NUVEEN TAX DEFERRED INVESTMENT TRUST, N-1A, 1998-03-13

NUVEEN TAX DEFERRED INVESTMENT TRUST
N-1A, 1998-03-13

Previous: NUVEEN TAX DEFERRED INVESTMENT TRUST, N-8A, 1998-03-13

Next: MNI NEWCO INC, S-3, 1998-03-13

<PAGE>

As filed with the Securities and Exchange Commission on March 13, 1998

Registration No. _____________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. _____ [ ]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. _____ [ ]

NUVEEN TAX-DEFERRED INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)

333 West Wacker Drive
Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)

(312) 917-7700
(Registrant's Telephone Number, Including Area Code)

Copies to:

Gifford R. Zimmerman Cathy G. O'Kelly
Vice President and 222 North LaSalle Street
Assistant Secretary Suite 2600
333 West Wacker Drive Chicago, Illinois 60601
Chicago, Illinois 60606
(Name and Address of Agent for Service)

It is proposed that this filing become effective (check appropriate box):

[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] On (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] On (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] On (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

<PAGE>

CONTENTS
OF
REGISTRATION STATEMENT

The Registration Statement is comprised of the following papers and
contents:

The Facing Sheet
Part A-Prospectus for the Nuveen Tax-Deferred Investment Trust
Part B-Statement of Additional Information
Part C-Other Information
Signatures
Index to Exhibits
Exhibits

<PAGE>

NUVEEN TAX-DEFERRED INVESTMENT TRUST
Registration Statement on Form N-1A

CROSS REFERENCE SHEET
Pursuant to Rule 481(a)

N-1A
Item No. Caption
- -------- ----------
<S> <C> <C>

PART A INFORMATION REQUIRED IN A PROSPECTUS

1. Cover Page Cover Page

2. Synopsis *

3. Condensed Financial Information *

4. General Description of Registrant The Portfolios:
Strategic Income
Portfolio, Balanced
Portfolio, Growth
and Income Portfolio,
Blue Chip Growth
Portfolio, European Value
Portfolio, International
Equity Portfolio; How
to Determine Which
Portfolios Are
Right For You;
What Securities We
Invest In; How We
Select Investments;
What the Risks Are;
Organization of
the Trust

5. Management of the Fund Who Manages the
Portfolios; Management
Fees; Trust Service
Providers

5A. Management's Discussion of Fund *
Performance

6. Capital Stock and Other Securities Cover Page;
Distributions and
Taxes; Organization of
the Trust

7. Purchase of Securities Being Offered Purchases and
Redemptions; Net Asset
Value

8. Redemption or Repurchase Purchases and
Redemptions

9. Pending Legal Proceedings *

PART B INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
</TABLE>

<PAGE>

<TABLE>

10. Cover Page Cover Page

11. Table of Contents Cover Page

12. General Information and History *

13. Investment Objectives and Policies Investment Policies
and Restrictions;
Investment Policies
and Techniques

14. Management of the Registrant

15. Control Persons and Principal Holders of Management
Securities

16. Investment Advisory and Other Services Trust Manager and
Portfolio Managers;
Independent Public
Accountants and
Custodian

17. Brokerage Allocation and Other Practices Portfolio Transactions

18. Capital Stock and Other Securities Tax Matters; See Cover
Page and "Organization
of the Trust" in the
Prospectus

19. Purchase, Redemption and Pricing of Net Asset Value
Securities Being Offered

20. Tax Status Tax Matters

21. Underwriters *

22. Calculation of Performance Data Performance
Information

23. Financial Statements To Be Filed By Post-
Effective Amendment

PART C OTHER INFORMATION

</TABLE>

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.

*Omitted from the Prospectus or the Statement of Additional Information
because the Item is not applicable.

<PAGE>

Nuveen Tax-Deferred Investment Trust

, 1998

PROSPECTUS

The Nuveen Tax-Deferred Investment Trust (the "Trust"), a Mas-
sachusetts business trust, is a mutual fund that provides a
range of investment objectives through six separate investment
portfolios (each a "Portfolio," and collectively, the "Portfo-
lios"). The Trust is sponsored by John Nuveen & Co. Incorpo-
rated ("Nuveen"). Shares of the Trust are not offered directly
to the public but are currently made available only to insur-
ance companies in connection with their variable insurance
contracts.

The investment objective and primary investments of each of
the Portfolios are as follows:

. The Strategic Income Portfolio seeks to provide current in-
come and long-term growth of income and capital by investing
in a diversified portfolio consisting primarily of income-
producing securities, including equity and fixed-income se-
curities.

. The Balanced Portfolio seeks to provide over time an attrac-
tive total return by investing in a diversified portfolio of
equity securities, taxable fixed-income securities, and cash
equivalents by emphasizing capital appreciation in favorable
markets and capital preservation in adverse markets.

. The Growth and Income Portfolio seeks to provide over time a
superior total return with moderated risk by investing in a
diversified portfolio consisting primarily of equity securi-
ties of domestic companies with market capitalizations of at
least $500 million. Under normal market conditions, in seek-
ing to reduce volatility and preserve capital, the Portfolio
may also invest up to 35% of its net assets in short-term
fixed-income securities.

. The Blue Chip Growth Portfolio seeks to provide long-term
growth of capital by investing in a diversified portfolio
consisting primarily of equity securities traded in U.S. se-
curities markets of large capitalization companies that have
a history of consistent earnings and dividend growth.

. The European Value Portfolio seeks to provide a superior to-
tal return, with moderated risk, by investing in a diversi-
fied portfolio consisting primarily of equity securities of
established, well-known European companies with market capi-
talizations of at least $1 billion. Under normal market con-
ditions, in seeking to reduce volatility and preserve capi-
tal, the Portfolio may also invest up to 35% of its net as-
sets in short-term fixed-income securities.

. The International Equity Portfolio seeks to provide a high
level of total return by investing in a diversified portfo-
lio consisting primarily of foreign equity securities.

This prospectus contains information you should know before
you invest in any of the Portfolios. Please keep it for future
reference. You can find more detailed information about the
Trust and each of its Portfolios in the current Statement of
Additional Information ("SAI") that has been filed electroni-
cally with the Securities and Exchange Commission and is le-
gally part of this prospectus. The Commission maintains a
Website (http://www.sec.gov) where you can obtain all informa-
tion about the Trust filed electronically with the Commission.

If you have questions about investing in any of the Portfo-
lios, or if you want a free copy of the SAI, write to the
Nuveen Mutual Funds, 333 West Wacker Drive, Chicago, IL 60606,
or call Nuveen toll free at (800) 621-7227.

Like all mutual fund shares, these securities have not been
approved or disapproved by the Securities and Exchange Commis-
sion or any state securities commission, nor has the Securi-
ties and Exchange Commission or any state securities commis-
sion passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
<PAGE>

TABLE OF CONTENTS

SUMMARY INFORMATION ABOUT THE PORTFOLIOS
SECTION 1 THE PORTFOLIOS
This section provides you with an overview of the Portfo-
lios including investment objectives, portfolio holdings,
and historical performance information.
<TABLE>
<S> <C>
Strategic Income Portfolio................................... 4
Balanced Portfolio........................................... 4
Growth and Income Portfolio.................................. 6
Blue Chip Growth Portfolio................................... 7
European Value Portfolio..................................... 8
International Equity Portfolio............................... 9
How To Determine Which Portfolios Are Right For You.......... 10

SECTION 2 HOW WE MANAGE YOUR INVESTMENT
This section gives you a detailed discussion of our invest-
ment and risk management strategies.
Who Manages the Portfolios................................... 11
What Securities We Invest In................................. 11
What the Risks Are........................................... 14
Management Fees.............................................. 15

SECTION 3 GENERAL INFORMATION
This section summarizes how to purchase and redeem Portfo-
lio shares, the Portfolios' distribution policies, and
other general information about the Portfolios.
Purchases and Redemptions.................................... 15
Net Asset Value.............................................. 16
Distributions and Taxes...................................... 16
How the Portfolios Show Performance.......................... 17
Organization of the Trust.................................... 17
Trust Service Providers...................................... 18
</TABLE>

---
2
<PAGE>

SUMMARY INFORMATION ABOUT THE PORTFOLIOS

A summary of each Portfolio's investment objective, primary investments, and
portfolio manager appears below. This chart is only a summary. You should also
read the complete description of each Portfolio's investment objective and
policies, which begins on the next page, and related information in this pro-
spectus. The Portfolios may not realize their objectives.

<TABLE>
- ----------------------------------------------------------------------------------------------------
<CAPTION>
PORTFOLIO MANAGER/
PORTFOLIO OBJECTIVE PRIMARY INVESTMENTS STYLE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Strategic Income Current income and long- Income-producing securities, Nuveen Institutional
term growth of income including equity and fixed- Advisory Corp./
and capital income securities Value
Balanced Attractive total return Equity securities of Institutional Capital
established, well-known, Corporation/
domestic companies and Value
taxable fixed-income
securities
Growth and Income Superior total return Equity securities of Institutional Capital
with moderated risk established, well-known, Corporation/
domestic companies, and Large Cap Value
short-term fixed-income
securities
Blue Chip Growth Long-term growth of Equity securities of Rittenhouse Financial
capital established, well-known, Services, Inc./
U.S. traded companies that Large Cap Growth
have a history of consistent
earnings and dividend growth
European Value Superior total return Equity securities of Institutional Capital
with moderated risk established, well-known, Corporation/
European companies, and Large Cap Value
short-term fixed-income
securities
International Equity High level of total Foreign equity securities TBD (to be determined)/
return TBD (to be determined)
- ----------------------------------------------------------------------------------------------------
</TABLE>

---
3
<PAGE>

SECTION 1 THE PORTFOLIOS

Your personal investment circumstances, along with the advice of your personal
financial adviser, will determine which of the Portfolios you should consider.
This section provides you with an overview of the Portfolios that can help you
evaluate how to allocate your investment. Each Portfolio's investment objec-
tive may not be changed without the approval of its shareholders. The Portfo-
lios may not realize their objectives.

STRATEGIC INCOME PORTFOLIO

INVESTMENT OBJECTIVE
The Strategic Income Portfolio seeks to provide current income and long-term
growth of income and capital.

HOW THE PORTFOLIO IS INVESTED
The Portfolio will invest substantially all (at least 80%) of its assets in
income-producing securities. Although the relative percentages of each type of
security held will fluctuate, under normal market conditions, the Portfolio
will invest at least 60% of its assets in equity securities and at least 25%
of its assets in fixed-income securities.

The Portfolio will not invest 25% or more of its assets in securities of is-
suers in any one industry. For purposes of this restriction, the electric,
natural gas, and telecommunications industries will each be considered sepa-
rate industries.

The Portfolio may invest up to 20% of its assets in foreign securities traded
in the U.S., including American Depositary Receipts ("ADRs"), and up to 20% of
its assets in non-investment grade fixed-income securities. For a more de-
tailed discussion of the Portfolio's investments, see "How We Manage Your In-
vestment" later in this prospectus.

HOW THE PORTFOLIO PURSUES ITS OBJECTIVE
Nuveen Institutional Advisory Corp. ("NIAC") manages the Portfolio's invest-
ments. NIAC, a wholly owned subsidiary of Nuveen, currently manages other in-
vestment companies. Nuveen and its affiliates have sponsored or underwritten
more than $60 billion of investment company securities. Over 1,000,000 indi-
viduals have invested to date in Nuveen investment products. For more informa-
tion about NIAC, see "Who Manages the Portfolios" later in this prospectus.

We manage the Portfolio as a whole to pursue its objective. Accordingly, each
individual security purchased may not meet each portion of the objective.

BENCHMARK RETURNS
<TABLE>
- ---------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12/31/97)
- ---------------------------------------------------------
1-YEAR 5-YEAR 10-YEAR 20-YEAR
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
Lipper Equity Income Index 27.51% 17.30% 15.45% 15.52%
Lehman Brothers Aggregate
Bond Index 9.65% 7.48% 9.18% 9.81%
S&P 500 33.36% 20.27% 18.05% 16.66%
- ---------------------------------------------------------
</TABLE>

The table above presents the performance of the Lipper Equity Income Index,
the Lehman Brothers Aggregate Bond Index, and the S&P 500 Index, which are in-
dices that may be used as benchmarks against which to evaluate the Portfolio's
future performance. The Portfolio's future performance and the index returns
shown above do not include any charges or fees paid pursuant to the terms of
the contracts funded by the separate accounts that invest in shares of the
Portfolios. The Lipper Equity Income Index is a managed index that represents
the average annualized returns of the 30 largest funds in the Lipper Equity
Income Fund Category, which is the category in which the Portfolio is likely
to be placed by Lipper. The Lipper Index is based on changes in net asset
value of the mutual funds included in the index with all dividends reinvested
and with no adjustments for sales charges. The Lehman Brothers Aggregate Bond
Index is an unmanaged index that covers all sectors of the fixed-income market
and is a combination of the Lehman Brothers Treasury Bond Index, the Agency
Bond Index, the Corporate Bond Index, the Yankee Bond Index, and the Mortgage-
Backed Securities Index. Unmanaged index returns assume reinvestment of all
dividends but do not include any brokerage commissions, sales charges, or
other fees. This table does not represent the past or future performance of
the Portfolio. For more information, see "How the Portfolios Show Performance"
later in this prospectus.

BALANCED PORTFOLIO

INVESTMENT OBJECTIVE
The Balanced Portfolio seeks to provide over time an attractive total return.

HOW THE PORTFOLIO IS INVESTED
We will invest in a diversified portfolio of equity securities and taxable
fixed-income securities. We invest in equity securities primarily of estab-
lished, well-known domestic companies with at least $500 million in market
capitalization. We seek reduced risk, capital preservation potential, and cur-
rent income by balancing our equity investments with fixed-income securities.
The fixed-income securities we purchase are primarily U.S. Treasury securities
with maturities from one to 15 years, but from time to time, we may also pur-
chase investment-grade fixed-income securities if market

---
4
<PAGE>

conditions warrant. We may invest up to 20% of the Portfolio's net assets in
foreign equity securities traded in the U.S., including ADRs. We may gradually
shift the allocations of the Portfolio's investments in order to emphasize
capital appreciation in favorable market environments and capital preservation
in less favorable market environments. We will shift the Portfolio's invest-
ments within defined ranges for each asset category based upon each category's
relative risk and reward characteristics. We will also rebalance the Portfo-
lio's investments when necessary in order to prevent the Portfolio's invest-
ment mix from moving outside defined ranges for each asset category under nor-
mal market conditions. The Board of Trustees from time to time may also adjust
the Portfolio's target investment mix, reflecting the Portfolio's anticipated
average allocation of its investments over a full market cycle, and the allow-
able range for each asset category if it determines that such a change is in
the best interest of shareholders. The table below sets forth the Portfolio's
target investment mix and the allowable range for each category. For a more
detailed discussion of the Portfolio's investments, see "How We Manage Your
Investment" later in this prospectus.

<TABLE>
- --------------------------------------------------------------
<CAPTION>
ASSET CATEGORY TARGET INVESTMENT MIX ALLOWABLE RANGE
- --------------------------------------------------------------
<S> <C> <C>
Equity Securities 55% 40%-70%
Fixed-Income Securities 40% 25%-55%
Cash Equivalents 5% 0%-20%
- --------------------------------------------------------------
</TABLE>

HOW THE PORTFOLIO PURSUES ITS OBJECTIVE
Institutional Capital Corporation manages the Portfolio's investments. We se-
lect equity securities from a universe of approximately 450 large- and mid-
size companies. Proprietary quantitative valuation models determine which of
these equity securities currently appear to be selling for less than their in-
trinsic worth. Based on a qualitative assessment of each company's prospects,
we then look for a catalyst that we believe will unlock the security's unrec-
ognized value. A catalyst may be as simple as a management change or as com-
plex as a fundamentally improved industry outlook. Generally, we choose only
the 40 to 50 most attractive stocks with a 15% to 25% price appreciation po-
tential over the next 18 months.

We select fixed-income securities for the Portfolio based on our general out-
look for the fixed-income markets as well as a detailed analysis of expected
yield curve changes. We use proprietary quantitative models and quantitative
assessment of top-down economic and market factors to develop an outlook on
interest rates. We then analyze the current shape of the yield curve and ex-
pected changes under different scenarios. We select the specific mix of matu-
rities that offer the best balance of current income and capital appreciation
preservation potential in light of current and expected market conditions.

HOW THE PORTFOLIO MANAGER HAS PERFORMED
Institutional Capital is an institutional investment management firm with over
27 years of experience and over $10 billion in assets under management. For
more information about Institutional Capital, see "Who Manages the Portfolios"
later in this prospectus.

Growth of a $10,000 Investment 1/78-12/97

[Mountain chart of composite and Lipper Balanced Index returns]

---
5
<PAGE>

PORTFOLIO MANAGER COMPOSITE RETURNS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12/31/97)
- --------------------------------------------------------
20-
1-YEAR 5-YEAR 10-YEAR YEAR
- --------------------------------------------------------
<S> <C> <C> <C> <C>
Manager Balanced Composite 18.65% 14.67% 14.59% 15.19%
Lipper Balanced Index 20.05% 13.19% 12.90% 13.69%
- --------------------------------------------------------
</TABLE>

The chart and table above present the performance of the Institutional Capital
Balanced Composite, which represents all its individually managed accounts
(totaling approximately $700 million as of December 31, 1997) that have sub-
stantially the same investment objectives and policies as the Portfolio. This
Composite also includes the Nuveen Balanced Stock and Bond Fund (with assets
totaling approximately $80 million as of December 31, 1997), a mutual fund
whose investments are managed by Institutional Capital, which has substan-
tially the same investment objectives and policies as the Portfolio. The indi-
vidually managed accounts included in the Institutional Capital Balanced Com-
posite are not subject to all of the same investment restrictions, including
diversification requirements, investment inflows and outflows, and distribu-
tion requirements as the Portfolio, which may affect Portfolio performance.
The Institutional Capital Balanced Composite performance does not reflect any
charges or fees paid pursuant to the terms of the contracts funded by the sep-
arate accounts that invest in shares of the Portfolio. We assumed gross oper-
ating expenses of %, the maximum operating expenses for the first year
of operations. The Institutional Capital Balanced Composite performance is
compared to the Lipper Balanced Index. The Lipper Balanced Index is a managed
index that represents the average annualized total returns of the 30 largest
funds in the Lipper Balanced Fund category. The Lipper Index is based on
changes in net asset value of the mutual funds included in the index with all
dividends reinvested and with no adjustments for sales charges. This chart
does not represent past or future performance of the Portfolio. For more in-
formation, see "How the Portfolios Show Performance" later in this prospectus.

