<PAGE>
NUVEEN
Mutual Funds
Nuveen Rittenhouse Growth Fund
A blue chip portfolio for investors seeking a tax-efficient way to build and
sustain wealth.
Semiannual Report
January 31, 1999
[PHOTO APPEARS HERE]
Featuring portfolio management by Rittenhouse Financial Services,
Nuveen's Premier Adviser/SM/ for growth investing.
<PAGE>
Highlights
As of January 31, 1999
For Class A shares
[BAR CHART APPEARS HERE]
Attractive Fund Returns/1/
30%
23.71% 16.58%
20
10
0 One-Year Year-to-Date
(NAV) (Offer)
With its focus on long-term growth, the fund
provided attractive total returns for the first
seven months of the year.
[BAR CHART APPEARS HERE]
Relative Market Capitalization
$120
$103 billion $54 billion
80
40
0 Average Market Cap of Average Market Cap of
of Fund Holdings Morningstar Peer Group/2/
Reflecting a preference for large, well-known
companies, the average market capitalization
of the fund's holdings is significantly greater
than that of its peer group.
Top Ten Common Stock Holdings/3/
- --------------------------------------------------------------------------------
General Electric Company 5.6% Johnson & Johnson 4.7%
- --------------------------------------------------------------------------------
Automatic Data Processing, Inc. 4.9% The Procter & Gamble Company 4.6%
- --------------------------------------------------------------------------------
Pfizer Inc. 4.9% Schering-Plough Corporation 4.6%
- --------------------------------------------------------------------------------
The Home Depot, Inc. 4.9% Merck & Company, Inc. 4.1%
- --------------------------------------------------------------------------------
American International Group, Inc. 4.8% The Coca-Cola Company 4.0%
- --------------------------------------------------------------------------------
The fund's investment strategy leads to the selection of blue chip companies and
household names, as is reflected in the fund's top 10 holdings.
Contents
1 Dear Shareholder
3 Report from the
Portfolio Manager
6 Performance Overview
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
14 Financial Highlights
15 Building a Better Portfolio
16 Fund Information
1 See the Performance Overview on page six for more information.
2 Represents the average market capitalization of the 337 mutual funds in the
Morningstar Large Growth category as of January 31, 1999.
3 The companies listed above represent their respective percentages of total
market value as of January 31, 1999. Over time, the fund's holdings and their
percentages will vary.
<PAGE>
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
I'm pleased to report that the Nuveen Rittenhouse Growth Fund continued to
perform well in pursuit of its primary objective: helping investors participate
in the growth potential of the stock market while providing the measure of
protection that can be found in the stocks of large, well-known companies.
The key strategy for the Fund - and for most Nuveen investors - is continually
focusing on long-term goals. At times, it is easy to lose sight of this fact,
given the daily ups and downs of the market and the allure of the latest stock
du jour. However, with long-term goals in mind, our management team's commitment
to a disciplined buy-and-hold investment approach helps soften the blow of
market downturns. Another feature of this investment style is purchasing stocks
for the long-term and keeping turnover low. This helps minimize the impact of
taxes - which can make a big difference in overall investment returns.
The Year in Review
Over the past year, the markets endured bouts of volatility, as the Asian
financial crisis spilled over into emerging markets and affected economies
around the globe. To avert a potential domestic credit crunch and bring some
stability to global markets, the Federal Reserve moved to ease short-term
interest rates for the first time in almost three years. Between the end of
September and mid-November, three successive cuts reduced the federal funds rate
to 4.75%. This recent market turbulence and economic uncertainty led many
investors to choose growth-oriented, blue chip companies that can offer a
measure of stability in a volatile market. Those types of companies comprise the
main components of the Nuveen Rittenhouse Growth Fund.
In the coming months, we will continue to watch several key factors affecting
the economy's future, including corporate earnings reports, wage and employment
statistics, the strength of the U.S. dollar, events in international markets,
and any further interest rate indications from the Federal Reserve.
