<PAGE>
As filed with the Securities and Exchange Commission on or about October 28,
1999
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
Registration No. 333-03715
Pre-Effective Amendment No. [_]
---
[X]
Post-Effective Amendment No. 18
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
Registration No. 811-07619
[X]
Amendment No. 20
----------------
Nuveen Investment Trust
(Exact Name of Registrant as Specified in Declaration of Trust)
333 West Wacker Drive, Chicago, 60606
Illinois (Zip Code)
(Address of Principal Executive
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
Copies to:
Gifford R. Zimmerman--Vice President Eric F. Fess
and Chapman and Cutler
Secretary 111 W. Monroe
333 West Wacker Drive Chicago, Illinois 60603
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[X]immediately upon filing pursuant to [_]on (date) pursuant to paragraph
paragraph (b) (a)(1)
[_]on (date) pursuant to paragraph (b) [_]75 days after filing pursuant to
[_]60 days after filing pursuant to paragraph (a)(2)
paragraph (a)(1) [_]on (date) pursuant to paragraph
(a)(2) of Rule 485.
If appropriate, check the following box:
[_]This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 18
This Post-Effective Amendment to the Registration Statement comprises the fol-
lowing papers and contents:
The Facing Sheet
Part A--Prospectus for the Nuveen European Value Fund dated
October 28, 1999.
Part B--Statement of Additional Information for the Nuveen
European Value Fund--copy of Annual Report to Shareholders
of the Nuveen European Value Fund (the Financial Statements
from which are incorporated by reference into the Statement
of Additional Information)
Part C--Other Information
Signatures
Index to Exhibits
Exhibits
The Nuveen Growth and Income Stock Fund, Nuveen Balanced Stock and Bond Fund
and Nuveen Balanced Municipal and Stock Fund are not affected by and therefore
not included in this Post-Effective Amendment No. 18.
<PAGE>
October 28, 1999 Prospectus
NUVEEN
Mutual Funds
Nuveen European Value Fund
[PHOTO APPEARS HERE]
A portfolio of quality European companies for investors seeking long-term growth
potential and international diversification.
Featuring Portfolio Management By Institutional Capital Corporation
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
We have used the icons below throughout this prospectus to make it easy for you
to find the type of information you need.
Investment Strategy
Risks
Fees, Charges and Expenses
Shareholder Instructions
Performance and Current Portfolio Information
Table of Contents
Section 1 The Fund
This section provides you with an overview of the fund including investment
objectives, expenses, and portfolio holdings.
Introduction 1
...............................................................................
Nuveen European Value Fund 2
...............................................................................
Section 2 How We Manage Your Money
This section gives you a detailed discussion of our investment and risk
management strategies.
Who Manages the Fund 4
...............................................................................
What Securities We Invest In 5
...............................................................................
How We Select Investments 6
...............................................................................
What the Risks Are 7
...............................................................................
How We Manage Risk 7
...............................................................................
Section 3 How You Can Buy and Sell Shares
This section provides the information you need to move money into or out of your
account.
What Share Classes We Offer 9
...............................................................................
How to Reduce Your Sales Charge 10
...............................................................................
How to Buy Shares 11
...............................................................................
Systematic Investing 11
...............................................................................
Systematic Withdrawal 12
...............................................................................
Special Services 12
...............................................................................
How to Sell Shares 13
...............................................................................
Section 4 General Information
This section summarizes the fund's distribution policies and other general fund
information.
Dividends, Distributions and Taxes 15
...............................................................................
Distribution and Service Plan 16
...............................................................................
Net Asset Value 16
...............................................................................
Fund Service Providers 17
...............................................................................
Year 2000 17
...............................................................................
Section 5 Financial Highlights
This section provides the fund's financial performance since inception.
Nuveen European Value Fund 18
...............................................................................
<PAGE>
October 28, 1999
Section 1 The Fund
Nuveen European Value Fund
Introduction
This prospectus is intended to provide important information to help you
evaluate whether the fund may be right for you. Please read it carefully before
investing and keep it for future reference.
Investment Opportunities in the New Europe
The European Economic Monetary Union (EMU) is a significant economic event that
is expected to create a new international business environment. Many analysts
believe the EMU will revolutionize financial markets and provide enhanced
investment opportunities by reducing currency risk, fostering lower interest
rates and increasing cross-border trading, competition, corporate mergers and
restructurings.
The Nuveen European Value Fund seeks to provide a superior total return with
moderated risk by investing in a diversified portfolio consisting primarily of
American Depositary Receipts (ADRs) of established, well-known European
companies. The portfolio manager concentrates on stocks that are selling for
less than their intrinsic worth, trying to identify those with a catalyst--for
example, a management change or an improved industry outlook--that will unlock
the stock's unrecognized value.
NOT FDIC OR GOVERNMENT INSURED MAY LOSE VALUE NO BANK GUARANTEE
Section 1 The Fund 1
<PAGE>
Nuveen European Value Fund
Fund Overview
Investment Objective
The investment objective of the fund is to provide over time a superior total
return (income plus capital appreciation) with moderated risk.
How the Fund Pursues Its Objective
The fund purchases primarily stocks of established, well-known European
companies with at least $1 billion in market capitalization. We concentrate on
stocks we believe are selling for less than their intrinsic worth, trying to
identify those with a catalyst--for example, a management change or an improved
industry outlook--that will unlock the stock's unrecognized value. We generally
buy only those 20 to 30 stocks, which we believe have 15% to 25% price
appreciation potential over the next 18 months.
Our target investment mix is 90% European equity securities and 10% cash
equivalents. Under normal market conditions, we will invest at least 65% of the
fund's total assets in European equity securities, predominantly U.S.-traded
ADRs, and we may invest up to 35% of the fund's assets in cash equivalents and
short-term fixed-income securities in order to reduce volatility and preserve
capital.
What are the Risks of Investing in the Fund?
An investment in the fund is subject to market risk. Market risk is the risk
that a particular stock, or stocks in general, may fall in value. The fund's
investments in foreign stock present additional risk including currency risk. As
with any mutual fund investment, loss of money is a risk of investing.
Is This Fund Right For You?
This fund may be a suitable investment for you if you seek to:
. invest in European equity securities;
. pursue the high potential returns of foreign stocks using a value-oriented
investment strategy;
. diversify your otherwise U.S.-oriented equity portfolio.
You should not invest in this fund if you are:
. unwilling to accept share price fluctuation, including the possibility of
sharp price declines;
. unwilling to accept the risks of foreign investment;
. investing to meet short-term financial goals.
What are the Costs of Investing?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses/1/
Paid Directly From Your Investment
Share Class A B C R/2/
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases 5.75%/3/ None None None
- --------------------------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Reinvested Dividends None None None None
- --------------------------------------------------------------------------------------------------
Exchange Fees None None None None
- --------------------------------------------------------------------------------------------------
Deferred Sales Charge/4/ None/3/ 5%/5/ 1%/6/ None
- --------------------------------------------------------------------------------------------------
</TABLE>
Annual Fund Operating Expenses/7/
Paid From Fund Assets
<TABLE>
<CAPTION>
Share Class A B C R/2/
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Management Fees 0.95% 0.95% 0.95% 0.95%
- --------------------------------------------------------------------------------------------------
12b-1 Distribution and Service Fees 0.25% 1.00% 1.00% --%
- --------------------------------------------------------------------------------------------------
Other Expenses 1.36% 1.38% 1.41% 1.36%
- --------------------------------------------------------------------------------------------------
Total Operating Expenses-Gross 2.56% 3.33% 3.36% 2.31%
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Expense Waivers/Reimbursements (1.01%) (1.03%) (1.06%) (1.01%)
- --------------------------------------------------------------------------------------------------
Total Operating Expenses-Net 1.55% 2.30% 2.30% 1.30%
- --------------------------------------------------------------------------------------------------
</TABLE>
The following example is intended to help you compare the cost of investing in
the fund with the costs of investing in other mutual funds. The example assumes
you invest $10,000 in the fund for the time period indicated and then either
redeem or do not redeem your shares at the end of a period. The example assumes
that your investment has a 5% return each year and that the fund's operating
expenses remain the same. Your actual returns and costs may be higher or
lower.
<TABLE>
<CAPTION>
Redemption No Redemption
Share Class A B C R A B C R
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
1 Year $ 819 $ 724 $ 339 $ 234 $ 819 $ 336 $ 339 $ 234
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3 Years $1,326 $1,327 $1,033 $ 721 $1,326 $1,024 $1,033 $ 721
- -----------------------------------------------------------------------------
5 Years $1,857 $1,841 $1,750 $1,235 $1,857 $1,736 $1,750 $1,235
- -----------------------------------------------------------------------------
10 Years $3,304 $3,447 $3,649 $2,646 $3,304 $3,447 $3,649 $2,646
- -----------------------------------------------------------------------------
</TABLE>
2 Section 1 The Fund
<PAGE>
How the Fund is Invested (as of 6/30/99)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Portfolio Allocation/8/ Actual Target
- -----------------------------------------------------------------------------
<S> <C> <C>
Equity 100% 90%
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Cash Equivalents 0% 10%
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Stock Portfolio Statistics
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Beta --
- -----------------------------------------------------------------------------
Average Market Capitalization $28 billion
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Average P/E 17.9
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- -----------------------------------------------------------------------------
Top 10 Stock Holdings/8/
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Daimler-Chrysler AG 6.1%
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Philips Electronics N.V. 5.7%
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Hoechst AG Sponsored ADR 5.4%
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Diageo plc Sponsored ADR 5.0%
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Bank Austria AG Sponsored ADR 4.7%
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Vivendi Sponsored ADR 4.6%
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Royal & Son Alliance Insurance Group plc ADR 4.6%
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ING Groep N.V. Sponsored ADR 4.5%
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Compagnie Financiere Richemont AG Sponsored ADR 4.5%
- -----------------------------------------------------------------------------
Granada Group plc 4.5%
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Industry Diversification (Top 10)
- -----------------------------------------------------------------------------
Financials 22.4%
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Consumer Cyclicals 19.0%
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Basic Materials 13.2%
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Communications Services 13.2%
- -----------------------------------------------------------------------------
Consumer Staples 9.5%
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Technology 5.7%
- -----------------------------------------------------------------------------
Health Care 5.4%
- -----------------------------------------------------------------------------
Transportation 4.5%
- -----------------------------------------------------------------------------
Capital Goods 4.5%
- -----------------------------------------------------------------------------
Energy 2.6%
- -----------------------------------------------------------------------------
</TABLE>
Opportunities in the New Europe
Europe is experiencing several favorable economic developments that may present
investment opportunities for long-term investors:
. Corporate restructuring. Like the merger and acquisition wave in the United
States in the 1980s and 1990s, the increased competition from deregulation
and a global economy is driving many corporations to seek to maintain their
competitive advantage through restructuring.
. Privatization. Some of Europe's most prominent airlines, banks and
utilities, once government-run, are moving to the private sector, and it is
expected that these businesses too will restructure or expand their markets
in an effort to increase profits.
. Development of Eastern Europe. The demand for goods and services from newly-
capitalist Eastern Europe may continue to grow, increasing the market and
profit for many Western European companies.
1. As a percent of offering price unless otherwise noted. Authorized dealers and
other firms may charge additional fees for shareholder transactions or for
advisory services. Please see their materials for details.
2. Class R shares may be purchased only under limited circumstances, or by
specified classes of investors. See "How You Can Buy and Sell Shares."
3. Reduced Class A sales charges apply to purchases of $50,000 or more. Certain
Class A purchases at net asset value of $1 million or more may bear a
contingent deferred sales charge (CDSC) if redeemed within 18 months of
purchase. See "How You Can Buy and Sell Shares."
4. As a percentage of lesser of purchase price or redemption proceeds.
5. Class B shares redeemed within six years of purchase are subject to a CDSC of
5% during the first year, 4% during the second and third years, 3% during the
fourth, 2% during the fifth, and 1% during the sixth year.
6. Class C shares redeemed within one year of purchase are subject to a 1% CDSC.
7. Long-term holders of Class B and C shares may pay more in 12b-1 fees and
CDSCs than the economic equivalent of the maximum front-end sales charge
permitted under the National Association of Securities Dealers Conduct Rules.
The adviser, pursuant to a contractual arrangement, will waive fees,
reimburse expenses through July 31, 2000 in order to prevent "Total Operating
Expenses" (excluding any distribution or service fees and extraordinary
expenses) from exceeding 1.30% of average daily net assets of any class of
fund shares.
8. Holdings will vary.
Section 1 The Fund 3
<PAGE>
Section 2 How We Manage Your Money
To help you understand how the fund's assets are managed, this section includes
a detailed discussion of our investment and risk management strategies. For a
more complete discussion of these matters, please consult the Statement of
Additional Information.
Who Manages the Fund
Nuveen Institutional Advisory Corp. ("NIAC"), the fund's investment adviser,
together with its advisory affiliate, Nuveen Advisory Corp., offer premier
advisory and investment management services to a broad range of mutual fund
clients. In the Nuveen family, these advisers are commonly referred to as Nuveen
Investment Advisory Services or NIAS. NIAC has overall responsibility for
management of the fund. NIAC oversees the management of the fund's portfolio,
manages the fund's business affairs and provides certain clerical, bookkeeping
and other administrative services. The NIAS advisers are located at 333 West
Wacker Drive, Chicago, IL 60606. The NIAS advisers are wholly-owned subsidiaries
of John Nuveen & Co. Incorporated ("Nuveen").
The NIAS advisers are wholly-owned subsidiaries of John Nuveen & Co.
Incorporated ("Nuveen"). Founded in 1898, Nuveen 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. Nuveen is the sponsor and principal underwriter of the fund's shares and
has sponsored or underwritten more than $60 billion of investment company
securities. Nuveen and its affiliates have more than $55 billion in assets under
management.
NIAC has selected Institutional Capital Corporation ("Institutional Capital"),
225 West Wacker Drive, Chicago, IL 60606, as subadviser to manage the investment
portfolio of the fund. Institutional Capital is an institutional investment
management firm with over 29 years of experience and approximately $12 billion
in assets under management. Institutional Capital's investment management
strategy and operating policies are set through a team approach, with all its
investment professionals contributing. Institutional Capital currently maintains
a staff of 13 investment professionals. Mr. Robert H. Lyon, President, owns
shares representing 51% of its voting rights. In addition, The John Nuveen
Company owns preferred shares of Institutional Capital, which are convertible
after several years into a 20% common stock interest.
4 Section 2 How We Manage Your Money
<PAGE>
For providing these services, NIAC is paid an annual fund management fee
according to the following schedule:
<TABLE>
<CAPTION>
Average Daily Net Assets Fund Fee
<S> <C>
For the first $125 million 0.9500 of 1%
- -------------------------------------------------------------------------
For the next $125 million 0.9375 of 1%
- -------------------------------------------------------------------------
For the next $250 million 0.9250 of 1%
- -------------------------------------------------------------------------
For the next $500 million 0.9125 of 1%
- -------------------------------------------------------------------------
For the next $1 billion 0.9000 of 1%
- -------------------------------------------------------------------------
For net assets over $2 billion 0.8750 of 1%
- -------------------------------------------------------------------------
</TABLE>
For the most recent fiscal year, the fund paid NIAC management fees of .95% of
average net assets. Out of the fund management fee, NIAC pays a portfolio
management fee to Institutional Capital. The fund pays for its own operating
expenses such as custodial, transfer agent, accounting and legal fees; brokerage
commissions; distribution and service fees; and extraordinary expenses.
What Securities We Invest In
The fund's investment objective may not be changed without shareholder approval.
The fund's investment policies may be changed by the Board of Directors without
shareholder approval unless otherwise noted in this prospectus or the Statement
of Additional Information.
European Investments
The fund invests primarily in a diversified portfolio of stocks of established,
well-known companies with at least $1 billion in market capitalization that are
domiciled or have their principal activities in Europe. The domicile or the
location of the principal activities of a company will be the country (1) under
whose laws the company is organized, (2) in which the principal trading market
for the equity securities issued by the company is located, or (3) in which the
company has over half its assets or derives half its revenues.
The fund may invest in a variety of European securities, including American
Depositary Receipts (ADRs) and other types of depositary 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 (see "What the Risks Are--Foreign
investment risk").
Equity Securities
Eligible equity securities include common stocks; preferred stocks; warrants to
purchase common stocks or preferred stocks; securities convertible into common
or preferred stocks, such as convertible bonds and debentures; and other
securities with equity characteristics. Any convertible bonds and debentures
must be rated investment grade (one of the four highest ratings by Moody's
Investors Service, Standard & Poor's, Duff & Phelps or Fitch IBCA, Inc.) when
purchased.
Section 2 How We Manage Your Money 5
<PAGE>
Short-term Investments
The fund may invest in short-term investments including U.S. government
securities, quality commercial paper or similar fixed-income securities with
remaining maturities of one year or less. For more information on eligible
short-term investments, see the Statement of Additional Information.
Delayed Delivery Transactions
The fund may buy or sell securities on a when-issued or delayed-delivery basis,
paying for or taking delivery of the securities at a later date, normally within
15 to 45 days of the trade. Such transactions involve an element of risk because
the value of the security to be purchased may decline before the settlement
date.
How We Select Investments
We adhere to disciplined, value-driven investment strategies whose aim is to
provide consistent, attractive performance over time with moderated risk. We
emphasize quality securities carefully chosen through in-depth research and
follow those securities closely over time to assess whether they continue to
meet our purchase rationale.
We select stocks from the universe of large- and mid-size European companies.
Proprietary quantitative valuation models determine which of these stocks
currently appear to be selling for less than their intrinsic worth. Based on a
qualitative assessment of each company's prospects, we then look for a catalyst
that we believe will unlock the stock's unrecognized value. A catalyst may be as
simple as a management change or as complex as a fundamentally improved industry
outlook. Generally, we choose only 20 to 30 stocks which we believe have a 15%
to 25% price appreciation potential over the next 18 months.
Portfolio Turnover
The fund buys and sells portfolio securities in the normal course of its
investment activities. The proportion of the fund's investment portfolio that is
sold and replaced with new securities during a year is known as the fund's
portfolio turnover rate. The fund anticipates that it may engage in active
trading in equity securities and that its annual portfolio turnover rate will
generally be between 100% and 150%. A turnover rate of 100% would occur, for
example, if the fund sold and replaced securities valued at 100% of its net
assets within one year. Active trading would result in the payment by the fund
of increased brokerage costs and could result in the payment by shareholders of
increased taxes on realized investment gains.
What the Risks Are
Risk is inherent in all investing. Investing in a mutual fund -- even the most
conservative -- involves risk, including the risk that you may receive little or
no return on your investment or even that you may lose part or all of your
investment. Therefore, before investing you should consider carefully the
following risks that you assume when you invest in the fund. Because of these
and other risks, you should consider an investment in the fund to be a long-term
investment.
6 Section 2 How We Manage Your Money
<PAGE>
Market risk: As a mutual fund investing its assets in stocks, the fund is
subject to market risk. Market risk is the risk that a particular stock, an
industry, or stocks in general may fall in value.
Foreign investment risk: Securities of foreign issuers present risks beyond
those of domestic securities. Such risks include political or economic
instability, less publicly available information and currency risk. Foreign
securities may also have more volatile prices and may be less liquid than
domestic securities.
Inflation risk: Like all mutual funds, the fund is subject to inflation risk.
Inflation risk is the risk that the value of assets or income from investments
will be less in the future as inflation decreases the value of money. As
inflation increases, the value of the fund's assets can decline as can the value
of the fund's distributions.
Correlation risk: The U.S. and European equity markets often rise and fall at
different times or by different amounts due to economic or other developments
particular to a given country. This phenomenon would tend to lower the overall
price volatility of a portfolio that included both U.S. and European stocks.
Sometimes, however, global trends will cause the U.S. and European markets to
move in the same direction, reducing or eliminating the risk reduction benefit
of international investing.
How We Manage Risk
We use time-tested risk management strategies designed to help protect your
capital during periods of market uncertainty or weakness: broad portfolio
diversification, a rigorous sell discipline and defined portfolio allocation
ranges. While we use these strategies to control or reduce risk, there is no
assurance that we will succeed.
Emphasis on American Depositary Receipts (ADRs)
The fund buys equity securities of European companies primarily in the form of
sponsored ADRs that are traded in U.S. securities markets. Sponsored and
exchange-traded ADRs must comply with U.S. Generally Accepted Accounting
Principles and the reporting and disclosure requirements of the Securities and
Exchange Commission. Furthermore, such ADRs settle within three days through the
U.S. clearance system and are not subject to risks caused by the complicated and
varied settlement standards that exist for many foreign securities exchanges or
to currency risk during a transaction's settlement period.
Investment Limitations
The fund has adopted certain investment limitations (based on total assets) that
cannot be changed without shareholder approval and are designed to limit your
investment risk and maintain portfolio diversification. The fund may not have
more than:
. 5% in securities of any one issuer, or 10% of the voting securities of that
issuer (except for U.S. government securities or for 25% of the fund's total
assets);
. 25% in any one industry (except for U.S. government securities).
Section 2 How We Manage Your Money 7
<PAGE>
Please see the Statement of Additional Information for a more detailed
discussion of investment limitations.
Hedging and Other Defensive Investment Strategies
The fund may invest up to 100% in cash and cash equivalents and short-term
investments as a temporary defensive measure in response to adverse market
conditions, or to keep cash on hand fully invested. During these periods, the
proportion of the fund's assets invested in an asset category may fall outside
its allowable range, and the fund may not achieve its investment objective.
We may also use various investment strategies designed to limit the risk of
price fluctuations and to preserve capital. These hedging strategies include
using financial futures contracts, options on financial futures, or stock index
options. To protect against foreign currency exchange rate risk, the fund may
enter into foreign currency hedging transactions, including forward currency
exchange contracts, foreign currency futures contracts and options on foreign
currency futures contracts. The ability of the fund to benefit from options and
futures is largely dependent on our ability to use such strategies successfully.
The fund could lose money on futures transactions or an option can expire
worthless.
8 Section 2 How We Manage Your Money
<PAGE>
Section 3 How You Can Buy and Sell Shares
We offer four classes of fund shares, each with a different combination of sales
charges, fees, eligibility requirements and other features. Your financial
adviser can help you determine which class is best for you. We offer a number of
features for your convenience. Please see the Statement of Additional
Information for further details.
What Share Classes We Offer
Class A Shares
You can buy Class A shares at the offering price, which is the net asset value
per share plus an up-front sales charge. You may qualify for a reduced sales
charge, or the sales charge may be waived, as described in "How to Reduce Your
Sales Charge." Class A shares are also subject to an annual service fee of .25%
of the fund's average daily assets which compensates your financial adviser for
providing ongoing service to you. Nuveen retains the up-front sales charge and
the service fee on accounts with no authorized dealer of record. The up-front
Class A sales charge for the fund is as follows:
<TABLE>
<CAPTION>
Authorized Dealer
Sales Charge as % of Sales Charge as % of Commission as % of
Amount of Purchase Public Offering Price Net Amount Invested Public Offering Price
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.25%
$250,000 but less than $500,000 2.75% 2.83% 2.50%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 and over --/1/ -- 1.00%/1/
</TABLE>
/1/ You can buy $1 million or more of Class A shares at net asset value without
an up-front sales charge. Nuveen pays authorized dealers a commission equal to
the sum of 1% of the first $2.5 million, plus 0.50% of the next $2.5 million,
plus 0.25% of any amount over $5 million. Unless the authorized dealer waived
the commission, you may be assessed a contingent deferred sales charge ("CDSC")
of 1% if you redeem any of your shares within 18 months of purchase. The CDSC is
calculated on the lower of your purchase price or your redemption proceeds. You
do not pay a CDSC on any Class A shares you purchase by reinvesting dividends.
Class B Shares
You can buy Class B shares at the offering price, which is the net asset value
per share without any up-front sales charge so that the full amount of your
purchase is invested in the fund. However, you will pay annual distribution and
service fees of 1.00% of the fund's average daily net assets. The annual .25%
service fee compensates your financial adviser for providing ongoing service to
you. Nuveen retains the service and distribution fees on accounts with no
authorized dealer of record. The annual .75% distribution fee compensates Nuveen
for paying your financial adviser a 4% up-front sales commission, which includes
an advance of the first year's service fee. If you sell your shares within six
years of purchase, you will normally have to pay a CDSC as shown in the schedule
below. The CDSC is based on your purchase or sale price, whichever is lower. You
do not pay a CDSC on any Class B shares you purchase by reinvesting dividends.
Section 3 How You Can Buy and Sell Shares 9
<PAGE>
Class B shares automatically convert to Class A shares eight years after you buy
them so that the distribution fees you pay over the life of your investment are
limited. You will continue to pay an annual service fee on any converted Class
B shares.
Years Since Purchase 0-1 1-2 2-3 3-4 4-5 5-6
CDSC 5% 4% 4% 3% 2% 1%
- -------------------------------------------------------
Class C Shares
You can buy Class C shares at the offering price, which is the net asset value
per share without any up-front sales charge so that the full amount of your
purchase is invested in the fund. However, you will pay annual distribution and
service fees of 1% of the fund's average daily assets. The annual .25% service
fee compensates your financial adviser for providing ongoing service to you.
Nuveen retains the service and distribution fees on accounts with no authorized
dealer of record. The annual .75% distribution fee reimburses Nuveen for paying
your financial adviser an ongoing sales commission. Nuveen advances the first
year's service and distribution fees. If you sell your shares within 12 months
of purchase, you will normally have to pay a 1% CDSC based on your purchase or
sale price, whichever is lower. You do not pay a CDSC on any Class C shares you
purchase by reinvesting dividends.
Class R Shares
You may purchase Class R shares only under limited circumstances at the net
asset value on the day of purchase. In order to qualify, you must be eligible
under one of the programs described in "How to Reduce Your Sales Charge" (below)
or meet certain other purchase size criteria. Class R shares are not subject to
sales charges or ongoing service or distribution fees. Class R shares have lower
ongoing expenses than the other classes.
How to Reduce Your Sales Charge
We offer a number of ways to reduce or eliminate the up-front sales charge on
Class A shares or to qualify to purchase Class R shares.
Class A Sales Charge Reductions
. Rights of accumulation
. Letter of intent
. Group purchase
Class A Sales Charge Waivers
. Nuveen Defined Portfolio or Exchange-Traded Fund reinvestment
. Retirement plans
. Certain employees and directors of Nuveen or employees of authorized dealers
. Bank trust departments
Class R Eligibility
. Certain employees and directors of Nuveen or employees of authorized dealers
. Bank trust departments
In addition, Class A shares at net asset value and Class R shares may be
purchased through registered investment advisers, certified financial planners
and registered broker-dealers who charge asset-based or comprehensive "wrap"
fees for their services. Please refer to the Statement
10 Section 3 How You Can Buy and Sell Shares
<PAGE>
of Additional Information for detailed program descriptions and eligibility
requirements. Additional information is available from your financial adviser
or by calling (800) 257-8787. Your financial adviser can also help you prepare
any necessary application forms. You or your financial adviser must notify
Nuveen at the time of each purchase if you are eligible for any of these
programs. The fund may modify or discontinue these programs at any time.
