<PAGE>
As filed with the Securities and Exchange Commission on July 5, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[X]
Registration No. 333-03715
Pre-Effective Amendment No. 1
---
[X]
Post-Effective Amendment No.
--- [_]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[X]
Registration No. 811-07619
Amendment No. 1
--- [_]
NUVEEN INVESTMENT TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)
333 West Wacker Drive, Chicago, 60606
Illinois (Zip Code)
(Address of Principal Executive
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
Copies to:
James J. Wesolowski, Esq.-Vice
President and Secretary Eric F. Fess, Esq.
333 West Wacker Drive Chapman and Cutler
Chicago, Illinois 60606 111 West Monroe Street
Chicago, Illinois 60603
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[_] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (b)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HEREBY
DECLARES THAT AN INDEFINITE NUMBER OF SHARES OF THE TRUST ARE BEING REGISTERED
UNDER THE SECURITIES ACT OF 1933. A REGISTRATION FILING FEE OF $500 HAS BEEN
PAID.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGIS-
TRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
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<PAGE>
CONTENTS
OF
REGISTRATION STATEMENT
The Registration Statement comprises the following papers and contents:
The Facing Sheet
Cross-Reference Sheet
Part A-Prospectus for Nuveen Growth and Income Stock Fund
Prospectus for Nuveen Balanced Stock and Bond Fund
Prospectus for Nuveen Balanced Municipal and Stock Fund
Part B-The Statement of Additional Information
Part C-Other Information
Signatures
Index to Exhibits
Exhibits
<PAGE>
NUVEEN INVESTMENT TRUST
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
ITEM IN PART A
OF FORM N-1A PROSPECTUS LOCATION
-------------- -------------------
<S> <C>
1 Cover Page Cover Page
2 Synopsis Summary of Fund Expenses; How to Determine If
The Fund Is Right For You; Summary Information
about the Fund
3 Condensed Financial Not Applicable
Information
4 General Description of General Information; Additional Information about
Registrant the Fund's Investments
5 Management of the Fund Summary of Fund Expenses; Who Is Responsible
for the Operation of the Fund; Management of
the Fund; General Information
5A Management's Discussion Not Applicable
of Fund
Performance
6 Capital Stock and Other General Information; Distributions and Taxes
Securities
7 Purchase of Securities Flexible Purchase Options; How to Buy Fund
Being Offered Shares; Distribution and Service Plan;
Management of the Fund; Net Asset Value
8 Redemption or Repurchase How to Redeem Fund Shares
9 Pending Legal Not Applicable
Proceedings
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM IN PART A LOCATION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
-------------- -------------------------
<S> <C>
10 Cover Page Cover Page
11 Table of Contents Cover Page
12 General Information and Not Applicable
History
13 Investment Objectives Investment Policies and Restrictions; Investment
and Policies Policies and Techniques
14 Management of the Fund Management
15 Control Persons and Management
Principal Holders of
Securities
16 Investment Advisory and Fund Manager and Portfolio Manager; Distribution
Other Services and Service Plans; Independent Public Accountants
and Custodian
17 Brokerage Allocation and Portfolio Transactions
Other Practices
18 Capital Stock and Other See "General Information" in the Prospectus
Securities
19 Purchase, Redemption and Additional Information on the Purchase and
Pricing of Redemption of Fund Shares; Distribution and
Securities Service Plans; Net Asset Value
20 Tax Status Tax Matters
21 Underwriters Additional Information on the Purchase and
Redemption of Fund Shares; See "How to Buy
Fund Shares" and "Management of the Funds" in
the Prospectus
22 Calculation of Performance Information
Performance Data
23 Financial Statements Financial Statements
</TABLE>
<PAGE>
LOGO
NUVEEN
EQUITY
MUTUAL FUNDS
NUVEEN
GROWTH AND PHOTO APPEARS
INCOME STOCK FUND HERE
PROSPECTUS/ , 1996
<PAGE>
NUVEEN FAMILY OF MUTUAL FUNDS
Nuveen offers individual investors a broad range of mutual funds
to meet their investment needs:
GROWTH AND INCOME FUNDS
Nuveen Growth and Income Stock Fund
BALANCED FUNDS
Nuveen Balanced Stock and Bond Fund
Nuveen Balanced Municipal and Stock Fund
NATIONAL TAX-FREE INCOME FUNDS
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
STATE TAX-FREE INCOME FUNDS
Arizona
Nuveen Arizona Tax-Free Value Fund
California
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
Florida
Nuveen Florida Tax-Free Value Fund
Maryland
Nuveen Maryland Tax-Free Value Fund
Massachusetts
Nuveen Massachusetts Tax-Free Value Fund
Nuveen Massachusetts Insured Tax-Free Value Fund
Michigan
Nuveen Michigan Tax-Free Value Fund
New Jersey
Nuveen New Jersey Tax-Free Value Fund
New York
Nuveen New York Tax-Free Value Fund
Nuveen New York Insured Tax-Free Value Fund
Ohio
Nuveen Ohio Tax-Free Value Fund
Pennsylvania
Nuveen Pennsylvania Tax-Free Value Fund
Virginia
Nuveen Virginia Tax-Free Value Fund
<PAGE>
NUVEEN GROWTH AND INCOME STOCK FUND
Prospectus
, 1996
The NUVEEN GROWTH AND INCOME STOCK FUND (the "Fund") is a mutual fund that
seeks to provide over time a superior total return from a diversified portfolio
consisting primarily of equity securities of domestic companies with market
capitalizations of at least $500 million. Under normal market conditions, in
seeking to enhance returns and to preserve capital, the Fund may also invest up
to 35% of its total assets in cash equivalents and short-term fixed income
securities. This strategy seeks to provide you with higher returns over time
than the Standard & Poor's 500 Stock Index (the "S&P 500") with an equal or
lower level of risk.
The Fund offers you Flexible Purchase Options, which provide the flexibility
to purchase Fund shares in the same manner you typically make other mutual fund
investments. You may choose from one of four alternative classes of Fund shares
(Classes A, B, C and R), each with a different combination of sales charges,
ongoing fees, eligibility requirements, and other features. Your financial
adviser will be able to assist you in determining which share class is best for
you. See "Flexible Purchase Options," "How to Buy Fund Shares" and "Summary of
Fund Expenses."
The Fund is a series of the Nuveen Investment Trust (the "Trust"). This
Prospectus contains information you should know before investing in the Fund.
Please retain it for future reference. You can find more detailed information
about the Fund in the Statement of Additional Information dated , 1996,
as amended from time to time. For a free copy of this Statement, write to the
Nuveen Mutual Funds, 333 West Wacker Drive, Chicago, IL 60606, or call Nuveen
toll-free at 800-621-7227. The Statement has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. Shares
of the Fund involve investment risks, including possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<C> <S>
CONTENTS
3 SUMMARY OF FUND EXPENSES
5 SUMMARY INFORMATION ABOUT THE FUND
</TABLE>
<TABLE>
<C> <S>
5 INVESTMENT OBJECTIVE
5 HOW THE FUND PURSUES ITS OBJECTIVE
6 PERFORMANCE OF THE PORTFOLIO MANAGER
8 HOW TO DETERMINE IF THE FUND IS RIGHT FOR YOU
8 FUND FEATURES AND BENEFITS
11 RISKS AND SPECIAL CONSIDERATIONS
11 WHO IS RESPONSIBLE FOR THE OPERATION OF THE
FUND?
</TABLE>
<TABLE>
<C> <S>
12 ADDITIONAL INFORMATION ABOUT THE FUND'S
INVESTMENTS
17 FLEXIBLE PURCHASE OPTIONS
19 HOW TO BUY FUND SHARES
31 DISTRIBUTION AND SERVICE PLAN
32 HOW TO REDEEM FUND SHARES
36 MANAGEMENT OF THE FUND
38 HOW THE FUND SHOWS PERFORMANCE
39 DISTRIBUTIONS AND TAXES
41 NET ASSET VALUE
42 GENERAL INFORMATION
</TABLE>
<PAGE>
SUMMARY OF FUND EXPENSES
The purpose of the tables below is to help you understand all
expenses and fees that you would bear directly or indirectly
as a Fund shareholder. The percentages shown are estimated
for the current fiscal year. Actual fees and expenses may be
greater or less than those shown. An example of how the
expenses work is on the next page.
<TABLE>
<CAPTION>
Shareholder Transaction
Expenses (as a percent of
offering price)(1) Class A Class B Class C Class R(2)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed 5.25%(3) None None None
on
Purchases
Maximum Sales Charge Imposed None None None None
on
Reinvested Dividends
Exchange Fees None None None None
Deferred Sales Charge (as a None(4) 5%(5) 1%(6) None
percentage of lesser of pur-
chase price or redemption
proceeds)
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(as a percent of average daily
net assets) Class A Class B Class C Class R
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees .85% .85% .85% .85%
Rule 12b-1 Fees(7) .25% 1.00% 1.00% None
Other Operating Expenses
(after .10% .10% .10% .10%
reimbursement)(8) -------------- -------------- -------------- --------------
Total Expenses 1.20% 1.95% 1.95% .95%
</TABLE>
(1) Investment dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details.
(2) Class R Shares are available for purchase only under certain limited
circumstances, or by specified classes of investors. See "How to Buy Fund
Shares--Class R Shares."
(3) Reduced sales charges apply to purchases of $50,000 or more. See "How to
Buy Fund Shares--Class A Shares."
(4) Certain Class A purchases at net asset value of $1 million or more may be
subject to a 1% contingent deferred sales charge if redeemed within 18 months
of purchase. See "How to Buy Fund Shares--Class A Shares."
(5) Class B Shares redeemed within six years of purchase are subject to a
contingent deferred sales charge of 5% during the first year, 4% during the
second and third years, 3% during the fourth year, 2% during the fifth year,
and 1% during the sixth year.
(6) Class C Shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(7) Class A, Class B and Class C Shares are subject to an annual service fee of
.25% of the average daily net assets to compensate Authorized Dealers for
ongoing account services. In addition, Class B and Class C Shares are subject
to annual distribution fees of .75% of the average daily net assets to
reimburse Nuveen for costs in connection with the sale of Fund shares. See
"Distribution and Service Plan." Long-term holders of Class A, Class B and
Class C Shares may pay more in Rule 12b-1 fees than the economic equivalent of
the maximum front-end sales charge permitted under the National Association of
Securities Dealers Rules of Fair Practice.
(8) The investment adviser has agreed to waive fees and reimburse expenses
through July 31, 1997 in order to prevent Total Expenses (excluding any
distribution or service fees) from exceeding .95% of the average daily net
asset value of any class of Fund shares. Absent expense reimbursement, "Other
Operating Expenses" are estimated to be .25%.
3
<PAGE>
EXAMPLE*
For the Fund, you would pay the following expenses on a
$1,000 investment over various time periods, assuming (1) a
5% annual rate of return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
1 Year 3 Years
----------------------------------------------------------
<S> <C> <C>
Class A $64 $89
Class B** $59 $93
Class C*** $20 $67
Class R $10 $30
</TABLE>
*This example does not represent past or future expenses,
which may be greater or less than those shown. Moreover, the
Fund's actual rate of return may be greater or less than the
hypothetical 5% return shown in this example. This example
assumes that the percentage amounts listed under Annual
Operating Expenses remain the same in each of the periods.
For additional information about the Fund's fees and
expenses, see "Distribution and Service Plan" and "Management
of the Fund."
**Assumes that the shareholder redeemed on the first day of
the next year and the contingent deferred sales charge was
applied as follows: 1 year (4%), and 3 years (3%). If instead
the shareholder had redeemed on the last day of the prior
year, the expenses would have been as follows: 1 year $69 and
3 years $103. See "How to Buy Fund Shares--Class B Shares."
***Assumes that the shareholder redeemed on the first day of
the second year and the contingent deferred sales charge was
not applicable for any of the periods shown. If instead the
shareholder had redeemed on the last day of the first year,
the expenses in the first year would have been $30. See "How
to Buy Fund Shares--Class C Shares."
4
<PAGE>
SUMMARY INFORMATION ABOUT THE FUND
INVESTMENT OBJECTIVE
The Fund seeks to provide over time a superior total return
from a diversified portfolio consisting primarily of equity
securities of domestic companies with market capitalizations
of at least $500 million. The investment objective may not be
changed without shareholder approval. There is no assurance
that this objective will be realized.
HOW THE FUND PURSUES ITS OBJECTIVE
The Fund
invests The Fund invests primarily in a diversified portfolio of
primarily in large- and mid-cap equities as a source of capital growth.
large- and The Fund, however, may shift a portion of its investment
mid-cap stocks portfolio into cash equivalents and short-term securities
during adverse markets in order to reduce risk and preserve
capital. This strategy seeks to provide you with higher
returns over time than the S&P 500 with an equal or lower
level of risk. Please see "Additional Information About the
Fund's Investments," starting on page 12 for a more detailed
discussion.
The Fund The Fund's portfolio manager, Institutional Capital
employs a Corporation ("ICAP"), employs a value-oriented approach to
value-oriented select securities for the Fund's investment portfolio. Equity
strategy and securities are initially screened using proprietary valuation
fundamental models on the basis of each security's relative price-
company earnings ratio and earnings stability. ICAP then conducts
research to extensive company research on the securities that pass this
choose initial screen in order to identify those securities with a
equities clear company-specific or thematic catalyst which ICAP
believes will trigger significant price appreciation over a
defined nine to eighteen month period. The most attractive
40-45 securities identified are purchased by ICAP for the
Fund's investment portfolio. ICAP then monitors the
performance of its investments closely; if an investment
underperforms expectations and ICAP's expectations of the
investment's future performance potential no longer meet its
original purchase criteria, ICAP will quickly replace the
security in order to prevent continued underperformance. For
additional information regarding the Fund's portfolio
investments, see "Additional Information About the Fund's
Investments."
5
<PAGE>
PERFORMANCE OF THE PORTFOLIO MANAGER
The Fund does not have any prior operating history. ICAP,
the Fund's portfolio manager, has managed separate
private accounts since 1971. The following chart
illustrates the growth of a hypothetical $10,000
investment based upon the investment performance of the
ICAP Discretionary Equity Composite between March 31,
1976 and March 31, 1996. The ICAP Discretionary Equity
Composite represents the composite performance of the
managed accounts, presently totalling approximately $2.5
billion, for which ICAP has served as investment adviser
and that have substantially the same investment
objectives and policies as the Fund. The ICAP
Discretionary Equity Composite performance represents
past performance and should not be interpreted as
indicative of future performance of the Fund.
Growth of a $10,000 Investment
April 1976-March 1996
[Graph Appears Here]
<TABLE>
<CAPTION>
50% S&P 500/
ICAP Disc Morningstar Growth 50% Lehman Intermediate Consumer Price
Eq Composite & Income Treasury Index
<S> <C> <C> <C> <C>
1976 9475 10000 10000 10000
1977 9820 10361 9971 10640
1978 10078 10393 9507 11326
1979 11412 12442 11410 12486
1980 12239 13316 12106 14319
1981 15757 18480 16933 15830
1982 15757 17032 14744 16906
1983 21576 24074 21233 17519
1984 22072 26006 23103 18351
1985 25247 30088 27469 19036
1986 35441 40368 37869 19470
1987 44648 48205 47717 20062
1988 46858 45025 43818 20845
1989 52364 51776 51741 21883
1990 62888 58507 61647 23027
1991 74739 65176 70512 24153
1992 83861 73198 78303 24925
1993 95169 83373 90224 25688
1994 102011 85722 91530 26332
1995 115935 94907 105790 27084
1996 156058 121796 139689 27838
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
50% S&P 500/
ICAP Disc Morningstar Growth 50% Lehman Intermediate Consumer Price
Eq Composite & Income Treasury Index
<S> <C> <C> <C> <C>
1 Year 27.54% 28.33% 32.04% 2.78%
3 Year 15.82% 13.47% 15.69% 2.72%
5 Year 14.62% 13.32% 14.65% 2.88%
10 Year 15.35% 11.68% 13.94% 3.64%
20 Year 14.73% 13.31% 14.09% 5.25%
</TABLE>
6
<PAGE>
ICAP's performance results presented above and below reflect
the investment performance of the ICAP Discretionary Equity
Composite before deduction of any investment advisory fees or
other expenses, less Class A's projected annual operating
expenses as summarized in the Summary of Fund Expenses on
page 3. The chart above illustrating the growth of a
hypothetical $10,000 investment also assumes payment of the
maximum Class A sales charge of 5.25%. These performance
results would be different for a comparable Class B, C or R
investment, reflecting the different sales charge and ongoing
operating expenses of each respective class. The S&P 500
returns assume reinvestment of all dividends paid by the
stocks included in the index, but do not include brokerage
commissions or other fees an investor would incur by
investing in the portfolio of stocks comprising the index.
The Morningstar returns represent the average of the
annualized returns with dividends reinvested of all the funds
in Morningstar's Growth and Income Fund category for the
periods measured, but do not include the effect of any sales
charges that an investor will incur by purchasing the funds
comprising the Morningstar Index directly. All returns and
comparisons of returns are calculated on a quarterly basis.
See "How the Fund Shows Performance" for additional
information.
For the 10-year period ending March 31, 1996, the annualized
total returns of the ICAP Discretionary Equity Composite
exceeded those of the S&P 500 by more than 2% annually with
significantly less risk. Over the same investment period, the
ICAP Composite's annualized total returns exceeded those of
the Morningstar Growth and Income average by more than 4%
annually with comparable risk. Only 12 funds in the
Morningstar Growth and Income category provided annualized
returns over this 10-year period in excess of the S&P 500 and
only one fund provided annualized returns in excess of the
ICAP Composite. For the 1-, 3- and 5-year periods ending
March 31, 1996, the ICAP Composite's annualized total returns
exceeded those of the S&P 500 by 2.6%, 2.2% and 1.2%,
respectively, and exceeded those of the Morningstar Growth
and Income average by 6.3%, 4.5% and 2.5%, respectively. Of
the 504 funds in the Morningstar Growth and Income category,
there are 460, 278, 192 and 110 funds, respectively, with 1-,
3-, 5- and 10-year performance records.
The track record of the ICAP's Discretionary Equity Composite
is particularly strong in adverse markets. Over the past 20
years, there have been four periods over which the S&P 500
declined by more than 10% over consecutive quarters. As
illustrated in the table below, in each of these market
downturns the ICAP Composite's cumulative performance
significantly exceeded that of the S&P 500 as well as the
Morningstar Growth and Income average:
7
<PAGE>
<TABLE>
<CAPTION>
MARKET S&P ICAP/S&P ICAP/MS
DOWNTURN ICAP 500 MORNINGSTAR DIFFERENTIAL DIFFERENTIAL
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
01/77-03/78 -1.6% -11.8% -4.9% 10.2% 3.4%
04/81-06/82 1.0% -13.5% -7.8% 14.5% 8.8%
10/87-12/87 -10.1% -22.6% -19.1% 12.5% 9.0%
07/90-09/90 -7.8% -13.8% -13.2% 6.0% 5.4%
</TABLE>
HOW TO DETERMINE IF THE FUND IS RIGHT FOR YOU
WHO SHOULD INVEST
The Fund may be a suitable investment if:
. you are seeking a conservative, value-oriented stock fund
as the core of a balanced investment plan
. you wish to preserve and build wealth through prudent
capital management
. you have a long-term investment horizon
WHO SHOULD NOT INVEST
The Fund may not be a suitable investment if:
. you are unwilling to accept moderate fluctuations in share
price
. you have a short-term investment horizon
FUND FEATURES AND BENEFITS
LOW MINIMUM INVESTMENT
$3,000 minimum
initial You can start your investment with a low initial purchase of
investment $3,000 ($1,000 for an Individual Retirement Account) in a
particular share class. Additional investments can be made
for as little as $50. Exceptions to these minimums are made
for participants in the Fund's automatic deposit, group
purchase or reinvestment programs. See "How to Buy Fund
Shares" for more details.
FLEXIBLE PURCHASE OPTIONS
Choose from
Class A, B, C The Fund offers four classes of shares--Classes A, B, C and
or R shares R. Each class offers a different combination of sales
charges, ongoing fees, eligibility requirements and other
features. This permits you and your financial adviser to
choose the share class
8
<PAGE>
which best meets your investment needs. You and your adviser
will want to consider:
. the amount of your current investment
. current holdings in the Fund
. length of time you expect to hold the shares
. timing and amount of any future Fund investments
. other relevant information
See "Flexible Purchase Options", "How to Buy Fund Shares" and
"How to Redeem Fund Shares" for further discussion of the
Fund's flexible purchase options.
EXCHANGE PRIVILEGE
Exchange Shares of the Fund may be quickly and easily exchanged by
shares at no telephone, without a sales charge, for shares of the same or
charge equivalent class of any other Nuveen Mutual Fund or for
shares of certain Nuveen money market funds.
9
<PAGE>
DIVIDEND REINVESTMENT
Dividends
automatically All income dividends or capital gains paid with respect to
reinvested at each class of shares will be reinvested automatically into
no charge additional shares of the same class without a sales charge,
unless you elect to receive them in cash.
Invest INVESTMENT OF NUVEEN UNIT TRUST DISTRIBUTIONS
distributions
from Nuveen Distributions from any Nuveen Unit Trust may be used to buy
Unit Trusts at Class A Shares of the Fund without a sales charge.
no charge
AUTOMATIC DEPOSIT AND WITHDRAWAL PLANS
The Fund offers a number of options to help you manage
Easy-to-use additions to, and withdrawals from, your account. These
systematic include automatic deposit, direct deposit and payroll
investment and deduction plans for adding to your account on a regular
withdrawal basis. If you need periodic withdrawals, and own shares
options totaling $10,000 or more, you can arrange to have $50 or more
sent directly from your account monthly or quarterly.
ELECTRONIC FUND TRANSFERS
Transfer funds
electronically Nuveen's Fund Direct lets you link your Fund account to your
account at a bank or other financial institution. You may use
Fund Direct to transfer money electronically between
accounts, to purchase shares by phone, to invest through an
automatic deposit plan, or to send payments directly to your
bank account.
TELEPHONE REDEMPTION
Free telephone
redemption You may establish free telephone redemption privileges for
your account.
EASY LIQUIDITY
Redemption on
any business You may redeem all or some of your Fund shares on any
day business day at the then net asset value. Class B and Class C
Shares, as well as certain Class A purchases of $1 million or
more at net asset value, may be subject to a contingent
deferred sales charge upon redemption. See "How to Redeem
Fund Shares".
10
<PAGE>
RISKS AND SPECIAL CONSIDERATIONS
You should consider certain other factors about the Fund
before investing. As with other equity mutual funds, the
value of the Fund's investment portfolio will tend to vary
with changes in the stock market. Accordingly, the Fund
should be considered a long-term investment, designed to
provide the best results when held for a multi-year period.
The Fund may not be suitable if you have a short-term
investment horizon. In addition, investments by the Fund in
American Depository Receipts ("ADRs") of foreign companies
involve opportunities and risks not typically associated with
investing in U.S. companies. There are special risks
associated with options and futures transactions. See
"Additional Information About the Fund's Investments."
WHO IS RESPONSIBLE FOR THE OPERATION OF THE FUND?
The following organizations work together to provide the
services and features offered by the Fund:
<TABLE>
<CAPTION>
ORGANIZATION FUNCTION DUTIES
--------------------------------------------------------------
<S> <C> <C>
John Nuveen & Co. Fund Sponsor and Sponsors and manages
Incorporated Principal Underwriter the offering of Fund
("Nuveen") shares
Nuveen Institutional Fund Manager Oversees the Fund's
Advisory Corp. portfolio manager,
("NIAC") manages the Fund's
business affairs and
provides day-to-day
administrative
services to the Fund
Institutional Capital Portfolio Manager Manages the Fund's
Corporation ("ICAP") investment portfolio
Shareholder Services, Transfer Agent; Maintains shareholder
Inc. ("SSI") Shareholder Services accounts, handles
Agent; Dividend Paying share redemptions and
Agent exchanges and
dividend payments
The Chase Manhattan Custodian Maintains custody of
Bank, N.A. ("Chase") the Fund's
investments and
provides certain
accounting services
to the Fund
</TABLE>
11
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS
HOW THE FUND SELECTS INVESTMENTS
The Fund As portfolio manager, ICAP selects equity securities on the
employs a basis of its evaluation of each security's relative value in
value-oriented terms of projected relative price/earnings ratios and
strategy and earnings stability. When making investment decisions, ICAP
fundamental develops an economic framework (including an interest rate,
company inflation, and business cycle outlook) and analyzes strategic
research to economic and/or industry themes to identify appropriate
choose investments. ICAP uses a variety of proprietary research
equities techniques and computer models to search for equity
securities believed to possess the best relative value based
on proprietary price/earnings projections and an analysis of
earnings stability. Furthermore, a clear catalyst must exist,
either stock-specific, industry or economic, which ICAP
believes will trigger significant price appreciation within a
definable period. In order to enhance its internal research,
ICAP also utilizes a wide variety of external sources for
investment information including recognized strategists,
economists, technical and fundamental analysts, corporate
executives, and industry sources.
For each investment, ICAP establishes an upside price target
and a downside risk potential. This strategy allows for
continuous monitoring of fundamental conditions and stock
price performance. Although ICAP typically expects the
investment potential of each investment to be realized over a
nine to eighteen month time period, it is not unusual for
equities to be held for a longer period if justified by their
potential future performance. Investments that underperform
expectations are reviewed intensively. If the risk/reward
profile of a particular investment becomes unattractive or
the reasons for owning the security no longer appear valid,
the investment typically is sold expeditiously to avoid
continued underperformance.
The Fund may In addition to investments in equity securities, in order to
also invest in preserve capital and to enhance returns, under normal market
short-term conditions the Fund may invest up to 35% of its total assets
fixed-income in cash equivalents and short-term fixed income securities,
securities in and may invest up to 100% of its assets in such instruments
order to as a temporary defensive measure. See "Fixed Income
reduce risk Securities" below. This strategy seeks to provide you with
higher returns than the S&P 500 with an equal or lower level
of risk.
12
<PAGE>
EQUITY SECURITIES
The Fund
invests Under normal market conditions, the Fund will invest
primarily in primarily in equity securities of domestic companies with
domestic market capitalizations of at least $500 million ("Equity
companies with Securities"). Equity Securities include common stocks;
capitalizations preferred stocks; warrants to purchase common stocks or
of at least preferred stocks; securities convertible into common or
$500 million preferred stocks, such as convertible bonds and debentures;
and other securities with equity characteristics. The Fund
will invest at least 65% of its total assets in Equity
Securities which do not include warrants or rights to
purchase common stock.
Convertible securities must be rated Baa or higher by Moody's
Investors Service ("Moody's") or BBB or higher by Standard &
Poor's ("S&P"), Duff & Phelps, Inc. ("D&P") or Fitch
Investors Service, Inc. ("Fitch"). Bonds rated Baa or BBB,
although considered investment grade, have speculative
characteristics and may be subject to greater fluctuations in
value than higher-rated bonds. A general description of
ratings may be found in the Statement of Additional
Information.
In addition, the Fund may invest indirectly in equity
securities of foreign issuers through investments in American
Depository Receipts ("ADRs"), described later in this
section.
FIXED-INCOME SECURITIES
The Fund may
invest in The Fund may invest up to 35% of its total assets in cash
fixed-income equivalents and short-term fixed income securities. In
securities addition, when ICAP believes that market conditions warrant,
maturing in the Fund may invest up to 100% of its assets in such
one year or instruments for temporary defensive purposes. Cash
less equivalents and short-term fixed income securities must be
from issuers having a long-term rating of at least A or
higher by S&P, Moody's or Fitch, or A- or higher by D&P, and
having a maturity of one year or less. Such securities
include, without limitation, the following: U.S. government
securities that are either issued or guaranteed by the U.S.
Treasury or by U.S. governmental agencies or
instrumentalities; certificates of deposit; bank time
deposits; bankers' acceptances; commercial paper rated A-1 or
better by S&P, Prime-1 or better by Moody's, Duff 2 or higher
by D&P, or Fitch 2 or higher by Fitch; or repurchase
agreements entered into only with respect to obligations of
the U.S. government, its agencies or instrumentalities.
Repurchase agreements could involve certain risks in the
event of the default or insolvency of the other party to the
agreement, including possible delays or restrictions upon a
Fund's ability to dispose of the underlying securities.
13
<PAGE>
WHEN-ISSUED SECURITIES
The Fund may In order to lock in a fixed price on a security it intends to
purchase When- purchase, the Fund may invest without limitation in
Issued securities purchased on a when-issued or delayed delivery
Securities basis ("When-Issued Securities"). Although the payment and
terms of these securities are established at the time the
purchaser enters into the commitment, these securities may be
delivered and paid for at a future date, generally within 45
days. The Fund will segregate and maintain cash, cash
equivalents, U.S. government securities, or other high-
quality, liquid debt securities in an amount at least equal
to the amount of outstanding commitments for When-Issued
Securities at all times. Such securities involve a risk of
loss if the value of the security to be purchased declines
prior to the settlement date.
AMERICAN DEPOSITORY RECEIPTS ("ADRs")
The Fund may ADRs are receipts typically issued by a U.S. bank or trust
invest up to company evidencing ownership of the underlying foreign
20% of its security and denominated in U.S. dollars. The Fund may invest
assets in up to 20% of its net assets in ADRs or other instruments
foreign denominated in U.S. dollars that permit indirect investment
securities in foreign securities. ADRs do not eliminate all the risk
inherent in investing in foreign issuers, such as changes in
foreign currency exchange rates. However, by investing in
ADRs rather than directly in foreign issuers' stock, the Fund
avoids currency risks during the settlement period.
Investments in securities of foreign issuers involve risks in
addition to the usual risks inherent in domestic investments,
including currency risks. The value of a foreign security in
U.S. dollars tends to decrease when the value of the U.S.
dollar rises against the foreign currency in which the
security is denominated and tends to increase when the value
of the U.S. dollar falls against such currency.
Some ADRs may not be sponsored by the issuer. ADRs are
affected by the fact that in many countries there is less
publicly available information about issuers than is
available in the reports and ratings published about
companies in the U.S. and companies may not be subject to
uniform accounting, auditing and financial reporting
standards. Other risks inherent in foreign investments
include expropriation; confiscatory taxation; withholding
taxes on dividends and interest; less extensive regulation of
foreign brokers, securities markets and issuers; diplomatic
developments; and political or social instability. Foreign
economies may differ favorably or unfavorably from the U.S.
economy in various respects, and many foreign securities are
less liquid and their prices tend to be more volatile than
14
<PAGE>
comparable U.S. securities. From time to time, foreign
securities may be difficult to liquidate rapidly without
adverse price effects.
CERTAIN INVESTMENT STRATEGIES AND LIMITATIONS
Options and The Fund may engage in options and futures transactions,
Futures which are sometimes referred to as derivative transactions.
Transactions The Fund's options and futures transactions may include
instruments such as stock index options and futures
contracts. Such transactions may be used for several reasons,
including hedging unrealized portfolio gains. The Fund will
only engage in futures and options transactions that,
pursuant to regulations promulgated by the Commodity Futures
Trading Commission (the "CFTC"), constitute bona fide hedging
or other permissible risk management transactions and will
not enter into such transactions if the sum of the initial
margin deposits and premiums paid for unexpired options
exceeds 5% of the Fund's total assets. In addition, the Fund
will not enter into options and futures transactions if more
than 30% of the Fund's net assets would be committed to such
instruments.
The ability of the Fund to benefit from options and futures
is largely dependent upon ICAP's ability to correctly use
such instruments, which may involve skills different from
those associated with managing securities generally. The Fund
could lose money on a futures transaction or an option could
expire worthless, in addition to the Fund suffering a loss on
the value of its portfolio assets. For a further discussion
of options and futures transactions, please see the Statement
of Additional Information.
Lending of The Fund may lend its portfolio securities, up to 33 1/3% of
Portfolio its total assets, to broker-dealers or institutional
Securities investors. The loans will be secured continuously by
collateral at least equal to the value of the securities lent
by "marking to market" daily. The Fund will continue to
receive the equivalent of the interest or dividends paid by
the issuer of the securities lent and will retain the right
to call, upon notice, the lent securities. The Fund may also
receive interest on the investment of the collateral or a fee
from the borrower as compensation for the loan. As with other
extensions of credit, there are risks of delay in recovery or
even loss of rights in the collateral should the borrower of
the securities fail financially. However, loans will be made
only to firms deemed by the portfolio manager to be of good
standing.
Illiquid
Securities The Fund may invest up to 15% of its net assets in illiquid
securities, which include, but are not limited to, restricted
securities (securities the disposition of which is restricted
under the federal securities laws); securities that may be
resold
15
<PAGE>
pursuant to Rule 144A under the Securities Act of 1933 but
that are deemed to be illiquid; and repurchase agreements
with maturities in excess of seven days.
PORTFOLIO TURNOVER
The Fund anticipates that its annual portfolio turnover rate
will be between 100% and 125% under normal market conditions,
and will generally not exceed 150%. A turnover rate of 100%
would occur, for example, if the Fund sold and replaced
securities valued at 100% of its net assets within one year.
In the event the Fund were to have a turnover rate of 100% or
more in any year, it would result in the payment by the Fund
of increased brokerage costs and could result in the payment
by shareholders of increased taxes on realized investment
gains.
OTHER INVESTMENT POLICIES AND RESTRICTIONS
The Fund The Fund will not invest more than 5% of its net assets in
employs other any one of the following types of investments: warrants;
restrictions unseasoned companies; and transactions in short sales against
to protect the box. In addition, the Fund has adopted several
shareholders restrictions on the investments and other activities of the
Fund that may not be changed without shareholder approval.
For example, the Fund may not:
. With respect to 75% of its total assets, purchase the
securities of any issuer (except securities issued or
guaranteed by the U.S. government or any agency or
instrumentality thereof) if, as a result, (i) more than 5%
of the Fund's total assets would be invested in securities
of that issuer, or (ii) the Fund would hold more than 10%
of the outstanding voting securities of that issuer.
. Borrow money, except that the Fund may (i) borrow money
from banks for temporary or emergency purposes (but not for
leverage or the purchase of investments) and (ii) make
other investments or engage in other transactions
permissible under the Investment Company Act of 1940 that
may involve a borrowing, provided that the combination of
(i) and (ii) shall not exceed 33 1/3% of the value of the
Fund's total assets (including the amount borrowed), less
the Fund's liabilities (other than borrowings).
If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage beyond
the specified limit resulting from a change in the value of
assets will not be considered a violation.
Except as specifically noted above or in the Statement of
Additional Information, the Fund's investment policies are
not fundamental and may be changed without shareholder
approval. For a more complete description of investment
restrictions that may be changed without a shareholder vote,
see the Statement of Additional Information.
16
<PAGE>
FLEXIBLE PURCHASE OPTIONS
The Fund
offers various The Fund has adopted Flexible Purchase Options that offer you
methods of four alternative classes of Fund shares (Classes A, B, C and
purchasing R), each with a different combination of sales charges,
shares which ongoing fees, eligibility requirements, and other features.
are designed The Fund's Flexible Purchase Options are designed to permit
to meet your you and your financial adviser to choose the method of
individual purchasing shares that you believe is most beneficial given
investment the amount of your investment, any current holdings of Fund
needs and shares, the length of time you expect to hold your investment
preferences and other relevant circumstances. A summary of the four
classes of Fund shares is set forth below:
<TABLE>
<CAPTION>
UP-FRONT CONTINGENT DEFERRED ANNUAL 12B-1 ANNUAL 12B-1
SALES CHARGE SALES CHARGE ("CDSC") DISTRIBUTION FEE SERVICE FEE
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 5.25%(1) None(2) None .25%
Class B None 5%(3) .75%(4) .25%
Class C None 1%(5) .75% .25%
Class R None None None None
</TABLE>
(1) Maximum up-front sales charge, which is reduced for
purchases of $50,000 or more. Up-front sales charge may be
reduced or waived for certain purchases.
(2) Certain Class A purchases at net asset value of $1
million or more may be subject to a 1% CDSC if redeemed
within 18 months of purchase.
(3) CDSC in the first year. CDSC declines to 0% after six
years.
(4) Class B Shares convert to Class A Shares after eight
years, which reduces the ongoing expenses borne by an
investor.
(5) CDSC is applicable to shares redeemed within 12 months of
purchase.
For more information regarding features of each class, see
"How to Buy Fund Shares," "How to Redeem Fund Shares" and
"Distribution and Service Plan" below.
Which Option When you purchase Class A Shares, you will normally pay an
is Right for up-front sales charge. As a result, you will have less money
You? invested initially and you will own fewer Class A Shares than
you would in the absence of an up-front sales charge.
Alternatively, when you purchase Class B or Class C Shares,
you will not pay an up-front sales charge and all of your
monies will be fully invested at the time of purchase.
However, Class B and Class C Shares are subject to an annual
distribution fee which constitutes an asset-based sales
charge whose purpose is the same as an up-front sales charge.
In addition, Class B Shares when redeemed are subject to a
CDSC, which will vary depending on the length of time you
owned your shares. Class B Shares automatically convert to
Class A Shares eight years after purchase in order to limit
the distribution fees you pay over the life of your
investment. Class C Shares are subject to a CDSC of 1% if
redeemed within 12 months of purchase. Because Class C Shares
do not convert to Class A Shares and continue to pay an
annual distribution fee indefinitely, Class C Shares should
normally not be purchased by an investor who expects to hold
shares for significantly longer than eight years. Class A,
Class B and Class C Shares are subject to annual service
fees, which are identical in
17
<PAGE>
amount and are used to compensate Authorized Dealers for
providing you with ongoing account services. You may qualify
for a reduced sales charge or a sales charge waiver on a
purchase of Class A Shares, as described on page 20 under
"How the Class A Sales Charge May Be Reduced or Waived."
Class R Shares are available for purchase at a price equal to
their net asset value, but only under certain circumstances
or for certain categories of investors, as described below
under "How to Buy Fund Shares--Class R Shares."
In deciding whether to purchase Class A, Class B, Class C or
Class R Shares, you should consider all relevant factors,
including the dollar amount of your purchase, any current
holdings of Fund shares, the length of time you expect to
hold the shares and whether a CDSC would apply, the amount of
any applicable up-front sales charge, the amount of any
applicable distribution or service fees that may be incurred
while you own the shares, whether or not you will be
reinvesting income or capital gain distributions in
additional shares, whether or not you meet applicable
eligibility requirements or qualify for a sales charge waiver
or reduction, and the relative level of services that your
financial adviser may provide to different classes.
Authorized Dealers and other persons distributing the Fund's
shares may receive different compensation for selling
different classes of shares.
Differences
Between Each class of shares represents an interest in the same
the Classes of portfolio of investments. Each class of shares is identical
Shares in all respects except that each class has its own sales
charge structure, each class bears its own class expenses,
including distribution and service fees, and each class has
exclusive voting rights with respect to any distribution or
service plan applicable to its shares. In addition, Class B
Shares are subject to a conversion feature. As a result of
the differences in the expenses borne by each class of
shares, and differences in the purchase and redemption
activity for each class, net income per share, dividends per
share and net asset value per share will vary among the
Fund's classes of shares.
Dealer
Incentives Upon notice to all Authorized Dealers, Nuveen may reallow to
Authorized Dealers electing to participate up to the full
applicable Class A Share up-front sales charge during periods
and for transactions specified in the notice. The
reallowances made during these periods may be based upon
attainment of minimum sales levels. Furthermore, Nuveen may
from time to time provide additional promotional support and
make additional reallowances only to certain Authorized
Dealers who sell or are expected to sell certain minimum
amounts of the Fund or other Nuveen Mutual Funds and Nuveen
Unit Trusts during specified time periods. Promotional
support may include providing sales literature to and holding
informational or educational programs for the benefit of such
Authorized Dealers' representatives,
18
<PAGE>
seminars for the public, and advertising and sales campaigns.
Nuveen may reimburse a participating Authorized Dealer for up
to one-half of specified media costs incurred in the
placement of advertisements which jointly feature the
Authorized Dealer and Nuveen Funds and Nuveen Unit Trusts.
Such reimbursement will be based on the number of its
financial advisers who have sold Nuveen Fund shares and
Nuveen Unit Trust units during the prior calendar year
according to an established schedule. Any such support or
reimbursement would be provided by Nuveen out of its own
assets, and not out of the assets of the Funds, and will not
change the price an investor pays for shares or the amount
that a Fund will receive from such a sale. The staff of the
Securities and Exchange Commission takes the position that
dealers who receive 90% or more of the applicable sales
charge may be deemed underwriters under the Securities Act of
1933, as amended.
HOW TO BUY FUND SHARES
CLASS A SHARES
Class A Shares
are offered at You may purchase Class A Shares at a public offering price
their net equal to the applicable net asset value per share plus an up-
asset value front sales charge imposed at the time of purchase as set
plus an up- forth below. You may qualify for a reduced sales charge, or
front sales the sales charge may be waived in its entirety, as described
charge below under "How the Class A Sales Charge May Be Reduced or
Waived." Class A Shares are also subject to an annual service
fee of .25%. See "Flexible Purchase Options" and
"Distribution and Service Plan."
The up-front sales charge schedule for Class A Shares is as
follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS REALLOWANCE AS
% OF PUBLIC % OF NET % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
-----------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.25% 5.54% 5.00%
$50,000 but less than
$100,000 4.25% 4.44% 4.00%
$100,000 but less than
$250,000 3.50% 3.63% 3.25%
$250,000 but less than
$500,000 2.75% 2.83% 2.50%
$500,000 but less than
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over 0.00% 0.00% 0.00%*
</TABLE>
*Authorized Dealers are eligible to receive a commission from
Nuveen as discussed below.
19
<PAGE>
The Fund receives the entire net asset value of all Class A
Shares that are sold. Nuveen retains the full applicable
sales charge from which it pays the uniform reallowances
shown above to Authorized Dealers. See "Flexible Purchase
Options-- Dealer Incentives" on page 18 for more information
about reallowances and other compensation to Authorized
Dealers.
Certain commercial banks may make Class A Shares of the Fund
available to their customers on an agency basis. Pursuant to
the agreements between Nuveen and these banks, some or all of
the sales charge paid by a bank customer in connection with a
purchase of Class A Shares may be retained by or paid to the
bank. Certain banks and other financial institutions may be
required to register as securities dealers in certain states.
Class A Share purchases of $1 million or more are sold at net
Class A asset value without an up-front sales charge. Nuveen pays
purchases of Authorized Dealers of record on such Class A Share purchases
$1 million or a commission of up to 1.00% of the amount of the purchase. If
more at net such shares are redeemed within 18 months of purchase, a CDSC
asset value of 1% of the lower of the purchase price or the redemption
are subject to proceeds may be imposed upon the redemption. Shares purchased
a CDSC by investors investing $1 million or more who have made
arrangements with Nuveen and whose dealer of record waived
the commission are not subject to the CDSC.
There are HOW THE CLASS A SALES CHARGE MAY BE REDUCED OR WAIVED
several ways There are several ways to reduce or eliminate the up-front
to reduce or sales charge:
eliminate the . cumulative discount;
up-front sales . letter of intent;
charge
. purchases with monies representing distributions from
Nuveen-sponsored Unit Trusts;
. group purchase programs;
. reinvestment of redemption proceeds from non-affiliated
funds; and
. special sales charge waivers for certain categories of
investors.
Cumulative
Discount You may qualify for a reduced sales charge as shown above on
a purchase of Class A Shares if the amount of your purchase,
when added to the value that day of all of your prior
purchases of shares of the Fund or of another Nuveen Mutual
Fund, or units of a Nuveen Unit Trust, on which an up-front
sales charge or ongoing distribution fee is imposed, falls
within the amounts stated in the table. You or your financial
adviser need to notify Nuveen or SSI of any cumulative
discount level you have achieved at the time you purchase
your shares.
20
<PAGE>
Letter of
Intent You may qualify for a reduced sales charge on a purchase of
Class A Shares if you plan to purchase Class A Shares of
Nuveen Mutual Funds over the next 13 months and the total
amount of your purchases would, if purchased at one time,
qualify you for one of the reduced sales charges shown above.
In order to take advantage of this option, you need to
complete the applicable section of the Application Form or
sign and deliver either to an Authorized Dealer or to SSI a
written Letter of Intent in a form acceptable to Nuveen. A
Letter of Intent states that you intend, but are not
obligated, to purchase over the next 13 months a stated total
amount of Class A Shares that would qualify you for a reduced
sales charge shown above. You may count shares of a Nuveen
Mutual Fund that you already own on which you paid an
up-front sales charge or an ongoing distribution fee and any
Class B and Class C Shares of a Nuveen Mutual Fund that you
purchase over the next 13 months towards completion of your
investment program, but you will receive a reduced sales
charge only on new Class A Shares you purchase over that
period. You cannot count Class A Shares that you purchase
without a sales charge through investment of distributions
from a Nuveen Mutual Fund, a Nuveen Unit Trust or otherwise,
towards completion of your Letter of Intent program.
By establishing a Letter of Intent, you agree that your first
purchase of Class A Shares following execution of the Letter
of Intent will be at least 5% of the total amount of your
intended purchases. You further agree that shares
representing 5% of the total amount of your intended
purchases will be held in escrow pending completion of these
purchases. All dividends and capital gains distributions on
Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the
expiration of the 13 month period equal or exceed the amount
specified in your Letter of Intent, the Class A Shares held
in escrow will be transferred to your account. If the total
purchases, less redemptions, exceed the amount specified in
your Letter of Intent and thereby qualify for a lower sales
charge than the sales charge specified in your Letter of
Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher
sales charge paid will be used to purchase additional Class A
Shares on your behalf. If the total purchases, less
redemptions, are less than the amount specified, you must pay
Nuveen an amount equal to the difference between the amounts
paid for these purchases and the amounts that would have been
paid if the higher sales charge had been applied. If you do
not pay the additional amount within 20 days after written
request by Nuveen or your financial adviser, Nuveen will
redeem an appropriate number of your escrowed Class A Shares
to meet the required payment. By establishing a Letter of
Intent, you irrevocably appoint Nuveen as attorney to give
instructions to redeem any or all of your escrowed shares,
with full power of substitution in the premises.
21
<PAGE>
You or your financial adviser need to notify Nuveen or SSI
whenever you make a purchase of Fund shares that you wish to
be covered under the Letter of Intent option.
Investment of You may purchase Class A Shares without an up-front sales
Nuveen Unit charge if you are investing distributions from a Nuveen Unit
Trust Trust. There is no initial or subsequent minimum investment
Distributions requirement for such purchases.
Group Purchase If you are a member of a qualified group, you may purchase
Programs Class A Shares of the Fund or of another Nuveen Mutual Fund
at the reduced sales charge applicable to the group's
purchases taken as a whole. A "qualified group" is one which
has been in existence for more than six months, has a purpose
other than investment, has five or more participating
members, has agreed to include Fund sales publications in
mailings to members and has agreed to comply with certain
administrative requirements relating to its group purchases.
Under any group purchase program, the minimum monthly
investment in Class A Shares of any particular fund or
portfolio by each participant is $25, and the minimum monthly
investment in Class A Shares of any particular fund or
portfolio for all participants in the program combined is
$3,000. No certificates will be issued for any participant's
account. All dividends and other distributions by the Fund
will be reinvested in additional Class A Shares of the Fund.
No participant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself
and each participant must fill out special application
materials, which the group administrator may obtain from the
group's financial adviser by checking the applicable box on
the enclosed Application Form or by calling SSI toll-free at
800-621-7227. See the Statement of Additional Information for
more complete information about "qualified groups" and group
purchase programs.
Reinvestment
of Redemption You may also purchase Class A Shares at net asset value
Proceeds from without a sales charge if the purchase takes place through an
Unaffiliated Authorized Dealer and represents the reinvestment of the
Funds proceeds of the redemption of shares of one or more
registered investment companies not affiliated with Nuveen.
You need to provide appropriate documentation that the
redemption occurred not more than 60 days prior to the
reinvestment of the proceeds in Class A Shares, and that you
either paid an up-front sales charge or were subject to a
contingent deferred sales charge upon the redemption of the
shares of the other investment company.
22
<PAGE>
Special Sales Class A Shares of the Fund may be purchased at net asset
Charge Waivers value without a sales charge and in any amount by: officers,
trustees and retired trustees of the Trust; bona fide, full-
time and retired employees of Nuveen or ICAP, any parent
company of Nuveen, and subsidiaries thereof, or their
immediate family members (as defined below); any person who,
for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate
family members; officers and directors of bank holding
companies that make Fund shares available directly or
through subsidiaries or bank affiliates; bank or broker-
affiliated trust departments; investors purchasing on a
periodic, asset-based fee or no transaction fee basis through
a broker-dealer sponsored mutual fund purchase program; and
clients of investment advisers, financial planners or other
financial intermediaries that charge periodic or asset-based
fees for their services. For further details about these
special categories and their eligibility requirements, please
consult your financial adviser or consult the Statement of
Additional Information, or call Nuveen at 800-621-7227.
Any Class A Shares purchased pursuant to a special sales
charge waiver must be acquired for investment purposes and on
the condition that they will not be transferred or resold
except through redemption by the Fund. You or your financial
adviser need to notify Nuveen or SSI whenever you make a
purchase of Class A Shares that you wish to be covered under
these special sales charge waivers. All of the above
categories of investors are also eligible to purchase Class R
Shares, as described below under "Class R Shares." Finally,
Class A Shares may be issued at net asset value without a
sales charge in connection with the acquisition by the Fund
of another investment company.
GENERAL
In determining the amount of your purchases of Class A Shares
that may qualify for a reduced sales charge, the following
purchases may be combined: (1) all purchases by a trustee or
other fiduciary for a single trust estate or fiduciary
account; (2) all purchases by individuals and their immediate
family members (i.e., their spouses and their children under
21 years of age); or (3) all purchases made through a group
purchase program as described above.
The reduced sales charge programs may be modified or
discontinued by the Fund at any time upon prior written
notice to shareholders of the Fund.
FOR MORE INFORMATION ABOUT THE PURCHASE OF CLASS A SHARES OR
REDUCED SALES CHARGE PROGRAMS, OR TO OBTAIN THE REQUIRED
APPLICATION FORMS, CALL NUVEEN TOLL-FREE AT 800-621-7227.
23
<PAGE>
CLASS B SHARES
You may purchase Class B Shares at a public offering price
Class B Shares equal to the applicable net asset value per share without any
may be up-front sales charge. Since Class B Shares are sold without
purchased at an initial sales charge, the full amount of your purchase
net asset payment will be invested in Class B Shares. Class B Shares
value, but are are subject to an annual distribution fee to compensate
subject to an Nuveen for its costs in connection with the sale of Class B
annual shares, and are also subject to an annual service fee to
distribution compensate Authorized Dealers for providing you with ongoing
fee and a CDSC financial advice and other account services.
You may be subject to a CDSC if you redeem your Class B
shares within a specified period after purchase, as shown in
the table below. See "Flexible Purchase Options" and
"Distribution and Service Plan." Nuveen compensates
Authorized Dealers for sales of Class B Shares at the time of
sale at the rate of 4.00% of the amount of Class B Shares
purchased, which represents a sales commission of 3.75% plus
an advance on the first year's annual service fee of .25%.
If redeemed prior to the end of the sixth year after
purchase, Class B Shares may be subject to a CDSC, as set
forth below:
<TABLE>
<CAPTION>
YEARS SINCE
PURCHASE CDSC
------------------------------------------------------
<S> <C>
0-1 5%
1-2 4%
2-3 4%
3-4 3%
4-5 2%
5-6 1%
</TABLE>
Class B Shares acquired through the reinvestment of dividends
are not subject to a CDSC. Any CDSC will be imposed on the
lower of the redeemed shares' cost or net asset value at the
time of redemption. For more information regarding the
imposition of the CDSC, see "How to Redeem Fund Shares--Class
B Shares," below.
Class B Shares
automatically Class B Shares will automatically convert to Class A Shares
convert to eight years after purchase. The purpose of the conversion is
Class A Shares to limit the distribution fees you pay over the life of your
eight years investment. All conversions will be done at net asset value
after purchase without the imposition of any sales load, fee, or other
charge, so that the value of each shareholder's account
immediately before conversion will be the same as the value
of the account immediately after conversion. Class B Shares
acquired through reinvestment of distributions will convert
into Class A Shares based on the date of
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<PAGE>
the initial purchase to which such shares relate. For this
purpose, Class B Shares acquired through reinvestment of
distributions will be attributed to particular purchases of
Class B Shares in accordance with such procedures as the
Board of Trustees may determine from time to time. Class B
Shares that are converted to Class A Shares will remain
subject to an annual service fee that is identical in amount
for both Class B Shares and Class A Shares. Since net asset
value per share of the Class B Shares and the Class A Shares
may differ at the time of conversion, a shareholder may
receive more or fewer Class A Shares than the number of Class
B Shares converted. Any conversion of Class B Shares into
Class A Shares will be subject to the continuing availability
of an opinion of counsel or a private letter ruling from the
Internal Revenue Service to the effect that the conversion of
shares would not constitute a taxable event under federal
income tax law. Conversion of Class B Shares into Class A
Shares might be suspended if such an opinion or ruling were
no longer available.
CLASS C SHARES
Class C Shares You may purchase Class C Shares at a public offering price
may be equal to the applicable net asset value per share without any
purchased at up-front sales charge. Class C Shares are subject to an
net asset annual distribution fee to compensate Nuveen for its costs in
value, but are connection with the sale of Class C Shares. Class C Shares
subject to an are also subject to an annual service fee of .25% to
annual compensate Authorized Dealers for providing you with ongoing
distribution financial advice and other account services. Nuveen
fee and a CDSC compensates Authorized Dealers for sales of Class C Shares at
if redeemed the time of the sale at a rate of 1% of the amount of Class C
within 12 Shares purchased, which represents a sales commission of .75%
months of plus an advance on the first year's annual service fee of
purchase .25%. See "Flexible Purchase Options" and "Distribution and
Service Plan."
Redemptions of Class C Shares within 12 months of purchase
may be subject to a CDSC of 1% of the lower of the purchase
price or redemption proceeds. See "How to Redeem Fund
Shares--Class C Shares."
CLASS R SHARES
Class R Shares If you are making an initial purchase of $1 million or more
are offered at of Fund shares in a single transaction, you may purchase
net asset Class R shares at a public offering price equal to the
value only applicable net asset value per share without any up-front
under limited sales charge or ongoing distribution or service fees. You
circumstances also may purchase Class R Shares subject only to the Fund's
or to minimum investment requirement of $3,000 if you are within
specified the following specified categories of investors who are
classes of eligible to purchase Class A Shares at net asset value
investors without an up-front sales charge: officers, trustees and
retired trustees of the Trust; bona fide, full-time and
retired employees of Nuveen or
25
<PAGE>
ICAP, any parent company of Nuveen, and subsidiaries thereof,
or their immediate family members; any person who, for at
least 90 days, has been an officer, director or bona fide
employee of any Authorized Dealer, or their immediate family
members; officers and directors of bank holding companies
that make Fund shares available directly or through
subsidiaries or bank affiliates; bank or broker-affiliated
trust departments; investors purchasing on a periodic fee,
asset-based fee or no transaction fee basis through a broker-
dealer sponsored mutual fund purchase program; and clients of
investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for
their services. For further details about these special
categories and their eligibility requirements, please consult
your financial adviser or the Statement of Additional
Information, or call Nuveen at 800-621-7227.
