<PAGE>
As filed with the Securities and Exchange Commission on October 8, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[_]
Registration No. 333-03715
Pre-Effective Amendment No.
--- [_]
Post-Effective Amendment No. 4
--- [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
[_]
Registration No. 811-07619
Amendment No. 6
---
[X]
NUVEEN INVESTMENT TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)
333 West Wacker Drive, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
Copies to:
Gifford R. Zimmerman-Vice President and Eric F. Fess, Esq.
Assistant Secretary Chapman and Cutler
333 West Wacker Drive 111 West Monroe Street
Chicago, Illinois 60606 Chicago, Illinois 60603
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[_] immediately upon filing [_] on (date) pursuant to
pursuant to paragraph (b) paragraph (a)(1)
[_] on (date) pursuant [_] 75 days after filing pursuant
to paragraph (b) to paragraph (a)(2)
[X] 60 days after filing pursuant [_] on (date) pursuant to paragraph
to paragraph (a)(1) (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a previ-
ously filed post-effective amendment.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, Registrant has
previously elected to register under the Securities Act of 1933 an indefinite
number of its shares of beneficial interest of its series designated Nuveen
Growth and Income Stock Fund, Nuveen Balanced Stock and Bond Fund, and Nuveen
Balanced Municipal and Stock Fund. Registrant's Rule 24f-2 Notice for its fis-
cal year ended June 30, 1997 was filed on or before August 29, 1997.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 4
The Registration Statement comprises the following papers and contents:
The Facing Sheet
Part A-Prospectus for the Nuveen Growth and Income Stock
Fund, the Nuveen Balanced Stock and Bond Fund and Nuveen Bal-
anced Municipal and Stock Fund.
Part B-Statement of Additional Information;--Copy of Annual
Reports to Shareholders (the Financial Statements from which
are incorporated by reference into the Statement of Addi-
tional Information)
Part C-Other Information
Signatures
Index to Exhibits
Exhibits
The prospectus for Nuveen Balanced California Municipal and Stock Fund is not
affected by and therefore not included in this Post-Effective Amendment No. 4.
<PAGE>
NUVEEN INVESTMENT TRUST
-----------------
CROSS REFERENCE SHEET
PART A--PROSPECTUS
<TABLE>
<CAPTION>
ITEM IN PART A OF FORM N-1A PROSPECTUS LOCATION
--------------------------- -------------------
<S> <C>
1Cover Page Cover Page
2Synopsis Summary of Fund Expenses
3Condensed Financial Information Financial Highlights
4General Description of Registrant The Funds: Growth and Income Stock Fund,
Balanced Stock and Bond Fund, and Balanced
Municipal and Stock Fund; How We Select
Investments; What Securities We Invest In;
What the Risks Are; How We Manage Risk;
Organization of the Funds
5Management of the Fund Who Manages the Funds; Management Fees;
Organization of the Funds
5AManagement's Discussion of Fund Not Applicable
Performance
6Capital Stock and Other Securi- Cover Page; Choosing a Share Class;
ties Distributions and Taxes; Organization of
the Funds
7Purchase of Securities Being Of- Who Manages the Fund; Choosing a Share
fered Class; How You Can Reduce Your Sales
Charges; How to Buy Shares; Distribution
and Service Plans; Net Asset Value
8Redemption or Repurchase Summary of Fund Expenses; How to Sell
Shares
9Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
PART B--STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
LOCATION IN STATEMENT OF ADDITIONAL
ITEM IN PART B OF FORM N-1A INFORMATION
--------------------------- -----------------------------------
<S> <C>
10Cover Page Cover Page
11Table of Contents Cover Page
12General Information and History Not Applicable
13Investment Objectives and Poli- Investment Policies and Restrictions;
cies Investment Policies and Techniques
14Management of the Fund Management
15Control Persons and Principal Management
Holders of Securities
16Investment Advisory and Other Fund Manager and Portfolio Manager;
Services Distribution and Service Plans; Independent
Public Accountants and Custodian
17Brokerage Allocation and Other Portfolio Transactions
Practices
18Capital Stock and Other Securi- Tax Matters; Additional Information on the
ties Purchase and Redemption of Fund Shares and
Shareholder Programs; See " Organization of
the Funds," Cover Page, "Choosing a Share
Class" and "How to Sell Shares" in the
Prospectus
19Purchase, Redemption and Pricing Additional Information on the Purchase and
of Securities Redemption of Fund Shares and Shareholder
Programs; Distribution and Service Plans;
Net Asset Value
20Tax Status Tax Matters
21Underwriters Additional Information on the Purchase and
Redemption of Fund Shares and Shareholder
Programs; See "Who Manages the Funds" in
the Prospectus
22Calculation of Performance Data Performance Information
23Financial Statements Incorporated by Reference to Annual Reports
to Shareholders
</TABLE>
<PAGE>
NUVEEN
Growth and Income Stock Funds
Prospectus October 29, 1997
Growth and Income Stock Fund Three value-driven
[PHOTO -- COUPLE READING] strategies for building
capital while
Balanced Stock and Bond Fund moderating risk
[PHOTO -- FAMILY OUTDOORS]
Balanced Municipal and Stock Fund
[PHOTO -- COUPLE WALKING ON BEACH]
<PAGE>
Table of Contents
Section 1
The Funds
This section provides you with an overview of the funds including investment
objectives, portfolio holdings, and historical performance information.
Summary of Fund Expenses 5
..........................................
Financial Highlights 8
..........................................
Growth and Income Stock Fund 11
..........................................
Balanced Stock and Bond Fund 13
..........................................
Balanced Municipal and Stock Fund 15
..........................................
Section 2
How We Manage Your Money
This section gives you a detailed discussion of our investment and risk
management strategies.
Who Manages the Funds 18
..........................................
What Securities We Invest In 18
..........................................
How We Select Investments 20
..........................................
What the Risks Are 21
..........................................
How We Manage Risk 22
..........................................
Management Fees 25
..........................................
Section 3
How You Can Buy and Sell Shares
This section provides the information you need to move money into or out of your
account.
Choosing a Share Class 28
..........................................
How You Can Reduce Your Sales Charges 30
..........................................
How to Buy Shares 30
..........................................
Systematic Investing 31
..........................................
Special Services 31
..........................................
How to Sell Shares 32
..........................................
Net Asset Value 33
..........................................
Organization of the Funds 34
..........................................
Section 4
General Information
This section summarizes the funds' distribution policies and other general fund
information.
Distributions and Taxes 34
..........................................
Distribution and Service Plans 37
..........................................
Fund Service Providers 37
..........................................
We have used the icons below throughout this prospectus to make it easy for you
to find the type of information you need.
[ART] Investment Strategy
[ART] Risks
[ART] Fees, Charges and Expenses
[ART] Shareholder Instructions
[ART] Performance and Current
Portfolio Information
<PAGE>
Prospectus October 29, 1997
Building Capital While Moderating Risk
People who plan to rely primarily on their investments for financial security
are often concerned about maintaining a comfortable standard of living. For
these investors, a growth and income mutual fund is often an appropriate
investment. These funds generally invest in stocks of established, well-known
companies that offer attractive long-term growth potential but also pay regular
dividend income. Some growth and income funds also invest a portion of their
assets in fixed-income securities. This strategy can provide additional current
income while also reducing overall portfolio volatility and stabilizing returns
during unfavorable markets. As a result, growth and income mutual funds can
offer investors the balance of long-term growth, current income and capital
preservation potential they are seeking to help them maintain their lifestyle
over time.
For those who seek suitable growth and income funds for their portfolios, Nuveen
offers the Nuveen Growth and Income Stock Fund, Nuveen Balanced Stock and Bond
Fund and Nuveen Balanced Municipal and Stock Fund, each with a different balance
of long-term growth, current income and capital preservation potential.
A Tradition of Disciplined Investing
Since our founding in 1898, John Nuveen & Co. Incorporated has specialized in
investments designed for people who plan to rely on their portfolios as a
principal source of their ongoing financial security. A cornerstone of our
investment philosophy has been a commitment to disciplined, long-term investment
strategies that seek to provide consistent performance over time with moderated
risk. We emphasize quality securities carefully chosen through in-depth
research, and we monitor those securities closely over time to assess whether
they meet our exacting standards. More than 1.3 million investors today entrust
Nuveen to help them maintain over time the lifestyle they currently enjoy.
Learn More About the Nuveen Growth and Income Funds
This prospectus contains information you should know before you invest in any of
the Nuveen Growth and Income Funds. Please keep it for future reference. You can
find more detailed information about the Nuveen Investment Trust and each of its
funds in the current Statement of Additional Information (SAI) which has been
filed with the Securities and Exchange Commission and is legally a part of this
prospectus.
If you have questions about investing in any of these funds, or if you want a
free copy of the Statement of Additional Information, write to the Nuveen Mutual
Funds, 333 West Wacker Drive, Chicago, IL 60606, or call Nuveen toll-free at
800-621-7227.
LIKE ALL MUTUAL FUND SHARES, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOT FDIC-INSURED
May lose value
No bank guarantee
| 3
<PAGE>
The Funds
Section 1
Your personal investment circumstances, along with the advice of your personal
financial adviser, will determine which of the Nuveen Growth and Income Funds
you should consider. This section provides you with an overview of the funds
that can help you evaluate which one might be appropriate for your needs.
4 | Section 1 The Funds
<PAGE>
Summary of Fund Expenses
The following tables will help you understand all the expenses and fees you
would bear directly or indirectly as a fund shareholder.
Shareholder Transaction Expenses (as a percent of offering price)/1/
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
<TABLE>
<CAPTION>
Share Class A B C R/2/
<S> <C> <C> <C> <C>
Maximum sales charge imposed on purchases 5.25%/3/ None None None
Maximum sales charge imposed on
reinvested dividends None None None None
Exchange fees None None None None
Deferred sales charge/4/ None/5/ 5%/6/ 1%/7/ None
</TABLE>
1 Authorized Dealers and other firms may charge additional fees for shareholder
transactions or for advisory services. Please see their materials for
details.
2 Class R shares may be purchased only under limited circumstances, or by
specified classes of investors. See "How You Can Buy and Sell Shares."
3 Reduced sales charges apply to purchases of $50,000 or more. See "How You Can
Buy and Sell Shares."
4 As a percentage of lesser of purchase price or redemption proceeds.
5 Certain Class A purchases at net asset value of $1 million or more may be
subject to a contingent deferred sales charge if redeemed within 18 months of
purchase. See "How You Can Buy and Sell Shares."
6 Class B shares redeemed within six years of purchase are subject to a
contingent deferred sales charge of 5% during the first year, 4% during the
second and third years, 3% during the fourth, 2% during the fifth, and 1%
during the sixth year.
7 Class C shares redeemed within one year of purchase are subject to a 1%
contingent deferred sales charge.
Annual Fund Operating Expenses (as a percent of average daily net assets)/1/
Growth and Income Stock Fund
<TABLE>
<CAPTION>
Share Class A B C R
<S> <C> <C> <C> <C>
Management fees .83% .83% .83% .83%
Rule 12b-1 fees/2/ .25% 1.00% 1.00% .00%
Other .20% .20% .20% .64%
----- ----- ----- -----
Total (gross) 1.28% 2.03% 2.03% 1.47%
Waivers/reimbursements/3/ (.08)% (.08)% (.08)% (.52)%
----- ----- ----- -----
Total (net) 1.20% 1.95% 1.95% .95%
</TABLE>
1 Amounts shown are for the fiscal year ended 6/30/97.
2 Class A, Class B and Class C shares are subject to an annual service fee of
.25% of the average daily net assets to compensate Authorized Dealers for
continuing account services. In addition, Class B and Class C shares are
subject to annual distribution fees of .75% of the average daily net assets
to reimburse Nuveen for costs in connection with the sale of fund shares.
Long-term holders of Class B and Class C shares may pay more in Rule 12b-1
fees and CDSCs than the economic equivalent of the maximum front-end sales
charge permitted under the National Association of Securities Dealers Conduct
Rules.
Section 1 The Funds | 5
<PAGE>
(cont'd)
Annual Fund Operating Expenses (as a percent of average daily net assets)/1/
Balanced Stock and Bond Fund
<TABLE>
<CAPTION>
Share Class A B C R
<S> <C> <C> <C> <C>
Management fees 0.75% 0.75% 0.75% 0.75%
Rule 12b-1 fees/2/ 0.25% 1.00% 1.00% 0.00%
Other 0.71% 0.74% 0.56% 1.54%
------- ------- ------- -------
Total (gross) 1.71% 2.49% 2.31% 2.29%
Waivers/reimbursements/3/ (0.61)% (0.64)% (0.46)% (1.44)%
------- ------- ------- -------
Total (net) 1.10% 1.85% 1.85% 0.85%
</TABLE>
Balanced Municipal and Stock Fund
<TABLE>
<CAPTION>
Share Class A B C R
<S> <C> <C> <C> <C>
Management fees 0.75% 0.75% 0.75% 0.75%
Rule 12b-1 fees/2/ 0.25% 1.00% 1.00% 0.00%
Other 0.58% 0.47% 0.54% 1.30%
------- ------- ------- -------
Total (gross) 1.58% 2.22% 2.29% 2.05%
Waivers/reimbursements/3/ (0.48)% (0.37)% (0.44)% (1.20)%
------- ------- ------- -------
Total (net) 1.10% 1.85% 1.85% 0.85%
</TABLE>
3 The fund manager has agreed to waive fees and reimburse expenses through July
31, 1998 in order to prevent total expenses (excluding any distribution or
service fees and extraordinary expenses) from exceeding .95%, .85% and .85%,
respectively, of the average daily net asset value of each class of shares
for the Growth and Income Stock Fund, the Balanced Stock and Bond Fund and
the Balanced Municipal and Stock Fund.
6 | Section 1 The Funds
<PAGE>
Examples
The examples illustrate the expenses on a hypothetical $1,000 investment in the
funds based on the Annual Fund Operating Expenses shown previously, an assumed
annual total return of 5% and reinvestment of all dividends. These examples do
not represent past or future expenses, which may be greater or less than those
used here. Moreover, a fund's actual rate of return may be greater or less than
the hypothetical 5% return shown in these examples. These examples assume that
the percentage amounts listed under Annual Fund Operating Expenses for each fund
remain the same in each of the periods.
Growth and Income Stock Fund
<TABLE>
<CAPTION>
Holding Period 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $64 $89 $115 $190
Class B/1/ $59 $93 $116 $208
Class C/1/ $20 $61 $105 $227
Class R $10 $30 $ 53 $117
</TABLE>
Balanced Stock and Bond Fund
<TABLE>
<CAPTION>
Holding Period 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $63 $86 $110 $179
Class B/1/ $58 $90 $111 $197
Class C/1/ $19 $58 $100 $217
Class R $ 9 $27 $ 47 $105
</TABLE>
Balanced Municipal and Stock Fund
<TABLE>
<CAPTION>
Holding Period 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $63 $86 $110 $179
Class B/1/ $58 $90 $111 $197
Class C/1/ $19 $58 $100 $217
Class R $ 9 $27 $ 47 $105
</TABLE>
1 Assumes redemption at the end of each holding period. If redemption had
occurred instead prior to the end of each holding period, your expense might
be higher. If you did not redeem Class B shares at the end of each holding
period, your expenses for the 1-, 3-, 5-, and 10-year holding periods would
have been, respectively, $20, $61, $105 and $208 for the Growth and Income
Stock Fund, and $19, $58, $100 and $197 for both the Balanced Stock and Bond
Fund and Balanced Municipal Fund. Class B shares convert to Class A shares
after 8 years.
Section 1 The Funds | 7
<PAGE>
Financial Highlights
The financial highlights are excerpted from the fund's latest annual report
which has been audited by Arthur Andersen LLP, the fund's independent auditors.
You may find more information about the fund's performance in its annual report.
For a free copy of the fund's latest annual and/or semi-annual reports, write to
Nuveen or call (800) 621-7227.
<TABLE>
<CAPTION>
Growth and Income Stock Fund (year ended 6/30) Class A Class B
(Inception Date) 8/96 8/96
<S> <C> <C>
Investment Operations and Distributions 1997(d)** 1997(d)**
Beginning net asset value $ 17.96 $ 17.97
Net investment income (b) .30 .21
Net realized and unrealized gain (loss) from investments 6.18 6.13
Dividends from net investment income (.20) (.08)
Distributions from capital gains (.23) (.23)
--------- ---------
Ending net asset value $ 24.01 $ 24.00
Ratios/Supplemental Data
Total return (a) 36.30% 35.37%
Ending net assets (thousands) $616,209 $ 10,664
Ratio of expenses to average net assets (b) 1.20%* 1.95%*
Ratio of net investment income to average net assets (b) 1.53%* 1.03%*
Portfolio turnover rate 110% 110%
Average commission rate paid (c) $ .0322 $ .0322
Class C Class R
8/96 8/96
Investment Operations and Distributions 1997(d)** 1997(d)**
Beginning net asset value $ 17.97 $ 17.96
Net investment income (b) .21 .30
Net realized and unrealized gain (loss) from investments 6.11 6.24
Dividends from net investment income (.08) (.25)
Distributions from capital gains (.23) (.23)
--------- ---------
Ending net asset value $ 23.98 $ 24.02
Ratios/Supplemental Data
Total return (a) 35.26% 36.65%
Ending net assets (thousands) $ 3,630 $ 15,647
Ratio of expenses to average net assets (b) 1.95%* .95%*
Ratio of net investment income to average net assets (b) 1.04%* 1.56%*
Portfolio turnover rate 110% 110%
Average commission rate paid (c) $ .0322 $ .0322
</TABLE>
See footnotes on page [9]
8 Section 1 The Funds
<PAGE>
<TABLE>
<CAPTION>
Balanced Stock and Bond Fund (year ended 6/30) Class A Class B
(Inception Date) 8/96 8/96
<S> <C> <C>
Investment Operations and Distributions 1997(d) 1997(d)
Beginning net asset value $20.00 $20.00
Net investment income (b) .70 .46
Net realized and unrealized gain (loss) from investments 3.66 3.75
Dividends from net investment income (.42) (.27)
Distributions from capital gains (.10) (.10)
------- -------
Ending net asset value $23.84 $23.84
Ratios/Supplemental Data
Total return (a) 22.04% 21.26%
Ending net assets (thousands) $56,686 $ 646
Ratio of expenses to average net assets (b) 1.10%* 1.85%*
Ratio of net investment income to average net assets (b) 3.39%* 2.23%*
Portfolio turnover rate 52% 52%
Average commission rate paid (c) $ .0244 $ .0244
Class C Class R
8/96 8/96
Investment Operations and Distributions 1997(d) 1997(d)
Beginning net asset value $20.00 $20.00
Net investment income (b) .53 .61
Net realized and unrealized gain (loss) from investments 3.68 3.80
Dividends from net investment income (.27) (.47)
Distributions from capital gains (.10) (.10)
------- -------
Ending net asset value $23.84 $23.84
Ratios/Supplemental Data
Total return (a) 21.26% 22.31%
Ending net assets (thousands) $ 980 $ 6,052
Ratio of expenses to average net assets (b) 1.85%* .85%*
Ratio of net investment income to average net assets (b) 2.53%* 3.12%*
Portfolio turnover rate 52% 52%
Average commission rate paid (c) $ .0244 $ .0244
</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 returns are calculated on net asset value without any sales charge
and are not annualized.
(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 through June 30, 1997.
Section 1 The Funds | 9
<PAGE>
Financial Highlights (cont'd)
<TABLE>
<CAPTION>
Balanced Municipal and Stock Fund (year ended 6/30) Class A Class B
(Inception Date) 8/96 8/96
<S> <C> <C>
Investment Operations and Distributions 1997(d) 1997(d)
Beginning net asset value $ 20.00 $ 20.00
Net investment income (b) .56 .40
Net realized and unrealized gain (loss) from investments 3.02 3.04
Dividends from net investment income (.42) (.28)
Distributions from capital gains (.05) (.05)
-------- --------
Ending net asset value $ 23.11 $ 23.11
Ratios/Supplemental Data
Total return (a) 18.05% 17.32%
Ending net assets (thousands) $ 79,952 $ 2,051
Ratio of expenses to average net assets (b) 1.10%* 1.85%*
Ratio of net investment income to average net assets (b) 2.79%* 1.99%*
Portfolio turnover rate 32% 32%
Average commission rate paid (c) $ .0244 $ .0244
</TABLE>
<TABLE>
<CAPTION>
Class C Class R
8/96 8/96
<S> <C> <C>
Investment Operations and Distributions 1997(d) 1997(d)
Beginning net asset value $ 20.00 $ 20.00
Net investment income (b) .40 .61
Net realized and unrealized gain (loss) from investments 3.03 3.03
Dividends from net investment income (.28) (.48)
Distributions from capital gains (.05) (.05)
-------- --------
Ending net asset value $ 23.10 $ 23.11
Ratios/Supplemental Data
Total return (a) 17.27% 18.38%
Ending net assets (thousands) $ 1,559 $ 6,963
Ratio of expenses to average net assets (b) 1.85%* .85%*
Ratio of net investment income to average net assets (b) 1.97%* 3.16%*
Portfolio turnover rate 32% 32%
Average commission rate paid (c) $ .0244 $ .0244
</TABLE>
* Annualized
(a) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(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 through June 30, 1997.
10 | Section 1 The Funds
<PAGE>
Growth and Income Stock Fund
(as of 6/30/97)
How the Fund Has Performed
<TABLE>
<CAPTION>
Highlights
Share Class A B C R
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 8/96 8/96 8/96 8/96
- ----------------------------------------------------------------------
NAV $24.01 $24.00 $23.98 $24.02
- ----------------------------------------------------------------------
Latest Quarterly Dividend $0.1153 $0.0733 $0.0733 $0.1294
- ----------------------------------------------------------------------
Total Net Assets $646.2 million
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Yields
Share Class A(NAV) A(Offer) B C R
- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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%
- ---------------------------------------------------------------
Total Return/1/
Share Class A(NAV) A(Offer) B C R
- -----------------------------------------------------------------
Since Inception 36.30% 29.13% 35.37% 35.26% 36.65%
</TABLE>
/1/ Class A Shares have a 5.25% maximum sales charge. Class B Shares have a
declining CDSC that begins at 5% for redemptions within six years of
purchase. Class C Shares have a 1% CDSC for redemptions within one year.
Neither CDSC is reflected in the total returns.
How the Portfolio Manager Has Performed
Institutional Capital Corporation (ICAP) manages the fund's portfolio. ICAP is
an institutional investment management firm based in Chicago with over 27 years
of experience and approximately $10 billion in assets under management. (For
more information on ICAP see "Who Manages the Funds" on page 19.)
Growth of a $10,000 Investment 1/77-6/30/97
[LINE GRAPH APPEAR HERE]
<TABLE>
<CAPTION>
ICAP $199,689 S & P 500 $182,367 Lipper G & I Index $162,409 Inflation $27,524 Treasury Bonds $59,265
<S> <C> <C> <C>
1977 9,475 10,000 10,000 10,000 10,000
1980 11,406 11,714 12,891 13,190 11,224
1985 21,498 23,315 25,924 18,101 20,570
1990 59,728 59,001 58,913 21,672 34,094
1995 97,492 89,479 88,521 25,728 48,438
1997 166,521 151,345 140,098 27,258 57,672
</TABLE>
Average Annual Total Returns Ending 6/30/97
<TABLE>
<CAPTION>
ICAP Discretionary Equity Composite
- -----------------------------------------------------------------
1-Year 5-Year 10-Year 20-Year
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
On Offer 29.06% 19.24% 15.92% 16.18%
- -----------------------------------------------------------------
On NAV 36.21% 20.54% 16.55% 16.50%
- -----------------------------------------------------------------
</TABLE>
The chart and table above give the combined performance of ICAP's Discretionary
Equity Composite representing all of the accounts managed by ICAP that have
substantially the same investment objectives and policies as the fund. The
composite accounts which presently total $3.7 billion are not subject to all of
the same investment restrictions, investment inflows and outflows, and
distribution requirements as the fund, which may affect fund performance. We
assumed that an investor making a $10,000 ICAP investment paid a maximum Class
A sales charge of 5.25% and we used the gross-of-fee returns of ICAP's
Discretionary Equity Composite and deducted the fund's projected Class A
operating expenses of 1.20%, which reflects Nuveen's expense reimbursement
policy. The chart would be different for a Class B, C or R investment because of
their different sales charges and operating expenses. For the S&P 500 returns we
assumed that the investor reinvested all dividends, but we do not include
brokerage commissions or other fees. The Lipper Growth and Income Index is the
average of the annualized returns of the 30 largest funds in the Lipper Growth
and Income Fund Category, and we assume that the investor reinvested all
dividends but we did not include any sales charges. This chart does not
represent past or future performance of the fund.
Section 1 The Funds | 11
<PAGE>
How the Fund Is Invested
Portfolio Allocation
[PIE CHART APPEARS HERE]
Cash 10%
Stocks 90%
<TABLE>
<CAPTION>
<S> <C>
Industry Diversification
Transportation 11%
- -------------------------------------------
Defense 9%
- -------------------------------------------
Telephone 9%
- -------------------------------------------
Entertainment 8%
- -------------------------------------------
Pharmaceutical 8%
- -------------------------------------------
Automotive 6%
- -------------------------------------------
Banks 5%
- -------------------------------------------
Chemicals 5%
- -------------------------------------------
Computer Systems 5%
- -------------------------------------------
Other 34%
Top 10 Stock Holdings/1/
Philips Electronics NV ADR 4.8%
- -------------------------------------------
NYNEX Corp. 3.5%
- -------------------------------------------
Raytheon Corp. 3.4%
- -------------------------------------------
Ford Motor Co. 3.4%
- -------------------------------------------
International Business Machines Corp. 3.3%
- -------------------------------------------
Rhone-Poulenc SA ADR 3.2%
- -------------------------------------------
Allstate Corp. 3.1%
- -------------------------------------------
Boeing Co. 3.0%
- -------------------------------------------
General Motors Corp. 3.0%
- -------------------------------------------
Burlington Northern Santa Fe 3.0%
- -------------------------------------------
1 Holdings may vary with market conditions.
Portfolio Statistics
Beta 0.90
- -------------------------------------------
Average Market Capitalization (stocks)
$25.0 billion
- -------------------------------------------
Average Trailing 12 Mos. P/E (stocks) 18.5
- -------------------------------------------
</TABLE>
Investment Objective
The Growth and Income Stock Fund seeks to provide over time a superior total
return from a diversified portfolio consisting primarily of equity securities of
domestic companies with market capitalization of at least $500 million. The fund
may not realize its objective.
How the Fund Pursues Its Objective
The portfolio managers invest primarily in a diversified portfolio of stocks of
domestic large and midsize companies. These are established, well-known
companies with at least $500 million in market capitalization. We concentrate on
stocks we believe are selling for less than their intrinsic worth, trying to
identify those with a catalyst--for example, a management change or an improved
industry outlook--that will unlock the stock's unrecognized value.
We generally buy only those 40 to 50 stocks with 15% to 25% price appreciation
potential over the next 18 months. Once selected, we monitor these stocks
closely and replace them if they reach their value target, fail to meet
expectations or become less attractive relative to other portfolio candidates.
Under normal market conditions, we may invest up to 35% of the fund's assets in
cash equivalents and short-term fixed-income securities in order to reduce
volatility and preserve capital. For a more detailed discussion of our
investment strategy, please see "How We Manage Your Money" beginning on page
______.
Is This Fund Right For You?
This fund may be an appropriate investment if you are:
. seeking long-term growth potential from a value-driven strategy;
. concerned about moderating risks associated with stock investing;
. more comfortable with a focus on established, well-known companies;
. investing to meet long-term financial goals.
You should not invest in this fund if you are:
. unwilling to accept share price fluctuation, including the possibility of
sharp price declines;
. investing to meet short-term financial goals.
12 | Section 1 The Funds
<PAGE>
Balanced Stock and Bond Fund
(as of 6/30/97)
How the Fund Has Performed
<TABLE>
<CAPTION>
Highlights
Share Class A B C R
<S> <C> <C> <C> <C> <C>
Inception Date 8/96 8/96 8/96 8/96
NAV $23.84 $23.84 $23.84 $23.84
Latest Quarterly Dividend $.1244 $.0814 $.0814 $.1388
Total Net Assets - $64.4 million
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%
Total Return/1/
Share Class A(NAV) A(offer) B C R
Since Inception 22.04% 15.63% 21.26% 21.26% 22.31%
</TABLE>
1 Class A Shares have a 5.25% maximum sales charge. Class B Shares have a
declining CDSC that begins at 5% for redemptions within six years of
purchase. Class C Shares have a 1% CDSC for redemptions within one year.
Neither CDSC is reflected in the total returns.
How the Portfolio Manager Has Performed
Institutional Capital Corporation (ICAP) manages the fund's portfolio. ICAP is
an institutional investment management firm based in Chicago with over 27 years
of experience and approximately $10 billion in assets under management. (For
more information on ICAP see "Who Manages the Funds" on page 19.)
Growth of a $10,000 Investment 1/77-6/30/97
<TABLE>
<CAPTION>
[LINE GRAPH APPEARS HERE]
ICAP Balanced $143,539 Lipper Balanced $119,706 Treasury Bonds $59,265 Inflation $27,524
---------------------- ------------------------ ---------------------- -----------------
<S> <C> <C> <C> <C>
1977 9,475 10,000 10,000 10,000
1980 11,162 11,932 11,224 13,190
1985 20,959 23,985 20,570 18,101
1990 55,424 51,096 34,094 21,672
1995 86,519 76,267 48,438 25,728
1997 128,538 107,652 57,672 27,258
</TABLE>
Average Annual Total Returns Ending 6/30/97
<TABLE>
<CAPTION>
ICAP Balanced Composite
1-Year 5-Year 10-Year 20-Year
<S> <C> <C> <C> <C>
On Offer 16.95% 13.33% 12.77% 14.29%
On NAV 23.43% 14.56% 13.38% 14.60%
</TABLE>
The chart and table above give the combined performance of ICAP's Balanced
Composite representing all the accounts for which ICAP has served as investment
adviser that have substantially the same investment objectives and policies as
the fund. The composite accounts which presently total $611 million are not
subject to all of the same investment restrictions, investment inflows and
outflows, and distribution requirement as the fund which may affect fund
performance. We assumed that an investor making a $10,000 ICAP investment paid a
maximum Class A sales charge of 5.25% and we used the gross-of-fee returns of
ICAP's Balanced Composite and deducted the fund's projected Class A operating
expenses of 1.10% which reflects Nuveen's expense reimbursement policy. This
chart would be different for a Class B, C or R investment because of their
different sales charges and operating expenses. The Lipper Balanced Fund Index
is the average of the annualized returns of the 30 largest funds in the Lipper
Balanced Fund Category and we assume that the investor reinvested all dividends
but we do not include any sales charges. This chart does not represent past or
future performance of the fund.
Section 1 The Funds | 13
<PAGE>
How the Fund Is Invested
Portfolio Allocation
[PIE CHART APPEARS HERE]
Stocks 44%
Cash 8%
Taxable
Bonds 48%
Industry Diversification (stocks)
Defense 10%
- -----------------------------------------
Telephone 9%
- -----------------------------------------
Pharmaceuticals 8%
- -----------------------------------------
Automotive 7%
- -----------------------------------------
Electronics 7%
- -----------------------------------------
Transportation 7%
- -----------------------------------------
Banks 5%
- -----------------------------------------
Chemicals 5%
- -----------------------------------------
Computer Systems 5%
- -----------------------------------------
Services/Misc. 5%
- -----------------------------------------
Other 32%
- -----------------------------------------
Top 10 Stock Holdings/1/
Philips Electronics NV ADR 5.1%
- -----------------------------------------
NYNEX Corp. 3.7%
- -----------------------------------------
Raytheon Corp. 3.6%
- -----------------------------------------
Ford Motor Co. 3.6%
- -----------------------------------------
Allstate Corp. 3.3%
- -----------------------------------------
Rhone-Poulenc SA ADR 3.3%
- -----------------------------------------
Boeing Co. 3.3%
- -----------------------------------------
General Motors Corp. 3.2%
- -----------------------------------------
Burlington Northern Santa Fe 3.1%
- -----------------------------------------
Northrop Grumman Corp. 3.1%
- -----------------------------------------
1 As a percentage of the fund's stock holdings.
Portfolio Statistics
Average Market
Capitalization (stocks) $250 billion
- -------------------------------------------------------
Average Trailing 12 Mos. P/E (stocks) 18.5
- -------------------------------------------------------
Weighted Average
Duration (bonds) 4.42 years
- -------------------------------------------------------
Weighted Average Maturity (bonds) 6.0 years
- -------------------------------------------------------
Investment Objective
The Balanced Stock and Bond Fund seeks to provide over time an attractive total
return from a diversified portfolio of equity securities, taxable fixed-income
securities and cash equivalents by emphasizing capital appreciation in favorable
markets and capital preservation in adverse markets. The fund may not realize
its objective.
How the Fund Pursues Its Objective
The portfolio managers invest primarily in a diversified portfolio of stocks of
domestic large and midsize companies. These are established, well-known
companies with at least $500 million in market capitalization. We concentrate on
stocks we believe are selling for less than their intrinsic worth, trying to
identify those with a catalyst--for example, a management change or an improved
industry outlook--that will unlock the stocks unrecognized value. We generally
buy only those 40 to 50 stocks with 15% to 25% price appreciation potential
over the next 18 months. Once selected, we monitor these stocks closely and
replace them if they reach their value target, fail to meet expectations or
become less attractive relative to other portfolio candidates.
We seek reduced risk, capital preservation potential and current income by
balancing our stock investments with bonds. The bonds we purchase are primarily
U.S. Treasury bonds with maturities from one to 15 years, but from time to time
we may also purchase investment-grade corporate bonds if market conditions
warrant. Based upon the shape of the yield curve and our outlook for interest
rates, we generally will purchase bonds with a range of maturities to achieve
what we believe is the best balance of current income and capital preservation
potential.
Our long-term target investment mix is 55% stocks, 40% taxable bonds and 5% cash
equivalents, which we may adjust over time within defined ranges. For a more
detailed discussion of our investment strategies please see "How We Manage Your
Money" beginning on page .
Is This Fund Right for You?
This fund may be an appropriate investment if you are:
. seeking long-term growth potential from a value-driven strategy;
. looking for a substantial measure of downside protection;
. more comfortable with a focus on established, well-known companies;
. seeking the convenience of a balanced portfolio in a single investment;
. investing to meet long-term financial goals.
You should not invest in this fund if you are:
. unwilling to accept share price fluctuation;
. investing to meet short-term financial goals.
14 | Section 1 The Funds
<PAGE>
Balanced Municipal and Stock Fund
(as of 6/30/97)
How the Fund Has Performed
<TABLE>
<CAPTION>
Highlights
Share Class A B C R
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception Date 8/96 8/96 8/96 8/96
- -------------------------------------------------------------
NAV $23.11 $23.11 $23.10 $23.11
- -------------------------------------------------------------
June tax free
Dividend $.0455 $.0320 $.0320 $.0500
- -------------------------------------------------------------
Total Net Assets $90.5 million
- -------------------------------------------------------------
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%
- -------------------------------------------------------------
Total Return/1/
Share class A (NAV) A (Offer) B C R
- -------------------------------------------------------------
Since Inception 18.05% 11.86% 17.32% 17.27% 18.38%
- -------------------------------------------------------------
</TABLE>
/1/ Class A Shares have a 5.25% maximum sales charge. Class B Shares have a
declining CDSC that begins at 5% for redemptions within six years of
purchase. Class C Shares have a 1% CDSC for redemptions within one year.
Neither CDSC is reflected in the total returns.
Monthly Tax-Free Dividends (per Class A share)
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Fund Class Me Date Div Factor
<S> <C> <C> <C>
1997
NBMS A January 0.043
NBMS A February 0.043
NBMS A March 0.0455
NBMS A April 0.0455
NBMS A May 0.0455
NBMS A June 0.0455
</TABLE>
The Benefits of Balancing Stocks and Municipal Bonds
Nuveen manages the municipal portion of the fund's portfolio. Institutional
Capital Corporation (ICAP) manages the equity portion of the fund's portfolio.
ICAP is an institutional investment management firm based in Chicago with over
27 years of experience and approximately $10 billion in assets under management.
(For more information on Nuveen and ICAP, see "Who Manages the Funds" beginning
on page .)
Nuveen and ICAP manage the funds by pursuing a strategy of balancing stocks with
municipal bonds as shown in the chart below. For investors in higher tax
brackets, a strategy of balancing stocks with municipal bonds has historically
provided superior after-tax performance with lower risk compared with taxable
bonds and stocks.
Higher After-Tax Returns, Lower Risk (7/77-6/97)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers Long Corporate
--------------------------------------------------------------
Average After Tax Total Return Variability of Returns (Risk)
--------------------------------------------------------------
<S> <C> <C>
100% Stock 11.04% 14.68%
90% Stock 10.54% 13.65%
80% Stock 10.03% 12.69%
70% Stock 9.51% 11.83%
60% Stock 8.95% 11.07%
50% Stock 8.40% 10.45%
40% Stock 7.84% 9.99%
30% Stock 7.26% 9.71%
20% Stock 6.66% 9.63%
10% Stock 6.07% 9.74%
0% Stock 5.37% 10.06%
</TABLE>
<TABLE>
<CAPTION>
Lehman Brothers Long Municipal
--------------------------------------------------------------
Average After Tax Total Return Variability of Returns (Risk)
--------------------------------------------------------------
<S> <C> <C>
100% Stock 11.04% 14.68%
90% Stock 10.87% 13.60%
80% Stock 10.68% 12.58%
70% Stock 10.48% 11.65%
60% Stock 10.26% 10.82%
50% Stock 10.00% 10.11%
40% Stock 9.76% 9.56%
30% Stock 9.50% 9.20%
20% Stock 9.21% 9.03%
10% Stock 8.90% 9.08%
0% Stock 8.58% 9.34%
</TABLE>
<TABLE>
<CAPTION>
Lehman Brothers Long Government
--------------------------------------------------------------
Average After Tax Total Return Variability of Returns (Risk)
--------------------------------------------------------------
<S> <C> <C>
100% Stock 11.04% 14.68%
90% Stock 10.54% 13.69%
80% Stock 10.02% 12.80%
70% Stock 9.47% 12.01%
60% Stock 8.91% 11.36%
50% Stock 8.36% 10.88%
40% Stock 7.78% 10.58%
30% Stock 7.19% 10.47%
20% Stock 6.57% 10.57%
10% Stock 5.96% 10.84%
0% Stock 5.27% 11.31%
</TABLE>
Stock returns are represented by the Standard & Poor's 500 Composite Stock Price
Index. Municipal bond returns are represented for the period since January 1,
1980 by the Lehman Brothers Long Municipal Bond Index and are represented for
prior periods by an index created by Nuveen using market data and designed to
closely emulate that index. Corporate bond returns are represented by the Lehman
Brothers Long Corporate Bond Index. Treasury bond returns are represented by the
Lehman Brothers Long Government Bond Index. Treasury bonds are backed by the
full faith and credit of the U.S. government. After-tax-returns are calculated
assuming turnover rates of 100% for stocks and 20% for bonds. Index returns
assume reinvestment of all dividends and income, but do not include brokerage
commissions or other fees an investor would otherwise incur. Ordinary income
was taxed in each year at the federal rates applicable to a {married} individual
earning $100,000 in 1996 dollars, and capital gains were similarly taxed at
historical rates. Returns of the stock, corporate and municipal indices are
adjusted for state taxes. The allocation between the two sets is allowed to vary
within a 5% band around its target mix before rebalancing. This example depicts
the performance of unmanaged indices and does not represent historical or future
fund performance. There can be no assurance that the historical return and risk
characteristics of municipal bonds and stocks will continue in the future, or
that the fund's future performance will be comparable to that of those indices.
Section 1 The Funds | 15
<PAGE>
How the Fund Is Invested (as of 6/30/97)
Portfolio Allocation
[PIE CHART APPEARS HERE]
Stocks 35%
Cash 5%
Municipal
Bonds 60%
Industry Diversification (Stocks)
Technology 14%
Consumer Services 13%
Health Care 12%
Capital Spending 12%
Utilities 9%
Financial 9%
Other 31%
Fixed Income Credit Quality
AAA 62%
AA 10%
A 5%
BBB 23%
Top 5 Stock Holdings/1/
Philips Electronics NV ADR 4.71%
NYNEX Corp. 3.60%
Raytheon Corp. 3.50%
Ford Motor Co. 3.50%
International Business Machines Corp. 3.40%
/1/ As a percentage of the fund's stock holdings.
Portfolio Statistics
Average Market Capitalization (stocks) $25 billion
Average Trailing 12 mos. P/E (stocks) 18.5
Weighted Average Duration (bonds) 6.90 years
Weighted Average Maturity (bonds) 12.6 years
Investment Objective
The Balanced Municipal and Stock Fund seeks to provide over time an attractive
after-tax total return through a combination of federally tax-exempt income and
capital appreciation with capital preservation in adverse markets. The fund may
not realize its objective.
How the Fund Pursues Its Objective
We emphasize investments in investment-grade quality municipal bonds with the
balance in stocks of large and midsize companies. We concentrate on municipal
bonds with favorable characteristics not yet recognized by the market, trying to
identify those higher-yielding and undervalued bonds with intermediate
characteristics that we believe offer the best balance of current tax-free
income and capital preservation potential.
The stocks we purchase primarily are from established, well-known domestic
companies with at least $500 million in market capitalization. We concentrate
on stocks selling for less than their intrinsic worth, trying to identify those
with a catalyst--for example, a management change or an improved industry
outlook--that will unlock the stock's unrecognized value. We generally buy only
those 40 to 50 stocks with 15% to 25% price appreciation potential over the next
18 months. Once selected, we monitor these stocks and replace them if they reach
their value target, fail to meet expectations or become less attractive relative
to other portfolio candidates.
Our long-run target investment mix is 60% municipal bonds, and 40% stocks, which
we may adjust over time within defined ranges. For a more detailed discussion of
our investment strategy, please see "How We Manage Your Money" beginning on page
______.
Is This Fund Right for You?
This fund may be an appropriate investment if you are:
. seeking attractive after-tax returns from a value-driven strategy;
. looking for a substantial measure of downside protection;
. seeking to reduce the taxes on your investment returns;
. seeking the convenience of a balanced portfolio in a single investment;
. investing to meet long-term financial goals.
You should not invest in this fund if you are:
. unwilling to accept share price fluctuation;
. investing in a tax-deferred account;
. investing to meet short-term financial goals.
16 | Section 1 The Funds
<PAGE>
How We Manage Your Money
Section 2
To help you understand the funds better, this section includes a detailed
discussion of our investment and risk management strategies. You'll learn about
what securities we invest in and how we select them, what risks they involve
and how we seek to reduce them. For a more complete discussion of these
matters, please consult the Statement of Additional Information.
Section 2 The Funds | 17
<PAGE>
Who Manages the Funds
Nuveen Institutional Advisory Corp. (NIAC) has overall responsibility for
management of the funds. NIAC oversees the management of the funds' portfolios,
manages the funds' business affairs, and provides day-to-day administrative
services. The Board of Trustees of the funds has general supervisory
responsibility for the funds and supervises the duties performed for the funds
by NIAC.
NIAC is a wholly owned subsidiary of John Nuveen and Co. Incorporated
("Nuveen"), which has sponsored or underwritten more than $60 billion of
investment company securities. Nuveen is a subsidiary of The John Nuveen Company
which, in turn, is approximately 78% owned by The St. Paul Companies, Inc. St.
Paul is located in St. Paul, Minnesota, and is principally engaged in providing
property-liability insurance through subsidiaries. NIAC places orders for the
purchase and sale of municipal obligations.
Under a sub-advisory agreement with NIAC, Institutional Capital Corporation
(ICAP) manages the investment portfolios of the Growth and Income Stock Fund and
the Balanced Stock and Bond Fund, and the equity portion of the Balanced
Municipal and Stock Fund's investment portfolio. ICAP's investment management
strategy and operating policies are set through a team approach, with all ICAP
investment professionals contributing. ICAP currently maintains a staff of 12
investment professionals. Mr. Robert H. Lyon, president of ICAP, owns shares
representing 51% of the voting rights of ICAP. In addition, The John Nuveen
Company owns preferred shares of ICAP, which are convertible after several years
into a 20% common stock interest in ICAP.
NIAC manages the municipal portion of the Balanced Municipal and Stock Fund's
investment portfolio. Overall investment management strategy and operating
policies for the fund's municipal investments are set by the Investment Policy
Committee. This committee is comprised of executive officers and portfolio
managers and meets regularly to review economic conditions, the outlook for
financial markets in general and the status of the municipal markets in
particular. Daniel F. Solender has responsibility for the day-to-day management
of the fund's municipal investments. Mr. Solender has been an assistant vice
president of NIAC since September 1997 and manager of the fund's municipal
investments since the fund's inception. Mr. Solender is also an assistant vice
president and previously was an assistant portfolio manager of Nuveen Advisory
Corp., another investment subsidiary of Nuveen. Mr. Solender currently manages
investments for ten Nuveen-sponsored investment companies.
What Securities We Invest In
Each fund's investment objective may not be changed without shareholder
approval. The following investment policies may be
18 | Section 2 How We Manage Your Money
<PAGE>
changed by the Board of Trustees without shareholder approval unless otherwise
noted in this prospectus or the Statement of Additional Information.
Equity Securities
Eligible equity securities include common stocks; preferred stocks; warrants to
purchase common stocks or preferred stocks; securities convertible into common
or preferred stocks, such as convertible bonds and debentures; dollar-
denominated securities of foreign companies, and other securities with equity
characteristics. Any convertible bonds and debentures must be rated investment
grade (one of the four highest ratings by Moody's Investors Service, Standard
& Poor's, Duff & Phelps or Fitch Investors Service) when purchased. Foreign
securities involve additional risks not present with domestic investments,
including currency risks.
Taxable Fixed-Income Securities
Eligible fixed-income securities are U.S. Treasury and other investment-grade
fixed-income securities with maturities of one to 15 years. We focus on U.S.
Treasury securities but may purchase other fixed-income securities from time to
time if market conditions warrant. Investment-grade securities are those rated
in the four highest ratings by Moody's Investors Service, Standard & Poor's,
Duff & Phelps, or Fitch Investors Service when purchased.
Municipal Obligations
States, local governments and municipalities issue municipal bonds to raise
money for various public purposes such as building public facilities,
refinancing outstanding obligations, and financing general operating expenses. A
municipality may issue general obligation bonds which are secured by its taxing
power, or it may issue revenue bonds which are payable from the revenues of a
particular project or a special excise tax.
The Balanced Municipal and Stock Fund will invest all of its municipal assets in
investment-grade quality municipal bonds. Investment-grade quality municipal
bonds are rated in one of the four highest ratings assigned by Moody's Investors
Service, Standard & Poor's, Duff & Phelps or Fitch Investors Service when we
purchase them, or are judged by NIAC to have comparable credit and quality
characteristics to those rated municipal bonds.
The Balanced Municipal and Stock Fund will invest at least 80% of its municipal
assets in investment-grade quality municipal bonds with effective remaining
maturities of no more than 15 years. This policy will not limit the stated or
nominal maturities of the municipal bonds in which the funds invest. The
effective remaining maturity of a municipal bond may be shorter than its stated
maturity for a variety of reasons including the bond's call features, its stated
or expected payment schedule, or other terms or conditions that may cause the
bond to have the risk of price fluctuations of an otherwise comparable but
shorter-term bond. As a fundamental policy, the Balanced Municipal and Stock
Fund will invest all of its assets allocated to municipal investments in
municipal obligations that are either rated or unrated as described above,
provided that not more than 20% of its investments are in such unrated municipal
obligations.
Short-Term Investments
The funds may invest in short-term investments including U.S. government
Section 2 How We Manage Your Money | 19
<PAGE>
securities, quality commercial paper or similar fixed-income securities with
remaining maturities of one year or less. The Balanced Municipal and Stock Fund
intends to invest in taxable short-term investments only in the event that
suitable tax-exempt temporary investments are not available at reasonable prices
and yields. For more information on short-term investments see the Statement of
Additional Information.
Delayed Delivery Transactions
We may buy or sell securities on a when-issued or delayed-delivery basis, paying
for or taking delivery of the securities at a later date, normally within 15 to
45 days of the trade. Such transactions involve an element of risk because the
value of the security to be purchased may decline before the settlement date.
How we select Investments
The portfolio managers adhere to disciplined, value-driven investment strategies
whose aim is to provide consistent, attractive performance over time with
moderated risk. We emphasize quality securities carefully chosen through
in-depth research and follow those securities closely over time to assess
whether they continue to meet our exacting investment standards.
Equity Securities
ICAP selects stocks for all three funds from a universe of approximately 450
large and midsize companies. Proprietary quantitative valuation models
determine which of these stocks currently appear to be selling for less than
their intrinsic worth. Based on a qualitative assessment of each company's
prospects, portfolio managers then look for a catalyst they believe will unlock
the stock's unrecognized value. A catalyst may be as simple as a management
change or as complex as a fundamentally improved industry outlook. Generally,
we choose only the 40 to 50 most attractive stocks with a 15% to 25% price
appreciation potential over the next 18 months for the equity portion of each
fund's investment portfolio.
Taxable Fixed-Income Securities
ICAP selects taxable fixed-income securities for the Balanced Stock and Bond
Fund based on its general outlook for the fixed-income markets as well as a
detailed analysis of expected yield curve changes. ICAP uses proprietary
quantitative models and qualitative assessment of top-down economic and market
factors to develop an outlook on interest rates. ICAP then analyzes the current
shape of the yield curve as well as expected changes under different scenarios.
ICAP selects the specific mix of maturities that offer the best balance of
current income and capital preservation potential in light of current and
expected market conditions.
Municipal Obligations for the Balanced Municipal and Stock Fund
NIAC selects municipal obligations for the Balanced Municipal and Stock Fund
based upon its assessment of a bond's relative value in terms of current yield,
price, credit quality and future prospects. NIAC is supported by Nuveen's award-
winning team of specialized research analysts who review municipal securities
available for purchase, monitor the continued
20 | Section 2 How We Manage Your Money
<PAGE>
creditworthiness of Nuveen's municipal investments, and analyze economic,
political and demographic trends affecting the municipal markets. NIAC utilizes
these resources to identify municipal obligations with favorable characteristics
not yet recognized by the market. NIAC then selects those higher-yielding and
undervalued municipal obligations that it believes represent the most attractive
values. NIAC diversifies its municipal investments by purchasing securities from
a broad range of issuers, industry sectors and geographic regions.
Portfolio Turnover
The three funds anticipate that their annual equity portfolio turnover rate will
be between 100% and 125% under normal market conditions, and will generally not
exceed 150%. A turnover rate of 100% would occur, for example, if the fund sold
and replaced securities valued at 100% of its net assets within one year.
The Balanced Municipal and Stock Fund expects annual portfolio turnover for the
municipal portion of the portfolio to be significantly less than 75%, because
the fund generally purchases municipal bonds with a view to holding them for
investment. The Balanced Stock and Bond Fund anticipates that its annual bond
portfolio turnover rate will be between 75% and 100% and will generally not
exceed 125%. Please see the Statement of Additional Information for a more
detailed discussion of portfolio turnover.
What the Risks Are
Risk is inherent in all investing. Investing in a mutual fund -- even the most
conservative -- involves risk, including the risk that you may receive little
or no return on your investment or even that you may lose part or all of your
investment. Therefore, before investing you should consider carefully the
following risks that you assume when you invest in these funds. Because of these
and other risks, you should consider an investment in any of these funds to be
a long-term investment that will provide the best results when held over a
number of years.
Market risk: the risk that the market value of a stock may change rapidly and
unpredictably, causing a security to be worth less than its original price. The
equity markets tend to have periods of generally rising prices and periods of
generally falling prices.
Interest rate risk: the risk that bonds will decline in value because of changes
in interest rates. Generally, bonds will increase in value when interest rates
decline and decrease when interest rates rise.
Credit risk: the risk that an issuer of a bond is unable to meet its obligation
to make interest and principal payments.
Inflation risk: the risk that the value of assets or income from investments
will be less in the future as inflation decreases the value of money. As
inflation increases, the value of the funds' assets can decline as can the value
of the funds' distributions.
Section 2 How We Manage Your Money | 21
<PAGE>
Correlation risk: Although the prices of fixed-income and equity securities
often rise and fall at different times so that a fall in the price of one is
offset by a rise in the price of the other, in a down market the prices of these
securities can also fall in tandem.
How We Manage Risk
We use time-tested risk management strategies designed to help protect your
capital during periods of market uncertainty or weakness. We expect that our
value investing strategy used in selecting stocks of quality companies will help
protect the funds' performance under adverse economic conditions. The Balanced
Stock and Bond Fund and the Balanced Municipal and Stock Fund also invest in
quality bonds whose income and greater price stability can provide an added
level of capital protection in down markets. We continuously monitor the
performance of our investments. While we use these strategies to control or
reduce risk, there is no assurance that we will succeed.
Portfolio Allocation Ranges
Each fund follows a disciplined asset allocation methodology that automatically
keeps your portfolio mix within a defined range over time as market conditions
change. The funds have established the following operating ranges for each asset
class:
<TABLE>
<CAPTION>
Balanced
Municipal
Growth and Income Balanced Stock and Stock
Stock Fund and Bond Fund Fund
- -------------------------------------------------------------
<S> <C> <C> <C>
Stocks 65-100% 40-70% 30-50%
Bonds -- 25-55% 50-70%
Cash Equivalent 0-35% 0-20% 0-10%
- -------------------------------------------------------------
</TABLE>
A fund's Board of Trustees may change the target investment mix and operating
ranges for each asset class without shareholder approval. The Balanced Municipal
and Stock Fund will not set the minimum allowable allocation for municipal bonds
below 50%.
Investment Limitations
The funds have adopted certain investment limitations (based on total assets)
that cannot be changed without shareholder approval and are designed to limit
your investment risk and maintain portfolio diversification. Each fund may not
have more than:
. 5% in securities in any one issuer, or 10% of the voting securities of that
issuer (except for U.S. government securities or for 25% of the fund's total
assets);
. 33 1/3% in borrowing;
. 33 1/3% in loans of its portfolio securities;
22 | Section 2 How We Manage Your Money
<PAGE>
. 25% in any one industry (except U.S. government securities and, in the case of
the Balanced Municipal and Stock Fund, municipal securities backed by
governmental users).
In addition, the funds have adopted certain other investment limitations that
may be changed by the funds' Board of Trustees without shareholder approval.
Each fund may not have more than:
. 5% of its total assets in warrants, unseasoned companies and in short sales
against the box;
. 30% of its total net assets in futures contracts;
. 5% of its net assets in initial margin deposits and premiums on futures
contracts;
. 15% of its net assets in illiquid securities.
Please see the Statement of Additional Information for a more detailed
discussion of the investment limitations.
Hedging and Other Defensive Investment Strategies
We may invest up to 100% of a fund's assets in cash equivalents and short-term
fixed-income securities as a temporary defensive measure in response to adverse
market conditions, or to keep cash on hand fully invested. (See "Short-Term
Investments" on page _____.) In addition, during temporary defensive periods,
the proportion of the fund's assets invested in an asset category may fall
outside the allowable range for that asset category. We may also use various
investment strategies designed to limit the risk of price fluctuations and to
preserve capital. These hedging strategies include using financial futures
contracts, options on financial futures, or stock index options.
The ability of a fund to benefit from options and futures is largely dependent
on NIAC's or ICAP's ability to use such strategies correctly. The fund could
lose money on futures transactions or an option can expire worthless. For a more
complete discussion of these strategies, please see the Statement of Additional
Information.
Portfolio Managers' Strategies to Manage Risk
Over the past 20 years, there have been four periods in which the S&P 500
declined by more than 10%. As the accompanying charts show, in each of these
market downturns the funds' managers successfully preserved capital for
investors. Note that these charts do not reflect past fund performance or
predict future fund performance.
The Growth and Income Fund invests primarily in equities of large and midsize
companies. During the down periods measured, the ICAP Discretionary Composite
outperformed the S&P 500 and the Lipper Growth and Income Index. Please refer to
the description of ICAP's Discretionary Equity Composite performance on page
[9] for additional information.
ICAP's Superior Performance in Down Markets: Stocks
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
ICAP Balanced S & P 500 Lipper Balanced
<S> <C> <C> <C>
1/77-3/78 -0.016 -0.1176 -0.0678
4/81-6/82 0.01 -0.1347 -0.0935
10/87-12/87 -0.108 -0.2263 -0.1986
7/90-9/90 -0.078 -0.1378 -0.1345
</TABLE>
Section 2 How We Manage Your Money | 23
<PAGE>
The Balanced Stock and Bond Fund seeks attractive total returns through a
portfolio of equity securities and taxable fixed-income securities. The ICAP
Balanced Composite's performance exceeded the S&P 500 and the Lipper Balanced
Fund Index during the periods indicated. See the description of ICAP's
Discretionary Balanced Composite performance on page [14] for additional
information.
ICAP's Superior Performance in Down Markets: Stocks and Bonds
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
ICAP Balanced Composite S & P 500 Lipper Balanced
<S> <C> <C> <C>
1/77-3/78 -0.0209 -0.1176 -0.0299
4/81-6/82 0.0405 -0.1347 -0.067
10/87-12/87 -0.0926 -0.2263 -0.1326
7/90-9/90 -0.0675 -0.1378 -0.0809
</TABLE>
Balancing Municipals with Stocks
The Balanced Municipal and Stock Fund combines stocks and municipal bonds in a
single portfolio to help mitigate risk. As the following chart shows, during the
four periods of market decline cited previously, an investment strategy like
this resulted in lower volatility than a portfolio consisting of stocks alone.
Our example uses the Lehman Bros. 10-Year Municipal Bond Index and the S&P 500
to simulate a portfolio using the Fund's target allocation of 60% municipal
bonds and 40% stocks.
Preserving Capital with a Municipal/Stock Portfolio
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Muni/S&P 500 Portfolio S & P 500
<S> <C> <C>
1/77-3/78 -0.0422 -0.1176
4/81-6/82 -0.0844 -0.1347
10/87-12/87 -0.1182 -0.2263
7/90-9/90 -0.0843 -0.1378
</TABLE>
Section 2 How We Manage Your Money | 24
<PAGE>
Management Fees
For the fund management services and facilities furnished by NIAC, the funds
have agreed to pay an annual fund management fee according to the following
schedule:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Average Daily Growth and Income Balanced Stock Balanced Municipal
Net Asset Value Stock Fund and Bond Fund and Stock Fund
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
For the first $125 million .8500 of 1% .7500 of 1% .7500 of 1%
- -----------------------------------------------------------------------------------
For the next $125 million .8375 of 1% .7375 of 1% .7375 of 1%
- -----------------------------------------------------------------------------------
For the next $250 million .8250 of 1% .7250 of 1% .7250 of 1%
- -----------------------------------------------------------------------------------
For the next $500 million .8125 of 1% .7125 of 1% .7125 of 1%
- -----------------------------------------------------------------------------------
For the next $1 billion .8000 of 1% .7000 of 1% .7000 of 1%
- -----------------------------------------------------------------------------------
For assets over $2 billion .7750 of 1% .6750 of 1% .6750 of 1%
- -----------------------------------------------------------------------------------
</TABLE>
Fund Management Fee
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Assets of all the Nuveen-Sponsored Equity Portfolio Fixed-Income Portfolio
Investment Products Managed Management Fee Management Fee
by ICAP
- ----------------------------------------------------------------------------------
<S> <C> <C>
For the first $500 million .35% of 1% .20% of 1%
- ----------------------------------------------------------------------------------
For the next $500 million .30% of 1% .15% of 1%
- ----------------------------------------------------------------------------------
For assets over $1 billion .25% of 1% .12% of 1%
- ----------------------------------------------------------------------------------
</TABLE>
Out of the fund management fee, NIAC pays ICAP a portfolio management fee based
on the average daily market value of the all Nuveen-sponsored investment
products for which ICAP is the portfolio manager. NIAC pays ICAP separate
portfolio management fees for the equity and fixed-income portions of the
fund's assets, if applicable, according to the following schedule:
Portfolio Management Fee
The equity and fixed-income portfolio management fees are each paid on a
specified proportion of fund net assets. The specified proportions for the
equity portfolio management fees are currently 100%, 55% and 35%, respectively,
for the Growth and Income Stock Fund, Balanced Stock and Bond Fund and Balanced
Municipal and Stock Fund. The specified proportions for the fixed-income
portfolio management fee is currently 45% for the Balanced Stock and Bond Fund.
Each fund pays for its own operating expenses such as custodial, transfer agent,
accounting and legal fees; interest charges; brokerage commissions;
Section 2 How We Manage Your Money | 25
<PAGE>
daily securities pricing; distribution and service fees; organizational
expenses; extraordinary expenses and any other expenses that are not covered
under any sub-advisory agreements. Each fund also pays a portion of the Nuveen
Investment Trust's general administrative expenses allocated in proportion to
the net assets of each fund. In order to prevent total operating expenses
(excluding any distribution or service fees, and extraordinary expenses) from
exceeding .85% of the average daily net asset value of any class of shares of
the Balanced Stock and Bond and Balanced Municipal and Stock Funds (.95% for the
Growth and Income Stock Fund) for the fiscal year ended July 31, 1998, NIAC has
agreed to waive all or a portion of its management fee or reimburse certain
expenses of the funds. All fees and expenses are accrued daily and deducted
before payment of dividends to investors.
26 | Section 2 How We Manage Your Money
<PAGE>
How You Can Buy and Sell Shares
Section 3
You can choose from four classes of fund shares, each with a different
combination of sales charges, fees, eligibility requirements and other features.