1
<PAGE>
"An appropriately diversified portfolio . . . can help cushion your investments
against volatility and enhance your overall total return potential."
The Nuveen Choice
As a further enhancement to our management capabilities, Nuveen has assembled a
group of investment managers who are experts in their particular areas of the
market to provide their experience and insights. In addition to Rittenhouse
Financial Services for growth investing and Nuveen Advisory Services for income
investing, you and your adviser can rely on Institutional Capital Corporation
for value investing. For more information about Nuveen Mutual Funds, including
sales charges and expenses, contact your financial adviser for a prospectus, or
call Nuveen at (800) 621-7227. Please read the prospectus carefully before you
invest or send money.
Considering the market volatility of 1998, we believe that investors will
continue to find diversification to be an important strategy in the months
ahead. An appropriately diversified portfolio - one that balances different
types of investments, levels of risk, and tax management strategies - can help
cushion your investments against volatility and enhance your overall total
return potential.
We encourage you to talk with your financial adviser about the ways Nuveen
Mutual Funds can help you establish a diversified portfolio designed to build
and sustain long-term financial security. We are grateful for the confidence you
have placed in us and are dedicated to maintaining your trust in the years
ahead.
Sincerely,
/s/ Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
March 15, 1999
2
<PAGE>
Nuveen Rittenhouse Growth Fund
Report from the Portfolio Manager
Investors found 1998 to be a very challenging year, and many expect 1999 to
follow suit. To gain a clearer perspective on the successful first year and the
future of the Nuveen Rittenhouse Growth Fund, we talked with John P. Waterman,
Managing Director, Investments, at Rittenhouse Financial Services, Nuveen's
Premier Adviser for Growth Investing and portfolio manager of the Fund.
"In the wake of financial turmoil around the globe, investors sought the
potential safe haven of large companies whose earnings growth was expected to be
strong and secure."
What is your assessment of the stock market's results last year?
In terms of overall performance, the equity market produced another strong year
in 1998, setting a number of records in the process. The S&P 500 generated a
total return of 28.6% for the year, its fourth consecutive year of increases
over 20% and the first such string of increases in almost 130 years. The stock
market has now risen for each of the last eight years, and 16 of the last 17.
Due to this strong performance, the S&P 500 has produced an annualized total
return of almost 18%, the highest total return on record for that index.
Even though the market was up for the year, its performance was hampered by the
volatility that occurred in other economic circles. After steadily rising more
than 23% through mid-July, stocks stumbled, as concerns about the Russian
financial situation spread, and fears of a credit crunch and eventual recession
in the U.S. were injected into the market. At its low point late in the summer,
the S&P 500 had retreated almost 20% from the record highs established less than
three months earlier. Almost as quickly as it declined, however, the market
bounced back, returning to record highs in only a four month span. The market
had never before recovered so quickly from a decline of this magnitude.
Another notable aspect of equity market performance in 1998 was the
concentration of return in a relatively small group of large-capitalization,
growth-oriented issues. In the wake of financial turmoil around the globe,
investors sought the potential safe haven of large companies whose earnings
growth was expected to be strong and secure. This investment philosophy typifies
the manner in which stocks are added to the Nuveen Rittenhouse Growth Fund. The
top five contributors to the S&P 500's total return in 1998 were Microsoft,
General Electric, Wal-Mart, Lucent Technologies, and Cisco. These five stocks
showed a median return of nearly 115% while the return for the other 495 stocks
in the S&P 500 was only about 7%. Of these top performers, General Electric has
been in the fund's portfolio since the inception of the Fund, while Wal-Mart and
Lucent Technologies were added during the year. Microsoft, which was not in the
portfolio in 1998, was added in the first quarter of 1999. However, due to the
fact that the Fund is actively managed, these holdings may change.
How did the economic landscape affect financial market performance last year?