GROWTH AND INCOME PORTFOLIO

INVESTMENT OBJECTIVE
The Growth and Income Portfolio seeks to provide over time a superior total
return with moderated risk.

HOW THE PORTFOLIO IS INVESTED
We invest in a diversified portfolio of value-oriented equity securities pri-
marily of established, well-known companies with market capitalization of at
least $500 million. We may also invest up to 20% of the Portfolio's net assets
in foreign equity securities traded in the U.S., including ADRs. We also may
invest in cash equivalents and short-term fixed-income securities to reduce
volatility and preserve capital. This strategy seeks to provide you with a to-
tal return greater than the S&P 500 with an equal or lesser degree of risk.
The table below sets forth the Portfolio's target investment mix and the al-
lowable range for each category under normal market conditions. For a more de-
tailed discussion of the Portfolio's investments, see "How We Manage Your In-
vestment" later in this prospectus.

<TABLE>
- --------------------------------------------------------
<CAPTION>
ASSET CATEGORY TARGET INVESTMENT MIX ALLOWABLE RANGE
- --------------------------------------------------------
<S> <C> <C>
Equity Securities 90% 65%-100%
Cash Equivalents 10% 0%-35%
- --------------------------------------------------------
</TABLE>

---
6
<PAGE>

Growth of a $10,000 Investment 1/78-12/97

[Mountain chart of composite, S&P 500, and Lipper Growth and Income Index re-
turns]

PORTFOLIO MANAGER COMPOSITE RETURNS

<TABLE>
- ---------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12/31/97)
- ---------------------------------------------------------------------
1-YEAR 5-YEAR 10-YEAR 20-YEAR
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Manager Discretionary Equity Composite 28.39% 20.74% 17.92% 17.09%
Lipper Growth and Income Index 26.96% 18.06% 16.03% 15.69%
S&P 500 33.36% 20.27% 18.05% 16.66%
- ---------------------------------------------------------------------
</TABLE>

The chart and table above present the performance of Institutional Capital's
Discretionary Equity Composite, which represents its individually managed ac-
counts (totaling approximately $4.1 billion as of December 31, 1997). This
Composite also includes the Nuveen Growth and Income Stock Fund (with assets
totaling approximately $700 million as of December 31, 1997) and other mutual
funds subadvised by Institutional Capital. These accounts and mutual funds
have substantially the same investment objectives and policies as the Portfo-
lio. The individually managed accounts included in the Institutional Capital
Discretionary Equity Composite are not subject to all of the same investment
restrictions, including diversification requirements, investment inflows and
outflows, and distribution requirements as the Portfolio, which may affect
Portfolio performance. The Institutional Capital Discretionary Equity Compos-
ite performance does not reflect any charges or fees paid pursuant to the
terms of the contracts funded by the separate accounts that invest in shares
of the Portfolios. We assumed gross operating expenses of %, the maximum
operating expenses for the first year of operations. The Lipper Growth and In-
come Index is a managed index that represents the average annualized returns
of the 30 largest funds in the Lipper Growth and Income Fund Category. The
Lipper Index is based on changes in net asset value of the mutual funds in-
cluded in the index with all dividends reinvested and with no readjustments
for sales charges. S&P 500 returns assume reinvestment of all dividends but do
not include any brokerage commissions, sales charges, or other fees. This
chart does not represent past or future performance of the Portfolio. For more
information, see "How the Portfolios Show Performance" later in this prospec-
tus.

BLUE CHIP GROWTH PORTFOLIO

INVESTMENT OBJECTIVE
The Portfolio seeks to provide long-term growth of capital.

HOW THE PORTFOLIO IS INVESTED
The Portfolio invests primarily in a diversified portfolio of growth-oriented
equity securities listed on one or more U.S. exchanges or quoted on the Nasdaq
National Market of large capitalization companies (i.e., companies with an ag-
gregate market capitalization of at least $5 billion under current market con-
ditions) that have a history of consistent earnings and dividend growth ("blue
chip companies"). Under normal market conditions, the Portfolio will invest at
least 65% of its total assets in equity securities of blue chip companies.
Blue chip companies are generally characterized by their substantial capital-
ization, established history of earnings and dividends, ready access to cred-
it, industry leadership position, and superior management structure. As a re-
sult, blue chip companies have historically exhibited less investment risk and
price volatility than companies lacking these high-quality characteristics. In
addition, the large market of publicly-held shares for these companies and
substantial daily trading volume create a relatively high degree of liquidity
for their stocks. The Portfolio may also invest up to 15% of its net assets in
foreign equity securities traded in the U.S. securities markets, including
ADRs. For a more detailed discussion of the Portfolio's investments, see "How
We Invest Your Money" later in this prospectus.

HOW THE PORTFOLIO PURSUES ITS OBJECTIVE
Rittenhouse Financial Services, Inc. manages the Portfolio's investments. From
the universe of all equity securities traded in U.S. securities markets, we
first identify stocks of those large capitalization companies that have a fi-
nancial strength rating of A or better by Standard & Poor's or Value Line and
a history of consistent, predictable earnings and dividend growth. We then se-
lect the industries with the most attractive potential based upon our evalua-
tion of current market conditions and long-term industry growth trends.
Through fundamental analysis, we seek to identify the companies within these
industries that have a demonstrated leadership position and offer sustained
growth opportunities at reasonable valuations relative to historical levels.
We then select the 25 to 50 stocks that we believe represent the best mix of
sustained growth opportunities at reasonable valuations.

HOW THE PORTFOLIO MANAGER HAS PERFORMED
Rittenhouse is an institutional investment management firm with over 15 years
of experience and approximately $10 billion in assets under management. Rit-
tenhouse is a wholly owned subsidiary of a Nuveen affiliate. For more informa-
tion

---
7
<PAGE>

about Rittenhouse, see "Who Manages the Portfolios" later in this prospectus.

Growth of a $10,000 Investment 1/83-12/97

[Mountain chart of composite, S&P 500, and Lipper Growth Fund Index returns]
PORTFOLIO MANAGER COMPOSITE RETURNS
<TABLE>
- -------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12/31/97)
- -------------------------------------------------------------------
SINCE
COMPOSITE
INCEPTION
1-YEAR 5-YEAR 10-YEAR (1/83)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Manager Blended Equity Composite 36.78% 18.04% 17.57% 18.41%
Lipper Growth Fund Index 28.08% 17.08% 16.08% 14.94%
S&P 500 33.36% 20.27% 18.05% 17.52%
- -------------------------------------------------------------------
</TABLE>

The chart and table above present the performance of Rittenhouse's Blended Eq-
uity Composite, which represents all its individually managed accounts (total-
ing approximately $2.9 billion as of December 31, 1997) that have substan-
tially the same investment objectives and policies as the Portfolio. These
accounts are not subject to all of the same investment restrictions, including
diversification requirements, investment inflows and outflows, and distribu-
tion requirements as the Portfolio, which may affect Portfolio performance.
The Rittenhouse Blended Equity Composite performance does not reflect any
charges or fees paid pursuant to the terms of the contracts funded by the sep-
arate accounts that invest in shares of the Portfolios. We assumed gross oper-
ating expenses of %, the maximum operating expenses for the first year of
operations.

The Lipper Growth Fund Index is a managed index that represents the average
annualized returns of the 30 largest funds in the Lipper Growth Fund Category.
The Lipper Index is based on changes in net asset value of the mutual funds
included in the index with all dividends reinvested and with no adjustments
for sales charges. S&P 500 returns assume reinvestment of all dividends but do
not include any brokerage commissions, sales charges, or other fees. This
chart does not represent past or future performance of the Portfolio. For more
information, see "How the Portfolios Show Performance."

EUROPEAN VALUE PORTFOLIO

INVESTMENT OBJECTIVE
The European Value Portfolio seeks to provide a superior total return with
moderated risk.

HOW THE PORTFOLIO IS INVESTED
Under normal market conditions, we will invest at least 65% of the Portfolio's
total assets in equity securities, predominantly ADRs, of established European
companies with market capitalizations of at least $1 billion. The foreign se-
curities in which we may invest include direct investments in foreign equity
and fixed-income securities that may or may not be traded in the U.S. securi-
ties markets. We may also invest up to 35% of the Portfolio's total assets in
cash equivalents and short-term fixed-income securities for any purpose, in-
cluding pending investment and reinvestment. This strategy seeks to provide
you with a total return greater than the Morgan Stanley Capital International
Europe Index (the "MSCI Europe Index"). For a more detailed discussion of the
Portfolio's investments, see "How We Manage Your Investment" later in this
prospectus.

HOW THE PORTFOLIO PURSUES ITS OBJECTIVE
Institutional Capital Corporation manages the Portfolio's investments. We se-
lect equity securities from the universe of large- and mid-size established
European companies. Proprietary quantitative valuation models determine which
of these equity securities appear to be selling for less than their intrinsic
worth. Based on a qualitative assessment of each Company's prospects, we then
look for a catalyst that we believe will unlock the security's unrecognized
value. A catalyst may be as simple as a management change or as complex as a
fundamentally improved industry outlook. Generally, we choose only the 20 to
30 most attractive stocks with a 15% to 25% price appreciation potential over
the next 18 months.

HOW THE PORTFOLIO MANAGER HAS PERFORMED
Institutional Capital is an institutional investment management firm with over
27 years of experience and approximately $10 billion in assets under manage-
ment. For more information about Institutional Capital, see "Who Manages the
Portfolios" later in this prospectus.

---
8
<PAGE>

Growth of a $10,000 Investment -12/97

[Mountain chart of Composite and MSCI Europe Index returns]

PORTFOLIO MANAGER COMPOSITE RETURNS
<TABLE>
- -------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF
12/31/97)
- -------------------------------------
SINCE
COMPOSITE
INCEPTION
1-YEAR (1/1/97)
------ ---------
- -------------------------------------
<S> <C> <C>
Manager Euro Select
Composite 29.85% 29.85%
MSCI Europe Index 24.20% 24.20%
- -------------------------------------
</TABLE>

The chart and table above present the performance of the Institutional Capital
Euro Select Composite (totaling approximately $2.5 million as of December 31,
1997), which includes a single separate account for the period from January 1,
1997 to December 31, 1997 and a mutual fund from December 31, 1997 to date.
The assets included in this Composite are not subject to all of the same in-
vestment restrictions, including diversification requirements, investment
inflows and outflows, and distribution requirements as the Portfolio, which
may affect Portfolio performance. The performance information shown above does
not reflect any charges or fees paid pursuant to the terms of the contracts
funded by the separate accounts that invest in shares of the Portfolios. We
assumed gross operating expenses of %, the maximum operating expenses for
the first year of operations. The MSCI Europe Index is an unmanaged index com-
prised of the companies listed on the stock exchanges of 14 European coun-
tries. The index includes companies that replicate the industry composition of
each local market and represent a capitalization weighted sampling of large,
medium, and small capitalization companies. MSCI Europe Index returns assume
reinvestment of all dividends paid by the stocks included in the index net of
foreign withholding taxes, but do not include brokerage commissions or other
fees an investor would incur by investing in the portfolio of stocks that com-
prise the index. This table does not represent past or future performance of
the Portfolio. For more information, see "How the Portfolios Show Performance"
later in this prospectus.

INTERNATIONAL EQUITY PORTFOLIO

INVESTMENT OBJECTIVE
The International Equity Portfolio seeks to provide a high level of total re-
turn, consisting of capital appreciation and current income.

HOW THE PORTFOLIO IS INVESTED
We invest primarily in a wide range of foreign equity securities. The foreign
securities in which we may invest include ADRs and other depositary receipts,
as well as direct investments in foreign equity and fixed-income securities
that may or may not be traded in U.S. securities markets. We will normally in-
vest in the securities of companies located in at least three different for-
eign countries. Under normal market conditions, we will invest at least 80% of
the Portfolio's total assets in foreign equity securities, including convert-
ible securities, up to 20% of the Portfolio's total assets in fixed-income se-
curities, and no more than 10% of the Portfolio's net assets in cash equiva-
lents and short-term fixed-income securities. For a more detailed discussion
of the Portfolio's investments, see "How We Manage Your Investment" later in
this prospectus.

HOW THE PORTFOLIO PURSUES ITS OBJECTIVE
manages the Portfolio's investments.

HOW THE PORTFOLIO MANAGER HAS PERFORMED
is an institutional investment management firm with over
years of experience and approximately $ in assets under manage-
ment. For more information about , see "Who Manages the
Portfolios" later in this prospectus.

Growth of a $10,000 Investment -12/97

[Mountain chart of composite and MSCI EAFE returns]

---
9
<PAGE>

PORTFOLIO MANAGER COMPOSITE RETURNS
<TABLE>
- ------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12/31/97)
- ------------------------------------------------
1-YEAR 5-YEAR 10-YEAR 20-YEAR
- ------------------------------------------------
<S> <C> <C> <C> <C>
Manager Composite
MSCI EAFE 1.78% 11.39% 6.25% 13.73%
- ------------------------------------------------
</TABLE>

The chart and table above present the performance of the Com-
posite, which represents all its accounts and pooled investment vehicles (to-
taling approximately $ billion as of December 31, 1997) that have substan-
tially the same investment objectives and policies as the Portfolio. These ac-
counts are not subject to all of the same investment restrictions, including
diversification requirements, investment inflows and outflows, and distribu-
tion requirements as the Portfolio, which may affect Portfolio performance.
The Composite performance does not reflect any charges or fees
paid pursuant to the terms of the contracts funded by the separate accounts
that invest in shares of the Portfolios. We assumed gross operating expenses
of %, the maximum operating expenses for the first year of operations.
The Morgan Stanley Capital International Europe, Australia and Far East ("MSCI
EAFE") Index is an unmanaged index comprised of the companies listed on the
stock exchanges of 20 foreign countries. The index includes companies that
replicate the industry composition of each local market and represents a capi-
talization weighted sampling of large, medium, and small capitalization compa-
nies. MSCI EAFE Index returns assume reinvestment of all dividends paid by the
stocks included in the index net of foreign withholding taxes, but do not in-
clude any brokerage commissions, sales charges or other fees. This chart does
not represent past or future performance of the Portfolio. For more informa-
tion, see "How the Portfolios Show Performance" later in this prospectus.

HOW TO DETERMINE WHICH PORTFOLIOS ARE RIGHT FOR YOU

As you decide how to allocate your investment among the Portfolios, you should
bear in mind that an investment in the Portfolios may not be suitable for you
if your allocation to a Portfolio is for a short-term investment horizon. In
addition, if you choose to invest in the Portfolios, you should be willing to
accept at least moderate fluctuations in share price caused by changes in the
prices of the securities held by a Portfolio and, with respect to the Portfo-
lios that invest in foreign securities, fluctuations in share price caused by
changes in currency exchange rates. The following table is designed to help
you decide how to allocate your investment among the Portfolios based on your
financial goals:

<TABLE>
- ------------------------------------------------------------------------
<CAPTION>
PORTFOLIO THE PORTFOLIO MAY BE SUITABLE FOR YOU IF:
- ------------------------------------------------------------------------
<C> <S>
Strategic Income . you are seeking a conservative portfolio focusing on
income-producing securities
Balanced . you are seeking a conservative, balanced portfolio
. you wish to pursue the long-term growth potential of
equities using a value-driven investment strategy
</TABLE>
<TABLE>
<C> <S>
. you are looking for a substantial measure of downside
protection
Growth and Income . you are seeking the long-term growth potential of
equities from a value-driven equity investment strategy
. you are concerned about moderating the risks associated
with stock investing
Blue Chip Growth . you are seeking a conservative growth stock fund as the
core of a balanced investment plan
. you wish to build and protect wealth through prudent
capital management
European Value . you are seeking to invest in European equity securities
. you want to pursue the high potential returns of
foreign stocks using a value-oriented investment
strategy
. you want to diversify your otherwise U.S.-oriented
equity portfolio
. you are willing to accept the risks of foreign
investment
International Equity . you are seeking to invest in a diversified portfolio of
international equity securities
. you want to diversify your otherwise U.S.-oriented
equity portfolio
. you are willing to accept the risks of foreign
investment
</TABLE>

Historically, investments that have generated a greater return have presented
greater risk. The following chart reflects Nuveen's assessment of the relative
risk of the Portfolios based upon past experience, and is designed to help you
make portfolio selections. The chart reflects the expected relative risk of
each Portfolio, based upon the standard deviation of periodic returns of the
composite or asset class. Standard deviation is a statistical measurement of
the variability of periodic returns. Future results may not be consistent with
past results or with our expectations.

<TABLE>
<CAPTION>
LOWEST RISK HIGHEST RISK
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
.Strategic .European Value
Income
. Growth and . Blue Chip
Income Growth
. International
.Balanced Equity
- ---------------------------------------------------------------------------------------------
</TABLE>

For more information, see "What the Risks Are" later in this prospectus.

SECTION 2 HOW WE MANAGE YOUR INVESTMENT

To help you understand the Portfolios better, this section includes a detailed
discussion of our investment and risk management strategies. For a more com-
plete discussion of these matters, please consult the SAI.

---
10
<PAGE>

WHO MANAGES THE PORTFOLIOS

Nuveen Institutional Advisory Corp. ("NIAC"), 333 West Wacker Drive, Chicago,
IL 60606, has overall responsibility for management of the Portfolios. NIAC
oversees the management of the Portfolios' investments, manages the Portfo-
lios' business affairs, and provides day-to-day administrative services (col-
lectively "management services"). The Board of Trustees has general supervi-
sory responsibility for the Portfolios and supervises NIAC's duties.

NIAC is a wholly owned subsidiary of John Nuveen & Co. Incorporated
("Nuveen"). Nuveen and its affiliates have sponsored or underwritten more than
$60 billion of investment company securities. Nuveen is a subsidiary of The
John Nuveen Company, which is approximately 78% owned by the St. Paul Compa-
nies, Inc. St. Paul is located in St. Paul, Minnesota, and is principally en-
gaged in providing property-liability insurance through subsidiaries.

