<PAGE>
NUVEEN
Growth and Income
Mutual Funds
June 30, 1997
Annual Report
Designed to provide
superior equity market
performance with less risk.
[PHOTO APPEARS HERE]
Growth
and Income
Stock Fund
<PAGE>
Contents
1 Dear Shareholder
4 Meeting Investor Needs
5 Answering Your Questions
8 Growth and Income Stock
Fund Overview
10 Portfolio of Investments
12 Statement of Net Assets
13 Statement of Operations
14 Statement of Changes
in Net Assets
15 Notes to Financial Statements
20 Financial Highlights
22 Report of Independent
Public Accountants
23 Shareholder Information
24 Fund Information
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
It is a great pleasure to share with you the Nuveen Growth and Income Stock
Fund's outstanding performance record for its first fiscal year of operations, a
period covering the eleven months from August 7, 1996 through June 30, 1997.
Since the fund's inception last August, Class A shareholders have enjoyed a
36.30% return, compared with the 29.70% average for the 561 peer funds ranked in
Lipper Analytical Service's Growth and Income fund category for the same period.
The fund's performance ranked among the top 8% of all peer group funds. The fund
also outpaced the 36.04% return produced by the Standard & Poor's 500-Stock
Index--a very impressive achievement considering the conservative market
orientation of the fund. This level of performance is especially gratifying
because nearly 43,000 individuals have more than $700 million invested in the
fund.
A 46% Return During the Fund's First Year of Operations
It's also been an excellent first full calendar year for the Nuveen Growth and
Income Stock Fund. On August 7, 1997, the fund reached its first anniversary
turning in an outstanding total return of 45.95% for Class A Shares. This return
compares favorably with a 39.33% average for the Lipper Growth and Income peer
funds for that same 365-day period.
Finding Value in Today's Stock Market with Less Volatility
The large price fluctuations experienced in today's equity markets can be
discomforting to investors who rely upon their investments as a principal source
of their financial security. An important objective of the Nuveen Growth and
Income Stock Fund is to allow investors to participate in the growth potential
of equity investments with less risk and price volatility than the overall
market. This concept is illustrated on page 9.
1
<PAGE>
Since the fund's inception last August, fund Class A shareholders have enjoyed a
36.30% return, compared with the 29.70% average for the 561 peer funds ranked in
Lipper Analytical Service's Growth and Income fund category for the same period.
The fund seeks to produce superior returns with less risk by purchasing stocks
of large, well-established companies whose current earnings and near term growth
potential seem undervalued by the market. The stocks in our portfolio--most of
which have very familiar names, such as IBM, General Motors and Boeing--are
solid companies. These stocks generally trade at valuations relative to their
earnings that are considerably below market averages, and they have been
selected based upon their earnings stability and a clearly identified catalyst
for near-term price appreciation.
A Disciplined Investment Process
Stock selection based upon a value-oriented philosophy is not the only strategy
that helps the fund deliver outstanding performance. Our fund's sub-adviser,
Institutional Capital Corporation (ICAP), also follows a rigorous sell
discipline so that once a stock has realized its potential it is replaced with
another expected to perform well. This strict adherence to a time-tested
strategy takes the emotion out of investing in equities--something that hinders
many investors who directly invest in the market.
A Fund Designed for Security Conscious Equity Investors
With more than 2,500 stock mutual funds in existence today, investors have many
ways to participate in the equity market. The Nuveen Growth and Income Stock
Fund is designed for security conscious investors who want to harness the
potential of this huge market while pursuing a balance of long-term growth with
below-market risk.
ICAP shares Nuveen's traditional value-oriented management philosophy and has an
established history of exceptional performance--especially in difficult markets.
For a more thorough examination of the strategies the fund employed to deliver
this excellent performance, please read the interview with Rob Lyon, President
of ICAP, on pages 4-7.
A Core Holding for the Accomplished Investor
Wealth, like success, takes many forms. But both wealth and success convey a
sense of arrival--and the special satisfaction that comes with accomplishment.
We are
2
<PAGE>
The fund seeks to produce superior returns with less risk by purchasing stocks
of large, well-established companies whose current earnings and near term growth
potential seem undervalued by the market.
dedicated to helping investors enjoy their accomplishments and sustain the
lifestyles they have built for themselves. Even after nearly 100 years of
offering investments to the public, we continue to strive to better appreciate
the distinct needs of investors who rely on their investment portfolios as their
principal source of income and financial security. We recognize that Nuveen
investors seek a balance between preservation of what they have achieved, income
to meet their current needs and growth to maintain their lifestyle in the
future.
Nuveen's Growth and Income Stock Fund is one of an expanded array of Nuveen
equity and fixed-income investment products designed to meet these important
objectives.
I'm thrilled that the fund has performed so well. On behalf of everyone at
Nuveen, I thank you for your confidence in us and our family of investments. We
will continue to strive to provide you with high-quality investments that
withstand the test of time. We look forward to reporting to you again in six
months.
Sincerely,
/S/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 15, 1997
3
<PAGE>
Meeting Investor Needs
The Nuveen Growth and Income Stock Fund seeks to provide investors with a
superior total return over time from a diversified portfolio of large company
stocks. In general, the portfolio is comprised primarily of equity securities of
companies with market capitalizations of at least $500 million.
The fund's subadviser, Institutional Capital Corporation (ICAP), employs a
value-oriented team approach to stock selection. The equity portfolio management
team, which consists of 12 portfolio managers and analysts, seeks to identify
stocks with strong relative value--that is, stocks that appear to be priced at
less than their true value--with clear catalysts for price appreciation. A
catalyst is a company or industry event that could trigger a rise in the stock's
price, such as a corporate restructuring or a favorable market climate for a
particular industry.
To craft the fund's portfolio, ICAP begins with a large universe of
approximately 450 large- and mid-size company stocks and use proprietary
valuation models to identify roughly 120 stocks believed to have the best
relative value and earnings stability. We then apply a qualitative catalyst
identification process to select the 40-45 most attractively valued stocks from
this group. The team applies the same disciplined, thorough consideration to its
sell decisions. Stocks are sold if they have reached their value targets, if the
reason for purchase is no longer valid, or if they become less attractive
relative to other candidates.
This disciplined investment approach is behind the phenomenal performance
produced for the fund's investors during both the first fiscal and calendar year
of operations.
4
<PAGE>
Answering Your Questions
Robert Lyon, President and Chief Investment Officer of Institutional Capital
Corporation, talks about the equity market and offers insights into factors that
affected fund performance over the past year.
What economic and market factors affected the fund's performance?
Since the inception of the fund, the stock market has enjoyed tremendous gains
as a result of a number of factors, including a very strong U.S. economy, a
relatively low interest rate environment, few signs of inflationary pressures,
strong corporate earnings, and a record amount of merger and acquisition
activity. These factors boosted investor confidence and helped propel the U.S.
equity market to substantial gains.
How did the Nuveen Growth and Income Stock Fund perform in its first year?
As Tim stated in his letter to shareholders, the fund performed exceptionally
well since its inception last August, rewarding fund Class A investors with a
total return on net asset value for the fiscal year ended June 30 of 36.30%,
including price changes and reinvested dividends. Additionally, the fund ranked
in the top 8% of the 561 peer funds ranked in Lipper Analytical Services' Growth
and Income fund category for the same period.
Given the highly-valued U.S. equity market, where were you able to find value?
Much of the fund's stellar performance came from the selection of stocks
undergoing corporate restructurings, such as Phillips Electronics, Novartis,
American Home Products, DuPont, and Allstate Insurance. Our view is that
companies undergoing restructurings are particularly appropriate for today's
market because they have generally been poor market performers over the past
several years. New management approaches can frequently jump-start the earnings
of a company, which can often translate into a higher earnings multiple.
5
<PAGE>
What is your outlook for the financial markets?
In general, our view remains neutral. While company valuations are very high by
historical standards, we believe low interest rates will keep investors in the
market. At ICAP we have long believed that "tight money," or reduced liquidity
for equities, is the signal to take a more conservative stance. At this time,
despite high valuations, there is little evidence that conditions will be moving
shortly to a period of reduced liquidity.
We believe we will continue to enjoy a period of sustained growth with low
inflation. Among the reasons for continued optimism is strong productivity
growth in the U.S. due to massive investments in new technology, strong demand
being met by slack operating rates in Europe and Japan, and healthy merger and
acquisition activity in the U.S. and abroad. In addition, a modest upturn in the
economies of Japan and Germany in 1998, met by reduced growth in the U.S.,
should allow for a continuation of noninflationary growth. In general, the
economic data currently indicate few signs of inflation. However, there is a
modest chance of tightening by the Federal Reserve in the short term, which
could lead to a more difficult market environment.
What factors will you focus on in picking stocks in the coming months?
Most of the stocks that we find that meet our investment criteria fall in the
category of corporate restructurings. Our view is that restructurings are
particularly appropriate for today's market.
6
<PAGE>
Even though most consumer product and service markets are very competitive from
a pricing standpoint, in some instances, companies have the ability to raise
prices. Thus, companies that have some degree of pricing flexibility should be
relatively advantaged. Such flexibility could come from a particular product, or
industry supply and demand conditions. As we have increasingly focused on this
potential, several areas of opportunity have emerged, reflecting our holdings in
Host Marriott, ITT Corp. and AMR Corp. In each case, we have looked
for companies that are benefiting from enhanced pricing power, and have
managements who are working hard to maximize that value for shareholders.
For these reasons, we believe the fund is well positioned and that these key
strategic investment themes should provide significant upside potential while
providing valuable protection in difficult markets.
7
<PAGE>
Growth and Income
Stock Fund
Overview as of June 30, 1997
Top Ten Stock Holdings
Philips Electronics NV 4.8%
- ------------------------------------
NYNEX Corporation 3.5%
- ------------------------------------
Raytheon Corporation 3.4%
- ------------------------------------
Ford Motor Company 3.4%
- ------------------------------------
IBM Corporation 3.3%
- ------------------------------------
Rhone-Poulenc SA 3.2%
- ------------------------------------
Allstate Corporation 3.1%
- ------------------------------------
Boeing Company 3.0%
- ------------------------------------
General Motors Corporation 3.0%
- ------------------------------------
Burlington Northern Santa Fe 3.0%
- ------------------------------------
Diversification
[PIE CHART APPEARS HERE]
Other 14%
Transportation 11%
Automotive 6%
Banks 5%
Chemicals 5%
Defense 9%
Computer Systems 5%
Media 4%
Entertainment 8%
Pharmaceutical 8%
Retail 4%
Telephone 9%
Insurance 3%
Health Care 3%
Services 3%
Toys 3%
Fund Highlights
================================================================================
Share Class A B C R
CUSIP 67064Y503 67064Y602 67064Y701 67064Y800
- --------------------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $24.01 $24.00 $23.98 $24.02
- --------------------------------------------------------------------------------
Last Quarterly Dividend $0.1153 $0.0733 $0.0733 $0.1294
- --------------------------------------------------------------------------------
Total Net Assets ($000) $646,150
- --------------------------------------------------------------------------------
Beta 0.9
- --------------------------------------------------------------------------------
Average Market Capitalization $25 billion
- --------------------------------------------------------------------------------
Average P/E (trailing 12 months) 18.5
- --------------------------------------------------------------------------------
Number of Stocks 47
- --------------------------------------------------------------------------------
Expected Turnover Rate 100%-125%
- --------------------------------------------------------------------------------
Expense Ratio (A Shares) (After Reimbursement) 1.20%
- --------------------------------------------------------------------------------
Portfolio Allocation Equity Cash
90% 10%
- --------------------------------------------------------------------------------
Total Return/1/
================================================================================
Share Class A(NAV) A(Offer) B C R
Year-to-Date 19.74% 13.45% 19.24% 19.14% 19.94%
- --------------------------------------------------------------------------------
Since Inception 36.30% 29.14% 35.37% 35.26% 36.65%
- --------------------------------------------------------------------------------
Dividend Yields
- --------------------------------------------------------------------------------
Share Class A(NAV) A(Offer) B C R
Distribution Rate 1.92% 1.82% 1.22% 1.22% 2.15%
- --------------------------------------------------------------------------------
SEC 30-Day Yield 0.91% 0.87% 0.18% 0.18% 1.16%
- --------------------------------------------------------------------------------
8
<PAGE>
Nuveen Growth and Income Stock Fund
June 30, 1997 Annual Report
1 Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.25% maximum sales charge. Class B shares
have a CDSC that begins at 5% for redemptions during the first year after
purchase and declines periodically to 0% over the following six years, which
is not reflected in the return figures. Class B shares convert to Class A
shares after eight years. Class C shares have a 1% CDSC for redemptions
within one year, which is not reflected in the return figures.
2 The Index Comparison shows the change in value of a $10,000 investment in the
A shares of the Nuveen fund compared with the Standard & Poor's 500 Index,
which does not reflect any initial or ongoing expenses. The Nuveen fund
return depicted in the chart reflects the initial maximum sales charge
applicable to A shares (5.25%) and all ongoing fund expenses.
Index Comparison/2/
[LINE GRAPH APPEARS HERE]
S&P 500 Nuveen Growth and Income Stock Fund (Offer)
10000 9475 8/96
9834 9484 9/96
10344 9877 10/96
10630 10304 11/96
11434 11038 12/96
11214 10787 1/97
11915 11337 2/97
12008 11417 3/97
11514 11180 4/97
12202 11727 5/97
12945 12359 6/97
13556 12919 7/97
. Nuveen Growth and Income Stock Fund (Offer) $12,914 (NAV=$13,684)
. S&P 500 $13,556
Past performance is not predictive of future performance.
Superior Returns with Less Volatility
[BAR CHART APPEARS HERE]
Positive Weeks Negative Weeks
. Nuveen Growth and Income Stock Fund 1.42 -0.94
. S&P 500 1.76 -1.2
. Lipper Growth and Income Fund Index 1.45 -0.97
Class A share performance for the period 8/7/96 (Fund Inception) through
6/30/97.