Your financial adviser can help you determine which class is best for you. We
offer a number of features for your convenience, including low investment
minimums, flexible purchase options, exchange privileges, no-cost dividend
reinvestment and investment of Nuveen unit trust distributions, automatic
deposit and withdrawal plans and electronic fund transfer privileges. Please see
the Statement of Additional Information for further details.
Section 3 How You Can Buy and Sell Shares | 27
<PAGE>
Choosing a Share Class
In deciding whether to purchase Class A, Class B, Class C or Class R shares, you
should consider:
. the amount of your purchase;
. any current holdings of fund shares;
. how long you expect to hold the shares;
. the amount of any up-front sales charge;
. whether a contingent deferred sales charge (CDSC) would apply upon redemption;
. the amount of any distribution or service fees that you may incur while you
own the shares;
. whether you will be reinvesting income or capital gain distributions in
additional shares;
. whether you qualify for a sales charge waiver or reduction.
Each class of shares represents an interest in the same portfolio of investments
but has its own sales charge structure, class expenses and exclusive voting
rights for any distribution or service plan. These differences will cause net
income per share, dividends per share and net asset value per share to vary
among the classes. For a summary of the charges and expenses for each class,
please see the Summary of Fund Expenses on page [5.]
Class A Shares
You can buy Class A shares at net asset value per share plus an up-front sales
charge imposed at the time of purchase. You may qualify for a reduced sales
charge, or the sales charge may be waived, as described in "How You Can Reduce
Your Sales Charge." Class A shares are also subject to an annual service fee
of .25% which compensates your financial adviser for providing ongoing service
to you. The up-front sales charge schedule for Class A shares is as follows:
<TABLE>
<CAPTION>
Amount of Purchase Sales Charge as % Sales Charge as % Authorized Dealer
of Public Offering of Net Amount Commission
Price Invested as % of Public
Offering Price
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------
Less than $50,000 5.25% 5.54% 5.00%
- --------------------------------------------------------------------------------------
$50,000 but less
than $100,000 4.25% 4.44% 4.00%
- --------------------------------------------------------------------------------------
$100,000 but less
than $250,000 3.50% 3.63% 3.25%
- --------------------------------------------------------------------------------------
$250,000 but less
than $500,000 2.75% 2.83% 2.50%
- --------------------------------------------------------------------------------------
$500,000 but less
than $1,000,000 2.00% 2.04% 1.75%
- --------------------------------------------------------------------------------------
$1,000,000 and 0.00% 0.00% 0.00%
over
</TABLE>
28 | Section 3 How You Can Buy and Sell Shares
<PAGE>
You can buy $1 million or more of Class A shares at net asset value with no up-
front sales charge. Nuveen pays Authorized Dealers of record on these share
purchases a sales commission of 1.00% of the first $2.5 million, plus 0.50% of
the next $2.5 million, plus 0.25% of the amount over $5.0 million. If you
redeem your shares within 18 months of purchase, you may have to pay a CDSC of
1% of either your purchase price or your redemption proceeds, whichever is
lower. You do not have to pay this CDSC if you have made arrangements with
Nuveen and your dealer of record waives the commission.
Class B Shares
You can buy Class B shares at net asset value per share without any up-front
sales charge so that the full amount of your purchase is invested in the fund.
However, the fund will pay annual distribution and service fees of 1% of average
daily assets. The annual 0.25% service fee compensates your financial adviser
for providing ongoing service to you. The annual 0.75% distribution fee
compensates Nuveen for paying your financial adviser a sales commission of 3.75%
at the time of purchase. Nuveen also advances the first year's annual service
fee of .25%. If you sell your shares within six years of purchase, you will have
to pay a CDSC based on either your purchase price or what you sell your shares
for, whichever amount is lower, according to the following schedule. You do not
pay a CDSC on any Class B shares you purchase by reinvesting dividends.
Class B shares automatically convert to Class A shares eight years after you buy
them so that the distribution fees you pay over the life of your investment are
limited. You will continue to pay an annual service fee on any converted Class B
shares.
<TABLE>
<CAPTION>
======================================================================================
Years Since Purchase 0-1 1-2 2-3 3-4 4-5 5-6
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
CDSC 5% 4% 4% 3% 2% 1%
======================================================================================
</TABLE>
Class C Shares
You can buy Class C shares at net asset value per share without any up-front
sales charge so that the full amount of your purchase is invested in the fund.
However, you will pay annual distribution and service fees of 1%. The annual
0.25% service fee compensates your financial adviser for providing ongoing
service to you. The .25% service fee and the 0.75% distribution fee for the
first year compensates Nuveen for paying your financial adviser a 1% commission
at the time of purchase. The annual .75% distribution fee in following years
is paid as a commission to your financial adviser for selling the shares. If you
sell your shares within 12 months of purchase, you may have to pay a 1% CDSC
based on either your purchase price or what you sell your shares for, whichever
amount is lower.
Class R Shares
Under limited circumstances, you may purchase Class R shares at their net asset
value on the day of purchase. In order to qualify, you must be eligible under
one of the programs described in "How to Reduce Your Sales Charges" on page [ ]
or meet certain other purchase size criteria. Please refer to the Statement of
Additional Information for further information. There are no sales charges or
ongoing fees. Class R Shares have lower ongoing expenses than Class A shares.
Section 3 How You Can Buy and Sell Shares | 29
<PAGE>
How to Reduce Your Sales Charges
We offer a number of ways to reduce or eliminate the up-front sales charge on
Class A shares or to qualify to purchase class R shares.
Class A Sales Charge Reductions
. Rights of accumulation
. Letter of intent
. Group purchase
Class A Sales Charge Waivers
. Nuveen Unit Trust reinvestment
. Purchases using redemptions from unrelated funds
. Retirement Plans
. Certain employees of Nuveen or
authorized dealers
. Fee-based programs
. Bank trust departments
Class R Eligibility
. Certain employees of Nuveen or authorized dealers
. Fee-based programs
. Bank trust departments
Please refer to the Statement of Additional Information for detailed program
descriptions. Additional information on other programs is available from your
financial adviser or by calling (800) 621-7227. Your financial adviser can also
help you prepare any necessary application forms. You or your financial adviser
must notify Nuveen at the time of each purchase if you are eligible for any of
these programs. The funds may modify or discontinue these programs at any time.
How to Buy Shares
You may open an account with $3,000 ($1,000 for an IRA account) and make
additional investments at any time with as little as $50. There is no minimum
if you are reinvesting Nuveen unit trust distributions. The share price you pay
will depend on when Nuveen receives your order. Orders received before the close
of trading on a business day will receive that day's closing share price,
otherwise you will receive the next business day's price. A business day is any
day the New York Stock Exchange is open for business and usually ends at 4 p.m.
New York time when the Exchange closes.
Through a Financial Adviser
You may buy shares through your financial adviser, who can handle all the
details for you, including opening a new account. Financial advisers can also
help you review your financial needs and formulate long-term investment goals
and objectives. In addition, financial advisers generally can help you develop
a customized financial plan, select investments and monitor and review your
portfolio on a n ongoing basis to help assure your investments continue to meet
your needs as circumstances change. Financial advisers are paid either from
fund sales charges and fees or by charging you a separate fee in lieu of a sales
charge for ongoing investment advice and services. If you do not have a
financial adviser, call (800) 621-7227 and Nuveen can refer you to one in your
area.
By Mail
You may open an account and buy shares by mail by completing the enclosed
application and mailing it along with your check to: Nuveen Mutual Funds, c/o
Shareholder Services Inc., P.O. Box 5330, Denver, CO 80217-5330.
30 | Section 3 How You Can Buy and Sell Shares
<PAGE>
Systematic Investing
Systematic investing allows you to make regular investments through automatic
deductions from your bank account (simply complete the appropriate section of
the account application form) or directly from your paycheck. To invest directly
from your paycheck, contact your financial adviser or you can call Nuveen at
(800) 621-7227. Systematic investing may also make you eligible for reduced
sales charges.
Systematic Deposit Plan
You can make regular investments of $50 or more a month by authorizing us to
draw preauthorized checks on your bank account. You can stop the withdrawals at
any time. There is no charge for this plan.
Payroll Direct Deposit Plan
You can, with your employer's consent, make regular investments of $25 or more
per pay period (meeting the monthly minimum of $50) by authorizing your employer
to deduct this amount automatically from your paycheck. You can stop the
deductions at any time. There is no charge for this plan.
Dollar Cost Averaging
One of the benefits of systematic investing is dollar cost averaging. Because
you regularly invest a fixed amount of money over a period of years regardless
of the share price, you buy more shares when the price is low and fewer shares
when the price is high. As a result, the average share price you pay should be
less than the average share price of fund shares over the same period. To be
effective, dollar cost averaging requires that you invest over a long period of
time, and does not assure that you will profit.
Special Services
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
Exchanging Shares
You may exchange fund shares at any time for the same class of another Nuveen
mutual fund available in your state. You must have owned your fund shares for at
least 15 days, and your exchange must meet the minimum purchase requirements of
the fund into which you are exchanging. You will not be charged a CDSC when you
exchange the shares, and the holding period of your investment will be
transferred to the new fund for purposes of determining any future CDSC. You may
not exchange Class B shares for shares of a Nuveen money market fund. Because an
exchange is treated for tax purposes as a concurrent sale and purchase, you
should consult your tax adviser about the tax consequences of any contemplated
exchange.
The exchange privilege is not intended to allow you to use a fund for
short-term trading. Because excessive exchange activity may interfere with
Section 3 How You Can Buy and Sell Shares | 31
<PAGE>
portfolio management, raise fund operating expenses or otherwise have an adverse
effect on fund shareholders, each fund reserves the right to revise or end the
exchange privilege, limit the amount or number of exchanges, or reject any
exchange.
Reinstatement Privilege
If you redeem fund shares, you may reinvest all or part of your redemptions
proceeds up to one year later without incurring any additional charges. You may
only reinvest into the same share class you redeemed. If you paid a CDSC, we
will refund your CDSC and reinstate your holding period. You may use this
reinstatement privilege only once for any redemption.
Fund Direct
You may link your fund account to your bank account and transfer money
electronically between these accounts and perform a variety of account
transactions, including buying shares by telephone and investing through an
Automatic Deposit Plan. You may also have dividends, distributions, redemption
payments or Automatic Withdrawal Plan payments sent directly to your bank
account.
In addition, if you have established electronic funds transfer privileges on
your account, you may request that redemption proceeds of $1,000 or more be
sent by Federal Reserve wire directly into your bank account. While you will
generally receive your redemption proceeds more quickly than a regular
telephone redemption via Fund Direct, the fund may charge you a fee for this
expedited service.
Your financial adviser can help you complete the form for this service, or you
can call Nuveen at (800) 621-7227 for copies of the necessary forms.
How to Sell Shares
You may use one of the following methods to sell (redeem) your shares on any day
the New York Stock Exchange is open. You will receive the share price next
determined after Nuveen has received your properly completed redemption request.
Your redemption request must be received before the close of trading for you to
receive that day's price. While the funds do not charge a redemption fee, you
may be assessed a CDSC, if applicable.
Through Your Financial Adviser
You may sell your shares through your financial adviser who can prepare all the
necessary documentation. Your financial adviser may charge for this service.
By Telephone
If you have authorized telephone redemption privileges, you can redeem by
telephone up to $50,000. You may not redeem by telephone shares held in
certificate form. Checks will be issued only to the shareholder of record and
mailed to the address of record. If you have established electronic funds
transfer privileges, you may have redemption proceeds transferred electronically
to your bank account. We will normally mail your check the next business day.
Nuveen and Shareholder Services, Inc. will be liable for losses resulting from
unauthorized telephone redemptions only if they do not follow reasonable
procedures designed to verify the
32 | Section 3 How You Can Buy and Sell Shares
<PAGE>
identity of the caller. You should immediately verify your trade confirmations
when you receive them.
By Mail
You can sell your shares at any time by sending a written request to the
appropriate fund, c/o Shareholder Services, Inc. P.O. Box 5330, Denver, CO
80217-5330. Your request must include the following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person to whom you want your redemption proceeds paid (if
other than to the shareholder of record);
. The address where you want your redemption proceeds sent (if other than the
address of record);
. Any certificates you have for the shares; and
. Any required signature guarantees.
We will normally mail your check the next business day, but in no event more
than seven days after we receive your request.
Guaranteed signatures are required if you are redeeming more than $50,000, you
want the check payable to someone other than the shareholder of record or you
want the check sent to another address (or the address of record has been
changed within the last 60 days). Signature guarantees must be obtained from a
bank, brokerage firm or other financial intermediary that is a member of an
approved Medallion Guarantee Program or that is otherwise approved by a fund. A
notary public cannot provide a signature guarantee.
An Important Note About Involuntary Redemption
From time to time, the funds may establish minimum account size requirements.
The funds reserve the right to liquidate your account upon 30 days' written
notice if the value of your account falls below an established minimum. The
funds presently have set a minimum balance of $100 unless you have an active
Nuveen unit trust reinvestment account. You will not be assessed a CDSC on an
involuntary redemption.
Net Asset Value
The funds' net asset value per share is determined as of the close of trading
(normally 4:00 p.m. eastern time) on each day the New York Stock Exchange is
open for business. Net asset value is calculated for each class by taking the
fair value of the class's total assets, including interest or dividends accrued
but not yet collected, less all liabilities, and dividing by the total number of
shares outstanding. The result, rounded to the nearest cent, is the net asset
value per share.
In determining net asset value, expenses are accrued and applied daily and
securities and other assets for which market quotations are available are valued
at market value. Common stocks and other equity securities are
Section 3 How You Can Buy and Sell Shares | 33
<PAGE>
valued at the last sales price that day. Securities not listed on a national
securities exchange or Nasdaq are valued at the most recent bid prices. The
prices of municipal bonds are provided by a pricing service and based on the
mean between the bid and asked price. When price quotes are not readily
available (which is usually the case for municipal securities), the pricing
service establishes fair market value based on prices of comparable municipal
bonds.
Regardless of the method employed to value a particular security, all valuations
are subject to review by the fund's Board of Trustees or its delegate.
Organization of the Funds
Each fund is a series of the Nuveen Investment Trust, an open-end diversified
management investment company under the Investment Company Act of 1940. The
trust was organized as a Massachusetts business trust on May 6, 1996. The trust
is authorized to issue an unlimited number of shares in one or more series or
"funds," which may be divided into classes of shares. Each fund is divided into
four classes of shares designated as Class A, Class B, Class C and Class R.
Each class of shares represents an interest in the same portfolio of
investments of the fund, and each class of shares has equal rights as to voting,
redemption, dividends, and liquidation, except that each bears different class
expenses, including different distribution and service fees, and each has
exclusive voting rights with respect to any distribution or service plan
applicable to its shares. The Board of Trustees of the trust has the right to
establish additional series and classes of shares in the future, to change
those series or classes, and to determine the preferences, voting powers, rights
and privileges for each.
The trust is not required and does not intend to hold annual meetings of
shareholders. Shareholders owning more than 10% of the outstanding shares of a
fund have the right to call a special meeting to remove trustees or for any
other purpose.
Under Massachusetts law, shareholders of a Massachusetts business trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the trust and requires that
notice of this disclaimer must be given in each agreement, obligation, or
instrument that the trust enters into or executes. The Declaration of Trust
further provides that any shareholder held personally liable for the obligations
of the trust shall be indemnified for any financial loss out of the trust's
assets and property. Thus, the risk of a shareholder incurring financial loss
because of shareholder liability is limited to both inadequate insurance and the
trust's inability to meet its obligations. The trust believes the likelihood of
34 | Section 3 How You Can Buy and Sell Shares
<PAGE>
Section 4
General Information
To help you understand the
tax implications of investing
in the funds, this section
includes important details
about how the funds make
distributions to shareholders.
We discuss some other fund
policies, as well.
Section 4 General Information | 35
<PAGE>
Distributions and Taxes
Each fund intends to operate as a "Regulated Investment Company" under
Subchapter M of the Internal Revenue Service Code, and therefore will not be
liable for federal income taxes to the extent earnings are distributed on a
timely basis. Because the Balanced Municipal and Stock Fund invests in
municipal bonds, certain dividends you receive will be exempt from regular
federal income tax. All or a portion of these dividends, however, may be subject
to state and local taxes or to the federal alternative minimum tax (AMT). The
tax status of your dividends from any of these funds is not affected by whether
you reinvest your dividends or receive them in cash. If you receive social
security benefits, you should be aware that any tax-free income is taken into
account in calculating the amount of these benefits that may be subject to
federal income tax. Tax laws are subject to change, so we urge you to consult
your tax adviser about your particular tax situation and how it might be
affected by current tax law.
Payment and Reinvestment Options
The funds automatically reinvest your dividends in additional fund shares unless
you request otherwise. You may request to have your dividends paid to you by
check, deposited directly into your bank account, paid to a third party, sent to
an address other than your address of record or reinvested in shares of another
Nuveen mutual fund. For further information, contact your financial adviser or
call Nuveen at (800) 621-7227.
Tax Reporting
Early in each year, you will receive a statement detailing the amount and nature
of all dividends and capital gains, including any percentage of your fund
dividends attributable to municipal obligations, that you were paid during the
prior year. You will receive this statement from the firm where you purchased
your fund shares if you hold your investment in street name. Nuveen will send
you this statement if you hold your shares in registered form.
Buying or Selling Shares Close to a Record Date
Buying fund shares shortly before the record date for a taxable dividend is
commonly known as "buying the dividend." The entire dividend may be taxable to
you even though a portion of the dividend effectively represents a return of
your purchase price. Similarly, if you sell or exchange fund shares shortly
before the record date for a tax-exempt dividend, a portion of the price you
receive may be treated as a taxable capital gain even though it reflects tax-
free income earned but not yet distributed by the fund.
Distribution Schedule
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Tax-Free Dividends Taxable Dividends CapitalGains
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth and Income Stock Fund None Quarterly December
- ----------------------------------------------------------------------------------------------------
Balanced Stock and Bond Fund None Quarterly December
- ----------------------------------------------------------------------------------------------------
Balanced Municipal and Stock Fund Monthly December December
- ----------------------------------------------------------------------------------------------------
</TABLE>
Please note that if you do not furnish us with your correct Social Security
number or employer identification number, federal law requires us to withhold
federal income tax from your distributions and redemption proceeds at a rate of
31%.
36 | Section 4 General Information
<PAGE>
Distributions and Service Plans
John Nuveen and Co. Incorporated serves as the selling agent and distributor of
the funds' shares. In this capacity, Nuveen manages the offering of the funds'
shares and is responsible for all sales and promotional activities. In order to
reimburse Nuveen for its costs in connection with these activities, including
compensation paid to authorized dealers, each fund has adopted a distribution
and service plan under Rule 12b-1 under the Investment Company Act of 1940 (See
"Choosing a Share Class" on page [30] for a description of the distribution and
service fees paid under this plan).
Nuveen receives the distribution fee for Class B and Class C shares primarily
for providing compensation to Authorized Dealers, including Nuveen, in
connection with the distribution of shares. Nuveen uses the service fee for
Class A, Class B, and Class C shares to compensate Authorized Dealers,
including Nuveen, for providing account services to shareholders. These services
may include establishing and maintaining shareholder accounts, answering
shareholder inquiries, and providing other personal services to shareholders.
These fees also compensate Nuveen for other expenses, including printing and
distributing prospectuses to persons other than shareholders , the expenses of
preparing, printing, and distributing advertising and sales literature and
reports to shareholders used in connection with the sale of shares.
Fund Service Providers
The custodian of the assets of the funds is The Chase Manhattan Bank, 4 New York
Plaza, New York, New York 10004-2413. Chase also provides certain accounting
services to the funds. The funds' transfer, shareholder services and dividend
paying agent, Shareholder Services, Inc., performs bookkeeping, data processing
and administrative services for the maintenance of shareholder accounts.
Section 4 General Information | 37
<PAGE>
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed
to help you reach your financial goals.
The funds below are grouped by
investment objectives.
Growth and Income Funds
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Municipal Bond Funds
National Funds
Long-term
Insured Long-term
Intermediate-term
Limited-term
Nuveen Family of Municipal Bond Funds
[U.S. MAP APPEARS HERE]
[ ] State Funds [ ] National Funds
<TABLE>
<CAPTION>
State Funds
<S> <C> <C>
Alabama Kentucky/3/ New York/1/
Arizona Louisiana North Carolina
California/1/ Maryland Ohio
Colorado Massachusetts/1/ Pennsylvania
Connecticut Michigan South Carolina
Florida/2/ Missouri Tennessee
Georgia New Jersey/2/ Virginia
Kansas New Mexico Wisconsin
</TABLE>
/1./ Long-term and insured long-term portfolios.
/2./ Long-term and intermediate-term portfolios.
/3./ Long-term and limited-term portfolios.
Nuveen
John Nuveen & Co, Incorporated
333 West Wacker Drive
(800) 621-7227
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
Statement of Additional Information
October 29, 1997
Nuveen Investment Trust
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN GROWTH AND INCOME STOCK FUND
NUVEEN BALANCED STOCK AND BOND FUND
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
NUVEEN BALANCED CALIFORNIA MUNICIPAL AND STOCK FUND
This Statement of Additional Information is not a prospectus. A prospectus may
be obtained from certain securities representatives, banks and other financial
institutions that have entered into sales agreements with John Nuveen & Co. In-
corporated, or from the Fund, c/o John Nuveen & Co. Incorporated, 333 West
Wacker Drive, Chicago, Illinois 60606. This Statement of Additional Information
relates to, and should be read in conjunction with, as to each Fund the Pro-
spectus for that Fund. The Prospectus for the Funds (other than the Nuveen Bal-
anced California Municipal and Stock Fund) is dated October 29, 1997, and the
Prospectus for the Nuveen Balanced California Municipal and Stock Fund is not
yet effective.
<TABLE>
<S> <C>
Table of Contents Page
- ------------------------------------------------------------------------------
General Information B-2
- ------------------------------------------------------------------------------
Investment Policies and Restrictions B-2
- ------------------------------------------------------------------------------
Investment Policies and Techniques B-5
- ------------------------------------------------------------------------------
Management B-30
- ------------------------------------------------------------------------------
Fund Manager and Portfolio Manager B-37
- ------------------------------------------------------------------------------
Portfolio Transactions B-38
- ------------------------------------------------------------------------------
Net Asset Value B-40
- ------------------------------------------------------------------------------
Tax Matters B-41
- ------------------------------------------------------------------------------
Performance Information B-48
- ------------------------------------------------------------------------------
Additional Information on the Purchase and Redemption of Fund Shares and
Shareholder Programs B-53
- ------------------------------------------------------------------------------
Distribution and Service Plans B-68
- ------------------------------------------------------------------------------
Independent Public Accountants and Custodian B-70
- ------------------------------------------------------------------------------
Financial Statements B-71
- ------------------------------------------------------------------------------
Appendix A--Ratings of Investments A-1
- ------------------------------------------------------------------------------
</TABLE>
The audited financial statements for each Fund's most recent fiscal year appear
in the Funds' Annual Reports. The Annual Reports accompany this Statement of
Additional Information.
<PAGE>
GENERAL INFORMATION
Nuveen Growth and Income Stock Fund ("Growth/Income Fund"), Nuveen Balanced
Stock and Bond Fund ("Stock/Bond Fund"), Nuveen Balanced Municipal and Stock
Fund ("Muni/Stock Fund") and Nuveen Balanced California Municipal and Stock
Fund ("California Muni/Stock Fund,") (individually a "Fund" and collectively
the "Funds") are series of the Nuveen Investment Trust (the "Trust"), an open-
end diversified management series investment company. Each series of the Trust
represents shares of beneficial interest in a separate portfolio of securities
and other assets, with its own objectives and policies. Currently, four series
of the Trust are authorized and outstanding.
Certain matters under the Investment Company Act of 1940 which must be submit-
ted to a vote of the holders of the outstanding voting securities of a series
company shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding voting securities of each se-
ries affected by such matter.
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT RESTRICTIONS
The investment objective and certain fundamental investment policies of each
Fund are described in the Prospectus for that Fund. A Fund, as a fundamental
policy, may not, without the approval of the holders of a majority of the
shares of the Fund:
(1) With respect to 75% of its total assets, purchase the securities of any is-
suer (except securities issued or guaranteed by the United States government or
any agency or instrumentality thereof) if, as a result, (i) more than 5% of the
Fund's total assets would be invested in securities of that issuer, or (ii) the
Fund would hold more than 10% of the outstanding voting securities of that is-
suer.
(2) Borrow money, except that the Fund may (i) borrow money from banks for tem-
porary or emergency purposes (but not for leverage or the purchase of invest-
ments) and (ii) engage in other transactions permissible under the Investment
Company Act of 1940 that may involve a borrowing (such as, investing in When-
Issued Securities or certain futures and options), provided that the combina-
tion of (i) and (ii) shall not exceed 33 1/3% of the value of the Fund's total
assets (including the amount borrowed), less the Fund's liabilities (other than
borrowings). This limitation shall not apply to the California Muni/Stock Fund.
Instead, the California Muni/Stock Fund shall not borrow money except from
banks for temporary or emergency purposes and not for investment purposes and
then only in an amount not exceeding (i) 10% of the value of its total assets
at the time of borrowing or (ii) one-third of the value of the Fund's total as-
sets including the amount borrowed, in order to meet redemption requests which
might otherwise require the untimely disposition of securities.
(3) Act as an underwriter of another issuer's securities, except to the extent
that the Fund may be deemed to be an underwriter within the meaning of the Se-
curities Act of 1933 in connection with the purchase and sale of portfolio se-
curities.
(4) Make loans to other persons, except through (i) the purchase of debt secu-
rities permissible under the Fund's investment policies, (ii) repurchase agree-
ments, or (iii) the lending of portfolio securities, pro-
B-2
<PAGE>
vided that no such loan of portfolio securities may be made by the Fund if, as
a result, the aggregate of such loans would exceed 33 1/3% of the value of the
Fund's total assets.
(5) Purchase or sell physical commodities unless acquired as a result of owner-
ship of securities or other instruments (but this shall not prevent the Fund
from purchasing or selling options, futures contracts, or other derivative in-
struments, or from investing in securities or other instruments backed by phys-
ical commodities).
(6) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prohibit the Fund from pur-
chasing or selling securities or other instruments backed by real estate or of
issuers engaged in real estate activities).
(7) Issue senior securities, except as permitted under the Investment Company
Act of 1940.
(8) Purchase the securities of any issuer if, as a result, 25% or more of the
Fund's total assets would be invested in the securities of issuers whose prin-
cipal business activities are in the same industry (except that this restric-
tion shall not be applicable to securities issued or guaranteed by the U.S.
government or any agency or instrumentality thereof and, in the case of the
Muni/Stock Fund and the California Muni/Stock Fund, to Municipal Obligations
and California Municipal Obligations (as applicable), other than those Munici-
pal Obligations and California Municipal Obligations backed only by the assets
and revenues of non-governmental users).
If a percentage restriction is adhered to at the time of investment, a later
increase in percentage resulting from a change in market value of the invest-
ment or the total assets will not constitute a violation of that restriction.
For the purpose of applying the limitation set forth in restriction (1) above
to Municipal Obligations or California Municipal Obligations (collectively,
"Municipal Securities"), an issuer shall be deemed the sole issuer of a secu-
rity when its assets and revenues are separate from other governmental entities
and its securities are backed only by its assets and revenues. Similarly, in
the case of a non-governmental user, such as an industrial corporation or a
privately owned or operated hospital, if the security is backed only by the as-
sets and revenues of the non-governmental user, then such non-governmental user
would be deemed to be the sole issuer. Where a security is also backed by the
enforceable obligation of a superior or unrelated governmental or other entity
(other than a bond insurer), it shall also be included in the computation of
securities owned that are issued by such governmental or other entity. Where a
security is guaranteed by a governmental entity or some other facility, such as
a bank guarantee or letter of credit, such a guarantee or letter of credit
would be considered a separate security and would be treated as an issue of
such government, other entity or bank. When a Municipal Security is insured by
bond insurance, it shall not be considered a security that is issued or guaran-
teed by the insurer; instead, the issuer of such Municipal Security will be de-
termined in accordance with the principles set forth above. The foregoing re-
strictions do not limit the percentage of the assets of the Muni/Stock Fund or
the California Muni/Stock Fund that may be invested in Municipal Obligations or
California Municipal Obligations, respectively, insured by any given insurer.
The foregoing fundamental investment policies, together with the investment ob-
jective of each of the Nuveen Growth and Income Stock Fund, the Nuveen Balanced
Stock and Bond Fund, the Muni/Stock Fund, and California Muni/Stock Fund and
certain other policies specifically identified in the prospectus, cannot be
changed without approval by holders of a "majority of the Fund's outstanding
voting shares."
B-3
<PAGE>
As defined in the Investment Company Act of 1940, this means the vote of (i)
67% or more of the Fund's shares present at a meeting, if the holders of more
than 50% of the Fund's shares are present or represented by proxy, or (ii) more
than 50% of the Fund's shares, whichever is less.
In addition to the foregoing fundamental investment policies, each Fund is also
subject to the following non-fundamental restrictions and policies, which may
be changed by the Board of Trustees. A Fund may not:
(1) Sell securities short, unless the Fund owns or has the right to obtain se-
curities equivalent in kind and amount to the securities sold short at no added
cost, and provided that transactions in options, futures contracts, options on
futures contracts, or other derivative instruments are not deemed to constitute
selling securities short.
(2) Purchase securities on margin, except that the Fund may obtain such short-
term credits as are necessary for the clearance of transactions; and provided
that margin deposits in connection with futures contracts, options on futures
contracts, or other derivative instruments shall not constitute purchasing se-
curities on margin.
(3) Pledge, mortgage or hypothecate any assets owned by the Fund except as may
be necessary in connection with permissible borrowings or investments and then
such pledging, mortgaging, or hypothecating may not exceed 33 1/3% of the
Fund's total assets at the time of the borrowing or investment. This limita-
tion, shall not apply to the California Muni/Bond Fund. With respect to this
Fund, the Fund may not pledge, mortgage or hypothecate its assets, except that,
to secure permissible borrowings described above, it may pledge securities hav-
ing a market value at the time of pledge not exceeding 10% of the value of such
Fund's total assets.
(4) Purchase the securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political subdivisions there-
of) if, as a result, more than 5% of its total assets would be invested in the
securities of issuers that, including predecessors or unconditional guarantors,
have a record of less than three years of continuous operation. This policy
does not apply to securities of pooled investment vehicles or mortgage or as-
set-backed securities. This limitation does not apply to the California
Muni/Stock Fund.
(5) Purchase securities of open-end or closed-end investment companies except
in compliance with the Investment Company Act of 1940 and applicable state law.
(6) Enter into futures contracts or related options if more than 30% of the
Fund's net assets would be represented by futures contracts or more than 5% of
the Fund's net assets would be committed to initial margin deposits and premi-
ums on futures contracts and related options.
(7) Invest in direct interests in oil, gas or other mineral exploration pro-
grams or leases; however, the Fund may invest in the securities of issuers that
engage in these activities.
(8) Purchase securities when borrowings exceed 5% of its total assets. If due
to market fluctuations or other reasons, the value of the Fund's assets falls
below 300% of its borrowings, the Fund will reduce its borrowings within 3
business days. To do this, the Fund may have to sell a portion of its invest-
ments at a time when it may be disadvantageous to do so.
(9) Each Fund may not invest in illiquid securities if, as a result of such in-
vestment, more than 15% of the Fund's net assets would be invested in illiquid
securities.
B-4
<PAGE>
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of the Funds' investment
objectives, policies, and techniques that are described in the Prospectus for
each Fund.
INVESTMENT IN MUNICIPAL OBLIGATIONS
Portfolio Investments
Except to the extent the Muni/Stock Fund and the California Muni/Stock Fund in-
vest in temporary investments as described below, all of the Muni/Stock Fund's
investments in Municipal Obligations and the California Muni/Stock Fund's in-
vestments in California Municipal Obligations will be comprised of tax-exempt
Municipal Obligations or California Municipal Obligations, as the case may be,
that are either (1) rated at the time of purchase within the four highest
grades (Baa or BBB or better) by Moody's Investors Services, Inc. ("Moody's"),
by Standard & Poor's Ratings Group ("S&P") or in the case of the California
Muni/Bond Fund, by Fitch Services, Inc. ("Fitch") or (2) unrated but which, in
the opinion of the NIAC, have credit characteristics equivalent to, and will be
of comparable quality to, Municipal Obligations or California Municipal Obliga-
tions, as the case may be, so rated; provided, however, that not more than 20%
of the Muni/Stock Fund's investments in Municipal Obligations or the California
Muni/Stock Fund's investments in California Municipal Obligations, may be in
such unrated bonds. The foregoing policies are fundamental policies of the
Muni/Stock Fund but are non-fundamental policies of the California Muni/Stock
Fund. Municipal Securities rated Baa or BBB are considered "investment grade"
securities; Municipal Securities rated Baa are considered medium grade obliga-
tions which lack outstanding investment characteristics and in fact have specu-
lative characteristics as well, while Municipal Securities rated BBB are re-
garded as having an adequate capacity to pay principal and interest. Municipal
Securities rated AAA in which the Fund may invest may have been so rated on the
basis of the existence of insurance guaranteeing the timely payment, when due,
of all principal and interest. A general description of Moody's, S&P's and
Fitch's ratings is set forth in Appendix A hereto. The ratings of Moody's, S&P
and Fitch represent their opinions as to the quality of the Municipal Securi-
ties they rate. It should be emphasized, however, that ratings are general and
are not absolute standards of quality. Consequently, Municipal Securities with
the same maturity, coupon and rating may have different yields while obliga-
tions of the same maturity and coupon with different ratings may have the same
yield.
The foregoing policies as to rating of investments in securities will apply
only at the time of the purchase of a security, and the Fund will not be re-
quired to dispose of securities in the event Moody's, S&P or Fitch downgrades
its assessment of the credit characteristics of a particular issuer.
The municipal portfolio manager of the Muni/Stock Fund and the California
Muni/Stock Fund pursues a value oriented approach for selecting municipal secu-
rities by seeking to identify underrated or undervalued Municipal Securities
(i.e., Municipal Obligations with respect to the Muni/Stock Fund and California
Municipal Obligations with respect to the California Muni/Stock Fund). Under-
rated Municipal Securities are those whose ratings do not, in NIAC's opinion,
reflect their true value. Such Municipal Securities may be underrated because
of the time that has elapsed since their rating was assigned or reviewed, or
because of positive factors that may not have been fully taken into account by
rating agencies, or for
B-5
<PAGE>
other similar reasons. Municipal Securities that are undervalued or that rep-
resent undervalued municipal market sectors are Municipal Securities that, in
NIAC's opinion, are worth more than the value assigned to them in the market-
place. Municipal Securities of particular types or purposes (e.g., hospital
bonds, industrial revenue bonds or bonds issued by a particular municipal is-
suer) may be undervalued because there is a temporary excess of supply in that
market sector, or because of a general decline in the market price of Munici-
pal Securities of the market sector for reasons that do not apply to the par-
ticular Municipal Securities that are considered undervalued. The Muni/Stock
Fund's investment in underrated or undervalued Municipal Obligations and the
California Muni/Stock Fund's investment in underrated or undervalued Califor-
nia Municipal Obligations, will be based on NIAC's belief that their prices
should ultimately reflect their true value.
The Funds have not established any limit on the percentage of their respective
portfolio of investments in Municipal Securities that may be invested in Mu-
nicipal Obligations or California Municipal Obligations, as the case may be,
subject to the alternative minimum tax provisions of Federal tax law. Conse-
quently, a substantial portion of the current income produced by the Funds may
be includable in alternative minimum taxable income. Special considerations
apply to corporate investors. See "Tax Matters."
Also included within the general category of Municipal Obligations described
in the Muni/Stock Fund Prospectus and California Municipal Obligations in the
California Muni/Stock Fund Prospectus are participations in lease obligations
or installment purchase contract obligations (hereinafter collectively called
"Municipal Lease Obligations") of municipal authorities or entities. Although
a Municipal Lease Obligation does not constitute a general obligation of the
municipality for which the municipality's taxing power is pledged, a Municipal
Lease Obligation is ordinarily backed by the municipality's covenant to budget
for, appropriate and make the payments due under the Municipal Lease Obliga-
tion. However, certain Municipal Lease Obligations contain "non-appropriation"
clauses which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. In the case of a "non-appropriation" lease,
the Fund's ability to recover under the lease in the event of non-appropria-
tion or default will be limited solely to the repossession of the leased prop-
erty, without recourse to the general credit of the lessee, and disposition or
releasing of the property might prove difficult. The Muni/Stock Fund will seek
to minimize these risks by not investing more than 20% of the assets allocated
to investments in Municipal Obligations in Municipal Lease Obligations that
contain "non-appropriation" clauses, and by only investing in those "non-ap-
propriation" Municipal Lease Obligations where (1) the nature of the leased
equipment or property is such that its ownership or use is essential to a gov-
ernmental function of the municipality, (2) appropriate covenants will be ob-
tained from the municipal obligor prohibiting the substitution or purchase of
similar equipment if lease payments are not appropriated, (3) the lease obli-
gor has maintained good market acceptability in the past, and (4) the invest-
ment is of a size that will be attractive to institutional investors. The Cal-
ifornia Muni/Stock Fund will seek to minimize the special risks associated
with "non-appropriation" lease obligations by investing only in those non-ap-
propriation leases where NIAC has determined that the issuer has a strong in-
centive to continue making appropriations and timely payment until the
security's maturity.
During temporary defensive periods (e.g., times when, in NIAC's opinion, the
ability of the Fund to meet its long-term investment objectives and preserve
the asset value of the Fund may be adversely
B-6
<PAGE>
affected by significant adverse market, economic, political, or other circum-
stances), and in order to keep cash on hand fully invested, the Fund may invest
any percentage of its assets in temporary investments. Temporary investments
may be either tax-exempt or taxable. To the extent the Muni/Stock Fund and the
California Muni/Stock Fund invest in taxable temporary investments, the Funds
will not at such times be in a position to achieve that portion of the Fund's
investment objective of seeking income exempt from federal income tax (or fed-
eral and California state income taxes in the case of the California Muni/Stock
Fund). For further information, see "Short-Term Tax-Exempt Fixed Income Securi-
ties" and "Short-Term Taxable Fixed Income Securities."
Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Bankruptcy Reform Act of 1978. In addition, the obliga-
tions of such issuers may become subject to the laws enacted in the future by
Congress, state legislatures or referenda extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or upon municipalities to levy taxes. There is also the
possibility that, as a result of legislation or other conditions, the power or
ability of any issuer to pay, when due, the principal of and interest on its
Municipal Obligations or California Municipal Obligations may be materially af-
fected.
SPECIAL CONSIDERATIONS RELATING TO CALIFORNIA MUNICIPAL OBLIGATIONS
As described in the California Muni/Stock Fund Prospectus, except to the extent
the Fund invests in temporary investments, the Fund will invest substantially
all of its assets allocated to the fixed income portion of its portfolio in
California Municipal Obligations. The Fund is therefore susceptible to politi-
cal, economic or regulatory factors affecting issuers of California Municipal
Obligations.
These include the possible adverse effects of certain California constitutional
amendments, legislative measures, voter initiatives and other matters that are
described below. The following information provides only a brief summary of the
complex factors affecting the financial situation in California (the "State")
and is derived from sources that are generally available to investors and are
believed to be accurate. No independent verification has been made of the accu-
racy or completeness of any of the following information. It is based in part
on information obtained from various State and local agencies in California or
contained in Official Statements for various California Municipal Obligations.
During the early 1990's, California experienced significant financial difficul-
ties, which reduced its credit standing, but the state's finances have improved
since 1994. The ratings of certain related debt of other issuers for which Cal-
ifornia has an outstanding lease purchase, guarantee or other contractual obli-
gation (such as for state-insured hospital beds) are generally linked directly
to California's rating. Should the financial condition of California deterio-
rate again, its credit ratings could be further reduced, and the market value
and marketability of all outstanding notes and bonds issued by California, its
public authorities or local governments could be adversely affected.
Economic Overview
California's economy is the largest among the 50 states and one of the largest
in the world. The State's population of more than 32 million represents over
12% of the total United States population and grew
B-7
<PAGE>
by 26% in the 1980s, more than double the national rate. Population growth
slowed to less than 1% annually in 1994 and 1995, but rose to 1.9% in 1996.
During the early 1990's, net population growth in the State was due to births
and foreign immigration.
Total personal income in the State, at an estimated $760 billion in 1995, ac-
counts for almost 13% of all personal income in the nation. Total employment is
over 14 million, the majority of which is in the service, trade and manufactur-
ing sectors.
From mid-1990 to late 1993, the State suffered a recession with the worst eco-
nomic, fiscal and budget conditions since the 1930s. Construction, manufactur-
ing (especially aerospace), and financial services, among others, were all se-
verely affected, particularly in Southern California. Job losses were the worst
of any post-war recession. Employment levels stabilized by late 1993 and steady
job growth has occurred since early 1994. Pre-recession job levels are expected
to be reached in 1996. Unemployment, while remaining higher than the national
average, has come down substantially from its 10% peak to 6.5% in spring, 1997.
Economic indicators show a steady and strong recovery underway in California
since the start of 1994 particularly in export-related industries, services,
electronics, entertainment and tourism, although the residential housing sector
has been weaker than in prior recoveries. Any delay or reversal of the recovery
may create new shortfalls in State revenues.
Constitutional Limitations on Taxes, Other Charges and Appropriations
Limitation on Property Taxes. Certain California Municipal Obligations may be
obligations of issuers which rely in whole or in part, directly or indirectly,
on ad valorem property taxes as a source of revenue. The taxing powers of Cali-
fornia local governments and districts are limited by Article XIIIA of the Cal-
ifornia Constitution, enacted by the voters in 1978 and commonly known as
"Proposition 13." Briefly, Article XIIIA limits to 1% of full cash value the
rate of ad valorem property taxes on real property and generally restricts the
reassessment of property to 2% per year, except upon new construction or change
of ownership (subject to a number of exemptions). Taxing entities may, however,
raise ad valorem taxes above the 1% limit to pay debt service on voter-approved
bonded indebtedness.
Under Article XIIIA, the basic 1% ad valorem tax levy is applied against the
assessed value of property as of the owner's date of acquisition (or as of
March 1, 1975, if acquired earlier), subject to certain adjustments. This sys-
tem has resulted in widely varying amounts of tax on similarly situated proper-
ties. Several lawsuits have been filed challenging the acquisition-based as-
sessment system of Proposition 13, but it was upheld by the U.S. Supreme Court
in 1992.
Article XIIIA prohibits local governments from raising revenues through ad va-
lorem property taxes above the 1% limit; it also requires voters of any govern-
ment unit to give two-thirds approval to levy any "special tax." Court deci-
sions, however, allowed a non-voter approved levy of "general taxes" which were
not dedicated to a specific use.
Limitations on Other Taxes, Fees and Charges. On November 5, 1996, the voters
of the State approved Proposition 218, called the "Right to Vote on Taxes Act."
Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which
contain a number of provisions affecting the ability of local agencies to levy
and collect both existing and future taxes, assessments, fees and charges.
B-8
<PAGE>
Article XIIIC requires that all new or increased local taxes be submitted to
the electorate before they become effective. Taxes for general governmental
purposes require a majority vote and taxes for specific purposes require a
two-thirds vote. Further, any general purpose tax which was imposed, extended
or increased without voter approval after December 31, 1994 must be approved
by a majority vote within two years.
Article XIIID contains several new provisions making it generally more diffi-
cult for local agencies to levy and maintain "assessments" for municipal serv-
ices and programs. Article XIIID also contains several new provisions affect-
ing "fees" and "charges", defined for purposes of Article XIIID to mean "any
levy other than an ad valorem tax, a special tax, or an assessment, imposed by
a [local government] upon a parcel or upon a person as an incident of property
ownership, including a user fee or charge for a property related service." All
new and existing property related fees and charges must conform to require-
ments prohibiting, among other things, fees and charges which generate reve-
nues exceeding the funds required to provide the property related service or
are used for unrelated purposes. There are new notice, hearing and protest
procedures for levying or increasing property related fees and charges, and,
except for fees or charges for sewer, water and refuse collection services (or
fees for electrical and gas service, which are not treated as "property relat-
ed" for purposes of Article XIIID), no property related fee or charge may be
imposed or increased without majority approval by the property owners subject
to the fee or charge or, at the option of the local agency, two-thirds voter
approval by the electorate residing in the affected area.
In addition to the provisions described above, Article XIIIC removes limita-
tions on the initiative power in matters of local taxes, assessments, fees and
charges. Consequently, local voters could, by future initiative, repeal, re-
duce or prohibit the future imposition or increase of any local tax, assess-
ment, fee or charge. It is unclear how this right of local initiative may be
used in cases where taxes or charges have been or will be specifically pledged
to secure debt issues.
The interpretation and application of Proposition 218 will ultimately be de-
termined by the courts with respect to a number of matters, and it is not pos-
sible at this time to predict with certainty the outcome of such determina-
tions. Proposition 218 is generally viewed as restricting the fiscal flexibil-
ity of local governments, and for this reason, some ratings of California cit-
ies and counties have been, and others may be, reduced.
Appropriations Limits. The State and its local governments are subject to an
annual "appropriations limit" imposed by Article XIIIB of the California Con-
stitution, enacted by the voters in 1979 and significantly amended by Proposi-
tions 98 and 111 in 1988 and 1990, respectively. Article XIIIB prohibits the
State or any covered local government from spending "appropriations subject to
limitation" in excess of the appropriations limit imposed. "Appropriations
subject to limitation" are authorizations to spend "proceeds of taxes," which
consist of tax revenues and certain other funds, including proceeds from regu-
latory licenses, user charges or other fees, to the extent that such proceeds
exceed the cost of providing the product or service, but "proceeds of taxes"
exclude most State subventions to local governments. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such as reasonable
user charges or fees, and certain other non-tax funds, including bond pro-
ceeds.
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Among the expenditures not included in the Article XIIIB appropriations limit
are (1) the debt service cost of bonds issued or authorized prior to January 1,
1979, or subsequently authorized by the voters, (2) appropriations arising from
certain emergencies declared by the Governor, (3) appropriations for certain
capital outlay projects, (4) appropriations by the State of post-1989 increases
in gasoline taxes and vehicle weight fees, and (5) appropriations made in cer-
tain cases of emergency.
The appropriations limit for each year is adjusted annually to reflect changes
in cost of living and population, and any transfers of service responsibilities
between government units. The definitions for such adjustments were liberalized
in 1990 to follow more closely growth in the State's economy.
"Excess" revenues are measured over a two-year cycle. Local governments must
return any excess to taxpayers by rate reductions. The State must refund 50% of
any excess, with the other 50% paid to schools and community colleges. With
more liberal annual adjustment factors since 1988, and depressed revenues since
1990 because of the recession, few governments are currently operating near
their spending limits, but this condition may change over time. Local govern-
ments may by voter approval exceed their spending limits for up to four years.
During Fiscal Year 1986-87, State receipts from proceeds of taxes exceeded its
appropriations limit by $1.1 billion, which was returned to taxpayers. Since
that year, appropriations subject to limitation have been under the State lim-
it. State appropriations were $7.0 billion under the limit for Fiscal Year
1996-97.
Because of the complex nature of Articles XIIIA, XIIIB, XIIIC, and XIIID of the
California Constitution, the ambiguities and possible inconsistencies in their
terms, and the impossibility of predicting future appropriations or changes in
population and cost of living, and the probability of continuing legal chal-
lenges, it is not currently possible to determine fully the impact of these Ar-
ticles on California Municipal Obligations or on the ability of the State or
local governments to pay debt service on such California Municipal Obligations.
It is not possible, at the present time, to predict the outcome of any pending
litigation with respect to the ultimate scope, impact or constitutionality of
these Articles, or the impact of any such determinations upon State agencies or
local governments, or upon their ability to pay debt service on their obliga-
tions. Further initiatives or legislative changes in laws or the California
Constitution may also affect the ability of the State or local issuers to repay
their obligations.
Obligations of the State of California
Under the California Constitution, debt service on outstanding general obliga-
tion bonds is the second charge to the General Fund after support of the public
school system and public institutions of higher education. As of August 1,
1997, the State had outstanding approximately $17.8 billion of long-term gen-
eral obligation bonds, plus $1.008 billion of general obligation commercial pa-
per which will be refunded by long-term bonds in the future, and $6.2 billion
of lease-purchase debt supported by the State General Fund. The State also had
about $9.3 billion of authorized and unissued general obligation bonds and
lease-purchase debt. In FY 1996-97, debt service on general obligation bonds
and lease-purchase debt was approximately 5.2% of General Fund revenues.
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Recent Financial Results
The principal sources of General Fund revenues in 1995-96 were the California
personal income tax (45% of total revenues), the sales tax (34%), bank and
corporation taxes (13%), and the gross premium tax on insurance (2%). The
State maintains a Special Fund for Economic Uncertainties (the "SFEU"), de-
rived from General Fund revenues, as a reserve to meet cash needs of the Gen-
eral Fund, but which is required to be replenished as soon as sufficient reve-
nues are available. Year-end balances in the SFEU are included for financial
reporting purposes in the General Fund balance. Because of the recession and
an accumulated budget deficit, no reserve was budgeted from 1992-93 to 1995-
96.
General. Throughout the 1980's, State spending increased rapidly as the State
population and economy also grew rapidly, including increased spending for
many assistance programs to local governments, which were constrained by Prop-
osition 13 and other laws. The largest State program is assistance to local
public school districts. In 1988, an initiative (Proposition 98) was enacted
which (subject to suspension by a two-thirds vote of the Legislature and the
Governor) guarantees local school districts and community college districts a
minimum share of State General Fund revenues (currently about 35%).
Starting in mid-1990, the State has faced adverse economic, fiscal and budget
conditions. The 1990-1994 economic recession seriously affected State tax rev-
enues. It also caused increased expenditures for health and welfare programs.
The State is also facing a structural imbalance in its budget with the largest
programs supported by the General Fund (education, health, welfare and correc-
tions) growing at rates significantly higher than the growth rates for the
principal revenue sources of the General Fund. These structural concerns will
be exacerbated in coming years by the expected need to substantially increase
capital and operating funds for corrections as a result of a "Three Strikes"
law enacted in 1994.
Recent Budgets. As a result of the recession and these factors, among others,
the State experienced substantial revenue shortfalls, and greater than antici-
pated social service costs, in the early 1990's. The State accumulated and
sustained a budget deficit in the budget reserve, the SFEU, approaching $2.8
billion at its peak at June 30, 1993. The Legislature and Governor agreed on a
number of different steps to respond to the adverse financial conditions and
produce Budget Acts in the years 1991-92 to 1995-96 (although not all actions
were taken in each year):
. significant cuts in health and welfare program expenditures;
. transfers of program responsibilities and some funding sources from the
State to local governments, coupled with some reduction in mandates on
local government;
. transfer of about $3.6 billion in annual local property tax revenues
from cities, counties, redevelopment agencies and some other districts
to local school districts, thereby reducing state funding for schools;
. reduction in growth of support for higher education programs, coupled
with increases in student fees;
. revenue increases (particularly in the 1992-93 Fiscal Year budget), most
of which were for a short duration;
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. increased reliance on aid from the federal government to offset the
costs of incarcerating, educating and providing health and welfare serv-
ices to undocumented aliens (although these efforts have produced much
less federal aid than the State Administration had requested); and
. various one-time adjustment and accounting changes (some of which have
been challenged in court).
The combination of stringent budget actions cutting State expenditures, and the
turnaround of the economy by late 1993, finally led to the restoration of posi-
tive financial results with revenues equaling or exceeding expenditures start-
ing in FY 1992-93. As a result, the accumulated budget deficit of $2.8 billion
was eliminated by June 30, 1997 when the State showed a positive budget reserve
of about $281 million.
A consequence of the accumulated budget deficits in the early 1990's together
with other factors such as disbursement of funds to local school districts
"borrowed" from future fiscal years and hence not shown in the annual budget,
was to significantly reduce the State's cash resources available to pay its on-
going obligations. The State's cash condition became so serious that from late
spring 1992 until 1995, the State had to rely on issuance of short term notes
which matured in a subsequent fiscal year to finance its ongoing deficit, and
pay current obligations. For a two-month period in the summer of 1992, pending
adoption of the annual Budget Act, the State was forced to issue registered
warrants (IOUs) to some of its suppliers, employees, and other creditors. With
the repayment of the last of these deficit notes in April, 1996, the State does
not plan to rely further on external borrowing across fiscal years, but will
continue its normal cash flow borrowings during a fiscal year.
The 1996-97 Budget Act was signed by the Governor on July 15, 1996. Revenues
for the Fiscal Year were initially estimated to total $47.643 billion, a 3.3
percent increase over the final estimated 1995-96 revenues. The Budget Act con-
tained General Fund appropriations totaling $47.251 billion, a 4.0 percent in-
crease over the final estimated 1995-96 expenditures. The principal features of
the 1996-97 Budget Act included substantially increased funding for schools and
community college districts, much of which was budgeted to fund class-size re-
ductions in grades K-3. The funding increases have brought K-12 expenditures to
almost $4,800 per pupil, an almost 15% increase over the level prevailing dur-
ing the recession years. The budget also included cuts in health and welfare
costs which proved lower than anticipated because of less than expected aid
from the federal government related to illegal immigrants.
With signing of the Budget Act, the State implemented its regular cash flow
borrowing program with the issuance of $3.0 billion of Revenue Anticipation
Notes to mature on June 30, 1997. The Budget Act appropriated a modest budget
reserve in the SFEU of $305 million, as of June 30, 1997. The General Fund fund
balance on that date, however, reflects $1.45 billion of "loans" which the Gen-
eral Fund made to local schools in the recession years, representing cash out-
lays above the mandatory minimum funding level. Settlement of litigation over
these transactions in July 1996 calls for repayment of these loans over the pe-
riod ending in 2001-02, about equally split between outlays from the General
Fund and from schools' entitlements. The 1996-97 Budget Act contained a $150
million appropriation from the General Fund toward this settlement.
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The Department of Finance has reported that, based on stronger than expected
revenues reflecting the continued strength of the State's economic recovery,
General Fund revenues and transfers for the full 1996-97 fiscal year were some
$2 billion above the initial projections, at about $49.8 billion. This was off-
set by required increased payments to schools, and lower than expected savings
resulting from federal welfare reform actions and federal aid for illegal immi-
grants. Total expenditures in the fiscal year were about $49.6 billion.
Fiscal Year 1997-98 Budget. With continued strong economic recovery and surging
tax receipts, the State entered the 1997-98 Fiscal Year in the strongest finan-
cial position in the decade. However, in May 1997, the California Supreme Court
ruled that the State had acted illegally in 1993 and 1994 by using a deferral
of payments to the Public Employees Retirement Fund to help balance earlier
budgets. In response to this court decision, the Governor ordered an immediate
repayment to the Retirement Fund of about $1.36 billion, which was made in
early August, 1997, and substantially "used up" the expected additional reve-
nues of the fiscal year. On August 11, 1997, the legislature passed the 1997-98
Budget Act, totaling approximately $53 billion in General Fund expenditures.
Although the State's strong economy is producing record revenues to the State
government, the State's budget continues to be under stress from mandated
spending on education, a rising prison population, and social needs of a grow-
ing population with many immigrants. These factors which limit State spending
growth assurances that, if economic conditions weaken, or other factors inter-
cede, the State will not experience budget gaps in the future.
Bond Rating. The ratings on California's long-term general obligation bonds
were reduced in the early 1990's from "AAA" levels which had existed prior to
the recession. In 1996, Fitch and Standard & Poor's raised their ratings of
California's general obligation bonds, which as of April 1997 were assigned
ratings of "A+" from Standard & Poor's, "A1" from Moody's and "A+" from Fitch.
There can be no assurance that such ratings will be maintained in the future.
It should be noted that the creditworthiness of obligations issued by local
California issuers may be unrelated to the creditworthiness of obligations is-
sued by the State of California, and that there is no obligation on the part of
the State to make payment on such local obligations in the event of default.
Legal Proceedings.
The State is involved in certain legal proceedings (described in the State's
recent financial statements) that, if decided against the State, may require
the State to make significant future expenditures or may substantially impair
revenues. Trial courts have recently entered tentative decisions or injunctions
which would overturn several parts of the state's recent budget compromises.
The matters covered by these lawsuits include reductions in welfare payments
and the use of certain cigarette tax funds for health costs. All of these cases
are subject to further proceedings and appeals, and if California eventually
loses, the final remedies may not have to be implemented in one year.
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Obligations of Other Issuers
Other Issuers of California Municipal Obligations. There are a number of state
agencies, instrumentalities and political subdivisions of the State that issue
Municipal Obligations, some of which may be conduit revenue obligations payable
from payments from private borrowers. These entities are subject to various
economic risks and uncertainties, and the credit quality of the securities is-
sued by them may vary considerably from the credit quality of obligations
backed by the full faith and credit of the State.
State Assistance. Property tax revenues received by local governments declined
more than 50% following passage of Proposition 13. Subsequently, the California
Legislature enacted measures to provide for the redistribution of the State's
General Fund surplus to local agencies, the reallocation of certain State reve-
nues to local agencies and the assumption of certain governmental functions by
the State to assist municipal issuers to raise revenues. Total local assistance
from the State's General Fund was budgeted at approximately 75% of General Fund
expenditures in recent years, including the effect of implementing reductions
in certain aid programs. To reduce State General Fund support for school dis-
tricts, the 1992-93 and 1993-94 Budget Acts caused local governments to trans-
fer $3.9 billion of property tax revenues to school districts, representing
loss of the post-Proposition 13 "bailout" aid. Local governments have in return
received greater revenues and greater flexibility to operate health and welfare
programs. While the Governor initially proposed to grant new aid to local gov-
ernments from the State's improved fiscal condition in 1997-98, the decision to
repay the State pension fund eliminated these moneys.
To the extent the State should be constrained by its Article XIIIB appropria-
tions limit, or its obligation to conform to Proposition 98, or other fiscal
considerations, the absolute level, or the rate of growth, of State assistance
to local governments may continue to be reduced. Any such reductions in State
aid could compound the serious fiscal constraints already experienced by many
local governments, particularly counties. At least one rural county (Butte)
publicly announced that it might enter bankruptcy proceedings in August 1990,
although such plans were put off after the Governor approved legislation to
provide additional funds for the county. Other counties have also indicated
that their budgetary condition is extremely grave. Los Angeles County, the
largest in the State, was forced to make significant cuts in services and per-
sonnel, particularly in the health care system, in order to balance its budget
in FY 1995-96 and FY 1996-97. Los Angeles County's debt was downgraded by
Moody's and S&P in the summer of 1995. Orange County, which emerged from Fed-
eral Bankruptcy Court protection in June 1996, has significantly reduced county
services and personnel, and faces strict financial conditions following large
investment fund losses in 1994 which resulted in bankruptcy.
Counties and cities may face further budgetary pressures as a result of changes
in welfare and public assistance programs, which were enacted in August, 1997
in order to comply with the federal welfare reform law.
Assessment Bonds. California Municipal Obligations which are assessment bonds
may be adversely affected by a general decline in real estate values or a slow-
down in real estate sales activity. In many cases, such bonds are secured by
land which is undeveloped at the time of issuance but anticipated to be devel-
oped within a few years after issuance. In the event of such reduction or slow-
down, such development may not occur or may be delayed, thereby increasing the
risk of a default on the bonds. Because the special assessments or taxes secur-
ing these bonds are not the personal liability of the owners of the property
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assessed, the lien on the property is the only security for the bonds. More-
over, in most cases the issuer of these bonds is not required to make payments
on the bonds in the event of delinquency in the payment of assessments or tax-
es, except from amounts, if any, in a reserve fund established for the bonds.
California Long-Term Lease Obligations. Based on a series of court decisions,
certain California long-term lease obligations, though typically payable from
the general fund of the State or a municipality, are not considered "indebted-
ness" requiring voter approval. Such leases, however, are subject to "abate-
ment" in the event the facility being leased is unavailable for beneficial use
and occupancy by the municipality during the term of the lease. Abatement is
not a default, and there may be no remedies available to the holders of the
certificates evidencing the lease obligation in the event abatement occurs. The
most common cases of abatement are failure to complete construction of the fa-
cility before the end of the period during which lease payments have been capi-
talized and uninsured casualty losses to the facility (e.g., due to earth-
quake). In the event abatement occurs with respect to a lease obligation, lease
payments may be interrupted (if all available insurance proceeds and reserves
are exhausted) and the certificates may not be paid when due. Litigation is
brought from time to time which challenges the constitutionality of such lease
arrangements.
Other Considerations
The repayment of industrial development securities secured by real property may
be affected by California laws limiting foreclosure rights of creditors. Secu-
rities backed by healthcare and hospital revenues may be affected by changes in
State regulations governing cost reimbursements to health care providers under
Medi-Cal (the State's Medicaid program), including risks related to the policy
of awarding exclusive contracts to certain hospitals.
Limitations on ad valorem property taxes may particularly affect "tax alloca-
tion" bonds issued by California redevelopment agencies. Such bonds are secured
solely by the increase in assessed valuation of a redevelopment project area
after the start of redevelopment activity. In the event that assessed values in
the redevelopment project decline (e.g., because of a major natural disaster
such as an earthquake), the tax increment revenue may be insufficient to make
principal and interest payments on these bonds. Both Moody's and S&P suspended
ratings on California tax allocation bonds after the enactment of Articles
XIIIA and XIIIB, and only resumed such ratings on a selective basis.