- -------------------------------------------------------------------------------
How to Buy Shares
- -------------------------------------------------------------------------------
Fund shares may be purchased on any business day, which is any day the New York
Stock Exchange is open for business and normally ends at 4 p.m. New York time.
Generally, the Exchange is closed on weekends and national holidays. The share
price you pay will depend on when Nuveen receives your order. Orders received
before the close of trading on a business day will receive that day's closing
share price, otherwise you will receive the next business day's price.
Through a Financial Adviser
You may buy shares through your financial adviser, who can handle all the
details for you, including opening a new account. Financial advisers can also
help you review your financial needs and formulate long-term investment goals
and objectives. In addition, financial advisers generally can help you develop
a customized financial plan, select investments and monitor and review your
portfolio on an ongoing basis to help assure your investments continue to meet
your needs as circumstances change. Financial advisers are paid for ongoing
investment advice and services either from fund sales charges and fees or by
charging you a separate fee in lieu of a sales charge. If you do not have a
financial adviser, call (800) 257-8787 and Nuveen can refer you to one in your
area.
By Mail
You may open an account and buy shares by mail by completing the enclosed
application and mailing it along with your check to: Nuveen Investor Services,
P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186. No third party
checks will be accepted.
Investment Minimums
The minimum initial investment is $3,000 ($1,000 for a Traditional/Roth IRA
account; $500 for an Education IRA account; $50 through systematic investment
plan accounts and may be lower for accounts opened through certain fee-based
programs). Subsequent investments must be in amounts of $50 or more. The fund
reserves the right to reject purchase orders and to waive or increase the
minimum investment requirements.
- -------------------------------------------------------------------------------
Systematic Investing
- -------------------------------------------------------------------------------
Systematic investing allows you to make regular investments through automatic
deductions from your bank account (simply complete the appropriate section of
the account application form) or directly from your paycheck. To invest directly
from your paycheck, contact your financial
Section 3 How You Can Buy and Sell Shares 11
<PAGE>
adviser or call Nuveen at (800) 257-8787. Systematic investing may also make
you eligible for reduced sales charges.
One of the benefits of systematic investing is dollar cost averaging. Because
you regularly invest a fixed amount of money over a period of years regardless
of the share price, you buy more shares when the price is low and fewer shares
when the price is high. As a result, the average share price you pay should be
less than the average share price of fund shares over the same period. To be
effective, dollar cost averaging requires that you invest over a long period of
time, and does not assure that you will profit.
Systematic Investment Plan
You can make regular investments of $50 or more per month by authorizing us to
draw preauthorized checks on your bank account. You can stop the withdrawals at
any time. There is no charge for this plan.
Payroll Direct Deposit Plan
You can, with your employer's consent, make regular investments of $25 or more
per pay period (meeting the monthly minimum of $50) by authorizing your employer
to deduct this amount automatically from your paycheck. You can stop the
deductions at any time. There is no charge for this plan.
- -------------------------------------------------------------------------------
Systematic Withdrawal
- -------------------------------------------------------------------------------
If the value of your fund account is at least $10,000, you may request to have
$50 or more withdrawn automatically from your account. You may elect to receive
payments monthly, quarterly, semi-annually or annually, and may choose to
receive a check, have the monies transferred directly into your bank account
(see "Special Services--Fund Direct" below), paid to a third party or sent
payable to you at an address other than your address of record. You must
complete the appropriate section of the account application or Account Update
Form to participate in the fund's systematic withdrawal plan.
You should not establish systematic withdrawals if you intend to make concurrent
purchases of Class A, B or C shares because you may unnecessarily pay a sales
charge or CDSC on these purchases.
- -------------------------------------------------------------------------------
Special Services
- -------------------------------------------------------------------------------
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
Exchanging Shares
You may exchange fund shares into an identically registered account at any time
for an appropriate class of another Nuveen mutual fund available in your state.
Your exchange must meet the minimum purchase requirements of the fund into which
you are exchanging. You may have to pay a sales charge when exchanging shares
that you purchased without a sales charge for shares that are sold with a sales
charge. Please consult the Statement of Additional Information for details.
12 Section 3 How You Can Buy and Sell Shares
<PAGE>
The exchange privilege is not intended to allow you to use the fund for short-
term trading. Because excessive exchanges may interfere with portfolio
management, raise fund operating expenses or otherwise have an adverse effect on
other shareholders, the fund reserves the right to revise or suspend the
exchange privilege, limit the amount or number of exchanges, or reject any
exchange.
The fund may change or cancel its exchange policy at any time upon 60 days'
notice. Because an exchange is treated for tax purposes as a purchase and sale,
and any gain may be subject to tax, you should consult your tax adviser about
the tax consequences of exchanging your shares.
Fund Direct/SM/
The Fund Direct Program allows you to link your fund account to your bank
account and transfer money electronically between these accounts and perform a
variety of account transactions, including purchasing shares by telephone and
investing through a systematic investment plan. You may also have dividends,
distributions, redemption payments or systematic withdrawal plan payments sent
directly to your bank account. Your financial adviser can help you complete the
forms for these services, or you can call Nuveen at (800) 257-8787 for copies of
the necessary forms.
Reinstatement Privilege
If you redeem fund shares, you may reinvest all or part of your redemption
proceeds up to one year later without incurring any additional charges. You may
only reinvest into the same share class you redeemed. If you paid a CDSC, we
will refund your CDSC and reinstate your holding period. You may use this
reinstatement privilege only once for any redemption.
- -------------------------------------------------------------------------------
How to Sell Shares
- -------------------------------------------------------------------------------
You may sell (redeem) your shares on any business day. You will receive the
share price next determined after Nuveen has received your properly completed
redemption request. Your redemption request must be received before the close
of trading for you to receive that day's price. If you are selling shares
purchased recently with a check, you will not receive your redemption proceeds
until your check has cleared. This may take up to ten business days from your
purchase date. While the fund does not charge a redemption fee, you may be
assessed a CDSC, if applicable. When you redeem Class A, Class B, or Class C
shares subject to a CDSC, the fund will first redeem any shares that are not
subject to a CDSC or that represent an increase in the value of your fund
account due to capital appreciation, and then redeem the shares you have owned
for the longest period of time, unless you ask the fund to redeem your shares in
a different order. No CDSC is imposed on shares you buy through the
reinvestment of dividends and capital gains. The holding period is calculated
on a monthly basis and begins on the first day of the month in which you buy
shares. When you redeem shares subject to a CDSC, the CDSC is calculated on the
lower of your purchase price or redemption proceeds, deducted from your
redemption proceeds, and paid to Nuveen. The CDSC may be waived under certain
special circumstances as described in the Statement of Additional Information.
Section 3 How You Can Buy and Sell Shares 13
<PAGE>
An Important Note About Telephone Transactions
Although Nuveen Investor Services has certain safeguards and procedures to
confirm the identity of callers, it will not be liable for losses resulting from
following telephone instructions it reasonably believes to be genuine. Also, you
should verify your trade confirmations immediately upon receipt.
An Important Note About Involuntary Redemption
From time to time, the fund may establish minimum account size requirements. The
fund reserves the right to liquidate your account upon 30 days' written notice
if the value of your account falls below an established minimum. The fund
presently has set a minimum balance of $100 unless you have an active Nuveen
Defined Portfolio reinvestment account. You will not be assessed a CDSC on an
involuntary redemption.
Through Your Financial Adviser
You may sell your shares through your financial adviser who can prepare the
necessary documentation. Your financial adviser may charge for this.
By Telephone
If you have authorized telephone redemption privileges, you can redeem your
shares by calling (800) 257-8787. Telephone redemptions are not available if
you own shares in certificate form and may not exceed $50,000. Checks will only
be issued to you as the shareholder of record and mailed to your address of
record. If you have established Fund Direct privileges, you may have redemption
proceeds transferred electronically to your bank account. We will normally mail
your check the next business day.
By Mail
You can sell your shares at any time by sending a written request to the fund,
c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186. Your request must include the following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person to whom you want your redemption proceeds paid (if
other than to the shareholder of record);
. The address where you want your redemption proceeds sent (if other than the
address of record);
. Any certificates you have for the shares; and
. Any required signature guarantees.
We will normally mail your check the next business day, but in no event more
than seven days after we receive your request. If you purchased your shares by
check, your redemption proceeds will not be mailed until your check has cleared.
Guaranteed signatures are required if you are redeeming more than $50,000, you
want the check payable to someone other than the shareholder of record or you
want the check sent to another address (or the address of record has been
changed within the last 60 days). Signature guarantees must be obtained from a
bank, brokerage firm or other financial intermediary that is a member of an
approved Medallion Guarantee Program or that is otherwise approved by the fund.
A notary public cannot provide a signature guarantee.
Redemptions In-Kind
The fund generally pays redemption proceeds in cash. Under unusual conditions
that make cash payment unwise and for the protection of existing shareholders,
the fund may pay all or a portion of your redemption proceeds in securities or
other fund assets. Although it is unlikely that your shares would be redeemed
in-kind, you would probably have to pay brokerage costs to sell the securities
distributed to you, as well as taxes on any capital gains from that sale.
14 Section 3 How You Can Buy and Sell Shares
<PAGE>
Section 4 General Information
To help you understand the tax implications of investing in the fund, this
section includes important details about how the fund makes distributions to
shareholders. We discuss some other fund policies, as well.
- -------------------------------------------------------------------------------
Dividends, Distributions and Taxes
- -------------------------------------------------------------------------------
The fund pays income dividends and any taxable capital gains once a year in
December.
Payment and Reinvestment Options
The fund automatically reinvests your dividends in additional fund shares unless
you request otherwise. You may request to have your dividends paid to you by
check, deposited directly into your bank account, paid to a third party, sent to
an address other than your address of record or reinvested in shares of another
Nuveen mutual fund. For further information, contact your financial adviser or
call Nuveen at (800) 257-8787.
Foreign Income Tax Considerations
Investment income that the fund receives from its foreign investments may be
subject to foreign income taxes, which generally will reduce the fund's
distributions. However, the U.S. has entered into tax treaties with many foreign
countries that may entitle you to certain tax benefits.
Taxes and Tax Reporting
The fund's distributions are taxed as ordinary income or capital gains (which
may be taxable at different rates depending on the length of time the fund holds
its assets). Dividends from the fund's long-term capital gains are taxable as
capital gains, while dividends from short-term capital gains and net investment
income are generally taxable as ordinary income. The tax you pay on a given
capital gains distribution depends generally on how long the fund has held the
portfolio securities it sold. It does not depend on how long you have owned your
fund shares. Dividends generally do not qualify for a dividends received
deduction if you are a corporate shareholder.
Early in each year, you will receive a statement detailing the amount and nature
of all dividends and capital gains that you were paid during the prior year. If
you hold your investment at the firm where you purchased your fund shares, you
will receive the statement from that firm. If you hold your shares directly at
the fund, Nuveen will send you the statement. The tax status of your dividends
is the same whether you reinvest your dividends or elect to receive them in
cash. The sale of shares in your account may produce a gain or loss, and is a
taxable event. For tax purposes, an exchange is the same as a sale.
Section 4 General Information 15
<PAGE>
Please note that if you do not furnish the fund with your correct Social
Security number or employer identification number, federal law requires the fund
to withhold federal income tax from your distributions and redemption proceeds,
currently at a rate of 31%.
Please consult the Statement of Additional Information and your tax adviser for
more information about taxes.
Buying or Selling Shares Close to a Record Date
Buying fund shares shortly before the record date for a taxable dividend is
commonly known as "buying the dividend." The entire dividend may be taxable to
you even though a portion of the dividend effectively represents a return of
your purchase price.
- -------------------------------------------------------------------------------
Distribution and Service Plans
- -------------------------------------------------------------------------------
Nuveen serves as the selling agent and distributor of the fund's shares. In this
capacity, Nuveen manages the offering of the fund's shares and is responsible
for all sales and promotional activities. In order to reimburse Nuveen for its
costs in connection with these activities, including compensation paid to
authorized dealers, the fund has adopted a distribution and service plan in
accordance with Rule 12b-1 under the Investment Company Act of 1940. (See "How
You Can Buy and Sell Shares" for a description of the distribution and service
fees paid under this plan.)
Nuveen receives the distribution fee for Class B and Class C shares primarily
for providing compensation to authorized dealers, including Nuveen, in
connection with the distribution of shares. Nuveen uses the service fee for
Class A, Class B, and Class C shares to compensate authorized dealers, including
Nuveen, for providing ongoing account services to shareholders. These services
may include establishing and maintaining shareholder accounts, answering
shareholder inquiries, and providing other personal services to shareholders.
These fees also compensate Nuveen for other expenses, including printing and
distributing prospectuses to persons other than shareholders, and preparing,
printing, and distributing advertising and sales literature and reports to
shareholders used in connection with the sale of shares. Because these fees are
paid out of the fund's assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
Nuveen periodically undertakes sales promotion programs with authorized dealers
and may pay them the full applicable sales charge as a commission. In addition,
Nuveen may provide support at its own expense to authorized dealers in
connection with sales meetings, seminars, prospecting seminars and other events
at which Nuveen presents its products and services. Under certain circumstances,
Nuveen also will share with authorized dealers up to half the costs of
advertising that features the products and services of both parties. The
Statement of Additional Information contains further information about these
programs.
16 Section 4 General Information
<PAGE>
- -------------------------------------------------------------------------------
Net Asset Value
- -------------------------------------------------------------------------------
The price you pay for your shares is based on the fund's net asset value per
share which is determined as of the close of trading (normally 4:00 p.m. New
York time) on each day the New York Stock Exchange is open for business. Net
asset value is calculated for each class by taking the value of the class' total
assets, including interest or dividends accrued but not yet collected, less all
liabilities, and dividing by the total number of shares outstanding. The result,
rounded to the nearest cent, is the net asset value per share. All valuations
are subject to review by the fund's Board of Trustees or its delegate.
In determining net asset value, expenses are accrued and applied daily and
securities and other assets for which market quotations are available are valued
at market value. Common stocks and other equity securities are valued at the
last sales price that day. Common stocks and other equity 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.
- -------------------------------------------------------------------------------
Fund Service Providers
- -------------------------------------------------------------------------------
The custodian of the assets of the fund is The Chase Manhattan Bank, 4 New York
Plaza, New York, NY 10004-2413. Chase also provides certain accounting services
to the fund. The fund's transfer, shareholder services and dividend paying
agent, Chase Global Funds Services Company, P.O. Box 5186, Bowling Green
Station, New York, NY 10274-5186, performs bookkeeping, data processing and
administrative services for the maintenance of shareholder accounts.
- -------------------------------------------------------------------------------
Year 2000
- -------------------------------------------------------------------------------
The fund's service providers rely on computer systems to manage the fund's
investments, process shareholder transactions and provide shareholder account
maintenance. Because of the way computers historically have stored dates, some
of these systems currently may not be able to correctly process activity
occuring in the year 2000. Nuveen is working with the fund's service providers
to adapt their systems to address this "Year 2000" issue. Nuveen and the fund
expect that the necessary work will be completed on a timely basis, although
there can be no assurance of this. Foreign issuers and markets may not be as
prepared as their U.S. counterparts to address the year 2000 issue.
Section 4 General Information 17
<PAGE>
Section 5 Financial Highlights
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate that an
investor would have earned on an investment in the fund (assuming reinvestment
of all dividends and distributions). This information has been audited by Arthur
Andersen LLP, whose report, along with the fund's financial statements, are
included in the Statement of Additional Information and annual report, which are
available upon request.
<TABLE>
<CAPTION>
Nuveen European Value Fund
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) 20.01 1.86
1998 (c) 20.00 .03 (.13) (.10) (.03) -- (.03) 19.87 (.52)
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------------------
Ratio
of Net
Ratio of Investment
Expenses Income to
to Average Average
Ending Net Assets Net Assets
Net After Credit/ After Credit/ Portfolio
Assets Reimburse- Reimburse- Turnover
(000) ment (a) ment (a) Rate
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (5/98)
1999 $ 3,277 1.55% 1.15% 230%
1998 (c) 102 1.55* 1.33* 5
Class B (5/98)
1999 3,130 2.30 .19 230
1998 (c) 335 2.30* 1.59* 5
Class C (5/98)
1999 711 2.30 .35 230
1998 (c) 42 2.30* .60* 5
Class R (5/98)
1999 4,135 1.30 1.20 230
1998 (c) 3,240 1.30* 1.75* 5
==========================================================================
</TABLE>
* Annualized.
(a) After custodian fee credit and expense reimbursement, where applicable.
(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 Section 5 Financial Highlights
<PAGE>
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
Nuveen Mutual Funds
Nuveen offers a variety of mutual funds designed to help you reach your
financial goals. The funds below are grouped by investment objectives.
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
Taxable Income
Income Fund
Tax-Free Income
National Municipal Bond Funds
High Yield
Long-term
Insured Long-term
Intermediate-term
Limited-term
State Municipal Bond Funds
Arizona
California/1/
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts/1/
Michigan
Missouri
New Jersey
New Mexico
New York/1/
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Cash Reserves
Money Market Fund
Municipal Money Market Fund
California Tax-Exempt Money Market Fund
New York Tax-Exempt Money Market Fund
Several additional sources of information are available to you. The Statement of
Additional Information ("SAI"), incorporated by reference into this prospectus,
contains detailed information on the fund's policies and operation. Additional
information about the fund's investments is available in the fund's annual and
semi-annual reports to shareholders. In the fund's annual report, you will find
a discussion of the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year. Call
Nuveen at (800) 257-8787 to request a free copy of any of these materials or
other fund information; or ask your financial advisor for copies.
You may also obtain this and other fund information directly from the Securities
and Exchange Commission ("SEC"). The SEC may charge a copying fee for this
information. Visit the SEC on-line at http://www.sec.gov or in person at the
SEC's Public Reference Room in Washington, D.C. Call the SEC at (800) SEC-0330
for room hours and operation. You may also request fund information by writing
to the SEC's Public Reference Section, Washington, D.C. 20549. The fund's
Investment Company file number is 811-07619.
EPR-EUR-NA 10-99
/1/ Long-term and insured long-term portfolios.
<PAGE>
Statement of Additional Information
October 28, 1999
Nuveen Investment Trust
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN EUROPEAN VALUE FUND
This Statement of Additional Information is not a prospectus. A prospectus may
be obtained from certain securities representatives, banks and other financial
institutions that have entered into sales agreements with John Nuveen & Co. In-
corporated, or from the Fund by written request to the Fund, c/o Nuveen In-
vestor Services, P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186
or by calling 800-257-8787. This Statement of Additional Information relates
to, and should be read in conjunction with, the Prospectus for the Fund. The
Prospectus for the Fund is dated October 28, 1999.
<TABLE>
<S> <C>
Table of Contents Page
- ------------------------------------------------------------------------------
General Information B-2
- ------------------------------------------------------------------------------
Investment Policies and Restrictions B-2
- ------------------------------------------------------------------------------
Investment Policies and Techniques B-4
- ------------------------------------------------------------------------------
Management B-18
- ------------------------------------------------------------------------------
Trust Manager and Fund Manager B-23
- ------------------------------------------------------------------------------
Portfolio Transactions B-25
- ------------------------------------------------------------------------------
Net Asset Value B-26
- ------------------------------------------------------------------------------
Tax Matters B-27
- ------------------------------------------------------------------------------
Performance Information B-31
- ------------------------------------------------------------------------------
Additional Information on the Purchase And Redemption of Fund Shares and
Shareholder Programs B-36
- ------------------------------------------------------------------------------
Distribution and Service Plans B-50
- ------------------------------------------------------------------------------
Independent Public Accountants and Custodian B-51
- ------------------------------------------------------------------------------
Financial Statements B-51
- ------------------------------------------------------------------------------
General Trust Information B-51
- ------------------------------------------------------------------------------
Appendix A--Ratings of Investments A-1
- ------------------------------------------------------------------------------
</TABLE>
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report and are incorporated herein by reference. The An-
nual Report accompanies this Statement of Additional Information.
<PAGE>
GENERAL INFORMATION
The Nuveen European Value Fund (the "Fund") is a series of the Nuveen Invest-
ment Trust (the "Trust"), an open-end diversified management series investment
company. Each series of the Trust represents shares of beneficial interest in a
separate portfolio of securities and other assets, with its own objectives and
policies. Currently, four series of the Trust are authorized and outstanding.
Certain matters under the Investment Company Act of 1940 which must be submit-
ted to a vote of the holders of the outstanding voting securities of a series
company shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding voting securities of each se-
ries affected by such matter.
INVESTMENT POLICIES AND RESTRICTIONS
Investment Restrictions
The investment objective and certain fundamental investment policies of the
Fund are described in the Prospectus for the Fund. The Fund, as a fundamental
policy, may not, without the approval of the holders of a majority of the
shares of the Fund:
(1) With respect to 75% of its total assets, purchase the securities of any is-
suer (except securities issued or guaranteed by the United States government or
any agency or instrumentality thereof) if, as a result, (i) more than 5% of the
Fund's total assets would be invested in securities of that issuer, or (ii) the
Fund would hold more than 10% of the outstanding voting securities of that is-
suer.
(2) Borrow money, except that the Fund may (i) borrow money from banks for tem-
porary or emergency purposes (but not for leverage or the purchase of invest-
ments) and (ii) engage in other transactions permissible under the Investment
Company Act of 1940 that may involve a borrowing (such as obtaining such short-
term credits as are necessary for the clearance of transactions, engaging in
delayed- delivery transactions, or purchasing certain futures and options),
provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the
value of the Fund's total assets (including the amount borrowed), less the
Fund's liabilities (other than borrowings).
(3) Act as an underwriter of another issuer's securities, except to the extent
that the Fund may be deemed to be an underwriter within the meaning of the Se-
curities Act of 1933 in connection with the purchase and sale of portfolio se-
curities.
(4) Make loans to other persons, except through (i) the purchase of debt secu-
rities permissible under the Fund's investment policies, (ii) repurchase agree-
ments, or (iii) the lending of portfolio securities, provided that no such loan
of portfolio securities may be made by the Fund if, as a result, the aggregate
of such loans would exceed 33 1/3% of the value of the Fund's total assets.
(5) Purchase or sell physical commodities unless acquired as a result of owner-
ship of securities or other instruments (but this shall not prevent the Fund
from purchasing or selling options, futures contracts, or other derivative in-
struments, or from investing in securities or other instruments backed by phys-
ical commodities).
B-2
<PAGE>
(6) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prohibit the Fund from pur-
chasing or selling securities or other instruments backed by real estate or of
issuers engaged in real estate activities).
(7) Issue senior securities, except as permitted under the Investment Company
Act of 1940.
(8) Purchase the securities of any issuer if, as a result, 25% or more of the
Fund's total assets would be invested in the securities of issuers whose prin-
cipal business activities are in the same industry (except that this restric-
tion shall not be applicable to securities issued or guaranteed by the U.S.
government or any agency or instrumentality thereof).
If a percentage restriction is adhered to at the time of investment, a later
increase in percentage resulting from a change in market value of the invest-
ment or the total assets will not constitute a violation of that restriction.
The foregoing fundamental investment policies, together with the investment ob-
jective of the Fund and certain other policies specifically identified in the
Prospectus, cannot be changed without approval by holders of a "majority of the
Fund's outstanding voting shares." As defined in the Investment Company Act of
1940, this means the vote of (i) 67% or more of the Fund's shares present at a
meeting, if the holders of more than 50% of the Fund's shares are present or
represented by proxy, or (ii) more than 50% of the Fund's shares, whichever is
less.
In addition to the foregoing fundamental investment policies, the Fund is also
subject to the following non-fundamental restrictions and policies, which may
be changed by the Board of Trustees. The Fund may not:
(1) Sell securities short, unless the Fund owns or has the right to obtain se-
curities equivalent in kind and amount to the securities sold short at no added
cost, and provided that transactions in options, futures contracts, options on
futures contracts, or other derivative instruments are not deemed to constitute
selling securities short.
(2) Purchase securities on margin, except that the Fund may obtain such short
term credits as are necessary for the clearance of transactions; and provided
that margin deposits in connection with futures contracts, options on futures
contracts, or other derivative instruments shall not constitute purchasing se-
curities on margin.
(3) Pledge, mortgage or hypothecate any assets owned by the Fund except as may
be necessary in connection with permissible borrowings or investments and then
such pledging, mortgaging, or hypothecating may not exceed 33 1/3% of the
Fund's total assets at the time of the borrowing or investment.
(4) Purchase securities of open-end or closed-end investment companies except
in compliance with the Investment Company Act of 1940 and applicable state law.
(5) Enter into futures contracts or related options if more than 30% of the
Fund's net assets would be represented by futures contracts or more than 5% of
the Fund's net assets would be committed to initial margin deposits and premi-
ums on futures contracts and related options.
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(6) Invest in direct interests in oil, gas or other mineral exploration pro-
grams or leases; however, the Fund may invest in the securities of issuers that
engage in these activities.
(7) Purchase securities when borrowings exceed 5% of its total assets. If due
to market fluctuations or other reasons, the value of the Fund's assets falls
below 300% of its borrowings, the Fund will reduce its borrowings within 3
business days. To do this, the Fund may have to sell a portion of its invest-
ments at a time when it may be disadvantageous to do so.
(8) Invest in illiquid securities if, as a result of such investment, more than
15% of the Fund's net assets would be invested in illiquid securities.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of the Fund's investment
objective, policies, and techniques that are described in the Prospectus for
the Fund.
Cash Equivalents and Short-Term Investments
Short-Term Taxable Fixed Income Securities
The Fund may invest up to 35% of its total assets, and for temporary defensive
purposes or to keep cash on hand fully invested up to 100% of its total assets,
in cash equivalents and short-term taxable fixed income securities from issuers
having a long-term rating of at least A or higher by S&P, Moody's or Fitch, or
A- or higher by Duff & Phelps, Inc. ("D&P"), or determined by the portfolio
manager to be of comparable quality, and having a maturity of one year or less.
Short-term taxable fixed income securities are defined to include, without lim-
itation, the following:
(1) The Fund may invest in U.S. government securities, including bills, notes
and bonds differing as to maturity and rates of interest, which are either is-
sued or guaranteed by the U.S. Treasury or by U.S. government agencies or in-
strumentalities. U.S. government agency securities include securities issued by
(a) the Federal Housing Administration, Farmers Home Administration, Export-Im-
port Bank of the United States, Small Business Administration, and the Govern-
ment National Mortgage Association, whose securities are supported by the full
faith and credit of the United States; (b) the Federal Home Loan Banks, Federal
Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities
are supported by the right of the agency to borrow from the U.S. Treasury; (c)
the Federal National Mortgage Association, whose securities are supported by
the discretionary authority of the U.S. government to purchase certain obliga-
tions of the agency or instrumentality; and (d) the Student Loan Marketing As-
sociation, whose securities are supported only by its credit. While the U.S.
government provides financial support to such U.S. government-sponsored agen-
cies or instrumentalities, no assurance can be given that it always will do so
since it is not so obligated by law. The U.S. government, its agencies, and in-
strumentalities do not guarantee the market value of their securities, and con-
sequently, the value of such securities may fluctuate. In addition, the Fund
may invest in sovereign debt obligations of foreign countries. A sovereign
debtor's willingness or ability to repay principal and interest in a timely
manner may be affected by a number of factors, including its cash flow situa-
tion, the extent of its foreign reserves, the availability of sufficient for-
eign exchange on the date a payment is due, the relative
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size of the debt service burden to the economy as a whole, the sovereign debt-
or's policy toward principal international lenders and the political
constraints to which it may be subject.