The economy continued to support the market's advance in 1998, growing at about
4%, even in the face of slowed foreign trade. While the economy is not likely
headed for recession, there are signs that growth may eventually slow in 1999:
U.S. exports continue to be affected by financial market turmoil, spending on
capital expenditures should moderate, and housing growth should slow. But even
though the economy's pace could taper off in the coming months, there are
adjustments taking place that could lessen the economic slowdown anticipated in
1999, such as foreign central banks moving aggressively to reduce interest
rates, higher government spending in the U.S. due to the current budget surplus,
and initial signs of stability in Asia.
3
<PAGE>
What role did the Federal Reserve
play in the stock market's strong
performance?
The Federal Reserve played an important role in the strength of the economy and
the financial markets in 1998, lowering short-term interest rates three times in
the last half of the year. Those reductions helped to stave off further declines
in stock prices by easing fears of a looming credit crunch and a potential
recession. The Fed's interest rate adjustments also set the stage for the
market's unprecedented recovery to new highs.
How did the Nuveen Rittenhouse Growth Fund perform over the
past year?
The Nuveen Rittenhouse Growth Fund's Class A Shares generated a 23.71% total
return on net asset value for the 12 months ended January 31, 1999. This
compares to a 30.18% total return for the Lipper Growth Fund Index, and a 32.49%
total return for the S&P 500.
See your fund's performance overview in this report for more information.
Despite the Fund's underperformance in comparison to the two indices, the Fund
performed well in its inaugural year. Contributing to this performance was a
positive economic environment as well as successful individual stock selections
and sector weightings. The healthcare sector, which was among the market's best
performing sectors last year, was a major component of the Nuveen Rittenhouse
Growth Fund. Some of the Fund's largest holdings and top performers last year
were pharmaceutical stocks, including Pfizer, Inc., Merck & Co., Inc. and
Schering-Plough Corporation. The Fund also had successful holdings in other
sectors. Home Depot, Inc., one of the Fund's largest holdings, was also its
biggest gainer. The stock advanced in response to the strength in the housing
market, which benefited from the decline in interest rates.
From a tax-efficiency standpoint, the Fund's performance was especially
noteworthy. In a year in which many funds not only had negative total returns
but made significant capital gain distributions, the tax-sensitive management
strategies employed by the portfolio management team resulted in the Fund
generating an extremely high tax-efficiency of 99.5%, according to Morningstar,
Inc.*
What investment strategies were employed in managing the Nuveen Rittenhouse
Growth Fund? In addition, what are some of the holdings you've identified as
being particularly attractive?
The portfolio management team believes that profits are the key determinant of
stock prices. Throughout the Fund's first year, we concentrated on identifying
large companies which have financial strength as well as the ability to generate
consistent, sustainable, and predictable earnings growth into the future. This
resulted in a portfolio of high quality stocks that we believe have the
potential to perform well in the years ahead.
As previously mentioned, the healthcare sector was an area of emphasis for the
Fund over the past year. Pfizer, Inc., one of the Fund's largest holdings, was
recently hailed by Forbes as the "Company of the Year"** because of its full
product pipeline and strategies for growth. While Pfizer's Viagra may become the
best-selling drug ever, the company has a lot more to offer after years of
significant spending on research and development and the establishment of
strategic marketing alliances. Johnson & Johnson is a prime example of the type
of stock we seek for the Fund: a company with consistent historical earnings
growth and a management team
* Morningstar's tax-efficiency rating measures the ratio of a fund's Tax-
Adjusted Return to its Pre-Tax Return. The higher a fund's tax-efficiency,
the better. A tax-efficiency of 100% means no taxable distributions were
made. Tax-Adjusted Return shows a fund's annualized after-tax total return
for the time period specified, excluding any capital-gains effects which
would result from selling the fund at the end of the period. To determine
this figure, all income and short-term capital-gains distributions are
taxed at the maximum federal rate of 39.6% at the time of distribution.
Long-term capital gains are taxed at a 20% rate. The after-tax portion is
then reinvested in the fund. State and local taxes are ignored, and only
the capital gains are adjusted for tax-exempt funds, as the income from
these funds in nontaxable.