If you are eligible to purchase either Class R Shares or
Class A Shares without a sales charge at net asset value, you
should be aware of the differences between these two classes
of shares. Class A Shares are subject to an annual service
fee to compensate Authorized Dealers for providing you with
ongoing account services. Class R Shares are not subject to a
distribution or service fee and, consequently, holders of
Class R Shares may not receive the same types or levels of
services from Authorized Dealers. In choosing between Class A
Shares and Class R Shares, you should weigh the benefits of
the services to be provided by Authorized Dealers against the
annual service fee imposed upon the Class A Shares.
INITIAL AND SUBSEQUENT PURCHASES OF SHARES
The Fund You may buy Fund shares through Authorized Dealers or by
offers a calling or directing your financial adviser to call Nuveen
number of toll-free at 800-843-6765. You may pay for your purchase by
convenient Federal Reserve draft or by check made payable to "Nuveen
payment Growth and Income Stock Fund, Class [A], [B], [C], [R],"
methods delivered to the financial adviser through whom the
investment is to be made for forwarding to the Fund's
shareholder services agent, SSI. When making your initial
investment, you must also furnish the information necessary
to establish your Fund account by completing and enclosing
with your payment the attached Application Form. After your
initial investment, you may make subsequent purchases at any
time by forwarding to your financial adviser or SSI a check
in the amount of your purchase made payable to "Nuveen Growth
and Income Stock Fund, Class [A], [B], [C], [R]," and
indicating on the check your account number. All payments
need to be in U.S. dollars and should be sent directly to SSI
at its address listed on the back cover of this Prospectus. A
check drawn on a foreign bank or payable other than to the
order of the Fund generally will not be acceptable. You may
also wire Federal Funds directly
26
<PAGE>
to SSI, but you may be charged a fee for this. For
instructions on how to make Fund purchases by wire transfer,
call Nuveen toll-free at 800-621-7227.
PURCHASE PRICE
The price at which you purchase a class of Fund shares is
based on the next calculation of the net asset value for that
share class after the order is placed. The net asset value
per share of each share class is determined as of the close
of trading (currently 4:00 p.m. Eastern Time) on each day the
New York Stock Exchange is open for business. See "Net Asset
Value," below for a description of how net asset value is
calculated.
MINIMUM INVESTMENT REQUIREMENTS
Generally, your first purchase of any class of the Fund's
shares needs to be for $3,000 or more ($1,000 or more for an
Individual Retirement Account). Additional purchases may be
in amounts of $50 or more. These minimums may be changed at
any time by the Fund. There are exceptions to these minimums
for shareholders who qualify under one or more of the Fund's
automatic investment, group purchase or reinvestment
programs.
SYSTEMATIC INVESTMENT PROGRAMS
The Fund The Fund offers you several opportunities to capture the
offers several benefits of "dollar cost averaging" through systematic
ways to make investment programs. In a regularly followed dollar cost
systematic averaging program, you would purchase more shares when Fund
investments share prices are lower and fewer shares when Fund share
prices are higher, so that the average price paid for Fund
shares is less than the average price of the Fund shares over
the same time period. Dollar cost averaging does not assure
profits or protect against losses in a steadily declining
market. Since dollar cost averaging involves continuous
investment regardless of fluctuating price levels, you should
consider your financial ability to continue investing in
declining as well as rising markets before deciding to invest
in this way. The Fund offers two different types of
systematic investment programs:
Automatic Once you have established a Fund account, you may make
Deposit Plan regular investments in an amount of $25 or more each month by
authorizing SSI to draw preauthorized checks on your bank
account. There is no obligation to continue payments and you
may terminate your participation at any time at your
discretion. No charge in addition to the applicable sales
charge is made in connection with this Plan, and there is no
cost to the Fund. To obtain an application form for the
Automatic Deposit Plan, check the applicable box on the
enclosed Application Form or call Nuveen toll-free at 800-
621-7227.
27
<PAGE>
Payroll Direct Once you have established a Fund account, you may, with your
Deposit Plan employer's consent, make regular investments in Fund shares
of $25 or more per pay period by authorizing your employer to
deduct this amount automatically from your paycheck. There is
no obligation to continue payments and you may terminate your
participation at any time at your discretion. No charge in
addition to the applicable sales charge is made for this
Plan, and there is no cost to the Fund. To obtain an
application form for the Payroll Direct Deposit Plan, check
the applicable box on the enclosed Application Form or call
Nuveen toll-free at 800-621-7227.
OTHER SHAREHOLDER PROGRAMS
Exchange
Privilege You may exchange shares of a class of the Fund for shares of
the same class of any other Nuveen Mutual Fund with
reciprocal exchange privileges, at net asset value without a
sales charge, by sending a written request to the Fund, c/o
Shareholder Services, Inc., P.O. Box 5330, Denver, CO 80217-
5330. Similarly, Class A, Class B, Class C and Class R Shares
of other Nuveen Mutual Funds may be exchanged for the same
class of shares of the Fund at net asset value without a
sales charge. Exchanges of shares from any Nuveen money
market fund will be made into Class A Shares, Class B Shares,
Class C Shares or Class R Shares (if eligible) of the Fund at
the public offering price. If, however, a sales charge has
previously been paid on the investment represented by the
exchanged shares (i.e., the shares to be exchanged were
originally issued in exchange for shares on which a sales
charge was paid), the exchange of shares from a Nuveen money
market fund will be made into shares of the Fund at net asset
value. Class A Shares, Class C Shares or Class R Shares may
be exchanged for shares of any Nuveen money market fund, but
Class B Shares may not be exchanged for shares of a Nuveen
money market fund.
If you exchange shares subject to a CDSC, no CDSC will be
charged at the time of the exchange. However, if you
subsequently redeem the shares acquired through the exchange,
the redemption may be subject to a CDSC, depending on when
you purchased your original shares and the CDSC schedule of
the fund from which you exchanged your shares.
The shares to be purchased must be offered in your state of
residence and you must have held the shares you are
exchanging for at least 15 days. The total value of exchanged
shares must at least equal the minimum investment requirement
of the Nuveen Mutual Fund being purchased. For federal income
tax purposes, any exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before making
any exchange, you should obtain the Prospectus for the Nuveen
Mutual Fund you are purchasing and read it carefully. If the
registration of the
28
<PAGE>
account for the Fund you are purchasing is not exactly the
same as that of the fund account from which the exchange is
made, written instructions from all holders of the account
from which the exchange is being made must be received, with
signatures guaranteed by a member of an approved Medallion
Guarantee Program or in such other manner as may be
acceptable to the Fund. You may also exchange shares by
telephone if you authorize telephone exchanges by checking
the applicable box on the enclosed Application Form or by
calling Nuveen toll-free at 800-621-7227 to obtain an
authorization form. The exchange privilege may be modified or
discontinued by the Fund at any time upon prior written
notice to shareholders of the Fund.
The exchange privilege is not intended to permit the Fund to
be used as a vehicle for short-term trading. Excessive
exchange activity may interfere with portfolio management,
raise expenses, and otherwise have an adverse effect on all
shareholders. In order to limit excessive exchange activity
and in other circumstances where Fund management believes
doing so would be in the best interest of the Fund, the Fund
reserves the right to revise or terminate the exchange
privilege, or limit the amount or number of exchanges or
reject any exchange. Shareholders would be notified of any
such action to the extent required by law.
Reinstatement If you redeemed Class A, Class B or Class C Shares of the
Privilege Fund or any other Nuveen Mutual Fund that were subject to a
sales charge or a CDSC, you have up to one year to reinvest
all or part of the full amount of the redemption in the same
class of shares of the Fund at net asset value. This
reinstatement privilege can be exercised only once for any
redemption, and reinvestment will be made at the net asset
value next calculated after reinstatement of the appropriate
class of Fund shares. If you reinstate shares that were
subject to a CDSC, your holding period as of the redemption
date also will be reinstated for purposes of calculating a
CDSC. The federal income tax consequences of any capital gain
realized on a redemption will not be affected by
reinstatement, but a capital loss may be disallowed in whole
or in part depending on the timing, the amount of the
reinvestment and the fund from which the redemption occurred.
Fund Direct You can use Fund Direct to link your Fund account to your
account at a bank or other financial institution. Fund Direct
enables you to transfer money electronically between these
accounts and perform a variety of account transactions. These
include purchasing shares by telephone, investing through an
Automatic Deposit Plan, and sending dividends, distributions,
redemption payments or Automatic Withdrawal Plan payments
directly to your bank account. Please refer to the
Application for details, or call SSI at 800-621-7227 for more
information.
29
<PAGE>
Fund Direct privileges may be requested via an Application
you obtain by calling 800-621-7227. Fund Direct privileges
will apply to each shareholder listed in the registration on
your account as well as to your Authorized Dealer
representative of record unless and until SSI receives
written instructions terminating or changing those
privileges. After you establish Fund Direct for your account,
any change of bank account information must be made by
signature-guaranteed instructions to SSI signed by all
shareholders who own the account.
Purchases may be made by telephone only after your account
has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call SSI at 800-
621-7227. The purchase payment will be debited from your bank
account.
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM, CALL
NUVEEN TOLL-FREE AT 800-621-7227.
ADDITIONAL INFORMATION
If you choose to invest in the Fund, an account will be
opened and maintained for you by SSI, the Fund's shareholder
services agent. Share certificates will be issued to you only
upon written request to SSI, and no certificates will be
issued for fractional shares. The Fund reserves the right to
reject any purchase order and to waive or increase minimum
investment requirements. A change in registration or transfer
of shares held in the name of your financial adviser's firm
can only be made by an order in good form from the financial
adviser acting on your behalf.
Authorized Dealers are encouraged to open single master
accounts. However, some Authorized Dealers may wish to use
SSI's sub-accounting system to minimize their internal
recordkeeping requirements. An Authorized Dealer or other
investor requesting shareholder servicing or accounting other
than the master account or sub-accounting service offered by
SSI will be required to enter into a separate agreement with
another agent for these services for a fee that will depend
upon the level of services to be provided.
Subject to the rules and regulations of the Securities and
Exchange Commission, the Fund reserves the right to suspend
the continuous offering of its shares at any time, but no
suspension shall affect your right of redemption as described
below.
30
<PAGE>
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, which
provides that Class B and Class C Shares will be subject to
an annual distribution fee and Class A, Class B and Class C
Shares will be subject to an annual service fee. Class R
Shares will not be subject to either distribution or service
fees.
The distribution fee applicable to Class B and Class C Shares
under the Plan will be payable to reimburse Nuveen for
services and expenses incurred in connection with the
distribution of such Shares. The distribution fee primarily
reimburses Nuveen for providing compensation to Authorized
Dealers, including Nuveen, either at the time of sale or on
an ongoing basis. The other expenses for which Nuveen may be
reimbursed include, without limitation, expenses of printing
and distributing prospectuses to persons other than
shareholders of the Fund, expenses of preparing, printing and
distributing advertising and sales literature and reports to
shareholders used in connection with the sale of such Shares,
certain other expenses associated with the distribution of
such Shares, and any other distribution-related expenses that
may be authorized from time to time by the Board of Trustees.
The service fee applicable to Class A, Class B and Class C
Shares under the Plan will be paid to Nuveen to compensate
Authorized Dealers, including Nuveen, in connection with the
provision of ongoing account services to shareholders. These
services may include establishing and maintaining shareholder
accounts, answering shareholder inquiries and providing other
personal services to shareholders.
The Fund may spend up to .25 of 1% per year of the average
daily net assets of Class A Shares as a service fee under the
Plan applicable to Class A Shares. The Fund may spend up to
.75 of 1% per year of the average daily net assets of Class B
Shares as a distribution fee and up to .25 of 1% per year of
the average daily net assets of Class B Shares as a service
fee under the Plan applicable to Class B Shares. The Fund may
spend up to .75 of 1% per year of the average daily net
assets of Class C Shares as a distribution fee and up to .25
of 1% per year of the average daily net assets of Class C
Shares as a service fee under the Plan applicable to Class C
Shares.
31
<PAGE>
HOW TO REDEEM FUND SHARES
You may redeem your Fund shares at any time for cash at the
net asset value next computed after the redemption
instructions and any required documents and certificates are
received in proper form, as described below. There is no
charge for the redemption of Class R Shares.
CLASS A SHARES
Class A Shares are normally redeemed at net asset value,
without any CDSC. However, in the case of Class A purchases
of $1 million or more at net asset value, where the dealer of
record has not waived the sales commission, a CDSC of 1% is
imposed on any redemptions within 18 months of purchase.
CLASS B SHARES
Class B Shares redeemed within 6 years of purchase may be
subject to a CDSC. The level of the CDSC is determined by how
long you have owned your shares, as described under "How to
Buy Fund Shares--Class B Shares," above.
CLASS C SHARES
Class C Shares are redeemed at net asset value, without any
CDSC, except that a CDSC of 1% is imposed upon redemptions of
Class C Shares within 12 months of purchase.
OPERATION OF THE CDSC
In determining whether a CDSC is payable, a Fund will first
redeem shares not subject to any charge, and then in the
order in which the Class B Shares were purchased or in the
reverse order in which the Class A or Class C Shares were
purchased, except if another order of redemption would result
in a lower charge or you specify another order. No CDSC is
charged on shares purchased as a result of automatic
reinvestment of dividends or capital gains paid. In addition,
no CDSC will be charged on exchanges of shares into another
Nuveen Mutual Fund or money market fund. Your holding period
is calculated on a monthly basis and begins the first day of
the month in which the order for investment is received. The
CDSC is calculated based on the lower of the redeemed shares'
cost or net asset value at the time of the redemption and is
deducted from the redemption proceeds. Nuveen receives the
amount of any CDSC you pay. The CDSC may be waived under
certain special circumstances, as described in the Statement
of Additional Information.
32
<PAGE>
By Written You may redeem shares by sending a written request for
Request redemption directly to the Fund, c/o Shareholder Services,
Inc., P.O. Box 5330, Denver, CO 80217-5330, accompanied by
duly endorsed certificates, if issued. Requests for
redemption and share certificates, if issued, must be signed
by each shareholder and, if the redemption proceeds exceed
$50,000 or are payable other than to the shareholder of
record at the address of record (which address may not have
changed in the preceding 60 days), the signature must be
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. You will receive payment based on the net asset value
per share next determined after receipt by the Fund of a
properly executed redemption request in proper form. A check
for the redemption proceeds will be mailed to you within
seven days after receipt of your redemption request. For
accounts registered in the name of a broker-dealer, payment
will be forwarded within three business days. However, if any
shares to be redeemed were purchased by check within 15 days
prior to the date the redemption request is received, the
Fund will not mail the redemption proceeds until the check
received for the purchase of shares has cleared, which may
take up to 15 days.
By TEL-A-CHECK If you have authorized telephone redemption and your account
address has not changed within the last 60 days, you can
redeem shares that are held in non-certificate form and that
are worth $50,000 or less by calling Nuveen at 800-621-7227.
While you or anyone authorized by you may make telephone
redemption requests, redemption checks will be issued only in
the name of the shareholder of record and will be mailed to
the address of record. If your telephone request is received
prior to 4:00 p.m. eastern time, the redemption check will
normally be mailed the next business day. For requests
received after 4:00 p.m. eastern time, the redemption will be
effected at 4:00 p.m. eastern time the following business day
and the check will normally be mailed on the second business
day after the request.
By TEL-A-WIRE If you have authorized TEL-A-WIRE redemption or established
or Fund Direct Fund Direct privileges, you can take advantage of the
following expedited redemption procedures to redeem shares
held in non-certificate form that are worth at least $1,000.
You may make TEL-A-WIRE redemption requests through a phone
representative or Fund Direct redemption requests by calling
Nuveen at 800-621-7227. If a redemption request is received
by 4:00 p.m. eastern time, the redemption will be made as of
4:00 p.m. that day. If the redemption request is received
after 4:00 p.m. eastern time, the redemption will be made as
of 4:00 p.m. the following business day. Proceeds of
redemptions through TEL-A-WIRE will normally be wired on the
second business day following the redemption, but may be
delayed one additional
33
<PAGE>
business day if the Federal Reserve Bank of Boston or the
Federal Reserve Bank of New York is closed on the day
redemption proceeds would ordinarily be wired. The Fund
reserves the right to charge a fee for TEL-A-WIRE. Proceeds
of redemptions through Fund Direct will normally be wired to
your Fund Direct bank account on the second or third business
day after the redemption.
Before you may redeem shares by TEL-A-CHECK, TEL-A-WIRE or
Fund Direct, you need to complete the telephone redemption
authorization section of the enclosed Application Form or the
Fund Direct Application Form and return it to Nuveen or SSI.
If you did not authorize telephone redemption when you opened
your account, you may obtain a telephone redemption
authorization form by writing the Fund or by calling Nuveen
toll-free at 800-621-7227. Proceeds of share redemptions made
by TEL-A-WIRE will be transferred by Federal Reserve wire
only to the commercial bank account specified by the
shareholder on the application form. You need to send a
written request to Nuveen or SSI in order to establish
multiple accounts, or to change the account or accounts
designated to receive redemption proceeds. These requests
must be signed by each account owner with signatures
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. Further documentation may be required from
corporations, executors, trustees or personal
representatives.
For the convenience of shareholders, the Fund has authorized
Nuveen as its agent to accept orders from financial advisers
by wire or telephone for the redemption of Fund shares. The
redemption price is the first net asset value of the
appropriate share class determined following receipt of an
order placed by the financial adviser. The Fund makes payment
for the redeemed shares to the securities representatives who
placed the order promptly upon presentation of required
documents with signatures guaranteed as described above.
Neither the Fund nor Nuveen charges any redemption fees other
than any CDSC as described above. However, your financial
adviser may charge you for serving as agent in the redemption
of shares.
The Fund reserves the right to refuse telephone redemptions
and, at its option, may limit the timing, amount or frequency
of these redemptions. Telephone redemption procedures may be
modified or terminated at any time, on 30 days' notice, by
the Fund. The Fund, SSI and Nuveen will not be liable for
following telephone instructions reasonably believed to be
genuine. The Fund employs procedures reasonably designed to
confirm that telephone instructions are genuine. These
procedures include recording all telephone instructions and
requiring up to three forms of identification prior to acting
upon a caller's instructions. If the Fund does
34
<PAGE>
not follow reasonable procedures for protecting shareholders
against loss on telephone transactions, it may be liable for
any losses due to unauthorized or fraudulent telephone
instructions.
Automatic If you own Fund shares currently worth at least $10,000, you
Withdrawal may establish an Automatic Withdrawal Plan by completing an
Plan application form for the Plan. You may obtain an application
form by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at 800-621-
7227.
The Plan permits you to request periodic withdrawals on a
monthly, quarterly, semi-annual or annual basis in an amount
of $50 or more. Depending upon the size of the withdrawals
requested under the Plan and fluctuations in the net asset
value of Fund shares, these withdrawals may reduce or even
exhaust your account.
The purchase of Class A Shares, other than through
reinvestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usually
be disadvantageous because you will be paying a sales charge
on any Class A Shares you purchase at the same time you are
redeeming shares. Similarly, use of the Automatic Withdrawal
Plan for Class B Shares held for less than six years or Class
C Shares held for less than 12 months may be disadvantageous
because the newly-purchased Class B or Class C Shares will be
subject to the CDSC.
General The Fund may suspend the right of redemption of Fund shares
or delay payment more than seven days (a) during any period
when the New York Stock Exchange is closed (other than
customary weekend and holiday closings), (b) when trading in
the markets the Fund normally utilizes is restricted, or an
emergency exists as determined by the Securities and Exchange
Commission so that trading of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for any other periods that the Securities
and Exchange Commission by order may permit for protection of
Fund shareholders.
The Fund may, from time to time, establish a minimum total
investment for Fund shareholders, and the Fund reserves the
right to redeem your shares if your investment is less than
the minimum after giving you at least 30 days' notice. If any
minimum total investment is established, and if your account
is below the minimum, you will be allowed 30 days following
the notice in which to purchase sufficient shares to meet the
minimum. So long as the Fund continues to offer shares at net
asset value to holders of Nuveen Unit Trusts who are
investing their Nuveen Unit Trust distributions, no minimum
total investment will be established for the Fund.
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<PAGE>
MANAGEMENT OF THE FUND
Board of The management of the Fund, including general supervision of
Trustees the duties performed for the Fund by NIAC under the
Management Agreement, is the responsibility of the Board of
Trustees of the Trust.
NIAC oversees
operation of Overall management of the Fund is the responsibility of NIAC,
the Fund which is located at 333 West Wacker Drive, Chicago, Illinois
60606. NIAC oversees the management of the Fund's investment
portfolio, manages the Fund's business affairs and provides
certain day-to-day administrative services to the Fund. NIAC
has entered into a Sub-Advisory Agreement with ICAP under
which ICAP manages the Fund's investment portfolio.
NIAC is a wholly-owned subsidiary of Nuveen, which has
sponsored or underwritten more than $60 billion of investment
company securities. Nuveen, the principal underwriter of the
Fund's shares, is sponsor of the Nuveen Tax-Free Unit Trust,
a registered unit investment trust. It is also the principal
underwriter for the Nuveen Mutual Funds, and served as co-
managing underwriter for the shares of the Nuveen Exchange-
Traded Funds. Over 1,000,000 individuals have invested to
date in Nuveen investment products. Founded in 1898, Nuveen
is a subsidiary of The John Nuveen Company which, in turn, is
approximately 80% owned by The St. Paul Companies, Inc. ("St.
Paul"). St. Paul is located in St. Paul, Minnesota, and is
principally engaged in providing property-liability insurance
through subsidiaries.
For the fund management services and facilities furnished by
NIAC, the Fund has agreed to pay an annual management fee as
follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE FUND MANAGEMENT FEE
---------------------------------------------
<S> <C>
For the first $125 million .8500 of 1%
For the next $125 million .8375 of 1%
For the next $250 million .8250 of 1%
For the next $500 million .8125 of 1%
For the next $1 billion .8000 of 1%
For assets over $2 billion .7750 of 1%
</TABLE>
36
<PAGE>
ICAP manages
the Fund's ICAP was founded in 1970 and is located at 225 West Wacker
investment Drive, Suite 2400, Chicago, IL 60606. Under the Sub-Advisory
portfolio Agreement, NIAC pays ICAP a portfolio management fee on the
Fund's average daily net asset value at an annual rate as set
forth below, which is determined by reference to the average
daily market value of that portion of the assets of all
Nuveen-sponsored investment products for which ICAP is
designated as equity portfolio manager:
<TABLE>
<CAPTION>
ASSETS OF NUVEEN-SPONSORED PORTFOLIO
INVESTMENT PRODUCTS MANAGEMENT
MANAGED BY ICAP FEE
---------------------------------
<S> <C>
For the first $500 million .35 of 1%
For the next $500 million .30 of 1%
For assets over $1 billion .25 of 1%
</TABLE>
The investment decisions for the Fund are made through a team
approach, with all of the ICAP investment professionals
contributing to the process. ICAP currently maintains a staff
of 12 investment professionals. Each of the investment
officers and other investment professionals of ICAP has
developed an expertise in at least one functional investment
area, including equity research, strategy, fixed income
analysis, quantitative research, technical research, and
trading. A key element in the decision making process is a
formal investment committee meeting generally held each
business day and attended by all the investment
professionals. These meetings also provide for the ongoing
review of ICAP's investment positions. Pertinent information
from outside sources is shared and incorporated into the
investment outlook. The investment strategy, asset sectors,
and individual security holdings are reviewed to verify their
continued appropriateness. Investment recommendations are
presented to the committee for decisions.
ICAP provides continuous advice and recommendations
concerning the Fund's investments, and is responsible for
selecting the broker-dealers who execute the portfolio's
transactions. In executing such transactions, ICAP seeks to
obtain the best net results for the Fund. ICAP also serves as
investment adviser to the ICAP Funds, Inc. and to pension and
profit-sharing plans, and other institutional and private
investors. As of May 1, 1996, ICAP had approximately $5
billion under management. Mr. Robert H. Lyon, President of
ICAP, owns shares representing 51% of the voting rights of
ICAP. In addition, The John Nuveen Company owns preferred
shares of ICAP, which are convertible after several years
into a 20% common stock interest of ICAP.
37
<PAGE>
HOW THE FUND SHOWS PERFORMANCE
The Fund may quote its yield or total return in reports to
shareholders, sales literature and advertisements. The Fund
may also from time to time compare its investment results to
various passive indices or other mutual funds with similar
investment objectives. Comparative performance information
may include data from Lipper Analytical Services, Inc.,
Morningstar, Inc. and other industry publications. See the
Statement of Additional Information for a more detailed
discussion.
All total return figures assume the reinvestment of all
dividends and measure the net investment income generated by,
and the effect of any realized and unrealized appreciation or
depreciation of, the underlying investments in the Fund over
a specified period of time. Average annual total return
figures are annualized and therefore represent the average
annual percentage change over the specified period.
Cumulative total return figures are not annualized and
represent the aggregate percentage or dollar value change
over a stated period of time. Average annual total return and
cumulative total return are based upon the historical results
of the Fund and are not necessarily representative of the
future performance of the Fund.
38
<PAGE>
DISTRIBUTIONS AND TAXES
The Fund intends to operate as a "Regulated Investment
Company" under Subchapter M of the Internal Revenue Code, and
therefore will not be liable for federal income taxes to the
extent earnings are distributed on a timely basis.
For federal income tax purposes, unless you are exempt from
taxation or entitled to a tax deferral, ALL DIVIDENDS PAID BY
THE FUND THAT ARE DERIVED FROM NET INVESTMENT INCOME AND NET
SHORT-TERM CAPITAL GAINS ARE TAXABLE AS ORDINARY INCOME, AND
DISTRIBUTIONS PAID BY THE FUND FROM NET LONG-TERM CAPITAL
GAINS ARE TAXABLE AS LONG-TERM CAPITAL GAIN, WHETHER RECEIVED
IN CASH OR REINVESTED IN ADDITIONAL SHARES. The capital gain
holding period for this purpose is determined by the length
of time the Fund has held the security and not the length of
time you have held shares in the Fund. Long-term capital gain
distributions received by individual shareholders are taxed
at a maximum rate of 28%. Investors are informed annually as
to the amount and nature of all dividends and capital gains
paid during the prior year. Such capital gains and dividends
may also be subject to state or local taxes. If you are not
required to pay taxes on your income, you are generally not
required to pay federal income taxes on the amounts
distributed to you.
Income dividends are usually distributed quarterly, and
capital gains, if any, are usually distributed annually in
December. When a dividend or capital gain is distributed, the
Fund's net asset value decreases by the amount of the
payment. ANY SUCH DISTRIBUTION WILL BE SUBJECT TO FEDERAL
INCOME TAX, EVEN IF THE DISTRIBUTION OCCURS SHORTLY AFTER A
PURCHASE OF FUND SHARES. All dividends or capital gains
distributions will automatically be reinvested in additional
shares of the same class of the Fund at the then prevailing
net asset value unless an investor specifically requests that
either dividends or capital gains, or both, be paid in cash.
The election to receive dividends or reinvest them may be
changed by writing to: Nuveen Funds, c/o Shareholder
Services, Inc., P.O. Box 5330, Denver, CO 80217-5330. Such
notice needs to be received at least 5 days prior to the
record date of any dividend or capital gain distribution.
Under certain circumstances, a corporate shareholder may be
entitled to a dividends received deduction with respect to
such shareholder's taxable dividends which are attributable
to dividends received by the Fund on its equity securities.
If you do not furnish the Fund with your correct social
security number or employer identification number, the Fund
is required by federal law to withhold federal income tax
from your distributions and redemption proceeds at a rate of
31%.
39
<PAGE>
This section is not intended to be a full discussion of
federal income tax laws and the effect of such laws on you. A
more detailed summary appears in the Statement of Additional
Information. There may be other federal, state, or local tax
considerations applicable to a particular investor. You are
urged to consult your own tax adviser.
40
<PAGE>
NET ASSET VALUE
Net asset The Fund's net asset value per share is determined as of the
value is close of trading (currently 4:00 p.m. eastern time) on each
calculated day the New York Stock Exchange is open for business. The
daily Fund's net asset value may not be calculated on days during
which the Fund receives no orders to purchase shares and no
shares are tendered for redemption. Net asset value is
calculated by taking the fair value of the Fund's total
assets, including interest or dividends accrued but not yet
collected, less all liabilities, and dividing by the total
number of shares outstanding. The result, rounded to the
nearest cent, is the net asset value per share. In
determining net asset value, expenses are accrued and applied
daily and securities and other assets for which market
quotations are available are valued at market value. Common
stocks and other equity-type securities are valued at the
last sales price on the national securities exchange or
Nasdaq on which such securities are primarily traded;
however, securities traded on a national securities exchange
or Nasdaq for which there were no transactions on a given day
or securities not listed on a national securities exchange or
Nasdaq are valued at the most recent bid prices. Debt
securities are valued by a pricing service that utilizes
electronic data processing techniques to determine values for
normal institutional-sized trading units of debt securities
without regard to the existence of sale or bid prices when
such values are believed to more accurately reflect the fair
market value of such securities; otherwise, actual sale or
bid prices are used. Any securities or other assets for which
market quotations are not readily available are valued at
fair value as determined in good faith by the Board of
Trustees. Debt securities having remaining maturities of 60
days or less when purchased are valued by the amortized cost
method when the Board of Trustees determines that the fair
market value of such securities is their amortized cost.
Under this method of valuation, a security is initially
valued at its acquisition cost, and thereafter amortization
of any discount or premium is assumed each day, regardless of
the impact of fluctuating interest rates on the market value
of the security. Regardless of the method employed to value a
particular security, all valuations are subject to review by
the Fund's Board of Trustees or its delegate who may
determine the appropriate value of a security whenever the
value as calculated is significantly different from the
previous day's calculated value.
Fund expenses
In addition to the Fund management fee paid to NIAC and the
distribution and service fees paid to Nuveen, the Fund is
responsible for its own expenses that are not covered under
such agreements, including, without limitation: custodial,
transfer agent, accounting and legal fees; interest charges;
brokerage commissions; organizational expenses; and
extraordinary expenses.
41
<PAGE>
GENERAL INFORMATION
Custodian and The Custodian of the assets of the Fund is The Chase
Transfer and Manhattan Bank, N.A. ("Chase"), 770 Broadway, New York, New
Shareholder York 10003. Chase also provides certain accounting services
Service Agent to the Fund. The Fund's transfer, shareholder services and
dividend paying agent, Shareholder Services, Inc., P.O. Box
5330, Denver, CO 80217-5330, performs bookkeeping, data
processing and administrative services for the maintenance of
shareholder accounts.
Organization
The Fund is a series of the Nuveen Investment Trust
("Trust"). The Trust is an open-end diversified management
investment company under the Investment Company Act of 1940.
The Trust was organized as a Massachusetts business trust on
May 6, 1996. The Board of Trustees of the Trust is authorized
to issue an unlimited number of shares in one or more series
or "Funds," which may be divided into classes of shares.
Currently, there are three series authorized and outstanding,
each of which is divided into four classes of shares
designated as Class A Shares, Class B Shares, Class C Shares
and Class R Shares. Each class of shares represents an
interest in the same portfolio of investments of the Fund.
Each class of shares has equal rights as to voting,
redemption, dividends and liquidation, except that each bears
different class expenses, including different distribution
and service fees, and each has exclusive voting rights with
respect to any distribution or service plan applicable to its
shares. There are no conversion, preemptive or other
subscription rights, except that Class B Shares automatically
convert into Class A Shares, as described above. The Board of
Trustees of the Trust has the right to establish additional
series and classes of shares in the future, to change those
series or classes and to determine the preferences, voting
powers, rights and privileges thereof.
The Trust is not required and does not intend to hold annual
meetings of shareholders. Shareholders owning more than 10%
of the outstanding shares of the Fund have the right to call
a special meeting to remove Trustees or for any other
purpose.
Under Massachusetts law applicable to Massachusetts business
trusts, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for its
obligations. However, the Declaration of Trust of the Trust
contains an express disclaimer of shareholder liability for
acts or obligations of the Trust and requires that notice of
this disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust or the
Trustees. The Fund's Declaration of Trust further provides
for indemnification out of the assets and property of the
Trust for all loss and expense of any shareholder held
personally liable for the obligations of the Trust. Thus, the
risk of a shareholder incurring
42
<PAGE>
financial loss on account of shareholder liability is limited
to circumstances in which both inadequate insurance existed
and the Trust or Fund itself was unable to meet its
obligations. The Trust believes the likelihood of the
occurrence of these circumstances is remote.
43
<PAGE>
LOGO
NUVEEN
EQUITY
MUTUAL FUNDS
NUVEEN BALANCED
STOCK AND BOND FUND
PHOTO APPEARS HERE
PROSPECTUS/ , 1996
<PAGE>
NUVEEN FAMILY OF MUTUAL FUNDS
Nuveen offers individual investors a broad range of mutual funds
to meet their investment needs:
GROWTH AND INCOME FUNDS
Nuveen Growth and Income Stock Fund
BALANCED FUNDS
Nuveen Balanced Stock and Bond Fund
Nuveen Balanced Municipal and Stock Fund
NATIONAL TAX-FREE INCOME FUNDS
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
STATE TAX-FREE INCOME FUNDS
Arizona
Nuveen Arizona Tax-Free Value Fund
California
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
Florida
Nuveen Florida Tax-Free Value Fund
Maryland
Nuveen Maryland Tax-Free Value Fund
Massachusetts
Nuveen Massachusetts Tax-Free Value Fund
Nuveen Massachusetts Insured Tax-Free Value Fund
Michigan
Nuveen Michigan Tax-Free Value Fund
New Jersey
Nuveen New Jersey Tax-Free Value Fund
New York
Nuveen New York Tax-Free Value Fund
Nuveen New York Insured Tax-Free Value Fund
Ohio
Nuveen Ohio Tax-Free Value Fund
Pennsylvania
Nuveen Pennsylvania Tax-Free Value Fund
Virginia
Nuveen Virginia Tax-Free Value Fund
<PAGE>
NUVEEN BALANCED STOCK AND BOND FUND
Prospectus
, 1996
The NUVEEN BALANCED STOCK AND BOND FUND (the "Fund") is a mutual fund that
seeks to provide over time an attractive total return from a diversified
portfolio of equity securities, taxable fixed-income securities and cash
equivalents. The Fund emphasizes capital appreciation in favorable market
environments and capital preservation in adverse market environments by
gradually shifting the allocation of the Fund's portfolio between equity
securities, taxable fixed-income securities and cash equivalents, depending
upon the relative risk/reward characteristics of these asset categories, within
defined ranges for each asset category.
The Fund offers you Flexible Purchase Options, which provide the flexibility
to purchase Fund shares in the same manner you typically make other mutual fund
investments. You may choose from one of four alternative classes of Fund shares
(Classes A, B, C and R), each with a different combination of sales charges,
ongoing fees, eligibility requirements, and other features. Your financial
adviser will be able to assist you in determining which share class is best for
you. See "Flexible Purchase Options," "How to Buy Fund Shares" and "Summary of
Fund Expenses."
The Fund is a series of The Nuveen Investment Trust (the "Trust"). This
Prospectus contains information you should know before investing in the Fund.
Please retain it for future reference. You can find more detailed information
about the Fund in the Statement of Additional Information dated , 1996,
as amended from time to time. For a free copy of this Statement, write to the
Nuveen Mutual Funds, 333 West Wacker Drive, Chicago, IL 60606, or call Nuveen
toll-free at 800-621-7227. The Statement has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. Shares
of the Fund involve investment risks, including possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<C> <S>
CONTENTS
3 SUMMARY OF FUND EXPENSES
5 SUMMARY INFORMATION ABOUT THE FUND
</TABLE>
<TABLE>
<C> <S>
5 INVESTMENT OBJECTIVE
5 HOW THE FUND PURSUES ITS OBJECTIVE
7 PERFORMANCE OF THE PORTFOLIO MANAGER
9 HOW TO DETERMINE IF THE FUND IS RIGHT FOR YOU
9 FUND FEATURES AND BENEFITS
11 RISKS AND SPECIAL CONSIDERATIONS
12 WHO IS RESPONSIBLE FOR THE OPERATION OF THE
FUND?
</TABLE>
<TABLE>
<C> <S>
13 ADDITIONAL INFORMATION ABOUT THE FUND'S
INVESTMENTS
19 FLEXIBLE PURCHASE OPTIONS
22 HOW TO BUY FUND SHARES
34 DISTRIBUTION AND SERVICE PLAN
35 HOW TO REDEEM FUND SHARES
39 MANAGEMENT OF THE FUND
41 HOW THE FUND SHOWS PERFORMANCE
42 DISTRIBUTIONS AND TAXES
43 NET ASSET VALUE
44 GENERAL INFORMATION
</TABLE>
<PAGE>
SUMMARY OF FUND EXPENSES
The purpose of the tables below is to help you understand all
expenses and fees that you would bear directly or indirectly
as a Fund shareholder. The percentages shown are estimated
for the current fiscal year. Actual fees and expenses may be
greater or less than those shown. An example of how the
expenses work is on the next page.
<TABLE>
<CAPTION>
Shareholder Transaction
Expenses (as a percent of
offering price)(1) Class A Class B Class C Class R(2)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed 5.25%(3) None None None
on
Purchases
Maximum Sales Charge Imposed None None None None
on
Reinvested Dividends
Exchange Fees None None None None
Deferred Sales Charge (as a None(4) 5%(5) 1%(6) None
percentage of lesser of pur-
chase price or redemption
proceeds)
<CAPTION>
Annual Fund Operating Expenses
(as a percent of average daily
net assets) Class A Class B Class C Class R
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees .75% .75% .75% .75%
Rule 12b-1 Fees(7) .25% 1.00% 1.00% None
Other Operating Expenses (af-
ter .10% .10% .10% .10%
reimbursement)(8) ----- ----- ----- ----
Total Expenses 1.10% 1.85% 1.85% .85%
</TABLE>
(1) Investment dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details.
(2) Class R Shares are available for purchase only under certain limited
circumstances, or by specified classes of investors. See "How to Buy Fund
Shares--Class R Shares."
(3) Reduced sales charges apply to purchases of $50,000 or more. See "How to
Buy Fund Shares--Class A Shares."
(4) Certain Class A purchases at net asset value of $1 million or more may be
subject to a 1% contingent deferred sales charge if redeemed within 18 months
of purchase. See "How to Buy Fund Shares--Class A Shares."
(5) Class B Shares redeemed within six years of purchase are subject to a
contingent deferred sales charge of 5% during the first year, 4% during the
second and third years, 3% during the fourth year, 2% during the fifth year,
and 1% during the sixth year.
(6) Class C Shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(7) Class A, Class B and Class C Shares are subject to an annual service fee of
.25% of the average daily net assets to compensate Authorized Dealers for
ongoing account services. In addition, Class B and Class C Shares are subject
to annual distribution fees of .75% of the average daily net assets to
reimburse Nuveen for costs in connection with the sale of Fund shares. See
"Distribution and Service Plan." Long-term holders of Class A, Class B and
Class C Shares may pay more in Rule 12b-1 fees than the economic equivalent of
the maximum front-end sales charge permitted under the National Association of
Securities Dealers Rules of Fair Practice.
(8) The investment adviser has agreed to waive fees and reimbursement expenses
through July 31, 1997 in order to prevent Total Expenses (excluding any
distribution or service fees) from exceeding .85% of the average daily net
asset value of any class of Fund shares. Absent reimbursement, "Other Operating
Expenses" are estimated to be .25%.
3
<PAGE>
EXAMPLE*
For the Fund, you would pay the following expenses on a
$1,000 investment over various time periods, assuming (1) a
5% annual rate of return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
1 Year 3 Years
----------------------------------------------------------
<S> <C> <C>
Class A $63 $86
Class B** $58 $90
Class C*** $19 $58
Class R $ 9 $27
</TABLE>
*This example does not represent past or future expenses,
which may be greater or less than those shown. Moreover, the
Fund's actual rate of return may be greater or less than the
hypothetical 5% return shown in this example. This example
assumes that the percentage amounts listed under Annual
Operating Expenses remain the same in each of the periods.
For additional information about the Fund's fees and
expenses, see "Distribution and Service Plan" and "Management
of the Fund."
**Assumes that the shareholder redeemed on the first day of
the next year and the contingent deferred sales charge was
applied as follows: 1 year (4%) and 3 years (3%). If instead
the shareholder had redeemed on the last day of the prior
year, the expenses would have been as follows: 1 year $68 and
3 years $100. See "How to Buy Fund Shares--Class B Shares."
***Assumes that the shareholder redeemed on the first day of
the second year and the contingent deferred sales charge was
not applicable for any of the periods shown. If instead the
shareholder had redeemed on the last day of the first year,
the expenses in the first year would have been $29. See "How
to Buy Fund Shares--Class C Shares."
4
<PAGE>
SUMMARY INFORMATION ABOUT THE FUND
INVESTMENT OBJECTIVE
The Fund seeks to provide over time an attractive total
return from a diversified portfolio of equity securities,
taxable fixed income securities and cash equivalents by
emphasizing capital appreciation in favorable markets and
capital preservation in adverse markets. The investment
objective may not be changed without shareholder approval.
There is no assurance that this objective will be realized.
HOW THE FUND PURSUES ITS OBJECTIVE
The Fund
invests across The Fund invests in a conservative mix of equities, taxable
different bonds and cash equivalents. The Fund will seek capital growth
asset classes primarily through its equity investments. The Fund invests in
to reduce taxable fixed-income securities and cash equivalents in order
investment to reduce risk and preserve capital and to provide current
risk income. Please see "Additional Information About the Fund's
Investments", starting on page 13 for a more detailed
discussion.
The Fund The Fund's portfolio manager, Institutional Capital
employs a Corporation ("ICAP"), employs a value-oriented approach to
value-oriented select equity securities for the equity portion of the Fund's
strategy and investment portfolio. Equity securities are initially
fundamental screened using proprietary valuation models on the basis of
company each security's relative price-earnings ratio and earnings
research to stability. ICAP then conducts extensive company research on
choose the securities that pass this initial screen in order to
equities identify those securities with a clear company-specific or
thematic catalyst which ICAP believes will trigger
significant price appreciation over a defined nine to
eighteen month period. The most attractive 40-45 securities
identified are purchased by ICAP for the Fund's investment
portfolio. ICAP then monitors the performance of its
investments closely; if an investment underperforms
expectations and ICAP's expectations of the investment's
future performance potential no longer meet its original
purchase criteria, ICAP will quickly replace the security in
order to prevent continued underperformance.
5
<PAGE>
The Fund may Over time, the Fund may gradually shift the mix of its
shift its investment portfolio in order to emphasize capital
asset mix over appreciation in favorable markets and capital preservation in
time to adverse markets. The Fund may shift its asset mix within the
enhance ranges defined below for each category in response to
returns and changing market conditions, and will rebalance when necessary
reduce risk in order to prevent the portfolio's investment mix from
moving outside these ranges under normal market
conditions.
<TABLE>
<CAPTION>
TARGET INVESTMENT
MIX OVER FULL ALLOWABLE
MARKET CYCLE RANGE
----------------------------------------------
<S> <C> <C>
Equity Securities 55% 40-70%
Fixed-Income Securities 40% 25-55%
Cash Equivalents 5% 0-20%
</TABLE>
6
<PAGE>
PERFORMANCE OF THE PORTFOLIO MANAGER
The Fund does not have any prior operating history.
ICAP, the Fund's portfolio manager, has managed separate
private accounts since 1971. The following chart
illustrates the growth of a hypothetical $10,000
investment based upon the investment performance of the
ICAP Balanced Composite between March 31, 1976 and
March 31, 1996. The ICAP Balanced Composite represents
the composite performance of the managed accounts,
presently totalling approximately $350 million, for
which ICAP has served as investment adviser and that
have substantially the same investment objectives and
policies as the Fund. The ICAP Balanced Composite
performance represents past performance and should not
be interpreted as indicative of future performance of
the Fund.
Growth of a $10,000 Investment
April 1976 - March 1996
<TABLE>
<CAPTION>
60% S&P
ICAP 40% Lehman Consumer
Balanced Morningstar Intermediate Price
Composite Balanced Treasury Index
<S> <C> <C> <C> <C>
1976 9,475 10,000 10,000 10,000
1977 9,845 10,864 10,332 10,640
1978 10,019 11,136 10,203 11,326
1979 11,245 12,598 11,614 12,486
1980 11,940 12,775 12,032 14,319
1981 14,864 17,040 15,533 15,830
1982 15,306 16,984 15,001 16,906
1983 20,871 23,761 20,396 17,519
1984 21,269 25,311 22,049 18,351
1985 24,097 29,892 25,953 19,036
1986 34,086 39,752 34,185 19,470
1987 42,456 46,085 40,717 20,062
1988 44,651 44,911 40,016 20,845
1989 48,968 49,946 44,985 21,883
1990 58,353 55,784 52,219 23,027
1991 58,769 62,597 59,545 24,153
1992 76,824 70,764 65,994 24,925
1993 87,475 80,379 75,265 25,688
1994 91,735 82,863 76,633 26,332
1995 100,398 88,208 85,435 27,084
1996 124,352 106,599 104,845 27,838
</TABLE>
Average Annual Total Returns
<TABLE>
<CAPTION>
Morningstar Balanced
ICAP Balanced Index CPI
<S> <C> <C> <C> <C>
1 Year 17.36% 20.85% 22.72% 2.78%
3 Year 10.44% 9.87% 11.68% 2.72%
5 Year 11.37% 11.23% 11.98% 2.88%
10 Year 13.20% 10.37% 11.86% 3.64%
20 Year 13.43% 12.56% 12.47% 5.25%
</TABLE>
7
<PAGE>
ICAP's performance results presented above and below reflect
the investment performance of the ICAP Balanced Composite
before deduction of any investment advisory fees or other
expenses, less Class A's projected annual operating expenses
as summarized in the Summary of Fund Expenses on page 3. The
chart above illustrating the growth of a hypothetical $10,000
investment also assumes payment of the maximum Class A sales
charge of 5.25%. These performance results would be different
from a comparable Class B, C or R investment, reflecting the
different sales charge and ongoing operating expenses of each
respective class. The Balanced Index represents the
investment performance of an unmanaged index comprised 60% of
Standard & Poor's 500 Composite Stock Price Index (the "S&P
500") and 40% of the Lehman Brothers Intermediate Treasury
Index (the "Lehman Index"). The Balanced Index returns assume
reinvestment of all dividends paid by the stocks and interest
paid by the bonds included in the index, but do not include
brokerage commissions or other fees an investor would incur
by investing in the portfolio of stocks and bonds comprising
the index. The Morningstar returns represent the average of
the annualized returns with dividends reinvested of all the
funds in the Morningstar Balanced Fund category for the
periods measured, but do not include the effect of any sales
charges that an investor would incur by purchasing the funds
comprising the Morningstar Index directly. All returns and
comparisons of returns are calculated on a quarterly basis.
See "How the Fund Shows Performance" for additional
information.
For the 10-year period ending March 31, 1996, the annualized
total returns of the ICAP Balanced Composite exceeded those
of the Balanced Index by approximately 2% annually. Over the
same investment period, the ICAP Composite's annualized total
returns exceeded those of the Morningstar Balanced Fund
average by more than 3% annually. Only 7 funds in the
Morningstar Balanced Fund category provided annualized
returns over this 10-year period in excess of the Balanced
Index, and no fund provided annualized returns in excess of
the ICAP Composite. For the 1-, 3- and 5-year periods ending
March 31, 1996, the ICAP Composite's annualized total returns
exceeded those of the Balanced Index by 1.1%, 0.8% and 0.6%,
respectively, and exceeded those of the Morningstar Balanced
Fund average by 3.0%, 2.6% and 1.4%, respectively. Of the 308
funds in the Morningstar Balanced Fund category, there are
286, 153, 81 and 41 funds, respectively, with 1-, 3-, 5- and
10-year performance records.
The track record of the ICAP's Balanced Composite is
particularly strong in adverse markets. Over the past 20
years, there have been 4 periods over which the S&P 500
declined by more than 10% over consecutive quarters. As
illustrated in the table below, in each of these market
downturns the ICAP Composite's cumulative
8
<PAGE>
performance significantly exceeded that of the Balanced Index
or the Morningstar Balanced Fund average:
<TABLE>
ICAP/BALANCED
MARKET BALANCED INDEX ICAP/MS
DOWNTURN ICAP INDEX MORNINGSTAR DIFFERENTIAL DIFFERENTIAL
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
01/77-03/78 -2.1% -5.8% -0.7% 3.7% -1.4%
04/81-06/82 4.1% -2.7% 0.5% 6.8% 3.6%
10/87-12/87 9.3% -11.8% -11.1% 21.0% 20.4%
07/90-09/90 -6.8% -7.5% -8.2% 0.7% 1.4%
</TABLE>
HOW TO DETERMINE IF THE FUND IS RIGHT FOR YOU
WHO SHOULD INVEST
The Fund may be a suitable investment if:
. you are seeking the growth potential of stocks but are
concerned about the higher risks of mutual funds investing
only in stocks.
. you are seeking the growth potential of stocks yet also
desire both capital preservation and current income
. you are looking for a balanced approach to achieving your
financial objectives in a single investment
. you have a long-term investment horizon
. you are seeking a balanced mutual fund for use in a tax-
deferred account
WHO SHOULD NOT INVEST
The Fund may not be a suitable investment if:
. you are unwilling to accept some fluctuations in share
price
. you have a short-term investment horizon
FUND FEATURES AND BENEFITS
LOW MINIMUM INVESTMENT
$3,000 minimum
initial You can start your investment with a low initial purchase of
investment $3,000 ($1,000 for an Individual Retirement Account) in a
particular share class. Additional investments can be made
for as little as $50. Exceptions to these minimums are made
for
9
<PAGE>
participants in the Fund's automatic deposit, group purchase
or reinvestment programs. See "How to Buy Fund Shares" for
more details.
FLEXIBLE PURCHASE OPTIONS
Choose from
Class A, B, C The Fund offers four classes of shares--Classes A, B, C and
or R shares R. Each class offers a different combination of sales
charges, ongoing fees, eligibility requirements and other
features. This permits you and your financial adviser to
choose the share class which best meets your investment
needs. You and your adviser will want to consider:
. the amount of your current investment
. current holdings in the Fund
. length of time you expect to hold the shares
. timing and amount of any future Fund investments
. other relevant information
See "Flexible Purchase Options", "How to Buy Fund Shares" and
"How to Redeem Fund Shares" for further discussion of the
Fund's flexible purchase options.
EXCHANGE PRIVILEGE
Exchange
shares at no Shares of the Fund may be quickly and easily exchanged by
charge telephone, without a sales charge, for shares of the same or
equivalent class of any other Nuveen Mutual Fund or for
shares of certain Nuveen money market funds.
DIVIDEND REINVESTMENT
Dividends
automatically All income dividends or capital gains paid with respect to
reinvested at each class of shares will be reinvested automatically into
no charge additional shares of the same class without a sales charge,
unless you elect to receive them in cash.
INVESTMENT OF NUVEEN UNIT TRUST DISTRIBUTIONS
Invest
distributions Distributions from any Nuveen Unit Trust may be used to buy
from Nuveen Class A Shares of the Fund without a sales charge.
Unit Trusts at
no charge
AUTOMATIC DEPOSIT AND WITHDRAWAL PLANS
Easy-to-use
systematic The Fund offers a number of options to help you manage
investment and additions to, and withdrawals from, your account. These
withdrawal include automatic deposit, direct deposit and payroll
options deduction plans for adding to your account on a regular
basis. If you need periodic withdrawals, and own shares
totaling $10,000 or more, you can arrange to have $50 or more
sent directly from your account monthly or quarterly.
10
<PAGE>
ELECTRONIC FUND TRANSFERS
Transfer funds
electronically Nuveen's Fund Direct lets you link your Fund account to your
account at a bank or other financial institution. You may use
Fund Direct to transfer money electronically between
accounts, to purchase shares by phone, to invest through an
automatic deposit plan, or to send payments directly to your
bank account.
TELEPHONE REDEMPTION
Free telephone
redemption You may establish free telephone redemption privileges for
your account.
EASY LIQUIDITY
Redemption on
any business You may redeem all or some of your Fund shares on any
day business day at the then net asset value. Class B and Class C
Shares, as well as certain Class A purchases of $1 million or
more at net asset value, may be subject to a contingent
deferred sales charge upon redemption. See "How to Redeem
Fund Shares".
RISKS AND SPECIAL CONSIDERATIONS
You should consider certain other factors about the Fund
before investing. The value and market risk of the Fund's
investment portfolio will tend to vary with changes in the
allocation of its investments among different asset classes
and changes in the fixed income and equity markets. The
Fund's equity investments are subject to equity market risk,
i.e. the risk that equity prices could decline over short or
even extended periods. The equity markets tend to be
cyclical, with periods of generally rising prices and periods
of generally declining prices. The Fund's fixed-income
investments are subject to interest rate and credit risk. In
general, the market value of the Fund's fixed-income
investments will increase when interest rates decline and
decrease when interest rates rise. Although the prices of
equity and fixed-income securities often rise and fall at
different times so that a fall in price of one will be offset
by a rise in, or at least buffered by price stability in, the
other, prices in the two markets often move in tandem.
Accordingly, the Fund should be considered a long-term
investment, designed to provide the best results when held
for a multi-year period. The Fund may not be suitable if you
have a short-term investment horizon. In addition,
investments by the Fund in American Depository Receipts
("ADRs") of foreign companies involve opportunities and risks
not typically associated with investing in U.S. companies.
There are special risks associated with options and futures
transactions. See "Additional Information About the Fund's
Investments."
11
<PAGE>
WHO IS RESPONSIBLE FOR THE OPERATION OF THE FUND?
The following organizations work together to provide the
services and features offered by the Fund:
<TABLE>
<CAPTION>
ORGANIZATION FUNCTION DUTIES
--------------------------------------------------------------
<S> <C> <C>
John Nuveen & Co. Fund Sponsor and Sponsors and manages
Incorporated Principal Underwriter the offering of Fund
("Nuveen") shares
Nuveen Institutional Fund Manager Oversees the Fund's
Advisory Corp. portfolio manager,
("NIAC") manages the Fund's
business affairs and
provides day-to-day
administrative
services to the Fund
Institutional Capital Portfolio Manager Manages the Fund's
Corporation ("ICAP") investment portfolio
Shareholder Services, Transfer Agent; Maintains shareholder
Inc. ("SSI") Shareholder Services accounts, handles
Agent; Dividend Paying share redemptions and
Agent exchanges and
dividend payments
The Chase Manhattan Custodian Maintains custody of
Bank, N.A. ("Chase") the Fund's
investments and
provides certain
accounting services
to the Fund
</TABLE>
12
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS
The Fund HOW THE FUND DIVERSIFIES ITS INVESTMENT PORTFOLIO
invests in a
conservative The Fund's investment portfolio will be invested in a
mix of stocks, diversified portfolio of equity securities, taxable fixed-
bonds and cash income securities and cash equivalents. The Fund's target
investment mix is 55% equity securities, 40% fixed-income
securities and 5% cash equivalents, reflecting the Fund's
anticipated average allocation of its investment portfolio
over a full market cycle. The Fund may gradually shift the
allocation of its investment portfolio in order to emphasize
capital appreciation in favorable market environments and
capital preservation in adverse market environments. The Fund
will shift its investment mix within defined ranges for each
asset category based upon each category's relative risk and
reward characteristics. The Fund will also rebalance its
investment portfolio when necessary in order to prevent the
portfolio's investment mix from moving outside these defined
ranges under normal market conditions. The table below
summarizes the Fund's target investment mix and the allowable
range of each asset category's target mix.