(2) The Fund may invest in certificates of deposit issued against funds depos-
ited in a bank or savings and loan association. Such certificates are for a
definite period of time, earn a specified rate of return, and are normally ne-
gotiable. If such certificates of deposit are non-negotiable, they will be con-
sidered illiquid securities and be subject to the Fund's 15% restriction on in-
vestments in illiquid securities. Pursuant to the certificate of deposit, the
issuer agrees to pay the amount deposited plus interest to the bearer of the
certificate on the date specified thereon. Under current FDIC regulations, the
maximum insurance payable as to any one certificate of deposit is $100,000;
therefore, certificates of deposit purchased by the Fund may not be fully in-
sured.
(3) The Fund may invest in bankers' acceptances, which are short-term credit
instruments used to finance commercial transactions. Generally, an acceptance
is a time draft drawn on a bank by an exporter or an importer to obtain a
stated amount of funds to pay for specific merchandise. The draft is then "ac-
cepted" by a bank that, in effect, unconditionally guarantees to pay the face
value of the instrument on its maturity date. The acceptance may then be held
by the accepting bank as an asset or it may be sold in the secondary market at
the going rate of interest for a specific maturity.
(4) The Fund may invest in repurchase agreements, which involve purchases of
debt securities. In such an action, at the time the Fund purchases the securi-
ty, it simultaneously agrees to resell and redeliver the security to the sell-
er, who also simultaneously agrees to buy back the security at a fixed price
and time. This assures a predetermined yield for the Fund during its holding
period since the resale price is always greater than the purchase price and re-
flects an agreed-upon market rate. Such actions afford an opportunity for the
Fund to invest temporarily available cash. The Fund may enter into repurchase
agreements only with respect to obligations of the U.S. government, its agen-
cies or instrumentalities; certificates of deposit; or bankers' acceptances in
which the Fund may invest. Repurchase agreements may be considered loans to the
seller, collateralized by the underlying securities. The risk to the Fund is
limited to the ability of the seller to pay the agreed-upon sum on the repur-
chase date; in the event of default, the repurchase agreement provides that the
affected Fund is entitled to sell the underlying collateral. If the value of
the collateral declines after the agreement is entered into, however, and if
the seller defaults under a repurchase agreement when the value of the under-
lying collateral is less than the repurchase price, the Fund could incur a loss
of both principal and interest. The portfolio manager monitors the value of the
collateral at the time the action is entered into and at all times during the
term of the repurchase agreement. The portfolio manager does so in an effort to
determine that the value of the collateral always equals or exceeds the agreed-
upon repurchase price to be paid to the Fund. If the seller were to be subject
to a federal bankruptcy proceeding, the ability of the Fund to liquidate the
collateral could be delayed or impaired because of certain provisions of the
bankruptcy laws.
(5) The Fund may invest in bank time deposits, which are monies kept on deposit
with banks or savings and loan associations for a stated period of time at a
fixed rate of interest. There may be penalties for the early withdrawal of such
time deposits, in which case the yields of these investments will be reduced.
(6) The Fund may invest in commercial paper, which are short-term unsecured
promissory notes, including variable rate master demand notes issued by corpo-
rations to finance their current operations. Master demand notes are direct
lending arrangements between the Fund and a corporation. There is no second-
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ary market for the notes. However, they are redeemable by the Fund at any
time. The portfolio manager will consider the financial condition of the cor-
poration (e.g., earning power, cash flow, and other liquidity ratios) and will
continuously monitor the corporation's ability to meet all of its financial
obligations, because the Fund's liquidity might be impaired if the corporation
were unable to pay principal and interest on demand. The Fund may only invest
in commercial paper rated A-2 or better by S&P, Prime-2 or higher by Moody's,
Duff 2 or higher by D&P or Fitch 2 or higher by Fitch, or unrated commercial
paper which is, in the opinion of the Fund manager, of comparable quality.
Foreign Investments
Indirect Foreign Investment--Depositary Receipts. The Fund may invest in for-
eign securities by purchasing depositary receipts, including American Deposi-
tary Receipts ("ADRs"), European Depository Receipts ("EDRs"), or Global De-
positary Receipts ("GDRs"), or other securities representing indirect owner-
ship interests in the securities of foreign issuers. Generally, ADRs, in reg-
istered form, are denominated in U.S. dollars and are designed for use in the
U.S. securities markets, while EDRs and GDRs, in bearer form, may be denomi-
nated in other currencies and are designed for use in European and other mar-
kets. For purposes of the Fund's investment policies, ADRs, EDRs, and GDRs are
deemed to have the same classification as the underlying securities they rep-
resent, except that ADRs, EDRs, and GDRs shall be treated as indirect foreign
investments. Thus, an ADR, EDR, or GDR representing ownership of common stock
will be treated as common stock. ADRs, EDRs, and GDRs do not eliminate all of
the risks associated with directly investing in the securities of foreign is-
suers.
Other types of depositary receipts include American Depositary Shares
("ADSs"), Global Depositary Certificates ("GDCs"), and International Deposi-
tary Receipts ("IDRs"). ADSs are shares issued under a deposit agreement rep-
resenting the underlying ordinary shares that trade in the issuer's home mar-
ket. An ADR, described above, is a certificate that represents a number of
ADSs. GDCs and IDRs are typically issued by a foreign bank or trust company,
although they may sometimes also be issued by a U.S. bank or trust company.
GDCs and IDRs are depositary receipts that evidence ownership of underlying
securities issued by either a foreign or a U.S. corporation.
Depositary receipts may be available through "sponsored" or "unsponsored" fa-
cilities. A sponsored facility is established jointly by a depositary and the
issuer of the security underlying the receipt. An unsponsored facility may be
established by a depositary without participation by the issuer of the secu-
rity underlying the receipt. There are greater risks associated with holding
unsponsored depositary receipts. For example, if the Fund holds an unsponsored
depositary receipt, it will generally bear all of the costs of establishing
the unsponsored facility. In addition, the depositary of an unsponsored facil-
ity frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through to the
holders of the receipts voting rights with respect to the deposited securi-
ties.
Direct Foreign Investments. The Fund may invest directly in the securities of
foreign issuers. In considering whether to invest in the securities of a for-
eign company, the Fund manager considers such factors as the characteristics
of the particular company, differences between economic trends, and the per-
formance of securities markets within the U.S. and those within other coun-
tries. The Fund manager also considers
B-6
<PAGE>
factors relating to the general economic, governmental, and social conditions
of the country or countries where the company is located.
The Fund may purchase debt obligations issued or guaranteed by governments
(including states, provinces or municipalities) of countries other than the
United States, or by their agencies, authorities, or instrumentalities. The
Fund also may purchase debt obligations issued or guaranteed by supranational
entities organized or supported by several national governments, such as the
International Bank for Reconstruction and Development (the "World Bank"), the
Inter-American Development Bank, the Asian Development Bank, and the European
Investment Bank. In addition, the Fund may purchase debt obligations of for-
eign corporations or financial institutions, such as Yankee bonds (dollar-de-
nominated bonds sold in the United States by non-U.S. issuers), Samurai bonds
(yen-denominated bonds sold in Japan by non-Japanese issuers), and Euro bonds
(bonds not issued in the country (and possibly not the currency of the coun-
try) of the issuer).
The Fund's investments will be allocated among securities denominated in the
currencies of a number of foreign countries and, within each such country,
among different types of debt securities. The percentage of assets invested in
securities of a particular country or denominated in a particular currency
will vary in accordance with the Fund manager's assessment of the country's
gross domestic product, purchasing power parity and market capitalization and
the relationship of a country's currency to the United States dollar. Funda-
mental economic strength, credit quality and interest rate trends will be the
principal factors considered by the Fund manager in determining whether to in-
crease or decrease the emphasis placed upon a particular type of security
within the Fund.
Securities transactions conducted outside the U.S. may not be regulated as
rigorously as in the U.S., may not involve a clearing mechanism and related
guarantees, and are subject to the risk of governmental actions affecting
trading in, or the prices of, foreign securities, currencies and other instru-
ments. The value of such positions also could be adversely affected by (i)
other complex foreign political, legal and economic factors, (ii) lesser
availability than in the U.S. of data on which to make trading decisions,
(iii) delays in the Fund's ability to act upon economic events occurring in
foreign markets during non-business hours in the U.S., (iv) the imposition of
different exercise and settlement terms and procedures and the margin require-
ments than in the U.S., and (v) lower trading volume and liquidity.
The Fund may invest in Eurodollar convertibles. Eurodollar convertibles are
fixed-income securities of a foreign issuer that are issued in U.S. dollars
outside the U.S. and are convertible into or exchangeable for specified equity
securities.
Special Risks Associated with the Introduction of the Euro. The introduction
of a single currency, the euro, on January 1, 1999 for participating European
nations in the European Economic and Monetary Union presents unique uncertain-
ties for European securities in the markets in which they trade and with re-
spect to the operation of the Fund that invest in securities denominated in
European currencies and other European securities. The introduction of the
euro will result in the redenomination of European debt and equity securities
over a period of time. Uncertainties raised by the introduction of the euro
include whether the payment and operational systems of banks and other finan-
cial institutions will be ready by the scheduled launch date, the creation of
suitable clearing and settlement payment systems for the new currency, the
valuation and legal treatment of outstanding financial contracts after
January 1,
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<PAGE>
1999 that refer to existing currencies rather than the euro and adverse ac-
counting or tax consequences that may arise from the transition to the euro.
These or other factors could cause market disruptions and could adversely af-
fect the value of securities and foreign currencies held by the Fund.
Foreign Currency Transactions. 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 pur-
poses only. Foreign currency futures and options contracts are traded in the
U.S. on regulated exchanges such as the Chicago Mercantile Exchange, the Mid-
America Commodities Exchange, and the Philadelphia Stock Exchange. If the Fund
invests in a currency futures or options contract, it must make a margin de-
posit 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 from purchase
to maturity. In addition, the Fund may segregate assets to cover its futures
contracts obligations.
(1) Currency Risks. 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 relative to a foreign currency, the Fund's in-
vestment in securities denominated in that currency will lose value because its
currency is worth fewer U.S. dollars. On the other hand, when the value of the
U.S. dollar falls relative to a foreign currency, the Fund's investments denom-
inated in that currency will tend to increase in value because that currency is
worth more U.S. dollars. The exchange rates between the U. S. dollar and for-
eign currencies depend upon such factors as supply and demand in the currency
exchange markets, international balances of payments, governmental interven-
tion, speculation, and other economic and political conditions. Although the
Fund values its assets daily in U.S. dollars, the Fund may not convert its
holdings of foreign currencies to U.S. dollars daily. The Fund may incur con-
version costs when it converts its holdings to another currency. Foreign ex-
change dealers may realize a profit on the difference between the price at
which the Fund buys and sells currencies. The Fund will engage in foreign cur-
rency exchange transactions in connection with its portfolio investments. The
Fund will conduct its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market or through forward contracts to purchase or sell foreign contracts.
(2) Forward Foreign Currency Exchange Contracts. The Fund may enter into for-
ward currency exchange contracts. Forward foreign currency exchange contracts
may limit potential gains that could result from a positive change in such cur-
rency relationships. The Fund manager believes that it is important to have the
flexibility to enter into forward foreign currency exchange contracts whenever
it determines that it is in the Fund's best interest to do so. The Fund will
not speculate in foreign currency exchange.
The Fund will not enter into forward currency exchange contracts or maintain a
net exposure in such contracts that it would be obligated to deliver an amount
of foreign currency in excess of the value of its portfolio securities or other
assets denominated in that currency or, in the case of a "cross-hedge," denomi-
nated in a currency or currencies that the Fund manager believes will tend to
be closely correlated with that currency with regard to price movements. Gener-
ally, the Fund will not enter into a forward foreign currency exchange contract
with a term longer than one year.
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<PAGE>
(3) Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price on a specified date or during the option period. The owner of a
call option has the right, but not the obligation, to buy the currency. Con-
versely, the owner of a put option has the right, but not the obligation, to
sell the currency. When the option is exercised, the seller (i.e., writer) of
the option is obligated to fulfill the terms of the sold option. However, ei-
ther the seller or the buyer may, in the secondary market, close its position
during the option period at any time prior to expiration.
A call option on foreign currency generally rises in value if the underlying
currency appreciates in value, and a put option on a foreign currency generally
rises in value if the underlying currency depreciates in value. Although pur-
chasing a foreign currency option can protect the Fund against an adverse move-
ment in the value of a foreign currency, the option will not limit the movement
in the value of such currency. For example, if the Fund held securities denomi-
nated in a foreign currency that was appreciating and had purchased a foreign
currency put to hedge against a decline in the value of the currency,
the Fund would not have to exercise its put option. Likewise, if the Fund en-
tered into a contract to purchase a security denominated in foreign currency
and, in conjunction with that purchase, purchased a foreign currency call op-
tion to hedge against a rise in value of the currency, and if the value of the
currency instead depreciated between the date of purchase and the settlement
date, the Fund would not have to exercise its call. Instead, the Fund could ac-
quire in the spot market the amount of foreign currency needed for settlement.
(4) Special Risks Associated with Foreign Currency Options. Buyers and sellers
of foreign currency options are subject to the same risks that apply to options
generally. In addition, there are certain risks associated with foreign cur-
rency options. The markets in foreign currency options are relatively new, and
the Fund's ability to establish and close out positions on such options is sub-
ject to the maintenance of a liquid secondary market. Although the Fund will
not purchase or write such options unless and until, in the opinion of the Fund
manager, the market for them has developed sufficiently to ensure that the
risks in connection with such options are not greater than the risks in connec-
tion with the underlying currency, there can be no assurance that a liquid sec-
ondary market will exist for a particular option at any specific time.
In addition, options on foreign currencies are affected by all of those factors
that influence foreign exchange rates and investments generally. The value of a
foreign currency option depends upon the value of the underlying currency rela-
tive to the U. S. dollar. As a result, the price of the option position may
vary with changes in the value of either or both currencies and may have no re-
lationship to the investment merits of a foreign security. Because foreign cur-
rency transactions occurring in the interbank market involve substantially
larger amounts than those that may be involved in the use of foreign currency
options, investors may be disadvantaged by having to deal in an odd lot market
(generally consisting of transactions of less than $1 million) for the under-
lying foreign currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign curren-
cies or any regulatory requirements that quotations available through dealers
or other market sources be firm or revised on a timely basis. Available quota-
tion information is generally representative of very large transactions in the
interbank market and thus may not reflect relatively smaller transactions
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-
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<PAGE>
clock market. To the extent that the U. S. options markets are closed while the
markets for the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be reflected in
the options markets until they reopen.
(5) Foreign Currency Futures Transactions. By using foreign currency futures
contracts and options on such contracts, the Fund may be able to achieve many
of the same objectives as it would through the use of forward foreign currency
exchange contracts. The Fund may be able to achieve these objectives possibly
more effectively and at a lower cost by using futures transactions instead of
forward foreign currency exchange contracts.
(6) Special Risks Associated with Foreign Currency Futures Contracts and Re-
lated Options. Buyers and sellers of foreign currency futures contacts are sub-
ject to the same risks that apply to the use of futures generally. In addition,
there are risks associated with foreign currency futures contracts and their
use as a hedging device similar to those associated with options on currencies,
as described above.
Options on foreign currency futures contracts may involve certain additional
risks. Trading options on foreign currency futures contracts is relatively new.
The ability to establish and close out positions on such options is subject to
the maintenance of a liquid secondary market. To reduce this risk, the Fund
will not purchase or write options on foreign currency futures contracts unless
and until, in the opinion of its Fund manager, the market for such options has
developed sufficiently that the risks in connection with such options are not
greater than the risks in connection with transactions in the underlying for-
eign currency futures contracts. Compared to the purchase or sale of foreign
currency futures contracts, the purchase of call or put options on futures con-
tracts involves less potential risk to the Fund
because the maximum amount at risk is the premium paid for the option (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss, such as when
there is no movement in the price of the underlying currency or futures con-
tract.
Hedging Strategies
General Description of Hedging Strategies
The Fund may engage in hedging activities. NIAC or Institutional Capital Corpo-
ration ("Institutional Capital") may cause the Fund to utilize a variety of fi-
nancial instruments, including options, futures contracts (sometimes referred
to as "futures") and options on futures contracts to attempt to hedge the
Fund's holdings.
Hedging instruments on securities generally are used to hedge against price
movements in one or more particular securities positions that the Fund owns or
intends to acquire. Hedging instruments on stock indices, in contrast, gener-
ally are used to hedge against price movements in broad equity market sectors
in which the Fund has invested or expects to invest. The use of hedging instru-
ments is subject to applicable regulations of the Securities and Exchange Com-
mission (the "SEC"), the several options and futures exchanges upon which they
are traded, the Commodity Futures Trading Commission (the "CFTC") and various
state regulatory authorities. In addition, the Fund's ability to use hedging
instruments will be limited by tax considerations.
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<PAGE>
General Limitations on Futures and Options Transactions
The Trust has filed a notice of eligibility for exclusion from the definition
of the term "commodity pool operator" with the CFTC and the National Futures
Association, which regulate trading in the futures markets. Pursuant to Section
4.5 of the regulations under the Commodity Exchange Act (the "CEA"), the notice
of eligibility for the Fund includes the representation that the Fund will use
futures contracts and related options solely for bona fide hedging purposes
within the meaning of CFTC regulations. The Fund will not enter into futures
and options transactions if the sum of the initial margin deposits and premiums
paid for unexpired options exceeds 5% of the Fund's total assets. In addition,
the Fund will not enter into futures contracts and options transactions if more
than 30% of its net assets would be committed to such instruments.
The foregoing limitations are not fundamental policies of the Fund and may be
changed without shareholder approval as regulatory agencies permit. Various ex-
changes and regulatory authorities have undertaken reviews of options and
futures trading in light of market volatility. Among the possible actions that
have been presented are proposals to adopt new or more stringent daily price
fluctuation limits for futures and options transactions and proposals to in-
crease the margin requirements for various types of futures transactions.
Asset Coverage for Futures and Options Positions
The Fund will comply with the regulatory requirements of the SEC and the CFTC
with respect to coverage of options and futures positions by registered invest-
ment companies and, if the guidelines so
require, will set aside cash, U.S. government securities, high grade liquid
debt securities and/or other liquid assets permitted by the SEC and CFTC in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or options position is out-
standing, unless replaced with other permissible assets, and will be marked-to-
market daily.
Stock Index Options
The Fund may (i) purchase stock index options for any purpose, (ii) sell stock
index options in order to close out existing positions, and/or (iii) write cov-
ered options on stock indexes for hedging purposes. Stock index options are put
options and call options on various stock indexes. In most respects, they are
identical to listed options on common stocks. The primary difference between
stock options and index options occurs when index options are exercised. In the
case of stock options, the underlying security, common stock, is delivered.
However, upon the exercise of an index option, settlement does not occur by de-
livery of the securities comprising the index. The option holder who exercises
the index option receives an amount of cash if the closing level of the stock
index upon which the option is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. This amount
of cash is equal to the difference between the closing price of the stock index
and the exercise price of the option expressed in dollars times a specified
multiple.
A stock index fluctuates with changes in the market values of the stock in-
cluded in the index. For example, some stock index options are based on a broad
market index, such as the Standard & Poor's 500 or the Value Line Composite In-
dex or a narrower market index, such as the Standard & Poor's 100. Indexes may
also be based on an industry or market segment, such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on stock indexes
are currently traded on the
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following exchanges: the Chicago Board of Options Exchange, the New York Stock
Exchange, the American Stock Exchange, the Pacific Stock Exchange, and the
Philadelphia Stock Exchange.
The Fund's use of stock index options is subject to certain risks. Successful
use by the Fund of options on stock indexes will be subject to the ability of
Institutional Capital to correctly predict movements in the direction of the
stock market. This requires different skills and techniques than predicting
changes in the prices of individual securities. In addition, the Fund's ability
to effectively hedge all or a portion of the securities in its portfolio, in
anticipation of or during a market decline through transactions in put options
on stock indexes, depends on the degree to which price movements in the under-
lying index correlate with the price movements of the securities held by the
Fund. Inasmuch as the Fund's securities will not duplicate the components of an
index, the correlation will not be perfect. Consequently, the Fund will bear
the risk that the prices of its securities being hedged will not move in the
same amount as the prices of its put options on the stock indexes. It is also
possible that there may be a negative correlation between the index and the
Fund's securities which would result in a loss on both such securities and the
options on stock indexes acquired by the Fund.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the options markets close
before the markets for the underlying securities, significant price and rate
movements can take place in the underlying markets that cannot be reflected in
the options markets. The purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions.
The purchase of stock index options involves the risk that the premium and
transaction costs paid by the Fund in purchasing an option will be lost as a
result of unanticipated movements in prices of the securities comprising the
stock index on which the option is based.
Certain Considerations Regarding Options
There is no assurance that a liquid secondary market on an options exchange
will exist for any particular option, or at any particular time, and for some
options no secondary market on an exchange or elsewhere may exist. If the Fund
is unable to close out a call option on securities that it has written before
the option is exercised, the Fund may be required to purchase the optioned se-
curities in order to satisfy its obligation under the option to deliver such
securities. If the Fund is unable to effect a closing sale transaction with re-
spect to options on securities that it has purchased, it would have to exercise
the option in order to realize any profit and would incur transaction costs
upon the purchase and sale of the underlying securities.
The writing and purchasing of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. Imperfect correlation between the
options and securities markets may detract from the effectiveness of attempted
hedging. Options transactions may result in significantly higher transaction
costs and portfolio turnover for the Fund.
Federal Income Tax Treatment of Options
Certain option transactions have special federal income tax results for the
Fund. Expiration of a call option written by the Fund will result in short-term
capital gain. If the call option is exercised, the
B-12
<PAGE>
Fund will realize a gain or loss from the sale of the security covering the
call option and, in determining such gain or loss, the option premium will be
included in the proceeds of the sale.
If the Fund writes options, or purchases puts that are subject to the loss de-
ferral rules of Section 1092 of the Internal Revenue Code of 1986, as amended
(the "Code"), any losses on such options transactions, to the extent they do
not exceed the unrecognized gains on the securities covering the options, may
be subject to deferral until the securities covering the options have been
sold.
In the case of transactions involving "nonequity options," as defined in Code
Section 1256, the Fund will treat any gain or loss arising from the lapse,
closing out or exercise of such positions as 60% long-term and 40% short-term
capital gain or loss as required by Section 1256 of the Code. In addition, such
positions must be marked-to-market as of the last business day of the year, and
gain or loss must be recognized for federal income tax purposes in accordance
with the 60%/40% rule discussed above even though the position has not been
terminated. A "nonequity option" includes an option with respect to any group
of stocks or a stock index if there is in effect a designation by the CFTC of a
contract market for a contract based on such group of stocks or indexes. For
example, options involving stock indexes such as the S&P 500 Index would be
"nonequity options" within the meaning of Code Section 1256.
Futures Contracts
The Fund may enter into futures contracts (hereinafter referred to as "Futures"
or "Futures Contracts"), including index Futures as a hedge against movements
in the equity markets, in order to establish more definitely the effective re-
turn on securities held or intended to be acquired by the Fund or for other
purposes permissible under the CEA. The Fund's hedging may include sales of
Futures as an offset against the effect of expected declines in stock prices
and purchases of Futures as an offset against the effect of expected increases
in stock prices. The Fund will not enter into Futures Contracts which are pro-
hibited under the CEA and will, to the extent required by regulatory authori-
ties, enter only into Futures Contracts that are traded on national futures ex-
changes and are standardized as to maturity date and underlying financial in-
strument. The principal interest rate Futures exchanges in the United States
are the Board of Trade of the City of Chicago and the Chicago Mercantile Ex-
change. Futures exchanges and trading are regulated under the CEA by the CFTC.
An index Futures Contract is an agreement pursuant to which the parties agree
to take or make delivery of an amount of cash equal to the difference between
the value of the index at the close of the last trading day of the contract and
the price at which the index Futures Contract was originally written. Transac-
tion costs are incurred when a Futures Contract is bought or sold and margin
deposits must be maintained. A Futures Contract may be satisfied by delivery or
purchase, as the case may be, of the instrument or by payment of the change in
the cash value of the index. More commonly, Futures Contracts are closed out
prior to delivery by entering into an offsetting transaction in a matching
Futures Contract. Although the value of an index might be a function of the
value of certain specified securities, no physical delivery of those securities
is made. If the offsetting purchase price is less than the original sale price,
a gain will be realized; if it is more, a loss will be realized. Conversely, if
the offsetting sale price is more than the original purchase price, a gain will
be realized; if it is less, a loss will be realized. The transaction costs must
also be included in these calculations. There can be no assurance, however,
that the Fund will be able to enter into an offsetting transaction with respect
to a
B-13
<PAGE>
particular Futures Contract at a particular time. If the Fund is not able to
enter into an offsetting transaction, the Fund will continue to be required to
maintain the margin deposits on the Futures Contract.
Margin is the amount of funds that must be deposited by the Fund with its cus-
todian in a segregated account in the name of the futures commission merchant
in order to initiate Futures trading and to maintain the Fund's open positions
in Futures Contracts. A margin deposit is intended to ensure the Fund's perfor-
mance of the Futures Contract. The margin required for a particular Futures
Contract is set by the exchange on which the Futures Contract is traded and may
be significantly modified from time to time by the exchange during the term of
the Futures Contract. Futures Contracts are customarily purchased and sold on
margins that may range upward from less than 5% of the value of the Futures
Contract being traded.
If the price of an open Futures Contract changes (by increase in the case of a
sale or by decrease in the case of a purchase) so that the loss on the Futures
Contract reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if
the value of a position increases because of favorable price changes in the
Futures Contract so that the margin deposit exceeds the required margin, the
broker will pay the excess to the Fund. In computing daily net asset value, the
Fund will mark to market the current value of its open Futures Contracts. The
Fund expects to earn interest income on its margin deposits.