Proposition 87, approved by California voters in 1988, requires that all reve-
nues produced by a tax rate increase go directly to the taxing entity which in-
creased such tax rate to repay that entity's general obligation indebtedness.
As a result, redevelopment agencies (which, typically, are the issuers of tax
allocation securities) no longer receive an increase in tax increment when
taxes on property in the project area are increased to repay voter-approved
bonded indebtedness.
The effect of these various constitutional and statutory changes upon the abil-
ity of California municipal securities issuers to pay interest and principal on
their obligations remains unclear. Furthermore, other measures affecting the
taxing or spending authority of California or its political subdivisions may be
approved or enacted in the future. Legislation has been or may be introduced
which would modify existing taxes or other revenue-raising measures or which
either would further limit or, alternatively, would increase the abilities of
state and local governments to impose new taxes or increase existing
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<PAGE>
taxes. It is not possible, at present, to predict the extent to which any such
legislation will be enacted. Nor is it possible, at present, to determine the
impact of any such legislation on California Municipal Obligations in which the
Fund may invest, future allocations of state revenues to local governments or
the abilities of state or local governments to pay the interest on, or repay
the principal of, such California Municipal Obligations.
Substantially all of California is within an active geologic region subject to
major seismic activity. Northern California in 1989 and Southern California in
1994 experienced major earthquakes causing billions of dollars in damages. The
federal government provided more than $13 billion in aid for both earthquakes,
and neither event is expected to have any long-term negative economic impact.
Any California Municipal Obligation in the Fund could be affected by an inter-
ruption of revenues because of damaged facilities, or, consequently, income tax
deductions for casualty losses or property tax assessment reductions. Compensa-
tory financial assistance could be constrained by the inability of (i) an is-
suer to have obtained earthquake insurance coverage; (ii) an insurer to perform
on its contracts of insurance in the event of widespread losses; or (iii) the
federal or State government to appropriate sufficient funds within their re-
spective budget limitations.
SHORT-TERM INVESTMENTS
Short-Term Taxable Fixed Income Securities
The Nuveen Growth and Income Stock Fund may invest up to 35% of its total as-
sets and, for temporary defensive purposes up to 100% of its total assets, in
cash equivalents and short-term taxable fixed income securities from issuers
having a long-term rating of at least A or higher by S&P, Moody's or Fitch, or
A- or higher by Duff & Phelps and having a maturity of one year or less. The
Nuveen Balanced Stock and Bond Fund may invest up to 20% of its total assets
and, for temporary defensive purposes up to 100% of its total assets, in cash
equivalents and short-term taxable fixed income securities from issuers having
a long-term rating of at least A or higher by S&P, Moody's or Fitch, or A- or
higher by Duff & Phelps and having a maturity of one year or less. For tempo-
rary defensive purposes the Muni/Stock Fund and the California Muni/Stock Fund
may invest up to 100% of their respective total assets in cash equivalents and
short-term taxable fixed income securities, although the Funds intend to invest
in taxable temporary investments only in the event that suitable tax-exempt
temporary investments are not available at reasonable prices and yields. Short-
term taxable fixed income securities are defined to include, without limita-
tion, the following:
(1) Each fund may invest in U.S. government securities, including bills, notes
and bonds differing as to maturity and rates of interest, which are either is-
sued or guaranteed by the U.S. Treasury or by U.S. government agencies or in-
strumentalities. U.S. government agency securities include securities issued by
(a) the Federal Housing Administration, Farmers Home Administration, Export-Im-
port Bank of the United States, Small Business Administration, and the Govern-
ment National Mortgage Association, whose securities are supported by the full
faith and credit of the United States; (b) the Federal Home Loan Banks, Federal
Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities
are supported by the right of the agency to borrow from the U.S. Treasury; (c)
the Federal National Mortgage Association, whose securities are supported by
the discretionary authority of the U.S. government to purchase certain obliga-
tions of the agency or instrumentality; and (d) the Student Loan Market -
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<PAGE>
ing Association, whose securities are supported only by its credit. While the
U.S. government provides financial support to such U.S. government-sponsored
agencies or instrumentalities, no assurance can be given that it always will do
so since it is not so obligated by law. The U.S. government, its agencies, and
instrumentalities do not guarantee the market value of their securities, and
consequently, the value of such securities may fluctuate. The Muni/Stock Fund
and the California Muni/Stock Fund may only invest in government securities
with maturities of less than one year or that have a variable or floating rate
of interest.
(2) Each Fund may invest in certificates of deposit issued against funds depos-
ited in a bank or savings and loan association. Such certificates are for a
definite period of time, earn a specified rate of return, and are normally ne-
gotiable. If such certificates of deposit are non-negotiable, they will be con-
sidered illiquid securities and be subject to the Fund's 15% restriction on in-
vestments in illiquid securities. Pursuant to the certificate of deposit, the
issuer agrees to pay the amount deposited plus interest to the bearer of the
certificate on the dated specified thereon. Under current FDIC regulations, the
maximum insurance payable as to any one certificate of deposit is $100,000;
therefore, certificates of deposit purchased by the Fund may not be fully in-
sured. The Muni/Stock Fund and the California Muni/Stock Fund may only invest
in certificates of deposit issued by U.S. banks with at least $1 billion in as-
sets.
(3) The Growth/Income Fund and the Stock/Bond Fund may invest in bankers' ac-
ceptances which are short-term credit instruments used to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect, uncondi-
tionally guarantees to pay the face value of the instrument on its maturity
date. The acceptance may then be held by the accepting bank as an asset or it
may be sold in the secondary market at the going rate of interest for a spe-
cific maturity.
(4) Each Fund may invest in repurchase agreements which involve purchases of
debt securities. In such an action, at the time the Fund purchases the securi-
ty, it simultaneously agrees to resell and redeliver the security to the sell-
er, who also simultaneously agrees to buy back the security at a fixed price
and time. This assures a predetermined yield for the Fund during its holding
period since the resale price is always greater than the purchase price and re-
flects an agreed-upon market rate. Such actions afford an opportunity for the
Fund to invest temporarily available cash. The Fund may enter into repurchase
agreements only with respect to obligations of the U.S. government, its agen-
cies or instrumentalities; certificates of deposit; or bankers acceptances in
which the Fund may invest. Repurchase agreements may be considered loans to the
seller, collateralized by the underlying securities. The risk to the Fund is
limited to the ability of the seller to pay the agreed-upon sum on the repur-
chase date; in the event of default, the repurchase agreement provides that the
affected Fund is entitled to sell the underlying collateral. If the value of
the collateral declines after the agreement is entered into, however, and if
the seller defaults under a repurchase agreement when the value of the under-
lying collateral is less than the repurchase price, the Fund could incur a loss
of both principal and interest. ICAP monitors the value of the collateral at
the time the action is entered into and at all times during the term of the re-
purchase agreement. ICAP does so in an effort to determine that the value of
the collateral always equals or exceeds the agreed-upon repurchase price to be
paid to the Fund. If the seller were to be subject to a federal bankruptcy pro-
ceeding, the ability of a Fund to liquidate the collateral could be delayed or
impaired because of certain provisions of the bankruptcy laws.
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(5) The Growth/Income Fund may invest in bank time deposits, which are monies
kept on deposit with banks or savings and loan associations for a stated period
of time at a fixed rate of interest. There may be penalties for the early with-
drawal of such time deposits, in which case the yields of these investments
will be reduced.
(6) Each Fund may invest in commercial paper, which are short-term unsecured
promissory notes, including variable rate master demand notes issued by corpo-
rations to finance their current operations. Master demand notes are direct
lending arrangements between the Fund and a corporation. There is no secondary
market for the notes. However, they are redeemable by the Fund at any time.
ICAP will consider the financial condition of the corporation (e.g., earning
power, cash flow, and other liquidity ratios) and will continuously monitor the
corporation's ability to meet all of its financial obligations, because the
Fund's liquidity might be impaired if the corporation were unable to pay prin-
cipal and interest on demand. The Growth/Income Fund and the Stock/Bond Fund
may only invest in commercial paper rated A-1 or better by S&P, Prime-1 or bet-
ter by Moody's, Duff 2 or higher by Duff & Phelps or Fitch 2 or higher by
Fitch. The Muni/Stock Fund and the California Muni/Stock Fund may only invest
in taxable commercial paper, corporate notes, corporate bonds or corporate de-
bentures that are rated within the highest grade by Moody's or S&P and which
mature within one year of the date of purchase or carry a variable or floating
rate of interest.
Short-Term Tax-Exempt Fixed Income Securities
During certain temporary periods, in order to keep cash on hand fully invested
or a defensive measure in response to prevailing market conditions, the
Muni/Stock Fund and California Muni/Stock Fund may invest up to 100% of their
respective total assets as "temporary investments" in cash equivalent and
short-term fixed income securities that are either taxable or tax-exempt. The
short-term taxable fixed income securities are described above. Short-term tax-
exempt fixed income securities are securities that are exempt from regular fed-
eral income tax and mature within three years or less from the date of issu-
ance. Short-term tax-exempt fixed income securities are defined to include,
without limitation, the following:
Bond Anticipation Notes (BANs) are usually general obligations of state and lo-
cal governmental issuers which are sold to obtain interim financing for pro-
jects that will eventually be funded through the sale of long-term debt obliga-
tions or bonds. The ability of an issuer to meet its obligations on its BANs is
primarily dependent on the issuer's access to the long-term municipal bond mar-
ket and the likelihood that the proceeds of such bond sales will be used to pay
the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi-
nance the current operations of such governments. Repayment is generally to be
derived from specific future tax revenues. Tax anticipation notes are usually
general obligations of the issuer. A weakness in an issuer's capacity to raise
taxes due to, among other things, a decline in its tax base or a rise in delin-
quencies, could adversely affect the issuer's ability to meet its obligations
on outstanding TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source will
be used to repay the notes. In general, they also constitute general obliga-
tions of the issuer. A decline in the receipt of projected revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet
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its obligations on outstanding RANs. In addition, the possibility that the
revenues would, when received, be used to meet other obligations could affect
the ability of the issuer to pay the principal and interest on RANs.
Construction Loan Notes are issued to provide construction financing for spe-
cific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.
Bank Notes are notes issued by local government bodies and agencies as those
described above to commercial banks as evidence of borrowings. The purposes
for which the notes are issued are varied but they are frequently issued to
meet short-term working capital or capital-project needs. These notes may have
risks similar to the risks associated with TANs and RANs.
Tax-Exempt Commercial Paper (Municipal Paper) represents very short-term
unsecured, negotiable promissory notes, issued by states, municipalities and
their agencies. Payment of principal and interest on issues of municipal paper
may be made from various sources, to the extent the funds are available there-
from. Maturities of municipal paper generally will be shorter than the maturi-
ties of TANs, BANs or RANs. There is a limited secondary market for issues of
municipal paper.
Certain Municipal Obligations and California Municipal Obligations may carry
variable or floating rates of interest whereby the rate of interest is not
fixed but varies with changes in specified market rates or indices, such as a
bank prime rate or a tax-exempt money market index.
While the various types of notes described above as a group represent the ma-
jor portion of the tax-exempt note market, other types of notes are occasion-
ally available in the marketplace and the Funds may invest in such other types
of notes to the extent permitted under their respective investment objective,
policies and limitations. Such notes may be issued for different purposes and
may be secured differently from those mentioned above.
EQUITY SECURITIES
Under normal market conditions, the Funds will invest the assets allocated to
equity investments primarily in equity securities of domestic companies with
market capitalizations of at least $500 million ("Equity Securities"). Equity
Securities include, but are not limited to, common stocks; preferred stocks;
warrants to purchase common stocks or preferred stocks; securities convertible
into common or preferred stocks, such as convertible bonds and debentures, and
other securities with equity characteristics. The Growth/Income Fund, under
normal market conditions, will invest at least 65% of its total assets in Eq-
uity Securities which do not include warrants or rights to purchase common
stock.
Convertible bonds and debentures must be rated Baa or higher by Moody's or BBB
or higher by S&P, Duff & Phelps or Fitch. Bonds rated Baa or BBB, although
considered investment grade, have speculative characteristics and may be sub-
ject to greater fluctuations in value than higher-rated bonds.
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In addition, the Funds may invest in dollar-denominated equity securities of
foreign issuers, including American Depository Receipts ("ADRs") as described
in "Foreign Securities" below.
HEDGING STRATEGIES
General Description of Hedging Strategies
Each Fund may engage in hedging activities. NIAC or ICAP may cause a Fund to
utilize a variety of financial instruments, including options, futures con-
tracts (sometimes referred to as "futures") and options on futures contracts to
attempt to hedge the Fund's holdings.
Hedging instruments on securities generally are used to hedge against price
movements in one or more particular securities positions that the Fund owns or
intends to acquire. Hedging instruments on stock indices, in contrast, gener-
ally are used to hedge against price movements in broad equity market sectors
in which the Fund has invested or expects to invest. The use of hedging instru-
ments is subject to applicable regulations of the Securities and Exchange Com-
mission (the "SEC"), the several options and futures exchanges upon which they
are traded, the Commodity Futures Trading Commission (the "CFTC") and various
state regulatory authorities. In addition, the Fund's ability to use hedging
instruments will be limited by tax considerations.
General Limitations on Futures and Options Transactions
The Trust has filed a notice of eligibility for exclusion from the definition
of the term "commodity pool operator" with the CFTC and the National Futures
Association, which regulate trading in the futures markets. Pursuant to Section
4.5 of the regulations under the Commodity Exchange Act (the "CEA"), the notice
of eligibility for a Fund includes the representation that the Fund will use
futures contracts and related options solely for bona fide hedging purposes
within the meaning of CFTC regulations.The Fund will not enter into futures and
options transactions if the sum of the initial margin deposits and premiums
paid for unexpired options exceeds 5% of the Fund's total assets. In addition,
the Fund will not enter into futures contracts and options transactions if more
than 30% of its net assets would be committed to such instruments.
The foregoing limitations are not fundamental policies of a Fund and may be
changed without shareholder approval as regulatory agencies permit. Various ex-
changes and regulatory authorities have undertaken reviews of options and
futures trading in light of market volatility. Among the possible actions that
have been presented are proposals to adopt new or more stringent daily price
fluctuation limits for futures and options transactions and proposals to in-
crease the margin requirements for various types of futures transactions.
Asset Coverage for Futures and Options Positions
Each Fund will comply with the regulatory requirements of the SEC and the CFTC
with respect to coverage of options and futures positions by registered invest-
ment companies and, if the guidelines so require, will set aside cash, U.S.
government securities, high grade liquid debt securities and/or other liquid
assets permitted by the SEC and CFTC in a segregated custodial account in the
amount pre-
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scribed. Securities held in a segregated account cannot be sold while the
futures or options position is outstanding, unless replaced with other permis-
sible assets, and will be marked-to-market daily.
Stock Index Options
Each Fund may (i) purchase stock index options for any purpose, (ii) sell stock
index options in order to close out existing positions, and/or (iii) write cov-
ered options on stock indexes for hedging purposes. Stock index options are put
options and call options on various stock indexes. In most respects, they are
identical to listed options on common stocks. The primary difference between
stock options and index options occurs when index options are exercised. In the
case of stock options, the underlying security, common stock, is delivered.
However, upon the exercise of an index option, settlement does not occur by de-
livery of the securities comprising the index. The option holder who exercises
the index option receives an amount of cash if the closing level of the stock
index upon which the option is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. This amount
of cash is equal to the difference between the closing price of the stock index
and the exercise price of the option expressed in dollars times a specified
multiple.
A stock index fluctuates with changes in the market values of the stock in-
cluded in the index. For example, some stock index options are based on a broad
market index, such as the Standard & Poor's 500 or the Value Line Composite In-
dex or a narrower market index, such as the Standard & Poor's 100. Indexes may
also be based on an industry or market segment, such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on stock indexes
are currently traded on the following exchanges: the Chicago Board of Options
Exchange, the New York Stock Exchange, the American Stock Exchange, the Pacific
Stock Exchange, and the Philadelphia Stock Exchange.
A Fund's use of stock index options is subject to certain risks. Successful use
by the Funds of options on stock indexes will be subject to the ability of ICAP
to correctly predict movements in the directions of the stock market. This re-
quires different skills and techniques than predicting changes in the prices of
individual securities. In addition, a Fund's ability to effectively hedge all
or a portion of the securities in its portfolio, in anticipation of or during a
market decline through transactions in put options on stock indexes, depends on
the degree to which price movements in the underlying index correlate with the
price movements of the securities held by a Fund. Inasmuch as a Fund's securi-
ties will not duplicate the components of an index, the correlation will not be
perfect. Consequently, each Fund will bear the risk that the prices of its se-
curities being hedged will not move in the same amount as the prices of its put
options on the stock indexes. It is also possible that there may be a negative
correlation between the index and a Fund's securities which would result in a
loss on both such securities and the options on stock indexes acquired by the
Fund.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the options markets close
before the markets for the underlying securities, significant price and rate
movements can take place in the underlying markets that cannot be reflected in
the options markets. The purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. The purchase of stock index
options involves the risk that the premium and transaction costs paid by a
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<PAGE>
Fund in purchasing an option will be lost as a result of unanticipated move-
ments in prices of the securities comprising the stock index on which the op-
tion is based.
Certain Considerations Regarding Options
There is no assurance that a liquid secondary market on an options exchange
will exist for any particular option, or at any particular time, and for some
options no secondary market on an exchange or elsewhere may exist. If a Fund is
unable to close out a call option on securities that it has written before the
option is exercised, the Fund may be required to purchase the optioned securi-
ties in order to satisfy its obligation under the option to deliver such secu-
rities. If a Fund is unable to effect a closing sale transaction with respect
to options on securities that it has purchased, it would have to exercise the
option in order to realize any profit and would incur transaction costs upon
the purchase and sale of the underlying securities.
The writing and purchasing of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. Imperfect correlation between the
options and securities markets may detract from the effectiveness of attempted
hedging. Options transactions may result in significantly higher transaction
costs and portfolio turnover for the Funds.
Federal Income Tax Treatment of Options
Certain option transactions have special federal income tax results for the
Funds. Expiration of a call option written by a Fund will result in short-term
capital gain. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the security covering the call option and, in determining
such gain or loss, the option premium will be included in the proceeds of the
sale.
If a Fund writes options, or purchases puts that are subject to the loss defer-
ral rules of Section 1092 of the Internal Revenue Code of 1986, as amended (the
"Code"), any losses on such options transactions, to the extent they do not ex-
ceed the unrecognized gains on the securities covering the options, may be sub-
ject to deferral until the securities covering the options have been sold.
In the case of transactions involving "nonequity options," as defined in Code
Section 1256, the Funds will treat any gain or loss arising from the lapse,
closing out or exercise of such positions as 60% long-term and 40% short-term
capital gain or loss as required by Section 1256 of the Code. In addition, such
positions must be marked-to-market as of the last business day of the year, and
gain or loss must be recognized for federal income tax purposes in accordance
with the 60%/40% rule discussed above even though the position has not been
terminated. A "nonequity option" includes an option with respect to any group
of stocks or a stock index if there is in effect a designation by the CFTC of a
contract market for a contract based on such group of stocks or indexes. For
example, options involving stock indexes such as the Standard & Poor's 500 in-
dex would be "nonequity options" within the meaning of Code Section 1256.
Futures Contracts
Each Fund may enter into futures contracts (hereinafter referred to as
"Futures" or "Futures Contracts"), including index Futures as a hedge against
movements in the equity markets, in order to establish more
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<PAGE>
definitely the effective return on securities held or intended to be acquired
by the Funds or for other purposes permissible under the CEA. Each Fund's hedg-
ing may include sales of Futures as an offset against the effect of expected
declines in stock prices and purchases of Futures as an offset against the ef-
fect of expected increases in stock prices. The Funds will not enter into
Futures Contracts which are prohibited under the CEA and will, to the extent
required by regulatory authorities, enter only into Futures Contracts that are
traded on national futures exchanges and are standardized as to maturity date
and underlying financial instrument. The principal interest rate Futures ex-
changes in the United States are the Board of Trade of the City of Chicago and
the Chicago Mercantile Exchange. Futures exchanges and trading are regulated
under the CEA by the CFTC.
An index Futures Contract is an agreement pursuant to which the parties agree
to take or make delivery of an amount of cash equal to the difference between
the value of the index at the close of the last trading day of the contract and
the price at which the index Futures Contract was originally written. Transac-
tion costs are incurred when a Futures Contract is bought or sold and margin
deposits must be maintained. A Futures Contract may be satisfied by delivery or
purchase, as the case may be, of the instrument or by payment of the change in
the cash value of the index. More commonly, Futures Contracts are closed out
prior to delivery by entering into an offsetting transaction in a matching
Futures Contract. Although the value of an index might be a function of the
value of certain specified securities, no physical delivery of those securities
is made. If the offsetting purchase price is less than the original sale price,
a gain will be realized; if it is more, a loss will be realized. Conversely, if
the offsetting sale price is more than the original purchase price, a gain will
be realized; if it is less, a loss will be realized. The transaction costs must
also be included in these calculations. There can be no assurance, however,
that the Funds will be able to enter into an offsetting transaction with re-
spect to a particular Futures Contract at a particular time. If the Funds are
not able to enter into an offsetting transaction, the Funds will continue to be
required to maintain the margin deposits on the Futures Contract.
Margin is the amount of funds that must be deposited by each Fund with its cus-
todian in a segregated account in the name of the futures commission merchant
in order to initiate Futures trading and to maintain the Fund's open positions
in Futures Contracts. A margin deposit is intended to ensure the Fund's perfor-
mance of the Futures Contract. The margin required for a particular Futures
Contract is set by the exchange on which the Futures Contract is traded and may
be significantly modified from time to time by the exchange during the term of
the Futures Contract. Futures Contracts are customarily purchased and sold on
margins that may range upward from less than 5% of the value of the Futures
Contract being traded.
If the price of an open Futures Contract changes (by increase in the case of a
sale or by decrease in the case of a purchase) so that the loss on the Futures
Contract reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if
the value of a position increases because of favorable price changes in the
Futures Contract so that the margin deposit exceeds the required margin, the
broker will pay the excess to the Fund. In computing daily net asset value,
each Fund will mark to market the current value of its open Futures Contracts.
The Funds expect to earn interest income on their margin deposits.
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<PAGE>
Because of the low margin deposits required, Futures trading involves an ex-
tremely high degree of leverage. As a result, a relatively small price movement
in a Futures Contract may result in immediate and substantial loss, as well as
gain, to the investor. For example, if at the time of purchase, 10% of the
value of the Futures Contract is deposited as margin, a subsequent 10% decrease
in the value of the Futures Contract would result in a total loss of the margin
deposit, before any deduction for the transaction costs, if the account were
then closed out. A 15% decrease would result in a loss equal to 150% of the
original margin deposit, if the Futures Contract were closed out. Thus, a pur-
chase or sale of a Futures Contract may result in losses in excess of the
amount initially invested in the Futures Contract. However, a Fund would pre-
sumably have sustained comparable losses if, instead of the Futures Contract,
it had invested in the underlying financial instrument and sold it after the
decline.
Most United States Futures exchanges limit the amount of fluctuation permitted
in Futures Contract prices during a single trading day. The day limit estab-
lishes the maximum amount that the price of a Futures Contract may vary either
up or down from the previous day's settlement price at the end of a trading
session. Once the daily limit has been reached in a particular type of Futures
Contract, no trades may be made on that day at a price beyond that limit. The
daily limit governs only price movement during a particular trading day and
therefore does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures Contract prices have occasionally
moved to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of Futures positions and sub-
jecting some Futures traders to substantial losses.
There can be no assurance that a liquid market will exist at a time when the
Funds seek to close out a Futures position. The Funds would continue to be re-
quired to meet margin requirements until the position is closed, possibly re-
sulting in a decline in the Funds' net asset value. In addition, many of the
contracts discussed above are relatively new instruments without a significant
trading history. As a result, there can be no assurance that an active second-
ary market will develop or continue to exist.
A public market exists in Futures Contracts covering a number of indexes, in-
cluding, but not limited to, the Standard & Poor's 500 Index, the Standard &
Poor's 100 Index, the NASDAQ 100 Index, the Value Line Composite Index and the
New York Stock Exchange Composite Index.
Options on Futures
Each Fund may also purchase or write put and call options on Futures Contracts
and enter into closing transactions with respect to such options to terminate
an existing position. A futures option gives the holder the right, in return of
the premium paid, to assume a long position (call) or short position (put) in a
Futures Contract at a specified exercise price prior to the expiration of the
option. Upon exercise of a call option, the holder acquires a long position in
the Futures Contract and the writer is assigned the opposite short position. In
the case of a put option, the opposite is true. Prior to exercise or expira-
tion, a futures option may be closed out by an offsetting purchase or sale of a
futures option of the same series.
The Funds may use options on Futures Contracts in connection with hedging
strategies. Generally, these strategies would be applied under the same market
and market sector conditions in which the Funds use put and call options on se-
curities or indexes. The purchase of put options on Futures Contracts is analo-
gous to the purchase of puts on securities or indexes so as to hedge the Funds'
securities holdings
B-24
<PAGE>
against the risk of declining market prices. The writing of a call option or
the purchasing of a put option on a Futures Contract constitutes a partial
hedge against declining prices of the securities which are deliverable upon ex-
ercise of the Futures Contract. If the futures price at expiration of a written
call option is below the exercise price, the Fund will retain the full amount
of the option premium which provides a partial hedge against any decline that
may have occurred in the Fund's holdings of securities. If the futures price
when the option is exercised is above the exercise price, however, the Fund
will incur a loss, which may be offset, in whole or in part, by the increase in
the value of the securities held by the Fund that were being hedged. Writing a
put option or purchasing a call option on a Futures Contract serves as a par-
tial hedge against an increase in the value of the securities the Fund intends
to acquire.
As with investments in Futures Contracts, each Fund is required to deposit and
maintain margin with respect to put and call options on Futures Contracts writ-
ten by it. Such margin deposits will vary depending on the nature of the under-
lying Futures Contract (and the related initial margin requirements), the cur-
rent market value of the option, and other futures positions held by the Fund.
The Funds will set aside in a segregated account at the Funds' custodian liquid
assets, such as cash, U.S. government securities or other high grade liquid
debt obligations equal in value to the amount due on the underlying obligation.
Such segregated assets will be marked to market daily, and additional assets
will be placed in the segregated account whenever the total value of the segre-
gated account falls below the amount due on the underlying obligation.
The risks associated with the use of options on Futures Contracts include the
risk that a Fund may close out its position as a writer of an option only if a
liquid secondary market exists for such options, which cannot be assured. The
Funds' successful use of options on Futures Contracts depends on ICAP's ability
to correctly predict the movement in prices of Futures Contracts and the under-
lying instruments, which may prove to be incorrect. In addition, there may be
imperfect correlation between the instruments being hedged and the Futures Con-
tract subject to the option. For additional information, see "Futures Con-
tracts."
Federal Income Tax Treatment of Futures Contracts
For federal income tax purposes, each Fund is required to recognize as income
for each taxable year its net unrealized gains and losses on Futures Contracts
as of the end of the year, as well as gains and losses actually realized during
the year. Except for transactions in Futures Contracts that are classified as
part of a "mixed straddle" under Code Section 1256, any gain or loss recognized
with respect to a Futures Contract is considered to be 60% long-term capital
gain or loss and 40% short-term capital gain or loss, without regard to the
holding period of the Futures Contract. In the case of a Futures transaction
not classified as a "mixed straddle," the recognition of losses may be required
to be deferred to a later taxable year.
Sales of Futures Contracts that are intended to hedge against a change in the
value of securities held by a Fund may affect the holding period of such secu-
rities and, consequently, the nature of the gain or loss on such securities
upon disposition.
The Funds will distribute to shareholders annually any net capital gains which
have been recognized for federal income tax purposes (including unrealized
gains at the end of the Fund's fiscal year) on Futures
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<PAGE>
transactions. Such distributions will be combined with distributions of capital
gains realized on the Funds' other investments and shareholders will be advised
of the nature of the payments.
OTHER INVESTMENT POLICIES AND TECHNIQUES
Illiquid Securities
The Fund may invest in illiquid securities (i.e., securities that are not read-
ily marketable). For purposes of this restriction, illiquid securities include,
but are not limited to, restricted securities (securities the disposition of
which is restricted under the federal securities laws), securities that may
only be resold pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"), but that are deemed to be illiquid; and repur-
chase agreements with maturities in excess of seven days. However, the Fund
will not acquire illiquid securities if, as a result, such securities would
comprise more than 15% of the value of the Fund's net assets. The Board of
Trustees or its delegate has the ultimate authority to determine, to the extent
permissible under the federal securities laws, which securities are liquid or
illiquid for purposes of this 15% limitation. The Board of Trustees has dele-
gated to Institutional Capital Corporation ("ICAP") the day-to-day determina-
tion of the illiquidity of any equity or taxable fixed-income security and to
Nuveen Institutional Advisory Corp. ("NIAC") as to any municipal security, al-
though it has retained oversight and ultimate responsibility for such determi-
nations. Although no definitive liquidity criteria are used, the Board of
Trustees has directed ICAP and NIAC to look to such factors as (i) the nature
of the market for a security (including the institutional private resale mar-
ket; the frequency of trades and quotes for the security; the number of dealers
willing to purchase or sell the security; and the amount of time normally
needed to dispose of the security, the method of soliciting offers and the me-
chanics of transfer), (ii) the terms of certain securities or other instruments
allowing for the disposition to a third party or the issuer thereof (e.g., cer-
tain repurchase obligations and demand instruments), and (iii) other permissi-
ble relevant factors.
Restricted securities may be sold only in privately negotiated transactions or
in a public offering with respect to which a registration statement is in ef-
fect under the Securities Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the
Fund may be permitted to sell a security under an effective registration state-
ment. If, during such a period, adverse market conditions were to develop, the
Fund might obtain a less favorable price than that which prevailed when it de-
cided to sell. Illiquid securities will be priced at fair value as determined
in good faith by the Board of Trustees or its delegate. If, through the appre-
ciation of illiquid securities or the depreciation of liquid securities, the
Fund should be in a position where more than 15% of the value of its net assets
are invested in illiquid securities, including restricted securities which are
not readily marketable, the affected Fund will take such steps as is deemed ad-
visable, if any, to protect liquidity.
Short Sales Against the Box
When ICAP believes that the price of a particular security held by a Fund may
decline, it may make "short sales against the box" to hedge the unrealized gain
on such security. Selling short against the box involves selling a security
which the Fund owns for delivery at a specified date in the future. The Fund
will limit its transactions in short sales against the box to 5% of its net as-
sets. In addition, the Fund
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<PAGE>
will limit its transactions such that the value of the securities of any issuer
in which it is short will not exceed the lesser of 2% of the value of the
Fund's net assets or 2% of the securities of any class of the issuer. If, for
example, the Fund bought 100 shares of ABC at $40 per share in January and the
price appreciates to $50 in March, the Fund might "sell short" the 100 shares
at $50 for delivery the following July. Thereafter, if the price of the stock
declines to $45, it will realize the full $1,000 gain rather than the $500 gain
it would have received had it sold the stock in the market. On the other hand,
if the price appreciates to $55 per share, the Fund would be required to sell
at $50 and thus receive a $1,000 gain rather than the $1,500 gain it would have
received had it sold the stock in the market. The Fund may also be required to
pay a premium for short sales which would partially offset any gain.
Warrants
Each Fund may invest in warrants if, after giving effect thereto, not more than
5% of its net assets will be invested in warrants other than warrants acquired
in units or attached to other securities. Of such 5%, not more than 2% of its
assets at the time of purchase may be invested in warrants that are not listed
on the New York Stock Exchange or the American Stock Exchange. Investing in
warrants is purely speculative in that they have no voting rights, pay no divi-
dends, and have no rights with respect to the assets of the corporation issuing
them. Warrants basically are options to purchase equity securities at a spe-
cific price for a specific period of time. They do not represent ownership of
the securities but only the right to buy them. Warrants are issued by the is-
suer of the security, which may be purchased on their exercise. The prices of
warrants do not necessarily parallel the prices of the underlying securities.
When-Issued Securities
Each Fund may from time to time purchase securities without limitation on a
"when-issued" basis. The price of securities purchased on a when-issued basis
is fixed at the time the commitment to purchase is made, but delivery and pay-
ment for the securities take place at a later date. Normally, the settlement
date occurs within 45 days of the purchase. During the period between the pur-
chase and settlement, no payment is made by the Fund to the issuer and no in-
terest is accrued on debt securities or dividend income is earned on equity se-
curities. Forward commitments involve a risk of loss if the value of the secu-
rity to be purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in value of the Fund's other assets. While
when-issued securities may be sold prior to the settlement date, the Fund in-
tends to purchase such securities with the purpose of actually acquiring them.
At the time the Fund makes the commitment to purchase a security on a when-is-
sued basis, it will record the transaction and reflect the value of the secu-
rity in determining its net asset value. The Fund does not believe that net as-
set value will be adversely affected by purchases of securities on a when-is-
sued basis.
The Fund will maintain cash, U.S. government securities and high grade liquid
debt securities equal in value to commitments for when-issued securities. Such
segregated securities either will mature or, if necessary be sold on or before
the settlement date. When the time comes to pay for when-issued securities, the
Fund will meet its obligations from then available cash flow, sale of the secu-
rities held in the separate account, described above, sale of other securities
or, although it would not normally expect to do so, from the sale of the when-
issued securities themselves (which may have a market value greater or less
than the Fund's payment obligation).
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<PAGE>
Unseasoned Companies
Each Fund (other than the California Muni/Stock Fund) may not invest more than
5% of its net assets in unseasoned issuers. While smaller companies generally
have potential for rapid growth, they often involve higher risks because they
lack the management experience, financial resources, product diversification,
and competitive strengths of larger corporations. In addition, in many instanc-
es, the securities of smaller companies are traded only over-the-counter or on
regional securities exchanges, and the frequency and volume of their trading is
substantially less than is typical of larger companies. Therefore, the securi-
ties of smaller companies may be subject to wider price fluctuations. When mak-
ing large sales, the Fund may have to sell portfolio holdings of small compa-
nies at discounts from quoted prices or may have to make a series of smaller
sales over an extended period of time due to the trading volume in smaller com-
pany securities.
Foreign Securities
Each Fund may invest up to 20% of its net assets in foreign securities denomi-
nated in U.S. dollars. Investments in securities of foreign issuers involve
risks in addition to the usual risks inherent in domestic investments, includ-
ing currency risks. The value of a foreign security in U.S. dollars tends to
decrease when the value of the U.S. dollar rises against the foreign currency
in which the security is denominated and tends to increase when the value of
the U.S. dollar falls against such currency.
Foreign securities are affected by the fact that in many countries there is
less publicly available information about issuers than is available in the re-
ports and ratings published about companies in the U.S. and companies may not
be subject to uniform accounting, auditing and financial reporting standards.
Other risks inherent in foreign investments include expropriation; confiscatory
taxation; withholding taxes on dividends and interest; less extensive regula-
tion of foreign brokers, securities markets and issuers; diplomatic develop-
ments; and political or social instability. Foreign economies may differ favor-
ably or unfavorably from the U.S. economy in various respects, and many foreign
securities are less liquid and their prices tend to be more volatile than com-
parable U.S. securities. From time to time, foreign securities may be difficult
to liquidate rapidly without adverse price effects.
Foreign securities include American Depository Receipts ("ADRs"). ADRs are re-
ceipts typically issued by a U.S. bank or trust company evidencing ownership of
the underlying foreign security and denominated in U.S. dollars. ADRs do not
eliminate all the risk inherent in investing in foreign issuers, such as
changes in foreign currency exchange rates. However, by investing in ADRs
rather than directly in foreign issuers' stock, the Fund avoids currency risks
during the settlement period. Some ADRs may not be sponsored by the issuer.
Lending of Portfolio Securities
Each Fund may lend its portfolio securities, up to 33 1/3% of its total assets,
to broker-dealers or institutional investors. The loans will be secured contin-
uously by collateral at least equal to the value of the securities lent by
"marking to market" daily. A Fund will continue to receive the equivalent of
the interest or dividends paid by the issuer of the securities lent and will
retain the right to call, upon notice, the lent securities. A Fund may also re-
ceive interest on the investment of the collateral or a fee from the borrower
as compensation for the loan. As with other extensions of credit, there are
risks of
B-28
<PAGE>
delay in recovery or even loss of rights in the collateral should the borrower
of the securities fail financially. However, loans will be made only to firms
deemed by the portfolio manager to be of good standing.
Portfolio Turnover
Under normal market conditions, the Nuveen Balanced Municipal and Stock Fund
and the Nuveen Balanced California Municipal and Stock Fund expect annual port-
folio turnover for the municipal portion of the portfolios to be significantly
less than 75%, as each Fund will attempt to achieve its municipal investment
objectives by prudent selection of Municipal Obligations with a view to holding
them for investment. However, the rate of municipal turnover will not be a lim-
iting factor if it is desirable to sell or purchase Municipal Obligations.
The Nuveen Balanced Stock and Bond Fund anticipates that its annual portfolio
turnover rate will be between 75% and 100% under normal market conditions, and
will generally not exceed 125%.
The Nuveen Balanced Municipal and Stock Fund, Nuveen Balanced California Munic-
ipal and Stock Fund and the Nuveen Balanced Stock and Bond Fund anticipate that
their annual equity portfolio turnover rate will be between 100% and 125% under
normal market conditions, and will generally not exceed 150%. A turnover rate
of 100% would occur, for example, if the Fund sold and replaced securities val-
ued at 100% of its net assets within one year.
The Nuveen Growth and Income Stock Fund anticipates that its annual portfolio
turnover rate will be between 100% and 125% under normal market conditions, and
will generally not exceed 150%. In the event a Fund were to have a turnover
rate of 100% or more in any year, it would result in the payment by the Fund of
increased brokerage costs and could result in the payment by shareholders of
increased taxes on realized investment gains. In addition to the foregoing, the
Nuveen Balanced Municipal and Stock Fund may be required to purchase or sell
Municipal Obligations and Equity Securities pursuant to a required reallocation
of assets and the anticipated portfolio turnover rates set forth above are made
without regard to such a reallocation of assets.
The portfolio turnover rates for the Nuveen Growth and Income Stock Fund,
Nuveen Balanced Stock and Bond Fund and the Nuveen Balanced Municipal and Stock
Fund for the fiscal year ended June 30, 1997 were 110%, 52% and 32%, respec-
tively.
B-29
<PAGE>
MANAGEMENT
The management of the Trust, including general supervision of the duties per-
formed for the Fund under the Management Agreement, is the responsibility of
its Board of Trustees. The number of trustees of the Trust is fixed at seven,
three of whom are "interested persons" (as the term "interested persons" is de-
fined in the Investment Company Act of 1940) and four of whom are "disinter-
ested persons." The names and business addresses of the trustees and officers
of the Trust and their principal occupations and other affiliations during the
past five years are set forth below, with those trustees who are "interested
persons" of the Trust indicated by an asterisk.
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
POSITION AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH TRUST DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------
<C> <C> <C> <S>
Anthony T. Dean* 52 Chairman and Trustee President (since July
333 West Wacker Drive 1996) and Director,
Chicago, IL 60606 formerly Executive Vice
President, of The John
Nuveen Company (from
March 1992 to July 1996)
and of John Nuveen & Co.
Incorporated; Director
and President (since July
1996), formerly Executive
Vice President (from May
1994 to July 1996) of
Nuveen Institutional
Advisory Corp. and Nuveen
Advisory Corp.
- -------------------------------------------------------------------------------
Timothy R. Schwertfeger* 48 President and Trustee Chairman (since July
333 West Wacker Drive 1996) and Director,
Chicago, IL 60606 formerly Executive Vice
President, of The John
Nuveen Company (from
March 1992 to July 1996)
and of John Nuveen & Co.
Incorporated; Director
and Chairman (since July
1996), formerly Executive
Vice President (from May
1994 to July 1996) of
Nuveen Institutional
Advisory Corp and Nuveen
Advisory Corp.
- -------------------------------------------------------------------------------
Robert H. Lyon* 47 Trustee President and a Director
225 West Wacker Drive of the ICAP Funds Inc.
Chicago, IL 60606 (since its inception in
December 1994);
President, Chief
Investment Officer, and a
Director of ICAP.
- -------------------------------------------------------------------------------
James E. Bacon 66 Trustee Business consultant;
114 W. 47th St. retired.
New York, New York 10036
- -------------------------------------------------------------------------------
William L. Kissick 65 Trustee Professor, School of
University of Pennsylvania Medicine and the Wharton
224 NEB/2L School of Management and
Philadelphia, PA 19104 Chairman, Leonard Davis
Institute of Health
Economics, University of
Pennsylvania.
- -------------------------------------------------------------------------------
Thomas E. Leafstrand 65 Trustee Retired, previously Vice
412 W. Franklin President in charge of
Wheaton, IL 60187 Municipal Underwriting
and Dealer Sales at The
Northern Trust Company.
- -------------------------------------------------------------------------------
Sheila W. Wellington 65 Trustee President (since 1993) of
250 Park Avenue Catalyst (a not-for-
New York, New York 10003 profit organization
focusing on women's
leadership development in
business and the
professions).
</TABLE>
- --------------------------------------------------------------------------------
B-30
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
POSITION AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH TRUST DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------
<C> <C> <C> <S>
Bruce P. Bedford 57 Executive Vice President Executive Vice President of
333 West Wacker Drive John Nuveen & Co.
Chicago, IL 60606 Incorporated, Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp. (since January 1997);
prior thereto, Chairman and
CEO of Flagship Resources
Inc. and Flagship Financial
Inc. and the Flagship
funds.
- -------------------------------------------------------------------------------
Kathleen M. Flannagan 50 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since June
1996) of Nuveen Advisory
Corp. and Nuveen
Institutional Advisory
Corp.
- -------------------------------------------------------------------------------
Anna R. Kucinskis 50 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co. Incorporated.
Chicago, IL 60606
- -------------------------------------------------------------------------------
Larry W. Martin 46 Vice President and Vice President, Assistant
333 West Wacker Drive Assistant Secretary Secretary and Assistant
Chicago, IL 60606 General Counsel of John
Nuveen & Co. Incorporated;
Vice President (since May
1993) and Assistant
Secretary of Nuveen
Advisory Corp; Vice
President (since May 1993)
and Assistant Secretary of
Nuveen Institutional
Advisory Corp.; Assistant
Secretary of The John
Nuveen Company (since
February 1993).
- -------------------------------------------------------------------------------
O. Walter Renfftlen 58 Vice President and Vice President and
333 West Wacker Drive Controller Controller of The John
Chicago, IL 60606 Nuveen Company, John Nuveen
& Co. Incorporated, Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.
- -------------------------------------------------------------------------------
Ronald E. Toupin, Jr. 39 Vice President Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago, IL 60606 Corp.
- -------------------------------------------------------------------------------
H. William Stabenow 63 Vice President and Vice President and
333 West Wacker Drive Treasurer Treasurer of The John
Chicago, IL 60606 Nuveen Company, John Nuveen
& Co. Incorporated, Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.
- -------------------------------------------------------------------------------
Gifford R. Zimmerman 41 Vice President and Vice President, Assistant
333 West Wacker Drive Assistant Secretary Secretary and Assistant
Chicago, IL 60606 General Counsel of John
Nuveen & Co. Incorporated;
Vice President (since May
1993) and Assistant
Secretary of Nuveen
Advisory Corp.; Vice
President (since May 1993)
and Assistant Secretary of
Nuveen Institutional
Advisory Corp.
</TABLE>
- --------------------------------------------------------------------------------
Anthony T. Dean, Thomas E. Leafstrand and Timothy R. Schwertfeger serve as mem-
bers of the Executive Committee of the Board of Trustees. The Executive Commit-
tee, which meets between regular meetings of the Board of Trustees, is autho-
rized to exercise all of the powers of the Board of Trustees.
Mr. Dean and Mr. Schwertfeger are also directors or trustees, as the case may
be, of 95 Nuveen open-end funds and closed-end funds advised by Nuveen Advisory
Corp.
B-31
<PAGE>
The other trustees of the Trust (other than Mr. Lyon) are also trustees of five
closed-end funds advised by NIAC. Mr. Lyon is also a director of ICAP and ICAP
Funds, Inc.
The following table sets forth compensation paid by the Trust to each of the
trustees who are not designated "interested persons" for the one year period
from the Trust's inception (August 7, 1996) to the August 6, 1997 and the total
compensation that the Nuveen Funds paid to such trustees during the one year
period, July 1, 1996 through June 30, 1997. The Trust has no retirement or pen-
sion plans. The officers and trustees affiliated with Nuveen serve without any
compensation from the Trust.
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
FROM TRUST
AGGREGATE AND FUND
COMPENSATION COMPLEX
FROM THE PAID TO
NAME OF TRUSTEE TRUST* TRUSTEES**
---------------------------------------------- ------------ ------------
<S> <C> <C>
James E. Bacon................................ $ 9,983.00 $ 28,000.00
William L. Kissick............................ $ 9,500.00 $ 28,000.00
Thomas E. Leafstrand.......................... $10,806.00 $ 29,800.00
Sheila W. Wellington.......................... $ 9,500.00 $ 28,000.00
---------- -----------
Total....................................... 39,789.00 113,800.00
========== ===========
</TABLE>
- --------
*Based on the compensation paid to the independent trustees for the one year
period, August 7, 1996 through August 6, 1997 for services to the Trust.
**Based on the compensation paid to the independent trustees for the one year
period, July 1, 1996 through June 30, 1997 for services to the Trust and
five closed-end funds advised by NIAC.
Each trustee who is not affiliated with NIAC or ICAP receives a $20,000 annual
retainer for serving as a director or trustee of all funds for which NIAC
serves as investment adviser or manager and a $1,000 fee per day plus expenses
for attendance at all meetings held on a day on which a regularly scheduled
Board meeting is held, a $500 fee per day plus expenses for attendance in per-
son or a $500 fee per day plus expenses for attendance by telephone at a meet-
ing held on a day on which no regular Board meeting is held and a $100 fee per
day plus expenses for attendance in person or by telephone at a meeting of the
Executive Committee held solely to declare dividends. The annual retainer, fees
and expenses are allocated among the funds for which NIAC serves as investment
adviser or manager on the basis of relative net asset sizes. The Trust requires
no employees other than its officers, all of whom are compensated by NIAC or
Nuveen.
As of September 26, 1997, the officers and directors of each Fund, in the ag-
gregate, own less than 1% of the shares of the Fund.
B-32
<PAGE>
The following table sets forth the percentage ownership of each person, who, as
of September 26, 1997, owns of record, or is known by Registrant to own of rec-
ord or beneficially 5% or more of any class of a Fund's shares.
<TABLE>
<CAPTION>
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
- ---------------------- ------------------------- ------------
<S> <C> <C>
Nuveen Growth and Income
Stock Fund Richard J. Franke 15.91
Class R Shares............. 400 N Michigan Ave. Ste. 300
Chicago IL 60611-4130
The John Nuveen Company 22.64
Attn: Ron Holler
333 W Wacker Dr.
Chicago IL 60606-1220
American Express Trust Co. 25.74
UA Jul 01 89
FBD Amer Exp. Trust Ret. Ser. Pl.
c/o Nancy Jendro
PO Box 534
Minneapolis MN 55440-0534
Donald E. Sveen TR 5.89
UA Jun 08 95
Donald E. Sveen 1995 Trust
1749 South Naperville Rd.
Suite C
Wheaton, Il 60187
Class A Shares............. Smith Barney Inc. 15.71
00112011509
388 Greenwich Street
New York NY 10013-2375
Merrill Lynch, Pierce, Fenner & Smith 21.44
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville FL 32246-6484
Class B Shares............. NFSC FEBO # C1B-064360 5.31
Lila J. Xing
60 West 68th St Apt. 6D
New York NY 10023
Smith Barney Inc 9.64
00154563919
388 Greenwich Street
New York NY 10013
</TABLE>
B-33
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
- ---------------------- ------------------------- ------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith 26.65
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville FL 32246-6484
PaineWebber for the benefit of 5.85
William P. Bushnell TTEE
UAD 5/2/85 FBO
William P. Bushnell Trust 47.45
P.O. Box 435
Largo FL 33779-D435
Class C Shares............. Smith Barney Inc. 9.37
00119962073
388 Greenwich Street
New York NY 10013
Merrill Lynch, Pierce, Fenner & Smith 58.12
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville FL 32246-6484
Nuveen Balanced Stock and
Bond Fund The John Nuveen Company 97.11
Class R Shares............. Attn: Ron Holler
333 W. Wacker Dr.
Chicago IL 60606-1220
Class A Shares............. NFSC FEBO # CL5-411205 5.10
NFSC/FMTC IRA Rollover
FBO S. Joseph Dibitetto
2719 Meadow Ct.
N. Bellmore NY 11710
Smith Barney Inc. 12.69
D0138507876
388 Greenwich Street
New York NY 10013
Merrill Lynch, Pierce, Fenner & Smith 23.28
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville FL 32246-6484
</TABLE>
B-34
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
- ---------------------- ------------------------- ------------
<S> <C> <C>
Class B Shares............. Merrill Lynch, Pierce, Fenner & Smith 37.54
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville FL 32246-6484
PaineWebber For the benefit of 31.98
William P. Bushnell, TTEE
UAD 5/2/85 FBO
William P. Bushnell Trust
P.O. Box 435
Largo FL 33779-0435
Class C Shares............. Merrill Lynch, Pierce, Fenner & Smith 77.68
for the Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville FL 32246-6484
Nuveen Balanced Municipal
and Stock Fund The John Nuveen Company 93.06
Class R Shares............. Attn: Ron Holler
333 W Wacker Dr
Chicago IL 60606-1220
Class A Shares............. Smith Barney Inc. 18.43
00121740906
386 Greenwich Street
New York New York 10013
Merrill Lynch, Pierce, Fenner & Smith 30.48
for the Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville FL 32246-6484
Class B Shares............. Smith Barney Inc. 10.44
00112725273
388 Greenwich Street
New York NY 10013
Merrill Lynch, Pierce, Fenner & Smith 34.87
for the Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville FL 32246-6484
</TABLE>
B-35
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
- ---------------------- ------------------------- ------------
<S> <C> <C>
Class C Shares.............. NFSC FEBO # CM5-113387 9.43
Dominick Pastorello
Elvira Pastorello
84 Raymond Lane
Wilton CT 06897
Smith Barney Inc. 8.32
00163602788
388 Greenwich Street
New York NY 10013
Merrill Lynch, Pierce, Fenner & Smith 23.48
for the Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville FL 32246-6484
Prudential Securities Inc., FBO 6.88
John M. Johnson
Jeanette B. Johnson Co-Trustees
The Johnson Rev Tr
UA DTD 09/24/79
Lake Village AR 71653-9512
Linda Jan Jolly & 11.37
Elaine Hoder TR
UA 08/05/96
Linda Jan Jolly Revocable Trust
412 E. Miami Ave.
McAlester OK 74501-6422
</TABLE>
B-36
<PAGE>
FUND MANAGER AND PORTFOLIO MANAGER
Fund Manager. NIAC acts as the manager of each Fund, with responsibility for
the overall management of each Fund. Its address is 333 West Wacker Drive, Chi-
cago, Illinois 60606. For the Nuveen Growth and Income Stock Fund and the
Nuveen Balanced Stock and Bond Fund, NIAC has entered into a Sub-Advisory
Agreement with ICAP under which ICAP, subject to NIAC's supervision, manages
the Fund's investment portfolio. For the Muni/Stock Fund and the California
Muni/Stock Fund, NIAC has entered into a Sub-Advisory Agreement with ICAP under
which ICAP, subject to NIAC's supervision, manages the Fund's equity invest-
ments. NIAC is also responsible for managing the Fund's business affairs and
providing day-to-day administrative services to the Fund. For additional infor-
mation regarding the management services performed by NIAC and ICAP, see the
section "Who Manages the Fund" in the Fund's Prospectus.
NIAC is a wholly-owned subsidiary of Nuveen, which is also the principal under-
writer of the Fund's shares. Nuveen is sponsor of the Nuveen Tax-Free Unit
Trust and Nuveen Unit Trust, registered unit investment trusts, is the princi-
pal underwriter for the Nuveen Mutual Funds, and has served as co-managing un-
derwriter for the shares of the Nuveen Exchange-Traded Funds. Over 1,000,000
individuals have invested to date in Nuveen's funds and trusts. Founded in
1898, Nuveen is a subsidiary of The John Nuveen Company which, in turn, is ap-
proximately 78% owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul is
located in St. Paul, Minnesota, and is principally engaged in providing proper-
ty-liability insurance through subsidiaries.
For the fund management services and facilities furnished by NIAC, each of the
Funds has agreed to pay an annual management fee at rates set forth in the
Fund's Prospectus under "Management of the Fund." In addition, NIAC has agreed
to waive all or a portion of its management fee or reimburse certain expenses
of the Fund for the year ending July 31, 1998 in order to prevent total operat-
ing expenses (excluding distribution or service fees, and extraordinary ex-
penses) from exceeding .85% (.95% for the Nuveen Growth and Income Stock Fund)
of the average daily net asset value of any class of shares of the Fund. Ac-
cordingly, for the period from inception (August 7, 1996) through the fiscal
year ended June 30, 1997, the Nuveen Growth and Income Stock Fund, the Nuveen
Balanced Stock and Bond Fund, and the Nuveen Balanced Municipal and Stock Fund
paid management fees net of expense reimbursements of $2,202,100, $0.00, and
$10,679, respectively. During this same period, NIAC waived fees and reimbursed
expenses of $283,295, $125,664, and $131,924 to the Nuveen Growth and Income
Stock Fund, the Nuveen Balanced Stock and Bond Fund, and the Nuveen Balanced
Municipal and Stock Fund, respectively.
Sub-Adviser. ICAP was founded in 1970 and is located at 225 West Wacker Drive,
Suite 2400, Chicago, IL 60606. Under the Sub-Advisory Agreement for each Fund,
ICAP is compensated by NIAC for its investment advisory services with respect
to all or a portion of each Fund's assets at the rates set forth in the Fund's
Prospectus under "Management Fees." Under a sub-advisory agreement with NIAC,
ICAP manages the investment portfolios of the Growth and Income Stock Fund and
the Balanced Stock and Bond Fund, and the equity portion of the Balanced Munic-
ipal and Stock Fund's investment portfolio. ICAP's investment management strat-
egy and operating policies are set through a team approach, with all ICAP in-
vestment professionals contributing. ICAP currently maintains a staff of 12 in-
vestment professionals. Each of the investment officers and other professionals
of ICAP has developed an expertise in
B-37
<PAGE>
at least one functional investment area, including equity research, strategy,
fixed income analysis, quantitative research, technical research and trading. A
key element in the decision-making process is a formal investment committee
meeting generally held each business day and attended by all professionals.
These meetings also provide for the ongoing review of ICAP's investment posi-
tions. Pertinent information from outside sources is shared and incorporated
into the investment outlook. The investment strategy, asset sectors, and indi-
vidual security holdings are reviewed to verify their continued appropriate-
ness. Investment recommendations are presented to the committee for decisions.
With regard to Fund assets subject to the Sub-Advisory Agreement, ICAP provides
continuous advice and recommendations concerning the Fund's investments, and is
responsible for selecting the broker-dealers who execute the portfolio transac-
tions. ICAP also serves as investment adviser to the ICAP Funds, Inc. and to
pension and profit-sharing plans, and other institutional and private
investors. As of September 30, 1997, ICAP had approximately $10 billion under
management. Mr. Robert H. Lyon, President of ICAP, owns shares representing 51%
of the voting rights of ICAP. For the period from the Fund's inception (August
7, 1996) to the fiscal year ended June 30, 1997, NIAC paid ICAP for its services
to the Nuveen Growth and Income Stock Fund, the Nuveen Balanced Stock and Bond
Fund, and the Nuveen Balanced Municipal and Stock Fund, $1,020,894, $33,128, and
$19,194, respectively.
PORTFOLIO TRANSACTIONS
NIAC (with respect to transactions in Municipal Obligations and California Mu-
nicipal Obligations) and ICAP (with respect to other transactions) are respon-
sible for decisions to buy and sell securities for the Funds and for the place-
ment of the Funds' securities business, the negotiation of the commissions to
be paid on brokered transactions, the prices for principal trades in securi-
ties, and the allocation of portfolio brokerage and principal business. It is
the policy of both NIAC and ICAP to seek the best execution at the best secu-
rity price available with respect to each transaction, and with respect to bro-
kered transactions, in light of the overall quality of brokerage and research
services provided to the respective adviser and its advisees. The best price to
the Funds means the best net price without regard to the mix between purchase
or sale price and commission, if any. Purchases may be made from underwriters,
dealers, and, on occasion, the issuers. Commissions will be paid on the Funds'
futures and options transactions, if any. The purchase price of portfolio secu-
rities purchased from an underwriter or dealer may include underwriting commis-
sions and dealer spreads. The Funds may pay mark-ups on principal transactions.
In selecting broker-dealers and in negotiating commissions, the portfolio man-
ager considers the firm's reliability, the quality of its execution services on
a continuing basis and its financial condition. Brokerage will not be allocated
based on the sale of a Fund's shares. NIAC expects that all transactions in Mu-
nicipal Obligations and California Municipal Obligations will be effected on a
principal (as opposed to an agency) basis and, accordingly, does not expect to
pay any brokerage commissions on such transactions.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)") permits
an investment adviser, under certain circumstances, to cause an account to pay
a broker or dealer who supplies brokerage and research services a commission
for effecting a transaction in excess of the amount of commission another bro-
ker or dealer would have charged for effecting the transaction. Brokerage and
research services include (a) furnishing advice as to the value of securities,
the advisability of investing, purchasing or
B-38
<PAGE>
selling securities, and the availability of securities or purchasers or sellers
of securities; (b) furnishing analyses and reports concerning issuers, indus-
tries, securities, economic factors and trends, portfolio strategy, and the
performance of accounts; and (c) effecting securities transactions and perform-
ing functions incidental thereto (such as clearance, settlement, and custody).
In selecting brokers, ICAP considers investment and market information and
other research, such as economic, securities and performance measurement re-
search, provided by such brokers, and the quality and reliability of brokerage
services, including execution capability, performance, and financial responsi-
bility. Accordingly, the commissions charged by any such broker may be greater
than the amount another firm might charge if ICAP determines in good faith that
the amount of such commissions is
reasonable in relation to the value of the research information and brokerage
services provided by such
broker to ICAP or the Funds. ICAP believes that the research information re-
ceived in this manner provides the Funds with benefits by supplementing the re-
search otherwise available to the Funds. The Management Agreement and the Sub-
Advisory Agreement provide that such higher commissions will not be paid by the
Funds unless the applicable adviser determines in good faith that the amount is
reasonable in relation to the services provided. The investment advisory fees
paid by the Funds to NIAC under the Management Agreement or the subadvisory
fees paid by NIAC to ICAP under the Sub-Advisory Agreement are not reduced as a
result of receipt by either NIAC or ICAP of research services.
NIAC and ICAP each place portfolio transactions for other advisory accounts
managed by them. Research services furnished by firms through which the Funds
effect their securities transactions may be used by NIAC and/or ICAP in servic-
ing all of its accounts; not all of such services may be used by NIAC and/or
ICAP in connection with the Funds. NIAC and ICAP believe it is not possible to
measure separately the benefits from research services to each of the accounts
(including the Funds) managed by them. Because the volume and nature of the
trading activities of the accounts are not uniform, the amount of commissions
in excess of those charged by another broker paid by each account for brokerage
and research services will vary. However, NIAC and ICAP believe such costs to
the Funds will not be disproportionate to the benefits received by the Funds on
a continuing basis. NIAC and ICAP seek to allocate portfolio transactions equi-
tably whenever concurrent decisions are made to purchase or sell securities by
the Funds and another advisory account. In some cases, this procedure could
have an adverse effect on the price or the amount of securities available to
the Funds. In making such allocations between the Fund and other advisory ac-
counts, the main factors considered by NIAC and ICAP are the respective invest-
ment objectives, the relative size of portfolio holdings of the same or compa-
rable securities, the availability of cash for investment and the size of in-
vestment commitments generally held.
For the period from inception (August 7, 1996) through the fiscal year ended
June 30, 1997, the Nuveen Growth and Income Stock Fund, the Nuveen Balanced
Stock and Bond Fund, and the Nuveen Balanced Municipal and Stock Fund paid
$724,507.90, $17,862.76, and $19,613.70, respectively, in brokerage commis-
sions. During the fiscal year ended June 30, 1997, the Nuveen Growth and Income
Stock Fund, the Nuveen Balanced Stock and Bond Fund and the Nuveen Balanced Mu-
nicipal and Stock Fund paid to brokers as commissions in return for research
services $403,560.66, $4,866.36, and $5,302.30, respectively, and the aggregate
amount of those transactions per Fund was, $1,906,101,422, $80,997,256 and
$97,311,621, respectively.
B-39
<PAGE>
Under the Investment Company Act of 1940, a Fund may not purchase portfolio se-
curities from any underwriting syndicate of which Nuveen is a member except un-
der certain limited conditions set forth in Rule 10f-3. The Rule sets forth re-
quirements relating to, among other things, the terms of a security purchased
by the Fund, the amount of securities that may be purchased in any one issue
and the assets of the Fund that may be invested in a particular issue. In addi-
tion, purchases of securities made pursuant to the terms of the Rule must be
approved at least quarterly by the Board of Trustees, including a majority of
the trustees who are not interested persons of the Trust.
