<PAGE>
[LOGO OF NUVEEN]
Municipal
Bond Funds
January 31, 1997
- ---------------------
Annual Report
- ---------------------
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO OF COUPLE GOLFING APPEARS HERE]
Arizona
Florida
Maryland
Michigan
Pennsylvania
Virginia
(Of Nuveen Multistate Tax-Free Trust)
<PAGE>
Contents
2 Dear Shareholder
4 Answering Your Questions
6 Arizona Overview
7 Florida Overview
8 Maryland Overview
9 Michigan Overview
10 Pennsylvania Overview
11 Virginia Overview
13 Financial Section
75 Shareholder Meeting Reports
82 Shareholder Information
83 Fund Information
1
<PAGE>
Dear Shareholder
It is a pleasure to report to you on the performance of your funds and to
welcome new investors to the Nuveen family of investments. Each of the funds in
this report continued to achieve its goal of delivering attractive tax-free
income from portfolios of quality municipal bonds. As of January 31, 1997,
investors in these funds' A Shares were receiving current yields on offering
price ranging from 4.19% to 4.49%, equating to taxable yields of 6.55% to 7.02%
for investors in the 36% federal tax bracket. The addition of state taxes to
this equation further enhances the amount of income protection you receive from
Nuveen investments.
Since our last report, Nuveen has undertaken a number of key strategic steps
geared to enhancing fund investment results and our service to you. We also have
broadened our family of municipal bond funds to better meet your needs for
attractive current income free from federal, and in some cases, state taxes. One
of these key strategic steps was acquiring Flagship Resources Inc., a respected
manager of municipal bond mutual funds based in Dayton, Ohio. This added 19
municipal mutual funds to the Nuveen family, giving investors an expanded array
of investment solutions for their personal portfolios. As we increased our
product offerings, we also broadened the pricing options you have to purchase
shares. We believe that all of this offers you even greater access to the
municipal market plus additional expertise, resources, and services to serve you
better.
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
TIMOTHY R. SCHWERTFEGER
2
<PAGE>
In January, several of the funds in this report were combined with their
Flagship counterparts to reduce operating expenses and to benefit shareholders.
In fact, this annual report represents a final report for the previous Nuveen
Tax-Free Value Funds for Arizona, Florida, Michigan, Pennsylvania, and Virginia.
Shareholders of these newly-combined funds have now become shareholders of the
former Flagship fund counterparts for financial reporting purposes, which have
fiscal year ends of May 31. The Nuveen Maryland Municipal Bond Fund did not
merge with a Flagship fund, but will also change to a May 31 year end.
Nuveen also has created new equity-based investments to help investors keep more
of what they have earned. In November we launched the Nuveen Growth and Income
Stock Fund, a fund that seeks to provide prudent investors superior equity
market performance with equal or less risk than the overall stock market. This
month we introduced two new balanced mutual funds, each designed to give
investors the combination of performance potential and income protection that
comes from a carefully assembled balance of stocks and bonds.
We at Nuveen pride ourselves on providing attractive tax-free income with modest
risk to more than 1.3 million shareholders. In conversations with investors,
many of you have told me how important tax-free income is to maintaining a
lifestyle that you have worked so hard to build. I appreciate the trust you have
placed in us.
Sincerely,
/s/Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
March 17, 1997
"Nuveen will continue to create new investments to help investors keep more of
what they have earned."
3
<PAGE>
Answering Your Questions
Tom Spalding, head of Nuveen's portfolio management team, talks about the
municipal bond market and offers insights into factors that affected fund
performance over the past year.
What key economic factors affected these funds during the past year?
In 1996, the bond market -- despite some fluctuations -- was relatively stable
compared with recent years. Following a strong start to the year, a succession
of mixed reports affecting interest rate and inflation forecasts caused
investors to view the markets with alternating enthusiasm and uncertainty. In
the third quarter of 1996, evidence of an economic slowdown, the strong U.S.
dollar, and lack of inflationary pressures combined to allay investor fears,
sparking a rally in bonds that continued through the post-election period.
Throughout the year, euphoria in the equity market focused investors' attention
on stocks and brought record amounts of new money into equity-based mutual
funds, bypassing the bond market. Some investors, concerned about a possible
correction in the stock market, decided to take their profits, but adopted a
wait-and-see attitude about investing capital gains, electing to go with short-
term vehicles until a clearer picture of market trends emerged. These events
affected demand for bond issues of all types in 1996.
What impact did interest rates have on performance?
Even with relative stability in 1996, interest rates continued to play a role in
bond market performance. The Federal Reserve altered interest rates only once in
1996, with a 0.25% increase in January, but anticipation of further moves kept
the markets restless the remainder of the year. This concern about potential
changes in monetary policy continues into 1997, contributing to higher long-term
interest rates.
[PHOTO OF TOM SPALDING APPEARS HERE]
TOM SPALDING
4
<PAGE>
How has the municipal market performed during the past year?
The municipal market has not been as volatile as the Treasury market. The easing
of the flat tax concerns in 1996 benefited municipals at a time when bond prices
were otherwise suffering generally. Property and casualty companies were large
buyers of municipals after Steven Forbes' withdrawal from the presidential
primary race last year. Retail buyers came back into the municipal bond market
in the fourth quarter, and institutional investors continue to be strong buyers.
All of this helps to support municipal bond prices.
What is your approach to managing the funds?
We seek income consistent with preservation of capital. To accomplish this, we
follow a value investing strategy that depends on obtaining detailed insights
into the outlook for individual issuers and the characteristics of specific
bonds -- assessments that are not yet recognized by the market as a whole. We
target bonds that may be upgraded, a strategy that results in a higher level of
quality and safety in the portfolios, as well as potential appreciation in asset
value.
What is your outlook for the bond market in the next year?
A look at the current economy shows a positive tone, reflecting a combination of
factors that historically bode well for the bond market, especially for long-
term issues. Yields remain attractive, as inflation maintains the same modest
pace that it has demonstrated over the past six years, giving every indication
of being well under control. At the same time, economic expansion continues to
be slow and steady, as evidenced by a lack of price pressure at the consumer and
producer levels, strong consumer confidence, low unemployment figures, and a
stable money supply.
"A look at the current economy shows a positive tone, reflecting a combination
of factors that historically bode well for the bond market, especially for long-
term issues."
5
<PAGE>
Nuveen Arizona Tax-Free Value Fund
January 31, 1997 Annual Report
Arizona Overview
A Shares
Highlights
- ----------------------------------
Net Assets $5,367,690
..................................
Net Asset Value $10.53
..................................
Average Maturity 18.62
- ----------------------------------
Total Return at NAV
- ----------------------------------
1-Year 2.94%
..................................
Since Inception 7.31%
- ----------------------------------
Tax-Free Yields at Offer Price
- ----------------------------------
SEC Yield 4.33%
..................................
Distribution Yield 4.59%
- ----------------------------------
* The Index Comparison shows change in value of a $10,000 investment in the
Nuveen fund compared with the Lehman Brothers Municipal Bond Index. The Lehman
Municipal Bond Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A Shares at the time (4.50%) and all ongoing fund
expenses.
During the fiscal year, the fund's average annual total return on NAV for R
Shares was 3.13%, and since their inception in February 1992 was 7.38%. For
more information on share class total returns, turn to the Financial
Highlights beginning on page 61.
[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]
[GRAPH APPEARS HERE]
[BAR CHART APPEARS HERE]
Fund Fact:
Where to find your fund on the NASDAQ: FAZTX
6
<PAGE>
Nuveen Florida Tax-Free Value Fund
January 31, 1997 Annual Report
Florida Overview
A Shares
Highlights
- ----------------------------------
Net Assets $11,119,107
..................................
Net Asset Value $10.33
..................................
Average Maturity 22.24
- ----------------------------------
Total Return at NAV
- ----------------------------------
1-Year 2.60%
..................................
Since Inception 6.93%
- ----------------------------------
Tax-Free Yields at Offer Price
- ----------------------------------
SEC Yield 4.26%
..................................
Distribution Yield 4.57%
- ----------------------------------
* The Index Comparison shows change in value of a $10,000 investment in the
Nuveen fund compared with the Lehman Brothers Municipal Bond Index. The Lehman
Municipal Bond Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A Shares at the time (4.50%) and all ongoing fund
expenses.
During the fiscal year, the fund's average annual total return on NAV for R
Shares was 2.84%, and since their inception in February 1992 was 6.89%. For
more information on share class total returns, turn to the Financial
Highlights beginning on page 61.
[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]
[GRAPH APPEARS HERE]
[BAR CHART APPEARS HERE]
Fund Fact:
Where to find your fund on the NASDAQ: FLOTX
7
<PAGE>
Nuveen Maryland Tax-Free Value Fund January 31, 1997 Annual Report
Maryland Overview A Shares
Highlights
- -----------------------------------
Net Assets $11,787,597
...................................
Net Asset Value $10.25
...................................
Average Maturity 18.91
- -----------------------------------
Total Return at NAV
- -----------------------------------
1-Year 3.06%
...................................
Since Inception 6.84%
- -----------------------------------
Tax-Free Yields at Offer Price
- -----------------------------------
SEC Yield 4.19%
...................................
Distribution Yield 4.53%
- -----------------------------------
* The Index Comparison shows change in value of a $10,000 investment in the
Nuveen fund compared with the Lehman Brothers Municipal Bond Index. The Lehman
Municipal Bond Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A Shares at the time (4.50%) and all ongoing fund
expenses.
During the fiscal year, the fund's average annual total return on NAV for R
Shares was 3.29%, and since their inception in February 1992 was 6.81%. For
more information on share class total returns, turn to the Financial
Highlights beginning on page 61.
[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]
[GRAPH APPEARS HERE]
[BAR CHART APPEARS HERE]
Fund Fact:
Where to find your fund on the NASDAQ: NMDAX
8
<PAGE>
Nuveen Michigan Tax-Free Value Fund January 31, 1997 Annual Report
Michigan Overview A Shares
Highlights
- -----------------------------------
Net Assets $5,517,761
...................................
Net Asset Value $10.50
...................................
Average Maturity 17.48
- -----------------------------------
Total Return at NAV
- -----------------------------------
1-Year 3.20%
...................................
Since Inception 7.27%
- -----------------------------------
Tax-Free Yields at Offer Price
- -----------------------------------
SEC Yield 4.38%
...................................
Distribution Yield 4.65%
- -----------------------------------
* The Index Comparison shows change in value of a $10,000 investment in the
Nuveen fund compared with the Lehman Brothers Municipal Bond Index. The Lehman
Municipal Bond Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A Shares at the time (4.50%) and all ongoing fund
expenses.
During the fiscal year, the fund's average annual total return on NAV for R
Shares was 3.44%, and since their inception in February 1992 was 7.62%. For
more information on share class total returns, turn to the Financial
Highlights beginning on page 61.
[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]
[GRAPH APPEARS HERE]
[BAR CHART APPEARS HERE]
Fund Fact:
Where to find your fund on the NASDAQ: FMITX
9
<PAGE>
Nuveen Pennsylvania Tax-Free Value Fund
January 31, 1997 Annual Report
Pennsylvania Overview
A Shares
Highlights
- -------------------------------------
Net Assets $10,326,580
.....................................
Net Asset Value $10.55
.....................................
Average Maturity 19.96
- -------------------------------------
Total Return at NAV
- -------------------------------------
1-Year 4.53%
.....................................
Since Inception 7.87%
- -------------------------------------
Tax-Free Yields at Offer Price
- -------------------------------------
SEC Yield 4.38%
.....................................
Distribution Yield 4.74%
- -------------------------------------
* The Index Comparison shows change in value of a $10,000 investment in the
Nuveen fund compared with the Lehman Brothers Municipal Bond Index. The Lehman
Municipal Bond Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A Shares at the time (4.50%) and all ongoing fund
expenses.
During the fiscal year, the fund's average annual total return on NAV for R
Shares was 4.89%, and since their inception in February 1992 was 7.46%. For
more information on share class total returns, turn to the Financial
Highlights beginning on page 61.
[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]
[GRAPH APPEARS HERE]
[BAR CHART APPEARS HERE]
Fund Fact:
Where to find your fund on the NASDAQ: FPNTX
10
<PAGE>
Nuveen Virginia Tax-Free Value Fund
January 31, 1997 Annual Report
Virginia Overview
A Shares
Highlights
- -----------------------------------
Net Assets $9,273,783
...................................
Net Asset Value $10.43
...................................
Average Maturity 22.34
- -----------------------------------
Total Return at NAV
- -----------------------------------
1-Year 3.44%
...................................
Since Inception 7.29%
- -----------------------------------
Tax-Free Yields at Offer Price
- -----------------------------------
SEC Yield 4.49%
...................................
Distribution Yield 4.75%
- -----------------------------------
* The Index Comparison shows change in value of a $10,000 investment in the
Nuveen fund compared with the Lehman Brothers Municipal Bond Index. The Lehman
Municipal Bond Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A Shares at the time (4.50%) and all ongoing fund
expenses.
During the fiscal year, the fund's average annual total return on NAV for R
Shares was 3.68%, and since their inception in February 1992 was 7.33%. For
more information on share class total returns, turn to the Financial
Highlights beginning on page 61.
[PIE CHART APPEARS HERE] [PIE CHART APPEARS HERE]
[GRAPH APPEARS HERE]
[BAR CHART APPEARS HERE]
Fund Fact:
Where to find your fund on the NASDAQ: NVATX
11
<PAGE>
Financial Section
Contents
14 Portfolio of Investments
42 Statement of Net Assets
44 Statement of Operations
46 Statement of Changes in Net Assets
52 Notes to Financial Statements
61 Financial Highlights
13
<PAGE>
Portfolio of Investments
Arizona
<TABLE>
<S> <C> <C> <C> <C>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
Arizona Board of Regents, Arizona State University
System Revenue Refunding Bonds, Series 1992-A:
$500,000 5.750%, 7/01/12 7/02 at 101 AA $507,330
500,000 5.500%, 7/01/19 7/02 at 101 AA 487,715
100,000 Arizona Educational Loan Marketing Corporation, 9/02 at 101 Aa 104,688
Educational Loan Revenue Bonds, 6.375%, 9/01/05
(Alternative Minimum Tax)
200,000 Arizona Educational Loan Marketing Corporation, 3/02 at 101 A 212,234
1992 Educational Loan Revenue Bonds, Series B,
7.000%, 3/01/05 (Alternative Minimum Tax)
300,000 Arizona Health Facilities Authority, Hospital System 9/03 at 100 Aaa 319,890
Revenue Refunding Bonds (Phoenix Baptist Hospital and
Medical Center, Inc. and Medical Environments, Inc.),
Series 1992, 6.250%, 9/01/11
200,000 Arizona Municipal Financing Program, Certificates of No Opt. Call Aaa 242,378
Participation, Series 20, 7.700%, 8/01/10
500,000 Arizona State University Research Park, Development 7/06 at 100 Aaa 463,130
Refunding Bonds, Series 1995, 5.000%, 7/01/21
250,000 State of Arizona Refunding Certificates of Participation, 9/02 at 102 Aaa 265,380
Series 1992B, 6.250%, 9/01/10
500,000 Student Loan Acquisition Authority of Arizona (A 5/04 at 102 Aa 531,395
nonprofit corporation organized pursuant to the laws of
the State of Arizona) Student Loan Revenue Bonds,
Series 1994, 6.600%, 5/01/10 (Alternative Minimum Tax)
175,000 Wastewater Management Authority of Arizona, 7/02 at 102 Aaa 181,468
Wastewater Treatment Financial Assistance
Revenue Bonds, Series 1992A, 5.950%, 7/01/12
250,000 Wastewater Management Authority of Arizona, 7/05 at 102 Aaa 254,000
Wastewater Treatment Financial Assistance
Revenue Bonds, Series 1995, 5.750%, 7/01/15
700,000 Apache County (Arizona) Public Finance Corporation, 5/00 at 102 A 707,224
Certificates of Participation, Series 1994, Arizona
Department of Corrections, 5.500%, 5/01/10
195,000 Central Arizona Water Conservation District (Central 5/01 at 102 AA- 213,582
Arizona Project), Contract Revenue Bonds, Series B 1991,
6.500%, 11/01/11 (Pre-refunded to 5/01/01)
300,000 Sierra Vista Unified School District No. 68 of Cochise No Opt. Call Aaa 364,077
County, Arizona, General Obligation Refunding Bonds,
Series 1992, 7.500%, 7/01/10
</TABLE>
14
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 250,000 Sedona-Oak Creek Joint Unified School District 7/01 at 101 A- $ 268,373
No. 9 of Coconino and Yavapai Counties, Arizona,
School Improvement Bonds, Project of
1992, Series A (1992), 6.750%, 7/01/07
550,000 City of Douglas (Arizona), Municipal Property Corporation, 7/05 at 101 Aaa 558,157
Municipal Facilities Excise Tax Revenue Bonds,
Series 1995, 5.750%, 7/01/15
280,000 Eloy Municipal Property Corporation, Municipal Facilities 7/02 at 101 BBB 299,684
Revenue Bonds, Series 1992, 7.000%, 7/01/11
500,000 The Industrial Development Authority of The City of 5/06 at 102 AAA 509,185
Glendale, Arizona Revenue Bonds, Midwestern
University, Series 1996A, 6.000%, 5/15/16
375,000 Maricopa Rural Road Improvement District of Pinal County, 7/99 at 101 N/R 391,076
Arizona, Refunding Bonds, Series 1994, 6.900%, 7/01/05
300,000 Hospital District No. One, Maricopa County, Arizona, 6/04 at 101 Aaa 318,306
Hospital Facilities Refunding Bonds,
Series B(1992), 6.250%, 6/01/10
500,000 The Industrial Development Authority of the County of 7/03 at 102 Aaa 486,570
Maricopa Insured Health Facility Revenue Bonds
(Catholic Healthcare West), 1993 Series A,
5.625%, 7/01/23
500,000 The Industrial Development Authority of the County of No Opt. Call Aaa 587,475
Maricopa (Arizona), Samaritan Health Services,
Hospital System Revenue Refunding Bonds,
Series 1990A, 7.000%, 12/01/16
600,000 The Industrial Development Authority of the County of 9/05 at 101 Aaa 584,196
Maricopa, Arizona, Baptist Hospital System Revenue
Refunding Bonds, Series 1995, 5.500%, 9/01/16
Kyrene Elementary School District No. 28 of Maricopa
County, Arizona, School Improvement Bonds, Project
of 1990, Series E (1993):
265,000 6.000%, 7/01/12 (Pre-refunded to 7/01/02) 7/02 at 100 Aaa 284,369
50,000 6.000%, 7/01/12 7/02 at 100 Aaa 51,568
500,000 The Industrial Development Authority of the County of 11/03 at 101 AA+ 527,050
Mohave (Arizona) Industrial Development Revenue
Bonds, 1994 Series (Citizens Utilities Company
Projects), 6.600%, 5/01/29 (Alternative Minimum Tax)
</TABLE>
15
<PAGE>
Portfolio of Investments
Arizona -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Navajo County, Arizona, Pollution Control Corporation,
Pollution Control Revenue Refunding Bonds (Arizona
Public Service Company), 1993 Series A:
$ 1,000,000 5.875%, 8/15/28 8/03 at 102 Baa1 $ 985,710
1,000,000 5.500%, 8/15/28 8/03 at 102 Aaa 945,050
425,000 City of Peoria, Arizona Improvement District No. 8801 1/03 at 101 BBB 458,108
(North Valley Power Center), Improvement Bonds,
7.300%, 1/01/12
250,000 City of Phoenix Civic Improvement Corporation, Airport 7/97 at 102 AA+ 258,555
Terminal Excise Tax Revenue Bonds, Series 1989,
7.800%, 7/01/11 (Alternative Minimum Tax)
295,000 Phoenix Housing Finance Corporation (Arizona), Mortgage 7/02 at 101 Aaa 304,481
Revenue Refunding Bonds, Series 1992A (FHA-Insured
Mortgage Loans -- Section 8 Assisted Projects),
6.500%, 7/01/24
400,000 City of Phoenix (Arizona), Civic Improvement Corporation, 7/03 at 102 AAA 440,576
Wastewater System Lease Revenue Bonds, Series 1993,
6.125%, 7/01/23 (Pre-refunded to 7/01/03)
1,000,000 City of Phoenix Civic Improvement Corporation (Arizona), 7/04 at 102 A1 906,540
Wastewater System Lease Revenue Refunding Bonds,
Series 1993, 5.000%, 7/01/18
530,000 City of Phoenix Civic Improvement Corporation, 7/06 at 100 Aa 542,402
Junior Lien Water System Revenue Bonds,
Series 1996, 6.000%, 7/01/19
200,000 Phoenix Industrial Development Authority (FHA-Insured 11/02 at 101 AAA 211,196
Chris Ridge Village Project), 6.750%, 11/01/12
300,000 City of Phoenix, Arizona, Junior Lien Street and Highway 7/02 at 102 A+ 317,745
User Revenue Refunding Bonds, Series 1992,
6.250%, 7/01/11
500,000 The Industrial Development Authority of the City of 2/03 at 102 Aaa 491,455
Phoenix, Arizona, Multifamily Housing Revenue
Refunding Bonds, Series 1993 (GNMA Collateralized --
Meadow Glen Apartments Project), 5.800%, 8/20/28
485,000 The Industrial Development Authority of the City of 6/05 at 102 AAA 492,173
Phoenix, Arizona, Statewide Single Family Mortgage
Revenue Bonds, Series 1995, 6.150%, 12/01/08
(Alternative Minimum Tax)
</TABLE>
16
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
The Industrial Development Authority of the City of
Phoenix, Arizona, Hospital Revenue Bonds (John C.
Lincoln Hospital and Health Center) Series 1994:
$ 500,000 6.000%, 12/01/10 12/03 at 102 BBB+ $ 499,860
500,000 6.000%, 12/01/14 12/03 at 102 BBB+ 491,790
240,000 The Industrial Development Authority of the County of 1/02 at 103 Aaa 266,100
Pima (Arizona) Industrial Development Lease Obligation
Refunding Revenue Bonds, 1988 Series A (Irvington
Project), 7.250%, 7/15/10
300,000 Tucson Unified School District No. 1 of Pima County, 7/02 at 102 Aaa 314,076
Arizona, School Improvement Bonds, Project of 1989,
Series D (1992), 6.100%, 7/01/12
640,000 The Industrial Development Authority of the County of No Opt. Call Aaa 625,856
Pima, Arizona, Health Care System Revenue Bonds,
Carondelet Health Care Corporation of Arizona Issue,
Series 1993, 5.250%, 7/01/13
420,000 The Industrial Development Authority of the County of 8/05 at 102 A 435,191
Pima (Arizona) Single Family Mortgage Revenue
Refunding Bonds, Series 1995A, 6.500%, 2/01/17
Pinal County, Arizona, Certificates of Participation,
Series 1994:
300,000 6.375%, 6/01/06 6/02 at 100 AA 321,165
200,000 6.500%, 6/01/09 6/02 at 100 AA 215,558
280,000 Salt River Project Agricultural Improvement and Power 2/97 at 100 Aa 279,101
District, Arizona, Salt River Project Electric System
Revenue Bonds, 1986 Series C, 5.750%, 1/01/20
300,000 Salt River Project Agricultural Improvement and Power 1/02 at 100 Aa 299,799
District, Arizona, Salt River Project Electric System
Revenue Bonds, 1992 Series D, 5.750%, 1/01/19
225,000 City of Tempe, General Obligation Bonds, Series 1992B, 7/02 at 101 AA+ 236,896
6.000%, 7/01/08
500,000 The Industrial Development Authority of the City of Tempe, 6/03 at 102 AAA 510,020
Arizona, Multi-Family Mortgage Refunding Bonds --
Series 1993A (FHA Insured Mortgage Loan --
Quadrangles Village Apartments), 6.250%, 6/01/26
600,000 Tempe Union High School District No. 213 of Maricopa 7/04 at 101 Aaa 628,578
County, Arizona, School Improvement and Refunding
Bonds, Series 1994, 6.000%, 7/01/12
500,000 City of Tucson, Arizona, General Obligation Bonds, 7/04 at 101 Aaa 528,560
Series 1984-G, 6.250%, 7/01/18
</TABLE>
17
<PAGE>
Portfolio of Investments
Arizona -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 575,000 Tucson Airport Authority, Inc. (Arizona), Airport Revenue 6/03 at 102 Aaa $ 582,366
Bonds, Refunding Series 1993, 5.700%, 6/01/13
250,000 Business Development Finance Corporation, Tucson 7/02 at 102 Aaa 263,378
(Arizona), Local Development Lease Revenue
Refunding Bonds, Series 1992, 6.250%, 7/01/12
390,000 City of Tucson, Arizona, Water System Revenue Bonds, 7/06 at 101 Aaa 403,173
Series 1994-A (1996), 6.000%, 7/01/21
300,000 Arizona Board of Regents, University of Arizona, System 6/02 at 102 AA 318,696
Revenue Refunding Bonds, Series 1992, 6.250%, 6/01/11
335,000 Yavapai County Community College District of Yavapai 7/03 at 101 A- 343,087
County, Arizona, Revenue Bonds, Series 1993,
6.000%, 7/01/12
675,000 Yuma Union High School District No. 70 of Yuma 7/02 at 101 Aaa 706,724
County, Arizona, School Improvement Bonds,
Series 1994, 5.700%, 7/01/06
- ----------------------------------------------------------------------------------------------------------------------------------
$23,755,000 Total Investments -- (cost $23,499,139) -- 96.5% 24,344,465
===========-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 3.5% 877,198
------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $25,221,663
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Summary of Ratings** -- Portfolio of Investments
Standard Number of Market Market
& Poors Moody's Securities Value Percent
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa 31 $13,183,911 54%
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 14 4,843,932 20
A+ A1 2 1,224,285 5
A, A- A, A2 ,A3 5 1,966,109 8
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 5 2,735,152 11
Non-rated Non-rated 1 391,076 2
------------------------------------------------------------------------------------------------------------------
Total 58 $24,344,465 100%
==================================================================================================================
</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.