Because of the low margin deposits required, Futures trading involves an ex-
tremely high degree of leverage. As a result, a relatively small price movement
in a Futures Contract may result in immediate and substantial loss, as well as
gain, to the investor. For example, if at the time of purchase, 10% of the
value of the Futures Contract is deposited as margin, a subsequent 10% decrease
in the value of the Futures Contract would result in a total loss of the margin
deposit, before any deduction for the transaction costs, if the account were
then closed out. A 15% decrease would result in a loss equal to 150% of the
original margin deposit, if the Futures Contract were closed out. Thus, a pur-
chase or sale of a Futures Contract may result in losses in excess of the
amount initially invested in the Futures Contract. However, the Fund would pre-
sumably have sustained comparable losses if, instead of the Futures Contract,
it had invested in the underlying financial instrument and sold it after the
decline.
Most United States Futures exchanges limit the amount of fluctuation permitted
in Futures Contract prices during a single trading day. The day limit estab-
lishes the maximum amount that the price of a Futures Contract may vary either
up or down from the previous day's settlement price at the end of a trading
session. Once the daily limit has been reached in a particular type of Futures
Contract, no trades may be made on that day at a price beyond that limit. The
daily limit governs only price movement during a particular trading day and
therefore does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures Contract prices have occasionally
moved to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of Futures positions and sub-
jecting some Futures traders to substantial losses.
There can be no assurance that a liquid market will exist at a time when the
Fund seeks to close out a Futures position. The Fund would continue to be re-
quired to meet margin requirements until the
B-14
<PAGE>
position is closed, possibly resulting in a decline in the Fund's net asset
value. In addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result, there can be no
assurance that an active secondary market will develop or continue to exist.
A public market exists in Futures Contracts covering a number of indexes, in-
cluding, but not limited to, the Standard & Poor's 500 Index, the Standard &
Poor's 100 Index, the NASDAQ 100 Index, the Value Line Composite Index and the
New York Stock Exchange Composite Index.
Options on Futures
The Fund may also purchase or write put and call options on Futures Contracts
and enter into closing transactions with respect to such options to terminate
an existing position. A futures option gives the holder the right, in return of
the premium paid, to assume a long position (call) or short position (put) in a
Futures Contract at a specified exercise price prior to the expiration of the
option. Upon exercise of a call option, the holder acquires a long position in
the Futures Contract and the writer is assigned the opposite short position. In
the case of a put option, the opposite is true. Prior to exercise or expira-
tion, a futures option may be closed out by an offsetting purchase or sale of a
futures option of the same series.
The Fund may use options on Futures Contracts in connection with hedging strat-
egies. Generally, these strategies would be applied under the same market and
market sector conditions in which the Fund uses put and call options on securi-
ties or indexes. The purchase of put options on Futures Contracts is analogous
to the purchase of puts on securities or indexes so as to hedge the Fund's se-
curities holdings
against the risk of declining market prices. The writing of a call option or
the purchasing of a put option on a Futures Contract constitutes a partial
hedge against declining prices of the securities which are deliverable upon ex-
ercise of the Futures Contract. If the futures price at expiration of a written
call option is below the exercise price, the Fund will retain the full amount
of the option premium which provides a partial hedge against any decline that
may have occurred in the Fund's holdings of securities. If the futures price
when the option is exercised is above the exercise price, however, the Fund
will incur a loss, which may be offset, in whole or in part, by the increase in
the value of the securities held by the Fund that were being hedged. Writing a
put option or purchasing a call option on a Futures Contract serves as a par-
tial hedge against an increase in the value of the securities the Fund intends
to acquire.
As with investments in Futures Contracts, the Fund is required to deposit and
maintain margin with respect to put and call options on Futures Contracts writ-
ten by it. Such margin deposits will vary depending on the nature of the under-
lying Futures Contract (and the related initial margin requirements), the cur-
rent market value of the option, and other futures positions held by the Fund.
The Fund will set aside in a segregated account at the Fund's custodian liquid
assets, such as cash, U.S. government securities or other high grade liquid
debt obligations equal in value to the amount due on the underlying obligation.
Such segregated assets will be marked-to-market daily, and additional assets
will be placed in the segregated account whenever the total value of the segre-
gated account falls below the amount due on the underlying obligation.
The risks associated with the use of options on Futures Contracts include the
risk that the Fund may close out its position as a writer of an option only if
a liquid secondary market exists for such options, which cannot be assured. The
Fund's successful use of options on Futures Contracts depends on Institu-
B-15
<PAGE>
tional Capital's ability to correctly predict the movement in prices of Futures
Contracts and the underlying instruments, which may prove to be incorrect. In
addition, there may be imperfect correlation between the instruments being
hedged and the Futures Contract subject to the option. For additional informa-
tion, see "Futures Contracts."
Federal Income Tax Treatment of Futures Contracts
For federal income tax purposes, the Fund is required to recognize as income
for each taxable year its net unrealized gains and losses on Futures Contracts
as of the end of the year, as well as gains and losses actually realized during
the year. Except for transactions in Futures Contracts that are classified as
part of a "mixed straddle" under Code Section 1256, any gain or loss recognized
with respect to a Futures Contract is considered to be 60% long-term capital
gain or loss and 40% short-term capital gain or loss, without regard to the
holding period of the Futures Contract. In the case of a Futures transaction
not classified as a "mixed straddle," the recognition of losses may be required
to be deferred to a later taxable year.
Sales of Futures Contracts that are intended to hedge against a change in the
value of securities held by the Fund may affect the holding period of such se-
curities and, consequently, the nature of the gain or loss on such securities
upon disposition.
The Fund will distribute to shareholders annually any net capital gains which
have been recognized for federal income tax purposes (including unrealized
gains at the end of the Fund's fiscal year) on Futures transactions. Such dis-
tributions will be combined with distributions of capital gains realized on the
Fund's other investments and shareholders will be advised of the nature of the
payments.
Other Investment Policies and Techniques
Delayed-Delivery Transactions
The Fund may from time to time purchase securities on a "when-issued" or other
delayed-delivery basis. The price of securities purchased in such transactions
is fixed at the time the commitment to purchase is made, but delivery and pay-
ment for the securities take place at a later date. Normally, the settlement
date occurs within 45 days of the purchase. During the period between the pur-
chase and settlement, no payment is made by the Fund to the issuer and no in-
terest is accrued on debt securities or dividend income is earned on equity se-
curities. Delayed-delivery commitments involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date, which risk
is in addition to the risk of decline in value of the Fund's other assets.
While securities purchased in delayed-delivery transactions may be sold prior
to the settlement date, the Fund intends to purchase such securities with the
purpose of actually acquiring them. At the time the Fund makes the commitment
to purchase a security in a delayed-delivery transaction, it will record the
transaction and reflect the value of the security in determining its net asset
value. The Fund does not believe that net asset value will be adversely af-
fected by purchases of securities in delayed-delivery transactions.
The Fund will maintain in a segregated account cash, U.S. government securi-
ties, and high grade liquid debt securities equal in value to commitments for
delayed-delivery securities. Such segregated securities
B-16
<PAGE>
will mature or, if necessary, be sold on or before the settlement date. When
the time comes to pay for delayed-delivery securities, the Fund will meet its
obligations from then-available cash flow, sale of the securities held in the
segregated account described above, sale of other securities, or, although it
would not normally expect to do so, from the sale of the delayed-delivery secu-
rities themselves (which may have a market value greater or less than the
Fund's payment obligation).
Illiquid Securities
The Fund may invest in illiquid securities (i.e., securities that are not read-
ily marketable). For purposes of this restriction, illiquid securities include,
but are not limited to, restricted securities (securities the disposition of
which is restricted under the federal securities laws), securities that may
only be resold pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"), but that are deemed to be illiquid; and repur-
chase agreements with maturities in excess of seven days. However, the Fund
will not acquire illiquid securities if, as a result, such securities would
comprise more than 15% of the value of the Fund's net assets. The Board of
Trustees or its delegate has the ultimate authority to determine, to the extent
permissible under the federal securities laws, which securities are liquid or
illiquid for purposes of this 15% limitation. The Board of Trustees has dele-
gated to Institutional Capital the day-to-day determination of the illiquidity
of any equity or taxable fixed-income security, although it has retained over-
sight and ultimate responsibility for such determinations. Although no defini-
tive liquidity criteria are used, the Board of Trustees has directed Institu-
tional Capital and NIAC to look to such factors as (i) the nature of the market
for a security (including the institutional private resale market; the fre-
quency of trades and quotes for the security; the number of dealers willing to
purchase or sell the security; and the amount of time normally needed to dis-
pose of the security, the method of soliciting offers and the mechanics of
transfer), (ii) the terms of certain securities or other instruments allowing
for the disposition to a third party or the issuer thereof (e.g., certain re-
purchase obligations and demand instruments), and (iii) other permissible rele-
vant factors.
Restricted securities may be sold only in privately negotiated transactions or
in a public offering with respect to which a registration statement is in ef-
fect under the Securities Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the
Fund may be permitted to sell a security under an effective registration state-
ment. If, during such a period, adverse market conditions were to develop, the
Fund might obtain a less favorable price than that which prevailed when it de-
cided to sell. Illiquid securities will be priced at fair value as determined
in good faith by the Board of Trustees or its delegate. If, through the appre-
ciation of illiquid securities or the depreciation of liquid securities, the
Fund should be in a position where more than 15% of the value of its net assets
are invested in illiquid securities, including restricted securities which are
not readily marketable, the affected Fund will take such steps as is deemed ad-
visable, if any, to protect liquidity.
Short Sales Against the Box
When Institutional Capital believes that the price of a particular security
held by the Fund may decline, it may make "short sales against the box" to
hedge the unrealized gain on such security. Selling short against the box in-
volves selling a security which the Fund owns for delivery at a specified date
in the future. The Fund will limit its transactions in short sales against the
box to 5% of its net assets. In addition, the Fund will limit its transactions
such that the value of the securities of any issuer in which
B-17
<PAGE>
it is short will not exceed the lesser of 2% of the value of the Fund's net as-
sets or 2% of the securities of any class of the issuer. If, for example, the
Fund bought 100 shares of ABC at $40 per share in January and the price appre-
ciates to $50 in March, the Fund might "sell short" the 100 shares at $50 for
delivery the following July. Thereafter, if the price of the stock declines to
$45, it will realize the full $1,000 gain rather than the $500 gain it would
have received had it sold the stock in the market. On the other hand, if the
price appreciates to $55 per share, the Fund would be required to sell at $50
and thus receive a $1,000 gain rather than the $1,500 gain it would have re-
ceived had it sold the stock in the market. The Fund may also be required to
pay a premium for short sales which would partially offset any gain.
Warrants
The Fund may invest in warrants if, after giving effect thereto, not more than
5% of its net assets will be invested in warrants other than warrants acquired
in units or attached to other securities. Of such 5%, not more than 2% of its
assets at the time of purchase may be invested in warrants that are not listed
on the New York Stock Exchange or the American Stock Exchange. Investing in
warrants is purely speculative in that they have no voting rights, pay no divi-
dends, and have no rights with respect to the assets of the corporation issuing
them. Warrants basically are options to purchase equity securities at a spe-
cific price for a specific period of time. They do not represent ownership of
the securities but only the right to buy them. Warrants are issued by the is-
suer of the security, which may be purchased on their exercise. The prices of
warrants do not necessarily parallel the prices of the underlying securities.
Lending of Portfolio Securities
The Fund may lend its portfolio securities, up to 33 1/3% of its total assets,
to broker-dealers or institutional investors. The loans will be secured contin-
uously by collateral at least equal to the value of the securities lent by
"marking to market" daily. The Fund will continue to receive the equivalent of
the interest or dividends paid by the issuer of the securities lent and will
retain the right to call, upon notice, the lent securities. The Fund may also
receive interest on the investment of the collateral or a fee from the borrower
as compensation for the loan. As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will be made only
to firms deemed by the portfolio manager to be of good standing.
Portfolio Turnover
The Fund anticipates that its annual portfolio turnover rate will be between
100% and 150% under normal market conditions, and generally will not exceed
200%. A turnover rate of 100% would occur, for example, if the Fund sold and
replaced securities valued at 100% of its net assets within one year. In the
event the Fund were to have a turnover rate of 100% or more in any year, it
would result in the payment by the Fund of increased brokerage costs and could
result in the payment by shareholders of increased taxes on realized investment
gains. The portfolio turnover rate for the fiscal year ended June 30, 1999
(230%) greatly exceeded the rate for the fiscal year June 30, 1998 (5%) due to
the limited period of time the Fund operated during fiscal year 1998.
B-18
<PAGE>
MANAGEMENT
The management of the Trust, including general supervision of the duties per-
formed for the Fund under the Management Agreement, is the responsibility of
its Board of Trustees. The number of trustees of the Trust is seven, two of
whom are "interested persons" (as the term "interested persons" is defined in
the Investment Company Act of 1940) and five of whom are "disinterested per-
sons." The names and business addresses of the trustees and officers of the
Trust and their principal occupations and other affiliations during the past
five years are set forth below, with those trustees who are "interested per-
sons" of the Trust indicated by an asterisk.
<TABLE>
- ---------------------------------------------------------------------------------
<CAPTION>
Date of Position and Principal Occupations
Name and Address Birth Offices with Trust During Past Five Years
- ---------------------------------------------------------------------------------
<C> <C> <C> <S>
Timothy R. Schwertfeger* 3/28/49 Chairman, President Chairman (since July
333 West Wacker Drive and Trustee 1996) and Director,
Chicago, IL 60606 formerly Executive Vice
President, of The John
Nuveen Company (from
March 1992 to July 1996)
and of John Nuveen & Co.
Incorporated; Director
and Chairman (since July
1996), formerly
Executive Vice President
(from May 1994 to July
1996) of Nuveen
Institutional Advisory
Corp and Nuveen Advisory
Corp.; Chairman and
Director (since January
1997) of Nuveen Asset
Management, Inc.;
Director (since 1996) of
Institutional Capital
Corporation; Chairman
and Director of
Rittenhouse Financial
Services Inc. (since
1999); Chief Executive
Officer (since September
1999) of Nuveen Senior
Loan Asset Management
Inc.
- ---------------------------------------------------------------------------------
Robert H. Lyon* 3/5/50 Trustee President and a Director
225 West Wacker Drive of the ICAP Funds, Inc.
Chicago, IL 60606 (since its inception in
December 1994);
President, Chief
Investment Officer, and
a Director of
Institutional Capital.
- ---------------------------------------------------------------------------------
James E. Bacon 2/27/31 Trustee Business consultant;
114 W. 47th St. retired.
New York, NY 10036
- ---------------------------------------------------------------------------------
Jack B. Evans 10/22/48 Trustee President, The Hall-
115 Third Street, S.E. Perrine Foundation, a
Cedar Rapids, IA 52401 private philanthropic
corporation (since
1996); formerly
President and Chief
Operating Officer, SCI
Financial Group, Inc., a
regional financial
services firm.
- ---------------------------------------------------------------------------------
William L. Kissick 7/29/32 Trustee Professor, School of
University of Pennsylvania Medicine and the Wharton
224 NEB/2L School of Management and
Philadelphia, PA 19104 Chairman, Leonard Davis
Institute of Health
Economics, University of
Pennsylvania.
- ---------------------------------------------------------------------------------
Thomas E. Leafstrand 11/11/31 Trustee Retired, previously Vice
412 W. Franklin President in charge of
Wheaton, IL 60187 Municipal Underwriting
and Dealer Sales at The
Northern Trust Company.
</TABLE>
- --------------------------------------------------------------------------------
B-19
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Date of Position and Principal Occupations
Name and Address Birth Offices with Trust During Past Five Years
- -------------------------------------------------------------------------------
<C> <C> <C> <S>
Sheila W. Wellington 2/24/32 Trustee President (since 1993) of
250 Park Avenue Catalyst (a not-for-profit
New York, NY 10003 organization focusing on
women's leadership
development in business and
the professions).
- -------------------------------------------------------------------------------
Alan G. Berkshire 12/28/60 Vice President and Senior Vice President
333 West Wacker Drive Assistant Secretary (since May 1999) formerly
Chicago, IL 60606 Vice President, and General
Counsel (since September
1997) and Secretary (since
May 1998) of The John
Nuveen Company, John Nuveen
& Co. Incorporated; Vice
President (since September
1997) and Secretary (since
July 1999) of Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.; Senior Vice
President and Secretary
(since September 1999) of
Nuveen Senior Loan Asset
Management Inc.; prior
thereto, Partner in the law
firm of Kirkland & Ellis.
- -------------------------------------------------------------------------------
Peter H. D'Arrigo 11/28/67 Vice President Vice President of John
333 West Wacker Drive and Treasurer Nuveen & Co. Incorporated;
Chicago, IL 60606 (January 1999), prior
thereto, Assistant Vice
President (January 1997);
formerly, Associate of John
Nuveen & Co. Incorporated;
Chartered Financial
Analyst; Vice President and
Treasurer (since September
1999) of Nuveen Senior Loan
Asset Management Inc.
- -------------------------------------------------------------------------------
Michael S. Davern 6/26/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 January 1997); prior
thereto, Vice President and
Portfolio Manager (since
September 1991) of Flagship
Financial.
- -------------------------------------------------------------------------------
Lorna C. Ferguson 10/24/45 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co. Incorporated;
Chicago, IL 60606 Vice President (since
January 1998) of Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.
- -------------------------------------------------------------------------------
William M. Fitzgerald 3/2/64 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. (since
Chicago, IL 60606 December 1995); Assistant
Vice President of Nuveen
Advisory Corp. (from
September 1992 to December
1995); Chartered Financial
Analyst.
- -------------------------------------------------------------------------------
Stephen D. Foy 5/31/54 Vice President and Vice President of John
333 West Wacker Drive Controller Nuveen & Co. Incorporated;
Chicago, IL 60606 Certified Public
Accountant; Vice President
(since September 1999) of
Nuveen Senior Loan Asset
Management Inc.
- -------------------------------------------------------------------------------
J. Thomas Futrell 7/5/55 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.; Chartered
Chicago, IL 60606 Financial Analyst.
- -------------------------------------------------------------------------------
Richard A. Huber 3/26/63 Vice President Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago IL 60606 Corp. (since March 1998)
and Nuveen Advisory Corp.
(since January 1997); prior
thereto, Vice President and
Portfolio Manager of
Flagship Financial.
- -------------------------------------------------------------------------------
Steven J. Krupa 8/21/57 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp.
Chicago IL 60606
</TABLE>
- --------------------------------------------------------------------------------
B-20
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Date of Position and Principal Occupations
Name and Address Birth Offices with Trust During Past Five Years
- -------------------------------------------------------------------------------
<C> <C> <C> <S>
Larry W. Martin 7/27/51 Vice President and Vice President, Assistant
333 West Wacker Drive Assistant Secretary Secretary and Assistant
Chicago, IL 60606 General Counsel of John
Nuveen & Co. Incorporated;
Vice President (since May
1993) and Assistant
Secretary of Nuveen
Advisory Corp and Nuveen
Institutional Advisory
Corp.; Vice President and
Assistant Secretary of
Nuveen Asset Management,
Inc.; Assistant Secretary
of The John Nuveen Company
and (since January 1997)
Nuveen Asset Management;
Vice President and
Assistant Secretary (since
September 1999) of Nuveen
Senior Loan Asset
Management Inc.
- -------------------------------------------------------------------------------
Edward F. Neild, IV 7/7/65 Vice President Vice President (since
333 West Wacker Drive September 1996),
Chicago, IL 60606 previously Assistant Vice
President (since December
1993) of Nuveen Advisory
Corp., Portfolio Manager
prior thereto; Vice
President (since September
1996), previously
Assistant Vice President
(since May 1995) of Nuveen
Institutional Advisory
Corp., Portfolio Manager
prior thereto; Chartered
Financial Analyst.
- -------------------------------------------------------------------------------
Stephen S. Peterson 9/20/57 Vice President Vice President (since
333 West Wacker Drive September 1997 of Nuveen
Chicago IL 60606 Advisory Corp.),
previously Assistant Vice
President (since September
1996 of Nuveen Advisory
Corp.), Portfolio Manager
prior thereto; Chartered
Financial Analyst.
- -------------------------------------------------------------------------------
Thomas C. Spalding, Jr. 7/31/51 Vice President Vice President of Nuveen
333 West Wacker Drive Advisory Corp. and Nuveen
Chicago, IL 60606 Institutional Advisory
Corp.; Chartered Financial
Analyst.
- -------------------------------------------------------------------------------
Gifford R. Zimmerman 9/9/56 Vice President and Vice President, Assistant
333 West Wacker Drive Secretary Secretary and Associate
Chicago, IL 60606 General Counsel,
previously Assistant
General Counsel of John
Nuveen & Co. Incorporated;
Vice President (since May
1993) and Assistant
Secretary (since July
1999) of Nuveen Advisory
Corp.and Nuveen
Institutional Advisory
Corp.; Assistant Secretary
of The John Nuveen
Company; Chartered
Financial Analyst.
</TABLE>
- --------------------------------------------------------------------------------
Thomas E. Leafstrand and Timothy R. Schwertfeger serve as members of the Execu-
tive Committee of the Board of Trustees. The Executive Committee, which meets
between regular meetings of the Board of Trustees, is authorized to exercise
all of the powers of the Board of Trustees.
The trustees of the Trust (other than Mr. Lyon) are trustees of eleven open-end
and closed-end funds advised by NIAC. Mr. Lyon is also a director of Institu-
tional Capital and ICAP Funds, Inc. None of the independent trustees has ever
been a director, officer, or employee of, or a consultant to, NIAC, Nuveen or
their affiliates.
Mr. Schwertfeger is a director or trustee, as the case may be, of 89 Nuveen
open-end funds and closed-end funds advised by Nuveen Advisory Corp.
B-21
<PAGE>
The following table sets forth compensation paid by the Fund to each of the
trustees who are not designated "interested persons" during the Trust's fiscal
year ended June 30, 1999 and the total compensation that the Nuveen Funds paid
to such trustees during that one year period. The Trust has no retirement or
pension plans. The officers and trustees affiliate with Nuveen serve without
any compensation from the Trust.
<TABLE>
<CAPTION>
Aggregate Total Compensation
Compensation from Trust and
from the Fund Complex
Name of Trustee Fund* Paid to Trustees**
--------------- ------------ ------------------
<S> <C> <C>
James E. Bacon.......................... $ 246 $31,250
Jack B. Evans........................... $ 33 $ 9,750
William L. Kissick...................... $ 246 $31,250
Thomas E. Leafstrand.................... $ 253 $33,750
Sheila W. Wellington.................... $ 246 $31,250
</TABLE>
* The compensation paid to the independent trustees for the twelve months
ended June 30, 1999 for services to the Fund.
** Based on the compensation paid to the independent trustees for the twelve
months ended June 30, 1999 for services to eleven open-end and closed-end
funds advised by NIAC.
Each trustee who is not affiliated with NIAC or Institutional Capital receives
a $35,000 annual retainer for serving as a director or trustee of all funds
for which NIAC serves as investment adviser or manager and a $1,000 fee per
day plus expenses for attendance at all meetings held on a day on which a reg-
ularly scheduled Board meeting is held, a $500 fee per day plus expenses for
attendance in person or a $500 fee per day plus expenses for attendance by
telephone at a meeting held on a day on which no regular Board meeting is held
and a $100 fee per day plus expenses for attendance in person or by telephone
at a meeting of the Executive Committee held solely to declare dividends. The
annual retainer, fees and expenses are allocated among the funds for which
NIAC serves as investment adviser or manager on the basis of relative net as-
set sizes. The Trust requires no employees other than its officers, all of
whom are compensated by NIAC or Nuveen.
As of October 6, 1999, NIAC was considered to control the Fund because it
owned 26.31% of the outstanding voting securities of the Fund. NIAC will be
deemed to control the Fund so long as it owns more than 25% of the Fund's vot-
ing securities.
As of October 6, 1999, the officers and directors of the Fund, in the aggre-
gate, own less than 1% of the shares of the Fund.
B-22
<PAGE>
The following table sets forth the percentage ownership of each person, who, as
of October 6, 1999, owns of record, or is known by Registrant to own of record
or beneficially 5% or more of any class of the Fund's shares.
<TABLE>
<CAPTION>
Percentage
of Record
Name of Fund and Class Name and Address of Owner Ownership
- ---------------------- ------------------------- ----------
<S> <C> <C>
Nuveen European Value Fund
Class R Shares................ Nuveen Institutional Advisory Corp. 70.34%
Attn: Joy Tyburk
333 W. Wacker Dr. Floor 33
Chicago, IL 60606-1220
American Express Finl. Adv. Inc. 11.33%
T4/645- Commission Accounting
IDS Tower 10
Minneapolis, MN 55402-2100
Class A Shares................ Merrill Lynch, Pierce, Fenner & Smith 17.49%
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
Douglas D. Brendle 6.03%
P.O. Box 5008
Winston-Salem, NC 27113-5008
<CAPTION>
Percentage
of Record
Name of Fund and Class Name and Address of Owner Ownership
- ---------------------- ------------------------- ----------
<S> <C> <C>
Class B Shares................ Merrill Lynch, Pierce, Fenner & Smith 29.43%
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
Mark Kardonski 7.42%
15223 Fisher Island Drive
Fisher Island, FL 33109
Rathman Family Trust 6.46%
Thomas D. Rathman
6 Cadic Circle
Redwood City, CA 94065
Class C Shares................ Merrill Lynch, Pierce, Fenner & Smith 62.66%
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
</TABLE>
B-23
<PAGE>
TRUST MANAGER AND FUND MANAGER
Trust Manager
Nuveen Institutional Advisory Corp. ("NIAC") acts as the manager of the Trust,
with responsibility for the overall management of the Fund. Its address is 333
West Wacker Drive, Chicago, Illinois 60606. For the Fund, NIAC has entered into
a Sub-Advisory Agreement with Institutional Capital under which Institutional
Capital, subject to NIAC's supervision, manages the Fund's investment portfo-
lio. NIAC is also responsible for managing the Fund's business affairs and pro-
viding day-to-day administrative services to the Fund. For additional informa-
tion regarding the management services performed by NIAC and Institutional Cap-
ital, see "Who Manages the Fund" in the Prospectus.
NIAC is a wholly-owned subsidiary of Nuveen, which is also the principal under-
writer of the Fund's shares. Nuveen is sponsor of the Nuveen Defined Portfo-
lios, registered unit investment trusts, and is the principal underwriter for
the Nuveen Mutual Funds, and has served as co-managing underwriter for the
shares of the Nuveen Exchange-Traded Funds. Over 1,000,000 individuals have in-
vested to date in Nuveen's funds and trusts. Founded in 1898, Nuveen is a sub-
sidiary of The John Nuveen Company which, in turn, is approximately 78% owned
by The St. Paul Companies, Inc. ("St. Paul"). St. Paul is located in St. Paul,
Minnesota, and is principally engaged in providing property-liability insurance
through subsidiaries.