9
<PAGE>
Portfolio of Investments
Nuveen Growth and Income Stock Fund
<TABLE>
<CAPTION>
Market
Shares Description Value
==================================================================================================================================
<S> <C> <C>
COMMON STOCKS - 89.3%
Automotive - 5.7%
514,100 Ford Motor Company $ 19,407,275
312,500 General Motors Corporation 17,402,344
- ----------------------------------------------------------------------------------------------------------------------------------
Banks - 4.3%
325,500 Banc One Corporation 15,766,406
45,200 Wells Fargo & Company 12,181,400
- ----------------------------------------------------------------------------------------------------------------------------------
Chemicals - 4.6%
217,650 Akzo Nobel N.V. Sponsored ADR 15,045,056
236,000 E.I. du Pont de Nemours and Company Ltd. 14,838,500
- ----------------------------------------------------------------------------------------------------------------------------------
Computer Systems - 4.7%
209,400 International Business Machines Corporation 18,885,262
308,300 Sun Microsystems, Inc. + 11,474,541
- ----------------------------------------------------------------------------------------------------------------------------------
Defense - 8.5%
330,800 Boeing Company 17,553,075
196,500 Northrop Grumman Corporation 17,255,156
384,900 Raytheon Company 19,629,900
- ----------------------------------------------------------------------------------------------------------------------------------
Electronics - 6.1%
120,500 Advanced Micro Devices, Inc. + 4,338,000
381,500 Philips Electronic N.V. 27,420,313
97,800 SGS-Thomson Microelectronics N.V. + 7,824,000
- ----------------------------------------------------------------------------------------------------------------------------------
Entertainment - 3.0%
464,300 Host Marriott Corp. + 8,270,344
186,900 ITT Corporation + 11,412,581
- ----------------------------------------------------------------------------------------------------------------------------------
Financial Services - 1.1%
170,600 Morgan Stanley, Dean Witter, Discover and Co. 7,346,462
- ----------------------------------------------------------------------------------------------------------------------------------
Food, Tobacco, Beverage - 1.9%
305,000 Grand Metropolitan PLC Sponsored ADR 11,952,187
- ----------------------------------------------------------------------------------------------------------------------------------
Health Care - 3.1%
130,050 Aetna Inc. 13,313,869
230,700 Tenet Healthcare Corporation + 6,820,069
- ----------------------------------------------------------------------------------------------------------------------------------
Insurance - 2.8%
245,950 Allstate Corporation 17,954,350
- ----------------------------------------------------------------------------------------------------------------------------------
Media - 3.9%
468,500 Dun & Bradstreet Corporation 12,298,125
63,400 Tribune Company 3,047,163
484,850 U.S. West Media Group + 9,818,213
- ----------------------------------------------------------------------------------------------------------------------------------
Metals - 1.9%
175,650 Reynolds Metals Company 12,515,063
- ----------------------------------------------------------------------------------------------------------------------------------
Natural Gas - 1.1%
286,900 Union Pacific Resources Group Inc. 7,136,638
- ----------------------------------------------------------------------------------------------------------------------------------
Non-Defense Capital Spending - 2.0%
189,300 Case Corporation 13,038,037
- ----------------------------------------------------------------------------------------------------------------------------------
Oil - 0.6%
79,600 Ashland Inc. 3,691,450
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Nuveen Growth and Income Stock Fund
June 30, 1997 Annual Report
<TABLE>
<CAPTION>
Market
Shares Description Value
====================================================================================================================================
<S> <C> <C>
COMMON STOCKS--continued
Pharmaceuticals--7.2%
198,250 American Home Products Corporation $ 15,166,125
155,400 Novartis AG Sponsored ADR 12,439,730
447,000 Rhone--Poulenc SA Sponsor ADR 18,606,375
- ------------------------------------------------------------------------------------------------------------------------------------
Retail--3.5%
153,350 Dillard's Inc. 5,309,744
422,900 Federated Department Stores, Inc.+ 14,695,775
138,600 Office Depot, Inc.+ 2,694,037
- ------------------------------------------------------------------------------------------------------------------------------------
Services/Miscellaneous--4.8%
148,650 AMR Corporation+ 13,750,125
112,100 Continental Airlines, Inc.+ 3,916,494
55,600 HFS, Inc.+ 3,224,800
503,118 Peninsular and Oriental Steam Navigation Company 10,048,071
- ------------------------------------------------------------------------------------------------------------------------------------
Software & Services--1.7%
252,300 First Data Corporation 11,085,431
- ------------------------------------------------------------------------------------------------------------------------------------
Telephone--7.9%
448,600 MCI Communications Corporation 17,172,969
348,900 NYNEX Corporation 20,105,362
264,200 Sprint Corporation 13,903,525
- ------------------------------------------------------------------------------------------------------------------------------------
Toys--2.5%
360,400 Hasbro, Inc. 10,226,350
177,400 Mattel, Inc. 6,009,425
- ------------------------------------------------------------------------------------------------------------------------------------
Transportation--6.4%
192,600 Burlington Northern Santa Fe 17,309,925
354,200 Canadian Pacific, Ltd. 10,072,562
196,600 Union Pacific Corporation 13,860,300
- ------------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks--(cost $497,518,397) 577,232,904
- ------------------------------------------------------------------------------------------------------------------------------------
Principal Market
Amount Description Value
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--10.4%
300,000 AT&T Corporation, Commercial Paper, effective yield of 6.13%, 7/01/97 300,000
15,900,000 AT&T Corporation, Commercial Paper, effective yield of 6.14%, 7/02/97 15,897,593
9,500,000 Coca Cola Company, Commercial Paper, effective yield of 5.56%, 7/10/97 9,487,080
12,000,000 General Electric Capital Corporation, Commercial Paper, effective yield of 5.57%, 7/21/97 11,963,200
11,500,000 Shell Oil Company, Commercial Paper, effective yield of 6.13%, 7/01/97 11,500,000
9,500,000 Toys "R" Us, Inc., Commercial Paper, effective yield of 5.57%, 7/25/97 9,465,166
8,400,000 Warner Lambert Inc., Commercial Paper, effective yield of 5.58%, 7/29/97 8,364,067
- ------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments--(cost $66,977,106) 66,977,106
-------------------------------------------------------------------------------------------------------------------
Total Investments--(cost $564,495,503)--99.7% 644,210,010
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities--0.3% 1,939,908
------------------------------------------------------------------------------------------------------------------
Net Assets--100% $646,149,918
===================================================================================================================
+Non-income producing.
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
Statement of Net Assets
June 30, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
<S> <C>
Assets
Investment securities, at market value (cost $564,495,503) (note 1) $ 644,210,010
Receivables:
Dividends and interest 973,998
Investments sold 6,065,440
Shares sold 2,360,873
Deferred organization costs (note 1) 154,938
Other assets 3,010
- --------------------------------------------------------------------------------------------
Total assets 653,768,269
- --------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 37,776
Payables:
Investments purchased 3,487,771
Shares redeemed 361,400
Accrued expenses:
Management fees (note 4) 376,269
12b-1 distribution and service fees (notes 1 and 4) 132,519
Other 137,230
Dividends payable 3,085,386
- --------------------------------------------------------------------------------------------
Total liabilities 7,618,351
- --------------------------------------------------------------------------------------------
Net assets (note 5) $ 646,149,918
============================================================================================
Class A Shares (note 1)
Net assets $ 616,209,268
Shares outstanding 25,665,342
Net asset value and redemption price per share $ 24.01
Offering price per share (net asset value per share plus
maximum sales charge of 5.25% of offering price) $ 25.34
============================================================================================
Class B Shares (note 1)
Net assets $ 10,663,985
Shares outstanding 444,400
Net asset value, offering and redemption price per share $ 24.00
============================================================================================
Class C Shares (note 1)
Net assets $ 3,629,784
Shares outstanding 151,360
Net asset value, offering and redemption price per share $ 23.98
============================================================================================
Class R Shares (note 1)
Net assets $ 15,646,881
Shares outstanding 651,364
Net asset value, offering and redemption price per share $ 24.02
============================================================================================
</TABLE>
======= See accompanying notes to financial statements.
12
<PAGE>
Statement of Operations Nuveen Growth and Income Stock Fund
For the period August 7, 1996 June 30, 1997 Annual Report
(commencement of operations)
through June 30, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
<S> <C>
Investment Income (note 1)
Dividends $ 6,249,713
Interest 1,884,775
- --------------------------------------------------------------------------------------------
Total investment income 8,134,488
- --------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 2,485,395
12b-1 service fees--Class A (notes 1 and 4) 721,457
12b-1 distribution and service fees--Class B (notes 1 and 4) 16,725
12b-1 distribution and service fees--Class C (notes 1 and 4) 6,701
Shareholders' servicing agent fees and expenses 190,640
Custodian's fees and expenses 65,411
Trustees' fees and expenses (note 4) 22,246
Professional fees 15,547
Shareholders' reports--printing and mailing expenses 126,174
Federal and state registration fees 171,408
Amortization of deferred organization costs (note 1) 31,800
Other expenses 12,021
- --------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 3,865,525
Expense reimbursement (note 4) (283,295)
- --------------------------------------------------------------------------------------------
Net expenses 3,582,230
- --------------------------------------------------------------------------------------------
Net investment income 4,552,258
- --------------------------------------------------------------------------------------------
Realized and Unrealized Gain From Investments
Net realized gain from investment transactions (notes 1 and 3) 23,971,540
Net change in unrealized appreciation or depreciation of investments 79,714,507
- --------------------------------------------------------------------------------------------
Net gain from investments 103,686,047
- --------------------------------------------------------------------------------------------
Net increase in net assets from operations $108,238,305
============================================================================================
</TABLE>
See accompanying notes to financial statements.
- -----
13
<PAGE>
Statement of Changes in Net Assets
For the period August 7, 1996 (commencement of operations) through June 30, 1997
- -------------------------------------------------------------------------------
Operations
Net investment income $ 4,552,258
Net realized gain from investment transactions
(notes 1 and 3) 23,971,540
Net change in unrealized appreciation or depreciation
of investments 79,714,507
- -------------------------------------------------------------------------------
Net increase in net assets from operations 108,238,305
- -------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (4,326,777)
Class B (33,641)
Class C (11,701)
Class R (131,681)
From accumulated net realized gains
from investment transactions:
Class A (96)
Class B (96)
Class C (96)
Class R (57,187)
- -------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,561,275)
- -------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 560,742,869
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 1,085,746
- -------------------------------------------------------------------------------
561,828,615
- -------------------------------------------------------------------------------
Cost of shares redeemed (19,389,087)
- -------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 542,439,528
- -------------------------------------------------------------------------------
Net increase in net assets 646,116,558
Net assets at beginning of period 33,360
- -------------------------------------------------------------------------------
Net assets at end of period $646,149,918
===============================================================================
Balance of undistributed net investment income at end of period $ 48,458
===============================================================================
See accompanying notes to financial statements.
14
<PAGE>
Notes to Financial Statements Nuveen Growth and Income Stock Fund
June 30, 1997 Annual Report
1. General Information and Significant Accounting Policies
The Nuveen Growth and Income Stock Fund (the "Fund") is a series of the Nuveen
Investment Trust (the "Trust"). The Trust (and each series within the Trust) is
an open-end diversified management investment company registered under the
Investment Company Act of 1940. The Trust was organized as a Massachusetts
business trust on May 6, 1996. Prior to commencement of operations on August 7,
1996, the Trust had no operations other than those related to organizational
matters and the initial capital contribution of $100,080 (of which $33,360 was
allocated to the Fund) by Nuveen Institutional Advisory Corp. (the "Adviser"), a
wholly owned subsidiary of The John Nuveen Company, for the issuance of shares
on July 29, 1996. On August 7, 1996, The John Nuveen Company made an additional
investment of approximately $5 million in the Fund for the purpose of
establishing an initial investment portfolio. During the Fund's initial offering
period of its shares to investors, November 6, 1996 through January 31, 1997,
Class A Shares were only available for purchase on a privileged load-waived
basis (without an up-front sales charge) by existing investors in the investment
products sponsored and distributed by John Nuveen & Co. Incorporated (the
"Distributor"), a wholly owned subsidiary of The John Nuveen Company, and by
Flagship Resources Inc., also a sponsor and distributor of investment products
which was acquired by The John Nuveen Company on January 2, 1997.
The Fund invests primarily in a diversified portfolio of large- and mid-cap
equities of domestic companies as a source of capital growth. In addition to
investments in equity securities, the Fund may invest in cash equivalents and
short-term fixed income investments in order to preserve capital or to enhance
returns or as a temporary defensive measure.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with generally
accepted accounting principles.
Securities Valuation
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 are 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 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.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains
and losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended set-
15
<PAGE>
Notes to Financial Statements--continued
tlement periods. Any securities so purchased are subject to market fluctuation
during this period. The Fund has instructed the custodian to segregate assets in
a separate account with a current value at least equal to the amount of the
when-issued and delayed delivery purchase commitments. At June 30, 1997, the
Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for accretion of
discounts.
Dividends and Distributions to Shareholders
Net investment income is declared and distributed to shareholders quarterly.
Net realized capital gains from investment transactions, if any, are declared
and distributed to shareholders not less frequently than annually. Furthermore,
capital gains are distributed only to the extent they exceed available capital
loss carryovers.
Distributions to shareholders of net investment income and net realized capital
gains are recorded on the ex-dividend date. The amount and timing of
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. Accordingly,
temporary over-distributions as a result of these differences may occur and will
be classified as either distributions in excess of net investment income and/or
distributions in excess of net realized gains from investment transactions,
where applicable.
Federal Income Taxes
The Fund intends to distribute all taxable income and capital gains to
shareholders and to otherwise comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
Therefore, no federal tax provision is required.
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a 1% contingent deferred sales charge ("CDSC") if redeemed
within 18 months of purchase. Class B Shares are sold without a sales charge but
incur annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within 12 months of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available for purchases of over $1 million and in other limited
circumstances.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning August 7, 1996 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption
16
<PAGE>
Notes to Financial Statements--continued Nuveen Growth and Income Stock Fund
June 30, 1997 Annual Report
will be reduced by the pro-rata share of the unamortized organization costs as
of the date of redemption.
Derivative Financial Instruments
The Fund may invest in options and futures transactions, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in such financial instruments, and may do so in the future, it did not
make any such investments during the period August 7, 1996 (commencement of
operations) through June 30, 1997.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class
of shares are prorated among the classes based on the relative net assets of
each class. Expenses directly attributable to a class of shares, which
presently only includes 12b-1 distribution and service fees, are recorded to
the specific class.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
2. Fund Shares
Transactions in Fund shares for the period August 7, 1996 (commencement of
operations) through June 30, 1997, were as follows:
Shares* Amount
- ------------------------------------------------------------------
Shares sold:
Class A 26,506,586 $ 534,047,616
Class B 451,781 10,154,679
Class C 156,621 3,451,741
Class R 655,095 13,088,833
Shares issued to shareholders due to reinvestment of distributions:
Class A 51,079 1,069,544
Class B 38 787
Class C 10 201
Class R 726 15,214
- ------------------------------------------------------------------
27,821,936 561,828,615
- ------------------------------------------------------------------
Shares redeemed:
Class A (892,740) (18,980,846)
Class B (7,836) (182,828)
Class C (5,688) (119,188)
Class R (4,874) (106,225)
- ------------------------------------------------------------------
(911,138) (19,389,087)
- ------------------------------------------------------------------
Net increase 26,910,798 $ 542,439,528
- ------------------------------------------------------------------
* Shares sold reflect a December 18, 1996, stock split of 1.113830, 1.112700,
1.112700 and 1.113806 shares, respectively, for each share of Class A, B, C
and R.
- ------
17
<PAGE>
Notes to Financial Statements--continued
3. Securities Transactions
Purchases and sales (including maturities) of investments in common and
preferred stocks, U.S. government obligations and temporary investments for the
period August 7, 1996 (commencement of operations) through June 30, 1997, were
as follows:
- --------------------------------------------------------------------------------
Purchases
Common and preferred stocks $ 826,230,295
U.S. government obligations 363,440,152
Temporary investments 639,403,539
Sales
Common and preferred stocks 352,703,159
U.S. government obligations 363,727,816
Temporary investments 573,678,964
- --------------------------------------------------------------------------------
At June 30, 1997, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation for financial reporting and federal income tax
purposes aggregated $79,714,507, of which $81,191,305 related to appreciated
securities and $1,476,798 related to depreciated securities.