**1/11/99 issue.
4
<PAGE>
committed to doing what is necessary to sustain that growth going forward.
One of the fund's largest positions throughout the year was American
International Group, Inc. (AIG), a world leader in property and casualty
insurance. AIG has delivered an enviable record of earnings growth through the
years and has a talented and well-respected management team at the helm. AIG was
one of the fund's top performers over the past year.
During the last 12 months, the fund had little exposure to one of the market's
hottest industries: the Internet. The current frenzy in Internet-related stocks
means that multi-billion dollar market valuations are being assigned to
companies that will not produce earnings for the foreseeable future. Although
those types of stocks have exhibited tremendous price momentum, most do not meet
the stringent standards necessary for inclusion in the Nuveen Rittenhouse Growth
Fund's portfolio.
While the fund will continue to hold few, if any, pure Internet-related issues,
the portfolio does include a number of companies poised to take advantage of the
increase in Internet activity and electronic commerce. For example, Lucent
Technologies Inc. was added to the portfolio in the fourth quarter of 1998 and
has been one of the fund's top performers since that time. Lucent is a global
leader in the areas of data networking and wireless technology and is at the
forefront of advances in Internet communications. The Walt Disney Company is
another holding exhibiting foresight in the emerging area of electronic
commerce. Disney is now considered an important Internet player as a result of
its recent stake in Infoseek, a widely used Internet search facility. Again, it
is important to note that since the Fund is actively managed, the holdings in
the portfolio may change.
Do you anticipate any changes to these strategies in the coming year? Yes. In
the Fund's first year, a principal requirement of stocks being considered for
the fund was that they had to demonstrate a record of dividend growth. Going
forward, we will attempt to enhance the Fund's investment process by including a
very select number of non-dividend-paying stocks in our investment universe.
From time to time, one or two of these companies may be included in the Fund's
portfolio.
In today's ever-changing global economy, companies continue to modify the ways
they create shareholder value. Today it is evident that certain non-dividend-
paying companies do meet the stringent investment objectives of earnings
consistency, sustainability, and predictability without paying dividends. These
companies are not the market's "high flyers." They are A rated global leaders we
believe have the financial strength to weather turbulent economic conditions and
possess the skilled, experienced leadership necessary to prosper in an
increasingly dynamic economic landscape.
Good examples are companies in the technology industry - a sector that has not
historically emphasized dividends given the demands for reinvestment of
earnings. A number of these companies have tremendous financial strength and
have consistently delivered high quality earnings growth while not paying
dividends. Given the increasing impact of technology on the world's economy, we
believe that these premier technology companies can contribute to the
portfolio's long-term performance.
5
<PAGE>
Nuveen Rittenhouse Growth Fund
Performance Overview
As of January 31, 1999
Stock Diversification
[PIE CHART APPEARS HERE]
Technology 14%
Capital Goods 8%
Financials 18%
Consumer Cyclicals 7%
Health Care 26%
Consumer Staples 27%
Portfolio Allocation
[PIE CHART APPEARS HERE]
Cash Equivalents 6%
Stocks 94%
<TABLE>
<CAPTION>
Fund Highlights
- ------------------------------------------------------------------------------------------------------------------
Share Price A B C R
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception Date 12/97 12/97 12/97 12/97
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value $25.21 $25.03 $25.05 $25.30
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Total Net Assets ($000) $384,703
- ------------------------------------------------------------------------------------------------------------------
Beta of Portfolio 1.06
- ------------------------------------------------------------------------------------------------------------------
Average Market Capitalization of Stocks in Portfolio 103 billion
- ------------------------------------------------------------------------------------------------------------------
Average P/E of Stocks in Portfolio 38
- ------------------------------------------------------------------------------------------------------------------
Number of Stocks in Portfolio 27
- ------------------------------------------------------------------------------------------------------------------
Expected Turnover Rate 20%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Annualized Total Return/1/
- ------------------------------------------------------------------------------------------------------------------
Share Class A (On NAV) A (On Offer) B C R
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year 23.71% 16.58% 22.84% 22.93% 24.04%
- ------------------------------------------------------------------------------------------------------------------
Since Inception 24.08% 17.50% 23.22% 23.31% 24.44%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% maximum sales charge. Class B shares
have a CDSC that begins at 5% for redemptions during the first year after
purchase and declines periodically to 0% over the following six years, which
is not reflected in the return figures. Class B shares convert to Class A
shares after eight years. Class C shares have a 1% CDSC for redemptions
within one year, which is not reflected in the return figures.