For the fund management services and facilities furnished by NIAC, the Fund has
agreed to pay an annual management fee at rates set forth in the Prospectus un-
der "Management Fees." In addition, NIAC has agreed to waive all or a portion
of its management fee or reimburse certain expenses of the Fund through July
31, 2000 to prevent total expenses (excluding any distribution or service fees
and extraordinary expenses) on an annualized basis from exceeding 1.30% of the
average daily net asset value of each class of shares. Accordingly, for the pe-
riod from inception (May 29, 1998) through the fiscal year ended June 30, 1998,
the Fund paid management fees net of expense reimbursements of $0. In addition,
for the period July 1, 1998 through June 30,1999 the Fund paid management fees
net of expense reimburses of $6,233. During these periods, NIAC waived fees and
reimbursed expenses of $34,256 and $86,754 to the Fund. In addition to the man-
agement fee, the Fund also pays its portion of the Nuveen Investment Trust's
general administrative expenses allocated in proportion to its net assets. All
fees and expenses are accrued daily and deducted before payment of dividends to
investors.
Sub-Adviser (Fund Manager)
Institutional Capital Corporation ("Institutional Capital") was founded in 1970
and is located at 225 West Wacker Drive, Suite 2400, Chicago, IL 60606. Under
the Sub-Advisory Agreement for the Fund, Institutional Capital is compensated
by NIAC for its investment advisory services with respect to all or a portion
of the Fund's assets. Under a Sub-Advisory Agreement with NIAC, Institutional
Capital manages the investment portfolio of the Fund. Institutional Capital's
investment management strategy and operating policies are set through a team
approach, with all Institutional Capital investment professionals contributing.
Institutional Capital currently maintains a staff of 13 investment profession-
als. Each of the investment officers and other professionals of Institutional
Capital has developed an expertise in at least one functional investment area,
including equity research, strategy, fixed income analysis, quantitative re-
search, technical research and trading. A key element in the decision-making
process is a
B-24
<PAGE>
formal investment committee meeting generally held several times a week and
attended by all professionals. These meetings also provide for the ongoing re-
view of Institutional Capital's investment positions. Pertinent information
from outside sources is shared and incorporated into the investment outlook.
The investment strategy, asset sectors, and individual security holdings are
reviewed to verify their continued appropriateness. Investment recommendations
are presented to the committee for decisions.
Out of the fund management fee, NIAC pays ICAP a portfolio management fee
based on the average daily market value of all the Nuveen-sponsored investment
products for which it serves as the portfolio manager, according to the fol-
lowing base schedule:
<TABLE>
<CAPTION>
Assets of All the Nuveen-Sponsored
Investment Products Managed by ICAP Portfolio Management Fee
----------------------------------- ------------------------
<S> <C>
For the first $500 million....................... .35 of 1%
For the next $500 million........................ .30 of 1%
For assets over $1 billion....................... .25 of 1%
</TABLE>
In addition, NIAC has agreed to pay Institutional Capital a supplemental man-
agement fee until assets in the aggregate in this fund and another European
fund subadvised by Institutional Capital reach $50 million. When this level is
reached, the aggregate amount of the supplemental fee paid by NIAC will be
credited back to NIAC through a temporary reduction in fees.
With regard to Fund assets subject to the Sub-Advisory Agreement, Institu-
tional Capital provides continuous advice and recommendations concerning the
Fund's investments, and is responsible for selecting the broker/dealers who
execute the portfolio transactions. Institutional Capital also serves as in-
vestment adviser to the ICAP Funds, Inc. and to pension and profit-sharing
plans, and other institutional and private investors. As of December 31, 1997,
Institutional Capital had approximately $12 billion under management. Mr. Rob-
ert H. Lyon, President of Institutional Capital, owns shares representing 51%
of the voting rights of Institutional Capital. For the period from the Fund's
inception (May 29, 1998) to the fiscal year ended June 30, 1998, NIAC paid
$1,137 to ICAP for its services to the Fund. For the period from July 1, 1998
through June 30, 1999, NIAC paid ICAP for its services to the Fund $44,602.
PORTFOLIO TRANSACTIONS
Institutional Capital is responsible for decisions to buy and sell securities
for the Fund and for the placement of the Fund's securities business, the ne-
gotiation of the commissions to be paid on brokered transactions, the prices
for principal trades in securities, and the allocation of portfolio brokerage
and principal business. It is the policy of Institutional Capital to seek the
best execution at the best security price available with respect to each
transaction, and with respect to brokered transactions, in light of the over-
all quality of brokerage and research services provided to the respective ad-
viser and its advisees. The best price to the Fund means the best net price
without regard to the mix between purchase or sale price and commission, if
any. Purchases may be made from underwriters, dealers, and, on occasion, the
issuers. Commissions will be paid on the Fund's futures and options transac-
tions, if any. The purchase price of portfolio securities purchased from an
underwriter or dealer may include underwriting commis-
B-25
<PAGE>
sions and dealer spreads. The Fund may pay mark-ups on principal transactions.
In selecting broker-dealers and in negotiating commissions, the portfolio man-
ager considers the firm's reliability, the quality of its execution services
on a continuing basis and its financial condition. Brokerage will not be allo-
cated based on the sale of the Fund's shares.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)") permits
an investment adviser, under certain circumstances, to cause an account to pay
a broker or dealer who supplies brokerage and research services a commission
for effecting a transaction in excess of the amount of commission another bro-
ker or dealer would have charged for effecting the transaction. Brokerage and
research services include (a) furnishing advice as to the value of securities,
the advisability of investing, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b) fur-
nishing analyses and reports concerning issuers, industries, securities, eco-
nomic factors and trends, portfolio strategy, and the performance of accounts;
and (c) effecting securities transactions and performing functions incidental
thereto (such as clearance, settlement, and custody).
In selecting brokers, Institutional Capital considers investment and market
information and other research, such as economic, securities and performance
measurement research, provided by such brokers, and the quality and reliabil-
ity of brokerage services, including execution capability, performance, and
financial responsibility. Accordingly, the commissions charged by any such
broker may be greater than the amount another firm might charge if Institu-
tional Capital determines in good faith that the amount of such commissions is
reasonable in relation to the value of the research information and brokerage
services provided by such broker to Institutional Capital or the Fund. Insti-
tutional Capital believes that the research information received in this man-
ner provides the Fund with benefits by supplementing the research otherwise
available to the Fund. The Management Agreement and the Sub-Advisory Agreement
provide that such higher commissions will not be paid by the Fund unless the
applicable adviser determines in good faith that the amount is reasonable in
relation to the services provided. The investment advisory fees paid by the
Fund to NIAC under the Management Agreement or the subadvisory fees paid by
NIAC to Institutional Capital under the Sub-Advisory Agreement are not reduced
as a result of receipt by either NIAC or Institutional Capital of research
services.
Institutional Capital places portfolio transactions for other advisory ac-
counts managed by it. Research services furnished by firms through which the
Fund effects its securities transactions may be used by
Institutional Capital in servicing all of its accounts; not all of such serv-
ices may be used by Institutional Capital in connection with the Fund. Insti-
tutional Capital believes it is not possible to measure separately the bene-
fits from research services to each of the accounts (including the Fund) man-
aged by it. Because the volume and nature of the trading activities of the ac-
counts are not uniform, the amount of commissions in excess of those charged
by another broker paid by each account for brokerage and research services
will vary. However, Institutional Capital believes such costs to the Fund will
not be disproportionate to the benefits received by the Fund on a continuing
basis. Institutional Capital seeks to allocate portfolio transactions equita-
bly whenever concurrent decisions are made to purchase or sell securities by
the Fund and another advisory account. In some cases, this procedure could
have an adverse effect on the price or the amount of securities available to
the Fund. In making such allocations between the Fund and other advisory ac-
counts, the main factors considered by Institutional Capital are the respec-
tive investment objectives, the relative size of portfolio holdings of the
same or comparable securi-
B-26
<PAGE>
ties, the availability of cash for investment and the size of investment com-
mitments generally held. For the period from inception (May 29, 1998) through
the fiscal year ended June 30, 1998 and from July 1, 1998 through June 30,
1999, the Fund paid $1,098 and $34,442, respectively, in brokerage commis-
sions. During the fiscal years ended June 30, 1998 and June 30, 1999, the Fund
paid $609 and $31,132, respectively, to brokers as commissions in return for
research services and the aggregate amount of those transactions per Fund on
which such commissions were paid was $1,683,405 and $23,121,778, respectively.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of a security pur-
chased by the Fund, the amount of securities that may be purchased in any one
issue and the assets of the Fund that may be invested in a particular issue.
In addition, purchases of securities made pursuant to the terms of the Rule
must be approved at least quarterly by the Board of Trustees, including a ma-
jority of the trustees who are not interested persons of the Trust.
NET ASSET VALUE
The Fund's net asset value per share is determined separately for each class
of the Fund's shares as of the close of trading (normally 4:00 p.m. eastern
time) on each day the New York Stock Exchange (the "Exchange") is open for
business. The Exchange is not open for trading on New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. The net asset value per share of a class of shares of
the Fund will be computed by dividing the value of the Fund's assets attribut-
able to the class, less the liabilities attributable to the class, by the num-
ber of shares of the class outstanding. The Fund's net asset value may not be
calculated on days during which the Fund receives no orders to purchase shares
and no shares are tendered for redemption. Net asset value is calculated by
taking the fair value of the Fund's total assets, including interest or divi-
dends accrued but not yet collected, less all liabilities, and dividing by the
total number of shares outstanding. The result, rounded to the nearest cent,
is the net asset value per share. In determining net asset value, expenses are
accrued and applied daily and securities and other assets for which market
quotations are available are valued at market value. Common stocks and other
equity-type securities are valued at the last sales price on the national se-
curities exchange or Nasdaq on which such securities are primarily traded;
however, securities traded on a national securities exchange or Nasdaq for
which there were no transactions on a given day or securities not listed on a
national securities exchange or Nasdaq are valued at the most recent bid pric-
es. Securities for which quotations are not readily available are valued at
fair value as determined by the pricing service using methods that include
consideration of the following: yields or prices of securities of comparable
quality, type of issue, coupon,
maturity and rating; indications as to value from securities dealers; and gen-
eral market conditions. The pricing service may employ electronic data
processing techniques and/or a matrix system to determine valuations. Debt se-
curities having remaining maturities of 60 days or less when purchased are
valued by the amortized cost method when the Board of Trustees determines that
the fair market value of such securities is their amortized cost. Under this
method of valuation, a security is initially valued at its acquisition cost,
and thereafter amortization of any discount or premium is assumed each day,
regardless
B-27
<PAGE>
of the impact of fluctuating interest rates on the market value of the securi-
ty. Regardless of the method employed to value a particular security, all valu-
ations are subject to review by the Fund's Board of Trustees or its delegate
who may determine the appropriate value of a security whenever the value as
calculated is significantly different from the previous day's calculated value.
TAX MATTERS
Federal Income Tax Matters
The following discussion of federal income tax matters is based upon the advice
of Chapman and Cutler, counsel to the Trust.
As described in the Prospectus, the Fund intends to qualify under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code") for tax treatment
as a regulated investment company. In order to qualify as a regulated invest-
ment company, the Fund (i) must elect to be treated as a regulated investment
company and (ii) for each taxable year thereafter must satisfy certain require-
ments relating to the source of its income, diversification of its assets, and
distributions of its income to shareholders. First, the Fund must derive at
least 90% of its annual gross income (including tax-exempt interest) from divi-
dends, interest, payments with respect to securities loans, gains from the sale
or other disposition of stock or securities, foreign currencies or other income
(including but not limited to gains from options, futures, or forward con-
tracts) derived with respect to its business of investing in such stock, secu-
rities or currencies (the "90% gross income test"). Second, the Fund must di-
versify its holdings so that, at the close of each quarter of its taxable year,
(i) at least 50% of the value of its total assets is comprised of cash, cash
items, United States Government securities, securities of other regulated in-
vestment companies and other securities limited in respect of any one issuer to
an amount not greater in value than 5% of the value of the Fund's total assets
and to not more than 10% of the outstanding voting securities of such issuer,
and (ii) not more than 25% of the value of the Fund's total assets is invested
in the securities of any one issuer (other than United States Government secu-
rities and securities of other regulated investment companies) or two or more
issuers controlled by the Fund and engaged in the same, similar or related
trades or businesses.
As a regulated investment company, the Fund will not be subject to federal in-
come tax in any taxable year for which it distributes at least 90% of the sum
of (i) its "investment company taxable income" (without regard to its net capi-
tal gain, i.e., the excess of its net long-term capital gain over its short-
term capital loss) and (ii) its net tax-exempt interest (the excess of its
gross tax-exempt interest income over certain disallowed deductions). In addi-
tion, to the extent the Fund timely distributes to shareholders at least 98% of
its taxable income (including any net capital gain), it will not be subject to
the 4% excise tax on certain undistributed income of "regulated investment com-
panies." The Fund intends to
make timely distributions in compliance with these requirements and conse-
quently it is anticipated that they generally will not be required to pay the
excise tax. The Fund may retain for investment its net capital gain. However,
if the Fund retains any net capital gain or any investment company taxable in-
come, it will be subject to federal income tax at regular corporate rates on
the amount retained. If the Fund retains any net capital gain, the Fund may
designate the retained amount as undistributed capital gains in a notice to its
shareholders who, if subject to federal income tax on long-term capital gains,
(i)
B-28
<PAGE>
will be required to include in income for federal income tax purposes, as long-
term capital gain, their shares of such undistributed amount, and (ii) will be
entitled to credit their proportionate shares of the tax paid by the Fund
against their federal income tax liabilities if any, and to claim refunds to
the extent the credit exceeds such liabilities. For federal income tax purpos-
es, the tax basis of shares owned by a shareholder of the Fund will be in-
creased by an amount equal to the difference between the amount of such includ-
ible gains and the tax deemed paid by such shareholder in respect of such
shares. The Fund intends to distribute at least annually to its shareholders
all or substantially all of its investment company taxable income, net tax-ex-
empt interest and net capital gain.
Treasury regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain, to elect (unless it has
made a taxable year election for excise tax purposes as discussed below) to
treat all or part of any net capital loss, any net long-term capital loss or
any net foreign currency loss incurred after October 31 as if they had been in-
curred in the succeeding year.
If the Fund engages in hedging transactions involving financial futures and op-
tions, these transactions will be subject to special tax rules, the effect of
which may be to accelerate income to the Fund, defer the Fund's losses, cause
adjustments in the holding periods of the Fund's securities, convert long-term
capital gains into short-term capital gains and convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
Prior to purchasing shares in the Fund, the impact of dividends or distribu-
tions which are expected to be or have been declared, but not paid, should be
carefully considered. Any dividend or distribution declared shortly after a
purchase of such shares prior to the record date will have the effect of reduc-
ing the per share net asset value by the per share amount of the dividend or
distribution and will be subject to federal income tax to the extent it is a
distribution of ordinary income or capital gain.
In any taxable year of the Fund, distributions from the Fund, other than dis-
tributions which are designated as capital gains dividends, will to the extent
of the earnings and profits on the Fund, constitute dividends for Federal in-
come tax purposes which are taxable as ordinary income to shareholders. To the
extent that distributions to a shareholder in any year exceed the Fund's cur-
rent and accumulated earnings and profits, they will be treated as a return of
capital and will reduce the shareholder's basis in his or her shares and, to
the extent that they exceed his or her basis, will be treated as gain from the
sale of such shares as discussed below. Distributions of the Fund's net capital
gain which are properly designated as capital gain dividends by the Fund will
be taxable to the shareholders as long-term capital gain, regardless of the
length of time the shares have been held by a shareholder. Distributions will
be taxed in the manner described (i.e., as ordinary income, long-term capital
gain, return of capital or exempt-interest dividends) even if reinvested in ad-
ditional shares of the Fund.
Although dividends generally will be treated as distributed when paid, divi-
dends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received
by the shareholders) on December 31 of the year such dividends are declared.
B-29
<PAGE>
The redemption or exchange of the shares of the Fund normally will result in
capital gain or loss to the shareholders. Generally, a shareholder's gain or
loss will be long-term gain or loss if the shares have been held for more than
one year. Present law taxes both long- and short-term capital gains of corpora-
tions at the rates applicable to ordinary income. The Internal Revenue Service
Restructuring and Reform Act for 1998 (the "1998 Tax Act") provides that for
taxpayers other than corporations, net capital gain (which is defined as net
long-term capital gain over net short-term capital loss for the taxable year)
realized from property (with certain exclusions) is generally subject to a max-
imum marginal stated tax rate of 20% (10% in the case of certain taxpayers in
the lowest tax bracket). Capital gain or loss is long-term if the holding pe-
riod for the asset is more than one year, and is short-term if the holding pe-
riod for the asset is one year or less. The date on which a share is acquired
(i.e., the "trade date") is excluded for purposes for determining the holding
period of the share. Capital gains realized from assets held for one year or
less are taxed at the same rates as ordinary income. Note that if a sale of
shares held for less than six months results in a loss, the loss will be
treated as a long-term capital loss to the extent of any capital gain distribu-
tion made with respect to such shares during the period those shares are held
by the shareholder.
In addition, please note that capital gains may be recharacterized as ordinary
income in the case of certain financial transactions that are considered "con-
version transactions" effective for transactions entered into after April 30,
1993. Shareholders and prospective investors should consult with their tax ad-
visers regarding the potential effect of this provision on their investment in
shares of the Fund.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Fund as long as the shares
of the Fund are held by or for 500 or more persons at all times during the tax-
able year or another exception is met. In the event the shares of the Fund are
held by fewer than 500 persons, additional taxable income may be realized by
the individual (and other non-corporate) shareholders in excess of the distri-
butions received from the Fund.
All or a portion of a sales load paid in purchasing shares of the Fund cannot
be taken into account for purposes of determining gain or loss on the redemp-
tion or exchange of such shares within 90 days after their purchase to the ex-
tent shares of the Fund or another fund are subsequently acquired without pay-
ment of a sales load or with the payment of a reduced sales load pursuant to
the reinvestment or exchange privilege. Any disregarded portion of such load
will result in an increase in the shareholder's tax basis in the shares subse-
quently acquired. Moreover, losses recognized by a shareholder on the
redemption or exchange of shares of the Fund held for six months or less are
disallowed to the extent of any distribution of exempt-interest dividends re-
ceived with respect to such shares and, if not disallowed, such losses are
treated as long-term capital losses to the extent of any distributions of long-
term capital gains made with respect to such shares. In addition, no loss will
be allowed on the redemption or exchange of shares of the Fund if the share-
holder purchases other shares of the Fund (whether through reinvestment of dis-
tributions or otherwise) or the shareholder acquires or enters into a contract
or option to acquire securities that are substantially identical to shares of
the Fund within a period of 61 days
B-30
<PAGE>
beginning 30 days before and ending 30 days after such redemption or exchange.
If disallowed, the loss will be reflected in an adjustment to the basis of the
shares acquired.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year, and distributions
to its shareholders would be taxable to shareholders as ordinary dividend in-
come for federal income tax purposes to the extent of the Fund's available
earnings and profits.
The Fund is required in certain circumstances to withhold 31% of taxable divi-
dends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number
(in the case of individuals, their social security number) and certain certi-
fications, or who are otherwise subject to backup withholding.
A Shareholder who is a foreign investor (i.e., an investor other than a United
States citizen or resident or a United States corporation, partnership, estate
or trust) should be aware that, generally, subject to applicable tax treaties,
distributions from the Fund which constitute dividends for Federal income tax
purposes (other than dividends which the Fund designates as capital gain divi-
dends) will be subject to United States income taxes, including withholding
taxes. However, distributions received by a foreign investor from the Fund
that are designated by the Fund as capital gain dividends should not be sub-
ject to United States Federal income taxes, including withholding taxes, if
all of the following conditions are met: (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) the foreign investor (if an individu-
al) is not present in the United States for 183 days or more during his or her
taxable year, and (iii) the foreign investor provides all certification which
may be required of his status (foreign investors may contact the Sponsor to
obtain a Form W-8 which must be filed with the Fund and refiled every three
calendar years thereafter). Foreign investors should consult their tax advi-
sors with respect to United States tax consequences of ownership of Shares.
Units in the Fund and Fund distributions may also be subject to state and lo-
cal taxation and Shareholders should consult their tax advisors in this re-
gard.
A corporate shareholder may be entitled to a 70% dividends received deduction
with respect to any portion of such shareholder's ordinary income dividends
which are attributable to dividends received by the Fund on certain Equity Se-
curities (other than corporate shareholders, such as "S" corporations, which
are not eligible for the deduction because of their special characteristics
and other than for purposes of special taxes such as the accumulated earnings
tax and the personal holding corporation tax). The Fund will designate the
portion of any taxable dividend which is eligible for this deduction. However,
a corporate shareholder should be aware that Sections 246 and 246A of the Code
impose additional limitations on the eligibility of dividends for the 70% div-
idends received deduction. These limitations include a requirement that stock
(and therefore Shares of the Fund) must generally be held at least 46 days (as
determined under, and during the period specified in, Section 246(c) of the
Code). Regulations have been issued which address special rules that must be
considered in determining whether the 46 day holding requirement is met. More-
over, the allowable percentage of the deduction will generally be reduced from
70% if a corporate shareholder owns Shares of the Fund the financing of which
is directly attributable to indebtedness incurred by such corporation. It
should be noted that various legislative proposals that would affect the divi-
dends received deduction have been introduced. To the extent divi-
B-31
<PAGE>
dends received by the Fund are attributable to foreign corporations, a corpo-
rate shareholder will not be entitled to the dividends received deduction with
respect to its share of such foreign dividends since the dividends received de-
duction is generally available only with respect to dividends paid by domestic
corporations. It should be noted that payments to the Fund of dividends on Eq-
uity Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes. Corporate shareholders
should consult with their tax advisers with respect to the limitations on, and
possible modifications to, the dividends received deduction.
The Fund may elect to pass through to the Shareholders the foreign income and
similar taxes paid by the Fund in order to enable such Shareholders to take a
credit (or deduction) for foreign income taxes paid by the Fund. If such an
election is made, Shareholders of the Fund, because they are deemed to own a
pro rata portion of the foreign securities held by the Fund, must include in
their gross income, for federal income tax purposes, both their portion of div-
idends received by the Fund and also their portion of the amount which the Fund
deems to be the Shareholders' portion of foreign income taxes paid with respect
to, or withheld from, dividends, interest or other income of the Fund from its
foreign investments. Shareholders may then subtract from their federal income
tax the amount of such taxes withheld, or else treat such foreign taxes as de-
ductions from gross income; however, as in the case of investors receiving in-
come directly from foreign sources, the above described tax credit or deduction
is subject to certain limitations. The 1997 Act imposes a required holding pe-
riod for such credits. Shareholders should consult their tax advisers regarding
this election and its consequences to them.
Foreign currency gains and losses realized by the Fund in connection with cer-
tain transactions that involve foreign currency-denominated debt securities,
certain foreign currency options, foreign currency forward contracts, foreign
currencies, or payables or receivables denominated in a foreign currency are
subject to Section 988 of the Code, which generally causes such gains and
losses to be treated as ordinary income and losses and may affect the amount,
timing and character of distributions to shareholders. For example, if the Fund
sold a foreign stock or bond and part of the gain or loss on the sale was at-
tributable to an increase or decrease in the value of a foreign currency, then
the currency gain or loss may be treated as ordinary income or loss. If such
transactions result in higher net ordinary income, the dividends paid by the
Fund will be increased; if such transactions result in lower net ordinary in-
come, a portion of dividends paid could be classified as a return of capital.
The Fund may qualify for and make an election permitted under the "pass
through" provisions of Section 853 of the Internal Revenue Code, which allows a
regulated investment company to elect to have its foreign tax credit taken by
its shareholders instead of on its own tax return. To be eligible for this
credit, more than 50% of the value of the Fund's total assets at the close of
its taxable year must consist of stock or other securities in foreign corpora-
tions, and the Fund must meet certain other requirements.
If the Fund makes this election, it may not take any foreign tax credit and may
not take a deduction for foreign taxes paid. However, the Fund is allowed to
include the amount of foreign taxes paid in a taxable year in its dividends
paid deduction. Each shareholder would then include in his gross income, and
treat as paid by him, his proportionate share of the foreign taxes paid by the
Fund.
B-32
<PAGE>
If the U.S. government were to impose any restrictions, through taxation or
other means, on foreign investments by U.S. investors such as those to be made
through the Fund, the Board of Trustees of the Fund will promptly review the
policies of the Fund to determine whether significant changes in its invest-
ments are appropriate.
PERFORMANCE INFORMATION
The Fund may quote its yield, distribution rate, beta, average annual total re-
turn or cumulative total return in reports to shareholders, sales literature
and advertisements each of which will be calculated separately for each class
of shares.
In accordance with a standardized method prescribed by rules of the Securities
and Exchange Commission ("SEC"), yield is computed by dividing the net invest-
ment income per share earned during the specified one month or 30-day period by
the maximum offering price per share on the last day of the period, according
to the following formula:
Yield=2[(a-b +1)/6/ -1]
cd
In the above formula, a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursements); c = the average daily
number of shares outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share on the last day of the
period. In the case of Class A shares, the maximum offering price includes the
current maximum front-end sales charge of 5.75%.
In computing yield, the Fund follows certain standardized accounting practices
specified by SEC rules. These practices are not necessarily consistent with
those that the Fund uses to prepare its annual and interim financial statements
in conformity with generally accepted accounting principles. Thus, yield may
not equal the income paid to shareholders or the income reported in the Fund's
financial statements.
<TABLE>
<CAPTION>
As of June 30, 1999
-------------------------------
Yield
-------------------------------
Class A Class B Class C Class R
------- ------- ------- -------
<S> <C> <C> <C> <C>
Nuveen European Value Fund................ N/A N/A N/A N/A
</TABLE>
The Fund may from time to time in its advertising and sales materials report a
quotation of its current distribution rate. The distribution rate represents a
measure of dividends distributed for a specified period. Distribution rate is
computed by taking the most recent dividend per share, multiplying it as needed
to annualize it, and dividing by the appropriate price per share (e.g., net as-
set value for purchases to be made without a load such as reinvestments from
Nuveen Defined Portfolios, or the maximum public offering price). The distribu-
tion rate differs from yield and total return and therefore is not intended to
be a complete measure of performance. Distribution rate may sometimes differ
from yield
B-33
<PAGE>
because the Fund may be paying out more than it is earning and because it may
not include the effect of amortization of bond premiums to the extent such
premiums arise after the bonds were purchased.
The distribution rates as of the period quoted, based on the maximum public
offering price then in effect for the Fund, and assuming the imposition of the
maximum sales charge for Class A Shares of 5.75%, were as follows:
<TABLE>
<CAPTION>
As of June 30, 1999
-------------------------------
Distribution Rates
-------------------------------
Class A Class B Class C Class R
------- ------- ------- -------
<S> <C> <C> <C> <C>
Nuveen European Value Fund................ N/A N/A N/A N/A
</TABLE>
The Fund may from time to time in its advertising and sales literature quote
its beta. Beta is a standardized measure of a security's risk (variability of
returns) relative to the overall market, i.e., the proportion of the variation
in the security's returns that can be explained by the variation in the return
of the overall market. For example, a security with a beta of 0.85 is expected
to have returns that are 85% as variable as overall market returns. Converse-
ly, a security with a beta of 1.25 is expected to have returns that are 125%
as variable as overall market returns. The beta of the overall market is by
definition 1.00.
