<PAGE>
SEMIANNUAL REPORT January 31, 2000
[LOGO OF NUVEEN INVESTMENTS APPEARS HERE]
NUVEEN GROWTH FUNDS
[PICTURE APPEARS HERE]
Rittenhouse Growth Fund
Innovation Fund
International Growth Fund
<PAGE>
Contents
1 Dear Shareholder
3 From the Portfolio Manager's Perspective Nuveen Rittenhouse Growth Fund
6 Nuveen Rittenhouse Growth Fund Spotlight
7 From the Portfolio Manager's Perspective Nuveen Innovation Fund
10 Nuveen Innovation Fund Spotlight
11 From the Portfolio Manager's Perspective Nuveen International Growth Fund
14 Nuveen International Growth Fund Spotlight
15 Portfolio of Investments
21 Statement of Net Assets
22 Statement of Operations
23 Statement of Changes in Net Assets
24 Notes to Financial Statements
29 Financial Highlights
32 Building a Better Portfolio
33 Fund Information
<PAGE>
[PHOTO OF TIMOTHY R. SCHWERTFEGER CHAIRMAN OF THE BOARD APPEARS HERE]
DEAR
Shareholder,
Setting financial goals is an important first step toward building wealth. At
Nuveen Investments, we believe those goals should not be considered ends in
themselves. Rather, your and your financial adviser's focus should be on
realizing your life's dreams -- the things that matter most to you and how you
can make them happen -- or make them better.
Through a well-crafted financial plan, you have the chance to shape future
generations -- to broaden your sphere of influence -- to leave your legacy.
As you develop that plan, you'll want to consider the different ways your
success can benefit others. You may find that you want to create a new set of
goals to achieve this. Working with your financial adviser, you have the ability
to make those dreams a reality -- for yourself and future generations.
Family Wealth Management. Too often, family wealth management is thought of in
one dimension -- as the stewardship of your household's financial resources. At
Nuveen Investments, we think of family wealth management as the map to help you
reach your financial, and your life's, destinations. It's a multi-faceted
strategy to plan for not just your needs, but the needs of future generations.
We are dedicated to helping you and your financial adviser develop a family
wealth management strategy unique to you and your goals and values.
A Trusted Resource. As you face some of the most important, lasting decisions
you and your family will make, you'll want to draw upon the support, counsel and
objectivity of a trusted adviser. That's because your financial adviser has the
expertise and access to other professionals who can help you make informed
choices -- choices that affect not only your loved ones today, but those your
legacy will touch in the future.
Your financial adviser can provide sound financial insight, an integrated
approach to your investments and can serve as a knowledgeable friend with your
family's best interest at heart.
The Economic Environment. We've prepared the following interview to let you know
what the investment and research management teams have done during your fund's
fiscal period. Before we get to that, I want to briefly report on the economic
environment in which your Nuveen investment performed.
The end of your fund's fiscal period, January 31, 2000, was an important
day in our nation's economic life. It marked the 106th month of continued
economic expansion. The last time we saw 106 consecutive months of economic
expansion was February 1961 to December 1969, a period known best for its
military conflicts, domestic unrest and soaring inflation.
That was then; this is now.
"Your financial adviser can provide sound financial insight, an integrated
approach to your investments and can serve as a knowledgeable friend with your
family's best interest at heart."
SEMIANNUAL REPORT page 1
<PAGE>
The vigilant inflationary watch of Federal Reserve Chairman Alan Greenspan,
the growth of the Internet and other technology-related developments and the
globalization of the economy are three reasons for continued economic health.
In their battle to keep inflation at bay, Greenspan's Fed again raised
interest rates (to 5.75%) in early February. That marked the fourth time the Fed
has raised the federal funds rate -- the interest rate that banks charge each
other on overnight loans -- since June 1999.
Over the short term, the inflation threat has meant increased price
fluctuations in the equity markets. Part of that is due to the fact that
investors and the various markets have been watching -- and reacting to -- every
announcement concerning economic statistics.
Longer term, there's still faith in the emerging paradigm, which holds that
improvements in productivity enable us to have both economic growth and low
inflation at the same time. The 1960's 106-month expansion that I noted earlier
was fueled by government spending. Today's economy has been fueled by consumer
spending and improved productivity. Will the current expansion out-distance the
one of the 60s? Time will tell.
What Can You Do? We believe the potential presence of inflation and price swings
in the markets reinforce the importance of:
. working with an adviser
. staying focused on the long term; and
. adhering to your financial plan.
With a sound plan in place, you may be better positioned to weather the
markets' ups and downs. As you pursue your life's dreams, your financial adviser
can serve as a valuable resource in helping you keep short-term market events in
perspective while you focus on your overall financial plan.
For more information on any Nuveen investment, including a prospectus,
contact your financial adviser. Or call Nuveen at (800) 621-7227 or visit our
Internet site at www.nuveen.com. Please read the prospectus carefully before you
invest or send money.
Since 1898, Nuveen has been synonymous with investments that stand the test
of time. We are committed to maintaining that reputation and working with
financial advisers to provide investment solutions that help individuals achieve
their live's dreams. Thank you for your continued confidence.
Sincerely,
[SIGNATURE OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
March 15, 2000
"There's still faith in the emerging paradigm, which holds that improvements in
productivity enable us to have both economic growth and low inflation at the
same time."
SEMIANNUAL REPORT page 2
<PAGE>
NUVEEN RITTENHOUSE GROWTH FUND
From the Portfolio Manager's Perspective
With an investment in Nuveen Rittenhouse Growth Fund, managed by 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 holds these stocks in its
portfolio, rather than owning the stocks directly, offers you access to
professional money management. Recently we spoke with John P. Waterman, managing
director of investments at Rittenhouse, about the fund's performance during the
semiannual fiscal period ended January 31, 2000.
Q | During the six-month period ending January 31, 2000, the Federal Reserve
Board (the Fed) continued to raise interest rates, and the markets bounced up
and down -- mostly up, thanks mainly to technology stocks -- in response. How
did the Nuveen Rittenhouse Growth Fund respond to this market environment?
JOHN | Despite the bumps, the market fit in well with our portfolio positioning
and the fund was able to reap the benefits. The Nuveen Rittenhouse Growth Fund
returned 10.31% over the six-month period ending January 31, 2000, besting both
the Standard & Poor's 500 Index return of 5.59% and the Lipper Large Cap Core
Funds Index return of 7.15% for the same time period.*
Q | The fund's management team expanded the investment strategy for the fund in
1999, which allowed the fund to invest more in technology. Did that play a role
in the fund's performance?
JOHN | Yes, it did. There is an important reason why technology is so strong
right now. Technology and innovation play a dominant role in all types of
business, and the world marketplace constantly reinvents itself as a result of
new technology. In this new economy we believe companies need to make immediate
investments and reinvestments in their businesses to keep up with the pace of
today's markets. Recognizing that, the fund began allowing the purchase of non-
dividend-paying stocks beginning in the spring of 1999. Stocks that do not pay
dividends tend to be growth-oriented companies that require more capital
investment because they are in the earlier stages of their life cycle than an
older, more established company.
By relaxing the dividend requirement, we increased the number of companies
in our investable universe, most notably expanding our options in the technology
sector. That allowed the fund to participate more fully in the new economy.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, chosen for their rigorously disciplined
investment approaches.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's adviser for large-cap growth investing, Rittenhouse Financial Services,
Inc., a wholly owned subsidiary of Nuveen, has more than 20 years of investment
experience through a variety of market conditions. With 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 six-month period ended January 31, 2000. The views expressed reflect
those of the portfolio management team and are subject to change at any time,
based on market and other conditions.
*The annualized total return for the Nuveen Rittenhouse Growth Fund was 9.78%
for the one-year period ending January 31, 2000, and 17.02% since its inception
on December 31, 1997. The Lipper Large Cap Core Funds Index returned 10.65% for
the same one-year period, and 19.70% for the period since the fund's inception.
The S&P 500 Index returned 10.35% for the one-year period and 20.67% since the
fund's inception. The Lipper Large Cap Core Funds Index is a managed index
representing the average annualized total returns of the 30 largest funds in the
Lipper Large Cap Core Funds category. The S&P 500 Index is an unmanaged index
comprising 500 stocks generally considered representative of the U.S. stock
market. The returns assume reinvestment of dividends and do not reflect any
applicable sales charges.
SEMIANNUAL REPORT page 3
<PAGE>
Q | Were, and are, you concerned about the potential for increased volatility in
the portfolio, since you have more leeway to buy technology stocks?
JOHN | There is no doubt that, overall, technology stocks have had more
pronounced ups and downs than stocks in other sectors. With this in mind, we
have kept the fund focused on large, established companies that own a dominant
market position. This applies to technology stocks as well as other stocks. In
fact, we go even further than that -- we look for companies that meet the
stringent Rittenhouse criteria and that we think have the right business models
to capitalize on the key growth trends in technology and communications. We
think this could potentially translate into more reliable earnings growth for
these companies in the portfolio than if we were to simply select the hottest
technology stocks. We also aim to diversify within the technology sector, so
that the fund's technology holdings would be less likely to be concentrated in
one particular type of technology stock.
Q | Can you give us some examples of holdings in the fund that have met these
criteria?
JOHN | Lucent Technologies and Cisco Systems, the leading providers of
infrastructure for the telecommunications industry, are two examples that have
done very well over the period. Lucent has focused on providing services to
major telecommunications providers, while Cisco traditionally has focused on
corporate data networking. Cisco is a new addition to the fund, and it returned
59% over the period.
We also purchased a position in EMC -- the No. 1 maker of mainframe
computer disk memory hardware and software -- to try to take advantage of the
vast amount of storage space that has been generated through more and better
technologies. Intel, Texas Instruments and Sun Microsystems also did very well
for the fund.
NUVEEN RITTENHOUSE GROWTH FUND
Top Ten Stock Holdings
Procter & Gamble Co./1/ 4.9%
- ----------------------------------------
Intel Corp. 4.8%
- ----------------------------------------
American International Group, Inc. 4.8%
- ----------------------------------------
Colgate-Palmolive Co. 4.6%
- ----------------------------------------
General Electric 4.6%
- ----------------------------------------
Coca-Cola Co. 4.3%
- ----------------------------------------
Automatic Data Processing, Inc. 4.3%
- ----------------------------------------
Home Depot, Inc. 4.2%
- ----------------------------------------
Pfizer, Inc. 4.1%
- ----------------------------------------
Merck & Co., Inc. 4.1%
- ----------------------------------------
The companies listed represent their respective percentages of stock holdings as
of January 31, 2000. Over time, the fund's holdings and their percentages will
vary.
