<PAGE>
July 31, 1999 Annual Report
NUVEEN
Mutual Funds
Extraordinary Talent. Masterful Performance.
Nuveen Rittenhouse Growth Fund
A blue chip portfolio for investors seeking a tax-efficient way to build and
sustain wealth.
[PHOTO APPEARS HERE]
Featuring Portfolio Management By Rittenhouse Financial Services
A Premier Adviser/SM/ for Growth Investing
<PAGE>
Contents
1 Dear Shareholder
3 Report from the Portfolio Manager
6 Nuveen Rittenhouse Growth 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
14 Financial Highlights
15 Report of Independent Public
Accounts
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
"All efforts to
safeguard critical
systems are right
on schedule
at Nuveen."
At this writing, we're more than halfway through 1999. The much-talked-about
millennium (Y2K) looms, which really puts the concept of time in front of us
all. We think: "Where did the time go?"
We think about how old, 25 years ago, we thought we would be when the calendar
turned January 1, 2000. (And we realize, now, it is really not that old at all.)
We think about all the things we thought we would have accomplished before 1999
became 2000. Most likely, one of your millennium goals was financial. Whether it
was to fully fund your retirement accounts or set up trusts for your
grandchildren, the fact you're working with a financial adviser and reading this
report are positive signs that you're well on your way to achieving your goal.
I'm pleased to report we're meeting our goals, too. In addition to the goals we
have established for each mutual fund we manage, we have had to set goals in
preparation for the millennium.
All efforts to safeguard critical systems are right on schedule at Nuveen.
It's a goal we set more than 10 years ago. Nuveen's trading, fund management and
pricing -- systems that affect you and your investments -- have been updated or
replaced to be able to deal accurately with Y2K.
We continue to work closely with our service providers, transfer agent,
custodian and trustee to monitor the readiness of their systems, as well as
address any remaining internal systems issues. Testing should be completed by
the end of September.
The Securities and Exchange Commission (SEC), which oversees the securities
industry, is also taking significant steps to help the financial industry make a
smooth transition to the year 2000. First, the SEC is requiring all public
companies, investment advisers, investment companies and municipal securities
issuers to disclose their ability to comply with the Y2K issue.
In addition, the SEC mandated that tests be conducted on various financial
systems to test the ability of exchanges and broker/dealer firms to handle
transactions effectively. We participated successfully in those tests.
With our systems in place and ready to handle Y2K, we look forward to
helping you achieve your financial goals in the new millennium.
Your Fund's Fiscal Year. I want to briefly report on the economic environment
in which your investment in Nuveen Rittenhouse Growth Fund performed. Read on,
as we've conducted a more in-depth interview with a representative from the
portfolio management team for your fund, describing how that team of investment
and research professionals directed the portfolio during its fiscal year,
August 1, 1998, through July 31, 1999.
ANNUAL REPORT page 1
<PAGE>
"Your financial adviser can serve as a valuable
resource in helping you determine if adjustments
are needed in your current asset allocation
plan."
Over the past 12 months, the U.S. economy has continued to be characterized
by robust growth, relatively low interest rates, and unemployment levels that
remain among the lowest in three decades.
Concerns, however, about the pace of the economy's expansion have tested the
new paradigm that holds that improvements in productivity enable us to have both
economic growth and low inflation at the same time. With investors and the
various markets watching -- and reacting to -- every announcement concerning
economic statistics, volatility has increased, especially in the equity markets.
We have entered a different economic environment from that of 12 months ago.
This shift has occurred in response to two factors:
. the Asian financial crisis of 1998 did not produce the slowdown that was
widely expected to keep economic growth from becoming overly robust;
. evidence of accelerating prices, most obvious in recent rises in the
Consumer Price Index, contributed to the reemergence of the specter of
inflation, accompanied by predictions of higher interest rates.
In an effort to pre-empt this inflation threat, the Federal Reserve has twice
moved to raise the federal funds rate by a quarter-point -- to 5.25% -- since
the end of June. The upward adjustments to this rate, which represents the
amount banks charge one another on overnight loans, mark the first increases
since March 1997 and stand in sharp contrast to the three reductions made last
fall.