18 See accompanying notes to financial statements.
<PAGE>
Portfolio of Investments
Florida
Nuveen Tax-Free Mutual Funds
<TABLE> January 31, 1997 Annual Report
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,500,000 Florida Housing Finance Agency, Housing Revenue Bonds, 2/05 at 102 Aaa $ 2,651,150
(Antigua Club Apartments Project), 1995 Series A1,
6.875%, 8/01/26 (Alternative Minimum Tax)
1,000,000 Florida Housing Finance Agency, Multi-Family Housing 8/06 at 102 AAA 1,022,280
Revenue Refunding Bonds, 1991 Series C,
6.200%, 8/01/16
700,000 Florida Housing Finance Agency, Housing Revenue Bonds, 12/06 at 102 Aaa 692,650
1996 Series T (The Landings at Sea Front Apartments
Project), 6.050%, 12/01/36 (Alternative Minimum Tax)
750,000 Florida Housing Finance Agency, General Mortgage 6/02 at 103 AAA 766,410
Revenue Refunding Bonds, 1992 Series A,
6.400%, 6/01/24
1,440,000 Florida Housing Finance Agency, Multi-Family Housing 6/99 at 103 AAA 1,519,560
Revenue Bond, 1989 Series I (GNMA Collateralized--
Driftwood Terrace Apartments Project), 7.650%,
12/20/31 (Alternative Minimum Tax)
1,000,000 Florida Municipal Power Agency, All-Requirements 10/02 at 102 Aaa 1,101,350
Power Supply Project Revenue Bonds, Series 1992,
6.250%, 10/01/21 (Pre-refunded to 10/01/02)
1,145,000 Florida Municipal Power Agency, Stanton II Project 10/02 at 102 Aaa 1,246,275
Revenue Bonds, Series 1992, 6.000%, 10/01/27
(Pre-refunded to 10/01/02)
1,650,000 State of Florida, Department of Transportation, Turnpike 7/02 at 101 Aaa 1,806,932
Revenue Bonds, Series 1992A, 6.350%, 7/01/22
(Pre-refunded to 7/01/02)
1,160,000 State of Florida, Full Faith and Credit, State Board of No Opt. Call Aaa 1,186,761
Education, Public Education Capital Outlay Bonds,
Series 1986-C, 7.100%, 6/01/07
300,000 State of Florida, Full Faith and Credit, Pollution Control 7/02 at 101 Aa 326,076
Bonds, Series Y, Division of Bond Finance of the
Department of General Services, 6.600%, 7/01/17
State of Florida, Full Faith and Credit, State Board of
Education, Public Education Capital Outlay Bonds,
Series 1989-A (Refunding Bonds):
460,000 7.250%, 6/01/23 (Pre-refunded to 6/01/00) 6/00 at 102 Aaa 508,985
2,680,000 7.250%, 6/01/23 6/00 at 102 Aa 2,940,791
2,250,000 State of Florida, Full Faith and Credit, State Board of 6/05 at 101 Aa 2,272,320
Education, Public Education Capital Outlay Bonds,
1994 Series B, 5.875%, 6/01/20
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Florida -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 300,000 Brevard County Educational Facilities Authority (Florida), 11/02 at 102 BBB $ 312,930
Educational Facilities Refunding and Improvement
Revenue Bonds, Series 1992, 6.875%, 11/01/22
600,000 Housing Finance Authority of Broward County, Florida, 2/05 at 102 AAA 641,838
Multifamily Housing Revenue Refunding Bonds,
(Lakeside Apartments Project), Series 1995,
7.000%, 2/01/25
1,000,000 City of Callaway/Bay County, Florida, Wastewater System 9/99 at 100 Aaa 1,029,830
Revenue Bonds, Series 1996A, 6.000%, 9/01/26
1,000,000 Charlotte County, Florida, Utility System Refunding 10/97 at 100 Aaa 1,004,460
Revenue Bonds, Series 1996A, 6.200%, 10/01/23
1,000,000 Dade County, Florida, Aviation Facilities Revenue Bonds, 10/02 at 102 Aaa 1,076,040
1992 Series B, 6.550%, 10/01/13
(Alternative Minimum Tax)
115,000 Housing Finance Authority of Dade County (Florida), 3/01 at 102 Aaa 120,323
Single Family Mortgage Revenue Bonds, Series B,
7.250%, 9/01/23 (Alternative Minimum Tax)
2,480,000 Dade County, Florida, Public Facilities Revenue Refunding 6/03 at 102 Aaa 2,232,000
Bonds (Jackson Memorial Hospital), Series 1993A,
4.875%, 6/01/15
465,000 Dade County, Florida, Special Housing Revenue Bonds 7/00 at 100 A 476,532
(City of Miami Developments--Indenture VIII),
Series A, 12.000%, 7/01/12
255,000 Dade County, Florida, Special Obligation Bonds, (Courthouse 4/04 at 102 A 272,636
Center Project), Series 1994, 6.300%, 4/01/14
250,000 Dade County Health Facilities Authority, Hospital Revenue 10/99 at 102 Aaa 272,240
Refunding Bonds, Series 1989, (South Miami Hospital
Project), 7.000%, 10/01/18 (Pre-refunded to 10/01/99)
300,000 Dade County Health Facilities Authority, Hospital Revenue 8/02 at 102 Aaa 333,576
Refunding Bonds, Series 1992, (North Shore Medical
Center Project), 6.500%, 8/15/15
(Pre-refunded to 8/15/02)
1,000,000 Town of Davie, Florida, Water and Sewer Improvement and 10/02 at 102 Aaa 1,050,460
Refunding, Revenue Bonds, Series 1992,
6.250%, 10/01/17
600,000 The City of Daytona Beach, Florida, Water and Sewer 11/02 at 102 Aaa 621,624
Revenue Bonds, Series 1992, 6.000%, 11/15/14
1,000,000 City of Dunedin (Florida), Hospital Revenue Refunding Bonds, 11/03 at 101 Aaa 987,940
Series 1993, (Mease Health Care), 5.375%, 11/15/13
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 325,000 Escambia County Housing Finance Authority (Florida), 10/02 at 102 Aaa $ 337,776
Single Family Mortgage Revenue Bonds, Series 1992A,
(Multi-County Program), 6.900%, 4/01/20
(Alternative Minimum Tax)
630,000 Escambia County Housing Finance Authority (Florida), Single 4/05 at 102 Aaa 655,528
Family Mortgage Revenue Bonds, (Multi-County
Program), Series 1995, 6.950%, 10/01/27
(Alternative Minimum Tax)
Certificates of Participation, Series 1992, The School
Board of Escambia County, Florida:
310,000 6.375%, 2/01/12 (Pre-refunded to 2/01/02) 2/02 at 100 Aaa 335,550
190,000 6.375%, 2/01/12 2/02 at 100 Aaa 198,997
500,000 City of Gainesville, Florida, Utilities System Revenue 10/02 at 102 Aa 556,865
Bonds, 1992 Series A, 6.500%, 10/01/22
1,000,000 Hillsborough County Aviation Authority, Florida, 10/06 at 102 Aaa 1,016,810
Tampa International Airport Revenue Bonds,
Series 1996B, 5.875%, 10/01/23
1,200,000 Hillsborough Industrial Development Authority, Pollution 5/02 at 103 AA 1,395,168
Control Revenue Refunding Bonds (Tampa Electric
Company Project) Series 1992, 8.000%, 5/01/22
250,000 Hillsborough County, Florida, Capital Improvement, Non- 1/00 at 102 A 268,688
Ad Valorem Revenue Bonds, (Museum of Science and
Industry Project), Series 1992, 6.400%, 1/01/12
(Pre-refunded to 1/01/00)
250,000 City of Hollywood, Florida, Water and Sewer Revenue 10/01 at 102 Aaa 279,345
Bonds, Series 1991, 6.875%, 10/01/21
(Pre-refunded to 10/01/01)
470,000 Jacksonville Electric Authority, (Jacksonville, Florida), 10/97 at 101 1/2 Aa1 488,307
Electric System Revenue Bonds, Series Two
1987A-1, 7.500%, 10/01/02
500,000 Jacksonville Electric Authority, (Jacksonville, Florida), 10/02 at 101 Aa1 493,565
St. Johns River Power Park System Refunding Revenue
Bonds, Issue Two, Series Seven, 5.500%, 10/01/14
250,000 City of Jacksonville, Florida, Excise Taxes Revenue 10/02 at 102 Aaa 272,260
Refunding Bonds, Series 1992, 6.500% 10/01/13
605,000 Jacksonville Health Facilities Authority, Health Facilities 11/00 at 102 Aaa 679,742
Revenue Refunding Bonds, Daughters of Charity
National Health System, Inc., St. Vincent's Medical
Center Issue, Series 1990, 7.500%, 11/01/15
(Pre-refunded to 11/01/00)
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Florida -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,750,000 Jacksonville Health Facilities Authority, Hospital Revenue 6/01 at 102 Aaa $1,929,900
Bonds, (New Children's Hospital at Baptist Medical
Center Project), Series 1991, 7.000%, 6/01/21
375,000 City of Jacksonville, Florida, Water and Development 6/02 at 102 A 398,925
Revenue Bonds, Series 1992, (Jacksonville Suburban
Utilities Corporation Project), 6.750%, 6/01/22
(Alternative Minimum Tax)
250,000 Town of Jupiter, Water Revenue Bonds, Series 1992B, 10/01 at 102 Aaa 261,530
6.250%, 10/01/18
1,300,000 Kissimmee Utility Authority (Florida), Electric System 10/03 at 102 Aaa 1,291,745
Improvement and Refunding Revenue Bonds,
Series 1993, 5.375%, 10/01/12
845,000 Housing Finance Authority of Manatee County, Florida, 11/05 at 105 Aaa 926,771
Single Family Mortgage Revenue Bonds,
Series 1994--Sub Series 3, 7.600%, 11/01/26
(Alternative Minimum Tax)
2,550,000 City of Miami Beach, Florida, Water and Sewer Revenue 9/05 at 102 Aaa 2,505,783
Bonds, Series 1995, 5.375%, 9/01/15
250,000 North Broward Hospital District (Florida), Hospital Revenue 1/02 at 102 Aaa 261,163
Refunding Bonds, Series 1992A, 6.250%, 1/01/12
1,500,000 Orange County, Florida, Sales Tax Revenue Bonds, 1/03 at 102 Aaa 1,412,625
Series 1993B, 5.375%, 1/01/24
145,000 Orange County, Florida, Sales Tax Revenue Bonds, Series 1/00 at 102 Aaa 154,737
1989, 6.125%, 1/01/19 (Pre-refunded to 1/01/00)
500,000 Orange County, Florida, Water Utilities System Revenue 4/02 at 102 Aaa 524,180
Bonds, Series 1992, 6.250%, 10/01/17
1,000,000 Orange County Housing Finance Authority, Multifamily 10/01 at 101 BBB+ 1,028,420
Housing Revenue Bonds (Ashley Point Apartments),
1994 Series A, 7.100%, 10/01/24 (Alternative
Minimum Tax)
1,250,000 Orlando (Florida) Utilities Commission, Water and Electric 10/02 at 102 Aa 1,270,975
Subordinated Revenue Bonds, Series 1992A,
6.000%, 10/01/20
1,000,000 State of Florida, Orlando -- Orange County Expressway 7/03 at 102 Aaa 954,580
Authority, Senior Lien Revenue Refunding Bonds,
Series of 1993, 5.500%, 7/01/18
2,000,000 State of Florida, Orlando -- Orange County Expressway 7/03 at 102 Aaa 1,826,960
Authority, Junior Lien Revenue Refunding Bonds,
Series of 1993A, 5.125%, 7/01/20
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Palm Beach County, Florida, Criminal Justice Facilities
Revenue Refunding Bonds, Series 1993:
$ 1,000,000 5.300%, 6/01/05 No Opt. Call Aaa $1,042,660
1,000,000 5.375%, 6/01/10 No Opt. Call Aaa 1,016,600
3,000,000 City of Pensacola Health Facilities Authority, Health 1/03 at 102 Aa 2,910,570
Facilities Revenue Bonds, (Daughters of Charity
National Health System--Sacred Heart Hospital of
Pensacola), Series 1993, 5.250%, 1/01/11
2,000,000 Pinellas County (Florida), Health Facilities Authority, 11/03 at 102 Aaa 1,908,300
Hospital Revenue Bonds, Series 1993 (Morton Plant
Health System Project), 5.500%, 11/15/18
565,000 St. Lucie County, Florida, Solid Waste System Revenue 9/99 at 100 Aaa 591,250
Bonds, Series 1990, 6.000%, 9/01/15
(Pre-refunded to 9/01/99)
630,000 City of St. Petersburg Health Facilities Authority (Florida), 12/01 at 102 Aaa 700,131
Revenue Bonds, Series 1985A, (Allegany Health System
Loan Program), 7.000%, 12/01/15
City of Tampa, Florida, Water and Sewer System Revenue
Bonds, Series 1992:
335,000 6.000%, 10/01/17 (Pre-refunded to 10/01/02) 10/02 at 101 Aaa 362,030
165,000 6.000%, 10/01/17 10/02 at 101 Aaa 169,105
1,000,000 Turtle Run Community Development District, (Coral 5/03 at 100 A1 1,055,870
Springs, Florida), Water Management Benefit Tax
Refunding Bonds, Series 1993, 6.400%, 5/01/11
2,500,000 Commonwealth of Puerto Rico, Public Improvement 7/06 at 101 1/2 A 2,363,075
Bonds of 1996, (General Obligation Bonds),
5.400%, 7/01/25
1,600,000 Puerto Rico Electric Power Authority, Power Revenue 7/05 at 100 Baa1 1,517,487
Bonds, Series X, 5.500%, 7/01/25
- ----------------------------------------------------------------------------------------------------------------------------------
$62,390,000 Total Investments -- (cost $61,479,704) -- 97.2% 63,837,942
===========-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 2.8% 1,858,092
------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $65,696,034
==================================================================================================================
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Florida -- continued
Summary of Ratings** -- Portfolio of Investments
Standard Number Market Market
& Poor's Moody's of Securities Value Percent
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa 47 $43,488,742 68 %
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 9 12,654,637 20
A+ A1 1 1,055,870 2
A, A- A, A2, A3 5 3,779,856 6
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 3 2,858,837 4
------------------------------------------------------------------------------------------------------------------
Total 65 $63,837,942 100 %
==================================================================================================================
* 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.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Portfolio of Investments
Maryland
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,500,000 Washington Metropolitan Transit Authority 1/04 at 102 Aaa $2,404,675
(District of Columbia), Gross Revenue Transit
Refunding Bonds, Series 1993, 5.250%, 7/01/14
500,000 Community Development Administration, Department of 4/97 at 103 Aa 515,855
Economic and Community Development,
State of Maryland, Single Family Program Bonds,
1987 First Series, 7.000%, 4/01/14
1,390,000 Community Development Administration, Department of 4/01 at 102 Aa 1,456,039
Housing and Community Development, State of
Maryland, Single Family Program Bonds, 1991 Fourth
Series, 7.450%, 4/01/32 (Alternative Minimum Tax)
Community Development Administration, Department
of Housing and Community Development, State of
Maryland, Multi-Family Housing Revenue Bonds
(Insured Mortgage Loans), 1992 Series D:
700,000 6.700%, 5/15/27 5/02 at 102 Aa 727,251
500,000 6.750%, 5/15/33 5/02 at 102 Aa 519,725
1,855,000 Maryland Economic Development Corporation 4/11 at 102 N/R 1,780,986
(Health and Mental Hygiene Providers Facilities
Acquisition Program) Revenue Bonds,
Series 1996A, 7.625%, 4/01/21
500,000 Maryland Health and Higher Educational Facilities 7/00 at 102 Aaa 549,670
Authority, Revenue Bonds, Sinai Hospital of
Baltimore Issue, Series 1990, 7.000%, 7/01/19
(Pre-refunded to 7/01/00)
500,000 Maryland Health and Higher Educational Facilities 7/00 at 102 Aaa 545,910
Authority, Revenue Bonds, Francis Scott Key
Medical Center Issue, Series 1990, 6.750%,
7/01/23 (Pre-refunded to 7/01/00)
1,005,000 Maryland Health and Higher Educational Facilities 7/00 at 102 Aaa 1,158,504
Authority, Doctors' Community Hospital Issue, Series
1990, 8.750%, 7/01/22 (Pre-refunded to 7/01/00)
1,000,000 Maryland Health and Higher Educational Facilities 7/03 at 102 Aaa 951,020
Authority, Refunding Revenue Bonds, Francis Scott Key
Medical Center Issue, Series 1993, 5.000%, 7/01/13
1,000,000 Maryland Health and Higher Educational Facilities 7/03 at 102 Baa 958,760
Authority, Project and Refunding Revenue Bonds,
Doctors Community Hospital Issue,
Series 1993, 5.750%, 7/01/13
</TABLE>
25
<PAGE>
Portfolio of Investments
Maryland -- continued
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,760,000 Maryland Stadium Authority, Convention Center 12/04 at 102 Aaa $1,822,515
Expansion Lease Revenue Bonds, Series 1994,
5.875%, 12/15/12
Maryland Stadium Authority, Sports Facilities
Lease Revenue Bonds, Series 1989D:
500,000 7.375%, 12/15/04 (Alternative Minimum Tax) 12/99 at 102 Aa 548,940
500,000 7.500%, 12/15/10 (Alternative Minimum Tax) 12/99 at 102 Aa 545,425
3,010,000 Maryland Transportation Authority, Special Obligation 7/04 at 102 Aaa 3,109,450
Revenue Bonds, Baltimore/Washington International
Airport Projects, Series 1994-A (Qualified Airport
Bonds), 6.400%, 7/01/19 (Alternative Minimum Tax)
1,000,000 Maryland Transportation Authority, 7/02 at 100 A1 1,003,400
Transportation Facilities Projects,
Revenue Bonds, Series 1992, 5.750%, 7/01/15
2,000,000 State of Maryland, General Obligation Bonds, State and 7/03 at 101 Aaa 1,961,940
Local Facilities Loan of 1993, Third Series (Capital
Improvement and Refunding Bonds), 4.600%, 7/15/06
700,000 The Maryland National Capital Park and Planning 7/02 at 102 Aa 764,407
Commission, Maryland (Prince George's County,
Maryland), General Obligation Bonds, Prince George's
County Park Acquisition and Development Bonds,
Series L-2, 6.125%, 7/01/10 (Pre-refunded to 7/01/02)
2,000,000 Baltimore County, Maryland, General Obligation Bonds, 7/98 at 102 Aaa 2,099,600
Baltimore County Pension Funding Bonds,
1991 Refunding Series, 6.700%, 7/01/11
600,000 City of Baltimore, Maryland (Mayor and City Council of 10/02 at 100 Aaa 660,216
Baltimore), General Obligation Consolidated Public
Improvement Bonds of 1992--Series A, 6.500%,
10/15/12 (Pre-refunded to 10/15/02)
2,295,000 Mayor and City Council of Baltimore (City of Baltimore, No Opt. Call Aaa 2,647,810
Maryland), General Obligation Consolidated Public
Improvement Refunding Bonds of 1995 -- Series A,
7.375%, 10/15/03
1,000,000 Baltimore City, Maryland, Mortgage Revenue Refunding 12/02 at 102 AAA 1,044,660
Bonds, Series 1992, (GNMA Collateralized--
Tindeco Wharf Apartments Project), 6.700%, 12/20/28
1,500,000 Mayor and City Council of Baltimore (Maryland), Port 4/02 at 103 AA- 1,643,370
Facilities Revenue Bonds (Consolidation Coal Sales
Company Project), Series 1984B, 6.500%, 10/01/11
</TABLE>
26
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,500,000 City of Baltimore, Maryland (Mayor and City Council 7/06 at 101 Aaa $1,460,490
of Baltimore) Project and Refunding Revenue Bonds
(Water Projects), Series 1996-A, 5.500%, 7/01/26
625,000 Mayor and City Council of Baltimore (Maryland), Project 7/00 at 100 Aaa 668,331
and Refunding Revenue Bonds (Water Projects), Series
1990-A, 6.500%, 7/01/20 (Pre-refunded to 7/01/00)
2,165,000 City of Gaithersburg, Maryland, Nursing Home Revenue No Opt. Call Aaa 2,417,287
Refunding Bonds (Shady Grove Adventist Nursing and
Rehabilitation Center Project), Series 1992-A,
6.500%, 9/01/12
1,000,000 Howard County, Maryland, Mortgage Revenue Refunding 7/02 at 102 Aaa 1,036,400
Bonds, Series 1992 (Howard Hills Townhouses Project--
FHA Insured Mortgage Loan), 6.400%, 7/01/24
2,000,000 Howard County, Maryland, Multifamily Housing Revenue 7/02 at 104 Baa2 2,154,100
Refunding Bonds, Series 1994 (Chase Glen Project),
7.000%, 7/01/24 (Mandatory put 7/01/04)
1,000,000 Housing Opportunities Commission of Montgomery County, 7/05 at 102 Aa 1,009,960
(Montgomery County, Maryland), Multifamily Housing
Revenue Bonds, 1995 Series A, 6.000%, 7/01/20
450,000 Housing Opportunities Commission of Montgomery County 7/99 at 100 Aa 464,153
(Montgomery County, Maryland), Single Family Mortgage
Revenue Bonds, 1986 Series C, 7.250%, 7/01/13
1,615,000 Housing Opportunities Commission of Montgomery County 7/04 at 102 Aa 1,686,189
(Montgomery County, Maryland), Single Family Mortgage
Revenue Bonds, 1994 Series A, 6.600%, 7/01/14
1,000,000 Montgomery County, Maryland, Solid Waste System 6/03 at 102 Aaa 1,023,040
Revenue Bonds (1993 Series A), 5.875%, 6/01/13
(Alternative Minimum Tax)
1,500,000 Morgan State University, Maryland, Academic Fees No Opt. Call Aaa 1,610,400
and Auxiliary Facilities Fees, Revenue Refunding Bonds,
1993 Series, 6.100%, 7/01/20
1,000,000 Northeast Maryland Waste Disposal Authority, No Opt. Call Aaa 1,068,080
Resource Recovery Revenue Refunding Bonds
(Southwest Resource Recovery Facility),
Series 1993, 6.900%, 1/01/00
600,000 Prince George's County, Maryland, Hospital Revenue No Opt. Call A 607,218
Bonds, Dimensions Health Corporation, Series 1992,
6.700%, 7/01/97
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Maryland -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,550,000 Housing Authority of Prince George's County, Maryland, 1/02 at 102 Aaa $ 1,615,689
Mortgage Revenue Refunding Bonds, Series 1992A
(New Keystone Apartments Project-FHA Insured
Mortgage Loan), 6.800%, 7/01/25
1,500,000 Prince George's County, Maryland, Pollution Control 1/03 at 102 A1 1,586,865
Revenue Refunding Bonds (Potomac Electric Project),
1993 Series, 6.375%, 1/15/23
1,000,000 University of Maryland System, Auxiliary Facility and 10/03 at 101 AA+ 971,090
Tuition Revenue Bonds, 1993 Refunding Series C,
5.000%, 10/01/11
1,170,000 Washington Suburban Sanitary District, Maryland, No Opt. Call Aa1 1,347,360
(Montgomery and Prince Georges Counties, Maryland),
General Construction Bonds of 1991 (Second Series),
8.000%, 1/01/02
500,000 Commonwealth of Puerto Rico, Public Improvement 7/02 at 101 1/2 Aaa 558,430
Bonds of 1992 (General Obligation Bonds), 6.600%,
7/01/13 (Pre-refunded to 7/01/02)
1,750,000 Puerto Rico Aqueduct and Sewer Authority, Revenue 7/98 at 102 AAA 1,883,333
Bonds, Series 1988A, 7.875%, 7/01/17
(Pre-refunded to 7/01/98)
2,000,000 Puerto Rico Highway and Transportation Authority, 7/03 at 101 1/2 A 1,831,620
Highway Revenue Bonds, (Series X), 5.250%, 7/01/21
185,000 Puerto Rico Electric Power Authority, Power Revenue 7/99 at 101 1/2 A- 198,596
Refunding Bonds, Series 1989-N, 7.125%, 7/01/14
315,000 Puerto Rico Electric Power Authority, Power Revenue 7/99 at 101 1/2 AAA 342,084
Refunding Bonds, Series 1989-O, 7.125%, 7/01/14
(Pre-refunded to 7/01/99)
1,000,000 Puerto Rico Industrial, Tourist, Educational, Medical 1/05 at 102 Aaa 1,055,510
and Environmental Control Facilities
Financing Authority, Hospital Revenue Bonds, 1995 Series A,
(Hospital Auxilio Mutuo Obligated Group Project),
6.250%, 7/01/16
- ----------------------------------------------------------------------------------------------------------------------------------
$53,740,000 Total Investments -- (cost $53,957,913) -- 97.4% 56,016,353
===========-----------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities -- 1.7%
$ 1,000,000 Baltimore County (Spring Hill Apartments), GNMA Collateralized A-1 1,000,000
Housing, Variable Rate Demand Bonds, 3.550%, 9/20/28+
===========-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.9% 493,527
------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $57,509,880
==================================================================================================================
</TABLE>
28
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Summary of Ratings** -- Portfolio of Investments
(excluding temporary investments)
<TABLE>
<CAPTION>
Standard Number Market Market
& Poor's Moody's of Securities Value Percent
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa 24 $33,695,044 60%
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 13 12,199,764 22
A+ A1 2 2,590,265 5
A, A- A, A2, A3 3 2,637,434 5
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 2 3,112,860 5
Non-rated Non-rated 1 1,780,986 3
------------------------------------------------------------------------------------------------------------------
Total 45 $56,016,353 100%
===================================================================================================================
</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.
29
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Michigan
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,145,000 Board of Trustees of Michigan State University, 8/02 at 101 Aa $1,190,915
General Revenue Bonds, Series 1992 A,
6.250%, 8/15/15
555,000 Michigan Municipal Bond Authority, State Revolving 10/02 at 102 Aa 618,969
Fund Reserve Bonds, Series 1992 A, 6.600%,
10/01/18 (Pre-refunded to 10/01/02)
1,000,000 Michigan Municipal Bond Authority, State Revolving 12/01 at 100 Aaa 936,350
Fund Revenue Bonds, Series 1992 A, 4.750%,
12/01/09
950,000 Michigan Municipal Bond Authority, State Revolving No Opt. Call Aa 1,083,637
Fund Revenue Bonds, Series 1994, 7.000%,
10/01/04
1,000,000 Michigan Public Power Agency, Belle River Project 1/03 at 102 AA- 934,370
Refunding Revenue Bonds, 1993 Series A,
5.250%, 1/01/18
Michigan State Hospital Finance Authority,
Hospital Revenue and Refunding Bonds,
(The Detroit Medical Center Obligated Group),
Series 1988B:
460,000 8.125%, 8/15/08 (Pre-refunded to 8/15/98) 8/98 at 102 A 496,533
40,000 8.125%, 8/15/08 8/98 at 102 A 42,659
1,000,000 Michigan State Hospital Finance Authority, 11/01 at 102 Aa 1,081,880
Hospital Revenue Bonds, (Daughters of Charity
National Health System -- Providence Hospital),
Series 1991, 7.000%, 11/01/21
500,000 Michigan State Hospital Finance Authority, 12/02 at 102 A 529,825
Hospital Revenue Bonds, (MidMichigan Obligated
Group), Series 1992, 6.900%, 12/01/24
860,000 Michigan State Hospital Finance Authority, No Opt. Call A 870,303
Hospital Revenue Bonds, (The Detroit Medical Center
Obligated Group), Series 1993B, 5.000%, 8/15/02
1,000,000 Michigan State Hospital Finance Authority, 1/05 at 102 AA- 1,035,250
Hospital Revenue and Refunding Bonds,
(Otsego Memorial Hospital Gaylord, Michigan),
Series 1995, 6.125%, 1/01/15
1,190,000 Michigan State Housing Development Authority, Limited 10/05 at 102 Aaa 1,242,967
Obligation Multi-Family Revenue Refunding Bonds,
Series 1995A, (GNMA Collateralized Program--Parc
Pointe Apartments), 6.500%, 10/05/15
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,000,000 Michigan State Housing Development Authority, 6/05 at 102 AA+ $1,046,720
Single Family Mortgage Revenue Bonds, 1995 Series A,
6.800%, 12/01/16
1,740,000 Michigan State Housing Finance Authority, No Opt. Call Aa 1,800,900
Hospital Revenue and Refunding Bonds,
(Daughters of Charity National Health System--
St. Mary's Medical Center of Saginaw, Inc.)
Series 1995, 5.500%, 11/01/05
Michigan State Housing Development Authority,
Rental Housing Revenue Bonds, 1992 Series A:
500,000 6.400%, 4/01/05 10/02 at 102 A+ 527,795
500,000 6.650%, 4/01/23 10/02 at 102 A+ 516,585
1,000,000 Michigan State Housing Development Authority, 4/04 at 102 A+ 990,910
Rental Housing Revenue Bonds, 1994 Series B,
5.700%, 4/01/12
1,055,000 Michigan Strategic Fund, Limited Obligation Revenue 12/03 at 102 A1 1,075,077
Bonds, (WMX Technologies, Inc. Project), Series 1993,
6.000%, 12/01/13 (Alternative Minimum Tax)
1,000,000 State Building Authority, State of Michigan, 1991 Revenue 10/01 at 102 AA- 1,034,250
Bonds, Series II, 6.250%, 10/01/20
400,000 County of Bay, Michigan, Bay County West Side Regional 5/97 at 102 A 409,276
Sewage Disposal System Bonds, 6.400%, 5/01/02
250,000 Capital Region Airport Authority, (Lansing, Michigan), 7/02 at 102 Aaa 269,003
Airport Revenue Bonds, Series 1992, 6.700%, 7/01/21
(Alternative Minimum Tax)
1,000,000 School District of the City of Dearborn, County of Wayne, 5/01 at 102 Aa 1,022,570
State of Michigan, 1992 School Building and Site Bonds,
(General Obligation Unlimited Tax), 6.000%, 5/01/14
1,500,000 City of Detroit, Michigan, Convention Facility Limited Tax 9/03 at 102 Aaa 1,447,110
Revenue Refunding Bonds, (Cobo Hall Expansion Project),
Series 1993, 5.250%, 9/30/12
1,000,000 City of Detroit, Michigan, Water Supply System Revenue 7/04 at 102 Aaa 861,870
and Revenue Refunding Bonds, Series 1993, 4.750%,
7/01/19
1,000,000 Dexter Community Schools, Counties of Washtenaw and 5/03 at 102 Aa 915,890
Livingston, State of Michigan, 1993 School Building and
Site and Refunding Bonds, (General Obligation Unlimited
Tax), 5.000%, 5/01/17
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Michigan -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 440,000 Grand Rapids Housing Corporation, Multifamily Revenue 1/04 at 104 AAA $ 482,165
Refunding Bonds, Series 1992 ( FHA Insured Mortgage
Loan-Section 8 Assisted Elderly Project), 7.375%, 7/15/41
500,000 County of Grand Traverse (Michigan), Hospital Finance 7/02 at 102 Aaa 521,475
Authority, Hospital Revenue Refunding Bonds (Munson
Healthcare Obligated Group), Series 1992A,
6.250%, 7/01/22
950,000 Huron Valley School District, Counties of Oakland 5/07 at 100 Aaa 949,278
and Livingston, State of Michigan, 1996 School Building
and Site Bonds, (General Obligation -- Unlimited Tax),
5.750%, 5/01/22
1,000,000 Lake Orion Community School District, County of Oakland, 5/05 at 101 Aaa 971,180
State of Michigan, 1995 Refunding Bonds
(General Obligation -- Unlimited Tax),
5.500%, 5/01/20
1,250,000 City of Lansing, Sewage Disposal System Revenue 5/04 at 102 Aaa 1,272,112
and Revenue Refunding Bonds, 1994 Series,
5.850%, 5/01/14
1,000,000 County of Monroe, Michigan, Pollution Control No Opt. Call Aaa 1,086,530
Revenue Bonds, (The Detroit Edison Company
Project), Series A--1994, 6.350%, 12/01/04
(Alternative Minimum Tax)
City of Muskegon, County of Muskegon, State of Michigan,
Water Supply System Revenue Bonds, Series 1993:
450,000 4.500%, 5/01/12 5/01 at 101 Baa1 387,382
450,000 4.500%, 5/01/13 5/01 at 101 Baa1 384,902
180,000 Saginaw-Midland Municipal Waste Supply Corporation, 9/04 at 102 A 198,912
State of Michigan, Water Supply Revenue Bonds
(Limited Tax General Obligation), Series 1992,
6.875%, 9/01/16
1,000,000 Regents of the University of Michigan, Hospital 12/00 at 100 Aa 1,025,440
Revenue Bonds, Series 1990, 6.375%, 12/01/24
250,000 The Economic Development Corporation of the City 3/02 at 101 Aaa 262,498
of Warren, Nursing Home Revenue Refunding Bonds,
(GMNA Mortgage-Backed Security -- Autumn Woods
Project), Series 1992, 6.900%, 12/20/22
1,000,000 Charter County of Wayne, Michigan, Airport Revenue 12/03 at 102 Aaa 963,140
Refunding Bonds (Detroit Metropolitan Wayne County
Airport), Subordinate Lien, Series 1993C,
5.250%, 12/01/13
</TABLE>
32
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Western Townships Utilities Authority, Sewage Disposal 1/02 at 100 Aaa $ 1,065,290
System Refunding Bonds, Series 1991,
6.500%, 1/01/10
500,000 Puerto Rico Aqueduct and Sewer Authority, 7/98 at 102 AAA 538,095
Revenue Bonds, Series 1988A,
7.875%, 7/01/17 (Pre-refunded to 7/01/98)
250,000 Puerto Rico Public Buildings Authority, 7/02 at 101 1/2 Aaa 282,355
Public Education and Health Facilities Bonds,
Series L, 6.875%, 7/01/21
(Pre-refunded to 7/01/02)
- ----------------------------------------------------------------------------------------------------------------------------------
$31,865,000 Total Investments -- (cost $31,002,421) -- 98.2% 32,372,368
===========-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.8% 579,714
------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $32,952,082
==================================================================================================================
</TABLE>
Summary of Ratings**--Portfolio of Investments
<TABLE>
<CAPTION>
Standard Number Market Market
& Poor's Moody's of Issues Value Percent
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa 16 $13,151,418 40%
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 12 12,790,791 40
A+ A1 4 3,110,367 10
A, A- A, A2, A3 6 2,547,508 8
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 2 772,284 2
------------------------------------------------------------------------------------------------------------------
Total 40 $32,372,368 100%
==================================================================================================================
</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.