<TABLE>
<CAPTION>
TARGET
INVESTMENT ALLOWABLE
MIX RANGE
---------------------------------------
<S> <C> <C>
Equity Securities 55% 40-70%
Fixed-Income Securities 40% 25-55%
Cash Equivalents 5% 0-20%
</TABLE>
The Fund's Board of Trustees from time to time, without
shareholder approval, may change the Fund's target investment
mix and the allowable range for each asset category if, after
consultation with NIAC and ICAP, the Board determines that
such a change is in the best interests of shareholders.
During temporary defensive periods, the Fund may invest any
percentage of its assets in temporary investments, as
described below under "Temporary Investments." During such
periods, which may occur at a time when the Fund would
otherwise rebalance its investment mix, the proportion of the
Fund's assets invested in an asset category may fall outside
the allowable range for that asset category.
HOW THE FUND SELECTS INVESTMENTS
As portfolio manager, ICAP selects equity securities on the
The Fund basis of its evaluation of each security's relative value in
employs a terms of projected price-earnings ratios and earnings
value-oriented stability. When making investment decisions, ICAP develops an
strategy and economic framework (including an interest rate, inflation,
fundamental and business cycle outlook) and analyzes strategic economic
company and/or industry themes to identify appropriate investments.
research to ICAP uses a variety of proprietary research techniques and
choose computer
equities
13
<PAGE>
models to search for equity securities believed to possess
the best relative value based on proprietary price/earnings
projections and an analysis of earnings stability.
Furthermore, a clear catalyst must exist, either stock-
specific, industry or economic, which ICAP believes will
trigger significant price appreciation in a definable period.
In order to enhance its internal research, ICAP also utilizes
a wide variety of external sources for investment information
including recognized strategists, economists, technical and
fundamental analysts, corporate executives, and industry
sources.
For each equity investment, ICAP establishes an upside price
target and a downside risk potential. This strategy allows
for continuous monitoring of fundamental conditions and stock
price performance. Although ICAP typically expects the
investment potential of each investment to be realized over a
nine to eighteen month time period, it is not unusual for
equities to be held for a longer period if justified by their
potential future performance. Investments that underperform
expectations are reviewed intensively. If the risk/reward
profile of a particular investment becomes unattractive or
the reasons for owning the security no longer appear valid,
the investment typically is sold expeditiously to avoid
continued underperformance.
EQUITY SECURITIES
The Fund
invests Under normal market conditions, the Fund will invest the
primarily in assets allocated to equity investments primarily in equity
domestic securities of domestic companies with market capitalizations
companies with of at least $500 million ("Equity Securities"). Equity
capitalizations Securities include, but are not limited to, common stocks;
of at least preferred stocks; warrants to purchase common stocks or
$500 million preferred stocks; securities convertible into common or
preferred stocks, such as convertible bonds and debentures;
and other securities with equity characteristics.
Convertible bonds and debentures must be rated Baa or higher
by Moody's Investors Service ("Moody's") or BBB or higher by
Standard & Poor's ("S&P"), Duff & Phelps, Inc. ("D&P") or
Fitch Investors Service, Inc. ("Fitch"). Bonds rated Baa or
BBB, although considered investment grade, have speculative
characteristics and may be subject to greater fluctuations in
value than higher-rated bonds. A general description of
ratings may be found in the Statement of Additional
Information.
In addition, the Fund may invest indirectly in equity
securities of foreign issuers through investments in American
Depository Receipts ("ADRs"), described later in this
section.
14
<PAGE>
FIXED-INCOME SECURITIES AND CASH EQUIVALENTS
The Fund
invests in The Fund invests in taxable fixed-income securities and cash
taxable bonds equivalents in order to reduce risk and preserve capital, and
and cash to to provide current income.
reduce the
risks of
stocks and to
provide income
The Fund will invest the portion of its net assets allocated
to fixed-income securities in U.S. Treasury and investment
grade debt securities with maturities of one to fifteen
years. These securities are selected on the basis of the
shape of the yield curve and ICAP's outlook for interest
rates. Investment grade debt securities include bonds rated
Baa or higher by Moody's and BBB or higher by S&P, D&P or
Fitch. See the discussion above on bonds rated BBB or Baa.
The Fund will invest the portion of its net assets allocated
to cash in cash equivalents and short-term fixed-income
securities issued by issuers having a long-term rating of A
or higher by S&P, Moody's or Fitch, or A- or higher by Duff &
Phelps, and having a maturity of one year or less. Cash
equivalents may include U.S. Government securities,
certificates of deposit, bankers' acceptances, commercial
paper rated A-1 or higher by S&P, Prime-1 or higher by
Moody's, Duff 2 or higher by D&P or Fitch 2 or higher by
Fitch, and repurchase agreements with respect to U.S.
government obligations.
TEMPORARY INVESTMENTS
The Fund may
make temporary During certain temporary periods, in order to keep cash on
investments hand fully invested or, as a defensive measure in response to
from time to prevailing market conditions, the Fund may invest without
time limitation in cash equivalents and short-term fixed-income
securities as described above. See the Statement of
Additional Information under "Investment Policies and
Techniques--Short-Term Taxable Fixed Income Securities" for
additional information.
WHEN-ISSUED SECURITIES
The Fund may
purchase When- In order to lock in a fixed price on a security it intends to
Issued purchase, the Fund may invest without limitation in
Securities securities purchased on a when-issued or delayed delivery
basis ("When-Issued Securities"). Although the payment and
terms of these securities are established at the time the
purchaser enters into the commitment, these securities may be
delivered and paid for at a future date, generally within 45
days. The Fund will segregate and maintain cash, cash
equivalents, U.S. government securities, or other high-
quality, liquid debt securities in an amount at least equal
to the amount of outstanding commitments for When-Issued
Securities at all times. Such securities involve a risk of
loss if the value of the security to be purchased declines
prior to the settlement date.
15
<PAGE>
AMERICAN DEPOSITORY RECEIPTS ("ADRs")
The Fund may
invest up to ADRs are receipts typically issued by a U.S. bank or trust
20% of its company evidencing ownership of the underlying foreign
assets in security and denominated in U.S. dollars. The Fund may invest
foreign up to 20% of its net assets in ADRs or other instruments
securities denominated in U.S. dollars that permit indirect investment
in foreign securities. ADRs do not eliminate all the risk
inherent in investing in foreign issuers, such as changes in
foreign currency exchange rates. However, by investing in
ADRs rather than directly in foreign issuers' stock, the Fund
avoids currency risks during the settlement period.
Investments in securities of foreign issuers involve risks in
addition to the usual risks inherent in domestic investments,
including currency risks. The value of a foreign security in
U.S. dollars tends to decrease when the value of the U.S.
dollar rises against the foreign currency in which the
security is denominated and tends to increase when the value
of the U.S. dollar falls against such currency.
Some ADRs may not be sponsored by the issuer. ADRs are
affected by the fact that in many countries there is less
publicly available information about issuers than is
available in the reports and ratings published about
companies in the U.S. and companies may not be subject to
uniform accounting, auditing and financial reporting
standards. Other risks inherent in foreign investments
include expropriation; confiscatory taxation; withholding
taxes on dividends and interest; less extensive regulation of
foreign brokers, securities markets and issuers; diplomatic
developments; and political or social instability. Foreign
economies may differ favorably or unfavorably from the U.S.
economy in various respects, and many foreign securities are
less liquid and their prices tend to be more volatile than
comparable U.S. securities. From time to time, foreign
securities may be difficult to liquidate rapidly without
adverse price effects.
CERTAIN INVESTMENT STRATEGIES AND LIMITATIONS
Options and The Fund may engage in options and futures transactions,
Futures which are sometimes referred to as derivative transactions.
Transactions The Fund's options and futures transactions may include
instruments such as stock index options and futures
contracts. Such transactions may be used for several reasons,
including hedging unrealized portfolio gains. The Fund will
only engage in futures and options transactions that,
pursuant to regulations promulgated by the Commodity Futures
Trading Commission (the "CFTC"), constitute bona fide hedging
or other permissible risk management transactions and will
not enter into such transactions if the sum of the initial
margin deposits and premiums paid for unexpired options
exceeds 5% of the Fund's
16
<PAGE>
total assets. In addition, the Fund will not enter into
options and futures transactions if more than 30% of the
Fund's net assets would be committed to such instruments.
The ability of the Fund to benefit from options and futures
is largely dependent upon ICAP's ability to correctly use
such instruments, which may involve skills different from
those associated with managing securities generally. The Fund
could lose money on a futures transaction or an option could
expire worthless, in addition to the Fund suffering a loss on
the value of its portfolio assets. For a further discussion
of options and futures transactions, please see the Statement
of Additional Information.
Lending of The Fund may lend its portfolio securities, up to 33 1/3% of
Portfolio its total assets, to broker-dealers or institutional
Securities investors. The loans will be secured continuously by
collateral at least equal to the value of the securities lent
by "marking to market" daily. The Fund will continue to
receive the equivalent of the interest or dividends paid by
the issuer of the securities lent and will retain the right
to call, upon notice, the lent securities. The Fund may also
receive interest on the investment of the collateral or a fee
from the borrower as compensation for the loan. As with other
extensions of credit, there are risks of delay in recovery or
even loss of rights in the collateral should the borrower of
the securities fail financially. However, loans will be made
only to firms deemed by the portfolio manager to be of good
standing.
Illiquid
Securities The Fund may invest up to 15% of its net assets in illiquid
securities, which include, but are not limited to, restricted
securities (securities the disposition of which is restricted
under the federal securities laws); securities which may be
resold pursuant to Rule 144A under the Securities Act of 1933
but that are deemed to be illiquid; and repurchase agreements
with maturities in excess of seven days.
PORTFOLIO TURNOVER
The Fund anticipates that its annual portfolio turnover rate
will be between 75% and 100% under normal market conditions,
and will generally not exceed 125%. A turnover rate of 100%
would occur, for example, if the Fund sold and replaced
securities valued at 100% of its net assets within one year.
The Fund anticipates that the annual portfolio turnover rate
for the equity portion of the portfolio will be between 100%
and 125% under normal market conditions, and will generally
not exceed 150%.
17
<PAGE>
OTHER INVESTMENT POLICIES AND RESTRICTIONS
The Fund The Fund will not invest more than 5% of its net assets in
employs other any one of the following types of investments: warrants;
restrictions unseasoned companies; and transactions in short sales against
to protect the box. In addition the Fund has adopted several
shareholders restrictions on the investments and other activities of the
Fund that may not be changed without shareholder approval.
For example, the Fund may not:
. With respect to 75% of its total assets, purchase the
securities of any issuer (except securities issued or
guaranteed by the U.S. government or any agency or
instrumentality thereof) if, as a result, (i) more than 5%
of the Fund's total assets would be invested in securities
of that issuer, or (ii) the Fund would hold more than 10%
of the outstanding voting securities of that issuer.
. Borrow money, except that the Fund may (i) borrow money
from banks for temporary or emergency purposes (but not for
leverage or the purchase of investments) and (ii) make
other investments or engage in other transactions
permissible under the Investment Company Act of 1940 that
may involve a borrowing, provided that the combination of
(i) and (ii) shall not exceed 33 1/3% of the value of the
Fund's total assets (including the amount borrowed), less
the Fund's liabilities (other than borrowings).
If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage beyond
the specified limit resulting from a change in the value of
assets will not be considered a violation.
Except as specifically noted above or in the Statement of
Additional Information, the Fund's investment policies are
not fundamental and may be changed without shareholder
approval. For a more complete description of investment
restrictions that may be changed without a shareholder vote,
see the Statement of Additional Information.
18
<PAGE>
FLEXIBLE PURCHASE OPTIONS
The Fund
offers various The Fund has adopted Flexible Purchase Options that offers
methods of you four alternative classes of Fund shares (Classes A, B, C
purchasing and R), each with a different combination of sales charges,
shares which ongoing fees, eligibility requirements, and other features.
are designed The Fund's Flexible Purchase Options are designed to permit
to meet your you and your financial adviser to choose the method of
individual purchasing shares that you believe is most beneficial given
investment the amount of your investment, any current holdings of Fund
needs and shares, the length of time you expect to hold your investment
preferences and other relevant circumstances. A summary of the four
classes of Fund shares is set forth below:
<TABLE>
<CAPTION>
UP-FRONT CONTINGENT DEFERRED SALES ANNUAL 12B-1 ANNUAL 12B-1
SALES CHARGE CHARGE "CDSC" DISTRIBUTION FEE SERVICE FEE
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 5.25%(1) None(2) None .25%
Class B None 5%(3) .75%(4) .25%
Class C None 1%(5) .75% .25%
Class R None None None None
</TABLE>
(1) Maximum up-front sales charge, which is reduced for
purchases of $50,000 or more. Up-front sales charge may
be reduced or waived for certain purchases.
(2) Certain Class A purchases at net asset value of $1
million or more may be subject to a 1% CDSC if redeemed
within 18 months of purchase.
(3) CDSC in the first year. CDSC declines to 0% after six
years.
(4) Class B Shares convert to Class A Shares after eight
years, which reduces the ongoing expenses borne by an
investor.
(5) CDSC is applicable to shares redeemed within 12 months of
purchase.
For more information regarding features of each class, see
"How to Buy Fund Shares," "How to Redeem Fund Shares" and
"Distribution and Service Plan" below.
When you purchase Class A Shares, you will normally pay an
Which Option up-front sales charge. As a result, you will have less money
is Right for invested initially and you will own fewer Class A Shares than
You? you would in the absence of an up-front sales charge.
Alternatively, when you purchase Class B or Class C Shares,
you will not pay an up-front sales charge and all of your
monies will be fully invested at the time of purchase.
However, Class B and Class C Shares are subject to an annual
distribution fee which constitutes an asset-based sales
charge whose purpose is the same as an up-front sales charge.
In addition, Class B Shares when redeemed are subject to a
CDSC, which will vary depending on the length of time you
owned your shares. Class B Shares
automatically convert to Class A Shares eight years after
purchase in order to limit the distribution fees you pay over
the life of your investment. Class C Shares are subject to a
CDSC of 1% if redeemed within 12 months of purchase. Because
Class C Shares do not convert to Class A Shares and continue
to pay an annual distribution fee indefinitely, Class C
Shares should normally not be purchased by an investor who
expects to hold shares for significantly longer than eight
years. Class A,
19
<PAGE>
Class B and Class C Shares are subject to annual service
fees, which are identical in amount and are used to
compensate Authorized Dealers for providing you with ongoing
account services. You may qualify for a reduced sales charge
or a sales charge waiver on a purchase of Class A Shares, as
described on page 23 under "How the Class A Sales Charge May
Be Reduced or Waived." Class R Shares are available for
purchase at a price equal to their net asset value, but only
under certain circumstances or for certain categories of
investors, as described below under "How to Buy Fund Shares--
Class R Shares."
In deciding whether to purchase Class A, Class B, Class C or
Class R Shares, you should consider all relevant factors,
including the dollar amount of your purchase, any current
holdings of Fund shares, the length of time you expect to
hold the shares and whether a CDSC would apply, the amount of
any applicable up-front sales charge, the amount of any
applicable distribution or service fees that may be incurred
while you own the shares, whether or not you will be
reinvesting income or capital gain distributions in
additional shares, whether or not you meet applicable
eligibility requirements or qualify for a sales charge waiver
or reduction, and the relative level of services that your
financial adviser may provide to different classes.
Authorized Dealers and other persons distributing the Fund's
shares may receive different compensation for selling
different classes of shares.
Differences
Between the Each class of shares represents an interest in the same
Classes of portfolio of investments. Each class of shares is identical
Shares in all respects except that each class has its own sales
charge structure, each class bears its own class expenses,
including distribution and service fees, and each class has
exclusive voting rights with respect to any distribution or
service plan applicable to its shares. In addition, Class B
Shares are subject to a conversion feature. As a result of
the differences in the expenses borne by each class of
shares, and differences in the purchase and redemption
activity for each class, net income per share, dividends per
share and net asset value per share will vary among the
Fund's classes of shares.
Dealer
Incentives Upon notice to all Authorized Dealers, Nuveen may reallow to
Authorized Dealers electing to participate up to the full
applicable Class A Share up-front sales charge during periods
and for transactions specified in the notice. The
reallowances made during these periods may be based upon
attainment of minimum sales levels. Furthermore, Nuveen may
from time to time provide additional promotional support and
make additional reallowances only to certain Authorized
Dealers who sell or are expected to sell certain minimum
amounts of the Fund or other Nuveen Mutual Funds and Nuveen
Unit Trusts during specified time periods. Promotional
20
<PAGE>
support may include providing sales literature to and holding
informational or educational programs for the benefit of such
Authorized Dealers' representatives, seminars for the public,
and advertising and sales campaigns. Nuveen may reimburse a
participating Authorized Dealer for up to one-half of
specified media costs incurred in the placement of
advertisements which jointly feature the Authorized Dealer
and Nuveen Funds and Nuveen Unit Trusts.
Such reimbursement will be based on the number of its
financial advisers who have sold Nuveen Fund shares and
Nuveen Unit Trust units during the prior calendar year
according to an established schedule. Any such support or
reimbursement would be provided by Nuveen out of its own
assets, and not out of the assets of the Funds, and will not
change the price an investor pays for shares or the amount
that a Fund will receive from such a sale. The staff of the
Securities and Exchange Commission takes the position that
dealers who receive 90% or more of the applicable sales
charge may be deemed underwriters under the Securities Act of
1933, as amended.
21
<PAGE>
HOW TO BUY FUND SHARES
CLASS A SHARES
Class A Shares
are offered at You may purchase Class A Shares at a public offering price
their net equal to the applicable net asset value per share plus an up-
asset value front sales charge imposed at the time of purchase as set
plus an up- forth below. You may qualify for a reduced sales charge, or
front sales the sales charge may be waived in its entirety, as described
charge below under "How the Class A Sales Charge May Be Reduced or
Waived." Class A Shares are also subject to an annual service
fee of .25%. See "Flexible Purchase Options" and
"Distribution and Service Plan."
The up-front sales charge schedule for Class A Shares is as
follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS REALLOWANCE AS
% OF PUBLIC % OF NET % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
----------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.25% 5.54% 5.00%
$50,000 but less than
$100,000 4.25% 4.44% 4.00%
$100,000 but less than
$250,000 3.50% 3.63% 3.25%
$250,000 but less than
$500,000 2.75% 2.83% 2.50%
$500,000 but less than
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over 0.00% 0.00% 0.00%*
</TABLE>
*Authorized Dealers are eligible to receive a commission from
Nuveen as discussed below.
The Fund receives the entire net asset value of all Class A
Shares that are sold. Nuveen retains the full applicable
sales charge from which it pays the uniform reallowances
shown above to Authorized Dealers. See "Flexible Purchase
Options
--Dealer Incentives" on page 20 for more information about
reallowances and other compensation to Authorized Dealers.
Certain commercial banks may make Class A Shares of the Fund
available to their customers on an agency basis. Pursuant to
the agreements between Nuveen and these banks, some or all of
the sales charge paid by a bank customer in connection with a
purchase of Class A Shares may be retained by or paid to the
bank. Certain banks and other financial institutions may be
required to register as securities dealers in certain states.
Class A Class A purchases of $1 million or more are sold at net asset
purchases of value without an up-front sales charge. Nuveen pays
$1 million or Authorized Dealers of record on such Class A Share purchases
more at net a commission of up to 1.00% of the amount of the purchase. If
asset value such shares are redeemed within 18 months of purchase, a CDSC
are subject to of 1% of the lower of the purchase price or the redemption
a CDSC proceeds may be imposed upon the redemption. Shares purchased
by investors investing $1 million or more who have
22
<PAGE>
made arrangements with Nuveen and whose dealer of record
waived the commission are not subject to the CDSC.
HOW THE CLASS A SALES CHARGE MAY BE REDUCED OR WAIVED
There are There are several ways to reduce or eliminate the up-front
several ways sales charge:
to reduce or . cumulative discount;
eliminate the . letter of intent;
up-front sales
charge . purchases with monies representing distributions from
Nuveen-sponsored Unit Trusts;
. group purchase programs;
. reinvestment of redemption proceeds from non-affiliated
funds; and
. special sales charge waivers for certain categories of
investors.
Cumulative
Discount You may qualify for a reduced sales charge as shown above on
a purchase of Class A Shares if the amount of your purchase,
when added to the value that day of all of your prior
purchases of shares of the Fund or of another Nuveen Mutual
Fund, or units of a Nuveen Unit Trust, on which an up-front
sales charge or ongoing distribution fee is imposed, falls
within the amounts stated in the table. You or your financial
adviser need to notify Nuveen or SSI of any cumulative
discount level you have achieved at the time you purchase
your shares.
Letter of
Intent You may qualify for a reduced sales charge on a purchase of
Class A Shares if you plan to purchase Class A Shares of
Nuveen Mutual Funds over the next 13 months and the total
amount of your purchases would, if purchased at one time,
qualify you for one of the reduced sales charges shown above.
In order to take advantage of this option, you need to
complete the applicable section of the Application Form or
sign and deliver either to an Authorized Dealer or to SSI a
written Letter of Intent in a form acceptable to Nuveen. A
Letter of Intent states that you intend, but are not
obligated, to purchase over the next 13 months a stated total
amount of Class A Shares that would qualify you for a reduced
sales charge shown above. You may count shares of a Nuveen
Mutual Fund that you already own on which you paid an up-
front sales charge or an ongoing distribution fee and any
Class B and Class C Shares of a Nuveen Mutual Fund that you
purchase over the next 13 months towards completion of your
investment program, but you will receive a reduced sales
charge only on new Class A Shares you purchase over that
period. You cannot count Class A Shares that you purchase
without a sales charge through investment of distributions
from a Nuveen Mutual Fund, a Nuveen Unit Trust or otherwise,
towards completion of your Letter of Intent program.
23
<PAGE>
By establishing a Letter of Intent, you agree that your first
purchase of Class A Shares following execution of the Letter
of Intent will be at least 5% of the total amount of your
intended purchases. You further agree that shares
representing 5% of the total amount of your intended
purchases will be held in escrow pending completion of these
purchases. All dividends and capital gains distributions on
Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the
expiration of the 13 month period equal or exceed the amount
specified in your Letter of Intent, the Class A Shares held
in escrow will be transferred to your account. If the total
purchases, less redemptions, exceed the amount specified in
your Letter of Intent and thereby qualify for a lower sales
charge than the sales charge specified in your Letter of
Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher
sales charge paid will be used to purchase additional Class A
Shares on your behalf. If the total purchases, less
redemptions, are less than the amount specified, you must pay
Nuveen an amount equal to the difference between the amounts
paid for these purchases and the amounts that would have been
paid if the higher sales charge had been applied. If you do
not pay the additional amount within 20 days after written
request by Nuveen or your financial adviser, Nuveen will
redeem an appropriate number of your escrowed Class A Shares
to meet the required payment. By establishing a Letter of
Intent, you irrevocably appoint Nuveen as attorney to give
instructions to redeem any or all of your escrowed shares,
with full power of substitution in the premises.
You or your financial adviser need to notify Nuveen or SSI
whenever you make a purchase of Fund shares that you wish to
be covered under the Letter of Intent option.
Investment of You may purchase Class A Shares without an up-front sales
Nuveen Unit charge if you are investing distributions from a Nuveen Unit
Trust Trust. There is no initial or subsequent minimum investment
Distributions requirement for such purchases.
Group Purchase If you are a member of a qualified group, you may purchase
Programs Class A Shares of the Fund or of another Nuveen Mutual Fund
at the reduced sales charge applicable to the group's
purchases taken as a whole. A "qualified group" is one which
has been in existence for more than six months, has a purpose
other than investment, has five or more participating
members, has agreed to include Fund sales publications in
mailings to members and has agreed to comply with certain
administrative requirements relating to its group purchases.
24
<PAGE>
Under any group purchase program, the minimum monthly
investment in Class A Shares of any particular fund or
portfolio by each participant is $25, and the minimum monthly
investment in Class A Shares of any particular fund or
portfolio for all participants in the program combined is
$3,000. No certificates will be issued for any participant's
account. All dividends and other distributions by the Fund
will be reinvested in additional Class A Shares of the Fund.
No participant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself
and each participant must fill out special application
materials, which the group administrator may obtain from the
group's financial adviser by checking the applicable box on
the enclosed Application Form or by calling SSI toll-free at
800-621-7227. See the Statement of Additional Information for
more complete information about "qualified groups" and group
purchase programs.
Reinvestment
of Redemption You may also purchase Class A Shares at net asset value
Proceeds from without a sales charge if the purchase takes place through an
Unaffiliated Authorized Dealer and represents the reinvestment of the
Funds proceeds of the redemption of shares of one or more
registered investment companies not affiliated with Nuveen.
You need to provide appropriate documentation that the
redemption occurred not more than 60 days prior to the
reinvestment of the proceeds in Class A Shares, and that you
either paid an up-front sales charge or were subject to a
contingent deferred sales charge upon the redemption of the
shares of the other investment company.
Special Sales
Charge Waivers Class A Shares of the Fund may be purchased at net asset
value without a sales charge and in any amount by officers,
trustees and retired trustees of the Trust; bona fide, full-
time and retired employees of Nuveen or ICAP, any parent
company of Nuveen, and subsidiaries thereof, or their
immediate family members (as defined below); any person who,
for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate
family members; officers and directors of bank holding
companies that make Fund shares available directly or through
subsidiaries or bank affiliates; bank or broker-affiliated
trust departments; investors purchasing on a periodic fee,
asset-based fee or no transaction fee basis through a broker-
dealer sponsored mutual fund purchase program; and clients of
investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for
their services. For further details about these special
categories and their eligibility requirements, please consult
your financial adviser or the Statement of Additional
Information, or call Nuveen at 800-621-7227.
25
<PAGE>
Any Class A Shares purchased pursuant to a special sales
charge waiver must be acquired for investment purposes and on
the condition that they will not be transferred or resold
except through redemption by the Fund. You or your financial
adviser need to notify Nuveen or SSI whenever you make a
purchase of Class A Shares that you wish to be covered under
these special sales charge waivers. All of the above
categories of investors are also eligible to purchase Class R
Shares, as described below under "Class R Shares." Finally,
Class A Shares may be issued at net asset value without a
sales charge in connection with the acquisition by the Fund
of another investment company.
GENERAL
In determining the amount of your purchases of Class A Shares
that may qualify for a reduced sales charge, the following
purchases may be combined: (1) all purchases by a trustee or
other fiduciary for a single trust estate or fiduciary
account; (2) all purchases by individuals and their immediate
family members (i.e., their spouses and their children under
21 years of age); or (3) all purchases made through a group
purchase program as described above.
The reduced sales charge programs may be modified or
discontinued by the Fund at any time upon prior written
notice to shareholders of the Fund.
FOR MORE INFORMATION ABOUT THE PURCHASE OF CLASS A SHARES OR
REDUCED SALES CHARGE PROGRAMS, OR TO OBTAIN THE REQUIRED
APPLICATION FORMS, CALL NUVEEN TOLL-FREE AT 800-621-7227.
CLASS B SHARES
You may purchase Class B Shares at a public offering price
Class B Shares equal to the applicable net asset value per share without any
may be up-front sales charge. Since Class B Shares are sold without
purchased at an initial sales charge, the full amount of your purchase
net asset payment will be invested in Class B Shares. Class B Shares
value, but are are subject to an annual distribution fee to compensate
subject to an Nuveen for its costs in connection with the sale of Class B
annual shares, and are also subject to an annual service fee to
distribution compensate Authorized Dealers for providing you with ongoing
fee and a CDSC financial advice and other account services.
You may be subject to a CDSC if you redeem your Class B
shares within a specified period after purchase, as shown in
the table below. See "Flexible Purchase Options" and
"Distribution and Service Plan." Nuveen compensates
Authorized Dealers for sales of Class B Shares at the time of
sale at the rate of 4.00% of the amount of Class B Shares
purchased, which represents a sales commission of 3.75% plus
an advance on the first year's annual service fee of .25%.
26
<PAGE>
If redeemed prior to the end of the sixth year after
purchase, Class B Shares may be subject to a CDSC, as set
forth below:
<TABLE>
<CAPTION>
YEARS
SINCE
PURCHASE CDSC
------
<S> <C>
0-1 5%
1-2 4%
2-3 4%
3-4 3%
4-5 2%
5-6 1%
</TABLE>
Class B Shares acquired through the reinvestment of dividends
are not subject to a CDSC. Any CDSC will be imposed on the
lower of the redeemed shares' cost or net asset value at the
time of redemption. For more information regarding the
imposition of the CDSC, see "How to Redeem Fund Shares --
Class B Shares," below.
Class B Shares
automatically Class B Shares will automatically convert to Class A Shares
convert to eight years after purchase. The purpose of the conversion is
Class A Shares to limit the distribution fees you pay over the life of your
eight years investment. All conversions will be done at net asset value
after purchase without the imposition of any sales load, fee, or other
charge, so that the value of each shareholder's account
immediately before conversion will be the same as the value
of the account immediately after conversion. Class B Shares
acquired through reinvestment of distributions will convert
into Class A Shares based on the date of the initial purchase
to which such shares relate. For this purpose, Class B Shares
acquired through reinvestment of distributions will be
attributed to particular purchases of Class B Shares in
accordance with such procedures as the Board of Trustees may
determine from time to time. Class B Shares that are
converted to Class A Shares will remain subject to an annual
service fee that is identical in amount for both Class B
Shares and Class A Shares. Since net asset value per share of
the Class B Shares and the Class A Shares may differ at the
time of conversion, a shareholder may receive more or fewer
Class A Shares than the number of Class B Shares converted.
Any conversion of Class B Shares into Class A Shares will be
subject to the continuing availability of an opinion of
counsel or a private letter ruling from the Internal Revenue
Service to the effect that the conversion of shares would not
constitute a taxable event under federal income tax law.
Conversion of Class B Shares into Class A Shares might be
suspended if such an opinion or ruling were no longer
available.
27
<PAGE>
CLASS C SHARES
You may purchase Class C Shares at a public offering price
Class C Shares equal to the applicable net asset value per share without any
may be up-front sales charge. Class C Shares are subject to an
purchased at annual distribution fee to compensate Nuveen for its costs in
net asset connection with the sale of Class C Shares. Class C Shares
value, but are are also subject to an annual service fee to compensate
subject to an Authorized Dealers for providing you with ongoing financial
annual advice and other account services. Nuveen compensates
distribution Authorized Dealers for sales of Class C Shares at the time of
fee and a CDSC the sale at a rate of 1% of the amount of Class C Shares
if redeemed purchased, which represents a sales commission of .75% plus
within 12 an advance on the first year's annual service fee of .25%.
months of See "Flexible Purchase Options" and "Distribution and Service
purchase Plan."
Redemptions of Class C Shares within 12 months of purchase
may be subject to a CDSC of 1% of the lower of the purchase
price or redemption proceeds. See "How to Redeem Fund Shares
-- Class C Shares."
CLASS R SHARES
Class R Shares If you are making an initial purchase of $1 million or more
are offered at of Fund shares in a single transaction, you may purchase
net asset Class R shares at a public offering price equal to the
value only applicable net asset value per share without any up-front
under limited sales charge or ongoing distribution or service fees. You
circumstances also may purchase Class R Shares subject only to the Fund's
or to minimum investment requirement of $3,000 if you are within
specified the following specified categories of investors who are
classes of eligible to purchase Class A Shares at net asset value
investors without an up-front sales charge: officers, trustees and
retired trustees of the Trust; bona fide, full-time and
retired employees of Nuveen or ICAP, any parent company of
Nuveen, and subsidiaries thereof, or their immediate family
members; any person who, for at least 90 days, has been an
officer, director or
bona fide employee of any Authorized Dealer, or their
immediate family members; officers and directors of bank
holding companies that make Fund shares available directly or
through subsidiaries or bank affiliates; bank or broker-
affiliated trust departments; investors purchasing on a
periodic fee, asset based fee or no transaction fee basis
through a broker-dealer sponsored mutual fund purchase
program; and clients of investment advisers, financial
planners or other financial intermediaries that charge
periodic or asset-based fees for their services. For further
details about these special categories and their eligibility
requirements, please consult your financial adviser or the
Statement of Additional Information, or call Nuveen at 800-
621-7227.
If you are eligible to purchase either Class R Shares or
Class A Shares without a sales charge at net asset value, you
should be aware of the differences between these two classes
of shares. Class A Shares are subject to an annual service
fee to compensate
28
<PAGE>
Authorized Dealers for providing you with ongoing account
services. Class R Shares are not subject to a distribution or
service fee and, consequently, holders of Class R Shares may
not receive the same types or levels of services from
Authorized Dealers. In choosing between Class A Shares and
Class R Shares, you should weigh the benefits of the services
to be provided by Authorized Dealers against the annual
service fee imposed upon the Class A Shares.
INITIAL AND SUBSEQUENT PURCHASES OF SHARES
The Fund You may buy Fund shares through Authorized Dealers or by
offers a calling or directing your financial adviser to call Nuveen
number of toll-free at 800-843-6765. You may pay for your purchase by
convenient Federal Reserve draft or by check made payable to "Nuveen
payment Balanced Stock and Bond Fund, Class [A], [B], [C], [R],"
methods delivered to the financial adviser through whom the
investment is to be made for forwarding to the Fund's
shareholder services agent, SSI. When making your initial
investment, you must also furnish the information necessary
to establish your Fund account by completing and enclosing
with your payment the attached Application Form. After your
initial investment, you may make subsequent purchases at any
time by forwarding to your financial adviser or SSI a check
in the amount of your purchase made payable to "Nuveen
Balanced Stock and Bond Fund, Class [A], [B], [C], [R]," and
indicating on the check your account number. All payments
need to be in U.S. dollars and should be sent directly to SSI
at its address listed on the back cover of this Prospectus. A
check drawn on a foreign bank or payable other than to the
order of the Fund generally will not be acceptable. You may
also wire Federal Funds directly to SSI, but you may be
charged a fee for this. For instructions on how to make Fund
purchases by wire transfer, call Nuveen toll-free at 800-621-
7227.
PURCHASE PRICE
The price at which you purchase a class of Fund shares is
based on the next calculation of the net asset value for that
share class after the order is placed. The net asset value
per share of each share class is determined as of the close
of trading (currently 4:00 p.m. eastern time) on each day the
New York Stock Exchange is open for business. See "Net Asset
Value," below for a description of how net asset value is
calculated.
MINIMUM INVESTMENT REQUIREMENTS
Generally, your first purchase of any class of the Fund's
shares needs to be for $3,000 or more ($1,000 or more for an
Individual Retirement Account). Additional purchases may be
in amounts of $50 or more. These minimums may be changed at
any time by the Fund. There are exceptions to these minimums
for shareholders who qualify under one or more of the Fund's
automatic investment, group purchase or reinvestment
programs.
29
<PAGE>
SYSTEMATIC INVESTMENT PROGRAMS
The Fund The Fund offers you several opportunities to capture the
offers several benefits of "dollar cost averaging" through systematic
ways to make investment programs. In a regularly followed dollar cost
systematic averaging program, you would purchase more shares when Fund
investments share prices are lower and fewer shares when Fund share
prices are higher, so that the average price paid for Fund
shares is less than the average price of the Fund shares over
the same time period. Dollar cost averaging does not assure
profits or protect against losses in a steadily declining
market. Since dollar cost averaging involves continuous
investment regardless of fluctuating price levels, you should
consider your financial ability to continue investing in
declining as well as rising markets before deciding to invest
in this way. The Fund offers two different types of
systematic investment programs:
Automatic Once you have established a Fund account, you may make
Deposit Plan regular investments in an amount of $25 or more each month by
authorizing SSI to draw preauthorized checks on your bank
account. There is no obligation to continue payments and you
may terminate your participation at any time at your
discretion. No charge in addition to the applicable sales
charge is made in connection with this Plan, and there is no
cost to the Fund. To obtain an application form for the
Automatic Deposit Plan, check the applicable box on the
enclosed Application Form or call Nuveen toll-free at 800-
621-7227.
Payroll Direct Once you have established a Fund account, you may, with your
Deposit Plan employer's consent, make regular investments in Fund shares
of $25 or more per pay period by authorizing your employer to
deduct this amount automatically from your
paycheck. There is no obligation to continue payments and you
may terminate your participation at any time at your
discretion. No charge in addition to the applicable sales
charge is made for this Plan, and there is no cost to the
Fund. To obtain an application form for the Payroll Direct
Deposit Plan, check the applicable box on the enclosed
Application Form or call Nuveen toll-free at 800-621-7227.
OTHER SHAREHOLDER PROGRAMS
Exchange You may exchange shares of a class of the Fund for shares of
Privilege the same class of any other Nuveen Mutual Fund with
reciprocal exchange privileges, at net asset value without a
sales charge, by sending a written request to the Fund, c/o
Shareholder Services, Inc., P.O. Box 5330, Denver, CO 80217-
5330. Similarly, Class A, Class B, Class C and Class R Shares
of other Nuveen Mutual Funds may be exchanged for the same
class of shares of the Fund at net asset value without a
sales charge. Exchanges of shares from any Nuveen money
market fund will be made into Class A Shares,
30
<PAGE>
Class B Shares, Class C Shares or Class R Shares (if
eligible) of the Fund at the public offering price. If,
however, a sales charge has previously been paid on the
investment represented by the exchanged shares (i.e., the
shares to be exchanged were originally issued in exchange for
shares on which a sales charge was paid), the exchange of
shares from a Nuveen money market fund will be made into
shares of the Fund at net asset value. Class A Shares, Class
C Shares or Class R Shares may be exchanged for shares of any
Nuveen money market fund, but Class B Shares may not be
exchanged for shares of a Nuveen money market fund.
If you exchange shares subject to a CDSC, no CDSC will be
charged at the time of the exchange. However, if you
subsequently redeem the shares acquired through the exchange,
the redemption may be subject to a CDSC, depending on when
you purchased your original shares and the CDSC schedule of
the fund from which you exchanged your shares.
The shares to be purchased must be offered in your state of
residence and you must have held the shares you are
exchanging for at least 15 days. The total value of exchanged
shares must at least equal the minimum investment requirement
of the Nuveen Mutual Fund being purchased. For federal income
tax purposes, any exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before making
any exchange, you should obtain the Prospectus for the Nuveen
Mutual Fund you are purchasing and read it carefully. If the
registration of the account for the Fund you are purchasing
is not exactly the same as that of the fund account from
which the exchange is made, written instructions from all
holders of the account from which the exchange is being made
must be received, with signatures guaranteed by a member of
an approved Medallion Guarantee Program or in such other
manner as may be acceptable to the Fund. You may also
exchange shares by telephone if you authorize telephone
exchanges by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at 800-621-
7227 to obtain an authorization form. The exchange privilege
may be modified or discontinued by the Fund at any time upon
prior written notice to shareholders of the Fund.
The exchange privilege is not intended to permit the Fund to
be used as a vehicle for short-term trading. Excessive
exchange activity may interfere with portfolio management,
raise expenses, and otherwise have an adverse effect on all
shareholders. In order to limit excessive exchange activity
and in other circumstances where Fund management believes
doing so would be in the best interest of the Fund, the Fund
reserves the right to revise or terminate the exchange
privilege, or limit the amount
31
<PAGE>
or number of exchanges or reject any exchange. Shareholders
would be notified of any such action to the extent required
by law.
Reinstatement If you redeemed Class A, Class B or Class C Shares of the
Privilege Fund or any other Nuveen Mutual Fund that were subject to a
sales charge or a CDSC, you have up to one year to reinvest
all or part of the full amount of the redemption in the same
class of shares of the Fund at net asset value. This
reinstatement privilege can be exercised only once for any
redemption, and reinvestment will be made at the net asset
value next calculated after reinstatement of the appropriate
class of Fund shares. If you reinstate shares that were
subject to a CDSC, your holding period as of the redemption
date also will be reinstated for purposes of calculating a
CDSC. The federal income tax consequences of any capital gain
realized on a redemption will not be affected by
reinstatement, but a capital loss may be disallowed in whole
or in part depending on the timing, the amount of the
reinvestment and the fund from which the redemption occurred.
Fund Direct
You can use Fund Direct to link your Fund account to your
account at a bank or other financial institution. Fund Direct
enables you to transfer money electronically between these
accounts and perform a variety of account transactions. These
include purchasing shares by telephone, investing through an
Automatic Deposit Plan, and sending dividends, distributions,
redemption payments or Automatic Withdrawal Plan payments
directly to your bank account. Please refer to the
Application for details, or call SSI at 800-621-7227 for more
information.
Fund Direct privileges may be requested via an Application
you obtain by calling 800-621-7227. Fund Direct privileges
will apply to each shareholder listed in the registration on
your account as well as to your Authorized Dealer
representative of record unless and until SSI receives
written instructions terminating or changing those
privileges. After you establish Fund Direct for your account,
any change of bank account information must be made by
signature-guaranteed instructions to SSI signed by all
shareholders who own the account.
Purchases may be made by telephone only after your account
has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call SSI at 800-
621-7227. The purchase payment will be debited from your bank
account.
32
<PAGE>
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM, CALL
NUVEEN TOLL-FREE AT 800-621-7227.
ADDITIONAL INFORMATION
If you choose to invest in the Fund, an account will be
opened and maintained for you by SSI, the Fund's shareholder
services agent. Share certificates will be issued to you only
upon written request to SSI, and no certificates will be
issued for fractional shares. The Fund reserves the right to
reject any purchase order and to waive or increase minimum
investment requirements. A change in registration or transfer
of shares held in the name of your financial adviser's firm
can only be made by an order in good form from the financial
adviser acting on your behalf.
Authorized Dealers are encouraged to open single master
accounts. However, some Authorized Dealers may wish to use
SSI's sub-accounting system to minimize their internal
recordkeeping requirements. An Authorized Dealer or other
investor requesting shareholder servicing or accounting other
than the master account or sub-accounting service offered by
SSI will be required to enter into a separate agreement with
another agent for these services for a fee that will depend
upon the level of services to be provided.
Subject to the rules and regulations of the Securities and
Exchange Commission, the Fund reserves the right to suspend
the continuous offering of its shares at any time, but no
suspension shall affect your right of redemption as described
below.
33
<PAGE>
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, which
provides that Class B and Class C Shares will be subject to
an annual distribution fee and Class A, Class B and Class C
Shares will be subject to an annual service fee. Class R
Shares will not be subject to either distribution or service
fees.
The distribution fee applicable to Class B and Class C Shares
under the Plan will be payable to reimburse Nuveen for
services and expenses incurred in connection with the
distribution of such Shares. The distribution fee primarily
reimburses Nuveen for providing compensation to Authorized
Dealers, including Nuveen, either at the time of sale or on
an ongoing basis. The other expenses for which Nuveen may be
reimbursed include, without limitation, expenses of printing
and distributing prospectuses to persons other than
shareholders of the Fund, expenses of preparing, printing and
distributing advertising and sales literature and reports to
shareholders used in connection with the sale of such Shares,
certain other expenses associated with the distribution of
such Shares, and any other distribution-related expenses that
may be authorized from time to time by the Board of Trustees.
The service fee applicable to Class A, Class B and Class C
Shares under the Plan will be paid to Nuveen to compensate
Authorized Dealers, including Nuveen, in connection with the
provision of ongoing account services to shareholders. These
services may include establishing and maintaining shareholder
accounts, answering shareholder inquiries and providing other
personal services to shareholders.
The Fund may spend up to .25 of 1% per year of the average
daily net assets of Class A Shares as a service fee under the
Plan applicable to Class A Shares. The Fund may spend up to
.75 of 1% per year of the average daily net assets of Class B
Shares as a distribution fee and up to .25 of 1% per year of
the average daily net assets of Class B Shares as a service
fee under the Plan applicable to Class B Shares. The Fund may
spend up to .75 of 1% per year of the average daily net
assets of Class C Shares as a distribution fee and up to .25
of 1% per year of the average daily net assets of Class C
Shares as a service fee under the Plan applicable to Class C
Shares.
34
<PAGE>
HOW TO REDEEM FUND SHARES
You may redeem your Fund shares at any time for cash at the
net asset value next computed after the redemption
instructions and any required documents and certificates are
received in proper form, as described below. There is no
charge for the redemption of Class R Shares.
CLASS A SHARES
Class A Shares are normally redeemed at net asset value,
without any CDSC. However, in the case of Class A purchases
of $1 million or more at net asset value, where the dealer of
record has not waived the sales commission, a CDSC of 1% is
imposed on any redemptions within 18 months of purchase.
CLASS B SHARES
Class B Shares redeemed within 6 years of purchase may be
subject to a CDSC. The level of the CDSC is determined by how
long you have owned your shares, as described under "How to
Buy Fund Shares -- Class B Shares," above.
CLASS C SHARES
Class C Shares are redeemed at net asset value, without any
CDSC, except that a CDSC of 1% is imposed upon redemptions of
Class C Shares within 12 months of purchase.
OPERATION OF THE CDSC
In determining whether a CDSC is payable, a Fund will first
redeem shares not subject to any charge, and then in the
order in which the Class B Shares were purchased or in the
reverse order in which the Class A or Class C Shares were
purchased, except if another order of redemption would result
in a lower charge or you specify another order. No CDSC is
charged on shares purchased as a result of automatic
reinvestment of dividends or capital gains paid. In addition,
no CDSC will be charged on exchanges of shares into another
Nuveen Mutual Fund or money market fund. Your holding period
is calculated on a monthly basis and begins the first day of
the month in which the order for investment is received. The
CDSC is calculated based on the lower of the redeemed shares'
cost or net asset value at the time of the redemption and is
deducted from the redemption proceeds. Nuveen receives the
amount of any CDSC you pay. The CDSC may be waived under
certain special circumstances, as described in the Statement
of Additional Information.
35
<PAGE>
By Written You may redeem shares by sending a written request for
Request redemption directly to the Fund, c/o Shareholder Services,
Inc., P.O. Box 5330, Denver, CO 80217-5330, accompanied by
duly endorsed certificates, if issued. Requests for
redemption and share certificates, if issued, must be signed
by each shareholder and, if the redemption proceeds exceed
$50,000 or are payable other than to the shareholder of
record at the address of record (which address may not have
changed in the preceding 60 days), the signature must be
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. You will receive payment based on the net asset value
per share next determined after receipt by the Fund of a
properly executed redemption request in proper form. A check
for the redemption proceeds will be mailed to you within
seven days after receipt of your redemption request. For
accounts registered in the name of a broker-dealer, payment
will be forwarded within three business days. However, if any
shares to be redeemed were purchased by check within 15 days
prior to the date the redemption request is received, the
Fund will not mail the redemption proceeds until the check
received for the purchase of shares has cleared, which may
take up to 15 days.
By TEL-A-CHECK If you have authorized telephone redemption and your account
address has not changed within the last 60 days, you can
redeem shares that are held in non-certificate form and that
are worth $50,000 or less by calling Nuveen at 800-621-7227.
While you or anyone authorized by you may make telephone
redemption requests, redemption checks will be issued only in
the name of the shareholder of record and will be mailed to
the address of record. If your telephone request is received
prior to 4:00 p.m. eastern time, the redemption check will
normally be mailed the next business day. For requests
received after 4:00 p.m. eastern time, the redemption will be
effected at 4:00 p.m. eastern time the following business day
and the check will normally be mailed on the second business
day after the request.
By TEL-A-WIRE If you have authorized TEL-A-WIRE redemption or established
or Fund Direct Fund Direct privileges, you can take advantage of the
following expedited redemption procedures to redeem shares
held in non-certificate form that are worth at least $1,000.
You may make TEL-A-WIRE redemption requests through a phone
representative or Fund Direct redemption requests by calling
Nuveen at 800-621-7227. If a redemption request is received
by 4:00 p.m. eastern time, the redemption will be made as of
4:00 p.m. that day. If the redemption request is received
after 4:00 p.m. eastern time, the redemption will be made as
of 4:00 p.m. the following business day. Proceeds of
redemptions through TEL-A-WIRE will normally be wired on the
second business day following the redemption, but may be
delayed one additional
36
<PAGE>
business day if the Federal Reserve Bank of Boston or the
Federal Reserve Bank of New York is closed on the day
redemption proceeds would ordinarily be wired. The Fund
reserves the right to charge a fee for TEL-A-WIRE. Proceeds
of redemptions through Fund Direct will normally be wired to
your Fund Direct bank account on the second or third business
day after the redemption.
Before you may redeem shares by TEL-A-CHECK, TEL-A-WIRE or
Fund Direct, you need to complete the telephone redemption
authorization section of the enclosed Application Form or the
Fund Direct Application Form and return it to Nuveen or SSI.
If you did not authorize telephone redemption when you opened
your account, you may obtain a telephone redemption
authorization form by writing the Fund or by calling Nuveen
toll-free at 800-621-7227. Proceeds of share redemptions made
by TEL-A-WIRE will be transferred by Federal Reserve wire
only to the commercial bank account specified by the
shareholder on the application form. You need to send a
written request to Nuveen or SSI in order to establish
multiple accounts, or to change the account or accounts
designated to receive redemption proceeds. These requests
must be signed by each account owner with signatures
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. Further documentation may be required from
corporations, executors, trustees or personal
representatives.
For the convenience of shareholders, the Fund has authorized
Nuveen as its agent to accept orders from financial advisers
by wire or telephone for the redemption of Fund shares. The
redemption price is the first net asset value of the
appropriate share class determined following receipt of an
order placed by the financial adviser. The Fund makes payment
for the redeemed shares to the securities representatives who
placed the order promptly upon presentation of required
documents with signatures guaranteed as described above.
Neither the Fund nor Nuveen charges any redemption fees other
than any CDSC as described above. However, your financial
adviser may charge you for serving as agent in the redemption
of shares.
The Fund reserves the right to refuse telephone redemptions
and, at its option, may limit the timing, amount or frequency
of these redemptions. Telephone redemption procedures may be
modified or terminated at any time, on 30 days' notice, by
the Fund. The Fund, SSI and Nuveen will not be liable for
following telephone instructions reasonably believed to be
genuine. The Fund employs procedures reasonably designed to
confirm that telephone instructions are genuine. These
procedures include recording all telephone instructions and
requiring up to three forms of identification prior to acting
upon a caller's instructions. If the Fund does
37
<PAGE>
not follow reasonable procedures for protecting shareholders
against loss on telephone transactions, it may be liable for
any losses due to unauthorized or fraudulent telephone
instructions.
Automatic If you own Fund shares currently worth at least $10,000, you
Withdrawal may establish an Automatic Withdrawal Plan by completing an
Plan application form for the Plan. You may obtain an application
form by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at 800-621-
7227.
The Plan permits you to request periodic withdrawals on a
monthly, quarterly, semi-annual or annual basis in an amount
of $50 or more. Depending upon the size of the withdrawals
requested under the Plan and fluctuations in the net asset
value of Fund shares, these withdrawals may reduce or even
exhaust your account.
The purchase of Class A Shares, other than through
reinvestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usually
be disadvantageous because you will be paying a sales charge
on any Class A Shares you purchase at the same time you are
redeeming shares. Similarly, use of the Automatic Withdrawal
Plan for Class B Shares held for less than six years or Class
C Shares held for less than 12 months may be disadvantageous
because the newly-purchased Class B or Class C Shares will be
subject to the CDSC.
General The Fund may suspend the right of redemption of Fund shares
or delay payment more than seven days (a) during any period
when the New York Stock Exchange is closed (other than
customary weekend and holiday closings), (b) when trading in
the markets the Fund normally utilizes is restricted, or an
emergency exists as determined by the Securities and Exchange
Commission so that trading of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for any other periods that the Securities
and Exchange Commission by order may permit for protection of
Fund shareholders.
The Fund may, from time to time, establish a minimum total
investment for Fund shareholders, and the Fund reserves the
right to redeem your shares if your investment is less than
the minimum after giving you at least 30 days' notice. If any
minimum total investment is established, and if your account
is below the minimum, you will be allowed 30 days following
the notice in which to purchase sufficient shares to meet the
minimum. So long as the Fund continues to offer shares at net
asset value to holders of Nuveen Unit Trusts who are
investing their Nuveen Unit Trust distributions, no minimum
total investment will be established for the Fund.
38
<PAGE>
MANAGEMENT OF THE FUND
Board of The management of the Fund, including general supervision of
Trustees the duties performed for the Fund by NIAC under the
Management Agreement, is the responsibility of the Board of
Trustees of the Trust.
NIAC oversees
operation of Overall management of the Fund is the responsibility of NIAC,
the Fund which is located at 333 West Wacker Drive, Chicago, Illinois
60606. NIAC oversees the management of the Fund's investment
portfolio, manages the Fund's business affairs and provides
certain day-to-day administrative services to the Fund. NIAC
has entered into an agreement with ICAP under which ICAP
manages the Fund's investment portfolio.
NIAC is a wholly-owned subsidiary of Nuveen, which has
sponsored or underwritten more than $60 billion of investment
company securities. Nuveen, the principal underwriter of the
Fund's shares, is sponsor of the Nuveen Tax-Free Unit Trust,
a registered unit investment trust. It is also the principal
underwriter for the Nuveen Mutual Funds, and served as co-
managing underwriter for the shares of the Nuveen Exchange-
Traded Funds. Over 1,000,000 individuals have invested to
date in Nuveen investment products. Founded in 1898, Nuveen
is a subsidiary of The John Nuveen Company which, in turn, is
approximately 80% owned by The St. Paul Companies, Inc. ("St.
Paul"). St. Paul is located in St. Paul, Minnesota, and is
principally engaged in providing property-liability insurance
through subsidiaries.
For the fund management services and facilities furnished by
NIAC, the Fund has agreed to pay an annual management fee as
follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET
VALUE FUND MANAGEMENT FEE
-----------------------------------------
<S> <C>
For the first $125 million .7500 of 1%
For the next $125 million .7375 of 1%
For the next $250 million .7250 of 1%
For the next $500 million .7125 of 1%
For the next $1 billion .7000 of 1%
For assets over $2 billion .6750 of 1%
</TABLE>
ICAP manages
the Fund's ICAP was founded in 1970 and is located at 225 West Wacker
investment Drive, Suite 2400, Chicago, IL 60606. Under the Sub-Advisory
portfolio Agreement, NIAC pays ICAP a portfolio management fee on the
Fund's average daily net asset value at the annual rates as
set forth below, which are determined by reference to the
average daily market value of the equity and fixed-income
assets, respectively, of all Nuveen-sponsored investment
products for which ICAP is designated as portfolio manager,
based on the proportions set forth in the Sub-Advisory
Agreement. For these purposes, the equity management fee is
paid on a specified proportion of the Fund's average daily
net assets equal to the Fund's target investment mix with
respect to
39
<PAGE>
Equity Securities and the fixed income management fee is paid
on a specified proportion of the Fund's average daily net
assets equal to the Fund's target investment mix with respect
to the fixed income securities and cash equivalents.
