<PAGE>
NUVEEN
Growth and Income
Mutual Funds
June 30, 1998
Annual Report
For investors seeking
superior returns
with moderated risk.
[PHOTO APPEARS HERE]
Growth
and Income
Stock Fund
<PAGE>
Highlights
As of June 30, 1998
For Class A shares
Attractive Fund Returns/1/
[BAR CHART APPEARS HERE]
Class A Class A
(NAV) (OFFER)
ONE YEAR 21.59% 15.21%
SINCE INCEPTION
8/96 30.55% 26.88%
[_] Class A (NAV)
[_] Class A (Offer)
With its focus on long-term growth and a measure of downside protection, the
fund provided attractive total returns for the one-year period and since its
inception.
Portfolio Allocation
[PIE CHART APPEARS HERE]
Stocks 92%
Cash 8%
True to its investment objective, the fund remained almost completely invested
in stocks, allowing it to capitalize on stock appreciation opportunities.
Fund Manager's 20-Year Record of Positive Returns/2/
[BAR CHART APPEARS HERE]
<TABLE>
<S> <C>
78 7.96
79 11.56
80 24.53
81 3.14
82 25.45
83 14.43
84 1.73
85 32.78
86 14.64
87 27.50
88 7.99
89 31.93
90 0.16
91 32.02
92 6.01
93 15.13
94 0.64
95 36.51
96 24.89
97 28.03
</TABLE>
The fund manager boasts an excellent long-term track record through a variety of
market conditions, with positive returns for each of the past 20 years.
Contents
1 Dear Shareholder
3 A Time-Tested Strategy
that Can Add Real Value
4 Report from the
Fund's Equity Adviser
5 Performance Overview
6 Portfolio of Investments
8 Statement of Net Assets
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Notes to Financial Statements
14 Financial Highlights
16 Report of Independent Public Accountants
17 Building Better Portfolios with Nuveen
/1/ Please see the Performance Overview on page five for more information.
/2/ This chart reflects the performance of the Institutional Capital
Discretionary Equity Composite, which includes all assets (approximately
$4.79 billion as of 6/30/98) that have substantially the same investment
objective and policies as the Nuveen Growth and Income Stock Fund. The
composite's accounts may experience different investment inflows and
outflows than the fund, and are not subject to all of the restrictions of
the Investment Company Act of 1940 and the Internal Revenue Code that apply
to the fund, which could adversely affect fund performance. Investment
returns reflect composite gross-of-fee returns, adjusted for the fund's
Class A annual net operating expenses of 1.30%, but not the up-front sales
charge. Class B, C, or R investment results would differ due to differing
sales charges and operating expenses. This chart does not represent actual
fund past performance or predict future fund performance.
<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
I am pleased to report that over the past year the Nuveen Growth and Income
Stock Fund continued to provide strong returns with moderated risk and price
volatility -- as the fund was designed to do.
In addition, as you can see from the information on the facing page, the fund
remains well-positioned to take advantage of future market opportunities while
employing an investment strategy that historically has limited the impact of
severe market downturns.
Current Results Backed by a Proven Record
The solid performance achieved by the Growth and Income Stock Fund portfolio
managers inevitably leads to the question: "Can they keep it up?" Since no one
can predict the future with certainty, it's important to have confidence in your
fund managers' experience, investment approach and the results they've
demonstrated through a variety of market conditions over the years.
As Nuveen's Premier Adviser/SM/ for value investing, Institutional Capital
Corporation is a highly successful institutional money manager with more than 28
years of experience. Over that time, they've specialized in finding undervalued
midsize and large company stocks that are poised for significant growth.
This disciplined, research-oriented approach has paid off for investors, and is
still the key investment strategy of the Nuveen Growth and Income Stock Fund.
The managers start by looking for stocks whose intrinsic worth is greater than
their current market price. Then they look for a catalyst, such as a management
change, a new product, or improved industry outlook, that may help trigger a
rise in each stock's price. Generally, the fund only purchases stocks that the
managers believe have the potential to generate 15% - 25% returns over an 18-
month period.
Following this letter, you'll find one example of how this strategy has worked
to the advantage of fund investors.
Nuveen's Premier Advisers
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise.
1
<PAGE>
"Today, more than
ever, you can
count on Nuveen
for investments
designed to
produce a well-
balanced portfolio
that meets your
individual goals."
In addition to Institutional Capital, Nuveen Premier Advisers now include
Rittenhouse Financial Services, our specialist for growth investing, and Nuveen
Advisory Corp., our expert in tax-free investing. Each of these managers uses a
time-tested, research-driven investment strategy to build portfolios of quality
securities.
Diversification Can Help
You Build a Better Portfolio
In light of recent market volatility, we believe that investors will find
diversification to be an increasingly important strategy in the months ahead. An
appropriately diversified portfolio -- one that balances different types of
investments, levels of risk and tax management strategies -- can help cushion
your portfolio against volatility and enhance your overall return potential.
Many of you have invested in the Nuveen Growth and Income Stock Fund because of
its value investing orientation and the excellent track record of its Premier
Adviser. We are pleased to announce that this same disciplined approach is now
available in another Nuveen fund managed by Institutional Capital -- the Nuveen
European Value Fund.
With its focus on a portfolio of quality, undervalued European companies, this
fund can provide an excellent complement to the Growth and Income Stock Fund by
offering international diversification and growth potential. I encourage you to
talk with your financial adviser about how this new fund, along with the Nuveen
Rittenhouse Growth Fund and our wide array of tax-free bond funds, can help
round out your portfolio and meet your own particular investment needs.
If you would like additional information on the Nuveen European Value Fund, or
any of our other funds, contact your financial adviser for a prospectus. You
also may request a prospectus from Nuveen by calling (800) 257-8787. Please read
this information carefully and discuss it with your financial adviser before you
invest.
When seeking quality investments that withstand the test of time, we hope you
will continue to think of Nuveen. Today, more than ever, you can count on Nuveen
for investments designed to produce a well-balanced portfolio that meets your
individual goals. We thank you for your continued confidence in us, and look
forward to reporting to you again soon.
Sincerely,
/S/ Timothy R. Schwertfeger
- ----------------------------
Timothy R. Schwertfeger
Chairman of the Board
August 15, 1998
2
<PAGE>
A Time-Tested Strategy that Can Add Real Value
Stock Selection Process
Stocks
with Best
Relative
Value
Catalyst
Portfolio
of 40-50
Stocks
Institutional Capital Corporation, Nuveen's Premier Adviser for value investing,
selects stocks for the Nuveen Growth and Income Stock Fund from a universe of
approximately 450 large and midsize companies, using proprietary quantitative
valuation models to determine which of these stocks appear to be undervalued in
the current market. Based on a rigorous assessment of each company's prospects,
the portfolio manager then looks for a catalyst that could help the market
recognize the stock's true value. This catalyst may be as simple as an
anticipated dividend change, or as complex as a fundamentally improved industry
outlook.
Once selected, stocks in the portfolio are monitored closely and replaced if
they reach their target value, their prospects change or they become less
attractive than other portfolio candidates.
An example of how this process works to investors' advantage is the recent
purchase and sale of Ford Motor Company, the nation's second largest automaker.
First purchased by the Nuveen Growth and Income Stock Fund in February 1997, the
catalysts for Ford included a strong management team, significant cost cutting
and a corporate restructuring.
Ford was a major holding of the fund until it reached its target price in June
and was sold. The fund's position in Ford produced a gain of 159% over the
initial purchase price. While illustrative of the investment process generally,
this was a particularly rewarding investment by the fund. Not all of the fund's
investments have been or will be as successful.
Ford Motor Company:
An Example of a Stock with Identifiable Catalysts
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
8/96 22.25
9/96 20.75
10/96 20.75
11/96 21.75
12/96 21.42
1/97 21.33
2/97 21.83
3/97 20.84
4/97 23.08
5/97 24.91
6/97 25.23
7/97 27.14
8/97 28.56
9/97 29.97
10/97 29.02
11/97 28.56
12/97 32.25
1/98 33.88
2/98 37.56
3/98 43.05
4/98 45.81
5/98 51.88
6/98 59.00
</TABLE>
3
<PAGE>
Nuveen Growth and Income Stock Fund
Report from the Fund's Premier Adviser
The Institutional Capital portfolio management team talks about
the financial markets and factors that affected fund performance.
"In this environment, we will continue to invest in companies undergoing
corporate restructurings, both in the U.S. and Europe."
Over the past year, the economy and the financial markets again defied the
experts' consensus.
The conventional wisdom was that the Asian crisis and U.S. company profit
warnings that started last fall would result in a slow first half of 1998, with
a rebound in confidence and securities prices in the second half of this year.
Our own concern was whether the Federal Reserve would have to raise short-term
interest rates as the moderating influence of Asia diminished and the U.S.
economy picked up steam.
The facts have painted a different picture. Stimulated by lower interest rates,
strong employment and a significant drop in energy prices, U.S. consumption has
remained quite strong -- especially for this late in the economic cycle. Outside
the U.S., European companies also began showing strong results. While Asia did
slump, its overall impact on the U.S. economy was less severe than feared.
The low inflationary environment and strong economy fueled continued strength in
the U.S. equity markets, raising valuations and putting a premium on the quality
research needed to find undervalued stocks. Staying with our time-tested, value-
oriented strategy, we are pleased that the Class A share total return on net
asset value of the Growth and Income Stock Fund was a healthy 21.59% for the
year ended June 30, 1998.
Asia Looms Large
Given the lethargy in Japan and reduced growth in China, there will be no quick
or easy resolution of Asia's woes anytime soon. The central problem in Asia is
that massive amounts of capital are now invested in assets that are providing
poor returns. While we believe these problems can be solved, it will take time.
Perhaps the only good news is that the deflationary drag from the region should
prevent the Fed from raising interest rates and keep the dollar strong for some
time.
Unrealistic Valuations in Some Sectors
The U.S. stock market is now characterized by high valuations -- but given the
lack of investment alternatives, low interest rates and the strength of the
dollar, this is understandable (if not totally justifiable). However, there is a
degree of speculation now in the U.S. market, as evidenced particularly in some
Internet-related stocks, that makes us uneasy. While we believe the market
values of many of these high flyers will be adjusted, we also think that our
disciplined, catalyst-driven, value-investing approach will continue to uncover
companies that offer good prospects at attractive prices.
Outlook for the Second Half of 1998
Our view for the remainder of the year is that:
. The U.S. economy will slow as a result of high inventories, weaker exports and
a downturn in capital goods manufacturing.
. Corporate profits overall will be up modestly, and less than expected.
. The Fed will probably not raise interest rates as a result of the financial
situation in Asia and the fragile state of other dollar-linked economies such
as Russia.
. The domestic merger and acquisition boom will continue, but the impact on
overall market prices will diminish.
. U.S. stock market averages will gain modestly; European markets will see
even larger returns.
Our Strategy
In this environment, we will continue to invest in companies undergoing
corporate restructurings, both in the U.S. and Europe. This means looking for
companies that may have performed poorly in the recent past, but that have
attractive, underutilized assets or a newly focused management team. Some
portfolio holdings that highlight this strategy include Citicorp, News Corp. and
Raytheon, just to name a few.
We believe there may be good news coming from these companies and others like
them in the fund's portfolio. We are committed to uncovering additional
opportunities in the months ahead.
4
<PAGE>
Nuveen Growth and Income Stock Fund
Performance Overview
As of June 30, 1998
<TABLE>
<CAPTION>
Top Ten Holdings/1/
<S> <C>
News Corp. Ltd. Sponsored ADR 4.32%
- ---------------------------------------
NationsBank Corp 3.73%
- ---------------------------------------
Hoechst AG Sponsored ADR 3.56%
- ---------------------------------------
American Home Products Corp. 3.40%
- ---------------------------------------
Citicorp 3.29%
- ---------------------------------------
Philips Electronics N.V. 3.20%
- ---------------------------------------
Burlington Northern Santa Fe 2.97%
- ---------------------------------------
Seagram Co. Ltd. 2.81%
- ---------------------------------------
U.S.A. Waste Services Inc. 2.76%
- ---------------------------------------
General Motors Corporation 2.72%
- ---------------------------------------
</TABLE>
Industry Diversification
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
Transportation 8%
Capital Spending 8%
Consumer Staples 10%
Capital Equipment/Technology 9%
Energy 7%
Basic Industries 9%
Retail 4%
Health Care 13%
Consumer Durables 3%
Consumer Services 12%
Utilities 2%
Financial 15%
</TABLE>
Portfolio Allocation
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
Stocks 92%
Cash 8%
</TABLE>
<TABLE>
<CAPTION>
Fund Highlights
<S> <C> <C> <C> <C>
Share Price A B C R
- -------------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
- -------------------------------------------------------------------------
Net Asset Value $26.50 $26.47 $26.43 $ 26.52
- -------------------------------------------------------------------------
Total Net Assets ($000) $901,732
- -------------------------------------------------------------------------
Fund Beta 0.77
- -------------------------------------------------------------------------
Average Market Capitalization of Stocks in Portfolio $31 billion
- -------------------------------------------------------------------------
Average P/E of Stocks in Portfolio 17.6
- -------------------------------------------------------------------------
Number of Stocks in Portfolio 45
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Annualized Total Return/2/
Share Class A (NAV) A (Offer) B C R
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Year-to-Date 14.21% 8.23% 13.81% 13.74% 14.38%
- ----------------------------------------------------------------------------
One-Year 21.59% 15.21% 20.70% 20.63% 21.91%
- ----------------------------------------------------------------------------
Since Inception 30.55% 26.88% 29.58% 29.49% 30.91%
- ----------------------------------------------------------------------------
</TABLE>
Index Comparison/3/
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Growth and Income Nuveen Growth and Income
S&P 500 Stock Fund (NAV) Stock Fund (Offer)
<S> <C> <C> <C>
Aug-96 10000 10000 9475
Sep-96 10563 10414 9867
Oct-96 10855 10864 10294
Nov-96 11675 11638 11027
Dec-96 11444 11371 10774
Jan-97 12159 11951 11323
Feb-97 12254 12036 11404
Mar-97 11750 11784 11165
Apr-97 12452 12360 11711
May-97 13210 13026 12343
Jun-97 13803 13617 12902
Jul-97 14901 14626 13858
Aug-97 14066 14007 13272
Sep-97 14837 14776 14000
Oct-97 14342 14356 13603
Nov-97 15006 14368 13613
Dec-97 15264 14496 13735
Jan-98 15433 14577 13811
Feb-98 16546 15670 14847
Mar-98 17393 16030 15189
Apr-98 17569 16473 15608
May-98 17266 16479 15614
Jun-98 17968 16557 15688
</TABLE>
<TABLE>
<S> <C>
S&P 500 $17,968
Nuveen Growth and Income Stock Fund (NAV) $16,557
Nuveen Growth and Income Stock Fund (Offer) $15,688
</TABLE>
Past performance is not predictive of future results.
1 The companies listed above represent their respective percentages as of
6/30/98. Over time, the fund's holdings and their percentages will vary as
the prices of the stocks vary.
2 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.
3 The Index Comparison shows the change in value of a $10,000 investment in the
Class A shares of the Nuveen fund compared with the Standard and 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 Class A shares (5.25%) and all ongoing fund expenses.
