UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07755
Nuveen Multistate Trust II
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(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Address of principal executive offices) (Zip code)
Jessica R. Droeger
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 917-7700
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Date of fiscal year end: February 28
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Date of reporting period: August 31, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure
review, inspection, and policy making roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss.3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
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Nuveen Investments
Municipal Bond Funds
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Semiannual Report dated August
31, 2005
-----------------------------------
Dependable, tax-free income because it's not what you earn, it's what you
keep.(R)
[PHOTO]
Nuveen California Municipal Bond Fund
Nuveen California Insured Municipal Bond Fund
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OR
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if you get your Nuveen Investments Fund dividends and statements directly from
Nuveen Investments.
[LOGO]
------------------------------
Must be preceded by or accompanied by a prospectus.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
[PHOTO]
Timothy R. Schwertfeger
Dear Shareholder,
Once again, I am pleased to report that over the most recent reporting period
your Fund continued to provide you with attractive tax-free monthly income. For
more specific information about the performance of your Fund, please see the
Portfolio Manager's Comments and Fund Spotlight sections of this report.
With long-term interest rates still relatively low, many have begun to wonder
whether interest rates will rise, and whether that possibility should cause
them to adjust their holdings of fixed-income investments. No one knows what
the future will bring, which is why we think a well-balanced portfolio that is
structured and carefully monitored with the help of an investment professional
is an important component in achieving your long-term financial goals. A
well-diversified portfolio may actually help to reduce your overall investment
risk, and we believe that municipal bond investments like your Nuveen
Investments Fund can be important building blocks in a portfolio crafted to
perform well through a variety of market conditions.
Some of you may have heard that in April, 2005, The St. Paul Travelers
Companies, Inc., which owned 79% of Nuveen Investments, Inc. (the parent of
your Fund's investment adviser) completed a public offering of a substantial
portion of its equity stake in Nuveen. St. Paul Travelers recently sold the
balance of its Nuveen shares to Nuveen or to others. These transactions had and
will continue to have no impact on the investment objectives or management of
your Fund.
Since 1898, Nuveen Investments has offered financial products and solutions
that incorporate careful research, diversification, and the application of
conservative risk-management principles. We are grateful that you have chosen
us as a partner as you pursue your financial goals. We look forward to
continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
October 20, 2005
"No one knows what the future will bring, which is why we think a
well-balanced portfolio . . . is an important component in achieving
your long-term financial goals."
Semiannual Report Page 1
Portfolio Manager's Comments
Portfolio manager Scott Romans examines key investment strategies and the
performance of the Nuveen California Municipal Bond Fund and the Nuveen
California Insured Municipal Bond Fund. Scott, who has 5 years of investment
experience, has managed the Nuveen California Municipal Bond Fund since 2003
and the Nuveen California Insured Municipal Bond Fund since May 2005.
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How did the Funds perform during the six months ended August 31, 2005?
The chart on the next page provides total return performance information for
the two Funds for the six-month, one-year, five-year, and ten-year periods
ended August 31, 2005. Each Fund's total return performance is compared with
its corresponding Lipper peer fund category average, the Lipper California
Municipal Debt Funds category average and the Lipper California Insured
Municipal Debt Funds category average, as well as with the national Lehman
Brothers Municipal Bond Index. Although we believe that comparing the
performance of a state Fund with that of a national municipal index may offer
some insights into how the Fund performed relative to the general municipal
market, we also think that closely comparing the results of state Funds with a
national average is imperfect since most of the national index's results come
from out-of-state bonds. Most out-of-state bonds do not benefit from the state
tax exemption afforded to California bonds for California taxpayers.
The Nuveen California Municipal Bond Fund's Class A shares total return on net
asset value outperformed the Fund's peer group average as well as the national
Lehman Brothers Index during the six month period. We attribute this favorable
relative performance first to our overweighting in lower-rated bonds compared
to the national index. These securities benefited from investors' desire to
obtain higher yields, an increasingly challenging task in an environment of
declining long-term interest rates. Many of our strongest-performing
lower-rated holdings belonged to the tobacco sector. Investors in this part of
the market became more confident that the tobacco companies whose revenues back
these securities were facing reduced litigation risk.
By contrast, there was very little negative influence on the Fund's relative
performance during the past six months. However, as the period progressed, a
significant percentage of the portfolio was pre-refunded. Although
pre-refunding typically provides a portfolio with a short-term performance
benefit, the impact can become less favorable over time as the bonds get priced
to shorter call dates. This situation was undesirable during the period as the
yield curve flattened and long-term bonds outperformed their shorter-maturity
counterparts.
The performance story was similar for the Nuveen California Insured Municipal
Bond Fund, whose total return on net asset value also outperformed its Lipper
peer group average and the Lehman Brothers index. The insured Fund was helped
by its exposure to longer-duration bonds, which, as mentioned, benefited from
recent market conditions. Several of our zero-coupon holdings, which are highly
interest-rate sensitive, did particularly well. On the negative side, as with
the uninsured Fund, our pre-refunded bonds initially helped performance but,
over time, lost ground as these securities became priced to shorter call dates.
What strategies were used to manage the Funds during the six-month period?
In the uninsured Fund, our primary focus was on managing the Fund's duration,
or its sensitivity to changes in interest rates, a strategy made necessary by
the number of pre-refunded bonds in the portfolio as well as the continued
market rally on the long end of the yield curve.
Our focus on duration led us to sell some of the Fund's shorter-maturity
holdings, such as recently pre-refunded bonds or those facing near-term call
- --------------------------------------------------------------------------------
The views expressed reflect those of the portfolio manager and are subject to
change at any time, based on market and other conditions.
Semiannual Report Page 2
Class A Shares--
Total Returns as of 8/31/05
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Average Annual
Cumulative ---------------------
6-month 1-Year 5-Year 10-Year
- ---------------------
Nuveen California Municipal
Bond Fund
A Shares at NAV 3.14% 6.66% 5.36% 5.55%
A Shares at Offer -1.20% 2.21% 4.46% 5.09%
Lipper California Municipal
Debt Funds Category
Average/1/ 3.03% 5.88% 5.51% 5.65%
Lehman Brothers Municipal
Bond Index/2/ 2.85% 5.31% 6.37% 6.20%
------------------------------------------------------------
Nuveen California Insured
Municipal Bond Fund
A Shares at NAV 3.07% 5.26% 5.60% 5.59%
A Shares at Offer -1.28% 0.83% 4.69% 5.14%
Lipper California Insured
Municipal Debt Funds
Category Average/1/ 2.55% 5.12% 5.43% 5.48%
Lehman Brothers Municipal
Bond Index/2/ 2.85% 5.31% 6.37% 6.20%
------------------------------------------------------------
Returns quoted represent past performance, which is no guarantee of future
results. Returns at NAV would be lower if the sales charge were included.
Returns less than one year are cumulative. Current performance may be higher or
lower than the performance shown. Investment returns and principal value will
fluctuate so that when shares are redeemed, they may be worth more or less than
their original cost. Class A shares have a 4.2% maximum sales charge. Returns
do not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of shares. For the most recent month-end
performance, visit www.nuveen.com or call (800) 257-8787.
dates. With the proceeds of these sales, we bought longer bonds, especially
those with maturities of at least 20 years. As the period progressed, we
focused even further out on the yield curve, purchasing 30-year bonds to effect
a more substantial impact on the portfolio's duration.
For example, after some of the Fund's California general obligation bonds were
pre-refunded to a call date of 2010, we sold a portion of these securities and
reinvested in longer-dated, higher-rated insured bonds, which we believed
offered better relative values over lower-rated securities. The insured bonds
we favored generally offered coupon interest of about 5 percent and were priced
to a 2015 call with a 2020 to 2030 maturity. We believed that these bonds'
relatively high coupons would help protect the value of the portfolio on the
downside if the municipal market lost ground.
Our management approach was similar for the insured Fund. We also focused on
managing this portfolio's duration. A significant portion of the Fund was
pre-refunded during the period, most notably a 13 percent stake in the
California general obligation bonds mentioned earlier. As in the uninsured
Fund, we were looking for opportunities to lengthen duration, a process that
was still in progress as the period came to a close. Specifically, we bought
insured securities in the 20-year maturity part of the yield curve, and looked
to add even more interest-rate sensitivity by buying suitable bonds with
30-year maturities. All of our purchases during the period were of AAA-rated
bonds, and 100 percent of the portfolio's assets carried this highest credit
rating at period end.
Dividend Information
During the reporting period, both of the Funds experienced a reduction in their
dividend. The reduction in dividend was brought about by bonds in the portfolio
being called or retired and the proceeds subsequently reinvested in the current
low interest rate environment.
Each Fund seeks to pay dividends at a rate that reflects the past and projected
performance of the Fund. To permit a Fund to maintain a more stable monthly
dividend, the Fund may pay dividends at
================================================================================
1For each Fund, the Lipper category average shown represents the average
annualized total return for all reporting funds for the periods ended
August 31, 2005. The Lipper categories contained 130, 127, 103 and 68 funds in
the Lipper California Municipal Debt Funds Category and 19, 19, 19 and 17
funds in the Lipper California Insured Municipal Debt Funds Category for the
respective six-month, one-, five- and ten-year periods ended August 31, 2005.
The returns account for the effects of management fees and assume reinvestment
of dividends, but do not reflect any sales charges. You cannot invest directly
in a Lipper Category.
2The Lehman Brothers Municipal Bond Index is an unmanaged index composed of a
broad range of investment-grade municipal bonds and does not reflect any
initial or ongoing expenses. You cannot invest directly in an index.
Semiannual Report Page 3
a rate that may be more or less than the amount of net investment income
actually earned by the Fund during the period. If the Fund has cumulatively
earned more than it has paid in dividends, it will hold the excess in reserve
as undistributed net investment income (UNII) as part of the Fund's net asset
value. Conversely, if the Fund has cumulatively paid in dividends more than it
has earned, the excess will constitute a negative UNII that will likewise be
reflected in the Fund's net asset value. Each Fund will, over time, pay all its
net investment income as dividends to shareholders. As of August 31, 2005, both
Funds had negative UNII for financial statement purposes and positive UNII
balances for tax purposes.
Semiannual Report Page 4
Fund Spotlight as of 8/31/05 Nuveen California Municipal Bond Fund
================================================================================
Quick Facts
A Shares B Shares C Shares R Shares
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NAV $10.54 $10.53 $10.52 $10.54
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Latest Monthly Dividend/1/ $0.0375 $0.0310 $0.0330 $0.0395
--------------------------------------------------------------
Latest Ordinary Income
Distribution/2/ $0.0020 $0.0020 $0.0020 $0.0020
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Inception Date 9/07/94 3/07/97 9/19/94 7/01/86
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Returns quoted represent past performance which is no guarantee of future
results. Returns without sales charges would be lower if the sales charge were
included. Current performance may be higher or lower than the performance
shown. Investment returns and principal value will fluctuate so that when
shares are redeemed, they may be worth more or less than their original cost.
Returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of shares. Income is generally exempt from
regular federal income taxes. Some income may be subject to state and local
taxes and to the federal alternative minimum tax. Capital gains, if any, are
subject to tax. For the most recent month-end performance visit www.nuveen.com
or call (800) 257-8787.
Class A, C and R share returns are actual. Class B share returns are actual for
the period since class inception; returns prior to class inception are Class R
share returns adjusted for differences in sales charges and expenses, which are
primarily differences in distribution and service fees. Class A shares have a
4.2% maximum sales charge. Class B shares have a contingent deferred sales
charge (CDSC), also known as a back-end sales charge, that for redemptions
begins at 5% and declines periodically until after 6 years when the charge
becomes 0%. Class B shares automatically convert to Class A shares eight years
after purchase. Class C shares have a 1% CDSC for redemptions within less than
one year, which is not reflected in the one-year total return. Class R shares
have no sales charge and may be purchased under limited circumstances or by
specified classes of investors.
Average Annual Total Returns as of 8/31/05
A Shares NAV Offer
---------------------------------------------
1-Year 6.66% 2.21%
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5-Year 5.36% 4.46%
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10-Year 5.55% 5.09%
---------------------------------------------
B Shares w/o CDSC w/CDSC
---------------------------------------------
1-Year 5.77% 1.77%
---------------------------------------------
5-Year 4.59% 4.42%
---------------------------------------------
10-Year 4.93% 4.93%
---------------------------------------------
C Shares NAV
---------------------------------------------
1-Year 6.02%
---------------------------------------------
5-Year 4.78%
---------------------------------------------
10-Year 4.94%
---------------------------------------------
R Shares NAV
---------------------------------------------
1-Year 6.90%
---------------------------------------------
5-Year 5.59%
---------------------------------------------
10-Year 5.77%
---------------------------------------------
Tax-Free Yields
A Shares NAV Offer
---------------------------------------------
Dividend Yield/3/ 4.27% 4.09%
---------------------------------------------
SEC 30-Day Yield/4/ 3.48% 3.33%
---------------------------------------------
Taxable-Equivalent Yield/4,5/ 5.31% 5.08%
---------------------------------------------
B Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.53%
---------------------------------------------
SEC 30-Day Yield 2.74%
---------------------------------------------
Taxable-Equivalent Yield/5/ 4.18%
---------------------------------------------
C Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.76%
---------------------------------------------
SEC 30-Day Yield 2.93%
---------------------------------------------
Taxable-Equivalent Yield/5/ 4.47%
---------------------------------------------
R Shares NAV
---------------------------------------------
Dividend Yield/3/ 4.50%
---------------------------------------------
SEC 30-Day Yield 3.67%
---------------------------------------------
Taxable-Equivalent Yield/5/ 5.60%
---------------------------------------------
Average Annual Total Returns as of 9/30/05
A Shares NAV Offer
------------------------------------------
1-Year 5.01% 0.56%
------------------------------------------
5-Year 5.35% 4.45%
------------------------------------------
10-Year 5.40% 4.95%
------------------------------------------
B Shares w/o CDSC w/CDSC
------------------------------------------
1-Year 4.24% 0.24%
------------------------------------------
5-Year 4.57% 4.40%
------------------------------------------
10-Year 4.78% 4.78%
------------------------------------------
C Shares NAV
------------------------------------------
1-Year 4.48%
------------------------------------------
5-Year 4.76%
------------------------------------------
10-Year 4.79%
------------------------------------------
R Shares NAV
------------------------------------------
1-Year 5.15%
------------------------------------------
5-Year 5.55%
------------------------------------------
10-Year 5.60%
------------------------------------------
Portfolio Statistics
Net Assets ($000) $269,048
---------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.76
---------------------------------------------------------
Average Duration 5.46
---------------------------------------------------------
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1Paid September 1, 2005. This is the latest monthly tax-exempt dividend
declared during the period ended August 31, 2005.
2Paid December 1, 2004. Ordinary income is subject to federal taxation.
3Dividend Yield is the most recent dividend per share (annualized) divided by
the appropriate price per share. The SEC 30-Day Yield is a standardized
measure of the current market yield on the Fund's portfolio and is based on
the maximum offer price per share. The Dividend Yield also differs from the
SEC 30-Day Yield because the Fund may be paying out more or less than it is
earning and it may not include the effect of amortization of bond premium.
4The SEC 30-Day Yield and Taxable Equivalent Yield on A Shares at NAV applies
only to A Shares purchased at no-load pursuant to the Fund's policy permitting
waiver of the A Share load in certain specified circumstances.
5The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield on the Nuveen Investments
Fund on an after-tax basis at a specified tax rate. With respect to
investments that generate qualified dividend income that is taxable at a
maximum rate of 15%, the taxable-equivalent yield is lower. The
taxable-equivalent yield is based on the Fund's SEC 30-Day Yield on the
indicated date and a combined federal and state income tax rate of 34.5%.
Semiannual Report Page 5
Fund Spotlight as of 8/31/05 Nuveen California Municipal Bond Fund
================================================================================
Bond Credit Quality/1/
[CHART]
AAA/U.S. Guaranteed 53.9%
AA 8.4%
A 15.5%
BBB 10.6%
BB or Lower 2.9%
NR 8.7%
Sectors/1/
Tax Obligation/Limited 19.3%
----------------------------
Tax Obligation/General 16.9%
----------------------------
Utilities 15.2%
----------------------------
U.S. Guaranteed 10.3%
----------------------------
Transportation 10.3%
----------------------------
Water and Sewer 9.6%
----------------------------
Housing/Multifamily 5.2%
----------------------------
Other 13.2%
----------------------------
1As a percentage of total holdings as of August 31, 2005. Holdings are subject
to change.
- --------------------------------------------------------------------------------
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front and back end sales charges (loads) or redemption fees,
where applicable; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees, where applicable; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example below is based on an investment of $1,000 invested at the beginning
of the period and held for the period.
The information under "Actual Performance," together with the amount you
invested, allows you to estimate actual expenses incurred over the reporting
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60) and multiply the result by the cost
shown for your share class, in the row entitled "Expenses Incurred During
Period" to estimate the expenses incurred on your account during this period.
The information under "Hypothetical Performance," provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expense you incurred for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other Funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front
and back end sales charges (loads) or redemption fees, where applicable.
Therefore, the hypothetical information is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds or share classes. In addition, if these transactional costs
were included, your costs would have been higher.
Hypothetical Performance
Actual Performance (5% annualized return before expenses)
--------------------------------------- ---------------------------------------
A Shares B Shares C Shares R Shares A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------------------------------------------------------
Beginning Account Value (3/01/05) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------------------
Ending Account Value (8/31/05) $1,031.40 $1,027.60 $1,028.90 $1,032.60 $1,020.92 $1,017.14 $1,018.15 $1,021.93
- -----------------------------------------------------------------------------------------------------------------
Expenses Incurred During Period $ 4.35 $ 8.18 $ 7.16 $ 3.33 $ 4.33 $ 8.13 $ 7.12 $ 3.31
- -----------------------------------------------------------------------------------------------------------------
For each class of the Fund, expenses are equal to the Fund's annualized net
expense ratio of .85%, 1.60%, 1.40% and .65% for Classes A, B, C and R,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report Page 6
Fund Spotlight as of 8/31/05 Nuveen California Insured Municipal Bond Fund
================================================================================
Quick Facts
A Shares B Shares C Shares R Shares
--------------------------------------------------------------------
NAV $11.01 $11.03 $10.95 $11.01
--------------------------------------------------------------------
Latest Monthly Dividend/1/ $0.0365 $0.0295 $0.0310 $0.0380
--------------------------------------------------------------------
Latest Capital Gain and Ordinary
Income Distribution/2/ $0.0063 $0.0063 $0.0063 $0.0063
--------------------------------------------------------------------
Inception Date 9/07/94 3/07/97 9/13/94 7/01/86
--------------------------------------------------------------------
Returns quoted represent past performance which is no guarantee of future
results. Returns without sales charges would be lower if the sales charge were
included. Current performance may be higher or lower than the performance
shown. Investment returns and principal value will fluctuate so that when
shares are redeemed, they may be worth more or less than their original cost.
Returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of shares. Income is generally exempt from
regular federal income taxes. Some income may be subject to state and local
taxes and to the federal alternative minimum tax. Capital gains, if any, are
subject to tax. For the most recent month-end performance visit www.nuveen.com
or call (800) 257-8787.
Class A, C and R share returns are actual. Class B share returns are actual for
the period since class inception; returns prior to class inception are Class R
share returns adjusted for differences in sales charges and expenses, which are
primarily differences in distribution and service fees. Class A shares have a
4.2% maximum sales charge. Class B shares have a contingent deferred sales
charge (CDSC), also known as a back-end sales charge, that for redemptions
begins at 5% and declines periodically until after 6 years when the charge
becomes 0%. Class B shares automatically convert to Class A shares eight years
after purchase. Class C shares have a 1% CDSC for redemptions within less than
one year, which is not reflected in the one-year total return. Class R shares
have no sales charge and may be purchased under limited circumstances or by
specified classes of investors.
Average Annual Total Returns as of 8/31/05
A Shares NAV Offer
---------------------------------------------
1-Year 5.26% 0.83%
---------------------------------------------
5-Year 5.60% 4.69%
---------------------------------------------
10-Year 5.59% 5.14%
---------------------------------------------
B Shares w/o CDSC w/CDSC
---------------------------------------------
1-Year 4.54% 0.54%
---------------------------------------------
5-Year 4.81% 4.64%
---------------------------------------------
10-Year 4.97% 4.97%
---------------------------------------------
C Shares NAV
---------------------------------------------
1-Year 4.75%
---------------------------------------------
5-Year 5.03%
---------------------------------------------
10-Year 4.99%
---------------------------------------------
R Shares NAV
---------------------------------------------
1-Year 5.43%
---------------------------------------------
5-Year 5.81%
---------------------------------------------
10-Year 5.80%
---------------------------------------------
Tax-Free Yields
A Shares NAV Offer
---------------------------------------------
Dividend Yield/3/ 3.98% 3.81%
---------------------------------------------
SEC 30-Day Yield/4/ 3.08% 2.95%
---------------------------------------------
Taxable-Equivalent Yield/4,5/ 4.70% 4.50%
---------------------------------------------
B Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.21%
---------------------------------------------
SEC 30-Day Yield 2.34%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.57%
---------------------------------------------
C Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.40%
---------------------------------------------
SEC 30-Day Yield 2.54%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.88%
---------------------------------------------
R Shares NAV
---------------------------------------------
Dividend Yield/3/ 4.14%
---------------------------------------------
SEC 30-Day Yield 3.28%
---------------------------------------------
Taxable-Equivalent Yield/5/ 5.01%
---------------------------------------------
Average Annual Total Returns as of 9/30/05
A Shares NAV Offer
------------------------------------------
1-Year 3.90% -0.47%
------------------------------------------
5-Year 5.57% 4.67%
------------------------------------------
10-Year 5.44% 4.98%
------------------------------------------
B Shares w/o CDSC w/CDSC
------------------------------------------
1-Year 3.10% -0.88%
------------------------------------------
5-Year 4.78% 4.61%
------------------------------------------
10-Year 4.81% 4.81%
------------------------------------------
C Shares NAV
------------------------------------------
1-Year 3.29%
------------------------------------------
5-Year 4.99%
------------------------------------------
10-Year 4.85%
------------------------------------------
R Shares NAV
------------------------------------------
1-Year 4.16%
------------------------------------------
5-Year 5.80%
------------------------------------------
10-Year 5.66%
------------------------------------------
Portfolio Statistics
Net Assets ($000) $260,961
---------------------------------------------------------
Average Effective Maturity on Securities (Years) 17.10
---------------------------------------------------------
Average Duration 5.26
---------------------------------------------------------
- --------------------------------------------------------------------------------
1Paid September 1, 2005. This is the latest monthly tax-exempt dividend
declared during the period ended August 31, 2005.
2Paid December 1, 2004. Capital gains and/or ordinary income are subject to
federal taxation.
3Dividend Yield is the most recent dividend per share (annualized) divided by
the appropriate price per share. The SEC 30-Day Yield is a standardized
measure of the current market yield on the Fund's portfolio and is based on
the maximum offer price per share. The Dividend Yield also differs from the
SEC 30-Day Yield because the Fund may be paying out more or less than it is
earning and it may not include the effect of amortization of bond premium.
4The SEC 30-Day Yield and Taxable Equivalent Yield on A Shares at NAV applies
only to A Shares purchased at no-load pursuant to the Fund's policy permitting
waiver of the A Share load in certain specified circumstances.
5The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield on the Nuveen Investments
Fund on an after-tax basis at a specified tax rate. With respect to
investments that generate qualified dividend income that is taxable at a
maximum rate of 15%, the taxable-equivalent yield is lower. The
taxable-equivalent yield is based on the Fund's SEC 30-Day Yield on the
indicated date and a combined federal and state income tax rate of 34.5%.
Semiannual Report Page 7
Fund Spotlight as of 8/31/05 Nuveen California Insured Municipal Bond Fund
================================================================================
Bond Credit Quality/1/
[CHART]
Insured 73.1%
U.S. Guaranteed 23.2%
AAA (uninsured) 3.7%
The Fund features a portfolio of primarily investment-grade, long-term
municipal securities. These securities are covered by insurance, guaranteeing
the timely payment of principal and interest, or by an escrow or trust account
containing enough U.S. government or U.S. government agency securities to
ensure timely payment of principal and interest.
Sectors/1/
U.S. Guaranteed 23.2%
----------------------------
Tax Obligation/Limited 20.3%
----------------------------
Tax Obligation/General 17.7%
----------------------------
Transportation 9.8%
----------------------------
Utilities 6.6%
----------------------------
Water and Sewer 6.0%
----------------------------
Housing/Single Family 5.2%
----------------------------
Other 11.2%
----------------------------
1As a percentage of total holdings as of August 31, 2005. Holdings are subject
to change.
- --------------------------------------------------------------------------------
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front and back end sales charges (loads) or redemption fees,
where applicable; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees, where applicable; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example below is based on an investment of $1,000 invested at the beginning
of the period and held for the period.
The information under "Actual Performance," together with the amount you
invested, allows you to estimate actual expenses incurred over the reporting
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60) and multiply the result by the cost
shown for your share class, in the row entitled "Expenses Incurred During
Period" to estimate the expenses incurred on your account during this period.
The information under "Hypothetical Performance," provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expense you incurred for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other Funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front
and back end sales charges (loads) or redemption fees, where applicable.
Therefore, the hypothetical information is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds or share classes. In addition, if these transactional costs
were included, your costs would have been higher.
Hypothetical Performance
Actual Performance (5% annualized return before expenses)
--------------------------------------- ---------------------------------------
A Shares B Shares C Shares R Shares A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------------------------------------------------------
Beginning Account Value (3/01/05) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------------------
Ending Account Value (8/31/05) $1,030.70 $1,027.60 $1,027.70 $1,031.50 $1,021.02 $1,017.24 $1,018.25 $1,022.03
- -----------------------------------------------------------------------------------------------------------------
Expenses Incurred During Period $ 4.25 $ 8.07 $ 7.05 $ 3.23 $ 4.23 $ 8.03 $ 7.02 $ 3.21
- -----------------------------------------------------------------------------------------------------------------
For each class of the Fund, expenses are equal to the Fund's annualized net
expense ratio of .83%, 1.58%, 1.38% and .63% for Classes A, B, C and R,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report Page 8
Shareholder
Meeting Report
The annual shareholder meeting was held on July 26, 2005, at The Northern Trust
Bank, Chicago, Illinois.
- --------------------------------------------------------------------------------
Nuveen
Nuveen California
California Insured
Municipal Municipal
Bond Bond
Fund Fund
------------------------------------------------------------------------
To approve the new investment management agreement
For 17,656,686 16,663,416
Against 251,413 259,431
Abstain 451,456 393,384
------------------------------------------------------------------------
Total 18,359,555 17,316,231
------------------------------------------------------------------------
-----------------------------------------------------------------
Nuveen
Multistate
Approval of the Board Members was reached as follows: Trust II
-----------------------------------------------------------------
Robert P. Bremner
For 128,590,163
Withhold 1,810,507
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Lawrence H. Brown
For 128,609,154
Withhold 1,791,516
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Jack B. Evans
For 128,619,020
Withhold 1,781,650
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
William C. Hunter
For 128,649,278
Withhold 1,751,392
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
David J. Kundert
For 128,561,208
Withhold 1,839,462
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
William J. Schneider
For 128,579,817
Withhold 1,820,853
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Timothy R. Schwertfeger
For 128,604,178
Withhold 1,796,492
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
- ----
9
-----------------------------------------------------------------
Nuveen
Multistate
Approval of the Board Members was reached as follows: Trust II
-----------------------------------------------------------------
Judith M. Stockdale
For 128,613,010
Withhold 1,787,660
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Eugene S. Sunshine
For 128,626,733
Withhold 1,773,937
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
- ----
10
Portfolio of Investments (Unaudited)
NUVEEN CALIFORNIA MUNICIPAL BOND FUND
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------
Consumer Staples - 3.4%
$ 3,500 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 Baa3 $ 3,680,215
Settlement Asset-Backed Bonds, Alameda County Tobacco
Asset Securitization Corporation, Series 2002, 5.750%,
6/01/29
5,000 Golden State Tobacco Securitization Corporation, 6/13 at 100.00 BBB 5,585,800
California, Tobacco Settlement Asset-Backed Bonds, Series
2003A-1, 6.250%, 6/01/33
- ----------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 1.0%
1,500 California Statewide Community Development Authority, 12/06 at 105.00 N/R 1,574,805
Certificates of Participation, San Diego Space and Science
Foundation, Series 1996, 7.500%, 12/01/26
1,000 University of California, Certificates of Participation, 1/10 at 101.00 Aa2 1,058,670
San Diego and Sacramento Campus Projects, Series 2002A,
5.250%, 1/01/22
- ----------------------------------------------------------------------------------------------------------------------
Healthcare - 4.0%
2,985 California Health Facilities Financing Authority, Insured 10/05 at 102.00 A 3,054,461
Loan Program Small Facilities Revenue Bonds, Series 1994B,
7.500%, 4/01/22
650 California Health Facilities Financing Authority, Revenue 11/15 at 100.00 A3 673,036
Bonds, Cedars-Sinai Medical Center, Series 2005, 5.000%,
11/15/34
3,370 California Health Facilities Financing Authority, Hospital 11/05 at 100.00 BB 3,370,741
Revenue Bonds, Downey Community Hospital, Series 1993,
5.750%, 5/15/15
California Statewide Community Development Authority,
Revenue Bonds, Daughters of Charity Health System, Series
2005A:
260 5.250%, 7/01/24 7/15 at 100.00 BBB+ 275,660
550 5.250%, 7/01/35 7/15 at 100.00 BBB+ 576,125
1,735 Central California Joint Powers Health Finance Authority, 2/06 at 100.00 Baa2 1,735,295
Certificates of Participation, Community Hospitals of
Central California, Series 1993, 5.000%, 2/01/23
1,000 Central California Joint Powers Health Finance Authority, 2/11 at 101.00 Baa2 1,058,150
Certificates of Participation, Community Hospitals of
Central California, Series 2001, 5.625%, 2/01/21
- ----------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 5.1%
1,950 ABAG Finance Authority for Non-Profit Corporations, No Opt. Call Baa2 2,084,745
California, Multifamily Housing Revenue Refunding Bonds,
United Dominion/2000 Post Apartments, Series 2000B,
6.250%, 8/15/30 (Mandatory put 8/15/08)
2,905 California Statewide Community Development Authority, 6/06 at 100.00 AAA 2,939,221
FHA-Insured Senior Lien Multifamily Housing Revenue Bonds,
Monte Vista Terrace, Series 1996A, 6.375%, 9/01/20
2,500 Daly City Housing Development Finance Agency, California, 12/13 at 102.00 A- 2,672,425
Mobile Home Park Revenue Bonds, Franciscan Mobile Home
Park Project, Series 2002A, 5.800%, 12/15/25
2,000 Riverside County, California, Mobile Home Park Revenue 3/09 at 102.00 N/R 2,049,760
Bonds, Bravo Mobile Home Park Project, Series 1999A,
5.900%, 3/20/29
2,080 Salinas, California, GNMA Collateralized Housing Facility 1/06 at 101.00 AAA 2,103,795
Revenue Refunding Bonds, Villa Serra Project, Series
1994A, 6.500%, 7/20/17
2,000 San Dimas Housing Authority, California, Mobile Home Park 7/08 at 102.00 N/R 2,065,620
Revenue Bonds, Charter Oak Mobile Home Estates Acquisition
Project, Series 1998A, 5.700%, 7/01/28
- ----------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 0.1%
160 California Rural Home Mortgage Finance Authority, No Opt. Call AAA 162,731
Mortgage-Backed Securities Program Single Family Mortgage
Revenue Bonds, Series 1997A, 7.000%, 9/01/29 (Alternative
Minimum Tax)
- ----------------------------------------------------------------------------------------------------------------------
Industrials - 0.7%
1,000 California Municipal Finance Authority, Solid Waste No Opt. Call BBB 1,010,180
Disposal Revenue Bonds, Waste Management Inc., Series
2004, 4.100%, 9/01/14 (Alternative Minimum Tax) (Mandatory
put 9/01/09)
750 California Pollution Control Financing Authority, Solid No Opt. Call BBB+ 811,673
Waste Disposal Revenue Bonds, Republic Services Inc.,
Series 2002C, 5.250%, 6/01/23 (Alternative Minimum Tax)
(Mandatory put 12/01/17)
- ----------------------------------------------------------------------------------------------------------------------
- ----
11
Portfolio of Investments (Unaudited)
NUVEEN CALIFORNIA MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Long-Term Care - 3.9%
ABAG Finance Authority for Non-Profit Corporations,
California, Cal-Mortgage Revenue Bonds, Elder Care Alliance
of Union City, Series 2004:
$ 1,850 5.400%, 8/15/24 8/14 at 100.00 A $ 1,978,742
2,130 5.600%, 8/15/34 8/14 at 100.00 A 2,287,769
4,250 ABAG Finance Authority for Non-Profit Corporations, 10/07 at 102.00 BB+ 4,308,608
California, Certificates of Participation, American
Baptist Homes of the West, Series 1997A, 5.850%, 10/01/27
2,000 Chico Redevelopment Agency, California, Insured 2/06 at 100.00 A 2,005,340
Certificates of Participation, Walker Senior Housing
Corporation VII - Sierra Sunrise Lodge, Series 1991A,
6.750%, 2/01/21
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 16.8%
3,335 California, General Obligation Bonds, Derivative Tax Exempt No Opt. Call AAA 5,268,933
Receipts, Series 245, 12.410%, 2/01/15 (IF)
California, General Obligation Bonds, Series 2004:
2,500 5.000%, 2/01/20 2/14 at 100.00 A 2,687,250
1,000 5.000%, 4/01/21 4/14 at 100.00 A 1,073,140
6,000 5.125%, 4/01/23 4/14 at 100.00 A 6,474,780
Central Unified School District, Fresno County, California,
General Obligation Bonds, Series 2004A:
1,000 5.500%, 7/01/22 - FGIC Insured 7/14 at 100.00 AAA 1,134,120
1,500 5.500%, 7/01/24 - FGIC Insured 7/14 at 100.00 AAA 1,701,180
6,325 Desert Community College District, Riverside County, 8/15 at 100.00 AAA 6,873,504
California, General Obligation Bonds, Series 2005, 5.000%,
8/01/23 - MBIA Insured
1,035 Escondido Union School District, San Diego County, 8/12 at 100.00 AAA 1,132,745
California, General Obligation Bonds, Series 2002A,
5.250%, 8/01/23 - FSA Insured
1,150 Los Angeles Community College District, Los Angeles County, 8/15 at 100.00 AAA 1,238,953
California, General Obligation Bonds, Series 2005A,
5.000%, 6/01/26 - FSA Insured
1,570 Los Angeles Unified School District, California, General 7/15 at 100.00 AAA 1,695,867
Obligation Bonds, Series 2005A-1, 5.000%, 7/01/25 - FGIC
Insured
6,000 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 6,507,660
Obligation Bonds, Series 2003A, 5.000%, 7/01/22 - FSA
Insured
2,000 Murrieta Valley Unified School District, Riverside County, 9/13 at 100.00 AAA 2,129,440
California, General Obligation Bonds, Series 2003A,
5.000%, 9/01/26 - FGIC Insured
Oakland Unified School District, Alameda County,
California, General Obligation Bonds, Series 2005:
380 5.000%, 8/01/25 - MBIA Insured 8/15 at 100.00 AAA 409,712
400 5.000%, 8/01/26 - MBIA Insured 8/15 at 100.00 AAA 429,584
1,350 Riverside Community College District, California, General 8/15 at 100.00 AAA 1,475,186
Obligation Bonds, Series 2005, 5.000%, 8/01/21 - FSA
Insured
2,000 San Diego Unified School District, California, General 7/10 at 100.00 AAA 2,173,380
Obligation Bonds, Election of 1998, Series 2000B, 5.125%,
7/01/22 - MBIA Insured
San Jose-Evergreen Community College District, Santa Clara
County, California, General Obligation Bonds, Series 2005A:
295 5.000%, 9/01/25 - MBIA Insured 9/15 at 100.00 AAA 318,992
420 5.000%, 9/01/27 - MBIA Insured 9/15 at 100.00 AAA 452,004
2,000 West Contra Costa Unified School District, Contra Costa 8/11 at 101.00 AAA 2,153,180
County, California, General Obligation Bonds, Series
2003B, 5.000%, 8/01/20 - FSA Insured
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 19.3%
California, Economic Recovery Revenue Bonds, Series 2004A:
1,000 5.000%, 7/01/15 7/14 at 100.00 AA- 1,103,890
2,500 5.000%, 7/01/16 7/11 at 100.00 AA- 2,698,250
265 Hesperia Community Redevelopment Agency, California, Tax 9/15 at 100.00 AAA 287,006
Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA
Insured
2,000 La Mirada Redevelopment Agency, California, Special Tax 10/08 at 102.00 N/R 2,067,960
Refunding Bonds, Community Facilities District 89-1, Civic
Theatre Project, Series 1998, 5.700%, 10/01/20
1,120 Lancaster Redevelopment Agency, California, Tax Allocation 12/14 at 100.00 AAA 1,192,890
Refunding Bonds, Combined Fire Protection Facilities
Project, Series 2004, 5.000%, 12/01/23 - XLCA Insured
- ----
12
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited (continued)
$ 1,870 Lancaster Redevelopment Agency, California, Tax Allocation 12/14 at 100.00 AAA $ 1,991,700
Refunding Bonds, Combined Area Sheriff's Facilities
Projects, Series 2004, 5.000%, 12/01/23 - XLCA Insured
2,500 Los Angeles County Schools, California, Certificates of 9/13 at 100.00 AAA 2,674,125
Participation, Pooled Financing Program, Regionalized
Business Services Corporation, Series 2003A, 5.000%,
9/01/22 - FSA Insured
995 Milpitas, California, Local Improvement District 20 Limited 9/05 at 103.00 N/R 1,031,407
Obligation Bonds, Series 1998A, 5.700%, 9/02/18
Moreno Valley Unified School District, Riverside County,
California, Special Tax Bonds, Community Facilities
District, Series 2004:
805 5.550%, 9/01/29 9/05 at 102.00 N/R 822,726
1,250 5.650%, 9/01/34 9/05 at 102.00 N/R 1,277,575
1,040 Nevada County, California, Certificates of Participation 10/11 at 100.00 Aaa 1,147,307
Refunding, Series 2001, 5.250%, 10/01/13 - MBIA Insured
5,000 Oakland Redevelopment Agency, California, Subordinate Lien 3/13 at 100.00 AAA 5,602,850
Tax Allocation Bonds, Central District Redevelopment
Project, Series 2003, 5.500%, 9/01/15 - FGIC Insured
805 Ontario, California, Assessment District 100C Limited 9/05 at 103.00 N/R 843,817
Obligation Improvement Bonds, California Commerce Center
Phase III, Series 1991, 8.000%, 9/02/11
2,250 Orange County, California, Special Tax Bonds, Community 8/09 at 102.00 N/R 2,566,035
Facilities District 99-1 of Ladera Ranch, Series 1999A,
6.700%, 8/15/29
2,000 Poway, California, Community Facilities District 88-1, 8/08 at 102.00 N/R 2,200,700
Special Tax Refunding Bonds, Parkway Business Centre,
Series 1998, 6.750%, 8/15/15
1,645 Rancho Cucamonga, California, Limited Obligation 9/05 at 102.00 N/R 1,672,488
Improvement Bonds, Masi Plaza Assessment District 93-1,
Series 1997, 6.250%, 9/02/22
305 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 321,824
Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35
- XLCA Insured
205 Riverside County Public Financing Authority, California, 10/15 at 100.00 AAA 216,892
Tax Allocation Bonds, Multiple Projects, Series 2005A,
5.000%, 10/01/35 (WI, settling 9/08/05) - XLCA Insured
1,000 Sacramento City Financing Authority, California, Lease No Opt. Call AAA 1,169,830
Revenue Refunding Bonds, Series 1993A, 5.400%, 11/01/20 -
AMBAC Insured
500 Sacramento City Financing Authority, California, Lease No Opt. Call AA- 564,185
Revenue Refunding Bonds, Series 1993B, 5.400%, 11/01/20
995 Sacramento County, Laguna, California, Special Tax 12/07 at 102.00 N/R 1,023,775
Refunding Bonds, Community Facilities District 1 - Laguna
Creek Ranch, Series 1997, 5.700%, 12/01/20
2,880 San Francisco Redevelopment Agency, California, Lease 7/11 at 102.00 AAA 3,149,424
Revenue Bonds, Moscone Convention Center, Series 2004,
5.250%, 7/01/24 - AMBAC Insured
7,090 San Marcos Redevelopment Agency, California, Tax Allocation 10/07 at 102.00 A 7,407,207
Bonds, Affordable Housing Project, Series 1997A, 6.000%,
10/01/27 (Alternative Minimum Tax)
4,000 Shafter Joint Powers Financing Authority, California, Lease 1/07 at 101.00 A- 4,164,640
Revenue Bonds, Community Correctional Facility Acquisition
Project, Series 1997A, 6.050%, 1/01/17
1,025 Stockton Public Financing Authority, California, Lease 9/14 at 100.00 AAA 1,127,141
Revenue Bonds, Series 2004, 5.250%, 9/01/23 - FGIC Insured
2,000 Taft Public Financing Authority, California, Lease Revenue 1/07 at 101.00 A- 2,077,000
Bonds, Community Correctional Facility Acquisition, Series
1997A, 6.050%, 1/01/17
1,190 Vallejo Public Financing Authority, California, Limited No Opt. Call N/R 1,245,978
Obligation Revenue Refinancing Bonds, Fairground Drive
Assessment District 65, Series 1998, 5.700%, 9/02/11
- --------------------------------------------------------------------------------------------------------------------
Transportation - 10.3%
3,000 Bay Area Toll Authority, California, Revenue Bonds, San 4/11 at 100.00 AA 3,235,020
Francisco Bay Area Toll Bridge, Series 2001D, 5.000%,
4/01/16
4,460 California Infrastructure Economic Development Bank, First 7/13 at 100.00 AAA 4,837,361
Lien Revenue Bonds, San Francisco Bay Area Toll Bridge,
Series 2003A, 5.000%, 7/01/22 - FSA Insured
- ----
13
Portfolio of Investments (Unaudited)
NUVEEN CALIFORNIA MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Transportation (continued)
$ 2,000 Foothill/Eastern Transportation Corridor Agency, 1/10 at 100.00 BBB- $ 1,932,700
California, Toll Road Revenue Bonds, Series 1995A, 5.000%,
1/01/35
2,750 Foothill/Eastern Transportation Corridor Agency, 1/14 at 101.00 BBB- 2,368,740
California, Toll Road Revenue Refunding Bonds, Series
1999, 0.000%, 1/15/28
Port of Oakland, California, Revenue Bonds, Series 2000K:
2,000 5.500%, 11/01/09 (Alternative Minimum Tax) - FGIC Insured No Opt. Call AAA 2,173,780
4,000 5.750%, 11/01/29 (Alternative Minimum Tax) - FGIC Insured 5/10 at 100.00 AAA 4,320,680
5,500 Port of Oakland, California, Revenue Bonds, Series 2002M, 11/12 at 100.00 AAA 6,077,610
5.250%, 11/01/19 - FGIC Insured
2,475 San Francisco Airports Commission, California, Revenue 5/12 at 100.00 AAA 2,695,102
Refunding Bonds, San Francisco International Airport,
Second Series 2002, Issue 28B, 5.250%, 5/01/22 - MBIA
Insured
- --------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** - 10.3%
3,115 California Educational Facilities Authority, Revenue Bonds, 6/10 at 101.00 Baa3*** 3,614,553
Pooled College and University Projects, Series 2000C,
6.750%, 6/01/30
6,000 California Health Facilities Financing Authority, Revenue 12/09 at 101.00 A3*** 6,782,100
Bonds, Cedars-Sinai Medical Center, Series 1999A, 6.125%,
12/01/30 (Pre-refunded to 12/01/09)
7,100 California, Various Purpose General Obligation Bonds, 3/10 at 101.00 AAA 7,941,705
Series 2000, 5.750%, 3/01/27 (Pre-refunded to 3/01/10) -
MBIA Insured
2,405 Los Angeles Harbors Department, California, Revenue Bonds, No Opt. Call AAA 3,038,405
Series 1988, 7.600%, 10/01/18
5,729 Merced Irrigation District, California, Subordinated 3/08 at 102.00 AAA 6,343,550
Revenue Certificates of Participation, Electric System
Project, Series 2000, 7.450%, 3/01/18 (Pre-refunded to
3/01/08)
- --------------------------------------------------------------------------------------------------------------------
Utilities - 15.2%
4,500 California Department of Water Resources, Power Supply 5/12 at 101.00 A2 4,848,525
Revenue Bonds, Series 2002A, 5.125%, 5/01/18
6,420 California Department of Water Resources, Power Supply 5/12 at 101.00 AAA 8,977,343
Revenue Bonds, RITES PA-1120R, Series 2003, 10.148%,
5/01/14 (IF) - AMBAC Insured
2,875 California Statewide Community Development Authority, 12/05 at 101.50 N/R 2,933,794
Certificates of Participation Refunding, Rio Bravo Fresno
Project, Series 1999A, 6.300%, 12/01/18
Los Angeles Department of Water and Power, California,
Power System Revenue Bonds, Series 2001A-1:
5,000 5.250%, 7/01/15 7/11 at 100.00 AA- 5,461,950
10,000 5.250%, 7/01/21 - FSA Insured 7/11 at 100.00 AAA 10,817,000
500 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 542,980
Power System Revenue Bonds, Series 2003A-2, 5.000%,
7/01/21 - MBIA Insured
3,405 Merced Irrigation District, California, Revenue Refunding 9/05 at 102.00 Baa3 3,478,820
Bonds, Electric System Project, Series 2001, 6.850%,
9/01/36
3,470 Puerto Rico Industrial, Tourist, Educational, Medical and 6/10 at 101.00 Baa3 3,769,669
Environmental Control Facilities Financing Authority,
Co-Generation Facility Revenue Bonds, Series 2000A,
6.625%, 6/01/26 (Alternative Minimum Tax)
- --------------------------------------------------------------------------------------------------------------------
Water and Sewer - 9.5%
6,080 California Department of Water Resources, Water System 12/12 at 100.00 AAA 6,631,152
Revenue Bonds, Central Valley Project, Series 2002Z,
5.000%, 12/01/17 - FGIC Insured
1,270 California Department of Water Resources, Water System 6/13 at 100.00 AAA 1,417,828
Revenue Bonds, Central Valley Project, Series 2003Y,
5.250%, 12/01/16 - FGIC Insured
2,000 California Statewide Community Development Authority, Water 10/13 at 100.00 AAA 2,186,320
and Wastewater Revenue Bonds, Pooled Financing Program,
Series 2003A, 5.250%, 10/01/23 - FSA Insured
1,680 Castaic Lake Water Agency, California, Revenue Certificates 8/14 at 100.00 AAA 1,816,030
of Participation, Series 2004A, 5.000%, 8/01/20 - AMBAC
Insured
4,250 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AA 4,429,860
Waterworks Revenue Refunding Bonds, Series 2001A, 5.125%,
7/01/41
- ----
14
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Water and Sewer (continued)
$ 1,500 Metropolitan Water District of Southern California, Water 10/14 at 100.00 AAA $ 1,602,060
Revenue Bonds, Series 2004B-3, 5.000%, 10/01/29 - MBIA
Insured
1,190 Pasadena, California, Water Revenue Refunding Bonds, Series 6/13 at 100.00 AAA 1,294,101
2003, 5.000%, 6/01/20 - FGIC Insured
1,670 Sacramento County Sanitation District Financing Authority, 12/10 at 101.00 AA 2,267,726
California, Revenue Bonds, Series 694R-A, 10.949%,
12/01/10 (IF)
1,385 Sacramento County Sanitation District Financing Authority, 12/10 at 101.00 AA 1,786,913
California, Revenue Bonds, Series 694R-B, 9.301%, 12/01/11
(IF)
2,055 Westlands Water District, California, Revenue Certificates 3/15 at 100.00 AAA 2,203,491
of Participation, Series 2005A, 5.000%, 9/01/24 - MBIA
Insured
- --------------------------------------------------------------------------------------------------------------------
$ 245,404 Total Long-Term Investments (cost $251,266,797) - 99.6% 267,928,667
- --------------------------------------------------------------------------------------------------------------------
- ------------
Other Assets Less Liabilities - 0.4% 1,119,322
------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 269,047,989
------------------------------------------------------------------------------------------------------
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient
U.S. Government or U.S. Government agency securities which
ensures the timely payment of principal and interest. Such
securities are normally considered to be equivalent to AAA rated
securities.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis.
(IF) Inverse floating rate security.
See accompanying notes to financial statements.
- ----
15
Portfolio of Investments (Unaudited)
NUVEEN CALIFORNIA INSURED MUNICIPAL BOND FUND
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 3.8%
$ 2,125 California Educational Facilities Authority, Student Loan 3/08 at 102.00 Aaa $ 2,234,438
Revenue Bonds, Cal Loan Program, Series 2001A, 5.400%,
3/01/21 (Alternative Minimum Tax) - MBIA Insured
2,250 California State University, Systemwide Revenue Bonds, 5/15 at 100.00 AAA 2,427,863
Series 2005A, 5.000%, 11/01/25 - AMBAC Insured
5,000 Long Beach Bond Financing Authority, California, Lease 11/11 at 101.00 AAA 5,364,700
Revenue Refunding Bonds, Long Beach Aquarium of the South
Pacific, Series 2001, 5.250%, 11/01/30 - AMBAC Insured
- --------------------------------------------------------------------------------------------------------------------
Healthcare - 2.5%
2,000 Antelope Valley Healthcare District, California, Insured 1/08 at 102.00 AAA 2,117,080
Revenue Refunding Bonds, Series 1997A, 5.200%, 1/01/27 -
FSA Insured
4,000 California Statewide Community Development Authority, 8/09 at 101.00 AAA 4,324,840
Certificates of Participation, Sutter Health Obligated
Group, Series 1999, 5.500%, 8/15/31 - FSA Insured
- --------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 4.5%
4,180 California Statewide Community Development Authority, 12/11 at 100.00 AAA 4,354,348
Multifamily Housing Revenue Senior Bonds, Westgate
Courtyards Apartments, Series 2001X-1, 5.420%, 12/01/34
(Alternative Minimum Tax) - AMBAC Insured
3,865 Los Angeles, California, GNMA Mortgage-Backed Securities 7/11 at 102.00 AAA 4,069,729
Program Multifamily Housing Revenue Bonds, Park Plaza West
Senior Apartments, Series 2001B, 5.400%, 1/20/31
(Alternative Minimum Tax)
1,955 Napa, California, FHA-Insured Mortgage Revenue Refunding 1/06 at 100.00 AAA 1,958,030
Bonds, Creekside Park II Apartments, Series 1994A, 6.625%,
7/01/25 - MBIA Insured
1,285 Santa Cruz County Housing Authority, California, GNMA 7/09 at 102.00 AAA 1,340,885
Collateralized Multifamily Housing Revenue Bonds,
Northgate Apartments, Series 1999A, 5.500%, 7/20/40
(Alternative Minimum Tax)
- --------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 5.1%
3,985 California Rural Home Mortgage Finance Authority, FNMA 6/12 at 101.00 Aaa 4,142,846
Mortgage-Backed Securities Program Single Family Mortgage
Revenue Bonds, Series 2002D, 5.250%, 6/01/34 (Alternative
Minimum Tax)
California Department of Veterans Affairs, Home Purchase
Revenue Bonds, Series 2002A:
3,500 5.300%, 12/01/21 - AMBAC Insured 6/12 at 101.00 AAA 3,758,370
5,000 5.350%, 12/01/27 - AMBAC Insured 6/12 at 101.00 AAA 5,319,850
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 17.2%
Bonita Unified School District, San Diego County,
California, General Obligation Bonds, Series 2004A:
1,425 5.250%, 8/01/20 - MBIA Insured 8/14 at 100.00 AAA 1,585,113
1,570 5.250%, 8/01/21 - MBIA Insured 8/14 at 100.00 AAA 1,741,381
3,570 California, General Obligation Bonds, Series 2004, 5.000%, 2/14 at 100.00 AAA 3,888,087
2/01/17 - AMBAC Insured
4,080 Chaffey Joint Union High School District, San Bernardino 8/15 at 100.00 AAA 4,433,818
County, California, General Obligation Bonds, Series 2005,
5.000%, 8/01/23 - FGIC Insured
1,365 El Segundo Unified School District, Los Angeles County, 9/14 at 100.00 AAA 1,519,627
California, General Obligation Bonds, Series 2004, 5.250%,
9/01/20 - FGIC Insured
1,610 Eureka Unified School District, Humboldt County, 8/12 at 101.00 AAA 1,771,531
California, General Obligation Bonds, Series 2002, 5.250%,
8/01/23 - FSA Insured
1,000 Fremont Unified School District, Alameda County, 8/12 at 101.00 AAA 1,086,170
California, General Obligation Bonds, Series 2002A,
5.000%, 8/01/21 - FGIC Insured
Golden West Schools Financing Authority, California,
General Obligation Revenue Refunding Bonds, School District
Program, Series 1998A:
2,650 0.000%, 8/01/19 - MBIA Insured 8/13 at 68.56 AAA 1,276,373
2,755 0.000%, 8/01/20 - MBIA Insured 8/13 at 63.85 AAA 1,232,284
2,500 Huntington Beach Union High School District, Orange County, 8/14 at 100.00 AAA 2,706,350
California, General Obligation Bonds, Series 2004, 5.000%,
8/01/22 - FSA Insured
Imperial Community College District, Imperial County,
California, General Obligation Bonds, Series 2005:
1,330 5.000%, 8/01/23 - FGIC Insured 8/14 at 100.00 AAA 1,435,615
1,510 5.000%, 8/01/24 - FGIC Insured 8/14 at 100.00 AAA 1,626,376
- ----
16
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/General (continued)
$ 1,460 Jurupa Unified School District, Riverside County, 8/13 at 100.00 AAA $ 1,578,771
California, General Obligation Bonds, Series 2004, 5.000%,
8/01/24 - FGIC Insured
1,255 Los Angeles Community College District, Los Angeles County, 8/15 at 100.00 AAA 1,360,608
California, General Obligation Bonds, Series 2005A,
5.000%, 8/01/24 - FSA Insured
5,000 Los Angeles Unified School District, California, General 7/12 at 100.00 AAA 5,319,300
Obligation Bonds, Series 2002E, 5.125%, 1/01/27 - MBIA
Insured
1,280 Los Angeles Unified School District, California, General 7/13 at 100.00 AAA 1,383,603
Obligation Bonds, Series 2003A, 5.000%, 7/01/24 - FSA
Insured
Oakland Unified School District, Alameda County,
California, General Obligation Bonds, Series 2005:
360 5.000%, 8/01/25 - MBIA Insured 8/15 at 100.00 AAA 388,148
380 5.000%, 8/01/26 - MBIA Insured 8/15 at 100.00 AAA 408,105
2,525 San Joaquin Delta Community College District, California, 8/15 at 100.00 AAA 2,709,628
General Obligation Bonds, Series 2005A, 5.000%, 8/01/29 -
FSA Insured
San Jose-Evergreen Community College District, Santa Clara
County, California, General Obligation Bonds, Series 2005A:
285 5.000%, 9/01/25 - MBIA Insured 9/15 at 100.00 AAA 308,179
415 5.000%, 9/01/27 - MBIA Insured 9/15 at 100.00 AAA 446,623
2,335 San Juan Unified School District, Sacramento County, 8/14 at 100.00 AAA 2,553,486
California, General Obligation Bonds, Series 2004A,
5.000%, 8/01/18 - MBIA Insured
1,000 San Ramon Valley Unified School District, Contra Costa 8/14 at 100.00 AAA 1,077,070
County, California, General Obligation Bonds, Series 2004,
5.000%, 8/01/24 - FSA Insured
3,040 Sulphur Springs Union School District, Los Angeles County, No Opt. Call AAA 2,053,885
California, General Obligation Bonds, Series 1991A,
0.000%, 9/01/15 - MBIA Insured
1,000 Washington Unified School District, Yolo County, 8/13 at 100.00 AAA 1,084,910
California, General Obligation Bonds, Series 2004A,
5.000%, 8/01/22 - FGIC Insured
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 19.7%
415 Barstow Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 483,566
Bonds, Central Redevelopment Project, Series 1994A,
7.000%, 9/01/14 - MBIA Insured
7,005 Big Bear Lake Financing Authority, San Bernardino County, 2/06 at 102.00 AAA 7,163,103
California, Tax Allocation Revenue Refunding Bonds, Series
1995, 6.300%, 8/01/25 - AMBAC Insured
2,250 Brea and Olinda Unified School District, Orange County, 8/11 at 101.00 AAA 2,386,890
California, Certificates of Participation Refunding,
Series 2002A, 5.125%, 8/01/26 - FSA Insured
1,960 California Infrastructure Economic Development Bank, 12/13 at 100.00 AAA 2,116,624
Revenue Bonds, North County Center for Self- Sufficiency
Corporation, Series 2004, 5.000%, 12/01/25 - AMBAC Insured
2,000 Cerritos Public Financing Authority, California, Tax 11/17 at 102.00 AAA 2,197,520
Allocation Revenue Bonds, Los Cerritos Redevelopment
Projects, Series 2002A, 5.000%, 11/01/24 - AMBAC Insured
1,400 Chula Vista Public Financing Authority, California, Pooled 9/15 at 100.00 AAA 1,492,456
Community Facility District Assessment Revenue Bonds,
Series 2005A, 5.000%, 9/01/29 - MBIA Insured
2,285 Folsom Cordova Unified School District, Sacramento County, 10/14 at 100.00 AAA 2,482,013
California, General Obligation Bonds, School Facilities
Improvement District 1, Series 2004B, 5.000%, 10/01/21 -
MBIA Insured
1,185 Folsom Cordova Unified School District, Sacramento County, 10/14 at 100.00 AAA 1,268,412
California, General Obligation Bonds, School Facilities
Improvement District 2, Series 2004B, 5.000%, 10/01/27 -
FSA Insured
260 Hesperia Community Redevelopment Agency, California, Tax 9/15 at 100.00 AAA 281,590
Allocation Bonds, Series 2005A, 5.000%, 9/01/20 - XLCA
Insured
1,000 Los Angeles Community Redevelopment Agency, California, Tax 12/14 at 100.00 AAA 1,083,460
Allocation Bonds, Bunker Hill Project, Series 2004A,
5.000%, 12/01/20 - FSA Insured
2,000 Los Angeles County Metropolitan Transportation Authority, 7/13 at 100.00 AAA 2,184,700
California, Proposition A First Tier Senior Sales Tax
Revenue Bonds, Series 2003B, 5.000%, 7/01/19 - MBIA Insured
1,460 Moreno Valley Unified School District, Riverside County, 3/14 at 100.00 AAA 1,562,696
California, Certificates of Participation, Series 2005,
5.000%, 3/01/23 - FSA Insured
- ----
17
Portfolio of Investments (Unaudited)
NUVEEN CALIFORNIA INSURED MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited (continued)
$ 7,040 Norwalk Community Facilities Financing Authority, Los 9/05 at 102.00 AAA $ 7,197,274
Angeles County, California, Tax Allocation Revenue
Refunding Bonds, Series 1995A, 6.050%, 9/01/25 - FSA
Insured
14,050 Paramount Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 5,147,077
Refunding Bonds, Redevelopment Project Area 1, Series
1998, 0.000%, 8/01/26 - MBIA Insured
290 Rialto Redevelopment Agency, California, Tax Allocation 9/15 at 100.00 AAA 305,996
Bonds, Merged Project Area, Series 2005A, 5.000%, 9/01/35
- XLCA Insured
8,000 Riverside County, California, Asset Leasing Corporate 6/12 at 101.00 AAA 8,561,760
Leasehold Revenue Bonds, Riverside County Hospital
Project, Series 1997B, 5.000%, 6/01/19 - MBIA Insured
190 Riverside County Public Financing Authority, California, 10/15 at 100.00 AAA 201,022
Tax Allocation Bonds, Multiple Projects, Series 2005A,
5.000%, 10/01/35 (WI, settling 9/08/05) - XLCA Insured
3,560 Roseville, California, Special Tax Bonds, Community 9/15 at 100.00 AAA 3,780,150
Facilities District 1 - Woodcreek West, Series 2005,
5.000%, 9/01/30 - AMBAC Insured
1,490 Tulare Public Financing Authority, California, Lease 10/07 at 102.00 AAA 1,575,437
Revenue Bonds, Capital Facilities Project, Series 1997,
5.125%, 10/01/22 - MBIA Insured
- --------------------------------------------------------------------------------------------------------------------
Transportation - 9.5%
6,500 Foothill/Eastern Transportation Corridor Agency, 1/10 at 100.00 AAA 6,824,480
California, Toll Road Revenue Bonds, Series 1995A, 5.000%,
1/01/35 - MBIA Insured
3,255 Foothill/Eastern Transportation Corridor Agency, 1/10 at 101.00 AAA 3,585,708
California, Toll Road Revenue Refunding Bonds, Series
1999, 5.750%, 1/15/40 - MBIA Insured
2,000 Port of Oakland, California, Revenue Bonds, Series 2000K, 5/10 at 100.00 AAA 2,160,340
5.750%, 11/01/29 (Alternative Minimum Tax) - FGIC Insured
1,290 San Francisco Airports Commission, California, Special 1/08 at 101.00 AAA 1,348,295
Facilities Lease Revenue Bonds, San Francisco
International Airport, SFO Fuel Company LLC, Series 1997A,
5.250%, 1/01/22 (Alternative Minimum Tax) - AMBAC Insured
3,470 San Francisco Airports Commission, California, Revenue 5/08 at 101.00 AAA 3,654,396
Bonds, San Francisco International Airport, Second Series
Issue 16A, 5.375%, 5/01/16 (Alternative Minimum Tax) - FSA
Insured
1,320 San Francisco Airports Commission, California, Special 1/08 at 102.00 AAA 1,420,993
Facilities Lease Revenue Bonds, San Francisco
International Airport, SFO Fuel Company LLC, Series 2000A,
6.100%, 1/01/20 (Alternative Minimum Tax) - FSA Insured
625 San Francisco Airports Commission, California, Revenue 5/10 at 101.00 AAA 666,431
Bonds, San Francisco International Airport, Second Series
2000, Issue 26B, 5.000%, 5/01/21 - FGIC Insured
5,000 San Francisco Airports Commission, California, Revenue 5/11 at 100.00 AAA 5,227,400
Refunding Bonds, San Francisco International Airport,
Second Series 2001, Issue 27A, 5.250%, 5/01/31
(Alternative Minimum Tax) - MBIA Insured
- --------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** - 22.7%
750 Barstow Redevelopment Agency, California, Tax Allocation No Opt. Call AAA 883,313
Bonds, Central Redevelopment Project, Series 1994A,
7.000%, 9/01/14 - MBIA Insured
27,750 California, Various Purpose General Obligation Bonds, 3/10 at 101.00 AAA 31,039,763
Series 2000, 5.750%, 3/01/27 (Pre-refunded to 3/01/10) -
MBIA Insured
3,305 Centinela Valley Union High School District, Los Angeles 8/10 at 102.00 AAA 3,532,516
County, California, General Obligation Bonds, Series
2002C, 5.200%, 8/01/32 - FGIC Insured
3,195 Desert Community College District, Riverside County, 8/14 at 100.00 AAA 3,560,572
California, General Obligation Bonds, Series 2004A,
5.000%, 8/01/23 (Pre-refunded to 8/01/14) - MBIA Insured
6,000 Oakland, California, Insured Revenue Bonds, 1800 Harrison 1/10 at 100.00 AAA 6,719,580
Foundation - Kaiser Permanente, Series 1999A, 6.000%,
1/01/29 (Pre-refunded to 1/01/10) - AMBAC Insured
5,120 Orange County, California, Recovery Certificates of 7/06 at 102.00 AAA 5,355,366
Participation, Series 1996A, 6.000%, 7/01/26 (Pre-refunded
to 7/01/06) - MBIA Insured
4,570 Sacramento City Unified School District, Sacramento County, 7/09 at 102.00 Aaa 5,150,527
California, General Obligation Bonds, Series 2000A,
6.000%, 7/01/29 (Pre-refunded to 7/01/09) - FGIC Insured
2,500 San Bernardino County Transportation Authority, California, 9/05 at 100.00 AAA 2,689,875
Limited Sales Tax Revenue Bonds, Series 1992A, 6.000%,
3/01/10 - FGIC Insured
- ----
18
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Utilities - 6.4%
$ 1,310 Anaheim Public Finance Authority, California, Second Lien 10/14 at 100.00 AAA $ 1,459,510
Electric Distribution Revenue Bonds, Series 2004, 5.250%,
10/01/17 - MBIA Insured
5,000 California Pollution Control Financing Authority, 4/11 at 102.00 AAA 5,451,050
Remarketed Revenue Bonds, Pacific Gas and Electric
Company, Series 1996A, 5.350%, 12/01/16 (Alternative
Minimum Tax) - MBIA Insured
1,000 California Pollution Control Financing Authority, Revenue 9/09 at 101.00 AAA 1,078,100
Refunding Bonds, Southern California Edison Company,
Series 1999B, 5.450%, 9/01/29 - MBIA Insured
3,500 Northern California Power Agency, Revenue Refunding Bonds, 7/08 at 101.00 AAA 3,688,545
Hydroelectric Project 1, Series 1998A, 5.125%, 7/01/23 -
MBIA Insured
1,950 Salinas Valley Solid Waste Authority, California, Revenue 8/12 at 100.00 AAA 2,069,925
Bonds, Series 2002, 5.250%, 8/01/27 (Alternative Minimum
Tax) - AMBAC Insured
2,700 Santa Clara, California, Subordinate Electric Revenue 7/13 at 100.00 AAA 2,923,317
Bonds, Series 2003A, 5.000%, 7/01/23 - MBIA Insured
- --------------------------------------------------------------------------------------------------------------------
Water and Sewer - 5.8%
3,070 California Special District Finance Program, Certificates 9/10 at 100.00 AAA 3,291,194
of Participation, Water and Wastewater Revenue Bonds,
Jurupa Community Services District, Series 2001NN, 5.250%,
9/01/32 - MBIA Insured
2,850 Metropolitan Water District of Southern California, Water 1/08 at 101.00 AAA 2,930,057
Revenue Bonds, Series 1997A, 5.000%, 7/01/37 - FGIC Insured
6,000 Orange County Sanitation District, California, Certificates 8/13 at 100.00 AAA 6,305,820
of Participation, Series 2003, 5.000%, 2/01/33 - FGIC
Insured
1,000 Orange County Water District, California, Revenue 2/15 at 100.00 AAA 1,071,960
Certificates of Participation, Series 2005B,
5.000%, 8/15/24 - MBIA Insured
1,500 Sacramento County Sanitation District Financing Authority, 12/14 at 100.00 AAA 1,631,263
California, Revenue Bonds, Series 2004A, 5.000%, 12/01/21
- AMBAC Insured
- --------------------------------------------------------------------------------------------------------------------
$ 249,215 Total Long-Term Investments (cost $235,165,658) - 97.2% 253,580,062
- --------------------------------------------------------------------------------------------------------------------
- ------------
Other Assets Less Liabilities - 2.8% 7,381,218
-------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 260,961,280
-------------------------------------------------------------------------------------------------------
Primarily all of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio
Insurance, or are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency securities,
any of which ensure the timely payment of principal and interest.