<TABLE>
<CAPTION>
ASSETS OF NUVEEN-SPONSORED FIXED-INCOME
INVESTMENT PRODUCTS EQUITY PORTFOLIO PORTFOLIO
MANAGED BY ICAP MANAGEMENT FEE MANAGEMENT FEE
---------------------------------------------------------------
<S> <C> <C>
For the first $500 million .35 of 1% .20 of 1%
For the next $500 million .30 of 1% .15 of 1%
For assets over $1 billion .25 of 1% .12 of 1%
</TABLE>
The investment decisions for the Fund are made through a team
approach, with all of the ICAP investment professionals
contributing to the process. ICAP currently maintains a staff
of 12 investment professionals. Each of the officers and
other investment professionals of ICAP has developed an
expertise in at least one functional investment area,
including equity research, strategy, fixed income analysis,
quantitative research, technical research, and trading. A key
element in the decision making process is a formal investment
committee meeting generally held each business day and
attended by all the investment professionals. These meetings
also provide for the review of ICAP's investment positions.
Pertinent information from outside sources is shared and
incorporated into the investment outlook. The investment
strategy, asset sectors, and individual security holdings are
reviewed to verify their continued appropriateness.
Investment recommendations are presented to the committee for
decisions.
ICAP provides continuous advice and recommendations
concerning the Fund's investments, and is responsible for
selecting the broker-dealers who execute the portfolio's
transactions. In executing such transactions, ICAP seeks to
obtain the best net results for the Funds. ICAP also serves
as investment adviser to the ICAP Funds, Inc. and to pension
and profit-sharing plans, and other institutional and private
investors. As of May 1, 1996, ICAP had approximately $5
billion under management. Mr. Robert H. Lyon, President of
ICAP, owns shares representing 51% of the voting rights of
ICAP. In addition, The John Nuveen Company owns preferred
shares of ICAP, which are convertible after several years
into a 20% common stock interest of ICAP.
40
<PAGE>
HOW THE FUND SHOWS PERFORMANCE
The Fund may quote its yield or total return in reports to
shareholders, sales literature and advertisements. The Fund
may also from time to time compare its investment results to
various passive indices or other mutual funds with similar
investment objectives. Comparative performance information
may include data from Lipper Analytical Services, Inc.,
Morningstar, Inc. and other industry publications. See the
Statement of Additional Information for a more detailed
discussion.
All total return figures assume the reinvestment of all
dividends and measure the net investment income generated by,
and the effect of any realized and unrealized appreciation or
depreciation of, the underlying investments in the Fund over
a specified period of time. Average annual total return
figures are annualized and therefore represent the average
annual percentage change over the specified period.
Cumulative total return figures are not annualized and
represent the aggregate percentage or dollar value change
over a stated period of time. Average annual total return and
cumulative total return are based upon the historical results
of the Fund and are not necessarily representative of the
future performance of the Fund.
41
<PAGE>
DISTRIBUTIONS AND TAXES
The Fund intends to operate as a "Regulated Investment
Company" under Subchapter M of the Internal Revenue Code, and
therefore will not be liable for federal income taxes to the
extent earnings are distributed on a timely basis.
For federal income tax purposes, unless you are exempt from
taxation or entitled to a tax deferral, ALL DIVIDENDS PAID BY
THE FUND THAT ARE DERIVED FROM NET INVESTMENT INCOME AND NET
SHORT-TERM CAPITAL GAINS ARE TAXABLE AS ORDINARY INCOME, AND
DISTRIBUTIONS PAID BY THE FUND FROM NET LONG-TERM CAPITAL
GAINS ARE TAXABLE AS LONG-TERM CAPITAL GAIN, WHETHER RECEIVED
IN CASH OR REINVESTED IN ADDITIONAL SHARES. The capital gain
holding period for this purpose is determined by the length
of time the Fund has held the security and not the length of
time you have held shares in the Fund. Long-term capital gain
distributions received by individual shareholders are taxed
at a maximum rate of 28%. Investors are informed annually as
to the amount and nature of all dividends and capital gains
paid during the prior year. Such capital gains and dividends
may also be subject to state or local taxes. If you are not
required to pay taxes on your income, you are generally not
required to pay federal income taxes on the amounts
distributed to you.
Income dividends are usually distributed quarterly, and
capital gains, if any, are usually distributed annually in
December. When a dividend or capital gain is distributed, the
Fund's net asset value decreases by the amount of the
payment. ANY SUCH DISTRIBUTION WILL BE SUBJECT TO FEDERAL
INCOME TAX, EVEN IF THE DISTRIBUTION OCCURS SHORTLY AFTER A
PURCHASE OF FUND SHARES. All dividends or capital gains
distributions will automatically be reinvested in additional
shares of the same class of the Fund at the then prevailing
net asset value unless an investor specifically requests that
either dividends or capital gains, or both, be paid in cash.
The election to receive dividends or reinvest them may be
changed by writing to: Nuveen Funds, c/o Shareholder
Services, Inc., P.O. Box 5330, Denver, CO 80217-5330. Such
notice needs to be received at least 5 days prior to the
record date of any dividend or capital gain distribution.
Under certain circumstances, a corporate shareholder may be
entitled to the dividends received deduction with respect to
such shareholder's taxable dividends which are attributable
to dividends received by the Fund on its Equity Securities.
If you do not furnish the Fund with your correct social
security number or employer identification number, the Fund
is required by federal law to withhold federal income tax
from your distributions and redemption proceeds at a rate of
31%.
This section is not intended to be a full discussion of
federal income tax laws and the effect of such laws on you. A
more detailed summary appears in the Statement of Additional
Information. There may be other federal, state, or local tax
considerations applicable to a particular investor. You are
urged to consult your own tax adviser.
42
<PAGE>
NET ASSET VALUE
Net asset The Fund's net asset value per share is determined as of the
value is close of trading (currently 4:00 p.m. eastern time) on each
calculated day the New York Stock Exchange is open for business. The
daily Fund's net asset value may not be calculated on days during
which the Fund receives no orders to purchase shares and no
shares are tendered for redemption. Net asset value is
calculated by taking the fair value of the Fund's total
assets, including interest or dividends accrued but not yet
collected, less all liabilities, and dividing by the total
number of shares outstanding. The result, rounded to the
nearest cent, is the net asset value per share. In
determining net asset value, expenses are accrued and applied
daily and securities and other assets for which market
quotations are available are valued at market value. Common
stocks and other equity-type securities are valued at the
last sales price on the national securities exchange or
Nasdaq on which such securities are primarily traded;
however, securities traded on a national securities exchange
or Nasdaq for which there were no transactions on a given day
or securities not listed on a national securities exchange or
Nasdaq are valued at the most recent bid prices. Debt
securities are valued by a pricing service that utilizes
electronic data processing techniques to determine values for
normal institutional-sized trading units of debt securities
without regard to the existence of sale or bid prices when
such values are believed to more accurately reflect the fair
market value of such securities; otherwise, actual sale or
bid prices are used. Any securities or other assets for which
market quotations are not readily available are valued at
fair value as determined in good faith by the Board of
Trustees. Debt securities having remaining maturities of 60
days or less when purchased are valued by the amortized cost
method when the Board of Trustees determines that the fair
market value of such securities is their amortized cost.
Under this method of valuation, a security is initially
valued at its acquisition cost, and thereafter amortization
of any discount or premium is assumed each day, regardless of
the impact of fluctuating interest rates on the market value
of the security. Regardless of the method employed to value a
particular security, all valuations are subject to review by
the Fund's Board of Trustees or its delegate who may
determine the appropriate value of a security whenever the
value as calculated is significantly different from the
previous day's calculated value.
Fund expenses
In addition to the Fund management fee paid to NIAC and the
distribution and service fees paid to Nuveen, the Fund is
responsible for its own expenses that are not covered under
such agreements, including, without limitation: custodial,
transfer agent, accounting and legal fees; interest charges;
brokerage commissions; organizational expenses; and
extraordinary expenses.
43
<PAGE>
GENERAL INFORMATION
Custodian and The Custodian of the assets of the Fund is The Chase
Transfer and Manhattan Bank, N.A., 770 Broadway, New York, New York 10003.
Shareholder Chase also provides certain accounting services to the Fund.
Service Agent The Fund's transfer, shareholder services and dividend paying
agent, Shareholder Services, Inc., P.O. Box 5330, Denver, CO
80217-5330, performs bookkeeping, data processing and
administrative services for the maintenance of shareholder
accounts.
Organization
The Fund is a series of the Nuveen Investment Trust
("Trust"). The Trust is an open-end diversified management
investment company under the Investment Company Act of 1940.
The Trust was organized as a Massachusetts business trust on
May 6, 1996. The Board of Trustees is authorized to issue an
unlimited number of shares in one or more series or "Funds,"
which may be divided into classes of shares. Currently, there
are three series authorized and outstanding, each of which is
divided into four classes of shares designated as Class A
Shares, Class B Shares, Class C Shares and Class R Shares.
Each class of shares represents an interest in the same
portfolio of investments of a Fund. Each class of shares has
equal rights as to voting, redemption, dividends and
liquidation, except that each bears different class expenses,
including different distribution and service fees, and each
has exclusive voting rights with respect to any distribution
or service plan applicable to its shares. There are no
conversion, preemptive or other subscription rights, except
that Class B Shares automatically convert into Class A Shares
of the same Fund, as described above. The Board of Trustees
has the right to establish additional series and classes of
shares in the future, to change those series or classes and
to determine the preferences, voting powers, rights and
privileges thereof.
The Trust is not required and does not intend to hold annual
meetings of shareholders. Shareholders owning more than 10%
of the outstanding shares of the Trust have the right to call
a special meeting to remove Trustees or for any other
purpose.
Under Massachusetts law applicable to Massachusetts business
trusts, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for its
obligations. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or
obligations of the Trust and requires that notice of this
disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust further provides for
indemnification out of the assets and property of the Trust
for all loss and expense of any shareholder held personally
liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which
both inadequate insurance existed and the Trust itself was
unable to meet its obligations. The Trust believes the
likelihood of the occurrence of these circumstances is
remote.
44
<PAGE>
[LOGO]
NUVEEN
EQUITY
MUTUAL FUNDS [PHOTO APPEARS HERE]
NUVEEN BALANCED
MUNICIPIAL AND STOCK FUND
PROSPECTUS/ , 1996
<PAGE>
NUVEEN FAMILY OF MUTUAL FUNDS
Nuveen offers individual investors a broad range of mutual funds
to meet their investment needs:
GROWTH AND INCOME FUNDS
Nuveen Growth and Income Stock Fund
BALANCED FUNDS
Nuveen Balanced Stock and Bond Fund
Nuveen Balanced Municipal and Stock Fund
NATIONAL TAX-FREE INCOME FUNDS
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
STATE TAX-FREE INCOME FUNDS
Arizona
Nuveen Arizona Tax-Free Value Fund
California
Nuveen California Tax-Free Value Fund
Nuveen California Insured Tax-Free Value Fund
Florida
Nuveen Florida Tax-Free Value Fund
Maryland
Nuveen Maryland Tax-Free Value Fund
Massachusetts
Nuveen Massachusetts Tax-Free Value Fund
Nuveen Massachusetts Insured Tax-Free Value Fund
Michigan
Nuveen Michigan Tax-Free Value Fund
New Jersey
Nuveen New Jersey Tax-Free Value Fund
New York
Nuveen New York Tax-Free Value Fund
Nuveen New York Insured Tax-Free Value Fund
Ohio
Nuveen Ohio Tax-Free Value Fund
Pennsylvania
Nuveen Pennsylvania Tax-Free Value Fund
Virginia
Nuveen Virginia Tax-Free Value Fund
<PAGE>
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
Prospectus
, 1996
The NUVEEN BALANCED MUNICIPAL AND STOCK FUND (the "Fund") is a mutual fund
that seeks to provide over time an attractive after-tax total return through a
combination of federally tax-exempt income and long-term capital appreciation,
and preservation of capital in adverse markets. The Fund pursues this objective
by investing in a diversified portfolio of securities consisting of investment
grade quality municipal obligations and equity securities of domestic companies
with market capitalizations of at least $500 million. The Fund is designed to
offer you a tax-conscious investment strategy that reduces taxable
distributions and offers a balance between after-tax total returns and capital
preservation.
The Fund offers you Flexible Purchase Options, which provide the flexibility
to purchase Fund shares in the same manner you typically make other mutual fund
investments. You may choose from one of four alternative classes of Fund shares
(Classes A, B, C and R), each with a different combination of sales charges,
ongoing fees, eligibility requirements, and other features. Your financial
adviser will be able to assist you in determining which share class is best for
you. See "Flexible Purchase Options," "How to Buy Fund Shares" and "Summary of
Fund Expenses."
The Fund is a series of The Nuveen Investment Trust (the "Trust"). This
Prospectus contains information you should know before investing in the Fund.
Please retain it for future reference. You can find more detailed information
about the Fund in the Statement of Additional Information dated , 1996,
as amended from time to time. For a free copy of this Statement, write to the
Nuveen Mutual Funds, 333 West Wacker Drive, Chicago, IL 60606, or call Nuveen
toll-free at 800-621-7227. The Statement has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. Shares
of the Fund involve investment risks, including possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<C> <S>
CONTENTS
3 SUMMARY OF FUND EXPENSES
5 SUMMARY INFORMATION ABOUT THE FUND
</TABLE>
<TABLE>
<S> <C>
5 INVESTMENT OBJECTIVE
5 HOW THE FUND PURSUES ITS OBJECTIVE
7 THE BENEFITS OF BALANCING STOCKS
WITH MUNICIPAL BONDS
8 HOW TO DETERMINE IF THE FUND IS
RIGHT FOR YOU
9 FUND FEATURES AND BENEFITS
10 RISKS AND SPECIAL CONSIDERATIONS
11 WHO IS RESPONSIBLE FOR THE
OPERATION OF THE FUND?
</TABLE>
<TABLE>
<C> <S>
13 ADDITIONAL INFORMATION ABOUT THE
FUND'S INVESTMENTS
21 FLEXIBLE PURCHASE OPTIONS
23 HOW TO BUY FUND SHARES
35 DISTRIBUTION AND SERVICE PLAN
36 HOW TO REDEEM FUND SHARES
40 MANAGEMENT OF THE FUND
43 HOW THE FUND SHOWS PERFORMANCE
44 DISTRIBUTIONS AND TAXES
45 TAX MATTERS
48 NET ASSET VALUE
49 GENERAL INFORMATION
</TABLE>
<PAGE>
SUMMARY OF FUND EXPENSES
The purpose of the tables below is to help you understand all
expenses and fees that you would bear directly or indirectly
as a Fund shareholder. The percentages shown are estimated
for the current fiscal year. Actual fees and expenses may be
greater or less than those shown. An example of how the
expenses work is on the next page.
<TABLE>
<CAPTION>
Shareholder Transaction
Expenses (as a percent of
offering price)(1) Class A Class B Class C Class R(2)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed 5.25%(3) None None None
on
Purchases
Maximum Sales Charge Imposed None None None None
on
Reinvested Dividends
Exchange Fees None None None None
Deferred Sales Charge (as a None(4) 5%(5) 1%(6) None
percentage of lesser of pur-
chase price or redemption
proceeds)
<CAPTION>
Annual Fund Operating Expenses
(as a percent of average daily
net assets) Class A Class B Class C Class R
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees .75% .75% .75% .75%
Rule 12b-1 Fees(7) .25% 1.00% 1.00% None
Other Operating Expenses (af- .10% .10% .10% .10%
ter reimbursement)(8) ---- ---- ---- ----
Total Expenses 1.10% 1.85% 1.85% .85%
</TABLE>
(1) Investment dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details.
(2) Class R Shares are available for purchase only under certain limited
circumstances, or by specified classes of investors. See "How to Buy Fund
Shares--Class R Shares."
(3) Reduced sales charges apply to purchases of $50,000 or more. See "How to
Buy Fund Shares--Class A Shares."
(4) Certain Class A purchases at net asset value of $1 million or more may be
subject to a 1% contingent deferred sales charge if redeemed within 18 months
of purchase. See "How to Buy Fund Shares--Class A Shares."
(5) Class B Shares redeemed within six years of purchase are subject to a
contingent deferred sales charge of 5% during the first year, 4% during the
second and third years, 3% during the fourth year, 2% during the fifth year,
and 1% during the sixth year.
(6) Class C Shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
(7) Class A, Class B and Class C Shares are subject to an annual service fee of
.25% of the average daily net assets to compensate Authorized Dealers for
ongoing account services. In addition, Class B and Class C Shares are subject
to annual distribution fees of .75% of the average daily net assets to
reimburse Nuveen for costs in connection with the sale of Fund shares. See
"Distribution and Service Plan." Long-term holders of Class A, Class B and
Class C Shares may pay more in Rule 12b-1 fees than the economic equivalent of
the maximum front-end sales charge permitted under the National Association of
Securities Dealers Rules of Fair Practice.
(8) The investment adviser has agreed to waive fees and reimburse expenses
through July 31, 1997 in order to prevent Total Expenses (excluding any
distribution or service fees) from exceeding .85% of the average daily net
asset value of any class of Fund shares. Absent reimbursement, "Other Operating
Expenses" are estimated to be .25%.
3
<PAGE>
EXAMPLE*
For the Fund, you would pay the following expenses on a
$1,000 investment over various time periods, assuming (1) a
5% annual rate of return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
1 Year 3 Years
-------------------------------
<S> <C> <C>
Class A $63 $86
Class B** $58 $90
Class C*** $19 $58
Class R $ 9 $27
</TABLE>
*This example does not represent past or future expenses,
which may be greater or less than those shown. Moreover, the
Fund's actual rate of return may be greater or less than the
hypothetical 5% return shown in this example. This example
assumes that the percentage amounts listed under Annual
Operating Expenses remain the same in each of the periods.
For additional information about the Fund's fees and
expenses, see "Distribution and Service Plan" and "Management
of the Fund."
**Assumes that the shareholder redeemed on the first day of
the next year and the contingent deferred sales charge was
applied as follows: 1 year (4%) and 3 years (3%). If instead
the shareholder had redeemed on the last day of the prior
year, the expenses would have been as follows: 1 year $68 and
3 years $100. See "How to Buy Fund Shares--Class B Shares."
***Assumes that the shareholder redeemed on the first day of
the second year and the contingent deferred sales charge was
not applicable for any of the periods shown. If instead the
shareholder had redeemed on the last day of the first year,
the expenses in the first year would have been $29. See "How
to Buy Fund Shares--Class C Shares."
4
<PAGE>
SUMMARY INFORMATION ABOUT THE FUND
INVESTMENT OBJECTIVE
The Fund seeks to provide over time an attractive after-tax
total return through a combination of capital appreciation
and federally tax-exempt income and capital preservation in
adverse markets. The investment objective may not be changed
without shareholder approval. There is no assurance that this
objective will be realized.
HOW THE FUND PURSUES ITS OBJECTIVE
The Fund
invests across The Fund invests in a conservative mix of equities and tax-
different exempt securities. The Fund will seek capital growth
asset classes primarily through its equity investments. The Fund invests in
to reduce tax-exempt securities in order to reduce risk and preserve
investment capital, and to provide monthly current income exempt from
risk regular federal income tax. Dividends earned on the Fund's
equity investments are distributed annually and are taxable
as ordinary income. Please see "Additional Information About
the Fund's Investments," starting on page 13 for a more
detailed discussion.
The Fund The Fund's equity portfolio manager, Institutional Capital
employs a Corporation ("ICAP"), pursues a value-oriented approach to
value-oriented select equity securities for the equity portion of the Fund's
strategy and investment portfolio. Equity securities are initially
fundamental screened using proprietary valuation models on the basis of
company each security's relative price-earnings ratio and earnings
research to stability. ICAP then conducts extensive company research on
choose the securities that pass this initial screen in order to
equities identify those securities with a clear company-specific or
thematic catalyst which ICAP believes will trigger
significant price appreciation over a defined nine to
eighteen month period. The most attractive 40-45 securities
identified are purchased by ICAP for the Fund's investment
portfolio. ICAP then monitors the performance of its
investments closely; if an investment underperforms
expectations and ICAP's expectations of the investment's
future performance potential no longer meet its original
purchase criteria, ICAP will quickly replace the security in
order to prevent continued underperformance.
The Fund's municipal portfolio manager, Nuveen Institutional
Advisory Corp. ("NIAC"), pursues a value-oriented approach to
select municipal securities for the fixed-income portion of
the Fund's investment portfolio. The Fund invests only in
investment-grade quality municipal securities, and
diversifies geographically and across different municipal
sectors in order to further reduce risk. The Fund seeks to
moderate its exposure to interest rates by purchasing
municipal securities having a broad range of effective
maturities in order to create and maintain a diversified
portfolio with intermediate characteristics. In so doing, the
Fund seeks to
5
<PAGE>
prudently balance over economic cycles the Fund's exposure to
interest rates and its ability to provide stable current
income exempt from regular federal income tax.
NIAC selects municipal securities on the basis of its
evaluation of each security's relative value in terms of
current yield, price, credit quality and future prospects.
When making investment decisions, NIAC utilizes the resources
of Nuveen's award-winning research team of more than 30
professionals dedicated exclusively to following the
municipal markets. On a daily basis, Nuveen's research
analysts prepare credit reviews of individual municipal
securities available for purchase, monitor the continued
creditworthiness of the Fund's current municipal portfolio,
and analyze economic, political and demographic trends
affecting the municipal markets. By emphasizing fundamental
research and continuous monitoring of investments, NIAC seeks
to identify those municipal securities that over time offer
the best value consistent with the Fund's investment
objective.
The Fund Over time, the Fund may gradually shift the mix of its
adjusts its investment portfolio in order to emphasize capital
asset mix over appreciation in favorable markets and capital preservation in
time to adverse markets. The Fund will shift its asset mix within the
enhance ranges defined below for each investment category in response
returns and to changing market conditions, and will rebalance when
reduce risk necessary in order to prevent the portfolio's investment mix
from moving outside these defined ranges under normal market
conditions.
<TABLE>
<S> <C> <C>
TARGET
INVESTMENT MIX ALLOWABLE
ASSET CATEGORY OVER FULL MARKET CYCLE RANGE
-------------------------------------------------
Equity Securities 40% 30%-50%
Municipal Obligations 60% 50%-70%
</TABLE>
6
<PAGE>
THE BENEFITS OF BALANCING STOCKS WITH MUNICIPAL BONDS
Through a tax-conscious, balanced strategy the Fund seeks to
provide the growth potential of stocks with less risk than an
all-stock fund, as well as the benefits of stable current
income exempt from regular federal income tax. The benefits
of balancing stocks with municipal bonds in an investment
portfolio can be seen in the chart below, which represents
the returns and risk of a hypothetical balanced investment
portfolio.
Balancing Stocks with Municipal Bonds
January 1980 - December 1995
<TABLE>
<CAPTION>
Before Tax After Tax
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
Average Annual Variability Average Annual Variability
Total Return % of Returns % Total Return % of Returns %
- -------------------------------------------------------------------------------
0.158 0.1481 0.1126 0.1504
- -------------------------------------------------------------------------------
0.155 0.1423 0.1115 0.1445
- -------------------------------------------------------------------------------
0.1518 0.1367 0.1104 0.1389
- -------------------------------------------------------------------------------
0.1487 0.1312 0.1092 0.1334
- -------------------------------------------------------------------------------
0.1454 0.126 0.108 0.1281
- -------------------------------------------------------------------------------
0.1421 0.121 0.1067 0.123
- -------------------------------------------------------------------------------
0.1388 0.1163 0.1054 0.1182
- -------------------------------------------------------------------------------
0.1353 0.1118 0.1041 0.1136
- -------------------------------------------------------------------------------
0.1319 0.1077 0.1028 0.1094
- -------------------------------------------------------------------------------
0.1284 0.104 0.1014 0.1056
- -------------------------------------------------------------------------------
0.0867 0.0964 0.0838 0.0965
- -------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Stock returns are represented by the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500"), a widely-
recognized, unmanaged index of common stock prices. S&P 500
returns assume reinvestment of all dividends paid by the
stocks included in the index, but do not include brokerage
commissions or other fees an investor would incur by
investing in the portfolio of stocks comprising the index.
Municipal bond returns are represented by the Lehman 10 Year
Municipal Bond Index (the "Lehman 10 Year Index"), an
unmanaged index of fixed-rate, investment grade municipal
bonds with maturities from 8 to 12 years that reflect the
overall municipal bond marketplace. Lehman 10 Year Index
returns are available beginning in January 1980 and assume
reinvestment of all coupon income on the bonds included in
the index. For purposes of calculating after-tax returns,
portfolio turnover in each asset class was assumed to equal
the projected portfolio turnover rates of those classes in
the Fund. Ordinary income was taxed at the highest marginal
tax rate of 39.6% and realized capital gains were taxed at
the long-term individual rate of 28%. All returns used in the
chart above are quarterly returns.
The foregoing example depicts the performance of unmanaged
indices and does not depict the performance of the Fund or of
any investment product managed by NIAC or ICAP. There can be
no assurance that the return and risk characteristics of the
municipal and equity markets in the future will resemble
those in the past; nor can there be assurance that the Fund's
future performance will be comparable to that of these
indices.
HOW TO DETERMINE IF THE FUND IS RIGHT FOR YOU
WHO SHOULD INVEST
The Fund may be a suitable investment if:
. you are a tax-conscious investor seeking to reduce the
impact of taxes on your investment returns
. you are seeking the growth potential of stocks but are
concerned about the higher risks of mutual funds investing
only in stocks
. you are seeking the growth potential of stocks yet also
desire capital preservation and current tax-free income
. you are looking for a balanced approach to achieving your
financial goals in a single investment
. you have a long-term investment horizon
8
<PAGE>
WHO SHOULD NOT INVEST
The Fund may not be a suitable investment if:
. you are looking for a balanced mutual fund for a tax-
deferred account
. you are unwilling to accept some fluctuations in share
price
. you have a short-term investment horizon
FUND FEATURES AND BENEFITS
LOW MINIMUM INVESTMENT
$3,000 minimum
initial You can start your investment with a low initial purchase of
investment $3,000 ($1,000 for an Individual Retirement Account) in a
particular share class. Additional investments can be made
for as little as $50. Exceptions to these minimums are made
for participants in the Fund's automatic deposit, group
purchase or reinvestment programs. See "How to Buy Fund
Shares" for more details.
FLEXIBLE PURCHASE OPTIONS
Choose from
Class A, B, C The Fund offers four classes of shares--Classes A, B, C and
or R shares R. Each class offers a different combination of sales
charges, ongoing fees, eligibility requirements and other
features. This permits you and your financial adviser to
choose the share class which best meets your investment
needs. You and your adviser will want to consider:
. the amount of your current investment
. current holdings in the Fund
. length of time you expect to hold the shares
. timing and amount of any future Fund investments
. other relevant information
See "Flexible Purchase Options", "How to Buy Fund Shares" and
"How to Redeem Fund Shares" for further discussion of the
Fund's flexible purchase options.
EXCHANGE PRIVILEGE
Exchange
shares at no Shares of the Fund may be quickly and easily exchanged by
charge telephone, without a sales charge, for shares of the same or
equivalent class of any other Nuveen Mutual Fund or for
shares of certain Nuveen money market funds.
9
<PAGE>
DIVIDEND REINVESTMENT
Dividends
automatically All income dividends or capital gains paid with respect to
reinvested at each class of shares will be reinvested automatically into
no charge additional shares of the same class without a sales charge,
unless you elect to receive them in cash.
INVESTMENT OF NUVEEN UNIT TRUST DISTRIBUTIONS
Invest
distributions Distributions from any Nuveen Unit Trust may be used to buy
from Nuveen Class A Shares of the Fund without a sales charge.
Unit Trusts at
no charge
AUTOMATIC DEPOSIT AND WITHDRAWAL PLANS
Easy-to-use The Fund offers a number of options to help you manage
systematic additions to, and withdrawals from, your account. These
investment and include automatic deposit, direct deposit and payroll
withdrawal deduction plans for adding to your account on a regular
options basis. If you need periodic withdrawals, and own shares
totaling $10,000 or more, you can arrange to have $50 or more
sent directly from your account monthly or quarterly.
ELECTRONIC FUND TRANSFERS
Transfer funds
electronically Nuveen's Fund Direct lets you link your Fund account to your
account at a bank or other financial institution. You may use
Fund Direct to transfer money electronically between
accounts, to purchase shares by phone, to invest through an
automatic deposit plan, or to send payments directly to your
bank account.
TELEPHONE REDEMPTION
Free telephone
redemption You may establish free telephone redemption privileges for
your account.
EASY LIQUIDITY
Redemption on
any business You may redeem all or some of your Fund shares on any
day business day at the then net asset value. Class B and Class C
Shares, as well as certain Class A purchases of $1 million or
more at net asset value, may be subject to a contingent
deferred sales charge upon redemption. See "How to Redeem
Fund Shares".
RISKS AND SPECIAL CONSIDERATIONS
You should consider certain other factors about the Fund
before investing. The value and market risk of the Fund's
investment portfolio will tend to vary with changes in its
asset allocations among investment classes and changes in the
municipal and equity markets. The Fund's investments in
municipal bonds will be subject to interest rate and credit
risk. In general, the market value of the Fund's investments
in municipal bonds will increase when interest rates decline
and decrease when interest rates rise. In addition, the
Fund's investments in stocks will be subject to
10
<PAGE>
equity market risk, i.e. the risk that equity prices could
decline over short or even extended periods. The equity
markets tend to be cyclical, with periods of generally rising
prices and periods of generally declining prices. Although
the prices of fixed-income and equity securities often rise
and fall at different times so that a fall in price of one
will be offset by a rise in, or at least buffered by price
stability in, the other, prices in the two markets often move
in tandem. Accordingly, the Fund should be considered a long-
term investment, designed to provide the best results when
held for a multi-year period. The Fund may not be suitable if
you have a short-term investment horizon. In addition,
investments by the Fund in American Depository Receipts
("ADRs") of foreign companies involve opportunities and risks
not typically associated with investing in U.S. companies.
There are special risks associated with options and futures
transactions. See "Additional Information About the Fund's
Investments."
WHO IS RESPONSIBLE FOR THE OPERATION OF THE FUND?
The following organizations work together to provide the
services and features offered by the Fund:
<TABLE>
<CAPTION>
ORGANIZATION FUNCTION DUTIES
--------------------------------------------------------------
<S> <C> <C>
John Nuveen & Co. Fund Sponsor and Sponsors and manages
Incorporated Principal Underwriter the offering of Fund
("Nuveen") shares
Nuveen Institutional Fund Manager; Manages the Fund's
Advisory Corp. Municipal Portfolio municipal portfolio,
("NIAC") Manager oversees the Fund's
equity portfolio
manager, manages the
Fund's business
affairs and provides
day-to-day
administrative
services to the Fund
Institutional Capital Equity Portfolio Manages the Fund's
Corporation ("ICAP") Manager equity investment
portfolio
Shareholder Services, Transfer Agent; Maintains shareholder
Inc. ("SSI") Shareholder Services accounts, handles
Agent; Dividend Paying share redemptions and
Agent exchanges and
dividend payments
The Chase Manhattan Custodian Maintains custody of
Bank, N.A. ("Chase") the Fund's
investments and
provides certain
accounting services
to the Fund
</TABLE>
11
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS
HOW THE FUND DIVERSIFIES ITS INVESTMENT PORTFOLIO
The Fund
invests in a The Fund's investment portfolio will be invested in a
conservative diversified portfolio of Equity Securities and Municipal
mix of Obligations. The Fund's target investment mix is 60%
municipal Municipal Obligations and 40% Equity Securities, reflecting
bonds and the Fund's anticipated average allocation of its investment
stocks portfolio over a full market cycle. The Fund may gradually
shift the allocation of the investment portfolio in order to
emphasize capital appreciation in favorable market
environments and capital preservation in adverse market
environments. The Fund will shift its investment mix within
defined ranges for each asset category based upon each
category's relative risk and reward characteristics. The Fund
will also rebalance its investment portfolio when necessary
in order to prevent the Fund's investment mix from moving
outside defined ranges for each asset category under normal
market conditions. The table below summarizes the Fund's
target investment mix and the allowable range for each asset
category.
<TABLE>
<S> <C> <C>
TARGET ALLOWABLE
ASSET CATEGORY INVESTMENT MIX RANGE
-----------------------------------------------
Equity Securities 40% 35%-45%
Municipal Obligations 60% 55%-65%
</TABLE>
The Fund's Board of Trustees from time to time may also
adjust the Fund's target investment mix and the allowable
range for each asset category if, after consultation with
NIAC and ICAP, the Board determines that such a change is in
the best interests of shareholders, provided, however, that
the minimum allowable allocation for Municipal Obligations
may not be set below 50%.
During temporary defensive periods, the Fund may invest any
percentage of its assets in temporary investments, as
described below under "Temporary Investments." During such
periods, which may occur at a time when the Fund would
otherwise rebalance its investment mix, the proportion of the
Fund's assets invested in an asset category may fall outside
the allowable range for that asset category.
HOW THE FUND SELECTS INVESTMENTS
The Fund
employs a As equity portfolio manager, ICAP selects equity securities
value-oriented on the basis of its evaluation of each security's relative
strategy and value in terms of projected relative price-earnings ratios
fundamental and earnings stability. When making investment decisions,
company ICAP develops an economic framework (including an interest
research to rate, inflation, and business cycle outlook) and analyzes
choose strategic economic and/or industry themes to identify
equities appropriate investments. ICAP uses a variety of proprietary
research techniques and
12
<PAGE>
computer models to search for equity securities believed to
possess the best relative value based on proprietary
price/earnings projections and an analysis of earnings
stability. Furthermore, a clear catalyst must exist, either
stock-specific, industry or economic, which ICAP believes
will trigger significant price appreciation within a
definable period. In order to enhance its internal research,
ICAP also utilizes a wide variety of external sources for
investment information including recognized strategists,
economists, technical and fundamental analysts, corporate
executives, and industry sources.
For each investment, ICAP establishes an upside price target
and a downside risk potential. This strategy allows for
continuous monitoring of fundamental conditions and stock
price performance. Although ICAP typically expects the
investment potential of each investment to be realized over a
nine to eighteen month time period, it is not unusual for
equities to be held for a longer period if justified by their
potential future performance. Investments that underperform
expectations are reviewed intensively. If the risk/reward
profile of a particular investment becomes unattractive or
the reasons for owning the security no longer appear valid,
the investment typically is sold expeditiously to avoid
continued underperformance.
The Fund The Fund's municipal portfolio manager, Nuveen Institutional
employs a Advisory Corp. ("NIAC"), pursues a value-oriented approach
value-oriented for selecting municipal securities for the Fund's investment
strategy and portfolio. The Fund invests only in investment-grade quality
fundamental Municipal Obligations, and diversifies geographically and
credit across different municipal sectors in order to further reduce
research to risk. The Fund seeks to moderate its exposure to interest
choose rates by purchasing Municipal Obligations having a range of
municipal effective remaining maturities in order to create and
securities maintain a diversified portfolio with overall performance
characteristics similar to an otherwise comparable portfolio
of intermediate-term municipal securities. In so doing, the
Fund seeks to prudently balance over economic cycles the
Fund's exposure to interest rates and its ability to provide
stable current income exempt from regular federal income tax.
The Fund will invest substantially all (in excess of 80%) of
its assets allocated to municipal investments in a portfolio
of Municipal Obligations with effective remaining maturities
of no more than 15 years. The Fund will actively manage the
effective remaining maturities of the Municipal Obligations
in the Fund's investment portfolio, and will adjust its
holdings of Municipal Obligations in response to prevailing
market conditions in order to preserve the portfolio's
intermediate characteristics and insure that at all times
substantially all of the Municipal Obligations in which the
Fund invests continue to have a remaining effective maturity
of no more than 15 years.
13
<PAGE>
The Fund's foregoing policy of investing in Municipal
Obligations with effective remaining maturities of no more
than 15 years will not limit the stated or nominal maturities
of the Municipal Obligations in which the Fund invests. The
effective remaining maturity of a Municipal Obligation may be
shorter than its stated maturity as a result of the coupon,
the actual or expected payment schedule, or other terms or
conditions of an issue that cause the security to trade and
therefore have the risk of price fluctuation similar to an
otherwise comparable, but shorter-maturity, security. For
example, a Municipal Obligation with an above-market coupon
having a stated maturity of 25 years and a par call in 12
years will have volatility characteristics similar to an
otherwise comparable 12-year Municipal Obligation; a housing
revenue Municipal Obligation with a stated maturity of 30
years structured to have an expected maturity of five years
will have volatility characteristics similar to a five-year
Municipal Obligation; and a 20-year Municipal Obligation
advance refunded to a premium call in ten years will have
volatility characteristics similar to a ten-year Municipal
Obligation.
NIAC selects municipal securities on the basis of its
evaluation of each security's relative value in terms of
current yield, price, credit quality and future prospects.
When making investment decisions, NIAC utilizes the resources
of Nuveen's award-winning research team of more than 30
professionals dedicated exclusively to following the
municipal markets. On a daily basis, Nuveen's research
analysts prepare credit reviews of individual municipal
securities available for purchase, monitor the continued
creditworthiness of the Fund's current municipal portfolio,
and analyze economic, political and demographic trends
affecting the municipal markets. By emphasizing fundamental
research and continuous monitoring of investments, NIAC seeks
to identify those municipal securities that over time offer
the best value consistent with the Fund's investment
objective.
The Fund As a fundamental policy, the Fund will invest all of its
purchases only assets allocated to municipal investments in Municipal
investment- Obligations that are either (1) rated at the time of purchase
grade quality within the four highest grades (Baa or better by Moody's
Municipal Investors Service ("Moody's") or BBB or better by Standard &
Obligations Poor's ("S&P")), or (2) unrated but that, in the NIAC's
opinion, have credit characteristics equivalent to, and are
of comparable quality to, Municipal Obligations so rated,
provided that not more than 20% of the Fund's investments in
Municipal Obligations may be in such unrated Municipal
Obligations. Bonds rated in the lowest investment grade
category may have speculative characteristics, and changes in
economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. A general
description of S&P's and Moody's ratings is set forth in the
Statement of Additional Information.
14
<PAGE>
EQUITY SECURITIES
The Fund
invests Under normal market conditions, the Fund will invest the
primarily in assets allocated to equity investments primarily in equity
domestic securities of domestic companies with market capitalizations
companies with of at least $500 million ("Equity Securities"). Equity
capitalizations Securities include, but are not limited to, common stocks;
of at least preferred stocks; warrants to purchase common stocks or
$500 million. preferred stocks; securities convertible into common or
preferred stocks, such as convertible bonds and debentures;
and other securities with equity characteristics.
Convertible bonds and debentures must be rated Baa or higher
by Moody's or BBB or higher by S&P, Duff & Phelps, Inc.
("D&P") or Fitch Investors Service, Inc. ("Fitch"). Bonds
rated Baa or BBB, although considered investment grade, have
speculative characteristics and may be subject to greater
fluctuations in value than higher-rated bonds. A general
description of ratings may be found in the Statement of
Additional Information.
In addition, the Fund may invest indirectly in equity
securities of foreign issuers through investments in American
Depository Receipts ("ADRs"), described later in this
section.
MUNICIPAL OBLIGATIONS
Municipal
Obligations Municipal Obligations are debt obligations issued by states,
are issued by cities and local authorities, and certain possessions and
municipalities territories of the United States, to obtain funds for various
to support public purposes. These purposes include the construction and
various maintenance of public facilities such as airports, bridges,
essential highways, housing, hospitals, mass transportation, schools,
public streets and water and sewer works. Other public purposes for
purposes which Municipal Obligations may be issued include the
refinancing of outstanding obligations and the obtaining of
funds for general operating expenses and for loans to other
public institutions and facilities. Certain industrial
development, private activity and pollution control bonds
also may be included within the term Municipal Obligations if
the interest paid thereon qualifies as exempt from regular
federal income tax. The two principal classifications of
Municipal Obligations are "general obligation" and "revenue"
bonds. General obligation bonds are secured by the issuer's
pledge of its full faith, credit and taxing power for the
payment of principal and interest. Revenue bonds (e.g.,
industrial development bonds) are payable only from the
revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special
excise tax or other specific revenue source.
15
<PAGE>
Municipal Obligations may also include participations in
lease obligations or installment purchase contract
obligations (collectively, "lease obligations") of municipal
authorities or entities. Certain "non-appropriation" lease
obligations may present special risks because the
municipality's obligation to make future lease or installment
payments depends on money being appropriated each year for
this purpose. The Fund will seek to minimize these risks by
not investing more than 20% of the assets allocated to
investments in municipal obligations in non-appropriation
lease obligations and by only investing in those non-
appropriation lease obligations that meet certain criteria of
the Fund. See "Investment Policies and Techniques--
Investment in Municipal Obligations--Municipal Obligations"
in the Statement of Additional Information for further
information about lease obligations.
Municipal Obligations in which the Fund will invest bear
interest that, in the opinion of bond counsel to the issuer,
is exempt from federal income tax, although such interest may
be subject to the federal alternative minimum tax.
The yields on Municipal Obligations are dependent on a
variety of factors, including the condition of the financial
markets in general and the municipal bond market in
particular and the size, maturity and rating of a particular
issue. The market value of Municipal Obligations will vary
inversely with changes in prevailing interest rate levels and
as a result of changing evaluations of the ability of their
issuers to meet interest and principal payments.
TEMPORARY INVESTMENTS
The Fund may
make temporary During certain temporary periods, in order to keep cash on
investments hand fully invested or as a defensive measure in response to
from time to prevailing market conditions, the Fund may invest without
time limitation in cash equivalent and short-term fixed income
securities ("temporary investments"). Temporary investments
are high quality, short-term securities which may be either
tax-exempt or taxable. The Fund intends to invest in taxable
temporary investments only in the event that suitable tax-
exempt temporary investments are not available at reasonable
prices and yields.
Tax-exempt temporary investments include Municipal
Obligations maturing in three years or less from the date of
issuance such as tax-exempt notes (including bond
anticipation notes, tax anticipation notes, and revenue
anticipation notes) and municipal commercial paper. Taxable
temporary investments in which the Fund may invest include:
U.S. Government securities or securities rated within the
highest grade by Moody's or S&P, and which mature within one
year from the date of purchase or carry a variable or
floating rate of interest; certificates of deposit
16
<PAGE>
issued by U.S. banks with assets of at least $1 billion;
commercial paper or corporate notes, bonds or debentures with
a remaining maturity of one year or less; and repurchase
agreements. See the Statement of Additional Information under
"Investment Policies and Techniques--Short-Term Taxable Fixed
Income Securities and Short-Term Tax-Exempt Fixed Income
Securities" for additional information.
WHEN-ISSUED SECURITIES
The Fund may
purchase When- In order to lock in a fixed price on a security it intends to
Issued purchase, the Fund may invest without limitation in
Securities securities purchased on a when-issued or delayed delivery
basis ("When-Issued Securities"). Although the payment and
terms of these securities are established at the time the
purchaser enters into the commitment, these securities may be
delivered and paid for at a future date, generally within 45
days. The Fund will segregate and maintain cash, cash
equivalents, U.S. government securities, or other high-
quality, liquid debt securities in an amount at least equal
to the amount of outstanding commitments for When-Issued
Securities at all times. Such securities involve a risk of
loss if the value of the security to be purchased declines
prior to the settlement date.
AMERICAN DEPOSITORY RECEIPTS ("ADRs")
The Fund may
invest up to ADRs are receipts typically issued by a U.S. bank or trust
20% of its company evidencing ownership of the underlying foreign
assets in security and denominated in U.S. dollars. The Fund may invest
foreign up to 20% of its net assets in ADRs or other instruments
securities denominated in U.S. dollars that permit indirect investment
in foreign securities. ADRs do not eliminate all the risk
inherent in investing in foreign issuers, such as changes in
foreign currency exchange rates. However, by investing in
ADRs rather than directly in foreign issuers' stock, the Fund
avoids currency risks during the settlement period.
Investments in securities of foreign issuers involve risks in
addition to the usual risks inherent in domestic investments,
including currency risks. The value of a foreign security in
U.S. dollars tends to decrease when the value of the U.S.
dollar rises against the foreign currency in which the
security is denominated and tends to increase when the value
of the U.S. dollar falls against such currency.
Some ADRs may not be sponsored by the issuer. ADRs are
affected by the fact that in many countries there is less
publicly available information about issuers than is
available in the reports and ratings published about
companies in the U.S. and companies may not be subject to
uniform accounting, auditing and financial reporting
standards. Other risks inherent in foreign investments
include
17
<PAGE>
expropriation; confiscatory taxation; withholding taxes on
dividends and interest; less extensive regulation of foreign
brokers, securities markets and issuers; diplomatic
developments; and political or social instability. Foreign
economies may differ favorably or unfavorably from the U.S.
economy in various respects, and many foreign securities are
less liquid and their prices tend to be more volatile than
comparable U.S. securities. From time to time, foreign
securities may be difficult to liquidate rapidly without
adverse price effects.
CERTAIN INVESTMENT STRATEGIES AND LIMITATIONS
Options and
Futures The Fund may engage in options and futures transactions,
Transactions which are sometimes referred to as derivative transactions.
The Fund's options and futures transactions may include
instruments such as stock index options and futures
contracts. Such transactions may be used for several reasons,
including hedging unrealized portfolio gains. The Fund will
only engage in futures and options transactions that,
pursuant to regulations promulgated by the Commodity Futures
Trading Commission (the "CFTC"), constitute bona fide hedging
or other permissible risk management transactions and will
not enter into such transactions if the sum of the initial
margin deposits and premiums paid for unexpired options
exceeds 5% of the Fund's total assets. In addition, the Fund
will not enter into options and futures transactions if more
than 30% of the Fund's net assets would be committed to such
instruments.
The ability of the Fund to benefit from options and futures
is largely dependent upon NIAC's or ICAP's ability to
correctly use such instruments, which may involve skills
different from those associated with managing securities
generally. The Fund could lose money on a futures transaction
or an option could expire worthless, in addition to the Fund
suffering a loss on the value of its portfolio assets. For a
further discussion of options and futures transactions,
please see the Statement of Additional Information.
Lending of The Fund may lend its portfolio securities, up to 33 1/3% of
Portfolio its total assets, to broker-dealers or institutional
Securities investors. The loans will be secured continuously by
collateral at least equal to the value of the securities lent
by "marking to market" daily. The Fund will continue to
receive the equivalent of the interest or dividends paid by
the issuer of the securities lent and will retain the right
to call, upon notice, the lent securities. The Fund may also
receive interest on the investment of the collateral or a fee
from the borrower as compensation for the loan. As with other
extensions of credit, there are risks of delay in recovery or
even loss of rights in the collateral should the borrower of
the securities fail financially. However, loans will be made
only to firms deemed by the portfolio manager to be of good
standing.
18
<PAGE>
Illiquid
Securities The Fund may invest up to 15% of its net assets in illiquid
securities, which include, but are not limited to, restricted
securities (securities the disposition of which is restricted
under the federal securities laws); securities which may be
resold pursuant to Rule 144A under the Securities Act of 1933
but that are deemed to be illiquid; and repurchase agreements
with maturities in excess of seven days.
PORTFOLIO TURNOVER
Under normal market conditions, the Fund expects annual
portfolio turnover for the municipal portion of the portfolio
to be significantly less than 75%, as the Fund will attempt
to achieve its municipal investment objectives by prudent
selection of Municipal Obligations with a view to holding
them for investment. However, the rate of municipal turnover
will not be a limiting factor if it is desirable to sell or
purchase Municipal Obligations.
The Fund anticipates that its annual equity portfolio
turnover rate will be between 100% and 125% under normal
market conditions, and will generally not exceed 150%. A
turnover rate of 100% would occur, for example, if the Fund
sold and replaced securities valued at 100% of its net assets
within one year.
In addition to the foregoing, the Fund may be required to
purchase or sell Municipal Obligations and Equity Securities
pursuant to a required reallocation of assets as described
under "How The Fund Diversifies its Investment Portfolio" and
the anticipated portfolio turnover rates set forth above are
made without regard to such a required reallocation of
assets.
OTHER INVESTMENT POLICIES AND RESTRICTIONS
The Fund The Fund will not invest more than 5% of its net assets in
employs other any one of the following types of investments: warrants;
restrictions unseasoned companies; and transactions in short sales against
to protect the box. In addition the Fund has adopted several
shareholders restrictions on the investments and other activities of the
Fund that may not be changed without shareholder approval.
For example, the Fund may not:
. With respect to 75% of its total assets, purchase the
securities of any issuer (except securities issued or
guaranteed by the U.S. government or any agency or
instrumentality thereof) if, as a result, (i) more than 5%
of the Fund's total assets would be invested in securities
of that issuer, or (ii) the Fund would hold more than 10%
of the outstanding voting securities of that issuer.
. Borrow money, except that the Fund may (i) borrow money
from banks for temporary or emergency purposes (but not for
leverage or the purchase of investments) and (ii) make
other investments or engage in other transactions
19
<PAGE>
permissible under the Investment Company Act of 1940 that
may involve a borrowing, provided that the combination of
(i) and (ii) shall not exceed 33 1/3% of the value of the
Fund's total assets (including the amount borrowed), less
the Fund's liabilities (other than borrowings).
If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage beyond
the specified limit resulting from a change in the value of
assets will not be considered a violation.
Except as specifically noted above or in the Statement of
Additional Information, the Fund's investment policies are
not fundamental and may be changed without shareholder
approval. For a more complete description of investment
restrictions that may be changed without a shareholder vote,
see the Statement of Additional Information.
20
<PAGE>
FLEXIBLE PURCHASE OPTIONS
The Fund
offers various The Fund has adopted Flexible Purchase Options that offers
methods of you four alternative classes of Fund shares (Classes A, B, C
purchasing and R), each with a different combination of sales charges,
shares which ongoing fees, eligibility requirements, and other features.
are designed The Fund's Flexible Purchase Options are designed to permit
to meet your you and your financial adviser to choose the method of
individual purchasing shares that you believe is most beneficial given
investment the amount of your investment, any current holdings of Fund
needs and shares, the length of time you expect to hold your investment
preferences and other relevant circumstances. A summary of the four
classes of Fund shares is set forth below:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
UP-FRONT SALES SALES CHARGE ANNUAL 12B-1 ANNUAL 12B-1
CHARGE "CDSC" DISTRIBUTION FEE SERVICE FEE
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Class 5.25%(1) None(2) None .25%
A
Class None 5%(3) .75%(4) .25%
B
Class None 1%(5) .75% .25%
C
Class None None None None
R
</TABLE>
(1) Maximum up-front sales charge, which is reduced for
purchases of $50,000 or more. Up-front sales charge may be
reduced or waived for certain purchases.
(2) Certain Class A purchases at net asset value of $1
million or more may be subject to a 1% CDSC if redeemed
within 18 months of purchase.
(3) CDSC in the first year. CDSC declines to 0% after six
years.
(4) Class B Shares convert to Class A Shares after eight
years, which reduces the ongoing expenses borne by an
investor.
(5) CDSC is applicable to shares redeemed within 12 months of
purchase.
For more information regarding features of each class, see
"How to Buy Fund Shares," "How to Redeem Fund Shares" and
"Distribution and Service Plan" below.
Which Option When you purchase Class A Shares, you will normally pay an
is Right for up-front sales charge. As a result, you will have less money
You? invested initially and you will own fewer Class A Shares than
you would in the absence of an up-front sales charge.
Alternatively, when you purchase Class B or Class C Shares,
you will not pay an up-front sales charge and all of your
monies will be fully invested at the time of purchase.
However, Class B and Class C Shares are subject to an annual
distribution fee, which constitutes an asset-based sales
charge whose purpose is the same as an up-front sales charge.
In addition, Class B Shares when redeemed are subject to a
CDSC, which will vary depending on the length of time you
owned your shares. Class B Shares automatically convert to
Class A Shares eight years after purchase in order to limit
the distribution fees you pay over the life of your
investment. Class C Shares are subject to a CDSC of 1% if
redeemed within 12 months of purchase. Because Class C Shares
do not convert to Class A Shares and continue to pay an
annual distribution fee indefinitely, Class C Shares should
normally not be purchased by an investor who expects to hold
shares for significantly longer than eight years. Class A,
21
<PAGE>
Class B and Class C Shares are subject to annual service
fees, which are identical in amount and are used to
compensate Authorized Dealers for providing you with ongoing
account services. You may qualify for a reduced sales charge
or a sales charge waiver on a purchase of Class A Shares, as
described on page 24 under "How the Class A Sales Charge May
Be Reduced or Waived." Class R Shares are available for
purchase at a price equal to their net asset value, but only
under certain circumstances or for certain categories of
investors, as described below under "How to Buy Fund Shares--
Class R Shares."
In deciding whether to purchase Class A, Class B, Class C or
Class R Shares, you should consider all relevant factors,
including the dollar amount of your purchase, any current
holdings of Fund shares, the length of time you expect to
hold the shares and whether a CDSC would apply, the amount of
any applicable up-front sales charge, the amount of any
applicable distribution or service fees that may be incurred
while you own the shares, whether or not you will be
reinvesting income or capital gain distributions in
additional shares, whether or not you meet applicable
eligibility requirements or qualify for a sales charge waiver
or reduction, and the relative level of services that your
financial adviser may provide to different classes.
Authorized Dealers and other persons distributing the Fund's
shares may receive different compensation for selling
different classes of shares.
Differences
Between the Each class of shares represents an interest in the same
Classes of portfolio of investments. Each class of shares is identical
Shares in all respects except that each class has its own sales
charge structure, each class bears its own class expenses,
including distribution and service fees, and each class has
exclusive voting rights with respect to any distribution or
service plan applicable to its shares. In addition, Class B
Shares are subject to a conversion feature. As a result of
the differences in the expenses borne by each class of
shares, and differences in the purchase and redemption
activity for each class, net income per share, dividends per
share and net asset value per share will vary among the
Fund's classes of shares.
Dealer
Incentives Upon notice to all Authorized Dealers, Nuveen may reallow to
Authorized Dealers electing to participate up to the full
applicable Class A Share up-front sales charge during periods
and for transactions specified in the notice. The
reallowances made during these periods may be based upon
attainment of minimum sales levels. Furthermore, Nuveen may
from time to time provide additional promotional support and
make additional reallowances only to certain Authorized
Dealers who sell or are expected to sell certain minimum
amounts of the Fund or other Nuveen Mutual Funds and Nuveen
Unit Trusts during specified time periods. Promotional
22
<PAGE>
support may include providing sales literature to and holding
informational or educational programs for the benefit of such
Authorized Dealers' representatives, seminars for the public,
and advertising and sales campaigns. Nuveen may reimburse a
participating Authorized Dealer for up to one-half of
specified media costs incurred in the placement of
advertisements which jointly feature the Authorized Dealer
and Nuveen Funds and Nuveen Unit Trusts.
