<PAGE>
June 30, 1999 Annual Report
[NUVEEN LOGO APPEARS HERE]
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Growth and Income Stock Fund
For investors seeking long-term growth and potential and attractive value.
[PHOTO APPEARS HERE]
Featuring Portfolio Management By Nuveen Investment Advisory Services
A Premier Adviser(SM) for Income Investing
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective
6 Fund Spotlight
7 Portfolio of Investments
10 Statement of Net Assets
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Notes to Financial Statements
17 Financial Highlights
19 Report of Independent Public Accountants
20 Building a Better Portfolio
21 Fund Information
<PAGE>
DEAR
Shareholder
At this writing, we're more than halfway through 1999. The much-talked-about
millennium (Y2K) looms, which really puts the concept of time in front of us
all. We think: "Where did the time go?"
We think about how old, 25 years ago, we thought we would be when the calendar
turned January 1, 2000. (And we realize, now, it is really not that old at all.)
We think about all the things we thought we would have accomplished before 1999
became 2000. Most likely, one of your millennium goals was financial. Whether it
was to fully fund your retirement accounts or set up trusts for your
grandchildren, the fact you're working with a financial adviser and reading this
report are positive signs that you're well on your way to achieving your goal.
I'm pleased to report we're meeting our goals, too. In addition to the goals we
have established for each mutual fund we manage, we have had to set goals in
preparation for the millennium.
All efforts to safeguard critical systems are right on schedule at Nuveen.
It's a goal we set more than 10 years ago. Nuveen's trading, fund management and
pricing -- systems that affect you and your investments -- have been updated or
replaced to be able to deal accurately with Y2K.
We continue to work closely with our service providers, transfer agent,
custodian and trustee to monitor the readiness of their systems, as well as
address any remaining internal systems issues. Testing should be completed by
the end of September.
The Securities and Exchange Commission (SEC), which oversees the securities
industry, is also taking significant steps to help our industry make a smooth
transition to the Y2K. First, the SEC is requiring all public companies,
investment advisers, investment companies and municipal securities issuers to
disclose their ability to comply with the Y2K issue.
In addition, the SEC mandated that tests be conducted on various financial
systems to test the ability of exchanges and broker/dealer firms to handle
transactions effectively. We participated successfully in those tests.
With our systems in place and ready to handle Y2K, we look forward to
helping you achieve your financial goals in the new millennium.
Your Fund's Fiscal Year. I want to briefly report on the economic environment
in which your investment in Nuveen Growth and Income Stock Fund performed. Read
for a more in-depth interview with a representative from the portfolio
management team for your fund, describing how that team of investment and
research professionals directed the portfolio during its fiscal year, July 1,
1998, through June 30, 1999.
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
"All efforts to
safeguard critical
systems are right
on schedule
at Nuveen."
ANNUAL REPORT page 1
<PAGE>
Over the past 12 months, the U.S. economy has continued to be characterized by
robust growth, generally low interest rates, and unemployment levels that remain
among the lowest in three decades.
Concerns, however, about the continued persistent pace of the economy's
expansion have tested the new paradigm that holds that improvements in
productivity enable us to have both economic growth and low inflation at the
same time. With investors and the various markets watching -- and reacting to --
every announcement concerning economic statistics, volatility has increased,
especially in the equity markets.
We have entered a different economic environment from that of 12 months
ago. This shift has occurred in response to two factors:
. the Asian financial crisis of 1998 did not produce the slowdown that
was widely expected to keep economic growth from becoming overly
robust;
. evidence of accelerating prices, most obvious in the sudden spike in
the April 1999 Consumer Price Index, contributed to the reemergence of
the specter of inflation, accompanied by predictions of higher
interest rates.
In an effort to pre-empt this inflation threat, the Federal Reserve moved
to raise the federal funds rate by a quarter-point -- to 5.0% -- at the end of
June. The upward adjustment to this rate, which represents the amount banks
charge one another on overnight loans, marks the first increase since March 1997
and stands in sharp contrast to the three reductions made last fall.
Despite the minimal increase and the Fed's announcement that it would shift
to a neutral bias concerning future interest rate action, uncertainty about the
board's next move -- which was not diminished by Chairman Greenspan's
Congressional testimony in late July -- continues.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets are better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, contact your financial
adviser for a prospectus, call Nuveen at (800) 621-7227, or download one from
our Web site at www.nuveen.com. Please read the prospectus carefully before you
invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. As we look ahead to a new millennium, we are committed to maintaining
that reputation and finding the best ways to serve your evolving investment
needs. Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 16, 1999
"Your financial
adviser can serve
as a valuable
resource in helping
you determine if
adjustments are
needed in your
current asset
allocation plan."
ANNUAL REPORT page 2
<PAGE>
From the Portfolio Manager's Perspective
Value stocks are making a comeback after being out of favor for several years.
For those who never doubted the benefits of value investing, such as the
managers of Nuveen Growth and Income Stock Fund, the resurgence comes as no
surprise. Brandon Thomas, director of equity funds at Nuveen, speaks with Rob
Lyon, president and chief investment officer of Institutional Capital
Corporation (ICAP), Nuveen's Premier Adviser/sm/ for value investing and the
subadviser of the fund, about strategies ICAP used in managing the fund during
its fiscal year ended June 30, 1999.
BRANDON Value investing at Nuveen and ICAP means seeking out stocks of
established, well-known companies the portfolio management team believes offer
unrecognized value with a "catalyst" that may trigger a rise in the stocks'
prices. In the past few years, growth stocks, which generally have higher
earnings growth rates than value stocks, have been among the market's best
performers, as the economy has grown modestly and investors sought out companies
with consistent earnings. In fact, growth stocks have outperformed value stocks
in each of the past five years, through 1998.
But, during the first part of 1999, we've seen value stocks make a
comeback. To what do you attribute the change?
ROB It's not unusual to see the comeback given the economic conditions that
are surfacing. Since October 1998, there have been more than 100 interest rate
cuts made by foreign central banks. That results in stronger industrial
production throughout the world, which is likely to lead to more positive
earnings for many companies. With more companies participating in an
accelerating economy, investor confidence shifts and value stocks, as well as
emerging market issues, are once again attractive to investors.
BRANDON Isn't it extraordinary for a shift of this magnitude from growth to
value to take place without our economy having been in a recession?
ROB Yes, it would be. But while the United States avoided a recession, much of
the world was in a terrible one. It's coming out of it now, and a broad range of
companies are benefiting from the turnaround.
BRANDON That seems to be reflected in some of the investment strategies you've
employed in the fund. Let's first review the fund's performance during its
fiscal year. For the one-year period ended June 30, 1999, the fund returned
12.37%, behind
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/ -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. They have been chosen by Nuveen for their rigorously disciplined
investment approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for value investing, Institutional Capital
Corporation, is a highly successful institutional money manager with nearly 30
years of experience. They specialize in finding undervalued midsize and large
company stocks that are poised for significant growth.
This disciplined, research-oriented approach is the key investment strategy for
Nuveen Growth and Income Stock Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the fund's fiscal year ended June 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
ANNUAL REPORT page 3
<PAGE>
its Lipper Growth and Income Fund Index/1/ benchmark, which returned 13.56%. I
would like to point out two other figures, however. Since its inception in
August 1996, the fund returned 23.97%, outperforming the same benchmark, which
returned 22.70%. Also, since value's resurgence at the beginning of 1999, at the
midpoint of the fiscal period we are talking about, the fund has returned
16.78%, compared to Lipper's return of 11.59% (year-to-date).
What strategies did the portfolio team employ during the year to achieve
these numbers?
ROB As value investors, we took a hard look at companies that suffered during
the Asian financial crisis, which dominated the economic landscape last year.
Then we identified individual candidates that met our quantitative criteria --
where earnings were already starting to stabilize or improve, where there would
be a significant benefit from the world's economic improvement, and where we
computed there could be potential for 20% appreciation.
BRANDON What companies met those criteria?
ROB One of the fund's strongest performers in the first half of this year was
Motorola. Our analysts determined that its line of cellular phones was much
improved and that its upside potential in Asia was substantial. Motorola is a
good example of a company that should benefit from the economic improvement
underway throughout the world, particularly in non-Japan Asia.
Also, Northwest Airlines Inc., which is highly dependent upon Asian
traffic, exhibited many of the characteristics we seek. Here is a company that
is down by about 50% from where it was a year ago, but where the earnings are
rapidly improving.
Top Ten Stock Holdings/2/
General Motors Corporation 5.0%
----------------------------------------------
Philips Electronics N.V. 4.4%
----------------------------------------------
Bell Atlantic Corporation 4.2%
----------------------------------------------
News Corporation Limited Sponsored ADR 4.0%
----------------------------------------------
Hoechst AG Sponsored ADR 3.9%
----------------------------------------------
Bank of America Corporation 3.9%
----------------------------------------------
Citigroup Inc. 3.7%
----------------------------------------------
Waste Management, Inc./3/ 3.7%
----------------------------------------------
Philip Morris Companies Inc. 3.6%
----------------------------------------------
Bristol-Myers Squibb Company 3.4%
----------------------------------------------
The companies listed represent their respective percentage as of 6/30/99. Over
time, the fund's holdings and their percentages will vary as the prices of the
stocks vary.
BRANDON In addition to focusing on firms that would benefit from the economic
turnaround in Asia and the rest of the world, what other strategies were in
place during the year?
ROB Corporate restructurings continued to be another central theme guiding our
investment choices.
Philips Electronics, N.V., one of the fund's largest holdings, is
performing well as its cost-cutting initiatives and divestitures continued to
create a more focused corporate strategy. Many people don't realize that Philips
is one of the world's
/1/ The Lipper Peer Group returns reflect the performance of the Lipper Growth
and Income Fund Index, a managed index that represents the average returns
of the 30 largest funds in the Lipper Growth and Income category. The
returns assume reinvestment of dividends but do not include any initial or
ongoing expenses.
/2/ As a percentage of total stock holdings.
/3/ Shortly after the close of the fund's fiscal year, its position in Waste
Management was sold.
ANNUAL REPORT page 4
<PAGE>
leading semiconductor manufacturers and is the No. 1 producer of light bulbs.
And as part of its strategy to refocus on its core consumer electronics
business, the company sold off its Polygram Records division to Seagram for $12
billion and is now using the proceeds to buy back its own stock. That's just one
example of what's going right in the Netherlands-based company.
International Business Machines Corp. (IBM) also advanced sharply as the
company's efforts to become a leading electronic commerce and internet
consultant are beginning to show signs of success.
BRANDON Along with Motorola and IBM, Nortel Networks Corp., another
technology stock, has been a good performer. Are you a proponent of
technology stocks?
ROB We believe the Internet is a catalyst for change in the world economy.
While valuations of pure Internet stocks are outside of our idea of "value," we
try to keep abreast of the companies supplying the hardware to support Internet
users. When we can buy a leader in that field at attractive, value prices, we
will.
Nortel is an excellent example that shows real promise. It's a solid No. 2
company in one of the fastest growing industries in the world.
Equity Diversification
[Pie Chart Appears Here]
Consumer Cyclicals 22.7%
Financials 15.3%
Technology 15.2%
Communications 11.2%
Health Care 9.6%
Consumer Staples 8.4%
Basic Materials 5.9%
Capital Goods 5.6%
Transportation 3.8%
Energy 2.3%
Portfolio composition is as of 6/30/99 and is subject to change. Composition is
based on the fund's U.S. stocks and any American Depositary Receipts in its
portfolio.
BRANDON What is your outlook for the fund, especially in light of the recent
talk about inflation?
ROB We are confident the portfolio is positioned well, with its low relative
valuation, including its low price-to-earnings ratio, whether the market
continues its advance or levels off a bit.
The U.S. economy is very strong. The reason for the domestic October and
November rate cuts made by the Federal Reserve -- global economic uncertainty --
is behind us. We have had one rate increase by the Fed so far this year, and
there may be more, but we think the implications for the stock market are
neutral.
We think an interest rate hike is simply a confirmation that the economy is
exhibiting strong growth, which is usually favorable for cyclical, economically
sensitive value stocks.
Basically, we believe small increases in interest rates just confirm that
the earnings power of the value stocks is coming back.
There's no shortage of value out there, so we will continue to do our
homework to identify and add those companies to the portfolio that we believe
give the fund's shareholders the best opportunity for continued strong
performance.
"As value investors, we took a hard look at companies that suffered during the
Asian financial crisis . . . Then we identified individual candidates that met
our quantitative criteria."
ANNUAL REPORT page 5
<PAGE>
Fund Spotlight as of June 30, 1999
Terms To Know
The following are a few terms used throughout this report.
Beta Beta is a measure of a fund's volatility compared to the market's. A fund
with a beta of 1.20 is approximately 20% more volatile than the market, while a
fund with a beta of 0.80 is approximately 20% less volatile than the market.
Market capitalization Also referred to as market cap, market capitalization is
a measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: more than $5 billion in
market capitalization
Mid cap: between $1 billion
and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and share price.
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
NAV $27.07 $26.87 $26.84 $27.14
- -----------------------------------------------------------------
Fund Symbol NNGAX NNGBX NNGCX NNGRX
- -----------------------------------------------------------------
CUSIP 67064Y503 67064Y602 67064Y701 67064Y800
- -----------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
- -----------------------------------------------------------------
</TABLE>
Portfolio Allocation
[PIE CHART APPEARS HERE]
Equity.......94%
Cash
Equivalents.. 6%
Total Returns/1/
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
YTD 16.78% 10.09% 16.32% 16.39% 16.93%
- ---------------------------------------------------------
1-Year 12.37% 5.90% 11.52% 11.58% 12.71%
- ---------------------------------------------------------
Since
Inception* 23.97% 21.46% 23.04% 23.00% 24.32%
- ---------------------------------------------------------
SEC 30-Day
Yield 0.45% 0.43% 0.00% 0.00% 0.69%
</TABLE>
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% 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 total return figures.
* Annualized.
Portfolio Statistics
<TABLE>
<CAPTION>
Total Net Assets $946.7 million
- -----------------------------------------
<S> <C>
Beta 1.00
- -----------------------------------------
Average Market
Capitalization (Stocks) 57 billion
- -----------------------------------------
Average P/E 25.9
- -----------------------------------------
Number of Stocks 42
- -----------------------------------------
Expense Ratio* 1.24%
- -----------------------------------------
</TABLE>
* A shares after reimbursement
Index Comparison*
[LINE CHART APPEARS HERE]
Nuveen Growth and Income Stock Fund (NAV) $18,603
Nuveen Growth and Income Stock Fund (Offer) $17,534
S&P 500 $22,058
Lipper Growth and Income Fund Index $18,107
<TABLE>
<CAPTION>
Nuveen Growth Nuveen Growth Lipper Growth
and Income and Income & Income
Stock Fund (NAV) Stock Fund (Offer) S&P 500 Fund Index
---------------- ------------------ ------- -------------
<S> <C> <C> <C> <C>
8/96 10000 9425 10000 10000
6/97 13616 12833 13803 13055
6/98 16555 15603 17968 15945
6/99 18603 17534 22058 18107
</TABLE>
* The Index comparison shows the change in value of a $10,000 investment in
Class A shares of the Nuveen fund compared with the Standard and Poor's 500
Index and the Lipper Growth and Income Fund Index. The Lipper Growth and Income
Fund Index represents the average returns of the 30 largest funds in the Lipper
Growth and Income Fund category. Index returns reflect total returns and assume
reinvestment of dividends but do not include any initial or ongoing expenses.
The Nuveen fund returns depicted in the chart reflect the initial maximum sales
charge applicable to Class A shares (5.75%) and all ongoing fund expenses.
Effective January 11, 1999, the maximum sales charge on Class A Shares was
increased from 5.25% to 5.75%.
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund prospectus.