/1/ Approximately one month after the semiannual period closed, the fund's
position in Procter & Gamble Co. was sold.
"We have kept the fund focused on large, established companies that own a
dominant market position. This applies to technology stocks as well as other
stocks."
SEMIANNUAL REPORT page 4
<PAGE>
Q How did some of the other sectors represented in the fund perform
over the period?
JOHN Consumer cyclicals benefited from a robust economy as well as the
insatiable spending by consumers. Our holdings in this sector in Home Depot and
Wal-Mart outperformed both their sector and the overall market as represented by
the S&P 500 Index for the full year 1999. Both companies have increasingly taken
advantage of technology to stay connected to their customers, which has helped
contribute to their success.
Although performance in the healthcare sector as a whole was weaker over
the period in the face of a price control scare on prescription medications, the
healthcare companies in the Rittenhouse portfolio performed exceptionally well.
Pfizer continued its tremendous performance by again posting a record year in
both revenue and earnings. In addition, we expect that Pfizer's takeover of
Warner-Lambert will make the combined company the strongest player in the
industry if the deal closes. Schering-Plough continued to leverage the success
of Claritin and the benefit gained from the increased prevalence of allergies in
the American population. Merck, in the face of some concerns about their long-
term pipeline, benefited from the success of newer drugs Fosamax -- a treatment
for osteoporosis -- and Vioxx -- a pain medication. Overall, we believe long-
term demographic trends, as well as ever-increasing technology in research and
development, make healthcare one of the most attractive growth sectors over the
long term.
Consumer staples for the most part have lagged, but stocks such as Walgreen
Co. and Colgate-Palmolive have extremely attractive valuations and solid
earnings, and they are poised to do better in our opinion.
Q What is your outlook for the market environment and the fund for the coming
months?
JOHN The interest rate and the economic outlook are key factors. Looking
out one to two years, we continue to expect low inflation and moderate economic
growth, which is an ideal environment for the stock market. In the near future,
the Fed has made it clear that a 5% or higher growth rate is not sustainable
without inflation rekindling. The Fed has said it wants to slow growth to a
sustainable 3% to 3.5% rate. Therefore, we expect several more rate increases,
which may create uncertainty and volatility.
Beyond that, we look for slower economic growth and lower interest rates,
which should boost stocks, particularly stable growth stocks with earnings that
have low economic sensitivity.
NUVEEN RITTENHOUSE GROWTH FUND
Sector Diversification
[PIE CHART APPEARS HERE]
Technology..........31.4%
Healthcare..........19.9%
Consumer Staples....18.9%
Financials..........16.3%
Consumer Cyclical....6.7%
Capital Goods........4.6%
Communication
Services.............2.2%
Portfolio composition is as of January 31, 2000, and is subject to change.
Composition is based on the fund's stock holdings.
"We believe long-term demographic trends, as well as ever-increasing technology
in research and development, make healthcare one of the most attractive growth
sectors over the long term."
SEMIANNUAL REPORT page 5
<PAGE>
Fund Spotlight as of January 31, 2000
NUVEEN RITTENHOUSE GROWTH FUND
<TABLE>
<CAPTION>
Quick Facts
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $27.70 $27.29 $27.30 $27.86
- --------------------------------------------------------------------------------------------
Fund Symbol NRGAX NRGBX NRGCX NRGRX
- --------------------------------------------------------------------------------------------
CUSIP 67065W100 67065W209 67065W308 67065W407
- --------------------------------------------------------------------------------------------
Inception Date 12/97 12/97 12/97 12/97
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Total Returns+
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV w/CDSC NAV
<S> <C> <C> <C> <C> <C> <C> <C>
6-Month 10.31% 3.97% 9.86% 4.86% 9.85% 8.85% 10.42%
- ---------------------------------------------------------------------------------------------
YTD -2.88% -8.47% -2.95% -7.81% -2.95% -3.92% -2.86%
- ---------------------------------------------------------------------------------------------
1-Year ++ 9.78% 3.47% 8.98% 4.98% 8.93% N/A 10.07%
- ---------------------------------------------------------------------------------------------
Since Inception++ 17.02% 13.74% 16.18% 14.54% 16.20% N/A 17.34%
- ---------------------------------------------------------------------------------------------
</TABLE>
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% maximum sales charge. Class B shares
have a CDSC that begins at 5% for redemptions during the first year after
purchase and declines periodically to 0% over the following six years. Class
B shares convert to Class A shares after eight years. Class C shares have a
1% CDSC for redemptions within one year.
++ Annualized
Portfolio Allocation*
[PIE CHART APPEARS HERE]
Equity........95%
Cash
Equivalents....5%
* The fund is actively managed, and its holdings,
diversification and allocation will vary over time.
<TABLE>
<CAPTION>
Portfolio Statistics
<S> <C>
Total Net Assets 607 million
- ----------------------------------------------------
Beta 1.04
- ----------------------------------------------------
Average Market
Capitalization (Stocks) 154 billion
- ----------------------------------------------------
Average P/E 37.7
- ----------------------------------------------------
Number of Stocks 31
- ----------------------------------------------------
Turnover Rate (for reporting period) 13%
- ----------------------------------------------------
Expense Ratio* 1.24%
- ----------------------------------------------------
</TABLE>
* Class A shares after credit/reimbursement
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Terms To Know
The following are a few terms used throughout this report.
Beta - Beta is a measure of a fund's volatility compared to the market's. A fund
with a beta of 1.20 is approximately 20% more volatile than the market, while a
fund with a beta of 0.80 is approximately 20% less volatile than the market.
Market Capitalization - Also referred to as market cap, market capitalization is
a measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped in these main categories:
Large cap: over $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E) - The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return - Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
SEMIANNUAL REPORT page 6
<PAGE>
NUVEEN INNOVATION FUND
From the Portfolio Manager's Perspective
Nuveen Innovation Fund features portfolio management by Columbus Circle
Investors (CCI), an institutional management firm with approximately $6 billion
in assets under management. For more than 25 years, CCI has sought to produce
excellent investment results using a single, disciplined investment process for
all asset classes. To help you understand the fund's performance during the
period from its inception through January 31, 2000, the fund's semiannual fiscal
period end, we spoke with Anthony Rizza, portfolio manager of the Nuveen
Innovation Fund and Managing Director of CCI, the subadviser of the fund.
Q The Nuveen Innovation Fund commenced operations on December 20, 1999, against
the backdrop of a market carried mostly by the technology sector. However, in
January technology stocks pulled back, as can be seen in the -1.05% return of
the Lipper Science & Technology Fund Index and the -5.02% return of the S&P 500
Index (for the one-month period ending January 31, 2000). The cumulative total
return for the Nuveen Innovation Fund was 4.27% for the same period, and 12.40%
in the little more than one month from its inception through January 31, 2000.
To what do you attribute this outperformance?*
ANTHONY We believe companies that use innovative technologies become the
driving forces in the market, so the fund isn't limited to pure technology
stocks. We look for companies that have a strategic competitive advantage in
their market as a result of their resourceful use of technology. Because of our
continuous analysis of the industry and overall trends, certain themes, or
attractive stories, became evident to us, themes that allowed us to concentrate
on sectors or concepts that we felt were particularly timely.
One such theme was energy, driven by deregulation of the industry. Calpine
Corp., a company engaged in the acquisition, development and operation of power
generation facilities and the sale of electricity, returned almost 34% over the
period. Affymetrix, a company that falls into our biotechnology theme, has
developed the biochip (a high-tech method of analyzing human genes) -- it
returned 107% over the period.
NUVEEN INNOVATION FUND
Sector Diversification
[PIE CHART APPEARS HERE]
Technology....78.5%
Utilities......9.5%
Healthcare.....6.1%
Consumer
Cyclicals......5.9%
Portfolio composition is as of January 31, 2000, and is subject to change.
Composition is based on the fund's stock holdings.
See the Industry Diversification chart on page 9 for a further breakdown of the
fund's technology holdings.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. This select group of asset management firms direct
the investment activities of the Nuveen Mutual Funds, and Nuveen has chosen them
for their rigorously disciplined investment approaches and their consistent
long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's adviser for growth investing, Columbus Circle Investors (CCI), is an
institutional investment management firm with approximately $6 billion in assets
under management. For more than 25 years, CCI has sought to
produce excellent investment results using a single, disciplined investment
process for all asset classes.
Performance figures are quoted for Class A shares at net asset value.
Comments cover the period from the fund's December 20, 1999, inception through
January 31, 2000. The views expressed reflect those of the portfolio management
team and are subject to change at any time, based on market and other
conditions.
*The Lipper Science & Technology Funds Index is a managed index representing the
average annualized total returns of the 30 largest funds in the Lipper Science
& Technology Funds category. The S&P 500 Index is an unmanaged index comprising
500 stocks generally considered representative of the U.S. stock market. The
returns assume reinvestment of dividends and do not reflect any applicable
sales charges.
SEMIANNUAL REPORT page 7
<PAGE>
Q What are some of the other themes you followed and why did you feel they were
attractive?
ANTHONY Our top themes during the period were:
. PC evolution, driven by worldwide PC demand and the increased power and
memory capacity of PCs;
. the communications revolution, fueled by the proliferation and access to
the Internet and the increased demand for wireless services;
. semiconductors, where tight manufacturing capacity coupled with an upturn
in global economies has led to a strong rebound in the industry.
These are the same themes we plan to hold to in the near term as well.
Q What in particular is involved in the fund's investment selection process?
ANTHONY We do a great deal of research on individual companies. First and
foremost, we want to identify a universe of solid companies with strong growth
potential. Then we try to determine which companies are best positioned to
benefit in revenue and earnings acceleration, and look for the companies where
some change is occurring that could boost investor expectations.
We work to pinpoint the most important factors for a particular stock,
including long-term and cyclical industry trends, company-specific events, and
even political and economic developments. From there, we construct the portfolio
subject to certain risk controls.