Such reimbursement will be based on the number of its
financial advisers who have sold Nuveen Fund shares and
Nuveen Unit Trust units during the prior calendar year
according to an established schedule. Any such support or
reimbursement would be provided by Nuveen out of its own
assets, and not out of the assets of the Funds, and will not
change the price an investor pays for shares or the amount
that a Fund will receive from such a sale. The staff of the
Securities and Exchange Commission takes the position that
dealers who receive 90% or more of the applicable sales
charge may be deemed underwriters under the Securities Act of
1933, as amended.
HOW TO BUY FUND SHARES
CLASS A SHARES
Class A Shares
are offered at You may purchase Class A Shares at a public offering price
their net equal to the applicable net asset value per share plus an up-
asset value front sales charge imposed at the time of purchase as set
plus an up- forth below. You may qualify for a reduced sales charge, or
front sales the sales charge may be waived in its entirety, as described
charge below under "How the Class A Sales Charge May Be Reduced or
Waived." Class A Shares are also subject to an annual service
fee of .25%. See "Flexible Purchase Options" and
"Distribution and Service Plan."
The up-front sales charge schedule for Class A Shares is as
follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS REALLOWANCE AS
% OF PUBLIC % OF NET % OF PUBLIC
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
----------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.25% 5.54% 5.00%
$50,000 but less than
$100,000 4.25% 4.44% 4.00%
$100,000 but less than
$250,000 3.50% 3.63% 3.25%
$250,000 but less than
$500,000 2.75% 2.83% 2.50%
$500,000 but less than
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over 0.00% 0.00% 0.00%*
</TABLE>
*Authorized Dealers are eligible to receive a commission from
Nuveen as discussed below.
23
<PAGE>
The Fund receives the entire net asset value of all Class A
Shares that are sold. Nuveen retains the full applicable
sales charge from which it pays the uniform reallowances
shown above to Authorized Dealers. See "Flexible Purchase
Options--Dealer Incentives" on page 22 for more information
about reallowances and other compensation to Authorized
Dealers.
Certain commercial banks may make Class A Shares of the Fund
available to their customers on an agency basis. Pursuant to
the agreements between Nuveen and these banks, some or all of
the sales charge paid by a bank customer in connection with a
purchase of Class A Shares may be retained by or paid to the
bank. Certain banks and other financial institutions may be
required to register as securities dealers in certain states.
Class A Class A purchases of $1 million or more are sold at net asset
purchases of value without an up-front sales charge. Nuveen pays
$1 million or Authorized Dealers of record on such Class A Share purchases
more at net a commission of up to 1.00% of the amount of the purchase. If
asset value such shares are redeemed within 18 months of purchase, a CDSC
are subject to of 1% of the lower of the purchase price or the redemption
a CDSC proceeds may be imposed upon the redemption. Shares purchased
by investors investing $1 million or more who have made
arrangements with Nuveen and whose dealer of record waived
the commission are not subject to the CDSC.
There are HOW THE CLASS A SALES CHARGE MAY BE REDUCED OR WAIVED
several ways There are several ways to reduce or eliminate the up-front
to reduce or sales charge:
eliminate the . cumulative discount;
up-front sales . letter of intent;
charge
. purchases with monies representing distributions from
Nuveen-sponsored Unit Trusts;
. group purchase programs;
. reinvestment of redemption proceeds from non-affiliated
funds; and
. special sales charge waivers for certain categories of
investors.
Cumulative
Discount You may qualify for a reduced sales charge as shown above on
a purchase of Class A Shares if the amount of your purchase,
when added to the value that day of all of your prior
purchases of shares of the Fund or of another Nuveen Mutual
Fund, or units of a Nuveen Unit Trust, on which an up-front
sales charge or ongoing distribution fee is imposed, falls
within the amounts stated in the table. You or your financial
adviser need to notify Nuveen or SSI of any cumulative
discount level you have achieved at the time you purchase
your shares.
24
<PAGE>
Letter of
Intent You may qualify for a reduced sales charge on a purchase of
Class A Shares if you plan to purchase Class A Shares of
Nuveen Mutual Funds over the next 13 months and the total
amount of your purchases would, if purchased at one time,
qualify you for one of the reduced sales charges shown above.
In order to take advantage of this option, you need to
complete the applicable section of the Application Form or
sign and deliver either to an Authorized Dealer or to SSI a
written Letter of Intent in a form acceptable to Nuveen. A
Letter of Intent states that you intend, but are not
obligated, to purchase over the next 13 months a stated total
amount of Class A Shares that would qualify you for a reduced
sales charge shown above. You may count shares of a Nuveen
Mutual Fund that you already own on which you paid an up-
front sales charge or an ongoing distribution fee and any
Class B and Class C Shares of a Nuveen Mutual Fund that you
purchase over the next 13 months towards completion of your
investment program, but you will receive a reduced sales
charge only on new Class A Shares you purchase over that
period. You cannot count Class A Shares that you purchase
without a sales charge through investment of distributions
from a Nuveen Mutual Fund, a Nuveen Unit Trust or otherwise,
towards completion of your Letter of Intent program.
By establishing a Letter of Intent, you agree that your first
purchase of Class A Shares following execution of the Letter
of Intent will be at least 5% of the total amount of your
intended purchases. You further agree that shares
representing 5% of the total amount of your intended
purchases will be held in escrow pending completion of these
purchases. All dividends and capital gains distributions on
Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the
expiration of the 13 month period equal or exceed the amount
specified in your Letter of Intent, the Class A Shares held
in escrow will be transferred to your account. If the total
purchases, less redemptions, exceed the amount specified in
your Letter of Intent and thereby qualify for a lower sales
charge than the sales charge specified in your Letter of
Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher
sales charge paid will be used to purchase additional Class A
Shares on your behalf. If the total purchases, less
redemptions, are less than the amount specified, you must pay
Nuveen an amount equal to the difference between the amounts
paid for these purchases and the amounts that would have been
paid if the higher sales charge had been applied. If you do
not pay the additional amount within 20 days after written
request by Nuveen or your financial adviser, Nuveen will
redeem an appropriate number of your escrowed Class A Shares
to meet the required payment. By establishing a Letter of
Intent, you irrevocably appoint Nuveen as attorney to give
instructions to redeem any or all of your escrowed shares,
with full power of substitution in the premises.
25
<PAGE>
You or your financial adviser need to notify Nuveen or SSI
whenever you make a purchase of Fund shares that you wish to
be covered under the Letter of Intent option.
Investment of You may purchase Class A Shares without an up-front sales
Nuveen Unit charge if you are investing distributions from a Nuveen Unit
Trust Trust. There is no initial or subsequent minimum investment
Distributions requirement for such purchases.
Group Purchase If you are a member of a qualified group, you may purchase
Programs Class A Shares of the Fund or of another Nuveen Mutual Fund
at the reduced sales charge applicable to the group's
purchases taken as a whole. A "qualified group" is one which
has been in existence for more than six months, has a purpose
other than investment, has five or more participating
members, has agreed to include Fund sales publications in
mailings to members and has agreed to comply with certain
administrative requirements relating to its group purchases.
Under any group purchase program, the minimum monthly
investment in Class A Shares of any particular fund or
portfolio by each participant is $25, and the minimum monthly
investment in Class A Shares of any particular fund or
portfolio for all participants in the program combined is
$3,000. No certificates will be issued for any participant's
account. All dividends and other distributions by the Fund
will be reinvested in additional Class A Shares of the Fund.
No participant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself
and each participant must fill out special application
materials, which the group administrator may obtain from the
group's financial adviser by checking the applicable box on
the enclosed Application Form or by calling SSI toll-free at
800-621-7227. See the Statement of Additional Information for
more complete information about "qualified groups" and group
purchase programs.
Reinvestment
of Redemption You may also purchase Class A Shares at net asset value
Proceeds from without a sales charge if the purchase takes place through an
Unaffiliated Authorized Dealer and represents the reinvestment of the
Funds proceeds of the redemption of shares of one or more
registered investment companies not affiliated with Nuveen.
You need to provide appropriate documentation that the
redemption occurred not more than 60 days prior to the
reinvestment of the proceeds in Class A Shares, and that you
either paid an up-front sales charge or were subject to a
contingent deferred sales charge upon the redemption of the
shares of the other investment company.
26
<PAGE>
Special Sales
Charge Waivers Class A Shares of the Fund may be purchased at net asset
value without a sales charge and in any amount by officers,
trustees and retired trustees of the Trust; bona fide, full-
time and retired employees of Nuveen or ICAP, any parent
company of Nuveen, and subsidiaries thereof, or their
immediate family members (as defined below); any person who,
for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate
family members; officers and directors of bank holding
companies that make Fund shares available directly or through
subsidiaries or bank affiliates; bank or broker-affiliated
trust departments; investors purchasing on a periodic fee,
asset-based fee or no transaction fee basis through a broker-
dealer sponsored mutual fund purchase program; and clients of
investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for
their services. For further details about these special
categories and their eligibility requirements, please consult
your financial adviser or the Statement of Additional
Information, or call Nuveen at 800-621-7227.
Any Class A Shares purchased pursuant to a special sales
charge waiver must be acquired for investment purposes and on
the condition that they will not be transferred or resold
except through redemption by the Fund. You or your financial
adviser need to notify Nuveen or SSI whenever you make a
purchase of Class A Shares that you wish to be covered under
these special sales charge waivers. All of the above
categories of investors are also eligible to purchase Class R
Shares, as described below under "Class R Shares." Finally,
Class A Shares may be issued at net asset value without a
sales charge in connection with the acquisition by the Fund
of another investment company.
GENERAL
In determining the amount of your purchases of Class A Shares
that may qualify for a reduced sales charge, the following
purchases may be combined: (1) all purchases by a trustee or
other fiduciary for a single trust estate or fiduciary
account; (2) all purchases by individuals and their immediate
family members (i.e., their spouses and their children under
21 years of age); or (3) all purchases made through a group
purchase program as described above.
The reduced sales charge programs may be modified or
discontinued by the Fund at any time upon prior written
notice to shareholders of the Fund.
FOR MORE INFORMATION ABOUT THE PURCHASE OF CLASS A SHARES OR
REDUCED SALES CHARGE PROGRAMS, OR TO OBTAIN THE REQUIRED
APPLICATION FORMS, CALL NUVEEN TOLL-FREE AT 800-621-7227.
27
<PAGE>
CLASS B SHARES
You may purchase Class B Shares at a public offering price
Class B Shares equal to the applicable net asset value per share without any
may be up-front sales charge. Since Class B Shares are sold without
purchased at an initial sales charge, the full amount of your purchase
net asset payment will be invested in Class B Shares. Class B Shares
value, but are are subject to an annual distribution fee to compensate
subject to an Nuveen for its costs in connection with the sale of Class B
annual shares, and are also subject to an annual service fee to
distribution compensate Authorized Dealers for providing you with ongoing
fee and a CDSC financial advice and other account services.
You may be subject to a CDSC if you redeem your Class B
shares within a specified period after purchase, as shown in
the table below. See "Flexible Purchase Options" and
"Distribution and Service Plan." Nuveen compensates
Authorized Dealers for sales of Class B Shares at the time of
sale at the rate of 4.00% of the amount of Class B Shares
purchased, which represents a sales commission of 3.75% plus
an advance on the first year's annual service fee of .25%.
If redeemed prior to the end of the sixth year after
purchase, Class B Shares may be subject to a CDSC, as set
forth below:
<TABLE>
<CAPTION>
YEARS
SINCE
PURCHASE CDSC
------
<S> <C>
0-1 5%
1-2 4%
2-3 4%
3-4 3%
4-5 2%
5-6 1%
</TABLE>
Class B Shares acquired through the reinvestment of dividends
are not subject to a CDSC. Any CDSC will be imposed on the
lower of the redeemed shares' cost or net asset value at the
time of redemption. For more information regarding the
imposition of the CDSC, see "How to Redeem Fund Shares--Class
B Shares," below.
Class B Shares
automatically Class B Shares will automatically convert to Class A Shares
convert to eight years after purchase. The purpose of the conversion is
Class A Shares to limit the distribution fees you pay over the life of your
eight years investment. All conversions will be done at net asset value
after purchase without the imposition of any sales load, fee, or other
charge, so that the value of each shareholder's account
immediately before conversion will be the same as the value
of the account immediately after conversion. Class B Shares
acquired through reinvestment of distributions will convert
into Class A Shares based on the date of the initial purchase
to which such shares relate. For this purpose, Class B Shares
28
<PAGE>
acquired through reinvestment of distributions will be
attributed to particular purchases of Class B Shares in
accordance with such procedures as the Board of Trustees may
determine from time to time. Class B Shares that are
converted to Class A Shares will remain subject to an annual
service fee that is identical in amount for both Class B
Shares and Class A Shares. Since net asset value per share of
the Class B Shares and the Class A Shares may differ at the
time of conversion, a shareholder may receive more or fewer
Class A Shares than the number of Class B Shares converted.
Any conversion of Class B Shares into Class A Shares will be
subject to the continuing availability of an opinion of
counsel or a private letter ruling from the Internal Revenue
Service to the effect that the conversion of shares would not
constitute a taxable event under federal income tax law.
Conversion of Class B Shares into Class A Shares might be
suspended if such an opinion or ruling were no longer
available.
CLASS C SHARES
Class C Shares You may purchase Class C Shares at a public offering price
may be equal to the applicable net asset value per share without any
purchased at up-front sales charge. Class C Shares are subject to an
net asset annual distribution fee to compensate Nuveen for its costs in
value, but are connection with the sale of Class C Shares. Class C Shares
subject to an are also subject to an annual service fee of .25% to
annual compensate Authorized Dealers for providing you with ongoing
distribution financial advice and other account services. Nuveen
fee and a CDSC compensates Authorized Dealers for sales of Class C Shares at
if redeemed the time of the sale at a rate of 1% of the amount of Class C
within 12 Shares purchased, which represents a sales commission of .75%
months of plus an advance on the first year's annual service fee of
purchase .25%. See "Flexible Purchase Options" and "Distribution and
Service Plan."
Redemptions of Class C Shares within 12 months of purchase
may be subject to a CDSC of 1% of the lower of the purchase
price or redemption proceeds. See "How to Redeem Fund
Shares--Class C Shares."
CLASS R SHARES
Class R Shares If you are making an initial purchase of $1 million or more
are offered at of Fund Shares in a single transaction, you may purchase
net asset Class R Shares at a public offering price equal to the
value only applicable net asset value per share without any up-front
under limited sales charge or ongoing distribution or service fees. You
circumstances also may purchase Class R Shares subject only to the Fund's
or to minimum investment requirement of $3,000 if you are within
specified the following specified categories of investors who are
classes of eligible to purchase Class A Shares at net asset value
investors without an up-front sales charge: officers, trustees and
retired trustees of the Fund; bona fide, full-time and
retired employees of Nuveen or
29
<PAGE>
ICAP, any parent company of Nuveen, and subsidiaries thereof,
or their immediate family members; any person who, for at
least 90 days, has been an officer, director or bona fide
employee of any Authorized Dealer, or their immediate family
members; officers and directors of bank holding companies
that make Fund shares available directly or through
subsidiaries or bank affiliates; and bank or broker-
affiliated trust departments; investors purchasing on a
periodic fee, asset-based fee or no transaction fee basis
through a broker-dealer sponsored mutual fund purchase
program; and clients of investment advisers, financial
planners or other financial intermediaries that charge
periodic or asset-based fees for their services. For further
details about these special categories and their eligibility
requirements, please consult your financial adviser or the
Statement of Additional Information, or call Nuveen at 800-
621-7227.
If you are eligible to purchase either Class R Shares or
Class A Shares without a sales charge at net asset value, you
should be aware of the differences between these two classes
of shares. Class A Shares are subject to an annual service
fee to compensate Authorized Dealers for providing you with
ongoing account services. Class R Shares are not subject to a
distribution or service fee and, consequently, holders of
Class R Shares may not receive the same types or levels of
services from Authorized Dealers. In choosing between Class A
Shares and Class R Shares, you should weigh the benefits of
the services to be provided by Authorized Dealers against the
annual service fee imposed upon the Class A Shares.
INITIAL AND SUBSEQUENT PURCHASE OF SHARES
The Fund You may buy Fund shares through Authorized Dealers or by
offers a calling or directing your financial adviser to call Nuveen
number of toll-free at 800-843-6765. You may pay for your purchase by
convenient Federal Reserve draft or by check made payable to "Nuveen
payment Balanced Municipal and Stock Fund, Class [A], [B], [C], [R],"
methods delivered to the financial adviser through whom the
investment is to be made for forwarding to the Fund's
shareholder services agent, SSI. When making your initial
investment, you must also furnish the information necessary
to establish your Fund account by completing and enclosing
with your payment the attached Application Form. After your
initial investment, you may make subsequent purchases at any
time by forwarding to your financial adviser or SSI a check
in the amount of your purchase made payable to "Nuveen
Balanced Municipal and Stock Fund, Class [A], [B], [C], [R],"
and indicating on the check your account number. All payments
need to be in U.S. dollars and should be sent directly to SSI
at its address listed on the back cover of this Prospectus. A
check drawn on a foreign bank or payable other than to the
order of the Fund generally will not be acceptable. You may
also wire Federal Funds directly to SSI, but you may be
charged a
30
<PAGE>
fee for this. For instructions on how to make Fund purchases
by wire transfer, call Nuveen toll-free at 800-621-7227.
PURCHASE PRICE
The price at which you purchase a class of Fund shares is
based on the next calculation of the net asset value for that
share class after the order is placed. The net asset value
per share of each share class is determined as of the close
of trading (currently 4:00 p.m. Eastern Time) on each day the
New York Stock Exchange is open for business. See "Net Asset
Value," below for a description of how net asset value is
calculated.
MINIMUM INVESTMENT REQUIREMENTS
Generally, your first purchase of any class of the Fund's
shares needs to be for $3,000 or more ($1,000 or more for an
Individual Retirement Account). Additional purchases may be
in amounts of $50 or more. These minimums may be changed at
any time by the Fund. There are exceptions to these minimums
for shareholders who qualify under one or more of the Fund's
automatic investment, group purchase or reinvestment
programs.
SYSTEMATIC INVESTMENT PROGRAMS
The Fund The Fund offers you several opportunities to capture the
offers several benefits of "dollar cost averaging" through systematic
ways to make investment programs. In a regularly followed dollar cost
systematic averaging program, you would purchase more shares when Fund
investments share prices are lower and fewer shares when Fund share
prices are higher, so that the average price paid for Fund
shares is less than the average price of the Fund shares over
the same time period. Dollar cost averaging does not assure
profits or protect against losses in a steadily declining
market. Since dollar cost averaging involves continuous
investment regardless of fluctuating price levels, you should
consider your financial ability to continue investing in
declining as well as rising markets before deciding to invest
in this way. The Fund offers two different types of
systematic investment programs:
Automatic Once you have established a Fund account, you may make
Deposit Plan regular investments in an amount of $25 or more each month by
authorizing SSI to draw preauthorized checks on your bank
account. There is no obligation to continue payments and you
may terminate your participation at any time at your
discretion. No charge in addition to the applicable sales
charge is made in connection with this Plan, and there is no
cost to the Fund. To obtain an application form for the
Automatic Deposit Plan, check the applicable box on the
enclosed Application Form or call Nuveen toll-free at 800-
621-7227.
31
<PAGE>
Payroll Direct Once you have established a Fund account, you may, with your
Deposit Plan employer's consent, make regular investments in Fund shares
of $25 or more per pay period by authorizing your employer to
deduct this amount automatically from your paycheck. There is
no obligation to continue payments and you may terminate your
participation at any time at your discretion. No charge in
addition to the applicable sales charge is made for this
Plan, and there is no cost to the Fund. To obtain an
application form for the Payroll Direct Deposit Plan, check
the applicable box on the enclosed Application Form or call
Nuveen toll-free at 800-621-7227.
OTHER SHAREHOLDER PROGRAMS
Exchange
Privilege You may exchange shares of a class of the Fund for shares of
the same class of any other Nuveen Mutual Fund with
reciprocal exchange privileges, at net asset value without a
sales charge, by sending a written request to the Fund, c/o
Shareholder Services, Inc., P.O. Box 5330, Denver, CO 80217-
5330. Similarly, Class A, Class B, Class C and Class R Shares
of other Nuveen Mutual Funds may be exchanged for the same
class of shares of the Fund at net asset value without a
sales charge. Exchanges of shares from any Nuveen money
market fund will be made into Class A Shares, Class B Shares,
Class C Shares or Class R Shares (if eligible) of the Fund at
the public offering price. If, however, a sales charge has
previously been paid on the investment represented by the
exchanged shares (i.e., the shares to be exchanged were
originally issued in exchange for shares on which a sales
charge was paid), the exchange of shares from a Nuveen money
market fund will be made into shares of the Fund at net asset
value. Class A Shares, Class C Shares or Class R Shares may
be exchanged for shares of any Nuveen money market fund, but
Class B Shares may not be exchanged for shares of a Nuveen
money market fund.
If you exchange shares subject to a CDSC, no CDSC will be
charged at the time of the exchange. However, if you
subsequently redeem the shares acquired through the exchange,
the redemption may be subject to a CDSC, depending on when
you purchased your original shares and the CDSC schedule of
the fund from which you exchanged your shares.
The shares to be purchased must be offered in your state of
residence and you must have held the shares you are
exchanging for at least 15 days. The total value of exchanged
shares must at least equal the minimum investment requirement
of the Nuveen Mutual Fund being purchased. For federal income
tax purposes, any exchange constitutes a sale and purchase of
shares and may result in capital gain or loss. Before making
any exchange, you should obtain the Prospectus for the Nuveen
Mutual Fund you are purchasing and read it carefully. If the
registration of the
32
<PAGE>
account for the Fund you are purchasing is not exactly the
same as that of the fund account from which the exchange is
made, written instructions from all holders of the account
from which the exchange is being made must be received, with
signatures guaranteed by a member of an approved Medallion
Guarantee Program or in such other manner as may be
acceptable to the Fund. You may also exchange shares by
telephone if you authorize telephone exchanges by checking
the applicable box on the enclosed Application Form or by
calling Nuveen toll-free at 800-621-7227 to obtain an
authorization form. The exchange privilege may be modified or
discontinued by the Fund at any time upon prior written
notice to shareholders of the Fund.
The exchange privilege is not intended to permit the Fund to
be used as a vehicle for short-term trading. Excessive
exchange activity may interfere with portfolio management,
raise expenses, and otherwise have an adverse effect on all
shareholders. In order to limit excessive exchange activity
and in other circumstances where Fund management believes
doing so would be in the best interest of the Fund, the Fund
reserves the right to revise or terminate the exchange
privilege, or limit the amount or number of exchanges or
reject any exchange. Shareholders would be notified of any
such action to the extent required by law.
Reinstatement If you redeemed Class A, Class B or Class C Shares of the
Privilege Fund or any other Nuveen Mutual Fund that were subject to a
sales charge or a CDSC, you have up to one year to reinvest
all or part of the full amount of the redemption in the same
class of shares of the Fund at net asset value. This
reinstatement privilege can be exercised only once for any
redemption, and reinvestment will be made at the net asset
value next calculated after reinstatement of the appropriate
class of Fund shares. If you reinstate shares that were
subject to a CDSC, your holding period as of the redemption
date also will be reinstated for purposes of calculating a
CDSC. The federal income tax consequences of any capital gain
realized on a redemption will not be affected by
reinstatement, but a capital loss may be disallowed in whole
or in part depending on the timing, the amount of the
reinvestment and the fund from which the redemption occurred.
Fund Direct
You can use Fund Direct to link your Fund account to your
account at a bank or other financial institution. Fund Direct
enables you to transfer money electronically between these
accounts and perform a variety of account transactions. These
include purchasing shares by telephone, investing through an
Automatic Deposit Plan, and sending dividends, distributions,
redemption payments or Automatic Withdrawal Plan payments
directly to your bank account. Please refer to the
Application for details, or call SSI at 800-621-7227 for more
information.
33
<PAGE>
Fund Direct privileges may be requested via an Application
you obtain by calling 800-621-7227. Fund Direct privileges
will apply to each shareholder listed in the registration on
your account as well as to your Authorized Dealer
representative of record unless and until SSI receives
written instructions terminating or changing those
privileges. After you establish Fund Direct for your account,
any change of bank account information must be made by
signature-guaranteed instructions to SSI signed by all
shareholders who own the account.
Purchases may be made by telephone only after your account
has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call SSI at 800-
621-7227. The purchase payment will be debited from your bank
account.
FOR MORE INFORMATION ABOUT THESE PURCHASE OPTIONS AND TO
OBTAIN THE APPLICATION FORMS REQUIRED FOR SOME OF THEM, CALL
NUVEEN TOLL-FREE AT 800-621-7227.
ADDITIONAL INFORMATION
If you choose to invest in the Fund, an account will be
opened and maintained for you by SSI, the Fund's shareholder
services agent. Share certificates will be issued to you only
upon written request to SSI, and no certificates will be
issued for fractional shares. The Fund reserves the right to
reject any purchase order and to waive or increase minimum
investment requirements. A change in registration or transfer
of shares held in the name of your financial adviser's firm
can only be made by an order in good form from the financial
adviser acting on your behalf.
Authorized Dealers are encouraged to open single master
accounts. However, some Authorized Dealers may wish to use
SSI's sub-accounting system to minimize their internal
recordkeeping requirements. An Authorized Dealer or other
investor requesting shareholder servicing or accounting other
than the master account or sub-accounting service offered by
SSI will be required to enter into a separate agreement with
another agent for these services for a fee that will depend
upon the level of services to be provided.
Subject to the rules and regulations of the Securities and
Exchange Commission, the Fund reserves the right to suspend
the continuous offering of its shares at any time, but no
suspension shall affect your right of redemption as described
below.
34
<PAGE>
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940, which
provides that Class B and Class C Shares will be subject to
an annual distribution fee and Class A, Class B and Class C
Shares will be subject to an annual service fee. Class R
Shares will not be subject to either distribution or service
fees.
The distribution fee applicable to Class B and Class C Shares
under the Plan will be payable to reimburse Nuveen for
services and expenses incurred in connection with the
distribution of such Shares. The distribution fee primarily
reimburses Nuveen for providing compensation to Authorized
Dealers, including Nuveen, either at the time of sale or on
an ongoing basis. The other expenses for which Nuveen may be
reimbursed include, without limitation, expenses of printing
and distributing prospectuses to persons other than
shareholders of the Fund, expenses of preparing, printing and
distributing advertising and sales literature and reports to
shareholders used in connection with the sale of such Shares,
certain other expenses associated with the distribution of
such Shares, and any other distribution-related expenses that
may be authorized from time to time by the Board of Trustees.
The service fee applicable to Class A, Class B and Class C
Shares under the Plan will be paid to Nuveen to compensate
Authorized Dealers, including Nuveen, in connection with the
provision of ongoing account services to shareholders. These
services may include establishing and maintaining shareholder
accounts, answering shareholder inquiries and providing other
personal services to shareholders.
The Fund may spend up to .25 of 1% per year of the average
daily net assets of Class A Shares as a service fee under the
Plan applicable to Class A Shares. The Fund may spend up to
.75 of 1% per year of the average daily net assets of Class B
Shares as a distribution fee and up to .25 of 1% per year of
the average daily net assets of Class B Shares as a service
fee under the Plan applicable to Class B Shares. The Fund may
spend up to .75 of 1% per year of the average daily net
assets of Class C Shares as a distribution fee and up to .25
of 1% per year of the average daily net assets of Class C
Shares as a service fee under the Plan applicable to Class C
Shares.
35
<PAGE>
HOW TO REDEEM FUND SHARES
You may redeem your Fund shares at any time for cash at the
net asset value next computed after the redemption
instructions and any required documents and certificates are
received in proper form, as described below. There is no
charge for the redemption of Class R Shares.
CLASS A SHARES
Class A Shares are normally redeemed at net asset value,
without any CDSC. However, in the case of Class A purchases
of $1 million or more at net asset value, where the dealer of
record has not waived the sales commission, a CDSC of 1% is
imposed on any redemptions within 18 months of purchase.
CLASS B SHARES
Class B Shares redeemed within 6 years of purchase may be
subject to a CDSC. The level of the CDSC is determined by how
long you have owned your shares, as described under "How to
Buy Fund Shares--Class B Shares," above.
CLASS C SHARES
Class C Shares are redeemed at net asset value, without any
CDSC, except that a CDSC of 1% is imposed upon redemptions of
Class C Shares within 12 months of purchase.
OPERATION OF THE CDSC
In determining whether a CDSC is payable, a Fund will first
redeem shares not subject to any charge, and then in the
order in which the Class B Shares were purchased or in the
reverse order in which the Class A or Class C Shares were
purchased, except if another order of redemption would result
in a lower charge or you specify another order. No CDSC is
charged on shares purchased as a result of automatic
reinvestment of dividends or capital gains paid. In addition,
no CDSC will be charged on exchanges of shares into another
Nuveen Mutual Fund or money
market fund. Your holding period is calculated on a monthly
basis and begins the first day of the month in which the
order for investment is received. The CDSC is calculated
based on the lower of the redeemed shares' cost or net asset
value at the time of the redemption and is deducted from the
redemption proceeds. Nuveen receives the amount of any CDSC
you pay. The CDSC may be waived under certain special
circumstances, as described in the Statement of Additional
Information.
36
<PAGE>
By Written You may redeem shares by sending a written request for
Request redemption directly to the Fund, c/o Shareholder Services,
Inc., P.O. Box 5330, Denver, CO 80217-5330, accompanied by
duly endorsed certificates, if issued. Requests for
redemption and share certificates, if issued, must be signed
by each shareholder and, if the redemption proceeds exceed
$50,000 or are payable other than to the shareholder of
record at the address of record (which address may not have
changed in the preceding 60 days), the signature must be
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. You will receive payment based on the net asset value
per share next determined after receipt by the Fund of a
properly executed redemption request in proper form. A check
for the redemption proceeds will be mailed to you within
seven days after receipt of your redemption request. For
accounts registered in the name of a broker-dealer, payment
will be forwarded within three business days. However, if any
shares to be redeemed were purchased by check within 15 days
prior to the date the redemption request is received, the
Fund will not mail the redemption proceeds until the check
received for the purchase of shares has cleared, which may
take up to 15 days.
By TEL-A-CHECK If you have authorized telephone redemption and your account
address has not changed within the last 60 days, you can
redeem shares that are held in non-certificate form and that
are worth $50,000 or less by calling Nuveen at 800-621-7227.
While you or anyone authorized by you may make telephone
redemption requests, redemption checks will be issued only in
the name of the shareholder of record and will be mailed to
the address of record. If your telephone request is received
prior to 4:00 p.m. eastern time, the redemption check will
normally be mailed the next business day. For requests
received after 4:00 p.m. eastern time, the redemption will be
effected at 4:00 p.m. eastern time the following business day
and the check will normally be mailed on the second business
day after the request.
By TEL-A-WIRE If you have authorized TEL-A-WIRE redemption or established
or Fund Direct Fund Direct privileges, you can take advantage of the
following expedited redemption procedures to redeem shares
held in non-certificate form that are worth at least $1,000.
You may make TEL-A-WIRE redemption requests through a phone
representative or Fund Direct redemption requests by calling
Nuveen at 800-621-7227. If a redemption request is received
by 4:00 p.m. eastern time, the redemption will be made as of
4:00 p.m. that day. If the redemption request is received
after 4:00 p.m. eastern time, the redemption will be made as
of 4:00 p.m. the following business day. Proceeds of
redemptions through TEL-A-WIRE will normally be wired on the
second business day following the redemption, but may be
delayed one additional
37
<PAGE>
business day if the Federal Reserve Bank of Boston or the
Federal Reserve Bank of New York is closed on the day
redemption proceeds would ordinarily be wired. The Fund
reserves the right to charge a fee for TEL-A-WIRE. Proceeds
of redemptions through Fund Direct will normally be wired to
your Fund Direct bank account on the second or third business
day after the redemption.
Before you may redeem shares by TEL-A-CHECK, TEL-A-WIRE or
Fund Direct, you need to complete the telephone redemption
authorization section of the enclosed Application Form or the
Fund Direct Application Form and return it to Nuveen or SSI.
If you did not authorize telephone redemption when you opened
your account, you may obtain a telephone redemption
authorization form by writing the Fund or by calling Nuveen
toll-free at 800-621-7227. Proceeds of share redemptions made
by TEL-A-WIRE will be transferred by Federal Reserve wire
only to the commercial bank account specified by the
shareholder on the application form. You need to send a
written request to Nuveen or SSI in order to establish
multiple accounts, or to change the account or accounts
designated to receive redemption proceeds. These requests
must be signed by each account owner with signatures
guaranteed by a member of an approved Medallion Guarantee
Program or in such other manner as may be acceptable to the
Fund. Further documentation may be required from
corporations, executors, trustees or personal
representatives.
For the convenience of shareholders, the Fund has authorized
Nuveen as its agent to accept orders from financial advisers
by wire or telephone for the redemption of Fund shares. The
redemption price is the first net asset value of the
appropriate share class determined following receipt of an
order placed by the financial adviser. The Fund makes payment
for the redeemed shares to the securities representatives who
placed the order promptly upon presentation of required
documents with signatures guaranteed as described above.
Neither the Fund nor Nuveen charges any redemption fees other
than any CDSC as described above. However, your financial
adviser may charge you for serving as agent in the redemption
of shares.
The Fund reserves the right to refuse telephone redemptions
and, at its option, may limit the timing, amount or frequency
of these redemptions. Telephone redemption procedures may be
modified or terminated at any time, on 30 days' notice, by
the Fund. The Fund, SSI and Nuveen will not be liable for
following telephone instructions reasonably believed to be
genuine. The Fund employs procedures reasonably designed to
confirm that telephone instructions are genuine. These
procedures include recording all telephone instructions and
requiring up to three forms of identification prior to acting
upon a caller's instructions. If the Fund does
38
<PAGE>
not follow reasonable procedures for protecting shareholders
against loss on telephone transactions, it may be liable for
any losses due to unauthorized or fraudulent telephone
instructions.
Automatic If you own Fund shares currently worth at least $10,000, you
Withdrawal may establish an Automatic Withdrawal Plan by completing an
Plan application form for the Plan. You may obtain an application
form by checking the applicable box on the enclosed
Application Form or by calling Nuveen toll-free at 800-621-
7227.
The Plan permits you to request periodic withdrawals on a
monthly, quarterly, semi-annual or annual basis in an amount
of $50 or more. Depending upon the size of the withdrawals
requested under the Plan and fluctuations in the net asset
value of Fund shares, these withdrawals may reduce or even
exhaust your account.
The purchase of Class A Shares, other than through
reinvestment, while you are participating in the Automatic
Withdrawal Plan with respect to Class A Shares will usually
be disadvantageous because you will be paying a sales charge
on any Class A Shares you purchase at the same time you are
redeeming shares. Similarly, use of the Automatic Withdrawal
Plan for Class B Shares held for less than six years or Class
C Shares held for less than 12 months may be disadvantageous
because the newly-purchased Class B or Class C Shares will be
subject to the CDSC.
General The Fund may suspend the right of redemption of Fund shares
or delay payment more than seven days (a) during any period
when the New York Stock Exchange is closed (other than
customary weekend and holiday closings), (b) when trading in
the markets the Fund normally utilizes is restricted, or an
emergency exists as determined by the Securities and Exchange
Commission so that trading of the Fund's investments or
determination of its net asset value is not reasonably
practicable, or (c) for any other periods that the Securities
and Exchange Commission by order may permit for protection of
Fund shareholders.
The Fund may, from time to time, establish a minimum total
investment for Fund shareholders, and the Fund reserves the
right to redeem your shares if your investment is less than
the minimum after giving you at least 30 days' notice. If any
minimum total investment is established, and if your account
is below the minimum, you will be allowed 30 days following
the notice in which to purchase sufficient shares to meet the
minimum. So long as the Fund continues to offer shares at net
asset value to holders of Nuveen Unit Trusts who are
investing their Nuveen Unit Trust distributions, no minimum
total investment will be established for the Fund.
39
<PAGE>
MANAGEMENT OF THE FUND
Board of The management of the Fund, including general supervision of
Trustees the duties performed for the Fund by NIAC under the
Management Agreement, is the responsibility of the Board of
Trustees of the Trust.
NIAC oversees
operation of Overall management of the Fund is the responsibility of NIAC,
the Fund which is located at 333 West Wacker Drive, Chicago, Illinois
60606. NIAC oversees the management of the Fund's investment
portfolio, manages the Fund's business affairs and provides
certain day-to-day administrative services to the Fund. NIAC
has entered into a Sub-Advisory Agreement with ICAP under
which ICAP manages the Fund's equity investments.
NIAC manages
the Fund's NIAC manages the Fund's municipal investments and is
municipal responsible for the periodic rebalancing of the Fund's
investments investment portfolio in order to achieve the Fund's target
investment mix. [ ] has general supervisory responsibility
for all investment company assets managed by NIAC. [Mr.] [ ]
has been employed by since .
The day to day management of the Fund's municipal portfolio
is the responsibility of Daniel S. Solender, an Assistant
Portfolio Manager of NIAC since July 1996, Assistant
Portfolio Manager of Nuveen Advisory Corp., another
investment adviser subsidiary of Nuveen, since January 1992
and portfolio manager of the Fund since its inception. Prior
to joining Nuveen Advisory, Mr. Solender attended the
University of Chicago (from September 1990 to June 1992)
where he received his M.B.A. and worked part time in the
Research Department of Nuveen. He currently manages [nine]
Nuveen-sponsored investment companies. NIAC places orders for
the purchase and sale of Municipal Obligations and is
responsible for selecting the broker-dealers who execute the
portfolio transactions.
Consistent with the Fund's investment objective, NIAC's day-
to-day management of the Fund's Municipal Obligations is
characterized by an emphasis on value investing, a process
which involves the search for Municipal Obligations with
favorable characteristics that, in NIAC's judgment, have not
yet been recognized in the marketplace. The process of
searching for such undervalued or underrated securities is an
ongoing one that draws upon the resources of the portfolio
managers of the various Nuveen funds and senior management of
NIAC. All portfolio management decisions are subject to
weekly review by NIAC's management and to quarterly review by
the Board of Trustees.
NIAC is a wholly-owned subsidiary of Nuveen, which has
sponsored or underwritten more than $60 billion of investment
company securities. Nuveen, the principal underwriter of the
Fund's shares, is sponsor of the Nuveen Tax-Free Unit
40
<PAGE>
Trust, a registered unit investment trust. It is also the
principal underwriter for the Nuveen Mutual Funds, and served
as co-managing underwriter for the shares of the Nuveen
Exchange-Traded Funds. Over 1,000,000 individuals have
invested to date in Nuveen investment products. Founded in
1898, Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 80% owned by The St. Paul
Companies, Inc. ("St. Paul"). St. Paul is located in St.
Paul, Minnesota, and is principally engaged in providing
property-liability insurance through subsidiaries.
For the fund management services and facilities furnished by
NIAC, the Fund has agreed to pay an annual management fee as
follows:
<TABLE>
<CAPTION>
FUND
AVERAGE DAILY NET ASSET MANAGEMENT
VALUE FEE
---------------------------------
<S> <C>
For the first $125 million .7500 of 1%
For the next $125 million .7375 of 1%
For the next $250 million .7250 of 1%
For the next $500 million .7125 of 1%
For the next $1 billion .7000 of 1%
For assets over $2 billion .6750 of 1%
</TABLE>
ICAP manages
the Fund's ICAP was founded in 1970 and is located at 225 West Wacker
equity Drive, Suite 2400, Chicago, IL 60606. Under the Sub-Advisory
investments Agreement, NIAC pays ICAP a portfolio management fee on a
specified proportion of the Fund's average daily net asset
value, such proportion to be equal to the Fund's target
investment mix with respect to Equity Securities. The
portfolio management fee is paid at an annual rate as set
forth below, and is determined by reference to the average
daily market value of the equity assets of all Nuveen-
sponsored investment products for which ICAP is designated as
portfolio manager:
<TABLE>
<CAPTION>
PORTION OF NUVEEN PORTFOLIO
AVERAGE DAILY NET ASSETS MANAGEMENT
MANAGED BY ICAP FEE
--------------------------------
<S> <C>
For the first $500 million .35 of 1%
For the next $500 million .30 of 1%
For assets over $1 billion .25 of 1%
</TABLE>
The investment decisions made with respect to the Fund's
equity investments are made through a team approach, with all
of the ICAP investment professionals contributing to the
process. ICAP currently maintains a staff of 12 investment
professionals. Each of the investment officers and other
investment professionals of ICAP has developed an expertise
in at least one functional investment area, including equity
research, strategy, fixed income analysis, quantitative
research,
41
<PAGE>
technical research, and trading. A key element in the
decision making process is a formal investment committee
meeting generally held each business day and attended by all
the investment professionals. These meetings also provide for
the ongoing review of ICAP's investment positions. Pertinent
information from outside sources is shared and incorporated
into the investment outlook. The investment strategy, asset
sectors, and individual security holdings are reviewed to
verify their continued appropriateness. Investment
recommendations are presented to the committee for decisions.
ICAP provides continuous advice and recommendations
concerning the assets of the Fund allocated to Equity
Securities, and is responsible for selecting the broker-
dealers who execute the portfolio's transactions. In
executing such transactions, ICAP seeks to obtain the best
net results for the Fund. ICAP also serves as investment
adviser to the ICAP Funds, Inc. and to pension and profit-
sharing plans, and other institutional and private investors.
As of May 1, 1996, ICAP had approximately $5 billion under
management. Mr. Robert H. Lyon, President of ICAP, owns
shares representing 51% of the voting rights of ICAP. In
addition, The John Nuveen Company owns preferred shares of
ICAP, which are convertible after several years into a 20%
common stock interest of ICAP.
42
<PAGE>
HOW THE FUND SHOWS PERFORMANCE
The Fund may quote its yield or total return in reports to
shareholders, sales literature and advertisements. The Fund
may also from time to time compare its investment results to
various passive indices or other mutual funds with similar
investment objectives. Comparative performance information
may include data from Lipper Analytical Services, Inc.,
Morningstar, Inc. and other industry publications. See the
Statement of Additional Information for a more detailed
discussion.
All total return figures assume the reinvestment of all
dividends and measure the net investment income generated by,
and the effect of any realized and unrealized appreciation or
depreciation of, the underlying investments in the Fund over
a specified period of time. Average annual total return
figures are annualized and therefore represent the average
annual percentage change over the specified period.
Cumulative total return figures are not annualized and
represent the aggregate percentage or dollar value change
over a stated period of time. Average annual total return and
cumulative total return are based upon the historical results
of the Fund and are not necessarily representative of the
future performance of the Fund.
43
<PAGE>
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
The Fund pays The Fund will pay monthly tax-exempt income dividends to
monthly tax- shareholders at a level rate that reflects the past and
free dividends projected net tax-exempt income of the Fund and that results,
over time, in the distribution of substantially all of the
Fund's net tax-exempt income. To maintain a more stable
monthly distribution, the Fund may from time to time
distribute less than the entire amount of net tax-exempt
income earned in a particular period. This undistributed net
tax-exempt income would be available to supplement future
distributions, which might otherwise have been reduced by a
decrease in the Fund's monthly net income due to fluctuations
in investment income or expenses. As a result, the tax-exempt
income distributions paid by the Fund for any particular
monthly period may be more or less than the amount of net
tax-exempt income actually earned by the Fund during such
period. Undistributed net tax-exempt income is included in
the Fund's net asset value and, correspondingly,
distributions from previously undistributed net tax-exempt
income are deducted from the Fund's net asset value. It is
not expected that this dividend policy will impact the
management of the Fund's portfolio.
Net ordinary taxable income, including dividends received on
the Fund's equity investments, and net realized capital
gains, if any, will be paid annually.
When a dividend or capital gain is distributed, the Fund's
net asset value decreases by the amount of the payment. ANY
DISTRIBUTION OF ORDINARY TAXABLE INCOME AND CAPITAL GAIN WILL
BE SUBJECT TO FEDERAL INCOME TAX, EVEN IF THE DISTRIBUTION
OCCURS SHORTLY AFTER A PURCHASE OF FUND SHARES. All dividends
or capital gains distributions will automatically be
reinvested in additional shares of the same class of the Fund
at the then prevailing net asset value unless an investor
specifically requests that either dividends or capital gains,
or both, be paid in cash. The election to receive dividends
or reinvest them may be changed by writing to: Nuveen Funds,
c/o Shareholder Services, Inc., P.O. Box 5330, Denver, CO
80217-5330. Such notice needs to be received at least 5 days
prior to the record date of any dividend or capital gain
distribution.
44
<PAGE>
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The Fund intends to operate as a "Regulated Investment
Company" under Subchapter M of the Internal Revenue Code, and
therefore will not be liable for federal income taxes to the
extent earnings are distributed on a timely basis. In
addition the Fund intends to satisfy conditions which will
enable interest from Municipal Obligations, which is exempt
from federal income tax when received by the Fund, to qualify
as "exempt-interest" dividends when distributed to the
Shareholders of the Fund.
Each year the Fund intends to distribute substantially all of
its net tax-exempt income from Municipal Obligations, any
ordinary taxable income, including dividends from Equity
Securities, recognized market discount and net realized
short-term capital gains, and net realized long-term capital
gains, if any.
Exempt-interest dividends are not subject to the regular
federal income tax, but may be subject to the federal
alternative minimum tax as set forth below. For federal
income tax purposes, all dividends paid by the Fund that are
derived from taxable net investment income and net short-term
capital gains are taxable as ordinary income whether
reinvested or received in cash unless you are exempt from
taxation or entitled to tax deferral. Distributions paid by
the Fund from net long-term capital gains, whether received
in cash or reinvested in additional shares, are taxable as
long-term capital gain. The capital gain holding period for
this purpose is determined by the length of time the Fund has
held the security and not the length of time you have held
shares in the Fund. Long-term capital gain distributions
received by individual shareholders are taxed at a maximum
rate of 28%.
Federal tax law imposes an alternative minimum tax with
respect to both corporations and individuals based on certain
items of tax preference. Interest on certain Municipal
Obligations is included as an item of tax preference in
determining the amount of a taxpayer's alternative minimum
taxable income. To the extent that the Fund receives income
from Municipal Obligations treated as a tax preference item
for purposes of the federal alternative minimum tax, a
portion of the dividends paid by it, although otherwise
exempt from federal income tax, will be taxable to holders of
Shares to the extent that their tax liability is determined
under the alternative minimum tax. In addition, for
corporations, alternative minimum taxable income is increased
by 75% of the difference between an alternative measure of
income ("adjusted current earnings") and the amount otherwise
determined to be the alternative minimum taxable income. The
Fund will annually supply Shareholders with a report
indicating the percentage of Fund income attributable to
45
<PAGE>
Municipal Obligations that is treated as a tax preference
item for purposes of the federal alternative minimum tax.
Shareholders will be required to disclose on their federal
income tax returns the amount of tax-exempt interest earned
during the year, including exempt-interest dividends from the
Fund.
Under certain circumstances, a corporate shareholder may be
entitled to the dividends received deduction with respect to
such shareholder's taxable dividends which are attributable
to dividends received by the Fund on its Equity Securities.
A more detailed summary of the provisions of the Code and
regulations thereunder presently in effect as they directly
govern the taxation of the Fund and its Shareholders appears
in the Statement of Additional Information. These provisions
are subject to change by legislative or administrative
action, and any such change may be retroactive with respect
to Fund transactions. Shareholders are advised to consult
with their own tax advisers for more detailed information
concerning Federal income tax matters.
STATE AND LOCAL TAX MATTERS
The exemption from federal income tax for exempt-interest
dividends does not necessarily result in exemption for such
dividends under the income or other tax laws of any state or
local taxing authority. Some states exempt from state income
tax that portion of any exempt-interest dividend that is
derived from interest received by a regulated investment
company on its holdings of securities of that state and its
political subdivisions and instrumentalities. Therefore, the
Fund will report annually to its shareholders the percentage
of interest income earned by the Fund during the preceding
year on tax-exempt Municipal Obligations indicating, on a
state-by-state basis, the source of such income.
Shareholders of the Fund are advised to consult with their
own tax advisers about state and local tax matters.
46
<PAGE>
GENERAL
If you do not furnish the Fund with your correct social
security number or employer identification number, the Fund
is required by federal law to withhold federal income tax
from your distributions and redemption proceeds at a rate of
31%.
This section is not intended to be a full discussion of
federal and state income tax laws and the effect of such laws
on you. A more detailed summary appears in the Statement of
Additional Information. There may be other federal, state, or
local tax considerations applicable to a particular investor.
You are urged to consult your own tax adviser.
47
<PAGE>
NET ASSET VALUE
Net asset The Fund's net asset value per share is determined as of the
value is close of trading (currently 4:00 p.m. eastern time) on each
calculated day the New York Stock Exchange is open for business. The
daily Fund's net asset value may not be calculated on days during
which the Fund receives no orders to purchase shares and no
shares are tendered for redemption. Net asset value is
calculated by taking the fair value of the Fund's total
assets, including interest or dividends accrued but not yet
collected, less all liabilities, and dividing by the total
number of shares outstanding. The result, rounded to the
nearest cent, is the net asset value per share. In
determining net asset value, expenses are accrued and applied
daily and securities and other assets for which market
quotations are available are valued at market value. Common
stocks and other equity-type securities are valued at the
last sales price on the national securities exchange or
Nasdaq on which such securities are primarily traded;
however, securities traded on a national securities exchange
or Nasdaq for which there were no transactions on a given day
or securities not listed on a national securities exchange or
Nasdaq are valued at the most recent bid prices. Municipal
obligations are valued by a pricing service that values
portfolio securities at the mean between the quoted bid and
asked prices or the yield equivalent when quotations are
readily available. Securities for which quotations are not
readily available (which are expected to constitute a
majority of the Municipal Obligations held by the Fund) are
valued at fair value as determined by the pricing service
using methods that include consideration of the following:
yields or prices of municipal bonds of comparable quality,
type of issue, coupon, maturity and rating; indications as to
value from securities dealers; and general market conditions.
The pricing service may employ electronic data processing
techniques and/or a matrix system to determine valuations.
Debt securities having remaining maturities of 60 days or
less when pruchased are valued by the amortized cost method
when the Board of Trustees determines that the fair market
value of such securities is their amortized cost. Under this
method of valuation, a security is initially valued at its
acquisition cost, and thereafter amortization of any discount
or premium is assumed each day, regardless of the impact of
fluctuating interest rates on the market value of the
security. Regardless of the method employed to value a
particular security, all valuations are subject to review by
the Fund's Board of Trustees or its delegate who may
determine the appropriate value of a security whenever the
value as calculated is significantly different from the
previous day's calculated value.
Fund expenses
In addition to the Fund management fee paid to NIAC and the
distribution and service fees paid to Nuveen, the Fund is
responsible for its own expenses that are not covered under
such agreements, including, without limitation: custodial,
transfer agent, accounting and legal fees; interest charges;
brokerage commissions; organizational expenses; and
extraordinary expenses.
48
<PAGE>
GENERAL INFORMATION
Custodian and The Custodian of the assets of the Fund is The Chase
Transfer and Manhattan Bank, N.A. ("Chase"), 770 Broadway, New York, New
Shareholder York 10003. Chase also provides certain accounting services
Service Agent to the Fund. The Fund's transfer, shareholder services and
dividend paying agent, Shareholder Services, Inc., P.O. Box
5330, Denver, CO 80217-5330, performs bookkeeping, data
processing and administrative services for the maintenance of
shareholder accounts.
Organization
The Fund is a series of the Nuveen Investment Trust
("Trust"). The Trust is an open-end diversified management
investment company under the Investment Company Act of 1940.
The Trust was organized as a Massachusetts business trust on
May 6, 1996. The Board of Trustees is authorized to issue an
unlimited number of shares in one or more series or "Funds,"
which may be divided into classes of shares. Currently, there
are three series authorized and outstanding, each of which is
divided into four classes of shares designated as Class A
Shares, Class B Shares, Class C Shares and Class R Shares.
Each class of shares represents an interest in the same
portfolio of investments of a Fund. Each class of shares has
equal rights as to voting, redemption, dividends and
liquidation, except that each bears different class expenses,
including different distribution and service fees, and each
has exclusive voting rights with respect to any distribution
or service plan applicable to its shares. There are no
conversion, preemptive or other subscription rights, except
that Class B Shares automatically convert into Class A Shares
of the same Fund, as described above. The Board of Trustees
has the right to establish additional series and classes of
shares in the future, to change those series or classes and
to determine the preferences, voting powers, rights and
privileges thereof.
The Trust is not required and does not intend to hold annual
meetings of shareholders. Shareholders owning more than 10%
of the outstanding shares of the Trust have the right to call
a special meeting to remove Trustees or for any other
purpose.
Under Massachusetts law applicable to Massachusetts business
trusts, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for its
obligations. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or
obligations of the Trust and requires that notice of this
disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust further provides for
indemnification out of the assets and property of the Trust
for all loss and expense of any shareholder held personally
liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which
both inadequate insurance existed and the Trust itself was
unable to meet its obligations. The Trust believes the
likelihood of the occurrence of these circumstances is
remote.
49
<PAGE>
Statement of Additional Information
, 1996
Nuveen Investment Trust
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN GROWTH AND INCOME STOCK FUND
NUVEEN BALANCED STOCK AND BOND FUND
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
This Statement of Additional Information is not a prospectus. A prospectus may
be obtained from certain securities representatives, banks and other financial
institutions that have entered into sales agreements with John Nuveen & Co. In-
corporated, or from the Fund, c/o John Nuveen & Co. Incorporated, 333 West
Wacker Drive, Chicago, Illinois 60606. This Statement of Additional Information
relates to, and should be read in conjunction with, as to each Fund the Pro-
spectus for that Fund dated , 1996.
<TABLE>
<S> <C>
Table of Contents Page
- --------------------------------------------------------------------------
General Information B-2
- --------------------------------------------------------------------------
Investment Policies and Restrictions B-2
- --------------------------------------------------------------------------
Investment Policies and Techniques B-4
- --------------------------------------------------------------------------
Management B-18
- --------------------------------------------------------------------------
Fund Manager and Portfolio Manager B-20
- --------------------------------------------------------------------------
Portfolio Transactions B-21
- --------------------------------------------------------------------------
Net Asset Value B-22
- --------------------------------------------------------------------------
Tax Matters B-23
- --------------------------------------------------------------------------
Performance Information B-28
- --------------------------------------------------------------------------
Additional Information on the Purchase and Redemption of Fund Shares B-31
- --------------------------------------------------------------------------
Distribution and Service Plans B-34
- --------------------------------------------------------------------------
Independent Public Accountants and Custodian B-35
- --------------------------------------------------------------------------
Financial Statements B-35
- --------------------------------------------------------------------------
Appendix A--Ratings of Investments
- --------------------------------------------------------------------------
</TABLE>
<PAGE>
GENERAL INFORMATION
Nuveen Growth and Income Stock Fund, Nuveen Balanced Stock and Bond Fund and
Nuveen Balanced Municipal and Stock Fund (individually a "Fund" and collec-
tively the "Funds") are series of the Nuveen Investment Trust (the "Trust"), an
open-end diversified management series investment company. Each series of the
Trust represents shares of beneficial interest in a separate portfolio of secu-
rities and other assets, with its own objectives and policies. Currently, three
series of the Trust are authorized and outstanding.