NIAC manages the investments of Strategic Income Portfolio. Richard A. Huber
has responsibility for the day-to-day management of the Portfolio's invest-
ments. Mr. Huber joined NIAC in March 1998 and has served as a Vice President
of Nuveen Advisory Corp. since January 1997. Prior to January 1997, Mr. Huber
was a Vice President and Portfolio Manager of Flagship Financial, Inc. He cur-
rently manages investments for different Nuveen sponsored mutual funds.

Institutional Capital Corporation, 225 West Wacker Drive, Chicago, IL 60606,
manages the investments of the Balanced, Growth and Income, and European Value
Portfolios. Institutional Capital was founded in 1970. Institutional Capital's
investment management strategy and operating policies are set through a team
approach, with all its investment professionals contributing. Institutional
Capital currently maintains a staff of approximately 12 investment profession-
als. Institutional Capital also serves as investment adviser to other regis-
tered investment companies and to pension and profit-sharing plans and other
institutional and private investors. Robert H. Lyon, president, owns shares
representing 51% of its voting rights. In addition, The John Nuveen Company
owns preferred shares of Institutional Capital, which are convertible after
several years into a 20% common stock interest.

Rittenhouse Financial Services, Inc., Two Radnor Corporate Center, Radnor, PA
19087, manages the investments of the Blue Chip Growth Portfolio. Rittenhouse
was founded in 1979. Rittenhouse's investment management strategy and operat-
ing policies are set through a team approach, with all its investment profes-
sionals contributing. Rittenhouse currently maintains a staff of approximately
20 investment professionals. Rittenhouse also serves as investment adviser to
pension and profit-sharing plans, other institutional and private investors,
and other investment companies. Rittenhouse is a wholly owned subsidiary of
The John Nuveen Company.

manages the investments of the International Equity Portfolio.
's investment management strategy and operating policies are set
through .

WHAT SECURITIES WE INVEST IN

Each Portfolio's investment objective may not be changed without the approval
of its shareholders. The following investment policies may be changed by the
Board of Trustees without shareholder approval unless otherwise noted in this
prospectus or the SAI.

EQUITY SECURITIES
Each Portfolio may invest in equity securities. Eligible equity securities in-
clude common stocks; preferred stocks; warrants to purchase common or pre-
ferred stocks; securities convertible into common or preferred stocks, such as
convertible bonds and debentures; and other securities with equity character-
istics. For each Portfolio except the Strategic Income Portfolio, any convert-
ible bonds and debentures must be rated investment grade (one of the four
highest ratings by a national rating service), or determined by the portfolio
manager to be of comparable quality for unrated securities, when purchased.
For the Strategic Income Portfolio, convertible bonds and debentures must be
rated B or better, or determined by the portfolio manager to be of comparable
quality for unrated securities, when purchased. Foreign equity securities are
discussed under "Foreign Securities" below.

FIXED-INCOME SECURITIES
Bonds and other fixed-income securities are used by issuers to borrow money.
Issuers pay investors interest and generally must repay the amount borrowed at
maturity. Some fixed-income securities, such as zero coupon bonds, do not pay
current interest, but are purchased at a discount from their face values. The
prices of fixed-income securities fluctuate depending on such factors as in-
terest rates, credit quality, and maturity. In general, their prices decline
when interest rates rise and rise when interest rates decline.

Pass-Through Securities. The Strategic Income Portfolio may invest in various
fixed-income obligations backed by a pool of mortgages or other assets includ-
ing loans on single family residences, home equity loans, mortgages on commer-
cial buildings, credit card receivables, and leases on airplanes or other
equipment. Principal and interest payments made on the underlying asset pools
backing these obligations are typically passed through to investors. Pass-
through securities may have either fixed or adjustable coupons. The pass-
through securities in which the Portfolio may invest include mortgage-backed
securities, collateralized mortgage obligations, commercial mortgage-backed
securities, asset-backed securities, and other mortgage-related securities.

Non-Investment Grade Fixed-Income Securities. The Strategic Income Portfolio
may invest up to 20%, and the European Value Portfolio may invest up to 5%, of
its assets in fixed-income securities rated Ba, BB, or B by a national rating
service, or in unrated securities that are determined to be of equivalent
quality by the portfolio manager. Such securities are commonly known as "high-
yield, high-risk" or "junk" bonds. Although non-investment grade securities
typically offer higher yields than investment grade securities with similar
maturities, non-investment grade securities involve greater risks, including
the possibility of default or bankrupt-

---
11
<PAGE>

cy. Other potential risks associated with investing in non-investment grade
securities include substantial market price volatility resulting from changes
in interest rates, changes in or uncertainty regarding economic conditions,
and changes in the actual or perceived ability of the issuer to meet its obli-
gations; greater sensitivity of highly leveraged issuers to adverse economic
changes, and individual issuers' developments; subordination to the prior
claims of other creditors; and adverse publicity and changing investor percep-
tions about non-investment grade securities. See the SAI for a complete de-
scription of long-term fixed-income ratings.

CASH EQUIVALENTS AND SHORT-TERM FIXED-INCOME SECURITIES
Each Portfolio may invest in cash equivalents and short-term fixed-income se-
curities. Eligible cash equivalents and short-term fixed-income securities in-
clude, without limitation, U.S. government securities that are either issued
or guaranteed by the U.S. Treasury or by U.S. governmental agencies or instru-
mentalities; bank time deposits; certificates of deposit; bankers' accept-
ances; commercial paper (including commercial paper master notes) rated A-2,
Prime-2, Duff 2, or Fitch 2 or higher by a national rating service, or deter-
mined by the portfolio manager to be of comparable quality for unrated securi-
ties; or repurchase agreements entered into with respect to obligations of the
U.S. government, its agencies or instrumentalities, certificates of deposit,
and bankers' acceptances. For each Portfolio, eligible cash equivalents and
short-term fixed-income securities must have an effective maturity of one year
or less. A general description of ratings may be found in the SAI.

Each Portfolio has adopted a temporary defensive position policy that may be
changed by the Board of Trustees without shareholder approval. For temporary
defensive purposes during adverse markets to reduce risk and preserve capital,
each Portfolio may invest up to 100% of its total assets in cash equivalents
and short-term fixed-income securities. In addition, each Portfolio may invest
in such securities to keep cash on hand fully invested.

FOREIGN SECURITIES
Each Portfolio may invest in foreign securities traded in the U.S., including
American Depository Receipts ("ADRs"). In addition, each Portfolio may invest
in shares of closed-end investment companies that invest primarily in securi-
ties of foreign issuers. The European Value and International Equity Portfo-
lios each also may invest directly in equity securities of foreign issuers
that are not publicly traded in the U.S. Foreign equity securities include eq-
uity securities of companies that are domiciled or have their principal place
of business in countries outside the U.S. The country in which a company is
domiciled or has its principal place of business will be determined by the
country (1) under whose laws the company is organized, (2) in which the prin-
cipal trading market for the securities issued by the company is located, or
(3) in which the company has over half of its assets or derives over half of
its revenues or profits.

The Portfolios each may invest indirectly in foreign securities by purchasing
depository receipts, including ADRs. ADRs are receipts for the shares of a
foreign company that entitle the ADR holder to a proportionate beneficial own-
ership interest in the underlying shares, including all the dividends and cap-
ital gains distributions on such shares. By investing in ADRs, a Portfolio
avoids currency risks during the settlement period. ADRs do not eliminate
other risks of investing in foreign securities (see "What the Risks Are" be-
low).

The European Value and International Equity Portfolios each may invest in Eu-
rodollar convertibles. Eurodollar convertibles are fixed-income securities of
a foreign issuer that are issued in U.S. dollars outside the U.S. that are
convertible into or exchangeable for specified equity securities.

The Strategic Income, European Value, and International Equity Portfolios each
may invest in foreign fixed-income securities traded in the U.S. The European
Value and International Equity Portfolios each also may invest directly in the
fixed-income securities of foreign issuers that are not traded in the U.S. El-
igible foreign fixed-income securities include Yankee Bonds (dollar-denomi-
nated bonds issued in the U.S. by foreign banks and corporations), Eurobonds
(bonds that pay interest and principal in Eurodollars, which are U.S. dollars
held in banks outside the U.S., mainly in Europe), and Samurai Bonds (bonds
denominated in yen and issued by non-Japanese companies for sale mostly in Ja-
pan).

REAL ESTATE INVESTMENT TRUSTS ("REITS")
The Portfolios each may invest in REITs. REITs are pooled investment vehicles
that invest primarily in income-producing real estate or real estate related
loans or interests. As a result of investing in REITs, a Portfolio may be sub-
ject to risks similar to those associated with direct ownership of real es-
tate.

DELAYED-DELIVERY TRANSACTIONS
Each Portfolio may buy or sell securities on a when-issued or delayed-delivery
basis, paying for or taking delivery of the securities at a later date, nor-
mally within 15 to 45 days of the trade. Such transactions involve an element
of risk because the value of the security to be purchased may decline before
the settlement date.

DOLLAR ROLL TRANSACTIONS
The Strategic Income Portfolio may entered into "dollar roll" transactions,
which involve the sale of pass-through securities together with a commitment
to purchase similar, but not identical, securities at a later date. The Port-
folio assumes the rights and risks of ownership, including the risk of price
and yield fluctuations as of the time of the agreement.

DERIVATIVE TRANSACTIONS
Each Portfolio may engage in derivative transactions. Derivative transactions
involve investment contracts, the value of which is based upon the performance
of an underlying financial asset, index, or other investment. Derivative
transactions include, for example, transactions involving options contracts,
futures contracts, and options on futures contracts. A Portfolio may hold a
futures or options position until its expiration. Alternatively, if a liquid
secondary market exists, a Portfolio may close out a futures or options posi-
tion prior to expiration at current value.

---
12
<PAGE>

The Portfolios, other than the Strategic Income Portfolio, will engage only in
derivative transactions that constitute "bona fide hedging" or other permissi-
ble risk management transactions. The Strategic Income Portfolio may addition-
ally write listed covered call options on securities it owns. A Portfolio will
not enter into a derivative transaction if the sum of the initial margin de-
posits and premiums paid for unexpired options exceeds 5% of such Portfolio's
net assets. In addition, a Portfolio will not enter into a derivative transac-
tion if more than 30% of its net assets would be committed to derivative
transactions. When required, a Portfolio will set aside liquid assets in a
segregated account to secure its potential obligations under its futures or
options positions. Whether a Portfolio will benefit from derivative transac-
tions largely depends upon each portfolio manager's ability to correctly use
such instruments. Derivative transactions may involve skills different from
those associated with managing securities generally. A Portfolio engaging in
derivative transactions could lose money on a futures transaction or an option
could expire worthless. In addition, a Portfolio could suffer a loss on the
value of its assets.

FOREIGN CURRENCY HEDGING TRANSACTIONS
The European Value and International Equity Portfolios each may enter into
foreign currency hedging transactions. Foreign currency hedging transactions
include (1) forward foreign currency exchange contracts ("forward contracts"),
(2) foreign currency futures contracts ("futures contracts"), and (3) options
on futures contracts. The Portfolios will enter into foreign currency hedging
transactions for bona fide hedging and other permissible risk management pur-
poses only. A Portfolio will not enter into foreign currency hedging transac-
tions if, along with the Portfolio's investments in other options (see "Deriv-
ative Transactions" above), more than 30% of its net assets would be committed
to such transactions. The Portfolios will only enter into a forward contract
or a futures contract if it is expected that there will be a liquid market in
which to close out such contract.

A forward contract is a contract for the purchase or sale of a foreign curren-
cy, such as the Japanese yen, German mark, British pound or French franc, at
an exchange rate established now, with payment and delivery at a specified
time in the future. Foreign currency futures and options also involve con-
tracts based on foreign currencies. The buyer of a foreign currency futures
contract acquires the right to buy a particular amount of the currency by a
specific date at a fixed rate of exchange, and the seller agrees to sell that
currency at the same fixed price. Options on foreign currency futures con-
tracts include call options and put options. Call options give the buyer the
right, but not the obligation, to buy the underlying currency at a particular
price by a particular date. Put options give the buyer the right, but not the
obligation, to sell the underlying currency at a specific price by a specific
date.

ILLIQUID SECURITIES
Each Portfolio may invest up to 15% of its net assets in illiquid securities
(i.e., securities that are not readily marketable). Illiquid securities in-
clude, but are not limited to, restricted securities (securities the disposi-
tion of which is restricted under the federal securities laws, such as pri-
vately placed securities); securities that may be resold pursuant to Rule 144A
under the Securities Act of 1933 but that are deemed to be illiquid; and re-
purchase agreements with maturities in excess of seven days.

INVESTMENT COMPANY SECURITIES
As discussed above, each Portfolio may invest in shares of closed-end invest-
ment companies that invest primarily in securities of foreign issuers. In ad-
dition, the Strategic Income Portfolio may invest in securities of money mar-
ket funds to keep cash on hand fully invested. No more than 10% of the value
of a Portfolio's total assets will be invested in securities of other invest-
ment companies, and no more than 5% if its total assets will be invested in
any one investment company. A Portfolio may hold no more than 3% of the out-
standing voting stock of any other investment company. As a shareholder of an-
other investment company, a Portfolio would bear, along with such investment
company's other shareholders, its pro rata portion of the other investment
company's expenses, including advisory fees.

LOAN PARTICIPATIONS
The Strategic Income Portfolio may invest in loan participations and other re-
lated direct or indirect bank obligations. These instruments are interests in
floating or variable rate senior loans to U.S. corporations, partnerships, and
other entities. An investment in loan participations carries substantially the
same risks as those associated with non-investment grade fixed-income securi-
ties. (See "Non-Investment Grade Fixed-Income Obligations" below.) The Portfo-
lio may lose its entire investment in loan participations.

PORTFOLIO TURNOVER
Portfolio turnover refers to the volume of a Portfolio's net assets that are
sold and replaced during a one-year period expressed as a percentage of its
total net assets during that period. A turnover rate of 100% would occur, for
example, if a Portfolio sold and replaced securities valued at 100% of its net
assets within one year. Portfolios with higher turnover rates generally pay
higher brokerage commissions. For a further discussion of income taxes and
brokerage practices, see the SAI. The following table sets forth each Portfo-
lio's anticipated portfolio turnover rate under normal market conditions:

<TABLE>
- ---------------------------------------------------
<CAPTION>
PORTFOLIO ANTICIPATED TURNOVER RATE
- ---------------------------------------------------
<S> <C>
Strategic Income 25%- 50%
Balanced
Equity Investments 100%-150%
Fixed-Income Investments 50%- 75%
Growth and Income 100%-150%
Blue Chip Growth 25%- 50%
European Value 100%-200%
International Equity 50%-100%
- ---------------------------------------------------
</TABLE>

REPURCHASE AGREEMENTS
A repurchase agreement is a contract under which a Portfolio acquires securi-
ties, usually U.S. government securities, for a relatively short time, and the
seller agrees to buy back such securities at a fixed price and, generally, a
fixed time. Repurchase agreements could involve certain risks in the event of

---
13
<PAGE>

the default or insolvency of the seller, including possible delays or restric-
tions upon a Portfolio's ability to dispose of the underlying securities.

REVERSE REPURCHASE AGREEMENTS
The International Equity Portfolio may invest up to one-third of its total as-
sets in reverse repurchase agreements. Under a reverse repurchase agreement,
the Portfolio sells securities to a financial institution (such as a bank or
broker-dealer) and agrees to buy them back later at an agreed upon time and
price. The Portfolio will only enter into reverse repurchase agreements to
avoid the need to sell portfolio securities to meet redemption requests. When
the Portfolio enters into a reverse repurchase agreement, it places in a sepa-
rate custodial account either liquid assets or other high-grade fixed-income
securities that have a value equal to or greater than the repurchase price.
The portfolio manager then monitors the custodial account to ensure that an
appropriate value is maintained. Reverse repurchase agreements involve the
risk that the value of securities the Portfolio relinquishes may decline below
the price the Portfolio must pay when the transaction closes. In addition, in-
terest paid by the Portfolio in connection with a reverse repurchase agreement
will reduce the Portfolio's net investment income. Reverse repurchase agree-
ments are considered to be borrowings under the Investment Company Act of
1940. Borrowings may magnify the potential for gain or loss on amounts in-
vested in the Portfolio, making the Portfolio's outstanding shares more specu-
lative.

UTILITY SECURITIES
As a result of the Strategic Income Fund's investments in utility securities,
the Portfolio's performance will depend in part on conditions in the public
utility industries. Utility equity securities have traditionally been popular
among more conservative investors, because they have generally paid above-av-
erage dividends. However, utility stocks can still be affected by the risks of
the stock market, as well as by special factors specific to public utility
companies.

Rates of return of utility companies generally are subject to review and limi-
tation by state public utilities commissions and tend to fluctuate with mar-
ginal financing costs. Rate changes, however, ordinarily lag behind the
changes in financing costs, and thus can favorably or unfavorably affect the
earnings or dividend pay-outs on utility stocks depending upon whether such
rates and costs are declining or rising.

WHAT THE RISKS ARE

Risk is inherent in all investing. Investing in a mutual fund-- even the most
conservative--involves risk, including the risk that you may receive little or
no return on your investment or even that you may lose part or all of your in-
vestment. Therefore, before investing you should consider carefully the fol-
lowing risks that you assume when you allocate your investment to the Portfo-
lios. Because of these and other risks, you should consider an investment in
any of the Portfolios to be a long-term investment that will likely provide
the best results when held over a number of years.

Market risk: the risk that the market value of a stock may change rapidly and
unpredictably, causing a security to be worth less than its original price.
The equity markets tend to have periods of generally rising prices and periods
of generally falling prices.

Interest rate risk: the risk that bonds will decline in value because of a
rise in interest rates. Generally, bonds will increase in value when interest
rates decline and decrease in value when interest rates rise.

Credit risk: the risk that an issuer of a bond is unable to meet its obliga-
tion to make interest and principal payments.

Inflation risk: the risk that the value of assets or income from investments
will be less in the future as inflation decreases the value of money. As in-
flation increases, the "real" value of the Portfolios' assets can decline as
can the value of the Portfolios' distributions.

Correlation risk: the risk that, in a down market, the prices of equity and
fixed-income securities will rise and fall in tandem.