Q It is no secret that valuations of technology stocks are high compared to
historical levels. How do you sort through the opportunities and select stocks
suitable for the fund?
ANTHONY It's true that technology stocks are generally selling at record
highs in terms of stock price-to-earnings ratios. But we've seen a marked change
in the high-growth technology sector in the way the market values many of these
companies. The market has historically rewarded companies based on the earnings
they produce, but with respect to technology companies, it now tends to place
more value on expectations of future earnings. This has been particularly true
in regards to many Internet "start-ups."
Our investment selection process for the fund emphasizes companies that may
surprise the market with positive performance, and then are rewarded by the
market in the form of higher stock prices. Historic valuation measures such as
price-to-earnings ratios aren't as important to us; it's the increase in
expectations we are after.
NUVEEN INNOVATION FUND
Top Ten Stock Holdings
Affymetrix, Inc. 4.1%
- --------------------------------------------
Calpine Corporation 3.5%
- --------------------------------------------
JDS Uniphase Corporation 3.4%
- --------------------------------------------
Research In Motion 3.2%
- --------------------------------------------
Nokia Corp. 3.2%
- --------------------------------------------
Applied Micro Circuits Corporation 3.0%
- --------------------------------------------
Microsoft Corporation 2.8%
- --------------------------------------------
Veritas Software Corporation 2.8%
- --------------------------------------------
Ciena Corporation 2.8%
- --------------------------------------------
Motorola, Inc. 2.7%
- --------------------------------------------
The companies listed represent their respective percentages of stock holdings as
of January 31, 2000. Over time, the fund's holdings and their percentages will
vary.
SEMIANNUAL REPORT page 8
<PAGE>
We want to own companies displaying "positive momentum and positive
surprise." That's because we believe strong companies tend to get stronger
(which is positive momentum) and then pleasantly surprise the market by beating
investor and analyst expectations.
Our philosophy is based on the belief that when a company exceeds
expectations, its stock price tends to rise. We think that, as long as no
external factor breaks investor confidence, those favorable trends for each
company can continue and their stock prices should continue to bid up.
Q Do you employ any special strategies to help temper risk?
ANTHONY We focus on what we believe are growing companies with fundamental
strength that show promise of continuing positive performance. Start-ups and
"the hottest thing" are not what we are looking for. We believe in
diversification, and expect to maintain around 40 to 50 holdings in the
portfolio. The portfolio has had, to date, a minimum of eight themes with a
maximum of 25% of fund assets in any one theme.
Q What is your outlook for the market in the coming months?
ANTHONY The level of the stock market and the first stirrings of stress in
inflation and interest rates suggest taking a cautious approach. With market
risks at high levels, we will be on the lookout for quality companies that may
be in a turnaround mode. Now that Y2K is safely behind us, many companies can
focus their resources on e-commerce and new application development. We plan to
continue to focus our investments in the long-term technological trends that are
shaping our lives.
NUVEEN INNOVATION FUND
Industry Diversification (Top 5)
Computer Software & Services 31.2%
- -----------------------------------------
Communication Equipment 12.5%
- -----------------------------------------
Electronics Semiconductors 11.4%
- -----------------------------------------
Electronics Instrumentation 6.1%
- -----------------------------------------
Biotechnology 6.1%
- -----------------------------------------
The companies listed represent their respective percentages of stock holdings as
of January 31, 2000. Over time, the fund's holdings and their percentages will
vary.
"We focus on what we believe are growing companies
with fundamental strength that show promise of
continuing positive performance."
SEMIANNUAL REPORT page 9
<PAGE>
NUVEEN INNOVATION FUND
Fund Spotlight as of January 31, 2000
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $22.48 $22.46 $22.46 $22.48
- -------------------------------------------------------------------------------
Fund Symbol N/A N/A NIFCX N/A
- -------------------------------------------------------------------------------
CUSIP 67065W886 67065W878 67065W860 67065W852
- -------------------------------------------------------------------------------
Inception Date 12/99 12/99 12/99 12/99
- -------------------------------------------------------------------------------
</TABLE>
Cumulative Total Returns+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C> <C> <C> <C>
NAV Offer NAV w/CDSC NAV w/CDSC NAV
YTD 4.27% -1.75% 4.22% -0.78% 4.17% 3.17% 4.27%
- ------------------------------------------------------------------------------------------------------------
Since Inception 12.40% 5.94% 12.30% 7.30% 12.30% 11.30% 12.40%
</TABLE>
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% maximum sales charge. Class B shares have
a CDSC that begins at 5% for redemptions during the first year after purchase
and declines periodically to 0% over the following six years. Class B shares
convert to Class A shares after eight years. Class C shares have a 1% CDSC for
redemptions within one year.
Portfolio Allocation/./
[PIE CHART APPEARS HERE]
Equity....100%
/./The fund is actively managed, and its holdings, diversification and
allocation will vary over time.
Portfolio Statistics
<TABLE>
<S> <C>
Total Net Assets $27.7 million
- -------------------------------------------------
Beta 1.24
- -------------------------------------------------
Average Market
Capitalization (Stocks) $52 billion
- -------------------------------------------------
Average P/E 79.9
- -------------------------------------------------
Number of Stocks 48
- -------------------------------------------------
Turnover Rate (for reporting period) 21%
- -------------------------------------------------
Expense Ratio* 1.58%
- -------------------------------------------------
</TABLE>
* Class A shares after credit/reimbursement.
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Terms To Know
The following are a few terms used throughout this report.
Beta-Beta is a measure of a fund's volatility compared to the market's. A fund
with a beta of 1.20 is approximately 20% more volatile than the market, while a
fund with a beta of 0.80 is approximately 20% less volatile than the market.
Market Capitalization-Also referred to as market cap, market capitalization is a
measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped in these main categories:
Large cap: over $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E)-The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return-Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
SEMIANNUAL REPORT page 10
<PAGE>
NUVEEN INTERNATIONAL GROWTH FUND
From the Portfolio Manager's Perspective
Nuveen International Growth Fund features portfolio management by Columbus
Circle Investors (CCI), an institutional management firm with approximately $6
billion in assets under management. For more than 25 years, CCI has sought to
produce excellent investment results using a single, disciplined investment
process for all asset classes. To help you understand the fund's performance
from its inception December 20, 1999, through its semiannual fiscal year period
ending January 31, 2000, we spoke with Clifford Fox, portfolio manager of the
Nuveen International Growth Fund and managing director of CCI, the subadviser of
the fund.
Q The Nuveen International Growth Fund opened on December 20, 1999, amid very
active world markets. The fund's cumulative total return was 9.65% since
inception. For comparison purposes, we have measured the period January 1, 2000,
through January 31, 2000. For that one-month period, the fund returned 0.18%,
outperforming the MSCI All Country World Index ex-USA, which returned -5.08%,
and the Lipper International Funds Index, which returned -5.85%.* Although one
month is not a long time period, to what do you attribute the fund's impressive
initial showing and its outperformance of its benchmarks?
CLIFFORD What we've been seeing in world markets is a hearty recovery from
the Asian financial crisis of 1997 and 1998, with a boost from interest rate
cuts from central banks around the world. Another powerful factor has been the
reinvention of the global economy as a result of technology's enormous effect on
the way business is conducted.
Since the fund focuses on what we believe are fast-growing companies with
accelerating earnings, our investment process has led us to an overweight in
sectors like technology and telecommunications. In fact, these sectors have led
the world's markets during the past year, and advertising and media have pitched
in to drive performance. These sectors were well-represented in the fund, and
some particularly strong holdings helped boost the fund's performance above its
benchmarks.
Nuveen is dedicated to providing investors access to a team of highly
experienced investment managers, each overseeing portfolios within their
specific areas of expertise. This select group of asset management firms direct
the investment activities of the Nuveen Mutual Funds, and Nuveen has chosen them
for their rigorously disciplined investment approaches and their consistent
long-term performance.
Drawing on decades of experience and specialized knowledge, these skilled asset
managers have earned reputations for excellence in their fields of expertise,
whether it is blue-chip growth stocks, large-cap value stocks, bonds or
international securities.
Nuveen's adviser for growth investing, Columbus Circle Investors (CCI), is an
institutional investment management firm with approximately $6 billion in assets
under management. For more than 25 years, CCI has sought to produce excellent
investment results using a single, disciplined investment process for all asset
classes.
* The Lipper International Funds Index is a managed index representing the
average annualized total returns of the 30 largest funds in the Lipper
International Funds category. The S&P 500 Index is an unmanaged index
comprising 500 stocks generally considered representative of the U.S. stock
market. The returns assume reinvestment of dividends and do not reflect any
applicable sales charges.
Performance figures are quoted for Class A shares at net asset value. Comments
cover the period from the fund's inception December 20, 1999, through January
31, 2000. The views expressed reflect those of the portfolio management team
and are subject to change at any time, based on market and other conditions.
SEMIANNUAL REPORT page 11
<PAGE>
Q Can you give us some examples of fund holdings that performed particularly
well over the period?
CLIFFORD In the technology sector, companies such as Baltimore Technologies,
a U.K. Internet security software company, and Solution 6, an Australian
accounting software company, performed very well. Booming demand for wireless
services produced positive surprise across many companies in this sector,
particularly Nokia, with its innovative phone designs, which have allowed the
company to gain in the handset market. In the media sector, Gruppo Editoriale
L'Espresso, Italy's second largest newspaper, was up sharply due to the strong
economic environment and its ability to leverage content onto its Internet
portal.
Q You follow certain themes for the portfolio. What themes did you use during
the period and how did you determine them?
CLIFFORD Our top themes during the period were:
. media and advertising, driven by economic growth, media deregulation and
the opportunity created by the Internet;
. the global economic recovery, with monetary policy, favorable exchange
rates and strong country fundamentals being factors;
. healthcare, driven by the "aging baby boomers", regulation and new
products;
. wireless communication, with increased demand and penetration; and
. the Internet, driven by higher worldwide access, available information and
commerce opportunities.
These are themes we expect to continue following for the near term.
Q What is involved in the fund's investment selection process?