5
<PAGE>
Portfolio of Investments
Nuveen Growth and Income Stock Fund
June 30, 1998
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 87.2%
Basic Industries - 8.7%
179,850 Akzo Nobel N.V. Sponsored ADR $19,940,868
285,600 E.I. du Pont de Nemours and Company Ltd. 21,312,900
346,885 IMC Global Inc. 10,449,910
298,250 Reynolds Metals Company 16,683,359
353,150 UPM-Kymmene Oyj Corporation Sponsored ADR 9,719,429
- --------------------------------------------------------------------------------
Capital Equipment/Technology - 8.3%
439,300 First Data Corporation 14,634,181
201,050 International Business Machines Corporation 23,083,053
254,600 NCR Corporation # 8,274,500
337,500 Royal Philips Electronics N.V. 28,687,500
- --------------------------------------------------------------------------------
Capital Spending - 7.3%
222,400 B.F. Goodrich Company 11,036,600
276,700 Case Corporation 13,350,775
166,000 Northrop Grumman Corporation 17,118,750
416,500 Raytheon Company - Class A 24,000,812
- --------------------------------------------------------------------------------
Consumer Durables - 2.7%
364,150 General Motors Corporation 24,329,772
- --------------------------------------------------------------------------------
Consumer Services - 7.0%
612,900 Dun & Bradstreet Corporation 22,141,013
762,900 Host Marriot Corporation # 13,589,156
58,800 Starwood Hotels & Resorts 2,840,775
500,100 U.S.A. Waste Services Inc. # 24,692,438
- --------------------------------------------------------------------------------
Consumer Staples - 9.0%
406,400 Fort James Corporation 18,084,800
375,200 Hasbro, Inc. 14,750,050
592,600 Philip Morris Companies Inc. 23,333,625
615,900 Seagram Company Ltd. 25,213,406
- --------------------------------------------------------------------------------
Energy - 5.9%
307,010 Elf Aquitaine SA Sponsored ADR 21,797,710
245,000 Schlumberger Limited 16,736,563
419,350 Unocal Corporation 14,991,763
- --------------------------------------------------------------------------------
Financials - 13.4%
163,150 Bankers Trust Corporation 18,935,597
295,000 CIGNA Corporation 20,355,000
197,350 Citicorp 29,454,487
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Shares Description Market Value
- -------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
Financials (continued)
374,100 Household International, Inc. $ 18,611,475
436,450 NationsBank Corporation 33,388,425
- -------------------------------------------------------------------------------------------------------------------------------
Health Care - 12.4%
588,300 American Home Products Corporation 30,444,525
334,750 Baxter International Inc. 18,013,734
642,000 Hoechst AG Sponsored ADR 31,859,250
303,500 Humana Inc. # 9,465,406
137,200 St. Jude Medical, Inc. # 5,050,675
528,500 Tenet Healthcare Corporation # 16,515,625
- -------------------------------------------------------------------------------------------------------------------------------
Retail - 3.5%
88,300 Circuit City Stores 4,139,063
163,400 Consolidated Stores Corporation # 5,923,250
400,550 Federated Department Stores, Inc. # 21,554,597
- -------------------------------------------------------------------------------------------------------------------------------
Transportation - 7.1%
193,150 AMR Corporation # 16,079,738
270,650 Burlington Northern Santa Fe Corporation 26,574,447
753,600 Canadian Pacific Limited 21,383,400
- -------------------------------------------------------------------------------------------------------------------------------
Utilities - 1.9%
139,150 AT&T Corp. 7,948,944
209,600 Bell Atlantic Corporation 9,563,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks - (cost $686,234,947) 786,054,346
-----------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 4.3%
1,369,050 News Corporation Limited Sponsored ADR 38,675,663
- -------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks - (cost $25,272,089) 38,675,663
-----------------------------------------------------------------------------------------------------------
Principal Amount Description Market Value
- -------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 7.9%
$40,000,000 Walt Disney Company, Commercial Paper, effective yield of 5.67%, 7/13/98 39,927,467
16,300,000 Pitney Bowes, Inc., Commercial Paper, effective yield of 6.17%, 7/01/98 16,300,000
15,000,000 Proctor & Gamble Company, Commercial Paper, effective yield of 5.73%, 7/07/98 14,986,375
- -------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments - (cost $71,213,842) 71,213,842
-----------------------------------------------------------------------------------------------------------
Total Investments - (cost $782,720,878) - 99.4% 895,943,851
-----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.6% 5,788,486
-----------------------------------------------------------------------------------------------------------
Net Assets - 100% $901,732,337
===========================================================================================================
</TABLE>
# Non-income producing.
See accompanying notes to financial statements.
7
<PAGE>
Statement of Net Assets
June 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets
Investment securities, at market value (cost $782,720,878) (note 1) $895,943,851
Cash 47,717
Receivables:
Dividends 1,625,876
Investments sold 7,289,137
Shares sold 1,329,488
Deferred organization costs (note 1) 115,576
Other assets 34,292
- -------------------------------------------------------------------------------------------------------------------------
Total assets 906,385,937
- -------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 756,736
Shares redeemed 760,153
Accrued expenses:
Management fees (note 4) 448,070
12b-1 distribution and service fees (notes 1 and 4) 232,770
Other 121,508
Dividends payable 2,334,363
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,653,600
- -------------------------------------------------------------------------------------------------------------------------
Net assets (note 5) $901,732,337
=========================================================================================================================
Class A Shares (note 1)
Net assets $790,062,734
Shares outstanding 29,809,495
Net asset value and redemption price per share $ 26.50
Offering price per share (net asset value per share plus maximum sales charge of 5.25% of offering price) $ 27.97
=========================================================================================================================
Class B Shares (note 1)
Net assets $ 71,909,231
Shares outstanding 2,716,821
Net asset value, offering and redemption price per share $ 26.47
=========================================================================================================================
Class C Shares (note 1)
Net assets $ 21,425,577
Shares outstanding 810,673
Net asset value, offering and redemption price per share $ 26.43
=========================================================================================================================
Class R Shares (note 1)
Net assets $ 18,334,795
Shares outstanding 691,328
Net asset value, offering and redemption price per share $ 26.52
=========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
Statement of Operations
Year Ended June 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income (note 1)
Dividends $ 13,045,258
Interest 4,486,808
- ----------------------------------------------------------------------------------------------------------
Total investment income 17,532,066
- ----------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 6,459,095
12b-1 service fees -- Class A (notes 1 and 4) 1,775,281
12b-1 distribution and service fees -- Class B (notes 1 and 4) 428,635
12b-1 distribution and service fees -- Class C (notes 1 and 4) 119,199
Shareholders' servicing agent fees and expenses 1,345,702
Custodian's fees and expenses 88,438
Trustees' fees and expenses (note 4) 86,210
Professional fees 34,636
Shareholders' reports -- printing and mailing expenses 437,303
Federal and state registration fees 145,929
Amortization of deferred organization costs (note 1) 36,000
Other expenses 43,752
- ----------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 11,000,180
Expense reimbursement (note 4) (1,252,775)
- ----------------------------------------------------------------------------------------------------------
Net expenses 9,747,405
- ----------------------------------------------------------------------------------------------------------
Net investment income 7,784,661
- ----------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 3) 110,057,991
Net change in unrealized appreciation or depreciation of investments 33,508,467
- ----------------------------------------------------------------------------------------------------------
Net gain from investments 143,566,458
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $151,351,119
==========================================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
Year Ended 8/07/96 to
6/30/98 6/30/97
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 7,784,661 $ 4,552,258
Net realized gain from investment transactions
(notes 1 and 3) 110,057,991 23,971,540
Net change in unrealized appreciation or depreciation
of investments 33,508,467 79,714,507
- --------------------------------------------------------------------------------------------------
Net increase in net assets from operations 151,351,119 108,238,305
- --------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (7,296,320) (4,326,777)
Class B (174,471) (33,641)
Class C (50,306) (11,701)
Class R (207,438) (131,681)
From accumulated net realized gains from investment transactions:
Class A (55,954,562) (96)
Class B (3,039,218) (96)
Class C (762,373) (96)
Class R (1,266,493) (57,187)
- --------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (68,751,181) (4,561,275)
- --------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 171,997,447 560,742,869
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 55,521,813 1,085,746
- --------------------------------------------------------------------------------------------------
227,519,260 561,828,615
- --------------------------------------------------------------------------------------------------
Cost of shares redeemed (54,536,779) (19,389,087)
- --------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 172,982,481 542,439,528
- --------------------------------------------------------------------------------------------------
Net increase in net assets 255,582,419 646,116,558
Net assets at the beginning of period 646,149,918 33,360
- --------------------------------------------------------------------------------------------------
Net assets at the end of period $901,732,337 $646,149,918
==================================================================================================
Balance of undistributed net investment income at end of period $ 104,584 $ 48,458
==================================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
Notes to Financial Statements
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") which was organized as a Massachusetts business
trust in 1996. The Trust (and each series within the Trust) is an open-end
diversified management investment company registered under the Investment
Company Act of 1940. 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.
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 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, 1998, 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 carryforwards.
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 one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available for purchases of over $1 million and in other limited
circumstances.
Derivative Financial Instruments
The Fund may invest in options and futures contracts, 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 fiscal year ended June 30, 1998.
11
<PAGE>
Notes to Financial Statements (continued)
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.
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.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
For the Period
Year Ended 6/30/98 8/07/96 to 6/30/97
- -----------------------------------------------------------------------------------------------------------
Shares Amount Shares* Amount
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 3,567,835 $ 89,573,723 26,506,586 $534,047,616
Class B 2,261,218 56,728,012 451,781 10,154,679
Class C 697,568 17,510,818 156,621 3,451,741
Class R 325,380 8,184,894 655,095 13,088,833
Shares issued to shareholders
due to reinvestment of distributions:
Class A 2,217,304 50,837,734 51,079 1,069,544
Class B 119,470 2,714,481 38 787
Class C 30,815 699,886 10 201
Class R 55,208 1,269,712 726 15,214
- -----------------------------------------------------------------------------------------------------------
9,274,798 227,519,260 27,821,936 561,828,615
- -----------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,640,986) (41,459,146) (892,740) (18,980,846)
Class B (108,267) (2,735,040) (7,836) (182,828)
Class C (69,070) (1,753,632) (5,688) (119,188)
Class R (340,624) (8,588,961) (4,874) (106,225)
- -----------------------------------------------------------------------------------------------------------
(2,158,947) (54,536,779) (911,138) (19,389,087)
- -----------------------------------------------------------------------------------------------------------
Net increase 7,115,851 $172,982,481 26,910,798 $542,439,528
===========================================================================================================
</TABLE>
*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.
3. Securities Transactions
Purchases and sales (including maturities) of investment securities, U.S.
government obligations and short-term investments for the fiscal year ended June
30, 1998, were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
<S> <C>
Purchases:
Investment securities $1,024,986,003
U.S. government obligations 704,324,784
Short-term investments 4,976,323,220
Sales:
Investment securities 921,033,949
U.S. government obligations 704,500,000
Short-term investments 4,976,419,482
========================================================================
</TABLE>
At June 30, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation aggregated $113,222,973 of which $127,474,765
related to appreciated securities and $14,251,792 related to depreciated
securities.
12
<PAGE>
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:
<TABLE>
<CAPTION>
Average Daily Net Asset Value Management Fee
- --------------------------------------------------------------------------------
<S> <C>
For the first $125 million .8500 of 1%
For the next $125 million .8375 of 1
For the next $250 million .8250 of 1
For the next $500 million .8125 of 1
For the next $1 billion .8000 of 1
For net assets over $2 billion .7750 of 1
================================================================================
</TABLE>
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. Effective August
1, 1998, the Adviser has agreed to waive fees and reimburse expenses through
July 31, 1999, in order to prevent total operating expenses (excluding any 12b-1
distribution or service fees and extraordinary expenses) from exceeding 1.05% 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 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 those of 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.
During the fiscal year ended June 30, 1998, John Nuveen & Co. Incorporated (the
"Distributor"), a wholly owned subsidiary of The John Nuveen Company, collected
sales charges on purchases of Class A Shares of approximately $4,488,700 of
which approximately $4,303,400 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 fiscal year ended June 30, 1998, the Distributor compensated
authorized dealers directly with approximately $2,460,900 in commission advances
at the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees on Class B Shares, and
all 12b-1 service and distribution fees on Class C Shares during the first year
following a purchase are retained by the Distributor. During the fiscal year
ended June 30, 1998, the Distributor retained approximately $536,000 of such
12b-1 fees. The remaining 12b-1 fees charged to the Fund were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments. The Distributor also collected and retained approximately $521,600
of CDSC on share redemptions during the fiscal year ended June 30, 1998.
5. Composition of Net Assets
At June 30, 1998, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
<S> <C>
Capital paid-in $715,439,066
Balance of undistributed net investment income 104,584
Accumulated net realized gain from investment transactions 72,965,714
Net unrealized appreciation of investments 113,222,973
- -----------------------------------------------------------------------------------------------
Net assets $901,732,337
===============================================================================================
</TABLE>
13
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------------------- -----------------------------
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
June 30, Value Income (a) Gain (Loss) Total Income Gain Total Value Return (b)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1998 $24.01 $.26 $4.55 $4.81 $(.25) $(2.07) $(2.32) $26.50 21.59%
1997 (c)** 17.96 .30 6.18 6.48 (.20) (.23) (.43) 24.01 36.30
Class B (8/96)
1998 24.00 .10 4.51 4.61 (.07) (2.07) (2.14) 26.47 20.70
1997 (c)** 17.97 .21 6.13 6.34 (.08) (.23) (.31) 24.00 35.37
Class C (8/96)
1998 23.98 .10 4.49 4.59 (.07) (2.07) (2.14) 26.43 20.63
1997 (c)** 17.97 .21 6.11 6.32 (.08) (.23) (.31) 23.98 35.26
Class R (8/96)
1998 24.02 .32 4.56 4.88 (.31) (2.07) (2.38) 26.52 21.91
1997 (c)** 17.96 .30 6.24 6.54 (.25) (.23) (.48) 24.02 36.65
========================================================================================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Class (Inception Date)
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Year Ended Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
June 30, Assets (000) ment ment ment (a) ment (a) Rate
- ----------------------------------------------------------------------------------------------------
Class A (8/96)
1998 $790,063 1.36% .88% 1.20% 1.04% 232%
1997 (c)** 616,209 1.28* 1.45* 1.20* 1.53* 110
Class B (8/96)
1998 71,909 2.11 .22 1.95 .38 232
1997 (c)** 10,664 2.03* .95* 1.95* 1.03* 110
Class C (8/96)
1998 21,426 2.11 .23 1.95 .39 232
1997 (c)** 3,630 2.03* .96* 1.95* 1.04* 110
Class R (8/96)
1998 18,335 1.11 1.10 .95 1.26 232
1997 (c)** 15,647 1.47* 1.04* .95* 1.56* 110
====================================================================================================
</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) After waiver of certain management fees or reimbursement of expenses by
Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(c) From commencement of class operations as noted.
15
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Growth and Income Stock Fund
We have audited the accompanying statement of net assets, including the
portfolio of investments, of Nuveen Growth and Income Stock Fund (one of the
portfolios constituting the Nuveen Investment Trust (a Massachusetts business
trust)), as of June 30, 1998, and the related statement of operations, the
statements of changes in net assets and the financial highlights for the periods
indicated thereon. 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, 1998, 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 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 audits provide 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 Nuveen
Growth and Income Stock Fund as of June 30, 1998, the results of its operations,
the changes in its net assets and its financial highlights for the periods
indicated thereon in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 17, 1998
16
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Successful investors know that a well-diversified portfolio -- one that balances
different types of investments, levels of risk and tax management -- can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers/SM/ including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, experienced, professional
security selection and surveillance and daily liquidity at that day's net asset
value for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred/R/
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
Nuveen Family
of Mutual Funds
Nuveen offers a variety
of funds designed to
help you reach your
financial goals.
Growth
Nuveen Rittenhouse
Growth Fund
Growth and
Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
17
<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
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time -- with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime.
John Nuveen & Co, Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com EAN-GI-6-98
<PAGE>
NUVEEN
MUTUAL FUNDS
June 30, 1998
Annual Report
For investors seeking
attractive after-tax returns
through tax-free income and
long-term growth of capital.
[PHOTO APPEARS HERE]
Balanced
Municipal
and
Stock Fund
<PAGE>
Highlights
As of June 30, 1998
For Class A shares
Attractive Fund Returns/1/
[BAR CHART APPEARS HERE]
<TABLE>
One Year Since Inception--8/96
-------- ---------------------
<S> <C> <C>
Class A (NAV) 14.71% 17.36%
Class A (Offer) 8.69% 14.06%
</TABLE>
With its focus on tax-free income and long-term growth, the fund provided
attractive total returns for the one-year period and since its inception.
Portfolio Application
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
Municipal Bonds 56%
Stocks 41%
Cash 3%
</TABLE>
True to its investment objectives, the fund invested in municipal bonds to
provide tax-free income and stocks for long-term growth.