4. Management Fee and Other Transactions with Affiliates Under the Fund's
investment management agreement with the Adviser, the Fund pays an annual
management fee, payable monthly, which is based upon the average daily net asset
value of the Fund as follows:
Average daily net asset value 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 net assets over $2 billion .7750 of 1
- --------------------------------------------------------------------------------
The Adviser has agreed to waive fees and reimburse expenses through July 31,
1998, in order to prevent total operating expenses (excluding any 12b-1
distribution or service fees and extraordinary expenses) from exceeding .95% of
the average daily net asset value of any class of Fund shares.
18
<PAGE>
Notes to Financial Statements - continued
Nuveen Growth and Income Stock Fund
June 30, 1997 Annual Report
The management fee compensates the Adviser for overall investment advisory
and administrative services, and general office facilities. The Adviser has
entered into a Sub-Advisory Agreement with Institutional Capital Corporation
("ICAP"), of which The John Nuveen Company holds a minority interest, under
which ICAP manages the Fund's investment portfolio. ICAP is compensated for its
services from the management fee paid to the Adviser. The Fund pays no
compensation directly to its Trustees who are affiliated with the Adviser or to
its officers, all of whom receive remuneration for their services to the Fund
from the Adviser.
In conjunction with the load-waived introductory program, the Distributor
compensated authorized dealers directly with a 2% commission on Fund share
sales in addition to a selling fee payable to dealer managers ranging from .75%
to .80%. Shares purchased during this program are subject to a 2% CDSC if
redeemed within the first two years of purchase.
During the period August 7, 1996 (commencement of operations) through June
30, 1997, the Distributor collected gross sales charges on Class A Shares of
approximately $679,000, of which approximately $678,800 were paid out as
concessions to authorized dealers. The Distributor also received 12b-1 service
fees on Class A Shares, substantially all of which were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
During the period August 7, 1996 (commencement of operations) through June
30, 1997, the Distributor compensated authorized dealers directly with
approximately $406,200 in commission advances on Class B and Class C Shares. To
compensate for commissions advanced to authorized dealers, all 12b-1
distribution and service fees collected on Class B and Class C Shares were
retained by the Distributor. The Distributor also collected and retained
approximately $206,200 of CDSC on share redemptions during the period.
5. Composition of Net Assets
At June 30, 1997, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
- --------------------------------------------------------------------------------
Capital paid-in $542,456,577
Balance of undistributed net investment income 48,458
Accumulated net realized gain from investment transactions 23,930,376
Net unrealized appreciation of investments 79,714,507
- --------------------------------------------------------------------------------
Net assets $646,149,918
================================================================================
19
<PAGE>
Financial Highlights
Selected data for a common share outstanding August 7, 1996 (commencement of
operations) through June 30, 1997, is as follows:
<TABLE>
<CAPTION>
Class (Inception date) Operating performance Less distributions
--------------------- ------------------
NUVEEN GROWTH AND INCOME STOCK FUND
Net
Net realized and Net Total
asset unrealized Dividends asset return
value Net gain (loss) from net Distributions value on net
Year ending beginning investment from investment from capital end of asset
June 30, of period income(b) investments income gains period value(a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1997(d)** $20.00 $.30 $4.14 $(.20) $(.23) $24.01 36.30%
Class B (8/96)
1997(d)** 20.00 .21 4.10 (.08) (.23) 24.00 35.37
Class C (8/96)
1997(d)** 20.00 .21 4.08 (.08) (.23) 23.98 35.26
Class R (8/96)
1997(d)** 20.00 .30 4.20 (.25) (.23) 24.02 36.65
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** All per share amounts reflect a December 18, 1996, stock split of
1.113830, 1.112700, 1.112700 and 1.113806 shares, respectively, for
each share of Class A, B, C and R.
(a) Total return is calculated on net asset value without any sales
charge.
(b) After waiver of certain management fees or reimbursement of expenses
by Nuveen Institutional Advisory Corp.
(c) Average commission rate paid on equity portfolio transactions.
Commissions paid are included in the cost of the securities.
(d) From commencement of class operations as noted.
20
<PAGE>
<TABLE>
<CAPTION>
Nuveen Growth and Income Stock Fund
June 30, 1997 Annual Report
Ratios/Supplemental data
- --------------------------------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio Average
end of period reimbuse- reimburse- reimburse- reimburse- turnover commission
(in thousands) ment ment ment(b) ment(b) rate rate paid(c)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$616,209 1.28%* 1.45%* 1.20%* 1.53%* 110% $.0322
10,664 2.03* .95* 1.95* 1.03* 110 .0322
3,630 2.03* .96* 1.95* 1.04* 110 .0322
15,647 1.47* 1.04* .95* 1.56* 110 .0322
- --------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Investment Trust:
We have audited the accompanying statement of net assets of Nuveen
Investment Trust (comprising the Nuveen Growth and Income Stock Fund),
including the portfolio of investments, as of June 30, 1997, and the related
statement of operations, the statement of changes in net assets and the
financial highlights for the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1997, by correspondence with the custodian and brokers. As to securities
purchased but not received, we requested confirmation from brokers and, when
replies were not received, we carried out other alternative auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the fund
constituting Nuveen Investment Trust as of June 30, 1997, the results of its
operations, the changes in its net assets and its financial highlights for the
period then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 18, 1997
22
<PAGE>
Shareholder Information
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth and Income Funds
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Municipal Bond Funds
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama Michigan
Arizona Missouri
California New Jersey
Colorado New Mexico
Connecticut New York
Florida North Carolina
Georgia Ohio
Kansas Pennsylvania
Kentucky South Carolina
Louisiana Tennessee
Maryland Virginia
Massachusetts Wisconsin
To purchase additional shares of your Nuveen Fund, contact your financial
adviser. If you would like to add to your current investment on a monthly or
semi-annual basis, you can sign up for Nuveen's systematic investing program,
which allows you to invest a fixed dollar amount every month automatically.
You can also invest automatically through dividend reinvestment. By reinvesting
your fund's dividends back into the fund, you gain the added growth potential of
long-term compounding.
For more information on any of these service options call your adviser, or
Nuveen at (800) 621-7227.
23
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Anthony T. Dean
William T. Kissick
Thomas E. Leafstrand
Robert H. Lyon
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Fund Subadvisor
Institutional Capital Corporation
225 W. Wacker Drive
Chicago, IL 60606
Custodian
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Transfer Agent,
Shareholder Services and
Dividend Disbursing Agent
Shareholder Services, Inc.
Nuveen Investor Services
P.O. Box 5330
Denver, Colorado 80217-5330
(800) 621-7227
Legal Counsel
Chapman and Cutler
Chicago, Illinois
Independent Public
Accountants
Arthur Andersen LLP
Chicago, Illinois
24
<PAGE>
Serving Investors
for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
trusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach -- purchasing securities of strong companies and
communities that represent good long-term value -- is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of almost a century of investment
experience, including one of the most recognized research departments in the
industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of equity and fixed-income mutual funds,
unit trusts, exchange-traded funds, individual managed account services, and
cash management products, including many that generate tax-free income.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 621-7227 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Il 60606-1286
(800)621-7227
www.nuveen.com
<PAGE>
NUVEEN
Growth and Income
Mutual Funds
June 30, 1997
Annual Report
A balance of stocks and bonds that seeks to share in the growth potential of
stocks, while providing a measure of downside protection.
[PHOTO APPEARS HERE]
Balanced
Stock and
Bond Fund
<PAGE>
Contents
<TABLE>
<CAPTION>
<C> <S>
1 Dear Shareholder
3 Answering Your Questions
6 Balanced Stock and Bond Fund Overview
8 Portfolio of Investments
11 Statement of Net Assets
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Notes to Financial Statements
19 Financial Highlights
22 Report of Independent Public Accountants
23 Shareholder Information
24 Fund Information
</TABLE>
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwerfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
It is a great pleasure to share with you the Nuveen Balanced Stock and Bond
Fund's outstanding performance record for its first fiscal year of operations, a
period covering the eleven months from August 7, 1996 through June 30, 1997.
Since the fund's inception last August, Class A shareholders have enjoyed a
return on net asset value of 22.04%, compared with the 20.62% average for the 30
largest balanced funds included in the Lipper Balanced Fund Index for the same
period. The fund's performance ranked in the top quartile of the 320 balanced
stock and bond funds tracked by Lipper. With consistent growth to nearly $70
million in assets, this fund clearly has attracted investor enthusiasm.
Balancing Stability and Growth
The large price fluctuations experienced in today's equity markets can be
discomforting to investors who rely upon their investments as a principal source
of their financial security. An important objective of the fund is to allow
investors to participate in the growth potential of equity investments, while
enjoying the relative price stability of U.S. Treasury securities.
The fund has been able to produce attractive returns for investors by purchasing
stocks of large, well-established companies whose current earnings and near term
growth potential seem undervalued by the market. The fund also provides a
measure of stability to your portfolio by balancing the equity portion of the
fund's portfolio with bonds with laddered maturity schedules, offering regular
income and greater relative price stability.
1
<PAGE>
Since the fund's inception last August, Class A shareholders have enjoyed a
return on net asset value of 22.04%, compared with the 20.62% average for the 30
largest balanced funds included in the Lipper Balanced Fund Index for the same
period.
A Disciplined Investment Process
Stock and bond selection is based upon a value-oriented philosophy. Our fund's
sub-adviser, Institutional Capital Corporation (ICAP), analyzes economic
conditions, monetary and interest rate forecasts, and corporate earnings
estimates before assigning asset allocation targets. They also use proprietary
quantitative models comparing the expected returns of stocks and bonds.
A Fund Designed for Security Conscious Investors
Wealth, like success, takes many forms. But both wealth and success convey a
sense of arrival--and the special satisfaction that comes with accomplishment.
We are dedicated to helping investors enjoy their accomplishments and sustain
the lifestyles they have built for themselves. Even after nearly 100 years of
offering investments to the public, we continue to strive to better appreciate
the distinct needs of investors who rely on their investment portfolios as their
principal source of income and financial security. We recognize that Nuveen
investors seek a balance between preservation of what they have achieved, income
to meet their current needs and growth to maintain their lifestyle in the
future.
Nuveen's Balanced Stock and Bond Fund is one of an expanded array of Nuveen
equity and fixed-income investment products designed to meet these important
objectives.
I'm delighted that the fund has performed so well. On behalf of everyone at
Nuveen, I thank you for your confidence in us and our family of investments. We
will continue to strive to provide you with high-quality investments that
withstand the test of time, and we look forward to reporting to you again in
six months.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 15, 1997
2
<PAGE>
Answering Your Questions
Jerrold Senser, CFA and Executive Vice President of Institutional Capital
Corporation, offers insights into factors that affected fund performance over
the past year.
What are the basic investment objectives of the fund?
The Nuveen Balanced Municipal and Stock Fund seeks to provide investors with an
attractive after-tax total return from a diversified portfolio of equity
securities, taxable fixed-income securities and cash equivalents by emphasizing
long-term capital appreciation in favorable markets and preservation of capital
in difficult markets.
What is your process for meeting this objective?
The fund follows a balanced portfolio approach, using equities to provide price
appreciation while the fixed-income portion of the portfolio serves as the
conservative "anchor" helping to moderate price fluctuations.
We employ a value-oriented team approach to asset allocation and security
selection. The team, which consists of 12 portfolio managers and analysts,
determines the appropriate asset allocation target based on current economic
conditions, monetary and interest rate forecasts, and corporate profit
estimates. We also apply several proprietary quantitative models that compare
expected returns of stocks and bonds.
Once the asset allocation target is determined, our portfolio management team
pools their equity sector expertise to identify stocks with strong relative
value -- that is, stocks that appear to be priced at less than their true value
- -- with clear catalysts for price appreciation. A catalyst is a company or
industry event that could trigger a rise in the stock's price, such as a
corporate restructuring or a favorable market climate for a particular industry.
3
<PAGE>
We believe the fund is well positioned to provide the upside potential of
equities, while providing relative price stability of U.S. Treasury securities.
We start with a large universe of approximately 450 large- and mid-size company
stocks and use proprietary valuation models to identify roughly 80 stocks
believed to have the best relative value and earnings stability. We then apply a
qualitative catalyst identification process to select the 40-45 most
attractively valued stocks from this group. The team applies the same
disciplined, thorough consideration to its sell decisions. Stocks are sold if
they have reached their value targets, if the reason for purchase is no longer
valid, or if they become less attractive relative to other candidates.
For the fixed-income portion of the portfolio, we perform a rigorous analysis of
economic and market factors to determine how heavily we should invest in the
bond market. We then select a mix of U.S. Treasury maturities that should
provide the level of income and price stability we seek.
What principal economic and market factors
affected the fund's performance?
Since the inception of the fund, the stock market has enjoyed tremendous gains
as a result of a number of factors, including an economy growing at a moderate
pace, few signs of inflationary pressures, strong corporate earnings, and a
record amount of merger and acquisition activity. These factors boosted
investor confidence and helped propel the U.S. equity market to substantial
gains.
Over the same period of time, bond yields were essentially unchanged. The
good performance of the fund primarily reflected superior stock selection.
How did the fund perform in this market environment?
As Tim stated in his letter to shareholders, the fund performed exceptionally
well since its inception last August, rewarding investors with a total return on
net asset value for the year of 22.04%, including price changes and reinvested
dividends. Additionally, the fund outpaced the average of the 320 peer funds in
Lipper Analytical Services' Balanced fund category for the same period.
4
<PAGE>
What key strategies will you employ
in the coming months?
Currently, we believe the economy will show growth exceeding the Federal
Reserve's target increase of about 2-2 1/2% in the second half of the year. As a
result, the Fed may tighten monetary policy at some point in the second half of
1997. This could create some volatility in the markets as investors adjust to
the change in policy. The fund currently is in a position to increase its equity
exposure should opportunities arise. Given this environment, we will continue to
monitor the market for investment opportunities, allowing us to add yield
without increasing risk.
Most of the stocks that we find that meet our investment criteria fall in the
category of corporate restructurings. Our view is that restructurings are
particularly appropriate for today's market.
Even though most consumer product and service markets are very competitive from
a pricing standpoint, in some instances, companies have the ability to raise
prices. Thus, companies that have some degree of pricing flexibility should be
relatively advantaged. Such flexibility could come from a particular product, or
industry supply and demand conditions. As we have increasingly focused on this
potential, several areas of opportunity have emerged, reflecting our holdings in
Host Marriott, ITT Corp. and AMR Corp. In each case, we have looked for
companies that are benefiting from enhanced pricing power, and have managements
who are working hard to exploit that value for shareholders.
We believe the fund is well positioned to provide a certain amount of upside
potential from equities, while providing relative price stability of the fund's
holdings of U.S. Treasury securities.