ANNUAL REPORT page 6
<PAGE>
Portfolio of Investments
Nuveen Growth and Income Stock Fund
June 30, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ----------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 91.0%
Basic Materials -- 5.7%
463,500 Akzo Nobel N.V. Sponsored ADR $ 19,640,813
435,100 Monsanto Company 17,159,258
241,200 Weyerhauser Company 16,582,500
- ----------------------------------------------------------------------
Capital Goods -- 5.3%
182,800 Tyco International Ltd. 17,320,300
611,150 Waste Management, Inc. 32,849,313
- ----------------------------------------------------------------------
Communications Services -- 10.6%
479,675 AT&T Corp. 26,771,860
347,200 Ameritech Corporation 25,519,200
571,300 Bell Atlantic Corporation 37,348,737
179,800 U.S. West, Inc. 10,563,249
- ----------------------------------------------------------------------
Consumer Cyclicals -- 17.7%
272,900 Dana Corporation 12,570,456
396,200 Dayton Hudson Corporation 25,753,000
398,300 Dun & Bradstreet Corporation 14,114,756
430,250 Federated Department Stores, Inc.# 22,776,359
95,700 Ford Motor Company 5,401,069
261,050 Gannet Co., Inc. 18,632,444
450,200 General Motors Corporation 29,713,200
274,450 General Motors Corporation -- Class H# 15,437,813
495,200 R.H. Donnelley Corporation# 9,687,350
250,900 TRW Inc. 13,768,138
- ----------------------------------------------------------------------
Consumer Staples -- 8.0%
295,650 BestFoods 14,634,675
335,000 Fort James Corporation 12,688,125
273,900 Kimberly-Clark Corporation 15,612,300
814,300 Philip Morris Companies Inc. 32,724,681
- ----------------------------------------------------------------------
Energy -- 2.2%
281,560 Elf Aquitaine SA Sponsored ADR 20,712,258
- ----------------------------------------------------------------------
Financials -- 14.4%
472,000 Bank of America Corporation 34,603,500
162,800 CIGNA Corporation 14,489,200
701,962 Citigroup Inc. 33,343,195
189,650 Hartford Financial Services Group, Inc. 11,058,966
</TABLE>
- -----
7
<PAGE>
Portfolio of Investments (continued)
Nuveen Balanced Municipal and Stock Fund
June 30, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ----------------------------------------------------------------------
<C> <S> <C>
Financials -- continued
565,100 Household International, Inc. $ 26,771,613
497,600 U.S. Bancorp 16,918,400
- ----------------------------------------------------------------------
Health Care -- 9.1%
337,250 Baxter International Inc. 20,445,781
429,500 Bristol-Myers Squibb Company 30,252,906
769,000 Hoechst AG Sponsored ADR 35,374,000
- ----------------------------------------------------------------------
Technology -- 14.4%
229,500 Computer Associates International, Inc. 12,622,500
160,850 International Business Machines Corporation 20,789,863
219,032 Motorola, Inc. 20,753,282
213,500 Nortel Networks Corporation 18,534,469
388,552 Philips Electronics N.V. 39,195,183
419,450 Xerox Corporation 24,773,766
- ----------------------------------------------------------------------
Transportation -- 3.6%
161,150 AMR Corporation# 10,998,488
699,300 Northwest Airlines Corporation# 22,727,250
- ----------------------------------------------------------------------
Total Common Stock -- (cost $701,347,868) 861,634,216
------------------------------------------------------------
PREFERRED STOCKS -- 3.8%
Consumer Cyclicals -- 3.8%
1,130,450 News Corporation Limited Sponsored ADR 35,679,826
- ----------------------------------------------------------------------
Total Preferred Stock -- (cost $23,300,759) 35,679,826
------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Principal Market
Amount Description Value
- ------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 5.9%
$25,000,000 Coca-Cola Company, Commercial Paper, effective yield of 5.15%, 8/02/99 $ 24,891,777
25,000,000 Procter & Gamble, Commercial Paper, effective yield of 5.73%, 7/01/99 25,000,000
5,900,000 Wal-Mart Stores, Inc., Commercial Paper, effective yield of 5.73%, 7/01/99 5,900,000
- ------------------------------------------------------------------------------------------------------------------
$55,900,000 Total Short-Term Investments -- (cost $55,791,777) 55,791,777
- ------------------------------------------------------------------------------------------------------------------
Total Investments -- (cost $780,440,404) 100.7% 953,105,819
----------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- (0.7)% (6,111,019)
----------------------------------------------------------------------------------------------------
Net Assets -- 100% $946,694,800
====================================================================================================
</TABLE>
# Non-income producing.
9
See accompanying notes to financial statements.
<PAGE>
Statement of Net Assets
Nuveen Growth and Income Stock Fund
June 30, 1999
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities, at market value (cost $780,440,404) (note 1) $953,105,819
Cash 400,327
Receivables:
Dividends and interest 1,689,053
Shares sold 4,190,404
Deferred organization costs (note 1) 79,576
Other assets 340,165
- --------------------------------------------------------------------------------------------------------------------------
Total assets 959,805,344
- --------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 10,651,585
Shares redeemed 1,237,732
Accrued expenses:
Management fees (note 4) 619,038
12b-1 distribution and service fees (notes 1 and 4) 258,662
Other 339,405
Dividends payable 4,122
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 13,110,544
- --------------------------------------------------------------------------------------------------------------------------
Net assets (note 5) $946,694,800
==========================================================================================================================
Class A Shares (note 1)
Net assets $793,545,705
Shares outstanding 29,315,605
Net asset value and redemption price per share $ 27.07
Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price)* $ 28.72
==========================================================================================================================
Class B Shares (note 1)
Net assets $ 95,174,122
Shares outstanding 3,541,731
Net asset value, offering and redemption price per share $ 26.87
==========================================================================================================================
Class C Shares (note 1)
Net assets $ 41,071,190
Shares outstanding 1,530,214
Net asset value, offering and redemption price per share $ 26.84
==========================================================================================================================
Class R Shares (note 1)
Net assets $ 16,903,783
Shares outstanding 622,889
Net asset value, offering and redemption price per share $ 27.14
==========================================================================================================================
</TABLE>
*Effective January 11, 1999, the maximum sales charge on Class A Shares was
increased from 5.25% to 5.75%.
- -----
10
See accompanying notes to financial statements.
<PAGE>
Statement of Operations
Nuveen Growth and Income Stock Fund
Year Ended June 30, 1999
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------------------------
Investment Income (note 1)
Dividends $13,175,620
Interest 3,616,746
- -----------------------------------------------------------------------------------
Total investment income 16,792,366
- -----------------------------------------------------------------------------------
Expenses
Management fees (note 4) 6,911,325
12b-1 service fees - Class A (notes 1 and 4) 1,808,231
12b-1 distribution and service fees - Class B (notes 1 and 4) 730,747
12b-1 distribution and service fees - Class C (notes 1 and 4) 255,849
Shareholders' servicing agent fees and expenses 968,116
Custodian's fees and expenses 123,236
Trustees' fees and expenses (note 4) 90,468
Professional fees 59,225
Shareholders' reports - printing and mailing expenses 319,498
Federal and state registration fees 73,347
Amortization of deferred organization costs (note 1) 36,000
Other expenses 63,116
- -----------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 11,439,158
Custodian fee credit (note 1) (6,857)
Expense reimbursement (note 4) (347,366)
- -----------------------------------------------------------------------------------
Net expenses 11,084,935
- -----------------------------------------------------------------------------------
Net investment income 5,707,431
- -----------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 3) 31,610,896
Net change in unrealized appreciation or depreciation of investments 59,442,442
- -----------------------------------------------------------------------------------
Net gain from investments 91,053,338
- -----------------------------------------------------------------------------------
Net increase in net assets from operations $96,760,769
===================================================================================
</TABLE>
- -----
11
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended
6/30/99 6/30/98
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 5,707,431 $ 7,784,661
Net realized gain from investment transactions (notes 1 and 3) 31,610,896 110,057,991
Net change in unrealized appreciation or depreciation of investments 59,442,442 33,508,467
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 96,760,769 151,351,119
- --------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (1,233,736) (7,296,320)
Class B (2,076) (174,471)
Class C (4,846) (50,306)
Class R (45,702) (207,438)
From accumulated net realized gains from investment transactions:
Class A (64,233,341) (55,954,562)
Class B (6,427,129) (3,039,218)
Class C (2,186,424) (762,373)
Class R (1,233,763) (1,266,493)
- --------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (75,367,017) (68,751,181)
- --------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 105,953,619 171,997,447
Net proceeds from shares issued to shareholders due to reinvestment of distributions 49,322,552 55,521,813
- --------------------------------------------------------------------------------------------------------------------
155,276,171 227,519,260
Cost of shares redeemed (131,707,460) (54,536,779)
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 23,568,711 172,982,481
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets 44,962,463 255,582,419
Net assets at the beginning of year 901,732,337 646,149,918
- --------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 946,694,800 $901,732,337
====================================================================================================================
Balance of undistributed net investment income at the end of year $ 4,525,655 $ 104,584
====================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<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 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 delayed delivery purchase commitments. At June 30, 1999, 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 and net realized capital gains from investment
transactions, if any, are declared and distributed to shareholders 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.
- -----
13
<PAGE>
Notes to Financial Statements (continued)
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 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 only under limited circumstances, or by specified classes
of shareholders.
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, 1999.
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. Actual results may differ
from those estimates.
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.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
- -----
14
<PAGE>
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Year Ended 6/30/99 Year Ended 6/30/98
---------------------- -----------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 2,108,966 $ 51,032,462 3,567,835 $ 89,573,723
Class B 1,164,391 28,993,639 2,261,218 56,728,012
Class C 901,784 22,488,408 697,568 17,510,818
Class R 139,756 3,439,110 325,380 8,184,894
Shares issued to shareholders
due to reinvestment of distributions:
Class A 1,881,914 42,862,233 2,217,304 50,837,734
Class B 184,034 4,158,678 119,470 2,714,481
Class C 43,891 990,959 30,815 699,886
Class R 57,417 1,310,682 55,208 1,269,712
- -----------------------------------------------------------------------------------------------
6,482,153 155,276,171 9,274,798 227,519,260
- -----------------------------------------------------------------------------------------------
Shares redeemed:
Class A (4,484,770) (107,597,350) (1,640,986) (41,459,146)
Class B (523,515) (12,739,469) (108,267) (2,735,040)
Class C (226,134) (5,392,875) (69,070) (1,753,632)
Class R (265,612) (5,977,766) (340,624) (8,588,961)
- -----------------------------------------------------------------------------------------------
(5,500,031) (131,707,460) (2,158,947) (54,536,779)
- -----------------------------------------------------------------------------------------------
Net increase 982,122 $ 23,568,711 7,115,851 $172,982,481
===============================================================================================
</TABLE>
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, 1999, were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Purchases:
<S> <C>
Investment securities $1,043,257,403
U.S. government obligations 1,424,340,844
Short-term investments 4,372,894,683
Sales:
Investment securities 1,061,709,999
U.S. government obligations 1,424,600,000
Short-term investments 4,391,691,047
===============================================================================================
</TABLE>
At June 30, 1999, the identified cost of investments owned for federal income
tax purposes was $787,500,652. Net unrealized appreciation for federal income
tax purposes aggregated $165,605,167 of which $175,513,869 related to
appreciated securities and $9,908,702 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 assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets 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 had agreed to waive fees and reimburse expenses 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 through July 31, 1998, and 1.05% from August 1, 1998
through July 31, 2000.
- -----
15
<PAGE>
Notes to Financial Statements (continued)
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, 1999, 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 $1,865,400, of
which approximately $1,752,800 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, 1999, the Distributor compensated
authorized dealers directly with approximately $1,247,800 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, 1999, the Distributor retained approximately $802,900 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 $299,500
of CDSC on share redemptions during the fiscal year ended June 30, 1999.
5. Composition of Net Assets
At June 30, 1999, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
<TABLE>
- ---------------------------------------------------------------------------
<S> <C>
Capital paid-in $739,007,776
Balance of undistributed net investment income 4,525,655
Accumulated net realized gain from investment transactions 30,495,954
Net unrealized appreciation of investments 172,665,415
- ---------------------------------------------------------------------------
Net assets $946,694,800
===========================================================================
</TABLE>
- -----
16
<PAGE>
Financial Highlights
- -----
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
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
June 30, Value Income(a) (Loss) Total Income Gains Total Value Return(b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1999 $26.50 $.19 $2.64 $2.83 $(.04) $(2.22) $(2.26) $27.07 12.37%
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)
1999 26.47 .01 2.61 2.62 -- (2.22) (2.22) 26.87 11.52
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)
1999 26.43 .01 2.62 2.63 -- (2.22) (2.22) 26.84 11.58
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)
1999 26.52 .24 2.67 2.91 (.07) (2.22) (2.29) 27.14 12.71
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>
<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
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Credit/ Before Credit/ After Credit/ After Credit/ Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
June 30, (000) ment ment ment(a) ment(a) Rate
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1999 $793,546 1.28% .72% 1.24% .76% 134%
1998 790,063 1.36 .88 1.20 1.04 131
1997(c)** 616,209 1.28* 1.45* 1.20* 1.53* 110
Class B (8/96)
1999 95,174 2.03 (.01) 1.99 .03 134
1998 71,909 2.11 .22 1.95 .38 131
1997(c)** 10,664 2.03* .95* 1.95* 1.03* 110
Class C (8/96)
1999 41,071 2.02 -- 1.98 .04 134
1998 21,426 2.11 .23 1.95 .39 131
1997(c)** 3,630 2.03* .96* 1.95* 1.04* 110
Class R (8/96)
1999 16,904 1.03 .96 .99 1.00 134
1998 18,335 1.11 1.10 .95 1.26 131
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 custodian fee credit and expense reimbursement, where applicable
(notes 1 and 4).
(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.
- -----
18
<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, 1999, 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, 1999, 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, 1999, 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 20, 1999
- -----
19
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
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
Dividend and Growth Fund
Income
Income Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
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, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide 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
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.
- -----
20
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
- -----
21
<PAGE>
[NUVEEN LOGO APPEARS HERE]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
SERVING
Investors for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
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 whose aim is to provide consistent,
competitive 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 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 growth,
growth and income, income, and tax-free 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.
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
EAN-GI-6-99
<PAGE>
June 30, 1999 Annual Report
NUVEEN
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Balanced Municipal and Stock Fund
For investors seeking
tax-free income and
growth of capital.
[PHOTO APPEARS HERE]
Featuring Portfolio Management By Nuveen Investment Advisory Services
A Premier Adviser/SM/ for Income Investing
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective
7 Fund Spotlight
8 Portfolio of Investments
14 Statement of Net Assets
15 Statement of Operations
16 Statement of Changes in Net Assets
17 Notes to Financial Statements
21 Financial Highlights
23 Report of Independent Public
Accountants
24 Building a Better Portfolio
25 Fund Information
<PAGE>
DEAR
Shareholder
At this writing, we're more than halfway through 1999. The much-talked-about
millennium (Y2K) looms, which really puts the concept of time in front of us
all. We think: "Where did the time go?"
We think about how old, 25 years ago, we thought we would be when the calendar
turned January 1, 2000. (And we realize, now, it is really not that old at all.)
We think about all the things we thought we would have accomplished before 1999
became 2000. Most likely, one of your millennium goals was financial. Whether it
was to fully fund your retirement accounts or set up trusts for your
grandchildren, the fact you're working with a financial adviser and reading this
report are positive signs that you're well on your way to achieving your goal.
I'm pleased to report we're meeting our goals, too. In addition to the goals we
have established for each mutual fund we manage, we have had to set goals in
preparation for the millennium.
All efforts to safeguard critical systems are right on schedule at Nuveen.
It's a goal we set more than 10 years ago. Nuveen's trading, fund management and
pricing -- systems that affect you and your investments -- have been updated or
replaced to be able to deal accurately with Y2K.
We continue to work closely with our service providers, transfer agent,
custodian and trustee to monitor the readiness of their systems, as well as
address any remaining internal systems issues. Testing should be completed by
the end of September.
The Securities and Exchange Commission (SEC), which oversees the securities
industry, is also taking significant steps to help our industry make a smooth
transition into the year 2000. First, the SEC is requiring all public companies,
investment advisers, investment companies and municipal securities issuers to
disclose their ability to comply with the Y2K issue.
In addition, the SEC mandated that tests be conducted on various financial
systems to test the ability of exchanges and broker/dealer firms to handle
transactions effectively. We participated successfully in those tests.
With our systems in place and ready to handle Y2K, we look forward to
helping you achieve your financial goals in the new millennium.
Your Fund's Fiscal Year. I want to briefly report on the economic environment in
which your investment in Nuveen Balanced Municipal and Stock Fund performed.
Read on for an in-depth interview with representatives from the portfolio
management team for your fund, describing how that team of investment and
research professionals directed the portfolio during its fiscal year, July 1,
1998, through June 30, 1999.
Over the past 12 months, the U.S. economy has continued to be characterized
by robust growth, generally low interest rates, and unemployment levels that
remain among the lowest in three decades.
[Photo of Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
"All efforts to
safeguard critical
systems are right
on schedule
at Nuveen."
ANNUAL REPORT page 1
<PAGE>
2
Concerns, however, about the pace of the economy's expansion have tested
the new paradigm that holds that improvements in productivity enable us to have
both economic growth and low inflation at the same time. With investors and the
various markets watching -- and reacting to -- every announcement concerning
economic statistics, volatility has increased, especially in the equity markets.
We have entered a different economic environment from that of 12 months
ago. This shift has occurred in response to two factors:
. the Asian financial crisis of 1998 did not produce the slowdown that was
widely expected to keep economic growth from becoming overly robust;
. evidence of accelerating prices, most obvious in the sudden spike in the
April 1999 Consumer Price Index, contributed to the reemergence of the
specter of inflation, accompanied by predictions of higher interest
rates.