Steady Dividends Despite Declining Interest Rates
Dividend History
<TABLE>
<CAPTION>
[BAR CHART APPEARS HERE]
<C> <S>
.0455 July 1997
.0455 August 1997
.0455 September 1997
.0455 October 1997
.0455 November 1997
.0455 December 1997
.0455 January 1998
.0455 February 1998
.0455 March 1998
.0455 April 1998
.0455 May 1998
.0455 June 1998
</TABLE>
Bond Buyer 40
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<C> <S>
5.69 July 1997
5.40 August 1997
5.55 September 1997
5.47 October 1997
5.40 November 1997
5.36 December 1997
5.26 January 1998
5.19 February 1998
5.24 March 1998
5.27 April 1998
5.39 May 1998
5.22 June 1998
</TABLE>
Despite the declining interest rate environment, the fund provided a steady
monthly dividend to shareholders.
/1/ Please see the Performance Overview on page five for more information.
<TABLE>
Contents
<C> <S>
1 Dear Shareholder
3 Report from Your Fund Managers
5 Performance Overview
6 Portfolio of Investments
12 Statement of Net Assets
13 Statement of Operations
13 Statement of Changes in Net Assets
14 Notes to Financial Statements
18 Financial Highlights
20 Report of Independent
Public Accountants
21 Building Better Portfolios
</TABLE>
<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.
I am pleased to report that over the past year the Nuveen Balanced Municipal and
Stock Fund continued to provide current tax-free income and long-term growth
potential to offset inflation as the fund was designed to do.
In addition, as you can see from the information on the facing page, the fund
remains well-positioned to continue providing attractive tax-free income even in
today's lower interest rate environment.
Current Results Backed by a Proven Record
The solid performance achieved by the Balanced Municipal and Stock Fund managers
inevitably leads to the question: "Can they keep it up?" Since no one can
predict the future with certainty, it's important to have confidence in your
fund managers' experience, investment approach and the results they've
demonstrated through a variety of market conditions over the years.
The Nuveen Balanced Municipal and Stock Fund is managed by a team of Premier
Advisers(SM), each an expert in their particular investment category. As
Nuveen's Premier Adviser for value investing, Institutional Capital Corporation
is a highly successful institutional money manager with more than 28 years of
experience. Over that time, they've specialized in finding undervalued midsize
and large company stocks that are poised for significant growth.
Institutional Capital's expertise is matched by the other Premier Adviser
managing the Municipal and Stock Fund, Nuveen Institutional Advisory Corp. One
of the largest and most experienced municipal bond asset managers in the
country, Nuveen draws upon the systems, market knowledge and investing skills
the firm has developed through its 100 years of day-to-day participation in this
complex market.
The result of this combination is a disciplined, research-oriented approach that
has paid off for investors, and remains the key investment strategy of the
Nuveen Balanced Municipal and Stock Fund. On the equity side, the managers start
by looking for well-established but undervalued stocks. The portfolio managers
then look for a catalyst, such as a management change, a new product, or
improved industry outlook, that may help trigger a rise in the stock's price.
Generally, the fund only purchases stocks that the managers believe have the
potential to generate 15-25% returns over an 18-month period.
For the municipal bond portion of the portfolio, Nuveen Institutional Advisory
looks for intermediate-term, investment-quality bonds whose prices, features or
prospects make them appear undervalued relative to their peers. By maintaining a
relatively constant mix of municipal bonds providing steady,
1
<PAGE>
"Today, more than ever, you can count on Nuveen for investments designed to
produce a well-balanced portfolio that meets your individual goals."
dependable tax-free income and common stocks offering growth potential, the fund
can help investors meet both of these important needs.
Nuveen's Premier Advisers
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. In addition to Institutional Capital and Nuveen
Institutional Advisory, Nuveen's Premier Advisers include Rittenhouse Financial
Services, our Premier Adviser for growth investing. Each of these managers uses
a time-tested, research-driven investment strategy to build portfolios of
quality securities.
Diversification Can Help You Build a Better Portfolio
In light of current market conditions, we believe that investors will find
diversification to be an increasingly important strategy in the months ahead. An
appropriately diversified portfolio -- one that balances different types of
investments, levels of risk and tax management strategies -- can help cushion
your portfolio against volatility and enhance your overall return potential.
Many of you have invested in the Nuveen Balanced Municipal and Stock Fund
because of its value investing orientation and the excellent track record of its
Premier Advisers. We are pleased to announce that this same disciplined approach
is now available in another Nuveen fund -- the Nuveen European Value Fund.
With portfolio management by Institutional Capital and a focus on a portfolio of
quality, undervalued European companies, this fund can provide an excellent
complement to the Balanced Municipal and Stock Fund by offering international
diversification to reduce risk and increased return potential. I encourage you
to talk with your financial adviser about how this new fund, along with the
Nuveen Rittenhouse Growth Fund and our wide array of tax-free bond funds, can
help round out your portfolio and meet your own particular investment needs.
If you would like additional information on the Nuveen European Value Fund, or
any of our other funds, contact your financial adviser for an Investor Guide,
including a prospectus containing all charges and expenses. You also may request
a prospectus from Nuveen by calling toll-free (800) 257-8787. Please read this
information carefully and discuss it with your financial adviser before you
invest.
When seeking quality investments that withstand the test of time, we hope you
will continue to think of Nuveen. Today, more than ever, you can count on Nuveen
for investments designed to produce a well-balanced portfolio that meets your
individual goals. We thank you for your continued confidence in us, and look
forward to reporting to you again soon.
Sincerely,
/s/ Timothy R. Schwertfeger
- ---------------------------
Timothy R. Schwertfeger
Chairman of the Board
August 14, 1998
2
<PAGE>
Nuveen Balanced Municipal and Stock Fund
Report from Your Fund Managers
The Nuveen Institutional Advisory and Institutional Capital investment
management teams talk about the financial markets and factors that affected fund
performance.
"The continued market strength put a premium on the quality research needed to
find undervalued securities."
Over the past year, the economy and the financial markets again defied the
experts' consensus.
The conventional wisdom was that the Asian crisis and U.S. company profit
warnings that started last fall would result in a slow first half of 1998, with
a rebound in confidence and securities prices in the second half of this year.
Our own concern was whether the Federal Reserve would have to raise short-term
interest rates as the moderating influence of Asia diminished and the U.S.
economy picked up steam.
The facts have painted a different picture. Stimulated by lower interest rates,
strong employment and a significant drop in energy prices, U.S. consumption has
remained quite strong -- especially for this late in the economic cycle. Outside
the U.S., European companies also began showing strong results. While Asia did
slump, its overall impact on the U.S. economy was less severe than feared.
With a low inflationary environment, a strong economy and a large supply of
newly issued municipal bonds, there were plenty of opportunities to find
attractive investments for the fixed-income portion of the fund throughout the
year. While the fund is constantly seeking investment-grade credits in the A to
BBB range because of their traditionally higher yields, the recent abundance of
insured bonds with competitive yields allowed us to invest in a number of AAA-
rated bonds. With interest rates falling throughout the year, purchases were
concentrated in bonds with maturities of 12-15 years to maximize yield and reap
the benefits of the market rally, which added to the fund's total return.
On the equity side, the continued market strength put a premium on the quality
research needed to find undervalued securities. Staying with our time-tested,
value-oriented strategy, we are pleased that the Class A share total return on
net asset value of the Nuveen Balanced Municipal and Stock Fund was a healthy
14.71% for the year ended June 30, 1998.
Asia Looms Large
Given the lethargy in Japan and reduced growth in China, there will be no quick
or easy resolution of Asia's woes anytime soon. Perhaps the only good news is
that the deflationary drag from the region should prevent the Fed from raising
interest rates and keep the dollar strong for some time.
The central problem in Asia is that massive amounts of capital are now invested
in assets that are providing poor returns. This means that non-Asian competitors
are now faced with weak pricing conditions as Asian companies seek cash flow to
stay solvent. Even if Asian trade with the U.S. improves, a strengthening dollar
would make it difficult for Asian companies to significantly increase their
revenues in the near-term.
While we believe these problems can be solved, it will take time.
3
<PAGE>
"We will continue to invest in companies undergoing corporate restructurings,
both in the U.S. and Europe."
Outlook for the Second Half of 1998
Our view for the remainder of the year is that:
. The U.S. economy will slow as a result of high inventories, weaker exports
and a downturn in capital goods manufacturing.
. Municipal new issue supply will remain high as issuers take advantage of
the opportunity to borrow at low rates.
. Corporate profits overall will be up modestly, and less than expected.
. The Fed will probably not raise interest rates as a result of the financial
situation in Asia, and the fragile state of other dollar-linked economies
such as Russia.
. The domestic merger and acquisition boom will continue, but the impact on
overall market prices will diminish.
. U.S. stock market averages will gain modestly through the remainder of the
year; European markets will see even larger returns.
Our Strategy
In this environment, we will continue to focus upon the municipal new issue
market, especially smaller issues that can provide attractive yields. With
municipal bond yields at levels that are more than 90% of comparable U. S.
Treasury bonds, the municipal market remains extremely attractive compared to
taxable fixed-income markets.
On the equity side, we will continue to invest in companies undergoing corporate
restructurings, both in the U.S. and Europe. This means looking for stocks of
companies that may have performed poorly in the recent past, but that have
attractive, underutilized assets or a newly focused management team. Some
portfolio holdings that highlight this strategy include Citicorp, News Corp. and
Raytheon, just to name a few.
We believe there may be more good news coming from these companies and others
like them in the fund's portfolio. We are committed to uncovering additional
opportunities in the months ahead.
4
<PAGE>
Nuveen Balanced Municipal and Stock Fund
Performance Overview
As of June 30, 1998
<TABLE>
<CAPTION>
Top Five Stock Holdings/1/
<S> <C>
News Corp. Ltd. Sponsored ADR 2.08%
- --------------------------------------------------------------------------------
NationsBank Corporation 1.62%
- --------------------------------------------------------------------------------
Hoechst AG Sponsored ADR 1.62%
- --------------------------------------------------------------------------------
American Home Products Corp. 1.60%
- --------------------------------------------------------------------------------
Philips Electronics N.V. 1.54%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Stock Diversification
[PIE CHART APPEARS HERE]
<S> <C>
Capital Spending 8%
Transportation 8%
Consumer Staples 10%
Capital Equipment/Technology 10%
Energy 6%
Basic Industries 10%
Retail 4%
Consumer Services 12%
Consumer Durables 3%
Health Care 13%
Utilities 2%
Financial 14%
</TABLE>
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
.0455 July 1997
.0455 August 1997
.0455 September 1997
.0455 October 1997
.0455 November 1997
.0455 December 1997
.0455 January 1998
.0455 February 1998
.0455 March 1998
.0455 April 1998
.0455 May 1998
.0455 June 1998
</TABLE>
<TABLE>
<CAPTION>
Fund Highlights
Share Price A B C R
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 8/96 8/96 8/96 8/96
- --------------------------------------------------------------------------------
Net Asset Value $25.46 $25.53 $25.51 $ 25.39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Net Assets ($000) $165,650
- --------------------------------------------------------------------------------
Fixed Income Average Duration 6.7 Years
- --------------------------------------------------------------------------------
Average Market Capitalization of Stocks 30.67
- --------------------------------------------------------------------------------
Average P/E of Stocks (trailing 12 months) 17.6
- --------------------------------------------------------------------------------
Number of Stocks 45
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Annualized Total Return/2/
A (On NAV) A (On Offer) B C R
<S> <C> <C> <C> <C> <C>
Year-to-Date 8.10% 2.42% 7.73% 7.69% 8.21%
- --------------------------------------------------------------------------------
One-Year 14.71% 8.69% 13.91% 13.87% 14.94%
- --------------------------------------------------------------------------------
Since Inception/2/ 17.36% 14.06% 16.53% 16.49% 17.65%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Yield
<S> <C> <C> <C> <C> <C>
Tax-Exempt Distribution Rate 2.14% 2.03% 1.41% 1.41% 2.39%
- --------------------------------------------------------------------------------
SEC 30-Day Yield 1.58% 1.50% 0.84% 0.84% 1.83%
- --------------------------------------------------------------------------------
</TABLE>
Index Comparison /3/
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Balanced Index Lehman Brothers Nuveen Balanced Nuveen Balanced
S&P 500 (40% S&P/60% LB 10) 10-Year Municipal Bond Index Municipal & Stock Fund (NAV) Municipal & Stock Fund (Offer)
<S> <C> <C> <C> <C> <C>
8/96 10,000 10,000 10,000 10,000 9,475
6/97 13,210 11,606 10,613 11,584 10,976
6/98 17,968 13,908 11,640 13,603 12,889
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
. S&P 500 $17,968
. Balanced Index (40% S&P/60% LB10) $13,908
. Lehman Brothers 10-Year Municipal Bond Index $11,604
. Nuveen Balanced Municipal & Stock Fund (NAV) $13,603
. Nuveen Balanced Municipal & Stock Fund (Offer) $12,889
</TABLE>
Past performance is not predictive of future results.
1 The companies listed above represent their respective percentages as of
6/30/98. Over time, the fund's holdings and their percentages will vary.
2 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.