Certain matters under the Investment Company Act of 1940 which must be submit-
ted to a vote of the holders of the outstanding voting securities of a series
company shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding voting securities of each se-
ries affected by such matter.
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT RESTRICTIONS
The investment objective and certain fundamental investment policies of each
Fund are described in the Prospectus for that Fund. A Fund, as a fundamental
policy, may not, without the approval of the holders of a majority of the
shares of the Fund:
(1) With respect to 75% of its total assets, purchase the securities of any is-
suer (except securities issued or guaranteed by the United States government or
any agency or instrumentality thereof) if, as a result, (i) more than 5% of the
Fund's total assets would be invested in securities of that issuer, or (ii) the
Fund would hold more than 10% of the outstanding voting securities of that is-
suer;
(2) Borrow money, except that the Fund may (i) borrow money from banks for tem-
porary or emergency purposes (but not for leverage or the purchase of invest-
ments) and (ii) make other investments or engage in other transactions permis-
sible under the Investment Company Act of 1940 that may involve a borrowing,
provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the
value of the Fund's total assets (including the amount borrowed), less the
Fund's liabilities (other than borrowings).
(3) Act as an underwriter of another issuer's securities, except to the extent
that the Fund may be deemed to be an underwriter within the meaning of the Se-
curities Act of 1933 in connection with the purchase and sale of portfolio se-
curities.
(4) Make loans to other persons, except through (i) the purchase of debt secu-
rities permissible under the Fund's investment policies, (ii) repurchase agree-
ments, or (iii) the lending of portfolio securities, provided that no such loan
of portfolio securities may be made by the Fund if, as a result, the aggregate
of such loans would exceed 33 1/3% of the value of the Fund's total assets.
(5) Purchase or sell physical commodities unless acquired as a result of owner-
ship of securities or other instruments (but this shall not prevent the Fund
from purchasing or selling options, futures contracts, or other derivative in-
struments, or from investing in securities or other instruments backed by phys-
ical commodities).
(6) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prohibit the Fund from pur-
chasing or selling securities or other instruments backed by real estate or of
issuers engaged in real estate activities).
B-2
<PAGE>
(7) Issue senior securities, except as permitted under the Investment Company
Act of 1940.
(8) Purchase the securities of any issuer if, as a result, 25% or more of the
Fund's total assets would be invested in the securities of issuers whose prin-
cipal business activities are in the same industry (except that this restric-
tion shall not be applicable to securities issued or guaranteed by the U.S.
government or any agency or instrumentality thereof and, in the case of the
Nuveen Balanced Municipal and Stock Fund, to Municipal Obligations, other than
those Municipal Obligations backed only by the assets and revenues of non-gov-
ernmental users).
If a percentage restriction is adhered to at the time of investment, a later
increase in percentage resulting from a change in market value of the invest-
ment or the total assets will not constitute a violation of that restriction.
For the purpose of applying the limitation set forth in restriction (1) above
to Municipal Obligations, an issuer shall be deemed the sole issuer of a secu-
rity when its assets and revenues are separate from other governmental entities
and its securities are backed only by its assets and revenues. Similarly, in
the case of a non-governmental user, such as an industrial corporation or a
privately owned or operated hospital, if the security is backed only by the as-
sets and revenues of the non-governmental user, then such non-governmental user
would be deemed to be the sole issuer. Where a security is also backed by the
enforceable obligation of a superior or unrelated governmental or other entity
(other than a bond insurer), it shall also be included in the computation of
securities owned that are issued by such governmental or other entity. Where a
security is guaranteed by a governmental entity or some other facility, such as
a bank guarantee or letter of credit, such a guarantee or letter of credit
would be considered a separate security and would be treated as an issue of
such government, other entity or bank. When a Municipal Obligation is insured
by bond insurance, it shall not be considered a security that is issued or
guaranteed by the insurer; instead, the issuer of such Municipal Obligation
will be determined in accordance with the principles set forth above. The fore-
going restrictions do not limit the percentage of the Nuveen Balanced Municipal
and Stock Fund's assets that may be invested in Municipal Obligations insured
by any given insurer.
The foregoing fundamental investment policies, together with the investment ob-
jective of each of the Nuveen Growth and Income Stock Fund, the Nuveen Balanced
Stock and Bond Fund and the Nuveen Balanced Municipal and Stock Fund, and cer-
tain other policies specifically identified in the prospectus, cannot be
changed without approval by holders of a "majority of the Fund's outstanding
voting shares." As defined in the Investment Company Act of 1940, this means
the vote of (i) 67% or more of the Fund's shares present at a meeting, if the
holders of more than 50% of the Fund's shares are present or represented by
proxy, or (ii) more than 50% of the Fund's shares, whichever is less.
In addition to the foregoing fundamental investment policies, each Fund is also
subject to the following non-fundamental restrictions and policies, which may
be changed by the Board of Trustees. A Fund may not:
(1) Sell securities short, unless the Fund owns or has the right to obtain se-
curities equivalent in kind and amount to the securities sold short at no added
cost, and provided that transactions in options, futures contracts, options on
futures contracts, or other derivative instruments are not deemed to constitute
selling securities short.
B-3
<PAGE>
(2) Purchase securities on margin, except that the Fund may obtain such short-
term credits as are necessary for the clearance of transactions; and provided
that margin deposits in connection with futures contracts, options on futures
contracts, or other derivative instruments shall not constitute purchasing se-
curities on margin.
(3) Pledge, mortgage or hypothecate any assets owned by the Fund except as may
be necessary in connection with permissible borrowings or investments and then
such pledging, mortgaging, or hypothecating may not exceed 33 1/3% of the
Fund's total assets at the time of the borrowing or investment.
(4) Purchase the securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political subdivisions there-
of) if, as a result, more than 5% of its total assets would be invested in the
securities of issuers that, including predecessors or unconditional guarantors,
have a record of less than three years of continuous operation. This policy
does not apply to securities of pooled investment vehicles or mortgage or as-
set-backed securities.
(5) Purchase securities of open-end or closed-end investment companies except
in compliance with the Investment Company Act of 1940 and applicable state law.
(6) Enter into futures contracts or related options if more than 30% of the
Fund's net assets would be represented by futures contracts or more than 5% of
the Fund's net assets would be committed to initial margin deposits and premi-
ums on futures contracts and related options.
(7) Invest in direct interests in oil, gas or other mineral exploration pro-
grams or leases; however, the Fund may invest in the securities of issuers that
engage in these activities.
(8) Purchase securities when borrowings exceed 5% of its total assets. If due
to market fluctuations or other reasons, the value of the Fund's assets falls
below 300% of its borrowings, the Fund will reduce its borrowings within 3
business days. To do this, the Fund may have to sell a portion of its invest-
ments at a time when it may be disadvantageous to do so.
(9) The Nuveen Growth and Income Stock Fund, the Nuveen Balanced Stock and Bond
Fund and the Nuveen Balanced Municipal and Stock Fund may not invest in illiq-
uid securities if, as a result of such investment, more than 15% of the Fund's
net assets would be invested in illiquid securities.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of the Funds' investment
objectives, policies, and techniques that are described in the Prospectus for
each Fund.
INVESTMENT IN MUNICIPAL OBLIGATIONS
Portfolio Investments
Except to the extent the Nuveen Balanced Municipal and Stock Fund invests in
temporary investments as described below, all of the Fund's investments in Mu-
nicipal Obligations will be comprised of tax- exempt Municipal Obligations that
are either (1) rated at the time of purchase within the four highest grades
(Baa or better by Moody's Investors Services, Inc. ("Moody's") or BBB or better
by Standard &
B-4
<PAGE>
Poor's Ratings Group ("S&P")), or (2) unrated but which, in the opinion of the
NIAC, have credit characteristics equivalent to, and will be of comparable
quality to, Municipal Obligations so rated; provided, however, that not more
than 20% of the Fund's investments in Municipal Obligations may be in such
unrated Municipal Obligations. The foregoing policies are fundamental policies
of the Fund. Municipal Obligations rated Baa or BBB are considered "investment
grade" securities; Municipal Obligations rated Baa are considered medium grade
obligations which lack outstanding investment characteristics and in fact have
speculative characteristics as well, while Municipal Obligations rated BBB are
regarded as having an adequate capacity to pay principal and interest. Munici-
pal Obligations rated AAA in which the Fund may invest may have been so rated
on the basis of the existence of insurance guaranteeing the timely payment,
when due, of all principal and interest. A general description of Moody's and
S&P's ratings is set forth in Appendix A hereto. The ratings of Moody's and
S&P represent their opinions as to the quality of the Municipal Obligations
they rate. It should be emphasized, however, that ratings are general and are
not absolute standards of quality. Consequently, Municipal Obligations with
the same maturity, coupon and rating may have different yields while obliga-
tions of the same maturity and coupon with different ratings may have the same
yield.
The foregoing policies as to rating of investments in securities will apply
only at the time of the purchase of a security, and the Fund will not be re-
quired to dispose of securities in the event Moody's or S&P downgrades its as-
sessment of the credit characteristics of a particular issuer.
The Fund's municipal portfolio manager pursues a value oriented approach for
selecting municipal securities by seeking to identify underrated or underval-
ued Municipal Obligations. Underrated Municipal Obligations are those whose
ratings do not, in NIAC's opinion, reflect their true value. Municipal Obliga-
tions may be underrated because of the time that has elapsed since their rat-
ing was assigned or reviewed, or because of positive factors that may not have
been fully taken into account by rating agencies, or for other similar rea-
sons. Municipal Obligations that are undervalued or that represent undervalued
municipal market sectors are Municipal Obligations that, in NIAC's opinion,
are worth more than the value assigned to them in the marketplace. Municipal
Obligations of particular types or purposes (e.g., hospital bonds, industrial
revenue bonds or bonds issued by a particular municipal issuer) may be under-
valued because there is a temporary excess of supply in that market sector, or
because of a general decline in the market price of Municipal Obligations of
the market sector for reasons that do not apply to the particular Municipal
Obligations that are considered undervalued. The Fund's investment in under-
rated or undervalued Municipal Obligations will be based on NIAC's belief that
their prices should ultimately reflect their true value.
The Fund has not established any limit on the percentage of its portfolio of
investments in Municipal Obligations that may be invested in Municipal Obliga-
tions subject to the alternative minimum tax provisions of Federal tax law.
Consequently, a substantial portion of the current income produced by the Fund
may be includable in alternative minimum taxable income. Special considera-
tions apply to corporate investors. See "Tax Matters."
Also included within the general category of Municipal Obligations described
in the Prospectus are participations in lease obligations or installment pur-
chase contract obligations (hereinafter collectively called "Municipal Lease
Obligations") of municipal authorities or entities. Although a Municipal Lease
B-5
<PAGE>
Obligation does not constitute a general obligation of the municipality for
which the municipality's taxing power is pledged, a Municipal Lease Obligation
is ordinarily backed by the municipality's covenant to budget for, appropriate
and make the payments due under the Municipal Lease Obligation. However, cer-
tain Municipal Lease Obligations contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such pur-
pose on a yearly basis. In the case of a "non-appropriation" lease, the Fund's
ability to recover under the lease in the event of non-appropriation or de-
fault will be limited solely to the repossession of the leased property, with-
out recourse to the general credit of the lessee, and disposition or releasing
of the property might prove difficult. The Fund will seek to minimize these
risks by not investing more than 20% of the assets allocated to investments in
Municipal Obligations in Municipal Lease Obligations that contain "non-appro-
priation" clauses, and by only investing in those "non-appropriation" Munici-
pal Lease Obligations where (1) the nature of the leased equipment or property
is such that its ownership or use is essential to a governmental function of
the municipality, (2) appropriate covenants will be obtained from the munici-
pal obligor prohibiting the substitution or purchase of similar equipment if
lease payments are not appropriated, (3) the lease obligor has maintained good
market acceptability in the past, and (4) the investment is of a size that
will be attractive to institutional investors.
During temporary defensive periods (e.g., times when, in NIAC's opinion, the
ability of the Fund to meet its long-term investment objectives and preserve
the asset value of the Fund may be adversely affected by significant adverse
market, economic, political, or other circumstances), and in order to keep
cash on hand fully invested, the Fund may invest any percentage of its assets
in temporary investments. Temporary investments may be either tax-exempt or
taxable. To the extent the Nuveen Balanced Municipal and Stock Fund invests in
taxable temporary investments, the Fund will not at such times be in a posi-
tion to achieve that portion of its investment objective of seeking federally
tax-exempt income. For further information, see "Short-Term Tax-Exempt Fixed
Income Securities" and "Short-Term Taxable Fixed Income Securities."
Obligations of issuers of Municipal Obligations are subject to the provisions
of bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Bankruptcy Reform Act of 1978. In addition, the obliga-
tions of such issuers may become subject to the laws enacted in the future by
Congress, state legislatures or referenda extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or upon municipalities to levy taxes. There is also the
possibility that, as a result of legislation or other conditions, the power or
ability of any issuer to pay, when due, the principal of and interest on its
Municipal Obligations may be materially affected.
Short-Term Tax-Exempt Fixed Income Securities
During certain temporary periods, in order to keep cash on hand fully invest-
ed, the Nuveen Balanced Municipal and Stock Fund may invest up to 20% of its
total assets as "temporary investments" in short-term tax-exempt fixed income
securities, and as a defensive measure in response to prevailing market condi-
tions up to 100% of its total assets in such securities. Short-term tax-exempt
fixed income securities are defined to include, without limitation, the fol-
lowing:
Bond Anticipation Notes (BANs) are usually general obligations of state and
local governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of
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long-term debt obligations or bonds. The ability of an issuer to meet its obli-
gations on its BANs is primarily dependent on the issuer's access to the long-
term municipal bond market and the likelihood that the proceeds of such bond
sales will be used to pay the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. Tax anticipation notes are usually
general obligations of the issuer. A weakness in an issuer's capacity to raise
taxes due to, among other things, a decline in its tax base or a rise in delin-
quencies, could adversely affect the issuer's ability to meet its obligations
on outstanding TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general obliga-
tions of the issuer. A decline in the receipt of projected revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal and in-
terest on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local government bodies and agencies as those
described above to commercial banks as evidence of borrowings. The purposes for
which the notes are issued are varied but they are frequently issued to meet
short-term working capital or capital-project needs. These notes may have risks
similar to the risks associated with TANs and RANs.
Tax-Exempt Commercial Paper (Municipal Paper) represents very short-term
unsecured, negotiable promissory notes, issued by states, municipalities and
their agencies. Payment of principal and interest on issues of municipal paper
may be made from various sources, to the extent the funds are available there-
from. Maturities of municipal paper generally will be shorter than the maturi-
ties of TANs, BANs or RANs. There is a limited secondary market for issues of
municipal paper.
Certain Municipal Obligations may carry variable or floating rates of interest
whereby the rate of interest is not fixed but varies with changes in specified
market rates or indices, such as a bank prime rate or a tax-exempt money market
index.
While the various types of notes described above as a group represent the major
portion of the tax-exempt note market, other types of notes are occasionally
available in the marketplace and the Fund may invest in such other types of
notes to the extent permitted under its investment objective, policies and lim-
itations. Such notes may be issued for different purposes and may be secured
differently from those mentioned above.
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SHORT-TERM INVESTMENTS
Short-Term Taxable Fixed Income Securities
The Nuveen Growth and Income Stock Fund may invest up to 35% of its total as-
sets and, for temporary defensive purposes up to 100% of its total assets, in
cash equivalents and short-term taxable fixed income securities. The Nuveen
Balanced Stock and Bond Fund may invest up to 20% of its total assets and, for
temporary defensive purposes up to 100% of its total assets, in cash equiva-
lents and short-term taxable fixed income securities. For temporary defensive
purposes the Nuveen Balanced Municipal and Stock Fund may invest up to 100% of
its total assets in cash equivalents and short-term taxable fixed income secu-
rities, although the Fund intends to invest in taxable temporary investments
only in the event that suitable tax-exempt temporary investments are not avail-
able at reasonable prices and yields. Short-term taxable fixed income securi-
ties are defined to include, without limitation, the following:
(1) U.S. government securities, including bills, notes and bonds differing as
to maturity and rates of interest, which are either issued or guaranteed by the
U.S. Treasury or by U.S. government agencies or instrumentalities. U.S. govern-
ment agency securities include securities issued by (a) the Federal Housing Ad-
ministration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, and the Government National Mortgage As-
sociation, whose securities are supported by the full faith and credit of the
United States; (b) the Federal Home Loan Banks, Federal Intermediate Credit
Banks, and the Tennessee Valley Authority, whose securities are supported by
the right of the agency to borrow from the U.S. Treasury; (c) the Federal Na-
tional Mortgage Association, whose securities are supported by the discretion-
ary authority of the U.S. government to purchase certain obligations of the
agency or instrumentality; and (d) the Student Loan Marketing Association,
whose securities are supported only by its credit. While the U.S. government
provides financial support to such U.S. government-sponsored agencies or in-
strumentalities, no assurance can be given that it always will do so since it
is not so obligated by law. The U.S. government, its agencies, and instrumen-
talities do not guarantee the market value of their securities, and consequent-
ly, the value of such securities may fluctuate.
(2) Certificates of Deposit issued against funds deposited in a bank or savings
and loan association. Such certificates are for a definite period of time, earn
a specified rate of return, and are normally negotiable. If such certificates
of deposit are non-negotiable, they will be considered illiquid securities and
be subject to the Fund's 5% restriction on investments in illiquid securities.
Pursuant to the certificate of deposit, the issuer agrees to pay the amount de-
posited plus interest to the bearer of the certificate on the dated specified
thereon. Under current FDIC regulations, the maximum insurance payable as to
any one certificate of deposit is $100,000; therefore, certificates of deposit
purchased by the Fund may not be fully insured.
(3) Bankers' acceptances which are short-term credit instruments used to fi-
nance commercial transactions. Generally, an acceptance is a time draft drawn
on a bank by an exporter or an importer to obtain a stated amount of funds to
pay for specific merchandise. The draft is then "accepted" by a bank that, in
effect, unconditionally guarantees to pay the face value of the instrument on
its maturity date. The acceptance may then be held by the accepting bank as an
asset or it may be sold in the secondary market at the going rate of interest
for a specific maturity.
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<PAGE>
(4) Repurchase agreements which involve purchases of debt securities. In such
an action, at the time the Fund purchases the security, it simultaneously
agrees to resell and redeliver the security to the seller, who also simultane-
ously agrees to buy back the security at a fixed price and time. This assures a
predetermined yield for the Fund during its holding period since the resale
price is always greater than the purchase price and reflects an agreed-upon
market rate. Such actions afford an opportunity for the Fund to invest tempo-
rarily available cash. The Fund may enter into repurchase agreements only with
respect to obligations of the U.S. government, its agencies or instrumentali-
ties; certificates of deposit; or bankers acceptances in which the Fund may in-
vest. Repurchase agreements may be considered loans to the seller, collateral-
ized by the underlying securities. The risk to the Fund is limited to the abil-
ity of the seller to pay the agreed-upon sum on the repurchase date; in the
event of default, the repurchase agreement provides that the affected Fund is
entitled to sell the underlying collateral. If the value of the collateral de-
clines after the agreement is entered into, however, and if the seller defaults
under a repurchase agreement when the value of the underlying collateral is
less than the repurchase price, the Fund could incur a loss of both principal
and interest. ICAP monitors the value of the collateral at the time the action
is entered into and at all times during the term of the repurchase agreement.
ICAP does so in an effort to determine that the value of the collateral always
equals or exceeds the agreed-upon repurchase price to be paid to the Fund. If
the seller were to be subject to a federal bankruptcy proceeding, the ability
of a Fund to liquidate the collateral could be delayed or impaired because of
certain provisions of the bankruptcy laws.
(5) Bank time deposits, which are monies kept on deposit with banks or savings
and loan associations for a stated period of time at a fixed rate of interest.
There may be penalties for the early withdrawal of such time deposits, in which
case the yields of these investments will be reduced.
(6) Commercial paper, which are short-term unsecured promissory notes, includ-
ing variable rate master demand notes issued by corporations to finance their
current operations. Master demand notes are direct lending arrangements between
the Fund and a corporation. There is no secondary market for the notes. Howev-
er, they are redeemable by the Fund at any time. ICAP will consider the finan-
cial condition of the corporation (e.g., earning power, cash flow, and other
liquidity ratios) and will continuously monitor the corporation's ability to
meet all of its financial obligations, because the Fund's liquidity might be
impaired if the corporation were unable to pay principal and interest on de-
mand. Investments in commercial paper will be limited to commercial paper rated
in the two highest categories by a major rating agency or unrated commercial
paper which is, in the opinion of ICAP, of comparable quality.
Short-Term Tax-Exempt Fixed Income Securities
For a discussion regarding these instruments, see the above-named section set
forth under Investments in Municipal Obligations.
HEDGING STRATEGIES
General Description of Hedging Strategies
Each Fund may engage in hedging activities. NIAC or ICAP may cause a Fund to
utilize a variety of financial instruments, including options, futures con-
tracts (sometimes referred to as "futures") and options on futures contracts to
attempt to hedge the Fund's holdings.
B-9
<PAGE>
Hedging instruments on securities generally are used to hedge against price
movements in one or more particular securities positions that the Fund owns or
intends to acquire. Hedging instruments on stock indices, in contrast, gener-
ally are used to hedge against price movements in broad equity market sectors
in which the Fund has invested or expects to invest. The use of hedging instru-
ments is subject to applicable regulations of the Securities and Exchange Com-
mission (the "SEC"), the several options and futures exchanges upon which they
are traded, the Commodity Futures Trading Commission (the "CFTC") and various
state regulatory authorities. In addition, the Fund's ability to use hedging
instruments will be limited by tax considerations.
General Limitations on Futures and Options Transactions
The Trust has filed a notice of eligibility for exclusion from the definition
of the term "commodity pool operator" with the CFTC and the National Futures
Association, which regulate trading in the futures markets. Pursuant to Section
4.5 of the regulations under the Commodity Exchange Act (the "CEA"), the notice
of eligibility for a Fund includes the representation that the Fund will use
futures contracts and related options solely for bona fide hedging purposes
within the meaning of CFTC regulations, provided that the Fund may hold other
positions in futures contracts and related options that do not fall within the
definition of bona fide hedging transactions (i.e., for speculative purposes)
if aggregate initial margins and premiums paid do not exceed 5% of the net as-
set value of the Fund. In addition, the Fund will enter into futures contracts
and options transactions if more than 30% of its net assets would be committed
to such instruments.
The foregoing limitations are not fundamental policies of a Fund and may be
changed without shareholder approval as regulatory agencies permit. Various ex-
changes and regulatory authorities have undertaken reviews of options and
futures trading in light of market volatility. Among the possible actions that
have been presented are proposals to adopt new or more stringent daily price
fluctuation limits for futures and options transactions and proposals to in-
crease the margin requirements for various types of futures transactions.
Asset Coverage for Futures and Options Positions
Each Fund will comply with the regulatory requirements of the SEC and the CFTC
with respect to coverage of options and futures positions by registered invest-
ment companies and, if the guidelines so require, will set aside cash, U.S.
government securities, high grade liquid debt securities and/or other liquid
assets permitted by the SEC and CFTC in a segregated custodial account in the
amount prescribed. Securities held in a segregated account cannot be sold while
the futures or options position is outstanding, unless replaced with other per-
missible assets, and will be marked-to-market daily.
Stock Index Options
Each Fund may (i) purchase stock index options for any purpose, (ii) sell stock
index options in order to close out existing positions, and/or (iii) write cov-
ered options on stock indexes for hedging purposes. Stock index options are put
options and call options on various stock indexes. In most respects, they are
identical to listed options on common stocks. The primary difference between
stock options and index options occurs when index options are exercised. In the
case of stock options, the underlying security, common stock, is delivered.
However, upon the exercise of an index option, settlement does not occur by de-
livery of the securities comprising the index. The option holder who exercises
the index option
B-10
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receives an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in
the case of a put, the exercise price of the option. This amount of cash is
equal to the difference between the closing price of the stock index and the
exercise price of the option expressed in dollars times a specified multiple.
A stock index fluctuates with changes in the market values of the stock in-
cluded in the index. For example, some stock index options are based on a broad
market index, such as the Standard & Poor's 500 or the Value Line Composite In-
dex or a narrower market index, such as the Standard & Poor's 100. Indexes may
also be based on an industry or market segment, such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on stock indexes
are currently traded on the following exchanges: the Chicago Board of Options
Exchange, the New York Stock Exchange, the American Stock Exchange, the Pacific
Stock Exchange, and the Philadelphia Stock Exchange.
A Fund's use of stock index options is subject to certain risks. Successful use
by the Funds of options on stock indexes will be subject to the ability of ICAP
to correctly predict movements in the directions of the stock market. This re-
quires different skills and techniques than predicting changes in the prices of
individual securities. In addition, a Fund's ability to effectively hedge all
or a portion of the securities in its portfolio, in anticipation of or during a
market decline through transactions in put options on stock indexes, depends on
the degree to which price movements in the underlying index correlate with the
price movements of the securities held by a Fund. Inasmuch as a Fund's securi-
ties will not duplicate the components of an index, the correlation will not be
perfect. Consequently, each Fund will bear the risk that the prices of its se-
curities being hedged will not move in the same amount as the prices of its put
options on the stock indexes. It is also possible that there may be a negative
correlation between the index and a Fund's securities which would result in a
loss on both such securities and the options on stock indexes acquired by the
Fund.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the options markets close
before the markets for the underlying securities, significant price and rate
movements can take place in the underlying markets that cannot be reflected in
the options markets. The purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. The purchase of stock index
options involves the risk that the premium and transaction costs paid by a Fund
in purchasing an option will be lost as a result of unanticipated movements in
prices of the securities comprising the stock index on which the option is
based.
Certain Considerations Regarding Options
There is no assurance that a liquid secondary market on an options exchange
will exist for any particular option, or at any particular time, and for some
options no secondary market on an exchange or elsewhere may exist. If a Fund is
unable to close out a call option on securities that it has written before the
option is exercised, the Fund may be required to purchase the optioned securi-
ties in order to satisfy its obligation under the option to deliver such secu-
rities. If a Fund is unable to effect a closing sale transaction with respect
to options on securities that it has purchased, it would have to exercise the
option in order to realize any profit and would incur transaction costs upon
the purchase and sale of the underlying securities.
B-11
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The writing and purchasing of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. Imperfect correlation between the
options and securities markets may detract from the effectiveness of attempted
hedging. Options transactions may result in significantly higher transaction
costs and portfolio turnover for the Funds.
Federal Income Tax Treatment of Options
Certain option transactions have special federal income tax results for the
Funds. Expiration of a call option written by a Fund will result in short-term
capital gain. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the security covering the call option and, in determining
such gain or loss, the option premium will be included in the proceeds of the
sale.
If a Fund writes options other than "qualified covered call options," as de-
fined in Section 1092 of the Internal Revenue Code of 1986, as amended (the
"Code"), or purchases puts, any losses on such options transactions, to the ex-
tent they do not exceed the unrealized gains on the securities covering the op-
tions, may be subject to deferral until the securities covering the options
have been sold.
In the case of transactions involving "nonequity options," as defined in Code
Section 1256, the Funds will treat any gain or loss arising from the lapse,
closing out or exercise of such positions as 60% long-term and 40% short-term
capital gain or loss as required by Section 1256 of the Code. In addition, such
positions must be marked-to-market as of the last business day of the year, and
gain or loss must be recognized for federal income tax purposes in accordance
with the 60%/40% rule discussed above even though the position has not been
terminated. A "nonequity option" includes an option with respect to any group
of stocks or a stock index if there is in effect a designation by the CFTC of a
contract market for a contract based on such group of stocks or indexes. For
example, options involving stock indexes such as the Standard & Poor's 500 and
100 indexes would be "nonequity options" within the meaning of Code Section
1256.
Futures Contracts
Each Fund may enter into futures contracts (hereinafter referred to as
"Futures" or "Futures Contracts"), including index Futures as a hedge against
movements in the equity markets, in order to establish more definitely the ef-
fective return on securities held or intended to be acquired by the Funds or
for other purposes permissible under the CEA. Each Fund's hedging may include
sales of Futures as an offset against the effect of expected declines in stock
prices and purchases of Futures as an offset against the effect of expected in-
creases in stock prices. The Funds will not enter into Futures Contracts which
are prohibited under the CEA and will, to the extent required by regulatory au-
thorities, enter only into Futures Contracts that are traded on national
futures exchanges and are standardized as to maturity date and underlying fi-
nancial instrument. The principal interest rate Futures exchanges in the United
States are the Board of Trade of the City of Chicago and the Chicago Mercantile
Exchange. Futures exchanges and trading are regulated under the CEA by the
CFTC.
An index Futures Contract is an agreement pursuant to which the parties agree
to take or make delivery of an amount of cash equal to the difference between
the value of the index at the close of the last trading day of the contract and
the price at which the index Futures Contract was originally written.
B-12
<PAGE>
Transaction costs are incurred when a Futures Contract is bought or sold and
margin deposits must be maintained. A Futures Contract may be satisfied by de-
livery or purchase, as the case may be, of the instrument or by payment of the
change in the cash value of the index. More commonly, Futures Contracts are
closed out prior to delivery by entering into an offsetting transaction in a
matching Futures Contract. Although the value of an index might be a function
of the value of certain specified securities, no physical delivery of those se-
curities is made. If the offsetting purchase price is less than the original
sale price, a gain will be realized; if it is more, a loss will be realized.
Conversely, if the offsetting sale price is more than the original purchase
price, a gain will be realized; if it is less, a loss will be realized. The
transaction costs must also be included in these calculations. There can be no
assurance, however, that the Funds will be able to enter into an offsetting
transaction with respect to a particular Futures Contract at a particular time.
If the Funds are not able to enter into an offsetting transaction, the Funds
will continue to be required to maintain the margin deposits on the Futures
Contract.
Margin is the amount of funds that must be deposited by each Fund with its cus-
todian in a segregated account in the name of the futures commission merchant
in order to initiate Futures trading and to maintain the Fund's open positions
in Futures Contracts. A margin deposit is intended to ensure the Fund's perfor-
mance of the Futures Contract. The margin required for a particular Futures
Contract is set by the exchange on which the Futures Contract is traded and may
be significantly modified from time to time by the exchange during the term of
the Futures Contract. Futures Contracts are customarily purchased and sold on
margins that may range upward from less than 5% of the value of the Futures
Contract being traded.
If the price of an open Futures Contract changes (by increase in the case of a
sale or by decrease in the case of a purchase) so that the loss on the Futures
Contract reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if
the value of a position increases because of favorable price changes in the
Futures Contract so that the margin deposit exceeds the required margin, the
broker will pay the excess to the Fund. In computing daily net asset value,
each Fund will mark to market the current value of its open Futures Contracts.
The Funds expect to earn interest income on their margin deposits.
Because of the low margin deposits required, Futures trading involves an ex-
tremely high degree of leverage. As a result, a relatively small price movement
in a Futures Contract may result in immediate and substantial loss, as well as
gain, to the investor. For example, if at the time of purchase, 10% of the
value of the Futures Contract is deposited as margin, a subsequent 10% decrease
in the value of the Futures Contract would result in a total loss of the margin
deposit, before any deduction for the transaction costs, if the account were
then closed out. A 15% decrease would result in a loss equal to 150% of the
original margin deposit, if the Futures Contract were closed out. Thus, a pur-
chase or sale of a Futures Contract may result in losses in excess of the
amount initially invested in the Futures Contract. However, a Fund would pre-
sumably have sustained comparable losses if, instead of the Futures Contract,
it had invested in the underlying financial instrument and sold it after the
decline.
Most United States Futures exchanges limit the amount of fluctuation permitted
in Futures Contract prices during a single trading day. The day limit estab-
lishes the maximum amount that the price of a
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Futures Contract may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract, no trades may be made on that day at a
price beyond that limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Con-
tract prices have occasionally moved to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt liquidation
of Futures positions and subjecting some Futures traders to substantial losses.
There can be no assurance that a liquid market will exist at a time when the
Funds seek to close out a Futures position. The Funds would continue to be re-
quired to meet margin requirements until the position is closed, possibly re-
sulting in a decline in the Funds' net asset value. In addition, many of the
contracts discussed above are relatively new instruments without a significant
trading history. As a result, there can be no assurance that an active second-
ary market will develop or continue to exist.
A public market exists in Futures Contracts covering a number of indexes, in-
cluding, but not limited to, the Standard & Poor's 500 Index, the Standard &
Poor's 100 Index, the NASDAQ 100 Index, the Value Line Composite Index and the
New York Stock Exchange Composite Index.
Options on Futures
Each Fund may also purchase or write put and call options on Futures Contracts
and enter into closing transactions with respect to such options to terminate
an existing position. A futures option gives the holder the right, in return of
the premium paid, to assume a long position (call) or short position (put) in a
Futures Contract at a specified exercise price prior to the expiration of the
option. Upon exercise of a call option, the holder acquires a long position in
the Futures Contract and the writer is assigned the opposite short position. In
the case of a put option, the opposite is true. Prior to exercise or expira-
tion, a futures option may be closed out by an offsetting purchase or sale of a
futures option of the same series.
The Funds may use options on Futures Contracts in connection with hedging
strategies. Generally, these strategies would be applied under the same market
and market sector conditions in which the Funds use put and call options on se-
curities or indexes. The purchase of put options on Futures Contracts is analo-
gous to the purchase of puts on securities or indexes so as to hedge the Funds'
securities holdings against the risk of declining market prices. The writing of
a call option or the purchasing of a put option on a Futures Contract consti-
tutes a partial hedge against declining prices of the securities which are de-
liverable upon exercise of the Futures Contract. If the futures price at expi-
ration of a written call option is below the exercise price, the Fund will re-
tain the full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's holdings of securi-
ties. If the futures price when the option is exercised is above the exercise
price, however, the Fund will incur a loss, which may be offset, in whole or in
part, by the increase in the value of the securities held by the Fund that were
being hedged. Writing a put option or purchasing a call option on a Futures
Contract serves as a partial hedge against an increase in the value of the se-
curities the Fund intends to acquire.
As with investments in Futures Contracts, each Fund is required to deposit and
maintain margin with respect to put and call options on Futures Contracts writ-
ten by it. Such margin deposits will vary depending on the nature of the under-
lying Futures Contract (and the related initial margin require-
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<PAGE>
ments), the current market value of the option, and other futures positions
held by the Fund. The Funds will set aside in a segregated account at the
Funds' custodian liquid assets, such as cash, U.S. government securities or
other high grade liquid debt obligations equal in value to the amount due on
the underlying obligation. Such segregated assets will be marked to market dai-
ly, and additional assets will be placed in the segregated account whenever the
total value of the segregated account falls below the amount due on the under-
lying obligation.
The risks associated with the use of options on Futures Contracts include the
risk that a Fund may close out its position as a writer of an option only if a
liquid secondary market exists for such options, which cannot be assured. The
Funds' successful use of options on Futures Contracts depends on ICAP's ability
to correctly predict the movement in prices of Futures Contracts and the under-
lying instruments, which may prove to be incorrect. In addition, there may be
imperfect correlation between the instruments being hedged and the Futures Con-
tract subject to the option. For additional information, see "Futures Con-
tracts."
Federal Income Tax Treatment of Futures Contracts
For federal income tax purposes, each Fund is required to recognize as income
for each taxable year its net unrealized gains and losses on Futures Contracts
as of the end of the year, as well as gains and losses actually realized during
the year. Except for transactions in Futures Contracts that are classified as
part of a "mixed straddle" under Code Section 1256, any gain or loss recognized
with respect to a Futures Contract is considered to be 60% long-term capital
gain or loss and 40% short-term capital gain or loss, without regard to the
holding period of the Futures Contract. In the case of a Futures transaction
not classified as a "mixed straddle," the recognition of losses may be deferred
to a later taxable year.
Sales of Futures Contracts that are intended to hedge against a change in the
value of securities held by a Fund may affect the holding period of such secu-
rities and, consequently, the nature of the gain or loss on such securities
upon disposition.
Each Fund intends to operate as a "Regulated Investment Company" under
Subchapter M of the Code. In order for each Fund to qualify for federal income
tax treatment as a Regulated Investment Company, gains realized on the sale or
other disposition of securities or Futures Contracts held for less than three
months must be limited to less than 30% of the Fund's annual gross income. It
is anticipated that unrealized gains on Futures Contracts which have been open
for less than three months as of the end of a Fund's fiscal year and which are
recognized for tax purposes will not be considered gains on securities held
less than three months for purposes of the 30% test.
The Funds will distribute to shareholders annually any net capital gains which
have been recognized for federal income tax purposes (including unrealized
gains at the end of the Fund's fiscal year) on Futures transactions. Such dis-
tributions will be combined with distributions of capital gains realized on the
Funds' other investments and shareholders will be advised of the nature of the
payments.
B-15
<PAGE>
OTHER INVESTMENT POLICIES AND TECHNIQUES
Illiquid Securities
The Fund may invest in illiquid securities (i.e., securities that are not read-
ily marketable). For purposes of this restriction, illiquid securities include,
but are not limited to, restricted securities ( securities the disposition of
which is restricted under the federal securities laws), securities that may
only be resold pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"), but that are deemed to be illiquid; and repur-
chase agreements with maturities in excess of seven days. However, the Fund
will not acquire illiquid securities if, as a result, such securities would
comprise more than 15% of the value of the Fund's net assets. The Board of
Trustees or its delegate has the ultimate authority to determine, to the extent
permissible under the federal securities laws, which securities are illiquid or
illiquid for purposes of this 15% limitation. The Board of Trustees has dele-
gated to Institutional Capital Corporation ("ICAP") the day-to-day determina-
tion of the illiquidity of any equity or taxable fixed-income security and to
Nuveen Institutional Advisory Corp. ("NIAC") as to any municipal security, al-
though it has retained oversight and ultimate responsibility for such determi-
nations. Although no definitive liquidity criteria are used, the Board of
Trustees has directed ICAP and NIAC to look to such factors as (i) the nature
of the market for a security (including the institutional private resale mar-
ket; the frequency of trades and quotes for the security; the number of dealers
willing to purchase or sell the security; and the amount of time normally
needed to dispose of the security, the method of soliciting offers and the me-
chanics of transfer), (ii) the terms of certain securities or other instruments
allowing for the disposition to a third party or the issuer thereof (e.g., cer-
tain repurchase obligations and demand instruments), and (iii) other permissi-
ble relevant factors.
Restricted securities may be sold only in privately negotiated transactions or
in a public offering with respect to which a registration statement is in ef-
fect under the Securities Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the
Fund may be permitted to sell a security under an effective registration state-
ment. If, during such a period, adverse market conditions were to develop, the
Fund might obtain a less favorable price than that which prevailed when it de-
cided to sell. Illiquid securities will be priced at fair value as determined
in good faith by the Board of Trustees or its delegate. If, through the appre-
ciation of illiquid securities or the depreciation of liquid securities, the
Fund should be in a position where more than 15% of the value of its net assets
are invested in illiquid securities, including restricted securities which are
not readily marketable, the affected Fund will take such steps as is deemed ad-
visable, if any, to protect liquidity.
Short Sales Against the Box
When ICAP believes that the price of a particular security held by a Fund may
decline, it may make "short sales against the box" to hedge the unrealized gain
on such security. Selling short against the box involves selling a security
which the Fund owns for delivery at a specified date in the future. The Fund
will limit its transactions in short sales against the box to 5% of its net as-
sets. In addition, the Fund will limit its transactions such that the value of
the securities of any issuer in which it is short will not exceed the lesser of
2% of the value of the Fund's net assets or 2% of the securities of any class
of the issuer. If, for example, the Fund bought 100 shares of ABC at $40 per
share in January and the price appreciates to $50 in March, the Fund might
"sell short" the 100 shares at $50 for delivery the follow
B-16
<PAGE>
ing July. Thereafter, if the price of the stock declines to $45, it will real-
ize the full $1,000 gain rather than the $500 gain it would have received had
it sold the stock in the market. On the other hand, if the price appreciates to
$55 per share, the Fund would be required to sell at $50 and thus receive a
$1,000 gain rather than the $1,500 gain it would have received had it sold the
stock in the market. The Fund may also be required to pay a premium for short
sales which would partially offset any gain.
Warrants
Each Fund may invest in warrants if, after giving effect thereto, not more than
5% of its net assets will be invested in warrants other than warrants acquired
in units or attached to other securities. Of such 5%, not more than 2% of its
assets at the time of purchase may be invested in warrants that are not listed
on the New York Stock Exchange or the American Stock Exchange. Investing in
warrants is purely speculative in that they have no voting rights, pay no divi-
dends, and have no rights with respect to the assets of the corporation issuing
them. Warrants basically are options to purchase equity securities at a spe-
cific price for a specific period of time. They do not represent ownership of
the securities but only the right to buy them. Warrants are issued by the is-
suer of the security, which may be purchased on their exercise. The prices of
warrants do not necessarily parallel the prices of the underlying securities.
When-Issued Securities
Each Fund may from time to time purchase securities on a "when-issued" basis.
The price of securities purchased on a when-issued basis is fixed at the time
the commitment to purchase is made, but delivery and payment for the securities
take place at a later date. Normally, the settlement date occurs within 45 days
of the purchase. During the period between the purchase and settlement, no pay-
ment is made by the Fund to the issuer and no interest is accrued on debt secu-
rities or dividend income is earned on equity securities. Forward commitments
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition to the risk of decline
in value of the Fund's other assets. While when-issued securities may be sold
prior to the settlement date, the Fund intends to purchase such securities with
the purpose of actually acquiring them. At the time the Fund makes the commit-
ment to purchase a security on a when-issued basis, it will record the transac-
tion and reflect the value of the security in determining its net asset value.
The Fund does not believe that net asset value will be adversely affected by
purchases of securities on a when-issued basis.
The Fund will maintain cash, U.S. government securities and high grade liquid
debt securities equal in value to commitments for when-issued securities. Such
segregated securities either will mature or, if necessary be sold on or before
the settlement date. When the time comes to pay for when-issued securities, the
Fund will meet its obligations from then available cash flow, sale of the secu-
rities held in the separate account, described above, sale of other securities
or, although it would not normally expect to do so, from the sale of the when-
issued securities themselves (which may have a market value greater or less
than the Fund's payment obligation).
Unseasoned Companies
Each Fund may not invest more than 5% of its net assets in unseasoned issuers.
While smaller companies generally have potential for rapid growth, they often
involve higher risks because they lack the management experience, financial re-
sources, product diversification, and competitive strengths of larger
B-17
<PAGE>
corporations. In addition, in many instances, the securities of smaller compa-
nies are traded only over-the-counter or on regional securities exchanges, and
the frequency and volume of their trading is substantially less than is typical
of larger companies. Therefore, the securities of smaller companies may be sub-
ject to wider price fluctuations. When making large sales, the Fund may have to
sell portfolio holdings of small companies at discounts from quoted prices or
may have to make a series of smaller sales over an extended period of time due
to the trading volume in smaller company securities.
MANAGEMENT
The management of the Trust, including general supervision of the duties per-
formed for the Fund under the Management Agreement, is the responsibility of
its Board of Trustees. The number of trustees of the Trust is fixed at [7], [3]
of whom are "interested persons" (as the term "interested persons" is defined
in the Investment Company Act of 1940) and [4] of whom are "disinterested per-
sons." The names and business addresses of the trustees and officers of the
Trust and their principal occupations and other affiliations during the past
five years are set forth below, with those trustees who are "interested per-
sons" of the Trust indicated by an asterisk.
<TABLE>
- ----------------------------------------------------------------------------------------------------
<CAPTION>
POSITION AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger* 47 Chairman Executive Vice President
333 West Wacker Drive and Trustee and Director of The John
Chicago, IL 60606 Nuveen Company (since March
1992) and John Nuveen & Co.
Incorporated; Director of
Nuveen Advisory Corp.
(since 1992) and
Nuveen Institutional
Advisory Corp. (since
1992).
- ----------------------------------------------------------------------------------------------------
Anthony T. Dean* 51 President and Trustee Executive Vice President
333 West Wacker Drive and Director of The John
Chicago, IL 60606 Nuveen Company (since March
1992) and John Nuveen & Co.
Incorporated; Director of
Nuveen Advisory Corp.
(since 1992) and
Nuveen Institutional
Advisory Corp. (since
1992).
- ----------------------------------------------------------------------------------------------------
[ ]* Trustee [ ]
- ----------------------------------------------------------------------------------------------------
[ ] Trustee [ ]
- ----------------------------------------------------------------------------------------------------
[ ] Trustee [ ]
- ----------------------------------------------------------------------------------------------------
[ ] Trustee [ ]
- ----------------------------------------------------------------------------------------------------
[ ] Trustee [ ]
- ----------------------------------------------------------------------------------------------------
Kathleen M. Flanagan 49 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co. Incorporated.
Chicago, IL 60606
</TABLE>
- --------------------------------------------------------------------------------
B-18
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
POSITION AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH TRUST DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S>
Anna R. Kucinskis 50 Vice President Vice President of John Nuveen &
333 West Wacker Drive Co. Incorporated.
Chicago, IL 60606
- ------------------------------------------------------------------------------------------------------------
Larry W. Martin 44 Vice President and Vice President (since September
333 West Wacker Drive Assistant Secretary 1992), Assistant Secretary and
Chicago, IL 60606 Assistant General Counsel of
John Nuveen & Co. Incorporated;
Vice President (since May 1993)
and Assistant Secretary of
Nuveen Advisory Corp; Vice
President (since May 1993) and
Assistant Secretary (since
January 1992) of Nuveen
Institutional Advisory Corp.;
Assistant Secretary of The John
Nuveen Company (since February
1993).
- ------------------------------------------------------------------------------------------------------------
O. Walter Renfftlen 56 Vice President and Vice President and Controller of
333 West Wacker Drive Controller The John Nuveen Company (since
Chicago, IL 60606 March 1992), John Nuveen & Co.
Incorporated, Nuveen Advisory
Corp. and Nuveen Institutional
Advisory Corp. (since April
1990).
- ------------------------------------------------------------------------------------------------------------
H. William Stabenow 61 Vice President and Vice President and Treasurer of
333 West Wacker Drive Treasurer The John Nuveen Company (since
Chicago, IL 60606 March 1992), John Nuveen & Co.
Incorporated, Nuveen Advisory
Corp. and Nuveen Institutional
Advisory Corp, (since January
1992).
- ------------------------------------------------------------------------------------------------------------
James J. Wesolowski 45 Vice President and Vice President, General Counsel
333 West Wacker Drive Secretary and Secretary of The John Nuveen
Chicago, IL 60606 Company (since March 1992), John
Nuveen & Co. Incorporated,
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.
(since April 1990).
- ------------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman 39 Vice President and Vice President (since September
333 West Wacker Drive Assistant Secretary 1992), Assistant Secretary and
Chicago, IL 60606 Assistant General Counsel of
John Nuveen & Co. Incorporated;
Vice President (since May 1993)
and Assistant Secretary of
Nuveen Advisory Corp.; Vice
President (since May 1993) and
Assistant Secretary (since
January 1992) of Nuveen
Institutional Advisory Corp.
</TABLE>
- --------------------------------------------------------------------------------
Timothy R. Schwertfeger and [ ] serve as members of the Execu-
tive Committee of the Board of Trustees. The Executive Committee, which meets
between regular meetings of the Board of Trustees, is authorized to exercise
all of the powers of the Board of Trustees.
The trustees of the Trust (other than Mr. ) are also directors or trustees,
as the case may be, of [ ] other Nuveen open-end fund portfolios and Nuveen
closed-end funds.
The following table sets forth estimated compensation to be paid by the Trust
to each of the trustees who are not designated "interested persons" during the
Trust's first full fiscal year and the total compensation that the Nuveen Funds
paid or accrued to such trustees during calendar year 1995. The Trust has no
retirement or pension plans. The officers and trustees affiliated with Nuveen
serve without any compensation from the Trust.
B-19
<PAGE>
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
ESTIMATED FROM TRUST
AGGREGATE AND FUND
COMPENSATION COMPLEX
NAME OF FROM THE PAID TO
TRUSTEE TRUST TRUSTEES
- ----------------------------------
<S> <C> <C>
[
]
</TABLE>
Each trustee who is not affiliated with NIAC or ICAP receives a $20,000 annual
retainer for serving as a director or trustee of all funds for which NIAC
serves as investment adviser or manager and a $1,000 fee per day plus expenses
for attendance at all meetings held on a day on which a regularly scheduled
Board meeting is held, a $500 fee per day plus expenses for attendance in per-
son or a $500 fee per day plus expenses for attendance by telephone at a meet-
ing held on a day on which no regular Board meeting is held and a $100 fee per
day plus expenses for attendance in person or by telephone at a meeting of the
Executive Committee held solely to declare dividends. The annual retainer, fees
and expenses are allocated among the funds for which NIAC serves as investment
adviser or manager on the basis of relative net asset sizes. The Trust requires
no employees other than its officers, all of whom are compensated by NIAC.
As of May , 1996, owned all the shares of each class of the Fund
{with shares outstanding (Class A, Class B, Class C and Class R)}.
FUND MANAGER AND PORTFOLIO MANAGER
Fund Manager. NIAC acts as the manager of each Fund, with responsibility for
the overall management of each Fund. Its address is 333 West Wacker Drive, Chi-
cago, Illinois 60606. For the Nuveen Growth and Income Stock Fund and the
Nuveen Balanced Stock and Bond Fund, NIAC has entered into a Sub-Advisory
Agreement with ICAP under which ICAP, subject to NIAC's supervision, manages
the Fund's investment portfolio. For the Nuveen Balanced Municipal and Stock
Fund, NIAC has entered into a Sub-Advisory Agreement with ICAP under which
ICAP, subject to NIAC's supervision, manages the Fund's equity investments.
NIAC is also responsible for managing the Fund's business affairs and providing
day-to-day administrative services to the Fund.
NIAC is a wholly-owned subsidiary of Nuveen, which is also the principal under-
writer of the Fund's shares. Nuveen is sponsor of the Nuveen Tax-Free Unit
Trust, a registered unit investment trust, is also the principal underwriter
for the Nuveen Mutual Funds, and has served as co-managing underwriter for the
shares of the Nuveen Exchange-Traded Funds. Over 1,000,000 individuals have in-
vested to date in Nuveen's funds and trusts. Founded in 1898, Nuveen is a sub-
sidiary of The John Nuveen Company which, in turn, is approximately 75% owned
by The St. Paul Companies, Inc. ("St. Paul"). St. Paul is located in St. Paul,
Minnesota, and is principally engaged in providing property-liability insurance
through subsidiaries.
B-20
<PAGE>
Sub-Adviser. ICAP was founded in 1970 and is located at 225 West Wacker Drive,
Suite 2400, Chicago, IL 60606. Under the Sub-Advisory Agreement for each Fund,
ICAP is compensated by NIAC for its investment advisory services with respect
to all or a portion of each Fund's assets.
With regard to Fund assets subject to the Sub-Advisory Agreement, ICAP provides
continuous advice and recommendations concerning the Fund's investments, and is
responsible for selecting the broker-dealers who execute the portfolio transac-
tions. ICAP also serves as investment adviser to the ICAP Funds, Inc. and to
pension and profit-sharing plans, and other institutional and private invest-
ors. As of May 1, 1996, ICAP had approximately $5 billion under management. Mr.
Robert H. Lyon, President of ICAP, owns shares representing 51% of the voting
rights of ICAP.
PORTFOLIO TRANSACTIONS
NIAC (with respect to transactions in Municipal Obligations) and ICAP (with re-
spect to other transactions) are responsible for decisions to buy and sell se-
curities for the Funds and for the placement of the Funds' securities business,
the negotiation of the commissions to be paid on brokered transactions, the
prices for principal trades in securities, and the allocation of portfolio bro-
kerage and principal business. It is the policy of both NIAC and ICAP to seek
the best execution at the best security price available with respect to each
transaction, and with respect to brokered transactions, in light of the overall
quality of brokerage and research services provided to the respective adviser
and its advisees. The best price to the Funds means the best net price without
regard to the mix between purchase or sale price and commission, if any. Pur-
chases may be made from underwriters, dealers, and, on occasion, the issuers.
Commissions will be paid on the Funds' futures and options transactions, if
any. The purchase price of portfolio securities purchased from an underwriter
or dealer may include underwriting commissions and dealer spreads. The Funds
may pay mark-ups on principal transactions. In selecting broker-dealers and in
negotiating commissions, the portfolio manager considers the firm's reliabili-
ty, the quality of its execution services on a continuing basis and its finan-
cial condition. Brokerage will not be allocated based on the sale of a Fund's
shares. NIAC expects that all transactions in Municipal Obligations will be ef-
fected on a principal (as opposed to an agency) basis and, accordingly, does
not expect to pay any brokerage commissions on such transactions.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)") permits
an investment adviser, under certain circumstances, to cause an account to pay
a broker or dealer who supplies brokerage and research services a commission
for effecting a transaction in excess of the amount of commission another bro-
ker or dealer would have charged for effecting the transaction. Brokerage and
research services include (a) furnishing advice as to the value of securities,
the advisability of investing, purchasing or selling securities, and the avail-
ability of securities or purchasers or sellers of securities; (b) furnishing
analyses and reports concerning issuers, industries, securities, economic fac-
tors and trends, portfolio strategy, and the performance of accounts; and (c)
effecting securities transactions and performing functions incidental thereto
(such as clearance, settlement, and custody).
In selecting brokers, ICAP considers investment and market information and
other research, such as economic, securities and performance measurement re-
search, provided by such brokers, and the quality
B-21
<PAGE>
and reliability of brokerage services, including execution capability, perfor-
mance, and financial responsibility. Accordingly, the commissions charged by
any such broker may be greater than the amount another firm might charge if
ICAP determines in good faith that the amount of such commissions is reasonable
in relation to the value of the research information and brokerage services
provided by such broker to ICAP or the Funds. ICAP believes that the research
information received in this manner provides the Funds with benefits by supple-
menting the research otherwise available to the Funds. The Management Agreement
and the Sub-Advisory Agreement provide that such higher commissions will not be
paid by the Funds unless the applicable adviser determines in good faith that
the amount is reasonable in relation to the services provided. The investment
advisory fees paid by the Funds to NIAC under the Management Agreement or the
subadvisory fees paid by NIAC to ICAP under the Sub-Advisory Agreement are not
reduced as a result of receipt by either NIAC or ICAP of research services.