NET ASSET VALUE
Each Fund's net asset value per share is determined separately for each class
of those Fund's shares as of the close of trading (normally 4:00 p.m. eastern
time) on each day the New York Stock Exchange (the "Exchange") is open for
business. The Exchange is not open for trading on New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. The net asset value per share of a class of shares of a
Fund will be computed by dividing the value of the Fund's assets attributable
to the class, less the liabilities attributable to the class, by the number of
shares of the class outstanding. A Fund's net asset value may not be calculated
on days during which the Fund receives no orders to purchase shares and no
shares are tendered for redemption. Net asset value is calculated by taking the
fair value of a Fund's total assets, including interest or dividends accrued
but not yet collected, less all liabilities, and dividing by the total number
of shares outstanding. The result, rounded to the nearest cent, is the net as-
set value per share. In determining net asset value, expenses are accrued and
applied daily and securities and other assets for which market quotations are
available are valued at market value. Common stocks and other equity-type secu-
rities are valued at the last sales price on the national securities exchange
or Nasdaq on which such securities are primarily traded; however, securities
traded on a national securities exchange or Nasdaq for which there were no
transactions on a given day or securities not listed on a national securities
exchange or Nasdaq are valued at the most recent bid prices. Municipal obliga-
tions are valued by a pricing service that values portfolio securities at the
mean between the quoted bid and asked prices or the yield equivalent when quo-
tations are readily available. Securities for which quotations are not readily
available (which are expected to constitute a majority of the Municipal Obliga-
tions held by a Fund) are valued at fair value as determined by the pricing
service using methods that include consideration of the following: yields or
prices of municipal bonds of comparable quality, type of issue, coupon, matu-
rity and rating; indications as to value from securities dealers; and general
market conditions. The pricing service may employ electronic data processing
techniques and/or a matrix system to determine valuations. Debt securities hav-
ing 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 mar-
ket value of such securities is their amortized cost. Under this method of val-
uation, a security is initially valued at its acquisition cost, and thereafter
amortization of any discount or premium is assumed each day, regardless of the
impact of fluctuating interest rates on the market value of the security. Re-
gardless of the method employed to value a particular security, all valuations
are subject to review by a Fund's Board of Trustees or its delegate who may de-
termine the appropriate value of a security whenever the value as calculated is
significantly different from the previous day's calculated value.
B-40
<PAGE>
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Chapman and Cutler, counsel to the Trust.
As described in the Prospectuses, each of the Funds intends to qualify under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") for
tax treatment as a regulated investment company. In order to qualify as a regu-
lated investment company, a Fund (i) must elect to be treated as a
regulated investment company and (ii) for each taxable year thereafter must
satisfy certain requirements relating to the source of its income, diversifica-
tion of its assets, and distributions of its income to shareholders. First, the
Fund must derive at least 90% of its annual gross income (including tax-exempt
interest) from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock or securities, foreign cur-
rencies or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its business of invest-
ing in such stock, securities or currencies (the "90% gross income test"). Sec-
ond, the Fund must diversify its holdings so that, at the close of each quarter
of its taxable year, (i) at least 50% of the value of its total assets is com-
prised of cash, cash items, United States Government securities, securities of
other regulated investment companies and other securities limited in respect of
any one issuer to an amount not greater in value than 5% of the value of the
Fund's total assets and to not more than 10% of the outstanding voting securi-
ties of such issuer, and (ii) not more than 25% of the value of the Fund's to-
tal assets is invested in the securities of any one issuer (other than United
States Government securities and securities of other regulated investment com-
panies) or two or more issuers controlled by a Fund and engaged in the same,
similar or related trades or businesses.
As a regulated investment company, a Fund will not be subject to federal income
tax in any taxable year for which it distributes at least 90% of the sum of (i)
its "investment company taxable income" (without regard to its net capital
gain, i.e., the excess of its net long-term capital gain over its short-term
capital loss) and (ii) its net tax-exempt interest (the excess of its gross
tax-exempt interest income over certain disallowed deductions). In addition, to
the extent the Fund timely distributes to shareholders at least 98% of its tax-
able income (including any net capital gain), it will not be subject to the 4%
excise tax on certain undistributed income of "regulated investment companies."
The Fund intends to make timely distributions in compliance with these require-
ments and consequently it is anticipated that they generally will not be re-
quired to pay the excise tax. A Fund may retain for investment its net capital
gain. However, if the Fund retains any net capital gain or any investment com-
pany taxable income, it will be subject to federal income tax at regular corpo-
rate rates on the amount retained. If the Fund retains any net capital gain,
such Fund may designate the retained amount as undistributed capital gains in a
notice to its shareholders who, if subject to federal income tax on long-term
capital gains, (i) will be required to include in income for federal income tax
purposes, as long-term capital gain, their shares of such undistributed amount,
and (ii) will be entitled to credit their proportionate shares of the tax paid
by such Fund against their federal income tax liabilities if any, and to claim
refunds to the extent the credit exceeds such liabilities. For federal income
tax purposes, the tax basis of shares owned by a shareholder of the Fund will
be increased by an amount equal under current law to 65% of the amount of un-
distributed net capital gains included in the shareholder's gross income. Each
Fund intends to
B-41
<PAGE>
distribute at least annually to its shareholders all or substantially all of
its investment company taxable income, net tax-exempt interest and net capital
gain.
Treasury regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain, to elect (unless it has
made a taxable year election for excise tax purposes as discussed below) to
treat all or part of any net capital loss, any net long-term capital loss or
any net foreign currency loss incurred after October 31 as if they had been in-
curred in the succeeding year.
If any of the Funds engages in hedging transactions involving financial futures
and options, these transactions will be subject to special tax rules, the ef-
fect of which may be to accelerate income to a Fund, defer a Fund's losses,
cause adjustments in the holding periods of a Fund's securities, convert long-
term capital gains into short-term capital gains and convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
Prior to purchasing shares in one of the Funds, the impact of dividends or dis-
tributions which are expected to be or have been declared, but not paid, should
be carefully considered. Any dividend or distribution declared shortly after a
purchase of such shares prior to the record date will have the effect of reduc-
ing the per share net asset value by the per share amount of the dividend or
distribution and will be subject to federal income tax to the extent it is a
distribution of ordinary income or capital gain.
In any taxable year of a Fund, distributions from the Fund, other than distri-
butions which are designated as capital gains dividends (or exempt interest
dividends, in the case of Muni/Stock Fund and the California Muni/Stock Fund)
will to the extent of the earnings and profits on such Fund constitute divi-
dends for Federal income tax purposes which are taxable as ordinary income to
shareholders. To the extent that distributions to a shareholder in any year ex-
ceed the Fund's current and accumulated earnings and profits, they will be
treated as a return of capital and will reduce the shareholder's basis in his
or her shares and, to the extent that they exceed his or her basis, will be
treated as gain from the sale of such shares as discussed below. It should be
noted that certain legislative proposals have been made which could affect the
calculation of basis for shareholders holding securities that are substantially
identical to the Fund's securities. Distributions of the Fund's net capital
gain which are properly designated as capital gain dividends by the Fund will
be taxable to the shareholders as long-term capital gain, regardless of the
length of time the shares have been held by a shareholder. Distributions will
be taxed in the manner described (i.e., as ordinary income, long-term capital
gain, return of capital or exempt-interest dividends) even if reinvested in ad-
ditional shares of a Fund.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by each Fund (and received
by the shareholders) on December 31 of the year such dividends are declared.
The redemption or exchange of the shares of a Fund normally will result in cap-
ital gain or loss to the shareholders. Generally, a shareholder's gain or loss
will be long-term gain or loss if the shares have been held for more than one
year. Present law taxes both long- and short-term capital gains of corporations
at the rates applicable to ordinary income. For taxpayers other than corpora-
tions, net capital gains (which
B-42
<PAGE>
is defined as net long-term capital gain over net short-term capital loss for
the taxable year) are subject to a maximum marginal stated tax rate of either
28% or 20%, depending upon the holding period of the capital assets. In partic-
ular, net capital gain, excluding net gain from property held more than one
year but not more than 18 months and gain on certain other assets, is subject
to a maximum marginal stated tax rate of 20% (10% in the case of certain tax-
payers in the lowest tax bracket). Net capital gain that is not taxed at the
maximum marginal stated tax rate of 20% (or 10%) as described in the preceding
sentence, is generally subject to a maximum marginal stated tax rate of 28%.
The date on which a share is acquired (i.e., the "trade date") is excluded for
purposes of determining the holding period of
the share. It should be noted that legislative proposals are introduced from
time to time that affect tax rates and could affect relative differences at
which ordinary income and capital gains are taxed.
In addition, please note that capital gains may be recharacterized as ordinary
income in the case of certain financial transactions that are considered "con-
version transactions" effective for transactions entered into after April 30,
1993. Shareholders and prospective investors should consult with their tax ad-
visers regarding the potential effect of this provision on their investment in
shares of a Fund.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Fund as long as the shares
of the Fund are held by or for 500 or more persons at all times during the tax-
able year or another exception is met. In the event the shares of the Fund are
held by fewer than 500 persons, additional taxable income may be realized by
the individual (and other non-corporate) shareholders in excess of the distri-
butions received from the Fund.
All or a portion of a sales load paid in purchasing shares of a Fund cannot be
taken into account for purposes of determining gain or loss on the redemption
or exchange of such shares within 90 days after their purchase to the extent
shares of a Fund or another fund are subsequently acquired without payment of a
sales load or with the payment of a reduced sales load pursuant to the rein-
vestment or exchange privilege. Any disregarded portion of such load will re-
sult in an increase in the shareholder's tax basis in the shares subsequently
acquired. Moreover, losses recognized by a shareholder on the redemption or ex-
change of shares of a Fund held for six months or less are disallowed to the
extent of any distribution of exempt-interest dividends received with respect
to such shares and, if not disallowed, such losses are treated as long-term
capital losses to the extent of any distributions of long-term capital gains
made with respect to such shares. In addition, no loss will be allowed on the
redemption or exchange of shares of a Fund if the shareholder purchases other
shares of such Fund (whether through reinvestment of distributions or other-
wise) or the shareholder acquires or enters into a contract or option to ac-
quire securities that are substantially identical to shares of a Fund within a
period of 61 days beginning 30 days before and ending 30 days after such re-
demption or exchange. If disallowed, the loss will be reflected in an adjust-
ment to the basis of the shares acquired.
If in any year a Fund should fail to qualify under Subchapter M for tax treat-
ment as a regulated investment company, the Fund would incur a regular corpo-
rate federal income tax upon its income for that year (other than interest in-
come from Municipal Obligations and California Municipal Obliga-
B-43
<PAGE>
tions), and distributions to its shareholders would be taxable to shareholders
as ordinary dividend income for federal income tax purposes to the extent of
the Fund's available earnings and profits.
The Funds are required in certain circumstances to withhold 31% of taxable div-
idends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Funds their correct taxpayer identification number
(in the case of individuals, their social security number) and certain certifi-
cations, or who are otherwise subject to backup withholding.
Shareholders who are non-resident aliens are subject to U.S. withholding tax on
ordinary income dividends at a rate of 30% or such lower rate as prescribed by
an applicable tax treaty.
A corporate shareholder may be entitled to a 70% dividends received deduction
with respect to any portion of such shareholder's ordinary income dividends
which are attributable to dividends received by a Fund on certain Equity Secu-
rities (other than corporate shareholders, such as "S" corporations, which are
not eligible for the deduction because of their special characteristics and
other than for purposes of special taxes such as the accumulated earnings tax
and the personal holding corporation tax). A Fund will designate the portion of
any taxable dividend which is eligible for this deduction. However, a corporate
shareholder should be aware that Sections 246 and 246A of the Code impose addi-
tional limitations on the eligibility of dividends for the 70% dividends re-
ceived deduction. These limitations include a requirement that stock (and
therefore Shares of a Fund) must generally be held at least 46 days (as deter-
mined under, and during the period specified in, Section 246(c) of the Code).
Regulations have been issued which address special rules that must be consid-
ered in determining whether the 46 day holding requirement is met. Moreover,
the allowable percentage of the deduction will generally be reduced from 70% if
a corporate shareholder owns Shares of the Fund the financing of which is di-
rectly attributable to indebtedness incurred by such corporation. It should be
noted that various legislative proposals that would affect the dividends re-
ceived deduction have been introduced. To the extent dividends received by a
Fund are attributable to foreign corporations, a corporate shareholder will not
be entitled to the dividends received deduction with respect to its share of
such foreign dividends since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations. It
should be noted that payments to a Fund of dividends on Equity Securities that
are attributable to foreign corporations may be subject to foreign withholding
taxes. Corporate shareholders should consult with their tax advisers with re-
spect to the limitations on, and possible modifications to, the dividends re-
ceived deduction.
Nuveen Balanced Municipal and Stock Fund and Nuveen Balanced California
Municipal and Stock Fund Tax Matters
In addition to the matters discussed above, the Muni/Stock Fund and the Cali-
fornia Muni/Stock Fund intend to qualify to pay "exempt-interest" dividends as
defined under the Code. Under the Code, at the close of each quarter of its
taxable year, if at least 50% of the value of the Fund's total assets consists
of obligations described in Code Section 103(a)) ("Municipal Securities")
(i.e., Municipal Obligations in the case of the Muni/Stock Fund and California
Municipal Obligations in the case of the California Muni/Stock Fund), the Fund
shall be qualified to pay exempt-interest dividends to its Shareholders. Ex-
empt-interest dividends are dividends or any part thereof (other than a capital
gain dividend) paid by the Fund which are attributable to interest on Municipal
Securities (net of expenses and any bond
B-44
<PAGE>
premium amortization with respect to Municipal Securities) to the extent such
interest is excludible from gross income under Section 103 of the Code and are
so designated by the Fund. Exempt-interest dividends will be excluded from
gross income of the owners of the shares for federal income tax purposes, ex-
cept in the case of certain substantial users as described below. Such exempt-
interest dividends may be taken into account in determining the federal alter-
native minimum tax, as described below. Insurance proceeds received by the
Muni/Stock Fund or California Muni/Stock Fund under any insurance policies in
respect of scheduled interest payments on defaulted Municipal Securities, as
described herein, may be taken into account in determining the amount of ex-
empt-interest dividends provided that, at
the time such policies are purchased, the amounts paid for such policies are
reasonable, customary and consistent with the reasonable expectation that the
respective issuer of the Municipal Securities, rather than the insurer, will
pay debt service on the Municipal Securities; in the case of non-appropriation
by a political subdivision, however, there can be no assurance that payments
made by the insurer representing interest on such "non-appropriation" Munici-
pal Lease Obligations may be taken into account in determining the amount of
exempt-interest dividends. If a Fund purchases a Municipal Security at a mar-
ket discount, any gain realized by the Fund upon sale or redemption of the Mu-
nicipal Security will be treated as taxable interest income to the extent such
gain does not exceed the market discount, and any gain realized in excess of
the market discount generally will be treated as capital gain. The Funds will
be required by the Code to allocate their respective expenses proportionately
between their tax-exempt income and taxable income (excluding net realized
long-term capital gains). Distributions to shareholders by the Funds of net
income received, if any, from taxable dividends, market discount on Municipal
Securities treated as interest and net short-term capital gains, if any, real-
ized by the Funds will be taxable to shareholders as ordinary income. Distri-
butions of net realized long-term capital gains, if any, are taxable as long-
term capital gains, as discussed above.
In general, market discount is the amount (if any) by which the stated redemp-
tion price at maturity exceeds the Fund's purchase price (except to the extent
that such difference, if any, is attributable to original issue discount not
yet accrued), subject to a statutory de minimis rule. Accretion of market dis-
count is taxable as ordinary income. Market discount that accretes while the
Fund holds a Municipal Security would be recognized as ordinary income by the
Fund when principal payments are received on the Municipal Security, upon sale
or at redemption (including early redemption) or at the Fund's election, as
such market discount accrues. Market discount income recognized by the Fund
will result in taxable dividends to the shareholders.
For purposes of computing the alternative minimum tax for individuals and cor-
porations and the Superfund tax for corporations, interest on certain private
activity bonds (which includes most industrial and housing bonds) issued on or
after August 8, 1986 is included as a preference item. The Funds will annually
supply their shareholders with a report indicating the percentage of the re-
spective Fund's income attributable to Municipal Securities that is treated as
a tax preference item for purposes of the federal alternative minimum tax.
Moreover, for corporations, the alternative minimum taxable income is in-
creased by 75% of the difference between an alternative measure of income
("adjusted current earnings") and the amount otherwise determined to be the
alternative minimum taxable income. Interest on all Municipal Securities, and
therefore all exempt-interest dividends received from the Fund, are included
in calculating adjusted current earnings. Under current Code provisions, the
Superfund Tax does
B-45
<PAGE>
not apply to tax years beginning on or after January 1, 1996. Legislative pro-
posals have been made that would extend the Superfund Tax.
Individuals whose "modified income" exceeds a base amount will be subject to
federal income tax on up to one-half of their social security benefits. Modi-
fied income currently includes adjusted gross income, one-half of social secu-
rity benefits and tax-exempt interest, including exempt-interest dividends from
the Funds. In addition, individuals whose modified income exceeds certain base
amounts are required to include in gross income up to 85% of their social secu-
rity benefits.
The interest on private activity bonds in most instances is not federally tax-
exempt to a person who is a "substantial user" of a facility financed by such
bonds or a "related person" of such "substantial user." As a result, the Funds
may not be an appropriate investment for shareholders who are considered either
a "substantial user" or a "related person" within the meaning of the Code. In
general, a "substantial user" of a facility includes a "non-exempt person who
regularly uses a part of such facility in his trade or business." "Related per-
sons" are in general defined to include persons among whom there exists a rela-
tionship, either by family or business, which would result in a disallowance of
losses in transactions among them under various provisions of the Code (or if
they are members of the same controlled group of corporations under the Code),
including a partnership and each of its partners (and their spouses and minor
children), an S corporation and each of its shareholders (and their spouses and
minor children) and various combinations of these relationships. The foregoing
is not a complete statement of all of the provisions of the Code relating to
the definitions of "substantial user" and "related person." For additional in-
formation, investors should consult their tax advisers before investing in the
Fund.
The Code provides that interest on indebtedness incurred or continued to pur-
chase or carry shares of a fund that distributes exempt-interest dividends is
not deductible for Federal income tax purposes. Under rules used by the IRS for
determining when borrowed funds are considered used for the purpose of purchas-
ing or carrying particular assets, the purchase or ownership of shares may be
considered to have been made with borrowed funds even though such funds are not
directly traceable to the purchase or ownership of shares.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
federal income taxation of the Funds and their shareholders and relates only to
the federal income tax status of the Fund and to tax treatment of distributions
by the Fund to United States shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or adminis-
trative action, and any such change may be retroactive with respect to Fund
transactions. Shareholders are advised to consult their own tax advisers for
more detailed information concerning the federal taxation of the Funds and the
income tax consequences to their shareholders, as well as with respect to for-
eign, state and local tax consequences of ownership of Fund shares.
B-46
<PAGE>
NUVEEN BALANCED MUNICIPAL STOCK FUND AND NUVEEN CALIFORNIA BALANCED MUNICIPAL
AND STOCK FUND DISTRIBUTIONS
The Muni/Stock Fund and California Muni/Stock Fund will pay monthly tax-exempt
income dividends to shareholders at a level rate that reflects the past and
projected net tax-exempt income of the Funds and that results, over time, in
the distribution of substantially all of the Funds' net tax-exempt income. To
maintain a more stable monthly distribution, these Funds may from time to time
distribute less than the entire amount of net tax-exempt income earned in a
particular period. This undistributed net tax-exempt income would be available
to supplement future distributions, which might otherwise have been reduced by
a decrease in the Funds' monthly net income due to fluctuations in investment
income or expenses. As a result, the tax-exempt income distributions paid by a
Fund for any particular monthly period may be more or less than the amount of
net tax-exempt income actually earned by the Fund during such period. Undis-
tributed net tax-exempt income is included in a Fund's net asset value and,
correspondingly, distributions from previously undistributed net tax-exempt in-
come are deducted from such Fund's net asset value. It is not expected that
this dividend policy will impact the management of a Fund's portfolio.
CALIFORNIA STATE TAX MATTERS
The following is a general, abbreviated summary of certain provisions of the
applicable California tax law as presently in effect as it directly governs the
taxation of resident individual and corporate shareholders of the California
Muni/Stock Fund. This summary does not address the taxation of other sharehold-
ers nor does it discuss any local taxes that may be applicable. These provi-
sions are subject to change by legislative or administrative action, and any
such change may be retroactive with respect to transactions of the California
Muni/Stock Fund.
The following is based on the assumptions that the California Muni/Stock Fund
will qualify under Subchapter M of the Code as a regulated investment company,
that it will satisfy the conditions which
will cause distributions of the California Muni/Stock Fund attributable to Cal-
ifornia Municipal Obligations to qualify as exempt-interest dividends to share-
holders, and that they will distribute all interest and dividends they receive
to the California Muni/Stock Fund's shareholders.
The California Muni/Stock Fund will not be subject to the California corporate
franchise tax. The California Muni/Stock Fund will be subject to the California
corporate income tax only if it has a sufficient nexus with California. If it
is subject to the California corporate income tax, it does not expect to pay a
material amount of such tax.
Distributions by the California Muni/Stock Fund that are attributable to inter-
est on any obligation of California and its political subdivisions or to inter-
est on obligations of the United States, its territories, possessions or in-
strumentalities that are exempt from state taxation under federal law will not
be subject to the California personal income tax. All other distributions, in-
cluding distributions attributable to capital gains, will be subject to the
California personal income tax.
B-47
<PAGE>
All distributions of California Muni/Stock Fund to corporate shareholders, re-
gardless of source, will be subject to the California corporate franchise tax.
Gain on the sale, exchange, or other disposition of shares of the California
Muni/Stock Fund will be subject to the California personal income and corporate
franchise taxes.
Shares of the California Funds may be subject to the California estate tax if
held by a California decedent at the time of death.
Shareholders are advised to consult with their own tax advisers for more de-
tailed information concerning California tax matters.
PERFORMANCE INFORMATION
Each Fund may quote its yield, distribution rate, average annual total return
or cumulative total return in reports to shareholders, sales literature and ad-
vertisements each of which will be calculated separately for each class of
shares.
In accordance with a standardized method prescribed by rules of the Securities
and Exchange Commission ("SEC"), yield is computed by dividing the net invest-
ment income per share earned during the specified one month or 30-day period by
the maximum offering price per share on the last day of the period, according
to the following formula:
a-b
Yield=2[(---- + 1)/6/ -1]
cd
In the above formula, a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursements); c = the average daily
number of shares outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share on the last day of the
period. In the case of Class A shares, the maximum offering price includes the
current maximum front-end sales charge of 5.25%.
In computing yield, the Funds follow certain standardized accounting practices
specified by SEC rules. These practices are not necessarily consistent with
those that the Funds use to prepare their annual and interim financial state-
ments in conformity with generally accepted accounting principles. Thus, yield
may not equal the income paid to shareholders or the income reported in a
Fund's financial statements.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------------------
YIELD
-------------------------------
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- -------
<S> <C> <C> <C> <C>
Growth and Income Stock Fund.............. 0.87% 0.18% 0.18% 1.16%
Balanced Stock and Bond Fund.............. 2.94% 2.31% 2.35% 3.36%
Balanced Municipal and Stock Fund......... 2.66% 2.00% 1.99% 3.06%
</TABLE>
B-48
<PAGE>
The Funds may from time to time in their advertising and sales materials report
a quotation of their current distribution rate. The distribution rate repre-
sents a measure of dividends distributed for a specified period. Distribution
rate is computed by taking the most recent dividend per share, multiplying it
as needed to annualize it, and dividing by the appropriate price per share
(e.g., net asset value for purchases to be made without a load such as rein-
vestments from Nuveen UITs, or the maximum public offering price). The distri-
bution rate differs from yield and total return and therefore is not intended
to be a complete measure of performance. Distribution rate may sometimes differ
from yield because a Fund may be paying out more than it is earning and because
it may not include the effect of amortization of bond premiums to the extent
such premiums arise after the bonds were purchased.
The distribution rates as of the period quoted, based on the maximum public of-
fering price then in effect for the Funds, and assuming the imposition of the
maximum sales charge for Class A Shares of 5.25%, were as follows:
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------------------
DISTRIBUTION RATES
-------------------------------
CLASS A CLASS B CLASS C CLASS R
------- ------- ------- -------
<S> <C> <C> <C> <C>
Growth and Income Stock Fund.............. 1.82% 1.22% 1.22% 2.15%
Balanced Stock and Bond Fund.............. 1.98% 1.37% 1.37% 2.33%
Balanced Municipal and Stock Fund......... 2.24% 1.66% 1.66% 2.60%
</TABLE>
All total return figures assume the reinvestment of all dividends and measure
the net investment income generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the underlying investments in a
Fund over a specified period of time. Average annual total return figures are
annualized and therefore represent the average annual percentage change over
the specified period. Cumulative total return figures are not annualized and
represent the aggregate percentage or dollar value change over a stated period
of time. Average annual total return and cumulative total return are based upon
the historical results of a Fund and are not necessarily representative of the
future performance of a Fund.
The average annual total return quotation is computed in accordance with a
standardized method prescribed by SEC rules. The average annual total return
for a specific period is found by taking a hypothetical, $1,000 investment
("initial investment") in Fund shares on the first day of the period, reducing
the
amount to reflect the maximum sales charge, and computing the "redeemable val-
ue" of that investment at the end of the period. The redeemable value is then
divided by the initial investment, and this quotient is taken to the Nth root
(N representing the number of years in the period) and 1 is subtracted from the
result, which is then expressed as a percentage. The calculation assumes that
all income and capital gains distributions have been reinvested in Fund shares
at net asset value on the reinvestment dates during the period.
Calculation of cumulative total return is not subject to a prescribed formula.
Cumulative total return for a specific period is calculated by first taking a
hypothetical initial investment in Fund shares on the first day of the period,
deducting (in some cases) the maximum sales charge, and computing the "redeem-
able value" of that investment at the end of the period. The cumulative total
return percentage is then
B-49
<PAGE>
determined by subtracting the initial investment from the redeemable value and
dividing the remainder by the initial investment and expressing the result as a
percentage. The calculation assumes that all income and capital gains distribu-
tions by a Fund have been reinvested at net asset value on the reinvestment
dates during the period. Cumulative total return may also be shown as the in-
creased dollar value of the hypothetical investment over the period. Cumulative
total return calculations that do not include the effect of the sales charge
would be reduced if such charge were included.
From time to time, each Fund may compare its risk-adjusted performance with
other investments that may provide different levels of risk and return. For ex-
ample, a Fund may compare its risk level, as measured by the variability of its
periodic returns, or its RISK-ADJUSTED TOTAL RETURN, with those of other funds
or groups of funds. Risk-adjusted total return would be calculated by adjusting
each investment's total return to account for the risk level of the investment.
The risk level for a class of shares of a Fund, and any of the other invest-
ments used for comparison, would be evaluated by measuring the variability of
the investment's return, as indicated by the standard deviation of the invest-
ment's monthly returns over a specified measurement period (e.g., two years).
An investment with a higher standard deviation of monthly returns would indi-
cate that a fund had greater price variability, and therefore greater risk,
than an investment with a lower standard deviation.
THE RISK-ADJUSTED TOTAL RETURN for a class of shares of a Fund and for other
investments over a specified period would be evaluated by dividing (a) the re-
mainder of the investment's annualized two-year total return minus the
annualized total return of an investment in Treasury bill securities (essen-
tially a risk-free return) over that period, by (b) the standard deviation of
the investment's monthly returns for the period. This ratio is sometimes re-
ferred to as the "Sharpe measure" of return. An investment with a higher Sharpe
measure would be regarded as producing a higher return for the amount of risk
assumed during the measurement period than an investment with a lower Sharpe
measure.
Class A Shares of each Fund are sold at net asset value plus a current maximum
sales charge of 5.25% of the offering price. This current maximum sales charge
will typically be used for purposes of calculating performance figures. Returns
and net asset value of each class of shares of the Funds will fluctuate. Fac-
tors affecting the performance of the Funds include general market conditions,
operating expenses and investment management. Any additional fees charged by a
securities representative or other financial
services firm would reduce returns described in this section. Shares of the
Funds are redeemable at net asset value, which may be more or less than origi-
nal cost.
In reports or other communications to shareholders or in advertising and sales
literature, a Fund may also compare its performance or the performance of its
portfolio manager with that of: (1) the Consumer Price Index and (2) equity mu-
tual funds or mutual fund indexes as reported by Lipper Analytical Services,
Inc. ("Lipper"), Morningstar, Inc. ("Morningstar"), Wiesenberger Investment
Companies Service ("Wiesenberger") and CDA Investment Technologies, Inc.
("CDA") or similar independent services which monitor the performance of mutual
funds, or other industry or financial publications such as Barron's, Changing
Times, Forbes and Money Magazine. Performance comparisons by these indexes,
services or publications may rank mutual funds over different periods of time
by means of aggregate, average, year-by-year, or other types of total return
and performance figures. Any given performance
B-50
<PAGE>
quotation or performance comparison should not be considered as representative
of the performance of the Funds for any future period.
There are differences and similarities between the investments which the Funds
may purchase and the investments measured by the indexes and reporting services
which are described herein. The Consumer Price Index is generally considered to
be a measure of inflation. Lipper, Morningstar, Wiesenberger and CDA are widely
recognized mutual fund reporting services whose performance calculations are
based upon changes in net asset value with all dividends reinvested and which
do not include the effect of any sales charges.
Nuveen Growth and Income Stock Fund
The Fund commenced operations on August 7, 1996. The table below represents the
investment returns for the specified periods on the Fund's Class A, Class B,
Class C and Class R shares. The total return figures for Class A shares are
shown both with and without the effect of the maximum sales charge. The total
return figures for the Class B and Class C shares include the effect of the ap-
plicable CDSC.
<TABLE>
<CAPTION>
NUVEEN GROWTH AND INCOME STOCK
FUND
---------------------------
CUMULATIVE
-------------------
8/7/96
1/1/97- (INCEPTION)
6/30/97 -6/30/97
------- -----------
<S> <C> <C>
Class ANAV 19.74% 36.30%
Class APOP 13.45% 29.14%
Class B+ 14.24% 30.37%
Class C++ 18.14% 34.26%
Class R 19.94% 36.65%
</TABLE>
- --------
+The total return figures for Class B shares take into account a 5.00% CDSC.
++The total return figures for Class C shares take into account a 1.00% CDSC.
The table below presents annual investment returns for the ICAP Discretionary
Equity Composite between December 31, 1987 and December 31, 1996 and the return
for the first half of 1997. The ICAP Discretionary Equity Composite represents
the composite performance of the 40 managed accounts totalling approximately
$2.4 billion for which ICAP serves as investment adviser and that have the same
investment objectives and policies as the Fund.
<TABLE>
<CAPTION>
1/1/97- ANNUAL TOTAL RETURNS FOR THE YEAR ENDING DECEMBER 31,
6/30/97 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ICAP Discretionary Eq-
uity Composite (Gross). 20.58 26.44 38.16 1.95 16.58 7.38 33.63 1.47 33.54 9.37 29.08
ICAP Discretionary Eq-
uity Composite (Net)... 19.92 25.01 36.63 0.74 15.24 6.12 32.15 0.26 32.05 8.09 27.63
S&P 500................. 20.62 22.96 37.43 1.31 9.99 7.67 30.55 (3.17) 31.49 16.81 5.23
Lipper Growth and Income
Index.................. 15.93 20.69 31.17 (0.41) 14.62 9.64 27.75 (5.99) 23.74 18.35 2.63
</TABLE>
B-51
<PAGE>
Nuveen Balanced Stock and Bond Fund
The Fund commenced operations on August 7, 1996. The table below represents the
investment returns for the specified periods on the Fund's Class A, Class B,
Class C and Class R shares. The total return figures for Class A shares are
shown both with and without the effect of the maximum sales charge. The total
return figures for the Class B and Class C shares include the effect of the ap-
plicable CDSC.
<TABLE>
<CAPTION>
NUVEEN BALANCED STOCK AND BOND FUND
---------------------------------------------------------------------------
CUMULATIVE
-------------------
8/7/96
1/1/97- (INCEPTION)
6/30/97 -6/30/97
------- -----------
<S> <C> <C>
Class ANAV............................................ 10.91% 22.04%
Class APOP............................................ 5.09% 15.63%
Class B+.............................................. 5.55% 16.26%
Class C++............................................. 9.55% 20.26%
Class R............................................... 11.05% 22.31%
</TABLE>
- --------
+The total return figures for Class B shares take into account a 5.00% CDSC.
++The total return figures for Class C shares take into account a 1.00% CDSC.
The table below presents annual investment returns for the ICAP Balanced Com-
posite between December 31, 1987 and December 31, 1996 and the return for the
first half of 1997. The ICAP Balanced Composite represents the composite per-
formance of the 8 managed accounts totalling approximately $370 million for
which ICAP serves as investment adviser and that have the same investment ob-
jectives and policies as the Fund.
<TABLE>
<CAPTION>
1/1/97- ANNUAL TOTAL RETURNS FOR THE YEAR ENDING DECEMBER 31,
6/30/97 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ICAP Balanced Composite
(Gross)................ 12.25 17.52 29.09 0.21 13.81 7.34 31.04 2.69 31.14 8.57 27.52
ICAP Balanced Composite
(Net).................. 11.67 16.29 27.76 (0.89) 12.61 6.18 29.70 1.57 29.80 7.40 26.20
Balanced Index.......... 10.59 12.32 24.40 (0.30) 9.07 7.33 21.51 3.99 21.09 10.95 5.74
Lipper Balanced Index... 11.19 13.01 24.88 (2.04) 11.94 7.47 25.84 0.65 19.70 11.18 4.15
</TABLE>
The gross performance results of the ICAP Discretionary Equity Composite and
the ICAP Balanced Composite reflect the investment performance of the respec-
tive composites before deduction of any investment advisory fees or other ex-
penses. The net performance results of the ICAP Discretionary Equity Composite
and the ICAP Balanced Composite reflect the deduction of the projected annual
operating expenses for Class A shares of the Nuveen Growth and Income Stock
Fund and the Nuveen Balanced Stock and Bond Fund, respectively, as summarized
in the Summary of Fund Expenses section of each Fund's prospectus. The perfor-
mance information above of the ICAP Discretionary Equity Composite and ICAP
Balanced Composite should not be interpreted as indicative of future perfor-
mance of a fund. The Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500") is a widely-recognized, unmanaged index of common stock prices. S&P
500 returns assume reinvestment of all dividends paid by the stocks included in
the index, but do not include brokerage commissions or other fees an investor
would incur by investing in the portfolio of stocks comprising the index. The
Lipper Growth and Income Index represents the composite returns of the 30 larg-
est funds comprising the Lipper Growth and Income Objective and assumes rein-
vestment of all fund dividends and distributions. The Balanced Fund
B-52
<PAGE>
Index represents the investment performance of an unmanaged index comprised 55%
of the S&P 500 and 45% of the Lehman Brothers Intermediate Treasury Index (the
"Lehman Index"). The Lehman Index is an unmanaged index of all public obliga-
tions of the U.S. Treasury, U.S. Government agencies, quasi-federal corpora-
tions and corporate debt guaranteed by the U.S. Government with maturities be-
tween one and ten years and an outstanding par value of at least $100 million.
The Lipper Balanced Index represents the composite returns of the 30 largest
funds comprising the Lipper Balanced Objective and assumes reinvestment of all
fund dividends and distributions.
Nuveen Balanced Municipal and Stock Fund
The Fund commenced investment operations on August 7, 1996. The table below
represents the investment returns for the periods specified on the Fund's Class
A, Class B, Class C and Class R shares. The total return figures for Class A
shares are shown both with and without the effect of the maximum sales charge.
The total return figures for the Class B and Class C shares include the effect
of the applicable CDSC.
<TABLE>
<CAPTION>
NUVEEN BALANCED
MUNICIPAL AND STOCK FUND
--------------------------------
CUMULATIVE
-------------------
8/7/96
1/1/97- (INCEPTION)
6/30/97 -6/30/97
------- -----------
<S> <C> <C>
Class ANAV 9.61% 18.05%
Class APOP 3.86% 11.86%
Class B+ 4.26% 12.32%
Class C++ 8.22% 16.27%
Class R 9.84% 18.38%
</TABLE>
- --------
+The total return figures for Class B shares take into account a 5.00% CDSC.
++The total return figures for Class C shares take into account a 1.00% CDSC.
TOTAL RETURNS REFLECT PAST PERFORMANCE AND ARE NOT PREDICTIVE OF FUTURE RE-
SULTS.
ADDITIONAL INFORMATION ON THE PURCHASE AND
REDEMPTION OF FUND SHARES AND SHAREHOLDER PROGRAMS
As described in the Prospectuses, the Funds provide you with alternative ways
of purchasing Fund shares based upon your individual investment needs and pref-
erences.
Each class of shares of a Fund represents an interest in the same portfolio of
investments. Each class of shares is identical in all respects except that each
class bears its own class expenses, including distribution and administration
expenses, and each class has exclusive voting rights with respect to any dis-
tribution or service plan applicable to its shares. As a result of the differ-
ences in the expenses borne by each class of shares, net income per share, div-
idends per share and net asset value per share will vary among a Fund's classes
of shares. There are no conversion, preemptive or other subscription rights,
except that Class B shares automatically convert into Class A shares as de-
scribed in the Prospectus.
B-53
<PAGE>
Shareholders of each class will share expenses proportionately for services
that are received equally by all shareholders. A particular class of shares
will bear only those expenses that are directly attributable to that class,
where the type or amount of services received by a class varies from one class
to another. For example, class-specific expenses generally will include distri-
bution and service fees.
INITIAL AND SUBSEQUENT PURCHASES OF SHARES
You may buy Fund shares through Authorized Dealers or by calling or directing
your financial adviser to call Nuveen toll-free at 800-843-6765. You may pay
for your purchase by Federal Reserve draft or by check made payable to "[Your
Fund], Class [A], [B], [C], [R]," delivered to the financial adviser through
whom the investment is to be made for forwarding to the Funds' shareholder
services agent, SSI. When making your initial investment, you must also furnish
the information necessary to establish your Fund account by completing and en-
closing with your payment the application form attached to the Prospectus (the
"Application Form"). After your initial investment, you may make subsequent
purchases at any time by forwarding to your financial adviser or SSI a check in
the amount of your purchase made payable to "[Your Fund], Class [A], [B], [C],
[R]," and indicating on the check your account number. All payments need to be
in U.S. dollars and should be sent directly to SSI at its address listed on the
back cover of the Prospectus. A check drawn on a foreign bank or payable other
than to the order of your Fund generally will not be acceptable. You may also
wire Federal Funds directly to SSI, but you may be charged a fee for this. For
instructions on how to make Fund purchases by wire transfer, call Nuveen toll-
free at 800-621-7227.
Purchase Price
The price at which you purchase a class of Fund shares is based on the next
calculation of the net asset value for that share class after the order is
placed. The net asset value per share of each share class is determined as of
the close of trading (normally 4:00 p.m. Eastern Time) on each day the New York
Stock Exchange is open for business. See "Net Asset Value," below for a de-
scription of how net asset value is calculated.
Minimum Investment Requirements
The minimum initial investment is $3,000 per fund share class ($1,000 for an
Individual Retirement Account), and may be lower for accounts opened through
fee-based programs for which the program sponsor has established a single master
account with the fund's transfer agent and performs all sub-accounting services
related to that account. Additional purchases may be in amounts of $50 or more.
These minimums may be changed at any time by a Fund. There are exceptions to
these minimums for shareholders who qualify under one or more of the Fund's
automatic investment group purchase or reinvestment programs.
SYSTEMATIC INVESTMENT PROGRAMS
Each Fund offers you several opportunities to capture the benefits of "dollar
cost averaging" through systematic investment programs. In a regularly followed
dollar cost averaging program, you would purchase more shares when Fund share
prices are lower and fewer shares when Fund share prices are higher, so that
the average price paid for Fund shares is less than the average price of the
Fund shares over the
B-54
<PAGE>
same time period. Dollar cost averaging does not assure profits or protect
against losses in a steadily declining market. Since dollar cost averaging in-
volves continuous investment regardless of fluctuating price levels, you should
consider your financial ability to continue investing in declining as well as
rising markets before deciding to invest in this way. Each Fund offers two dif-
ferent types of systematic investment programs:
. Once you have established a Fund account, you may make regular invest-
ments in an amount of $50 or more each month by authorizing SSI to draw
preauthorized checks on your bank account. There is no obligation to
continue payments and you may terminate your participation at any time
at your discretion. No charge in addition to the applicable sales charge
is made in connection with this Plan, and there is no cost to your Fund.
To obtain an application form for the Automatic Deposit Plan, check the
applicable box on the Application Form or call Nuveen toll-free at 800-
621-7227.
. Once you have established a Fund account, you may, with your employer's
consent, make regular investments in Fund shares of $25 or more per pay
period by authorizing your employer to deduct this amount automatically
from your paycheck. There is no obligation to continue payments and you
may terminate your participation at any time at your discretion. No
charge in addition to the applicable sales charge is made for this Plan,
and there is no cost to your Fund. To obtain an application form for the
Payroll Direct Deposit Plan, check the applicable box on the Application
Form or call Nuveen toll-free at 800-621-7227.
CLASS A SHARES
You may purchase Class A Shares at a public offering price equal to the appli-
cable net asset value per share plus an up-front sales charge imposed at the
time of purchase as set forth in the Prospectus. You may qualify for a reduced
sales charge, or the sales charge may be waived in its entirety, as described
below. Class A Shares are also subject to an annual service fee of .25%. See
"Distribution and Service Plans."
Each Fund receives the entire net asset value of all Class A Shares that are
sold. Nuveen retains the full applicable sales charge from which it pays the
uniform reallowances shown in the Prospectus to Authorized Dealers.
Certain commercial banks may make Class A Shares of the Funds available to
their customers on an agency basis. Pursuant to the agreements between Nuveen
and these banks, some or all of the sales charge paid by a bank customer in
connection with a purchase of Class A Shares may be retained by or paid to the
bank. Certain banks and other financial institutions may be required to regis-
ter as securities dealers in certain states.
REDUCTION OR ELIMINATION OF UP-FRONT SALES CHARGE ON CLASS A SHARES
Rights of Accumulation. You may qualify for a reduced sales charge on a pur-
chase of Class A Shares of any Fund if the amount of your purchase, when added
to the value that day of all of your prior purchases of
B-55
<PAGE>
shares of any Fund or of another Nuveen Mutual Fund, or units of a Nuveen unit
trust, on which an up-front sales charge or ongoing distribution fee is im-
posed, or is normally imposed, falls within the amounts stated in the Class A
sales charges and commissions table in "Choosing a Share Class" in the Prospec-
tus. You or your financial adviser must notify Nuveen or the Fund's transfer
agent of any cumulative discount whenever you plan to purchase Class A Shares
of a Fund that you wish to qualify for a reduced sales charge.
Letter of Intent. You may qualify for a reduced sales charge on a purchase of
Class A Shares of any Fund if you plan to purchase Class A Shares of Nuveen Mu-
tual Funds over the next 13 months and the total amount of your purchases
would, if purchased at one time, qualify you for one of the reduced sales
charges shown in the Class A sales charges and commissions table in "Choosing a
Share Class" in the Prospectus. In order to take advantage of this option, you
must complete the applicable section of the Application Form or sign and de-
liver either to an Authorized Dealer or to the Fund's transfer agent a written
Letter of Intent in a form acceptable to Nuveen. A Letter of Intent states that
you intend, but are not obligated, to purchase over the next 13 months a stated
total amount of Class A shares that would qualify you for a reduced sales
charge shown above. You may count shares of a Nuveen Mutual Fund that you al-
ready own on which you paid an up-front sales charge or an ongoing distribution
fee and any Class B and Class C Shares of a Nuveen Mutual Fund that you pur-
chase over the next 13 months towards completion of your investment program,
but you will receive a reduced sales charge only on new Class A Shares you pur-
chase with a sales charge over the 13 months. You cannot count towards comple-
tion of your investment program Class A Shares that you purchase without a
sales charge through investment of distributions from a Nuveen Mutual Fund or a
Nuveen unit trust, or otherwise.
By establishing a Letter of Intent, you agree that your first purchase of Class
A Shares of a Fund following execution of the Letter of Intent will be at least
5% of the total amount of your intended purchases. You further agree that
shares representing 5% of the total amount of your intended purchases will be
held in escrow pending completion of these purchases. All dividends and capital
gains distributions on Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the expiration of the
13 month period equal or exceed the amount specified in your Letter of Intent,
the Class A Shares held in escrow will be transferred to your account. If the
total purchases, less redemptions, exceed the amount specified in your Letter
of Intent and thereby qualify for a lower sales charge than the sales charge
specified in your Letter of Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher sales charge paid
will be used to
purchase additional Class A Shares on your behalf. If the total purchases, less
redemptions, are less than the amount specified, you must pay Nuveen an amount
equal to the difference between the amounts paid for these purchases and the
amounts which would have been paid if the higher sales charge had been applied.
If you do not pay the additional amount within 20 days after written request by
Nuveen or your financial adviser, Nuveen will redeem an appropriate number of
your escrowed Class A Shares to meet the required payment. By establishing a
Letter of Intent, you irrevocably appoint Nuveen as attorney to give instruc-
tions to redeem any or all of your escrowed shares, with full power of substi-
tution in the premises.
You or your financial adviser must notify Nuveen or the Fund's transfer agent
whenever you make a purchase of Fund shares that you wish to be covered under
the Letter of Intent option.
B-56
<PAGE>
Reinvestment of Nuveen Unit Trust Distributions. You may purchase Class A
Shares without an up-front sales charge by reinvestment of distributions from
any of the various unit trusts sponsored by Nuveen. There is no initial or sub-
sequent minimum investment requirement for such reinvestment purchases.
Group Purchase Programs. If you are a member of a qualified group, you may pur-
chase Class A Shares of any Fund or of another Nuveen Mutual Fund at the re-
duced sales charge applicable to the group's purchases taken as a whole. A
"qualified group" is one which has previously been in existence, has a purpose
other than investment, has ten or more participating members, has agreed to in-
clude Fund sales publications in mailings to members and has agreed to comply
with certain administrative requirements relating to its group purchases.
Under any group purchase program, the minimum monthly investment in Class A
Shares of any particular Fund or portfolio by each participant is $50, and the
minimum initial investment in Class A Shares of any particular Fund or portfo-
lio for each participant in the program is $3,000. No certificate will be is-
sued for any participant's account. All dividends and other distributions by a
Fund will be reinvested in additional Class A Shares of the same Fund. No par-
ticipant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself and each partici-
pant must fill out special application materials, which the group administrator
may obtain from the group's financial adviser, by calling Nuveen toll-free at
(800) 621-7227.
Reinvestment of Redemption Proceeds from Unaffiliated Funds. You may also pur-
chase Class A Shares at net asset value without a sales charge if the purchase
takes place through an Authorized Dealer and represents the reinvestment of the
proceeds of the redemption of shares of one or more registered investment com-
panies not affiliated with Nuveen. You must provide appropriate documentation
that the redemption occurred not more than one year prior to the reinvestment
of the proceeds in Class A Shares, and that you either paid an up-front sales
charge or were subject to a contingent deferred sales charge in respect of the
redemption of such shares of such other investment company.
Class A Shares of a Fund may be purchased at net asset value without a sales
charge by the following categories of investors:
. investors purchasing $1,000,000 or more;
. officers, trustees and former trustees of the Trust;
. bona fide, full-time and retired employees of Nuveen or ICAP, any parent
company of Nuveen, and subsidiaries thereof, or their immediate family
members;
. any person who, for at least 90 days, has been an officer, director or
bona fide employee of any Authorized Dealer, or their immediate family
members;
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates or their
immediate family members;
B-57
<PAGE>
. bank or broker-affiliated trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are
held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transac-
tion fee basis through a broker-dealer sponsored mutual fund purchase
program;
. clients of investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for their serv-
ices; and
. with respect to the Growth/Income and the Stock/Bond Fund, any eligible
employer-sponsored qualified defined contribution retirement plan. Eli-
gible plans are those with at least 200 employees and which either (a)
make an initial purchase of one or more Nuveen mutual funds aggregating
$1 million or more; or (b) execute a Letter of Intent to purchase in the
aggregate $1 million or more of fund shares. Nuveen will pay Authorized
Dealers a sales commission on such purchases equal to 1% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of any
amount purchased over $5.0 million.
Any Class A Shares purchased pursuant to a special sales charge waiver must be
acquired for investment purposes and on the condition that they will not be
transferred or resold except through redemption by the Funds. You or your fi-
nancial adviser must notify Nuveen or the Fund's transfer agent whenever you
make a purchase of Class A Shares of any Fund that you wish to be covered under
these special sales charge waivers.
Class A Shares of any Fund may be issued at net asset value without a sales
charge in connection with the acquisition by a Fund of another investment com-
pany. All purchases under the special sales charge waivers will be subject to
minimum purchase requirements as established by the Funds.
In determining the amount of your purchases of Class A Shares of any Fund that
may qualify for a reduced sales charge, the following purchases may be com-
bined: (1) all purchases by a trustee or other fiduciary for a single trust,
estate or fiduciary account; (2) all purchases by individuals and their immedi-
ate family members (i.e., their spouses, parents, children, grandparents,
grandchildren parents-in-law, sons-and daughters-in-law, siblings, a sibling's
spouse, and a spouse's siblings); or (3) all purchases made through a group
purchase program as described above.
Class R Share Purchase Eligibility. Class R Shares are available for purchases
of $1 million or more and for purchases using dividends and capital gains dis-
tributions on Class R Shares. Class R Shares also are available for the follow-
ing categories of investors:
. officers, trustees and former trustees of the Trust;
. bona fide, full-time and retired employees of Nuveen or ICAP, any parent
company of Nuveen, and subsidiaries thereof, or their immediate family
members;
. any person who, for at least 90 days, has been an officer, director or
bona fide employee of any Authorized Dealer, or their immediate family
members;
B-58
<PAGE>
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates, or their
immediate family members;
. bank or broker-affiliated trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are
held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transac-
tion fee basis through a broker-dealer sponsored mutual fund purchase
program;
. clients of investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for their serv-
ices.
In addition, purchasers of Nuveen unit investment trusts may reinvest their
distributions from such unit investment trusts in Class R Shares, if, before
September 6, 1994, such purchasers had elected to reinvest distributions in
Nuveen Fund shares (before June 13, 1995 for Nuveen Municipal Bond Fund
shares). Shareholders may exchange their Class R Shares of any Nuveen Fund into
Class R Shares of any other Nuveen Fund.
The reduced sales charge programs may be modified or discontinued by the Funds
at any time.
For more information about the purchase of Class A Shares or reduced sales
charge programs, or to obtain the required application forms, call Nuveen toll-
free at (800) 621-7227.
If you are eligible to purchase either Class R Shares or Class A Shares without
a sales charge at net asset value, you should be aware of the differences be-
tween these two classes of shares. Class A Shares are subject to an annual
service fee to compensate Authorized Dealers for providing you with ongoing ac-
count services. Class R Shares are not subject to a distribution or service fee
and, consequently, holders of Class R Shares may not receive the sale types or
levels of services from Authorized Dealers. In choosing between Class A Shares
and Class R Shares, you should weigh the benefits of the services to be pro-
vided by Authorized Dealers against the annual service fee imposed upon the
Class A Shares.
CLASS B SHARES
You may purchase Class B Shares at a public offering price equal to the appli-
cable net asset value per share without any up-front sales charge. Since Class
B Shares are sold without an initial sales charge, the full amount of your
purchase payment will be invested in Class B Shares. Class B Shares are subject
to an annual distribution fee to compensate Nuveen for its costs in connection
with the sale of Class B shares, and are also subject to an annual service fee
to compensate Authorized Dealers for providing you with ongoing financial
advice and other account services.
You may be subject to a CDSC if you redeem your Class B shares within a speci-
fied period after purchase, as shown in the table below. See "Distribution and
Service Plans." Nuveen compensates Authorized Dealers for sales of Class B
Shares at the time of sale at the rate of 4.00% of the amount of Class B Shares
purchased, which represents a sales commission of 3.75% plus an advance on the
first year's annual service fee of .25%.
B-59
<PAGE>
If redeemed prior to the end of the sixth year after purchase, Class B Shares
may be subject to a CDSC, as set forth below:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS
SINCE
PURCHASE CDSC
- --------------
<S> <C>
0-1 5%
1-2 4%
2-3 4%
3-4 3%
4-5 2%
5-6 1%
</TABLE>
- --------------------------------------------------------------------------------
Class B Shares acquired through the reinvestment of dividends are not subject
to a CDSC. Any CDSC will be imposed on the lower of the redeemed shares' cost
or net asset value at the time of redemption.
Class B Shares will automatically convert to Class A Shares eight years after
purchase. The purpose of the conversion is to limit the distribution fees you
pay over the life of your investment. All conversions will be done at net asset
value without the imposition of any sales load, fee, or other charge, so that
the value of each shareholder's account immediately before conversion will be
the same as the value of the account immediately after conversion. Class B
Shares acquired through reinvestment of distributions will convert into Class A
Shares based on the date of the initial purchase to which such shares relate.
For this purpose, Class B Shares acquired through reinvestment of distributions
will be attributed to particular purchases of Class B Shares in accordance with
such procedures as the Board of Trustees may determine from time to time. Class
B Shares that are converted to Class A Shares will remain subject to an annual
service fee that is identical in amount for both Class B Shares and Class A
Shares. Since net asset value per share of the Class B Shares and the Class A
Shares may differ at the time of conversion, a shareholder may receive more or
fewer Class A Shares than the number of Class B Shares converted. Any conver-
sion of Class B Shares into Class A Shares will be subject to the continuing
availability of an opinion of counsel or a private letter ruling from the In-
ternal Revenue Service to the effect that the conversion of shares would not
constitute a taxable event under federal income tax law. Conversion of Class B
Shares into Class A Shares might be suspended if such an opinion or ruling were
no longer available.
CLASS C SHARES
You may purchase Class C Shares at a public offering price equal to the appli-
cable net asset value per share without any up-front sales charge. Class C
Shares are subject to an annual distribution fee of .75% to compensate Nuveen
for its costs in connection with the sale of Class C Shares. Class C Shares are
also subject to an annual service fee of .25% to compensate Authorized Dealers
for providing you with on-going financial advice and other account services.
Nuveen compensates Authorized Dealers for sales of Class C Shares at the time
of the sale at a rate of 1% of the amount of Class C Shares purchased, which
represents a sales commission of .75% plus an advance on the first year's an-
nual service fee of .25%. See "Distribution and Service Plans."
B-60
<PAGE>
Redemptions of Class C Shares within 12 months of purchase may be subject to a
CDSC of 1% of the lower of the purchase price or redemption proceeds. Because
Class C Shares do not convert to Class A Shares and continue to pay an annual
distribution fee indefinitely, Class C Shares should normally not be purchased
by an investor who expects to hold shares for significantly longer than eight
years.
REDUCTION OR ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
Class A Shares are normally redeemed at net asset value, without any Contingent
Deferred Sales Charge ("CDSC"). However, in the case of Class A Shares pur-
chased at net asset value because the purchase amount equaled or exceeded $1
million and for investors who purchase Class A Shares without a sales charge
through an eligible employer-sponsored qualified contribution plan and where
the Authorized Dealer did not waive the sales commission, a CDSC of 1% is im-
posed on any redemption within 18 months of purchase. In the case of Class B
Shares redeemed within six years of purchase, a CDSC is imposed, beginning at
5% for redemptions within the first year, declining to 4% for redemptions
within years two and three, and declining by 1% each year thereafter until dis-
appearing after the sixth year. Class C Shares are redeemed at net asset value,
without any CDSC, except that a CDSC of 1% is imposed upon redemption of Class
C Shares that are redeemed within 12 months of purchase.
In determining whether a CDSC is payable, a Fund will first redeem shares not
subject to any charge, or that represent an increase in the value of a Fund ac-
count due to capital appreciation, and then will redeem shares held for the
longest period, unless the shareholder specifies another order. No CDSC is
charged on shares purchased as a result of automatic reinvestment of dividends
or capital gains paid. In addition, no CDSC will be charged on exchanges of
shares into another Nuveen Mutual Fund or Nuveen money market fund. You may not
exchange Class B Shares for shares of a Nuveen money market fund. The holding
period is calculated on a monthly basis and begins the first day of the month
in which the order for investment is received. The CDSC is calculated based on
the lower of the redeemed shares' cost or net asset value at the time of the
redemption and is deducted from the redemption proceeds. Nuveen receives the
amount of any CDSC shareholders pay. If Class A or Class C shares subject to a
CDSC are exchanged for shares of a Nuveen money market fund, the CDSC would be
imposed on the subsequent redemption of those money market fund shares, and the
period during which the shareholder holds the money market fund shares would be
counted in determining the remaining duration of the CDSC. The Fund may elect
not to so count the period during which the shareholder held the money market
fund shares, in which event the amount of any applicable CDSC would be reduced
in accordance with applicable SEC rules by the amount of any 12b-1 plan payments
to which those money market funds shares may be subject.
The CDSC may be waived or reduced under the following six special circumstanc-
es: 1) redemptions within one year following the death or disability, as de-
fined in Section 72(m)(7) of the Internal Revenue Code of 1986, as amended, of
a shareholder; 2) in whole or in part for redemptions of shares by shareholders
with accounts in excess of specified breakpoints that correspond to the break-
points under which the up-front sales charge on Class A Shares is reduced pur-
suant to Rule 22d-1 under the Act; 3) redemptions of shares purchased under
circumstances or by a category of investors for which Class A Shares could be
purchased at net asset value without a sales charge; 4) in connection with the
exercise of
B-61
<PAGE>
a reinstatement privilege whereby the proceeds of a redemption of a Fund's
shares subject to a sales charge are reinvested in shares of certain Funds
within a specified number of days; 5) in connection with the exercise of a
Fund's right to redeem all shares in an account that does not maintain a cer-
tain minimum balance or that the applicable board has determined may have mate-
rial adverse consequences to the shareholders of such Fund; and 6) redemptions
made pursuant to a Fund's automatic withdrawal plan, up to 12% annually of the
original investment amount. If a Fund waives or reduces the CDSC, such waiver
or reduction would be uniformly applied to all Fund shares in the particular
category. In waiving or reducing a CDSC, the Funds will comply with the re-
quirements of Rule 22d-1 of the Investment Company Act of 1940, as amended.
SHAREHOLDER PROGRAMS
Exchange Privilege
You may exchange shares of a class of a Fund for shares of the same class of
any other Nuveen Mutual Fund with reciprocal exchange privileges, at net asset
value without a sales charge, by sending a written request to the Fund, c/o
Shareholder Services, Inc., P.O. Box 5330, Denver, CO 80217-5330. Similarly,
Class A, Class B, Class C and Class R Shares of other Nuveen Mutual Funds may
be exchanged for the same class of shares of a Fund at net asset value without
a sales charge. Exchanges of shares from any Nuveen money market fund will be
made into Class A Shares, Class B Shares, Class C Shares or Class R Shares (if
eligible) of a Fund at the public offering price. If, however, a sales charge
has previously been paid on the investment represented by the exchanged shares
(i.e., the shares to be exchanged were originally issued in exchange for shares
on which a sales charge was paid), the exchange of shares from a Nuveen money
market fund will be made into shares of a Fund at net asset value. Class A
Shares, Class C Shares or Class R Shares may be exchanged for shares of any
Nuveen money market fund, but Class B Shares may not be exchanged for shares of
a Nuveen money market fund.
If you exchange shares subject to a CDSC, no CDSC will be charged at the time
of the exchange. However, if you subsequently redeem the shares acquired
through the exchange, the redemption may be subject to a CDSC, depending on
when you purchased your original shares and the CDSC schedule of the fund from
which you exchanged your shares.
The shares to be purchased must be offered in your state of residence and you
must have held the shares you are exchanging for at least 15 days. The total
value of exchanged shares must at least equal the minimum investment requirement
of the Nuveen Mutual Fund being purchased. For federal income tax purposes, any
exchange constitutes a sale and purchase of shares and may result in capital
gain or loss. Before making any exchange, you should obtain the Prospectus for
the Nuveen Mutual Fund you are purchasing and read it carefully. If the
registration of the account for the Fund your are purchasing is not exactly the
same as that of the fund account from which the exchange is made, written
instructions from all holders of the account from which the exchange is being
made must be received, with signatures guaranteed by a member of an approved
Medallion Guarantee Program or in such other manner as may be acceptable to the
Fund. Your may also exchange shares by telephone if you authorize telephone
exchanges by checking the applicable box on the Application Form or by calling
Nuveen toll-free at 800-621-7227 to obtain an authorization form. The exchange
privilege may be modified or discontinued by a Fund at any time.
B-62
<PAGE>
The exchange privilege is not intended to permit a Fund to be used as a vehicle
for short-term trading. Excessive exchange activity may interfere with portfo-
lio management, raise expenses, and otherwise have an adverse effect on all
shareholders. In order to limit excessive exchange activity and in other cir-
cumstances where Fund management believes doing so would be in the best inter-
est of the Fund, each Fund reserves the right to revise or terminate the ex-
change privilege, or limit the amount or number of exchanges or reject any ex-
change. Shareholders would be notified of any such action to the extent re-
quired by law.