5
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund
June 30, 1998
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 39.3%
Basic Industries - 3.9%
14,950 Akzo Nobel N.V. Sponsored ADR $ 1,657,581
24,250 E.I. du Pont de Nemours and Company Ltd. 1,809,656
28,899 IMC Global Inc. 870,582
24,650 Reynolds Metals Company 1,378,859
29,550 UPM-Kymmene Oyj Corporation Sponsored ADR 813,278
- --------------------------------------------------------------------------------
Capital Equipment/Technology - 4.0%
38,200 First Data Corporation 1,272,538
17,650 International Business Machines Corporation 2,026,441
21,750 NCR Corporation # 706,875
29,950 Royal Philips Electronics N.V. 2,545,750
- --------------------------------------------------------------------------------
Capital Spending - 3.2%
18,500 B.F. Goodrich Company 918,063
23,950 Case Corporation 1,155,587
12,100 Northrop Grumman Corporation 1,247,813
34,837 Raytheon Company - Class A 2,007,482
- --------------------------------------------------------------------------------
Consumer Durables - 1.3%
31,000 General Motors Corporation 2,071,188
- --------------------------------------------------------------------------------
Consumer Services - 3.0%
43,350 The Dun & Bradstreet Corporation 1,566,019
67,050 Host Marriot Corp. # 1,194,328
5,000 Starwood Hotels & Resorts 241,563
41,400 U.S.A. Waste Services Inc. # 2,044,125
- --------------------------------------------------------------------------------
Consumer Staples - 3.9%
32,800 Fort James Corporation 1,459,600
29,075 Hasbro, Inc. 1,143,011
55,100 Philip Morris Companies Inc. 2,169,563
41,700 Seagram Company Ltd. 1,707,094
- --------------------------------------------------------------------------------
Energy - 2.6%
26,390 Elf Aquitaine SA Sponsored ADR 1,873,690
19,450 Schlumberger Limited 1,328,678
31,200 Unocal Corporation 1,115,400
- --------------------------------------------------------------------------------
Financials - 6.0%
13,600 Bankers Trust Corporation 1,578,450
23,500 CIGNA Corporation 1,621,500
16,400 Citicorp 2,447,700
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
Financials (continued)
32,150 Household International, Inc. $ 1,599,463
34,950 NationsBank Corporation 2,673,675
- --------------------------------------------------------------------------------
Health Care - 5.6%
51,100 American Home Products Corporation 2,644,425
27,800 Baxter International Inc. 1,495,988
53,900 Hoechst AG Sponsored ADR 2,674,788
23,800 Humana Inc. # 742,263
11,900 St. Jude Medical, Inc. # 438,069
40,000 Tenet Healthcare Corporation # 1,250,000
- --------------------------------------------------------------------------------
Retail - 1.5%
7,600 Circuit City Stores 356,250
14,000 Consolidated Stores Corporation # 507,500
30,600 Federated Department Stores, Inc. # 1,646,663
- --------------------------------------------------------------------------------
Transportation - 3.4%
16,600 AMR Corporation # 1,381,950
22,150 Burlington Northern Santa Fe Corporation 2,174,853
71,800 Canadian Pacific Limited 2,037,325
- --------------------------------------------------------------------------------
Utilities - 0.9%
11,650 AT&T Corp. 665,506
17,500 Bell Atlantic Corporation 798,438
- --------------------------------------------------------------------------------
Total Common Stocks - (cost $58,453,172) 65,059,570
- --------------------------------------------------------------------------------
PREFERRED STOCKS - 2.1%
121,700 News Corporation Limited Sponsored ADR 3,438,025
- --------------------------------------------------------------------------------
Total Preferred Stocks - (cost $2,305,577) 3,438,025
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS - 55.5%
Alabama - 0.3%
$ 455,000 Alabama Water Pollution
Control Authority,
Revolving Fund Loan Bond,
Series 1994, 6.625%, 8/15/08 8/05 at 100 Aaa $ 510,847
- --------------------------------------------------------------------------------
California - 3.7%
2,500,000 Escondido Multifamily Housing
Authority, Revenue Refunding
Bonds (Morning View Terrace
Apartments), FNMA, Series
1997B, 5.400%, 1/01/27
(Mandatory put 7/01/07) 7/05 at 101 1/2 AAA 2,619,725
1,525,000 Northern California Power
Agency, Public Power Revenue
Refunding Bonds, Geothermal
Project No. 3, Series A,
5.650%, 7/01/07 No Opt. Call A- 1,621,151
250,000 County of Orange, California,
Refunding Recovery Bonds,
1995 Series A, 6.000%,
6/01/10 No Opt. Call Aaa 281,950
1,495,000 Palmdale Civic Authority,
1997 Revenue Bonds, Series A
(Civic Center Refinancing),
5.375%, 7/01/12 7/07 at 102 Aaa 1,563,262
- --------------------------------------------------------------------------------
Colorado - 1.3%
2,000,000 City and County of Denver,
Colorado, Airport System
Revenue Bonds, Series 1996B,
5.625%, 11/15/08
(Alternative Minimum Tax) 11/06 at 102 Aaa 2,159,800
- --------------------------------------------------------------------------------
Connecticut - 1.3%
1,075,000 Connecticut Housing Finance
Authority, Housing Mortgage
Revenue Bonds, Series 1996B,
Subordinated Lien, 5.750%,
11/15/08 (Alternative
Minimum Tax) 5/06 at 102 AA 1,133,308
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (continued)
Nuveen Balanced Municipal and Stock Fund
June 30, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Connecticut (continued)
$1,000,000 State of Connecticut Health and Educational No Opt. Call BBB $1,026,100
Facilities Authority, Hospital for Special Care
Issue, Series B, 5.125%, 7/01/07
- -----------------------------------------------------------------------------------------------------------
District of Columbia - 2.7%
500,000 District of Columbia General Obligation Refunding No Opt. Call Aaa 577,185
Bonds, Series A-1, 6.500%, 6/01/10
3,500,000 District of Columbia General Obligation Bonds, No Opt. Call Aaa 3,888,220
Series 1998B, 6.000%, 6/01/11
- -----------------------------------------------------------------------------------------------------------
Georgia - 1.8%
2,000,000 Fulton County Development Authority, Special 5/08 at 101 BBB- 1,999,040
Facilities Revenue, Series 1999, Delta Airlines,
Inc. Project, 5.300%, 5/01/13 (Alternative
Minimum Tax)
895,000 Georgia Housing and Finance Authority, Single 6/06 at 102 AA+ 929,225
Family Mortgage Bonds, 1996 Series A, 5.875%,
12/01/19 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------
Idaho - 1.9%
1,500,000 Idaho Housing and Finance Association, Single 1/07 at 102 A1 1,586,430
Family Mortgage Bonds, 1997 Series D,
5.950%, 7/01/09 (Alternative Minimum Tax)
1,535,000 Idaho Housing and Finance Association, Single 7/07 at 101 1/2 A1 1,593,484
Family Mortgage Bonds, 1997 Series F, 5.700%,
7/01/10 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------
Illinois - 5.0%
2,160,000 Illinois Health Facilities Authority, Series 7/04 at 102 N/R*** 2,523,053
1985 (St. Elizabeth's Hospital of Chicago,
Inc.), 7.250%, 7/01/15 (Pre-refunded to
7/01/04)
1,500,000 Illinois Health Facilities Authority, Series 11/03 at 102 A1 1,605,690
1993 (OSF Healthcare System),
6.000%, 11/15/10
250,000 Illinois Health Facilities Authority, FHA Insured 2/06 at 102 Aaa 265,428
Mortgage Revenue Bonds, Series 1996 (Sinai
Health System), 5.500%, 2/15/09
1,200,000 Illinois Health Facilities Authority, Series 10/07 at 102 Aaa 1,285,080
1997A (Highland Park Hospital Project),
5.700%, 10/01/10
Community High School District Number
219, Cook County, Illinois (Niles Township),
General Obligation Limited Tax School Bonds,
Series 1998:
1,130,000 0.000%, 12/01/09 No Opt. Call Aaa 660,349
2,360,000 0.000%, 12/01/10 No Opt. Call Aaa 1,306,236
700,000 Kankakee School District No. 111, Kankakee 1/06 at 100 Aaa 725,879
County, Illinois, General Obligation School
Bonds, Series 1996, 5.500%, 1/01/12
- -----------------------------------------------------------------------------------------------------------
Kentucky - 1.5%
2,500,000 County of Boone, Kentucky, Mortgage Revenue Bonds, 12/98 at 100 N/R 2,501,025
Series 1998A (Normandy Green Apartments
Project), 5.200%, 6/20/38 (Alternative Minimum
Tax) (Mandatory put 12/20/99) (WI)
- -----------------------------------------------------------------------------------------------------------
Louisiana - 1.6%
Sales Tax School Bonds, Refunding Series 1998,
Jefferson Parish School Board, State of
Louisiana:
1,045,000 0.000%, 3/01/08 No Opt. Call AAA 667,483
2,175,000 0.000%, 9/01/08 No Opt. Call AAA 1,357,418
1,000,000 0.000%, 3/01/10 No Opt. Call AAA 573,620
- -----------------------------------------------------------------------------------------------------------
Maine - 0.2%
255,000 Town of Winslow, Maine, General Obligation Tax 3/07 at 102 Aaa 278,236
Increment Financing Bonds (Crowe Rope Industries
Project), 1997 Series A, 6.000%, 3/01/11
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------
Massachusetts - 1.4%
2,000,000 Massachusetts Turnpike Authority, Western 1/99 at 100 Aaa 2,039,940
Turnpike Revenue Bonds, Series 1997A, 5.550%,
1/01/17
250,000 Massachusetts Health and Educational Facilities 7/06 at 102 A-*** 274,985
Authority, Melrose-Wakefield Healthcare Corp.
Issue, Series C, 5.700%, 7/01/08 (Pre-refunded
to 7/01/06)
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Michigan - 2.5%
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 $1,045,580
1,010,000 5.500%, 5/01/12 5/07 at 100 Aaa 1,058,500
2,180,000 Taylor Tax Increment Finance Authority, Tax Increment Refunding 5/08 at 100 Aaa 2,102,545
Bonds, Series 1998, 4.500%, 5/01/11
- ----------------------------------------------------------------------------------------------------------------------------
Mississippi - 1.1%
Jones County, Mississippi, Hospital Revenue Refunding Bonds
(South Central Regional Medical Center Project), Series 1997:
1,285,000 5.350%, 12/01/10 12/07 at 100 BBB+ 1,307,680
500,000 5.400%, 12/01/11 12/07 at 100 BBB+ 508,355
- ----------------------------------------------------------------------------------------------------------------------------
Nebraska - 3.6%
6,000,000 Energy America Gas Supply Revenue Bonds, Series 1998A, No Opt. Call N/R 5,981,760
Metropolitan Utilities District Project, 5.700%, 7/01/08
- ----------------------------------------------------------------------------------------------------------------------------
Nevada - 1.6%
2,250,000 Nevada Housing Division, Single Family Mortgage Bonds, 1997 4/07 at 102 Aa3 2,338,335
Series A-1 Mezzanine Bonds, 6000%, 4/01/15 (Alternative Minimum
Tax)
250,000 Airport Authority of Washoe County, Reno, Nevada, Airport Revenue 7/03 at 102 Aaa 269,950
Refunding Bonds, Series 1993B, 5.875%, 7/01/11
- ----------------------------------------------------------------------------------------------------------------------------
New Hampshire - 2.3%
500,000 New Hampshire Higher Educational and Health Facilities Authority, 1/07 at 102 BBB- 535,265
Series 1997 (New Hampshire College), 6.200%, 1/01/12
3,000,000 State of New Hampshire, Turnpike System Revenue Bonds, 1992 4/02 at 102 Aaa 3,221,580
Series, 6.000%, 4/01/13
- ----------------------------------------------------------------------------------------------------------------------------
New York - 9.6%
Dormitory Authority of the State of New York, Revenue Bonds,
City University Issue, Series U:
160,000 6.375%, 7/01/08 (Pre-refunded to 7/01/02) 7/02 at 102 Baa1*** 175,939
115,000 6.375%, 7/01/08 7/02 at 102 Baa1 124,787
1,430,000 Empire State Development Corporation, New York State Urban No Opt. Call Baa1 1,609,565
Development Corporation (Youth Facilities), 6.500%, 4/01/07
2,000,000 New York State Thruway Authority, Local Highway and Bridge 4/06 at 102 Baa1 2,131,340
Service Contract Bonds, Series 1996, 5.625%, 4/01/07
1,700,000 New York State Urban Development Corporation (Cornell Center for 1/03 at 102 Baa1 1,819,187
Theory and Simulation in Science and Engineering Grant),
Series 1993, 5.900%, 1/01/07
285,000 New York State Urban Development Corporation, State Facilities No Opt. Call Baa1 314,178
Revenue Bonds, 1995 Refunding Series, 6.250%, 4/01/06
2,000,000 Certificates of Participation, The State of New York, The City No Opt. Call Baa1 2,180,840
University of New York (John Jay College of Criminal Justice
Project Refunding), 6.000%, 8/15/06
Dutchess County Water and Wastewater Authority, Service Agreement
Revenue Bonds, 1998 Series 1:
420,000 4.850%, 6/01/09 (DD) 6/08 at 101 A 419,702
925,000 4.950%, 6/01/10 (DD) 6/08 at 101 A 925,296
860,000 5.050%, 6/01/11 (DD) 6/08 at 101 A 862,107
500,000 Metropolitan Transportation Authority, Transit Facilities Service No Opt. Call Baa1 538,180
Contract Bonds, Series O, 5.750%, 7/01/07
250,000 The City of New York, General Obligation Bonds, Fiscal 1997, 11/06 at 101 1/2 A3 269,270
Series D, Tax Exempt Bonds, 5.875%, 11/01/11
500,000 The City of New York, General Obligation Bonds, Fiscal 1997, 4/07 at 101 A3 546,065
Series I, 6.000%, 4/15/09
4,000,000 The City of New York, General Obligation Bonds, Fiscal 1998, 8/07 at 101 A3 4,207,400
Series D, 5.500%, 8/01/10
- ----------------------------------------------------------------------------------------------------------------------------
North Carolina - 1.7%
2,045,000 North Carolina Municipal Power Agency, Number 1, Catawba Electric No Opt. Call Aaa 2,815,495
Revenue Bonds, Series 1980, 10.500%, 1/01/10
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments (continued)
Nuveen Balanced Municipal and Stock Fund
June 30, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio - 2.5%
$ 2,235,000 Ohio Building Authority,State Facilities, Series 1982-A (Toledo 4/03 at 100 Aaa $ 2,668,411
Government Office Building), 10.125%, 10/01/06 (Pre-refunded to
4/01/03)
1,500,000 Lorain County Health Care Facilities, Revenue Refunding Bonds, 2/08 at 101 BBB 1,514,400
Kendal at Oberlin, Series 1998A, 5.375%, 2/01/12
- -------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.7%
1,000,000 Oklahoma Industries Authority, Health System Revenue Refunding No Opt. Call Aaa 1,105,270
Bonds (Obligated Group consisting of INTEGRIS Baptist Medical
Center, Inc., INTEGRIS South Oklahoma City Hospital Corporation
and INTEGRIS Rural Health, Inc.), Series 1995D, 6.000%, 8/15/07
- -------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 0.9%
1,435,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 1,485,268
Revenue Bonds, Series 1996-50A, 5.350%, 10/01/08
- -------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 1.2%
1,760,000 City of Providence, Rhode Island, General Obligation Bonds, 1997 7/07 at 101 Aaa 1,940,541
Series A, 6.000%, 7/15/09
- -------------------------------------------------------------------------------------------------------------------------------
Tennessee - 1.7%
2,700,000 Cookeville Industrial Development Board, Revenue Refunding 10/03 at 102 A 2,839,293
Bonds, Series 1993 (Cookeville General Hospital Project),
5.750%, 10/01/10
- -------------------------------------------------------------------------------------------------------------------------------
Texas - 1.1%
225,000 Texas Department of Housing and Community Affairs, Single Family 9/06 at 102 Aaa 237,296
Mortgage Revenue Bonds, 1996 Series E, 5.750%, 3/01/10
195,000 City of Austin, Texas, Water, Sewer and Electric Refunding No Opt. Call A2 227,362
Revenue Bonds, Series 1982, 14.000%, 11/15/01
250,000 City of San Antonio, Texas, Airport System Improvement Revenue 7/06 at 101 Aaa 268,083
Bonds, Series 1996, 5.700%, 7/01/09 (Alternative Minimum Tax)
1,000,000 Tyler Health Facilities Development Corporation, Hospital 7/02 at 100 Baa2 1,013,410
Revenue Bonds (Mother Frances Hospital Regional Health Care
Center Project), Series 1997 A, 5.500%, 7/01/09
- -------------------------------------------------------------------------------------------------------------------------------
Utah - 0.4%
200,000 Board of Regents of the State of Utah, Student Loan Revenue 11/05 at 102 Aaa 217,762
Bonds, 1995 Series N, 6.000%, 5/01/08 (Alternative Minimum Tax)
500,000 Tooele County, Hazardous Waste Disposal Revenue Bonds (Laidlaw 8/05 at 102 BBB+ 552,150
Inc/USPCI Clive PJ), Series 1995, 6.750%, 8/01/10 (Alternative
Minimum Tax)
- -------------------------------------------------------------------------------------------------------------------------------
Washington - 1.9%
170,000 Washington Public Power Supply System, Nuclear Project No. 2, No Opt. Call Aa1 195,147
Revenue Bonds, Series 1981A, 14.375%, 7/01/01
800,000 Washington Public Power Supply System, Project No. 3, Refunding 7/06 at 102 Aaa 862,663
Revenue Bonds, Series 1996-A, 5.700%, 7/01/09
800,000 Washington State Housing Finance Commission, Single-Family 1/04 at 102 AAA 838,710
Mortgage Revenue Bonds (Mortgage Backed Securities Program),
Series 1995A, 6.650%, 7/01/16 (Alternative Minimum Tax)
1,060,000 Tahoma School District No. 409, King County, Washington, No Opt. Call Aaa 1,199,197
Unlimited Tax General Obligation Improvement and Refunding
Bonds,1997, 6.000%, 12/01/09
- -------------------------------------------------------------------------------------------------------------------------------
89,750,000 Total Municipal Investments - (cost $88,789,068) 92,028,013
==============-----------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEMPORARY INVESTMENTS IN SHORT-TERM MUNICIPAL SECURITIES - 2.8%
$4,700,000 Guadalupe-Blanco River Authority (Texas), Pollution Control VMIG-1 $ 4,700,000
Revenue Refunding Bonds (Central Power and Light Company Project),
Series 1995, Variable Rate Demand Bonds, 3.800%, 11/01/15+
============------------------------------------------------------------------------------------------------------------------------
Total Temporary Investments in Short-Term Municipal Securities
(Cost $4,700,000) 4,700,000
------------------------------------------------------------------------------------------------------------------
Total Investments - (cost $154,247,817) - 99.7% 165,225,608
------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.3% 424,647
------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $165,650,255
==================================================================================================================
</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.
*** Securities are backed by an escrow or trust containing
sufficient U.S. Government or U.S. Government agency
securities which ensures the timely payment of principal and
interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
# Non-income producing.
(DD) Security purchased on a delayed delivery basis (note 1).