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. Government or U.S. Government agency securities which
ensures the timely payment of principal and interest.
(WI)Security purchased on a when-issued basis.
See accompanying notes to financial statements.
- ----
19
Statement of Assets and Liabilities (Unaudited)
August 31, 2005
California
California Insured
- -----------------------------------------------------------------------------------------------------------
Assets
Investments, at market value (cost $251,266,797 and $235,165,658, respectively) $267,928,667 $253,580,062
Cash -- 615,651
Receivables:
Interest 4,050,817 3,285,455
Investments sold 185,000 5,456,095
Shares sold 67,017 139,920
Other assets 5,911 7,480
- -----------------------------------------------------------------------------------------------------------
Total assets 272,237,412 263,084,663
- -----------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 811,275 --
Payables:
Investments purchased 1,047,817 989,399
Shares redeemed 127,303 51,197
Accrued expenses:
Management fees 120,712 116,971
12b-1 distribution and service fees 36,354 36,344
Other 73,424 64,709
Dividends payable 972,538 864,763
- -----------------------------------------------------------------------------------------------------------
Total liabilities 3,189,423 2,123,383
- -----------------------------------------------------------------------------------------------------------
Net assets $269,047,989 $260,961,280
- -----------------------------------------------------------------------------------------------------------
Class A Shares
Net assets $ 72,057,323 $ 86,390,482
Shares outstanding 6,837,076 7,846,644
Net asset value per share $ 10.54 $ 11.01
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 11.00 $ 11.49
- -----------------------------------------------------------------------------------------------------------
Class B Shares
Net assets $ 14,327,648 $ 17,323,790
Shares outstanding 1,360,374 1,571,067
Net asset value and offering price per share $ 10.53 $ 11.03
- -----------------------------------------------------------------------------------------------------------
Class C Shares
Net assets $ 20,712,692 $ 12,800,852
Shares outstanding 1,968,791 1,168,992
Net asset value and offering price per share $ 10.52 $ 10.95
- -----------------------------------------------------------------------------------------------------------
Class R Shares
Net assets $161,950,326 $144,446,156
Shares outstanding 15,370,255 13,113,625
Net asset value and offering price per share $ 10.54 $ 11.01
- -----------------------------------------------------------------------------------------------------------
Net Assets Consist of:
- -----------------------------------------------------------------------------------------------------------
Capital paid-in $260,308,642 $241,915,733
Undistributed (Over-distribution of) net investment income (373,860) (290,918)
Accumulated net realized gain (loss) from investments (7,548,663) 922,061
Net unrealized appreciation of investments 16,661,870 18,414,404
- -----------------------------------------------------------------------------------------------------------
Net assets $269,047,989 $260,961,280
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
20
Statement of Operations (Unaudited)
Six Months Ended August 31, 2005
California
California Insured
- -------------------------------------------------------------------------------------------
Investment Income $6,973,794 $6,401,451
- -------------------------------------------------------------------------------------------
Expenses
Management fees 718,676 696,486
12b-1 service fees - Class A 70,728 82,931
12b-1 distribution and service fees - Class B 71,128 86,397
12b-1 distribution and service fees - Class C 73,673 48,562
Shareholders' servicing agent fees and expenses 72,602 62,215
Custodian's fees and expenses 43,194 42,199
Trustees' fees and expenses 3,095 2,604
Professional fees 15,746 8,170
Shareholders' reports - printing and mailing expenses 19,480 13,133
Federal and state registration fees 1,034 862
Other expenses 3,835 2,667
- -------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 1,093,191 1,046,226
Custodian fee credit (7,044) (3,253)
- -------------------------------------------------------------------------------------------
Net expenses 1,086,147 1,042,973
- -------------------------------------------------------------------------------------------
Net investment income 5,887,647 5,358,478
- -------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from investments (246,033) 1,206,765
Net change in unrealized appreciation (depreciation) of investments 2,736,062 1,321,726
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain 2,490,029 2,528,491
- -------------------------------------------------------------------------------------------
Net increase in net assets from operations $8,377,676 $7,886,969
- -------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
21
Statement of Changes in Net Assets (Unaudited)
California
------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
- ----------------------------------------------------------------------------------------------------
Operations
Net investment income $ 5,887,647 $ 12,332,829
Net realized gain (loss) from investments (246,033) (51,830)
Net change in unrealized appreciation (depreciation) of investments 2,736,062 (1,326,270)
- ----------------------------------------------------------------------------------------------------
Net increase in net assets from operations 8,377,676 10,954,729
- ----------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income:
Class A (1,578,424) (3,009,504)
Class B (279,927) (622,503)
Class C (387,169) (744,201)
Class R (3,853,669) (7,998,261)
From accumulated net realized gains from investments:
Class A -- --
Class B -- --
Class C -- --
Class R -- --
- ----------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (6,099,189) (12,374,469)
- ----------------------------------------------------------------------------------------------------
Fund Share Transactions
Proceeds from sale of shares 8,832,282 28,400,679
Proceeds from shares issued to shareholders due
to reinvestment of distributions 3,496,608 6,775,703
- ----------------------------------------------------------------------------------------------------
12,328,890 35,176,382
Cost of shares redeemed (14,556,259) (30,912,607)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions (2,227,369) 4,263,775
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 51,118 2,844,035
Net assets at the beginning of period 268,996,871 266,152,836
- ----------------------------------------------------------------------------------------------------
Net assets at the end of period $269,047,989 $268,996,871
- ----------------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income
at the end of period $ (373,860) $ (162,318)
- ----------------------------------------------------------------------------------------------------
California Insured
------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
- ---------------------------------------------------------------------------------------------------
Operations
Net investment income $ 5,358,478 $ 11,207,226
Net realized gain (loss) from investments 1,206,765 (286,406)
Net change in unrealized appreciation (depreciation) of investments 1,321,726 (6,330,145)
- ---------------------------------------------------------------------------------------------------
Net increase in net assets from operations 7,886,969 4,590,675
- ---------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income:
Class A (1,739,039) (3,476,841)
Class B (313,148) (699,301)
Class C (234,609) (488,685)
Class R (3,206,037) (6,707,998)
From accumulated net realized gains from investments:
Class A -- (46,002)
Class B -- (10,961)
Class C -- (7,497)
Class R -- (85,614)
- ---------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (5,492,833) (11,522,899)
- ---------------------------------------------------------------------------------------------------
Fund Share Transactions
Proceeds from sale of shares 8,835,840 15,205,484
Proceeds from shares issued to shareholders due
to reinvestment of distributions 3,035,891 6,074,615
- ---------------------------------------------------------------------------------------------------
11,871,731 21,280,099
Cost of shares redeemed (13,111,392) (27,713,724)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions (1,239,661) (6,433,625)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 1,154,475 (13,365,849)
Net assets at the beginning of period 259,806,805 273,172,654
- ---------------------------------------------------------------------------------------------------
Net assets at the end of period $260,961,280 $259,806,805
- ---------------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income
at the end of period $ (290,918) $ (156,563)
- ---------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
22
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Multistate Trust II (the "Trust") is an open-end investment company
registered under the Investment Company Act of 1940, as amended. The Trust is
comprised of the Nuveen California Municipal Bond Fund ("California") and the
Nuveen California Insured Municipal Bond Fund ("California Insured")
(collectively, the "Funds"), among others. The Trust was organized as a
Massachusetts business trust on July 1, 1996. The Funds were each organized as
a series of predecessor trusts or corporations prior to that date.
The Funds seek to provide high tax-free income and preservation of capital
through investments in diversified portfolios of quality municipal bonds.
Effective January 1, 2005, Nuveen Advisory Corp. ("NAC"), the Funds' previous
Adviser, and its affiliate, Nuveen Institutional Advisory Corp. ("NIAC"), were
merged into Nuveen Asset Management ("NAM"), each wholly owned subsidiaries of
Nuveen Investments, Inc. ("Nuveen"). As a result of the merger, NAM is now the
Adviser to all funds previously advised by either NAC or NIAC.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Investment Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When Market
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service or, in the absence of a pricing service for a
particular security, the Board of Trustees of the Funds, or its designee, may
establish fair market value using a wide variety of market data including
yields or prices of municipal bonds of comparable quality, type of issue,
coupon, maturity and rating, market quotes or indications of value from
securities dealers, evaluations of anticipated cash flows or collateral,
general market conditions and other information and analysis, including the
obligor's credit characteristics considered relevant by the pricing service of
the Board of Trustees' designee. Temporary investments in securities that have
variable rate and demand features qualifying them as short-term securities are
valued at amortized cost, which approximates market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued or delayed delivery basis may have
extended settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At August 31, 2005,
California and California Insured had outstanding when-issued purchase
commitments of $213,891 and $198,240, respectively.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
Professional Fees
Professional fees presented in the Statement of Operations consist of legal
fees incurred in the normal course of operations, audit fees, tax consulting
fees and, in some cases, workout expenditures. Workout expenditures are
incurred in an attempt to protect or enhance an investment, or to pursue other
claims or legal actions on behalf of the Fund's shareholders.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared monthly as a dividend. Generally,
payment is made or reinvestment is credited to shareholder accounts on the
first business day after month-end. Net realized capital gains and/or market
discount from investment transactions, if any, are distributed to shareholders
not less frequently than annually. Furthermore, capital gains are distributed
only to the extent they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount, if any, are recorded on the ex-dividend
date. The amount and timing of distributions are determined in accordance with
federal income tax regulations, which may differ from accounting principles
generally accepted in the United States.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all net investment income and net capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
each Fund intends to satisfy conditions which will enable interest from
municipal securities, which is exempt from regular federal and California state
income taxes, to retain such tax-exempt status when distributed to shareholders
of the Funds. Net realized capital gains and ordinary income distributions paid
by the Funds are subject to federal taxation.
Insurance
California Insured invests primarily in municipal securities which are either
covered by insurance or backed by an escrow or trust account containing
sufficient U.S. Government or U.S. Government agency securities, both of which
ensure the timely payment of
- ----
23
Notes to Financial Statements (Unaudited) (continued)
principal and interest. Each insured municipal security is covered by Original
Issue Insurance, Secondary Market Insurance or Portfolio Insurance. Such
insurance does not guarantee the market value of the municipal securities or
the value of the Fund's shares. Original Issue Insurance and Secondary Market
Insurance remain in effect as long as the municipal securities covered thereby
remain outstanding and the insurer remains in business, regardless of whether
the Fund ultimately disposes of such municipal securities. Consequently, the
market value of the municipal securities covered by Original Issue Insurance or
Secondary Market Insurance may reflect value attributable to the insurance.
Portfolio Insurance, in contrast, is effective only while the municipal
securities are held by the Fund. Accordingly, neither the prices used in
determining the market value of the underlying municipal securities nor the net
asset value of the Fund's shares include value, if any, attributable to the
Portfolio Insurance. Each policy of the Portfolio Insurance does, however, give
the Fund the right to obtain permanent insurance with respect to the municipal
security covered by the Portfolio Insurance policy at the time of its sale.
Flexible Sales Charge Program
Each Fund offers Class A, B, C and R Shares. Class A Shares are generally sold
with an up-front sales charge and incur a .20% annual 12b-1 service fee. Class
A Share purchases of $1 million or more are sold at net asset value without an
up-front sales charge but may be subject to a contingent deferred sales charge
("CDSC") if redeemed within 18 months of purchase. Class B Shares are sold
without an up-front sales charge but incur a .75% annual 12b-1 distribution fee
and a .20% annual 12b-1 service fee. 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 by the investor (CDSC is reduced to 0% at the end of six years). Class
B Shares convert to Class A Shares eight years after purchase. Class C Shares
are sold without an up-front sales charge but incur a .55% annual 12b-1
distribution fee and a .20% annual 12b-1 service fee. An investor purchasing
Class C Shares agrees to pay a CDSC of 1% if Class C Shares are redeemed within
one year of purchase. Class R Shares are not subject to any sales charge or
12b-1 distribution or service fees. Class R Shares are available only under
limited circumstances.
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 including inverse floating rate securities. During
the six months ended August 31, 2005, California invested in inverse floating
rate securities for the purpose of enhancing portfolio yield. Inverse floating
rate securities are identified in the Portfolio of Investments and are valued
daily. The interest rate of an inverse floating rate security has an inverse
relationship to the interest rate of a short-term floating rate security.
Consequently, as the interest rate of the floating rate security rises, the
interest rate on the inverse floating rate security declines. Conversely, as
the interest rate of the floating rate security declines, the interest rate on
the inverse floating rate security rises. The price of an inverse floating rate
security will be more volatile than that of an otherwise comparable fixed rate
security since the interest rate is dependent on an underlying fixed coupon
rate or the general level of long-term interest rates as well as the short-term
interest paid on the floating rate security, and because the inverse floating
rate security typically bears the risk of loss of a greater face value of an
underlying bond. California Insured did not invest in any such instruments
during the six months ended August 31, 2005.
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, which presently
only include 12b-1 distribution and service fees, are recorded to the specific
class.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Indemnifications
Under the Trust's organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Trust. In addition, in the normal course of business, the Trust
enters into contracts that provide general indemnifications to other parties.
The Trust's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Trust that have not yet
occurred. However, the Trust has not had prior claims or losses pursuant to
these contracts and expects the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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. Actual results may differ from those estimates.
- ----
24
2. Fund Shares
Transactions in Fund shares were as follows:
California
--------------------------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A 491,129 $ 5,137,926 2,150,380 $ 21,755,892
Class A - automatic conversion of Class B shares 56,021 584,848 -- --
Class B 27,506 287,597 93,993 970,696
Class C 220,051 2,297,292 382,515 3,957,725
Class R 50,199 524,619 165,121 1,716,366
Shares issued to shareholders due to reinvestment
of distributions:
Class A 59,604 623,730 111,654 1,151,215
Class B 11,870 124,141 22,318 229,963
Class C 16,206 169,256 31,882 328,245
Class R 246,596 2,579,481 491,285 5,066,280
- -------------------------------------------------------------------------------------------------------
1,179,182 12,328,890 3,449,148 35,176,382
- -------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (388,399) (4,055,563) (1,222,538) (12,599,709)
Class B (180,017) (1,873,334) (190,119) (1,944,729)
Class B - automatic conversion to Class A shares (56,074) (584,848) -- --
Class C (104,638) (1,092,003) (323,592) (3,314,931)
Class R (665,536) (6,950,511) (1,269,802) (13,053,238)
- -------------------------------------------------------------------------------------------------------
(1,394,664) (14,556,259) (3,006,051) (30,912,607)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) (215,482) $ (2,227,369) 443,097 $ 4,263,775
- -------------------------------------------------------------------------------------------------------
California Insured
--------------------------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A 650,562 $ 7,126,073 863,206 $ 9,412,701
Class A - automatic conversion of Class B shares 18,558 201,973 -- --
Class B 26,648 293,113 53,718 586,334
Class C 67,291 733,799 127,145 1,378,542
Class R 43,930 480,882 346,141 3,827,907
Shares issued to shareholders due to reinvestment
of distributions:
Class A 65,543 717,408 126,683 1,381,635
Class B 8,936 97,960 20,620 225,149
Class C 11,056 120,339 21,638 234,602
Class R 191,791 2,100,184 388,170 4,233,229
- -------------------------------------------------------------------------------------------------------
1,084,315 11,871,731 1,947,321 21,280,099
- -------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (344,998) (3,758,045) (1,037,905) (11,242,623)
Class B (144,900) (1,589,722) (281,058) (3,053,467)
Class B - automatic conversion to Class A shares (18,524) (201,973) -- --
Class C (103,266) (1,126,357) (191,208) (2,077,680)
Class R (589,039) (6,435,295) (1,043,144) (11,339,954)
- -------------------------------------------------------------------------------------------------------
(1,200,727) (13,111,392) (2,553,315) (27,713,724)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) (116,412) $ (1,239,661) (605,994) $ (6,433,625)
- -------------------------------------------------------------------------------------------------------
- ----
25
Notes to Financial Statements (Unaudited) (continued)
3. Securities Transactions
Purchases and sales (including maturities) of investments in long-term
municipal securities for the six months ended August 31, 2005, were as follows:
California
California Insured
--------------------------------------------
Purchases $14,511,602 $13,287,620
Sales and maturities 15,338,303 21,312,689
--------------------------------------------
4. Income Tax Information
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount and timing differences in recognizing
certain gains and losses on investment transactions.
At August 31, 2005, the cost of investments was as follows:
California
California Insured
---------------------------------------------
Cost of investments $251,429,444 $235,008,127
---------------------------------------------
Gross unrealized appreciation and gross unrealized depreciation of investments
at August 31, 2005, were as follows:
California
California Insured
-------------------------------------------------------------------
Gross unrealized:
Appreciation $16,713,753 $18,571,935
Depreciation (214,530) --
-------------------------------------------------------------------
Net unrealized appreciation of investments $16,499,223 $18,571,935
-------------------------------------------------------------------
The tax components of undistributed net investment income and net realized
gains at February 28, 2005, the Funds' last fiscal year end, were as follows:
California
California Insured
---------------------------------------------------------------
Undistributed net tax-exempt income* $839,375 $634,973
Undistributed net ordinary income** -- --
Undistributed net long-term capital gains -- --
---------------------------------------------------------------
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on February 9, 2005, paid on March 1, 2005.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the fiscal year ended February
28, 2005, the Funds' last fiscal year end, was designated for purposes of the
dividends paid deduction as follows:
California
2005 California Insured
----------------------------------------------------------------------
Distributions from net tax-exempt income $12,305,999 $11,418,295
Distributions from net ordinary income** 51,070 122,171
Distributions from net long-term capital gains -- 25,661
----------------------------------------------------------------------
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At February 28, 2005, the Funds' last fiscal year end, 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 carryforwards
will expire as follows:
California
California Insured
--------------------------------------
Expiration year:
2011 $1,920,794 $ --
2012 5,101,139 --
2013 84,060 284,475
--------------------------------------
Total $7,105,993 $284,475
--------------------------------------
- ----
26
At February 28, 2005, the Funds' last fiscal year end, California Insured
elected to defer $230 of net realized losses from investments incurred from
November 1, 2004 through February 28, 2005 ("post-October losses") in
accordance with Federal income tax regulations. The post-October losses were
treated as having arisen on the first day of the current fiscal year.
5. Management Fee and Other Transactions with Affiliates
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by the
Adviser, and a specific fund-level component, based only on the amount of
assets within each individual fund. This pricing structure enables Nuveen fund
shareholders to benefit from growth in the assets within each individual fund
as well as from growth in the amount of complex-wide assets managed by the
Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets of each Fund as follows:
Average Daily Net Assets Fund-Level Fee Rate
---------------------------------------------------
For the first $125 million .3500%
For the next $125 million .3375
For the next $250 million .3250
For the next $500 million .3125
For the next $1 billion .3000
For the next $3 billion .2750
For net assets over $5 billion .2500
---------------------------------------------------
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the table below. As
of August 31, 2005, the complex-level fee rate was .1896%.
Complex-Level Assets/(1)/ Complex-Level Fee Rate
----------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion/(2)/ .1400
----------------------------------------------------------------
(1)The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds in
the U.S.
(2)With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level fee
rate for such complex-wide Managed Assets shall be .1400% until such time as
a different rate or rates is determined.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Trust pays no
compensation directly to those of 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 or its affiliates. The Board of Trustees has
adopted a deferred compensation plan for independent Trustees that enables
Trustees to elect to defer receipt of all or a portion of the annual
compensation they are entitled to receive from certain Nuveen advised Funds.
Under the plan, deferred amounts are treated as though equal dollar amounts had
been invested in shares of select Nuveen advised Funds.
The Adviser has agreed to waive part of its management fees or reimburse
certain expenses of each Fund in order to limit total expenses (excluding 12b-1
distribution and service fees and extraordinary expenses) from exceeding .75%
of the average daily net assets of California and .975% of the average daily
net assets of California Insured. The Adviser may also voluntarily reimburse
additional expenses from time to time. Voluntary reimbursements may be
terminated at any time at the Adviser's discretion.
- ----
27
Notes to Financial Statements (Unaudited) (continued)
During the six months ended August 31, 2005, Nuveen Investments, LLC (the
"Distributor"), a wholly owned subsidiary of Nuveen, collected sales charges on
purchases of Class A Shares, the majority of which were paid out as concessions
to authorized dealers as follows:
California
California Insured
------------------------------------------------
Sales charges collected $82,745 $99,846
Paid to authorized dealers 71,309 90,698
------------------------------------------------
The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
During the six months ended August 31, 2005, the Distributor compensated
authorized dealers directly with commission advances at the time of purchase as
follows:
California
California Insured
-----------------------------------------
Commission advances $30,657 $51,046
-----------------------------------------
To compensate for commissions advanced to authorized dealers, all 12b-1 service
fees collected on Class B Shares during the first year following a purchase,
all 12b-1 distribution fees collected on Class B Shares, and all 12b-1 service
and distribution fees collected on Class C Shares during the first year
following a purchase are retained by the Distributor. During the six months
ended August 31, 2005, the Distributor retained such 12b-1 fees as follows:
California
California Insured
-----------------------------------------
12b-1 fees retained $69,335 $70,850
-----------------------------------------
The remaining 12b-1 fees charged to the Funds were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
The Distributor also collected and retained CDSC on share redemptions during
the six months ended August 31, 2005, as follows:
California
California Insured
-----------------------------------
CDSC retained $16,334 $12,145
-----------------------------------
6. Announcement Regarding Parent Company of Adviser
In early April, 2005, The St. Paul Travelers Companies, Inc. ("St. Paul
Travelers"), which owned 79% of Nuveen, (A) completed a public offering of a
substantial portion of its equity stake in Nuveen, (B) sold Nuveen $200 million
of its Nuveen shares, (C) entered into an agreement with Nuveen to sell an
additional $400 million of its Nuveen shares on a "forward" basis with payment
for and settlement of these shares delayed for several months, and (D) entered
into agreements with two unaffiliated investment banking firms to sell an
amount equal to most or all of its remaining Nuveen shares for current payment
but for future settlement. Transactions (C) and (D) above were settled in late
July, which effectively reduced St. Paul Travelers controlling stake in Nuveen
and was deemed an "assignment" (as defined in the 1940 Act) of the investment
management agreements between the Funds and the Adviser, which resulted in the
automatic termination of each agreement under the 1940 Act. In anticipation of
such deemed assignment, the Board of Trustees had approved new ongoing
investment management agreements for each Fund and the submission of those
agreements for approval by each respective Fund's shareholders, which
shareholder approval was received prior to the settlement of transactions (C)
and (D). The new ongoing management agreements took effect upon such settlement.
7. Subsequent Event - Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment
income which were paid on October 3, 2005, to shareholders of record on
September 9, 2005, as follows:
California
California Insured
-----------------------------------------
Dividend per share:
Class A $.0375 $.0365
Class B .0310 .0295
Class C .0330 .0310
Class R .0395 .0380
-----------------------------------------
- ----
28
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
Class (Commencement Date)
Investment Operations Less Distributions
--------------------------- ----------------------- --------
CALIFORNIA
Net
Beginning Net Realized/ Net Ending Ending
Net Invest- Unrealized Invest- Net Net
Asset ment Gain ment Capital Asset Total Assets
Year Ended February 28/29, Value Income(a) (Loss) Total Income Gains Total Value Return(b) (000)
- -------------------------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) $10.45 $.23 $ .10 $ .33 $(.24) $ -- $(.24) $10.54 3.14% $ 72,057
2005 10.52 .48 (.08) .40 (.47) -- (.47) 10.45 4.02 69,151
2004 10.30 .49 .22 .71 (.49) -- (.49) 10.52 7.08 58,671
2003 10.25 .50 .06 .56 (.51) -- (.51) 10.30 5.67 53,441
2002 10.42 .53 (.15) .38 (.53) (.02) (.55) 10.25 3.82 53,078
2001 10.01 .57 .41 .98 (.57) -- (.57) 10.42 9.99 52,540
Class B (3/97)
2006(e) 10.44 .19 .10 .29 (.20) -- (.20) 10.53 2.76 14,328
2005 10.51 .40 (.07) .33 (.40) -- (.40) 10.44 3.24 16,258
2004 10.29 .41 .22 .63 (.41) -- (.41) 10.51 6.30 17,139
2003 10.24 .43 .06 .49 (.44) -- (.44) 10.29 4.88 18,431
2002 10.41 .45 (.15) .30 (.45) (.02) (.47) 10.24 3.04 15,012
2001 10.00 .49 .41 .90 (.49) -- (.49) 10.41 9.23 14,825
Class C (9/94)
2006(e) 10.43 .20 .10 .30 (.21) -- (.21) 10.52 2.89 20,713
2005 10.50 .42 (.07) .35 (.42) -- (.42) 10.43 3.49 19,165
2004 10.29 .43 .21 .64 (.43) -- (.43) 10.50 6.42 18,341
2003 10.25 .45 .05 .50 (.46) -- (.46) 10.29 5.02 17,320
2002 10.42 .47 (.14) .33 (.48) (.02) (.50) 10.25 3.28 14,918
2001 10.01 .51 .41 .92 (.51) -- (.51) 10.42 9.42 14,077
Class R (7/86)
2006(e) 10.45 .24 .10 .34 (.25) -- (.25) 10.54 3.26 161,950
2005 10.52 .50 (.07) .43 (.50) -- (.50) 10.45 4.26 164,422
2004 10.31 .51 .21 .72 (.51) -- (.51) 10.52 7.22 172,001
2003 10.26 .52 .07 .59 (.54) -- (.54) 10.31 5.92 176,687
2002 10.43 .55 (.15) .40 (.55) (.02) (.57) 10.26 4.06 180,205
2001 10.02 .59 .41 1.00 (.59) -- (.59) 10.43 10.23 187,532
- -------------------------------------------------------------------------------------------------------------------------
Class (Commencement Date)
Ratios/Supplemental Data
-------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(c) Reimbursement(d)
CALIFORNIA ------------------ ------------------ ------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
to to to to to to
Average Average Average Average Average Average Portfolio
Net Net Net Net Net Net Turnover
Year Ended February 28/29, Assets Assets Assets Assets Assets Assets Rate
- --------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) .85%* 4.32%* .85%* 4.32%* .85%* 4.33%* 5%
2005 .86 4.62 .86 4.62 .86 4.62 16
2004 .88 4.74 .88 4.74 .87 4.75 28
2003 .89 4.91 .89 4.91 .88 4.92 25
2002 .88 5.15 .88 5.15 .87 5.16 6
2001 .88 5.52 .88 5.52 .87 5.53 39
Class B (3/97)
2006(e) 1.60* 3.58* 1.60* 3.58* 1.60* 3.58* 5
2005 1.61 3.87 1.61 3.87 1.61 3.87 16
2004 1.63 3.99 1.63 3.99 1.62 4.00 28
2003 1.64 4.16 1.64 4.16 1.63 4.17 25
2002 1.63 4.41 1.63 4.41 1.62 4.42 6
2001 1.63 4.77 1.63 4.77 1.62 4.78 39
Class C (9/94)
2006(e) 1.40* 3.77* 1.40* 3.77* 1.40* 3.78* 5
2005 1.41 4.07 1.41 4.07 1.41 4.07 16
2004 1.43 4.19 1.43 4.19 1.42 4.20 28
2003 1.44 4.37 1.44 4.37 1.43 4.37 25
2002 1.43 4.60 1.43 4.60 1.42 4.61 6
2001 1.43 4.97 1.43 4.97 1.42 4.98 39
Class R (7/86)
2006(e) .65* 4.53* .65* 4.53* .65* 4.53* 5
2005 .66 4.82 .66 4.82 .66 4.82 16
2004 .68 4.94 .68 4.94 .67 4.95 28
2003 .69 5.12 .69 5.12 .68 5.12 25
2002 .68 5.35 .68 5.35 .67 5.37 6
2001 .68 5.72 .68 5.72 .67 5.73 39
- --------------------------------------------------------------------------------------------------------
* Annualized
(a)Per share Net Investment Income is calculated using the average daily shares
method.
(b)Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c)After expense reimbursement from the Adviser, where applicable.
(d)After custodian fee credit and expense reimbursement, where applicable.
(e)For the six months ended August 31, 2005.
See accompanying notes to financial statements.
- ----
29
Financial Highlights (Unaudited) (continued)
Selected data for a share outstanding throughout each period:
Class (Commencement Date)
Investment Operations Less Distributions
--------------------------- ----------------------- --------
CALIFORNIA INSURED
Net
Beginning Net Realized/ Net Ending Ending
Net Invest- Unrealized Invest- Net Net
Asset ment Gain ment Capital Asset Total Assets
Year Ended February 28/29, Value Income(a) (Loss) Total Income Gains Total Value Return(b) (000)
- -------------------------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) $10.91 $.22 $ .11 $ .33 $(.23) $ -- $(.23) $11.01 3.07% $ 86,390
2005 11.19 .46 (.26) .20 (.47) (.01) (.48) 10.91 1.88 81,346
2004 11.06 .48 .15 .63 (.48) (.02) (.50) 11.19 5.84 83,966
2003 10.92 .49 .23 .72 (.50) (.08) (.58) 11.06 6.73 77,312
2002 10.85 .51 .12 .63 (.52) (.04) (.56) 10.92 5.90 70,068
2001 10.19 .52 .67 1.19 (.53) -- (.53) 10.85 11.98 63,775
Class B (3/97)
2006(e) 10.92 .18 .12 .30 (.19) -- (.19) 11.03 2.76 17,324
2005 11.20 .38 (.26) .12 (.39) (.01) (.40) 10.92 1.10 18,560
2004 11.07 .40 .15 .55 (.40) (.02) (.42) 11.20 5.04 21,346
2003 10.94 .41 .21 .62 (.41) (.08) (.49) 11.07 5.82 21,602
2002 10.86 .43 .12 .55 (.43) (.04) (.47) 10.94 5.18 18,985
2001 10.20 .45 .66 1.11 (.45) -- (.45) 10.86 11.14 13,487
Class C (9/94)
2006(e) 10.85 .19 .11 .30 (.20) -- (.20) 10.95 2.77 12,801
2005 11.12 .40 (.25) .15 (.41) (.01) (.42) 10.85 1.37 12,952
2004 10.99 .42 .14 .56 (.41) (.02) (.43) 11.12 5.25 13,751
2003 10.86 .43 .21 .64 (.43) (.08) (.51) 10.99 6.04 13,082
2002 10.78 .44 .13 .57 (.45) (.04) (.49) 10.86 5.42 11,794
2001 10.13 .46 .66 1.12 (.47) -- (.47) 10.78 11.32 7,489
Class R (7/86)
2006(e) 10.91 .24 .10 .34 (.24) -- (.24) 11.01 3.15 144,446
2005 11.19 .49 (.27) .22 (.49) (.01) (.50) 10.91 2.05 146,949
2004 11.05 .50 .16 .66 (.50) (.02) (.52) 11.19 6.11 154,110
2003 10.91 .51 .22 .73 (.51) (.08) (.59) 11.05 6.91 160,678
2002 10.84 .53 .11 .64 (.53) (.04) (.57) 10.91 6.08 162,649
2001 10.18 .54 .67 1.21 (.55) -- (.55) 10.84 12.18 162,081
- -------------------------------------------------------------------------------------------------------------------------
Class (Commencement Date)
Ratios/Supplemental Data
-------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(c) Reimbursement(d)
CALIFORNIA INSURED ------------------ ------------------ ------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
to to to to to to
Average Average Average Average Average Average Portfolio
Net Net Net Net Net Net Turnover
Year Ended February 28/29, Assets Assets Assets Assets Assets Assets Rate
- --------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) .83%* 4.07%* .83%* 4.07%* .83%* 4.07%* 5%
2005 .84 4.25 .84 4.25 .84 4.26 22
2004 .86 4.38 .86 4.38 .86 4.38 14
2003 .86 4.47 .86 4.47 .86 4.48 25
2002 .87 4.64 .87 4.64 .85 4.66 40
2001 .88 4.97 .88 4.97 .87 4.98 16
Class B (3/97)
2006(e) 1.59* 3.33* 1.59* 3.33* 1.58* 3.33* 5
2005 1.59 3.50 1.59 3.50 1.59 3.51 22
2004 1.61 3.63 1.61 3.63 1.61 3.63 14
2003 1.61 3.72 1.61 3.72 1.61 3.73 25
2002 1.62 3.89 1.62 3.89 1.60 3.91 40
2001 1.63 4.22 1.63 4.22 1.62 4.23 16
Class C (9/94)
2006(e) 1.39* 3.52* 1.39* 3.52* 1.38* 3.53* 5
2005 1.40 3.70 1.40 3.70 1.39 3.71 22
2004 1.41 3.83 1.41 3.83 1.41 3.83 14
2003 1.41 3.93 1.41 3.93 1.41 3.93 25
2002 1.42 4.10 1.42 4.10 1.40 4.12 40
2001 1.43 4.42 1.43 4.42 1.42 4.43 16
Class R (7/86)
2006(e) .64* 4.27* .64* 4.27* .63* 4.28* 5
2005 .65 4.45 .65 4.45 .64 4.46 22
2004 .66 4.58 .66 4.58 .66 4.58 14
2003 .66 4.67 .66 4.67 .66 4.68 25
2002 .67 4.84 .67 4.84 .65 4.86 40
2001 .68 5.18 .68 5.18 .67 5.18 16
- --------------------------------------------------------------------------------------------------------
* Annualized
(a)Per share Net Investment Income is calculated using the average daily shares
method.
(b)Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c)After expense reimbursement from the Adviser, where applicable.
(d)After custodian fee credit and expense reimbursement, where applicable.
(e)For the six months ended August 31, 2005.
See accompanying notes to financial statements.
- ----
30
Annual Investment Management Agreement Approval Process
At a meeting held on May 10-12, 2005, the Board of Trustees of the Funds,
including the independent Trustees, unanimously approved the Investment
Management Agreement between each Fund and NAM.
The Approval Process
To assist the Board in its evaluation of an advisory contract with NAM, the
independent Trustees received a report in adequate time in advance of their
meeting which outlined, among other things, the services provided by NAM; the
organization of NAM, including the responsibilities of various departments and
key personnel; the Fund's past performance as well as the Fund's performance
compared to funds of similar investment objectives compiled by an independent
third party (a "Peer Group") as described below and if available, with
recognized or, in certain cases, customized benchmarks; the profitability of
NAM and certain industry profitability analyses for advisers to unaffiliated
investment companies; the expenses of NAM in providing the various services;
the management fees of NAM, including comparisons of such fees with the
management fees of comparable funds in its Peer Group as well as comparisons of
NAM's management fees with the fees NAM assesses to other types of investment
products or accounts, if any; the soft dollar practices of NAM; and the
expenses of each Fund, including comparisons of the Fund's expense ratios
(after any fee waivers) with the expense ratios of its Peer Group. This
information supplements that received by the Board throughout the year
regarding Fund performance, expense ratios, portfolio composition, trade
execution and sales activity.
In addition to the foregoing materials, independent legal counsel to the
independent Trustees provided, in advance of the meeting, a legal memorandum
outlining, among other things, the duties of the Trustees under the 1940 Act as
well as the general principles of relevant state law in reviewing and approving
advisory contracts; the requirements of the 1940 Act in such matters; an
adviser's fiduciary duty with respect to advisory agreements and compensation;
the standards used by courts in determining whether investment company boards
of directors have fulfilled their duties and factors to be considered by the
board in voting on advisory agreements.
At the Board meeting, NAM made a presentation to and responded to questions
from the Board. After the presentation and after reviewing the written
materials, the independent Trustees met privately with their legal counsel to
review the Board's duties in reviewing advisory contracts and consider the
renewal of the advisory contract. It is with this background that the Trustees
considered each Investment Management Agreement with NAM. The independent
Trustees, in consultation with independent counsel, reviewed the factors set
out in judicial decisions and SEC directives relating to the renewal of
advisory contracts. As outlined in more detail below, the Trustees considered
all factors they believed relevant with respect to each Fund, including the
following: (a) the nature, extent and quality of the services to be provided by
NAM; (b) the investment performance of the Fund and NAM; (c) the costs of the
services to be provided and profits to be realized by NAM and its affiliates
from the relationship with the Fund; (d) the extent to which economies of scale
would be realized as the Fund grows; and (e) whether fee levels reflect these
economies of scale for the benefit of Fund investors.
A. Nature, Extent and Quality of Services
In evaluating the nature, extent and quality of NAM's services, the Trustees
reviewed information concerning the types of services that NAM or its
affiliates provide and are expected to provide to the Nuveen Funds; narrative
and statistical information concerning the Fund's performance record and how
such performance compares to the Fund's Peer Group and, if available,
recognized benchmarks or, in certain cases, customized benchmarks (as described
in further detail in Section B below); information describing NAM's
organization and its various departments, the experience and responsibilities
of key personnel, and available resources. In the discussion of key personnel,
the Trustees received materials regarding the changes or additions in personnel
of NAM. The Trustees further noted the willingness of the personnel of NAM to
engage in open, candid discussions with the Board. The Trustees further
considered the quality of NAM's investment process in making portfolio
management decisions, including any refinements or improvements to the
portfolio management processes, enhancements to technology and systems that are
available to portfolio managers, and any additions of new personnel which may
strengthen or expand the research and investment capabilities of NAM. In their
review of the advisory contracts for the fixed income funds, such as the Funds,
the Trustees also noted that Nuveen won the Lipper Award for Best Fund Family:
Fixed Income-Large Asset Class, for 2004. Given the Trustees' experience with
the Funds, other Nuveen funds and NAM, the Trustees noted that they were
familiar with and continue to have a good understanding of the organization,
operations and personnel of NAM.
In addition to advisory services, the independent Trustees considered the
quality of the administrative or non-advisory services provided. In this
regard, NAM provides the Fund with such administrative and other services
(exclusive of, and in addition to, any such services provided by others for the
Funds) and officers and other personnel as are necessary for the operations of
the respective Fund. In addition to investment management services, NAM and its
affiliates provide each Fund with a wide range of services, including:
preparing shareholder reports; providing daily accounting; providing quarterly
financial statements; overseeing and coordinating the activities of other
service providers; administering and organizing Board meetings and preparing
the Board materials for such meetings; providing legal support (such as helping
to prepare registration statements, amendments thereto and proxy statements and
responding to regulatory inquiries); and performing other Fund administrative
tasks necessary for the operation of the respective Fund (such as tax reporting
and fulfilling regulatory filing requirements). In addition, in evaluating the
administrative services, the Trustees considered, in particular, NAM's policies
and procedures for assuring compliance with applicable laws and regulations in
light of the new SEC regulations governing compliance. The Trustees noted NAM's
focus on compliance and its compliance systems. In their review, the Trustees
considered, among other things, the additions of experienced
- ----
31
Annual Investment Management Agreement Approval Process (continued)
personnel to NAM's compliance group and modifications and other enhancements to
NAM's computer systems. In addition to the foregoing, the Trustees also noted
that NAM outsources certain services that cannot be replicated without
significant costs or at the same level of expertise. Such outsourcing has been
a beneficial and efficient use of resources by keeping expenses low while
obtaining quality services.
With respect to services provided to municipal funds, such as the Funds, the
Trustees also noted, among other things, the enhancements NAM implemented to
its municipal portfolio management processes (e.g., the increased use of
benchmarks to guide and assess the performance of its portfolio managers); the
implementation of a risk management program; and the various initiatives being
undertaken to enhance or modify NAM's computer systems as necessary to support
the innovations of the municipal investment team (such as, the ability to
assess certain historical data in order to create customized benchmarks,
perform attribution analysis and facilitate the use of derivatives as hedging
instruments).
Based on their review, the Trustees found that, overall, the nature, extent and
quality of services provided (and expected to be provided) to the respective
Funds under the applicable Investment Management Agreement, were of a high
level and were quite satisfactory.
B. The Investment Performance of the Fund and NAM
As previously noted, the Board received a myriad of performance information
regarding each Fund and its Peer Group, if available. Among other things, the
Board received materials reflecting a Fund's historic performance, the Fund's
performance compared to its Peer Group (as described below) and, if available,
its performance compared to recognized and, in certain cases, customized
benchmarks (as applicable). Further in evaluating the performance information,
in certain limited instances, the Trustees noted that the closest Peer Group
for a Fund still would not adequately reflect such Fund's investment objectives
and strategies, thereby limiting the usefulness of the comparisons of such
Fund's performance with that of the Peer Group.
With respect to state municipal funds, such as the Funds, the performance data
included, among other things, the respective Fund's performance relative to its
peers, except as noted. More specifically, a Fund's one-, three- and five-year
total returns (as available) for the periods ending December 31, 2004 were
evaluated relative to the unaffiliated funds in its respective Peer Group
(including the returns of individual peers as well as the Peer Group average)
as well as additional performance information with respect to all funds in the
Peer Group, subject to the following. Certain state municipal Funds do not have
a corresponding Peer Group in which case their performance is measured against
a state-specific municipal index compiled by an independent third party. Such
indices measure bond performance rather than fund performance. The two open-end
Nuveen Funds that utilize such indices are the Nuveen New Mexico Municipal Bond
Fund and the Nuveen Wisconsin Municipal Bond Fund. Based on their review, the
Trustees determined that the respective Fund's absolute and relative investment
performance over time had been satisfactory.
C. Fees, Expenses and Profitability
1. Fees and Expenses
In evaluating the management fees and expenses that a Fund is expected to
bear, the Trustees considered the Fund's current management fee structure and
the Fund's expected expense ratios in absolute terms as well as compared with
the fees and respective expense ratios of the unaffiliated funds in its Peer
Group. The Trustees reviewed the financial information of NAM, including its
respective revenues, expenses and profitability. In reviewing fees, the
Trustees, among other things, reviewed comparisons of the Fund's gross
management fees (fees after fund-level and complex-wide level breakpoints but
before reimbursements and fee waivers), net management fees (after breakpoints
and reimbursements and fee waivers) and total expense ratios (before and after
waivers) with those of the unaffiliated funds in its Peer Group and peer
averages. In this regard, the Trustees noted that the relative ranking of the
Nuveen Funds on fees and expenses was aided by the significant level of fee
reductions provided by the fund-level and complex-wide breakpoint schedules,
and the fee waivers and reimbursements provided by Nuveen for certain Funds
launched since 1999. The complex-wide breakpoint schedule was instituted in
2004 and is described in further detail below in Section D entitled "Economies
of Scale and Whether Fee Levels Reflect these Economies of Scale." In addition
to the foregoing, in their review of the fee and expense information provided
for the municipal funds, including, in particular, the expense ratios of the
unaffiliated funds in the respective Peer Group, the Trustees determined that
such Funds' net total expense ratios were within an acceptable range compared
to such peers.
2. Comparisons with the Fees of Other Clients
The Trustees further compared the fees of NAM to the fees NAM or an affiliate
thereof assessed for other types of clients investing in municipal funds (such
as municipal managed accounts). With respect to municipal managed accounts,
the advisory fees for such accounts are generally lower than those charged to
the comparable Fund. The Trustees noted, however, the additional services that
are provided and the costs incurred by Nuveen in managing and operating
registered investment companies, such as the Funds, compared to individually
managed separate accounts. For instance, as described above, NAM and its
affiliates provide numerous services to the Funds including, but not limited
to, preparing shareholder reports; providing daily accounting; preparing
quarterly financial statements; overseeing and coordinating the activities of
other service providers; administering and organizing Board meetings and
preparing the Board materials for such meetings; providing legal support; and
administering all other aspects of the Fund's operations. Further, the
Trustees noted the increased compliance requirements for funds in light of new
SEC regulations and other legislation. These services are generally not
required to the same extent, if at all,
- ----
32
for separate accounts. In addition to the differences in services, the
Trustees also considered, among other things, the differences in product
distribution, investor profiles and account sizes. Accordingly, the Trustees
believe that the nature and number of services provided to operate a Fund
merit the higher fees than those to separate managed accounts.
3. Profitability of NAM
In conjunction with its review of fees, the Trustees also considered the
profitability of NAM. The Trustees reviewed NAM's revenues, expenses and
profitability margins (on both a pre-tax and after-tax basis). In reviewing
profitability, the Trustees recognized that one of the most difficult issues
in determining profitability is establishing a method of allocating expenses.
Accordingly, the Trustees reviewed NAM's assumptions and methodology of
allocating expenses. In this regard, the methods of allocation used appeared
reasonable but the Board noted the inherent limitations in allocating costs
among various advisory products. The Trustees also recognized that individual
fund or product line profitability of other advisers is generally not publicly
available. Further, profitability may be affected by numerous factors
including the types of funds managed, expense allocations, business mix, etc.,
and therefore comparability of profitability is somewhat limited.
Nevertheless, to the extent available, the Trustees considered NAM's profit
margin compared to the profitability of various publicly-traded investment
management companies and/or investment management companies that publicly
disclose some or all of their financial results compiled by three independent
third-party service providers. The Trustees also reviewed the revenues,
expenses and profit margins of various unaffiliated advisory firms with
similar amounts of assets under management for the last year prepared by NAM.
Based on their review, the Trustees were satisfied that NAM's level of
profitability from its relationship with each Fund was reasonable in light of
the services provided.
In evaluating the reasonableness of the compensation, the Trustees also
considered any other revenues paid to NAM as well as any indirect benefits
(such as soft dollar arrangements, if any) NAM and its affiliates are expected
to receive that are directly attributable to their management of the Funds, if
any. See Section E below for additional information. Based on their review of
the overall fee arrangements of the applicable Fund, the Trustees determined
that the advisory fees and expenses of the respective Fund were reasonable.
D. Economies of Scale and Whether Fee Levels Reflect these Economies of Scale
In reviewing the compensation, the Trustees have long understood the benefits
of economies of scale as the assets of a fund grow and have sought to ensure
that shareholders share in these benefits. One method for shareholders to share
in economies of scale is to include breakpoints in the advisory fee schedules
that reduce fees as fund assets grow. Accordingly, the Trustees received and
reviewed the schedules of advisory fees for each Fund, including fund-level
breakpoints thereto. In addition, after lengthy negotiations with management,
the Board in May 2004 approved a complex-wide fee arrangement pursuant to which
fees of the funds in the Nuveen complex, including the Funds, are reduced as
the assets in the fund complex reach certain levels. The complex-wide fee
arrangement was introduced on August 1, 2004 and the Trustees reviewed data
regarding the reductions of fees for the Funds for the period of August 1, 2004
to December 31, 2004. In evaluating the complex-wide fee arrangement, the
Trustees considered, among other things, the historic and expected fee savings
to shareholders as assets grow, the amount of fee reductions at various asset
levels, and that the arrangement would extend to all Funds in the Nuveen
complex. The Trustees also considered the impact, if any, the complex-wide fee
arrangement may have on the level of services provided. Based on their review,
the Trustees concluded that the breakpoint schedule and complex-wide fee
arrangement currently was acceptable and desirable in providing benefits from
economies of scale to shareholders.
E. Indirect Benefits
In evaluating fees, the Trustees also considered any indirect benefits or
profits NAM or its affiliates may receive as a result of its relationship with
each Fund. In this regard, the Trustees considered any benefits from soft
dollar arrangements. The Trustees noted that although NAM manages a large
amount of assets, it has very little, if any, brokerage to allocate. This is
due to the fact that NAM typically manages the portfolios of the municipal
funds in the Nuveen complex and municipal bonds generally trade on a principal
basis. Accordingly, NAM does not currently have any soft dollar arrangements
and does not pay excess brokerage commissions (or spreads on principal
transactions) in order to receive research services.
In addition to soft dollar arrangements, the Trustees also considered any other
revenues, if any, received by NAM or its affiliates. In this regard, for Funds
with 12b-1 plans, the Trustees received and considered the amount 12b-1 fees
retained by Nuveen during the last calendar year. The Trustees noted that the
vast majority of the 12b-1 fees received by Nuveen are ultimately paid to other
financial advisers.
F. Other Considerations
Nuveen, until recently, was a majority owned subsidiary of St. Paul Travelers
Companies, Inc. ("St. Paul"). As noted, St. Paul earlier this year announced
its intention to divest its equity stake in Nuveen. Nuveen is the parent of
NAM. Pursuant to a series of transactions, St. Paul had begun to reduce its
interest in Nuveen which would ultimately result in a change of control of
Nuveen and therefore NAM. As mandated by the 1940 Act, such a change in control
would result in an assignment of the advisory agreement with NAM and the
automatic termination of such agreement. Accordingly, the Board also considered
the approval of a New Investment Management Agreement with each Fund in light
of, and which would take effect upon, the anticipated change of control. More
specifically, the Board considered for each Fund a New Investment Management
Agreement on substantially identical terms
- ----
33
Annual Investment Management Agreement Approval Process (continued)
to the existing Investment Management Agreement, to take effect after the
change of control has occurred and the contract has been approved by Fund
shareholders. In its review, the Board considered whether the various
transactions necessary to divest St. Paul's interest will have an impact on the
various factors they considered in approving NAM, such as the scope and quality
of services to be provided following the change of control. In reviewing the
St. Paul transactions, the Board considered, among other things, the impact, if
any, on the operations and organizational structure of NAM; the possible
benefits and costs of the transactions to the respective Fund; the potential
implications of any arrangements used by Nuveen to finance certain of the
transactions; the ability of NAM to perform its duties after the transactions;
whether a Fund's fee structure or expense ratio would change; any changes to
the current practices of the respective Fund; any changes to the terms of the
advisory agreement; and any anticipated changes to the operations of NAM. Based
on its review, the Board determined that St. Paul's divestiture would not
affect the nature and quality of services provided by NAM, the terms of the
Investment Management Agreement, including the fees thereunder, and would not
materially affect the organization or operations of NAM. Accordingly, the Board
determined that their analysis of the various factors regarding their approval
of NAM would continue to apply after the change of control.
G. Approval
The Trustees did not identify any single factor discussed previously as
all-important or controlling. The Trustees, including a majority of independent
Trustees, concluded that the terms of the Investment Management Agreements were
fair and reasonable, that NAM's fees are reasonable in light of the services
provided to each Fund, that the renewal of the NAM Investment Management
Agreements should be approved, and that the new, post-change of control NAM
Investment Management Agreements be approved and recommended to shareholders.
- ----
34
Notes
- --------------------------------------------------------------------------------
35
Notes
- --------------------------------------------------------------------------------
36
- --------------------------------------------------------------------------------
Fund Information
================================================================================
Fund Manager Legal Counsel Transfer Agent and
Nuveen Asset Management Chapman and Cutler LLP Shareholder Services
333 West Wacker Drive Chicago, IL Boston Financial
Chicago, IL 60606 Data Services, Inc.
Independent Registered Nuveen Investor Services
Public Accounting Firm P.O. Box 8530
PricewaterhouseCoopers LLP Boston, MA 02266-8530
Chicago, IL (800) 257-8787
Custodian
State Street Bank & Trust
Boston, MA
================================================================================
Glossary of Terms Used in this Report
Average Annual Total Return: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return that would have been necessary each year to equal the
investment's actual cumulative performance (including change in NAV or offer
price and reinvested dividends and capital gains distributions, if any) over
the time period being considered.
Average Effective Maturity: The average of all the maturities of the bonds in a
Fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
Average Duration: Duration is a measure of the expected period over which a
bond's principal and interest will be paid, and consequently is a measure of
the sensitivity of a bond's (or bond fund's) value to changes when market
interest rates change. Generally, the longer a bond or Fund's duration, the
more the price of the bond or Fund will change as interest rates change.
Dividend Yield (also known as Market Yield or Current Yield): An investment's
current annualized dividend divided by its current offering price.
Net Asset Value (NAV): A Fund's NAV is the dollar value of one share in the
Fund. It is calculated by subtracting the liabilities of the Fund from its
total assets and then dividing the remainder by the number of shares
outstanding. Fund NAVs are calculated at the end of each business day.
SEC 30-Day Yield: A standardized measure of a Fund's yield that accounts for
the future amortization of premiums or discounts of bonds held in the fund's
portfolio.
Taxable-Equivalent Yield: The yield necessary from a fully taxable investment
to equal, on an after-tax basis at a specified assumed tax rate, the yield of a
municipal bond investment.
================================================================================
Quarterly Portfolio of Investments and Proxy Voting information: Each Fund's
(i) quarterly portfolio of investments, (ii) information regarding how the
Funds voted proxies relating to portfolio securities held during the 12-month
period ended June 30, 2004, and (iii) a description of the policies and
procedures that the Funds used to determine how to vote proxies relating to
portfolio securities are available without charge, upon request, by calling
Nuveen Investments at (800) 257-8787 or on Nuveen's website at www.nuveen.com.
You may also obtain this and other Fund information directly from the
Securities and Exchange Commission ("SEC"). The SEC may charge a copying fee
for this information. Visit the SEC on-line at http://www.sec.gov or in person
at the SEC's Public Reference Room in Washington, D.C. Call the SEC at
1-202-942-8090 for room hours and operation. You may also request fund
information by sending an e-mail request to publicinfo@sec.gov or by writing to
the SEC's Public Reference Section at 450 Fifth Street NW, Washington, D.C.
20549.
================================================================================
NASD Regulation, Inc. provides a Public Disclosure Program which supplies
certain information regarding the disciplinary history of NASD members and
their associated persons in response to either telephone inquiries at (800)
289-9999 or written inquiries at www.nasdr.com. NASD Regulation, Inc. also
provides an investor brochure that includes information describing the Public
Disclosure Program.
- ----
37
[PHOTO]
Learn more
about Nuveen Funds at
www.nuveen.com/mf
Nuveen Investments:
SERVING Investors
For GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past
century, Nuveen Investments has adhered to the belief that the best
approach to investing is to apply conservative risk-management principles
to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity
and fixed-income solutions that are integral to a well-diversified core
portfolio. Our clients have come to appreciate this diversity, as well as
our continued adherence to proven, long-term investing principles.
We offer many different investing solutions for our clients' different
needs.
Managing approximately $128 billion in assets, Nuveen Investments offers
access to a number of different asset classes and investing solutions
through a variety of products. Nuveen Investments markets its capabilities
under four distinct brands: Nuveen, a leader in tax-free investments; NWQ,
a leader in value-style equities; Rittenhouse, a leader in growth-style
equities; and Symphony, a leading institutional manager of market-neutral
alternative investment portfolios.
Find out how we can help you reach your financial goals.
To learn more about the products and services Nuveen Investments offers and
for a prospectus, where applicable, talk to your financial advisor, or call
us at (800) 257-8787. Please read the information carefully before you
invest.
.. Share prices
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.. Daily financial news
.. Investor education
[LOGO] Nuveen Investments
MSA-CA-0805D
- --------------------------------------------------------------------------------
Nuveen Investments
Municipal Bond Funds
- --------------------------------------------------------------------------------
Semiannual Report dated
August 31, 2005
-----------------------------------
Dependable, tax-free income because it's not what you earn, it's what you
keep.(R)
[PHOTO]
Nuveen Connecticut Municipal Bond Fund
Nuveen New Jersey Municipal Bond Fund
Nuveen New York Municipal Bond Fund
Nuveen New York Insured Municipal Bond Fund
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OR
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------------------------------
Must be preceded by or accompanied by a prospectus.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
[PHOTO]
Timothy R. Schwertfeger
Dear Shareholder,
Once again, I am pleased to report that over the most recent reporting period
your Fund continued to provide you with attractive tax-free monthly income. For
more specific information about the performance of your Fund, please see the
Portfolio Manager's Comments and Fund Spotlight sections of this report.
With long-term interest rates still relatively low, many have begun to wonder
whether interest rates will rise, and whether that possibility should cause
them to adjust their holdings of fixed-income investments. No one knows what
the future will bring, which is why we think a well-balanced portfolio that is
structured and carefully monitored with the help of an investment professional
is an important component in achieving your long-term financial goals. A
well-diversified portfolio may actually help to reduce your overall investment
risk, and we believe that municipal bond investments like your Nuveen
Investments Fund can be important building blocks in a portfolio crafted to
perform well through a variety of market conditions.
Some of you may have heard that in April, 2005, The St. Paul Travelers
Companies, Inc., which owned 79% of Nuveen Investments, Inc. (the parent of
your Fund's investment adviser) completed a public offering of a substantial
portion of its equity stake in Nuveen. St. Paul Travelers recently sold the
balance of its Nuveen shares to Nuveen or to others. These transactions had and
will continue to have no impact on the investment objectives or management of
your Fund.
Since 1898, Nuveen Investments has offered financial products and solutions
that incorporate careful research, diversification, and the application of
conservative risk-management principles. We are grateful that you have chosen
us as a partner as you pursue your financial goals. We look forward to
continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
October 20, 2005
"No one knows what the future will bring, which is why we think a
well-balanced portfolio . . . is an important component in achieving
your long-term financial goals."
Semiannual Report Page 1
Portfolio Manager's Comments
Portfolio manager Paul Brennan examines key investment strategies and the
performance of the Nuveen Connecticut, New Jersey, New York, and New York
Insured Municipal Bond Funds. Paul, who has 14 years of investment
experience, has managed the Connecticut, New York, and New York Insured Funds
since 1999 and the New Jersey Fund since 2003.
- --------------------------------------------------------------------------------
How did the Funds perform?