In an effort to pre-empt this inflation threat, the Federal Reserve moved
to raise the federal funds rate by a quarter-point -- to 5.0% -- at the end of
June. The upward adjustment to this rate, which represents the amount banks
charge one another on overnight loans, marks the first increase since March 1997
and stands in sharp contrast to the three reductions made last fall.
At the end of June 1999, the ratio between long-term municipal yields and
30-year Treasury yields stood at 94%, compared with the historical average of
86% over the period 1986-1999. For investors, this meant that quality long-term
municipal bonds offered yields comparable to those of long Treasury bonds --even
before the tax advantages of municipals were taken into account. On an after-tax
basis, municipal bonds continued to present an exceptionally attractive
investment option relative to Treasurys.
In the coming months, we expect to see a healthy supply of new municipal
bonds, although total volume is expected to drop from the near-record levels of
1998. This is due to the dramatic decrease in the refunding of existing bonds in
the wake of higher interest rates compared to last June.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets are better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, contact your financial
adviser for a prospectus, call Nuveen at (800) 621-7227, or download one from
our Web site at www.nuveen.com. Please read the prospectus carefully before you
invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. As we look ahead to a new millennium, we are committed to
maintaining that reputation and finding the best ways to serve your evolving
investment needs. Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 16, 1999
"Your financial
adviser can serve
as a valuable
resource in helping
you determine if
adjustments are
needed in your
current asset
allocation plan."
ANNUAL REPORT page 2
<PAGE>
From the Portfolio Manager's Perspective
- --------------------------------------------------------------------------------
Nuveen Balanced Municipal and Stock Fund features portfolio management by two
teams of experts -- one specializing in municipal bonds and the other in large
capitalization equities. The two Premier Advisers/sm/ managing the fund are
Nuveen Institutional Advisory Corp (NIAC), which manages the municipal portion
of the portfolio, and Institutional Capital Corporation (ICAP), managing the
equity portion. To help you understand the fund's performance during its fiscal
year ended June 30, 1999, Brandon Thomas, director of equity funds at Nuveen,
spoke with Tom Spalding of NIAC, and Rob Lyon, president and chief investment
officer of ICAP.
BRANDON Equity value investing at Nuveen and ICAP means seeking out stocks of
established, well-known companies the portfolio management team believes offer
unrecognized value with a "catalyst" that may trigger a rise in the stocks'
prices. In the past few years, growth stocks, which generally have higher
earnings growth rates than value stocks, have been among the market's best
performers, as the economy has grown modestly and investors sought out companies
with consistent earnings. In fact, these stocks have outperformed value stocks
in each of the past five years, through 1998.
But, during the first part of 1999, we've seen value stocks make a
comeback. To what do you attribute the change?
ROB It's not unusual to see the comeback given the economic conditions that are
surfacing. Since October 1998, there have been more than 100 interest rate cuts
made by foreign central banks. That has resulted in stronger industrial
production throughout the world, which is likely to lead to more positive
earnings for many companies. With more companies participating in an
accelerating economy, investor confidence then shifts, and value stocks, as well
as emerging market issues, are once again attractive to investors.
BRANDON Isn't it extraordinary for a shift of this magnitude from growth to
value to take place without our economy having been in a recession?
ROB Yes, it generally would be. But while the United States avoided a recession,
much of the world was in a terrible one. It's coming out of it now, and a broad
range of companies are benefiting from the turnaround.
BRANDON Let's review the fund's performance during its fiscal year. For the one-
year period ended June 30, 1999, the fund returned 5.49%. Since the fund's
inception in August 1996, it has gained 13.12%. The fund, at June 30, was 59%
invested in municipal bonds, 39% invested in stocks and about 2% invested in
cash equivalents.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Adviserssm -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. They have been chosen by Nuveen for their rigorously disciplined
investment approaches and their consistent long-term performance.
Nuveen's Premier Advisersm for value investing, Institutional Capital
Corporation, is a highly successful institutional money manager with nearly 30
years of experience. They specialize in finding undervalued midsize and large
company stocks that are poised for significant growth.
Nuveen Institutional Advisory Corp., is the Premier Advisersm for income
investing. Averaging 10 years of investment experience, the team members offer a
commitment to exhaustive research, an active, value-oriented investment style
and the presence and trading leverage of a market leader.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the fund's fiscal year ended June 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
ANNUAL REPORT page 3
<PAGE>
We believe investors and their financial advisers will continue to find
that balanced funds combining municipals and equities, such as this one, provide
a number of key benefits that are sometimes difficult to find in other balanced
funds. These benefits include growth potential afforded by equities, a monthly
tax-free dividend and moderated risk resulting from asset class diversification.
What strategies did your team employ in the equity portfolio during the
year?
ROB As value investors, we took a hard look at companies that suffered during
the Asian financial crisis, which dominated the economic landscape last year.
Then we identified individual candidates that met our quantitative criteria --
where earnings were already starting to stabilize or improve, where there would
be a significant benefit from the world's economic improvement, and where we
determined there could be potential for 20% appreciation.
I'd like to point out this is a shift from six months ago when we focused
on the stocks of companies whose business is primarily domestic in nature. The
reason for the change is the same as the shift in the market from growth to
value. In August and September of 1998, we were concerned with a global economic
slowdown and believed the U.S. would be a safe haven. Now that those concerns
have dissipated, we believe there's considerable value in multinational
companies, in addition to domestic firms.
BRANDON What companies met those criteria?
ROB One of the fund's strongest performers in the first half of this year was
Motorola, Inc. Our analysts determined that its line of cellular phones was much
improved and that its upside potential in non-Japan Asia was substantial.
Motorola, a leader in global communications and major investor in emerging
technologies, is a good example of a company that should benefit from the
economic improvement underway throughout the world, particularly in Asia.
Top Five Stock Holdings
General Motors Corporation 5.1%
- --------------------------------------------
Philips Electronics N.V. 4.3%
- --------------------------------------------
Bell Atlantic Corporation 4.1%
- -------------------------------------------
News Corporation Limited Sponsored ADR 3.9%
- --------------------------------------------
Bank of America Corporation 3.9%
- --------------------------------------------
The companies listed represent their respective percentage as a percentage of
total stock holdings as of 6/30/99. Over time, the fund's holdings and their
percentages will vary.
BRANDON In addition to focusing on firms that would benefit from the economic
turnaround in Asia and the rest of the world, what other strategies were in
place during the year?
ROB Corporate restructurings continued to be another central theme guiding our
investment choices.
Philips Electronics N.V., one of the fund's largest holdings, is performing
well as its cost-cutting initiatives and divestitures continued to create a more
focused corporate strategy. Many people don't realize that Philips is one of the
world's leading semiconductor manufacturers and is the No. 1 producer of light
bulbs. And as part of its refocusing on its
ANNUAL REPORT page 4
<PAGE>
core consumer electronics business, the company sold its Polygram Records
division to Seagram for $12 billion and is now using the proceeds to buy back
its own stock. That's just one example of what the Netherlands-based company is
doing right.
BRANDON We turn to Tom Spalding to discuss the municipal portion of the
portfolio. Throughout 1998, municipal bonds represented a reasonably insulated
haven in an otherwise turbulent market, with lower volatility relative to
Treasury bonds and other fixed-income investments.
How did the global economic crises of 1998, the three U.S. rate cuts last
fall and the Federal Funds rate hike on June 30, 1999, affect your management of
this portion of the fund's portfolio?
TOM Since the inception of the fund, our strategy in managing the municipal
portion has been to focus on bonds with intermediate maturities. During the last
six months of 1998 and the first three months of this year, these bonds enjoyed
solid price gains with the decline in interest rates and were instrumental in
moderating the fund's volatility in last summer's stock market decline.
With the acceleration in economic activity throughout the second quarter of
1999, however, bond prices fell and bond yields rose. Again, concentrating on
intermediate-term maturity municipals provided the portfolio with some downside
protection, as intermediates tend not to be as affected by interest rate
movements.
There was a second way we were able to take advantage of the rise in
interest rates in the second quarter of this year. As rates rose we were able to
demonstrate the effectiveness of a balanced portfolio by realizing losses in the
fixed-income portfolio in order to offset realized gains in the equity
portfolio. These equity gains resulted from the stock market's advance of the
past few years. By offsetting gains with losses, taxable distributions were kept
as low as possible.
Equity Diversification
[PIE CHART APPEARS HERE]
Consumer Cyclical.....23.3%
Financials............15.7%
Technology............15.6%
Communications........11.1%
Health Care............9.2%
Consumer Staples.......8.6%
Capital Goods..........5.9%
Basic Materials........5.8%
Energy.................2.5%
Transportation.........2.3%
Portfolio composition is subject to change. Composition is based on the fund's
U.S. stocks and American Depositary Receipts as of 6/30/99.
BRANDON What are some examples of bonds purchased during the year?
TOM The municipal portion of the portfolio had minimal turnover during the year,
but we did add an issue which we believe is particularly attractive, a
Southgate, Michigan Community School District bond.
In the first half of the fiscal year, we also focused on diversifying the
fund's municipal holdings geographically. Added during that period were New York
City General Obligation Bonds, District of Columbia General Obligation Bonds, as
well as Denver Airport Bonds and Nevada Housing Division Bonds.
"As value investors,
we took a hard look
at companies that
suffered during the
Asian financial
crisis ... Then we
identified individual
candidates that met
our quantitative
criteria."
ANNUAL REPORT page 5
<PAGE>
BRANDON What is your outlook for the fund, especially in light of the recent
concerns about inflation?
TOM In terms of the fixed-income portfolio, we believe the fund's holdings are
well-positioned. Even if the Fed raises rates again, the intermediate-term
nature of the portfolio should serve to help protect against an overall decline
in bond prices. And should bond prices rally and rates decline, the portfolio
should participate in the advance.
We'll continue to seek to diversify the portfolio geographically, and add
only those bonds that represent attractive value.
We'll also continue to seek opportunities to manage capital gains
distributions by working closely with the equity portfolio managers to realize
losses where appropriate. Tax losses can benefit shareholders when they are used
to offset capital gains.
ROB We are confident that the fund's equity portfolio is also positioned well,
with its low relative valuation, including its low price-to-earnings ratio,
whether the market continues its advance or levels off a bit.
The U.S. economy is very strong. The reason for the interest rate cuts made
by the Federal Reserve last fall -- global economic uncertainty -- is behind us.
We have had one rate increase by the Fed so far this year, and there may be
more, but we think the implications for the stock market are neutral.
We think an interest rate hike is simply a confirmation that the economy is
exhibiting strong growth, which is usually favorable for cyclical, economically
sensitive value stocks.
Basically, we believe small increases in interest rates just confirm that
the earnings power of the value stocks are coming back.
There's no shortage of value opportunities out there, so we will continue
to do our homework to identify and add those companies to the portfolio that we
believe give the fund's shareholders the best opportunity for continued strong
performance.
ANNUAL REPORT page 6
<PAGE>
Fund Spotlight as of June 30, 1999
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $25.45 $25.65 $25.63 $25.33
- ---------------------------------------------------------------------------
Fund Symbol NBMSX NMNBX NBMCX N/A
- ---------------------------------------------------------------------------
CUSIP 67064Y883 67064Y875 67064Y867 67064Y859
- ---------------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
- ---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Total Returns+
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
YTD 5.26% -0.79% 4.89% 4.85% 5.42%
- -----------------------------------------------------------------------
1-Year 5.49% -0.56% 4.71% 4.71% 5.81%
- -----------------------------------------------------------------------
Since
Inception* 13.12% 10.82% 12.31% 12.28% 13.42%
- -----------------------------------------------------------------------
Tax-Exempt
Distribution
Rate 2.05% 1.93% 1.31% 1.31% 2.30%
- -----------------------------------------------------------------------
SEC 30-Day
Yield 2.53% 2.38% 1.79% 1.79% 2.78%
</TABLE>
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% 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 total return
figures.
* Annualized
Portfolio Allocation
[PIE CHART APPEARS HERE]
Municipal
Bonds..........59%
Equity.........39%
Cash
Equivalents.....2%
Portfolio Statistics
Total Net Assets $198.3 million
- ------------------------------------------
Fixed Income
Average Duration 6.68
- ------------------------------------------
Average Market
Capitalization (Stocks) $57 billion
- ------------------------------------------
Average P/E 25.9
- ------------------------------------------
Number of Stocks 42
- ------------------------------------------
Expense Ratio* 1.19%
- ------------------------------------------
* For Class A shares after reimbursement
Terms To Know
The following are a few terms used throughout this report.
Duration Duration is an indicator of a portfolio's sensitivity to interest
rates.
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and share price.
Index Comparison(*)
[LINE CHART APPEARS HERE]
Nuveen Balanced Nuveen Balanced Lehman Brothers
Municipal and Municipal & 10-Year
Stock Fund (NAV) Stock Fund (Offer) S&P 500 Municipal Index
---------------- ------------------ ------- ---------------
8/96 10000 9425 10000 10000
6/97 11859 11177 13803 10730
6/98 13603 12821 17968 11640
6/99 14350 13525 22058 11907
Nuveen Balanced Municipal and Stock Fund (NAV) $14,350
Nuveen Balanced Municipal and Stock Fund (Offer) $13,525
S&P 500 $22,058
Lehman Brothers 10-Year Municipal Index $11,907
* The Index Comparison shows the change in value of a $10,000 investment in
Class A shares of the Nuveen Fund compared with the Standard and Poor's 500
Index and the Lehman Brothers 10-Year Municipal Bond 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 A shares (5.75%)
and all ongoing fund expenses.
Effective January 11, 1999, the maximum sales charge on Class A shares increased
to 5.75% from 5.25%.
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund prospectus.
ANNUAL REPORT page 7
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund
June 30, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 37.0%
Basic Materials - 2.2%
38,700 Akzo Nobel N.V. Sponsored ADR $ 1,639,913
39,000 Monsanto Company 1,538,063
39,650 UPM-Kymmene Oyj Corporation Sponsored ADR 1,246,497
- --------------------------------------------------------------------------------
Capital Goods - 2.3%
16,850 Tyco International Ltd. 1,596,538
53,750 Waste Management, Inc. 2,889,063
- --------------------------------------------------------------------------------
Communication Services - 4.3%
37,660 AT&T Corp. 2,101,899
31,650 Ameritech Corporation 2,326,275
47,500 Bell Atlantic Corporation 3,105,313
15,300 U.S. West, Inc. 898,875
- --------------------------------------------------------------------------------
Consumer Cyclicals - 7.5%
23,300 Dana Corporation 1,073,256
34,950 Dayton Hudson Corporation 2,271,750
35,950 Dun & Bradstreet Corporation 1,273,978
37,600 Federated Department Stores, Inc.# 1,990,450
8,200 Ford Motor Company 462,788
23,400 Gannett Co., Inc. 1,670,175
39,450 General Motors Corporation 2,603,700
23,100 General Motors Corporation - Class H# 1,299,375
21,300 TRW Inc. 1,168,838
22,700 Royal Caribbean Cruises Ltd. 993,125
- --------------------------------------------------------------------------------
Consumer Staples - 3.3%
26,450 BestFoods 1,309,275
28,200 Fort James Corporation 1,068,075
24,050 Kimberly-Clark Corporation 1,370,850
70,100 Philip Morris Companies Inc. 2,817,144
- --------------------------------------------------------------------------------
Energy - 1.0%
26,040 Elf Aquitaine SA Sponsored ADR 1,915,568
- --------------------------------------------------------------------------------
Financials - 6.1%
40,550 Bank of America Corporation 2,972,822
15,700 CIGNA Corporation 1,397,300
56,112 Citigroup Inc. 2,665,320
21,900 Hartford Financial Services Group, Inc. 1,277,044
47,450 Household International, Inc. 2,247,944
42,700 U.S. Bancorp 1,451,800
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Health Care - 3.5%
30,450 Baxter International Inc. $ 1,846,031
33,150 Bristol-Myers Squibb Company 2,335,003
61,500 Hoechst AG Sponsored ADR 2,829,000
- --------------------------------------------------------------------------------
Technology - 5.9%
19,600 Computer Associates International, Inc. 1,078,000
14,200 International Business Machines Corporation 1,835,350
18,896 Motorola, Inc. 1,790,396
18,950 Nortel Networks Corporation 1,645,097
32,238 Philips Electronics N.V. 3,252,008
38,750 Xerox Corporation 2,288,672
- --------------------------------------------------------------------------------
Transportation - 0.9%
14,050 AMR Corporation# 958,913
24,900 Northwest Airlines Corporation# 809,250
- --------------------------------------------------------------------------------
Total Common Stocks - (cost $58,769,216) 73,310,733
-----------------------------------------------------------------------
PREFERRED STOCKS - 1.5%
Consumer Cyclical - 1.5%
95,200 News Corporation Limited Sponsored ADR 3,004,750
- --------------------------------------------------------------------------------
Total Preferred Stocks - (cost $1,921,627) 3,004,750
-----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS - 58.9%
Alabama - 0.2%
$ 455,000 Alabama Water Pollution Control Authority, Revolving Fund Loan Bonds, 8/05 at 100 AAA $ 492,938
Series 1994, 6.625%, 8/15/08
- ------------------------------------------------------------------------------------------------------------------------------------
California - 2.6%
2,500,000 City of Escondido, California, Multifamily Housing Revenue Refunding Bonds, /05 at 101 1/2 AAA 2,603,150
Series 1997B (Morning View Terrace Apartments), 5.400%, 1/01/27 (Mandatory
put 7/01/07)
735,000 Northern California Power Agency, Public Power Revenue Refunding Bonds, No Opt. Call A- 769,302
Geothermal Project No. 3, 1993 Series A, 5.650%, 7/01/07
250,000 County of Orange, California, Refunding Recovery Bonds, 1995 Series A, 6.000%, No Opt. Call AAA 273,140
6/01/10
1,495,000 Palmdale Civic Authority (Civic Center Refinancing), 1997 Series A, 5.375%, 7/07 at 102 AAA 1,522,792
7/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 1.0%
2,000,000 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 11/06 at 102 AAA 2,075,080
1996 B, 5.625%, 11/15/08 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Connecticut - 3.6%
1,075,000 Connecticut Housing Finance Authority, Housing Mortgage Finance Program Bonds, 5/06 at 102 AA 1,120,806
1996 Series B, Subseries B-2, 5.750%, 11/15/08 (Alternative Minimum Tax)
1,000,000 State of Connecticut Health and Educational Facilities Authority, Hospital for No Opt. Call BBB 996,110
Special Care Issue, Series B, 5.125%, 7/01/07
1,485,000 Connecticut Development Authority, First Mortgage Gross Revenue Health Care 12/06 at 103 BBB+ 1,445,959
Project Refunding Bonds, Series 1998A (The Elim Park Baptist Home, Inc.