(WI) Security purchased on a when-issued basis (note 1).
+ 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.
See accompanying notes to financial statements.
11
<PAGE>
Statement of Net Assets
June 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Assets
<S> <C>
Investment securities, at market value (cost $154,247,817) (note 1) $165,225,608
Cash 1,450,112
Receivables:
Dividends 134,738
Interest 1,483,398
Investments sold 1,004,928
Shares sold 1,654,847
Deferred organization costs (note 1) 117,906
Other assets 3,903
- --------------------------------------------------------------------------------
Total assets 171,075,440
- --------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 4,850,090
Shares redeemed 215,637
Accrued expenses:
Management fees (note 5) 66,150
12b-1 distribution and service fees (notes 1 and 5) 59,676
Other 84,904
Dividends payable 148,728
- --------------------------------------------------------------------------------
Total liabilities 5,425,185
- --------------------------------------------------------------------------------
Net assets (note 6) $165,650,255
================================================================================
Class A Shares (note 1)
Net assets $117,005,382
Shares outstanding 4,595,899
Net asset value and redemption price per share $ 25.46
Offering price per share (net asset value per share plus maximum
sales charge of 5.25% of offering price) $ 26.87
================================================================================
Class B Shares (note 1)
Net assets $ 32,383,611
Shares outstanding 1,268,549
Net asset value, offering and redemption price per share $ 25.53
================================================================================
Class C Shares (note 1)
Net assets $ 14,908,495
Shares outstanding 584,415
Net asset value, offering and redemption price per share $ 25.51
================================================================================
Class R Shares (note 1)
Net assets $ 1,352,767
Shares outstanding 53,270
Net asset value, offering and redemption price per share $ 25.39
================================================================================
</TABLE>
12
See accompanying notes to financial statements
<PAGE>
Statement of Operations
Year Ended June 30, 1998
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income (note 1)
Dividends $ 1,030,764
Interest 3,793,174
- ---------------------------------------------------------------------------------------------------------------------
Total investment income 4,823,938
- ---------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 5) 943,274
12b-1 service fees -- Class A (notes 1 and 5) 245,421
12b-1 distribution and service fees -- Class B (notes 1 and 5) 154,547
12b-1 distribution and service fees -- Class C (notes 1 and 5) 71,825
Shareholders' servicing agent fees and expenses 120,870
Custodian's fees and expenses 84,421
Trustees' fees and expenses (note 5) 13,330
Professional fees 22,033
Shareholders' reports -- printing and mailing expenses 85,865
Federal and state registration fees 83,242
Amortization of deferred organization costs (note 1) 36,000
Other expenses 4,838
- ---------------------------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 1,865,666
Expense reimbursement (note 5) (323,541)
- ---------------------------------------------------------------------------------------------------------------------
Net expenses 1,542,125
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 3,281,813
- ---------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 6,299,554
Net change in unrealized appreciation or depreciation
of investments 7,014,341
- ---------------------------------------------------------------------------------------------------------------------
Net gain from investments 13,313,895
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 16,595,708
=====================================================================================================================
</TABLE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Period
Year Ended 8/07/96 to
6/30/98 6/30/97
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 3,281,813 $ 550,380
Net realized gain from investment transactions (notes 1 and 4) 6,299,554 457,166
Net change in unrealized appreciation or depreciation of investments 7,014,341 3,963,451
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 16,595,708 4,970,997
- ---------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (2,448,814) (291,349)
Class B (222,804) (714)
Class C (104,232) (485)
Class R (172,195) (141,518)
From accumulated net realized gains from investment transactions:
Class A (1,444,498) (22)
Class B (193,480) (22)
Class C (90,253) (22)
Class R (120,260) (15,983)
- ---------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,796,536) (450,115)
- ---------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 75,343,559 86,716,680
Net proceeds from shares issued to shareholders due to reinvestment of distributions 3,428,628 105,920
- ---------------------------------------------------------------------------------------------------------------------
78,772,187 86,822,600
- ---------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (15,446,129) (851,817)
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 63,326,058 85,970,783
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets 75,125,230 90,491,665
Net assets at the beginning of year 90,525,025 33,360
- ---------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $165,650,255 $90,525,025
=====================================================================================================================
Balance of undistributed net investment income at end of year $ 450,082 $ 116,314
=====================================================================================================================
</TABLE>
13 See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements
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") which was organized as a Massachusetts
business trust in 1996. The Trust (and each series within the Trust) is an open-
end diversified management investment company registered under the Investment
Company Act of 1940. 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.
The Fund invests in a 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, 1998, the Fund had outstanding when-issued and delayed delivery purchase
commitments of $4,722,209.
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 carryforwards.
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 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
Shareholders of the Fund. All monthly tax-exempt income dividends paid during
the fiscal year ended June 30,1998, have been designated Exempt Interest
Dividends. Net realized capital gains and ordinary income distributions are
subject to federal taxation.
14
<PAGE>
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 contingent deferred sales charge ("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 one year
of purchase. Class R Shares are not subject to any sales charge or 12b-1
distribution or service fees. Class R Shares are available 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 such financial instruments, and may do so in the future, it did not
make any such investments during the fiscal year ended June 30, 1998.
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 were as follows:
<TABLE>
<CAPTION>
Year Ended For the Period
6/30/98 8/07/96 to 6/30/97
----------------------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,308,803 $ 31,922,378 3,490,947 $77,077,576
Class B 1,193,459 29,265,901 89,676 2,064,529
Class C 524,249 12,864,555 67,179 1,548,508
Class R 53,309 1,290,725 300,930 6,026,067
Shares issued to shareholders
due to reinvestment
of distributions:
Class A 125,058 3,001,186 4,721 105,890
Class B 10,810 261,191 -- --
Class C 5,838 140,308 -- --
Class R 1,074 25,943 1 30
- ----------------------------------------------------------------------------------------------------
3,222,600 78,772,187 3,953,454 86,822,600
- ----------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (297,703) (7,230,838) (36,344) (818,648)
Class B (24,476) (597,282) (1,337) (30,923)
Class C (13,171) (326,708) (97) (2,246)
Class R (302,461) (7,291,301) -- --
- ----------------------------------------------------------------------------------------------------
(637,811) (15,446,129) (37,778) (851,817)
- ----------------------------------------------------------------------------------------------------
Net increase 2,584,789 $ 63,326,058 3,915,676 $85,970,783
====================================================================================================
</TABLE>
15
<PAGE>
Notes to Financial Statements (continued)
3. Distributions to Shareholders
The Fund declared a dividend distribution from its tax-exempt net investment
income which was paid on August 3, 1998, to shareholders of record on July 9,
1998, as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Dividend per share:
Class A $.0435
Class B .0280
Class C .0280
Class R .0485
===============================================================================
</TABLE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in common and
preferred stocks, municipal bonds and temporary investments for the fiscal year
ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Purchases:
Common and preferred stocks $90,545,656
Municipal bonds 77,914,039
Temporary investments 22,700,000
Sales:
Common and preferred stocks 64,982,344
Municipal bonds 43,676,481
Temporary investments 22,600,000
===============================================================================
</TABLE>
At June 30, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation aggregated $10,977,791 of which $12,388,795 related
to appreciated securities and $1,411,004 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:
<TABLE>
<CAPTION>
Average Daily Net Asset Value Management Fee
- -------------------------------------------------------------------------------
<S> <C>
For the first $125 million .7500 of 1%
For the next $125 million .7375 of 1
For the next $250 million .7250 of 1
For the next $500 million .7125 of 1
For the next $1 billion .7000 of 1
For net assets over $2 billion .6750 of 1
===============================================================================
</TABLE>
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. Effective August
1, 1998, the Adviser has agreed to waive fees and reimburse expenses through
July 31, 1999, 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.
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 management fee paid to the Adviser. The Fund pays no compensation
directly to those of its Trustees who are affiliated with the Adviser or to its
officers, all of whom receive remuneration for their services to the Fund from
the Adviser.
16
<PAGE>
During the fiscal year ended June 30, 1998, John Nuveen & Co. Incorporated (the
"Distributor"), a wholly owned subsidiary of The John Nuveen Company, collected
sales charges on purchases of Class A Shares of approximately $1,745,700 of
which approximately $1,648,800 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 fiscal year ended June 30, 1998, the Distributor compensated
authorized dealers directly with approximately $1,282,200 in commission advances
at the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees on Class B Shares, and
all 12b-1 service and distribution fees on Class C Shares during the first year
following a purchase are retained by the Distributor. During the fiscal year
ended June 30, 1998, the Distributor retained approximately $225,700 in such
12b-1 fees. The remaining 12b-1 fees charged to the Fund were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments. The Distributor also collected and retained approximately $66,000
of CDSC on share redemptions during the fiscal year ended June 30, 1998.
6. Composition of Net Assets
At June 30, 1998, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C>
Capital paid-in $ 149,330,199
Balance of undistributed net investment income 450,082
Accumulated net realized gain from investment transactions 4,892,183
Net unrealized appreciation of investments 10,977,791
- ---------------------------------------------------------------------------
Net assets $ 165,650,255
===========================================================================
</TABLE>
7. Investment Composition
The Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At June 30, 1998, the revenue sources by municipal
purpose for these investments, expressed as a percent of total municipal
investments, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C>
Revenue Bonds:
Housing Facilities 17%
Health Care Facilities 13
Lease Rental Facilities 5
Transportation 11
Utilities 9
Educational Facilities 3
Water & Sewer 3
Other 9
General Obligation Bonds 21
Escrowed Bonds 9
- ---------------------------------------------------------------------------
100%
===========================================================================
</TABLE>
44% of the long-term and intermediate-term municipal 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 of other institutions.
For additional information regarding each investment security, refer to the
Portfolio of Investments of the Fund.
17
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- ----------------------------
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
June 30, Value Income (a) Gain (Loss) Total Income Gain Total Value Return (b)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1998 $23.11 $.67 $2.66 $3.33 $(.61) $(.37) $ (.98) $25.46 14.71%
1997 (c) 20.00 .56 3.02 3.58 (.42) (.05) (.47) 23.11 18.05
Class B (8/96)
1998 23.11 .49 2.67 3.16 (.37) (.37) (.74) 25.53 13.91
1997 (c) 20.00 .40 3.04 3.44 (.28) (.05) (.33) 23.11 17.32
Class C (8/96)
1998 23.10 .49 2.66 3.15 (.37) (.37) (.74) 25.51 13.87
1997 (c) 20.00 .40 3.03 3.43 (.28) (.05) (.33) 23.10 17.27
Class R (8/96)
1998 23.11 .72 2.66 3.38 (.73) (.37) (1.10) 25.39 14.94
1997 (c) 20.00 .61 3.03 3.64 (.48) (.05) (.53) 23.11 18.38
=============================================================================================================
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment (a) ment (a) Rate
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$117,005 1.36% 2.47% 1.10% 2.73% 87%
79,952 1.58* 2.31* 1.10* 2.79* 32
32,384 2.10 1.71 1.85 1.96 87
2,051 2.22* 1.62* 1.85* 1.99* 32
14,908 2.11 1.71 1.85 1.97 87
1,559 2.29* 1.53* 1.85* 1.97* 32
1,353 1.11 2.73 .85 2.99 87
6,963 2.05* 1.96* .85* 3.16* 32
=================================================================================
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses by
Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(c) From commencement of class operations as noted.
19
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Balanced Municipal and Stock Fund:
We have audited the accompanying statement of net assets, including the
portfolio of investments, of Nuveen Balanced Municipal and Stock Fund (one of
the portfolios constituting the Nuveen Investment Trust (a Massachusetts
business trust)), as of June 30, 1998, and the related statement of operations,
the statements of changes in net assets and the financial highlights for the
periods indicated thereon. 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, 1998, 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 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 audits provide 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 Nuveen
Balanced Municipal and Stock Fund as of June 30, 1998, and the results of its
operations, the changes in its net assets and its financial highlights for the
periods indicated thereon in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 17, 1998
20
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Successful investors know that a well-diversified portfolio -- one that balances
different types of investments, levels of risk and tax management -- can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers(SM) including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, experienced, professional
security selection and surveillance and daily liquidity at that day's net asset
value for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
21
<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
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time -- with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime./TM/
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
NUVEEN
Mutual Funds
June 30, 1998
Annual Report
For investors seeking
long-term growth potential
with a measure of
downside protection.
[PHOTO APPEARS HERE]
Balanced
Stock and
Bond Fund
<PAGE>
Highlights
As of June 30, 1998
For Class A shares
Attractive Fund Returns/1/
[BAR CHART APPEARS HERE]
Class A (NAV) Class A (Offer)
One-Year 16.71% 10.58%
Since Inception-8/96 20.52% 17.14%
With its focus on long-term growth and a measure of downside
protection, the fund provided attractive total returns for
the one-year period and since its inception.
Attractive Long-Term Performance/2/
[BAR CHART APPEARS HERE]
Class A (NAV) Class A (Offer)
One-Year 16.68% 10.84%
Five-Year 15.12% 13.88%
Ten-Year 14.51% 13.89%
The fund manager boasts an excellent track record of
attractive long-term performance.
Portfolio Allocation
[PIE CHART APPEARS HERE]
U.S. Treasury Notes 40%
Stocks 58%
Cash 2%
True to its investment objectives,
the fund invested in stocks for
long-term growth and U.S. Treasury
notes for a measure of downside
protection.
Contents
1 Dear Shareholder
3 Report from Your Fund's Adviser
4 Performance Overview
5 Report of Independent Public Accountants
6 Portfolio of Investments
8 Statement of Net Assets
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Notes to Financial Statements
14 Financial Highlights
16 Building Better Portfolios
17 Fund Information
1 Please see the Performance Overview on page four for more information.
2 This chart reflects the performance of the Institutional Capital Balanced
Composite, which includes all assets (approximately $738 million as of
6/30/98) that have substantially the same investment objective and policies as
the Nuveen Balanced Stock and Bond Fund. The Composite's accounts may
experience different investment inflows and outflows than the fund and are not
subject to all of the restrictions of the Investment Company Act of 1940 and
the Internal Revenue Code that apply to the fund, which could adversely affect
fund performance. Investment returns reflect Composite gross-of-fee returns,
adjusted for the fund's Class A annual net operating expenses of 1.20%, but
not the up-front sales charge. Class B, C, or R investment results would
differ due to differing sales charges and operating expenses. This chart does
not represent actual fund past performance or predict future fund performance.
<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.
I am pleased to report that over the past year the Nuveen Balanced Stock and
Bond Fund continued to provide strong returns and attractive growth potential
with a measure of downside protection - as the fund was designed to do.
In addition, as you can see from the information on the facing page, the fund
remains well-positioned to take advantage of future market opportunities while
employing an investment strategy that historically has performed well and has
moderated the impact of severe market downturns.
Current Results Backed by a
Proven Record
The solid performance achieved by the Nuveen Balanced Stock and Bond Fund
managers inevitably leads to the question: "Can they keep it up?" Since no one
can predict the future with certainty, it's important to have confidence in your
fund managers' experience, investment approach and the results they've
demonstrated through a variety of market conditions over the years.
As Nuveen's Premier Adviser/SM/ for value investing, Institutional Capital
Corporation is a highly successful institutional money manager with more than 28
years of experience. For their balanced accounts, they've specialized in
combining undervalued midsize and large company stocks that are poised for
significant growth with Treasury securities. This strategy allows investors to
participate in the growth potential of the stock market while providing
stability in periods of uncertainty.
This disciplined, research-oriented approach has paid off for investors, and
remains the key investment strategy of the Nuveen Balanced Stock and Bond Fund.
On the equity side, the managers start by looking for well-established but
undervalued stocks. Then they look for a catalyst, such as a management change,
new product, or improved industry outlook, that may help trigger a rise in each
stock's price. Generally, the fund only purchases stocks that the managers
believe have the potential to generate 15-25% returns over an 18-month period.
These stocks are then combined with intermediate Treasury securities to provide
diversification and more consistent performance.
Nuveen's Premier Advisers
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
1
<PAGE>
"Today, more than ever, you can count on Nuveen for investments designed to
produce a well-balanced portfolio that meets your individual goals."
specific areas of expertise. In addition to Institutional Capital, Nuveen
Premier Advisers now include Rittenhouse Financial Services, our specialist for
growth investing, and Nuveen Advisory Corp., our expert for fixed-income
investing. Each of these managers uses a time-tested, research-driven investment
strategy to build portfolios of quality securities.