Despite the minimal increases and the Fed's announcement that it has shifted
to a neutral bias concerning future interest rate action, uncertainty about the
board's next move continues.
Keeping the Balance. The increased volatility in the markets highlights the
importance of maintaining balance in your investment portfolio. With a properly
balanced portfolio of equities, bonds and cash, your assets are better
positioned to weather the markets' ups and downs. A balanced portfolio can also
help you increase your opportunities for capital growth while reducing risk.
Your financial adviser can serve as a valuable resource in helping you determine
if adjustments are needed in your current asset allocation plan.
For more information on any Nuveen investment, contact your financial adviser
for a prospectus, call Nuveen at (800) 621-7227, or download one from our Web
site at www.nuveen.com. Please read the prospectus carefully before you invest
or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. As we look ahead to a new millennium, we are committed to maintaining
that reputation and finding the best ways to serve your evolving investment
needs. Thank you for your continued confidence.
Sincerely,
/s/ Timothy R. Schwertfeger
- ---------------------------
Timothy R. Schwertfeger
Chairman of the Board
September 16, 1999
ANNUAL REPORT page 2
<PAGE>
From the Portfolio Manager's Perspective
- --------------------------------------------------------------------------------
With an investment in Nuveen Rittenhouse Growth Fund, managed by Nuveen's
Premier Adviser for growth investing, Rittenhouse Financial Services, Inc., you
have the opportunity to own a portion of companies that make many of the
products you have in your home, from GE light bulbs to Colgate toothpaste.
Owning a Nuveen mutual fund that owns those stocks, rather than owning the
stocks directly, means you and your financial adviser believe in the benefits of
diversification and tax-efficient investing. Brandon Thomas, director of equity
funds at Nuveen, spoke with John P. Waterman, managing director, investments
at Rittenhouse, about the fund's performance during its fiscal year ended
July 31, 1999.
BRANDON The core characteristics that distinguish the Nuveen Rittenhouse Growth
Fund are an intense focus on company profits and the consistency of their
growth. You have said that you and your management team look for highly
predictable earnings growth that can be sustained throughout the cycles of the
economy. Why not look for out-of-the-ballpark earnings growth?
JOHN We are conservative growth stock investors. We don't aim for home runs, but
for consistent singles and doubles, and an occasional triple. In theory, the
faster a company's earnings growth rate, the greater the potential stock price
appreciation. In practice, fast growing companies often stumble and are unable
to sustain their high rate of earnings growth, and even the best and the
brightest of investment managers may not time the turns accurately and tend to
ride these stocks up and then down again. We prefer to invest in companies which
we believe can sustain earnings growth in the 12-15% range. Continuing the
baseball analogy, investing in these stocks is like hitting singles and doubles.
Over the long term we believe we have the potential to win more "games" than the
"home run hitter" managers who swing for the fences but frequently strike out.
Growth fund managers tend to make another mistake that can be undetectable
in a given year, but often becomes painfully clear over time, which is to make
too large a bet on any single company. We maintain a guideline of investing no
more than 5% of Nuveen Rittenhouse Growth Fund's portfolio in any one stock, at
the time of purchase. We own no more than 25-30 companies, diversified by
industry and economic sector, at any time, which enables us to track each
closely.
And we are patient. We believe that often more money is made in the stock
market by being patient rather than by a lot of buying and selling. Our annual
portfolio turnover is in the range of 20%, which keeps the fund's costs low and
makes it very tax-efficient. This low turnover is a reflection of our confidence
in the long-term success of our investments. We also pursue an investment
strategy which is tax-sensitive and maximizes after-tax returns for our
investors. As part of this strategy, we will offset realized capital gains with
losses where appropriate, and sell high-cost shares first when reducing or
eliminating a position.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. We call them Premier Advisers/sm/ -- a select group
of asset management firms who direct the investment activities of the Nuveen
Mutual Funds. They have been chosen by Nuveen for their rigorously disciplined
investment approaches and their focus on consistent long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it be blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's Premier Adviser for growth investing, Rittenhouse Financial Services,
Inc., a wholly owned subsidiary of Nuveen, has a long-standing history of strong
investment performance through a variety of market conditions. With more than 20
years of experience and approximately $17 billion in assets under management,
Rittenhouse has developed an expertise in selecting high quality, large-cap
companies that the fund managers believe will perform well over the long term.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the fund's fiscal year ended July 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.