Risks of foreign investments: risks including political or economic instabil-
ity of the issuer or the country of issue, the difficulty of predicting inter-
national trade patterns, changes in foreign currency exchange rates, and the
possibility of adverse changes in investment or exchange control regulations.
There is typically less publicly available information about a foreign company
than about a U.S. company. Moreover, foreign companies may be subject to less
stringent reserve, auditing, and reporting requirements than their U.S. coun-
terparts. Additionally, foreign stock markets are generally not as developed
or efficient as those in the U.S. In most foreign markets, volume and liquid-
ity are less than in the U.S. Fixed commissions on foreign stock exchanges are
also generally higher than the negotiated commissions on U.S. exchanges, and
there is generally less government supervision and regulation of foreign stock
exchanges, brokers, and companies than in the U.S. Foreign governments could
expropriate assets, levy confiscatory taxes, set limitations on the removal of
assets, or suffer adverse diplomatic developments.

MANAGEMENT FEES

PORTFOLIO MANAGEMENT FEES
For the management services and facilities furnished by NIAC, the Portfolios
have agreed to pay to NIAC an annual management fee according to the following
schedule, calculated as a percentage of average daily net assets:

<TABLE>
- -----------------------------------------------
<CAPTION>
STRATEGIC
AVERAGE DAILY INCOME BALANCED
NET ASSET VALUE PORTFOLIO PORTFOLIO
- -----------------------------------------------
<S> <C> <C>
For the first $125 million
For the next $125 million
For the next $250 million
For the next $500 million
For the next $1 billion
For assets over $2 billion
- -----------------------------------------------
</TABLE>

---
14
<PAGE>

<TABLE>
- ---------------------------------------------------
<CAPTION>
GROWTH
AND BLUE CHIP
AVERAGE DAILY NET ASSET INCOME GROWTH
VALUE PORTFOLIO PORTFOLIO
- ---------------------------------------------------
<S> <C> <C>
For the first $125 million
For the next $125 million
For the next $250 million
For the next $500 million
For the next $1 billion
For assets over $2 billion
- ---------------------------------------------------
<CAPTION>
EUROPEAN INTERNATIONAL
AVERAGE DAILY NET ASSET VALUE EQUITY
VALUE PORTFOLIO PORTFOLIO
- ---------------------------------------------------
<S> <C> <C>
For the first $125 million
For the next $125 million
For the next $250 million
For the next $500 million
For the next $1 billion
For assets over $2 billion
- ---------------------------------------------------
</TABLE>

NIAC has entered into investment sub-advisory agreements for certain of the
Portfolios as described below. The Portfolios do not pay the fees for services
provided under these agreements.

INSTITUTIONAL CAPITAL CORPORATION
NIAC has entered into a Sub-Advisory Agreement with Institutional Capital Cor-
poration under which Institutional Capital manages the Balanced, Growth and
Income, and European Value Portfolios. Under the Sub-Advisory Agreement, NIAC
pays Institutional Capital a portfolio management fee based on the average
daily market value of all the Nuveen-sponsored investment products, including
the assets of the Balanced, Growth and Income, and European Value Portfolios,
for which Institutional Capital serves as the portfolio manager. NIAC pays In-
stitutional Capital separate portfolio management fees for the equity and
fixed-income portions of the portfolios' assets, if applicable, according to
the following base schedule:

<TABLE>
- ------------------------------------------------------------------
<CAPTION>
ASSETS OF ALL THE
NUVEEN-SPONSORED INVESTMENT EQUITY
PRODUCTS MANAGED BY PORTFOLIO FIXED INCOME PORTFOLIO
INSTITUTIONAL CAPITAL MANAGEMENT FEE MANAGEMENT FEE
- ------------------------------------------------------------------
<S> <C> <C>
For the first $500 million .35 of 1% .20 of 1%
For the next $500 million .30 of 1% .15 of 1%
For assets over $1 billion .25 of 1% .12 of 1%
- ------------------------------------------------------------------
</TABLE>
In addition, NIAC has agreed to pay Institutional Capital a supplemental man-
agement fee with respect to each Portfolio until the total assets of such
Portfolio reach a specified level. When the specified asset level is reached
for a Portfolio, the aggregate amount of the supplemental fees paid by NIAC
for such Portfolio will be credited back to NIAC through a temporary reduction
in fees under the base schedule for such Portfolio.

RITTENHOUSE FINANCIAL SERVICES, INC.
NIAC has entered into a Sub-Advisory Agreement with Rittenhouse Financial
Services, Inc. under which Rittenhouse manages the Blue Chip Growth Portfolio.
Under the Sub-Advisory Agreement, NIAC pays Rittenhouse an annual portfolio
management fee of .30 of 1% of the Portfolio's average daily net asset value.

[INTERNATIONAL EQUITY PORTFOLIO MANAGER]
NIAC has entered into a Sub-Advisory Agreement with under which
manages the International Equity Portfolio. Under the Sub-Advisory
Agreement, NIAC pays a portfolio management fee on the Portfolio's
average daily net assets as set forth below:

<TABLE>
- -----------------------
<CAPTION>
AVERAGE
DAILY
NET PORTFOLIO
ASSETS MANAGEMENT FEE
- -----------------------
<S> <C>
- -----------------------
</TABLE>

OTHER EXPENSES
Each Portfolio pays for its own operating expenses such as custodial, transfer
agent, accounting, and legal fees; interest charges; brokerage commissions;
daily securities pricing; service fees; organizational expenses; extraordinary
expenses; and any other expenses that are not covered under each Portfolio's
respective sub-advisory agreement. Each Portfolio also pays a portion of the
Trust's general administrative expenses allocated in proportion to the net as-
sets of each Portfolio. All fees and expenses are accrued daily and deducted
before payment of any dividends.

SECTION 3 GENERAL INFORMATION

To help you understand the tax implications of investing in the Portfolios,
this section includes important details about how the Portfolios make distri-
butions to shareholders. We discuss some other Portfolio policies as well.

PURCHASES AND REDEMPTIONS

Contract owners do not deal directly with the Trust to purchase, redeem, or
exchange shares of a Portfolio, and should refer to the prospectus for the
separate accounts that invest in shares of the Portfolios for information on
the allocation of purchase payments and on transfers of accumulated value
among options available under the applicable contract. Shares of the Portfo-
lios are not sold directly to the general public. Shares of the Portfolios are
currently made available only to insurance companies in connection with their
variable insurance contracts. For information on how to purchase a contract,
consult the prospectus for the separate accounts. Shares of any Portfolio may
be redeemed on any business day upon receipt of a request for redemption from
the insurance company whose separate account owns the shares. Redemptions are
effected at the per share net asset

---
15
<PAGE>

value next determined after receipt of the redemption request. Redemption pro-
ceeds ordinarily will be paid within seven days following receipt of instruc-
tions in proper form or any sooner period required by law.

NET ASSET VALUE

Each Portfolio's net asset value per share is determined as of the close of
trading (normally 4:00 p.m. eastern time) on each day the New York Stock Ex-
change is open for business. A Portfolio's net asset value may not be calcu-
lated on days during which the Portfolio receives no orders to purchase shares
and no shares are tendered for redemption. Net asset value is calculated by
taking the fair value of a Portfolio's total assets, including interest or div-
idends accrued but not yet collected, less all liabilities, and dividing by the
total number of shares outstanding. The result, rounded to the nearest cent, is
the net asset value per share.

In determining net asset value, expenses are accrued and applied daily, and se-
curities and other assets for which market quotations are available are valued
at market value. Common stocks and other equity-type securities are valued at
the last sale price on the national securities exchange (or Nasdaq) on which
such securities are primarily traded; however, securities traded on a national
securities exchange for which there were no transactions on a given day or se-
curities not listed on a national securities exchange or Nasdaq are valued at
the most recent bid prices. Fixed-income securities are valued by a pricing
service that utilizes electronic data processing techniques to determine values
for normal institutional-sized trading units of fixed-income securities without
regard to the existence of sale or bid prices when such values are believed to
more accurately reflect the fair market value of such securities; otherwise,
actual sale or bid prices are used. Any securities or other assets for which
market quotations are not readily available are valued at fair value as deter-
mined in good faith by the Board of Trustees. Fixed-income securities having
remaining maturities of 60 days or less when purchased are valued by the amor-
tized cost method when the Board of Trustees determines that the fair market
value of such securities is their amortized cost. Under the amortized cost
method of valuation, a security is initially valued at its acquisition cost,
and thereafter amortization of any discount or premium is assumed each day, re-
gardless of the impact of fluctuating interest rates on the market value of the
security. Trading in foreign securities is generally completed prior to the end
of regular trading on the national securities exchanges. In addition, trading
may occur in foreign securities on Saturdays and on U.S. holidays and at other
times when the national securities exchanges are closed. As a result, there may
be delays in reflecting changes in market values of foreign securities in the
calculation of the net asset value of the Portfolios. Regardless of the method
employed to value a particular security, all valuations are subject to review
by the Trust's Board of Trustees or its delegate who may determine the appro-
priate value of a security whenever the value as calculated is significantly
different from the previous day's calculated value.

DISTRIBUTIONS AND TAXES

Income dividends are usually distributed quarterly, and capital gains, if any,
are usually distributed annually in December. When a Portfolio distributes a
dividend or capital gain, the Portfolio's net asset value decreases by the
amount of the payment. All dividends or capital gains distributions will auto-
matically be reinvested in additional shares of the applicable Portfolio or
Portfolios at the then-prevailing net asset value unless the shareholders (the
separate accounts) specifically request that either dividends or capital gains,
or both, be paid in cash.

The Trust intends to operate as a "regulated investment company" under
Subchapter M of the Internal Revenue Code and therefore will not be liable for
federal income taxes to the extent earnings are distributed on a timely basis.
Under the Internal Revenue Code, the insurance companies whose separate ac-
counts hold shares of the portfolios are taxed as a life insurance company, and
the operations of the separate accounts are taxed as part of such insurance
companies' total operations. Under current interpretations of existing federal
income tax law, investment income and capital gains of separate accounts are
not subject to federal income tax to the extent they are applied to increase
the value of variable annuity contracts.

In addition to the diversification requirements of Subchapter M, the Portfolios
must meet the diversification requirement of Code Section 817(h), which applies
to the separate accounts. This Section generally requires funds, such as the
Portfolios, that serve as the funding vehicles solely for separate accounts in-
vest no more than 55% of the value of their assets in one investment, 70% in
two investments, 80% in three investments and 90% in four investments. Alterna-
tively, a Portfolio will be treated as meeting these requirements for any quar-
ter of its taxable year if, as of the close of such quarter, the Portfolio
meets the diversification requirements applicable to regulated investment com-
panies under Subchapter M and no more than 55% of the value of its total assets
consists of cash and cash items (including receivables), U.S. government secu-
rities and securities of other regulated investment companies. Each of the
Portfolios intends to comply with these requirements; however, each applicable
law's diversification requirement could require the sale of assets of a Portfo-
lio, which could have an adverse impact on the net asset value of the Portfo-
lio.

Portfolio transactions in foreign currencies and hedging activities will likely
produce a difference between book income and taxable income. This difference
may cause a portion of a Portfolio's income distributions to constitute a re-
turn of capital for tax purposes or require a Portfolio to make distributions
exceeding book income to qualify as a regulated investment company for tax pur-
poses.

This section is not intended to be a full discussion of federal income tax laws
and the effect of such laws on you. A more detailed summary appears in the SAI.
Reference is made to the prospectus for the separate accounts and contracts for
information regarding the federal income tax treatment of

---
16
<PAGE>

distributions to the separate accounts. There may be other federal, state, or
local tax considerations applicable to a particular investor. You are urged to
consult your own tax adviser. For a further discussion, please see "Tax Mat-
ters" in the SAI.

HOW THE PORTFOLIOS SHOW PERFORMANCE

From time to time, the Trust may advertise each Portfolio's total return. These
total return figures will not reflect any fees or charges made pursuant to the
terms of the contracts funded by the separate accounts that invest in shares of
the Portfolios. Portfolio performance information will be presented only in
conjunction with performance information for the contracts. Purchasers of vari-
able insurance contracts should recognize that such fees and charges will re-
duce the total return to contract owners. For a description of the methods used
to determine total return, see the SAI.

A Portfolio's performance will fluctuate. Therefore, it should not be compared
to the performance of bank deposits, savings accounts, and other similar in-
vestments that often provide an agreed or fixed yield for a stated period. Per-
formance is generally a function of the kind and quality of the instruments in
which a Portfolio invests, Portfolio maturity, operating expenses, and market
conditions. Performance information should be considered in light of a Portfo-
lio's investment objectives and policies, the characteristics of the Portfolio,
and the market conditions during the given period. Performance information
should not be considered as a representation of what a Portfolio may achieve in
the future.

The Portfolios only recently commenced operations on , 1998. Conse-
quently, the Portfolios do not have a significant operating history. The per-
formance information set forth in Section 1 of this prospectus is composite
performance data relating to the historical performance of common trust funds,
mutual funds, and/or institutional private accounts managed by Institutional
Capital, Rittenhouse, , and that have investment
objectives, policies, strategies and risks substantially similar to those of
the Portfolios. The data is provided to illustrate the past performance of
these portfolio managers in managing substantially similar accounts. The data
does not represent the performance of the Portfolios.

Because of differences in computation methods, such as the method or frequency
of reinvesting dividends or measuring gains, the performance data included in
this prospectus may not be precisely comparable to performance data for the
Portfolios. If the asset size of the comparable accounts differs from that of
the pertinent Portfolio, or if the frequency or size of investment inflows or
outflows differs significantly, this might reduce the comparability of the
Portfolio's performance to that of the comparable accounts. The Portfolios'
current and future investments are not and will not necessarily be identical to
those of the comparable accounts. You should not rely upon this performance
data as an indication of the future performance of the Portfolios, NIAC, or the
portfolio managers.

ORGANIZATION OF THE TRUST

The Trust is an open-end diversified management investment company under the
Investment Company Act of 1940. The Trust was organized as a Massachusetts
business trust on January 20, 1998. The Board of Trustees of the Trust is au-
thorized to issue an unlimited number of shares in one or more series or "Port-
folios," which may be divided into classes of shares. Currently, there are six
series authorized and outstanding, each of which has only one class of shares.
Each class of shares represents an interest in the same portfolio of invest-
ments of the Trust. Each class of shares has equal rights as to voting, redemp-
tion, dividends, and liquidation. There are no conversion, preemptive, or other
subscription rights. Shareholders are entitled to one vote for each full share
held and fractional votes for fractional shares held, unless a different allo-
cation of voting rights is required under applicable law for an open-end in-
vestment company that serves as an investment medium for variable insurance
products. Shareholders will vote in the aggregate and not by series, except as
required by law or when permitted by the Board of Trustees. For a further dis-
cussion of voting rights, see the applicable contract. The Board of Trustees of
the Trust has the right to establish additional series and different classes of
shares in the future, to change those series or classes and to determine the
preferences, voting powers, rights and privileges thereof.

The Trust is not required to and does not intend to hold annual meetings of
shareholders. Shareholders owning more than 10% of the outstanding shares of
the Trust have the right to call a special meeting to remove Trustees or for
any other purpose. As of the date of this prospectus, all of the outstanding
shares of the Portfolios were owned by the John Nuveen Company, which has pro-
vided the seed capital required under the Investment Company Act of 1940.

Under Massachusetts law applicable to Massachusetts business trusts, sharehold-
ers of such a trust may, under certain circumstances, be held personally liable
as partners for its obligations. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the
Trust and requires that notice of this disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the Trust-
ees. The Trust's Declaration of Trust further provides for indemnification out
of the assets and property of the Trust for all loss and expense of any share-
holder held personally liable for the obligations of the Trust. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which both inadequate insurance existed and the
Trust or Portfolio itself was unable to meet its obligations. The Trust be-
lieves the likelihood of the occurrence of these circumstances is remote.

---
17
<PAGE>

TRUST SERVICE PROVIDERS

The Custodian of the assets of the Trust and its Transfer Agent, Shareholder
Services Agent and Dividend Paying Agent is The Chase Manhattan Bank, 4 New
York Plaza, New York, New York 10004-2413. Chase also provides certain book-
keeping, data processing, and accounting services to the Trust and administra-
tive services for the maintenance of the separate accounts.

The Minnesota Mutual Life Insurance Company provides administrative services to
the Portfolios. In its administrative services agreement, Minnesota Mutual has
agreed to coordinate matters relating to the operation of the separate accounts
with the operation of the Portfolios (including coordinating with the Trust's
custodian, record keeping agents, accountants, attorneys, and others), maintain
appropriate books and records of the separate accounts as required by law, ar-
range for the distribution of Portfolio proxy materials and periodic reports to
contract owners, address inquiries and provide information to the contract own-
ers related to Portfolio matters, tabulate contract owner voting for proxies,
and coordinate the preparation of certain documents with the Securities and Ex-
change Commission and other federal and state regulatory authorities.

NIAC, the portfolio managers, Minnesota Mutual, and Chase rely on computer sys-
tems to manage the Portfolios' investments, process shareholder transactions,
and provide shareholder account maintenance. Because of the way computers his-
torically have stored dates, some of these systems currently may not be able to
correctly process activity occurring in the year 2000. NIAC is working with the
Trust's service providers to adapt their systems to address this "year 2000 is-
sue." NIAC and the Trust expect the necessary work to be completed no later
than December 1999, although we can make no assurance with respect to the sys-
tems of the Trust's service providers.

---
18
<PAGE>

Nuveen Family of Mutual Funds

Nuveen offers a variety of funds designed
to help you reach your financial goals.
The funds below are grouped by
investment objective.

Growth
Nuveen Rittenhouse Growth Fund

Growth and Income
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund

Tax-Free Income

National Municipal Bond Funds

Long-Term

Insured Long-term

Intermediate-term

Limited-term

State Municipal Bond Funds
Alabama Kentucky/3/ New York/1/

Arizona Louisiana North Carolina

California/1/ Maryland Ohio

Colorado Massachusetts/1/ Pennsylvania

Connecticut Michigan South Carolina

Florida/2/ Missouri Tennessee

Georgia New Jersey/2/ Virginia

Kansas New Mexico Wisconsin

NUVEEN

John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
1. Long-term and insured long-term portfolios.
(800)621-7227
www.nuveen.com 2. Long-term and intermediate-term portfolios.