Diversification Can Help You
Build a Better Portfolio
In light of current market conditions, we believe that investors will find
diversification to be an increasingly important strategy in the months ahead. An
appropriately diversified portfolio - one that balances different types of
investments, levels of risk and tax management strategies - can help cushion
your portfolio against volatility and enhance your overall return potential.
Many of you have invested in the Nuveen Balanced Stock and Bond Fund because of
its value investing orientation and the excellent track record of Institutional
Capital. We are pleased to announce that this same disciplined approach is now
available in another Nuveen fund - the Nuveen European Value Fund.
With portfolio management by Institutional Capital and a focus on a portfolio of
quality, undervalued European companies, this fund can provide an excellent
complement to the Balanced Stock and Bond Fund by offering international
diversification to reduce risk as well as increased return potential. I
encourage you to talk with your financial adviser about how this new fund, along
with the Nuveen Rittenhouse Growth Fund and our wide array of tax-free bond
funds, can help round out your portfolio and meet your own particular investment
needs.
If you would like additional information on the Nuveen European Value Fund, or
any of our other funds, contact your financial adviser for an Investor Guide,
including a prospectus containing all charges and expenses.
You also may request a prospectus from Nuveen by calling toll-free (800) 257-
8787. Please read this information carefully and discuss it with your financial
adviser before you invest.
When seeking quality investments that withstand the test of time, we hope you
will continue to think of Nuveen. Today, more than ever, you can count on Nuveen
for investments designed to produce a well-balanced portfolio that meets your
individual goals. We thank you for your continued confidence in us, and look
forward to reporting to you again soon.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 14, 1998
2
<PAGE>
Nuveen Balanced Stock and Bond Fund
Report from Your Fund's Adviser
The Institutional Capital investment management team talks about the financial
markets and factors that affected fund performance.
"In this environment, we will continue to invest in companies undergoing
corporate restructurings, both in the U.S. and Europe."
Over the past year, the economy and the financial markets again defied the
experts' consensus.
The conventional wisdom was that the Asian crisis and U.S. company profit
warnings that started last fall would result in a slow first half of 1998, with
a rebound in confidence and securities prices in the second half of this year.
Our own concern was whether the Federal Reserve would have to raise short-term
interest rates as the moderating influence of Asia diminished and the U.S.
economy picked up steam.
The facts have painted a different picture. Stimulated by lower interest rates,
strong employment and a significant drop in energy prices, U.S. consumption has
remained quite strong--especially for this late in the economic cycle. Outside
the U.S., European companies also began showing strong results. While Asia did
slump, its overall impact on the U.S. economy was less severe than feared.
The low inflationary environment and strong economy fueled continued strength in
the U.S. equity and fixed-income markets, putting a premium on the quality
research needed to find undervalued securities. Staying with our time-tested,
value-oriented strategy, we are pleased that the Class A share total return on
net asset value of the Nuveen Balanced Stock and Bond Fund was a healthy 16.71%
for the year ended June 30, 1998.
Asia Looms Large
Given the lethargy in Japan and reduced growth in China, there will be no quick
or easy resolution of Asia's woes anytime soon. Perhaps the only good news is
that the deflationary drag from the region should prevent the Fed from raising
interest rates and keep the dollar strong for some time.
The central problem in Asia is that massive amounts of capital are now invested
in assets that are providing poor returns. This means that non-Asian competitors
are now faced with weak pricing conditions as Asian companies seek cash flow to
stay solvent. Even if Asian trade with the U.S. improves, a strengthening dollar
would make it difficult for Asian companies to significantly increase their
revenues in the near-term.
While we believe these problems can be solved, it will take time.
Unrealistic Valuations in Some Sectors
The U.S. stock market is now characterized by high valuations--but given the
lack of alternatives, low interest rates and the strength of the dollar, this is
understandable (if not totally justifiable). However, there is a degree of
speculation now in the U.S. market, as evidenced particularly in some Internet-
related stocks, that makes us uneasy. While we believe the market values of many
of these high flyers will be adjusted, we also think that our disciplined,
catalyst-driven, value-investing approach will continue to uncover companies
that offer good prospects at attractive prices.
Outlook for the Second Half of 1998
Our view for the remainder of the year is that:
. The U.S. economy will slow as a result of high inventories, weaker exports
and a downturn in capital goods manufacturing.
. Corporate profits overall will be up modestly, and less than expected.
. The Fed will probably not raise interest rates as a result of the financial
situation in Asia, and the fragile state of other dollar-linked economies
such as Russia.
. The domestic merger and acquisition boom will continue, but the impact on
overall market prices will diminish.
. U.S. stock market averages will gain modestly; European markets will see even
larger returns.
Our Strategy
In this environment, we will continue to invest in companies undergoing
corporate restructurings, both in the U.S. and Europe. This means looking for
stocks of companies that may have performed poorly in the recent past, but that
have attractive, underutilized assets or a newly focused management team. Some
portfolio holdings that highlight this strategy include Citicorp, News Corp. and
Raytheon, just to name a few.
We believe there may be more good news coming from these companies and others
like them in the fund's portfolio. We are committed to uncovering additional
opportunities in the months ahead.
3
<PAGE>
Nuveen Balanced Stock and Bond Fund
Performance Overview
As of June 30, 1998
Top Ten Stock Holdings/1/
<TABLE>
<S> <C>
News Corp. Ltd. Sponsored ADR 2.83%
- --------------------------------------------------
NationsBank Corporation 2.26%
- --------------------------------------------------
American Home Products 2.24%
- --------------------------------------------------
Hoechst AG Sponsored ADR 2.14%
- --------------------------------------------------
Philips Electronics N.V. 2.05%
- --------------------------------------------------
Citicorp 2.01%
- --------------------------------------------------
Burlington Northern Santa Fe Corporation 1.82%
- --------------------------------------------------
U.S.A. Waste Services Inc. 1.75%
- --------------------------------------------------
General Motors Corporation 1.75%
- --------------------------------------------------
International Business Machines Corporation 1.69%
==================================================
</TABLE>
<TABLE>
<CAPTION>
Stock Diversification
[PIE CHART APPEARS HERE]
<S> <C>
Transportation 8%
Consumer Services 12%
Capital Spending 8%
Capital Equipment/Technology 9%
Consumer Staples 9%
Energy 7%
Retail 4%
Basic Industries 10%
Consumer Durables 3%
Health Care 14%
Utilities 2%
Financial 14%
================================
</TABLE>
<TABLE>
<CAPTION>
Portfolio Allocation
[PIE CHART APPEARS HERE]
<S> <C>
U.S. Treasury Notes 40%
Cash 2%
Stocks 58%
================================
</TABLE>
<TABLE>
<CAPTION>
Fund Highlights
Share Price A B C R
================================================================================================
<S> <C> <C> <C> <C> <C>
Inception Date 8/96 8/96 8/96 8/96
- ------------------------------------------------------------------------------------------------
Net Asset Value $26.39 $26.39 $26.39 $ 26.39
================================================================================================
================================================================================================
Total Net Assets ($000) $87,525
- ------------------------------------------------------------------------------------------------
Fixed Income Average Duration 5.2 Years
- ------------------------------------------------------------------------------------------------
Average Market Capitalization of Stocks 30.67
- ------------------------------------------------------------------------------------------------
Average P/E of Stocks (trailing 12 months) 17.6
- ------------------------------------------------------------------------------------------------
Number of Stocks 45
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Annualized Total Return/2/
A (On NAV) A (On Offer) B C R
================================================================================================
<S> <C> <C> <C> <C> <C>
Year-to-Date 10.27% 4.46% 9.86% 9.86% 10.36%
- ------------------------------------------------------------------------------------------------
One-Year 16.71% 10.58% 15.86% 15.86% 16.99%
- ------------------------------------------------------------------------------------------------
Since Inception 20.52% 17.14% 19.65% 19.65% 20.82%
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Yield
<S> <C> <C> <C> <C> <C>
Distribution Rate 2.95% 2.80% 2.20% 2.20% 3.20%
SEC 30-Day Yield 2.23% 2.11% 1.48% 1.48% 2.48%
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Index Comparison/3/
[LINE CHART APPEARS HERE]
Nuveen Balanced Stock Nuveen Balanced Stock Balanced Index Lehman Brothers
and Bond Fund (NAV) and Bond Fund (Offer) (60% S&P/40% LB10) S&P 500 10-Year Treasury Index
<S> <C> <C> <C> <C> <C>
8/96 10,000 9,475 10,000 10,000 10,000
6/97 12,310 11,664 12,463 13,803 10,650
6/98 14,364 13,610 15,115 17,968 11,541
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
. S&P 500 $17,968
. Balance Index (60% S&P/40% LB10) $15,115
. Lehman Brothers 10-Year Treasury Index $11,541
. Nuveen Balanced Stock and Bond Fund (NAV) $14,364
. Nuveen Balanced Stock and Bond Fund (Offer) $13,610
</TABLE>
Past performance is not predictive of future results.
1 The companies listed above represent their respective percentages as of
6/30/98. Over time, the fund's holdings and their percentages will vary.
2 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.
3 The Index Comparison shows the change in value of a $10,000 investment in the
Class A shares of the Nuveen fund compared with the Standard and Poor's 500
Index, a Balanced Index and the 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 returns depicted in
the chart reflect the initial maximum sales charge applicable to Class A
shares (5.25%) and all ongoing fund expenses.
4
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Balanced Stock and Bond Fund:
We have audited the accompanying statement of net assets, including the
portfolio of investments, of Nuveen Balanced Stock and Bond Fund (one of the
portfolios constituting the Nuveen Investment Trust (a Massachusetts business
trust)), as of June 30, 1998, and the related statement of operations,
statements of changes in net assets and the financial highlights for the periods
indicated thereon. 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, 1998, 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 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 audits provide 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 Nuveen
Balanced Stock and Bond Fund as of June 30, 1998, and the results of its
operations, the changes in its net assets, and its financial highlights for the
periods indicated thereon in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 17, 1998
5
<PAGE>
Portfolio of Investments
Nuveen Balanced Stock and Bond Fund
June 30, 1998
<TABLE>
<CAPTION>
Shares Description Market Value
- -------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 54.3%
Basic Industries - 5.5%
11,100 Akzo Nobel N.V. Sponsored ADR $ 1,230,712
18,200 E.I. du Pont de Nemours and Company Ltd. 1,358,175
21,098 IMC Global Inc. 635,577
18,050 Reynolds Metals Company 1,009,672
21,450 UPM-Kymmene Oyj Corporation Sponsored ADR 590,349
- -------------------------------------------------------------------------------
Capital Equipment/Technology - 5.3%
27,600 First Data Corporation 919,425
12,750 International Business Machines Corporation 1,463,859
15,850 NCR Corporation # 515,125
20,850 Royal Philips Electronics N.V. 1,772,250
- -------------------------------------------------------------------------------
Capital Spending - 4.5%
13,400 B.F. Goodrich Company 664,975
17,850 Case Corporation 861,262
10,300 Northrop Grumman Corporation 1,062,187
22,907 Raytheon Company - Class A 1,320,015
- -------------------------------------------------------------------------------
Consumer Durables - 1.7%
22,600 General Motors Corporation 1,509,963
- -------------------------------------------------------------------------------
Consumer Services - 4.3%
31,400 The Dun & Bradstreet Corporation 1,134,325
47,300 Host Marriot Corporation # 842,531
5,100 Starwood Hotels & Resorts 246,394
30,600 U.S.A. Waste Services, Inc. # 1,510,875
- -------------------------------------------------------------------------------
Consumer Staples - 5.4%
23,800 Fort James Corporation 1,059,100
27,000 Hasbro, Inc. 1,061,437
37,100 Philip Morris Companies, Inc. 1,460,812
27,700 Seagram Company Ltd. 1,133,969
- -------------------------------------------------------------------------------
Energy - 3.7%
19,120 Elf Aquitaine SA Sponsored ADR 1,357,520
14,700 Schlumberger Limited 1,004,194
24,500 Unocal Corporation 875,875
- -------------------------------------------------------------------------------
Financials - 8.2%
9,900 Bankers Trust Corporation 1,149,019
17,300 CIGNA Corporation 1,193,700
11,600 Citicorp 1,731,300
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Shares Description Market Value
- -----------------------------------------------------------------------------------------------------
<C> <S> <C>
Financials (continued)
23,300 Household International, Inc. $1,159,175
25,500 NationsBank Corporation 1,950,750
- -----------------------------------------------------------------------------------------------------
Health Care--7.8%
37,450 American Home Products Corporation 1,938,038
20,500 Baxter International, Inc. 1,103,156
37,200 Hoechst AG Sponsored ADR 1,846,050
17,300 Humana, Inc. # 539,544
9,300 St. Jude Medical, Inc. # 342,356
32,400 Tenet Healthcare Corporation # 1,012,500
- -----------------------------------------------------------------------------------------------------
Retail--2.1%
5,500 Circuit City Stores 257,813
10,100 Consolidated Stores Corporation # 366,125
22,900 Federated Department Stores, Inc. # 1,232,306
- -----------------------------------------------------------------------------------------------------
Transportation--4.6%
12,550 AMR Corporation # 1,044,788
16,050 Burlington Northern Santa Fe Corporation 1,575,909
49,700 Canadian Pacific Limited 1,410,238
- -----------------------------------------------------------------------------------------------------
Utilities--1.2%
8,500 AT&T Corp. 485,563
12,800 Bell Atlantic Corporation 584,000
- -----------------------------------------------------------------------------------------------------
Total Common Stocks--(cost $42,102,594) 47,522,908
-----------------------------------------------------------------------------------------
PREFERRED STOCKS--2.8%
86,600 News Corporation Limited Sponsored ADR 2,446,450
- -----------------------------------------------------------------------------------------------------
Total Preferred Stocks--(cost $1,609,075) 2,446,450
-----------------------------------------------------------------------------------------
Principal
Amount Description Market Value
- -----------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--39.4%
$ 3,735,000 8.500%, 2/15/00 3,904,244
4,530,000 7.500%, 5/15/02 4,834,362
3,885,000 5.750%, 8/15/03 3,926,278
2,890,000 7.875%, 11/15/04 3,245,831
3,780,000 6.500%, 5/15/05 3,990,263
10,910,000 7.000%, 7/15/06 11,919,176
2,295,000 7.250%, 5/15/16 2,689,453
- -----------------------------------------------------------------------------------------------------
Total U.S. Treasury Notes--(cost $33,116,328) 34,509,607
--------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--2.2%
1,900,000 Pitney Bowes, Inc., Commercial Paper, effective yield of 6.17%, 7/01/98 1,900,000
- -----------------------------------------------------------------------------------------------------
Total Short-Term Investments--(cost $1,900,000) 1,900,000
--------------------------------------------------------------------------------------
Total Investments--(cost $78,727,997)--98.7% 86,378,965
--------------------------------------------------------------------------------------
Other Assets Less Liabilities--1.3% 1,146,273
--------------------------------------------------------------------------------------
Net Assets--100% $87,525,238
--------------------------------------------------------------------------------------
</TABLE>
# Non-income producing.
See accompanying notes to financial statements.
