class A Shares and Class C Shares) through January 31, 1995, respectively, were
as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
---------------------------------
FOR THE YEAR FROM INCEPTION
ENDED THROUGH
JANUARY 31, 1995 JANUARY 31, 1995
--------------------------------------------------------------------------------
<S> <C> <C>
Arizona Fund
Class A Shares............................... N/A (3.31)%
Class C Shares............................... N/A 1.25%
Class R Shares............................... (4.39)% 20.75%
Florida Fund
Class A Shares............................... N/A (4.00)%
Class C Shares............................... N/A 1.84%
Class R Shares............................... (4.33)% 18.43%
Maryland Fund
Class A Shares............................... N/A (4.75)%
Class C Shares............................... N/A 0.12%
Class R Shares............................... (4.58)% 17.18%
Michigan Fund
Class A Shares............................... N/A (4.48)%
Class C Shares............................... N/A 1.18%
Class R Shares............................... (3.98)% 20.85%
New Jersey Fund
Class A Shares............................... N/A (4.48)%
Class C Shares............................... N/A 1.16%
Class R Shares............................... (3.27)% 20.17%
Pennsylvania Fund
Class A Shares............................... N/A (4.03)%
Class C Shares............................... N/A (0.53)%
Class R Shares............................... (4.94)% 18.83%
Virginia Fund
Class A Shares............................... N/A (4.50)%
Class C Shares............................... N/A 0.10%
Class R Shares............................... (3.92)% 19.23%
--------------------------------------------------------------------------------
</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
66
<PAGE>
rate), calculated as described above under the discussion of "taxable equiva-
lent yield." The resulting amount for the calendar year is then divided by the
initial investment amount to arrive at a "taxable equivalent total return fac-
tor" 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 ex-
pressed as a percentage. Using the 39.6% maximum marginal federal tax rate for
1995, the annual taxable equivalent total returns for each Fund's Class R
Shares for the one-year period ended January 31, 1995, and for all classes for
the period from inception (on December 13, 1991 with respect to the Class R
Shares and on September 6, 1994 with respect to the Class A Shares and Class C
Shares) through January 31, 1995, respectively, were as follows:
<TABLE>
<CAPTION>
FROM INCEPTION
ONE YEAR ENDED THROUGH
JANUARY 31, JANUARY 31,
1995 1995 ASSUMED
--------------- -------------- COMBINED
WITH WITH FEDERAL
MAXIMUM MAXIMUM AND
4.50% AT NET 4.50% AT NET STATE
SALES ASSET SALES ASSET TAX
CHARGE VALUE CHARGE VALUE RATE*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Arizona Fund
Class A Shares......................... N/A N/A (1.74)% 2.89% 43.0%
Class C Shares......................... N/A N/A N/A% 2.90% 43.0%
Class R Shares......................... N/A % (0.55)% N/A% 10.57% 43.0%
Florida Fund
Class A Shares......................... N/A N/A (2.71)% 1.87% 39.6%
Class C Shares......................... N/A N/A N/A% 2.94% 39.6%
Class R Shares......................... N/A % (1.14)% N/A% 9.28% 39.6%
Maryland Fund**
Class A Shares......................... N/A N/A (3.10)% 1.47% 45.0%
Class C Shares......................... N/A N/A N/A% 1.53% 45.0%
Class R Shares......................... N/A % (0.54)% N/A% 9.75% 45.0%
Michigan Fund
Class A Shares......................... N/A N/A (2.86)% 1.72% 44.5%
Class C Shares......................... N/A N/A N/A% 2.57% 44.5%
Class R Shares......................... N/A % 0.06 % N/A% 10.88% 44.5%
New Jersey Fund
Class A Shares......................... N/A N/A (2.92)% 1.65% 43.5%
Class C Shares......................... N/A N/A N/A% 2.50% 43.5%
Class R Shares......................... N/A % 0.58 % N/A% 10.45% 43.5%
Pennsylvania Fund
Class A Shares......................... N/A N/A (2.57)% 2.02% 41.5%
Class C Shares......................... N/A N/A N/A% 1.00% 41.5%
Class R Shares......................... N/A % (1.35)% N/A% 9.80% 41.5%
Virginia Fund
Class A Shares......................... N/A N/A (2.94)% 1.63% 43.0%
Class C Shares......................... N/A N/A N/A% 1.74% 43.0%
Class R Shares......................... N/A % (0.06)% N/A% 10.12% 43.0%
</TABLE>
--------
*The combined tax rates used in the table do not reflect the current federal
tax limitations on itemized deductions and personal exemptions, which may
raise the effective tax rate and taxable equivalent yield for taxpayers above
certain income levels.
**Reflects a combined federal, state and local tax rate.
67
<PAGE>
From time to time, a Fund may compare its risk-adjusted performance with other
investments that may provide different levels of risk and return. For example,
a Fund may compare its risk level, as measured by the variability of its peri-
odic returns, or its RISK-ADJUSTED TOTAL RETURN, with those of other funds or
groups of funds. Risk-adjusted total return would be calculated by adjusting
each investment's total return to account for the risk level of the investment.
A Fund may also compare its TAX-ADJUSTED TOTAL RETURN with that of other funds
or groups of funds. This measure would take into account the tax-exempt nature
of exempt-interest dividends and the payment of income taxes on a fund's dis-
tributions of net realized capital gains and ordinary income.
The risk level for a class of shares of a Fund, and any of the other invest-
ments used for comparison, would be evaluated by measuring the variability of
the investment's return, as indicated by the standard deviation of the invest-
ment's monthly returns over a specified measurement period (e.g., two years).
An investment with a higher standard deviation of monthly returns would indi-
cate that a fund had greater price variability, and therefore greater risk,
than an investment with a lower standard deviation. The standard deviation of
monthly returns for the two years ended January 31, 1995, for the Class R
Shares of the Funds, were as follows:
<TABLE>
<CAPTION>
STANDARD
DEVIATION
OF RETURN
--------------------------------------------------------------------------------
<S> <C>
Arizona Fund.......................................................... 2.25%
Florida Fund.......................................................... 2.22%
Maryland Fund......................................................... 2.00%
Michigan Fund......................................................... 2.08%
New Jersey Fund....................................................... 1.73%
Pennsylvania Fund..................................................... 2.21%
Virginia Fund......................................................... 2.03%
</TABLE>
68
<PAGE>
THE RISK-ADJUSTED TOTAL RETURN for a class of shares of a Fund and for other
investments over a specified period would be evaluated by dividing (a) the re-
mainder of the investment's annualized two-year total return minus the
annualized total return of an investment in short-term tax-exempt securities
(essentially a risk-free return) over that period, by (b) the standard devia-
tion of the investment's monthly returns for the period. This ratio is some-
times referred to as the "Sharpe measure" of return. An investment with a
higher Sharpe measure would be regarded as producing a higher return for the
amount of risk assumed during the measurement period than an investment with a
lower Sharpe measure. The Sharpe measure, for the two-year period ended Janu-
ary 31, 1995, for the Class R Shares of each of the Funds was as follows:
<TABLE>
<CAPTION>
SHARPE
MEASURE
--------------------------
<S> <C>
Arizona Fund 0.759
Florida Fund 0.590
Maryland Fund 0.467
Michigan Fund 0.846
New Jersey Fund 1.206
Pennsylvania Fund 0.558
Virginia Fund 0.727
</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
conditions, operating expenses and investment management. 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"), Morn-
ingstar, Inc. ("Morningstar"), Wiesenberger Investment Companies Service
("Wiesenberger") and CDA Investment Technologies, Inc. ("CDA") or similar in-
dependent services which monitor the performance of mutual funds, or other in-
dustry or financial publications such as Barron's, Changing Times, Forbes and
Money Magazine. Performance comparisons by these indexes, services or publica-
tions may rank mutual funds over different periods of time by means of aggre-
gate, average, year-by-year, or other types of total return and performance
figures. Any given performance quotation or performance comparison should not
be considered as representative of the performance of the Funds for any future
period.
There are differences and similarities between the investments which the Funds
may purchase and the investments measured by the indexes and reporting serv-
ices which are described herein. The Consumer Price Index is generally consid-
ered to be a measure of inflation. The CDA Mutual Fund-Municipal Bond Index is
a weighted performance average of other mutual funds with a federally tax-ex-
empt income objective. The Salomon Brothers High Grade Corporate Bond Index is
an unmanaged index
69
<PAGE>
that generally represents the performance of high grade long-term taxable bonds
during various market conditions. The Lehman Brothers Municipal Bond Index is
an unmanaged index that generally represents the performance of high grade in-
termediate and long-term municipal bonds during various market conditions.
Lipper, Morningstar, Wiesenberger and CDA are widely recognized mutual fund re-
porting services whose performance calculations are based upon changes in net
asset value with all dividends reinvested and which do not include the effect
of any sales charges. The market prices and yields of taxable and tax-exempt
bonds will fluctuate. The Funds primarily invest in investment grade Municipal
Obligations in pursuing their objective of as high a level of current interest
income which is exempt from federal and state income tax as is consistent, in
the view of the Funds' management, with preservation of capital.
The Funds may also compare their taxable equivalent total return performance to
the total return performance of taxable income funds such as treasury securi-
ties funds, corporate bond funds (either investment grade or high yield), or
Ginnie Mae funds. These types of funds, because of the character of their un-
derlying securities, differ from municipal bond funds in several respects. The
susceptibility of the price of treasury bonds to credit risk is far less than
that of municipal bonds, but the price of treasury bonds tends to be slightly
more susceptible to change resulting from changes in market interest rates. The
susceptibility of the price of investment grade corporate bonds and municipal
bonds to market interest rate changes and general credit changes is similar.
High yield bonds are subject to a greater degree of price volatility than mu-
nicipal bonds resulting from changes in market interest rates and are particu-
larly susceptible to volatility from credit changes. Ginnie Mae bonds are gen-
erally subject to less price volatility than municipal bonds from credit con-
cerns, due primarily to the fact that the timely payment of monthly install-
ments of principal and interest are backed by the full faith and credit of the
U.S. Government, but Ginnie Mae bonds of equivalent coupon and maturity are
generally more susceptible to price volatility resulting from market interest
rate changes. In addition, the volatility of Ginnie Mae bonds due to changes in
market interest rates may differ from municipal bonds of comparable coupon and
maturity because bonds of the sensitivity of Ginnie Mae prepayment experience
to change in interest rates.
70
<PAGE>
ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF FUND SHARES
As described in the Prospectus, each Fund has adopted a Flexible Sales Charge
Program which provides you with alternative ways of purchasing Fund shares
based upon your individual investment needs and preferences. You may purchase
Class A Shares at a price equal to their net asset value plus an up-front sales
charge. For information regarding the up-front sales charge on Class A shares,
see the table under "How to Buy Fund Shares" of the Prospectus. Set forth is an
example of the method of computing the offering price of the Class A shares of
each of the Funds. The example assumes a purchase on January 31, 1995 of Class
A shares from the Arizona Fund aggregating less than $50,000 subject to the
schedule of sales charges set forth in the Prospectus at a price based upon the
net asset value of the Class A shares.
<TABLE>
<S> <C>
Net Asset Value per share........................................ $ 9.930
Per Share Sales Charge--4.50% of public offering price (4.71% of
net asset value per share)...................................... $ 0.468
Per Share Offering Price to the Public........................... $10.398
</TABLE>
You may purchase Class C Shares without any up-front sales charge at a price
equal to their net asset value, but subject to an annual distribution fee de-
signed to compensate Authorized Dealers over time for the sale of Fund shares.
Class C Shares automatically convert to Class A Shares six years after pur-
chase. Both Class A Shares and Class C Shares are subject to annual service
fees, which are used to compensate Authorized Dealers for providing you with
ongoing financial advice and other services.
Under the Flexible Sales Charge Program, all Fund shares outstanding as of Sep-
tember 6, 1994, have been designated as Class R Shares. Class R Shares are
available for purchase at a price equal to their net asset value only under
certain limited circumstances, or by specified investors, as described herein.
Each class of shares of a Fund represents an interest in the same portfolio of
investments. Each class of shares is identical in all respects except that each
class bears its own class expenses, including administration and distribution
expenses, and each class has exclusive voting rights with respect to any dis-
tribution or service plan applicable to its shares. In addition, the Class C
Shares are subject to a conversion feature, as described below. As a result of
the differences in the expenses borne by each class of shares, net income per
share, dividends per share and net asset value per share will vary among a
Fund's classes of shares.
The expenses to be borne by specific classes of shares may include (i) transfer
agency fees attributable to a specific class of shares, (ii) printing and post-
age expenses related to preparing and distributing materials such as share-
holder reports, prospectuses and proxy statements to current shareholders of a
specific class of shares, (iii) Securities and Exchange Commission ("SEC") and
state securities registration fees incurred by a specific class of shares, (iv)
the expense of administrative personnel and services required to support the
shareholders of a specific class of shares, (vi) litigation or other legal ex-
penses relating to a specific class of shares, (vi) directors' fees or expenses
incurred as a result of issues relating to a specific class of shares, (vii)
accounting expenses relating to a specific class of shares and (viii) any
71
<PAGE>
additional incremental expenses subsequently identified and determined to be
properly allocated to one or more classes of shares that shall be approved by
the SEC pursuant to an amended exemptive order.
Each Fund has special purchase programs under which certain persons may pur-
chase Class A Shares at reduced sales charges. One such program is available to
members of a "qualified group."
An individual who is a member of a "qualified group" may purchase Class A
Shares of a Fund (or any other Nuveen Fund with respect to which a sales charge
is imposed), at the reduced sales charge applicable to the group taken as a
whole. A "qualified group" is one which (i) has been in existence for more than
six months; (ii) has a purpose other than investment; (iii) has five or more
participating members; (iv) has agreed to include sales literature and other
materials related to the Fund in publications and mailings to members; (v) has
agreed to have its group administrator submit a single bulk order and make pay-
ment with a single remittance for all investments in the Fund during each in-
vestment period by all participants who choose to invest in the Fund; and (vi)
has agreed to provide the Fund's transfer agent with appropriate backup data
for each participant of the group in a format fully compatible with the trans-
fer agent's processing system.
The "amount" of a share purchase by a participant in a group purchase program
for purposes of determining the applicable sales charge is (i) the aggregate
value of all shares of the Fund (and all other Nuveen Funds with respect to
which a sales charge is imposed) currently held by participants of the group,
plus (ii) the amount of shares currently being purchased.
The Funds may encourage registered representatives and their firms to help ap-
portion their assets among bonds, stocks and cash, and may seek to participate
in programs that recommend a portion of their assets be invested in tax-free,
fixed income securities.
To help advisers and investors better understand and most efficiently use the
Funds to reach their investment goals, the Funds may advertise and create spe-
cific investment programs and systems. For example, this may include informa-
tion on how to use the Funds to accumulate assets for future education needs or
periodic payments such as insurance premiums. The Funds may produce software or
additional sales literature to promote the advantages of using the Funds to
meet these and other specific investor needs.
Exchanges 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.
72
<PAGE>
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 Trust, dated December 12, 1991 and last renewed on July 29, 1994
("Distribution Agreement"). Pursuant to the Distribution Agreement, the Trust
appointed Nuveen to be its agent for the distribution of the Funds' shares on a
continuous offering basis. Nuveen sells shares to or through brokers, dealers,
banks or other qualified financial intermediaries (collectively referred to as
"Dealers"), or others, in a manner consistent with the then effective registra-
tion statement of the Trust. Pursuant to the Distribution Agreement, Nuveen, at
its own expense, finances certain activities incident to the sale and distribu-
tion of the Funds' shares, including printing and distributing of prospectuses
and statements of additional information to other than existing shareholders,
the printing and distributing of sales literature, advertising and payment of
compensation and giving of concessions to dealers. Nuveen receives for its
services the excess, if any, of the sales price of the Funds' shares less the
net asset value of those shares, and reallows a majority or all of such amounts
to the Dealers who sold the shares; Nuveen may act as such a Dealer. Nuveen
also receives compensation pursuant to a distribution plan adopted by the Trust
pursuant to Rule 12b-1 and described herein under "Distribution and Service
Plans."
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
JANUARY 31, 1995 JANUARY 31, 1994 JANUARY 31, 1993
---------------------- ---------------------- ----------------------
AMOUNT OF AMOUNT AMOUNT OF AMOUNT AMOUNT OF AMOUNT
UNDERWRITING RETAINED UNDERWRITING RETAINED UNDERWRITING RETAINED
FUND COMMISSIONS BY NUVEEN COMMISSIONS BY NUVEEN COMMISSIONS BY NUVEEN
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Arizona Fund............ $ 88,000 $20,000 $178,000 $29,000 $170,000 $36,000
Florida Fund............ 178,000 32,000 462,000 84,000 346,000 60,000
Maryland Fund........... 216,000 38,000 474,000 61,000 552,000 49,000
Michigan Fund........... 127,000 30,000 260,000 35,000 138,000 31,000
New Jersey Fund......... 255,000 35,000 527,000 76,000 366,000 50,000
Pennsylvania Fund....... 236,000 45,000 459,000 67,000 378,000 47,000
Virginia Fund........... 255,000 30,000 544,000 78,000 526,000 62,000
</TABLE>
DISTRIBUTION AND SERVICE PLANS
Each Fund has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the In-
vestment Company Act of 1940, which provides that Class C Shares will be sub-
ject to an annual distribution fee, and that both Class A Shares and Class C
Shares will be subject to an annual service fee. Class R Shares will not be
subject to either distribution or service fees.
The distribution fee applicable to Class C Shares under each Fund's Plan will
be payable to reimburse Nuveen for services and expenses incurred in connection
with the distribution of Class C Shares. These expenses include payments to Au-
thorized Dealers, including Nuveen, who are brokers of record with respect to
the Class C Shares, as well as, without limitation, expenses of printing and
distributing prospectuses to persons other than shareholders of the Fund, ex-
penses of preparing, printing and distributing advertising and sales literature
and reports to shareholders used in connection with the sale of
73
<PAGE>
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 Trustees.
The service fee applicable to Class A Shares and Class C Shares under each
Fund's Plan will be payable to Authorized Dealers in connection with the provi-
sion of ongoing services to shareholders. These services may include establish-
ing 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 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. For the fiscal year ended January 31, 1995, 100% of
service fees and distribution fees were paid out as compensation to Authorized
Dealers. The amount of compensation paid to Authorized Dealers for the fiscal
year ended January 31, 1995 was $723 for the Arizona Fund, $920 for the Florida
Fund, $2,521 for the Maryland Fund, $504 for the Michigan Fund, $2,909 for the
New Jersey Fund, $1,993 for the Pennsylvania Fund and $1,873 for the Virginia
Fund.
Under each Fund's Plan, the Fund will report quarterly to the Board of Trustees
for its review 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 trustees who are not
"interested persons" and who have no direct or indirect financial interest in
the Plan or by vote of a majority of the outstanding voting securities of such
class. The Plan may be renewed from year to year if approved by a vote of the
Board of Trustees and a vote of the non-interested trustees 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
trustees who vote to approve such continuance conclude, in the exercise of rea-
sonable business judgment and in light of their fiduciary duties under applica-
ble 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 trustees
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 trustees of the Trust will be committed to the dis-
cretion of the non-interested trustees then in office.
74
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 W. Monroe Street, Chi-
cago, Illinois 60603 have been selected as auditors for the Trust. In addition
to audit services, Arthur Andersen LLP, will provide consultation and assis-
tance on accounting, internal control, tax and related matters. The financial
statements incorporated by reference elsewhere in this Statement of Additional
Information and the information set forth under "Financial Highlights" in the
Prospectus have been audited by Arthur Andersen LLP as indicated in their re-
port with respect thereto, and are included in reliance upon the authority of
said firm as experts in giving said report.
The custodian of the assets of the Funds is United States Trust Company of New
York, 114 West 47th Street, New York, NY 10036. The custodian performs custodi-
al, fund accounting and portfolio accounting services. The Chase Manhattan
Bank, N.A., 1 Chase Manhattan Plaza, New York, NY 10081 has agreed to become
successor to U.S. Trust, as custodian and fund accountant. The succession is
presently scheduled for July 1, 1995. No changes in the Funds' administration
or in the amount of fees and expenses paid by the Funds for those services will
result, and no action by shareholders will be required.
75
<PAGE>
ANNUAL REPORT TO SHAREHOLDERS
<PAGE>
[LOGO--PHOTO OF COUPLE]
Nuveen Tax-Free
Mutual Funds
Dependable tax-free
income for generations
NUVEEN MULTISTATE TAX-FREE TRUST
ARIZONA
FLORIDA
MARYLAND
MICHIGAN
NEW JERSEY
PENNSYLVANIA
VIRGINIA
ANNUAL REPORT/JANUARY 31, 1995
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
9 Fund performance
16 Portfolio of investments
38 Statement of net assets
40 Statement of operations
42 Statement of changes in net assets
46 Notes to financial statements
60 Financial highlights
<PAGE>
Dear shareholder
[PHOTO OF RICHARD J. FRANKE]
"Providing secure income remains our top priority"
The 12 months ended January 31, 1995, were one of the most difficult periods the
bond markets have experienced in decades. In the course of the past fiscal year,
the Federal Reserve Board raised interest rates seven times to fend off future
inflation. As a result, the prices of bonds and bond funds declined.
The unusually high volatility and uncertainty of the past year has brought
home a basic fact about fixed income securities: interest rates are subject to
change, and sometimes the changes can have marked effects on net asset values.
At Nuveen, we believe that the best approach to tax-free investing in such
tumultuous times is to focus on quality and income dependability. By this
standard, in one of the most challenging periods the municipal market has seen
in years, your Fund continued to meet its objectives well, providing an
attractive level of tax-free income while holding portfolio values in line with
or better than the market as a whole.
Looking first at income, current yields on net asset values for the funds
covered in this report ranged from 5.60% to 6.03% on January 31. To equal these
yields, an investor in the 36% federal income tax bracket would need to earn at
least 8.75% on taxable alternatives. This taxable yield is difficult to achieve
on investments of comparable credit quality.
3
<PAGE>
Your Fund also maintained its value relatively well during the past year.
While the net asset values of the funds in this report declined, the Bond Buyer
40 index--a measure of the value of newly issued municipal bonds--declined by
even more, slipping 15.8% over the past 12 months. And 30-year Treasury bonds
declined by 16.9% during the year.
In this context, we believe that your Fund met the demands of the past year
well. And when we take a long-range view of the municipal market, we believe the
outlook for your Fund is positively supported by several considerations.
First, from November of 1994 through February of 1995, municipal bond yields
declined by nearly a full percent and bond prices started to gain ground. This
development suggests that the underlying inflationary pressures that drove
interest rates higher and bond prices lower may be moderating.
Second, and as we have noted in past reports, the municipal market's supply
and demand fundamentals continue to be sound. To put these trends in
perspective, in 1994, the supply of new municipal bonds declined by
approximately 40% from 1993; for the first two months of 1995, new issue volume
is down a further 57% from last year's already low level.
Once investors perceive that the interest rate environment has stabilized,
demand for municipal investments, which has been subdued over the last 12 months
as a result of the market's extraordinary volatility, should resume its long-
term upward trend.
At Nuveen we are taking steps to increase the value our funds provide to
shareholders--steps reflected in last year's introduction of two new share
classes with different sales charge structures and service fees. These new share
classes, designated A Shares and C Shares, give you and your investment adviser
added flexibility in designing a tax-free investment program that meets your
requirements. These classes also encourage fund growth, which offset redemptions
and protects portfolio integrity.
Finally, we continue to pursue the objectives of your Fund--providing
attractive tax-free income and enhancing portfolio value relative to the
municipal bond market--through value investing, a disciplined approach to
security selection and portfolio construction supported by one of the largest
and most respected research teams in the municipal industry.
We appreciate your trust in our family of funds, and we look forward to
helping you meet your tax-free investment objectives in the future.
Sincerely,
/s/ Richard J. Franke
Richard J. Franke
Chairman of the Board
March 15, 1995
4
<PAGE>
Answering your questions
We spoke recently with Tom Spalding, head of Nuveen's portfolio management team,
and asked him about recent developments in the municipal market and the outlook
for Nuveen's Tax-Free Mutual Funds.
Why did my Fund's net asset value decline over the past year?
The past 12 months have been a difficult period for all fixed-income investors.
The Federal Reserve raised interest rates seven times from February 1994 through
February 1995, and its actions drove the prices of all bonds and bond funds
lower. Of course, changing interest rates are a fact of investment life. The
important point is that shareholders in these funds were less affected by rising
interest rates than the market overall. While the net asset values of the Class
R Shares of the funds covered in this report registered declines ranging from
9.02% to 9.99%, the municipal market overall, as measured by the Bond Buyer 40
index, was down 15.80% and as measured by the Lehman Brothers Municipal Bond
index was off 9.10%. The Bond Buyer 40 index reflects price movements of newly
issued long-term
5
<PAGE>
[PHOTO OF TOM SPALDING]
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market.
municipal bonds, while the Lehman Brothers Municipal Bond index reflects the
broader municipal market, including older and shorter-term bonds.
This is one result of our conservative, value-oriented approach to investing.
Our funds tend to hold their value better than the market as a whole when
interest rates are rising.
What steps did you take to moderate the impact of rising interest rates on the
value of the funds' portfolios?
As value investors, we don't manage our portfolios by anticipating future
interest rate movements. We feel that it's impossible to predict changes in the
economy or interest rates with any degree of accuracy, and we don't try.
Instead, we try to buy bonds that will perform well in any interest rate
environment, focusing closely on relative values in the market.
Because of that approach, we didn't need to make major changes in our
portfolios as interest rates rose. For a number of technical reasons--above all
the compression of yields between higher-rated and lower-rated issues that had
been taking place for some time--the best values, in our view, were to be found
in higher quality bonds. For some time, we had been concentrating on higher-
rated bonds with maturities in the 15-to-20 year range, as well as bonds priced
at premiums to their par values and pre-refunded issues. We also benefitted from
an increase in assets in many of our funds, driven
6
<PAGE>
by both higher demand for tax-free investments and reinvestment programs. As a
result, we weren't under pressure to sell into difficult markets to meet
redemptions.
Some analysts are expecting a record amount of municipal bonds to be called in
1995. Will bond calls affect my income or the stability of the net asset value
of my shares?
In general, bond calls can mean some reduction in income for investors in both
individual bonds and bond funds, because bonds issued when interest rates were
higher are replaced with today's lower-yielding bonds. Keep in mind, however,
that high coupon bonds which may be subject to calls often are priced at
premiums to their par values and to their call prices. As we saw last year, this
premium is a "cushion" that can soften the effect of rising interest rates. As
these bonds approach their call dates, the premiums gradually approach the
bonds' call prices, potentially reducing net asset values.
Of course, we manage all of our portfolios with calls in mind. As part of our
basic management process, we continually evaluate opportunities to sell bonds
approaching their call dates and to reinvest the proceeds in bonds we think have
high potential to provide above-market total returns.
7
<PAGE>
A number of fund managers have encountered problems recently related to the use
of derivative securities. Do you use derivatives in your portfolios?
Over the last year, participants in the financial services industry, including
securities dealers, underwriters and investment advisers, received much
attention in the press relating to the use of certain types of derivative
financial instruments in the management of portfolios, including those of mutual
funds. There are many different types of derivative investments available in the
market today, including those derivatives whose market values respond to
interest rate changes with greater volatility than do others. In general,
derivatives used to speculate on the future course of interest rates pose the
greatest risk, while derivatives used for hedging purposes present less risk
and, if used properly, can often reduce risk. Synthetic money market securities
generally present no greater risk to investors than ordinary money market
securities.
Although the Funds are authorized to invest in such financial instruments, and
may do so in the future, they did not make any such investments during the
fiscal year ended January 31, 1995, other than occasional purchases of high
quality synthetic money market securities, which were held temporarily pending
the investment in long-term portfolio securities.
8
<PAGE>
NUVEEN ARIZONA TAX-FREE
VALUE FUND
Arizona
INDEX COMPARISON
Nuveen Arizona Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
Tax- AZ Share
Adjusted Price
Date Lehman Lehman Wealth
----------------------------------------------
Jan-92 $10,000 $10,000 $9,525
Jun-92 $10,379 $10,386 $9,960
Jan-93 $10,975 $10,983 $10,546
Jun-93 $11,573 $11,628 $11,240
Jan-94 $12,270 $12,328 $12,029
Jun-94 $11,549 $11,648 $11,201
Dec-94 $11,461 $11,559 $11,123
ANNUALIZED TOTAL RETURN
-----------------------------------------------------------
1 year Since Inception
-----------------------------------------------------------
R shares on NAV -4.39% 6.49%
A shares on NAV 1.24%+
A shares on offering price** -3.31%+
C shares on NAV 1.25%+
Shareholders enjoyed three dividend increases during the period, bringing the
Fund's monthly dividend from 4.35 cents to 4.55 cents per share on January 31,
1995. During the year, the Fund paid dividends totaling 53.95 cents per share.
As yield differentials between higher and lower-rated bonds and longer- and
shorter- maturities narrowed, the Fund's manager focused attention on higher-
quality bonds with maturities in the 15-to-20 year range, as well as on pre-
refunded bonds.
