<PAGE>
Nuveen Investments
--------------------------------------------------------------------------------
Growth and
Income Funds
----------------------------------------------------
ANNUAL REPORT JUNE 30, 2000
--------------------------------------------------------------------------------
Four different balanced funds for investors seeking the right mixture of current
income, growth potential and preservation of capital.
--------------------------------------------------------------------------------
INVEST WELL
LOOK AHEAD
LEAVE YOUR MARK/SM/
[PHOTOS APPEAR HERE]
Nuveen Growth and Income Stock Fund
Nuveen Balanced Municipal and Stock Fund
Nuveen Balanced Stock and Bond Fund
Nuveen European Value Fund
<PAGE>
Contents
1 Dear Shareholder
3 Nuveen Growth and Income Stock Fund
7 Nuveen Balanced Municipal and Stock Fund
11 Nuveen Balanced Stock and Bond Fund
16 Nuveen European Value Fund
20 Portfolio of Investments
33 Statement of Net Assets
34 Statement of Operations
35 Statement of Changes in Net Assets
37 Notes to Financial Statements
44 Financial Highlights
48 Report of Independent Public Accountants
49 Fund Information
<PAGE>
DEAR
Shareholder,
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
"At Nuveen Investments, we think of family wealth management as the map to help
you reach your financial, and your life's, destinations."
As personal wealth continues to grow at an ever-increasing rate, people are
realizing the power of their investments to do good and to make a difference in
their families and communities now and for generations to come.
Setting financial goals is an important first step toward building wealth. At
Nuveen Investments, we believe those goals should not be considered ends in
themselves. Rather, you and your financial advisor's focus should be on
realizing your life's dreams -- the things that matter most to you and how you
can make them happen -- or make them better.
Through a well-crafted financial plan, you have the chance to shape future
generations -- to broaden your sphere of influence -- to leave your legacy.
As you develop that plan, you'll want to consider the different ways your
success can benefit others. You may find that you want to create a new set of
goals to achieve this. Working with your financial advisor, you have the ability
to make those dreams a reality -- for yourself and future generations.
Family Wealth Management Too often, family wealth management is thought of in
one dimension -- as the stewardship of your household's financial resources. At
Nuveen Investments, we think of family wealth management as the map to help you
reach your financial, and your life's, destinations. It's a multi-faceted
strategy to plan for not just your needs, but the needs of future generations.
We are dedicated to helping you and your financial advisor develop a family
wealth management strategy unique to you and your goals and values.
A Trusted Resource As you face some of the most important, lasting decisions you
and your family will make, you'll want to draw upon the support, counsel and
objectivity of a trusted advisor. That's because your financial advisor has the
expertise and access to other professionals who can help you make informed
choices -- choices that affect not only your loved ones today, but those your
legacy will touch in the future.
Your financial advisor can provide sound financial insight, an integrated
approach to your investments and can serve as a knowledgeable friend with your
family's best interests at heart.
Annual Report page 1
<PAGE>
"We believe the potential presence of inflation and price swings in the markets
reinforce the importance of working with an advisor, staying focused on the
long-term and adhering to your financial plan."
In addition, we believe the potential presence of inflation and price
swings in the markets reinforce the importance of working with an advisor,
staying focused on the long term and adhering to your financial plan. With a
sound plan in place, you may be better positioned to weather the markets' ups
and downs.
In fact, you may be reading this report at the suggestion of your financial
advisor. We've prepared the following interview to let you know what the
investment and research management teams have done during your fund's fiscal
period.
For more information on any Nuveen investment, including a prospectus,
contact your financial advisor. Or call Nuveen at (800) 621-7227 or visit our
Internet 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. We are committed to maintaining that reputation and working with
financial advisors to provide investment solutions that help individuals achieve
their dreams of a lifetime. Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
August 18, 2000
Annual Report page 2
<PAGE>
NUVEEN GROWTH AND INCOME STOCK FUND
From the Portfolio Manager's Perspective
--------------------------------------------------------------------------------
Nuveen Growth and Income Stock Fund features portfolio management by
Institutional Capital Corporation (ICAP), which specializes in large
capitalization equities. The market environment during the fund's fiscal year
ended June 30, 2000, displayed volatility levels not seen in years. To help you
understand the fund's performance during this period, we spoke with Rob Lyon,
president and chief investment officer of ICAP, the subadvisor of the fund.
Q The technology stock fever of 1999 culminated in a stunning correction in
the technology-heavy Nasdaq in the first half of 2000, accompanied by losses in
other stock indices. Meanwhile, the Federal Reserve (the Fed) continued to raise
interest rates in an effort to put the brakes on economic growth and stymie
inflation. What do you think was the psychological effect on investors, and how
did the fund react to these changing conditions?
ROB There was a marked difference in sentiment between the second half of 1999
and the first half of 2000. Those invested in the market learned an important
lesson -- company earnings do matter, even in the so-called "new economy."
Baseless stock price run-ups of profitless companies cannot continue
unchecked for long periods -- there is simply nothing to stand on. Although both
new economy and old economy stocks declined from their highs in the market rout
of 2000, the technology stocks of the new economy were punished more severely.
The S&P 500 Index,* generally made up of "old economy" stocks, was down 0.42% in
the first six months of the year, compared with the tech-heavy Nasdaq Composite
Index,* which was down 2.54% for the same period.
Within this volatile setting, the fund reported a total return of -5.33%
for the year ended June 30, 2000, compared to the Lipper Large-Cap Value Index,
which reported a total return of -2.38%/1/ and the S&P/Barra Value Index's
-5.11%/2/ for the same time period.
Q During short periods throughout the fiscal year, value stocks strongly
outperformed growth stocks. But the market ultimately gyrated back to growth
stocks, which outdistanced value for the year. What happened?
ROB Value stocks showed definite promise during the fund's fiscal year. The
wide variances in sector performance, the result of the Fed's interest rate
policy, were mostly to blame for the inability of value stocks to consistently
stay in favor.
As the Fed raised interest rates, value stocks returned to favor. However,
the perceived slowdown in the economy -- the result of the Fed's moves
-- brought growth stocks back from their precipitous decline.
For the fund's fiscal year, technology stocks dwarfed performance in
traditionally value-oriented sectors such as consumer cyclicals and basic
materials. I point to the tech-heavy Nasdaq Composite Index's gain of 47.96% for
the 12 months of the fund's
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within its specific
areas of expertise. Nuveen has chosen them for their rigorously disciplined
investment approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's subadvisor for value investing, Institutional Capital Corporation
(ICAP), is a highly successful institutional money manager with nearly 30 years
of experience. These professionals specialize in finding undervalued midsize and
large company stocks that are poised for significant growth.
This disciplined, research-oriented approach is the key investment strategy for
Nuveen Growth and Income Stock Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the funds fiscal year ended June 30, 2000. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
*The S&P 500 Index is an unmanaged index generally considered representative of
the U.S. stock market. The Nasdaq Composite Index is an unmanaged index that
measures the more than 5,000 companies listed on the Nasdaq Stock Market, Inc.
Indices are not available for direct investment.
/1/The Lipper Index return represent the average annualized total return of the
30 largest funds in the Lipper Large-Cap Value Funds category for the year
ended June 30, 2000. The returns assume reinvestment of dividends and do not
reflect any applicable sales charges.
/2/The S&P/Barra Value Index consists of the "value" half of the S&P 500 Index.
In this capitalization-weighted index, firms have higher book-to-price
ratios and are generally slower growing firms with less potential for
appreciation but lower volatility (relative to the "growth" half). The index
is not available for direct investment.
Annual Report page 3
<PAGE>
fiscal year, compared to the S&P/Barra Value Index (which is heavily weighted in
consumer cyclicals and basic materials), which reported a -5.11% return for the
period.
Remember that the market has been very concentrated: a large proportion of
the returns -- and losses -- of the S&P 500 has been due to select technology
stocks in the index.
Despite the challenges of the last year, we remain confident that the
fund's focus on strong companies with a catalyst unrecognized by the general
market (that may trigger a rise in the stocks' prices) is a careful means of
unlocking potential price appreciation. This investment process does not lock
the fund out of the new economy.
Q It would seem that finding technology stocks -- the essence of this new
economy -- to add to the portfolio would be a challenge for a value manager. It
is an extremely expensive sector by most measures, even after accounting for the
recent correction. How do you identify technology stocks for this fund?
ROB The fund's value approach does exclude many overpriced technology stocks
from the fund. But there are many names even in this expensive sector that fit
well within the premise of the fund. Not every technology name is a high-flying
Internet startup.
First, we found a number of attractively priced companies that have
profited from the infrastructure needs of the new economy. Examples include
Motorola, IBM and Vodafone.
Second, even within out-of-favor so-called old economy sectors, we
discovered attractive companies using new technologies to significantly enhance
their operations. In fact, this turned out to be one of the themes we followed
for the fund over the last year. Companies capitalizing on the emergence of new
applications for phone and cable equipment are perfect examples.
There were also companies with embedded new economy businesses that we
believed would be very highly valued if they were stand-alone entities. Some
examples of companies that fit that profile were News Corp. -- a media company
that owns British Sky Broadcasting, a leader in satellite and cable operations
-- and General Motors, which owns a controlling stake in Hughes Electronics.
With the valuation disparities between new economy and old economy stocks,
we think this theme has been an opportune way for the fund to participate in the
new economy without buying in at extremely high prices.
"We found a number of attractively priced companies that have profited from the
infrastructure needs of the new economy. Examples include Motorola, IBM and
Vodafone."
NUVEEN GROWTH AND INCOME STOCK FUND
Top Ten Stock Holdings
----------------------------------------------------
Philips Electronics NV 4.5%
----------------------------------------------------
Bell Atlantic Corporation 3.3%
----------------------------------------------------
Ford Motor Company 3.2%
----------------------------------------------------
General Motors Corporation 3.0%
----------------------------------------------------
AT&T Corp. 3.0%
----------------------------------------------------
Texaco Inc. 3.0%
----------------------------------------------------
Citigroup Inc. 2.9%
----------------------------------------------------
International Business Machines Corporation 2.9%
----------------------------------------------------
Exxon Mobil Corporation 2.9%
----------------------------------------------------
The News Corporation Limited Sponsored ADR 2.8%
----------------------------------------------------
As a percentage of total stock holdings as of June 30, 2000. Holdings are
subject to change.
Annual Report page 4
<PAGE>
Q Were there any other themes you followed during the year?
ROB We continued to follow our financial restructurings theme, which worked
very well. Companies like MetLife, one of the largest life insurance companies
in the U.S., fit this criterion. MetLife is the leading provider of group
insurance and employee benefits in the U.S., and serves the group life
insurance needs of 86 of the Fortune 100 companies.
The company went public on April 4th and exemplifies a classic financial
restructuring play as it improved profitability from expense reductions.
Philips Electronics continued to play out as a strong restructuring story
and was the fund's largest holding at fiscal year-end.
We discontinued the global revival theme as the worldwide expansion showed
signs of slowing in the near term, the result of the Fed's and other world
central banks' interest rate increases. Portfolio strategy now reflects the view
that constraints on the economy and the markets should make individual stock
selection, rather than sector weighting, the key to performance.
Q What other sectors were noteworthy?
ROB The fund benefited from its energy holdings, particularly oil, which had
gone from $12.50 per barrel to well over $30, then back down to the high $20s in
the last year. We reduced exposure to the energy sector, including holdings in
Conoco, USX-Marathon Group, Exxon Mobil and Texaco as oil prices peaked.
Healthcare also made an impressive comeback. The technology roller coaster
drove investors to seek sectors with strong, steady earnings, and healthcare
was a major beneficiary. Pharmacia Corp. and Abbott Laboratories were
beneficiaries as the sector heartily outperformed even technology in the first
half of 2000. The fund, at June 30, 2000, held 10.4% of its portfolio in
healthcare stocks.
Q With the possibility of more Fed interest rate hikes and market volatility,
what is your outlook for the fund for the coming months?
ROB The volatility we've seen in the markets, and the wild swings in
performance from one sector to another, should continue to provide opportunities
to buy and sell positions using the fund's disciplined value approach.
The market correction and retrenchment was a good thing, in our opinion. We
think the market will be able to refocus on cyclical and value-oriented stocks,
and we will continue to concentrate on those that are selling at reasonable
prices and that exhibit a catalyst for a turnaround.
We expect the combination of solid economic growth and continued upward
pressure on wages and inflation ultimately will prompt some further tightening
policy by the Fed over the balance of the year.
We believe that this is a much better scenario than trying to spur growth
in a recession. Company earnings reports continued to impress and beat Wall
Street's expectations, and business has been robust across many sectors. This
should be a flourishing environment for the fund going into the next fiscal
period.
"The volatility we've seen in the markets, and the wild swings in
performance from one sector to another, should continue to provide opportunities
to buy and sell positions using the fund's disciplined value approach."
NUVEEN GROWTH AND INCOME STOCK FUND
<TABLE>
<CAPTION>
Top Five Sectors
-----------------------------------------
<S> <C>
Consumer Cyclicals 19.2%
-----------------------------------------
Financials 16.7%
-----------------------------------------
Utilities 14.1%
-----------------------------------------
Consumer Staples 10.9%
-----------------------------------------
Technology 10.7%
-----------------------------------------
</TABLE>
As a percentage of total portfolio holdings as of June 30, 2000. Holdings are
subject to change
Annual Report page 5
<PAGE>
NUVEEN GROWTH AND INCOME STOCK FUND
Fund Spotlight as of June 30, 2000
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $24.35 $24.17 $24.13 $24.41
------------------------------------------------------------------
Fund Symbol NNGAX NNGBX NNGCX N/A
------------------------------------------------------------------
CUSIP 67064Y503 67064Y602 67064Y701 67064Y800
------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
------------------------------------------------------------------
</TABLE>
Total Returns as of 6/30/00 (Annualized)+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer w/o CDSC w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year -5.33% -10.77% -5.97% -9.57% -5.97% -5.13%
---------------------------------------------------------------------------------
3-Year 8.96% 6.83% 8.17% 7.31% 8.17% 9.24%
---------------------------------------------------------------------------------
Since inception 15.67% 13.92% 14.82% 14.30% 14.79% 15.97%
---------------------------------------------------------------------------------
</TABLE>
+Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% maximum sales charge. Class B shares have
a CDSC that begins at 5% for redemptions during the first year after purchase
and declines periodically to 0% over the following six years. Class B shares
convert to Class A shares after eight years. Class C shares have a 1% CDSC for
redemptions within one year, which is not reflected in the total return
figures.
Index Comparison [_]
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Growth Nuveen Growth S&P S&P/Barra
and Income Stock and Income Stock 500 Value
Fund (Offer) Fund (NAV) Index Index
<S> <C> <C> <C> <C>
8/1996 $ 9,425 $10,000 $10,000 $10,000
6/1997 $12,834 $13,617 $13,799 $13,299
6/1998 $15,603 $16,555 $17,959 $16,638
6/1999 $17,535 $18,605 $22,047 $19,390
6/2000 $16,602 $17,615 $23,644 $18,398
</TABLE>
----- Nuveen Growth and Income Stock Fund (Offer) $16,602
----- Nuveen Growth and Income Stock Fund (NAV) $17,615
----- S&P 500 Index $23,644
----- S&P/Barra Value Index $18,398
[_] The Index comparison shows the change in value of a $10,000 investment in
Class A shares of the Nuveen fund compared with the Standard and Poor's 500
Index and the S&P/Barra Value Index. The S&P 500 Index is an unmanaged index
generally considered representative of the U.S. stock market and is not
available to direct investment. The S&P/Barra Value Index consists of the
"value" half of the S&P 500 Index. In this capitalization-weighted index,
firms have higher book-to-price ratios and are generally slower growing
firms with less potential for returns but lower volatility (relative to the
"growth" half). 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 effect the initial maximum sales charge
applicable to Class A shares (5.75%) and all ongoing fund expenses.
Portfolio Statistics
<TABLE>
<CAPTION>
<S> <C>
Total Net Assets $835.8 million
-----------------------------------------
Beta 0.85
-----------------------------------------
Average Market
Capitalization (stocks) $62 billion
-----------------------------------------
Average P/E 17.4
-----------------------------------------
Number of Stocks 52
-----------------------------------------
Expense Ratio* 1.30%
-----------------------------------------
</TABLE>
*For Class A shares after credit/reimbursement.
Portfolio Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
Equity............. 95%
Cash Equivalents... 5%
</TABLE>
Returns reflect a voluntary expense limitation by the fund's investment advisor,
which may be modified or discontinued at anytime without notice.