Reinstatement Privilege
If you redeemed Class A, Class B or Class C Shares of a Fund or any other
Nuveen Mutual Fund that were subject to a sales charge or a CDSC, you have up
to one year to reinvest all or part of the full amount of the redemption in the
same class of shares of the Fund at net asset value. This reinstatement privi-
lege can be exercised only once for any redemption, and reinvestment will be
made at the net asset value next calculated after reinstatement of the appro-
priate class of Fund shares. If you reinstate shares that were subject to a
CDSC, your holding period as of the redemption date also will be reinstated for
purposes of calculating a CDSC. The federal income tax consequences of any cap-
ital gain realized on a redemption will not be affected by reinstatement, but a
capital loss may be disallowed in whole or in part depending on the timing, the
amount of the reinvestment and the fund from which the redemption occurred.
Fund Direct
You can use Fund Direct to link your Fund account to your account at a bank or
other financial institution. Fund Direct enables you to transfer money elec-
tronically between these accounts and perform a variety of account transac-
tions. These include purchasing shares by telephone, investing through an Auto-
matic Deposit Plan, and sending dividends, distributions, redemption payments
or Automatic Withdrawal Plan payments directly to your bank account. Please re-
fer to the Application Form for details, or call SSI at 800-621-7227 for more
information.
Fund Direct privileges may be requested via an application you obtain by call-
ing 800-621-7227. Fund Direct privileges will apply to each shareholder listed
in the registration on your account as well as to your Authorized Dealer repre-
sentative of record unless and until SSI receives written instructions termi-
nating or changing those privileges. After you establish Fund Direct for your
account, any change of bank account information must be made by signature-guar-
anteed instructions to SSI signed by all shareholders who own the account.
Purchases may be made by telephone only after your account has been estab-
lished. To purchase shares in amounts up to $250,000 through a telephone repre-
sentative, call SSI at 800-621-7227. The purchase payment will be debited from
your bank account.
REDEMPTION
You may redeem shares by sending a written request for redemption directly to
your Fund, c/o Shareholder Services, Inc., P.O. Box 5330, Denver, CO 80217-
5330, accompanied by duly endorsed certificates, if issued. Requests for re-
demption and share certificates, if issued, must be signed by each share -
B-63
<PAGE>
holder and, if the redemption proceeds exceed $50,000 or are payable other than
to the shareholder of record at the address of record (which address may not
have changed in the preceding 60 days), the signature must be guaranteed by a
member of an approved Medallion Guarantee Program or in such other manner as
may be acceptable to the Fund. You will receive payment based on the net asset
value per share next determined after receipt by the Fund of a properly exe-
cuted redemption request in proper form. A check for the redemption proceeds
will be mailed to you within seven days after receipt of your redemption re-
quest. For accounts registered in the name of a broker-dealer, payment will be
forwarded within three business days. However, if any shares to be redeemed
were purchased by check within 15 days prior to the date the redemption request
is received, the Fund will not mail the redemption proceeds until the check re-
ceived for the purchase of shares has cleared, which may take up to 15 days.
Telephone and Electronic Redemptions.
If you have authorized telephone redemption and your account address has not
changed within the last 60 days, you can redeem shares that are held in non-
certificate form and that are worth $50,000 or less by calling Nuveen at 800-
621-7227. While you or anyone authorized by you may make telephone redemption
requests, redemption checks will be issued only in the name of the shareholder
of record and will be mailed to the address of record. If your telephone re-
quest is received prior to 4:00 p.m. eastern time, the redemption check will
normally be mailed the next business day. For requests received after 4:00 p.m.
eastern time, the redemption will be effected at 4:00 p.m. eastern time the
following business day and the check will normally be mailed on the second
business day after the request.
If you have authorized electronic fund redemption or established Fund Direct
privileges, you can take advantage of the following expedited redemption proce-
dures to redeem shares held in non-certificate form that are worth at least
$1,000. You may make electronic fund redemption requests through a phone repre-
sentative or Fund Direct redemption requests by calling Nuveen at 800-621-7227.
If a redemption request is received by 4:00 p.m. eastern time, the redemption
will be made as of 4:00 p.m. that day. If the redemption request is received
after 4:00 p.m. eastern time, the redemption will be made as of 4:00 p.m. the
following business day. Proceeds of electronic fund redemptions will normally
be wired on the second business day following the redemption, but may be de-
layed one additional business day if the Federal Reserve Bank of Boston or the
Federal Reserve Bank of New York is closed on the day redemption proceeds would
ordinarily be wired. The Fund reserves the right to charge a fee for electronic
fund redemption. Proceeds of redemptions through Fund Direct will normally be
wired to your Fund Direct bank account on the second or third business day af-
ter the redemption.
Before you may redeem shares electronically by phone or through Fund Direct,
you need to complete the telephone redemption authorization section of the Ap-
plication Form or the Fund Direct application form and return it to Nuveen or
SSI. If you did not authorize telephone redemption when you opened your ac-
count, you may obtain a telephone redemption authorization form by writing your
Fund or by calling Nuveen toll-free at 800-621-7227. Proceeds from electronic
share redemptions will be transferred by Federal Reserve wire only to the com-
mercial bank account specified by the shareholder on the Application Form. You
need to send a written request to Nuveen or SSI in order to establish multiple
accounts, or to change the account or accounts designated to receive redemption
proceeds. These requests must be signed by each account owner with signatures
guaranteed by a member of an approved
B-64
<PAGE>
Medallion Guarantee Program or in such other manner as may be acceptable to a
Fund. Further documentation may be required from corporations, executors,
trustees or personal representatives.
For the convenience of shareholders, each Fund has authorized Nuveen as its
agent to accept orders from financial advisers by wire or telephone for the re-
demption of Fund shares. The redemption price is the first net asset value of
the appropriate share class determined following receipt of an order placed by
the financial adviser. Each Fund makes payment for the redeemed shares to the
securities representatives who placed the order promptly upon presentation of
required documents with signatures guaranteed as described above. Neither the
Fund nor Nuveen charges any redemption fees other than any CDSC as described
above. However, your financial adviser may charge you for serving as agent in
the redemption of shares.
Each Fund reserves the right to refuse telephone redemptions and, at its op-
tion, may limit the timing, amount or frequency of these redemptions. Telephone
redemption procedures may be modified or terminated at any time, on 30 days'
notice, by a Fund. A Fund, SSI and Nuveen will not be liable for following tel-
ephone instructions reasonably believed to be genuine. Each Fund employs proce-
dures reasonably designed to confirm that telephone instructions are genuine.
These procedures include recording all telephone instructions and requiring up
to three forms of identification prior to acting upon a caller's instructions.
If a Fund does not follow reasonable procedures for protecting shareholders
against loss on telephone transactions, it may be liable for any losses due to
unauthorized or fraudulent telephone instructions.
Automatic Withdrawal Plan.
If you own Fund shares currently worth at least $10,000, you may establish an
Automatic Withdrawal Plan by completing an application form for the Plan. You
may obtain an application form by checking the applicable box on the Applica-
tion Form or by calling Nuveen toll-free at 800-621-7227.
The Plan permits you to request periodic withdrawals on a monthly, quarterly,
semi-annual or annual basis in an amount of $50 or more. Depending upon the
size of the withdrawals requested under the Plan and fluctuations in the net
asset value of Fund shares, these withdrawals may reduce or even exhaust your
account.
The purchase of Class A Shares, other than through reinvestment, while you are
participating in the Automatic Withdrawal Plan with respect to Class A Shares
will usually be disadvantageous because you will be paying a sales charge on
any Class A Shares you purchase at the same time you are redeeming shares. Sim-
ilarly, use of the Automatic Withdrawal Plan for Class B Shares held for less
than six years or Class C Shares held for less than 12 months may be disadvan-
tageous because the newly-purchased Class B or Class C Shares will be subject
to the CDSC.
Suspension of Right of Redemption.
A Fund may suspend the right of redemption of Fund shares or delay payment more
than seven days (a) during any period when the New York Stock Exchange is
closed (other than customary weekend and holiday closings), (b) when trading in
the markets the Fund normally utilizes is restricted, or an emergency exists as
determined by the Securities and Exchange Commission so that trading of the
Fund's
B-65
<PAGE>
investments or determination of its net asset value is not reasonably practica-
ble, or (c) for any other periods that the Securities and Exchange Commission
by order may permit for protection of Fund shareholders.
Involuntary Redemption.
A Fund may, from time to time, establish a minimum total investment for Fund
shareholders, and each Fund reserves the right to redeem your shares if your
investment is less than the minimum after giving you at least 30 days' notice.
If any minimum total investment is established, and if your account is below
the minimum, you will be allowed 30 days following the notice in which to pur-
chase sufficient shares to meet the minimum. So long as a Fund continues to of-
fer shares at net asset value to holders of Nuveen Unit Trusts who are invest-
ing their Nuveen Unit Trust distributions, no minimum total investment will be
established for the Fund.
GENERAL MATTERS
The Funds may encourage registered representatives and their firms to help ap-
portion their assets among bonds, stocks and cash, and may seek to participate
in programs that recommend a portion of their assets be invested in equity se-
curities, equity and debt securities, or equity and municipal securities.
Upon notice to all Authorized Dealers, Nuveen may reallow to Authorized Dealers
electing to participate up to the full applicable Class A Share up-front sales
charge during periods and for transactions specified in the notice. The
reallowances made during these periods may be based upon attainment of minimum
sales levels.
In addition to the types of compensation to dealers to promote sales of fund
shares that are described in the prospectus, Nuveen may from time to time make
additional reallowances only to certain authorized dealers who sell or are ex-
pected to sell certain minimum amounts of shares of the Nuveen mutual funds and
Nuveen Unit Trusts during specified time periods. Promotional support may in-
clude providing sales literature to and holding informational or educational
programs for the benefit of such Authorized Dealers' representatives, seminars
for the public, and advertising and sales campaigns. Nuveen may reimburse a
participating Authorized Dealer for up to one-half of specified media costs
incurred in the placement of advertisements which jointly feature the Authorized
Dealer and Nuveen Funds and Nuveen Unit Trusts.
Such reimbursement will be based on the number of its financial advisers who
have sold Nuveen Fund shares and Nuveen Unit Trust units during the prior cal-
endar year according to an established schedule. Any such support or reimburse-
ment would be provided by Nuveen out of its own assets, and not out of the as-
sets of the Funds, and will not change the price an investor pays for shares or
the amount that a Fund will receive from such a sale. The staff of the Securi-
ties and Exchange Commission takes the position that dealers who receive 90% or
more of the applicable sales charge may be deemed underwriters under the Secu-
rities Act of 1933, as amended.
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<PAGE>
To help advisers and investors better understand and most efficiently use the
Fund to reach their investment goals, the Funds may advertise and create spe-
cific investment programs and systems. For example, this may include informa-
tion on how to use the Funds to accumulate assets for future education needs or
periodic payments such as insurance premiums. The Funds may produce software or
additional sales literature to promote the advantages of using the Funds to
meet these and other specific investor needs.
Exchanges of shares of a Fund for shares of a Nuveen money market fund may be
made on days when both funds calculate a net asset value and make shares avail-
able for public purchase. Shares of the Nuveen money market funds may be pur-
chased on days on which the Federal Reserve Bank of Boston is normally open for
business. In addition to the holidays observed by the Fund, the Nuveen money
market funds observe and will not make fund shares available for purchase on
the following holidays: Martin Luther King's Birthday, Columbus Day and Veter-
ans Day.
In addition, you may exchange Class R Shares of any Fund for Class A Shares of
the same Fund without a sales charge if the current net asset value of those
Class R Shares is at least $3,000 or you already own Class A Shares of that
Fund.
Shares will be registered in the name of the investor or the investor's finan-
cial adviser. A change in registration or transfer of shares held in the name
of a financial adviser may only be made by an order in good form from the fi-
nancial adviser acting on the investor's behalf. Share certificates will only
be issued upon written request to the Funds' transfer agent. No share certifi-
cates will be issued for fractional shares.
For more information on the procedure for purchasing shares of a Fund and on
the special purchase programs available thereunder, see "How to Buy Shares" and
"Systematic Investing" in the Prospectus.
If you choose to invest in a Fund, an account will be opened and maintained for
you by SSI, the Funds' shareholder services agent. Share certificates will be
issued to you only upon written request to SSI, and no certificates will be is-
sued for fractional shares. Each Fund reserves the right to reject any purchase
order and to waive or increase minimum investment requirements. A change in
registration or transfer of shares held in the name of your financial adviser's
firm can only be made by an order in good form from the financial adviser acting
on your behalf.
Authorized Dealers are encouraged to open single master accounts. However, some
Authorized Dealers may wish to use SSI's sub-accounting system to minimize
their internal recordkeeping requirements. An Authorized Dealer or other in-
vestor requesting shareholder servicing or accounting other than the master ac-
count or sub-accounting service offered by SSI will be required to enter into a
separate agreement with another agent for these services for a fee that will
depend upon the level of services to be provided.
The Shares are offered continuously. However, subject to the rules and regula-
tions of the Securities and Exchange Commission, each Fund reserves the right
to suspend the continuous offering of it shares at any time, but no suspension
shall affect your right of redemption.
B-67
<PAGE>
Nuveen serves as the principal underwriter of the shares of the Funds pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Trust ("Distribution Agreement"). Pursuant to the Distribution Agreement,
the Trust appointed Nuveen to be its agent for the distribution of the Funds'
shares on a continuous offering basis. Nuveen sells shares to or through bro-
kers, dealers, banks or other qualified financial intermediaries (collectively
referred to as "Dealers"), or others, in a manner consistent with the then ef-
fective registration statement of the Trust. Pursuant to the Distribution
Agreement, Nuveen, at its own expense, finances certain activities incident to
the sale and distribution of the Funds' shares, including printing and distrib-
uting of prospectuses and statements of additional information to other than
existing shareholders, the printing and distributing of sales literature, ad-
vertising and payment of compensation and giving of concessions to dealers.
Nuveen receives for its services the excess, if any, of the sales price of a
Fund's shares less the net asset value of those shares, and reallows a majority
or all of such amounts to the Dealers who sold the shares; Nuveen may act as
such a Dealer. Nuveen also receives compensation pursuant to a distribution
plan adopted by the Trust pursuant to Rule 12b-1 and described herein under
"Distribution and Service Plans." Nuveen receives any CDSCs imposed on redemp-
tions of Shares, but any amounts as to which a reinstatement privilege is not
exercised are set off against and reduce amounts otherwise payable to Nuveen
pursuant to the distribution plan.
The following table sets forth the aggregate amount of underwriting commissions
with respect to the sale of Fund shares, the amount thereof retained by Nuveen
and the compensation on redemptions and repurchases received by Nuveen for each
of the Funds for the fiscal year ended June 30, 1997. All figures are to the
nearest thousand.
<TABLE>
<CAPTION>
AMOUNT OF
COMPENSATION
AMOUNT ON
AMOUNT OF RETAINED REDEMPTIONS
UNDERWRITING BY AND
COMMISSIONS NUVEEN REPURCHASES
------------ -------- ------------
<S> <C> <C> <C>
Nuveen Growth and Income Stock Fund.......... $679 $-- $206
Nuveen Balanced Stock and Bond Fund.......... $ 27 $ 1 $ 2
Nuveen Balanced Municipal and Stock Fund..... $ 55 $ 9 $ 17
</TABLE>
DISTRIBUTION AND SERVICE PLANS
Each Fund has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the In-
vestment Company Act of 1940, which provides that Class B Shares and Class C
Shares will be subject to an annual distribution fee, and that Class A Shares,
Class B Shares and Class C Shares will all be subject to an annual service fee.
Class R Shares will not be subject to either distribution or service fees.
The distribution fee applicable to Class B Shares, and Class C Shares under
each Fund's Plan will be payable to reimburse Nuveen for services and expenses
incurred in connection with the distribution of such Shares. These expenses in-
clude payments to Authorized Dealers, including Nuveen, who are brokers of rec-
ord with respect to the Shares, as well as, without limitation, expenses of
printing and distributing prospectuses to persons other than shareholders of
the Fund, expenses of preparing, printing and distributing advertising and
sales literature and reports to shareholders used in connection with the sale
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<PAGE>
of such Shares, certain other expenses associated with the distribution of such
Shares, and any distribution-related expenses that may be authorized from time
to time by the Board of Trustees.
The service fee applicable to Class A Shares, Class B Shares and Class C Shares
under each Fund's Plan will be payable to Authorized Dealers in connection with
the provision of ongoing account services to shareholders. These services may
include establishing and maintaining shareholder accounts, answering share-
holder inquiries and providing other personal services to shareholders.
Each Fund may spend up to .25 of 1% per year of the average daily net assets of
Class A Shares as a service fee under the Plan as applicable to Class A Shares.
Each Fund may spend up to .75 of 1% per year of the average daily net assets of
each of the Class B Shares and Class C Shares as a distribution fee which con-
stitutes an asset-based sales charge whose purpose is the same as an up-front
sales charge and up to .25 of 1% per year of the average daily net assets of
each of the Class B Shares and Class C Shares as a service fee under the Plan
as applicable to such classes.
For the period from inception (August 7, 1996) to the fiscal year ended June
30, 1997, the Nuveen Growth and Income Stock Fund, the Nuveen Balanced Stock
and Bond Fund and the Nuveen Balanced Municipal and Stock Fund paid 12b-1 fees
pursuant to their respective 12b-1 Plan in the amounts set forth in the table
below. For this period, substantially all of the 12b-1 service fees on Class A
Shares were paid out as compensation to Authorized Dealers for providing serv-
ices to shareholders relating to their investments. All 12b-1 distribution and
service fees on Class B and Class C Shares were retained by the Distributor as
compensation for commissions advanced to Authorized Dealers.
<TABLE>
<CAPTION>
12B-1
FEES
PAID BY
THE FUND
FROM
8/7/96-
6/30/97
--------
<S> <C>
Nuveen Growth and Income Stock Fund
Class A............................................................. $721,457
Class B............................................................. $ 16,725
Class C............................................................. $ 6,701
--------
Total............................................................. $744,883
Nuveen Balanced Stock and Bond Fund
Class A............................................................. $ 22,683
Class B............................................................. $ 292
Class C............................................................. $ 772
--------
Total............................................................. $ 23,747
Nuveen Balanced Municipal and Stock Fund
Class A............................................................. $ 33,029
Class B............................................................. $ 818
Class C............................................................. $ 458
--------
Total............................................................. $ 34,305
</TABLE>
B-69
<PAGE>
Under each Fund's Plan, the Fund will report quarterly to the Board of Trustees
for its review all amounts expended per class of shares under the Plan. The
Plan may be terminated at any time with respect to any class of shares, without
the payment of any penalty, by a vote of a majority of the Trustees who are not
"interested persons" and who have no direct or indirect financial interest in
the Plan or by vote of a majority of the outstanding voting securities of such
class. The Plan may be renewed from year to year if approved by a vote of the
Board of Trustees and a vote of the non-interested Trustees who have no direct
or indirect financial interest in the Plan cast in person at a meeting called
for the purpose of voting on the Plan. The Plan may be continued only if the
trustees who vote to approve such continuance conclude, in the exercise of rea-
sonable business judgment and in light of their fiduciary duties under applica-
ble law, that there is a reasonable likelihood that the Plan will benefit the
Fund and its shareholders. The Plan may not be amended to increase materially
the cost which a class of shares may bear under the Plan without the approval
of the shareholders of the affected class, and any other material amendments of
the Plan must be approved by the non-interested trustees by a vote cast in per-
son at a meeting called for the purpose of considering such amendments. During
the continuance of the Plan, the selection and nomination of the non-interested
trustees of the Trust will be committed to the discretion of the non-interested
trustees then in office.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 West Monroe Street,
Chicago, Illinois 60603 have been selected as auditors for the Trust. In addi-
tion to audit services, Arthur Andersen LLP will provide consultation and as-
sistance on accounting, internal control, tax and related matters. The finan-
cial statements included in this Statement of Additional Information have been
audited by Arthur Andersen LLP as indicated in their report with respect there-
to, and are included in reliance upon the authority of said firm as experts in
giving said report.
The custodian of the assets of the Funds is The Chase Manhattan Bank, 4 New
York Plaza, New York, New York 10004. The custodian performs custodial, fund
accounting and portfolio accounting services.
B-70
<PAGE>
FINANCIAL STATEMENTS
The audited financial statements for each Fund's most recent fiscal year appear
in the Funds' Annual Reports. The Annual Reports accompany this Statement of
Additional Information.
B-71
<PAGE>
APPENDIX A--RATINGS OF INVESTMENTS
STANDARD & POOR'S RATINGS GROUP--A brief description of the applicable Standard
& Poor's Ratings Group ("S&P") rating symbols and their meanings (as published
by S&P) follows:
LONG TERM DEBT
An S&P corporate or municipal debt rating is a current assessment of the cred-
itworthiness of an obligor with respect to a specific obligation. This assess-
ment may take into consideration obligors such as guarantors, insurers, or
lessees.
The debt rating is not a recommendation to purchase, sell, or hold a security,
inasmuch as it does not comment as to market price or suitability for a partic-
ular investor.
The ratings are based on current information furnished by the issuer or ob-
tained by S&P from other sources it considers reliable. S&P does not perform an
audit in connection with any rating and may, on occasion, rely on unaudited fi-
nancial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or based on other
circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
INVESTMENT GRADE
AAA Debt rated "AAA' has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rated "AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small de-
gree.
A Debt rated "A' has a strong capacity to pay interest and repay princi-
pal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories.
BBB
Debt rated "BBB' is regarded as having an adequate capacity to pay in-
terest and repay principal. Whereas it normally exhibits adequate pro-
tection parameters, adverse economic conditions or changing circum-
stances are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated
categories.
<PAGE>
SPECULATIVE GRADE RATING
Debt rated "BB', "B', "CCC', "CC' and "C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. "BB' indicates the least degree of speculation and "C' the highest.
While such debt will likely have some quality and protective characteristics
these are outweighed by major uncertainties or major exposures to adverse con-
ditions.
BB Debt rated "BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and princi-
pal payments. The "BB' rating category is also used for debt subordi-
nated to senior debt that is assigned an actual or implied "BBB-' rat-
ing.
B Debt rated "B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal.
The "B' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BB' or "BB-' rating.
CCC Debt rated "CCC' has a currently identifiable vulnerability to de-
fault, and is dependent upon favorable business, financial, and eco-
nomic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal.
The "CCC' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "B' or "B-' rating.
CC The rating "CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC' debt rating.
C The rating "C' typically is applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-' debt rating. The
"C' rating may be used to cover a situation where a bankruptcy peti-
tion has been filed, but debt service payments are continued.
CI The rating "CI' is reserved for income bonds on which no interest is
being paid.
D Debt rated "D' is in payment default. The "D' rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
"D' rating also will be used upon the filing of a bankruptcy petition
if debt service payments are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA' to "CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
PROVISIONAL RATINGS: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project financed by
the debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely completion of the
project. This rating, however, while addressing credit quality subsequent to
comple-
A-2
<PAGE>
tion of the project, makes no comment on the likelihood of, or the risk of de-
fault upon failure of, such completion. The investor should exercise judgment
with respect to such likelihood and risk.
L The letter "L' indicates that the rating pertains to the principal
amount of those bonds to the extent that the underlying deposit col-
lateral is federally insured by the Federal Savings & Loan Insurance
Corp. or the Federal Deposit Insurance Corp.* and interest is ade-
quately collateralized. In the case of certificates of deposit the
letter "L' indicates that the deposit, combined with other deposits
being held in the same right and capacity will be honored for princi-
pal and accrued pre-default interest up to the federal insurance lim-
its within 30 days after closing of the insured institution or, in the
event that the deposit is assumed by a successor insured institution,
upon maturity.
NR Indicates no rating has been requested, that there is insufficient in-
formation on which to base a rating, or that S&P does not rate a par-
ticular type of obligation as a matter of policy.
MUNICIPAL NOTES
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rat-
ing. Notes maturing beyond 3 years will most likely receive a long-term debt
rating. The following criteria will be used in making that assessment:
--Amortization schedule (the larger the final maturity relative to
other maturities, the more likely it will be treated as a note).
--Source of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
NOTE RATING SYMBOLS ARE AS FOLLOWS:
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest with some vulnera-
bility to adverse financial and economic changes over the term of the
notes.
SP-3 Speculative capacity to pay principal and interest.
A note rating is not a recommendation to purchase, sell, or hold a security in-
asmuch as it does not comment as to market price or suitability for a particu-
lar investor. The ratings are based on current information furnished to S&P by
the issuer or obtained by S&P from other sources it considers reliable. S&P
does not perform an audit in connection with any rating and may, on occasion,
rely on unaudited financial information. The ratings may be changed, suspended,
or withdrawn as a result of changes in or unavailability of such information or
based on other circumstances.
*Continuance of the rating is contingent upon S&P's receipt of an executed copy
of the escrow agreement or closing documentation confirming investments and
cash flow.
A-3
<PAGE>
COMMERCIAL PAPER
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into several categories, ranging from "A-1" for the highest
quality obligations to "D" for the lowest. These categories are as follows:
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is satis-
factory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated "B" are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
A commercial rating is not a recommendation to purchase, sell, or hold a secu-
rity inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
S&P by the issuer or obtained by S&P from other sources it considers reliable.
S&P does not perform an audit in connection with any rating and may, on occa-
sion, rely on unaudited financial information. The ratings may be changed, sus-
pended, or withdrawn as a result of changes in or unavailability of such infor-
mation or based on other circumstances.
MOODY'S INVESTORS SERVICE, INC.--A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's") rating symbols and their meanings (as pub-
lished by Moody's) follows:
LONG TERM DEBT
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally re-
ferred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all stan-
dards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated
A-4
<PAGE>
lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa securi-
ties.
A Bonds which are rated A possess may favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Moody's bond rating symbols may contain numerical modifiers of a ge-
neric rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-
range ranking, and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristi-
cally unrealiable over any great length of time. Such bonds lack out-
standing investment characteristics and in fact have speculative char-
acteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protec-
tion of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desir-
able investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and is-
sues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Con( . . . )
Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operation experience, (c) rentals
which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes
probable credit stature upon completion of construction or elimination
of basis of condition.
NOTE: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the sym-
bols Aa1, A1, Baa1, Ba1, and B1.
A-5
<PAGE>
MUNICIPAL SHORT-TERM LOANS
MIG 1/VMIG 1 This designation denotes best quality. There is present
strong protection by established cash flows, superior liquid-
ity support or demonstrated broadbased access to the market
for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins or protection
are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security ele-
ments are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well-established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection com-
monly regarded as required of an investment security is pres-
ent and although not distinctly or predominantly speculative,
there is specific risk.
COMMERCIAL PAPER
Issuers rated PRIME-1 (or related supporting institutions) have a superior ca-
pacity for repayment of senior short-term promissory obligations. Prime-1 re-
payment capacity will often be evidenced by many of the following characteris-
tics:
--Leading market positions in well-established industries.
--High rates of return on funds employed.
--Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
--Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
--Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong capac-
ity for repayment of senior short-term promissory obligations. This will nor-
mally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated PRIME-3 (or related supporting institutions) have an acceptable
capacity for repayment of senior short-term promissory obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial lever-
age. Adequate alternate liquidity is maintained.
Issuers rated NOT PRIME do not fall within any of the Prime rating categories.
A-6
<PAGE>
DUFF & PHELPS, INC.--A brief description of the applicable Duff & Phelps, Inc.
("D&P") ratings symbols and their meanings (as published by D&P) follows:
LONG TERM DEBT
These ratings represent a summary opinion of the issuer's long-term fundamental
quality. Rating determination is based on qualitative and quantitative factors
which may vary according to the basic economic and financial characteristics of
each industry and each issuer. Important considerations are vulnerability to
economic cycles as well as risks related to such factors as competition, gov-
ernment action, regulation, technological obsolescence, demand shifts, cost
structure, and management depth and expertise. The projected viability of the
obligor at the trough of the cycle is a critical determination.
Each rating also takes into account the legal form of the security, (e.g.,
first mortgage bonds, subordinated debt, preferred stock, etc.). The extent of
rating dispersion among the various classes of securities is determined by sev-
eral factors including relative weightings of the different security classes in
the capital structure, the overall credit strength of the issuer, and the na-
ture of covenant protection.
The Credit Rating Committee formally reviews all ratings once per quarter (more
frequently, if necessary). Ratings of "BBB-' and higher fall within the defi-
nition of investment grade securities, as defined by bank and insurance super-
visory authorities. Structured finance issues, including real estate, asset-
backed and mortgage-backed financings, use this same rating scale. Duff &
Phelps Credit Rating claims paying ability ratings of insurance companies use
the same scale with minor modification in the definitions. Thus, an investor
can compare the credit quality of investment alternatives across industries and
structural types. A "Cash Flow Rating" (as noted for specific ratings) ad-
dresses the likelihood that aggregate principal and interest will equal or ex-
ceed the rated amount under appropriate stress conditions.
RATING SCALEDEFINITION
- --------------------------------------------------------------------------------
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
- --------------------------------------------------------------------------------
AA+ High credit quality. Protection factors are strong. Risk is mod-
AA est, but may vary slightly from time to time because of economic
AA- conditions.
- --------------------------------------------------------------------------------
A+ Protection factors are average but adequate. However, risk factors
A are more variable and greater in periods of economic stress.
A-
- --------------------------------------------------------------------------------
BBB+
BBB
BBB-
Below average protection factors but still considered sufficient
for prudent investment. Considerable variability in risk during
economic cycles.
- --------------------------------------------------------------------------------
A-7
<PAGE>
BB+ Below investment grade but deemed likely to meet obligations when
BB due. Present or prospective financial protection factors fluctuate
BB- according to industry conditions or company fortunes. Overall
quality may move up or down frequently within this category.
- -------------------------------------------------------------------------------
B+ Below investment grade and possessing risk that obligations will
B not be met when due. Financial protection factors will fluctuate
B- widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower rating
grade.
- -------------------------------------------------------------------------------
CCC Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substan-
tial with unfavorable economic/industry conditions, and/or with
unfavorable company developments.
- -------------------------------------------------------------------------------
DD Defaulted debt obligations. Issuer failed to meet scheduled prin-
cipal and/or interest payments.
DP Preferred stock with dividend arrearages.
- -------------------------------------------------------------------------------
SHORT-TERM DEBT RATINGS
Duff & Phelps' short-term ratings are consistent with the rating criteria used
by money market participants. The ratings apply to all obligations with matu-
rities of under one year, including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master notes, bankers accept-
ances, irrevocable letters of credit, and current maturities of long-term
debt. Asset-backed commercial paper is also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash from opera-
tions, but also access to alternative sources of funds including trade credit,
bank lines, and the capital markets. An important consideration is the level
of an obligor's reliance on short-term funds on an ongoing basis.
The distinguishing feature of Duff & Phelps Credit Ratings' short-term ratings
is the refinement of the traditional "1' category. The majority of short-term
debt issuers carry the highest rating, yet quality differences exist within
that tier. As a consequence, Duff & Phelps Credit Rating has incorporated gra-
dations of "1+' (one plus) and "1-' (one minus) to assist investors in recog-
nizing those differences.
These ratings are recognized by the SEC for broker-dealer requirements, spe-
cifically capital computation guidelines. These ratings meet Department of La-
bor ERISA guidelines governing pension and profit sharing investments. State
regulators also recognize the ratings of Duff & Phelps Credit Rating for in-
surance company investment portfolios.
A-8
<PAGE>
RATING SCALE:
DEFINITION
HIGH GRADE
D-1+ Highest certainty of timely payment. Short-term liquidity, includ-
ing internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are ex-
cellent and supported by good fundamental protection factors. Risk
factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.
GOOD GRADE
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
SATISFACTORY GRADE
D-3 Satisfactory liquidity and other protection factors qualify issue
as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
NON-INVESTMENT GRADE
D-4 Speculative investment characteristics. Liquidity is not suffi-
cient to insured against disruption in debt service. Operating
factors and market access may be subject to a high degree of vari-
ation.
DEFAULT
D-5 Issuer failed to meet scheduled principal and/or interest pay-
ments.
FITCH INVESTORS SERVICE, INC.--A brief description of the applicable Fitch In-
vestors Service, Inc. ("Fitch") ratings symbols and meanings (as published by
Fitch) follows:
LONG TERM DEBT
Fitch investment grade bond ratings provide a guide to investors in determining
the credit risk associated with a particular security. The ratings represent
Fitch's assessment of the issuer's ability to meet the obligations of a spe-
cific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its rela-
tionship to other obligations of the issuer, the current and prospective finan-
cial condition and operating performance of the issuer and any guarantor, as
well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by in-
surance policies or financial guaranties unless otherwise indicated.
A-9
<PAGE>
Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories do not fully reflect small differ-
ences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell, or hold any security. Rat-
ings do not comment on the adequacy of market price, the suitability of any se-
curity for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors,
underwriters, their experts, and other sources Fitch believes to be reliable.
Fitch does not audit or verify the truth or accuracy of such information. Rat-
ings may be changed, suspended, or withdrawn as a result of changes in, or the
unavailability of, information or for other reasons.
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay inter-
est and repay principal, which is unlikely to be affected by reasona-
bly foreseeable events.
AA Bonds considered to be investment grade and of very high credit quali-
ty. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA'. Because
bonds rated in the "AAA' and "AA' categories are not significantly
vulnerable to foreseeable future developments, short-term debt of the
issuers is generally rated "F-1+'.
A Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is consid-
ered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on
these bonds and, therefore, impair timely payment. The likelihood that
the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
Fitch speculative grade bond ratings provide a guide to investors in determin-
ing the credit risk associated with a particular security. The ratings ("BB' to
"C') represent Fitch's assessment of the likelihood of timely payment of prin-
cipal and interest in accordance with the terms of obligation for bond issues
not in default. For defaulted bonds, the rating ("DDD' to "D') is an assessment
of the ultimate recovery value through reorganization or liquidation.
The rating takes into consideration special features of the issue, its rela-
tionship to other obligations of the issuer, the current and prospective finan-
cial condition and operating performance of the issuer and any guarantor, as
well as the economic and political environment that might affect the issuer's
future financial strength.
A-10
<PAGE>
Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories cannot fully reflect the differ-
ences in the degrees of credit risk.
BB Bonds are considered speculative. The obligor's ability to pay inter-
est and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identi-
fied which could assist the obligor in satisfying its debt service re-
quirements.
B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of con-
tinued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and eco-
nomic activity throughout the life of the issue.
CCC Bonds have certain identifiable characteristics which, if not reme-
died, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD, Bonds are in default on interest and/or principal payments. Such bonds
DD are extremely speculative and should be valued on the basis of their
AND Dultimate recovery value in liquidation or reorganization of the obli-
gor. "DDD' represents the highest potential for recovery of these
bonds, and "D' represents the lowest potential for recovery.
SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on de-
mand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+ EXCEPTIONALLY STRONG CREDIT QUALITY Issues assigned this rating are
regarded as having the strongest degree of assurance for timely pay-
ment.
F-1 VERY STRONG CREDIT QUALITY Issues assigned this rating reflect an as-
surance of timely payment only slightly less in degree than issues
rated "F-1+'.
F-2
GOOD CREDIT QUALITY Issues assigned this rating have a satisfactory
degree of assurance for timely payment but the margin of safety is not
as great as for issues assigned "F-1+' and "F-1' ratings.
F-3
FAIR CREDIT QUALITY Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is ade-
quate; however, near-term adverse changes could cause these securities
to be rated below investment grade.
A-11
<PAGE>
F-S WEAK CREDIT QUALITY Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic con-
ditions.
D DEFAULT Issues assigned this rating are in actual or imminent payment
default.
LOC The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
A-12
<PAGE>
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
- -----
32
<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>
PART C--OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements:
1. Nuveen Growth and Income Stock Fund, Nuveen Balanced Stock and Bond Fund
and Nuveen Balanced Municipal and Stock Fund:
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information through incorporation
by reference to each Fund's most recent Annual Report:
Statement of Net Assets
Report of Independent Public Accountants
Portfolio of Investments
Statement of Operations
Changes in Net Assets
Notes to Financial Statements
(b) Exhibits
<TABLE>
<CAPTION>
<C> <S> <C>
1(a). Declaration of Trust of Registrant./1/
1(b). Certificate for the Establishment and Designation of
Series and Classes for the Nuveen Growth and Income Stock
Fund, the Nuveen Balanced Stock and Bond Fund, and Nuveen
Balanced Municipal and Stock Fund, dated
June 20, 1996./3/
1(c). Certificate for the Establishment and Designation of
Series for the Nuveen Balanced California Municipal and
Stock Fund, dated July 23, 1997./6/
2. By-Laws of Registrant./1/
3. Not applicable.
4. Specimen certificate of Shares of each Fund./3/
5(a). Management Agreement between Registrant and Nuveen
Institutional Advisory Corp. on behalf of Nuveen Growth
and Income Stock Fund, Nuveen Balanced Stock and Bond
Fund, and Nuveen Balanced Municipal and Stock Fund./6/
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
5(b). Management Agreement between Registrant and Nuveen
Institutional Advisory Corp. on behalf of Nuveen Balanced
California Municipal and Stock Fund./6/
5(c). Sub-Advisory Agreement between Nuveen Institutional
Advisory Corp and Institutional Capital Corporation on
behalf of Nuveen Growth and Income Stock Fund, Nuveen
Balanced Stock and Bond Fund, and Nuveen Balanced
Municipal and Stock Fund./6/
5(d). Form of Sub-Advisory Agreement between Nuveen
Institutional Advisory Corp. and Institutional Capital
Corp. on behalf of Nuveen Balanced California Municipal
and Stock Fund./6/
5(e). Renewal of Investment Management Agreement dated July 23,
1997./7/
6(a). Distribution Agreement between Registrant and John Nuveen
& Co. Incorporated./7/
6(b). Dealer Management Agreement dated October 22, 1996./4/
7. Not applicable.
8(a). Custodian Agreement between Registrant and Chase Manhattan
Bank./7/
8(b). Form of Subscription Agency Agreement between Registrant
and The Chase Manhattan Bank./4/
9. Transfer Agency Agreement between Registrant and
Shareholder Services, Inc./7/
10(a). Opinion and consent of Chapman and Cutler, dated July 30,
1996./3/
10(b). Opinion and consent of Bingham, Dana & Gould, dated July
30, 1996./3/
11. Consent of Independent Public Accountants./7/
12. Not applicable.
13. Subscription Agreement with Nuveen Institutional Advisory
Corp./7/
14. Not applicable.
15. Plan of Distribution and Service Pursuant to Rule 12b-1
for the Class A Shares, Class B Shares and Class C Shares
of each Fund./3/
16. Schedule of Computation of Performance Figures./7/
17. Financial Data Schedule./7/
18. Multi-Class Plan./4/
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
99(a). Original Powers of Attorney for Messrs. Schwertfeger,
Dean, Leafstrand, Bacon, Kissick, Lyon, and Ms.
Wellington, Trustees, authorizing, among others, Larry W.
Martin and Gifford R. Zimmerman to execute the
Registration Statement./6/
99(b). Code of Ethic and Reporting Requirements./7/
</TABLE>
- --------
/1/Incorporated by reference to the initial registration statement filed on
Form N-1A for Registrant.
/2/Incorporated by reference to the pre-effective amendment no. 1 filed on Form
N-1A for Registrant.
/3/Incorporated by reference to the pre-effective amendment no. 2 filed on Form
N-1A for Registrant.
/4/Incorporated by reference to the post-effective amendment no. 1 filed on
Form N-1A for Registrant.
/5/Incorporated by reference to the post-effective amendment no. 2 on Form N-1A
for Registrant.
/6/Incorporated by reference to the post-effective amendment no. 3 on Form N-1A
for Registrant.
/7/Filed herewith.
ITEM 25: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26: NUMBER OF HOLDERS OF SECURITIES
At August 13, 1997:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERIES RECORD HOLDERS
--------------- --------------
<S> <C>
Nuveen Growth and Income Stock Fund
Class A.................................................. 39,103
Class B.................................................. 3,794
Class C.................................................. 2,054
Class R.................................................. 2,840
Nuveen Balanced Stock and Bond Fund........................
Class A.................................................. 4,816
Class B.................................................. 2,625
Class C.................................................. 2,532
Class R.................................................. 2,524
Nuveen Balanced Municipal and Stock Fund...................
Class A.................................................. 4,928
Class B.................................................. 2,771
Class C.................................................. 2,674
Class R.................................................. 2,516
</TABLE>
ITEM 27: INDEMNIFICATION
Section 4 of Article XII of Registrant's Declaration of Trust provides as fol-
lows:
Subject to the exceptions and limitations contained in this Section 4, every
person who is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust
C-3
<PAGE>
as directors, trustees, officers, employees or agents of another organization
in which the Trust has an interest as a shareholder, creditor or otherwise
(hereinafter referred to as a "Covered Person"), shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any claim, ac-
tion, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been such a Trustee, director, officer, em-
ployee or agent and against amounts paid or incurred by him in settlement
thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross negli-
gence or reckless disregard of the duties involved in the conduct of his
office;
(b) with respect to any matter as to which he shall have been finally adju-
dicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a pay-
ment by a Covered Person, unless there has been either a determination that
such Covered Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office by the court or other body approving the settlement or other
disposition or a reasonable determination, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that he did not
engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by poli-
cies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall con-
tinue as to a person who has ceased to be such a Covered Person and shall inure
to the benefit of the heirs, executors and administrators of such a person.
Nothing contained herein shall affect any rights to indemnification to which
Trust personnel other than Covered Persons may be entitled by contract or oth-
erwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section 4
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it
is ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any
such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written
C-4
<PAGE>
opinion shall determine, based upon a review of the readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe
that the recipient ultimately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an
Interested Person of the Trust (including, as such Disinterested Trustee, any-
one who has been exempted from being an Interested Person by any rule, regula-
tion or order of the Commission), and (y) against whom none of such actions,
suits or other proceedings or another action, suit or other proceeding on the
same or similar grounds is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal, admin-
istrative or other, including appeals), actual or threatened; and the word "li-
ability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other lia-
bilities.
-----------------
The trustees and officers of the Registrant are covered by Investment Trust Er-
rors and Omission policies in the aggregate amount of $20,000,000 (with a maxi-
mum deductible of $500,000) against liability and expenses of claims of wrong-
ful acts arising out of their position with the Registrant, except for matters
which involved willful acts, bad faith, gross negligence and willful disregard
of duty (i.e., where the insured did not act in good faith for a purpose he or
she reasonably believed to be in the best interest of Registrant or where he or
she shall have had reasonable cause to believe this conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, trustees or controlling persons of the
Registrant pursuant to the Declaration of Trust of the Registrant or otherwise,
the Registrant has been advised that in the opinion of the Securities and Ex-
change Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indem-
nification against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by an officer or trustee or controlling person of
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such officer, trustee or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 28: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Nuveen Institutional Advisory Corp. serves as investment adviser or manager
to the following closed-end management type investment companies: Nuveen Select
Tax-Free Income Portfolio; Nuveen Select Tax-Free Income Portfolio 2; Nuveen
Insured California Select Tax-Free Income Portfolio; Nuveen Insured New York
Select Tax-Free Income Portfolio; Nuveen Select Tax-Free Income Portfolio 3 and
the Registrant, an open-end management type investment company. The principal
business address for all of these investment companies is 333 West Wacker
Drive, Chicago, Illinois 60606. In addition, Nuveen Institutional Advisory
Corp. serves as investment adviser to separately managed accounts.
C-5
<PAGE>
For a description of other business, profession, vocation or employment of a
substantial nature in which any director or officer of the investment adviser
has engaged during the last two years for his account or in the capacity of di-
rector, officer, employee, partner or trustee, see the descriptions under "Man-
agement" in the Statement of Additional Information.
(b) Institutional Capital Corporation (ICAP) acts as investment adviser to the
ICAP Funds, Inc. and as sub-investment adviser to the Registrant. In addition,
ICAP serves as investment adviser to separately managed accounts.
The following is a listing of each director and officer of ICAP. The principal
business address for each person is 225 W. Wacker Drive, Chicago, IL 60606.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH ICAP WITH REGISTRANT
---- --------------------- ---------------------
<S> <C> <C>
Robert H. Lyon........ President, Chief Investment Trustee
Officer and Director
Pamela H. Conroy...... Senior Vice President None
Donald D. Niemann..... Executive Vice President and None
Director
Gary S. Maurer........ Executive Vice President and None
Director
Barbara A. Chiesa..... Vice President and Director None
</TABLE>
ITEM 29: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Flagship
Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen Flagship
Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen Flagship Mu-
nicipal Trust, Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free Money
Market Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free
Reserves, Inc., Flagship Admiral Funds Inc., and the Registrant. Nuveen also
acts as depositor and principal underwriter of the Nuveen Tax-Free Unit Trust,
and the Nuveen Unit Trust, registered unit investment trusts. Nuveen has also
served or is serving as co-managing underwriter to the following closed-end
management type investment companies: Nuveen Municipal Value Fund, Inc., Nuveen
California Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund,
Inc., Nuveen Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund,
Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen California Perfor-
mance Plus Municipal Fund, Inc., Nuveen New York Performance Plus Municipal
Fund, Inc., Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Op-
portunity Fund, Inc., Nuveen California Municipal Market Opportunity Fund,
Inc., Nuveen Investment Quality Municipal Fund, Inc., Nuveen California Invest-
ment Quality Municipal Fund, Inc., Nuveen New York Investment Quality Municipal
Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida Invest-
ment Quality Municipal Fund, Nuveen New Jersey Investment Quality Municipal
Fund, Inc., Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen Se-
lect Quality Municipal Fund, Inc.,
C-6
<PAGE>
Nuveen California Select Quality Municipal Fund, Inc., Nuveen New York Select
Quality Municipal Fund, Inc., Nuveen Quality Income Municipal Fund, Inc.,
Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen Florida Quality Income
Municipal Fund, Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen
Ohio Quality Income Municipal Fund, Inc., Nuveen Texas Quality Income Municipal
Fund, Nuveen California Quality Income Municipal Fund, Inc., Nuveen New York
Quality Income Municipal Fund, Inc., Nuveen Premier Municipal Income Fund,
Inc., Nuveen Premier Insured Municipal Income Fund, Inc., Nuveen Premium Income
Municipal Fund 2, Inc., Nuveen Insured California Premium Income Municipal
Fund, Inc., Nuveen Insured New York Premium Income Municipal Fund, Inc., Nuveen
Select Maturities Municipal Fund, Nuveen Arizona Premium Income Municipal Fund,
Inc., Nuveen Insured Florida Premium Income Municipal Fund, Nuveen Michigan
Premium Income Municipal Fund, Inc., Nuveen New Jersey Premium Income Municipal
Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Insured Cali-
fornia Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania Premium In-
come Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen
Massachusetts Premium Income Municipal Fund, Nuveen Virginia Premium Income Mu-
nicipal Fund, Nuveen Washington Premium Income Municipal Fund, Nuveen Connecti-
cut Premium Income Municipal Fund, Nuveen Georgia Premium Income Municipal
Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen North Carolina Pre-
mium Income Municipal Fund, Nuveen California Premium Income Municipal Fund,
Nuveen Insured Premium Income Municipal Fund 2, Nuveen Select Tax-Free Income
Portfolio, Nuveen Select Tax-Free Income Portfolio 2, Nuveen Insured California
Select Tax-Free Income Portfolio, Nuveen Insured New York Select Tax-Free In-
come Portfolio and Nuveen Select Tax-Free Income Portfolio 3.
(b)
<TABLE>
<S> <C> <C>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------------------------------------------------
Anthony T. Dean President, Chief Operating Chairman and Trustee
333 West Wacker Drive Officer and Director
Chicago, IL 60606
Timothy R. Schwertfeger Chairman of the Board, President and Trustee
333 West Wacker Drive Chief Executive Officer,
Chicago, IL 60606 and Director
John P. Amboian Executive Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bruce P. Bedford Executive Vice President None
333 West Wacker Drive
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-7
<PAGE>
<TABLE>
<S> <C> <C>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ----------------------------------------------------------------------------------
Richard P. Davis Vice President None
One South Main Street
Dayton, OH 45402
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
O. Walter Renfftlen Vice President Vice President and
333 West Wacker Drive and Controller Controller
Chicago, IL 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
C-8
<PAGE>
<TABLE>
<S> <C> <C>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- -----------------------------------------------------------------------------------
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President Vice President and
333 West Wacker Drive and Treasurer Treasurer
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Assistant Secretary
Chicago, IL 60606
</TABLE>
(c) Not applicable.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Institutional Advisory Corp., 333 West Wacker Drive, Chicago, Illinois
60606, maintains the Declaration of Trust, By-Laws, minutes of trustees and
shareholder meetings and contracts of the Registrant and all advisory material
of the investment adviser.
The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004-2413,
maintains all general and subsidiary ledgers, journals, trial balances, records
of all portfolio purchases and sales, and all other required records not main-
tained by Nuveen Advisory Corp., or Shareholder Services, Inc.
Shareholder Services, Inc., P.O. Box 5330, Denver, Colorado 80217-5330, main-
tains all the required records in its capacity as transfer, dividend paying,
and shareholder service agent for the Registrant.
ITEM 31: MANAGEMENT SERVICES
Not applicable.
ITEM 32: UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
C-9
<PAGE>
(c) The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest Annual Report to Share-
holders upon request and without charge.
(d) The Registrant agrees to call a meeting of shareholders for the purpose of
voting upon the question of the removal of any trustee or trustees when re-
quested to do so in writing by the record holders of at least 10% of the
Registrant's outstanding shares and to assist the shareholders in communi-
cations with other Shareholders as required by Section 16(c) of the Act.
C-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT
COMPANY ACT OF 1940, THE REGISTRANT HAS DULY CAUSED THIS POST-EFFECTIVE AMEND-
MENT NO. 4 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UN-
DERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHICAGO, AND STATE OF IL-
LINOIS, ON THE 8TH DAY OF OCTOBER, 1997.
NUVEEN INVESTMENT TRUST
/s/ Gifford R. Zimmerman
---------------------------------------
Gifford R. Zimmerman, Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST-EFFECTIVE
AMENDMENT
NO. 4 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PER-
SONS IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ O. Walter Renfftlen
- -------------------------------
O. Walter Renfftlen Vice President and October 8, 1997
Controller (Principal
Financial and
Accounting Officer)
Timothy R. Schwertfeger President and Trustee )
Robert H. Lyon Trustee )
Thomas E. Leafstrand Trustee )
James E. Bacon Trustee ) By /s/ Gifford R. Zimmerman
William L. Kissick Trustee ) ------------------------
Sheila W. Wellington Trustee ) Gifford R. Zimmerman
Anthony T. Dean Chairman and Trustee ) Attorney-in-Fact
(Principal Executive ) October 8, 1997
Officer) )
</TABLE>
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, LARRY W. MARTIN AND
GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMENDMENTS
THERETO, FOR EACH OF THE OFFICERS AND TRUSTEES OF REGISTRANT ON WHOSE BEHALF
THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH THE SE-
CURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<C> <S> <C>
5(e). Renewal dated July 23, 1997 of Investment Management
Agreement.
6(a). Distribution Agreement between Registrant and John
Nuveen & Co. Incorporated.
8(a). Custodian Agreement between Registrant and Chase
Manhattan Bank.
9. Transfer Agency Agreement between Registrant and
Shareholder Services, Inc.
11. Consent of Independent Public Accountants.
13. Subscription Agreement with Nuveen Institutional
Advisory Corp.
16. Schedule of Computation of Performance Figures.
17. Financial Data Schedule.
99(b). Code of Ethics and Reporting Requirements.
</TABLE>
<PAGE>
Exhibit 5(e)
NUVEEN INVESTMENT TRUST
-----------------------
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
------------------------------------------
This Agreement made this 23rd day of July, 1997 by and between Nuveen Investment
Trust, a Massachusetts business trust (the "Fund"), and Nuveen Institutional
Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain
Management Agreement (the "Agreement") pursuant to which the Adviser furnishes
investment advisory and management services and certain other services to the
Fund; and
WHEREAS, the Board of Trustees at a meeting called for the purpose of reviewing
the Agreement, have approved the Agreement and its continuance until August 1,
1998 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the
Agreement, the parties hereto do hereby approve the continuance of the Agreement
in effect until August 1, 1998 and do ratify and confirm the Agreement in all
respects.
NUVEEN INVESTMENT TRUST
By: /s/ Gifford R. Zimmerman
-------------------------
Vice President
ATTEST:
/s/ Karen L. Healy
- ----------------------------
Assistant Secretary
NUVEEN INSTITUTIONAL
ADVISORY CORP.
By: /s/ Thomas C. Spalding
--------------------------
Vice President
ATTEST:
/s/ Larry Martin
- ----------------------------
Assistant Secretary
<PAGE>
EXHIBIT 6(a)
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made as of this 29th day of July, l996 between NUVEEN INVESTMENT
TRUST, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Fund"), and JOHN NUVEEN & CO. INCORPORATED, a Delaware
corporation (the "Underwriter").
W I T N E S S E T H
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In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the distribution of
shares of beneficial interest, par value $.0l per share, including such series
or classes of shares as may now or hereafter be authorized, (the "Shares") in
jurisdictions wherein Shares may legally be offered for sale; provided, however,
that the Fund, in its absolute discretion, may: (a) issue or sell Shares
directly to holders of Shares of the Fund upon such terms and conditions and for
such consideration, if any, as it may determine, whether in connection with the
distribution of subscription or purchase rights, the payment or reinvestment of
dividends or distributions, or otherwise; and (b) issue or sell Shares at net
asset value in connection with merger or consolidation with, or acquisition of
the assets of, other investment companies or similar companies.
2. The Underwriter hereby accepts appointment as agent for the distribution of
the Shares and agrees that it will use its best efforts to sell such part of the
authorized Shares remaining unissued as from time to time shall be effectively
registered under the Securities Act of l933 ("Securities Act"), at prices
determined as hereinafter provided and on terms hereinafter set forth, all
subject to applicable Federal and State laws and regulations and to the
Declaration of Trust of the Fund.
3. The Fund agrees that it will use its best efforts to keep effectively
registered under the Securities Act for sale, as herein contemplated, such
Shares as the Underwriter shall reasonably request and as the Securities and
Exchange Commission shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund may terminate, suspend,
or withdraw the offering of the Shares, or Shares of any series or class,
whenever, in its sole discretion, it deems such action to be desirable.
5. The Underwriter shall sell Shares to, or through, brokers, dealers, banks or
other qualified financial intermediaries (hereinafter referred to as "dealers"),
or others, in such manner not inconsistent with the provisions hereof and the
then effective Registration Statement of the Fund under the Securities Act (and
related Prospectus and Statement of Additional Information) as the Underwriter
may determine from time to time, provided that no dealer, or other person, shall
be appointed nor authorized to act as agent of the Fund without the prior
consent of the Fund. The Underwriter shall have the right to enter into
<PAGE>
agreements with brokers, dealers and banks (referred to herein as "dealers") of
its choice for the sale of Shares and fix therein the portion of the sales
charge which may be allocated to such dealers; provided that the Fund shall
approve the form of such agreements and shall evidence such approval by filing
said form and any amendments thereto as attachments to this Agreement, which
shall be filed as an exhibit to the Fund's currently effective registration
statement under the Securities Act. Shares sold to dealers shall be for resale
by such dealers only at the public offering price(s) set forth in the Fund's
then current Prospectus. The current forms of such agreements are attached
hereto as Exhibits 1, 2 and 3.
6. Shares offered for sale, or sold by the Underwriter, shall be so offered or
sold at a price per Share determined in accordance with the then current
Prospectus relating to the sale of Shares except as departure from such prices
shall be permitted by the rules and regulations of the Securities and Exchange
Commission. Any public offering price shall be the net asset value per Share
plus a sales charge of not more than 5.25% of such public offering price.
Shares may be sold at net asset value without a sales charge to such class or
classes of investors or in such class or classes of transactions as may be
permitted under applicable rules of the Securities and Exchange Commission and
as described in the then current Prospectus of the Fund. The net asset value
per Share of each series or class shall be calculated in accordance with the
Declaration of Trust of the Fund and shall be determined in the manner, and at
the time, set forth in the then current Prospectus of the Fund relating to such
Shares.
7. The price the Fund shall receive for all Shares purchased from the Fund
shall be the net asset value used in determining the public offering price
applicable to the sale of such Shares. The excess, if any, of the sales price
over the net asset value of Shares sold by the Underwriter as agent shall be
retained by the Underwriter as a commission for its services hereunder. Out of
such commission, the Underwriter may allow commissions or concessions to dealers
in such amounts as the Underwriter shall determine from time to time. Except as
may be otherwise determined by the Underwriter and the Fund from time to time,
such commissions or concessions shall be uniform to all dealers.
8. The Underwriter shall issue and deliver, or cause to be issued and
delivered, on behalf of the Fund such confirmations of sales made by it as
agent, pursuant to this Agreement, as may be required. At, or prior to, the
time of issuance of Shares, the Underwriter will pay, or cause to be paid, to
the Fund the amount due the Fund for the sale of such Shares. Certificates
shall be issued, or Shares registered on the transfer books of the Fund, in such
names and denominations as the Underwriter may specify.
9. The Fund will execute any and all documents, and furnish any and all
information, which may be reasonably necessary in connection with the
qualification of the Shares for sale (including the qualification of the Fund as
a dealer, where necessary or advisable) in such states as the Underwriter may
reasonably request (it being understood that the Fund shall not be required,
without its consent, to comply with any requirement which, in its opinion, is
unduly burdensome).
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l0. The Fund will furnish to the Underwriter, from time to time, such
information with respect to the Fund and the Shares as the Underwriter may
reasonably request for use in connection with the sale of Shares. The
Underwriter agrees that it will not use or distribute, nor will it authorize
dealers or others to use, distribute or disseminate, in connection with the sale
of such Shares, any statements other than those contained in the Fund's current
Prospectus and Statement of Additional Information, except such supplemental
literature or advertising as shall be lawful under Federal and State securities
laws and regulations, and that it will furnish the Fund with copies of all such
material.
ll. The Underwriter shall order Shares from the Fund only to the extent that it
shall have received purchase orders therefor. The Underwriter will not make,
nor authorize any dealers or others, to make: (a) any short sale of Shares; or
(b) any sale of Shares to any officer or trustee of the Fund, nor to any officer
or trustee of the Underwriter, or of any corporation or association furnishing
investment advisory, managerial, or supervisory services to the Fund, nor to any
such corporation or association, unless such sales are made in accordance with
the then current Prospectus relating to the sale of such Shares.
l2. In selling Shares for the account of the Fund, the Underwriter will in all
respects conform to the requirements of all Federal and State laws and the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.
relating to such sales, and will indemnify and save harmless the Fund from any
damage or expense on account of any wrongful act by the Underwriter or any
employee, representative, or agent of the Underwriter. The Underwriter will
observe and be bound by all the provisions of the Declaration of Trust of the
Fund (and of any fundamental policies adopted by the Fund pursuant to the
Investment Company Act of l940, notice of which shall have been given by the
Fund to the Underwriter) which at the time in any way require, limit, restrict,
prohibit or otherwise regulate any action on the part of the Underwriter.
l3. The Underwriter will require each dealer to conform to the provisions hereof
and of the Registration Statement (and related Prospectus) at the time in effect
under the Securities Act with respect to the public offering price of the
Shares, and neither the Underwriter nor any such dealer shall withhold the
placing of purchase orders so as to make a profit thereby.
l4. The Fund will pay, or cause to be paid, expenses (including the fees and
disbursements of its own counsel) of any registration of Shares under the
Securities Act, expenses of qualifying or continuing the qualification of the
Shares for sale and, in connection therewith, of qualifying or continuing the
qualification of the Fund as a dealer or broker under the laws of such states as
may be designated by the Underwriter under the conditions herein specified, and
expenses incident to the issuance of the Shares such as the cost of Share
certificates, issue taxes, and fees of the transfer and shareholder service
agent. The Underwriter will pay, or cause to be paid, all expenses (other than
expenses which any dealer may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the Shares issued or sold
hereunder, including, without limiting the generality of the foregoing, all:
(a) expenses of printing and distributing any Prospectus and Statement of
Additional Information and of preparing, printing and distributing or
disseminating any other literature, advertising and selling aids in connection
with such offering of the Shares
<PAGE>
for sale (except that such expenses need not include expenses incurred by the
Fund in connection with the preparation, printing and distribution of any report
or other communication to holders of Shares in their capacity as such), and (b)
expenses of advertising in connection with such offering. No transfer taxes, if
any, which may be payable in connection with the issue or delivery of Shares
sold as herein contemplated, or of the certificates for such Shares, shall be
borne by the Fund, and the Underwriter will indemnify and hold harmless the Fund
against liability for all such transfer taxes.
l5. This agreement shall continue in effect until August l, l997, unless and
until terminated by either party as hereinafter provided, and will continue from
year to year thereafter, but only so long as such continuance is specifically
approved, at least annually, in the manner required by the Investment Company
Act of l940. Either party hereto may terminate this agreement on any date by
giving the other party at least six months' prior written notice of such
termination, specifying the date fixed therefor. Without prejudice to any other
remedies of the Fund in any such event, the Fund may terminate this agreement at
any time immediately upon any failure of fulfillment of any of the obligations
of the Underwriter hereunder.
Without prejudice to any other remedies of the Fund in any such event, the Fund
may terminate this Agreement at any time immediately upon any failure of
fulfillment of any of the obligations of the Underwriter hereunder.
l6. This agreement shall automatically terminate in the event of its assignment.
l7. Any notice under this agreement shall be in writing, addressed, and
delivered or mailed, postage pre-paid, to the other party at such address as
such other party may designate for the receipt of such notice.
18. The Declaration of Trust of the Fund on file with the Secretary of State of
the Commonwealth of Massachusetts was executed on behalf of the Fund by the
initial trustees of the Fund and not individually, and any obligation of the
Fund shall be binding only upon the assets of the Fund (or applicable series
thereof) and shall not be binding upon any trustee, officer or shareholder of
the Fund. Neither the authorization of any action by the trustees or
shareholders of the Fund nor the execution of this agreement on behalf of the
Fund shall impose any liability upon any Trustee, officer or shareholder of the
Fund.