Other areas of emphasis included bonds issued to support Arizona's strong
healthcare system, housing bonds backed by guarantees from agencies of the
federal government, and state general obligation bonds, which became more
attractive in light of the economic expansion nationwide and the state's
improving finances.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares: (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
9
<PAGE>
NUVEEN FLORIDA TAX-FREE
VALUE FUND
FLORIDA
INDEX COMPARISON
Nuveen Florida Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
-----------------------------------------------------------
Tax- FL Share
Adjusted price
Date Lehman Lehman Wealth
-----------------------------------------------------------
Jan-92 $10,000 $10,000 $9,525
-----------------------------------------------------------
Jun-92 $10,386 $10,386 $9,865
-----------------------------------------------------------
Jan-93 $10,983 $10,983 $10,414
-----------------------------------------------------------
Jun-93 $11,628 $11,628 $11,093
-----------------------------------------------------------
Jan-94 $12,328 $12,328 $11,791
-----------------------------------------------------------
Jun-94 $11,648 $11,648 $10,967
-----------------------------------------------------------
Dec-94 $11,559 $11,559 $10,909
-----------------------------------------------------------
-----------------------------------------------------------
ANNUALIZED TOTAL RETURN
-----------------------------------------------------------
1 year Since Inception
-----------------------------------------------------------
R shares on NAV -4.33% 5.80%
A shares on NAV .52%+
A shares on offering price** -4.00%+
C shares on NAV 1.84%+
-----------------------------------------------------------
Shareholders enjoyed two dividend increases during the period, bringing the
Fund's monthly dividend from 4.2 cents to 4.3 cents per share on January 31,
1995. During the year, the Fund paid dividends totaling 50.95 cents per share.
As interest rates rose and yield differentials between bonds of different
quality ratings and maturities continued to compress, the Fund's manager focused
on higher-quality bonds with maturities in the 15-to-20 year range. When
possible, given limited supplies of investment-grade Florida bonds, the managers
also bought bonds whose prices tend to be less volatile in rising interest-rate
environments, notably housing issues with well-secured revenue streams.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
10
<PAGE>
NUVEEN MARYLAND TAX-FREE
VALUE FUND
Maryland
INDEX COMPARISON
Nuveen Maryland Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
Shareholders enjoyed four dividend increases during the period, bringing the
Fund's monthly dividend from 4.1 cents to 4.4 cents per share on January 31,
1995. During the year, the Fund paid dividends totaling 51.25 cents per share.
As interest rates rose and yield differentials between bonds of different
quality ratings and maturities continued to compress, the Fund's manager focused
on higher-quality bonds with maturities in the 15-to-20 year range.
Late in the period, as yield differentials widened, general obligation bonds
were emphasized. In addition to Maryland's housing and healthcare sectors,
attractive value investing opportunities were found in bonds issued to support
the state's transportation systems.
Tax- MD Share
Adjusted Price
Date Lehman Lehman Wealth
Jan-92 $10,000 $10,000 $ 9,525
Jun-92 $10,379 $10,386 $ 9,862
Jan-93 $10,975 $10,983 $10,379
Jun-93 $11,576 $11,628 $11,088
Jan-94 $12,273 $12,328 $11,698
Jun-94 $11,555 $11,648 $10,970
Dec-94 $11,467 $11,559 $10,833
ANNUALIZED TOTAL RETURN
--------------------------------------------------------
1 year Since Inception
--------------------------------------------------------
R shares on NAV -4.58% 5.43%
A shares on NAV -.26%+
A shares on offering price** -4.75%+
C shares on NAV .12%+
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25 % annual 12b-1 service fee applicable to Class A and Class C
Shares: (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
11
<PAGE>
NUVEEN MICHIGAN TAX-FREE
VALUE FUND
Michigan
INDEX COMPARISON
Nuveen Michigan Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
<TABLE>
<CAPTION>
Tax- MI Share
Adjusted Price
Date Lehman Lehman Wealth
------------------------------------------
<S> <C> <C> <C>
Jan-92 $10,000 $10,000 $ 9,525
Jun-92 $10,377 $10,386 $ 9,964
Jan-93 $10,973 $10,983 $10,554
Jun-03 $11,560 $11,628 $11,304
Jan-94 $12,256 $12,328 $11,988
Jun-94 $11,525 $11,648 $11,270
Dec-94 $11,438 $11,559 $11.145
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------
ANNUALIZED TOTAL RETURN
1 year Since Inception
------------------------------------------------------
<S> <C> <C>
R shares on NAV -3.98% 6.51%
A shares on NAV .02%+
A shares on offering price** -4.48%+
C shares on NAV 1.18%+
------------------------------------------------------
</TABLE>
Shareholders enjoyed two dividend increases during the period, bringing the
Fund's monthly dividend from 4.4 cents to 4.5 cents per share on January 31,
1995. During the year, the Fund paid dividends totaling 53.35 cents per share.
While the shortage of investment-grade Michigan paper offered few
opportunities to increase the portfolio's yield, the Fund's manager took
advantage of attractive value investing opportunities in Michigan's healthcare
and single-family housing sectors. Along with education bonds backed by state
agency guarantees and municipalities whose economies have strengthened with the
economic expansion, these issues now make up a significant percentage of the
portfolio's holdings.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
12
<PAGE>
NUVEEN NEW JERSEY TAX-FREE
VALUE FUND
New Jersey
INDEX COMPARISON
Nuveen New Jersey Tax-Free Value Fund R Shares* and Lehman Brothers Municipal
Bond Index Comparison of Change in Value of a $10,000 Investment
<TABLE>
<CAPTION>
Tax-Adjusted NJ Share
Date Lehman Lehman Price Wealth
---------------------------------------------------------------------
<S> <C> <C> <C>
Jan-92 $10,000 $10,000 $9,525
Jun-92 $10,378 $10,386 $9,912
Jan-93 $10,975 $10,983 $10,416
Jun-93 $11,571 $11,628 $11,006
Jan-94 $12,268 $12,328 $11,526
Jun-94 $11,546 $11,648 $11,370
Dec-94 $11,458 $11,559 $11,446
</TABLE>
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURN
---------------------------------------------------------------------
1 Year Since Inception
---------------------------------------------------------------------
<S> <C> <C>
R shares on NAV -3.27% 6.31%
A shares on NAV .02%+
A shares on offering price** -4.48%+
C shares on NAV 1.16%+
---------------------------------------------------------------------
</TABLE>
Shareholders enjoyed three dividend increases during the period, bringing the
Fund's monthly dividend from 4.15 cents to 4.5 cents per share on January 31,
1995. During the year, the Fund paid dividends totaling 52.2 cents per share.
As interest rates rose, the Fund's manager concentrated on bonds maturing in
the 15-to-20 year range, believing that longer-term bonds were relatively
overvalued. The manager also focused on bonds trading at a premium to their par
values, which helped cushion the portfolio against interest-rates.
Reflecting Nuveen's value investing approach and research strengths, emphasis
continued on bonds with contingent cash flows or call provision, which are
difficult for less experienced investors to value accurately and tend to trade
at attractive prices.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
13
<PAGE>
NUVEEN PENNSYLVANIA TAX-FREE
VALUE FUND
Pennsylvania
INDEX COMPARISON
Nuveen Pennsylvania Tax-Free Value Fund R Shares* and Lehman Brothers Municipal
Bond Index Comparison of Change in Value of a $10,000 Investment
Shareholders enjoyed a steady dividend of 4.45 cents per share throughout the
period. For the 12 months, the Fund's monthly dividends totaled 53.4 cents per
share.
As interest rates rose during the year, the Fund's manager reduced the
duration of the portfolio--a technical measure of a fund's sensitivity to
interest-rate changes--focusing more attention on bonds with maturities in the
long-intermediate (15-to-20 year) range. While a state law that had limited
trading by Pennsylvania funds was repealed early in the period, due to a
shortage of investment grade Pennsylvania bonds, the basic composition of the
portfolio was essentially unchanged, aside from the elimination of some small,
odd-lot positions.
<TABLE>
<CAPTION>
Tax- Penn Share
Adjusted Price
Date Lehman Lehman Wealth
<S> <C> <C> <C>
Jan-92 $10,000 $10,000 $ 9,525
Jun-92 $10,383 $10,386 $ 9,954
Jan-93 $10,979 $10,983 $10,475
Jun-93 $11,604 $11,628 $11,205
Jan-94 $12,303 $12,328 $11,906
Jun-94 $11,604 $11,648 $11,037
Dec-94 $11,516 $11,559 $10,954
</TABLE>
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURN
1 year Since Inception
<S> <C> <C>
R shares on NAV -4.94% 5.92%
A shares on NAV .49%+
A shares on offering price** -4.03%+
C shares on NAV -.53%+
</TABLE>
*One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
**Maximum public offering price, which includes sales charges, which are reduced
for purchases over $50,000 and waived for reinvestment of dividends.
+Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
<PAGE>
NUVEEN VIRGINIA TAX-FREE
VALUE FUND
Virginia
INDEX COMPARISON
Nuveen Virginia Tax-Free Value Fund R Shares* and Lehman Brothers Municipal Bond
Index Comparison of Change in Value of a $10,000 Investment
Tax- Virginia
Adjusted Share Price
Date Lehman Lehman Wealth
------ ---------- -------- -----------
Jan-92 $10,000 $10,000 $ 9,525
Jun-92 $10,378 $10,386 $ 9,902
Jan-93 $10,975 $10,983 $10,481
Jun-93 $11,572 $11,628 $11,164
Jan-94 $12,269 $12,328 $11,820
Jun-94 $11,547 $11,648 $11,083
Dec-94 $11,459 $11,559 $10,992
ANNUALIZED TOTAL RETURN
-----------------------------------------------------------
1 year Since Inception
-----------------------------------------------------------
R shares on NAV -3.92% 6.04%
A shares on NAV .01%+
A shares on offering price** -4.50%+
C shares on NAV .10%+
-----------------------------------------------------------
Shareholders enjoyed a dividend increase during the period, bringing the Fund's
monthly dividend from 4.4 cents to 4.5 cents on January 31, 1995. For the year,
the Fund's monthly dividends totaled 53.7 cents per share.
As interest rates rose during the year, the Fund's manager shortened the
maturity of the portfolio somewhat, focusing on bonds maturing in 15-to-20
years. Significant holdings of pre-refunded bonds also helped moderate the
impact of interest-rate changes on the portfolio's net asset value.
The managers placed more emphasis on general obligation bonds and bonds issued
to support the state's healthcare system, the fund continues to emphasize
education issues supporting state colleges and universities, and transportation
issues, notably revenue bonds backing the Washington, D.C. airport.
* One-year, 5-year and life of fund total return figures for Class R Shares are
not representative for Class A Shares or Class C Shares because they do not take
into account (1) the difference between the maximum front-end sales charge
applicable to Class R Shares (none), Class A Shares (4.50%) and Class C Shares
(none); (2) the .25% annual 12b-1 service fee applicable to Class A and Class C
Shares; (3) the .75% annual 12b-1 distribution fee to be deducted from income
with respect to Class C Shares; and (4) other class-level expenses applicable to
Class A Shares and Class C Shares.
** Maximum public offering price, which includes sales charges, which are
reduced for purchases over $50,000 and waived for reinvestment of dividends.
+ Life of class; not annualized. Class A Shares and Class C Shares were first
issued at different times after September 6, 1994.
The Lehman Municipal Bond Index is comprised of a broad range of investment-
grade municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the table reflects the initial maximum sales
charge applicable to R Shares at the time (4.75%) and all ongoing fund expenses.
15
<PAGE>
PORTFOLIO OF INVESTMENTS
ARIZONA
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 250,000 Arizona Certificates of
Participation,
6.250%, 9/01/10 9/02 at 102 Aaa $ 254,488
Arizona Educational Loan
Marketing Corporation,
Alternative Minimum Tax:
200,000 7.000%, 3/01/05 3/02 at 101 A 207,466
100,000 6.375%, 9/01/05 9/02 at 101 Aa 102,615
300,000 Arizona Health Facilities
Authority
(Phoenix Baptist Hospital
and Medical Center),
6.250%, 9/01/11 9/03 at 100 Aaa 304,350
200,000 Arizona Municipal
Financing Program,
Certificates of
Participation, 7.700%,
8/01/10 No Opt. Call Aaa 223,222
200,000 Arizona State
Transportation Board,
6.500%, 7/01/11 (Pre-
refunded to 7/01/02) 7/02 at 101 1/2 Aaa 213,158
500,000 Arizona State University,
5.750%, 7/01/12 7/02 at 101 AA 477,745
500,000 Arizona Student Loan
Acquisition Authority,
Alternative Minimum Tax,
6.600%, 5/01/10 5/04 at 102 Aa 512,705
175,000 Arizona Wastewater
Management Authority,
5.950%, 7/01/12 7/02 at 102 Aaa 171,645
700,000 Apache County Public
Finance Corporation,
Certificates of
Participation, 5.500%,
5/01/10 5/00 at 102 A 629,076
195,000 Central Arizona Water
Conservation District,
6.500%, 11/01/11 (Pre-
refunded to 5/01/01) 5/01 at 102 AA- 207,845
300,000 Cochise County Unified
School District No. 68,
General Obligation,
7.500%, 7/01/10 No Opt. Call Aaa 348,471
250,000 Coconino and Yavapai
Counties, Joint Unified
School District No. 9,
6.750%, 7/01/07 7/01 at 101 A- 259,128
280,000 Eloy Municipal Property
Corporation,
7.000%, 7/01/11 7/02 at 101 BBB 285,382
375,000 Maricopa Rural Road
Improvement District,
6.900%, 7/01/05 7/99 at 101 N/R 380,779
300,000 Maricopa County Hospital
District No. 1,
6.250%, 6/01/10 6/04 at 101 Aaa 308,058
500,000 Maricopa County Industrial
Development Authority
(Catholic Healthcare
West),
5.750%, 7/01/11 7/02 at 102 Aaa 476,010
500,000 Maricopa County Industrial
Development Authority
(Samaritan Health
Services),
7.000%, 12/01/16 No Opt. Call Aaa 555,785
50,000 Maricopa County School
District No. 28,
General Obligation,
6.000%, 7/01/12 7/02 at 100 Aaa 49,890
265,000 Maricopa County School
District No. 28,
6.000%, 7/01/12 (Pre-
refunded to 7/01/02) 7/02 at 100 Aaa 271,829
200,000 Maricopa County Unified
School District No. 41,
6.500%, 7/01/08 (Pre-
refunded to 7/01/02) 7/02 at 100 Aaa 211,286
250,000 Maricopa County Unified
School District No. 69
(Paradise Valley),
6.500%, 7/01/09
(Pre-refunded to 7/01/01) 7/01 at 100 Aaa 263,073
</TABLE>
16
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Mohave County Industrial
Development Authority,
(Citizens Utilities
Company), Alternative
Minimum Tax, 6.600%, 5/01/29 11/03 at 101 AAA $ 495,235
750,000 Navajo County Pollution
Control Corporation (Arizona
Public Service Company),
5.875%, 8/15/28 8/03 at 102 Baa2 639,735
425,000 Peoria Improvement District
(North Valley Power Center),
7.300%, 1/01/12 1/03 at 101 BBB 445,621
200,000 Phoenix General Obligation,
6.500%, 7/01/11 (Pre-
refunded to 7/01/99) 7/99 at 102 AA+ 212,178
250,000 Phoenix Civic Improvement
Corporation, Airport
Terminal Excise Tax,
Alternative Minimum Tax,
7.800%, 7/01/11 7/97 at 102 AA+ 265,400
295,000 Phoenix Housing Finance
Corporation,
FHA-Insured 6.500%, 7/01/24 7/02 at 101 Aaa 290,230
Phoenix Civic Improvement
Corporation, Wastewater
System:
400,000 6.125%, 7/01/23 (Pre-refunded
to 7/01/03) 7/03 at 102 AAA 420,044
500,000 4.750%, 7/01/23 7/04 at 102 A1 380,405
200,000 Phoenix Industrial
Development Authority,
FHA-Insured (Chris Ridge
Village Project),
6.750%, 11/01/12 11/02 at 101 AAA 203,976
300,000 Phoenix Junior Lien Street
and Highway,
6.250%, 7/01/11 7/02 at 102 A+ 301,461
500,000 Phoenix Industrial
Development Authority, GNMA
(Meadow Glen Apartments),
5.800%, 8/20/28 2/03 at 102 Aaa 434,245
Phoenix Industrial
Development Authority
(John C. Lincoln Hospital
and Health Center):
500,000 6.000%, 12/01/10 12/03 at 102 BBB+ 446,395
500,000 6.000%, 12/01/14 12/03 at 102 BBB+ 434,725
290,000 Pima County Industrial
Development Authority
(Tucson Electric), 7.250%,
7/15/10 1/02 at 103 Aaa 310,451
300,000 Pima County Unified School
District No. 1, General
Obligation, 6.100%, 7/01/12 7/02 at 102 Aaa 302,115
Pinal County Certificates of
Participation:
300,000 6.375%, 6/01/06 6/02 at 100 AA 306,843
200,000 6.500%, 6/01/09 6/02 at 100 AA 203,614
Salt River Project,
Agricultural Improvement and
Power District:
300,000 5.750%, 1/01/19 1/02 at 100 AA 277,989
280,000 5.750%, 1/01/20 1/96 at 100 AA 258,115
225,000 Tempe General Obligation,
6.000%, 7/01/08 7/02 at 101 AA+ 227,354
500,000 Tempe Industrial Development
Authority,
Multi-Family Housing, FHA-
Insured (Quadrangles Village
Apartments),
6.250%, 6/01/26 6/03 at 102 AAA 464,475
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
ARIZONA--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 600,000 Tempe Union High School District
No. 213, General Obligation,
6.000%, 7/01/12 7/04 at 101 Aaa $ 598,674
500,000 Tucson General Obligation, 6.250%,
7/01/18 7/04 at 101 Aaa 506,070
575,000 Tucson Airport Authority, 5.700%,
6/01/13 6/03 at 102 Aaa 545,520
250,000 Tucson Local Business Development
Finance Corporation, 6.250%,
7/01/12 7/02 at 102 Aaa 253,352
300,000 University of Arizona, 6.250%,
6/01/11 6/02 at 102 AA 304,625
335,000 Yavapai County Community College
District, 6.000%, 7/01/12 7/03 at 101 A- 323,753
675,000 Yuma County Union High School
District No. 70, General
Obligation, 5.700%, 7/01/06 7/02 at 101 Aaa 668,823
------------------------------------------------------------------------------------
$17,540,000 Total Investments - (cost
$17,484,124) - 97.3% 17,235,429
------------------------------------------------------------------------------------
-------------------
----------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 1.1%
$ 200,000 Maricopa County Pollution Control
Corporation (Arizona Public
Service Company Palo Verde
Project), Variable Rate Demand
Bonds,
----------- 4.000%, 5/01/29+ P-1 200,000
------------------------------------------------------------------------------------
----------------
Other Assets Less Liabilities -
1.6% 285,984
------------------------------------------------------------------------------------
Net Assets - 100% $17,721,413
</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 26 $ 9,144,475 53%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 12 3,357,028 20
PORTFOLIO OF A+ A1 2 681,866 4
INVESTMENTS A, A- A, A2, A3 4 1,419,423 8
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 5 2,251,858 13
TEMPORARY Non-rated Non-rated 1 380,779 2
INVESTMENTS):
--------------------------------------------------------------------------------------
TOTAL 50 $17,235,429 100%
</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.
18
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
FLORIDA
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 300,000 Florida Department of General
Services, General
Obligation, 6.600%, 7/01/17 7/02 at 101 AA $ 308,547
1,705,000 Florida General Obligation,
5.125%, 7/01/17 7/04 at 101 AA 1,452,472
750,000 Florida Housing Finance
Agency, 6.400%, 6/01/24 6/02 at 103 AAA 734,370
65,000 Florida Housing Finance
Agency, Home Ownership
(GNMA), Alternative Minimum
Tax,
8.595%, 11/01/18 No Opt. Call AAA 66,950
Florida Municipal Power
Agency:
1,000,000 5.500%, 10/01/12 10/02 at 102 Aaa 925,390
1,000,000 6.250%, 10/01/21 (Pre-
refunded to 10/01/02) 10/02 at 102 Aaa 1,054,990
1,145,000 6.000%, 10/01/27 (Pre-
refunded to 10/01/02) 10/02 at 102 Aaa 1,196,159
Florida State Board of
Education:
1,160,000 7.100%, 6/01/07 No Opt. Call Aaa 1,210,263
360,000 7.250%, 6/01/23 (Pre-refunded
to 6/01/00) 6/00 at 102 Aaa 394,834
1,915,000 7.250%, 6/01/23 6/00 at 102 AA 2,066,094
Florida Turnpike Authority:
650,000 6.350%, 7/01/22 (Pre-refunded
to 7/01/02) 7/02 at 101 Aaa 686,368
350,000 6.350%, 7/01/22 7/02 at 101 Aaa 353,836
400,000 Alachua County Health
Facilities Authority (Shands
Hospital), 5.750%, 12/01/15 12/02 at 100 Aaa 376,392
300,000 Brevard County Educational
Facilities Authority
(Florida Institute of
Technology),
6.875%, 11/01/22 11/02 at 102 BBB+ 296,115
1,000,000 Broward County Health
Facilities Authority
(Holy Cross Hospital),
5.850%, 6/01/12 6/03 at 102 Aaa 964,060
600,000 Broward County Housing
Finance Authority (Lakeside
Apartments), 7.000%, 2/01/25 2/05 at 102 AAA 613,188
200,000 Cape Coral Health Facilities
Authority (Cape Coral
Medical Center), 8.125%,
11/01/08 No Opt. Call Aaa 210,046
1,000,000 Dade County (Miami
International Airport),
Alternative Minimum Tax,
6.550%, 10/01/13 10/02 at 102 Aaa 1,027,980
115,000 Dade County Housing Finance
Authority, Single Family
Mortgage, Alternative
Minimum Tax, 7.250%, 9/01/23 3/01 at 102 Aaa 119,033
2,480,000 Dade County (Jackson Memorial
Hospital), 4.875%, 6/01/15 6/03 at 102 Aaa 2,055,449
480,000 Dade County Special Housing
(City of Miami
Developments), 12.000%,
7/01/12 7/00 at 100 A 494,270
255,000 Dade County (Courthouse
Center),
6.300%, 4/01/14 4/04 at 102 A 246,450
250,000 Dade County Health Facilities
Authority
(South Miami Hospital),
7.000%, 10/01/18 10/99 at 102 Aaa 261,450
300,000 Dade County Health Facilities
Authority
(North Shore Medical
Center), 6.500%, 8/15/15 8/02 at 102 Aaa 306,396
1,000,000 Davie Water and Sewer System,
6.250%, 10/01/17 10/02 at 102 Aaa 1,006,370
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
FLORIDA--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 600,000 Daytona Beach Water and
Sewer System,
6.000%, 11/15/14 11/02 at 102 Aaa $ 589,038
1,600,000 Dunedin (Mease Health
Care), 5.375%, 11/15/13 11/03 at 101 Aaa 1,449,584
400,000 Escambia County Housing
Finance Authority,
Single Family Mortgage,
Alternative Minimum
Tax, 6.900%, 4/01/20 10/02 at 102 Aaa 405,908
500,000 Escambia County School
Board, Certificates of
Participation, 6.375%,
2/01/12 2/02 at 100 Aaa 509,730
500,000 Gainesville Utility
System, 6.500%,
10/01/22 10/02 at 102 AA 508,910
1,500,000 Hillsborough County
Aviation Authority
(Tampa International
Airport), Alternative
Minimum Tax, 5.375%,
10/01/23 10/03 at 102 Aaa 1,278,300
1,200,000 Hillsborough County
Industrial Development
Authority, Pollution
Control (Tampa
Electric), 8.000%,
5/01/22 5/02 at 103 Aa2 1,368,048
250,000 Hillsborough County
Capital Improvement
(Museum of Science and
Industry),
6.400%, 1/01/12 1/00 at 102 A 250,810
500,000 Hillsborough County
School District,
General Obligation,
8.875%, 9/01/04
(Pre-refunded to
9/01/95) 9/95 at 102 AAA 520,415
250,000 Hollywood Water and
Sewer System,
6.875%, 10/01/21 (Pre-
refunded to 10/01/01) 10/01 at 102 Aaa 273,600
Jacksonville Electric
Authority:
470,000 7.500%, 10/01/02 10/97 at 101 1/2 Aa1 505,494
500,000 5.500%, 10/01/14 10/02 at 101 Aa1 457,310
1,000,000 5.250%, 10/01/21 10/02 at 101 Aa1 853,710
1,000,000 5.250%, 10/01/28 10/02 at 101 Aa1 846,580
250,000 Jacksonville Excise
Taxes, 6.500%, 10/01/13 10/02 at 102 Aaa 257,195
605,000 Jacksonville Health
Facilities Authority
(Daughters of Charity
Health System - St.
Vincent),
7.500%, 11/01/15 (Pre-
refunded to 11/01/00) 11/00 at 102 Aaa 672,736
375,000 Jacksonville Water and
Sewer (Jacksonville
Suburban Utilities
Corporation),
Alternative Minimum
Tax, 6.750%, 6/01/22 6/02 at 102 A2 381,701
250,000 Jupiter Water System,
6.250%, 10/01/18 10/01 at 102 Aaa 250,635
700,000 Lakeland (Lakeland
Regional Medical
Center),
6.125%, 11/15/22 11/02 at 102 Aaa 690,263
250,000 North Broward Hospital
District, 6.250%,
1/01/12 1/02 at 102 Aaa 253,218
Orange County Sales Tax:
355,000 6.125%, 1/01/19 1/00 at 102 Aaa 352,114
145,000 6.125%, 1/01/19 No Opt. Call Aaa 151,582
1,500,000 5.375%, 1/01/24 1/03 at 102 Aaa 1,309,155
375,000 Orange County Tourist
Development,
6.500%, 10/01/19 10/02 at 102 Aaa 384,964
</TABLE>
20
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 500,000 Orange County Water
Utilities System,
6.250%, 10/01/17 4/02 at 102 Aaa $ 501,675
1,000,000 Orange County Housing
Finance Authority (Ashley
Point Apartments),
Alternative Minimum Tax,
7.100%, 10/01/24 10/01 at 101 BBB+ 1,002,780
Orlando Utilities
Commission:
500,000 8.500%, 10/01/09 (Pre-
refunded to 10/01/95) 10/95 at 102 Aaa 520,645
750,000 6.750%, 10/01/17 No Opt. Call AA- 808,395
1,250,000 6.000%, 10/01/20 10/02 at 102 AA- 1,203,988
1,000,000 5.500%, 10/01/20 10/99 at 100 AA- 891,790
Orlando and Orange County
Expressway Authority:
1,000,000 5.250%, 7/01/14 7/03 at 102 Aaa 885,300
1,000,000 5.500%, 7/01/18 7/03 at 102 Aaa 898,160
1,000,000 5.125%, 7/01/20 7/03 at 102 Aaa 843,650
425,000 Palm Beach County General
Obligation,
4.600%, 7/01/07 No Opt. Call AA 364,370
Palm Beach County Criminal
Justice Facilities:
1,000,000 5.300%, 6/01/05 No Opt. Call Aaa 960,700
1,000,000 5.375%, 6/01/10 No Opt. Call Aaa 924,600
445,000 Pasco County Guaranteed
Entitlement,
6.000%, 12/01/11 12/02 at 102 Aaa 438,930
1,000,000 Pensacola Health Facilities
Authority (Daughters of
Charity - Sacred Heart),
5.250%, 1/01/11 1/03 at 102 Aa 871,720
2,000,000 Pinellas County Health
Facilities Authority
(Morton Plant Health
System), 5.500%, 11/15/18 11/03 at 102 Aaa 1,797,080
1,000,000 Reedy Creek Improvement
District,
5.000%, 10/01/14 4/04 at 101 Aaa 855,490
565,000 St. Lucie County Solid Waste
System,
6.000%, 9/01/15 (Pre-
refunded to 9/01/99) 9/99 at 100 Aaa 580,645
500,000 St. Petersburg Health
Facilities Authority
(St. Joseph's Hospital
Inc.), 7.000%, 12/01/15 12/01 at 102 Aaa 526,485
1,000,000 Sarasota Water and Sewer
System,
7.625%, 10/01/08 (Pre-
refunded to 10/01/96) 10/96 at 102 Aaa 1,058,140
500,000 Tampa Water and Sewer
System,
6.000%, 10/01/17 10/02 at 101 Aaa 491,439
1,000,000 Turtle Run Community
Development District,
6.400%, 5/01/11 5/03 at 100 A1 1,013,279
2,000,000 West Palm Beach Utility
System,
5.400%, 10/01/23 10/02 at 101 Aaa 1,744,539
-------------------------------------------------------------------------------
$54,290,000 Total Investments - (cost
$53,488,907) - 96.5% 52,132,272
-------------------------------------------------------------------------
-------------------
-----------
Other Assets Less
Liabilities - 3.5% 1,875,711
-------------------------------------------------------------------------------
Net Assets - 100% $54,007,983
-------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
FLORIDA--CONTINUED
<TABLE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 50 $35,939,439 69%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 14 12,507,428 24
PORTFOLIO OF A+ A1 1 1,013,279 2
INVESTMENTS: A, A- A, A2, A3 4 1,373,231 3
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 2 1,298,895 2
-------------------------------------------------------------------------------------
TOTAL 71 $52,132,272 100%
-------------------------------------------------------------------------------------
</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.