The chart on the next page provides total return performance information for
the four Funds for the six-month, one-year, five-year, and ten-year periods
ended August 31, 2005. Each Fund's total return performance is compared with
its corresponding Lipper peer fund category, as well as with the national
Lehman Brothers Municipal Bond Index. The reasons for each Fund's variance from
its corresponding state-specific Lipper peer fund category average and the
national Lehman Brothers Index are discussed later in the report. Although we
believe that comparing the performance of a state Fund with that of a national
municipal index may offer some insights into how the Fund performed relative to
the general municipal market, we also think that closely comparing the results
of state Funds with a national average is imperfect since most of the national
index's results come from out-of-state bonds.
What strategies were used to manage the Funds during the six-month period, and
how did these strategies influence performance?
Connecticut Fund
During the past six months, the Nuveen Connecticut Municipal Bond Fund's total
return on net asset value outperformed its Lipper peer group average but
modestly trailed the national Lehman Brothers Index.
The Fund benefited as intermediate- and long-term interest rates continued to
decline during the past six months. Because we maintained a healthy allocation
to bonds in the long-intermediate part of the yield curve, the Fund was
well-positioned for such a scenario. Our allocation to tobacco bonds also
helped performance. The tobacco companies whose payments made pursuant to the
1998 master tobacco settlement agreement which back these securities got a
boost from an improving litigation environment. The Fund's lower-rated holdings
also continued to perform well as investors seemingly became less risk averse
which tightened credit spreads. A fourth positive influence came from favorable
security selection. In the healthcare sector, for example, the portfolio was
helped by bonds issued by the Connecticut Health and Education Facilities
Authority, Hospital for Special Care. This issuer, cited six months ago as a
positive contributor, continued to rebound from past financial difficulties and
remained one of the Fund's best performers during the past six months.
There were few largely negative influences on performance during a strong
municipal investing environment. The Fund did, however, see mixed results from
a significant weighting in pre-refunded bonds. When bonds are pre-refunded,
investors usually benefit as they generally become priced to shorter call dates
and usually see price appreciation. However, pre-refunded bonds already held in
the portfolios during the period underperformed because of their shorter
durations as shorter-term rates rose and longer-term rates fall.
Throughout the past six months, our management focus was on adding suitable
intermediate-duration bonds to the Fund. We remained concerned about the
performance of bonds with very near-term maturities or call dates, which we
believed could decline or lag the market in the event of further short-term
interest-rate hikes from the Federal Reserve. Accordingly, we sold some of
these securities in favor of longer bonds - focusing especially on the 10-year
part of the yield curve, which we believed offered our shareholders better
future value potential based on our view that the decline in yields on the
longest maturities may be becoming overdone.
- --------------------------------------------------------------------------------
The views expressed reflect those of the portfolio manager and are subject to
change at any time, based on market and other conditions.
Semiannual Report Page 2
Class A Shares--
Total Returns as of 8/31/05
- --------------------------------------------------------------------------------
Cumulative Average Annual
6-month ---------------------
1-Year 5-Year 10-Year
- ---------------------
Nuveen Connecticut
Municipal Bond Fund
A Shares at NAV 2.77% 5.46% 6.18% 5.72%
A Shares at Offer -1.53% 1.05% 5.27% 5.27%
Lipper Connecticut Municipal
Debt Funds Category
Average/1/ 2.32% 4.20% 5.50% 5.32%
Lehman Brothers Municipal
Bond Index/2/ 2.85% 5.31% 6.37% 6.20%
-------------------------------------------------------------
Nuveen New Jersey
Municipal Bond Fund
A Shares at NAV 3.13% 6.30% 6.03% 5.61%
A Shares at Offer -1.24% 1.85% 5.12% 5.17%
Lipper New Jersey Municipal
Debt Funds Category
Average/1/ 2.52% 5.40% 5.54% 5.28%
Lehman Brothers Municipal
Bond Index/2/ 2.85% 5.31% 6.37% 6.20%
-------------------------------------------------------------
Cumulative Average Annual
6-month ---------------------
1-Year 5-Year 10-Year
- ---------------------
Nuveen New York Municipal
Bond Fund
A Shares at NAV 3.19% 6.14% 6.22% 6.04%
A Shares at Offer -1.15% 1.65% 5.31% 5.59%
Lipper New York Municipal
Debt Funds Category
Average/1/ 2.65% 4.96% 5.67% 5.40%
Lehman Brothers Municipal
Bond Index/2/ 2.85% 5.31% 6.37% 6.20%
----------------------------------------------------------
Nuveen New York Insured
Municipal Bond Fund
A Shares at NAV 2.86% 5.28% 6.16% 5.61%
A Shares at Offer -1.47% 0.88% 5.25% 5.16%
Lipper New York Insured
Municipal Debt Funds
Category Average/1/ 2.45% 4.64% 5.61% 5.26%
Lehman Brothers Municipal
Bond Index/2/ 2.85% 5.31% 6.37% 6.20%
----------------------------------------------------------
Returns quoted represent past performance, which is no guarantee of future
results. Returns at NAV would be lower if the sales charge were included.
Returns less than one year are cumulative. Current performance may be higher or
lower than the performance shown. Investment returns and principal value will
fluctuate so that when shares are redeemed, they may be worth more or less than
their original cost. Class A shares have a 4.2% maximum sales charge. Returns
do not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of shares. For the most recent month-end
performance, visit www.nuveen.com or call (800) 257-8787.
Portfolio activity was limited, with the majority of new purchases taking place
during the first half of the period. All of the new bonds bought carried the
highest credit rating of AAA. Although lower-rated bonds continued their recent
run of strong performance during the period, we believed they were offering
declining relative value than their higher-rated counterparts. One notable new
high-quality purchase made relatively late in the period was of Greater New
Haven Water Solution Control bonds. These securities, due to mature in 2017,
2030 and 2035, were somewhat longer than we thought ideal. However, this issuer
is an infrequent borrower that offered attractive yields, and the opportunity
to further diversify the portfolio.
New Jersey Fund
The Nuveen New Jersey Municipal Bond Fund's total return on net asset value
outpaced its Lipper peer group average as well as the national Lehman Brothers
index. As the yield curve flattened during the period, meaning that short-term
interest rates were rising and long-term rates were falling, our healthy
weighting in intermediate- and longer-maturity bonds added to performance.
Security selection also contributed to results. In particular, tobacco bonds
continued to do well nationally, but the situation was particularly favorable
in New Jersey, as investors anticipated a potential restructuring. Lower-rated
bonds broadly outperformed during the period, as investors continued to look
for higher municipal yields in a
- --------------------------------------------------------------------------------
1For each Fund, the Lipper category average shown represents the average
annualized total return for all reporting funds for the periods ended
August 31, 2005. The Lipper categories contained 22, 22, 21 and 15 funds in
the Lipper Connecticut Municipal Debt Funds Category, 57, 56, 50 and 39 funds
in the Lipper New Jersey Municipal Debt Funds Category, 107, 107, 89 and 63
funds in the Lipper New York Municipal Debt Funds Category and 8, 8, 8 and 7
funds in the Lipper New York Insured Municipal Debt Funds Category for the
respective six-month, one-, five- and ten-year periods ended August 31, 2005.
The returns account for the effects of management fees and assume reinvestment
of dividends, but do not reflect any applicable sales charges. You cannot
invest directly in a Lipper Category.
2The Lehman Brothers Municipal Bond Index is an unmanaged index composed of a
broad range of investment-grade municipal bonds and does not reflect any
initial or ongoing expenses. You cannot invest directly in an index.
Semiannual Report Page 3
strong market environment. Among our lower-rated holdings, we saw particularly
strong performance from the tobacco, industrial development, and life care
sectors.
As with the Connecticut Fund, our pre-refunded holdings detracted modestly from
performance as these bonds, which have relative short average lives,
underperformed in line with short-term interest rates. We also were slightly
overweighted in insured bonds, which, although they performed positively,
continued to lag their lower-rated counterparts.
We did not make many changes to the portfolio during the past six months. We
remained comfortable with the Fund's allocation to lower-rated securities.
However, when we added new bonds to the Fund, we favored high-quality issues
because we believed they offered improving value potential after several years
of underperformance relative to lower-grade bonds. Our high-quality purchases
focused on intermediate bonds. With the yield curve flattening, we saw risks
associated with owning both short- and long-term bonds. As in Connecticut, we
believed the best relative values were to be found in bonds with maturities of
around 10 years.
New York Funds
Both the Nuveen New York Municipal Bond Fund and the Nuveen New York Insured
Municipal Bond Fund performed well during the period. The total return on net
asset value of both portfolios beat the performance of the Funds' Lipper peer
group averages as well as the national Lehman Brothers index.
Both Funds benefited from many of the same factors discussed elsewhere in this
report. A decent allocation to intermediate- and longer-term bonds helped the
uninsured Fund's performance as the yield curve flattened and longer bonds
continued to gain ground. The uninsured Fund also benefited from its
lower-rated holdings, which performed well as investors sought opportunities to
pick up additional yield. Among our lower-rated investments, tobacco debt did
particularly well. Some of our tobacco holdings were pre-refunded during the
period and, as a result, saw significant price appreciation. Lower-rated
healthcare and industrial development revenue bonds also added to relative
outperformance. More mixed results, however, came from our
inverse-floating-rate holdings, also called "inverse floaters." Some of our
longer-maturity inverse floaters generally performed well, but our
shorter-maturity inverse floaters lost ground during the past six months.
The insured Fund also benefited from its intermediate- and longer-maturity bond
holdings. However, because the portfolio is entirely invested in AAA-rated
securities, we were not able to participate in the rally enjoyed by lower-rated
bonds. Compared to the uninsured Fund, however, we enjoyed very favorable
results from our inverse- floating-rate bonds, which, because of the relatively
long maturities of their underlying bonds, tended to perform well.
Both New York Funds were managed similarly during the past six months. In both
cases, we were actively looking to sell our shorter-maturity holdings, which we
believed would be challenged if short-term interest rates continued to rise. In
both portfolios, especially the insured Fund, we saw a number of pre-refundings
that put downward pressure on the portfolios' duration. We sold many of these
pre-refunded bonds and looked to reinvest the proceeds in intermediate bonds
with maturities of around 10 years. We did, however, invest in longer-dated
paper when we found attractive opportunities. All of our new purchases in the
insured Fund, and most of our new purchases in the uninsured portfolio, were of
AAA-rated bonds. We were comfortable with the uninsured Fund's existing
weighting in lower-rated bonds but also believed that higher-rated paper
offered better future value potential for our shareholders.
Dividend Information
During the reporting period, the New Jersey and New York Municipal Bond Funds
experienced a reduction in their dividend, while the Connecticut and New York
Insured Municipal Bond Funds' dividend was unchanged. The reduction in
Semiannual Report Page 4
dividend was brought about by bonds in the portfolio being called or retired
and the proceeds subsequently reinvested in the current low interest rate
environment.
Each Fund seeks to pay dividends at a rate that reflects the past and projected
performance of the Fund. To permit a Fund to maintain a more stable monthly
dividend, the Fund may pay dividends at a rate that may be more or less than
the amount of net investment income actually earned by the Fund during the
period. If the Fund has cumulatively earned more than it has paid in dividends,
it will hold the excess in reserve as undistributed net investment income
(UNII) as part of the Fund's net asset value. Conversely, if the Fund has
cumulatively paid in dividends more than it has earned, the excess will
constitute a negative UNII that will likewise be reflected in the Fund's net
asset value. Each Fund will, over time, pay all its net investment income as
dividends to shareholders. As of August 31, 2005, all of the Funds in this
report had negative UNII for financial statement purposes and positive UNII for
tax purposes.
Semiannual Report Page 5
Fund Spotlight as of 8/31/05 Nuveen Connecticut Municipal Bond Fund
================================================================================
Quick Facts
A Shares B Shares C Shares R Shares
--------------------------------------------------------------------
NAV $10.84 $10.84 $10.83 $10.89
--------------------------------------------------------------------
Latest Monthly Dividend/1/ $0.0375 $0.0305 $0.0325 $0.0395
--------------------------------------------------------------------
Latest Capital Gain and Ordinary
Income Distribution/2/ $0.0419 $0.0419 $0.0419 $0.0419
--------------------------------------------------------------------
Inception Date 7/13/87 2/11/97 10/04/93 2/25/97
--------------------------------------------------------------------
Returns quoted represent past performance which is no guarantee of future
results. Returns without sales charges would be lower if the sales charge were
included. Current performance may be higher or lower than the performance
shown. Investment returns and principal value will fluctuate so that when
shares are redeemed, they may be worth more or less than their original cost.
Returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of shares. Income is generally exempt from
regular federal income taxes. Some income may be subject to state and local
taxes and to the federal alternative minimum tax. Capital gains, if any, are
subject to tax. For the most recent month-end performance visit www.nuveen.com
or call (800) 257-8787.
Class A and C share returns are actual. Class B and R share returns are actual
for the period since class inception; returns prior to class inception are
Class A share returns adjusted for differences in sales charges and (in the
case of Class B) expenses, which are primarily differences in distribution and
service fees. Class A shares have a 4.2% maximum sales charge. Class B shares
have a contingent deferred sales charge (CDSC), also known as a back-end sales
charge, that for redemptions begins at 5% and declines periodically until after
6 years when the charge becomes 0%. Class B shares automatically convert to
Class A shares eight years after purchase. Class C shares have a 1% CDSC for
redemptions within less than one year, which is not reflected in the one-year
total return. Class R shares have no sales charge and may be purchased under
limited circumstances or by specified classes of investors.
Average Annual Total Returns as of 8/31/05
A Shares NAV Offer
---------------------------------------------
1-Year 5.46% 1.05%
---------------------------------------------
5-Year 6.18% 5.27%
---------------------------------------------
10-Year 5.72% 5.27%
---------------------------------------------
B Shares w/o CDSC w/CDSC
---------------------------------------------
1-Year 4.75% 0.75%
---------------------------------------------
5-Year 5.40% 5.24%
---------------------------------------------
10-Year 5.11% 5.11%
---------------------------------------------
C Shares NAV
---------------------------------------------
1-Year 4.89%
---------------------------------------------
5-Year 5.61%
---------------------------------------------
10-Year 5.14%
---------------------------------------------
R Shares NAV
---------------------------------------------
1-Year 5.66%
---------------------------------------------
5-Year 6.41%
---------------------------------------------
10-Year 5.93%
---------------------------------------------
Tax-Free Yields
A Shares NAV Offer
---------------------------------------------
Dividend Yield/3/ 4.15% 3.98%
---------------------------------------------
SEC 30-Day Yield/4/ 3.02% 2.89%
---------------------------------------------
Taxable-Equivalent Yield/4,5/ 4.41% 4.22%
---------------------------------------------
B Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.38%
---------------------------------------------
SEC 30-Day Yield 2.28%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.33%
---------------------------------------------
C Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.60%
---------------------------------------------
SEC 30-Day Yield 2.48%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.62%
---------------------------------------------
R Shares NAV
---------------------------------------------
Dividend Yield/3/ 4.35%
---------------------------------------------
SEC 30-Day Yield 3.22%
---------------------------------------------
Taxable-Equivalent Yield/5/ 4.70%
---------------------------------------------
Average Annual Total Returns as of 9/30/05
A Shares NAV Offer
------------------------------------------
1-Year 4.18% -0.17%
------------------------------------------
5-Year 6.11% 5.20%
------------------------------------------
10-Year 5.59% 5.14%
------------------------------------------
B Shares w/o CDSC w/CDSC
------------------------------------------
1-Year 3.37% -0.60%
------------------------------------------
5-Year 5.32% 5.15%
------------------------------------------
10-Year 4.97% 4.97%
------------------------------------------
C Shares NAV
------------------------------------------
1-Year 3.60%
------------------------------------------
5-Year 5.52%
------------------------------------------
10-Year 5.02%
------------------------------------------
R Shares NAV
------------------------------------------
1-Year 4.29%
------------------------------------------
5-Year 6.30%
------------------------------------------
10-Year 5.79%
------------------------------------------
Portfolio Statistics
Net Assets ($000) $293,386
---------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.61
---------------------------------------------------------
Average Duration 5.49
---------------------------------------------------------
- --------------------------------------------------------------------------------
1Paid September 1, 2005. This is the latest monthly tax-exempt dividend
declared during the period ended August 31, 2005.
2Paid December 1, 2004. Capital gains and/or ordinary income are subject to
federal taxation.
3Dividend Yield is the most recent dividend per share (annualized) divided by
the appropriate price per share. The SEC 30-Day Yield is a standardized
measure of the current market yield on the Fund's portfolio and is based on
the maximum offer price per share. The Dividend Yield also differs from the
SEC 30-Day Yield because the Fund may be paying out more or less than it is
earning and it may not include the effect of amortization of bond premium.
4The SEC 30-Day Yield and Taxable Equivalent Yield on A Shares at NAV applies
only to A Shares purchased at no-load pursuant to the Fund's policy permitting
waiver of the A Share load in certain specified circumstances.
5The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield on the Nuveen Investments
Fund on an after-tax basis at a specified tax rate. With respect to
investments that generate qualified dividend income that is taxable at a
maximum rate of 15%, the taxable-equivalent yield is lower. The
taxable-equivalent yield is based on the Fund's SEC 30-Day Yield on the
indicated date and a combined federal and state income tax rate of 31.5%.
Semiannual Report Page 6
Fund Spotlight as of 8/31/05 Nuveen Connecticut Municipal Bond Fund
================================================================================
Bond Credit Quality/1/
[CHART]
AAA/U.S. Guaranteed 66.1%
AA 18.3%
A 3.5%
BBB 9.4%
BB or Lower 1.6%
NR 1.1%
Sectors/1/
Education and Civic Organizations 21.2%
---------------------------------------
Tax Obligation/General 17.5%
---------------------------------------
U.S. Guaranteed 14.5%
---------------------------------------
Tax Obligation/Limited 13.1%
---------------------------------------
Healthcare 7.1%
---------------------------------------
Utilities 6.6%
---------------------------------------
Long-Term Care 5.9%
---------------------------------------
Water and Sewer 5.9%
---------------------------------------
Other 8.2%
---------------------------------------
1As a percentage of total holdings as of August 31, 2005. Holdings are subject
to change.
- --------------------------------------------------------------------------------
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front and back end sales charges (loads) or redemption fees,
where applicable; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees, where applicable; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example below is based on an investment of $1,000 invested at the beginning
of the period and held for the period.
The information under "Actual Performance," together with the amount you
invested, allows you to estimate actual expenses incurred over the reporting
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60) and multiply the result by the cost
shown for your share class, in the row entitled "Expenses Incurred During
Period" to estimate the expenses incurred on your account during this period.
The information under "Hypothetical Performance," provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expense you incurred for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other Funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front
and back end sales charges (loads) or redemption fees, where applicable.
Therefore, the hypothetical information is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds or share classes. In addition, if these transactional costs
were included, your costs would have been higher.
Hypothetical Performance
Actual Performance (5% annualized return before expenses)
--------------------------------------- ---------------------------------------
A Shares B Shares C Shares R Shares A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------------------------------------------------------
Beginning Account Value (3/01/05) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------------------
Ending Account Value (8/31/05) $1,027.70 $1,024.60 $1,024.80 $1,028.70 $1,021.02 $1,017.24 $1,018.25 $1,022.03
- -----------------------------------------------------------------------------------------------------------------
Expenses Incurred During Period $ 4.24 $ 8.06 $ 7.04 $ 3.22 $ 4.23 $ 8.03 $ 7.02 $ 3.21
- -----------------------------------------------------------------------------------------------------------------
For each class of the Fund, expenses are equal to the Fund's annualized net
expense ratio of .83%, 1.58%, 1.38% and .63% for Classes A, B, C and R,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report Page 7
Fund Spotlight as of 8/31/05 Nuveen New Jersey Municipal Bond Fund
================================================================================
Quick Facts
A Shares B Shares C Shares R Shares
--------------------------------------------------------------
NAV $10.96 $10.96 $10.93 $10.98
--------------------------------------------------------------
Latest Monthly Dividend/1/ $0.0360 $0.0290 $0.0310 $0.0375
--------------------------------------------------------------
Inception Date 9/06/94 2/03/97 9/21/94 2/28/92
--------------------------------------------------------------
Returns quoted represent past performance which is no guarantee of future
results. Returns without sales charges would be lower if the sales charge were
included. Current performance may be higher or lower than the performance
shown. Investment returns and principal value will fluctuate so that when
shares are redeemed, they may be worth more or less than their original cost.
Returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of shares. Income is generally exempt from
regular federal income taxes. Some income may be subject to state and local
taxes and to the federal alternative minimum tax. Capital gains, if any, are
subject to tax. For the most recent month-end performance visit www.nuveen.com
or call (800) 257-8787.
Class A, C and R share returns are actual. Class B share returns are actual for
the period since class inception; returns prior to class inception are Class R
share returns adjusted for differences in sales charges and expenses, which are
primarily differences in distribution and service fees. Class A shares have a
4.2% maximum sales charge. Class B shares have a contingent deferred sales
charge (CDSC), also known as a back-end sales charge, that for redemptions
begins at 5% and declines periodically until after 6 years when the charge
becomes 0%. Class B shares automatically convert to Class A shares eight years
after purchase. Class C shares have a 1% CDSC for redemptions within less than
one year, which is not reflected in the one-year total return. Class R shares
have no sales charge and may be purchased under limited circumstances or by
specified classes of investors.
Average Annual Total Returns as of 8/31/05
A Shares NAV Offer
---------------------------------------------
1-Year 6.30% 1.85%
---------------------------------------------
5-Year 6.03% 5.12%
---------------------------------------------
10-Year 5.61% 5.17%
---------------------------------------------
B Shares w/o CDSC w/CDSC
---------------------------------------------
1-Year 5.59% 1.59%
---------------------------------------------
5-Year 5.23% 5.07%
---------------------------------------------
10-Year 4.99% 4.99%
---------------------------------------------
C Shares NAV
---------------------------------------------
1-Year 5.84%
---------------------------------------------
5-Year 5.46%
---------------------------------------------
10-Year 5.01%
---------------------------------------------
R Shares NAV
---------------------------------------------
1-Year 6.57%
---------------------------------------------
5-Year 6.25%
---------------------------------------------
10-Year 5.82%
---------------------------------------------
Tax-Free Yields
A Shares NAV Offer
---------------------------------------------
Dividend Yield/2/ 3.94% 3.78%
---------------------------------------------
SEC 30-Day Yield/3/ 3.45% 3.30%
---------------------------------------------
Taxable-Equivalent Yield/3,4/ 5.11% 4.89%
---------------------------------------------
B Shares NAV
---------------------------------------------
Dividend Yield/2/ 3.18%
---------------------------------------------
SEC 30-Day Yield 2.70%
---------------------------------------------
Taxable-Equivalent Yield/4/ 4.00%
---------------------------------------------
C Shares NAV
---------------------------------------------
Dividend Yield/2/ 3.40%
---------------------------------------------
SEC 30-Day Yield 2.90%
---------------------------------------------
Taxable-Equivalent Yield/4/ 4.30%
---------------------------------------------
R Shares NAV
---------------------------------------------
Dividend Yield/2/ 4.10%
---------------------------------------------
SEC 30-Day Yield 3.64%
---------------------------------------------
Taxable-Equivalent Yield/4/ 5.39%
---------------------------------------------
Average Annual Total Returns as of 9/30/05
A Shares NAV Offer
------------------------------------------
1-Year 4.73% 0.35%
------------------------------------------
5-Year 5.98% 5.07%
------------------------------------------
10-Year 5.45% 4.99%
------------------------------------------
B Shares w/o CDSC w/CDSC
------------------------------------------
1-Year 3.92% -0.08%
------------------------------------------
5-Year 5.18% 5.01%
------------------------------------------
10-Year 4.82% 4.82%
------------------------------------------
C Shares NAV
------------------------------------------
1-Year 4.26%
------------------------------------------
5-Year 5.40%
------------------------------------------
10-Year 4.85%
------------------------------------------
R Shares NAV
------------------------------------------
1-Year 4.99%
------------------------------------------
5-Year 6.19%
------------------------------------------
10-Year 5.66%
------------------------------------------
Portfolio Statistics
Net Assets ($000) $174,728
---------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.72
---------------------------------------------------------
Average Duration 5.56
---------------------------------------------------------
- --------------------------------------------------------------------------------
1Paid September 1, 2005. This is the latest monthly tax-exempt dividend
declared during the period ended August 31, 2005.
2Dividend Yield is the most recent dividend per share (annualized) divided by
the appropriate price per share. The SEC 30-Day Yield is a standardized
measure of the current market yield on the Fund's portfolio and is based on
the maximum offer price per share. The Dividend Yield also differs from the
SEC 30-Day Yield because the Fund may be paying out more or less than it is
earning and it may not include the effect of amortization of bond premium.
3The SEC 30-Day Yield and Taxable Equivalent Yield on A Shares at NAV applies
only to A Shares purchased at no-load pursuant to the Fund's policy permitting
waiver of the A Share load in certain specified circumstances.
4The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield on the Nuveen Investments
Fund on an after-tax basis at a specified tax rate. With respect to
investments that generate qualified dividend income that is taxable at a
maximum rate of 15%, the taxable-equivalent yield is lower. The
taxable-equivalent yield is based on the Fund's SEC 30-Day Yield on the
indicated date and a combined federal and state income tax rate of 32.5%.
Semiannual Report Page 8
Fund Spotlight as of 8/31/05 Nuveen New Jersey Municipal Bond Fund
================================================================================
Bond Credit Quality/1/
[CHART]
AAA/U.S. Guaranteed 68.7%
AA 11.5%
A 4.2%
BBB 11.9%
BB or Lower 0.9%
NR 2.8%
Sectors/1/
Tax Obligation/Limited 22.4%
---------------------------------------
Transportation 14.2%
---------------------------------------
Healthcare 12.5%
---------------------------------------
Education and Civic Organizations 10.5%
---------------------------------------
U.S. Guaranteed 8.9%
---------------------------------------
Long-Term Care 6.5%
---------------------------------------
Tax Obligation/General 6.2%
---------------------------------------
Water and Sewer 5.8%
---------------------------------------
Other 13.0%
---------------------------------------
1As a percentage of total holdings as of August 31, 2005. Holdings are subject
to change.
- --------------------------------------------------------------------------------
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front and back end sales charges (loads) or redemption fees,
where applicable; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees, where applicable; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example below is based on an investment of $1,000 invested at the beginning
of the period and held for the period.
The information under "Actual Performance," together with the amount you
invested, allows you to estimate actual expenses incurred over the reporting
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60) and multiply the result by the cost
shown for your share class, in the row entitled "Expenses Incurred During
Period" to estimate the expenses incurred on your account during this period.
The information under "Hypothetical Performance," provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expense you incurred for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other Funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front
and back end sales charges (loads) or redemption fees, where applicable.
Therefore, the hypothetical information is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds or share classes. In addition, if these transactional costs
were included, your costs would have been higher.
Hypothetical Performance
Actual Performance (5% annualized return before expenses)
--------------------------------------- ---------------------------------------
A Shares B Shares C Shares R Shares A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------------------------------------------------------
Beginning Account Value (3/01/05) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------------------
Ending Account Value (8/31/05) $1,031.30 $1,027.30 $1,028.50 $1,032.10 $1,020.87 $1,017.09 $1,018.10 $1,021.88
- -----------------------------------------------------------------------------------------------------------------
Expenses Incurred During Period $ 4.40 $ 8.23 $ 7.21 $ 3.38 $ 4.38 $ 8.19 $ 7.17 $ 3.36
- -----------------------------------------------------------------------------------------------------------------
For each class of the Fund, expenses are equal to the Fund's annualized net
expense ratio of .86%, 1.61%, 1.41% and .66% for Classes A, B, C and R,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report Page 9
Fund Spotlight as of 8/31/05 Nuveen New York Municipal Bond Fund
================================================================================
Quick Facts
A Shares B Shares C Shares R Shares
--------------------------------------------------------------------------
NAV $11.04 $11.04 $11.05 $11.07
--------------------------------------------------------------------------
Latest Monthly Dividend/1/ $0.0385 $0.0320 $0.0340 $0.0405
--------------------------------------------------------------------------
Latest Ordinary Income Distribution/2/ $0.0013 $0.0013 $0.0013 $0.0013
--------------------------------------------------------------------------
Inception Date 9/07/94 2/03/97 9/14/94 12/22/86
--------------------------------------------------------------------------
Returns quoted represent past performance which is no guarantee of future
results. Returns without sales charges would be lower if the sales charge were
included. Current performance may be higher or lower than the performance
shown. Investment returns and principal value will fluctuate so that when
shares are redeemed, they may be worth more or less than their original cost.
Returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of shares. Income is generally exempt from
regular federal income taxes. Some income may be subject to state and local
taxes and to the federal alternative minimum tax. Capital gains, if any, are
subject to tax. For the most recent month-end performance visit www.nuveen.com
or call (800) 257-8787.
Class A, C and R share returns are actual. Class B share returns are actual for
the period since class inception; returns prior to class inception are Class R
share returns adjusted for differences in sales charges and expenses, which are
primarily differences in distribution and service fees. Class A shares have a
4.2% maximum sales charge. Class B shares have a contingent deferred sales
charge (CDSC), also known as a back-end sales charge, that for redemptions
begins at 5% and declines periodically until after 6 years when the charge
becomes 0%. Class B shares automatically convert to Class A shares eight years
after purchase. Class C shares have a 1% CDSC for redemptions within less than
one year, which is not reflected in the one-year total return. Class R shares
have no sales charge and may be purchased under limited circumstances or by
specified classes of investors.
Average Annual Total Returns as of 8/31/05
A Shares NAV Offer
---------------------------------------------
1-Year 6.14% 1.65%
---------------------------------------------
5-Year 6.22% 5.31%
---------------------------------------------
10-Year 6.04% 5.59%
---------------------------------------------
B Shares w/o CDSC w/CDSC
---------------------------------------------
1-Year 5.29% 1.29%
---------------------------------------------
5-Year 5.43% 5.27%
---------------------------------------------
10-Year 5.41% 5.41%
---------------------------------------------
C Shares NAV
---------------------------------------------
1-Year 5.51%
---------------------------------------------
5-Year 5.64%
---------------------------------------------
10-Year 5.43%
---------------------------------------------
R Shares NAV
---------------------------------------------
1-Year 6.45%
---------------------------------------------
5-Year 6.44%
---------------------------------------------
10-Year 6.26%
---------------------------------------------
Tax-Free Yields
A Shares NAV Offer
---------------------------------------------
Dividend Yield/3/ 4.18% 4.01%
---------------------------------------------
SEC 30-Day Yield/4/ 3.40% 3.26%
---------------------------------------------
Taxable-Equivalent Yield/4,5/ 5.07% 4.87%
---------------------------------------------
B Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.48%
---------------------------------------------
SEC 30-Day Yield 2.66%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.97%
---------------------------------------------
C Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.69%
---------------------------------------------
SEC 30-Day Yield 2.86%
---------------------------------------------
Taxable-Equivalent Yield/5/ 4.27%
---------------------------------------------
R Shares NAV
---------------------------------------------
Dividend Yield/3/ 4.39%
---------------------------------------------
SEC 30-Day Yield 3.60%
---------------------------------------------
Taxable-Equivalent Yield/5/ 5.37%
---------------------------------------------
Average Annual Total Returns as of 9/30/05
A Shares NAV Offer
------------------------------------------
1-Year 4.76% 0.33%
------------------------------------------
5-Year 6.22% 5.32%
------------------------------------------
10-Year 5.90% 5.45%
------------------------------------------
B Shares w/o CDSC w/CDSC
------------------------------------------
1-Year 4.01% 0.01%
------------------------------------------
5-Year 5.45% 5.29%
------------------------------------------
10-Year 5.28% 5.28%
------------------------------------------
C Shares NAV
------------------------------------------
1-Year 4.23%
------------------------------------------
5-Year 5.66%
------------------------------------------
10-Year 5.31%
------------------------------------------
R Shares NAV
------------------------------------------
1-Year 4.97%
------------------------------------------
5-Year 6.44%
------------------------------------------
10-Year 6.12%
------------------------------------------
Portfolio Statistics
Net Assets ($000) $365,997
---------------------------------------------------------
Average Effective Maturity on Securities (Years) 15.73
---------------------------------------------------------
Average Duration 5.46
---------------------------------------------------------
- --------------------------------------------------------------------------------
1Paid September 1, 2005. This is the latest monthly tax-exempt dividend
declared during the period ended August 31, 2005.
2Paid December 1, 2004. Ordinary income is subject to federal taxation.
3Dividend Yield is the most recent dividend per share (annualized) divided by
the appropriate price per share. The SEC 30-Day Yield is a standardized
measure of the current market yield on the Fund's portfolio and is based on
the maximum offer price per share. The Dividend Yield also differs from the
SEC 30-Day Yield because the Fund may be paying out more or less than it is
earning and it may not include the effect of amortization of bond premium.
4The SEC 30-Day Yield and Taxable Equivalent Yield on A Shares at NAV applies
only to A Shares purchased at no-load pursuant to the Fund's policy permitting
waiver of the A Share load in certain specified circumstances.
5The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield on the Nuveen Investments
Fund on an after-tax basis at a specified tax rate. With respect to
investments that generate qualified dividend income that is taxable at a
maximum rate of 15%, the taxable-equivalent yield is lower. The
taxable-equivalent yield is based on the Fund's SEC 30-Day Yield on the
indicated date and a combined federal and state income tax rate of 33.0%.
Semiannual Report Page 10
Fund Spotlight as of 8/31/05 Nuveen New York Municipal Bond Fund
================================================================================
Bond Credit Quality/1/
[CHART]
AAA/U.S. Guaranteed 55.5%
AA 21.8%
A 6.2%
BBB 11.3%
BB or Lower 1.8%
NR 3.4%
Sectors/1/
Tax Obligation/Limited 21.2%
---------------------------------------
U.S. Guaranteed 15.2%
---------------------------------------
Education and Civic Organizations 11.6%
---------------------------------------
Healthcare 9.6%
---------------------------------------
Utilities 9.3%
---------------------------------------
Transportation 6.9%
---------------------------------------
Tax Obligation/General 6.6%
---------------------------------------
Water and Sewer 5.4%
---------------------------------------
Housing/Multifamily 5.0%
---------------------------------------
Other 9.2%
---------------------------------------
1As a percentage of total holdings as of August 31, 2005. Holdings are subject
to change.
- --------------------------------------------------------------------------------
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front and back end sales charges (loads) or redemption fees,
where applicable; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees, where applicable; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example below is based on an investment of $1,000 invested at the beginning
of the period and held for the period.
The information under "Actual Performance," together with the amount you
invested, allows you to estimate actual expenses incurred over the reporting
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60) and multiply the result by the cost
shown for your share class, in the row entitled "Expenses Incurred During
Period" to estimate the expenses incurred on your account during this period.
The information under "Hypothetical Performance," provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expense you incurred for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other Funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front
and back end sales charges (loads) or redemption fees, where applicable.
Therefore, the hypothetical information is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds or share classes. In addition, if these transactional costs
were included, your costs would have been higher.
Hypothetical Performance
Actual Performance (5% annualized return before expenses)
--------------------------------------- ---------------------------------------
A Shares B Shares C Shares R Shares A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------------------------------------------------------
Beginning Account Value (3/01/05) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------------------
Ending Account Value (8/31/05) $1,031.90 $1,027.30 $1,028.40 $1,032.90 $1,021.02 $1,017.19 $1,018.25 $1,021.98
- -----------------------------------------------------------------------------------------------------------------
Expenses Incurred During Period $ 4.25 $ 8.12 $ 7.06 $ 3.28 $ 4.23 $ 8.08 $ 7.02 $ 3.26
- -----------------------------------------------------------------------------------------------------------------
For each class of the Fund, expenses are equal to the Fund's annualized net
expense ratio of .83%, 1.59%, 1.38% and .64% for Classes A, B, C and R,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report Page 11
Fund Spotlight as of 8/31/05 Nuveen New York Insured Municipal Bond Fund
================================================================================
Quick Facts
A Shares B Shares C Shares R Shares
--------------------------------------------------------------------
NAV $10.80 $10.82 $10.80 $10.83
--------------------------------------------------------------------
Latest Monthly Dividend/1/ $0.0355 $0.0285 $0.0305 $0.0370
--------------------------------------------------------------------
Latest Capital Gain and Ordinary
Income Distribution/2/ $0.0861 $0.0861 $0.0861 $0.0861
--------------------------------------------------------------------
Inception Date 9/07/94 2/11/97 9/14/94 12/22/86
--------------------------------------------------------------------
Returns quoted represent past performance which is no guarantee of future
results. Returns without sales charges would be lower if the sales charge were
included. Current performance may be higher or lower than the performance
shown. Investment returns and principal value will fluctuate so that when
shares are redeemed, they may be worth more or less than their original cost.
Returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of shares. Income is generally exempt from
regular federal income taxes. Some income may be subject to state and local
taxes and to the federal alternative minimum tax. Capital gains, if any, are
subject to tax. For the most recent month-end performance visit www.nuveen.com
or call (800) 257-8787.
Class A, C and R share returns are actual. Class B share returns are actual for
the period since class inception; returns prior to class inception are Class R
share returns adjusted for differences in sales charges and expenses, which are
primarily differences in distribution and service fees. Class A shares have a
4.2% maximum sales charge. Class B shares have a contingent deferred sales
charge (CDSC), also known as a back-end sales charge, that for redemptions
begins at 5% and declines periodically until after 6 years when the charge
becomes 0%. Class B shares automatically convert to Class A shares eight years
after purchase. Class C shares have a 1% CDSC for redemptions within less than
one year, which is not reflected in the one-year total return. Class R shares
have no sales charge and may be purchased under limited circumstances or by
specified classes of investors.
Average Annual Total Returns as of 8/31/05
A Shares NAV Offer
---------------------------------------------
1-Year 5.28% 0.88%
---------------------------------------------
5-Year 6.16% 5.25%
---------------------------------------------
10-Year 5.61% 5.16%
---------------------------------------------
B Shares w/o CDSC w/CDSC
---------------------------------------------
1-Year 4.45% 0.45%
---------------------------------------------
5-Year 5.37% 5.20%
---------------------------------------------
10-Year 4.97% 4.97%
---------------------------------------------
C Shares NAV
---------------------------------------------
1-Year 4.69%
---------------------------------------------
5-Year 5.59%
---------------------------------------------
10-Year 4.98%
---------------------------------------------
R Shares NAV
---------------------------------------------
1-Year 5.44%
---------------------------------------------
5-Year 6.37%
---------------------------------------------
10-Year 5.82%
---------------------------------------------
Tax-Free Yields
A Shares NAV Offer
---------------------------------------------
Dividend Yield/3/ 3.94% 3.78%
---------------------------------------------
SEC 30-Day Yield/4/ 3.02% 2.89%
---------------------------------------------
Taxable-Equivalent Yield/4,5/ 4.51% 4.31%
---------------------------------------------
B Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.16%
---------------------------------------------
SEC 30-Day Yield 2.28%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.40%
---------------------------------------------
C Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.39%
---------------------------------------------
SEC 30-Day Yield 2.48%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.70%
---------------------------------------------
R Shares NAV
---------------------------------------------
Dividend Yield/3/ 4.10%
---------------------------------------------
SEC 30-Day Yield 3.22%
---------------------------------------------
Taxable-Equivalent Yield/5/ 4.81%
---------------------------------------------
Average Annual Total Returns as of 9/30/05
A Shares NAV Offer
------------------------------------------
1-Year 3.61% -0.71%
------------------------------------------
5-Year 6.07% 5.16%
------------------------------------------
10-Year 5.44% 4.99%
------------------------------------------
B Shares w/o CDSC w/CDSC
------------------------------------------
1-Year 2.80% -1.15%
------------------------------------------
5-Year 5.28% 5.11%
------------------------------------------
10-Year 4.81% 4.81%
------------------------------------------
C Shares NAV
------------------------------------------
1-Year 3.03%
------------------------------------------
5-Year 5.50%
------------------------------------------
10-Year 4.82%
------------------------------------------
R Shares NAV
------------------------------------------
1-Year 3.87%
------------------------------------------
5-Year 6.28%
------------------------------------------
10-Year 5.65%
------------------------------------------
Portfolio Statistics
Net Assets ($000) $363,781
---------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.53
---------------------------------------------------------
Average Duration 5.73
---------------------------------------------------------
- --------------------------------------------------------------------------------
1Paid September 1, 2005. This is the latest monthly tax-exempt dividend
declared during the period ended August 31, 2005.
2Paid December 1, 2004. Capital gains and/or ordinary income are subject to
federal taxation.
3Dividend Yield is the most recent dividend per share (annualized) divided by
the appropriate price per share. The SEC 30-Day Yield is a standardized
measure of the current market yield on the Fund's portfolio and is based on
the maximum offer price per share. The Dividend Yield also differs from the
SEC 30-Day Yield because the Fund may be paying out more or less than it is
earning and it may not include the effect of amortization of bond premium.
4The SEC 30-Day Yield and Taxable Equivalent Yield on A Shares at NAV applies
only to A Shares purchased at no-load pursuant to the Fund's policy permitting
waiver of the A Share load in certain specified circumstances.
5The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield on the Nuveen Investments
Fund on an after-tax basis at a specified tax rate. With respect to
investments that generate qualified dividend income that is taxable at a
maximum rate of 15%, the taxable-equivalent yield is lower. The
taxable-equivalent yield is based on the Fund's SEC 30-Day Yield on the
indicated date and a combined federal and state income tax rate of 33.0%.
Semiannual Report Page 12
Fund Spotlight as of 8/31/05 Nuveen New York Insured Municipal Bond Fund
================================================================================
Bond Credit Quality/1/
[CHART]
Insured 89.6%
U.S. Guaranteed 9.1%
AAA (uninsured) 1.3%
The Fund features a portfolio of primarily investment-grade, long-term
municipal securities. These securities are covered by insurance, guaranteeing
the timely payment of principal and interest, or by an escrow or trust account
containing enough U.S. government or U.S. government agency securities to
ensure timely payment of principal and interest.
Sectors/1/
Tax Obligation/Limited 23.1%
---------------------------------------
Healthcare 15.8%
---------------------------------------
Tax Obligation/General 14.7%
---------------------------------------
Transportation 12.6%
---------------------------------------
U.S. Guaranteed 9.1%
---------------------------------------
Education and Civic Organizations 7.9%
---------------------------------------
Utilities 5.6%
---------------------------------------
Other 11.2%
---------------------------------------
1As a percentage of total holdings as of August 31, 2005. Holdings are subject
to change.
- --------------------------------------------------------------------------------
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front and back end sales charges (loads) or redemption fees,
where applicable; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees, where applicable; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example below is based on an investment of $1,000 invested at the beginning
of the period and held for the period.
The information under "Actual Performance," together with the amount you
invested, allows you to estimate actual expenses incurred over the reporting
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60) and multiply the result by the cost
shown for your share class, in the row entitled "Expenses Incurred During
Period" to estimate the expenses incurred on your account during this period.
The information under "Hypothetical Performance," provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expense you incurred for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other Funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front
and back end sales charges (loads) or redemption fees, where applicable.
Therefore, the hypothetical information is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds or share classes. In addition, if these transactional costs
were included, your costs would have been higher.
Hypothetical Performance
Actual Performance (5% annualized return before expenses)
--------------------------------------- ---------------------------------------
A Shares B Shares C Shares R Shares A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------------------------------------------------------
Beginning Account Value (3/01/05) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------------------
Ending Account Value (8/31/05) $1,029.50 $1,025.50 $1,026.70 $1,030.30 $1,020.97 $1,017.19 $1,018.20 $1,021.98
- -----------------------------------------------------------------------------------------------------------------
Expenses Incurred During Period $ 4.30 $ 8.12 $ 7.10 $ 3.28 $ 4.28 $ 8.08 $ 7.07 $ 3.26
- -----------------------------------------------------------------------------------------------------------------
For each class of the Fund, expenses are equal to the Fund's annualized net
expense ratio of .84%, 1.59%, 1.39% and .64% for Classes A, B, C and R,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report Page 13
Shareholder
Meeting Report
The annual shareholder meeting was held on July 26, 2005, at The Northern Trust
Bank, Chicago, Illinois.
- --------------------------------------------------------------------------------
Nuveen
Nuveen Nuveen Nuveen New York
Connecticut New Jersey New York Insured
Municipal Municipal Municipal Municipal
Bond Bond Bond Bond
Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------
To approve the new investment management agreement
For 21,277,935 11,190,093 23,387,059 21,052,315
Against 219,191 190,706 319,342 175,748
Abstain 381,864 176,433 551,381 749,774
- -----------------------------------------------------------------------------------------------
Total 21,878,990 11,557,232 24,257,782 21,977,837
- -----------------------------------------------------------------------------------------------
-----------------------------------------------------------------
Nuveen
Multistate
Approval of the Board Members was reached as follows: Trust II
-----------------------------------------------------------------
Robert P. Bremner
For 128,590,163
Withhold 1,810,507
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Lawrence H. Brown
For 128,609,154
Withhold 1,791,516
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Jack B. Evans
For 128,619,020
Withhold 1,781,650
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
William C. Hunter
For 128,649,278
Withhold 1,751,392
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
David J. Kundert
For 128,561,208
Withhold 1,839,462
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
William J. Schneider
For 128,579,817
Withhold 1,820,853
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Timothy R. Schwertfeger
For 128,604,178
Withhold 1,796,492
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
- ----
14
-----------------------------------------------------------------
Nuveen
Multistate
Approval of the Board Members was reached as follows: Trust II
-----------------------------------------------------------------
Judith M. Stockdale
For 128,613,010
Withhold 1,787,660
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Eugene S. Sunshine
For 128,626,733
Withhold 1,773,937
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
- ----
15
Portfolio of Investments (Unaudited)
NUVEEN CONNECTICUT MUNICIPAL BOND FUND
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Consumer Staples - 1.7%
$ 4,730 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB $ 4,885,381
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
- ------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 20.8%
905 Connecticut Higher Education Supplemental Loan Authority, 11/11 at 100.00 Aaa 960,187
Revenue Bonds, Family Education Loan Program, Series
2001A, 5.250%, 11/15/18 (Alternative Minimum Tax) - MBIA
Insured
1,125 Connecticut Health and Educational Facilities Authority, 7/08 at 101.00 AA 1,156,005
Revenue Bonds, Sacred Heart University, Series 1998E,
5.000%, 7/01/28 - RAAI Insured
1,490 Connecticut Health and Educational Facilities Authority, 7/08 at 101.00 AA 1,539,945
Revenue Bonds, Canterbury School, Series 1998A, 5.000%,
7/01/18 - RAAI Insured
1,000 Connecticut Health and Educational Facilities Authority, 7/07 at 102.00 AAA 1,057,420
Revenue Bonds, Suffield Academy, Series 1997A, 5.400%,
7/01/27 - MBIA Insured
Connecticut Health and Educational Facilities Authority,
Revenue Bonds, Connecticut State University System, Series
2005H:
1,100 5.000%, 11/01/17 - FSA Insured 11/15 at 100.00 AAA 1,219,702
4,700 5.000%, 11/01/18 - FSA Insured 11/15 at 100.00 AAA 5,190,492
Connecticut Health and Educational Facilities Authority,
Revenue Bonds, Fairfield University, Series 1999I:
925 5.250%, 7/01/25 - MBIA Insured 7/09 at 101.00 AAA 991,683
2,755 5.500%, 7/01/29 - MBIA Insured 7/09 at 101.00 AAA 2,982,260
2,000 Connecticut Health and Educational Facilities Authority, 7/09 at 101.00 Aaa 2,175,400
Revenue Bonds, Horace Bushnell Memorial Hall, Series
1999A, 5.625%, 7/01/29 - MBIA Insured
1,000 Connecticut Health and Educational Facilities Authority, No Opt. Call AAA 1,111,330
Revenue Bonds, Connecticut State University System, Series
2003F, 5.000%, 11/01/13 - FSA Insured
650 Connecticut Health and Educational Facilities Authority, 1/15 at 100.00 Aaa 716,417
Revenue Bonds, Kent School, Series 2004D, 5.000%, 7/01/16
- MBIA Insured
750 Connecticut Health and Educational Facilities Authority, 7/10 at 101.00 AAA 832,860
Revenue Bonds, Connecticut College, Series 2000D, 5.750%,
7/01/30 - MBIA Insured
2,250 Connecticut Health and Educational Facilities Authority, 7/11 at 101.00 AAA 2,378,363
Revenue Bonds, Trinity College, Series 2001G, 5.000%,
7/01/31 - AMBAC Insured
Connecticut Health and Educational Facilities Authority,
Revenue Bonds, Loomis Chaffee School, Series 2001D:
1,000 5.500%, 7/01/23 7/11 at 101.00 A2 1,092,600
500 5.250%, 7/01/31 7/11 at 101.00 A2 535,765
650 Connecticut Health and Educational Facilities Authority, 4/14 at 100.00 AAA 712,888
Revenue Bonds, Trinity College, Series 2004H, 5.000%,
7/01/17 - MBIA Insured
925 Connecticut Health and Educational Facilities Authority, 3/11 at 101.00 AAA 974,506
Revenue Bonds, Greenwich Academy, Series 2001B, 5.000%,
3/01/32 - FSA Insured
900 Connecticut Health and Educational Facilities Authority, 7/11 at 101.00 A2 971,199
Revenue Bonds, Loomis Chaffee School, Series 2001E,
5.250%, 7/01/21
Connecticut Health and Educational Facilities Authority,
Revenue Bonds, University of Hartford, Series 2002E:
1,000 5.500%, 7/01/22 - RAAI Insured 7/12 at 101.00 AA 1,110,100
6,000 5.250%, 7/01/32 - RAAI Insured 7/12 at 101.00 AA 6,384,420
4,500 Connecticut Health and Educational Facilities Authority, 7/09 at 100.00 AAA 4,748,400
Revenue Bonds, Yale University, Series 2002W, 5.125%,
7/01/27
1,540 Connecticut Health and Educational Facilities Authority, 7/13 at 100.00 AAA 1,635,696
Revenue Bonds, Brunswick School, Series 2003B, 5.000%,
7/01/33 - MBIA Insured
2,160 University of Connecticut, Special Obligation Student Fee 5/12 at 100.00 AA- 2,372,566
Revenue Bonds, Series 2002A, 5.250%, 5/15/18
- ----
16
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations (continued)
$ 3,120 University of Connecticut, Student Fee Revenue Refunding 11/12 at 101.00 AAA $ 3,447,194
Bonds, Series 2002A, 5.250%, 11/15/20 - FGIC Insured
1,500 University of Connecticut, General Obligation Bonds, Series 4/11 at 101.00 AA 1,639,605
2001A, 5.250%, 4/01/20
1,000 University of Connecticut, General Obligation Bonds, Series 4/12 at 100.00 AA 1,105,340
2002A, 5.375%, 4/01/19
University of Connecticut, General Obligation Bonds, Series
2004A:
7,000 5.000%, 1/15/13 - MBIA Insured No Opt. Call AAA 7,740,530
1,435 5.000%, 1/15/16 - MBIA Insured 1/14 at 100.00 AAA 1,579,591
2,670 University of Connecticut, General Obligation Bonds, Series 2/15 at 100.00 AAA 2,954,889
2005A, 5.000%, 2/15/17 - FSA Insured
- ------------------------------------------------------------------------------------------------------------------
Healthcare - 7.0%
2,000 Connecticut Health and Educational Facilities Authority, 1/06 at 100.00 AAA 2,056,320
Revenue Bonds, Bridgeport Hospital Issue, Series 1992A,
6.625%, 7/01/18 - MBIA Insured
800 Connecticut Health and Educational Facilities Authority, 1/06 at 101.00 AAA 809,856
Revenue Bonds, New Britain General Hospital Issue, Series
1994B, 6.000%, 7/01/24 - AMBAC Insured
1,000 Connecticut Health and Educational Facilities Authority, 7/09 at 101.00 Aaa 1,064,860
Revenue Bonds, Stamford Hospital, Series 1999G, 5.000%,
7/01/18 - MBIA Insured
Connecticut Health and Educational Facilities Authority,
Revenue Bonds, Hospital for Special Care, Series 1997B:
1,000 5.375%, 7/01/17 7/07 at 102.00 Ba1 1,002,150
3,500 5.500%, 7/01/27 7/07 at 102.00 Ba1 3,468,990
1,550 Connecticut Health and Educational Facilities Authority, 7/06 at 102.00 AAA 1,613,317
Revenue Bonds, Greenwich Hospital, Series 1996A, 5.800%,
7/01/26 - MBIA Insured
Connecticut Health and Educational Facilities Authority,
Revenue Bonds, Danbury Hospital, Series 1999G:
500 5.700%, 7/01/22 - AMBAC Insured 7/09 at 101.00 AAA 545,940
1,000 5.625%, 7/01/25 - AMBAC Insured 7/09 at 101.00 AAA 1,083,940
1,500 Connecticut Health and Educational Facilities Authority, 11/09 at 101.00 AAA 1,647,510
Revenue Bonds, Catholic Health East, Series 1999F, 5.750%,
11/15/29 - MBIA Insured
2,725 Connecticut Health and Educational Facilities Authority, 7/09 at 101.00 AA 2,942,918
Revenue Bonds, Waterbury Hospital, Series 1999C, 5.750%,
7/01/20 - RAAI Insured
2,000 Connecticut Health and Educational Facilities Authority, 7/10 at 101.00 AA 2,214,300
Revenue Bonds, Eastern Connecticut Health Network, Series
2000A, 6.000%, 7/01/25 - RAAI Insured
2,000 Connecticut Health and Educational Facilities Authority, 7/12 at 101.00 AA 2,169,860
Revenue Bonds, Bristol Hospital, Series 2002B, 5.500%,
7/01/32 - RAAI Insured
- ------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 1.9%
1,890 Bridgeport Housing Authority, Connecticut, Multifamily 12/09 at 102.00 N/R 2,005,536
Housing Revenue Bonds, Stratfield Apartments, Series 1999,
7.250%, 12/01/24 (Alternative Minimum Tax)
2,000 Connecticut Housing Finance Authority, Housing Mortgage 12/09 at 100.00 AAA 2,098,960
Finance Program Bonds, Series 1999D-2, 6.200%, 11/15/41
(Alternative Minimum Tax)
1,420 New Britain Senior Citizens Housing Development 1/06 at 100.00 AAA 1,436,358
Corporation, Connecticut, FHA-Insured Section 8 Assisted
Mortgage Revenue Refunding Bonds, Nathan Hale Apartments,
Series 1992A, 6.875%, 7/01/24
- ------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 0.6%
1,595 Connecticut Housing Finance Authority, Housing Mortgage 11/10 at 100.00 AAA 1,643,297
Finance Program Bonds, Series 2001C, 5.300%, 11/15/33
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------
Industrials - 2.2%
5,250 Connecticut Resource Recovery Authority, Revenue Bonds, 11/05 at 100.50 Baa2 5,349,225
American Ref-Fuel Company of Southeastern Connecticut LP,
Series 1992A, 6.450%, 11/15/22 (Alternative Minimum Tax)
1,000 Connecticut Resource Recovery Authority, Revenue Bonds, 12/11 at 102.00 Baa2 1,038,860
American Ref-Fuel Company of Southeastern Connecticut LP,
Series 1998A-II, 5.500%, 11/15/15 (Alternative Minimum Tax)
- ----
17
Portfolio of Investments (Unaudited)
NUVEEN CONNECTICUT MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Long-Term Care - 5.8%
$ 500 Connecticut Housing Finance Authority, Group Home Mortgage 6/10 at 102.00 AAA $ 534,505
Finance Program Special Obligation Bonds, Series 2000GH-5,
5.850%, 6/15/30 - AMBAC Insured
1,000 Connecticut Health and Educational Facilities Authority, 8/08 at 102.00 AAA 1,045,960
FHA-Insured Mortgage Revenue Bonds, Hebrew Home and
Hospital, Series 1999B, 5.200%, 8/01/38
Connecticut Development Authority, First Mortgage Gross
Revenue Refunding Healthcare Bonds, Church Homes Inc. -
Congregational Avery Heights, Series 1997:
1,700 5.700%, 4/01/12 4/07 at 102.00 BBB- 1,764,583
2,560 5.800%, 4/01/21 4/07 at 102.00 BBB- 2,633,830
1,875 Connecticut Development Authority, First Mortgage Gross 12/06 at 103.00 BBB+ 1,944,300
Revenue Refunding Healthcare Bonds, Elim Park Baptist Home
Inc., Series 1998A, 5.375%, 12/01/18
Connecticut Development Authority, First Mortgage Gross
Revenue Refunding Healthcare Bonds, Connecticut Baptist
Homes Inc., Series 1999:
1,000 5.500%, 9/01/15 - RAAI Insured 9/09 at 102.00 AA 1,080,320
500 5.625%, 9/01/22 - RAAI Insured 9/09 at 102.00 AA 543,435
1,000 Connecticut Development Authority, First Mortgage Gross 12/09 at 102.00 N/R 1,095,400
Revenue Refunding Healthcare Bonds, Mary Wade Home Inc.,
Series 1999A, 6.375%, 12/01/18
Connecticut Development Authority, Revenue Refunding Bonds,
Duncaster Inc., Series 1999A:
2,200 5.250%, 8/01/19 - RAAI Insured 2/10 at 102.00 AA 2,337,588
3,910 5.375%, 8/01/24 - RAAI Insured 2/10 at 102.00 AA 4,171,540
- ------------------------------------------------------------------------------------------------------------------
Materials - 0.4%
1,000 Sprague, Connecticut, Environmental Improvement Revenue 10/07 at 102.00 BBB 1,033,160
Bonds, International Paper Company, Series 1997A, 5.700%,
10/01/21 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 17.3%
2,800 Bridgeport, Connecticut, General Obligation Bonds, Series 3/07 at 101.00 AAA 2,913,372
1997A, 5.250%, 3/01/17 - AMBAC Insured
1,500 Bridgeport, Connecticut, General Obligation Refunding 8/12 at 100.00 Aaa 1,665,930
Bonds, Series 2002A, 5.375%, 8/15/19 - FGIC Insured
1,440 Bridgeport, Connecticut, General Obligation Bonds, Series 9/13 at 100.00 AAA 1,600,301
2003A, 5.250%, 9/15/22 - FSA Insured
325 Canterbury, Connecticut, General Obligation Bonds, Series No Opt. Call A3 368,128
1989, 7.200%, 5/01/09
395 Colchester, Connecticut, General Obligation Bonds, Series 6/11 at 102.00 Aaa 443,423
2001, 5.500%, 6/15/14 - FGIC Insured
5,000 Connecticut, General Obligation Residual Certificates, No Opt. Call Aa2 7,214,250
Series 514, 11.040%, 12/15/13 (IF)
1,000 Connecticut, General Obligation Bonds, Series 2002D, 11/12 at 100.00 AA 1,107,710
5.375%, 11/15/21
1,000 Connecticut, General Obligation Bonds, Series 2001D, 11/11 at 100.00 AA 1,074,880
5.000%, 11/15/20
3,330 Connecticut, General Obligation Bonds, Series 2004C, 4/14 at 100.00 AAA 3,598,698
5.000%, 4/01/23 - FGIC Insured
1,090 Connecticut, General Obligation Bonds, Series 2004D, No Opt. Call AAA 1,211,175
5.000%, 12/01/13 - MBIA Insured
1,015 East Lyme, Connecticut, General Obligation Bonds, Series 7/11 at 102.00 Aaa 1,112,673
2001, 5.000%, 7/15/16 - FGIC Insured
200 Glastonbury, Connecticut, General Obligation Bonds, Series No Opt. Call Aa1 208,092
1988, 7.200%, 8/15/06
Hartford, Connecticut, General Obligation Bonds, Series
2005A:
1,195 5.000%, 8/01/20 - FSA Insured 8/15 at 100.00 AAA 1,308,907
595 5.000%, 8/01/21 - FSA Insured 8/15 at 100.00 AAA 649,663
1,210 4.375%, 8/01/24 - FSA Insured 8/15 at 100.00 AAA 1,231,417
1,300 Hartford, Connecticut, General Obligation Bonds, Series No Opt. Call AAA 1,461,902
2005C, 5.000%, 9/01/17 - MBIA Insured
340 Middletown, Connecticut, General Obligation Bonds, Series No Opt. Call AA 348,463
1990, 6.900%, 4/15/06
1,630 New Haven, Connecticut, General Obligation Bonds, Series 11/10 at 101.00 AAA 1,751,794
2001A, 5.000%, 11/01/20 - FGIC Insured
New London, Connecticut, General Obligation Bonds, Series
1988:
120 7.300%, 12/01/05 No Opt. Call A+ 121,320
100 7.300%, 12/01/07 No Opt. Call A+ 109,174
1,000 Newtown, Connecticut, General Obligation Bonds, Series No Opt. Call Aa2 1,039,680
2004, 4.000%, 6/15/11
975 Northern Mariana Islands, General Obligation Bonds, Series 6/10 at 100.00 A 1,041,787
2000A, 6.000%, 6/01/20 - ACA Insured
- ----
18
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/General (continued)
Old Saybrook, Connecticut, General Obligation Bonds, Series
1989:
$ 160 7.400%, 5/01/08 No Opt. Call Aa3 $ 177,408
160 7.400%, 5/01/09 No Opt. Call Aa3 182,792
Old Saybrook, Connecticut, General Obligation Bonds, Series
1991:
275 6.500%, 2/15/10 - AMBAC Insured No Opt. Call AAA 313,233
270 6.500%, 2/15/11 - AMBAC Insured No Opt. Call AAA 314,391
Regional School District 16, Beacon Falls and Prospect,
Connecticut, General Obligation Bonds, Series 2000:
650 5.500%, 3/15/18 - FSA Insured 3/10 at 101.00 Aaa 714,116
650 5.625%, 3/15/19 - FSA Insured 3/10 at 101.00 Aaa 717,509
650 5.700%, 3/15/20 - FSA Insured 3/10 at 101.00 Aaa 718,822
1,460 Regional School District 8, Andover, Hebron and 5/11 at 101.00 Aaa 1,573,603
Marlborough, Connecticut, General Obligation Bonds, Series
2002, 5.000%, 5/01/21 - FSA Insured
420 Regional School District 15, Connecticut, General 8/10 at 101.00 Aaa 450,379
Obligation Bonds, Series 2002, 5.000%, 8/15/22 - FSA
Insured
2,050 Stratford, Connecticut, General Obligation Bonds, Series 2/12 at 100.00 AAA 2,091,492
2002, 4.000%, 2/15/16 - FSA Insured
3,700 Puerto Rico, Public Improvement Bonds, TICS/TOCS, Series No Opt. Call AAA 5,468,674
2001, 8.286%, 7/01/19 (IF) - FSA Insured
3,000 Waterbury, Connecticut, General Obligation Bonds, Series No Opt. Call AAA 3,303,660
2004B, 5.000%, 4/01/13 - FSA Insured
Watertown, Connecticut, General Obligation Bonds, Series
2005:
1,055 5.000%, 8/01/14 - MBIA Insured No Opt. Call Aaa 1,170,333
1,060 5.000%, 8/01/15 - MBIA Insured No Opt. Call Aaa 1,179,261
Winchester, Connecticut, General Obligation Bonds, Series
1990:
140 6.750%, 4/15/06 No Opt. Call A2 143,297
140 6.750%, 4/15/07 No Opt. Call A2 148,250
140 6.750%, 4/15/08 No Opt. Call A2 152,816
140 6.750%, 4/15/09 No Opt. Call A2 157,119
140 6.750%, 4/15/10 No Opt. Call A2 161,048
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 12.9%
Connecticut Health and Educational Facilities Authority,
Revenue Bonds, Nursing Home Program - St. Camillus Health
Center, Series 1994:
2,000 6.250%, 11/01/18 11/05 at 101.00 AA 2,043,860
3,695 6.250%, 11/01/18 - AMBAC Insured 11/05 at 101.00 AAA 3,778,544
825 Connecticut Health and Educational Facilities Authority, 7/08 at 102.00 AAA 856,663
Revenue Bonds, Child Care Facilities Program,
Series 1998A, 5.000%, 7/01/28 - AMBAC Insured
5,000 Connecticut Health and Educational Facilities Authority, 11/05 at 101.00 AAA 5,113,100
Revenue Bonds, Nursing Home Program - St. Joseph's Manor,
Series 1994, 6.250%, 11/01/16 - AMBAC Insured
3,000 Connecticut Health and Educational Facilities Authority, 11/05 at 101.00 AAA 3,067,860
Revenue Bonds, Nursing Home Program - Jewish Home for the
Elderly, Series 1994, 6.250%, 11/01/20 - AMBAC Insured
2,895 Connecticut Health and Educational Facilities Authority, 7/08 at 105.00 A 3,189,306
Revenue Bonds, New Opportunities for Waterbury Inc.,
Series 1998A, 6.750%, 7/01/28
4,365 Connecticut Health and Educational Facilities Authority, 11/06 at 102.00 AA 4,578,710
Revenue Bonds, Nursing Home Program - 3030 Park Fairfield
Health Center, Series 1996, 6.250%, 11/01/21
4,000 Connecticut, Special Tax Obligation Transportation 12/12 at 100.00 AAA 4,335,760
Infrastructure Purpose Bonds, Series 2002B, 5.000%,
12/01/20 - AMBAC Insured
1,000 Connecticut, Special Tax Obligation Transportation 1/14 at 100.00 AAA 1,076,460
Infrastructure Purpose Bonds, Series 2003B, 5.000%,
1/01/23 - FGIC Insured
1,150 Connecticut, Special Tax Obligation Transportation No Opt. Call AA- 1,315,347
Infrastructure Purpose Bonds, Series 1992B, 6.125%, 9/01/12
1,870 Connecticut, Special Obligation Rate Reduction Bonds, No Opt. Call AAA 2,043,050
Series 2004A, 5.000%, 6/30/11
- ----
19
Portfolio of Investments (Unaudited)
NUVEEN CONNECTICUT MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited (continued)
Connecticut, Certificates of Participation, Juvenile
Training School, Series 2001:
$ 1,275 5.000%, 12/15/20 12/11 at 101.00 AA- $ 1,362,108
1,000 5.000%, 12/15/30 12/11 at 101.00 AA- 1,055,180
1,000 Puerto Rico Highway and Transportation Authority, Highway 7/10 at 101.00 AAA 1,120,690
Revenue Bonds, Series 2000B, 5.750%, 7/01/19 - MBIA Insured
2,000 Virgin Islands Public Finance Authority, Gross Receipts 10/10 at 101.00 BBB 2,266,900
Taxes Loan Note, Series 1999A, 6.500%, 10/01/24
725 Woodstock, Connecticut, Special Obligation Bonds, Woodstock 9/05 at 100.00 AAA 727,414
Academy, Series 1990, 6.900%, 3/01/06 - AMBAC Insured
- ------------------------------------------------------------------------------------------------------------------
Transportation - 1.3%
2,100 Connecticut, General Airport Revenue Bonds, Bradley 4/11 at 101.00 AAA 2,196,264
International Airport, Series 2001A, 5.125%, 10/01/26
(Alternative Minimum Tax) - FGIC Insured
1,360 New Haven, Connecticut, Revenue Refunding Bonds, Air Rights No Opt. Call AAA 1,551,638
Parking Facility, Series 2002, 5.375%, 12/01/14 - AMBAC
Insured
250 Puerto Rico Ports Authority, Special Facilities Revenue 6/06 at 102.00 CCC 196,760
Bonds, American Airlines Inc., Series 1996A, 6.250%,
6/01/26 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** - 14.3%
1,000 Bridgeport, Connecticut, General Obligation Bonds, Series 7/10 at 101.00 AAA 1,136,000
2000A, 6.000%, 7/15/19 (Pre-refunded to 7/15/10) - FGIC
Insured
Cheshire, Connecticut, General Obligation Bonds, Series
1999:
660 5.625%, 10/15/18 (Pre-refunded to 10/15/09) 10/09 at 101.00 Aa3*** 730,409
660 5.625%, 10/15/19 (Pre-refunded to 10/15/09) 10/09 at 101.00 Aa3*** 730,409
1,870 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 7/10 at 100.00 AAA 1,987,249
Asset-Backed Bonds, Series 2000, 5.750%, 7/01/20
(Pre-refunded to 7/01/10)
Connecticut, General Obligation Bonds, Series 2002B:
1,000 5.500%, 6/15/19 (Pre-refunded to 6/15/12) 6/12 at 100.00 AA*** 1,128,690
2,000 5.500%, 6/15/21 (Pre-refunded to 6/15/12) 6/12 at 100.00 AA*** 2,257,380
2,500 Connecticut, General Obligation Bonds, Series 2002A, 4/12 at 100.00 AA*** 2,797,225
5.375%, 4/15/19 (Pre-refunded to 4/15/12)
1,250 Connecticut Health and Educational Facilities Authority, 1/06 at 100.00 AAA 1,567,300
Revenue Bonds, Lutheran General Healthcare System -
Parkside Lodges Projects, Series 1989, 7.375%, 7/01/19
Connecticut Health and Educational Facilities Authority,
Revenue Bonds, Connecticut State University System, Series
1999C:
1,155 5.500%, 11/01/17 (Pre-refunded to 11/01/09) - FSA Insured 11/09 at 101.00 AAA 1,273,538
1,155 5.500%, 11/01/18 (Pre-refunded to 11/01/09) - FSA Insured 11/09 at 101.00 AAA 1,273,538
1,155 5.500%, 11/01/19 (Pre-refunded to 11/01/09) - FSA Insured 11/09 at 101.00 AAA 1,273,538
Connecticut, Special Tax Obligation Transportation
Infrastructure Purpose Bonds, Series 2002A:
1,500 5.375%, 7/01/18 (Pre-refunded to 7/01/12) - FSA Insured 7/12 at 100.00 AAA 1,682,610
1,780 5.375%, 7/01/19 (Pre-refunded to 7/01/12) - FSA Insured 7/12 at 100.00 AAA 1,996,697
1,000 Hartford, Connecticut, Parking System Revenue Bonds, Series 7/10 at 100.00 Baa2*** 1,142,070
2000A, 6.500%, 7/01/25 (Pre-refunded to 7/01/10)
500 New Haven, Connecticut, General Obligation Bonds, Series 2/08 at 101.00 AAA 524,935
1999, 4.700%, 2/01/15 (Pre-refunded to 2/01/08) - FGIC
Insured
Puerto Rico Infrastructure Financing Authority, Special
Obligation Bonds, Series 2000A:
2,540 5.500%, 10/01/32 10/10 at 101.00 AAA 2,802,763
4,500 5.500%, 10/01/40 10/10 at 101.00 AAA 4,954,455
2,105 Stamford, Connecticut, General Obligation Bonds, Series 8/12 at 100.00 AAA 2,318,889
2002, 5.000%, 8/15/15 (Pre-refunded to 8/15/12)
500 University of Connecticut, Special Obligation Student Fee 11/10 at 101.00 AAA 563,750
Revenue Bonds, Series 2000A, 5.750%, 11/15/29
(Pre-refunded to 11/15/10) - FGIC Insured
- ----
20
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** (continued)
$ 135 University of Connecticut, General Obligation Bonds, Series 3/10 at 101.00 AAA $ 149,800
2000A, 5.550%, 3/01/18 (Pre-refunded to 3/01/10) - FGIC
Insured
University of Connecticut, General Obligation Bonds, Series
2002A:
3,065 5.375%, 4/01/17 (Pre-refunded to 4/01/12) 4/12 at 100.00 AA*** 3,427,896
1,000 5.375%, 4/01/18 (Pre-refunded to 4/01/12) 4/12 at 100.00 AA*** 1,118,400
Waterbury, Connecticut, General Obligation Bonds, Series
2002A:
1,500 5.375%, 4/01/16 (Pre-refunded to 4/01/12) - FSA Insured 4/12 at 100.00 AAA 1,677,600
1,090 5.375%, 4/01/17 (Pre-refunded to 4/01/12) - FSA Insured 4/12 at 100.00 AAA 1,219,056
Waterbury, Connecticut, General Obligation Tax Revenue
Intercept Bonds, Series 2000:
910 6.000%, 2/01/18 (Pre-refunded to 2/01/09) - RAAI Insured 2/09 at 101.00 AA*** 1,006,160
1,025 6.000%, 2/01/20 (Pre-refunded to 2/01/09) - RAAI Insured 2/09 at 101.00 AA*** 1,133,312
- ------------------------------------------------------------------------------------------------------------------
Utilities - 6.6%
3,800 Bristol Resource Recovery Facility Operating Committee, No Opt. Call AAA 4,169,018
Connecticut, Solid Waste Revenue Bonds, Covanta Bristol
Inc., Series 2005, 5.000%, 7/01/12 - AMBAC Insured
2,025 Connecticut Development Authority, Pollution Control 10/08 at 102.00 Baa1 2,201,823
Revenue Refunding Bonds, Connecticut Light and Power
Company, Series 1993A, 5.850%, 9/01/28
Eastern Connecticut Resource Recovery Authority, Solid
Waste Revenue Bonds, Wheelabrator Lisbon Project, Series
1993A:
240 5.250%, 1/01/06 (Alternative Minimum Tax) No Opt. Call BBB 240,355
1,370 5.500%, 1/01/14 (Alternative Minimum Tax) 1/06 at 100.00 BBB 1,385,207
2,415 5.500%, 1/01/20 (Alternative Minimum Tax) 1/06 at 100.00 BBB 2,419,830
Guam Power Authority, Revenue Bonds, Series 1999A:
2,280 5.125%, 10/01/29 - MBIA Insured 10/09 at 101.00 AAA 2,437,753
1,000 5.125%, 10/01/29 - AMBAC Insured 10/09 at 101.00 AAA 1,069,190
4,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, No Opt. Call AAA 5,314,680
TICS, Series 2002-1, 6.660%, 7/01/20 (IF) - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------
Water and Sewer - 5.8%
1,550 Connecticut, State Revolving Fund General Revenue Bonds, 10/13 at 100.00 AAA 1,700,970
Series 2003A, 5.000%, 10/01/16
1,750 Connecticut Development Authority, Water Facilities Revenue 4/07 at 102.00 A 1,836,678
Bonds, Bridgeport Hydraulic Company, Series 1995, 6.150%,
4/01/35 (Alternative Minimum Tax)
Greater New Haven Water Pollution Control Authority,
Connecticut, Regional Wastewater System Revenue Bonds,
Series 2005A:
1,685 5.000%, 11/15/17 - MBIA Insured 11/15 at 100.00 AAA 1,865,918
1,440 5.000%, 11/15/30 - MBIA Insured 11/15 at 100.00 AAA 1,551,470
1,920 5.000%, 11/15/35 - MBIA Insured 11/15 at 100.00 AAA 2,061,984
South Central Connecticut Regional Water Authority, Water
System Revenue Bonds, Eighteenth Series 2003A:
3,000 5.000%, 8/01/20 - MBIA Insured 8/13 at 100.00 AAA 3,261,360
3,955 5.000%, 8/01/33 - MBIA Insured 8/13 at 100.00 AAA 4,211,324
500 Stamford, Connecticut, Water Pollution Control System and 11/13 at 100.00 AA+ 530,160
Facility Revenue Bonds, Series 2003A, 5.000%, 11/15/32
- ------------------------------------------------------------------------------------------------------------------
$265,070 Total Long-Term Investments (cost $271,828,414) - 98.6% 289,307,497
- ------------------------------------------------------------------------------------------------------------------
- ------------
Other Assets Less Liabilities - 1.4% 4,078,174
----------------------------------------------------------------------------------------------------
Net Assets - 100% $ 293,385,671
----------------------------------------------------------------------------------------------------
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. Government or U.S. Government agency securities which
ensures the timely payment of principal and interest. Such
securities are normally considered to be equivalent to AAA rated
securities.