Project), 4.875%, 12/01/07
3,500,000 West Haven Housing Authority (Connecticut), Multifamily Housing Revenue Bonds, 1/01 at 100 N/R 3,538,010
Series 1998B (Meadows Landing Apartments), 6.000%, 1/01/02 (Alternative
Minimum Tax)
</TABLE>
9
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund (continued)
June 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
District of Columbia -- 2.2%
$3,500,000 District of Columbia, General Obligation Bonds, Series 1998B, 6.000%, 6/01/11 No Opt. Call AAA $3,744,650
500,000 District of Columbia, General Obligation Refunding Bonds, Series A-1, 6.500%, No Opt. Call AAA 555,668
6/01/10
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 1.4%
2,000,000 Development Authority of Fulton County (Georgia), Special Facilities Revenue 5/08 at 101 BBB- 1,960,500
Bonds (Delta Air Lines, Inc. Project), Series 1998, 5.300%, 5/01/13
(Alternative Minimum Tax)
805,000 Georgia Housing and Finance Authority, Single Family Mortgage Bonds, 1996 6/06 at 102 AAA 828,184
Series A, 5.875%, 12/01/19 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Idaho - 1.5%
1,350,000 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 1997 1/07 at 102 A1 1,413,828
Series D, 5.950%, 7/01/09 (Alternative Minimum Tax)
1,425,000 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 1997 7/07 at 101 1/2 A1 1,466,582
Series F, 5.700%, 7/01/10 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 5.3%
1,075,000 Village of Bolingbrook, Will and DuPage Counties, Illinois, Residential No Opt. Call AAA 1,263,512
Mortgage Revenue Bonds, Series 1979, 7.500%, 8/01/10
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 662,553
2,360,000 0.000%, 12/01/10 No Opt. Call AAA 1,302,980
Illinois Development Finance Authority, Economic Development Revenue Bonds,
Series 1998 (The Latin School of Chicago Project):
270,000 5.200%, 8/01/11 8/08 at 100 Baa2 259,678
200,000 5.250%, 8/01/12 8/08 at 100 Baa2 191,946
580,000 5.300%, 8/01/13 8/08 at 100 Baa2 556,841
2,160,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1985 7/04 at 102 N/R*** 2,443,997
(St. Elizabeths Hospital of Chicago, Inc.), 7.250%, 7/01/05
(Pre-refunded to 7/01/04)
1,500,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1993 (OSF 11/03 at 102 A 1,551,150
Healthcare System), 6.000%, 11/15/10
245,000 Illinois Health Facilities Authority, FHA Insured Mortgage Revenue Bonds, 2/06 at 102 AAA 251,495
Series 1996 (Sinai Health System), 5.500%, 2/15/09
1,200,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1997A (Highland 10/07 at 102 AAA 1,249,728
Park Hospital Project), 5.700%, 10/01/10
700,000 Kankakee School District No. 111, Kankakee County, Illinois, General Obligation 1/06 at 100 AAA 711,655
School Bonds, Series 1996, 5.500%, 1/01/12
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 0.8%
1,525,000 Indiana Housing Finance Authority, Single Family Mortgage Revenue Bonds, 7/08 at 101 Aaa 1,517,543
1998 Series C-3, 5.300%, 7/01/13 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Kentucky - 1.3%
2,500,000 County of Boone, Kentucky, Mortgage Revenue Bonds (Normandy Green Apartments 12/99 at 100 N/R 2,510,500
Project), Series 1998A, 5.200%, 6/20/38 (Alternative Minimum Tax)
(Mandatory put 12/20/99)
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana - 1.3%
Parish School Board of the Parish of Jefferson, State of Louisiana, Sales Tax
School Bonds, Refunding Series 1998:
1,045,000 0.000%, 3/01/08 No Opt. Call AAA 675,885
2,175,000 0.000%, 9/01/08 No Opt. Call AAA 1,371,838
1,000,000 0.000%, 3/01/10 No Opt. Call AAA 575,870
- ------------------------------------------------------------------------------------------------------------------------------------
Maine - 0.1%
255,000 Town of Winslow, Maine (Crowe Rope Industries Project), General Obligation 3/07 at 102 Aaa 268,941
Tax Increment Financing Bonds, 1997 Series A, 6.000%, 3/01/11 (Alternative
Minimum Tax)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Massachusetts - 4.3%
Massachusetts Development Finance Agency, Resource Recovery Revenue
Bonds (Ogden Haverhill Project), Series 1998B:
$ 1,720,000 5.100%, 12/01/12 (Alternative Minimum Tax) 12/08 at 102 BBB $1,624,024
1,885,000 5.200%, 12/01/13 (Alternative Minimum Tax) 12/08 at 102 BBB 1,785,981
250,000 Massachusetts Health and Educational Facilities Authority, 7/06 at 102 AAA 268,773
Revenue Bonds, Melrose-Wakefield Healthcare Corp. Issue, Series C,
5.700%, 7/01/08 (Pre-refunded to 7/01/06)
Massachusetts Industrial Finance Agency, Resource Recovery Revenue
Refunding Bonds (Ogden Haverhill Project), Series 1998A:
1,500,000 5.450%, 12/01/12 (Alternative Minimum Tax) 12/08 at 102 BBB 1,465,080
1,825,000 5.500%, 12/01/13 (Alternative Minimum Tax) 12/08 at 102 BBB 1,782,332
1,835,000 Massachusetts Turnpike Authority, Western Turnpike Revenue Bonds, 7/99 at 100 AAA 1,844,175
1997 Series A, 5.550%, 1/01/17
- -----------------------------------------------------------------------------------------------------------------------------------
Michigan - 1.6%
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 (Pre-refunded to 5/01/07) 5/07 at 100 AAA 1,044,380
1,010,000 5.500%, 5/01/12 (Pre-refunded to 5/01/07) 5/07 at 100 AAA 1,061,369
1,000,000 Southgate Community School District, County of Wayne, State of 5/09 at 100 AAA 1,042,240
Michigan, 1999 School Building and Site Bonds (General Obligation -
Unlimited Tax), 5.750%, 5/01/14
- -----------------------------------------------------------------------------------------------------------------------------------
Mississippi - 0.9%
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+ 1,283,741
500,000 5.400%, 12/01/11 12/07 at 100 BBB+ 497,965
- -----------------------------------------------------------------------------------------------------------------------------------
Nebraska - 5.0%
9,921,273 Energy America (Nebraska), Natural Gas Revenue Note (Metropolitan No Opt. Call N/R 9,851,824
Utility District Project), Series 1997B, 5.700%, 7/01/08
- -----------------------------------------------------------------------------------------------------------------------------------
Nevada - 1.3%
2,200,000 Nevada Housing Division, Single Family Mortgage Bonds, 1997 4/07 at 102 Aa3 2,266,880
Series A-1 Mezzanine Bonds, 6.000%, 4/01/15 (Alternative Minimum Tax)
250,000 Airport Authority of Washoe County, Reno, Nevada, Airport Revenue 7/03 at 102 AAA 263,075
Refunding Bonds, Series 1993B, 5.875%, 7/01/11
- -----------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 2.3%
1,450,000 New Hampshire Higher Educational and Health Facilities Authority 1/07 at 102 BBB- 1,473,389
(New Hampshire College), Series 1997, 6.200%, 1/01/12
3,000,000 State of New Hampshire, Turnpike System Revenue Bonds, 1992 4/02 at 102 AAA 3,158,130
Series, 6.000%, 4/01/13
- -----------------------------------------------------------------------------------------------------------------------------------
New York - 10.5%
2,000,000 Certificates of Participation, The State of New York, The City No Opt. Call BBB+ 2,120,360
University of New York (John Jay College of Criminal Justice
Project Refunding), 6.000%, 8/15/06
Dutchess County Water and Wastewater Authority (New York), Service
Agreement Revenue Bonds, 1998 Series One:
420,000 4.850%, 6/01/09 6/08 at 101 A 405,766
925,000 4.950%, 6/01/10 6/08 at 101 A 894,882
860,000 5.050%, 6/01/11 6/08 at 101 A 833,392
5,000,000 Erie County (New York), Industrial Development Agency, Solid 12/10 at 103 N/R 5,257,950
Waste Disposal Facility Revenue Bonds (1998 CanFibre of
Lackawanna Project), 8.875%, 12/01/13 (Alternative Minimum Tax)
500,000 Metropolitan Transportation Authority, Transit Facilities Service No Opt. Call BBB+ 522,305
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 A- 262,053
Series D, Tax Exempt Bonds, 5.875%, 11/01/11
</TABLE>
11
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund (continued)
June 30, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (continued)
$ 500,000 The City of New York, General Obligation Bonds, Fiscal 1997 Series I, 4/07 at 101 A- $ 530,810
6.000%, 4/15/09
4,000,000 The City of New York, General Obligation Bonds, Fiscal 1998 Series D, 8/07 at 101 A- 4,094,640
5.500%, 8/01/10
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*** 172,099
115,000 6.375%, 7/01/08 7/02 at 102 Baa1 122,337
2,000,000 New York State Thruway Authority, Local Highway and Bridge Service 4/06 at 102 BBB+ 2,072,200
Contract Bonds, Series 1996, 5.625%, 4/01/07
285,000 New York State, Urban Development Corporation, State Facilities No Opt. Call BBB+ 305,936
Revenue Bonds, 1995 Refunding Series, 6.250%, 4/01/06
1,700,000 New York State Urban Development Corporation, Project Revenue Bonds 1/03 at 102 BBB+ 1,769,904
(Cornell Center for Theory and Simulation in Science and Engineering
Grant), Series 1993, 5.900%, 1/01/07
1,430,000 New York State Development Corporation, New York Urban Development No Opt. Call BBB+ 1,560,087
Corporation, Youth Facilities Revenue Bonds, Series 1997, 6.500%, 4/01/07
- -----------------------------------------------------------------------------------------------------------------------------------
North Carolina - 1.4%
2,045,000 North Carolina Municipal Power Agency Number 1, Catawba Electric No Opt. Call AAA 2,677,375
Revenue Bonds, Series 1980, 10.500%, 1/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Ohio - 2.9%
1,750,000 City of Dayton, Ohio, Special Facilities Revenue Refunding Bonds, 1988 No Opt. Call BBB 1,823,098
Series C (Emery Air Freight Corporation and Emery Worldwide Airlines,
Inc - Guarantors), 6.050%, 10/01/09
1,500,000 County of Lorain, Ohio, Health Care Facilities Revenue Refunding Bonds, 2/08 at 101 BBB 1,467,615
Series 1998A (Kendal at Oberlin), 5.375%, 2/01/12
2,065,000 Ohio Building Authority, State Facilities Refunding Bonds (Toledo 4/03 at 100 AAA 2,389,102
Government Office Building), 1982 Series A, 10.125%, 10/01/06
(Pre-refunded to 4/01/03)
- -----------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.5%
1,000,000 Oklahoma Industries Authority, Health System Revenue Refunding Bonds No Opt. Call AAA 1,068,440
(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 - 0.6%
1,250,000 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue 4/06 at 102 AA+ 1,282,125
Bonds, Series 1996-50A, 5.350%, 10/01/08
- -----------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 0.9%
1,760,000 City of Providence, Rhode Island, General Obligation Bonds, 1997 7/07 at 101 AAA 1,882,936
Series A, 6.000%, 7/15/09
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 1.4%
2,700,000 The Industrial Development Board of the City of Cookeville, 10/03 at 102 A 2,782,512
Tennessee, Hospital Refunding Revenue Bonds (Cookeville General
Hospital Project), Series 1993, 5.750%, 10/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Texas - 2.3%
3,000,000 Abilene Higher Education Authority, Inc., Texas, Student Loan 11/08 at 100 Aa3 2,874,150
Revenue Bonds (Subordinate Lien Fixed Rate Term Bonds), Series 1998B,
5.050%, 7/01/13 (Alternative Minimum Tax)
150,000 City of Austin, Texas, Water, Sewer and Electric Refunding Revenue No Opt. Call A2 169,400
Bonds, Series 1982, 14.000%, 11/15/01
250,000 City of San Antonio, Texas, Airport System Improvement Revenue Bonds, 7/06 at 101 AAA 259,824
Series 1996, 5.700%, 7/01/09 (Alternative Minimum Tax)
205,000 Texas Department of Housing and Community Affairs, Single Family 9/06 at 102 AAA 213,806
Mortgage Revenue Bonds, 1996 Series E, 5.750%, 3/01/10
1,000,000 Tyler Health Facilities Development Corporation, Texas, Hospital 7/02 at 100 Baa2 990,009
Revenue Bonds (Mother Frances Hospital Regional HealthCare Center
Project), Series 1997A, 5.500%, 7/01/09
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utah - 0.4%
$ 500,000 Tooele County, Hazardous Waste Disposal Revenue Bonds (Laidlaw Inc./USPCI 8/05 at 102 BBB $ 532,104
Clive PJ), Series 1995, 6.750%, 8/01/10 (Alternative Minimum Tax)
200,000 State Board of Regents of the State of Utah, Student Loan Revenue Bonds, 11/05 at 102 AAA 208,907
1995 Series N Bonds, 6.000%, 5/01/08 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Washington - 1.3%
1,060,000 Tacoma School District No. 409, King County, Washington, Unlimited Tax No Opt. Call Aaa 1,147,460
General Obligation Improvement and Refunding Bonds, 1997, 6.000%, 12/01/09
380,000 Washington State Housing Finance Commission, Single-Family Mortgage 1/04 at 102 AAA 394,918
Revenue Bonds (Mortgage Backed Securities Program), Series 1995A, 6.650%,
7/01/16 (Alternative Minimum Tax)
115,000 Washington Public Power Supply System, Nuclear Project No. 2 Revenue Bonds, No Opt. Call Aaa 126,538
Series 1981A, 14.375%, 7/01/01
800,000 Washington Public Power Supply System, Project No. 3, Refunding Revenue 7/06 at 102 AAA 836,359
Bonds, Series 1996-A, 5.700%, 7/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
$116,501,273 Total Municipal Bonds - (cost $115,759,860) 116,937,568
============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.8%
$ 700,000 Michigan State Strategic Fund Pollution Control (Consumers Power Company), P-1 700,000
Variable Rate Demand Bonds, 3.400%, 4/15/18+
2,800,000 Ohio Air Quality Development Authority, State of Ohio, Air Quality A-1+ 2,800,000
Development Revenue Refunding Bonds (The Cincinnati Gas and Electric
Company Project), 1995 Series A, Variable Rate Demand Bonds, 3.350%,
9/01/30+
- -----------------------------------------------------------------------------------------------------------------------------------
$ 3,500,000 Total Short-Term Investments - (cost $3,500,000) 3,500,000
============-----------------------------------------------------------------------------------------------------------------------
Total Investments - (cost $179,950,703) - 99.2% 196,753,051
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.8% 1,561,749
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $198,314,800
====================================================================================================================
</TABLE>
# Non-income producing.
* 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.
+ 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.