ANNUAL REPORT page 3
<PAGE>
BRANDON Why do you invest only in high-quality, typically blue-chip companies
with highly recognizable names?
JOHN Experience has taught us that when the market goes up, those sorts of
stocks you just described have gone up more than the market in general,
typically represented by the S&P 500 stock index. And when it declines, those
stocks usually have declined less and recovered faster, as investors turned to
higher quality stocks when market volatility increased.
In general, we keep the fund fully invested at all times and throughout
market cycles. We are not `hot' stock pickers, nor are we market timers. We stay
the course, even during storms, and buying high-quality stocks has generally
enabled the portfolio to better weather such storms. Our goal is superior risk-
adjusted performance in all seasons.
BRANDON At the beginning of 1999, the fund's investment criteria were enhanced
to allow it to invest in companies that do not currently pay a dividend. What
sorts of companies did you buy with this new ability?
JOHN We were able to establish positions in Microsoft and Cisco Systems,
certainly household names with dominant market positions, which should enable
them to deliver sustained above-average earnings growth. While neither Microsoft
nor Cisco Systems pay dividends, they otherwise meet our stringent investment
criteria.
BRANDON Most of us have heard the term "flight to quality" used to describe the
economic environment of 1998, particularly the summer of 1998. Could you tell us
what that means, as well as describe the economic environment in which Nuveen
Rittenhouse Growth Fund performed during its fiscal year?
JOHN In mid-summer of 1998, the equity market confronted some worrisome signs
that had emerged abruptly in the global economy. On one front, the economic
situation in Russia--to which a number of U.S. multinationals had significant
exposure--appeared to be worsening. The Russian government had defaulted on
bonds it had issued, and there appeared to be mounting questions as to who was
in control in Moscow. On a second front, the Asian economies that had collapsed
so dramatically showed little sign of rapid recovery. As a result, the U.S.
securities markets corrected sharply in the third quarter of 1998.
These developments proved positive for the fund. We saw a surge of
investment inflows into the U.S. stock market as worried investors sought safety
and security. We also witnessed a flight away from sensitive cyclical and
financial issues to quality growth stocks. In the second half of 1998, future
profit growth appeared scarce, so money flowed to the stocks in which
Rittenhouse seeks to invest--companies positioned to grow their profits
consistently in both good and bad economic times.
At the time, the threat of global recession was so widespread that I found
myself spending much of my time addressing investors' concerns regarding a
possible
Top Ten Stock Holdings/1/
General Electric Company 5.3%
----------------------------------------
Johnson & Johnson 5.3%
----------------------------------------
Colgate Palmolive Company 5.1%
----------------------------------------
Automatic Data Processing, Inc. 4.9%
----------------------------------------
Home Depot, Inc. 4.8%
----------------------------------------
American International Group, Inc. 4.7%
----------------------------------------
Procter & Gamble Company 4.7%
----------------------------------------
Pfizer Inc. 4.3%
----------------------------------------
Merck & Co., Inc. 4.0%
----------------------------------------
Intel Corporation 3.9%
----------------------------------------
/1/The companies listed represent their respective percentages of total stock
holdings as of 7/31/99. Over time, the fund's holdings and their percentages
will vary.
ANNUAL REPORT page 4
<PAGE>
economic downturn in the U.S. My message was that the U.S. economy was so
fundamentally healthy and strong that robust economic growth would continue, and
that growth stocks would outperform the market.