NIAC and ICAP each place portfolio transactions for other advisory accounts
managed by them. Research services furnished by firms through which the Funds
effect their securities transactions may be used by NIAC and/or ICAP in servic-
ing all of its accounts; not all of such services may be used by NIAC and/or
ICAP in connection with the Funds. NIAC and ICAP believe it is not possible to
measure separately the benefits from research services to each of the accounts
(including the Funds) managed by them. Because the volume and nature of the
trading activities of the accounts are not uniform, the amount of commissions
in excess of those charged by another broker paid by each account for brokerage
and research services will vary. However, NIAC and ICAP believe such costs to
the Funds will not be disproportionate to the benefits received by the Funds on
a continuing basis. NIAC and ICAP seek to allocate portfolio transactions equi-
tably whenever concurrent decisions are made to purchase or sell securities by
the Funds and another advisory account. In some cases, this procedure could
have an adverse effect on the price or the amount of securities available to
the Funds. In making such allocations between the Fund and other advisory ac-
counts, the main factors considered by NIAC and ICAP are the respective invest-
ment objectives, the relative size of portfolio holdings of the same or compa-
rable securities, the availability of cash for investment and the size of in-
vestment commitments generally held.
Under the Investment Company Act of 1940, a Fund may not purchase portfolio se-
curities from any underwriting syndicate of which Nuveen is a member except un-
der certain limited conditions set forth in Rule 10f-3. The Rule sets forth re-
quirements relating to, among other things, the terms of a security purchased
by the Fund, the amount of securities that may be purchased in any one issue
and the assets of the Fund that may be invested in a particular issue. In addi-
tion, purchases of securities made pursuant to the terms of the Rule must be
approved at least quarterly by the Board of Trustees, including a majority of
the trustees who are not interested persons of the Trust.
NET ASSET VALUE
As stated in the Prospectuses, the net asset value of the shares of each Fund
will be determined separately for each class of a Fund's shares by Chase Man-
hattan Bank, N.A., the Trust's custodian, as of 4:00 p.m. eastern time on each
day on which the New York Stock Exchange (the "Exchange") is normally open for
trading. The Exchange is not open for trading on New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. The
B-22
<PAGE>
net asset value per share of a class of shares of a Fund will be computed by
dividing the value of the Fund's assets attributable to the class, less the li-
abilities attributable to the class, by the number of shares of the class out-
standing.
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Chapman and Cutler, counsel to the Trust.
As described in the Prospectuses, each of the Funds intends to qualify under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") for
tax treatment as a regulated investment company. In order to qualify as a regu-
lated investment company, a Fund must satisfy certain requirements relating to
the source of its income, diversification of its assets, and distributions of
its income to shareholders. First, the Fund must derive at least 90% of its an-
nual gross income (including tax-exempt interest) from dividends, interest,
payments with respect to securities loans, gains from the sale or other dispo-
sition of stock or securities, foreign currencies or other income (including
but not limited to gains from options and futures) derived with respect to its
business of investing in such stock or securities (the "90% gross income
test"). Second, a Fund must derive less than 30% of its annual gross income
from the sale or other disposition of any of the following which was held for
less than three months: stock, securities and certain options, futures, or for-
ward contracts (the "short-short test"). Third, the Fund must diversify its
holdings so that, at the close of each quarter of its taxable year, (i) at
least 50% of the value of its total assets is comprised of cash, cash items,
United States Government securities, securities of other regulated investment
companies and other securities limited in respect of any one issuer to an
amount not greater in value than 5% of the value of the Fund's total assets and
to not more than 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of the Fund's total assets is invested in
the securities of any one issuer (other than United States Government securi-
ties and securities of other regulated investment companies) or two or more is-
suers controlled by a Fund and engaged in the same, similar or related trades
or businesses.
As a regulated investment company, a Fund will not be subject to federal income
tax in any taxable year for which it distributes at least 90% of its "invest-
ment company taxable income" (which includes dividends, taxable interest, in-
come from securities lending, net short-term capital gain in excess of long-
term capital loss, and any other taxable income other than "net capital gain"
(as defined below) and is reduced by deductible expenses). A Fund may retain
for investment its net capital gain (which consists of the excess of its net
long-term capital gain over its net short-term capital loss). However, if the
Fund retains any net capital gain or any investment company taxable income, it
will be subject to federal income tax at regular corporate rates on the amount
retained. If the Fund retains any net capital gain, such Fund may designate the
retained amount as undistributed capital gains in a notice to its shareholders
who, if subject to federal income tax on long-term capital gains, (i) will be
required to include in income for federal income tax purposes, as long-term
capital gain, their shares of such undistributed amount, and (ii) will be enti-
tled to credit their proportionate shares of the tax paid by such Fund against
their federal income tax liabilities if any, and to claim refunds to the extent
the credit exceeds
B-23
<PAGE>
such liabilities. For federal income tax purposes, the tax basis of shares
owned by a shareholder of the Fund will be increased by an amount equal under
current law to 65% of the amount of undistributed net capital gains included in
the shareholder's gross income. Each Fund intends to distribute at least annu-
ally to its shareholders all or substantially all of its investment company
taxable income and net capital gain.
Treasury regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain, to elect (unless it has
made a taxable year election for excise tax purposes as discussed below) to
treat all or part of any net capital loss, any net long-term capital loss or
any net foreign currency loss incurred after October 31 as if they had been in-
curred in the succeeding year.
If any of the Funds engages in hedging transactions involving financial futures
and options, these transactions will be subject to special tax rules, the ef-
fect of which may be to accelerate income to a Fund, defer a Fund's losses,
cause adjustments in the holding periods of a Fund's securities, convert long-
term capital gains into short-term capital gains and convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
Prior to purchasing shares in one of the Funds, the impact of dividends or dis-
tributions which are expected to be or have been declared, but not paid, should
be carefully considered. Any dividend or distribution declared shortly after a
purchase of such shares prior to the record date will have the effect of reduc-
ing the per share net asset value by the per share amount of the dividend or
distribution and will be subject to federal income tax to the extent it is a
distribution of ordinary income or capital gain.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by each Fund (and received
by the shareholders) on December 31.
The redemption or exchange of the shares of a Fund normally will result in cap-
ital gain or loss to the shareholders. Generally, a shareholder's gain or loss
will be long-term gain or loss if the shares have been held for more than one
year. Present law taxes both long- and short-term capital gains of corporations
at the rates applicable to ordinary income. For non-corporate taxpayers, howev-
er, net capital gains (i.e., the excess of net long-term capital gain over net
short-term capital loss) will be taxed at a maximum marginal rate of 28%, while
short-term capital gains and other ordinary income will be taxed at a maximum
marginal rate of 39.6%. Because of the limitations on itemized deductions and
the deduction for personal exemptions applicable to higher income taxpayers,
the effective tax rate may be higher in certain circumstances.
All or a portion of a sales load paid in purchasing shares of a Fund cannot be
taken into account for purposes of determining gain or loss on the redemption
or exchange of such shares within 90 days after their purchase to the extent
shares of a Fund or another fund are subsequently acquired without payment of a
sales load or with the payment of a reduced sales load pursuant to the rein-
vestment or exchange privilege. Any disregarded portion of such load will re-
sult in an increase in the shareholder's tax basis in the shares subsequently
acquired. Moreover, losses recognized by a shareholder on the redemp
B-24
<PAGE>
tion or exchange of shares of a Fund held for six months or less are disallowed
to the extent of any distribution of exempt-interest dividends received with
respect to such shares and, if not disallowed, such losses are treated as long-
term capital losses to the extent of any distributions of long-term capital
gains made with respect to such shares. In addition, no loss will be allowed on
the redemption or exchange of shares of a Fund if the shareholder purchases
other shares of such Fund (whether through reinvestment of distributions or
otherwise) or the shareholder acquires or enters into a contract or option to
acquire securities that are substantially identical to shares of a Fund within
a period of 61 days beginning 30 days before and ending 30 days after such re-
demption or exchange. If disallowed, the loss will be reflected in an adjust-
ment to the basis of the shares acquired.
In order to avoid a 4% federal excise tax, each Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on October 31 of such year) and 100% of
any taxable ordinary income and the excess of realized capital gains over real-
ized capital losses for the prior year that was not distributed during such
year and on which such Fund paid no federal income tax. For purposes of the ex-
cise tax, a regulated investment company may reduce its capital gain net income
(but not below its net capital gain) by the amount of any net ordinary loss for
the calendar year. The Funds intend to make timely distributions in compliance
with these requirements and consequently it is anticipated that they generally
will not be required to pay the excise tax.
If in any year a Fund should fail to qualify under Subchapter M for tax treat-
ment as a regulated investment company, the Fund would incur a regular corpo-
rate federal income tax upon its income for that year (other than interest in-
come from Municipal Obligations), and distributions to its shareholders would
be taxable to shareholders as ordinary dividend income for federal income tax
purposes to the extent of the Fund's available earnings and profits.
The Funds are required in certain circumstances to withhold 31% of taxable div-
idends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Funds their correct taxpayer identification number
(in the case of individuals, their social security number) and certain certifi-
cations, or who are otherwise subject to backup withholding.
Shareholders who are non-resident aliens are subject to U.S. withholding tax on
ordinary income dividends at a rate of 30% or such lower rate as prescribed by
an applicable tax treaty.
A corporate shareholder will generally be entitled to a 70% dividends received
deduction with respect to any portion of such shareholder's ordinary income
dividends which are attributable to dividends received by a Fund on certain Eq-
uity Securities (other than corporate shareholders, such as "S" corporations,
which are not eligible for the deduction because of their special characteris-
tics and other than for purposes of special taxes such as the accumulated earn-
ings tax and the personal holding corporation tax). A Fund will designate the
portion of any taxable dividend which is eligible for this deduction. However,
a corporate shareholder should be aware that Sections 246 and 246A of the Code
impose additional limitations on the eligibility of dividends for the 70% divi-
dends received deduction. These limitations include a requirement that stock
(and therefore Shares of a Fund) must generally be held at least 46 days (as
B-25
<PAGE>
determined under Section 246(c) of the Code). Regulations have been issued
which address special rules that must be considered in determining whether the
46 day holding requirement is met. Moreover, the allowable percentage of the
deduction will generally be reduced from 70% if a corporate shareholder owns
Shares of the Fund the financing of which is directly attributable to indebted-
ness incurred by such corporation. It should be noted that various legislative
proposals that would affect the dividends received deduction have been intro-
duced. To the extent dividends received by a Fund are attributable to foreign
corporations, a corporate shareholder will not be entitled to the dividends re-
ceived deduction with respect to its share of such foreign dividends since the
dividends received deduction is generally available only with respect to divi-
dends paid by domestic corporations. It should be noted that payments to a Fund
of dividends on Equity Securities that are attributable to foreign corporations
may be subject to foreign withholding taxes. Corporate shareholders should con-
sult with their tax advisers with respect to the limitations on, and possible
modifications to, the dividends received deduction.
Nuveen Balanced Municipal and Stock Fund Tax Matters
In addition to the matters discussed above, the Nuveen Balanced Municipal and
Stock Fund intends to qualify to pay "exempt-interest" dividends as defined un-
der the Code. Under the Code, at the close of each quarter of its taxable year,
if at least 50% of the value of its total assets consists of Municipal Obliga-
tions, the Fund shall be qualified to pay exempt-interest dividends to its
Shareholders. Exempt-interest dividends are dividends or any part thereof
(other than a capital gain dividend) paid by the Fund which are attributable to
interest on Municipal Obligations (net of expenses and any bond premium amorti-
zation with respect to Municipal Obligations) and are so designated by the
Fund. Exempt-interest dividends will be exempt from federal income tax, subject
to the possible application of the federal alternative minimum tax. Insurance
proceeds received by the Fund under any insurance policies in respect of sched-
uled interest payments on defaulted Municipal Obligations, as described herein,
will be excludable from federal gross income under Section 103(a) of the Code
provided that, at the time such policies are purchased, the amounts paid for
such policies are reasonable, customary and consistent with the reasonable ex-
pectation that the respective issuer of the Municipal Obligations, rather than
the insurer, will pay debt service on the Municipal Obligations; in the case of
non-appropriation by a political subdivision, however, there can be no assur-
ance that payments made by the insurer representing interest on such "non-ap-
propriation" Municipal Lease Obligations will be excludable from gross income
for federal income tax purposes. If the Fund purchases a Municipal Obligation
at a market discount, any gain realized by the Fund upon sale or redemption of
the Municipal Obligation will be treated as taxable interest income to the ex-
tent such gain does not exceed the market discount, and any gain realized in
excess of the market discount generally will be treated as capital gain. The
Fund will be required by the Code to allocate its expenses proportionately be-
tween its tax-exempt income and taxable income (excluding net realized long-
term capital gains). Distributions to shareholders by the Fund of net income
received, if any, from taxable dividends market discount on Municipal Obliga-
tions treated as interest and net short-term capital gains, if any, realized by
the Fund will be taxable to shareholders as ordinary income. Distributions of
net realized long-term capital gains, if any, are taxable as long-term capital
gains, regardless of the length of time the shareholder has owned shares of the
Fund and regardless of whether the distribution is received in additional
shares or in cash.
In general, market discount is the amount (if any) by which the stated redemp-
tion price at maturity exceeds the Fund's purchase price (except to the extent
that such difference, if any, is attributable to
B-26
<PAGE>
original issue discount not yet accrued). Accretion of market discount is tax-
able as ordinary income; under prior law the accretion had been treated as cap-
ital gain. Market discount that accretes while the Fund holds a Municipal Obli-
gation would be recognized as ordinary income by the Fund when principal pay-
ments are received on the Municipal Obligation, upon sale or at redemption (in-
cluding early redemption) or at the Fund's election, as such market discount
accrues. Market discount income recognized by the Fund will result in taxable
dividends to the shareholders.
For purposes of computing the alternative minimum tax for individuals and cor-
porations and the Superfund tax for corporations, interest on certain private
activity bonds (which includes most industrial and housing bonds) issued on or
after August 8, 1986 is included as a preference item. The Fund will annually
supply shareholders with a report indicating the percentage of Fund income at-
tributable to Municipal Obligations that is treated as a tax preference item
for purposes of the federal alternative minimum tax. Moreover, for corpora-
tions, the alternative minimum taxable income is increased by 75% of the dif-
ference between an alternative measure of income ("adjusted current earnings")
and the amount otherwise determined to be the alternative minimum taxable in-
come. Interest on all Municipal Obligations, and therefore all exempt-interest
dividends received from the Fund, are included in calculating adjusted current
earnings. In addition, a corporate shareholder cannot take into account the
dividends received deductions in determining its adjusted current earnings.
For taxable years beginning before 1996, the Code imposes a separate tax on
corporations at a rate of 0.12% of the excess of such corporation's "modified
alternative minimum taxable income" over $2,000,000. A portion of the tax-ex-
empt interest, including exempt-interest dividends from the Fund, and taxable
dividends are includable in modified alternative minimum taxable income. This
tax will be imposed even if the corporation is not required to pay an alterna-
tive minimum tax because the corporation's regular income tax liability exceeds
its minimum tax liability.
Individuals whose "modified income" exceeds a base amount will be subject to
federal income tax on up to one-half of their social security benefits. Modi-
fied income currently includes adjusted gross income, one-half of social secu-
rity benefits and tax-exempt interest, including exempt-interest dividends
from the Fund. In addition, individuals whose modified income exceeds certain
base amounts are required to include in gross income up to 85% of their social
security benefits.
The interest on private activity bonds in most instances is not federally tax-
exempt to a person who is a "substantial user" of a facility financed by such
bonds or a "related person" of such "substantial user." As a result, the Fund
may not be an appropriate investment for shareholders who are considered either
a "substantial user" or a "related person" within the meaning of the Code. In
general, a "substantial user" of a facility includes a "non-exempt person who
regularly uses a part of such facility in his trade or business." "Related per-
sons" are in general defined to include persons among whom there exists a rela-
tionship, either by family or business, which would result in a disallowance of
losses in transactions among them under various provisions of the Code (or if
they are members of the same controlled group of corporations under the Code),
including a partnership and each of its partners (and their spouses and minor
children), an S corporation and each of its shareholders (and their spouses and
minor children) and various combinations of these relationships. The foregoing
is not a complete statement of all of the provisions of the Code relating to
the definitions of "substantial user" and "related person." For additional in-
formation, investors should consult their tax advisers before investing in the
Fund.
B-27
<PAGE>
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of a fund that distributes exempt-interest dividends is
not deductible. Under rules used by the IRS for determining when borrowed funds
are considered used for the purpose of purchasing or carrying particular as-
sets, the purchase or ownership of shares may be considered to have been made
with borrowed funds even though such funds are not directly traceable to the
purchase or ownership of shares.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
federal income taxation of the Funds and their shareholders. For complete pro-
visions, reference should be made to the pertinent Code sections and Treasury
Regulations. The Code and Treasury Regulations are subject to change by legis-
lative or administrative action, and any such change may be retroactive with
respect to Fund transactions. Shareholders are advised to consult their own tax
advisers for more detailed information concerning the federal taxation of the
Funds and the income tax consequences to their shareholders.
PERFORMANCE INFORMATION
As explained in the Prospectuses, the historical investment performance of the
Funds may be shown in the form of "average annual total return," and "cumula-
tive total return" each of which will be calculated separately for each class
of shares.
The average annual total return quotation is computed in accordance with a
standardized method prescribed by SEC rules. The average annual total return
for a specific period is found by taking a hypothetical, $1,000 investment
("initial investment") in Fund shares on the first day of the period, reducing
the amount to reflect the maximum sales charge, and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted
from the result, which is then expressed as a percentage. The calculation as-
sumes that all income and capital gains distributions have been reinvested in
Fund shares at net asset value on the reinvestment dates during the period.
Calculation of cumulative total return is not subject to a prescribed formula.
Cumulative total return for a specific period is calculated by first taking a
hypothetical initial investment in Fund shares on the first day of the period,
deducting (in some cases) the maximum sales charge, and computing the "redeem-
able value" of that investment at the end of the period. The cumulative total
return percentage is then determined by subtracting the initial investment from
the redeemable value and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
and capital gains distributions by a Fund have been reinvested at net asset
value on the reinvestment dates during the period. Cumulative total return may
also be shown as the increased dollar value of the hypothetical investment over
the period. Cumulative total return calculations that do not include the effect
of the sales charge would be reduced if such charge were included.
From time to time, each Fund may compare its risk-adjusted performance with
other investments that may provide different levels of risk and return. For ex-
ample, a Fund may compare its risk level, as measured by the variability of its
periodic returns, or its RISK-ADJUSTED TOTAL RETURN, with those of other
B-28
<PAGE>
funds or groups of funds. Risk-adjusted total return would be calculated by ad-
justing each investment's total return to account for the risk level of the in-
vestment.
The risk level for a class of shares of a Fund, and any of the other invest-
ments used for comparison, would be evaluated by measuring the variability of
the investment's return, as indicated by the standard deviation of the invest-
ment's monthly returns over a specified measurement period (e.g., two years).
An investment with a higher standard deviation of monthly returns would indi-
cate that a fund had greater price variability, and therefore greater risk,
than an investment with a lower standard deviation.
THE RISK-ADJUSTED TOTAL RETURN for a class of shares of a Fund and for other
investments over a specified period would be evaluated by dividing (a) the re-
mainder of the investment's annualized two-year total return minus the
annualized total return of an investment in Treasury bill securities (essen-
tially a risk-free return) over that period, by (b) the standard deviation of
the investment's monthly returns for the period. This ratio is sometimes re-
ferred to as the "Sharpe measure" of return. An investment with a higher Sharpe
measure would be regarded as producing a higher return for the amount of risk
assumed during the measurement period than an investment with a lower Sharpe
measure.
Class A Shares of each Fund are sold at net asset value plus a current maximum
sales charge of 5.25% of the offering price. This current maximum sales charge
will typically be used for purposes of calculating performance figures. Returns
and net asset value of each class of shares of the Funds will fluctuate. Fac-
tors affecting the performance of the Funds include general market conditions,
operating expenses and investment management. Any additional fees charged by a
securities representative or other financial services firm would reduce returns
described in this section. Shares of the Funds are redeemable at net asset val-
ue, which may be more or less than original cost.
In reports or other communications to shareholders or in advertising and sales
literature, a Fund may also compare its performance with that of: (1) the Con-
sumer Price Index and (2) equity mutual funds or mutual fund indexes as re-
ported by Lipper Analytical Services, Inc. ("Lipper"), Morningstar, Inc.
("Morningstar"), Wiesenberger Investment Companies Service ("Wiesenberger") and
CDA Investment Technologies, Inc. ("CDA") or similar independent services which
monitor the performance of mutual funds, or other industry or financial publi-
cations such as Barron's, Changing Times, Forbes and Money Magazine. Perfor-
mance comparisons by these indexes, services or publications may rank mutual
funds over different periods of time by means of aggregate, average, year-by-
year, or other types of total return and performance figures. Any given perfor-
mance quotation or performance comparison should not be considered as represen-
tative of the performance of the Funds for any future period.
There are differences and similarities between the investments which the Funds
may purchase and the investments measured by the indexes and reporting services
which are described herein. The Consumer Price Index is generally considered to
be a measure of inflation. Lipper, Morningstar, Wiesenberger and CDA are widely
recognized mutual fund reporting services whose performance calculations are
based upon changes in net asset value with all dividends reinvested and which
do not include the effect of any sales charges.
B-29
<PAGE>
NUVEEN GROWTH AND INCOME STOCK FUND
THE FUND DOES NOT HAVE ANY PRIOR OPERATING HISTORY. THE TABLE BELOW PRESENTS
ANNUAL INVESTMENT RETURNS FOR THE ICAP DISCRETIONARY EQUITY COMPOSITE BETWEEN
DECEMBER 31, 1985 AND DECEMBER 31, 1995. THE ICAP DISCRETIONARY EQUITY COMPOS-
ITE REPRESENTS THE COMPOSITE PERFORMANCE OF THE 35 MANAGED ACCOUNTS TOTALLING
APPROXIMATELY $2.5 BILLION FOR WHICH ICAP SERVES AS INVESTMENT ADVISER AND THAT
HAVE THE SAME INVESTMENT OBJECTIVES AND POLICIES AS THE FUND.
<TABLE>
<CAPTION>
1ST
QUARTER ANNUAL TOTAL RETURNS FOR THE YEAR ENDING DECEMBER 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ICAP Discretionary Eq-
uity Composite (Gross). 8.72 38.16 1.95 16.58 7.38 33.63 1.47 33.54 9.37 29.08 16.09
ICAP Discretionary Eq-
uity Composite (Net)... 8.42 36.63 0.74 15.24 6.12 32.15 0.26 32.05 8.09 27.63 14.75
S&P 500................. 5.44 37.43 1.31 9.99 7.67 30.55 (3.17) 31.49 16.81 5.23 18.47
Morningstar Growth and
Income Average......... 5.34 31.34 1.81 15.37 11.14 25.81 (3.91) 22.65 19.94 6.11 18.23
</TABLE>
NUVEEN BALANCED STOCK AND BOND FUND
THE FUND DOES NOT HAVE ANY PRIOR OPERATING HISTORY. THE TABLE BELOW PRESENTS
ANNUAL INVESTMENT RETURNS FOR THE ICAP BALANCED COMPOSITE BETWEEN DECEMBER 31,
1985 AND DECEMBER 31, 1995. THE ICAP BALANCED COMPOSITE REPRESENTS THE COMPOS-
ITE PERFORMANCE OF THE 8 MANAGED ACCOUNTS TOTALLING APPROXIMATELY $350 MILLION
FOR WHICH ICAP SERVES AS INVESTMENT ADVISER AND THAT HAVE THE SAME INVESTMENT
OBJECTIVES AND POLICIES AS THE FUND.
<TABLE>
<CAPTION>
1ST
QUARTER ANNUAL TOTAL RETURNS FOR THE YEAR ENDING DECEMBER 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ICAP Balanced Composite
(Gross)................ 4.45 29.09 0.21 13.81 7.34 31.04 2.69 31.14 8.57 27.52 15.75
ICAP Balanced Composite
(Net).................. 4.18 27.76 (0.89) 12.61 6.18 29.70 1.57 29.80 7.40 26.20 14.52
Balanced Index.......... 2.98 26.60 (0.22) 9.11 7.34 22.27 3.34 21.93 11.48 6.15 15.97
Morningstar Balanced Av-
erage.................. 2.50 26.35 2.53 15.44 9.57 28.92 (0.71) 21.09 13.52 4.07 20.02
</TABLE>
The gross performance results of the ICAP Discretionary Equity Composite and
the ICAP Balanced Composite reflect the investment performance of the respec-
tive composites before deduction of any investment advisory fees or other ex-
penses. The net performance results of the ICAP Discretionary Equity Composite
and the ICAP Balanced Composite reflect the deduction of the projected annual
operating expenses for Class A shares of the Nuveen Growth and Income Stock
Fund and the Nuveen Balanced Stock and Bond Fund, respectively, as summarized
in the Summary of Fund Expenses section of each Fund's prospectus. The Standard
& Poor's 500 Composite Stock Price Index (the "S&P 500") is a widely-recog-
nized, unmanaged index of common stock prices. S&P 500 returns assume reinvest-
ment of all dividends paid by the stocks included in the index, but do not in-
clude brokerage commissions or other fees an investor would incur by investing
in the portfolio of stocks comprising the index. The Morningstar Growth and In-
come Average represents the composite returns of the 504 funds comprising the
Morningstar Growth and Income category and assumes reinvestment of all fund
dividends and distributions. The Balanced Fund Index represents the investment
performance of an unmanaged index
B-30
<PAGE>
comprised 60% of the S&P 500 and 40% of the Lehman Brothers Intermediate Gov-
ernment Index (the "Lehman Index"). The Lehman Index is an unmanaged index of
all public obligations of the U.S. Treasury, U.S. Government agencies, quasi-
federal corporations and corporate debt guaranteed by the U.S. Government with
maturities between one and ten years and an outstanding par value of at least
$100 million.
TOTAL RETURNS REFLECT PAST PERFORMANCE AND ARE NOT PREDICTIVE OF FUTURE RE-
SULTS.
ADDITIONAL INFORMATION ON THE PURCHASE AND
REDEMPTION OF FUND SHARES
As described in the Prospectuses, each Fund has adopted a Flexible Sales Charge
Program which provides you with alternative ways of purchasing Fund shares
based upon your individual investment needs and preferences. You may purchase
Class A Shares at a price equal to their net asset value plus an up-front sales
charge. For information regarding the up-front sales charge on Class A shares,
see the table under "How to Buy Fund Shares" of the Prospectus. Set forth is an
example of the method of computing the offering price of the Class A shares of
each of the Funds. The example assumes a purchase on July 29, 1996 of Class A
shares from a Fund aggregating less than $50,000 subject to the schedule of
sales charges set forth in the Prospectus at a price based upon the net asset
value of the Class A shares.
<TABLE>
<S> <C>
Net Asset Value per share.............................................. $10.000
Per Share Sales Charge--5.25% of public offering price (5.54% of net
asset value per share)................................................ $ 0.554
Per Share Offering Price to the Public................................. $10.554
</TABLE>
You may purchase Class B Shares without any up-front sales charge at a price
equal to their net asset value, but subject to a contingent deferred sales
charge ("CDSC") if you redeem shares within six years of purchase. The CDSC
will be waived (a) in the event of the total disability (as evidenced by a de-
termination by the federal Social Security Administration) of the shareholder
(including a registered joint owner) occurring after the purchase of the shares
being redeemed, (b) in the event of the death of the shareholder (including a
registered joint owner), (c) for redemptions made pursuant to a systematic
withdrawal plan, (d) for redemptions made pursuant to an IRA systematic with-
drawal based on the shareholder's life expectancy including, but not limited
to, substantially equal periodic payments described in Internal Revenue Code
Section 72(t)(2)(A)(iv) prior to age 59 and (e) for redemptions to satisfy re-
quired minimum distributions after age 70 from an IRA account (with the maximum
amount subject to this waiver being based only upon the shareholder's Nuveen
IRA accounts). The CDSC will also be waived in connection with the following
redemptions of shares held by employer sponsored employee benefit plans main-
tained on the subaccount recordkeeping system made available by the Shareholder
Service Agent: (a) redemptions to satisfy participant loan advances (note than
loan repayments constitute new purchases for purposes of the contingent de-
ferred sales charge and the conversation privilege), (b) redemptions in connec-
tion with retirement distributions (limited at any one time to 10% of the total
value of plan assets invested in a Fund), (c) redemptions in connection with
distributions qualifying under the hardship provisions of the Internal Revenue
Code and (d) redemptions representing returns of excess contributions to such
plans. Class B Shares are also subject to an annual distribution fee designed
to compensate Authorized Dealers over time for the sale of Fund shares. Class B
Shares automatically convert to Class A Shares eight years after purchase.
B-31
<PAGE>
You may purchase Class C Shares without any up-front sales charge at a price
equal to their net asset value, but subject to an annual distribution fee de-
signed to compensate Authorized Dealers over time for the sale of Fund shares.
Class C Shares are subject to a contingent deferred sales charge for redemption
within 12 months of purchase. The CDSC will be waived for redemption following
the disability (as determined in writing by the Social Security Administration)
or death of the shareholder. Class A Shares, Class B Shares and Class C Shares
are all subject to annual service fees, which are used to compensate Authorized
Dealers for providing you with ongoing financial advice and other services.
Each class of shares of a Fund represents an interest in the same portfolio of
investments. Each class of shares is identical in all respects except that each
class bears its own class expenses, including administration and distribution
expenses, and each class has exclusive voting rights with respect to any dis-
tribution or service plan applicable to its shares. In addition, the Class B
Shares are subject to a conversion feature, as described below. As a result of
the differences in the expenses borne by each class of shares, net income per
share, dividends per share and net asset value per share will vary among a
Fund's classes of shares.
The expenses to be borne by specific classes of shares may include (i) transfer
agency fees attributable to a specific class of shares, (ii) printing and post-
age expenses related to preparing and distributing materials such as share-
holder reports, prospectuses and proxy statements to current shareholders of a
specific class of shares, (iii) Securities and Exchange Commission ("SEC") and
state securities registration fees incurred by a specific class of shares, (iv)
the expense of administrative personnel and services required to support the
shareholders of a specific class of shares, (vi) litigation or other legal ex-
penses relating to a specific class of shares, (vi) directors' fees or expenses
incurred as a result of issues relating to a specific class of shares, (vii)
accounting expenses relating to a specific class of shares and (viii) any addi-
tional incremental expenses subsequently identified and determined to be prop-
erly allocated to one or more classes of shares.
Each Fund has special purchase programs under which certain persons may pur-
chase Class A Shares at reduced sales charges. One such program is available to
members of a "qualified group."
An individual who is a member of a "qualified group" may purchase Class A
Shares of a Fund (or any other Nuveen Fund with respect to which a sales charge
is imposed), at the reduced sales charge applicable to the group taken as a
whole. A "qualified group" is one which (i) has been in existence for more than
six months; (ii) has a purpose other than investment; (iii) has five or more
participating members; (iv) has agreed to include sales literature and other
materials related to the Fund in publications and mailings to members; (v) has
agreed to have its group administrator submit a single bulk order and make pay-
ment with a single remittance for all investments in a Fund during each invest-
ment period by all participants who choose to invest in the Fund; and (vi) has
agreed to provide the Funds' transfer
agent with appropriate backup data for each participant of the group in a for-
mat fully compatible with the transfer agent's processing system.
The "amount" of a share purchase by a participant in a group purchase program
for purposes of determining the applicable sales charge is (i) the aggregate
value of all shares of the Funds (and all other Nuveen Funds with respect to
which a sales charge is imposed) currently held by participants of the group,
plus (ii) the amount of shares currently being purchased.
B-32
<PAGE>
Special Sales Charge Waivers. Class A Shares of the Funds may be purchased at
net asset value without a sales charge, and Class R Shares may be purchased, by
the following categories of investors:
. officers, trustees and retired trustees of the Trust;
. bona fide, full-time and retired employees of Nuveen or ICAP, any parent
company of Nuveen, and subsidiaries thereof, or their immediate family mem-
bers (as defined below);
. any person who, for at least 90 days, has been an officer, director or bona
fide employee of any Authorized Dealer, or their immediate family members;
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates;
. bank or broker-affiliated trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in a
fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing through a mutual fund purchase program sponsored by a
broker-dealer that offers a selected group of mutual funds either without a
transaction fee or with an asset-based fee or a fixed fee that does not vary
with the amount of the purchase. In order to qualify, such purchase program
must offer a full range of mutual fund related services and shareholder ac-
count servicing capabilities, including establishment and maintenance of
shareholder accounts, addressing investor inquiries regarding account activ-
ity and investment performances, processing of trading and dividend activity
and generation of monthly account statements and year-end tax reporting; and
. registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees to their custom-
ers for financial planning, investment advisory or asset management servic-
es, or provide such services in connection with the establishment of an in-
vestment account for which a comprehensive "wrap fee" charge is imposed.
To help advisers and investors better understand and most efficiently use the
Funds to reach their investment goals, the Funds may advertise and create spe-
cific investment programs and systems. For example, this may include informa-
tion on how to use the Funds to accumulate assets for future education needs or
periodic payments such as insurance premiums. The Funds may produce software or
additional sales literature to promote the advantages of using the Funds to
meet these and other specific investor needs.
Exchanges of shares of a Fund for shares of a Nuveen money market fund may be
made on days when both funds calculate a net asset value and make shares avail-
able for public purchase. Shares of the Nuveen money market funds may be pur-
chased on days on which the Federal Reserve Bank of Boston is normally open for
business. In addition to the holidays observed by the Fund, the Nuveen money
market funds observe and will not make fund shares available for purchase on
the following holidays: Martin Luther King's Birthday, Columbus Day and Veter-
ans Day.
For more information on the procedure for purchasing shares of the Funds and on
the special purchase programs available thereunder, see "How to Buy Fund
Shares" in the Prospectus.
B-33
<PAGE>
Nuveen serves as the principal underwriter of the shares of the Funds pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Trust ("Distribution Agreement"). Pursuant to the Distribution Agreement,
the Trust appointed Nuveen to be its agent for the distribution of the Funds'
shares on a continuous offering basis. Nuveen sells shares to or through bro-
kers, dealers, banks or other qualified financial intermediaries (collectively
referred to as "Dealers"), or others, in a manner consistent with the then ef-
fective registration statement of the Trust. Pursuant to the Distribution
Agreement, Nuveen, at its own expense, finances certain activities incident to
the sale and distribution of the Funds' shares, including printing and distrib-
uting of prospectuses and statements of additional information to other than
existing shareholders, the printing and distributing of sales literature, ad-
vertising and payment of compensation and giving of concessions to dealers.
Nuveen receives for its services the excess, if any, of the sales price of a
Fund's shares less the net asset value of those shares, and reallows a majority
or all of such amounts to the Dealers who sold the shares; Nuveen may act as
such a Dealer. Nuveen also receives compensation pursuant to a distribution
plan adopted by the Trust pursuant to Rule 12b-1 and described herein under
"Distribution and Service Plans." Nuveen receives any CDSCs imposed on redemp-
tions of Shares, but any amounts as to which a reinstatement privilege is not
exercised are set off against and reduce amounts otherwise payable to Nuveen
pursuant to the distribution plan.
DISTRIBUTION AND SERVICE PLANS
Each Fund has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the In-
vestment Company Act of 1940, which provides that Class B Shares and Class C
Shares will be subject to an annual distribution fee, and that Class A Shares,
Class B Shares and Class C Shares will all be subject to an annual service fee.
Class R Shares will not be subject to either distribution or service fees.
The distribution fee applicable to Class B Shares, and Class C Shares under
each Fund's Plan will be payable to reimburse Nuveen for services and expenses
incurred in connection with the distribution of such Shares. These expenses in-
clude payments to Authorized Dealers, including Nuveen, who are brokers of rec-
ord with respect to the Shares, as well as, without limitation, expenses of
printing and distributing prospectuses to persons other than shareholders of
the Fund, expenses of preparing, printing and distributing advertising and
sales literature and reports to shareholders used in connection with the sale
of such Shares, certain other expenses associated with the distribution of such
Shares, and any distribution-related expenses that may be authorized from time
to time by the Board of Trustees.
The service fee applicable to Class A Shares, Class B Shares and Class C Shares
under each Fund's Plan will be payable to Authorized Dealers in connection with
the provision of ongoing account services to shareholders. These services may
include establishing and maintaining shareholder accounts, answering share-
holder inquiries and providing other personal services to shareholders.
Each Fund may spend up to .25 of 1% per year of the average daily net assets of
Class A Shares as a service fee under the Plan as applicable to Class A Shares.
Each Fund may spend up to .75 of 1% per year of the average daily net assets of
each of the Class B Shares and Class C Shares as a distribution fee and up to
.25 of 1% per year of the average daily net assets of each of the Class B
Shares and Class C Shares as a service fee under the Plan as applicable to such
classes.
B-34
<PAGE>
Under each Fund's Plan, the Fund will report quarterly to the Board of Trustees
for its review all amounts expended per class of shares under the Plan. The
Plan may be terminated at any time with respect to any class of shares, without
the payment of any penalty, by a vote of a majority of the Trustees who are not
"interested persons" and who have no direct or indirect financial interest in
the Plan or by vote of a majority of the outstanding voting securities of such
class. The Plan may be renewed from year to year if approved by a vote of the
Board of Trustees and a vote of the non-interested Trustees who have no direct
or indirect financial interest in the Plan cast in person at a meeting called
for the purpose of voting on the Plan. The Plan may be continued only if the
trustees who vote to approve such continuance conclude, in the exercise of rea-
sonable business judgment and in light of their fiduciary duties under applica-
ble law, that there is a reasonable likelihood that the Plan will benefit the
Fund and its shareholders. The Plan may not be amended to increase materially
the cost which a class of shares may bear under the Plan without the approval
of the shareholders of the affected class, and any other material amendments of
the Plan must be approved by the non-interested trustees by a vote cast in per-
son at a meeting called for the purpose of considering such amendments. During
the continuance of the Plan, the selection and nomination of the non-interested
trustees of the Trust will be committed to the discretion of the non-interested
trustees then in office.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 West Monroe Street,
Chicago, Illinois 60603 have been selected as auditors for the Trust. In addi-
tion to audit services, Arthur Andersen LLP will provide consultation and as-
sistance on accounting, internal control, tax and related matters. The finan-
cial statements included in this Statement of Additional Information have been
audited by Arthur Andersen LLP as indicated in their report with respect there-
to, and are included in reliance upon the authority of said firm as experts in
giving said report.
The custodian of the assets of the Funds is The Chase Manhattan Bank, N.A., 770
Broadway, New York, New York 10003. The custodian performs custodial, fund ac-
counting and portfolio accounting services.
FINANCIAL STATEMENTS
To be filed by Pre-Effective Amendment.
B-35
<PAGE>
APPENDIX A--RATINGS OF INVESTMENTS
STANDARD & POOR'S RATINGS GROUP--A brief description of the applicable Standard
& Poor's Ratings Group ("S&P") rating symbols and their meanings (as published
by S&P) follows:
LONG TERM DEBT
An S&P corporate or municipal debt rating is a current assessment of the cred-
itworthiness of an obligor with respect to a specific obligation. This assess-
ment may take into consideration obligors such as guarantors, insurers, or
lessees.
The debt rating is not a recommendation to purchase, sell, or hold a security,
inasmuch as it does not comment as to market price or suitability for a partic-
ular investor.
The ratings are based on current information furnished by the issuer or ob-
tained by S&P from other sources it considers reliable. S&P does not perform an
audit in connection with any rating and may, on occasion, rely on unaudited fi-
nancial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or based on other
circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
INVESTMENT GRADE
AAA Debt rated "AAA' has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rated "AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small de-
gree.
A Debt rated "A' has a strong capacity to pay interest and repay princi-
pal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories.
BBB Debt rated "BBB' is regarded as having an adequate capacity to pay in-
terest and repay principal. Whereas it normally exhibits adequate pro-
tection parameters, adverse economic conditions or changing circum-
stances are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated
categories.
<PAGE>
SPECULATIVE GRADE RATING
Debt rated "BB', "B', "CCC', "CC' and "C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. "BB' indicates the least degree of speculation and "C' the highest.
While such debt will likely have some quality and protective characteristics
these are outweighed by major uncertainties or major exposures to adverse con-
ditions.
BB Debt rated "BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and princi-
pal payments. The "BB' rating category is also used for debt subordi-
nated to senior debt that is assigned an actual or implied "BBB-' rat-
ing.
B Debt rated "B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal.
The "B' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BB' or "BB-' rating.
CCC Debt rated "CCC' has a currently identifiable vulnerability to de-
fault, and is dependent upon favorable business, financial, and eco-
nomic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal.
The "CCC' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "B' or "B-' rating.
CC The rating "CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC' debt rating.
C The rating "C' typically is applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-' debt rating. The
"C' rating may be used to cover a situation where a bankruptcy peti-
tion has been filed, but debt service payments are continued.
CI The rating "CI' is reserved for income bonds on which no interest is
being paid.
D Debt rated "D' is in payment default. The "D' rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
"D' rating also will be used upon the filing of a bankruptcy petition
if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA' to "CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
PROVISIONAL RATINGS: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project financed by
the debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely completion of the
project. This rating, however, while addressing credit quality subsequent to
comple-
A-2
<PAGE>
tion of the project, makes no comment on the likelihood of, or the risk of de-
fault upon failure of, such completion. The investor should exercise judgment
with respect to such likelihood and risk.
L The letter "L' indicates that the rating pertains to the principal
amount of those bonds to the extent that the underlying deposit col-
lateral is federally insured by the Federal Savings & Loan Insurance
Corp. or the Federal Deposit Insurance Corp.* and interest is ade-
quately collateralized. In the case of certificates of deposit the
letter "L' indicates that the deposit, combined with other deposits
being held in the same right and capacity will be honored for princi-
pal and accrued pre-default interest up to the federal insurance lim-
its within 30 days after closing of the insured institution or, in the
event that the deposit is assumed by a successor insured institution,
upon maturity.
NR Indicates no rating has been requested, that there is insufficient in-
formation on which to base a rating, or that S&P does not rate a par-
ticular type of obligation as a matter of policy.
MUNICIPAL NOTES
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rat-
ing. Notes maturing beyond 3 years will most likely receive a long-term debt
rating. The following criteria will be used in making that assessment:
--Amortization schedule (the larger the final maturity relative to
other maturities, the more likely it will be treated as a note).
--Source of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
NOTE RATING SYMBOLS ARE AS FOLLOWS:
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest with some vulnera-
bility to adverse financial and economic changes over the term of the
notes.
SP-3 Speculative capacity to pay principal and interest.
A note rating is not a recommendation to purchase, sell, or hold a security in-
asmuch as it does not comment as to market price or suitability for a particu-
lar investor. The ratings are based on current information furnished to S&P by
the issuer or obtained by S&P from other sources it considers reliable. S&P
does not perform an audit in connection with any rating and may, on occasion,
rely on unaudited financial information. The ratings may be changed, suspended,
or withdrawn as a result of changes in or unavailability of such information or
based on other circumstances.
*Continuance of the rating is contingent upon S&P's receipt of an executed copy
of the escrow agreement or closing documentation confirming investments and
cash flow.
A-3
<PAGE>
COMMERCIAL PAPER
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into several categories, ranging from "A-1" for the highest
quality obligations to "D" for the lowest. These categories are as follows:
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is satis-
factory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated "B" are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
A commercial rating is not a recommendation to purchase, sell, or hold a secu-
rity inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
S&P by the issuer or obtained by S&P from other sources it considers reliable.
S&P does not perform an audit in connection with any rating and may, on occa-
sion, rely on unaudited financial information. The ratings may be changed, sus-
pended, or withdrawn as a result of changes in or unavailability of such infor-
mation or based on other circumstances.
MOODY'S INVESTORS SERVICE, INC.--A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's") rating symbols and their meanings (as pub-
lished by Moody's) follows:
LONG TERM DEBT
AAA Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally re-
ferred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
AA Bonds which are rated Aa are judged to be of high quality by all stan-
dards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated
A-4
<PAGE>
lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa securi-
ties.
A Bonds which are rated A possess may favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
BAA Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristi-
cally unrealiable over any great length of time. Such bonds lack out-
standing investment characteristics and in fact have speculative char-
acteristics as well.
BA Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protec-
tion of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desir-
able investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
CAA Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and is-
sues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
CON( . . . )
Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operation experience, (c) rentals
which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes
probable credit stature upon completion of construction or elimination
of basis of condition.
NOTE:Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the sym-
bols Aa1, A1, Baa1, Ba1, and B1.
MUNICIPAL SHORT-TERM LOANS
MIG 1/VMIG 1 This designation denotes best quality. There is present
strong protection by established cash flows, superior liquid-
ity support or demonstrated broadbased access to the market
for refinancing.
A-5
<PAGE>
MIG 2/VMIG 2 This designation denotes high quality. Margins or protection
are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security ele-
ments are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well-established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection com-
monly regarded as required of an investment security is pres-
ent and although not distinctly or predominantly speculative,
there is specific risk.
COMMERCIAL PAPER
Issuers rated PRIME-1 (or related supporting institutions) have a superior ca-
pacity for repayment of senior short-term promissory obligations. Prime-1 re-
payment capacity will often be evidenced by many of the following characteris-
tics:
--Leading market positions in well-established industries.
--High rates of return on funds employed.
--Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
--Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
--Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong capac-
ity for repayment of senior short-term promissory obligations. This will nor-
mally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated PRIME-3 (or related supporting institutions) have an acceptable
capacity for repayment of senior short-term promissory obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial lever-
age. Adequate alternate liquidity is maintained.
Issuers rated NOT PRIME do not fall within any of the Prime rating categories.
A-6
<PAGE>
DUFF & PHELPS, INC.--A brief description of the applicable Duff & Phelps, Inc.
("D&P") ratings symbols and their meanings (as published by D&P) follows:
LONG TERM DEBT
These ratings represent a summary opinion of the issuer's long-term fundamental
quality. Rating determination is based on qualitative and quantitative factors
which may vary according to the basic economic and financial characteristics of
each industry and each issuer. Important considerations are vulnerability to
economic cycles as well as risks related to such factors as competition, gov-
ernment action, regulation, technological obsolescence, demand shifts, cost
structure, and management depth and expertise. The projected viability of the
obligor at the trough of the cycle is a critical determination.
Each rating also takes into account the legal form of the security, (e.g.,
first mortgage bonds, subordinated debt, preferred stock, etc.). The extent of
rating dispersion among the various classes of securities is determined by sev-
eral factors including relative weightings of the different security classes in
the capital structure, the overall credit strength of the issuer, and the na-
ture of covenant protection.
The Credit Rating Committee formally reviews all ratings once per quarter (more
frequently, if nec- essary). Ratings of "BBB-' and higher fall within the defi-
nition of investment grade securities, as defined by bank and insurance super-
visory authorities. Structured finance issues, including real estate, asset-
backed and mortgage-backed financings, use this same rating scale. Duff &
Phelps Credit Rating claims paying ability ratings of insurance companies use
the same scale with minor modification in the definitions. Thus, an investor
can compare the credit quality of investment alternatives across industries and
structural types. A "Cash Flow Rating" (as noted for specific ratings) ad-
dresses the likelihood that aggregate principal and interest will equal or ex-
ceed the rated amount under appropriate stress conditions.
RATING SCALEDEFINITION
- --------------------------------------------------------------------------------
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
- --------------------------------------------------------------------------------
AA+ High credit quality. Protection factors are strong. Risk is mod-
AA est, but may vary slightly from time to time because of economic
AA- conditions.
- --------------------------------------------------------------------------------
A+ Protection factors are average but adequate. However, risk factors
A are more variable and greater in periods of economic stress.
A-
- --------------------------------------------------------------------------------
BBB+ Below average protection factors but still considered sufficient
BBB for prudent investment. Considerable variability in risk during
BBB- economic cycles.
- --------------------------------------------------------------------------------
A-7
<PAGE>
BB+ Below investment grade but deemed likely to meet obligations when
BB due. Present or prospective financial protection factors fluctuate
BB- according to industry conditions or company fortunes. Overall
quality may move up or down frequently within this category.
- -------------------------------------------------------------------------------
B+ Below investment grade and possessing risk that obligations will
B not be met when due. Financial protection factors will fluctuate
B- widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower rating
grade.
- -------------------------------------------------------------------------------
CCC Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substan-
tial with unfavorable economic/industry conditions, and/or with
unfavorable company developments.
- -------------------------------------------------------------------------------
DD Defaulted debt obligations. Issuer failed to meet scheduled prin-
cipal and/or interest payments.
DP Preferred stock with dividend arrearages.
- -------------------------------------------------------------------------------
SHORT-TERM DEBT RATINGS
Duff & Phelps' short-term ratings are consistent with the rating criteria used
by money market participants. The ratings apply to all obligations with matu-
rities of under one year, including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master notes, bankers accept-
ances, irrevocable letters of credit, and current maturities of long-term
debt. Asset-backed commercial paper is also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash from opera-
tions, but also access to alternative sources of funds including trade credit,
bank lines, and the capital markets. An important consideration is the level
of an obligor's reliance on short-term funds on an ongoing basis.
The distinguishing feature of Duff & Phelps Credit Ratings' short-term ratings
is the refinement of the traditional "1' category. The majority of short-term
debt issuers carry the highest rating, yet quality differences exist within
that tier. As a consequence, Duff & Phelps Credit Rating has incorporated gra-
dations of "1+' (one plus) and "1-' (one minus) to assist investors in recog-
nizing those differences.
These ratings are recognized by the SEC for broker-dealer requirements, spe-
cifically capital computation guidelines. These ratings meet Department of La-
bor ERISA guidelines governing pension and profit sharing investments. State
regulators also recognize the ratings of Duff & Phelps Credit Rating for in-
surance company investment portfolios.
A-8
<PAGE>
RATING SCALE:
DEFINITION
HIGH GRADE
D-1+ Highest certainty of timely payment. Short-term liquidity, includ-
ing internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are ex-
cellent and supported by good fundamental protection factors. Risk
factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.
GOOD GRADE
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
SATISFACTORY GRADE
D-3 Satisfactory liquidity and other protection factors qualify issue
as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
NON-INVESTMENT GRADE
D-4 Speculative investment characteristics. Liquidity is not suffi-
cient to insured against disruption in debt service. Operating
factors and market access may be subject to a high degree of vari-
ation.
DEFAULT
D-5 Issuer failed to meet scheduled principal and/or interest pay-
ments.
FITCH INVESTORS SERVICE, INC.--A brief description of the applicable Fitch In-
vestors Service, Inc. ("Fitch") ratings symbols and meanings (as published by
Fitch) follows:
LONG TERM DEBT
Fitch investment grade bond ratings provide a guide to investors in determining
the credit risk associated with a particular security. The ratings represent
Fitch's assessment of the issuer's ability to meet the obligations of a spe-
cific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its rela-
tionship to other obligations of the issuer, the current and prospective finan-
cial condition and operating performance of the issuer and any guarantor, as
well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by in-
surance policies or financial guaranties unless otherwise indicated.
A-9
<PAGE>
Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories do not fully reflect small differ-
ences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell, or hold any security. Rat-
ings do not comment on the adequacy of market price, the suitability of any se-
curity for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors,
underwriters, their experts, and other sources Fitch believes to be reliable.
Fitch does not audit or verify the truth or accuracy of such information. Rat-
ings may be changed, suspended, or withdrawn as a result of changes in, or the
unavailability of, information or for other reasons.
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay inter-
est and repay principal, which is unlikely to be affected by reasona-
bly foreseeable events.
AA Bonds considered to be investment grade and of very high credit quali-
ty. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA'. Because
bonds rated in the "AAA' and "AA' categories are not significantly
vulnerable to foreseeable future developments, short-term debt of the
issuers is generally rated "F-1+'.
A Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is consid-
ered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on
these bonds and, therefore, impair timely payment. The likelihood that
the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
Fitch speculative grade bond ratings provide a guide to investors in determin-
ing the credit risk associated with a particular security. The ratings ("BB' to
"C') represent Fitch's assessment of the likelihood of timely payment of prin-
cipal and interest in accordance with the terms of obligation for bond issues
not in default. For defaulted bonds, the rating ("DDD' to "D') is an assessment
of the ultimate recovery value through reorganization or liquidation.
The rating takes into consideration special features of the issue, its rela-
tionship to other obligations of the issuer, the current and prospective finan-
cial condition and operating performance of the issuer and any guarantor, as
well as the economic and political environment that might affect the issuer's
future financial strength.
A-10
<PAGE>
Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories cannot fully reflect the differ-
ences in the degrees of credit risk.
BB Bonds are considered speculative. The obligor's ability to pay inter-
est and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identi-
fied which could assist the obligor in satisfying its debt service re-
quirements.
B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of con-
tinued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and eco-
nomic activity throughout the life of the issue.
CCC Bonds have certain identifiable characteristics which, if not reme-
died, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD, Bonds are in default on interest and/or principal payments. Such bonds
DD are extremely speculative and should be valued on the basis of their
AND Dultimate recovery value in liquidation or reorganization of the obli-
gor. "DDD' represents the highest potential for recovery of these
bonds, and "D' represents the lowest potential for recovery.
SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on de-
mand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+ EXCEPTIONALLY STRONG CREDIT QUALITY Issues assigned this rating are
regarded as having the strongest degree of assurance for timely pay-
ment.
F-1 VERY STRONG CREDIT QUALITY Issues assigned this rating reflect an as-
surance of timely payment only slightly less in degree than issues
rated "F-1+'.
F-2 GOOD CREDIT QUALITY Issues assigned this rating have a satisfactory
degree of assurance for timely payment but the margin of safety is not
as great as for issues assigned "F-1+' and "F-1' ratings.
F-3 FAIR CREDIT QUALITY Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is ade-
quate; however, near-term adverse changes could cause these securities
to be rated below investment grade.
A-11
<PAGE>
F-S WEAK CREDIT QUALITY Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic con-
ditions.
D DEFAULT Issues assigned this rating are in actual or imminent payment
default.
LOC The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
A-12
<PAGE>
PART C--OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements:
Included in the Prospectus:
Not Applicable
Included in the Statement of Additional Information:
Statement of Net Assets, , 1996, for each of the Nuveen Growth
and Income Stock Fund, Nuveen Balanced Stock and Bond Fund and Nuveen
Balanced Municipal and Stock Fund
Report of Independent Public Accountants dated , 1996
(b) Exhibits
<TABLE>
<CAPTION>
<C> <S> <C>
1(a). Declaration of Trust of Registrant./1/
1(b). Certificate for the Establishment and Designation of
Series and Classes, dated , 1996./1/
2. By-Laws of Registrant./1/
3. Not applicable.
4(a). Specimen certificates of Class A Shares of each Fund.*
4(b). Specimen certificates of Class B Shares of each Fund.*
4(c). Specimen certificates of Class C Shares of each Fund.*
4(d). Specimen certificates of Class R Shares of each Fund.*
5(a). Form of Management Agreement between Registrant and Nuveen
Institutional Advisory Corp.
5(b). Form of Sub-Advisory Agreement between Nuveen
Institutional Advisory Corp and Institutional Capital
Corporation.