6
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Rittenhouse Growth Fund
January 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- -------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 94.7%
Capital Goods - 7.8%
146,000 Emerson Electric Co. $ 8,495,375
206,000 General Electric Company 21,604,250
- -------------------------------------------------------------------------------------
Consumer Cyclical - 7.0%
311,000 The Home Depot, Inc. 18,776,625
95,000 Wal-Mart Stores, Inc. 8,170,000
- -------------------------------------------------------------------------------------
Consumer Staples - 25.5%
147,000 BestFoods 7,395,938
235,000 The Coca-Cola Company 15,377,813
188,000 Colgate-Palmolive Company 15,122,250
151,000 Gillette Company 8,871,250
346,000 PepsiCo Inc. 13,515,625
196,000 The Procter & Gamble Company 17,811,500
137,000 Walgreen Co. 8,562,500
345,000 The Walt Disney Company 11,385,000
- -------------------------------------------------------------------------------------
Financials - 17.1%
181,000 American International Group, Inc. 18,631,688
218,000 Federal Home Loan Mortgage Corporation 13,516,000
204,000 Federal National Mortgage Association 14,866,500
139,000 State Street Corporation 9,938,500
252,000 Wells Fargo Company 8,804,250
- -------------------------------------------------------------------------------------
Health Care - 24.3%
273,000 Abbott Laboratories 12,677,438
213,000 Johnson & Johnson 18,105,000
127,000 Medtronic, Inc. 10,120,313
107,000 Merck & Co., Inc. 15,702,250
148,000 Pfizer Inc. 19,036,500
326,000 Schering-Plough Corporation 17,767,000
- -------------------------------------------------------------------------------------
Technology - 13.0%
450,000 Automatic Data Processing, Inc. 19,153,125
106,000 Hewlett-Packard Company 8,307,749
100,000 Intel Corporation 14,093,749
75,000 Lucent Technologies Inc. 8,442,187
- -------------------------------------------------------------------------------------
Total Common Stocks - (cost $316,338,121) 364,250,375
----------------------------------------------------------------
Principal Market
Amount Description Value
- -------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 5.9%
$ 22,820,000 Swiss Bank Repurchase Agreement, 4.650%, 2/01/99 22,820,000
============-------------------------------------------------------------------------
Total Short-Term Investments - (cost $22,820,000) 22,820,000
----------------------------------------------------------------
Total Investments - (cost $339,158,121) - 100.6% 387,070,375
----------------------------------------------------------------
Other Assets Less Liabilities - (0.6%) (2,367,346)