As we entered 1999, global economic worries receded sharply, due in no
small part to sound U.S. policies that resisted the temptation to fix what
wasn't really broken. Overseas economies began to recover, and the U.S. economy
delivered stronger and greater than expected growth in the first half.
The paradox is that this was not positive for many of our stocks in the
short run. As cyclicals began to look more promising in late 1998, the forces
driving the increasing valuations of growth stocks such as Walgreens, Pfizer and
Procter & Gamble receded. Money began to move away from these issues to
economically sensitive issues such as Alcoa and International Paper and the
financial sector, where companies such as Citigroup and Merrill Lynch were
reporting sharp increases in earnings from depressed levels in the prior year.
Strong growth in earnings began to appear widely available, and premiums on
growth shares declined.
In this environment, we sold our entire positions in Royal Dutch Shell,
Emerson Electric and Best Foods, while reducing others, and added to our
weighting in technology companies.
BRANDON What is your outlook for the markets?
Equity Diversification
[PIE CHART APPEARS HERE]
Healthcare..........24.4%
Technology..........23.2%
Consumer Staples....21.7%
Financials..........18.3%
Consumer Cyclicals.. 7.1%
Capital Goods....... 5.3%
Portfolio composition is as of 7/31/99 and is subject to change. Composition is
based on the fund's stock holdings.
JOHN Looking ahead to the remainder of this year and the first quarter of 2000,
we believe that U.S. economic growth will slow. The 3-4% year-over-year rates of
growth in the Gross Domestic Product (GDP) we have been experiencing are not
sustainable without rekindling inflation.
Fed chairman Alan Greenspan has stated that GDP growth must slow to 3% or
less. He has also said that the Fed will act preemptively to achieve this, if
necessary. We do not believe we are there yet. Tight labor markets and strong
consumer demand are creating inflationary pressures.
Another interest rate increase by the Federal Reserve is possible in
October. This would mark the third rate increase this year, in effect offsetting
the three cuts made in 1998 to curb global recession fears. We are watching
employment figures, consumer spending and confidence closely: if they drop, a
rate increase may not be necessary.
Our current scenario is for slower growth to become apparent in the first
quarter of 2000, leading to a gradual decline in long-term interest rates. We
think that Y2K will have a negligible impact on the economy, and therefore do
not anticipate negative earnings surprises in technology issues.
One concern is current optimism about the economic recovery overseas. We
see this manifested in the rising share prices of export-dependent manufacturing
companies. We are confident the recovery will prove to be slower than these
valuations suggest, and that the basic problems bedeviling economies such as
Korea have yet to be fixed.
We expect continued moderate economic growth and low inflation to provide a
foundation for the stock market. We believe profit growth will be the central
issue. This environment is positive for our investment approach. We expect
large-cap growth stocks to outperform the overall market over the next 3-5
years.
"We expect continued moderate economic growth and low inflation to provide a
foundation for the stock market. We believe profit growth will be the central
issue. This environment is positive for our investment approach."
ANNUAL REPORT page 5
<PAGE>
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 U.S. stock
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.
Price/Earnings Ratio (P/E) The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and share price.
Fund Spotlight as of July 31, 1999
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $25.10 $24.82 $24.84 $25.22
- ----------------------------------------------------------------
Fund Symbol NRGAX NRGBX NRGCX NRGRX
- ----------------------------------------------------------------
CUSIP 67065W100 67065W209 67065W308 67065W407
- ----------------------------------------------------------------
Inception Date 12/97 12/97 12/97 12/97
- ----------------------------------------------------------------
</TABLE>
Total Returns/+/
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV NAV NAV
<S> <C> <C> <C> <C> <C>
1-Year 10.62% 4.25% 9.86% 9.86% 10.95%
- --------------------------------------------------------------
Since Inception* 15.62% 11.38% 14.84% 14.87% 15.97%
</TABLE>
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% maximum sales charge. Class B shares have
a CDSC that begins at 5% for redemptions during the first year after purchase
and declines periodically to 0% over the following six years, 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.