-----
5
<PAGE>
Balanced Stock and Bond
Fund Overview
June 30, 1997
Top Ten Stock Holdings
Philips Electronics NV 5.1%
- -----------------------------------------
NYNEX Corporation 3.7%
- -----------------------------------------
Raytheon Corporation 3.6%
- -----------------------------------------
Ford Motor Company 3.6%
- -----------------------------------------
Allstate Corporation 3.3%
- -----------------------------------------
Rhone-Poulenc SA 3.3%
- -----------------------------------------
Boeing Company 3.3%
- -----------------------------------------
General Motors Corporation 3.2%
- -----------------------------------------
Burlington Northern Santa Fe 3.1%
- -----------------------------------------
Northrop Grumman Corporation 3.1%
=========================================
Stock Diversification
[PIE CHART APPEARS HERE]
Automotive 7%
Banks 5%
Chemicals 5%
Computer Systems 5%
Defense 10%
Other 10%
Electronics 7%
Entertainment 4%
Health Care 4%
Insurance 3%
Media 4%
Retail 4%
Pharmaceuticals 8%
Services/Misc. 5%
Telephone 9%
Toys 3%
Transportation 7%
<TABLE>
<CAPTION>
Fund Highlights
================================================================================
<S> <C> <C> <C> <C>
Share Class A B C R
CUSIP 67064Y107 67064Y206 67064Y305 67064Y404
- --------------------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
Net Asset Value (NAV) $23.84 $23.84 $23.84 $23.84
Last Quarterly Dividend 0.1244 0.0814 0.0814 0.1388
Total Net Assets ($000) $64,364
Fixed Income Average Duration 4.42 years
Average Market Capitalization of Stock $25 billion
Average P/E (trailing 12 months) of Stock 18.5
Number of Stocks 46
Expected Turnover Rate 75%-100%
Expense Ratio (A Shares) (After Reimbursement) 1.10%
Portfolio Allocation Stock U.S. Treasury Notes Cash
44% 48% 8%
- --------------------------------------------------------------------------------
Total Return/1/
================================================================================
Share Class A(NAV) A(Offer) B C R
Year-to-Date 10.91% 5.09% 10.55% 10.55% 11.05%
Since Inception 22.04% 15.63% 21.26% 21.26% 22.31%
Dividend Yields
================================================================================
Share Class A(NAV) A(Offer) B C R
Distribution Rate 2.09% 1.98% 1.37% 1.37% 2.33%
SEC 30-Day Yield 3.10% 2.94% 2.31% 2.35% 3.36%
</TABLE>
-----
6
<PAGE>
Nuveen Balanced Stock and Bond Fund
June 30, 1997 Annual Report
/1/ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.25% maximum sales charge. Class B shares
have a CDSC that begins at 5% for redemptions during the first year after
purchase and declines periodically to 0% over the following six years, which
is not reflected in the return figures. Class B shares convert to Class A
shares after eight years. Class C shares have a 1% CDSC for redemptions
within one year which is not reflected in the return figures.
/2/ The Index Comparison shows the change in value of a $10,000 investment in
the A shares of the Nuveen fund compared with the Standard & Poor's 500
Index, a Balanced Index and Lehman Brothers Intermediate Treasury Index. The
Balanced Index is comprised of a 60% weighting in the S&P 500 Index and 40%
in the Lehman Brothers Intermediate Treasury Index. The indexes do not
reflect any initial or ongoing expenses. The Nuveen fund return depicted in
the chart reflects the initial maximum sales charge applicable to A shares
(5.25%) and all ongoing fund expenses.
Index Comparison/2/
[Line Graph Appears Here]
<TABLE>
<CAPTION>
Lehman Brothers
10-Year Balanced Index Nuveen Balanced Stock
Treasury Index S&P 500 (60% S&P/40% LBIT) Lipper Index and Bond Fund (Offer)
<S> <C> <C> <C> <C> <C>
10000 10000 10000 10000 9475 8/96
10013 9834 9906 9903 9394 9/96
10141 10344 10265 10269 9681 10/96
10307 10630 10502 10487 10019 11/96
10431 11434 11029 10976 10561 12/96
10375 11214 10878 10839 10427 1/97
10413 11915 11302 11169 10778 2/97
10429 12008 11362 11212 10827 3/97
10367 11514 11055 10885 10651 4/97
10483 12202 11500 11213 10945 5/97
10565 12945 11956 11672 11254 6/97
10655 13556 12336 12043 11564 7/97
</TABLE>
S&P 500 $13,556
Nuveen Balanced Stock and Bond Fund (Offer) $11,564 (NAV = $12,204)
Balanced Index (60% S&P/40% LBIT) $12,336
Lipper Index $12,043
Lehman Brothers 10-Year Treasury Index $10,655
Past performance is not predictive of future performance.
- ------
7
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen Balanced Stock and Bond Fund
Market
Shares Description Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 43.6%
Automotive -- 3.0%
26,550 Ford Motor Company $ 1,002,262
16,250 General Motors Corporation 904,922
- ---------------------------------------------------------------------------------------------------------------
Banks -- 2.2%
16,750 Banc One Corporation 811,328
2,325 Wells Fargo & Company 626,588
- ---------------------------------------------------------------------------------------------------------------
Chemicals -- 2.4%
10,800 Akzo Nobel N.V. Sponsored ADR 746,550
12,300 E.I. du Pont de Nemours and Company Ltd. 773,362
- ---------------------------------------------------------------------------------------------------------------
Computer Systems -- 2.2%
9,200 International Business Machines Corporation 829,725
16,000 Sun Microsystems, Inc. + 595,500
- ---------------------------------------------------------------------------------------------------------------
Defense -- 4.3%
17,200 Boeing Company 912,675
9,800 Northrop Grumman Corporation 860,563
19,950 Raytheon Company 1,017,450
- ---------------------------------------------------------------------------------------------------------------
Electronics -- 2.9%
2,800 Advanced Micro Devices, Inc. + 100,800
19,750 Philips Electronics N.V. 1,419,531
4,450 SGS--Thomson Microelectronics N.V. + 356,000
- ---------------------------------------------------------------------------------------------------------------
Entertainment -- 1.7%
23,100 Host Marriott Corp. + 411,469
9,700 ITT Corporation + 592,306
- ---------------------------------------------------------------------------------------------------------------
Food, Tobacco, Beverage -- 0.9%
15,300 Grand Metropolitan PLC Sponsored ADR 599,569
- ---------------------------------------------------------------------------------------------------------------
Health Care -- 1.6%
6,650 Aetna Inc. 680,794
12,100 Tenet Healthcare Corporation + 357,706
- ---------------------------------------------------------------------------------------------------------------
Insurance -- 1.4%
12,750 Allstate Corporation 930,750
- ---------------------------------------------------------------------------------------------------------------
Media -- 1.7%
22,300 Dun & Bradstreet Corporation 585,375
2,700 Tribune Company 129,769
19,500 U.S. West Media Group + 394,875
- ---------------------------------------------------------------------------------------------------------------
Metals -- 1.0%
9,050 Reynolds Metals Company 644,813
- ---------------------------------------------------------------------------------------------------------------
Natural Gas -- 0.5%
14,100 Union Pacific Resources Group Inc. 350,738
- ---------------------------------------------------------------------------------------------------------------
Non-Defense Capital Spending -- 1.1%
9,800 Case Corporation 674,975
- ---------------------------------------------------------------------------------------------------------------
Oil -- 0.3%
3,400 Ashland Inc. 157,675
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
------
8
<PAGE>
Nuveen Balanced Stock and Bond Fund
June 30, 1997 Annual Report
<TABLE>
<CAPTION>
Market
Shares Description Value
- -------------------------------------------------------------------------------
<C> <S> <C>
Common Stocks -- continued
Pharmaceuticals -- 3.5%
10,300 American Home Products Corporation $ 787,950
7,289 Novartis AG Sponsored ADR 583,480
22,300 Rhone-Poulenc SA Sponsored ADR 928,238
- -------------------------------------------------------------------------------
Retail -- 1.5%
7,900 Dillard's Inc. 273,537
19,000 Federated Department Stores, Inc. + 660,250
2,400 Office Depot, Inc. + 46,650
- -------------------------------------------------------------------------------
Services/Miscellaneous -- 2.3%
7,600 AMR Corporation + 703,000
5,400 Continental Airlines, Inc. + 188,662
1,600 HFS, Inc. + 92,800
24,880 Peninsular and Oriental Steam Navigation Company 496,893
- -------------------------------------------------------------------------------
Software & Services -- 0.9%
12,950 First Data Corporation 568,991
- -------------------------------------------------------------------------------
Telephone -- 4.1%
22,300 MCI Communications Corporation 853,672
18,000 NYNEX Corporation 1,037,250
13,600 Sprint Corporation 715,700
- -------------------------------------------------------------------------------
Toys -- 1.2%
17,500 Hasbro, Inc. 496,562
8,300 Mattel, Inc. 281,163
- -------------------------------------------------------------------------------
Transportation -- 2.9%
9,800 Burlington Northern Santa Fe 880,775
10,200 Canadian Pacific, Ltd. 290,062
10,150 Union Pacific Corporation 715,575
- -------------------------------------------------------------------------------
Total Common Stocks -- (cost $25,212,666) 28,069,280
- -------------------------------------------------------------------------------
Principal Market
Amount Description Value
- -------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 48.7%
3,960,000 7.125%, 10/15/98 4,018,164
1,935,000 6.375%, 7/15/99 1,945,884
2,490,000 8.500%, 2/15/00 2,626,173
3,510,000 7.500%, 5/15/02 3,672,338
5,840,000 5.750%, 8/15/03 5,639,250
2,890,000 7.875%, 11/15/04 3,117,588
2,990,000 6.500%, 5/15/05 2,985,330
7,125,000 7.000%, 7/15/06 7,329,843
- -------------------------------------------------------------------------------
Total U.S. Treasury Notes -- (cost $31,136,574) 31,334,570
----------------------------------------------------------------
9
</TABLE>
<PAGE>
Portfolio of Investments
Nuveen Balanced Stock and Bond Fund -- continued
<TABLE>
<CAPTION>
Principal Market
Amount Description Value
- -------------------------------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER -- 7.6%
300,000 AT&T Corporation, Commercial Paper,
effective yield of 6.13%, 7/01/97 $ 300,000
1,600,000 AT&T Corporation, Commercial Paper,
effective yield of 6.14%, 7/02/97 1,599,758
1,800,000 Coca Cola Company, Commercial Paper,
effective yield of 5.56%, 7/10/97 1,797,552
1,200,000 Shell Oil Company, Commercial Paper,
effective yield of 6.13%, 7/01/97 1,200,000
- -------------------------------------------------------------------------------
Total Commercial Paper -- (cost $4,897,310) 4,897,310
- -------------------------------------------------------------------------------
Total Investments -- (cost $61,246,550) -- 99.9% 64,301,160
---------------------------------------------------------------
Other Assets Less Liabilities -- 0.1% 63,300
---------------------------------------------------------------
Net Assets-- 100% $64,364,460
===============================================================
+ Non-income producing.
</TABLE>
10 See accompanying notes to financial statements.
<PAGE>
Statement of Net Assets Nuveen Balanced Stock and Bond Fund
June 30, 1997 June 30, 1997 Annual Report
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Assets
Investment securities, at market value
(cost $61,246,550) (note 1) $ 64,301,160
Cash 190,097
Receivables:
Dividends and Interest 674,497
Shares sold 163,662
Investments sold 1,937,248
Deferred organization costs (note 1) 149,855
Other assets 1,977
- -------------------------------------------------------------------------------
Total assets 67,418,496
- -------------------------------------------------------------------------------
Liabilities
Payable for investments purchased 2,660,029
Accrued expenses:
Management fees (note 4) 21,071
12b-1 distribution and service fees (notes 1 and 4) 12,495
Other 23,760
Dividends payable 336,681
- -------------------------------------------------------------------------------
Total liabilities 3,054,036
- -------------------------------------------------------------------------------
Net assets (note 5) $ 64,364,460
===============================================================================
Class A Shares (note 1)
Net assets $ 56,686,069
Shares outstanding 2,378,045
Net asset value and redemption price per share $ 23.84
Offering price per share (net asset value per share plus
maximum sales charge of 5.25% of offering price) $ 25.16
===============================================================================
Class B Shares (note 1)
Net assets $ 646,340
Shares outstanding 27,111
Net asset value, offering and redemption price per share $ 23.84
===============================================================================
Class C Shares (note 1)
Net assets $ 979,806
Shares outstanding 41,095
Net asset value, offering and redemption price per share $ 23.84
===============================================================================
Class R Shares (note 1)
Net assets $ 6,052,245
Shares outstanding 253,833
Net asset value, offering and redemption price per share $ 23.84
===============================================================================
</TABLE>
11 See accompanying notes to financial statements.
<PAGE>
Statement of Operations
For the period August 7, 1996 (commencement of operations)
through June 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Investment Income (note 1)
Dividends $ 130,015
Interest 474,095
- -------------------------------------------------------------------------------
Total investment income 604,110
- -------------------------------------------------------------------------------
Expenses
Management fees (note 4) 105,195
12b-1 service fees -- Class A (notes 1 and 4) 22,683
12b-1 distribution and service fees -- Class B (notes 1 and 4) 292
12b-1 distribution and service fees -- Class C (notes 1 and 4) 772
Shareholders' servicing agent fees and expenses 8,261
Custodian's fees and expenses 39,411
Trustees' fees and expenses (note 4) 2,457
Professional fees 15,561
Shareholders' reports -- printing and mailing expenses 9,865
Federal and state registration fees 31,671
Amortization of deferred organization costs (note 1) 31,857
Other expenses 606
- -------------------------------------------------------------------------------
Total expenses before expense reimbursement 268,631
Expense reimbursement (note 4) (125,664)
- -------------------------------------------------------------------------------
Net expenses 142,967
- -------------------------------------------------------------------------------
Net investment income 461,143
- -------------------------------------------------------------------------------
Realized and Unrealized Gain From Investments
Net realized gain from investment transactions (notes 1 and 3) 529,537
Net change in unrealized appreciation or depreciation
of investments 3,054,610
- -------------------------------------------------------------------------------
Net gain from investments 3,584,147
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 4,045,290
===============================================================================
</TABLE>
12 See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets Nuveen Balanced Stock and Bond Fund
June 30, 1997 Annual Report
For the period August 7, 1996 (commencement of operations)
through June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
<S> <C>
Operations
Net investment income $ 461,143
Net realized gain from investment transactions (notes 1 and 3) 529,537
Net change in unrealized appreciation or depreciation of investments 3,054,610
- ---------------------------------------------------------------------------------
Net increase in net assets from operations 4,045,290
- ---------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (320,023)
Class B (2,239)
Class C (3,396)
Class R (116,780)
From accumulated net realized gains from investment transactions:
Class A (43)
Class B (43)
Class C (43)
Class R (25,820)
- ---------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (468,387)
- ---------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 62,071,093
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 15,990
- ---------------------------------------------------------------------------------
62,087,083
- ---------------------------------------------------------------------------------
Cost of shares redeemed (1,332,886)
- ---------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 60,754,197
- ---------------------------------------------------------------------------------
Net increase in net assets 64,331,100
Net assets at beginning of period 33,360
- ---------------------------------------------------------------------------------
Net assets at end of period $64,364,460
=================================================================================
Balance of undistributed net investment income at end of period $ 18,705
=================================================================================
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen Balanced Stock and Bond Fund (the "Fund") is a series of the Nuveen
Investment Trust (the "Trust"). The Trust is an open-end diversified management
investment company registered under the Investment Company Act of 1940. The
Trust was organized as a Massachusetts business trust on May 6, 1996. Prior to
commencement of operations on August 7, 1996, the Trust had no operations other
than those related to organizational matters and the initial capital
contribution of $100,080 (of which $33,360 was allocated to the Fund) by Nuveen
Institutional Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The
John Nuveen Company, for the issuance of shares on July 29, 1996. On August 7,
1996, The John Nuveen Company made an additional investment of approximately $5
million in the Fund for the purpose of establishing an initial investment
portfolio. During the Fund's initial offering period of its shares to
investors, March 3, 1997, through May 31, 1997, Class A Shares were available
for purchase on a privileged load-waived basis (without an up-front sales
charge).