3. Long-term and limited-term portfolios.

EPR-1-2/98
<PAGE>

Statement of Additional Information
May 1, 1998
Nuveen Tax-Deferred Investment Trust
333 West Wacker Drive
Chicago, Illinois 60606

Strategic Income Portfolio Blue Chip Growth Portfolio
Balanced Portfolio European Value Portfolio
Growth and Income Portfolio International Equity Portfolio

This Statement of Additional Information supplements the Prospectus
offering Shares of the Strategic Income Portfolio, the Balanced Portfolio, the
Growth and Income Portfolio, the Blue Chip Growth Portfolio, the European Value
Portfolio, and the International Equity Portfolio (each a "Portfolio" and,
collectively, the "Portfolios"). Each Portfolio is a series of the Nuveen Tax-
Deferred Investment Trust, a Massachusetts business trust, which is a registered
open-end management investment company (the "Trust"). Because this Statement of
Additional Information is not a prospectus, you should not invest in the
Portfolios based solely upon the information in this Statement. A prospectus may
be obtained by writing the Nuveen Mutual Funds, 333 West Wacker Drive, Chicago,
Illinois 60606 or by calling Nuveen toll free at 800-621-7227. This Statement of
Additional Information relates to, and should be read in conjunction with the
Portfolios' Prospectus dated May 1, 1998.
<TABLE>
<CAPTION>

TABLE OF CONTENTS
-----------------
<S> <C>

Page

GENERAL INFORMATION........................... B-2

INVESTMENT POLICIES AND RESTRICTIONS.......... B-2

INVESTMENT POLICIES AND TECHNIQUES............ B-4

MANAGEMENT.................................... B-19

TRUST MANAGER, PRINCIPAL UNDERWRITER,
AND PORTFOLIO MANAGERS....................... B-21

PORTFOLIO TRANSACTIONS........................ B-22

NET ASSET VALUE............................... B-23

TAX MATTERS................................... B-24

PERFORMANCE INFORMATION....................... B-26

INDEPENDENT PUBLIC ACCOUNTANTS, ADMINISTRATOR,
AND CUSTODIAN................................ B-29

FINANCIAL STATEMENTS.......................... B-30

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS...... B-31

APPENDIX A,RATINGS OF INVESTMENTS............. A-1

</TABLE>
<PAGE>

GENERAL INFORMATION

The Nuveen Tax-Deferred Investment Trust (the "Trust"), a Massachusetts business
trust, is a mutual fund that provides for a range of investment objectives
through six separate investment portfolios: the Strategic Income Portfolio, the
Balanced Portfolio, the Growth and Income Portfolio, the Blue Chip Growth
Portfolio, the European Value Portfolio, and the International Equity Portfolio
(each a "Portfolio," and collectively, the "Portfolios"). Shares of the Trust
are not offered directly to the public, but are made available only to insurance
companies in connection with their variable insurance contracts.

Shares of the Portfolios currently may be sold only to separate accounts
("Separate Accounts") of such insurance companies to serve as investment
vehicles for variable insurance contracts issued by these companies (the
"Contracts"). The Portfolios may be used for other purposes in the future. The
Separate Accounts, which will be the owners of all of the Portfolios' shares,
will invest in such shares in accordance with instructions received from the
owners of the Contracts. Contract owners should consider that the investment
experience of the Portfolio or Portfolios that they select will affect the value
of and the benefits provided under the Contracts. See the Prospectus for the
Separate Accounts for a discussion of the relationship between increases or
decreases in the net asset value of the Portfolios (and any distributions of
such shares) and the benefits provided under the Contracts.

Certain matters under the Investment Company Act of 1940 that must be submitted
to a vote of the holders of the outstanding voting securities of a series
company shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding voting securities of each series
affected by such matter.

INVESTMENT POLICIES AND RESTRICTIONS

Investment Restrictions

The investment objective and certain fundamental investment policies of each
Portfolio are described in the Prospectus for the Nuveen Tax-Deferred Investment
Trust. The following fundamental investment policies, together with the
investment objective of each Portfolio, and certain other policies specifically
identified in the Portfolios' Prospectus, can not be changed without approval by
holders of a "majority of the Portfolio's outstanding voting shares." As defined
in the Investment Company Act of 1940, this means the vote of (i) 67% or more of
the Portfolio's shares present at a meeting, if the holders of more than 50% of
the Portfolio's shares are present or represented by proxy, or (ii) more than
50% of the Portfolio's shares, whichever is less.

Each Portfolio may not:

(1) With respect to 75% of its total assets, purchase the securities of any
issuer (except securities issued or guaranteed by the United States government
or any agency or instrumentality thereof) if, as a result, (i) more than 5% of
the Portfolio's total assets would be invested in securities of that issuer, or
(ii) the Portfolio would hold more than 10% of the outstanding voting securities
of that issuer.

(2) Borrow money, except that the Portfolio may (i) borrow money from banks
for temporary or emergency purposes (but not for leverage or the purchase of
investments) and (ii) engage in other transactions permissible under the
Investment Company Act of 1940 that may involve a borrowing (such as obtaining
such short-term credits as are necessary for the clearance of transactions,
engaging in delayed-delivery transactions, or purchasing certain futures and
options), provided that the combination of (i) and (ii) shall not exceed 33-1/3%
of the value of the Portfolio's total assets (including the amount borrowed),
less the Portfolio's liabilities (other than borrowings).

(3) Act as an underwriter of another issuer's securities, except to the extent
that the Portfolio may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in connection with the purchase and sale of portfolio
securities.

B-2
<PAGE>

(4) Make loans to other persons, except through (i) the purchase of debt
securities permissible under the Portfolio's investment policies, (ii)
repurchase agreements, or (iii) the lending of portfolio securities, provided
that no such loan of portfolio securities may be made by the Portfolio if, as a
result, the aggregate of such loans would exceed 33-1/3% of the value of the
Portfolio's total assets.

(5) Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Portfolio from purchasing or selling options, futures contracts, or other
derivative instruments, or from investing in securities or other instruments
backed by physical commodities).

(6) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prohibit the Portfolio from
purchasing or selling securities or other instruments backed by real estate or
of issuers engaged in real estate activities).

(7) Issue senior securities, except as permitted under the Investment Company
Act of 1940.

(8) Purchase the securities of any issuer if, as a result, 25% or more of the
Portfolio's total assets would be invested in the securities of issuers whose
principal business activities are in the same industry (except that this
restriction shall not be applicable to securities issued or guaranteed by the
U.S. government or any agency or instrumentality thereof). For the Strategic
Income Portfolio, electric company securities, natural gas company securities,
and telecommunications company securities shall each be considered securities of
issuers in separate industries for the purposes of this restriction.

If a percentage restriction is adhered to at the time of investment, a later
increase in percentage resulting from a change in market value of the investment
or the total assets will not constitute a violation of that restriction.

In addition to the fundamental investment policies listed above, each Portfolio
is also subject to the following non-fundamental restrictions and policies,
which may be changed by the Board of Trustees without shareholder approval.

Each Portfolio may not:

(1) Sell securities short, unless the Portfolio owns or has the right to
obtain securities equivalent in kind and amount to the securities sold short at
no added cost, and provided that transactions in options, futures contracts,
options on futures contracts, or other derivative instruments are not deemed to
constitute selling securities short.

(2) Purchase securities of open-end or closed-end investment companies except
in compliance with the Investment Company Act of 1940 or any exemptive relief
obtained thereunder.

(3) Enter into futures contracts or related options or forward contracts, if
more than 30% of the Portfolio's net assets would be represented by futures
contracts or more than 5% of the Portfolio's net assets would be committed to
initial margin deposits and premiums on futures contracts and related options.

(4) Purchase securities when borrowings exceed 5% of its total assets. If due
to market fluctuations or other reasons, the value of the Portfolio's assets
falls below 300% of its borrowings, the Portfolio will reduce its borrowings
within 3 business days. To do this, the Portfolio may have to sell a portion of
its investments at a time when it may be disadvantageous to do so.

(5) Invest in illiquid securities if, as a result of such investment, more
than 15% of the Portfolio's net assets would be invested in illiquid securities.

(6) Purchase securities of companies for the purpose of exercising control.

B-3
<PAGE>

INVESTMENT POLICIES AND TECHNIQUES

The following information supplements, and should be read in conjunction with,
the discussion of each Portfolio's investment objectives, policies, and
techniques that are described in the Portfolios' Prospectus.

Short-Term Investments

Short-Term Fixed-income Securities. Each Portfolio may invest a limited portion
of its assets in cash equivalents and short-term fixed-income securities under
normal market conditions, or to keep cash on hand fully invested. In addition,
for temporary defensive purposes, each Portfolio may invest up to 100% of its
total assets in such instruments. Short-term fixed-income securities are defined
to include, without limitation, the following:

(1) U.S. government securities, including bills, notes and bonds differing
as to maturity and rates of interest that are either issued or guaranteed by the
U.S. Treasury or by U.S. government agencies or instrumentalities. U.S.
government agency securities include securities issued by (a) the Federal
Housing Administration, Farmers Home Administration, Export-Import Bank of the
United States, Small Business Administration, and the Government National
Mortgage Association, whose securities are supported by the full faith and
credit of the United States; (b) the Federal Home Loan Banks, Federal
Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities
are supported by the right of the agency to borrow from the U.S. Treasury; (c)
the Federal National Mortgage Association, whose securities are supported by the
discretionary authority of the U.S. government to purchase certain obligations
of the agency or instrumentality; and (d) the Student Loan Marketing
Association, whose securities are supported only by its credit. While the U.S.
government provides financial support to such U.S. government-sponsored agencies
or instrumentalities, no assurance can be given that it always will do so since
it is not so obligated by law. The U.S. government, its agencies, and
instrumentalities do not guarantee the market value of their securities.
Consequently, the value of such securities may fluctuate. In addition, the
Strategic Income Portfolio, the European Value Portfolio, and the International
Equity Portfolio may each invest in sovereign debt obligations of foreign
countries. A sovereign debtor's willingness or ability to repay principal and
interest in a timely manner may be affected by a number of factors, including
its cash flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the sovereign debtor's policy
toward principal international lenders and the political constraints to which it
may be subject.

(2) Certificates of Deposit issued against funds deposited in a bank or a
savings and loan association. Such certificates are for a definite period of
time, earn a specified rate of return, and are normally negotiable. If such
certificates of deposit are non-negotiable, they will be considered illiquid
securities and be subject to each Portfolio's applicable restriction on
investments in illiquid securities. The issuer of a certificate of deposit
agrees to pay the amount deposited plus interest to the bearer of the
certificate on the dated specified thereon. Under current FDIC regulations, the
maximum insurance payable as to any one certificate of deposit is $100,000;
therefore, certificates of deposit purchased by a Portfolio may not be fully
insured.

(3) Bankers' acceptances, which are short-term credit instruments used to
finance commercial transactions. Generally, an acceptance is a time draft drawn
on a bank by an exporter or an importer to obtain a stated amount of funds to
pay for specific merchandise. The draft is then "accepted" by a bank that, in
effect, unconditionally guarantees to pay the face value of the instrument on
its maturity date. The acceptance may then be held by the accepting bank as an
asset, or it may be sold in the secondary market at the going rate of interest
for a specific maturity.

(4) Repurchase agreements, which involve purchases of debt securities. At
the time a Portfolio purchases securities pursuant to a repurchase agreement, it
simultaneously agrees to resell and redeliver such securities to the seller, who
also simultaneously agrees to buy back the securities at a fixed price and time.
This assures a predetermined yield for the Portfolio during its holding period,
since the resale price is always greater than the purchase price and reflects an
agreed-upon market rate. Such actions afford an opportunity for a Portfolio to
invest temporarily available cash. Each Portfolio may enter into repurchase
agreements only with respect to obligations of the U.S. government, its agencies
or instrumentalities; certificates of deposit; or bankers' acceptances in which
the Portfolio may invest. Repurchase agreements may be considered loans to the
seller, collateralized by the underlying securities. The risk to a Portfolio is

B-4
<PAGE>

limited to the ability of the seller to pay the agreed-upon sum on the
repurchase date; in the event of default, the repurchase agreement provides that
the affected Portfolio is entitled to sell the underlying collateral. If the
value of the collateral declines after the agreement is entered into, and if the
seller defaults under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, the Portfolio could incur a loss
of both principal and interest. Each portfolio manager monitors the value of the
collateral at the time the action is entered into and at all times during the
term of the repurchase agreement. The portfolio manager does so in an effort to
determine that the value of the collateral always equals or exceeds the agreed-
upon repurchase price to be paid to the Portfolio. If the seller were to be
subject to a federal bankruptcy proceeding, the ability of a Portfolio to
liquidate the collateral could be delayed or impaired because of certain
provisions of the bankruptcy laws.

(5) Bank time deposits, which are monies kept on deposit with banks or
savings and loan associations for a stated period of time at a fixed rate of
interest. There may be penalties for the early withdrawal of such time deposits,
in which case the yields of these investments will be reduced.

(6) Commercial paper, which consists of short-term unsecured promissory
notes, including variable rate master demand notes issued by corporations to
finance their current operations. Master demand notes are direct lending
arrangements between a Portfolio and a corporation. There is no secondary market
for such notes. However, they are redeemable by a Portfolio at any time. A
portfolio manager will consider the financial condition of the corporation
(e.g., earning power, cash flow, and other liquidity ratios) and will
continuously monitor the corporation's ability to meet all of its financial
obligations, because a Portfolio's liquidity might be impaired if the
corporation were unable to pay principal and interest on demand. Investments in
commercial paper will be limited to commercial paper rated in the two highest
categories by a major rating agency or unrated commercial paper which is, in the
opinion of each portfolio manager, of comparable quality.

Derivative Transactions

In General. Each Portfolio may engage in derivative transactions for any lawful
purpose consistent with their respective investment objectives, such as hedging
or managing risk, but not for speculation. In addition, the Strategic Income
Portfolio may write listed covered call options on securities it owns.
Derivative instruments are commonly defined to include securities or contracts
whose values depend on (or "derive" from) the value of one or more other assets,
such as securities, currencies, or commodities. These other assets are commonly
referred to as "underlying assets."

A derivative instrument generally consists of, is based upon, or exhibits
characteristics similar to, options or forward contracts. Options and forward
contracts are considered to be the basic "building blocks" of derivatives. For
example, forward-based derivatives include forward contracts and swap contracts
as well as exchange-traded futures. Option-based derivatives include privately
negotiated, over-the-counter ("OTC") options (including caps, floors, collars,
and options on forward and swap contracts), and exchange-traded options on
futures. Diverse types of derivatives may be created by combining options or
forward contracts in different ways, and by applying these structures to a wide
range of underlying assets.

An option is a contract in which the "holder" (the buyer) pays a certain amount
(the "premium") to the "writer" (the seller) to obtain the right, but not the
obligation, to buy from the writer (in a "call") or sell to the writer (in a
"put") a specific asset at an agreed upon price at or before a certain time. The
holder pays the premium at inception and has no further financial obligation.
The holder of an option-based derivative generally will benefit from favorable
movements in the price of the underlying asset but is not exposed to
corresponding losses due to adverse movements in the value of the underlying
asset. The writer of an option-based derivative generally will receive fees or
premiums, but generally is exposed to losses due to changes in the value of the
underlying asset.

A forward contract is a sales contract between a buyer (holding the "long"
position) and a seller (holding the "short" position) for an asset with delivery
deferred until a future date. The buyer agrees to pay a fixed price at the
agreed future date and the seller agrees to deliver the asset. The seller hopes
that the market price on the delivery date is less than the agreed upon price,
while the buyer hopes that the market price on the delivery date is more than
the agreed upon price.

B-5
<PAGE>

The change in value of a forward-based derivative generally is roughly
proportional to the change in value of the underlying asset.

Hedging. A Portfolio may use derivative instruments to protect against possible
adverse changes in the market value of securities it holds or anticipates that
it will hold. Derivatives may also be used to "lock-in" realized but
unrecognized gains in the value of portfolio securities. Hedging strategies, if
successful, can reduce the risk of loss by wholly or partially offsetting the
negative effect of unfavorable price movements in the investments being hedged.
However, hedging strategies can also reduce the opportunity for gain by
offsetting the positive effect of favorable price movements in the hedged
investments.

Managing Risk. A Portfolio may also use derivative instruments to manage the
risks of its assets. Risk management strategies include, but are not limited
to, facilitating the sale of Portfolio securities, managing the effective
maturity or duration of debt obligations that the Portfolio holds, establishing
a position in the derivatives markets as a substitute for buying or selling
certain securities or creating or altering exposure to certain asset classes,
such as equity, debt, and foreign securities. The use of derivative instruments
may provide a less expensive, more expedient, or more specifically focused way
for a Portfolio to invest than would "traditional" securities (i.e., stocks or
bonds).

Exchange versus OTC Derivatives. Derivative instruments may be exchange-traded
or traded in OTC transactions between private parties. Exchange-traded
derivatives are standardized options and futures contracts traded in an auction
on the floor of a regulated exchange. Exchange-traded derivatives are generally
liquid. The exchange clearinghouse is the counterparty of every contract.
Thus, each holder of an exchange contract bears the credit risk of the
clearinghouse (and has the benefit of its financial strength) rather than that
of a particular counterparty. OTC transactions are subject to additional risks,
such as the credit risk of the counterpart to the instrument, and are less
liquid than exchange-traded derivatives since they often can only be closed out
with the other party to the transaction.

Risks and Special Considerations. The use of derivative instruments involves
certain general risks and considerations as described below. The specific risks
pertaining to certain types of derivative instruments are described in the
sections that follow.

(1) Market Risk. Market risk is the risk that the value of the underlying
assets may go up or down. Adverse movements in the value of an underlying asset
can expose a Portfolio to losses. Market risk is the primary risk associated
with derivative transactions. Derivative instruments may include elements of
leverage and, accordingly, fluctuations in the value of the derivative
instrument in relation to the underlying asset may be magnified. The successful
use of derivative instruments depends upon a variety of factors, particularly
each portfolio manager's ability to predict movements of the securities,
currencies, and commodities markets, which may require different skills than
predicting changes in the prices of individual securities. There can be no
assurance that any particular strategy adopted will succeed. A decision to
engage in a derivative transaction will reflect a portfolio manager's judgment
that the derivative transaction will provide value to the Portfolio and its
shareholders and is consistent with the Portfolio's objectives, investment
limitations, and operating policies. In making such a judgment, the portfolio
manager will analyze the benefits and risks of the derivative transaction and
weigh them in the context of the Portfolio's overall investments and investment
objective.