----------------------------------------------------------------
Net Assets - 100% $384,703,029
================================================================
</TABLE>
7 See accompanying notes to financial statements.
<PAGE>
Statement of Net Assets (Unaudited)
January 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Assets
<S> <C>
Investment securities, at market value (cost $339,158,121) (note 1) $387,070,375
Receivables:
Dividends and interest 234,555
Shares sold 3,565,285
Deferred organization cost (note 1) 137,072
Other assets 1,402
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 391,008,689
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 1,061
Payables:
Investments purchased 5,327,628
Shares redeemed 166,605
Accrued expenses:
Management fees (note 4) 253,706
12b-1 distribution and service fees (notes 1 and 4) 221,450
Other 335,210
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,305,660
- ---------------------------------------------------------------------------------------------------------------------------
Net assets (note 5) $384,703,029
===========================================================================================================================
Class A Shares (note 1)
Net assets $ 79,037,294
Shares outstanding 3,135,081
Net asset value and redemption price per share $ 25.21
Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price)* $ 26.75
===========================================================================================================================
Class B Shares (note 1)
Net assets $162,301,276
Shares outstanding 6,484,623
Net asset value, offering and redemption price per share $ 25.03
===========================================================================================================================
Class C Shares (note 1)
Net assets $ 99,781,461
Shares outstanding 3,984,080
Net asset value, offering and redemption price per share $ 25.05
===========================================================================================================================
Class R Shares (note 1)
Net assets $ 43,582,998
Shares outstanding 1,722,419
Net asset value, offering and redemption price per share $ 25.30
===========================================================================================================================
* Effective January 11, 1999, the maximum sales charge on Class A Shares was increased from 5.25% to 5.75%.
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
Statement of Operations (Unaudited)
Six Months Ended January 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Investment Income (note 1)
<S> <C>
Dividends $ 1,363,672
Interest 273,491
- ---------------------------------------------------------------------------------------------------
Total investment income 1,637,163
- ---------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 1,141,394
12b-1 service fees - Class A (notes 1 and 4) 69,307
12b-1 distribution and service fees - Class B (notes 1 and 4) 562,391
12b-1 distribution and service fees - Class C (notes 1 and 4) 325,988
Shareholders' servicing agent fees and expenses 112,156
Custodian's fees and expenses 51,617
Trustees' fees and expenses (note 4) 10,436
Professional fees 70,084
Shareholders' reports - printing and mailing expenses 35,470
Federal and state registration fees 61,454
Amortization of deferred organization costs (note 1) 18,148
Other expenses 1,018
- ---------------------------------------------------------------------------------------------------
Total expenses before expense reimbursement 2,459,463
Expense reimbursement (note 4) (10,536)
- ---------------------------------------------------------------------------------------------------
Net expenses 2,448,927
- ---------------------------------------------------------------------------------------------------
Net investment income (loss) (811,764)
- ---------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions (notes 1 and 3) (5,090,370)
Net change in unrealized appreciation or depreciation of investments 41,175,243
- ---------------------------------------------------------------------------------------------------
Net gain from investments 36,084,873
- ---------------------------------------------------------------------------------------------------
Net increase in net assets from operations $35,273,109
===================================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended December 31, 1997 (commencement of
January 31, 1999 operations) through July 31, 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss) $ (811,764) $ (262,403)
Net realized gain (loss) from investment
transactions (notes 1 and 3) (5,090,370) 779,703
Net change in unrealized appreciation or depreciation of
investments 41,175,243 6,737,012
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 35,273,109 7,254,312
- --------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From accumulated net realized gains from investment transactions:
Class A (162,515) --
Class B (332,952) --
Class C (189,464) --
Class R (103,805) --
- --------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (788,736) --
- --------------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 162,420,489 203,076,665
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 352,492 --
- --------------------------------------------------------------------------------------------------------------------------
162,772,981 203,076,665
- --------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (18,394,080) (4,591,222)
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 144,378,901 198,485,443
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 178,863,274 205,739,755
Net assets at the beginning of period 205,839,755 100,000
- --------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $384,703,029 $205,839,755
==========================================================================================================================
Undistributed net investment income at end of period $ -- $ --
==========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Rittenhouse Growth Fund (the "Fund") is a series of the Nuveen
Investment Trust II (the "Trust") which was organized as a Massachusetts
business trust in 1997. The Trust is an open-end diversified management
investment company registered under the Investment Company Act of 1940. Prior to
commencement of operations on December 31, 1997, the Trust had no operations
other than those related to organizational matters and the initial capital
contribution of $100,000 by Nuveen Institutional Advisory Corp. (the "Adviser"),
a wholly owned subsidiary of The John Nuveen Company, for the issuance of shares
on November 12, 1997.
