-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S++NjSR2hGAAsqfnKzoxQbeT6o9/ur0aRZIOaWofC/Ip2YyLFpILzI2Yk6adW4J2 ONx5UrgBRnUZ15C6xaZqCQ== 0001193125-05-219273.txt : 20051108 0001193125-05-219273.hdr.sgml : 20051108 20051108103856 ACCESSION NUMBER: 0001193125-05-219273 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050831 FILED AS OF DATE: 20051108 DATE AS OF CHANGE: 20051108 EFFECTIVENESS DATE: 20051108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUVEEN MULTISTATE TRUST II /MA/ CENTRAL INDEX KEY: 0001018975 IRS NUMBER: 000000000 STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-07755 FILM NUMBER: 051185064 BUSINESS ADDRESS: STREET 1: C/O NUVEEN INVESTMENTS STREET 2: 333 WEST WACKER DRIVE 33RD FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129177783 MAIL ADDRESS: STREET 1: NUVEEN INVESTMENTS STREET 2: 333 WEST WACKER DRIVE 33RD FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: NUVEEN FLAGSHIP MULTISTATE TRUST II DATE OF NAME CHANGE: 19960716 N-CSRS 1 dncsrs.txt NUVEEN MULTISTATE TRUST II 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 - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Jessica R. Droeger Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (312) 917-7700 -------------- Date of fiscal year end: February 28 ----------- Date of reporting period: August 31, 2005 --------------- 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. - -------------------------------------------------------------------------------- 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 California Municipal Bond Fund Nuveen California Insured Municipal Bond Fund [LOGO] Nuveen Investments [PHOTO] NOW YOU CAN RECEIVE YOUR NUVEEN INVESTMENTS FUND REPORTS FASTER. NO MORE WAITING. SIGN UP TODAY TO RECEIVE NUVEEN INVESTMENTS FUND INFORMATION BY E-MAIL. It only takes a minute to sign up for E-Reports. Once enrolled, you'll receive 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. [LOGO] IT'S FAST, EASY & FREE: www.investordelivery.com if you get your Nuveen Investments Fund dividends and statements from your financial advisor or brokerage account. (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 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. - -------------------------------------------------------------------------------- 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 - --------------------------------------------------------------------------------
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 -------------------------------------------------------------- NAV $10.54 $10.53 $10.52 $10.54 -------------------------------------------------------------- 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 -------------------------------------------------------------- Inception Date 9/07/94 3/07/97 9/19/94 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 6.66% 2.21% --------------------------------------------- 5-Year 5.36% 4.46% --------------------------------------------- 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 ---------------------------------------------------------
- -------------------------------------------------------------------------------- 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 .. Fund details .. 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 [LOGO] Nuveen Investments [PHOTO] NOW YOU CAN RECEIVE YOUR NUVEEN INVESTMENTS FUND REPORTS FASTER. NO MORE WAITING. SIGN UP TODAY TO RECEIVE NUVEEN INVESTMENTS FUND INFORMATION BY E-MAIL. It only takes a minute to sign up for E-Reports. Once enrolled, you'll receive 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. [LOGO] IT'S FAST, EASY & FREE: www.investordelivery.com if you get your Nuveen Investments Fund dividends and statements from your financial advisor or brokerage account. (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 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
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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
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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 - ---- 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, - ---- 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 - ---- 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. - ---- 62 Notes - -------------------------------------------------------------------------------- 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. - ---- 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. NO MORE WAITING. SIGN UP TODAY TO RECEIVE NUVEEN INVESTMENTS FUND INFORMATION BY E-MAIL. It only takes a minute to sign up for E-Reports. Once enrolled, you'll receive 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. [LOGO] IT'S FAST, EASY & FREE: www.investordelivery.com if you get your Nuveen Investments Fund dividends and statements from your financial advisor or brokerage account. (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 ------------------------------------------------------------------------------
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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 -----------------------------------------------------------------
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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 - ---- 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. - ---- 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. - ---- 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. EX-99.10.A.1 2 dex9910a1.txt CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT EX-99.CERT CERTIFICATIONS I, Gifford R. Zimmerman, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Multistate Trust II; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting 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; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 8, 2005 -------------------- /s/ Gifford R. Zimmerman ----------------------------- Chief Administrative Officer (principal executive officer) I, Stephen D. Foy, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Multistate Trust II; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting 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; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 8, 2005 -------------------- /s/ Stephen D. Foy ----------------------------- Vice President and Controller (principal financial officer) EX-99.10.A.2 3 dex9910a2.txt CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT EX-99.906CERT Certification Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002; provided by the Chief Executive Officer and Chief Financial Officer, based on each such officer's knowledge and belief. The undersigned officers of Nuveen Multistate Trust II ("the Fund"), certify that, to the best of each such officer's knowledge and belief: 1. The Form N-CSR of the Fund for the period ended August 31, 2005 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Date: November 8, 2005 -------------------- /s/ Gifford R. Zimmerman -------------------------- Chief Administrative Officer (principal executive officer) /s/ Stephen D. Foy ------------------ Vice President and Controller (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----