33
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Pennsylvania
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$3,000,000 Commonwealth of Pennsylvania General Obligation 9/03 at 102 AA- $2,857,800
Bonds, Third Series of 1993, 5.000%, 9/01/12
2,500,000 Pennsylvania Economic Development Financing Authority 12/04 at 102 Baa1 2,786,750
(Sun Company, Inc.(R&M) Project), Series 1994A,
7.600%, 12/01/24 ( Alternative Minimum Tax)
1,505,000 Pennsylvania Higher Education Assistance Agency No Opt. Call AAA 1,517,793
Student Loan Revenue Bonds, 1984 Series A,
4.625%, 12/01/00
750,000 Pennsylvania Higher Educational Facilities Authority, 7/99 at 102 Aa 756,165
Revenue Bonds (Thomas Jefferson University--
Life Sciences Building Project), 1989 Series A,
6.000%, 7/01/19
540,000 Pennsylvania Housing Finance Agency, Single Family 10/01 at 102 AA+ 571,952
Mortgage Revenue Bonds, Series 1991-32,
7.150%, 4/01/15
1,250,000 Pennsylvania Housing Finance Agency Single Family 4/06 at 102 AA+ 1,270,225
Mortgage Revenue Bonds, Series 1996-50A,
6.000%, 10/01/13
2,000,000 Pennsylvania Housing Finance Agency Single Family 4/06 at 102 AA+ 2,037, 380
Mortgage Revenue Bonds, Series 1996-51,
6.375%, 4/01/28 (Alternative Minimum Tax)
Pennsylvania Industrial Development Authority,
Economic Development Revenue Bonds, Series 1994:
1,000,000 7.000%, 7/01/06 No Opt. Call Aaa 1,155,610
1,000,000 7.000%, 7/01/07 No Opt. Call Aaa 1,158,600
1,390,000 Pennsylvania Intergovernmental Cooperative Authority No Opt. Call Aaa 1,599,209
(City of Philadelphia Funding Program), Series of
1994, 7.000%, 6/15/05
3,965,000 Pennsylvania Intergovernmental Cooperation Authority, 6/02 at 100 A- 4,386,281
Special Tax Revenue Bonds (City of Philadelphia
Funding Program), Series of 1992, 6.800%, 6/15/12
(Pre-refunded to 6/15/02)
4,000,000 Pennsylvania Intergovernmental Cooperation Authority, 6/03 at 100 Aaa 3,804,320
Special Tax Revenue Refunding Bonds, (City of
Philadelphia Funding Program), Series of 1993A,
5.000%, 6/15/13
2,300,000 Pennsylvania Turnpike Commission, Pennsylvania Turnpike 12/02 at 102 Aaa 2,215,636
Revenue Bonds, Series 0 of 1992, 5.500%, 12/01/17
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,525,000 Allegheny County Hospital Development Authority No Opt. Call A $1,696,029
(Allegheny County, Pennsylvania), Hospital Revenue
Bonds, Series Q (Allegheny Valley Hospital, Sublessee),
7.000%, 8/01/15
1,500,000 Allegheny County Hospital Development Authority, 6/02 at 102 BBB 1,565,025
(Allegheny County, Pennsylvania) Health and Education
Revenue Bonds, Series 1992 (The Rehabilitation Institute
of Pittsburgh Project), 7.000%, 6/01/22
3,000,000 Allegheny County Residential Finance Authority 10/05 at 100 AAA 3,041,550
Mortgage Revenue Bonds (FHA Insured Mortgage,
Ladies Grand Army of the Republic Health Facility
Project) 1995 Series G, 6.350%, 10/01/36
2,000,000 Allegheny County Residential Finance Authority, No Opt. Call Aaa 244,480
Single Family Mortgage Revenue Bonds, 1994 Series Y,
0.000%, 5/01/27 (Alternative Minimum Tax)
2,000,000 Armstrong County Hospital Authority (Armstrong County, 12/01 at 100 Aaa 2,105,760
Pennsylvania), Health Center Revenue Refunding
Bonds, Series 1991 (Canterbury Place Project),
6.500%, 12/01/21
1,000,000 Bucks County Community College Authority, Bucks County, 6/02 at 100 Aa 1,078,920
Pennsylvania, College Building Revenue and Refunding
Bonds, Series of 1992, 6.250%, 6/15/14
(Pre-refunded to 6/15/02)
1,000,000 Chester Water Authority, Delaware County, Pennsylvania, 12/98 at 100 Aaa 976,600
Water Revenue Bonds, Series of 1993, 5.200%, 12/01/11
2,850,000 Deer Lakes School District (Allegheny County, 1/04 at 100 Aaa 2,992,557
Pennsylvania), General Obligation Bonds, Series of 1995,
6.350%, 1/15/14
800,000 Greater Lebanon Refuse Authority, Lebanon County, 11/02 at 100 A- 860,360
Pennsylvania Solid Waste Revenue Bonds,
Series of 1992, 7.000%, 11/15/04
550,000 The City of Jeannette Health Services Authority Hospital 11/06 at 102 BBB+ 544,863
Revenue Bonds, (Jeannette District Memorial Hospital)
Series A of 1996, 6.000%, 11/01/18
1,610,000 Lehigh County Industrial Development Authority Pollution 11/02 at 102 Aaa 1,703,911
Control Revenue Refunding Bonds, 1992 Series A
(Pennsylvania Power & Light Company Project),
6.400%, 11/01/21
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Pennsylvania -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 950,000 Luzerne County Industrial Development Authority Exempt 12/02 at 102 A3 $1,008,055
Facilities Revenue Bonds, 1992 Series B
(Pennsylvania Gas and Water Company Project), 7.125%,
12/01/22 (Alternative Minimum Tax)
1,500,000 Luzerne County Industrial Development Authority Exempt 12/04 at 102 Aaa 1,689,255
Facilities Revenue Refunding Bonds, 1994 Series A
(Pennsylvania Gas and Water Company Project), 7.000%,
12/01/17 (Alternative Minimum Tax)
2,000,000 McKeesport Area School District (Allegheny County, 10/06 at 100 Aaa 2,047,660
Pennsylvania) General Obligation Bonds, Series of
1996A, 6.000%, 10/01/25
3,000,000 County of Montgomery, Pennsylvania, 10/00 at 100 Aaa 3,172,290
General Obligation Bonds, Series A of 1995,
6.100%, 10/15/25 (Pre-refunded to 10/15/00)
2,000,000 Montgomery County Higher Education and Health 1/06 at 101 BBB 2,001,580
Authority Mortgage Revenue Bonds, Series of 1996
(Waverly Heights Project), 6.375%, 1/01/26
1,800,000 Northampton County Higher Education Authority, 10/01 at 102 Aaa 1,988,964
University Revenue Bonds, Series of 1991 (Lehigh
University), 6.900%, 10/15/06
2,000,000 Philadelphia Authority for Industrial Development 7/03 at 102 AA 1,899,300
Project Revenue Refunding Bonds
(PGH Development Corporation), Series of 1993,
5.250%, 7/01/17
2,000,000 City of Philadelphia, Pennsylvania Gas Works Revenue 7/03 at 102 Aaa 2,135,260
Bonds, Fourteenth Series, 6.375%, 7/01/14
1,275,000 The Hospitals and Higher Education Facilities Authority 7/98 at 100 Aaa 1,247,333
of Philadelphia Hospital Revenue Refunding Bonds,
Series A of 1996 (St. Agnes Medical Center/
Franciscan Health System Project), 5.250%, 7/01/10
3,000,000 Urban Redevelopment Authority of Pittsburgh Home 8/05 at 102 A 3,035,460
Improvement Loan Bonds, 1995 Series A, 6.375%,
8/01/18 (Alternative Minimum Tax)
1,075,000 Urban Redevelopment Authority of Pittsburgh Mortgage 4/04 at 102 A1 1,097,425
Revenue Bonds, 1994 Series A, 6.625%, 4/01/22
(Alternative Minimum Tax)
500,000 Saint Mary Hospital Authority Hospital Revenue 7/02 at 102 Aaa 539,240
Bonds, Series 1992A (Franciscan Health System/
Saint Mary Hospital of Langhorne, Inc.), 6.500%, 7/01/12
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 230,000 Health Care Facilities Authority of Sayre (Pennsylvania), 3/01 at 102 Aaa $ 253,499
Series 1991A Revenue Bonds, Guthrie Healthcare
System, 7.100%, 3/01/17
350,000 Washington County Hospital Authority, Hospital Revenue 4/02 at 102 A 370,773
Bonds, Series 1992 (Monongahela Valley Hospital,
Inc. Project), 6.750%, 12/01/08
935,000 The Municipal Authority of the Borough of West View No Opt. Call Aaa 1,295,340
(Allegheny County, Pennsylvania), Special Obligation
Bonds, Series of 1985A, 9.500%, 11/15/14
600,000 The General Municipal Authority of the City of Wilkes- 12/00 at 100 N/R 644,265
Barre, College Misericordia Revenue Bonds,
Refunding Series A of 1992, 7.750%, 12/01/12
- -----------------------------------------------------------------------------------------------------------------------------------
$66,250,000 Total Investments -- (cost $64,549,638) -- 98.1% 67,353,475
=============----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.9% 1,280,820
-------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $68,634,295
===================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Summary Ratings**--Portfolio of Investments
Standard Number Market Market
& Poor's Moody's of Securities Value Percent
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AAA Aaa 21 $36,884,867 54%
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 7 10,471,742 16
A+ A1 1 1,097,425 2
A, A- A, A2, A3 6 11,356,958 17
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 4 6,898,218 10
Non-rated Non-rated 1 644,265 1
-------------------------------------------------------------------------------------------------------------------
Total 40 $67,353,475 100%
===================================================================================================================
* Optional Call Provisions (not covered by the report of
independent public accountants): Dates (month and year) and
prices of the earliest optional call or redemption. There
may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or
Moody's rating.
N/R -- Investment is not rated.
See accompanying notes to financial statements.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Virginia
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Metropolitan Washington Airports Authority,
Airport System Revenue Bonds, Series 1992A:
$ 1,500,000 6.625%, 10/01/19 (Alternative Minimum Tax) 10/02 at 102 Aaa $ 1,608,810
1,500,000 6.250%, 10/01/21 (Alternative Minimum Tax) 10/02 at 102 Aaa 1,559,490
1,000,000 Metropolitan Washington Airports Authority, 10/04 at 102 Aaa 984,040
Airport System Revenue Bonds, Series 1994A,
5.750%, 10/01/20 (Alternative Minimum Tax)
2,260,000 City of Virginia Beach Development Authority 11/01 at 102 Aa 2,311,370
(Virginia), Hospital Revenue Bonds (Sentara
Bayside Hospital), Series 1991, 6.300%, 11/01/21
800,000 Virginia College Building Authority, Educational 5/02 at 102 A- 850,808
Facilities Revenue Bonds, (Randolph-Macon College
Project), Series of 1992, 6.625%, 5/01/13
Virginia College Building Authority, Educational
Facilities Revenue Bonds (The Washington and Lee
University Project), Series of 1994:
1,000,000 5.750%, 1/01/14 1/04 at 102 Aa 1,003,750
1,000,000 5.800%, 1/01/24 1/04 at 102 Aa 1,001,670
650,000 Virginia Housing Development Authority, Commonwealth 1/00 at 102 Aa1 674,018
Mortgage Bonds, 1990 Series B, Subseries B-4,
6.850%, 7/01/17
4,000,000 Virginia Housing Development Authority, Commonwealth 1/02 at 102 Aa1 4,148,080
Mortgage Bonds, 1992 Series A, 7.150%, 1/01/33
800,000 Virginia Housing Development Authority, Multi-Family 5/02 at 102 AA+ 848,168
Housing Bonds, 1992 Series D, 6.800%, 11/01/09
1,090,000 Virginia Public Building Authority, State Building Revenue 8/01 at 102 Aa 1,195,992
Bonds, Series 1991A, 6.500%, 8/01/11
1,000,000 Virginia Resources Authority, Sewer System Revenue 10/05 at 102 AA 1,005,770
Bonds, 1995 Series A, (Hopewell Regional Wastewater
Treatment Facility Project), 6.000%, 10/01/25
(Alternative Minimum Tax)
1,960,000 Virginia Resources Authority, Solid Waste Disposal System 4/05 at 102 AA 1,906,120
Revenue Bonds, (County of Prince William, Virginia--
Refunding), 1995 Series A, 5.500%, 4/01/15
800,000 Virginia Resources Authority, Water System Refunding 4/02 at 102 AA 841,776
Revenue Bonds, 1992 Series A, 6.450%, 4/01/13
1,000,000 Town of Abington, Virginia, General Obligation Capital 8/02 at 102 A 1,049,660
Improvement Bonds, Series 1992, 6.250%, 8/01/12
</TABLE>
38
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,060,000 Industrial Development Authority of Albemarle 10/03 at 102 A $ 2,070,918
County, Virginia, Hospital Refunding Revenue Bonds
(Martha Jefferson Hospital), Series 1993,
5.875%, 10/01/13
2,250,000 Capital Region Airport Commission, Richmond 7/05 at 102 Aaa 2,206,102
(Virginia), International Airport Projects, Airport
Revenue Bonds, Series 1995A,
5.625%, 7/01/25
750,000 Charlottesville-Albemarle Airport Authority, (Virginia), 12/05 at 102 BBB 740,625
Airport Revenue Refunding Bonds, Series 1995,
6.125%, 12/01/13 (Alternative Minimum Tax)
2,500,000 Chesapeake Bay Bridge and Tunnel District, General 7/01 at 102 Aaa 2,731,574
Resolution Revenue Bonds, Refunding Series 1991,
6.375%, 7/01/22 (Pre-refunded to 7/01/01)
1,000,000 Industrial Development Authority of Covington--Alleghany 4/02 at 102 A- 1,105,960
County Virginia, Hospital Facility Revenue Bonds,
(Alleghany Regional Hospital) Series 1992,
6.625%, 4/01/12 (Pre-refunded to 4/01/02)
1,460,000 Industrial Development Authority of Fairfax County, No Opt. Call Aaa 1,400,475
Virginia, Hospital Revenue Refunding Bonds,
(Inova Health System Hospitals Project) Series 1993A,
5.000%, 8/15/13
500,000 Fairfax County Redevelopment and Housing Authority, 12/06 at 103 AAA 501,285
Multifamily Housing Revenue Refunding Bonds (FHA
Insured Mortgage Loan--Paul Spring Retirement
Center) Series 1996A, 6.000%, 12/15/28
3,250,000 Fairfax County (Virginia) Water Authority, Water 4/02 at 100 Aa 3,214,445
Refunding Revenue Bonds, Series 1992,
5.750%, 4/01/29
1,110,000 The Industrial Development Authority of the County 12/05 at 102 A+ 1,122,798
of Giles, Virginia, Exempt Facility Revenue Bonds,
Hoechst Celanese Project, Series 1995,
5.950%, 12/01/25 (Alternative Minimum Tax)
3,000,000 Hampton Roads Regional Jail Authority, Regional Jail 7/06 at 102 Aaa 2,911,050
Facility Revenue Bonds, Series 1996A, 5.500%, 7/01/24
500,000 Industrial Development Authority of the City of Hampton, 11/04 at 102 A 535,925
Virginia, Hospital Revenue and Refunding Bonds
(Sentara Hampton General Hospital), Series 1994A,
6.500%, 11/01/12
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Virginia -- continued
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,500,000 Henrico County, Virginia, Water and Sewer System 5/02 at 100 AA- $2,582,525
Refunding Revenue Bonds, Series 1992, 6.250%, 5/01/13
1,000,000 Loudoun County Sanitation Authority (Virginia), Water 1/03 at 102 Aaa 1,053,130
and Sewer System Revenue Bonds, Refunding
Series 1992, 6.250%, 1/01/16
1,000,000 Industrial Development Authority of Loudoun County, 5/02 at 102 A1 1,023,650
Virginia, University Facilities Revenue Refunding Bonds
(The George Washington University), Series of 1992,
6.250%, 5/15/22
1,500,000 Industrial Development Authority of the City of Lynchburg, 9/03 at 102 A- 1,512,975
Virginia, Educational Facilities Revenue Bonds,
(Randolph-Macon Women's College), Series 1993,
5.875%, 9/01/13
2,080,000 Peninsula Ports Authority of Virginia, Health System 7/02 at 102 Aa 2,195,565
Revenue and Refunding Bonds (Riverside Health
System Project), Series 1992-A, 6.625%, 7/01/18
2,500,000 Prince William County Park Authority, (Virginia), Revenue 10/04 at 102 A- 2,690,300
Bonds, Series 1994, 6.875%, 10/15/16
1,000,000 Prince William County Service Authority (Virginia), 7/01 at 100 Aaa 1,012,480
Water and Sewer System Revenue Bonds,
Series 1991, 6.000%, 7/01/29
3,005,000 City of Richmond, Virginia, General Obligation Public 7/03 at 102 AA 2,901,448
Improvement Bonds, Series 1993B, 5.500%, 7/15/23
2,250,000 Valley Resource Authority of the City of Roanoke, 9/02 at 102 A+ 2,239,583
Virginia, Solid Waste System Revenue Bonds,
Series 1992, 5.750%, 9/01/12
1,000,000 Industrial Development Authority of the City of Roanoke, 7/00 at 100 Aaa 1,066,060
Virginia, Hospital Revenue Bonds (Roanoke Memorial
Hospitals, Community Hospital of Roanoke Valley and
Franklin Memorial Hospital Project), Series 1990,
6.500%, 7/01/25 (Pre-refunded to 7/01/00)
Industrial Development Authority of Rockingham County,
Virginia, Educational Facilities Revenue Bonds
(Bridgewater College), Series 1993:
400,000 5.600%, 10/01/06 10/03 at 102 Baa 399,640
400,000 5.700%, 10/01/07 10/03 at 102 Baa 400,100
2,750,000 Southeastern Public Service Authority of Virginia, Senior 7/03 at 102 A- 2,754,318
Revenue Bonds, Series 1993, (Regional Solid Waste
System), 6.000%, 7/01/13 (Alternative Minimum Tax)
</TABLE>
40
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Staunton Industrial Development Authority, Educational
Facilities Revenue Bonds, (Mary Baldwin College):
$ 350,000 5.900%, 11/01/03 No Opt. Call N/R $ 352,867
370,000 6.000%, 11/01/04 No Opt. Call N/R 373,378
480,000 Suffolk Redevelopment and Housing Authority, Multifamily 7/02 at 104 Baa2 509,538
Housing Revenue Refunding Bonds, Series 1994 (Chase
Heritage at Dulles Project), 7.000%, 7/01/24
(Mandatory put 7/01/04)
4,000,000 Upper Occoquan Sewage Authority (Virginia), Regional 1/04 at 102 Aaa 3,587,080
Sewerage System Revenue Refunding Bonds,
Series of 1993, 5.000%, 7/01/21
800,000 Puerto Rico Highway and Transportation Authority, 7/02 at 101 1/2 AAA 894,400
Highway Revenue Bonds, (Series T),
6.625%, 7/01/18 (Pre-refunded to 7/01/02)
- ----------------------------------------------------------------------------------------------------------------------------------
$66,125,000 Total Investments -- (cost $63,784,516) -- 99.0% 67,079,716
===========-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.0% 685,539
------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $67,765,255
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Summary of Ratings** -- Portfolio of Investments
Standard Number Market Market
& Poor's Moody's of Securities Value Percent
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa 13 $21,515,976 32%
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 14 25,830,697 39
A+ A1 3 4,386,031 6
A, A- A, A2, A3 8 12,570,864 19
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 4 2,049,903 3
Non-rated Non-rated 2 726,245 1
------------------------------------------------------------------------------------------------------------------
Total 44 $67,079,716 100%
==================================================================================================================
* Optional Call Provisions (not covered by the report of independent public accountants): Dates (month and
year) and prices of the earliest optional call or redemption. There may be other call provisions at varying
prices at later dates.
** Ratings (not covered by the report of independent public accountants): Using the higher of Standard & Poor's
or Moody's rating.
N/R -- Investment is not rated.
See accompanying notes to financial statements.
</TABLE>
41
<PAGE>
Statement of Net Assets
January 31, 1997
<TABLE>
<CAPTION>
AZ FL MD
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $24,344,465 $63,837,942 $56,016,353
Temporary investments in short-term municipal securities,
at amortized cost (note 1) - - 1,000,000
Cash 442,400 1,227,264 226,802
Receivables:
Interest 267,983 918,701 514,232
Shares sold 175,302 1,800 -
Investments sold 35,000 - -
Other assets 4,588 3,311 5,829
- ------------------------------------------------------------------------------------------------------
Total assets 25,269,738 65,989,018 57,763,216
- ------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft - - -
Payable for shares redeemed 2,875 213,865 13,958
Accrued expenses:
Management fees (note 6) 11,620 30,662 26,841
Other 33,580 48,457 62,321
Dividends payable - - 150,216
- ------------------------------------------------------------------------------------------------------
Total liabilities 48,075 292,984 253,336
- ------------------------------------------------------------------------------------------------------
Net assets (note 7) $25,221,663 $65,696,034 $57,509,880
======================================================================================================
Class A Shares (note 1)
Net assets $ 5,367,690 $11,119,107 $11,787,597
Shares outstanding 509,918 1,076,482 1,150,502
Net asset value and redemption price per share $ 10.53 $ 10.33 $ 10.25
Offering price per share (net asset value per share plus
maximum sales charge of 4.50% of offering price) $ 11.03 $ 10.82 $ 10.73
======================================================================================================
Class C Shares (note 1)
Net assets $ 530,721 $ 358,702 $ 1,984,645
Shares outstanding 50,825 34,871 193,854
Net asset value, offering and redemption price per share $ 10.44 $ 10.29 $ 10.24
======================================================================================================
Class R Shares (note 1)
Net assets $19,323,252 $54,218,225 $43,737,638
Shares outstanding 1,847,032 5,243,213 4,264,334
Net asset value, offering and redemption price per share $ 10.46 $ 10.34 $ 10.26
======================================================================================================
</TABLE>
See accompanying notes to financial statements.
42
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
MI PA VA
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $32,372,368 $67,353,475 $67,079,716
Temporary investments in short-term municipal securities,
at amortized cost (note 1) -- -- --
Cash 29,767 372,308 --
Receivables:
Interest 468,630 875,779 849,206
Shares sold 129,895 116,687 16,490
Investments sold -- -- --
Other assets 5,755 7,148 2,748
- -------------------------------------------------------------------------------------------------------
Total assets 33,006,415 68,725,397 67,948,160
- -------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- -- 71,820
Payable for shares redeemed -- -- 10,099
Accrued expenses:
Management fees (note 6) 15,320 31,765 31,468
Other 39,013 59,337 69,518
Dividends payable -- -- --
- -------------------------------------------------------------------------------------------------------
Total liabilities 54,333 91,102 182,905
- -------------------------------------------------------------------------------------------------------
Net assets (note 7) $32,952,082 $68,634,295 $67,765,255
=======================================================================================================
Class A Shares (note 1)
Net assets $ 5,517,761 $10,326,580 $ 9,273,783
Shares outstanding 525,313 978,428 888,847
Net asset value and redemption price per share $ 10.50 $ 10.55 $ 10.43
Offering price per share (net asset value per share plus
maximum sales charge of 4.50% of offering price) $ 10.99 $ 11.05 $ 10.92
=======================================================================================================
Class C Shares (note 1)
Net assets $ 345,582 $ 1,033,183 $ 1,158,978
Shares outstanding 32,870 98,980 111,412
Net asset value, offering and redemption price per share $ 10.51 $ 10.44 $ 10.40
=======================================================================================================
Class R Shares (note 1)
Net assets $27,088,739 $57,274,532 $57,332,494
Shares outstanding 2,577,031 5,441,112 5,496,304
Net asset value, offering and redemption price per share $ 10.51 $ 10.53 $ 10.43
=======================================================================================================
</TABLE>
See accompanying notes to financial statements.
43
<PAGE>
Statement of Operations
Year ended January 31, 1997
<TABLE>
<CAPTION>
AZ FL MD
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Investment Income
Tax-exempt interest income (note 1) $ 1,409,350 $ 3,593,764 $ 3,259,374
- ----------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 132,967 345,435 308,754
12b-1 service fees -- Class A (notes 1 and 6) 11,526 21,762 23,402
12b-1 distribution and service fees -- Class C (notes 1 and 6) 4,586 2,466 17,826
Shareholders' servicing agent fees and expenses 22,931 56,125 63,195
Custodian's fees and expenses 39,054 44,231 54,862
Trustees' fees and expenses (note 6) 959 1,759 881
Professional fees 11,368 13,834 15,074
Shareholders' reports -- printing and mailing expenses 10,457 22,890 26,663
Federal and state registration fees 7,128 3,594 8,086
Amortization of deferred organization costs (note 1) 6,998 6,998 7,828
Other expenses 2,077 3,743 3,472
- ----------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 250,051 522,837 530,043
Expense reimbursement from investment adviser (note 6) (52,620) (27,560) (67,787)
- ----------------------------------------------------------------------------------------------------------
Net expenses 197,431 495,277 462,256
- ----------------------------------------------------------------------------------------------------------
Net investment income 1,211,919 3,098,487 2,797,118
- ----------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions
(notes 1 and 4) 80,171 (213,030) 68,885
Net change in unrealized appreciation or depreciation
of investments (535,678) (1,065,819) (1,067,755)
- ----------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (455,507) (1,278,849) (998,870)
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 756,412 $ 1,819,638 $ 1,798,248
==========================================================================================================
</TABLE>
See accompanying notes to financial statements.
44
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
MI PA VA
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $1,940,678 $ 3,842,586 $ 3,935,312
- ---------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 182,513 357,802 364,787
12b-1 service fees -- Class A (notes 1 and 6) 12,011 19,419 19,494
12b-1 distribution and service fees -- Class C (notes 1 and 6) 2,894 10,735 9,820
Shareholders' servicing agent fees and expenses 36,881 86,468 68,925
Custodian's fees and expenses 38,648 51,124 44,859
Trustees' fees and expenses (note 6) 1,231 1,798 1,176
Professional fees 12,146 13,927 20,034
Shareholders' reports -- printing and mailing expenses 20,890 36,505 44,521
Federal and state registration fees 6,196 4,619 5,261
Amortization of deferred organization costs (note 1) 8,424 7,984 5,824
Other expenses 2,758 4,375 5,090
- ---------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 324,592 594,756 589,791
Expense reimbursement from investment adviser (note 6) (60,806) (76,616) (63,039)
- ---------------------------------------------------------------------------------------------------------
Net expenses 263,786 518,140 526,752
- ---------------------------------------------------------------------------------------------------------
Net investment income 1,676,892 3,324,446 3,408,560
- ---------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions
(notes 1 and 4) (132,434) 779,121 (152,699)
Net change in unrealized appreciation or depreciation
of investments (475,191) (1,021,843) (859,495)
- ---------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (607,625) (242,722) (1,012,194)
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $1,069,267 $ 3,081,724 $ 2,396,366
=========================================================================================================
</TABLE>
See accompanying notes to financial statements.
45
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AZ
-------------------------------------------
Year ended 1/31/97 Year ended 1/31/96
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 1,211,919 $ 1,030,283
Net realized gain (loss) from investment transactions
(notes 1 and 4) 80,171 (27,336)
Net change in unrealized appreciation or depreciation
of investments (535,678) 1,629,699
- --------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 756,412 2,632,646
- --------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Class A (225,221) (101,157)
Class C (18,614) (6,237)
Class R (969,893) (937,616)
From accumulated net realized gains from
investment transactions:
Class A -- --
Class C -- --
Class R -- --
- --------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (1,213,728) (1,045,010)
- --------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 2)
Net proceeds from sale of shares:
Class A 1,972,867 2,882,755
Class C 224,697 273,019
Class R 1,938,481 2,473,853
Net proceeds from shares issued to shareholders
due to reinvestment of distributions:
Class A 121,104 38,250
Class C 18,877 5,264
Class R 619,778 529,462
- --------------------------------------------------------------------------------------------------------
4,895,804 6,202,603
- --------------------------------------------------------------------------------------------------------
Cost of shares redeemed:
Class A (554,634) (303,388)
Class C (38,151) (3,168)
Class R (2,379,921) (1,449,215)
- --------------------------------------------------------------------------------------------------------
(2,972,706) (1,755,771)
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
derived from Fund share transactions 1,923,098 4,446,832
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 1,465,782 6,034,468
Net assets at the beginning of year 23,755,881 17,721,413
- --------------------------------------------------------------------------------------------------------
Net assets at the end of year $25,221,663 $23,755,881
========================================================================================================
Balance of undistributed net investment income at end of year $ -- $ 1,809
========================================================================================================
See accompanying notes to financial statements.