CLIFFORD We do a great deal of research on individual companies. First and
foremost, we want to identify a universe of solid companies with strong growth
potential. Then we try to determine which companies are best positioned to
benefit in revenue and earnings acceleration, and look for the companies where
some change is occurring that could boost investor expectations. We work to
pinpoint the most important factors for a particular stock, including long-term
and cyclical industry trends, company-specific events, and even political and
economic developments. From there, we construct the portfolio subject to certain
risk controls. The ultimate goal is to find strong companies showing what we
call positive momentum and positive surprise.
NUVEEN INTERNATIONAL GROWTH FUND
Top Ten Stock Holdings
Nokia Corp. 3.5%
- ----------------------------------------------------
Murata Manufacturing Company, LTD. 3.3%
- ----------------------------------------------------
STMicroelectronics N.V. 2.6%
- ----------------------------------------------------
NTT Mobile Communications Network, Inc. 2.5%
- ----------------------------------------------------
Sony Corporation 2.5%
- ----------------------------------------------------
Steag Hamatech AG 2.4%
- ----------------------------------------------------
Ericsson LM Sponsored ADR 2.3%
- ----------------------------------------------------
Thomson Multimedia Sponsored ADR 2.1%
- ----------------------------------------------------
Gruppo Editoriale L'Espresso 2.1%
- ----------------------------------------------------
Vestas Wind Systems A/S 2.1%
- ----------------------------------------------------
The companies listed represent their respective percentages of stock holdings as
of January 31, 2000. Over time, the fund's holdings and their percentages will
vary.
SEMIANNUAL REPORT page 12
<PAGE>
Q What do you mean by "positive momentum and positive surprise?"
CLIFFORD Our investment process for the fund emphasizes companies that may
surprise the market with positive performance, and then are rewarded by the
market in the form of higher stock prices. Historic valuation measures such as
price-to-earnings ratios aren't as important to us; it's the increase in
expectations we are after, or what we call the positive surprise.
We believe strong companies tend to get stronger (which is positive
momentum) and then pleasantly surprise the market by beating investor and
analyst expectations. Our philosophy is based on our belief that when a company
exceeds expectations, its stock price tends to rise. We think that, as long as
no external factor breaks investor confidence, those favorable trends for each
company can continue and their stock prices should continue to bid up.
A core part of CCI's discipline is to keep the top performers until the
forces of their positive surprise ebb or the stocks cease to respond to
additional supporting evidence.
Q What strategies do you use to help temper risk?
CLIFFORD We invest the portfolio primarily in mid- to large-capitalization
foreign stocks that we believe are of high quality. Company performance is our
primary consideration for international stocks; we also adhere to specific
stock, region and country allocation guidelines to help spread risk and manage
portfolio volatility.
We maintain diversification by investing in at least 50 different stocks
and by trying to keep position sizes moderate to help avoid being too heavily
concentrated in any one company or sector. Investment in emerging markets is
limited to 20% of portfolio assets.
Q What is your outlook for the international markets in the coming months?
CLIFFORD The level of the stock market and the first stirrings of stress in
inflation and interest rates prompted us to begin implementing a more cautious
strategy, by taking profits in the biggest winners to date, trying to reduce the
risk parameters (price-to-earnings ratios, for example) and by seeking companies
whose stock prices are not far advanced.
We plan to continue to emphasize strong global themes and to try to
minimize our holdings of interest rate-sensitive stocks. We have added
information technology service companies in an attempt to take advantage of a
post-Y2K spending rebound and the need for many firms to become Internet
enabled.
We remain favorably disposed toward those companies likely to benefit from
a stronger global economy.
NUVEEN INTERNATIONAL GROWTH FUND
Sector Diversification
[PIE CHART APPEARS HERE]
Technology 33.3%
- -----------------------------
Consumer Cyclicals 18.0%
- -----------------------------
Utilities 11.5%
- -----------------------------
Consumer Staples 10.7%
- -----------------------------
Capital Goods 10.3%
- -----------------------------
Financials 9.2%
- -----------------------------
Healthcare 6.1%
- -----------------------------
Basic Materials 0.9%
- -----------------------------
Portfolio composition is as of January 31, 2000, and is subject to change.
Composition is based on the fund's stock holdings.
"We believe strong companies tend to get stronger
(which is positive momentum) and then pleasantly surprise
the market by beating investor and analyst expectations."
SEMIANNUAL REPORT page 13
<PAGE>
NUVEEN INTERNATIONAL GROWTH FUND
Fund Spotlight as of January 31, 2000
Quick Facts
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
<S> <C> <C> <C> <C>
NAV $21.93 $21.91 $21.91 $21.93
- --------------------------------------------------------------------------------
Fund Symbol N/A N/A N/A N/A
- --------------------------------------------------------------------------------
CUSIP 67065W506 67065W605 67065W704 67065W803
- --------------------------------------------------------------------------------
Inception Date 12/99 12/99 12/99 12/99
- --------------------------------------------------------------------------------
</TABLE>
Cumulative Total Returns+
<TABLE>
<CAPTION>
A Shares B Shares C Shares R Shares
NAV Offer NAV w/CDSC NAV w/CDSC NAV
<S> <C> <C> <C> <C> <C> <C> <C>
YTD 0.18% -5.60% 0.14% -4.86% 0.14% -0.86% 0.18%
- --------------------------------------------------------------------------------------------------------------
Since Inception 9.65% 3.35% 9.55% 4.55% 9.55% 8.55% 9.65%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
+ Returns reflect differences in sales charges and expenses among the share
classes. Class A shares have a 5.75% maximum sales charge. Class B shares
have a CDSC that begins at 5% for redemptions during the first year after
purchase and declines periodically to 0% over the following six years. Class
B shares convert to Class A shares after eight years. Class C shares have a
1% CDSC for redemptions within one year.
Portfolio Statistics
<TABLE>
<CAPTION>
<S> <C>
Total Net Assets 13.1 million
- -----------------------------------------------------
Beta .89
- -----------------------------------------------------
Average Market
Capitalization (Stocks) 47 billion
- -----------------------------------------------------
Average P/E 73.07
- -----------------------------------------------------
Number of Stocks 61
- -----------------------------------------------------
Turnover Rate (for reporting period) 12%
- -----------------------------------------------------
Expense Ratio** 1.66%
- -----------------------------------------------------
</TABLE>
** Class A shares after credit/reimbursement
Returns are historical and do not guarantee future performance. Investment
returns and principal value will fluctuate so that when shares are redeemed,
they may be worth more or less than their original cost. Performance of classes
will differ. For additional information, please see the fund prospectus.
Portfolio Allocation.
[PIE CHART APPEARS HERE]
Equity 100%
. The fund is actively managed, and its holdings, diversification and
allocation will vary over time.
Country Allocation*
<TABLE>
<CAPTION>
<S> <C>
Japan 19.4%
- ---------------------------------
United Kingdom 11.2%
- ---------------------------------
France 8.7%
- ---------------------------------
Singapore 7.5%
- ---------------------------------
Italy 7.1%
- ---------------------------------
Finland 6.9%
- ---------------------------------
Germany 6.7%
- ---------------------------------
Canada 6.1%
- ---------------------------------
Netherlands 4.6%
- ---------------------------------
Switzerland 3.5%
- ---------------------------------
</TABLE>
* As a percentage of total stock holdings as of January 31, 2000. Holdings are
subject to change.
Terms To Know
The following are a few terms used throughout this report.
Beta-Beta is a measure of a fund's volatility compared to the market's. A fund
with a beta of 1.20 is approximately 20% more volatile than the market, while a
fund with a beta of 0.80 is approximately 20% less volatile than the market.
Market Capitalization-Also referred to as market cap, market capitalization is a
measure of a corporation's value, calculated by multiplying the number of
outstanding shares of common stock by the current market price per share. Market
capitalization is usually grouped in these main categories:
Large cap: over $5 billion in market capitalization
Mid cap: between $1 billion and $5 billion
Small cap: $1 billion or less
Price/Earnings Ratio (P/E)-The P/E ratio of a stock is calculated by dividing
the current price of the stock by its trailing 12 months' earnings per share. A
high P/E generally indicates that the market will pay more to obtain the
company's stock because investors have confidence in the company's ability to
increase its earnings over time. Conversely, a low P/E indicates that investors
are less confident that the company's earnings will increase, and therefore are
not willing to pay as much for its stock. The weighted average of the
price/earnings ratios of the stocks in a mutual fund's portfolio can act as a
gauge of the fund's investment strategy in the current market climate by
indicating a value orientation (low P/E ratios) or a growth orientation (high
P/E ratios).
Total Return-Total return is a measure of a fund's performance that takes into
account income dividends, capital gains distribution and change in net asset
value.
SEMIANNUAL REPORT page 14
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Rittenhouse Growth Fund
January 31, 2000
<TABLE>
<CAPTION>
<C> <S> <C>
Market
Shares Description Value
- -------------------------------------------------------------------------
COMMON STOCKS - 96.5%
Capital Goods - 4.4%
202,000 General Electric Company $ 26,941,750
- -------------------------------------------------------------------------
Communication Services - 2.1%
279,000 MCI WorldCom, Inc. 12,816,560
- -------------------------------------------------------------------------
Consumer Cyclicals - 6.5%
437,000 Home Depot, Inc. 24,745,125
264,000 Wal-Mart Stores, Inc. 14,454,000
- -------------------------------------------------------------------------
Consumer Staples - 18.2%
441,000 The Coca-Cola Company 25,329,938
458,000 Colgate-Palmolive Company 27,136,500
285,000 Procter & Gamble Company 28,749,375
408,000 Walgreens Co. 11,271,000
497,000 The Walt Disney Company 18,047,313
- -------------------------------------------------------------------------
Financials - 15.7%
271,000 American International Group, Inc. 28,217,875
322,000 Federal Home Loan Mortgage Corporation 16,160,375
304,000 Federal National Mortgage Association 18,221,000
160,000 State Street Corporation 12,830,000
498,000 Wells Fargo Company 19,920,000
- -------------------------------------------------------------------------
Health Care - 19.2%
252,000 Johnson & Johnson 21,687,750
381,000 Medtronic, Inc. 17,430,750
305,000 Merck & Co., Inc. 24,037,813
663,000 Pfizer Inc. 24,116,625
349,000 Schering-Plough Corporation 15,356,000
149,000 Warner-Lambert Company 14,145,688
- -------------------------------------------------------------------------
Technology - 30.4%
526,000 Automatic Data Processing, Inc. 24,952,125
181,000 Cisco Systems, Inc.# 19,819,500
173,000 EMC Corporation 18,424,500
149,500 Hewlett-Packard Company 16,183,375
287,000 Intel Corporation 28,395,063
135,000 International Business Machines Corporation 15,145,313
312,000 Lucent Technologies Inc. 17,238,000
172,000 Microsoft Corporation# 16,834,500
180,000 Oracle Corporation 8,991,563
120,000 Sun Microsystems, Inc. 9,427,500
80,000 Texas Instruments Incorporated 8,630,000
- -------------------------------------------------------------------------
Total Common Stocks - (cost $495,115,701) 585,656,876
------------------------------------------------------------
</TABLE>
15
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Rittenhouse Growth Fund (continued)
January 31, 2000
<TABLE>
<CAPTION>
Principal Market
Amount Description Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 4.9%
$ 29,953,000 Swiss Bank Repurchase Agreement, 5.60%, 2/01/00 $ 29,953,000
- --------------------------------------------------------------------------------
Total Short-Term Investments - (cost $29,953,000) 29,953,000
-----------------------------------------------------------------
Total Investments - (cost $525,068,701) - 101.4% 615,609,876
-----------------------------------------------------------------
Other Assets Less Liabilities - (1.4)% (8,651,547)