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Terms To Know
The following are a few terms used throughout this report.
Beta A measure of a fund's volatility compared to the market's. A fund with a
beta of 1.20 is approximately 20% more volatile than the market, while a fund
with a beta of 0.80 is approximately 20% less volatile than the market.
Market capitalization Also referred to as market cap, market capitalization is
a measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: more than $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
Annual Report page 6
<PAGE>
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
From the Portfolio Manager's Perspective
Nuveen Balanced Municipal and Stock Fund features portfolio management by two
teams of experts -- one specializing in municipal bonds and the other in large
capitalization equities. To help you understand the fund's performance during
the fiscal year ended June 30, 2000, we spoke with Tom Spalding of Nuveen
Investment Management (NIM), who manages the municipal portion of the portfolio,
and Rob Lyon, president and chief investment officer of Institutional Capital
Corporation (ICAP), managing the equity portion.
Q|During the fund's fiscal year, the combination of the Federal Reserve's rate
increases and the rise and fall of technology stocks took a toll on both the
equity and fixed-income markets. The equity markets saw volatility not
experienced in years, while the fixed-income markets saw yields rise and fall.
What effect do you think this had on investors?
ROB|Uncertainty reigned supreme after the Fed's first rate hikes in 1999 began
to take effect in early 2000. Although investors came to expect rate increases
so long as economic strength persisted, they may have underestimated the
magnitude and effect on the markets, both equity and fixed.
Between the second half of 1999 and the first half of 2000, the
difference in sentiment in both the stock and bond markets was very apparent.
Stock market investors learned an important lesson -- that earnings do
matter, even in the so-called "new economy." Baseless stock price run-ups of
profitless companies cannot continue unchecked for long periods -- there is
simply nothing to stand on.
Although both new economy and old economy stocks declined from their
highs in the market rout of 2000, the technology stocks of the new economy were
punished more severely. The S&P 500 Index/1/, generally made up of "old economy"
stocks, was down just 0.42% in the first six months of the year, compared with
the tech-heavy Nasdaq Composite Index,/1/ which was down 2.46% for the same
period.
Municipal bonds also recovered nicely in the first part of 2000 after a
disappointing 1999, as investors once again looked to them as an alternative to
stocks.
Q|How did the fund perform in this environment?
ROB|Although the economic environment tended to favor aggressively positioned
portfolios focused on "new economy" companies, the more conservatively
positioned Balanced Municipal and Stock Fund weathered the market's extreme
volatility.
For the fiscal year ended June 30, 2000, the fund reported a total
return of -0.83%. At June 30, the fund was invested 61% in municipal bonds and
39% in stocks. (For more information, see the Fund Spotlight on page 10.)
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within its specific
areas of expertise. Nuveen has chosen them for their rigorously disciplined
investment approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's subadvisor for value investing, Institutional Capital Corporation
(ICAP), is a highly successful institutional money manager with nearly 30 years
of experience. These professionals specialize in finding undervalued midsize
and large company stocks that are poised for significant growth.
This disciplined, research-oriented approach is a key investment strategy for
Nuveen Balanced Municipal and Stock Fund.
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
Top Five Stock Holdings
Philips Electronics NV 4.6%
---------------------------------------------------
Bell Atlantic Corporation 3.3%
---------------------------------------------------
General Motors Corporation 3.1%
---------------------------------------------------
Ford Motor Company 3.1%
---------------------------------------------------
AT&T Corp. 3.1%
---------------------------------------------------
As a percentage of total stock holdings as of June 30, 2000. Holdings are
subject to change.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the fund's fiscal year ended June 30, 2000. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
/1/ The S&P 500 Index is an unmanaged index generally considered representative
of the U.S. stock market. The Nasdaq Composite Index is an unmanaged index
that measures the more than 5,000 companies listed on the Nasdaq Stock
Market, Inc. Indices are not available for direct investment.
Annual Report page 7
<PAGE>
Q| Periodically throughout the fiscal year, value stocks strongly outperformed
growth stocks. But the market ultimately gyrated back to growth stocks, which
outdistanced value for the year. What happened?
ROB| Value stocks looked promising during the period. However, the wide
variances in sector performance, resulting from the Fed's interest rate policy,
were mostly to blame for the inability of value stocks to stay in favor
consistently. As the Fed raised interest rates, value stocks returned to favor.
The perceived economic slowdown, however, a result of the Fed's moves, brought
growth stocks back from their precipitous decline.
For the year, technology stocks dwarfed performance in traditionally
value-oriented sectors such as consumer cyclicals and basic materials. I point
to the tech-heavy Nasdaq Composite Index's gain of 47.96% for the 12 months of
the fund's fiscal year, compared to the S&P/Barra Value Index/2/ (which is
heavily weighted in consumer cyclicals and basic materials), which reported a
-5.11% return for the period.
Remember that the market has been very concentrated: A large proportion
of the returns -- and losses -- of the S&P 500 have been due to select
technology stocks in the index.
Despite the challenges of the last year, we remain confident that the
fund's focus on strong companies with a catalyst unrecognized by the general
marketplace (that may trigger a rise in the stocks' prices) is a less volatile
means of unlocking price appreciation potential. Keep in mind that this does
not lock the fund out of the new economy.
Q| It would seem that finding technology stocks -- the essence of this new
economy -- to add to the portfolio would be a challenge for a value manager. It
is an extremely expensive sector by most measures, even after accounting for the
recent correction. How do you identify technology stocks for this fund?
ROB| The fund's value approach does exclude many overpriced technology stocks
from the fund. But many names even in this expensive sector fit well within the
premise of the fund. Not every technology name is a high-flying Internet
startup.
First, we found a number of attractively priced companies that have
profited from the infrastructure needs of the new economy. Examples include
Motorola, IBM, and Vodafone.
Second, even within out-of-favor old economy sectors, we discovered
attractive companies using new technologies to significantly enhance their
operations. In fact, this turned out to be one of the themes we followed for the
fund over the last year. Companies capitalizing on the emergence of new
applications for phone and cable equipment are perfect examples.
There were also companies with embedded new economy businesses that we
believed would be very highly valued if they were stand-alone entities. Some
examples were News Corp. -- a media company that owns British Sky Broadcasting,
a leader in satellite and cable operations -- and General Motors, which owns a
controlling stake in Hughes Electronics.
With the valuation disparities between new economy and old economy
stocks, we think this theme has been an opportune way for the fund to
participate in the new economy without buying in at extremely high prices.
"We found a number of attractively priced companies that have profited from the
infrastructure needs of the new economy. Examples include Motorola, IBM, and
Vodafone."
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
Top Five Sectors
Consumer Cyclicals 20.2%
----------------------------------------------------
Financials 16.7%
----------------------------------------------------
Utilities 15.0%
----------------------------------------------------
Healthcare 11.6%
----------------------------------------------------
Technology 11.3%
----------------------------------------------------
2 The S&P/Barra Value Index consists of the "value" half of the S&P 500 Index.
In this capitalization-weighted index, firms have higher book-to-price ratios
and are generally slower growing firms with less potential for returns but
lower volatility (relative to the "growth" half). The index is not available
for direct investment.
As a percentage of total stock holdings as of June 30, 2000. Holdings are
subject to change.
Annual Report page 8
<PAGE>
"Portfolio strategy
now reflects the view
that constraints on
the economy and the
markets should make
individual stock
selection, rather than
sector weighting, the
key to performance."
Q Were there any other themes you followed during the year?
ROB We continued to follow our financial restructurings theme, which worked
very well. Companies like MetLife, one of the largest life insurance companies
in the U.S., fit this criterion. MetLife is the leading provider of group
insurance and employee benefits in the U.S., and serves the group life
insurance needs of 86 of the Fortune 100 companies. The company went public on
April 4th and exemplifies a classic financial restructuring play as it improved
profitability from expense reductions.
Philips Electronics continued to play out as a strong restructuring story,
and it was the fund's largest equity holding at fiscal year-end.
We discontinued the global revival theme as the worldwide expansion showed
signs of slowing in the near term, the result of the Fed's and other world
central banks' interest rate increases. Portfolio strategy now reflects the view
that constraints on the economy and the markets should make individual stock
selection, rather than sector weighting, the key to performance.
Q We now turn to Tom Spalding to discuss the municipal portion of the
portfolio. What effect have higher interest rates had on the fund's municipal
holdings?
TOM Although the municipal portion of the portfolio suffered at times in the
wake of higher interest rates, we continued our focus on intermediate-term
bonds, which helped hold up the municipal portion of the fund. The rebound in
municipals helped enhance the fund's performance.
The supply of new bonds was down sharply over the year. Higher rates,
coupled with the robust economy and generally healthy cash flows of governments
and municipalities, limited issuance. Since that somewhat limited the number of
new purchase choices for the fund, we maintained a steady position in the
municipal bond portion of the portfolio.
We maintained approximately the same credit quality breakdown throughout
the period, with between 34% and 40% in AAA/U.S. Guaranteed bonds (35% at
June 30, 2000) and between 38% and 42% in BBB and non-rated bonds combined
(41% at June 30, 2000).
When we made trades, we looked for opportunities to improve the fund's call
protection. That provides a measure of protection against having to surrender a
high-yielding bond to the issuer before maturity.
Q With the possibility of more Fed interest rate hikes and market volatility,
what is your outlook for the fund for the coming months?
ROB Looking forward, the volatility in the markets, and wild swings in
performance from one sector to another, should continue to provide opportunities
to buy and sell positions using the fund's disciplined value approach.
The Fed's vigilance in its fight against inflation should eventually
translate into lower long-term interest rates, although we expect the
combination of solid economic growth and continued upward pressure on wages and
inflation ultimately will prompt some further tightening policy by the Fed over
the balance of the year. We believe that this is a much better scenario than
trying to spur growth in a recession.
Company earnings reports continued to impress and beat Wall Street's
expectations, and business has been robust across many sectors. Continued
volatility in the stock market may increase demand for municipal bonds as
investors seek alternatives. This should be a flourishing environment for the
fund going into the next fiscal period.
Annual Report page 9
<PAGE>
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
Fund Spotlight as of June 30, 2000
Terms To Know
The following are a few terms used throughout this report.
Beta A measure of a fund's volatility compared to the market's. A fund with a
beta of 1.20 is approximately 20% more volatile than the market, while a fund
with a beta of 0.80 is approximately 20% less volatile than the market.
Duration Duration is an indicator of a portfolio's sensitivity to interest
rates.
Market capitalization Also referred to as market cap, market capitalization is a
measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: more than $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
Quick Facts
A Shares B Shares C Shares R Shares
NAV $24.31 $24.70 $24.68 $24.13
--------------------------------------------------------------------------------
Fund Symbol NBMSX NMNBX N/A N/A
--------------------------------------------------------------------------------
CUSIP 67064Y883 67064Y875 67064Y867 67064Y859
--------------------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
--------------------------------------------------------------------------------
Total Returns as of 6/30/00 (Annualized)+
A Shares B Shares C Shares R Shares
NAV Offer w/o CDSC w/CDSC NAV NAV
1-Year -0.83% -6.52% -1.57% -5.42% -1.57% -0.64%
--------------------------------------------------------------------------------
3-Year 6.27% 4.19% 5.49% 4.59% 5.48% 6.51%
--------------------------------------------------------------------------------
Since Inception 9.35% 7.70% 8.56% 7.95% 8.54% 9.63%
--------------------------------------------------------------------------------
+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. Class B shares
convert to Class A shares after eight years. Class C shares have a 1% CDSC for
redemptions within one year, which is not reflected in the total return figures.
Yields
A Shares B Shares C Shares R Shares
NAV Offer w/o CDSC
30-Day SEC Yield 2.98% 2.81% 2.23% 2.23% 3.23%
--------------------------------------------------------------------------------
Distribution Rate* 2.59% 2.44% 1.82% 1.82% 2.83%
--------------------------------------------------------------------------------
*The distribution rate differs from yield and total return and therefore is not
intended to be a complete measure of performance. Distribution rate may
sometimes differ from yield because a fund may be paying out more or less 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.
Index Comparison[_]
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Nuveen Balanced Nuveen Balanced S&P Brothers
Municipal and Municipal and 500 10-Year
Stock Fund (Offer) Stock Fund (NAV) Index Municipal Index
<S> <C> <C> <C> <C>
8/1996 $ 9,425 $10,000 $10,000 $10,000
6/1997 $11,177 $11,858 $13,799 $10,730
6/1998 $12,821 $13,603 $17,959 $11,640
6/1999 $13,525 $14,350 $22,047 $11,907
6/2000 $13,413 $14,231 $23,644 $12,440
</TABLE>
Nuveen Balanced Municipal and Stock Fund (Offer) $13,413
Nuveen Balanced Municipal and Stock Fund (NAV) $14,231
S&P 500 Index $23,644
Lehman Brothers 10-Year Municipal Index $12,440
[ ] The Index Comparison shows the change in value of a $10,000 investment in
Class A shares of the Nuveen Fund compared with the Standard and Poor's 500
Index and the Lehman Brothers 10-Year Municipal Bond Index. The indexes do
not reflect any initial or ongoing expenses and are not available for
direct investment. The Nuveen fund returns depicted in the chart reflect
the initial maximum sales charge applicable to A shares (5.75%) and all
ongoing fund expenses.
Portfolio Statistics
Total Net Assets $155.1 million
-----------------------------------------------
Beta 0.40
-----------------------------------------------
Average Market
Capitalization (stocks) $63 billion
-----------------------------------------------
Average P/E 17.4
-----------------------------------------------
Number of Stocks 50
-----------------------------------------------
Average Duration (bonds) 6.41
-----------------------------------------------
Expense Ratio* 1.20%
-----------------------------------------------
*For Class A shares after credit/reimbursement.
Portfolio Allocation
[PIE CHART APPEARS HERE]
Bonds...............61%
Equity..............39%
Returns reflect a voluntary expense limitation by the fund's investment advisor,
which may be modified or discontinued at any time without notice.
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
ANNUAL REPORT page 10
<PAGE>
NUVEEN BALANCED STOCK AND BOND FUND
From the Portfolio Manager's Perspective
--------------------------------------------------------------------------------
Nuveen Balanced Stock and Bond Fund features portfolio management by
Institutional Capital Corporation (ICAP), which specializes in large
capitalization equities. To help you understand the fund's performance during
the fiscal year ended June 30, 2000, we spoke with Rob Lyon, president and chief
investment officer of ICAP, the subadvisor of the fund.
Q During the fund's fiscal year, the combination of the Federal Reserve's
rate increases and the rise and fall of technology stocks took a toll on both
the equity and fixed-income markets. The equity markets saw volatility not
experienced in years, while the fixed-income markets saw yields going up and
then down. How did investors react?
ROB There was a marked difference in sentiment in both the stock and bond
markets between the second half of 1999 and the first half of 2000. It became
obvious going into 2000 that having an all-weather portfolio was important.
While the broader equity market bounced around, the fixed-income markets
rebounded from one of the worst years on record. For the first time in a long
time, diversification was key to performance.
Those in the stock market learned an important lesson -- company earnings
do matter, even in the so-called "new economy." Baseless stock price run-ups of
profitless companies cannot continue unchecked for long periods -- there is
simply nothing to stand on. As such, although both new economy and old economy
stocks declined from their highs in the market rout of 2000, the technology
stocks of the new economy were punished more severely. The S&P 500 Index,
generally made up of "old economy" stocks, was down 0.42% in the first six
months of the year, compared with the tech-heavy Nasdaq Composite Index,1 which
was down 2.46% for the same period.
Q At June 30, 2000, the fund was invested 60% in equities, 39% in U.S.
government bonds and notes and about 1% in cash equivalents. With this
allocation and the dramatic economic environment, how did the fund fare?
ROB The fund's focus on intermediate-term fixed income securities helped temper
interest rate sensitivity; at the same time, its focus on value stocks
contributed to its loss. For the fiscal year ended June 30, 2000, the fund
reported a -1.23% total return.
Although the fund underperformed the 4.43% gain for the Lipper Balanced
Fund Index/2/ (which includes funds that invest in growth stocks), it is
interesting to compare it to the S&P/Barra Value Index3, which returned -5.11%
for the same time period. These two comparative indices show the stark
difference between value and growth stocks for the period.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within its specific
areas of expertise. Nuveen has chosen them for their rigorously disciplined
investment approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's subadvisor for value investing, Institutional Capital Corporation
(ICAP), is a highly successful institutional money manager with nearly 30 years
of experience. These professionals specialize in finding undervalued midsize and
large company stocks that are poised for significant growth.