* Annualized
Index Comparison/./
[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Nuveen Rittenhouse Nuveen Rittenhouse S&P
Growth Fund Growth Fund Index 500
(NAV) $12,583 (Offer) $11,859 $13,999
- -----------------------------------------------------------------
<S> <C> <C> <C>
12/97 $10,000 $ 9,425 $10,000
7/98 $11,375 $10,721 $11,645
7/99 $12,583 $11,859 $13,999
</TABLE>
Nuveen Rittenhouse Growth Fund (NAV) $12,583
Nuveen Rittenhouse Growth Fund (Offer) $11,859
S&P Index 500 $13,999
. The Index Comparison shows the change in value of a $10,000 investment in
the Class A shares of the Nuveen fund, adjusted for the maximum sales charge
(5.75%) and all ongoing fund expenses. It also shows the Nuveen fund at NAV.
Both are compared to the Standard and Poor's 500 Index, which does not reflect
any initial or ongoing expenses. An index is not available for direct
investment.
Portfolio Allocation/./
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Equity............... 96%
Cash Equivalents..... 4%
</TABLE>
. The fund is actively managed, and its holdings, diversification and allocation
will vary over time.
Portfolio Statistics
<TABLE>
<S> <C>
Total Net Assets $515.4 million
- --------------------------------------------------------
Beta 0.96
- --------------------------------------------------------
Average Market Capitalization (Stocks) 123 billion
- --------------------------------------------------------
Average P/E 36.5
- --------------------------------------------------------
Number of Stocks 29
- --------------------------------------------------------
Expected Turnover Rate 20%
- --------------------------------------------------------
Expense Ratio* 1.27%
- --------------------------------------------------------
</TABLE>
* A shares after reimbursement
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Effective January 11, 1999, the maximum sales charge on Class A shares was
increased to 5.75% from 5.25%.
ANNUAL REPORT page 6
<PAGE>
Portfolio of Investments
Nuveen Rittenhouse Growth Fund
July 31, 1999
<TABLE>
<CAPTION>
Market
Shares Description Value
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 98.1%
Capital Goods - 5.2%
247,000 General Electric Company $ 26,923,000
- -------------------------------------------------------------------------------
Consumer Cyclicals - 7.0%
378,500 Home Depot, Inc. 24,153,031
284,000 Wal-Mart Stores, Inc. 11,999,000
- -------------------------------------------------------------------------------
Consumer Staples - 21.2%
326,000 The Coca-Cola Company 19,661,875
518,000 Colgate-Palmolive Company 25,576,250
170,000 Gillette Company 7,448,125
282,000 PepsiCo Inc. 11,033,250
260,000 Procter & Gamble Company 23,530,000
386,000 Walgreen Co. 10,928,625
409,000 The Walt Disney Company 11,298,625
- -------------------------------------------------------------------------------
Financials - 17.9%
203,500 American International Group, Inc. 23,631,438
296,500 Federal Home Loan Mortgage Corporation 17,011,688
275,500 Federal National Mortgage Association 19,009,500
193,500 State Street Corporation 13,714,313
487,000 Wells Fargo Company 18,993,000
- -------------------------------------------------------------------------------
Health Care - 24.0%
374,000 Abbott Laboratories 16,058,625
292,000 Johnson & Johnson 26,900,500
174,000 Medtronic, Inc. 12,538,875
295,000 Merck & Co., Inc. 19,967,813
645,000 Pfizer Inc. 21,889,688
332,000 Schering-Plough Corporation 16,268,000
144,000 Warner-Lambert Company 9,504,000
- -------------------------------------------------------------------------------
Technology - 22.8%
616,000 Automatic Data Processing, Inc. 24,678,500
202,000 Cisco Systems, Inc.# 12,549,250
149,500 Hewlett-Packard Company 15,650,781
287,000 Intel Corporation 19,803,000
90,000 International Business Machines Corporation 11,311,873
296,000 Lucent Technologies Inc. 19,258,500
164,000 Microsoft Corporation# 14,073,250
- -------------------------------------------------------------------------------
Total Common Stock - (cost $468,295,089) 505,364,375
----------------------------------------------------------------
Principal Market
Amount Description Value
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 3.7%
$19,240,000 Swiss Bank Repurchase Agreement, 5.05%, 8/02/99 19,240,000
- -------------------------------------------------------------------------------
Total Short-Term Investments - (cost $19,240,000) 19,240,000
----------------------------------------------------------------
Total Investments - (cost $487,535,089) - 101.8% 524,604,375
----------------------------------------------------------------
Other Assets Less Liabilities - (1.8%) (9,230,029)