-----------------------------------------------------------------
Net Assets - 100% $606,958,329
-----------------------------------------------------------------
</TABLE>
# Non-income producing.
See accompanying notes to financial statements.
16
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Innovation Fund
January 31, 2000
<TABLE>
<CAPTION>
Market
Shares Description Value
- -------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 77.6%
Consumer Cyclicals - 4.6%
29,500 APAC Customer Services Inc. # $376,125
5,100 DoubleClick Inc. # 503,944
5,500 GoTo.com, Inc. # 411,813
- -------------------------------------------------------------------
Health Care - 4.7%
3,900 Affymetrix, Inc. # 902,850
6,800 Amgen Inc. # 433,075
- -------------------------------------------------------------------
Technology - 60.9%
8,400 Adaptec, Inc. # 439,950
800 Adobe Systems Incorporated 44,050
6,300 Agilent Technologies, Inc. # 416,981
8,000 Altera Corporation # 526,000
8,400 Amdocs Limited # 446,775
6,800 America Online, Inc. # 387,175
4,400 Applied Micro Circuits Corporation # 650,100
14,300 Atmel Corporation # 444,194
8,400 Business Objects S.A. Sponsored ADR # (DD) 565,425
9,300 CIENA Corporation # 610,313
3,600 Cisco Systems, Inc. # 394,200
10,600 Clearnet Communications Inc. # 412,075
12,200 Compaq Computer Corporation 333,975
4,500 Critical Path, Inc. # 288,281
10,600 Fairchild Semiconductor Corporation # 360,400
4,500 Healtheon/WebMD Corporation # 292,500
10,600 iXL Enterprises, Inc. # 507,475
5,100 Intel Corporation 504,581
9,700 J.D. Edwards & Company # 289,181
3,600 JDS Uniphase Corporation # (DD) 734,175
7,100 KLA-Tencor Corporation # 416,238
3,000 Micromuse Inc. # 489,563
6,300 Microsoft Corporation # 616,613
4,400 Motorola, Inc. 601,700
3,800 Nokia Oyj Sponsored ADR (DD) 695,400
6,300 Open Market, Inc. # 324,450
13,700 PeopleSoft, Inc. # 308,250
7,600 Portal Software, Inc. # 377,150
4,000 PurchasePro.com, Inc. # 331,500
10,600 Research in Motion Limited # 696,950
4,100 SAP AG Sponsored ADR 267,269
5,900 Siebel Systems, Inc. # 540,956
6,700 Tellabs, Inc. # 361,800
7,200 Teradyne, Inc. # 466,200
3,500 Terayon Communication Systems, Inc. # 374,500
</TABLE>
17
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen Innovation Fund (continued)
January 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
Market
Shares Description Value
- -------------------------------------------------------------------------
Technology (continued)
8,400 TSI International Software Ltd. # $ 515,025
4,200 VERITAS Software Corporation # 612,675
2,600 Waters Corporation # 192,075
1,100 Yahoo! Inc. # 354,269
- -------------------------------------------------------------------------
Utilities - 7.4%
10,600 Calpine Corporation # 775,124
13,100 Global TeleSystems Group, Inc. # 326,680
13,100 Intermedia Communications Inc. # 563,300
3,600 VoiceStream Wireless Corporation # 422,550
- -------------------------------------------------------------------------
Total Investments - (cost $21,060,886) - 77.6% 21,905,850
------------------------------------------------------------
Other Assets Less Liabilities - 22.4% 6,317,654
------------------------------------------------------------
Net Assets - 100% $28,223,504
------------------------------------------------------------
</TABLE>
# Non-income producing.
(DD) Portion of security purchased on a delayed delivery basis.
See accompanying notes to financial statements.
18
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen International Growth Fund
January 31, 2000
<TABLE>
<CAPTION>
<C> <S> <C>
Market
Shares Description Value
- ---------------------------------------------------------------------------------
COMMON STOCKS - 90.6%
Basic Materials - 0.8%
20,000 Billiton plc $103,819
- ---------------------------------------------------------------------------------
Capital Goods - 9.4%
8,200 CRH plc 156,847
20,000 JOT Automation Group Oyj 217,204
440 Mannesmann AG # 107,624
2,700 Singulus Technologies AG # 224,278
6,800 Steag Hamatech AG # 285,418
1,100 Vestas Wind Systems A/S # 255,928
- ---------------------------------------------------------------------------------
Consumer Cyclicals - 16.3%
3,000 Asatsu - DK Inc. 195,619
2,000 Gucci Group N.V. 213,625
20,000 Gruppo Editoriale L'Espresso 255,949
140,000 Seat Pagine Gialle SpA 243,131
2,000 Secom Co., Ltd. 179,364
10,000 Sharp Corporation 177,682
5,500 Singapore Press Holdings Limited 108,040
1,200 Sony Corporation 302,228
3,400 Thomson Multimedia Sponsored ADR # 257,550
3,000 WPP Group plc Sponsored ADR 243,000
- ---------------------------------------------------------------------------------
Consumer Staples - 9.7%
15,000 BEC World Public Company Limited 120,913
6,300 British Sky Broadcasting Group plc # 146,997
1,700 FamilyMart Co., Ltd 106,721
10 Fuji Television Network Inc. 154,141
11,000 Mediaset SpA 174,135
175 NRJ S.A. 107,526
40,000 Rentokil Initial plc 154,634
230 Societe Television Francaise 1 122,867
24,400 TV Azteca, S.A. de C.V. Sponsored ADR 202,825
- ---------------------------------------------------------------------------------
Financials - 8.4%
2,100 Bipop SpA 178,548
14,000 DBS Group Holdings Limited 187,732
9,000 INES Corporation 218,600
2,300 ING Groep N.V. 116,116
11,700 Prudential plc 216,575
200 Softbank Corp. 196,179
- ---------------------------------------------------------------------------------
Health Care - 5.5%
100 Ares-Serono Group 255,506
4,000 Biovail Corporation International # 199,500
35 Disetronic Holding AG 169,272
2,000 Takeda Chemical Industries, Ltd. 108,366
</TABLE>
19
<PAGE>
Portfolio of Investments (Unaudited)
Nuveen International Growth Fund (continued)
January 31, 2000
<TABLE>
<CAPTION>
Market
Shares Description Value
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Technology - 30.1%
1,500 AudioCodes Ltd. # $ 83,813
2,400 Baltimore Technologies plc # 254,456
2,300 Chartered Semiconductor Manufacturing Limited Sponsored ADR # 188,888
1,600 Check Point Software Technologies Ltd. # 176,275
2,000 Comptel Oyj 199,593
24,700 Datacraft Asia Limited 226,005
1,700 GFI Informatique (DD) 241,175
8,900 Logica plc 235,433
2,000 Murata Manufacturing Company, Ltd. 404,316
21,000 NatSteel Electronics Ltd. 102,511
2,300 Nokia Oyj Sponsored ADR 420,900
3,800 Research in Motion Limited # 249,850
330 SAP AG 189,202
2,500 St Assembly Test Services Limited Sponsored ADR # (DD1) 96,250
1,900 STMicroelectronics N.V. 319,913
18,000 Solution 6 Holdings Limited # 117,100
900 724 Solutions Inc. # 61,088
2,600 Terra Networks, S.A. Sponsored ADR # 228,313
1,800 United Pan-Europe Communications N.V. Sponsored ADR # 229,500
- -------------------------------------------------------------------------------------------------------------------
Utilities - 10.4%
65,000 Cable & Wireless Optus Limited # 232,740
1,500 China Telecom (Hong Kong) Limited Sponsored ADR # 187,500
3,700 Ericsson LM Sponsored ADR 275,881
9 NTT Mobile Communications Network, Inc. 306,040
5,000 Rogers Cantel Mobile Communications Inc. # 225,934
6,400 Telefonica S.A. 162,179
------------------------------------------------------------------------------------------------------------------
Total Investments - (cost $10,897,378) - 90.6% 12,079,314
--------------------------------------------------------------------------------------
Other Assets Less Liabilities - 9.4% 1,256,153
--------------------------------------------------------------------------------------
Net Assets - 100% $13,335,467
--------------------------------------------------------------------------------------
Country Allocation (as a percentage of the fund's net assets)
--------------------------------------------------------------------------------------
Japan 17.6% Spain 2.9%
--------------------------------------------------------------------------------------
United Kingdom 10.2 Australia 2.6
--------------------------------------------------------------------------------------
France 7.9 Sweden 2.1
--------------------------------------------------------------------------------------
Singapore 6.8 Israel 2.0
--------------------------------------------------------------------------------------
Italy 6.4 Denmark 1.9
--------------------------------------------------------------------------------------
Finland 6.3 Mexico 1.5
--------------------------------------------------------------------------------------
Germany 6.0 Hong Kong 1.4
--------------------------------------------------------------------------------------
Canada 5.5 Ireland 1.2
--------------------------------------------------------------------------------------
Netherlands 4.2 Thailand 0.9
--------------------------------------------------------------------------------------
Switzerland 3.2
-------------------------------------
# Non-income producing.
(DD) Portion of security purchased on a delayed delivery basis.