See accompanying notes to financial statements.
22
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
MARYLAND
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,500,000 Maryland Community
Development Administration,
Department of Housing and
Community Development
Alternative Minimum Tax,
7.450%, 4/01/32 4/01 at 102 Aa $ 1,555,365
Maryland Community
Development Administration,
Multi-Family Housing:
700,000 6.700%, 5/15/27 5/02 at 102 Aa 694,414
500,000 6.750%, 5/15/33 5/02 at 102 Aa 500,610
2,000,000 Maryland General Obligation,
4.600%, 7/15/06 7/03 at 101 Aaa 1,758,220
Maryland Health and Higher
Educational Facilities
Authority (Doctors'
Community Hospital):
1,000,000 5.750%, 7/01/13 7/03 at 102 BBB- 835,440
1,005,000 8.750%, 7/01/22 (Pre-refunded
to 7/01/00) 7/00 at 102 Aaa 1,171,629
Maryland Health and Higher
Educational Facilities
Authority (Francis Scott Key
Medical Center):
1,800,000 5.000%, 7/01/13 7/03 at 102 Aaa 1,531,278
500,000 6.750%, 7/01/23 (Pre-refunded
to 7/01/00) 7/00 at 102 Aaa 537,085
1,000,000 Maryland Health and Higher
Educational Facilities
Authority (Greater Baltimore
Medical Center), 6.000%,
7/01/21 7/01 at 100 A1 883,530
1,000,000 Maryland Health and Higher
Educational Facilities
Authority (Mercy Medical
Center),
5.500%, 7/01/22 7/03 at 102 Aaa 875,020
500,000 Maryland Health and Higher
Educational Facilities
Authority (Sinai Hospital of
Baltimore),
7.000%, 7/01/19 (Pre-
refunded to 7/01/00) 7/00 at 102 Aaa 542,635
1,760,000 Maryland Stadium Authority,
5.875%, 12/15/12 12/04 at 102 Aaa 1,693,050
Maryland Stadium Authority,
Sports Facility, Alternative
Minimum Tax:
500,000 7.375%, 12/15/04 12/99 at 102 AA- 535,680
500,000 7.500%, 12/15/10 12/99 at 102 AA- 530,550
3,500,000 Maryland Transportation
Authority
(Baltimore/Washington
International Airport),
Alternative Minimum Tax,
6.400%, 7/01/19 7/04 at 102 Aaa 3,495,450
1,000,000 Maryland Transportation
Authority,
5.750%, 7/01/15 7/02 at 100 A1 921,100
600,000 Baltimore General Obligation,
6.500%, 10/15/12 (Pre-
refunded to 10/15/02) 10/02 at 100 Aaa 634,890
1,000,000 Baltimore GNMA (Tindeco Wharf
Apartments Project), 6.700%,
12/20/28 12/02 at 102 AAA 986,720
1,500,000 Baltimore Port Facilities
(Consolidated Coal Sales
Company), 6.500%, 10/01/11 4/02 at 103 Aa2 1,518,735
750,000 Baltimore Wastewater Project,
6.500%, 7/01/20 (Pre-
refunded to 7/01/00) 7/00 at 100 Aaa 786,465
930,000 Baltimore Water System,
6.500%, 7/01/20
(Pre-refunded to 7/01/00) 7/00 at 100 Aaa 975,217
</TABLE>
23
<PAGE>
PORTFOLIO OF INVESTMENTS
MARYLAND--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,250,000 Frederick County General
Obligation,
5.750%, 7/01/16 7/02 at 102 AA- $ 1,147,738
1,000,000 Howard County, (Howard
Hills Townhouse
Project--FHA Insured),
6.400%, 7/01/24 7/02 at 102 Aaa 948,110
2,000,000 Howard County Multi-Family
(Chase Glen Project),
7.000%, 7/01/24
(Mandatory put 7/01/04) 7/02 at 104 N/R 2,027,600
700,000 Maryland National Capital
Park and Planning
Commission, 6.125%,
7/01/10 7/02 at 102 AA 706,678
Montgomery County Housing
Opportunities Commission,
Single-Family:
450,000 7.250%, 7/01/13 7/96 at 103 Aa 461,876
1,615,000 6.600%, 7/01/14 7/04 at 102 Aa 1,613,127
2,100,000 Montgomery County, Solid
Waste Resource Recovery
Project, 5.875%, 6/01/13 6/03 at 102 Aaa 1,992,627
1,500,000 Morgan State University,
6.100%, 7/01/20 No Opt. Call Aaa 1,460,265
900,000 Prince George's County
(Maryland Local
Government Insurance
Trust), 6.050%, 8/01/12 8/02 at 102 AA- 881,946
500,000 Prince George's County
General Obligation,
5.000%, 1/15/09 1/02 at 102 AA- 441,920
600,000 Prince George's County
(Dimensions Health
Corporation), 6.700%,
7/01/97 No Opt. Call A 613,596
1,550,000 Prince George's County
Housing Authority,
(New Keystone
Apartments--FHA Insured),
6.800%, 7/01/25 1/02 at 102 Aaa 1,570,522
1,500,000 Prince George's County
Pollution Control
(Potomac Electric
Project), 6.375%, 1/15/23 1/03 at 102 A+ 1,483,530
1,000,000 University of Maryland,
5.000%, 10/01/11 10/03 at 101 AA+ 848,600
500,000 Commonwealth of Puerto
Rico, General Obligation,
6.600%, 7/01/13
(Pre-refunded to 7/01/02) 7/02 at 101 1/2 Aaa 540,655
1,750,000 Puerto Rico Aqueduct and
Sewer Authority, 7.875%,
7/01/17 7/98 at 102 A 1,899,677
2,000,000 Puerto Rico Highway and
Transportation Authority,
5.250% 7/01/21 7/03 at 101 1/2 A 1,653,600
Puerto Rico Electric Power
Authority:
315,000 7.125%, 7/01/14 (Pre-
refunded to 7/01/99) 7/99 at 101 1/2 AAA 342,814
185,000 7.125%, 7/01/14 7/99 at 101 1/2 A- 191,670
-------------------------------------------------------------------------------
$44,960,000 Total Investments - (cost
$44,662,008) - 96.9% 43,789,634
-------------------------------------------------------------------------------
-------------------
-----------
</TABLE>
24
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 2.2%
$1,000,000 Maryland Energy Financing
Administration (Baltimore Ferst
Project), Variable Rate Demand
Bonds, Alternative Minimum Tax,
4.200%, 7/01/11+ VMIG-1 $ 1,000,000
-------------------
-----------------------------------------------------------------------------------
---------------
Other Assets Less Liabilities -
0.9% 416,142
-----------------------------------------------------------------------------------
Net Assets - 100% $45,205,776
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
--------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 18 $21,842,652 50%
RATINGS** AA+, AA, Aa1, Aa, Aa2, Aa3
AA- 13 11,437,239 26
PORTFOLIO OF A+ A1 3 3,288,160 8
INVESTMENTS A, A- A, A2, A3 4 4,358,543 10
(EXCLUDING BBB+, BBB, Baa1, Baa, Baa2, Baa3
BBB- 1 835,440 2
TEMPORARY Non-Rated Non-Rated 1 2,027,600 4
INVESTMENTS):
--------------------------------------------------------------------------------------
TOTAL 40 $43,789,634 100%
</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.
25
<PAGE>
PORTFOLIO OF INVESTMENTS
MICHIGAN
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 900,000 Michigan Comprehensive
Transportation,
5.750%, 5/15/11 5/02 at 100 AA- $ 854,316
200,000 Michigan Hospital Finance
Authority
(Oakwood Hospital),
7.200%, 11/01/15
(Pre-refunded to 8/01/00) 8/00 at 102 Aaa 219,116
Michigan Housing
Development Authority,
Single Family Mortgage:
1,000,000 6.800%, 12/01/16 (WI) 6/05 at 102 AA+ 1,007,340
565,000 6.875%, 6/01/23 6/02 at 102 AA 570,537
Michigan Housing
Development Authority,
Rental Housing:
500,000 6.400%, 4/01/05 10/02 at 102 A+ 498,465
300,000 6.600%, 4/01/12 10/02 at 102 A+ 300,174
500,000 6.650%, 4/01/23 10/02 at 102 A+ 489,355
Michigan Municipal Bond
Authority:
250,000 4.750%, 12/01/09 12/01 at 100 Aaa 215,148
555,000 6.600%, 10/01/18 10/02 at 102 AA 561,249
950,000 Michigan Municipal Bond
Authority, State
Revolving Fund, 7.000%,
10/01/04 No Opt. Call AA 1,035,548
1,000,000 Michigan Public Power
Agency (Belle River
Project), 5.250%, 1/01/18 1/03 at 102 AA- 848,870
Michigan State Hospital
Finance Authority
(The Detroit Medical
Center):
860,000 5.000%, 8/15/02 No Opt. Call A- 776,425
460,000 8.125%, 8/15/08 (Pre-
refunded to 8/15/98) 8/98 at 102 Aaa 507,490
40,000 8.125%, 8/15/08 8/98 at 102 A- 43,912
465,000 Michigan State Hospital
Finance Authority
(Harper Grace and Huron
Valley Hospitals),
10.000%, 10/01/16 10/95 at 102 A- 489,185
1,000,000 Michigan State Hospital
Finance Authority
(Daughters of Charity
Health System),
7.000%, 11/01/21 11/01 at 102 Aa 1,025,450
500,000 Michigan State Hospital
Finance Authority (Mid-
Michigan Obligated
Group), 6.900%, 12/01/24 12/02 at 102 A 500,815
1,050,000 Michigan State Trunk Line,
5.500%, 10/01/21 10/02 at 100 AA- 920,084
900,000 Michigan State University,
6.250%, 8/15/15 8/02 at 101 AA- 885,663
400,000 Bay County General
Obligation, West Side
Regional Sewage Disposal
System,
6.400%, 5/01/02 5/95 at 103 A 408,632
250,000 Capital Region Airport
Authority, Alternative
Minimum Tax, 6.700%,
7/01/21 7/02 at 102 Aaa 254,340
300,000 Chippewa Valley Schools,
General Obligation,
7.000%, 5/01/12 (Pre-
refunded to 5/01/01) 5/01 at 102 AA 326,601
500,000 Clarkston Community
Schools, General
Obligation, 5.900%,
5/01/16 5/03 at 102 AA 468,915
</TABLE>
26
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Dearborn School District, General Obligation,
6.000%, 5/01/14 5/01 at 102 AA $ 968,850
1,000,000 Detroit Convention Facility (Cobo Hall),
5.250%, 9/30/12 9/03 at 102 A 864,990
1,000,000 Detroit Water Supply System, 4.750%, 7/01/19 7/04 at 102 Aaa 777,060
1,000,000 Dexter Community Schools, General Obligation,
5.000%, 5/01/17 5/03 at 102 AA 808,660
455,000 Grand Rapids Housing Corporation, Multi-Family
Mortgage, 7.375%, 7/15/41 1/04 at 104 AAA 464,300
650,000 Grand Rapids Sanitary Sewer System,
6.000%, 1/01/20 1/00 at 100 AA- 613,932
500,000 Grand Traverse County Hospital Finance
Authority (Munson Healthcare), 6.250%, 7/01/22 7/02 at 102 Aaa 494,790
340,000 Kent County Building Authority,
6.000%, 12/01/08 12/98 at 102 AAA 339,650
1,250,000 Lansing Sewage Disposal System, 5.850%, 5/01/14 5/04 at 102 Aaa 1,188,950
Monroe County Economic Development Corporation,
Pollution Control (The Detroit Edison
Company), Alternative Minimum Tax,
1,000,000 6.350%, 12/01/04 No Opt. Call Aaa 1,027,100
600,000 6.875%, 9/01/22 9/02 at 102 Aaa 617,970
Muskegon Water Supply System:
450,000 4.500%, 5/01/12 5/01 at 101 Baa1 342,005
450,000 4.500%, 5/01/13 5/01 at 101 Baa1 336,915
300,000 Reeths-Puffer Schools, General Obligation,
6.625%, 5/01/12 5/02 at 102 AA 308,196
1,250,000 Rockford Public Schools, General Obligation,
5.875%, 5/01/19 5/02 at 102 Aaa 1,169,562
180,000 Saginaw-Midland Municipal Water Supply
Corporation, 6.875%, 9/01/16 9/04 at 102 A- 184,230
200,000 St. Joseph Hospital Finance Authority (Mercy
Memorial Medical Center), 7.300%, 10/01/00 10/96 at 102 A- 210,520
1,000,000 University of Michigan Student Fee,
5.500%, 4/01/12 4/03 at 102 AA+ 915,720
250,000 Warren Economic Development Corporation, GNMA
(Autumn Woods Project),
6.900%, 12/20/22 3/02 at 101 Aaa 248,138
805,000 Wayne County, Detroit Metropolitan Airport,
Alternative Minimum Tax, 5.400%, 12/01/16 12/03 at 102 Aaa 694,843
</TABLE>
27
<PAGE>
PORTFOLIO OF INVESTMENTS
MICHIGAN--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,300,000 Western Michigan University,
5.000%, 7/15/21 12/03 at 102 Aaa $ 1,059,382
250,000 Puerto Rico Public Buildings
Authority,
6.875%, 7/01/21 (Pre-refunded to 7/02 at 101
7/01/02) 1/2 A 274,480
----------------------------------------------------------------------------------------
$28,675,000 Total Investments - (cost
$27,528,505) - 98.2% 27,117,873
----------------------------------------------------------------------------------------
-------------------
-------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 2.2%
$ 600,000 Michigan State Strategic Fund,
Pollution Control (Consumers Power
Company) Variable Rate Demand
Bonds, 4.100%, 4/15/18+ P-1 600,000
----------------------------------------------------------------------------------------
-------------------
Other Assets Less Liabilities -
(0.4)% (102,228)
----------------------------------------------------------------------------------------
Net Assets - 100% $27,615,645
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
--------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 15 $ 9,277,839 34%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 16 12,119,931 45
PORTFOLIO OF A+ A1 3 1,287,994 5
INVESTMENTS A, A- A, A2, A3 9 3,753,189 14
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 2 678,920 2
TEMPORARY
INVESTMENTS):
--------------------------------------------------------------------------------------
TOTAL 45 $27,117,873 100%
</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.
(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.
28
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
NEW JERSEY
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 200,000 New Jersey Economic
Development Authority
(Liberty State Park
Project), 6.800%, 3/15/22 3/02 at 102 A1 $ 201,870
1,000,000 New Jersey Economic
Development Authority
(Yeshiva K'tana of
Passaic), 8.000%, 9/15/18 No Opt. Call N/R 1,068,710
2,965,000 New Jersey Economic
Development Authority
(Bridgewater Resources,
Inc.), Alternative
Minimum Tax, 8.375%,
11/01/04 No Opt. Call N/R 3,006,658
250,000 New Jersey Economic
Development Authority,
Solid Waste Disposal
Facility
(Garden State Paper
Company),
7.125%, 4/01/22 4/02 at 102 Aa1 260,808
1,415,000 New Jersey Economic
Development Authority,
Alternative Minimum Tax,
5.300%, 12/01/07 12/03 at 102 Aa1 1,329,506
975,000 New Jersey Educational
Facilities Authority
(Trenton State College),
6.750%, 7/01/08 7/96 at 100 A+ 980,460
835,000 New Jersey Educational
Facilities Authority
(Princeton University),
5.875%, 7/01/11 7/04 at 100 Aaa 824,997
1,150,000 New Jersey Educational
Facilities Authority (New
Jersey Institute of
Technology), 6.000%,
7/01/24 7/04 at 102 Aaa 1,112,947
1,000,000 New Jersey General
Obligation, 5.800%,
2/15/07 No Opt. Call Aa1 1,000,820
1,010,000 New Jersey Health Care
Facilities Financing
Authority (Hackensack
Hospital),
8.750%, 7/01/09 No Opt. Call Aaa 1,164,742
400,000 New Jersey Health Care
Facilities Financing
Authority (Atlantic City
Medical Center), 6.800%,
7/01/05 7/02 at 102 A- 411,868
900,000 New Jersey Health Care
Facilities Financing
Authority (Palisades
Medical Center),
7.500%, 7/01/06 7/02 at 102 Ba 908,361
670,000 New Jersey Health Care
Facilities Financing
Authority (St. Peter's
Medical Center),
5.000%, 7/01/10 7/03 at 102 Aaa 585,438
New Jersey Housing Finance
Agency:
2,365,000 9.000%, 11/01/15 5/95 at 102 1/2 AA+ 2,430,038
1,250,000 10.000%, 4/01/30 4/95 at 102 A1 1,298,125
1,000,000 New Jersey Housing Finance
Agency,
7.250%, 11/01/23 5/95 at 100 A1 999,870
700,000 New Jersey Housing and
Mortgage Finance Agency,
6.950%, 11/01/13 5/02 at 102 A+ 716,660
200,000 New Jersey Sports and
Exposition Authority,
6.500%, 3/01/19 3/02 at 102 Aa 201,893
500,000 New Jersey Transporation
Trust Fund Authority,
6.250%, 12/15/03 No Opt. Call Aa 523,865
1,000,000 Camden County Pollution
Control Financing
Authority, Solid Waste
Disposal and Resource
Recovery, Alternative
Minimum Tax,
7.125%, 12/01/01 No Opt. Call Baa1 1,000,670
</TABLE>
29
<PAGE>
PORTFOLIO OF INVESTMENTS
NEW JERSEY--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Camden County Pollution
Control Finance Authority,
Solid Waste Disposal and
Resource Recovery, 7.250%,
12/01/10 12/01 at 102 Baa1 $ 995,200
1,415,000 Delaware River and Bay
Authority,
5.000%, 1/01/17 1/04 at 102 Aaa 1,180,294
595,000 East Windsor Municipal
Utility Authority, 5.000%,
12/01/07 No Opt. Call Aaa 543,217
500,000 Essex County Improvement
Authority,
6.500%, 12/01/12 12/02 at 102 A1 500,300
500,000 Franklin Township General
Obligation,
5.900%, 11/01/08 11/02 at 102 AA- 503,260
500,000 Hillsborough Township School
District,
5.875%, 8/01/11 No Opt. Call AA 485,870
400,000 Hudson County Improvement
Authority,
Multi-Family Housing
(Observer Park Project),
Alternative Minimum Tax,
6.900%, 6/01/22 6/04 at 100 AAA 405,432
1,605,000 Little Ferry Board of
Education, Certificates of
Participation, 6.300%,
1/15/08 No Opt. Call N/R 1,631,948
1,565,000 Middletown Township General
Obligation, 5.100%, 8/01/06 No Opt. Call AA- 1,439,424
Monroe Township Board of
Education, General
Obligation:
725,000 5.200%, 8/01/11 No Opt. Call Aaa 648,694
825,000 5.200%, 8/01/14 No Opt. Call Aaa 720,572
900,000 Newark General Obligation,
5.500%, 10/01/09 10/03 at 102 Aaa 845,982
500,000 North Bergen Housing
Development Corporation,
FHA-Insured, 7.400%, 9/01/20 9/09 at 100 N/R 513,995
300,000 North Bergen Township General
Obligation, 6.500%, 8/15/12 8/02 at 102 Aaa 310,104
2,350,000 Ocean County Utilities
Authority,
5.000%, 1/01/14 1/97 at 100 Aaa 2,008,005
2,215,000 Passaic County General
Obligation,
5.125%, 9/01/12 No Opt. Call Aaa 1,938,413
Rutgers State University,
775,000 8.000%, 5/01/18 (Pre-refunded
to 5/01/98) 5/98 at 102 Aaa 850,671
Union County Utilities
Authority, Solid Waste
System, Alternative Minimum
Tax:
195,000 7.100%, 6/15/06 6/02 at 102 A- 198,713
1,100,000 7.200%, 6/15/14 6/02 at 102 A- 1,111,044
270,000 6.850%, 6/15/14 6/02 at 102 Aaa 272,754
100,000 University of Medicine and
Dentistry of New Jersey,
6.500%, 12/01/18 12/01 at 102 AA 101,125
300,000 Wanaque Borough Sewerage
Authority,
7.000%, 12/01/21 12/02 at 102 Baa1 303,996
1,000,000 Puerto Rico Aqueduct and
Sewer Authority, 7.875%,
7/01/17 7/98 at 102 A 1,085,530
</TABLE>
30
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL
AMOUNT DESCRIPTION PROVISIONS* RATINGS** MARKET VALUE
-----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Puerto Rico Highway Transportation
Authority,
$ 60,000 6.625%, 7/01/18 (Pre-refunded to
7/01/02) 7/02 at 101 1/2 A $ 64,969
1,500,000 Puerto Rico Industrial Medical
Educational and Environmental
Authority (American Home
Products), 5.100%, 12/01/18 12/03 at 103 A2 1,216,125
-----------------------------------------------------------------------------------------
$40,980,000 Total Investments - (cost
$40,700,878) - 93.3% 39,903,943
-----------------------------------------------------------------------------------------
-------------------
-------------------
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 3.7%
$ 1,600,000 New Jersey Economic Development
Authority,
Dock Facility (Bayonne/IMTT),
Variable Rate Demand Bonds,
3.900%, 12/01/27+ VMIG-1 1,600,000
-----------------------------------------------------------------------------------------
Other Assets Less Liabilities -
3.0% 1,283,099
-----------------------------------------------------------------------------------------
Net Assets - 100% $42,787,042
-----------------------------------------------------------------------------------------
</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 15 $13,412,262 34%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 10 8,276,609 21
PORTFOLIO OF A+ A1 6 4,697,285 12
INVESTMENTS A, A- A, A2, A3 6 4,088,249 10
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 3 2,299,866 6
TEMPORARY BB+, BB, BB- Ba1, Ba, Ba2, Ba3 1 908,361 2
INVESTMENTS): Non-rated Non-rated 4 6,221,311 15
--------------------------------------------------------------------------------------
TOTAL 45 $39,903,943 100%
</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
PENNSYLVANIA
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 750,000 Pennsylvania Certificates of
Participation,
5.250%, 7/01/10 7/03 at 102 Aaa $ 672,315
2,500,000 Pennsylvania Economic
Development Financing
Authority (Sun Co--R&M
Project), Alternative
Minimum Tax, 7.600%,
12/01/24 12/04 at 102 Baa1 2,585,200
1,290,000 Pennsylvania General
Obligation,
5.000%, 5/01/03 No Opt. Call AA- 1,214,096
425,000 Pennsylvania Higher
Educational Facilities
Authority (Temple
University),
7.100%, 10/01/00 10/96 at 102 A 441,197
Pennsylvania Higher
Educational Facilities
Authority (Thomas Jefferson
University):
350,000 6.625%, 8/15/09 8/02 at 102 Aa 359,818
750,000 6.000%, 7/01/19 7/99 at 102 Aa 715,358
440,000 Pennsylvania Housing Finance
Agency, Alternative Minimum
Tax, 8.150%, 4/01/24 4/00 at 102 AA 459,158
600,000 Pennsylvania Housing Finance
Agency, Single Family
Mortgage, 7.150%, 4/01/15 10/01 at 102 AA 624,246
1,390,000 Pennsylvania
Intergovernmental
Cooperative Authority (City
of Philadelphia Funding
Program), 7.000%, 6/15/05 No Opt. Call Aaa 1,461,766
2,205,000 Pennsylvania State
University, 5.500%, 8/15/16 8/02 at 102 AA- 1,984,169
2,300,000 Pennsylvania Turnpike
Commission,
5.500%, 12/01/17 12/02 at 102 Aaa 2,053,072
Allegheny County (Pittsburgh
International Airport),
Alternative Minimum Tax:
1,000,000 7.000%, 1/01/18 1/00 at 102 Aaa 1,015,230
900,000 5.625%, 1/01/19 1/03 at 102 Aaa 789,264
1,300,000 Allegheny County Hospital
Development Authority
(Allegheny Valley
Hospital),
7.000%, 8/01/15 No Opt. Call A 1,327,079
1,500,000 Allegheny County Hospital
Development Authority
(Rehabilitation Institute
of Pittsburgh), 7.000%,
6/01/22 6/02 at 102 BBB 1,429,830
2,000,000 Allegheny County Residential
Finance Authority, Single
Family Mortgage, (GNMA),
Alternative Minimum Tax,
0.000%, 5/01/27 No Opt. Call Aaa 201,000
2,000,000 Armstrong County Hospital
Authority (Canterbury Place
Project), 6.500%, 12/01/21 12/01 at 100 Aaa 2,009,600
1,000,000 Bucks County Community
College Authority, 6.250%,
6/15/14 6/02 at 100 AA 998,790
2,750,000 Central Bucks School
District, General
Obligation, 5.400%, 5/15/14 5/04 at 100 Aaa 2,475,605
1,500,000 Chester County General
Obligation,
5.650%, 12/15/11 12/03 at 100 Aa 1,408,335
1,300,000 Delaware County Authority
(Crozer-Chester Medical
Center),
5.300%, 12/15/20 12/03 at 102 Aaa 1,100,034
</TABLE>
32
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 800,000 Greater Lebanon Refuse Authority, Solid Waste,
7.000%, 11/15/04 11/02 at 100 A- $ 810,504
1,470,000 Lawrence County General Obligation,
5.000%, 8/01/18 8/04 at 100 Aaa 1,204,694
Luzerne County Industrial Development Authority
(Pennsylvania Gas and Water Company),
Alternative Minimum Tax:
1,500,000 7.000%, 12/01/17 12/04 at 102 Aaa 1,564,845
950,000 7.125%, 12/01/22 12/02 at 102 Baa3 939,094
300,000 Montgomery County Higher Educational and Health
Authority (Abington Memorial Hospital),
6.000%, 6/01/22 6/03 at 102 Aaa 283,830
1,860,000 Norristown Municipal Waste Authority,
5.125%, 11/15/23 11/03 at 102 Aaa 1,530,817
1,800,000 Northampton County Higher Education Authority
(Lehigh University), 6.900%, 10/15/06 10/01 at 102 Aaa 1,929,816
1,000,000 Northumberland County Industrial Development
Authority (Roaring Creek Water Company),
Alternative Minimum Tax, 6.375%, 10/15/23 10/03 at 102 N/R 857,610
2,630,000 Penn Hills General Obligation, 0.000%, 12/01/16 No Opt. Call Aaa 639,826
350,000 Philadelphia Authority for Industrial
Development (National Board of Medical
Examiners),
6.750%, 5/01/12 5/02 at 102 A+ 356,692
2,000,000 Philadelphia Gas Works, 6.375%, 7/01/14 7/03 at 102 Aaa 2,020,300
3,000,000 Philadelphia Hospital and Higher Educational
Facilities Authority
(The Children's Hospital of Philadelphia),
5.000%, 2/15/21 2/03 at 102 AA 2,351,070
Pittsburgh Urban Redevelopment Authority,
Alternative Minimum Tax:
1,100,000 6.625%, 4/01/22 4/04 at 102 A 1,060,356
750,000 6.800%, 10/01/25 4/03 at 102 A1 735,705
500,000 St. Mary's Hospital Authority (Franciscan
Health System/St. Mary of Langhorne), 6.500%,
7/01/12 7/02 at 102 Aaa 509,830
230,000 Sayre Health Care Facilities Authority (Guthrie
Healthcare System), 7.100%, 3/01/17 3/01 at 102 Aaa 241,201
2,250,000 University of Pittsburgh, 6.125%, 6/01/21 6/02 at 102 Aaa 2,193,818
350,000 Washington County Hospital Authority
(Monongahela Valley Hospital),
6.750%, 12/01/08 4/02 at 102 A 352,702
1,000,000 Washington County Hospital Authority
(The Washington Hospital), 5.625%, 7/01/23 7/03 at 102 Aaa 891,900
935,000 West View Municipal Authority, 9.500%, 11/15/14 No Opt. Call Aaa 1,220,427
600,000 Wilkes-Barre General Municipal Authority
(College Misericordia), Alternative Minimum
Tax, 7.750%, 12/01/12 12/00 at 100 N/R 630,642
-------------------------------------------------------------------------------------------------
$53,625,000 Total Investments - (cost $48,680,853) - 89.1% 47,650,841
</TABLE>
----------- -----------
33
<PAGE>
PORTFOLIO OF INVESTMENTS
PENNSYLVANIA--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 1.9%
$ 1,000,000 Allegheny County Hospital
Development Authority
(Presbyterian-University
Health System), Variable
Rate Demand Bonds, 3.600%,
3/01/18+ VMIG-1 $ 1,000,000
-----------
------------------------------------------------------------------------------
----------
Other Assets Less Liabilities
- 9.0% 4,824,976
------------------------------------------------------------------------------
Net Assets - 100% $53,475,817
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
--------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 21 $26,009,190 55%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 9 10,115,040 21
PORTFOLIO OF A+ A1 2 1,092,397 2
INVESTMENTS A, A- A, A2, A3 5 3,991,838 8
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 3 4,954,124 11
TEMPORARY Non-Rated Non-Rated 2 1,488,252 3
INVESTMENTS):
--------------------------------------------------------------------------------------
TOTAL 42 $47,650,841 100%
</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.