13
<PAGE>
Statement of Net Assets
Nuveen Balanced Municipal and Stock Fund
June 30, 1999
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets
Investment securities, at market value (cost $179,950,703) (note 1) $196,753,051
Cash 347,100
Receivables:
Dividends 154,174
Interest 1,831,566
Investments sold 435,000
Shares sold 309,307
Deferred organization costs (note 1) 81,906
Other assets 32,470
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 199,944,574
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 880,159
Shares redeemed 235,547
Accrued expenses:
Management fees (note 5) 116,348
12b-1 distribution and service fees (notes 1 and 5) 84,822
Other 139,872
Dividends Payable 173,026
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,629,774
- ---------------------------------------------------------------------------------------------------------------------------
Net assets (note 6) $198,314,800
===========================================================================================================================
Class A Shares (note 1)
Net assets $123,916,875
Shares outstanding 4,869,035
Net asset value and redemption price per share $ 25.45
Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price)* $ 27.00
===========================================================================================================================
Class B Shares (note 1)
Net assets $ 52,717,888
Shares outstanding 2,055,103
Net asset value, offering and redemption price per share $ 25.65
===========================================================================================================================
Class C Shares (note 1)
Net assets $ 20,497,875
Shares outstanding 799,641
Net asset value, offering and redemption price per share $ 25.63
===========================================================================================================================
Class R Shares (note 1)
Net assets $ 1,182,162
Shares outstanding 46,678
Net asset value, offering and redemption price per share $ 25.33
===========================================================================================================================
*Effective January 11, 1999, the maximum sales charge on Class A Shares was increased from 5.25% to 5.75%.
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
Statement of Operations
Nuveen Balanced Municipal and Stock Fund
June 30, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
<S> <C>
Investment Income (note 1)
Dividends $ 1,159,303
Interest 5,722,334
- ------------------------------------------------------------------------------------
Total investment income 6,881,637
- ------------------------------------------------------------------------------------
Expenses
Management fees (note 5) 1,374,619
12b-1 service fees - Class A (notes 1 and 5) 300,341
12b-1 distribution and service fees - Class B (notes 1 and 5) 449,751
12b-1 distribution and service fees - Class C (notes 1 and 5) 178,061
Shareholders' servicing agent fees and expenses 112,431
Custodian's fees and expenses 85,512
Trustees' fees and expenses (note 5) 15,090
Professional fees 36,929
Shareholders' reports - printing and mailing expenses 70,784
Federal and state registration fees 66,452
Amortization of deferred organization costs (note 1) 36,000
Other expenses 9,167
- ------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 2,735,137
Custodian fee credit (note 1) (451)
Expense reimbursement (note 5) (70,901)
- ------------------------------------------------------------------------------------
Net expenses 2,663,785
- ------------------------------------------------------------------------------------
Net investment income 4,217,852
- ------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 392,403
Net change in unrealized appreciation or depreciation of investments 5,824,556
- ------------------------------------------------------------------------------------
Net gain from investments 6,216,959
- ------------------------------------------------------------------------------------
Net increase in net assets from operations $10,434,811
====================================================================================
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
Statement of Changes in Net Assets
Nuveen Balanced Municipal and Stock Fund
June 30, 1999
<TABLE>
<CAPTION>
Year Ended Year Ended
6/30/99 6/30/98
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 4,217,852 $ 3,281,813
Net realized gain from investment transactions (notes 1 and 4) 392,403 6,299,554
Net change in unrealized appreciation or depreciation of investments 5,824,556 7,014,341
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 10,434,811 16,595,708
- -------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (3,165,304) (2,448,814)
Class B (611,994) (222,804)
Class C (242,322) (104,232)
Class R (43,038) (172,195)
From accumulated net realized gains from investment transactions:
Class A (3,293,468) (1,444,498)
Class B (1,225,114) (193,480)
Class C (486,028) (90,253)
Class R (38,192) (120,260)
- -------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (9,105,460) (4,796,536)
- -------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 52,403,705 75,343,559
Net proceeds from shares issued to shareholders due to reinvestment of distributions 5,420,959 3,428,628
- -------------------------------------------------------------------------------------------------------------------
57,824,664 78,772,187
Cost of shares redeemed (26,489,470) (15,446,129)
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 31,335,194 63,326,058
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets 32,664,545 75,125,230
Net assets at the beginning of year 165,650,255 90,525,025
- -------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $198,314,800 $165,650,255
===================================================================================================================
Balance of undistributed net investment income at the end of year $ 605,276 $ 450,082
===================================================================================================================
</TABLE>
See accompanying notes to financial statements.
16
<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, 1999, 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 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 dividends paid during the
fiscal year ended June 30, 1999, have been designated Exempt Interest Dividends.
Net realized capital gains and ordinary income distributions are subject to
federal taxation.
17
<PAGE>
Notes to Financial Statements (continued)
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 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 only under limited circumstances, or by specified classes
of shareholders.
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, 1999.
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. Actual results may differ
from those estimates.
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.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
6/30/99 6/30/98
----------------------------- --------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 801,383 $ 19,758,610 1,308,803 $ 31,922,378
Class B 950,013 23,509,766 1,193,459 29,265,901
Class C 361,871 9,025,013 524,249 12,864,555
Class R 4,472 110,316 53,309 1,290,725
Shares issued to shareholders due to reinvestment of distributions:
Class A 166,972 4,085,713 125,058 3,001,186
Class B 38,607 947,489 10,810 261,191
Class C 13,468 330,353 5,838 140,308
Class R 2,354 57,404 1,074 25,943
- -------------------------------------------------------------------------------------------------------------------------------
2,339,140 57,824,664 3,222,600 78,772,187
- -------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (695,219) (17,146,719) (297,703) (7,230,838)
Class B (202,066) (5,046,935) (24,476) (597,282)
Class C (160,113) (3,961,328) (13,171) (326,708)
Class R (13,418) (334,488) (302,461) (7,291,301)
- -------------------------------------------------------------------------------------------------------------------------------
(1,070,816) (26,489,470) (637,811) (15,446,129)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase 1,268,324 $ 31,335,194 2,584,789 $ 63,326,058
===================================================================================================================================
</TABLE>
18
<PAGE>
3. Distributions to Shareholders
The Fund declared a dividend distribution from its tax-exempt net investment
income which was paid on August 2, 1999, to shareholders of record on July 9,
1999, as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Dividend per share:
<S> <C>
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 short-term investments for the fiscal year
ended June 30, 1999, were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Purchases:
<S> <C>
Common and preferred stocks $86,498,287
Municipal bonds 34,594,163
Short-term investments 25,100,000
Sales:
Common and preferred stocks 86,831,762
Municipal bonds 7,358,280
Short-term investments 26,300,000
- -------------------------------------------------------------------------------
</TABLE>
At June 30, 1999, the identified cost of investments owned for federal income
tax purposes was $180,519,915. Net unrealized appreciation for federal income
tax purposes aggregated $16,233,136 of which $18,153,115 related to appreciated
securities and $1,919,979 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 assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets 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 had agreed to waive fees and reimburse expenses, 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 through July 31, 1998, and .95% from August 1, 1998
through July 31, 2000.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Adviser has entered
into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"),
of which The John Nuveen Company owns a minority interest, under which ICAP
manages the Fund's equity portion of the 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.
19
<PAGE>
Notes to Financial Statements (continued)
During the fiscal year ended June 30, 1999, 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 $776,900, of which
approximately $725,200 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, 1999, the Distributor compensated
authorized dealers directly with approximately $1,018,900 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, 1999, the Distributor retained approximately $537,200 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 $129,400
of CDSC on share redemptions during the fiscal year ended June 30, 1999.
6. Composition of Net Assets
At June 30, 1999, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
<TABLE>
- ----------------------------------------------------------------------------------
<S> <C>
Capital paid-in $180,665,392
Balance of undistributed net investment income 605,276
Accumulated net realized gain (loss) from investment transactions 241,784
Net unrealized appreciation of investments 16,802,348
- ----------------------------------------------------------------------------------
Net assets $198,314,800
==================================================================================
</TABLE>
7. Investment Composition
At June 30, 1999, the revenue sources by municipal purpose, expressed as a
percent of total municipal bonds, were as follows:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Education and Civic Organizations 7%
Health Care 9
Housing/Multifamily 7
Housing/Single Family 9
Tax Obligation/General 14
Tax Obligation/Limited 11
Transportation 10
U.S. Guaranteed 10
Utilities 20
Other 3
- --------------------------------------------------------------------------------
100%
================================================================================
</TABLE>
33% of the municipal bonds 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.
For additional information regarding each investment security, refer to the
Portfolio of Investments of the Fund.
20
<PAGE>
Financial Highlights
- -----
21
<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
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
June 30, Value Income (a) (Loss) Total Income Gains Total Value Return(b)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1999 $25.46 $.62 $ .70 $1.32 $(.65) $(.68) $(1.33) $25.45 5.49%
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)
1999 25.53 .46 .68 1.14 (.34) (.68) (1.02) 25.65 4.71
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)
1999 25.51 .45 .69 1.14 (.34) (.68) (1.02) 25.63 4.71
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)
1999 25.39 .68 .71 1.39 (.77) (.68) (1.45) 25.33 5.81
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>
<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
Ending Before Before After After
Net Credit/ Credit/ Credit/ Credit/ Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
June 30, (000) ment ment ment (a) ment (a) Rate
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1999 $123,917 1.23% 2.48% 1.19% 2.52% 52%
1998 117,005 1.36 2.47 1.10 2.73 87
1997 (c) 79,952 1.58* 2.31* 1.10* 2.79* 32
Class B (8/96)
1999 52,718 1.98 1.79 1.94 1.83 52
1998 32,384 2.10 1.71 1.85 1.96 87
1997 (c) 2,051 2.22* 1.62* 1.85* 1.99* 32
Class C (8/96)
1999 20,498 1.98 1.76 1.94 1.80 52
1998 14,908 2.11 1.71 1.85 1.97 87
1997 (c) 1,559 2.29* 1.53* 1.85* 1.97* 32
Class R (8/96)
1999 1,182 .98 2.73 .94 2.77 52
1998 1,353 1.11 2.73 .85 2.99 87
1997 (c) 6,963 2.05* 1.96* .85* 3.16* 32
==========================================================================================================
</TABLE>
* Annualized.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 5).
(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.
22
<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, 1999, the related statement of operations for
the year then ended, and 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, 1999, 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, 1999, and the results of its
operations for the year then ended, and 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 20, 1999
- -----
23
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
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
Dividend and
Growth Fund
Income
Income Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
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, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide 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
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.
- -----
24
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL.
Independent Public
Accountants
Arthur Andersen LLP
Chicago, IL
- -----
25
<PAGE>
SERVING
Investors for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
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 whose aim is to provide consistent,
competitive 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 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 growth,
growth and income, income, and tax-free 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.
[PHOTO OF JOHN NUVEEN, SR., APPEARS HERE]
John Nuveen, Sr.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
EAN-MS-6-99
<PAGE>
June 30, 1999 Annual Report
Nuveen
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Balanced Stock and Bond Fund
[PHOTO APPEARS HERE]
For investors seeking
long-term growth potential
with a measure of downside
protection.
Featuring Portfolio Management By Nuveen Investment Advisory Services
A Premier Adviser/SM/ for Income Investing
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective
6 Fund Spotlight
7 Portfolio of Investments
9 Statement of Net Assets
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Notes to Financial Statements
15 Financial Highlights
16 Report of Independent Public
Accountants
17 Fund Information
<PAGE>
DEAR
Shareholder
At this writing, we're more than halfway through 1999. The much-talked-about
millennium (Y2K) looms, which really puts the concept
of time in front of us all. We think: "Where did the time go?"
We think about how old, 25 years ago, we thought we would be when
the calendar turned January 1, 2000. (And we realize, now, it is really not that
old at all.)
We think about all the things we thought we would have accomplished before 1999
became 2000. Most likely, one of your millennium goals was financial. Whether it
was to fully fund your retirement accounts or set up trusts for your
grandchildren, the fact you're working with a financial adviser and reading this
report are positive signs that you're well on your way to achieving your goal.
I'm pleased to report we're meeting our goals, too. In addition to the goals we
have established for each mutual fund we manage, we have had to set goals in
preparation for the millennium.
All efforts to safeguard critical systems are right on schedule at Nuveen.
It's a goal we set more than 10 years ago. Nuveen's trading, fund management and
pricing -- systems that affect you and your investments -- have been updated or
replaced to be able to deal accurately with Y2K.
We continue to work closely with our service providers, transfer agent,
custodian and trustee to monitor the readiness of their systems, as well as
address any remaining internal systems issues. Testing should be completed by
the end of September.
The Securities and Exchange Commission (SEC), which oversees the securities
industry, is also taking significant steps to help our industry make a smooth
transition to the Y2K. First, the SEC is requiring all public companies,
investment advisers, investment companies and municipal securities issuers to
disclose their ability to comply with the Y2K issue.
In addition, the SEC mandated that tests be conducted on various financial
systems to test the ability of exchanges and broker/dealer firms to handle
transactions effectively. We participated successfully in those tests.
With our systems in place and ready to handle Y2K, we look forward to
helping you achieve your financial goals in the new millennium.
Your Fund's Fiscal Year. I want to briefly report on the economic environment in
which your investment in Nuveen Balanced Stock and Bond Fund performed. Read on
for a more in-depth interview with a representative from the portfolio
management team for your fund, describing how that team of investment and
research professionals directed the portfolio during its fiscal year, July 1,
1998, through June 30, 1999.
[Photo of Timothy R. Schwertfeger
appears here]
Timothy R. Schwertfeger
Chairman of the Board
"All efforts to safeguard critical systems are right on schedule at Nuveen."
ANNUAL REPORT page 1
<PAGE>
"Your financial adviser can serve as a valuable resource in helping you
determine if adjustments are needed in your current asset allocation plan."
Over the past 12 months, the U.S. economy has continued to be characterized
by robust growth, generally low interest rates, and unemployment levels that
remain among the lowest in three decades.
Concerns, however, about the pace of the economy's expansion have tested the
new paradigm that holds that improvements in productivity enable us to have both
economic growth and low inflation at the same time. With investors and the
various markets watching -- and reacting to -- every announcement concerning
economic statistics, volatility has increased, especially in the equity markets.
We have entered a different economic environment from that of 12 months ago.
This shift has occurred in response to two factors:
. the Asian financial crisis of 1998 did not produce the slowdown that was
widely expected to keep economic growth from becoming overly robust;
. evidence of accelerating prices, most obvious in the sudden spike in the
April 1999 Consumer Price Index, contributed to the reemergence of the
specter of inflation, accompanied by predictions of higher interest rates.
In an effort to pre-empt this inflation threat, the Federal Reserve moved to
raise the federal funds rate by a quarter-point -- to 5.0% -- at the end of
June. The upward adjustment to this rate, which represents the amount banks
charge one another on overnight loans, marks the first increase since March 1997
and stands in sharp contrast to the three reductions made last fall.
Despite the minimal increase and the Fed's announcement that it would shift
to a neutral bias concerning future interest rate action, uncertainty about the
board's next move -- which was not diminished by Chairman Greenspan's
Congressional testimony in late July -- continues.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets are better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen fund, contact your financial adviser for a
prospectus, call Nuveen at (800) 621-7227, or download one from our Web site at
www.nuveen.com. Please read the prospectus carefully before you invest or send
money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. As we look ahead to a new millennium, we are committed to maintaining
that reputation and finding the best ways to serve your evolving investment
needs. Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 16, 1999
ANNUAL REPORT page 2
<PAGE>
From the Portfolio Manager's Perspective
- --------------------------------------------------------------------------------
Value stocks are making a comeback after being out of favor for several years.
For those who never doubted the benefits of value investing, such as the
managers of Nuveen Balanced Stock and Bond Fund, the resurgence comes as no
surprise. Brandon Thomas, director of equity funds at Nuveen, spoke with Rob
Lyon, president and chief investment officer of Institutional Capital
Corporation (ICAP), Nuveen's Premier Adviser/sm/ for value investing and the
subadviser of the fund, about strategies ICAP used in managing the fund during
its fiscal year ended June 30, 1999.
BRANDON | Value investing at Nuveen and ICAP means seeking out stocks of
established, well-known companies the portfolio management team believes offer
unrecognized value with a "catalyst" that may trigger a rise in the stocks'
prices. In the past few years, growth stocks, which generally have higher
earnings growth rates than value stocks, have been among the market's best
performers, as the economy has grown modestly and investors sought out companies
with consistent earnings. In fact, growth stocks have outperformed value stocks
in each of the past five years, through 1998.
But, during the first part of 1999, we've seen value stocks make a comeback.
To what do you attribute the change?
ROB | It's not unusual to see the comeback given the economic conditions that
are surfacing. Since October 1998, there have been more than 100 interest rate
cuts made by foreign central banks. That results in stronger industrial
production throughout the world, which is likely to lead to more positive
earnings for many companies. With more companies participating in an
accelerating economy, investor confidence has shifted and value stocks, as well
as emerging market issues, are once again attractive to investors.