----------------------------------------------------------------
Net Assets - 100% $515,374,346
================================================================
</TABLE>
# Non-income producing.
See accompanying notes to financial statements.
7
<PAGE>
Statement of Net Assets
Nuveen Rittenhouse Growth Fund
July 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Assets
<S> <C>
Investment securities, at market value (cost $487,535,089) (note 1) $524,604,375
Cash 371
Receivables:
Dividends and interest 333,843
Investments sold 446,405
Shares sold 2,922,828
Deferred organization costs (note 1) 119,220
Other assets 281,784
- ----------------------------------------------------------------------------------------------------------------------------
Total assets 528,708,826
- ----------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Investments purchased 11,256,107
Shares redeemed 948,466
Accrued expenses:
Management fees (note 4) 375,039
12b-1 distribution and service fees (notes 1 and 4) 343,365
Other 411,503
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 13,334,480
- ----------------------------------------------------------------------------------------------------------------------------
Net assets (note 5) $515,374,346
============================================================================================================================
Class A Shares (note 1)
Net assets $101,080,200
Shares outstanding 4,026,966
Net asset value and redemption price per share $ 25.10
Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price)* $ 26.63
============================================================================================================================
Class B Shares (note 1)
Net assets $222,156,460
Shares outstanding 8,950,110
Net asset value, offering and redemption price per share $ 24.82
============================================================================================================================
Class C Shares (note 1)
Net assets $146,926,617
Shares outstanding 5,915,907
Net asset value, offering and redemption price per share $ 24.84
============================================================================================================================
Class R Shares (note 1)
Net assets $ 45,211,069
Shares outstanding 1,792,864
Net asset value, offering and redemption price per share $ 25.22
============================================================================================================================
* 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
Nuveen Rittenhouse Growth Fund
Year Ended July 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Investment Income (note 1)
<S> <C>
Dividends $ 3,318,230
Interest 713,089
- --------------------------------------------------------------------------------------------------
Total investment income 4,031,319
- --------------------------------------------------------------------------------------------------
Expenses
Management fees (note 4) 3,101,132
12b-1 service fees - Class A (notes 1 and 4) 186,231
12b-1 distribution and service fees - Class B (notes 1 and 4) 1,565,700
12b-1 distribution and service fees - Class C (notes 1 and 4) 975,760
Shareholders' servicing agent fees and expenses 223,675
Custodian's fees and expenses 77,164
Trustees' fees and expenses (note 4) 16,228
Professional fees 101,220
Shareholders' reports - printing and mailing expenses 82,465
Federal and state registration fees 137,100
Amortization of deferred organization costs (note 1) 36,000
Other expenses 6,200
- --------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and expense reimbursement 6,508,875
Custodian fee credit (note 1) (4,101)
Expense reimbursement (note 4) (10,536)
- --------------------------------------------------------------------------------------------------
Net expenses 6,494,238
- --------------------------------------------------------------------------------------------------
Net investment income (loss) (2,462,919)
- --------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 3) 2,654,612
Net change in unrealized appreciation or depreciation of investments 30,332,273
- --------------------------------------------------------------------------------------------------
Net gain from investments 32,986,885
- --------------------------------------------------------------------------------------------------
Net increase in net assets from operations $30,523,966
- -=================================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
Statement of Changes in Net Assets
Nuveen Rittenhouse Growth Fund
<TABLE>
<CAPTION>
Year Ended December 31, 1997 (commencement of
7/31/99 operations) through July 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss) $ (2,462,919) $ (262,403)
Net realized gain from investment transactions
(notes 1 and 3) 2,654,612 779,703
Net change in unrealized appreciation or depreciation of
investments 30,332,273 6,737,012
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 30,523,966 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 329,272,030 203,076,665
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 352,550 --
- ------------------------------------------------------------------------------------------------------------------------
329,624,580 203,076,665
Cost of shares redeemed (49,825,219) (4,591,222)
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 279,799,361 198,485,443
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 309,534,591 205,739,755
Net assets at the beginning of period 205,839,755 100,000
- ------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $515,374,346 $205,839,755
========================================================================================================================
Undistributed net investment income at the end of period $ -- $ --
========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
Notes to Financial Statements
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 July
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 (continued)
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a contingent deferred sales charge ("CDSC") if redeemed within
18 months of purchase. Class B Shares are sold without a sales charge but incur
annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available only under limited circumstances.