N/RInvestment is not rated.
(IF)Inverse floating rate security.
See accompanying notes to financial statements.
- ----
21
Portfolio of Investments (Unaudited)
NUVEEN NEW JERSEY MUNICIPAL BOND FUND
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Consumer Discretionary - 0.2%
Middlesex County Improvement Authority, New Jersey, Senior
Revenue Bonds, Heldrich Center Hotel/Conference Center
Project, Series 2005A:
$ 140 5.000%, 1/01/32 1/15 at 100.00 Baa3 $ 140,769
140 5.125%, 1/01/37 1/15 at 100.00 Baa3 141,282
- ------------------------------------------------------------------------------------------------------------------
Consumer Staples - 4.3%
Tobacco Settlement Financing Corporation, New Jersey,
Tobacco Settlement Asset-Backed Bonds, Series 2002:
4,630 5.750%, 6/01/32 6/12 at 100.00 BBB 4,843,999
1,000 6.000%, 6/01/37 6/12 at 100.00 BBB 1,076,460
Tobacco Settlement Financing Corporation, New Jersey,
Tobacco Settlement Asset-Backed Bonds, Series 2003:
710 6.125%, 6/01/24 6/13 at 100.00 BBB 792,843
750 6.375%, 6/01/32 6/13 at 100.00 BBB 856,103
- ------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 10.4%
2,500 Bergen County Improvement Authority, New Jersey, Revenue 9/12 at 101.00 N/R 2,660,775
Bonds, Yeshiva Ktana of Passaic Project, Series 2002,
6.000%, 9/15/27
1,000 New Brunswick Housing Authority, New Jersey, Lease Revenue 1/09 at 101.00 AAA 1,042,860
Refunding Bonds, Rutgers University, Series 1998,
4.750%, 7/01/18 - FGIC Insured
375 New Jersey Economic Development Authority, Revenue Bonds, 6/15 at 100.00 AAA 405,165
The Seeing Eye Inc., Series 2005, 5.000%, 12/01/24 - AMBAC
Insured
825 New Jersey Economic Development Authority, Revenue Bonds, No Opt. Call N/R 985,628
Yeshiva Ktana of Passaic, Series 1993, 8.000%, 9/15/18
325 New Jersey Educational Facilities Authority, Revenue Bonds, 1/06 at 100.00 A- 325,975
Trenton State College Issue, Series 1976D, 6.750%, 7/01/08
410 New Jersey Educational Facilities Authority, Revenue 1/06 at 100.00 Baa1 410,508
Refunding Bonds, Monmouth College, Series 1993A,
5.625%, 7/01/13
1,025 New Jersey Educational Facilities Authority, Revenue Bonds, 7/11 at 100.00 AAA 1,089,862
Ramapo College, Series 2001D, 5.000%, 7/01/25 - AMBAC
Insured
2,500 New Jersey Educational Facilities Authority, Revenue Bonds, 7/13 at 100.00 A 2,594,875
Fairleigh Dickinson University, Series 2002D,
5.250%, 7/01/32 - ACA Insured
500 New Jersey Educational Facilities Authority, Revenue Bonds, 7/13 at 100.00 AAA 549,830
Rowan University, Series 2003I, 5.125%, 7/01/21 - FGIC
Insured
560 New Jersey Educational Facilities Authority, Revenue Bonds, 7/14 at 100.00 AAA 612,786
Montclair State University, Series 2004L, 5.125%, 7/01/21
- MBIA Insured
New Jersey Educational Facilities Authority, Revenue Bonds,
New Jersey Institute of Technology, Series 2004B:
930 5.000%, 7/01/18 - AMBAC Insured 1/14 at 100.00 AAA 1,010,761
425 5.000%, 7/01/19 - AMBAC Insured 1/14 at 100.00 AAA 460,959
1,030 4.750%, 7/01/20 - AMBAC Insured 1/14 at 100.00 AAA 1,088,350
815 4.250%, 7/01/24 - AMBAC Insured 1/14 at 100.00 AAA 820,371
290 New Jersey Educational Facilities Authority, Revenue Bonds, 7/14 at 100.00 AA 319,365
Rider University, Series 2004A, 5.500%, 7/01/23 - RAAI
Insured
New Jersey Educational Facilities Authority, Revenue Bonds,
Montclair State University, Series 2005F:
1,400 5.000%, 7/01/16 - FGIC Insured 7/15 at 100.00 AAA 1,550,640
625 5.000%, 7/01/32 - FGIC Insured 7/15 at 100.00 AAA 669,069
20 New Jersey Higher Education Assistance Authority, Student No Opt. Call A+ 20,048
Loan Revenue Bonds, New Jersey Class Loan Program, Series
1992A, 6.000%, 1/01/06 (Alternative Minimum Tax)
1,500 Puerto Rico Industrial, Tourist, Educational, Medical and 12/12 at 101.00 BBB 1,611,345
Environmental Control Facilities Financing Authority,
Higher Education Revenue Refunding Bonds, Ana G. Mendez
University System, Series 2002, 5.500%, 12/01/31
- ----
22
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Financials - 0.6%
$ 1,000 New Jersey Economic Development Authority, Revenue No Opt. Call Baa3 $ 1,103,800
Refunding Bonds, Kapkowski Road Landfill Project, Series
2002, 5.750%, 10/01/21
- ------------------------------------------------------------------------------------------------------------------
Healthcare - 12.4%
350 Camden County Improvement Authority, New Jersey, Revenue 8/14 at 100.00 BBB 374,595
Bonds, Cooper Health System, Series 2004A, 5.750%, 2/15/34
500 New Jersey Health Care Facilities Financing Authority, 7/07 at 102.00 BBB- 522,465
Revenue Refunding Bonds, St. Elizabeth Hospital Obligated
Group, Series 1997, 6.000%, 7/01/27
1,200 New Jersey Health Care Facilities Financing Authority, 7/07 at 102.00 AAA 1,263,516
Revenue Refunding Bonds, Holy Name Hospital, Series 1997,
5.250%, 7/01/20 - AMBAC Insured
4,375 New Jersey Health Care Facilities Financing Authority, 8/11 at 100.00 AAA 4,625,775
FHA-Insured Mortgage Revenue Bonds, Jersey City Medical
Center, Series 2001, 5.000%, 8/01/31 - AMBAC Insured
265 New Jersey Health Care Facilities Financing Authority, 7/11 at 100.00 A2 283,847
Revenue Bonds, Kennedy Health System Obligated Group,
Series 2001, 5.625%, 7/01/31
1,710 New Jersey Health Care Facilities Financing Authority, 1/12 at 100.00 AA 1,789,652
Revenue Refunding Bonds, Bayshore Community Hospital,
Series 2002, 5.000%, 7/01/22 - RAAI Insured
1,250 New Jersey Health Care Facilities Financing Authority, 7/12 at 100.00 Baa1 1,361,175
Revenue Bonds, South Jersey Hospital System, Series 2002,
5.875%, 7/01/21
1,125 New Jersey Health Care Facilities Financing Authority, 7/13 at 100.00 Baa3 1,162,845
Revenue Bonds, Somerset Medical Center, Series 2003,
5.500%, 7/01/33
1,000 New Jersey Health Care Facilities Financing Authority, 7/07 at 102.00 AAA 1,045,410
Revenue Refunding Bonds, AHS Hospital Corporation, Series
1997A, 5.000%, 7/01/27 - AMBAC Insured
510 New Jersey Health Care Facilities Financing Authority, 7/10 at 101.00 BBB- 577,493
Revenue Bonds, Trinitas Hospital Obligated Group, Series
2000, 7.500%, 7/01/30
New Jersey Health Care Facilities Financing Authority,
Revenue Bonds, Bayonne Hospital Obligated Group, Series
1994:
215 6.400%, 7/01/07 - FSA Insured 1/06 at 101.00 AAA 217,739
175 6.250%, 7/01/12 - FSA Insured 1/06 at 101.00 AAA 177,209
2,000 New Jersey Health Care Facilities Financing Authority, 7/10 at 100.00 A 2,166,480
Revenue Bonds, Robert Wood Johnson University Hospital,
Series 2000, 5.750%, 7/01/31
1,500 New Jersey Health Care Facilities Financing Authority, 1/09 at 101.00 AAA 1,607,205
Revenue Bonds, Virtua Health System, Series 1998,
5.250%, 7/01/10 - FSA Insured
1,500 New Jersey Health Care Facilities Financing Authority, 7/10 at 100.00 BBB+ 1,664,070
Revenue Bonds, St. Peter's University Hospital, Series
2000A, 6.875%, 7/01/30
845 New Jersey Health Care Facilities Financing Authority, 7/14 at 100.00 AA 917,662
Revenue Bonds, St. Clare's Hospital, Series 2004A,
5.250%, 7/01/20 - RAAI Insured
900 New Jersey Health Care Facilities Financing Authority, 7/15 at 100.00 AA 946,350
Revenue Bonds, RWJ Health Care Corporation, Series 2005B,
5.000%, 7/01/35 - RAAI Insured
1,000 Puerto Rico Industrial, Tourist, Educational, Medical and 1/06 at 101.00 AAA 1,022,800
Environmental Control Facilities Financing Authority,
Hospital Revenue Bonds, Auxilio Mutuo Hospital, Series
1995A, 6.250%, 7/01/16 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 3.4%
1,000 Essex County Improvement Authority, New Jersey, FNMA 11/12 at 100.00 Aaa 1,017,260
Enhanced Multifamily Housing Revenue Bonds, Ballantyne
House Project, Series 2002, 4.750%, 11/01/22 (Alternative
Minimum Tax)
1,500 New Jersey Housing and Mortgage Finance Agency, Multifamily 3/10 at 100.00 AAA 1,587,690
Housing Revenue Bonds, Series 2000A-1, 6.350%, 11/01/31
(Alternative Minimum Tax) - FSA Insured
630 New Jersey Housing and Mortgage Finance Agency, Multifamily 8/10 at 100.00 AAA 664,934
Housing Revenue Bonds, Series 2000E-1, 5.750%, 5/01/25 -
FSA Insured
1,500 New Jersey Housing and Mortgage Finance Agency, Multifamily 5/06 at 102.00 AAA 1,544,220
Housing Revenue Bonds, Series 1996A, 6.200%, 11/01/18
(Alternative Minimum Tax) - AMBAC Insured
- ----
23
Portfolio of Investments (Unaudited)
NUVEEN NEW JERSEY MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Housing/Multifamily (continued)
$ 1,015 Newark Housing Authority, New Jersey, GNMA Collateralized 10/09 at 102.00 Aaa $ 1,089,663
Housing Revenue Bonds, Fairview Apartments Project, Series
2000A, 6.300%, 10/20/19 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 3.0%
4,000 New Jersey Housing and Mortgage Finance Agency, Home Buyer 10/07 at 101.50 AAA 4,154,240
Program Revenue Bonds, Series 1997U, 5.700%, 10/01/14
(Alternative Minimum Tax) - MBIA Insured
800 New Jersey Housing and Mortgage Finance Agency, Home Buyer 10/10 at 100.00 AAA 802,352
Program Revenue Bonds, Series 2000CC, 5.875%, 10/01/31
(Alternative Minimum Tax) - MBIA Insured
205 Virgin Islands Housing Finance Corporation, GNMA 9/05 at 102.00 AAA 208,520
Mortgage-Backed Securities Program Single Family Mortgage
Revenue Refunding Bonds, Series 1995A, 6.450%, 3/01/16
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------
Long-Term Care - 6.5%
1,500 New Jersey Economic Development Authority, Revenue Bonds, 1/08 at 102.00 BB+ 1,506,585
United Methodist Homes of New Jersey Obligated Group,
Series 1998, 5.125%, 7/01/25
5,100 New Jersey Economic Development Authority, Revenue Bonds, 12/09 at 101.00 Aa3 5,538,243
Jewish Community Housing Corporation of Metropolitan New
Jersey, Series 1999, 5.900%, 12/01/31
New Jersey Health Care Facilities Financing Authority,
Revenue Bonds, House of the Good Shepherd Obligated Group,
Series 2001:
1,000 5.100%, 7/01/21 - RAAI Insured 7/11 at 100.00 AA 1,050,880
1,350 5.200%, 7/01/31 - RAAI Insured 7/11 at 100.00 AA 1,416,137
1,300 New Jersey Economic Development Authority, First Mortgage 7/08 at 102.00 A 1,362,374
Fixed Rate Revenue Bonds, Cadbury Corporation, Series
1998A, 5.500%, 7/01/18 - ACA Insured
375 New Jersey Economic Development Authority, First Mortgage 11/14 at 100.00 N/R 401,861
Revenue Bonds, Winchester Gardens at Wards Homestead,
Series 2004A, 5.750%, 11/01/24
- ------------------------------------------------------------------------------------------------------------------
Materials - 0.2%
250 Union County Pollution Control Financing Authority, New No Opt. Call Baa1 266,903
Jersey, Revenue Refunding Bonds, American Cyanamid
Company, Series 1994, 5.800%, 9/01/09
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 6.1%
1,445 Clifton, New Jersey, General Obligation Bonds, Series 2002, 1/11 at 100.00 AAA 1,551,352
5.000%, 1/15/19 - FGIC Insured
500 Hillsborough Township School District, Somerset County, New No Opt. Call AA 567,525
Jersey, General Obligation School Bonds, Series 1992,
5.875%, 8/01/11
3,500 Middletown Township Board of Education, Monmouth County, 8/10 at 100.00 AAA 3,718,890
New Jersey, Refunding School Bonds, Series 2001,
5.000%, 8/01/22 - FSA Insured
480 New Jersey, General Obligation Bonds, Series 2005L, No Opt. Call AAA 546,773
5.250%, 7/15/16 - AMBAC Insured
165 Parsippany-Troy Hills Township, New Jersey, General No Opt. Call AA 157,278
Obligation Bonds, Series 1992, 0.000%, 4/01/07
250 Union City, Hudson County, New Jersey, General Obligation No Opt. Call AAA 287,703
Bonds, Series 1992, 6.375%, 11/01/10 - FSA Insured
1,000 Washington Township Board of Education, Gloucester County, 2/13 at 100.00 Aaa 1,091,750
New Jersey, General Obligation Bonds, Series 2004,
5.000%, 2/01/15 - MBIA Insured
2,550 Washington Township Board of Education, Mercer County, New No Opt. Call Aaa 2,824,304
Jersey, General Obligation Bonds, Series 2005,
5.000%, 1/01/16 - FSA Insured
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 22.3%
650 Bergen County Improvement Authority, New Jersey, Guaranteed No Opt. Call Aaa 742,801
Lease Revenue Bonds, County Administration Complex
Project, Series 2005, 5.000%, 11/15/26 (WI, settling
9/15/05)
1,550 Essex County Improvement Authority, New Jersey, General 10/13 at 100.00 Aaa 1,644,566
Obligation Lease Revenue Bonds, Correctional Facilities
Project, Series 2003A, 5.000%, 10/01/28 - FGIC Insured
450 Essex County Improvement Authority, New Jersey, Guaranteed 12/05 at 100.00 A3 450,873
Pooled Revenue Bonds, Series 1992A, 6.500%, 12/01/12
3,000 Essex County Improvement Authority, New Jersey, Lease No Opt. Call Aaa 3,296,850
Revenue Bonds, Series 2003, 5.000%, 12/15/12 - FSA Insured
- ----
24
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited (continued)
Garden State Preservation Trust, New Jersey, Open Space and
Farmland Preservation Bonds, Series 2003A:
$ 750 5.250%, 11/01/19 - FSA Insured 11/13 at 100.00 AAA $ 835,170
1,225 5.000%, 11/01/20 - FSA Insured 11/13 at 100.00 AAA 1,332,971
1,625 5.000%, 11/01/21 - FSA Insured 11/13 at 100.00 AAA 1,764,766
Hudson County Improvement Authority, New Jersey, County
Secured Lease Revenue Bonds, County Services Building
Project, Series 2005:
395 5.000%, 4/01/25 - AMBAC Insured 4/15 at 100.00 AAA 425,036
920 5.000%, 4/01/35 - AMBAC Insured 4/15 at 100.00 AAA 979,414
505 Little Ferry Board of Education, Bergen County, New Jersey, No Opt. Call N/R 516,655
Certificates of Participation, Series 1994, 6.300%, 1/15/08
3,000 Middlesex County, New Jersey, Certificates of 8/11 at 100.00 AAA 3,205,440
Participation, Series 2001, 5.000%, 8/01/22 - MBIA Insured
3,025 Middlesex County Improvement Authority, New Jersey, County 9/09 at 100.00 AAA 3,250,453
Guaranteed Open Space Trust Fund Revenue Bonds, Series
1999, 5.250%, 9/15/15
1,280 New Jersey Economic Development Authority, Lease Revenue 11/08 at 101.00 Aaa 1,311,846
Bonds, Bergen County Administration Complex, Series 1998,
4.750%, 11/15/26 - MBIA Insured
1,050 New Jersey Health Care Facilities Financing Authority, 9/15 at 100.00 AAA 1,147,913
Lease Revenue Bonds, Department of Human Services -
Greystone Park Psychiatric Hospital, Series 2005,
5.000%, 9/15/18 (WI, settling 9/08/05) - AMBAC Insured
700 New Jersey Economic Development Authority, School 9/15 at 100.00 AAA 772,100
Facilities Construction Bonds, Series 2005N-1,
5.000%, 9/01/17 - AMBAC Insured
2,600 New Jersey Economic Development Authority, Revenue Bonds, 7/14 at 100.00 AAA 2,910,518
Motor Vehicle Surcharge, Series 2004A, 5.250%, 7/01/15 -
MBIA Insured
1,560 New Jersey Economic Development Authority, Cigarette Tax 6/14 at 100.00 BBB 1,678,451
Revenue Bonds, Series 2004, 5.750%, 6/15/34
1,700 New Jersey Economic Development Authority, School Facility No Opt. Call AAA 1,919,283
Construction Bonds, Series 2005K, 5.250%, 12/15/14 - FGIC
Insured
1,000 New Jersey Educational Facilities Authority, Revenue Bonds, 9/12 at 100.00 AAA 1,102,270
Higher Education Capital Improvement Bonds, Fund Issue,
Series 2002A, 5.250%, 9/01/19 - AMBAC Insured
1,180 New Jersey Transit Corporation, Lease Appropriation Bonds, 9/15 at 100.00 AAA 1,284,395
Series 2005A, 5.000%, 9/15/18 (WI, settling 9/07/05) -
FGIC Insured
1,300 New Jersey Transportation Trust Fund Authority, No Opt. Call AAA 1,455,246
Transportation System Bonds, Series 2004B,
5.250%, 12/15/13 - FGIC Insured
1,910 New Jersey Transportation Trust Fund Authority, No Opt. Call AAA 2,138,092
Transportation System Bonds, Series 2005B,
5.250%, 12/15/13 - MBIA Insured
170 Puerto Rico Aqueduct and Sewerage Authority, Revenue 7/06 at 101.50 BBB 174,063
Refunding Bonds, Series 1995, 5.000%, 7/01/15
4,000 Puerto Rico Public Finance Corporation, Commonwealth No Opt. Call AAA 4,609,520
Appropriation Bonds, Series 1998A, 5.125%, 6/01/24 - AMBAC
Insured
- ------------------------------------------------------------------------------------------------------------------
Transportation - 14.1%
1,335 Delaware River and Bay Authority, Delaware and New Jersey, 1/15 at 100.00 AAA 1,440,759
Revenue Bonds, Series 2005, 5.000%, 1/01/26 - MBIA Insured
3,500 Delaware River Port Authority, New Jersey and Pennsylvania, 1/10 at 100.00 AAA 3,830,120
Revenue Bonds, Series 1999, 5.750%, 1/01/22 - FSA Insured
1,330 New Jersey Turnpike Authority, Revenue Bonds, Series 2005C, 1/15 at 100.00 AAA 1,419,323
5.000%, 1/01/35 - FSA Insured
New Jersey Turnpike Authority, Revenue Bonds, Series 1991C:
40 6.500%, 1/01/16 No Opt. Call A 47,582
485 6.500%, 1/01/16 - MBIA Insured No Opt. Call AAA 582,805
3,400 New Jersey Turnpike Authority, Revenue Bonds, Residual 7/13 at 100.00 Aaa 4,290,664
Interest, Series 835, Series 2003A, 9.400%, 1/01/19 (IF) -
FGIC Insured
- ----
25
Portfolio of Investments (Unaudited)
NUVEEN NEW JERSEY MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Transportation (continued)
$ 375 Newark Housing Authority, New Jersey, Port Authority 1/14 at 100.00 AAA $ 411,964
Terminal Revenue Bonds, Series 2004, 5.250%, 1/01/21 -
MBIA Insured
1,000 Port Authority of New York and New Jersey, Consolidated 1/07 at 101.00 AA- 1,040,140
Revenue Bonds, One Hundred Ninth Series 1997,
5.375%, 7/15/22
Port Authority of New York and New Jersey, Special Project
Bonds, JFK International Air Terminal LLC, Sixth Series
1997:
2,125 6.250%, 12/01/08 (Alternative Minimum Tax) - MBIA Insured No Opt. Call AAA 2,305,498
1,000 7.000%, 12/01/12 (Alternative Minimum Tax) - MBIA Insured No Opt. Call AAA 1,192,800
2,000 5.750%, 12/01/22 (Alternative Minimum Tax) - MBIA Insured 12/07 at 102.00 AAA 2,142,600
3,125 5.750%, 12/01/25 (Alternative Minimum Tax) - MBIA Insured 12/07 at 100.00 AAA 3,289,750
2,500 Port Authority of New York and New Jersey, Consolidated 6/15 at 101.00 AAA 2,690,775
Revenue Bonds, One Hundred Fortieth Series 2005,
5.000%, 12/01/28 - XLCA Insured
- ------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** - 8.8%
625 New Jersey Health Care Facilities Financing Authority, No Opt. Call AAA 691,025
Revenue Bonds, Hackensack Hospital, Series 1979A,
8.750%, 7/01/09
New Jersey Economic Development Authority, School
Facilities Construction Bonds, Series 2002C:
1,500 5.000%, 6/15/15 (Pre-refunded to 6/15/12) - MBIA Insured 6/12 at 100.00 AAA 1,649,775
1,750 5.000%, 6/15/20 (Pre-refunded to 6/15/12) - MBIA Insured 6/12 at 100.00 AAA 1,924,738
1,000 New Jersey Economic Development Authority, School 6/13 at 100.00 AAA 1,123,210
Facilities Construction Bonds, Series 2003F,
5.250%, 6/15/21 (Pre-refunded to 6/15/13) - FGIC Insured
1,350 New Jersey Economic Development Authority, School 9/13 at 100.00 AAA 1,496,003
Facilities Construction Bonds, Series 2004G,
5.000%, 9/01/17 (Pre-refunded to 9/01/13) - MBIA Insured
New Jersey Transportation Trust Fund Authority,
Transportation System Bonds, Series 2003C:
1,000 5.500%, 6/15/17 (Pre-refunded to 6/15/13) 6/13 at 100.00 AAA 1,140,160
1,000 5.500%, 6/15/18 (Pre-refunded to 6/15/13) 6/13 at 100.00 AAA 1,140,160
New Jersey Turnpike Authority, Revenue Bonds, Series 1991C:
600 6.500%, 1/01/16 No Opt. Call AAA 723,582
10 6.500%, 1/01/16 No Opt. Call AAA 12,060
10 6.500%, 1/01/16 - MBIA Insured No Opt. Call AAA 12,060
115 6.500%, 1/01/16 - MBIA Insured No Opt. Call AAA 138,687
165 6.500%, 1/01/16 - AMBAC Insured No Opt. Call AAA 198,985
165 6.500%, 1/01/16 - MBIA Insured No Opt. Call AAA 198,985
615 Puerto Rico, General Obligation and Public Improvement 7/11 at 100.00 AAA 677,343
Bonds, Series 2001, 5.125%, 7/01/30 (Pre-refunded to
7/01/11) - FSA Insured
3,900 Puerto Rico Infrastructure Financing Authority, Special 10/10 at 101.00 AAA 4,307,823
Obligation Bonds, Series 2000A, 5.375%, 10/01/24
- ------------------------------------------------------------------------------------------------------------------
Utilities - 1.2%
525 Camden County Pollution Control Financing Authority, New 12/05 at 100.00 Baa3 527,646
Jersey, Solid Waste Disposal and Resource Recovery System
Revenue Bonds, Series 1991D, 7.250%, 12/01/10
1,250 New Jersey Economic Development Authority, Pollution No Opt. Call Baa1 1,334,263
Control Revenue Refunding Bonds, Public Service Electric
and Gas Company, Series 2001A, 5.000%, 3/01/12
200 Port Authority of New York and New Jersey, Special Project No Opt. Call N/R 210,194
Bonds, KIAC Partners, Fourth Series 1996, 7.000%, 10/01/07
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------
Water and Sewer - 5.8%
1,380 Bayonne Municipal Utilities Authority, New Jersey, Water 4/13 at 100.00 Aaa 1,484,880
System Revenue Refunding Bonds, Series 2003A,
5.000%, 4/01/18 - XLCA Insured
1,005 Burlington County Bridge Commission, New Jersey, 8/13 at 100.00 AA 1,092,867
Governmental Leasing Program Revenue Bonds, County
Guaranteed, Series 2003, 5.000%, 8/15/15
Burlington County Bridge Commission, New Jersey, Guaranteed
Pooled Loan Bonds, Series 2003:
1,000 5.000%, 12/01/20 - MBIA Insured 12/13 at 100.00 AAA 1,088,460
695 5.000%, 12/01/21 - MBIA Insured 12/13 at 100.00 AAA 754,985
- ----
26
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------
Water and Sewer (continued)
$ 500 North Hudson Sewerage Authority, New Jersey, Sewerage 8/12 at 100.00 Aaa $ 550,581
Revenue Refunding Bonds, Series 2002A, 5.250%, 8/01/19 -
FGIC Insured
5,000 Union County Utilities Authority, New Jersey, Solid Waste 6/08 at 102.00 AA+ 5,158,445
System County Deficiency Revenue Bonds, Series 1998A,
5.000%, 6/15/28 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------
$160,380 Total Long-Term Investments (cost $164,137,219) - 99.3% 173,538,542
- -----------------------------------------------------------------------------------------------------------------
- ------------
Other Assets Less Liabilities - 0.7% 1,189,650
---------------------------------------------------------------------------------------------------
Net Assets - 100% $ 174,728,192
---------------------------------------------------------------------------------------------------
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. Government or U.S. Government agency securities which
ensures the timely payment of principal and interest.
N/RInvestment is not rated.
(WI)Security purchased on a when-issued basis.
(IF)Inverse floating rate security.
See accompanying notes to financial statements.
- ----
27
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK MUNICIPAL BOND FUND
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Consumer Discretionary - 0.2%
$ 715 New York City Industrial Development Agency, New York, 9/15 at 100.00 BBB- $ 734,312
Liberty Revenue Bonds, IAC/InterActiveCorp, Series 2005,
5.000%, 9/01/35
- ------------------------------------------------------------------------------------------------------------------
Consumer Staples - 2.7%
1,375 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 1,420,169
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
Monroe Tobacco Asset Securitization Corporation, New York,
Tobacco Settlement Asset-Backed Bonds, Series 2000:
250 6.000%, 6/01/15 6/10 at 101.00 BBB 269,048
945 6.150%, 6/01/25 6/10 at 101.00 BBB 1,006,699
780 New York Counties Tobacco Trust I, Tobacco Settlement 6/10 at 101.00 BBB 804,882
Pass-Through Bonds, Series 2000, 5.800%, 6/01/23
1,110 New York Counties Tobacco Trust II, Tobacco Settlement 6/11 at 101.00 BBB 1,139,071
Pass-Through Bonds, Series 2001, 5.250%, 6/01/25
1,500 Nassau County Tobacco Settlement Corporation, New York, 7/09 at 101.00 BBB- 1,602,330
Tobacco Settlement Asset-Backed Bonds, Series 1999A,
6.500%, 7/15/27
615 Rensselaer Tobacco Asset Securitization Corporation, New 6/12 at 100.00 BBB 629,170
York, Tobacco Settlement Asset-Backed Bonds, Series 2001A,
5.200%, 6/01/25
2,750 TSASC Inc., New York, Tobacco Flexible Amortization Bonds, 7/09 at 101.00 BBB 2,924,598
Series 1999-1, 6.250%, 7/15/27
- ------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 11.6%
2,000 Albany Industrial Development Agency, New York, Revenue 10/10 at 100.00 AA 2,188,820
Bonds, Albany Law School, Series 2000A, 5.750%, 10/01/30 -
RAAI Insured
1,655 Brookhaven Industrial Development Agency, New York, Revenue No Opt. Call BBB- 1,656,258
Bonds, Dowling College, Series 1993, 6.750%, 3/01/23
2,470 Dutchess County Industrial Development Agency, New York, 11/05 at 100.00 A3 2,486,821
Civic Facility Revenue Bonds, Bard College, Series 1992,
7.000%, 11/01/17
1,000 Madison County Industrial Development Agency, New York, 6/15 at 101.00 AAA 1,065,630
Civic Facility Revenue Bonds, Morrisville State College
Foundation, Series 2005A, 5.000%, 6/01/37 - CIFG Insured
700 New York City Trust for Cultural Resources, New York, 7/10 at 101.00 A 766,710
Revenue Bonds, Museum of American Folk Art, Series 2000,
6.000%, 7/01/22 - ACA Insured
1,000 New York City Trust for Cultural Resources, New York, 7/12 at 100.00 AAA 1,060,800
Revenue Bonds, Museum of Modern Art, Series 2001D,
5.125%, 7/01/31 - AMBAC Insured
1,650 New York City Industrial Development Agency, New York, 7/12 at 100.00 A1 1,765,550
Civic Facility Revenue Bonds, American Council of Learned
Societies, Series 2002, 5.250%, 7/01/27
New York City Industrial Development Agency, New York,
Civic Facility Revenue Bonds, College of New Rochelle,
Series 1995:
1,000 6.200%, 9/01/10 9/05 at 102.00 Baa2 1,022,000
1,000 6.300%, 9/01/15 9/05 at 102.00 Baa2 1,021,670
Dormitory Authority of the State of New York, Lease Revenue
Bonds, State University Dormitory Facilities, Series 2003B:
1,250 5.250%, 7/01/31 (Mandatory put 7/01/13) - FGIC Insured No Opt. Call AAA 1,394,600
2,000 5.250%, 7/01/32 (Mandatory put 7/01/13) - XLCA Insured No Opt. Call AAA 2,231,360
860 Dormitory Authority of the State of New York, Second No Opt. Call A2 954,953
General Resolution Consolidated Revenue Bonds, City
University System, Series 1990C, 7.500%, 7/01/10
1,500 Dormitory Authority of the State of New York, Second No Opt. Call AA- 1,571,205
General Resolution Consolidated Revenue Bonds, City
University System, Series 1993A, 5.750%, 7/01/07
1,000 Dormitory Authority of the State of New York, Revenue 5/14 at 100.00 AA- 1,126,220
Bonds, State University Educational Facilities, Series
1993B, 5.250%, 5/15/19
1,850 Dormitory Authority of the State of New York, Insured 7/08 at 101.00 AAA 1,949,123
Revenue Bonds, New York Medical College, Series 1998,
5.000%, 7/01/21 - MBIA Insured
- ----
28
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations (continued)
$ 1,000 Dormitory Authority of the State of New York, Revenue No Opt. Call AAA $ 1,171,900
Bonds, City University of New York, Series 2005A,
5.500%, 7/01/18 - FGIC Insured
1,750 Dormitory Authority of the State of New York, Revenue 7/09 at 101.00 A+ 1,873,777
Bonds, University of Rochester, Series 1999B,
5.625%, 7/01/24
1,250 Dormitory Authority of the State of New York, Revenue 7/09 at 102.00 AA 1,387,063
Bonds, Pratt Institute, Series 1999, 6.000%, 7/01/24 -
RAAI Insured
2,700 Dormitory Authority of the State of New York, Revenue 7/09 at 101.00 AA 2,982,042
Bonds, Marymount Manhattan College, Series 1999,
6.250%, 7/01/29 - RAAI Insured
1,335 Dormitory Authority of the State of New York, Revenue 5/10 at 101.00 AAA 2,068,716
Bonds, State University Educational Facilities, 1999
Resolution, Series A-D, RITES, Series PA-781R,
10.923%, 5/15/16 (IF) - FSA Insured
685 Dormitory Authority of the State of New York, Insured 7/11 at 102.00 AA 740,554
Revenue Bonds, D'Youville College, Series 2001,
5.250%, 7/01/20 - RAAI Insured
Niagara County Industrial Development Agency, New York,
Civic Facility Revenue Bonds, Niagara University, Series
2001A:
3,000 5.500%, 11/01/16 - RAAI Insured 11/11 at 101.00 AA 3,348,090
1,000 5.350%, 11/01/23 - RAAI Insured 11/11 at 101.00 AA 1,098,620
3,425 Suffolk County Industrial Development Agency, New York, 12/05 at 101.00 BBB- 3,452,674
Revenue Bonds, Dowling College, Series 1994,
6.625%, 6/01/24
1,000 Suffolk County Industrial Development Agency, New York, 12/06 at 102.00 BBB- 1,029,980
Revenue Bonds, Dowling College, Series 1996,
6.700%, 12/01/20
Utica Industrial Development Agency, New York, Revenue
Bonds, Utica College, Series 1998A:
195 5.300%, 8/01/08 No Opt. Call N/R 197,231
1,000 5.750%, 8/01/28 8/08 at 102.00 N/R 1,018,550
- ------------------------------------------------------------------------------------------------------------------
Healthcare - 9.6%
2,550 New York City Health and Hospitals Corporation, New York, 2/13 at 100.00 AAA 2,808,927
Health System Revenue Bonds, Series 2003A, 5.250%, 2/15/22
- AMBAC Insured
2,175 New York City Industrial Development Agency, New York, 7/12 at 101.00 B2 2,180,699
Civic Facility Revenue Bonds, Staten Island University
Hospital, Series 2002C, 6.450%, 7/01/32
745 New York City Industrial Development Agency, New York, 7/12 at 100.00 B2 746,594
Civic Facility Revenue Bonds, Staten Island 7/12 at 100.00
B2 746,594 University Hospital, Series 2001B,
6.375%, 7/01/31
3,300 Dormitory Authority of the State of New York, FHA-Insured 2/07 at 102.00 AAA 3,506,184
Mortgage Nursing Home Revenue Bonds, Menorah Campus Inc.,
Series 1997, 5.950%, 2/01/17
220 Dormitory Authority of the State of New York, Revenue 7/06 at 102.00 B2 221,635
Bonds, Nyack Hospital, Series 1996, 6.000%, 7/01/06
2,250 Dormitory Authority of the State of New York, FHA-Insured 2/07 at 102.00 AAA 2,374,560
Mortgage Nursing Home Revenue Bonds, Rosalind and Joseph
Gurwin Jewish Geriatric Center of Long Island, Series
1997, 5.700%, 2/01/37 - AMBAC Insured
3,285 Dormitory Authority of the State of New York, Revenue 8/14 at 100.00 AAA 3,651,573
Bonds, New York and Presbyterian Hospital, Series 2004A,
5.250%, 8/15/15 - FSA Insured
1,000 Dormitory Authority of the State of New York, Revenue 7/13 at 100.00 Baa1 1,058,230
Bonds, Winthrop - South Nassau University Hospital
Association, Series 2003A, 5.500%, 7/01/32
1,500 Dormitory Authority of the State of New York, Revenue 7/13 at 100.00 Baa1 1,607,715
Bonds, South Nassau Communities Hospital, Series 2003B,
5.500%, 7/01/23
1,250 Dormitory Authority of the State of New York, Revenue 5/13 at 100.00 A3 1,332,275
Bonds, North Shore Long Island Jewish Group, Series 2003,
5.375%, 5/01/23
1,650 Dormitory Authority of the State of New York, Revenue 7/10 at 101.00 Ba1 1,763,207
Bonds, Mount Sinai NYU Health Obligated Group, Series
2000A, 6.500%, 7/01/25
3,000 Dormitory Authority of the State of New York, Revenue 7/10 at 101.00 Baa1 3,335,130
Bonds, Catholic Health Services of Long Island Obligated
Group - St. Catherine of Siena Medical Center, Series
2000A, 6.500%, 7/01/20
- ----
29
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Healthcare (continued)
$ 2,400 Dormitory Authority of the State of New York, Revenue 7/11 at 101.00 Baa2 $ 2,514,504
Bonds, Lenox Hill Hospital Obligated Group, Series 2001,
5.500%, 7/01/30
345 New York State Medical Care Facilities Finance Agency, 2/06 at 100.00 AAA 348,771
FHA-Insured Mortgage Revenue Bonds, Hospital and Nursing
Home Projects, Series 1992B, 6.200%, 8/15/22
840 New York State Medical Care Facilities Finance Agency, 2/06 at 101.00 AA 858,774
FHA-Insured Mortgage Revenue Bonds, Kenmore Mercy
Hospital, Series 1995B, 6.100%, 2/15/15
960 New York State Medical Care Facilities Finance Agency, 11/05 at 102.00 Aa1 985,258
Secured Mortgage Revenue Bonds, Brookdale Family Care
Centers Inc., Series 1995A, 6.375%, 11/15/19
1,020 New York State Medical Care Facilities Finance Agency, 2/06 at 100.00 AA 1,065,064
FHA-Insured Hospital and Nursing Home Mortgage Revenue
Bonds, Series 1994A, 6.200%, 2/15/21
1,620 Newark-Wayne Community Hospital, New York, Hospital Revenue 9/05 at 100.00 N/R 1,620,016
Refunding and Improvement Bonds, Series 1993A,
7.600%, 9/01/15
Suffolk County Industrial Development Agency, New York,
Revenue Bonds, Huntington Hospital, Series 2002C:
850 6.000%, 11/01/22 11/12 at 100.00 Baa1 926,492
1,220 5.875%, 11/01/32 11/12 at 100.00 Baa1 1,303,985
1,000 Yonkers Industrial Development Agency, New York, Revenue 7/11 at 101.00 BB 1,048,730
Bonds, St. John's Riverside Hospital, Series 2001A,
7.125%, 7/01/31
- ------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 5.0%
335 East Syracuse Housing Authority, New York, FHA-Insured 4/10 at 102.00 AAA 365,760
Section 8 Assisted Revenue Refunding Bonds, Bennet
Project, Series 2001A, 6.700%, 4/01/21
New York City Housing Development Corporation, New York,
Multifamily Housing Revenue Bonds, Series 2001A:
2,000 5.500%, 11/01/31 5/11 at 101.00 AA 2,091,700
2,000 5.600%, 11/01/42 5/11 at 101.00 AA 2,090,460
2,000 New York City Housing Development Corporation, New York, 11/11 at 100.00 AA 2,069,620
Multifamily Housing Revenue Bonds, Series 2001C-2,
5.400%, 11/01/33 (Alternative Minimum Tax)
New York City Housing Development Corporation, New York,
Multifamily Housing Revenue Bonds, Series 2002A:
910 5.375%, 11/01/23 (Alternative Minimum Tax) 5/12 at 100.00 AA 952,160
450 5.500%, 11/01/34 (Alternative Minimum Tax) 5/12 at 100.00 AA 469,193
2,000 New York City Housing Development Corporation, New York, 5/14 at 100.00 AA 2,112,420
Multifamily Housing Revenue Bonds, Series 2004A,
5.250%, 11/01/30
2,040 New York State Housing Finance Agency, Mortgage Revenue 5/06 at 102.00 AAA 2,123,334
Refunding Bonds, Housing Project, Series 1996A,
6.125%, 11/01/20 - FSA Insured
New York State Housing Finance Agency, FHA-Insured Mortgage
Multifamily Housing Revenue Bonds, Series 1992A:
455 6.950%, 8/15/12 2/06 at 100.00 AA 461,889
180 7.000%, 8/15/22 2/06 at 100.00 AA 180,211
1,000 New York State Housing Finance Agency, Secured Mortgage 8/11 at 100.00 Aa1 1,038,020
Program Multifamily Housing Revenue Bonds, Series 2001G,
5.400%, 8/15/33 (Alternative Minimum Tax)
1,250 Tonawanda Housing Authority, New York, Housing Revenue 9/09 at 103.00 N/R 1,193,113
Bonds, Kibler Senior Housing LP, Series 1999A,
7.750%, 9/01/31
3,030 Westchester County Industrial Development Agency, New York, 8/11 at 102.00 Aaa 3,269,794
GNMA Collateralized Mortgage Loan Revenue Bonds, Living
Independently for the Elderly Inc., Series 2001A,
5.400%, 8/20/32
- ------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 1.2%
755 New York State Mortgage Agency, Homeowner Mortgage Revenue 10/09 at 100.00 Aa1 771,074
Bonds, Series 82, 5.650%, 4/01/30 (Alternative Minimum Tax)
1,470 New York State Mortgage Agency, Homeowner Mortgage Revenue 4/10 at 100.00 Aa1 1,547,690
Bonds, Series 95, 5.625%, 4/01/22
- ----
30
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Housing/Single Family (continued)
$ 280 New York State Mortgage Agency, Mortgage Revenue Bonds, 10/10 at 100.00 Aaa $ 289,988
Twenty-Ninth Series, 5.450%, 4/01/31 (Alternative Minimum
Tax)
1,660 New York State Mortgage Agency, Mortgage Revenue Bonds, 4/13 at 101.00 Aaa 1,696,503
Thirty-Third Series A, 4.750%, 4/01/23 (Alternative
Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------
Long-Term Care - 4.9%
1,320 East Rochester Housing Authority, New York, GNMA Secured 12/11 at 101.00 Aaa 1,417,759
Revenue Refunding Bonds, Genesee Valley Presbyterian
Nursing Center, Series 2001, 5.200%, 12/20/24
965 Nassau County Industrial Development Agency, New York, 7/11 at 101.00 N/R 1,049,196
Revenue Bonds, Special Needs Facilities Pooled Program,
Series 2001B-1, 7.250%, 7/01/16
1,000 New York City Industrial Development Agency, New York, 7/10 at 102.00 N/R 1,084,270
Civic Facility Revenue Bonds, Special Needs Facilities
Pooled Program, Series 2000, 8.125%, 7/01/19
2,000 Dormitory Authority of the State of New York, Revenue 7/06 at 102.00 Aa1 2,082,600
Bonds, Bishop Henry R. Hucles Nursing Home Inc., Series
1996, 6.000%, 7/01/24
1,935 Dormitory Authority of the State of New York, FHA-Insured 8/06 at 102.00 AAA 1,974,919
Mortgage Revenue Bonds, W.K. Nursing Home Corporation,
Series 1996, 5.950%, 2/01/16
1,000 Dormitory Authority of the State of New York, Revenue 7/10 at 102.00 A 1,109,380
Bonds, Miriam Osborn Memorial Home Association, Series
2000B, 6.375%, 7/01/29 - ACA Insured
1,500 Dormitory Authority of the State of New York, Revenue 7/10 at 101.00 Aa3 1,651,635
Bonds, Concord Nursing Home Inc., Series 2000,
6.500%, 7/01/29
300 Dormitory Authority of the State of New York, FHA-Insured 2/12 at 101.00 AAA 324,021
Mortgage Revenue Bonds, Augustana Lutheran Home for the
Aged Inc., Series 2001, 5.400%, 2/01/31 - MBIA Insured
1,520 Dormitory Authority of the State of New York, FHA-Insured 2/13 at 102.00 AAA 1,640,962
Nursing Home Mortgage Revenue Bonds, Shorefront Jewish
Geriatric Center Inc., Series 2002, 5.200%, 2/01/32
250 Suffolk County Industrial Development Agency, New York, 7/11 at 101.00 N/R 271,812
Revenue Bonds, Special Needs Facilities Pooled Program,
Series 2001C-1, 7.250%, 7/01/16
5,000 Syracuse Housing Authority, New York, FHA-Insured Mortgage 2/08 at 102.00 AAA 5,352,200
Revenue Bonds, Loretto Rest Residential Healthcare
Facility, Series 1997A, 5.800%, 8/01/37
- ------------------------------------------------------------------------------------------------------------------
Materials - 0.2%
700 Essex County Industrial Development Agency, New York, 11/09 at 101.00 BBB 758,079
Environmental Improvement Revenue Bonds, International
Paper Company, Series 1999A, 6.450%, 11/15/23 (Alternative
Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 5.3%
New York City, New York, General Obligation Bonds, Fiscal
Series 1996G:
220 5.750%, 2/01/17 2/06 at 101.50 A+ 225,535
235 5.750%, 2/01/20 2/06 at 101.50 A+ 240,913
5,000 New York City, New York, General Obligation Bonds, Fiscal 8/14 at 100.00 AAA 5,463,900
Series 2004I, 5.000%, 8/01/17 - MBIA Insured
895 New York City, New York, General Obligation Bonds, Fiscal 11/06 at 101.50 A+ 935,812
Series 1997D, 5.875%, 11/01/11
1,650 New York City, New York, General Obligation Bonds, Fiscal 8/14 at 100.00 A+ 1,818,944
Series 2004C, 5.250%, 8/15/16
1,725 New York City, New York, General Obligation Bonds, Fiscal 8/15 at 100.00 AAA 1,905,918
Series 2006C, 5.000%, 8/01/16 - FSA Insured
950 Northern Mariana Islands, General Obligation Bonds, Series 6/10 at 100.00 A 1,015,075
2000A, 6.000%, 6/01/20 - ACA Insured
South Orangetown Central School District, Rockland County,
New York, General Obligation Bonds, Series 1990:
390 6.875%, 10/01/08 No Opt. Call A1 432,054
390 6.875%, 10/01/09 No Opt. Call A1 443,719
United Nations Development Corporation, New York, Senior
Lien Revenue Bonds, Series 2004A:
880 5.250%, 7/01/23 1/08 at 100.00 A3 915,878
750 5.250%, 7/01/24 1/08 at 100.00 A3 780,578
- ----
31
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/General (continued)
$ 2,150 West Islip Union Free School District, Suffolk County, New 10/15 at 100.00 Aaa $ 2,369,107
York, General Obligation Bonds, Series 2005,
5.000%, 10/01/18 - FSA Insured
505 White Plains, New York, General Obligation Bonds, Series 5/11 at 100.00 AA+ 540,608
2004A, 5.000%, 5/15/22
2,085 Yonkers, New York, General Obligation Bonds, Series 2005B, 8/15 at 100.00 AAA 2,285,535
5.000%, 8/01/18 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 21.2%
300 Albany Housing Authority, Albany, New York, Limited 10/05 at 102.00 A3 306,585
Obligation Refunding Bonds, Series 1995, 5.850%, 10/01/07
1,500 Albany Parking Authority, New York, Revenue Refunding No Opt. Call Baa1 854,580
Bonds, Series 1992A, 0.000%, 11/01/17
3,000 Battery Park City Authority, New York, Senior Revenue 11/13 at 100.00 AAA 3,347,400
Bonds, Series 2003A, 5.250%, 11/01/22 Canton Human Services
Initiative Inc., New York, Facility Revenue Bonds, Series
2001:
920 5.700%, 9/01/24 9/11 at 102.00 Baa2 994,971
1,155 5.750%, 9/01/32 9/11 at 102.00 Baa2 1,246,915
Metropolitan Transportation Authority, New York, State
Service Contract Refunding Bonds, Series 2002A:
1,825 5.750%, 7/01/18 No Opt. Call AA- 2,142,021
4,400 5.125%, 1/01/29 7/12 at 100.00 AA- 4,736,776
Metropolitan Transportation Authority, New York, Dedicated
Tax Fund Bonds, Series 2002A:
4,400 5.250%, 11/15/25 - FSA Insured 11/12 at 100.00 AAA 4,813,116
2,000 5.000%, 11/15/30 11/12 at 100.00 AA- 2,095,300
1,680 Monroe Newpower Corporation, New York, Power Facilities 1/13 at 102.00 BBB 1,778,011
Revenue Bonds, Series 2003, 5.500%, 1/01/34
1,915 New York City Transitional Finance Authority, New York, 5/10 at 101.00 Aa3 2,650,858
Future Tax Secured Bonds, Residual Interest Certificates,
Series 319, 12.190%, 11/01/17 (IF)
2,000 New York City Transitional Finance Authority, New York, 2/13 at 100.00 AAA 2,163,860
Future Tax Secured Refunding Bonds, Fiscal Series 2003D,
5.000%, 2/01/22 - MBIA Insured
2,665 New York City Transitional Finance Authority, New York, 2/13 at 100.00 AAA 2,838,891
Future Tax Secured Bonds, Fiscal Series 2003E,
5.000%, 2/01/23
10 Dormitory Authority of the State of New York, Improvement 2/07 at 102.00 AAA 10,599
Revenue Bonds, Mental Health Services Facilities, Series
1997A, 5.750%, 8/15/22 - MBIA Insured
1,495 Dormitory Authority of the State of New York, Revenue 2/07 at 102.00 AA- 1,569,092
Bonds, Mental Health Services Facilities Improvements,
Series 1997B, 5.625%, 2/15/21
1,180 New York State Environmental Facilities Corporation, 3/14 at 100.00 AA- 1,266,836
Infrastructure Revenue Bonds, Series 2003A, 5.000%, 3/15/21
1,000 New York State Housing Finance Agency, Revenue Refunding 5/06 at 101.50 A+ 1,032,700
Bonds, New York City Health Facilities, Series 1996A,
6.000%, 11/01/08
3,125 New York State Local Government Assistance Corporation, No Opt. Call AAA 3,526,906
Revenue Bonds, Series 1993E, 5.250%, 4/01/16 - FSA Insured
10 New York State Housing Finance Agency, Service Contract 9/05 at 102.00 AA- 10,226
Obligation Revenue Bonds, Series 1995A, 6.375%, 9/15/15
5,500 New York State Thruway Authority, Highway and Bridge Trust No Opt. Call AAA 6,488,405
Fund Bonds, Second Generation, Series 2005B,
5.500%, 4/01/20 (WI, settling 9/08/05) - AMBAC Insured
3,335 New York State Thruway Authority, Highway and Bridge Trust 4/10 at 100.00 Aaa 4,541,103
Fund Bonds, Residual Interest Certificates, Series 368,
11.800%, 4/01/16 - FGIC Insured (IF)
2,315 New York State Thruway Authority, State Personal Income Tax 3/15 at 100.00 AAA 2,524,855
Revenue Bonds, Series 2005A, 5.000%, 3/15/20 - FSA Insured
1,000 New York State Urban Development Corporation, Special 1/06 at 102.00 AA- 1,030,200
Project Revenue Refunding Bonds, Onondaga County
Convention Center, Series 1995, 6.250%, 1/01/20
3,500 New York State Urban Development Corporation, Service No Opt. Call AA- 3,831,450
Contract Revenue Bonds, Correctional and Youth Facilities,
Series 2002A, 5.500%, 1/01/17 (Mandatory put 1/01/11)
- ----
32
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited (continued)
$ 1,000 Puerto Rico Highway and Transportation Authority, Highway 7/10 at 101.00 AAA $ 1,120,690
Revenue Bonds, Series 2000B, 5.750%, 7/01/19 - MBIA Insured
New York City Sales Tax Asset Receivable Corporation, New
York, Dedicated Revenue Bonds, Local Government Assistance
Corporation, Series 2004A:
3,900 5.000%, 10/15/25 - MBIA Insured 10/14 at 100.00 AAA 4,221,828
1,930 5.000%, 10/15/26 - MBIA Insured 10/14 at 100.00 AAA 2,081,582
New York State Tobacco Settlement Financing Corporation,
Tobacco Settlement Asset-Backed and State Contingency
Contract-Backed Bonds, Series 2003A-1:
2,755 5.250%, 6/01/21 - AMBAC Insured 6/13 at 100.00 AAA 3,021,794
4,945 5.250%, 6/01/22 - AMBAC Insured 6/13 at 100.00 AAA 5,406,517
3,000 New York State Tobacco Settlement Financing Corporation, 6/13 at 100.00 AA- 3,323,490
Tobacco Settlement Asset-Backed and State Contingency
Contract-Backed Bonds, Series 2003B-1C, 5.500%, 6/01/21
1,205 Triborough Bridge and Tunnel Authority, New York, No Opt. Call AA- 1,320,535
Convention Center Bonds, Series 1990E, 7.250%, 1/01/10
1,250 Virgin Islands Public Finance Authority, Gross Receipts 10/10 at 101.00 BBB 1,416,813
Taxes Loan Note, Series 1999A, 6.500%, 10/01/24
- ------------------------------------------------------------------------------------------------------------------
Transportation - 6.9%
Metropolitan Transportation Authority, New York,
Transportation Revenue Refunding Bonds, Series 2002A:
1,500 5.500%, 11/15/19 - AMBAC Insured 11/12 at 100.00 AAA 1,693,080
1,000 5.125%, 11/15/22 - FGIC Insured 11/12 at 100.00 AAA 1,089,350
1,500 Metropolitan Transportation Authority, New York, No Opt. Call AAA 1,673,880
Transportation Revenue Bonds, Series 2003A,
5.000%, 11/15/15 - FGIC Insured
2,225 Metropolitan Transportation Authority, New York, 11/15 at 100.00 AAA 2,379,949
Transportation Revenue Bonds, Series 2005B,
5.000%, 11/15/35 - MBIA Insured
500 New York City Industrial Development Agency, New York, 12/08 at 102.00 Ba2 451,850
Special Facilities Revenue Bonds, British Airways PLC,
Series 1998, 5.250%, 12/01/32 (Alternative Minimum Tax)
750 New York State Thruway Authority, General Revenue Bonds, 1/15 at 100.00 AAA 800,970
Series 2005F, 5.000%, 1/01/30 - AMBAC Insured
1,000 Niagara Frontier Airport Authority, New York, Airport 4/09 at 101.00 AAA 1,073,650
Revenue Bonds, Buffalo Niagara International Airport,
Series 1999A, 5.625%, 4/01/29 (Alternative Minimum Tax) -
MBIA Insured
1,500 Port Authority of New York and New Jersey, Special Project 12/07 at 100.00 AAA 1,579,080
Bonds, JFK International Air Terminal LLC, Sixth Series
1997, 5.750%, 12/01/25 (Alternative Minimum Tax) - MBIA
Insured
2,500 Port Authority of New York and New Jersey, Consolidated 6/15 at 101.00 AAA 2,690,775
Revenue Bonds, One Hundred Fortieth Series 2005,
5.000%, 12/01/28 - XLCA Insured
250 Puerto Rico Ports Authority, Special Facilities Revenue 6/06 at 102.00 CCC 196,760
Bonds, American Airlines Inc., Series 1996A,
6.250%, 6/01/26 (Alternative Minimum Tax)
1,500 Triborough Bridge and Tunnel Authority, New York, General 1/12 at 100.00 Aa2 1,593,030
Purpose Revenue Bonds, Series 2001A, 5.000%, 1/01/19
5,000 Triborough Bridge and Tunnel Authority, New York, General 11/12 at 100.00 AA- 6,623,000
Purpose Revenue Bonds, ROLS II-R, Series 194,
10.484%, 11/15/19 (IF)
Triborough Bridge and Tunnel Authority, New York,
Subordinate Lien General Purpose Revenue Refunding Bonds,
Series 2002E:
780 5.500%, 11/15/20 - MBIA Insured No Opt. Call AAA 925,556
2,300 5.250%, 11/15/22 - MBIA Insured 11/12 at 100.00 AAA 2,528,137
- ------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** - 15.3%
1,000 Cattaraugus County Industrial Development Agency, New York, 7/10 at 102.00 Baa1*** 1,163,060
Revenue Bonds, Jamestown Community College, Series 2000A,
6.500%, 7/01/30 (Pre-refunded to 7/01/10)
1,045 Erie County Tobacco Asset Securitization Corporation, New 7/10 at 101.00 AAA 1,186,106
York, Senior Tobacco Settlement Asset- Backed Bonds,
Series 2000, 6.000%, 7/15/20 (Pre-refunded to 7/15/10)
- ----
33
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** (continued)
$ 2,000 Metropolitan Transportation Authority, New York, Commuter 7/07 at 102.00 AAA $ 2,105,880
Facilities Revenue Bonds, Series 1997B, 5.000%, 7/01/20 -
AMBAC Insured
Metropolitan Transportation Authority, New York, Dedicated
Tax Fund Bonds, Series 1999A:
1,000 5.250%, 4/01/23 (Pre-refunded to 10/01/14) - FSA Insured 10/14 at 100.00 AAA 1,135,550
2,000 5.000%, 4/01/29 (Pre-refunded to 10/01/14) - FSA Insured 10/14 at 100.00 AAA 2,232,480
1,000 Nassau County Interim Finance Authority, New York, Sales 11/10 at 100.00 AAA 1,121,580
Tax Secured Revenue Bonds, Series 2000A, 5.750%, 11/15/16
(Pre-refunded to 11/15/10) - MBIA Insured
2,265 New York City, New York, General Obligation Bonds, Fiscal 2/06 at 101.50 A+*** 2,327,174
Series 1996G, 5.750%, 2/01/20 (Pre-refunded to 2/01/06)
855 New York City, New York, General Obligation Bonds, Fiscal 11/06 at 101.50 A+*** 897,605
Series 1997D, 5.875%, 11/01/11 (Pre-refunded to 11/01/06)
220 Dormitory Authority of the State of New York, Suffolk 10/05 at 114.14 Baa1*** 312,404
County, Lease Revenue Bonds, Judicial Facilities, Series
1991A, 9.500%, 4/15/14
Dormitory Authority of the State of New York, Improvement
Revenue Bonds, Mental Health Services Facilities, Series
1997A:
965 5.750%, 8/15/22 (Pre-refunded to 2/15/07) - MBIA Insured 2/07 at 102.00 AAA 1,023,489
25 5.750%, 8/15/22 (Pre-refunded to 2/15/07) - MBIA Insured 2/07 at 102.00 AAA 26,530
1,005 Dormitory Authority of the State of New York, Revenue 2/07 at 102.00 AA-*** 1,064,134
Bonds, Mental Health Services Facilities Improvements,
Series 1997B, 5.625%, 2/15/21 (Pre-refunded to 2/15/07)
Dormitory Authority of the State of New York, Revenue
Bonds, State University Educational Facilities, 1999
Resolution, Series A-D, RITES, Series PA-781R:
835 10.923%, 5/15/14 (IF) (Pre-refunded to 5/15/10) - FSA 5/10 at 101.00 AAA 1,145,119
Insured
500 10.923%, 5/15/16 (IF) (Pre-refunded to 5/15/10) - FSA 5/10 at 101.00 AAA 685,700
Insured
670 10.923%, 5/15/17 (IF) (Pre-refunded to 5/15/10) - FSA 5/10 at 101.00 AAA 918,838
Insured
200 New York State Housing Finance Agency, Construction Fund No Opt. Call AAA 234,488
Bonds, State University, Series 1986A, 8.000%, 5/01/11
1,785 New York State Housing Finance Agency, Service Contract 9/07 at 100.00 AAA 1,906,434
Obligation Revenue Bonds, Series 1995A, 6.375%, 9/15/15
(Pre-refunded to 9/15/07)
1,200 Dormitory Authority of the State of New York, Revenue 3/13 at 100.00 AA*** 1,358,724
Bonds, State Personal Income Tax, Series 2003A,
5.375%, 3/15/22 (Pre-refunded to 3/15/13)
1,535 New York State Thruway Authority, Highway and Bridge Trust 4/12 at 100.00 AAA 1,712,216
Fund Bonds, Series 2002A, 5.250%, 4/01/18 (Pre-refunded to
4/01/12) - FSA Insured
1,500 New York State Thruway Authority, Highway and Bridge Trust 4/13 at 100.00 AAA 1,686,750
Fund Bonds, Second General, Series 2003A, 5.250%, 4/01/23
(Pre-refunded to 4/01/13) - MBIA Insured
2,170 New York State Thruway Authority, Highway and Bridge Trust 4/14 at 100.00 AAA 2,350,045
Fund Bonds, Second General, Series 2004, 5.000%, 4/01/20
(Pre-refunded to 4/01/14) - MBIA Insured
5,745 New York State Thruway Authority, Local Highway and Bridge No Opt. Call AAA 7,835,491
Service Contract Bonds, DRIVERS, Series 145,
11.671%, 10/01/08 (IF) - AMBAC Insured
3,000 New York State Thruway Authority, Local Highway and Bridge 4/11 at 100.00 AA-*** 3,308,040
Service Contract Bonds, Series 2001, 5.250%, 4/01/17
(Pre-refunded to 4/01/11)
New York State Urban Development Corporation, State
Personal Income Tax Revenue Bonds, State Facilities and
Equipment, Series 2002A:
1,500 5.375%, 3/15/18 (Pre-refunded to 3/15/12) 3/12 at 100.00 AA*** 1,683,285
3,500 5.125%, 3/15/27 (Pre-refunded to 3/15/12) 3/12 at 100.00 AA*** 3,876,565
2,000 New York State Urban Development Corporation, State 3/13 at 100.00 AA*** 2,215,000
Personal Income Tax Revenue Bonds, State Facilities and
Equipment, Series 2002C-1, 5.000%, 3/15/33 (Pre-refunded
to 3/15/13)
2,000 Niagara Falls City School District, Niagara County, New 6/08 at 101.00 AAA 2,150,000
York, Certificates of Participation, High School Facility,
Series 1998, 5.375%, 6/15/28 (Pre-refunded to 6/15/08) -
MBIA Insured
1,420 Niagara Falls City School District, Niagara County, New 6/09 at 101.00 BBB-*** 1,613,475
York, Certificates of Participation, High School Facility,
Series 2000, 6.625%, 6/15/28 (Pre-refunded to 6/15/09)
- ----
34
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** (continued)
$ 2,500 Westchester Tobacco Asset Securitization Corporation, New 7/10 at 101.00 BBB*** $ 2,930,250
York, Tobacco Settlement Asset-Backed Bonds, Series 1999,
6.750%, 7/15/29 (Pre-refunded to 7/15/10)
225 Yonkers, New York, General Obligation Bonds, School Issue, 6/09 at 101.00 AAA 242,975
Series 1999C, 5.000%, 6/01/19 (Pre-refunded to 6/01/09) -
FGIC Insured
Yonkers Industrial Development Agency, New York, Revenue
Bonds, Community Development Properties - Yonkers Inc.