BRANDON | Isn't it extraordinary for a shift of this magnitude from growth to
value to take place without our economy having been in a recession?
ROB | Yes, generally it would be. But while the United States avoided a
recession, much of the world was in a terrible one. It's coming out of it now,
and a broad range of companies are benefiting from the turnaround.
BRANDON | That seems to be reflected in some of the investment strategies you've
employed in the fund, which is 60% invested in stocks, as of June 30, 1999, 38%
in Treasury notes and 2% in cash equivalents. Let's first review the fund's
performance during its fiscal year. For the one-year period ended June 30, 1999,
the fund returned
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/ -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. They have been chosen by Nuveen for their rigorously disciplined
investment approaches and their focus on consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for value investing, Institutional Capital
Corporation, is a highly successful institutional money manager with nearly 30
years of experience. They specialize in finding undervalued midsize and large
company stocks that are poised for significant growth.
This disciplined, research-oriented approach is the key investment strategy for
Nuveen Balanced Stock and Bond Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the fund's fiscal year ended June 30, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
ANNUAL REPORT page 3
<PAGE>
10.21%, slightly behind the Lipper Balanced Fund Index/1/ benchmark, which
returned 11.54%. While we always stress long-term investing, I would like to
point out the fund's performance year-to-date, which reflects the shift to value
stocks. Our fund returned 9.29%, compared to the Lipper index of 6.17% for the
same period ended June 30, 1999. Since the fund's inception in August 1996, the
fund has gained 16.86% versus its Lipper peer group's return of 17.53%.
What strategies did the portfolio team employ during the year to achieve
these numbers?
ROB | As value investors, we took a hard look at companies that suffered during
the Asian financial crisis, which dominated the economic landscape last year.
Then we identified individual candidates that met our quantitative criteria --
where earnings were already starting to stabilize or improve, where there would
likely be a significant benefit from the world's economic improvement, and where
we determined there could be potential for 20% appreciation.
This is a shift from six months ago when we focused on the stocks of
companies whose business is primarily domestic in nature. The reason for the
change is the same as the shift in the market from growth to value. In August
and September of 1998, we were concerned with a global economic slowdown and
believed the U.S. would be a safe haven. Now that those concerns have
dissipated, we believe there's considerable value in multinational companies, in
addition to domestic firms.
BRANDON | What companies met those criteria?
ROB | One of the fund's strongest performers in the first half of this year was
Motorola. Our analysts determined that its line of cellular phones was much
improved and that its upside potential in Asia was substantial. Motorola, a
leader in global telecommunications and major investor in emerging technologies,
is a good example of a company that should benefit from the economic improvement
underway throughout the world, particularly in non-Japan Asia.
Top Ten Stock Holdings/2/
General Motors Corporation 5.2%
------------------------------------------------
Philips Electronics N.V. 4.2%
------------------------------------------------
News Corporation Limited Sponsored ADR 4.2%
------------------------------------------------
Bank of America Corporation 4.1%
------------------------------------------------
Philip Morris Companies Inc. 3.7%
------------------------------------------------
Waste Management, Inc./3/ 3.7%
------------------------------------------------
Bell Atlantic Corporation 3.7%
------------------------------------------------
Hoechst AG Sponsored ADR 3.5%
------------------------------------------------
Citigroup Inc. 3.4%
------------------------------------------------
Elf Acquitaine SA Sponsored ADR 3.3%
------------------------------------------------
The companies listed represent their respective percentage as of 6/30/99. Over
time, the fund's holdings and their percentages will vary as the prices of the
stocks vary.
BRANDON | What other strategies were in place during the year?
ROB | Corporate restructurings continued to be another central theme this year.
Philips Electronics N.V., one of the fund's largest holdings, is performing
well as its cost-cutting initiatives and divestitures continued to create a more
focused corporate strategy. Many people don't realize that Philips is one of the
world's leading semiconductor manufacturers and is the No. 1 producer of light
bulbs. And as part of its strategy to refocus on its core consumer electronics
business, the company sold its Polygram Records division to Seagram for $12
billion and is now using the proceeds
/1/The Lipper Peer Group returns reflect the performance of the Lipper Balanced
Fund Index, a managed index that represents the average returns of the 30
largest funds in the Lipper Balanced Fund category. The returns assume
reinvestment of dividends but do not include any initial or ongoing expenses.
/2/As a percentage of stock holdings.
/3/Shortly after the close of the fund's fiscal year, its position in Waste
Management was sold.
ANNUAL REPORT page 4
<PAGE>
to buy back its own stock. That's just one example of what we believe the
Netherlands-based company is doing right.
Additionally, General Motors advanced sharply on increased sales resulting
in part from its vigorous restructuring efforts. The company's new streamlined
organization should allow it to respond to customer needs and to leverage
economies of scale.
BRANDON | What about the fixed-income part of the portfolio? How did the global
economic crises of 1998, the three U.S. rate cuts last fall and the subsequent
rate hike on June 30th affect your management of this portion of the fund's
portfolio?
ROB U.S. | Treasurys were a bright spot last year in the portfolio, as their
value swelled when investors worldwide looked to these safe investment vehicles
as the place to invest when the rest of the world's economies weren't so
certain.
We concentrated on U.S. Treasury issues in the intermediate segment of the
yield curve. During the last six months of 1998 and the first three months of
this year, these bonds enjoyed solid price gains with the decline in interest
rates and were instrumental in moderating the fund's volatility in last summer's
stock market decline.
With the acceleration in economic activity throughout the second quarter of
1999, however, bond prices fell and bond yields rose. Again, concentrating on
the intermediate-term maturity Treasurys provided the portfolio with some
downside protection.
Equity Diversification
[PIE CHART APPEARS HERE]
Consumer Cyclicals.. 23.5%
Financials.......... 15.8%
Technology.......... 15.4%
Communications...... 10.4%
Health Care......... 9.1%
Consumer Staples.... 8.7%
Capital Goods....... 5.8%
Basic Materials..... 5.7%
Energy.............. 3.3%
Transportation...... 2.3%
Portfolio composition is as of 6/30/99 and is subject to change. Composition is
based on the fund's U.S. common and preferred stocks and American Depositary
Receipts.
BRANDON | What is your outlook for the fund, especially in light of the recent
talk about inflation?
ROB | We are confident the portfolio is positioned well, with its low relative
valuation, including its low price-to-earnings ratio, whether the market
continues its advance or levels off a bit.
The U.S. economy is very strong. The reason for the interest rate cuts made
by the Federal Reserve last fall -- global economic uncertainty -- is behind us.
We have had one rate increase by the Fed so far this year, and there may be
more, but we think the implications for the stock market are neutral.
We think an interest rate hike is simply a confirmation that the economy is
exhibiting strong growth, which is usually favorable for cyclical, economically
sensitive value stocks.
Basically, we believe small increases in interest rates just confirm that the
earnings power of the value stocks is coming back.
There's no shortage of value opportunities out there, so we will continue to
do our homework to identify and add those companies to the portfolio that we
believe provide the fund the best opportunity for continued strong performance.
"As value investors, we took a hard look at companies that suffered during
the Asian financial crisis...Then we identified individual candidates that met
our quantitative criteria."
ANNUAL REPORT page 5
<PAGE>
Fund Spotlight as of June 30, 1999
Terms To Know
The following are a few terms used throughout this report.
Market capitalization Also referred to as market cap, market capitalization is
a measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: more than $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and share price.
Yield Curve The yield curve describes the relationship between the yield on a
given type of debt and the maturity of that debt.
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $27.18 $27.18 $27.19 $27.18
- ------------------------------------------------------------------------------
Fund Symbol NNSAX NNSBX N/A N/A
- ------------------------------------------------------------------------------
CUSIP 67064Y107 67064Y206 67064Y305 67064Y404
- ------------------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
- ------------------------------------------------------------------------------
</TABLE>
Portfolio Allocation
[Pie Chart Appears Here]
Equity ................ 60%
U.S. Treasury Notes ... 38%
Cash Equivalents ...... 2%
Total Returns+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
YTD 9.29% 2.99% 8.88% 8.88% 9.42%
- ------------------------------------------------------------------------------
1-Year 10.21% 3.87% 9.39% 9.39% 10.48%
- ------------------------------------------------------------------------------
Since Inception* 16.86% 14.49% 16.00% 16.00% 17.14%
- ------------------------------------------------------------------------------
SEC 30-Day Yield 2.06% 1.94% 1.32% 1.32% 2.31%
</TABLE>
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% 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 total return figures.
* Annualized
Portfolio Statistics
Total Net Assets $92.0 million
Fixed Income Average Duration 5.67
Average Market Capitalization (Stocks) $57 billion
Average P/E 25.9
Number of Stocks 42
Expense Ratio* 1.19%
* For A shares after reimbursement
Growth of $10,000 Investment+ (Invested on 8/31/96)
[Line Chart Appears Here]
Nuveen Balanced Nuveen Balanced
Stock & Bond Stock & Bond
Fund (NAV) Fund (Offer)
--------------- ---------------
8/96 10000 10000
6/97 12309 11601
6/98 14365 13539
6/99 15830 14920
Nuveen Balanced Stock and Bond Fund (NAV) $15,830
Nuveen Balanced Stock and Bond Fund (Offer) $14,920
S&P 500 $22,058
Lehman Brothers Intermediate Treasury Index $12,053
+ 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 and 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 (5.75%) and all ongoing fund expenses.
Effective January 11, 1999, the maximum sales charge on Class A Shares increased
to 5.75% from 5.25%.
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund prospectus.
ANNUAL REPORT page 6
<PAGE>
Portfolio of Investments
Nuveen Balanced Stock and Bond Fund
June 30, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 57.3%
Basic Materials -- 3.4%
28,500 Akzo Nobel N.V. Sponsored ADR $ 1,207,688
27,000 Monsanto Company 1,064,813
27,450 UPM-Kymmene Oyj Corporation Sponsored ADR 862,959
- -------------------------------------------------------------------------------
Capital Goods -- 3.4%
12,050 Tyco International Ltd. 1,141,738
37,600 Waste Management, Inc. 2,021,000
- -------------------------------------------------------------------------------
Communications Services -- 6.2%
27,191 AT&T Corp. 1,517,598
21,000 Ameritech Corporation 1,543,500
30,900 Bell Atlantic Corporation 2,020,082
11,000 U.S. West, Inc. 646,250
- -------------------------------------------------------------------------------
Consumer Cyclicals -- 11.7%
16,900 Dana Corporation 778,456
24,700 Dayton Hudson Corporation 1,605,500
25,200 Dun & Bradstreet Corporation 893,025
29,100 Federated Department Stores, Inc.# 1,540,481
5,900 Ford Motor Company 332,981
16,200 Gannet Co., Inc. 1,156,275
28,150 General Motors Corporation 1,857,900
18,200 General Motors Corporation -- Class H# 1,023,750
14,200 TRW Inc. 779,225
16,300 Royal Caribbean Cruises Ltd. 713,125
- -------------------------------------------------------------------------------
Consumer Staples -- 5.2%
19,350 BestFoods 957,825
22,300 Fort James Corporation 844,613
16,850 Kimberly-Clark Corporation 960,450
50,300 Philip Morris Companies Inc. 2,021,431
- -------------------------------------------------------------------------------
Energy -- 2.0%
24,670 Elf Aquitaine SA Sponsored ADR 1,814,787
- -------------------------------------------------------------------------------
Financials -- 9.4%
30,850 Bank of America Corporation 2,261,691
11,450 CIGNA Corporation 1,019,050
39,312 Citigroup Inc. 1,867,320
14,600 Hartford Financial Services Group, Inc. 851,363
34,000 Household International, Inc. 1,610,750
31,100 U.S. Bancorp 1,057,400
</TABLE>
7
<PAGE>
Portfolio of Investments
Nuveen Balanced Stock and Bond Fund (continued)
June 30, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care -- 5.4%
20,700 Baxter International Inc. $ 1,254,938
25,600 Bristol-Myers Squibb Company 1,803,200
41,900 Hoechst AG Sponsored ADR 1,927,400
- ----------------------------------------------------------------------------------------------------------------------
Technology -- 9.2%
14,600 Computer Associates International, Inc. 803,000
10,100 International Business Machines Corporation 1,305,425
13,904 Motorola, Inc. 1,317,404
13,000 Nortel Networks Corporation 1,128,563
23,072 Philips Electronics N.V. 2,327,388
27,050 Xerox Corporation 1,597,641
- ----------------------------------------------------------------------------------------------------------------------
Transportation -- 1.4%
10,350 AMR Corporation# 706,388
17,400 Northwest Airlines Corporation# 565,500
- ----------------------------------------------------------------------------------------------------------------------
Total Common Stock - (cost $41,660,571) 52,709,873
-------------------------------------------------------------------------------------------------------
PREFERRED STOCKS -- 2.5%
Consumer Cyclicals -- 2.5%
72,600 News Corporation Limited Sponsored ADR 2,291,438
- ----------------------------------------------------------------------------------------------------------------------
Total Preferred Stock -- (cost $1,390,625) 2,291,438
------------------------------------------------------------------------------------------------------
Principal Market
Amount Description Value
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS -- 38.6%
U.S. Treasury Notes:
$4,310,000 7.500%, 5/15/02 $ 4,518,768
7,375,000 7.875%, 11/15/04 8,052,578
3,780,000 6.500%, 5/15/05 3,895,763
10,285,000 7.000%, 7/15/06 10,895,672
- ----------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
5,325,000 7.250%, 5/15/16 5,844,188
2,385,000 6.000%, 2/15/26 2,319,413
- -----------------------------------------------------------------------------------------------------------------------
Total U.S. Government Obligations -- (cost $35,648,997) 35,526,382
-------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 2.0%
$1,800,000 Wal Mart Stores, Inc., Commercial Paper, effective yield of 5.73%, 7/01/99 $ 1,800,000
- ----------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments -- (cost $1,800,000) 1,800,000
-------------------------------------------------------------------------------------------------------
Total Investments -- (cost $80,500,193) -- 100.4% 92,327,693
-------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- (0.4)% (373,066)
-------------------------------------------------------------------------------------------------------
Net Assets -- 100% $91,954,627
=======================================================================================================
</TABLE>
# Non-income producing.
---------
8
See accompanying notes to financial statements.
<PAGE>
Statement of Net Assets
Nuveen Balanced Stock and Bond Fund
June 30, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets
Investment securities, at market value (cost $80,500,193) (note 1) $92,327,693
Cash 203,606
Receivables:
Dividends and interest 698,142
Shares sold 158,013
Deferred organization costs (note 1) 82,691
Other assets 25,878
- -----------------------------------------------------------------------------------------------------------------------------
Total assets 93,496,023
- -----------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 749,183
Shares redeemed 55,113
Accrued expenses:
Management fees (note 4) 47,988
12b-1 distribution and service fees (notes 1 and 4) 29,821
Other 124,808
Dividends payable 534,483
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,541,396
- -----------------------------------------------------------------------------------------------------------------------------
Net assets (note 5) $91,954,627
=============================================================================================================================
Class A Shares (note 1)
Net assets $67,512,011
Shares outstanding 2,483,794
Net asset value and redemption price per share $ 27.18
Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price)* $ 28.84
=============================================================================================================================
Class B Shares (note 1)
Net assets $12,855,890
Shares outstanding 472,983
Net asset value, offering and redemption price per share $ 27.18
=============================================================================================================================
Class C Shares (note 1)
Net assets $ 7,141,658
Shares outstanding 262,705
Net asset value, offering and redemption price per share $ 27.19
=============================================================================================================================
Class R Shares (note 1)
Net assets $ 4,445,068
Shares outstanding 163,556
Net asset value, offering and redemption price per share $ 27.18
=============================================================================================================================
* Effective January 11, 1999, the maximum sales charge on Class A Shares was increased from 5.25% to 5.75%.
</TABLE>
9
See accpanying notes to financial statements.