This disciplined, research-oriented approach is a key investment strategy for
Nuveen Balanced Stock and Bond Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the fund's fiscal year ended June 30, 2000. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
/1/ The S&P 500 Index is an unmanaged index generally considered representative
of the U.S. stock market. The Nasdaq Composite Index is an unmanaged index that
measures the more than 5,000 companies listed on the Nasdaq Stock Market, Inc.
Indices are not available for direct investment.
/2/ The Lipper Index return represents the average annualized total return of
the 30 largest funds in the Lipper Balanced Fund Index for the year ended June
30, 2000. The returns assume reinvestment of dividends and do not reflect any
applicable sales charges.
/3/ The S&P/Barra Value Index consists of the "value" half of the S&P 500
Index. In this capitalization-weighted index, firms have higher book-to-price
ratios and are generally slower growing firms with less potential for
appreciation but lower volatility (relative to the "growth" half). The index is
not available for direct investment.
Annual Report page 11
<PAGE>
Q During short periods throughout the fiscal year, value stocks strongly
outperformed growth stocks. But the market ultimately gyrated back to growth
stocks, which outdistanced value for the year. What happened?
ROB Value stocks looked promising during the period. The wide variance in
sector performance, resulting from the Fed's interest rate policy, was mostly to
blame for the inability of value stocks to consistently stay in favor, however.
As the Fed raised interest rates, value stocks returned to favor. The perceived
slowdown in the economy -- a result of the Fed's moves -- brought growth stocks
back from their precipitous decline.
For the year, technology stocks dwarfed performance in traditionally value-
oriented sectors such as consumer cyclicals and basic materials. I point to the
tech-heavy Nasdaq Composite Index's gain of 47.96% for the 12 months of the
fund's fiscal year, compared to the S&P/Barra Value Index (which is heavily
weighted in consumer cyclicals and basic materials), which reported a -5.11%
return for the period.
Also remember that the market has been very concentrated: a large
proportion of the returns -- and losses -- of the S&P 500 has been due to select
technology stocks in the index.
Despite the challenges of the last year, we remain confident that the
fund's focus on strong companies with a catalyst unrecognized by the general
marketplace (that may trigger a rise in the stocks' prices) is a careful means
of unlocking potential price appreciation. This investment process does not lock
the fund out of the new economy.
Q It would seem that finding technology stocks -- the essence of this new
economy -- to add to the portfolio would be a challenge for a value manager. It
is an extremely expensive sector by most measures, even after accounting for the
recent correction. How do you identify technology stocks for this fund?
ROB The fund's value approach excludes many overpriced technology stocks. But
there are many stocks even in this expensive sector that fit well within the
premise of the fund. Not every technology name is a high-flying Internet
startup.
First, we found a number of attractively priced companies that have
profited from the infrastructure needs of the new economy. Examples include
Motorola, IBM and Vodafone.
Second, even within out-of-favor old economy sectors, we discovered
attractive companies using new technologies to significantly enhance their
operations. In fact, this turned out to be one of the themes we followed for the
fund over the last year. Companies capitalizing on the emergence of new
applications for phone and cable equipment are perfect examples.
There were also companies with embedded new economy businesses that we
believed would be very highly valued if they were stand-alone entities. Some
examples of companies that fit that profile were News Corp. -- a media company
that owns British Sky Broadcasting, a leader in satellite and cable operations
-- and General Motors, which owns a controlling stake in Hughes Electronics.
With the valuation disparities between new economy and old economy stocks,
we think this theme has been an opportune way for the fund to participate in the
new economy without buying in at extremely high prices.
"We remain confident that the
fund's focus on strong companies with a
catalyst unrecognized by the general
marketplace (that may trigger a raise in
the stocks' prices) is a careful means of
unlocking potential price appreciation."
Annual Report page 12
<PAGE>
NUVEEN BALANCED STOCK AND BOND FUND
Top Five Stock Holdings
Philips Electronics NV 4.7%
---------------------------------------
Bell Atlantic Corporation 3.4%
---------------------------------------
Ford Motor Company 3.2%
---------------------------------------
Citigroup Inc. 3.1%
---------------------------------------
AT&T Corp. 3.0%
---------------------------------------
As a percentage of total stock holdings as of June 30, 2000. Holdings are
subject to change.
Q Were there any other themes you followed during the year?
ROB We continued to follow our financial restructurings theme, which worked
very well. Companies like MetLife, one of the largest life insurance companies
in the U.S., fit this criterion. MetLife is the leading provider of group
insurance and employee benefits in the U.S., and serves the group life insurance
needs of 86 of the Fortune 100 companies. The company went public on April 4th
and exemplifies a classic financial restructuring play as it improved
profitability from expense reductions.
Philips Electronics continued to play out as a strong restructuring story
and was the fund's largest equity holding at fiscal year-end.
We discontinued the global revival theme as the worldwide expansion showed
signs of slowing in the near term, the result of the Fed's and other world
central banks' interest rate increases.
Portfolio strategy now reflects the view that constraints on the economy
and the markets should make individual stock selection, rather than sector
weighting, the key to performance.
On the bond side of the portfolio, as I mentioned, we primarily continued
our focus on intermediate-term securities.
NUVEEN BALANCED STOCK AND BOND FUND
Top Five Sectors
Consumer Cyclicals 20.1%
-----------------------------
Financials 16.9%
-----------------------------
Utilities 15.1%
-----------------------------
Healthcare 11.5%
-----------------------------
Technology 11.4%
-----------------------------
As a percentage of total stock holdings as of June 30, 2000. Holdings are
subject to change.
Q What other sectors were noteworthy?
ROB The fund benefited from its energy holdings, particularly oil, which had
gone from $12.50 per barrel to well over $30, then back down to the high $20s in
the last year. We reduced exposure to the energy sector, including holdings in
Conoco, USX-Marathon Group, Exxon Mobil and Texaco as oil prices peaked.
Healthcare also made an impressive comeback. The technology roller coaster
drove investors to seek sectors with strong, steady earnings, and healthcare was
a major beneficiary. Pharmacia Corp. and Abbott Laboratories were beneficiaries
as the sector heartily outperformed even technology in the first half of 2000.
Q With the possibility of more Fed interest rate hikes and market volatility,
what is your outlook for the fund for the coming months?
ROB The volatility we've seen in the markets, and the wild swings in
performance from one sector to another, should continue to provide opportunities
to buy and sell positions using the fund's disciplined value approach.
"The technology roller coaster drove
investors to seek sectors with strong,
steady earnings, and healthcare was a
major beneficiary."
Annual Report page 13
<PAGE>
"We think the market will be able to refocus
on cyclical and value-oriented stocks,
and we will continue to concentrate on those
that are selling at reasonable prices and
that exhibit a catalyst for a turnaround."
The market correction and retrenchment was a good thing, in our opinion. We
think the market will be able to refocus on cyclical and value-oriented stocks,
and we will continue to concentrate on those that are selling at reasonable
prices and that exhibit a catalyst for a turnaround.
For the fixed-income portion of the portfolio, we plan to continue to
focus on intermediate term bonds to try to keep the portfolio well-positioned in
light of the heightened market volatility.
We expect the combination of solid economic growth and continued upward
pressure on wages and inflation ultimately will prompt some further tightening
policy by the Fed over the balance of the year. We believe that this is a much
better scenario than trying to spur growth in a recession. Company earnings
reports continued to impress and beat Wall Street's expectations, and business
has been robust across many sectors. This should be a flourishing environment
for the fund going into the next fiscal period.
Annual Report page 14
<PAGE>
NUVEEN BALANCED STOCK AND BOND FUND
Fund Spotlight as of June 30, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Quick Facts
--------------------------------------------------------------------------------
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $25.20 $25.20 $25.21 $25.19
--------------------------------------------------------------------------------
Fund Symbol NNSAX N/A N/A N/A
--------------------------------------------------------------------------------
CUSIP 67064Y107 67064Y206 67064Y305 67064Y404
--------------------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
--------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
Total Returns as of 6/30/00 (Annualized)+
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C> <C> <C>
NAV Offer w/o CDSC w/CDSC NAV NAV
1-Year -1.23% -6.92% -1.97% -5.67% -1.93% -1.02%
--------------------------------------------------------------------------------
3-Year 8.30% 6.19% 7.50% 6.63% 7.52% 8.55%
--------------------------------------------------------------------------------
Since Inception 11.91% 10.22% 11.09% 10.52% 11.10% 12.17%
--------------------------------------------------------------------------------
</TABLE>
+Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% maximum sales charge. Class B shares have a
CDSC that begins at 5% for redemptions during the first year after purchase and
declines periodically to 0% over the following six years. Class B shares convert
to Class A shares after eight years. Class C shares have a 1% CDSC for
redemptions within one year, which is not reflected in the total return figures.
--------------------------------------------------------------------------------
Yields
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C> <C>
NAV Offer w/o CDSC
30-Day SEC Yield 2.46% 2.32% 1.69% 1.69% 2.72%
--------------------------------------------------------------------------------
Distribution Rate* 2.62% 2.47% 1.85% 1.85% 2.88%
--------------------------------------------------------------------------------
</TABLE>
*The distribution rate differs from yield and total return and therefore is not
intended to be a complete measure of performance. Distribution rate may
sometimes differ from yield because a fund may be paying out more or less 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.
Index Comparison[_]
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Balanced Nuveen Balanced S&P Lehman Brothers
Stock and Bond Stock and Bond 500 Intermediate
Fund (Offer) Fund (NAV) Index Treasury Index
<S> <C> <C> <C> <C>
8/1996 $ 9,712 $10,305 $10,562 $10,128
6/1997 $12,186 $12,929 $14,896 $10,841
6/1998 $13,219 $14,025 $17,768 $11,581
6/1999 $14,472 $15,355 $21,359 $12,064
6/2000 $14,733 $15,632 $23,644 $12,608
</TABLE>
Nuveen Balanced Stock and Bond Fund (Offer) $14,733
Nuveen Balanced Stock and Bond Fund (NAV) $15,632
S&P 500 Index $23,644
Lehman Brothers Intermediate Treasury Index $12,608
[_]The Index comparison shows the change in value of a $10,000 investment in
Class A shares of the Nuveen fund compared with the Standard and Poor's 500
Index and the Lehman Brothers Intermediate Treasury Index. The indexes do not
reflect any initial or ongoing expenses and are not available for direct
investment. 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.
<TABLE>
<CAPTION>
-------------------------------------
Portfolio Statistics
-------------------------------------
<S> <C>
Total Net Assets $74.9 million
-------------------------------------
Beta 0.56
-------------------------------------
Average Market
Capitalization (stocks) $63 billion
-------------------------------------
Average P/E 17.5
-------------------------------------
Number of Stocks 50
-------------------------------------
Average Duration (bonds) 5.12
-------------------------------------
Expense Ratio* 1.20%
-------------------------------------
</TABLE>
*For Class A shares after credit/reimbursement
-------------------------------------
Portfolio Allocation
-------------------------------------
[PIE CHART APPEARS HERE]
Equity..........................60%
U.S. Government Obligations.....39%
Cash Equivalents................ 1%
Returns reflect a voluntary expense limitation by the fund's investment advisor,
which may be modified or discontinued at any time without notice.
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
--------------------------------------------------------------------------------
Terms To Know
--------------------------------------------------------------------------------
The following are a few terms used throughout this report.
Beta A measure of a fund's volatility compared to the market's. A fund with a
beta of 1.20 is approximately 20% more volatile than the market, while a fund
with a beta of 0.80 is approximately 20% less volatile than the market.
Market capitalization Also referred to as market cap, market capitalization is
a measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: more than $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share.
A high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
ANNUAL REPORT page 15
<PAGE>
NUVEEN EUROPEAN VALUE FUND
From the Portfolio Manager's Perspective
--------------------------------------------------------------------------------
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within its specific
areas of expertise. Nuveen has chosen them for their rigorously disciplined
investment approaches and their consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's subadvisor for value investing, Institutional Capital Corporation
(ICAP), is a highly successful institutional money manager with nearly 30 years
of experience. These professionals 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.
Nuveen European Value Fund features portfolio management by Institutional
Capital Corporation (ICAP), which specializes in large capitalization equities.
To help you understand the fund's performance during this period, we spoke with
Rob Lyon, president and chief in vestment officer of ICAP, the subadvisor of the
fund.
Q The European equity markets gave investors hope as they improved during the
first three quarters of the fund's fiscal year, but backtracked along with the
U.S. equity markets the last quarter (for the fiscal year ended June 30, 2000).
What effect did the macroeconomy have on the European Value Fund?
ROB The fund reported a 17.22% total return for the fiscal year ended June 30,
2000. Comparatively, the Lipper European Index/1/ returned 32.33% and the MSCI
Europe IX GD/2/ returned 15.42%. The discrepancy between these two indices'
returns can help explain our fund's underperformance to Lipper. The Lipper index
is made up of the 30 largest funds in the category, which has tended to be
heavily skewed toward growth-oriented international funds, which outperformed
value for the period. The MSCI index, on the other hand, is a broad-based index
that includes both growth- and value-oriented funds.
Q What happened in the international markets during the past 12 months?
ROB What we saw in world markets during the fund's fiscal period was a healthy
recovery from the Asian financial crisis of 1997 and 1998, with a boost from
interest rate cuts from central banks around the world. European stock prices
reached all-time highs in August 1999 before declining again in September.
The main culprit for the decline was the August 24, 1999, interest rate
increase by the U.S. Federal Reserve, which was closely watched by world
markets. Four more rate increases would follow during the fund's fiscal year, in
the Fed's attempt to curtail growth domestically and stymie threats of
inflation.
In the last few months of 1999, European stock prices rose alone with their
U.S. counterparts and the markets seemed to shrug off concerns about the affect
of Y2K on the economy.
As we entered the first quarter of 2000, European equity markets continued
on the road to improvement, mirroring U.S. markets with technology, media and
telecommunications stocks leading the way.
Those industries--technology, media and telecommunications--turned around
to hurt investors in the final three months of the fund's fiscal year, ending
the period on a down note. However, during this brief period, European value
stocks tended to fair better than their growth counterparts as the European
Central Bank raised interest rates a larger-than-expected half point in June to
slow economic growth. As a result, the euro, which has been struggling this
year, gained strength relative to the dollar.
Performance figures are quoted for Class A shares at net asset value.
Comments cover the fund's fiscal year ended June 30, 20 00. The views expressed
reflect those of the portfolio management team and are subject to change at any
time, based on market and other conditions.
1 The Lipper Index returns represent the average annualized total return of the
30 largest funds in the Lipper European Equity Fund category for the year
ended June 30, 2000. The returns assume reinvestment of dividends and do not
reflect any applicable sales charges.
2 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. It is not available for direct investment.
ANNUAL REPORT page 16
<PAGE>
Q Where did you find opportunities during the year?
ROB For much of the period, mergers and acquisition activity was stepped up in
Europe, providing us many opportunities for the fund. For one, the fund owned
Vivendi, a French conglomerate with particularly strong businesses in wireless
telephone and internet access services, along with stakes in multimedia and
publishing ventures.
The company agreed to acquire Seagram in June to create a fully integrated
global media and communications company for the wired and wireless world. We
sold the stock on the good news.
The fund benefited from its energy holdings--Royal Dutch Petroleum and
Shell Transport & Trading in particular--as oil went from $12.50 per barrel to
well over $30, then back down to the high $20s in the last year.
We also continued to focus on corporate restructurings, which significantly
contributed to performance. Philips Electronics, our top-holding, continued to
see positive returns as its cost-cutting initiatives and a more focused
corporate strategy seemingly has come to fruition.
Another top-holding, Vodafone, benefited from higher stock prices as its
acquisition strategy has been rewarded by the market. With its successful bid
for Mannesman, we believe the company is well on its way to becoming the
preeminent wireless communications company.
Q It would seem that finding technology stocks--the essence of the new
economy--to add to the portfolio would be a challenge for a value manager. It is
an extremely expensive sector by most measures, even after accounting for the
recent correction. How do you identify technology stocks for this fund?
ROB The fund's value approach does exclude many overpriced technology stocks as
potential holdings in the fund. But there are many names even in this expensive
sector that fit well within the premise of the fund. Not every technology name
is a high-flying Internet startup.
First, we found a number of attractively priced companies that have
profited from the infrastructure needs of the new economy. Vodafone is one
example.