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IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this agreement
to be executed on its behalf as of the day and year first above written.
NUVEEN INVESTMENT TRUST
By /s/ Gifford R. Zimmerman
------------------------
Vice President
Attest:
/s/ Karen L. Healy
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Assistant Secretary
JOHN NUVEEN & CO. INCORPORATED
By /s/ Larry Martin
----------------
Vice President
Attest:
/s/ Morrison C. Warren
- ----------------------
Assistant Secretary
<PAGE>
EXHIBIT A TO NUVEEN MUTUAL FUNDS
DISTRIBUTION AND SHAREHOLDER SERVICING AGREEMENT
Policies and Procedures With Respect to Sales of
Multiple Classes of Funds
The Nuveen non-money market open-end mutual funds (the "Funds") have the
following classes of shares generally available to the public: Class A Shares,
which are normally subject to an up-front sales charge and a service fee; Class
B Shares, which are subject to an asset-based sales charge, a service fee, and a
declining contingent deferred sales charge ("CDSC"); and Class C Shares, which
are subject to an asset-based sales charge, a service fee, and a 12-month CDSC,
it is important for an investor to choose the method of purchasing shares which
best suits his or her particular circumstances. To assist investors in these
decisions, John Nuveen & Co. Incorporated, underwriter for the Nuveen Mutual
Funds, has instituted the following policies with respect to orders for Fund
shares. These policies apply to each Authorized Dealer which distributes Fund
shares.
1. Purchase orders for a single purchaser equal to or exceeding $1,000,000
should be placed only for Class A shares, unless such purchase for
Class B or Class C Shares has been reviewed and approved by the
Authorized Dealer's appropriate supervisor.
2. Any purchase order for less than $1,000,000 may be for Class A, Class B
or Class C Shares in light of the relevant facts and circumstances,
including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold his or her
Shares;
c. whether the investor expects to reinvest dividends; and
d. any other relevant circumstances such as the availability of
purchases under a letter of intent, a combined discount or a
cumulative discount, as described in the Prospectus for the
Fund, and any anticipated changes in the funds net asset value
per share.
There are instances when one method of purchasing Shares may be more appropriate
than the other. For example, investors who would qualify for a significant
discount from the maximum sales load on Class A Shares might determine that
payment of such a reduced up-front sales charge is preferable to the payment of
a higher ongoing distribution fee on Class B or Class C Shares. On the other
hand, investors who prefer not to pay an up-front sales charge may wish to defer
the sales charge by purchasing Class B or Class C Shares. Those who plan to
redeem their shares within five years might consider Class C Shares,
particularly if they do not expect to reinvest dividends in additional shares.
Note that, if an investor anticipate redeeming Class B Shares within a short
period of time such as one year, that investor may bear higher distribution
expenses than if Class A Shares had been purchased. In addition, investors who
intend to hold their shares for a significantly long
<PAGE>
time may not wish to bear the higher ongoing asset-based sales charges of Class
B or Class C Shares, irrespective of the fact that the CDSC that would apply to
a redemption of Class B Shares is reduced over time and is ultimately
eliminated, and that the CDSC that would apply to a redemption of Class C Shares
is relatively short in duration and small in amount.
Appropriate supervisory personnel within your organization must ensure that all
employees receiving investor inquiries about the purchase of shares of the Funds
advise the investor of the available pricing structures offered by the Funds and
the impact of choosing one method over another, including breakpoints and the
availability of letters of intent, combined purchases and cumulative discounts.
In some instances it may be appropriate for a supervisory person to discuss a
purchase with the investor.
These policies are effective immediately with respect to any order for the
purchase of shares of the Funds.
July 18, 1996
<PAGE>
Nuveen Mutual Funds
Dealer Distribution and
Shareholder Servicing Agreement
As principal underwriter of shares of the various Nuveen non-money market open-
end mutual funds, and of the shares of any future such funds (collectively, the
"Funds"), we invite you to join a selling group for the distribution of shares
of common stock of the Funds (the "Shares"). As exclusive agent of the Funds, we
offer to sell you Shares on the following terms:
1. In all sales of Shares to the public you shall act as dealer for your own
account, and in no transaction shall you have any authority to act as agent
for any Fund, for us or for any other member of the Selling Group.
2. Orders received from you shall be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts provided in
such Prospectus. Upon receipt from you of any order to purchase Shares we
shall confirm to you in writing or by wire to be followed by a confirmation
in writing. Additional instructions may be forwarded to you from time to
time. All orders are subject to acceptance or rejection by us in our sole
discretion.
3. You may offer and sell Shares to your customers only at the public offering
price determined in the manner described in the current Prospectus of the
appropriate Fund. Shares will be offered at a public offering price based
upon the net asset value of such Shares plus, with respect to certain
class(es) of Shares, a sales charge from which you shall receive a discount
equal to a percentage of the applicable offering price as provided in the
Prospectus. You may receive a distribution fee and/or a service fee with
respect to certain class(es) of Shares for which such fees are applicable,
as provided in the applicable Prospectus, which distribution fee and/or
service fee shall be payable for such periods and at such intervals as are
from time to time specified by us. Your placement of an order for Shares
after the date of any notice of such amendment shall conclusively evidence
your agreement to be bound thereby.
Reduced sales charges may also be available as a result of a cumulative
discount or pursuant to a letter of intent. Further information as to such
reduced sales charges, if any, is set forth in the appropriate Fund
Prospectus. You agree to advise us promptly as to the amounts of any sales
made by you to the public qualifying for reduced sales charges.
4. By accepting this Agreement, you agree:
a) That you will purchase Shares only from us;
b) That you will purchase Shares from us only to cover purchase orders
already received from your customers, or for your own bona fide
investment; and
c) That you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholding.
d) That, with respect to the sale of Shares of Funds that offer multiple
classes of Shares, you will comply with the terms of the Policies and
Procedures with Respect to Sales of Multiple Classes of Shares, attached
hereto as Exhibit A.
5. We will not accept from you any conditional orders for Shares.
6. Payment for Shares ordered from us shall be in New York clearing house funds
and must be received by the Funds' agent, Shareholder Services, Inc., P. O.
Box 5330, Denver, Colorado 80217-5330, within three business days after our
acceptance of your order. If such payment is not received, we reserve the
right, without notice, forthwith to cancel the sale or, at our option, to
cause the Fund to redeem the Shares ordered, in which case we may hold you
responsible for any loss, including loss of profit, suffered by us
1
<PAGE>
as result of your failure to make such payment. If any Shares confirmed to
you under the terms of this agreement are repurchased by the issuing Fund or
by us as agent for the Fund, or are tendered for repurchase, within seven
business days after the date of our confirmation of the original purchase
order, you shall promptly refund to us the full discount, commission, or
other concession, if any, allowed or paid to you on such Shares.
7. Shares sold hereunder shall be available in book-entry form on the books of
Shareholder Services, Inc. unless other instructions have been given.
8. No person is authorized to make any representations concerning Shares of any
Fund except those contained in the applicable current Prospectus and printed
information subsequently issued by the appropriate Fund or by us as
information supplemental to such Prospectus. You agree that you will not
offer or sell any Shares except under circumstances that will result in
compliance with the applicable Federal and state securities laws and that in
connection with sales and offers to sell Shares you will furnish to each
person to whom any such sale or offer is made a copy of the then current
Prospectus for the appropriate Fund (as the amended or supplemented) and
will not furnish to any persons any information relating to Shares which is
inconsistent in any respect with the information contained in the then
current Prospectus or cause any advertisement to be published in any
newspaper or posted in any public place without our consent and the consent
of the appropriate Fund. You shall be responsible for any required filing of
such advertising.
9. All sales will be made subject to our receipt of Shares from the appropriate
Fund. We reserve the right, in our discretion, without notice, to modify,
suspend or withdraw entirely the offering of any Shares, and upon notice to
change the price, sales charge, or dealer discount or to modify, cancel or
change the terms of this agreement.
10. Your acceptance of this agreement constitutes a representation that you are
a registered securities dealer and a member in good standing of the
National Association of Securities Dealers, Inc. and agree to comply with
all applicable state and Federal laws, rules and regulations applicable to
transactions hereunder and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., including specifically Section 26,
Article III thereof. You likewise agree that you will not offer to sell
Shares in any state or other jurisdiction in which they may not lawfully be
offered for sale.
11. You shall provide such office space and equipment, telephone facilities,
personnel and literature distribution as is necessary or appropriate for
providing information and services to your customers. Such services and
assistance may include, but not be limited to, establishment and
maintenance of shareholder accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Funds,
and such other services as may be agreed upon from time to time and as may
be permitted by applicable statute, rule, or regulation. You shall perform
these services in good faith and with reasonable care. You shall
immediately inform the Funds or us of all written complaints received by
you from Fund shareholders relating to the maintenance of their accounts
and shall promptly answer all such complaints.
12. All communications to us should be sent to 333 W. Wacker Drive, Chicago,
Illinois 60606. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
13. This Agreement shall be construed in accordance with the laws of the State
of Illinois. This Agreement is subject to the Prospectuses of the Funds
from time to time in effect, and, in the event of a conflict, the terms of
the Prospectuses shall control. References herein to the "Prospectus" of a
Fund shall mean the prospectus and statement of additional information of
such Fund as from time to time in effect. Any changes, modifications or
additions reflected in any such Prospectus shall be effective on the date
of such Prospectus (or supplement thereto) unless specified otherwise. This
Agreement shall supersede any prior dealer distribution agreement with
respect to the Funds.
John Nuveen & Co. Incorporated
| |
John Nuveen | |
Authorized Signature | |
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2
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We have read the foregoing agreement and accept and agree to the terms and
conditions therein.
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The above agreement should be executed in duplicate and both copies returned to
us for signature. We will return a fully executed copy to you for your files.
Please return the completed agreement to:
John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois
60606-1286
3
<PAGE>
Nuveen Mutual Funds
Distribution and Shareholder
Servicing Agreement
(Bank Version)
As principal underwriter of shares of common stock (the "Shares") of the
various Nuveen non-money market open-end mutual funds and any future such funds
(collectively, the "Funds"), we offer to make available Shares for purchase by
your customers on the following terms:
1. In all sales of Shares to the public you shall act as agent for your
customers, and in no transaction shall you have any authority to act as
agent for any Fund or for us. The customers in question are for all purposes
your customers and not customers of John Nuveen & Co. Incorporated. We shall
execute transactions for each of your customers only upon your
authorization, it being understood in all cases that (a) you are acting as
agent for the customer; (b) the transactions are without recourse against
you by the customer; (c) as between you and the customer, the customer will
have full beneficial ownership of the securities; (d) each transaction is
initiated solely upon the order of the customer; and (e) each transaction is
for the account of the customer and not for your account.
2. Orders received from you shall be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts provided in
such Prospectus. Upon receipt from you of any order to purchase Shares we
shall confirm to you in writing or by wire to be followed by a confirmation
in writing, and we shall concurrently send to your customer a letter
confirming such order, together with a copy of the appropriate Fund's
current Prospectus. Additional instructions may be forwarded to you from
time to time. All orders are subject to acceptance or rejection by us in our
sole discretion.
3. Members of the general public, including your customers, may purchase Shares
only at the public offering price determined in the manner described in the
current Prospectus of the appropriate Fund. Shares will be offered at a
public offering price based upon the net asset value of such Shares plus,
with respect to certain class(es) of Shares, a sales charge which, together
with the amount of that sales charge to be retained by banks acting as agent
for their customers, is set forth in the Prospectus. You may receive a
distribution fee and/or a service fee with respect to certain class(es) of
Shares for which such fees are applicable, as provided in the applicable
Prospectus, which distribution fee and/or service fee shall be payable for
such periods and at such intervals as are from time to time specified by us.
Your placement of an order for Shares after the date of any notice of such
amendment shall conclusively evidence your agreement to be bound thereby.
Reduced sales charges may also be available as a result of a cumulative
discount or pursuant to a letter of intent. Further information as to such
reduced sales charges, if any, is set forth in the appropriate Fund
Prospectus. You agree to advise us promptly as to the amounts of any sales
made by or though you to the public qualifying for reduced sales charges.
4. By accepting this Agreement, you agree:
a) That you will purchase Shares only from us, and only to cover purchase
orders already received from your customers;
b) That you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholding; and
c) That, with respect to the sale of Shares of Funds that offer multiple
classes of Shares, you will comply with the terms of the Policies and
Procedures with Respect to Sales of Multiple Classes of Shares, attached
hereto as Exhibit A.
5. We will not accept from you any conditional orders for Shares.
1
<PAGE>
6. Payment for Shares ordered from us shall be in New York clearing house funds
and must be received by the Funds' agent, Shareholder Services, Inc., P.O.
Box 5330, Denver, Colorado 80217-5330, within three business days after our
acceptance of your order. If such payment is not received, we reserve the
right, without notice, forthwith to cancel the sale or, at our option, to
cause the Fund to redeem the Shares ordered, in which case we may hold you
responsible for any loss, including loss of profit, suffered by us as result
of your or your customer's failure to make such payment. If any Shares
confirmed to you or your customer under the terms of this agreement are
repurchased by the issuing Fund or by us as agent for the Fund, or are
tendered for repurchase, within seven business days after the date of our
confirmation of the original purchase order, you shall promptly refund to us
the full discount, commission, or other concession, if any, allowed or paid
to you on such Shares.
7. Shares sold hereunder shall be available in book-entry form on the books of
Shareholder Services, Inc. unless other instructions have been given.
8. No person is authorized to make any representations concerning Shares of any
Fund except those contained in the applicable current Prospectus and printed
information issued by the appropriate Fund or by us as information
supplemental to such Prospectus. You agree that you will not offer or sell
any Shares except under circumstances that will result in compliance with
the applicable Federal and state securities laws and that in connection with
sales and offers to sell Shares you will furnish to each person to whom any
such sale or offer is made a copy of the then current Prospectus for the
appropriate Fund (as amended or supplemented) and will not furnish to any
persons any information relating to Shares which is inconsistent in any
respect with the information contained in the then current Prospectus or
cause any advertisement to be published in any newspaper or posted in any
public place without our consent and the consent of the appropriate Fund.
You shall be responsible for any required filing of such advertising.
9. All sales will be made subject to our receipt of Shares from the appropriate
Fund. We reserve the right, in our discretion, without notice, to modify,
suspend or withdraw entirely the offering of any Shares, and upon notice to
change the price, sales charge, or dealer discount or to modify, cancel or
change the terms of this agreement.
10. Your acceptance of this agreement constitutes a representation that you are
a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934,
as amended, and are duly authorized to engage in the transactions to be
performed hereunder. You hereby agree to comply with all applicable state
and Federal laws, rules and regulations applicable to transactions
hereunder. You likewise agree that you will not make Shares available in
any state or other jurisdiction in which they may not lawfully be offered
for sale.
11. You shall provide such office space and equipment, telephone facilities,
personnel and literature distribution as is necessary or appropriate for
providing information and services to your customers. Such services and
assistance may include, but not be limited to, establishment and maintenance
of shareholder accounts and records, processing purchase and redemption
transactions, answering routine inquiries regarding the Funds, and such
other services as may be agreed upon from time to time and as may be
permitted by applicable statute, rule, or regulation. You shall perform
these services in good faith and with reasonable care. You shall
immediately inform the Funds or us of all written complaints received by you
from Fund shareholders relating to the maintenance of their accounts and
shall promptly answer all such complaints.
12. All communications to us should be sent to 333 W. Wacker Drive, Chicago,
Illinois 60606. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
13. This Agreement shall be construed in accordance with the laws of the State
of Illinois. This Agreement is subject to the Prospectuses of the Funds
from time to time in effect, and, in the event of a conflict, the terms of
the Prospectuses shall control. References herein to the "Prospectus" of a
Fund shall mean the prospectus and statement of additional information of
such Fund as from time to time in effect. Any changes, modifications or
additions reflected in any such Prospectus shall be effective on the date of
such Prospectus (or supplement thereto) unless specified otherwise. This
Agreement shall supersede any prior dealer distribution agreement with
respect to the Funds.
2
<PAGE>
<TABLE>
John Nuveen & Co. Incorporated
| |
John Nuveen | |
Authorized Signature | |
__________________________________________________________________________________________________________
We have read the foregoing agreement and accept and agree to the terms and conditions therein.
<S> <C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C><C>
Firm | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
__________________________________________________________________________________________________________
| Month Day Year |
Authorized Signature | | | | |
__________________________________________________________________________________________________________
Print Name of | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
__________________________________________________________________________________________________________
Address | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
__________________________________________________________________________________________________________
City | | | | | | | | | | | | | | | | | | | | Zip | | | | | |
__________________________________________________________________________________________________________
Tax ID Number | | | | | | | | | | | | NASD | | | | | | | | | | | | | |
__________________________________________________________________________________________________________
</TABLE>
The above agreement should be executed in duplicate and both copies returned to
us for signature. We will return a fully executed copy to you for your files.
Please return the completed agreement to:
John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois 60606-
1286
3
<PAGE>
Nuveen Mutual Funds
Distribution and Shareholder
Servicing Agreement
(Version for Bank-Affiliated Broker-Dealers)
As principal underwriter of shares of common stock (the "Shares") of the
various Nuveen non-money market open-end mutual funds and any future such funds
(collectively, the "Funds"), we offer to make available Shares for purchase by
your customers on the following terms:
1. In all sales of Shares to the public you shall act as agent for your
customers, and in no transaction shall you have any authority to act as
agent for any Fund or for us. The customers in question are for all purposes
your customers and not customers of John Nuveen & Co. Incorporated. We shall
execute transactions for each of your customers only upon your
authorization, it being understood in all cases that (a) you are acting as
agent for the customer; (b) the transactions are without recourse against
you by the customer; (c) as between you and the customer, the customer will
have full beneficial ownership of the securities; (d) each transaction is
initiated solely upon the order of the customer; and (e) each transaction is
for the account of the customer and not for your account.
2. Orders received from you shall be accepted by us only at the public offering
price applicable to each order, as established by the then current
Prospectus of the appropriate Fund, subject to the discounts provided in
such Prospectus. Upon receipt from you of any order to purchase Shares we
shall confirm to you in writing or by wire to be followed by a confirmation
in writing, and we shall concurrently send to your customer a letter
confirming such order, together with a copy of the appropriate Fund's
current Prospectus. Additional instructions may be forwarded to you from
time to time. All orders are subject to acceptance or rejection by us in our
sole discretion.
3. Members of the general public, including your customers, may purchase Shares
only at the public offering price determined in the manner described in the
current Prospectus of the appropriate Fund. Shares will be offered at a
public offering price based upon the net asset value of such Shares plus,
with respect to certain class(es) of Shares, a sales charge which, together
with the amount of that sales charge to be retained by banks or bank-
affiliated broker-dealers acting as agent for their customers, is set forth
in the Prospectus. You may receive a distribution fee and/or a service fee
with respect to certain class(es) of Shares for which such fees are
applicable, as provided in the applicable Prospectus, which distribution fee
and/or service fee shall be payable for such periods and at such intervals
as are from time to time specified by us. Your placement of an order for
Shares after the date of any notice of such amendment shall conclusively
evidence your agreement to be bound thereby. Reduced sales charges may also
be available as a result of a cumulative discount or pursuant to a letter of
intent. Further information as to such reduced sales charges, if any, is set
forth in the appropriate Fund Prospectus. You agree to advise us promptly as
to the amounts of any sales made by or though you to the public qualifying
for reduced sales charges.
4. By accepting this Agreement, you agree:
(a) That you will purchase Shares only from us, and only to cover purchase
orders already received from your customers;
(b) That you will not withhold placing with us orders received from your
customers so as to profit yourself as a result of such withholding; and
(c) That, with respect to the sale of Shares of Funds that offer multiple
classes of Shares, you will comply with the terms of the Policies and
Procedures with Respect to Sales of Multiple Classes of Shares,
attached hereto as Exhibit A.
1
<PAGE>
5. We will not accept from you any conditional orders for Shares.
2
<PAGE>
6. Payment for Shares ordered from us shall be in New York clearing house funds
and must be received by the Funds' agent, Shareholder Services, Inc., P. O.
Box 5330, Denver, Colorado 80217-5330, within three business days after our
acceptance of your order. If such payment is not received, we reserve the
right, without notice, forthwith to cancel the sale or, at our option, to
cause the Fund to redeem the Shares ordered, in which case we may hold you
responsible for any loss, including loss of profit, suffered by us as result
of your or your customer's failure to make such payment. If any Shares
confirmed to you or your customer under the terms of this agreement are
repurchased by the issuing Fund or by us as agent for the Fund, or are
tendered for repurchase, within seven business days after the date of our
confirmation of the original purchase order, you shall promptly refund to us
the full discount, commission, or other concession, if any, allowed or paid
to you on such Shares.
7. Shares sold hereunder shall be available in book-entry form on the books of
Shareholder Services, Inc. unless other instructions have been given.
8. No person is authorized to make any representations concerning Shares of any
Fund except those contained in the applicable current Prospectus and printed
information issued by the appropriate Fund or by us as information
supplemental to such Prospectus. You agree that you will not offer or sell
any Shares except under circumstances that will result in compliance with
the applicable Federal and state securities laws and that in connection with
sales and offers to sell Shares you will furnish to each person to whom any
such sale or offer is made a copy of the then current Prospectus for the
appropriate Fund (as amended or supplemented) and will not furnish to any
persons any information relating to Shares which is inconsistent in any
respect with the information contained in the then current Prospectus or
cause any advertisement to be published in any newspaper or posted in any
public place without our consent and the consent of the appropriate Fund.
You shall be responsible for any required filing of such advertising.
9. All sales will be made subject to our receipt of Shares from the appropriate
Fund. We reserve the right, in our discretion, without notice, to modify,
suspend or withdraw entirely the offering of any Shares, and upon notice to
change the price, sales charge, or dealer discount or to modify, cancel or
change the terms of this agreement.
10. Your acceptance of this agreement constitutes a representation that you are
a registered securities broker-dealer and a member in good standing of the
National Association of Securities Dealers, Inc. and agree to comply with
all state and Federal laws, rules and regulations applicable to transactions
hereunder and with the Rules of Fair Practice of the NASD, including
specifically Section 26 of Article III thereof. You likewise agree that you
will not offer to sell Shares in any state or other jurisdiction in which
they may not lawfully be offered for sale. We agree to advise you currently
of the identity of those states and jurisdictions in which the Shares may
lawfully be offered for sale.
11. You shall provide such office space and equipment, telephone facilities,
personnel and literature distribution as is necessary or appropriate for
providing information and services to your customers. Such services and
assistance may include, but not be limited to, establishment and maintenance
of shareholder accounts and records, processing purchase and redemption
transactions, answering routine inquiries regarding the Funds, and such
other services as may be agreed upon from time to time and as may be
permitted by applicable statute, rule, or regulation. You shall perform
these services in good faith and with reasonable care. You shall immediately
inform the Funds or us of all written complaints received by you from Fund
shareholders relating to the maintenance of their accounts and shall
promptly answer all such complaints.
12. All communications to us should be sent to 333 W. Wacker Drive, Chicago,
Illinois 60606. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
13. This Agreement shall be construed in accordance with the laws of the State
of Illinois. This Agreement is subject to the Prospectuses of the Funds from
time to time in effect, and, in the event of a conflict, the terms of the
Prospectuses shall control. References herein to the "Prospectus" of a Fund
shall mean the prospectus and statement of additional information of such
Fund as from time to time in effect. Any changes, modifications or additions
reflected in any such Prospectus shall be effective on the date of such
Prospectus (or supplement thereto) unless specified otherwise. This
Agreement shall supersede any prior distribution agreement with respect to
the Funds.
3
<PAGE>
<TABLE>
<CAPTION>
John Nuveen & Co. Incorporated
| |
John Nuveen | |
Authorized Signature| |
___________________________________________________________________________________________________________
<S> <C>
We have read the foregoing agreement and accept and agree to the terms and
conditions therein.
Firm | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
___________________________________________________________________________________________________________
| |
| Month Day Year |
Authorized Signature | | | | |
__________________________________________________________________________________________________________
Print Name of | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
__________________________________________________________________________________________________________
Address | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
__________________________________________________________________________________________________________
City | | | | | | | | | | | | | | | | | | | Zip| | | | | | | |
__________________________________________________________________________________________________________
Tax ID Number | | | | | | | | | | | | | NASD| | | | | | | | | | | | | | |
__________________________________________________________________________________________________________
</TABLE>
The above agreement should be executed in duplicate and both copies returned to
us for signature. We will return a fully executed copy to you for your files.
Please return the completed agreement to:
John Nuveen & Co. Incorporated, 333 West Wacker Drive, Chicago, Illinois
60606-1286
4
<PAGE>
Exhibit A to Nuveen Mutual Funds
Dealer Distribution and
Shareholder Servicing Agreement
Policies and Procedures With Respect to
Sales of Multiple Classes of Funds
The Nuveen non-money market open-end mutual funds (the "Funds") have one or more
of the following classes of shares generally available to the public: Class A
Shares, which are normally subject to an up-front sales charge and a service
fee; Class B Shares, which are subject to an asset-based sales charge, a service
fee, and a declining contingent deferred sales charge ("CDSC"); and Class C
Shares, which are subject to an asset-based sales charge, a service fee, and a
12-month CDSC, it is important for an investor to choose the method of
purchasing shares which best suits his or her particular circumstances. To
assist investors in these decisions, John Nuveen & Co. Incorporated, underwriter
for the Nuveen Mutual Funds, has instituted the following policies with respect
to orders for Fund shares. These policies apply to each Authorized Dealer which
distributes Fund shares.
1. Purchase orders for a single purchaser equal to or exceeding $1,000,000
should be placed only for Class A shares, unless such purchase for Class B
or Class C Shares has been reviewed and approved by the Authorized Dealer's
appropriate supervisor.
2. Any purchase order for less than $1,000,000 may be for Class A, Class B or
Class C Shares in light of the relevant facts and circumstances, including:
a) the specific purchase order dollar amount;
b) the length of time the investor expects to hold his or her Shares;
c) whether the investor expects to reinvest dividends; and
d) any other relevant circumstances such as the availability of purchases
under a letter of intent, a combined discount or a cumulative discount,
as described in the Prospectus for the Fund, and any anticipated changes
in the funds net asset value per share.
There are instances when one method of purchasing Shares may be more appropriate
than the other. For example, investors who would qualify for a significant
discount from the maximum sales load on Class A Shares might determine that
payment of such a reduced up-front sales charge is preferable to the payment of
a higher ongoing distribution fee on Class B or Class C Shares. On the other
hand, investors who prefer not to pay an up-front sales charge may wish to defer
the sales charge by purchasing Class B or Class C Shares. Those who plan to
redeem their shares within 5 years might consider Class C Shares, particularly
if they do not expect to reinvest dividends in additional shares. Note that, if
an investor anticipates redeeming Class B Shares within a short period of time
such as one year, that investor may bear higher distribution expenses than if
Class A Shares had been purchased. In addition, investors who intend to hold
their shares for a significantly long time may not wish to bear the higher
ongoing-asset-based sales charges of Class B or Class C Shares, irrespective of
the fact that the CDSC that would apply to a redemption of Class B Shares is
reduced over time and is ultimately eliminated, and that the CDSC that would
apply to a redemption of Class C Shares is relatively short in duration and
small in amount.
Appropriate supervisory personnel within your organization must ensure that all
employees receiving investor inquiries about the purchase of shares of the Funds
advise the investor of the available pricing structures offered by the Funds and
the impact of choosing one method over another, including breakpoints and the
availability of letters of intent, combined purchases and cumulative discounts.
In some instances it may be appropriate for a supervisory person to discuss a
purchase with the investor.
These policies are effective immediately with respect to any order for the
purchase of shares of the Funds.
<PAGE>
October 4, 1996
<PAGE>
<TABLE>
<CAPTION>
Exhibit A (Page 2)
- -------------------------------------------
Nuveen Mutual Funds
------------------
CUSIP Quotron
Number Symbol
- -------------------------------------------------------------
Nuveen Tax-Free Money Market Funds
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nuveen Tax-Exempt Money Market 670634104 NUVXX
Nuveen Tax-Free Reserves, Inc. 670639103 NRFXX
Nuveen CA Tax-Free Money Market
Service Portfolio 67062D303 NCTXX
Distribution Portfolio 67062D402 NCTXX
Institutional Portfolio 67062D501 NCTXX
Nuveen MA Tax-Free Money Market
Service Portfolio 670637107 NMAXX
Distribution Portfolio 670637206 NMAXX
Institutional Portfolio 670637305 NMAXX
Nuveen NY Tax-Free Money Market
Service Portfolio 670637404 NTFXX
Distribution Portfolio 670637503 NTFXX
Institutional Portfolio 670637602 NTFXX
- -------------------------------------------------------------
A SHARE B SHARE C SHARE R SHARE
-------------------------------------------------------------------------------
CUSIP Quotron CUSIP Quotron CUSIP Quotron CUSIP Quotron
Number Symbol Number Symbol Number Symbol Number Symbol
- -------------------------------------------------------------------------------------------------------------------------
Equity Mutual Funds
Nuveen Growth and Income Stock Fund 67064Y503 # 67064Y602 # 67064Y701 # 67064Y800 #
Nuveen Balanced Stock and Bond Fund 67064Y107 # 67064Y206 # 67064Y305 # 67064Y404 #
Nuveen Balanced Municipal and Stock Fund 67064Y883 # 67064Y875 # 67064Y867 # 67064Y859 #
Nuveen Flagship Utility Fund 33841G108 FUIAX - - 33841G306 FLUCX - -
Golden Rainbow Fund 33841G207 GLRBX - - - - - -
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Municipal Mutual Funds
Nuveen Municipal Bond Fund 67065Q202 NMBAX 67065Q103 # 67065Q301 # 67065Q400 NUVBX
Nuveen Insured Municipal Bond Fund 67065Q509 NMBIX 67065Q608 # 67065Q707 # 67065Q806 NITNX
Nuveen Flagship All-American Tax Exempt 67065Q889 FLAAX 67065Q871 # 67065Q863 FAACX 67065Q855 #
Nuveen Flagship Limited Term Tax Exempt 67065Q848 FLTDX - - 67065Q830 FLTCX 67065Q822 #
Nuveen Flagship Intermediate Tax Exempt 67065Q814 FINTX - - 67065Q798 FINCX 67065Q780 #
Nuveen Flagship AL Municipal Bond Fund 67065P105 FABTX 67065P204 # 67065P303 # 67065P402 #
Nuveen Flagship AZ Municipal Bond Fund 67065L104 FAZTX 67065L203 # 67065L302 FAZCX 67065L401 NMARX
Nuveen CA Municipal Bond Fund 67065N100 NCAAX 67065N209 # 67065N308 # 67065N407 NCSPX
Nuveen CA Insured Municipal Bond Fund 67065N506 NCAIX* 67065N605 # 67065N704 # 67065N803 NCIBX
Nuveen Flagship CO Municipal Bond Fund 67065L609 FCOTX 67065L500 # 67065L807 # 67065L880 #
Nuveen Flagship CT Municipal Bond Fund 67065N886 FCTTX 67065N878 # 67065N860 FCTCX 67065N852 #
Nuveen Flagship FL Municipal Bond Fund 67065L708 FLOTX 67065L658 # 67065L641 NFLCX 67065L872 NMFLX
Nuveen Flagship FL Intermediate 67065L864 FIFAX - - 67065L856 FIFCX 67065L849 #
Municipal
Nuveen Flagship GA Municipal Bond Fund 67065P501 FGATX 67065P600 # 67065P709 FGACX 67065P808 #
Nuveen Flagship KS Municipal Bond Fund 67065R101 FKSTX 67065R200 # 67065R309 # 67065R408 #
Nuveen Flagship KY Municipal Bond Fund 67065R507 FKYTX 67065R606 # 67065R705 FKYCX 67065R804 #
Nuveen Flagship KY Limited Term 67065R887 FLKAX - - 67065R879 FLKCX 67065R861 #
Municipal
Nuveen Flagship LA Municipal Bond Fund 67065P881 FTLAX 67065P873 # 67065P865 FTLCX 67065P857 #
Nuveen MD Municipal Bond Fund 67065L831 NMDAX 67065L823 # 67065L815 # 67065L799 NMMDX
Nuveen MA Municipal Bond Fund 67065N845 NMAAX 67065N837 # 67065N829 # 67065N811 NBMAX
Nuveen MA Insured Municipal Bond Fund 67065N795 NMAIX* 67065N787 # 67065N779 # 67065N761 NIMAX
Nuveen Flagship MI Municipal Bond Fund 67065R853 FMITX 67065R846 # 67065R838 FLMCX 67065R820 NMMIX
Nuveen Flagship MO Municipal Bond Fund 67065R812 FMOTX 67065R796 # 67065R788 FMOCX 67065R770 #
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit A (Page 3)
- --------------------------------------
Nuveen Mutual Funds
A SHARE B SHARE C SHARE R SHARE
-------------------------------------------------------------------------------
CUSIP Quotron CUSIP Quotron CUSIP Quotron CUSIP Quotron
Number Symbol Number Symbol Number Symbol Number Symbol
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Municipal Mutual Funds (cont.)
Nuveen Flagship NJ Municipal Bond Fund 67065N753 NNJAX 67065N746 # 67065N738 NNJCX 67065N720 NMNJX
Nuveen Flagship NJ Intermediate Municipal 67065N712 FNJIX - - 67065N696 # 67065N688 #
Nuveen Flagship NM Municipal Bond Fund 67065L781 FNMTX 67065L773 # 67065L765 # 67065L757 #
Nuveen Flagship NY Municipal Bond Fund 67065N670 NNYAX* 67065N662 # 67065N654 NNYCX 67065N647 NTNYX
Nuveen NY Insured Municipal Bond Fund 67065N639 NNYIX* 67065N621 # 67065N613 # 67065N597 NINYX
Nuveen Flagship NC Municipal Bond Fund 67065P840 FLNCX 67065P832 # 67065P824 FCNCX 67065P816 #
Nuveen Flagship OH Municipal Bond Fund 67065R762 FOHTX 67065R754 # 67065R747 FOHCX 67065R739 NXOHX
Nuveen Flagship PA Municipal Bond Fund 67065L740 FPNTX 67065L732 # 67065L724 FPNCX 67065L716 NBPAX
Nuveen Flagship SC Municipal Bond Fund 67065P790 FLSCX 67065P782 # 67065P774 # 67065P766 #
Nuveen Flagship TN Municipal Bond Fund 67065P758 FTNTX 67065P741 # 67065P733 FTNCX 67065P725 #
Nuveen Flagship VA Municipal Bond Fund 67065L690 FVATX 67065L682 # 67065L674 FVACX 67065L666 NMVAX
Nuveen Flagship WI Municipal Bond Fund 67065R721 FWIAX 67065R713 # 67065R697 # 67065R689 #
</TABLE>
# Will receive a supplemental listing when the number of class shareholder
accounts is 300 or when the class asset base reaches $1 million.
NOTE: A Quotron Symbol requires 1,000 shareholder accounts or $25 million in
assets.
*Denotes supplemental listing only
<PAGE>
EXHIBIT 8(a)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Appointment 1
2. Delivery of Documents 1
3. Definitions 3
4. Delivery and Registration of the Property 4
5. Voting Rights 5
6. Receipt and Disbursement of Money 5
6A. Advances By Custodian 7
7. Receipt and Delivery of Securities 8
8. Use of Securities Depository or the Book Entry System 9
9. Segregated Account 11
10. Instructions Consistent With The Declaration, etc. 12
11. Transaction Not Requiring Instructions, 15
Collection of Income and Other Payments 15
Miscellaneous Transactions 16
12. Transactions Requiring Instructions 17
13. Purchase of Securities 19
14. Sale of Securities 20
15. Not In Use 20
16. Records 20
17. Cooperation with Accountants 21
18. Reports to Fund Independent Public Accountants 21
19. Confidentiality 21
20. Equipment Failures 22
21. Right to Receive Advice 22
22. Compliance with Governmental Rules and Regulations 23
23. Compensation 23
24. Indemnification 24
25. Responsibility of Chase Manhattan Bank 25
26. Collection of Income 26
27. Ownership Certificates for Tax Purposes 26
28. Effective Period; Terminations and Amendment 27
29. Successor Custodian 28
30. Notices 29
31. Further Actions 29
32. Amendments 30
33. Additional Funds 30
34. Miscellaneous 30
35. Declaration of Trust 30
</TABLE>
<PAGE>
CUSTODY AGREEMENT
-----------------
THIS AGREEMENT is made this 15th day of July, 1996 by and between NUVEEN
INVESTMENT TRUST (the "Fund"), and CHASE MANHATTAN BANK, N.A., a New York State
chartered bank.
W I T N E S S E T H
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interest in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in three series, Nuveen
Growth and Income Stock Fund, Nuveen Balanced Stock and Bond Fund and Nuveen
Balanced Municipal and Stock Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 33, being herein referred to as the "Fund(s)"):
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints Chase Manhattan Bank, N.A. to
act as custodian of its portfolio securities, cash and other property on the
terms set forth in this Agreement. Chase Manhattan Bank, N.A. accepts such
appointment and agrees to furnish the services herein set forth in return for
the compensation as provided in Section 23 of this Agreement.
2. DELIVERY OF DOCUMENTS. The Fund has furnished Chase Manhattan Bank,
N.A. with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Trustees authorizing the appointment
of Chase Manhattan Bank, N.A. as Custodian of the portfolio securities, cash and
other property of the Fund and approving this Agreement;
(b) Incumbency and signature certificates identifying and containing the
signatures of the Fund's officers and/or the persons authorized to sign Proper
Instructions, as hereinafter defined, on behalf of the Fund;
<PAGE>
(c) The Fund's Declaration of Trust filed with the Commonwealth of
Massachusetts and all amendments thereto (such Declaration of Trust as currently
in effect and from time to time, be amended, are herein called the
"Declaration");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
currently in effect and as they shall from time to time be amended, are herein
called the "By-Laws"),
(e) Resolutions of the Fund's Board of Trustees appointing the investment
advisor of the Fund and resolutions of the Fund's Board of Trustees and the
Fund's Shareholders approving the proposed Investment Advisory Agreement between
the Fund and the advisor (the "Advisory Agreement");
(f) The Advisory Agreement
(g) The Fund's Registration Statement on Form N-1A under the 1940 Act and
the Securities Act of 1933, as amended ("the 1933 Act") as filed with the SEC;
and
(h) The Fund's most recent prospectus and statement of additional
information including all amendments and supplements thereto (the "Prospectus").
Upon request the Fund will furnish Chase Manhattan Bank, N.A. with copies
of all amendments of or supplements to the foregoing, if any. The Fund will
also furnish Chase Manhattan Bank, N.A. upon request with a copy of the opinion
of counsel for the Fund with respect to the validity of the Shares and the
status of such Shares under the 1933 Act filed with the SEC, and any other
applicable federal law or regulation.
3. DEFINITIONS.
-----------
(a) "Authorized Person". As used in this Agreement, the term "Authorized
Person" means the Fund's President, Treasurer and any other person, whether or
not any such person is an officer or employee of the Fund, duly authorized by
the Board of Trustees of the Fund to give Proper Instructions on behalf of the
Fund as set forth in resolutions of the Fund's Board of Trustees.
(b) "Book-Entry System". As used in this Agreement, the term "Book-Entry
System" means a book-entry system authorized by the U.S. Department of Treasury,
its successor or successors and its nominee or nominees.
(c) "Proper Instructions". Proper Instructions as used herein means a
writing signed or initialed by two or more persons as the Board of Trustees
shall have from time to time
<PAGE>
authorized. Each such writing shall set forth the specific transaction or type
of transaction involved, including a specific statement of the purpose for which
such action is requested. Oral instructions will be considered Proper
Instructions if Chase Manhattan Bank, N.A. reasonably believes them to have been
given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all such oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and Chase Manhattan Bank, N.A. are satisfied that such procedures
afford adequate safeguards for the Fund's assets. For purposes of this Section,
Proper Instructions shall include instructions received by Chase Manhattan Bank,
N.A. pursuant to any three-party agreement which requires a segregated asset
account in accordance with Section 9.
(d) "Property". The term "Property", as used in this Agreement, means:
(i) any and all securities and other property of the Fund which the
Fund may from time to time deposit, or cause to be deposited, with
Chase Manhattan Bank, N.A. or which Chase Manhattan Bank, N.A. may
from time to time hold for the Fund;
(ii) all income in respect of any such securities or other property;
(iii) all proceeds of the sales of any of such securities or other
property; and
(iv) all proceeds of the sale of securities issued by the Fund,
which are received by Chase Manhattan Bank, N.A. from time to time
from or on behalf of the Fund.
(e) "Securities Depository". As used in this Agreement, the term
"Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC or its successor or successors and its nominee or
nominees; and shall also mean any other registered clearing agency, its
successor or successors specifically identified in a certified copy of a
resolution of the Company's Board of Trustees approving deposits by Chase
Manhattan Bank, N.A. therein.
<PAGE>
4. DELIVERY AND REGISTRATION OF THE PROPERTY. The Fund will deliver or
cause to be delivered to Chase Manhattan Bank, N.A. all securities and all
moneys owned by it, including payments of interest, principal and capital
distributions and cash received for the issuance of its Shares, at any time
during the period of this Agreement, except for securities and monies to be
delivered to any subcustodian appointed pursuant to Section 7 hereof. Chase
Manhattan Bank, N.A. will not be responsible for such securities and such monies
until actually received by it. All securities delivered to Chase Manhattan Bank,
N.A. or to any such subcustodian (other than in bearer form) shall be registered
in the name of the Fund or in the name of a nominee of the Fund or in the name
of Chase Manhattan Bank, N.A. or any nominee of Chase Manhattan Bank, N.A. (with
or without indication of fiduciary status) or in the name of any subcustodian or
any nominee of such subcustodian appointed pursuant to Paragraph 7 hereof or
shall be properly endorsed and in form for transfer satisfactory to Chase
Manhattan Bank, N.A.
5. VOTING RIGHTS. With respect to all securities, however registered, it
is understood that the voting and other rights and powers shall be exercised by
the Fund. Chase Manhattan Bank, N.A.'s only duty shall be to mail for delivery
on the next business day to the Fund any documents received, including proxy
statements and offering circulars, with any proxies for securities registered in
a nominee name executed by such nominee. Where warrants, options, tenders or
other securities have fixed expiration dates, the Fund understands that in order
for Chase Manhattan Bank, N.A. to act, Chase Manhattan Bank, N.A. must receive
the Fund's instructions at its offices in New York, addressed as Chase Manhattan
Bank, N.A. may from time to time request, by no later than noon (NY City time)
at least one business day prior to the last scheduled date to act with respect
thereto (or such earlier date or time as Chase Manhattan Bank, N.A. may
reasonably notify the Fund). Absent Chase Manhattan Bank, N.A.'s timely receipt
of such instructions, such instruments will expire without liability to Chase
Manhattan Bank, N.A.
6. RECEIPT AND DISBURSEMENT OF MONEY.
(a) Chase Manhattan Bank, N.A. shall open and maintain a custody account
for the Fund, subject only to draft or order by Chase Manhattan Bank, N.A.
acting pursuant to the terms of this Agreement, and shall hold in such account,
subject to the provisions hereof, all
<PAGE>
cash received by it from or for the Fund other than cash maintained by the Fund
in a bank account established and used in accordance with Rule 17f-3 under the
1940 Act. Funds held by Chase Manhattan Bank, N.A. for the Fund may be deposited
by it to its credit at Chase Manhattan Bank, N.A. in the Banking Department of
Chase Manhattan Bank, N.A. or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however, that every
such bank or trust company shall be qualified to act as a custodian under the
1940 Act, and that each such bank or trust company shall be approved by vote of
a majority of the Board of Trustees of the Fund. Such funds shall be deposited
by Chase Manhattan Bank, N.A. in its capacity as Custodian and shall be
withdrawable by Chase Manhattan Bank, N.A. only in that capacity.
(b) Upon receipt of Proper Instructions (which may be continuing
instructions as deemed appropriate by the parties) Chase Manhattan Bank, N.A.
shall make payments of cash to, or for the account of, the Fund from such cash
only (i) for the purchase of securities, options, futures contracts or options
on futures contracts for the Fund as provided in Section 13 hereof; (ii) in the
case of a purchase of securities effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set forth in Section 8
hereof; (iii) in the case of repurchase agreements entered into between the Fund
and Chase Manhattan Bank, N.A., or another bank, or a broker-dealer which is a
member of The National Association of Securities Dealers, Inc. ("NASD"), either
(a) against delivery of the securities either in certificate form or through an
entry crediting Chase Manhattan Bank, N.A.'s account at the Federal Reserve Bank
with such securities or (b) against delivery of the receipt evidencing purchase
by the Fund of securities owned by Chase Manhattan Bank, N.A. along with written
evidence of the agreement by Chase Manhattan Bank, N.A. to repurchase such
securities from the Fund; (iv) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund; (v) for the payment of dividends
or other distributions on shares declared pursuant to the governing documents of
the Fund, or for the payment of interest, taxes, administration, distribution or
advisory fees or expenses which are to be borne by the Fund under the terms of
this Agreement, any Advisory Agreement, or any administration
<PAGE>
agreement; (vi) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund and held by or to be
delivered to Chase Manhattan Bank, N.A.; (vii) to a subcustodian pursuant to
Section 7 hereof; (viii) for such common expenses incurred by the Fund in the
ordinary course of its business, including but not limited to printing and
mailing expenses, legal fees, accountants fees, exchange fees; or (ix) for any
other proper purpose, but only upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of Trustees or of
the Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the person or persons
to whom such payment is to be made.
(c) Chase Manhattan Bank, N.A. is hereby authorized to endorse and collect
all checks, drafts or other orders for the payment of money received as
custodian for the Fund.
6A. ADVANCES BY CUSTODIAN. The Custodian may from time to time agree to
advance cash to the Fund, without interest, for the fund's other proper
corporate purposes. If the Custodian advances cash for any purpose, the Fund
shall and hereby does grant to the Custodian a security interest in Fund
securities equal in value to the amount of the cash advance but in no event
shall the value of securities in which a security interest has been granted
exceed 20% of the value of the Fund's total assets at the time of the pledge;
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to reasonably dispose of any securities
in which it has a security interest to the extent necessary to obtain
reimbursement.
7. RECEIPT AND DELIVERY OF SECURITIES.
(a) Except as provided by Section 8 hereof, Chase Manhattan Bank, N.A.
shall hold and physically segregate all securities and noncash Property received
by it for the Fund. All such securities and non-cash Property are to be held or
disposed of by Chase Manhattan Bank, N.A. for the Fund pursuant to the terms of
this Agreement. In the absence of Proper Instructions accompanied by a
certified resolution authorizing the specific transaction by the Fund's Board,
Chase Manhattan Bank, N.A. shall have no power or authority to withdraw,
deliver, assign, hypothecate, pledge or otherwise dispose of any such securities
and
<PAGE>
investments, except in accordance with the express terms provided for in this
Agreement. In no case may any director, officer, employee or agent of the Fund
withdraw any securities. In connection with its duties under this Section 7,
Chase Manhattan Bank, N.A. may, at its own expense, enter into subcustodian
agreements with other banks or trust companies for the receipt of certain
securities and cash to be held by Chase Manhattan Bank, N.A. for the account of
the Fund pursuant to this Agreement; provided that each such bank or trust
company has an aggregate capital, surplus and undivided profits, as shown by its
last published report, of not less than twenty million dollars ($20,000,000) and
that such bank or trust company agrees with Chase Manhattan Bank, N.A. to comply
with all relevant provisions of the 1940 Act and applicable rules and
regulations thereunder. Chase Manhattan Bank, N.A. will be liable for acts or
omissions of any subcustodian. Chase Manhattan Bank, N.A. shall employ sub-
custodians upon receipt of Proper Instructions, but only in accordance with an
applicable vote by the Board of Trustees of the Fund.
(b) Promptly after the close of business on each day Chase Manhattan Bank,
N.A. shall furnish the Fund with confirmations and a summary of all transfers to
or from the account of the Fund during said day. Where securities are
transferred to the account of the Fund established at a Securities Depository or
Book Entry System pursuant to Section 8 hereof, Chase Manhattan Bank, N.A. shall
also by book-entry or otherwise identify as belonging to such Fund the quantity
of securities in a fungible bulk of securities registered in the name of Chase
Manhattan Bank, N.A. (or its nominee) or shown in Chase Manhattan Bank, N.A.'s
account on the books of a Securities Depository or Book-Entry System. At least
monthly and from time to time, Chase Manhattan Bank, N.A. shall furnish the Fund
with a detailed statement of the Property held for the Fund under this
Agreement.
8. USE OF SECURITIES DEPOSITORY OR BOOK-ENTRY SYSTEM. The Fund shall
deliver to Chase Manhattan Bank, N.A. a certified resolution of the Board of
Trustees of the Fund approving, authorizing and instructing Chase Manhattan
Bank, N.A. on a continuous and ongoing basis until instructed to the contrary by
Proper Instructions actually received by Chase Manhattan Bank, N.A. (i) to
deposit in a Securities Depository or Book-Entry System all securities of the
Fund eligible for deposit therein and (ii) to utilize a Securities Depository or
Book-Entry System to the extent possible in connection with the performance
<PAGE>
of its duties hereunder, including without limitation settlements of purchases
and sales of securities by the Fund, and deliveries and returns of securities
collateral in connection with borrowings. Without limiting the generality of
such use, it is agreed that the following provisions shall apply thereto:
(a) Securities and any cash of the Fund deposited in a Securities
Depository or Book-Entry System will at all times (1) be represented in an
account of Chase Manhattan Bank, N.A. in the Securities Depository or Book Entry
System (the "Account") and (2) be segregated from any assets and cash controlled
by Chase Manhattan Bank, N.A. in other than a fiduciary or custodian capacity
but may be commingled with other assets held in such capacities. Chase
Manhattan Bank, N.A. will effect payment for securities and receive and deliver
securities in accordance with accepted industry practices as set forth in (b)
below, unless the Fund has given Chase Manhattan Bank, N.A. Proper Instructions
to the contrary. The records of Chase Manhattan Bank, N.A. with respect to
securities of the Fund maintained in a Securities Depository or Book Entry
System shall identify by book entry those securities belonging to the Fund.
(b) Chase Manhattan Bank, N.A. shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the Securities Depository or
Book Entry System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of Chase Manhattan Bank, N.A. to
reflect such payment and transfer for the account of the Fund. Upon receipt of
Proper Instructions, Chase Manhattan Bank, N.A. shall transfer securities sold
for the account of the Fund upon (i) receipt of advice from the Securities
Depository or Book Entry System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the records of
Chase Manhattan Bank, N.A. to reflect such transfer and payment for the account
of the Fund. Copies of all advices from the Securities Depository or Book Entry
System of transfers of securities for the account of the Fund shall identify the
Fund, be maintained for the Fund by Chase Manhattan Bank, N.A. and be provided
to the Fund at its request. Upon request, Chase Manhattan Bank, N.A. shall
furnish the Fund confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall furnish to the
<PAGE>
Fund copies of daily transaction sheets reflecting each day's transactions in a
Securities Depository or Book Entry System for the account of the Fund.
(c) Chase Manhattan Bank, N.A. shall provide the Fund with any report
obtained by Chase Manhattan Bank, N.A. on the Securities Depository or Book
Entry System's accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities Depository or Book Entry
System;
(d) All Books and records maintained by Chase Manhattan Bank, N.A. which
relate to the Fund participation in a Securities Depository or Book-Entry System
will at all times during Chase Manhattan Bank, N.A.'s regular business hours be
open to the inspection of the Fund's duly authorized employees or agents, and
the Fund will be furnished with all information in respect of the services
rendered to it as it may require.
(e) Anything to the contrary in this Agreement notwithstanding, Chase
Manhattan Bank, N.A. shall be liable to the Fund for any loss or damage to the
Fund resulting from any negligence, misfeasance or misconduct of Chase Manhattan
Bank, N.A. or any of its agents or of any of its or their employees in
connection with its or their use of the Securities Depository or Book Entry
Systems or from failure of Chase Manhattan Bank, N.A. or any such agent to
enforce effectively such rights as it may have against such Securities
Depository or Book Entry System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of Chase Manhattan Bank, N.A. with
respect to any claim against the Securities Depository or Book Entry System or
any other person which Chase Manhattan Bank, N.A. may have as a consequence of
any such loss or damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
9. SEGREGATED ACCOUNT. Chase Manhattan Bank, N.A. shall upon receipt of
Proper Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by Chase
Manhattan Bank, N.A. pursuant to Section 8 hereof, (i) in accordance with the
provisions of any agreement among the Fund, Chase Manhattan Bank, N.A. and a
broker dealer registered under the Securities and Exchange Act of 1934 and a
member of the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The Options
<PAGE>
Clearing Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for purposes of
segregating cash or government securities in connection with options purchased,
sold or written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purposes of compliance by the Fund
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Trustees or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated account and
declaring such purposes to be proper corporate purposes.
10. INSTRUCTIONS CONSISTENT WITH THE DECLARATION, ETC.
(a) Unless otherwise provided in this Agreement, Chase Manhattan Bank, N.A.
shall act only upon Proper Instructions. Chase Manhattan Bank, N.A. may assume
that any Proper Instructions received hereunder are not in any way inconsistent
with any provision of the Declaration or By-Laws or any vote or resolution of
the Fund's Board of Trustees or any committee thereof. Chase Manhattan Bank,
N.A. shall be entitled to rely upon any Proper Instructions actually received by
Chase Manhattan Bank, N.A. pursuant to this Agreement. The Fund agrees that
Chase Manhattan Bank, N.A. shall incur no liability in acting in good faith upon
Proper Instructions given to Chase Manhattan Bank, N.A., except to the extent
such liability was incurred as a result of Chase Manhattan Bank, N.A.'s
negligence or willful misconduct. In accord with instructions from the Fund, as
required by accepted industry practice or as Chase Manhattan Bank, N.A. may
elect in effecting the execution of Fund instructions, advances of cash or other
Property made by Chase Manhattan Bank, N.A., arising from the purchase, sale,
redemption, transfer or other disposition of Property of the Fund, or in
connection with the disbursement of funds to any party, or in payment of fees,
expenses, claims or liabilities owed to Chase Manhattan Bank,
<PAGE>
N.A. by the Fund, or to any other party which has secured judgment in a court of
law against the Fund which creates an overdraft in the accounts or over-delivery
of Property, shall be deemed a loan by Chase Manhattan Bank, N.A. to the Fund,
payable on demand, bearing interest at such rate customarily charged by Chase
Manhattan Bank, N.A. for similar loans.
(b) The Fund agrees that test arrangements, authentication methods or other
security devices to be used with respect to instructions which the Fund may give
by telephone, telex, TWX, facsimile transmission, bank wire or other
teleprocess, or through an electronic instruction system, shall be processed in
accordance with terms and conditions for the use of such arrangements, methods
or devices as Chase Manhattan Bank, N.A. may put into effect and modify from
time to time. The Fund shall safeguard any test keys, identification codes or
other security devices which Chase Manhattan Bank, N.A. makes available to the
Fund and agrees that the Fund shall be responsible for any loss, liability or
damage incurred by Chase Manhattan Bank, N.A. or by the Fund as a result of
Chase Manhattan Bank, N.A.'s acting in accordance with instructions from any
unauthorized person using the proper security device except to the extent such
loss, liability or damage was incurred as a result of Chase Manhattan Bank,
N.A.'s negligence or willful misconduct. Chase Manhattan Bank, N.A. may
electronically record, but shall not be obligated to so record, any instructions
given by telephone and any other telephone discussions with respect to the Fund.
In the event that the Fund uses Chase Manhattan Bank, N.A.'s Asset Management
system or any successor electronic communications or information system, the
Fund agrees that Chase Manhattan Bank, N.A. is not responsible for the
consequences of the failure of that system to perform for any reason, beyond the
reasonable control of Chase Manhattan Bank, N.A., or the failure of any
communications carrier, utility, or communications network. In the event that
system is inoperable, the Fund agrees that it will accept the communication of
transaction instructions by telephone, facsimile transmission on equipment
compatible to Chase Manhattan Bank, N.A.'s facsimile receiving equipment or by
letter, at no additional charge to the Fund.
(c) Chase Manhattan Bank, N.A. shall transmit promptly to the Fund all
written information (including, without limitation, pendency of calls and
maturities of securities and
<PAGE>
expirations of rights in connection therewith and notices of exercise of call
and put options written by the Fund and the maturity of futures contracts
purchased or sold by the Fund) received by Chase Manhattan Bank, N.A. from
issuers of the securities being held for the Fund. With respect to tender or
exchange offers, Chase Manhattan Bank, N.A. shall transmit promptly by facsimile
to the Fund all written information received by Chase Manhattan Bank, N.A. from
issuers of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify Chase Manhattan Bank, N.A. at least three
business days prior to the date on which Chase Manhattan Bank, N.A. is to take
such action or upon the date such notification is first received by the Fund, if
later. If any Property registered in the name of a nominee of Chase Manhattan
Bank, N.A. is called for partial redemption by the issuer of such property,
Chase Manhattan Bank, N.A. is authorized to allot the called portion to the
respective beneficial holders of the Property in such manner deemed to be fair
and equitable by Chase Manhattan Bank, N.A. in its sole discretion.
11. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. Chase Manhattan Bank, N.A. is
authorized to take the following action without Proper Instructions:
(a) Collection of Income and Other Payments. Chase Manhattan Bank, N.A.
shall:
(i) collect and receive on a timely basis for the account of the
Fund, all income and other payments and distributions, including
(without limitation) stock dividends, rights, warrants and similar
items, included or to be included in the Property of the Fund, and
promptly advise the Fund of such receipt and shall credit such income,
as collected, to the Fund. From time to time, Chase Manhattan Bank,
N.A. may elect, but shall not be obligated, to credit the account with
interest, dividends or principal payments on payable or contractual
settlement date, in anticipation of receiving same from a payor,
central depository, broker or other agent employed by the Fund or
Chase Manhattan Bank, N.A. Any such crediting and posting shall be at
the Fund's sole risk, and Chase Manhattan Bank, N.A. shall be
authorized to reverse any such advance posting in the event it does
not receive good funds from any such payor, central
<PAGE>
depository, broker or agent of the Customer. Chase Manhattan Bank,
N.A. agrees to promptly notify the Fund of the reversal of any such
advance posting.
(ii) endorse and deposit for collection in the name of the Fund,
checks, drafts, or other orders for the payment of money on the same
day as received;
(iii) receive and hold for the account of the Fund all securities
received by the Fund as a result of a stock dividend, share split-up
or reorganization, merger, recapitalization, readjustment or other
rearrangement or distribution of rights or similar securities issued
with respect to any portfolio securities of the Fund held by Chase
Manhattan Bank, N.A. hereunder;
(iv) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed or retired, or
otherwise become payable on the date such securities become payable;
(v) take any action which may be necessary and proper in
connection with the collection and receipt of such income and other
payments and the endorsement for collection of checks, drafts and
other negotiable instruments;
(vi) to effect an exchange of the securities where the par value
is changed, and to surrender securities at maturity or upon an earlier
call for redemption, or when securities otherwise become payable,
against payment therefore in accordance with accepted industry
practice. If any Property registered in the name of a nominee of Chase
Manhattan Bank, N.A. is called for partial redemption by the issuer of
such property, Chase Manhattan Bank, N.A. is authorized to allot the
called portion to the respective beneficial holders of the Property in
such manner deemed to be fair and equitable by Chase Manhattan Bank,
N.A. in its sole discretion.
(b) Miscellaneous Transactions. Chase Manhattan Bank, N.A. is authorized to
deliver or cause to be delivered Property against payment or other consideration
or written receipt therefor for examination by a dealer selling for the account
of the Fund in accordance with street delivery custom.
12. TRANSACTIONS REQUIRING INSTRUCTIONS. In addition to the actions
requiring Proper Instructions set forth herein, upon receipt of Proper
Instructions and not otherwise,
<PAGE>
Chase Manhattan Bank, N.A., directly or through the use of a Securities
Depository or Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated in such Proper
Instructions, proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any securities may be exercised;
(b) Deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
issuer of securities or corporation, or the exercise of any conversion
privilege;
(c) Deliver any securities held for the Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
issuer of securities or corporation, against receipt of such certificates of
deposit, interim receipts or other instruments or documents, and cash, if any,
as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in said instructions to be for the purpose
of effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(e) Release securities belonging to the Fund to any bank or trust company
for the purpose of pledge or hypothecation to secure any loan incurred by the
Fund; provided, however, that securities shall be released only upon payment to
Chase Manhattan Bank, N.A. of the monies borrowed, or upon receipt of adequate
collateral as agreed upon by the Fund and Chase Manhattan Bank, N.A. which may
be in the form of cash or obligations issued by the U.S. government, its
agencies or instrumentalities, except that in cases where additional collateral
is required to secure a borrowing already made, subject to proper prior
authorization, further securities may be released for that purpose; and pay such
loan upon re-delivery to it of the securities pledged or hypothecated therefore
and upon surrender of the note or notes evidencing the loan; and
<PAGE>
(f) Deliver securities in accordance with the provisions of any agreement
among the Fund, Chase Manhattan Bank, N.A. and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Funds;
(g) Deliver securities in accordance with the provisions of any agreement
among the Fund, Chase Manhattan Bank, N.A. and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account deposits in
connection with transactions by the Fund; and
(h) Deliver securities against payment or other consideration or written
receipt therefore for transfer of securities into the name of the Fund or Chase
Manhattan Bank, N.A. or a nominee of either, or for exchange or securities for a
different number of bonds, certificates, or other evidence, representing the
same aggregate face amount or number of units bearing the same interest rate,
maturity date and call provisions, if any; provided that, in any such case, the
new securities are to be delivered to Chase Manhattan Bank, N.A.;
(i) Exchange securities in temporary form for securities in definitive
form;
(j) Surrender, in connection with their exercise, warrants, rights or
similar securities, provided that in each case, the new securities and cash, if
any, are to be delivered to Chase Manhattan Bank, N.A.;
(k) Deliver securities upon receipt of payment in connection with any
repurchase agreement related to such securities entered into by the Fund;
(l) Deliver securities pursuant to any other proper corporate purpose, but
only upon receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee signed by an
officer of the Funds and certified by the Secretary or an Assistant Secretary,
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
<PAGE>
proper corporate purpose, and naming the person or persons to whom delivery of
such securities shall be made.