6(a). Form of Distribution Agreement between Registrant and John
Nuveen & Co. Incorporated.*
7. Not applicable.
8. Form of Custodian Agreement among Registrant, Nuveen
Institutional Advisory Corp. and Chase Manhattan Bank,
N.A.*
9(a). Form of Transfer Agency Agreement among Registrant, Nuveen
Institutional Advisory Corp. and Shareholder Services,
Inc.*
10(a). Opinion and consent of Chapman and Cutler, dated
, 1996.*
10(b). Opinion and consent of Bingham, Dana & Gould, dated
, 1996.*
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
11. Consent of Independent Public Accountants.*
12. Not applicable.
13. Subscription Agreement with Nuveen Investment Advisory
Corp.*
14. Not applicable.
15. Plan of Distribution and Service Pursuant to Rule 12b-1
for the Class A Shares, Class B Shares and Class C Shares
of each Fund.*
16. Not applicable.
17. Financial Data Schedule.*
18. Multi-Class Plan.
99(a). Original Powers of Attorney for Messrs. Schwertfeger and
Dean, Trustees, authorizing, among others, James J.
Wesolowski and Gifford R. Zimmerman to execute the
Registration Statement./1/
</TABLE>
- --------
*To be filed by pre-effective amendment.
/1/Incorporated by reference to the initial registration statement filed on
Form N-1A for Registrant.
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At , 1996:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
<S> <C>
Nuveen Growth and Income Stock Fund........................ 0
Nuveen Balanced Stock and Bond Fund........................ 0
Nuveen Balanced Municipal and Stock Fund................... 0
</TABLE>
ITEM 27: INDEMNIFICATION
Section 4 of Article XII of Registrant's Amended and Restated Declaration of
Trust provides as follows:
Subject to the exceptions and limitations contained in this Section 4, every
person who is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors, trustees,
officers, employees or agents of another organization in which the Trust has an
interest as a shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person"), shall be indemnified by the Trust to the fullest extent per-
mitted by law against liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been such a Trustee, director, officer, employee or agent and against amounts
paid or incurred by him in settlement thereof.
C-2
<PAGE>
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross negli-
gence or reckless disregard of the duties involved in the conduct of his
office;
(b) with respect to any matter as to which he shall have been finally adju-
dicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a pay-
ment by a Covered Person, unless there has been either a determination that
such Covered Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office by the court or other body approving the settlement or other
disposition or a reasonable determination, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that he did not
engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by poli-
cies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall con-
tinue as to a person who has ceased to be such a Covered Person and shall inure
to the benefit of the heirs, executors and administrators of such a person.
Nothing contained herein shall affect any rights to indemnification to which
Trust personnel other than Covered Persons may be entitled by contract or oth-
erwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section 4
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it
is ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any
such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient ul-
timately will be found entitled to indemnification.
C-3
<PAGE>
As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an
Interested Person of the Trust (including, as such Disinterested Trustee, any-
one who has been exempted from being an Interested Person by any rule, regula-
tion or order of the Commission), and (y) against whom none of such actions,
suits or other proceedings or another action, suit or other proceeding on the
same or similar grounds is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal, admin-
istrative or other, including appeals), actual or threatened; and the word "li-
ability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other lia-
bilities.
-----------------
The trustees and officers of the Registrant are covered by an Investment Trust
Errors and Omission policy in the aggregate amount of $20,000,000 (with a maxi-
mum deductible of $350,000) against liability and expenses of claims of wrong-
ful acts arising out of their position with the Registrant, except for matters
which involved willful acts, bad faith, gross negligence and willful disregard
of duty (i.e., where the insured did not act in good faith for a purpose he or
she reasonably believed to be in the best interest of Registrant or where he or
she shall have had reasonable cause to believe this conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, trustees or controlling persons of the
Registrant pursuant to the Declaration of Trust of the Registrant or otherwise,
the Registrant has been advised that in the opinion of the Securities and Ex-
change Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indem-
nification against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by an officer or trustee or controlling person of
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such officer, trustee or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Nuveen Institutional Advisory Corp. serves as investment adviser or manager
to the following closed-end management type investment companies: Nuveen Select
Tax-Free Income Portfolio; Nuveen Select Tax-Free Income Portfolio 2; Nuveen
Insured California Select Tax-Free Income Portfolio; Nuveen Insured New York
Select Tax-Free Income Portfolio; Nuveen Select Tax-Free Income Portfolio 3 and
the Registrant. The principal business address for all of these investment com-
panies is 333 West Wacker Drive, Chicago, Illinois 60606. In addition, Nuveen
Institutional Advisory Corp. serves as investment adviser to separately managed
accounts.
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer of the investment adviser
has engaged during the last two years for his account or
C-4
<PAGE>
in the capacity of director, officer, employee, partner or trustee, see the de-
scriptions under "Management" in the Statement of Additional Information.
(b) Institutional Capital Corporation (ICAP) acts as investment adviser to the
ICAP Funds, Inc. and as sub-investment adviser to the Registrant. In addition,
ICAP serves as investment adviser to separately managed accounts.
The following is a listing of each director and officer of ICAP. The principal
business address for each person is 225 W. Wacker Drive, Chicago, IL 60606.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH ICAP WITH REGISTRANT
---- --------------------- ---------------------
<S> <C> <C>
Robert H. Lyon........ President, Chief Investment Trustee
Officer and Director
Pamela H. Conroy...... Senior Vice President None
Donald D. Niemann..... Executive Vice President and None
Director
Gary S. Maurer........ Executive Vice President and None
Director
Barbara A. Chiesa..... Vice President and Director None
</TABLE>
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Municipal
Bond Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free Re-
serves, Inc., Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free Bond Fund,
Inc., Nuveen Insured Tax-Free Bond Fund, Inc. and Nuveen Tax-Free Money Market
Fund, Inc. Nuveen also acts as depositor and principal underwriter of the
Nuveen Tax-Free Unit Trust, a registered unit investment trust. Nuveen has also
served or is serving as co-managing underwriter to the following closed-end
management type investment companies: Nuveen Municipal Value Fund, Inc., Nuveen
California Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund,
Inc., Nuveen Municipal Income Fund, Inc., Nuveen California Municipal Income
Fund, Inc., Nuveen New York Municipal Income Fund, Inc., Nuveen Premium Income
Municipal Fund, Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen Cal-
ifornia Performance Plus Municipal Fund, Inc., Nuveen New York Performance Plus
Municipal Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal
Market Opportunity Fund, Inc., Nuveen California Municipal Market Opportunity
Fund, Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen California
Investment Quality Municipal Fund, Inc., Nuveen New York Investment Quality Mu-
nicipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida
Investment Quality Municipal Fund, Nuveen New Jersey Investment Quality Munici-
pal Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen
Select Quality Municipal Fund, Inc., Nuveen California Select Quality Municipal
Fund, Inc., Nuveen New York Select Quality Municipal Fund, Inc., Nuveen Quality
Income Municipal Fund, Inc., Nuveen Insured Municipal Opportunity Fund, Inc.,
Nuveen Florida Quality Income Municipal Fund,
C-5
<PAGE>
Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio Quality Income
Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund, Nuveen Cali-
fornia Quality Income Municipal Fund, Inc., Nuveen New York Quality Income Mu-
nicipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen Premier
Insured Municipal Income Fund, Inc., Nuveen Select Tax-Free Income Portfolio,
Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Insured California Premium
Income Municipal Fund, Inc., Nuveen Insured New York Premium Income Municipal
Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen Arizona Premium In-
come Municipal Fund, Inc., Nuveen Insured Florida Premium Income Municipal
Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey
Premium Income Municipal Fund, Inc., Nuveen Insured Premium Income Municipal
Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Insured Cali-
fornia Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania Premium In-
come Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen
Massachusetts Premium Income Municipal Fund, Nuveen Virginia Premium Income Mu-
nicipal Fund, Nuveen Washington Premium Income Municipal Fund, Nuveen Connecti-
cut Premium Income Municipal Fund, Nuveen Georgia Premium Income Municipal
Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen North Carolina Pre-
mium Income Municipal Fund, Nuveen California Premium Income Municipal Fund,
Nuveen Insured Premium Income Municipal Fund 2, Nuveen Select Tax-Free Income
Portfolio 2, Nuveen Insured California Select Tax-Free Income Portfolio, Nuveen
Insured New York Select Tax-Free Income Portfolio, Nuveen Select Tax-Free In-
come Portfolio 3 and the Registrant.
(b)
<TABLE>
<S> <C> <C>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------------------------------------------
Anthony T. Dean President, Chief Operating President and Trustee
333 West Wacker Drive Officer and Director
Chicago, IL 60606
Timothy R. Schwertfeger Chairman of the Board, Chairman and Trustee
333 West Wacker Drive Chief Executive Officer,
Chicago, IL 60606 and Director
John P. Amboian Executive Vice President None
333 West Wacker Drive
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-6
<PAGE>
<TABLE>
<S> <C> <C>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ----------------------------------------------------------------------------------
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
James W. Gratehouse Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
O. Walter Renfftlen Vice President Vice President and
333 West Wacker Drive and Controller Controller
Chicago, IL 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President Vice President and
333 West Wacker Drive and Treasurer Treasurer
Chicago, IL 60606
James J. Wesolowski Vice President, Vice President and
333 West Wacker Drive General Counsel Secretary
Chicago, IL 60606 and Secretary
</TABLE>
C-7
<PAGE>
<TABLE>
<S> <C> <C>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -----------------------------------------------------------------------------------
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Assistant Secretary
Chicago, IL 60606
</TABLE>
(c) Not applicable.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois 60606, main-
tains the Declaration of Trust, By-Laws, minutes of trustees and shareholder
meetings and contracts of the Registrant and all advisory material of the in-
vestment adviser.
Chase Manhattan Bank, N.A., 770 Broadway, New York, New York 10003, maintains
all general and subsidiary ledgers, journals, trial balances, records of all
portfolio purchases and sales, and all other required records not maintained by
Nuveen Advisory Corp., or Shareholder Services, Inc.
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado 80217-5330, main-
tains all the required records in its capacity as transfer, dividend paying,
and shareholder service agent for the Registrant.
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
(a) Not applicable.
(b) The Registrant undertakes to file a post-effective amendment to its regis-
tration statement, using financial statements which need not be certified,
within four to six months from the effective date of Registrant's 1933 Act
registration statement.
(c) The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest Annual Report to Share-
holders upon request and without charge.
C-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
THE CITY OF CHICAGO, AND STATE OF ILLINOIS, ON THE 2ND DAY OF JULY, 1996.
NUVEEN INVESTMENT TRUST
/s/ Gifford R. Zimmerman
---------------------------------------
Gifford R. Zimmerman, Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ O. Walter Renfftlen
- -------------------------------
O. Walter Renfftlen Vice President and
Controller (Principal
Financial and
Accounting Officer)
Trustee
Anthony T. Dean President and Trustee
Trustee
Trustee
Trustee
Trustee
Timothy R. Schwertfeger Chairman and Trustee
(Principal Executive /s/ Gifford R.
Officer) Zimmerman
</TABLE>
By_________________________
Gifford R. Zimmerman
Attorney-in-Fact
July 2, 1996
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, JAMES J. WESOLOWSKI
AND GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMENDMENTS
THERETO, FOR EACH OF THE OFFICERS AND TRUSTEES OF REGISTRANT ON WHOSE BEHALF
THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH THE SE-
CURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
(b) Exhibits
<C> <S> <C>
1(a). Declaration of Trust of Registrant./1/
1(b). Certificate for the Establishment and Designation of
Series and Classes, dated , 1996./1/
2. By-Laws of Registrant./1/
3. Not applicable.
4(a). Specimen certificates of Class A Shares of each
Fund.*
4(b). Specimen certificates of Class B Shares of each
Fund.*
4(c). Specimen certificates of Class C Shares of each
Fund.*
4(d). Specimen certificates of Class R Shares of each
Fund.*
5(a). Form of Management Agreement between Registrant and
Nuveen Institutional Advisory Corp.
5(b). Form of Sub-Advisory Agreement between Nuveen
Institutional Advisory Corp and Institutional Capital
Corporation.
6(a). Form of Distribution Agreement between Registrant and
John Nuveen & Co. Incorporated.*
7. Not applicable.
8. Form of Custodian Agreement among Registrant, Nuveen
Institutional Advisory Corp. and Chase Manhattan
Bank, N.A.*
9(a). Form of Transfer Agency Agreement among Registrant,
Nuveen Institutional Advisory Corp. and Shareholder
Services, Inc.*
10(a). Opinion and consent of Chapman and Cutler, dated
, 1996.*
10(b). Opinion and consent of Bingham, Dana & Gould, dated
, 1996.*
11. Consent of Independent Public Accountants.*
12. Not applicable.
13. Subscription Agreement with Nuveen Investment
Advisory Corp.*
14. Not applicable.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
15. Plan of Distribution and Service Pursuant to Rule
12b-1 for the Class A Shares, Class B Shares and
Class C Shares of each Fund.*
16. Not applicable.
17. Financial Data Schedule.*
18. Multi-Class Plan.
99(a). Original Powers of Attorney for Messrs. Schwertfeger
and Dean, Trustees, authorizing, among others, James
J. Wesolowski and Gifford R. Zimmerman to execute the
Registration Statement./1/
</TABLE>
- --------
*To be filed by pre-effective amendment.
/1/Incorporated by reference to the initial registration statement filed on
Form N-1A for Registrant.
<PAGE>
EXHIBIT (b)5(a)
MANAGEMENT AGREEMENT
BETWEEN
NUVEEN INVESTMENT TRUST
AND
NUVEEN INSTITUTIONAL ADVISORY CORP.
NUVEEN INVESTMENT TRUST, A Massachusetts business trust registered under
the Investment Company Act of 1940 ("1940 Act") as an open-end diversified
management series investment company ("Trust"), hereby appoints NUVEEN
INSTITUTIONAL ADVISORY CORP., a Delaware corporation registered under the
Investment Advisers Act of 1940 as an investment adviser, of Chicago, Illinois
("Manager"), to furnish investment advisory and management services and certain
administrative services with respect to the portion of its assets represented by
the shares of beneficial interest issued in each series listed in Schedule A
hereto, as such schedule may be amended from time to time (each such series
hereinafter referred to as "Fund"). Trust and Manager hereby agree that:
1. Investment Management Services. Manager shall manage the
investment operations of Trust and each Fund, subject to the terms of this
Agreement and to the supervision and control of Trust's Board of Trustees
("Trustees"). Manager agrees to perform, or arrange for the performance of,
the following services with respect to each Fund:
(a) to obtain and evaluate such information relating to
economies, industries, businesses, securities and commodities markets,
and individual securities, commodities and indices as it may deem
necessary or useful in discharging its responsibilities hereunder;
(b) to formulate and maintain a continuous investment program
in a manner consistent with and subject to (i) Trust's agreement and
declaration of trust and by-laws; (ii) the Fund's investment
objectives, policies, and restrictions as set forth in written
documents furnished by the Trust to Manager; (iii) all securities,
commodities, and tax laws and regulations applicable to the Fund and
Trust; and (iv) any other written limits or directions furnished by
the Trustees to Manager;
(c) unless otherwise directed by the Trustees, to determine
from time to time securities, commodities, interests or other
investments to be purchased, sold, retained or lent by the Fund, and
to implement those decisions, including the selection of entities with
or through which such purchases, sales or loans are to be effected;
<PAGE>
(d) to use reasonable efforts to manage the Fund so that it will
qualify as a regulated investment company under subchapter M of the
Internal Revenue Code of 1986, as amended ;
(e) to make recommendations as to the manner in which voting rights,
rights to consent to Trust or Fund action, and any other rights pertaining
to Trust or the Fund shall be exercised;
(f) to make available to Trust promptly upon request all of the
Fund's records and ledgers and any reports or information reasonably
requested by the Trust; and
(g) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the services provided
pursuant to this Agreement.
Except as otherwise instructed from time to time by the Trustees, with
respect to execution of transactions for Trust on behalf of a Fund, Manager
shall place, or arrange for the placement of, all orders for purchases, sales,
or loans with issuers, brokers, dealers or other counterparts or agents selected
by Manager. In connection with the selection of all such parties for the
placement of all such orders, Manager shall attempt to obtain most favorable
execution and price, but may nevertheless in its sole discretion as a secondary
factor, purchase and sell portfolio securities from and to brokers and dealers
who provide Manager with statistical, research and other information, analysis,
advice, and similar services. In recognition of such services or brokerage
services provided by a broker or dealer, Manager is hereby authorized to pay
such broker or dealer a commission or spread in excess of that which might be
charged by another broker or dealer for the same transaction if the Manager
determines in good faith that the commission or spread is reasonable in relation
to the value of the services so provided.
Trust hereby authorizes any entity or person associated with Manager that
is a member of a national securities exchange to effect any transaction on the
exchange for the account of a Fund to the extent permitted by and in accordance
with Section 11(a) of the Securities Exchange Act or 1934 and Rule 11a2-2(T)
thereunder. Trust hereby consents to the retention by such entity or person of
compensation for such transactions in accordance with Rule 11a-2-2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders for its other
customers together with any securities of the same type to be sold or purchased
for Trust or one or more Funds in order to obtain best execution or lower
brokerage commissions. In such event, Manager shall allocate the shares so
purchased or sold, as well as the expenses incurred in the transaction, in a
manner it considers to be equitable and fair and consistent with its fiduciary
obligations to Trust, the Funds, and Manager's other customers.
-2-
<PAGE>
Manager shall for all purposes be deemed to be an independent contractor
and not an agent of Trust and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent Trust in any way.
2. Administrative Services. Subject to the terms of this Agreement
and to the supervision and control of the Trustees, Manager shall provide to the
Trust facilities, equipment, statistical and research data, clerical, accounting
and bookkeeping services, internal auditing and legal services, and personnel to
carry out all management services required for operation of the business and
affairs of the Funds other than those services to be performed by the Trust's
Distributor pursuant to the Distribution Agreement, those services to be
performed by the Trust's Custodian pursuant to the Custody Agreement, those
services to be performed by the Trust's Transfer Agent pursuant to the Transfer
Agency Agreement, those services to be provided by the Trust's Custodian
pursuant to the Accounting Agreement and those services normally performed by
the Trust's counsel and auditors.
3. Use of Affiliated Companies and Subcontractors. In connection
with the services to be provided by Manager under this Agreement, Manager may,
to the extent it deems appropriate, and subject to compliance with the
requirements of applicable laws and regulations, make use of (i) its affiliated
companies and their directors, trustees, officers, and employees and (ii)
subcontractors selected by Manager, provided that Manager shall supervise and
remain fully responsible for the services of all such third parties in
accordance with and to the extent provided by this Agreement. All costs and
expenses associated with services provided by any such third parties shall be
borne by Manager or such parties.
4. Expenses Borne by Trust. Except to the extent expressly assumed
by Manager herein or under a separate agreement between Trust and Manager and
except to the extent required by law to be paid by Manager, Manager shall not be
obligated to pay any costs or expenses incidental to the organization,
operations or business of the Trust. Without limitation, such costs and expenses
shall include but not be limited to:
(a) all charges of depositories, custodians and other agencies
for the safekeeping and servicing of its cash, securities, and other
property;
(b) all charges for equipment or services used for obtaining
price quotations or for communication between Manager or Trust and the
custodian, transfer agent or any other agent selected by Trust;
(c) all charges for and accounting services provided to Trust
by Manager, or any other provider of such services;
(d) all charges for services of Trust's independent auditors
and for services to Trust by legal counsel;
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<PAGE>
(e) all compensation of Trustees, other than those affiliated with
Manager, all expenses incurred in connection with their services to Trust,
and all expenses of meetings of the Trustees or committees thereof;
(f) all expenses incidental to holding meetings of holders of units
of interest in the Trust ("Shareholders"), including printing and of
supplying each record-date Shareholder with notice and proxy solicitation
material, and all other proxy solicitation expense;
(g) all expenses of printing of annual or more frequent revisions of
Trust prospectus(es) and of supplying each then-existing Shareholder with a
copy of a revised prospectus;
(h) all expenses related to preparing and transmitting certificates
representing Trust shares;
(i) all expenses of bond and insurance coverage required by law or
deemed advisable by the Board of Trustees;
(j) all brokers' commissions and other normal charges incident to the
purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to Federal, state or
other governmental agencies, domestic or foreign, including all stamp or
other transfer taxes;
(l) all expenses of registering and maintaining the registration of
Trust under the 1940 Act and, to the extent no exemption is available,
expenses of registering Trust's shares under the 1933 Act, of qualifying
and maintaining qualification of Trust and of Trust's shares for sale under
securities laws of various states or other jurisdictions and of
registration and qualification of Trust under all other laws applicable to
Trust or its business activities;
(m) all interest on indebtedness, if any, incurred by Trust or a
Fund; and
(n) all fees, dues and other expenses incurred by Trust in connection
with membership of Trust in any trade association or other investment
company organization.
5. Allocation of Expenses Borne by Trust. Any expenses borne by Trust
that are attributable solely to the organization, operation or business of a
Fund shall be paid solely out of Fund assets. Any expense borne by Trust which
is not solely attributable to a Fund, nor solely to any other series of shares
of Trust, shall be apportioned in such manner as Manager determines is fair and
appropriate, or as otherwise specified by the Board of Trustees.
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<PAGE>
6. Expenses Borne by Manager. Manager at its own expense shall furnish
all executive and other personnel, office space, and office facilities required
to render the investment management and administrative services set forth in
this Agreement.
In the event that Manager pays or assumes any expenses of Trust or a Fund
not required to be paid or assumed by Manager under this Agreement, Manager
shall not be obligated hereby to pay or assume the same or similar expense in
the future; provided that nothing contained herein shall be deemed to relieve
Manager of any obligation to Trust or a Fund under any separate agreement or
arrangement between the parties.
7. Management Fee. For the services rendered, facilities provided, and
charges assumed and paid by Manager hereunder, Trust shall pay to Manager out of
the assets of each Fund fees at the annual rate for such Fund as set forth in
Schedule B to this Agreement. For each Fund, the management fee shall accrue on
each calendar day, and shall be payable monthly on the first business day of the
next succeeding calendar month. The daily fee accrual shall be computed by
multiplying the fraction of one divided by the number of days in the calendar
year by the applicable annual rate of fee, and multiplying this product by the
net assets of the Fund, determined in the manner established by the Board of
Trustees, as of the close of business on the last preceding business day on
which the Fund's net asset value was determined.
8. State Expense Limitation. If for any fiscal year of a Fund, its
aggregate operating expenses ("Aggregate Operating Expenses") exceed the
applicable percentage expense limit imposed under the securities law and
regulations of any state in which Shares of the Fund are qualified for sale (the
"State Expense Limit"), the Manager shall pay such Fund the amount of such
excess. For purposes of this State Expense Limit, Aggregate Operating Expenses
shall (a) include (i) any fees or expenses reimbursements payable to Manager
pursuant to this Agreement and (ii) to the extent the Fund invests all or a
portion of its assets in another investment company registered under the 1940
Act, the pro rata portion of that company's operating expenses allocated to the
Fund, and (iii) any compensation payable to Manager pursuant to any separate
agreement relating to the Fund's administration, but (b) exclude any interest,
taxes, brokerage commissions, and other normal charges incident to the purchase,
sale or loan of securities, commodity interests or other investments held by the
Fund, litigation and indemnification expense, and other extraordinary expenses
not incurred in the ordinary course of business. Except as otherwise agreed to
by the parties or unless otherwise required by the law or regulation of any
state, any reimbursement by Manager to a Fund under this section shall not
exceed the management fee payable to Manager by the Fund under this Agreement.
Any payment to a Fund by Manager hereunder shall be made monthly, by
annualizing the Aggregate Operating Expenses for each month as of the last day
of the month. An adjustment for payments made during any fiscal year of the Fund
shall be made on or before the last day of the first month following such fiscal
year of the Fund if the Annual Operating Expenses for such fiscal year (i) do
not exceed the State
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<PAGE>
Expense Limitation or (ii) for such fiscal year there is no applicable State
Expense Limit.
9. Retention of Sub-Adviser. Subject to obtaining the initial and
periodic approvals required under Section 15 of the 1940 Act, Manager may retain
one or more sub-advisers at Manager's own cost and expense for the purpose of
furnishing one or more of the services described in Section 1 hereof with
respect to Trust or one or more Funds. Retention of a sub-adviser shall in no
way reduce the responsibilities or obligations of Manager under this Agreement,
and Manager shall be responsible to Trust and its Funds for all acts or
omissions of any sub-adviser in connection with the performance or Manager's
duties hereunder.
10. Non-Exclusivity. The services of Manager to Trust hereunder are not to
be deemed exclusive and Manager shall be free to render similar services to
others.
11. Standard of Care. The Manager shall not be liable for any loss
sustained by reason of the purchase, sale or retention of any security, whether
or not such purchase, sale or retention shall have been based upon the
investigation and research made by any other individual, firm or corporation, if
such recommendation shall have been selected with due care and in good faith,
except loss resulting from willful misfeasance, bad faith, or gross negligence
on the part of the Manager in the performance of its obligations and duties, or
by reason of its reckless disregard of its obligations and duties under this
Agreement.
12. Amendment. This Agreement may not be amended as to Trust or any Fund
without the affirmative votes (a) of a majority of the Board of Trustees,
including a majority of those Trustees who are not "interested persons" of Trust
or of Manager, voting in person at a meeting called for the purpose of voting on
such approval, and (b) of a "majority of the outstanding shares" of Trust or,
with respect to any amendment affecting an individual Fund, a "majority of the
outstanding shares" of that Fund. The terms "interested persons" and "vote of a
majority of the outstanding shares" shall be construed in accordance with their
respective definitions in the 1940 Act and, with respect to the latter term, in
accordance with Rule 18f-2 under the 1940 Act.
13. Effective Date and Termination. This Agreement shall become effective
as to any Fund as of the effective date for that Fund specified in Schedule A
hereto. This Agreement may be terminated at any time, without payment of any
penalty, as to any Fund by the Board of Trustees of Trust, or by a vote of a
majority of the outstanding shares of that fund, upon at least sixty (60) days'
written notice to Manager. This Agreement may be terminated by Manager at any
time upon at least sixty (60) days' written notice to Trust. This Agreement
shall terminate automatically in the event of its "assignment" (as defined in
the 1940 Act). Unless terminated as hereinbefore provided, this Agreement shall
continue in effect with respect to any Fund until the end of the initial term
applicable to that Fund specified in Schedule A and thereafter from year to year
only so long as such continuance is specifically
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<PAGE>
approved with respect to that Fund at least annually (a) by a majority of those
Trustees who are not interested persons of Trust or of Manager, voting in person
at a meeting called for the purpose of voting on such approval, and (b) by
either the Board of Trustees of Trust or by a "vote of a majority of the
outstanding shares" of the Fund.
14. Ownership of Records; Interparty Reporting. All records required to be
maintained and preserved by Trust pursuant to the provisions of rules or
regulations of the Securities and Exchange Commission under Section 31(a) of the
1940 Act or other applicable laws or regulations which are maintained and
preserved by Manager on behalf of Trust and any other records the parties
mutually agree shall be maintained by Manager on behalf of Trust are the
property of Trust and shall be surrendered by Manager promptly on request by
Trust; provided that Manager may at its own expense make and retain copies of
any such records.
Trust shall furnish or otherwise make available to Manager such copies of
the financial statements, proxy statements, reports, and other information
relating to the business and affairs of each Shareholder in a Fund as Manager
may, at any time or from time to time, reasonably require in order to discharge
its obligations under this Agreement.
Manager shall prepare and furnish to Trust as to each Fund statistical data
and other information in such form and at such intervals as Trust may reasonably
request.
15. Non-Liability of Trustees and Shareholders. Any obligation of Trust
hereunder shall be binding only upon the assets of Trust (or the applicable Fund
thereof) and shall not be binding upon any Trustee, officer, employee, agent or
Shareholder of Trust. Neither the authorization of any action by the Trustees or
Shareholders of Trust nor the execution of this Agreement on behalf of Trust
shall impose any liability upon any Trustee or any Shareholder.
16. Use of Manager's Name. Trust may use the name "Nuveen Investment
Trust" and the Fund names listed in Schedule A or any other name derived from
the name "Nuveen" only for so long as this Agreement or any extension, renewal,
or amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of Manager as investment
adviser. At such time as this Agreement or any extension, renewal or amendment
hereof, or such other similar agreement shall no longer be in effect, Trust will
cease to use any name derived from the name "Nuveen" or otherwise connected with
Manager, or with any organization which shall have succeeded to Manager's
business as investment adviser.
17. References and Headings. In this Agreement and in any such amendment,
references to this Agreement and all expressions such as "herein," "hereof," and
"hereunder'" shall be deemed to refer to this Agreement as amended or affected
by any such amendments. Headings are placed herein for convenience of reference
only
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<PAGE>
and shall not be taken as a part hereof or control or affect the meaning,
construction, or effect of this Agreement. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original.
Dated: ____________, 1996
NUVEEN INVESTMENT TRUST
ATTEST By
---------------------------------------
NUVEEN INSTITUTIONAL ADVISORY CORP.
ATTEST By
---------------------------------------
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<PAGE>
NUVEEN INVESTMENT TRUST
MANAGEMENT AGREEMENT
SCHEDULE A
The Funds of the Trust currently subject to this Agreement and the
effective date of each are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
FUND EFFECTIVE DATE
Nuveen Growth and Income Stock Fund ________________________
Nuveen Balanced Stock and Bond Fund ________________________
Nuveen Balanced Municipal
and Stock Fund ________________________
</TABLE>
<PAGE>
NUVEEN INVESTMENT TRUST
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Section 7 of this Agreement shall be calculated
with respect to each Fund in accordance with the following schedule applicable
to the average daily net assets of the Fund:
<TABLE>
<CAPTION>
NUVEEN GROWTH AND INCOME STOCK FUND
<S> <C> <C>
AVERAGE DAILY NET ASSET VALUE FUND MANAGEMENT FEE
For the first $125 million .8500 of 1%
For the next $125 million .8375 of 1%
For the next $250 million .8250 of 1%
For the next $500 million .8125 of 1%
For the next $1 billion .8000 of 1%
For assets over $2 billion .7750 of 1%
NUVEEN BALANCED STOCK AND BOND FUND
AVERAGE DAILY NET ASSET VALUE FUND MANAGEMENT FEE
For the first $125 million .7500 of 1%
For the next $125 million .7375 of 1%
For the next $250 million .7250 of 1%
For the next $500 million .7125 of 1%
For the next $1 billion .7000 of 1%
For assets over $2 billion .6750 of 1%
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
AVERAGE DAILY NET ASSET VALUE FUND MANAGEMENT FEE
For the first $125 million .7500 of 1%
For the next $125 million .7375 of 1%
For the next $250 million .7250 of 1%
For the next $500 million .7125 of 1%
For the next $1 billion .7000 of 1%
For assets over $2 billion .6750 of 1%
</TABLE>
<PAGE>
EXHIBIT (b)5(b)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT MADE THIS 16th day of May, by and between Nuveen Institutional
Advisory Corp., a Delaware corporation and registered investment adviser
("Manager"), and Institutional Capital Corporation, a Delaware corporation and
registered investment adviser ("Sub-Adviser").
WHEREAS, Manager is the investment manager for the Nuveen Investment Trust
(the "Fund"), an open-end diversified, management investment company registered
under the Investment Company Act of 1940, as amended ("1940 Act"), currently
consisting of three separate series or portfolios including the Nuveen Growth
and Income Stock Fund, the Nuveen Balanced Stock and Bond Fund and the Nuveen
Balanced Municipal and Stock Fund (the "Initial Portfolios"); and
WHEREAS, Manager desires to retain Sub-Adviser as its agent to furnish
investment advisory services for the Initial Portfolios, upon the terms and
conditions hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Appointment. Manager hereby appoints Sub-Adviser to provide
certain sub-investment advisory services to the Initial Portfolios for the
period and on the terms set forth in this Agreement. Sub-Adviser accepts
such appointments and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Additional Portfolios. In the event that the Fund establishes one
or more portfolios other than the Initial Portfolios, with respect to which
the Manager desires to engage the Sub-Adviser to render investment advisory
services hereunder, the Manager shall notify the Sub-Adviser of such
desire. If the Sub-Adviser is willing to render such services, it shall
notify the Manager in writing whereupon such portfolio or portfolios shall
become a Portfolio or Portfolios hereunder.
3. Services to be Performed. Subject always to the supervision of
Fund's Board of Trustees and the Manager, Sub-Adviser will furnish an
investment program in respect of, make investment decisions for, and place
all orders for the purchase and sale of securities for, the assets
designated in Schedule A hereto, as such schedule may be amended from time
to time, of the Initial Portfolios and other Portfolios hereunder, all on
behalf of such Portfolios. In the performance of its duties, Sub-Adviser
will satisfy its fiduciary duties to the Fund (as set forth in Section 7,
below), and will monitor the Portfolios' investments, and will comply with
the provisions of Fund's Declaration of Trust and By-laws, as amended from
time to time, and the stated investment objectives, policies and
restrictions of the Portfolios. Manager will provide Sub-Adviser with
current copies of the Fund's Declaration of Trust, By-laws, prospectus and
any amendments thereto, and any objectives, policies or limitations not
appearing therein as they may be relevant to Sub-Adviser's performance
under this Agreement. Sub-Adviser and Manager will each make its officers
and employees available to the other from time to time at reasonable times
to review investment
<PAGE>
policies of the Portfolios and to consult with each other regarding the
investment affairs of the Portfolios. Sub-Adviser will report to the Board
of Trustees and to Manager with respect to the implementation of such
program.
Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will conform to all applicable Rules and Regulations of the
Securities and Exchange Commission in all material respects and in addition
will conduct its activities under this Agreement in accordance with any
applicable regulations of any governmental authority pertaining to its
investment advisory activities;
(c) Sub-Adviser is authorized to select the brokers or dealers that
will execute the purchases and sales of portfolio securities for the
Portfolios and is directed to use its best efforts to obtain best
execution, which includes most favorable net results and execution of the
Fund's orders, taking into account all appropriate factors, including
price, dealer spread or commission, size and difficulty of the transaction
and research or other services provided. It is understood that the Sub-
Adviser will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Fund or in respect of any Portfolio, or be in breach
of any obligation owing to the Fund or in respect of any Portfolio under
this Agreement, or otherwise, solely by reason of its having caused the
Fund to pay a member of a securities exchange, a broker or a dealer a
commission for effecting a securities transaction for the Fund in excess of
the amount of commission another member of an exchange, broker or dealer
would have charged if the Sub-Adviser determined in good faith that the
commission paid was reasonable in relation to the brokerage or research
services provided by such member, broker or dealer, viewed in terms of that
particular transaction or the Sub-Adviser's overall responsibilities with
respect to its accounts, including the Fund, as to which it exercises
investment discretion. In addition, if in the judgment of the Sub-Adviser,
the Fund would be benefited by supplemental services, the Sub-Adviser is
authorized to pay spreads or commissions to brokers or dealers furnishing
such services in excess of spreads or commissions which another broker or
dealer may charge for the same transaction, provided that the Sub-Adviser
determined in good faith that the commission or spread paid was reasonable
in relation to the services provided. The Sub-Adviser will properly
communicate to the officers and trustees of the Fund such information
relating to transactions for any Portfolio as they may reasonably request.
In no instance will portfolio securities be purchased from or sold to the
Manager, Sub-Adviser or any affiliated person of either the Fund, Manager,
or Sub-Adviser, except as may be permitted under the 1940 Act;
(d) will report regularly to Manager and to the Board of Trustees and
will make appropriate persons available for the purpose of reviewing with
representatives of Manager and the Board of Trustees on a regular basis at
reasonable times the
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<PAGE>
management of the Portfolios, including, without limitation, review of the
general investment strategies of the Portfolios, the performance of the
Portfolios in relation to standard industry indices, interest rate
considerations and general conditions affecting the marketplace and will provide
various other reports from time to time as reasonably requested by Manager; and
(e) will prepare such books and records with respect to the Portfolios'
securities transactions as requested by the Manager and will furnish Manager and
Fund's Board of Trustees such periodic and special reports as the Board or
Manager may reasonably request.
4. Expenses. During the term of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commission, if any)
purchased for the Fund.
5. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Manager will pay the Sub-Adviser, and the Sub-
Adviser agrees to accept as full compensation therefor, at the end of each
calendar month, an equity or fixed income portfolio management fee on the
specified proportion of each Portfolio's average daily net asset value set forth
in Schedule A hereto, as such schedule may be amended from time to time, at an
annual rate as set forth below, which rate is determined by reference to the
average daily market value of the equity and fixed income assets, respectively,
of all Nuveen-sponsored investment products for which Institutional Capital
serves as portfolio manager, applying the same proportions as set forth in
Schedule A.
EQUITY ASSETS OF NUVEEN-SPONSORED
INVESTMENT PRODUCTS MANAGED BY EQUITY
INSTITUTIONAL CAPITAL MANAGEMENT FEE
For the first $500 million .35 of 1%
For the next $500 million .30 of 1%
For assets over $1 billion .25 of 1%
FIXED-INCOME ASSETS OF NUVEEN-SPONSORED
INVESTMENT PRODUCTS MANAGED BY FIXED INCOME
INSTITUTIONAL CAPITAL MANAGEMENT FEE
For the first $500 million .20 of 1%
For the next $500 million .15 of 1%
For assets over $1 billion .12 of 1%
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<PAGE>
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
6. Services to Others. Manager understands, and has advised Fund's Board of
Trustees, that Sub-Adviser now acts, or may in the future act, as an investment
adviser to fiduciary and other managed accounts, and as investment adviser or
sub-investment adviser to other investment companies, provided that the Sub-
Adviser conforms to the provisions of the Joint Business Initiative Agreement,
and further provided that whenever the Fund and one or more other investment
advisory clients of Sub-Adviser have available funds for investment, investments
suitable and appropriate for each will be allocated in a manner believed by Sub-
Adviser to be equitable to each. Manager recognizes, and has advised Fund's
Board of Trustees, that in some cases this procedure may adversely affect the
size of the position that a Portfolio may obtain in a particular security. It is
further agreed that, on occasions when the Sub-Adviser deems the purchase or
sale of a security to be in the best interests of the Fund as well as other
accounts, it may, to the extent permitted by applicable law, but will not be
obligated to, aggregate the securities to be so sold or purchased for the Fund
with those to be sold or purchased for other accounts in order to obtain
favorable execution and lower brokerage commissions. In addition, Manager
understands, and has advised Fund's Board of Trustees, that the persons employed
by Sub-Adviser to assist in Sub-Adviser's duties under this Agreement will not
devote their full such service and nothing contained in this Agreement will be
deemed to limit or restrict the right of Sub-Adviser or any of its affiliates to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature. It is also agreed that the Sub-Adviser may
use any supplemental research obtained for the benefit of the Fund in providing
investment advice to its other investment advisory accounts or for managing its
own accounts.
7. Limitation of Liability. Manager will not take any action against Sub-
Adviser to hold Sub-Adviser liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the performance of Sub-
Adviser's duties under this Agreement, except for a loss resulting from Sub-
Adviser's willful misfeasance, bad faith, or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement.
8. Cross-Indemnification. Each party to this Agreement ("Indemnitor") shall
indemnify and hold the other party and its officers, directors, employees,
representatives, agents, and affiliates (collectively, "Indemnitee") harmless as
follows:
a. Duty to Indemnify. Each Indemnitee shall be indemnified against any
and all losses, liabilities, damages, expenses and other costs (including,
without limitation, Indemnitee's own attorneys' and paralegals' fees and
other litigation expenses) suffered or incurred by Indemnitee arising out
of or in connection with any breach or violation of this Agreement, federal
or state statutes, rules or regulations, exchange or self-regulatory agency
rules and
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<PAGE>
regulations, or common law that is attributable in whole or, to the extent
responsible, in part to Indemnitor's actions or the actions of any person
whom Indemnitor may supervise or control, in any civil, criminal,
administrative, arbitration, mediation or other proceeding.
b. Notice of Claims. An Indemnitee asserting an indemnity claim shall
promptly notify Indemnitor in writing of the amount and nature of the
claim. Upon receipt of an indemnity claim, the Indemnitor shall, within 30
days, fulfill any part of its obligation then due under this Section or
give Indemnitee a written explanation for its denial of the claim. If any
indemnity claim is not denied, Indemnitor shall continue to fulfill its
indemnity obligations as and when they come due. The Indemnitee shall be
entitled at its expense to participate in the defense of any claim,
lawsuit, or proceedings. No claim asserted by a third party for which
indemnification from Indemnitor is sought shall be settled without first
obtaining the written consent of Indemnitor, which consent shall not be
unreasonably withheld.
9. Term; Termination; Amendment. This Agreement shall become effective with
respect to the Initial Portfolios on the same date as the Management Agreement
between the Fund and the Manager becomes effective; provided that it has been
approved by a vote of a majority of the outstanding voting securities of each
Portfolio in accordance with the requirements of the 1940 Act and shall remain
in full force for a period ending two (2) years from such date unless sooner
terminated as hereinafter provided. This Agreement shall continue in force from
year to year thereafter with respect to each Portfolio, but only as long as such
continuance is specifically approved for each Portfolio at least annually in the
manner required by the 1940 Act and the rules and regulations thereunder;
provided, however, that if the continuation of this Agreement is not approved
for a Portfolio, the Sub-Adviser may continue to serve in such capacity for such
Portfolio in the manner and to the extent permitted by the 1940 Act and the
rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the
Manager on sixty (60) days' written notice to the Sub-Adviser. This Agreement
may also be terminated by the Fund with respect to any Portfolio by action of
the Board of Trustees or by a vote of a majority of the outstanding voting
securities of such Portfolio on sixty (60) days' written notice to the Sub-
Adviser by the Fund.
This Agreement may be terminated with respect to any Portfolio at any time
without the payment of any penalty by the Manager, the Board of Trustees or by
vote of a majority of the outstanding voting securities of such Portfolio in the
event that it shall have been established by a court of competent jurisdiction
that the Sub-Adviser or any officer or director of the Sub-Adviser has taken any
action which results in a breach of the covenants of the Sub-Adviser set forth
herein.
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<PAGE>
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Section 5 earned prior to such termination. This Agreement shall automatically
terminate in the event the Investment Management Agreement between the Manager
and the Fund is terminated, assigned or not renewed.
10. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
11. Limitations on Liability. All parties hereto are expressly put on
notice of the Fund's Agreement and Declaration of Trust and all amendments
thereto, all of which are on file with the Secretary of Massachusetts, and the
limitation of shareholder and trustee liability contained therein. The
obligations of the Fund entered in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually but only in such
capacities and are not binding upon any of the Trustees, officers, or
shareholders of the Fund individually but are binding upon only the assets and
property of the Fund, and persons dealing with the Fund must look solely to the
assets of the Fund and those assets belonging to the subject Portfolio, for the
enforcement of any claims.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors.
13. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 11 hereof which shall be
construed in accordance with the laws of Massachusetts) the laws of the State of
Illinois.
-6-
<PAGE>
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have caused this
Agreement to be executed as of the day and year first above written.
NUVEEN INSTITUTIONAL ADVISORY CORP., a
Delaware corporation
By:
-----------------------------------
Title:
-----------------------------
ATTEST:
- --------------------------
Title:
--------------------
INSTITUTIONAL CAPITAL CORPORATION, a
Delaware corporation
By:-----------------------------------
Title:
------------------------------
ATTEST:
- --------------------------
Title:
--------------------
-7-
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
Schedule A
<TABLE>
<CAPTION>
Nuveen Growth and Income Stock Fund (as currently known)
- --------------------------------------------------------
<S> <C>
Assets for which Services are to be rendered All
pursuant to Section 3:
Proportions applied under fee schedule 100% of all
pursuant to Section 5: assets under
Equity
Management
Fee
Nuveen Balanced Stock and Bond Fund (as currently known)
- --------------------------------------------------------
Assets for which Services are to be rendered All
pursuant to Section 3:
Proportions applied under fee schedule The percentage of the
pursuant to Section 5: Target Investment mix
allocated by the Fund
Board of Directors
from time to time
to Equity Securities
under Equity
Management Fee
40% of all
assets under
Fixed Income
Management
Fee
Nuveen Balanced Municipal and Stock Fund (as currently known)
- -------------------------------------------------------------
Assets for which Services are to be rendered All Equity
pursuant to Section 3: Securities
Proportions applied under fee schedule All remaining
pursuant to Section 5: assets under
Equity
Management
Fee
</TABLE>
-8-
<PAGE>
EXHIBIT (b)18
NUVEEN INVESTMENT TRUST
MULTIPLE CLASS PLAN
ADOPTED PURSUANT TO RULE 18f-3
WHEREAS, Nuveen Investment Trust, a Massachusetts business trust (the
"Fund"), engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Fund is authorized to and does issue shares of beneficial
interest in separate series, with the shares of each such series representing
the interests in a separate portfolio of securities and other assets (the Fund's
series together with all other such series subsequently established by a Fund
being referred to herein individually as a "Series" and collectively as the
"Series");
WHEREAS, the Fund is authorized to and has divided the shares of each
Series into four classes, designated as Class A Shares, Class B Shares, Class C
Shares and Class R Shares; and
WHEREAS, the Board of the Fund as a whole, and the Trustees who are not
interested persons of the Fund (as defined in the Act) (the "Non-Interested
Members"), after having been furnished and having evaluated information
reasonably necessary to evaluate this Multiple Class Plan (the "Plan"), have
determined in the exercise of their reasonable business judgment that the Plan
is in the best interests of each class of each Series individually, and each
Series and the Fund as a whole.
NOW, THEREFORE, the Fund hereby adopts this Plan, effective the date
hereof, in accordance with Rule 18f-3 under the Act:
Section 1. Class Differences. Each class of shares of a Series shall
represent interests in the same portfolio of investments of that Series and,
except as otherwise set forth in this Plan, shall differ solely with respect to:
(i) distribution, service and other charges and expenses as provided for in
Sections 2 and 3 of this Plan; (ii) the exclusive right of each class of shares
to vote on matters submitted to shareholders that relate solely to that class or
for which the interests of one class differ from the interests of another class
or classes; (iii) such differences relating to eligible investors as may be set
forth in the prospectus and statement of additional information of each Series,
as the same may be amended or supplemented from time to time (each a
"Prospectus" and "SAI" and collectively, the "Prospectus" and "SAI"); (iv) the
designation of each class of shares; and (v) conversion features.
Section 2. Distribution and Service Arrangements; Conversion Features.
Class A Shares, Class B Shares, Class C Shares and Class R Shares of each Fund
shall differ in the manner in which such shares are distributed and in the
services provided to shareholders of each such class as follows:
<PAGE>
(a) Class A Shares:
(i) Class A Shares shall be sold at net asset value subject to a front-end
sales charge set forth in the Prospectus and SAI;
(ii) Class A Shares shall be subject to an annual service fee ("Service
Fee") pursuant to a Plan of Distribution and Service Pursuant to Rule 12b-1 (the
"12b-1 Plan") not to exceed 0.25 of 1% of the average daily net assets of the
Series allocable to Class A Shares, which, as set forth in the Prospectus, SAI
and the 12b-1 Plan, may be used to compensate certain authorized dealers for
providing ongoing account services to shareholders; and
(iii) Class A Shares shall not be subject to a Distribution Fee (as
hereinafter defined); and
(iv) As described in the Prospectus and SAI, certain Class A shares
redeemed within 18 months of purchase shall be subject to a contingent deferred
sales charge ("CDSC") of 1% of the lower of (a) the net asset value of Class A
Shares at the time of purchase or (b) the net asset value of Class A Shares at
the time of redemption, as set forth in the Prospectus and SAI.
(b) Class B Shares:
(i) Class B Shares shall be sold at net asset value without a front-end
sales charge;
(ii) Class B Shares shall be subject to a Service Fee pursuant to the 12b-1
Plan not to exceed 0.25 of 1% of average daily net assets of the Series
allocable to Class B Shares, which, as set forth in the Prospectus, SAI and the
12b-1 Plan, may be used to compensate certain authorized dealers for providing
ongoing account services to shareholders;
(iii) Class B Shares shall be subject to an annual distribution fee
("Distribution Fee") pursuant to the 12b-1 Plan not to exceed 0.75 of 1% of
average daily net assets of the Series allocable to Class B Shares, which, as
set forth in the Prospectus, SAI and the 12b-1 Plan, will be used to reimburse
John Nuveen & Co. Incorporated, the Funds' distributor, for certain expenses and
for providing compensation to certain authorized dealers;
(iv) Class B Shares redeemed within 6 years of purchase shall be subject
to a CDSC described below of the lower of (a) the net asset value of Class B
Shares at the time of purchase or (b) the net asset value of Class B Shares at
the time of redemption, as set forth in the Prospectus and SAI; and
-2-
<PAGE>
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE
OF CLASS B SHARES CDSC
<S> <C>
0-1 5%
1-2 4%
2-3 4%
3-4 3%
4-5 2%
5-6 1%
</TABLE>
(v) Class B Shares will automatically convert to Class A Shares eight years
after purchase, as set forth in the Prospectus and SAI.
(c) Class C Shares:
(i) Class C Shares shall be sold at net asset value without a front-end
sales charge;
(ii) Class C Shares shall be subject to a Service Fee pursuant to the
12b-1 Plan not to exceed 0.25 of 1% of average daily net assets of the Series
allocable to Class C Shares, which, as set forth in the Prospectus, SAI and the
12b-1 Plan, may be used to compensate certain authorized dealers for providing
ongoing account services to shareholders;
(iii) Class C Shares shall be subject to a Distribution Fee pursuant to the
12b-1 Plan not to exceed 0.75 of 1% of average daily net assets of the Series
allocable to Class C Shares, which, as set forth in the Prospectus, SAI and the
12b-1 Plan, will be used to reimburse John Nuveen & Co. Incorporated, the Funds'
distributor, for certain expenses and for providing compensation to certain
authorized dealers; and
(iv) Class C Shares redeemed within 12 months of purchase shall be subject
to a CDSC of 1% of the lower of (a) the net asset value of Class C Shares at the
time of purchase or (b) the net asset value of Class C Shares at the time of
redemption, as set forth in the Prospectus and SAI.
(d) Class R Shares:
(i) Class R Shares shall be sold at net asset value without a front-end
sales charge;
(ii) Class R Shares shall not be subject to a Service Fee; and
(iii) Class R Shares shall not be subject to a Distribution Fee.
-3-
<PAGE>
Section 3. Allocation of Income, Expenses, Gains and Losses.
(a) Investment Income, and Realized and Unrealized Gains and Losses. The
daily investment income, and realized and unrealized gains and losses, of a
Series will be allocated to each class of shares based on each class' relative
percentage of the total value of shares outstanding of the Series at the
beginning of the day, after such net assets are adjusted for the prior day's
capital share transactions.
(b) Series Level Expenses. Expenses that are attributable to a Series, but
not a particular class thereof ("Series level expenses"), will be allocated to
each class of shares based on each class' relative percentage of the total value
of shares outstanding of the Series at the beginning of the day, after such net
assets are adjusted for the prior day's capital share transactions. Series level
expenses include fees for services that are received equally by the classes
under the same fee arrangement. All expenses attributable to a Series that are
not "class level expenses" (as defined below) shall be Series level expenses,
including but not limited to transfer agency fees and expenses, share
registration expenses, and shareholder reporting expenses.
(c) Class Level Expenses. Expenses that are directly attributable to a
particular class of shares, including the expenses relating to the distribution
of a class' shares, or to services provided to the shareholders of a class, as
set forth in Section 2 of this Plan, will be incurred by that class of shares.
Class level expenses include expenses for services that are unique to a class of
shares in either form or amount. "Class level expenses" shall include, but not
be limited to, 12b-1 Service Fees, 12b-1 Distribution Fees, expenses associated
with the addition of share classes to a Fund (to the extent that the expenses
were not fully accrued prior to the issuance of the new classes of shares),
expenses of administrative personnel and services required to support the
shareholders of a specific class, litigation or other legal expenses relating to
a specific class of shares, directors' fees or expenses incurred as a result of
issues relating to a specific class of shares, and accounting expenses relating
to a specific class of shares.
(d) Fee Waivers and Expense Reimbursements. On a daily basis, if the Series
level expenses and the class level expenses (not including 12b-1 plan payments)
exceed the daily expense cap for the Series, an appropriate waiver/reimbursement
will be made to the Series. The amount of such reimbursement to each class will
be in an amount such that the expenses of the class with the highest expense
ratio (excluding Service Fees and Distribution Fees) will be equal to the daily
expense cap after reimbursement. The expense reimbursement will be allocated to
each class of shares based on each class' relative percentage of the total value
of shares outstanding of the Series at the beginning of the day, after such net
assets are adjusted for the prior day's capital share transactions.
Section 4. Exchange Privilege. Shares of a class of a Series may be
exchanged only for shares of the same class of another Series, except as
otherwise set forth in the Prospectus and SAI.
-4-
<PAGE>
Section 5. Term and Termination.
(a) The Series. This Plan shall become effective with respect to each
Series on the date hereof, and shall continue in effect with respect to such
Class A, Class B, Class C and Class R Shares of each such Series until
terminated in accordance with the provisions of Section 5(c) hereof.
(b) Additional Series or Classes. This Plan shall become effective with
respect to any class of shares of a Series other than Class A, Class B, Class C
or Class R and with respect to each additional Series or class thereof
established by a Fund after the date hereof and made subject to this Plan upon
commencement of the initial public offering thereof (provided that the Plan has
previously been approved with respect to such additional Series or class by
votes of a majority of both (i) the members of the Board of a Fund, as a whole,
and (ii) the Non-Interested Members, cast at a meeting held before the initial
public offering of such additional Series or classes thereof), and shall
continue in effect with respect to each such additional Series or class until
terminated in accordance with provisions of Section 5(c) hereof. An addendum
setting forth such specific and different terms of such additional series or
classes shall be attached to or made part of this Plan.
(c) Termination. This Plan may be terminated at any time with respect to
any Fund or any Series or class thereof, as the case may be, by vote of a
majority of both the members of the Board of a Fund, as a whole, and the Non-
Interested Members. The Plan may remain in effect with respect to a particular
Fund or any Series or class thereof even if it has been terminated in accordance
with this Section 5(c) with respect to any other Fund or Series or class
thereof.
Section 6. Subsequent Funds. The parties hereto intend that any open-end
investment company established subsequent to the date set forth below for which
Nuveen Institutional Advisory Corp. acts as investment adviser (each a "Future
Fund"), will be covered by the terms and conditions of this Plan, provided that
the Board of such Future Fund as a whole, and the Non-Interested Members of such
Future Fund, after having been furnished and having evaluated information
reasonably necessary to evaluate the Plan, have determined in the exercise of
their reasonable business judgment that the Plan is in the best interests of
each class of each Series of such Future Fund individually, and each Series of
such Future Fund and such Future Fund as a whole.
Section 7. Amendments.
(a) General. Except as set forth below, any material amendment to this Plan
affecting a Fund or Series or class thereof shall require the affirmative vote
of a majority of both the members of the Board of that Fund, as a whole, and the
Non-Interested Members that the amendment is in the best interests of each class
of each Series individually and each Series as a whole.
-5-
<PAGE>
(b) Future Funds. Any amendment to the Plan solely for the purpose of
adding a Future Fund as a party hereto in accordance with Section 6, will not
require any action by the Boards of the Funds.
Dated: July ___, 1996
-6-