</TABLE>
46
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
FL
----------------------------------------
Year ended 1/31/97 Year ended 1/31/96
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 3,098,487 $ 2,868,644
Net realized gain (loss) from investment transactions
(notes 1 and 4) (213,000) (140,189)
Net change in unrealized appreciation or depreciation
of investments (1,065,819) 4,780,693
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 1,819,638 7,509,148
- --------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (417,408) (148,024)
Class C (9,755) (5,956)
Class R (2,692,120) (2,730,462)
From accumulated net realized gains from investment transactions:
Class A -- --
Class C -- --
Class R -- --
- --------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,119,283) (2,884,442)
- --------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares:
Class A 6,613,090 4,315,210
Class C 206,811 77,334
Class R 6,098,663 8,465,473
Net proceeds from shares issued to shareholders
due to reinvestment of distributions:
Class A 226,923 52,678
Class C 4,719 3,575
Class R 1,593,972 1,500,287
- --------------------------------------------------------------------------------------------------------------
14,744,178 14,414,557
- --------------------------------------------------------------------------------------------------------------
Cost of shares redeemed:
Class A (1,443,629) (173,983)
Class C (17,677) --
Class R (7,595,823) (11,564,633)
- --------------------------------------------------------------------------------------------------------------
(9,057,129) (11,738,616)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
derived from Fund share transactions 5,687,049 2,675,941
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 4,387,404 7,300,647
Net assets at the beginning of year 61,308,630 54,007,983
- --------------------------------------------------------------------------------------------------------------
Net assets at the end of year $65,696,034 $ 61,308,630
- --------------------------------------------------------------------------------------------------------------
Balance of undistributed net investment income at end of year $ -- $ 20,796
- --------------------------------------------------------------------------------------------------------------
</TABLE>
47
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
MD
----------------------------------------
Year ended 1/31/97 Year ended 1/31/96
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 2,797,118 $ 2,553,861
Net realized gain (loss) from investment transactions
(notes 1 and 4) 68,885 138,640
Net change in unrealized appreciation or depreciation
of investments (1,067,755) 3,998,568
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 1,798,248 6,691,069
- ---------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Class A (444,620) (198,145)
Class C (71,252) (47,180)
Class R (2,248,162) (2,335,847)
From accumulated net realized gains from
investment transactions:
Class A - -
Class C - -
Class R - -
- ---------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (2,764,034) (2,581,172)
- ---------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 2)
Net proceeds from sale of shares:
Class A 6,107,242 5,206,011
Class C 841,446 645,990
Class R 2,063,260 4,099,669
Net proceeds from shares issued to shareholders
due to reinvestment of distributions:
Class A 308,915 112,734
Class C 55,286 39,318
Class R 1,417,349 1,461,612
- ---------------------------------------------------------------------------------------------------------
10,793,498 11,565,334
- ---------------------------------------------------------------------------------------------------------
Cost of shares redeemed:
Class A (1,394,119) (350,679)
Class C (327,651) (195,323)
Class R (6,283,336) (4,647,731)
- ---------------------------------------------------------------------------------------------------------
(8,005,106) (5,193,733)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
derived from Fund share transactions 2,788,392 6,371,601
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 1,822,606 10,481,498
Net assets at the beginning of year 55,687,274 45,205,776
- ---------------------------------------------------------------------------------------------------------
Net assets at the end of year $57,509,880 $55,687,274
- ---------------------------------------------------------------------------------------------------------
Balance of undistributed net investment income at end of year $ 34,020 $ 936
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
48
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
MI
---------------------------------------
YEAR ENDED 1/31/97 YEAR ENDED 1/31/96
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 1,676,892 $ 1,588,746
Net realized gain (loss) from investment transactions
(notes 1 and 4) (132,434) 414,083
Net change in unrealized appreciation or depreciation
of investments (475,191) 2,255,770
- ----------------------------------------------------------------------------------------------------
Net increase in net assets from operations 1,069,267 4,258,599
- ----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income:
Class A (242,169) (110,174)
Class C (12,277) (5,812)
Class R (1,433,339) (1,479,047)
From accumulated net realized gains from
investment transactions:
Class A (20,724) (9,042)
Class C (1,239) (536)
Class R (155,518) (88,511)
- ----------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (1,865,266) (1,693,122)
- ----------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 2)
Net proceeds from sale of shares:
Class A 2,079,376 3,071,799
Class C 206,420 146,180
Class R 1,780,528 3,061,856
Net proceeds from shares issued to shareholders
due to reinvestment of distributions:
Class A 167,112 58,075
Class C 11,723 5,428
Class R 1,178,293 1,044,771
- ----------------------------------------------------------------------------------------------------
5,423,452 7,388,109
- ----------------------------------------------------------------------------------------------------
Cost of shares redeemed:
Class A (669,494) (171,433)
Class C (99,102) (4,206)
Class R (5,291,205) (3,009,162)
- ----------------------------------------------------------------------------------------------------
(6,059,801) (3,184,801)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
derived from Fund share transactions (636,349) 4,203,308
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (1,432,348) 6,768,785
Net assets at the beginning of year 34,384,430 27,615,645
- ----------------------------------------------------------------------------------------------------
Net assets at the end of year $32,952,082 $34,384,430
====================================================================================================
Balance of undistributed net investment income at end of year $ -- $ 10,893
====================================================================================================
</TABLE>
See accompanying notes to financial statements.
49
<PAGE>
Statement of Changes in Net Assets -- continued
<TABLE>
<CAPTION>
PA
----------------------------------------------
Year ended 1/31/97 Year ended 1/31/96
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 3,324,446 $ 3,007,154
Net realized gain (loss) from investment transactions
(notes 1 and 4) 779,121 (36,684)
Net change in unrealized appreciation or depreciation
of investments (1,021,843) 4,855,692
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 3,081,724 7,826,162
- --------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (388,733) (173,805)
Class C (44,583) (28,974)
Class R (2,896,781) (2,830,558)
From accumulated net realized gains from
investment transactions:
Class A -- --
Class C -- --
Class R -- --
- --------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,330,097) (3,033,337)
- --------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares:
Class A 5,158,973 4,222,635
Class C 313,596 633,225
Class R 4,815,608 6,005,478
Net proceeds from shares issued to shareholders
due to reinvestment of distributions:
Class A 312,895 126,885
Class C 38,889 24,758
Class R 1,961,068 1,786,453
- --------------------------------------------------------------------------------------------------------------
12,601,029 12,799,434
- --------------------------------------------------------------------------------------------------------------
Cost of shares redeemed:
Class A (994,215) (281,318)
Class C (417,595) (105,804)
Class R (6,569,221) (6,418,284)
- --------------------------------------------------------------------------------------------------------------
(7,981,031) (6,805,406)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
derived from Fund share transactions 4,619,998 5,994,028
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 4,371,625 10,786,853
Net assets at the beginning of year 64,262,670 53,475,817
- --------------------------------------------------------------------------------------------------------------
Net assets at the end of year $68,634,295 $64,262,670
==============================================================================================================
Balance of undistributed net investment income at end of year $ -- $ 5,651
==============================================================================================================
</TABLE>
See accompanying notes to financial statements.
50
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
VA
----------------------------------------
Year ended 1/31/97 Year ended 1/31/96
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 3,408,560 $ 3,221,308
Net realized gain (loss) from investment transactions
(notes 1 and 4) (152,699) 334,528
Net change in unrealized appreciation or depreciation
of investments (859,495) 4,882,314
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 2,396,366 8,438,150
- ----------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (387,773) (191,806)
Class C (41,508) (23,926)
Class R (3,008,985) (2,997,681)
From accumulated net realized gains from
investment transactions:
Class A (1,334) (15,706)
Class C (165) (2,511)
Class R (8,815) (193,671)
- ----------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,448,580) (3,425,301)
- ----------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares:
Class A 4,016,618 3,799,529
Class C 376,756 402,084
Class R 3,165,758 3,456,619
Net proceeds from shares issued to shareholders
due to reinvestment of distributions:
Class A 251,192 109,800
Class C 34,334 21,313
Class R 1,995,266 1,928,344
- ----------------------------------------------------------------------------------------------------------
9,839,924 9,717,689
- ----------------------------------------------------------------------------------------------------------
Cost of shares redeemed:
Class A (795,574) (543,599)
Class C (32,018) (54,845)
Class R (6,262,890) (5,446,943)
- ----------------------------------------------------------------------------------------------------------
(7,090,482) (6,045,387)
- ----------------------------------------------------------------------------------------------------------
Net inrease (decrease) in net assets
derived from Fund share transactions 2,749,442 3,672,302
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 1,697,228 8,685,151
Net assets at the beginning of year 66,068,027 57,382,876
- ----------------------------------------------------------------------------------------------------------
Net assets at the end of year $67,765,255 $66,068,027
==========================================================================================================
Balance of undistributed net investment income at end of year $ - $ 29,706
==========================================================================================================
</TABLE>
See accompanying notes to financial statements.
51
<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 (reported under separate cover), the Nuveen Pennsylvania Tax-
Free Value Fund and the Nuveen Virginia Tax-Free Value Fund. Sale
of Fund shares first commenced on February 28, 1992. Each Fund
invests primarily in municipal obligations issued within its
respective state.
The John Nuveen Company, parent of John Nuveen & Co. Incorporated
and Nuveen Advisory Corp., respectively, the distributor
("Distributor") and investment advisor ("Adviser") of the Funds,
entered into an agreement under which Nuveen acquired Flagship
Resources Inc. and after the close of business on January 31, 1997,
consolidated their respective mutual fund businesses. This
agreement was approved at a meeting by the shareholders of the
Flagship Funds in December, 1996.
After the close of business on January 31, 1997, the Nuveen
Arizona, Florida, Michigan, New Jersey, Pennsylvania and Virginia
Tax-Free Value Funds were reorganized with their respective
Flagship Funds into new Trusts and named Nuveen Flagship Arizona
Municipal Bond Fund, Nuveen Flagship Florida Municipal Bond Fund,
Nuveen Flagship Michigan Municipal Bond Fund, Nuveen Flagship New
Jersey Municipal Bond Fund, Nuveen Flagship Pennsylvania Municipal
Bond Fund and Nuveen Flagship Virginia Municipal Bond Fund,
respectively. Nuveen Maryland Tax-Free Value Fund was reorganized
in a new Trust and renamed Nuveen Maryland Municipal Bond Fund.
Each Fund became a part of the Nuveen Flagship Multistate Trust I,
with the exception of Nuveen Flagship Michigan Municipal Bond Fund
and Nuveen Flagship New Jersey Municipal Bond Fund which became a
part of the Nuveen Flagship Multistate Trust IV and Nuveen Flagship
Multistate Trust II, respectively. Each Trust is an open-end
diversified management investment company. The reorganization was
accomplished by a tax-free exchange of shares outstanding on
January 31, 1997. As part of their reorganization, each Fund's
fiscal year end changed from January 31 to May 31 with the
exception of Nuveen Flagship New Jersey Municipal Bond Fund whose
fiscal year end will change from January 31 to February 28. The
statements presented in this report reflect the balances of the
Funds, immediately prior to the reorganization.
The following is a summary of significant accounting policies
followed by the Funds in the preparation of their financial
statements in accordance with generally accepted accounting
principles.
52
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
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 amortized cost.
Securities Transactions
Securities transactions are recorded on a trade date basis.
Realized gains and losses from such transactions are determined on
the specific identification method. Securities purchased or sold on
a when-issued or delayed delivery basis may be settled a month or
more after the transaction date. Any securities so purchased are
subject to market fluctuation during this period. The 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, 1997, there were no such purchase
commitments in any of the Funds.
Interest Income
Interest income is determined on the basis of interest accrued,
adjusted for amortization of premiums and accretion of discounts on
long-term debt securities when required for federal income tax
purposes.
Dividends and Distributions to Shareholders
Tax-exempt 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 capital gains and/or market
discount from investment transactions are distributed to
shareholders not less frequently than annually. Furthermore,
capital gains are distributed only to the extent they exceed
available capital loss carryovers.
Distributions to shareholders of tax-exempt net investment income,
net realized capital gains and/or market discount 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 occur and will be classified as either
distributions in excess of net investment income, distributions in
excess of net realized gains and/or distributions in excess of net
ordinary taxable income from investment transactions, where
applicable.
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
to shareholders all of its tax-exempt net investment income, in
addition to any significant amounts of net realized capital gains
and/or market discount from investment transactions. The Funds
currently consider significant net realized capital gains and/or
market discount 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
53
<PAGE>
Notes to Financial Statements -- continued
the shareholders of the respective Funds. All income dividends paid
during the fiscal year ended January 31, 1997, have been designated
Exempt Interest Dividends.
Deferred Organization Costs
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.
Flexible Sales Charge Program
Effective September 1994, each Fund commenced offering Class A and
Class C Shares. Class A Shares incur a sales charge on purchases
and an annual 12b-1 service fee. Class C Shares are sold without a
sales charge on purchases but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a
contingent deferred sales charge ("CDSC") of 1% if Class C Shares
are redeemed within 12 months of purchase.
Prior to the offering of Class A and Class C Shares, the shares
outstanding were renamed Class R and are not subject to any sales
charge on purchases or 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
Class R shareholders and for already established Nuveen Unit
Investment Trust reinvestment accounts.
Subsequent to the reorganization of the Funds, Class R Shares are
available for purchases of over $1 million and in other limited
circumstances. The Funds also commenced offering Class B Shares
which are sold without a sales charge on purchases but incur annual
12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length
of time the shares are held (CDSC declines to 0% at the end of six
years).
Expense Allocation
Expenses of the Funds that are not directly attributable to a
specific 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.
Derivative Financial Instruments
The Funds may invest in 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, 1997.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from
operations during the reporting period.
54
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
AZ AZ FL FL
Year ended Year ended Year ended Year ended
1/31/97 1/31/96 1/31/97 1/31/96
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 188,794 274,843 643,349 420,409
Class C 21,925 26,227 20,200 7,638
Class R 186,314 239,176 591,087 824,725
Shares issued to shareholders
due to reinvestment of
distributions:
Class A 11,535 3,655 21,995 5,125
Class C 1,812 505 459 350
Class R 59,412 51,292 154,334 147,052
- -------------------------------------------------------------------------------
469,792 595,698 1,431,424 1,405,299
- -------------------------------------------------------------------------------
Shares redeemed:
Class A (53,035) (29,122) (140,543) (16,925)
Class C (3,687) (313) (1,759) --
Class R (229,448) (139,521) (737,814) (1,126,197)
- -------------------------------------------------------------------------------
(286,170) (168,956) (880,116) (1,143,122)
- -------------------------------------------------------------------------------
Net increase (decrease) 183,622 426,742 551,308 262,177
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MD MD MI MI
Year ended Year ended Year ended Year ended
1/31/97 1/31/96 1/31/97 1/31/96
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 599,512 514,083 198,187 294,831
Class C 82,446 63,846 19,686 13,867
Class R 201,418 406,673 169,035 293,923
Shares issued to
shareholders due to
reinvestment of
distribution:
Class A 30,226 11,066 15,893 5,538
Class C 5,415 3,894 1,116 521
Class R 138,494 144,632 111,966 99,905
- -------------------------------------------------------------------------------
1,057,511 1,144,194 515,883 708,585
- -------------------------------------------------------------------------------
Shares redeemed:
Class A (137,185) (34,362) (63,626) (16,428)
Class C (32,039) (19,328) (9,496) (401)
Class R (615,881) (459,618) (506,688) (288,460)
- -------------------------------------------------------------------------------
(785,105) (513,308) (579,810) (305,289)
- -------------------------------------------------------------------------------
Net increase (decrease) 272,406 630,886 (63,927) 403,296
===============================================================================
</TABLE>
55
<PAGE>
Notes to Financial Statements -- continued
<TABLE>
<CAPTION>
PA PA VA VA
Year ended Year ended Year ended Year ended
1/31/97 1/31/96 1/31/97 1/31/96
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 494,906 411,858 387,183 369,049
Class C 30,640 62,079 36,569 39,142
Class R 462,546 585,804 306,033 336,826
Shares issued to
shareholders due to
reinvestment of
distributions:
Class A 29,935 12,297 24,147 10,624
Class C 3,766 2,439 3,310 2,074
Class R 188,264 174,784 191,909 186,098
- -------------------------------------------------------------------------------
1,210,057 1,249,261 949,151 943,813
- -------------------------------------------------------------------------------
Shares redeemed:
Class A (95,179) (27,436) (76,491) (52,547)
Class C (40,541) (10,542) (3,085) (5,359)
Class R (633,705) (628,872) (605,598) (529,723)
- -------------------------------------------------------------------------------
(769,425) (666,850) (685,174) (587,629)
- -------------------------------------------------------------------------------
Net increase (decrease) 440,632 582,411 263,977 356,184
===============================================================================
</TABLE>
3. Distributions to Shareholders
On February 13, 1997, the Nuveen Flagship Municipal Bond Funds (AZ, FL, MI, PA,
and VA) and Nuveen Maryland Municipal Bond Fund (see note 1 of the notes to
financial statements) declared dividend distributions from their tax-exempt net
investment income which were paid on March 3, 1997, to shareholders of record on
February 13, 1997, as follows:
<TABLE>
<CAPTION>
AZ FL MD MI PA VA
- -------------------------------------------------------------------------
Dividend per share:
<S> <C> <C> <C> <C> <C> <C>
Class A $.0462 $.0461 $.0410 $.0509 $.0466 $.0476
Class B* .0394 .0395 -- .0436 .0402 .0410
Class C .0412 .0413 .0360 .0456 .0419 .0427
Class R .0480 .0479 .0425 .0528 .0483 .0494
=========================================================================
</TABLE>
* Subsequent to the reorganizations (see note 1 of the Notes to Financial
Statements) the Funds commenced offering Class B Shares.
56
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
4. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments for the fiscal year ended January
31, 1997, were as follows:
<TABLE>
<CAPTION>
AZ FL MD MI PA VA
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Purchases:
Investments in municipal
securities $3,291,056 $15,310,103 $4,144,098 $5,199,868 $50,146,687 $20,780,982
Temporary municipal
investments 8,000,000 16,400,000 9,050,000 3,600,000 24,875,000 8,605,000
Sales:
Investments in municipal
securities 1,751,359 10,272,865 1,970,358 5,471,625 47,265,519 17,876,106
Temporary municipal
investments 8,000,000 16,400,000 8,050,000 4,200,000 26,875,000 8,605,000
===================================================================================================
</TABLE>
At January 31, 1997, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes for each
Fund.
At January 31, 1997, the Funds had unused capital loss carryforwards available
for federal income tax purposes to be applied against future capital gains, if
any. If not applied, the carryovers will expire as follows:
<TABLE>
<CAPTION>
AZ* FL* MD* MI* PA* VA*
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expiration year:
2003 $56,918 $ 87,166 $135,110 $ - $ - $ -
2004 17,690 141,494 377,963 - 66,661 -
2005 - 213,030 - 132,650 - 152,699
- ----------------------------------------------------------------------------
Total $74,608 $441,690 $513,073 $132,650 $66,661 $152,699
============================================================================
</TABLE>
*Each Fund had net capital losses from investment transactions which carried
forward into the reorganized entities, as permitted under applicable tax
regulations.
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at January 31, 1997, were as follows:
<TABLE>
<CAPTION>
AZ FL MD MI PA VA
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross unrealized:
appreciation $ 967,802 $2,582,885 $2,212,210 $1,385,321 $2,831,572 $3,391,088
depreciation (122,476) (224,647) (153,770) (15,374) (27,735) (95,888)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 845,326 $2,358,238 $2,058,440 $1,369,947 $2,803,837 $3,295,200
=========================================================================================================
</TABLE>
57
<PAGE>
Notes to Financial Statements -- continued
6. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with the Adviser,
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 million .5500 of 1%
For the next $125 million .5375 of 1
For the next $250 million .5250 of 1
For the next $500 million .5125 of 1
For the next $1 billion .5000 of 1
For net assets over $2 billion .4750 of 1
--------------------------------------------------------------
</TABLE>
From inception of the Trust on December 13, 1991, through January
31, 1997, the Adviser 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
Shares.
The management fee 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.
During the fiscal year ended January 31, 1997, the Distributor
received 12b-1 distribution and service fees, substantially all of
which were paid to compensate authorized dealers for providing
services to shareholders relating to their investments. The
Distributor also collected sales charge on purchases, the majority
of which was paid out as concessions to authorized dealers as
follows:
<TABLE>
<CAPTION>
AZ FL MD MI PA VA
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross sales charge on
purchases collected $34,700 $113,300 $178,800 $43,900 $124,700 $84,600
Paid to authorized
dealers $28,600 $ 88,400 $154,300 $29,600 $ 97,800 $67,300
- -----------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
7. Composition of Net Assets
At January 31, 1997, there were an unlimited number of $.01 par
value shares authorized. Net assets consisted of:
<TABLE>
<CAPTION>
AZ FL MD MI PA VA
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Capital paid-in $24,450,945 $63,779,486 $55,930,493 $31,714,785 $65,923,086 $64,622,813
Balance of undistributed
net investment income - - 34,020 - - -
Accumulated net realized
gain (loss) from
investment transactions (74,608) (441,690) (513,073) (132,650) (92,628) (152,758)
Net unrealized appreciation
of investments 845,326 2,358,238 2,058,440 1,369,947 2,803,837 3,295,200
- -----------------------------------------------------------------------------------------------------------------
Net assets $25,221,663 $65,696,034 $57,509,880 $32,952,082 $68,634,295 $67,765,255
=================================================================================================================
</TABLE>
59
<PAGE>
Notes to Financial Statements -- continued
8. Investment Composition
Each Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At January 31, 1997, 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 PA VA
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue Bonds:
Housing Facilities 10% 17% 22% 16% 12% 9%
Health Care Facilities 14 17 14 21 20 13
Water/Sewer Facilities 9 11 2 13 2 20
Educational Facilities 14 1 4 4 7 10
Transportation 2 8 12 4 3 11
Pollution Control 11 3 6 7 11 2
Lease Rental Facilities 7 1 5 3 - 6
Electric Utilities 3 6 1 3 3 -
Other 8 10 7 7 15 10
General Obligation Bonds 16 12 14 16 12 10
Escrowed Bonds 6 14 13 6 15 9
- -----------------------------------------------------------------------------------------
100% 100% 100% 100% 100% 100%
=========================================================================================
</TABLE>
Certain long-term and intermediate-term investments owned by the Funds are
covered by insurance issued by several private insurers or are backed by an
escrow or trust containing U.S. Government or U.S. Government agency securities,
either of which ensure the timely payment of principal and interest in the event
of default (50% for Arizona, 59% for Florida, 52% for Maryland, 38% for
Michigan, 56% for Pennsylvania and 33% for Virginia). Such insurance or escrow,
however, does not guarantee the market value of the municipal securities or the
value of the Funds' shares.
The temporary investments in short-term municipal securities held by Maryland
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.
60
<PAGE>
Financial Highlights
61
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period
is as follows.
<TABLE>
<CAPTION>
Operating Performance Less Distributions
-------------------------- ------------------------------
Net
Net realized and Distributions Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
beginning investment from investment from capital end of asset
ARIZONA of period income++ investments income gains period value+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
Year ended 1/31,
1997 $10.740 $.474 $ (.172) $(.512) $ -- $10.530 2.94%
1996 9.930 .503 .829 (.522) -- 10.740 13.68
9/7/94 to 1/31/95 10.030 .203 (.086) (.217) -- 9.930 1.24
Class C
Year ended 1/31,
1997 10.650 .399 (.182) (.427) -- 10.440 2.13
1996 9.840 .419 .830 (.439) -- 10.650 12.90
9/12/94 to 1/31/95 9.940 .169 (.052) (.217) -- 9.840 1.25
Class R
Year ended 1/31,
1997 10.670 .487 (.167) (.530) -- 10.460 3.13
1996 9.850 .529 .831 (.540) -- 10.670 14.09
1995 10.880 .536 (1.026) (.540) -- 9.850 (4.39)
1994 10.050 .531 .853 (.522) (.032) 10.880 14.07
1993 9.525 .438 .563 (.435) (.041) 10.050 10.71
12/13/91 to 1/31/92 9.525 -- -- -- -- 9.525 --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 72.
62
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment++ ment++ rate
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 5,368 1.22% 4.60% 1.00% 4.82% 7%
3,895 1.31 4.49 1.00 4.80 5
1,124 1.60* 4.68* 1.00* 5.28* 29
531 1.97 3.85 1.75 4.07 7
328 2.11 3.66 1.75 4.02 5
43 3.51* 2.79* 1.75* 4.55* 29
19,323 .97 4.86 .75 5.08 7
19,533 1.15 4.72 .75 5.12 5
16,554 1.06 5.12 .75 5.43 29
16,140 1.25 4.48 .75 4.98 11
8,026 1.75* 3.94* .75* 4.94* 43
15 -- -- -- -- --
- -----------------------------------------------------------------------------------------
</TABLE>
63
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as
follows.
<TABLE>
<CAPTION>
Operating Performance Less Distributions
--------------------- ------------------
Net
Net realized and Distributions Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
beginning investment from investment from capital end of asset
FLORIDA of period income++ investments income gains period value+
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
Year ended 1/31,
1997 $10.560 $.462 $(.200) $(.492) $ -- $10.330 2.60%
1996 9.730 .488 .840 (.498) -- 10.560 13.92
9/7/94 to 1/31/95 9.890 .193 (.148) (.202) (.003) 9.730 .52
Class C
Year ended 1/31,
1997 10.510 .383 (.189) (.414) -- 10.290 1.93
1996 9.730 .413 .789 (.422) -- 10.510 12.54
9/19/94 to 1/31/95 9.720 .152 .021 (.163) -- 9.730 1.84
Class R
Year ended 1/31,
1997 10.570 .472 (.186) (.516) -- 10.340 2.84
1996 9.750 .518 .824 (.522) -- 10.570 14.05
1995 10.740 .508 (.985) (.510) (.003) 9.750 (4.33)
1994 9.960 .511 .779 (.510) -- 10.740 13.22
1993 9.525 .440 .431 (.436) -- 9.960 9.33
12/13/91 to 1/31/92 9.525 -- -- -- -- 9.525 --
- -------------------------------------------------------------------------------------------------------------------------------
See notes on page 72.
</TABLE>
64
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment++ ment++ rate
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$11,119 1.04% 4.68% 1.00% 4.72% 17%
5,823 1.21 4.53 1.00 4.74 21
1,392 1.56* 4.52* 1.00* 5.08* 4
359 1.79 3.91 1.75 3.95 17
168 2.16 3.62 1.75 4.03 21
78 2.84* 3.26* 1.75* 4.35* 4
54,218 .79 4.93 .75 4.97 17
55,318 .88 4.93 .75 5.06 21
52,538 .84 5.12 .75 5.21 4
48,254 .89 4.69 .75 4.83 3
23,727 1.24* 4.35* .75* 4.84* 1
15 -- -- -- -- --
- --------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as follows.
<TABLE>
<CAPTION>
Operating Performance Less Distributions
------------------------- -----------------------------
Net
Net realized and Distributions Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
beginning investment from investment from capital end of asset
MARYLAND of period income++ investments income gains period value+
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
Year ended 1/31,
1997 $10.430 $.462 $ (.156) $(.486) $ -- $10.250 3.06%
1996 9.600 .483 .844 (.497) -- 10.430 14.07
9/7/94 to 1/31/95 9.840 .198 (.229) (.207) (.002) 9.600 (.26)
Class C
Year ended 1/31,
1997 10.420 .387 (.159) (.408) -- 10.240 2.28
1996 9.590 .409 .842 (.421) -- 10.420 13.24
9/16/94 to 1/31/95 9.750 .160 (.153) (.167) -- 9.590 .12
Class R
Year ended 1/31,
1997 10.440 .475 (.145) (.510) -- 10.260 3.29
1996 9.610 .513 .838 (.521) -- 10.440 14.33
1995 10.620 .513 (1.008) (.513) (.002) 9.610 (4.58)
1994 9.910 .509 .727 (.503) (.023) 10.620 12.71
1993 9.525 .442 .395 (.442) (.010) 9.910 8.96
12/13/91 to 1/31/92 9.525 -- -- -- -- 9.525 --
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 72.
66
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment ment++ rate
- ----------------------------------------------------------------------------------------------
$11,788 1.12% 4.67% 1.00% 4.79% 4%
6,860 1.33 4.41 1.00 4.74 17
1,605 1.59* 4.67* 1.00* 5.26* 35
1,985 1.87 3.93 1.75 4.05 4
1,438 2.06 3.73 1.75 4.04 17
860 1.86* 4.44* 1.75* 4.55* 35
43,738 .87 4.94 .75 5.06 4
47,389 1.04 4.78 .75 5.07 17
42,741 .89 5.14 .75 5.28 35
47,822 .86 4.74 .75 4.85 4
28,283 1.02* 4.69* .75* 4.96* 20
15 -- -- -- -- --
- ----------------------------------------------------------------------------------------------
</TABLE>
67
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as follows.