The Fund invests in a conservative mix of equities, taxable bonds and cash
equivalents for capital growth, capital preservation and current income. During
temporary defensive periods, the Fund may invest any percentage of its assets in
temporary investments. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements in
accordance with generally accepted accounting principles.
Securities Valuation
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 are 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 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.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject
to market fluctuation during this period. The Fund has instructed the custodian
to segregate assets in a separate account with a current value at least equal
to the amount of its when-issued and delayed delivery purchase commitments. At
June 30, 1997, the Fund had no such outstanding purchase commitments.
- ------
14
<PAGE>
Nuveen Balanced Stock and Bond Fund
June 30, 1997 Annual Report
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for accretion of
discounts.
Dividends and Distributions to Shareholders
Net investment income is declared and distributed to shareholders quarterly. Net
realized capital gains from investment transactions, if any, are declared and
distributed to shareholders not less frequently than annually. Furthermore,
capital gains are distributed only to the extent they exceed available capital
loss carryovers.
Distributions to shareholders of net investment income and net realized capital
gains are recorded on the ex-dividend date. The amount and timing of
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. Accordingly,
temporary over-distributions as a result of these differences may occur and will
be classified as either distributions in excess of net investment income and/or
distributions in excess of net realized gains from investment transactions,
where applicable.
Federal Income Taxes
The Fund intends to distribute all taxable income and capital gains to
shareholders and to otherwise comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
Therefore, no federal income tax provision is required.
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a 1% contingent deferred sales charge ("CDSC") if redeemed
within 18 months of purchase. Class B Shares are sold without a sales charge but
incur annual 12b-1 distribution and service fees. An investor purchasing Class
B Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within 12 months of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available for purchases of over $1 million and in other limited
circumstances.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning August 7, 1996 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption will be reduced by the pro-rata share of
the unamortized organization costs as of the date of redemption.
Derivative Financial Instruments
The Fund may invest in options and futures transactions, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in
- ------
15
<PAGE>
Notes to Financial Statements--continued
such financial instruments, and may do so in the future, it did not make any
such investments during the period August 7, 1996 (commencement of operations)
through June 30, 1997.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
2. Fund Shares
Transactions in Fund shares for the period August 7, 1996 (commencement of
operation) through June 30, 1997, were as follows:
<TABLE>
<CAPTION>
Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C>
Shares sold:
Class A 2,433,860 $55,396,538
Class B 26,837 638,169
Class C 40,678 949,886
Class R 253,630 5,086,500
Shares issued to shareholders due to reinvestment of distributions:
Class A 723 15,981
Class B -- --
Class C -- --
Class R -- 9
- -------------------------------------------------------------------------------
2,755,728 62,087,083
- -------------------------------------------------------------------------------
Shares redeemed:
Class A (56,955) (1,324,519)
Class B (143) (3,405)
Class C -- (11)
Class R (214) (4,951)
- -------------------------------------------------------------------------------
(57,312) (1,332,886)
- -------------------------------------------------------------------------------
Net increase 2,698,416 $60,754,197
===============================================================================
</TABLE>
- ----
16
<PAGE>
Nuveen Balanced Stock and Bond Fund
June 30, 1997 Annual Report
3. Securities Transactions
Purchases and sales (including maturities) of investments in common stocks, U.S.
government obligations and temporary investments for the period August 7, 1996
(commencement of operations) through June 30, 1997, were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
<S> <C>
Purchases
Common stocks $ 30,938,074
U.S. government obligations 37,464,635
Temporary investments 89,723,786
Sales
Common stocks 6,252,766
U.S. government obligations 6,341,781
Temporary investments 84,885,896
===============================================================================
</TABLE>
At June 30, 1997, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation for financial reporting and federal income tax
purposes aggregated $3,054,610 of which $3,135,089 related to appreciated
securities and $80,479 related to depreciated securities.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, which is based upon the average daily
net asset value of the Fund as follows:
Average daily net asset value 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 net assets over $2 billion .6750 of 1
- --------------------------------------------------------------------------------
The Adviser has agreed to waive fees and reimburse expenses through July 31,
1998, in order to prevent total operating expenses (excluding any 12b-1
distribution or service fees and extraordinary expenses) from exceeding .85% of
the average daily net asset value of any class of Fund shares.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Adviser has entered
into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"),
of which The John Nuveen Company owns a minority interest, under which ICAP
manages the Fund's investment portfolio. ICAP is compensated for its services
from the manage-
- ----
17
<PAGE>
Notes to Financial Statements--continued
ment fee paid to the Adviser. The Fund pays no compensation directly to its
Trustees who are affiliated with the Adviser or to its officers, all of whom
receive remuneration for their services to the Fund from the Adviser.
In conjunction with the load-waived introductory program, John Nuveen & Co.
Incorporated (the "Distributor"), a wholly owned subsidiary of the John Nuveen
Company, compensated authorized dealers directly with a 2% commission on Fund
share sales. Shares purchased during this program are subject to a 2% CDSC if
redeemed within the first two years of purchase.
During the period August 7, 1996 (commencement of operations) through June 30,
1997, the Distributor collected gross sales charges on Class A Shares of
approximately $26,900, of which approximately $25,600 were paid out as
concessions to authorized dealers. The Distributor also received 12b-1 service
fees on Class A Shares, substantially all of which were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
During the period August 7, 1996 (commencement of operations) through June 30,
1997, the Distributor compensated authorized dealers directly with
approximately $25,000 in commission advances on Class B and Class C Shares. To
compensate for commissions advanced to authorized dealers, all 12b-1
distribution and service fees collected on Class B and Class C Shares were
retained by the Distributor. The Distributor also collected and retained
approximately $2,000 of CDSC on share redemptions during the period.
5. Composition of Net Assets
At June 30, 1997, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
- --------------------------------------------------------------------------------
Capital paid-in $ 60,787,557
Balance of undistributed net investment income 18,705
Accumulated net realized gain from investment transactions 503,588
Net unrealized appreciation of investments 3,054,610
- --------------------------------------------------------------------------------
Net assets $ 64,364,460
================================================================================
18
<PAGE>
Financial Highlights
----
19
<PAGE>
Financial Highlights
Selected data for a common share outstanding August 7, 1996 (commencement of
operations) through June 30, 1997, is as follows:
<TABLE>
<CAPTION>
Class (Inception date) Operating performance Less distributions
--------------------------- ---------------------------
NUVEEN BALANCED STOCK AND BOND FUND***
Net
Net realized and Net Total
asset unrealized Dividends asset return
value Net gain (loss) from net Distributions value on net
Year ending beginning investment from investment from capital end of asset
June 30, of period income(b) investments income gains period value(a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1997 (d) $20.00 $.70 $3.66 $(.42) $(.10) $23.84 22.04%
Class B (8/96)
1997 (d) 20.00 .46 3.75 (.27) (.10) 23.84 21.26
Class C (8/96)
1997 (d) 20.00 .53 3.68 (.27) (.10) 23.84 21.26
Class R (8/96)
1997 (d) 20.00 .61 3.80 (.47) (.10) 23.84 22.31
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value without any sales
charge.
(b) After waiver of certain management fees or reimbursement of expenses
by Nuveen Institutional Advisory Corp.
(c) Average commission rate paid on equity portfolio transactions.
Commissions paid are included in the cost of the securities.
(d) From commencement of class operations as noted.
20
<PAGE>
Nuveen Balanced Stock and Bond Fund
June 30, 1997 Annual Report
<TABLE>
<CAPTION>
Ratios/Supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio Average
end of period reimburse- reimburse- reimburse- reimburse- turnover commission
(in thousands) ment ment ment(b) ment(b) rate rate paid(c)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$56,686 1.71%* 2.78%* 1.10%* 3.39%* 52% $.0244
646 2.49* 1.59* 1.85* 2.23* 52 .0244
980 2.31* 2.07* 1.85* 2.53* 52 .0244
6,052 2.29* 1.68* .85* 3.12* 52 .0244
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Investment Trust:
We have audited the accompanying statement of net assets of Nuveen Investment
Trust (comprising the Nuveen Balanced Stock and Bond Fund), including the
portfolio of investments, as of June 30, 1997, the related statement of
operations, the statement of changes in net assets and the financial highlights
for the period then ended. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of June 30, 1997, by
correspondence with the custodian and brokers. As to securities purchased but
not received, we requested confirmation from brokers and, when replies were not
received, we carried out other alternative auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the fund
constituting the Nuveen Investment Trust as of June 30, 1997, the results of its
operations, the changes in its net assets and its financial highlights for the
period then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 18, 1997
22
<PAGE>
Shareholder Information
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth and Income Funds
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Municipal Bond Funds
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama Michigan
Arizona Missouri
California New Jersey
Colorado New Mexico
Connecticut New York
Florida North Carolina
Georgia Ohio
Kansas Pennsylvania
Kentucky South Carolina
Louisiana Tennessee
Maryland Virginia
Massachusetts Wisconsin
To purchase additional shares of your Nuveen Fund, contact your financial
adviser. If you would like to add to your current investment on a monthly or
semi-annual basis, you can sign up for Nuveen's systematic investing program,
which allows you to invest a fixed dollar amount every month automatically.
You can also invest automatically through dividend reinvestment. By reinvesting
your fund's dividends back into the fund, you gain the added growth potential of
long-term compounding.
For more information on any of these service options call your adviser, or
Nuveen at (800) 621-7227.
23
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Anthony T. Dean
William L. Kissick
Thomas E. Leafstrand
Robert H. Lyon
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Fund Subadviser
Institutional Capital Corporation
225 W. Wacker Drive
Chicago, IL 60606
Custodian
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Transfer Agent,
Shareholder Services and
Dividend Disbursing Agent
Shareholder Services, Inc.
Nuveen Investor Services
P.O. Box 5330
Denver, CO 80217-5330
(800) 621-7227
Legal Counsel
Chapman and Cutler
Chicago, Illinois
Independent Public
Accountants
Arthur Andersen LLP
Chicago, Illinois
24
<PAGE>
Serving Investors
for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
trusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach -- purchasing securities of strong companies and
communities that represent good long-term value -- is the cornerstone of
Nuveen's investment philosophy. It is a careful, long-term strategy that offers
the potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of almost a century of investment
experience, including one of the most recognized research departments in the
industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of equity and fixed-income mutual funds,
unit trusts, exchange-traded funds, individual managed account services, and
cash management products, including many that generate tax-free income.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 621-7227 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
www.nuveen.com
<PAGE>
NUVEEN
Growth and Income Mutual Funds
June 30, 1997
Annual Report
A balance of municipal bonds and stocks that seeks to grow your tax-free income
and help offset inflation.
[PHOTO APPEARS HERE]
Balanced Municipal and Stock Fund
<PAGE>
Contents
1 Dear Shareholder
3 Fund Adviser Commentary
6 Balanced Municipal and Stock
Fund Overview
9 Financial Section
31 Shareholder Information
32 Fund Information
<PAGE>
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
Dear Shareholder
It is a great pleasure to share with you the Nuveen Balanced Municipal and Stock
Fund's outstanding performance record for its first fiscal year of operations, a
period covering the eleven months from August 7, 1996 through June 30, 1997.
Since the fund's inception last August, Class A shareholders have enjoyed a
return on net asset value of 18.05%. The average total return for the other
three balanced funds incorporating municipals was 16.93% over the same time
period. With consistent growth to more than $100 million in assets, this unique
fund clearly has attracted investor enthusiasm.
Balancing Stability and Growth of Tax-Free Income
The Nuveen Balanced Municipal and Stock Fund is designed for investors who
depend on their portfolio as a principal source of their financial security. To
that end, we have designed a fund that, over time, should keep your income
growing to help preserve your standard of living into the future. In March, the
fund increased its tax-free dividend 5.81%, showing that relative price
stability and growth of tax-free income are achievable.
The fund seeks to provide investors with consistent, tax-free income by
selecting intermediate-term, investment-grade quality bonds that our portfolio
managers believe offer attractive yields with relatively modest price
sensitivity. The fund is also able to produce attractive after-tax total returns
over time by purchasing stocks of large, well-established companies whose
current earnings and near-term growth potential seem undervalued by the market.
If the fund's equity holdings do appreciate, rebalancing the portfolio by
selling stocks and buying municipal bonds will allow the fund to pay increasing
levels of tax-free income.
- -----
1
<PAGE>
An important objective of the fund is to provide investors with an attractive
after-tax total return by combining the tax-free income and price stability of
municipal bonds with the long-term growth potential of stocks.
A Disciplined Investment Process
The Nuveen Balanced Municipal and Stock Fund links the talents of two
outstanding investment managers--Nuveen and Institutional Capital Corporation
(ICAP)--both of whom apply decades of experience, painstaking analysis and
strict investment disciplines to help the fund reach its objectives.
Managing the municipal bonds in the portfolio, Nuveen brings to the fund nearly
100 years of experience in the municipal business. Nuveen's team of portfolio
managers follow a time-tested, value-oriented investment philosophy backed by a
research department renowned in the industry. Even as we broaden the investment
solutions we offer investors, we remain committed to maintaining our position as
one of the largest investors in the municipal market.
To manage the stock component of the fund's portfolio, Nuveen has teamed up with
ICAP, an equity manager whose disciplined, research-driven style closely mirrors
its own. Based in Chicago, ICAP has over 27 years of investment management
experience and currently manages about $10 billion for some of the country's
most prestigious institutions.
Looking Ahead
I'm delighted that the fund has performed so well. With a disciplined balance of
municipal bonds and stocks, the fund is positioned to produce a growing level
of tax-free income over time while capturing future stock market growth with
moderate price fluctuations.
On behalf of everyone at Nuveen, I thank you for your confidence in us and our
family of investments. We will continue to strive to provide you with high-
quality investments that withstand the test of time, and we look forward to
reporting to you again in six months.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 15, 1997
- -----
2
<PAGE>
Fund Adviser Commentary
Investment Objective
The Nuveen Balanced Municipal and Stock Fund seeks to provide investors with 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.