Derivative Financial Instruments
The Fund may invest in options and futures contracts, which are sometimes
referred to as derivative transactions. Although the Fund is authorized to
invest in such financial instruments, and may do so in the future, it did not
make any such investments during the fiscal year ended July 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.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
December 31, 1997 (commencement
Year Ended 7/31/99 of operations) through July 31, 1998
-------------------------- ------------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 2,927,355 $ 70,955,142 1,988,648 $ 44,029,027
Class B 5,856,226 140,460,433 3,666,978 81,559,486
Class C 4,601,620 110,898,865 1,946,440 43,544,923
Class R 285,712 6,957,590 1,661,302 33,943,229
Shares issued to shareholders due to reinvestment of
distributions:
Class A 4,037 97,207 -- --
Class B 6,527 156,121 -- --
Class C 3,092 73,983 -- --
Class R 1,045 25,239 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
13,685,614 329,624,580 9,263,368 203,076,665
- ----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (798,461) (19,308,120) (95,863) (2,146,252)
Class B (523,896) (12,612,079) (56,975) (1,322,737)
Class C (596,853) (14,525,925) (39,642) (891,049)
Class R (146,221) (3,379,095) (10,224) (231,184)
- ----------------------------------------------------------------------------------------------------------------------------------
(2,065,431) (49,825,219) (202,704) (4,591,222)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase 11,620,183 $279,799,361 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 fiscal year ended July 31, 1999, were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Purchases:
Common stocks $ 354,492,358
Short-term investments 3,654,724,000
Sales:
Common stocks 79,018,806
Short-term investments 3,641,985,000
===============================================================================
</TABLE>
At July 31, 1999, the identified cost of investments owned for federal income
tax purposes was $487,774,296. Net unrealized appreciation aggregated
$36,830,079 of which $45,725,732 related to appreciated securities and
$8,895,653 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 through July 31,
2000, in order to prevent total operating expenses (excluding any 12b-1
distribution or service fees and extraordinary expenses) from exceeding 1.10% 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 fiscal year ended July 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 $2,083,400, of
which approximately $1,983,000 were paid out as concessions to authorized
dealers. The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
During the fiscal year ended July 31, 1999, the Distributor compensated
authorized dealers directly with approximately $6,604,900 in commission advances
at the time of purchase. To compensate for commissions advanced to authorized
dealers, all 12b-1 service fees collected on Class B Shares during the first
year following a purchase, all 12b-1 distribution fees on Class B Shares, and
all 12b-1 service and distribution fees on Class C Shares during the first year
following a purchase are retained by the Distributor. During the fiscal year
ended July 31, 1999, the Distributor retained approximately $2,327,500 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 $509,700
of CDSC on share redemptions during the fiscal year ended July 31, 1999.