<PAGE>
Statement of Operations
Nuveen Balanced Stock and Bond Fund
Year Ended June 30, 1999
<TABLE>
- -----------------------------------------------------------------------------------
<S> <C>
Investment Income (note 1)
Dividends $ 935,682
Interest 2,072,266
- -----------------------------------------------------------------------------------
Total investment income 3,007,948
- -----------------------------------------------------------------------------------
Expenses
Management fees (note 4) 650,113
12b-1 service fees -- Class A (notes 1 and 4) 166,640
12b-1 distribution and service fees -- Class B (notes 1 and 4) 106,921
12b-1 distribution and service fees -- Class C (notes 1 and 4) 55,428
Shareholders' servicing agent fees and expenses 76,664
Custodian's fees and expenses 58,661
Trustees' fees and expenses (note 4) 11,076
Professional fees 15,196
Shareholders' reports -- printing and mailing expenses 47,119
Federal and state registration fees 61,287
Amortization of deferred organization costs (note 1) 36,000
Other expenses 7,007
- -----------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,292,112
Custodian fee credit (note 1) (2,405)
Expense reimbursement (note 4) (144,674)
- -----------------------------------------------------------------------------------
Net expenses 1,145,033
- -----------------------------------------------------------------------------------
Net investment income 1,862,915
- -----------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 3) 2,685,999
Net change in unrealized appreciation or depreciation of investments 4,176,532
- -----------------------------------------------------------------------------------
Net gain from investments 6,862,531
- -----------------------------------------------------------------------------------
Net increase in net assets from operations $8,725,446
===================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
Statement of Changes in Net Assets
Nuveen Balanced Stock and Bond Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
6/30/99 6/30/98
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 1,862,915 $ 2,347,199
Net realized gain from investment transactions (notes 1 and 3) 2,685,999 4,988,412
Net change in unrealized appreciation or depreciation of investments 4,176,532 4,596,358
- ----------------------------------------------------------------------------------------------------
Net increase in net assets from operations 8,725,446 11,931,969
- ----------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (1,491,505) (1,955,711)
Class B (170,929) (165,258)
Class C (93,642) (64,225)
Class R (98,001) (175,931)
From accumulated net realized gains from investment transactions:
Class A (2,988,949) (1,410,980)
Class B (473,062) (120,791)
Class C (232,637) (50,758)
Class R (161,189) (204,679)
- ----------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (5,709,914) (4,148,333)
- ----------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 17,356,264 28,460,346
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 4,127,472 3,182,983
- ----------------------------------------------------------------------------------------------------
21,483,736 31,643,329
Cost of shares redeemed (20,069,879) (16,266,187)
- ----------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 1,413,857 15,377,142
- ----------------------------------------------------------------------------------------------------
Net increase in net assets 4,429,389 23,160,778
Net assets at the beginning of year 87,525,238 64,364,460
- ----------------------------------------------------------------------------------------------------
Net assets at the end of year $ 91,954,627 $ 87,525,238
====================================================================================================
Balance of undistributed net investment income at the end of year $ 13,617 $ 4,779
====================================================================================================
</TABLE>
See accompanying notes to financial statements.
11
<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 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 delayed delivery purchase commitments. At June 30, 1999, 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.
12
<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 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 only under limited circumstances, or by specified classes
of shareholders.
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, 1999.
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. Actual results may differ
from those estimates.
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.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Year Ended 6/30/99 Year Ended 6/30/98
------------------------ -------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 249,981 $ 6,320,839 519,941 $ 13,025,786
Class B 224,425 5,686,636 372,091 9,257,698
Class C 180,324 4,627,668 124,310 3,141,845
Class R 28,167 721,121 120,833 3,035,017
Shares issued to shareholders due to
reinvestment of distributions:
Class A 136,296 3,414,330 116,290 2,853,684
Class B 14,507 362,620 6,908 169,109
Class C 4,175 104,710 1,846 45,583
Class R 9,825 245,812 4,668 114,607
- ---------------------------------------------------------------------------------------------
847,700 21,483,736 1,266,887 31,643,329
- ---------------------------------------------------------------------------------------------
Shares redeemed:
Class A (540,472) (13,837,529) (376,287) (9,460,805)
Class B (158,426) (4,121,472) (13,633) (346,082)
Class C (78,718) (2,018,644) (10,327) (264,621)
Class R (3,791) (92,234) (249,979) (6,194,679)
- ---------------------------------------------------------------------------------------------
(781,407) (20,069,879) (650,226) (16,266,187)
- ---------------------------------------------------------------------------------------------
Net increase 66,293 $ 1,413,857 616,661 $ 15,377,142
=============================================================================================
</TABLE>
13
<PAGE>
Notes to Financial Statements (continued)
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, 1999, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------
Purchases:
Investment securities $ 65,980,339
U.S. government obligations 116,842,117
Short-term investments 286,790,044
Sales:
Investment securities 68,977,761
U.S. government obligations 112,084,410
Short-term investments 289,550,000
============================================
</TABLE>
At June 30, 1999, the identified cost of investments owned for federal income
tax purposes was $80,945,858. Net unrealized appreciation for federal income tax
purposes aggregated $11,381,835 of which $12,556,815 related to appreciated
securities and $1,174,980 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 assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets 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 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 through July 31, 1998 and .95% from August 1, 1998
through July 31, 2000.
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, 1999, 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 $238,200, of which
approximately $221,300, 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 fiscal year ended June 30, 1999, the Distributor compensated
authorized dealers directly with approximately $245,000 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, 1999, the Distributor retained approximately $133,500 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 $98,100
of CDSC on share redemptions during the fiscal year ended June 30, 1999.
5. Composition of Net Assets
At June 30, 1999, the Fund had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------
Capital paid-in $77,578,556
Balance of undistributed net investment income 13,617
Accumulated net realized gain from investment transactions 2,534,954
Net unrealized appreciation of investments 11,827,500
- --------------------------------------------------------------------------
Net assets $91,954,627
==========================================================================
</TABLE>
- -----
14
<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
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
June 30, Value Income (a) (Loss) Total Income Gains Total Value Return (b)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1999 $26.39 $.5 8 $1.93 $2.51 $(.57) $(1.15) $(1.72) $27.18 10.21%
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)
1999 26.39 .39 1.93 2.32 (.38) (1.15) (1.53) 27.18 9.39
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)
1999 26.39 .40 1.93 2.33 (.38) (1.15) (1.53) 27.19 9.39
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)
1999 26.39 .65 1.93 2.58 (.64) (1.15) (1.79) 27.18 10.48
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>
<TABLE>
<CAPTION>
Class (Inception Date)
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
Ending Before Before After After
Net Credit/ Credit/ Credit/ Credit/ Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
June 30, (000) ment ment ment (a) ment (a) Rate
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
1999 $67,512 1.36% 2.10% 1.19% 2.27% 96%
1998 69,614 1.48 2.68 1.10 3.06 86
1997 (c) 56,686 1.71* 2.78* 1.10* 3.39* 52
Class B (8/96)
1999 12,856 2.11 1.37 1.94 1.54 96
1998 10,356 2.24 1.93 1.85 2.32 86
1997 (c) 646 2.49* 1.59* 1.85* 2.23* 52
Class C (8/96)
1999 7,142 2.10 1.39 1.94 1.55 96
1998 4,142 2.24 1.92 1.85 2.31 86
1997 (c) 980 2.31* 2.07* 1.85* 2.53* 52
Class R (8/96)
1999 4,445 1.11 2.36 .94 2.53 96
1998 3,413 1.23 2.94 .85 3.32 86
1997 (c) 6,052 2.29* 1.68* .85* 3.12* 52
========================================================================================================
</TABLE>
* Annualized.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 4).
(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 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, 1999, 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, 1999, 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, 1999, 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 20, 1999
16
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
17
<PAGE>
SERVING
Investors for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
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 whose aim is to provide consistent,
competitive 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 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 growth,
growth and income, income, and tax-free 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.
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
[Logo of Nuveen appears here]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
June 30, 1999 Annual Report
NUVEEN
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen European Value Fund
For investors seeking
long-term growth potential and
international diversification.
[PICTURE APPEARS HERE]
Featuring Portfolio Management By Nuveen Investment Advisory Services
A Premier Adviser/SM/ for Income Investing
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective
6 Fund Spotlight
7 Portfolio of Investments
8 Statement of Net Assets
9 Statement of Operations
9 Statement of Changes in Net Assets
10 Notes to Financial Statements
14 Financial Highlights
15 Report of Independent Public
Accountants
16 Building a Better Portfolio
17 Fund Information
<PAGE>
DEAR
Shareholder
At this writing, we're more than halfway through 1999. The much-talked-about
millennium (Y2K) looms, which really puts the concept of time in front of us
all. We think: "Where did the time go?"
We think about how old, 25 years ago, we thought we would be when the calendar
turned January 1, 2000. (And we realize, now, it is really not that old at all.)
We think about all the things we thought we would have accomplished before 1999
became 2000. Most likely, one of your millennium goals was financial. Whether it
was to fully fund your retirement accounts or set up trusts for your
grandchildren, the fact you're working with a financial adviser and reading this
report are positive signs that you're well on your way to achieving your goal.
I'm pleased to report we're meeting our goals, too. In addition to the goals we
have established for each mutual fund we manage, we have had to set goals in
preparation for the millennium.
All efforts to safeguard critical systems are right on schedule at Nuveen.
It's a goal we set more than 10 years ago. Nuveen's trading, fund management and
pricing -- systems that affect you and your investments -- have been updated or
replaced to be able to deal accurately with Y2K.
We continue to work closely with our service providers, transfer agent,
custodian and trustee to monitor the readiness of their systems, as well as
address any remaining internal systems issues. Testing should be completed by
the end of September.
The Securities and Exchange Commission (SEC), which oversees the securities
industry, is also taking significant steps to help our industry make a smooth
transition into the year 2000. First, the SEC is requiring all public companies,
investment advisers, investment companies and municipal securities issuers to
disclose their ability to comply with the Y2K issue.
In addition, the SEC mandated that tests be conducted on various financial
systems to test the ability of exchanges and broker/dealer firms to handle
transactions effectively. We participated successfully in those tests.
With our systems in place and ready to handle Y2K, we look forward to
helping you achieve your financial goals in the new millennium.
Your Fund's Fiscal Year. I want to briefly report on the economic environment in
which your investment in Nuveen European Value Fund performed. Read on for an
in-depth interview with a representative from the portfolio management team for
your fund, describing how that team of investment and research professionals
directed the portfolio during its fiscal year, July 1, 1998, through June 30,
1999.
Over the past 12 months, the U.S. economy has continued to be characterized
by robust growth, generally low interest rates, and unemployment levels that
remain among the lowest in three decades.
[PICTURE OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
"All efforts to
safeguard critical
systems are right
on schedule
at Nuveen."
ANNUAL REPORT page 1
<PAGE>
"Your financial
adviser can serve
as a valuable
resource in helping
you determine if
adjustments are
needed in your
current asset
allocation plan."
Concerns, however, about the pace of the economy's expansion have tested the
new paradigm that holds that improvements in productivity enable us to have both
economic growth and low inflation at the same time. With investors and the
various markets watching -- and reacting to -- every announcement concerning
economic statistics, volatility has increased, especially in the equity markets.
We have entered a different economic environment from that of 12 months ago.
This shift has occurred in response to two factors:
. the Asian financial crisis of 1998 did not produce the slowdown that was
widely expected to keep economic growth from becoming overly robust;
. evidence of accelerating prices, most obvious in the sudden spike in the
April 1999 Consumer Price Index, contributed to the reemergence of the
specter of inflation, accompanied by predictions of higher interest rates.
In an effort to pre-empt this inflation threat, the Federal Reserve moved to
raise the federal funds rate by a quarter-point -- to 5.0% -- at the end of
June. The upward adjustment to this rate, which represents the amount banks
charge one another on overnight loans, marks the first increase since March 1997
and stands in sharp contrast to the three reductions made last fall.
Despite the minimal increase and the Fed's announcement that it would shift
to a neutral bias concerning future interest rate action, uncertainty about the
board's next move -- which was not diminished by Chairman Greenspan's
Congressional testimony in late July -- continues.
The European markets had a difficult time last summer, as financial turmoil
in Asia and Russia affected economies around the world. However, the
difficulties were short-lived and the Morgan Stanley Capital International
(MSCI) Europe Index was flat for the 12-month period, posting only a 0.054%
loss.
We feel there have been several economic developments in Europe that have
created investment opportunities for investors, including:
. lower interest rates . the privatization of some of Europe's businesses
. corporate restructuring . the continued development of Eastern Europe
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets are better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, contact your financial adviser
for a prospectus, call Nuveen at (800) 621-7227, or download one from our Web
site at www.nuveen.com. Please read the prospectus carefully before you invest
or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. As we look ahead to a new millennium, we are committed to maintaining
that reputation and finding the best ways to serve your evolving investment
needs. Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 16, 1999
ANNUAL REPORT page 2
<PAGE>
From the Portfolio Manager's Perspective
- --------------------------------------------------------------------------------
In its inaugural fiscal year, Nuveen European Value Fund faced a European market
that was overcoming Asian and Russian financial turmoil, economies that were
managing the advent of the European Monetary Union (EMU), as well as a market in
which growth stocks continued to outperform value stocks. These factors made the
fund's relative success even sweeter. Brandon Thomas, director of equity funds
at Nuveen, spoke with Rob Lyon, president and chief investment officer of
Institutional Capital Corporation (ICAP), Nuveen's Premier Adviser/sm/ for value
investing and the subadviser of the fund, about strategies ICAP used in managing
the fund during its fiscal year ended June 30, 1999.
BRANDON The fund is ranked in the top 12% of the Lipper European Fund Index/1/
for the one-year period ended June 30, 1999. Nuveen European Value Fund had a
positive average annual total return of 1.63% versus the Lipper index 1.89%
loss, which must please your investment team.
To what do you attribute this performance?
ROB We're happy to have come out of the gate with relative strong performance.
The fund also outperformed the Lipper index for the year-to-date period and
since inception./1/ From the beginning of 1999 to June 30, 1999, the fund
returned 4.51% versus the index, which returned 0.71%. Since the fund's
inception May 29, 1998, the fund returned 0.95% versus the Lipper index's loss
of 1.49%.
[PIE CHART APPEARS HERE]
Equity Diversification
Financials........................ 22.4%
Consumer Cyclicals................ 19.0%
Basic Materials................... 13.2%
Communications.................... 13.2%
Consumer Staples.................. 9.5%
Technology........................ 5.7%
Health Care....................... 5.4%
Transportation.................... 4.5%
Capital Goods..................... 4.5%
Energy............................ 2.6%
Portfolio composition is as of 6/30/99 and is subject to change. Composition is
based on the fund's U.S. stocks and American Depositary Receipts.
We attribute much of the fund's strength to our disciplined value-investing
approach and to the return of value stocks. Our stock selection process
identifies stocks of established, well-known European companies offering
exceptional relative value and attractive price appreciation potential. We use
proprietary quantitative valuation models to determine which of these stocks
appears to be undervalued in today's market. Additionally, we look for a
catalyst that could be the key to unlocking hidden value and trigger price
appreciation. The catalyst may be as simple as an anticipated change in
management or as complex as a fundamentally improved industry outlook.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call Premier Advisers/sm/ -- a select group of
asset management firms who direct the investment activities of the Nuveen Mutual
Funds. They have been chosen by Nuveen for their rigorously disciplined
investment approaches and their focus on consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser/sm/ for value investing, Institutional Capital
Corporation, is a highly successful institutional money manager with nearly 30
years of experience. They specialize in finding undervalued midsize and large
company stocks that are poised for significant growth.
This disciplined, research-oriented approach is the key investment strategy for
Nuveen European Value Fund.
/1/ The Lipper Peer Group returns reflect the performance of the Lipper
European Fund Index, a managed index that represents the average returns of
the 30 largest funds in the Lipper European Fund Category. The returns
assume reinvestment of dividends but do not include any initial or ongoing
expenses.
Performance figures are quoted for Class A shares at net asset value.
Comments cover the fund's fiscal year ended June 30, 1999. The views
expressed reflect those of the portfolio management team and are subject to
change at any time, based on market and other conditions.
ANNUAL REPORT page 3
<PAGE>
BRANDON What sorts of companies did you add to the portfolio during the year?
ROB Much like in Nuveen's domestically focused equity portfolios, our strategy
focused on corporate restructurings. Philips Electronics N.V., one of the fund's
largest holdings, is performing well as its cost-cutting initiatives and
divestitures continued to create a more focused corporate strategy. Many people
don't realize that Philips is one of the world's leading semiconductor
manufacturers and is the No. 1 producer of light bulbs. And as part of its
strategy to refocus on its core consumer electronics business, the company sold
its Polygram Records division to Seagram for $12 billion and is now using the
proceeds to buy back its own stock. That's just one example of what's going
right in the Netherlands-based company.
Other strong performers included BOC Group plc and UPM-Kymmene Corp. BOC, an
industrial gas company based in the United Kingdom, is witnessing a structural
change in the demand for its products from basic manufacturing applications
toward electronic technologies. BOC, along with UPM-Kymmene, a Finnish forest
products company, performed well due in part to the worldwide recovery of value-
oriented stocks.
BRANDON In the past few years, growth stocks, which generally have higher
earnings growth rates than value stocks, have been among the market's best
performers, as the economy has grown modestly and investors sought out companies
with consistent earnings. In fact, growth stocks have outperformed value stocks
in each of the past five years, through 1998.
But, during the first part of 1999, as you've mentioned, we've seen value
stocks make a comeback. To what do you attribute the change?
ROB It's not unusual to see the comeback given the economic conditions that
have surfaced. Since October 1998, there have been more than 100 interest rate
cuts made by foreign central banks. That has resulted in stronger industrial
production throughout the world, which is likely to lead to more positive
earnings for many companies. With more companies participating in an
accelerating economy, investor confidence is shifting, and value stocks, as well
as emerging market issues, are once again attractive to investors.