13. PURCHASE OF SECURITIES. Promptly after each purchase of securities,
options, futures contracts or options on futures contracts by the investment
advisor, the Fund shall deliver to Chase Manhattan Bank, N.A. (as Custodian)
Proper Instructions specifying with respect to each such purchase: (a) the name
of the issuer and the title of the securities, (b) the number of shares of the
principal amount purchased and accrued interest, if any, (c) the dates of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, (f) the name of the person from whom or the broker
through whom the purchase was made and (g) the Fund name. Chase Manhattan Bank,
N.A. shall upon receipt of securities purchased by or for the Fund registered in
the name of the Fund or in the name of a nominee of Chase Manhattan Bank, N.A.
or of the Fund or in proper form for transfer or upon receipt of evidence of
title to options, futures contracts or options on futures contracts purchased by
the Fund, pay out of the moneys held for the account of the Fund the total
amount payable to the person from whom or the broker through whom the purchase
was made, provided that the same conforms to the total amount payable as set
forth in such Proper Instructions. Except as specifically stated otherwise in
this Agreement, in any and every case where payment for purchase of securities
for the account of the Fund is made by Chase Manhattan Bank, N.A. in advance of
receipt of the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, Chase Manhattan Bank, N.A.
shall be absolutely liable to the Fund for such securities to the same extent as
if the securities had been received by Chase Manhattan Bank, N.A.
14. SALE OF SECURITIES. Promptly after each sale of securities by the Fund
at the instruction of the investment advisor, the Fund shall deliver to Chase
Manhattan Bank, N.A. (as Custodian) Proper Instructions, specifying with respect
to each such sale: (a) the name of the issuer and the title of the security, (b)
the number of shares or principal amount sold, and accrued interest, if any, (c)
the date of sale, (d) the sale price per unit, (e) the total amount payable to
the Fund upon such sale, (f) the name of the broker through whom or the person
to whom the sale was made and (g) the Fund name. Chase Manhattan Bank, N.A.
shall deliver the securities upon receipt of the total amount payable to the
Fund upon such
<PAGE>
sale, provided that the same conforms to the total amount payable as set forth
in such Proper Instructions. Subject to the foregoing, Chase Manhattan Bank,
N.A. may accept payment in such form as shall be satisfactory to it, and may
deliver securities and arrange for payment in accordance with the customs
prevailing among dealers in securities.
15. NOT IN USE.
16. RECORDS. The books and records pertaining to the Fund which are in the
possession of Chase Manhattan Bank, N.A. shall be the property of the Fund. Such
books and records shall be prepared and maintained as required by the 1940 Act,
as amended, and other applicable securities laws and rules and regulations. The
Fund, or the Fund's authorized representative, shall have access to such books
and records at all times during Chase Manhattan Bank, N.A.'s normal business
hours, and such books and records shall be surrendered to the Fund promptly upon
request. Upon reasonable request of the Fund, copies of any such books and
records shall be provided by Chase Manhattan Bank, N.A. to the Fund or the
Fund's authorized representative at the Fund's expense.
17. COOPERATION WITH ACCOUNTANTS. Chase Manhattan Bank, N.A. shall
cooperate with the Fund's independent certified public accountants and shall
take all reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to such
accountants for the expression of their unqualified opinion, including but not
limited to the opinion included in the Fund's Form N-1A, Form N-SAR and other
reports to the Securities and Exchange Commission and with respect to any other
requirement of such Commission.
18. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. Chase Manhattan
Bank, N.A. shall provide the Fund, at such times as the Fund may reasonably
require, with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities Depository or Book Entry System,
relating to the services provided by Chase Manhattan Bank, N.A. under this
Contract; such reports, shall be of sufficient scope and in sufficient detail,
as may reasonably be required by the Fund to provide reasonable assurance that
any material
<PAGE>
inadequacies would be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
19. CONFIDENTIALITY. Chase Manhattan Bank, N.A. agrees on behalf of itself
and its employees to treat confidentially and as the proprietary information of
the Fund all records and other information relative to the Fund and its prior,
present or potential Shareholders and relative to the advisors and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where Chase
Manhattan Bank, N.A. may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund. Nothing contained
herein, however, shall prohibit Chase Manhattan Bank, N.A. from advertising or
soliciting the public generally with respect to other products or services,
regardless of whether such advertisement or solicitation may include prior,
present or potential Shareholders of the Fund.
20. EQUIPMENT FAILURES. In the event of equipment failures beyond Chase
Manhattan Bank, N.A.'s control, Chase Manhattan Bank, N.A. shall, at no
additional expense to the Fund, take reasonable steps to minimize service
interruptions but shall not have liability with respect thereto. Chase Manhattan
Bank, N.A. shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provisions for back up
emergency use of electronic data processing equipment to the extent appropriate
equipment is available.
21. RIGHT TO RECEIVE ADVICE.
(a) Advice of Fund. If Chase Manhattan Bank, N.A. shall be in doubt as to
any action to be taken or omitted by it, it may request, and shall receive, from
the Fund clarification or advice.
(b) Advice of Counsel. If Chase Manhattan Bank, N.A. shall be in doubt as
to any question of law involved in any action to be taken or omitted by Chase
Manhattan Bank, N.A., it may request advice at its own cost from counsel of its
own choosing (who may be
<PAGE>
counsel for the Fund or Chase Manhattan Bank, N.A., at the option of Chase
Manhattan Bank, N.A.).
(c) Conflicting Advice. In case of conflict between directions or advice
received by Chase Manhattan Bank, N.A. pursuant to sub-paragraph (a) of this
paragraph and advice received by Chase Manhattan Bank, N.A. pursuant to
subparagraph (b) of this paragraph, Chase Manhattan Bank, N.A. shall be entitled
to rely on and follow the advice received pursuant to the latter provision
alone.
(d) Protection of Chase Manhattan Bank, N.A. Chase Manhattan Bank, N.A.
shall be protected in any action or inaction which it takes or omits to take in
reliance on any directions or advice received pursuant to subparagraphs (a) or
(b) of this section which Chase Manhattan Bank, N.A., after receipt of any such
directions or advice, in good faith believes to be consistent with such
directions or advice. However, nothing in this paragraph shall be construed as
imposing upon Chase Manhattan Bank, N.A. any obligation (i) to seek such
directions or advice, or (ii) to act in accordance with such directions or
advice when received, unless, under the terms of another provision of this
Agreement, the same is a condition to Chase Manhattan Bank, N.A.'s properly
taking or omitting to take such action. Nothing in this subsection shall excuse
Chase Manhattan Bank, N.A. when an action or omission on the part of Chase
Manhattan Bank, N.A. constitutes willful misfeasance, bad faith, negligence or
reckless disregard by Chase Manhattan Bank, N.A. of its duties under this
Agreement.
22. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The Fund assumes
full responsibility for insuring that the contents of each Prospectus of the
Fund complies with all applicable requirements of the 1933 Act, the 1940 Act,
and any laws, rules and regulations of governmental authorities having
jurisdiction.
23. COMPENSATION. As compensation for the services rendered by Chase
Manhattan Bank, N.A. during the term of this Agreement, the Fund will pay to
Chase Manhattan Bank, N.A., in addition to reimbursement of its out-of-pocket
expenses, monthly fees as outlined in Exhibit A.
24. INDEMNIFICATION. The Fund, as sole owner of the Property, agrees to
indemnify and hold harmless Chase Manhattan Bank, N.A. and its nominees from all
taxes,
<PAGE>
charges, expenses, assessments, claims, and liabilities (including, without
limitation, liabilities arising under the 1933 Act, the Securities Exchange Act
of 1934, the 1940 Act, and any state and foreign securities and blue sky laws,
all as or to be amended from time to time) and expenses, including (without
limitation) attorney's fees and disbursements (hereafter "liabilities and
expenses"), arising directly or indirectly from any action or thing which Chase
Manhattan Bank, N.A. takes or does or omits to take or do (i) at the request or
on the direction of or in reliance on the advice of the Fund, or (ii) upon
Proper Instructions, provided, that neither Chase Manhattan Bank, N.A. nor any
of its nominees or sub-custodians shall be indemnified against any liability to
the Fund or to its Shareholders (or any expenses incident to such liability)
arising out of (x) Chase Manhattan Bank, N.A.'s or such nominee's or sub-
custodian's own willful misfeasance, bad faith, negligence or reckless disregard
of its duties under this Agreement or any agreement between Chase Manhattan
Bank, N.A. and any nominee or subcustodian or (y) Chase Manhattan Bank, N.A.'s
own negligent failure to perform its duties under this Agreement. Chase
Manhattan Bank, N.A. similarly agrees to indemnify and hold harmless the Fund
from all liabilities and expenses arising directly or indirectly from Chase
Manhattan Bank, N.A.'s or such nominee's or sub-custodian's willful misfeasance,
bad faith, negligence or reckless disregard in performing its duties under this
agreement. In the event of any advance of cash for any purpose made by Chase
Manhattan Bank, N.A. resulting from orders or Proper Instructions of the Fund,
or in the event that Chase Manhattan Bank, N.A. or its nominee or subcustodian
shall incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Agreement, except such as
may arise from its or its nominee's or sub-custodian's own negligent action,
negligent failure to act, willful misconduct, or reckless disregard, the Fund
shall promptly reimburse Chase Manhattan Bank, N.A. for such advance of cash or
such taxes, charges, expenses, assessments claims or liabilities.
25. RESPONSIBILITY OF CHASE MANHATTAN BANK, N.A. In the performance of its
duties hereunder, Chase Manhattan Bank, N.A. shall be obligated to exercise care
and diligence and to act in good faith to insure the accuracy and completeness
of all services performed under this Agreement. Chase Manhattan Bank, N.A. shall
be responsible for its own negligent failure or that of any subcustodian it
shall appoint to perform its duties under
<PAGE>
this Agreement but to the extent that duties, obligations and responsibilities
are not expressly set forth in this Agreement, Chase Manhattan Bank, N.A. shall
not be liable for any act or omission which does not constitute willful
misfeasance, bad faith, or negligence on the part of Chase Manhattan Bank, N.A.
or such subcustodian or reckless disregard of such duties, obligations and
responsibilities. Without limiting the generality of the foregoing or of any
other provision of this Agreement, Chase Manhattan Bank, N.A. in connection with
its duties under this Agreement shall, so long as and to the extent it is in the
exercise of reasonable care, not be under any duty or obligation to inquire into
and shall not be liable for or in respect of (a) the validity or invalidity or
authority or lack thereof of any advice, direction, notice or other instrument
which conforms to the applicable requirements of this Agreement, if any, and
which Chase Manhattan Bank, N.A. believes to be genuine, (b) the validity of the
issue of any securities purchased or sold by the Fund, the legality of the
purchase or sale thereof or the propriety of the amount paid or received
therefor, (c) the legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefore, (d) the legality of the
redemption of any Shares, or the propriety of the amount to be paid therefor,
(e) the legality of the declaration or payment of any dividend or distribution
on Shares, of (f) delays or errors or loss of data occurring by reason of
circumstances beyond Chase Manhattan Bank, N.A.'s control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown (except as provided in Section 20), flood or catastrophe,
acts of God, insurrection, war, riots, or failure of the mail, transportation,
communication or power supply.
26. COLLECTION OF INCOME. Chase Manhattan Bank, N.A. shall collect on a
timely basis all income and other payments with respect to registered securities
held hereunder to which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held by Chase Manhattan Bank, N.A. or
its agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, Chase
Manhattan Bank, N.A. shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and shall
collect interest when
<PAGE>
due on securities held hereunder. Income due the Fund on securities loaned
pursuant to the provisions of Section 9 shall be the responsibility of the Fund.
Chase Manhattan Bank, N.A. will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Fund is properly entitled.
27. OWNERSHIP CERTIFICATES FOR TAX PURPOSES. Chase Manhattan Bank, N.A.
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to securities of the Fund held by it and in connection with
transfers of securities.
28. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT.
This Agreement shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that Chase Manhattan Bank, N.A. shall not act under Section 8 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees of the Fund has approved the
initial use of a particular Securities Depository or Book Entry System and the
receipt of an annual certificate of the Secretary or an Assistant Secretary that
the Board of Trustees has reviewed the use by the Fund of such Securities
Depository and/or Book Entry System, as required in each case by Rule 17f-4
under the Investment Company Act of 1940, as amended; provided further, however,
that the Fund shall not amend or terminate this Agreement in contravention of
any applicable federal or state regulations, or any provision of the Declaration
of Trust, and further provided, that the Fund may at any time by action of its
Board of Trustees (i) substitute another bank or trust company for Chase
Manhattan Bank, N.A. by giving notice as described above to Chase Manhattan
Bank, N.A., or (ii) immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for Chase Manhattan Bank, N.A. by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
<PAGE>
Upon termination of the Agreement, the Fund shall pay to Chase Manhattan
Bank, N.A. such compensation as may be due as of the date of such termination
and shall likewise reimburse Chase Manhattan Bank, N.A. for its costs, expenses
and disbursements.
29. SUCCESSOR CUSTODIAN.
If a successor custodian shall be appointed by the Board of Trustees of the
Fund, Chase Manhattan Bank, N.A. shall, upon termination, deliver to such
successor custodian at the office of the custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder and shall transfer
to an account of the successor custodian all of the Fund's securities held in a
Securities Depository or Book Entry System.
If no such successor custodian shall be appointed, Chase Manhattan Bank,
N.A. shall, in like manner, upon receipt of a certified copy of a vote of the
Board of Trustees of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
Chase Manhattan Bank, N.A. on or before the date when such termination shall be
come effective, then Chase Manhattan Bank, N.A. shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the 1940 Act, doing
business in New York, New York, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
Chase Manhattan Bank, N.A. and all instruments held by Chase Manhattan Bank,
N.A. relative thereto and all other property held by it under this Agreement and
to transfer to an account of such successor custodian all of the Fund's
securities held in any Securities Depository or Book Entry System. Thereafter,
such bank or trust company shall be the successor of the Custodian under this
Contract.
In the event that securities, funds and other properties remain in the
possession of Chase Manhattan Bank, N.A. after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Trustees to appoint a successor custodian, Chase Manhattan
Bank, N.A. shall be entitled to fair compensation for its services during such
period as Chase Manhattan Bank, N.A. retains
<PAGE>
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of Chase Manhattan Bank,
N.A. shall remain in full force and effect.
30. NOTICES. All notices and other communications (collectively referred to
as "Notice" or "Notices") in this section hereunder shall be in writing and
shall be first sent by telegram, cable, telex, or facsimile sending device and
thereafter by overnight mail for delivery on the next business day. Notices
shall be addressed (a) if to Chase Manhattan Bank, N.A., at Chase Manhattan
Bank, N.A.'s address, 770 Broadway, New York, New York, 10003, facsimile number
(212) 388-4239; (b) if to the Fund, at the address of the Fund Attention:
Controller, facsimile number (312) 917-8049; or (c) if to neither of the
foregoing, at such other address as shall have been notified to the sender of
any such Notice or other communication. Notices sent by overnight mail shall be
deemed to have been given the next business day. Notices sent by messenger shall
be deemed to have been given on the day delivered, and notices sent by
confirming telegram, cable, telex or facsimile sending device shall be deemed to
have been given immediately. All postage, cable, telegram, telex and facsimile
sending device charges arising from the sending of a Notice hereunder shall be
paid by the sender.
31. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
32. AMENDMENTS. This Agreement or any part hereof may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of such change or waiver is sought.
33. ADDITIONAL FUNDS. In the event that the Fund establishes one or more
series of Shares in addition to Nuveen Growth and Income Stock Fund, Nuveen
Balanced Stock and Bond Fund and Nuveen Balanced Municipal and Stock Fund with
respect to which it desires to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such series of Shares
shall become a Fund hereunder.
34. MISCELLANEOUS. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and
<PAGE>
understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall insure to the benefit of the parties hereto and their respective
successors.
35. The Fund's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed on behalf of the Fund
by the Fund's officers as officers and not individually and the obligations
imposed upon the Fund by this Agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
CHASE MANHATTAN BANK, N.A.
Attest: /s/ Thomas V. Dibella By: /s/ Peter C. Arrighetti
--------------------- -----------------------
THOMAS V. DIBELLA PETER C. ARRIGHETTI
VICE PRESIDENT SENIOR VICE PRESIDENT
NUVEEN INVESTMENT TRUST
Attest: /s/ Gifford R. Zimmerman By: /s/ O. Walter Renfftlen
------------------------ -----------------------
GIFFORD R. ZIMMERMAN O. WALTER RENFFTLEN
ASSISTANT GENERAL COUNSEL VICE PRESIDENT & CONTROLLER
<PAGE>
EXHIBIT A
---------
CUSTODY SERVICE FEE
-------------------
Administration and Maintenance Fee
- ----------------------------------
.01375% (1 3/8 Basis Points) on first $10 billion
.00875% (7/8 Basis Point) on second $10 billion
.0075% (3/4 Basis Point) on third $10 billion
.00625% (5/8 Basis Point) on remainder
Transaction Fees
- ----------------
$10.00 Per Book Entry or Physical Transaction
$35.00 Per Future Contract or Option wire
$8.00 Per outgoing Wire Transfer for ETFs
$5.00 Per incoming and outgoing Wire Transfer for Open End and
Money Market Funds
NOTES:
1. Schedule should be applied to total assets for all Exchange Traded funds,
Open End Load Funds, and Money Market Funds.
2. Add $5.00 per book entry transaction and physical transaction if Custody
inputs trades.
BALANCES
--------
1. During each month, daily net overdrafts are offset by daily net cash
balances dollar for dollar with no penalty or charge for daily net
overdrafts.
2. At the end of each month, the net overdraft for the month incurs an
overdraft charge computed as follows:
The negative net cumulative balance plus 10% reserves multiplied by
the average monthly Fed Funds rate divided by 365 days.
3. Net credit balance at month end carries forward and is eligible for offset
with overdrafts in the next month. The carry forward net credit balance
incurs a 10% reduction. Carry forward balances expire at the end of each
portfolio's fiscal year end for "fully invested funds"; for new funds not
fully invested, the credit balance carries forward until the fund become
fully invested. Each series of the Fund will use its best efforts to keep
its cumulative balances at each calendar quarter end below $50 million.
4. Nuveen Institutional Advisory Corp. or Nuveen Advisory Corp. will be
responsible for promptly advising The Chase Manhattan Bank of the date a
new fund becomes fully invested.
5. Effective January 1, 1996, FDIC charges will be no longer applied to the
portfolios.
6. Overdrafts are permissible only as a means of compensating for positive
balances.
7. Due to FDIC capitalization requirements, overdrafts are not permissible on
June 30th and December 31st.
<PAGE>
8. The allowable overdraft policy will not apply to the Growth and Income
Stock Fund and the Balanced Stock and Bond Fund series of Nuveen Investment
Trust. Instead, those series will receive an earnings credit which will be
applied to the bill and used to reduce the monthly custody fees. This
monthly assessment will be determined at the end of the month as follows:
The positive net cumulative balance less 10% reserves multiplied by
the monthly average 90-Day Treasury Bill rate divided by 365 days.
If the average monthly balance is negative a charge will be applied to the
custody bill as follows:
The negative net cumulative balance plus 10% reserves multiplied by
the average monthly Fed Funds rate divided by 365 days.
Effective October 1, 1996, this Exhibit A hereby supersedes in its entirety the
Exhibit A attached to the Custody Agreement dated July 15, 1996 by and between
Nuveen Investment Trust and The Chase Manhattan Bank (National Association).
dated: November 7, 1996.
NUVEEN INVESTMENT TRUST
Attest:
/s/ Gifford R. Zimmerman /s/ O. Walter Renfftlen
- ---------------------------------- ------------------------------------
Name: Gifford R. Zimmerman Name: Walter Renfftlen
Title: Vice President Title: Vice President and Controller
CHASE MANHATTAN BANK
Attest:
/s/ Thomas V. DiBella /s/ Peter C. Arrighetti
- ---------------------------------- ------------------------------------
Name: Thomas V. DiBella Name: Peter C. Arrighetti
Title: Vice President Title: Senior Vice President
<PAGE>
EXHIBIT 9
NUVEEN INVESTMENT TRUST
TRANSFER AGENCY AGREEMENT
This agreement is made as of the 1st day of July, 1996, between
NUVEEN INVESTMNT TRUST, a Massachusetts business trust having its principal
office and place of business at 333 West Wacker Drive, Chicago, Illinois 60606
(hereinafter referred to as the "Fund"), and SHAREHOLDER SERVICES, INC., a
Colorado corporation having its place of business at 3410 South Galena Street,
Denver, Colorado 80231 (hereinafter referred to as the "Transfer Agent").
In consideration of the mutual promises hereinafter set forth, the parties
hereto covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the following meanings:
1.1 "Approved Institution" shall mean a broker-dealer, broker, bank
or other entity named in a Certificate, as hereinafter defined, and having
account(s) in the Trust or the Distributor or an agent it appoints, in each case
acting on behalf of the Fund for the benefits of its clients. From time to time
the Fund may amend a previously delivered Certificate by delivering to the
Transfer Agent a Certificate naming an additional entity as an Approved
Institution or deleting any entity named as an Approved Institution in a
previously delivered Certificate.
1.2 "Business Day" shall mean each day on which the New York Stock
Exchange is open for trading.
1.3 "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the Transfer
Agent by the Fund and which is signed by any Officer, as hereinafter defined,
and actually received by the Transfer Agent. "Certificate" shall also include
any notice submitted to the Transfer Agent by electronic or telephone
transmission, reasonably believed by the Transfer Agent to be genuine and to
have been properly made, signed or authorized by an Officer.
1.4 "Computer Tape" shall mean any computer/electromagnetic tape or
transmission transmitted by an Approved Institution, via a remote terminal or
other similar link, into a data processing, storage, or collection system or
similar system (the "System"), located on the Transfer Agent's premises. For
purposes of Section 5.1, such Computer Tape shall be deemed to have been
furnished at such times as are agreed upon from time to time by the Transfer
Agent and Fund only if the information reflected thereon was input into the
system at such times as are agreed upon from time to time by the Transfer Agent
and the Fund.
1.5 "Custodian" shall mean, with respect to the Fund, Chase Manhattan Bank
of New York as custodian under the terms and conditions of the Custody Agreement
between the Custodian and the Fund, or in any case any successor(s) to such
Custodian performing similar functions for or on behalf of the Fund.
<PAGE>
1.6 "Direct Accounts" means accounts registered in the names(s) of
shareholders other than Approved Institutions.
1.7 "Distributor" shall mean John Nuveen & Co. Incorporated (hereinafter
referred to as "Nuveen & Co.", as distributor under the terms and conditions of
the Distributor's Contract between the Fund and Nuveen & Co., wherein Nuveen &
Co. has the exclusive right to sell shares of the Fund to investors against
orders therefor at net asset value, or any successor(s) to Nuveen & Co.
performing a similar function for or on behalf of the Fund.
1.8 "Effective Date" shall mean July 1, 1996 or the date the Fund begins
operations.
1.9 "SERIES" shall mean each individual portfolio of the Fund, if any, each
being a separate portfolio of securities and other assets, interests in which
are represented by a separate series of the Fund's shares, and such terms shall
include any other such portfolio that may be created for which the Transfer
Agent agrees to act as transfer agent pursuant to Article 10 of this Agreement.
1.10 "Officer" shall mean the Fund's Chairman of the Board, President, any
Vice President, Secretary, any Assistant Secretary, Treasurer, any Assistant
Treasurer and any other person duly authorized by the Board of Trustees of the
Fund to execute or give any Certificate on behalf of the Fund and named in the
Certificate annexed hereto as Appendix A, as such Certificate may be amended
from time to time.
1.11 "Prospectus" shall mean the most current Fund prospectus and statement
of additional information relating to the Shares, actually received by the
Transfer Agent from the Fund and shall include to the extent applicable, shares
designated as comprising any and all classes of any series of the Fund.
1.12 "Shares" shall mean full or fractional shares comprising all or any
part of each series representing the beneficial interest in the Fund and shall
include to the extent applicable, shares designated as comprising any and all
classes of any series of the Fund.
ARTICLE 2
APPOINTMENT OF TRANSFER AGENT
2.1 The Fund hereby constitutes and appoints the Transfer Agent as
transfer agent of all the Shares of the Fund and as dividend disbursing agent
for the Fund during the term of this Agreement.
2.2 The Transfer Agent hereby accepts appointment as transfer agent and
dividend disbursing agent and agrees to perform the duties hereinafter set
forth.
2.3 In connection with such appointment, upon or prior to executing this
Agreement, the Fund shall deliver to the Transfer Agent such of the following as
have not already been furnished to the Transfer Agent:
(a) A copy of the Declaration of Trust of the Fund and all amendments
thereto certified by the Secretary of the Fund;
(b) A copy of the By-Laws of the Fund certified by the Secretary of the
Fund;
<PAGE>
(c) A copy of resolutions of the Board of Trustees of the Fund, certified
by the Secretary of the Fund, authorizing the execution of this Transfer Agency
Agreement;
(d) A Certificate signed by the Secretary of the Fund specifying the names
and specimen signatures of the Officers of the Fund;
(e) Specimen Share certificates for Shares of each series of the Fund in
the form approved by the Board of Trustees of the Fund, together with a
certificate signed by the Secretary of the Fund as to such approval;
(f) Copies of the most recently filed Post-Effective Amendment to the
Fund's Registration Statement, filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and under the Investment Company
Act of 1940, as amended, together with any applications for exemptive relief
from any of the provisions of such laws filed by the Fund and the record of any
formal action of the Securities and Exchange Commission with respect to all such
applications; and
(g) Opinion of Counsel for the Fund to the effect that (1) beneficial
interest in each Fund is divided into an unlimited number of shares of
beneficial interest, (2) the issue and sale of the Fund's authorized but
unissued Shares have been duly authorized under Massachusetts law, (3) the
outstanding Shares are fully paid and non-assessable and (4) upon the issue and
sale of any authorized and unissued Shares and upon receipt of the authorized
consideration therfor in an amount not less than either the Shares' net asset
value or par value, if any, established and in force at the time of their sale,
the Fund Shares so issued will be validly issued, fully paid and non-assessable.
2.4 The Fund shall either (a) furnish the Transfer Agent with sufficient
supplies of blank share certificates in the form approved from time by the
Board of Trustees of the Fund, and from time to time will renew such supplies
upon request of the Transfer Agent, or (b) authorize the Transfer Agent to
itself create laser-printed Share certificates in the form approved by the Board
of Trustees of the Fund. Any such blank Share certificates shall be properly
signed, by fascimile or otherwise, by authorized Officers and, if required,
shall bear the seal of the Fund or a facsimile thereof. Notwithstanding the
death, resignation or removal of any Officer authorized to sign such Share
certificates, the Transfer Agent may continue to countersign and issue Share
certificates bearing such Officer's signature until otherwise directed by the
Fund. The Fund agrees to indemnify and exonerate, save and hold the Transfer
Agent harmless, from and against any and all claims or demands that may be
asserted against the Transfer Agent with respect to the genuineness of any Share
certificate supplied to the Transfer Agent by the Fund pursuant to this
Agreement.
ARTICLE 3
AUTHORIZATION AND ISSUANCE OF SHARES
3.1 The Transfer Agent shall maintain records of accounts evidencing
ownership of Shares as provided in this Agreement and in the Fund's Prospectus
and, subject to the terms and conditions of this Agreement, when requested shall
countersign, record, issue, and deliver certificates for Shares both upon
original issue and transfer. Evidence of the ownership of Shares shall be
maintained on the Transfer Agent's records in book (uncertificated) form, or, if
requested by an Approved Institution (or the Distributor or its agent acting on
behalf of such Approved Institution) or shareholder, share certificates shall be
issued, subject to the provisions of Article 5 hereof, to evidence the ownership
of Shares.
<PAGE>
3.2 Prior to the issuance of any Shares pursuant to Share splits and prior
to any reduction in the number of Shares outstanding the Fund shall deliver the
following documents to the Transfer Agent:
(a) A copy of the resolutions(s) adopted by the Board of Trustees of the
Fund and/or the shareholders of the relevant Fund, certified by the Secretary of
the Fund, authorizing such issuance of additional Shares of such Fund or such
reduction, as the case may be;
(b) In the case of the issuance of Shares, an opinion of counsel for the
Fund with respect to matters set forth in Section 2.3(g) hereof as to such
shares; and
(c) Such additional documents as the Transfer Agent may reasonably
request.
ARTICLE 4
RECAPITALIZATION OR CAPITAL ADJUSTMENT
4.1 In the case of any Share split, recapitalization or other capital
adjustment, the Transfer Agent will, in the case of accounts represented by
uncertificated Shares, cause the account records to be adjusted, as necessary,
to reflect the number of Shares held for the account of each such shareholder as
a result of such adjustment, or, in the case of Shares represented by
certificates, will, if so instructed by the Fund, issue revised Share
certificates in exchange for, or upon transfer of, outstanding Share
certificates in the old form, in either case upon receiving:
(a) A Certificate authorizing the issuance of revised Share certificates
and any other action required to be taken by the Transfer Agent in connection
with any such split, recapitalization or other capital adjustment;
(b) A copy of any amendment to the Declaration of Trust of the Fund,
certified by the Secretary of the Fund, with respect to the adjustment;
(c) Specimen Share certificates in the revised form approved by the Board
of Trustees of the Fund;
(d) An opinion of counsel for the Fund with respect to the matters set
forth in Article 2, Section 2.3(g) hereof as to such Shares; and
(e) Such additional documents as the Transfer Agent may reasonably
request.
4.2 The Fund shall either (a) furnish the Transfer Agent with a sufficient
supply of blank Share certificates in any new form authorized in connection with
any such Share split, recapitalization or other capital adjustment, and from
time to time will replenish such supply upon the request of the Transfer Agent,
or (b) authorize the Transfer Agent to itself create laser-printed Share
certificates in the form approved by the Board of Trustees of the Fund. Any such
blank Share certificates in the form approved by the Board of Trustees of the
Fund. Any such blank Share certificates shall be properly signed by authorized
Officers and, if required, shall bear the Fund's seal or facsimile thereof.
<PAGE>
ARTICLE 5
ISSUANCE, REDEMPTION, AND TRANSFER OF SHARES
5.1 (a) On each Business Day, the Transfer Agent shall accept, at such
time as are agreed upon from time to time by the Transfer Agent and the Fund,
(i) purchase orders received by the Transfer Agent directly from an Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution) or an individual investor, (ii) redemption requests either received
from a shareholder, whether or not an Approved Institution (or the Distributor
or its agent acting on behalf of such Approved Institution), or contained in a
Certificate, and (iii) requests for exchanges of the Fund's Shares of a given
class for Shares of another fund received from a shareholder, whether or not an
Approved Institution (or the Distributor or its agent acting on behalf of such
Approved Institution), or contained in a Certificate, provided that (1) such
purchase order, exchange request or redemption request, as the case may be, is
in conformity with the Fund's purchase, exchange, and redemption procedures, as
applicable, described in the Prospectus, and (2) if such type of purchase order,
exchange request or redemption request is not described in the Prospectus in
effect upon the commencement date of the Agreement, the Transfer Agent has
agreed to accept and act as to such order or request. Upon receipt on any
Business Day of any check drawn or endorsed to the Transfer Agent, the Fund or
the Distributor for the purchase of Shares, or any payment made by Automated
Clearing House or Federal Funds wire, the Transfer Agent shall deposit such
check or payment in the bank account established by the Fund or the Distributor
for the collection of such amounts and shall wire such amounts to the Fund's
Custodian on the next Business Day. The Transfer Agent shall have no
responsibility hereunder for the Fund's compliance with states securities
registration laws ("Blue Sky laws") relating to such purchase orders, except to
the extent that the Transfer Agent will maintain records in a manner that will
enable the Fund to monitor the total number of Shares of the Fund sold in each
state and shall provide the Fund reports as to such sales as specified in
Appendix B to this Agreement.
(b) On each Business Day, the Transfer Agent shall accept, at such
time as are agreed upon from time to time by the Transfer Agent and the Fund, a
Computer Tape consistent in all respects with the Transfer Agent's tape layout
package, as amended from time to time, which is believed by the Transfer Agent
to be furnished by or on behalf of any Approved Institution, setting forth data
as to purchases, redemptions and exchanges of Shares irrespective of whether
payment of the purchase price accompanies such computer tape. The Transfer Agent
may rely on the data on such Computer Tapes as accurate, and shall not be
responsible hereunder for errors in such Computer Tapes furnished to it
hereunder, unless caused by the Transfer Agent's own negligence, bad faith or
willful misconduct.
(c) On each Business Day, the Fund shall provide or cause to be
provided to the Transfer Agent, at such times as the parties hereto shall agree,
the net asset value per share for the Fund and such other information as the
Transfer Agent may reasonably request.
5.2 On the Business Day following each Business Day, at such time as the
Transfer Agent and the Fund shall agree, an authorized employee of the Transfer
Agent shall confirm the following information by summary sheet transmitted by
electronic or other electromagnetic means to an authorized employee or agent of
the Fund (or by such other form as shall be agreed upon from time to time by the
Fund and the Transfer Agent):
(a) The total dollar amount to be applied toward the purchase of
Shares of the Fund and the number of Shares of the Fund purchased on such prior
Business Day, computed by aggregating
<PAGE>
the amounts so specified in (i) the purchase orders received by the Transfer
Agent on such prior Business Day from individual investors and (ii) all Computer
Tapes described in Section 5.1(b) timely received by the Transfer Agent with
respect to such prior Business Day;
(b) The total dollar value and number of Shares of the Fund redeemed
on such prior Business Day, computed by aggregating the amounts so specified in
(i) the redemption requests received by the Transfer Agent directly on
the preceding Business Day from shareholders, and (ii) all Computer Tapes
described in Section 5.1(b) relating to such prior Business Day; and
(c) The total dollar value and number of Shares of the Fund to be
exchanged for Shares of another fund and the number of Shares of such other fund
to be issued in such exchanges on such prior Business Day, and the total dollar
value and number of shares of the Fund to be issued in exchange for shares of
another fund on such prior business day (if not included in 5.2(a) above)
computed by aggregating the amounts represented by any exchange requests
received directly by the Transfer Agent from shareholders and the amounts
specified in all Computer Tapes described in Section 5.1(b) relating to such
prior Business Day.
5.3. Following each Business Day, the Transfer Agent will (on a day on
which banks in Denver, Colorado, Chicago, Illinois and New York, New York are
open for business but in any event on or prior to the Fifth Business Day
following such Business Day) advise the Distributor of the amount of cash
necessary to be wired to the Custodian, representing purchase orders for
appropriate Fund's Shares received by the Transfer Agent as to such Business
Day, as set forth in Section 5.1 above. As to each Business Day, the Transfer
Agent will advise the Fund of the amount of cash representing exchange orders
received by the Transfer Agent as to such Business Day, such advice to be given
on the next Business Day.
5.4. As to each Business Day, the Transfer Agent shall issue to, and
redeem from, the accounts specified in a purchase order, redemption request, or
exchange request received by the Transfer Agent in proper form in accordance
with the Prospectus and, when required by the Prospectus, properly endorsed by
the record owner thereof with the record owner's or owners' signature(s)
guaranteed by a U.S. commercial bank or U.S. trust company, a member of a
national securities exchange, a foreign bank with a U.S. correspondent bank or a
federally-chartered savings and loan association, or shall issue to, and/or
redeem from, the accounts specified in a Computer Taped received by the Transfer
Agent from an Approved Institution, the appropriate number of full and
fractional Shares based on the net asset value per Share of the relevent series
of the relevant Funds specified in an advice received as to such Business Day
from the Fund. Notwithstanding the foregoing, if a redemption specified in a
redemption request received directly by the Transfer Agent or in a Computer Tape
is for a dollar value of Shares in excess of the dollar value of uncertificated
Shares in the specified account plus the dollar value of certificated Shares in
the specified account for which the Transfer Agent has received the tender of
Share certificate or certificates in proper form as described above, the
Transfer Agent shall not effect such redemption in whole or part. In such case
involving a Computer Tape, the Transfer Agent shall orally or by electronic or
other electromagnetic means advise both the Fund and the Approved Institution
(or the Distributor or its agent if acting on behalf of such Approved
Institution) which supplied such Computer Tape of such discrepancy. In such case
involving a direct shareholder, the Transfer Agent shall, within five (5)
business days, notify such shareholder directly, orally or in writing.
5.5. The Transfer Agent shall, as of each Business Day specified in a
Certificate described in Section 6.1, issue Shares of the Fund, based on the net
asset value per Share of the Fund specified in an advice received from the Fund
to such Business Day, in connection with a reinvestment of a dividend or
distribution on Shares of the Fund.
<PAGE>
5.6 On each Business Day, the Transfer Agent shall advise the Fund by
computer/electromagnetic tape specifying, with respect to the immediately
preceding business Day: the total number of Shares of the Fund (including
fractional Shares) issued and outstanding at the opening of business on such
day; the total number of Shares of the Fund sold on such day, pursuant to
Section 5.2; the total number of Shares of the Fund redeemed or exchanged on
such day; the total number of Shares of the Fund, if any, sold on such day
pursuant to preceding Section 5.4, and the total number of Shares of the Fund
issued and outstanding at the close of business on such day. Unless the Fund or
its agent shall advise the Transfer Agent of any error in the information
contained in such computer/electromagnetic tape (the "Initial Tape") prior to
the transmission of the next computer/electromagnetic tape by the Transfer
Agent, the Transfer Agent shall be deemed to have fulfilled its responsibilities
hereunder with respect to the accuracy of the data on subsequent
computer/electromagnetic tapes submitted to the Fund that are based, in whole or
in part upon any inaccurate data from the Initial Tape.
5.7. In connection with each purchase, exchange and redemption of Shares
other than pursuant to a Computer Tape submitted by an Approved Institution (or
by the Distributor or its agent acting on behalf of such Approved Institution),
the Transfer Agent shall send to the shareholder such statements as are
described in the Prospectus or as otherwise reasonably instructed in writing by
the Funds. If the Prospectus indicates that certificates for Shares are
available, and if specifically requested in writing by any shareholder, or if
otherwise required hereunder, the Transfer Agent will countersign, issue and
mail to such shareholder, at the address set forth in the records of the
Transfer Agent, a Share certificate for any full Shares requested.
5.8 In computing the redemption proceeds to be paid to any shareholder or
to an account for an Approved Institution, the Transfer Agent shall first
compute the amount of any withholding for federal income taxes for which the
Transfer Agent has the responsibility under this Agreement to calculate such
withholding, in such manner as the Fund and the Transfer Agent shall agree from
time to time in conformity with instructions provided by the Fund to the
Transfer Agent. The Transfer Agent shall also compute any withholding for
federal income taxes for which the Transfer Agent has such responsibility at the
time of any exchange of a Fund's shares for another fund's shares. In the case
of a redemption of Shares directly by a shareholder of record and not by means
of a Computer Tape submitted by an Approved Institution (or by the Distributor
or its agent acting on behalf of such Approved Institution), upon deposit of
moneys in a redemption account by the relevant Custodian against which the
Transfer Agent is authorized by the Fund to draw checks in connection with a
redemption of Shares of the Fund, the Transfer Agent shall cancel the redeemed
Shares and after making appropriate deduction for any withholding of taxes
required of it by this Agreement or applicable law, make payment of (i) the
redemption proceeds to the order of the shareholder, and (ii) any tax withheld
to the Internal Revenue Service, in accordance with the Fund's redemption and
payment procedures described in the Prospectus or as otherwise reasonably
described in a written instruction from the Fund. In the case of an exchange of
Shares directly by a shareholder of record and not by means of a Computer Tape
submitted by an Approved Institution (or the Distributor or its agent acting on
behalf of such Approved Institution), upon deposit of moneys in an account by
the relevant Custodian against which the Transfer Agent is authorized by the
Fund to draw checks in connection with an exchange of Shares of a fund, the
Transfer Agent shall cancel the exchanged Shares, and withhold and pay taxes
required under this Agreement and applicable law. In the case of a redemption of
Shares pursuant to a Computer Tape, the Transfer Agent shall, on the next
Business Day, send the Fund a Computer Tape setting forth the amount of
redemption proceeds due each Approved Institution. If such Approved Institution
(or the Distributor or its agent acting on behalf of such Approved Institution)
has previously furnished the Transfer Agent withholding instructions with
respect to such redemption or any exchange of Shares pursuant to a Computer
Tape, the Transfer Agent shall include in the Computer Tape furnished to the
Fund information as to the amount of such withholding.
<PAGE>
5.9 The Transfer Agent shall not be required to issue Shares of any fund
(other than with respect to the reinvestment of dividends or distributions on
shares owned by an existing shareholder if so stated in the Certificate) after
it has received a Certificate stating that the sale of Shares of that fund has
been suspended or discontinued.
5.10 The Transfer Agent shall not be responsible for the payment of any
original issue or other taxes required to be paid by the Fund in connection with
the issuance of any Shares.
5.11 The Transfer Agent shall not be responsible for issuing or effecting
any "stop transfer" or other similar order or restrictions on any Shares held in
the name of an Approved Institution. In the case of Shares registered in the
name of a shareholder other than an Approved Institution as to which a "stop
transfer" or other similar order or restriction applies, the Transfer Agent will
adhere to the terms of such stop transfer or similar order, except that it may
rely on a Certificate to effect a redemption, exchange or transfer of such
Shares, notwithstanding such stop order or restriction.
5.12 The Transfer Agent shall accept (a) a Computer Tape which is
furnished by or on behalf of any Approved Institution (or the Distributor or its
agent acting on behalf of such Approved Institution) and represented to be
instructions with respect to the transfer of Shares from one account of such
Approved Institution to another such account, and (b) as to Shares standing
directly in the name of a shareholder other than an Approved Institution,
transfer instructions in proper form in accordance with the Fund's Prospectus
and the Transfer Agent's rules described herein, and shall effect the transfer
specified in said Computer Tape or transfer instructions, provided that any
necessary documents or Share certificates have been tendered to the Transfer
Agent.
5.13 (a) Except as otherwise provided in sub-paragraph (b) of this Section
5.13 and in Section 5.14, Shares will be transferred, exchanged or redeemed
other than pursuant to Computer Tapes from an Approved Institution (or the
Distributor or its agent acting on behalf of such Approved Institution) upon
presentation to the Transfer Agent of endorsed Share certificates or, in the
case of uncertificated Shares, instructions endorsed in proper form in
accordance with the Prospectus as stated in Section 5.4, accompanied by such
documents as the Transfer Agent reasonably deems necessary to evidence the
authority of the person making such transfer, exchange or redemption, and
bearing satisfactory evidence of the payment of transfer taxes. In the case of
small estates, where no administration is contemplated, the Transfer Agent may,
when furnished with an appropriate small estates affidavit under applicable law
or with a surety bond, and without further approval of the Fund, transfer or
redeem Shares registered in the name of a decedent if the current market value
of the Shares being redeemed or transferred does not exceed such amount as may
from time to time be prescribed by the applicable state statues and regulations.
The Transfer Agent reserves the right to refuse to transfer, exchange or redeem
Shares until it is reasonably satisfied that the endorsement on the Share
certificate or instructions is valid and genuine, and for that purpose it will
require, unless otherwise instructed by an Officer, a signature guarantee as
stated in Section 5.4 of this Agreement. The Transfer Agent also reserves the
right to refuse to transfer, exchange or redeem Shares until it is reasonably
satisfied that the requested transfer, exchange or redemption is legally
authorized, or until it is reasonably satisfied that the requested transfer,
exchange or redemption is legally authorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such transfer,
exchange or redemption. The Transfer Agent may, in effecting transfers,
exchanges and redemptions of Shares, rely upon those provisions of the Uniform
Act for the Simplification of Fiduciary Security Transfers or the Uniform
Commercial Code, as the same may be amended from time to time, applicable to the
transfer of securities.
(b) Notwithstanding the foregoing or any other provision contained in
this Agreement to the contrary, the Transfer Agent shall be fully protected by
the Fund in requiring any instructions,
<PAGE>
documents, assurances, endorsements or guarantees, including, without
limitation, any signature guarantees, in connection with a redemption, exchange
or transfer of Shares whenever the Transfer Agent reasonably believes that
requiring the same would be consistent with the transfer, exchange and
redemption procedures described in the Prospectus, or in any instructions or
certificates provided to the Transfer Agent by the Fund.
5.14. Notwithstanding any provision contained in this Agreement to the
contrary, the Transfer Agent shall not be expected to require, as a condition to
any transfer, redemption or exchange of any Shares pursuant to a Computer Tape,
any documents, including, without limitation, any documents of the kind
described in Section 5.13(a) to evidence the authority of the person requesting
the transfer, exchange or redemption and/or the payment of any transfer taxes,
and shall be fully protected in acting in accordance with the applicable
provisions of this Agreement.
5.15 Nothing contained in this Agreement shall constitute any agreement or
representation by the Transfer Agent to permit, or to agree to permit, any
Approved Institution to input information into the System, although the Transfer
Agent may, with the Fund's written permission, permit access to the System by an
Approved Institution to retrieve data or information as to such Approved
Institution's accounts.
ARTICLE 6
DIVIDENDS AND DISTRIBUTIONS
6.1. The Fund shall furnish to the Transfer Agent a Certificate either (i)
setting forth with respect to each series of the Fund the date of the
declaration of a dividend or distribution, the date of accrual or payment
thereof, as the case may be, the record date as of which shareholders entitled
to payment or accrual, as the case may be, shall be determined, the amount per
Share of such dividend or distribution for each series of the Fund, the payment
date on which all previously accrued and unpaid dividends are to be paid, and
the total amount, if any, payable by the Transfer Agent with respect to such
dividend or distribution on such payment date, or (ii) stating that the
declaration of dividends and distributions shall be on a daily or other periodic
basis and containing information of the type set forth in subsection (i) hereof.
6.2. Upon the payment date specified in the relevant Certificate, the
Transfer Agent shall, in the case of a cash dividend or distribution, advise the
Fund (by telephone or other electronic transmission) of the amount of cash
necessary to make the payment of the dividend or distribution to the
shareholders of record as of such payment date, including the amounts to be paid
to Approved Institutions. The Fund shall be responsible for having the
appropriate Custodian transfer a sufficient amount of cash to a dividend
disbursement account maintained by the Fund for the relevant Series against
which the Transfer Agent shall cause checks, ACH or federal funds wire payment
to be drawn to the order of such shareholders or Approved Institutions in
payment of the dividend. The Transfer Agent shall not be liable for any improper
payments made in accordance with a Certificate described in Section 6.1. If the
Transfer Agent shall not receive from the appropriate Custodian sufficient cash
to make payments of any cash dividend or distribution to shareholders of the
Fund as of the record date, the Transfer Agent shall, upon notifying the Fund,
withhold payment to all shareholders of record as of the record date until
sufficient cash is provided to the Transfer Agent unless otherwise instructed by
the Fund by a Certificate and acceptable to the Transfer Agent. In the case of
dividends or distributions reinvested in additional Shares of a series of the
Fund, the Transfer Agent shall follow the procedures set forth in Section 5.5.
<PAGE>
6.3. The Transfer Agent shall in no way be responsible for the
determination of the rate or form of dividends or capital gain distributions due
shareholders.
6.4. The Transfer Agent shall, upon request of the Fund, file such
appropriate information returns concerning the payment of dividends and capital
gain distributions and redemptions with the proper Federal, state and local
authorities as are required by laws to be filed by the Fund but shall in no way
be responsible for the collection or withholding of taxes due on such dividends
or distributions or on redemption proceeds due shareholders, except and only to
the extent required of it by applicable law for accounts of shareholders other
than Approved Institutions. If any amount is to be withheld from any dividend or
distribution paid to, or exchange or redemption proceeds or other cash
distribution from, the account of an Approved Institution, such Approved
Institution (or the Distributor or its agent acting on behalf of such Approved
Institution) may advise the Transfer Agent of the amount to be withheld
therefrom, and if such advice is provided in a timely manner to the Transfer
Agent, the Transfer Agent will provide a separate check for such amount to the
Approved Institution, which shall be responsible for the proper application of
such withheld amounts.
ARTICLE 7
CONCERNING THE FUND
7.1. The Fund shall promptly deliver to the Transfer Agent written notice
of any change in the Officers authorized to sign or give Share certificates or
Certificates, together with a specimen signature of each new Officer.
7.2. It shall be the sole responsibility of the Fund to deliver to the
Transfer Agent in a timely manner the Fund's currently effective Prospectus,
copies of any exemptive relief obtained by the Fund under applicable securities
laws and copies of any amendments to the Fund; Declaration of Trust, By-Laws and
any other documents to be furnished by the Fund under this Agreement to enable
the Transfer Agent to carry out its duties hereunder, and, for purposes of this
Agreement, the Transfer Agent shall not be deemed to have notice of any
information contained in such Prospectus, exemptive relief or other document
until it is actually received by the Transfer Agent.
7.3. The Transfer Agent has been advised by the Fund and agrees that the
Fund's Declaration of Trust is on file with the Secretary of State of the
Commonwealth of Massachusetts and that this Agreement has been executed by the
officers of the Fund, as officers and not individually. The obligations of the
Agreement are not binding upon the Trustees, officers or shareholders of the
Fund individually but are binding only upon the assets and property of the Fund
or a particular series of Shares. The Transfer Agent agrees to look only to the
assets of the Fund or a particular series of Shares for payment under such
Agreement and that the shareholders, Trustees and officers shall not be liable
therefore.
ARTICLE 8
CONCERNING THE TRANSFER AGENT
8.1. Subject to the standard of care set forth in Section 8.4, the
Transfer Agent shall not be liable and shall be fully protected in acting upon
any Computer Tape, Certificate, oral instructions, writing or document
reasonably believed by it to be genuine and to have been signed (in the case of
written instructions or documents) or made by the proper person or persons and
shall not be held to have any
<PAGE>
notice of any change of authority of any person until receipt of written notice
thereof from the Fund or such person. Subject to the standard of care set forth
in Section 8.4, the Transfer Agent shall be similarly protected in processing
Share certificates which it reasonably believes to bear the proper manual or
facsimile signatures of the Officers of the Fund and the proper countersignature
of the Transfer Agent or any prior transfer agent.
8.2 The Transfer Agent covenants that it shall carry out its
responsibilities under this Agreement in accordance and compliance with the
provisions of applicable laws and regulations governing its operation as a
transfer agent.
8.3 The Transfer Agent shall keep and maintain on behalf of the Fund such
records which the Fund or the Transfer Agent is, or may be, required to keep and
maintain pursuant to any applicable statutes, rules and regulations, including
without limitation Rule 31a-1 under the Investment Company Act of 1940,
relating to the maintenance of records in connection with the services to be
provided hereunder. The Transfer Agent agrees to make such records available
for inspection by the Trust at reasonable times and otherwise to keep
confidential all records and other information relative to the Fund and its
shareholders, except when the Transfer Agent reasonably believes it has been
requested to divulge such information by duly-constituted authorities or court
process, or requested by a shareholder with respect to information concerning an
account as to which such shareholder has either a legal or beneficial interest
or when requested by the Fund, the shareholder, or the dealer of record as to
such account.
8.4 (a) The Transfer Agent shall not be liable for any loss or damage,
including, without limitation, attorneys' fees, expenses and court costs,
resulting from the Transfer Agent's actions or omissions to act under or in
connection with this Agreement and its duties and responsibilities hereunder,
except for any loss or damage arising out of its own failure to act in good
faith, or its negligence or willful misfeasance.
(b) The Transfer Agent shall, provided such coverage is readily
available to the Transfer Agent at reasonable rates and upon reasonable terms
and conditions, maintain an insurance policy or surety bond, in the face amount
of $10 million per covered transaction against losses suffered by the Transfer
Agent in Excess of the policy deductibles arising from errors or omission on the
part of the Transfer Agent in carrying out its responsibilities under this
Agreement and other agreements. The Transfer Agent shall upon request, furnish
promptly to the Fund copies of all insurance policies maintained pursuant to
this Section 8.4(b) that have not previously been furnished to the Fund.
(c) Any costs or losses incurred by the Fund for the processing of
any purchase, redemption, exchange or other share transactions at a price per
share other than the price per share applicable to the effective date of the
transaction (the foregoing being generally referred to herein as "as of"
transactions) will be handled in the following manner:
1. For each calendar year, if all "as of" transactions for the
year resulting from the actions or inactions of the Transfer
Agent, taken in the aggregate, result in a net loss to the
Fund ("net loss"), Transfer Agent will reimburse the Fund for
such net loss, except to the extent that such net loss may be
offset by application of a "net benefit" to the Fund carried
over from prior calendar years pursuant to subparagraph 2
immediately below.
<PAGE>
2. For each calendar year, if all "as of" transactions for the year
resulting from the actions or inactions of the Transfer Agents,
taken in the aggregate, results in a net benefit to the Fund ("net
benefit"), the Fund shall not reimburse the Transfer Agent for the
amount of such net benefit; however, any "net benefit" for any
calendar year may be used to offset, in whole or in part, any "net
loss" suffered by the Fund in any future calendar year so as to
reduce the amount by which the Transfer Agent shall be required to
reimburse the Fund for such "net loss" in such year pursuant to
sub-paragraph 1 immediately above.
3. Any "net loss" for which the Transfer Agent reimburses the Fund in
any calendar year shall not be carried over into future years so
as to offset any "net benefit" in such future years.
8.5 The fund shall indemnify and exonerate, save and hold harmless the
Transfer Agent and its officers, directors, employees and agents (hereinafter
the Transfer Agent and such persons are referred to as "Indemnitees") from and
against any and all liabilities or losses arising from claims or demands
(whether with or without basis in fact or law), and from any and all expenses
(including, without limitation, reasonable attorney's fees, expenses and court
costs associated with defending against such claims and demands), of any nature
which any Indemnitee may sustain or incur or which may be asserted against any
Indemnitee by any person arising out of or in any manner related to any action
taken or omitted to be taken by the Transfer Agent in good faith and without
negligence or willful misconduct in reasonable reliance upon (i) any provision
of this Agreement; (ii) the Prospectus; (iii) any instruction or order
including, without limitation, any Computer Tape reasonably believed by the
Transfer Agent to have been received from an Approval Institution (or the
Distributor or its agent acting on behalf of such Approved Institution); (iv)
any instrument or order reasonably believed by the Transfer Agent to be genuine
and to be signed, countersigned or executed by and duly authorized Officer, (v)
any Certificate or other instructions of an Officer, (vi) any opinion of legal
counsel for the Fund; (vii) any records or data supplied by the fund's prior
transfer agent; or (viii) any order of any court, arbitration panel or other
judicial entity.
8.6 At any time the Transfer Agent may apply to an Officer of the Fund for
written instructions with respect to any matters arising in connection with the
Transfer Agent's duties and obligations under this Agreement, and the Transfer
Agent shall not be liable for any action taken or omitted by it in good faith
and without negligence or willful misconduct in accordance with such written
instructions. The Transfer Agent may consult with counsel to the Fund, at the
expense of the Fund and shall be fully protected with respect to anything done
or omitted by it in good faith and without negligence or willful misfeasance in
accordance with the advice or opinion of counsel to the Fund. Such application
by the Transfer Agent for written instructions from an Officer of the Fund may,
at the option of the Transfer Agent, set forth in writing any action proposed to
be taken or omitted by the Transfer Agent with respect to its duties or
obligations under this Agreement and the date on and/or after which such action
shall be taken, and the Transfer Agent shall not be liable (other than for its
bad faith, negligence or willful misfeasance) for any action taken or omitted in
accordance with a proposal included in any such application on or after the date
specified therein unless, prior to taking or omitting any such action, the
Transfer Agent has received written instructions in response to such application
specifying the action to be taken or omitted.
8.7 Any report, confirmation or other document furnished to the Fund or to
an Approved Institution as part of the Transfer Agent's responsibilities under
this Agreement shall be deemed final and conclusive on the 8th Business Day
after such report, confirmation or document has been furnished to the Fund or
Approved Institution, as the case may be, and the Transfer Agent shall not be
liable to the Fund
<PAGE>
or such Approved Institution under this Agreement as to any error or omission in
such report, confirmation or document that is not reported to the Transfer Agent
within such 7-day period.
8.8. The Transfer Agent shall deliver Share certificates by courier or by
certified or registered mail to the shareholder's address in the records of the
Transfer Agent. The Transfer Agent shall advise the Fund of any Share
certificates returned as undeliverable after being transmitted by courier or
mailed as herein provided for.
8.9. The Transfer Agent may issue new Share certificates in place of Share
certificates represented to have been lost, stolen, or destroyed upon receiving
instructions satisfactory to the Transfer Agent. If the Transfer Agent receives
written notification from the owner of the lost, destroyed, or stolen Share
certificate within a reasonable time after the owner has notice of such loss,
destruction or theft, the Transfer Agent shall issue a replacement Share
certificate upon receipt of an affidavit or affidavits of loss or nonreceipt and
an indemnity agreement executed by the registered owner or his legal
representative, and supported (a) in the case of a certificate having a value at
the time of replacement of less than $100, by a fixed penalty surety bond for
twice the then-current market value of Shares represented by said certificate
and (b) in the case of a certificate having a value at time of replacement of
$100 or more, by an open penalty bond, in form satisfactory to the Transfer
Agent or (c) by such other documentation or reasonable assurances in a
particular case as may be set forth in a Certificate. If the Fund receives such
written notification from the owner of the lost, destroyed or stolen Share
certificate within a reasonable time after the owner has notice of it, the Fund
shall promptly notify the Transfer Agent. The Transfer Agent may issue new Share
certificates in exchange for, and upon surrender of, mutilated Share
certificates.
8.10. The Transfer Agent will supply shareholder lists to the Fund from
time to time upon receiving a request therefor from an Officer of the Fund.
8.11. At the request of an Officer, the Transfer Agent will address and
mail such appropriate notices to shareholders as to the Fund may direct, at the
Fund's expense.
8.12. Notwithstanding any of the foregoing provisions of this Agreement,
the Transfer Agent shall be under no duty or obligation to inquire into, and
shall not be liable for:
(a) The legality of the issue or sale of any Shares, the sufficiency
of the amount to be received therefor, or the authority of an Approved
Institution or of the Fund, as the case may be, to request such sale or
issuance;
(b) The legality of a transfer, exchange or of a redemption of any
Shares by an Approved Institution, the propriety of the amount to be paid
therefor, or the authority of an Approved Institution to request such transfer,
exchange or redemption;
(c) The legality of the declaration of any dividend or capital gains
distribution by the Fund, or the legality of the issue of any Shares in payment
of any Share dividend or distribution; or
(d) The legality of any recapitalization or readjustment of the
Shares.
8.13. The Transfer Agent shall be entitled to receive, and the Fund hereby
agrees to pay to the Transfer Agent for its performance hereunder, including its
performance of the duties and functions set forth in Appendix B hereto, (i) its
reasonable out-of-pocket expenses (including without limitation legal expenses,
court costs, and attorney's fees associated with litigation or arbitration)
incurred in connection
<PAGE>
with this Agreement and its performance hereunder and (ii) such compensation as
is specified in Appendix C hereto as such fees may be amended from time to time
by agreement in writing by the Transfer Agent and the Fund.
8.14. The Transfer Agent shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement, and no covenant or obligation shall be implied in this
Agreement against the Transfer Agent.
8.15. The Transfer Agent shall indemnify and exonerate, save and hold
harmless the Fund, and its officers, directors, employees and agents, from and
against any and all liabilities or losses arising from claims and demands
(whether with or without basis in fact or law), and from any and all expenses
(including, without limitation, reasonable attorney's fees, expenses and court
costs), of any nature which the Fund or any officer, director, employee or agent
may sustain or incur or which may be asserted against them by any person arising
out of or in any manner related to the Transfer Agent's failure to comply with
the terms of this Agreement or which arise out of the Transfer Agent's
negligence or willful misconduct provided, however, that the Transfer Agent
shall not indemnify and exonerate, save and hold harmless, the Fund, its
officers, directors, employees, and agents for anything arising out of or in any
manner related to the Fund's failure to comply with the terms of this Agreement
or which arises out of the Fund's, or any officer's, director's, employee's or
agent's (other than the Transfer Agent) negligence or willful misconduct or the
Transfer Agent's reliance on information or instructions received from, or
issued on behalf of, the Fund.