The formula for beta is given by:
Beta = S A * B / C
where
A = (Xi - X), i=1,..., N
B = (Yi - Y), i=1,..., N
C = S (Xi - X)/2/, i=1,..., N
Xi = Security Return in period i
Yi = Market Return in period i
X = Average of all observations Xi
Y = Average of all observations Yi
N = Number of observations in the measurement period
All total return figures assume the reinvestment of all dividends and measure
the net investment income generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the underlying investments in the
Fund over a specified period of time. Average annual total return figures are
annualized and therefore represent the average annual percentage change over
the specified period. Cumulative total return figures are not annualized and
represent the aggregate percentage or dollar value change over a stated period
of time. Average annual total return and cumulative total return are based
upon the historical results of the Fund and are not necessarily representative
of the future performance of the Fund.
B-34
<PAGE>
The average annual total return quotation is computed in accordance with a
standardized method prescribed by SEC rules. The average annual total return
for a specific period is found by taking a hypothetical $1,000 investment
("initial investment") in Fund shares on the first day of the period, reducing
the amount to reflect the maximum sales charge, and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted
from the result, which is then expressed as a percentage. The calculation as-
sumes that all income and capital gains distributions have been reinvested in
Fund shares at net asset value on the reinvestment dates during the period.
Calculation of cumulative total return is not subject to a prescribed formula.
Cumulative total return for a specific period is calculated by first taking a
hypothetical initial investment in Fund shares on the first day of the period,
deducting (in some cases) the maximum sales charge, and computing the "redeem-
able value" of that investment at the end of the period. The cumulative total
return percentage is then determined by subtracting the initial investment
from the redeemable value and dividing the remainder by the initial investment
and expressing the result as a percentage. The calculation assumes that all
income and capital gains distributions by the Fund have been reinvested at net
asset value on the reinvestment dates during the period. Cumulative total re-
turn may also be shown as the increased dollar value of the hypothetical in-
vestment over the period. Cumulative total return calculations that do not in-
clude the effect of the sales charge would be reduced if such charge were in-
cluded. Average annual and cumulative total returns may also be presented in
advertising and sales literature without the inclusion of sales charges.
From time to time, the Fund may compare its risk-adjusted performance with
other investments that may provide different levels of risk and return. For
example, the Fund may compare its risk level, as measured by the variability
of its periodic returns, or its risk-adjusted total return, with those of
other funds or groups of funds. Risk-adjusted total return would be calculated
by adjusting each investment's total return to account for the risk level of
the investment.
The risk level for a class of shares of the Fund, and any of the other invest-
ments used for comparison, would be evaluated by measuring the variability of
the investment's return, as indicated by the standard deviation of the invest-
ment's monthly returns over a specified measurement period (e.g., two years).
An investment with a higher standard deviation of monthly returns would indi-
cate that the Fund had greater price variability, and therefore greater risk,
than an investment with a lower standard deviation.
The risk-adjusted total return for a class of shares of the Fund and for other
investments over a specified period would be evaluated by dividing (a) the re-
mainder of the investment's annualized two-year total return, minus the
annualized total return of an investment in Treasury bill securities (essen-
tially a risk-free return) over that period, by (b) the standard deviation of
the investment's monthly returns for the period. This ratio is sometimes re-
ferred to as the "Sharpe measure" of return. An investment with a higher
Sharpe measure would be regarded as producing a higher return for the amount
of risk assumed during the measurement period than an investment with a lower
Sharpe measure.
B-35
<PAGE>
Class A Shares of the Fund are sold at net asset value plus a current maximum
sales charge of 5.75% of the offering price. This current maximum sales charge
will typically be used for purposes of calculating performance figures. Returns
and net asset value of each class of shares of the Fund will fluctuate.
Factors affecting the performance of the Fund include general market condi-
tions, operating expenses and investment management. Any additional fees
charged by a securities representative or other financial services firm would
reduce returns described in this section. Shares of the Fund are redeemable at
net asset value, which may be more or less than original cost.
In reports and other communications to shareholders or in advertising and sales
literature, the Fund may also present economic statistics obtained from govern-
mental agencies or industry or financial publications comparing Europe or coun-
tries participating in European Monetary Union to the U.S. Additionally, the
Fund may discuss certain economic and financial trends existing in Europe in
order to illustrate the general investment opportunities there. The Fund may
present historical performance of certain European countries, as reported by
Morgan Stanley Capital International, or other independent data providers, as a
way to show the opportunities provided by European countries. The Fund may also
show the historical performance of certain European equity market indicies to
compare against other international equity market indices and to show how main-
taining investments in both European stocks and U.S. stocks may moderate risk.
This data is obtained from independent services such as Morgan Stanley Capital
International and Ibbotson Associates, Inc.
In reports or other communications to shareholders or in advertising and sales
literature, the Fund may also compare its performance or the performance of its
portfolio manager with that of, or reflect the performance of: (1) the Consumer
Price Index; (2) equity mutual funds or mutual fund indexes as reported by
Lipper Analytical Services, Inc. ("Lipper"), Morningstar, Inc. ("Morningstar"),
Wiesenberger Investment Companies Service ("Wiesenberger") and CDA Investment
Technologies, Inc. ("CDA") or similar independent services which monitor the
performance of mutual funds, or other industry or financial publications such
as Barron's, Changing Times, Forbes and Money Magazine; and/or (3) the S&P
500 Index or other unmanaged indices reported by Lehman Brothers. Performance
comparisons by these indexes, services or publications may rank mutual funds
over different periods of time by means of aggregate, average, year-by-year, or
other types of total return and performance figures. Any given performance quo-
tation or performance comparison should not be considered as representative of
the performance of the Fund for any future period.
There are differences and similarities between the investments which the Fund
may purchase and the investments measured by the indexes and reporting services
which are described herein. The Consumer Price Index is generally considered to
be a measure of inflation. Lipper, Morningstar, Wiesenberger and CDA are widely
recognized mutual fund reporting services whose performance calculations are
based upon changes in net asset value with all dividends reinvested and which
do not include the effect of any sales charges.
The Fund may also from time to time in its advertising and sales literature
compare its current yield or total return with the yield or total return on
taxable investments such as corporate or U.S. Government bonds, bank certifi-
cates of deposit (CDs) or money market funds or indices that represent these
types of investments. U.S. Government bonds are long-term investments backed by
the full faith and credit of
B-36
<PAGE>
the U.S. Government. Bank CDs are generally short-term, FDIC-insured invest-
ments, which pay fixed principal and interest but are subject to fluctuating
rollover rates. Money market funds are short-term investments with stable net
asset values, fluctuating yields and special features enhancing liquidity.
The Fund commenced operations on May 29, 1998. The table below represents the
investment returns for the specified periods on the Fund's Class A, Class B,
Class C and Class R shares. The total return figures for Class A shares are
shown both with and without the effect of the maximum sales charge. The total
return figures for the Class B shares include the effect of the applicable Con-
tingent Deferred Sales Charge ("CDSC").
<TABLE>
<CAPTION>
Nuveen European Value Fund
------------------------------------------------------------------------
Average Annual Total
Return Cumulative
-------------------- ------------
5/29/98 5/29/98
7/1/98- (inception)- (inception)-
6/30/99 6/30/99 6/30/99
------- ------------ ------------
<S> <C> <C> <C>
Class ANAV............................ 1.63% .95% 1.03%
Class APOP............................ (4.21)% (4.41)% (4.75)%
Class B............................... (3.14)% (3.45)% (3.75)%
Class C............................... .86% .23% .25%
Class R............................... 1.86% 1.22% 1.33%
</TABLE>
ADDITIONAL INFORMATION ON THE PURCHASE AND REDEMPTION OF FUND SHARES AND
SHAREHOLDER PROGRAMS
As described in the Prospectus, the Fund provides you with alternative ways of
purchasing Fund shares based upon your individual investment needs and prefer-
ences.
Each class of shares of the Fund represents an interest in the same portfolio
of investments. Each class of shares is identical in all respects except that
each class bears its own class expenses, including distribution and administra-
tion expenses, and each class has exclusive voting rights with respect to any
distribution or service plan applicable to its shares. As a result of the dif-
ferences in the expenses borne by each class of shares, net income per share,
dividends per share and net asset value per share will vary among the Fund's
classes of shares. There are no conversion, preemptive or other subscription
rights, except that Class B shares automatically convert into Class A shares as
described below.
Shareholders of each class will share expenses proportionately for services
that are received equally by all shareholders. A particular class of shares
will bear only those expenses that are directly attributable to that class,
where the type or amount of services received by a class varies from one class
to another. For example, class-specific expenses generally will include distri-
bution and service fees.
The expenses to be borne by specific classes of shares may include (i) transfer
agency fees attributable to a specific class of shares, (ii) printing and post-
age expenses related to preparing and distributing materials such as share-
holder reports, prospectuses and proxy statements to current shareholders of a
specific class of shares, (iii) Securities and Exchange Commission ("SEC") and
state securities registration fees
B-37
<PAGE>
incurred by a specific class of shares, (iv) the expense of administrative per-
sonnel and services required to support the shareholders of a specific class of
shares, (v) litigation or other legal expenses relating to a specific class of
shares, (vi) directors' fees or expenses incurred as a result of issues relat-
ing to a specific class of shares, (vii) accounting expenses relating to a spe-
cific class of shares and (viii) any additional incremental expenses subse-
quently identified and determined to be properly allocated to one or more clas-
ses of shares.
Class A Shares
You may purchase Class A Shares at a public offering price equal to the appli-
cable net asset value per share plus an up-front sales charge imposed at the
time of purchase as set forth in the Prospectus. You may qualify for a reduced
sales charge, or the sales charge may be waived in its entirety, as described
below. Class A Shares are also subject to an annual service fee of .25%. See
"Distribution and Service Plans." Set forth below is an example of the method
of computing the offering price of the Class A shares of the Fund. The example
assumes a purchase on June 30, 1999 of Class A shares from the Fund aggregating
less than $50,000 subject to the schedule of sales charges set forth in the
Prospectus at a price based upon the net asset value of the Class A shares.
<TABLE>
<S> <C>
Net Asset Value per share...................................... $20.17
Per Share Sales Charge--5.75% of public offering price (6.10%
of net asset value per share)................................. 1.23
-------
Per Share Offering Price to the Public......................... $21.40
Shares Outstanding (June 30, 1999)............................. 162,475
</TABLE>
The Fund receives the entire net asset value of all Class A Shares that are
sold. Nuveen retains the full applicable sales charge from which it pays the
uniform reallowances shown in the Prospectus to Authorized Dealers.
Certain commercial banks may make Class A Shares of the Fund available to their
customers on an agency basis. Pursuant to the agreements between Nuveen and
these banks, some or all of the sales charge paid by a bank customer in connec-
tion with a purchase of Class A Shares may be retained by or paid to the bank.
Certain banks and other financial institutions may be required to register as
securities dealers in certain states.
Reduction or Elimination of Up-Front Sales Charge on Class A Shares and Class R
Share Purchase Availability
Rights of Accumulation
You may qualify for a reduced sales charge on a purchase of Class A Shares of
the Fund if the amount of your purchase, when added to the value that day of
all of your prior purchases of shares of the Fund, of another Nuveen Mutual
Fund or Nuveen exchange-traded fund, or units of a Nuveen Defined Portfolio, on
which an up-front sales charge or ongoing distribution fee is imposed, or is
normally imposed, falls within the amounts stated in the Class A sales charges
and commissions table in "How to Choose a Share Class" in the Prospectus. You
or your financial adviser must notify Nuveen or the Fund's transfer
B-38
<PAGE>
agent of any cumulative discount whenever you plan to purchase Class A Shares
of the Fund that you wish to qualify for a reduced sales charge.
Letter of Intent
You may qualify for a reduced sales charge on a purchase of Class A Shares of
the Fund if you plan to purchase Class A Shares of Nuveen Mutual Funds over the
next 13 months and the total amount of your purchases would, if purchased at
one time, qualify you for one of the reduced sales charges shown in the Class A
sales charges and commissions table in "How to Choose a Share Class" in the
Prospectus. In order to take advantage of this option, you must complete the
applicable section of the Application Form or sign and deliver either to an Au-
thorized Dealer or to the Fund's transfer agent a written Letter of Intent in a
form acceptable to Nuveen. A Letter of Intent states that you intend, but are
not obligated, to purchase over the next 13 months a stated total amount of
Class A shares that would qualify you for a reduced sales charge shown above.
You may count shares of a Nuveen Mutual Fund that you already own on which you
paid an up-front sales charge or an ongoing distribution fee and any Class B
and Class C Shares of a Nuveen Mutual Fund that you purchase over the next 13
months towards completion of your investment program, but you will receive a
reduced sales charge only on new Class A Shares you purchase with a sales
charge over the 13 months. You cannot count towards completion of your invest-
ment program Class A Shares that you purchase without a sales charge through
investment of distributions from a Nuveen Mutual Fund or a Nuveen Defined Port-
folio, or otherwise.
By establishing a Letter of Intent, you agree that your first purchase of Class
A Shares of the Fund following execution of the Letter of Intent will be at
least 5% of the total amount of your intended purchases. You further agree that
shares representing 5% of the total amount of your intended purchases will be
held in escrow pending completion of these purchases. All dividends and capital
gains distributions on Class A Shares held in escrow will be credited to your
account. If total purchases, less redemptions, prior to the expiration of the
13 month period equal or exceed the amount specified in your Letter of Intent,
the Class A Shares held in escrow will be transferred to your account. If the
total purchases, less redemptions, exceed the amount specified in your Letter
of Intent and thereby qualify for a lower sales charge than the sales charge
specified in your Letter of Intent, you will receive this lower sales charge
retroactively, and the difference between it and the higher sales charge paid
will be used to purchase additional Class A Shares on your behalf. If the total
purchases, less redemptions, are less than the amount specified, you must pay
Nuveen an amount equal to the difference between the amounts paid for these
purchases and the amounts which would have been paid if the higher sales charge
had been applied. If you do not pay the additional amount within 20 days after
written request by Nuveen or your financial adviser, Nuveen will redeem an ap-
propriate number of your escrowed Class A Shares to meet the required payment.
By establishing a Letter of Intent, you irrevocably appoint Nuveen as attorney
to give instructions to redeem any or all of your escrowed shares, with full
power of substitution in the premises.
You or your financial adviser must notify Nuveen or the Fund's transfer agent
whenever you make a purchase of Fund shares that you wish to be covered under
the Letter of Intent option.
B-39
<PAGE>
Reinvestment of Nuveen Defined Portfolio Distributions
You may purchase Class A Shares without an up-front sales charge by reinvest-
ment of distributions from any of the various defined portfolios sponsored by
Nuveen. There is no initial or subsequent minimum investment requirement for
such reinvestment purchases.
Group Purchase Programs
If you are a member of a qualified group, you may purchase Class A Shares of
the Fund or of another Nuveen Mutual Fund at the reduced sales charge applica-
ble to the group's purchases taken as a whole. A "qualified group" is one
which has previously been in existence, has a purpose other than investment,
has ten or more participating members, has agreed to include Fund sales publi-
cations in mailings to members and has agreed to comply with certain adminis-
trative requirements relating to its group purchases.
Under any group purchase program, the minimum initial investment in Class A
Shares of the Fund or portfolio for each participant in the program is $50,
provided that the group invests at least $3,000 in the Fund. The minimum
monthly investment in Class A Shares of the Fund or portfolio by each partici-
pant is $50. No certificate will be issued for any
participant's account. All dividends and other distributions by the Fund will
be reinvested in additional Class A Shares of the Fund. No participant may
utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself and each partici-
pant must fill out application materials, which the group administrator may
obtain from the group's financial adviser, by calling Nuveen toll-free at 800-
257-8787.
Reinvestment of Redemption Proceeds from Unaffiliated Funds Subject to Merger
or Closure
You may also purchase Class A Shares at net asset value without a sales charge
if the purchase takes place through an Authorized Dealer and represents the
reinvestment of the proceeds of the redemption of shares of one or more regis-
tered investment companies not affiliated with Nuveen that are subject to
merger or closure. You must provide appropriate documentation that the redemp-
tion occurred not more than one year prior to the reinvestment of the proceeds
in Class A Shares, and that you either paid an up-front sales charge or were
subject to a contingent deferred sales charge in respect of the redemption of
such shares of such other investment company.
Elimination of Sales Charge on Class A Shares
Class A Shares of the Fund may be purchased at net asset value without a sales
charge by the following categories of investors:
. investors purchasing $1,000,000 or more; Nuveen may pay Authorized Deal-
ers on Class A sales of $1.0 million and above to an additional 0.25% of
the purchase amount;
. officers, trustees and former trustees of the Nuveen Funds;
. bona fide, full-time and retired employees of Nuveen, any parent company
of Nuveen, and subsidiaries thereof, or their immediate family members;
B-40
<PAGE>
. officers, directors or bona fide employees of any investment advisory
partner of Nuveen that provides sub-advisory services for a Nuveen prod-
uct, or their immediate family members;
. any person who, for at least 90 days, has been an officer, director or
bona fide employee of any Authorized Dealer, or their immediate family
members;
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates or their
immediate family members;
. bank or broker-affiliated trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are
held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transac-
tion fee basis through a broker-dealer sponsored mutual fund purchase
program;
. clients of investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for their serv-
ices; and
. any eligible employer-sponsored qualified defined contribution retire-
ment plan. Eligible plans are those with at least 25 employees and which
either (a) make an initial purchase of one or more Nuveen mutual funds
aggregating $500,000 or more; or (b) execute a Letter of Intent to pur-
chase in the aggregate $500,000 or more of fund shares. Nuveen will pay
Authorized Dealers a sales commission on such purchases equal to 1% of
the first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25%
of any amount purchased over $5.0 million.
For investors that purchased Class A Shares at net asset value because they
purchased such shares through an eligible employer-sponsored qualified defined
contribution plan or because the purchase amount equaled or exceeded $1 million
and the Authorized Dealer did not waive the sales commission, a contingent de-
ferred sales charge of 1.00% will be assessed on redemptions within 18 months
of purchase.
Any Class A Shares purchased pursuant to a special sales charge waiver must be
acquired for investment purposes and on the condition that they will not be
transferred or resold except through redemption by the Fund. You or your finan-
cial adviser must notify Nuveen or the Fund's transfer agent whenever you make
a purchase of Class A Shares of the Fund that you wish to be covered under
these special sales charge waivers.
Class A Shares of the Fund may be issued at net asset value without a sales
charge in connection with the acquisition by the Fund of another investment
company. All purchases under the special sales charge waivers will be subject
to minimum purchase requirements as established by the Fund.
In determining the amount of your purchases of Class A Shares of the Fund that
may qualify for a reduced sales charge, the following purchases may be com-
bined: (1) all purchases by a trustee or other fiduciary for a single trust,
estate or fiduciary account; (2) all purchases by individuals and their immedi-
ate family members (i.e., their spouses, parents, children, grandparents,
grandchildren, parents-in-law,
B-41
<PAGE>
sons- and daughters-in-law, siblings, a sibling's spouse, and a spouse's sib-
lings); or (3) all purchases made through a group purchase program as described
above.
Class R Share Purchase Eligibility
Class R Shares are available for purchases of $10 million or more and for pur-
chases using dividends and capital gains distributions on Class R Shares. Class
R Shares also are available for the following categories of investors and pen-
sion, profit-sharing, 401(k), IRA or other similar plans maintained by or for
the benefit of such persons:
. officers, trustees and former trustees of the Trust or any Nuveen spon-
sored registered investment company and their immediate family members
or trustees/directors of any fund sponsored by Nuveen, any parent com-
pany of Nuveen and subsidiaries thereof and their immediate family mem-
bers;
. bona fide, full-time and retired employees of Nuveen or Institutional
Capital, any parent company of Nuveen, and subsidiaries thereof, or
their immediate family members;
. officers, directors or bona fide employees of any investment advisory
partner of Nuveen that provides sub-advisory services for a Nuveen prod-
uct, or their immediate family members;
. any person who, for at least 90 days, has been an officer, director or
bona fide employee of any Authorized Dealer, or their immediate family
members;
. officers and directors of bank holding companies that make Fund shares
available directly or through subsidiaries or bank affiliates, or their
immediate family members;
. bank or broker-affiliated trust departments investing funds over which
they exercise exclusive discretionary investment authority and that are
held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transac-
tion fee basis through a broker-dealer sponsored mutual fund purchase
program;
. clients of investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for their serv-
ices; and
. any shares purchased by investors falling within any of the first four
categories listed above must be acquired for investment purposes and on
the condition that they will not be transferred or resold except through
redemption by the Fund.
In addition, purchasers of Nuveen Defined Portfolios may reinvest their distri-
butions from such defined portfolios in Class R Shares, if, before September 6,
1994, such purchasers had elected to reinvest distributions in Nuveen Fund
shares (before June 13, 1995 for Nuveen Municipal Bond Fund shares). Sharehold-
ers may exchange their Class R Shares of any Nuveen Fund into Class R Shares of
any other Nuveen Fund. You may also exchange Class R Shares of the Fund for
Class A Shares without a sales charge if the current net asset value of your
Class R Shares is at least $3,000 (or you already own Class A Shares).
B-42
<PAGE>
The reduced sales charge programs may be modified or discontinued by the Fund
at any time. To encourage their participation, the Fund waives the sales charge
on Class A Shares and offers Class R Shares to trustees and officers of the
Trust and other affiliated persons of the Trust and Nuveen as noted above.
If you are eligible to purchase either Class R Shares or Class A Shares without
a sales charge at net asset value, you should be aware of the differences be-
tween these two classes of shares. Class A Shares are subject to an annual
service fee to compensate Authorized Dealers for providing you with ongoing ac-
count services. Class R Shares are not subject to a distribution or service fee
and, consequently, holders of Class R Shares may not receive the sale types or
levels of services from Authorized Dealers. In choosing between Class A Shares
and Class R Shares, you should weigh the benefits of the services to be pro-
vided by Authorized Dealers against the annual service fee imposed upon the
Class A Shares.
For more information about the purchase of Class A Shares or the reduced sales
charge program, or to obtain the required application forms, call Nuveen toll-
free at (800) 257-8787.
Class B Shares
You may purchase Class B Shares at a public offering price equal to the appli-
cable net asset value per share without any up-front sales charge. Since Class
B Shares are sold without an initial sales charge, the full amount of your pur-
chase payment will be invested in Class B Shares. Class B Shares are subject to
an annual distribution fee to compensate Nuveen for its costs in connection
with the sale of Class B shares, and are also subject to an annual service fee
to compensate Authorized Dealers for providing you with ongoing financial ad-
vice and other account services.
You may be subject to a CDSC if you redeem your Class B shares prior to the end
of the sixth year after purchase. See "Reduction or Elimination of Contingent
Deferred Sales Charge" below. Nuveen compensates Authorized Dealers for sales
of Class B Shares at the time of sale at the rate of 4.00% of the amount of
Class B Shares purchased, which represents a sales commission of 3.75% plus an
advance on the first year's annual service fee of .25%.
Class B Shares acquired through the reinvestment of dividends are not subject
to a CDSC. Any CDSC will be imposed on the lower of the redeemed shares' cost
or net asset value at the time of redemption.
Class B Shares will automatically convert to Class A Shares eight years after
purchase. The purpose of the conversion is to limit the distribution fees you
pay over the life of your investment. All conversions will be done at net asset
value without the imposition of any sales load, fee, or other charge, so that
the value of each shareholder's account immediately before conversion will be
the same as the value of the account immediately after conversion. Class B
Shares acquired through reinvestment of distributions will convert into Class A
Shares based on the date of the initial purchase to which such shares relate.
For this purpose, Class B Shares acquired through reinvestment of distributions
will be attributed to particular purchases of Class B Shares in accordance with
such procedures as the Board of Trustees may determine from time to time. Class
B Shares that are converted to Class A Shares will remain subject to an
B-43
<PAGE>
annual service fee that is identical in amount for both Class B Shares and
Class A Shares. Since net asset value per share of the Class B Shares and the
Class A Shares may differ at the time of conversion, a shareholder may receive
more or fewer Class A Shares than the number of Class B Shares converted. Any
conversion of Class B Shares into Class A Shares will be subject to the contin-
uing availability of an opinion of counsel or a private letter ruling from the
Internal Revenue Service to the effect that the conversion of shares would not
constitute a taxable event under federal income tax law. Conversion of Class B
Shares into Class A Shares might be suspended if such an opinion or ruling were
no longer available.
Class C Shares
You may purchase Class C Shares at a public offering price equal to the appli-
cable net asset value per share without any up-front sales charge. Class C
Shares are subject to an annual distribution fee of .75% to compensate Nuveen
for paying your financial adviser an ongoing sales commission. Class C Shares
are also subject to an annual service fee of .25% to compensate Authorized
Dealers for providing you with on-going financial advice and other account
services. Nuveen compensates Authorized Dealers for sales of Class C Shares at
the time of the sale at a rate of 1% of the amount of Class C Shares purchased,
which represents an advance of the first year's distribution fee of .75% plus
an advance on the first year's service fee of .25%. See "Distribution and Serv-
ice Plans."
Redemptions of Class C Shares within 12 months of purchase may be subject to a
CDSC of 1% of the lower of the purchase price or redemption proceeds. Because
Class C Shares do not convert to Class A Shares and continue to pay an annual
distribution fee indefinitely, Class C Shares should normally not be purchased
by an investor who expects to hold shares for significantly longer than eight
years.
Reduction or Elimination of Contingent Deferred Sales Charge
Class A Shares are normally redeemed at net asset value, without any CDSC. How-
ever, in the case of Class A Shares purchased at net asset value because the
purchase amount equaled or exceeded $1 million or pursuant to an eligible em-
ployer-sponsored defined contribution plan described above, where the Autho-
rized Dealer did not waive the sales commission, a CDSC of 1% is imposed on any
redemption within 18 months of purchase. In the case of Class B Shares redeemed
within six years of purchase, a CDSC is imposed, beginning at 5% for redemp-
tions within the first year, declining to 4% for redemptions within years two
and three, and declining by 1% each year thereafter until disappearing
after the sixth year. Class C Shares are redeemed at net asset value, without
any CDSC, except that a CDSC of 1% is imposed upon redemption of Class C Shares
that are redeemed within 12 months of purchase.