Top Ten Stock Holdings
Daimler-Chrysler AG............................... 6.1%
- -------------------------------------------------------------
Philips Electronics N.V........................... 5.7%
- -------------------------------------------------------------
Hoechst AG Sponsored ADR.......................... 5.4%
- -------------------------------------------------------------
Diageo plc Sponsored ADR.......................... 5.0%
- -------------------------------------------------------------
Bank Austria AG Sponsored ADR..................... 4.7%
- -------------------------------------------------------------
Vivendi Sponsored ADR............................. 4.6%
- -------------------------------------------------------------
Royal & Sun Alliance Insurance Group plc ADR...... 4.6%
- -------------------------------------------------------------
ING Groep NV Sponsored ADR........................ 4.5%
- -------------------------------------------------------------
Compagnie Financiere Richemont AG Sponsored ADR... 4.5%
- -------------------------------------------------------------
Granada Group plc................................. 4.5%
- -------------------------------------------------------------
The companies listed represent their respective percentage of total stock
holdings as of 6/30/99. Over time, the fund's holdings and their percentages
will vary.
ANNUAL REPORT page 4
<PAGE>
BRANDON Did the war in Kosovo have any affect on the European markets?
ROB The war was perhaps the most significant event in the region during the
second quarter of 1999, but it seemed to have little impact on stock prices,
except for a minor advance when the war ended.
What appeared to have had a greater effect on European markets was Wal-
Mart's long-anticipated entry into Europe this spring. Wal-Mart's entry was
through the purchase of a UK retailer, news of which sent shudders through the
European retailing community. The discount retailer's presence should mean lower
prices for consumers but reduced profit margins for retailers.
[PIE CHART APPEARS HERE]
Country Allocation
Netherlands.................................. 23.4%
United Kingdom............................... 22.5%
France....................................... 16.1%
Germany...................................... 11.5%
Switzerland.................................. 8.7%
Austria...................................... 4.7%
Finland...................................... 4.4%
Ireland...................................... 4.4%
Greece....................................... 4.3%
In general for the fund's fiscal year, European markets were mixed. From
July 1998 through the end of that year, the markets were challenged when turmoil
in Russia affected economics around the world. As interest rate cuts swept
across Europe, and the countries prepared for the introduction of the Euro
January 1, 1999, prices rebounded. The markets have traded in a fairly narrow
range in 1999.
BRANDON What is your outlook for Nuveen European Value Fund as it enters its
second fiscal year?
ROB Our focus for the portfolio continues to be on stocks of European companies
doing business primarily in Europe and the United States, which should show
stronger growth than most other regions of the world.
We'll also continue to focus on corporate restructurings.
Finally, easier global monetary polices should provide the impetus for
better performance among many of the European Value Fund holdings.
"The war was perhaps
the most significant
event in the region
during the second
quarter of 1999,
but it seemed to have
little impact on stock
prices, except for a
minor advance when
the war ended."
ANNUAL REPORT page 5
<PAGE>
Fund Spotlight as of June 30, 1999
Terms To Know
The following are a few terms used throughout this report.
Market Capitalization Also referred to as market cap, market capitalization is a
measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: over $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and share price.
Quick Facts
A Shares B Shares C Shares R Shares
NAV $20.17 $20.04 $20.04 $20.21
- ----------------------------------------------------------------------
Fund Symbol N/A N/A N/A N/A
- ----------------------------------------------------------------------
CUSIP 67064Y842 67064Y834 67064Y826 67064Y818
- ----------------------------------------------------------------------
Inception Date 5/98 5/98 5/98 5/98
- ----------------------------------------------------------------------
Total Returns+
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
YTD 4.51% -1.51% 4.16% 4.21% 4.66%
- ------------------------------------------------------------------------------
1-Year 1.63% -4.21% 0.86% 0.86% 1.86%
- ------------------------------------------------------------------------------
Since
Inception* 0.95% -4.41% 0.23% 0.23% 1.22%
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% 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 total return figures.
* Annualized
Index Comparison.
[LINE CHART APPEARS HERE]
Nuveen European Nuveen European Lipper MSCI
Value Fund (NAV) Value (Offer) European Index Europe IX GD
---------------- --------------- -------------- ------------
5/98 10000 9425 10000 10000
6/98 9941 9370 10029 10112
6/99 10103 9522 9840 10057
Nuveen European Value Fund (NAV) $10,103
Nuveen European Value Fund (Offer) $9,522
Lipper European Index $9,840
MSCI Europe IX GD $10,057
. 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 MSCI Europe Index and the
Lipper European Index. The MSCI Europe Index is an unmanaged index comprised
of a capitalization-weighted sampling of the companies listed on the stock
exchanges of 14 European countries. The Lipper European Fund Index represents
the average returns of the 30 largest funds in the Lipper European Fund
Category. Index returns reflect total returns and assume reinvestment of
dividends but do not include any initial or ongoing expenses. The Nuveen fund
returns depicted in the chart reflect the initial maximum sales charge
applicable to Class A shares (5.75%) and all ongoing fund expenses.
Portfolio Allocation
[PIE CHART APPEARS HERE]
Equity . . . . 100%
Portfolio Statistics
Total Net Assets $11,254 million
- --------------------------------------------
Average Market
Capitalization (Stocks) $28 billion
- --------------------------------------------
Average P/E 17.9
- --------------------------------------------
Number of Stocks 22
- --------------------------------------------
Expense Ratio* 1.55%
- --------------------------------------------
* For Class A shares after reimbursement
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund prospectus.
ANNUAL REPORT page 6
<PAGE>
Portfolio of Investments
Nuveen European Value Fund
June 30, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 98.5%
Basic Materials -- 13.0%
11,200 Akzo Nobel N.V. Sponsored ADR $ 474,600
12,300 BOC Group plc Sponsored ADR 495,844
15,600 UPM-Kymmene Oyj Corporation Sponsored ADR 490,425
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Goods -- 4.4%
13,300 Lagardere S.C.A. Sponsored ADR 495,143
- -----------------------------------------------------------------------------------------------------------------------------------
Communications Services -- 13.0%
43,500 Hellenic Telecommunications Organization SA Sponsored ADR 481,219
9,900 KPN N.V. Sponsored ADR 475,200
31,500 Vivendi Sponsored ADR 510,337
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals -- 18.7%
7,572 Daimler-Chrysler AG 672,962
26,800 Granada Group plc (DD) 497,125
101,500 Independent News & Media PLC 490,351
14,700 Peninsular and Oriental Sponsored ADR 441,648
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Staples -- 9.4%
25,800 Compagnie Financiere Richemont AG Sponsored ADR 501,093
12,900 Diageo plc Sponsored ADR 554,700
- -----------------------------------------------------------------------------------------------------------------------------------
Energy -- 2.5%
3,900 Elf Aquitaine SA Sponsored ADR 286,894
- -----------------------------------------------------------------------------------------------------------------------------------
Financials -- 22.1%
7,900 Axa Sponsored ADR 492,269
49,000 Bank Austria AG Sponsored ADR 515,426
9,150 ING Groep N.V. Sponsored ADR 503,250
1,550 UBS AG 462,925
11,300 Royal & Sun Alliance Insurance Group plc ADR 508,090
- -----------------------------------------------------------------------------------------------------------------------------------
Health Care -- 5.4%
13,100 Hoechst AG Sponsored ADR 602,600
- -----------------------------------------------------------------------------------------------------------------------------------
Technology -- 5.6%
6,302 Philips Electronics N.V. 635,714
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation -- 4.4%
17,300 KLM Royal Dutch Airlines Sponsored ADR 494,131
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $10,054,835) 98.5% 11,081,946
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.5% 171,998
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $11,253,944
====================================================================================================================
</TABLE>
(DD) Portion of security purchased on a delayed delivery basis
(note 1).
See accompanying notes to financial statements.
7
<PAGE>
Statement of Net Assets
Nuveen European Value Fund
June 30, 1999
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------
Assets
Investment securities, at market value (cost $10,054,835) (note 1) $11,081,946
Cash 124,401
Receivables:
Dividends 26,671
Fund manager (note 4) 752
Investments sold 27,607
Shares sold 79,324
Deferred organization costs (note 1) 125,370
Other assets 88,056
- -----------------------------------------------------------------------------------------
Total assets 11,554,127
- -----------------------------------------------------------------------------------------
Liabilities
Payable for investments purchased 86,089
Accrued expenses:
12b-1 distribution and service fees (notes 1 and 4) 3,710
Other 210,384
- -----------------------------------------------------------------------------------------
Total liabilities 300,183
- -----------------------------------------------------------------------------------------
Net assets (note 5) $11,253,944
=========================================================================================
Class A Shares (note 1)
Net assets $ 3,277,480
Shares outstanding 162,475
Net asset value and redemption price per share $ 20.17
Offering price per share (net asset value per share plus
maximum sales charge of 5.75% of offering price) $ 21.40
=========================================================================================
Class B Shares (note 1)
Net assets $ 3,130,383
Shares outstanding 156,204
Net asset value, offering and redemption price per share $ 20.04
=========================================================================================
Class C Shares (note 1)
Net assets $ 710,945
Shares outstanding 35,484
Net asset value, offering and redemption price per share $ 20.04
=========================================================================================
Class R Shares (note 1)
Net assets $ 4,135,136
Shares outstanding 204,606
Net asset value, offering and redemption price per share $ 20.21
=========================================================================================
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
Nuveen European Value Fund
Year Ended June 30, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income (note 1) $ 250,611
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 92,987
12b-1 service fees - Class A (notes 1 and 4) 6,419
12b-1 distribution and service fees - Class B (notes 1 and 4) 28,225
12b-1 distribution and service fees - Class C (notes 1 and 4) 6,060
Shareholders' servicing agent fees and expenses 4,610
Custodian's fees and expenses 49,611
Trustees' fees and expenses (note 4) 969
Professional fees 21,194
Shareholders' reports - printing and mailing expenses 18,142
Federal and state registration fees 4,741
Amortization of deferred organization costs (note 1) 32,000
Other expenses 2,560
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 267,518
Custodian fee credit (note 1) (12,814)
Expense reimbursement (note 4) (86,754)
- -----------------------------------------------------------------------------------------------------------------------------------
Net expenses 167,950
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 82,661
- -----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions (notes 1 and 3) (834,511)
Net change in unrealized appreciation or depreciation of investments 1,037,490
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 202,979
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 285,640
===================================================================================================================================
</TABLE>
Statement of Changes in Net Assets
Nuveen European Value Fund
<TABLE>
<CAPTION>
May 29, 1998
Year Ended (commencement of operations)
6/30/99 through June 30, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 82,661 $ 4,334
Net realized gain (loss) from investment transactions (notes 1 and 3) (834,511) (1,619)
Net change in unrealized appreciation or depreciation of investments 1,037,490 (10,446)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 285,640 (7,731)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (1,314) (106)
Class B -- (179)
Class C -- (22)
Class R (4,385) (4,369)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (5,699) (4,676)
- -----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 9,930,964 3,730,770
Net proceeds from shares issued to shareholders due to reinvestment of distributions 2,735 --
- -----------------------------------------------------------------------------------------------------------------------------------
9,933,699 3,730,770
Cost of shares redeemed (2,678,059) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in assets from Fund share transactions 7,255,640 3,730,770
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 7,535,581 3,718,363
Net assets at the beginning of period 3,718,363 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $11,253,944 $3,718,363
===================================================================================================================================
Balance of undistributed (overdistributed) net investment income at end of period $ 76,620 $ (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, 1999, the Fund had an outstanding delayed delivery purchase commitment of
$30,396.
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 annually. 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
10
<PAGE>
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 fiscal year ended June 30, 1999.
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. Actual results may differ
from those estimates.
Deferred Organization Costs
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, 1999, there were no open foreign currency forward
contracts, options or futures transactions.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
11
<PAGE>
Notes to Financial Statements (continued)
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
May 29, 1998
(commencement of operations)
Year Ended 6/30/99 through June 30, 1998
----------------------- ------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 194,861 $ 3,715,826 5,134 $ 101,463
Class B 186,211 3,593,989 16,844 333,000
Class C 47,596 931,339 2,115 42,015
Class R 86,684 1,689,810 163,073 3,254,292
Shares issued to shareholders due to reinvestment of distributions:
Class A 69 1,043 -- --
Class B 5 104 -- --
Class C -- -- -- --
Class R 98 1,588 -- --
- ------------------------------------------------------------------------------------------------------------------------------
515,524 9,933,699 187,166 3,730,770
- ------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (37,589) (672,167) -- --
Class B (46,856) (907,051) -- --
Class C (14,227) (253,272) -- --
Class R (45,249) (845,569) -- --
- ------------------------------------------------------------------------------------------------------------------------------
(143,921) (2,678,059) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net increase 371,603 $ 7,255,640 187,166 $3,730,770
==============================================================================================================================
</TABLE>
3. Securities Transactions
Purchases and sales (including maturities) of investment securities and short-
term investments for the fiscal year ended June 30, 1999, were as follows:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Purchases:
Investment securities $28,978,333
Short-term investments 599,912
Sales:
Investment securities 21,188,756
Short-term investments 600,000
===============================================================================
</TABLE>
At June 30, 1999, the identified cost of investments owned for federal income
tax purposes was $10,475,353. Net unrealized appreciation for federal income tax
purposes aggregated $606,593 of which $1,170,762 related to appreciated
securities and $564,169 related to depreciated securities.
At June 30, 1999, the Fund had unused capital loss carryforwards of $421,268
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, $1,619 of the carryforward will expire in the
year 2006 and $419,649 will expire in the year 2007.
12
<PAGE>
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 assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets 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,
2000, 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 fiscal year ended June 30, 1999, 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 $165,700, of
which approximately $144,200 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, 1999, the Distributor compensated
authorized dealers directly with approximately $155,800 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, 1999, the Distributor retained approximately $34,200 in such
12b-1 fees. The remaining12b-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 $15,400
of CDSC on share redemptions during the fiscal year ended June 30, 1999.
5. Composition of Net Assets
At June 30, 1999, 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 $10,986,343
Balance of undistributed net investment income 76,620
Accumulated net realized gain (loss) from investment transactions (836,130)
Net unrealized appreciation of investments 1,027,111
- ----------------------------------------------------------------------------------
Net assets $11,253,944
==================================================================================
</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
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
June 30, Value Income(a) (Loss) Total Income Gains Total Value Return(b)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/98)
1999 $19.86 $ .22 $ .10 $ .32 $(.01) $ -- $(.01) $20.17 1.63%
1998 (c) 20.00 .02 (.14) (.12) (.02) -- (.02) 19.86 (.59)
Class B (5/98)
1999 19.87 .04 .13 .17 -- -- -- 20.04 .86
1998 (c) 20.00 .03 (.15) (.12) (.01) -- (.01) 19.87 (.60)
Class C (5/98)
1999 19.87 .07 .10 .17 -- -- -- 20.04 .86
1998 (c) 20.00 .01 (.13) (.12) (.01) -- (.01) 19.87 (.60)
Class R (5/98)
1999 19.87 .23 .13 .36 (.02) -- (.02) 20.21 1.86
1998 (c) 20.00 .03 (.13) (.10) (.03) -- (.03) 19.87 (.52)
================================================================================================================
</TABLE>
<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
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Credit/ Before Credit/ After Credit/ After Credit/ Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
June 30, (000) ment ment ment(a) ment(a) Rate
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (5/98) $3,277 2.56% .14% 1.55% 1.15% 230%
1999 102 14.82* (11.94)* 1.55* 1.33* 5
1998 (c)
Class B (5/98)
1999 3,130 3.33 (.84) 2.30 .19 230
1998 (c) 335 14.56* (10.67)* 2.30* 1.59* 5
Class C (5/98)
1999 711 3.36 (.71) 2.30 .35 230
1998 (c) 42 15.88* (12.98)* 2.30* .60* 5
Class R (5/98)
1999 4,135 2.31 .19 1.30 1.20 230
1998 (c) 3,240 15.04* (11.99)* 1.30* 1.75* 5
==============================================================================================================================
</TABLE>
* Annualized.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 4).
(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.
14
<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, 1999, the related statement of operations for the year then ended,
and the statement 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, 1999, 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
European Value Fund as of June 30, 1999, the results of its operations for the
year then ended, and 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 20, 1999
15
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
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
Dividend and
Growth Fund
Income
Income Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
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, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide 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
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.
16
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL.
Independent Public
Accountants
Arthur Andersen LLP
Chicago, IL
17
<PAGE>
SERVING
Investors for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
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 whose aim is to provide consistent,
competitive 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 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 growth,
growth and income, income, and tax-free 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.
[Picture of John Nuveen, Sr. appears here]
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
EAN-EV-6-99