Project, Series 2001A:
1,000 6.250%, 2/01/16 (Pre-refunded to 2/01/11) 2/11 at 100.00 BBB-*** 1,114,380
1,960 6.625%, 2/01/26 (Pre-refunded to 2/01/11) 2/11 at 100.00 BBB-*** 2,297,002
- ------------------------------------------------------------------------------------------------------------------
Utilities - 9.3%
Long Island Power Authority, New York, Electric System
General Revenue Bonds, Series 1998A:
3,000 5.125%, 12/01/22 - FSA Insured 6/08 at 101.00 AAA 3,171,690
1,000 5.250%, 12/01/26 - AMBAC Insured 6/08 at 101.00 AAA 1,062,120
1,000 5.250%, 12/01/26 6/08 at 101.00 A- 1,053,320
2,350 Long Island Power Authority, New York, Electric System No Opt. Call AAA 1,293,346
General Revenue Bonds, Series 2000A, 0.000%, 6/01/20 - FSA
Insured
2,000 Long Island Power Authority, New York, Electric System 9/11 at 100.00 A- 2,168,140
General Revenue Bonds, Series 2001A, 5.375%, 9/01/25
1,000 Long Island Power Authority, New York, Electric System 5/11 at 100.00 A- 1,060,820
General Revenue Bonds, Series 2001L, 5.375%, 5/01/33
5,000 Long Island Power Authority, New York, Electric System 9/13 at 100.00 AAA 5,486,500
General Revenue Bonds, Series 2003C, 5.000%, 9/01/16 -
CIFG Insured
2,950 New York City Industrial Development Agency, New York, 10/08 at 102.00 BBB- 2,955,635
Revenue Bonds, Brooklyn Navy Yard Cogeneration Partners
LP, Series 1997, 5.750%, 10/01/36 (Alternative Minimum Tax)
3,500 New York State Energy Research and Development Authority, 3/08 at 101.50 AAA 3,559,850
Pollution Control Revenue Bonds, New York State Electric
and Gas Corporation, Series 2005A, 4.100%, 3/15/15 - MBIA
Insured
3,000 New York State Power Authority, General Revenue Bonds, 11/10 at 100.00 Aa2 3,222,570
Series 2000A, 5.250%, 11/15/40
1,500 Niagara County Industrial Development Agency, New York, 11/11 at 101.00 Baa3 1,601,535
Solid Waste Disposal Facility Revenue Bonds, American
Ref-Fuel Company of Niagara LP, Series 2001A,
5.450%, 11/15/26 (Alternative Minimum Tax) (Mandatory put
11/15/12)
200 Niagara County Industrial Development Agency, New York, 11/11 at 101.00 Baa3 212,930
Solid Waste Disposal Facility Revenue Refunding Bonds,
American Ref-Fuel Company of Niagara LP, Series 2001D,
5.550%, 11/15/24 (Mandatory put 11/15/15)
1,250 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 AAA 1,344,938
Series 2005RR, 5.000%, 7/01/35 - FGIC Insured
Suffolk County Industrial Development Agency, New York,
Revenue Bonds, Nissequogue Cogeneration Partners Facility,
Series 1998:
1,800 5.300%, 1/01/13 (Alternative Minimum Tax) 1/09 at 101.00 N/R 1,822,356
4,000 5.500%, 1/01/23 (Alternative Minimum Tax) 1/09 at 101.00 N/R 4,041,800
- ------------------------------------------------------------------------------------------------------------------
Water and Sewer - 5.4%
Monroe County Water Authority, New York, Water System
Revenue Bonds, Series 2001:
850 5.150%, 8/01/22 8/11 at 101.00 AA 919,369
2,250 5.250%, 8/01/36 8/11 at 101.00 AA 2,439,225
275 New York City Municipal Water Finance Authority, New York, 6/09 at 101.00 AAA 297,875
Water and Sewerage System Revenue Bonds, Fiscal Series
2000A, 5.500%, 6/15/32 - FGIC Insured
3,015 New York City Municipal Water Finance Authority, New York, 6/10 at 101.00 AA+ 3,295,727
Water and Sewerage System Revenue Bonds, Fiscal Series
2001A, 5.500%, 6/15/33
2,225 New York City Municipal Water Finance Authority, New York, 6/12 at 100.00 AA+ 2,465,812
Water and Sewerage System Revenue Bonds, Fiscal Series
2003A, 5.375%, 6/15/19
4,000 New York State Environmental Facilities Corporation, State 11/12 at 100.00 AAA 4,432,800
Clean Water and Drinking Water Revolving Funds Revenue
Bonds, Pooled Loan Issue, Series 2002F, 5.250%, 11/15/18
- ----
35
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------
Water and Sewer (continued)
$ 1,000 Niagara Falls Public Water Authority, New York, Water and 7/06 at 100.00 AAA $ 1,023,746
Sewer Revenue Bonds, Series 2003A, 5.500%, 7/15/24 - MBIA
Insured
2,950 Niagara Falls Public Water Authority, New York, Water and 7/15 at 100.00 AAA 3,164,873
Sewer Revenue Bonds, Series 2005, 5.000%, 7/15/27 - XLCA
Insured
1,455 Western Nassau County Water Authority, New York, Water 5/15 at 100.00 Aaa 1,598,167
System Revenue Bonds, Series 2005, 5.000%, 5/01/18 - AMBAC
Insured
- -----------------------------------------------------------------------------------------------------------------
$332,340 Total Long-Term Investments (cost $337,889,931) - 98.8% 361,802,742
- -----------------------------------------------------------------------------------------------------------------
- ------------
Short-Term Investments - 1.3%
4,700 Puerto Rico Government Development Bank, Adjustable VMIG-1 4,700,000
Refunding Bonds, Variable Rate Demand Obligations, Series
1985, 2.220%, 12/01/15 - MBIA Insured+
- -----------------------------------------------------------------------------------------------------------------
$ 4,700 Total Short-Term Investments (cost $4,700,000) 4,700,000
- -----------------------------------------------------------------------------------------------------------------
- ------------
Total Investments (cost $342,589,931) - 100.1% 366,502,742
---------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (0.1)% (506,072)
---------------------------------------------------------------------------------------------------
Net Assets - 100% $ 365,996,670
---------------------------------------------------------------------------------------------------
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. Government or U.S. Government agency securities which
ensures the timely payment of principal and interest. Such
securities are normally considered to be equivalent to AAA rated
securities.
N/RInvestment is not rated.
(WI)Security purchased on a when-issued basis.
+ 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 in effect at the end of the
reporting period. This rate changes periodically based on market
conditions or a specified market index.
(IF)Inverse floating rate security.
- ----
36
See accompanying notes to financial statements.
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK INSURED MUNICIPAL BOND FUND
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 7.9%
$ 1,000 Allegany County Industrial Development Agency, New York, 8/08 at 102.00 Aaa $ 1,057,120
Revenue Bonds, Alfred University, Series 1998, 5.000%,
8/01/28 - MBIA Insured
3,095 Amherst Industrial Development Agency, New York, Revenue 8/10 at 102.00 AAA 3,475,592
Bonds, UBF Faculty/Student Housing Corporation, University
of Buffalo Project, Series 2000A, 5.750%, 8/01/30 - AMBAC
Insured
1,110 Amherst Industrial Development Agency, New York, Revenue 8/12 at 101.00 AAA 1,204,095
Bonds, UBF Faculty/Student Housing Corporation, University
of Buffalo Creekside Project, Series 2002A,
5.000%, 8/01/22 - AMBAC Insured
1,750 New York City Trust for Cultural Resources, New York, 4/07 at 101.00 AAA 1,833,248
Revenue Bonds, American Museum of Natural History, Series
1997A, 5.650%, 4/01/27 - MBIA Insured
1,145 New York City Industrial Development Agency, New York, 6/07 at 102.00 Aaa 1,220,181
Civic Facility Revenue Bonds, Anti- Defamation League
Foundation, Series 1997A, 5.600%, 6/01/17 - MBIA Insured
1,000 Dormitory Authority of the State of New York, Lease Revenue No Opt. Call AAA 1,115,680
Bonds, State University Dormitory Facilities, Series
2003B, 5.250%, 7/01/32 (Mandatory put 7/01/13) - XLCA
Insured
4,000 Dormitory Authority of the State of New York, Consolidated No Opt. Call AAA 4,622,120
Revenue Bonds, City University System, Series 1993A,
5.750%, 7/01/13 - MBIA Insured
3,000 Dormitory Authority of the State of New York, Insured 7/08 at 101.00 Aaa 3,160,740
Revenue Bonds, Ithaca College, Series 1998,
5.000%, 7/01/21 - AMBAC Insured
1,345 Dormitory Authority of the State of New York, Revenue No Opt. Call AAA 1,576,206
Bonds, City University of New York, Series 2005A,
5.500%, 7/01/18 - FGIC Insured
5,280 Dormitory Authority of the State of New York, Revenue 7/10 at 101.00 AAA 4,447,766
Bonds, University of Rochester, Series 2000A,
0.000%, 7/01/25 - MBIA Insured
1,000 Dormitory Authority of the State of New York, Revenue 7/11 at 101.00 AAA 1,089,450
Bonds, Canisius College, Series 2000, 5.250%, 7/01/30 -
MBIA Insured
1,000 Dormitory Authority of the State of New York, General No Opt. Call AAA 1,227,140
Revenue Bonds, New York University, Series 2001-1,
5.500%, 7/01/40 - AMBAC Insured
1,000 Dormitory Authority of the State of New York, Insured 7/11 at 100.00 AAA 1,045,430
Revenue Bonds, Yeshiva University, Series 2001,
5.000%, 7/01/30 - AMBAC Insured
1,490 Dormitory Authority of the State of New York, Insured 7/12 at 100.00 AAA 1,605,013
Revenue Bonds, Fordham University, Series 2002,
5.000%, 7/01/21 - FGIC Insured
- ------------------------------------------------------------------------------------------------------------------
Healthcare - 15.7%
New York City Health and Hospitals Corporation, New York,
Health System Revenue Bonds, Series 2003A:
2,000 5.250%, 2/15/21 - AMBAC Insured 2/13 at 100.00 AAA 2,203,080
1,750 5.250%, 2/15/22 - AMBAC Insured 2/13 at 100.00 AAA 1,927,695
6,510 Dormitory Authority of New York, Revenue Bonds, St. 2/06 at 102.00 AAA 6,817,923
Vincent's Hospital and Medical Center, Series 1995,
5.800%, 8/01/25 - AMBAC Insured
3,305 Dormitory Authority of the State of New York, FHA-Insured 2/06 at 104.00 AAA 3,443,314
Mortgage Hospital Revenue Bonds, Millard Fillmore
Hospitals, Series 1997, 5.375%, 2/01/32 - AMBAC Insured
2,500 Dormitory Authority of the State of New York, Secured 2/08 at 101.50 AAA 2,625,525
Hospital Insured Revenue Bonds, Southside Hospital, Series
1998, 5.000%, 2/15/25 - MBIA Insured
4,000 Dormitory Authority of the State of New York, FHA-Insured 2/08 at 102.00 AAA 4,272,800
Mortgage Revenue Refunding Bonds, United Health Services,
Series 1997, 5.375%, 8/01/27 - AMBAC Insured
6,115 Dormitory Authority of the State of New York, FHA-Insured 2/08 at 101.00 AAA 6,237,973
Mortgage Hospital Revenue Bonds, New York and Presbyterian
Hospital, Series 1998, 4.750%, 8/01/27 - AMBAC Insured
3,000 Dormitory Authority of the State of New York, Revenue 11/08 at 101.00 AAA 3,175,350
Bonds, North Shore Health System Obligated Group, Series
1998, 5.000%, 11/01/23 - MBIA Insured
1,910 Dormitory Authority of the State of New York, FHA-Insured 2/15 at 100.00 AAA 2,036,194
Mortgage Revenue Bonds, Montefiore Hospital, Series 2004,
5.000%, 8/01/29 - FGIC Insured
- ----
37
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK INSURED MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------
Healthcare (continued)
$ 2,460 Dormitory Authority of the State of New York, Revenue 8/14 at 100.00 AAA $ 2,734,511
Bonds, New York and Presbyterian Hospital, Series 2004A,
5.250%, 8/15/15 - FSA Insured
2,000 Dormitory Authority of the State of New York, Revenue 7/13 at 100.00 AAA 2,162,320
Bonds, Memorial Sloan-Kettering Cancer Center, Series
2003-1, 5.000%, 7/01/21 - MBIA Insured
2,000 Dormitory Authority of the State of New York, FHA-Insured 8/09 at 101.00 AAA 2,164,140
Mortgage Hospital Revenue Bonds, Montefiore Medical
Center, Series 1999, 5.500%, 8/01/38 - AMBAC Insured
3,125 Dormitory Authority of the State of New York, Revenue 7/09 at 101.00 AAA 3,406,344
Bonds, Catholic Health Services of Long Island Obligated
Group - St. Charles Hospital and Rehabilitation Center,
Series 1999A, 5.500%, 7/01/22 - MBIA Insured
2,260 Dormitory Authority of the State of New York, Hospital 7/09 at 101.00 AAA 2,446,427
Revenue Bonds, Catholic Health Services of Long Island
Obligated Group - St. Francis Hospital, Series 1999A,
5.500%, 7/01/29 - MBIA Insured
1,000 Dormitory Authority of the State of New York, Insured 7/09 at 101.00 AAA 1,093,470
Revenue Bonds, New Island Hospital, Series 1999A,
5.750%, 7/01/19 - AMBAC Insured
5,000 Dormitory Authority of the State of New York, Revenue 7/11 at 101.00 AAA 5,428,600
Bonds, Winthrop South Nassau University Health System
Obligated Group, Series 2001A, 5.250%, 7/01/31 - AMBAC
Insured
2,890 New York State Medical Care Facilities Finance Agency, 2/06 at 101.00 AAA 2,931,934
FHA-Insured Mortgage Revenue Bonds, Montefiore Medical
Center, Series 1995A, 5.750%, 2/15/15 - AMBAC Insured
1,910 Dormitory Authority of the State of New York, FHA-Insured 8/12 at 100.00 AAA 2,035,678
Mortgage Hospital Revenue Bonds, St. Barnabas Hospital,
Series 2002A, 5.125%, 2/01/22 - AMBAC Insured
- -----------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 4.7%
4,030 New York City Housing Development Corporation, New York, 7/15 at 100.00 AAA 4,349,660
Capital Fund Program Revenue Bonds, Series 2005A,
5.000%, 7/01/25 - FGIC Insured
2,511 New York City Housing Development Corporation, New York, 9/05 at 105.00 AAA 2,641,814
Multifamily Housing Revenue Bonds, Pass- Through
Certificates, Series 1991C, 6.500%, 2/20/19 - AMBAC Insured
New York State Housing Finance Agency, Mortgage Revenue
Refunding Bonds, Housing Project, Series 1996A:
5,005 6.100%, 11/01/15 - FSA Insured 5/06 at 102.00 AAA 5,223,568
4,525 6.125%, 11/01/20 - FSA Insured 5/06 at 102.00 AAA 4,709,846
- -----------------------------------------------------------------------------------------------------------------
Long-Term Care - 3.5%
4,250 East Rochester Housing Authority, New York, FHA-Insured 8/07 at 102.00 AAA 4,529,055
Mortgage Revenue Bonds, St. John's Meadows Project, Series
1997A, 5.700%, 8/01/27 - MBIA Insured
2,000 Dormitory Authority of the State of New York, Insured 7/15 at 100.00 AAA 2,131,840
Revenue Bonds, NYSARC Inc., Series 2005A, 5.000%, 7/01/34
- FSA Insured
2,000 Dormitory Authority of the State of New York, FHA-Insured 8/10 at 101.00 AAA 2,192,240
Nursing Home Mortgage Revenue Bonds, Augustana Lutheran
Home for the Aged Inc., Series 2000A, 5.500%, 8/01/38 -
MBIA Insured
3,665 Dormitory Authority of the State of New York, FHA-Insured 8/11 at 101.00 AAA 3,954,095
Nursing Home Mortgage Revenue Bonds, Norwegian Christian
Home and Health Center, Series 2001, 5.200%, 8/01/36 -
MBIA Insured
- -----------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 14.6%
1,150 Binghamton, New York, General Obligation Bonds, Series 8/15 at 100.00 Aaa 1,280,123
2005, 5.000%, 8/15/16 - FSA Insured
Erie County, New York, General Obligation Bonds, Series
2003A:
1,000 5.250%, 3/15/15 - FGIC Insured 3/13 at 100.00 Aaa 1,114,720
1,000 5.250%, 3/15/16 - FGIC Insured 3/13 at 100.00 Aaa 1,110,870
1,000 5.250%, 3/15/17 - FGIC Insured 3/13 at 100.00 Aaa 1,110,170
1,000 5.250%, 3/15/18 - FGIC Insured 3/13 at 100.00 Aaa 1,108,080
Saratoga County, Half Moon, New York, Public Improvement
Bonds, Series 1991:
385 6.500%, 6/01/09 - AMBAC Insured No Opt. Call AAA 431,200
395 6.500%, 6/01/10 - AMBAC Insured No Opt. Call AAA 452,931
395 6.500%, 6/01/11 - AMBAC Insured No Opt. Call AAA 461,135
2,295 Harborsfield Central School District, Suffolk County, New 6/11 at 100.00 Aaa 2,489,570
York, General Obligation Bonds, Series 2001,
5.000%, 6/01/19 - FSA Insured
- ----
38
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/General (continued)
$ 475 Middle Country Central School District, Suffolk County, New No Opt. Call AAA $ 531,012
York, General Obligation Bonds, Series 1991A,
6.900%, 12/15/08 - AMBAC Insured
2,250 Monroe County, New York, General Obligation Public 3/12 at 100.00 AAA 2,444,018
Improvement Bonds, Series 2002, 5.000%, 3/01/16 - FGIC
Insured
2,000 Monroe Woodbury Central School District, Orange County, New 5/14 at 100.00 AAA 2,031,200
York, General Obligation Bonds, Series 2004A,
4.250%, 5/15/22 - FGIC Insured
Mount Sinai Union Free School District, Suffolk County, New
York, General Obligation Refunding Bonds, Series 1992:
500 6.200%, 2/15/15 - AMBAC Insured No Opt. Call AAA 604,290
1,035 6.200%, 2/15/16 - AMBAC Insured No Opt. Call AAA 1,261,365
60 New York City, New York, General Obligation Bonds, Fiscal 2/06 at 100.00 AAA 60,168
Series 1992C, 6.250%, 8/01/10 - FSA Insured
New York City, New York, General Obligation Bonds, Fiscal
Series 2001D:
3,000 5.250%, 8/01/15 - MBIA Insured 8/10 at 101.00 AAA 3,279,660
2,000 5.000%, 8/01/16 - FGIC Insured 8/10 at 101.00 AAA 2,161,120
2,460 New York City, New York, General Obligation Bonds, Fiscal 11/11 at 101.00 AAA 2,719,555
Series 2002A, 5.250%, 11/01/15 - MBIA Insured
4,250 New York City, New York, General Obligation Bonds, Fiscal 8/14 at 100.00 AAA 4,644,315
Series 2004I, 5.000%, 8/01/17 - MBIA Insured
3,000 New York City, New York, General Obligation Bonds, Fiscal No Opt. Call AAA 3,337,470
Series 2004B, 5.250%, 8/01/12 - FSA Insured
New York City, New York, General Obligation Bonds, Fiscal
Series 2004E:
1,100 5.000%, 11/01/13 - FSA Insured No Opt. Call AAA 1,214,213
2,030 5.000%, 11/01/14 - FSA Insured No Opt. Call AAA 2,250,458
New York City, New York, General Obligation Bonds, Fiscal
Series 2005O:
2,500 5.000%, 6/01/17 - FSA Insured 6/15 at 100.00 AAA 2,749,875
2,500 5.000%, 6/01/18 - FSA Insured 6/15 at 100.00 AAA 2,739,175
1,000 New York City, New York, General Obligation Bonds, Fiscal 8/15 at 100.00 AAA 1,097,050
Series 2005P, 5.000%, 8/01/18 - MBIA Insured
1,505 Nassau County, North Hempstead, New York, General No Opt. Call AAA 1,823,022
Obligation Refunding Bonds, Series 1992B, 6.400%, 4/01/14
- FGIC Insured
Rensselaer County, New York, General Obligation Bonds,
Series 1991:
960 6.700%, 2/15/13 - AMBAC Insured No Opt. Call AAA 1,164,106
960 6.700%, 2/15/14 - AMBAC Insured No Opt. Call AAA 1,181,568
960 6.700%, 2/15/15 - AMBAC Insured No Opt. Call AAA 1,198,445
Rondout Valley Central School District, Ulster County, New
York, General Obligation Bonds, Series 1991:
550 6.850%, 6/15/09 - FGIC Insured No Opt. Call AAA 622,132
550 6.850%, 6/15/10 - FGIC Insured No Opt. Call AAA 637,489
1,500 West Islip Union Free School District, Suffolk County, New 10/15 at 100.00 Aaa 1,664,820
York, General Obligation Bonds, Series 2005, 5.000%,
10/01/16 - FSA Insured
1,985 Yonkers, New York, General Obligation Bonds, Series 2005B, 8/15 at 100.00 AAA 2,184,532
5.000%, 8/01/17 - MBIA Insured
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 22.9%
1,215 Buffalo Fiscal Stability Authority, New York, Sales Tax 9/15 at 100.00 AAA 1,329,538
Revenue State Aid Secured Bonds, Series 2005A,
5.000%, 9/01/19 - MBIA Insured
1,000 Erie County Industrial Development Agency, New York, School 5/12 at 100.00 AAA 1,134,930
Facility Revenue Bonds, Buffalo City School District,
Series 2003, 5.750%, 5/01/19 - FSA Insured
1,100 Erie County Industrial Development Agency, New York, School 5/14 at 100.00 AAA 1,270,247
Facility Revenue Bonds, Buffalo City School District,
Series 2004, 5.750%, 5/01/26 - FSA Insured
- ----
39
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK INSURED MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited (continued)
Metropolitan Transportation Authority, New York, State
Service Contract Refunding Bonds, Series 2002A:
$ 2,000 5.500%, 1/01/20 - MBIA Insured 7/12 at 100.00 AAA $ 2,233,400
1,350 5.000%, 7/01/25 - FGIC Insured 7/12 at 100.00 AAA 1,447,456
5,000 Metropolitan Transportation Authority, New York, Dedicated 11/12 at 100.00 AAA 5,469,450
Tax Fund Bonds, Series 2002A, 5.250%, 11/15/25 - FSA
Insured
1,700 New York City Transitional Finance Authority, New York, 11/11 at 101.00 AAA 1,792,463
Future Tax Secured Bonds, Fiscal Series 2002B,
5.000%, 5/01/30 - MBIA Insured
New York City Transitional Finance Authority, New York,
Future Tax Secured Bonds, Fiscal Series 2003C:
2,000 5.250%, 8/01/20 - AMBAC Insured 8/12 at 100.00 AAA 2,195,260
1,700 5.250%, 8/01/22 - AMBAC Insured 8/12 at 100.00 AAA 1,865,971
3,000 New York City Transitional Finance Authority, New York, 2/13 at 100.00 AAA 3,245,790
Future Tax Secured Refunding Bonds, Fiscal Series 2003D,
5.000%, 2/01/22 - MBIA Insured
1,330 New York City Transitional Finance Authority, New York, 2/13 at 100.00 AAA 1,469,863
Future Tax Secured Bonds, Fiscal Series 2003E,
5.250%, 2/01/22 - MBIA Insured
1,000 Dormitory Authority of the State of New York, Lease Revenue 8/14 at 100.00 AAA 1,069,580
Bonds, Wayne-Finger Lakes Board of Cooperative Education
Services, Series 2004, 5.000%, 8/15/23 - FSA Insured
Dormitory Authority of the State of New York, Revenue
Bonds, Mental Health Services Facilities Improvements,
Series 2005D:
745 5.000%, 2/15/14 - FGIC Insured No Opt. Call AAA 822,152
1,370 5.000%, 8/15/14 - FGIC Insured No Opt. Call AAA 1,516,796
220 Dormitory Authority of the State of New York, Improvement 8/10 at 100.00 AAA 236,441
Revenue Bonds, Mental Health Services Facilities, Series
2000D, 5.250%, 8/15/30 - FSA Insured
2,410 Dormitory Authority of the State of New York, Revenue 7/14 at 100.00 AAA 2,611,042
Bonds, Department of Health, Series
2004-2, 5.000%, 7/01/20 - FGIC Insured
245 Dormitory Authority of the State of New York, Improvement 8/09 at 101.00 AAA 263,123
Revenue Bonds, Mental Health Services Facilities, Series
1999D, 5.250%, 2/15/29 - FSA Insured
2,000 New York State Local Government Assistance Corporation, No Opt. Call AAA 2,257,220
Revenue Bonds, Series 1993E, 5.250%, 4/01/16 - FSA Insured
New York State Municipal Bond Bank Agency, Buffalo, Special
Program Revenue Bonds, Series 2001A:
1,185 5.250%, 5/15/25 - AMBAC Insured 5/11 at 100.00 AAA 1,283,059
1,250 5.250%, 5/15/26 - AMBAC Insured 5/11 at 100.00 AAA 1,353,438
Dormitory Authority of the State of New York, Revenue
Bonds, School Districts Financing Program, Series 2002D:
6,275 5.250%, 10/01/23 - MBIA Insured 10/12 at 100.00 AAA 6,888,319
875 5.000%, 10/01/30 - MBIA Insured 10/12 at 100.00 AAA 922,136
5,385 New York State Thruway Authority, Highway and Bridge Trust No Opt. Call AAA 6,352,738
Fund Bonds, Second Generation, Series 2005B,
5.500%, 4/01/20 (WI, settling 9/08/05) - AMBAC Insured
1,000 New York State Thruway Authority, Highway and Bridge Trust 4/14 at 100.00 AAA 1,075,400
Fund Bonds, Second General, Series 2004, 5.000%, 4/01/23 -
MBIA Insured
1,900 New York State Thruway Authority, Highway and Bridge Trust No Opt. Call AAA 2,111,052
Fund Bonds, Series 2004B, 5.250%, 4/01/12 - AMBAC Insured
1,200 New York State Thruway Authority, State Personal Income Tax 9/14 at 100.00 AAA 1,293,564
Revenue Bonds, Series 2004A, 5.000%, 3/15/24 - AMBAC
Insured
2,380 New York State Thruway Authority, State Personal Income Tax 3/15 at 100.00 AAA 2,595,747
Revenue Bonds, Series 2005A, 5.000%, 3/15/20 - FSA Insured
675 Niagara Falls City School District, Niagara County, New 6/15 at 100.00 AAA 718,774
York, Certificates of Participation, High School Facility,
Series 2005, 5.000%, 6/15/28 - FSA Insured
- ----
40
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited (continued)
Puerto Rico Highway and Transportation Authority, Highway
Revenue Refunding Bonds, Series 2002E:
$ 1,525 5.500%, 7/01/14 - FSA Insured No Opt. Call AAA $ 1,761,848
4,000 5.500%, 7/01/18 - FSA Insured No Opt. Call AAA 4,718,880
New York City Sales Tax Asset Receivable Corporation, New
York, Dedicated Revenue Bonds, Local Government Assistance
Corporation, Series 2004A:
1,500 5.000%, 10/15/24 - MBIA Insured 10/14 at 100.00 AAA 1,624,965
1,670 5.000%, 10/15/25 - MBIA Insured 10/14 at 100.00 AAA 1,807,808
1,225 5.000%, 10/15/26 - MBIA Insured 10/14 at 100.00 AAA 1,321,212
4,020 5.000%, 10/15/29 - AMBAC Insured 10/14 at 100.00 AAA 4,313,420
500 5.000%, 10/15/32 - AMBAC Insured 10/14 at 100.00 AAA 533,820
New York State Tobacco Settlement Financing Corporation,
Tobacco Settlement Asset-Backed and State Contingency
Contract-Backed Bonds, Series 2003A-1:
3,900 5.250%, 6/01/20 - AMBAC Insured 6/13 at 100.00 AAA 4,291,443
250 5.250%, 6/01/21 - AMBAC Insured 6/13 at 100.00 AAA 274,210
5,400 5.250%, 6/01/22 - AMBAC Insured 6/13 at 100.00 AAA 5,903,982
- ------------------------------------------------------------------------------------------------------------------
Transportation - 12.5%
2,500 Albany County Airport Authority, New York, Airport Revenue 12/07 at 102.00 AAA 2,658,750
Bonds, Series 1997, 5.500%, 12/15/19 (Alternative Minimum
Tax) - FSA Insured
4,250 Metropolitan Transportation Authority, New York, 11/12 at 100.00 AAA 4,797,060
Transportation Revenue Refunding Bonds, Series 2002A,
5.500%, 11/15/18 - AMBAC Insured
3,450 Metropolitan Transportation Authority, New York, 11/12 at 100.00 AAA 4,763,484
Transportation Revenue Bonds, DRIVERS Series 267, Series
2002E, 10.908%, 11/15/18 (IF) - MBIA Insured
1,500 Metropolitan Transportation Authority, New York, No Opt. Call AAA 1,673,880
Transportation Revenue Bonds, Series
2003A, 5.000%, 11/15/15 - FGIC Insured
3,850 Metropolitan Transportation Authority, New York, 11/15 at 100.00 AAA 4,118,114
Transportation Revenue Bonds, Series
2005B, 5.000%, 11/15/35 - MBIA Insured
2,175 New York State Thruway Authority, General Revenue Bonds, 1/15 at 100.00 AAA 2,322,813
Series 2005F, 5.000%, 1/01/30 - AMBAC Insured
Niagara Frontier Airport Authority, New York, Airport
Revenue Bonds, Buffalo Niagara International Airport,
Series 1998:
1,000 5.000%, 4/01/18 (Alternative Minimum Tax) - FGIC Insured 4/08 at 101.00 AAA 1,028,960
1,500 5.000%, 4/01/28 (Alternative Minimum Tax) - FGIC Insured 4/08 at 101.00 AAA 1,536,030
3,000 Niagara Frontier Airport Authority, New York, Airport 4/09 at 101.00 AAA 3,220,950
Revenue Bonds, Buffalo Niagara International Airport,
Series 1999A, 5.625%, 4/01/29 (Alternative Minimum Tax) -
MBIA Insured
2,000 Port Authority of New York and New Jersey, Consolidated 10/07 at 101.00 AAA 2,119,860
Revenue Bonds, One Hundred Twentieth Series 2000,
5.750%, 10/15/26 (Alternative Minimum Tax) - MBIA Insured
3,000 Port Authority of New York and New Jersey, Special Project 12/07 at 100.00 AAA 3,158,160
Bonds, JFK International Air Terminal LLC, Sixth Series
1997, 5.750%, 12/01/25 (Alternative Minimum Tax) - MBIA
Insured
Port Authority of New York and New Jersey, Consolidated
Revenue Bonds, One Hundred Fortieth Series 2005:
1,000 5.000%, 12/01/19 - FSA Insured 6/15 at 101.00 AAA 1,101,730
2,000 5.000%, 12/01/28 - XLCA Insured 6/15 at 101.00 AAA 2,152,620
2,500 Triborough Bridge and Tunnel Authority, New York, General 1/12 at 100.00 AAA 2,735,325
Purpose Revenue Bonds, Series 2002A, 5.250%, 1/01/19 -
FGIC Insured
Triborough Bridge and Tunnel Authority, New York,
Subordinate Lien General Purpose Revenue Refunding Bonds,
Series 2002E:
780 5.500%, 11/15/20 - MBIA Insured No Opt. Call AAA 925,556
2,300 5.250%, 11/15/22 - MBIA Insured 11/12 at 100.00 AAA 2,528,137
3,535 Triborough Bridge and Tunnel Authority, New York, General 11/13 at 100.00 AAA 4,730,961
Purpose Revenue Bonds, DRIVERS, Series 342, 10.160%,
11/15/19 (IF)
- ----
41
Portfolio of Investments (Unaudited)
NUVEEN NEW YORK INSURED MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** - 9.1%
Camden Central School District, Oneida County, New York,
General Obligation Bonds, Series 1991:
$ 600 7.100%, 6/15/09 - AMBAC Insured No Opt. Call AAA $ 687,216
275 7.100%, 6/15/10 - AMBAC Insured No Opt. Call AAA 323,144
1,000 Erie County Water Authority, New York, Water Revenue Bonds, 12/09 at 100.00 AAA 1,189,140
Series 1990B, 6.750%, 12/01/14 - AMBAC Insured
500 Greece Central School District, Monroe County, New York, No Opt. Call AAA 553,505
General Obligation Bonds, School District Bonds, Series
1992, 6.000%, 6/15/09 - FGIC Insured
3,040 Metropolitan Transportation Authority, New York, Commuter 7/07 at 102.00 AAA 3,182,576
Facilities Revenue Bonds, Series 1997B, 5.125%, 7/01/24 -
AMBAC Insured
3,500 Metropolitan Transportation Authority, New York, Commuter 7/13 at 100.00 AAA 3,885,945
Facilities Revenue Bonds, Series 1997E, 5.000%, 7/01/21
(Pre-refunded to 7/01/13) - AMBAC Insured
Metropolitan Transportation Authority, New York, Dedicated
Tax Fund Bonds, Series 1998A:
2,865 4.500%, 4/01/18 (Pre-refunded to 10/01/15) - FGIC Insured 10/15 at 100.00 AAA 3,092,682
1,800 4.750%, 4/01/28 (Pre-refunded to 10/01/15) - FGIC Insured 10/15 at 100.00 AAA 1,977,678
Metropolitan Transportation Authority, New York, Dedicated
Tax Fund Bonds, Series 1999A:
1,000 5.000%, 4/01/17 (Pre-refunded to 10/01/14) - FSA Insured 10/14 at 100.00 AAA 1,116,240
500 5.000%, 4/01/29 (Pre-refunded to 10/01/14) - FSA Insured 10/14 at 100.00 AAA 558,120
1,500 Dormitory Authority of the State of New York, Revenue 3/13 at 100.00 AAA 1,661,250
Bonds, State Personal Income Tax, Series 2003A,
5.000%, 3/15/32 (Pre-refunded to 3/15/13) - FGIC Insured
Dormitory Authority of the State of New York, Revenue
Bonds, State University Educational Facilities,
Series 2002A:
2,225 5.125%, 5/15/21 (Pre-refunded to 5/15/12) - FGIC Insured 5/12 at 101.00 AAA 2,486,660
1,000 5.000%, 5/15/27 (Pre-refunded to 5/15/12) - FGIC Insured 5/12 at 101.00 AAA 1,110,130
2,000 New York State Thruway Authority, Highway and Bridge Trust 4/12 at 100.00 AAA 2,201,520
Fund Bonds, Series 2002B, 5.000%, 4/01/20 (Pre-refunded to
4/01/12) - AMBAC Insured
New York State Thruway Authority, Highway and Bridge Trust
Fund Bonds, Series 2002A:
2,000 5.250%, 4/01/18 (Pre-refunded to 4/01/12) - FSA Insured 4/12 at 100.00 AAA 2,230,900
1,000 5.250%, 4/01/19 (Pre-refunded to 4/01/12) - FSA Insured 4/12 at 100.00 AAA 1,115,450
1,500 New York State Thruway Authority, Highway and Bridge Trust 4/13 at 100.00 AAA 1,686,750
Fund Bonds, Second General, Series 2003A, 5.250%, 4/01/23
(Pre-refunded to 4/01/13) - MBIA Insured
1,000 New York State Thruway Authority, Highway and Bridge Trust 4/14 at 100.00 AAA 1,082,970
Fund Bonds, Second General, Series 2004, 5.000%, 4/01/20
(Pre-refunded to 4/01/14) - MBIA Insured
New York State Urban Development Corporation, State
Personal Income Tax Revenue Bonds, State Facilities and
Equipment, Series 2002C-1:
1,000 5.500%, 3/15/20 (Pre-refunded to 3/15/13) - FGIC Insured 3/13 at 100.00 AAA 1,140,530
1,500 5.500%, 3/15/21 (Pre-refunded to 3/15/13) - FGIC Insured 3/13 at 100.00 AAA 1,710,795
- ------------------------------------------------------------------------------------------------------------------
Utilities - 5.5%
Long Island Power Authority, New York, Electric System
General Revenue Bonds, Series 1998A:
6,000 0.000%, 12/01/19 - FSA Insured No Opt. Call AAA 3,393,300
3,185 5.125%, 12/01/22 - FSA Insured 6/08 at 101.00 AAA 3,367,278
1,000 5.750%, 12/01/24 - FSA Insured 6/08 at 101.00 AAA 1,078,480
3,380 5.250%, 12/01/26 - AMBAC Insured 6/08 at 101.00 AAA 3,589,966
555 5.250%, 12/01/26 - MBIA Insured 6/08 at 101.00 AAA 589,477
Long Island Power Authority, New York, Electric System
General Revenue Bonds, Series 2000A:
2,000 0.000%, 6/01/24 - FSA Insured No Opt. Call AAA 910,700
2,000 0.000%, 6/01/25 - FSA Insured No Opt. Call AAA 868,220
Long Island Power Authority, New York, Electric System
General Revenue Bonds, Series 2001A:
1,500 5.000%, 9/01/27 - FSA Insured 9/11 at 100.00 AAA 1,575,645
1,500 5.250%, 9/01/28 - FSA Insured 9/11 at 100.00 AAA 1,629,960
1,000 New York State Energy Research and Development Authority, 3/09 at 102.00 AAA 1,068,850
Electric Facilities Revenue Bonds, Long Island Lighting
Company, Series 1995A, 5.300%, 8/01/25 (Alternative
Minimum Tax) - MBIA Insured
- ----
42
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------
Utilities (continued)
$ 1,875 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 AAA $ 2,017,406
Series 2005RR, 5.000%, 7/01/35 - FGIC Insured
- -----------------------------------------------------------------------------------------------------------------
Water and Sewer - 2.9%
2,955 Buffalo Municipal Water Finance Authority, New York, Water 7/08 at 101.00 AAA 3,108,394
System Revenue Bonds, Series 1998A, 5.000%, 7/01/28 - FGIC
Insured
3,340 New York City Municipal Water Finance Authority, New York, 6/15 at 100.00 AAA 3,595,510
Water and Sewerage System Revenue Bonds, Fiscal Series
2005C, 5.000%, 6/15/27 - MBIA Insured
3,000 New York City Municipal Water Finance Authority, New York, 6/11 at 100.00 AAA 3,249,900
Water and Sewerage System Revenue Bonds, Fiscal Series
2002A, 5.250%, 6/15/33 - FGIC Insured
405 New York City Municipal Water Finance Authority, New York, 6/10 at 101.00 AAA 457,064
Water and Sewerage System Revenue Bonds, Fiscal Series
2000B, 6.000%, 6/15/33 - MBIA Insured
50 New York State Environmental Facilities Corporation, State 9/05 at 100.00 AAA 50,176
Water Pollution Control Revolving Fund Pooled Revenue
Bonds, Series 1990C, 7.200%, 3/15/11 - MBIA Insured
- -----------------------------------------------------------------------------------------------------------------
$336,076 Total Long-Term Investments (cost $337,419,239) - 99.3% 361,207,488
- -----------------------------------------------------------------------------------------------------------------
- ------------
Other Assets Less Liabilities - 0.7% 2,573,345
---------------------------------------------------------------------------------------------------
Net Assets - 100% $ 363,780,833
---------------------------------------------------------------------------------------------------
Primarily all of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio
Insurance, or are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency securities,
any of which ensure the timely payment of principal and interest.
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. Government or U.S. Government agency securities which
ensures the timely payment of principal and interest.
(WI)Security purchased on a when-issued basis.
(IF)Inverse floating rate security.
See accompanying notes to financial statements.
- ----
43
Statement of Assets and Liabilities (Unaudited)
August 31, 2005
New York
Connecticut New Jersey New York Insured
- ----------------------------------------------------------------------------------------------------------------------
Assets
Investments, at market value (cost $271,828,414, $164,137,219,
$342,589,931, and $337,419,239, respectively) $289,307,497 $173,538,542 $366,502,742 $361,207,488
Cash 1,958,147 708,977 2,164,756 4,017,478
Receivables:
Interest 3,715,730 2,123,956 4,915,127 3,907,906
Investments sold -- 2,013,047 1,665,555 4,364,315
Shares sold 223,564 210,215 349,724 101,255
Other assets 9,024 317 12,753 25,453
- ----------------------------------------------------------------------------------------------------------------------
Total assets 295,213,962 178,595,054 375,610,657 373,623,895
- ----------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased -- 3,129,080 7,717,656 7,541,107
Shares redeemed 567,781 11,040 300,593 772,858
Accrued expenses:
Management fees 131,132 78,749 162,042 162,077
12b-1 distribution and service fees 82,997 50,274 77,816 43,804
Other 69,233 49,104 96,441 115,860
Dividends payable 977,148 548,615 1,259,439 1,207,356
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 1,828,291 3,866,862 9,613,987 9,843,062
- ----------------------------------------------------------------------------------------------------------------------
Net assets $293,385,671 $174,728,192 $365,996,670 $363,780,833
- ----------------------------------------------------------------------------------------------------------------------
Class A Shares
Net assets $225,263,904 $ 77,622,065 $150,660,997 $ 92,317,391
Shares outstanding 20,771,966 7,081,032 13,647,994 8,548,345
Net asset value per share $ 10.84 $ 10.96 $ 11.04 $ 10.80
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 11.32 $ 11.44 $ 11.52 $ 11.27
- ----------------------------------------------------------------------------------------------------------------------
Class B Shares
Net assets $ 27,709,522 $ 23,772,985 $ 34,148,090 $ 21,989,382
Shares outstanding 2,557,051 2,168,743 3,092,289 2,031,717
Net asset value and offering price per share $ 10.84 $ 10.96 $ 11.04 $ 10.82
- ----------------------------------------------------------------------------------------------------------------------
Class C Shares
Net assets $ 36,553,848 $ 28,904,217 $ 40,746,304 $ 17,039,529
Shares outstanding 3,374,140 2,645,141 3,686,063 1,577,660
Net asset value and offering price per share $ 10.83 $ 10.93 $ 11.05 $ 10.80
- ----------------------------------------------------------------------------------------------------------------------
Class R Shares
Net assets $ 3,858,397 $ 44,428,925 $140,441,279 $232,434,531
Shares outstanding 354,221 4,046,021 12,692,280 21,463,949
Net asset value and offering price per share $ 10.89 $ 10.98 $ 11.07 $ 10.83
- ----------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
- ----------------------------------------------------------------------------------------------------------------------
Capital paid-in $275,259,189 $164,911,902 $341,471,257 $333,352,014
Undistributed (Over-distribution of) net investment income (94,047) (188,241) (449,930) (424,243)
Accumulated net realized gain from investments 741,446 603,208 1,062,532 7,064,813
Net unrealized appreciation of investments 17,479,083 9,401,323 23,912,811 23,788,249
- ----------------------------------------------------------------------------------------------------------------------
Net assets $293,385,671 $174,728,192 $365,996,670 $363,780,833
- ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
44
Statement of Operations (Unaudited)
Six Months Ended August 31, 2005
New York
Connecticut New Jersey New York Insured
- ----------------------------------------------------------------------------------------------------------------------
Investment Income $7,259,956 $4,176,425 $ 9,066,259 $ 8,695,552
- ----------------------------------------------------------------------------------------------------------------------
Expenses
Management fees 775,802 465,574 933,510 966,899
12b-1 service fees - Class A 223,341 76,222 138,020 89,736
12b-1 distribution and service fees - Class B 136,112 117,227 165,739 106,311
12b-1 distribution and service fees - Class C 134,410 106,103 144,558 63,711
Shareholders' servicing agent fees and expenses 61,249 53,996 102,436 111,368
Custodian's fees and expenses 48,210 29,188 52,794 56,218
Trustees' fees and expenses 2,561 1,579 3,215 3,435
Professional fees 9,240 6,473 13,206 10,268
Shareholders' reports - printing and mailing expenses 20,322 17,301 22,844 22,914
Federal and state registration fees 1,072 1,050 131 94
Other expenses 4,156 2,316 4,968 5,361
- ----------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 1,416,475 877,029 1,581,421 1,436,315
Custodian fee credit (4,678) (5,848) (12,597) (7,524)
- ----------------------------------------------------------------------------------------------------------------------
Net expenses 1,411,797 871,181 1,568,824 1,428,791
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 5,848,159 3,305,244 7,497,435 7,266,761
- ----------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain from investments 545,852 788,853 669,942 5,026,543
Net change in unrealized appreciation (depreciation) of investments 1,479,642 1,096,219 2,703,360 (2,022,722)
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 2,025,494 1,885,072 3,373,302 3,003,821
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $7,873,653 $5,190,316 $10,870,737 $10,270,582
- ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
45
Statement of Changes in Net Assets (Unaudited)
Connecticut
------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
- ------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 5,848,159 $ 12,421,110
Net realized gain from investments 545,852 1,093,768
Net change in unrealized appreciation (depreciation) of investments 1,479,642 (6,181,604)
- ------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 7,873,653 7,333,274
- ------------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income:
Class A (4,629,493) (9,783,993)
Class B (482,380) (1,117,226)
Class C (643,974) (1,444,219)
Class R (81,694) (171,410)
From accumulated net realized gains from investments:
Class A -- (849,040)
Class B -- (115,145)
Class C -- (137,069)
Class R -- (13,901)
- ------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (5,837,541) (13,632,003)
- ------------------------------------------------------------------------------------------------------
Fund Share Transactions
Proceeds from sale of shares 16,590,766 28,129,175
Proceeds from shares issued to shareholders due
to reinvestment of distributions 2,611,188 6,214,663
- ------------------------------------------------------------------------------------------------------
19,201,954 34,343,838
Cost of shares redeemed (18,334,625) (42,226,640)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions 867,329 (7,882,802)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 2,903,441 (14,181,531)
Net assets at the beginning of period 290,482,230 304,663,761
- ------------------------------------------------------------------------------------------------------
Net assets at the end of period $293,385,671 $290,482,230
- ------------------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income at the end
of period $ (94,047) $ (104,665)
- ------------------------------------------------------------------------------------------------------
New Jersey
------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
- -----------------------------------------------------------------------------------------------------
Operations
Net investment income $ 3,305,244 $ 6,918,685
Net realized gain from investments 788,853 714,869
Net change in unrealized appreciation (depreciation) of investments 1,096,219 (2,744,124)
- -----------------------------------------------------------------------------------------------------
Net increase in net assets from operations 5,190,316 4,889,430
- -----------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income:
Class A (1,569,880) (3,067,106)
Class B (415,855) (906,256)
Class C (507,834) (1,032,700)
Class R (944,368) (1,928,441)
From accumulated net realized gains from investments:
Class A -- --
Class B -- --
Class C -- --
Class R -- --
- -----------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,437,937) (6,934,503)
- -----------------------------------------------------------------------------------------------------
Fund Share Transactions
Proceeds from sale of shares 10,919,008 18,557,768
Proceeds from shares issued to shareholders due
to reinvestment of distributions 2,210,107 4,213,126
- -----------------------------------------------------------------------------------------------------
13,129,115 22,770,894
Cost of shares redeemed (10,491,254) (28,582,272)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions 2,637,861 (5,811,378)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 4,390,240 (7,856,451)
Net assets at the beginning of period 170,337,952 178,194,403
- -----------------------------------------------------------------------------------------------------
Net assets at the end of period $174,728,192 $170,337,952
- -----------------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income at the end
of period $ (188,241) $ (55,548)
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
46
New York
-----------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
- -----------------------------------------------------------------------------------------------------
Operations
Net investment income $ 7,497,435 $ 15,520,382
Net realized gain from investments 669,942 1,611,586
Net change in unrealized appreciation (depreciation) of investments 2,703,360 (7,116,589)
- -----------------------------------------------------------------------------------------------------
Net increase in net assets from operations 10,870,737 10,015,379
- -----------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income:
Class A (2,928,987) (5,701,431)
Class B (620,343) (1,487,443)
Class C (725,827) (1,472,644)
Class R (3,160,254) (6,951,970)
From accumulated net realized gains from investments:
Class A -- --
Class B -- --
Class C -- --
Class R -- --
- -----------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (7,435,411) (15,613,488)
- -----------------------------------------------------------------------------------------------------
Fund Share Transactions
Proceeds from sale of shares 36,304,806 47,143,308
Proceeds from shares issued to shareholders due
to reinvestment of distributions 4,434,200 8,697,581
- -----------------------------------------------------------------------------------------------------
40,739,006 55,840,889
Cost of shares redeemed (18,990,358) (60,373,650)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions 21,748,648 (4,532,761)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 25,183,974 (10,130,870)
Net assets at the beginning of period 340,812,696 350,943,566
- -----------------------------------------------------------------------------------------------------
Net assets at the end of period $365,996,670 $340,812,696
- -----------------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income at the end
of period $ (449,930) $ (511,954)
- -----------------------------------------------------------------------------------------------------
New York Insured
------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
- -----------------------------------------------------------------------------------------------------
Operations
Net investment income $ 7,266,761 $ 15,588,911
Net realized gain from investments 5,026,543 3,821,452
Net change in unrealized appreciation (depreciation) of investments (2,022,722) (10,261,988)
- -----------------------------------------------------------------------------------------------------
Net increase in net assets from operations 10,270,582 9,148,375
- -----------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income:
Class A (1,772,810) (3,466,947)
Class B (354,030) (841,776)
Class C (288,685) (701,521)
Class R (4,862,863) (10,734,936)
From accumulated net realized gains from investments:
Class A -- (668,889)
Class B -- (187,751)
Class C -- (146,614)
Class R -- (1,916,810)
- -----------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (7,278,388) (18,665,244)
- -----------------------------------------------------------------------------------------------------
Fund Share Transactions
Proceeds from sale of shares 12,285,564 20,610,414
Proceeds from shares issued to shareholders due
to reinvestment of distributions 4,910,633 12,512,641
- -----------------------------------------------------------------------------------------------------
17,196,197 33,123,055
Cost of shares redeemed (21,448,411) (43,703,759)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions (4,252,214) (10,580,704)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (1,260,020) (20,097,573)
Net assets at the beginning of period 365,040,853 385,138,426
- -----------------------------------------------------------------------------------------------------
Net assets at the end of period $363,780,833 $365,040,853
- -----------------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income at the end
of period $ (424,243) $ (412,616)
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
47
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Multistate Trust II (the "Trust") is an open-end investment company
registered under the Investment Company Act of 1940, as amended. The Trust is
comprised of the Nuveen Connecticut Municipal Bond Fund ("Connecticut"), Nuveen
New Jersey Municipal Bond Fund ("New Jersey"), Nuveen New York Municipal Bond
Fund ("New York") and Nuveen New York Insured Municipal Bond Fund ("New York
Insured") (collectively, the "Funds"), among others. The Trust was organized as
a Massachusetts business trust on July 1, 1996. The Funds were each organized
as a series of predecessor trusts or corporations prior to that date.