7
<PAGE>
Statement of Net Assets
June 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Assets
<S> <C>
Investment securities, at market value (cost $78,727,997) (note 1) $86,378,965
Cash 127,776
Receivables:
Dividends and interest 774,334
Investments sold 625,051
Shares sold 359,650
Deferred organization costs (note 1) 118,691
Other assets 3,181
- --------------------------------------------------------------------------------------------------------------------------
Total assets 88,387,648
- --------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 61,116
Shares redeemed 61,448
Accrued expenses:
Management fees (note 4) 22,288
12b-1 distribution and service fees (notes 1 and 4) 25,898
Other 72,668
Dividends payable 618,992
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 862,410
- --------------------------------------------------------------------------------------------------------------------------
Net assets (note 5) $87,525,238
==========================================================================================================================
Class A Shares (note 1)
Net assets $69,614,035
Shares outstanding 2,637,989
Net asset value and redemption price per share $ 26.39
Offering price per share (net asset value per share plus maximum sales charge of 5.25% of offering price) $ 27.85
==========================================================================================================================
Class B Shares (note 1)
Net assets $10,356,139
Shares outstanding 392,477
Net asset value, offering and redemption price per share $ 26.39
==========================================================================================================================
Class C Shares (note 1)
Net assets $ 4,141,789
Shares outstanding 156,924
Net asset value, offering and redemption price per share $ 26.39
==========================================================================================================================
Class R Shares (note 1)
Net assets $ 3,413,275
Shares outstanding 129,355
Net asset value, offering and redemption price per share $ 26.39
==========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
Statement of Operations
Year Ended June 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Investment Income (note 1)
<S> <C>
Dividends $ 815,163
Interest 2,443,369
- ------------------------------------------------------------------------------------------
Total investment income 3,258,532
- ------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 586,832
12b-1 service fees - Class A (notes 1 and 4) 159,557
12b-1 distribution and service fees - Class B (notes 1 and 4) 61,772
12b-1 distribution and service fees - Class C (notes 1 and 4) 24,924
Shareholders' servicing agent fees and expenses 95,583
Custodian's fees and expenses 64,069
Trustees' fees and expenses (note 4) 9,227
Professional fees 18,174
Shareholders' reports - printing and mailing expenses 71,086
Federal and state registration fees 77,974
Amortization of deferred organization costs (note 1) 36,000
Other expenses 3,124
- ------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 1,208,322
Expense reimbursement (note 4) (296,989)
- ------------------------------------------------------------------------------------------
Net expenses 911,333
- ------------------------------------------------------------------------------------------
Net investment income 2,347,199
- ------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 3) 4,988,412
Net change in unrealized appreciation or depreciation of investments 4,596,358
- ------------------------------------------------------------------------------------------
Net gain from investments 9,584,770
- ------------------------------------------------------------------------------------------
Net increase in net assets from operations $11,931,969
==========================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended For the Period
6/30/98 8/07/96 to 6/30/97
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 2,347,199 $ 461,143
Net realized gain from investment transactions
(notes 1 and 3) 4,988,412 529,537
Net change in unrealized appreciation or depreciation
of investments 4,596,358 3,054,610
- -----------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 11,931,969 4,045,290
- -----------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (1,955,711) (320,023)
Class B (165,258) (2,239)
Class C (64,225) (3,396)
Class R (175,931) (116,780)
From accumulated net realized gains from investment transactions:
Class A (1,410,980) (43)
Class B (120,791) (43)
Class C (50,758) (43)
Class R (204,679) (25,820)
- -----------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,148,333) (468,387)
- -----------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 28,460,346 62,071,093
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 3,182,983 15,990
- -----------------------------------------------------------------------------------------------------------------
31,643,329 62,087,083
- -----------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (16,266,187) (1,332,886)
- -----------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 15,377,142 60,754,197
- -----------------------------------------------------------------------------------------------------------------
Net increase in net assets 23,160,778 64,331,100
Net assets at the beginning of period 64,364,460 33,360
- -----------------------------------------------------------------------------------------------------------------
Net assets at the end of period $87,525,238 $64,364,460
=================================================================================================================
Balance of undistributed net investment income at end of period $ 4,779 $ 18,705
=================================================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<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") which was organized as a Massachusetts business
trust in 1996. The Trust (and each series within the Trust) is an open-end
diversified management investment company registered under the Investment
Company Act of 1940. Prior to commencement of operations on August 7, 1996, the
Trust had no operations other than those relating 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.
The Fund invests in a 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 the when-issued and delayed delivery purchase commitments. At June
30, 1998, 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 carryforwards.
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%
11
<PAGE>
Notes to Financial Statements (continued)
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 one year of purchase. Class R Shares are not subject to any
sales charge or 12b-1 distribution or service fees. Class R Shares are available
for purchases of over $1 million and in other limited circumstances.
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 fiscal year ended June 30, 1998.
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.
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.
<TABLE>
<CAPTION>
2. Fund Shares
Transactions in Fund shares were as follows:
For the Period
Year ended 6/30/98 8/07/96 to 6/30/97
---------------------------------------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 519,941 $13,025,786 2,433,860 $55,396,538
Class B 372,091 9,257,698 26,837 638,169
Class C 124,310 3,141,845 40,678 949,886
Class R 120,833 3,035,017 253,630 5,086,500
Shares issued to shareholders due to
reinvestment of distributions:
Class A 116,290 2,853,684 723 15,981
Class B 6,908 169,109 -- --
Class C 1,846 45,583 -- --
Class R 4,668 114,607 -- 9
- ------------------------------------------------------------------------------------------------------------------------
1,266,887 31,643,329 2,755,728 62,087,083
- ------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (376,287) (9,460,805) (56,955) (1,324,519)
Class B (13,633) (346,082) (143) (3,405)
Class C (10,327) (264,621) -- (11)
Class R (249,979) (6,194,679) (214) (4,951)
- ------------------------------------------------------------------------------------------------------------------------
(650,226) (16,266,187) (57,312) (1,332,886)
- ------------------------------------------------------------------------------------------------------------------------
Net increase 616,661 $ 15,377,142 2,698,416 $60,754,197
========================================================================================================================
</TABLE>
12
<PAGE>
3. Securities Transactions
Purchases and sales (including maturities) of investment securities, U.S.
government obligations and short-term investments for the fiscal year ended June
30, 1998, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Purchases:
Investment securities $ 67,354,632
U.S. government obligations 64,984,744
Short-term investments 344,203,611
Sales:
Investment securities 53,728,744
U.S. government obligations 63,171,554
Short-term investments 347,295,731
================================================================================
</TABLE>
At June 30, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation aggregated $7,650,968 of which $8,654,944 related to
appreciated securities and $1,003,976 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:
<TABLE>
<CAPTION>
Average Daily Net Asset Value Management Fee
- --------------------------------------------------------------------------------
<S> <C>
For the first $125 million .7500 of 1%
For the next $125 million .7375 of 1
For the next $250 million .7250 of 1
For the next $500 million .7125 of 1
For the next $1 billion .7000 of 1
For net assets over $2 billion .6750 of 1
================================================================================
</TABLE>
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. Effective August
1, 1998, the Adviser has agreed to waive fees and reimburse expenses through
July 31, 1999, 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.
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 those of 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.
During the fiscal year ended June 30, 1998, John Nuveen & Co. Incorporated (the
"Distributor") collected sales charges on purchases of Class A Shares of
approximately $506,500 of which approximately $479,500 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 fiscal year ended June 30, 1998, the Distributor compensated
authorized dealers directly with approximately $401,100 in commission advances
at the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees on Class B Shares, and
all 12b-1 service and distribution fees on Class C Shares during the first year
following a purchase are retained by the Distributor. During the fiscal year
ended June 30, 1998, the Distributor retained approximately $85,700 in such 12b-
1 fees. The remaining 12b-1 fees charged to the Fund were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments. The Distributor also collected and retained approximately $67,400
of CDSC on share redemptions during the fiscal year ended June 30, 1998.
5. Composition of Net Assets
At June 30, 1998, the Fund had unlimited $.01 par value per share common stock
authorized. Net assets consisted of:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Capital paid-in $76,164,699
Balance of undistributed net investment income 4,779
Accumulated net realized gain from investment transactions 3,704,792
Net unrealized appreciation of investments 7,650,968
- --------------------------------------------------------------------------------
Net assets $87,525,238
================================================================================
</TABLE>
13
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
<TABLE>
<CAPTION>
Class (Inception Date) Investment Operations Less Distributions
---------------------------------- ------------------------------
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
June 30, Value Income (a) Gain (Loss) Total Income Gain Total Value Return(b)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1998 $23.84 $.77 $3.11 $3.88 $(.76) $(.57) $(1.33) $26.39 16.71%
1997 (c) 20.00 .70 3.66 4.36 (.42) (.10) (.52) 23.84 22.04
Class B (8/96)
1998 23.84 .59 3.10 3.69 (.57) (.57) (1.14) 26.39 15.86
1997 (c) 20.00 .46 3.75 4.21 (.27) (.10) (.37) 23.84 21.26
Class C (8/96)
1998 23.84 .59 3.10 3.69 (.57) (.57) (1.14) 26.39 15.86
1997 (c) 20.00 .53 3.68 4.21 (.27) (.10) (.37) 23.84 21.26
Class R (8/96)
1998 23.84 .83 3.11 3.94 (.82) (.57) (1.39) 26.39 16.99
1997 (c) 20.00 .61 3.80 4.41 (.47) (.10) (.57) 23.84 22.31
===============================================================================================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- -------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment (a) ment (a) Rate
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$69,614 1.48% 2.68% 1.10% 3.06% 155%
56,686 1.71* 2.78* 1.10* 3.39* 52
10,356 2.24 1.93 1.85 2.32 155
646 2.49* 1.59* 1.85* 2.23* 52
4,142 2.24 1.92 1.85 2.31 155
980 2.31* 2.07* 1.85* 2.53* 52
3,413 1.23 2.94 .85 3.32 155
6,052 2.29* 1.68* .85* 3.12* 52
===============================================================================
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses by
Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c) From commencement of class operations as noted.
15
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers/SM/ including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, experienced, professional
security selection and surveillance and daily liquidity at that day's net asset
value for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred/R/
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
Nuveen Family
of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and
Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
16
<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 SubAdviser
Institutional Capital Corporation
225 West Wacker Drive
Chicago, Illinois 60606
Transfer Agent and
Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Morgan, Lewis &
Bockius LLP
Washington, D.C.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
17
<PAGE>
Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR., APPEARS HERE]
Photo of 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
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time -- with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime./TM/
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
NUVEEN
Growth and Income
Mutual Funds
June 30, 1998
Annual Report
For investors seeking
long-term growth potential and
international diversification.
[PHOTO APPEARS HERE]
European
Value Fund
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
We are pleased to report to you on the Nuveen European Value Fund for the period
since its start of operations at the end of May through its fiscal year end in
June.
The fund features the value investing expertise of Institutional Capital
Corporation -- Nuveen's Premier Adviser(SM) for value investing. Institutional
Capital has developed a unique stock selection process that seeks to identify
stocks of established, well-known European companies offering exceptional
relative value and attractive growth potential. The portfolio managers analyze
stocks from a universe of large and midsize European companies, using
proprietary quantitative valuation models to determine which of these stocks
appear to be undervalued in today's market. Based on a rigorous assessment of
each company's prospects, they then look for a "catalyst" that could be the key
to unlocking hidden value and triggering price appreciation. This catalyst may
be as simple as an anticipated change in management, or as complex as a
fundamentally improved industry out look. Once selected, the stocks are
monitored closely and replaced if they reach their target value, their prospects
for growth change or they become less attractive relative to other portfolio
candidates. This disciplined, research-oriented approach has paid off for
investors, and is the key investment strategy of the Nuveen European Value Fund.
The Value Added by
Nuveen's Premier Advisers(SM)
Nuveen has assembled a team of highly experienced investment managers, each
overseeing portfolios within their specific areas of expertise. In addition to
Institutional Capital, Nuveen Premier Advisers now include Rittenhouse Financial
Services, our specialist for growth investing and Nuveen Advisory Corp., our
expert in tax-free investing. Each of these managers brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on long-term performance.
Diversification: A Key Element
to a Better Portfolio
Given recent volatility in the stock market, we believe that investors will
2
<PAGE>
"Today, more than ever, you can count on Nuveen for investments designed to
produce a well-balanced portfolio that meets your individual goals."
find diversification to be an increasingly important strategy in the months
ahead. An appropriately diversified portfolio -- one that balances different
types of investments, levels of risk and tax management -- can help cushion your
portfolio against volatility and enhance your overall return potential.
Many of you have invested in the Nuveen European Value Fund because of its
value-investing orientation and the excellent track record of its Premier
Adviser. This same disciplined approach is also available in three other Nuveen
funds managed by Institutional Capital -- the Nuveen Growth and Income Stock
Fund, Nuveen Balanced Stock and Bond Fund, and Nuveen Balanced Municipal and
Stock Fund. We encourage you to talk with your financial adviser about how these
and other Nuveen funds, including the Nuveen Rittenhouse Growth Fund and a wide
array of tax-free municipal bond funds, can help round out your portfolio and
meet your particular investment needs.
If you would like additional information on these or any of Nuveen's other
funds, contact your financial adviser for a prospectus. You also may request a
prospectus from Nuveen by calling (800) 257-8787. Please read the information
carefully and discuss it with your financial adviser before you invest.
When seeking quality investments that withstand the test of time, we hope you
will continue to think of Nuveen. Today, more than ever, you can count on Nuveen
for investments designed to produce a well-balanced portfolio that meets your
individual goals. We thank you for your continued confidence in us, and
look forward to reporting to you again soon.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 14, 1998
3
<PAGE>
Nuveen European Value Fund
Report from the Fund's Adviser
The portfolio management team at Institutional Capital Corporation talks about
the European financial markets and provides an outlook for the coming year.
[PICTURES OF FLAGS APPEAR HERE]
Netherlands
France
Germany
United Kingdom
During June, world markets including Europe retreated somewhat after posting
returns of more than 20% during the first five months of the year. Although one
month is not sufficient time to accurately assess the performance of a long-term
investment, preliminary results show that during the one-month period between
the fund's inception and its fiscal year-end (May 29 through June 30), its total
return was down slightly, with a -0.59% return for the period. Despite a slow
first month, we believe that European stocks offer exceptional value. In fact,
European stock markets have been among the world's best-performing markets over
the past 18 months.
One key reason for the strong longer-term performance is that the economic
landscape in Europe is shaping up to be quite favorable for equity investments.
Many economists believe that building a common Europe is a necessity, as Europe
is now caught between an ultra-competitive U.S. economy with higher
productivity, and a more nimble and currency-deflated Asia. With strong
management in the United States and low labor costs and excellent productivity
in Asia, Europe cannot continue to do business its own way and expect to be
competitive. As a result, long-term interest rates have been declining in
Europe, which in turn has driven down financing costs for European corporations
and has also made equities increasingly attractive relative to fixed-income
investments.
Another important reason for the recent growth of the European markets is the
anticipation of the European Monetary Union (EMU), which will create a larger,
more efficient market. The advent of the EMU will result in an integrated market
with one currency, a unified marketplace with a population of approximately 300
million, and an economy comparable in size to that of the U.S. This should
result in more efficient manufacturing and distribution, and is already
propelling a wave of mergers and acquisitions as firms in Europe seek to have a
Pan-European scale.
European companies are also enhancing profitability through restructuring. In
our view, individual European companies are becoming much more responsive to
shareholders. They are focusing on raising returns, simplifying corporate
structures by divesting underperforming assets and businesses that don't fit
into a coherent whole. Just as U.S. companies retooled their operations over the
last decade to compete more effectively in the global economy, European
companies are now following suit. Also, European companies are in the early
stages of obtaining the legislative ability to repurchase their stock. Many of
these companies have low levels of debt leverage and high amounts of cash,
providing the opportunity for significant stock repurchases.
In addition, privatization in European companies is creating new investment
opportunities. Beginning in England in the 1980s and continuing across
4
<PAGE>
[PICTURES OF FLAGS APPEAR HERE]
Switzerland
Finland
Italy
Sweden
Europe in the 1990s, there have been a large number of privatizations of
formerly government-owned businesses, from telephone to automobile companies.
These privatizations are creating new stocks in which the Nuveen European Value
Fund is likely to invest, since these large, formerly government-owned
businesses represent great opportunities for corporate restructuring.
The growth in self-directed retirement funding in Europe is also leading to a
strong demand for equities. Looking out into the years 2005 through 2020, we
foresee a large number of Europeans who will be relying on their retirement
income. As in the U.S., these people are coming to the conclusion that they need
to invest more of their own money now to maintain their current lifestyle in
retirement. The European stock market will become a vehicle for Europeans to
increase their savings. Mutual funds focused on Europe will become a large part
of these retirement savings efforts, which should lead to stronger demand for
equities. Between share repurchases and individuals taking on increasing stock
market exposure, we anticipate continued growth in the demand for equities.
We believe the fund is currently well-positioned to take advantage of these
opportunities. Our focus going forward will be to seek out companies undergoing
restructurings that we believe will lead to enhanced shareholder value and
attractive returns.