Second, even within out-of-favor so-called old economy sectors, we
discovered attractive companies using new technologies to significantly enhance
their operations. In fact, this turned out to be one of the themes we followed
for the fund over the last year. Companies capitalizing on the emergence of new
applications for phone and cable equipment are perfect examples.
There were also companies with embedded new economy businesses that we
believed would be very highly valued if they were stand-alone entities. An
example of such a company was News Corp. -- a media company that owns British
Sky Broadcasting, a leader in satellite and cable.
NUVEEN EUROPEAN VALUE FUND
<TABLE>
<CAPTION>
----------------------------------------------------
Top Ten Stock Holdings
----------------------------------------------------
<S> <C>
Philips Electronics NV 8.3%
----------------------------------------------------
Zurich Allied AG Sponsored ADR 8.3%
----------------------------------------------------
Diageo plc Sponsored ADR 7.3%
----------------------------------------------------
Bass plc Sponsored ADR 5.1%
----------------------------------------------------
The News Corporation Limited - Sponsored ADR 5.0%
----------------------------------------------------
ING Groep NV Sponsored ADR 4.6%
----------------------------------------------------
Shell Transport & Trading Company ADR 4.6%
----------------------------------------------------
Nordic Baltic Holdings AB FDR 4.5%
----------------------------------------------------
Siemens AG Unsponsored ADR 4.5%
----------------------------------------------------
Investor AB 4.5%
----------------------------------------------------
</TABLE>
As a percentage of total stock holdings as of June 30, 2000. Holdings are
subject to change. The fund's investments in foreign stocks present additional
risks, including currency risk. In addition, investing in securities of
developing countries involves risks greater than, or in addition to, investing
in foreign developed countries.
"We also continued to focus on corporate restructurings, which significantly
contributed to performance. Philips Electronics, our top-holding, continued to
see positive returns as its cost-cutting initiatives and a more focused
corporate strategy seemingly has had come to fruition."
ANNUAL REPORT page 17
<PAGE>
"We remain favorably disposed toward those companies likely to benefit from a
stronger global economy."
Q What are your plans for the fund in the coming fiscal year?
ROB Despite the challenges of the last year, we remain confident that the
fund's focus on strong companies with a catalyst unrecognized by the general
marketplace (that may trigger a rise in the stocks' prices) is a careful means
of unlocking potential price appreciation. This investment process does not
lock the fund out of the new economy.
With the valuation disparities between new economy and old economy stocks,
we think this theme has been an opportune way for the fund to participate in the
new economy without buying in at extremely high prices.
The level of the stock market and the first stirrings of stress in
inflation and interest rates suggest taking a cautious approach. We have begun
implementing a more cautious strategy, by taking profits in the biggest winners
to date, trying to reduce the risk parameters (price/earnings ratios, for
example) and by seeking companies whose stock prices are not as far advanced.
We remain favorably disposed toward those companies likely to benefit from
a stronger global economy. We will continue to watch emerging markets and
consider adding to our holdings if the recovery continues on its current path.
NUVEEN EUROPEAN VALUE FUND
<TABLE>
<CAPTION>
--------------------------------------------
Top Five Sectors
--------------------------------------------
<S> <C>
Financials 26.4%
--------------------------------------------
Consumer Staples 16.8%
--------------------------------------------
Utilities 14.0%
--------------------------------------------
Consumer Cyclicals 13.2%
--------------------------------------------
Energy 9.1%
--------------------------------------------
</TABLE>
As a percentage of total stock holdings as of June 30, 2000. Holdings are
subject to change.
ANNUAL REPORT page 18
<PAGE>
NUVEEN EUROPEAN VALUE FUND
Fund Spotlight as of June 30, 2000
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $23.34 $23.17 $23.16 $23.39
--------------------------------------------------------------------------
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
--------------------------------------------------------------------------
</TABLE>
Total Returns as of 6/30/00+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer w/o CDSC w/CDSC w/o CDSC w/CDSC NAV
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------
1-Year* 17.22% 10.48% 16.34% 12.34% 16.29% 16.29% 17.44%
----------------------------------------------------------------------------
Since Inception* 8.43% 5.40% 7.64% 5.86% 7.62% 7.62% 8.68%
----------------------------------------------------------------------------
YTD -2.75% -8.32% -3.14% -7.98% -3.18% -4.15% -2.70%
----------------------------------------------------------------------------
</TABLE>
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A Shares have a 5.75% maximum sales charge. Class B shares have
a CDSC that begins at 5% for redemptions during the first year after purchase
and declines peridoically to 0% over the following six years. 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 [_]
[MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen European Nuveen European MSCI
Value Fund Value Fund Europe
(Offer) (NAV) IX GD
<S> <C> <C> <C>
5/1998 $ 9,425 $10,000 $10,000
6/1998 $ 9,369 $ 9,941 $10,112
6/1999 $ 9,520 $10,101 $10,057
6/2000 $11,161 $11,842 $11,606
</TABLE>
Nuveen European Value Fund (Offer) $11,161
Nuveen European Value Fund (NAV) $11,842
MSCI Europe IX GD $11,606
[_] 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.
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. Index returns reflect total returns and assume
reinvestment of dividends but do not include any initial or ongoing
expenses and are not available for direct investment. 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 Statistics
<TABLE>
<CAPTION>
<S> <C>
Total Net Assets $13.2 million
---------------------------------------------------
Beta 0.85
---------------------------------------------------
Average Market Capitalization (stocks) $66 billion
---------------------------------------------------
Average P/E 29.0
---------------------------------------------------
Number of Stocks 22
---------------------------------------------------
Expense Ratio* 1.55%
---------------------------------------------------
</TABLE>
*For Class A shares after credit/reimbursement.
Returns reflect a voluntary expense limitation by the fund's investment advisor
which may be modified or discontinued at any time without notice.
The fund's investments in foreign stocks present additional risks, including
currency risk. In addition, investing in securities of developing countries
involves risks greater than, or in addition to, investing in foreign developed
countries.
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 their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Portfolio Allocation
[PIE CHART APPEARS HERE]
Equity 100%
Country Allocation*
<TABLE>
<CAPTION>
<S> <C>
Netherlands 24.8%
-----------------------------
United Kingdom 23.9%
-----------------------------
Sweden 8.4%
-----------------------------
Switzerland 8.3%
-----------------------------
United States 5.2%
-----------------------------
Australia 5.0%
-----------------------------
Finland 4.5%
-----------------------------
Germany 4.5%
-----------------------------
Canada 4.4%
-----------------------------
Portugal 4.1%
-----------------------------
Ireland 3.8%
-----------------------------
France 3.1%
-----------------------------
</TABLE>
*As a percentage of total stock holdings as of June 30, 2000. Holdings are
subject to change.
Terms To Know
The following are a few terms used throughout this report.
Beta A measure of a fund's volatility compared to the market's. A fund with a
beta of 1.20 is approximately 20% more volatile than the market, while a fund
with a beta of 0.80 is approximately 20% less volatile than the market.
Market Capitalization Also referred to as market cap, market capitalization is
a measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: 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 change in net asset
value.
Annual Report page 19
<PAGE>
Portfolio of Investments
Nuveen Growth and Income Stock Fund
June 30, 2000
<TABLE>
<CAPTION>
Market
Shares Description Value
-------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 93.1%
Basic Materials - 5.2%
387,400 Alcan Aluminum Ltd. $12,009,400
357,650 Union Carbide Corporation 17,703,675
322,900 Weyerhaeuser Company 13,884,700
-------------------------------------------------------------------------------
Capital Goods - 4.2%
293,400 General Dynamics Corporation 15,330,150
422,650 Tyco International Ltd. 20,023,044
-------------------------------------------------------------------------------
Consumer Cyclicals - 16.8%
379,450 Federated Department Stores, Inc. # 12,806,438
586,600 Ford Motor Company 25,223,800
414,702 General Motors Corporation 24,078,635
181,500 Knight-Ridder, Inc. 9,653,531
758,708 Philips Electronics NV 36,038,630
204,300 R. H. Donnelley Corporation # 3,958,313
214,100 TRW Inc. 9,286,588
314,500 Target Corporation 18,241,000
76,805 Visteon Corporation 931,264
-------------------------------------------------------------------------------
Consumer Staples - 5.7%
320,700 Kimberly-Clark Corporation 18,400,163
51,150 Newell Rubbermaid Inc. 1,317,113
332,050 The Seagram Company Ltd. 19,258,900
306,850 Tricon Global Restaurants, Inc. # 8,668,513
-------------------------------------------------------------------------------
Energy - 8.6%
579,900 Conoco Inc. 14,243,794
291,900 Exxon Mobil Corporation 22,914,150
448,800 Texaco Inc. 23,898,600
421,850 USX-Marathon Group 10,572,616
-------------------------------------------------------------------------------
Financials - 17.0%
179,750 Aetna Inc. 11,537,703
348,750 The Allstate Corporation 7,759,688
820,150 Associates First Capital Corporation 18,299,597
382,162 Citigroup Inc. 23,025,261
354,350 Fannie Mae 18,492,641
375,200 Household International, Inc. 15,594,250
872,750 MetLife, Inc. # 18,382,297
97,700 Providian Financial Corporation 8,793,000
504,100 Wells Fargo & Company 19,533,875
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Description Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Healthcare - 10.5%
438,550 Abbott Laboratories $ 19,542,884
430,500 Becton, Dickinson and Company 12,349,969
368,000 Biomet, Inc. 14,145,000
381,200 Bristol-Myers Squibb Company 22,204,900
378,801 Pharmacia Corporation 19,579,277
----------------------------------------------------------------------------------------------------------------------------------
Technology - 10.8%
378,950 Computer Associates International, Inc. 19,397,503
385,400 Electronic Data Systems Corporation 15,897,750
137,900 Gateway, Inc. # 7,825,825
209,250 International Business Machines Corporation 22,925,953
42,650 Lucent Technologies Inc. 2,527,013
748,546 Motorola, Inc. 21,754,618
----------------------------------------------------------------------------------------------------------------------------------
Transportation - 0.1%
49,150 Burlington Northern Santa Fe Corporation 1,127,378
----------------------------------------------------------------------------------------------------------------------------------
Utilities - 14.2%
760,075 AT&T Corp. 24,037,372
519,850 Bell Atlantic Corporation # 26,414,878
76,350 Cable & Wireless plc Sponsored ADR 3,822,272
548,100 Edison International 11,236,050
266,050 FPL Group, Inc. 13,169,475
250,250 US West, Inc. 21,458,934
449,650 Vodafone Group plc Sponsored ADR 18,632,370
7,200 WorldCom, Inc. # 330,300
----------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (cost $754,635,034) 778,241,050
-------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 2.7%
Consumer Cyclicals - 2.7%
468,400 The News Corporation Limited Sponsored ADR 22,249,000
----------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks (cost $8,147,162) 22,249,000
-------------------------------------------------------------------------------------------------------------------
Principal Market
Amount (000) Description Value
----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 5.3%
$ 27,000 The Coca-Cola Company, Commercial Paper, effective yield of 6.664%, 7/27/00 26,873,640
17,500 Sara Lee Corporation, Commercial Paper, effective yield of 6.648%, 7/06/00 17,484,299
----------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $44,357,939) 44,357,939
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $807,140,135) - 101.1% 844,847,989
-------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - (1.1)% (9,014,578)
-------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $835,833,411
===================================================================================================================
# Non-income producing.
See accompanying notes to financial statements.
</TABLE>
21
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund
June 30, 2000
Market
Shares Description Value
-------------------------------------------------------------------------------
COMMON STOCKS - 38.2%
Basic Materials - 2.2%
30,250 Alcan Aluminum Ltd. $ 937,750
27,200 Union Carbide Corporation 1,346,400
25,400 Weyerhaeuser Company 1,092,200
-------------------------------------------------------------------------------
Capital Goods - 1.7%
22,400 General Dynamics Corporation 1,170,400
31,700 Tyco International Ltd. 1,501,788
-------------------------------------------------------------------------------
Consumer Cyclicals - 6.8%
28,800 Federated Department Stores, Inc. # 972,000
44,550 Ford Motor Company 1,915,650
33,061 General Motors Corporation 1,919,604
14,050 Knight-Ridder, Inc. 747,284
59,402 Philips Electronics NV 2,821,595
16,200 TRW Inc. 702,675
24,400 Target Corporation 1,415,200
5,833 Visteon Corporation 70,726
-------------------------------------------------------------------------------
Consumer Staples - 2.4%
25,050 Kimberly-Clark Corporation 1,437,244
3,900 Newell Rubbermaid Inc. 100,425
26,350 The Seagram Company Ltd. 1,528,300
23,200 Tricon Global Restaurants, Inc. # 655,400
-------------------------------------------------------------------------------
Energy - 3.5%
44,350 Conoco Inc. 1,089,347
22,900 Exxon Mobil Corporation 1,797,650
32,900 Texaco Inc. 1,751,925
33,400 USX-Marathon Group 837,088
-------------------------------------------------------------------------------
Financials - 6.6%
13,800 Aetna Inc. 885,788
26,600 The Allstate Corporation 591,850
62,300 Associates First Capital Corporation 1,390,069
29,812 Citigroup Inc. 1,796,173
27,600 Fannie Mae 1,440,375
28,250 Household International, Inc. 1,174,141
64,300 MetLife, Inc. # 1,354,319
40,000 Wells Fargo & Company 1,550,000
-------------------------------------------------------------------------------
22
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Description Value
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Healthcare - 4.6%
34,200 Abbott Laboratories $ 1,524,038
33,150 Becton, Dickinson and Company 950,991
28,900 Biomet, Inc. 1,110,844
32,200 Bristol-Myers Squibb Company 1,875,650
31,251 Pharmacia Corporation 1,615,286
-----------------------------------------------------------------------------------------------------------------------------------
Technology - 4.4%
27,650 Computer Associates International, Inc. 1,415,334
29,700 Electronic Data Systems Corporation 1,225,125
10,250 Gateway, Inc. # 581,688
16,600 International Business Machines Corporation 1,818,738
3,300 Lucent Technologies Inc. 195,525
56,788 Motorola, Inc. 1,650,401
-----------------------------------------------------------------------------------------------------------------------------------
Transportation - 0.1%
3,550 Burlington Northern Santa Fe Corporation 81,428
-----------------------------------------------------------------------------------------------------------------------------------
Utilities - 5.9%
59,860 AT&T Corp. 1,893,073
39,800 Bell Atlantic Corporation # 2,022,338
6,300 Cable & Wireless plc Sponsored ADR 315,394
42,200 Edison International 865,100
20,100 FPL Group, Inc. 994,950
18,900 US West, Inc. 1,620,675
34,400 Vodafone Group plc Sponsored ADR 1,425,450
600 WorldCom, Inc. # 27,525
-----------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (cost $55,403,616) 59,202,919
--------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 1.1%
Consumer Cyclicals - 1.1%
36,600 The News Corporation Limited Sponsored ADR 1,738,500
-----------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks (cost $638,823) 1,738,500
--------------------------------------------------------------------------------------------------------------------
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS - 60.2%
Alabama - 0.3%
$ 455 Alabama Water Pollution Control Authority, Revolving Fund Loan Bonds, 8/05 at 100 AAA $ 487,605
Series 1994A, 6.625%, 8/15/08
-----------------------------------------------------------------------------------------------------------------------------------
California - 3.9%
2,500 City of Escondido, California Multifamily Housing Revenue 7/05 at 101 1/2 AAA 2,517,700
Refunding Bonds, Series 1997B (Morning View Terrace Apartments),
5.400%, 1/01/27 (Mandatory put 7/01/07)
735 Northern California Power Agency, Public Power Revenue No Opt. Call A- 757,903
Refunding Bonds, Geothermal Project No. 3, 1993 Series A,
5.650%, 7/01/07
</TABLE>
23
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund (continued)
June 30, 2000
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount (000) Description Provisions* Ratings** Value
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California (continued)
$ 250 County of Orange, California, Refunding Recovery Bonds, 1995 Series No Opt. Call AAA $ 274,378
A, 6.000%, 6/01/10
1,495 Palmdale Civic Authority (Civic Center Refinancing), 1997 Series A, 7/07 at 102 AAA 1,529,250
5.375%, 7/01/12
1,000 County of San Diego, California, Certificates of Participation, The 9/09 at 101 Baa3 1,004,590
Burnham Institute, 5.700%, 9/01/11
-----------------------------------------------------------------------------------------------------------------------------------
Colorado - 2.7%
2,000 City and County of Denver, Colorado, Airport System Revenue Bonds, 11/06 at 102 AAA 2,074,160
Series 1996B, 5.625%, 11/15/08 (Alternative Minimum Tax)
1,000 City and County of Denver, Colorado, Airport Special Facilities 1/09 at 101 AAA 1,040,700
Revenue Bonds (Rental Car Projects), Series 1999A, 6.000%, 1/01/13
(Alternative Minimum Tax)
2,000 Metropolitan Football Stadium District (Colorado), Sales Tax Revenue No Opt. Call AAA 1,061,920
Bonds, Series 1999A, 0.000%, 1/01/12
-----------------------------------------------------------------------------------------------------------------------------------
Connecticut - 4.4%
1,075 Connecticut Housing Finance Authority, Housing Mortgage Finance 5/06 at 102 AA 1,080,321
Program Bonds, 1996 Series B, Subseries B-2, 5.750%, 11/15/08
(Alternative Minimum Tax)
1,000 State of Connecticut Health and Educational Facilities Authority, No Opt. Call BBB 948,540
Revenue Bonds, Hospital for Special Care Issue, Series B, 5.125%,
7/01/07
1,485 Connecticut Development Authority, First Mortgage Gross Revenue 12/06 at 103 BBB+ 1,369,393
Health Care Project Refunding Bonds, Series 1998A (The Elim Park
Baptist Home, Inc. Project), 4.875%, 12/01/07
3,500 West Haven Housing Authority (Connecticut), Multifamily Housing 1/01 at 100 N/R 3,503,080
Revenue Bonds, Series 1998B (Meadows Landing Apartments), 6.000%,
1/01/02 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 0.4%
500 District of Columbia, General Obligation Refunding Bonds, Series No Opt. Call AAA 548,675
A-1, 6.500%, 6/01/10
-----------------------------------------------------------------------------------------------------------------------------------
Georgia - 1.6%
2,000 Development Authority of Fulton County (Georgia), Special Facilities 5/08 at 101 BBB- 1,822,260
Revenue Bonds (Delta Air Lines, Inc. Project), Series 1998, 5.300%,
5/01/13 (Alternative Minimum Tax)
650 Georgia Housing and Finance Authority, Single Family Mortgage Bonds, 6/06 at 102 AAA 652,984
1996 Series A, 5.875%, 12/01/19 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Idaho - 0.8%
1,185 Idaho Housing and Finance Association, Single Family Mortgage Bonds, 1/07 at 102 A1 1,188,911
1997 Series D-2, 5.950%, 7/01/09 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Illinois - 5.4%
1,075 Village of Bolingbrook, Will and DuPage Counties, Illinois, No Opt. Call AAA 1,234,423
Residential Mortgage Revenue Bonds, Series 1979, 7.500%, 8/01/10
Community High School District Number 219, Cook County, Illinois
(Niles Township), General Obligation Limited Tax School Bonds,
Series 1998:
1,130 0.000%, 12/01/09 No Opt. Call AAA 687,221
2,360 0.000%, 12/01/10 No Opt. Call AAA 1,353,177
Illinois Development Finance Authority, Economic Development Revenue
Bonds, Series 1998 (The Latin School of Chicago Project):
270 5.200%, 8/01/11 8/08 at 100 Baa2 251,643
200 5.250%, 8/01/12 8/08 at 100 Baa2 184,956
580 5.300%, 8/01/13 8/08 at 100 Baa2 531,982
2,160 Illinois Health Facilities Authority, Revenue Bonds, Series 1985 7/04 at 102 N/R*** 2,372,674
(St. Elizabeth's Hospital of Chicago, Inc.), 7.250%, 7/01/05
(Pre-refunded to 7/01/04)
1,500 Illinois Health Facilities Authority, Revenue Bonds, Series 1993 11/03 at 102 A 1,499,310
(OSF Healthcare System), 6.000%, 11/15/10
235 Illinois Health Facilities Authority, FHA-Insured Mortgage Revenue 2/06 at 102 AAA 239,007
Bonds, Series 1996 (Sinai Health System), 5.500%, 2/15/09
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indiana - 0.9%
$ 1,470 Indiana Housing Finance Authority, Single Family Mortgage Revenue 7/08 at 101 Aaa $1,410,524
Bonds, 1998 Series C-3, 5.300%, 7/01/13 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Louisiana - 1.7%
Parish School Board of the Parish of Jefferson, State of Louisiana,
Sales Tax School Bonds, Refunding Series 1998:
1,045 0.000%, 3/01/08 No Opt. Call AAA 698,603
2,175 0.000%, 9/01/08 No Opt. Call AAA 1,416,360
1,000 0.000%, 3/01/10 No Opt. Call AAA 598,490
-----------------------------------------------------------------------------------------------------------------------------------
Maine - 0.2%
255 Town of Winslow, Maine (Crowe Rope Industries Project), 1997 Series 3/07 at 102 Aaa 266,625
A, General Obligation Tax Increment Financing Bonds, 6.000%, 3/01/11
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 4.7%
Massachusetts Development Finance Agency, Resource Recovery Revenue
Bonds (Ogden Haverhill Project), Series 1998B:
1,720 5.100%, 12/01/12 (Alternative Minimum Tax) 12/08 at 102 BBB 1,501,268
1,885 5.200%, 12/01/13 (Alternative Minimum Tax) 12/08 at 102 BBB 1,638,819
250 Massachusetts Health and Educational Facilities Authority, Revenue 7/06 at 102 AAA 264,368
Bonds, Melrose-Wakefield Healthcare Corp. Issue, Series C, 5.700%,
7/01/08 (Pre-refunded to 7/01/06)
Massachusetts Industrial Finance Agency, Resource Recovery Revenue
Refunding Bonds (Ogden Haverhill Project), Series 1998A:
1,500 5.450%, 12/01/12 (Alternative Minimum Tax) 12/08 at 102 BBB 1,371,270
1,825 5.500%, 12/01/13 (Alternative Minimum Tax) 12/08 at 102 BBB 1,657,812
835 Massachusetts Turnpike Authority, Western Turnpike Revenue Bonds, 7/00 at 100 AAA 835,000
1997 Series A, 5.550%, 1/01/17
-----------------------------------------------------------------------------------------------------------------------------------
Mississippi - 1.1%
Jones County, Mississippi, Hospital Revenue Refunding Bonds (South
Central Regional Medical Center Project), Series 1997:
1,285 5.350%, 12/01/10 12/07 at 100 BBB+ 1,182,264
500 5.400%, 12/01/11 12/07 at 100 BBB+ 455,925
-----------------------------------------------------------------------------------------------------------------------------------
Nebraska - 6.1%
9,921 Energy America (Nebraska), Natural Gas Revenue Note (Metropolitan No Opt. Call N/R 9,513,211
Utility District Project), Series 1997B, 5.700%, 7/01/08
-----------------------------------------------------------------------------------------------------------------------------------
Nevada - 1.3%
1,770 Nevada Housing Division, Single Family Mortgage Bonds, 1997 Series 4/07 at 102 Aa3 1,724,228
A-1 Mezzanine Bonds, 6.000%, 4/01/15 (Alternative Minimum Tax)
250 Airport Authority of Washoe County, Reno, Nevada, Airport Revenue 7/03 at 102 AAA 257,573
Refunding Bonds, Series 1993B, 5.875%, 7/01/11
-----------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 1.8%
1,450 New Hampshire Higher Educational and Health Facilities Authority, 1/07 at 102 BBB- 1,428,366
Revenue Bonds, Series 1997 (New Hampshire College), 6.200%, 1/01/12
1,300 State of New Hampshire, Turnpike System Revenue Bonds, 1992 Series, 4/02 at 102 AAA 1,341,392
6.000%, 4/01/13
-----------------------------------------------------------------------------------------------------------------------------------
New York - 10.0%
2,000 The City University of New York, Certificates of Participation, The No Opt. Call A 2,095,140
State of New York (John Jay College of Criminal Justice Project
Refunding), 6.000%, 8/15/06
5,000 Erie County Industrial Development Agency, Solid Waste Disposal 12/10 at 103 N/R 5,211,750
Facility Revenue Bonds (1998 CanFibre of Lackawanna Project),
8.875%, 12/01/13 (Alternative Minimum Tax)
500 Metropolitan Transportation Authority, Transit Facilities Service No Opt. Call A 517,895
Contract Bonds, Series O, 5.750%, 7/01/07
</TABLE>
25
<PAGE>
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund (continued)
June 30, 2000
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (continued)
$ 250 The City of New York, General Obligation Bonds, Fiscal 1997 11/06 at 101 1/2 A- $ 259,820
Series D, Tax Exempt Bonds, 5.875%, 11/01/11
500 The City of New York, General Obligation Bonds, Fiscal 1997 4/07 at 101 A- 527,150
Series I, 6.000%, 4/15/09
1,000 The City of New York, General Obligation Bonds, Fiscal 1998 8/07 at 101 A- 1,018,920
Series D, 5.500%, 8/01/10
Dormitory Authority of the State of New York, Revenue Bonds,
City University Issue, Series U:
160 6.375%, 7/01/08 (Pre-refunded to 7/01/02) 7/02 at 102 Baa1*** 168,186
115 6.375%, 7/01/08 7/02 at 102 Baa1 119,837
2,000 New York State Thruway Authority, Local Highway and Bridge 4/06 at 102 A 2,057,440
Service Contract Bonds, Series 1996, 5.625%, 4/01/07
285 New York State Urban Development Corporation, State Facilities No Opt. Call A 301,499
Revenue Bonds, 1995 Refunding Series, 6.250%, 4/01/06
1,700 New York State Urban Development Corporation, Project Revenue 1/03 at 102 A 1,748,943
Bonds (Cornell Center for Theory and Simulation in Science
and Engineering Grant), Series 1993, 5.900%, 1/01/07
1,430 New York State Urban Development Corporation, Empire State No Opt. Call A 1,540,053
Development Corporation, Youth Facilities Revenue Bonds,
Series 1997, 6.500%, 4/01/07
-----------------------------------------------------------------------------------------------------------------------------------
North Carolina - 1.7%
2,045 North Carolina Municipal Power Agency Number 1, Catawba Electric
Revenue Bonds, Series 1980, 10.500%, 1/01/10 No Opt. Call AAA 2,589,768
-----------------------------------------------------------------------------------------------------------------------------------
Ohio - 3.3%
1,750 City of Dayton, Ohio, Special Facilities Revenue Refunding Bonds, 1988 No Opt. Call BBB 1,756,195
Series C (Emery Air Freight Corporation and Emery Worldwide
Airlines, Inc. - Guarantors), 6.050%, 10/01/09
1,500 County of Lorain, Ohio, Health Care Facilities Revenue Refunding Bonds, 2/08 at 101 BBB 1,349,325
Series 1998A (Kendal at Oberlin), 5.375%, 2/01/12
1,875 Ohio Building Authority, State Facilities Refunding Bonds (Toledo 4/03 at 100 AAA 2,082,900
Government Office Building), 1982 Series A, 10.125%, 10/01/06
(Pre-refunded to 4/01/03)
-----------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.7%
1,000 Oklahoma Industries Authority, Health System Revenue Refunding Bonds No Opt. Call AAA 1,052,830
(Obligated Group consisting of INTEGRIS Baptist Medical Center, Inc.,
INTEGRIS South Oklahoma City Hospital Corporation and
INTEGRIS Rural Health, Inc.), Series 1995D, 6.000%, 8/15/07
-----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 0.7%
1,065 Pennsylvania Housing Finance Agency, Single Family Mortgage Revenue
Bonds, Series 1996-50A, 5.350%, 10/01/08 4/06 at 102 AA+ 1,068,589
-----------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 1.2%
1,760 City of Providence, Rhode Island, General Obligation Bonds, 1997 7/07 at 101 AAA 1,870,933
Series A, 6.000%, 7/15/09
-----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 1.7%
2,700 The Industrial Development Board of the City of Cookeville, 10/03 at 102 A 2,712,474
Tennessee, Hospital Refunding Revenue Bonds, Series 1993 (Cookeville
General Hospital Project), 5.750%, 10/01/10
-----------------------------------------------------------------------------------------------------------------------------------
Texas - 2.8%
3,000 Abilene Higher Education Authority, Inc. (Texas), Student Loan Revenue 11/08 at 100 Aa3 2,804,850
Bonds, Subordinate Series 1998B (Subordinate Lien Fixed Rate Term
Bonds), 5.050%, 7/01/13 (Alternative Minimum Tax)
City of Austin, Texas, Water, Sewer and Electric Refunding Revenue Bonds,
Series 1982:
10 14.000%, 11/15/01 No Opt. Call A*** 10,804
85 14.000%, 11/15/01 No Opt. Call A 91,557
250 City of San Antonio, Texas, Airport System Improvement Revenue Bonds, 7/06 at 101 AAA 257,684
Series 1996, 5.700%, 7/01/09 (Alternative Minimum Tax)
180 Texas Department of Housing and Community Affairs, Single Family 9/06 at 102 AAA 183,030
Mortgage Revenue Bonds, 1996 Series E, 5.750%, 3/01/10
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas (continued)
$ 1,000 Tyler Health Facilities Development Corporation (Texas), Hospital 7/02 at 100 Baa2 $921,940
Revenue Bonds (Mother Frances Hospital Regional HealthCare Center
Project), Series 1997A, 5.500%, 7/01/09
------------------------------------------------------------------------------------------------------------------------------------
Utah -- 0.2%
500 Tooele County, Hazardous Waste Disposal Revenue Bonds (Laidlaw 8/05 at 102 N/R 145,230
Inc./USPCI Clive PJ), Series 1995, 6.750%, 8/01/10
(Alternative Minimum Tax)
200 State Board of Regents of Utah, Student Loan Revenue Bonds, 1995 Series 11/05 at 102 AAA 208,340
N Bonds, 6.000%, 5/01/08 (Alternative Minimum Tax)
------------------------------------------------------------------------------------------------------------------------------------
Washington -- 0.6%
30 Washington State Housing Finance Commission, Single Family Mortgage 1/04 at 102 AAA 30,170
Revenue Bonds (Mortgage-Backed Securities Program), Series 1995A,
6.650%, 7/01/16 (Alternative Minimum Tax)
55 Washington Public Power Supply System, Nuclear Project No. 2, Revenue No Opt. Call Aaa 57,560
Bonds, Series 1981A, 14.375% 7/01/01
800 Washington Public Power Supply System, Project No. 3, Refunding Revenue 7/06 at 102 AAA 829,360
Bonds, Series 1996-A, 5.700%, 7/01/09
-----------------------------------------------------------------------------------------------------------------------------------
$ 97,521 Total Municipal Bonds (cost $95,451,247) 93,369,033
===========------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $151,493,686) - 99.5% 154,310,452
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.5% 817,010
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 155,127,462
====================================================================================================================
</TABLE>
# Non-income producing.
* Optional Call Provisions (not covered by the report of independent public
accountants): Dates (month and year) and prices of the earliest optional
call or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent public accountants):
Using the higher of Standard & Poor's or Moody's rating.
*** Securities are backed by an escrow or trust containing sufficient U.S.
Government or U.S. Government agency securities which ensures the timely
payment of principal and interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
27
<PAGE>
Portfolio of Investments
Nuveen Balanced Stock and Bond Fund
June 30, 2000
<TABLE>
<CAPTION>
Market
Shares Description Value
-----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 57.9%
Basic Materials - 3.3%
21,500 Alcan Aluminum Ltd. $ 666,500
19,900 Union Carbide Corporation 985,050
18,300 Weyerhaeuser Company 786,900
-----------------------------------------------------------------------
Capital Goods - 2.5%
14,700 General Dynamics Corporation 768,075
23,600 Tyco International Ltd. 1,118,050
-----------------------------------------------------------------------
Consumer Cyclicals - 10.3%
21,350 Federated Department Stores, Inc. # 720,563
33,400 Ford Motor Company 1,436,200
23,170 General Motors Corporation 1,345,308
10,200 Knight-Ridder, Inc. 542,513
43,938 Philips Electronics NV 2,087,055
11,850 TRW Inc. 513,994
17,400 Target Corporation 1,009,200
4,373 Visteon Corporation 53,024
-----------------------------------------------------------------------
Consumer Staples - 3.6%
17,600 Kimberly-Clark Corporation 1,009,800
2,800 Newell Rubbermaid Inc. 72,100
19,550 The Seagram Company Ltd. 1,133,900
16,800 Tricon Global Restaurants, Inc. # 474,600
-----------------------------------------------------------------------
Energy - 5.4%
32,850 Conoco Inc. 806,878
16,650 Exxon Mobil Corporation 1,307,025
24,700 Texaco Inc. 1,315,275
24,400 USX-Marathon Group 611,525
-----------------------------------------------------------------------
Financials - 10.1%
10,200 Aetna Inc. 654,713
19,500 The Allstate Corporation 433,875
45,700 Associates First Capital Corporation 1,019,681
22,662 Citigroup Inc. 1,365,386
20,050 Fannie Mae 1,046,359
20,500 Household International, Inc. 852,031
48,100 MetLife, Inc. # 1,013,106
29,600 Wells Fargo & Company 1,147,000
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Description Value
-------------------------------------------------------------------------------
<C> <S> <C>
Healthcare -- 6.8%
25,800 Abbott Laboratories $ 1,149,713
24,550 Becton, Dickinson and Company 704,278
20,700 Biomet, Inc. 795,656
22,600 Bristol-Myers Squibb Company 1,316,450
22,166 Pharmacia Corporation 1,145,705
-------------------------------------------------------------------------------
Technology -- 6.8%
20,850 Computer Associates International, Inc. 1,067,259
21,800 Electronic Data Systems Corporation 899,250
7,700 Gateway, Inc. # 436,975
12,300 International Business Machines Corporation 1,347,619
2,500 Lucent Technologies Inc. 148,125
41,412 Motorola, Inc. 1,203,536
-------------------------------------------------------------------------------
Transportation -- 0.1%
2,700 Burlington Northern Santa Fe Corporation 61,931
-------------------------------------------------------------------------------
Utilities -- 9.0%
42,891 AT&T Corp. 1,356,428
29,800 Bell Atlantic Corporation # 1,514,213
4,750 Cable & Wireless plc Sponsored ADR 237,797
31,100 Edison International 637,550
14,900 FPL Group, Inc. 737,550
13,950 US West, Inc. 1,196,213
25,200 Vodafone Group plc Sponsored ADR 1,044,225
400 WorldCom, Inc. # 18,350
-------------------------------------------------------------------------------
Total Common Stocks (cost $40,888,619) 43,314,509
---------------------------------------------------------------------
PREFERRED STOCKS -- 1.7%
Consumer Cyclicals -- 1.7%
26,800 The News Corporation Limited Sponsored ADR 1,273,000
-------------------------------------------------------------------------------
Total Preferred Stocks (cost $466,980) 1,273,000
---------------------------------------------------------------------
</TABLE>
29
<PAGE>
Portfolio of Investments
Nuveen Balanced Stock and Bond Fund (continued)
June 30, 2000
<TABLE>
<CAPTION>
Principal Market
Amount (000) Description Value
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 38.9%
U. S. Treasury Notes - 30.6%
$ 3,075 7.500%, 5/15/02 $ 3,131,697
7,275 7.875%, 11/15/04 7,700,136
4,530 6.500%, 5/15/05 4,579,549
7,310 7.000%, 7/15/06 7,572,707
----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds - 8.3%
3,725 7.250%, 5/15/16 4,098,666
2,135 6.000%, 2/15/26 2,086,962
----------------------------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations - (cost $29,569,645) 29,169,717
-------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 1.2%
900 Federal Home Loan Mortgage Corporation, Discount Note, effective yield of 6.645%, 7/03/00 899,672
----------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (cost $899,672) 899,672
-------------------------------------------------------------------------------------------------------
Total Investments (cost $71,824,916) - 99.7% 74,656,898
-------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.3% 257,667
-------------------------------------------------------------------------------------------------------
Net Assets - 100% $74,914,565
=======================================================================================================
</TABLE>
# Non-income producing.
See accompanying notes to financial statements.
30
<PAGE>
Portfolio of Investments
Nuveen European Value Fund
June 30, 2000
<TABLE>
<CAPTION>
Market
Shares Description Value
----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 89.2%
Basic Materials - 6.5%
26,750 Jefferson Smurfit Group plc Sponsored ADR $ 471,469
18,300 Pechiney SA Sponsored ADR 379,725
----------------------------------------------------------------------------
Capital Goods - 7.9%
29,000 SKF AB Sponsored ADR 482,125
3,700 Siemens AG Unsponsored ADR 558,618
----------------------------------------------------------------------------
Consumer Cyclicals - 7.8%
21,500 Philips Electronics NV 1,021,250
----------------------------------------------------------------------------
Consumer Staples - 15.7%
54,100 Bass plc Sponsored ADR 625,531
25,500 Diageo plc Sponsored ADR 906,844
9,400 The Seagram Company Ltd. 545,200
----------------------------------------------------------------------------
Energy - 8.5%
9,000 Royal Dutch Petroleum Company 554,063
11,300 Shell Transport & Trading Company ADR 564,294
----------------------------------------------------------------------------
Financials - 24.7%
22,400 ABN AMRO Holding NV Sponsored ADR 550,200
8,450 ING Groep NV Sponsored ADR 570,375
40,800 Investor AB 557,226
76,986 Nordic Baltic Holding AB FDR 559,457
10,300 Zurich Allied AG Sponsored ADR 1,021,087
----------------------------------------------------------------------------
Healthcare - 4.2%
10,600 Pharmacia Corporation 547,888
----------------------------------------------------------------------------
Technology - 0.7%
7,500 Infonet Services Corporation # 89,531
----------------------------------------------------------------------------
Utilities - 13.2%
7,200 Cable & Wireless plc Sponsored ADR 360,450
45,300 Portugal Telecom SA Sponsored ADR 509,627
8,200 KPN NV Sponsored ADR 368,493
11,900 Vodafone Group plc Sponsored ADR 493,111
----------------------------------------------------------------------------
Total Common Stocks (cost $10,823,078) 11,736,564
-----------------------------------------------------------------
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen European Value Fund (continued)
June 30, 2000
Market
Shares Description Value
---------------------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS -- 4.7%
Consumer Cyclicals -- 4.7%
12,900 The News Corporation Limited Sponsored ADR $ 612,750
---------------------------------------------------------------------------------------------------
Total Preferred Stocks (cost $531,284) 612,750
----------------------------------------------------------------------------------
Total Investments (cost $11,354,362) -- 93.9% 12,349,314
----------------------------------------------------------------------------------
Other Assets Less Liabilities -- 6.1% 804,412
----------------------------------------------------------------------------------
Net Assets -- 100% $13,153,726
==================================================================================
</TABLE>
Country Allocation (as a percentage of the fund's net assets)
-------------------------------------------------------------
Netherlands 23.3%
-------------------------------------------------------------
United Kingdom 22.4%
-------------------------------------------------------------
Sweden 7.9%
-------------------------------------------------------------
Switzerland 7.8%
-------------------------------------------------------------
United States 4.8%
-------------------------------------------------------------
Australia 4.7%
-------------------------------------------------------------
Finland 4.3%
-------------------------------------------------------------
Germany 4.2%
-------------------------------------------------------------
Canada 4.1%
-------------------------------------------------------------
Portugal 3.9%
-------------------------------------------------------------
Ireland 3.6%
-------------------------------------------------------------
France 2.9%
-------------------------------------------------------------
# Non-income producing.
See accompanying notes to financial statements.
32
<PAGE>
Statement of Net Assets
June 30, 2000
<TABLE>
<CAPTION>
Growth and Municipal and Stock and European
Income Stock Bond Value
Assets
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment securities, at market value $ 844,847,989 $ 154,310,452 $ 74,656,898 $ 12,349,314
Cash 1,771,922 -- 159,200 477,529
Receivables:
Dividends and interest 1,165,948 1,669,841 531,555 36,043
Fund manager -- -- -- 72,647
Investments sold 5,722,565 880,172 890,898 161,091
Shares sold 386,910 319,233 88,481 35,474
Deferred organization costs 43,478 45,807 46,593 76,129
Other assets 94,248 19,318 11,484 8,137
----------------------------------------------------------------------------------------------------------------------
Total assets 854,033,060 157,244,823 76,385,109 13,216,364
----------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft -- 469,308 -- --
Payables:
Investments purchased 13,747,624 1,035,455 658,719 --
Shares redeemed 3,254,075 178,467 230,284 15,167
Accrued expenses:
Management fees 550,596 81,810 25,846 --
12b-1 distribution and service fees 268,267 70,067 26,476 4,321
Other 379,087 103,148 69,547 43,150
Dividends payable -- 179,106 459,672 --
----------------------------------------------------------------------------------------------------------------------
Total liabilities 18,199,649 2,117,361 1,470,544 62,638
----------------------------------------------------------------------------------------------------------------------
Net assets $ 835,833,411 $ 155,127,462 $ 74,914,565 $ 13,153,726
----------------------------------------------------------------------------------------------------------------------
Class A Shares
Net assets $ 669,651,194 $ 93,399,986 $ 52,469,567 $ 3,372,633
Shares outstanding 27,505,938 3,841,415 2,082,169 144,470
Net asset value and redemption price per share $ 24.35 $ 24.31 $ 25.20 $ 23.34
Offering price per share (net asset value per
share plus
maximum sales charge of 5.75% of offering price) $ 25.84 $ 25.79 $ 26.74 $ 24.76
----------------------------------------------------------------------------------------------------------------------
Class B Shares
Net assets $ 93,275,189 $ 45,779,431 $ 11,199,824 $ 3,517,995
Shares outstanding 3,859,745 1,853,543 444,430 151,853
Net asset value, offering and redemption price
per share $ 24.17 $ 24.70 $ 25.20 $ 23.17
----------------------------------------------------------------------------------------------------------------------
Class C Shares
Net assets $ 55,303,256 $ 14,836,671 $ 6,620,067 $ 867,843
Shares outstanding 2,291,421 601,223 262,582 37,468
Net asset value, offering and redemption price
per share $ 24.13 $ 24.68 $ 25.21 $ 23.16
----------------------------------------------------------------------------------------------------------------------
Class R Shares
Net assets $ 17,603,772 $ 1,111,374 $ 4,625,107 $ 5,395,255
Shares outstanding 721,301 46,063 183,593 230,637
Net asset value, offering and redemption price
per share $ 24.41 $ 24.13 $ 25.19 $ 23.39
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
33
<PAGE>
Statement of Operations
Year Ended June 30, 2000
<TABLE>
<CAPTION>
Growth and Municipal and Stock and European
Income Stock Bond Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Dividends $ 15,519,931 $ 1,317,355 $ 926,561 $ 296,530
Interest 3,838,056 6,172,356 2,338,888 --
----------------------------------------------------------------------------------------------------------------------------------
Total investment income 19,357,987 7,489,711 3,265,449 296,530
----------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees 7,392,251 1,325,770 632,399 119,488
12b-1 service fees - Class A 1,828,952 271,396 149,250 9,004
12b-1 distribution and service fees - Class B 976,408 495,015 126,605 33,748
12b-1 distribution and service fees - Class C 495,577 184,605 74,073 7,732
Shareholders' servicing agent fees and expenses 1,589,920 179,375 94,806 27,332
Custodian's fees and expenses 167,755 76,953 70,850 41,557
Trustees' fees and expenses 82,633 20,680 12,374 1,282
Professional fees 56,559 3,489 10,167 4,266
Shareholders' reports - printing and mailing expenses 336,399 112,810 67,935 114,231
Federal and state registration fees 40,847 30,527 17,242 49,846
Amortization of deferred organization costs 36,099 36,099 36,099 32,087
Other expenses 51,472 12,986 7,273 9,188
----------------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 13,054,872 2,749,705 1,299,073 449,761
Custodian fee credit (53,115) (9,245) (7,461) (1,117)
Expense reimbursement (291,021) (101,801) (140,646) (234,652)
----------------------------------------------------------------------------------------------------------------------------------
Net expenses 12,710,736 2,638,659 1,150,966 213,992
----------------------------------------------------------------------------------------------------------------------------------
Net investment income 6,647,251 4,851,052 2,114,483 82,538
----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain from investment transactions 78,196,283 6,680,397 5,523,658 1,836,797
Net change in unrealized appreciation or depreciation of investments (134,957,559) (13,985,582) (8,995,519) (32,334)
----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (56,761,276) (7,305,185) (3,471,861) 1,804,463
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $ (50,114,025) $ (2,454,133) $(1,357,378) $1,887,001
==================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
34
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Growth and Income Municipal and Stock
-------------------------- ------------------------
Year Ended Year Ended Year Ended Year Ended
6/30/00 6/30/99 6/30/00 6/30/99
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 6,647,251 $ 5,707,431 $ 4,851,052 $ 4,217,852
Net realized gain (loss) from investment transactions 78,196,283 31,610,896 6,680,397 392,403
Net change in unrealized appreciation or depreciation of investments (134,957,559) 59,442,442 (13,985,582) 5,824,556
---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (50,114,025) 96,760,769 (2,454,133) 10,434,811
---------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
From undistributed net investment income:
Class A (7,504,717) (1,233,736) (3,577,517) (3,165,304)
Class B (245,079) (2,076) (869,308) (611,994)
Class C (126,515) (4,846) (326,338) (242,322)
Class R (222,288) (45,702) (42,783) (43,038)
From accumulated net realized gains from investment transactions:
Class A (30,549,212) (64,233,341) (496,300) (3,293,468)
Class B (4,159,620) (6,427,129) (222,282) (1,225,114)
Class C (2,042,685) (2,186,424) (87,759) (486,028)
Class R (709,668) (1,233,763) (4,836) (38,192)
---------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (45,559,784) (75,367,017) (5,627,123) (9,105,460)
---------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions
Net proceeds from sale of shares 101,938,343 105,953,619 19,407,372 52,403,705
Net proceeds from shares issued to shareholders due to reinvestment
of distributions 28,852,919 49,322,552 3,291,735 5,420,959
---------------------------------------------------------------------------------------------------------------------------------
130,791,262 155,276,171 22,699,107 57,824,664
Cost of shares redeemed (145,978,842) (131,707,460) (57,805,189) (26,489,470)
---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in assets from Fund share transactions (15,187,580) 23,568,711 (35,106,082) 31,335,194
---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (110,861,389) 44,962,463 (43,187,338) 32,664,545
Net assets at the beginning of year 946,694,800 901,732,337 198,314,800 165,650,255
---------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 835,833,411 $ 946,694,800 $155,127,462 $198,314,800
=================================================================================================================================
Balance of undistributed net investment income at the end of year $ 3,074,307 $ 4,525,655 $ 640,382 $ 605,276
=================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
35
<PAGE>
Statement of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
Stock and Bond European Value
-------------------------- ------------------------
Year Ended Year Ended Year Ended Year Ended
6/30/00 6/30/99 6/30/00 6/30/99
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income $ 2,114,483 $ 1,862,915 $ 82,538 $ 82,661
Net realized gain (loss) from investment transactions 5,523,658 2,685,999 1,836,797 (834,511)
Net change in unrealized appreciation or depreciation of investments (8,995,519) 4,176,532 (32,334) 1,037,490
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (1,357,378) 8,725,446 1,887,001 285,640
-----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
From undistributed net investment income:
Class A (1,568,157) (1,491,505) (30,095) (1,314)
Class B (245,431) (170,929) (5,021) --
Class C (143,080) (93,642) (1,092) --
Class R (137,173) (98,001) (49,434) (4,385)
From accumulated net realized gains from investment transactions:
Class A (2,146,376) (2,988,949) (17,974) --
Class B (477,311) (473,062) (16,300) --
Class C (278,764) (232,637) (3,569) --
Class R (162,756) (161,189) (22,473) --
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (5,159,048) (5,709,914) (145,958) (5,699)
-----------------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions
Net proceeds from sale of shares 10,886,010 17,356,264 2,541,787 9,930,964
Net proceeds from shares issued to shareholders due to reinvestment of
distributions 3,505,664 4,127,472 69,293 2,735
-----------------------------------------------------------------------------------------------------------------------------------
14,391,674 21,483,736 2,611,080 9,933,699
Cost of shares redeemed (24,915,310) (20,069,879) (2,452,341) (2,678,059)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in assets from Fund share transactions (10,523,636) 1,413,857 158,739 7,255,640
-----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (17,040,062) 4,429,389 1,899,782 7,535,581
Net assets at the beginning of year 91,954,627 87,525,238 11,253,944 3,718,363
-----------------------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $ 74,914,565 $ 91,954,627 $13,153,726 $11,253,944
===================================================================================================================================
Balance of undistributed net investment income at the end of year $ 34,259 $ 13,617 $ 73,516 $ 76,620
===================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
36
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen Investment Trust (the "Trust") is an open-end, diversified management
investment company registered under the Investment Company Act of 1940. The
Trust comprises the Nuveen Growth and Income Stock Fund ("Growth and Income"),
the Nuveen Balanced Municipal and Stock Fund ("Municipal and Stock"), the Nuveen
Balanced Stock and Bond Fund ("Stock and Bond") and the Nuveen European Value
Fund ("European Value") (collectively, the "Funds"). The Trust was organized as
a Massachusetts business trust in 1996.
Growth and Income invests primarily in a diversified portfolio of large- and
mid-cap equities of domestic companies as a source of capital growth. In
addition to investments in equity securities, the Fund may invest in cash
equivalents and short-term fixed income in vestments in order to preserve
capital or to enhance returns or as a temporary defensive measure.
Municipal and Stock invests in a mix of equities and tax-exempt securities for
capital growth, capital preservation and current tax-exempt income. During
temporary defensive periods, the Fund may invest any percentage of its assets in
temporary investments.
Stock and Bond invests in a mix of equities, taxable bonds and cash equivalents
for capital growth, capital preservation and current income. During temporary
defensive periods, the Fund may invest any percentage of its assets in temporary
investments.
European Value 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
Funds in the preparation of their financial statements in accordance with
accounting principles generally accepted in the United States.
Securities Valuation
Common stocks and other equity-type securities are valued at the last sales
price on the securities exchange on which such securities are primarily traded;
however, securities traded on a securities exchange for which there are no
transactions on a given day or securities not listed on a securities exchange
are valued at the most recent bid prices. The prices of fixed-income securities
are provided by a pricing service and based on the mean between the bid and
asked price. When price quotes are not readily available (which is usually the
case for municipal bonds), the pricing service establishes fair market value
based on prices of comparable securities. Temporary investments in securities
that have variable rate and demand features qualifying them as short-term
securities are valued at amortized cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject
to market fluctuation during this period. The Funds have instructed the
custodian to segregate assets in a separate account with a current value at
least equal to the amount of their when-issued and delayed delivery purchase
commitments. At June 30, 2000, there were no such outstanding purchase
commitments in any of the Funds.
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 and in the case of Municipal and Stock, amortization of premiums.
37
<PAGE>
Notes to Financial Statements (continued)
Dividends and Distributions to Shareholders
Net ordinary taxable income is declared and distributed to shareholders annually
for Growth and Income, Municipal and Stock, and European Value and quarterly
for Stock and Bond. Tax-exempt net investment income is declared and distributed
to shareholders monthly for Municipal and Stock. Net realized capital gains, if
any, for the Funds 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 accounting principles generally accepted in the United
States. 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 Funds intend 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. In addition, Municipal and
Stock intends to satisfy conditions which will enable interest from municipal
obligations, which is exempt from regular federal income tax when received by
the Fund, to qualify as exempt-interest dividends when distributed to
shareholders of the Fund. Net realized capital gains and ordinary income
distributions made by the Funds are subject to federal taxation.
Flexible Sales Charge Program
Each Fund offers Class A, B, C and R Shares. Class A Shares are sold with a
sales charge and incur an annual 12b-1 service fee. Class A Share purchases of
$1 million or more are sold at net asset value without an up-front sales charge
but may be subject to a contingent deferred sales charge ("CDSC") if redeemed
within 18 months of purchase. Class B Shares are sold without a sales charge
but incur annual 12b-1 distribution and service fees. An investor purchasing
Class B Shares agrees to pay a CDSC of up to 5% depending upon the length of
time the shares are held by the investor (CDSC is reduced to 0% at the end of
six years). Class B Shares convert to Class A Shares eight years after
purchase. Class C Shares are sold without a sales charge but incur annual 12b-1
distribution and service fees. An investor purchasing Class C Shares agrees to
pay a CDSC of 1% if Class C Shares are redeemed within one year of purchase.
Class R Shares are not subject to any sales charge or 12b-1 distribution or
service fees. Class R Shares are available for purchase only under limited
circumstances.
Derivative Financial Instruments
The Funds may invest in options, forward and futures contracts, which are
sometimes referred to as derivative transactions. Although the Funds are
authorized to invest in such financial instruments, and may do so in the future,
they did not make any such investments during the fiscal year ended June 30,
2000.
Expense Allocation
Expenses of each 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.
Deferred Organization Costs
Each 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 August 7, 1996 for Growth and Income, Municipal and Stock, and
Stock and Bond and May 29, 1998, for European Value. 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 European Value 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
de nominated 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
European Value 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, options and futures contracts. The Fund will enter into foreign
currency transactions for hedging and other permissible risk management purposes
only. If the Fund
38
<PAGE>
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 European Value'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, 2000, there were no open
foreign currency forward, options or futures contracts.
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby certain custodian
fees and expenses are reduced by credits earned on each Fund's cash on deposit
with the bank. Such deposit arrangements are an alternative to overnight
investments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Growth and Income
--------------------------------------------------------------
Year Ended 6/30/00 Year Ended 6/30/99
----------------------------- ------------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,761,871 $ 44,811,297 2,108,966 $ 51,032,462
Class B 967,092 24,522,740 1,164,391 28,993,639
Class C 1,135,150 28,507,655 901,784 22,488,408
Class R 161,754 4,096,651 139,756 3,439,110
Shares issued to shareholders due to
reinvestment of distributions:
Class A 962,657 24,267,663 1,881,914 42,862,233
Class B 105,666 2,637,854 184,034 4,158,678
Class C 42,467 1,058,472 43,891 990,959
Class R 35,163 888,930 57,417 1,310,682
-------------------------------------------------------------------------------------------------------
5,171,820 130,791,262 6,482,153 155,276,171
-------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (4,534,195) (114,268,646) (4,484,770) (107,597,350)
Class B (754,744) (18,838,768) (523,515) (12,739,469)
Class C (416,410) (10,390,237) (226,134) (5,392,875)
Class R (98,505) (2,481,191) (265,612) (5,977,766)
-------------------------------------------------------------------------------------------------------
(5,803,854) (145,978,842) (5,500,031) (131,707,460)
-------------------------------------------------------------------------------------------------------
Net increase (decrease) (632,034) $ (15,187,580) 982,122 $ 23,568,711
=======================================================================================================
</TABLE>
39
<PAGE>
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
Municipal and Stock
--------------------------------------------------------------------
Year Ended 6/30/00 Year Ended 6/30/99
------------------------------- -------------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 404,996 $ 9,963,144 801,383 $ 19,758,610
Class B 248,954 6,223,578 950,013 23,509,766
Class C 117,947 2,957,347 361,871 9,025,013
Class R 10,768 263,303 4,472 110,316
Shares issued to shareholders due to
reinvestment of distributions:
Class A 104,555 2,584,344 166,972 4,085,713
Class B 19,984 503,090 38,607 947,489
Class C 6,904 172,438 13,468 330,353
Class R 1,298 31,863 2,354 57,404
----------------------------------------------------------------------------------------------------------
915,406 22,699,107 2,339,140 57,824,664
----------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,537,171) (37,787,854) (695,219) (17,146,719)
Class B (470,498) (11,702,549) (202,066) (5,046,935)
Class C (323,269) (8,007,667) (160,113) (3,961,328)
Class R (12,681) (307,119) (13,418) (334,488)
----------------------------------------------------------------------------------------------------------
(2,343,619) (57,805,189) (1,070,816) (26,489,470)
----------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,428,213) $(35,106,082) 1,268,324 $ 31,335,194
==========================================================================================================
Stock and Bond
--------------------------------------------------------------------
Year Ended 6/30/00 Year Ended 6/30/99
------------------------------- -------------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------
Shares sold:
Class A 208,394 $ 5,424,708 249,981 $ 6,320,839
Class B 92,046 2,420,178 224,425 5,686,636
Class C 91,257 2,385,624 180,324 4,627,668
Class R 25,474 655,500 28,167 721,121
Shares issued to shareholders due to
reinvestment of distributions:
Class A 104,968 2,725,992 136,296 3,414,330
Class B 14,345 371,683 14,507 362,620
Class C 5,005 129,615 4,175 104,710
Class R 10,719 278,374 9,825 245,812
----------------------------------------------------------------------------------------------------------
552,208 14,391,674 847,700 21,483,736
----------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (714,987) (18,543,074) (540,472) (13,837,529)
Class B (134,944) (3,482,397) (158,426) (4,121,472)
Class C (96,385) (2,477,972) (78,718) (2,018,644)
Class R (16,156) (411,867) (3,791) (92,234)
----------------------------------------------------------------------------------------------------------
(962,472) (24,915,310) (781,407) (20,069,879)
----------------------------------------------------------------------------------------------------------
Net increase (decrease) (410,264) $(10,523,636) 66,293 $ 1,413,857
==========================================================================================================
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
European Value
----------------------------------------------------
Year Ended 6/30/00 Year Ended 6/30/99
---------------------- ------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 43,145 $ 963,730 194,861 $ 3,715,826
Class B 24,436 554,536 186,211 3,593,989
Class C 7,549 171,403 47,596 931,339
Class R 36,974 852,118 86,684 1,689,810
Shares issued to shareholders due to reinvestment of distributions:
Class A 1,478 34,370 69 1,043
Class B 562 12,755 5 104
Class C 77 1,748 -- --
Class R 875 20,420 98 1,588
----------------------------------------------------------------------------------------------------------------------------
115,096 2,611,080 515,524 9,933,699
----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (62,628) (1,406,509) (37,589) (672,167)
Class B (29,349) (659,593) (46,856) (907,051)
Class C (5,642) (120,771) (14,227) (253,272)
Class R (11,818) (265,468) (45,249) (845,569)
----------------------------------------------------------------------------------------------------------------------------
(109,437) (2,452,341) (143,921) (2,678,059)
----------------------------------------------------------------------------------------------------------------------------
Net increase 5,659 $ 158,739 371,603 $ 7,255,640
============================================================================================================================
</TABLE>
3. Distributions to Shareholders
Municipal and Stock declared a dividend distribution from its tax-exempt net
investment income which was paid on August 1, 2000, to shareholders of record
on July 7, 2000, as follows:
Municipal
and Stock
-------------------------------------------------------------------------------
Dividend per share:
Class A $.0525
Class B .0375
Class C .0375
Class R .0570
===============================================================================
4. Securities Transactions
Purchases and sales (including maturities) of investment securities, U.S.
Government and agency obligations and short-term investments for the fiscal
year ended June 30, 2000, were as follows:
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases:
Investment securities $1,282,574,823 $ 92,925,305 $ 62,383,302 $33,580,117
U.S. Government and agency obligations 1,502,936,385 -- 94,574,010 --
Short-term investments 2,900,439,510 6,300,000 243,047,551 --
Sales and maturities:
Investment securities 1,322,646,817 124,656,227 69,965,915 34,122,674
U.S. Government and agency obligations 1,503,300,000 -- 99,414,550
Short-term investments 2,915,338,508 9,800,000 244,900,000 --
===================================================================================================================
</TABLE>
At June 30, 2000, the identified cost of investments owned for federal income
tax purposes were as follows:
<TABLE>
<CAPTION>
Growth and Municipal and Stock and European
Income Stock Bond Value
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 813,763,413 $ 151,939,748 $ 72,123,149 $ 11,478,750
===================================================================================================================
</TABLE>
41
<PAGE>
Notes to Financial Statements (continued)
5. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
for federal income tax purposes at June 30, 2000, were as follows:
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross unrealized:
appreciation $ 90,507,579 $ 9,681,722 $ 6,154,545 $ 1,374,141
depreciation (59,423,003) (7,311,018) (3,620,796) (503,577)
--------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 31,084,576 $ 2,370,704 $ 2,533,749 $ 870,564
================================================================================================================================
</TABLE>
6. Management Fee and Other Transactions with Affiliates
Under the Funds' investment management agreement with Nuveen Institutional
Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen
Company, the Funds pay an annual management fee, payable monthly, which is based
upon the average daily net assets of the Funds as follows:
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
For the first $125 million .8500 of 1% .7500 of 1% .7500 of 1% .9500 of 1%
For the next $125 million .8375 of 1 .7375 of 1 .7375 of 1 .9375 of 1
For the next $250 million .8250 of 1 .7250 of 1 .7250 of 1 .9250 of 1
For the next $500 million .8125 of 1 .7125 of 1 .7125 of 1 .9125 of 1
For the next $1 billion .8000 of 1 .7000 of 1 .7000 of 1 .9000 of 1
For net assets over $2 billion .7750 of 1 .6750 of 1 .6750 of 1 .8750 of 1
==============================================================================================================================
</TABLE>
The Adviser had 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 1.05% of
the average daily net assets of Growth and Income, .95% of the average daily
net assets of Municipal and Stock, and Stock and Bond, and 1.30% of the average
daily net as sets of European Value. Effective August 1, 2000, the Adviser
agreed to waive fees and reimburse expenses through July 31, 2001, in order to
prevent total operating expenses (excluding 12b-1 distribution or service fees
and extaordinary expenses) from exceeding 1.05% of the average daily net assets
of Municipal and Stock, and Stock and Bond, and 1.30% of the average daily net
assets of European Value.
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 investment portfolio of Growth and Income, Stock and Bond, and
European Value, as well as the equity portion of Municipal and Stock's
investment portfolio. ICAP is compensated for its services from the management
fee paid to the Adviser. The Trust 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 Trust from the Adviser. During
the fiscal year ended June 30, 2000, John Nuveen & Co. Incorporated (the
"Distributor"), a wholly owned subsidiary of The John Nuveen Company, collected
sales charges on purchases of Class A Shares, the majority of which were paid
out as concessions to authorized dealers as follows:
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales charges collected $503,316 $107,219 $39,388 $10,165
Paid to authorized dealers 467,843 96,116 34,784 8,998
==============================================================================================================================
</TABLE>
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, 2000, the Distributor compensated
authorized dealers directly with commission advances at the time of purchase as
follows:
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commission advances $1,077,638 $243,493 $93,830 $11,390
==============================================================================================================================
</TABLE>
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 collected on Class B Shares, and all 12b-1 service
and distribution fees collected on Class C Shares during the first year
following a purchase are retained by the Distributor. During the fiscal year
ended June 30, 2000, the Distributor retained such 12b-1 fees as follows:
42
<PAGE>
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12b-1 fees retained $ 1,052,780 $ 445,593 $ 135,408 $ 29,457
==============================================================================================================================
</TABLE>
The remaining 12b-1 fees charged to the Fund were paid to compensate authorized
dealers for providing services to shareholders relating to their investments.
The Distributor also collected and retained CDSC on share redemptions during the
fiscal year ended June 30, 2000, as follows:
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CDSC retained $ 495,956 $ 321,856 $ 82,771 $ 21,794
==============================================================================================================================
</TABLE>
At June 30, 2000, The John Nuveen Company owned 145,000 shares of European Value
Class R.
7. Composition of Net Assets
At June 30, 2000, the Funds had an unlimited number of $.01 par value per share
common stock authorized. Net assets consisted of:
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital paid-in $ 723,915,215 $ 145,559,312 $ 67,054,777 $ 11,138,557
Balance of undistributed net investment income 3,074,307 640,382 34,259 73,516
Accumulated net realized gain from investment transactions 71,136,035 6,111,002 4,993,547 946,944
Net unrealized appreciation of investments 37,707,854 2,816,766 2,831,982 994,709
------------------------------------------------------------------------------------------------------------------------------
Net assets $ 835,833,411 $ 155,127,462 $ 74,914,565 $ 13,153,726
==============================================================================================================================
</TABLE>
8. Investment Composition
At June 30, 2000, the revenue sources expressed as a percent of total
investments were as follows:
<TABLE>
<CAPTION>
Growth and Municipal Stock and European
Income and Stock Bond Value
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic Materials 7% 3% 4% 7%
Capital Goods 4 2 3 8
Consumer Cyclicals 19 8 12 13
Consumer Staples 11 2 4 17
Education and Civic Organizations - 6 - -
Energy 7 3 5 9
Financials 17 7 10 26
Health Care 10 10 7 5
Housing/Multifamily - 4 - -
Housing/Single Family - 5 - -
Tax Obligation/General - 4 - -
Tax Obligation/Limited - 8 - -
Technology 11 4 7 1
Transportation - 6 - -
U.S. Guaranteed - 6 39 -
Utilities 14 20 9 14
Other - 2 - -
-----------------------------------------------------------------------------------------------------------------------------
100% 100% 100% 100%
=============================================================================================================================
</TABLE>
30% of the municipal bonds owned by Municipal and Stock are either covered by
insurance issued by several private insurers or are backed by an escrow or trust
containing U.S. Government or U.S. Government agency securities, either of which
ensure the timely payment of principal and interest in the event of default.
Such insurance or escrow, however, does not guarantee the market value of the
municipal securities or the value of any of the Funds' shares.
For additional information regarding each investment security, refer to the
Portfolio of Investments of each Fund.
43
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- ---------------------------
Growth and Income
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 (Loss) Total Income Gains Total Value Return (a)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 $27.07 $.22 $(1.62) $(1.40) $(.25) $(1.07) $(1.32) $24.35 (5.33)%
1999 26.50 .19 2.64 2.83 (.04) (2.22) (2.26) 27.07 12.37
1998 24.01 .26 4.55 4.81 (.25) (2.07) (2.32) 26.50 21.59
1997 (d)** 17.96 .30 6.18 6.48 (.20) (.23) (.43) 24.01 36.30
Class B (8/96)
2000 26.87 .03 (1.60) (1.57) (.06) (1.07) (1.13) 24.17 (5.97)
1999 26.47 .01 2.61 2.62 -- (2.22) (2.22) 26.87 11.52
1998 24.00 .10 4.51 4.61 (.07) (2.07) (2.14) 26.47 20.70
1997 (d)** 17.97 .21 6.13 6.34 (.08) (.23) (.31) 24.00 35.37
Class C (8/96)
2000 26.84 .03 (1.61) (1.58) (.06) (1.07) (1.13) 24.13 (5.97)
1999 26.43 .01 2.62 2.63 -- (2.22) (2.22) 26.84 11.58
1998 23.98 .10 4.49 4.59 (.07) (2.07) (2.14) 26.43 20.63
1997 (d)** 17.97 .21 6.11 6.32 (.08) (.23) (.31) 23.98 35.26
Class R (8/96)
2000 27.14 .28 (1.62) (1.34) (.32) (1.07) (1.39) 24.41 (5.13)
1999 26.52 .24 2.67 2.91 (.07) (2.22) (2.29) 27.14 12.71
1998 24.02 .32 4.56 4.88 (.31) (2.07) (2.38) 26.52 21.91
1997 (d)** 17.96 .30 6.24 6.54 (.25) (.23) (.48) 24.02 36.65
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
------------------ ------------------ ------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Assets Net Net Net Net Net Net Turnover
(000) Assets Assets Assets Assets Assets Assets Rate
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 $ 669,651 1.34% .82% 1.30% .85% 1.30% .86% 155%
1999 793,546 1.28 .72 1.24 .76 1.24 .76 134
1998 790,063 1.36 .88 1.20 1.04 1.20 1.04 131
1997 (d)** 616,209 1.28* 1.45* 1.20* 1.53* 1.20* 1.53* 110
Class B (8/96)
2000 93,275 2.09 .08 2.06 .11 2.05 .12 155
1999 95,174 2.03 (.01) 1.99 .03 1.99 .03 134
1998 71,909 2.11 .22 1.95 .38 1.95 .38 131
1997 (d)** 10,664 2.03* .95* 1.95* 1.03* 1.95* 1.03* 110
Class C (8/96)
2000 55,303 2.11 .06 2.07 .09 2.05 .10 155
1999 41,071 2.02 .01 1.98 .04 1.98 .04 134
1998 21,426 2.11 .23 1.95 .39 1.95 .39 131
1997 (d)** 3,630 2.03* .96* 1.95* 1.04* 1.95* 1.04* 110
Class R (8/96)
2000 17,604 1.10 1.06 1.06 1.09 1.05 1.10 155
1999 16,904 1.03 .96 .99 1.00 .99 1.00 134
1998 18,335 1.11 1.10 .95 1.26 .95 1.26 131
1997 (d)** 15,647 1.47* 1.04* .95* 1.56* .95* 1.56* 110
===============================================================================================================
</TABLE>
* Annualized.
** All per share amounts reflect a December 18, 1996, stock split of 1.113830,
1.112700, 1.112700 and 1.113806 shares, respectively, for each share of
Class A, B, C and R.
(a) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable.
(c) After custodian fee credit and expense reimbursement, where applicable.
(d) From commencement of class operations as noted.
44
<PAGE>
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
------------------------------- ------------------------------
Municipal and Stock Net
Realized/
Unrealized Ending
Beginning Net Investment Net Net
Year Ended Net Asset Investment Gain Investment Capital Asset Total
June 30, Value Income (Loss) Total Income Gains Total Value Return (a)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 $25.45 $.74 $ (.96) $(.22) $(.81) $(.11) $ (.92) $24.31 (.83)%
1999 25.46 .62 .70 1.32 (.65) (.68) (1.33) 25.45 5.49
1998 23.11 .67 2.66 3.33 (.61) (.37) (.98) 25.46 14.71
1997 (d) 20.00 .56 3.02 3.58 (.42) (.05) (.47) 23.11 18.05
Class B (8/96)
2000 25.65 .57 (.97) (.40) (.44) (.11) (.55) 24.70 (1.57)
1999 25.53 .46 .68 1.14 (.34) (.68) (1.02) 25.65 4.71
1998 23.11 .49 2.67 3.16 (.37) (.37) (.74) 25.53 13.91
1997 (d) 20.00 .40 3.04 3.44 (.28) (.05) (.33) 23.11 17.32
Class C (8/96)
2000 25.63 .57 (.97) (.40) (.44) (.11) (.55) 24.68 (1.57)
1999 25.51 .45 .69 1.14 (.34) (.68) (1.02) 25.63 4.71
1998 23.10 .49 2.66 3.15 (.37) (.37) (.74) 25.51 13.87
1997 (d) 20.00 .40 3.03 3.43 (.28) (.05) (.33) 23.10 17.27
Class R (8/96)
2000 25.33 .80 (.96) (.16) (.93) (.11) (1.04) 24.13 (.64)
1999 25.39 .68 .71 1.39 (.77) (.68) (1.45) 25.33 5.81
1998 23.11 .72 2.66 3.38 (.73) (.37) (1.10) 25.39 14.94
1997 (d) 20.00 .61 3.03 3.64 (.48) (.05) (.53) 23.11 18.38
=========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class (Inception Date)
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
----------------------- ----------------------- -----------------------
Municipal and Stock Ratio Ratio Ratio
of Net of Net of Net
Ending Ratio of Investment Ratio of Investment Ratio of Investment
Net Expenses Income Expenses Income Expenses Income Portfolio
Year Ended Assets to Average to Average to Average to Average to Average to Average Turnover
June 30, (000) Net Assets Net Assets Net Assets Net Assets Net Assets Net Assets Rate
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 $ 93,400 1.26% 2.95% 1.21% 3.01% 1.20% 3.02% 53%
1999 123,917 1.23 2.49 1.19 2.52 1.19 2.52 52
1998 117,005 1.36 2.47 1.10 2.73 1.10 2.73 87
1997 (d) 79,952 1.58* 2.31* 1.10* 2.79* 1.10* 2.79* 32
Class B (8/96)
2000 45,779 2.01 2.20 1.96 2.26 1.95 2.27 53
1999 52,718 1.98 1.80 1.94 1.83 1.94 1.83 52
1998 32,384 2.10 1.71 1.85 1.96 1.85 1.96 87
1997 (d) 2,051 2.22* 1.62* 1.85* 1.99* 1.85* 1.99* 32
Class C (8/96)
2000 14,837 2.01 2.21 1.96 2.27 1.95 2.28 53
1999 20,498 1.98 1.76 1.94 1.80 1.94 1.80 52
1998 14,908 2.11 1.71 1.85 1.97 1.85 1.97 87
1997 (d) 1,559 2.29* 1.53* 1.85* 1.97* 1.85* 1.97* 32
Class R (8/96)
2000 1,111 1.01 3.20 .96 3.26 .95 3.26 53
1999 1,182 .98 2.72 .94 2.76 .94 2.77 52
1998 1,353 1.11 2.73 .85 2.99 .85 2.99 87
1997 (d) 6,963 2.05* 1.96* .85* 3.16* .85* 3.16* 32
=========================================================================================================================
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable.
(c) After custodian fee credit and expense reimbursement, where applicable.
(d) From commencement of class operations as noted.
45
<PAGE>
Financial Highlights (continued)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
--------------------------- -------------------------
Stock and Bond
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 (Loss) Total Income Gains Total Value Return (a)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 $ 27.18 $.69 $(1.02) $(.33) $(.70) $ (.95) $(1.65) $25.20 (1.23)%
1999 26.39 .58 1.93 2.51 (.57) (1.15) (1.72) 27.18 10.21
1998 23.84 .77 3.11 3.88 (.76) (.57) (1.33) 26.39 16.71
1997 (d) 20.00 .70 3.66 4.36 (.42) (.10) (.52) 23.84 22.04
Class B (8/96)
2000 27.18 .50 (1.02) (.52) (.51) (.95) (1.46) 25.20 (1.97)
1999 26.39 .39 1.93 2.32 (.38) (1.15) (1.53) 27.18 9.39
1998 23.84 .59 3.10 3.69 (.57) (.57) (1.14) 26.39 15.86
1997 (d) 20.00 .46 3.75 4.21 (.27) (.10) (.37) 23.84 21.26
Class C (8/96)
2000 27.19 .50 (1.02) (.52) (.51) (.95) (1.46) 25.21 (1.93)
1999 26.39 .40 1.93 2.33 (.38) (1.15) (1.53) 27.19 9.39
1998 23.84 .59 3.10 3.69 (.57) (.57) (1.14) 26.39 15.86
1997 (d) 20.00 .53 3.68 4.21 (.27) (.10) (.37) 23.84 21.26
Class R (8/96)
2000 27.18 .76 (1.03) (.27) (.77) (.95) (1.72) 25.19 (1.02)
1999 26.39 .65 1.93 2.58 (.64) (1.15) (1.79) 27.18 10.48
1998 23.84 .83 3.11 3.94 (.82) (.57) (1.39) 26.39 16.99
1997 (d) 20.00 .61 3.80 4.41 (.47) (.10) (.57) 23.84 22.31
=========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
----------------- ------------------ ------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Assets Net Net Net Net Net Net Turnover
(000) Assets Assets Assets Assets Assets Assets Rate
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 $52,470 1.38% 2.50% 1.21% 2.66% 1.20% 2.67% 81%
1999 67,512 1.36 2.10 1.19 2.27 1.19 2.27 96
1998 69,614 1.48 2.68 1.10 3.06 1.10 3.06 86
1997 (d) 56,686 1.71* 2.78* 1.10* 3.39* 1.10* 3.39* 52
Class B (8/96)
2000 11,200 2.13 1.76 1.96 1.92 1.95 1.93 81
1999 12,856 2.11 1.38 1.94 1.54 1.94 1.54 96
1998 10,356 2.24 1.93 1.85 2.32 1.85 2.32 86
1997 (d) 646 2.49* 1.59* 1.85* 2.23* 1.85* 2.23* 52
Class C (8/96)
2000 6,620 2.13 1.76 1.96 1.93 1.95 1.93 81
1999 7,142 2.10 1.38 1.94 1.54 1.94 1.55 96
1998 4,142 2.24 1.92 1.85 2.31 1.85 2.31 86
1997 (d) 980 2.31* 2.07* 1.85* 2.53* 1.85* 2.53* 52
Class R (8/96)
2000 4,625 1.13 2.74 .96 2.91 .95 2.92 81
1999 4,445 1.11 2.37 .94 2.53 .94 2.53 96
1998 3,413 1.23 2.94 .85 3.32 .85 3.32 86
1997 (d) 6,052 2.29* 1.68* .85* 3.12* .85* 3.12* 52
============================================================================================================
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(b) After expense reimbursement from the investment adviser, where
applicable.
(c) After custodian fee credit and expense reimbursement, where applicable.
(d) From commencement of class operations as noted.
46
<PAGE>
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
------------------------------- ------------------------------
European Value Net
Realized/
Unrealized Ending
Beginning Net Investment Net Net
Year Ended Net Asset Investment Gain Investment Capital Asset Total
June 30, Value Income (Loss) Total Income Gains Total Value Return (a)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/98)
2000 $20.17 $.18 $3.28 $3.46 $(.18) $(.11) $(.29) $23.34 17.22%
1999 19.86 .22 .10 .32 (.01) -- (.01) 20.17 1.63
1998 (d) 20.00 .02 (.14) (.12) (.02) -- (.02) 19.86 (.59)
Class B (5/98)
2000 20.04 .01 3.26 3.27 (.03) (.11) (.14) 23.17 16.34
1999 19.87 .04 .13 .17 -- -- -- 20.04 .86
1998 (d) 20.00 .03 (.15) (.12) (.01) -- (.01) 19.87 (.60)
Class C (5/98)
2000 20.04 .01 3.25 3.26 (.03) (.11) (.14) 23.16 16.29
1999 19.87 .07 .10 .17 -- -- -- 20.04 .86
1998 (d) 20.00 .01 (.13) (.12) (.01) -- (.01) 19.87 (.60)
Class R (5/98)
2000 20.21 .24 3.29 3.53 (.24) (.11) (.35) 23.39 17.44
1999 19.87 .23 .13 .36 (.02) -- (.02) 20.21 1.86
1998 (d) 20.00 .03 (.13) (.10) (.03) -- (.03) 19.87 (.52)
=========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class (Inception Date)
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------------
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
----------------------- ----------------------- -----------------------
Municipal and Stock Ratio Ratio Ratio
of Net of Net of Net
Ending Ratio of Investment Ratio of Investment Ratio of Investment
Net Expenses Income Expenses Income Expenses Income Portfolio
Year Ended Assets to Average to Average to Average to Average to Average to Average Turnover
June 30, (000) Net Assets Net Assets Net Assets Net Assets Net Assets Net Assets Rate
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/98)
2000 $3,373 3.36% (1.00)% 1.56% .80% 1.55% .81% 281%
1999 3,277 2.44 .26 1.55 1.15 1.55 1.15 230
1998 (d) 102 14.82* (11.94)* 1.55* 1.33* 1.55* 1.33* 5
Class B (5/98)
2000 3,518 4.17 (1.83) 2.31 .03 2.30 .04 281
1999 3,130 3.17 (.68) 2.30 .19 2.30 .19 230
1998 (d) 335 14.56* (10.67)* 2.30* 1.59* 2.30* 1.59* 5
Class C (5/98)
2000 868 4.22 (1.86) 2.31 .05 2.30 .06 281
1999 711 3.20 (.56) 2.30 .34 2.30 .35 230
1998 (d) 42 15.88* (12.98)* 2.30* .60* 2.30* .60* 5
Class R (5/98)
2000 5,395 3.22 (.85) 1.31 1.06 1.30 1.07 281
1999 4,135 2.20 .30 1.30 1.20 1.30 1.20 230
1998 (d) 3,240 15.04* (11.99)* 1.30* 1.75* 1.30* 1.75* 5
=========================================================================================================================
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable.
(c) After custodian fee credit and expense reimbursement, where applicable.
(d) From commencement of class operations as noted.
47
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Investment Trust:
We have audited the accompanying statement of net assets of Nuveen Investment
Trust (comprising the Nuveen Growth and Income Stock Fund, Nuveen Balanced
Municipal and Stock Fund, Nuveen Balanced Stock and Bond Fund and Nuveen
European Value Fund (the "Funds")) (a Massachusetts business trust), including
the portfolio of investments, as of June 30, 2000, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years then ended and the financial highlights for the periods
indicated thereon. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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, 2000, 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 each of the
respective funds constituting the Nuveen Investment Trust as of June 30, 2000,
the results of their operations for the year then ended, the changes in their
net assets for each of the two years then ended, and the financial highlights
for the periods indicated thereon in conformity with accounting principles
generally accepted in the United States.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 23, 2000
48
<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.
73 Tremont Street
Boston, MA 02108
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
49
<PAGE>
Serving
Investors
For Generations
--------------------------------------------------------------------------------
A 100-Year Tradition of Quality Investments
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since 1898, John Nuveen & Co. Incorporated has been synonymous with investments
that withstand the test of time. In fact, more than 1.3 million investors have
trusted Nuveen to help them build and sustain the wealth of a lifetime.
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. We can help
you build a better, well-diversified portfolio.
Call Your Financial Advisor Today
To find out how Nuveen Mutual Funds might round out your investment portfolio,
contact your financial advisor today. Or call Nuveen at (800) 257-8787 for more
information. Ask your advisor or call for a prospectus, which details risks,
fees and expenses. Please read the prospectus carefully before you invest.
Nuveen Investments
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
www.nuveen.com