The Funds seek to provide high tax-free income and preservation of capital
through investments in diversified portfolios of quality municipal bonds.
Effective January 1, 2005, Nuveen Advisory Corp. ("NAC"), the Funds' previous
Adviser, and its affiliate, Nuveen Institutional Advisory Corp. ("NIAC"), were
merged into Nuveen Asset Management ("NAM"), each wholly owned subsidiaries of
Nuveen Investments, Inc. ("Nuveen"). As a result of the merger, NAM is now the
Adviser to all funds previously advised by either NAC or NIAC.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Investment Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When market
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service or, in the absence of a pricing service for a
particular security, the Board of Trustees of the Funds, or its designee, may
establish fair market value using a wide variety of market data including
yields or prices of municipal bonds of comparable quality, type of issue,
coupon, maturity and rating, market quotes or indications of value from
securities dealers, evaluations of anticipated cash flows or collateral,
general market conditions and other information and analysis, including the
obligor's credit characteristics considered relevant by the pricing service or
the Board of Trustees' designee. Temporary investments in securities that have
variable rate and demand features qualifying them as short-term securities are
valued at amortized cost, which approximates market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued or delayed delivery basis may have
extended settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At August 31, 2005, New
Jersey, New York and New York Insured had outstanding when-issued purchase
commitments of $3,129,080, $6,389,685 and $6,256,147, respectively. There were
no such outstanding purchase commitments in Connecticut.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared monthly as a dividend. Generally,
payment is made or reinvestment is credited to shareholder accounts on the
first business day after month-end. Net realized capital gains and/or market
discount from investment transactions, if any, are distributed to shareholders
not less frequently than annually. Furthermore, capital gains are distributed
only to the extent they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount, if any, are recorded on the ex-dividend
date. The amount and timing of distributions are determined in accordance with
federal income tax regulations, which may differ from accounting principles
generally accepted in the United States.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all net investment income and net capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
each Fund intends to satisfy conditions which will enable interest from
municipal securities, which is exempt from regular federal and designated state
income taxes, to retain such tax-exempt status when distributed to shareholders
of the Funds. Net realized capital gains and ordinary income distributions paid
by the Funds are subject to federal taxation.
Insurance
New York Insured invests primarily in municipal securities which are either
covered by insurance or backed by an escrow or trust account containing
sufficient U.S. Government or U.S. Government agency securities, both of which
ensure the timely payment of principal and interest. Each insured municipal
security is covered by Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance. Such insurance does not guarantee the market value of the
municipal securities or the value of the Fund's
- ----
48
shares. Original Issue Insurance and Secondary Market Insurance remain in
effect as long as the municipal securities covered thereby remain outstanding
and the insurer remains in business, regardless of whether the Fund ultimately
disposes of such municipal securities. Consequently, the market value of the
municipal securities covered by Original Issue Insurance or Secondary Market
Insurance may reflect value attributable to the insurance. Portfolio Insurance,
in contrast, is effective only while the municipal securities are held by the
Fund. Accordingly, neither the prices used in determining the market value of
the underlying municipal securities nor the net asset value of the Fund's
shares include value, if any, attributable to the Portfolio Insurance. Each
policy of the Portfolio Insurance does, however, give the Fund the right to
obtain permanent insurance with respect to the municipal security covered by
the Portfolio Insurance policy at the time of its sale.
Flexible Sales Charge Program
Each Fund offers Class A, B, C and R Shares. Class A Shares are generally sold
with an up-front sales charge and incur a .20% annual 12b-1 service fee. Class
A Share purchases of $1 million or more are sold at net asset value without an
up-front sales charge but may be subject to a contingent deferred sales charge
("CDSC") if redeemed within 18 months of purchase. Class B Shares are sold
without an up-front sales charge but incur a .75% annual 12b-1 distribution fee
and a .20% annual 12b-1 service fee. 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 by the investor (CDSC is reduced to 0% at the end of six years). Class
B Shares convert to Class A Shares eight years after purchase. Class C Shares
are sold without an up-front sales charge but incur a .55% annual 12b-1
distribution fee and a .20% annual 12b-1 service fee. An investor purchasing
Class C Shares agrees to pay a CDSC of 1% if Class C Shares are redeemed within
one year of purchase. Class R Shares are not subject to any sales charge or
12b-1 distribution or service fees. Class R Shares are available only under
limited circumstances.
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 including inverse floating rate securities. During
the six months ended August 31, 2005, Connecticut, New Jersey, New York and New
York Insured invested in inverse floating rate securities for the purpose of
enhancing portfolio yield. Inverse floating rate securities are identified in
the Portfolio of Investments and are valued daily. The interest rate of an
inverse floating rate security has an inverse relationship to the interest rate
of a short-term floating rate security. Consequently, as the interest rate of
the floating rate security rises, the interest rate on the inverse floating
rate security declines. Conversely, as the interest rate of the floating rate
security declines, the interest rate on the inverse floating rate security
rises. The price of an inverse floating rate security will be more volatile
than that of an otherwise comparable fixed rate security since the interest
rate is dependent on an underlying fixed coupon rate or the general level of
long-term interest rates as well as the short-term interest paid on the
floating rate security, and because the inverse floating rate security
typically bears the risk of loss of a greater face value of an underlying bond.
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, which presently
only include 12b-1 distribution and service fees, are recorded to the specific
class.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Indemnifications
Under the Trust's organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Trust. In addition, in the normal course of business, the Trust
enters into contracts that provide general indemnifications to other parties.
The Trust's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Trust that have not yet
occurred. However, the Trust has not had prior claims or losses pursuant to
these contracts and expects the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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. Actual results may differ from those estimates.
- ----
49
Notes to Financial Statements (Unaudited) (continued)
2. Fund Shares
Transactions in Fund shares were as follows:
Connecticut
--------------------------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A 1,070,298 $ 11,532,419 2,025,155 $ 21,781,511
Class A - automatic conversion of Class B shares 22,620 244,298 1,898 20,627
Class B 47,851 516,360 134,562 1,440,160
Class C 381,340 4,102,026 421,903 4,547,997
Class R 18,025 195,663 31,197 338,880
Shares issued to shareholders due to reinvestment
of distributions:
Class A 187,926 2,026,449 440,364 4,719,778
Class B 19,525 210,393 49,804 533,105
Class C 29,037 312,785 76,211 815,966
Class R 5,684 61,561 13,543 145,814
- -------------------------------------------------------------------------------------------------------
1,782,306 19,201,954 3,194,637 34,343,838
- -------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,069,933) (11,554,626) (2,634,442) (28,153,024)
Class B (237,134) (2,557,813) (319,223) (3,406,461)
Class B - automatic conversion to Class A shares (22,641) (244,298) (1,899) (20,627)
Class C (360,258) (3,888,111) (926,692) (9,913,012)
Class R (8,307) (89,777) (68,916) (733,516)
- -------------------------------------------------------------------------------------------------------
(1,698,273) (18,334,625) (3,951,172) (42,226,640)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) 84,033 $ 867,329 (756,535) $ (7,882,802)
- -------------------------------------------------------------------------------------------------------
New Jersey
--------------------------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A 630,861 $ 6,852,791 925,774 $ 9,943,095
Class A - automatic conversion of Class B shares 32,201 348,328 631 6,901
Class B 83,186 902,505 261,352 2,812,723
Class C 182,958 1,984,734 421,131 4,499,862
Class R 76,333 830,650 120,738 1,295,187
Shares issued to shareholders due to reinvestment
of distributions:
Class A 95,133 1,034,546 173,379 1,858,306
Class B 16,614 180,609 33,285 356,650
Class C 25,809 279,699 52,393 559,769
Class R 65,685 715,253 134,036 1,438,401
- -------------------------------------------------------------------------------------------------------
1,208,780 13,129,115 2,122,719 22,770,894
- -------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (467,252) (5,072,211) (1,330,787) (14,244,929)
Class B (227,992) (2,481,099) (440,043) (4,696,885)
Class B - automatic conversion to Class A shares (32,218) (348,328) (631) (6,901)
Class C (143,877) (1,556,999) (474,317) (5,067,655)
Class R (95,142) (1,032,617) (426,642) (4,565,902)
- -------------------------------------------------------------------------------------------------------
(966,481) (10,491,254) (2,672,420) (28,582,272)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) 242,299 $ 2,637,861 (549,701) $ (5,811,378)
- -------------------------------------------------------------------------------------------------------
- ----
50
New York
--------------------------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A 2,475,331 $ 27,114,376 3,215,756 $ 34,736,493
Class A - automatic conversion of Class B shares 49,887 544,931 -- --
Class B 80,074 876,282 203,267 2,200,730
Class C 600,717 6,591,437 759,650 8,276,743
Class R 107,654 1,177,780 176,869 1,929,342
Shares issued to shareholders due to reinvestment
of distributions:
Class A 135,893 1,488,117 246,189 2,664,268
Class B 25,549 279,931 55,358 599,405
Class C 28,439 311,888 56,364 611,000
Class R 214,546 2,354,264 444,556 4,822,908
- -------------------------------------------------------------------------------------------------------
3,718,090 40,739,006 5,158,009 55,840,889
- -------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (675,546) (7,384,904) (2,843,779) (30,535,028)
Class B (266,067) (2,900,526) (699,489) (7,549,343)
Class B - automatic conversion to Class A shares (49,857) (544,931) -- --
Class C (342,151) (3,746,136) (639,015) (6,920,102)
Class R (401,621) (4,413,861) (1,418,040) (15,369,177)
- -------------------------------------------------------------------------------------------------------
(1,735,242) (18,990,358) (5,600,323) (60,373,650)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,982,848 $ 21,748,648 (442,314) $ (4,532,761)
- -------------------------------------------------------------------------------------------------------
New York Insured
--------------------------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A 908,787 $ 9,725,633 1,432,420 $ 15,273,618
Class A - automatic conversion of Class B shares 42,686 457,825 -- --
Class B 24,079 259,659 55,652 595,934
Class C 102,242 1,096,322 283,989 3,056,554
Class R 69,788 746,125 157,525 1,684,308
Shares issued to shareholders due to reinvestment
of distributions:
Class A 102,376 1,096,689 232,235 2,476,597
Class B 17,395 186,714 47,057 502,655
Class C 11,214 120,157 34,170 364,478
Class R 326,622 3,507,073 857,399 9,168,911
- -------------------------------------------------------------------------------------------------------
1,605,189 17,196,197 3,100,447 33,123,055
- -------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (630,313) (6,746,412) (690,675) (7,345,418)
Class B (99,089) (1,060,547) (435,382) (4,658,336)
Class B - automatic conversion to Class A shares (42,592) (457,825) -- --
Class C (166,772) (1,777,781) (622,152) (6,583,300)
Class R (1,062,750) (11,405,846) (2,354,300) (25,116,705)
- -------------------------------------------------------------------------------------------------------
(2,001,516) (21,448,411) (4,102,509) (43,703,759)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) (396,328) $ (4,252,214) (1,002,062) $(10,580,704)
- -------------------------------------------------------------------------------------------------------
- ----
51
Notes to Financial Statements (Unaudited) (continued)
3. Securities Transactions
Purchases and sales (including maturities) of investments in long-term
municipal securities for the six months ended August 31, 2005, were as follows:
New York
Connecticut New Jersey New York Insured
--------------------------------------------------------------------
Purchases $23,395,816 $17,934,423 $41,297,531 $49,882,326
Sales and maturities 21,783,041 14,875,185 18,623,437 53,081,838
--------------------------------------------------------------------
4. Income Tax Information
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount and timing differences in recognizing
certain gains and losses on investment transactions.
At August 31, 2005, the cost of investments was as follows:
New York
Connecticut New Jersey New York Insured
-----------------------------------------------------------------------
Cost of investments $271,643,668 $164,101,884 $342,328,511 $337,330,325
-----------------------------------------------------------------------
Gross unrealized appreciation and gross unrealized depreciation of investments
at August 31, 2005, were as follows:
New York
Connecticut New Jersey New York Insured
- ---------------------------------------------------------------------------------------------
Gross unrealized:
Appreciation $17,827,268 $9,496,538 $24,501,374 $23,947,406
Depreciation (163,439) (59,880) (327,143) (70,243)
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation of investments $17,663,829 $9,436,658 $24,174,231 $23,877,163
- ---------------------------------------------------------------------------------------------
The tax components of undistributed net investment income and net realized
gains at February 28, 2005, the Funds' last fiscal year end, were as follows:
New York
Connecticut New Jersey New York Insured
- ------------------------------------------------------------------------------------
Undistributed net tax-exempt income* $676,526 $484,953 $472,209 $ 720,864
Undistributed net ordinary income** 23,781 -- -- 3,415
Undistributed net long-term capital gains 195,594 -- 422,890 2,038,270
- ------------------------------------------------------------------------------------
* Undistributed net tax-exempt income (on a tax basis) has not been reduced
for the dividend declared on February 9, 2005, paid on March 1, 2005.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the fiscal year ended February
28, 2005, the Funds' last fiscal year end, was designated for purposes of the
dividends paid deduction as follows:
New York
Connecticut New Jersey New York Insured
- ---------------------------------------------------------------------------------------------
Distributions from net tax-exempt income $12,646,998 $6,948,158 $15,627,360 $15,861,612
Distributions from net ordinary income** 8,042 -- 41,178 23,031
Distributions from net long-term capital gains 1,115,155 -- -- 2,920,062
- ---------------------------------------------------------------------------------------------
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
At February 28, 2005, the Funds' last fiscal year end, New Jersey had unused
capital loss carryforwards available for federal income tax purposes to be
applied against future capital gains, if any. If not applied, the carryforwards
will expire as follows:
New Jersey
---------------------------
Expiration year:
2009 $185,645
2010 --
2011 --
2012 --
---------------------------
Total $185,645
---------------------------
- ----
52
5. Management Fee and Other Transactions with Affiliates
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by the
Adviser, and a specific fund-level component, based only on the amount of
assets within each individual fund. This pricing structure enables Nuveen fund
shareholders to benefit from growth in the assets within each individual fund
as well as from growth in the amount of complex-wide assets managed by the
Adviser.
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets of each Fund as follows:
Average Daily Net Assets Fund-Level Fee Rate
---------------------------------------------------
For the first $125 million .3500%
For the next $125 million .3375
For the next $250 million .3250
For the next $500 million .3125
For the next $1 billion .3000
For the next $3 billion .2750
For net assets over $5 billion .2500
---------------------------------------------------
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the table below. As
of August 31, 2005, the complex-level fee rate was .1896%.
Complex-Level Assets/(1)/ Complex-Level Fee Rate
----------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion/(2)/ .1400
----------------------------------------------------------------
(1)The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds in
the U.S.
(2)With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level fee
rate for such complex-wide Managed Assets shall be .1400% until such time as
a different rate or rates is determined.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Trust pays no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to their officers, all of whom receive remuneration for their
services to the Trust from the Adviser or its affiliates. The Board of Trustees
has adopted a deferred compensation plan for independent Trustees that enables
Trustees to elect to defer receipt of all or a portion of the annual
compensation they are entitled to receive from certain Nuveen advised Funds.
Under the plan, deferred amounts are treated as though equal dollar amounts had
been invested in shares of select Nuveen advised Funds.
The Adviser has agreed to waive part of its management fees or reimburse
certain expenses of New York and New York Insured in order to limit total
expenses (excluding 12b-1 distribution and service fees and extraordinary
expenses) from exceeding .75% of the average daily net assets of New York and
..975% of the average daily net assets of New York Insured. The Adviser may also
voluntarily reimburse additional expenses from time to time in any of the
Funds. Voluntary reimbursements may be terminated at any time at the Adviser's
discretion.
During the six months ended August 31, 2005, Nuveen Investments, LLC (the
"Distributor"), a wholly owned subsidiary of Nuveen, collected sales charges on
purchases of Class A Shares, the majority of which were paid out as concessions
to authorized dealers as follows:
New York
Connecticut New Jersey New York Insured
- -------------------------------------------------------------------------------------------
Sales charges collected $183,734 $102,109 $286,257 $121,402
Paid to authorized dealers 159,479 86,866 257,619 106,950
- -------------------------------------------------------------------------------------------
- ----
53
Notes to Financial Statements (Unaudited) (continued)
The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
During the six months ended August 31, 2005, the Distributor compensated
authorized dealers directly with commission advances at the time of purchase as
follows:
New York
Connecticut New Jersey New York Insured
- -------------------------------------------------------------------------------------------
Commission advances $86,637 $54,461 $184,229 $49,727
- -------------------------------------------------------------------------------------------
To compensate for commissions advanced to authorized dealers, all 12b-1 service
fees collected on Class B Shares during the first year following a purchase,
all 12b-1 distribution fees collected on Class B Shares, and all 12b-1 service
and distribution fees collected on Class C Shares during the first year
following a purchase are retained by the Distributor. During the six months
ended August 31, 2005, the Distributor retained such 12b-1 fees as follows:
New York
Connecticut New Jersey New York Insured
- -------------------------------------------------------------------------------------------
12b-1 fees retained $126,992 $111,712 $169,239 $91,510
- -------------------------------------------------------------------------------------------
The remaining 12b-1 fees charged to the Funds were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
The Distributor also collected and retained CDSC on share redemptions during
the six months ended August 31, 2005, as follows:
New York
Connecticut New Jersey New York Insured
- -------------------------------------------------------------------------------------------
CDSC retained $28,941 $29,535 $22,704 $26,068
- -------------------------------------------------------------------------------------------
6. Announcement Regarding Parent Company of Adviser
In early April, 2005, The St. Paul Travelers Companies, Inc. ("St. Paul
Travelers"), which owned 79% of Nuveen, (A) completed a public offering of a
substantial portion of its equity stake in Nuveen, (B) sold Nuveen $200 million
of its Nuveen shares, (C) entered into an agreement with Nuveen to sell an
additional $400 million of its Nuveen shares on a "forward" basis with payment
for and settlement of these shares delayed for several months, and (D) entered
into agreements with two unaffiliated investment banking firms to sell an
amount equal to most or all of its remaining Nuveen shares for current payment
but for future settlement. Transactions (C) and (D) above were settled in late
July, which effectively reduced St. Paul Travelers' controlling stake in Nuveen
and was deemed an "assignment" (as defined in the 1940 Act) of the investment
management agreements between the Funds and the Adviser, which resulted in the
automatic termination of each agreement under the 1940 Act. In anticipation of
such deemed assignment, the Board of Trustees had approved new ongoing
investment management agreements for each Fund and the submission of those
agreements for approval by each respective Fund's shareholders, which
shareholder approval was received prior to the settlement of transactions (C)
and (D). The new ongoing management agreements took effect upon such settlement.
7. Subsequent Event - Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment
income which were paid on October 3, 2005, to shareholders of record on
September 9, 2005, as follows:
New York
Connecticut New Jersey New York Insured
------------------------------------------------------------
Dividend per share:
Class A $.0375 $.0360 $.0385 $.0355
Class B .0305 .0290 .0320 .0285
Class C .0325 .0310 .0340 .0305
Class R .0395 .0375 .0405 .0370
------------------------------------------------------------
- ----
54
Financial Highlights
Selected data for a share outstanding throughout each period:
Class (Commencement Date)
Investment Operations Less Distributions
--------------------------- ----------------------- -----------------------------
Before Credit/
Reimbursement
CONNECTICUT ------------------
Ratio
of Net
Invest-
Ratio of ment
Net Expenses Income
Beginning Net Realized/ Net Ending Ending to to
Net Invest- Unrealized Invest- Net Net Average Average
Year Ended Asset ment Gain ment Capital Asset Total Assets Net Net
February 28/29, Value Income(a) (Loss) Total Income Gains Total Value Return(b) (000) Assets Assets
- -------------------------------------------------------------------------------------------------------------------------------
Class A (7/87)
2006(e) $10.77 $.23 $ .07 $ .30 $(.23) $ -- $(.23) $10.84 2.77% $225,264 .83%* 4.15%*
2005 10.99 .48 (.18) .30 (.48) (.04) (.52) 10.77 2.89 221,463 .83 4.45
2004 10.88 .50 .15 .65 (.50) (.04) (.54) 10.99 6.21 227,787 .85 4.60
2003 10.67 .52 .26 .78 (.53) (.04) (.57) 10.88 7.51 234,133 .85 4.82
2002 10.51 .53 .16 .69 (.53) -- (.53) 10.67 6.66 217,024 .85 5.01
2001 9.96 .53 .55 1.08 (.53) -- (.53) 10.51 11.14 204,442 .87 5.20
Class B (2/97)
2006(e) 10.76 .18 .08 .26 (.18) -- (.18) 10.84 2.46 27,710 1.58* 3.40*
2005 10.98 .40 (.18) .22 (.40) (.04) (.44) 10.76 2.09 29,587 1.58 3.70
2004 10.87 .42 .15 .57 (.42) (.04) (.46) 10.98 5.40 31,678 1.60 3.85
2003 10.65 .43 .27 .70 (.44) (.04) (.48) 10.87 6.78 31,987 1.60 4.06
2002 10.49 .45 .15 .60 (.44) -- (.44) 10.65 5.84 23,310 1.60 4.26
2001 9.94 .45 .55 1.00 (.45) -- (.45) 10.49 10.31 19,794 1.62 4.45
Class C (10/93)
2006(e) 10.76 .20 .07 .27 (.20) -- (.20) 10.83 2.48 36,554 1.38* 3.59*
2005 10.98 .42 (.18) .24 (.42) (.04) (.46) 10.76 2.32 35,767 1.38 3.90
2004 10.87 .44 .15 .59 (.44) (.04) (.48) 10.98 5.62 41,194 1.40 4.05
2003 10.66 .46 .26 .72 (.47) (.04) (.51) 10.87 6.92 38,312 1.40 4.26
2002 10.50 .47 .16 .63 (.47) -- (.47) 10.66 6.07 26,890 1.40 4.47
2001 9.95 .47 .55 1.02 (.47) -- (.47) 10.50 10.50 18,460 1.42 4.65
Class R (2/97)
2006(e) 10.82 .24 .07 .31 (.24) -- (.24) 10.89 2.87 3,858 .63* 4.34*
2005 11.03 .50 (.17) .33 (.50) (.04) (.54) 10.82 3.16 3,666 .63 4.65
2004 10.92 .52 .15 .67 (.52) (.04) (.56) 11.03 6.36 4,005 .65 4.79
2003 10.70 .54 .27 .81 (.55) (.04) (.59) 10.92 7.76 3,878 .65 5.01
2002 10.54 .56 .14 .70 (.54) -- (.54) 10.70 6.82 3,568 .65 5.23
2001 9.99 .55 .55 1.10 (.55) -- (.55) 10.54 11.30 1,992 .67 5.40
- -------------------------------------------------------------------------------------------------------------------------------
Class (Commencement Date)
Ratios/Supplemental Data
----------------------------------------------------
After After Credit/
Reimbursement(c) Reimbursement(d)
CONNECTICUT ------------------ ------------------
Ratio Ratio
of Net of Net
Invest- Invest-
Ratio of ment Ratio of ment
Expenses Income Expenses Income
to to to to
Average Average Average Average Portfolio
Year Ended Net Net Net Net Turnover
February 28/29, Assets Assets Assets Assets Rate
- --------------------------------------------------------------------
Class A (7/87)
2006(e) .83%* 4.15%* .83%* 4.15%* 8%
2005 .83 4.45 .83 4.45 8
2004 .85 4.60 .84 4.60 8
2003 .85 4.82 .84 4.82 19
2002 .85 5.01 .84 5.02 20
2001 .87 5.20 .86 5.21 7
Class B (2/97)
2006(e) 1.58* 3.40* 1.58* 3.40* 8
2005 1.58 3.70 1.58 3.70 8
2004 1.60 3.85 1.59 3.85 8
2003 1.60 4.06 1.59 4.07 19
2002 1.60 4.26 1.59 4.27 20
2001 1.62 4.45 1.61 4.46 7
Class C (10/93)
2006(e) 1.38* 3.59* 1.38* 3.60* 8
2005 1.38 3.90 1.38 3.90 8
2004 1.40 4.05 1.39 4.05 8
2003 1.40 4.26 1.39 4.27 19
2002 1.40 4.47 1.39 4.48 20
2001 1.42 4.65 1.41 4.66 7
Class R (2/97)
2006(e) .63* 4.34* .63* 4.35* 8
2005 .63 4.65 .63 4.65 8
2004 .65 4.79 .64 4.80 8
2003 .65 5.01 .64 5.02 19
2002 .65 5.23 .64 5.24 20
2001 .67 5.40 .66 5.41 7
- --------------------------------------------------------------------
* Annualized.
(a)Per share Net Investment Income is calculated using the average daily shares
method.
(b)Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c)After expense reimbursement from the Adviser, where applicable.
(d)After custodian fee credit and expense reimbursement, where applicable.
(e)For the six months ended August 31, 2005.
See accompanying notes to financial statements.
- ----
55
Financial Highlights (continued)
Selected data for a share outstanding throughout each period:
Class (Commencement Date)
Investment Operations Less Distributions
--------------------------- ---------------------- ----------------------------
Before Credit/
Reimbursement
NEW JERSEY ------------------
Ratio
of Net
Invest-
Ratio of ment
Net Expenses Income
Beginning Net Realized/ Net Ending Ending to to
Net Invest- Unrealized Invest- Net Net Average Average
Year Ended Asset ment Gain ment Capital Asset Total Assets Net Net
February 28/29, Value Income(a) (Loss) Total Income Gains Total Value Return(b) (000) Assets Assets
- -----------------------------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) $10.85 $.22 $ .12 $ .34 $(.23) $-- $(.23) $10.96 3.13% $77,622 .87%* 3.95%*
2005 10.97 .45 (.11) .34 (.46) -- (.46) 10.85 3.20 73,687 .88 4.22
2004 10.79 .46 .18 .64 (.46) -- (.46) 10.97 6.07 77,021 .90 4.26
2003 10.60 .46 .20 .66 (.47) -- (.47) 10.79 6.36 74,067 .91 4.29
2002 10.45 .47 .15 .62 (.47) -- (.47) 10.60 6.04 60,835 .90 4.45
2001 9.73 .48 .72 1.20 (.48) -- (.48) 10.45 12.59 52,277 1.00 4.73
Class B (2/97)
2006(e) 10.85 .18 .11 .29 (.18) -- (.18) 10.96 2.73 23,773 1.62* 3.21*
2005 10.96 .37 (.11) .26 (.37) -- (.37) 10.85 2.49 25,273 1.63 3.47
2004 10.78 .38 .17 .55 (.37) -- (.37) 10.96 5.26 27,140 1.65 3.51
2003 10.59 .38 .20 .58 (.39) -- (.39) 10.78 5.58 26,926 1.66 3.54
2002 10.44 .39 .15 .54 (.39) -- (.39) 10.59 5.26 23,451 1.65 3.70
2001 9.72 .40 .72 1.12 (.40) -- (.40) 10.44 11.74 15,979 1.75 3.98
Class C (9/94)
2006(e) 10.82 .19 .12 .31 (.20) -- (.20) 10.93 2.85 28,904 1.42* 3.40*
2005 10.94 .39 (.11) .28 (.40) -- (.40) 10.82 2.63 27,914 1.43 3.67
2004 10.76 .40 .18 .58 (.40) -- (.40) 10.94 5.50 28,226 1.45 3.72
2003 10.56 .40 .21 .61 (.41) -- (.41) 10.76 5.88 21,192 1.46 3.74
2002 10.41 .41 .15 .56 (.41) -- (.41) 10.56 5.46 14,376 1.45 3.89
2001 9.70 .42 .71 1.13 (.42) -- (.42) 10.41 11.92 12,757 1.55 4.17
Class R (2/92)
2006(e) 10.87 .23 .12 .35 (.24) -- (.24) 10.98 3.21 44,429 .67* 4.15*
2005 10.98 .48 (.12) .36 (.47) -- (.47) 10.87 3.46 43,464 .68 4.42
2004 10.80 .48 .17 .65 (.47) -- (.47) 10.98 6.24 45,807 .70 4.46
2003 10.60 .48 .21 .69 (.49) -- (.49) 10.80 6.63 45,043 .71 4.49
2002 10.45 .49 .15 .64 (.49) -- (.49) 10.60 6.22 43,465 .70 4.64
2001 9.73 .50 .72 1.22 (.50) -- (.50) 10.45 12.79 41,916 .80 4.93
- -----------------------------------------------------------------------------------------------------------------------------
Class (Commencement Date)
Ratios/Supplemental Data
----------------------------------------------------
After After Credit/
Reimbursement(c) Reimbursement(d)
NEW JERSEY ------------------ ------------------
Ratio Ratio
of Net of Net
Invest- Invest-
Ratio of ment Ratio of ment
Expenses Income Expenses Income
to to to to
Average Average Average Average Portfolio
Year Ended Net Net Net Net Turnover
February 28/29, Assets Assets Assets Assets Rate
- --------------------------------------------------------------------
Class A (9/94)
2006(e) .87%* 3.95%* .86%* 3.96%* 9%
2005 .88 4.22 .87 4.23 15
2004 .90 4.26 .89 4.27 17
2003 .91 4.29 .90 4.30 6
2002 .90 4.45 .89 4.46 7
2001 1.00 4.73 .98 4.74 12
Class B (2/97)
2006(e) 1.62* 3.21* 1.61* 3.21* 9
2005 1.63 3.47 1.62 3.48 15
2004 1.65 3.51 1.64 3.52 17
2003 1.66 3.54 1.65 3.55 6
2002 1.65 3.70 1.64 3.71 7
2001 1.75 3.98 1.73 3.99 12
Class C (9/94)
2006(e) 1.42* 3.40* 1.41* 3.41* 9
2005 1.43 3.67 1.42 3.68 15
2004 1.45 3.72 1.44 3.73 17
2003 1.46 3.74 1.45 3.75 6
2002 1.45 3.89 1.44 3.90 7
2001 1.55 4.17 1.53 4.19 12
Class R (2/92)
2006(e) .67* 4.15* .66* 4.16* 9
2005 .68 4.42 .67 4.43 15
2004 .70 4.46 .69 4.47 17
2003 .71 4.49 .70 4.50 6
2002 .70 4.64 .69 4.65 7
2001 .80 4.93 .78 4.94 12
- --------------------------------------------------------------------
* Annualized.
(a)Per share Net Investment Income is calculated using the average daily shares
method.
(b)Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c)After expense reimbursement from the Adviser, where applicable.
(d)After custodian fee credit and expense reimbursement, where applicable.
(e)For the six months ended August 31, 2005.
See accompanying notes to financial statements.
- ----
56
Selected data for a share outstanding throughout each period:
Class (Commencement Date)
Investment Operations Less Distributions
--------------------------- ----------------------- --------
NEW YORK
Net
Beginning Net Realized/ Net Ending Ending
Net Invest- Unrealized Invest- Net Net
Year Ended Asset ment Gain ment Capital Asset Total Assets
February 28/29, Value Income(a) (Loss) Total Income Gains Total Value Return(b) (000)
- --------------------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) $10.93 $.24 $ .11 $ .35 $(.24) $ -- $(.24) $11.04 3.19% $150,661
2005 11.10 .50 (.17) .33 (.50) -- (.50) 10.93 3.12 127,502
2004 10.88 .52 .22 .74 (.52) -- (.52) 11.10 6.94 122,569
2003 10.72 .52 .22 .74 (.54) (.04) (.58) 10.88 7.11 113,197
2002 10.66 .58 .04 .62 (.56) -- (.56) 10.72 5.94 105,700
2001 10.17 .57 .52 1.09 (.60) -- (.60) 10.66 10.97 102,144
Class B (2/97)
2006(e) 10.94 .20 .10 .30 (.20) -- (.20) 11.04 2.73 34,148
2005 11.11 .42 (.17) .25 (.42) -- (.42) 10.94 2.38 36,125
2004 10.90 .44 .21 .65 (.44) -- (.44) 11.11 6.07 41,579
2003 10.73 .44 .23 .67 (.46) (.04) (.50) 10.90 6.43 40,951
2002 10.68 .50 .03 .53 (.48) -- (.48) 10.73 5.07 34,262
2001 10.18 .49 .53 1.02 (.52) -- (.52) 10.68 10.24 25,992
Class C (9/94)
2006(e) 10.95 .21 .10 .31 (.21) -- (.21) 11.05 2.84 40,746
2005 11.12 .44 (.16) .28 (.45) -- (.45) 10.95 2.60 37,221
2004 10.91 .46 .22 .68 (.47) -- (.47) 11.12 6.30 35,832
2003 10.75 .46 .23 .69 (.49) (.04) (.53) 10.91 6.56 27,687
2002 10.70 .52 .03 .55 (.50) -- (.50) 10.75 5.29 24,505
2001 10.20 .51 .53 1.04 (.54) -- (.54) 10.70 10.47 17,757
Class R (12/86)
2006(e) 10.96 .25 .11 .36 (.25) -- (.25) 11.07 3.29 140,441
2005 11.13 .52 (.17) .35 (.52) -- (.52) 10.96 3.34 139,964
2004 10.91 .54 .23 .77 (.55) -- (.55) 11.13 7.06 150,963
2003 10.75 .55 .22 .77 (.57) (.04) (.61) 10.91 7.33 146,759
2002 10.69 .60 .04 .64 (.58) -- (.58) 10.75 6.16 144,581
2001 10.20 .59 .52 1.11 (.62) -- (.62) 10.69 11.19 144,950
- --------------------------------------------------------------------------------------------------------------------
Class (Commencement Date)
Ratios/Supplemental Data
-------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(c) Reimbursement(d)
NEW YORK ------------------ ------------------ ------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
to to to to to to
Average Average Average Average Average Average Portfolio
Year Ended Net Net Net Net Net Net Turnover
February 28/29, Assets Assets Assets Assets Assets Assets Rate
- ---------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) .84%* 4.29%* .84%* 4.29%* .83%* 4.30%* 5%
2005 .86 4.59 .86 4.59 .85 4.60 8
2004 .88 4.76 .88 4.76 .88 4.76 12
2003 .88 4.87 .88 4.87 .87 4.87 23
2002 .89 5.16 .66 5.39 .65 5.39 11
2001 .91 5.26 .70 5.47 .69 5.48 28
Class B (2/97)
2006(e) 1.59* 3.55* 1.59* 3.55* 1.59* 3.56* 5
2005 1.61 3.84 1.61 3.84 1.60 3.85 8
2004 1.63 4.01 1.63 4.01 1.63 4.01 12
2003 1.63 4.11 1.63 4.11 1.62 4.12 23
2002 1.64 4.41 1.41 4.64 1.41 4.65 11
2001 1.66 4.51 1.45 4.72 1.44 4.73 28
Class C (9/94)
2006(e) 1.39* 3.75* 1.39* 3.75* 1.38* 3.75* 5
2005 1.41 4.04 1.41 4.04 1.40 4.05 8
2004 1.43 4.21 1.43 4.21 1.43 4.21 12
2003 1.43 4.31 1.43 4.31 1.42 4.32 23
2002 1.44 4.61 1.21 4.84 1.21 4.85 11
2001 1.46 4.72 1.26 4.92 1.25 4.92 28
Class R (12/86)
2006(e) .64* 4.50* .64* 4.50* .64* 4.51* 5
2005 .66 4.79 .66 4.79 .65 4.80 8
2004 .68 4.96 .68 4.96 .68 4.96 12
2003 .68 5.07 .68 5.07 .67 5.07 23
2002 .69 5.36 .46 5.59 .46 5.59 11
2001 .71 5.46 .49 5.67 .49 5.68 28
- ---------------------------------------------------------------------------------------------------
* Annualized.
(a)Per share Net Investment Income is calculated using the average daily shares
method.
(b)Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c)After expense reimbursement from the Adviser, where applicable.
(d)After custodian fee credit and expense reimbursement, where applicable.
(e)For the six months ended August 31, 2005.
See accompanying notes to financial statements.
- ----
57
Financial Highlights (continued)
Selected data for a share outstanding throughout each period:
Class (Commencement Date)
Investment Operations Less Distributions
--------------------------- ----------------------- -----------------------------
Before Credit/
Reimbursement
NEW YORK INSURED ------------------
Ratio
of Net
Invest-
Ratio of ment
Net Expenses Income
Beginning Net Realized/ Net Ending Ending to to
Net Invest- Unrealized Invest- Net Net Average Average
Year Ended Asset ment Gain ment Capital Asset Total Assets Net Net
February 28/29, Value Income(a) (Loss) Total Income Gains Total Value Return(b) (000) Assets Assets
- -------------------------------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) $10.71 $.21 $ .09 $ .30 $(.21) $ -- $(.21) $10.80 2.86% $ 92,317 .84%* 3.91%*
2005 10.98 .45 (.18) .27 (.45) (.09) (.54) 10.71 2.59 87,032 .85 4.17
2004 10.92 .46 .21 .67 (.47) (.14) (.61) 10.98 6.37 78,526 .86 4.28
2003 10.59 .47 .40 .87 (.48) (.06) (.54) 10.92 8.46 73,936 .88 4.40
2002 10.50 .49 .10 .59 (.50) -- (.50) 10.59 5.75 63,043 .89 4.67
2001 9.95 .51 .55 1.06 (.51) -- (.51) 10.50 10.97 56,936 .91 4.98
Class B (2/97)
2006(e) 10.73 .17 .09 .26 (.17) -- (.17) 10.82 2.45 21,989 1.59* 3.16*
2005 11.00 .37 (.18) .19 (.37) (.09) (.46) 10.73 1.79 22,881 1.60 3.42
2004 10.93 .38 .22 .60 (.39) (.14) (.53) 11.00 5.64 27,104 1.61 3.53
2003 10.60 .39 .40 .79 (.40) (.06) (.46) 10.93 7.64 27,786 1.63 3.65
2002 10.51 .41 .10 .51 (.42) -- (.42) 10.60 4.97 23,418 1.64 3.92
2001 9.96 .43 .56 .99 (.44) -- (.44) 10.51 10.12 16,965 1.66 4.23
Class C (9/94)
2006(e) 10.71 .18 .09 .27 (.18) -- (.18) 10.80 2.57 17,040 1.39* 3.36*
2005 10.98 .39 (.18) .21 (.39) (.09) (.48) 10.71 2.02 17,470 1.40 3.62
2004 10.92 .40 .21 .61 (.41) (.14) (.55) 10.98 5.78 21,246 1.42 3.73
2003 10.59 .41 .40 .81 (.42) (.06) (.48) 10.92 7.85 14,446 1.43 3.84
2002 10.49 .43 .11 .54 (.44) -- (.44) 10.59 5.26 9,926 1.44 4.12
2001 9.94 .45 .55 1.00 (.45) -- (.45) 10.49 10.33 5,131 1.46 4.43
Class R (12/86)
2006(e) 10.74 .22 .09 .31 (.22) -- (.22) 10.83 2.94 232,435 .64* 4.11*
2005 11.00 .47 (.17) .30 (.47) (.09) (.56) 10.74 2.85 237,657 .65 4.37
2004 10.94 .49 .20 .69 (.49) (.14) (.63) 11.00 6.53 258,263 .66 4.48
2003 10.60 .49 .41 .90 (.50) (.06) (.56) 10.94 8.72 263,572 .68 4.60
2002 10.50 .51 .11 .62 (.52) -- (.52) 10.60 6.03 260,568 .69 4.87
2001 9.95 .53 .55 1.08 (.53) -- (.53) 10.50 11.16 259,651 .71 5.18
- -------------------------------------------------------------------------------------------------------------------------------
Class (Commencement Date)
Ratios/Supplemental Data
----------------------------------------------------
After After Credit/
Reimbursement(c) Reimbursement(d)
NEW YORK INSURED ------------------ ------------------
Ratio Ratio
of Net of Net
Invest- Invest-
Ratio of ment Ratio of ment
Expenses Income Expenses Income
to to to to
Average Average Average Average Portfolio
Year Ended Net Net Net Net Turnover
February 28/29, Assets Assets Assets Assets Rate
- --------------------------------------------------------------------
Class A (9/94)
2006(e) .84%* 3.91%* .84%* 3.91%* 14%
2005 .85 4.17 .85 4.18 12
2004 .86 4.28 .86 4.28 10
2003 .88 4.40 .87 4.40 21
2002 .89 4.67 .88 4.68 17
2001 .91 4.98 .90 4.99 15
Class B (2/97)
2006(e) 1.59* 3.16* 1.59* 3.17* 14
2005 1.60 3.42 1.60 3.42 12
2004 1.61 3.53 1.61 3.53 10
2003 1.63 3.65 1.62 3.66 21
2002 1.64 3.92 1.63 3.93 17
2001 1.66 4.23 1.65 4.24 15
Class C (9/94)
2006(e) 1.39* 3.36* 1.39* 3.37* 14
2005 1.40 3.62 1.40 3.63 12
2004 1.42 3.73 1.41 3.73 10
2003 1.43 3.84 1.42 3.85 21
2002 1.44 4.12 1.43 4.13 17
2001 1.46 4.43 1.45 4.44 15
Class R (12/86)
2006(e) .64* 4.11* .64* 4.12* 14
2005 .65 4.37 .65 4.37 12
2004 .66 4.48 .66 4.48 10
2003 .68 4.60 .67 4.61 21
2002 .69 4.87 .68 4.88 17
2001 .71 5.18 .70 5.19 15
- --------------------------------------------------------------------
* Annualized.
(a)Per share Net Investment Income is calculated using the average daily shares
method.
(b)Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c)After expense reimbursement from the Adviser, where applicable.
(d)After custodian fee credit and expense reimbursement, where applicable.
(e)For the six months ended August 31, 2005.
See accompanying notes to financial statements.
- ----
58
Annual Investment Management Agreement Approval Process
At a meeting held on May 10-12, 2005, the Board of Trustees of the Funds,
including the independent Trustees, unanimously approved the Investment
Management Agreement between each Fund and NAM.
The Approval Process
To assist the Board in its evaluation of an advisory contract with NAM, the
independent Trustees received a report in adequate time in advance of their
meeting which outlined, among other things, the services provided by NAM; the
organization of NAM, including the responsibilities of various departments and
key personnel; the Fund's past performance as well as the Fund's performance
compared to funds of similar investment objectives compiled by an independent
third party (a "Peer Group") as described below and if available, with
recognized or, in certain cases, customized benchmarks; the profitability of
NAM and certain industry profitability analyses for advisers to unaffiliated
investment companies; the expenses of NAM in providing the various services;
the management fees of NAM, including comparisons of such fees with the
management fees of comparable funds in its Peer Group as well as comparisons of
NAM's management fees with the fees NAM assesses to other types of investment
products or accounts, if any; the soft dollar practices of NAM; and the
expenses of each Fund, including comparisons of the Fund's expense ratios
(after any fee waivers) with the expense ratios of its Peer Group. This
information supplements that received by the Board throughout the year
regarding Fund performance, expense ratios, portfolio composition, trade
execution and sales activity.
In addition to the foregoing materials, independent legal counsel to the
independent Trustees provided, in advance of the meeting, a legal memorandum
outlining, among other things, the duties of the Trustees under the 1940 Act as
well as the general principles of relevant state law in reviewing and approving
advisory contracts; the requirements of the 1940 Act in such matters; an
adviser's fiduciary duty with respect to advisory agreements and compensation;
the standards used by courts in determining whether investment company boards
of directors have fulfilled their duties and factors to be considered by the
board in voting on advisory agreements.
At the Board meeting, NAM made a presentation to and responded to questions
from the Board. After the presentation and after reviewing the written
materials, the independent Trustees met privately with their legal counsel to
review the Board's duties in reviewing advisory contracts and consider the
renewal of the advisory contract. It is with this background that the Trustees
considered each Investment Management Agreement with NAM. The independent
Trustees, in consultation with independent counsel, reviewed the factors set
out in judicial decisions and SEC directives relating to the renewal of
advisory contracts. As outlined in more detail below, the Trustees considered
all factors they believed relevant with respect to each Fund, including the
following: (a) the nature, extent and quality of the services to be provided by
NAM; (b) the investment performance of the Fund and NAM; (c) the costs of the
services to be provided and profits to be realized by NAM and its affiliates
from the relationship with the Fund; (d) the extent to which economies of scale
would be realized as the Fund grows; and (e) whether fee levels reflect these
economies of scale for the benefit of Fund investors.
A. Nature, Extent and Quality of Services
In evaluating the nature, extent and quality of NAM's services, the Trustees
reviewed information concerning the types of services that NAM or its
affiliates provide and are expected to provide to the Nuveen Funds; narrative
and statistical information concerning the Fund's performance record and how
such performance compares to the Fund's Peer Group and, if available,
recognized benchmarks or, in certain cases, customized benchmarks (as described
in further detail in Section B below); information describing NAM's
organization and its various departments, the experience and responsibilities
of key personnel, and available resources. In the discussion of key personnel,
the Trustees received materials regarding the changes or additions in personnel
of NAM. The Trustees further noted the willingness of the personnel of NAM to
engage in open, candid discussions with the Board. The Trustees further
considered the quality of NAM's investment process in making portfolio
management decisions, including any refinements or improvements to the
portfolio management processes, enhancements to technology and systems that are
available to portfolio managers, and any additions of new personnel which may
strengthen or expand the research and investment capabilities of NAM. In their
review of the advisory contracts for the fixed income funds, such as the Funds,
the Trustees also noted that Nuveen won the Lipper Award for Best Fund Family:
Fixed Income-Large Asset Class, for 2004. Given the Trustees' experience with
the Funds, other Nuveen funds and NAM, the Trustees noted that they were
familiar with and continue to have a good understanding of the organization,
operations and personnel of NAM.
In addition to advisory services, the independent Trustees considered the
quality of the administrative or non-advisory services provided. In this
regard, NAM provides the Fund with such administrative and other services
(exclusive of, and in addition to, any such services provided by others for the
Funds) and officers and other personnel as are necessary for the operations of
the respective Fund. In addition to investment management services, NAM and its
affiliates provide each Fund with a wide range of services, including:
preparing shareholder reports; providing daily accounting; providing quarterly
financial statements; overseeing and coordinating the activities of other
service providers; administering and organizing Board meetings and preparing
the Board materials for such meetings; providing legal support (such as helping
to prepare registration statements, amendments thereto and proxy statements and
responding to regulatory inquiries); and performing other Fund administrative
tasks necessary for the operation of the respective Fund (such as tax reporting
and fulfilling regulatory filing requirements). In addition, in evaluating the
administrative services, the Trustees considered, in particular, NAM's policies
and procedures for assuring compliance with applicable laws and regulations in
light of the new SEC regulations governing compliance. The Trustees noted NAM's
focus on compliance and its compliance systems. In their review, the Trustees
considered, among other things, the additions of experienced
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59
Annual Investment Management Agreement Approval Process (continued)
personnel to NAM's compliance group and modifications and other enhancements to
NAM's computer systems. In addition to the foregoing, the Trustees also noted
that NAM outsources certain services that cannot be replicated without
significant costs or at the same level of expertise. Such outsourcing has been
a beneficial and efficient use of resources by keeping expenses low while
obtaining quality services.
With respect to services provided to municipal funds, such as the Funds, the
Trustees also noted, among other things, the enhancements NAM implemented to
its municipal portfolio management processes (e.g., the increased use of
benchmarks to guide and assess the performance of its portfolio managers); the
implementation of a risk management program; and the various initiatives being
undertaken to enhance or modify NAM's computer systems as necessary to support
the innovations of the municipal investment team (such as, the ability to
assess certain historical data in order to create customized benchmarks,
perform attribution analysis and facilitate the use of derivatives as hedging
instruments).
Based on their review, the Trustees found that, overall, the nature, extent and
quality of services provided (and expected to be provided) to the respective
Funds under the applicable Investment Management Agreement, were of a high
level and were quite satisfactory.
B. The Investment Performance of the Fund and NAM
As previously noted, the Board received a myriad of performance information
regarding each Fund and its Peer Group, if available. Among other things, the
Board received materials reflecting a Fund's historic performance, the Fund's
performance compared to its Peer Group (as described below) and, if available,
its performance compared to recognized and, in certain cases, customized
benchmarks (as applicable). Further in evaluating the performance information,
in certain limited instances, the Trustees noted that the closest Peer Group
for a Fund still would not adequately reflect such Fund's investment objectives
and strategies, thereby limiting the usefulness of the comparisons of such
Fund's performance with that of the Peer Group.
With respect to state municipal funds, such as the Funds, the performance data
included, among other things, the respective Fund's performance relative to its
peers, except as noted. More specifically, a Fund's one-, three- and five-year
total returns (as available) for the periods ending December 31, 2004 were
evaluated relative to the unaffiliated funds in its respective Peer Group
(including the returns of individual peers as well as the Peer Group average)
as well as additional performance information with respect to all funds in the
Peer Group, subject to the following. Certain state municipal Funds do not have
a corresponding Peer Group in which case their performance is measured against
a state-specific municipal index compiled by an independent third party. Such
indices measure bond performance rather than fund performance. The two open-end
Nuveen Funds that utilize such indices are the Nuveen New Mexico Municipal Bond
Fund and the Nuveen Wisconsin Municipal Bond Fund. Based on their review, the
Trustees determined that the respective Fund's absolute and relative investment
performance over time had been satisfactory.
C. Fees, Expenses and Profitability
1. Fees and Expenses
In evaluating the management fees and expenses that a Fund is expected to
bear, the Trustees considered the Fund's current management fee structure and
the Fund's expected expense ratios in absolute terms as well as compared with
the fees and respective expense ratios of the unaffiliated funds in its Peer
Group. The Trustees reviewed the financial information of NAM, including its
respective revenues, expenses and profitability. In reviewing fees, the
Trustees, among other things, reviewed comparisons of the Fund's gross
management fees (fees after fund-level and complex-wide level breakpoints but
before reimbursements and fee waivers), net management fees (after breakpoints
and reimbursements and fee waivers) and total expense ratios (before and after
waivers) with those of the unaffiliated funds in its Peer Group and peer
averages. In this regard, the Trustees noted that the relative ranking of the
Nuveen Funds on fees and expenses was aided by the significant level of fee
reductions provided by the fund-level and complex-wide breakpoint schedules,
and the fee waivers and reimbursements provided by Nuveen for certain Funds
launched since 1999. The complex-wide breakpoint schedule was instituted in
2004 and is described in further detail below in Section D entitled "Economies
of Scale and Whether Fee Levels Reflect these Economies of Scale." In addition
to the foregoing, in their review of the fee and expense information provided
for the municipal funds, including, in particular, the expense ratios of the
unaffiliated funds in the respective Peer Group, the Trustees determined that
such Funds' net total expense ratios were within an acceptable range compared
to such peers.
2. Comparisons with the Fees of Other Clients
The Trustees further compared the fees of NAM to the fees NAM or an affiliate
thereof assessed for other types of clients investing in municipal funds (such
as municipal managed accounts). With respect to municipal managed accounts,
the advisory fees for such accounts are generally lower than those charged to
the comparable Fund. The Trustees noted, however, the additional services that
are provided and the costs incurred by Nuveen in managing and operating
registered investment companies, such as the Funds, compared to individually
managed separate accounts. For instance, as described above, NAM and its
affiliates provide numerous services to the Funds including, but not limited
to, preparing shareholder reports; providing daily accounting; preparing
quarterly financial statements; overseeing and coordinating the activities of
other service providers; administering and organizing Board meetings and
preparing the Board materials for such meetings; providing legal support; and
administering all other aspects of the Fund's operations. Further, the
Trustees noted the increased compliance requirements for funds in light of new
SEC regulations and other legislation. These services are generally not
required to the same extent, if at all,
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60
for separate accounts. In addition to the differences in services, the
Trustees also considered, among other things, the differences in product
distribution, investor profiles and account sizes. Accordingly, the Trustees
believe that the nature and number of services provided to operate a Fund
merit the higher fees than those to separate managed accounts.
3. Profitability of NAM
In conjunction with its review of fees, the Trustees also considered the
profitability of NAM. The Trustees reviewed NAM's revenues, expenses and
profitability margins (on both a pre-tax and after-tax basis). In reviewing
profitability, the Trustees recognized that one of the most difficult issues
in determining profitability is establishing a method of allocating expenses.
Accordingly, the Trustees reviewed NAM's assumptions and methodology of
allocating expenses. In this regard, the methods of allocation used appeared
reasonable but the Board noted the inherent limitations in allocating costs
among various advisory products. The Trustees also recognized that individual
fund or product line profitability of other advisers is generally not publicly
available. Further, profitability may be affected by numerous factors
including the types of funds managed, expense allocations, business mix, etc.,
and therefore comparability of profitability is somewhat limited.
Nevertheless, to the extent available, the Trustees considered NAM's profit
margin compared to the profitability of various publicly-traded investment
management companies and/or investment management companies that publicly
disclose some or all of their financial results compiled by three independent
third-party service providers. The Trustees also reviewed the revenues,
expenses and profit margins of various unaffiliated advisory firms with
similar amounts of assets under management for the last year prepared by NAM.
Based on their review, the Trustees were satisfied that NAM's level of
profitability from its relationship with each Fund was reasonable in light of
the services provided.
In evaluating the reasonableness of the compensation, the Trustees also
considered any other revenues paid to NAM as well as any indirect benefits
(such as soft dollar arrangements, if any) NAM and its affiliates are expected
to receive that are directly attributable to their management of the Funds, if
any. See Section E below for additional information. Based on their review of
the overall fee arrangements of the applicable Fund, the Trustees determined
that the advisory fees and expenses of the respective Fund were reasonable.
D. Economies of Scale and Whether Fee Levels Reflect these Economies of Scale
In reviewing the compensation, the Trustees have long understood the benefits
of economies of scale as the assets of a fund grow and have sought to ensure
that shareholders share in these benefits. One method for shareholders to share
in economies of scale is to include breakpoints in the advisory fee schedules
that reduce fees as fund assets grow. Accordingly, the Trustees received and
reviewed the schedules of advisory fees for each Fund, including fund-level
breakpoints thereto. In addition, after lengthy negotiations with management,
the Board in May 2004 approved a complex-wide fee arrangement pursuant to which
fees of the funds in the Nuveen complex, including the Funds, are reduced as
the assets in the fund complex reach certain levels. The complex-wide fee
arrangement was introduced on August 1, 2004 and the Trustees reviewed data
regarding the reductions of fees for the Funds for the period of August 1, 2004
to December 31, 2004. In evaluating the complex-wide fee arrangement, the
Trustees considered, among other things, the historic and expected fee savings
to shareholders as assets grow, the amount of fee reductions at various asset
levels, and that the arrangement would extend to all Funds in the Nuveen
complex. The Trustees also considered the impact, if any, the complex-wide fee
arrangement may have on the level of services provided. Based on their review,
the Trustees concluded that the breakpoint schedule and complex-wide fee
arrangement currently was acceptable and desirable in providing benefits from
economies of scale to shareholders.
E. Indirect Benefits
In evaluating fees, the Trustees also considered any indirect benefits or
profits NAM or its affiliates may receive as a result of its relationship with
each Fund. In this regard, the Trustees considered any benefits from soft
dollar arrangements. The Trustees noted that although NAM manages a large
amount of assets, it has very little, if any, brokerage to allocate. This is
due to the fact that NAM typically manages the portfolios of the municipal
funds in the Nuveen complex and municipal bonds generally trade on a principal
basis. Accordingly, NAM does not currently have any soft dollar arrangements
and does not pay excess brokerage commissions (or spreads on principal
transactions) in order to receive research services.
In addition to soft dollar arrangements, the Trustees also considered any other
revenues, if any, received by NAM or its affiliates. In this regard, for Funds
with 12b-1 plans, the Trustees received and considered the amount 12b-1 fees
retained by Nuveen during the last calendar year. The Trustees noted that the
vast majority of the 12b-1 fees received by Nuveen are ultimately paid to other
financial advisers.
F. Other Considerations
Nuveen, until recently, was a majority owned subsidiary of St. Paul Travelers
Companies, Inc. ("St. Paul"). As noted, St. Paul earlier this year announced
its intention to divest its equity stake in Nuveen. Nuveen is the parent of
NAM. Pursuant to a series of transactions, St. Paul had begun to reduce its
interest in Nuveen which would ultimately result in a change of control of
Nuveen and therefore NAM. As mandated by the 1940 Act, such a change in control
would result in an assignment of the advisory agreement with NAM and the
automatic termination of such agreement. Accordingly, the Board also considered
the approval of a New Investment Management Agreement with each Fund in light
of, and which would take effect upon, the anticipated change of control. More
specifically, the Board considered for each Fund a New Investment Management
Agreement on substantially identical terms
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61
Annual Investment Management Agreement Approval Process (continued)
to the existing Investment Management Agreement, to take effect after the
change of control has occurred and the contract has been approved by Fund
shareholders. In its review, the Board considered whether the various
transactions necessary to divest St. Paul's interest will have an impact on the
various factors they considered in approving NAM, such as the scope and quality
of services to be provided following the change of control. In reviewing the
St. Paul transactions, the Board considered, among other things, the impact, if
any, on the operations and organizational structure of NAM; the possible
benefits and costs of the transactions to the respective Fund; the potential
implications of any arrangements used by Nuveen to finance certain of the
transactions; the ability of NAM to perform its duties after the transactions;
whether a Fund's fee structure or expense ratio would change; any changes to
the current practices of the respective Fund; any changes to the terms of the
advisory agreement; and any anticipated changes to the operations of NAM. Based
on its review, the Board determined that St. Paul's divestiture would not
affect the nature and quality of services provided by NAM, the terms of the
Investment Management Agreement, including the fees thereunder, and would not
materially affect the organization or operations of NAM. Accordingly, the Board
determined that their analysis of the various factors regarding their approval
of NAM would continue to apply after the change of control.
G. Approval
The Trustees did not identify any single factor discussed previously as
all-important or controlling. The Trustees, including a majority of independent
Trustees, concluded that the terms of the Investment Management Agreements were
fair and reasonable, that NAM's fees are reasonable in light of the services
provided to each Fund, that the renewal of the NAM Investment Management
Agreements should be approved, and that the new, post-change of control NAM
Investment Management Agreements be approved and recommended to shareholders.
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62
Notes
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63
Notes
- --------------------------------------------------------------------------------
64
- --------------------------------------------------------------------------------
Fund Information
================================================================================
Fund Manager Legal Counsel Transfer Agent and
Nuveen Asset Management Chapman and Cutler LLP Shareholder Services
333 West Wacker Drive Chicago, IL Boston Financial
Chicago, IL 60606 Data Services, Inc.
Independent Registered Nuveen Investor Services
Public Accounting Firm P.O. Box 8530
PricewaterhouseCoopers LLP Boston, MA 02266-8530
Chicago, IL (800) 257-8787
Custodian
State Street Bank & Trust
Boston, MA
================================================================================
Glossary of Terms Used in this Report
Average Annual Total Return: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return that would have been necessary each year to equal the
investment's actual cumulative performance (including change in NAV or offer
price and reinvested dividends and capital gains distributions, if any) over
the time period being considered.
Average Effective Maturity: The average of all the maturities of the bonds in a
Fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
Average Duration: Duration is a measure of the expected period over which a
bond's principal and interest will be paid, and consequently is a measure of
the sensitivity of a bond's (or bond fund's) value to changes when market
interest rates change. Generally, the longer a bond or Fund's duration, the
more the price of the bond or Fund will change as interest rates change.
Dividend Yield (also known as Market Yield or Current Yield): An investment's
current annualized dividend divided by its current offering price.
Net Asset Value (NAV): A Fund's NAV is the dollar value of one share in the
Fund. It is calculated by subtracting the liabilities of the Fund from its
total assets and then dividing the remainder by the number of shares
outstanding. Fund NAVs are calculated at the end of each business day.
SEC 30-Day Yield: A standardized measure of a Fund's yield that accounts for
the future amortization of premiums or discounts of bonds held in the fund's
portfolio.
Taxable-Equivalent Yield: The yield necessary from a fully taxable investment
to equal, on an after-tax basis at a specified assumed tax rate, the yield of a
municipal bond investment.
================================================================================
Quarterly Portfolio of Investments and Proxy Voting information: Each Fund's
(i) quarterly portfolio of investments, (ii) information regarding how the
Funds voted proxies relating to portfolio securities held during the 12-month
period ended June 30, 2004, and (iii) a description of the policies and
procedures that the Funds used to determine how to vote proxies relating to
portfolio securities are available without charge, upon request, by calling
Nuveen Investments at (800) 257-8787 or on Nuveen's website at www.nuveen.com.
You may also obtain this and other Fund information directly from the
Securities and Exchange Commission ("SEC"). The SEC may charge a copying fee
for this information. Visit the SEC on-line at http://www.sec.gov or in person
at the SEC's Public Reference Room in Washington, D.C. Call the SEC at
1-202-942-8090 for room hours and operation. You may also request fund
information by sending an e-mail request to publicinfo@sec.gov or by writing to
the SEC's Public Reference Section at 450 Fifth Street NW, Washington, D.C.