<TABLE>
<CAPTION>
Operating Performance Less Distributions
----------------------------------- ----------------------------
Net
Net realized and Distributions Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
beginning investment from investment from capital end of asset
MICHIGAN of period income++ investments income gains period value+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
Year ended 1/31,
1997 $10.740 $.478 $(.148) $(.511) $(.059) $10.500 3.20%
1996 9.870 .510 .911 (.519) (.032) 10.740 14.68
9/7/94 to 1/31/95 10.090 .204 (.209) (.212) (.003) 9.870 .02
Class C
Year ended 1/31,
1997 10.730 .398 (.132) (.427) (.059) 10.510 2.58
1996 9.850 .430 .922 (.440) (.032) 10.730 13.96
9/19/94 to 1/31/95 9.910 .161 (.050) (.171) -- 9.850 1.18
Class R
Year ended 1/31,
1997 10.750 .491 (.137) (.535) (.059) 10.510 3.44
1996 9.880 .539 .906 (.543) (.032) 10.750 14.93
1995 10.860 .529 (.972) (.534) (.003) 9.880 (3.98)
1994 10.060 .531 .808 (.528) (.011) 10.860 13.58
1993 9.525 .456 .554 (.449) (.026) 10.060 10.80
12/13/91 to 1/31/92 9.525 -- -- -- -- 9.525 --
- ------------------------------------------------------------------------------------------------------------------------------------
See notes on page 72.
</TABLE>
68
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment++ ment++ rate
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 5,518 1.18% 4.66% 1.00% 4.84% 16%
4,027 1.35 4.52 1.00 4.87 33
897 2.62* 3.68* 1.00* 5.30* 35
346 1.93 3.91 1.75 4.09 16
231 2.08 3.79 1.75 4.12 33
75 3.52* 2.76* 1.75* 4.53* 35
27,089 .93 4.92 .75 5.10 16
30,126 1.05 4.87 .75 5.17 33
26,644 .96 5.12 .75 5.33 35
25,085 1.07 4.67 .75 4.99 3
14,684 1.62* 4.19* .75* 5.06* 32
15 -- -- -- -- --
- ---------------------------------------------------------------------------------------------
</TABLE>
69
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as
follows.
<TABLE>
<CAPTION>
Operating Performance Less Distributions
------------------------- -----------------------------
Net
Net realized and Distributions Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
beginning investment from investment from capital end of asset
PENNSYLVANIA of period income++ investments income gains period value+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
Year ended 1/31,
1997 $10.600 $.482 $ (.021) $(.511) $ - $10.550 4.53%
1996 9.750 .498 .862 (.510) - 10.600 14.22
9/7/94 to 1/31/95 9.920 .206 (.164) (.212) - 9.750 .49
Class C
Year ended 1/31,
1997 10.480 .395 (.008) (.427) - 10.440 3.84
1996 9.650 .417 .843 (.430) - 10.480 13.27
9/22/94 to 1/31/95 9.920 .176 (.235) (.211) - 9.650 (.53)
Class R
Year ended 1/31,
1997 10.570 .493 .002 (.535) - 10.530 4.89
1996 9.730 .527 .846 (.533) - 10.570 14.40
1995 10.810 .531 (1.077) (.534) - 9.730 (4.94)
1994 10.010 .533 .807 (.534) (.006) 10.810 13.67
1993 9.525 .451 .481 (.443) (.004) 10.010 9.97
12/13/91 to 1/31/92 9.525 - - - - 9.525 -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 72.
70
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- -------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio to investment Ratio to investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment++ ment++ rate
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10,327 1.11% 4.79% 1.00% 4.90% 74%
5,817 1.30 4.52 1.00 4.82 52
1,483 1.87* 4.56* 1.00* 5.43* 74
1,033 1.87 4.04 1.75 4.16 74
1,101 2.14 3.70 1.75 4.09 52
494 2.52* 3.90* 1.75* 4.67* 74
57,275 .87 5.04 .75 5.16 74
57,345 .96 4.93 .75 5.14 52
51,499 .91 5.27 .75 5.43 74
48,720 .94 4.82 .75 5.01 5
23,680 1.25* 4.53* .75* 5.03* 15
15 - - - - -
- -------------------------------------------------------------------------------
</TABLE>
71
<PAGE>
Financial Highlights -- continued
Selected data for a share outstanding throughout each period is as follows.
<TABLE>
<CAPTION>
Operating Performance Less Distributions
------------------------- ----------------------------
Net
Net realized and Distributions Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
beginning investment from investment from capital end of asset
VIRGINIA of period income++ investments income gains period value+
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
Year ended 1/31,
1997 $10.600 $.481 $(.130) $(.519) $(.002) $10.430 3.44%
1996 9.760 .509 .878 (.509) (.038) 10.600 14.50
9/7/94 to 1/31/95 9.980 .201 (.207) (.214) - 9.760 .01
Class C
Year ended 1/31,
1997 10.570 .405 (.133) (.440) (.002) 10.400 2.67
1996 9.740 .432 .868 (.432) (.038) 10.570 13.58
9/19/94 to 1/31/95 9.950 .171 (.167) (.214) - 9.740 .10
Class R
Year ended 1/31,
1997 10.600 .495 (.120) (.543) (.002) 10.430 3.68
1996 9.770 .537 .864 (.533) (.038) 10.600 14.65
1995 10.740 .531 (.964) (.537) - 9.770 (3.92)
1994 10.030 .529 .726 (.527) (.018) 10.740 12.78
1993 9.525 .439 .499 (.433) - 10.030 10.04
12/13/91 to 1/31/92 9.525 - - - - 9.525 -
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Total Return on Net Asset Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in net asset value per share. The total returns shown for
Class A Shares do not include the effect of applicable sales charge
on purchases. The total returns shown for Class C Shares do not
include the effect of applicable contingent deferred sales charges.
Class R Shares are not subject to any sales charge on purchases or
contingent deferred sales charges.
++Reflects the waiver of certain management fees and reimbursement of
certain other expenses by the Adviser (see note 6 of Notes to
Financial Statements).
72
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- -----------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment++ ment++ rate
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 9,274 1.09% 4.84% 1.00% 4.93% 27%
5,874 1.20 4.73 1.00 4.93 42
2,215 1.57 4.70 1.00* 5.27 40
1,159 1.84 4.09 1.75 4.18 27
789 1.92 4.04 1.75 4.21 42
378 2.20* 4.12* 1.75* 4.57* 40
57,332 .85 5.08 .75 5.18 27
59,405 .94 5.04 .75 5.23 42
54,791 .82 5.33 .75 5.40 40
55,773 .84 4.94 .75 5.03 7
37,196 .96* 4.71* .75* 4.92* 12
15 -- -- -- -- --
- -----------------------------------------------------------------------------
</TABLE>
73
<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 Nuveen Arizona, Florida, Maryland, Michigan,
Pennsylvania and Virginia Tax-Free Value Funds), including the
portfolios of investments, as of January 31, 1997, 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 securites owned
as of January 31, 1997, by correspondence with the custodian. 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, 1997, the results of
their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the
financial highlights for the periods indicated thereon, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 7, 1997
74
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Shareholder Meeting Report
Arizona
On January 10, 1997, the following Nuveen Arizona
Tax-Free Value Fund held a Special Meeting of
Shareholders. At that meeting, shareholders approved
the following matters:
<TABLE>
<CAPTION>
A Shares C Shares R Shares
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
ELECTION OF THE FUND'S
BOARD OF TRUSTEES:
- ----------------------------------------------------------------------------
(A) Bremner For 343,556 43,457 1,446,220
Withhold 92 -- 1,536
-------------------------------------------------
Total 343,648 43,457 1,447,756
============================================================================
(B) Brown For 343,556 43,457 1,446,220
Withhold 92 -- 1,536
-------------------------------------------------
Total 343,648 43,457 1,447,756
============================================================================
(C) Dean For 343,556 43,457 1,446,220
Withhold 92 -- 1,536
-------------------------------------------------
Total 343,648 43,457 1,447,756
============================================================================
(D) Impellizzeri For 343,556 43,457 1,446,220
Withhold 92 -- 1,536
-------------------------------------------------
Total 343,648 43,457 1,447,756
============================================================================
(E) Rosenheim For 343,556 43,457 1,446,220
Withhold 92 -- 1,536
-------------------------------------------------
Total 343,648 43,457 1,447,756
============================================================================
(F) Sawers For 343,556 43,457 1,446,220
Withhold 92 -- 1,536
-------------------------------------------------
Total 343,648 43,457 1,447,756
============================================================================
(G) Schneider For 343,556 43,457 1,446,220
Withhold 92 -- 1,536
-------------------------------------------------
Total 343,648 43,457 1,447,756
============================================================================
(H) Schwertfeger For 343,556 43,457 1,446,220
Withhold 92 -- 1,536
-------------------------------------------------
Total 343,648 43,457 1,447,756
============================================================================
FUND REORGANIZATION For 263,533 7,946 1,262,251
Against 92 -- 52,980
Abstain 8,016 11,252 13,659
-------------------------------------------------
Total 271,641 19,198 1,328,890
============================================================================
Broker Non Votes 72,007 24,259 118,866
------------------------------------------------
</TABLE>
75
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Shareholder Meeting Report
Florida
On January 10, 1997, the following Nuveen Florida
Tax-Free Value Fund held a Special Meeting of
Shareholders. At that meeting, shareholders approved
the following matters:
<TABLE>
<CAPTION>
A Shares C Shares R Shares
- ------------------------------------------------------------------------------
Election of the Fund's
Board of Trustees:
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(A) Bremner For 761,686 23,006 4,048,464
Withhold 7,919 - 47,167
----------------------------------------------------
Total 769,605 23,006 4,095,631
- ------------------------------------------------------------------------------
(B) Brown For 761,686 23,006 4,048,464
Withhold 7,919 - 47,167
----------------------------------------------------
Total 769,605 23,006 4,095,631
- ------------------------------------------------------------------------------
(C) Dean For 761,686 23,006 4,048,464
Withhold 7,919 - 47,167
----------------------------------------------------
Total 769,605 23,006 4,095,631
- ------------------------------------------------------------------------------
(D) Impellizzeri For 761,686 23,006 4,048,464
Withhold 7,919 - 47,167
----------------------------------------------------
Total 769,605 23,006 4,095,631
- ------------------------------------------------------------------------------
(E) Rosenheim For 761,686 23,006 4,048,464
Withhold 7,919 - 47,167
----------------------------------------------------
Total 769,605 23,006 4,095,631
- ------------------------------------------------------------------------------
(F) Sawers For 761,686 23,006 4,048,464
Withhold 7,919 - 47,167
----------------------------------------------------
Total 769,605 23,006 4,095,631
- ------------------------------------------------------------------------------
(G) Schneider For 761,686 23,006 4,048,464
Withhold 7,919 - 47,167
----------------------------------------------------
Total 769,605 23,006 4,095,631
- ------------------------------------------------------------------------------
(H) Schwertfeger For 761,686 23,006 4,048,464
Withhold 7,919 - 47,167
----------------------------------------------------
Total 769,605 23,006 4,095,631
- ------------------------------------------------------------------------------
Fund Reorganization For 560,496 18,550 3,441,957
Against 2,444 - 91,606
Abstain 26,314 - 193,354
----------------------------------------------------
Total 589,254 18,550 3,726,917
- ------------------------------------------------------------------------------
Broker Non Votes 180,351 4,456 368,714
----------------------------------------------------
</TABLE>
76
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Shareholder Meeting Report
Maryland
On January 10, 1997, the following Nuveen Maryland
Tax-Free Value Fund held a Special Meeting of
Shareholders. At that meeting, shareholders approved
the following matters:
<TABLE>
<CAPTION>
A Shares C Shares R Shares
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Election of the Fund's
Board of Trustees:
- ------------------------------------------------------------------------------
(A) Bremner For 716,051 124,997 3,049,761
Withhold 23,099 10,660 107,461
---------------------------------------------------
Total 739,150 135,657 3,157,222
- ------------------------------------------------------------------------------
(B) Brown For 716,051 124,997 3,063,472
Withhold 23,099 10,660 93,750
---------------------------------------------------
Total 739,150 135,657 3,157,222
- ------------------------------------------------------------------------------
(C) Dean For 716,051 124,997 3,063,905
Withhold 23,099 10,660 93,317
---------------------------------------------------
Total 739,150 135,657 3,157,222
- ------------------------------------------------------------------------------
(D) Impellizzeri For 716,017 124,997 3,050,195
Withhold 23,133 10,660 107,027
---------------------------------------------------
Total 739,150 135,657 3,157,222
- ------------------------------------------------------------------------------
(E) Rosenheim For 716,017 124,997 3,063,905
Withhold 23,133 10,660 93,317
---------------------------------------------------
Total 739,150 135,657 3,157,222
- ------------------------------------------------------------------------------
(F) Sawers For 716,051 124,997 3,063,905
Withhold 23,099 10,660 93,317
---------------------------------------------------
Total 739,150 135,657 3,157,222
- ------------------------------------------------------------------------------
(G) Schneider For 716,051 124,997 3,049,761
Withhold 23,099 10,660 107,461
---------------------------------------------------
Total 739,150 135,657 3,157,222
- ------------------------------------------------------------------------------
(H) Schwertfeger For 716,051 124,997 3,063,905
Withhold 23,099 10,660 93,317
---------------------------------------------------
Total 739,150 135,657 3,157,222
- ------------------------------------------------------------------------------
Div vs. Non-Div For 470,908 56,428 2,563,265
Against 18,486 8,595 142,492
Abstain 18,312 - 139,853
---------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
- ------------------------------------------------------------------------------
AMT Bonds For 445,821 48,464 2,417,433
Against 36,038 5,899 230,562
Abstain 25,847 10,660 197,615
---------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
---------------------------------------------------
</TABLE>
77
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
Shareholder Meeting Report
Maryland -- continued
<TABLE>
<CAPTION>
A Shares C Shares R Shares
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Grade For 466,664 48,464 2,544,152
Against 16,787 5,899 140,661
Abstain 24,255 10,660 160,797
----------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
- ------------------------------------------------------------------------------
Illiquid Securities For 456,055 53,481 2,374,678
Against 20,946 882 284,553
Abstain 30,705 10,660 186,379
----------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
- ------------------------------------------------------------------------------
Unseasoned Issuers For 438,564 44,445 2,329,868
Against 33,374 9,918 298,121
Abstain 35,768 10,660 217,621
----------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
- ------------------------------------------------------------------------------
Average Maturity For 473,373 48,464 2,585,687
Against 13,372 5,899 71,298
Abstain 20,961 10,660 188,625
----------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
- ------------------------------------------------------------------------------
Temporary Investments For 455,679 44,445 2,493,083
Against 30,500 9,918 152,599
Abstain 21,527 10,660 199,928
----------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
- ------------------------------------------------------------------------------
Single Bank Limits For 457,309 48,464 2,432,144
Against 22,537 5,899 187,573
Abstain 27,860 10,660 225,893
----------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
- ------------------------------------------------------------------------------
Fund Reorganization For 472,319 58,382 2,613,258
Against 13,497 - 84,902
Abstain 21,890 6,641 147,450
----------------------------------------------------
Total 507,706 65,023 2,845,610
- ------------------------------------------------------------------------------
Broker Non Votes 231,444 70,634 311,612
- -------------------------------------------------------------------------------
</TABLE>
78
<PAGE>
Nuveen Tax-Free Mutual Fund
January 31, 1997 Annual Report
Shareholder Meeting Report
Michigan
On January 10, 1997, the following Nuveen Michigan
Tax-Free Value Fund held a Special Meeting of
Shareholders. At that meeting, shareholders approved
the following matters:
<TABLE>
<CAPTION>
A Shares C Shares R Shares
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Election of the Fund's
Board of Trustees:
- --------------------------------------------------------------------------
(A) Bremner For 344,784 22,975 1,832,113
Withhold 11,365 - 35,829
------------------------------------------------
Total 356,149 22,975 1,867,942
- --------------------------------------------------------------------------
(B) Brown For 344,784 22,975 1,832,113
Withhold 11,365 - 35,829
------------------------------------------------
Total 356,149 22,975 1,867,942
- --------------------------------------------------------------------------
(C) Dean For 344,784 22,975 1,832,113
Withhold 11,365 - 35,829
------------------------------------------------
Total 356,149 22,975 1,867,942
- --------------------------------------------------------------------------
(D) Impellizzeri For 344,784 22,975 1,830,721
Withhold 11,365 - 37,221
------------------------------------------------
Total 356,149 22,975 1,867,942
- --------------------------------------------------------------------------
(E) Rosenheim For 344,784 22,975 1,830,721
Withhold 11,365 - 37,221
------------------------------------------------
Total 356,149 22,975 1,867,942
- --------------------------------------------------------------------------
(F) Sawers For 344,784 22,975 1,832,113
Withhold 11,365 - 35,829
------------------------------------------------
Total 356,149 22,975 1,867,942
- --------------------------------------------------------------------------
(G) Schneider For 344,784 22,975 1,832,113
Withhold 11,365 - 35,829
------------------------------------------------
Total 356,149 22,975 1,867,942
- --------------------------------------------------------------------------
(H) Schwertfeger For 344,784 22,975 1,832,113
Withhold 11,365 - 35,829
------------------------------------------------
Total 356,149 22,975 1,867,942
- --------------------------------------------------------------------------
Fund Reorganization For 282,042 13,646 1,541,760
Against 18,767 - 40,807
Abstain 2,007 - 100,868
------------------------------------------------
Total 302,816 13,646 1,683,435
- --------------------------------------------------------------------------
Broker Non Votes 53,333 9,329 184,507
------------------------------------------------
</TABLE>
79
<PAGE>
Nuveen Tax-Free Mutual Funds
January 31, 1997 Annual Report
SHAREHOLDER MEETING REPORT
PENNSYLVANIA
On January 10, 1997, the following Nuveen
Pennsylvania Tax-Free Value Fund held a Special
Meeting of Shareholders. At that meeting,
shareholders approved the following matters:
<TABLE>
<CAPTION>
A SHARES C SHARES R SHARES
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ELECTION OF THE FUND'S
BOARD OF TRUSTEES:
- --------------------------------------------------------------------------------
(A) Bremner For 571,472 53,286 3,931,391
Withhold 6,668 451 87,931
-----------------------------------------------------
Total 578,140 53,737 4,019,322
- --------------------------------------------------------------------------------
(B) Brown For 571,472 53,286 3,931,391
Withhold 6,668 451 87,931
-----------------------------------------------------
Total 578,140 53,737 4,019,322
- --------------------------------------------------------------------------------
(C) Dean For 571,951 53,286 3,931,391
Withhold 6,189 451 87,931
-----------------------------------------------------
Total 578,140 53,737 4,019,322
- --------------------------------------------------------------------------------
(D) Impellizzeri For 571,951 53,286 3,931,391
Withhold 6,189 451 87,931
-----------------------------------------------------
Total 578,140 53,737 4,019,322
- --------------------------------------------------------------------------------
(E) Rosenheim For 571,951 53,286 3,915,809
Withhold 6,189 451 103,513
-----------------------------------------------------
Total 578,140 53,737 4,019,322
- --------------------------------------------------------------------------------
(F) Sawers For 571,951 53,286 3,931,391
Withhold 6,189 451 87,931
-----------------------------------------------------
Total 578,140 53,737 4,019,322
- --------------------------------------------------------------------------------
(G) Schneider For 571,951 53,286 3,931,391
Withhold 6,189 451 87,931
-----------------------------------------------------
Total 578,140 53,737 4,019,322
- --------------------------------------------------------------------------------
(H) Schwertfeger For 571,951 53,286 3,931,391
Withhold 6,189 451 87,931
-----------------------------------------------------
Total 578,140 53,737 4,019,322
- --------------------------------------------------------------------------------
FUND REORGANIZATION For 532,792 51,541 3,454,133
Against 24 502 137,312
Abstain 8,836 451 87,603
-----------------------------------------------------
Total 541,652 52,494 3,679,048
- --------------------------------------------------------------------------------
Broker Non Votes 36,488 1,243 340,274
-----------------------------------------------------
</TABLE>
80
<PAGE>
Nuveen Tax-Free Mutual Fund
January 31, 1997 Annual Report
Shareholder Meeting Report
Virginia
On January 10, 1997, the following Nuveen Virginia
Tax-Free Value Fund held a Special Meeting of
Shareholders. At that meeting, shareholders approved
the following matters:
<TABLE>
<CAPTION>
A Shares C Shares R Shares
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Election of the Fund's
Board of Trustees:
- --------------------------------------------------------------------------
(A) Bremner For 559,778 78,170 4,157,104
Withhold 12,275 - 36,514
------------------------------------------------
Total 572,053 78,170 4,193,618
- --------------------------------------------------------------------------
(B) Brown For 559,778 78,170 4,157,358
Withhold 12,275 - 36,260
------------------------------------------------
Total 572,053 78,170 4,193,618
- --------------------------------------------------------------------------
(C) Dean For 559,778 78,170 4,157,358
Withhold 12,275 - 36,260
------------------------------------------------
Total 572,053 78,170 4,193,618
- --------------------------------------------------------------------------
(D) Impellizzeri For 559,778 78,170 4,157,104
Withhold 12,275 - 36,514
------------------------------------------------
Total 572,053 78,170 4,193,618
- --------------------------------------------------------------------------
(E) Rosenheim For 559,778 78,170 4,156,866
Withhold 12,275 - 36,752
------------------------------------------------
Total 572,053 78,170 4,193,618
- --------------------------------------------------------------------------
(F) Sawers For 559,778 78,170 4,157,358
Withhold 12,275 - 36,260
------------------------------------------------
Total 572,053 78,170 4,193,618
- --------------------------------------------------------------------------
(G) Schneider For 559,778 78,170 4,157,358
Withhold 12,275 - 36,260
------------------------------------------------
Total 572,053 78,170 4,193,618
- --------------------------------------------------------------------------
(H) Schwertfeger For 559,778 78,170 4,157,358
Withhold 12,275 - 36,260
------------------------------------------------
Total 572,053 78,170 4,193,618
- --------------------------------------------------------------------------
Fund Reorganization For 429,515 59,027 3,663,234
Against 15,396 - 43,052
Abstain 7,399 - 83,700
------------------------------------------------
Total 452,310 59,027 3,789,986
- --------------------------------------------------------------------------
Broker Non Votes 119,743 19,143 403,632
------------------------------------------------
</TABLE>
81
<PAGE>
Shareholder Information
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals. The funds below are grouped by investment objectives.
Growth and Income Funds
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Municipal Bond Funds
National Funds/1/
State Funds
Alabama Michigan
Arizona Missouri
California/2/ New Jersey/3/
Colorado New Mexico
Connecticut New York/2/
Florida/3/ North Carolina
Georgia Ohio
Kansas Pennsylvania
Kentucky/4/ South Carolina
Louisiana Tennessee
Maryland Virginia
Massachusetts/2/ Wisconsin
1. Long-term, insured long-term, intermediate-term
and limited-term portfolios.
2. Long-term and insured long-term portfolios.
3. Long-term and intermediate-term portfolios.
4. Long-term and limited-term portfolios.
To purchase additional shares of your Nuveen Municipal Bond Fund, contact your
financial adviser. If you would like to add to your current investment on a
monthly or semiannual basis, you can sign up for Nuveen's systematic investing
program, which allows you to invest a fixed dollar amount every month
automatically.
You can also invest automatically through dividend reinvestment. By reinvesting
your fund's dividends back into the fund, you give your investment the added
growth potential of long-term compounding.
For more information on the service options listed above, call your adviser, or
Nuveen at (800) 621-7227.
82
<PAGE>
Fund Information
Board of Directors Transfer Agent,
Robert P. Bremner Shareholder Services and
Dividend Disbursing Agent
Lawrence H. Brown
Maryland
Anthony T. Dean Shareholder Services, Inc.
Nuveen Investor Services
Anne E. Impellizzeri P.O. Box 5330
Denver, Colorado 80217-5330
Margaret K. Rosenheim
(800) 621-7227
Peter R. Sawers
All Other Funds
William J. Schneider Boston Financial
Nuveen Investor Services
Timothy R. Schwertfeger P.O. Box 8509
Boston, Massachusetts 02266-8509
Fund Manager
Nuveen Advisory Corp. (800)225-8530
333 West Wacker Drive
Chicago, IL 60606 Legal Counsel
Fried, Frank, Harris,
Custodian Shriver & Jacobson
The Chase Manhattan Bank Washington, D.C.
4 New York Plaza
New York, New York 10004-2413 Public Accountants
Arthur Andersen LLP
Chicago, Illinois
83
<PAGE>
Serving Investors
for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
entrusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach -- purchasing securities of strong companies and
communities that represent good long-term value -- is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of almost a century of investment
experience, including one of the most recognized municipal research departments
in the industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of taxable and tax-free investment
products -- including equity and fixed-income mutual funds, unit trusts,
exchange-traded funds, individual managed account services, and cash management
products.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 621-7227 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
JOHN NUVEEN, SR.
[LOGO OF NUVEEN]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
VAN-1-1.97
<PAGE>
[NUVEEN LOGO]
Municipal
Bond Funds
January 31, 1997 and February 28, 1997
Annual Report
Dependable, tax-free income
to help you keep more of
what you earn.
[PHOTO OF COUPLE SKIING APPEARS HERE]
New Jersey
<PAGE>
Contents
2 Dear Shareholder
4 Answering Your Questions
6 New Jersey Overview
7 New Jersey Intermediate Overview
9 Financial Section
47 Shareholder Meeting Report
51 Shareholder Information
52 Fund Information
1
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
It is a pleasure to report to you on the performance of your funds and to
welcome new investors to the Nuveen family of investments. Each of the funds in
this report continued to achieve its goal of delivering attractive tax-free
income from portfolios of quality municipal bonds, helping you to keep more of
what you've earned.
Since our last report, Nuveen has undertaken a number of key strategic steps
geared to enhancing fund investment results and our service to you. We also have
broadened our family of municipal bond funds to better meet your needs for
attractive current income free from federal and, in some cases, state taxes. One
of these key strategic steps was acquiring Flagship Resources Inc., a respected
manager of municipal bond mutual funds, based in Dayton, Ohio. This added 19
municipal mutual funds to the Nuveen family, giving investors an expanded array
of investment solutions for their personal portfolios. As we increased our
product offerings, we also broadened the pricing options you have to purchase
shares. We believe that all of this offers you even greater access to the
municipal market plus additional expertise, resources, and services to serve you
better.
In January, the Nuveen New Jersey Tax-Free Value Fund merged with the Flagship
New Jersey Double Tax Exempt Fund to reduce operating expenses and to benefit
shareholders. The combined fund's fiscal year end will now be February 28. The
Nuveen Flagship Intermediate Municipal Bond Fund, a former Flagship fund, will
continue forward, though its
TIMOTHY R. SCHWERTFEGER
2
<PAGE>
"Nuveen will continue to create new investments to help investors keep more of
what they have earned."
year end will change to February 28. The next report for the New Jersey funds
will be the semi-annual report dated August 31, 1997.
Nuveen also has created new equity-based investments to help investors keep more
of what they have earned. In November we launched the Nuveen Growth and Income
Stock Fund, a fund that seeks to provide prudent investors superior equity
market performance with equal or less risk than the overall stock market. This
month we introduced two new balanced mutual funds, each designed to give
investors the combination of performance potential and income protection that
comes from a carefully assembled balance of stocks and bonds.
We at Nuveen pride ourselves on providing attractive tax-free income with modest
risk to more than 1.3 million shareholders. In conversations with investors,
many of you have told me how important tax-free income is to maintaining a
lifestyle that you have worked so hard to build. I appreciate the trust you have
placed in us.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
March 17, 1997
3
<PAGE>
Answering Your Questions
Tom Spalding, head of Nuveen's portfolio management team, talks about the
municipal bond market and offers insights into factors that affected fund
performance over the past year.
[PHOTO OF TOM SPALDING APPEARS HERE]
TOM SPALDING
What key economic factors affected
these funds during the past year?
In 1996, the bond market -- despite some fluctuations -- was relatively stable
compared with recent years. Following a strong start to the year, a succession
of mixed reports affecting interest rate and inflation forecasts caused
investors to view the markets with alternating enthusiasm and uncertainty. In
the third quarter of 1996, evidence of an economic slowdown, the strong U.S.
dollar, and lack of inflationary pressures combined to allay investor fears,
sparking a rally in bonds that continued through the post-election period.
Throughout the year, euphoria in the equity market focused investors' attention
on stocks and brought record amounts of new money into equity-based mutual
funds, bypassing the bond market. Some investors, concerned about a possible
correction in the stock market, decided to take their profits, but adopted a
wait-and-see attitude about investing capital gains, electing to go with short-
term vehicles until a clearer picture of market trends emerged. These events
affected demand for bond issues of all types in 1996.
What impact did interest rates have on performance?
Even with relative stability in 1996, interest rates continued to play a role in
bond market performance. The Federal Reserve altered interest rates only once in
1996, with a 0.25% increase in January, but anticipation of further moves kept
the markets restless the remainder of the year. This concern about potential
changes in monetary policy continues into 1997, contributing to higher long-term
interest rates.
4
<PAGE>
"A look at the current economy shows a positive tone, reflecting a combination
of factors that historically bode well for the bond market, especially for
long-term issues."
How has the municipal market
performed during the past year?
The municipal market has not been as volatile as the Treasury market. The easing
of the flat tax concerns in 1996 benefited municipals at a time when bond prices
were otherwise suffering generally. Property and casualty companies were large
buyers of municipals after Steven Forbes' withdrawal from the presidential
primary race last year. Retail buyers came back into the municipal bond market
in the fourth quarter, and institutional investors continue to be strong buyers.
All of this helps to support municipal bond prices.
What is your approach to managing the funds?