(DD1) Security purchased on a delayed delivery basis.
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
STATEMENT OF NET ASSETS (Unaudited)
January 31, 2000
<TABLE>
<CAPTION>
INTERNATIONAL
GROWTH INNOVATION GROWTH
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities, at market value (cost $525,068,701,
$21,060,886 and $10,897,378, respectively) $615,609,876 $21,905,850 $12,079,314
Cash 718 5,694,139 1,022,829
Receivables:
Dividends and interest 321,659 -- 1,605
Fund manager -- 14,782 23,327
Investments sold -- 915,567 307,022
Shares sold 1,560,347 2,456,344 634,445
Other assets 543,566 660 --
- ----------------------------------------------------------------------------------------------------------------------
Total assets 618,036,166 30,987,342 14,068,542
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables:
Investments purchased 8,566,524 2,693,518 686,198
Net unrealized depreciation on unsettled foreign currency
forward contracts from transaction hedges -- -- 539
Shares redeemed 1,612,357 19,878 6,327
Accrued expenses:
Management fees 430,821 -- --
12b-1 distribution and service fees 405,874 10,644 166
Other 62,261 39,798 39,845
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 11,077,837 2,763,838 733,075
- ----------------------------------------------------------------------------------------------------------------------
Net assets $606,958,329 $28,223,504 $13,335,467
- ----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Net assets $114,710,924 $ 2,154,370 $ 761,476
Shares outstanding 4,141,149 95,832 34,724
Net asset value and redemption price per share $ 27.70 $ 22.48 $ 21.93
Offering price per share (net asset value per share plus
maximum sales charge of 5.75% of offering price) $ 29.39 $ 23.85 $ 23.27
- ----------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Net assets $270,683,670 $ 4,462,986 $ 343,672
Shares outstanding 9,920,007 198,752 15,688
Net asset value, offering and redemption price per share $ 27.29 $ 22.46 $ 21.91
- ----------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Net assets $174,735,237 $14,620,054 $ 142,519
Shares outstanding 6,400,058 651,014 6,505
Net asset value, offering and redemption price per share $ 27.30 $ 22.46 $ 21.91
- ----------------------------------------------------------------------------------------------------------------------
CLASS R SHARES
Net assets $ 46,828,498 $ 6,986,094 $12,087,800
Shares outstanding 1,680,657 310,759 551,186
Net asset value, offering and redemption price per share $ 27.86 $ 22.48 $ 21.93
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
INTERNATIONAL
GROWTH INNOVATION GROWTH
---------------- --------------- ---------------
12/20/99 12/20/99
(COMMENCEMENT (COMMENCEMENT
SIX MONTHS ENDED OF OPERATIONS) OF OPERATIONS)
1/31/00 THROUGH 1/31/00 THROUGH 1/31/00
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 2,350,400 $ 27 $ 1,682
Interest 504,801 -- --
- --------------------------------------------------------------------------------------------------------------------------
Total investment income 2,855,201 27 1,682
- --------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees 2,367,449 21,033 14,208
12b-1 service fees - Class A 136,762 170 19
12b-1 distribution and service fees - Class B 1,251,249 1,230 104
12b-1 distribution and service fees - Class C 818,049 11,582 61
Shareholders' servicing agent fees and expenses 284,324 120 120
Custodian's fees and expenses 46,011 6,532 7,248
Trustees' fees and expenses 16,345 138 138
Professional fees 7,030 31,561 31,561
Shareholders' reports - printing and mailing expenses 46,094 3,350 3,397
Federal and state registration fees 26,492 807 373
Other expenses 34,264 53 186
- --------------------------------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit and
expense reimbursement 5,034,069 76,576 57,415
Custodian fee credit (51) (2,712) (2,993)
Expense reimbursement -- (32,657) (35,253)
- --------------------------------------------------------------------------------------------------------------------------
Net expenses 5,034,018 41,207 19,169
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (2,178,817) (41,180) (17,487)
- --------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss):
Investment transactions 2,189,519 881,766 (68,175)
Foreign currency transactions -- -- (29,432)
Net change in unrealized appreciation or depreciation
of investments 53,471,889 844,965 1,181,936
Net change in unrealized gain (loss) on translation of assets and
liabilities denominated in foreign currencies -- -- (3,221)
- --------------------------------------------------------------------------------------------------------------------------
Net gain from investments 55,661,408 1,726,731 1,081,108
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $53,482,591 $1,685,551 $1,063,621
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INTERNATIONAL
GROWTH INNOVATION GROWTH
------------------------------- --------------------- -------------------
12/20/99 (COMMENCE- 12/20/99 (COMMENCE-
SIX MONTHS ENDED YEAR ENDED MENT OF OPERATIONS) MENT OF OPERATIONS)
1/31/00 7/31/99 THROUGH 1/31/00 THROUGH 1/31/00
- ----------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income (loss) $ (2,178,817) $ (2,462,919) $ (41,180) $ (17,487)
Net realized gain (loss):
Investment transactions 2,189,519 2,654,612 881,766 (68,175)
Foreign currency transactions -- -- -- (29,432)
Net change in unrealized appreciation
or depreciation of investments 53,471,889 30,332,273 844,965 1,181,936
Net change in unrealized gain (loss) on
translation of assets and liabilities
denominated in foreign currencies -- -- -- (3,221)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 53,482,591 30,523,966 1,685,551 1,063,621
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From accumulated net realized gains
from investment transactions:
Class A (30,276) (162,515) -- --
Class B (72,146) (332,952) -- --
Class C (47,034) (189,464) -- --
Class R (12,078) (103,805) -- --
- ----------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions
to shareholders (161,534) (788,736) -- --
- ----------------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Net proceeds from sale of shares 87,369,947 329,272,030 26,717,002 12,278,880
Net proceeds from shares issued to
shareholders due to reinvestment
of distributions 77,942 352,550 -- --
- ----------------------------------------------------------------------------------------------------------------------------
87,447,889 329,624,580 26,717,002 12,278,880
Cost of shares redeemed (49,184,963) (49,825,219) (179,049) (7,034)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund
share transactions 38,262,926 279,799,361 26,537,953 12,271,846
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 91,583,983 309,534,591 28,223,504 13,335,467
Net assets at the beginning of period 515,374,346 205,839,755 -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at the end of period $606,958,329 $515,374,346 $28,223,504 $13,335,467
- ----------------------------------------------------------------------------------------------------------------------------
Balance of undistributed net investment
income at the end of period $ -- $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
Notes to Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
The Nuveen Investment Trust II (the "Trust") is an open-end, diversified
management investment company registered under the Investment Company Act of
1940. The Trust comprises the Nuveen Rittenhouse Growth Fund ("Growth"), the
Nuveen Innovation Fund ("Innovation") and the Nuveen International Growth Fund
("International Growth") (collectively, the "Funds"). The Trust was organized as
a Massachusetts business trust in 1997.
The Growth 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") in order to provide long-term growth of capital.
The Innovation Fund will invest at least 65% of its total assets in stocks of
companies which utilize innovative technologies to gain a strategic competitive
advantage in their industry and in companies that develop, provide and service
those technologies in order to provide capital appreciation without
consideration for income.
The International Growth Fund primarily invests in common stocks of medium and
large capitalization companies domiciled in countries other than the United
States in order to provide long-term capital appreciation.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements in accordance with
generally accepted accounting principles.
Securities Valuation
Common stocks and other equity-type securities held by the Funds are valued at
the last sales price on the securities exchange or Nasdaq on which such
securities are primarily traded; however, securities traded on a securities
exchange or Nasdaq for which there are no transactions on a given day or
securities not listed on a securities exchange or Nasdaq are valued at the most
recent bid prices. Debt securities held by the Growth Fund are valued by a
pricing service at the mean between the quoted bid and asked prices or the yield
equivalent when quotations are readily available. When quotations are not
readily available electronic data processing techniques are used 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. 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 Funds have 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, 2000, the Innovation and International Growth Funds had delayed
delivery purchase commitments of $380,684 and $111,498, respectively. The Growth
Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for accretion of
discounts.
Dividends and Distributions to Shareholders
Net investment income and net realized capital gains from investment
transactions, if any, are declared and distributed to shareholders annually.
Furthermore, capital gains are distributed only to the extent they exceed
available capital loss carryforwards.
Distributions to shareholders of net investment income and net realized capital
gains are recorded on the ex-dividend date. The amount and timing of
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles. Accordingly,
temporary over-distributions as a result of these differences may occur and will
be classified as either distributions in excess of net investment income and/or
distributions in excess of net realized gains from investment transactions,
where applicable.
24
<PAGE>
Federal Income Taxes
Each Fund intends to distribute all taxable income and capital gains to
shareholders and to otherwise comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
Therefore, no federal tax provision is required.
Flexible Sales Charge Program
Each Fund offers Class A, B, C and R Shares. Class A Shares are sold with a
sales charge and incur an annual 12b-1 service fee. Class A Share purchases of
$1 million or more are sold at net asset value without an up-front sales charge
but may be subject to a contingent deferred sales charge ("CDSC") if redeemed
within 18 months of purchase. Class B Shares are sold without a sales charge but
incur annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a CDSC of up to 5% depending upon the length of time the
shares are held by the investor (CDSC is reduced to 0% at the end of six years).
Class B Shares convert to Class A Shares eight years after purchase. Class C
Shares are sold without a sales charge but incur annual 12b-1 distribution and
service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1%
if Class C Shares are redeemed within one year of purchase. Class R Shares are
not subject to any sales charge or 12b-1 distribution or service fees. Class R
Shares are available only under limited circumstances.
Derivative Financial Instruments
The Funds may invest in options and futures contracts, which are sometimes
referred to as derivative transactions. Although the Funds are authorized to
invest in such financial instruments, and may do so in the future, they did not
make any such investments during the period ended January 31, 2000. The
International Growth Fund has entered into foreign currency forward contracts
for hedging purposes as described in the Foreign Currency Transactions paragraph
below.