<TABLE>
<CAPTION>
Top Ten Holdings
<S> <C>
Royal Philips Electronics N.V. 7.6%
- --------------------------------------------------------------------------------
Elf Aquitaine SA Sponsored ADR 6.9%
- --------------------------------------------------------------------------------
KLM Royal Dutch Airlines Sponsored ADR 5.5%
- --------------------------------------------------------------------------------
Vivendi Sponsored ADR 4.8%
- --------------------------------------------------------------------------------
Tomkins plc Sponsored ADR 4.8%
- --------------------------------------------------------------------------------
Diageo plc Sponsored ADR 4.8%
- --------------------------------------------------------------------------------
British Petroleum plc Sponsored ADR 4.7%
- --------------------------------------------------------------------------------
RWE AG Sponsored ADR 4.6%
- --------------------------------------------------------------------------------
Novartis AG Sponsored ADR 4.6%
- --------------------------------------------------------------------------------
National Westminister Bank plc Sponsored ADR 4.5%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Country Allocation
<S> <C>
Netherlands 24%
- --------------------------------------------------------------------------------
France 20%
- --------------------------------------------------------------------------------
Germany 18%
- --------------------------------------------------------------------------------
United Kingdom 18%
- --------------------------------------------------------------------------------
Switzerland 9%
- --------------------------------------------------------------------------------
Finland 4%
- --------------------------------------------------------------------------------
Italy 4%
- --------------------------------------------------------------------------------
Sweden 3%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Fund Highlights
Share Class A B C R
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value $19.86 $19.87 $19.87 $19.87
- --------------------------------------------------------------------------------
Inception Date 5/98
- --------------------------------------------------------------------------------
Total Net Assets ($000) $3,718
- --------------------------------------------------------------------------------
Average Market Capitalization $33 Billion
- --------------------------------------------------------------------------------
Average P/E (trailing 12 months) 21
- --------------------------------------------------------------------------------
Number of Stocks 22
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Total Return
A(On NAV) A(On Offer) MSCI-Europe
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception -0.59% -6.29% 1.12%
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen European Value Fund
We have audited the accompanying statement of net assets, including the
portfolio of investments, of Nuveen European Value Fund (one of the portfolios
constituting the Nuveen Investment Trust (a Massachusetts business trust)), as
of June 30, 1998, 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, 1998, 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 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 Nuveen
European Value Fund as of June 30, 1998, 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 17, 1998
6
<PAGE>
Portfolio of Investments
Nuveen European Value Fund
June 30, 1998
<TABLE>
<CAPTION>
Shares Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 83.0%
Basic Industries - 8.8%
1,200 Akzo Nobel N.V. $ 133,200
2,300 Svenska Cellulosa AB Sponsored ADR 59,555
4,900 UPM-Kymmene Oyj Corporation Sponsored ADR 134,858
- --------------------------------------------------------------------------------
Capital Equipment/Technology - 6.3%
2,750 Royal Philips Electronics N.V. 233,750
- --------------------------------------------------------------------------------
Capital Spending - 7.4%
3,200 SGL Carbon AG Sponsored ADR 124,800
6,500 Tomkins plc Sponsored ADR 148,688
- --------------------------------------------------------------------------------
Consumer Services - 7.1%
6,900 Pearson plc Sponsored ADR 126,639
4,850 United News & Media plc Sponsored ADR 136,406
- --------------------------------------------------------------------------------
Consumer Staples - 4.0%
3,050 Diageo plc Sponsored ADR 146,972
- --------------------------------------------------------------------------------
Energy - 9.6%
1,650 British Petroleum Company plc Sponsored ADR 145,612
3,000 Elf Aquitaine SA Sponsored ADR 213,000
- --------------------------------------------------------------------------------
Financials - 14.5%
2,400 Axa Sponsored ADR 136,350
1,550 Bayerische Vereinsbank AG Sponsored ADR 131,383
2,050 ING Groep N.V. Sponsored ADR 134,019
1,300 National Westminster Bank plc Sponsored ADR 139,750
- --------------------------------------------------------------------------------
Health Care - 7.3%
2,650 Hoechst AG Sponsored ADR 131,506
1,700 Novartis AG Sponsored ADR 141,441
- --------------------------------------------------------------------------------
Retail - 2.4%
1,650 Gucci Group N.V. 87,450
- --------------------------------------------------------------------------------
Transportation - 4.6%
4,150 KLM Royal Dutch Airlines Sponsored ADR 169,891
- --------------------------------------------------------------------------------
Utilities - 11.0%
2,400 RWE AG Sponsored ADR 142,003
1,650 Telecom Italia SpA Sponsored ADR 121,275
3,500 Vivendi Sponsored ADR 149,470
- --------------------------------------------------------------------------------
Total Investments - (cost $3,098,464) - 83.0% 3,088,018
----------------------------------------------------------------------
Other Assets Less Liabilities - 17.0% 630,345
----------------------------------------------------------------------
Net Assets - 100% $ 3,718,363
======================================================================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Statement of Net Assets
June 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Assets
Investment securities, at market value (cost $3,098,464) (note 1) $3,088,018
Cash 461,582
Receivables:
Dividends 7,640
Fund manager 31,882
Shares sold 334,160
Deferred organization costs (note 1) 157,370
Other assets 84
- -------------------------------------------------------------------------------
Total assets 4,080,736
- -------------------------------------------------------------------------------
Liabilities
Payable for investments purchased 165,295
Accrued expenses:
12b-1 distribution and service fees (notes 1 and 4) 60
Other 192,342
Dividends payable 4,676
- -------------------------------------------------------------------------------
Total liabilities 362,373
- -------------------------------------------------------------------------------
Net assets (note 5) $3,718,363
================================================================================
Class A Shares (note 1)
Net assets $ 101,972
Shares outstanding 5,134
Net asset value and redemption price per share $ 19.86
Offering price per share (net asset value per share
plus maximum sales charge of 5.75% of offering price) $ 21.07
================================================================================
Class B Shares (note 1)
Net assets $ 334,765
Shares outstanding 16,844
Net asset value, offering and redemption price per share $ 19.87
================================================================================
Class C Shares (note 1)
Net assets $ 42,021
Shares outstanding 2,115
Net asset value, offering and redemption price per share $ 19.87
================================================================================
Class R Shares (note 1)
Net assets $3,239,605
Shares outstanding 163,073
Net asset value, offering and redemption price per share $ 19.87
================================================================================
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
Statement of Operations
For the Period May 29, 1998 (commencement of operations) through June 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Investment Income (note 1)
<S> <C>
Dividends $ 7,641
- -------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 2,373
12b-1 service fees - Class A (notes 1 and 4) 6
12b-1 distribution and service fees - Class B (notes 1 and 4) 31
12b-1 distribution and service fees - Class C (notes 1 and 4) 23
Shareholders' servicing agent fees and expenses 2
Custodian's fees and expenses 3,055
Trustees' fees and expenses (note 4) 243
Professional fees 8,158
Shareholders' reports - printing and mailing expenses 20,000
Federal and state registration fees 885
Amortization of deferred organization costs (note 1) 2,630
Other expenses 157
- -------------------------------------------------------------------------------------
Total expenses before expense reimbursement 37,563
Expense reimbursement (note 4) (34,256)
- -------------------------------------------------------------------------------------
Net expenses 3,307
- -------------------------------------------------------------------------------------
Net investment income 4,334
- -------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions (notes 1 and 3) (1,619)
Net change in unrealized appreciation or depreciation of investments (10,446)
- -------------------------------------------------------------------------------------
Net gain (loss) from investments (12,065)
- -------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $ (7,731)
=====================================================================================
</TABLE>
Statement of Changes in Net Assets
For the Period May 29, 1998 (commencement of operations) through June 30, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Operations
<S> <C>
Net investment income $ 4,334
Net realized gain (loss) from investment transactions (notes 1 and 3) (1,619)
Net change in unrealized appreciation or depreciation of investments (10,446)
- -------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (7,731)
- -------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (106)
Class B (179)
Class C (22)
Class R (4,369)
- -------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,676)
- -------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 3,730,770
- -------------------------------------------------------------------------------------
Net increase in net assets 3,718,363
Net assets at the beginning of period -
- -------------------------------------------------------------------------------------
Net assets at the end of period $3,718,363
=====================================================================================
Distributions in excess of net investment income at end of period $ (342)
=====================================================================================
</TABLE>
See accompanying notes to financial statements
9
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen European Value Fund (the "Fund") is a series of the Nuveen Investment
Trust (the "Trust") which was organized as a Massachusetts business trust in
1996. The Trust (and each series within the Trust) is an open-end diversified
management investment company registered under the Investment Company Act of
1940. Prior to commencement of operations on May 29, 1998, the Fund had no
operations other than those related to organizational matters.
The Fund invests primarily in a diversified portfolio of stocks of established,
well-known European companies with at least $1 billion in market capitalization
and seeks to provide over time a superior total return with moderated risk. In
addition to investments in equity securities, the Fund may invest in cash
equivalents and short-term investments as a temporary defensive measure.
The Fund may invest in a variety of European securities, including American
Depository Receipts ("ADRs") and other types of depository receipts; equity
securities of European companies that may or may not be publicly traded in the
U.S.; Eurodollar convertibles; fixed-income securities of European companies
that may or may not be publicly traded in the U.S.; and debt obligations issued
or guaranteed by European governments, their agencies, authorities or
instrumentalities. All foreign investments involve certain risks in addition to
those associated with U.S. 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 securities are 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. When price quotes are not readily
available, the pricing service establishes fair market value based on prices of
comparable securities.
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, 1998, 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 carryforwards.
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.
10
<PAGE>
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 one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available for purchase under limited circumstances.
Derivative Financial Instruments
The Fund may invest in options and futures contracts, 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 May 29, 1998 (commencement of
operations) through June 30, 1998.
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.
Organizational Expenses
The Fund's costs incurred in connection with its organization and initial
registration of shares was deferred and is being amortized over a 60-month
period beginning May 29, 1998 (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.
Foreign Currency Translations
To the extent that the Fund invests in securities that are denominated in a
currency other than U.S. dollars, the Fund will be subject to currency risk,
which is the risk that an increase in the U.S. dollar relative to the foreign
currency will reduce returns or portfolio value. Generally, when the U.S. dollar
rises in value against a foreign currency, the Fund's investment in securities
denominated in that currency will lose value because its currency is worth fewer
U.S. dollars; the opposite effect occurs if U.S. dollars fall in relative value.
Investments and other assets and liabilities denominated in foreign currencies
are converted into U.S. dollars on a spot (i.e. cash) basis at the spot rate
prevailing in the foreign currency exchange market at the time of valuation.
Purchases and sales of investments and dividend income denominated in foreign
currencies are translated into U.S. dollars on the respective dates of such
transactions. The gains or losses on investments resulting from changes in
foreign exchange rates are included with net realized and unrealized gain (loss)
on investments.
Foreign Currency Transactions
The Fund may engage in foreign currency exchange transactions in connection with
its portfolio investments and assets and liabilities denominated in foreign
currencies. The Fund may engage in foreign currency forward contracts, options
and futures transactions. The Fund will enter into foreign currency transactions
for hedging and other permissible risk management purposes only. If the Fund
invests in a currency futures or options contract, it must make a margin deposit
to secure performance of such contract. With respect to investments in currency
futures contracts, the Fund may also be required to make a variation margin
deposit because the value of futures contracts fluctuates daily. In addition,
the Fund may segregate assets to cover its futures contracts obligations.
The objective of the Fund's foreign currency hedging transactions is to reduce
the risk that the U.S. dollar value of the Fund's foreign currency denominated
securities and other assets and liabilities will decline in value due to changes
in foreign currency exchange rates. All foreign currency forward contracts,
options and futures transactions are "marked-to-market" daily at the applicable
market rates and any resulting unrealized gains or losses are recorded in the
Fund's financial statements. The Fund records realized gains and losses at the
time the forward contract is offset by entering into a closing transaction or
extinguished by delivery of the currency. The contractual amounts of forward
foreign currency exchange contracts does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions are
considered. As of June 30, 1998, there were no open foreign currency forward
contracts, options and futures transactions.
11
<PAGE>
Notes to Financial Statements (continued)
2. Fund Shares
Transactions in Fund shares for the period May 29, 1998 (commencement of
operations) through June 30, 1998 were as follows:
<TABLE>
<CAPTION>
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
Shares sold:
Class A 5,134 $ 101,463
Class B 16,844 333,000
Class C 2,115 42,015
Class R 163,073 3,254,292
- --------------------------------------------------------------------------------
Net increase 187,166 $3,730,770
================================================================================
</TABLE>
3. Securities Transactions
Purchases and sales of investment securities for the period May 29, 1998
(commencement of operations) through June 30, 1998, were $3,256,646 and
$156,563, respectively.
At June 30, 1998, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
Net unrealized depreciation for financial reporting and federal income tax
purposes aggregated $10,446 of which $55,810 related to appreciated securities
and $66,256 related to depreciated securities.
At June 30, 1998, the Fund had an unused capital carryforward of $1,619
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied the carryforward will expire in the year 2006.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with Nuveen Institutional
Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen
Company, the Fund pays an annual management fee, payable monthly, which is based
upon the average daily net asset value of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Asset Value Management Fee
- --------------------------------------------------------------------------------
<S> <C>
For the first $125 million .9500 of 1%
For the next $125 million .9375 of 1
For the next $250 million .9250 of 1
For the next $500 million .9125 of 1
For the next $1 billion .9000 of 1
For net assets over $2 billion .8750 of 1
================================================================================
</TABLE>
The Adviser has agreed to waive fees and reimburse expenses through July 31,
1999, in order to prevent total operating expenses (excluding any 12b-1
distribution or service fees and extraordinary expenses) from exceeding 1.30% 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 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 those of 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.
During the period May 29, 1998 (commencement of operations) through June 30,
1998, the Distributor collected sales charges on purchases of Class A Shares of
approximately $1,500 of which approximately $1,300 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 May 29, 1998 (commencement of operations) through June 30,
1998, the Distributor compensated authorized dealers directly with approximately
$4,200 in commission advances at the time of purchase. To compensate for
commissions advanced to authorized dealers, all 12b-1 service fees collected on
Class B Shares during the first year following a purchase, all 12b-1
distribution fees on Class B Shares, and all 12b-1 service and distribution fees
on Class C Shares during the first year following a purchase are retained by the
Distributor. During the period May 29, 1998 (commencement of operations) through
June 30, 1998, the Distributor retained approximately $100 in such 12b-1 fees.
The remaining 12b-1 fees charged to the Fund were paid to compensate authorized
dealers for providing services to shareholders relating to their investments.
12
<PAGE>
5. Composition of Net Assets
At June 30, 1998, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Capital paid-in $3,730,770
Distributions in excess of net investment income (342)
Net realized gain (loss) from investment transactions (1,619)
Net unrealized appreciation (depreciation) of investments (10,446)
- --------------------------------------------------------------------------------
Net assets $3,718,363
================================================================================
</TABLE>
13
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout the period May 29,1998
(commencement of operations) through June 30, 1998 is as follows:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- ----------------------------
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
June 30, Value Income (a) Gain (Loss) Total Income Gain Total Value Return (b)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/98)
1998 (c) $20.00 $.02 $(.14) $(.12) $(.02) $ -- $(.02) $19.86 (.59)%
Class B (5/98)
1998 (c) 20.00 .03 (.15) (.12) (.01) -- (.01) 19.87 (.60)
Class C (5/98)
1998 (c) 20.00 .01 (.13) (.12) (.01) -- (.01) 19.87 (.60)
Class R (5/98)
1998 (c) 20.00 .03 (.13) (.10) (.03) -- (.03) 19.87 (.52)
=============================================================================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment (a) ment (a) Rate
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 102 14.82%* (11.94)%* 1.55%* 1.33%* 5%
335 14.56* (10.67)* 2.30* 1.59* 5
42 15.88* (12.98)* 2.30* .60* 5
3,240 15.04* (11.99)* 1.30* 1.75* 5
================================================================================
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses by
Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge and
are not annualized.
(c) From commencement of class operations as noted.
15
<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
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime.(TM)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