The Fund invests in a diversified portfolio consisting primarily of equity
securities traded in U.S. securities markets of large capitalization companies
that have a history of consistent earnings and dividend growth ("blue chip
companies").
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements in accordance with generally
accepted accounting principles.
Securities Valuation
Common stocks and other equity-type securities are valued at the last sales
price on the national securities exchange or Nasdaq on which such securities are
primarily traded; however, securities traded on a national securities exchange
or Nasdaq for which there are no transactions on a given day or securities not
listed on a national securities exchange or Nasdaq are valued at the most recent
bid prices. Debt securities are valued by a pricing service that utilizes
electronic data processing techniques to determine values when such values are
believed to more accurately reflect the fair market value of such securities;
otherwise, actual sale or bid prices are used. Any securities or other assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Trustees. Debt securities having
remaining maturities of 60 days or less when purchased are valued by the
amortized cost method when the Board of Trustees determines that the fair market
value of such securities is their amortized cost.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. Any securities so purchased are subject to
market fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At
January 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.
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 1% contingent deferred sales charge ("CDSC") if redeemed
within 18 months of purchase. Class B Shares are sold without a sales charge but
incur annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available for purchases of over $1 million and in other limited
circumstances.
Derivative Financial Instruments
The Fund may invest in options and futures contracts, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in such financial instruments, and may do so in the future, it did not
make any such investments during the six months ended January 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.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning December 31, 1997 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption will be reduced by the pro-rata share of
the unamortized organization costs as of the date of redemption.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
December 31, 1997 (commencement
Six Months Ended 1/31/99 of operations) through July 31, 1998
------------------------- ------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 1,568,542 $ 36,321,462 1,988,648 $ 44,029,027
Class B 3,063,120 70,067,749 3,666,978 81,559,486
Class C 2,290,042 52,563,942 1,946,440 43,544,923
Class R 148,397 3,467,336 1,661,302 33,943,229
Shares issued to shareholders due to reinvestment of
distributions:
Class A 4,039 97,268 -- --
Class B 6,522 155,997 -- --
Class C 3,091 73,987 -- --
Class R 1,045 25,240 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
7,084,798 162,772,981 9,263,368 203,076,665
- ----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (331,535) (7,401,089) (95,863) (2,146,252)
Class B (196,272) (4,397,042) (56,975) (1,322,737)
Class C (217,101) (4,915,362) (39,642) (891,049)
Class R (79,351) (1,680,587) (10,224) (231,184)
- ----------------------------------------------------------------------------------------------------------------------------------
(824,259) (18,394,080) (202,704) (4,591,222)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase 6,260,539 $144,378,901 9,060,664 $198,485,443
==================================================================================================================================
</TABLE>
12
<PAGE>
3. Securities Transactions
Purchases and sales (including maturities) of common stocks and short-term
investments for the six months ended January 31, 1999, were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Purchases:
<S> <C>
Common stocks $ 152,041,940
Short-term investments 1,310,089,000
Sales:
Common stocks 22,936,291
Short-term investments 1,293,770,000
============================================================================
</TABLE>
At January 31, 1999, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation aggregated $47,912,254 of which $52,049,751 related
to appreciated securities and $4,137,497 related to depreciated securities.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays
an annual management fee, payable monthly, which is based upon the average daily
net asset value of the Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Asset Value Management Fee
- ----------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------
For the first $125 million .8500 of 1%
For the next $125 million .8375 of 1
For the next $250 million .8250 of 1
For the next $500 million .8125 of 1
For the next $1 billion .8000 of 1
For net assets over $2 billion .7750 of 1
============================================================================
</TABLE>
The Adviser has agreed to waive fees and reimburse expenses through July 31,
1999, in order to prevent total operating expenses (excluding any 12b-1
distribution or service fees and extraordinary expenses) from exceeding 1.10% 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 Rittenhouse Financial Services, Inc.