We seek income consistent with preservation of capital. To accomplish this, we
follow a value investing strategy that depends on obtaining detailed insights
into the outlook for individual issuers and the characteristics of specific
bonds -- assessments that are not yet recognized by the market as a whole. We
target bonds that may be upgraded, a strategy that results in a higher level of
quality and safety in the portfolios, as well as potential appreciation in asset
value.
What is your outlook for the bond market in the next year?
A look at the current economy shows a positive tone, reflecting a combination of
factors that historically bode well for the bond market, especially for long-
term issues. Yields remain attractive, as inflation maintains the same modest
pace that it has demonstrated over the past six years, giving every indication
of being well under control. At the same time, economic expansion continues to
be slow and steady, as evidenced by a lack of price pressure at the consumer and
producer levels, strong consumer confidence, low unemployment figures, and a
stable money supply.
5
<PAGE>
Nuveen New Jersey Tax-Free Value Fund
January 31, 1997 Annual Report *
New Jersey Overview
A Shares
<TABLE>
<CAPTION>
<S> <C>
Highlights
- -----------------------------------
Net Assets $17,071,934
Net Asset Value $10.22
Average Maturity 16.98
- -----------------------------------
Total Return at NAV
- -----------------------------------
1-Year 3.31%
Since Inception 6.51%
- -----------------------------------
Tax-Free Yields at Offer Price
- -----------------------------------
SEC Yield 4.61%
Distribution Yield 4.72%
- -----------------------------------
</TABLE>
* All information as of January 31, 1997, except for the Index Comparison
chart, which shows the growth of a $10,000 investment in the Nuveen Flagship
New Jersey Municipal Bond Fund from the funds inception through February 28,
1997.
** The Index Comparison shows change in value of a $10,000 investment in the
Nuveen fund compared with the Lehman Brothers Municipal Bond Index. The
Lehman Municipal Bond Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A Shares at the time (4.50%) and all ongoing fund
expenses.
During the fiscal year, the fund's average annual total return on NAV for R
Shares was 3.55%, and since their inception in February 1992 was 7.13%. For
more information on share class total returns, turn to the Financial
Highlights beginning on page 41.
[PIE CHART APPEARS HERE]
[PIE CHART APPEARS HERE]
[GRAPH APPEARS HERE]
[BAR CHART APPEARS HERE]
6
<PAGE>
Nuveen Flagship New Jersey
Intermediate Municipal Bond Fund
February 28, 1997 Annual Report
New Jersey Intermediate Overview
A Shares
<TABLE>
<CAPTION>
<S> <C>
Fund Highlights
- -----------------------------------------------
Net Assets $7,010,918
Net Asset Value $10.30
Average Maturity 7.47
- -----------------------------------------------
Total Return at NAV
- -----------------------------------------------
1-Year 3.56%
Since Inception 6.49%
- -----------------------------------------------
Tax-Free Yields at Offer Price
- -----------------------------------------------
SEC Yield 4.33%
Distribution Yield 4.76%
- -----------------------------------------------
</TABLE>
* The Index Comparison shows change in value of a $10,000 investment in the
Nuveen fund compared with the Lehman Brothers Municipal Bond Index. The
Lehman Municipal Bond Index is comprised of a broad range of investment-grade
municipal bonds, and does not reflect any initial or ongoing expenses. The
Nuveen fund return depicted in the chart reflects the initial maximum sales
charge applicable to A Shares at the time (3.00%) and all ongoing fund
expenses.
[PIE CHART APPEARS HERE]
[PIE CHART APPEARS HERE]
[GRAPH APPEARS HERE]
[BAR CHART APPEARS HERE]
7
<PAGE>
Financial Section
Contents
10 Portfolio of Investments
27 Statement of Net Assets
28 Statement of Operations
29 Statement of Changes in Net Assets
31 Notes to Financial Statements
41 Financial Highlights
9
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen New Jersey
January 31, 1997
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,415,000 The Delaware River and Bay Authority, Revenue Bonds 1/04 at 102 Aaa $ 1,295,532
Series 1993, 5.000%, 1/01/17
1,000,000 New Jersey Economic Development Authority, 4/97 at 102 A3 1,021,210
Gas Facilities Revenue Bonds, 1991 Series A
(Elizabethtown Gas Company Project), 6.750%, 10/01/21
(Alternative Minimum Tax)
200,000 New Jersey Economic Development Authority, Lease Rental 3/02 at 102 Aaa 223,158
Bonds, 1992 Series (Liberty State Park Project), 6.800%
3/15/22 (Pre-refunded to 3/15/02)
1,000,000 New Jersey Economic Development Authority, Economic No Opt. Call N/R 1,168,500
Development Bonds (Yeshiva K'Tana of Passaic -- 1992
Project), 8.000%, 9/15/18
2,965,000 New Jersey Economic Development Authority, Economic No Opt. Call N/R 3,107,231
Development Bonds (Bridgewater Resources, Inc.
Project) 1994 Series A, 8.375%, 11/01/04
(Alternative Minimum Tax)
250,000 New Jersey Economic Development Authority, Solid Waste 4/02 at 102 Aa1 268,300
Disposal Facility Revenue Bonds (Garden State Paper
Company, Inc. Project), Series 1992, 7.125%, 4/01/22
(Alternative Minimum Tax)
1,215,000 New Jersey Economic Development Authority, Economic 12/03 at 102 Aa3 1,226,166
Growth Bond, Composite Issue -- 1992 Second Series H,
5.300%, 12/01/07 (Alternative Minimum Tax)
650,000 New Jersey Economic Development Authority, Market 7/04 at 102 Aaa 674,707
Transition Facility Senior Lien Revenue Bonds,
Series 1994A, 5.875%, 7/01/11
975,000 New Jersey Educational Facilities Authority, Trenton 7/97 at 100 A+ 976,892
State College Issue, Revenue Bonds, Series 1976 D,
6.750%, 7/01/08
835,000 New Jersey Educational Facilities Authority, Princeton 7/04 at 100 Aaa 867,198
University Revenue Bonds, 1994 Series A,
5.875%, 7/01/11
1,930,000 New Jersey Health Care Facilities Financing Authority, No Opt. Call Aaa 2,272,729
Revenue Bonds, Hackensack Hospital Issue Series A,
8.750%, 7/01/09
2,065,000 New Jersey Health Care Facilities Financing Authority, 7/01 at 102 A1 2,324,323
Revenue Bonds, Series 1990-E (Kennedy Memorial
Hospital), 8.375%, 7/01/10
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 700,000 New Jersey Health Care Facilities Financing Authority 7/00 at 102 Aaa $ 761,138
Revenue Bonds, Community Medical Center/Kensington
Manor Care Center Issue, Series E, 7.000%, 7/01/20
480,000 New Jersey Health Care Facilities Financing Authority 7/98 at 102 A 508,411
Revenue Bonds, Community Memorial Hospital
Association Issue, Series C, 8.000%, 7/01/14
3,000,000 New Jersey Health Care Facilities Financing Authority 7/99 at 102 A- 3,188,940
Revenue Bonds, Newton Memorial Hospital Issue,
Series A, 7.500%, 7/01/19
400,000 New Jersey Health Care Facilities Financing Authority 7/02 at 102 A 433,048
Refunding Revenue Bonds, Atlantic City Medical Center
Issue, Series C, 6.800%, 7/01/05
800,000 New Jersey Health Care Facilities Financing Authority 7/02 at 102 Ba1 827,152
Revenue Bonds, Palisades Medical Center, Obligated
Group Issue, Series 1992, 7.500%, 7/01/06
1,750,000 New Jersey Housing Finance Agency, Special Pledge 11/97 at 103 A1 1,810,148
Revenue Obligations, 1975 Series One, 9.000%, 11/10/18
1,500,000 New Jersey Housing Mortgage Finance Agency, 5/06 at 102 Aaa 1,529,040
Multifamily Housing Revenue Bonds, 1996 Series A,
6.200%, 11/01/18 (Alternative Minimum Tax)
2,000,000 New Jersey Housing and Mortgage Finance Agency, 5/05 at 102 Aaa 2,039,660
Multifamily Housing Revenue Bonds, 1995 Series A,
6.00%m 11/01/14
700,000 New Jersey Housing and Mortgage Finance Agency, 5/02 at 102 A+ 752,605
Housing Revenue Bonds, 1992 Series A,
6.950%, 11/01/13
335,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, No Opt. Call AAA 403,471
1984 Series, 10.375%, 1/01/03
New Jersey Turnpike Authority, Turnpike Revenue Bonds,
Series 1991 C:
1,750,000 6.500%, 1/01/08 No Opt. Call Baa1 1,929,918
435,000 6.500%, 1/01/16 No Opt. Call Aaa 485,999
1,000,000 State of New Jersey, General Obligation Bonds, Series D, No Opt. Call Aa1 1,069,770
5.800%, 2/15/07
1,000,000 Pollution Control Financing Authority of Camden County No Opt. Call BBB+ 1,023,830
(Camden County, New Jersey), Solid Waste Disposal
and Resource Recovery System Revenue Bonds,
Series 1991 C, 7.125%, 12/01/01
(Alternative Minimum Tax)
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen New Jersey
January 31, 1997
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 2,645,000 Pollution Control Financing Authority of Camden County 12/01 at 102 BBB+ $ 2,723,953
(Camden County, New Jersey), Solid Waste Disposal
and Resource Recovery System Revenue Bonds,
Series 1991 D, 7.250%, 12/01/10
500,000 The Essex County Improvement Authority (Essex County, 12/02 at 102 Baa1 518,710
New Jersey), County Guaranteed Pooled Revenue Bonds,
Series 1992 A, 6.500%, 12/01/12
500,000 The Board of Education of The Township of Hillsborough, No Opt. Call AA 525,730
in the County of Somerset, State of New Jersey,
General Obligation School Purpose Bonds, Series 1992,
5.875%, 8/01/11
240,000 Hoboken Housing Finance Corporation, Multifamily No Opt. Call AA+ 241,495
Mortgage Revenue Bonds (Project Uplift - FHA
Section B), 1995 - A Refunding, 6.250%, 2/01/24
400,000 The Hudson County Improvement Authority, Multifamily 6/04 at 100 AAA 417,688
Housing Revenue Bonds, Series 1992 A (Conduit
Financing - Observer Park Project), 6.900%, 6/01/22
(Alternative Minimum Tax)
1,560,000 The Board of Education of the Borough of Little Ferry, No Opt. Call N/R 1,579,016
Bergen County, New Jersey, Certificates of
Participation, 6.300%, 1/15/08
The Board of Education of the Township of Monroe,
In the county of Gloucester, New Jersey, School Bonds,
Series 1993:
725,000 5.200%, 8/01/11 No Opt. Call Aaa 718,381
825,000 5.200%, 8/01/14 No Opt. Call Aaa 808,203
500,000 North Bergen Housing Development Corporation (North 9/09 at 100 N/R 510,310
Bergen, New Jersey), Mortgage Revenue Bonds,
Series 1978 (FHA Insured Mortgage Loan - Section 8
Assisted Project), 7.400%, 9/01/20
300,000 The Township of North Bergen (Hudson County, 8/02 at 102 Aaa 326,322
New Jersey), Fiscal Year Adjustment General Obligation
Bonds, Series 1992, 6.500%, 8/15/12
2,350,000 The Ocean County Utilities Authority (New Jersey), 4/97 at 100 Aaa 2,217,860
Wastewater Revenue Bonds, Refunding Series 1987,
5.000%, 1/01/14
2,215,000 County of Passaic, State of New Jersey, General No Opt. Call Aaa 2,179,892
Obligation Refunding Bonds, Series 1993,
5.125%, 9/01/12
</TABLE>
12
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,100,000 Sparta Township School District, General Obligation 9/06 at 100 AAA $ 1,116,005
Bonds (Unlimited Tax), 5.800%, 9/01/18
270,000 The Union County Utilities Authority (New Jersey), 6/02 at 102 Aaa 287,137
Solid Waste System Revenue Bonds, Series D,
6.850%, 6/15/14 (Alternative Minimum Tax)
The Union County Utilites Authority (New Jersey),
Solid Waste System Revenue Bonds, 1991 Series A:
195,000 7.100%, 6/15/06 (Alternative Minimum Tax) 6/02 at 102 BB 200,004
1,100,000 7.200%, 6/15/14 (Alternative Minimum Tax) 6/02 at 102 BB 1,125,443
100,000 University of Medicine and Denistry of New Jersey 12/01 at 102 AA 110,229
Bonds, Series E, 6.500%, 12/01/18
(Pre-refunded to 12/01/01)
300,000 The Wanaque Borough Sewerage Authority (Passaic 12/02 at 102 Baa1 319,365
County, New Jersey), Sewer Revenue Bonds,
(Series 1992), (Bank Qualified), 7.000%, 12/10/21
2,145,000 The Port Authority of New York and New Jersey, 8/01 at 101 AA- 2,311,322
Consolidated Bonds, Seventy-Fourth Series,
6.750%, 8/01/26
1,750,000 Virgin Islands Housing Finance Authority, Single-Family 3/05 at 102 AAA 1,198,465
Mortgage Revenue Refunding Bonds (GNMA
Mortgage-Backed Securities Program), 1995 Series A,
6.450%, 3/01/16 (Alternative Minimum Tax)
2,000,000 Commonwealth of Puerto Rico, Public Improvement 7/05 at 101 1/2 Aaa 2,020,960
Bonds of 1995 (General Obligation Bonds),
5.750%, 7/01/24
1,000,000 Puerto Rico Aqueduct and Sewer Authority, Revenue 7/98 at 102 AAA 1,076,190
Bonds, Series 1988A, 7.875%, 7/01/17
(Pre-refunded to 7/01/98)
60,000 Puerto Rico Highway and Transportation Authority, 7/02 at 101 1/2 AAA 67,080
Highway Revenue Bonds (Series T),
6.625%, 7/01/18 (Pre-refunded to 7/01/02)
Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series P:
790,000 7.000%, 7/01/07 No Opt. Call Baa1 902,875
1,875,000 7.000%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 2,104,837
1,500,000 Puerto Rico Electric Power Authority, Power Revenue 7/05 at 100 Baa1 1,377,344
Refunding Revenue Bonds, Series Z, 5.250%, 7/01/21
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
Annual Report
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,000,000 Puerto Rico Industrial, Tourist, Educational, Medical 1/05 at 102 Aaa $ 1,055,510
and Environmental Control Facilities Financing
Authority, Hospital Revenue Bonds, 1995 Series A
(Hospital Auxilio Mutuo Obligated Group Project),
6.250%, 7/01/16
- ----------------------------------------------------------------------------------------------------------------------------------
$57,720,000 Total Investments --(cost $58,667,900) -- 96.2% 60,229,402
===========-----------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities -- 2.6%
$ 600,000 New Jersey Economic Development Authority, VMIG-1 600,000
Dock Facility Revenue Refunding Bonds
(Bayonne/IMTT -- Bayonne Project), Series 1993A, Variable
Rate Demand Bonds, 3.400%, 12/01/27+
1,000,000 Port Authority of New York and New Jersey, Variable Rate VMIG-1 1,000,000
Demand Bonds, 3.650%, 6/01/20+
- ----------------------------------------------------------------------------------------------------------------------------------
$ 1,600,000 Total Temporary Investments -- 2.6% 1,600,000
===========-----------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.2% 758,683
------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $62,588,085
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Summary of Ratings** -- Portfolio of Investments (excluding temporary investments)
Standard Number Market Market
& Poor's Moody's of Securities Value Percent
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa 24 $26,147,162 43%
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 7 5,753,012 9
A+ A1 4 5,863,968 10
A, A- A, A2, A3 4 5,151,609 8
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 7 8,795,995 15
BB+, BB, BB- Ba1, Ba, Ba2, Ba3 3 2,152,599 4
Non-rated Non-rated 4 6,365,057 11
------------------------------------------------------------------------------------------------------------------
TOTAL 53 $60,229,402 100%
==================================================================================================================
* 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.
14 See accompanying notes to financial statements.
</TABLE>
<PAGE>
Portfolio of Investments Nuveen Municipal Bond Funds
Annual Report
Nuveen Flagship New Jersey
February 28, 1997
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,415,000 The Delaware River and Bay Authority, Revenue Bonds, 1/04 at 102 Aaa $ 1,311,564
Series 1993, 5.000%, 1/01/17
1,000,000 New Jersey Economic Development Authority, 4/97 at 102 A3 1,021,480
Gas Facilities Revenue Bonds, 1991 Series A
(Elizabethtown Gas Company Project), 6.750%, 10/01/21
(Alternative Minimum Tax)
100,000 New Jersey Economic Development Authority, District 12/03 at 102 BBB- 101,977
Heating and Cooling Revenue Bonds (Trigen - Trenton
Project), 1993 Series A, 6.200%, 12/01/10
200,000 New Jersey Economic Development Authority, Lease 3/02 at 102 Aaa 223,704
Rental Bonds, 1992 Series (Liberty State Park Project),
6.800%, 3/15/22 (Pre-refunded to 3/15/02)
1,000,000 New Jersey Economic Development Authority, Economic No Opt. Call N/R 1,175,020
Development Bonds (Yeshiva K'Tana of Passaic - 1992
Project), 8.000%, 9/15/18
2,965,000 New Jersey Economic Development Authority, Economic No Opt. Call N/R 3,115,385
Development Bonds (Bridgewater Resources, Inc.
Project), 1994 Series A, 8.375%, 11/01/04
(Alternative Minimum Tax)
100,000 New Jersey Economic Development Authority, Water 6/03 at 102 Aaa 93,609
Facilities Revenue Refunding Bonds (New Jersey
American Water Company Inc. Project), Series 1993,
5.500%, 6/01/23 (Alternative Minimum Tax)
150,000 New Jersey Economic Development Authority, Water 3/04 at 102 Aaa 151,617
Facilities Revenue Refunding Bonds (Hackensack
Water Company, Project - 1994 Series B), 5.900%,
3/01/24 (Alternative Minimum Tax)
250,000 New Jersey Economic Development Authority, Solid 4/02 at 102 Aa1 268,670
Waste Disposal Facility Revenue Bonds (Garden State
Paper Company, Inc. Project), 7.125%, 4/01/22
(Alternative Minimum Tax)
1,215,000 New Jersey Economic Development Authority, Economic 12/03 at 102 Aa3 1,230,005
Growth Bond, Composite Issue - 1992 Second Series H,
5.300%, 12/01/07 (Alternative Minimum Tax)
185,000 New Jersey Economic Development Authority, 12/02 at 101 1/2 Aa3 196,176
Economic Growth Bonds, Composite Issue - 1992
Second Series A3, 6.550%, 12/01/07 (Alternative
Minimum Tax)
</TABLE>
15
<PAGE>
Portfolio of Investments
Nuveen Flagship New Jersey - continued
February 28, 1997
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 625,000 New Jersey Economic Development Authority, 5/05 at 102 Aaa $ 658,650
Insured Revenue Bonds (Educational Testing
Service Issue), Series 1995B, 6.125%, 5/15/15
300,000 New Jersey Economic Development Authority, 7/04 at 102 Aaa 319,509
Revenue Bonds (RWJ Health Care Corp. at
Hamilton Obligated Group Project), Series 1994,
6.250%, 7/01/14
450,000 New Jersey Economic Development Authority, 7/06 at 102 Aaa 412,727
Revenue Bonds (Clara Maass Health System
Obligated Group Project), Series 1996,
5.000%, 7/01/25
300,000 New Jersey Economic Development Authority, 9/02 at 102 Aaa 309,060
State Contract Economic Recovery Bonds, Series
1992 - A, 6.000%, 3/15/21
650,000 New Jersey Economic Development Authority, Market 7/04 at 102 Aaa 678,665
Transition Facility Senior Lien Revenue Bonds,
Series 1994A, 5.875%, 7/01/11
975,000 New Jersey Educational Facilities Authority, Trenton 7/97 at 100 A+ 977,272
State College Issue, Revenue Bonds, Series 1976 D,
6.750%, 7/01/08
835,000 New Jersey Educational Facilities Authority, Princeton 7/04 at 100 Aaa 870,780
University Revenue Bonds, 1994 Series A,
5.875%, 7/01/11
410,000 New Jersey Educational Facilities Authority, Revenue 7/03 at 102 Baa 391,710
Funding Bonds (Monmouth College), Series 1993 - A,
5.625%, 7/01/13
1,930,000 New Jersey Health Care Facilities Financing Authority, No Opt. Call Aaa 2,307,026
Revenue Bonds, Hackensack Hospital Issue, Series A,
8.750%, 7/01/09
2,065,000 New Jersey Health Care Facilities Financing Authority, 7/01 at 102 A1 2,327,771
Revenue Bonds, Series 1990-E (Kennedy Memorial
Hospital), 8.375%, 7/01/10
700,000 New Jersey Health Care Facilities Financing Authority, 7/00 at 102 Aaa 762,202
Revenue Bonds, Community Medical Center/Kensington
Manor Care Center Issue, Series E, 7.000%, 7/01/20
480,000 New Jersey Health Care Facilities Financing Authority, 7/98 at 102 A 507,883
Revenue Bonds, Community Memorial Hospital
Association Issue Series C, 8.000%, 7/01/14
</TABLE>
16
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,000,000 New Jersey Health Care Facilities Financing Authority, 7/99 at 102 A- $ 3,189,840
Revenue Bonds, Newton Memorial Hospital Issue,
Series A, 7.500%, 7/01/19
400,000 New Jersey Health Care Facilities Financing Authority, 7/02 at 102 A 434,096
Refunding Revenue Bonds, Atlantic City Medical Center
Issue, Series C, 6.800%, 7/01/05
800,000 New Jersey Health Care Facilities Financing Authority, 7/02 at 102 Ba1 829,088
Revenue Bonds, Palisades Medical Center, Obligated
Group Issue, Series 1992, 7.500%, 7/01/06
250,000 New Jersey Health Care Facilities Financing Authority, 7/04 at 102 Aaa 265,880
Revenue Bonds, Monmouth Medical Center Issue,
Series C, 6.250%, 7/01/16
200,000 New Jersey Health Care Facilities Financing Authority, 7/04 at 102 Aaa 214,220
Bayonne Hospital Obligated Group, Revenue Bonds,
Series 1994, 6.250%, 7/01/12
200,000 New Jersey Health Care Facilities Financing Authority, 7/04 at 102 Aaa 204,500
Revenue Bonds, Newark Beth Israel Medical Center
Issue, Series 1994, 6.000%, 7/01/16
250,000 New Jersey Health Care Financing Authority, Refunding 8/04 at 102 AAA 262,068
Revenue Bonds, Irrington General Hospital Issue
(FHA Insured Mortgage), Series 1994,
6.375%, 8/01/15
1,750,000 New Jersey Housing Finance Agency, Special Pledge 11/97 at 103 A1 1,811,618
Revenue Obligations, 1975 Series One, 9.000%,
11/01/18
1,500,000 New Jersey Housing Mortgage Finance Agency, 5/06 at 102 Aaa 1,535,055
Multi-Family Housing Revenue Bonds, 1996 Series A,
6.200%, 11/01/18 (Alternative Minimum Tax)
2,000,000 New Jersey Housing and Mortgage Finance Agency, 5/05 at 102 Aaa 2,047,200
Multi-Family Housing Revenue Bonds, 1995 Series A,
6.000%, 11/01/14
700,000 New Jersey Housing and Mortgage Finance Agency, 5/02 at 102 A+ 753,116
Housing Revenue Bonds, 1992 Series A,
6.950%, 11/01/13
500,000 New Jersey Housing and Mortgage Finance Agency, 11/02 at 102 A+ 526,975
Housing Revenue Bonds, 1992 Series One,
6.600%, 11/01/14
</TABLE>
17
<PAGE>
Portfolio of Investments
Nuveen Flagship New Jersey - continued
February 28, 1997
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
New Jersey Housing and Mortgage Finance Agency,
Home Buyer Revenue Bonds, 1994 Series K:
$ 250,000 6.300%, 10/01/16 (Alternative Minimum Tax) 7/04 at 102 Aaa $ 256,538
400,000 6.375%, 10/01/26 (Alternative Minimum Tax) 7/04 at 102 Aaa 410,568
New Jersey Sports and Exposition Authority, Convention
Center Luxury Tax Bonds, 1992 A:
250,000 6.250%, 7/01/20 7/02 at 102 Aaa 265,283
100,000 5.500%, 7/01/22 7/02 at 102 Aaa 96,484
335,000 New Jersey Turnpike Authority, Turnpike Revenue Bonds, No Opt. Call AAA 402,546
1984 Series, 10.375%, 1/01/03
New Jersey Turnpike Authority, Turnpike Revenue Bonds,
Series 1991 C:
1,750,000 6.500%, 1/01/08 No Opt. Call Baa1 1,941,170
435,000 6.500%, 1/01/16 No Opt. Call Aaa 488,614
200,000 New Jersey Wastewater Treatment Trust, Wastewater 4/04 at 102 AA- 218,962
Treatment Bonds, Series 1994A, 6.500%, 4/01/14
1,000,000 State of New Jersey, General Obligation Bonds, Series D, No Opt. Call Aa1 1,074,750
5.800%, 2/15/07
200,000 The City of Atlantic City, In the County of Atlantic, No Opt. Call A- 205,754
New Jersey, General Obligation General Improvement
Bonds, Series 1994, 5.650%, 8/15/04
100,000 The City of Atlantic City, New Jersey, Municipal Utilities 5/02 at 102 A- 99,695
Authority Water System, Revenue Refunding Bonds,
Series 1993, 5.750%, 5/01/17
100,000 County of Atlantic, New Jersey, General Improvements 1/04 at 101 Aaa 106,889
Bonds, 6.000%, 1/01/07
150,000 County of Bergen Utility Authority, Water Pollution Control 12/02 at 102 Aaa 156,671
System Revenue, Series 1992 - B, 6.000%, 12/15/13
250,000 The Camden County Municipal Utilities Authority 7/06 at 102 Aaa 238,433
(Camden County, New Jersey), County Agreement Sewer
Revenue Refunding Bonds, 1996 Series, 5.125%, 7/15/17
1,000,000 Pollution Control Financing Authority of Camden County No Opt. Call BBB+ 1,025,380
(Camden County, New Jersey), Solid Waste Disposal
and Resource Recovery System Revenue Bonds,
Series 1991 C, 7.125%, 12/01/01
(Alternative Minimum Tax)
2,645,000 Pollution Control Finance Authority of Camden County 12/01 at 102 BBB+ 2,729,878
(Camden County, New Jersey), Solid Waste Disposal
and Resource Recovery System Revenue Bonds,
Series 1991 D, 7.250%, 12/01/10
</TABLE>
18
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 250,000 City of East Orange, In the County of Essex, New Jersey, No Opt. Call Aaa $ 315,210
Fiscal Year Adjustment Bonds (Qualified under the
Municipal Qualified Bond Act P.L. 1976, c. 38,
as Amended), 8.400%, 8/01/06
The Essex County Improvement Authority (Essex County,
New Jersey), City of Newark General Obligation Lease
Revenue Bonds, Series 1994:
300,000 6.350%, 4/01/07 4/04 at 102 Baa1 311,190
450,000 6.600%, 4/01/14 4/04 at 102 Baa1 470,120
100,000 The Essex County Improvement Authority (Essex County, 12/04 at 102 Aaa 116,254
New Jersey), General Obligation Lease Revenue Bonds,
Series 1994 (County Jail and Youth House Projects),
6.900%, 12/01/14
500,000 The Essex County Improvement Authority (Essex County, 12/02 at 102 Baa1 520,455
New Jersey), County Guaranteed Pooled Revenue Bonds,
Series 1992A, 6.500%, 12/01/12
250,000 The Board of Education of the Township of Hillsborough, No Opt. Call AA 529,490
In the County of Somerset, State of New Jersey, General
Obligation School Purpose Bonds, Series 1992, 5.875%,
8/01/11
240,000 Hoboken Housing Finance Corporation, Multifamily No Opt. Call AA+ 242,177
Mortgage Revenue Bonds (Project Uplift - FHA
Section 8), 1995 - A Refunding, 6.250%, 2/01/24
100,000 Parking Authority of the City of Hoboken, County of 3/02 at 102 Baa1 102,928
Hudson, New Jersey, Parking General Revenue
Refunding Bonds, Series 1992A, 6.625%, 3/01/09
250,000 The Hoboken - Union City Weehawken Sewerage Authority 8/02 at 102 Aaa 264,043
(New Jersey), Sewer Revenue Bonds (Refunding
Series 1992), 6.200%, 8/01/19
400,000 The Hudson County Improvement Authority, Multifamily 6/04 at 100 AAA 418,252
Housing Revenue Bonds, Series 1992 A (Conduit
Financing - Observer Park Project), 6.900%, 6/01/22
(Alternative Minimum Tax)
1,560,000 The Board of Education of the Borough of Little Ferry, No Opt. Call N/R 1,587,518
Bergen County, New Jersey, Certificates of
Participation, 6.300%, 1/15/08
50,000 The Monmouth County Improvement Authority (Monmouth 7/02 at 102 AA+ 53,870
County, New Jersey), Revenue Bonds, Series 1992
(Howell Township Board of Education Project), 6.450%,
7/01/08
</TABLE>
19
<PAGE>
Portfolio of Investments
Nuveen Flagship New Jersey -- continued
February 28, 1997
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Board of Education of the Township of Monroe,
In the County of Gloucester, New Jersey, School Bonds,
Series 1993:
$ 725,000 5.200%, 8/01/11 No Opt. Call Aaa $ 722,274
825,000 5.200%, 8/01/14 No Opt. Call Aaa 815,933
500,000 North Bergen Housing Development Corporation (North 9/09 at 100 N/R 512,390
Bergen, New Jersey), Mortgage Revenue Bonds,
Series 1978 (FHA Insured Mortgage Loan -- Section 8
Assisted Project), 7.400%, 9/01/20
300,000 The Township of North Bergen (Hudson County, 8/02 at 102 Aaa 329,259
New Jersey), Fiscal Year Adjustment General Obligation
Bonds, Series 1992, 6.500%, 8/15/12
200,000 North New Jersey District Water Supply Commission of the 7/03 at 102 Aaa 206,398
State of New Jersey, Wanaque South Project, Revenue
Refunding Bonds, Series 1993, 6.000%, 7/01/21
2,350,000 The Ocean County Utilities Authority (New Jersey), 4/97 at 100 Aaa 2,240,467
Wastewater Revenue Bonds, Refunding Series 1987,
5.000%, 1/01/14
165,000 Parsippany -- Troy Hills Township, General Obligation, No Opt. Call Aa 100,734
Capital Appreciation Bonds, Series 1992, 0.000%,
4/01/07
2,215,000 County of Passaic, State of New Jersey, General No Opt. Call Aaa 2,198,388
Obligation Refunding Bonds, Series 1993,
5.125%, 9/01/12
1,100,000 Sparta Township School District General Obligation 9/06 at 100 AAA 1,119,690
Bonds (Unlimited Tax), 5.800%, 9/01/18
250,000 The City of Union City, In the County of Hudson, State of No Opt. Call Aaa 279,645
New Jersey, General Obligation School Purpose Bonds,
Series 1992, 6.375%, 11/01/10
250,000 Pollution Control Financing Authority of Union County No Opt. Call A3 268,168
(New Jersey), Pollution Control Revenue Refunding
Bonds, American Cyanamid Company Issue, Series 1994,
5.800%, 9/01/09
270,000 The Union County Utilities Authority (New Jersey), 6/02 at 102 Aaa 287,582
Solid Waste System Revenue Bonds, Series D,
6.850%, 6/15/14 (Alternative Minimum Tax)
The Union County Utilities Authority (New Jersey),
Solid Waste System Revenue Bonds, 1991 Series A:
195,000 7.100%, 6/15/06 (Alternative Minimum Tax) 6/02 at 102 BB 200,503
1,100,000 7.200%, 6/15/14 (Alternative Minimum Tax) 6/02 at 102 BB 1,128,127
</TABLE>
20
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100,000 University of Medicine and Dentistry of New Jersey 12/01 at 102 AA $ 110,522
Bonds, Series E, 6.500%, 12/01/18
(Pre-refunded to 12/01/01)
300,000 The Wanaque Borough Sewerage Authority (Passaic 12/02 at 102 Baa1 320,244
County, New Jersey), Sewer Revenue Bonds,
(Series 1992), (Bank Qualified), 7.000%, 12/01/21
75,000 The Wanaque Valley Regional Sewerage Authority 9/03 at 102 Baa 72,560
(Passaic County, New Jersey), Sewer Revenue
Bonds (1993 Series A), 6.125%, 9/01/22
2,145,000 The Port Authority of New York and New Jersey, 8/01 at 101 AA- 2,316,150
Consolidated Bonds, Seventy-Fourth Series,
6.750%, 8/01/26
125,000 The Port Authority of New York and New Jersey, 10/04 at 101 Aaa 136,249
Consolidated Bonds, Ninety-Sixth Series,
6.600%, 10/01/20 (Alternative Minimum Tax)
200,000 The Port Authority of New York and New Jersey, 6/05 at 101 AA- 200,366
Consolidated Bonds, One Hundredth Series,
5.750%, 12/15/20 (Alternative Minimum Tax)
200,000 The Port Authority of New York and New Jersey, 7/04 at 101 AA- 208,917
Consolidated Bonds, Ninety-Fifth Series,
5.875%, 7/15/09 (Alternative Minimum Tax)
1,175,000 Virgin Islands Housing Finance Authority, Single Family 3/05 at 102 AAA 1,202,812
Mortgage Revenue Refunding Bonds (GNMA
Mortgage--Backed Securities Program), 1995 Series A,
6.450%, 3/01/16 (Alternative Minimum Tax)
2,000,000 Commonwealth of Puerto Rico, Public Improvement 7/05 at 101 1/2 Aaa 2,027,060
Bonds of 1995 (General Obligation Bonds),
5.750%, 7/01/24
550,000 Commonwealth of Puerto Rico, Public Improvement 7/06 at 101 1/2 A 523,562
Bonds of 1996 (General Obligation Bonds),
5.400%, 7/01/25
1,000,000 Puerto Rico Aqueduct and Sewer Authority, Revenue 7/06 at 101 1/2 AAA 1,074,630
Bonds, Series 1988A, 7.875%, 7/01/17
(Pre-refunded to 7/01/98)
170,000 Puerto Rico Aqueduct and Sewer Authority, Refunding 7/06 at 101 1/2 A 157,012
Bonds, Series 1995, Guaranteed by the Commonwealth
of Puerto Rico, 5.000%, 7/01/15
60,000 Puerto Rico Highway and Transportation Authority, 7/02 at 101 1/2 AAA 67,245
Highway Revenue Bonds (Series T), 6.625%,
7/01/18 (Pre-refunded to 7/01/02)
</TABLE>
21
<PAGE>
Portfolio of Investments
Nuveen Flagship New Jersey -- continued
February 28, 1997
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 225,000 Puerto Rico Commonwealth Highway Authority, 7/00 at 100 A $ 225,888
Highway Revenue Bonds, Series 1990 --
Q, 6.000%, 7/01/20
Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series P:
790,000 7.000%, 7/01/07 No Opt. Call Baa1 907,686
1,875,000 7.000%, 7/01/21 (Pre-refunded to 7/01/01) 7/01 at 102 Aaa 2,109,767
200,000 Puerto Rico Electric Power Authority, Power Revenue 7/02 at 101 1/2 Baa1 208,023
Bonds, Series R, 6.250%, 7/01/17
250,000 Puerto Rico Electric Power Authority, Power Revenue 7/04 at 102 Baa1 264,387
Bonds, Series T, 6.375%, 7/01/24
1,500,000 Puerto Rico Electric Power Authority, Power Revenue 7/05 at 100 Baa1 1,390,244
Refunding, Series Z, 5.250%, 7/01/21
1,000,000 Puerto Rico Industrial, Tourist, Educational, Medical, and 1/05 at 102 Aaa 1,066,110
Environmental Control Facilities Financing Authority,
Hospital Revenue Bonds, 1995 Series A (Hospital
Auxilio Mutuo Obligated Group Project), 6.250%, 7/01/16
- --------------------------------------------------------------------------------------------------------------------------------
$68,100,000 Total Investments -- (cost $68,883,751) -- 97.0% 71,134,232
===========---------------------------------------------------------------------------------------------------------------------
Temporary Investments in Short-Term Municipal Securities -- 2.2%
$ 600,000 New Jersey Economic Development Authority, VMIG-1 600,000
Dock Facility Revenue Refunding Bonds
(Bayonne/IMTT -- Bayonne Project), Series 1993A, Variable
Rate Demand Bonds, 3.150%, 12/01/27+
1,000,000 Port Authority of New York and New Jersey, Variable Rate VMIG-1 1,000,000
Demand Bonds, 3.450%, 6/01/20+
- --------------------------------------------------------------------------------------------------------------------------------
$ 1,600,000 Total Temporary Investments -- 2.2% 1,600,000
===========---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 0.8% 582,190
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $73,316,422
================================================================================================================
</TABLE>
22
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
Summary of Ratings** -- Portfolio of Investments (excluding
temporary investments)
<TABLE>
<CAPTION>
Standard Number Market Market
& Poor's Moody's of Securities Value Percent
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa 47 $32,047,330 45%
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 13 6,750,789 10
A+ A1 5 6,396,752 9
A, A- A, A2, A3 10 6,633,378 9
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 15 10,757,952 15
BB+, BB, BB- Ba1, Ba, Ba2, Ba3 3 2,157,718 3
Non-rated Non-rated 4 6,390,313 9
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL 97 $71,134,232 100%
=================================================================================================================================
* 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.