ARTICLE 9
TERMINATION
9.1. The initial term of this Agreement shall commence on the Effective
Date and shall continue through June 30, 1997 (the "Initial Term") unless
earlier terminated pursuant to Section 9.2. Thereafter, unless earlier
terminated by either party at the end of the Initial Term upon at least 90 days'
prior written notice, this Agreement shall continue from day to day thereafter
(such period shall be referred to as the "Renewal Term"), until either of the
parties hereto terminates this Agreement by giving at least 6 months' prior
written notice to the other party, whereupon this Agreement shall terminate
automatically upon the expiration of the 6-month period specified in the written
notice. In the event such notice of termination is given by the Fund, it shall
be accompanied by a copy of a resolution of the Board of Trustees of the Fund,
certified by the Secretary or any Assistant Secretary, electing to terminate
this Agreement. In the event such notice is given by the Transfer Agent, the
Fund shall, on or before the termination date, deliver to the Transfer Agent a
copy of a resolution of its Board of Trustees certified by the Secretary or any
Assistant Secretary designating a successor transfer agent or transfer agents.
In the absence of such designation by the Fund, the Transfer Agent may designate
a successor transfer agent. If the Fund fails to designate a successor transfer
agent, the Fund shall, upon the date specified for termination of this Agreement
and delivery of the records maintained hereunder, be deemed to be its own
transfer agent and the Transfer Agent shall thereby be relieved of all duties
and responsibilities pursuant to this Agreement.
9.2. Notwithstanding Section 9.1 hereof, this Agreement may be terminated
at any time by the Fund upon not less than 60 days' written notice from the Fund
to the Transfer Agent notifying the Transfer Agent: (i) if a majority of the
Trustees who are not "interested persons" (as that term is defined in the
Investment Company Act of 1940) upon completion of the procedures set forth
below have reasonably made a specific finding that the Transfer Agent has failed
on a continuing basis to perform its duties pursuant to this Agreement in a
satisfactory manner consistent with then current industry standards and
<PAGE>
practices or (ii) if there is instituted or pending an action or proceeding by
or before any court or governmental, administrative or regulatory agency against
or involving the parties hereto, their affiliates, the Trustees of the Fund or
any of them and challenging the making of this Agreement or alleging that any
material term of the Agreement is contrary to law or any governmental agency has
threatened in writing to commence such an action or proceeding. Prior to any
termination pursuant to clause (i), the Board of Trustees of the Fund shall
provide the Transfer Agent with a written statement of the specific aspects of
the Transfer Agent's performance of its duties that are unsatisfactory, the
specific incident or incidents giving rise to the Board of Trustees' conclusion
and any written material that the Board of Trustees' relied upon in making such
a determination. The Transfer Agent shall have 30 days to respond to such
written statement. If no response is made, or if, after reasonable consideration
of the response of the Transfer Agent, such response is unsatisfactory to the
Board of Trustees, then the Board of Trustees of the Fund may terminate the
Agreement pursuant to clause (i) thereof. For purposes of making a finding as
contemplated by clause (i) above, the Transfer Agent shall be, absent unusual
circumstances, conclusively presumed to have failed on a continuing basis to
perform its duties pursuant to this Agreement in a satisfactory manner
consistent with the industry standards and practices prevailing on the date of
this Agreement if any of the following should occur:
(1) The Transfer Agent through its fault is unable (more than once in
a twelve-month period) to process daily activity for any two successive Business
Days and to confirm information generated by such activity by the fourth
Business Day following the later of such two Business Days. (For example,
assuming no holidays, daily activity on a Monday and Tuesday is not confirmed by
the following Monday.)
(2) The Transfer Agent through its fault is unable (more than two
times in any twelve-month period) to provide system access to personnel of an
Approved Institution for six hours between 9:00 a.m. and 5:00 p.m. Chicago time
on three successive Business Days.
(3) The Transfer Agent through its fault is unable (more than twice
in any one year) to create and mail dividend checks within four Business Days
after the Fund's payable date (assuming that the required information has been
furnished to the Transfer Agent on the record date).
(4) The Transfer Agent through its fault is unable to instruct
various financial institutions on daily money movements from and to the Fund's
Custodians for two successive Business Days by the Fourth Business Day following
the later of such two Business Days. (For this purpose, instructions based on
reasonable estimates are treated as fulfilling the Transfer Agent's obligations
hereunder.)
(5) The Transfer Agent through its fault is unable (more than twice
in any twelve-month period) to transmit dividend activity to an Approved
Institution within five Business days from the relevant Fund's payable date.
For purposes of the foregoing, an event described in any of the foregoing
clauses 1 through 5 shall be deemed not to have occurred if the Transfer Agent's
inability to perform is a result, directly or indirectly of faulty or inadequate
performance by service provider including, but not limited to, telephone
companies, pricing services, Nuveen & Co., Approved Institutions, and banks
other than the Transfer Agent and its agents and employees or a result, directly
or indirectly, of other events out of the Transfer Agent's reasonable control.
Also for the purposes of the foregoing, if the Transfer Agent processes
transactions or instructions (as the case may be) as required hereunder within
the time periods indicated but more than 10% of the transactions, checks or
instructions, as the case may be, are inaccurate in any material respect,
<PAGE>
and are not corrected within the requisite time then the Transfer Agent shall be
deemed to have been unable to perform the relevant service within the requisite
time.
9.3. In the event of termination of this Agreement, the Transfer Agent
will facilitate transfer of the records maintained by it hereunder and cooperate
with such successor transfer agent as may be designated pursuant to the
provisions of Section 9.1 hereof with respect to delivery of such records and
assumption by such successor transfer agent of its duties. In the event the Fund
or the Transfer Agent terminates the Transfer Agency Agreement at any time, the
Fund shall be responsible for the payment of fees and expenses of the Transfer
Agent relating to the conversion to the new Transfer Agent.
ARTICLE 10
ADDITIONAL SERIES
10.1. In the event that the Fund establishes one or more Series in
addition to the Series named herein with respect to which it desires to have the
Transfer Agent render services as transfer agent under the terms hereof, it
shall so notify the Transfer Agent in writing at least 60 days in advance of the
sale of Shares of such Series and shall deliver to the Transfer Agent the
documents listed in Section 2.3 with respect to such Series. Unless the Transfer
Agent declines in writing within a reasonable time to provide such services, the
Shares of such Series shall be subject to this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1. The Fund agrees that prior to effecting any change in the Prospectus
which would increase or alter the duties and obligations of the Transfer Agent
hereunder, it shall advise the Transfer Agent of such proposed change at least
30 days prior to the intended date of the same, and shall proceed with such
change only if it shall have received the written consent of the Transfer Agent
hereto, and shall have received and agreed to the schedule of charges, if any,
specified by the Transfer Agent necessary to effect such change.
11.2. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its office at 333 West
Wacker Drive, Chicago, Illinois 60606, Attention: Mr. Stuart Rogers, or at such
other place as the Fund may from time to time designate in writing.
11.3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Transfer Agent shall be sufficiently given if
addressed to the Transfer Agent, Attention: President, and mailed or delivered
to it at its office at 3410 South Galena Street, Denver, Colorado 80231, with a
copy to be sent to Andrew J. Donohue at OppenheimerFunds, Inc., Two World Trade
Center, New York, NY 10048 or at such other place as the Transfer Agent may from
time to time designate in writing.
11.4. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties.
<PAGE>
11.5 This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund or the Transfer Agent without
the written consent of the other party. A change of ownership of the Transfer
Agent as a result of an internal reorganization of the Transfer Agent, its
parent corporation or affiliates shall not be deemed to be an "assignment"
hereunder. A change in "control" (as defined under the Investment Company Act of
1940) of the Transfer Agent's parent corporation shall not be deemed an
"assignment" hereunder. A sale of a controlling interest in the capital stock or
of all or substantially all of the assets of the Transfer Agent to a third party
unaffiliated with the Transfer Agent or its parent corporation shall be deemed
to be an "assignment" hereunder.
11.6 This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado applicable to agreements to be wholly
performed in that state.
11.7 This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
11.8 The provisions of this Agreement are intended to benefit only the
Transfer Agent and the Fund, and no rights shall be granted to any other person
by virtue of this Agreement.
11.9 Neither the Fund nor the Transfer Agent will be liable or responsible
hereunder for delays or errors by reason of circumstances reasonably beyond its
control, including, without limitation, acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdown, flood,
catastrophe, acts of God, insurrection, war, riots, or failure of
transportation, communication or power supply.
11.10 The Fund shall establish and maintain such bank accounts, with such
bank or banks as are selected by the Fund, as are necessary so that the Transfer
Agent may perform the services to be provided hereunder. To the extent that
performance of such services shall require the Transfer Agent directly to
disburse amounts for payments of dividends, redemption proceeds or other
purposes, the Fund shall provide such bank or banks with all instructions and
authorizations necessary to evidence the Transfer Agent's authority to effect
such transactions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the day
and year first above written.
Attest: NUVEEN INVESTMENT TRUST
/s/Gifford R. Zimmerman VP /s/Anna R. Kucinskis VP
- ------------------------------- By:-------------------------------
Name Title Name Title
Gifford R. Zimmerman Vice President Anna R. Kucinskis Vice President
Attest: SHAREHOLDER SERVICES, INC.
/s/Kathryn L. Cluck AVP /s/Barbara Hennigar
---------------------------- By:--------------------------------
Name Title Barbara Hennigar President
<PAGE>
NUVEEN INVESTMENT TRUST
TRANSFER AGENCY AGREEMENT
Appendix A
Officer's Certificate
I, , the Secretary of Nuveen Investment Trust, a
------------------------
Massachusetts business trust (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Trustees of the
Fund in conformity with the Fund's Declaration of Trust and By-Laws to execute
any Certificate, instruction, notice or other instrument, including an amendment
to Appendix B to this Agreement, or to give oral instructions on behalf of the
Fund, and the signatures set forth opposite their respective names are their
true and correct signatures.
<TABLE>
<CAPTION>
Name Title Signature
- ---- ----- ---------
<S> <C> <C>
Chairman
- -------------------------- ---------------------------
President
- -------------------------- ---------------------------
Secretary
- -------------------------- ---------------------------
Trustee
- -------------------------- ---------------------------
Vice President
- -------------------------- ---------------------------
- -------------------------- ----------------- ---------------------------
- -------------------------- ----------------- ---------------------------
- -------------------------- ----------------- ---------------------------
- -------------------------- ----------------- ---------------------------
- -------------------------- ----------------- ---------------------------
- -------------------------- ----------------- ---------------------------
- -------------------------- ----------------- ---------------------------
</TABLE>
--------------------------, Secretary
Name
<PAGE>
NUVEEN INVESTMENT TRUST
TRANSFER AGENCY AGREEMENT
Appendix B
Transfer Agent Services
<TABLE>
<CAPTION>
Service: SSI Will:
- ------- --------
<C> <S>
New Account Set-Ups Process new sales applications. Place
telephone calls to account
representatives as needed to clarify
instructions for new account set-ups.
Purchases--New and Subsequent Process mailed-in, lockbox, bank wire,
list billing, ACH, and telephone payments
as received. Coordinate and balance UIT
reinvestment payments.
Transfers Negotiate and process all transfer
requests.
Exchanges--Mail and Telephone Negotiate and process exchange requests.
Record telephone exchange requests.
Redemptions--Mail and Telephone Negotiate and process mailed in, ACH and
telephone redemption requests. Record
telephone redemption requests.
Wire Order Purchases and Redemptions Process wire order purchases and
redemptions for designated settlement
period accepted on recorded telephone
lines and via NSCC FUND/SERV. Process
purchases and redemptions for same day
wire settlement.
Account Maintenance Process all written and telephone
(Address Changes, Dividend Option maintenance. For address changes, prepare
Changes, Name Changes, Broker or and mail a notice of the address change
Dealer Changes, etc.) to the former address.
Certificate Issuances Issue certificates as requested by
shareholders.
Telephone Services Provide efficient handling of all
incoming shareholder and broker/dealer
telephone calls. Make outgoing
clarification calls/coordination with
Chase or UIT/ETF consolidations. Provide
timely problem resolution for all
servicing calls. Provide automated trend
reporting.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SERVICE: SSI WILL:
- -------- ---------
<C> <S>
Correspondence with Shareholders Respond to all shareholder and broker/dealer written inquiries.
and Broker/Dealers Document all correspondence affecting shareholder accounts on
the Shareholder Accounting System.
Shareholder Confirms Prepare and mail confirmation of daily account activity.
(Daily/Monthly/Quarterly/Annual) Prepare and mail monthly, quarterly, and annual confirmations
as directed by the fund.
Dealer Confirms Prepare and mail weekly dealer confirmations listing activity on
client accounts as directed by the Fund.
Distribution Disbursements Prepare and mail cash distribution checks. Process reinvested
distributions.
Commission Statements Provide bimonthly commission statements listing each purchase
and the portion of the sales charge paid to the broker/dealer.
Commission Checks Provide bimonthly commission checks to broker/dealers.
Daily Transmission of Reports Transmit daily transaction activity reports, balancing reports,
and sales information via telephone lines to a printer at Nuveen.
Fund Summary Sheets Prepare daily reports that summarize by type of transaction all
capital stock activity for each fund. Transmit/download
wire/capital stock activity information to Chase.
Sales Reporting Provide daily, weekly, monthly, quarterly, and annual reports of
sales information.
12b-1 Reporting Complete 12b-1 processing including calculating the 12b-1
payments amounts and sending checks to the broker/dealer home
offices. Provide a listing broken down by sales representative
within each branch.
Invalid Taxpayer Identification Mail Forms W-9 as required to validate taxpayer identification
Number Solicitation and number; institute backup withholding as required by IRS
Backup Withholding regulations, and timely send all notices.
Regulatory Reporting Compute, prepare, and mail all necessary reports to
shareholders, federal, and/or state authorities (Forms 1099-DIV,
1099-B, and 1042S).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Service: SSI Will:
- -------- ---------
<S> <C>
Front-End Imaging of Documents Front-end Image all incoming documents.
Cost Basis Reporting Provide cost basis information as
available to shareholders annually for
use in determining capital gains and
losses.
Blue Sky Reporting Provide monthly report of purchases and
redemptions by state.
Financial Reporting Mailings Provide mail handling for 2 financial
reports per fund per year to Nuveen
shareholders.
Prospectus Mailings Provide mail handling for 1 prospectus
per fund per year to Nuveen shareholders.
Proxy Solicitation and Tabulation Perform 1 proxy solicitation and
tabulation per fund per year.
Networking Accounts Provide transmission and appropriate
services for each network level.
Cash Availability Transmit mutual fund activity to
designated entity on a daily basis for
cash availability purposes.
Commission/12b-1 Balancing Provide balancing reports for commission
and 12b-1 payments.
</TABLE>
<PAGE>
Next 100,000 Accounts** $ 18.75 per account
Next 50,000 Accounts** $ 18.25 per account
Over 300,000 Accounts** $ 17.75 per account
Annual-Per-Account Fees For Series of the Fund that Pay Dividends
Quarterly*
First 150,000 Accounts** $ 17.50 per account
Next 100,000 Accounts** $ 17.00 per account
Over 250,000 Accounts** $ 16.50 per account
Out-Of-Pocket Expenses:
- ----------------------
Out-of-pocket expenses may be incurred by either the Fund or the Transfer
Agent and are not included in the annual Transfer Agent Fees. Those out-of-
pocket expenses directly incurred by the Transfer Agent will be billed to the
Fund on a monthly basis. These out-of-pocket expenses include, but are not
limited to, the printing of forms, envelopes, postage and proxy solicitation
fees for the shareholder mailings, costs of abandoned property reports or
searches for missing or inactive shareholders, equipment and system access
costs, microfilm, telephone line and usage charges, overnight express mail
charges, check signature plates and stamps, and programmer/analyst and testing
technician time beyond that agreed to in writing. Bank charges and earnings
credit will be billed directly to the Fund by United Missouri Bank (or other
banks). The Transfer Agent may require the prior payment of anticipated out-of-
pocket expenses, from time to time.
- ----------
* Payable on a monthly basis for each non-retirement plan account in existence
at the end of the month. Retirement Plan accounts may be subject to a separate
fee schedule to be negotiated.
** The determination of the number of accounts for purposes of determining the
per account fee shall be based on all Nuveen Funds using the same fee schedule
and shall be allocated on a Fund by Fund basis in a manner determined by the
Transfer Agent based on the number of accounts in each fund.
These fees are valid for twelve months after which they are subject to change,
from time to time.
<PAGE>
The Transfer Agent shall, from time to time, but no more frequently than
monthly, send an invoice to the Fund itemizing the compensation and expense
reimbursement. The Fund shall pay such notice (except to the extent that the
amount thereof is in dispute) by wire not later than 30 days after receipt of
the invoice.
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated August 18, 1997, and to all references to our Firm included in or made a
part of this registration statement on Form N-1A of Nuveen Investment Trust,
comprising the Nuveen Growth and Income Stock Fund, Nuveen Balanced Stock and
Bond Fund and Nuveen Balanced Municipal and Stock Fund.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 3, 1997
<PAGE>
Exhibit 13
NUVEEN INVESTMENT TRUST
Subscription Agreement
----------------------
This Agreement made this 29th day of July, 1996 by and between Nuveen
Investment Trust, a Massachusetts business trust (the "Fund"), and Nuveen
Institutional Advisory Corp., a Delaware corporation (the "Subscriber");
WITNESSETH:
WHEREAS, the Fund has been formed for the purposes of carrying on business
as an open-end diversified management investment company; and
WHEREAS, the Subscriber has been selected by the Fund's Board of Trustees
to serve as investment adviser to the Fund; and
WHEREAS, the Subscriber wishes to subscribe for and purchase, and the Fund
wishes to sell to the Subscriber, 5,004 common shares (417 shares of each of the
four classes of shares designated in the Fund's Establishment and Designation of
Classes, a total of 1,668 shares of each of the three series of shares
designated in the Fund's Establishment and Designation of Series of Shares of
Beneficial Interest), for a purchase price of $20.00 per share;
NOW THEREFORE, IT IS AGREED:
1. The Subscriber subscribes for and agrees to purchase from the Fund 5,004
common shares, (417 shares of each of the four classes of shares designated in
the Fund's Establishment and Designation of Classes, a total of 1,668 shares of
each of the three series designated in the Fund's Establishment and Designation
of Series of Shares), for a purchase price $20.00 per share. Subscriber agrees
to make payment for these shares at such time as demand for payment may be made
by an officer of the Fund.
2. The Fund agrees to issue and sell said shares to Subscriber promptly
upon its receipt of the purchase price.
3. To induce the Fund to accept its subscription and issue the shares
subscribed for, the Subscriber represents that it is informed as follows:
(a) That the shares being subscribed for have not been and will not be
registered under the Securities Act of 1933 ("Securities Act");
(b) That the shares will be sold by the Fund in reliance on an exemption
from the registration requirements of the Securities Act;
<PAGE>
2
(c) That the Fund's reliance upon an exemption from the registration
requirements of the Securities Act is predicated in part on the
representations and agreements contained in this Subscription
Agreement;
(d) That when issued, the shares will be "restricted securities" as
defined in paragraph (a)(3) of Rule 144 of the General Rules and
Regulations under the Securities Act ("Rule 144") and cannot be sold or
transferred by Subscriber unless they are subsequently registered under the
Securities Act or unless an exemption from such registration is available;
(e) That there do not appear to be any exemptions from the registration
provisions of the Securities Act available to the Subscriber for resale of
the shares. In the future, certain exemptions may possibly become
available, including an exemption for limited sales including an exemption
for limited sales in accordance with the conditions of Rule 144.
The Subscriber understands that a primary purpose of the information
acknowledged in subparagraphs (a) through (e) above is to put it on notice as to
restrictions on the transferability of the shares.
4. To further induce the Fund to accept its subscription and issue the
shares subscribed for, the Subscriber:
(a) Represents and warrants that the shares subscribed for are being and
will be acquired for investment for its own account and not on behalf of
any other person or persons and not with a view to, or for sale in
connection with, any public distribution thereof; and
(b) Agrees that any certificates representing the shares subscribed for
may bear a legend substantially in the following form:
The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933 or any other federal or state securities law. These shares may
not be offered for sale, sold or otherwise transferred unless
registered under said securities laws or unless some exemption from
registration is available.
5. This Subscription Agreement and all of its provisions shall be binding
upon the legal representatives, heirs, successors and assigns of the parties
hereto.
<PAGE>
6. The Fund's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed on behalf of the Fund
by the Fund's officers as officers and not individually and the obligations
imposed upon the Fund by this Agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.
IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
parties hereto as of the day and date first above written.
NUVEEN INVESTMENT TRUST
By: /s/ James J. Wesolowski
---------------------------------
NUVEEN INSTITUTIONAL ADVISORY CORP.
By: /s/ Ronald E. Toupin, Jr.
---------------------------------
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATION OF PERFORMANCE FIGURES*
I. YIELD
A. Yield Formula
Yield is computed according to the following formula:
A - B 6
YIELD = 2 [ ( ----- + 1) - 1]
CD
Where:
A = dividends and interest(degrees) earned during the period.
B = expenses accrued for the period (net of reimbursements).
C = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
D = the maximum offering price per share on the last day of the period.
- --------
*The maximum sales charge in effect during the periods shown was 5.25%.
(degrees)Interest earned on tax-exempt obligations is determined as follows:
A. In the case of a tax-exempt obligation (1) with a current market premium
or (2) issued at a discount where the current market discount is less
than the then-remaining portion of the original issue discount, it is
necessary to first compute the yield to maturity (YTM). The YTM is then
divided by 360 and the quotient is multiplied by the market value of the
obligation (plus accrued interest).
B. In the case of a tax-exempt obligation issued at a discount where the
current market discount is in excess of the then-remaining portion of the
original issue discount, the adjusted original issue discount basis of
the obligation (plus accrued interest) is used in lieu of the market
value of the obligation (plus accrued interest) in computing the yield to
maturity (YTM). The YTM is then divided by 360 and the quotient is multi-
plied by the adjusted original issue basis of the obligation (plus ac-
crued interest).
C. In the case of a tax-exempt obligation issued without original issue
discount and having a current market discount, the coupon rate of inter-
est is used in lieu of the yield to maturity. The coupon rate is then di-
vided by 360 and the quotient is multiplied by the par value of the obli-
gation.
1
<PAGE>
B. Yield Calculations
1. Growth and Income Stock Fund
The following is a 30-day yield as of June 30, 1997, for the Class A Shares
of the Fund:
[$1,065,938.57 - $598,477.46] 6
Yield = 2 [ ( ----------------------------- + 1 ) - 1 ]
[25,594,173.41 X $ 25.34]
= .87%
The following is a 30-day yield as of June 30, 1997, for the Class B Shares
of the Fund:
[$ 15,015.51 - $13,732.69] 6
Yield = 2 [ ( ---------------------------- + 1 ) - 1 ]
[ 361,380.93 X $ 24.00]
= .18%
The following is a 30-day yield as of June 30, 1997, for the Class C Shares
of the Fund:
[$ 5,481.67 - $ 5,011.27] 6
Yield = 2 [ ( ---------------------------- + 1 ) - 1 ]
[ 131,999.61 X $ 23.98]
= .18%
The following is a 30-day yield as of June 30, 1997, for the Class R Shares
of the Fund:
[$ 26,398.92 - $11,736.67] 6
Yield = 2 [ ( ---------------------------- + 1 ) - 1 ]
[ 633,236.25 X $ 24.02]
= 1.16%
2. Balanced Stock and Bond Fund
The following is a 30-day yield as of June 30, 1997, for the Class A Shares
of the Fund:
[$ 195,046.28 - $ 50,573.05] 6
Yield = 2 [ ( ------------------------------ + 1 ) - 1]
[ 2,357,439.65 X $ 25.16]
= 2.94%
The following is a 30-day yield as of June 30, 1997, for the Class B Shares
of the Fund:
[$ 916.04 - $ 405.40] 6
Yield = 2 [ ( ------------------------------ + 1 ) - 1]
[ 11,166.31 X $ 23.84]
= 2.31%
The following is a 30-day yield as of June 30, 1997, for the Class C Shares
of the Fund:
[$ 2,955.77 - $ 1,293.18] 6
Yield = 2 [ ( ----------------------------- + 1 ) - 1]
[ 35,832.63 X $ 23.84]
= 2.35%
The following is a 30-day yield as of June 30, 1997, for the Class R Shares
of the Fund:
[$ 20,992.08 - $ 4,205.73] 6
Yield = 2 [ ( ----------------------------- + 1 ) - 1]
[ 253,535.90 X $ 23.84]
= 3.36%
2
<PAGE>
3. Balanced Municipal and Stock Fund
The following is the 30-day yield as of June 30, 1997, for the Class A
Shares of the Fund:
[$ 253,723.10 - $ 70,573.43] 6
Yield = 2 [ ( ----------------------------- + 1 ) - 1 ]
[ 3,401,362.39 X $ 24.39]
= 2.66%
The following is a 30-day yield as of June 30, 1997, for the Class B Shares
of the Fund:
[$ 2,888.39 - $ 1,380.65] 6
Yield = 2 [ ( ----------------------------- + 1 ) - 1 ]
[ 39,313.57 X $ 23.11]
= 2.00%
The following is a 30-day yield as of June 30, 1997, for the Class C Shares
of the Fund:
6
[$ 1,493.67 - $ 716.36] + 1 ) - 1 ]
Yield = 2 [ ( -----------------------------
[ 20,417.02 X $ 23.10]
= 1.99%
The following is the 30-day yield as of June 30, 1997, for the Class R
Shares of the Fund:
[$ 22,364.13 - $ 4,805.73] 6
Yield = 2 [ ( ----------------------------- + 1 ) - 1 ]
[ 299,818.02 X $ 23.11]
= 3.06%
II. DISTRIBUTION RATE
A. Distribution Rate Formula
The formula for calculation of distribution rate for the Growth and Income
and the Balanced Stock and Bond Fund are as follows:
Distribution Rate = 4 X most recent dividend per share
----------------------------------
share price
The formula for calculation of distribution rate for Balanced Municipal and
Stock Fund is as follows:
Distribution Rate = 1 X taxable dividend per share
+ (12 X most recent tax-exempt income dividend per share)
---------------------------------------------------------
share price
3
<PAGE>
B. Distribution Rate Calculations
1. Growth and Income Stock Fund:
The following is the distribution rate as of June 30, 1997, based on the
maximum public offering price for the Growth and Income Stock Fund.
Class A Distribution Rate = 4 X $.1153
----------
$25.34
= 1.82%
Class B Distribution Rate = 4 X $.0733
----------
$24.00
= 1.22%
Class C Distribution Rate = 4 X $.0733
----------
$23.98
= 1.22%
Class R Distribution Rate = 4 X $.1294
----------
$24.02
= 2.15%
2. Balanced Stock and Bond Fund:
The following is the distribution rate as of June 30, 1997, based on the
maximum public offering price for the Balanced Stock and Bond Fund.
Class A Distribution Rate = 4 X $.1244
----------
$25.16
= 1.98%
Class B Distribution Rate = 4 X $.0814
----------
$23.84
= 1.37%
Class C Distribution Rate = 4 X $.0814
----------
$23.84
= 1.37%
Class R Distribution Rate = 4 X $.1388
----------
$23.84
= 2.33%
4
<PAGE>
3. Balanced Municipal and Stock Fund:
The following is the distribution rate as of June 30, 1997, based on maximum
public offering price for the Balanced Municipal and Stock Fund.
Class A Distribution Rate+ = (12 X $.0455)
-------------
$24.39
=2.24%
Class B Distribution Rate+ = (12 X $.0320)
-------------
$23.11
=1.66%
Class C Distribution Rate+ = (12 X $.0320)
-------------
$23.10
=1.66%
Class R Distribution Rate+ = (12 X $.0500)
-------------
$23.11
=2.60%
III. CUMULATIVE TOTAL RETURN
A. Cumulative Total Return Formula
Cumulative Total Return is computed according to the following formula:
ERV - P
T = -------
P
Where: T = cumulative total return.
P = a hypothetical initial payment of $1,000.
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
inception of the Fund or at the first day of a specified 1-year,
5-year or 10-year period.
B. Cumulative Total Return Calculation
The following are the cumulative total returns for Class A, B, C and R Shares
of the Funds for the periods from inception and for the first six months of
1997, assuming an imposition of sales charges for Class A or CDSC for Classes B
and C.
CUMULATIVE CLASS A TOTAL RETURNS:
1. Growth and Income Stock Fund:
$1,197 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 19.74%
$1,000 ======
$1,363 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 36.30%
$1,000 ======
5
<PAGE>
2. Balanced Stock and Bond Fund:
$1,109 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 10.91%
$1,000 ======
$1,220 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 22.04%
$1,000 ======
3. Balanced Municipal and Stock Fund:
$1,096 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 9.61%
$1,000 =====
$1,181 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 18.05%
$1,000 ======
CUMULATIVE CLASS A TOTAL RETURNS INCLUDING CURRENT MAXIMUM SALES CHARGE OF
5.25%:
1. Growth and Income Stock Fund:
$1,135 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 13.45%
$1,000 ======
$1,291 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 29.14%
$1,000 ======
2. Balanced Stock and Bond Fund:
$1,051 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 5.09%
$1,000 =====
$1,156 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 15.63%
$1,000 ======
3. Balanced Municipal and Stock Fund:
$1,039 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 3.86%
$1,000 =====
$1,119 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 11.86%
$1,000 ======
CUMULATIVE CLASS B TOTAL RETURNS:
1. Growth and Income Stock Fund:
$1,142 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 14.24%
$1,000 ======
$1,304 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 30.37%
$1,000 ======
2. Balanced Stock and Bond Fund:
$1,056 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 5.55%
$1,000 =====
$1,163 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 16.26%
$1,000 ======
3. Balanced Municipal and Stock Fund:
$1,043 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 4.26%
$1,000 =====
$1,123 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 12.32%
$1,000 ======
6
<PAGE>
CUMULATIVE CLASS C TOTAL RETURNS:
1. Growth and Income Stock Fund:
$1,181 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 18.14%
$1,000 ======
$1,343 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 34.26%
$1,000 ======
2. Balanced Stock and Bond Fund:
$1,096 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 9.55%
$1,000 =====
$1,203 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 20.26%
$1,000 ======
3. Balanced Municipal and Stock Fund:
$1,082 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 8.22%
$1,000 =====
$1,163 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 16.27%
$1,000 ======
CUMULATIVE CLASS R TOTAL RETURNS:
1. Growth and Income Stock Fund:
$1,199 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 19.94%
$1,000 ======
$1,366 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 36.65%
$1,000 ======
2. Balanced Stock and Bond Fund:
$1,110 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 11.05%
$1,000 ======
$1,223 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 22.31%
$1,000 ======
3. Balanced Municipal and Stock Fund:
$1,098 - $1,000
A. Six months ended June 30, 1997 = ( --------------- ) = 9.84%
$1,000 =====
$1,184 - $1,000
B. From inception through June 30, 1997 = ( --------------- ) = 18.38%
$1,000 ======
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> NUVEEN GROWTH AND INCOME STOCK FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-7-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 564496
<INVESTMENTS-AT-VALUE> 644210
<RECEIVABLES> 9400
<ASSETS-OTHER> 158
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 653768
<PAYABLE-FOR-SECURITIES> 3488
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4130
<TOTAL-LIABILITIES> 7618
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 542457
<SHARES-COMMON-STOCK> 25665
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 48
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23930
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 79715
<NET-ASSETS> 646150
<DIVIDEND-INCOME> 6250
<INTEREST-INCOME> 1884
<OTHER-INCOME> 0
<EXPENSES-NET> 3582
<NET-INVESTMENT-INCOME> 4552
<REALIZED-GAINS-CURRENT> 23972
<APPREC-INCREASE-CURRENT> 79714
<NET-CHANGE-FROM-OPS> 108238
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4327
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26507
<NUMBER-OF-SHARES-REDEEMED> (893)
<SHARES-REINVESTED> 51
<NET-CHANGE-IN-ASSETS> 646117
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2485
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3866
<AVERAGE-NET-ASSETS> 326107
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> 4.14
<PER-SHARE-DIVIDEND> (.20)
<PER-SHARE-DISTRIBUTIONS> (.23)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.01
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> NUVEEN GROWTH AND INCOME STOCK FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-7-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 564496
<INVESTMENTS-AT-VALUE> 644210
<RECEIVABLES> 9400
<ASSETS-OTHER> 158
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 653768
<PAYABLE-FOR-SECURITIES> 3488
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4130
<TOTAL-LIABILITIES> 7618
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 542457
<SHARES-COMMON-STOCK> 444
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 48
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23930
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 79715
<NET-ASSETS> 646150
<DIVIDEND-INCOME> 6250
<INTEREST-INCOME> 1884
<OTHER-INCOME> 0
<EXPENSES-NET> 3582
<NET-INVESTMENT-INCOME> 4552
<REALIZED-GAINS-CURRENT> 23972
<APPREC-INCREASE-CURRENT> 79714
<NET-CHANGE-FROM-OPS> 108238
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 34
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 452
<NUMBER-OF-SHARES-REDEEMED> (8)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 646117
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2485
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3866
<AVERAGE-NET-ASSETS> 1890
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 4.10
<PER-SHARE-DIVIDEND> (.08)
<PER-SHARE-DISTRIBUTIONS> (.23)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.00
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> NUVEEN GROWTH AND INCOME STOCK FUND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-7-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 564496
<INVESTMENTS-AT-VALUE> 644210
<RECEIVABLES> 9400
<ASSETS-OTHER> 158
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 653768
<PAYABLE-FOR-SECURITIES> 3488
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4130
<TOTAL-LIABILITIES> 7618
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 542457
<SHARES-COMMON-STOCK> 151
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 48
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23930
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 79715
<NET-ASSETS> 646150
<DIVIDEND-INCOME> 6250
<INTEREST-INCOME> 1884
<OTHER-INCOME> 0
<EXPENSES-NET> 3582
<NET-INVESTMENT-INCOME> 4552
<REALIZED-GAINS-CURRENT> 23972
<APPREC-INCREASE-CURRENT> 79714
<NET-CHANGE-FROM-OPS> 108238
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 157
<NUMBER-OF-SHARES-REDEEMED> (6)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 646117
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2485
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3866
<AVERAGE-NET-ASSETS> 757
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 4.08
<PER-SHARE-DIVIDEND> (.08)
<PER-SHARE-DISTRIBUTIONS> (.23)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.98
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents
</LEGEND>
<SERIES>
<NUMBER> 014
<NAME> NUVEEN GROWTH AND INCOME STOCK FUND CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-7-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 564496
<INVESTMENTS-AT-VALUE> 644210
<RECEIVABLES> 9400
<ASSETS-OTHER> 158
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 653768
<PAYABLE-FOR-SECURITIES> 3488
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4130
<TOTAL-LIABILITIES> 7618
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 542457
<SHARES-COMMON-STOCK> 651
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 48
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23930
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 79715
<NET-ASSETS> 646150
<DIVIDEND-INCOME> 6250
<INTEREST-INCOME> 1884
<OTHER-INCOME> 0
<EXPENSES-NET> 3582
<NET-INVESTMENT-INCOME> 4552
<REALIZED-GAINS-CURRENT> 23972
<APPREC-INCREASE-CURRENT> 79714
<NET-CHANGE-FROM-OPS> 108238
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 132
<DISTRIBUTIONS-OF-GAINS> 57
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 655
<NUMBER-OF-SHARES-REDEEMED> (5)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 646117
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2485
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3866
<AVERAGE-NET-ASSETS> 8749
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> 4.20
<PER-SHARE-DIVIDEND> (.25)
<PER-SHARE-DISTRIBUTIONS> (.23)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.02
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> NUVEEN BALANCED STOCK AND BOND FUND CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-07-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 61247
<INVESTMENTS-AT-VALUE> 64301
<RECEIVABLES> 2775
<ASSETS-OTHER> 342
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 67418
<PAYABLE-FOR-SECURITIES> 2660
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 394
<TOTAL-LIABILITIES> 3054
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60788
<SHARES-COMMON-STOCK> 2378
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 503
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3054
<NET-ASSETS> 64364
<DIVIDEND-INCOME> 130
<INTEREST-INCOME> 474
<OTHER-INCOME> 0
<EXPENSES-NET> 143
<NET-INVESTMENT-INCOME> 461
<REALIZED-GAINS-CURRENT> 529
<APPREC-INCREASE-CURRENT> 3055
<NET-CHANGE-FROM-OPS> 4045
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 320
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2434
<NUMBER-OF-SHARES-REDEEMED> (57)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 64331
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 105
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 269
<AVERAGE-NET-ASSETS> 10253
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .70
<PER-SHARE-GAIN-APPREC> 3.66
<PER-SHARE-DIVIDEND> (.42)
<PER-SHARE-DISTRIBUTIONS> (.1)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.84
<EXPENSE-RATIO> 1.1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> NUVEEN BALANCED STOCK AND BOND FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-07-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 61247
<INVESTMENTS-AT-VALUE> 64301
<RECEIVABLES> 2775
<ASSETS-OTHER> 342
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 67418
<PAYABLE-FOR-SECURITIES> 2660
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 394
<TOTAL-LIABILITIES> 3054
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60788
<SHARES-COMMON-STOCK> 27
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 503
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3054
<NET-ASSETS> 64364
<DIVIDEND-INCOME> 130
<INTEREST-INCOME> 474
<OTHER-INCOME> 0
<EXPENSES-NET> 143
<NET-INVESTMENT-INCOME> 461
<REALIZED-GAINS-CURRENT> 529
<APPREC-INCREASE-CURRENT> 3055
<NET-CHANGE-FROM-OPS> 4045
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 64331
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 105
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 269
<AVERAGE-NET-ASSETS> 33
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .46
<PER-SHARE-GAIN-APPREC> 3.75
<PER-SHARE-DIVIDEND> (.27)
<PER-SHARE-DISTRIBUTIONS> (.1)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.84
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> NUVEEN BALANCED STOCK AND BOND FUND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-07-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 61247
<INVESTMENTS-AT-VALUE> 64301
<RECEIVABLES> 2775
<ASSETS-OTHER> 342
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 67418
<PAYABLE-FOR-SECURITIES> 2660
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 394
<TOTAL-LIABILITIES> 3054
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60788
<SHARES-COMMON-STOCK> 41
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 503
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3054
<NET-ASSETS> 64364
<DIVIDEND-INCOME> 130
<INTEREST-INCOME> 474
<OTHER-INCOME> 0
<EXPENSES-NET> 143
<NET-INVESTMENT-INCOME> 461
<REALIZED-GAINS-CURRENT> 529
<APPREC-INCREASE-CURRENT> 3055
<NET-CHANGE-FROM-OPS> 4045
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 64331
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 105
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 269
<AVERAGE-NET-ASSETS> 87
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .53
<PER-SHARE-GAIN-APPREC> 3.68
<PER-SHARE-DIVIDEND> (.27)
<PER-SHARE-DISTRIBUTIONS> (.1)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.84
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety to
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 024
<NAME> NUVEEN BALANCED STOCK AND BOND FUND CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-07-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 61247
<INVESTMENTS-AT-VALUE> 64301
<RECEIVABLES> 2775
<ASSETS-OTHER> 342
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 67418
<PAYABLE-FOR-SECURITIES> 2660
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 394
<TOTAL-LIABILITIES> 3054
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60788
<SHARES-COMMON-STOCK> 254
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 503
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3054
<NET-ASSETS> 64364
<DIVIDEND-INCOME> 130
<INTEREST-INCOME> 474
<OTHER-INCOME> 0
<EXPENSES-NET> 143
<NET-INVESTMENT-INCOME> 461
<REALIZED-GAINS-CURRENT> 529
<APPREC-INCREASE-CURRENT> 3055
<NET-CHANGE-FROM-OPS> 4045
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 117
<DISTRIBUTIONS-OF-GAINS> 26
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 254
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 64331
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 105
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 269
<AVERAGE-NET-ASSETS> 5476
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> 3.80
<PER-SHARE-DIVIDEND> (.47)
<PER-SHARE-DISTRIBUTIONS> (.1)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.84
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> Nuveen Balanced Municipal and Stock Fund CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-07-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 88310
<INVESTMENTS-AT-VALUE> 92273
<RECEIVABLES> 3137
<ASSETS-OTHER> 248
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95658
<PAYABLE-FOR-SECURITIES> 4951
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182
<TOTAL-LIABILITIES> 5133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86004
<SHARES-COMMON-STOCK> 3460
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 116
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 441
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3964
<NET-ASSETS> 90525
<DIVIDEND-INCOME> 134
<INTEREST-INCOME> 612
<OTHER-INCOME> 0
<EXPENSES-NET> 196
<NET-INVESTMENT-INCOME> 550
<REALIZED-GAINS-CURRENT> 457
<APPREC-INCREASE-CURRENT> 3964
<NET-CHANGE-FROM-OPS> 4971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 291
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3491
<NUMBER-OF-SHARES-REDEEMED> (36)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 90492
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 143
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 328
<AVERAGE-NET-ASSETS> 14929
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> 3.02
<PER-SHARE-DIVIDEND> (.42)
<PER-SHARE-DISTRIBUTIONS> (.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.11
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> NUVEEN BALANCED MUNICIPAL & STOCK FUND CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-07-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 88310
<INVESTMENTS-AT-VALUE> 92273
<RECEIVABLES> 3137
<ASSETS-OTHER> 248
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95658
<PAYABLE-FOR-SECURITIES> 4951
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182
<TOTAL-LIABILITIES> 5133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86004
<SHARES-COMMON-STOCK> 89
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 116
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 441
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3964
<NET-ASSETS> 90525
<DIVIDEND-INCOME> 134
<INTEREST-INCOME> 612
<OTHER-INCOME> 0
<EXPENSES-NET> 196
<NET-INVESTMENT-INCOME> 550
<REALIZED-GAINS-CURRENT> 457
<APPREC-INCREASE-CURRENT> 3964
<NET-CHANGE-FROM-OPS> 4971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 90
<NUMBER-OF-SHARES-REDEEMED> (1)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 90492
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 143
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 328
<AVERAGE-NET-ASSETS> 92
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .40
<PER-SHARE-GAIN-APPREC> 3.04
<PER-SHARE-DIVIDEND> (.28)
<PER-SHARE-DISTRIBUTIONS> (.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.11
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> NUVEEN BALANCED MUNICIPAL & STOCK FUND CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-07-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 88310
<INVESTMENTS-AT-VALUE> 92273
<RECEIVABLES> 3137
<ASSETS-OTHER> 248
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95658
<PAYABLE-FOR-SECURITIES> 4951
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182
<TOTAL-LIABILITIES> 5133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86004
<SHARES-COMMON-STOCK> 67
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 116
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 441
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3964
<NET-ASSETS> 90525
<DIVIDEND-INCOME> 134
<INTEREST-INCOME> 612
<OTHER-INCOME> 0
<EXPENSES-NET> 196
<NET-INVESTMENT-INCOME> 550
<REALIZED-GAINS-CURRENT> 457
<APPREC-INCREASE-CURRENT> 3964
<NET-CHANGE-FROM-OPS> 4971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 67
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 90492
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 143
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 328
<AVERAGE-NET-ASSETS> 52
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .40
<PER-SHARE-GAIN-APPREC> 3.03
<PER-SHARE-DIVIDEND> (.28)
<PER-SHARE-DISTRIBUTIONS> (.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.10
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains Summary Financial Information extracted from the Form
N-SAR and the financial statements and is qualified in its entirety by
references to such documents.
</LEGEND>
<SERIES>
<NUMBER> 034
<NAME> NUVEEN BALANCED MUNICIPAL & STOCK FUND CLASS R
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-07-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 88310
<INVESTMENTS-AT-VALUE> 92273
<RECEIVABLES> 3137
<ASSETS-OTHER> 248
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95658
<PAYABLE-FOR-SECURITIES> 4951
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182
<TOTAL-LIABILITIES> 5133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 86004
<SHARES-COMMON-STOCK> 301
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 116
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 441
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3964
<NET-ASSETS> 90525
<DIVIDEND-INCOME> 134
<INTEREST-INCOME> 612
<OTHER-INCOME> 0
<EXPENSES-NET> 196
<NET-INVESTMENT-INCOME> 550
<REALIZED-GAINS-CURRENT> 457
<APPREC-INCREASE-CURRENT> 3964
<NET-CHANGE-FROM-OPS> 4971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 142
<DISTRIBUTIONS-OF-GAINS> 16
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 301
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 90492
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 143
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 328
<AVERAGE-NET-ASSETS> 6412
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> 3.03
<PER-SHARE-DIVIDEND> (.48)
<PER-SHARE-DISTRIBUTIONS> (.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.11
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99(b)
NUVEEN UNIT TRUSTS
NUVEEN MUTUAL FUNDS
NUVEEN EXCHANGE-TRADED FUNDS
NUVEEN ADVISORY CORP.
NUVEEN INSTITUTIONAL ADVISORY CORP.
NUVEEN ASSET MANAGEMENT INC.
JOHN NUVEEN & CO. INCORPORATED
----------------------------
Standards and Procedures
Regarding
Conflicts of Interest
----------------------------
Code of Ethics
And
Reporting Requirements
The Securities and Exchange Commission, in Investment Company Act Release No.
11421, has adopted Rule 17j-1 "to provide guidance to investment companies as to
the minimum standards of conduct appropriate for persons who have access to
information regarding the purchase and sale of portfolio securities by
investment companies." The Rule requires registered investment companies, their
investment advisers and their principal underwriters to adopt codes of ethics
and reporting requirements to guard against violations of the standards set
forth in the Rule and the principles provided below and to establish guidelines
for the conduct of persons who (1) may obtain material non-public information
concerning securities held by or considered for purchase or sale by any series
of the Nuveen Unit Trusts (the "Trusts") or by any of the Nuveen-sponsored
registered management investment companies (the "Funds") or non-management
investment company clients ("Clients") to which Nuveen Advisory Corp., Nuveen
Asset Management Inc. or Nuveen Institutional Advisory Corp. act as investment
advisers or (2) may make any recommendation or participate in the determination
of which recommendation shall be made concerning the purchase or sale of any
securities by a Trust, Fund or Client. The equity Funds advised pursuant to
subadvisory agreements with non-controlled advisers ("Subadvised Funds")
acknowledge that, in lieu of being subject to this Code of Ethics, all employees
and other persons affiliated with such subadvisers shall be subject to the
subadviser's Code of Ethics. In addition, due to limited access to information
regarding the subadvisers' portfolio activities concerning equity securities,
Nuveen personnel who are access persons of the Subadvised Funds shall not be
required to preclear any transactions solely for being access persons of such
Funds. This Code of Ethics (the "Code") consists of six sections--1. Statement
of General Principles; 2. Definitions; 3. Exempted Transactions; 4.
Prohibitions; 5. Reporting Requirements; and 6. Sanctions.
<PAGE>
2
I. Statement of General Principles
The Code is based upon the principle that the officers, directors and
employees of a Fund, Nuveen Advisory Corp., Nuveen Institutional Advisory
Corp., Nuveen Asset Management Inc. and John Nuveen & Co. Incorporated owe
a fiduciary duty to, among others, the unitholders and shareholders of the
Trusts and Funds and the Clients, to conduct their personal securities
transactions in a manner which does not interfere with Trust, Fund or
Client portfolio transactions or otherwise take unfair advantage of their
relationship to the Trusts, Funds or Clients. In accordance with this
general principle, persons covered by the Code must: (1) place the
interests of unitholders and shareholders of the Trusts and Funds and the
Clients first; (2) execute personal securities transactions in compliance
with the Code; (3) avoid any actual or potential conflict of interest and
any abuse of their positions of trust and responsibility; and (4) not take
inappropriate advantage of their positions. It bears emphasis that
technical compliance with the Code's procedures will not automatically
insulate from scrutiny trades which show a pattern of abuse of the
individual's fiduciary duties to the Trust, Fund or Client. In addition, a
violation of the general principles of the Code may constitute a punishable
violation.
II. Definitions
As used herein:
(1) "Access person" shall mean:
(a) Any director, officer or advisory person of any Fund or Trust or
of Nuveen Advisory Corp., Nuveen Institutional Advisory Corp. or
Nuveen Asset Management Inc.
(b) Any director or officer of John Nuveen & Co. Incorporated who in
the ordinary course of his business makes, participates in or
obtains information regarding the purchase or sale of securities
for the Funds, Trusts or Clients or whose functions or duties as
part of the ordinary course of his business relate to the making
of any recommendation to such Fund, Trust or Client regarding the
purchase or sale of securities.
A list of access persons of all entities other than the Flagship
Utility Income Fund ("Utility Fund") is attached as Exhibit A. A list
of persons deemed to be access persons of the Utility Fund is attached
as Exhibit B ("Utility Fund Access Persons").
<PAGE>
3
For purposes of this section "advisory person" shall mean:
(a) Any employee of a Fund, of Nuveen Advisory Corp., of Nuveen
Institutional Advisory Corp., of Nuveen Asset Management Inc. or of
John Nuveen & Co. Incorporated who, in connection with his or her
regular functions or duties, makes, participates in, or obtains
information, regarding the purchase or sale of a security by a Trust,
Fund or Client or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
(b) Any director or officer of John Nuveen & Co. Incorporated who obtains
information concerning recommendations made to such Trust, Fund or
Client with respect to the purchase or sale of a security.
(2) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the recommendation,
when such person considers making such recommendation.
(3) Beneficial ownership shall be interpreted in accordance with the definition
set forth in Rule 16a-1(a)(2) under the Securities Exchange Act of 1934.
Section 16a-1(a)(2) specifies that a person will be deemed to be the
"beneficial owner" of securities that such individual, directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise has or shares in the opportunity to profit or share in any
profit derived from a transaction in the subject security. In addition, a
person will be deemed to be the beneficial owner of securities:
(a) held by members of such person's immediate family sharing the same
household;
(b) held by a general or limited partnership for which such person is a
general partner;
(c) held in a trust:
(i) of which such person is trustee and the trustee or members of
his or her immediate family have a pecuniary interest in the
trust;
(ii) in which such person has a vested beneficial interest or shares
in investment control with the trustee;
<PAGE>
4
(iii) of which such person is settlor and which the settlor has
the power to revoke the trust without consent of the
beneficiaries; or
(iv) certain other trusts as set forth in Rule 16a-1(a)(2)
under the Securities Exchange Act of 1934.
A person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment
company solely by reason of his or her ownership of shares or
units of such registered investment company.
(4) "Security" shall mean any stock, bond, debenture, evidence of
indebtedness or in general any other instrument defined to be a
security in Section 2(a)(36) of the Investment Company Act of 1940
except that it shall not include securities issued by the Government
of the United States, short term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of registered open-end
investment companies.
(5) "Purchase of sale of a security" shall include any transaction in
which a beneficial interest in a security is acquired or disposed of,
including but not limited to the writing of an option to purchase or
sell a security or the cancellation of a good-until-canceled order.
(6) "Control" shall have the same meaning as set forth in Section 2(a) (9)
of the Investment Company Act of 1940.
(7) "Investment personnel" shall mean any employee of Nuveen Advisory
Corp., Nuveen Institutional Advisory Corp., Nuveen Asset Management
Inc. or John Nuveen and Co. Incorporated who acts as a portfolio
manager or as an analyst or trader who provides information or advice
to the portfolio manager or who helps execute the portfolio manager's
decisions. A list of investment personnel of all entities other than
the Utility Fund is included in Exhibit A. A list of persons deemed to
be investment personnel of the Utility Fund is included in Exhibit B.
Investment personnel are also access persons by definition.
(8) "Portfolio manager" shall mean any employee of Nuveen Advisory Corp.,
Nuveen Institutional Advisory Corp., Nuveen Asset Management Inc. or
John Nuveen & Co. Incorporated who is entrusted with the direct
responsibility and authority to make investment decisions affecting a
Trust, Fund or Client. A list of portfolio managers of all entities
other than the Utility Fund is included in Exhibit A. A list
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5
of persons deemed to be portfolio managers of the Utility Fund is
included in Exhibit B. Portfolio managers are also investment
personnel and access persons by definition.
(9) "Utility Fund Eligible Securities" shall include preferred and common
stock of companies in the public utilities industry, such as companies
principally engaged in the production, transmission or distribution of
electric energy, gas, water, or communications services or in solid
waste disposal.
III. Exempted Transactions
The prohibitions of Section IV of this Code shall not apply to:
(1) Purchases or sales affecting any account over which the party involved
has no direct or indirect influence or control;
(2) Purchases or sales which are non-volitional on the part of either the
party involved or a Trust, Fund or Client;
(3) Purchases which are part of an automatic dividend reinvestment plan.
(4) Purchases effected upon the exercise or rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
IV. Prohibitions
(1) Unless such transaction is exempted above or is previously cleared in
the manner described in paragraph (9) below, no access person shall
purchase or sell the following securities for his or her own account
or for any account in which he or she has any beneficial ownership:
(a) securities offered in a private placement;
(b) shares of The John Nuveen Company;
(c) municipal securities (other than variable rate securities with
reset periods of 6 months or less);
(d) shares of a Nuveen-sponsored exchange-traded fund (excluding
preferred shares of those funds); or
(e) Utility fund Eligible Securities (for Utility Fund Access Persons
only).
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6
The purchase of securities identified in paragraph (1)(a) by
investment personnel must also comply with paragraph (4) below.
Directors of the Funds who are not "interested persons" of the Funds
are not subject to the prohibition of subparagraph (a) above and are
only subject to subparagraphs (c) and (e) to the extent such
director purchases or sells a security that he knows, or reasonably
should have known, is being considered for purchase or sale by a
Trust, Fund or Client. Individuals who are only non-interested
directors of the Nuveen open-end Funds shall not be subject to the
prohibition of subparagraph (d) above.
(2) No portfolio manager shall execute a securities transaction on a day
during which a Trust, Fund or Client that is managed or surveyed by
the company he is employed by has a pending "buy" or "sell" order in
that same security until that order is executed or withdrawn.
However, this prohibition shall not apply to securities transactions
involving a security held by a Fund and invested and managed under a
subadvisory agreement unless the portfolio manager knows, or
reasonably should have known, that the Fund has a pending "buy" or
"sell" order involving such security. No other access person shall
execute a securities transaction on a day during which a Trust, Fund
or Client has a pending "buy" or "sell" order in that same security
until that order is executed or withdrawn if that person knows, or
reasonably should have known, an order is pending. In addition, only
Utility Fund Access Persons shall be subject to the restrictions
imposed by this paragraph for securities held or considered for
purchase by Utility Fund. Trades made in violation of this
prohibition shall be unwound or, if that is impractical, any profits
realized must be disgorged to a charitable organization.
(3) Investment personnel shall not purchase any securities in an initial
public offering other than an offering of securities issued by
municipal or United States government entities.
(4) Unless such transaction is previously approved in the manner
described in paragraph (10) below and the criteria set forth in that
paragraph are followed, investment personnel shall not purchase any
security in a private placement.
(5) Investment personnel shall not profit in the purchase and sale, or
sale and purchase, of the same (or equivalent) security within 60
calendar days if such security is a municipal security or shares
issued by a Nuveen-sponsored exchange-traded fund. In addition,
Utility Fund investment personnel shall not profit in such purchases
or sales or sales and purchases of the same (or equivalent) security
within 60 calendar days is such security is a Utility Fund Eligible
Security. Trades made in violation of this prohibition shall be
unwound or, if that is impractical, any profits realized must be
disgorged to a charitable organization.
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7
(6) Investment personnel shall not accept any gift or other thing of
material value from any person or entity that does business with or
on behalf of a Trust, Fund or Client. For purposes of this
prohibition the term "material value" shall have the same meaning
expressed in Rule 2830 of the National Association of Securities
Dealers, Inc.'s Conduct Rules.
(7) Unless such service is previously cleared in the manner described in
paragraph (11) below and the criteria set forth in that paragraph are
followed, investment personnel shall not serve as board members or
other decision-makers for entities that issue municipal securities.
In addition, Utility Fund investment personnel shall not serve as a
board member or decision-maker for a company that issues Utility Fund
Eligible Securities without preclearance.
(8) No portfolio manager of a Trust, Fund or Client shall purchase or
sell any security within seven calendar days before or after the
Trust, Fund or Client he surveys or manages trades or considers to
purchase or sell such security. This prohibition shall not apply to
securities invested and managed under a subadvisory agreement. Trades
made in violation of this prohibition should be unwound or, if that
is impractical, any profits realized must be disgorged to a
charitable organization.
(9) An access person may request clearance of a transaction otherwise
prohibited by paragraph (1) above prior to the placement of any order
in connection therewith by submitting a written or oral request for
clearance to the General Counsel of John Nuveen & Co. Incorporated or
his designee. Unless specifically exempted herein, no such
transaction may be effected without the prior clearance of the
transaction. Clearance may be reflected in a written or an electronic
report. Clearance shall be valid for three business days. Clearance
shall not be granted for municipal security limit orders.
(10) Investment personnel may request approval of a transaction otherwise
prohibited by paragraph (4) above prior to the placement of any order
in connection therewith by submitting a written request for approval
to the General Counsel of John Nuveen & Co. Incorporated or his
designee. Unless specifically exempted herein, no such transaction
may be effected without the prior clearance of the transaction.
Clearance may be reflected in a written or an electronic report. Any
approval shall be valid for three business days. Transactions may be
approved only if the party clearing the transaction takes into
account, among other factors, whether the investment opportunity
should be reserved for a Trust, Fund or Client and whether the
opportunity is being offered to an individual by virtue of his or her
position. In addition, investment personnel who receive authorization
to purchase securities in
<PAGE>
8
a private placement have an affirmative duty to disclose that
position to the General Counsel or his designee if he or she plays
a role in a Trust's, Fund's or Client's subsequent investment
decision regarding the same issuer. Once such disclosure is made,
the General Counsel or his designee shall assemble a commission of
investment personnel with no personal interest in the issuer
involved to independently review the Trust's, Fund's or Client's
investment decision.
(11) Investment personnel may request clearance of service otherwise
prohibited by paragraph (7) above, prior to acceptance of any such
position, by submitting a written request for clearance to the
General Counsel of John Nuveen & Co. Incorporated or his designee.
Such request shall state the position sought, the reason service is
desired and any possible conflicts of interest known at the time of
the request. No such position may be accepted without prior
clearance. Clearance may be reflected in a written or an electronic
report. Service may be cleared only if the party clearing the
transaction determines that service in that capacity would not be
inconsistent with the interests of the Trusts, Funds or Clients.
In addition, investment personnel who receive authorization to
serve in such a capacity must be isolated through "Chinese Wall"
procedures from those making investment decisions regarding
securities issued by the entity involved.
V. Reporting Requirements
(1) Every access person (other than directors of a Fund who are not
"interested persons" of such Fund) shall report to the Legal
Department of John Nuveen & Co. Incorporated details of each
transaction by reason of which he or she acquires any direct or
indirect beneficial ownership of any security (as defined in
Section II herein). Notwithstanding the foregoing, an access person
need not make a report pursuant hereto where such report would
duplicate information recorded pursuant to Rules 204-2(a)(12) or
204-2(a)(13) under the Investment Advisers Act of 1940. In addition
to the reporting requirement expressed above, access persons (other
than directors who are not "interested persons") shall authorize
the Legal Department to direct their broker or brokers to supply to
the Legal Department, on a timely basis, duplicate copies of
confirmations of all securities transactions and copies of periodic
statements for all securities accounts involving securities in
which such access person acquires or disposes of direct or indirect
beneficial ownership. Such duplicate confirmations and periodic
statements received during the prescribed period shall satisfy the
reporting requirements set forth in this paragraph. Also, trades
executed through Nuveen or in an account in which Nuveen is the
broker of record shall be deemed to have been reported for purposes
of this paragraph. Notwithstanding the provisions of this
paragraph, a report shall
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9
not be required for purchases and sales in any account over which
the party involved does not have direct or indirect influence or
control.
(2) Every director of a Fund who is not an "interested person" of such
Fund shall be required to report the details of each transaction
with respect to which such director knew or, in the ordinary course
of fulfilling his or her official duties as a director of the Fund,
should have known that during the 15 day period immediately
preceding or after the date of the transaction in a security by the
director such security is or was purchased or sold by the Fund or
such purchase or sale by the Fund is or was considered by the Fund
or its investment adviser.
(3) Every report required to be made pursuant to paragraphs 1 and 2 of
this Section (other than duplicate copies of confirmations and
periodic statements) shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:
(a) the date of the transaction, the title and the number of
shares, or principal amount of each security involved;
(b) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(c) the price at which the transaction was effected; and
(d) the name of the broker, dealer or bank with or through whom
the transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he
or she has or disposed of any direct or indirect beneficial
ownership in the security to which the report relates.
(4) The reporting requirements established pursuant to paragraphs 1 and
2 of this Section (other than duplicate copies of confirmations and
periodic statements) shall apply only to transactions by an access
person in securities in which such access person has, or by reason
of such transaction acquires or disposes of, any direct or indirect
beneficial ownership in the security.
(5) Investment personnel shall disclose to the General Counsel of John
Nuveen & Co. Incorporated all personal securities holdings within 10
days of commencement of employment as an investment person and shall
continue to disclose such holdings on an annual basis.
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10
VI. Sanctions
Upon discovery of a violation of this Code, including either
violations of the enumerated provisions or the general principles
provided, any Fund, Nuveen Advisory Corp., Nuveen Institutional
Advisory Corp., Nuveen Asset Management Inc. or John Nuveen & Co.
Incorporated may impose such sanctions as it deems appropriate,
including, inter alia, a letter of censure or suspension or
termination of the employment of the violator. All material violations
of this Code and any sanctions imposed with respect thereto shall be
reported periodically to the board of directors of the management
investment company with respect to securities of which the violation
occurred, or to the Executive Committee of John Nuveen & Co.
Incorporated if the violation was with respect to securities of any
series of the Nuveen Unit Trusts, or to the board of directors of
Nuveen Institutional Advisory Corp., Nuveen Asset Management Inc. or
Nuveen Advisory Corp. with respect to securities of non-management
investment company clients advised by these entities.
Revised December 31, 1996