("Rittenhouse"), a wholly owned subsidiary of The John Nuveen Company, under
which Rittenhouse manages the Fund's investment portfolio. Rittenhouse 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 January 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, the majority of which
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 January 31, 1999, the Distributor compensated
authorized dealers directly with approximately $3,233,000 in commission advances
at the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees on Class B Shares, and
all 12b-1 service and distribution fees on Class C Shares during the first year
following a purchase are retained by the Distributor. During the six months
ended January 31, 1999, the Distributor retained approximately $883,800 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 $188,200
of CDSC on share redemptions during the six months ended January 31, 1999.
5. Composition of Net Assets
At January 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 $341,890,178
Balance of undistributed net investment income --
Accumulated net realized gain (loss) from investment transactions (5,099,403)
Net unrealized appreciation of investments 47,912,254
- -------------------------------------------------------------------------------
Net assets $384,703,029
===============================================================================
</TABLE>
13
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
<TABLE>
<CAPTION>
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
July 31, Value Income (a) (Loss) Total Income Gain Total Value Return (b)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (12/97)
1999 (d) $22.75 $(.02) $2.54 $2.52 $ -- $(.06) $(.06) $25.51 11.14%
1998 (c) 20.00 (.01) 2.76 2.75 -- -- -- 22.75 13.75
Class B (12/97)
1999 (d) 22.66 (.10) 2.53 2.43 -- (.06) (.06) 25.03 10.75
1998 (c) 20.00 (.11) 2.77 2.66 -- -- -- 22.66 13.30
Class C (12/97)
1999 (d) 22.67 (.10) 2.54 2.44 -- (.06) (.06) 25.05 10.79
1998 (c) 20.00 (.11) 2.78 2.67 -- -- -- 22.67 13.35
Class R (12/97)
1999 (d) 22.79 .01 2.56 2.57 -- (.06) (.06) 25.30 11.30
1998 (c) 20.00 .03 2.76 2.79 -- -- -- 22.79 13.95
=========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
----------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Ending Net Assets Net Assets Net Assets Net Assets
Net Before Before After After Portfolio
Year Ended Assets Reimbursem- Reimbursem- Reimbursem- Reimbursem- Turnover
July 31, (000) ment ment ment ment Rate
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (12/97)
1999 (d) $ 79,037 1.35%* (.15)%* 1.35%* (.15)%* 9%
1998 (c) 43,092 1.42* (.16)* 1.35* (.09)* 4
Class B (12/97)
1999 (d) 162,301 2.10* (.89)* 2.10* (.89)* 9
1998 (c) 81,823 2.17* (.91)* 2.10* (.84)* 4
Class C (12/97)
1999 (d) 98,781 2.10* (.89)* 2.10* (.89)* 9
1998 (c) 43,260 2.17* (.91)* 2.10* (.84)* 4
Class R (12/97)
1999 (d) 43,583 1.11* .11* 1.10* .12* 9
1998 (c) 37,664 1.19* .11* 1.10* .20* 4
========================================================================================
</TABLE>
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses by
Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(c) From commencement of class operations as noted.
(d) For the six months ended January 31, 1999.
- ----
14
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family of Mutual Funds
Nuveen offers a variety
of funds designed to
help you reach your
financial goals.
Growth
Nuveen Rittenhouse
Growth Fund
Growth and Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Dividend and
Growth Fund
Income
Income Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers(SM) including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
=====
15
<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
Investment Manager
Rittenhouse Financial Services, Inc.
Two Radnor Corporate Center
Suite 400
Radnor, PA 19087-4570
Transfer Agent and
Shareholder Services
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
Legal Counsel
Chapman and Cutler
Chicago, IL
Independent Public
Accountants
Arthur Andersen LLP
Chicago, IL
====
16
<PAGE>
BLANK PAGE
====
17
<PAGE>
Serving Investors for Generations
[Photo of John Nuveen, Sr. Appears Here]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 621-7227
www.nuveen.com