(2) Credit Risk. Credit risk is the risk that a loss may be sustained as a
result of the failure of a counterpart to comply with the terms of a derivative
instrument. The counterparty risk for exchange-traded derivatives is generally
less than for privately-negotiated or OTC derivatives, since generally a
clearing agency, which is the issuer or counterparty to each exchange-traded
instrument, provides a guarantee of performance. For privately-negotiated
instruments, there is no similar clearing agency guarantee. In all
transactions, the Portfolios will bear the risk that the counterparty will
default, and this could result in a loss of the expected benefit of the
derivative transaction and possibly other losses to the Portfolios. The
Portfolios will enter into transactions in derivative instruments only within
counterparties that their respective portfolio manager reasonably believes are
capable of performing under the contract.

(3) Correlation Risk. Correlation risk is the risk that there might be an
imperfect correlation, or even no correlation, between price movements of a
derivative instrument and price movements of investments being hedged. When a
derivative transaction is used to completely hedge another position, changes in
the market value of the combined position (the derivative instrument plus the
position being hedged) result from an imperfect correlation between the price

B-6
<PAGE>

movements of the two instruments. With a perfect hedge, the value of the
combined position remains unchanged with any change in the price of the
underlying asset. With an imperfect hedge, the value of the derivative
instrument and its hedge are not perfectly correlated. For example, if the value
of a derivative instrument used in a short hedge (such as writing a call option,
buying a put option or selling a futures contract) increased by less than the
decline in value of the hedged investments, the hedge would not be perfectly
correlated. This might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the markets
in which these instruments are traded. The effectiveness of hedges using
instruments on indices will depend, in part, on the degree of correlation
between price movements in the index and the price movements in the investments
being hedged.

(4) Liquidity Risk. Liquidity risk is the risk that a derivative instrument
cannot be sold, closed out, or replaced quickly at or very close to its
fundamental value. Generally, exchange contracts are very liquid because the
exchange clearinghouse is the counterparty of every contract. OTC transactions
are less liquid than exchange-traded derivatives since they often can only be
closed out with the other party to the transaction. A Portfolio might be
required by applicable regulatory requirements to maintain assets as "cover,"
maintain segregated accounts, and/or make margin payments when it takes
positions in derivative instruments involving obligations to third parties
(i.e., instruments other than purchase options). If a Portfolio is unable to
close out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expires, matures, or is closed out. These requirements might impair a
Portfolio's ability to sell a security or make an investment at a time when it
would otherwise be favorable to do so, or require that the Portfolio sell a
portfolio security at a disadvantageous time. A Portfolio's ability to sell or
close out a position in an instrument prior to expiration or maturity depends
upon the existence of a liquid secondary market or, in the absence of such a
market, the ability and willingness of the counterparty to enter into a
transaction closing out the position. Due to liquidity risk, there is no
assurance that any derivatives position can be sold or closed out at a time and
price that is favorable to a Portfolio.

(5) Legal Risk. Legal risk is the risk of loss caused by the unenforceability
of a party's obligations under the derivative. While a party seeking price
certainty agrees to surrender the potential upside in exchange for downside
protection, the party taking the risk is looking for a positive payoff. Despite
this voluntary assumption of risk, a counterparty that has lost money in a
derivative transaction may try to avoid payment by exploiting various legal
uncertainties about certain derivative products.

(6) Systemic or "Interconnection" Risk. Systemic or interconnection risk is the
risk that a disruption in the financial markets will cause difficulties for all
market participants. In other words, a disruption in one market will spill over
into other markets, perhaps creating a chain reaction. Much of the OTC
derivatives market takes place among the OTC dealers themselves, thus creating a
large interconnected web of financial obligations. This interconnectedness
raises the possibility that a default by one large dealer could create losses
for other dealers and destabilize the entire market for OTC derivative
instruments.

General Limitations on the Use of Derivatives. The use of derivative instruments
is subject to regulation by the Securities and Exchange Commission (the "SEC"),
the options and futures exchanges upon which they may be traded, the Commodity
Futures Trading Commission ("CFTC"), and various state regulatory authorities.

The Trust has filed a notice of eligibility for exclusion from the definition of
the term "commodity pool operator" with the CFTC and the National Futures
Association, which regulate trading in the futures markets. In accordance with
Rule 4.5 of the regulations under the Commodities Exchange Act (the "CEA"), the
notice of eligibility for the Portfolios includes a representation that a
Portfolio will use futures contracts and related options solely for "bona fide
hedging" purposes within the meaning of CFTC regulations. The Portfolios may,
however, hold other positions in futures contracts and related options that do
not qualify as a bona fide hedging position if the aggregate initial margin
deposits and premiums required to establish these positions, less the amount by
which any such futures contracts and related options positions are "in the
money," do not exceed 5% of each Portfolio's net assets. Adherence to these
guidelines does not limit a Portfolio's risk to 5% of the Portfolio's assets. In
addition to the foregoing guidelines, no Portfolio will enter into options,
futures, or options on futures transactions if more than 30% of the Portfolio's
net assets would be committed to such instruments.

B-7
<PAGE>

The SEC has identified certain trading practices involving derivative
instruments that raise the potential for leveraging Portfolio assets in a manner
that may be impermissible under the 1940 Act. To limit the potential for the
leveraging of Portfolio assets, as defined under the 1940 Act, the SEC has
stated that a Portfolio may cover or segregate assets. The Portfolios will also
set aside permissible liquid assets in a segregated custodial account if
required to do so by SEC or CFTC regulations. Assets used as cover or held in a
segregated account can not be sold while the derivative position is open, unless
they are replaced with similar assets. As a result, the commitment of a large
portion of a Portfolio's assets to segregated accounts could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.

In some cases, a Portfolio may be required to maintain or limit exposure to a
specified percentage of its assets to a particular asset class. In such cases,
when a Portfolio uses a derivative instrument to increase or decrease exposure
to an asset class and is required by applicable SEC guidelines to set aside
liquid assets in a segregated account to secure its obligations under the
derivative instruments, each portfolio manager may, where reasonable in light of
the circumstances, measure compliance with the applicable percentage by
reference to the nature of the economic exposure created through the use of the
derivative instrument and by reference to the nature of the exposure arising
from the assets set aside in the segregated account.

Options. The Portfolios may use options for any lawful purpose consistent with
their respective investment objectives such as hedging or managing risk but not
for speculation. An option is a contract in which the "holder" (the buyer) pays
a certain amount (the "premium") to the "writer" (the seller) to obtain the
right, but not the obligation, to buy from the writer (in a "call") or sell to
the writer (in a "put") a specific asset at an agreed upon price (the "strike
price" or "exercise price") at or before a certain time (the "expiration date").
The holder pays the premium at inception and has no further financial
obligation. The holder of an option will benefit from favorable movements in
the price of the underlying asset but is not exposed to corresponding losses due
to adverse movements in the value of the underlying asset. The writer of an
option will receive fees or premiums but is exposed to losses due to changes in
the value of the underlying asset. The Portfolios each may purchase (buy) or
write (sell) put and call options on assets, such as securities, currencies,
commodities, and indices of debt and equity securities ("underlying assets") and
enter into closing transactions with respect to such options to terminate an
existing position. Options used by the Portfolios may include European-,
American- and Bermuda-style options. If an option is exercisable only at
maturity, it is a "European" option; if it is also exercisable prior to
maturity, it is an "American" option; if it is exercisable only at certain
times, it is a "Bermuda" option.

The Portfolios each may purchase and write put and call options and enter into
closing transactions with respect to such options to terminate an existing
position. The purchase of call options serves as a long hedge, and the purchase
of put options serves as a short hedge. Writing put or call options can enable
the Portfolios to enhance income by reason of the premiums paid by the purchaser
of such options. Writing call options serves as a limited short hedge because
declines in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. If the security appreciates to a
price higher than the exercise price of the call option, however, it can be
expected that the option will be exercised and the affected Portfolio will be
obligated to sell the security at less than its market value or will be
obligated to purchase the security at a price greater than that at which the
security must be sold under the option. All or a portion of any assets used as
cover for OTC options written by the Portfolios would be considered illiquid to
the extent described under "Investment Policies and Techniques--Illiquid
Securities." Writing put options serves as a limited long hedge because
increases in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. If the security depreciates to a
price lower than the exercise price of the put option, it can be expected that
the put option will be exercised and the affected Portfolio will be obligated to
purchase the security at more than its market value.

The value of an option position will reflect, among other things, the historical
price volatility of the underlying investment, the current market value of the
underlying investment, the time remaining until expiration, the relationship of
the exercise price to the market price of the underlying investment, and general
market conditions.

B-8
<PAGE>

A Portfolio may effectively terminate its right or obligation under an option by
entering into a closing transaction. For example, a Portfolio may terminate its
obligation under a call or put option that it has written by purchasing an
identical call or put option; this is known as a closing purchase transaction.
Conversely, a Portfolio may terminate a position in a put or call option it had
purchased by writing an identical put or call option; this is known as a closing
sale transaction. Closing transactions permit the Portfolios to realize the
profit or limit the loss on an option position prior to its exercise or
expiration.

The Portfolios each may purchase or write both exchange-traded and OTC options.
Exchange-traded options are issued by a clearing organization affiliated with
the exchange on which the option is listed that, in effect, guarantees
completion of every exchange-traded option transaction. In contrast, OTC
options are contracts between a Portfolio and the other party to the transaction
("counterparty") (usually a securities dealer or a bank) with no clearing
organization guarantee. Thus, when a Portfolio purchases or writes an OTC
option, it relies on the counter party to make or take delivery of the
underlying investment upon exercise of the option. Failure by the counter party
to do so would result in the loss of any premium paid by the Portfolio as well
as the loss of any expected benefit of the transaction.

A Portfolio's ability to establish and close out positions in exchange-listed
options depends upon the existence on a liquid market for such instruments. The
Portfolios intend to purchase or write only those exchange-traded options for
which there appears to be a liquid secondary market. However, there can be no
assurance that such a market will exist at any particular time. Closing
transactions can be made for OTC options only by negotiating directly with the
counter party, or by a transaction in the secondary market if any such market
exists. Although the Portfolios will enter into OTC options only with counter
parties that are expected to be capable of entering into closing transactions,
there is no assurance that the Portfolios will in fact be able to close out OTC
options at favorable prices prior to expiration. In the event of insolvency of
the counter party, the Portfolios may be unable to close out an OTC option
position at any time prior to its expiration. If a Portfolio were unable to
effect a closing transaction for an option it had purchased, it would have to
exercise the option to realize any profit.

The Portfolios also may engage in options transactions on indices in much the
same manner as the options on securities discussed above, except the index
options may serve as a hedge against overall fluctuations in the securities
market in general. The writing and purchasing of options is a highly
specialized activity that involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. An
imperfect correlation between the options and securities markets may detract
from the effectiveness of attempted hedging.

Futures Contracts. The Portfolios each may use futures contracts for any lawful
purpose consistent with their respective investment objectives such as hedging
and managing risk but not for speculation. The Portfolios each may enter into
futures contracts, including interest rate, index, and currency futures. The
Portfolios also each may purchase put and call options, and write covered put
and call options, on futures in which they are allowed to invest. The purchase
of futures or call options on futures can serve as a long hedge, and the sale of
futures or the purchase of put options on futures can serve as a short hedge.
Writing covered call options on futures contracts can serve as a limited short
hedge, and writing covered put options on futures contracts can serve as a
limited long hedge, using a strategy similar to that used for writing covered
options in securities. The Portfolios' hedging strategies may include purchases
of futures as an offset against the effect of expected increases in currency
exchange rates and securities prices and sales of futures as an offset against
the effect of expected declines in currency exchange rates and securities
prices. The Portfolios may also write put options on futures contracts while at
the same time purchasing call options on the same futures contracts to create
synthetically a long futures contract position. Such options would have the
same strike prices and expiration dates. The Portfolios will engage in this
strategy only when their respective portfolio manager believes it is more
advantageous than purchasing a futures contract.

To the extent required by regulatory authorities, the Portfolios may enter into
futures contracts that are traded on national futures exchanges and are
standardized as to maturity date and underlying financial instrument. Futures
exchanges and trading are regulated under the CEA by the CFTC. Although
techniques other than sales and purchases of futures contracts could be used to
reduce a Portfolio's exposure to market, currency or interest rate fluctuations,
a Portfolio may be able to hedge its exposure more effectively and perhaps at a
lower cost through using futures contracts.

B-9
<PAGE>

An interest rate futures contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument (e.g., a debt security) or currency for a specified price at a
designated date, time, and place. An index futures contract is an agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to the difference between the value of the index at the close of the
last trading day of the contract and the price at which the index futures
contract was originally written. Transaction costs are incurred when a futures
contract is bought or sold and margin deposits must be maintained. A futures
contract may be satisfied by delivery or purchase, as the case may be, of the
instrument or the currency or by payment of the change in the cash value of the
index. More commonly, futures contracts are closed out prior to delivery by
entering into an offsetting transaction in a matching futures contract.
Although the value of an index might be a function of the value of certain
specified securities, no physical delivery of those securities is made. If the
offsetting purchase price is less than the original sale price, a Portfolio
realizes a gain; if it is more, the Portfolio realizes a loss. Conversely, if
the offsetting sale price is more than the original purchase price, a Portfolio
realizes a gain; if it is less, the Portfolio realizes a loss. The transaction
costs must also be included in these calculations. There can be no assurance,
however, that a Portfolio will be able to enter into an offsetting transaction
with respect to a particular futures contract at a particular time. If a
Portfolio is not able to enter into an offsetting transaction, the Portfolio
will continue to be required to maintain the margin deposits on the futures
contract.

No price is paid by a Portfolio upon entering into a futures contract. Instead,
at the inception of a futures contract, a Portfolio is required to deposit in a
segregated account with its custodian, in the name of the futures broker through
whom the transaction was effected, "initial margin," consisting of cash or other
liquid assets, in an amount generally equal to 10% or less of the contract
value. Margin must also be deposited when writing a call or put option on a
futures contract, in accordance with applicable exchange rules. Unlike margin
in securities transactions, initial margin on futures contracts does not
represent a borrowing, but rather is in the nature of a performance bond or
good-faith deposit that is returned to the Portfolio at the termination of the
transaction if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, a Portfolio may be required
by an exchange to increase the level of its initial margin payment, and initial
margin requirements might be increased generally in the future by regulatory
action.

Subsequent "variation margin" payments are made to and from the futures broker
daily as the value of the futures position varies, a process known as "marking
to market." Variation margin does not involve borrowing, but rather represents
a daily settlement of a Portfolio's obligations to or from a futures broker.
When a Portfolio purchases an option on a future, the premium paid plus
transaction costs is all that is at risk. In contrast, when a Portfolio
purchases or sells a futures contract or writes a call or put option on a
futures contract, it is subject to daily variation margin calls that could be
substantial in the event of adverse price movements. If the Portfolio has
insufficient cash to meet daily variation margin requirements, it might need to
sell securities at a time when such sales are disadvantageous. Purchasers and
sellers of futures positions and options on futures can enter into offsetting
closing transactions by selling or purchasing, respectively, an instrument
identical to the instrument held or written. Positions in futures and options
on futures may be closed only on an exchange or board of trade that provides a
secondary market. The Portfolios intend to enter into futures transactions only
on exchanges or boards of trade where there appears to be a liquid secondary
market. However, there can be no assurance that such a market will exist for a
particular contract at a particular time.

Under certain circumstances, futures exchanges may establish daily limits on the
amount that the price of a future or option on a futures contract can vary from
the previous day's settlement price; once that limit is reached, no trades may
be made that day at a price beyond the limit. Daily price limits do not limit
potential losses because prices could move to the daily limit for several
consecutive days with little or no trading, thereby preventing liquidation of
unfavorable positions.

If a Portfolio were unable to liquidate a futures or option on a futures
contract position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Portfolio
would continue to be subject to market risk with respect to the position. In
addition, except in the case of purchased options, the Portfolio would continue
to be required to make daily variation margin payments and might be required to
maintain the position being hedged by the future or option or to maintain
certain liquid securities in a segregated account.

B-10
<PAGE>

Certain characteristics of the futures market might increase the risk that
movements in the prices of futures contracts or options on futures contracts
might not correlate perfectly with movements in the prices of the investments
being hedged. For example, all participants in the futures and options on
futures contracts markets are subject to daily variation margin calls and might
be compelled to liquidate futures or options on futures contracts positions
whose prices are moving unfavorably to avoid being subject to further calls.
These liquidations could increase the price volatility of the instruments and
distort the normal price relationship between the futures or options and the
investments being hedged. Also, because initial margin deposit requirements in
the futures markets are less onerous than margin requirements in the securities
markets, there might be increased participation by speculators in the futures
markets. This participation also might cause temporary price distortions. In
addition, activities of large traders in both the futures and securities markets
involving arbitrage, "program trading," and other investment strategies might
result in temporary price distortions.

Foreign Investments

Indirect Foreign Investment--Depositary Receipts. Subject to their respective
investment objectives and policies, the Portfolios may invest in foreign
securities by purchasing depositary receipts, including American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or Global Depositary
Receipts ("GDRs"), or other securities representing indirect ownership interests
in the securities of foreign issuers. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in the U.S. securities
markets, while EDRs, and GDRs in bearer form, may be denominated in other
currencies and are designed for use in European and other markets. For purposes
of a Portfolio's investment policies, ADRs, EDRs, and GDRs are deemed to have
the same classification as the underlying securities they represent, except that
ADRs, EDRs, and GDRs shall be treated as indirect foreign investments. Thus, an
ADR, EDR, or GDR representing ownership of common stock will be treated as
common stock. ADRs, EDRs, and GDRs do not eliminate all of the risks associated
with directly investing in the securities of foreign issuers.