Investment Philosophy
The fund follows a balanced portfolio approach, using equities to provide price
appreciation while the municipal bond portion of the portfolio seeks to obtain
attractive tax-free income in balancing the fund's exposure to both rate
fluctuations and credit risk. We employ a value-oriented team approach to asset
allocation and security selection, determining the appropriate asset allocation
target based on current economic conditions, monetary and interest rate
forecasts, corporate profit estimates and municipal market dynamics. We also
apply several proprietary quantitative models that compare expected returns of
stocks and bonds.
Investment Strategy
Once the asset allocation target is determined, our portfolio management team
pools their municipal bond and equity sector expertise. For the municipal
portion, we focus on after-tax total return through value investing. This means
that we look for intermediate-term bonds that have a high level of tax-exempt
income, while also trying to uncover those bonds or sectors of the market that
- -----
3
<PAGE>
We believe the fund is well positioned to provide the upside potential of
equities and the attractive tax-free income of municipal bonds, while providing
valuable protection in difficult markets.
appear temporarily underpriced. We analyze how the various sectors of the bond
market are trading in relation to the types of bonds that are expected to be
brought to market through new issue supply. If we feel that bonds from a
certain sector of the market--for instance, public power--have the potential to
appreciate in value due to increased competition or reduced supply, we will
purchase these undervalued bonds for both the tax-free income and the
expectation of strong price performance over the long term.
Likewise, our equity portfolio management team, which consists of 12 portfolio
managers and analysts, seeks to identify stocks with strong relative value--that
is, stocks that appear to be priced under what the team believes to be their
warranted value--and clear catalysts for price appreciation. A catalyst is a
company or industry event that could trigger a rise in the stock's price, such
as a corporate restructuring or a favorable market climate for a particular
industry.
Economic Review
Since the inception of the fund, the stock market has enjoyed tremendous gains
as a result of a number of factors, including a very strong U.S. economy, a
relatively low interest rate environment, few signs of inflationary pressures,
strong corporate earnings, and a record amount of merger and acquisition
activity. These factors boosted investor confidence and helped propel the U.S.
equity market--and fixed-income securities--to substantial gains. Over the same
period of time, municipal bond yields have decreased, leading to good
performance from the bond portion of the portfolio as well.
Investment Outlook
Currently, we do not think the Federal Reserve will act to
- -----
4
<PAGE>
raise short-term interest rates during the third quarter, and, consequently,
interest rates will probably remain in a relatively low trading range. Given
this environment, we will continue to monitor the municipal market for
attractive situations such as when increased credit spreads create investment
opportunities, allowing us to add yield necessary to compensate for increased
risk.
Most of the stocks that we find that meet our investment criteria fall in the
category of corporate restructurings. Our view is that restructurings are
particularly appropriate for today's market.
Even though most consumer product and service markets are very competitive from
a pricing standpoint, in some instances, companies have the ability to raise
prices. Thus, companies that have some degree of pricing flexibility should be
relatively advantaged. Such flexibility could come from a particular product,
or industry supply and demand conditions. As we have increasingly focused on
this potential, several areas of opportunity have emerged, reflecting our
holdings in Host Marriott, ITT Corp and AMR Corp. In each case, we have looked
for companies that are benefiting from enhanced pricing power, and have
managements who are working hard to exploit that value for shareholders.
We believe the fund is well positioned to provide the upside potential of
equities and the attractive tax-free income of municipal bonds, while providing
valuable protection in difficult markets.
- -----
5
<PAGE>
Balanced Municipal
and Stock Fund
Overview as of June 30, 1997
Top Five Stock Holdings
Philips Electronics NV 4.71%
NYNEX Corporation 3.60%
Raytheon Corporation 3.50%
Ford Motor Company 3.50%
IBM Corporation 3.40%
Stock Diversification
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
Transportation 7%
Automotive 6%
Banks 5%
Chemicals 5%
Defense 10%
Compute Systems 5%
Entertainment 4%
Media 4%
Electronics 7%
Pharmaceutical 8%
Retail 4%
Telephone 9%
Insurance 3%
Health Care 4%
Services 6%
Toys 3%
Other 10%
</TABLE>
Municipal Bond Credit Quality
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
AAA 62%
BBB 23%
A 5%
AA 10%
</TABLE>
<TABLE>
<CAPTION>
Fund Highlights
================================================================================
Share Class A B C R
<S> <C> <C> <C> <C>
CUSIP 67064Y883 67064Y875 67064Y867 67064Y859
Inception Date 8/96 8/96 8/96 8/96
Net Asset Value (NAV) $23.11 $23.11 $23.10 $23.11
Last Quarterly Dividend $0.0455 $0.0320 $0.0320 $0.0500
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Net Assets ($000) $90,525
Fixed Income Maturity/Duration 13/6.9 years
Average Market Capitalization of Stocks $25 billion
Average P/E of Stocks (trailing 12 months) 18.5
Number of Stocks 46
Expected Turnover Rate 100%-125%
Expense Ratio (A Shares) (After Reimbursement) 1.10%
Portfolio Allocation Stocks Municipal Bonds Cash
35% 60% 5%
- --------------------------------------------------------------------------------
Total Return/1/
================================================================================
Share Class A(NAV) A(Offer) B C R
Year-to-Date 9.61% 3.86% 9.26% 9.22% 9.84%
Since Inception 18.05% 11.86% 17.32% 17.27% 18.38%
- --------------------------------------------------------------------------------
Dividend Yields
================================================================================
Share Class A(NAV) A(Offer) B C R
Distribution Rate 2.36% 2.24% 1.66% 1.66% 2.60%
SEC 30-Day Yield 2.81% 2.66% 2.00% 1.99% 3.06%
- --------------------------------------------------------------------------------
</TABLE>
=====
6
<PAGE>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
1 Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.25% maximum sales charge. Class B shares have
a CDSC that begins at 5% for redemptions during the first year after purchase
and declines periodically to 0% over the following six years, which is not
reflected in the return figures. Class B shares convert to Class A shares
after eight years. Class C shares have a 1% CDSC for redemptions within one
year which is not reflected in return figures.
2 The Index Comparison shows the change in value of a $10,000 investment in the
A shares of the Nuveen fund compared with the Standard & Poor's 500 Index, a
Balanced Index and Lehman Brothers Intermediate Treasury Index. The Balanced
Index is comprised of a 60% weighting in the S&P 500 Index and 40% in the
Lehman Brothers Intermediate Treasury Index. The indexes do not reflect any
initial or ongoing expenses. The Nuveen fund return depicted in the chart
reflects the initial maximum sales charge applicable to A shares (5.25%) and
all ongoing fund expenses.
[LINE GRAPH APPEARS HERE]
Nuveen
Balanced Balanced
Lehman Brothers Index Municipal
10 Year Municipal (60% S&P/ & Stock
Bond Index S&P 500 40% LBIT) Fund (Offer)
10,000 10,000 10,000 9,475 August 1996
10,000 9,834 9,934 9,432 September 1996
10,103 10,344 10,201 9,650 October 1996
10,230 10,630 10,391 9,869 November 1996
10,437 11,434 10,831 10,274 December 1996
10,390 11,214 10,719 10,204 January 1997
10,431 11,915 11,012 10,411 February 1997
10,529 12,008 11,108 10,518 March 1997
10,387 11,514 10,836 10,382 April 1997
10,464 12,202 11,143 10,615 May 1997
10,613 12,945 10,510 10,926 June 1997
10,730 13,556 11,803 11,185 July 1997
S&P 500 $13,556
Nuveen Balanced Municipal and Stock Fund (Offer) $11,185 (NAV = $11,805)
Balanced Index (60% S&P / 40% LBIT) $11,803
Lehman Brothers 10 Year Municipal Bond Index $10,730
Past performance is not predictive of future performance.
- -----
7
<PAGE>
Financial Section
Contents
10 Portfolio of Investments
18 Statement of Net Assets
19 Statement of Operations
20 Statement of Changes
in Net Assets
21 Notes to Financial Statements
28 Financial Highlights
30 Report of Independent
Public Accountants
- -----
9
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks -- 36.1%
Automotive -- 2.4%
30,000 Ford Motor Company $ 1,132,500
18,250 General Motors Corporation 1,016,297
- --------------------------------------------------------------------------------
Banks -- 1.8%
19,200 Banc One Corporation 930,000
2,600 Wells Fargo & Company 700,700
- --------------------------------------------------------------------------------
Chemicals -- 1.9%
12,700 Akzo Nobel N.V. Sponsored ADR 877,888
13,900 E.l. du Pont de Nemours and Company Ltd. 873,963
- --------------------------------------------------------------------------------
Computer Systems -- 1.9%
12,200 International Business
Machines Corporation 1,100,287
17,100 Sun Microsystems, Inc. + 636,441
- --------------------------------------------------------------------------------
Defense -- 3.5%
19,400 Boeing Company 1,029,413
11,450 Northrop Grumman Corporation 1,005,453
22,500 Raytheon Company 1,147,500
- --------------------------------------------------------------------------------
Electronics -- 2.5%
7,100 Advanced Micro Devices, Inc. + 255,600
21,200 Philips Electronic N.V. 1,523,750
5,700 SGS-Thomson Microelectronics N.V. + 456,000
- --------------------------------------------------------------------------------
Entertainment -- 1.3%
27,150 Host Marriott Corp. + 483,609
10,950 ITT Corporation + 668,634
- --------------------------------------------------------------------------------
Food, Tobacco, Beverage -- 0.8%
17,750 Grand Metropolitan PLC
Sponsored ADR 695,578
- --------------------------------------------------------------------------------
Health Care -- 1.3%
7,700 Aetna Inc. 788,288
13,500 Tenet Healthcare Corporation + 399,094
- --------------------------------------------------------------------------------
Insurance -- 1.2%
14,300 Allstate Corporation 1,043,900
- --------------------------------------------------------------------------------
Media -- 1.5%
27,350 Dun & Bradstreet Corporation 717,937
3,500 Tribune Company 168,219
25,250 U.S.West Media Group + 511,312
- --------------------------------------------------------------------------------
Metals -- 0.8%
10,200 Reynolds Metals Company 726,750
- --------------------------------------------------------------------------------
Natural Gas -- 0.5%
16,650 Union Pacific Resources Group Inc. 414,169
</TABLE>
- ------
10
<PAGE>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
Market
Shares Decription Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- continued
Non-Defense Capital Spending -- 0.9%
11,150 Case Corporation $ 767,956
- --------------------------------------------------------------------------------
Oil -- 0.2%
4,600 Ashland Inc. 213,325
- --------------------------------------------------------------------------------
Pharmaceuticals -- 2.9%
11,600 American Home Products Corporation 887,400
8,593 Novartis AG Sponsored ADR 687,864
25,300 Rhone-Poulenc SA Sponsored ADR 1,053,112
- --------------------------------------------------------------------------------
Retail -- 1.3%
8,500 Dillard's Inc. 294,313
21,550 Federated Department Stores, Inc. + 748,863
6,200 Office Depot, Inc. + 120,512
- --------------------------------------------------------------------------------
Services, Miscellaneous -- 1.9%
8,750 AMR Corporation + 809,375
6,500 Continental Airlines, Inc. + 227,094
3,300 HFS, Inc. + 191,400
28,793 Peninsular and Oriental Steam Navigation Company 575,042
- --------------------------------------------------------------------------------
Software & Services -- 0.7%
14,650 First Data Corporation 643,684
- --------------------------------------------------------------------------------
Telephone -- 3.3%
26,200 MCI Communications Corporation 1,002,969
20,300 NYNEX Corporation 1,169,787
15,400 Sprint Corporation 810,425
- --------------------------------------------------------------------------------
Toys -- 1.0%
20,475 Hasbro, Inc. 580,978
10,350 Mattel, Inc. 350,606
- --------------------------------------------------------------------------------
Transportation -- 2.5%
11,100 Burlington Northern Santa Fe 997,613
14,900 Canadian Pacific, Ltd. 423,719
11,500 Union Pacific Corporation 810,750
- --------------------------------------------------------------------------------
Total Common Stock Investments--(cost $29,549,718) 32,670,069
- --------------------------------------------------------------------------------
- -----
11
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS--60.7%
Alabama--0.6%
$ 480,000 Alabama Water Pollution Control Authority, Revolving 8/05 at 100 Aaa $ 528,494
Fund Loan Bonds, Series 1994, 6.625%, 8/15/08
- --------------------------------------------------------------------------------------------------------------------------
California--4.8%
2,500,000 Escondido Multifamily Housing Revenue Refunding 7/05 at 101 1/2 AAA 2,533,375
(Morning View Terrace Apartments),
FNMA Series 1997B, 5.400%, 1/01/27
(Mandatory put 7/01/07)
250,000 County of Orange, California, Refunding Recovery No Opt. Call Aaa 269,368
Bonds, 1995 Series A, 6.000%, 6/01/10
1,495,000 Palmdale Civic Authority, 1997 Revenue Bonds, 7/07 at 102 Aaa 1,495,658
Series A (Civic Center Refinancing),
5.375%, 7/01/12
- --------------------------------------------------------------------------------------------------------------------------
Colorado--2.3%
2,000,000 City and County of Denver, Colorado, Airport System 11/06 at 102 Aaa 2,063,500
Revenue Bonds, Series 1996 B, 5.625%, 11/15/08
(Alternative Minimum Tax)
- --------------------------------------------------------------------------------------------------------------------------
District of Columbia--0.6%
500,000 District of Columbia General Obligation Refunding No Opt. Call Aaa 554,595
Bonds, Series A-1, 6.500%, 6/01/10
- --------------------------------------------------------------------------------------------------------------------------
Florida--1.9%
1,500,000 Dade County, Florida, Seaport Revenue and No Opt. Call Aaa 1,698,600
General Obligation Refunding Bonds, Series
6.500%, 10/01/07
- --------------------------------------------------------------------------------------------------------------------------
Georgia--5.4%
1,110,000 Georgia Housing and Finance Authority, Single Family 6/06 at 102 AA+ 1,133,166
Mortgage Bonds, 1996 Series A, 5.875%, 12/01/19
(Alternative Minimum Tax)
1,360,000 Georgia, State of, General Obligation Bonds, No Opt. Call Aaa 1,522,343
Series 1996C, 6.250%, 8/01/08
2,000,000 State of Georgia, General Obligation Bonds, Bonds, 1997A, No Opt. Call Aaa 2,229,340
6.250%, 4/01/07
- --------------------------------------------------------------------------------------------------------------------------
Idaho--0.8%
750,000 Idaho Housing and Finance Association, Single Family 1/07 at 102 A1 759,345
Mortgage Bonds, 1997 Series D, 5.950%, 7/01/09
(Alternative Minimum Tax)
--
12
</TABLE>
<PAGE>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS--continued
Illinois -- 10.3%
$2,160,000 Illinois Health Facilities Authority, Revenue Bonds, 7/04 at 102 BBB $2,361,290
Series 1985 (St. Elizabeth's Hospital of Chicago,
Inc.), 7.250%, 7/01/05
1,500,000 Illinois Health Facilities Authority, Revenue Bonds, 11/03 at 102 A1 1,537,050
Series 1993 (OSF Healthcare System),
6.000%, 11/15/10
250,000 Illinois Health Facilities Authority, FHA Insured 2/06 at 102 Aaa 254,005
Mortgage Revenue Bonds, Series 1996 (Sinai
Health System), 5.500%, 2/15/09
1,200,000 Illinois Health Facilities Authority Revenue Bonds, 10/07 at 102 Aaa 1,207,668
Series 1997A (Highland Park Hospital Project),