In determining whether a CDSC is payable, the Fund will first redeem shares not
subject to any charge, or that represent an increase in the value of a Fund ac-
count due to capital appreciation, and then will redeem shares held for the
longest period, unless the shareholder specifies another order. No CDSC is
charged on shares purchased as a result of automatic reinvestment of dividends
or capital gains paid. In
B-44
<PAGE>
addition, no CDSC will be charged on exchanges of shares into another Nuveen
Mutual Fund or Nuveen money market fund. You may not exchange Class B Shares
for shares of a Nuveen money market fund. The holding period is calculated on
a monthly basis and begins the first day of the month in which the order for
investment is received. The CDSC is calculated based on the lower of the re-
deemed shares' cost or net asset value at the time of the redemption and is
deducted from the redemption proceeds. Nuveen receives the amount of any CDSC
shareholders pay. If Class A or Class C shares subject to a CDSC are exchanged
for shares of a Nuveen money market fund, the CDSC would be imposed on the
subsequent redemption of those money market fund shares, and the period during
which the shareholder holds the money market fund shares would be counted in
determining the remaining duration of the CDSC. The Fund may elect not to so
count the period during which the shareholder held the money market fund
shares, in which event the amount of any applicable CDSC would be reduced in
accordance with applicable SEC rules by the amount of any 12b-1 plan payments
to which those money market funds shares may be subject.
The CDSC may be waived or reduced under the following circumstances: (i) in
the event of total disability (as evidenced by a determination by the federal
Social Security Administration) of the shareholder (including a registered
joint owner) occurring after the purchase of the shares being redeemed; (ii)
in the event of the death of the shareholder (including a registered joint
owner); (iii) for redemptions made pursuant to a systematic withdrawal plan,
up to 12% of the current market value; (iv) involuntary redemptions caused by
operation of law; (v) redemptions in connection with a payment of account or
plan fees; (vi) redemptions in connection with the exercise of a reinstatement
privilege whereby the proceeds of a redemption of the Fund's shares subject to
a sales charge are reinvested in shares of certain Funds within a specified
number of days; (vii) redemptions in connection with the exercise of the
Fund's right to redeem all shares in an account that does not maintain a cer-
tain minimum balance or that the applicable board has determined may have ma-
terial adverse consequences to the shareholders of the Fund; and (viii) re-
demptions of Class B or Class C Shares if the proceeds are transferred to an
account managed by another Nuveen Adviser and the adviser refunds the advanced
service and distribution fees to Nuveen.
In addition, the CDSC will be waived in connection with the following redemp-
tions of shares held by an employer-sponsored qualified defined contribution
retirement plan: (i) partial or complete redemptions in connection with a dis-
tribution without penalty under Section 72(t) of the Internal Revenue Code
("Code") from a retirement plan: (a) upon attaining age 59 1/2, (b) as part of
a series of substantially equal periodic payments, or (c) upon separation from
service and attaining age 55; (ii) partial or complete redemptions in connec-
tion with a qualifying loan or hardship withdrawal; (iii) complete redemptions
in connection with termination of employment, plan termination or transfer to
another employer's plan or IRA; and (iv) redemptions resulting from the return
of an excess contribution. The CDSC will also be waived in connection with the
following redemptions of shares held in an IRA account: (i) for redemptions
made pursuant to an IRA systematic withdrawal based on the shareholder's life
expectancy including, but not limited to, substantially equal periodic pay-
ments described in Code Section 72(t)(A)(iv) prior to age 59; and (ii) for re-
demptions to satisfy required minimum distributions after age 70 from an IRA
account (with the maximum amount subject to this waiver being based only upon
the shareholder's Nuveen IRA accounts).
B-45
<PAGE>
Shareholder Programs
Exchange Privilege
You may exchange shares of a class of the Fund for shares of the same class of
any other Nuveen Mutual Fund with reciprocal exchange privileges, at net asset
value without a sales charge, by sending a written request to the Fund, c/o
Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, New
York 10274-5186. Similarly, Class A, Class B, Class C and Class R Shares of
other Nuveen Mutual Funds may be exchanged for the same class of shares of the
Fund at net asset value without a sales charge. Exchanges of shares from any
Nuveen money market fund will be made into Class A Shares, Class B Shares,
Class C Shares or Class R Shares (if eligible) of the Fund at the public offer-
ing price. If, however, a sales charge has previously been paid on the invest-
ment represented by the exchanged shares (i.e., the shares to be exchanged were
originally issued in exchange for shares on which a sales charge was paid), the
exchange of shares from a Nuveen money market fund will be made into shares of
the Fund at net asset value. All shares may be exchanged for shares of any
Nuveen money market fund.
If you exchange shares subject to a CDSC, no CDSC will be charged at the time
of the exchange. However, if you subsequently redeem the shares acquired
through the exchange, the redemption may be subject to a CDSC, depending on
when you purchased your original shares and the CDSC schedule of the fund from
which you exchanged your shares.
The shares to be purchased must be offered in your state of residence and you
must have held the shares you are exchanging for at least 15 days. The total
value of exchanged shares must at least equal the minimum investment require-
ment of the Nuveen Mutual Fund being purchased. For federal income tax purpos-
es, any exchange constitutes a sale and purchase of shares and may result in
capital gain or loss. Before making any exchange, you should obtain the Pro-
spectus for the Nuveen Mutual Fund you are purchasing and read it carefully. If
the registration of the account for the Fund you are purchasing is not exactly
the same as that of the fund account from which the exchange is made, written
instructions from all holders of the account from which the exchange is being
made must be received, with signatures guaranteed by a member of an approved
Medallion Guarantee Program or in such other manner as may be acceptable to the
Fund. You may also exchange shares by telephone if you authorize telephone ex-
changes by checking the applicable box on the Application Form or by calling
Nuveen toll-free at 800-257-8787 to obtain an authorization form. The exchange
privilege may be modified or discontinued by the Fund at any time.
The exchange privilege is not intended to permit the Fund to be used as a vehi-
cle for short-term trading. Excessive exchange activity may interfere with
portfolio management, raise expenses, and
otherwise have an adverse effect on all shareholders. In order to limit exces-
sive exchange activity and in other circumstances where Fund management be-
lieves doing so would be in the best interest of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, or limit the amount or
number of exchanges or reject any exchange. Shareholders would be notified of
any such action to the extent required by law.
Reinstatement Privilege
If you redeemed Class A, Class B or Class C Shares of the Fund or any other
Nuveen Mutual Fund that were subject to a sales charge or a CDSC, you have up
to one year to reinvest all or part of the full
B-46
<PAGE>
amount of the redemption in the same class of shares of the Fund at net asset
value. This reinstatement privilege can be exercised only once for any redemp-
tion, and reinvestment will be made at the net asset value next calculated af-
ter reinstatement of the appropriate class of Fund shares. If you reinstate
shares that were subject to a CDSC, your holding period as of the redemption
date also will be reinstated for purposes of calculating a CDSC and the CDSC
paid at redemption will be refunded. The federal income tax consequences of any
capital gain realized on a redemption will not be affected by reinstatement,
but a capital loss may be disallowed in whole or in part depending on the tim-
ing, the amount of the reinvestment and the fund from which the redemption oc-
curred.
Redemption In Kind
The Fund has reserved the right to redeem in kind (that is, to pay redemption
requests in cash and portfolio securities, or wholly in portfolio securities),
although the Fund has no present intention to redeem in kind. The Fund volun-
tarily has committed to pay in cash all requests for redemption by any share-
holder, limited as to each shareholder during any ninety-day period to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
the ninety-day period.
General Matters
The Fund may encourage registered representatives and their firms to help ap-
portion their assets among bonds, stocks and cash, and may seek to participate
in programs that recommend a portion of their assets be invested in equity se-
curities, equity and debt securities, or equity and municipal securities.
Upon notice to all Authorized Dealers, Nuveen may reallow to Authorized Dealers
electing to participate up to the full applicable Class A Share up-front sales
charge during periods and for transactions specified in the notice. The
reallowances made during these periods may be based upon attainment of minimum
sales levels.
In addition to the types of compensation to dealers to promote sales of fund
shares that are described in the Prospectus, Nuveen may from time to time make
additional reallowances only to certain authorized dealers who sell or are ex-
pected to sell certain minimum amounts of shares of the Nuveen Mutual Funds and
Nuveen Defined Portfolios during specified time periods. Promotional support
may include providing sales literature to and holding informational or educa-
tional programs for the benefit of such Authorized Dealers' representatives,
seminars for the public, and advertising and sales campaigns. Nuveen may reim-
burse a participating Authorized Dealer for up to one-half of specified media
costs incurred in the placement of advertisements which jointly feature the Au-
thorized Dealer and Nuveen Funds and Nuveen Defined Portfolios.
Such reimbursement will be based on the number of its financial advisers who
have sold Nuveen Fund shares and Nuveen Defined Portfolio units during the
prior calendar year according to an established schedule. Any such support or
reimbursement would be provided by Nuveen out of its own assets, and not out of
the assets of the Fund, and will not change the price an investor pays for
shares or the amount that the Fund will receive from such a sale. The staff of
the Securities and Exchange Commis-
B-47
<PAGE>
sion takes the position that dealers who receive 90% or more of the applicable
sales charge may be deemed underwriters under the Securities Act of 1933, as
amended.
To help advisers and investors better understand and most efficiently use the
Fund to reach their investment goals, the Fund may advertise and create spe-
cific investment programs and systems. For example, this may include informa-
tion on how to use the Fund to accumulate assets for future education needs or
periodic payments such as insurance premiums. The Fund may produce software,
electronic information sites, or additional sales literature to promote the ad-
vantages of using the Fund to meet these and other specific investor needs.
The Fund has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other interme-
diaries to accept purchase and redemption orders on the Fund's behalf. The Fund
will be deemed to have received a purchase or redemption order when an autho-
rized broker or, if applicable, a broker's authorized designee accepts the or-
der. Customer orders received by such broker (or their designee) will be priced
at the Fund's net asset value next computed after it is accepted by an autho-
rized broker (or their designee). Orders accepted by an authorized broker (or
their designee) before the close of regular trading on the New York Stock Ex-
change will receive that day's share price; orders accepted after the close of
trading will receive the next business day's share price.
Exchanges of shares of the Fund for shares of a Nuveen money market fund may be
made on days when both Fund calculate a net asset value and make shares avail-
able for public purchase. Shares of the Nuveen money market Fund may be pur-
chased on days on which the Federal Reserve Bank of Boston is normally open for
business. In addition to the holidays observed by the Fund, the Nuveen money
market Fund observe and will not make fund shares available for purchase on the
following holidays: Martin Luther King's Birthday, Columbus Day and Veterans'
Day.
In addition, you may exchange Class R Shares of the Fund for Class A Shares of
the Fund without a sales charge if the current net asset value of those Class R
Shares is at least $3,000 or you already own Class A Shares of the Fund.
Shares will be registered in the name of the investor or the investor's finan-
cial adviser. A change in registration or transfer of shares held in the name
of a financial adviser may only be made by an order in good form from the fi-
nancial adviser acting on the investor's behalf.
For more information on the procedure for purchasing shares of the Fund and on
the special purchase programs available thereunder, see "How to Buy Shares" and
"Systematic Investing" in the Prospectus.
If you choose to invest in the Fund, an account will be opened and maintained
for you by Chase Global, the Fund's shareholder services agent. Share certifi-
cates will be issued to you only upon written request to Nuveen Investor Serv-
ices, and no certificates will be issued for fractional shares. The Fund re-
serves the right to reject any purchase order and to waive or increase minimum
investment requirements. A change in registration or transfer of shares held in
the name of your financial adviser's firm can only be made by an order in good
form from the financial adviser acting on your behalf.
B-48
<PAGE>
A fee of 1% of the current market value of any shares represented by a certif-
icate will be charged if the certificate is lost, stolen, or destroyed. The
fee is paid to Seaboard Surety Company for insurance of the lost, stolen, or
destroyed certificate.
Authorized Dealers are encouraged to open single master accounts. However,
some Authorized Dealers may wish to use Chase Global's sub-accounting system
to minimize their internal recordkeeping requirements. An Authorized Dealer or
other investor requesting shareholder servicing or accounting other than the
master account or sub-accounting service offered by Chase Global will be re-
quired to enter into a separate agreement with another agent for these serv-
ices for a fee that will depend upon the level of services to be provided.
The Shares are offered continuously. However, subject to the rules and regula-
tions of the Securities and Exchange Commission, the Fund reserves the right
to suspend the continuous offering of it shares at any time, but no suspension
shall affect your right of redemption.
Nuveen serves as the principal underwriter of the shares of the Fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with
the Trust ("Distribution Agreement"). Pursuant to the Distribution Agreement,
the Trust appointed Nuveen to be its agent for the distribution of the Fund's
shares on a continuous offering basis. Nuveen sells shares to or through bro-
kers, dealers, banks or other qualified financial intermediaries (collectively
referred to as "Dealers"), or others, in a manner consistent with the then ef-
fective registration statement of the Trust. Pursuant to the Distribution
Agreement, Nuveen, at its own expense, finances certain activities incident to
the sale and distribution of the Fund's shares, including printing and dis-
tributing of prospectuses and statements of additional information to other
than existing shareholders, the printing and distributing of sales literature,
advertising and payment of compensation and giving of concessions to dealers.
Nuveen receives for its services the excess, if any, of the sales price of the
Fund's shares less the net asset value of those shares, and reallows a major-
ity or all of such amounts to the Dealers who sold the shares; Nuveen may act
as such a Dealer. Nuveen also receives compensation pursuant to a distribution
plan adopted by the Trust pursuant to Rule 12b-1 and described herein under
"Distribution and Service Plans." Nuveen receives any CDSCs imposed on redemp-
tions of Shares, but any amounts as to which a reinstatement privilege is not
exercised are set off against and reduce amounts otherwise payable to Nuveen
pursuant to the distribution plan.
The following table sets forth the aggregate amount of underwriting commis-
sions with respect to the sale of Fund shares, the amount thereof retained by
Nuveen and the compensation on redemptions and repurchases received by Nuveen
for the Fund for the fiscal years ended June 30, 1998 and June 30, 1999. All
figures are to the nearest thousand.
<TABLE>
<CAPTION>
Amount of
Amount of Compensation on
Underwriting Amount Retained Redemptions and
Commissions by Nuveen Repurchases
---------------- ---------------- ----------------
5/29/98- 7/1/98- 5/29/98- 7/1/98- 5/29/98- 7/1/98-
6/30/98 6/30/99 6/30/98 6/30/99 6/30/98 6/30/99
<S> <C> <C> <C> <C> <C> <C>
Nuveen European Value Fund... $2 $166 $-- $22 $-- $15
</TABLE>
B-49
<PAGE>
DISTRIBUTION AND SERVICE PLANS
The Fund has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the In-
vestment Company Act of 1940, which provides that Class B Shares and Class C
Shares will be subject to an annual distribution fee, and that Class A Shares,
Class B Shares and Class C Shares will all be subject to an annual service fee.
Class R Shares will not be subject to either distribution or service fees.
The distribution fee applicable to Class B Shares and Class C Shares under the
Fund's Plan will be payable to reimburse Nuveen for services and expenses in-
curred in connection with the distribution of Class B and Class C Shares, re-
spectively. These expenses include payments to Authorized Dealers, including
Nuveen, who are brokers of record with respect to the Class B and Class C
Shares, as well as, without limitation, expenses of printing and distributing
prospectuses to persons other than shareholders of the Fund, expenses of pre-
paring, printing and distributing advertising and sales literature and reports
to shareholders used in connection with the sale of Class B and Class C Shares,
certain other expenses associated with the distribution of Class B and Class C
Shares, and any distribution-related expenses that may be authorized from time
to time by the Board of Trustees.
The service fee applicable to Class A Shares, Class B Shares and Class C Shares
under the Fund's Plan will be payable to Authorized Dealers in connection with
the provision of ongoing account services to shareholders. These services may
include establishing and maintaining shareholder accounts, answering share-
holder inquiries and providing other personal services to shareholders.
The Fund may spend up to .25 of 1% per year of the average daily net assets of
Class A Shares as a service fee under the Plan as applicable to Class A Shares.
The Fund may spend up to .75 of 1% per year of the average daily net assets of
each of the Class B Shares and Class C Shares as a distribution fee which con-
stitutes an asset-based sales charge whose purpose is the same as an up-front
sales charge and up to .25 of 1% per year of the average daily net assets of
each of the Class B Shares and Class C Shares as a service fee under the Plan
as applicable to such classes.
During the last fiscal year ended June 30, 1999, the Fund paid 12b-1 fees pur-
suant to its 12b-1 Plan in the amounts set forth in the table below. For this
period, substantially all of the 12b-1 service fees on Class A Shares were paid
out as compensation to Authorized Dealers for providing services to sharehold-
ers relating to their investments. 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.
<TABLE>
<CAPTION>
12b-1 Fees
Paid by
the Fund from
6/30/98-6/30/99
---------------
<S> <C>
Nuveen European Value Fund
Class A....................................................... $ 6,419
Class B....................................................... $28,225
Class C....................................................... $ 6,060
-------
Total....................................................... $40,704
</TABLE>
B-50
<PAGE>
Under the Fund's Plan, the Fund will report quarterly to the Board of Trustees
for its review all amounts expended per class of shares under the Plan. The
Plan may be terminated at any time with respect to any class of shares, without
the payment of any penalty, by a vote of a majority of the
Trustees who are not "interested persons" and who have no direct or indirect
financial interest in the Plan or by vote of a majority of the outstanding vot-
ing securities of such class. The Plan may be renewed from year to year if ap-
proved by a vote of the Board of Trustees and a vote of the non-interested
Trustees who have no direct or indirect financial interest in the Plan cast in
person at a meeting called for the purpose of voting on the Plan. The Plan may
be continued only if the trustees who vote to approve such continuance con-
clude, in the exercise of reasonable business judgment and in light of their
fiduciary duties under applicable law, that there is a reasonable likelihood
that the Plan will benefit the Fund and its shareholders. The Plan may not be
amended to increase materially the cost which a class of shares may bear under
the Plan without the approval of the shareholders of the affected class, and
any other material amendments of the Plan must be approved by the non-inter-
ested trustees by a vote cast in person at a meeting called for the purpose of
considering such amendments. During the continuance of the Plan, the selection
and nomination of the non-interested trustees of the Trust will be committed to
the discretion of the non-interested trustees then in office.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 West Monroe Street,
Chicago, Illinois 60603 have been selected as auditors for the Trust. In addi-
tion to audit services, Arthur Andersen LLP will provide consultation and as-
sistance on accounting, internal control, tax and related matters.
The custodian of the assets of the Fund is The Chase Manhattan Bank, 4 New York
Plaza, New York, New York 10004. The custodian performs custodial, fund ac-
counting and portfolio accounting services.
FINANCIAL STATEMENTS
The audited financial statements for the Fund's most recent fiscal year appear
in the Fund's Annual Report and are incorporated herein by reference. The An-
nual Report accompanies this Statement of Additional Information.
GENERAL TRUST INFORMATION
The Fund is a series of the Trust. The Trust is an open-end diversified manage-
ment investment company under the Investment Company Act of 1940. The Trust was
organized as a Massachusetts business trust on May 6, 1996. The Board of Trust-
ees of the Trust is authorized to issue an unlimited number of shares in one or
more series or "Fund," which may be divided into classes of shares. Currently,
there are four series authorized and outstanding, each of which is divided into
four classes of shares designated as Class A Shares, Class B Shares, Class C
Shares and Class R Shares. Each class of shares represents an interest in the
same portfolio of investments of the Fund. Each class of shares has equal
rights as to
B-51
<PAGE>
APPENDIX A--RATINGS OF INVESTMENTS
Standard & Poor's Ratings Group--A brief description of the applicable Stan-
dard & Poor's Ratings Group ("S&P") rating symbols and their meanings (as pub-
lished by S&P) follows:
Long Term Debt
An S&P corporate or municipal debt rating is a current assessment of the cred-
itworthiness of an obligor with respect to a specific obligation. This assess-
ment may take into consideration obligors such as guarantors, insurers, or
lessees.
The debt rating is not a recommendation to purchase, sell, or hold a security,
inasmuch as it does not comment as to market price or suitability for a par-
ticular investor.
The ratings are based on current information furnished by the issuer or ob-
tained by S&P from other sources it considers reliable. S&P does not perform
an audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as
a result of changes in, or unavailability of, such information, or based on
other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
Investment Grade
AAA Debt rated "AAA' has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated "AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small de-
gree.
A
Debt rated "A' has a strong capacity to pay interest and repay princi-
pal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories.
BBB
Debt rated "BBB' is regarded as having an adequate capacity to pay in-
terest and repay principal. Whereas it normally exhibits adequate pro-
tection parameters, adverse economic conditions or changing circum-
stances are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated
categories.
<PAGE>
Speculative Grade Rating
Debt rated "BB', "B', "CCC', "CC' and "C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. "BB' indicates the least degree of speculation and "C' the highest.
While such debt will likely have some quality and protective characteristics
these are outweighed by major uncertainties or major exposures to adverse con-
ditions.
BB Debt rated "BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and princi-
pal payments. The "BB' rating category is also used for debt subordi-
nated to senior debt that is assigned an actual or implied "BBB-' rat-
ing.
B Debt rated "B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal.
The "B' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BB' or "BB-' rating.
CCC Debt rated "CCC' has a currently identifiable vulnerability to de-
fault, and is dependent upon favorable business, financial, and eco-
nomic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal.
The "CCC' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "B' or "B-' rating.
CC The rating "CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC' debt rating.
C The rating "C' typically is applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-' debt rating. The
"C' rating may be used to cover a situation where a bankruptcy peti-
tion has been filed, but debt service payments are continued.
CI The rating "CI' is reserved for income bonds on which no interest is
being paid.
D Debt rated "D' is in payment default. The "D' rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
"D' rating also will be used upon the filing of a bankruptcy petition
if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA' to "CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Provisional Ratings: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project financed by
the debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely completion of the
project. This rating, however, while addressing credit quality subsequent to
comple-
A-2
<PAGE>
tion of the project, makes no comment on the likelihood of, or the risk of de-
fault upon failure of, such completion. The investor should exercise judgment
with respect to such likelihood and risk.
L The letter "L' indicates that the rating pertains to the principal
amount of those bonds to the extent that the underlying deposit col-
lateral is federally insured by the Federal Savings & Loan Insurance
Corp. or the Federal Deposit Insurance Corp.* and interest is ade-
quately collateralized. In the case of certificates of deposit the
letter "L' indicates that the deposit, combined with other deposits
being held in the same right and capacity will be honored for princi-
pal and accrued pre-default interest up to the federal insurance lim-
its within 30 days after closing of the insured institution or, in the
event that the deposit is assumed by a successor insured institution,
upon maturity.
NR Indicates no rating has been requested, that there is insufficient in-
formation on which to base a rating, or that S&P does not rate a par-
ticular type of obligation as a matter of policy.
Municipal Notes
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rat-
ing. Notes maturing beyond 3 years will most likely receive a long-term debt
rating. The following criteria will be used in making that assessment:
--Amortization schedule (the larger the final maturity relative to
other maturities, the more likely it will be treated as a note).
--Source of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest with some vulnera-
bility to adverse financial and economic changes over the term of the
notes.
SP-3
Speculative capacity to pay principal and interest.
A note rating is not a recommendation to purchase, sell, or hold a security in-
asmuch as it does not comment as to market price or suitability for a particu-
lar investor. The ratings are based on current information furnished to S&P by
the issuer or obtained by S&P from other sources it considers reliable. S&P
does not perform an audit in connection with any rating and may, on occasion,
rely on unaudited financial information. The ratings may be changed, suspended,
or withdrawn as a result of changes in or unavailability of such information or
based on other circumstances.
*Continuance of the rating is contingent upon S&P's receipt of an executed copy
of the escrow agreement or closing documentation confirming investments and
cash flow.
A-3
<PAGE>
Commercial Paper
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into several categories, ranging from "A-1' for the highest
quality obligations to "D' for the lowest. These categories are as follows:
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is satis-
factory. However, the relative degree of safety is not as high as for
issues designated "A-1.'
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated "B' are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D Debt rated "D' is in payment default. The "D' rating category is used
when interest payments or principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
A commercial rating is not a recommendation to purchase, sell, or hold a secu-
rity inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
S&P by the issuer or obtained by S&P from other sources it considers reliable.
S&P does not perform an audit in connection with any rating and may, on occa-
sion, rely on unaudited financial information. The ratings may be changed, sus-
pended, or withdrawn as a result of changes in or unavailability of such infor-
mation or based on other circumstances.
Moody's Investors Service, Inc.--A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's") rating symbols and their meanings (as pub-
lished by Moody's) follows:
Long Term Debt
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally re-
ferred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all stan-
dards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated
A-4
<PAGE>
lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa securi-
ties.
A Bonds which are rated A possess may favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Moody's bond rating symbols may contain numerical modifiers of a ge-
neric rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-
range ranking, and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristi-
cally unreliable over any great length of time. Such bonds lack out-
standing investment characteristics and in fact have speculative char-
acteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protec-
tion of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desir-
able investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and is-
sues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Con(...)
Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operation experience, (c) rentals
which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes
probable credit stature upon completion of construction or elimination
of basis of condition.
Note:
Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the sym-
bols Aa1, A1, Baa1, Ba1, and B1.
A-5
<PAGE>
Municipal Short-Term Loans
MIG 1/VMIG 1 This designation denotes best quality. There is present
strong protection by established cash flows, superior liquid-
ity support or demonstrated broad based access to the market
for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins or protection
are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security ele-
ments are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well-established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection com-
monly regarded as required of an investment security is pres-
ent and although not distinctly or predominantly speculative,
there is specific risk.
Commercial Paper
Issuers rated Prime-1 (or related supporting institutions) have a superior ca-
pacity for repayment of senior short-term promissory obligations. Prime-1 re-
payment capacity will often be evidenced by many of the following characteris-
tics:
--Leading market positions in well-established industries.
--High rates of return on Fund employed.
--Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
--Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
--Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a strong capac-
ity for repayment of senior short-term promissory obligations. This will nor-
mally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated Prime-3 (or related supporting institutions) have an acceptable
capacity for repayment of senior short-term promissory obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial lever-
age. Adequate alternate liquidity is maintained.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
A-6
<PAGE>
Duff & Phelps, Inc.--A brief description of the applicable Duff & Phelps, Inc.
("D&P") ratings symbols and their meanings (as published by D&P) follows:
Long Term Debt
These ratings represent a summary opinion of the issuer's long-term fundamental
quality. Rating determination is based on qualitative and quantitative factors
which may vary according to the basic economic and financial characteristics of
each industry and each issuer. Important considerations are vulnerability to
economic cycles as well as risks related to such factors as competition, gov-
ernment action, regulation, technological obsolescence, demand shifts, cost
structure, and management depth and expertise. The projected viability of the
obligor at the trough of the cycle is a critical determination.
Each rating also takes into account the legal form of the security, (e.g.,
first mortgage bonds, subordinated debt, preferred stock, etc.). The extent of
rating dispersion among the various classes of securities is determined by sev-
eral factors including relative weightings of the different security classes in
the capital structure, the overall credit strength of the issuer, and the na-
ture of covenant protection.