Other types of depositary receipts include American Depositary Shares ("ADSs"),
Global Depositary Certificates ("GDCs"), and International Depositary Receipts
("IDRs"). ADSs are shares issued under a deposit agreement representing the
underlying ordinary shares that trade in the issuer's home market. An ADR,
described above, is a certificate that represents a number of ADSs. GDCs, and
IDRs are typically issued by a foreign bank or trust company, although they may
sometimes also be issued by a U.S. bank or trust company. GDCs, and IDRs are
depositary receipts that evidence ownership of underlying securities issued by
either a foreign or a U.S. corporation.

Depositary receipts may be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by a depositary and the
issuer of the security underlying the receipt. An unsponsored facility may be
established by a depositary without participation by the issuer of the security
underlying the receipt. There are greater risks associated with holding
unsponsored depositary receipts. For example, if a Portfolio holds an
unsponsored depositary receipt, it will generally bear all of the costs of
establishing the unsponsored facility. In addition, the depositary of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through to the holders of the receipts voting rights with respect to the
deposited securities.

Direct Foreign Investments. Subject to their respective investment policies
regarding direct foreign investments, each Portfolio may invest to some extent
directly in the securities of foreign issuers, including shares of closed-end
investment companies that invest primarily in securities of foreign issuers. In
considering whether to invest in the securities of a foreign company, each
portfolio manager considers such factors as the characteristics of the
particular company, differences between economic trends, and the performance of
securities markets within the U.S. and those within other countries. Each
portfolio manager also considers factors relating to the general economic,
governmental, and social conditions of the country or countries where the
company is located.

The Strategic Income Portfolio, the European Value Portfolio, and the
International Equity Portfolio each may purchase debt obligations issued or
guaranteed by governments (including states, provinces or municipalities) of
countries other than the United States, or by their agencies, authorities, or
instrumentalities. These Portfolios also each may purchase debt obligations
issued or guaranteed by supranational entities organized or supported by several
national governments,

B-11
<PAGE>

such as the International Bank for Reconstruction and Development (the "World
Bank"), the Inter-American Development Bank, the Asian Development Bank, and the
European Investment Bank. In addition, these Portfolios each may purchase debt
obligations of foreign corporations or financial institutions, such as Yankee
bonds (dollar-denominated bonds sold in the United States by non-U.S. issuers),
Samurai bonds (yen-denominated bonds sold in Japan by non-Japanese issuers), and
Euro bonds (bonds not issued in the country (and possibly not the currency of
the country) of the issuer).

Each Portfolio's investments will be allocated among securities denominated in
the currencies of a number of foreign countries and, within each such country,
among different types of debt securities. The percentage of assets invested in
securities of a particular country or denominated in a particular currency will
vary in accordance with each Portfolio manager's assessment of the country's
gross domestic product, purchasing power parity and market capitalization and
the relationship of a country's currency to the United States dollar.
Fundamental economic strength, credit quality and interest rate trends will be
the principal factors considered by the portfolio manager in determining whether
to increase or decrease the emphasis placed upon a particular type of security
within a Portfolio.

Securities transactions conducted outside the U.S. may not be regulated as
rigorously as in the U.S., may not involve a clearing mechanism and related
guarantees, and are subject to the risk of governmental actions affecting
trading in, or the prices of, foreign securities, currencies and other
instruments. The value of such positions also could be adversely affected by (i)
other complex foreign political, legal and economic factors, (ii) lesser
availability than in the U.S. of data on which to make trading decisions, (iii)
delays in a Portfolio's ability to act upon economic events occurring in foreign
markets during non-business hours in the U.S., (iv) the imposition of different
exercise and settlement terms and procedures and the margin requirements than in
the U.S., and (v) lower trading volume and liquidity.

The Strategic Income Portfolio, the European Value Portfolio, and the
International Equity Portfolio each may invest in Eurodollar convertibles.
Eurodollar convertibles are fixed-income securities of a foreign issuer that are
issued in U.S. dollars outside the U.S. and are convertible into or exchangeable
for specified equity securities.

As an operating policy, each Portfolio will follow certain California Insurance
Department diversification guidelines and, therefore, will not invest more than
50% of its assets in any one second tier country or more than 25% of its assets
in any one third tier country. First tier countries are Germany, the United
Kingdom, Japan, the United States, France, Canada, and Australia. Second tier
countries are all countries not in the first or third tier. Third tier countries
are countries identified as "emerging" or "developing" by the International Bank
for Reconstruction and Development ("World Bank") or International Finance
Corporation.

Foreign Currency Transactions. The Strategic Income Portfolio, the European
Value Portfolio, and the International Equity Portfolio each may engage in
foreign currency forward contracts, options, and futures transactions. The
Portfolios will enter into foreign currency transactions for hedging and other
permissible risk management purposes only. Foreign currency futures and options
contracts are traded in the U.S. on regulated exchanges such as the Chicago
Mercantile Exchange, the Mid-America Commodities Exchange, and the Philadelphia
Stock Exchange. If a Portfolio invests in a currency futures or options
contract, it must make a margin deposit to secure performance of such contract.
With respect to investments in currency futures contracts, the Portfolios may
also be required to make a variation margin deposit because the value of futures
contracts fluctuates from purchase to maturity. In addition, the Portfolios may
segregate assets to cover their futures contracts obligations.

(1) Currency Risks. The exchange rates between the U.S. dollar and foreign
currencies depend upon such factors as supply and demand in the currency
exchange markets, international balances of payments, governmental intervention,
speculation, and other economic and political conditions. Although the
Portfolios value their assets daily in U.S. dollars, the Portfolios may not
convert their holdings of foreign currencies to U.S. dollars daily. The
Portfolios may incur conversion costs when they convert their holdings to
another currency. Foreign exchange dealers may realize a profit on the
difference between the price at which the Portfolios buy and sell currencies.
The Portfolios will engage in foreign currency exchange transactions in
connection with their portfolio investments. The Portfolios will conduct their
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate

B-12
<PAGE>

prevailing in the foreign currency exchange market or through forward contracts
to purchase or sell foreign contracts.

(2) Forward Foreign Currency Exchange Contracts. The Portfolios may enter into
forward currency exchange contracts. Forward foreign currency exchange contracts
may limit potential gains that could result from a positive change in such
currency relationships. Each portfolio manager believes that it is important to
have the flexibility to enter into forward foreign currency exchange contracts
whenever it determines that it is in the Portfolio's best interest to do so. The
Portfolios will not speculate in foreign currency exchange.

The Portfolios will not enter into forward currency exchange contracts or
maintain a net exposure in such contracts that they would be obligated to
deliver an amount of foreign currency in excess of the value of its portfolio
securities or other assets denominated in that currency or, in the case of a
"cross-hedge," denominated in a currency or currencies that each portfolio
manager believes will tend to be closely correlated with that currency with
regard to price movements. Generally, the Portfolios will not enter into a
forward foreign currency exchange contract with a term longer than one year.

(3) Foreign Currency Options. A foreign currency option provides the option
buyer with the right to buy or sell a stated amount of foreign currency at the
exercise price on a specified date or during the option period. The owner of a
call option has the right, but not the obligation, to buy the currency.
Conversely, the owner of a put option has the right, but not the obligation, to
sell the currency. When the option is exercised, the seller (i.e., writer) of
the option is obligated to fulfill the terms of the sold option. However, either
the seller or the buyer may, in the secondary market, close its position during
the option period at any time prior to expiration.

A call option on foreign currency generally rises in value if the underlying
currency appreciates in value, and a put option on a foreign currency generally
rises in value if the underlying currency depreciates in value. Although
purchasing a foreign currency option can protect the Portfolios against an
adverse movement in the value of a foreign currency, the option will not limit
the movement in the value of such currency. For example, if a Portfolio held
securities denominated in a foreign currency that was appreciating and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, the Portfolio would not have to exercise its put option. Likewise, if
a Portfolio entered into a contract to purchase a security denominated in
foreign currency and, in conjunction with that purchase, purchased a foreign
currency call option to hedge against a rise in value of the currency, and if
the value of the currency instead depreciated between the date of purchase and
the settlement date, the Portfolio would not have to exercise its call. Instead,
the Portfolio could acquire in the spot market the amount of foreign currency
needed for settlement.

(4) Special Risks Associated with Foreign Currency Options. Buyers and sellers
of foreign currency options are subject to the same risks that apply to options
generally. In addition, there are certain risks associated with foreign currency
options. The markets in foreign currency options are relatively new, and a
Portfolio's ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market. Although the Portfolios
will not purchase or write such options unless and until, in the opinion of
their respective portfolio manager, the market for them has developed
sufficiently to ensure that the risks in connection with such options are not
greater than the risks in connection with the underlying currency, there can be
no assurance that a liquid secondary market will exist for a particular option
at any specific time.

In addition, options on foreign currencies are affected by all of those factors
that influence foreign exchange rates and investments generally. The value of a
foreign currency option depends upon the value of the underlying currency
relative to the U.S. dollar. As a result, the price of the option position may
vary with changes in the value of either or both currencies and may have no
relationship to the investment merits of a foreign security. Because foreign
currency transactions occurring in the interbank market involve substantially
larger amounts than those that may be involved in the use of foreign currency
options, investors may be disadvantaged by having to deal in an odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.

B-13
<PAGE>

There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Available quotation
information is generally representative of very large transactions in the
interbank market and thus may not reflect relatively smaller transactions (i.e.,
less than $1 million) where rates may be less favorable. The interbank market in
foreign currencies is a global, around-the-clock market. To the extent that the
U.S. options markets are closed while the markets for the underlying currencies
remain open, significant price and rate movements may take place in the
underlying markets that cannot be reflected in the options markets until they
reopen.

(5) Foreign Currency Futures Transactions. By using foreign currency futures
contracts and options on such contracts, the Portfolios may be able to achieve
many of the same objectives as they would through the use of forward foreign
currency exchange contracts. The Portfolios may be able to achieve these
objectives possibly more effectively and at a lower cost by using futures
transactions instead of forward foreign currency exchange contracts.

(6) Special Risks Associated with Foreign Currency Futures Contracts and Related
Options. Buyers and sellers of foreign currency futures contacts are subject to
the same risks that apply to the use of futures generally. In addition, there
are risks associated with foreign currency futures contracts and their use as a
hedging device similar to those associated with options on currencies, as
described above.

Options on foreign currency futures contracts may involve certain additional
risks. Trading options on foreign currency futures contracts is relatively new.
The ability to establish and close out positions on such options is subject to
the maintenance of a liquid secondary market. To reduce this risk, the
Portfolios will not purchase or write options on foreign currency futures
contracts unless and until, in the opinion of their respective portfolio
managers, the market for such options has developed sufficiently that the risks
in connection with such options are not greater than the risks in connection
with transactions in the underlying foreign currency futures contracts. Compared
to the purchase or sale of foreign currency futures contracts, the purchase of
call or put options on futures contracts involves less potential risk to the
Portfolios because the maximum amount at risk is the premium paid for the option
(plus transaction costs). However, there may be circumstances when the purchase
of a call or put option on a futures contract would result in a loss, such as
when there is no movement in the price of the underlying currency or futures
contract.

Other Investment Policies and Techniques

Delayed-Delivery Transactions. Each Portfolio may from time to time purchase
securities on a "when-issued" or other delayed-delivery basis. The price of
securities purchased in such transactions is fixed at the time the commitment to
purchase is made, but delivery and payment for the securities take place at a
later date. Normally, the settlement date occurs within 45 days of the purchase.
During the period between the purchase and settlement, no payment is made by the
Portfolio to the issuer and no interest is accrued on debt securities or
dividend income is earned on equity securities. Delayed-delivery commitments
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition to the risk of decline
in value of a Portfolio's other assets. While securities purchased in delayed-
delivery transactions may be sold prior to the settlement date, each Portfolio
intends to purchase such securities with the purpose of actually acquiring them.
At the time a Portfolio makes the commitment to purchase a security in a
delayed-delivery transaction, it will record the transaction and reflect the
value of the security in determining its net asset value. The Portfolios do not
believe that net asset value will be adversely affected by purchases of
securities in delayed-delivery transactions.

The Portfolios will maintain cash, U.S. government securities, and high grade
liquid debt securities equal in value to commitments for delayed-delivery
securities. Such segregated securities will mature or, if necessary, be sold on
or before the settlement date. When the time comes to pay for delayed-delivery
securities, the Portfolio will meet its obligations from then-available cash
flow, sale of the securities held in the segregated account described above,
sale of other securities, or, although it would not normally expect to do so,
from the sale of the delayed-delivery securities themselves (which may have a
market value greater or less than the Portfolio's payment obligation).

B-14
<PAGE>

Illiquid Securities. Each Portfolio may invest up to 15% of its net assets in
illiquid securities (i.e., securities that are not readily marketable). For the
purpose of this restriction, illiquid securities include, but are not limited
to, restricted securities (securities the disposition of which is restricted
under the federal securities laws, such as privately placed securities);
securities that may only be resold pursuant to Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act"), but that are deemed to be
illiquid; and repurchase agreements with maturities in excess of seven days. The
Board of Trustees or its delegate has the ultimate authority to determine, to
the extent permissible under the federal securities laws, which securities are
liquid for purposes of each Portfolio's respective investment limitation. The
Board of Trustees has delegated to each Portfolio manager the day-to-day
determination of the liquidity of any security held by a Portfolio, although it
has retained oversight and ultimate responsibility for such determinations.
Although no definitive liquidity criteria are used, the Board of Trustees has
directed each portfolio manager to look to such factors as (i) the nature of the
market for a security (including the institutional private resale market, the
frequency of trades and quotes for the security, the number of dealers willing
to purchase or sell the security, the amount of time normally needed to dispose
of the security, the method of soliciting offers and the mechanics of transfer);
(ii) the terms of certain securities or other instruments allowing for the
disposition to a third party or the issuer thereof (e.g., certain repurchase
obligations and demand instruments); and (iii) other permissible relevant
factors. Illiquid securities will be priced at fair value as determined in good
faith by the Board of Trustees or its delegate. If, through the appreciation of
illiquid securities or the depreciation of liquid securities, a Portfolio should
be in a position where more than 15% of the value of its net assets are invested
in illiquid securities, including restricted securities that are not readily
marketable, the affected Portfolio will take such steps as is deemed advisable,
if any, to protect liquidity.

Inflation-Indexed Bonds. The Strategic Income Portfolio may invest in
inflation-indexed bonds issued by the U.S. Government, its agencies or
instrumentalities, or by private corporations. The principal value of this type
of bond is periodically adjusted according to changes in the rate of inflation.
The interest rate is generally fixed at issuance; however, interest payments are
based upon an inflation adjusted principal value. For example, in a period of
falling inflation, principal value will be adjusted downward, reducing the
interest payable.

Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed in the case of U.S. Treasury inflation indexed bonds,
even during a period of deflation. However, the current market value of the
bonds is not guaranteed and will fluctuate. The Portfolio may also invest in
other bonds which may or may not provide a similar guarantee. If a guarantee of
principal is not provided, the adjusted principal value of the bond repaid at
maturity may be less than the original principal.

Lending. Each Portfolio may lend its portfolio securities, up to 33 1/3% of its
total assets, including collateral received, to broker-dealers or institutional
investors. Such loans will be secured continuously by collateral at least equal
to the value of the securities lent by "marking to market" daily. A Portfolio
will continue to receive the equivalent of the interest or dividends paid by the
issuer of the securities lent and will retain the right to call, upon notice,
the lent securities. A Portfolio may also receive interest on the investment of
the collateral or a fee from the borrower as compensation for the loan. As with
other extensions of credit, there are risks of delay in recovery or even loss of
rights in the collateral should the borrower of the securities fail financially.
However, loans will be made only to firms deemed by the portfolio manager to be
of good standing.

Loan Participations. The Strategic Income Portfolio may invest in loan
participations, which may have speculative characteristics, when the portfolio
manager believes such investments offer the possibility of long-term
appreciation in value. Loan participations are interests in floating or variable
rate senior loans to U.S. corporations, partnerships, and other entities that
operate in a variety of industries and geographic regions. An investment in loan
participations carries a high degree of risk and may have the consequence that
interest payments with respect to such securities may be reduced, deferred,
suspended, or eliminated and may have the further consequence that principal
payments may likewise be reduced, deferred, suspended or canceled, causing the
loss of the entire amount of the investment. In addition, most loan
participations are illiquid. To the extent that loan participations are deemed
to be illiquid, they will be subject to the Portfolio's 15% restriction on
investments in illiquid securities.

Loans in which the Strategic Income Portfolio will purchase participation
interests may pay interest at rates which are periodically redetermined on the
basis of a base lending rate plus a premium. These base lending rates are
generally the Prime Rate offered by a major U.S. bank, the London Inter-Bank
Offered Rate, the Certificate of Deposit rate or other base lending rates used
by commercial lenders. The loans typically have the most senior position in a
borrower's capital

B-15
<PAGE>

structure, although some loans may hold an equal ranking with other senior
securities of the borrower. Although the loans generally are secured by specific
collateral, the Portfolio may invest in loans which are not secured by any
collateral. Uncollateralized loans pose a greater risk of nonpayment of interest
or loss of principal than do collateralized loans. The collateral underlying a
collateralized loan may consist of assets that may not be readily liquidated,
and there is no assurance that the liquidation of such assets would satisfy
fully a borrower's obligation under a loan. The Strategic Income Portfolio is
not subject to any restrictions with respect to the maturity of the loans in
which it purchases participation interests.

The loans in which the Portfolio will purchase participation interests generally
are not rated by nationally recognized statistical rating organizations.
Ratings of other securities issued by a borrower do not necessarily reflect
adequately the relative quality of a borrower's loans. Therefore, although the
portfolio manager may consider such ratings in determining whether to invest in
a particular loan, such ratings will not be the determinative factor in the
portfolio manager's analysis.

The loans are not readily marketable and may be subject to restrictions on
resale. Participation interests in the loans generally are not listed on any
national securities exchange or automated quotation system and no regular market
has developed for such interests. Any secondary purchases and sales of loan
participations generally are conducted in private transactions between buyers
and sellers. Many of the loans in which the Strategic Income Portfolio expects
to purchase interests are of a relatively large principal amount and are held by
a relatively large number of owners which, in the portfolio manager's opinion,
should enhance the relative liquidity of such interests.