34
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
VIRGINIA
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 300,000 Virginia College Building
Authority
(Hampton University),
6.500%, 4/01/08 4/02 at 102 A+ $ 309,573
800,000 Virginia College Building
Authority
(Randolph-Macon College),
6.625%, 5/01/13 5/02 at 102 A- 812,872
Virginia College Building
Authority
(The Washington and Lee
University):
1,250,000 5.750%, 1/01/14 1/04 at 102 AA 1,175,863
1,000,000 5.800%, 1/01/24 1/04 at 102 AA 921,350
3,000,000 Virginia General Obligation,
5.000%, 6/01/11 6/03 at 102 Aaa 2,636,070
Virginia Housing Development
Authority:
800,000 6.800%, 11/01/09 5/02 at 102 AA 815,824
650,000 6.850%, 7/01/17 1/00 at 102 Aa 652,425
4,000,000 7.150%, 1/01/33 1/02 at 102 AA+ 4,072,080
1,090,000 Virginia Public Building
Authority,
6.500%, 8/01/11 8/01 at 102 AA 1,114,231
250,000 Virginia Resource Authority,
Solid Waste Disposal,
7.300%, 4/01/15 4/00 at 102 AA 260,700
800,000 Virginia Resource Authority,
Water System, 6.450%,
4/01/13 4/02 at 102 AA 805,952
1,200,000 Virginia Transportation
Board, 6.000%, 5/15/19 5/98 at 102 AA 1,142,508
1,340,000 Virginia Transportation Board
(Northern Virginia
Transportation District),
5.250%, 5/15/19 5/03 at 102 AA 1,126,632
1,000,000 Abingdon General Obligation,
6.250%, 8/01/12 8/02 at 102 A 998,940
1,000,000 Covington-Alleghany County
Industrial Development
Authority (Alleghany
Regional Hospital), 6.625%,
4/01/12 4/02 at 102 A- 980,320
1,460,000 Fairfax County, Industrial
Development Authority (Inova
Health System), 5.000%,
8/15/13 No Opt. Call Aaa 1,228,721
1,495,000 Fairfax County Water
Authority, 6.125%, 1/01/29
(Pre-refunded to 1/01/00) 1/00 at 100 Aaa 1,541,166
2,500,000 Henrico County Water and
Sewer System,
6.250%, 5/01/13 5/02 at 100 A1 2,486,250
1,000,000 Loudoun County Sanitation
Authority, Water and Sewer
System, 6.250%, 1/01/16 1/02 at 102 Aaa 999,930
2,000,000 Loudoun County Industrial
Development Authority (The
George Washington
University), 6.250%, 5/15/22 5/02 at 102 A1 1,933,780
1,500,000 Lynchburg Industrial
Development Authority
(Randolph-Macon Women's
College), 5.875%, 9/01/13 9/03 at 102 A 1,413,465
1,250,000 Nelson County Service
Authority, Water and Sewer
System, 5.500%, 7/01/18 7/03 at 102 Aaa 1,114,350
2,015,000 Newport News General
Obligation, 5.250%, 6/01/10 6/03 at 102 AA- 1,792,343
</TABLE>
35
<PAGE>
PORTFOLIO OF INVESTMENTS
VIRGINIA--CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,500,000 Peninsula Ports Authority
of Virginia (Riverside
Health System),
6.625%, 7/01/18 7/02 at 102 AA- $ 1,493,700
2,500,000 Prince William Couny Park
Authority,
6.875%, 10/15/16 10/04 at 102 A- 2,520,625
1,000,000 Prince William County
Service Authority, Water
and Sewer System,
6.000%, 7/01/29 7/01 at 100 Aaa 955,250
1,350,000 Richmond General
Obligation,
6.250%, 1/15/21 1/01 at 102 AA 1,311,174
1,600,000 Richmond Redevelopment and
Housing Authority, Multi-
Family Mortgage
(Jefferson Village
Associates),
6.500%, 4/01/27 4/03 at 103 AAA 1,549,584
1,000,000 Roanoke County General
Obligation,
6.500%, 6/01/21 (Pre-
refunded to 6/01/01) 6/01 at 102 AA 1,066,400
1,020,000 Roanoke County Water
System, 5.000%, 7/01/21 7/03 at 102 Aaa 833,503
1,000,000 Roanoke Industrial
Development Authority
(Roanoke Memorial
Hospitals),
6.500%, 7/01/25 (Pre-
refunded to 7/01/00) 7/00 at 100 Aaa 1,044,810
Rockingham County
Industrial Development
Authority (Bridgewater
College):
400,000 5.600%, 10/01/06 10/03 at 102 Baa1 405,416
400,000 5.700%, 10/01/07 10/03 at 102 Baa1 388,040
2,750,000 Southeastern Public
Service Authority
(Regional Solid Waste
System), Alternative
Minimum Tax,
6.000%, 7/01/13 7/03 at 102 A- 2,547,848
1,000,000 Southeastern Public
Service Authority
(Regional Solid Waste
System), 4.900%, 7/01/06 No Opt. Call Aaa 904,580
800,000 Upper Occoquan Sewer
Authority Regional
Sewerage System,
6.500%, 7/01/17
(Pre-refunded to 7/01/01) 7/01 at 102 Aaa 853,112
4,000,000 Upper Occoquan Sewer
Authority,
5.000%, 7/01/21 1/04 at 102 Aaa 3,268,640
2,260,000 Virginia Beach Development
Authority (Sentara
Bayside Hospital),
6.300%, 11/01/21 (DD) 11/01 at 102 AA 2,177,804
500,000 Virginia Beach Development
Authority, GNMA (Pembroke
Lake Apartments), 6.125%,
6/20/13 6/04 at 102 AAA 474,365
950,000 Virginia Beach Water and
Sewer System,
6.625%, 2/01/17 (Pre-
refunded to 2/01/02) 2/02 at 102 A1 1,020,376
145,000 Washington County
Industrial Development
Authority (Johnston
Memorial Hospital),
6.750%, 7/01/12 7/02 at 102 A 146,092
2,075,000 Washington D. C. Airports
Authority,
5.250%, 10/01/22 10/03 at 102 Aaa 1,732,189
Puerto Rico Highway
Transportation Authority:
200,000 6.625%, 7/01/18 (Pre-
refunded to 7/01/02) 7/02 at 101 1/2 A 216,564
800,000 6.625%, 7/01/18 7/02 at 101 1/2 A 805,774
-------------------------------------------------------------------------------
$58,950,000 Total Investments - (cost
$56,778,810) - 97.7% 56,051,191
</TABLE>
--------------------------------------------------------------------------------
----------- -----------
-----------
-----------
-----------
36
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
-------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEMPORARY INVESTMENTS IN
SHORT-TERM MUNICIPAL
SECURITIES - 2.2%
$ 600,000 Henrico County Industrial
Development Health Facility,
Series 1994 (The Hermitage at
Cedarfield), Variable Rate
Demand Bonds, 4.250%,
5/01/24+ VMIG-1 $ 600,000
500,000 Roanoke Industrial Development
Authority (Roanoke Memorial,
Roanoke Valley Community,
Giles Memorial, Bedford
County and Radford
Community), Series 1992A,
Variable Rate Demand
Obligation, 3.850%, 7/01/17+ VMIG-1 500,000
200,000 Industrial Development
Authority of South Hampton
County, Alternative Minimum
Tax, Variable Rate Demand
Bonds, 4.300%, 4/01/15+ Aa-2 200,000
-------------------------------------------------------------------------------
$ 1,300,000 Total Temporary Investments -
2.2% 1,300,000
-------------------------------------------------------------------------------
-------------------
-----------
Other Assets Less Liabilities
- 0.1% 31,685
-------------------------------------------------------------------------------
Net Assets - 100% $57,382,876
</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 14 $19,136,270 34%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 15 19,928,986 36
PORTFOLIO OF A+ A1 4 5,749,979 10
INVESTMENTS A, A- A, A2, A3 9 10,442,500 19
(EXCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 2 793,456 1
TEMPORARY
INVESTMENTS):
--------------------------------------------------------------------------------------
TOTAL 44 $56,051,191 100%
</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.
(DD) Security purchased on a delayed delivery 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.
37
<PAGE>
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
AZ FL MD MI
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in municipal
securities, at market
value (note 1) $17,235,429 $52,132,272 $43,789,634 $27,117,873
Temporary investments in
short-term municipal
securities,
at market value which
equals cost (note 1) 200,000 -- 1,000,000 600,000
Cash 144,941 1,283,079 209,521 28,095
Receivables:
Interest 186,514 788,751 403,958 414,689
Shares sold 15,678 38,230 7,878 --
Investments sold -- -- -- 584,486
Deferred organization costs
(note 1) 13,783 14,608 13,905 14,009
Other assets 5,147 12,984 5,121 6,030
----------- ----------- ----------- -----------
Total assets 17,801,492 54,269,924 45,430,017 28,765,182
----------- ----------- ----------- -----------
LIABILITIES
Payables:
Investments purchased -- -- -- 1,010,011
Shares reacquired 212 74,188 53,803 11,569
Accrued expenses:
Management fees (note 7) 8,038 24,636 20,732 12,645
Other 29,700 33,478 22,103 34,787
Dividends payable 42,129 129,639 127,603 80,525
----------- ----------- ----------- -----------
Total liabilities 80,079 261,941 224,241 1,149,537
----------- ----------- ----------- -----------
Net assets (note 8) $17,721,413 $54,007,983 $45,205,776 $27,615,645
----------- ----------- ----------- -----------
Class A Shares (note 1)
Net Assets $ 1,124,302 $ 1,392,220 $ 1,605,403 $ 897,465
----------- ----------- ----------- -----------
Shares outstanding 113,248 143,072 167,162 90,918
----------- ----------- ----------- -----------
Net asset value and
redemption price per share $ 9.93 $ 9.73 $ 9.60 $ 9.87
----------- ----------- ----------- -----------
Offering price per share
(net asset value per share
plus
maximum sales charge of
4.50% of offering price) $ 10.40 $ 10.19 $ 10.05 $ 10.34
----------- ----------- ----------- -----------
Class C Shares (note 1)
Net Assets $ 42,862 $ 77,640 $ 859,630 $ 74,661
----------- ----------- ----------- -----------
Shares outstanding 4,356 7,983 89,620 7,577
----------- ----------- ----------- -----------
Net asset value, offering
and redemption price per
share $ 9.84 $ 9.73 $ 9.59 $ 9.85
----------- ----------- ----------- -----------
Class R Shares (note 1)
Net Assets $16,554,249 $52,538,123 $42,740,743 $26,643,519
----------- ----------- ----------- -----------
Shares outstanding 1,679,807 5,390,026 4,448,616 2,697,350
----------- ----------- ----------- -----------
Net asset value and
redemption price per share $ 9.85 $ 9.75 $ 9.61 $ 9.88
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
38
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
NJ PA VA
------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in municipal securities, at
market value (note 1) $39,903,943 $47,650,841 $56,051,191
Temporary investments in short-term
municipal securities,
at market value which equals cost
(note 1) 1,600,000 1,000,000 1,300,000
Cash 705,272 233,155 105,974
Receivables:
Interest 602,406 708,981 704,080
Shares sold 122,309 4,000 75,400
Investments sold -- 4,059,586 1,518,000
Deferred organization costs (note 1) 14,285 15,375 13,198
Other assets 8,438 7,786 3,318
----------- ----------- -----------
Total assets 42,956,653 53,679,724 59,771,161
----------- ----------- -----------
LIABILITIES
Payables:
Investments purchased -- -- 2,181,228
Shares reacquired -- -- 16,743
Accrued expenses:
Management fees (note 7) 19,506 24,378 26,202
Other 20,347 28,939 14,073
Dividends payable 129,758 150,590 150,039
----------- ----------- -----------
Total liabilities 169,611 203,907 2,388,285
----------- ----------- -----------
Net assets (note 8) $42,787,042 $53,475,817 $57,382,876
----------- ----------- -----------
Class A Shares (note 1)
Net Assets $ 2,741,141 $ 1,482,853 $ 2,214,507
----------- ----------- -----------
Shares outstanding 281,659 152,047 226,882
----------- ----------- -----------
Net asset value and redemption price
per share $ 9.73 $ 9.75 $ 9.76
----------- ----------- -----------
Offering price per share (net asset
value per share plus maximum sales
charge of 4.50% of offering price) $ 10.19 $ 10.21 $ 10.22
----------- ----------- -----------
Class C Shares (note 1)
Net Assets $ 463,637 $ 493,574 $ 377,641
----------- ----------- -----------
Shares outstanding 47,733 51,139 38,761
----------- ----------- -----------
Net asset value, offering and
redemption price per share $ 9.71 $ 9.65 $ 9.74
----------- ----------- -----------
Class R Shares (note 1)
Net Assets $39,582,264 $51,499,390 $54,790,728
----------- ----------- -----------
Shares outstanding 4,063,423 5,292,291 5,610,759
----------- ----------- -----------
Net asset value and redemption price
per share $ 9.74 $ 9.73 $ 9.77
----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
39
<PAGE>
STATEMENT OF OPERATIONS
Year Ended January 31, 1995
<TABLE>
<CAPTION>
AZ FL MD MI
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $ 996,092 $ 2,937,714 $ 2,789,443 $ 1,599,951
---------- ----------- ----------- -----------
Expenses (note 2):
Management fees (note 7) 88,709 270,996 254,482 144,751
12b-1 distribution and
service fees (note 1) 723 920 2,521 504
Shareholders' servicing
agent fees and expenses 15,732 54,587 49,992 33,948
Custodian's fees and
expenses 34,543 34,307 33,122 32,807
Trustees' fees and
expenses (note 7) 3,140 2,373 2,579 1,147
Professional fees 8,415 12,264 18,317 13,680
Shareholders' reports--
printing and mailing
expenses 8,582 25,617 39,706 15,561
Federal and state
registration fees 5,146 5,037 6,214 6,185
Amortization of deferred
organization costs
(note 1) 7,020 7,044 5,872 6,753
Other expenses 832 1,424 2,194 1,014
---------- ----------- ----------- -----------
Total expenses before
expense reimbursement 172,842 414,569 414,999 256,350
Expense reimbursement
from investment advisor
(note 7) (51,152) (44,113) (65,460) (58,458)
---------- ----------- ----------- -----------
Net expenses 121,690 370,456 349,539 197,892
---------- ----------- ----------- -----------
Net investment income 874,402 2,567,258 2,439,904 1,402,059
---------- ----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) FROM
INVESTMENTS
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable
(notes 1 and 5) (127,639) (88,470) (720,598) (138,495)
Net change in unrealized
appreciation or
depreciation of
investments (1,415,009) (4,454,622) (4,017,204) (2,255,350)
---------- ----------- ----------- -----------
Net gain (loss) from
investments (1,542,648) (4,543,092) (4,737,802) (2,393,845)
---------- ----------- ----------- -----------
Net increase (decrease)
in net assets from
operations $ (668,246) $(1,975,834) $(2,297,898) $ (991,786)
---------- ----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
40
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
NJ PA VA
-------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income (note 1) $ 2,328,339 $ 3,091,245 $ 3,379,014
----------- ----------- -----------
Expenses (note 2):
Management fees (note 7) 210,822 275,097 302,011
12b-1 distribution and service fees
(note 1) 2,909 1,993 1,873
Shareholders' servicing agent fees
and expenses 51,556 74,450 53,796
Custodian's fees and expenses 28,218 32,570 33,907
Trustees' fees and expenses (note 7) 1,671 1,175 1,862
Professional fees 10,356 11,543 14,675
Shareholders' reports--printing and
mailing expenses 23,572 47,270 30,665
Federal and state registration fees 7,216 7,851 8,021
Amortization of deferred
organization costs (note 1) 6,922 7,391 6,379
Other expenses 1,414 1,579 1,328
----------- ----------- -----------
Total expenses before expense
reimbursement 344,656 460,919 454,517
Expense reimbursement from
investment advisor (note 7) (54,105) (83,798) (40,815)
----------- ----------- -----------
Net expenses 290,551 377,121 413,702
----------- ----------- -----------
Net investment income 2,037,788 2,714,124 2,965,312
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS
Net realized gain (loss) from
investment transactions, net of
taxes, if applicable (notes 1 and 5) (452,878) (835,288) (110,113)
Net change in unrealized appreciation
or depreciation of investments (2,665,300) (4,232,526) (5,022,831)
----------- ----------- -----------
Net gain (loss) from investments (3,118,178) (5,067,814) (5,132,944)
----------- ----------- -----------
Net increase (decrease) in net assets
from operations $(1,080,390) $(2,353,690) $(2,167,632)
----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
41
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AZ FL
--------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
1/31/95 1/31/94 1/31/95 1/31/94
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 874,402 $ 600,068 $ 2,567,258 $ 1,704,945
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (127,639) 33,150 (88,470) 17,478
Net change in unrealized
appreciation or
depreciation of
investments (1,415,009) 897,739 (4,454,622) 2,494,017
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets from
operations (668,246) 1,530,957 (1,975,834) 4,216,440
----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (11,579) -- (12,861) --
Class C (786) -- (807) --
Class R (863,461) (584,496) (2,538,376) (1,692,420)
From accumulated net
realized gains from
investment transactions:
Class A -- -- (11) --
Class C -- -- -- --
Class R -- (41,744) (13,228) --
----------- ----------- ----------- -----------
Decrease in net assets
from distributions to
shareholders (875,826) (626,240) (2,565,283) (1,692,420)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sales
of shares:
Class A 1,124,442 -- 1,665,651 --
Class C 51,694 -- 73,100 --
Class R 4,004,198 7,809,237 13,751,923 24,923,984
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 2,269 -- 4,072 --
Class C 509 -- 230 --
Class R 464,469 336,258 1,376,114 843,950
----------- ----------- ----------- -----------
5,647,581 8,145,495 16,871,090 25,767,934
----------- ----------- ----------- -----------
Cost of shares redeemed:
Class A (30,002) -- (314,814) --
Class C (9,346) -- -- --
Class R (2,482,522) (936,685) (6,261,459) (3,764,665)
----------- ----------- ----------- -----------
(2,521,870) (936,685) (6,576,273) (3,764,665)
----------- ----------- ----------- -----------
Net increase in net
assets derived from
Fund share transactions 3,125,711 7,208,810 10,294,817 22,003,269
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets 1,581,639 8,113,527 5,753,700 24,527,289
Net assets at the
beginning of year 16,139,774 8,026,247 48,254,283 23,726,994
----------- ----------- ----------- -----------
Net assets at the end of
year $17,721,413 $16,139,774 $54,007,983 $48,254,283
----------- ----------- ----------- -----------
Balance of undistributed
net investment income at
end of year $ 16,536 $ 17,960 $ 36,594 $ 21,380
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
42
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
MD MI
--------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
1/31/95 1/31/94 1/31/95 1/31/94
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 2,439,904 $ 1,895,717 $ 1,402,059 $ 1,004,520
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (720,598) 125,239 (138,495) 7,595
Net change in unrealized
appreciation or
depreciation of
investments (4,017,204) 2,411,915 (2,255,350) 1,437,626
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets from
operations (2,297,898) 4,432,871 (991,786) 2,449,741
----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (14,257) -- (7,070) --
Class C (9,717) -- (582) --
Class R (2,417,246) (1,865,943) (1,399,025) (992,020)
From accumulated net
realized gains from
investment transactions:
Class A (5) -- (1) --
Class C -- -- -- --
Class R (10,234) (103,043) (7,967) (22,556)
----------- ----------- ----------- -----------
Decrease in net assets
from distributions to
shareholders (2,451,459) (1,968,986) (1,414,645) (1,014,576)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sale of
shares:
Class A 1,562,186 -- 881,646 --
Class C 818,595 -- 73,345 --
Class R 9,116,010 19,337,429 6,369,706 9,838,503
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 5,306 -- 2,560 --
Class C 5,892 -- 338 --
Class R 1,385,256 1,101,658 872,246 595,076
----------- ----------- ----------- -----------
12,893,245 20,439,087 8,199,841 10,433,579
----------- ----------- ----------- -----------
Cost of shares redeemed:
Class A (2,267) -- (9,411) --
Class C (226) -- -- --
Class R (10,757,200) (3,364,769) (3,253,109) (1,467,617)
----------- ----------- ----------- -----------
(10,759,693) (3,364,769) (3,262,520) (1,467,617)
----------- ----------- ----------- -----------
Net increase in net
assets derived from
Fund share transactions 2,133,552 17,074,318 4,937,321 8,965,962
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets (2,615,805) 19,538,203 2,530,890 10,401,127
Net assets at the
beginning of year 47,821,581 28,283,378 25,084,755 14,683,628
----------- ----------- ----------- -----------
Net assets at the end of
year $45,205,776 $47,821,581 $27,615,645 $25,084,755
----------- ----------- ----------- -----------
Balance of undistributed
net investment income at
end of year $ 28,247 $ 29,563 $ 17,180 $ 21,798
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
43
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NJ PA
--------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
1/31/95 1/31/94 1/31/95 1/31/94
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income $ 2,037,788 $ 1,289,235 $ 2,714,124 $ 1,828,606
Net realized gain (loss)
from investment
transactions, net of
taxes, if applicable (452,878) 517,054 (835,288) 21,353
Net change in unrealized
appreciation or
depreciation of
investments (2,665,300) 1,519,986 (4,232,526) 2,620,245
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets from
operations (1,080,390) 3,326,275 (2,353,690) 4,470,204
----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS (note 1)
From undistributed net
investment income:
Class A (35,663) -- (17,517) --
Class C (5,043) -- (5,177) --
Class R (1,973,703) (1,283,971) (2,690,297) (1,816,930)
From accumulated net
realized gains from
investment transactions:
Class A (773) -- -- --
Class C -- -- -- --
Class R (341,737) (190,655) -- (23,816)
----------- ----------- ----------- -----------
Decrease in net assets
from distributions to
shareholders (2,356,919) (1,474,626) (2,712,991) (1,840,746)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
(note 3)
Net proceeds from sale of
shares
Class A 2,826,031 -- 1,465,445 --
Class C 458,588 -- 480,657 --
Class R 10,783,764 20,199,064 12,882,787 23,774,163
Net asset value of shares
issued to shareholders
due to reinvestment of
distributions from net
investment income and
from net realized gains
from investment
transactions:
Class A 18,788 -- 9,834 --
Class C 2,567 -- 3,155 --
Class R 1,592,197 929,885 1,624,542 1,018,792
----------- ----------- ----------- -----------
15,681,935 21,128,949 16,466,420 24,792,955
----------- ----------- ----------- -----------
Cost of shares redeemed:
Class A (122,722) -- (27,047) --
Class C (1,205) -- -- --
Class R (5,795,917) (2,726,739) (6,616,545) (2,382,573)
----------- ----------- ----------- -----------
(5,919,844) (2,726,739) (6,643,592) (2,382,573)
----------- ----------- ----------- -----------
Net increase in net
assets derived from
Fund share transactions 9,762,091 18,402,210 9,822,828 22,410,382
----------- ----------- ----------- -----------
Net increase (decrease)
in net assets 6,324,782 20,253,859 4,756,147 25,039,840
Net assets at the
beginning of year 36,462,260 16,208,401 48,719,670 23,679,830
----------- ----------- ----------- -----------
Net assets at the end of
year $42,787,042 $36,462,260 $53,475,817 $48,719,670
----------- ----------- ----------- -----------
Balance of undistributed
net investment income at
end of year $ 34,789 $ 11,410 $ 31,834 $ 30,701
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
44
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
VA
------------------------------------------------------------------------------
Year Ended Year Ended
1/31/95 1/31/94
------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 2,965,312 $ 2,359,981
Net realized gain (loss) from investment
transactions, net of taxes, if applicable (110,113) 56,948
Net change in unrealized appreciation or
depreciation of investments (5,022,831) 3,076,278
----------- -----------
Net increase (decrease) in net assets from
operations (2,167,632) 5,493,207
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From undistributed net investment income:
Class A (20,902) --
Class C (4,516) --
Class R (2,960,225) (2,340,151)
From accumulated net realized gains from
investment transactions:
Class A -- --
Class C -- --
Class R -- (87,317)
----------- -----------
Decrease in net assets from distributions to
shareholders (2,985,643) (2,427,468)
----------- -----------
FUND SHARE TRANSACTIONS (note 3)
Net proceeds from sale of shares
Class A 2,169,078 --
Class C 359,962 --
Class R 9,464,055 18,263,731
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 6,496 --
Class C 2,776 --
Class R 1,626,894 1,297,642
----------- -----------
13,629,261 19,561,373
----------- -----------
Cost of shares redeemed:
Class A (10,247) --
Class C -- --
Class R (6,855,537) (4,049,967)
----------- -----------
(6,865,784) (4,049,967)
----------- -----------
Net increase in net assets derived from Fund
share transactions 6,763,477 15,511,406
----------- -----------
Net increase (decrease) in net assets 1,610,202 18,577,145
Net assets at the beginning of year 55,772,674 37,195,529
----------- -----------
Net assets at the end of year $57,382,876 $55,772,674
----------- -----------
Balance of undistributed net investment income at
end of year $ 21,811 $ 42,142
----------- -----------
</TABLE>
See accompanying notes to financial statements.
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The Nuveen Multistate Tax-Free Trust (the "Trust") is an
open-end diversified management series investment company
registered under the Investment Company Act of 1940. The
Trust comprises seven single-state tax-free mutual funds (the
Nuveen Tax-Free Value Funds--the "Funds"). Each Fund
constitutes a separate series of the Trust and is itself an
open-end diversified management investment company, commonly
referred to as a mutual fund. The Trust was organized as a
Massachusetts Business Trust on July 26, 1991.
The Trust currently has seven authorized state tax-free
Funds: the Nuveen Arizona Tax-Free Value Fund, the Nuveen
Florida Tax-Free Value Fund, the Nuveen Maryland Tax-Free
Value Fund, the Nuveen Michigan Tax-Free Value Fund, the
Nuveen New Jersey Tax-Free Value Fund, the Nuveen
Pennsylvania Tax-Free Value Fund and the Nuveen Virginia Tax-
Free Value Fund. Additional state Funds may be established in
the future. Sale of Fund shares first commenced on February
28, 1992. Each Fund invests primarily in municipal
obligations issued within its respective state.
Each Fund issues shares of each of its classes at a price
equal to net asset value of such class plus the appropriate
front-end sales charge, if any.
The following is a summary of significant accounting policies
followed by each Fund in the preparation of their financial
statements in accordance with generally accepted accounting
principles.
Securities Valuation
Portfolio securities for which market quotations are readily
available are valued at the mean between the quoted bid and
asked prices or the yield equivalent. Portfolio securities
for which market quotations are not readily available are
valued at fair value by consistent application of methods
determined in good faith by the Board of Trustees. Temporary
investments in securities that have variable rate and demand
features qualifying them as short-term securities are traded
and valued at principal amount.
46
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
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 Trust has instructed the custodian to
segregate assets in a separate account with a current value
at least equal to the amount of its purchase commitments. At
January 31, 1995, the Nuveen Michigan Tax-Free Value Fund and
the Nuveen Virginia Tax-Free Value Fund had purchase
commitments of $1,010,011 and $2,181,228, respectively. There
were no such purchase commitments in any of the other Funds.
Interest Income Interest income is determined on the basis of interest
accrued and discount earned, adjusted for amortization of
premiums or discounts on long-term debt securities when
required for federal income tax purposes.
Dividends and Distributions to Shareholders
Net investment income is declared as a dividend monthly and
payment is made or reinvestment is credited to shareholder
accounts after month-end. Net realized gains from 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.
47
<PAGE>
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 and
designated state income taxes, to retain such tax exempt
status when distributed to the shareholders of the respective
Funds. The Nuveen Florida Tax-Free Value Fund and the Nuveen
Michigan Tax-Free Value Fund also intend to satisfy
conditions so that their shares will also be exempt from
their respective state's intangible personal property tax.