20549.
================================================================================
NASD Regulation, Inc. provides a Public Disclosure Program which supplies
certain information regarding the disciplinary history of NASD members and
their associated persons in response to either telephone inquiries at (800)
289-9999 or written inquiries at www.nasdr.com. NASD Regulation, Inc. also
provides an investor brochure that includes information describing the Public
Disclosure Program.
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65
[PHOTO]
Learn more
about Nuveen Funds at
www.nuveen.com/mf
Nuveen Investments:
SERVING Investors
For GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past
century, Nuveen Investments has adhered to the belief that the best
approach to investing is to apply conservative risk-management principles
to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity
and fixed-income solutions that are integral to a well-diversified core
portfolio. Our clients have come to appreciate this diversity, as well as
our continued adherence to proven, long-term investing principles.
We offer many different investing solutions for our clients' different
needs.
Managing approximately $128 billion in assets, Nuveen Investments offers
access to a number of different asset classes and investing solutions
through a variety of products. Nuveen Investments markets its capabilities
under four distinct brands: Nuveen, a leader in tax-free investments; NWQ,
a leader in value-style equities; Rittenhouse, a leader in growth-style
equities; and Symphony, a leading institutional manager of market-neutral
alternative investment portfolios.
Find out how we can help you reach your financial goals.
To learn more about the products and services Nuveen Investments offers and
for a prospectus, where applicable, talk to your financial advisor, or call
us at (800) 257-8787. Please read the information carefully before you
invest.
.. Share prices
.. Fund details
.. Daily financial news
.. Investor education
[LOGO] Nuveen Investments
MSA-MS3-0805D
- --------------------------------------------------------------------------------
Nuveen Investments
Municipal Bond Funds
- --------------------------------------------------------------------------------
Semiannual Report dated August
31, 2005
-----------------------------------
Dependable, tax-free income because it's not what you earn, it's what you
keep.(R)
[PHOTO]
Nuveen Massachusetts Municipal Bond Fund
Nuveen Massachusetts Insured Municipal Bond Fund
[LOGO] Nuveen Investments
[PHOTO]
NOW YOU CAN RECEIVE YOUR
NUVEEN INVESTMENTS FUND REPORTS FASTER.
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an e-mail as soon as your Nuveen Investments Fund information is ready -- no
more waiting for delivery by regular mail. Just click on the link within the
e-mail to see the report, and save it on your computer if your wish.
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IT'S FAST, EASY & FREE:
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if you get your Nuveen Investments Fund dividends and statements from your
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(Be sure to have the address sheet that accompanied this report handy. You'll
need it to complete the enrollment process.)
OR
www.nuveen.com/accountaccess
if you get your Nuveen Investments Fund dividends and statements directly from
Nuveen Investments.
[LOGO]
------------------------------
Must be preceded by or accompanied by a prospectus.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
[PHOTO]
Timothy R. Schwertfeger
Dear Shareholder,
Once again, I am pleased to report that over the most recent reporting period
your Fund continued to provide you with attractive tax-free monthly income. For
more specific information about the performance of your Fund, please see the
Portfolio Manager's Comments and Fund Spotlight sections of this report.
With long-term interest rates still relatively low, many have begun to wonder
whether interest rates will rise, and whether that possibility should cause
them to adjust their holdings of fixed-income investments. No one knows what
the future will bring, which is why we think a well-balanced portfolio that is
structured and carefully monitored with the help of an investment professional
is an important component in achieving your long-term financial goals. A
well-diversified portfolio may actually help to reduce your overall investment
risk, and we believe that municipal bond investments like your Nuveen
Investments Fund can be important building blocks in a portfolio crafted to
perform well through a variety of market conditions.
Some of you may have heard that in April, 2005, The St. Paul Travelers
Companies, Inc., which owned 79% of Nuveen Investments, Inc. (the parent of
your Fund's investment adviser) completed a public offering of a substantial
portion of its equity stake in Nuveen. St. Paul Travelers recently sold the
balance of its Nuveen shares to Nuveen or to others. These transactions had and
will continue to have no impact on the investment objectives or management of
your Fund.
Since 1898, Nuveen Investments has offered financial products and solutions
that incorporate careful research, diversification, and the application of
conservative risk-management principles. We are grateful that you have chosen
us as a partner as you pursue your financial goals. We look forward to
continuing to earn your trust in the months and years ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
October 20, 2005
"No one knows what the future will bring, which is why we think a
well-balanced portfolio . . . is an important component in achieving
your long-term financial goals."
Semiannual Report Page 1
Portfolio Manager's Comments
Portfolio manager Paul Brennan examines key investment strategies and the
performance of the Nuveen Massachusetts Municipal Bond Fund and the Nuveen
Massachusetts Insured Municipal Bond Fund. Paul, who has 14 years of
investment experience, has managed the uninsured Fund since 2003 and the
insured Fund since May 2005.
- --------------------------------------------------------------------------------
How did the Funds perform during the six months ended August 31, 2005?
The chart on the next page provides total return performance information for
the two Funds for the six-month, one-year, five-year, and ten-year periods
ended August 31, 2005, along with comparisons to the Lipper Massachusetts
Municipal Debt Funds category average and the national Lehman Brothers
Municipal Bond Index. Although we believe that comparing the performance of a
state Fund with that of a national municipal index may offer some insights into
how the Fund performed relative to the general municipal market, we also think
that closely comparing the results of state Funds with a national average is
imperfect since most of the national index's results come from out-of-state
bonds.
The total return on net asset value of the uninsured Fund outperformed its
Lipper peer group average and matched the results of the national Lehman
Brothers index. The Fund benefited as intermediate- and long-term interest
rates continued to decline during the past six months. Because we maintained a
healthy allocation to bonds in the long-intermediate part of the yield curve,
the Fund was well-positioned for such a scenario. Our allocation to tobacco
bonds also helped performance. The tobacco companies, whose payments made
pursuant to the 1998 master tobacco settlement agreement back these securities,
got a boost from an improved litigation environment. The Fund's lower-rated
holdings also continued to perform well as investors seemingly became less risk
averse, which tightened credit spreads. In addition to benefiting from our
lower-rated tobacco holdings, the Fund also was helped by the performance of
individual securities in the health care, industrial development, and
multifamily housing sectors. There were few negative influences on performance
during a strong municipal investing environment. The Fund did, however, see
mixed results from a significant weighting in pre-refunded bonds. When bonds
are pre-refunded, investors usually benefit as they generally become priced to
shorter call dates and usually see price appreciation. However, pre-refunded
bonds already held in the portfolio during the period underperformed because of
their shorter durations, as shorter-term interest rates held steady or rose
during the period.
The total return on net asset value of the insured Fund also outperformed its
Lipper peer group average, although it slightly trailed the Lehman Brothers
index. Many of the same factors influencing the uninsured portfolio's
performance had an impact on the insured portfolio as well. This Fund also
benefited from its intermediate- and longer-maturity bond holdings. However,
because the portfolio is entirely invested in AAA-rated securities, we were not
able to participate in the rally enjoyed by lower-rated bonds. We also enjoyed
very favorable results from a Puerto Rico issuer-based inverse-floating-rate
security that generated particularly strong performance during the period.
What strategies were used to manage the Funds during the six-month period, and
how did these strategies influence performance?
In both Funds, our primary focus was to manage the portfolios' yield curve
positioning. With short-term interest rates rising and our view that the
decline in yield on long-term maturities may be becoming overdone, we believed
that the best available values for our shareholders were to be found in bonds
having intermediate maturities, with a particular focus on securities maturing
in 10 years or longer.
- --------------------------------------------------------------------------------
The views expressed reflect those of the portfolio manager and are subject to
change at any time, based on market and other conditions.
Semiannual Report Page 2
Class A Shares--
Total Returns as of 8/31/05
- --------------------------------------------------------------------------------
Average Annual
Cumulative ---------------------
6-month 1-Year 5-Year 10-Year
--------------------------------
Nuveen Massachusetts
Municipal Bond Fund
A Shares at NAV 2.85% 5.78% 6.03% 5.42%
A Shares at Offer -1.45% 1.33% 5.12% 4.97%
----------------------------------------------------------
Nuveen Massachusetts
Insured Municipal Bond
Fund
A Shares at NAV 2.82% 4.78% 5.64% 5.17%
A Shares at Offer -1.52% 0.39% 4.74% 4.72%
----------------------------------------------------------
Lipper Massachusetts
Municipal Debt Funds
Category Average/1/ 2.42% 4.54% 5.59% 5.33%
Lehman Brothers Municipal
Bond Index/2/ 2.85% 5.31% 6.37% 6.20%
----------------------------------------------------------
Returns quoted represent past performance, which is no guarantee of future
results. Returns at NAV would be lower if the sales charge were included.
Returns less than one year are cumulative. Current performance may be higher or
lower than the performance shown. Investment returns and principal value will
fluctuate so that when shares are redeemed, they may be worth more or less than
their original cost. Class A shares have a 4.2% maximum sales charge. Returns
do not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of shares. For the most recent month-end
performance, visit www.nuveen.com or call (800) 257-8787.
During the period, we looked for opportunities to sell some of our
shorter-maturity holdings and, when appropriate, reinvested the proceeds in
suitable longer bonds.
In the uninsured Fund, as credit spreads (the difference in yields between
lower quality bonds and otherwise comparable higher quality bonds) narrowed
during the period, indicating a declining premium for taking on additional
credit risk, we focused nearly all of our new purchase activity in high-grade
investments. Although BBB-rated bonds continued to outperform their
higher-rated counterparts during the past six months, we saw improving relative
future appreciation prospects from AAA-rated issues. The insured Fund was
invested exclusively in AAA-rated bonds and thus did not take advantage of the
continued strong performance of lower-rated bonds.
Compared to the prior year, there was an ample amount of new supply of
Massachusetts municipal bonds during the period. Accordingly, we had little
difficulty finding new bonds in which to invest. Unlike in previous periods,
much of the new issuance came from new or infrequent borrowers in the municipal
marketplace, providing us with opportunities to add to the portfolios'
diversification.
Dividend Information
During the reporting period, both of the Funds maintained their dividend.
Each Fund seeks to pay dividends at a rate that reflects the past and projected
performance of the Fund. To permit a Fund to maintain a more stable monthly
dividend, the Fund may pay dividends at a rate that may be more or less than
the amount of net investment income actually earned by the Fund during the
period. If the Fund has cumulatively earned more than it has paid in dividends,
it will hold the excess in reserve as undistributed net investment income
(UNII) as part of the Fund's net asset value. Conversely, if the Fund has
cumulatively paid in dividends more than it has earned, the excess will
constitute a negative UNII that will likewise be reflected in the Fund's net
asset value. Each Fund will, over time, pay all its net investment income as
dividends to shareholders. As of August 31, 2005, Nuveen Massachusetts
Municipal Bond Fund had negative UNII for financial statement purposes and
positive UNII for tax purposes. Nuveen Massachusetts Insured Municipal Bond
Fund had positive UNII for both financial statement and tax purposes.
- --------------------------------------------------------------------------------
1The Lipper Massachusetts Municipal Debt Funds category average shown
represents the average annualized total return for all reporting funds for the
periods ended August 31, 2005. The Lipper Massachusetts Municipal Debt Funds
category contained 53, 52, 47 and 38 funds for the respective six-month, one-,
five- and ten-year periods ended August 31, 2005. The returns account for the
effects of management fees and assume reinvestment of dividends, but do not
reflect any applicable sales charges. You cannot invest directly in a Lipper
Category.
2The Lehman Brothers Municipal Bond Index is an unmanaged index composed of a
broad range of investment-grade municipal bonds and does not reflect any
initial or ongoing expenses. You cannot invest directly in an index.
Semiannual Report Page 3
Fund Spotlight as of 8/31/05 Nuveen Massachusetts Municipal Bond Fund
================================================================================
Quick Facts
A Shares B Shares C Shares R Shares
--------------------------------------------------------------
NAV $10.18 $10.20 $10.11 $10.16
--------------------------------------------------------------
Latest Monthly Dividend/1/ $0.0325 $0.0265 $0.0280 $0.0340
--------------------------------------------------------------
Inception Date 9/07/94 3/07/97 10/06/94 12/22/86
--------------------------------------------------------------
Returns quoted represent past performance which is no guarantee of future
results. Returns without sales charges would be lower if the sales charge were
included. Current performance may be higher or lower than the performance
shown. Investment returns and principal value will fluctuate so that when
shares are redeemed, they may be worth more or less than their original cost.
Returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of shares. Income is generally exempt from
regular federal income taxes. Some income may be subject to state and local
taxes and to the federal alternative minimum tax. Capital gains, if any, are
subject to tax. For the most recent month-end performance visit www.nuveen.com
or call (800) 257-8787.
Class A, C and R share returns are actual. Class B share returns are actual for
the period since class inception; returns prior to class inception are Class R
share returns adjusted for differences in sales charges and expenses, which are
primarily differences in distribution and service fees. Class A shares have a
4.2% maximum sales charge. Class B shares have a contingent deferred sales
charge (CDSC), also known as a back-end sales charge, that for redemptions
begins at 5% and declines periodically until after 6 years when the charge
becomes 0%. Class B shares automatically convert to Class A shares eight years
after purchase. Class C shares have a 1% CDSC for redemptions within less than
one year, which is not reflected in the one-year total return. Class R shares
have no sales charge and may be purchased under limited circumstances or by
specified classes of investors.
Average Annual Total Returns as of 8/31/05
A Shares NAV Offer
---------------------------------------------
1-Year 5.78% 1.33%
---------------------------------------------
5-Year 6.03% 5.12%
---------------------------------------------
10-Year 5.42% 4.97%
---------------------------------------------
B Shares w/o CDSC w/CDSC
---------------------------------------------
1-Year 5.02% 1.02%
---------------------------------------------
5-Year 5.25% 5.09%
---------------------------------------------
10-Year 4.83% 4.83%
---------------------------------------------
C Shares NAV
---------------------------------------------
1-Year 5.25%
---------------------------------------------
5-Year 5.47%
---------------------------------------------
10-Year 4.81%
---------------------------------------------
R Shares NAV
---------------------------------------------
1-Year 5.98%
---------------------------------------------
5-Year 6.24%
---------------------------------------------
10-Year 5.63%
---------------------------------------------
Tax-Free Yields
A Shares NAV Offer
---------------------------------------------
Dividend Yield/2/ 3.83% 3.67%
---------------------------------------------
SEC 30-Day Yield/3/ 3.36% 3.22%
---------------------------------------------
Taxable-Equivalent Yield/3,4/ 4.94% 4.74%
---------------------------------------------
B Shares NAV
---------------------------------------------
Dividend Yield/2/ 3.12%
---------------------------------------------
SEC 30-Day Yield 2.62%
---------------------------------------------
Taxable-Equivalent Yield/4/ 3.85%
---------------------------------------------
C Shares NAV
---------------------------------------------
Dividend Yield/2/ 3.32%
---------------------------------------------
SEC 30-Day Yield 2.82%
---------------------------------------------
Taxable-Equivalent Yield/4/ 4.15%
---------------------------------------------
R Shares NAV
---------------------------------------------
Dividend Yield/2/ 4.02%
---------------------------------------------
SEC 30-Day Yield 3.56%
---------------------------------------------
Taxable-Equivalent Yield/4/ 5.24%
---------------------------------------------
Average Annual Total Returns as of 9/30/05
A Shares NAV Offer
------------------------------------------
1-Year 4.20% -0.17%
------------------------------------------
5-Year 5.91% 5.02%
------------------------------------------
10-Year 5.24% 4.79%
------------------------------------------
B Shares w/o CDSC w/CDSC
------------------------------------------
1-Year 3.46% -0.54%
------------------------------------------
5-Year 5.13% 4.97%
------------------------------------------
10-Year 4.66% 4.66%
------------------------------------------
C Shares NAV
------------------------------------------
1-Year 3.68%
------------------------------------------
5-Year 5.35%
------------------------------------------
10-Year 4.65%
------------------------------------------
R Shares NAV
------------------------------------------
1-Year 4.40%
------------------------------------------
5-Year 6.14%
------------------------------------------
10-Year 5.46%
------------------------------------------
Portfolio Statistics
Net Assets ($000) $141,573
---------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.83
---------------------------------------------------------
Average Duration 5.83
---------------------------------------------------------
- --------------------------------------------------------------------------------
1Paid September 1, 2005. This is the latest monthly tax-exempt dividend
declared during the period ended August 31, 2005.
2Dividend Yield is the most recent dividend per share (annualized) divided by
the appropriate price per share. The SEC 30-Day Yield is a standardized
measure of the current market yield on the Fund's portfolio and is based on
the maximum offer price per share. The Dividend Yield also differs from the
SEC 30-Day Yield because the Fund may be paying out more or less than it is
earning and it may not include the effect of amortization of bond premium.
3The SEC 30-Day Yield and Taxable Equivalent Yield on A Shares at NAV applies
only to A Shares purchased at no-load pursuant to the Fund's policy permitting
waiver of the A Share load in certain specified circumstances.
4The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield on the Nuveen Investments
Fund on an after-tax basis at a specified tax rate. With respect to
investments that generate qualified dividend income that is taxable at a
maximum rate of 15%, the taxable-equivalent yield is lower. The
taxable-equivalent yield is based on the Fund's SEC 30-Day Yield on the
indicated date and a combined federal and state income tax rate of 32.0%.
Semiannual Report Page 4
Fund Spotlight as of 8/31/05 Nuveen Massachusetts Municipal Bond Fund
================================================================================
Bond Credit Quality/1/
[CHART]
AAA/U.S. Guaranteed 68.6%
AA 17.6%
A 5.2%
BBB 5.5%
BB or Lower 1.1%
NR 2.0%
Sectors/1/
Tax Obligation/General 19.8%
---------------------------------------
Healthcare 14.9%
---------------------------------------
U.S. Guaranteed 14.8%
---------------------------------------
Education and Civic Organizations 13.3%
---------------------------------------
Tax Obligation/Limited 8.8%
---------------------------------------
Water and Sewer 6.8%
---------------------------------------
Transportation 6.2%
---------------------------------------
Long-Term Care 6.2%
---------------------------------------
Other 9.2%
---------------------------------------
1As a percentage of total holdings as of August 31, 2005. Holdings are subject
to change.
- --------------------------------------------------------------------------------
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front and back end sales charges (loads) or redemption fees,
where applicable; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees, where applicable; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example below is based on an investment of $1,000 invested at the beginning
of the period and held for the period.
The information under "Actual Performance," together with the amount you
invested, allows you to estimate actual expenses incurred over the reporting
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60) and multiply the result by the cost
shown for your share class, in the row entitled "Expenses Incurred During
Period" to estimate the expenses incurred on your account during this period.
The information under "Hypothetical Performance," provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expense you incurred for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other Funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front
and back end sales charges (loads) or redemption fees, where applicable.
Therefore, the hypothetical information is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds or share classes. In addition, if these transactional costs
were included, your costs would have been higher.
Hypothetical Performance
Actual Performance (5% annualized return before expenses)
--------------------------------------- ---------------------------------------
A Shares B Shares C Shares R Shares A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------------------------------------------------------
Beginning Account Value (3/01/05) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------------------
Ending Account Value (8/31/05) $1,028.50 $1,024.80 $1,026.00 $1,029.50 $1,020.77 $1,016.99 $1,018.00 $1,021.78
- -----------------------------------------------------------------------------------------------------------------
Expenses Incurred During Period $ 4.50 $ 8.32 $ 7.30 $ 3.48 $ 4.48 $ 8.29 $ 7.27 $ 3.47
- -----------------------------------------------------------------------------------------------------------------
For each class of the Fund, expenses are equal to the Fund's annualized net
expense ratio of .88%, 1.63%, 1.43% and .68% for Classes A, B, C and R,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report Page 5
Fund Spotlight as of 8/31/05 Nuveen Massachusetts Insured Municipal Bond Fund
================================================================================
Quick Facts
A Shares B Shares C Shares R Shares
--------------------------------------------------------------------
NAV $10.54 $10.55 $10.53 $10.57
--------------------------------------------------------------------
Latest Monthly Dividend/1/ $0.0320 $0.0255 $0.0270 $0.0335
--------------------------------------------------------------------
Latest Capital Gain and Ordinary
Income Distribution/2/ $0.0603 $0.0603 $0.0603 $0.0603
--------------------------------------------------------------------
Inception Date 9/07/94 3/06/97 9/15/94 12/22/86
--------------------------------------------------------------------
Returns quoted represent past performance which is no guarantee of future
results. Returns without sales charges would be lower if the sales charge were
included. Current performance may be higher or lower than the performance
shown. Investment returns and principal value will fluctuate so that when
shares are redeemed, they may be worth more or less than their original cost.
Returns do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of shares. Income is generally exempt from
regular federal income taxes. Some income may be subject to state and local
taxes and to the federal alternative minimum tax. Capital gains, if any, are
subject to tax. For the most recent month-end performance visit www.nuveen.com
or call (800) 257-8787.
Class A, C and R share returns are actual. Class B share returns are actual for
the period since class inception; returns prior to class inception are Class R
share returns adjusted for differences in sales charges and expenses, which are
primarily differences in distribution and service fees. Class A shares have a
4.2% maximum sales charge. Class B shares have a contingent deferred sales
charge (CDSC), also known as a back-end sales charge, that for redemptions
begins at 5% and declines periodically until after 6 years when the charge
becomes 0%. Class B shares automatically convert to Class A shares eight years
after purchase. Class C shares have a 1% CDSC for redemptions within less than
one year, which is not reflected in the one-year total return. Class R shares
have no sales charge and may be purchased under limited circumstances or by
specified classes of investors.
Average Annual Total Returns as of 8/31/05
A Shares NAV Offer
---------------------------------------------
1-Year 4.78% 0.39%
---------------------------------------------
5-Year 5.64% 4.74%
---------------------------------------------
10-Year 5.17% 4.72%
---------------------------------------------
B Shares w/o CDSC w/CDSC
---------------------------------------------
1-Year 4.00% 0.00%
---------------------------------------------
5-Year 4.84% 4.68%
---------------------------------------------
10-Year 4.55% 4.55%
---------------------------------------------
C Shares NAV
---------------------------------------------
1-Year 4.09%
---------------------------------------------
5-Year 5.06%
---------------------------------------------
10-Year 4.55%
---------------------------------------------
R Shares NAV
---------------------------------------------
1-Year 4.95%
---------------------------------------------
5-Year 5.85%
---------------------------------------------
10-Year 5.38%
---------------------------------------------
Tax-Free Yields
A Shares NAV Offer
---------------------------------------------
Dividend Yield/3/ 3.64% 3.49%
---------------------------------------------
SEC 30-Day Yield/4/ 3.08% 2.95%
---------------------------------------------
Taxable-Equivalent Yield/4,5/ 4.53% 4.34%
---------------------------------------------
B Shares NAV
---------------------------------------------
Dividend Yield/3/ 2.90%
---------------------------------------------
SEC 30-Day Yield 2.34%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.44%
---------------------------------------------
C Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.08%
---------------------------------------------
SEC 30-Day Yield 2.54%
---------------------------------------------
Taxable-Equivalent Yield/5/ 3.74%
---------------------------------------------
R Shares NAV
---------------------------------------------
Dividend Yield/3/ 3.80%
---------------------------------------------
SEC 30-Day Yield 3.28%
---------------------------------------------
Taxable-Equivalent Yield/5/ 4.82%
---------------------------------------------
Average Annual Total Returns as of 9/30/05
A Shares NAV Offer
------------------------------------------
1-Year 3.17% -1.15%
------------------------------------------
5-Year 5.52% 4.61%
------------------------------------------
10-Year 5.00% 4.56%
------------------------------------------
B Shares w/o CDSC w/CDSC
------------------------------------------
1-Year 2.40% -1.55%
------------------------------------------
5-Year 4.75% 4.58%
------------------------------------------
10-Year 4.38% 4.38%
------------------------------------------
C Shares NAV
------------------------------------------
1-Year 2.58%
------------------------------------------
5-Year 4.94%
------------------------------------------
10-Year 4.39%
------------------------------------------
R Shares NAV
------------------------------------------
1-Year 3.43%
------------------------------------------
5-Year 5.73%
------------------------------------------
10-Year 5.21%
------------------------------------------
Portfolio Statistics
Net Assets ($000) $89,829
--------------------------------------------------------
Average Effective Maturity on Securities (Years) 16.44
--------------------------------------------------------
Average Duration 5.85
--------------------------------------------------------
- --------------------------------------------------------------------------------
1Paid September 1, 2005. This is the latest monthly tax-exempt dividend
declared during the period ended August 31, 2005.
2Paid December 1, 2004. Capital gains and/or ordinary income are subject to
federal taxation.
3Dividend Yield is the most recent dividend per share (annualized) divided by
the appropriate price per share. The SEC 30-Day Yield is a standardized
measure of the current market yield on the Fund's portfolio and is based on
the maximum offer price per share. The Dividend Yield also differs from the
SEC 30-Day Yield because the Fund may be paying out more or less than it is
earning and it may not include the effect of amortization of bond premium.
4The SEC 30-Day Yield and Taxable Equivalent Yield on A Shares at NAV applies
only to A Shares purchased at no-load pursuant to the Fund's policy permitting
waiver of the A Share load in certain specified circumstances.
5The taxable-equivalent yield represents the yield that must be earned on a
fully taxable investment in order to equal the yield on the Nuveen Investments
Fund on an after-tax basis at a specified tax rate. With respect to
investments that generate qualified dividend income that is taxable at a
maximum rate of 15%, the taxable-equivalent yield is lower. The
taxable-equivalent yield is based on the Fund's SEC 30-Day Yield on the
indicated date and a combined federal and state income tax rate of 32.0%.
Semiannual Report Page 6
Fund Spotlight as of 8/31/05 Nuveen Massachusetts Insured Municipal Bond Fund
================================================================================
Bond Credit Quality/1/
[CHART]
Insured 83.4%
U.S. Guaranteed 13.5%
AAA (uninsured) 3.1%
The Fund features a portfolio of primarily investment-grade, long-term
municipal securities. These securities are covered by insurance, guaranteeing
the timely payment of principal and interest, or by an escrow or trust account
containing enough U.S. government or U.S. government agency securities to
ensure timely payment of principal and interest.
Sectors/1/
Tax Obligation/General 27.2%
---------------------------------------
U.S. Guaranteed 13.5%
---------------------------------------
Healthcare 11.7%
---------------------------------------
Education and Civic Organizations 11.4%
---------------------------------------
Housing/Multifamily 11.2%
---------------------------------------
Tax Obligation/Limited 9.5%
---------------------------------------
Transportation 5.5%
---------------------------------------
Other 10.0%
---------------------------------------
1As a percentage of total holdings as of August 31, 2005. Holdings are subject
to change.
- --------------------------------------------------------------------------------
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including front and back end sales charges (loads) or redemption fees,
where applicable; and (2) ongoing costs, including management fees;
distribution and service (12b-1) fees, where applicable; and other Fund
expenses. This Example is intended to help you understand your ongoing costs
(in dollars) of investing in the Fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
The Example below is based on an investment of $1,000 invested at the beginning
of the period and held for the period.
The information under "Actual Performance," together with the amount you
invested, allows you to estimate actual expenses incurred over the reporting
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60) and multiply the result by the cost
shown for your share class, in the row entitled "Expenses Incurred During
Period" to estimate the expenses incurred on your account during this period.
The information under "Hypothetical Performance," provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expense you incurred for the period. You may use this information to
compare the ongoing costs of investing in the Fund and other Funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as front
and back end sales charges (loads) or redemption fees, where applicable.
Therefore, the hypothetical information is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds or share classes. In addition, if these transactional costs
were included, your costs would have been higher.
Hypothetical Performance
Actual Performance (5% annualized return before expenses)
--------------------------------------- ---------------------------------------
A Shares B Shares C Shares R Shares A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------------------------------------------------------
Beginning Account Value (3/01/05) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
- -----------------------------------------------------------------------------------------------------------------
Ending Account Value (8/31/05) $1,028.20 $1,024.40 $1,024.30 $1,029.00 $1,020.67 $1,016.89 $1,017.90 $1,021.68
- -----------------------------------------------------------------------------------------------------------------
Expenses Incurred During Period $ 4.60 $ 8.42 $ 7.40 $ 3.58 $ 4.58 $ 8.39 $ 7.37 $ 3.57
- -----------------------------------------------------------------------------------------------------------------
For each class of the Fund, expenses are equal to the Fund's annualized net
expense ratio of .90%, 1.65%, 1.45% and .70% for Classes A, B, C and R,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
Semiannual Report Page 7
Shareholder
Meeting Report
The annual shareholder meeting was held on July 26, 2005, at The Northern Trust
Bank, Chicago, Illinois.
- --------------------------------------------------------------------------------
Nuveen
Nuveen Massachusetts
Massachusetts Insured
Municipal Municipal
Bond Bond
Fund Fund
------------------------------------------------------------------------------
To approve the new investment management agreement
For 9,119,000 5,372,267
Against 112,372 194,249
Abstain 140,168 114,984
------------------------------------------------------------------------------
Total 9,371,540 5,681,500
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nuveen
Multistate
Approval of the Board Members was reached as follows: Trust II
-----------------------------------------------------------------
Robert P. Bremner
For 128,590,163
Withhold 1,810,507
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Lawrence H. Brown
For 128,609,154
Withhold 1,791,516
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Jack B. Evans
For 128,619,020
Withhold 1,781,650
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
William C. Hunter
For 128,649,278
Withhold 1,751,392
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
David J. Kundert
For 128,561,208
Withhold 1,839,462
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
William J. Schneider
For 128,579,817
Withhold 1,820,853
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Timothy R. Schwertfeger
For 128,604,178
Withhold 1,796,492
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
- ----
8
- --------------------------------------------------------------------------------
Nuveen
Multistate
Approval of the Board Members was reached as follows: Trust II
-----------------------------------------------------------------
Judith M. Stockdale
For 128,613,010
Withhold 1,787,660
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
Eugene S. Sunshine
For 128,626,733
Withhold 1,773,937
-----------------------------------------------------------------
Total 130,400,670
-----------------------------------------------------------------
- ----
9
Portfolio of Investments (Unaudited)
NUVEEN MASSACHUSETTS MUNICIPAL BOND FUND
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Consumer Discretionary - 1.1%
$ 1,500 Boston Industrial Development Financing Authority, 9/12 at 102.00 Ba3 $ 1,517,505
Massachusetts, Senior Revenue Bonds, Crosstown Center
Project, Series 2002, 6.500%, 9/01/35 (Alternative Minimum
Tax)
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples - 0.7%
915 Puerto Rico, The Children's Trust Fund, Tobacco Settlement 5/12 at 100.00 BBB 945,058
Asset-Backed Refunding Bonds, Series 2002, 5.375%, 5/15/33
- --------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 13.0%
895 Massachusetts Educational Finance Authority, Educational 1/12 at 100.00 AAA 935,669
Loan Revenue Bonds, Series 2002E, 5.000%, 1/01/13
(Alternative Minimum Tax) - AMBAC Insured
3,075 Massachusetts Development Finance Authority, Revenue Bonds, 7/15 at 100.00 AAA 3,239,636
Massachusetts College of Pharmacy and Allied Health
Sciences, Series 2005D, 5.000%, 7/01/27 - AGC Insured
3,000 Massachusetts Development Finance Authority, Revenue Bonds, 3/09 at 101.00 A 3,098,220
Curry College, Series 1999A, 5.500%, 3/01/29 - ACA Insured
750 Massachusetts Development Finance Authority, Revenue Bonds, 9/13 at 100.00 AA- 817,688
Milton Academy, Series 2003A, 5.000%, 9/01/19
1,500 Massachusetts Development Finance Agency, Revenue Bonds, 10/15 at 100.00 Aaa 1,583,235
Williston Northampton School, Series 2005B, 5.000%,
10/01/37 - XLCA Insured
1,135 Massachusetts Development Finance Agency, Revenue Bonds, 10/15 at 100.00 AAA 1,204,950
Boston University, Series 2005T-1, 5.000%, 10/01/39 -
AMBAC Insured
1,000 Massachusetts Health and Educational Facilities Authority, No Opt. Call AA- 1,130,400
Revenue Bonds, Boston College, Series 1993K, 5.375%,
6/01/14
500 Massachusetts Health and Educational Facilities Authority, 7/13 at 100.00 AA+ 542,375
Revenue Bonds, Williams College, Series 2003H, 5.000%,
7/01/21
500 Massachusetts Health and Educational Facilities Authority, 7/13 at 100.00 AA+ 532,450
Revenue Bonds, Wellesley College, Series 2003H, 5.000%,
7/01/26
1,000 Massachusetts Health and Educational Facilities Authority, No Opt. Call AAA 1,142,250
Revenue Bonds, Massachusetts Institute of Technology,
Series 2004M, 5.250%, 7/01/15
425 Puerto Rico Industrial, Tourist, Educational, Medical and 2/09 at 101.00 BBB 441,660
Environmental Control Facilities Financing Authority,
Higher Education Revenue Bonds, Ana G. Mendez University
System, Series 1999, 5.375%, 2/01/19
University of Massachusetts Building Authority, Senior Lien
Project Revenue Bonds, Series 2005-1:
1,495 5.000%, 5/01/14 - AMBAC Insured No Opt. Call AAA 1,655,668
860 5.000%, 5/01/15 - AMBAC Insured No Opt. Call AAA 955,443
1,000 University of Massachusetts Building Authority, Senior Lien 11/14 at 100.00 AAA 1,104,370
Project Revenue Bonds, Series 2004-1, 5.250%, 11/01/24 -
AMBAC Insured
- --------------------------------------------------------------------------------------------------------------------
Healthcare - 14.5%
2,900 Massachusetts Development Finance Authority, Revenue Bonds, 8/09 at 101.00 A 3,080,815
Northern Berkshire Community Services Inc., Series 1999A,
6.250%, 8/15/29 - ACA Insured
1,500 Massachusetts Health and Educational Facilities Authority, 7/08 at 101.00 AAA 1,528,440
Revenue Bonds, Harvard Pilgrim Healthcare, Series 1998A,
4.750%, 7/01/22 - FSA Insured
600 Massachusetts Health and Educational Facilities Authority, 5/12 at 100.00 AAA 658,230
Revenue Bonds, New England Medical Center Hospitals,
Series 2002H, 5.375%, 5/15/19 - FGIC Insured
2,785 Massachusetts Health and Educational Facilities Authority, 7/11 at 101.00 AA- 3,091,266
Revenue Bonds, Partners HealthCare System Inc., Series
2001C, 5.750%, 7/01/32
375 Massachusetts Health and Educational Facilities Authority, 7/11 at 100.00 BBB 412,530
Revenue Bonds, UMass Memorial Health Care, Series 2001C,
6.625%, 7/01/32
3,000 Massachusetts Health and Educational Facilities Authority, 11/11 at 101.00 AA 3,166,560
Revenue Bonds, Cape Cod Health Care Inc., Series 2001C,
5.250%, 11/15/31 - RAAI Insured
1,000 Massachusetts Health and Educational Facilities Authority, 1/12 at 101.00 A 1,081,580
Revenue Bonds, Covenant Health Systems Obligated Group,
Series 2002, 6.000%, 7/01/31
- ----
10
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------
Healthcare (continued)
$ 1,250 Massachusetts Health and Educational Facilities Authority, 10/11 at 101.00 BBB+ $ 1,341,300
Revenue Bonds, Berkshire Health System, Series 2001E,
6.250%, 10/01/31
1,000 Massachusetts Health and Educational Facilities Authority, 8/12 at 100.00 AAA 1,084,960
Revenue Bonds, Dartmouth-Hitchcock Obligated Group, Series
2002, 5.125%, 8/01/22 - FSA Insured
1,000 Massachusetts Health and Educational Facilities Authority, 7/12 at 101.00 BBB 1,092,920
Revenue Bonds, Caritas Christi Obligated Group, Series
2002B, 6.250%, 7/01/22
1,770 Massachusetts Health and Educational Facilities Authority, 8/15 at 100.00 AAA 1,911,122
Revenue Bonds, Lahey Clinic Medical Center, Series 2005C,
5.000%, 8/15/21 - FGIC Insured
875 Massachusetts Health and Educational Facilities Authority, 7/15 at 100.00 BBB 886,821
Revenue Bonds, UMass Memorial Health Care, Series 2005D,
5.000%, 7/01/33
1,250 Massachusetts Health and Educational Facilities Authority, 8/15 at 100.00 AA 1,297,650
Revenue Bonds, Emerson Hospital, Series 2005E, 5.000%,
8/15/35 - RAAI Insured
- -----------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 4.0%
1,115 Framingham Housing Authority, Massachusetts, GNMA 8/10 at 105.00 AAA 1,241,307
Collateralized Mortgage Revenue Refunding Bonds, Beaver
Terrace Apartments, Series 2000A, 6.350%, 2/20/32
2,875 Massachusetts Development Financing Authority, Assisted 12/09 at 102.00 N/R 2,827,131
Living Revenue Bonds, Prospect House Apartments, Series
1999, 7.000%, 12/01/31
1,000 Massachusetts Industrial Finance Agency, FHA-Insured 1/08 at 102.00 AAA 1,073,660
Mortgage Loan Bonds, Hudner Associates Projects, Series
1997, 5.650%, 1/01/22 - MBIA Insured
500 Massachusetts Housing Finance Agency, Housing Revenue 6/13 at 100.00 AA- 512,625
Bonds, Series 2003S, 5.050%, 12/01/23 (Alternative Minimum
Tax)
- -----------------------------------------------------------------------------------------------------------------------
Housing/Single Family - 0.5%
650 Massachusetts Housing Finance Agency, Single Family Housing 6/10 at 100.00 AA 653,192
Revenue Bonds, Series 84, 5.550%, 12/01/31 (Alternative
Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------
Industrials - 0.3%
400 Massachusetts Development Finance Agency, Solid Waste No Opt. Call BBB 433,284
Disposal Revenue Bonds, Waste Management Inc., Series
2003, 5.450%, 6/01/14
- -----------------------------------------------------------------------------------------------------------------------
Long-Term Care - 6.0%
1,790 Massachusetts Development Finance Authority, Revenue Bonds, 9/09 at 102.00 AA 1,950,241
May Institute, Series 1999, 5.750%, 9/01/24 - RAAI Insured
885 Massachusetts Health and Educational Facilities Authority, 1/06 at 100.00 AAA 886,876
Revenue Bonds, Cable Housing and Health Services, Series
1993A, 5.625%, 7/01/13 - MBIA Insured
Massachusetts Industrial Finance Agency, GNMA
Collateralized Assisted Living Facility Revenue Bonds, TNG
Draper Place Project, Series 1998:
265 5.400%, 8/20/12 (Alternative Minimum Tax) 8/08 at 105.00 AA 271,169
2,490 6.450%, 8/20/39 (Alternative Minimum Tax) 8/08 at 105.00 AA 2,756,679
2,020 Massachusetts Industrial Finance Agency, GNMA 6/09 at 102.00 AAA 2,135,059
Collateralized Assisted Living Facility Revenue Bonds,
Arbors at Taunton LP, Series 1999, 5.500%, 6/20/40
(Alternative Minimum Tax)
545 Massachusetts Industrial Finance Agency, FHA-Insured 2/06 at 102.00 AAA 560,849
Project Revenue Bonds, Heights Crossing LP, Series 1995,
6.000%, 2/01/15 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 18.9%
1,085 Amherst-Pelham Regional School District, Massachusetts, 11/15 at 101.00 AAA 1,213,855
General Obligation Bonds, Series 2005, 5.000%, 11/15/17 -
FSA Insured
500 Ashland, Massachusetts, General Obligation Bonds, Series 5/15 at 100.00 Aaa 555,570
2004, 5.250%, 5/15/23 - AMBAC Insured
1,160 Beverly, Massachusetts, General Obligation Bonds, Series 11/13 at 100.00 Aaa 1,259,772
2003, 5.000%, 11/01/21 - MBIA Insured
1,000 Boston, Massachusetts, General Obligation Bonds, Series 8/11 at 100.00 Aa1 1,085,630
2001B, 5.000%, 8/01/15
1,500 Boston, Massachusetts, General Obligation Bonds, Series 1/15 at 100.00 Aa1 1,655,760
2005A, 5.000%, 1/01/17
1,090 Brookline, Massachusetts, General Obligation Bonds, Series 4/10 at 101.00 Aaa 1,193,605
2000, 5.375%, 4/01/17
- ----
11
Portfolio of Investments (Unaudited)
NUVEEN MASSACHUSETTS MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/General (continued)
$ 1,000 Erving, Massachusetts, General Obligation Bonds, Series 6/12 at 101.00 BBB $ 1,073,460
2002, 5.500%, 6/15/16
1,000 Fall River, Massachusetts, General Obligation Bonds, Series 2/13 at 101.00 AAA 1,086,830
2003, 5.000%, 2/01/21 - FSA Insured
1,145 Falmouth, Massachusetts, General Obligation Bonds, Series 2/12 at 101.00 AA+ 1,250,970
2002, 5.000%, 2/01/19
545 Lawrence, Massachusetts, General Obligation Bonds, Series 2/11 at 100.00 Aaa 584,725
2001, 5.000%, 2/01/21 - AMBAC Insured
745 Lowell, Massachusetts, General Obligation Bonds, Series 12/15 at 100.00 Aaa 826,198
2005, 5.000%, 12/15/18 - MBIA Insured
1,335 Marlborough, Massachusetts, General Obligation Bonds, 6/09 at 101.00 Aaa 1,435,058
Series 1999, 5.125%, 6/15/19 - FGIC Insured
2,500 Massachusetts Bay Transportation Authority, General No Opt. Call AAA 3,197,950
Obligation Transportation System Bonds, Series 1991A,
7.000%, 3/01/21
1,250 Massachusetts, General Obligation Bonds, Consolidated Loan, No Opt. Call AA 1,466,875
Series 2002D, 5.500%, 8/01/19
1,490 Northbridge, Massachusetts, General Obligation Bonds, 2/12 at 101.00 AAA 1,650,026
Series 2002, 5.250%, 2/15/18 - AMBAC Insured
1,000 Randolph, Massachusetts, General Obligation Bonds, Series No Opt. Call AAA 1,110,140
2004, 5.000%, 9/01/13 - AMBAC Insured
1,000 Reading, Massachusetts, General Obligation Bonds, Series 3/14 at 100.00 AAA 1,102,660
2004, 5.000%, 3/15/15 - MBIA Insured
1,415 Springfield, Massachusetts, General Obligation Bonds, 1/13 at 100.00 AAA 1,570,735
Series 2003, 5.250%, 1/15/23 - MBIA Insured
Westfield, Massachusetts, General Obligation Bonds, Series
2004:
695 5.000%, 8/01/18 - AMBAC Insured 8/14 at 100.50 AAA 764,743
690 5.000%, 8/01/19 - AMBAC Insured 8/14 at 100.50 AAA 757,040
1,825 Worcester, Massachusetts, General Obligation Bonds, Series 7/15 at 100.00 AAA 1,999,288
2005A, 5.000%, 7/01/19 - FGIC Insured
- --------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 8.6%
680 Martha's Vineyard Land Bank, Massachusetts, Revenue Bonds, 5/13 at 100.00 AAA 717,815
Series 2002, 5.000%, 5/01/32 - AMBAC Insured
395 Martha's Vineyard Land Bank, Massachusetts, Revenue Bonds, 5/14 at 100.00 AAA 424,416
Series 2004, 5.000%, 5/01/26 - AMBAC Insured
1,610 Massachusetts Bay Transportation Authority, Assessment 7/15 at 100.00 AAA 1,767,909
Bonds, Series 2005A, 5.000%, 7/01/18 (WI, settling 9/08/05)
770 Massachusetts Bay Transportation Authority, Senior Lien No Opt. Call AAA 894,378
Sales Tax Revenue Bonds, Series 2004C, 5.250%, 7/01/21
1,125 Massachusetts College Building Authority, Project Revenue No Opt. Call AAA 1,320,334
Refunding Bonds, Series 2003B, 5.375%, 5/01/23 - XLCA
Insured
550 Massachusetts College Building Authority, Project Revenue 5/14 at 100.00 AAA 597,262
Bonds, Series 2004A, 5.000%, 5/01/19 - MBIA Insured
1,600 Massachusetts School Building Authority, Dedicated Sales 8/15 at 100.00 AAA 1,750,256
Tax Revenue Bonds, Series 2005A, 5.000%, 8/15/20 - FSA
Insured
670 Massachusetts, Special Obligation Dedicated Tax Revenue No Opt. Call AAA 753,844
Bonds, Series 2005, 5.000%, 1/01/20 - FGIC Insured
2,000 Massachusetts, Special Obligation Refunding Notes, Federal No Opt. Call Aaa 2,197,220
Highway Grant Anticipation Note Program, Series 2003A,
5.000%, 12/15/13 - FSA Insured
1,500 Puerto Rico, Highway Revenue Bonds, Highway and No Opt. Call AAA 1,778,535
Transportation Authority, Series 2003AA, 5.500%, 7/01/19 -
MBIA Insured
- --------------------------------------------------------------------------------------------------------------------
Transportation - 6.1%
3,835 Massachusetts Port Authority, Revenue Bonds, Series 2003A, 7/13 at 100.00 AAA 4,140,304
5.000%, 7/01/24 - MBIA Insured
2,300 Massachusetts Port Authority, Revenue Bonds, Series 2005A, 7/15 at 100.00 AAA 2,488,278
5.000%, 7/01/23 - AMBAC Insured
1,950 Massachusetts Port Authority, Special Facilities Revenue 1/11 at 101.00 AAA 1,996,079
Bonds, Delta Air Lines Inc., Series 2001A, 5.000%, 1/01/27
(Alternative Minimum Tax) - AMBAC Insured
- ----
12
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** - 14.5%
$ 600 Massachusetts Bay Transportation Authority, General 3/07 at 101.00 AA*** $ 624,222
Obligation Transportation System Bonds, Series 1997D,
5.000%, 3/01/27 (Pre-refunded to 3/01/07)
250 Massachusetts Bay Transportation Authority, Certificates of 12/06 at 100.00 AA-*** 265,653
Participation, Series 1988, 7.800%, 1/15/14 (Pre-refunded
to 12/22/06)
1,860 Massachusetts, General Obligation Bonds, Consolidated Loan, 1/13 at 100.00 AA*** 2,034,580
Series 2003A, 5.000%, 1/01/22 (Pre-refunded to 1/01/13)
1,250 Massachusetts, General Obligation Bonds, Consolidated Loan, 8/14 at 100.00 AA*** 1,376,913
Series 2004B, 5.000%, 8/01/24 (Pre-refunded to 8/01/14)
2,000 Massachusetts Development Finance Authority, Revenue Bonds, 1/10 at 101.00 Aaa 2,301,640
Massachusetts College of Pharmacy and Allied Health
Sciences, Series 1999B, 6.625%, 7/01/20 (Pre-refunded to
1/01/10)
1,820 Massachusetts Health and Educational Facilities Authority, 8/10 at 100.00 AAA 1,906,159
FHA-Insured Revenue Bonds, Malden Hospital, Series 1982A,
5.000%, 8/01/16 (Pre-refunded to 8/01/10)
700 Massachusetts Health and Educational Facilities Authority, 7/06 at 100.00 Aaa 712,789
Revenue Bonds, Daughters of Charity National Health System
- Carney Hospital, Series 1994D, 6.100%, 7/01/14
(Pre-refunded to 7/01/06)
1,285 Massachusetts Health and Educational Facilities Authority, 2/07 at 102.00 Aa2*** 1,370,067
FHA-Insured Revenue Refunding Bonds, Youville Hospital,
Series 1997A, 6.250%, 2/15/41 (Pre-refunded to 2/15/07)
3,000 Massachusetts Health and Educational Facilities Authority, 7/10 at 101.00 N/R*** 3,451,800
Revenue Bonds, Winchester Hospital, Series 2000E, 6.750%,
7/01/30 (Pre-refunded to 7/01/10)
535 Massachusetts Port Authority, Revenue Bonds, Series 1982, 1/06 at 100.00 AAA 759,267
13.000%, 7/01/13
1,500 Massachusetts Industrial Finance Agency, Healthcare 5/07 at 102.00 N/R*** 1,585,035
Facilities Revenue Bonds, Jewish Geriatric Services Inc.
Obligated Group, Series 1997B, 5.500%, 5/15/27
(Pre-refunded to 5/15/07)
1,500 Massachusetts, Special Obligation Dedicated Tax Revenue 1/14 at 100.00 AAA 1,677,315
Bonds, Series 2004, 5.250%, 1/01/25 (Pre-refunded to
1/01/14) - FGIC Insured
1,000 Massachusetts, Special Obligation Revenue Refunding Bonds, 6/12 at 100.00 AAA 1,112,310
Series 2002A, 5.375%, 6/01/19 (Pre-refunded to 6/01/12) -
FGIC Insured
1,200 University of Massachusetts Building Authority, Senior Lien 11/13 at 100.00 AAA 1,351,440
Project Revenue Bonds, Series 2003-1, 5.250%, 11/01/18
(Pre-refunded to 11/01/13) - AMBAC Insured
- --------------------------------------------------------------------------------------------------------------------
Utilities - 2.5%
1,000 Massachusetts Development Finance Agency, Resource Recovery 1/12 at 101.00 AAA 1,105,830
Revenue Bonds, SEMass System, Series 2001A, 5.625%,
1/01/16 - MBIA Insured
1,000 Massachusetts Industrial Finance Agency, Resource Recovery 12/08 at 102.00 BBB 1,029,830
Revenue Refunding Bonds, Ogden Haverhill Project, Series
1998A, 5.600%, 12/01/19 (Alternative Minimum Tax)
1,240 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/15 at 100.00 AAA 1,334,177
Series 2005RR, 5.000%, 7/01/35 - FGIC Insured
- --------------------------------------------------------------------------------------------------------------------
Water and Sewer - 6.7%
2,000 Boston Water and Sewerage Commission, Massachusetts, 11/14 at 100.00 AA 2,157,680
General Revenue Bonds, Senior Series 2004A, 5.000%,
11/01/25
1,750 Massachusetts Water Resources Authority, General Revenue 8/17 at 100.00 AAA 1,896,382
Bonds, Series 2005A, 5.000%, 8/01/29 - MBIA Insured
1,500 Massachusetts Water Pollution Abatement Trust, Revenue 8/12 at 100.00 AAA 1,641,660
Bonds, MWRA Loan Program, Series 2002A, 5.250%, 8/01/20
1,500 Massachusetts Water Pollution Abatement Trust, Pooled Loan 8/13 at 100.00 AAA 1,625,550
Program Bonds, Series 9, 5.000%, 8/01/22
2,000 Massachusetts Water Pollution Abatement Trust, Pooled Loan 8/14 at 100.00 AAA 2,147,920
Program Bonds, Series 10, 5.000%, 8/01/26
- --------------------------------------------------------------------------------------------------------------------
$ 126,835 Total Long-Term Investments (cost $130,635,434) - 97.4% 137,918,582
- --------------------------------------------------------------------------------------------------------------------
- ------------
- ----
13
Portfolio of Investments (Unaudited)
NUVEEN MASSACHUSETTS MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Market
Amount (000) Description Ratings** Value
- ------------------------------------------------------------------------------------------------------
Short-Term Investments - 0.4%
$ 600 Puerto Rico Government Development Bank, Adjustable A-1 $ 600,000
Refunding Bonds, Variable Rate Demand Obligations, Series
1985, 2.220%, 12/01/15 - MBIA Insured +
- ------------------------------------------------------------------------------------------------------
$ 600 Total Short-Term Investments (cost $600,000) 600,000
- ------------------------------------------------------------------------------------------------------
- ------------
Total Investments (cost $131,235,434) - 97.8% 138,518,582
----------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.2% 3,054,586
----------------------------------------------------------------------------------------
Net Assets - 100% $ 141,573,168
----------------------------------------------------------------------------------------
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. Government or U.S. Government agency securities which
ensures the timely payment of principal and interest. Such
securities are normally considered to be equivalent to AAA rated
securities.
N/RInvestment is not rated.
(WI)Security purchased on a when-issued basis.
+ 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 in effect at the end of the
reporting period. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
- ----
14
Portfolio of Investments (Unaudited)
NUVEEN MASSACHUSETTS INSURED MUNICIPAL BOND FUND
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------
Education and Civic Organizations - 11.3%
$ 1,790 Massachusetts Educational Finance Authority, Educational 1/12 at 100.00 AAA $ 1,871,338
Loan Revenue Bonds, Series 2002E, 5.000%, 1/01/13
(Alternative Minimum Tax) - AMBAC Insured
1,500 Massachusetts Development Finance Agency, Revenue Bonds, 10/15 at 100.00 Aaa 1,583,235
Williston Northampton School, Series 2005B, 5.000%,
10/01/37 - XLCA Insured
865 Massachusetts Development Finance Agency, Revenue Bonds, 10/15 at 100.00 AAA 918,310
Boston University, Series 2005T-1, 5.000%, 10/01/39 -
AMBAC Insured
1,000 Massachusetts Health and Educational Facilities Authority, 10/12 at 100.00 AAA 1,123,480
Revenue Bonds, University of Massachusetts - Worcester
Campus, Series 2002C, 5.500%, 10/01/18 - MBIA Insured
1,000 Massachusetts Health and Educational Facilities Authority, 10/14 at 100.00 AAA 1,103,600
Revenue Bonds, University of Massachusetts, Series 2005D,
5.250%, 10/01/24 - FGIC Insured
1,000 Massachusetts Industrial Finance Agency, Revenue Bonds, 3/06 at 102.00 AAA 1,032,070
College of the Holy Cross, Series 1996, 5.500%, 3/01/20 -
MBIA Insured
420 Massachusetts Industrial Finance Agency, Revenue Bonds, 10/05 at 102.00 AAA 429,391
Babson College, Series 1995A, 5.800%, 10/01/10
(Pre-refunded to 10/01/05) - MBIA Insured
1,970 Massachusetts Industrial Finance Agency, Revenue Bonds, 7/08 at 102.00 AAA 2,076,282
Western New England College, Series 1998, 5.000%, 7/01/28
- AMBAC Insured
- -------------------------------------------------------------------------------------------------------------------
Healthcare - 11.5%
2,000 Boston, Massachusetts, Special Obligation Bonds, Boston 8/12 at 100.00 AAA 2,169,400
Medical Center, Series 2002, 5.000%, 8/01/18 - MBIA Insured
1,000 Massachusetts Health and Educational Facilities Authority, 7/06 at 102.00 AAA 1,042,740
Revenue Bonds, Baystate Medical Center, Series 1996E,
6.000%, 7/01/26 - FSA Insured
20 Massachusetts Health and Educational Facilities Authority, 1/06 at 100.00 AAA 20,261
Revenue Bonds, Capital Asset Program, Series 1989G-2,
7.200%, 7/01/09 - MBIA Insured
600 Massachusetts Health and Educational Facilities Authority, 5/12 at 100.00 AAA 658,230
Revenue Bonds, New England Medical Center Hospitals,
Series 2002H, 5.375%, 5/15/19 - FGIC Insured
1,705 Massachusetts Health and Educational Facilities Authority, 7/08 at 102.00 AAA 1,792,347
Revenue Bonds, CareGroup Inc., Series 1998A, 5.000%,
7/01/25 - MBIA Insured
1,000 Massachusetts Health and Educational Facilities Authority, 8/12 at 100.00 AAA 1,084,960
Revenue Bonds, Dartmouth-Hitchcock Obligated Group, Series
2002, 5.125%, 8/01/22 - FSA Insured
1,230 Massachusetts Health and Educational Facilities Authority, 8/15 at 100.00 AAA 1,328,068
Revenue Bonds, Lahey Clinic Medical Center, Series 2005C,
5.000%, 8/15/21 - FGIC Insured
2,290 Puerto Rico Industrial, Tourist, Educational, Medical and 1/06 at 101.00 AAA 2,342,212
Environmental Control Facilities Financing Authority,
Hospital Revenue Bonds, Auxilio Mutuo Hospital, Series
1995A, 6.250%, 7/01/16 - MBIA Insured
- -------------------------------------------------------------------------------------------------------------------
Housing/Multifamily - 11.1%
2,500 Massachusetts Development Finance Authority, GNMA 10/11 at 105.00 AAA 2,827,400
Collateralized Revenue Bonds, VOA Concord Assisted Living
Inc., Series 2000A, 6.900%, 10/20/41
2,500 Massachusetts Development Finance Authority, GNMA 3/12 at 105.00 AAA 2,801,325
Collateralized Assisted Living Facility Revenue Bonds,
Arbors at Chicopee, Series 2001A, 6.250%, 9/20/42
(Alternative Minimum Tax)
850 Massachusetts Housing Finance Agency, Housing Development 6/08 at 101.00 AAA 867,077
Revenue Bonds, Series 1998A, 5.375%, 6/01/16 (Alternative
Minimum Tax) - MBIA Insured
640 Massachusetts Industrial Finance Agency, FHA-Insured 1/08 at 102.00 AAA 687,142
Mortgage Loan Bonds, Hudner Associates Projects, Series
1997, 5.650%, 1/01/22 - MBIA Insured
2,575 Somerville Housing Authority, Massachusetts, GNMA 5/12 at 103.00 AAA 2,754,812
Collateralized Mortgage Revenue Bonds, Clarendon Hill
Towers, Series 2002, 5.200%, 11/20/22
- -------------------------------------------------------------------------------------------------------------------
Long-Term Care - 3.8%
3,185 Massachusetts Industrial Finance Agency, GNMA 12/07 at 102.00 AAA 3,375,145
Collateralized Assisted Living Facility Revenue Bonds,
Arbors at Amherst LP, Series 1997, 5.950%, 6/20/39
(Alternative Minimum Tax)
- ----
15
Portfolio of Investments (Unaudited)
NUVEEN MASSACHUSETTS INSURED MUNICIPAL BOND FUND (continued)
August 31, 2005
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------
Tax Obligation/General - 27.0%
$ 585 Brookline, Massachusetts, General Obligation Bonds, Series 4/10 at 101.00 Aaa $ 640,084
2000, 5.375%, 4/01/18
1,520 Fall River, Massachusetts, General Obligation Bonds, Series 2/13 at 101.00 AAA 1,697,810
2003, 5.250%, 2/01/17 - FSA Insured
1,265 Freetown Lakeville Regional School District, Plymouth 1/13 at 101.00 AAA 1,396,977
County, Massachusetts, General Obligation Bonds, Series
2003, 5.000%, 1/01/15 - MBIA Insured
1,000 Lawrence, Massachusetts, General Obligation Bonds, Series 2/11 at 100.00 Aaa 1,072,890
2001, 5.000%, 2/01/21 - AMBAC Insured
1,000 Massachusetts Bay Transportation Authority, General 3/08 at 101.00 AAA 1,051,540
Obligation Transportation System Bonds, Series 1998A,
5.000%, 3/01/18 - MBIA Insured
3,000 Massachusetts, General Obligation Bonds, Consolidated Loan, No Opt. Call AAA 3,520,440
Series 2001D, 6.000%, 11/01/13 - MBIA Insured
1,500 Monson, Massachusetts, Unlimited Tax General Obligation No Opt. Call AAA 1,640,535
School Refunding Bonds, Series 1993, 5.500%, 10/15/10 -
MBIA Insured
1,250 Northampton, Massachusetts, General Obligation Bonds, 9/12 at 101.00 Aaa 1,359,813
Series 2002, 5.000%, 9/01/19 - MBIA Insured
190 Northfield, Massachusetts, General Obligation Bonds, Series 10/05 at 100.00 AAA 190,811
1992, 6.350%, 10/15/09 - MBIA Insured
1,350 Norwell, Massachusetts, General Obligation Bonds, Series No Opt. Call AAA 1,470,812
2005, 5.000%, 2/15/25 - AMBAC Insured
1,230 Pioneer Valley Regional School District, Massachusetts, 6/12 at 101.00 Aaa 1,378,338
General Obligation Bonds, Series 2002, 5.375%, 6/15/19 -
AMBAC Insured
1,770 Reading, Massachusetts, General Obligation Bonds, Series 3/14 at 100.00 AAA 1,940,522
2004, 5.000%, 3/15/16 - MBIA Insured
2,575 Tantasqua Regional School District, Massachusetts, General 8/10 at 101.00 Aaa 2,783,807
Obligation Bonds, Series 2000, 5.000%, 8/15/19 - FSA
Insured
220 Taunton, Massachusetts, General Obligation Bonds, Series 9/05 at 101.00 AAA 222,917
1991, 6.800%, 9/01/09 - MBIA Insured
2,200 Puerto Rico, Public Improvement Bonds, TICS/TOCS, Series No Opt. Call AAA 3,251,644
2001, 8.286%, 7/01/19 - FSA Insured (IF)
545 Worcester, Massachusetts, General Obligation Bonds, Series 8/11 at 100.00 AAA 607,937
2001A, 5.500%, 8/15/18 - FGIC Insured
- -------------------------------------------------------------------------------------------------------------------
Tax Obligation/Limited - 9.4%
2,000 Massachusetts Bay Transportation Authority, Senior Sales 7/12 at 100.00 AAA 2,099,540
Tax Revenue Refunding Bonds, Series 2002A, 5.000%, 7/01/32
1,000 Massachusetts College Building Authority, Project Revenue No Opt. Call AAA 1,144,720
Refunding Bonds, Series 2003B, 5.375%, 5/01/17 - XLCA
Insured
1,160 Massachusetts College Building Authority, Project Revenue 5/14 at 100.00 AAA 1,266,836
Bonds, Series 2004A, 5.000%, 5/01/17 - MBIA Insured
1,100 Massachusetts School Building Authority, Dedicated Sales 8/15 at 100.00 AAA 1,203,301
Tax Revenue Bonds, Series 2005A, 5.000%, 8/15/20 - FSA
Insured
460 Massachusetts, Special Obligation Dedicated Tax Revenue No Opt. Call AAA 517,564
Bonds, Series 2005, 5.000%, 1/01/20 - FGIC Insured
2,000 Puerto Rico Highway and Transportation Authority, Highway 7/14 at 100.00 AAA 2,198,240
Revenue Bonds, Series 2004J, 5.000%, 7/01/18 - MBIA Insured
- -------------------------------------------------------------------------------------------------------------------
Transportation - 5.5%
1,000 Massachusetts Port Authority, Revenue Bonds, Series 2003C, 7/13 at 100.00 AAA 1,092,630
5.000%, 7/01/18 - MBIA Insured
1,630 Massachusetts Port Authority, Revenue Bonds, Series 2005A, 7/15 at 100.00 AAA 1,763,432
5.000%, 7/01/23 - AMBAC Insured
2,000 Massachusetts Turnpike Authority, Metropolitan Highway 1/07 at 102.00 AAA 2,074,720
System Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37
- MBIA Insured
- -------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** - 13.3%
850 Massachusetts Municipal Wholesale Electric Company, Power 1/06 at 100.00 AAA 905,854
Supply System Revenue Bonds, Nuclear Project 6, Series
1993A, 5.000%, 7/01/10 - AMBAC Insured
1,000 Massachusetts, General Obligation Bonds, Consolidated Loan, 3/12 at 100.00 AAA 1,117,720
Series 2002B, 5.500%, 3/01/17 (Pre-refunded to 3/01/12) -
FSA Insured
295 Massachusetts Health and Educational Facilities Authority, 7/21 at 100.00 AAA 331,374
Revenue Bonds, CareGroup Inc., Series 1998A, 5.000%,
7/01/25 (Pre-refunded to 7/01/21) - MBIA Insured
- ----
16
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------
U.S. Guaranteed *** (continued)
$ 2,000 Massachusetts, Special Obligation Dedicated Tax Revenue 1/14 at 100.00 AAA $ 2,236,420
Bonds, Series 2004, 5.250%, 1/01/21 (Pre-refunded to
1/01/14) - FGIC Insured
2,450 Massachusetts Water Resources Authority, General Revenue 8/13 at 100.00 AAA 2,691,815
Bonds, Series 2004D, 5.000%, 8/01/15 (Pre-refunded to
8/01/13) - MBIA Insured
2,000 University of Massachusetts Building Authority, Senior Lien 11/14 at 100.00 AAA 2,283,700
Project Revenue Bonds, Series 2004-1, 5.375%, 11/01/18
(Pre-refunded to 11/01/14) - AMBAC Insured
2,225 Worcester, Massachusetts, General Obligation Bonds, Series 8/10 at 101.00 AAA 2,459,026
2000, 5.250%, 8/15/20 (Pre-refunded to 8/15/10) - FGIC
Insured
- ----------------------------------------------------------------------------------------------------------------------
Utilities - 3.8%
1,500 Massachusetts Development Finance Agency, Resource Recovery 1/12 at 101.00 AAA 1,658,741
Revenue Bonds, SEMass System, Series 2001A, 5.625%,
1/01/16 - MBIA Insured
1,600 Puerto Rico Electric Power Authority, Power Revenue Bonds, 7/10 at 101.00 AAA 1,736,960
Series 2000HH, 5.250%, 7/01/29 - FSA Insured
- ----------------------------------------------------------------------------------------------------------------------
Water and Sewer - 2.5%
1,000 Massachusetts Water Resources Authority, General Revenue No Opt. Call AAA 1,151,460
Bonds, Series 2002J, 5.250%, 8/01/19 - FSA Insured
1,000 Springfield Water and Sewerage Commission, Massachusetts, 7/14 at 100.00 AAA 1,076,450
General Revenue Bonds, Series 2003A, 5.000%, 7/01/23 -
MBIA Insured
- ----------------------------------------------------------------------------------------------------------------------
$ 81,110 Total Long-Term Investments (cost $84,139,629) - 99.2% 89,126,205
- ----------------------------------------------------------------------------------------------------------------------
- ------------
Other Assets Less Liabilities - 0.8% 702,487
-----------------------------------------------------------------------------------------------------
Net Assets - 100% $ 89,828,692
-----------------------------------------------------------------------------------------------------
Primarily all of the bonds in the portfolio are either covered by
Original Issue Insurance, Secondary Market Insurance or Portfolio
Insurance, or are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency securities,
any of which ensures the timely payment of principal and interest.