23 See accompanying notes to financial statements.
</TABLE>
<PAGE>
Portfolio of Investments
Nuveen Flagship New Jersey Intermediate
February 28, 1997
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100,000 The Board of Education of the City of Atlantic City, 12/02 at 102 Aaa $107,148
In the County of Atlantic, New Jersey, School Bonds,
Series 1992, 6.000%, 12/01/06
250,000 The Atlantic City Municipal Utilities Authority, Atlantic 5/02 at 102 A- 252,473
County, New Jersey, Water System Revenue Bonds,
Series 1990, 5.650%, 5/01/07
100,000 County of Camden, New Jersey, General Obligation No Opt. Call Aaa 104,867
Refunding Bonds, Series 1992, 5.500%, 6/01/02
320,000 The Essex County Improvement Authority (Essex County, 4/04 at 102 Baa1 331,936
New Jersey), City of Newark General Obligation,
Lease Revenue Bonds, Series 1994, 6.350%, 4/01/07
330,000 Parking Authority of the City of Hoboken, County of No Opt. Call Baa1 341,464
Hudson, New Jersey, Parking General Revenue
Refunding Bonds, Series 1992A, 5.850%, 3/01/00
400,000 The City of Jersey City (Hudson County, New Jersey), No Opt. Call AA 435,280
School Bonds, 6.500%, 2/15/02
250,000 The Mercer County Improvement Authority, Mercer County, No Opt. Call Aa 179,208
New Jersey, Revenue Bonds (Hamilton Board of
Education Lease Project, Township Guaranteed
Refunding Series 1992), 0.000%, 4/01/04
100,000 The Monmouth County Improvement Authority 7/02 at 102 AA+ 107,703
(Monmouth County, New Jersey), Revenue Bonds,
Series 1992 (Howell Township Board of Education
Project), 6.000%, 7/01/03
100,000 Township of Montclair, In the County of Essex, New 3/00 at 101 1/2 Aaa 103,965
Jersey, General Obligation Bonds, 5.800%, 3/01/06
250,000 New Jersey Economic Development Authority, District 12/03 at 102 BBB- 260,770
Heating and Cooling Revenue Bonds, 6.100%, 12/01/04
150,000 New Jersey Economic Development Authority, Electric No Opt. Call BB+ 153,486
Energy Facility Revenue Bonds (Vineland Cogeneration
Limited Partnership Project), Series 1992, 6.750%, 6/01/99
100,000 New Jersey Economic Development Authority, Economic No Opt. Call A1 103,376
Development Refunding Bonds (Burlington Coat
Factory Warehouse of New Jersey, Inc. -- 1985 Project),
5.400%, 9/01/03
200,000 New Jersey Health Care Facilities Financing Authority, 7/04 at 102 Aaa 212,840
Revenue Bonds, Newark Beth Israel Medical Center
Issue, Series 1994, 5.800%, 7/01/07
</TABLE>
24
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100,000 New Jersey Health Care Facilities Financing Authority, 7/02 at 102 Aaa $106,232
West Jersey Health System, Series 1992, 6.000%, 7/01/07
250,000 New Jersey Health Care Facilities Financing Authority, 7/04 at 102 Aaa 275,968
Revenue Bonds, Bayonne Hospital Obligated Group
Issue, Series 1994, 6.400%, 7/01/07
250,000 New Jersey Health Care Facilities Financing Authority, No Opt. Call Aaa 264,695
Revenue Bonds, Monmouth Medical Center Issue,
Series C, 5.700%, 7/01/02
250,000 New Jersey Health Care Facilities Financing Authority, 7/04 at 102 Aaa 269,218
Revenue Bonds, Dover General Hospital and Medical
Center Issue, Series 1994, 5.900%, 7/01/05
480,000 New Jersey Economic Development Authority, Insured No Opt. Call Aaa 500,563
Revenue Bonds (Educational Testing Service Issue),
Series 1995B, 5.500%, 5/15/05
300,000 New Jersey Economic Development Authority, Market No Opt. Call Aaa 340,806
Transition Facility Senior Lien Revenue Bonds,
Series 1994A, 7.000%, 7/01/04
100,000 New Jersey Sports and Exposition Authority, Convention 7/02 at 102 Aaa 106,676
Center Luxury Tax Bonds, 1992 Series A, 6.000%, 7/01/07
200,000 State of New Jersey General Obligation Bonds, No Opt. Call Aa1 152,934
Refunding Bonds (Series D), 0.000%, 2/15/03
140,000 New Jersey Educational Authority, Seton Hall Facilities 7/01 at 102 Baa1 151,739
University Project Revenue Bonds, 1991 Series,
Project D, 6.600%, 7/01/02
330,000 New Jersey Educational Facilities Authority, Higher No Opt. Call BBB+ 342,573
Education Facilities Revenue Bonds, St. Peter's College
Issue, 1992 Series B, 6.000%, 7/01/99
160,000 New Jersey Educational Facilities Authority, Stevens 7/02 at 102 A- 173,296
Institute of Technology Issue Revenue Bonds,
1992 Series A, 6.400%, 7/01/03
85,000 Higher Education Assistance Authority (State of New 7/02 at 102 A+ 85,217
Jersey), Student Loan Revenue Bonds, 1992
Series A, 6.000%, 1/01/06
175,000 New Jersey Transportation Trust Fund Authority, 6/05 at 102 Aaa 175,886
Transportation System Bonds, 1995 Series A,
5.250%, 6/15/09
100,000 North Jersey District Water Supply Commission of the 7/03 at 102 Aaa 106,608
State of New Jersey, Wanaque South Project, Revenue
Refunding Bonds, Series 1993, 5.700%, 7/01/05
</TABLE>
25
<PAGE>
Portfolio of Investments
Nuveen Flagship New Jersey Intermediate -- continued
February 28, 1997
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 200,000 County of Ocean, New Jersey, General Improvement 10/01 at 102 Aa $215,074
Bonds, Series 1991A, 6.250%, 10/01/06
185,000 The Board of Education of the City of Perth Amboy, No Opt. Call Aaa 202,277
In the County of Middlesex, New Jersey,
School Bonds, 6.200%, 8/01/04
200,000 The Port Authority of New York and New Jersey 7/04 at 101 AA- 208,434
Consolidated Bonds, Ninety-Fifth Series,
5.500%, 7/15/05
100,000 South Jersey Transportation Authority, Transportation 11/02 at 102 Aaa 106,714
Revenue Bonds, 1992 Series, 5.900%, 11/01/06
125,000 Township of Woodbridge, In the County of Middlesex, 8/02 at 102 A1 134,358
State of New Jersey, 6.150%, 8/15/06
300,000 The Port Authority of New York and New Jersey, Special No Opt. Call N/R 323,684
Project Bonds, Series 4, 7.000%, 10/01/07
250,000 Puerto Rico Electric Power Authority, 5.900%, 7/01/01 No Opt. Call Baa1 262,742
- --------------------------------------------------------------------------------------------------------------------------------
$ 6,930,000 Total Investments -- (cost $6,838,216) -- 102.7% 7,200,210
===========---------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- (2.7)% (189,292)
----------------------------------------------------------------------------------------------------------------
Net Assets -- 100% $7,010,918
================================================================================================================
Summary of Ratings** -- Portfolio of Investments
Standard Number of Market Market
& Poor's Moody's Securities Value Percent
----------------------------------------------------------------------------------------------------------------
AAA Aaa 15 $2,984,463 40%
AA+, AA, AA- Aa1, Aa, Aa2, Aa3 6 1,298,633 18
A+ A1 3 322,951 5
A, A- A, A2, A3 2 425,769 6
BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 6 1,691,224 24
BB+, BB, BB- Ba1, Ba, Ba2, Ba3 1 153,486 2
Non-rated Non-rated 1 323,684 5
----------------------------------------------------------------------------------------------------------------
Total 34 $7,200,210 100%
================================================================================================================
* 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.
26 See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nuveen Municipal Bond Funds
Annual Report
Statement of Net Assets
Nuveen Flagship
Nuveen Nuveen Flagship New Jersey
New Jersey* New Jersey Intermediate
-------------------------------------------------
1/31/97 2/28/97 2/28/97
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in municipal securities, at market value (note 1) $60,229,402 $71,134,232 $7,200,210
Temporary investments in short-term municipal securities,
at amortized cost (note 1) 1,600,000 1,600,000 --
Receivables:
Interest 763,197 1,072,312 93,875
Shares sold 116,197 105,279 --
Investments sold 10,000 -- --
Other assets 5,808 26,712 13,389
- ----------------------------------------------------------------------------------------------------------------------
Total assets 62,724,604 73,938,535 7,307,474
- ----------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 3,008 158,129 160,364
Payable for shares redeemed 40,447 147,650 75,316
Accrued expenses:
Management fees (note 6) 28,933 31,048 3,021
Other 64,131 69,856 28,713
Dividends payable -- 215,430 29,142
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 136,519 622,113 296,556
- ----------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $62,588,085 $73,316,422 $7,010,918
======================================================================================================================
Class A Shares (note 1)
Net assets $17,071,934 $27,879,126 $7,010,918
Shares outstanding 1,671,230 2,717,000 680,702
Net asset value and redemption price per share $ 10.22 $ 10.26 $10.30
Offering price per share (net asset value per share plus
maximum sales charge of 4.50%, 4.20% and 3.00%,
respectively, of offering price) $ 10.70 $ 10.71 $10.62
======================================================================================================================
Class B Shares (note 1)
Net assets N/A $ 74,217 N/A
Shares outstanding N/A 7,230 N/A
Net asset value, offering and redemption price per share N/A $ 10.26 N/A
======================================================================================================================
Class C Shares (note 1)
Net assets $ 2,610,879 $ 2,712,111 --
Shares outstanding 255,888 264,614 --
Net asset value, offering and redemption price per share $ 10.20 $ 10.25 --
======================================================================================================================
Class R Shares (note 1)
Net assets $42,905,272 $42,650,968 --
Shares outstanding 4,195,136 4,151,700 --
Net asset value, offering and redemption price per share $ 10.23 $ 10.27 --
======================================================================================================================
</TABLE>
* Nuveen New Jersey was reorganized into Nuveen Flagship New Jersey and
ceased to exist after the close of business on January 31, 1997 (see
note 1 of the Notes to Financial Statements).
N/A - Nuveen New Jersey was not authorized to issue Class B Shares. Nuveen
Flagship New Jersey Intermediate is not authorized to issue Class B
Shares and prior to February 1, 1997, its predecessor (see note 1 of
the Notes to Financial Statements) did not issue Class C Shares and
was not authorized to issue Class R Shares.
See accompanying notes to financial statements.
27
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Nuveen Flagship
Nuveen Nuveen Flagship New Jersey
New Jersey* New Jersey Intermediate
---------------------------------------------------
Year ended One month ended Nine months ended
1/31/97 2/28/97 2/28/97
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Tax-exempt interest income (note 1) $3,525,548 $363,696 $319,418
- --------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 324,016 31,048 28,675
12b-1 service fees -- Class A (notes 1
and 6) 35,270 4,293 11,368
12b-1 distribution and service fees --
Class B (notes 1 and 6) N/A 15 N/A
12b-1 distribution and service fees --
Class C (notes 1 and 6) 19,286 1,534 --
Shareholders' servicing agent fees and
expenses 85,895 5,968 12,024
Custodian's fees and expenses 46,622 3,664 30,802
Trustees' fees and expenses (note 6) 1,002 117 195
Professional fees 15,660 1,796 8,333
Shareholders' reports - printing and
mailing expenses 32,296 2,913 10,270
Federal and state registration fees 5,092 -- --
Amortization of deferred organization
costs 7,390 -- 8,020
Other expenses 3,381 101 169
- --------------------------------------------------------------------------------------------------
Total expenses before expense
reimbursement 575,910 51,449 109,856
Expense reimbursement from investment
adviser (note 6) (79,514) (25,690) (71,304)
- --------------------------------------------------------------------------------------------------
Net expenses 496,396 25,759 38,552
- --------------------------------------------------------------------------------------------------
Net investment income 3,029,152 337,937 280,866
- --------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from
Investment
Net realized gain (loss) from investment
transactions (notes 1 and 4) (98,679) -- 35,472
Net change in unrealized appreciation or
depreciation of investments (891,352) 328,719 90,246
- --------------------------------------------------------------------------------------------------
Net gain (loss) from investments (990,031) 328,719 125,718
- --------------------------------------------------------------------------------------------------
Net increase in net assets from operations $2,039,121 $666,656 $406,584
==================================================================================================
</TABLE>
* Nuveen New Jersey was reorganized into Nuveen Flagship New
Jersey and ceased to exist after the close of business on
January 31, 1997 (see note 1 of the Notes to Financial
Statements).
N/A - Nuveen New Jersey was not authorized to issue Class B Shares.
Nuveen Flagship New Jersey Intermediate is not authorized to
issue Class B Shares and prior to February 1, 1997, its
predecessor (see note 1 of the Notes to Financial Statements)
did not issue Class C Shares and was not authorized to issue
Class R Shares.
See accompanying notes to financial statements.
28
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Nuveen Nuveen Flagship
New Jersey* New Jersey
------------------------- ---------------
Year ended Year ended One month ended
1/31/97 1/31/96 2/28/97
- -------------------------------------------------------------------------- ---------------
<S> <C> <C> <C>
Operations
Net investment income $ 3,029,152 $ 2,617,653 $ 337,937
Net realized gain (loss) from investment
transactions (notes 1 and 4) (98,679) (30,019) --
Net change in unrealized appreciation or
depreciation of investments (891,352) 3,249,789 328,719
- -------------------------------------------------------------------------- ---------------
Net increase in net assets from operations 2,039,121 5,837,423 666,656
- -------------------------------------------------------------------------- ---------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (704,372) (329,633) (125,569)
Class B N/A N/A (49)
Class C (82,289) (32,025) (10,843)
Class R (2,250,619) (2,282,656) (200,899)
- -------------------------------------------------------------------------- ---------------
Decrease in net assets from
distributions to shareholders (3,037,280) (2,644,314) (337,360)
- -------------------------------------------------------------------------- ---------------
Fund Share Transactions (note 2)
Net proceeds from shares issued in the
reorganization of Nuveen New Jersey
(note 1) -- -- 62,588,085
Net proceeds from shares issued in the
reorganization of Flagship New Jersey
(note 1) -- -- 10,797,401
Net proceeds from sale of shares 14,264,870 12,793,035 859,670
Net asset value of shares issued to
shareholders due to reinvestment
of distributions 2,264,231 1,765,951 --
- -------------------------------------------------------------------------- ---------------
16,529,101 14,558,986 74,245,156
- -------------------------------------------------------------------------- ---------------
Cost of shares redeemed (7,972,757) (5,509,237) (1,308,030)
- -------------------------------------------------------------------------- ---------------
Net increase (decrease) in net assets derived
from Fund share transactions 8,556,344 9,049,749 72,937,126
- -------------------------------------------------------------------------- ---------------
Net increase (decrease) in net assets 7,558,185 12,242,858 73,266,422
- -------------------------------------------------------------------------- ---------------
Net assets at the beginning of year 55,029,900 42,787,042 50,000
- -------------------------------------------------------------------------- ---------------
Net assets at the end of year $62,588,085 $55,029,900 $ 73,316,422
========================================================================== ===============
Balance of undistributed net investment
income at end of year $ -- $ 8,128 $ 577
========================================================================== ===============
</TABLE>
* Nuveen New Jersey was reorganized into Nuveen Flagship New Jersey and
ceased to exist after the close of business on January 31, 1997 (see
note 1 of the Notes to Financial Statements).
N/A - Nuveen New Jersey was not authorized to issue Class B Shares. Nuveen
Flagship New Jersey Intermediate is not authorized to issue Class B
Shares and prior to February 1, 1997, its predecessor (see note 1 of
the Notes to Financial Statements) did not issue Class C Shares and
was not authorized to issue Class R Shares.
See accompanying notes to financial statements.
29
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Nuveen Flagship New Jersey Intermediate*
----------------------------------------
Nine months ended Year ended
2/28/97 5/31/96
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 280,866 $ 447,320
Net realized gain (loss) from investment transactions
(notes 1 and 4) 35,472 12,478
Net change in unrealized appreciation or depreciation
of investments 90,246 (98,145)
- ------------------------------------------------------------------------------------------------
Net increase in net assets from operations 406,584 361,653
- ------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (282,787) (446,648)
Class B N/A N/A
Class C -- --
Class R -- N/A
- ------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (282,787) (446,648)
- ------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from shares issued in the
reorganization of Nuveen New Jersey
(note 1) -- --
Net proceeds from shares issued in the
reorganization of Flagship New Jersey
(note 1) -- --
Net proceeds from sale of shares 300,959 1,086,130
Net asset value of shares issued to shareholders due to
reinvestment of distributions 174,134 265,262
- ------------------------------------------------------------------------------------------------
475,093 1,351,392
- ------------------------------------------------------------------------------------------------
Cost of shares redeemed (1,905,553) (2,165,321)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived
from Fund share transactions (1,430,460) (813,929)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (1,306,663) (898,924)
- ------------------------------------------------------------------------------------------------
Net assets at the beginning of year 8,317,581 9,216,505
- ------------------------------------------------------------------------------------------------
Net assets at the end of year $ 7,010,918 $ 8,317,581
================================================================================================
Balance of undistributed net investment income
at end of year $ 33 $ 1,954
================================================================================================
</TABLE>
* Nuveen Flagship New Jersey Intermediate information included for the year
ended May 31, 1996, reflects the financial information of Flagship New
Jersey Intermediate (see note 1 of the Notes to Financial Statements).
N/A - Nuveen New Jersey was not authorized to issue Class B Shares. Nuveen
Flagship New Jersey Intermediate is not authorized to issue Class B Shares
and prior to February 1, 1997, its predecessor (see note 1 of the Notes to
Financial Statements) did not issue Class C Shares and was not authorized
to issue Class R Shares.
See accompanying notes to financial statements.
30
<PAGE>
Notes to Financial Statements Nuveen Municipal Bond Funds
Annual Report
1. General Information and Significant Accounting Policies
The Nuveen Flagship Multistate Trust II (the "Trust") is an open-end
diversified management investment company registered under the
Investment Company Act of 1940, as amended. The Trust comprises the
Nuveen Flagship New Jersey Municipal Bond Fund ("Nuveen Flagship New
Jersey") and the Nuveen Flagship New Jersey Intermediate Municipal
Bond Fund ("Nuveen Flagship New Jersey Intermediate"), among others.
The Trust was organized as a Massachusetts business trust on July 1,
1996.
The John Nuveen Company, parent of John Nuveen & Co. Incorporated and
Nuveen Advisory Corp., respectively, the distributor ("Distributor")
and investment advisor ("Adviser") of the Funds, entered into an
agreement under which Nuveen acquired Flagship Resources Inc. and
after the close of business on January 31, 1997, consolidated their
respective mutual fund businesses. This agreement was approved at a
meeting by the shareholders of the Flagship Funds in December, 1996.
After the close of business on January 31, 1997, Nuveen New Jersey
Tax-Free Value Fund ("Nuveen New Jersey") and Flagship's New Jersey
Double Tax Exempt Fund ("Flagship New Jersey") reorganized into Nuveen
Flagship New Jersey. Flagship's New Jersey Intermediate Tax Exempt
Fund ("Flagship New Jersey Intermediate") was reorganized into the
Trust and renamed Nuveen Flagship New Jersey Intermediate. Prior to
these reorganizations, Nuveen New Jersey was a series of the Nuveen
Multistate Tax-Free Trust while Flagship New Jersey and Flagship New
Jersey Intermediate were each a sub-trust of the Flagship Tax Exempt
Funds Trust. Nuveen New Jersey had a fiscal year end of January 31
prior to being reorganized into Nuveen Flagship New Jersey which has a
February 28 fiscal year end. Flagship New Jersey Intermediate had a
May 31 fiscal year end prior to being reorganized into the Trust and
now has a February 28 fiscal year end.
Each Fund seeks to provide high double or triple tax-free income and
preservation of capital through investments in diversified portfolios
of quality municipal bonds whose income is exempt from regular
federal, state and, in some cases, local income taxes.
The following is a summary of significant accounting policies followed
by the Funds in the preparation of their financial statements in
accordance with generally accepted accounting principles.
Securities Valuation
The prices of municipal bonds in each Fund's investment portfolio are
provided by a pricing service approved and supervised by the Fund's
Board of Trustees. When price quotes are not readily available (which
is usually the case for municipal securities), the pricing service
establishes fair market value based on yields or prices of municipal
bonds of comparable quality, type of issue, coupon, maturity and
rating, indications of value from securities dealers and general
market conditions. Temporary investments in securities that have
variable rate and demand features qualifying them as short-term
securities are traded and valued at amortized cost.
31
<PAGE>
Notes to Financial Statements - continued
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. The Funds had
no such purchase commitments at the end of the periods covered by this
report.
Interest Income
Interest income is determined on the basis of interest accrued,
adjusted for amortization of premiums and accretion of discounts on
long-term debt securities when required for federal income tax
purposes.
Dividends and Distributions to Shareholders
Nuveen New Jersey and Nuveen Flagship New Jersey, for the periods
covered by this report, and Nuveen Flagship New Jersey Intermediate,
from February 1, 1997, to February 28, 1997, declared tax-exempt net
investment income as a dividend monthly and payment was made or
reinvestment was credited to shareholder accounts after month-end. Net
realized capital gains and/or market discount from investment
transactions are distributed to shareholders not less frequently than
annually. Furthermore, capital gains are distributed only to the
extent they exceed available capital loss carryovers. Prior to the
reorganization, tax-exempt net investment income for Flagship New
Jersey Intermediate was declared as a dividend daily and payment was
made on the last business day of each month.