When acquiring a loan participation, the Strategic Income Portfolio will have a
contractual relationship only with the lender (typically an entity in the
banking, finance or financial services industries), not with the borrower. The
Strategic Income Portfolio has the right to receive payments of principal and
interest to which it is entitled only from the lender selling the loan
participation and only upon receipt by such lender of such payments from the
borrower. In connection with purchasing loan participations, the Strategic
Income Portfolio generally will have no right to enforce compliance by the
borrower with the terms of the loan agreement, nor any rights with respect to
any funds acquired by other lenders through set-off against the borrower, and
the Portfolio may not directly benefit from the collateral supporting the loan
in which it has purchased the loan participation. As a result, the Portfolio
may assume the credit risk of both the borrower and the lender selling the loan
participation. In the event of insolvency of the lender selling a loan
participation, the Strategic Income Portfolio may be treated as a general
creditor of such lender, and may not benefit from any set-off between such
lender and the borrower.

Non-Investment Grade Debt Securities ("Junk Bonds"). The Strategic Income
Portfolio and the European Value Portfolio each may invest in junk bonds. Junk
bonds, while generally offering higher yields than investment grade securities
with similar maturities, involve greater risks, including the possibility of
default or bankruptcy. They are regarded as predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal. The
special risk considerations in connection with investments in these securities
are discussed below. Refer to the Appendix of this Statement of Additional
Information for a discussion of securities ratings.

(1) Effect of Interest Rates and Economic Changes. The junk bond market is
relatively new and its growth has paralleled a long economic expansion. As a
result, it is not clear how this market may withstand a prolonged recession or
economic downturn. Such an economic downturn could severely disrupt the market
for and adversely affect the value of such securities.

All interest-bearing securities typically experience appreciation when interest
rates decline and depreciation when interest rates rise. In addition, the
market values of junk bond securities tend to reflect individual corporate
developments to a greater extent than do the market values of higher rated
securities, which react primarily to fluctuations in the general level of
interest rates. Junk bond securities also tend to be more sensitive to economic
conditions than are higher rated securities. As a result, they generally
involve more credit risk than securities in the higher rated categories. During
an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of junk bond securities may experience financial stress and
may not have sufficient revenues to meet their payment obligations. The risk of
loss due to default by an issuer of these securities is significantly greater
than by an

B-16
<PAGE>

issuer of higher rated securities because such securities are generally
unsecured and are often subordinated to other creditors. Further, if the issuer
of a junk bond security defaults, the Portfolio may incur additional expenses to
seek recovery. Periods of economic uncertainty and changes would also generally
result in increased volatility in the market prices of these securities and thus
in the Portfolio's net asset value.

As previously stated, the value of a junk bond security will generally decrease
in a rising interest rate market and, accordingly, so will a Portfolio's net
asset value. If a Portfolio experiences unexpected net redemptions in such a
market, it may be forced to liquidate a portion of its portfolio securities
without regard to their investment merits. Due to the limited liquidity of junk
bond securities, the Portfolio may be forced to liquidate these securities at a
substantial discount. Any such liquidation would reduce a Portfolio's asset base
over which expenses could be allocated and could result in a reduced rate of
return for the Portfolio.

(2) Payment Expectations. Junk bond securities typically contain redemption,
call, or prepayment provisions that permit the issuer of securities containing
such provisions to redeem the securities at its discretion. During periods of
falling interest rates, issuers of these securities are likely to redeem or
prepay the securities and refinance them with debt securities with a lower
interest rate. To the extent an issuer is able to refinance the securities, or
otherwise redeem them, a Portfolio may have to replace the securities with a
lower yielding securities, which could result in a lower return for the
Portfolio.

(3) Credit Ratings. Credit ratings are issued by credit rating agencies and are
indicative of the rated securities' safety of principal and interest payments.
They do not, however, evaluate the market value risk of junk bond securities
and, therefore, may not fully reflect the true risks of such an investment. In
addition, credit rating agencies may not make timely changes in a rating to
reflect changes in the economy or in the condition of the issuer that affect the
value of the security. Consequently, credit ratings are used only as a
preliminary indicator of investment quality. Investments in junk bonds will
depend more upon Institutional Capital's credit analysis than investments in
investment grade debt securities. Institutional Capital employs its own credit
research and analysis, which includes a study of the issuer's existing debt,
capital structure, ability to service debts pay dividends, sensitivity to
economic conditions, operating history, and current earnings trend.
Institutional Capital continually monitors the Portfolio's investments and
carefully evaluates whether to dispose of or to retain junk bond securities
whose credit ratings or credit quality may have changed.

(4) Liquidity and Valuation. The Portfolio may have difficulty disposing of
certain junk bond securities because there may be a thin trading market for such
securities. Not all dealers maintain markets in all junk bond securities. As a
result, there is no established retail secondary market for many of these
securities. The Portfolio anticipates that such securities could be sold only to
a limited number of dealers or institutional investors. To the extent a
secondary trading market does exist, it is generally not as liquid as the
secondary market for higher rated securities. The lack of a liquid secondary
market may have an adverse impact on the market price of the security. The lack
of a liquid secondary market for certain securities may also make it more
difficult for the Portfolio to obtain accurate market quotations for purposes of
valuing its securities. Market quotations are generally available on many junk
bond issues only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. During periods
of thin trading, the spread between bid and asked prices is likely to increase
significantly. In addition, adverse publicity and investor perceptions, whether
or not based on fundamental analysis, may decrease the value and liquidity of
junk bond securities, especially in a thinly traded market.

Pass-Through Securities. The Strategic Income Portfolio may invest in various
fixed-income obligations backed by a pool of mortgages or other assets. The
pass-through securities in which the Portfolio may invest are each described
below.

(1) "Mortgage-backed securities" are issued both by U.S. government agencies,
including the Government National Mortgage Association (GNMA), the Federal Na-
tional Mortgage Association (FNMA), and the Federal Home Loan Mortgage Corpo-
ration (FHLMC), and by private entities. The payment of interest and principal
on securities issued by U.S. government agencies is guaranteed by the full
faith and credit of the U.S. government (in the case of GNMA securities) or
the issuer (in the case of FNMA and FHLMC securities). However, the guarantees
do not apply to the market prices and yields of these securities, which vary
with changes in interest rates. Mortgage-backed securities issued by private
entities are structured similarly to mortgage-backed securities issued by
GNMA, FNMA, and FHLMC. These securities and the underlying mortgages are not
guaranteed by government agencies. However, these securities generally are
structured with one or more types of credit enhancement by a third party.
Mortgage-backed securities permit borrowers to prepay their underlying mort-
gages. Prepayments by borrowers on underlying obligations can alter the effec-
tive maturity of these instruments.

(2) "Collateralized mortgage obligations" (CMOs) are also backed by a pool of
mortgages or mortgage loans, which are divided into two or more separate bond
issues. CMOs issued by U.S. government agencies are backed by agency mort-
gages, while privately issued CMOs may be backed by either government agency
mortgages or private mortgages. Payments of principal and interest are passed
through to each bond at varying schedules resulting in bonds with different
coupons, effective maturities, and sensitivities to interest rates. In fact,
some CMOs may be structured in a way that when interest rates change the im-
pact of changing prepayment rates on these securities' effective maturities is
magnified.

(3) "Commercial mortgage-backed securities" are backed by mortgages of commer-
cial property, such as hotels, office buildings, retail stores, hospitals, and
other commercial buildings. These securities may have a lower prepayment risk
than other mortgage-related securities because commercial mortgage loans gen-
erally prohibit or impose penalties on prepayments of principal. In addition,
commercial mortgage-related securities often are structured with some form of
credit enhancement to protect against potential losses on the underlying mort-
gage loans. Many of the risks of investing in commercial mortgage-backed secu-
rities reflect the risks of investing in the real estate securing the under-
lying mortgage loans, including the effects of local and other economic condi-
tions on real estate markets, the ability of tenants to make loan payments,
and the ability of a property to attract and retain tenants.

(4) "Asset-backed securities" are backed by other assets such as credit card,
automobile or consumer loan receivables, retail installment loans, or partici-
pations in pools of leases. Credit support for these securities may be based
on the underlying assets and/or provided through credit enhancements by a
third party. The values of these securities are sensitive to changes in the
credit quality of the underlying collateral, the credit strength of the credit
enhancement, changes in interest rates, and at times the financial condition
of the issuer. Some asset-backed securities also may receive prepayments,
which can change the securities' effective maturities.

(5) Other Mortgage-Related Securities. The Strategic Income Portfolio may
invest in real estate investment conduits which are issued in portions or
tranches with varying maturities and characteristics. Some tranches may only
receive the interest paid on the underlying mortgages (IOs) and others may only
receive the principal payments (POs). The values of IOs and POs are extremely
sensitive to interest rate fluctuations and prepayment rates, and IOs are also
subject to the risk of early repayment of the underlying mortgages, which will
substantially reduce or eliminate interest payments. To the extent that the
Strategic Income Portfolio invests in IOs and POs, the Portfolios do not intend
to invest more than 5% of their assets in such securities.
B-17
<PAGE>

Privately Placed Securities. The Strategic Income Portfolio may invest in
privately placed securities. If the Portfolio purchases privately placed
securities, it may sell such securities only in a privately negotiated
transaction with a willing buyer, unless such securities are registered with the
Securities and Exchange Commission. If privately placed securities held by the
Portfolio must be registered before the portfolio manager is able to sell them,
the Portfolio may be obligated to pay all or part of the securities'
registration expenses. In addition, a long time may pass between when the
portfolio manager decides to sell privately placed securities and when the
securities become registered and are eligible for resale to the public. If
during this interim period adverse market conditions were to develop, the
Portfolio might receive less from the sale of the securities than it would have
received on the day that the portfolio manager decided to sell the securities.
Due to the limited secondary market for privately placed securities, the
Portfolio's investments in privately placed securities may be considered to be
illiquid. To the extent that such securities are considered to be illiquid, the
Portfolio's investments in privately placed securities are subject to the
Portfolio's 15% limitation on investments in illiquid securities. See "Illiquid
Securities" above.

Real Estate Investment Trusts ("REITs"). Each Portfolio may invest in REITs.
REITs are pooled investment vehicles that invest primarily in income producing
real estate or real estate related loans or interests. Any investment in REITs
would be subject to each Portfolio's fundamental investment restriction
prohibiting it from investing more than 25% of its total assets in any one
industry. REITs generally may be classified as one of three types: equity REITs,
mortgage REITs, and hybrid REITs. Equity REITs, which invest the majority of
their assets directly in real property, derive their income primarily from
rents. Equity REITs may also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs, which invest the majority of their
assets in real estate mortgages, derive their income primarily from interest
payments. Hybrid REITs, as their name suggests, combine the characteristics of
equity REITs and mortgage REITs.

Under the Internal Revenue Code of 1986, as amended, a REIT is not taxed on the
income that it distributes to shareholders if it complies with several
requirements relating to its organization, ownership, assets, and income and a
requirement that it distribute to its shareholders at least 95% of its taxable
income for each taxable year.

As a result of investing in REITs, a Portfolio may be subject to risks similar
to those associated with direct ownership of real estate. Such risks include
declines in the value of real estate, risks related to general and local
economic conditions, dependency on management skill, heavy cash flow dependency,
possible lack of availability of mortgage funds, overbuilding, extended
vacancies of properties, increased competition, increases in property taxes and
operating expenses, changes in zoning laws, losses due to costs resulting from
the clean up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses,
limitations on rents, changes in neighborhood values and appeal of properties to
tenants, and changes in interest rates.

In addition, equity REITs may be affected by changes in the value of the
underlying property owned by the REITs. Mortgage REITs may be affected by the
quality of any credit extended. (For a discussion of the specific risks
associated with investments in mortgages, see "Pass-Through Securities" above.)
Further, equity and mortgage REITs generally are not diversified and are
subject to defaults by borrowers and self-liquidation. A REIT may fail to
qualify for the exemption from federal income tax for distributed income or to
maintain its exemption from registration as an investment company under the
Investment Company Act of 1940, as amended. Even if a company qualifies for
taxation as a REIT, it may be subject to certain federal, state, and local taxes
on its income and property.

Roll Transactions. The Strategic Income Portfolio also may enter into "roll"
transactions, which consist of the sale of Government National Mortgage
Association certificates or other securities together with a commitment to
purchase similar, but not identical, securities at a future date. The Portfolio
intends to treat roll transactions as two separate transactions: (1) a
transaction involving the purchase of a security and (2) a transaction involving
the sale of a security. Since the Portfolio does not intend to enter into roll
transactions for financing purposes, it may treat these transactions as not
falling within the definition of "borrowing" set forth in Section 2(a)(23) of
the Investment Company Act of 1940.

Short Sales Against the Box. When the portfolio manager believes that the price
of a particular security held by a Portfolio will decline, it may make "short
sales against the box" to hedge the unrealized gain on such security. Selling
short against the box involves selling a security that a Portfolio owns for
delivery at a specified date in the future. Each Portfolio will limit its
transactions in short sales against the box to 5% of its net assets. If, for
example, a Portfolio bought 100 shares of ABC at $40 per share in January and
the price appreciates to $50 in March, the Portfolio might "sell short" the 100
shares at $50 for delivery the following July. Thereafter, if the price of the
stock declines to $45, it will realize the full $1,000 gain rather than the $500
gain it would have received had it sold the stock in the market. On the other
hand, if the price appreciates to $55 per share, the Portfolio would be required
to sell at $50 and thus receive a $1,000 gain rather than the $1,500 gain it
would have received had it sold the stock in the market. A Portfolio may also be
required to pay a premium for short sales, which would partially offset any
gain.

Utilities Securities. The Strategic Income Portfolio may invest in utilities
securities. Utilities companies in the United States are generally subject to
substantial regulation intended to ensure appropriate standards of review and
adequate capacity to meet public demand. Utility rates generally are subject to
review and limitation by state public utilities commissions and tend to
fluctuate with marginal financing costs. Rate changes, however, tend to lag
changes in financing costs. Therefore, rate changes can favorably or unfavorably
affect the earnings or dividend payouts on utilities securities, depending upon
whether rates are increasing or decreasing. The nature of regulation in the
United States utilities industry continues to evolve. Although certain companies
may profit from regulatory changes, others may become less profitable. Some
public utilities companies are facing increased competition due to deregulation,
which may reduce these companies' profits. All of these factors, and the factors
discussed below, are subject to rapid changes, which may affect utilities
companies independent from other market factors.

B-18
<PAGE>

Electric utility companies historically have been subject to the risks
associated with increases in fuel and other operating costs, high interest rates
on borrowings, compliance costs associated with environmental, nuclear safety,
and other safety regulations, and changes in the regulatory climate. Increased
scrutiny of electric utilities might result in higher costs and higher capital
expenditures, with the risk that regulators might disallow inclusion of these
costs in rate authorizations.

Increasing competition due to past regulatory changes in the telephone
communications industry continues to develop. While some companies have
benefitted from this increased competition, others may be adversely affected in
the future. The telephone and telecommunications industry has undergone rapid
growth in some segments. It is, however, also subject to regulatory changes and
numerous competitive pressures as new technologies are developed.

Gas transmission companies and gas distribution companies continue to undergo
significant changes as well. Many companies have diversified into oil and gas
exploration and development, making their returns more sensitive to energy
prices. In addition, several large suppliers have recently suffered financial
difficulties, partly as a result of being locked into long-term fixed-price
contracts.

Warrants. Each Portfolio may invest in warrants if, after giving effect
thereto, not more than 5% of such Portfolio's net assets will be invested in
warrants other than warrants acquired in units or attached to other securities.
A warrant is a security, usually issued together with a bond or preferred stock,
that entitles the holder to buy a proportionate amount of common stock at a
specified price, usually higher than the market price at the time the warrant is
issued, for a specific or an indefinite time period. Investing in warrants is
purely speculative. A Portfolio will not own the securities represented by a
warrant; the Portfolio will merely own the right to buy such securities. In
addition, warrants do not carry voting rights, pay dividends, or entitle the
warrant holder to any rights with respect to the warrant's issuer.

MANAGEMENT

The management of the Portfolios, including general supervision of the duties
performed for the Portfolios under the Management Agreement, is the
responsibility of its Board of Trustees. The number of trustees of the Trust is
fixed at six, two of whom are "interested persons" (as the term "interested
persons" is defined in the Investment Company Act of 1940) and four of whom are
"disinterested persons." The names and business addresses of the trustees and
officers of the Trust and their principal occupations and other affiliations
during the past five years are set forth below, with those trustees who are
"interested persons" of the Trust indicated by an asterisk.

Anthony T. Dean* 52 Chairman and President (since July 1996) and Director, formerly
Trustee Executive Vice President, of The John Nuveen
Company (from March 1992 to July 1996) and of John
Nuveen & Co. Incorporated; Director and President
(since July 1996), formerly Executive Vice
President (from May 1994 to July 1996) of Nuveen
Institutional Advisory Corp. and Nuveen Advisory
Corp.; President and Director (since January
1997) of Nuveen Asset Management, Inc.; Chairman
and Director (since 1997) of Rittenhouse Financial
Services, Inc.

Timothy R. Schwertfeger* 48 President and Chairman (since July 1996) and Director, formerly
Trustee Executive Vice President, of The John Nuveen
Company (from March 1992 to July 1996) and of John
Nuveen & Co. Incorporated; Director and Chairman
(since July 1996), formerly Executive Vice
President (from May 1994 to July 1996) of Nuveen
Institutional Advisory Corp. and Nuveen Advisory
Corp.; Chairman and Director (since January 1997)
of Nuveen Asset Management, Inc.; Director
(since 1996) of Institutional Capital Corporation.

[James E. Bacon] 67 [Trustee] Business consultant; retired.
</TABLE>

B-19
<PAGE>

=========================================================================================================================
Position and Principal Occupations
Name and Address Age Offices with Trust During Past Five Years
=========================================================================================================================
<S> <C> <C> <C>
[William L. Kissick] 65 [Trustee] Professor, School of Medicine and the Wharton
School of Management and Chairman, Leonard Davis
Institute of Health Economics, University of
Pennsylvania.

[Thomas E. Leafstrand] 66 [Trustee] Retired, previously Vice President in charge of
Municipal Underwriting and Dealer Sales at The
Northern Trust Company.

[Sheila W. Wellington] 66 [Trustee] President of Catalyst (a not-for-profit
organization focusing on women's leadership
development in business and the professions).

Bruce P. