<PAGE>
December 31, 1999 Semiannual Report
[NUVEEN LOGO]
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Growth and Income Stock Fund
For investors seeking
long-term growth potential
and attractive value.
Featuring Portfolio Management By Institutional Capital Corporation
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective
6 Fund Spotlight
7 Portfolio of Investments
9 Statement of Net Assets
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Notes to Financial Statements
16 Financial Highlights
17 Fund Information
<PAGE>
DEAR
Shareholder
[Photo of Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
How did you gain your financial wisdom? While some of us study finance, the
financial markets, economics or related disciplines in formal programs, most of
us end up accumulating practical knowledge through the years, from friends,
family, colleagues and media.
At Nuveen, we believe a formal financial education should start early in life. A
study sponsored by the National Council on Economic Education shows that a
whopping 66% of high school students tested on basic money skills scored an "F."
Only 3% received an "A."
Because we believe strongly in education and are committed to children's
financial literacy, we have launched a community service program, Kid$ense, in
our hometown of Chicago.
The Kid$ense curriculum, which is available for grades kindergarten through
sixth, includes textbooks, teaching materials and teacher training. The lessons
introduce children to the concept of money and how it works in society; buying,
selling and trading; working, earning, saving and investing.
Nuveen's commitment to children's financial literacy goes beyond the 250
Chicago public schools who have benefited from the Kid$ense curriculum. We also
have a commitment to family wealth management, which is a positive philosophy
that addresses the role of wealth in our lives and our world.
At Nuveen, we are dedicated to helping you and your financial adviser
develop a family wealth management strategy unique to you and your goals and
values. In your next shareholder report, look for more information about
Nuveen's dedication to Family Wealth Management, or ask your financial adviser
about this new approach to investing.
The Economic Environment. I want to briefly report on the economic environment
in which your Nuveen investment performed. Read on, as we've conducted an in-
depth interview with a representative from your fund's portfolio management
team, describing how the team of investment and research professionals directed
the portfolio during the semiannual fiscal period ended December 31, 1999.
The equity markets ended 1999 with a record-breaking performance as the Dow
Jones Industrial Average reached 11,497. The Standard and Poor's (S&P) 500 Stock
Index rose more than 21%, following gains that averaged 30% annually the
preceding four years. Strong performance of technology stocks drove the equity
market in 1999, and returns were highly concentrated; about one-half of the
stocks in the S&P 500 declined last year.
The economy has now experienced the longest business-cycle expansion in
U.S. history. However, concerns about the continued pace of the economy's
expansion have begun to test the "new paradigm," which holds that improvements
in productivity enable us to have both economic growth and low inflation at the
same time. With investors and the various markets watching -- and reacting to --
every announcement concerning economic statistics, volatility has increased,
especially in the equity markets.
"We also have a
commitment to
family wealth
management,
which is a
positive philosophy
that addresses
the role of wealth
in our lives
and our world."
SEMIANNUAL REPORT page 1
<PAGE>
"Your financial
adviser can serve
as a valuable
resource in helping
you determine if
adjustments are
needed in your
current asset
allocation plan."
The portfolio management team for your Nuveen fund plans to continue to
focus on finding value in the markets, partly through their Global Revival
theme. They expect companies in this theme will see strong earnings growth as
economic activity improves around the world. The portfolios also continue to
emphasize company-specific situations, particularly where a significant
restructuring action is expected to unlock value.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets may be better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial adviser. 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 finding the best
ways to serve your evolving investment needs. Thank you for your continued
confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
February 15, 2000
SEMIANNUAL 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 from
Institutional Capital Corporation (ICAP), which specializes in large
capitalization equities. To help you understand the fund's performance during
the six-month period ending December 31, 1999, we spoke with Rob Lyon, president
and chief investment officer of ICAP, the subadviser of the fund.
Q In the six-month period ending December 31, 1999, the Federal Reserve Board
(the Fed) raised interest rates twice in response to the threat of inflation and
continued economic strength. Meanwhile, the S&P 500 Index finished the year up
21%, the fifth consecutive annual increase of more than 20%. How did this
environment affect the Nuveen Growth and Income Stock Fund?
ROB The Fed raised interest rates over the period by a total of 50 basis
points, causing temporary slumps in stock prices, which quickly turned around to
finish the year on a high note. Although value-oriented stocks had shown some
recovery at the end of the last reporting period, rising interest rates halted
the resurgence, and value stocks underperformed growth stocks for the calendar
year.
The Nuveen Growth and Income Stock Fund, which focuses on value stocks,
returned -1.83% for the six-month period ended December 31, 1999.*
Q As the economy has grown in the past several years and investors have sought
out companies with consistent earnings, growth stocks, which tend to have higher
earnings growth rates than value stocks, have been among the market's best
performers. What causes value stocks to fall in and out of favor? What happened
in 1999?
ROB Historically speaking, value-oriented stocks have tended to outperform
during periods of strong and/or accelerating global activity. It didn't happen
this way in 1999, largely because of differentials in sector performance. Value
managers were challenged by the combination of extremely strong returns in
technology -- a growth-oriented sector -- and very weak (in fact, negative)
performance in financials -- a value-oriented sector. In fact, the technology
sector alone accounted for about 70% of the entire return of the S&P 500 index.
Technology stocks were selling at an average 79 times earnings as of
December 31, 1999, compared to non-technology stocks at an average of 29 times
earnings. Based on the current components of the index, it's obvious that if the
technology sector has a period of extended losses, the entire S&P 500 will
suffer. We think value investing will regain momentum if that happens.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
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 be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's subadviser for value investing, Institutional Capital Corporation
(ICAP), is a highly successful institutional money manager with nearly 30 years
of experience. They specialize in finding undervalued midsize and large company
stocks that are poised for significant growth.
This disciplined, research-oriented approach is the key investment strategy for
Nuveen Growth and Income Stock Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the six-month period ended December 31, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
* For the one-year time period ending December 31, 1999, the Nuveen Growth and
Income Stock Fund had a total return of 14.64%. Since the fund's inception
August 7, 1996, the fund had an average annual total return of 19.43%. The
returns assume reinvestment of dividends and do not reflect any applicable
sales charges.
SEMIANNUAL REPORT page 3
<PAGE>
"Our investment
process involves
seeking out stocks
of established,
well-known
companies that
we believe offer
unrecognized value
with a `catalyst'
that may trigger
a rise in the
stocks' prices."
Q How do you manage a value-oriented fund in a market that favors growth
stocks?
ROB Our investment process involves seeking out stocks of established, well-
known companies that we believe offer unrecognized value with a "catalyst" that
may trigger a rise in the stocks' prices. We follow two primary investment
themes to help us look for such companies that stand to benefit from the current
economic environment.
The first theme is corporate restructurings, which focuses on companies
with past challenges that now have specific restructuring programs well
underway. One prime example of this theme is one of the fund's largest holdings,
Philips Electronics N.V., whose cost-cutting initiatives continued to create a
more focused corporate strategy throughout the period. Philips gained over 100%
in 1999 and performed especially well in the fourth quarter.
We instituted our global revival theme in the spring of 1999, which focused
on the stocks of companies that we believed would experience better earnings
growth as a result of an improving world economy. We believe that if earnings
growth does continue to improve, that will in turn be reflected in better stock
price performance. Some holdings we are watching are in the basic industries
(Alcan, Union Carbide) and energy (Conoco, Texaco, Exxon Mobil) sectors.
Q Since, as value investors, you look for companies that may be out of favor
but have strong turnaround prospects, how do you know if it is time to sell a
holding?
ROB We have a rigorous sell discipline in place, so that, while we buy
companies when they are out of favor, we monitor them continuously to see if
they meet our expectations for a turnaround. If there are adverse fundamental
changes or potential long-term hindrances to what we see as a company's growth
potential, we sell.
One example is Xerox. During the fourth quarter of 1999 we sold our
holdings in Xerox, which made up a fairly substantial portion of the portfolio,
because of an unexpected earnings shortfall and anticipated future
underperformance. The earnings shortfall was due to many factors, including a
business mix shift to the lower-margin business of document outsourcing, a
realignment of the sales force, and an increase in bad debts. We expected that
all of these issues would continue to an equal or greater degree into 2000, so
we decided to put that part of the fund's assets to better use.
NUVEEN GROWTH AND INCOME STOCK FUND
- ------------------------------------------------
Top Ten Stock Holdings
- ------------------------------------------------
Philips Electronics N.V. 4.7%
- ------------------------------------------------
U.S. West, Inc. 3.8%
- ------------------------------------------------
Ford Motor Company 3.4%
- ------------------------------------------------
Motorola, Inc. 3.3%
- ------------------------------------------------
Aventis SA Sponsored ADR 3.0%
- ------------------------------------------------
Citigroup Inc. 3.0%
- ------------------------------------------------
Exxon Mobil Corporation 3.0%
- ------------------------------------------------
News Corporation Limited Sponsored ADR 2.9%
- ------------------------------------------------
Bell Atlantic Corporation 2.9%
- ------------------------------------------------
Baxter International Inc. 2.9%
- ------------------------------------------------
As a percentage of total stock holdings as of December 31, 1999.
Holdings are subject to change.
SEMIANNUAL REPORT page 4
<PAGE>
Q What is your outlook for the equity markets and for value stocks in 2000?
ROB In light of the building momentum in the global economy, we have taken
steps to increase exposure to more cyclical sectors such as basic materials and
energy. Producers in these industries should enjoy some degree of pricing
flexibility going forward, in our opinion.
As far as value stocks go, it is easy to forget in this high-flying market
that value has outperformed growth over the long haul. In fact, in the 25 year
period ending December 31, 1999, the total return for value stocks as measured
by the S&P 500/Barra Value Index was 17.31% verses the total return of 16.76%
for growth stocks, as measured by the S&P 500/Barra Growth Index.
We believe that seeking what are, in our opinion, attractively-priced
stocks of companies that can benefit from the infrastructure of a new economy
will position the fund strongly for the near future. We believe there is a solid
investment case for "old economy" companies that have strong business franchises
and that are repositioning for the future.
NUVEEN GROWTH AND INCOME STOCK FUND
- -----------------------------------
Top Five Sectors
- -----------------------------------
Consumer Cyclicals 21.4%
- -----------------------------------
Financials 14.6%
- -----------------------------------
Technology 11.7%
- -----------------------------------
Health Care 11.3%
- -----------------------------------
Communications 10.4%
- -----------------------------------
As a percentage of total stock holdings as of December 31, 1999.
Holdings are subject to change.
"We believe there is a
solid investment case
for "old economy"
companies that
have strong business
franchises and that
are repositioning
for the future."
SEMIANNUAL REPORT page 5
<PAGE>
NUVEEN GROWTH AND INCOME STOCK FUND
Fund Spotlight as of December 31, 1999
Terms To Know
The following are a few terms used throughout this report.
Beta Beta is a measure of a fund's volatility compared to the market's. A fund
with a beta of 1.20 is approximately 20% more volatile than the market, while a
fund with a beta of 0.80 is approximately 20% less volatile than the market.
Market capitalization Also referred to as market cap, market capitalization is a
measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: more than $5 billion in
market capitalization
Mid cap: between $1 billion
and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $25.25 $25.16 $25.12 $25.28
- -----------------------------------------------------------------------
Fund Symbol NNGAX NNGBX NNGCX NNGRX
- -----------------------------------------------------------------------
CUSIP 67064Y503 67064Y602 67064Y701 67064Y800
- -----------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
- -----------------------------------------------------------------------
</TABLE>
Portfolio Allocation
[PIE CHART APPEARS HERE]
Equity.............. 95%
Cash Equivalents.... 5%
<TABLE>
<CAPTION>
Total Returns (Annualized)+
<S> <C> <C> <C> <C>
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
1-Year 14.64% 8.07% 13.86% 9.86% 13.88% 14.89%
- -------------------------------------------------------------------------------
3-Year 17.11% 14.82% 16.25% 15.50% 16.20% 17.43%
- -------------------------------------------------------------------------------
Since
Inception 19.43% 17.37% 18.57% 17.98% 18.52% 19.75%
- -------------------------------------------------------------------------------
SEC 30-Day
Yield 0.51% 0.48% 0.00% N/A 0.00% 0.76%
- -------------------------------------------------------------------------------
</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.
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Total Net Assets $918.8 million
- -----------------------------------------------
Beta 0.86
- -----------------------------------------------
Average Market
Capitalization (Stocks) $54 billion
- -----------------------------------------------
Average P/E 20.1
- -----------------------------------------------
Number of Stocks 46
- -----------------------------------------------
Expense Ratio* 1.20%
- -----------------------------------------------
</TABLE>
* For Class A shares after credit/reimbursement.
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund prospectus.
SEMIANNUAL REPORT page 6
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Growth and Income Stock Fund
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 92.5%
Basic Materials - 9.8%
370,500 Akzo Nobel N.V. Sponsored ADR $18,432,375
401,450 Alcan Aluminum Ltd. 16,534,722
320,850 International Paper Company 18,107,972
249,000 Union Carbide Corporation 16,620,750
287,600 Weyerhaeuser Company 20,653,275
- -------------------------------------------------------------------------------
Capital Goods - 1.4%
249,500 General Dynamics Corporation 13,161,125
- -------------------------------------------------------------------------------
Consumer Cyclicals - 17.7%
290,400 Dayton Hudson Corporation 21,326,250
402,200 Federated Department Stores, Inc.# 20,336,238
553,050 Ford Motor Company 29,553,609
325,200 General Motors Corporation 23,637,975
302,902 Philips Electronics N.V. 40,891,770
506,200 R. H. Donnelley Corporation# 9,554,525
249,500 TRW Inc. 12,958,406
289,100 Toys "R" Us, Inc.# 4,137,744
- -------------------------------------------------------------------------------
Consumer Staples - 8.1%
233,900 Avon Products, Inc. 7,718,700
364,450 Kimberly-Clark Corporation 23,780,363
133,550 MediaOne Group, Inc.# 10,258,309
505,450 The Seagram Company Ltd. 22,713,659
266,600 Tricon Global Restaurants, Inc.# 10,297,425
- -------------------------------------------------------------------------------
Energy - 7.4%
768,100 Conoco Inc. 19,106,488
321,800 Exxon Mobil Corporation 25,925,013
418,600 Texaco Inc. 22,735,213
- -------------------------------------------------------------------------------
Financials - 13.9%
741,900 Associates First Capital Corporation 20,355,881
474,062 Citigroup Inc. 26,340,070
305,650 Hartford Financial Services Group, Inc. 14,480,169
622,100 Household International, Inc. 23,173,225
168,850 Providian Financial Corporation 15,375,903
724,300 U.S. Bancorp 17,247,394
259,900 Wells Fargo Company 10,509,706
</TABLE>
7
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Growth and Income Stock Fund (continued)
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care - 10.7%
529,000 American Home Products Corporation $ 20,862,438
465,825 Aventis SA Sponsored ADR 26,493,796
403,950 Baxter International Inc. 25,373,109
412,500 Becton, Dickinson and Company 11,034,375
231,300 Bristol-Myers Squibb Company 14,846,569
- --------------------------------------------------------------------------------------------------------
Technology - 11.2%
311,300 Electronic Data Systems Corporation 20,837,644
148,850 General Motors Corporation - Class H# 14,289,600
232,100 International Business Machines Corporation 25,066,800
198,232 Motorola, Inc. 29,189,662
131,050 Nortel Networks Corporation 13,236,050
- --------------------------------------------------------------------------------------------------------
Transportation - 2.4%
205,200 AMR Corporation# 13,748,400
384,100 Northwest Airlines Corporation# 8,546,225
- --------------------------------------------------------------------------------------------------------
Utilities - 9.9%
368,975 AT&T Corp. 18,725,481
417,500 Bell Atlantic Corporation 25,702,344
245,000 Cable & Wireless plc Sponsored ADR 12,969,686
462,750 U.S. West, Inc. 33,318,000
- --------------------------------------------------------------------------------------------------------
Total Common Stocks - (cost $730,524,858) 850,164,433
---------------------------------------------------------------------------------------
PREFERRED STOCKS - 2.8%
Consumer Cyclicals - 2.8%
769,450 News Corporation Limited Sponsored ADR 25,728,484
- --------------------------------------------------------------------------------------------------------
Total Preferred Stocks - (cost $13,546,663) 25,728,484
---------------------------------------------------------------------------------------
Principal Market
Amount Description Value
- --------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 4.6%
$ 5,000,000 Campbell Soup Company, Commercial Paper, 0.000%, 1/24/00 4,981,344
10,000,000 Coca Cola Company, Commercial Paper, 0.000%, 1/10/00 9,985,300
26,800,000 DuPont, Commercial Paper, 0.000%, 1/24/00 26,696,924
1,000,000 Federal Home Loan Mortgage Corporation, Discount Notes, 0.000%, 1/03/00 999,922
- --------------------------------------------------------------------------------------------------------
Total Short-Term Investments - (cost $42,663,490) 42,663,490
---------------------------------------------------------------------------------------
Total Investments - (cost $786,735,011) - 99.9% 918,556,407
---------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.1% 280,885
---------------------------------------------------------------------------------------
Net Assets - 100% $ 918,837,292
=======================================================================================
</TABLE>
# Non-income producing.
See accompanying notes to financial statements.
8
<PAGE>
Statement of Net Assets (Unaudited)
Nuveen Growth and Income Stock Fund
December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------
Assets
Investment securities, at market value (cost $786,735,011) (note 1) $918,556,407
Cash 319,996
Receivables:
Dividends and interest 1,186,954
Shares sold 553,347
Deferred organization costs (note 1) 61,428
Other assets 621,435
- -------------------------------------------------------------------------------------------------------------------------
Total assets 921,299,567
- -------------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for shares redeemed 1,310,130
Accrued expenses:
Management fees (note 4) 634,228
12b-1 distribution and service fees (notes 1 and 4) 282,274
Other 235,643
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,462,275
- -------------------------------------------------------------------------------------------------------------------------
Net assets (note 5) $918,837,292
=========================================================================================================================
Class A Shares (note 1)
Net assets $747,165,039
Shares outstanding 29,592,002
Net asset value and redemption price per share $ 25.25
Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price) $ 26.79
=========================================================================================================================
Class B Shares (note 1)
Net assets $102,073,363
Shares outstanding 4,057,483
Net asset value, offering and redemption price per share $ 25.16
=========================================================================================================================
Class C Shares (note 1)
Net assets $ 51,234,975
Shares outstanding 2,039,379
Net asset value, offering and redemption price per share $ 25.12
=========================================================================================================================
Class R Shares (note 1)
Net assets $ 18,363,915
Shares outstanding 726,406
Net asset value, offering and redemption price per share $ 25.28
=========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
Statement of Operations (Unaudited)
Nuveen Growth and Income Stock Fund
Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------
Investment Income (note 1)
Dividends $ 9,356,911
Interest 1,705,891
- ------------------------------------------------------------------------------------------------
Total investment income 11,062,802
- ------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 3,759,219
12b-1 service fees - Class A (notes 1 and 4) 939,453
12b-1 distribution and service fees - Class B (notes 1 and 4) 488,153
12b-1 distribution and service fees - Class C (notes 1 and 4) 228,699
Shareholders' servicing agent fees and expenses 248,474
Custodian's fees and expenses 79,708
Trustees' fees and expenses (note 4) 42,798
Professional fees 43,136
Shareholders' reports - printing and mailing expenses 165,382
Federal and state registration fees 10,074
Amortization of deferred organization costs (note 1) 18,148
Other expenses 30,976
- ------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 6,054,220
Custodian fee credit (note 1) (17,664)
- ------------------------------------------------------------------------------------------------
Net expenses 6,036,556
- ------------------------------------------------------------------------------------------------
Net investment income 5,026,246
- ------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain from investment transactions (notes 1 and 3) 18,113,105
Net change in unrealized appreciation or depreciation of investments (40,844,018)
- ------------------------------------------------------------------------------------------------
Net gain (loss) from investments (22,730,913)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $(17,704,667)
================================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
Statement of Changes in Net Assets (Unaudited)
Nuveen Growth and Income Stock Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
12/31/99 6/30/99
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 5,026,246 $ 5,707,431
Net realized gain from investment transactions (notes 1 and 3) 18,113,105 31,610,896
Net change in unrealized appreciation or depreciation of investments (40,844,018) 59,442,442
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (17,704,667) 96,760,769
- ------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (7,527,270) (1,233,736)
Class B (245,816) (2,076)
Class C (126,895) (4,846)
Class R (222,956) (45,702)
From accumulated net realized gains from investment transactions:
Class A (30,526,659) (64,233,341)
Class B (4,158,883) (6,427,129)
Class C (2,042,305) (2,186,424)
Class R (709,000) (1,233,763)
- ------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (45,559,784) (75,367,017)
- ------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 61,550,263 105,953,619
Net proceeds from shares issued to shareholders due to reinvestment of distributions 28,847,088 49,322,552
- ------------------------------------------------------------------------------------------------------------------------
90,397,351 155,276,171
Cost of shares redeemed (54,990,408) (131,707,460)
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 35,406,943 23,568,711
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (27,857,508) 44,962,463
Net assets at the beginning of period 946,694,800 901,732,337
- ------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $918,837,292 $ 946,694,800
========================================================================================================================
Balance of undistributed net investment income at the end of period $ 1,428,964 $ 4,525,655
========================================================================================================================
See accompanying notes to financial statements.
</TABLE>
11
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Growth and Income Stock Fund (the "Fund") is a series of the Nuveen
Investment Trust (the "Trust") which was organized as a Massachusetts business
trust in 1996. The Trust (and each series within the Trust) is an open-end,
diversified management investment company registered under the Investment
Company Act of 1940. Prior to commencement of operations on August 7, 1996, the
Trust had no operations other than those related to organizational matters and
the initial capital contribution of $100,080 (of which $33,360 was allocated to
the Fund) by Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of The John Nuveen Company, for the issuance of shares on July 29,
1996.
The Fund invests primarily in a diversified portfolio of large- and mid-cap
equities of domestic companies as a source of capital growth. In addition to
investments in equity securities, the Fund may invest in cash equivalents and
short-term fixed income investments in order to preserve capital or to enhance
returns or as a temporary defensive measure.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with generally
accepted accounting principles.
Securities Valuation
Common stocks and other equity-type securities are valued at the last sales
price on the national securities exchange or Nasdaq on which such securities are
primarily traded; however, securities traded on a national securities exchange
or Nasdaq for which there are no transactions on a given day or securities not
listed on a national securities exchange or Nasdaq are valued at the most recent
bid prices. Debt securities are valued by a pricing service that utilizes
electronic data processing techniques to determine values when such values are
believed to more accurately reflect the fair market value of such securities;
otherwise, actual sale or bid prices are used. Any securities or other assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Trustees. Debt securities having
remaining maturities of 60 days or less when purchased are valued by the
amortized cost method when the Board of Trustees determines that the fair market
value of such securities is their amortized cost.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a delayed delivery basis may have
extended settlement periods. Any securities so purchased are subject to market
fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of the delayed delivery purchase commitments. At December 31, 1999,
the Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for accretion of
discounts.
Dividends and Distributions to Shareholders
Net investment income and net realized capital gains from investment
transactions, if any, are declared and distributed to shareholders annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to shareholders of net investment income and net realized capital
gains are recorded on the ex-dividend date. The amount and timing of
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. Accordingly,
temporary over-distributions as a result of these differences may occur and will
be classified as either distributions in excess of net investment income and/or
distributions in excess of net realized gains from investment transactions,
where applicable.
Federal Income Taxes
The Fund intends to distribute all taxable income and capital gains to
shareholders and to otherwise comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
Therefore, no federal tax provision is required.
12
<PAGE>
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a contingent deferred sales charge ("CDSC") if redeemed within
18 months of purchase. Class B Shares are sold without a sales charge but incur
annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available only under limited circumstances, or by specified classes
of shareholders.
Derivative Financial Instruments
The Fund may invest in options and futures contracts, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in such financial instruments, and may do so in the future, it did not
make any such investments during the six months ended December 31, 1999.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning August 7, 1996 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption will be reduced by the pro-rata share of
the unamortized organization costs as of the date of redemption.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
13
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
<TABLE>
<CAPTION>
2. Fund Shares
Transactions in Fund shares were as follows:
Six Months Ended Year Ended
12/31/99 6/30/99
------------------------- --------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,041,519 $ 26,627,214 2,108,966 $ 51,032,462
Class B 679,610 17,368,156 1,164,391 28,993,639
Class C 589,461 14,980,968 901,784 22,488,408
Class R 100,635 2,573,925 139,756 3,439,110
Shares issued to shareholders
due to reinvestment of distributions:
Class A 962,451 24,262,109 1,881,914 42,862,233
Class B 105,664 2,637,810 184,034 4,158,678
Class C 42,461 1,058,346 43,891 990,959
Class R 35,159 888,823 57,417 1,310,682
- ------------------------------------------------------------------------------------------------------
3,556,960 90,397,351 6,482,153 155,276,171
- ------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,727,573) (44,194,876) (4,484,770) (107,597,350)
Class B (269,522) (6,845,390) (523,515) (12,739,469)
Class C (122,757) (3,123,046) (226,134) (5,392,875)
Class R (32,277) (827,096) (265,612) (5,977,766)
- ------------------------------------------------------------------------------------------------------
(2,152,129) (54,990,408) (5,500,031) (131,707,460)
- ------------------------------------------------------------------------------------------------------
Net increase 1,404,831 $ 35,406,943 982,122 $ 23,568,711
======================================================================================================
</TABLE>
3. Securities Transactions
Purchases and sales (including maturities) of investment securities, U.S.
government and agency obligations and short-term investments for the six months
ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Purchases:
<S> <C>
Investment securities $ 653,891,781
U.S. government and agency obligations 459,706,874
Short-term investments 1,844,416,906
Sales and maturities:
Investment securities 652,583,530
U.S. government and agency obligations 458,800,000
Short-term investments 1,860,156,420
======================================================================================================
</TABLE>
At December 31, 1999, the identified cost of investments owned for federal
income tax purposes was $793,795,259. Net unrealized appreciation for federal
income tax purposes aggregated $124,761,148 of which $161,262,259 related to
appreciated securities and $36,501,111 related to depreciated securities.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, which is based upon the average daily
net assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
- ------------------------------------------------------------------------------------------------------
<S> <C>
For the first $125 million .8500 of 1%
For the next $125 million .8375 of 1
For the next $250 million .8250 of 1
For the next $500 million .8125 of 1
For the next $1 billion .8000 of 1
For net assets over $2 billion .7750 of 1
======================================================================================================
</TABLE>
The Adviser has agreed to waive fees and reimburse expenses in order to prevent
total operating expenses (excluding any 12b-1 distribution or service fees and
extraordinary expenses) from exceeding 1.05% of the average daily net asset
value of any class of Fund shares through July 31, 2000.
14
<PAGE>
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Adviser has entered
into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"),
of which The John Nuveen Company holds a minority interest, under which ICAP
manages the Fund's investment portfolio. ICAP is compensated for its services
from the management fee paid to the Adviser. The Fund pays no compensation
directly to those of its Trustees who are affiliated with the Adviser or to its
officers, all of whom receive remuneration for their services to the Fund from
the Adviser.
During the six months ended December 31, 1999, John Nuveen & Co. Incorporated
(the "Distributor"), a wholly owned subsidiary of The John Nuveen Company,
collected sales charges on purchases of Class A Shares of approximately $335,600
of which approximately $297,200 were paid out as concessions to authorized
dealers. The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
During the six months ended December 31, 1999, the Distributor compensated
authorized dealers directly with approximately $720,800 in commission advances
at the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees 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 six months ended December 31, 1999, the Distributor retained
approximately $518,900 of such 12b-1 fees. The remaining 12b-1 fees charged to
the Fund were paid to compensate authorized dealers for providing services to
shareholders relating to their investments. The Distributor also collected and
retained approximately $204,800 of CDSC on share redemptions during the six
months ended December 31, 1999.
5. Composition of Net Assets
At December 31, 1999, the Fund had an unlimited number of $.01 par value per
share common stock authorized. Net assets consisted of:
- --------------------------------------------------------------------------------
Capital paid-in $ 774,414,720
Balance of undistributed net investment income 1,428,964
Accumulated net realized gain from investment transactions 11,172,212
Net unrealized appreciation of investments 131,821,396
- --------------------------------------------------------------------------------
Net assets $ 918,837,292
================================================================================
15
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
--------------------- ------------------
Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
June 30, Value Income (Loss) Total Income Gains Total Value Return (a)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 (e) $27.07 $.16 $(.66) $(.50) $(.25) $(1.07) $(1.32) $25.25 (1.83)%
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 (e) 26.87 .06 (.64) (.58) (.06) (1.07) (1.13) 25.16 (2.12)
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 (e) 26.84 .07 (.66) (.59) (.06) (1.07) (1.13) 25.12 (2.16)
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 (e) 27.14 .19 (.66) (.47) (.32) (1.07) (1.39) 25.28 (1.75)
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
Year Ended Assets Net Net Net Net Net Net Turnover
June 30, (000) Assets Assets Assets Assets Assets Assets Rate
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 (e) $747,165 1.21%* 1.20%* 1.21%* 1.20%* 1.21%* 1.20%* 77%
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 (e) 102,073 1.96* .49* 1.96* .49* 1.96* .49* 77
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 (e) 51,235 1.96* .53* 1.96* .53* 1.96* .53* 77
1999 41,071 2.02 -- 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 (e) 18,364 .96* 1.48* .96* 1.48* .96* 1.48* 77
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
(note 4).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 4).
(d) From commencement of class operations as noted.
(e) For the six months ended December 31, 1999.
16
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
17
<PAGE>
SERVING
Investors for Generations
[Photo of John Nuveen, Sr. appears here]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to
disciplined long-term investment strategies whose aim is to provide consistent,
competitive performance over time -- with moderated risk. We emphasize quality
securities carefully chosen through in-depth research, and we follow those
securities closely over time to ensure that they continue to meet our exacting
standards.
Whether your focus is long-term growth, dependable income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our growth,
growth and income, income, and tax-free funds, along with our defined portfolios
and private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
December 31, 1999 Semiannual Report
NUVEEN
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Balanced Stock and Bond Fund
For investors seeking
long-term growth potential
with a measure of downside
protection.
[PHOTO APPEARS HERE]
Featuring Portfolio Management By Institutional Capital Corporation
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective
6 Fund Spotlight
7 Portfolio of Investments
9 Statement of Net Assets
10 Statement of Operations
11 Statement of Changes in Net Assets
12 Notes to Financial Statements
15 Financial Highlights
16 Building a Better Portfolio
17 Fund Information
<PAGE>
DEAR
Shareholder
[Photo of Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
How did you gain your financial wisdom? While some of us study finance, the
financial markets, economics or related disciplines in formal programs, most of
us end up accumulating practical knowledge through the years, from friends,
family, colleagues and media.
At Nuveen, we believe a formal financial education should start early in life. A
study sponsored by the National Council on Economic Education shows that a
whopping 66% of high school students tested on basic money skills scored an "F."
Only 3% received an "A."
Because we believe strongly in education and are committed to children's
financial literacy, we have launched a community service program, Kid$ense, in
our hometown of Chicago.
The Kid$ense curriculum, which is available for grades kindergarten through
sixth, includes textbooks, teaching materials and teacher training. The lessons
introduce children to the concept of money and how it works in society; buying,
selling and trading; working, earning, saving and investing.
Nuveen's commitment to children's financial literacy goes beyond the 250
Chicago public schools who have benefited from the Kid$ense curriculum. We also
have a commitment to family wealth management, which is a positive philosophy
that addresses the role of wealth in our lives and our world.
At Nuveen, we are dedicated to helping you and your financial adviser
develop a family wealth management strategy unique to you and your goals and
values. In your next shareholder report, look for more information about
Nuveen's dedication to Family Wealth Management, or ask your financial adviser
about this new approach to investing.
The Economic Environment. I want to briefly report on the economic environment
in which your Nuveen investment performed. Read on, as we've conducted an in-
depth interview with a representative from your fund's portfolio management
team, describing how the team of investment and research professionals directed
the portfolio during the semiannual fiscal period ended December 31, 1999.
The equity markets ended 1999 with a record-breaking performance as the Dow
Jones Industrial Average reached 11,497. The Standard and Poor's (S&P) 500 Stock
Index rose more than 21%, following gains that averaged 30% annually the
preceding four years. Strong performance of technology stocks drove the equity
market in 1999, and returns were highly concentrated; about one-half of the
stocks in the S&P 500 declined last year.
The economy has now experienced the longest business-cycle expansion in
U.S. history. However, concerns about the continued pace of the economy's
expansion have begun to test the "new paradigm," which holds that improvements
in productivity enable us to have both economic growth and low inflation at the
same time. With investors and the various markets watching -- and reacting to --
every announcement concerning economic statistics, volatility has increased,
especially in the equity markets.
"We also have a commitment to family wealth management, which is a positive
philosophy that addresses the role of wealth in our lives and our world."
SEMIANNUAL REPORT page 1
<PAGE>
"Your financial adviser can serve as a valuable resource in helping you
determine if adjustments are needed in your current asset allocation plan."
The portfolio management team for your Nuveen fund plans to continue to
focus on finding value in the markets, partly through their Global Revival
theme. They expect companies in this theme will see strong earnings growth as
economic activity improves around the world. The portfolios also continue to
emphasize company-specific situations, particularly where a significant
restructuring action is expected to unlock value.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets may be better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial adviser. 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 finding the best
ways to serve your evolving investment needs. Thank you for your continued
confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
February 15, 2000
SEMIANNUAL REPORT page 2
<PAGE>
NUVEEN BALANCED STOCK AND BOND FUND
From the Portfolio Manager's Perspective
- --------------------------------------------------------------------------------
Nuveen Balanced Stock and Bond Fund features portfolio management from
Institutional Capital Corporation (ICAP), which specializes in large
capitalization equities. To help you understand the fund's performance during
the six-month period ending December 31, 1999, we spoke with Rob Lyon, president
and chief investment officer of ICAP, the subadviser of the fund.
Q In the six-month period ending December 31, 1999, the Federal Reserve Board
(the Fed) raised interest rates twice in response to the threat of inflation and
continued economic strength. Meanwhile, the S&P 500 Index finished the year up
21%, the fifth consecutive annual increase of more than 20%. How did this
environment affect the equity portion of the Nuveen Balanced Stock and Bond
Fund?
ROB The Fed raised interest rates over the period by a total of 50 basis
points, causing temporary slumps in stock prices, which quickly turned around to
finish the year on a high note. Although value-oriented stocks had shown some
recovery at the end of the last reporting period, rising interest rates halted
the resurgence, and value stocks underperformed growth stocks for the calendar
year.
The Nuveen Balanced Stock and Bond Fund, which focuses on value stocks in
the equity portion, returned -0.55% for the six-month period ended December 31,
1999.* As of December 31, 63% of the portfolio was invested in stocks, 36% was
invested in U.S. government bonds, with around 1% in cash equivalents.
Q As the economy has grown in the past several years and investors have sought
out companies with consistent earnings, growth stocks, which tend to have higher
earnings growth rates than value stocks, have been among the market's best
performers. What causes value stocks to fall in and out of favor? What happened
in 1999?
ROB Historically speaking, value-oriented stocks have tended to outperform
during periods of strong and/or accelerating global activity. It didn't happen
this way in 1999, largely because of differentials in sector performance. Value
managers were challenged by the combination of extremely strong returns in
technology -- a growth-oriented sector -- and very weak (in fact, negative)
performance in financials -- a value-oriented sector. In fact, the technology
sector alone accounted for about 70% of the entire return of the S&P 500 index.
Technology stocks were selling at an average 79 times earnings as of
December 31, 1999, compared to non-technology stocks at an average of 29 times
earnings. Based on the current components of the index, it's obvious that if the
technology sector has a period of extended losses, the entire S&P 500 will
suffer. We think value investing will regain momentum if that happens.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
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 be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's subadviser for value investing, Institutional Capital Corporation
(ICAP), is a highly successful institutional money manager with nearly
30 years of experience. They specialize in finding undervalued midsize and large
company stocks that are poised for significant growth.
This disciplined, research-oriented approach is 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 six-month period ended December 31, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
* For the one-year period ending December 31, 1999, the Nuveen Balanced Stock
and Bond Fund had a total return of 8.68%. Since the fund's inception August
7, 1996, its average annual total return is 14.00% as of December 31, 1999.
The returns assume reinvestment of dividends and do not reflect any
applicable sales charges.
SEMIANNUAL REPORT page 3
<PAGE>
"Our investment process involves seeking out stocks of established, well-known
companies that we believe offer unrecognized value with a `catalyst' that may
trigger a rise in the stocks' prices."
Q How do you manage a value-oriented fund in a market that favors growth
stocks?
ROB Our investment process involves seeking out stocks of established, well-
known companies that we believe offer unrecognized value with a "catalyst" that
may trigger a rise in the stocks' prices. We follow two primary investment
themes to help us look for such companies that stand to benefit from the current
economic environment.
The first theme is corporate restructurings, which focuses on companies
with past challenges that now have specific restructuring programs well
underway. One prime example of this theme is one of the fund's largest holdings,
Philips Electronics N.V., whose cost-cutting initiatives continued to create a
more focused corporate strategy throughout the period. Philips gained over 100%
in 1999 and performed especially well in the fourth quarter. Another example is
the merger of Elf Aquitaine, the French oil company and long-time fund holding,
with Total Fina, creating the world's fourth-largest oil company. The combined
company -- using the name Total Fina -- was up sharply over the period.
We instituted our global revival theme in the spring of 1999, which focused
on the stocks of companies that we believed would experience better earnings
growth as a result of an improving world economy. We believe that if earnings
growth does continue to improve, that will in turn be reflected in better stock
price performance. Some holdings we are watching are in the basic industries
(Alcan, Union Carbide) and energy (Conoco, Texaco, Exxon Mobil) sectors.
Q Since, as value investors, you look for companies that may be out of favor
but have strong turnaround prospects, how do you know if it is time to sell a
holding?
ROB We have a rigorous sell discipline in place, so that, while we buy
companies when they are out of favor, we monitor them continuously to see if
they meet our expectations for a turnaround. If there are adverse fundamental
changes or potential long-term hindrances to what we see as a company's growth
potential, we sell.
One example is Xerox. During the fourth quarter of 1999 we sold our
holdings in Xerox, which made up a fairly substantial portion of the portfolio,
because of an unexpected earnings shortfall and anticipated future
underperformance. The earnings shortfall was due to many factors, including a
business mix shift to the lower-margin business of document outsourcing, a
realignment of the sales force, and an increase in bad debts. We expected that
all of these issues would continue to an equal or greater degree into 2000, so
we decided to put that part of the fund's assets to better use.
NUVEEN BALANCED STOCK AND BOND FUND
Portfolio Allocation
[PIE CHART APPEARS HERE]
Equity........................63%
U.S. Government
Obligations...................36%
Cash Equivalents...............1%
As a percentage of total holdings as of December 31, 1999. Holdings are subject
to change.
SEMIANNUAL REPORT page 4
<PAGE>
NUVEEN BALANCED STOCK AND BOND FUND
Top Five Sectors
Consumer Cyclicals 20.7%
- -----------------------------------
Financials 14.2%
- -----------------------------------
Technology 12.2%
- -----------------------------------
Health Care 11.0%
- -----------------------------------
Basic Materials 10.3%
- -----------------------------------
As a percentage of total stock holdings as of December 31, 1999. Holdings are
subject to change.
Q How did the global economic recovery and Federal Reserve interest rate
increases affect your management of the bond portion of the fund's portfolio?
ROB The high bond yields -- and therefore falling bond prices -- that resulted
from the Fed interest rate hikes put pressure on the fixed income portion of the
fund. The benchmark 30-year U.S. Treasury bond yield spiked up to a two-year
high at one point during the period, then retreated somewhat. Fortunately, our
focus on intermediate-term maturities helped mitigate the adverse effects of
falling bond prices. Overall, the team left the fixed income portion of the
portfolio relatively unchanged.
Q Do you foresee changing the fixed income strategy for the fund going into
2000?
ROB We believe that current conditions favor a continuation of strong growth in
2000, with some moderation. All in all, we're looking for market yields to keep
rising and bond prices to keep falling, so we plan to continue to seek out
intermediate-term securities to help temper the interest rate risk.
Q What is your outlook for the equity markets and for value stocks in 2000?
ROB In light of the building momentum in the global economy, we have taken
steps to increase exposure to more cyclical sectors such as basic materials and
energy. Producers in these industries should enjoy some degree of pricing
flexibility going forward, in our opinion. Alternatively, we have reduced our
holdings in sectors such as consumer services and staples where pricing pressure
is seen as more intense.
In fact, in the 25 year period ending December 31, 1999, the total return
for value stocks as measured by the S&P 500/Barra Value Index was 17.31% versus
the total return of 16.76% for growth stocks, as measured by the S&P 500/Barra
Growth Index.
We believe that seeking what are, in our opinion, attractively priced
stocks of companies that can benefit from the infrastructure of a new economy
will position the fund strongly for the near future. We believe there is a solid
investment case for "old economy" companies that have strong business franchises
and that are repositioning for the future.
"We believe there is a solid investment case for "old economy" companies that
have strong business franchises and that are repositioning for the future."
SEMIANNUAL REPORT page 5
<PAGE>
NUVEEN BALANCED STOCK AND BOND FUND
Fund Spotlight as of December 31, 1999
Terms to Know
The following are a few terms used throughout this report.
Market capitalization Also referred to as market cap, market capitalization is
a measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: more than $5 billion in
market capitalization
Mid cap: between $1 billion
and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $25.72 $25.72 $25.73 $25.72
- -------------------------------------------------------------------
Fund Symbol NNSAX NNSBX N/A N/A
- -------------------------------------------------------------------
CUSIP 67064Y107 67064Y206 67064Y305 67064Y404
- -------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Total Returns (Annualized)+
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year 8.68% 2.42% 7.87% 3.87% 7.92% 8.95%
- ------------------------------------------------------------------------------
3-Year 12.36% 10.17% 11.55% 10.74% 11.56% 12.64%
- ------------------------------------------------------------------------------
Since
Inception 14.00% 12.03% 13.17% 12.51% 13.18% 14.28%
- ------------------------------------------------------------------------------
SEC 30-Day
Yield 2.10% 1.98% 1.36% N/A 1.36% 2.35%
- ------------------------------------------------------------------------------
</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.
<TABLE>
<CAPTION>
Top Ten Stock Holdings
<S> <C>
Philips Electronics N.V. 4.8%
- --------------------------------------------------------
U.S. West, Inc. 3.6%
- --------------------------------------------------------
Motorola, Inc. 3.5%
- --------------------------------------------------------
Ford Motor Company 3.5%
- --------------------------------------------------------
Citigroup Inc. 3.1%
- --------------------------------------------------------
News Corporation Limited Sponsored ADR 3.0%
- --------------------------------------------------------
Aventis SA Sponsored ADR 3.0%
- --------------------------------------------------------
Exxon Mobil Corporation 3.0%
- --------------------------------------------------------
International Business Machines Corporation 2.9%
- --------------------------------------------------------
Bell Atlantic Corporation 2.9%
- --------------------------------------------------------
</TABLE>
As a percentage of total stock holdings as of December 31, 1999. Holdings are
subject to change.
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Total Net Assets $84.3 million
- --------------------------------------------------------------------------
Fixed Income
Average Duration 5.37
- --------------------------------------------------------------------------
Average Market
Capitalization (Stocks) $ 55 billion
- --------------------------------------------------------------------------
Average P/E 20.1
- --------------------------------------------------------------------------
Number of Stocks 46
- --------------------------------------------------------------------------
Expense Ratio* 1.20%
- --------------------------------------------------------------------------
</TABLE>
* For Class A shares after credit/reimbursement.
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund prospectus.
SEMIANNUAL REPORT page 6
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Balanced Stock and Bond Fund
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 61.3%
Basic Materials - 6.5%
23,100 Akzo Nobel N.V. Sponsored ADR $1,149,225
22,600 Alcan Aluminum Ltd. 930,838
19,500 International Paper Company 1,100,531
15,250 Union Carbide Corporation 1,017,938
17,650 Weyerhaeuser Company 1,267,491
- --------------------------------------------------------------------------------
Capital Goods - 1.0%
15,400 General Dynamics Corporation 812,350
- --------------------------------------------------------------------------------
Consumer Cyclicals - 11.0%
17,700 Dayton Hudson Corporation 1,299,844
25,200 Federated Department Stores, Inc.# 1,274,175
34,600 Ford Motor Company 1,848,938
20,400 General Motors Corporation 1,482,825
18,922 Philips Electronics N.V. 2,554,470
13,000 TRW Inc. 675,188
18,000 Toys "R" Us, Inc.# 257,625
- --------------------------------------------------------------------------------
Consumer Staples - 5.4%
14,200 Avon Products, Inc. 468,600
22,250 Kimberly-Clark Corporation 1,451,813
7,750 MediaOne Group, Inc.# 595,297
31,150 The Seagram Company Ltd. 1,399,803
16,400 Tricon Global Restaurtants, Inc.# 633,450
- --------------------------------------------------------------------------------
Energy - 5.7%
47,300 Conoco Inc. 1,176,588
19,550 Exxon Mobil Corporation 1,574,997
17,900 Texaco Inc. 972,194
15,217 Total Fina SA Sponsored ADR 1,053,777
- --------------------------------------------------------------------------------
Financials - 9.0%
45,200 Associates First Capital Corporation 1,240,175
29,762 Citigroup Inc. 1,653,651
18,800 Hartford Financial Services Group, Inc. 890,650
34,200 Household International, Inc. 1,273,950
9,100 Providian Financial Corporation 828,669
44,500 U.S. Bancorp 1,059,656
15,700 Wells Fargo Company 634,869
</TABLE>
7
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Balanced Stock and Bond Fund (continued)
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care - 7.0%
32,700 American Home Products Corporation $ 1,289,606
28,333 Aventis SA Sponsored ADR 1,611,423
21,200 Baxter International Inc. 1,331,625
25,450 Becton, Dickinson and Company 680,788
14,700 Bristol-Myers Squibb Company 943,556
- ----------------------------------------------------------------------------------------------------
Technology - 7.7%
20,250 Electronic Data Systems Corporation 1,355,484
9,400 General Motors Corporation - Class H# 902,400
14,200 International Business Machines Corporation 1,533,600
12,604 Motorola, Inc. 1,855,939
8,500 Nortel Networks Corporation 858,500
- ----------------------------------------------------------------------------------------------------
Transportation - 1.6%
11,850 AMR Corporation# 793,950
23,500 Northwest Airlines Corporation# 522,875
- ----------------------------------------------------------------------------------------------------
Utilities - 6.4%
22,791 AT&T Corp. 1,156,643
24,750 Bell Atlantic Corporation 1,523,672
14,800 Cable & Wireless plc Sponsored ADR 783,475
26,400 U.S. West, Inc. 1,900,800
- ----------------------------------------------------------------------------------------------------
Total Common Stocks - (cost $42,700,683) 51,623,913
---------------------------------------------------------------------------------------
PREFERRED STOCKS - 1.9%
Consumer Cyclicals - 1.9%
48,300 News Corporation Limited Sponsored ADR 1,615,031
- ----------------------------------------------------------------------------------------------------
Total Preferred Stocks - (cost $853,515) 1,615,031
---------------------------------------------------------------------------------------
Principal Market
Amount Description Value
- ----------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 35.6%
U.S. Treasury Notes - 27.9%
$4,375,000 7.500%, 5/15/02 4,491,213
6,475,000 7.875%, 11/15/04 6,849,339
3,780,000 6.500%, 5/15/05 3,781,183
8,210,000 7.000%, 7/15/06 8,410,116
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Bonds - 7.7%
4,125,000 7.250%, 5/15/16 4,311,916
2,385,000 6.000%, 2/15/26 2,181,531
- ----------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations - (cost $31,045,090) 30,025,298
---------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.7%
$ 550,000 Federal Home Loan Mortgage Corporation, Discount Notes, 0.000%, 1/03/00 549,957
- ----------------------------------------------------------------------------------------------------
Total Short-Term Investments - (cost $549,957) 549,957
---------------------------------------------------------------------------------------
Total Investments - (cost $75,149,245) - 99.5% 83,814,199
---------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.5% 455,549
---------------------------------------------------------------------------------------
Net Assets - 100% $84,269,748
=======================================================================================
</TABLE>
# Non-income producing.
See accompanying notes to financial statements.
8
<PAGE>
Statement of Net Assets (Unaudited)
Nuveen Balanced Stock and Bond Fund
December 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Assets
<S> <C>
Investment securities, at market value (cost $75,149,245) (note 1) $83,814,199
Cash 113,447
Receivables:
Dividends and interest 569,304
Shares sold 14,642
Deferred organization costs (note 1) 64,543
Other assets 36,665
- ------------------------------------------------------------------------------------------------------------------------
Total assets 84,612,800
- ------------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for shares redeemed 188,684
Accrued expenses:
Management fees (note 4) 33,506
12b-1 distribution and service fees (notes 1 and 4) 30,259
Other 90,603
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 343,052
- ------------------------------------------------------------------------------------------------------------------------
Net assets (note 5) $84,269,748
========================================================================================================================
Class A Shares (note 1)
Net assets $58,861,451
Shares outstanding 2,288,285
Net asset value and redemption price per share $ 25.72
Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price) $ 27.29
========================================================================================================================
Class B Shares (note 1)
Net assets $13,164,132
Shares outstanding 511,766
Net asset value, offering and redemption price per share $ 25.72
========================================================================================================================
Class C Shares (note 1)
Net assets $ 7,686,154
Shares outstanding 298,744
Net asset value, offering and redemption price per share $ 25.73
========================================================================================================================
Class R Shares (note 1)
Net assets $ 4,558,011
Shares outstanding 177,243
Net asset value, offering and redemption price per share $ 25.72
========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
Statement of Operations (Unaudited)
Nuveen Balanced Stock and Bond Fund
Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------------------------------------------------------
Investment Income (note 1)
Dividends $ 559,207
Interest 1,210,622
- -----------------------------------------------------------------------------------
Total investment income 1,769,829
- -----------------------------------------------------------------------------------
Expenses
Management fees (note 4) 332,318
12b-1 service fees - Class A (notes 1 and 4) 79,185
12b-1 distribution and service fees - Class B (notes 1 and 4) 65,825
12b-1 distribution and service fees - Class C (notes 1 and 4) 38,277
Shareholders' servicing agent fees and expenses 50,502
Custodian's fees and expenses 29,724
Trustees' fees and expenses (note 4) 2,946
Professional fees 7,390
Shareholders' reports - printing and mailing expenses 32,172
Federal and state registration fees 1,000
Amortization of deferred organization costs (note 1) 18,148
Other expenses 2,842
- -----------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 660,329
Custodian fee credit (note 1) (5,207)
Expense reimbursement (note 4) (50,895)
- -----------------------------------------------------------------------------------
Net expenses 604,227
- -----------------------------------------------------------------------------------
Net investment income 1,165,602
- -----------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain from investment transactions (notes 1 and 3) 1,295,221
Net change in unrealized appreciation or depreciation of investments (3,162,545)
- -----------------------------------------------------------------------------------
Net gain (loss) from investments (1,867,324)
- -----------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $ (701,722)
===================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
Statement of Changes in Net Assets (Unaudited)
Nuveen Balanced Stock and Bond Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
12/31/99 6/30/99
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 1,165,602 $ 1,862,915
Net realized gain from investment transactions (notes 1 and 3) 1,295,221 2,685,999
Net change in unrealized appreciation or depreciation of investments (3,162,545) 4,176,532
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (701,722) 8,725,446
- -------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (823,197) (1,491,505)
Class B (128,056) (170,929)
Class C (75,523) (93,642)
Class R (66,655) (98,001)
From accumulated net realized gains from investment transactions:
Class A (2,146,376) (2,988,949)
Class B (477,311) (473,062)
Class C (278,764) (232,637)
Class R (162,756) (161,189)
- -------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,158,638) (5,709,914)
- -------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 6,213,628 17,356,264
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 3,141,696 4,127,472
- -------------------------------------------------------------------------------------------------------
9,355,324 21,483,736
Cost of shares redeemed (12,179,843) (20,069,879)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions (2,824,519) 1,413,857
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (7,684,879) 4,429,389
Net assets at the beginning of period 91,954,627 87,525,238
- -------------------------------------------------------------------------------------------------------
Net assets at the end of period $ 84,269,748 $ 91,954,627
=======================================================================================================
Balance of undistributed net investment income at the end of period $ 85,788 $ 13,617
=======================================================================================================
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Balanced Stock and Bond Fund (the "Fund") is a series of the Nuveen
Investment Trust (the "Trust") which was organized as a Massachusetts business
trust in 1996. The Trust (and each series within the Trust) is an open-end,
diversified management investment company registered under the Investment
Company Act of 1940. Prior to commencement of operations on August 7, 1996, the
Trust had no operations other than those relating to organizational matters and
the initial capital contribution of $100,080 (of which $33,360 was allocated to
the Fund) by Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of The John Nuveen Company, for the issuance of shares on July 29,
1996.
The Fund invests in a mix of equities, taxable bonds and cash equivalents for
capital growth, capital preservation and current income. During temporary
defensive periods, the Fund may invest any percentage of its assets in temporary
investments.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with generally
accepted accounting principles.
Securities Valuation
Common stocks and other equity-type securities are valued at the last sales
price on the national securities exchange or Nasdaq on which such securities are
primarily traded; however, securities traded on a national securities exchange
or Nasdaq for which there are no transactions on a given day or securities not
listed on a national securities exchange or Nasdaq are valued at the most recent
bid prices. Debt securities are valued by a pricing service that utilizes
electronic data processing techniques to determine values when such values are
believed to more accurately reflect the fair market value of such securities;
otherwise, actual sale or bid prices are used. Any securities or other assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Trustees. Debt securities having
remaining maturities of 60 days or less when purchased are valued by the
amortized cost method when the Board of Trustees determines that the fair market
value of such securities is their amortized cost.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a delayed delivery basis may have
extended settlement periods. Any securities so purchased are subject to market
fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of the delayed delivery purchase commitments. At December 31, 1999,
the Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for accretion of
discounts.
Dividends and Distributions to Shareholders
Net investment income is declared and distributed to shareholders quarterly. Net
realized capital gains from investment transactions, if any, are declared and
distributed to shareholders not less frequently than annually. Furthermore,
capital gains are distributed only to the extent they exceed available capital
loss carryforwards.
Distributions to shareholders of net investment income and net realized capital
gains are recorded on the ex-dividend date. The amount and timing of
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. Accordingly,
temporary over-distributions as a result of these differences may occur and will
be classified as either distributions in excess of net investment income and/or
distributions in excess of net realized gains from investment transactions,
where applicable.
Federal Income Taxes
The Fund intends to distribute all taxable income and capital gains to
shareholders and to otherwise comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
Therefore, no federal tax provision is required.
12
<PAGE>
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a contingent deferred sales charge ("CDSC") if redeemed within
18 months of purchase. Class B Shares are sold without a sales charge but incur
annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available only under limited circumstances, or by specified classes
of shareholders.
Derivative Financial Instruments
The Fund may invest in options and futures transactions, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in such financial instruments, and may do so in the future, it did not
make any such investments during the six months ended December 31, 1999.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning August 7, 1996 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption will be reduced by the pro-rata share of
the unamortized organization costs as of the date of redemption.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
<TABLE>
<CAPTION>
2. Fund Shares
Transactions in Fund shares were as follows:
Six Months Ended Year Ended
12/31/99 6/30/99
------------------------- -------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 80,957 $ 2,119,323 249,981 $ 6,320,839
Class B 68,327 1,812,762 224,425 5,686,636
Class C 79,699 2,091,176 180,324 4,627,668
Class R 7,351 190,367 28,167 721,121
Shares issued to shareholders due to reinvestment of distributions:
Class A 94,189 2,441,946 136,296 3,414,330
Class B 13,051 337,588 14,507 362,620
Class C 4,560 117,898 4,175 104,710
Class R 9,424 244,264 9,825 245,812
- ----------------------------------------------------------------------------------------------------------------------------
357,558 9,355,324 847,700 21,483,736
- ----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (370,655) (9,731,261) (540,472) (13,837,529)
Class B (42,595) (1,112,337) (158,426) (4,121,472)
Class C (48,220) (1,255,822) (78,718) (2,018,644)
Class R (3,088) (80,423) (3,791) (92,234)
- ----------------------------------------------------------------------------------------------------------------------------
(464,558) (12,179,843) (781,407) (20,069,879)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (107,000) $ (2,824,519) 66,293 $ 1,413,857
============================================================================================================================
</TABLE>
13
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
3. Securities Transactions
Purchases and sales (including maturities) of investment securities, U.S.
government and agency obligations and short-term investments for the six months
ended December 31, 1999, were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Purchases:
<S> <C>
Investment securities $ 32,822,604
U.S. government and agency obligations 26,757,330
Short-term investments 159,466,987
Sales and maturities:
Investment securities 33,847,913
U.S. government and agency obligations 30,584,848
Short-term investments 161,300,000
</TABLE>
================================================================================
At December 31, 1999, the identified cost of investments owned for federal
income tax purposes was $75,594,910. Net unrealized appreciation for federal
income tax purposes aggregated $8,219,289 of which $11,129,964 related to
appreciated securities and $2,910,675 related to depreciated securities.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, which is based upon the average daily
net assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
- --------------------------------------------------------------------------------
<S> <C>
For the first $125 million .7500 of 1%
For the next $125 million .7375 of 1
For the next $250 million .7250 of 1
For the next $500 million .7125 of 1
For the next $1 billion .7000 of 1
For net assets over $2 billion .6750 of 1
</TABLE>
================================================================================
The Adviser has agreed to waive fees and reimburse expenses in order to prevent
total operating expenses (excluding any 12b-1 distribution or service fees and
extraordinary expenses) from exceeding .95% of the average daily net asset value
of any class of Fund shares through July 31, 2000.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Adviser has entered
into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"),
of which The John Nuveen Company holds a minority interest, under which ICAP
manages the Fund's investment portfolio. ICAP is compensated for its services
from the management fee paid to the Adviser. The Fund pays no compensation
directly to those of its Trustees who are affiliated with the Adviser or to its
officers, all of whom receive remuneration for their services to the Fund from
the Adviser.
During the six months ended December 31, 1999, John Nuveen & Co. Incorporated
(the "Distributor"), a wholly owned subsidiary of The John Nuveen Company,
collected sales charges on purchases of Class A Shares of approximately $32,300
of which approximately $28,400, were paid out as concessions to authorized
dealers. The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
During the six months ended December 31, 1999, the Distributor compensated
authorized dealers directly with approximately $65,800 in commission advances at
the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees 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 six months ended December 31, 1999, the Distributor retained
approximately $73,800 in such 12b-1 fees. The remaining 12b-1 fees charged to
the Fund were paid to compensate authorized dealers for providing services to
shareholders relating to their investments. The Distributor also collected and
retained approximately $32,100 of CDSC on share redemptions during the six
months ended December 31, 1999.
5. Composition of Net Assets
At December 31, 1999, the Fund had an unlimited number of $.01 par value per
share common stock authorized. Net assets consisted of:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Capital paid-in $74,754,038
Balance of undistributed net investment income 85,788
Accumulated net realized gain from investment transactions 764,968
Net unrealized appreciation of investments 8,664,954
- --------------------------------------------------------------------------------
Net assets $84,269,748
================================================================================
</TABLE>
14
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- ---------------------------
Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
June 30, Value Income (Loss) Total Income Gains Total Value Return (a)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 (e) $27.18 $.37 $(.53) $(.16) $(.35) $ (.95) $(1.30) $25.72 (.55)%
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 (e) 27.18 .27 (.53) (.26) (.25) (.95) (1.20) 25.72 (.92)
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 (e) 27.19 .27 (.53) (.26) (.25) (.95) (1.20) 25.73 (.89)
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 (e) 27.18 .40 (.53) (.13) (.38) (.95) (1.33) 25.72 (.43)
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 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
Year Ended Assets Net Net Net Net Net Net Turnover
June 30, (000) Assets Assets Assets Assets Assets Assets Rate
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 (e) $58,861 1.32%* 2.65%* 1.21%* 2.77%* 1.20%* 2.78%* 40%
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 (e) 13,164 2.07* 1.93* 1.96* 2.05* 1.95* 2.06* 40
1999 12,856 2.11 1.37 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 (e) 7,686 2.07* 1.93* 1.95* 2.05* 1.95* 2.06* 40
1999 7,142 2.10 1.39 1.94 1.55 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 (e) 4,558 1.08* 2.93* .96* 3.05* .95* 3.06* 40
1999 4,445 1.11 2.36 .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
(note 4).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 4).
(d) From commencement of class operations as noted.
(e) For the six months ended December 31, 1999.
15
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family
of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
International Growth Fund
Innovation Fund
Nuveen Rittenhouse Growth Fund
Growth and
Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Dividend and
Growth Fund
Income
Income Fund
Floating Rate Fund(1)
Tax-Free Income
National Funds
High Yield
Long-Term
Insured Long Term
Intermediate-Term
Limited-Term
State Funds
Arizona
California(2)
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts(2)
Michigan
Missouri
New Jersey
New Mexico
New York(2)
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers(SM) including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
quality municipal bonds. The fund shares are listed and traded on the New York
and American stock exchanges. Exchange-traded funds provide the investment
convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
1. This is a continuously-offered closed-end interval fund. As such, redemptions
are only available during quarterly repurchase periods. See fund prospectus for
additional information.
2. Long-term and insured long-term portfolios.
16
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
17
<PAGE>
SERVING
Investors for Generations
[Photo of John Nuveen, Sr. appears here]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies whose aim is to provide consistent, competitive
performance over time -- with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our growth,
growth and income, income, and tax-free funds, along with our defined portfolios
and private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
December 31, 1999 Semiannual Report
NUVEEN
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Balanced Municipal and Stock Fund
For investors seeking
tax-free income and
growth of capital.
[PHOTO APPEARS HERE]
Featuring Portfolio Management By Institutional Capital Corporation and
Nuveen Investment Advisory Services
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective
6 Fund Spotlight
7 Portfolio of Investments
13 Statement of Net Assets
14 Statement of Operations
15 Statement of Changes in Net Assets
16 Notes to Financial Statements
20 Financial Highlights
21 Fund Information
<PAGE>
DEAR
Shareholder
[Photo of Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
How did you gain your financial wisdom? While some of us study finance, the
financial markets, economics or related disciplines in formal programs, most of
us end up accumulating practical knowledge through the years, from friends,
family, colleagues and media.
At Nuveen, we believe a formal financial education should start early in life. A
study sponsored by the National Council on Economic Education shows that a
whopping 66% of high school students tested on basic money skills scored an "F."
Only 3% received an "A."
Because we believe strongly in education and are committed to children's
financial literacy, we have launched a community service program, Kid$ense, in
our hometown of Chicago.
The Kid$ense curriculum, which is available for grades kindergarten through
sixth, includes textbooks, teaching materials and teacher training. The lessons
introduce children to the concept of money and how it works in society; buying,
selling and trading; working, earning, saving and investing.
Nuveen's commitment to children's financial literacy goes beyond the 250
Chicago public schools who have benefited from the Kid$ense curriculum. We also
have a commitment to family wealth management, which is a positive philosophy
that addresses the role of wealth in our lives and our world.
At Nuveen, we are dedicated to helping you and your financial adviser
develop a family wealth management strategy unique to you and your goals and
values. In your next shareholder report, look for more information about
Nuveen's dedication to Family Wealth Management, or ask your financial adviser
about this new approach to investing.
The Economic Environment. I want to briefly report on the economic environment
in which your Nuveen investment performed. Read on, as we've conducted an in-
depth interview with a representative from your fund's portfolio management
team, describing how the team of investment and research professionals directed
the portfolio during the semiannual fiscal period ended December 31, 1999.
The equity markets ended 1999 with a record-breaking performance as the Dow
Jones Industrial Average reached 11,497. The Standard and Poor's (S&P) 500 Stock
Index rose more than 21%, following gains that averaged 30% annually the
preceding four years. Strong performance of technology stocks drove the equity
market in 1999, and returns were highly concentrated; about one-half of the
stocks in the S&P 500 declined last year.
The economy has now experienced the longest business-cycle expansion in
U.S. history. However, concerns about the continued pace of the economy's
expansion have begun to test the "new paradigm," which holds that improvements
in productivity enable us to have both economic growth and low inflation at the
same time. With investors and the various markets watching -- and reacting to --
every announcement concerning economic statistics, volatility has increased,
especially in the equity markets.
"We also have a
commitment to
family wealth
management,
which is a
positive philosophy
that addresses
the role of wealth
in our lives
and our world."
SEMIANNUAL REPORT page 1
<PAGE>
"Your financial
adviser can serve
as a valuable
resource in helping
you determine if
adjustments are
needed in your
current asset
allocation plan."
The portfolio management team for your Nuveen fund plans to continue to
focus on finding value in the markets, partly through their Global Revival
theme. They expect companies in this theme will see strong earnings growth as
economic activity improves around the world. The portfolios also continue to
emphasize company-specific situations, particularly where a significant
restructuring action is expected to unlock value.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets may be better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial adviser. 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 finding the best
ways to serve your evolving investment needs. Thank you for your continued
confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
February 15, 2000
SEMIANNUAL REPORT page 2
<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 six-month period ending December 31, 1999, we spoke with Tom Spalding of
Nuveen Institutional Advisory Corp (NIAC), 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 In the six-month period ending December 31, 1999, the Federal Reserve Board
(the Fed) raised interest rates twice in response to the threat of inflation as
a result of the continued economic strength. Meanwhile, the S&P 500 Index
finished the year up 21%, the fifth consecutive increase of more than 20%. How
did this environment affect the equity portion of the Nuveen Balanced Municipal
and Stock Fund?
ROB The Fed raised interest rates over the period by a total of 50 basis points,
causing temporary slumps in stock prices that quickly turned around to finish
the year on a high note. Although value-oriented stocks had shown some recovery
at the end of the last reporting period, rising interest rates halted the
resurgence, and value stocks underperformed growth stocks for the year.
The fund returned -0.59% for the six-month period ended December 31, 1999.*
As of December 31, 1999, 59% of the portfolio was invested in municipal bonds,
40% was invested in stocks, and 1% was invested in cash equivalents.
Q As the economy has grown in the past several years and investors have sought
out companies with consistent earnings, growth stocks, which tend to have higher
earnings growth rates than value stocks, have been among the market's best
performers. What causes value stocks to fall in and out of favor? What happened
in 1999?
ROB Historically speaking, value-oriented stocks have tended to outperform
during periods of strong and/or accelerating global activity. It didn't happen
this way in 1999 because of differentials in sector performance. Value managers
were challenged by the combination of extremely strong returns in technology --
a growth-oriented sector -- and very weak (in fact, negative) performance in
financials -- a value-oriented sector. In fact, the technology sector alone
accounted for about 70% of the entire return of the S&P 500 index.
Technology stocks were selling at an average 79 times earnings as of
December 31, 1999, compared to non-technology stocks at an average of 29 times
earnings. Based on the current components of the index, it's obvious that if the
technology sector has a period of extended losses, the entire S&P 500 will
suffer. We think value investing will regain momentum if that happens.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
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 be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's subadviser for value investing, Institutional Capital Corporation
(ICAP), is a highly successful institutional money manager with nearly 30 years
of experience. They specialize in finding undervalued midsize and large company
stocks that are poised for significant growth.
This disciplined, research-oriented approach is a key investment strategy for
Nuveen Balanced Municipal and Stock Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the six-month period ended December 31, 1999. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
* For the one-year period ending December 31,1999, the Nuveen Balanced Municipal
and Stock Fund had a total return of 4.64%. Since the fund's inception August
7, 1996, its average annual total return is 10.87%. The returns assume
reinvestment of dividends and do not reflect any applicable sales charges.
SEMIANNUAL REPORT page 3
<PAGE>
"Our investment
process involves
seeking out stocks
of established,
well-known
companies that
we believe offer
unrecognized value
with a "catalyst"
that may trigger
a rise in the
stocks' prices."
Q How do you manage a value-oriented fund in a market that favors
growth stocks?
ROB Our investment process involves seeking out stocks of established, well-
known companies that we believe offer unrecognized value with a "catalyst" that
may trigger a rise in the stocks' prices. We follow two primary investment
themes to help us look for such companies that stand to benefit from the current
economic environment.
The first theme is Corporate Restructurings, which focuses on companies
with past challenges that now have specific restructuring programs well
underway. One prime example of this theme is one of the fund's largest holdings,
Philips Electronics N.V., whose cost-cutting initiatives continued to create a
more focused corporate strategy throughout the period. Philips gained over 100%
in 1999 and performed especially well in the fourth quarter.
We instituted our global revival theme in the spring of 1999, which focused
on the stocks of companies that we believed would experience better earnings as
a result of an improving world economy. We believe that if earnings growth does
continue to improve, that will in turn be reflected in better stock price
performance. Some holdings we will watch are in the basic industries (Alcan,
Union Carbide) and energy (Conoco, Texaco, Exxon Mobil) sectors.
Q Since, as value investors, you look for companies that may not be in favor but
have strong turnaround prospects, how do you know if it is time to sell
a holding?
ROB We have a rigorous sell discipline in place, so that, while we buy companies
when they are out of favor, we monitor them continuously to see if they meet our
expectations for a turnaround. If there are adverse fundamental changes or
potential long-term hindrances to what we see as a company's prospects, we sell.
One example is Xerox. During the fourth quarter of 1999 we sold our
holdings in Xerox, which made up a fairly substantial portion of the portfolio,
because of an unexpected earnings shortfall and anticipated future
underperformance. The earnings shortfall was due to many factors, including a
business mix shift to the lower-margin business of document outsourcing, a
realignment of the sales force, and an increase in bad debts. We expected that
all of these issues would continue to an equal or greater degree into 2000, so
we decided to put that part of the fund's assets to better use.
<TABLE>
<CAPTION>
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
Portfolio Allocation
[PIE CHART APPEARS HERE]
<S> <C>
Equity............40%
Municipal Bonds...59%
Cash Equivalents...1%
</TABLE>
As a percentage of total holdings as of December 31, 1999. Holdings are subject
to change.
SEMIANNUAL REPORT page 4
<PAGE>
Q We turn to Tom Spalding to discuss the municipal portion of the portfolio. How
did the global economic recovery and Federal Reserve interest rate increases
affect your management of this portion of the fund's portfolio?
<TABLE>
<CAPTION>
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
Top Five Sectors
<S> <C>
Consumer Cyclicals 21.0%
--------------------------------
Financials 14.7%
--------------------------------
Technology 12.5%
--------------------------------
Health Care 11.0%
--------------------------------
Basic Materials 10.4%
--------------------------------
</TABLE>
As a percentage of total stock holdings as of December 31, 1999. Holdings are
subject to change.
TOM The benchmark 30-year U.S. Treasury bond yield spiked at a two-year high at
one point during the period causing bond prices to fall. Fortunately, our focus
on intermediate-term maturities helped mitigate the adverse effects of falling
prices.
The team left the fixed income portion of the portfolio relatively
unchanged, but did add one attractive issue: Washington, D.C. Convention
Authority general obligation bonds, which are scheduled to mature in 2011.
Q Do you foresee changing the fund's fixed income strategy going into 2000?
TOM We expect economic growth to moderate a bit but stay strong, and inflation
should remain in check throughout the first half of 2000. All in all, this
combination of strong growth and moderate inflation should keep yields on the
30-year Treasury bond high -- in the 6.0% to 6.4% range -- so we will continue
to focus on finding good relative value in the marketplace consistent with
pursuing the fund's objective.
Q Rob, what is your outlook for the equity markets and for value stocks in 2000?
ROB In light of the building momentum in the global economy, we have taken steps
to increase exposure to more cyclical sectors such as basic materials and
energy. Producers in these industries should enjoy some degree of pricing
flexibility going forward, in our opinion.
As far as value stocks go, it is easy to forget in this high-flying
market that value has outperformed growth over the long haul. In fact, in the 25
year period ending December 31, 1999, the total return for value stocks as
measured by the S&P 500/Barra Value Index was 17.31% versus the total return of
16.76% for growth stocks, as measured by the S&P 500/Barra Growth Index.
We believe that seeking what are, in our opinion, attractively-priced
stocks of companies that can benefit from the infrastructure of a new economy
will position the fund strongly for the near future. We believe there is a solid
investment case for "old economy" companies that have strong business franchises
and that are repositioning for the future.
We also continue to believe strongly in the potential benefits that a
balanced fund combining municipals and equities, such as this one, can provide.
Some of these benefits are the growth potential of equities, a monthly tax-free
dividend and moderated risk resulting from asset class diversification.
"We believe there is a
solid investment case
for "old economy"
companies that
have strong business
franchises and that
are repositioning
for the future."
SEMIANNUAL REPORT page 5
<PAGE>
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
Fund Spotlight as of December 31, 1999
Terms To Know
The following are a few terms used throughout this report.
Duration Duration is an indicator of a portfolio's sensitivity to interest
rates.
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.
<TABLE>
<CAPTION>
Quick Facts
<S> <C> <C> <C> <C>
A Shares B Shares C Shares R Shares
NAV $24.69 $25.08 $25.06 $24.51
- ------------------------------------------------------------------------------
Fund Symbol NBMSX NMNBX NBMCX N/A
- ------------------------------------------------------------------------------
CUSIP 67064Y883 67064Y875 67064Y867 67064Y859
- ------------------------------------------------------------------------------
Inception Date 8/96 8/96 8/96 8/96
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Total Returns (Annualized)+
<S> <C> <C> <C> <C> <C> <C>
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
1-Year 4.64% -1.37% 3.90% -0.10% 3.87% 4.92%
- ------------------------------------------------------------------------------
3-Year 9.65% 7.51% 8.88% 8.03% 8.86% 9.96%
- ------------------------------------------------------------------------------
Since
Inception 10.87% 8.96% 10.09% 9.38% 10.06% 11.17%
- ------------------------------------------------------------------------------
SEC 30-Day
Yield 2.74% 2.58% 1.98% N/A 1.98% 2.99%
</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.
<TABLE>
<CAPTION>
Top Five Stock Holdings*
<S> <C>
Philips Electronics N.V. 4.8%
- ------------------------------------------------------------------------------
U.S. West, Inc. 3.7%
- ------------------------------------------------------------------------------
Motorola, Inc. 3.6%
- ------------------------------------------------------------------------------
Ford Motor Company 3.5%
- ------------------------------------------------------------------------------
Citigroup Inc. 3.2%
- ------------------------------------------------------------------------------
* As a percentage of total stock holdings as of December 31, 1999. Holdings
are subject to change.
</TABLE>
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Total Net Assets $182.3 million
- ----------------------------------------------------------------------
Fixed Income
Average Duration 6.86
- ----------------------------------------------------------------------
Average Market
Capitalization (Stocks) $55 billion
- ----------------------------------------------------------------------
Average P/E 20.1
- ----------------------------------------------------------------------
Number of Stocks 45
- ----------------------------------------------------------------------
Expense Ratio* 1.20%
- ----------------------------------------------------------------------
</TABLE>
* For Class A shares after credit/reimbursement.
SEMIANNUAL REPORT page 6
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Balanced Municipal and Stock Fund
December 31, 1999
<TABLE>
<CAPTION>
<C> <S> <C>
Market
Shares Description Value
- ---------------------------------------------------------------------
COMMON STOCKS - 38.9%
Basic Materials - 4.2%
32,200 Akzo Nobel N.V. Sponsored ADR $1,601,950
31,500 Alcan Aluminum Ltd. 1,297,406
27,400 International Paper Company 1,546,388
21,050 Union Carbide Corporation 1,405,088
24,300 Weyerhaeuser Company 1,745,044
- ---------------------------------------------------------------------
Capital Goods - 0.6%
21,100 General Dynamics Corporation 1,113,025
- ---------------------------------------------------------------------
Consumer Cyclicals - 7.3%
24,900 Dayton Hudson Corporation 1,828,594
35,200 Federated Department Stores, Inc.# 1,779,800
48,450 Ford Motor Company 2,589,047
28,500 General Motors Corporation 2,071,594
25,988 Philips Electronics N.V. 3,508,380
19,200 TRW Inc. 997,200
25,100 Toys "R" Us, Inc.# 359,244
- ---------------------------------------------------------------------
Consumer Staples - 3.5%
19,500 Avon Products, Inc. 643,500
31,100 Kimberly-Clark Corporation 2,029,275
10,800 MediaOne Group, Inc.# 829,575
44,200 The Seagram Company Ltd. 1,986,238
23,200 Tricon Global Restaurants, Inc.# 896,100
- ---------------------------------------------------------------------
Energy - 2.8%
65,200 Conoco Inc. 1,621,850
27,300 Exxon Mobil Corporation 2,199,356
24,700 Texaco Inc. 1,341,519
- ---------------------------------------------------------------------
Financials - 5.9%
62,500 Associates First Capital Corporation 1,714,844
42,312 Citigroup Inc. 2,350,961
26,400 Hartford Financial Services Group, Inc. 1,250,700
47,750 Household International, Inc. 1,778,688
13,900 Providian Financial Corporation 1,265,769
61,400 U.S. Bancorp 1,462,088
21,600 Wells Fargo Company 873,450
- ---------------------------------------------------------------------
</TABLE>
7
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Balanced Municipal and Stock Fund (continued)
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care - 4.4%
44,900 American Home Products Corporation $ 1,770,744
39,036 Aventis SA Sponsored ADR 2,220,192
28,850 Baxter International Inc. 1,812,141
35,550 Becton, Dickinson and Company 950,963
19,450 Bristol-Myers Squibb Company 1,248,447
- -----------------------------------------------------------------------------------------------------------------------------------
Technology - 5.0%
27,950 Electronic Data Systems Corporation 1,870,903
13,050 General Motors Corporation - Class H# 1,252,800
20,650 International Business Machines Corporation 2,230,200
17,596 Motorola, Inc. 2,591,011
11,950 Nortel Networks Corporation 1,206,950
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation - 1.1%
18,850 AMR Corporation# 1,262,950
32,400 Northwest Airlines Corporation# 720,900
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities - 4.1%
31,660 AT&T Corp. 1,606,745
34,450 Bell Atlantic Corporation 2,120,828
20,900 Cable & Wireless plc Sponsored ADR 1,106,394
37,050 U.S. West, Inc. 2,667,600
- -------------------------------------------------------------------------------
Total Common Stocks - (cost $59,266,488) 70,726,441
--------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 1.2%
Consumer Cyclicals - 1.2%
67,500 News Corporation Limited Sponsored ADR 2,257,031
- -----------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks - (cost $1,195,563) 2,257,031
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS - 58.4%
Alabama - 0.3%
$ 455,000 Alabama Water Pollution Control Authority, Revolving Fund 8/05 at 100 AAA 487,437
Loan Bonds, Series 1994, 6.625%, 8/15/08
- -----------------------------------------------------------------------------------------------------------------------------------
California - 3.3%
2,500,000 City of Escondido, California Multifamily Housing Revenue 7/05 at 101 1/2 AAA 2,513,000
Refunding Bonds (Morning View Terrace Apartments),
Series 1997B, 5.400%, 1/01/27 (Mandatory put 7/01/07)
735,000 Northern California Power Agency, Public Power Revenue No Opt. Call A- 752,809
Refunding Bonds, Geothermal
Project No. 3, 1993 Series A, 5.650%, 7/01/07
250,000 County of Orange, California, Refunding Recovery Bonds, 1995 No Opt. Call AAA 268,310
Series A, 6.000%, 6/01/10
1,495,000 Palmdale Civic Authority (Civic Center Refinancing), 1997 7/07 at 102 AAA 1,484,266
Series A, 5.375%, 7/01/12
1,000,000 County of San Diego, California, Certificates of 9/09 at 101 Baa3 990,270
Participation, The Burnham Institute,
5.700%, 9/01/11
- -----------------------------------------------------------------------------------------------------------------------------------
Colorado - 2.2%
2,000,000 City and County of Denver, Colorado, Airport System Revenue 11/06 at 102 AAA 2,056,520
Bonds, Series 1996B,
5.625%, 11/15/08 (Alternative Minimum Tax)
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Colorado (continued)
$1,000,000 City and County of Denver, Colorado, Airport Special 1/09 at 101 AAA $1,024,680
Facilities Revenue Bonds (Rental Car Projects),
Series 1999A, 6.000%, 1/01/13 (Alternative Minimum Tax)
2,000,000 Metropolitan Football Stadium District, Colorado, Sales Tax No Opt. Call AAA 1,012,960
Revenue Bonds, Series 1999A, 0.000%, 1/01/12
- -----------------------------------------------------------------------------------------------------------------------------------
Connecticut - 3.8%
1,075,000 Connecticut Housing Finance Authority, Housing Mortgage 5/06 at 102 AA 1,081,654
Finance Program Bonds, 1996 Series B, Subseries B-2, 5.750%, 11/15/08
(Alternative Minimum Tax)
1,000,000 State of Connecticut Health and Educational Facilities Authority, Revenue No Opt. Call BBB 959,300
Bonds, Hospital for Special Care Issue, Series B, 5.125%, 7/01/07
1,485,000 Connecticut Development Authority, First Mortgage Gross 12/06 at 103 BBB+ 1,382,283
Revenue Health Care Project Refunding Bonds (The Elim Park Baptist Home,
Inc. Project), Series 1998A, 4.875%, 12/01/07
3,500,000 West Haven Housing Authority (Connecticut), Multifamily Housing Revenue 1/01 at 100 N/R 3,506,405
Bonds (Meadows Landing Apartments), Series 1998B 6.000%, 1/01/02
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 1.2%
1,500,000 District of Columbia, General Obligation Bonds, Series 1998B, No Opt. Call AAA 1,571,310
6.000%, 6/01/11
500,000 District of Columbia, General Obligation Refunding Bonds, No Opt. Call AAA 545,210
Series A-1, 6.500%, 6/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Georgia - 1.4%
2,000,000 Development Authority of Fulton County (Georgia), Special 5/08 at 101 BBB- 1,809,460
Facilities Revenue Bonds (Delta Air Lines, Inc. Project),
Series 1998, 5.300%, 5/01/13 (Alternative Minimum Tax)
760,000 Georgia Housing and Finance Authority, Single Family Mortgage 6/06 at 102 AAA 744,504
Bonds, 1996 Series A, 5.875%, 12/01/19 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Idaho - 1.4%
1,280,000 Idaho Housing and Finance Association, Single Family Mortgage 1/07 at 102 A1 1,284,416
Bonds, 1997 Series D, 5.950%, 7/01/09 (Alternative Minimum Tax)
1,345,000 Idaho Housing and Finance Association, Single Family Mortgage 7/07 at 101 1/2 A1 1,346,372
Bonds, 1997 Series F, 5.700%, 7/01/10 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Illinois - 5.6%
1,075,000 Village of Bolingbrook, Will and DuPage Counties, Illinois, No Opt. Call AAA 1,229,144
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:
1,130,000 0.000%, 12/01/09 No Opt. Call AAA 657,886
2,360,000 0.000%, 12/01/10 No Opt. Call AAA 1,288,654
Illinois Development Finance Authority, Economic Development
Revenue Bonds (The Latin School of Chicago Project), Series 1998:
270,000 5.200%, 8/01/11 8/08 at 100 Baa2 251,027
200,000 5.250%, 8/01/12 8/08 at 100 Baa2 184,378
580,000 5.300%, 8/01/13 8/08 at 100 Baa2 532,312
2,160,000 Illinois Health Facilities Authority, Revenue Bonds (St. 7/04 at 102 N/R*** 2,389,673
Elizabeth's Hospital of Chicago, Inc.), Series 1985, 7.250%,
7/01/05 (Pre-refunded to 7/01/04)
1,500,000 Illinois Health Facilities Authority, Revenue Bonds (OSF 11/03 at 102 A 1,509,075
Healthcare System), Series 1993, 6.000%, 11/15/10
240,000 Illinois Health Facilities Authority, FHA-Insured Mortgage 2/06 at 102 AAA 243,024
Revenue Bonds (Sinai Health System), Series 1996, 5.500%, 2/15/09
1,200,000 Illinois Health Facilities Authority, Revenue Bonds (Highland 10/07 at 102 AAA 1,224,528
Park Hospital Project), Series 1997A, 5.700%, 10/01/10
700,000 Kankakee School District No. 111, Kankakee County, Illinois, 1/06 at 100 AAA 699,090
General Obligation School Bonds, Series 1996, 5.500%, 1/01/12
</TABLE>
9
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Balanced Municipal and Stock Fund (continued)
December 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indiana - 0.8%
$1,485,000 Indiana Housing Finance Authority, Single Family Mortgage 7/08 at 101 Aaa $1,405,508
Revenue Bonds, 1998 Series C-3, 5.300%, 7/01/13
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Louisiana - 1.4%
Parish School Board of the Parish of Jefferson, State of Louisiana,
Sales Tax School Bonds, Refunding Series 1998:
1,045,000 0.000%, 3/01/08 No Opt. Call AAA 673,607
2,175,000 0.000%, 9/01/08 No Opt. Call AAA 1,364,813
1,000,000 0.000%, 3/01/10 No Opt. Call AAA 573,180
- -----------------------------------------------------------------------------------------------------------------------------------
Maine - 0.1%
255,000 Town of Winslow, Maine (Crowe Rope Industries Project), General 3/07 at 102 Aaa 262,211
Obligation Tax Increment Financing Bonds, 1997 Series A, 6.000%,
3/01/11 (Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts - 4.6%
Massachusetts Development Finance Agency, Resource Recovery Revenue
Bonds (Ogden Haverhill Project), Series 1998B:
1,720,000 5.100%, 12/01/12 (Alternative Minimum Tax) 12/08 at 102 BBB 1,554,140
1,885,000 5.200%, 12/01/13 (Alternative Minimum Tax) 12/08 at 102 BBB 1,695,407
250,000 Massachusetts Health and Educational Facilities Authority, 7/06 at 102 AAA 263,665
Revenue Bonds, Melrose-Wakefield Healthcare Corp. Issue, Series C,
5.700%, 7/01/08 (Pre-refunded to 7/01/06)
Massachusetts Industrial Finance Agency, Resource Recovery Revenue
Refunding Bonds (Ogden Haverhill Project), Series 1998A:
1,500,000 5.450%, 12/01/12 (Alternative Minimum Tax) 12/08 at 102 BBB 1,380,270
1,825,000 5.500%, 12/01/13 (Alternative Minimum Tax) 12/08 at 102 BBB 1,664,856
1,835,000 Massachusetts Turnpike Authority, Western Turnpike Revenue 1/00 at 100 AAA 1,825,018
Bonds, 1997 Series A, 5.550%, 1/01/17
- -----------------------------------------------------------------------------------------------------------------------------------
Michigan - 1.1%
Essexville-Hampton Public Schools, County of Bay, State of Michigan,
1997 School Building and Site Bonds (General Obligation - Unlimited Tax):
1,000,000 5.400%, 5/01/11 (Pre-refunded to 5/01/07) 5/07 at 100 AAA 1,024,790
1,010,000 5.500%, 5/01/12 (Pre-refunded to 5/01/07) 5/07 at 100 AAA 1,040,926
- -----------------------------------------------------------------------------------------------------------------------------------
Mississippi - 0.9%
Jones County, Mississippi, Hospital Revenue Refunding Bonds (South Central
Regional Medical Center Project), Series 1997:
1,285,000 5.350%, 12/01/10 12/07 at 100 BBB+ 1,199,509
500,000 5.400%, 12/01/11 12/07 at 100 BBB+ 462,490
- -----------------------------------------------------------------------------------------------------------------------------------
Nebraska - 5.2%
9,921,273 Energy America (Nebraska), Natural Gas Revenue Note (Metropolitan Utility
District Project), Series 1997B, 5.700%, 7/01/08 No Opt. Call N/R 9,497,238
- -----------------------------------------------------------------------------------------------------------------------------------
Nevada - 1.1%
1,840,000 Nevada Housing Division, Single Family Mortgage Bonds, 1997 4/07 at 102 Aa3 1,791,461
Series A-1 Mezzanine Bonds, 6.000%, 4/01/15 (Alternative Minimum Tax)
250,000 Airport Authority of Washoe County, Reno, Nevada, Airport 7/03 at 102 AAA 256,663
Revenue Refunding Bonds, Series 1993B, 5.875%, 7/01/11
- -----------------------------------------------------------------------------------------------------------------------------------
New Hampshire - 2.5%
1,450,000 New Hampshire Higher Educational and Health Facilities Authority, 1/07 at 102 BBB- 1,428,468
Revenue Bonds (New Hampshire College), Series 1997, 6.200%, 1/01/12
3,000,000 State of New Hampshire, Turnpike System Revenue Bonds, 1992 4/02 at 102 AAA 3,063,270
Series, 6.000%, 4/01/13
- -----------------------------------------------------------------------------------------------------------------------------------
New York - 9.5%
2,000,000 Certificates of Participation, The State of New York, The City No Opt. Call BBB+ 2,071,880
University of New York (John Jay College of Criminal Justice
Project Refunding), 6.000%, 8/15/06
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
New York (continued)
$5,000,000 Erie County Industrial Development Agency, Solid Waste 12/10 at 103 N/R $5,336,650
Disposal Facility Revenue Bonds (1998 CanFibre of Lackawanna
Project), 8.875%, 12/01/13 (Alternative Minimum Tax)
500,000 Metropolitan Transportation Authority, Transit Facilities No Opt. Call A- 512,690
Service Contract Bonds, Series O, 5.750%, 7/01/07
250,000 The City of New York, General Obligation Bonds, Fiscal 1997 11/06 at 101 1/2 A- 256,030
Series D, Tax Exempt Bonds, 5.875%, 11/01/11
500,000 The City of New York, General Obligation Bonds, Fiscal 1997 4/07 at 101 A- 521,900
Series I, 6.000%, 4/15/09
2,500,000 The City of New York, General Obligation Bonds, Fiscal 1998 8/07 at 101 A- 2,512,625
Series D, 5.500%, 8/01/10
Dormitory Authority of the State of New York, Revenue Bonds, City University
Issue, Series U:
160,000 6.375%, 7/01/08 (Pre-refunded to 7/01/02) 7/02 at 102 Baa1*** 169,043
115,000 6.375%, 7/01/08 7/02 at 102 Baa1 120,457
2,000,000 New York State Thruway Authority, Local Highway and Bridge 4/06 at 102 A- 2,034,920
Service Contract Bonds, Series 1996, 5.625%, 4/01/07
285,000 New York State Urban Development Corporation, State Facilities No Opt. Call A- 299,216
Revenue Bonds, 1995 Refunding Series, 6.250%, 4/01/06
1,700,000 New York State Urban Development Corporation, Project 1/03 at 102 A- 1,740,919
Revenue Bonds (Cornell Center for Theory and Simulation in Science
and Engineering Grant), Series 1993, 5.900%, 1/01/07
1,430,000 Empire State Development Corporation, New York State Urban No Opt. Call A- 1,525,839
Development Corporation, Youth Facilities Revenue Bonds,
Series 1997, 6.500%, 4/01/07
- -----------------------------------------------------------------------------------------------------------------------------------
North Carolina - 1.4%
2,045,000 North Carolina Municipal Power Agency Number 1, Catawba No Opt. Call AAA 2,617,457
Electric Revenue Bonds, Series 1980, 10.500%, 1/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Ohio - 2.9%
1,750,000 City of Dayton, Ohio, Special Facilities Revenue Refunding No Opt. Call BBB 1,755,548
Bonds, 1988 Series C (Emery Air Freight Corporation and Emery
Worldwide Airlines, Inc. - Guarantors), 6.050%, 10/01/09
1,500,000 County of Lorain, Ohio, Health Care Facilities Revenue 2/08 at 101 BBB 1,371,300
Refunding Bonds, Series 1998A (Kendal at Oberlin), 5.375%, 2/01/12
1,875,000 Ohio Building Authority, State Facilities Refunding Bonds 4/03 at 100 AAA 2,125,875
(Toledo Government Office Building), 1982 Series A, 10.125%,
10/01/06 (Pre-refunded to 4/01/03)
- -----------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.6%
1,000,000 Oklahoma Industries Authority, Health System Revenue No Opt. Call AAA 1,051,220
Refunding Bonds (Obligated Group consisting of INTEGRIS Baptist
Medical Center, Inc., INTEGRIS South Oklahoma City Hospital
Corporation and INTEGRIS Rural Health, Inc.), Series 1995D,
6.000%, 8/15/07
- -----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 0.6%
1,160,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 1,154,455
Revenue Bonds, Series 1996-50A, 5.350%, 10/01/08
- -----------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 1.0%
1,760,000 City of Providence, Rhode Island, General Obligation Bonds, 7/07 at 101 AAA 1,856,554
1997 Series A, 6.000%, 7/15/09
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee - 1.5%
2,700,000 The Industrial Development Board of the City of Cookeville, 10/03 at 102 A 2,708,640
Tennessee, Hospital Refunding Revenue Bonds (Cookeville General
Hospital Project), Series 1993, 5.750%, 10/01/10
- -----------------------------------------------------------------------------------------------------------------------------------
Texas - 2.4%
3,000,000 Abilene Higher Education Authority, Inc., Texas, Student 11/08 at 100 Aa3 2,773,890
Loan Revenue Bonds (Subordinate Lien Fixed Rate Term Bonds),
Series 1998B, 5.050%, 7/01/13 (Alternative Minimum Tax)
City of Austin, Texas, Water, Sewer and Electric Refunding
Revenue Bonds, Series 1982:
10,000 14.000%, 11/15/01 5/00 at 100 A*** 11,147
110,000 14.000%, 11/15/01 No Opt. Call A 120,867
</TABLE>
11
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Balanced Municipal and Stock Fund (continued)
December 31, 1999
<TABLE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Texas (continued)
$ 250,000 City of San Antonio, Texas, Airport System Improvement 7/06 at 101 AAA $ 255,743
Revenue Bonds, Series 1996, 5.700%, 7/01/09
(Alternative Minimum Tax)
190,000 Texas Department of Housing and Community Affairs, Single 9/06 at 102 AAA 191,077
Family Mortgage Revenue Bonds, 1996 Series E, 5.750%, 3/01/10
1,000,000 Tyler Health Facilities Development Corporation, Texas, 7/02 at 100 Baa2 939,240
Hospital Revenue Bonds (Mother Frances Hospital Regional HealthCare
Center Project), Series 1997A, 5.500%, 7/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
Utah - 0.4%
500,000 Tooele County, Hazardous Waste Disposal Revenue Bonds 8/05 at 102 BBB 503,345
(Laidlaw Inc/USPCI Clive PJ), Series 1995, 6.750%, 8/01/10
(Alternative Minimum Tax)
200,000 State Board of Regents of the State of Utah, Student Loan 11/05 at 102 AAA 206,894
Revenue Bonds, 1995 Series N Bonds, 6.000%, 5/01/08
(Alternative Minimum Tax)
- -----------------------------------------------------------------------------------------------------------------------------------
Washington - 1.2%
1,060,000 Tahoma School District No. 409, King County, Washington, No Opt. Call Aaa 1,124,671
Unlimited Tax General Obligation Improvement and Refunding Bonds,
Series 1997, 6.000%, 12/01/09
210,000 Washington State Housing Finance Commission, Single-Family 1/04 at 102 AAA 211,730
Mortgage Revenue Bonds (Mortgage Backed Securities Program),
Series 1995A, 6.650%, 7/01/16 (Alternative Minimum Tax)
85,000 Washington Public Power Supply System, Nuclear Project No. 2 No Opt. Call Aaa 92,005
Revenue Bonds, Series 1981A, 14.375%, 7/01/01
800,000 Washington Public Power Supply System, Project No. 3 7/06 at 102 AAA 823,323
Refunding Revenue Bonds, Series 1996A, 5.700%, 7/01/09
- -----------------------------------------------------------------------------------------------------------------------------------
110,171,273 Total Municipal Bonds - (cost $108,261,279) 106,454,597
============-----------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 0.5%
$ 1,000,000 Allegheny County Industrial Development Authority, Variable VMIG-1 1,000,000
Rate Demand Revenue Bonds (Longwood at Oakmont, Inc. Project),
Series 1997B, 4.700%, 7/01/27+
- -----------------------------------------------------------------------------------------------------------------------------------
$ 1,000,000 Total Short-Term Investments - (cost $1,000,000) 1,000,000
============-----------------------------------------------------------------------------------------------------------------------
Total Investments - (cost $169,723,330) - 99.0% 180,438,069
--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.0% 1,850,023
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $182,288,092
====================================================================================================================
</TABLE>
# Non-income producing.
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's
rating.
*** Securities are backed by an escrow or trust containing
sufficient U.S. government or U.S. government agency
securities which ensures the timely payment of principal and
interest. Securities are normally considered to be
equivalent to AAA rated securities.
N/R Investment is not rated.
+ Security has a maturity of more than one year, but has
variable rate and demand features which qualify it as a
short-term security. The rate disclosed is that currently in
effect. This rate changes periodically based on market
conditions or a specified market index.
See accompanying notes to financial statements.
12
<PAGE>
Statement of Net Assets (Unaudited)
Nuveen Balanced Municipal and Stock Fund
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets
Investment securities, at market value (cost $169,723,330) (note 1) $180,438,069
Cash 576,858
Receivables:
Dividends 98,818
Interest 1,770,250
Investments sold 390,000
Shares sold 211,367
Deferred organization costs (note 1) 63,758
Other assets 11,621
- --------------------------------------------------------------------------------------------------------------------------
Total assets 183,560,741
- --------------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for shares redeemed 967,761
Accrued expenses:
Management fees (note 5) 103,304
12b-1 distribution and service fees (notes 1 and 5) 83,900
Other 117,684
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,272,649
- --------------------------------------------------------------------------------------------------------------------------
Net assets (note 6) $182,288,092
==========================================================================================================================
Class A Shares (note 1)
Net assets $110,791,971
Shares outstanding 4,487,344
Net asset value and redemption price per share $ 24.69
Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price) $ 26.20
==========================================================================================================================
Class B Shares (note 1)
Net assets $ 50,441,417
Shares outstanding 2,011,526
Net asset value, offering and redemption price per share $ 25.08
==========================================================================================================================
Class C Shares (note 1)
Net assets $ 19,919,985
Shares outstanding 794,985
Net asset value, offering and redemption price per share $ 25.06
==========================================================================================================================
Class R Shares (note 1)
Net assets $ 1,134,719
Shares outstanding 46,304
Net asset value, offering and redemption price per share $ 24.51
==========================================================================================================================
See accompanying notes to financial statements.
</TABLE>
13
<PAGE>
Statement of Operations (Unaudited)
Nuveen Balanced Municipal and Stock Fund
Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income (note 1)
Dividends $ 781,829
Interest 3,281,620
- -------------------------------------------------------------------------------------------------------------------------
Total investment income 4,063,449
- -------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 5) 707,499
12b-1 service fees - Class A (notes 1 and 5) 145,858
12b-1 distribution and service fees - Class B (notes 1 and 5) 257,748
12b-1 distribution and service fees - Class C (notes 1 and 5) 101,780
Shareholders' servicing agent fees and expenses 77,498
Custodian's fees and expenses 45,517
Trustees' fees and expenses (note 5) 6,785
Professional fees 18,648
Shareholders' reports - printing and mailing expenses 38,955
Federal and state registration fees 22,550
Amortization of deferred organization costs (note 1) 18,148
Other expenses 8,130
- -------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 1,449,116
Custodian fee credit (note 1) (4,297)
Expense reimbursement (note 5) (38,198)
- -------------------------------------------------------------------------------------------------------------------------
Net expenses 1,406,621
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 2,656,828
- -------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain from investment transactions (notes 1 and 4) 1,748,526
Net change in unrealized appreciation or depreciation of investments (6,087,610)
- -------------------------------------------------------------------------------------------------------------------------
Net gain (loss) from investments (4,339,084)
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $(1,682,256)
=========================================================================================================================
See accompanying notes to financial statements.
</TABLE>
14
<PAGE>
Statement of Changes in Net Assets (Unaudited)
Nuveen Balanced Municipal and Stock Fund
<TABLE>
<CAPTION>
Six months Ended Year Ended
12/31/99 6/30/99
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 2,656,828 $ 4,217,852
Net realized gain from investment transactions (notes 1 and 4) 1,748,526 392,403
Net change in unrealized appreciation or depreciation of investments (6,087,610) 5,824,556
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations (1,682,256) 10,434,811
- -----------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (2,285,195) (3,165,304)
Class B (444,505) (611,994)
Class C (176,924) (242,322)
Class R (27,098) (43,038)
From accumulated net realized gains from investment transactions:
Class A (496,300) (3,293,468)
Class B (222,282) (1,225,114)
Class C (87,759) (486,028)
Class R (4,836) (38,192)
- -----------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,744,899) (9,105,460)
- -----------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 11,910,373 52,403,705
Net proceeds from shares issued to shareholders due to reinvestment of distributions 2,381,255 5,420,959
- -----------------------------------------------------------------------------------------------------------------------
14,291,628 57,824,664
Cost of shares redeemed (24,891,181) (26,489,470)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share transactions (10,599,553) 31,335,194
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (16,026,708) 32,664,545
Net assets at the beginning of period 198,314,800 165,650,255
- -----------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $182,288,092 $198,314,800
=======================================================================================================================
Balance of undistributed net investment income at the end of period $ 328,382 $ 605,276
=======================================================================================================================
See accompanying notes to financial statements.
</TABLE>
15
<PAGE>
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen Balanced Municipal and Stock Fund (the "Fund") is a series of the
Nuveen Investment Trust (the "Trust") which was organized as a Massachusetts
business trust in 1996. The Trust (and each series within the Trust) is an open-
end, diversified management investment company registered under the Investment
Company Act of 1940. Prior to commencement of operations on August 7, 1996, the
Trust had no operations other than those related to organizational matters and
the initial capital contribution of $100,080 (of which $33,360 was allocated to
the Fund) by Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of The John Nuveen Company, for the issuance of shares on July 29,
1996.
The Fund invests in a mix of equities and tax-exempt securities for capital
growth, capital preservation and current tax-exempt income. During temporary
defensive periods, the Fund may invest any percentage of its assets in temporary
investments.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with generally
accepted accounting principles.
Securities Valuation
Common stocks and other equity-type securities are valued at the last sales
price on the national securities exchange or Nasdaq on which such securities are
primarily traded; however, securities traded on a national securities exchange
or Nasdaq for which there are no transactions on a given day or securities not
listed on a national securities exchange or Nasdaq are valued at the most recent
bid prices. The prices of municipal bonds in the Fund's investment portfolio are
provided by a pricing service approved by the Fund's Board of Trustees. When
price quotes are not readily available (which is usually the case for municipal
securities), the pricing service establishes fair market value based on yields
or prices of municipal bonds of comparable quality, type of issue, coupon,
maturity and rating, indications of value from securities dealers and general
market conditions. Temporary investments in securities that have variable rate
and demand features qualifying them as short-term securities and/or securities
having remaining maturities of 60 days or less when purchased, are valued at
amortized cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
December 31, 1999, the Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for amortization of
premiums and accretion of discounts on long-term debt securities when required
for federal income tax purposes.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared and distributed to shareholders
monthly. Net ordinary taxable income and net realized capital gains from
investment transactions, if any, are declared and distributed to shareholders
not less frequently than annually. Furthermore, capital gains are distributed
only to the extent they exceed available capital loss carryforwards.
Distributions to shareholders of net investment income and net realized capital
gains are recorded on the ex-dividend date. The amount and timing of
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. Accordingly,
temporary over-distributions as a result of these differences may occur and will
be classified as either distributions in excess of net investment income and/or
distributions in excess of net realized gains from investment transactions,
where applicable.
Federal Income Taxes
The Fund intends to distribute all of its net investment income and capital
gains to shareholders and to otherwise comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies. Therefore, no federal tax provision is required. In addition, the
Fund intends to satisfy conditions which will enable interest from municipal
obligations, which is exempt from regular federal income tax when received by
the Fund, to qualify as exempt-interest dividends when distributed to
shareholders of the Fund. Net realized capital gains and ordinary income
distributions are subject to federal taxation.
16
<PAGE>
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a contingent deferred sales charge ("CDSC") if redeemed within
18 months of purchase. Class B Shares are sold without a sales charge but incur
annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available only under limited circumstances, or by specified classes
of shareholders.
Derivative Financial Instruments
The Fund may invest in options and futures transactions, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in such financial instruments, and may do so in the future, it did not
make any such investments during the six months ended December 31, 1999.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning August 7, 1996 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption will be reduced by the pro-rata share of
the unamortized organization costs as of the date of redemption.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
12/31/99 6/30/99
----------------------- -----------------------
Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 237,606 $ 5,857,152 801,383 $ 19,758,610
Class B 135,429 3,384,349 950,013 23,509,766
Class C 100,258 2,517,332 361,871 9,025,013
Class R 6,151 151,540 4,472 110,316
Shares issued to shareholders due to reinvestment of distributions:
Class A 76,748 1,899,048 166,972 4,085,713
Class B 13,617 340,466 38,607 947,489
Class C 4,755 118,780 13,468 330,353
Class R 934 22,961 2,354 57,404
- -----------------------------------------------------------------------------------------------------------------------------
575,498 14,291,628 2,339,140 57,824,664
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (696,045) (17,172,852) (695,219) (17,146,719)
Class B (192,623) (4,804,125) (202,066) (5,046,935)
Class C (109,669) (2,732,934) (160,113) (3,961,328)
Class R (7,459) (181,270) (13,418) (334,488)
- -----------------------------------------------------------------------------------------------------------------------------
(1,005,796) (24,891,181) (1,070,816) (26,489,470)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (430,298) $(10,599,553) 1,268,324 $ 31,335,194
=============================================================================================================================
</TABLE>
17
<PAGE>
Notes to Financial Statements (continued)
3. Distributions to Shareholders
The Fund declared a dividend distribution from its tax-exempt net investment
income which was paid on February 1, 2000, to shareholders of record on January
7, 2000, as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Dividend per share:
<S> <C>
Class A $.0495
Class B .0345
Class C .0345
Class R .0545
================================================================================
</TABLE>
4. Securities Transactions
Purchases and sales (including maturities) of investments in common and
preferred stocks, municipal bonds and short-term investments for the six months
ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Purchases:
<S> <C>
Common and preferred stocks $45,587,191
Municipal bonds 6,664,920
Short-term investments 4,200,000
Sales:
Common and preferred stocks 47,727,578
Municipal bonds 14,030,535
Short-term investments 6,700,000
================================================================================
</TABLE>
At December 31, 1999, the identified cost of investments owned for federal
income tax purposes was $170,292,541. Net unrealized appreciation for federal
income tax purposes aggregated $10,145,528 of which $15,753,973 related to
appreciated securities and $5,608,445 related to depreciated securities.
5. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, which is based upon the average daily
net assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
- --------------------------------------------------------------------------------
<S> <C>
For the first $125 million .7500 of 1%
For the next $125 million .7375 of 1
For the next $250 million .7250 of 1
For the next $500 million .7125 of 1
For the next $1 billion .7000 of 1
For net assets over $2 billion .6750 of 1
================================================================================
</TABLE>
The Adviser has agreed to waive fees and reimburse expenses, in order to prevent
total operating expenses (excluding any 12b-1 distribution or service fees and
extraordinary expenses) from exceeding .95% of the average daily net asset value
of any class of Fund shares through July 31, 2000.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Adviser has entered
into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"),
of which The John Nuveen Company owns a minority interest, under which ICAP
manages the Fund's equity portion of the investment portfolio. ICAP is
compensated for its services from the management fee paid to the Adviser. The
Fund pays no compensation directly to those of its Trustees who are affiliated
with the Adviser or to its officers, all of whom receive remuneration for their
services to the Fund from the Adviser.
18
<PAGE>
During the six months ended December 31, 1999, John Nuveen & Co. Incorporated
(the "Distributor"), a wholly owned subsidiary of The John Nuveen Company,
collected sales charges on purchases of Class A Shares of approximately $51,900,
of which approximately $45,400 were paid out as concessions to authorized
dealers. The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
During the six months ended December 31, 1999, the Distributor compensated
authorized dealers directly with approximately $139,700 in commission advances
at the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees on Class B Shares, and
all 12b-1 service and distribution fees on Class C Shares during the first year
following a purchase are retained by the Distributor. During the six months
ended December 31, 1999, the Distributor retained approximately $242,900 in such
12b-1 fees. The remaining 12b-1 fees charged to the Fund were paid to compensate
authorized dealers for providing services to shareholders relating to their
investments. The Distributor also collected and retained approximately $125,500
of CDSC on share redemptions during the six months ended December 31, 1999.
6. Composition of Net Assets
At December 31, 1999, the Fund had an unlimited number of $.01 par value per
share common stock authorized. Net assets consisted of:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Capital paid-in $170,065,838
Balance of undistributed net investment income 328,382
Accumulated net realized gain from investment transactions 1,179,133
Net unrealized appreciation of investments 10,714,739
- --------------------------------------------------------------------------------
Net assets $182,288,092
================================================================================
</TABLE>
7. Investment Composition
At December 31, 1999, the revenue sources expressed as a percent of total common
stocks, preferred stocks, and municipal bonds, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Basic Materials 4%
Consumer Cyclicals 9
Consumer Staples 4
Education and Civic Organizations 5
Energy 3
Financials 6
Health Care 10
Housing/Multifamily 3
Housing/Single Family 5
Tax Obligation/General 6
Tax Obligation/Limited 6
Technology 5
Transportation 8
U.S.Guaranteed 6
Utilities 17
Other 3
- --------------------------------------------------------------------------------
100%
================================================================================
</TABLE>
35% of the municipal bonds owned by the Fund are either covered by insurance
issued by several private insurers or are backed by an escrow or trust
containing U.S. government or U.S. government agency securities, either of which
ensure the timely payment of principal and interest in the event of default.
Such insurance or escrow, however, does not guarantee the market value of the
municipal securities or the value of the Fund's shares.
For additional information regarding each investment security, refer to the
Portfolio of Investments of the Fund.
19
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
--------------------- ------------------
Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
June 30, Value Income (Loss) Total Income Gains Total Value Return(a)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 (e) $25.45 $.38 $(.53) $(.15) $(.50) $(.11) $ (.61) $24.69 (.59)%
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 (e) 25.65 .29 (.53) (.24) (.22) (.11) (.33) 25.08 (.94)
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 (e) 25.63 .29 (.53) (.24) (.22) (.11) (.33) 25.06 (.94)
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 (e) 25.33 .41 (.53) (.12) (.59) (.11) (.70) 24.51 (.47)
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)
------------------ ------------------ ------------------
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
Year Ended Assets Net Net Net Net Net Net Turnover
June 30, (000) Assets Assets Assets Assets Assets Assets Rate
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (8/96)
2000 (e) $110,792 1.24%* 3.03%* 1.20%* 3.07%* 1.20%* 3.07%* 28%
1999 123,917 1.23 2.48 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 (e) 50,441 1.99* 2.29* 1.95* 2.33* 1.95* 2.33* 28
1999 52,718 1.98 1.79 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 (e) 19,920 1.99* 2.29* 1.95* 2.33* 1.95* 2.33* 28
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 (e) 1,135 .99* 3.28* .95* 3.32* .95* 3.33* 28
1999 1,182 .98 2.73 .94 2.77 .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
(note 5).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 5).
(d) From commencement of class operations as noted.
(e) For the six months ended December 31, 1999.
20
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and
Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
21
<PAGE>
SERVING
Investors for Generations
[Photo of John Nuveen Sr. appears here]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies whose aim is to provide consistent, competitive
performance over time -- with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our growth,
growth and income, income, and tax-free funds, along with our defined portfolios
and private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
<PAGE>
December 31, 1999 Semiannual Report
NUVEEN
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen European Value Fund
For investors seeking long-term growth potential and international
diversification.
[PHOTO APPEARS HERE]
Featuring Portfolio Management By Institutional Capital Corporation
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective
6 Fund Spotlight
7 Portfolio of Investments
8 Statement of Net Assets
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Notes to Financial Statements
15 Financial Highlights
16 Building a Better Portfolio
17 Fund Information
<PAGE>
DEAR
Shareholder
[Photo of Timothy R. Schwertfeger Appears Here]
Timothy R. Schwertfeger
Chairman of the Board
How did you gain your financial wisdom? While some of us study finance, the
financial markets, economics or related disciplines in formal programs, most of
us end up accumulating practical knowledge through the years, from friends,
family, colleagues and media.
At Nuveen, we believe a formal financial education should start early in life. A
study sponsored by the National Council on Economic Education shows that a
whopping 66% of high school students tested on basic money skills scored an "F."
Only 3% received an "A."
Because we believe strongly in education and are committed to children's
financial literacy, we have launched a community service program, Kid$ense, in
our hometown of Chicago.
The Kid$ense curriculum, which is available for grades kindergarten through
sixth, includes textbooks, teaching materials and teacher training. The lessons
introduce children to the concept of money and how it works in society; buying,
selling and trading; working, earning, saving and investing.
Nuveen's commitment to children's financial literacy goes beyond the 250
Chicago public schools who have benefited from the Kid$ense curriculum. We also
have a commitment to family wealth management, which is a positive philosophy
that addresses the role of wealth in our lives and our world.
At Nuveen, we are dedicated to helping you and your financial adviser
develop a family wealth management strategy unique to you and your goals and
values. In your next shareholder report, look for more information about
Nuveen's dedication to Family Wealth Management, or ask your financial adviser
about this new approach to investing.
The Economic Environment. I want to briefly report on the economic environment
in which your Nuveen investment performed. Read on, as we've conducted an in-
depth interview with a representative from your fund's portfolio management
team, describing how the team of investment and research professionals directed
the portfolio during the semiannual fiscal period ended December 31, 1999.
The equity markets ended 1999 with a record-breaking performance as the Dow
Jones Industrial Average reached 11,497 at December 31, 1999. Although European
stocks, as measured by the MSCI Europe Index, underperformed the Standard &
Poor's 500 Index of U.S. stocks for the year, they had an extremely strong six
months ending December 31, returning 18.93% versus the S&P 500's 7.69% for the
period.
European central banks implemented interest rate cuts late in 1998 to
stimulate the economy, which was feeling the effects of the Asian crisis of
1997-98. We expect economic growth in Europe to continue.
Your portfolio management team plans to continue to focus on finding value
in the European markets, partly through their Global Revival theme. They expect
companies in this theme will see strong earnings growth as economic activity
improves around the world. The portfolios also will continue to emphasize
company-specific situations, particularly where a significant restructuring
action is expected to unlock value.
"We also have a
commitment to
family wealth
management,
which is a
positive philosophy
that addresses
the role of wealth
in our lives
and our world."
SEMIANNUAL REPORT page 1
<PAGE>
"Your financial
adviser can serve
as a valuable
resource in helping
you determine if
adjustments are
needed in your
current asset
allocation plan."
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets may be better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial adviser. 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. As we enter a new millennium, we are committed to maintaining that
reputation and finding the best ways to serve your evolving investment needs.
Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
February 15, 2000
SEMIANNUAL REPORT page 2
<PAGE>
NUVEEN EUROPEAN VALUE FUND
From the Portfolio Manager's Perspective
- -------------------------------------------------------------------------------
Nuveen European Value Fund features portfolio management from Institutional
Capital Corporation (ICAP), which specializes in large capitalization equities.
To help you understand the fund's performance during the six-month period ending
December 31, 1999, we spoke with Rob Lyon, president and chief investment
officer of ICAP, the subadviser of the fund.
Q As Europe and Asia began an impressive recovery, European stock prices had an
extremely strong run in the six-month period ending December 31, 1999. At the
same time, the Federal Reserve (the Fed) raised U.S. interest rates twice in the
period in response to continued economic strength and the potential threat of
inflation. How did this active world environment affect Europe and the Nuveen
European Value Fund?
ROB The fund returned 20.54% for the six-month period ending December 31, 1999.
For the one-year period and since the fund's inception (May 29, 1998), the fund
had average annual total returns of 25.97% and 13.18%, respectively.
Thanks to a late 1998 stimulus in the form of several interest rate cuts
all across Europe, the region began a strong recovery from the Asian financial
crisis of 1997-98. Although European stocks temporarily declined in reaction to
each successive interest rate hike by the Fed, they came back to outperform the
S&P 500 for the six-month period ending December 31, 1999*.
Q What kinds of strategies did you employ for the fund during the period?
ROB Our primary aim for the fund in all economic environments is to discover
well-known European stocks that offer unrecognized relative value and a
"catalyst" -- a corporate restructuring, a market deregulation, or a new product
- -- that will unlock a stock's hidden value and trigger significant price
appreciation.
For the six-month period, the fund's investment strategy remained
relatively unchanged and the team continued to focus on the overriding theme of
corporate restructurings. This theme allows us to look at historically
underperforming companies which now have specific restructuring programs well
underway. Such restructuring activity could be mergers, acquisitions or
divestitures that we believe will unlock shareholder value.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
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 be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's subadviser for value investing, Institutional Capital Corporation
(ICAP), is a highly successful institutional money manager with nearly 30 years
of experience. They specialize in finding undervalued midsize and large company
stocks that are poised for significant growth.
This disciplined, research-oriented approach is the key investment strategy for
Nuveen European Value Fund.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the period ending December 31, 1999. The views expressed reflect those
of the portfolio management team and are subject to change at any time, based
on market and other conditions.
* Performance of European stocks is measured by the MSCI Europe Index, an
unmanaged index which does not represent Nuveen fund performance. The S&P 500
is an unmanaged index comprised of U.S. stocks. Index returns reflect total
returns and assume reinvestment of dividends but do not include any initial or
ongoing expenses.
SEMIANNUAL REPORT page 3
<PAGE>
"In light of the
building momentum
in the global
economy, we have
taken steps to
increase exposure
to more cyclical
sectors such as
basic materials
and energy."
Q Can you provide any examples of the corporate restructurings theme at work in
the fund?
ROB One excellent example is Philips Electronics N.V. Philips is the fund's
largest holding, and gained more than 100% in 1999. Philips' cost-cutting
initiatives continued to create a more focused corporate strategy throughout the
period. Another example is Total Fina, which merged with Elf Acquitaine, the
French oil company and longtime Nuveen European Value Fund holding, to create
the world's fourth-largest oil company. The combined company -- using the name
Total Fina -- was up sharply over the period.
KPN is the incumbent telecommunications provider for the Netherlands whose
stock price has been punished over the last year due to concerns with the
industry regulator and competition. At this point, however, conditions appear to
be improving for KPN in our opinion. The regulator's willingness to modify
tariffs in KPN's favor, along with KPN's strong performance to date despite the
new competition on the scene, look promising for the company.
Another example is a firm called Peninsular & Oriental Steam Navigation
Company (P&O). A diversified international company with its origins in shipping,
P&O also runs ferry operations, construction, property investment, and
port/transport services. It also owns Princess Cruises, one of the three global
leaders in the cruise field. Management has implemented a program to reduce debt
and plan for an initial public offering of their container shipping joint
venture. The remaining company would be debt-free and focused on its Princess
and P&O cruise operations.
In light of the building momentum in the global economy, we have taken
steps to increase exposure to more cyclical sectors such as basic materials and
energy. Producers in these industries should enjoy some degree of pricing
flexibility going forward, in our opinion. Alternatively, we have reduced our
holdings in sectors such as consumer services and staples where we see pricing
pressure as more intense.
Q Since, as value investors, you look for companies that may not be in favor
but have strong turnaround prospects, how do you know if it is time to sell a
holding?
ROB We have a rigorous sell discipline in place, so that, while we buy
companies when they are out of favor, we monitor them thoroughly and
continuously to see if they meet our expectations for a turnaround. If there are
adverse fundamental changes or potential long-term hindrances to what we see as
the companies' prospects, we sell our holdings.
NUVEEN EUROPEAN VALUE FUND
<TABLE>
<CAPTION>
Country Allocation
<S> <C>
Netherlands 22.1%
- ---------------------------------
United Kingdom 19.8%
- ---------------------------------
France 16.2%
- ---------------------------------
Germany 8.7%
- ---------------------------------
Ireland 8.6%
- ---------------------------------
Switzerland 7.5%
- ---------------------------------
Finland 6.6%
- ---------------------------------
Italy 4.0%
- ---------------------------------
Austria 3.3%
- ---------------------------------
Portugal 3.2%
- ---------------------------------
</TABLE>
As a percentage of total stock holdings as of December 31, 1999. Holdings are
subject to change.
SEMIANNUAL REPORT page 4
<PAGE>
"We look for the European economy
to improve as
the global
recovery continues."
Q What is your outlook for the European equity markets in 2000?
ROB Continued strong U.S. growth should serve as a stimulus to Europe, even if
it does moderate a bit in 2000. Any sign of inflation will prompt a quick
response by the Fed in the form of another interest rate increase in the U.S.
That could set off volatility in European markets, but it would likely be short-
lived. We look for the European economy to improve as the global recovery
continues. Industrial production numbers have been climbing after nearly two
years of declines.
As Europe continues to grow, companies will keep up with the trend toward
corporate restructuring, preparing them for future global strength.
NUVEEN EUROPEAN VALUE FUND
<TABLE>
<CAPTION>
Top Five Sectors
<S> <C>
Financials 17.3%
- ----------------------------------
Consumer Cyclicals 16.9%
- ----------------------------------
Communication Services 15.8%
- ----------------------------------
Basic Materials 14.1%
- ----------------------------------
Consumer Staples 8.7%
- ----------------------------------
</TABLE>
As a percentage of total stock holdings as of December 31, 1999. Holdings are
subject to change.
SEMIANNUAL REPORT page 5
<PAGE>
Terms To Know
The following are a few terms used throughout this report.
Market Capitalization Also referred to as market cap, market capitalization is
a measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped into these main categories:
Large cap: over $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
NUVEEN EUROPEAN VALUE FUND
Fund Spotlight as of December 31, 1999
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $24.01 $23.92 $23.92 $24.04
- ------------------------------------------------------------------------------------
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>
<TABLE>
<CAPTION>
Total Returns+
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV NAV
<S> <C> <C> <C> <C> <C> <C>
1-Year 25.97% 18.71% 25.10% 21.10% 25.16% 26.33%
- -------------------------------------------------------------------------------------
Since
Inception* 13.18% 9.05% 12.38% 10.02% 12.38% 13.49%
</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 total
return figures.
* Annualized
Portfolio Allocation
[PIE CHART APPEARS HERE]
Equity 100%
Portfolio Statistics
Total Net Assets $13.4 million
- --------------------------------------
Average Market
Capitalization (Stocks) $48 billion
- --------------------------------------
Average P/E 20.0
- --------------------------------------
Number of Stocks 24
- --------------------------------------
Expense Ratio* 1.55%
- --------------------------------------
* For Class A shares after credit/reimbursement.
Top Ten Stock Holdings
Philips Electronic N.V. 7.9%
- --------------------------------------------------------------
ING Groep N.V. Sponsored ADR 6.4%
- --------------------------------------------------------------
Aventis SA Sponsored ADR 5.6%
- --------------------------------------------------------------
Independent News & Media plc 4.9%
- --------------------------------------------------------------
Deutsche Telekom AG Sponsored ADR 4.6%
- --------------------------------------------------------------
Nestle SA Sponsored ADR 4.5%
- --------------------------------------------------------------
Diageo plc Sponsored ADR 4.2%
- --------------------------------------------------------------
Peninsular and Oriental Steam Navigation Company
Sponsored ADR 4.1%
- --------------------------------------------------------------
Deutsche Bank AG Sponsored ADR 4.1%
- --------------------------------------------------------------
Cable & Wireless plc Sponsored ADR 4.1%
- --------------------------------------------------------------
As a percentage of total stock holdings as of December 31, 1999. Holdings are
subject to change.
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than original cost. Performance of classes will
differ. For additional information, please see the fund prospectus.
SEMIANNUAL REPORT page 6
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen European Value Fund
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 98.5%
Basic Materials - 13.9%
10,200 Akzo Nobel N.V. Sponsored ADR $ 507,450
17,000 Jefferson Smurfit Group plc Sponsored ADR 493,000
12,500 Pechiney SA Sponsored ADR 453,906
9,600 UPM-Kymmene Oyj Corporation Sponsored ADR 410,400
- ------------------------------------------------------------------------------------------------
Capital Goods - 3.2%
25,100 Rolls-Royce plc Sponsored ADR 431,845
- ------------------------------------------------------------------------------------------------
Communication Services - 15.7%
10,300 Cable & Wireless plc Sponsored ADR 545,256
8,500 Deutsche Telekom AG Sponsored ADR 603,500
38,300 Portugal Telecom SA Sponsored ADR 416,513
5,500 KPN N.V. Sponsored ADR 528,688
- ------------------------------------------------------------------------------------------------
Consumer Cyclicals - 16.6%
53,500 Granada Group plc 542,040
97,200 Independent News & Media plc 651,295
7,702 Philips Electronics N.V. 1,039,770
- ------------------------------------------------------------------------------------------------
Consumer Staples - 8.5%
17,400 Diageo plc Sponsored ADR 556,800
6,500 Nestle SA Sponsored ADR 592,246
- ------------------------------------------------------------------------------------------------
Energy - 7.3%
9,600 ENI Sponsored ADR 529,200
6,585 Total Fina SA Sponsored ADR 456,011
- ------------------------------------------------------------------------------------------------
Financials - 17.1%
39,400 Bank Austria AG Sponsored ADR 442,297
6,500 Deutsche Bank AG Sponsored ADR 546,281
13,850 ING Groep N.V. Sponsored ADR 844,850
79,300 Merita plc 467,618
- ------------------------------------------------------------------------------------------------
Health Care - 8.5%
13,129 Aventis SA Sponsored ADR 746,683
3,400 Roche Holding AG Sponsored ADR 401,442
- ------------------------------------------------------------------------------------------------
Transportation - 4.1%
16,500 Peninsular and Oriental Steam Navigation Company Sponsored ADR 546,756
- ------------------------------------------------------------------------------------------------
Utilities - 3.6%
27,000 Vivendi Sponsored ADR 485,225
- ------------------------------------------------------------------------------------------------
Total Investments - (cost $11,111,070) - 98.5% 13,239,072
-------------------------------------------------------------------------------
Other Assets Less Liabilities - 1.5% 205,701
-------------------------------------------------------------------------------
Net Assets - 100% $13,444,773
===============================================================================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Statement of Net Assets (Unaudited)
Nuveen European Value Fund
December 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Assets
<S> <C>
Investment securities, at market value (cost $11,111,070) (note 1) $13,239,072
Cash 123,261
Receivables:
Dividends 18,719
Fund manager (note 4) 1,396
Shares sold 30,113
Deferred organization costs (note 1) 92,085
Other assets 42,837
- ----------------------------------------------------------------------------------
Total assets 13,547,483
- ----------------------------------------------------------------------------------
Liabilities
Payable for shares redeemed 55,286
Accrued expenses:
12b-1 distribution and service fees (notes 1 and 4) 4,363
Other 43,061
- ----------------------------------------------------------------------------------
Total liabilities 102,710
- ----------------------------------------------------------------------------------
Net assets (note 5) $13,444,773
==================================================================================
Class A Shares (note 1)
Net assets $ 3,893,853
Shares outstanding 162,152
Net asset value and redemption price per share $ 24.01
Offering price per share (net asset value per share plus
maximum sales charge of 5.75% of offering price) $ 25.47
==================================================================================
Class B Shares (note 1)
Net assets $ 3,697,953
Shares outstanding 154,582
Net asset value, offering and redemption price per share $ 23.92
==================================================================================
Class C Shares (note 1)
Net assets $ 803,111
Shares outstanding 33,581
Net asset value, offering and redemption price per share $ 23.92
==================================================================================
Class R Shares (note 1)
Net assets $ 5,049,856
Shares outstanding 210,088
Net asset value, offering and redemption price per share $ 24.04
==================================================================================
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
Statement of Operations (Unaudited)
Nuveen European Value Fund
Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Investment Income (note 1) $ 133,093
- ----------------------------------------------------------------------------------
<S> <C>
Expenses
Management fees (note 4) 55,469
12b-1 service fees - Class A (notes 1 and 4) 4,290
12b-1 distribution and service fees - Class B (notes 1 and 4) 15,848
12b-1 distribution and service fees - Class C (notes 1 and 4) 3,560
Shareholders' servicing agent fees and expenses 6,811
Custodian's fees and expenses 26,066
Trustees' fees and expenses (note 4) 636
Professional fees 15,876
Shareholders' reports - printing and mailing expenses 11,050
Federal and state registration fees 15,359
Amortization of deferred organization costs (note 1) 16,131
Other expenses 914
- ----------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 172,010
Custodian fee credit (note 1) (6,836)
Expense reimbursement (note 4) (65,568)
- ----------------------------------------------------------------------------------
Net expenses 99,606
- ----------------------------------------------------------------------------------
Net investment income 33,487
- ----------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 3) 1,159,641
Net change in unrealized appreciation or depreciation of investments 1,100,854
- ----------------------------------------------------------------------------------
Net gain from investments 2,260,495
- ----------------------------------------------------------------------------------
Net increase in net assets from operations $2,293,982
==================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
Statement of Changes in Net Assets (Unaudited)
Nuveen European Value Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
12/31/99 6/30/99
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 33,487 $ 82,661
Net realized gain (loss) from investment transactions (notes 1 and 3) 1,159,641 (834,511)
Net change in unrealized appreciation or depreciation of investments 1,100,854 1,037,490
- -----------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 2,293,982 285,640
- -----------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (30,095) (1,314)
Class B (5,067) --
Class C (1,111) --
Class R (49,434) (4,385)
From accumulated net realized gains from investment transacations:
Class A (17,974) --
Class B (16,300) --
Class C (3,569) --
Class R (22,473) --
- -----------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (146,023) (5,699)
- -----------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 932,520 9,930,964
Net proceeds from shares issued to shareholders due to reinvestment of distributions 69,293 2,735
- -----------------------------------------------------------------------------------------------------------------
1,001,813 9,933,699
Cost of shares redeemed (958,943) (2,678,059)
- -----------------------------------------------------------------------------------------------------------------
Net increase in assets from Fund share transactions 42,870 7,255,640
- -----------------------------------------------------------------------------------------------------------------
Net increase in net assets 2,190,829 7,535,581
Net assets at the beginning of period 11,253,944 3,718,363
- -----------------------------------------------------------------------------------------------------------------
Net assets at the end of period $13,444,773 $11,253,944
=================================================================================================================
Balance of undistributed net investment income at the end of period $ 24,400 $ 76,620
=================================================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen European Value Fund (the "Fund") is a series of the Nuveen Investment
Trust (the "Trust") which was organized as a Massachusetts business trust in
1996. The Trust (and each series within the Trust) is an open-end, diversified
management investment company registered under the Investment Company Act of
1940. Prior to commencement of operations on May 29, 1998, the Fund had no
operations other than those related to organizational matters.
The Fund invests primarily in a diversified portfolio of stocks of established,
well-known European companies with at least $1 billion in market capitalization
and seeks to provide over time a superior total return with moderated risk. In
addition to investments in equity securities, the Fund may invest in cash
equivalents and short-term investments as a temporary defensive measure.
The Fund may invest in a variety of European securities, including American
Depository Receipts ("ADRs") and other types of depository receipts; equity
securities of European companies that may or may not be publicly traded in the
U.S.; Eurodollar convertibles; fixed-income securities of European companies
that may or may not be publicly traded in the U.S.; and debt obligations issued
or guaranteed by European governments, their agencies, authorities or
instrumentalities. All foreign investments involve certain risks in addition to
those associated with U.S. investments.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with generally
accepted accounting principles.
Securities Valuation
Common stocks and other equity securities are valued at the last sales price
that day. Securities not listed on a national securities exchange or Nasdaq are
valued at the most recent bid prices. When price quotes are not readily
available, the pricing service establishes fair market value based on prices of
comparable securities.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of its when-issued and delayed delivery purchase commitments. At
December 31, 1999, there were no such outstanding purchase commitments in the
Fund.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for accretion of
discounts.
Dividends and Distributions to Shareholders
Net investment income is declared and distributed to shareholders annually. Net
realized capital gains from investment transactions, if any, are declared and
distributed to shareholders not less frequently than annually. Furthermore,
capital gains are distributed only to the extent they exceed available capital
loss carryforwards.
Distributions to shareholders of net investment income and net realized capital
gains are recorded on the ex-dividend date. The amount and timing of
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. Accordingly,
temporary over-distributions as a result of these differences may occur and will
be classified as either distributions in excess of net investment income and/or
distributions in excess of net realized gains from investment transactions,
where applicable.
Federal Income Taxes
The Fund intends to distribute all taxable income and capital gains to
shareholders and to otherwise comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
Therefore, no federal tax provision is required.
11
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a contingent deferred sales charge ("CDSC") if redeemed within
18 months of purchase. Class B Shares are sold without a sales charge but incur
annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available for purchase under limited circumstances.
Derivative Financial Instruments
The Fund may invest in options and futures contracts, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in such financial instruments, and may do so in the future, it did not
make any such investments during the six months ended December 31, 1999.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Deferred Organization Costs
The Fund's costs incurred in connection with its organization and initial
registration of shares was deferred and is being amortized over a 60-month
period beginning May 29, 1998 (commencement of operations). If any of the
initial shares of the Fund are redeemed during this period, the proceeds of the
redemption will be reduced by the pro-rata share of the unamortized organization
costs as of the date of redemption.
Foreign Currency Translations
To the extent that the Fund invests in securities that are denominated in a
currency other than U.S. dollars, the Fund will be subject to currency risk,
which is the risk that an increase in the U.S. dollar relative to the foreign
currency will reduce returns or portfolio value. Generally, when the U.S. dollar
rises in value against a foreign currency, the Fund's investment in securities
denominated in that currency will lose value because its currency is worth fewer
U.S. dollars; the opposite effect occurs if U.S. dollars fall in relative value.
Investments and other assets and liabilities denominated in foreign currencies
are converted into U.S. dollars on a spot (i.e. cash) basis at the spot rate
prevailing in the foreign currency exchange market at the time of valuation.
Purchases and sales of investments and dividend income denominated in foreign
currencies are translated into U.S. dollars on the respective dates of such
transactions. The gains or losses on investments resulting from changes in
foreign exchange rates are included with net realized and unrealized gain (loss)
on investments.
Foreign Currency Transactions
The Fund may engage in foreign currency exchange transactions in connection with
its portfolio investments and assets and liabilities denominated in foreign
currencies. The Fund may engage in foreign currency forward contracts, options
and futures transactions. The Fund will enter into foreign currency transactions
for hedging and other permissible risk management purposes only. If the Fund
invests in a currency futures or options contract, it must make a margin deposit
to secure performance of such contract. With respect to investments in currency
futures contracts, the Fund may also be required to make a variation margin
deposit because the value of futures contracts fluctuates daily. In addition,
the Fund may segregate assets to cover its futures contracts obligations.
The objective of the Fund's foreign currency hedging transactions is to reduce
the risk that the U.S. dollar value of the Fund's foreign currency denominated
securities and other assets and liabilities will decline in value due to changes
in foreign currency exchange rates. All foreign currency forward contracts,
options and futures transactions are "marked-to-market" daily at the applicable
market rates and any resulting unrealized gains or losses are recorded in the
Fund's financial statements. The Fund records realized gains and losses at the
time the forward contract is offset by entering into a closing transaction or
extinguished by delivery of the currency. The contractual amounts of forward
foreign currency exchange contracts does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions are
considered. As of December 31, 1999, there were no open foreign currency forward
contracts, options or futures transactions.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
12
<PAGE>
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
<TABLE>
<CAPTION>
2. Fund Shares
Transactions in Fund shares were as follows: Six Months Ended Year Ended
12/31/99 6/30/99
------------------- --------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 23,165 $ 485,272 194,861 $ 3,715,826
Class B 10,361 220,896 186,211 3,593,989
Class C 1,922 40,935 47,596 931,339
Class R 8,902 185,417 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
- --------------------------------------------------------------------------------------------------------------------
47,342 1,001,813 515,524 9,933,699
- --------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (24,966) (533,797) (37,589) (672,167)
Class B (12,545) (256,202) (46,856) (907,051)
Class C (3,902) (79,710) (14,227) (253,272)
Class R (4,295) (89,234) (45,249) (845,569)
- --------------------------------------------------------------------------------------------------------------------
(45,708) (958,943) (143,921) (2,678,059)
- --------------------------------------------------------------------------------------------------------------------
Net increase 1,634 $ 42,870 371,603 $ 7,255,640
====================================================================================================================
</TABLE>
3. Securities Transactions
Purchases and sales (including maturities) of investment securities and
short-term investments for the six months ended December 31, 1999, were as
follows:
- ---------------------------------------------------
Purchases:
Investment securities $ 11,241,634
Short-term investments --
Sales and maturities:
Investment securities 11,346,390
Short-term investments --
===================================================
At December 31, 1999, the identified cost of investments owned for federal
income tax purposes was $11,531,588. Net unrealized appreciation for federal
income tax purposes aggregated $1,707,484 of which $2,393,554 related to
appreciated securities and $686,070 related to depreciated securities.
At June 30, 1999, the Fund's last fiscal year end, the Fund had unused capital
loss carryforwards of $421,268 available for federal income tax purposes to be
applied against future capital gains, if any. If not applied, $1,619 of the
carryforward will expire in the year 2006 and $419,649 will expire in the year
2007.
13
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with Nuveen Institutional
Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen
Company, the Fund pays an annual management fee, payable monthly, which is based
upon the average daily net assets of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets Management Fee
- -------------------------------------------------
<S> <C>
For the first $125 million .9500 of 1%
For the next $125 million .9375 of 1
For the next $250 million .9250 of 1
For the next $500 million .9125 of 1
For the next $1 billion .9000 of 1
For net assets over $2 billion .8750 of 1
=================================================
</TABLE>
The Adviser has agreed to waive fees and reimburse expenses through July 31,
2000, in order to prevent total operating expenses (excluding any 12b-1
distribution or service fees and extraordinary expenses) from exceeding 1.30% of
the average daily net asset value of any class of Fund shares.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Adviser has entered
into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"),
of which The John Nuveen Company holds a minority interest, under which ICAP
manages the Fund's investment portfolio. ICAP is compensated for its services
from the management fee paid to the Adviser. The Fund pays no compensation
directly to those of its Trustees who are affiliated with the Adviser or to its
officers, all of whom receive remuneration for their services to the Fund from
the Adviser.
During the six months ended December 31, 1999, John Nuveen & Co. Incorporated
(the "Distributor"), a wholly owned subsidiary of The John Nuveen Company,
collected sales charges on purchases of Class A Shares of approximately $6,100,
of which approximately $5,400 were paid out as concessions to authorized
dealers. The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
During the six months ended December 31, 1999, the Distributor compensated
authorized dealers directly with approximately $5,300 in commission advances at
the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees 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 six months ended December 31, 1999, the Distributor retained
approximately $14,600 of such 12b-1 fees. The remaining12b-1 fees charged to the
Fund were paid to compensate authorized dealers for providing services to
shareholders relating to their investments. The Distributor also collected and
retained approximately $8,000 of CDSC on share redemptions during the six months
ended December 31, 1999.
5. Composition of Net Assets
At December 31, 1999, the Fund had an unlimited number of $.01 par value per
share common stock authorized. Net assets consisted of:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
<S> <C>
Capital paid-in $11,029,176
Balance of undistributed net investment income 24,400
Accumulated net realized gain from investment transactions 263,195
Net unrealized appreciation of investments 2,128,002
- --------------------------------------------------------------------------
Net assets $13,444,773
==========================================================================
</TABLE>
14
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
-------------------------------- -----------------------------
Net
Realized/
Unrealized
Beginning Net Invest- Net Ending
Net Invest- ment Invest- Net
Year Ended Asset ment Gain ment Capital Asset Total
June 30, Value Income (Loss) Total Income Gains Total Value Return (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/98)
2000 (e) $20.17 $.08 $4.05 $4.13 $(.18) $(.11) $(.29) $24.01 20.54%
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 (e) 20.04 -- 4.02 4.02 (.03) (.11) (.14) 23.92 20.10
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 (e) 20.04 -- 4.02 4.02 (.03) (.11) (.14) 23.92 20.10
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 (e) 20.21 .10 4.08 4.18 (.24) (.11) (.35) 24.04 20.70
1999 19.87 .23 .13 .36 (.02) -- (.02) 20.21 1.86
1998 (d) 20.00 .03 (.13) (.10) (.03) -- (.03) 19.87 (.52)
====================================================================================================================================
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
Year Ended Assets Net Net Net Net Net Net Turnover
June 30, (000) Assets Assets Assets Assets Assets Assets Rate
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (5/98)
2000 (e) $3,894 2.78%* (.51)%* 1.66%* .61%* 1.55%* .72%* 99%
1999 3,277 2.56 .14 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 (e) 3,698 3.53* (1.26)* 2.41* (.13)* 2.30* (.02)* 99
1999 3,130 3.33 (.84) 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 (e) 803 3.53* (1.27)* 2.41* (.15)* 2.30* (.03)* 99
1999 711 3.36 (.71) 2.30 .35 2.30 .35 230
1998 (d) 42 15.88* (12.98)* 2.30* .60* 2.30* .60* 5
Class R (5/98)
2000 (e) 5,050 2.53* (.26)* 1.41* .86* 1.30* .98* 99
1999 4,135 2.31 .19 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
(note 4).
(c) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 4).
(d) From commencement of class operations as noted.
(e) For the six months ended December 31, 1999.
15
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
International Growth Fund
Innovation Fund
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Income
Income Fund
Floating Rate Fund(1)
Tax-Free Income
National Funds
High Yield
Long-Term
Insured Long Term
Intermediate-Term
Limited-Term
State Funds
Arizona
California(2)
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts(2)
Michigan
Missouri
New Jersey
New Mexico
New York(2)
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers(SM) including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
quality municipal bonds. The fund shares are listed and traded on the New York
and American stock exchanges. Exchange-traded funds provide the investment
convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
1. This is a continuously-offered closed-end interval fund. As such, redemptions
are only available during quarterly repurchase periods. See fund prospectus for
additional information.
2. Long-term and insured long-term portfolios.
16
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Transfer Agent and Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman & Cutler
Chicago, IL.
Independent Public Accountants
Arthur Andersen LLP
Chicago, IL
17
<PAGE>
SERVING
Investors for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to
disciplined long-term investment strategies whose aim is to provide consistent,
competitive performance over time -- with moderated risk. We emphasize quality
securities carefully chosen through in-depth research, and we follow those
securities closely over time to ensure that they continue to meet our exacting
standards.
Whether your focus is long-term growth, dependable income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our growth,
growth and income, income, and tax-free funds, along with our defined portfolios
and private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