5. Composition of Net Assets
At July 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 $478,305,060
Balance of undistributed net investment income --
Accumulated net realized gain from investment transactions --
Net unrealized appreciation of investments 37,069,286
- -------------------------------------------------------------------------------
Net assets $515,374,346
===============================================================================
</TABLE>
13
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Class (Inception Date)
Investment Operations Less Distributions
------------------------------- -------------------------
Net
Realized/
Net Unrealized
Beginning Invest- Invest- Net Ending
Net ment ment Invest- Net
Year Ended Asset Income/ Gain ment Capital Asset Total
July 31, Value (Loss)(a) (Loss) Total Income Gains Total Value Return (b)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A (12/97)
1999 $22.75 $(.04) $2.45 $2.41 $-- $(.06) $(.06) $25.10 10.62%
1998 (c) 20.00 (.01) 2.76 2.75 -- -- -- 22.75 13.75
Class B (12/97)
1999 22.66 (.23) 2.45 2.22 -- (.06) (.06) 24.82 9.86
1998 (c) 20.00 (.11) 2.77 2.66 -- -- -- 22.66 13.30
Class C (12/97)
1999 22.67 (.23) 2.46 2.23 -- (.06) (.06) 24.84 9.86
1998 (c) 20.00 (.11) 2.78 2.67 -- -- -- 22.67 13.35
Class R (12/97)
1999 22.79 .02 2.47 2.49 -- (.06) (.06) 25.22 10.95
1998 (c) 20.00 .03 2.76 2.79 -- -- -- 22.79 13.95
======================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class (Inception Date)
Ratios/Supplemental Data
-------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Ending Before Before After After
Net Credit/ Credit/ Credit/ Credit/ Portfolio
Year Ended Assets Reimburse- Reimburse- Reimburse- Reimburse- Turnover
July 31, (000) ment ment ment (a) ment (a) Rate
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A (12/97)
1999 $101,080 1.27% (.18)% 1.27% (.18)% 22%
1998 (c) 43,092 1.42* (.16)* 1.35* (.09)* 4
Class B (12/97)
1999 222,156 2.02 (.94) 2.01 (.93) 22
1998 (c) 81,823 2.17* (.91)* 2.10* (.84)* 4
Class C (12/97)
1999 146,927 2.01 (.93) 2.01 (.93) 22
1998 (c) 43,260 2.17* (.91)* 2.10* (.84)* 4
Class R (12/97)
1999 45,211 1.03 .08 1.03 .08 22
1998 (c) 37,664 1.19* .11* 1.10* .20* 4
====================================================================================================
</TABLE>
* Annualized.
(a) After custodian fee credit and expense reimbursement, where applicable
(notes 1 and 4).
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(c) From commencement of class operations as noted.
14
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of
Nuveen Rittenhouse Growth Fund
We have audited the accompanying statement of net assets, including the
portfolio of investments, of Nuveen Rittenhouse Growth Fund (one of the
portfolios constituting the Nuveen Investment Trust II (a Massachusetts business
trust)), as of July 31, 1999, and the related statement of operations, the
statement of changes in net assets and the financial highlights for the periods
indicated thereon. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
July 31, 1999, by correspondence with the custodian and brokers. As to
securities purchased but not received, we requested confirmation from brokers
and, when replies were not received, we carried out alternative auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of the Nuveen
Rittenhouse Growth Fund as of July 31, 1999, the results of its operations, the
change in its net assets and its financial highlights for the periods indicated
thereon in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
September 17, 1999
15
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Income
Income Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited Term
State Funds
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier Advisers/SM/ including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
municipal bonds. The fund shares are listed and traded on the New York and
American stock exchanges. Exchange-traded funds provide the investment
convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
16
<PAGE>
Fund Information
Board of Trustees
James E. Bacon
Jack B. Evans
William T. Kissick
Thomas E. Leafstrand
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Investment Manager
Rittenhouse Financial Services, Inc.
Two Radnor Corporate Center
Suite 400
Radnor, PA 19087-4570
Transfer Agent and
Shareholder Services
Chase Global Funds Services Co.
P.O. Box 5186
New York, NY 10274
(800) 257-8787
Legal Counsel
Chapman and 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 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