All income dividends paid during the fiscal year ended
January 31, 1995, have been designated Exempt Interest
Dividends.
Deferred Costs incurred by the Trust in connection with its
organization and initial registration of shares were deferred
and are being amortized over a 60-month period beginning
February 28, 1992. If any of the initial shares of each Fund
are redeemed during this period, the proceeds of the
redemption will be reduced by the pro-rata share of the
unamortized organization costs as of the date of redemption.
Organization Costs
Flexible Sales Charge
Effective September 6, 1994, each Fund commenced offering
Program Class "A" Shares and Class "C" Shares. Class "A" Shares incur
a front-end sales charge and an annual 12b-1 service fee.
Class "C" Shares are sold without a sales charge but incur
annual 12b-1 distribution and service fees.
Prior to the offering of Class "A" and Class "C" shares, the
shares outstanding were renamed Class "R" and are not subject
to any 12b-1 distribution or service fees. Effective with the
offering of the new classes, Class "R" Shares are generally
available only for reinvestment of dividends by current "R"
shareholders and for already established Nuveen Unit
Investment Trust reinvestment accounts.
48
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
Derivative Financial
In October 1994, the Financial Accounting Standards Board
Instruments issued Statement of Financial Accounting Standards (FASB) No.
119 Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments which prescribes
disclosure requirements for transactions in certain
derivative financial instruments including futures, forward,
swap, and option contracts, and other financial instruments
with similar characteristics. Although the Funds are
authorized to invest in such financial instruments, and may
do so in the future, they did not make any such investments
during the fiscal year ended January 31, 1995, other than
occasional purchases of high quality synthetic money market
securities which were held temporarily pending the re-
investment in long-term portfolio securities.
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. EXPENSE ALLOCATION
Expenses of the Funds that are not directly attributable to
any class of shares are prorated among the classes based on
the relative net assets of each class. Expenses directly
attributable to a class of shares are recorded to the
specific class. A breakdown of the class level expenses, as
well as the total fund level expenses, for the year ended
January 31, 1995 are as follows:
<TABLE>
<CAPTION>
AZ FL MD MI
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
12b-1 service fees $ 572 $ 744 $ 753 $ 379
Shareholder servicing agent fees and
expenses 406 639 753 522
Shareholder reports-printing and
mailing 444 953 956 1,713
Federal and state registration fees 245 357 330 209
-------- -------- -------- --------
Total class level expenses 1,667 2,693 2,792 2,823
Total fund level expenses 1,990 1,956 1,998 1,137
-------- -------- -------- --------
Total expenses before expense reim-
bursement 3,657 4,649 4,790 3,960
Less: Expense reimbursement from in-
vestment adviser (1,366) (1,676) (1,779) (2,447)
-------- -------- -------- --------
Net expenses--Class A $ 2,291 $ 2,973 $ 3,011 $ 1,513
-------- -------- -------- --------
CLASS C
12b-1 service fees $ 38 $ 44 $ 442 $ 31
12b-1 distribution fees 113 132 1,326 94
Shareholder servicing agent fees and
expenses 123 70 145 77
Shareholder reports-printing and
mailing 98 95 119 111
Federal and state registration fees 26 43 79 34
-------- -------- -------- --------
Total class level expenses 398 384 2,111 347
Total fund level expenses 131 116 1,185 94
-------- -------- -------- --------
Total expenses before expense reim-
bursement 529 500 3,296 441
Less: Expense reimbursement from in-
vestment adviser (266) (193) (190) (222)
-------- -------- -------- --------
Net expenses--Class C $ 263 $ 307 $ 3,106 $ 219
-------- -------- -------- --------
CLASS R
Shareholder servicing agent fees and
expenses $ 15,203 $ 53,878 $ 49,094 $ 33,349
Shareholder reports-printing and
mailing 8,040 24,569 38,631 13,737
Federal and state registration fees 4,875 4,637 5,805 5,942
-------- -------- -------- --------
Total class level expenses 28,118 83,084 93,530 53,028
Total fund level expenses 140,538 326,336 313,383 198,921
-------- -------- -------- --------
Total expenses before expense reim-
bursement 168,656 409,420 406,913 251,949
Less: Expense reimbursement from in-
vestment adviser (49,520) (42,244) (63,491) (55,789)
-------- -------- -------- --------
Net expenses--Class R $119,136 $367,176 $343,422 $196,160
-------- -------- -------- --------
Net expenses--Fund $121,690 $370,456 $349,539 $197,892
-------- -------- -------- --------
</TABLE>
50
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
NJ PA VA
------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A
12b-1 service fees $ 1,884 $ 894 $ 1,056
Shareholder servicing agent fees and expenses 859 886 720
Shareholder reports-printing and mailing 1,150 1,866 1,629
Federal and state registration fees 828 684 511
-------- -------- --------
Total class level expenses 4,721 4,330 3,916
Total fund level expenses 5,165 2,334 2,716
-------- -------- --------
Total expenses before expense reimbursement 9,886 6,664 6,632
Less: Expense reimbursement from investment
adviser (2,349) (3,096) (2,410)
-------- -------- --------
Net expenses--Class A $ 7,537 $ 3,568 $ 4,222
-------- -------- --------
CLASS C
12b-1 service fees $ 256 $ 275 $ 204
12b-1 distribution fees 769 824 613
Shareholder servicing agent fees and expenses 82 163 169
Shareholder reports-printing and mailing 118 526 223
Federal and state registration fees 123 261 66
-------- -------- --------
Total class level expenses 1,348 2,049 1,275
Total fund level expenses 707 718 525
-------- -------- --------
Total expenses before expense reimbursement 2,055 2,767 1,800
Less: Expense reimbursement from investment
adviser (259) (844) (372)
-------- -------- --------
Net expenses--Class C $ 1,796 $ 1,923 $ 1,428
-------- -------- --------
CLASS R
Shareholder servicing agent fees and expenses $ 50,615 $ 73,401 $ 52,907
Shareholder reports-printing and mailing 22,304 44,878 28,813
Federal and state registration fees 6,265 6,906 7,444
-------- -------- --------
Total class level expenses 79,184 125,185 89,164
Total fund level expenses 253,531 326,303 356,921
-------- -------- --------
Total expenses before expense reimbursement 332,715 451,488 446,085
Less: Expense reimbursement from investment
adviser (51,497) (79,858) (38,033)
-------- -------- --------
Net expenses--Class R $281,218 $371,630 $408,052
-------- -------- --------
Net expenses--Fund $290,551 $377,121 $413,702
-------- -------- --------
</TABLE>
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS
3. FUND SHARES
Transactions in shares were as follows:
<TABLE>
<CAPTION>
AZ FL
-----------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
1/31/95 1/31/94 1/31/95 1/31/94
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 116,098 -- 175,913 --
Class C 5,260 -- 7,959 --
Class R 401,984 740,910 1,397,272 2,389,702
Shares issued to shareholders
due to reinvestment of
distributions from net
investment income and from
net realized gains from
investment transactions:
Class A 237 -- 435 --
Class C 54 -- 24 --
Class R 48,864 30,628 139,011 81,058
-------- ------- --------- ---------
572,497 771,538 1,720,614 2,470,760
-------- ------- --------- ---------
Shares redeemed:
Class A (3,087) -- (33,276) --
Class C (958) -- -- --
Class R (254,213) (86,785) (639,360) (360,118)
-------- ------- --------- ---------
(258,258) (86,785) (672,636) (360,118)
-------- ------- --------- ---------
Net increase 314,239 684,753 1,047,978 2,110,642
-------- ------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
MD MI
------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
1/31/95 1/31/94 1/31/95 1/31/94
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 166,832 -- 91,636 --
Class C 89,009 -- 7,542 --
Class R 921,445 1,868,687 631,960 934,037
Shares issued to shareholders
due to reinvestment of
distributions from net
investment income and from
net realized gains from
investment transactions:
Class A 570 -- 269 --
Class C 635 -- 35 --
Class R 142,445 106,238 87,694 54,703
---------- --------- -------- --------
1,320,936 1,974,925 819,136 988,740
---------- --------- -------- --------
Shares redeemed:
Class A (240) -- (987) --
Class C (24) -- -- --
Class R (1,119,703) (324,722) (332,766) (137,168)
---------- --------- -------- --------
(1,119,967) (324,722) (333,753) (137,168)
---------- --------- -------- --------
Net increase 200,969 1,650,203 485,383 851,572
---------- --------- -------- --------
</TABLE>
52
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
<TABLE>
<CAPTION>
NJ PA
-------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
1/31/95 1/31/94 1/31/95 1/31/94
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 292,386 -- 153,866 --
Class C 47,588 -- 50,810 --
Class R 1,077,289 1,952,002 1,297,150 2,268,630
Shares issued to shareholders
due to reinvestment of
distributions from net
investment income and from
net realized gains from
investment transactions:
Class A 1,978 -- 1,047 --
Class C 270 -- 329 --
Class R 161,549 85,433 165,879 97,009
--------- --------- --------- ---------
1,581,060 2,037,435 1,669,081 2,365,639
--------- --------- --------- ---------
Shares redeemed:
Class A (12,705) -- (2,866) --
Class C (125) -- -- --
Class R (581,386) (258,472) (676,175) (226,377)
--------- --------- --------- ---------
(594,216) (258,472) (679,041) (226,377)
--------- --------- --------- ---------
Net increase 986,844 1,778,963 990,040 2,139,262
--------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
VA
------------------------------------------------------------------------------
Year Ended Year Ended
1/31/95 1/31/94
------------------------------------------------------------------------------
<S> <C> <C>
Shares sold:
Class A 227,287 --
Class C 38,465 --
Class R 931,986 1,720,431
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from
net realized gains from investment transactions:
Class A 690 --
Class C 296 --
Class R 165,173 151,119
--------- ---------
1,363,897 1,871,550
--------- ---------
Shares redeemed:
Class A (1,095) --
Class C -- --
Class R (680,380) (386,394)
--------- ---------
(681,475) (386,394)
--------- ---------
Net increase 682,422 1,485,156
--------- ---------
</TABLE>
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. DISTRIBUTIONS TO SHAREHOLDERS
On February 9, 1995, the Funds declared dividend
distributions from their ordinary income which were paid on
March 1, 1995, to shareholders of record on February 9, 1995
as follows:
<TABLE>
<CAPTION>
AZ FL MD MI
--------------------------------------------------
<S> <C> <C> <C> <C>
Dividend per share:
Class A $.0440 $.0410 $.0420 $.0430
Class C .0375 .0350 .0360 .0370
Class R .0455 .0430 .0440 .0450
------ ------ ------ ------
</TABLE>
<TABLE>
<CAPTION>
NJ PA VA
-------------------------------------------
<S> <C> <C> <C>
Dividend per share:
Class A $.0430 $.0440 $.0430
Class C .0365 .0375 .0370
Class R .0450 .0455 .0450
------ ------ ------
</TABLE>
54
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
5. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in
municipal securities and temporary municipal investments for
the period ended January 31, 1995, were as follows:
<TABLE>
<CAPTION>
AZ FL MD MI
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PURCHASES
Investments in municipal se-
curities $6,971,348 $10,230,226 $17,083,727 $14,222,155
Temporary municipal invest-
ments 5,700,000 14,200,000 9,100,000 11,500,000
SALES
Investments in municipal se-
curities 4,533,174 1,889,866 15,577,459 8,873,924
Temporary municipal invest-
ments 6,500,000 14,200,000 8,600,000 11,500,000
---------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
NJ PA VA
--------------------------------------------------------------------------
<S> <C> <C> <C>
PURCHASES
Investments in municipal securities $18,632,301 $40,444,211 $27,549,536
Temporary municipal investments 14,950,000 26,000,000 11,100,000
SALES
Investments in municipal securities 11,749,812 35,266,165 21,514,126
Temporary municipal investments 13,350,000 26,400,000 9,800,000
----------- ----------- -----------
</TABLE>
At January 31, 1995, the cost of investments for federal
income tax purposes was the same as the cost for financial
reporting purposes for each Fund.
At January 31, 1995, the following Funds had unused capital
loss carryforwards available for federal income tax purposes
to be applied against future security gains, if any. If not
applied, the carryovers will expire as follows:
<TABLE>
<CAPTION>
AZ FL MD MI
------------------------------------------------------
<S> <C> <C> <C> <C>
Expiration year:
2002 $127,444 $88,470 $720,598 $138,495
-------- ------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
NJ PA VA
----------------------------------------------
<S> <C> <C> <C>
Expiration year:
2002 $452,892 $835,216 $110,093
-------- -------- --------
</TABLE>
55
<PAGE>
NOTES TO FINANCIAL STATEMENTS
6. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized
depreciation of investments at January 31, 1995, were as
follows:
<TABLE>
<CAPTION>
AZ FL MD MI
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized:
Appreciation $ 326,654 $ 711,981 $ 472,358 $ 316,449
Depreciation (575,349) (2,068,616) (1,344,732) (727,081)
--------- ----------- ----------- ---------
Net unrealized appreciation
(depreciation) $(248,695) $(1,356,635) $ (872,374) $(410,632)
--------- ----------- ----------- ---------
</TABLE>
<TABLE>
<CAPTION>
NJ PA VA
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
Appreciation $ 507,318 $ 506,375 $ 858,776
Depreciation (1,304,253) (1,536,387) (1,586,395)
---------- ----------- -----------
Net unrealized appreciation (deprecia-
tion) $ (796,935) $(1,030,012) $ (727,619)
---------- ----------- -----------
</TABLE>
7. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Trust's investment management agreement 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>
From inception of the Trusts on December 13, 1991 through
January 31, 1995, the Adviser has waived part of its
management fees or reimbursed certain expenses of each Fund
in order to limit total expenses to .75 of 1% of the average
daily net asset value of each Fund, excluding any 12b-1 fees
applicable to Class A and Class C. The Adviser has currently
agreed to continue its fee waivers and expense reimbursements
through July 31, 1995.
56
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
The management fee referred to above compensates the Adviser
for overall investment advisory and administrative services,
and general office facilities. The Trust pays no compensation
directly to its trustees who are affiliated with the Adviser
or to its officers, all of whom receive remuneration for
their services to the Trust from the Adviser.
8. COMPOSITION OF NET ASSETS
At January 31, 1995, there were an unlimited number of $.01
par value shares authorized. Net assets consisted of:
<TABLE>
<CAPTION>
AZ FL MD MI
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid in $18,081,016 $55,416,494 $46,770,501 $28,147,592
Balance of undistributed
net investment income 16,536 36,594 28,247 17,180
Undistributed net real-
ized gain (loss) from
investment transac-
tions, net of taxes, if
applicable (127,444) (88,470) (720,598) (138,495)
Net unrealized apprecia-
tion (depreciation) of
investments (248,695) (1,356,635) (872,374) (410,632)
----------- ----------- ----------- -----------
Net assets $17,721,413 $54,007,983 $45,205,776 $27,615,645
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
NJ PA VA
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid in $44,002,080 $55,309,211 $58,198,777
Balance of undistributed net invest-
ment income 34,789 31,834 21,811
Undistributed net realized gain
(loss) from investment transactions,
net of taxes, if applicable (452,892) (835,216) (110,093)
Net unrealized appreciation (depreci-
ation) of investments (796,935) (1,030,012) (727,619)
----------- ----------- -----------
Net assets $42,787,042 $53,475,817 $57,382,876
----------- ----------- -----------
</TABLE>
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS
9. INVESTMENT COMPOSITION
Each Fund invests in municipal securities which include
general obligation, escrowed and revenue bonds. At January
31, 1995, the revenue sources by municipal purpose for these
investments, expressed as a percent of total investments,
were as follows:
<TABLE>
<CAPTION>
AZ FL MD MI
----------------------------------------------------
<S> <C> <C> <C> <C>
Revenue Bonds:
Housing Facilities 8% 7% 24% 13%
Health Care Facilities 13 18 11 13
Water/Sewer Facilities 3 6 4 17
Electric Utilities 3 18 1 3
Educational Facilities 11 1 5 10
Pollution Control Facilities 8 3 7 6
Transportation 3 10 10 4
Lease Rental Facilities 10 1 6 --
Other 8 12 8 13
General Obligation Bonds 21 8 10 16
Escrowed Bonds 12 16 14 5
----------------------------------------------------
100% 100% 100% 100%
</TABLE>
<TABLE>
<CAPTION>
NJ PA VA
-----------------------------------------------
<S> <C> <C> <C>
Revenue Bonds:
Housing Facilities 16% 7% 13%
Health Care Facilities 5 19 11
Water/Sewer Facilities 10 3 19
Electric Utilities -- 4 --
Educational Facilities 10 17 13
Pollution Control Facilities 7 13 --
Transportation 3 8 3
Lease Rental Facilities 5 1 --
Other 17 8 17
General Obligation Bonds 22 17 14
Escrowed Bonds 5 3 10
-----------------------------------------------
100% 100% 100%
</TABLE>
58
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
Certain long-term and intermediate investments owned by the
Funds are covered by insurance issued by several private
insurers or are backed by an escrow or trust containing U.S.
Government or U.S. Government agency securities, either of
which ensure the timely payment of principal and interest in
the event of default (49% for Arizona, 64% for Florida, 44%
for Maryland, 33% for Michigan, 30% for New Jersey, 54% for
Pennsylvania, and 28% for Virginia). 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.
59
<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
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income++ investments** income capital gains
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AZ
--------------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 $10.030 $.203 $(.086) $(.217) $ --
Class C
9/12/94 to 1/31/95 9.940 .169 (.052) (.217) --
Class R
Year ended 1/31,
1995 10.880 .536 (1.026) (.540) --
1994 10.050 .531 .853 (.522) (.032)
1993 9.525 .438 .563 (.435) (.041)
12/13/91 to 1/31/92 9.525 -- -- -- --
--------------------------------------------------------------------------------------------
FL
--------------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 9.890 .193 (.148) (.202) (.003)
Class C
9/19/94 to 1/31/95 9.720 .152 .021 (.163) --
Class R
Year ended 1/31,
1995 10.740 .508 (.985) (.510) (.003)
1994 9.960 .511 .779 (.510) --
1993 9.525 .440 .431 (.436) --
12/13/91 to 1/31/92 9.525 -- -- -- --
--------------------------------------------------------------------------------------------
MD
--------------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 9.840 .198 (.229) (.207) (.002)
Class C
9/16/94 to 1/31/95 9.750 .160 (.153) (.167) --
Class R
Year ended 1/31,
1995 10.620 .513 (1.008) (.513) (.002)
1994 9.910 .509 .727 (.503) (.023)
1993 9.525 .442 .395 (.442) (.010)
12/13/91 to 1/31/92 9.525 -- -- -- --
--------------------------------------------------------------------------------------------
</TABLE>
See notes on page 64.
60
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
-------------------------------------------------------------
Net
asset Total return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value + (in thousands) net assets++ net assets++ turnover rate
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------
$ 9.930 1.24% $ 1,124 1.00%* 5.28%* 29%
9.840 1.25 43 1.75* 4.55* 29
9.850 (4.39) 16,554 .75 5.43 29
10.880 14.07 16,140 .75 4.98 11
10.050 10.71 8,026 .75* 4.94* 43
9.525 -- 15 -- -- --
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
9.730 .52 1,392 1.00* 5.08* 4
4
9.730 1.84 78 1.75* 4.35*
9.750 (4.33) 52,538 .75 5.21 4
10.740 13.22 48,254 .75 4.83 3
9.960 9.33 23,727 .75* 4.84* 1
9.525 -- 15 -- -- --
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
9.600 (.26) 1,605 1.00* 5.26* 35
35
9.590 .12 860 1.75* 4.55*
9.610 (4.58) 42,741 .75 5.28 35
10.620 12.71 47,822 .75 4.85 4
9.910 8.96 28,283 .75* 4.96* 20
9.525 -- 15 -- -- --
-----------------------------------------------------------------------------------------
</TABLE>
61
<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
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from
of period income++ investments** income capital gains
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MI
---------------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 $10.090 $.204 $(.209) $(.212) $(.003)
Class C
9/19/94 to 1/31/95 9.910 .161 (.050) (.171) --
Class R
Year ended 1/31,
1995 10.860 .529 (.972) (.534) (.003)
1994 10.060 .531 .808 (.528) (.011)
1993 9.525 .456 .554 (.449) (.026)
12/13/91 to 1/31/92 9.525 -- -- -- --
---------------------------------------------------------------------------------------------
NJ
---------------------------------------------------------------------------------------------
Class A
9/7/94 to 1/31/95 10.030 .205 (.209) (.210) (.086)
Class C
9/22/94 to 1/31/95 9.770 .159 (.050) (.169) --
Class R
Year ended 1/31,
1995 10.710 .524 (.886) (.522) (.086)
1994 9.960 .513 .810 (.513) (.060)
1993 9.525 .445 .431 (.441) --
12/13/91 to 1/31/92 9.525 -- -- -- --
---------------------------------------------------------------------------------------------
</TABLE>
See notes on page 64.
62
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental data
----------------------------------------------------------------
Net
asset Total Return Ratio of net
value on Net assets Ratio of investment income
end of net asset end of period expenses to average to average Portfolio
period value+ (in thousands) net assets++ net assets++ turnover rate
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------
$ 9.870 .02% $ 897 1.00%* 5.30%* 35%
9.850 1.18 75 1.75* 4.53* 35
9.880 (3.98) 26,644 .75 5.33 35
10.860 13.58 25,085 .75 4.99 3
10.060 10.80 14,684 .75* 5.06* 32
9.525 -- 15 -- -- --
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
9.730 .02 2,741 1.00* 5.34* 32
9.710 1.16 464 1.75* 4.62* 32
9.740 (3.27) 39,582 .75 5.32 32
10.710 13.60 36,462 .75 4.84 52
9.960 9.36 16,208 .75* 4.96* 9
9.525 -- 15 -- -- --
--------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income from
investment Less
operations distributions
--------------------------------------------------------------------------------
Net realized
Net asset Net and unrealized Dividends from Distribution
value beginning investment gain (loss) from net investment from
of period income++ investments** income capital gains
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PA
---------------------------------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 $ 9.920 $.206 $ (.164) $(.212) $ --
Class C
9/7/94 to
1/31/95 9.920 .176 (.235) (.211) --
Class R
Year ended 1/31,
1995 10.810 .531 (1.077) (.534) --
1994 10.010 .533 .807 (.534) (.006)
1993 9.525 .451 .481 (.443) (.004)
12/13/91 to
1/31/92 9.525 -- -- -- --
---------------------------------------------------------------------------------------------------------
VA
---------------------------------------------------------------------------------------------------------
Class A
9/7/94 to
1/31/95 9.980 .201 (.207) (.214) --
Class C
9/9/94 to
1/31/95 9.950 .171 (.167) (.214) --
Class R
Year ended 1/31,
1995 10.740 .531 (.964) (.537) --
1994 10.030 .529 .726 (.527) (.018)
1993 9.525 .439 .499 (.433) --
12/13/91 to
1/31/92 9.525 -- -- -- --
---------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized. For year ended 1/31/93, the information is based on the period
beginning 2/28/92, commencement of operations.
** Net of taxes, if applicable. See note 1.
+ 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.
++ Reflects the waiver of certain management fees and reimbursement of certain
other expenses by the Advisor. See note 7 of Notes to Financial Statements.
64
<PAGE>
NUVEEN TAX-FREE VALUE FUNDS ANNUAL REPORT JANUARY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplemental
data
---------------------------------------------------------------------------------
Ratio of net
Net assets Ratio of investment income
Net asset value Total return on end of period expenses to average to average Portfolio
end of period net asset value+ (in thousands) net assets++ net assets++ turnover rate
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
$ 9.750 .49% $ 1,483 1.00%* 5.43%* 74%
9.650 (.53) 494 1.75* 4.67* 74
9.730 (4.94) 51,499 .75 5.43 74
10.810 13.67 48,720 .75 5.01 5
10.010 9.97 23,680 .75* 5.03* 15
9.525 -- 15 -- -- --
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
9.760 .01 2,215 1.00* 5.27* 40
9.740 .10 378 1.75* 4.57* 40
9.770 (3.92) 54,791 .75 5.40 40
10.740 12.78 55,773 .75 5.03 7
10.030 10.04 37,196 .75* 4.92* 12
9.525 -- 15 -- -- --
-------------------------------------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of
Nuveen Multistate Tax-Free Trust:
We have audited the accompanying statements of net assets of
Nuveen Multistate Tax-Free Trust (a Massachusetts business
trust comprising the Arizona, Florida, Maryland, Michigan,
New Jersey, Pennsylvania and Virginia Nuveen Tax-Free Value
Funds), including the portfolios of investments, as of
January 31, 1995, and the related statements of operations
for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended
and the financial highlights for the periods indicated
thereon. These financial statements and financial highlights
are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
January 31, 1995, 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 the Nuveen Multistate Tax-Free Trust as of
January 31, 1995, the results of their operations for the
year then ended, the changes in their net assets for each of
the two years in the period then ended, and the financial
highlights for the periods indicated in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 1, 1995
66
<PAGE>
The human bond
[PHOTO OF MR. JOHN NUVEEN IN BOOK]
At John Nuveen & Co. Incorporated, where our tax-free municipal bonds have
helped people live their dreams for nearly 100 years, we still believe our
strongest bond is human.(TM)
For almost a century, John Nuveen & Company has concentrated its resources and
expertise on one area: municipal bonds. We are the oldest and largest investment
banking firm specializing exclusively in municipal securities, and we strive to
be the best.
We maintain a sharp focus on the needs of prudent investors and their
families, offer investments of quality, and then work to make them better by
seeking out opportunity. We hold to a dedicated belief in the importance of
research. And we sustain a commitment to sound financial management through
value investing.
Our hope is that by providing quality investments we may foster opportunity
for our investors. Through careful research, attention to detail, and our
philosophy of managing for long-term value, we hope to provide our shareholders
with the attractive level of income they need to achieve their personal goals
and aspirations.
These are the things that matter most, and it's why we say that, at Nuveen,
our strongest bond is human.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
<PAGE>
PART C--OTHER INFORMATION
NUVEEN MULTISTATE TAX-FREE TRUST
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, January 31, 1995
Statement of Net Assets, January 31, 1995
Statement of Operations, Year Ended January 31, 1995
Statement of Changes in Net Assets, Years Ended January 31, 1995, and
January 31, 1994.
Report of Independent Public Accountants dated March 1, 1995
(b) Exhibits
<TABLE>
<S> <C>
1(a). Amended and Restated Declaration of Trust of Registrant. Filed as Exhibit 1 to
Pre-effective Amendment No. 2 to Registrant's Registration Statement on Form N-
1A (File No. 33-43285) and incorporated herein by reference thereto.
1(b). Certificate for the Establishment and Designation of Classes, dated August 24,
1994. Filed as Exhibit 1(b) to Post-Effective Amendment No. 7 to Registrant's
Registration Statement on Form N-1A (File No. 33-43285) and incorporated herein
by reference thereto.
2. By-Laws of Registrant, as amended on July 28, 1994. Filed as Exhibit 2 to Post-
Effective Amendment No. 6 to Registrant's Registration Statement on Form N-1A
(File No. 33-43285) 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. 7 to Registrant's Registration Statement on Form N-
1A (File No. 33-43285) 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. 7 to Registrant's Registration Statement on Form N-
1A (File No. 33-43285) 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. 7 to Registrant's Registration Statement on Form N-
1A (File No. 33-43285) and incorporated herein by reference thereto.
5(a). Investment Management Agreement between Registrant and Nuveen Advisory Corp.,
dated December 12, 1991. Filed as Exhibit 5 to Pre-effective Amendment No. 2 to
Registrant's
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
Registration Statement on Form N-1A (File No. 33-43285) and incorporated herein
by reference thereto.
5(b). Renewal, dated July 14, 1994, of Investment Management Agreement. Filed as Ex-
hibit 5(b) to Post-Effective Amendment No. 6 to Registrant's Registration State-
ment on Form N-1A (File No. 33-43285) and incorporated herein by reference
thereto.
6(a). Distribution Agreement between Registrant and John Nuveen & Co. Incorporated,
dated December 12, 1991. Filed as Exhibit 6 to Pre-effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A (File No. 33-43285) and incor-
porated herein by reference thereto.
6(b). Renewal, dated July 29, 1994, of Distribution Agreement.
7. Not applicable.
8. Custodian Contract, dated October 1, 1993, between Registrant and United States
Trust Company of New York. Filed as Exhibit 8 to Post-Effective Amendment No. 4
to Registrant's Registration Statement on Form N-1A (File No. 33-43285) and in-
corporated herein by reference thereto.
9. Transfer Agency Agreement between Registrant and Shareholder Services, Inc.
Filed as Exhibit 9 to Post-effective Amendment No. 2 to Registrant's Registra-
tion Statement on Form N-1A (File No. 33-43285) and incorporated herein by ref-
erence thereto.
10(a). Opinion of Fried, Frank, Harris, Shriver & Jacobson, dated March 29, 1995.
10(b). Opinion of Bingham, Dana & Gould, dated March 29, 1995.
11. Consent of Independent Public Accountants.
12. Not applicable.
13. Subscription Agreement of Nuveen Advisory Corp., dated December 9, 1991. Filed
as Exhibit 13 to Pre-effective Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File No. 33-43285) and incorporated herein by reference
thereto.
14. Not applicable.
15. Form of Plan of Distribution and Service for the Class A Shares and Class C
Shares of each Fund. Filed as Exhibit 15 to Post-Effective Amendment No. 6 to
Registrant's Registration Statement on Form N-1A (File No. 33-43285) and incor-
porated herein by reference thereto.
16. Schedule of Computation of Performance Figures.
17. Financial Data Schedule.
99(a). Certified copy of resolution of Board of Trustees authorizing the signing of the
names of trustees and officers on the Registrant's Registration Statement pursu-
ant to power of attorney.
99(b). Original Powers of Attorney of all of Registrant's Trustees authorizing, among
others, James J. Wesolowski and Gifford R. Zimmerman to execute the Registration
Statement.
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
99(c). Code of Ethics and Reporting Requirements.
</TABLE>
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At March 14, 1995:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
Nuveen Arizona Tax-Free Value Fund,
Class A Shares........................................... 98
Class C Shares........................................... 7
<S> <C>
Class R Shares........................................... 709
Nuveen Florida Tax-Free Value Fund,
Class A Shares........................................... 167
Class C Shares........................................... 7
Class R Shares........................................... 1,900
Nuveen Maryland Tax-Free Value Fund,
Class A Shares........................................... 212
Class C Shares........................................... 36
Class R Shares........................................... 2,088
Nuveen Michigan Tax-Free Value Fund,
Class A Shares........................................... 123
Class C Shares........................................... 6
Class R Shares........................................... 1,396
Nuveen New Jersey Tax-Free Value Fund,
Class A Shares........................................... 289
Class C Shares........................................... 17
Class R Shares........................................... 2,255
Nuveen Pennsylvania Tax-Free Value Fund,
Class A Shares........................................... 283
Class C Shares........................................... 47
Class R Shares........................................... 2,900
Nuveen Virginia Tax-Free Value Fund,
Class A Shares........................................... 219
Class C Shares........................................... 24
Class R Shares........................................... 2,422
</TABLE>
C-3
<PAGE>
ITEM 27: INDEMNIFICATION
Section 4 of Article XII of Registrant's Amended and Restated Declaration of
Trust provides as follows:
Subject to the exceptions and limitations contained in this Section 4, every
person who is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors, trustees,
officers, employees or agents of another organization in which the Trust has an
interest as a shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person"), shall be indemnified by the Trust to the fullest extent per-
mitted by law against liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been such a Trustee, director, officer, employee or agent and against amounts
paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross negli-
gence or reckless disregard of the duties involved in the conduct of his
office;
(b) with respect to any matter as to which he shall have been finally adju-
dicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a pay-
ment by a Covered Person, unless there has been either a determination that
such Covered Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office by the court or other body approving the settlement or other
disposition or a reasonable determination, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that he did not
engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by poli-
cies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall con-
tinue as to a person who has ceased to be such a Covered Person and shall inure
to the benefit of the heirs, executors and administrators of such a person.
Nothing contained herein shall affect any rights to indemnification to which
Trust personnel other than Covered Persons may be entitled by contract or oth-
erwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section 4
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such
C-4
<PAGE>
amount if it is ultimately determined that he is not entitled to indemnifica-
tion under this Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any
such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient ul-
timately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an
Interested Person of the Trust (including, as such Disinterested Trustee, any-
one who has been exempted from being an Interested Person by any rule, regula-
tion or order of the Commission), and (y) against whom none of such actions,
suits or other proceedings or another action, suit or other proceeding on the
same or similar grounds is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal, admin-
istrative or other, including appeals), actual or threatened; and the word "li-
ability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other lia-
bilities.
-----------------
The trustees and officers of the Registrant are covered by an Investment Trust
Errors and Omission policy in the aggregate amount of $20,000,000 (with a maxi-
mum deductible of $350,000) against liability and expenses of claims of wrong-
ful acts arising out of their position with the Registrant, except for matters
which involved 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 shall have 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, trustees or controlling persons of the
Registrant pursuant to the Declaration of Trust of the Registrant or otherwise,
the Registrant has been advised that in the opinion of the Securities and Ex-
change Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indem-
nification against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by an officer or trustee or controlling person of
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such officer, trustee or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Nuveen Advisory Corp. serves as investment adviser to the following open-end
management type investment companies: Nuveen Municipal Bond Fund, Inc., Nuveen
Tax-Exempt Money Market Fund,
C-5
<PAGE>
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 Califor-
nia Municipal Income Fund, Inc., Nuveen New York Municipal Income Fund, Inc.,
Nuveen Premium Income Municipal Fund, Inc., Nuveen Performance Plus Municipal
Fund, Inc., Nuveen California Performance Plus Municipal Fund, Inc., Nuveen New
York Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund,
Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California Munici-
pal Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund,
Inc., Nuveen California Investment Quality Municipal Fund, Inc., Nuveen New
York Investment Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal
Fund, Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey
Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality
Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Munici-
pal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund,
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc. Nuveen Premium Income Municipal Fund 2,
Inc., Nuveen Insured California Premium Income Municipal Fund, Inc., Nuveen In-
sured New York Premium Income Municipal Fund, Inc., Nuveen Select Maturities
Municipal Fund, Nuveen Arizona Premium Income Municipal Fund, Inc., Nuveen In-
sured Florida Premium Income Municipal Fund, Nuveen Michigan Premium Income Mu-
nicipal Fund, Inc., Nuveen New Jersey Premium Income Municipal Fund, Inc.,
Nuveen Insured Premium Income Municipal Fund, Inc., Nuveen Premium Income Mu-
nicipal Fund 4, Inc., Nuveen Insured California Premium Income Municipal Fund
2, Inc., Nuveen Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland
Premium Income Municipal Fund, Nuveen Massachusetts Premium Income Municipal
Fund, Nuveen Virginia Premium Income Municipal Fund, Nuveen Washington Premium
Income Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen
Georgia Premium Income Municipal Fund, Nuveen Missouri Premium Income Municipal
Fund, Nuveen North Carolina Premium Income Municipal Fund, Nuveen California
Premium Income Municipal Fund, and Nuveen Insured Premium Income Municipal Fund
2. Nuveen Advisory Corp. has no other clients or business at the present time.
The principal business address for all of these investment companies is 333
West Wacker Drive, Chicago, Illinois 60606.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer, other than Donald E. Sveen
and Anthony T. Dean, of the investment adviser has engaged during the last two
years for his account or in the capacity of director, officer, employee, part-
ner or trustee, see the descriptions under "Management" in the Statement of Ad-
ditional Information.
Donald E. Sveen is President and Director, formerly Executive Vice President,
of Nuveen Advisory Corp., the investment adviser. Mr. Sveen has, during the
last two years, been President, Director and
C-6
<PAGE>
formerly Executive Vice President of John Nuveen & Co. Incorporated; and Presi-
dent and Director of Nuveen Institutional Advisory Corp. Anthony T. Dean is Di-
rector of Nuveen Advisory Corp., the investment adviser. Mr. Dean has, during
the last two years, been Executive Vice President and Director of John Nuveen
Company and John Nuveen & Co. Incorporated; and Director of Nuveen Institu-
tional Advisory Corp.
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co., Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Municipal
Bond Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free Re-
serves, Inc., Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund,
Inc., Nuveen Insured Tax-Free Bond Fund, Inc. 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 co-managing underwriter to the following closed-
end management type investment companies: Nuveen Municipal Value Fund, Inc.,
Nuveen California Municipal Value Fund, Inc., Nuveen New York Municipal Value
Fund, Inc., Nuveen Municipal Income Fund, Inc., Nuveen California Municipal In-
come Fund, Inc., Nuveen New York Municipal Income Fund, Inc., Nuveen Premium
Income Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc.,
Nuveen California Performance Plus Municipal Fund, Inc., Nuveen New York Per-
formance Plus Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc.,
Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California Municipal
Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc.,
Nuveen California Investment Quality Municipal Fund, Inc., Nuveen New York In-
vestment Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund,
Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen New Jersey In-
vestment Quality Municipal Fund, Inc., Nuveen Pennsylvania Investment Quality
Municipal Fund, Nuveen Select Quality Municipal Fund, Inc., Nuveen California
Select Quality Municipal Fund, Inc., Nuveen New York Select Quality Municipal
Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen Insured Munici-
pal Opportunity Fund, Inc., Nuveen Florida Quality Income Municipal Fund,
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen 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 In-
come Municipal Fund, Inc., Nuveen Insured Florida Premium Income Municipal
Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey
Premium Income Municipal Fund, Inc., Nuveen Insured Premium Income Municipal
Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Insured Cali-
fornia Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania Premium In-
come Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen
Massachusetts Premium Income Municipal Fund, Nuveen Virginia Premium Income Mu-
nicipal Fund, Nuveen Washington Premium Income Municipal Fund, Nuveen Connecti-
cut Premium Income Municipal Fund, Nuveen Georgia Premium Income Municipal
Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen North Carolina Pre-
mium 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.
C-7
<PAGE>
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
--------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Franke Chairman of the Board, Chairman of the Board
333 West Wacker Drive Chicago, Chief Executive Officer and Trustee
IL 60606 and Director
Donald E. Sveen President, Chief Operating None
333 Wacker Drive Officer and Director
Chicago, IL 60606
Anthony T. Dean Executive Vice President None
333 West Wacker Drive and Director
Chicago, IL 60606
Timothy R. Schwertfeger Executive Vice President President and Trustee
333 West Wacker Drive and Director
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
James W. Gratehouse Vice President None
333 West Wacker Drive
Chicago, IL 60606
Paul E. Greenawalt Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
NAME AND PRINCIPAL POSITIONS AND OFFICES OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
----------------------------------------------------------------------------------
<S> <C> <C>
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
O. Walter Renfftlen Vice President Vice President and
333 West Wacker Drive and Controller Controller
Chicago, IL 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President Vice President and
333 West Wacker Drive and Treasurer Treasurer
Chicago, IL 60606
George P. Thermos Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
James J. Wesolowski Vice President, Vice President and
333 West Wacker Drive General Counsel Secretary
Chicago, IL 60606 and Secretary
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Assistant Secretary
Chicago, IL 60606
</TABLE>
(c) Not applicable.
C-9
<PAGE>
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois 60606, main-
tains the Declaration of Trust, By-Laws, minutes of trustees and shareholder
meetings and contracts of the Registrant and all advisory material of the in-
vestment adviser.
United States Trust Company of New York, 114 West 47th Street, New York, New
York 10036, maintains all general and subsidiary ledgers, journals, trial bal-
ances, records of all portfolio purchases and sales, and all other required
records not maintained by Nuveen Advisory Corp., or Shareholder Services, Inc.
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado 80217-5330, main-
tains all the required records in its capacity as transfer, dividend paying,
and shareholder service 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 Sharehold-
ers upon request and without charge.
C-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT THIS REGISTRATION STATEMENT
MEETS ALL THE REQUIREMENTS FOR EFFECTIVENESS UNDER PARAGRAPH (B) OF RULE 485
UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS REGISTRATION STATE-
MENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED,
IN THE CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 31ST DAY OF MARCH, 1995.
NUVEEN MULTISTATE TAX-FREE TRUST
/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 Vice President and March 31, 1995
----------------------------- Controller (Principal
O. Walter Renfftlen Financial and Accounting
Officer)
Richard J. Franke Chairman of the Board
and Trustee (Principal
Executive Officer)
Lawrence H. Brown Trustee
/s/ Gifford R. Zimmerman
Anne E. Impellizzeri Trustee By------------------------------
Gifford R. Zimmerman
John E. O'Toole Trustee Attorney-in-Fact
Margaret K. Rosenheim Trustee March 31, 1995
Peter R. Sawers Trustee
Timothy R. Schwertfeger President and Trustee
</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 TRUSTEES OF REGISTRANT ON WHOSE
BEHALF THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
6(b). Renewal, dated July 29, 1994, of Distribution Agree-
ment.
10(a). Opinion of Fried, Frank, Harris, Shriver & Jacobson,
dated March 29, 1995.
10(b). Opinion of Bingham, Dana & Gould, dated March 29,
1995.
11. Consent of Independent Public Accountants.
16. Schedule of Computation of Performance figures.
17. Financial Data Schedule.
99(a). Certified copy of resolution of Board of Trustees au-
thorizing the signing of the names of trustees and
officers on the Registrant's Registration Statement
pursuant to power of attorney.
99(b). Original Powers of Attorney of all of Registrant's
Trustees authorizing, among others, James J. Wesolow-
ski and Gifford R. Zimmerman to execute the Registra-
tion Statement.
99(c). Code of Ethics and Reporting Requirements.
</TABLE>
<PAGE>
EXHIBIT 6(b)
Renewal of Distribution Agreement
---------------------------------
This Agreement made this 29th day of July, 1994 by and between Nuveen Multistate
Tax-Free Trust, a Massachusetts business trust (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, 1994 unless continued in the manner
required by the Investment Company Act of 1940; and
WHEREAS, in connection with the implementation of its Flexible Pricing
Structure, the form of the Dealer Distribution Agreement attached as an Exhibit
has been revised; and
WHEREAS, the Board of Directors of the Fund, at a meeting called for the purpose
of reviewing the Agreement has approved the Agreement with the revised form of
Dealer Distribution Agreement as an Exhibit, and its continuance until August 1,
1995 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, 1995 and ratify and confirm the Agreement with the revised form of
Dealer Distribution Agreement as an Exhibit, in all respects.
NUVEEN MULTISTATE TAX-FREE TRUST
By: /s/ Gifford R. Zimmerman
-----------------------------
Vice President
ATTEST:
/s/ Morrison C. Warren
-------------------------
Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By: /s/ James J. Wesolowski
-----------------------------
Vice President
ATTEST:
/s/ Larry W. Martin
-------------------------
Assistant Secretary
<PAGE>
EXHIBIT 10(a)
March 29, 1995
Nuveen Multistate Tax-Free Trust
333 West Wacker Drive
Chicago, Illinois 60606
Re: Nuveen Multistate Tax-Free Trust
--------------------------------
Ladies and Gentlemen:
We have acted as counsel for Nuveen Multistate Tax-Free Trust, a
Massachusetts business trust (the "Trust"), with respect to the following series
of the Trust: Nuveen Arizona Tax-Free Value Fund, Nuveen Florida Tax-Free Value
Fund, Nuveen Maryland Tax-Free Value Fund, Nuveen Michigan Tax-Free Value Fund,
Nuveen New Jersey Tax-Free Value Fund, Nuveen Pennsylvania Tax-Free Value Fund
and Nuveen Virginia Tax-Free Value Fund, in connection with the Trust's
Post-Effective Amendment Number 8 to its Registration Statement on Form N-1A as
proposed to be filed with the Securities and Exchange Commission on March 30,
1995 (the "Amendment") pursuant to Rule 485(b) of the Securities Act of 1933
(the "1933 Act")(as proposed to be amended, the "Registration Statement") with
respect to certain of its Shares of Beneficial Interest, par value $.01 per
share, designated as (i) Class A Common Shares (the "Class A Shares"), (ii)
Class C Common Shares (the "Class C Shares") and (iii) Class R Common Shares
(the "Class R Shares") (such Class A Shares, Class C Shares and Class R Shares
referred to collectively herein as the "Shares"). This opinion is being
delivered to you in connection with the Trust's filing of such Amendment. 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 Commonwealth of
Massachusetts as to the existence of the Trust;
<PAGE>
Nuveen Multistate Tax-Free Trust
March 29, 1995
Page 2
(b) copies, certified by the Secretary of State of the Commonwealth
of Massachusetts, of the Trust's Declaration of Trust and of all
amendments thereto on file in the office of the Secretary of
State;
(c) a certificate executed by Karen L. Healy, the Assistant Secretary
of the Trust, certifying as to, and attaching copies of, the
Trust's Declaration of Trust and By-Laws, as amended, and certain
votes of the Trustees of the Trust; and
(d) a printer's proof, dated March 29, 1995, of the Amendment.
In our capacity as counsel to the Trust, 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 opinions 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 opinions, we have
relied upon, and assume the accuracy of, certificates and oral or written
statements of public officials and officers or representatives of the
Trust. 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
Trust's Declaration of Trust and By-Laws, and for the consideration
described in the Registration Statement, will be legally issued, fully paid
and non-assessable, except that, as set forth in the Registration
Statement, shareholders of the Trust may, under certain circumstances, be
held personally liable for its obligations.
The opinion expressed herein is limited to the laws of the
Commonwealth of Massachusetts. As to matters of Massachusetts law covered
thereby, we have relied solely upon the opinion of Bingham, Dana & Gould,
addressed to us and dated March 29, 1995.
<PAGE>
Nuveen Multistate Tax-Free Trust
March 29, 1995
Page 3
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By:_____________________________________
Thomas S. Harman
JMS:APV:RAS:TSH
<PAGE>
EXHIBIT 10(b)
March 29, 1995
Fried, Frank, Harris Shriver & Jacobson
1001 Pennsylvania Ave., N.W., Suite 800
Washington, D.C. 20004-2505
Re: Nuveen Multistate Tax-Free Trust
--------------------------------
Ladies and Gentlemen:
We have acted as special Massachusetts counsel to Nuveen Multistate Tax-
Free Trust (the "Fund") with respect to the following series of the Fund, Nuveen
Arizona Tax-Free Value Fund, Nuveen Florida Tax-Free Value Fund, Nuveen Maryland
Tax-Free Value Fund, Nuveen Michigan Tax-Free Value Fund, Nuveen New Jersey Tax-
Free Value Fund, Nuveen Pennsylvania Tax-Free Value Fund and Nuveen Virginia
Tax-Free Value Fund (the "Fund"), in connection with the Fund's Post-Effective
Amendment Number 8 to its Registration Statement on Form N-1A as proposed to be
filed with the Securities and Exchange Commission on March 30, 1995 (the
"Amendment") pursuant to Rule 485(b) of the Investment Company Act of 1940, (as
proposed to be amended, the "Registration Statement") with respect to certain of
its Class A Common Shares, par value $.01 per share (the "Class A Shares"), its
Class C Common Shares, par value $.01 per share (the "Class C Shares") and its
Class R Common Shares, par value $.01 per share (the "Class R Shares", such
Class A Shares, Class C Shares and Class R Shares referred to collectively
herein as the "Common Shares"). You have requested that we deliver this opinion
to you, as special counsel to the Fund, for use by you in connection with your
opinion to the Fund with respect to the Common Shares.
<PAGE>
Fried, Frank, Harris Shriver & Jacobson
March 29, 1995
Page 2
In connection with the furnishing of this opinion, we have examined the
following documents:
(a) a certificate of the Secretary of State of the Commonwealth
of Massachusetts as to the existence of the Fund;
(b) copies, certified by the Secretary of State of the Commonwealth
of Massachusetts, of the Fund's Declaration of Trust and of all amendments
thereto on file in the office of the Secretary of State;
(c) a Certificate executed by an appropriate officer of the Fund,
certifying as to, and attaching copies of, the Fund's Declaration of Trust
and By-Laws, and certain resolutions adopted by the Trustees of the Fund;
(d) a printer's proof dated March 29, 1995 of the Amendment.
In such examination, we have assumed the genuineness of all signatures, the
conformity to the originals of all of the documents reviewed by us as copies,
the authenticity and completeness of all original documents reviewed by us in
original or copy form and the legal competence of each individual executing any
document. 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.
This opinion is based entirely on our review of the documents listed above
and such investigation of law as we have deemed necessary or appropriate. We
have made no other review or investigation of any kind whatsoever, and we have
assumed, without independent inquiry, the accuracy of the information set forth
in such documents.
This opinion is limited solely to the internal substantive laws of the
Commonwealth of Massachusetts as applied by courts located in such
Commonwealth, except that we express no opinion as to any Massachusetts
securities law.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
<PAGE>
Fried, Frank, Harris Shriver & Jacobson
March 29, 1995
Page 3
Based upon and subject to the foregoing, please be advised that it is our
opinion that:
1. The Fund is duly organized and existing under the Fund's Declaration of
Trust and the laws of the Commonwealth of Massachusetts as a voluntary
association with transferable shares of beneficial interest commonly referred to
as a "Massachusetts business trust."
2. The Common Shares, when issued and sold in accordance with the Fund's
Declaration of Trust and By-Laws and for the consideration described in the
Registration Statement, will be legally issued, fully paid and non-assessable,
except that, as set forth in the Registration Statement, shareholders of the
Fund may under certain circumstances be held personally liable for its
obligations.
We hereby consent to your reliance on this opinion in connection with your
opinion to the Fund with respect to the Common Shares and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
BINGHAM, DANA & GOULD
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
dated March 1, 1995, and to all references to our firm included in or made a
part of this registration statement on Form N-1A of Nuveen Multistate Tax-Free
Trust, comprising the Arizona, Florida, Maryland, Michigan, New Jersey,
Pennsylvania and Virginia Tax-Free Value Funds.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 23, 1995
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF PERFORMANCE FIGURES*
I. YIELD
A.Yield Formula
Yield is computed according to the following formula:
6
YIELD = 2 [ ( A - B + 1 - 1
-----
CD ) ]
Where:
A = dividends and interest(degrees) earned during the period.
B = expenses accrued for the period (net of reimbursements).
C = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
D = the maximum offering price per share on the last day of the period.
--------
* The maximum sales charge in effect during the periods shown was 4.50%.
(degrees)Interest earned on tax-exempt obligations is determined as follows:
A. In the case of a tax-exempt obligation (1) with a current market premium
or (2) issued at a discount where the current market discount is less
than the then-remaining portion of the original issue discount, it is
necessary to first compute the yield to maturity (YTM). The YTM is then
divided by 360 and the quotient is multiplied by the market value of the
obligation (plus accrued interest).
B. In the case of a tax-exempt obligation issued at a discount where the
current market discount is in excess of the then-remaining portion of the
original issue discount, the adjusted original issue discount basis of
the obligation (plus accrued interest) is used in lieu of the market
value of the obligation (plus accrued interest) in computing the yield to
maturity (YTM). The YTM is then divided by 360 and the quotient is multi-
plied by the adjusted original issue basis of the obligation (plus ac-
crued interest).
C. In the case of a tax-exempt obligation issued without original issue
discount and having a current market discount, the coupon rate of inter-
est is used in lieu of the yield to maturity. The coupon rate is then di-
vided by 360 and the quotient is multiplied by the par value of the obli-
gation.
1
<PAGE>
B. Yield Calculations
1. Arizona Fund
The following is the 30-day yield as of January 31, 1995 for the Class A
Shares of the Arizona Fund:
[$ 5,363.29 - $836.41] 6
Yield = 2 [ ( ----------------------- + 1 ) - 1 ]
[ 104,427.76 X $ 10.40]
= 5.05%
The following is the 30-day yield as of January 31, 1995 for the Class C
Shares of the Arizona Fund:
[$ 214.87 - $58.68] 6
Yield = 2 [ ( -------------------- + 1 ) - 1 ]
[ 4,217.45 X $ 9.84]
= 4.56%
The following is the 30-day yield as of January 31, 1995 for the Class R
Shares of the Arizona Fund:
[$ 85,308.21 - $9,966.09] 6
Yield = 2 [ ( -------------------------- + 1 ) - 1 ]
[ 1,672,159.47 X $ 9.85]
= 5.55%
2. Florida Fund
The following is the 30-day yield as of January 31, 1995 for the Class A
Shares of the Florida Fund:
[$ 6,446.87 - $1,017.63] 6
Yield = 2 [ ( ------------------------- + 1 ) - 1 ]
[ 129,568.04 X $ 10.19]
= 4.99%
The following is the 30-day yield as of January 31, 1995 for the Class C
Shares of the Florida Fund:
[$ 397.87 - $110.01] 6
Yield = 2 [ ( --------------------- + 1 ) - 1 ]
[ 7,983.49 X $ 9.73]
= 4.48%
The following is the 30-day yield as of January 31, 1995 for the Class R
Shares of the Florida Fund:
[$ 268,040.10 - $31,715.42] 6
Yield = 2 [ ( ---------------------------- + 1 ) - 1 ]
[ 5,375,655.83 X $ 9.75]
= 5.47%
2
<PAGE>
3. Maryland Fund
The following is the 30-day yield as of January 31, 1995 for the Class A
Shares of the Maryland Fund:
6
Yield = 2 [ ( [$ 7,451.60 - $1,161.24] + 1 ) - 1 ]
-------------------------
[ 149,467.47 X $ 10.05]
= 5.08%
The following is the 30-day yield as of January 31, 1995 for the Class C
Shares of the Maryland Fund:
6
Yield = 2 [ ( [$ 4,419.86 - $1,204.53] + 1 ) - 1 ]
------------------------
[ 88,720.67 X $ 9.59]
= 4.58%
The following is the 30-day yield as of January 31, 1995 for the Class R
Shares of the Maryland Fund:
6
Yield = 2 [ ( [$ 222,471.52 - $25,982.62] + 1 ) - 1 ]
----------------------------
[ 4,459,761.68 X $ 9.61]
= 5.56%
4. Michigan Fund
The following is the 30-day yield as of January 31, 1995 for the Class A
Shares of the Michigan Fund:
6
Yield = 2 [ ( [$ 3,994.40 - $616.46] + 1 ) - 1 ]
----------------------
[ 77,325.46 X $ 10.34]
= 5.12%
The following is the 30-day yield as of January 31, 1995 for the Class C
Shares of the Michigan Fund:
6
Yield = 2 [ ( [$ 334.83 - $90.43] + 1 ) - 1 ]
-------------------
[6,492.21 X $ 9.85]
= 4.63%
The following is the 30-day yield as of January 31, 1995 for the Class R
Shares of the Michigan Fund:
6
Yield = 2 [ ( [$ 140,028.86 - $16,191.36] + 1 ) - 1 ]
----------------------------
[ 2,708,478.91 X $ 9.88]
= 5.62%
3
<PAGE>
5. New Jersey Fund
The following is the 30-day yield as of January 31, 1995 for the Class A
Shares of the New Jersey Fund:
6
Yield = 2 [ ( [$ 14,246.66 - $2,142.22] + 1 ) - 1 ]
-------------------------
[ 271,138.01 X $ 10.19]
= 5.32%
The following is the 30-day yield as of January 31, 1995 for the Class C
Shares of the New Jersey Fund:
6
Yield = 2 [ ( [$ 2,005.78 - $528.11] + 1 ) - 1 ]
----------------------
[ 38,248.27 X $ 9.71]
= 4.82%
The following is the 30-day yield as of January 31, 1995 for the Class R
Shares of the New Jersey Fund:
6
Yield = 2 [ ( [$ 212,155.60 - $23,919.63] + 1 ) - 1 ]
----------------------------
[ 4,033,490.57 X $ 9.74]
= 5.82%
6. Pennsylvania Fund
The following is the 30-day yield as of January 31, 1995 for the Class A
Shares of the Pennsylvania Fund:
6
Yield = 2 [ ( [$ 7,652.88 - $1,126.81] + 1 ) - 1 ]
------------------------
[143,124.22 X $ 10.21]
= 5.42%
The following is the 30-day yield as of January 31, 1995 for the Class C
Shares of the Pennsylvania Fund:
6
Yield = 2 [ ( [$ 2,539.52 - $654.50] + 1 ) - 1 ]
----------------------
[ 47,981.19 X $ 9.65]
= 4.94%
The following is the 30-day yield as of January 31, 1995 for the Class R
Shares of the Pennsylvania Fund:
6
Yield = 2 [ ( [$ 281,462.46 - $31,062.98] + 1 ) - 1 ]
----------------------------
[ 5,274,457.50 X $ 9.73]
= 5.93%
4
<PAGE>
7. Virginia Fund
The following is the 30-day yield as of January 31, 1995 for the Class A
Shares of the Virginia Fund:
6
Yield = 2 [ ( [$ 10,168.11 - $1,577.34] + 1 ) - 1 ]
-------------------------
[ 200,198.82 X $ 10.22]
= 5.09%
The following is the 30-day yield as of January 31, 1995 for the Class C
Shares of the Virginia Fund:
6
Yield = 2 [ ( [$ 1,923.21 - $521.78] + 1 ) - 1 ]
----------------------
[ 37,916.10 X $ 9.74]
= 4.60%
The following is the 30-day yield as of January 31, 1995 for the Class R
Shares of the Virginia Fund:
6
Yield = 2 [ ( [$ 285,395.97 - $33,182.85] + 1 ) - 1 ]
----------------------------
[ 5,615,481.03 X $ 9.77]
= 5.58%
II. TAXABLE EQUIVALENT YIELD
A. Taxable Equivalent Yield Formula
The Taxable Equivalent Yield Formula is as follows:
<TABLE>
<S> <C>
Tax Exempt Yield
Taxable Equivalent Yield = --------------------------------------------------------
(1 - Maximum combined federal and state income tax rate)
</TABLE>
5
<PAGE>
B. Taxable Equivalent Yield Calculations
Based on combined federal and state income tax rates of 43.0% for Arizona,
39.6% for Florida, 45.0% for Maryland*, 44.5% for Michigan, 43.5% for New Jer-
sey, 41.5% for Pennsylvania and 43.0% for Virginia, the Taxable Equivalent
Yields for the Class A Shares, Class C Shares and Class R Shares of each of the
Arizona Fund, Florida Fund, Maryland Fund, Michigan Fund, New Jersey Fund,
Pennsylvania Fund and Virginia Fund for the 30-day period ended January 31,
1995 are as follows:
Class A Shares Class C Shares Class R Shares
5.05% 4.56% 5.55%
Arizona Fund: -------- = 8.86% -------- = 8.00% -------- = 9.74%
1 - .430 1 - .430 1 - .430
4.99% 4.48% 5.47%
Florida Fund: -------- = 8.26% -------- = 7.42% -------- = 9.06%
1 - .396 1 - .396 1 - .396
5.08% 4.58% 5.56%
Maryland Fund*: -------- = 9.24% -------- = 8.33% -------- = 10.11%
1 - .450 1 - .450 1 - .450
5.12% 4.63% 5.62%
Michigan Fund: -------- = 9.23% -------- = 8.34% -------- = 10.13%
1 - .445 1 - .445 1 - .445
5.32% 4.82% 5.82%
New Jersey Fund: -------- = 9.42% -------- = 8.53% -------- = 10.30%
1 - .435 1 - .435 1 - .435
5.42% 4.94% 5.93%
Pennsylvania Fund: -------- = 9.26% -------- = 8.44% -------- = 10.14%
1 - .415 1 - .415 1 - .415
5.09% 4.60% 5.58%
Virginia Fund: -------- = 8.93% -------- = 8.07% -------- = 9.79%
1 - .430 1 - .430 1 - .430
*Reflects a combined federal, state and local tax rate.
6
<PAGE>
III. AVERAGE ANNUAL TOTAL RETURN
A.Average Annual Total Return Formula
Average Annual Total Return is computed according to the following formula:
ERV
T = /1//N - 1
Where: T = annual total return ------
P
P = a hypothetical initial payment of $1,000
N = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10-year (or fractional portion there-
of) periods at the end of such 1, 5 or 10-year (or fractional por-
tion thereof) periods.
B.Average Annual Total Return Calculations
The following are the annual total returns for Class R Shares of the Funds
for the 1-year period ended January 31, 1995, and for the period from inception
through January 31, 1995, assuming no imposition of sales charges:
1. Arizona Fund:
/1///1/
= $956.10
Year ended January 31, 1995 - 1 = (4.39)%
( ------- ) ------
------
$1,000
$1,207.50 /1///2/./9//2//4//0/
Inception through January 31, 1995
=
( )
------- - 1 = 6.66%
-----
-----
$1,000
2. Florida Fund:
/1///1/
= $956.70
Year ended January 31, 1995 - 1 = (4.33)%
( ------- ) ------
------
$1,000
$1,184.30 /1///2/./9//2//4//0/
Inception through January 31, 1995
=
( )
------- - 1 = 5.96%
-----
-----
$1,000
3. Maryland Fund:
/1///1/
=
Year ended January 31, 1995 $954.20 - 1 = (4.58)%
( ) ------
------- ------
$1,000
/1///2/./9//2//4//0/
$1,171.80
Inception through January 31, 1995
=
- 1 = 5.57%
( ------- ) -----
-----
$1,000
4. Michigan Fund:
= /1///1/
Year ended January 31, 1995 ( $960.20 )
- 1 = (3.98)%
------- ------
------
$1,000
/1///2/./9//2//4//0/
$1,208.50
Inception through January 31, 1995
=
- 1 = 6.69%
( ------- ) -----
-----
$1,000
7
<PAGE>
5. New Jersey Fund:
/1///1/
= $967.30
Year ended January 31, 1995 - 1 = (3.27)%
( ------- ) ------
------
$1,000
$1,201.68 /1///2/./9//2//4//0/
Inception through January 31, 1995
=
( )
------- - 1 = 6.48%
-----
-----
$1,000
6. Pennsylvania Fund:
/1///1/
= $950.60
Year ended January 31, 1995 - 1 = (4.94)%
( ------- ) ------
------
$1,000
$1,188.30 /1///2/./9//2//4//0/
Inception through January 31, 1995
=
( )
------- - 1 = 6.08%
-----
-----
$1,000
7. Virginia Fund:
/1///1/
=
Year ended January 31, 1995 $960.80 - 1 = (3.92)%
( ) ------
------- ------
$1,000
/1///2/./9//2//4//0/
$1,192.30
Inception through January 31, 1995
=
- 1 = 6.20%
( ------- ) -----
-----
$1,000
IV. CUMULATIVE TOTAL RETURN
A.Cumulative Total Return Formula
Cumulative Total Return is computed according to the following formula:
T = ERV - P
--------
P
Where: T = cumulative total return
P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
inception of the Fund or at the first day of a specified 1-year, 5-
year or 10-year period.
B.Cumulative Total Return Calculation
The following are the cumulative total returns for the Class R Shares of
Funds for the 1-year period ended January 31, 1995, and for the period from in-
ception through January 31, 1995, assuming no imposition of sales charges:
1. Arizona Fund:
= =
Year ended January 31, 1995 $956.10 - (4.39)%
( $1,000 ) ------
---------------- ------
$1,000
Inception through January 31, 1995 $1,207.50 -
= $1,000 =
20.75%
( ) -----
---------------- -----
$1,000
8
<PAGE>
2. Florida Fund:
= $956.70 - =
Year ended January 31, 1995 $1,000 (4.33)%
( ---------------- ) -----
-----
$1,000
$1,184.30 -
Inception through January 31, 1995 $1,000
= =
18.43%
( ---------------- ) -----
$1,000 -----
3. Maryland Fund:
= $954.20 - =
Year ended January 31, 1995 $1,000 (4.58)%
( ---------------- ) -----
-----
$1,000
$1,171.80 -
Inception through January 31, 1995 $1,000
= =
17.18%
( ---------------- ) -----
$1,000 -----
4. Michigan Fund:
= $960.20 - =
Year ended January 31, 1995 $1,000 (3.98)%
( ---------------- ) -----
-----
$1,000
$1,208.50 -
Inception through January 31, 1995 $1,000
= =
20.85%
( ---------------- ) -----
-----
$1,000
5. New Jersey Fund:
= $967.30 - =
Year ended January 31, 1995 $1,000 (3.27)%
( ---------------- ) -----
-----
$1,000
$1,201.70 -
Inception through January 31, 1995 $1,000
= =
20.17%
( ---------------- ) -----
$1,000 -----
6. Pennsylvania Fund:
= $950.60 - =
Year ended January 31, 1995 $1,000 (4.94)%
( ---------------- ) -----
-----
$1,000
$1,188.30 -
Inception through January 31, 1995 $1,000
= =
18.83%
( ---------------- ) -----
$1,000 -----
7. Virginia Fund:
= $960.80 - =
Year ended January 31, 1995 $1,000 (3.92)%
( ---------------- ) -----
-----
$1,000
$1,192.30 -
Inception through January 31, 1995 $1,000
= =
19.23%
( ---------------- ) -----
$1,000 -----
9
<PAGE>
V. TAXABLE EQUIVALENT TOTAL RETURN
A. Taxable Equivalent Total Return Formula
Each Fund's taxable equivalent total return for a specific period is
calculated by first taking a hypothetical initial investment in the Fund's
shares on the first day of the period, computing the Fund's total return for
each calendar year in the period according to the above formula, and increasing
the total return for each such calendar year by the amount of additional income
that a taxable fund would need to have generated to equal the income of the Fund
on an after-tax basis, at a specified tax rate (usually the highest marginal
federal or combined federal and state tax rate), calculated pursuant to the
formula presented above under "taxable equivalent yield." The resulting amount
for the calendar year is then divided by the initial investment amount to arrive
at a "taxable equivalent total return factor" for the calendar year. The taxable
equivalent total return factors for all the calendar years in the period are
then multiplied together and the result is then annualized by taking its Nth
root (N representing the number of years in the period) and subtracting 1, which
provides a taxable equivalent total return expressed as a percentage.
B. Taxable Equivalent Total Return Calculations
The taxable equivalent total return calculations for the Class R Shares of
Arizona Fund for the period from inception through January 31, 1995, are set
forth on the following pages. One set of calculations presents the Fund's
taxable equivalent total return with the maximum 4.50% sales charge and the
other set of calculations presents the taxable equivalent total return at the
Fund's net asset value.
VI. MEASUREMENT OF RISK
The annualized standard deviation of monthly returns for Class R Shares of
each of the Funds over the two years ended January 31, 1995, was calculated as
follows:
annualized
standard -----------------------------------------------------
deviation {sigma((Total return in month X) - (Average monthly
(omega) = total return))/2/}/1/
-----------------------------------------------------
number of months (24)
10
<PAGE>
The calculation of annualized standard deviation for the Arizona Fund for the
two years ended January 31, 1995 was as follows:
<TABLE>
<CAPTION>
MONTHLY (TOTAL RETURN IN MONTH X) -
ARIZONA FUND TOTAL RETURNS (AVERAGE MONTHLY TOTAL RETURN)/2/
------------ ------------- ---------------------------------
<S> <C> <C>
Feb-93.......................... 4.11% 0.14%
Mar-93.......................... -1.60% 0.04%
Apr-93.......................... 1.41% 0.01%
May-93.......................... 0.81% 0.00%
Jun-93.......................... 1.78% 0.02%
Jul-93.......................... -0.16% 0.00%
Aug-93.......................... 2.63% 0.05%
Sep-93.......................... 1.33% 0.01%
Oct-93.......................... 0.50% 0.00%
Nov-93.......................... -0.99% 0.02%
Dec-93.......................... 2.24% 0.03%
Jan-94.......................... 1.34% 0.01%
Feb-94.......................... -3.01% 0.12%
Mar-94.......................... -4.92% 0.28%
Apr-94.......................... 0.15% 0.00%
May-94.......................... 1.57% 0.01%
Jun-94.......................... -0.76% 0.01%
Jul-94.......................... 1.77% 0.02%
Aug-94.......................... 0.25% 0.00%
Sep-94.......................... -1.55% 0.04%
Oct-94.......................... -1.88% 0.05%
Nov-94.......................... -3.17% 0.13%
Dec-94.......................... 4.03% 0.13%
Jan-95.......................... 3.41% 0.09%
Average monthly total return.... 0.39%
Sum of Column C................. 1.22%
Number of months................ 24
</TABLE>
---------
Annualized Std. Dev. = (1.22%/24) = 2.25%
11
<PAGE>
VII. RISK-ADJUSTED TOTAL RETURN
The risk-adjusted total return for the Class R Shares of the Arizona Fund
over the two years ended January 31, 1995, was calculated as follows:
Annualized total return of Fund - annualized
total return of
Ponder Varifact Municipal Variable Rate Demand
Bond Index
Risk-Adjusted Total Return =
------------------------------------------------
Annualized standard deviation of return (s)
4.43% -
2.72%
------------
=
2.25%
=
0.760
12
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 1
<NAME> NUVEEN ARIZONA CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 17684
<INVESTMENTS-AT-VALUE> 17435
<RECEIVABLES> 202
<ASSETS-OTHER> 164
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80
<TOTAL-LIABILITIES> 80
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18081
<SHARES-COMMON-STOCK> 113
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (127)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (249)
<NET-ASSETS> 1124
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 996
<OTHER-INCOME> 0
<EXPENSES-NET> 122
<NET-INVESTMENT-INCOME> 874
<REALIZED-GAINS-CURRENT> (127)
<APPREC-INCREASE-CURRENT> (1415)
<NET-CHANGE-FROM-OPS> (668)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 116
<NUMBER-OF-SHARES-REDEEMED> 3
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1582
<ACCUMULATED-NII-PRIOR> 18
<ACCUMULATED-GAINS-PRIOR> 1
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 89
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 173
<AVERAGE-NET-ASSETS> 569
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> .203
<PER-SHARE-GAIN-APPREC> (.086)
<PER-SHARE-DIVIDEND> (.217)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 1
<NAME> NUVEEN ARIZONA CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 17684
<INVESTMENTS-AT-VALUE> 17435
<RECEIVABLES> 202
<ASSETS-OTHER> 164
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80
<TOTAL-LIABILITIES> 80
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18081
<SHARES-COMMON-STOCK> 4
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (127)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (249)
<NET-ASSETS> 43
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 996
<OTHER-INCOME> 0
<EXPENSES-NET> 122
<NET-INVESTMENT-INCOME> 874
<REALIZED-GAINS-CURRENT> (127)
<APPREC-INCREASE-CURRENT> (1415)
<NET-CHANGE-FROM-OPS> (668)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1582
<ACCUMULATED-NII-PRIOR> 18
<ACCUMULATED-GAINS-PRIOR> 1
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 89
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 173
<AVERAGE-NET-ASSETS> 39
<PER-SHARE-NAV-BEGIN> 9.94
<PER-SHARE-NII> .169
<PER-SHARE-GAIN-APPREC> (.052)
<PER-SHARE-DIVIDEND> (.217)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.84
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> NUVEEN ARIZONA CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 17684
<INVESTMENTS-AT-VALUE> 17435
<RECEIVABLES> 202
<ASSETS-OTHER> 164
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80
<TOTAL-LIABILITIES> 80
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18081
<SHARES-COMMON-STOCK> 1680
<SHARES-COMMON-PRIOR> 1483
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (127)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (249)
<NET-ASSETS> 16554
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 996
<OTHER-INCOME> 0
<EXPENSES-NET> 122
<NET-INVESTMENT-INCOME> 874
<REALIZED-GAINS-CURRENT> (127)
<APPREC-INCREASE-CURRENT> (1415)
<NET-CHANGE-FROM-OPS> (668)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 863
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 402
<NUMBER-OF-SHARES-REDEEMED> 254
<SHARES-REINVESTED> 49
<NET-CHANGE-IN-ASSETS> 1582
<ACCUMULATED-NII-PRIOR> 18
<ACCUMULATED-GAINS-PRIOR> 1
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 89
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 173
<AVERAGE-NET-ASSETS> 15,882
<PER-SHARE-NAV-BEGIN> 10.88
<PER-SHARE-NII> .536
<PER-SHARE-GAIN-APPREC> (1.026)
<PER-SHARE-DIVIDEND> (.540)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.85
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 2
<NAME> NUVEEN FLORIDA CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 53489
<INVESTMENTS-AT-VALUE> 52132
<RECEIVABLES> 827
<ASSETS-OTHER> 1311
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54270
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 262
<TOTAL-LIABILITIES> 262
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55416
<SHARES-COMMON-STOCK> 143
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 37
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (88)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1357)
<NET-ASSETS> 1392
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2938
<OTHER-INCOME> 0
<EXPENSES-NET> 371
<NET-INVESTMENT-INCOME> 2567
<REALIZED-GAINS-CURRENT> (88)
<APPREC-INCREASE-CURRENT> (4455)
<NET-CHANGE-FROM-OPS> (1976)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 176
<NUMBER-OF-SHARES-REDEEMED> 33
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5754
<ACCUMULATED-NII-PRIOR> 21
<ACCUMULATED-GAINS-PRIOR> 13
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 271
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415
<AVERAGE-NET-ASSETS> 739
<PER-SHARE-NAV-BEGIN> 9.89
<PER-SHARE-NII> .193
<PER-SHARE-GAIN-APPREC> (.148)
<PER-SHARE-DIVIDEND> (.202)
<PER-SHARE-DISTRIBUTIONS> (.003)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.73
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 2
<NAME> NUVEEN FLORIDA CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 53489
<INVESTMENTS-AT-VALUE> 52132
<RECEIVABLES> 827
<ASSETS-OTHER> 1311
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54270
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 262
<TOTAL-LIABILITIES> 262
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55416
<SHARES-COMMON-STOCK> 8
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 37
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (88)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1357)
<NET-ASSETS> 78
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2938
<OTHER-INCOME> 0
<EXPENSES-NET> 371
<NET-INVESTMENT-INCOME> 2567
<REALIZED-GAINS-CURRENT> (88)
<APPREC-INCREASE-CURRENT> (4455)
<NET-CHANGE-FROM-OPS> (1976)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5754
<ACCUMULATED-NII-PRIOR> 21
<ACCUMULATED-GAINS-PRIOR> 13
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 271
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415
<AVERAGE-NET-ASSETS> 48
<PER-SHARE-NAV-BEGIN> 9.72
<PER-SHARE-NII> .152
<PER-SHARE-GAIN-APPREC> .021
<PER-SHARE-DIVIDEND> (.163)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.73
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> NUVEEN FLORIDA CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 53489
<INVESTMENTS-AT-VALUE> 52132
<RECEIVABLES> 827
<ASSETS-OTHER> 1311
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54270
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 262
<TOTAL-LIABILITIES> 262
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55416
<SHARES-COMMON-STOCK> 5390
<SHARES-COMMON-PRIOR> 4493
<ACCUMULATED-NII-CURRENT> 37
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (88)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1357)
<NET-ASSETS> 52538
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2938
<OTHER-INCOME> 0
<EXPENSES-NET> 371
<NET-INVESTMENT-INCOME> 2567
<REALIZED-GAINS-CURRENT> (88)
<APPREC-INCREASE-CURRENT> (4455)
<NET-CHANGE-FROM-OPS> (1976)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2538
<DISTRIBUTIONS-OF-GAINS> 13
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1397
<NUMBER-OF-SHARES-REDEEMED> 639
<SHARES-REINVESTED> 139
<NET-CHANGE-IN-ASSETS> 5754
<ACCUMULATED-NII-PRIOR> 21
<ACCUMULATED-GAINS-PRIOR> 13
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 271
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415
<AVERAGE-NET-ASSETS> 48959
<PER-SHARE-NAV-BEGIN> 10.74
<PER-SHARE-NII> .508
<PER-SHARE-GAIN-APPREC> (.985)
<PER-SHARE-DIVIDEND> (.510)
<PER-SHARE-DISTRIBUTIONS> (.003)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.75
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 3
<NAME> NUVEEN MARYLAND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 45662
<INVESTMENTS-AT-VALUE> 44790
<RECEIVABLES> 412
<ASSETS-OTHER> 228
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45430
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 224
<TOTAL-LIABILITIES> 224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46771
<SHARES-COMMON-STOCK> 167
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 28
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (721)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (872)
<NET-ASSETS> 1605
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2789
<OTHER-INCOME> 0
<EXPENSES-NET> 349
<NET-INVESTMENT-INCOME> 2440
<REALIZED-GAINS-CURRENT> (721)
<APPREC-INCREASE-CURRENT> (4017)
<NET-CHANGE-FROM-OPS> (2298)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 167
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (2616)
<ACCUMULATED-NII-PRIOR> 30
<ACCUMULATED-GAINS-PRIOR> 10
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415
<AVERAGE-NET-ASSETS> 748
<PER-SHARE-NAV-BEGIN> 9.840
<PER-SHARE-NII> .198
<PER-SHARE-GAIN-APPREC> (.229)
<PER-SHARE-DIVIDEND> (.207)
<PER-SHARE-DISTRIBUTIONS> (.002)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.600
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 3
<NAME> NUVEEN MARYLAND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 45662
<INVESTMENTS-AT-VALUE> 44790
<RECEIVABLES> 412
<ASSETS-OTHER> 228
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45430
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 224
<TOTAL-LIABILITIES> 224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46771
<SHARES-COMMON-STOCK> 90
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 28
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (721)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (872)
<NET-ASSETS> 860
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2789
<OTHER-INCOME> 0
<EXPENSES-NET> 349
<NET-INVESTMENT-INCOME> 2440
<REALIZED-GAINS-CURRENT> (721)
<APPREC-INCREASE-CURRENT> (4017)
<NET-CHANGE-FROM-OPS> (2298)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 89
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (2616)
<ACCUMULATED-NII-PRIOR> 30
<ACCUMULATED-GAINS-PRIOR> 10
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415
<AVERAGE-NET-ASSETS> 468
<PER-SHARE-NAV-BEGIN> 9.750
<PER-SHARE-NII> .160
<PER-SHARE-GAIN-APPREC> (.153)
<PER-SHARE-DIVIDEND> (.167)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.590
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> NUVEEN MARYLAND CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 45662
<INVESTMENTS-AT-VALUE> 44790
<RECEIVABLES> 412
<ASSETS-OTHER> 228
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45430
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 224
<TOTAL-LIABILITIES> 224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46771
<SHARES-COMMON-STOCK> 4449
<SHARES-COMMON-PRIOR> 4504
<ACCUMULATED-NII-CURRENT> 28
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (721)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (872)
<NET-ASSETS> 42741
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2789
<OTHER-INCOME> 0
<EXPENSES-NET> 349
<NET-INVESTMENT-INCOME> 2440
<REALIZED-GAINS-CURRENT> (721)
<APPREC-INCREASE-CURRENT> (4017)
<NET-CHANGE-FROM-OPS> (2298)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2417
<DISTRIBUTIONS-OF-GAINS> 10
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 921
<NUMBER-OF-SHARES-REDEEMED> 1120
<SHARES-REINVESTED> 142
<NET-CHANGE-IN-ASSETS> (2616)
<ACCUMULATED-NII-PRIOR> 30
<ACCUMULATED-GAINS-PRIOR> 10
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415
<AVERAGE-NET-ASSETS> 45778
<PER-SHARE-NAV-BEGIN> 10.620
<PER-SHARE-NII> .513
<PER-SHARE-GAIN-APPREC> (1.008)
<PER-SHARE-DIVIDEND> (.513)
<PER-SHARE-DISTRIBUTIONS> (.002)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.610
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 4
<NAME> NUVEEN MICHIGAN CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-1-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 28129
<INVESTMENTS-AT-VALUE> 27718
<RECEIVABLES> 999
<ASSETS-OTHER> 48
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28765
<PAYABLE-FOR-SECURITIES> 1010
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139
<TOTAL-LIABILITIES> 1149
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28148
<SHARES-COMMON-STOCK> 91
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (138)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (411)
<NET-ASSETS> 897
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1600
<OTHER-INCOME> 0
<EXPENSES-NET> 198
<NET-INVESTMENT-INCOME> 1402
<REALIZED-GAINS-CURRENT> (139)
<APPREC-INCREASE-CURRENT> (2255)
<NET-CHANGE-FROM-OPS> (992)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 92
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2531
<ACCUMULATED-NII-PRIOR> 22
<ACCUMULATED-GAINS-PRIOR> 7
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 145
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 256
<AVERAGE-NET-ASSETS> 376
<PER-SHARE-NAV-BEGIN> 10.090
<PER-SHARE-NII> .204
<PER-SHARE-GAIN-APPREC> (.209)
<PER-SHARE-DIVIDEND> (.212)
<PER-SHARE-DISTRIBUTIONS> (.003)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.870
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 4
<NAME> NUVEEN MICHIGAN CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 28129
<INVESTMENTS-AT-VALUE> 27718
<RECEIVABLES> 999
<ASSETS-OTHER> 48
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28765
<PAYABLE-FOR-SECURITIES> 1010
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139
<TOTAL-LIABILITIES> 1149
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28148
<SHARES-COMMON-STOCK> 8
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (138)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (411)
<NET-ASSETS> 75
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1600
<OTHER-INCOME> 0
<EXPENSES-NET> 198
<NET-INVESTMENT-INCOME> 1402
<REALIZED-GAINS-CURRENT> (139)
<APPREC-INCREASE-CURRENT> (2255)
<NET-CHANGE-FROM-OPS> (992)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2531
<ACCUMULATED-NII-PRIOR> 22
<ACCUMULATED-GAINS-PRIOR> 7
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 145
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 256
<AVERAGE-NET-ASSETS> 34
<PER-SHARE-NAV-BEGIN> 9.910
<PER-SHARE-NII> .161
<PER-SHARE-GAIN-APPREC> (.050)
<PER-SHARE-DIVIDEND> (.171)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.850
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> NUVEEN MICHIGAN CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 28129
<INVESTMENTS-AT-VALUE> 27718
<RECEIVABLES> 999
<ASSETS-OTHER> 48
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28765
<PAYABLE-FOR-SECURITIES> 1010
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139
<TOTAL-LIABILITIES> 1149
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28148
<SHARES-COMMON-STOCK> 2697
<SHARES-COMMON-PRIOR> 2310
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (138)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (411)
<NET-ASSETS> 26644
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1600
<OTHER-INCOME> 0
<EXPENSES-NET> 198
<NET-INVESTMENT-INCOME> 1402
<REALIZED-GAINS-CURRENT> (139)
<APPREC-INCREASE-CURRENT> (2255)
<NET-CHANGE-FROM-OPS> (992)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1399
<DISTRIBUTIONS-OF-GAINS> 8
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 632
<NUMBER-OF-SHARES-REDEEMED> 333
<SHARES-REINVESTED> 88
<NET-CHANGE-IN-ASSETS> 2531
<ACCUMULATED-NII-PRIOR> 22
<ACCUMULATED-GAINS-PRIOR> 7
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 145
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 256
<AVERAGE-NET-ASSETS> 26158
<PER-SHARE-NAV-BEGIN> 10.860
<PER-SHARE-NII> .529
<PER-SHARE-GAIN-APPREC> (.972)
<PER-SHARE-DIVIDEND> (.534)
<PER-SHARE-DISTRIBUTIONS> (.003)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.880
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schecule 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> 5
<NAME> NUVEEN NEW JERSEY CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 42301
<INVESTMENTS-AT-VALUE> 41504
<RECEIVABLES> 725
<ASSETS-OTHER> 728
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42957
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 170
<TOTAL-LIABILITIES> 170
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44002
<SHARES-COMMON-STOCK> 282
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 35
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (453)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (797)
<NET-ASSETS> 2741
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2328
<OTHER-INCOME> 0
<EXPENSES-NET> 290
<NET-INVESTMENT-INCOME> 2038
<REALIZED-GAINS-CURRENT> (453)
<APPREC-INCREASE-CURRENT> (2665)
<NET-CHANGE-FROM-OPS> (1080)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 36
<DISTRIBUTIONS-OF-GAINS> 1
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 292
<NUMBER-OF-SHARES-REDEEMED> 13
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 6325
<ACCUMULATED-NII-PRIOR> 11
<ACCUMULATED-GAINS-PRIOR> 342
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 211
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 344
<AVERAGE-NET-ASSETS> 1,871
<PER-SHARE-NAV-BEGIN> 10.030
<PER-SHARE-NII> .205
<PER-SHARE-GAIN-APPREC> (.209)
<PER-SHARE-DIVIDEND> (.210)
<PER-SHARE-DISTRIBUTIONS> (.086)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.730
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schecule 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> 5
<NAME> NUVEEN NEW JERSEY CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 42301
<INVESTMENTS-AT-VALUE> 41504
<RECEIVABLES> 725
<ASSETS-OTHER> 728
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42957
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 170
<TOTAL-LIABILITIES> 170
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44002
<SHARES-COMMON-STOCK> 48
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 35
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (453)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (797)
<NET-ASSETS> 464
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2328
<OTHER-INCOME> 0
<EXPENSES-NET> 290
<NET-INVESTMENT-INCOME> 2038
<REALIZED-GAINS-CURRENT> (453)
<APPREC-INCREASE-CURRENT> (2665)
<NET-CHANGE-FROM-OPS> (1080)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 48
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6325
<ACCUMULATED-NII-PRIOR> 11
<ACCUMULATED-GAINS-PRIOR> 342
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 211
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 344
<AVERAGE-NET-ASSETS> 284
<PER-SHARE-NAV-BEGIN> 9.770
<PER-SHARE-NII> .159
<PER-SHARE-GAIN-APPREC> (.050)
<PER-SHARE-DIVIDEND> (.169)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.710
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schecule 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> 5
<NAME> NUVEEN NEW JERSEY CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 42301
<INVESTMENTS-AT-VALUE> 41504
<RECEIVABLES> 725
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42957
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 170
<TOTAL-LIABILITIES> 170
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44002
<SHARES-COMMON-STOCK> 4063
<SHARES-COMMON-PRIOR> 3406
<ACCUMULATED-NII-CURRENT> 35
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (453)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (797)
<NET-ASSETS> 39582
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2328
<OTHER-INCOME> 0
<EXPENSES-NET> 290
<NET-INVESTMENT-INCOME> 2038
<REALIZED-GAINS-CURRENT> (453)
<APPREC-INCREASE-CURRENT> (2665)
<NET-CHANGE-FROM-OPS> (1080)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1974
<DISTRIBUTIONS-OF-GAINS> 342
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1077
<NUMBER-OF-SHARES-REDEEMED> 581
<SHARES-REINVESTED> 162
<NET-CHANGE-IN-ASSETS> 6325
<ACCUMULATED-NII-PRIOR> 11
<ACCUMULATED-GAINS-PRIOR> 342
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 211
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 344
<AVERAGE-NET-ASSETS> 37476
<PER-SHARE-NAV-BEGIN> 10.710
<PER-SHARE-NII> .524
<PER-SHARE-GAIN-APPREC> (.886)
<PER-SHARE-DIVIDEND> (.522)
<PER-SHARE-DISTRIBUTIONS> (.086)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.740
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 6
<NAME> NUVEEN PENN CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 49681
<INVESTMENTS-AT-VALUE> 48651
<RECEIVABLES> 4773
<ASSETS-OTHER> 256
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53680
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 204
<TOTAL-LIABILITIES> 204
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55309
<SHARES-COMMON-STOCK> 152
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 32
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (835)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1030)
<NET-ASSETS> 1483
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3091
<OTHER-INCOME> 0
<EXPENSES-NET> 377
<NET-INVESTMENT-INCOME> 2714
<REALIZED-GAINS-CURRENT> (835)
<APPREC-INCREASE-CURRENT> (4233)
<NET-CHANGE-FROM-OPS> (2354)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 18
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 154
<NUMBER-OF-SHARES-REDEEMED> 3
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 4756
<ACCUMULATED-NII-PRIOR> 31
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 275
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 461
<AVERAGE-NET-ASSETS> 888
<PER-SHARE-NAV-BEGIN> 9.920
<PER-SHARE-NII> .206
<PER-SHARE-GAIN-APPREC> (.164)
<PER-SHARE-DIVIDEND> (.212)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.750
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 6
<NAME> NUVEEN PENN CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 49681
<INVESTMENTS-AT-VALUE> 48651
<RECEIVABLES> 4773
<ASSETS-OTHER> 256
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53680
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 204
<TOTAL-LIABILITIES> 204
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55309
<SHARES-COMMON-STOCK> 51
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 32
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (835)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1030)
<NET-ASSETS> 494
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3091
<OTHER-INCOME> 0
<EXPENSES-NET> 377
<NET-INVESTMENT-INCOME> 2714
<REALIZED-GAINS-CURRENT> (835)
<APPREC-INCREASE-CURRENT> (4233)
<NET-CHANGE-FROM-OPS> (2354)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 51
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4756
<ACCUMULATED-NII-PRIOR> 31
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 275
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 461
<AVERAGE-NET-ASSETS> 273
<PER-SHARE-NAV-BEGIN> 9.920
<PER-SHARE-NII> .176
<PER-SHARE-GAIN-APPREC> (.235)
<PER-SHARE-DIVIDEND> (.211)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.650
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> NUVEEN PENN CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 49681
<INVESTMENTS-AT-VALUE> 48651
<RECEIVABLES> 4773
<ASSETS-OTHER> 256
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53680
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 204
<TOTAL-LIABILITIES> 204
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55309
<SHARES-COMMON-STOCK> 5292
<SHARES-COMMON-PRIOR> 4505
<ACCUMULATED-NII-CURRENT> 32
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (835)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1030)
<NET-ASSETS> 51499
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3091
<OTHER-INCOME> 0
<EXPENSES-NET> 377
<NET-INVESTMENT-INCOME> 2714
<REALIZED-GAINS-CURRENT> (835)
<APPREC-INCREASE-CURRENT> (4233)
<NET-CHANGE-FROM-OPS> (2354)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2690
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1297
<NUMBER-OF-SHARES-REDEEMED> 676
<SHARES-REINVESTED> 166
<NET-CHANGE-IN-ASSETS> 4756
<ACCUMULATED-NII-PRIOR> 31
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 275
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 461
<AVERAGE-NET-ASSETS> 49549
<PER-SHARE-NAV-BEGIN> 10.810
<PER-SHARE-NII> .531
<PER-SHARE-GAIN-APPREC> (1.077)
<PER-SHARE-DIVIDEND> (.534)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.730
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 7
<NAME> NUVEEN VIRGINIA CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 58079
<INVESTMENTS-AT-VALUE> 57351
<RECEIVABLES> 2297
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59771
<PAYABLE-FOR-SECURITIES> 2181
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 207
<TOTAL-LIABILITIES> 2388
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58199
<SHARES-COMMON-STOCK> 227
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 22
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (110)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (728)
<NET-ASSETS> 2215
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3379
<OTHER-INCOME> 0
<EXPENSES-NET> 414
<NET-INVESTMENT-INCOME> 2965
<REALIZED-GAINS-CURRENT> (110)
<APPREC-INCREASE-CURRENT> (5023)
<NET-CHANGE-FROM-OPS> (2168)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 227
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 1610
<ACCUMULATED-NII-PRIOR> 42
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 302
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 455
<AVERAGE-NET-ASSETS> 1,050
<PER-SHARE-NAV-BEGIN> 9.980
<PER-SHARE-NII> .201
<PER-SHARE-GAIN-APPREC> (.207)
<PER-SHARE-DIVIDEND> (.214)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.760
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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> 7
<NAME> NUVEEN VIRGINIA CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 58079
<INVESTMENTS-AT-VALUE> 57351
<RECEIVABLES> 2297
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59771
<PAYABLE-FOR-SECURITIES> 2181
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 207
<TOTAL-LIABILITIES> 2388
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58199
<SHARES-COMMON-STOCK> 39
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 22
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (110)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (728)
<NET-ASSETS> 378
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3379
<OTHER-INCOME> 0
<EXPENSES-NET> 414
<NET-INVESTMENT-INCOME> 2965
<REALIZED-GAINS-CURRENT> (110)
<APPREC-INCREASE-CURRENT> (5023)
<NET-CHANGE-FROM-OPS> (2168)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1610
<ACCUMULATED-NII-PRIOR> 42
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 302
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 455
<AVERAGE-NET-ASSETS> 206
<PER-SHARE-NAV-BEGIN> 9.950
<PER-SHARE-NII> .171
<PER-SHARE-GAIN-APPREC> (.167)
<PER-SHARE-DIVIDEND> (.214)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.740
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> NUVEEN VIRGINIA CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 58079
<INVESTMENTS-AT-VALUE> 57351
<RECEIVABLES> 2297
<ASSETS-OTHER> 123
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59771
<PAYABLE-FOR-SECURITIES> 2181
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 207
<TOTAL-LIABILITIES> 2388
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58199
<SHARES-COMMON-STOCK> 5611
<SHARES-COMMON-PRIOR> 5194
<ACCUMULATED-NII-CURRENT> 22
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (110)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (728)
<NET-ASSETS> 54791
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3379
<OTHER-INCOME> 0
<EXPENSES-NET> 414
<NET-INVESTMENT-INCOME> 2965
<REALIZED-GAINS-CURRENT> (110)
<APPREC-INCREASE-CURRENT> (5023)
<NET-CHANGE-FROM-OPS> (2168)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2960
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 932
<NUMBER-OF-SHARES-REDEEMED> 680
<SHARES-REINVESTED> 165
<NET-CHANGE-IN-ASSETS> 1610
<ACCUMULATED-NII-PRIOR> 42
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 302
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 455
<AVERAGE-NET-ASSETS> 54398
<PER-SHARE-NAV-BEGIN> 10.740
<PER-SHARE-NII> .531
<PER-SHARE-GAIN-APPREC> (.964)
<PER-SHARE-DIVIDEND> (.537)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.770
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99(a)
Certified Resolution
--------------------
The undersigned, James J. Wesolowski, hereby certifies, on behalf of Nuveen
Multistate Tax-Free Trust (the "Fund"), (1) that he is the duly elected,
qualified and acting Secretary of the Fund, and that as such Secretary he has
custody of its corporate books and records, (2) that attached to this
Certificate is a true and correct copy of a resolution duly adopted by the Board
of Directors of the Fund at a meeting held on February 14, 1995, and (3) that
said resolution has not been amended or rescinded and remains in full force and
effect.
March 24, 1995
James J. Wesolowski
------------------------------
James J. Wesolowski, Secretary
<PAGE>
RESOLVED, that each member of the Board and officer of the Fund who may be
required to execute the Registration Statement on Form N-1A, or any amendment or
amendments thereto, be, and each of them hereby is, authorized to execute a
power of attorney appointing Richard J. Franke, Timothy R. Schwertfeger, James
J. Wesolowski, Larry W. Martin, Gifford R. Zimmerman, and Thomas S. Harman, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign the Registration Statement and any and all
amendments thereto and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, and ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
<PAGE>
EXHIBIT 99(b)
NUVEEN MULTISTATE TAX-FREE TRUST
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and affix his seal thereto and file one or more Registration
Statements on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof,
or the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 14th day of February, 1995.
/s/ Richard J. Franke
-----------------------
Richard J. Franke
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known
to me to be the person whose name and signature is affixed to the foregoing
Power of Attorney and who acknowledged the same to be his voluntary act and
deed for the intent and purposes therein set forth.
(SEAL) ---------------------------------
"OFFICIAL SEAL" /s/ Virginia L. Corcoran
Virginia L. Corcoran -------------------------------
Notary Public, State of Illinois Notary Public
My Commission Expires 10/26/97
----------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN MULTISTATE TAX-FREE TRUST
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the
above-referenced organization, hereby constitutes and appoints RICHARD J.
FRANKE, TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD
R. ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 14th day of February, 1995.
/s/ Lawrence H. Brown
--------------------------------
Lawrence H. Brown
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
(SEAL) --------------------------------- /s/ Virginia L. Corcoran
"OFFICIAL SEAL" ---------------------------------
Virginia L. Corcoran Notary Public
Notary Public, State of Illinois
My Commission Expires 10/26/97
---------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN MULTISTATE TAX-FREE TRUST
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the
above-referenced organization, hereby constitutes and appoints RICHARD J.
FRANKE, TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD
R. ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) her true and lawful attorney-in-fact and agent, for him on
her behalf and in her name, place and stead, in any and all capacities, to sign,
execute and affix her seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set her hand this 14th day of February, 1995.
/s/ Anne E. Impellizzeri
--------------------------------
Anne E. Impellizzeri
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be her voluntary act and deed for
the intent and purposes therein set forth.
(SEAL) --------------------------------- /s/ Virginia L. Corcoran
"OFFICIAL SEAL" ---------------------------------
Virginia L. Corcoran Notary Public
Notary Public, State of Illinois
My Commission Expires 10/26/97
---------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN MULTISTATE TAX-FREE TRUST
-----------------------
POWER OF ATTORNEY
-----------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the
above-referenced organization, hereby constitutes and appoints RICHARD J.
FRANKE, TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD
R. ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to sign,
execute and affix his seal thereto and file one or more Registration Statements
on Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940, including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed with any regulatory authority,
federal or state, relating to the registration thereof, or the issuance of
shares thereof, without limitation, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 14th day of February, 1995.
/s/ John E. O'Toole
--------------------------------
John E. O'Toole
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
(SEAL) --------------------------------- /s/ Virginia L. Corcoran
"OFFICIAL SEAL" ---------------------------------
Virginia L. Corcoran Notary Public
Notary Public, State of Illinois
My Commission Expires 10/26/97
----------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN MULTISTATE TAX-FREE TRUST
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) her true and lawful attorney-in-fact and agent, for him on
her behalf and in her name, place and stead, in any and all capacities, to
sign, execute and affix her seal thereto and file one or more Registration
Statements on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof,
or the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set her hand this 14th day of February, 1995.
/s/ Margaret K. Rosenheim
--------------------------
Margaret K. Rosenheim
STATE OF ILLINOIS )
_________________ )
) SS
COUNTY OF COOK )
_________________ )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known
to me to be the person whose name and signature is affixed to the foregoing
Power of Attorney and who acknowledged the same to be her voluntary act and
deed for the intent and purposes therein set forth.
(SEAL) ---------------------------------
"OFFICIAL SEAL" /s/ Virginia L. Corcoran
Virginia L. Corcoran -------------------------------
Notary Public, State of Illinois Notary Public
My Commission Expires 10/26/97
----------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN MULTISTATE TAX-FREE TRUST
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and affix his seal thereto and file one or more Registration
Statements on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof,
or the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 14th day of February, 1995.
/s/ Peter R. Sawers
--------------------------
Peter R. Sawers
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known
to me to be the person whose name and signature is affixed to the foregoing
Power of Attorney and who acknowledged the same to be his voluntary act and
deed for the intent and purposes therein set forth.
(SEAL) ---------------------------------
"OFFICIAL SEAL" /s/ Virginia L. Corcoran
Virginia L. Corcoran -------------------------------
Notary Public, State of Illinois Notary Public
My Commission Expires 10/26/97
----------------------------------
My Commission Expires: 10/26/97
<PAGE>
NUVEEN MULTISTATE TAX-FREE TRUST
-----------------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organization, hereby constitutes and appoints RICHARD J. FRANKE,
TIMOTHY R. SCHWERTFFEGER, JAMES J. WESOLOWSKI, LARRY W. MARTIN, GIFFORD R.
ZIMMERMAN, and THOMAS S. HARMAN, and each of them (with full power to each of
them to act alone) his true and lawful attorney-in-fact and agent, for him on
his behalf and in his name, place and stead, in any and all capacities, to
sign, execute and affix his seal thereto and file one or more Registration
Statements on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof,
or the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as he might or could do if personally present, hereby ratifying and confirming
all that said attorney-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 14th day of February, 1995.
/s/ Timothy R. Schwertfeger
----------------------------
Timothy R. Schwertfeger
STATE OF ILLINOIS )
_________________ )
) SS
COUNTY OF COOK )
_________________ )
On this 14th day of February, 1995, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known
to me to be the person whose name and signature is affixed to the foregoing
Power of Attorney and who acknowledged the same to be her voluntary act and
deed for the intent and purposes therein set forth.
(SEAL) ---------------------------------
"OFFICIAL SEAL" (Sig. of Virginia L. Corcoran)
Virginia L. Corcoran -------------------------------
Notary Public, State of Illinois Notary Public
My Commission Expires 10/26/97
----------------------------------
My Commission Expires: 10/26/97
<PAGE>
EXHIBIT 99(c)
NUVEEN TAX-EXEMPT UNIT TRUSTS
NUVEEN TAX-EXEMPT MUTUAL FUNDS
NUVEEN MUNICIPAL EXCHANGE-TRADED FUNDS
NUVEEN ADVISORY CORP.
NUVEEN INSTITUTIONAL ADVISORY CORP.
JOHN NUVEEN & CO. INCORPORATED
THE JOHN NUVEEN COMPANY
______________________________
Standards and Procedures
Regarding
Conflicts of Interest
______________________________
Code of Ethics
And
Reporting Requirements
The Securities and Exchange Commission, in Investment Company Act Release No.
ll42l, has adopted Rule l7j-l "to provide guidance to investment companies as to
the minimum standards of conduct appropriate for persons who have access to
information regarding the purchase and sale of portfolio securities by
investment companies." The Rule requires registered investment companies, their
investment advisers and their principal underwriters to adopt codes of ethics
and reporting requirements to guard against violations of the standards set
forth in the Rule and the principles provided below and to establish guidelines
for the conduct of persons who (1) may obtain information concerning securities
held by or considered for purchase or sale by any series of the Nuveen Tax-
Exempt Unit Trusts (the "Trusts") or by any of the registered management
investment companies (the "Funds") or non-management investment company clients
("Clients") to which Nuveen Advisory Corp. or Nuveen Institutional Advisory
Corp. act as investment advisers or (2) who may make any recommendation or
participate in the determination of which recommendation shall be made
concerning the purchase or sale of any securities by a Trust, Fund or Client.
This Code of Ethics (the "Code") consists of six sections -- 1. Statement of
General Principles; 2. Definitions; 3. Exempted Transactions; 4. Prohibitions;
5. Reporting Requirements; and 6. Sanctions.
I. Statement of General Principles
The Code is based upon the principle that the officers, directors and
employees of a Fund, Nuveen Advisory Corp., Nuveen Institutional Advisory
Corp., John Nuveen & Co. Incorporated and The John Nuveen Company owe a
fiduciary duty to, among others, the unitholders and shareholders of the
Trusts and Funds and the Clients, to conduct their personal securities
transactions in a manner which does not interfere with Trust, Fund or
Client portfolio transactions or otherwise take unfair advantage of their
relationship to the Trusts, Funds or Clients. In accordance with this
general principle, persons covered by the Code must: (1) place the
interests of unitholders and shareholders of the Trusts and Funds and the
<PAGE>
2
Clients first; (2) execute personal securities transactions in compliance
with the Code; (3) avoid any actual or potential conflict of interest and
any abuse of their positions of trust and responsibility; and (4) not take
inappropriate advantage of their positions. It bears emphasis that
technical compliance with the Code's procedures will not automatically
insulate from scrutiny trades which show a pattern of abuse of the
individual's fiduciary duties to the Trust, Fund or Client.
II. Definitions
As used herein:
(l) "Access person" shall mean any director, officer or advisory person of
any Fund or of Nuveen Advisory Corp. or Nuveen Institutional Advisory
Corp.
A list of persons deemed to be access persons is attached as Exhibit
A.
(2) "Advisory person" shall mean:
(a) Any employee of a Fund, of Nuveen Advisory Corp., of Nuveen
Institutional Advisory Corp. or of John Nuveen & Co. Incorporated
who, in connection with his or her regular functions or duties,
makes, participates in, or obtains information regarding the
purchase or sale of securities by a Trust, Fund or Client or whose
functions relate to the making of any recommendations with respect
to such purchases or sales; and
(b) Any director or officer of John Nuveen & Co. Incorporated or The
John Nuveen Company who in the ordinary course of business makes,
participates in or obtains information regarding the purchase or
sale of securities for a Trust, Fund or Client or recommendations
made with regard to the purchase or sale of a security by a Trust,
Fund or Client, or whose functions or duties relate to the making
of any recommendation to a Trust, Fund or Client regarding the
purchase or sale of securities.
(3) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the
recommendation, when such person considers making such recommendation.
<PAGE>
3
(4) A person will be deemed to be the "beneficial owner" of securities:
(a) held in his or her own name or the name of his or her spouse and
their minor children;
(b) held in a trust
(i) of which such person is trustee and the trustee or members
of his or her immediate family have a vested interest in
the income of the trust,
(ii) in which such person has a vested beneficial interest, or
(iii) of which such person is settlor and which the settlor has
the power to revoke without consent of the beneficiaries; a
person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment
company solely by reason of his or her ownership of shares
or units of such registered investment company;
(c) held in any other name if by reason of any contract,
understanding, relationship, agreement or other arrangement such
person obtains benefits substantially equivalent to those of
ownership (e.g. the right to income from and the right to
exercise a controlling influence over the purchase or sale of
such securities) or would otherwise be deemed to beneficially own
such security for purposes of determining whether such person
would be subject to the provisions of Section l6 of the
Securities Exchange Act of l934 and the rules and regulations
thereunder, except that the determination of direct or indirect
beneficial ownership shall apply to all securities which an
access person has or acquires.
A person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment
company solely by reason of his or her ownership of shares or
units of such registered investment company.
(5) "Security" shall mean any stock, bond, debenture, evidence of
indebtedness or in general any other instrument defined to be a
security in Section 2(a)(36) of the Investment Company Act of l940
except that it shall not include securities issued by the Government
of the United States, short term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of registered open-end investment
companies.
<PAGE>
4
(6) "Purchase or sale of a security" shall include any transaction in
which a beneficial interest in a security is acquired or disposed of,
including but not limited to the writing of an option to purchase or
sell a security.
(7) "Control" shall have the same meaning as set forth in Section 2(a) (9)
of the Investment Company Act of 1940.
(8) "Investment personnel" shall mean any employee of a Fund, Nuveen
Advisory Corp. or Nuveen Institutional Advisory Corp. who acts as a
portfolio manager or as an analyst or trader who provides information
or advice to the portfolio manager or who helps execute the portfolio
manager's decisions. A list of investment personnel is attached as
Exhibit B.
(9) "Portfolio manager" shall mean any employee of a Fund, Nuveen Advisory
Corp. or Nuveen Institutional Advisory Corp. who is entrusted with the
direct responsibility and authority to make investment decisions
affecting a Trust, Fund or Client. A list of portfolio managers is
attached as Exhibit C.
III. Exempted Transactions
The prohibitions of Section IV of this Code shall not apply to:
(1) Purchases or sales affecting any account over which the party involved
has no direct or indirect influence or control;
(2) Purchases or sales of securities which are not:
(a) acquired in a private placement;
(b) shares of The John Nuveen Company;
(c) municipal securities; or
(d) shares of Nuveen-sponsored exchange-traded funds.
(3) Purchases or sales which are non-volitional on the part of either the
party involved or a Trust, Fund or Client;
(4) Purchases which are part of an automatic dividend reinvestment plan.
<PAGE>
5
(5) Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
IV. Prohibitions
(l) Unless such transaction is exempted above or is previously cleared in
the manner described in paragraph (9) below, no access person shall
purchase or sell the following securities for his or her own account
or for any account in which he or she has any beneficial ownership:
(a) securities offered in a private placement;
(b) shares of The John Nuveen Company;
(c) municipal securities; or
(d) shares of a Nuveen-sponsored exchange-traded fund.
The purchase of securities identified in paragraph (1)(a) by
investment personnel must also comply with paragraph (4) below.
(2) No access person shall execute a securities transaction on a day
during which a Trust, Fund or Client has a pending "buy" or "sell"
order in that same security until that order is executed or withdrawn.
Trades made in violation of this prohibition should be unwound or, if
that is impractical, any profits realized must be disgorged to a
charitable organization.
(3) Investment personnel shall not purchase any securities in an initial
public offering except an offering of securities issued by municipal
or United States government entities.
(4) Unless such transaction is previously approved in the manner described
in paragraph (10) below and the criteria set forth in that paragraph
are followed, investment personnel shall not purchase any security in
a private placement.
(5) Investment personnel shall not profit in the purchase and sale, or
sale and purchase, of the same (or equivalent) security within 60
calendar days if such security is a municipal security or shares
issued by a Nuveen-sponsored exchange-traded fund. Trades made in
violation of this prohibition should be unwound or, if that is
impractical, any profits realized must be disgorged to a charitable
organization.
<PAGE>
6
(6) Investment personnel shall not accept any gift or other thing of more
than de minimis value from any person or entity that does business
with or on behalf of a Trust, Fund or Client. For purposes of this
prohibition the term "de minimis value" shall have the same meaning
expressed in the National Association of Securities Dealers, Inc.
Rules of Fair Practice.
(7) Unless such service is previously cleared in the manner described in
paragraph (11) below and the criteria set forth in that paragraph are
followed, investment personnel shall not serve as board members or
other decision-makers for entities that issue municipal securities.
(8) No portfolio manager of a Trust, Fund or Client shall purchase or sell
any security within seven calendar days before or after the Fund or
Client he surveys or manages trades or considers to purchase or sell
such security. Trades made in violation of this prohibition should be
unwound or, if that is impractical, any profits realized must be
disgorged to a charitable organization.
(9) An access person may request clearance of a transaction otherwise
prohibited by paragraph (1) above prior to the placement of any order
in connection therewith by submitting a written request for clearance
to the Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the title and principal amount of the security proposed to be
purchased or sold, the nature of the transaction, the price at which
the transaction is proposed to be effected, and the name of the
broker, dealer or bank with or through whom the transaction is
proposed to be effected. No such transaction may be effected without
the prior clearance of the transaction and the price by the Chairman
or President or his designee. Employee transaction tickets must bear
initials showing such clearance before processing. Preclearance shall
be valid for three days. Transactions may be cleared by the Chairman
or President or his designee only if such officer determines that the
potential harm to any Trust, Fund or Client is highly remote or non-
existent because such transaction would be very unlikely to affect a
highly institutional market, or because it clearly is not related
economically to the securities to be purchased, sold or held by any
Trust, Fund or Client.
(10) Investment personnel may request approval of a transaction otherwise
prohibited by paragraph (4) above prior to the placement of any order
in connection therewith by submitting a written request for approval
to the Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the title and principal amount of the security proposed to be
purchased or sold, the nature of the transaction, the price at which
the transaction is proposed to be effected, and the name of the
broker, dealer or bank with or through
<PAGE>
7
whom the transaction is proposed to be effected. No such transaction
may be effected without the prior approval of the transaction and the
price by the Chairman or President or his designee. Employee
transaction tickets must bear initials showing such approval before
processing. Any approval shall be valid for three days. Transactions
may be approved by the Chairman or President or his designee only if
such officer takes into account, among other factors, whether the
investment opportunity should be reserved for a Trust, Fund or Client
and any shareholders or unitholders affected, and whether the
opportunity is being offered to an individual by virtue of his or her
position. In addition, Investment personnel who receive authorization
to purchase securities in a private placement have an affirmative duty
to disclose that position to the Chairman or President or his designee
if he or she plays a role in a Trust's, Fund's or Client's subsequent
investment decision regarding the same issuer. Once such disclosure is
made, the Chairman or President or his designee shall assemble a
commission of investment personnel with no personal interest in the
issuer involved to independently review the Trust's, Fund's or
Client's investment decision.
(11) Investment Personnel may request clearance of service otherwise
prohibited by paragraph (7) above, prior to acceptance of any such
position, by submitting a written request for clearance to the
Chairman or President of John Nuveen & Co. Incorporated or his
designee, with a copy to the Legal Department. Such request shall
state the position sought, the reason service is desired and any
possible conflicts of interest known at the time of the request. No
such position may be accepted without the prior clearance by the
Chairman or President or his designee. Service may be cleared by the
Chairman or President or his designee only if such officer determines
that service in that capacity would be consistent with the interests
of the Trusts, Funds or Clients and any shareholders or unitholders
affected. In addition, Investment personnel who receive authorization
to serve in such a capacity must be isolated through "Chinese Wall"
procedures from those making investment decisions regarding securities
issued by the entity involved.
V. Reporting Requirements
(l) Every access person (other than directors of a Fund who are not
"interested persons" of such Fund) shall report to the Legal
Department of John Nuveen & Co. Incorporated details of each
transaction by reason of which he or she acquires any direct or
indirect beneficial ownership of any security. Notwithstanding the
foregoing, an access person need not make a report pursuant hereto
where such report would duplicate information recorded pursuant to
Rules 204-2(a)(l2) or 204-2(a)(l3) under the Investment Advisers Act
of l940. In addition to the reporting requirement expressed above,
every access person (including directors who are not "interested
<PAGE>
8
persons") shall direct his or her broker or brokers to supply to the
Legal Department, on a timely basis, duplicate copies of confirmations
of all securities transactions and copies of periodic statements for
all securities accounts involving securities in which such access
person acquires or foregoes direct or indirect beneficial ownership.
(2) Every director of a Fund who is not an "interested person" of such
Fund shall be required to report the details of each transaction with
respect to which such director knew or, in the ordinary course of
fulfilling his or her official duties as a director of the Fund,
should have known that during the 15 day period immediately preceding
or after the date of the transaction in a security by the director
such security is or was purchased or sold by the Fund or such purchase
or sale by the Fund is or was considered by the Fund or its investment
adviser.
(3) Every report required to be made pursuant to paragraphs 1 and 2 of
this Section (other than duplicate copies of confirmations and
periodic statements) shall be made not later than l0 days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:
(a) the date of the transaction, the title and the number of shares,
or principal amount of each security involved;
(b) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(c) the price at which the transaction was effected; and
(d) the name of the broker, dealer or bank with or through whom the
transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or
she has any direct or indirect beneficial ownership in the security to
which the report relates.
(4) The reporting requirements established pursuant to paragraphs 1 and 2
of this Section (other than duplicate copies of confirmations and
periodic statements) shall apply only to transactions by an access
person in securities in which such access person has, or by reason of
such transaction acquires, any direct or indirect beneficial ownership
in the security.
(5) Investment personnel shall disclose to the General Counsel of John
Nuveen & Co. Incorporated all personal securities holdings within 10
days of commencement of employment as an investment person and shall
continue to disclose such holdings on an annual basis.
<PAGE>
9
VI. Sanctions
Upon discovery of a violation of this Code, any Fund, Nuveen Advisory
Corp., Nuveen Institutional Advisory Corp., John Nuveen & Co.
Incorporated or The John Nuveen Company may impose such sanctions as
it deems appropriate, including, inter alia, a letter of censure or
suspension or termination of the employment of the violator. All
material violations of this Code and any sanctions imposed with
respect thereto shall be reported periodically to the board of
directors of the management investment company with respect to
securities of which the violation occurred, or to the Executive
Committee of John Nuveen & Co. Incorporated if the violation was with
respect to securities of any series of the Nuveen Tax-Exempt Unit
Trusts, or to the board of directors of Nuveen Institutional Advisory
Corp. or Nuveen Advisory Corp. with respect to securities of non-
management investment company clients advised by these entities.
Revised October 1994