Distributions to shareholders of tax-exempt net investment income, net
realized capital gains and/or market discount 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
occur and will be classified as either distributions in excess of net
investment income, distributions in excess of net realized gains
and/or distributions in excess of ordinary taxable income from
investment transactions, where applicable.
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 to
shareholders all of its tax-exempt net investment income, in addition
to any significant amounts of net realized capital gains and/or market
discount from investment transactions. The Funds currently consider
significant net realized capital gains and/or market discount 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 New Jersey state
income taxes, to retain such tax-exempt status when distributed to the
shareholders of the respective Funds. All income dividends paid during
the periods covered by this report have been designated Exempt
Interest Dividends.
32
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
Flexible Sales Charge Program
Each Fund of the Trust offers Class A, Class C and Class R Shares.
Class A Shares incur a sales charge on purchases and an annual 12b-1
service fee. Class C Shares are sold without a sales charge on
purchases but incur annual 12b-1 distribution and service fees. An
investor purchasing Class C Shares agrees to pay a contingent deferred
sales charge ("CDSC") of 1% if Class C Shares are redeemed within 18
months of purchase. Class R Shares are not subject to any sales charge
on purchases or 12b-1 distribution or service fees. Class R Shares are
available for purchases of over $1 million and in other limited
circumstances. Nuveen Flagship New Jersey also offers Class B Shares
which are sold without a sales charge on purchases but incur annual
12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC up to 5% depending upon the length of time
the shares are held (CDSC declines to 0% at the end of six years).
Derivative Financial Instruments
The Funds may invest 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
periods covered by this report.
Expense Allocation
Expenses of each Fund that are not directly attributable to a specific
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.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets from operations
during the reporting period.
33
<PAGE>
Notes to Financial Statements - continued
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Nuveen New Jersey*
----------------------------------------------------
Year ended Year ended
1/31/97 1/31/96
----------------------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 798,711 $ 8,132,760 765,342 $ 7,757,684
Class B N/A N/A N/A N/A
Class C 182,286 1,861,710 56,488 573,759
Class R 418,474 4,270,400 440,121 4,461,592
Shares issued in the reorganization of
Nuveen New Jersey:
Class A --- --- --- ---
Class B N/A N/A N/A N/A
Class C --- --- --- ---
Class R --- --- --- ---
Shares issued in the reorganization of
Flagship New Jersey:
Class A --- --- --- ---
Class B N/A N/A N/A N/A
Class C --- --- --- ---
Class R --- --- --- ---
Shares issued to shareholders due to
reinvestment of distributions:
Class A 49,041 499,709 17,820 181,529
Class B N/A N/A N/A N/A
Class C 4,353 44,287 1,638 16,615
Class R 168,605 1,720,235 154,754 1,567,807
- ----------------------------------------------------------------------------------------------------
1,621,470 16,529,101 1,436,163 14,558,986
- ----------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (201,249) (2,042,963) (40,094) (406,168)
Class B N/A N/A N/A N/A
Class C (33,320) (335,344) (3,290) (32,865)
Class R (550,089) (5,594,450) (500,152) (5,070,204)
- ----------------------------------------------------------------------------------------------------
(784,658) (7,972,757) (543,536) (5,509,237)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) 836,812 $ 8,556,344 892,627 $ 9,049,749
====================================================================================================
</TABLE>
* Nuveen New Jersey was reorganized into Nuveen Flagship New Jersey and
ceased to exist after the close of business on January 31, 1997 (see
note 1 of the Notes to Financial Statements).
N/A -- Nuveen New Jersey was not authorized to issue Class B Shares. Nuveen
Flagship New Jersey Intermediate is not authorized to issue Class B
Shares and prior to February 1, 1997, its predecessor (see note 1 of the
Notes to Financial Statements) did not issue Class C Shares and was not
authorized to issue Class R Shares.
34
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Nuveen Flagship New Jersey Nuveen Flagship New Jersey Intermediate*
------------------------------- ----------------------------------------------------
One month ended Nine months ended Year ended
2/28/97 2/28/97 5/31/96
------------------------------- ----------------------------------------------------
Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 39,089 $ 402,796 29,384 $ 300,959 105,150 $ 1,086,130
Class B 6,006 61,899 N/A N/A N/A N/A
Class C 8,563 88,093 --- --- --- ---
Class R 29,727 306,882 --- --- N/A N/A
Shares issued in the
reorganization
of Nuveen
New Jersey:
Class A 1,671,230 17,071,934 --- --- --- ---
Class B --- --- N/A N/A N/A N/A
Class C 255,888 2,610,879 --- --- --- ---
Class R 4,195,136 42,905,272 --- --- N/A N/A
Shares issued in the
reorganization
of Flagship
New Jersey:
Class A 1,056,994 10,797,401 --- --- --- ---
Class B --- --- N/A N/A N/A N/A
Class C --- --- --- --- --- ---
Class R --- --- --- --- N/A N/A
Shares issued to
shareholders due
to reinvestment
of distributions:
Class A --- --- 17,041 174,134 25,702 265,262
Class B --- --- N/A N/A N/A N/A
Class C --- --- --- --- --- ---
Class R --- --- --- --- N/A N/A
--------- ---------- ------ ------- ------- ---------
7,262,633 74,245,156 46,425 475,093 130,852 1,351,392
--------- ---------- ------ ------- ------- ---------
Shares redeemed:
Class A (51,537) (530,506) (185,962) (1,905,553) (209,872) (2,165,321)
Class B --- --- N/A N/A N/A N/A
Class C (1,062) (10,935) --- --- --- ---
Class R (74,385) (766,589) --- --- N/A N/A
--------- ---------- ------ ------- ------- ---------
(126,984) (1,308,030) (185,962) (1,905,553) (209,872) (2,165,321)
--------- ---------- ------- --------- ------- ---------
Net increase (decrease) 7,135,649 $72,937,126 (139,537) $(1,430,460) (79,020) $ (813,929)
========= ========== ======= ========= ======= =========
</TABLE>
* Nuveen Flagship New Jersey Intermediate information included for the year
ended May 31, 1996, reflects the financial information of Flagship New
Jersey Intermediate (see note 1 of the Notes to Financial Statements).
N/A -- Nuveen New Jersey was not authorized to issue Class B Shares. Nuveen
Flagship New Jersey Intermediate is not authorized to issue Class B
Shares and prior to February 1, 1997, its predecessor (see note 1 of the
Notes to Financial Statements) did not issue Class C Shares and was not
authorized to issue Class R Shares.
35
<PAGE>
Notes to Financial Statements - continued
3. Distributions to Shareholders
On March 7, 1997, the Nuveen Flagship Funds declared dividend distributions from
their tax-exempt net investment income which were paid on April 1, 1997, to
shareholders of record on March 7, 1997, as follows:
<TABLE>
<CAPTION>
Nuveen Flagship Nuveen Flagship
New Jersey New Jersey Intermediate
- -----------------------------------------------------------------------------
<S> <C> <C>
Dividend per share:
Class A $.0465 $.0421
Class B .0401 N/A
Class C .0418 .0374
Class R .0483 .0438
=============================================================================
N/A - Nuveen Flagship New Jersey Intermediate is not authorized to issue
Class B Shares.
</TABLE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments, were as follows:
<TABLE>
<CAPTION>
Nuveen Flagship
Nuveen Nuveen Flagship New Jersey
New Jersey New Jersey Intermediate
------------------------------------------------------------
Year ended One month ended Nine months ended
1/31/97 2/28/97 2/28/97
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases
Investments in municipal securities $14,065,387 $ --- $ 817,828
Investments in municipal securities in the
reorganization of Nuveen New Jersey --- 58,667,900 ---
Investments in municipal securities in the
reorganization of Flagship New Jersey --- 10,232,563 ---
Temporary municipal investments 16,400,000 400,000 ---
Temporary municipal investments in the
reorganization of Nuveen New Jersey --- 1,600,000 ---
Sales
Investments in municipal securities 5,905,125 --- 2,109,785
Temporary municipal investments 14,800,000 400,000 ---
========================================================================================================================
</TABLE>
The identified cost of investments owned for the federal income tax purposes was
the same as the cost for financial reporting purposes for the periods covered by
this report.
36
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
The Nuveen Flagship Funds had unused capital loss carryforwards
available for federal income tax purposes to be applied against
future capital gains, if any. If not applied, the carryovers will
expire as follows:
<TABLE>
<CAPTION>
Nuveen Nuveen Flagship
Flagship New Jersey
New Jersey* Intermediate
----------------------------
2/28/97 2/28/97
- --------------------------------------------------------------------------
<S> <C> <C>
Expiration year:
2002 $170,150 $ ---
2003 424,626 198,683
2004 116,050 ---
- --------------------------------------------------------------------------
Total $710,826 $198,683
==========================================================================
</TABLE>
* Due to the reorganization of Nuveen New Jersey and Flagship New
Jersey into Nuveen Flagship New Jersey (see note 1 of the Notes
to Financial Statements), Nuveen New Jersey and Flagship New
Jersey had net capital losses from investment transactions of
$576,597 and $134,229, respectively, which were carried forward
into Nuveen Flagship New Jersey, as permitted under applicable
tax regulations.
<TABLE>
<CAPTION>
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
were as follows:
Nuveen Flagship
Nuveen Nuveen Flagship New Jersey
New Jersey New Jersey Intermediate
-----------------------------------------------
1/31/97 2/28/97 2/28/97
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized:
Appreciation $1,859,073 $2,464,264 $363,882
Depreciation (297,571) (213,783) (1,888)
- -------------------------------------------------------------------------------
Net unrealized appreciation $1,561,502 $2,250,481 $361,994
===============================================================================
</TABLE>
6. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with the Adviser,
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 million .5500 of 1%
For the next $125 million .5375 of 1
For the next $250 million .5250 of 1
For the next $500 million .5125 of 1
For the next $1 billion .5000 of 1
For net assets over $2 billion .4750 of 1
- -------------------------------------------------------------
</TABLE>
Prior to the reorganization (see note 1 of the Notes to Financial
Statements) Nuveen Flagship New Jersey Intermediate paid a
management fee of .50 of 1%.
37
<PAGE>
Notes to Financial Statements - continued
From inception of Nuveen New Jersey on December 13, 1991, through
January 31, 1997, the Adviser waived part of its management fees or
reimbursed certain expenses of the Fund in order to limit total
expenses to .75 of 1% of the average daily net asset value of each
class excluding any 12b-1 fees applicable to Class A and Class C
Shares. From inception of Nuveen Flagship New Jersey on February 1,
1997, through July 31, 1997, the Adviser has agreed to waive part
of its management fees or reimburse certain expenses of the Fund in
order to limit total expenses to .75 of 1% of the average daily net
asset value of each class, excluding any 12b-1 fees applicable to
Class A, Class B and Class C Shares. In addition, the Adviser may
also voluntarily reimburse additional expenses from time to time,
which may be terminated at any time at its discretion.
The management fee 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.
During the fiscal year ended January 31, 1997, for Nuveen New
Jersey, the Distributor received 12b-1 distribution and service
fees, substantially all of which were paid to compensate authorized
dealers for providing services to shareholders relating to their
investments. The Distributor also collected approximately $203,300
of sales charge on purchases, of which $184,300 was paid out as
concessions to authorized dealers.
During the one month ended February 28, 1997, for Nuveen Flagship
New Jersey, the Distributor compensated authorized dealers directly
with approximately $1,900 in commission advances on Class B and
Class C Share sales. Class B and Class C Shares purchased are
subject to a contingent deferred sales charge to be received by the
Distributor if the shares are redeemed within a specified period of
purchase. For the period February 1, 1997, through February 28,
1997, the Distributor received approximately $100 in such
contingent deferred sales charges. The Distributor also received
12b-1 distribution and service fees, substantially all of which
were paid to compensate authorized dealers for providing services
to shareholders relating to their investments. In addition, the
Distributor collected approximately $3,000 of sales charge on
purchases, of which $2,900 was paid out as concessions to
authorized dealers.
During the nine months ended February 28, 1997, for Nuveen Flagship
New Jersey Intermediate, the Distributor and its predecessor
(Flagship Funds Inc., a wholly-owned subsidiary of Flagship
Resources Inc.) collected 12b-1 service fees, substantially all of
which was paid to compensate authorized dealers for providing
services to shareholders relating to their investments.
Additionally, the Distributor collected approximately $6,300 of
sales charge on purchases of which $5,000 was paid out as
concessions to authorized dealers.
38
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
7. Composition of Net Assets
There were an unlimited number of $.01 par value shares authorized.
Net assets consisted of:
<TABLE>
<CAPTION>
Nuveen Nuveen Flagship
Nuveen Flagship New Jersey
New Jersey New Jersey Intermediate
---------------------------------------------
1/31/97 2/28/97 2/28/97
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital paid-in $61,608,174 $71,781,229 $6,847,574
Balance of undistributed net
investment income --- 577 33
Accumulated net realized gain (loss)
from investment transactions (581,591) (715,865) (198,683)
Net unrealized appreciation or
depreciation of investments 1,561,502 2,250,481 361,994
- ----------------------------------------------------------------------------------
Net assets $62,588,085 $73,316,422 $7,010,918
==================================================================================
</TABLE>
8. Investment Composition
The Funds invest in municipal securities which include general
obligation, escrowed and revenue bonds. The revenue sources by
municipal purpose for these investments, expressed as a percent of
total investments, were as follows:
<TABLE>
<CAPTION>
Nuveen Nuveen Flagship
Nuveen Flagship New Jersey
New Jersey New Jersey Intermediate
------------------------------------------------
1/31/97 2/28/97 2/28/97
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue Bonds:
Health Care Facilities 15% 15% 16%
Pollution Control 9 10 15
Housing Facilities 14 14 --
Educational Facilities 5 5 11
Transportation 10 9 4
Water/Sewer Facilities 4 5 5
Lease Rental Facilities 3 3 5
Electric Utilities 4 4 4
Other 10 9 11
General Obligation Bonds 16 17 29
Escrowed Bonds 10 9 --
- ----------------------------------------------------------------------------------
100% 100% 10%
==================================================================================
</TABLE>
39
<PAGE>
Notes to Financial Statements - continued
Certain long-term and intermediate-term investments owned by the
Funds are covered by insurance issued by several private insurers
or are backed by an escrow or trust containing U.S. Government or
U.S. Government agency securities, either of which ensure the
timely payment of principal and interest in the event of default
(40% for Nuveen New Jersey, 42% for Nuveen Flagship New Jersey and
41% for Nuveen Flagship New Jersey Intermediate). Such insurance or
escrow, however, does not guarantee the market value of the
municipal securities or the value of the Funds' shares.
All of the temporary investments in short-term municipal securities
have credit enhancements (letters of credit, guarantees or
insurance) issued by third-party domestic or foreign banks or other
institutions.
For additional information regarding each investment security,
refer to the Portfolio of Investments of each Fund.
40
<PAGE>
Financial Highlights
41
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
Operating Performance Less distributions
-------------------------- ----------------------------
Net
Net realized & Dividends Net Total
asset unrealized from tax- asset return
value Net gain (loss) exempt net Distributions value on net
Nuveen Flagship beginning investment from investment from capital end of asset
New Jersey** of period income++ investments income gains period value+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
One month ended 2/28/97 $10.220 $.046 $ .041 $(.047) $ - $10.260 .85%
Year ended 1/31,
1997 10.400 .478 (.148) (.510) - 10.220 3.31
1996 9.730 .519 .685 (.534) - 10.400 12.63
9/6/94 to 1/31/95 10.030 .205 (.209) (.210) (.086) 9.730 .02
Class B
One month ended 2/28/97 10.220 .049 .031 (.040) - 10.260 .78
Class C
One month ended 2/28/97 10.200 .042 .050 (.042) - 10.250 .90
Year ended 1/31,
1997 10.380 .410 (.158) (.432) - 10.200 2.53
1996 9.710 .443 .683 (.456) - 10.380 11.80
9/12/94 to 1/31/95 9.770 .159 (.050) (.169) - 9.710 1.16
Class R
One month ended 2/28/97 10.230 .048 .040 (.048) - 10.270 .86
Year ended 1/31,
1997 10.410 .491 (.137) (.534) - 10.230 3.55
1996 9.740 .551 .677 (.558) - 10.410 12.88
1995 10.710 .524 (.886) (.522) (.086) 9.740 (3.27)
1994 9.960 .513 .810 (.513) (.060) 10.710 13.60
1993 9.525 .445 .431 (.441) - 9.960 9.36
12/13/91 to 1/31/92 9.525 - - - - 9.525 -
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes on page 44.
42
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
end of period reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment++ ment++ rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A
One month ended 2/28/97 $27,879 1.01%* 5.43%* .55%* 5.89%* -%*
Year ended 1/31,
1997 17,072 1.13 4.85 1.00 4.98 10
1996 10,661 1.25 4.85 1.00 5.10 39
9/6/94 to 1/31/95 2,741 1.31* 5.03* 1.00* 5.34* 32
Class B
One month ended 2/28/97 74 1.77* 5.71* 1.27* 6.21* -
One month ended 2/28/97 2,712 1.56* 4.89* 1.10* 5.35* -
Year ended 1/31,
1997 2,611 1.88 4.09 1.75 4.22 10
1996 1,065 1.96 4.16 1.75 4.37 39
9/12/94 to 1/31/95 464 2.00* 4.37* 1.75* 4.62* 32
Class R
One month ended 2/28/97 42,651 .81* 5.63* .35* 6.09* -
Year ended 1/31,
1997 42,905 .89 5.10 .75 5.24 10
1996 43,304 .98 5.20 .75 5.43 39
1995 39,582 .89 5.18 .75 5.32 32
1994 36,462 .98 4.61 .75 4.84 52
1993 16,208 1.43* 4.28* .75* 4.96* 9
12/13/91 to 1/31/92 15 - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
Financial Highlights - continued
<TABLE>
<CAPTION>
Operating Performance Less distributions
--------------------- -----------------------------
Net
Net realized & Distributions Net Total
asset unrealized from tax- asset return
Nuveen Flagship value Net gain (loss) exempt net Distributions value on net
New Jersey beginning investment from investment from capital end of asset
Intermediate** of period income++ investments income gains period value+
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
Nine months ended 2/28/97 $10.140 $.378 $ .162 $(.380) $ - $10.300 5.41%
Year ended 5/31,
1996 10.250 .510 (.110) (.510) - 10.140 3.89
1995 10.040 .500 .220 (.510) - 10.250 7.42
1994 10.150 .530 (.100) (.520) (.020)*** 10.040 4.27
9/16/92 to 5/31/93 9.700 .340 .450 (.340) - 10.150 11.07
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Nuveen Flagship New Jersey information included prior to the one month
ended February 28, 1997, reflects the financial highlights of Nuveen New
Jersey. Nuveen Flagship New Jersey Intermediate information included
prior to the nine months ended February 28, 1997, reflects the financial
highlights of Flagship New Jersey Intermediate.
*** The amounts shown reflect distributions in excess of capital gains.
+ Total Return on Net Asset Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and
changes in net asset value per share. The total returns shown for Class
A Shares do not include the effect of applicable sales charge on
purchases. The total returns shown for Class B and Class C Shares do not
include the effect of applicable contingent deferred sales charges.
Class R Shares are not subject to any sales charge on purchases or
contingent deferred sales charges.
++ Reflects the waiver of certain management fees and reimbursement of
certain other expenses by the Adviser (see note 6 of the Notes to
Financial Statements).
44
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental data
- ---------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio
period end of reimburse- reimburse- reimburse- reimburse- turnover
(in thousands) ment ment ment++ ment++ rate
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$7,011 1.93%* 3.69%* .68%* 4.94%* 11%
8,318 1.71 3.79 .60 4.90 17
9,217 1.81 3.92 .69 5.04 35
9,321 1.81 3.45 .16 5.10 27
5,649 2.70* 2.54* .40* 4.84* 29
=================================================================================
</TABLE>
45
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Multistate Tax-Free Trust and
Nuveen Flagship Multistate Trust II:
We have audited the accompanying statement of net assets of Nuveen
Multistate Tax-Free Trust (a Massachusetts business trust
comprising the Nuveen New Jersey Tax-Free Value Fund), including
the portfolio of investments, as of January 31, 1997, and the
related statement 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 and we have audited the accompanying statements
of net assets for the Nuveen Flagship Multistate Trust II (a
Massachusetts business trust comprising the Nuveen Flagship New
Jersey and New Jersey Intermediate Funds), including the portfolios
of investments, as of February 28, 1997, and the related statements
of operations, changes in net assets and financial highlights for
the periods indicated thereon, except for the financial statements
and financial highlights for the Nuveen Flagship New Jersey
Intermediate Bond Fund for the years ended May 31, 1996 and prior
which were audited by other auditors whose report dated July 3,
1996, expressed an unqualified opinion on those financial
statements and financial highlights. 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 securites owned
by the Nuveen New Jersey Tax-Free Value Fund as of January 31,
1997, and by the Nuveen Flagship New Jersey and New Jersey
Intermediate Municipal Bond Funds as of February 28, 1997, by
correspondence with the custodian. 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, 1997, and the Nuveen
Flagship Multistate Trust II as of February 28, 1997, the results
of their operations, the changes in their net assets, and the
financial highlights for the periods indicated above, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 21, 1997
46
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
Shareholder Meeting Report
Nuveen New Jersey
On January 10, 1997, the Nuveen New Jersey Tax-Free Value
Fund held a Special Meeting of Shareholders. At that meeting,
shareholders approved the following matters:
<TABLE>
<CAPTION>
A Shares C Shares R Shares
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(1) Election of the Fund's
Board of Trustees:
- --------------------------------------------------------------------------------------------
(A) Bremner For 883,908 139,347 2,859,654
Withhold 4,755 - 43,708
---------------------------------------------------------
Total 888,663 139,347 2,903,362
- --------------------------------------------------------------------------------------------
(B) Brown For 883,908 139,347 2,861,911
Withhold 4,755 - 41,451
---------------------------------------------------------
Total 888,663 139,347 2,903,362
- --------------------------------------------------------------------------------------------
(C) Dean For 883,908 139,347 2,861,911
Withhold 4,755 - 41,451
---------------------------------------------------------
Total 888,663 139,347 2,903,362
- --------------------------------------------------------------------------------------------
(D) Impellizzeri For 883,908 139,347 2,861,537
Withhold 4,755 - 41,825
---------------------------------------------------------
Total 888,663 139,347 2,903,362
- --------------------------------------------------------------------------------------------
(E) Rosenheim For 883,533 139,347 2,861,461
Withhold 5,130 - 41,901
---------------------------------------------------------
Total 888,663 139,347 2,903,362
- --------------------------------------------------------------------------------------------
(F) Sawers For 883,908 139,347 2,861,539
Withhold 4,755 - 41,823
---------------------------------------------------------
Total 888,663 139,347 2,903,362
- --------------------------------------------------------------------------------------------
(G) Schneider For 883,908 139,347 2,861,911
Withhold 4,755 - 41,451
---------------------------------------------------------
Total 888,663 139,347 2,903,362
- --------------------------------------------------------------------------------------------
(H) Schwertfeger For 883,908 139,347 2,861,539
Withhold 4,755 - 41,823
---------------------------------------------------------
Total 888,663 139,347 2,903,362
- --------------------------------------------------------------------------------------------
(2) Fund Reorganization For 661,399 110,803 2,562,193
Against 16,695 - 56,043
Abstain 18,620 16,793 91,716
---------------------------------------------------------
Total 696,714 127,596 2,709,952
- --------------------------------------------------------------------------------------------
Broker Non Votes 191,949 11,751 193,410
---------------------------------------------------------
</TABLE>
47
<PAGE>
Shareholder Meeting Report
Flagship New Jersey
On January 10, 1997, the Flagship New Jersey Double Tax
Exempt Fund held a Special Meeting of Shareholders. At that
meeting, shareholders approved the following matters:
<TABLE>
<CAPTION>
For Withhold Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Elections of the Fund's
Board of Trustees:
(A) Bremner 974,673 10,500 985,173
(B) Brown 974,673 10,500 985,173
(C) Dean 974,673 10,500 985,173
(D) Impellizzeri 974,673 10,500 985,173
(E) Rosenheim 974,673 10,500 985,173
(F) Sawers 974,673 10,500 985,173
(G) Schneider 974,673 10,500 985,173
(H) Schwertfeger 974,673 10,500 985,173
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Broker
For Against Abstain Total Non-Votes
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2 Advisory Agreement was reached as follows: 884,640 3,705 26,950 915,295 69,878
3 12b-1 Plan was reached as follows: 806,758 19,083 89,454 915,295 69,878
4 Reorganization was reached as follows: 573,140 5,682 20,665 599,487 385,686
- ---------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
Shareholder Meeting Report
Flagship New Jersey Intermediate
On January 10, 1997, the Flagship New Jersey Intermediate Tax
Exempt Fund held a Special Meeting of Shareholders. At that
meeting, shareholders approved the following matters:
<TABLE>
<CAPTION>
Broker
For Against Abstain Total Non-Votes
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Approval of a new investment advisory
agreement with Nuveen Advisory Corp.
was reached as follows: 509,069 22,791 11,345 543,205 46,731
2 Approval of an Agreement and Plan of
Reorganization and the transaction
contemplated thereby was reached as follows: 387,801 15,046 13,933 416,780 173,156
3 Approve certain changes to the Trust's
investment objective and fundamental policies
was reached as follows:
(A) Investment Objective 386,586 28,647 1,547 416,780 173,156
(B) Investment Assets 386,586 28,647 1,547 416,780 173,156
(C) Type of Securities 386,586 28,647 1,547 416,780 173,156
(D) Borrowing 386,586 28,647 1,547 416,780 173,156
(E) Pledges 386,586 28,647 1,547 416,780 173,156
(F) Senior Securities 386,586 28,647 1,547 416,780 173,156
(G) Underwriting 386,586 28,647 1,547 416,780 173,156
(H) Real Estate 386,586 28,647 1,547 416,780 173,156
(I) Commodities 386,586 28,647 1,547 416,780 173,156
(J) Loans 386,586 28,647 1,547 416,780 173,156
(K) Short Sales/Margin Purchases 384,586 28,647 3,547 416,780 173,156
(L) Put and Call Options 384,586 28,647 3,547 416,780 173,156
(M) Industry Concentration 386,586 28,647 1,547 416,780 173,156
(N) Affiliate Purchases 384,586 28,647 3,547 416,780 173,156
(O) Investment Companies 386,586 28,647 1,547 416,780 173,156
4 12b-1 Fees 503,511 28,349 11,345 543,205 46,731
- -------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
Shareholder Meeting Report
Flagship New Jersey Intermediate
-- continued
<TABLE>
<CAPTION>
For Withhold Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
5 Approval of the Trustees to the Board of
Trustees of the Fund was reached as follows:
(A) Bremner 571,080 18,856 589,936
(B) Brown 571,080 18,856 589,936
(C) Dean 571,080 18,856 589,936
(D) Impellizzeri 571,080 18,856 589,936
(E) Rosenheim 571,080 18,856 589,936
(F) Sawers 571,080 18,856 589,936
(G) Schneider 571,080 18,856 589,936
(H) Schwertfeger 571,080 18,856 589,936
- --------------------------------------------------------------------------------
</TABLE>
50
<PAGE>
Nuveen Municipal Bond Funds
Annual Report
Shareholder Information
NUVEEN FAMILY OF MUTUAL FUNDS
Nuveen offers a variety of funds designed to
help you reach your financial goals. The funds
below are grouped by investment objectives.
GROWTH AND INCOME FUNDS
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
MUNICIPAL BOND FUNDS
National Funds/1/
State Funds
Alabama Michigan
Arizona Missouri
California/2/ New Jersey/3/
Colorado New Mexico
Connecticut New York/2/
Florida/3/ North Carolina
Georgia Ohio
Kansas Pennsylvania
Kentucky/4/ South Carolina
Louisiana Tennessee
Maryland Virginia
Massachusetts/2/ Wisconsin
1. Long-term, insured long-term, intermediate-term
and limited-term portfolios.
2. Long-term and insured long-term portfolios.
3. Long-term and intermediate-term portfolios.
4. Long-term and limited-term portfolios.
To purchase additional shares of your Nuveen
Municipal Bond Fund, contact your financial adviser.
If you would like to add to your current investment
on a monthly or semi-annual basis, you can sign up
for Nuveen's systematic investing program, which
allows you to invest a fixed dollar amount every
month automatically.
You can also invest automatically through dividend
reinvestment. By reinvesting your fund's dividends
back into the fund, you give your investment the
added growth potential of long-term compounding.
For more information on the service options listed
above, call your adviser, or Nuveen at (800) 621-7227.
51
<PAGE>
Fund Information
BOARD OF DIRECTORS
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Margaret K. Rosenheim
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN
The Chase Manhattan Bank
4 New York Plaza
New York, New York 10004-2413
TRANSFER AGENT,
SHAREHOLDER SERVICES AND
DIVIDEND DISBURSING AGENT
Shareholder Services, Inc.
Nuveen Investor Services
P.O. Box 5330
Denver, Colorado 80217-5330
(800) 621-7227
LEGAL COUNSEL
Fried, Frank, Harris,
Shriver & Jacobson
Washington, D.C.
PUBLIC ACCOUNTANTS
Arthur Andersen LLP
Chicago, Illinois
52
<PAGE>
Serving Investors
for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
JOHN NUVEEN, SR.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
entrusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach -- purchasing securities of strong companies and
communities that represent good long-term value -- is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of almost a century of investment
experience, including one of the most recognized municipal research departments
in the industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of taxable and tax-free investment
products -- including equity and fixed-income mutual funds, unit trusts,
exchange-traded funds, individual managed account services, and cash management
products.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 621-7227 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
[NUVEEN LOGO]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
VAN-2-1.97