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
***Securities are backed by an escrow or trust containing sufficient
U.S. Government or U.S. Government agency securities which
ensures the timely payment of principal and interest.
(IF)Inverse floating rate security.
See accompanying notes to financial statements.
- ----
17
Statement of Assets and Liabilities (Unaudited)
August 31, 2005
Massachusetts
Massachusetts Insured
- -----------------------------------------------------------------------------------------------------------
Assets
Investments, at market value (cost $131,235,434 and $84,139,629, respectively) $138,518,582 $89,126,205
Cash 3,562,529 207,301
Receivables:
Interest 1,474,058 1,009,841
Shares sold 375,783 19,913
Other assets 204 172
- -----------------------------------------------------------------------------------------------------------
Total assets 143,931,156 90,363,432
- -----------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 1,753,161 --
Shares redeemed 20,841 168,041
Accrued expenses:
Management fees 63,482 40,838
12b-1 distribution and service fees 22,370 15,994
Other 52,226 39,604
Dividends payable 445,908 270,263
- -----------------------------------------------------------------------------------------------------------
Total liabilities 2,357,988 534,740
- -----------------------------------------------------------------------------------------------------------
Net assets $141,573,168 $89,828,692
- -----------------------------------------------------------------------------------------------------------
Class A Shares
Net assets $ 61,287,567 $21,754,033
Shares outstanding 6,021,603 2,064,347
Net asset value per share $ 10.18 $ 10.54
Offering price per share (net asset value per share plus
maximum sales charge of 4.20% of offering price) $ 10.63 $ 11.00
- -----------------------------------------------------------------------------------------------------------
Class B Shares
Net assets $ 6,397,963 $ 6,474,054
Shares outstanding 627,406 613,831
Net asset value and offering price per share $ 10.20 $ 10.55
- -----------------------------------------------------------------------------------------------------------
Class C Shares
Net assets $ 11,640,055 $11,277,133
Shares outstanding 1,151,836 1,070,731
Net asset value and offering price per share $ 10.11 $ 10.53
- -----------------------------------------------------------------------------------------------------------
Class R Shares
Net assets $ 62,247,583 $50,323,472
Shares outstanding 6,127,929 4,761,595
Net asset value and offering price per share $ 10.16 $ 10.57
- -----------------------------------------------------------------------------------------------------------
Net Assets Consist of:
- -----------------------------------------------------------------------------------------------------------
Capital paid-in $134,009,196 $84,565,240
Undistributed (Over-distribution of) net investment income (137,277) 42,204
Accumulated net realized gain from investments 418,101 234,672
Net unrealized appreciation of investments 7,283,148 4,986,576
- -----------------------------------------------------------------------------------------------------------
Net assets $141,573,168 $89,828,692
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
18
Statement of Operations (Unaudited)
Six Months Ended August 31, 2005
Massachusetts
Massachusetts Insured
- -------------------------------------------------------------------------------------------------
Investment Income $3,136,140 $2,109,395
- -------------------------------------------------------------------------------------------------
Expenses
Management fees 359,698 244,143
12b-1 service fees - Class A 52,181 21,478
12b-1 distribution and service fees - Class B 32,303 31,832
12b-1 distribution and service fees - Class C 41,103 43,280
Shareholders' servicing agent fees and expenses 46,522 31,305
Custodian's fees and expenses 26,517 19,696
Trustees' fees and expenses 1,278 864
Professional fees 5,596 4,912
Shareholders' reports - printing and mailing expenses 16,728 13,631
Federal and state registration fees 4,407 3,986
Other expenses 1,566 1,284
- -------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 587,899 416,411
Custodian fee credit (8,365) (4,454)
- -------------------------------------------------------------------------------------------------
Net expenses 579,534 411,957
- -------------------------------------------------------------------------------------------------
Net investment income 2,556,606 1,697,438
- -------------------------------------------------------------------------------------------------
Realized and Unrealized Gain
Net realized gain from investments 302,015 188,430
Net change in unrealized appreciation (depreciation) of investments 937,529 571,875
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1,239,544 760,305
- -------------------------------------------------------------------------------------------------
Net increase in net assets from operations $3,796,150 $2,457,743
- -------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
19
Statement of Changes in Net Assets (Unaudited)
Massachusetts
------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
- ------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 2,556,606 $ 4,709,279
Net realized gain from investments 302,015 164,166
Net change in unrealized appreciation (depreciation) of investments 937,529 (524,059)
- ------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 3,796,150 4,349,386
- ------------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income:
Class A (992,526) (1,388,915)
Class B (106,458) (244,478)
Class C (181,898) (379,301)
Class R (1,271,009) (2,711,619)
From accumulated net realized gains from investments:
Class A -- --
Class B -- --
Class C -- --
Class R -- --
- ------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (2,551,891) (4,724,313)
- ------------------------------------------------------------------------------------------------------
Fund Share Transactions
Proceeds from sale of shares 19,548,522 25,154,774
Proceeds from shares issued to shareholders due
to reinvestment of distributions 1,311,543 2,696,361
- ------------------------------------------------------------------------------------------------------
20,860,065 27,851,135
Cost of shares redeemed (7,671,509) (13,540,039)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions 13,188,556 14,311,096
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 14,432,815 13,936,169
Net assets at the beginning of period 127,140,353 113,204,184
- ------------------------------------------------------------------------------------------------------
Net assets at the end of period $141,573,168 $127,140,353
- ------------------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income at the end
of period $ (137,277) $ (141,992)
- ------------------------------------------------------------------------------------------------------
Massachusetts Insured
------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
- -----------------------------------------------------------------------------------------------------
Operations
Net investment income $ 1,697,438 $ 3,598,471
Net realized gain from investments 188,430 391,096
Net change in unrealized appreciation (depreciation) of investments 571,875 (2,317,158)
- -----------------------------------------------------------------------------------------------------
Net increase in net assets from operations 2,457,743 1,672,409
- -----------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income:
Class A (391,425) (821,809)
Class B (97,228) (226,130)
Class C (177,651) (430,939)
Class R (963,471) (2,141,575)
From accumulated net realized gains from investments:
Class A -- (118,836)
Class B -- (38,675)
Class C -- (71,126)
Class R -- (291,343)
- -----------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (1,629,775) (4,140,433)
- -----------------------------------------------------------------------------------------------------
Fund Share Transactions
Proceeds from sale of shares 1,961,705 5,239,680
Proceeds from shares issued to shareholders due
to reinvestment of distributions 1,066,382 2,764,948
- -----------------------------------------------------------------------------------------------------
3,028,087 8,004,628
Cost of shares redeemed (4,431,932) (10,717,819)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions (1,403,845) (2,713,191)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (575,877) (5,181,215)
Net assets at the beginning of period 90,404,569 95,585,784
- -----------------------------------------------------------------------------------------------------
Net assets at the end of period $89,828,692 $ 90,404,569
- -----------------------------------------------------------------------------------------------------
Undistributed (Over-distribution of) net investment income at the end
of period $ 42,204 $ (25,459)
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ----
20
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Multistate Trust II (the "Trust") is an open-end investment company
registered under the Investment Company Act of 1940, as amended. The Trust is
comprised of the Nuveen Massachusetts Municipal Bond Fund ("Massachusetts") and
the Nuveen Massachusetts Insured Municipal Bond Fund ("Massachusetts Insured")
(collectively, the "Funds"), among others. The Trust was organized as a
Massachusetts business trust on July 1, 1996. The Funds were each organized as
a series of predecessor trusts or corporations prior to that date.
The Funds seek to provide high tax-free income and preservation of capital
through investments in diversified portfolios of quality municipal bonds.
Effective January 1, 2005, Nuveen Advisory Corp. ("NAC"), the Funds' previous
Adviser, and its affiliate, Nuveen Institutional Advisory Corp. ("NIAC"), were
merged into Nuveen Asset Management ("NAM"), each wholly owned subsidiaries of
Nuveen Investments, Inc. ("Nuveen"). As a result of the merger, NAM is now the
Adviser to all funds previously advised by either NAC or NIAC.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Investment Valuation
The prices of municipal bonds in each Fund's investment portfolio are provided
by a pricing service approved by the Fund's Board of Trustees. When market
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service or, in the absence of a pricing service for a
particular security, the Board of Trustees of the Funds, or its designee, may
establish fair market value using a wide variety of market data including
yields or prices of municipal bonds of comparable quality, type of issue,
coupon, maturity and rating, market quotes or indications of value from
securities dealers, evaluations of anticipated cash flows or collateral,
general market conditions and other information and analysis, including the
obligor's credit characteristics considered relevant by the pricing service or
the Board of Trustees' designee. Temporary investments in securities that have
variable rate and demand features qualifying them as short-term securities are
valued at amortized cost, which approximates market value.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and
losses from transactions are determined on the specific identification method.
Investments purchased on a when-issued or delayed delivery basis may have
extended settlement periods. Any investments so purchased are subject to market
fluctuation during this period. The Funds have instructed the custodian to
segregate assets with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At August 31, 2005,
Massachusetts had outstanding when-issued purchase commitments of $1,753,161.
There were no such outstanding purchase commitments in Massachusetts Insured.
Investment Income
Interest income, which includes the amortization of premiums and accretion of
discounts for financial reporting purposes, is recorded on an accrual basis.
Investment income also includes paydown gains and losses, if any.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared monthly as a dividend. Generally,
payment is made or reinvestment is credited to shareholder accounts on the
first business day after month-end. Net realized capital gains and/or market
discount from investment transactions, if any, are distributed to shareholders
not less frequently than annually. Furthermore, capital gains are distributed
only to the extent they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount, if any, are recorded on the ex-dividend
date. The amount and timing of distributions are determined in accordance with
federal income tax regulations, which may differ from accounting principles
generally accepted in the United States.
Income Taxes
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund
intends to distribute substantially all net investment income and net capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal income tax provision is required. Furthermore,
each Fund intends to satisfy conditions which will enable interest from
municipal securities, which is exempt from regular federal and Massachusetts
state income taxes, to retain such tax-exempt status when distributed to
shareholders of the Funds. Net realized capital gains and ordinary income
distributions paid by the Funds are subject to federal taxation.
- ----
21
Notes to Financial Statements (Unaudited) (continued)
Insurance
Massachusetts Insured invests primarily in municipal securities which are
either covered by insurance or backed by an escrow or trust account containing
sufficient U.S. Government or U.S. Government agency securities, both of which
ensure the timely payment of principal and interest. Each insured municipal
security is covered by Original Issue Insurance, Secondary Market Insurance or
Portfolio Insurance. Such insurance does not guarantee the market value of the
municipal securities or the value of the Fund's shares. Original Issue
Insurance and Secondary Market Insurance remain in effect as long as the
municipal securities covered thereby remain outstanding and the insurer remains
in business, regardless of whether the Fund ultimately disposes of such
municipal securities. Consequently, the market value of the municipal
securities covered by Original Issue Insurance or Secondary Market Insurance
may reflect value attributable to the insurance. Portfolio Insurance, in
contrast, is effective only while the municipal securities are held by the
Fund. Accordingly, neither the prices used in determining the market value of
the underlying municipal securities nor the net asset value of the Fund's
shares include value, if any, attributable to the Portfolio Insurance. Each
policy of the Portfolio Insurance does, however, give the Fund the right to
obtain permanent insurance with respect to the municipal security covered by
the Portfolio Insurance policy at the time of its sale.
Flexible Sales Charge Program
Each Fund offers Class A, B, C and R Shares. Class A Shares are generally sold
with an up-front sales charge and incur a .20% annual 12b-1 service fee. Class
A Share purchases of $1 million or more are sold at net asset value without an
up-front sales charge but may be subject to a contingent deferred sales charge
("CDSC") if redeemed within 18 months of purchase. Class B Shares are sold
without an up-front sales charge but incur a .75% annual 12b-1 distribution fee
and a .20% annual 12b-1 service fee. 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 by the investor (CDSC is reduced to 0% at the end of six years). Class
B Shares convert to Class A Shares eight years after purchase. Class C Shares
are sold without an up-front sales charge but incur a .55% annual 12b-1
distribution fee and a .20% annual 12b-1 service fee. An investor purchasing
Class C Shares agrees to pay a CDSC of 1% if Class C Shares are redeemed within
one year of purchase. Class R Shares are not subject to any sales charge or
12b-1 distribution or service fees. Class R Shares are available only under
limited circumstances.
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 including inverse floating rate securities. During
the six months ended August 31, 2005, Massachusetts Insured invested in inverse
floating rate securities for the purpose of enhancing portfolio yield. Inverse
floating rate securities are identified in the Portfolio of Investments and are
valued daily. The interest rate of an inverse floating rate security has an
inverse relationship to the interest rate of a short-term floating rate
security. Consequently, as the interest rate of the floating rate security
rises, the interest rate on the inverse floating rate security declines.
Conversely, as the interest rate of the floating rate security declines, the
interest rate on the inverse floating rate security rises. The price of an
inverse floating rate security will be more volatile than that of an otherwise
comparable fixed rate security since the interest rate is dependent on an
underlying fixed coupon rate or the general level of long-term interest rates
as well as the short-term interest paid on the floating rate security, and
because the inverse floating rate security typically bears the risk of loss of
a greater face value of an underlying bond. Massachusetts did not invest in any
such instruments during the six months ended August 31, 2005.
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, which presently
only include 12b-1 distribution and service fees, are recorded to the specific
class.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Indemnifications
Under the Trust's organizational documents, its Officers and Trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Trust. In addition, in the normal course of business, the Trust
enters into contracts that provide general indemnifications to other parties.
The Trust's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Trust that have not yet
occurred. However, the Trust has not had prior claims or losses pursuant to
these contracts and expects the risk of loss to be remote.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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. Actual results may differ from those estimates.
- ----
22
2. Fund Shares
Transactions in Fund shares were as follows:
Massachusetts
------------------------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
---------------------- ------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------
Shares sold:
Class A 1,753,749 $17,716,493 2,278,620 $ 22,675,538
Class A - automatic conversion of Class B shares 18,405 185,244 -- --
Class B 8,096 81,263 35,573 355,153
Class C 129,142 1,292,514 144,522 1,435,009
Class R 27,158 273,008 69,727 689,074
Shares issued to shareholders due to reinvestment
of distributions:
Class A 30,125 304,281 59,971 596,979
Class B 4,461 45,162 8,777 87,518
Class C 9,057 90,826 19,014 187,960
Class R 86,437 871,274 183,616 1,823,904
- -----------------------------------------------------------------------------------------------------
2,066,630 20,860,065 2,799,820 27,851,135
- -----------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (272,195) (2,740,969) (682,855) (6,705,111)
Class B (88,992) (897,772) (107,874) (1,074,892)
Class B - automatic conversion to Class A shares (18,379) (185,244) -- --
Class C (100,483) (1,004,197) (145,217) (1,436,682)
Class R (282,240) (2,843,327) (436,177) (4,323,354)
- -----------------------------------------------------------------------------------------------------
(762,289) (7,671,509) (1,372,123) (13,540,039)
- -----------------------------------------------------------------------------------------------------
Net increase 1,304,341 $13,188,556 1,427,697 $ 14,311,096
- -----------------------------------------------------------------------------------------------------
Massachusetts Insured
------------------------------------------------
Six Months Ended Year Ended
8/31/05 2/28/05
---------------------- ------------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------
Shares sold:
Class A 79,738 $ 831,915 304,562 $ 3,188,735
Class A - automatic conversion of Class B shares 4,234 44,005 -- --
Class B 19,210 200,537 38,632 405,809
Class C 58,308 609,949 116,200 1,209,824
Class R 26,455 275,299 41,541 435,312
Shares issued to shareholders due to reinvestment
of distributions:
Class A 23,917 250,053 59,189 616,815
Class B 2,797 29,275 8,245 85,927
Class C 8,498 88,749 26,113 271,800
Class R 66,615 698,305 171,388 1,790,406
- -----------------------------------------------------------------------------------------------------
289,772 3,028,087 765,870 8,004,628
- -----------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (77,047) (805,370) (305,258) (3,210,446)
Class B (50,715) (530,649) (69,357) (735,971)
Class B - automatic conversion to Class A shares (4,231) (44,005) -- --
Class C (144,193) (1,499,366) (196,226) (2,051,779)
Class R (148,312) (1,552,542) (452,101) (4,719,623)
- -----------------------------------------------------------------------------------------------------
(424,498) (4,431,932) (1,022,942) (10,717,819)
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) (134,726) $(1,403,845) (257,072) $ (2,713,191)
- -----------------------------------------------------------------------------------------------------
- ----
23
Notes to Financial Statements (Unaudited) (continued)
3. Securities Transactions
Purchases and sales (including maturities) of investments in long-term
municipal securities for the six months ended August 31, 2005, were as follows:
Massachusetts
Massachusetts Insured
------------------------------------------------
Purchases $22,972,899 $8,958,110
Sales and maturities 10,626,989 9,934,283
------------------------------------------------
4. Income Tax Information
The following information is presented on an income tax basis. Differences
between amounts for financial statement and federal income tax purposes are
primarily due to the treatment of paydown gains and losses, timing differences
in recognizing taxable market discount and timing differences in recognizing
certain gains and losses on investment transactions.
At August 31, 2005, the cost of investments was as follows:
Massachusetts
Massachusetts Insured
-----------------------------------------------
Cost of investments $131,206,963 $84,084,463
-----------------------------------------------
Gross unrealized appreciation and gross unrealized depreciation of investments
at August 31, 2005, were as follows:
Massachusetts
Massachusetts Insured
------------------------------------------------------------------------
Gross unrealized:
Appreciation $7,384,241 $5,056,537
Depreciation (72,622) (14,795)
------------------------------------------------------------------------
Net unrealized appreciation of investments $7,311,619 $5,041,742
------------------------------------------------------------------------
The tax components of undistributed net investment income and net realized
gains at February 28, 2005, the Funds' last fiscal year end, were as follows:
Massachusetts
Massachusetts Insured
---------------------------------------------------------------------
Undistributed net tax-exempt income* $200,715 $145,253
Undistributed net ordinary income** 5,581 46,240
Undistributed net long-term capital gains 116,073 --
---------------------------------------------------------------------
* Undistributed net tax-exempt income (on a tax basis) has not been reduced for
the dividend declared on February 9, 2005, paid on March 1, 2005.
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
The tax character of distributions paid during the fiscal year ended February
28, 2005, the Funds' last fiscal year end, was designated for purposes of the
dividends paid deduction as follows:
Massachusetts
Massachusetts Insured
--------------------------------------------------------------------------
Distributions from net tax-exempt income $4,700,459 $3,654,598
Distributions from net ordinary income** 906 622
Distributions from net long-term capital gains -- 519,980
--------------------------------------------------------------------------
** Net ordinary income consists of taxable market discount income and net
short-term capital gains, if any.
5. Management Fee and Other Transactions with Affiliates
Each Fund's management fee is separated into two components - a complex-level
component, based on the aggregate amount of all fund assets managed by the
Adviser, and a specific fund-level component, based only on the amount of
assets within each individual Fund. This pricing structure enables Nuveen fund
shareholders to benefit from growth in the assets within each individual fund
as well as from growth in the amount of complex-wide assets managed by the
Adviser.
- ----
24
The annual fund-level fee, payable monthly, for each Fund is based upon the
average daily net assets of each Fund as follows:
Average Daily Net Assets Fund-Level Fee Rate
---------------------------------------------------
For the first $125 million .3500%
For the next $125 million .3375
For the next $250 million .3250
For the next $500 million .3125
For the next $1 billion .3000
For the next $3 billion .2750
For net assets over $5 billion .2500
---------------------------------------------------
The annual complex-level fee, payable monthly, which is additive to the
fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the
aggregate amount of total fund assets managed as stated in the table below. As
of August 31, 2005, the complex-level rate was .1896%.
Complex-Level Assets/(1)/ Complex-Level Fee Rate
----------------------------------------------------------------
For the first $55 billion .2000%
For the next $1 billion .1800
For the next $1 billion .1600
For the next $3 billion .1425
For the next $3 billion .1325
For the next $3 billion .1250
For the next $5 billion .1200
For the next $5 billion .1175
For the next $15 billion .1150
For Managed Assets over $91 billion/(2)/ .1400
----------------------------------------------------------------
(1)The complex-level fee component of the management fee for the funds is
calculated based upon the aggregate Managed Assets ("Managed Assets" means
the average daily net assets of each fund including assets attributable to
all types of leverage used by the Nuveen funds) of Nuveen-sponsored funds in
the U.S.
(2)With respect to the complex-wide Managed Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined at a later
date. In the unlikely event that complex-wide Managed Assets reach $91
billion prior to a determination of the complex-level fee rate or rates to
be applied to Managed Assets in excess of $91 billion, the complex-level fee
rate for such complex-wide Managed Assets shall be .1400% until such time as
a different rate or rates is determined.
The management fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Trust pays no
compensation directly to those of its Trustees who are affiliated with the
Adviser or to their officers, all of whom receive remuneration for their
services to the Trust from the Adviser or its affiliates. The Board of Trustees
has adopted a deferred compensation plan for independent Trustees that enables
Trustees to elect to defer receipt of all or a portion of the annual
compensation they are entitled to receive from certain Nuveen advised Funds.
Under the plan, deferred amounts are treated as though equal dollar amounts had
been invested in shares of select Nuveen advised Funds.
The Adviser has agreed to waive part of its management fees or reimburse
certain expenses of each Fund in order to limit total expenses (excluding 12b-1
distribution and service fees and extraordinary expenses) from exceeding .75%
of the average daily net assets of Massachusetts and .975% of the average daily
net assets of Massachusetts Insured. The Adviser may also voluntarily reimburse
additional expenses from time to time. Voluntary reimbursements may be
terminated at any time at the Adviser's discretion.
During the six months ended August 31, 2005, Nuveen Investments, LLC (the
"Distributor"), a wholly owned subsidiary of Nuveen, collected sales charges on
purchases of Class A Shares, the majority of which were paid out as concessions
to authorized dealers as follows:
Massachusetts
Massachusetts Insured
------------------------------------------------------
Sales charges collected $34,752 $15,661
Paid to authorized dealers 29,833 13,502
------------------------------------------------------
The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
- ----
25
Notes to Financial Statements (Unaudited) (continued)
During the six months ended August 31, 2005, the Distributor compensated
authorized dealers directly with commission advances at the time of purchase as
follows:
Massachusetts
Massachusetts Insured
-----------------------------------------------
Commission advances $15,922 $13,563
-----------------------------------------------
To compensate for commissions advanced to authorized dealers, all 12b-1 service
fees collected on Class B Shares during the first year following a purchase,
all 12b-1 distribution fees collected on Class B Shares, and all 12b-1 service
and distribution fees collected on Class C Shares during the first year
following a purchase are retained by the Distributor. During the six months
ended August 31, 2005, the Distributor retained such 12b-1 fees as follows:
Massachusetts
Massachusetts Insured
-----------------------------------------------
12b-1 fees retained $30,600 $27,155
-----------------------------------------------
The remaining 12b-1 fees charged to the Funds were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
The Distributor also collected and retained CDSC on share redemptions during
the six months ended August 31, 2005, as follows:
Massachusetts
Massachusetts Insured
-----------------------------------------
CDSC retained $4,297 $10,785
-----------------------------------------
6. Announcement Regarding Parent Company of Adviser
In early April, 2005, The St. Paul Travelers Companies, Inc. ("St. Paul
Travelers"), which owned 79% of Nuveen, (A) completed a public offering of a
substantial portion of its equity stake in Nuveen, (B) sold Nuveen $200 million
of its Nuveen shares, (C) entered into an agreement with Nuveen to sell an
additional $400 million of its Nuveen shares on a "forward" basis with payment
for and settlement of these shares delayed for several months, and (D) entered
into agreements with two unaffiliated investment banking firms to sell an
amount equal to most or all of its remaining Nuveen shares for current payment
but for future settlement. Transactions (C) and (D) above were settled in late
July, which effectively reduced St. Paul Travelers' controlling stake in Nuveen
and was deemed an "assignment" (as defined in the 1940 Act) of the investment
management agreements between the Funds and the Adviser, which resulted in the
automatic termination of each agreement under the 1940 Act. In anticipation of
such deemed assignment, the Board of Trustees had approved new ongoing
investment management agreements for each Fund and the submission of those
agreements for approval by each respective Fund's shareholders, which
shareholder approval was received prior to the settlement of transactions (C)
and (D). The new ongoing management agreements took effect upon such settlement.
7. Subsequent Event - Distributions to Shareholders
The Funds declared dividend distributions from their tax-exempt net investment
income which were paid on October 3, 2005, to shareholders of record on
September 9, 2005, as follows:
Massachusetts
Massachusetts Insured
-----------------------------------------------
Dividend per share:
Class A $.0325 $.0320
Class B .0265 .0255
Class C .0280 .0270
Class R .0340 .0335
-----------------------------------------------
- ----
26
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
Class (Commencement Date)
Investment Operations Less Distributions
--------------------------- ---------------------- ----------------------------
Before Credit/
Reimbursement
MASSACHUSETTS ------------------
Ratio
of Net
Invest-
Ratio of ment
Net Expenses Income
Beginning Net Realized/ Net Ending Ending to to
Net Invest- Unrealized Invest- Net Net Average Average
Year Ended Asset ment Gain ment Capital Asset Total Assets Net Net
February 28/29, Value Income(a) (Loss) Total Income Gains Total Value Return(b) (000) Assets Assets
- -----------------------------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) $10.09 $.19 $ .10 $ .29 $(.20) $-- $(.20) $10.18 2.85% $61,288 .89%* 3.81%*
2005 10.13 .41 (.04) 0.37 (.41) -- (.41) 10.09 3.75 45,302 .91 4.06
2004 9.98 .42 .16 .58 (.43) -- (.43) 10.13 5.95 28,720 .94 4.25
2003 9.75 .45 .24 .69 (.46) -- (.46) 9.98 7.27 21,751 .95 4.62
2002 9.70 .48 .07 .55 (.50) -- (.50) 9.75 5.86 19,878 .94 4.96
2001 9.26 .50 .44 .94 (.50) -- (.50) 9.70 10.34 18,433 .99 5.23
Class B (3/97)
2006(e) 10.11 .16 .09 .25 (.16) -- (.16) 10.20 2.48 6,398 1.65* 3.07*
2005 10.15 .33 (.04) .29 (.33) -- (.33) 10.11 3.00 7,300 1.66 3.30
2004 10.01 .35 .15 .50 (.36) -- (.36) 10.15 5.07 7,976 1.68 3.49
2003 9.77 .38 .25 .63 (.39) -- (.39) 10.01 6.58 8,031 1.70 3.87
2002 9.72 .41 .06 .47 (.42) -- (.42) 9.77 4.96 6,588 1.69 4.21
2001 9.28 .43 .44 .87 (.43) -- (.43) 9.72 9.60 4,198 1.74 4.48
Class C (10/94)
2006(e) 10.02 .17 .09 .26 (.17) -- (.17) 10.11 2.60 11,640 1.44* 3.27*
2005 10.06 .35 (.04) .31 (.35) -- (.35) 10.02 3.21 11,160 1.46 3.50
2004 9.92 .37 .14 .51 (.37) -- (.37) 10.06 5.31 11,025 1.48 3.69
2003 9.69 .40 .24 .64 (.41) -- (.41) 9.92 6.73 9,703 1.50 4.07
2002 9.64 .43 .06 .49 (.44) -- (.44) 9.69 5.20 6,614 1.49 4.42
2001 9.20 .44 .45 .89 (.45) -- (.45) 9.64 9.89 6,591 1.54 4.67
Class R (12/86)
2006(e) 10.07 .20 .09 .29 (.20) -- (.20) 10.16 2.95 62,248 .69* 4.02*
2005 10.11 .42 (.04) .38 (.42) -- (.42) 10.07 3.95 63,379 .71 4.25
2004 9.96 .44 .16 .60 (.45) -- (.45) 10.11 6.16 65,483 .73 4.45
2003 9.73 .47 .24 .71 (.48) -- (.48) 9.96 7.59 66,545 .75 4.83
2002 9.67 .50 .07 .57 (.51) -- (.51) 9.73 5.96 69,034 .74 5.16
2001 9.24 .52 .43 .95 (.52) -- (.52) 9.67 10.58 68,208 .79 5.43
- -----------------------------------------------------------------------------------------------------------------------------
Class (Commencement Date)
Ratios/Supplemental Data
----------------------------------------------------
After After Credit/
Reimbursement(c) Reimbursement(d)
MASSACHUSETTS ------------------ ------------------
Ratio Ratio
of Net of Net
Invest- Invest-
Ratio of ment Ratio of ment
Expenses Income Expenses Income
to to to to
Average Average Average Average Portfolio
Year Ended Net Net Net Net Turnover
February 28/29, Assets Assets Assets Assets Rate
- --------------------------------------------------------------------
Class A (9/94)
2006(e) .89%* 3.81%* .88%* 3.82%* 8%
2005 .91 4.06 .91 4.06 11
2004 .94 4.25 .93 4.25 22
2003 .95 4.62 .94 4.63 14
2002 .94 4.96 .93 4.97 16
2001 .95 5.27 .94 5.29 13
Class B (3/97)
2006(e) 1.65* 3.07* 1.63* 3.08* 8
2005 1.66 3.30 1.65 3.31 11
2004 1.68 3.49 1.68 3.50 22
2003 1.70 3.87 1.69 3.88 14
2002 1.69 4.21 1.68 4.22 16
2001 1.70 4.52 1.69 4.54 13
Class C (10/94)
2006(e) 1.44* 3.27* 1.43* 3.28* 8
2005 1.46 3.50 1.45 3.51 11
2004 1.48 3.69 1.48 3.70 22
2003 1.50 4.07 1.49 4.08 14
2002 1.49 4.42 1.48 4.42 16
2001 1.50 4.71 1.49 4.73 13
Class R (12/86)
2006(e) .69* 4.02* .68* 4.03* 8
2005 .71 4.25 .70 4.26 11
2004 .73 4.45 .72 4.45 22
2003 .75 4.83 .74 4.84 14
2002 .74 5.16 .73 5.17 16
2001 .75 5.47 .74 5.48 13
- --------------------------------------------------------------------
* Annualized.
(a)Per share Net Investment Income is calculated using the average daily shares
method.
(b)Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c)After expense reimbursement from the Adviser, where applicable.
(d)After custodian fee credit and expense reimbursement, where applicable.
(e)For the six months ended August 31, 2005.
See accompanying notes to financial statements.
- ----
27
Financial Highlights (Unaudited) (continued)
Selected data for a share outstanding throughout each period:
Class (Commencement Date)
Investment Operations Less Distributions
--------------------------- ----------------------- -------
MASSACHUSETTS INSURED
Net
Beginning Net Realized/ Net Ending Ending
Net Invest- Unrealized Invest- Net Net
Year Ended Asset ment Gain ment Capital Asset Total Assets
February 28/29, Value Income(a) (Loss) Total Income Gains Total Value Return(b) (000)
- ---------------------------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) $10.44 $.20 $ .09 $ .29 $(.19) $ -- $(.19) $10.54 2.82% $21,754
2005 10.72 .41 (.21) .20 (.42) (.06) (.48) 10.44 1.95 21,233
2004 10.54 .43 .19 .62 (.44) -- (.44) 10.72 6.03 21,179
2003 10.36 .45 .23 .68 (.47) (.03) (.50) 10.54 6.74 23,212
2002 10.30 .50 .07 .57 (.49) (.02) (.51) 10.36 5.67 16,970
2001 9.77 .49 .55 1.04 (.50) (.01) (.51) 10.30 10.93 14,669
Class B (3/97)
2006(e) 10.45 .16 .09 .25 (.15) -- (.15) 10.55 2.44 6,474
2005 10.73 .33 (.21) .12 (.34) (.06) (.40) 10.45 1.19 6,759
2004 10.55 .35 .19 .54 (.36) -- (.36) 10.73 5.24 7,183
2003 10.37 .38 .23 .61 (.40) (.03) (.43) 10.55 5.94 6,361
2002 10.31 .42 .07 .49 (.41) (.02) (.43) 10.37 4.87 3,574
2001 9.78 .42 .55 .97 (.43) (.01) (.44) 10.31 10.06 2,308
Class C (9/94)
2006(e) 10.44 .17 .08 .25 (.16) -- (.16) 10.53 2.43 11,277
2005 10.71 .35 (.20) .15 (.36) (.06) (.42) 10.44 1.46 11,981
2004 10.53 .37 .19 .56 (.38) -- (.38) 10.71 5.43 12,879
2003 10.35 .40 .22 .62 (.41) (.03) (.44) 10.53 6.14 12,935
2002 10.28 .44 .08 .52 (.43) (.02) (.45) 10.35 5.17 5,940
2001 9.75 .44 .54 .98 (.44) (.01) (.45) 10.28 10.29 1,667
Class R (12/86)
2006(e) 10.47 .21 .09 .30 (.20) -- (.20) 10.57 2.90 50,323
2005 10.75 .43 (.21) .22 (.44) (.06) (.50) 10.47 2.12 50,432
2004 10.56 .45 .20 .65 (.46) -- (.46) 10.75 6.30 54,344
2003 10.38 .48 .22 .70 (.49) (.03) (.52) 10.56 6.91 56,496
2002 10.31 .52 .08 .60 (.51) (.02) (.53) 10.38 5.95 54,719
2001 9.78 .51 .55 1.06 (.52) (.01) (.53) 10.31 11.11 53,878
- ---------------------------------------------------------------------------------------------------------------
Class (Commencement Date)
Ratios/Supplemental Data
-------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement(c) Reimbursement(d)
MASSACHUSETTS INSURED ------------------ ------------------ ------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
to to to to to to
Average Average Average Average Average Average Portfolio
Year Ended Net Net Net Net Net Net Turnover
February 28/29, Assets Assets Assets Assets Assets Assets Rate
- -----------------------------------------------------------------------------------------------
Class A (9/94)
2006(e) .91%* 3.77%* .91%* 3.77%* .90%* 3.78%* 10%
2005 .91 3.95 .91 3.95 .90 3.95 26
2004 .93 4.11 .93 4.11 .92 4.12 36
2003 .93 4.36 .93 4.36 .92 4.38 18
2002 .95 4.78 .95 4.78 .92 4.81 23
2001 1.05 4.92 1.05 4.92 1.04 4.93 8
Class B (3/97)
2006(e) 1.66* 3.01* 1.66* 3.01* 1.65* 3.02* 10
2005 1.66 3.20 1.66 3.20 1.65 3.20 26
2004 1.68 3.37 1.68 3.37 1.67 3.37 36
2003 1.68 3.59 1.68 3.59 1.67 3.61 18
2002 1.69 4.03 1.69 4.03 1.67 4.06 23
2001 1.80 4.17 1.80 4.17 1.79 4.18 8
Class C (9/94)
2006(e) 1.46* 3.21* 1.46* 3.21* 1.45* 3.22* 10
2005 1.46 3.40 1.46 3.40 1.45 3.40 26
2004 1.48 3.56 1.48 3.56 1.47 3.57 36
2003 1.48 3.79 1.48 3.79 1.47 3.81 18
2002 1.49 4.25 1.49 4.25 1.46 4.27 23
2001 1.60 4.37 1.60 4.37 1.59 4.38 8
Class R (12/86)
2006(e) .71* 3.96* .71* 3.96* .70* 3.97* 10
2005 .71 4.15 .71 4.15 .70 4.15 26
2004 .73 4.31 .73 4.31 .72 4.32 36
2003 .73 4.58 .73 4.58 .72 4.59 18
2002 .75 4.98 .75 4.98 .73 5.00 23
2001 .85 5.12 .85 5.12 .84 5.13 8
- -----------------------------------------------------------------------------------------------
* Annualized.
(a)Per share Net Investment Income is calculated using the average daily shares
method.
(b)Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c)After expense reimbursement from the Adviser, where applicable.
(d)After custodian fee credit and expense reimbursement, where applicable.
(e)For the six months ended August 31, 2005.
See accompanying notes to financial statements.
- ----
28
Annual Investment Management Agreement Approval Process
At a meeting held on May 10-12, 2005, the Board of Trustees of the Funds,
including the independent Trustees, unanimously approved the Investment
Management Agreement between each Fund and NAM.
The Approval Process
To assist the Board in its evaluation of an advisory contract with NAM, the
independent Trustees received a report in adequate time in advance of their
meeting which outlined, among other things, the services provided by NAM; the
organization of NAM, including the responsibilities of various departments and
key personnel; the Fund's past performance as well as the Fund's performance
compared to funds of similar investment objectives compiled by an independent
third party (a "Peer Group") as described below and if available, with
recognized or, in certain cases, customized benchmarks; the profitability of
NAM and certain industry profitability analyses for advisers to unaffiliated
investment companies; the expenses of NAM in providing the various services;
the management fees of NAM, including comparisons of such fees with the
management fees of comparable funds in its Peer Group as well as comparisons of
NAM's management fees with the fees NAM assesses to other types of investment
products or accounts, if any; the soft dollar practices of NAM; and the
expenses of each Fund, including comparisons of the Fund's expense ratios
(after any fee waivers) with the expense ratios of its Peer Group. This
information supplements that received by the Board throughout the year
regarding Fund performance, expense ratios, portfolio composition, trade
execution and sales activity.
In addition to the foregoing materials, independent legal counsel to the
independent Trustees provided, in advance of the meeting, a legal memorandum
outlining, among other things, the duties of the Trustees under the 1940 Act as
well as the general principles of relevant state law in reviewing and approving
advisory contracts; the requirements of the 1940 Act in such matters; an
adviser's fiduciary duty with respect to advisory agreements and compensation;
the standards used by courts in determining whether investment company boards
of directors have fulfilled their duties and factors to be considered by the
board in voting on advisory agreements.
At the Board meeting, NAM made a presentation to and responded to questions
from the Board. After the presentation and after reviewing the written
materials, the independent Trustees met privately with their legal counsel to
review the Board's duties in reviewing advisory contracts and consider the
renewal of the advisory contract. It is with this background that the Trustees
considered each Investment Management Agreement with NAM. The independent
Trustees, in consultation with independent counsel, reviewed the factors set
out in judicial decisions and SEC directives relating to the renewal of
advisory contracts. As outlined in more detail below, the Trustees considered
all factors they believed relevant with respect to each Fund, including the
following: (a) the nature, extent and quality of the services to be provided by
NAM; (b) the investment performance of the Fund and NAM; (c) the costs of the
services to be provided and profits to be realized by NAM and its affiliates
from the relationship with the Fund; (d) the extent to which economies of scale
would be realized as the Fund grows; and (e) whether fee levels reflect these
economies of scale for the benefit of Fund investors.
A. Nature, Extent and Quality of Services
In evaluating the nature, extent and quality of NAM's services, the Trustees
reviewed information concerning the types of services that NAM or its
affiliates provide and are expected to provide to the Nuveen Funds; narrative
and statistical information concerning the Fund's performance record and how
such performance compares to the Fund's Peer Group and, if available,
recognized benchmarks or, in certain cases, customized benchmarks (as described
in further detail in Section B below); information describing NAM's
organization and its various departments, the experience and responsibilities
of key personnel, and available resources. In the discussion of key personnel,
the Trustees received materials regarding the changes or additions in personnel
of NAM. The Trustees further noted the willingness of the personnel of NAM to
engage in open, candid discussions with the Board. The Trustees further
considered the quality of NAM's investment process in making portfolio
management decisions, including any refinements or improvements to the
portfolio management processes, enhancements to technology and systems that are
available to portfolio managers, and any additions of new personnel which may
strengthen or expand the research and investment capabilities of NAM. In their
review of the advisory contracts for the fixed income funds, such as the Funds,
the Trustees also noted that Nuveen won the Lipper Award for Best Fund Family:
Fixed Income-Large Asset Class, for 2004. Given the Trustees' experience with
the Funds, other Nuveen funds and NAM, the Trustees noted that they were
familiar with and continue to have a good understanding of the organization,
operations and personnel of NAM.
In addition to advisory services, the independent Trustees considered the
quality of the administrative or non-advisory services provided. In this
regard, NAM provides the Fund with such administrative and other services
(exclusive of, and in addition to, any such services provided by others for the
Funds) and officers and other personnel as are necessary for the operations of
the respective Fund. In addition to investment management services, NAM and its
affiliates provide each Fund with a wide range of services, including:
preparing shareholder reports; providing daily accounting; providing quarterly
financial statements; overseeing and coordinating the activities of other
service providers; administering and organizing Board meetings and preparing
the Board materials for such meetings; providing legal support (such as helping
to prepare registration statements, amendments thereto and proxy statements and
responding to regulatory inquiries); and performing other Fund administrative
tasks necessary for the operation of the respective Fund (such as tax reporting
and fulfilling regulatory filing requirements). In addition, in evaluating the
administrative services, the Trustees considered, in particular, NAM's policies
and procedures for assuring compliance with applicable laws and regulations in
light of the new SEC regulations governing compliance. The Trustees noted NAM's
focus on compliance and its compliance systems. In their review, the Trustees
considered, among other things, the additions of experienced
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29
Annual Investment Management Agreement Approval Process (continued)
personnel to NAM's compliance group and modifications and other enhancements to
NAM's computer systems. In addition to the foregoing, the Trustees also noted
that NAM outsources certain services that cannot be replicated without
significant costs or at the same level of expertise. Such outsourcing has been
a beneficial and efficient use of resources by keeping expenses low while
obtaining quality services.
With respect to services provided to municipal funds, such as the Funds, the
Trustees also noted, among other things, the enhancements NAM implemented to
its municipal portfolio management processes (e.g., the increased use of
benchmarks to guide and assess the performance of its portfolio managers); the
implementation of a risk management program; and the various initiatives being
undertaken to enhance or modify NAM's computer systems as necessary to support
the innovations of the municipal investment team (such as, the ability to
assess certain historical data in order to create customized benchmarks,
perform attribution analysis and facilitate the use of derivatives as hedging
instruments).
Based on their review, the Trustees found that, overall, the nature, extent and
quality of services provided (and expected to be provided) to the respective
Funds under the applicable Investment Management Agreement, were of a high
level and were quite satisfactory.
B. The Investment Performance of the Fund and NAM
As previously noted, the Board received a myriad of performance information
regarding each Fund and its Peer Group, if available. Among other things, the
Board received materials reflecting a Fund's historic performance, the Fund's
performance compared to its Peer Group (as described below) and, if available,
its performance compared to recognized and, in certain cases, customized
benchmarks (as applicable). Further in evaluating the performance information,
in certain limited instances, the Trustees noted that the closest Peer Group
for a Fund still would not adequately reflect such Fund's investment objectives
and strategies, thereby limiting the usefulness of the comparisons of such
Fund's performance with that of the Peer Group.
With respect to state municipal funds, such as the Funds, the performance data
included, among other things, the respective Fund's performance relative to its
peers, except as noted. More specifically, a Fund's one-, three- and five-year
total returns (as available) for the periods ending December 31, 2004 were
evaluated relative to the unaffiliated funds in its respective Peer Group
(including the returns of individual peers as well as the Peer Group average)
as well as additional performance information with respect to all funds in the
Peer Group, subject to the following. Certain state municipal Funds do not have
a corresponding Peer Group in which case their performance is measured against
a state-specific municipal index compiled by an independent third party. Such
indices measure bond performance rather than fund performance. The two open-end
Nuveen Funds that utilize such indices are the Nuveen New Mexico Municipal Bond
Fund and the Nuveen Wisconsin Municipal Bond Fund. Based on their review, the
Trustees determined that the respective Fund's absolute and relative investment
performance over time had been satisfactory.
C. Fees, Expenses and Profitability
1. Fees and Expenses
In evaluating the management fees and expenses that a Fund is expected to
bear, the Trustees considered the Fund's current management fee structure and
the Fund's expected expense ratios in absolute terms as well as compared with
the fees and respective expense ratios of the unaffiliated funds in its Peer
Group. The Trustees reviewed the financial information of NAM, including its
respective revenues, expenses and profitability. In reviewing fees, the
Trustees, among other things, reviewed comparisons of the Fund's gross
management fees (fees after fund-level and complex-wide level breakpoints but
before reimbursements and fee waivers), net management fees (after breakpoints
and reimbursements and fee waivers) and total expense ratios (before and after
waivers) with those of the unaffiliated funds in its Peer Group and peer
averages. In this regard, the Trustees noted that the relative ranking of the
Nuveen Funds on fees and expenses was aided by the significant level of fee
reductions provided by the fund-level and complex-wide breakpoint schedules,
and the fee waivers and reimbursements provided by Nuveen for certain Funds
launched since 1999. The complex-wide breakpoint schedule was instituted in
2004 and is described in further detail below in Section D entitled "Economies
of Scale and Whether Fee Levels Reflect these Economies of Scale." In addition
to the foregoing, in their review of the fee and expense information provided
for the municipal funds, including, in particular, the expense ratios of the
unaffiliated funds in the respective Peer Group, the Trustees determined that
such Funds' net total expense ratios were within an acceptable range compared
to such peers.
2. Comparisons with the Fees of Other Clients
The Trustees further compared the fees of NAM to the fees NAM or an affiliate
thereof assessed for other types of clients investing in municipal funds (such
as municipal managed accounts). With respect to municipal managed accounts,
the advisory fees for such accounts are generally lower than those charged to
the comparable Fund. The Trustees noted, however, the additional services that
are provided and the costs incurred by Nuveen in managing and operating
registered investment companies, such as the Funds, compared to individually
managed separate accounts. For instance, as described above, NAM and its
affiliates provide numerous services to the Funds including, but not limited
to, preparing shareholder reports; providing daily accounting; preparing
quarterly financial statements; overseeing and coordinating the activities of
other service providers; administering and organizing Board meetings and
preparing the Board materials for such meetings; providing legal support; and
administering all other aspects of the Fund's operations. Further, the
Trustees noted the increased compliance requirements for funds in light of new
SEC regulations and other legislation. These services are generally not
required to the same extent, if at all,
- ----
30
for separate accounts. In addition to the differences in services, the
Trustees also considered, among other things, the differences in product
distribution, investor profiles and account sizes. Accordingly, the Trustees
believe that the nature and number of services provided to operate a Fund
merit the higher fees than those to separate managed accounts.
3. Profitability of NAM
In conjunction with its review of fees, the Trustees also considered the
profitability of NAM. The Trustees reviewed NAM's revenues, expenses and
profitability margins (on both a pre-tax and after-tax basis). In reviewing
profitability, the Trustees recognized that one of the most difficult issues
in determining profitability is establishing a method of allocating expenses.
Accordingly, the Trustees reviewed NAM's assumptions and methodology of
allocating expenses. In this regard, the methods of allocation used appeared
reasonable but the Board noted the inherent limitations in allocating costs
among various advisory products. The Trustees also recognized that individual
fund or product line profitability of other advisers is generally not publicly
available. Further, profitability may be affected by numerous factors
including the types of funds managed, expense allocations, business mix, etc.,
and therefore comparability of profitability is somewhat limited.
Nevertheless, to the extent available, the Trustees considered NAM's profit
margin compared to the profitability of various publicly-traded investment
management companies and/or investment management companies that publicly
disclose some or all of their financial results compiled by three independent
third-party service providers. The Trustees also reviewed the revenues,
expenses and profit margins of various unaffiliated advisory firms with
similar amounts of assets under management for the last year prepared by NAM.
Based on their review, the Trustees were satisfied that NAM's level of
profitability from its relationship with each Fund was reasonable in light of
the services provided.
In evaluating the reasonableness of the compensation, the Trustees also
considered any other revenues paid to NAM as well as any indirect benefits
(such as soft dollar arrangements, if any) NAM and its affiliates are expected
to receive that are directly attributable to their management of the Funds, if
any. See Section E below for additional information. Based on their review of
the overall fee arrangements of the applicable Fund, the Trustees determined
that the advisory fees and expenses of the respective Fund were reasonable.
D. Economies of Scale and Whether Fee Levels Reflect these Economies of Scale
In reviewing the compensation, the Trustees have long understood the benefits
of economies of scale as the assets of a fund grow and have sought to ensure
that shareholders share in these benefits. One method for shareholders to share
in economies of scale is to include breakpoints in the advisory fee schedules
that reduce fees as fund assets grow. Accordingly, the Trustees received and
reviewed the schedules of advisory fees for each Fund, including fund-level
breakpoints thereto. In addition, after lengthy negotiations with management,
the Board in May 2004 approved a complex-wide fee arrangement pursuant to which
fees of the funds in the Nuveen complex, including the Funds, are reduced as
the assets in the fund complex reach certain levels. The complex-wide fee
arrangement was introduced on August 1, 2004 and the Trustees reviewed data
regarding the reductions of fees for the Funds for the period of August 1, 2004
to December 31, 2004. In evaluating the complex-wide fee arrangement, the
Trustees considered, among other things, the historic and expected fee savings
to shareholders as assets grow, the amount of fee reductions at various asset
levels, and that the arrangement would extend to all Funds in the Nuveen
complex. The Trustees also considered the impact, if any, the complex-wide fee
arrangement may have on the level of services provided. Based on their review,
the Trustees concluded that the breakpoint schedule and complex-wide fee
arrangement currently was acceptable and desirable in providing benefits from
economies of scale to shareholders.
E. Indirect Benefits
In evaluating fees, the Trustees also considered any indirect benefits or
profits NAM or its affiliates may receive as a result of its relationship with
each Fund. In this regard, the Trustees considered any benefits from soft
dollar arrangements. The Trustees noted that although NAM manages a large
amount of assets, it has very little, if any, brokerage to allocate. This is
due to the fact that NAM typically manages the portfolios of the municipal
funds in the Nuveen complex and municipal bonds generally trade on a principal
basis. Accordingly, NAM does not currently have any soft dollar arrangements
and does not pay excess brokerage commissions (or spreads on principal
transactions) in order to receive research services.
In addition to soft dollar arrangements, the Trustees also considered any other
revenues, if any, received by NAM or its affiliates. In this regard, for Funds
with 12b-1 plans, the Trustees received and considered the amount 12b-1 fees
retained by Nuveen during the last calendar year. The Trustees noted that the
vast majority of the 12b-1 fees received by Nuveen are ultimately paid to other
financial advisers.
F. Other Considerations
Nuveen, until recently, was a majority owned subsidiary of St. Paul Travelers
Companies, Inc. ("St. Paul"). As noted, St. Paul earlier this year announced
its intention to divest its equity stake in Nuveen. Nuveen is the parent of
NAM. Pursuant to a series of transactions, St. Paul had begun to reduce its
interest in Nuveen which would ultimately result in a change of control of
Nuveen and therefore NAM. As mandated by the 1940 Act, such a change in control
would result in an assignment of the advisory agreement with NAM and the
automatic termination of such agreement. Accordingly, the Board also considered
the approval of a New Investment Management Agreement with each Fund in light
of, and which would take effect upon, the anticipated change of control. More
specifically, the Board considered for each Fund a New Investment Management
Agreement on substantially identical terms
- ----
31
Annual Investment Management Agreement Approval Process (continued)
to the existing Investment Management Agreement, to take effect after the
change of control has occurred and the contract has been approved by Fund
shareholders. In its review, the Board considered whether the various
transactions necessary to divest St. Paul's interest will have an impact on the
various factors they considered in approving NAM, such as the scope and quality
of services to be provided following the change of control. In reviewing the
St. Paul transactions, the Board considered, among other things, the impact, if
any, on the operations and organizational structure of NAM; the possible
benefits and costs of the transactions to the respective Fund; the potential
implications of any arrangements used by Nuveen to finance certain of the
transactions; the ability of NAM to perform its duties after the transactions;
whether a Fund's fee structure or expense ratio would change; any changes to
the current practices of the respective Fund; any changes to the terms of the
advisory agreement; and any anticipated changes to the operations of NAM. Based
on its review, the Board determined that St. Paul's divestiture would not
affect the nature and quality of services provided by NAM, the terms of the
Investment Management Agreement, including the fees thereunder, and would not
materially affect the organization or operations of NAM. Accordingly, the Board
determined that their analysis of the various factors regarding their approval
of NAM would continue to apply after the change of control.
G. Approval
The Trustees did not identify any single factor discussed previously as
all-important or controlling. The Trustees, including a majority of independent
Trustees, concluded that the terms of the Investment Management Agreements were
fair and reasonable, that NAM's fees are reasonable in light of the services
provided to each Fund, that the renewal of the NAM Investment Management
Agreements should be approved, and that the new, post-change of control NAM
Investment Management Agreements be approved and recommended to shareholders.
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32
- --------------------------------------------------------------------------------
Fund Information
================================================================================
Fund Manager Legal Counsel Transfer Agent and
Nuveen Asset Management Chapman and Cutler LLP Shareholder Services
333 West Wacker Drive Chicago, IL Boston Financial
Chicago, IL 60606 Data Services, Inc.
Independent Registered Nuveen Investor Services
Public Accounting Firm P.O. Box 8530
PricewaterhouseCoopers LLP Boston, MA 02266-8530
Chicago, IL (800) 257-8787
Custodian
State Street Bank & Trust
Boston, MA
================================================================================
Glossary of Terms Used in this Report
Average Annual Total Return: This is a commonly used method to express an
investment's performance over a particular, usually multi-year time period. It
expresses the return that would have been necessary each year to equal the
investment's actual cumulative performance (including change in NAV or offer
price and reinvested dividends and capital gains distributions, if any) over
the time period being considered.
Average Effective Maturity: The average of all the maturities of the bonds in a
Fund's portfolio, computed by weighting each maturity date (the date the
security comes due) by the market value of the security. This figure does not
account for the likelihood of prepayments or the exercise of call provisions.
Average Duration: Duration is a measure of the expected period over which a
bond's principal and interest will be paid, and consequently is a measure of
the sensitivity of a bond's (or bond fund's) value to changes when market
interest rates change. Generally, the longer a bond or Fund's duration, the
more the price of the bond or Fund will change as interest rates change.
Dividend Yield (also known as Market Yield or Current Yield): An investment's
current annualized dividend divided by its current offering price.
Net Asset Value (NAV): A Fund's NAV is the dollar value of one share in the
Fund. It is calculated by subtracting the liabilities of the Fund from its
total assets and then dividing the remainder by the number of shares
outstanding. Fund NAVs are calculated at the end of each business day.
SEC 30-Day Yield: A standardized measure of a Fund's yield that accounts for
the future amortization of premiums or discounts of bonds held in the fund's
portfolio.
Taxable-Equivalent Yield: The yield necessary from a fully taxable investment
to equal, on an after-tax basis at a specified assumed tax rate, the yield of a
municipal bond investment.
================================================================================
Quarterly Portfolio of Investments and Proxy Voting information: Each Fund's
(i) quarterly portfolio of investments, (ii) information regarding how the
Funds voted proxies relating to portfolio securities held during the 12-month
period ended June 30, 2004, and (iii) a description of the policies and
procedures that the Funds used to determine how to vote proxies relating to
portfolio securities are available without charge, upon request, by calling
Nuveen Investments at (800) 257-8787 or on Nuveen's website at www.nuveen.com.
You may also obtain this and other Fund information directly from the
Securities and Exchange Commission ("SEC"). The SEC may charge a copying fee
for this information. Visit the SEC on-line at http://www.sec.gov or in person
at the SEC's Public Reference Room in Washington, D.C. Call the SEC at
1-202-942-8090 for room hours and operation. You may also request fund
information by sending an e-mail request to publicinfo@sec.gov or by writing to
the SEC's Public Reference Section at 450 Fifth Street NW, Washington, D.C.
20549.
================================================================================
NASD Regulation, Inc. provides a Public Disclosure Program which supplies
certain information regarding the disciplinary history of NASD members and
their associated persons in response to either telephone inquiries at (800)
289-9999 or written inquiries at www.nasdr.com. NASD Regulation, Inc. also
provides an investor brochure that includes information describing the Public
Disclosure Program.
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33
[PHOTO]
Learn more
about Nuveen Funds at
www.nuveen.com/mf
Nuveen Investments:
SERVING Investors
For GENERATIONS
Since 1898, financial advisors and their clients have relied on Nuveen
Investments to provide dependable investment solutions. For the past
century, Nuveen Investments has adhered to the belief that the best
approach to investing is to apply conservative risk-management principles
to help minimize volatility.
Building on this tradition, we today offer a range of high quality equity
and fixed-income solutions that are integral to a well-diversified core
portfolio. Our clients have come to appreciate this diversity, as well as
our continued adherence to proven, long-term investing principles.
We offer many different investing solutions for our clients' different
needs.
Managing approximately $128 billion in assets, Nuveen Investments offers
access to a number of different asset classes and investing solutions
through a variety of products. Nuveen Investments markets its capabilities
under four distinct brands: Nuveen, a leader in tax-free investments; NWQ,
a leader in value-style equities; Rittenhouse, a leader in growth-style
equities; and Symphony, a leading institutional manager of market-neutral
alternative investment portfolios.
Find out how we can help you reach your financial goals.
To learn more about the products and services Nuveen Investments offers and
for a prospectus, where applicable, talk to your financial advisor, or call
us at (800) 257-8787. Please read the information carefully before you
invest.
.. Share prices
.. Fund details
.. Daily financial news
.. Investor education
[LOGO] Nuveen Investments
MSA-MA-0805D
ITEM 2. CODE OF ETHICS.
Not applicable to this filing.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to this filing.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable to this filing.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to this registrant.
ITEM 6. SCHEDULE OF INVESTMENTS
See Portfolio of Investments in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable to this registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to this registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable to this registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's Board implemented after the registrant
last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing date of
this report that includes the disclosure required by this paragraph, based on
their evaluation of the controls and procedures required by Rule 30a-3(b) under
the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))
that occurred during the second fiscal quarter of the period covered by this
report that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS
File the exhibits listed below as part of this Form.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable to
this filing.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: EX-99.CERT
Attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons: Not applicable
to this registrant.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) as an Exhibit. A certification furnished
pursuant to this paragraph will not be deemed "filed" for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of
that section. Such certification will not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the registration specifically incorporates it by
reference. EX-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Multistate Trust II
--------------------------------------------------------
By (Signature and Title)* /s/ Jessica R. Droeger
-------------------------------------------
Jessica R. Droeger
Vice President and Secretary
Date November 8, 2005
----------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Gifford R. Zimmerman
-------------------------------------------
Gifford R. Zimmerman
Chief Administrative Officer
(principal executive officer)
Date November 8, 2005
----------------------------------------------------------------
By (Signature and Title)* /s/ Stephen D. Foy
-------------------------------------------
Stephen D. Foy
Vice President and Controller
(principal financial officer)
Date November 8, 2005
----------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.