5.700%, 10/01/10
1,000,000 Cook County School District 99 (Cicero), General No Opt. Call Aaa 1,227,000
Obligation School Bonds, Series 1997,
8.500%, 12/01/04
250,000 Public Building Commission of Kane County, Kane No Opt. Call Aaa 269,128
County, Illinois, Community College Facilities
Revenue Refunding Bonds, Series 1996
(Waubonsee Community College District No. 516),
6.000%, 12/01/04
700,000 Kankakee School District No. 111, Kankakee County, 1/06 at 100 Aaa 701,883
Illinois, General Obligation School Bonds,
Series 1996, 5.500%, 1/01/12
1,415,000 School District Number 112, Lake County, Illinois No Opt. Call AA+ 1,810,096
(Highland Park), General Obligation School Building
Bonds, Series 1997, 9.000%, 12/01/05 (WI)
- ------------------------------------------------------------------------------------------------------------------------------------
Kentucky--0.3%
310,000 Grant County School District Finance Corporation, 3/07 at 102 Aaa 311,234
School Building Revenue Bonds, Series 1997,
5.300%, 3/01/10
- ------------------------------------------------------------------------------------------------------------------------------------
Maine--1.4%
1,000,000 Maine Educational Loan Marketing Corporation, No Opt. Call Aaa 1,034,350
Student Loan Revenue Bonds, Series A-4,
5.750%, 11/01/01 (Alternative Minimum Tax)
255,000 Town of Winslow, Maine (Crowe Rope Industries 3/07 at 102 Aaa 261,870
Project), 1997 Series A, General Obligation Tax
Increment Financing Bonds, 6.000%, 3/01/11
(Alternative Minimum Tax)
</TABLE>
13
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS--continued
Massachusetts--0.3%
$ 250,000 Massachusetts Health and Educational Facilities 7/06 at 102 A- $ 253,673
Authority, Revenue Bonds, Melrose-Wakefield
Healthcare Corp. Issue, Series C, 5.700%, 7/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan--2.2%
Essexville-Hampton Public Schools, County of Bay,
State of Michigan, 1997 School Building and Site
Bonds (General Obligation - Unlimited Tax):
1,000,000 5.400%, 5/01/11 5/07 at 100 Aaa 1,006,670
1,010,000 5.500%, 5/01/12 5/07 at 100 Aaa 1,021,777
- ------------------------------------------------------------------------------------------------------------------------------------
Nevada--2.8%
2,250,000 Nevada Housing Division Single Family Mortgage 4/07 at 102 Aa3 2,276,235
Bonds, 1997 Series A-1 Mezzanine Bonds,
6.000%, 4/01/15 (Alternative Minimum Tax)
250,000 Airport Authority of Washoe County, Reno, Nevada, 7/03 at 102 Aaa 257,308
Airport Revenue Refunding Bonds, Series 1993B,
5.875%, 7/01/11
- ------------------------------------------------------------------------------------------------------------------------------------
New Hampshire--4.0%
500,000 New Hampshire Higher Educational and Health 1/07 at 102 BBB- 496,930
Facilities Authority, Revenue Bonds, Series 1997
(New Hampshire College), 6.200%, 1/01/12
3,000,000 State of New Hampshire, Turnpike System 4/02 at 102 Aaa 3,090,180
Revenue Bonds, 1992 Series, 6.000%, 4/01/13
- ------------------------------------------------------------------------------------------------------------------------------------
New York--10.6%
275,000 Dormitory Authority of the State of New York, 7/02 at 102 Baa1 290,054
Revenue Bonds, City University Issue, Series U,
6.375%, 7/01/08
1,430,000 Empire State Development Corporation, New York No Opt. Call Baa1 1,566,079
State Urban Development Corporation,
Revenue Bonds (Youth Facilities), 6.500%, 4/01/07
250,000 New York State Finance Agency, Housing Project 5/06 at 102 Aaa 256,938
Mortgage Revenue Bonds, 1996 Series A
Refunding, 5.875%, 11/01/10
2,000,000 New York State Thruway Authority, Local Highway 4/06 at 102 Baa1 2,058,040
and Bridge Service Contract Bonds, Series 1996,
5.625%, 4/01/07
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
Principal Optional Call Market
Amount Description Provisions Ratings Value
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS -- continued
New York -- continued
$1,700,000 New York State, Urban Development Corporation, 1/03 at 102 Baa1 $ 1,740,817
Project Revenue Bonds (Cornell Center for Theory
and Simulation in Science and Engineering Grant),
Series 1993, 5.900%, 1/01/07
285,000 New York State, Urban Development Corporation, No Opt. Call Baa1 306,423
State Facilities Revenue Bonds, 1995 Refunding
Series, 6.250%, 4/01/06
2,000,000 Certificates of Participation, The State of New York, No Opt. Call Baa1 2,106,020
The City University of New York (John Jay College
of Criminal Justice Project Refunding),
6.000%, 8/15/06
500,000 Metropolitan Transportation Authority, Transit No Opt. Call Baa1 519,655
Facilities Service Contract Bonds, Series O,
5.750%, 7/01/07
250,000 The City of New York, General Obligation Bonds, 11/06 at 101 1/2 Baa1 254,220
Fiscal 1997 Series D, Tax-Exempt Bonds,
5.875%, 11/01/11
500,000 The City of New York, General Obligation Bonds, 4/07 at 101 Baa1 519,670
Fiscal 1997 Series I, 6.000%, 4/15/09
- --------------------------------------------------------------------------------------------------------------------------
Oklahoma -- 1.2%
1,000,000 Oklahoma Industries Authority, Health System No Opt. Call Aaa 1,077,800
Revenue Refunding Bonds
Series 1995D, 6.000%, 8/15/07
- --------------------------------------------------------------------------------------------------------------------------
Pennsylvania -- 4.0%
2,500,000 Commonwealth of Pennsylvania, Certificates of 7/03 at 102 Aaa 2,533,850
Participation, Series 1993A, 5.400%, 7/01/09
1,000,000 Southeastern Pennsylvania Transportation Authority, No Opt. Call Aaa 1,063,580
Special Revenue Bonds, Series of 1997,
5.750%, 3/01/07
- --------------------------------------------------------------------------------------------------------------------------
Rhode Island -- 2.3%
200,000 Rhode Island Clean Water Protection Finance Agency, No Opt. Call Aaa 248,358
Water Pollution Control Revolving Fund Revenue
Bonds, Series 1993 A (Pooled Loan Issue),
9.200%, 10/01/03
1,760,000 City of Providence, Rhode Island, General 7/07 at 102 Aaa 1,875,262
Obligation Bonds, 1997 Series A,
6.000%, 7/15/09
</TABLE>
15
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ---------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS-continued
Texas - 0.9%
$ 240,000 Texas Department of Housing and Community Affairs, 9/06 at 102 Aaa $ 246,754
Single Family Mortgage Revenue Bonds, 1996
Series E 5.750%, 3/01/10
215,000 City of Austin, Texas, Water, Sewer and Electric No Opt. Call A 271,384
Refunding Revenue Bonds, Series 1982,
14.000%, 11/15/01
250,000 City of San Antonio, Texas, Airport System 7/06 at 101 Aaa 258,593
Improvement Revenue Bonds, Series 1996,
5.700%, 7/01/09 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------
Utah - 0.8%
200,000 State Board of Regents of the State of Utah, 11/05 at 102 Aaa 209,232
Student Loan Revenue Bonds, 1995 Series N Bonds,
6.000%, 5/01/08 (Alternative Minimum Tax)
500,000 Tooele County, Hazardous Waste Disposal Revenue 8/05 at 102 BBB+ 529,315
Bonds (Laidlaw Inc./USPCI Clive PJ), Series 1995,
6.750%, 8/01/10 (Alternative Minimum Tax)
- ---------------------------------------------------------------------------------------------------------------
Washington - 3.2%
230,000 Washington Public Power Supply System, Nuclear No Opt. Call Aa1 278,555
Project No. 2 Revenue Bonds, Series 1981 A,
14.375%, 7/01/01
800,000 Washington Public Power Supply System, 7/06 at 102 Aaa 824,671
Project No. 3, Refunding Revenue Bonds,
Series 1996-A, 5.700%, 7/01/09
650,000 Public Utility District No. 1 of Benton County, 7/07 at 102 Aaa 665,950
Washington, Electric Revenue and Acquisition
Bonds, Series 1997, 5.450%, 11/01/08
1,060,000 Tacoma School District No. 409, King County, No Opt. Call Aaa 1,135,821
Washington, Unlimited Tax General Obligation
Improvement and Refunding Bonds, 1997,
6.000%, 12/01/09 (WI)
- ---------------------------------------------------------------------------------------------------------------
$52,040,000 Total Municipal Investments - (cost $54,160,072) 55,003,172
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
<TABLE>
<CAPTION>
Principal Market
Amount Description Ratings** Value
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Temporary Investments in Short-Term Municipal Securities - 5.1%
$1,000,000 McIntosh Industrial Development Board Pollution A-1+ $1,000,000
Control Revenue (Ciba-Geigy Corporation),
Variable Rate Demand Bonds, 4.050%, 7/01/04++
3,600,000 Sabine River Authority of Texas, Collateralized A-1+ 3,600,000
Pollution Control (Texas Utilities Electric Company),
Variable Rate Demand Bonds,
4.150%, 4/01/30 (Alternative Minimum Tax)++
- ------------------------------------------------------------------------------------------
$4,600,000 Total Temporary Investments - (cost $4,600,000) 4,600,000
==========--------------------------------------------------------------------------------
Total Municipal Bond Investments - (cost $58,760,072) 59,603,172
------------------------------------------------------------------------------
Total Investments - (cost $88,309,790) - 101.9% 92,273,241
------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.9%) (1,748,216)
------------------------------------------------------------------------------
Net Assets - 100% $90,525,025
==============================================================================
</TABLE>
* Optional Call Provisions (not covered by the report of
independent public accountants): Dates (month and year) and
prices of the earliest optional call or redemption. There may
be other call provisions at varying prices at later dates.
** Ratings (not covered by the report of independent public
accountants): Using the higher of Standard & Poor's or Moody's
rating.
+ Non-income producing.
++ The security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a short-
term security. The rate disclosed is that currently in effect.
This rate changes periodically based on market conditions or a
specified market index.
(WI) Security purchased on a when-issued basis (see note 1 of the
Notes to Financial Statements).
- -----
17 See accompanying notes to financial statements.
<PAGE>
Statement of Net Assets
June 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
<S> <C>
Assets
Investment securities, at market value (cost $88,309,790) (note 1) $92,273,241
Cash 95,975
Receivables:
Dividends and interest 40,200
Interest 842,260
Investments sold 335,961
Shares sold 1,918,666
Deferred organization costs (note 1) 150,025
Other assets 1,868
- ------------------------------------------------------------------------------------------
Total assets 95,658,196
- ------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 4,951,159
Shares redeemed 8,150
Accrued expenses:
Management fees (note 5) 32,982
12b-1 distribution and service fees (notes 1 and 5) 17,254
Other 33,934
Dividends payable 89,692
- ------------------------------------------------------------------------------------------
Total liabilities 5,133,171
- ------------------------------------------------------------------------------------------
Net assets (note 6) $90,525,025
==========================================================================================
Class A Shares (note 1)
Net assets $79,951,739
Shares outstanding 3,459,741
Net asset value and redemption price per share $ 23.11
Offering price per share (net asset value per share plus
maximum sales charge of 5.25% of offering price) $ 24.39
==========================================================================================
Class B Shares (note 1)
Net assets $ 2,051,187
Shares outstanding 88,756
Net asset value, offering and redemption price per share $ 23.11
==========================================================================================
Class C Shares (note 1)
Net assets $ 1,559,205
Shares outstanding 67,499
Net asset value, offering and redemption price per share $ 23.10
==========================================================================================
Class R Shares (note 1)
Net assets $ 6,962,894
Shares outstanding 301,348
Net asset value, offering and redemption price per share $ 23.11
==========================================================================================
</TABLE>
- -----
18 See accompanying notes to financial statements.
<PAGE>
Statement of Operations Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
For the period August 7, 1996 (commencement
of operations) through June 30, 1997
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Investment Income (note 1)
Dividends $ 134,371
Interest 611,930
- --------------------------------------------------------------------------------
Total investment income 746,301
- --------------------------------------------------------------------------------
Expenses
Management fees (note 5) 142,603
12b-1 service fees -- Class A (notes 1 and 5) 33,029
12b-1 distribution and service fees -- Class B (notes 1 and 5) 818
12b-1 distribution and service fees -- Class C (notes 1 and 5) 458
Shareholders' servicing agent fees and expenses 8,620
Custodian's fees and expenses 39,416
Trustees' fees and expenses (note 5) 2,799
Professional fees 15,658
Shareholders' reports -- printing and mailing expenses 14,744
Federal and state registration fees 37,434
Amortization of deferred organization costs (note 1) 31,857
Other expenses 409
- --------------------------------------------------------------------------------
Total expenses before expense reimbursement 327,845
Expense reimbursement (note 5) (131,924)
- --------------------------------------------------------------------------------
Net expenses 195,921
- --------------------------------------------------------------------------------
Net investment income 550,380
- --------------------------------------------------------------------------------
Realized and Unrealized Gain From Investments
Net realized gain from investment transactions (notes 1 and 4) 457,166
Net change in unrealized appreciation or depreciation of investments 3,963,451
- --------------------------------------------------------------------------------
Net gain from investments 4,420,617
- --------------------------------------------------------------------------------
Net increase in net assets from operations $4,970,997
================================================================================
</TABLE>
See accompanying notes to financial statements.
- -----
19
<PAGE>
Statement of Changes in Net Assets
For the period August 7, 1996 (commencement of operations) through June 30, 1997
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Operations
Net investment income $ 550,380
Net realized gain from investment transactions
(notes 1 and 4) 457,166
Net change in unrealized appreciation or depreciation
of investments 3,963,451
- --------------------------------------------------------------------------------
Net increase in net assets from operations 4,970,997
- --------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (291,349)
Class B (714)
Class C (485)
Class R (141,518)
From accumulated net realized gains from
investment transactions:
Class A (22)
Class B (22)
Class C (22)
Class R (15,983)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (450,115)
- --------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 86,716,680
Net proceeds from shares issued to shareholders due
to reinvestment of distributions 105,920
- --------------------------------------------------------------------------------
86,822,600
- --------------------------------------------------------------------------------
Cost of shares redeemed (851,817)
- --------------------------------------------------------------------------------
Net increase in net assets from fund share transactions 85,970,783
- --------------------------------------------------------------------------------
Net increase in net assets 90,491,665
Net assets at the beginning of period 33,360
- --------------------------------------------------------------------------------
Net assets at the end of period $90,525,025
================================================================================
Balance of undistributed net investment income at end of period $ 116,314
================================================================================
</TABLE>
See accompanying notes to financial statements.
- -----
20
<PAGE>
Notes to Financial Statements Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
1. General Information and Significant Accounting Policies
The Nuveen Balanced Municipal and Stock Fund (the "Fund") is a series of the
Nuveen Investment Trust (the "Trust"). The Trust is an open-end diversified
management investment company registered under the Investment Company Act of
1940. The Trust was organized as a Massachusetts business trust on May 6, 1996.
Prior to commencement of operations on August 7, 1996, the Trust had no
operations other than those related to organizational matters and the initial
capital contribution of $100,080 (of which $33,360 was allocated to the Fund) by
Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned subsidiary
of The John Nuveen Company, for the issuance of shares on July 29, 1996. On
August 7, 1996, The John Nuveen Company made an additional investment of
approximately $6 million in the Fund for the purpose of establishing an initial
investment portfolio. During the Fund's initial offering period of its shares
to investors, March 3, 1997 through May 31, 1997, Class A Shares were available
for purchase on a privileged load-waived basis (without an up-front sales
charge).
The Fund invests in a conservative mix of equities and tax-exempt securities for
capital growth, capital preservation and current tax-exempt income. During
temporary defensive periods, the Fund may invest any percentage of its assets in
temporary investments.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with generally
accepted accounting principles.
Securities Valuation
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 are 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. The prices of municipal bonds in the Fund's
investment portfolio are provided by a pricing service approved by the Fund's
Board of Trustees. When price quotes are not readily available (which is usually
the case for municipal securities), the pricing service establishes fair market
value based on yields or prices of municipal bonds of comparable quality, type
of issue, coupon, maturity and rating, indications of value from securities
dealers and general market conditions. Temporary investments in securities that
have variable rate and demand features qualifying them as short-term securities
and/or securities having remaining maturities of 60 days or less when
purchased, are valued at amortized cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject
to market fluctuation during this period. The Fund has instructed the custodian
to segregate assets in a separate account with a current value at least equal
to the amount of the when-issued and delayed delivery purchase commitments. At
June 30, 1997, the Fund had such outstanding purchase commitments of $2,930,722.
- -----
21
<PAGE>
Notes to Financial Statements -- continued
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for amortization of
premiums and accretion of discounts on long-term debt securities when required
for federal income tax purposes.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared and distributed to shareholders
monthly. Net ordinary taxable income and net realized capital gains from
investment transactions, if any, are declared and distributed to shareholders
not less frequently than annually. Furthermore, capital gains are distributed
only to the extent they exceed available capital loss carryovers.
Distributions to shareholders of net investment income and net realized capital
gains are recorded on the ex-dividend date. The amount and timing of
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. Accordingly,
temporary over-distributions as a result of these differences may occur and will
be classified as either distributions in excess of net investment income and/or
distributions in excess of net realized gains from investment transactions,
where applicable.
Federal Income Taxes
The Fund intends to distribute all of its net investment income and capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal tax provision is required. In addition, the
Fund intends to satisfy conditions which will enable interest from Municipal
Obligations, which is exempt from regular federal income tax when received by
the fund, to qualify as exempt-interest dividends when distributed to the
Shareholders of the Fund. All tax-exempt income received by the fund and paid to
shareholders during the period August 7, 1996 (commencement of operations)
through June 30, 1997, have been designated Exempt Interest Dividends. Net
realized capital gains and ordinary income distributions are subject to federal
taxation.
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a 1% contingent deferred sales charge ("CDSC") if redeemed
within 18 months of purchase. Class B Shares are sold without a sales charge but
incur annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within 12 months of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available for purchases of over $1 million and in other limited
circumstances.
22
<PAGE>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning August 7, 1996 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption will be reduced by the pro-rata share of
the unamortized organization costs as of the date of redemption.
Derivative Financial Instruments
The Fund may invest in options and futures transactions, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in such financial instruments, and may do so in the future, it did not
make any such investments during the period August 7, 1996 (commencement of
operations) through June 30, 1997.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently
only includes 12b-1 distribution and service fees, are recorded to the specific
class.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
- -----
23
<PAGE>
Notes to Financial Statements -- continued
2. Fund Shares
Transactions in Fund shares for the period August 7, 1996 (commencement of
operation) through June 30, 1997, were as follows:
<TABLE>
<CAPTION>
Shares Amount
- ----------------------------------------------------------------------------
<S> <C> <C>
Shares sold:
Class A 3,490,947 $77,077,576
Class B 89,676 2,064,529
Class C 67,179 1,548,508
Class R 300,930 6,026,067
Shares issued to shareholders due to reinvestment of distributions:
Class A 4,721 105,890
Class B -- --
Class C -- --
Class R 1 30
- ----------------------------------------------------------------------------
3,953,454 86,822,600
- ----------------------------------------------------------------------------
Shares redeemed:
Class A (36,344) (818,648)
Class B (1,337) (30,923)
Class C (97) (2,246)
Class R -- --
- ----------------------------------------------------------------------------
(37,778) (851,817)
- ----------------------------------------------------------------------------
Net increase 3,915,676 $85,970,783
============================================================================
</TABLE>
3. Distributions to Shareholders
On July 9, 1997, the Fund declared a dividend distribution from its tax-exempt
net investment income which was paid on August 1, 1997, to shareholders of
record on July 9, 1997, as follows:
<TABLE>
- ----------------------------------------------------------------------------
<S> <C>
Dividend per share:
Class A $.0455
Class B .0320
Class C .0320
Class R .0500
- ----------------------------------------------------------------------------
</TABLE>
- -----
24
<PAGE>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
4. Securities Transactions
Purchases and sales (including maturities) of investments in common and
preferred stocks, long-term municipal bonds and temporary investments for the
period August 7, 1996 (commencement of operations) through June 30, 1997, were
as follows:
- --------------------------------------------------------------------------------
Purchases
Common and preferred stocks $ 35,065,459
Long-term municipal bonds 55,233,338
Temporary investments 31,400,000
Sales
Common and preferred stocks 5,973,373
Long-term municipal bonds 1,039,451
Temporary investments 26,800,000
================================================================================
At June 30, 1997, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation for financial reporting and federal income tax
purposes aggregated $3,963,451 of which $4,060,388 related to appreciated
securities and $96,937 related to depreciated securities.
5. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, which is based upon the average daily
net asset value of the Fund as follows:
Average daily net asset value 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 net assets over $2 billion .6750 of 1
================================================================================
The Adviser has agreed to waive fees and reimburse expenses through July 31,
1998, in order to prevent total operating expenses (excluding any 12b-1
distribution or service fees and extraordinary expenses) from exceeding .85% of
the average daily net asset value of any class of Fund shares.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Adviser has entered
into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"),
of which The John Nuveen Company owns a minority interest, under which ICAP
manages the Fund's equity investment portfolio. ICAP is compensated for its
services from the management fee paid to the Adviser. The Fund pays no
compensation directly to its
- ------
25
<PAGE>
Notes to Financial Statements -- continued
Trustees who are affiliated with the Adviser or to its officers, all of
whom receive remuneration for their services to the Fund from the Adviser.
In conjunction with the load-waived introductory program, John Nuveen & Co.
Incorporated (the "Distributor"), a wholly owned subsidiary of the John Nuveen
Company, compensated authorized dealers directly with a 2% commission on Fund
share sales. Shares purchased during this program are subject to a 2% CDSC if
redeemed within the first two years of purchase.
During the period August 7, 1996 (commencement of operations) through June 30,
1997, the Distributor collected gross sales charges on Class A Shares of
approximately $54,800, of which approximately $46,300 were paid out as
concessions to authorized dealers. The Distributor also received 12b-1 service
fees on Class A Shares, substantially all of which were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments.
During the period August 7, 1996 (commencement of operations) through June 30,
1997, the Distributor compensated authorized dealers directly with
approximately $75,200 in commission advances on Class B and Class C Shares. To
compensate for commissions advanced to authorized dealers, all 12b-1
distribution and service fees on Class B and Class C Shares were retained by the
Distributor. The Distributor also collected and retained approximately $17,000
of CDSC on share redemptions during the period.
6. Composition of Net Assets
At June 30, 1997, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
- --------------------------------------------------------------------------------
Capital paid-in $ 86,004,140
Balance of undistributed net investment income 116,314
Accumulated net realized gain from investment transactions 441,120
Net unrealized appreciation of investments 3,963,451
- --------------------------------------------------------------------------------
Net assets $ 90,525,025
================================================================================
- ------
26
<PAGE>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
7. Investment Composition
The Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At June 30, 1997, the revenue sources by municipal
purpose for these investments, expressed as a percent of total municipal
investments, were as follows:
- --------------------------------------------------------------------------------
Revenue Bonds:
Housing Facilities 14%
Lease Rental Facilities 13
Health Care Facilities 12
Transportation 11
Educational Facilities 8
Electric Utilities 4
Water/Sewer Facilities 1
Other 4
General Obligation Bonds 33
- --------------------------------------------------------------------------------
100%
================================================================================
48% of the long-term and intermediate-term investments owned by the Fund are
either covered by insurance issued by several private insurers or are backed by
an escrow or trust containing U.S. Government or U.S. Government agency
securities, either of which ensure the timely payment of principal and interest
in the event of default. Such insurance or escrow, however, does not guarantee
the market value of the municipal securities or the value of the Fund's shares.
All of the temporary investments in short-term municipal securities have credit
enhancements (letters of credit, guarantees or insurance) issued by third party
domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of the Fund.
- ------
27
<PAGE>
Financial Highlights
Selected data for a common share outstanding August 7, 1996 (commencement of
operations) through June 30, 1997, is as follows:
<TABLE>
<CAPTION>
Class (Inception date) Operating performance Less distributions
------------------------ -------------------------
NUVEEN BALANCED
MUNICIPAL AND STOCK FUND
Net
Net realized and Net Total
asset unrealized Dividends asset return
value Net gain (loss) from net Distributions value on net
Year ending beginning investment from investment from capital end of turnover
June 30, of period income(b) investments income gains period value(a)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1997(d) $20.00 $.56 $3.02 $(.42) $(.05) $23.11 18.05%
Class B (8/96)
1997(d) 20.00 .40 3.04 (.28) (.05) 23.11 17.32
Class C (8/96)
1997(d) 20.00 .40 3.03 (.28) (.05) 23.10 17.27
Class R (8/96)
1997(d) 20.00 .61 3.03 (.48) (.05) 23.11 18.38
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value without any sales charge.
(b) After waiver of certain management fees or reimbursement of expenses by
Nuveen Institutional Advisory Corp.
(c) Average commission rate paid on equity portfolio transactions. Commissions
paid are included in the cost of the securities.
(d) From commencement of class operations as noted.
28
<PAGE>
<TABLE>
<CAPTION>
Nuveen Balanced Municipal and Stock Fund
June 30, 1997 Annual Report
Ratios/Supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio Ratio
of net of net
Ratio of investment Ratio of investment
expenses income to expenses income to
to average average to average average
net assets net assets net assets net assets
Net assets before before after after Portfolio Average
end of period reimburse- reimburse- reimburse- reimburse- turnover commission
(in thousands) ment ment ment(b) ment(b) rate rate paid(c)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$79,952 1.58%* 2.31%* 1.10%* 2.79%* 32% $.0244
2,051 2.22* 1.62* 1.85* 1.99* 32 .0244
1,559 2.29* 1.53* 1.85* 1.97* 32 .0244
6,963 2.05* 1.96* .85* 3.16* 32 .0244
===================================================================================================================================
</TABLE>
29
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Investment Trust:
We have audited the accompanying statement of net assets of Nuveen Investment
Trust (comprising the Nuveen Balanced Municipal and Stock Fund), including the
portfolio of investments, as of June 30, 1997, and the related statement of
operations, the statement of changes in net assets and the financial highlights
for the period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1997, by correspondence with the custodian and brokers. As to securities
purchased but not received, we requested confirmation from brokers and, when
replies were not received, we carried out other alternative auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the fund
constituting Nuveen Investment Trust as of June 30, 1997, the results of its
operations, the changes in its net assets and its financial highlights for the
period then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 18, 1997
- -----
30
<PAGE>
Shareholder Information
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth and Income Funds
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Municipal Bond Funds
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama Michigan
Arizona Missouri
California New Jersey
Colorado New Mexico
Connecticut New York
Florida North Carolina
Georgia Ohio
Kansas Pennsylvania
Kentucky South Carolina
Louisiana Tennessee
Maryland Virginia
Massachusetts Wisconsin
To purchase additional shares of your Nuveen Fund, contact your financial
adviser. If you would like to add to your current investment on a monthly or
semi-annual basis, you can sign up for Nuveen's systematic investing program,
which allows you to invest a fixed dollar amount every month automatically.
You can also invest automatically through dividend reinvestment. By reinvesting
your fund's dividends back into the fund, you gain the added growth potential of
long-term compounding.
For more information on any of these service options call your adviser, or
Nuveen at (800) 621-7227.
- -----
31
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Anthony T. Dean
William L. Kissick
Thomas E. Leafstrand
Robert H. Lyon
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Fund Subadvisor
Institutional Capital Corporation
225 W. Wacker Drive
Chicago, IL 60606
Custodian
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
Transfer Agent,
Shareholder Services and
Dividend Disbursing Agent
Shareholder Services, Inc.
Nuveen Investor Services
P.O. Box 5330
Denver, CO 80217-5330
(800) 621-7227
Legal Counsel
Chapman and Cutler
Chicago, Illinois
Independent Public
Accountants
Arthur Andersen LLP
Chicago, Illinois
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Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today, we offer a broad range of
investments designed for mature investors whose portfolios are the principal
source of their ongoing financial security. More than 1.3 million investors have
trusted Nuveen to help them maintain the lifestyle they currently enjoy.
A value investing approach--purchasing securities of strong companies and
communities that represent good long-term value--is the cornerstone of Nuveen's
investment philosophy. It is a careful, long-term strategy that offers the
potential for attractive returns with moderated risk. Successful value
investing begins with in-depth research and a discerning eye for marketplace
opportunity. Nuveen's team of investment professionals is backed by the
discipline, resources and expertise of almost a century of investment
experience, including one of the most recognized research departments in the
industry.
To meet the unique circumstances and financial planning needs of mature
investors, Nuveen offers a wide array of equity and fixed-income mutual funds,
unit trusts, exchange-traded funds, individual managed account services, and
cash management products, including many that generate tax-free income.
To find out more about how Nuveen investment products and services can help you
preserve your financial security, talk with your financial adviser, or call us
at (800) 621-7227 for more information, including a prospectus where applicable.
Please read that information carefully before you invest.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
www.nuveen.com