Expense Allocation
Expenses of the Funds 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.
Foreign Currency Translations
To the extent that the Innovation and International Growth Funds invest in
securities that are denominated in a currency other than U.S. dollars, each Fund
will be subject to currency risk, which is the risk that an increase in the U.S.
dollar relative to the foreign currency will reduce returns or portfolio value.
Generally, when the U.S. dollar rises in value against a foreign currency, the
Fund's investment in securities denominated in that currency will lose value
because its currency is worth fewer U.S. dollars; the opposite effect occurs if
U.S. dollars fall in relative value. Investments and other assets and
liabilities denominated in foreign currencies are converted into U.S. dollars on
a spot (i.e. cash) basis at the spot rate prevailing in the foreign currency
exchange market at the time of valuation. Purchases and sales of investments and
dividend income denominated in foreign currencies are translated into U.S.
dollars on the respective dates of such transactions.
Foreign Currency Transactions
The Innovation and International Growth Funds may engage in foreign currency
exchange transactions in connection with their portfolio investments and assets
and liabilities denominated in foreign currencies. Each Fund may engage in
foreign currency forward contracts, options and futures transactions. Each Fund
will enter into foreign currency transactions for hedging and other permissible
risk management purposes only. If the Fund invests in a currency futures or
options contract, it must make a margin deposit to secure performance of such
contract. With respect to investments in currency futures contracts, each Fund
may also be required to make a variation margin deposit because the value of
futures contracts fluctuates daily. In addition, each Fund may segregate assets
to cover its futures contracts obligations.
25
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
The objective of each Fund's foreign currency hedging transactions is to reduce
the risk that the U.S. dollar value of the Fund's foreign currency denominated
securities and other assets and liabilities will decline in value due to changes
in foreign currency exchange rates. All foreign currency forward contracts,
options and futures transactions are "marked-to-market" daily at the applicable
market rates and any resulting unrealized gains or losses are recorded in the
Fund's financial statements. Each Fund records realized gains and losses at the
time the forward contract is offset by entering into a closing transaction or
extinguished by delivery of the currency. The contractual amounts of forward
foreign currency exchange contracts does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with these
instruments is meaningful only when all related and offsetting transactions are
considered. As of January 31, 2000, the International Growth Fund had
outstanding foreign currency forward contracts as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
U.S. DOLLARS SETTLEMENT (DEPRECIATION)
SOLD FOREIGN CURRENCY PURCHASED DATE AT JANUARY 31, 2000
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
$73,281 Euro Dollar (71,036) February 2000 $ 3,779
81,303 Euro Dollar (78,812) February 2000 4,193
69,598 Hong Kong Dollars (541,471) February 2000 4
- --------------------------------------------------------------------------------------
7,976
- --------------------------------------------------------------------------------------
UNREALIZED
APPRECIATION
U.S. DOLLARS SETTLEMENT (DEPRECIATION)
PURCHASED FOREIGN CURRENCY SOLD DATE AT JANUARY 31, 2000
- -------------------------------------------------------------------------------------
$59,175 Euro Dollar (57,340) February 2000 $(3,073)
53,861 Euro Dollar (52,692) February 2000 (2,307)
149,008 Japanese Yen (15,615,012) February 2000 (3,135)
- -------------------------------------------------------------------------------------
(8,515)
- -------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on foreign currency forward contracts (539)
- -------------------------------------------------------------------------------------
</TABLE>
Custodian Fee Credit
Each Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on each Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
2. Fund Shares
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
GROWTH
------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
1/31/00 7/31/99
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 685,139 $ 18,292,086 2,927,355 $ 70,955,142
Class B 1,435,519 37,750,178 5,856,226 140,460,433
Class C 1,062,107 28,020,278 4,601,620 110,898,865
Class R 119,831 3,307,405 285,712 6,957,590
Shares issued to shareholders due to reinvestment of distributions:
Class A 696 19,228 4,037 97,207
Class B 1,256 34,214 6,527 156,121
Class C 747 20,375 3,092 73,983
Class R 148 4,125 1,045 25,239
- -------------------------------------------------------------------------------------------------------------------------------
3,305,443 87,447,889 13,685,614 329,624,580
- -------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (571,652) (15,326,724) (798,461) (19,308,120)
Class B (466,878) (12,278,381) (523,896) (12,612,079)
Class C (578,703) (15,328,052) (596,853) (14,525,925)
Class R (232,186) (6,251,806) (146,221) (3,379,095)
- -------------------------------------------------------------------------------------------------------------------------------
(1,849,419) (49,184,963) (2,065,431) (49,825,219)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase 1,456,024 $ 38,262,926 11,620,183 $279,799,361
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
INNOVATION INTERNATIONAL GROWTH
--------------------------- ----------------------------
12/20/99 (COMMENCEMENT OF 12/20/99 (COMMENCEMENT OF
OPERATIONS) THROUGH 1/31/00 OPERATIONS) THROUGH 1/31/00
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold:
Class A 95,874 $ 2,149,661 35,009 $ 769,155
Class B 198,767 4,515,172 15,688 338,068
Class C 658,921 13,815,165 6,538 139,027
Class R 310,759 6,237,004 551,186 11,032,630
Shares issued to shareholders due to reinvestment of distributions:
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class R -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
1,264,321 26,717,002 608,421 12,278,880
- ------------------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (42) (992) (285) (6,327)
Class B (15) (336) -- --
Class C (7,907) (177,721) (33) (707)
Class R -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(7,964) (179,049) (318) (7,034)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase 1,256,357 $26,537,953 608,103 $12,271,846
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. Securities Transactions
Purchases and sales (including maturities) of common stocks and short-term
investments for the period ended January 31, 2000, were as follows:
<TABLE>
<CAPTION>
GROWTH INNOVATION INTERNATIONAL GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases:
Common stocks $ 98,156,086 $23,859,257 $12,360,148
Short-term investments 2,369,469,000 -- --
Sales and maturities:
Common stocks 73,524,993 3,680,136 1,394,595
Short-term investments 2,358,756,000 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
At January 31, 2000, the identified cost of investments owned for federal income tax purposes were as follows:
GROWTH INNOVATION INTERNATIONAL GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
$ 525,273,519 $21,060,886 $10,897,378
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4. Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and gross unrealized depreciation of investments
for federal income tax purposes at January 31, 2000, were as follows:
<TABLE>
<CAPTION>
GROWTH INNOVATION INTERNATIONAL GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
Gross unrealized:
<S> <C> <C> <C>
appreciation $100,598,961 $1,563,427 $1,612,142
depreciation (10,262,604) (718,463) (430,206)
- ------------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 90,336,357 $ 844,964 $1,181,936
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. Management Fee and Other Transactions with Affiliates
Under the Trust's investment management agreement with Nuveen Institutional
Advisory Corp. (the "Adviser"), each Fund pays an annual management fee, payable
monthly, which is based upon the average daily net assets of each Fund as
follows:
<TABLE>
<CAPTION>
GROWTH INNOVATION INTERNATIONAL GROWTH
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
For the first $125 million .8500% 1.0000% 1.0500%
For the next $125 million .8375 .9875 1.0375
For the next $250 million .8250 .9750 1.0250
For the next $500 million .8125 .9625 1.0125
For the next $1 billion .8000 .9500 1.0000
For net assets over $2 billion .7750 .9250 .9750
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
Notes to Financial Statements (Unaudited) (continued)
The Adviser has agreed to waive fees and reimburse expenses for the Growth Fund
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 Adviser may also voluntarily agree to reimburse expenses from time
to time, in any of the Funds which may be terminated at any time at its
discretion.
The management fee compensates the Adviser for overall investment advisory and
administrative services, and general office facilities. The Adviser has entered
into Sub-Advisory Agreements with Rittenhouse Financial Services, Inc.
("Rittenhouse"), a wholly owned subsidiary of The John Nuveen Company, and
Columbus Circle Investors ("CCI") under which Rittenhouse manages the Growth
Fund's investment portfolio and CCI manages the investment portfolios of the
Innovation and International Growth Funds. Rittenhouse and CCI are compensated
for their services from the management fee paid to the Adviser. The Funds pay 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 period ended January 31, 2000, John Nuveen & Co. Incorporated (the
"Distributor"), a wholly owned subsidiary of The John Nuveen Company, collected
sales charges on purchases of Class A Shares the majority of which were paid out
as concessions to authorized dealers as follows:
<TABLE>
<CAPTION>
Growth Innovation International Growth
<S> <C> <C> <C>
- -------------------------------------------------------------------------
Sales charges collected $194,142 $21,291 $4,119
Paid to authorized dealers 177,577 18,557 3,587
=========================================================================
</TABLE>
The Distributor also received 12b-1 service fees on Class A Shares,
substantially all of which were paid to compensate authorized dealers for
providing services to shareholders relating to their investments.
During the period ended January 31, 2000, the Distributor compensated authorized
dealers directly with commission advances at the time of purchase as follows:
<TABLE>
<CAPTION>
Growth Innovation International Growth
<S> <C> <C> <C>
- -------------------------------------------------------------------------
Commission advances $ 1,631,347 $ 241,858 $ 12,793
=========================================================================
</TABLE>
To compensate for commissions advanced to authorized dealers, all 12b-1 service
fees collected on Class B Shares during the first year following a purchase, all
12b-1 distribution fees collected on Class B Shares, and all 12b-1 service and
distribution fees collected on Class C Shares during the first year following a
purchase are retained by the Distributor. During the period ended January 31,
2000, the Distributor retained such 12b-1 fees as follows:
<TABLE>
<CAPTION>
Growth Innovation International Growth
<S> <C> <C> <C>
- -------------------------------------------------------------------------
12b-1 fees retained $ 1,600,617 $ 6,848 $ 119
=========================================================================
</TABLE>
The remaining 12b-1 fees charged to the Fund were paid to compensate authorized
dealers for providing services to shareholders relating to their investments.