The Credit Rating Committee formally reviews all ratings once per quarter (more
frequently, if necessary). Ratings of "BBB-' and higher fall within the defini-
tion of investment grade securities, as defined by bank and insurance supervi-
sory authorities. Structured finance issues, including real estate, asset-
backed and mortgage-backed financings, use this same rating scale. Duff &
Phelps Credit Rating claims paying ability ratings of insurance companies use
the same scale with minor modification in the definitions. Thus, an investor
can compare the credit quality of investment alternatives across industries and
structural types. A "Cash Flow Rating" (as noted for specific ratings) ad-
dresses the likelihood that aggregate principal and interest will equal or ex-
ceed the rated amount under appropriate stress conditions.
A-7
<PAGE>
Rating ScaleDefinition
- -------------------------------------------------------------------------------
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
- -------------------------------------------------------------------------------
AA+ AA AA- High credit quality. Protection factors are strong. Risk is mod-
est, but may vary slightly from time to time because of economic
conditions.
- -------------------------------------------------------------------------------
A+ Protection factors are average but adequate. However, risk factors
AA are more variable and greater in periods of economic stress.
AA-
- -------------------------------------------------------------------------------
BBB+ Below average protection factors but still considered sufficient
BBB for prudent investment. Considerable variability in risk during
BBB- economic cycles.
- -------------------------------------------------------------------------------
B+ Below investment grade but deemed likely to meet obligations when
B due. Present or prospective financial protection factors fluctuate
B- according to industry conditions or company fortunes. Overall
quality may move up or down frequently within this category.
- -------------------------------------------------------------------------------
CCC Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate
widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower rating
grade.
Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substan-
tial with unfavorable economic/industry conditions, and/or with
unfavorable company developments.
- -------------------------------------------------------------------------------
DD Defaulted debt obligations. Issuer failed to meet scheduled prin-
cipal and/or interest payments.
- -------------------------------------------------------------------------------
DP
Preferred stock with dividend arrearages.
- -------------------------------------------------------------------------------
Short-Term Debt Ratings
Duff & Phelps' short-term ratings are consistent with the rating criteria used
by money market participants. The ratings apply to all obligations with matu-
rities of under one year, including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master notes, bankers
A-8
<PAGE>
acceptances, irrevocable letters of credit, and current maturities of long-
term debt. Asset-backed commercial paper is also rated according to this
scale.
Emphasis is placed on liquidity which is defined as not only cash from opera-
tions, but also access to alternative sources of Fund including trade credit,
bank lines, and the capital markets. An important consideration is the level
of an obligor's reliance on short-term Fund on an ongoing basis.
The distinguishing feature of Duff & Phelps Credit Ratings' short-term ratings
is the refinement of the traditional "1' category. The majority of short-term
debt issuers carry the highest rating, yet quality differences exist within
that tier. As a consequence, Duff & Phelps Credit Rating has incorporated gra-
dations of "1+' (one plus) and "1-' (one minus) to assist investors in recog-
nizing those differences.
These ratings are recognized by the SEC for broker-dealer requirements, spe-
cifically capital computation guidelines. These ratings meet Department of La-
bor ERISA guidelines governing pension and profit sharing investments. State
regulators also recognize the ratings of Duff & Phelps Credit Rating for in-
surance company investment portfolios.
Rating ScaleDefinition
High Grade
D-1+ Highest certainty of timely payment. Short-term liquidity, includ-
ing internal operating factors and/or access to alternative
sources of Fund, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are ex-
cellent and supported by good fundamental protection factors. Risk
factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.
Good Grade
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
Satisfactory Grade
D-3
Satisfactory liquidity and other protection factors qualify issue
as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
Non-investment Grade
D-4
Speculative investment characteristics. Liquidity is not suffi-
cient to insured against disruption in debt service. Operating
factors and market access may be subject to a high degree of vari-
ation.
Default
D-5
Issuer failed to meet scheduled principal and/or interest pay-
ments.
A-9
<PAGE>
Fitch IBCA, Inc.--A brief description of the applicable Fitch IBCA, Inc.
("Fitch") ratings symbols and meanings (as published by Fitch) follows:
Long Term Debt
Fitch investment grade bond ratings provide a guide to investors in determining
the credit risk associated with a particular security. The ratings represent
Fitch's assessment of the issuer's ability to meet the obligations of a spe-
cific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its rela-
tionship to other obligations of the issuer, the current and prospective finan-
cial condition and operating performance of the issuer and any guarantor, as
well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by in-
surance policies or financial guaranties unless otherwise indicated.
Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories do not fully reflect small differ-
ences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell, or hold any security. Rat-
ings do not comment on the adequacy of market price, the suitability of any se-
curity for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors,
underwriters, their experts, and other sources Fitch believes to be reliable.
Fitch does not audit or verify the truth or accuracy of such information. Rat-
ings may be changed, suspended, or withdrawn as a result of changes in, or the
unavailability of, information or for other reasons.
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA'.
Because bonds rated in the "AAA' and "AA' categories are not sig-
nificantly vulnerable to foreseeable future developments, short-
term debt of the issuers is generally rated "F-1+'.
A
Bonds considered to be investment grade and of high credit quali-
ty. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB
Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic condi-
tions and circumstances, however, are more likely to have
A-10
<PAGE>
adverse impact on these bonds and, therefore, impair timely pay-
ment. The likelihood that the ratings of these bonds will fall be-
low investment grade is higher than for bonds with higher ratings.
Fitch speculative grade bond ratings provide a guide to investors in determin-
ing the credit risk associated with a particular security. The ratings ("BB'
to "C') represent Fitch's assessment of the likelihood of timely payment of
principal and interest in accordance with the terms of obligation for bond is-
sues not in default. For defaulted bonds, the rating ("DDD' to "D') is an as-
sessment of the ultimate recovery value through reorganization or liquidation.
The rating takes into consideration special features of the issue, its rela-
tionship to other obligations of the issuer, the current and prospective fi-
nancial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the is-
suer's future financial strength.
Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories cannot fully reflect the differ-
ences in the degrees of credit risk.
BB Bonds are considered speculative. The obligor's ability to pay in-
terest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its
debt service requirements.
B Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability
of continued timely payment of principal and interest reflects the
obligor's limited margin of safety and the need for reasonable
business and economic activity throughout the life of the issue.
CCC Bonds have certain identifiable characteristics which, if not rem-
edied, may lead to default. The ability to meet obligations re-
quires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds are in imminent default in payment of interest or principal.
DDD, DD
and D Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis
of their ultimate recovery value in liquidation or reorganization
of the obligor. "DDD' represents the highest potential for recov-
ery of these bonds, and "D' represents the lowest potential for
recovery.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on de-
mand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and investment notes.
A-11
<PAGE>
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
F-1+ Exceptionally Strong Credit Quality Issues assigned this rating
are regarded as having the strongest degree of assurance for
timely payment.
F-1 Very Strong Credit Quality Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than is-
sues rated "F-1+'.
F-2 Good Credit Quality Issues assigned this rating have a satisfac-
tory degree of assurance for timely payment but the margin of
safety is not as great as for issues assigned "F-1+' and "F-1'
ratings.
F-3 Fair Credit Quality Issues assigned this rating have characteris-
tics suggesting that the degree of assurance for timely payment is
adequate; however, near-term adverse changes could cause these se-
curities to be rated below investment grade.
A-12
<PAGE>
EAI-EUR 10-99
<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
<PAGE>
PART C--OTHER INFORMATION
Item 23: Exhibits:
<TABLE>
<C> <S> <C>
(a)(1). Declaration of Trust of Registrant.(1)
(a)(2). Certificate for the Establishment and Designation of Series and
Classes for the Nuveen Growth and Income Stock Fund, the Nuveen
Balanced Stock and Bond Fund, and Nuveen Balanced Municipal and
Stock Fund, dated June 20, 1996.(3)
(a)(3). Certificate for the Establishment and Designation of Series for
the Nuveen European Value Fund, dated May 27, 1998.(10)
(b)(1). By-Laws of Registrant.(1)
(b)(2). Amendment to By-Laws of Registrant.(15)
(c). Specimen certificate of Shares of each Fund.(3)
(d)(1). Management Agreement between Registrant and Nuveen
Institutional Advisory Corp. on behalf of Nuveen Growth and
Income Stock Fund, Nuveen Balanced Stock and Bond Fund, and
Nuveen Balanced Municipal and Stock Fund.(6)
(d)(2). Sub-Advisory Agreement between Nuveen Institutional Advisory
Corp. and Institutional Capital Corporation on behalf of Nuveen
Growth and Income Stock Fund, Nuveen Balanced Stock and Bond
Fund, and Nuveen Balanced Municipal and Stock Fund.(6)
(d)(3). Renewal of Investment Management Agreement dated May 22,
1999.(15)
(d)(4). Form of Amended Schedule A to Management Agreement between
Registrant and Nuveen Institutional Advisory Corp.(10)
(d)(5). Form of Amended Schedule A to Sub-Advisory Agreement between
Nuveen Institutional Advisory Corp. and Institutional Capital
Corporation.(10)
(d)(6). Form of Amended Schedule B to Management Agreement between
Registrant and Nuveen Institutional Advisory Corp.(10)
(d)(7). Form of Addendum to Investment Sub-Advisory Agreement between
Nuveen Institutional Advisory Corp. and Institutional Capital
Corporation.(10)
(e)(1). Distribution Agreement between Registrant and John Nuveen & Co.
Incorporated dated August 1, 1998.(11)
(e)(2). Renewal of Distribution Agreement between Registrant and John
Nuveen & Co. Incorporated.(15)
(e)(3). Dealer Management Agreement dated October 22, 1996.(4)
(f). Not applicable.
(g)(1). Custodian Agreement between Registrant and The Chase Manhattan
Bank.(7)
(g)(2). Global Custody Agreement between Registrant and The Chase
Manhattan Bank dated July 21, 1998.(13)
(h)(1). Form of Subscription Agency Agreement between Registrant and
The Chase Manhattan Bank.(4)
(h)(2). Transfer Agency Agreement between Registrant and Chase Global
Funds Services Company.(11)
(i)(1). Opinion and consent of Chapman and Cutler, dated July 30,
1996.(3)
(i)(2). Opinion and consent of Bingham, Dana & Gould, dated July 30,
1996.(3)
(i)(3). Opinion and consent of Vedder, Price, Kaufman & Kammholz, dated
May 28, 1998.(10)
(i)(4). Opinion and consent of Bingham Dana LLP dated May 28, 1998.(10)
(i)(5). Opinion and consent of Chapman and Cutler, dated October 28,
1999.(16)
(j). Consent of Independent Public Accountants.(16)
(k). Not applicable.
(l). Subscription Agreement with Nuveen Institutional Advisory
Corp.(7)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S> <C>
(m)(1). Plan of Distribution and Service Pursuant to Rule 12b-1 for the
Class A Shares, Class B Shares and Class C Shares of each
Fund.(3)
(m)(2). Amendment to Plan of Distribution and Service Pursuant to Rule
12b-1.(11)
(n). Not applicable
(o). Multi-Class Plan.(4)
(z)(1). Original Powers of Attorney for Messrs. Schwertfeger, Dean,
Leafstrand, Bacon, Kissick, Lyon, and Ms. Wellington, Trustees,
authorizing, among others, Larry W. Martin and Gifford R.
Zimmerman to execute the Registration Statement.(6)
(z)(2). Code of Ethic and Reporting Requirements.(7)
(z)(3). Original Power of Attorney for Jack B. Evans, Trustee,
authorizing, among others, Alan G. Berkshire, Larry W. Martin
and Gifford R. Zimmerman to execute the Registration
Statement.(14)
</TABLE>
- --------
(1) Incorporated by reference to the initial registration statement filed on
Form N-1A for Registrant.
(2) Incorporated by reference to the pre-effective amendment no. 1 filed on
Form N-1A for Registrant.
(3) Incorporated by reference to the pre-effective amendment no. 2 filed on
Form N-1A for Registrant.
(4) Incorporated by reference to the post-effective amendment no. 1 filed on
Form N-1A for Registrant.
(5) Incorporated by reference to the post-effective amendment no. 2 filed on
Form N-1A for Registrant.
(6) Incorporated by reference to the post-effective amendment no. 3 filed on
Form N-1A for Registrant.
(7) Incorporated by reference to the post-effective amendment no. 4 filed on
Form N-1A for Registrant.
(8) Incorporated by reference to the post-effective amendment no. 5 filed on
Form N-1A for Registrant.
(9) Incorporated by reference to the post-effective amendment no. 6 filed on
Form N-1A for Registrant.
(10) Incorporated by reference to the post-effective amendment no. 12 filed on
Form N-1A for Registrant.
(11) Incorporated by reference to the post-effective amendment no. 13 filed on
Form N-1A for Registrant.
(12) Incorporated by reference to the post-effective amendment no. 14 filed on
Form N-1A for Registrant.
(13) Incorporated by reference to the post-effective amendment no. 15 filed on
Form N-1A for Registrant.
(14) Incorporated by reference to the post-effective amendment no. 16 filed on
Form N-1A for Registrant.
(15) Incorporated by reference to the post-effective amendment no. 17 filed on
Form N-1A for Registrant.
(16) Filed herewith.
Item 24: Persons Controlled by or under Common Control with Fund.
Not applicable.
Item 25: Indemnification
Section 4 of Article XII of Registrant's Declaration of Trust provides as fol-
lows:
Subject to the exceptions and limitations contained in this Section 4, every
person who is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors, trustees,
officers, employees or agents of another organization in which the Trust has an
interest as a shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person"), shall be indemnified by the Trust to the fullest extent per-
mitted by law against liability and against all expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been such a Trustee, director, officer, employee or agent and against amounts
paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross negli-
gence or reckless disregard of the duties involved in the conduct of his
office;
(b) with respect to any matter as to which he shall have been finally adju-
dicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust; or
II-2
<PAGE>
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a pay-
ment by a Covered Person, unless there has been either a determination that
such Covered Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office by the court or other body approving the settlement or other
disposition or a reasonable determination, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that he did not
engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in of-
fice act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by poli-
cies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall con-
tinue as to a person who has ceased to be such a Covered Person and shall inure
to the benefit of the heirs, executors and administrators of such a person.
Nothing contained herein shall affect any rights to indemnification to which
Trust personnel other than Covered Persons may be entitled by contract or oth-
erwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section 4
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it
is ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any
such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient ul-
timately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an
Interested Person of the Trust (including, as such Disinterested Trustee, any-
one who has been exempted from being an Interested Person by any rule, regula-
tion or order of the Commission), and (y) against whom none of such actions,
suits or other proceedings or another action, suit or other proceeding on the
same or similar grounds is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal, admin-
istrative or other, including appeals), actual or threatened; and the word "li-
ability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other lia-
bilities.
----------------
The trustees and officers of the Registrant are covered by Investment Trust Er-
rors and Omission policies in the aggregate amount of $20,000,000 (with a maxi-
mum deductible of $500,000) against liability and expenses of claims of wrong-
ful acts arising out of their position with the Registrant, except for matters
which involved willful acts, bad faith, gross negligence and willful disregard
of duty (i.e., where the insured did not act in good faith for a purpose he or
she reasonably believed to be in the best interest of Registrant or where he or
she shall have had reasonable cause to believe this conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, trustees or controlling persons of the
Registrant pursuant to the Declaration of Trust of the Registrant or otherwise,
the Registrant has been advised that in the opinion of the Securities and Ex-
change Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indem-
nification against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by an officer or trustee or controlling person of
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such officer, trustee or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
Item 26: Business and Other Connections of Investment Adviser
(a) Nuveen Institutional Advisory Corp. ("NIAC") manages the Registrant and
serves as investment adviser or manager to other open-end and closed-end man-
agement investment companies and to separately managed accounts. The principal
business address for all of these investment companies is 333 West Wacker
Drive, Chicago, Illinois 60606.
A description of any other business, profession, vocation or employment of a
substantial nature in which the directors and officers of NIAC who serve as of-
ficers or Trustees of the Registrant have engaged during the last two years for
his or her account or in the capacity of director, officer, employee, partner
or trustee appears under "Management" in the Statement of Additional Informa-
tion. Such information for the remaining senior officers of NIAC appears below:
<TABLE>
<CAPTION>
Other Business, Profession, Vocation or
Name and Position with NIAC Employment During Past Two Years
--------------------------- ---------------------------------------
<C> <S>
John P. Amboian, Executive Vice President..... Executive Vice President and Secretary of The
John Nuveen Company; Executive Vice President of
John Nuveen & Co. Incorporated, Nuveen Advisory
Corp. and Nuveen Asset Management, Inc. and
Executive Vice President and Director of
Rittenhouse Financial Services, Inc.
Michael S. Davern, Vice President............. Vice President of Nuveen Advisory Corp. (since
January 1997); prior thereto, Vice President and
Portfolio Manager of Flagship Financial
Richard A. Huber, Vice President.............. Vice President of Nuveen Advisory Corp. (since
January 1997); prior thereto, Vice President and
Portfolio Manager of Flagship Financial
Thomas C. Spalding, Vice President............ Vice President of Nuveen Advisory Corp.
Margaret E. Wilson, Vice President and Con- Vice President and Controller of The John Nuveen
troller...................................... Company, John Nuveen & Co. Incorporated and
Nuveen Advisory Corp.
</TABLE>
(b) Institutional Capital Corporation (Institutional Capital) acts as invest-
ment adviser to the ICAP Funds, Inc. and as sub-investment adviser to the Reg-
istrant. In addition, Institutional Capital serves as investment adviser to
separately managed accounts.
A description of any other business, profession, vocation, or employment of a
substantial nature in which Robert H. Lyon, President, Chief Investment Officer
and a Director of Institutional Capital, is or has been, at any time during the
last two fiscal years, engaged for his own account or in the capacity of direc-
tor, officer, employee, partner, or trustee appears under "Management" in the
Statement of Additional Information. Such information for the remaining senior
officers of Institutional Capital appears below. The principal business address
for each person is 225 West Wacker Drive, Chicago, Illinois 60606.
<TABLE>
<CAPTION>
Other Business, Profession,
Positions and Offices with Vocation, or
Name Institutional Capital Employment During Past Two Years
- ---- ------------------------------------- ------------------------------------
<S> <C> <C>
Pamela H. Conroy........ Senior Vice President and Director Vice President, Treasurer, and a
Director of the ICAP Funds, Inc.
(since its inception in December
1994).
Donald D. Niemann....... Executive Vice President and Director Vice President and Secretary of ICAP
Funds, Inc. (since its inception in
December 1994) and a Director (since
July 1995).
Gary S. Maurer.......... Executive Vice President and Director Director of ICAP Funds, Inc. (since
its inception in December 1994).
Barbara C. Schanmier.... Senior Vice President and Director Director of ICAP Funds, Inc. (since
its inception in December 1994).
</TABLE>
II-4
<PAGE>
Item 27: Principal Underwriters
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Flagship
Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen Flagship
Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen Flagship Mu-
nicipal Trust, Nuveen Money Market Trust, Nuveen Municipal Money Market Fund,
Inc., Nuveen Taxable Funds Inc., Nuveen Investment Trust II, III and IV and
the Registrant. Nuveen also acts as depositor and principal underwriter of the
Nuveen Tax-Free Unit Trust and the Nuveen Unit Trust, registered unit invest-
ment trusts. Nuveen has also served or is serving as co-managing underwriter
to the following closed-end management type investment companies: Nuveen Mu-
nicipal Value Fund, Inc., Nuveen California Municipal Value Fund, Inc., Nuveen
New York Municipal Value Fund, Inc., Nuveen Municipal Income Fund, Inc.,
Nuveen Premium Income Municipal Fund, Inc., Nuveen Performance Plus Municipal
Fund, Inc., Nuveen California Performance Plus Municipal Fund, Inc., Nuveen
New York Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage
Fund, Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California
Municipal Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal
Fund, Inc., Nuveen California Investment Quality Municipal Fund, Inc., Nuveen
New York Investment Quality Municipal Fund, Inc., Nuveen Insured Quality Mu-
nicipal Fund, Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen
New Jersey Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania In-
vestment Quality Municipal Fund, Nuveen Select Quality Municipal Fund, Inc.,
Nuveen California Select Quality Municipal Fund, Inc., Nuveen New York Select
Quality Municipal Fund, Inc., Nuveen Quality Income Municipal Fund, Inc.,
Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen Florida Quality Income
Municipal Fund, Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen
Ohio Quality Income Municipal Fund, Inc., Nuveen Texas Quality Income Munici-
pal Fund, Nuveen California Quality Income Municipal Fund, Inc., Nuveen New
York Quality Income Municipal Fund, Inc., Nuveen Premier Municipal Income
Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc., Nuveen Premium
Income Municipal Fund 2, Inc., Nuveen Insured California Premium Income Munic-
ipal Fund, Inc., Nuveen Insured New York Premium Income Municipal Fund, Inc.,
Nuveen Select Maturities Municipal Fund, Nuveen Arizona Premium Income Munici-
pal Fund, Inc., Nuveen Insured Florida Premium Income Municipal Fund, Nuveen
Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey Premium Income
Municipal Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen In-
sured California Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania
Premium Income Municipal Fund 2, Nuveen Maryland Premium Income Municipal
Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen Virginia Pre-
mium Income Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund,
Nuveen Georgia Premium Income Municipal Fund, Nuveen Missouri Premium Income
Municipal Fund, Nuveen North Carolina Premium Income Municipal Fund, Nuveen
California Premium Income Municipal Fund, Nuveen Insured Premium Income Munic-
ipal Fund 2, Nuveen Select Tax-Free Income Portfolio, Nuveen Select Tax-Free
Income Portfolio 2, Nuveen Insured California Select Tax-Free Income Portfo-
lio, Nuveen Insured New York Select Tax-Free Income Portfolio, Nuveen Select
Tax-Free Income Portfolio 3, Nuveen Dividend Advantage Municipal Fund, Nuveen
California Dividend Advantage Municipal Fund and Nuveen New York Dividend Ad-
vantage Municipal Fund.
(b)
<TABLE>
<CAPTION>
Positions and
Name and Principal Positions and Offices Offices with
Business Address with Underwriter Registrant
- ----------------------------------------------------------------------------------
<S> <C> <C>
Timothy R. Schwertfeger Chairman of the Board, Chairman and Trustee
333 West Wacker Drive Chief Executive Officer,
Chicago, IL 60606 and Director
John P. Amboian President and Director None
333 West Wacker Drive
Chicago, IL 60606
William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Positions and
Name and Principal Positions and Offices Offices with
Business Address with Underwriter Registrant
- ----------------------------------------------------------------------------------
<S> <C> <C>
Alan G. Berkshire Senior Vice President Vice President and
333 West Wacker Drive and Secretary Assistant Secretary
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President Vice President and
333 West Wacker Drive Controller
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President None
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President Vice President
333 West Wacker Drive and Assistant and Assistant
Chicago, IL 60606 Secretary Secretary
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Margaret E. Wilson Vice President None
333 West Wacker Drive and Corporate
Chicago, IL 60606 Controller
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Secretary
Chicago, IL 60606
</TABLE>
(c) Not applicable.
Item 28: Location of Accounts and Records
Nuveen Institutional Advisory Corp., 333 West Wacker Drive, Chicago, Illinois
60606, maintains the Declaration of Trust, By-Laws, minutes of trustees and
shareholder meetings and contracts of the Registrant and all advisory material
of the investment adviser.
The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004-2413,
maintains all general and subsidiary ledgers, journals, trial balances, records
of all portfolio purchases and sales, and all other required records not main-
tained by Nuveen Institutional Advisory Corp., or Chase Global Fund Services
Company.
II-6
<PAGE>
Chase Global Funds Services Company, 73 Tremont Street, Boston, MA 02108, main-
tains all the required records in its capacity as transfer, dividend paying,
and shareholder service agent for the Registrant.
Item 29: Management Services
Not applicable.
Item 30: Undertakings
(a)Not applicable.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment Company
Act, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement under Rule 485(b) under the
Securities Act and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, duly authorized, in the City of Chicago, and
State of Illinois, on the 28th day of October, 1999.
NUVEEN INVESTMENT TRUST
/s/ Gifford R. Zimmerman
__________________________________________
Gifford R. Zimmerman
Vice President
Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Stephen D. Foy Vice President and October 28, 1999
________________________________ Controller (Principal
Stephen D. Foy Financial and
Accounting Officer)
Timothy R. Schwertfeger Chairman,
President and Trustee
Robert H. Lyon Trustee
Thomas E. Leafstrand Trustee /s/ Gifford R. Zimmerman
By_________________________
Gifford R. Zimmerman
James E. Bacon Trustee Attorney-in-Fact
Jack B. Evans Trustee
William L. Kissick Trustee
Sheila W. Wellington Trustee October 28, 1999
</TABLE>
An original power of attorney authorizing, among others, Larry W. Martin and
Gifford R. Zimmerman to execute this Registration Statement, and Amendments
thereto, for each of the trustees of Registrant on whose behalf this
Registration Statement is filed, has been executed and filed with the
Securities and Exchange Commission.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Exhibit Numbered Page
------- ------- -------------
<C> <S> <C>
(j) Consent of Independent Public Accountants.
(i)(5) Opinion and Consent of Chapman and Cutler, dated
October 28, 1999.
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
dated August 20, 1999, and to all references to our Firm included in or made a
part of this registration statement of Nuveen Investment Trust (comprised of the
Nuveen European Value Fund).
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 25, 1999
<PAGE>
Exhibit(i)(5)
Chapman and Cutler Opinion
October 28, 1999
Nuveen Investment Trust
333 West Wacker Drive
Chicago, Illinois 60606-1286
Re: Nuveen Investment Trust
-----------------------
Gentlemen:
We have served as counsel for the Nuveen Investment Trust (the "Fund"),
which proposes to offer and sell shares of various classes of its series, the
Nuveen Growth and Income Stock Fund, Nuveen Balanced Municipal and Stock Fund,
Nuveen Balanced Stock and Bond Fund and Nuveen European Value Fund
(collectively, the "Shares") in the manner and on the terms set forth in Post-
Effective Amendments No. 17 and 18 to its Registration Statement on Form N-1A to
be filed on or about October 28, 1999 (the "Amendments") with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended.
In connection therewith, we have examined such pertinent records and
documents and matters of law, including the opinions of Bingham, Dana & Gould
LLP upon which we have relied as they relate to the laws of the Commonwealth of
Massachusetts, as we have deemed necessary in order to enable us to express the
opinion hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
The Shares of the Fund may be legally and validly issued from time to
time in accordance with the Fund's Declaration of Trust dated May 6, 1996,
the Fund's By-Laws, the Fund's Certificates for the Establishment and
Designation of Series and/or Classes, and subject to compliance with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and applicable state laws regulating the sale of securities and
the receipt by the Fund of a purchase price of not less than the net asset
value per share and such Shares, when so issued and sold, will be legally
issued and outstanding, fully paid and non-assessable, except that, as set
forth in the Amendments, shareholders of the Fund may under certain
circumstances be held personally liable for its obligations.
<PAGE>
Nuveen Investment Trust
October 28, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-03715) relating to the Shares referred to
above, to the use of our name and to the reference to our firm in said
Registration Statement.
Respectfully submitted,
Chapman and Cutler