The Distributor also collected and retained CDSC on share redemptions during the
period ended January 31, 2000, as follows:
<TABLE>
<CAPTION>
Growth Innovation International Growth
<S> <C> <C> <C>
- -------------------------------------------------------------------------
CDSC retained $ 372,912 $ 418 $ 7
=========================================================================
</TABLE>
6. Composition of Net Assets
At January 31, 2000, the Funds had an unlimited number of $.01 par value per
share common stock authorized. Net assets consisted of:
<TABLE>
<CAPTION>
Growth Innovation International Growth
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Capital paid-in $514,389,169 $26,496,773 $12,254,359
Balance of undistributed net investment income -- -- --
Accumulated net realized gain (loss) from investment transactions
and foreign currency transactions 2,027,985 881,766 (97,607)
Net unrealized appreciation of investments 90,541,175 844,965 1,181,936
Net unrealized gain (loss) on translation of assets and liabilities
denominated in foreign currencies -- -- (3,221)
- -------------------------------------------------------------------------------------------------------------------------
Net assets $606,958,329 $28,223,504 $13,335,467
=========================================================================================================================
</TABLE>
28
<PAGE>
Financial Highlights (Unaudited)
Selected data for a share outstanding throughout each period:
Class (Inception Date)
<TABLE>
<CAPTION>
Investment Operations Less Distributions
------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth
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) (Loss) Total Income Gains Total Value Returns(s)
- --------------------------------------------------------------------------------------------------------
Class A (12/97)
2000 (e) $ 25.10 $ (.03) $ 2.64 $ 2.61 $ -- $ (.01) $ (.01) $ 27.70 10.31%
1999 22.75 (.04) 2.45 2.41 -- (.06) (.06) 25.10 10.62
1998 (d) 20.00 (.01) 2.76 2.75 -- -- -- 22.75 13.75
Class B (12/97)
2000 (e) 24.82 (.13) 2.61 2.48 -- (.01) (.01) 27.29 9.86
1999 22.66 (.23) 2.45 2.22 -- (.06) (.06) 24.82 9.86
1998 (d) 20.00 (.11) 2.77 2.66 -- -- -- 22.66 13.30
Class C (12/97)
2000 (e) 24.84 (.13) 2.60 2.47 -- (.01) (.01) 27.30 9.85
1999 22.67 (.23) 2.46 2.23 -- (.06) (.06) 24.84 9.86
1998 (d) 20.00 (.11) 2.78 2.67 -- -- -- 22.67 13.35
Class R (12/97)
2000 (e) 25.22 -- 2.65 2.65 -- (.01) (.01) 27.86 10.42
1999 22.79 .02 2.47 2.49 -- (.06) (.06) 25.22 10.95
1998 (d) 20.00 .03 2.76 2.79 -- -- -- 22.79 13.95
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
------------------ ------------------- -------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Year Ended Assets Net Net Net Net Net Net Turnover
July 31, (000) Assets Assets Assets Assets Assets Assets Rate
- ---------------------------------------------------------------------------------------------------
Class A (12/97)
2000 (e) $ 114,711 1.24%* (.24)%* 1.24%* (.24)%* 1.24%* (.24)%* 13%
1999 101,080 1.27 (.18) 1.27 (.18) 1.27 (.18) 22
1998 (d) 43,092 1.42* (.16)* 1.35* (.09)* 1.35* (.09)* 4
Class B (12/97)
2000 (e) 270,684 1.99* (.99)* 1.99* (.99)* 1.99* (.99)* 13
1999 222,156 2.02 (.94) 2.02 (.94) 2.01 (.93) 22
1998 (d) 81,823 2.17* (.91)* 2.10* (.84)* 2.10* (.84)* 4
Class C (12/97)
2000 (e) 174,735 1.99* (.99)* 1.99* (.99)* 1.99* (.99)* 13
1999 146,927 2.01 (.93) 2.01 (.93) 2.01 (.93) 22
1998 (d) 43,260 2.17* (.91)* 2.10* (.84)* 2.10* (.84)* 4
Class R (12/97)
2000 (e) 46,828 .99* .03* .99* .03* .99* .03* 13
1999 45,211 1.03 .08 1.03 .08 1.03 .08 22
1998 (d) 37,664 1.19* .11* 1.10* .20* 1.10* .20* 4
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable.
(c) After custodian fee credit and expense reimbursement, where applicable.
(d) From commencement of class operations as noted.
(e) For the six months ended January 31, 2000.
29
<PAGE>
Financial Highlights (Unaudited) (continued)
Selected data for a share outstanding throughout the period
December 20, 1999 (commencement of operations) through January 31,
2000:
Class (Inception Date)
<TABLE>
<CAPTION>
Investment Operations Less Distributions
------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Innovation 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) (Loss) Total Income Gains Total Value Returns(s)
- --------------------------------------------------------------------------------------------------------
Class A (12/99)
2000 (d) $ 20.00 $ (.04) $ 2.52 $ 2.48 $ -- $ -- $ -- $ 22.48 12.40%
Class B (12/99)
2000 (d) 20.00 (.06) 2.52 2.46 -- -- -- 22.46 12.30
Class C (12/99)
2000 (d) 20.00 (.06) 2.52 2.48 -- -- -- 22.46 12.30
Class R (12/99)
2000 (d) 20.00 (.03) 2.51 2.48 -- -- -- 22.48 12.40
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
------------------ ------------------- -------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Year Ended Assets Net Net Net Net Net Net Turnover
July 31, (000) Assets Assets Assets Assets Assets Assets Rate
- ---------------------------------------------------------------------------------------------------
Class A (12/99)
2000 (d) $ 2,154 4.93%* (4.93)%* 1.71%* (1.71)%* 1.58%* (1.58)%* 21%
Class B (12/99)
2000 (d) 4,463 6.38* (6.38)* 2.45* (2.44)* 2.34* (2.34)* 21
Class C (12/99)
2000 (d) 14,620 3.93* (3.92)* 2.46* (2.46)* 2.34* (2.33)* 21
Class R (12/99)
2000 (d) 6,986 2.61* (2.61)* 1.47* (1.47)* 1.34* (1.34)* 21
===================================================================================================
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable.
(c) After custodian fee credit and expense reimbursement, where applicable.
(d) For the period December 20, 1999 (commencement of operation) through
January 31, 2000.
30
<PAGE>
Selected data for a share outstanding throughout the period
December 20, 1999 (commencement of operations) through January 31,
2000:
Class (Inception Date)
<TABLE>
<CAPTION>
Investment Operations Less Distributions
------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Growth 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) (Loss) Total Income Gains Total Value Returns(s)
- --------------------------------------------------------------------------------------------------------
Class A (12/99)
2000 (d) $ 20.00 $ (.04) $ 1.97 $ 1.93 $ -- $ -- $ -- $ 21.93 9.65%
Class B (12/99)
2000 (d) 20.00 (.06) 1.97 1.91 -- -- -- 21.91 9.55
Class C (12/99)
2000 (d) 20.00 (.06) 1.97 1.91 -- -- -- 21.91 9.55
Class R (12/99)
2000 (d) 20.00 (.03) 1.96 1.93 -- -- -- 21.93 9.65
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Before Credit/ After After Credit/
Reimbursement Reimbursement (b) Reimbursement (c)
------------------ ------------------- -------------------
Ratio Ratio Ratio
of Net of Net of Net
Invest- Invest- Invest-
Ratio of ment Ratio of ment Ratio of ment
Expenses Income Expenses Income Expenses Income
Ending to to to to to to
Net Average Average Average Average Average Average Portfolio
Year Ended Assets Net Net Net Net Net Net Turnover
July 31, (000) Assets Assets Assets Assets Assets Assets Rate
- ---------------------------------------------------------------------------------------------------
Class A (12/99)
2000 (d) $ 761 18.88%* (18.82)%* 1.87%* (1.81)%* 1.65%* (1.60)%* 12%
Class B (12/99)
2000 (d) 334 10.61* (10.54)* 2.51* (2.54)* 2.40* (2.32)* 12
Class C (12/99)
2000 (d) 143 8.34* (8.27)* 2.64* (2.57)* 2.40* (2.35)* 12
Class R (12/99)
2000 (d) 12,088 4.08* (3.96)* 1.62* (1.49)* 1.40* (1.27)* 12
===================================================================================================
</TABLE>
* Annualized.
(a) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(b) After expense reimbursement from the investment adviser, where applicable.
(c) After custodian fee credit and expense reimbursement, where applicable.
(d) For the period December 20, 1999 (commencement of operations) through
January 31, 2000.
31
<PAGE>
Building a Better Portfolio
Can Make You a Successful Investor
Nuveen Family
of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
International Growth Fund
Innovation Fund
Nuveen Rittenhouse Growth Fund
Growth and
Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Dividend and
Growth Fund
Income
Income Fund
Floating Rate Fund(1)
Tax-Free Income
National Funds
High Yield
Long-Term
Insured Long Term
Intermediate-Term
Limited-Term
State Funds
Arizona
California(2)
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts(2)
Michigan
Missouri
New Jersey
New Mexico
New York(2)
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
experienced investment managers 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.
Nuveen's managers give you all the advantages of a family of funds plus the
benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
quality municipal bonds. The fund shares are listed and traded on the New York
and American stock exchanges. Exchange-traded funds provide the investment
convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
1. This is a continuously-offered closed-end interval fund. As such, redemptions
are only available during quarterly repurchase periods. See fund prospectus
for additional information.
2. Long-term and insured long-term portfolios.
32
<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 Managers
Rittenhouse Financial Services, Inc.
Two Radnor Corporate Center
Suite 400
Radnor, PA 19087-4570
Columbus Circle Investors
Metro Center
One Station Place
Stamford, CT 06902
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
33
<PAGE>
SERVING INVESTORS
FOR GENERATIONS
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
A 100-Year Tradition of Quality Investments
Since 1898, John Nuveen & Co. Incorporated has been synonymous with investments
that withstand the test of time. In fact, more than 1.3 million investors have
trusted Nuveen to help them build and sustain the wealth of a lifetime.
Whether your focus is long-term growth, dependable income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. We can help
you build a better, well-diversified portfolio.
Call Your Financial Adviser Today
To find out how the Nuveen Innovation Fund might round out your investment
portfolio, contact your financial adviser today. Or call Nuveen at (800)
257.8787 for more information. Ask your adviser or call for a prospectus which
details risks, fees and expenses. Please read the prospectus carefully before
you invest.
[LOGO OF NUVEEN INVESTMENTS APPEARS HERE]
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
ESA-1-1-00
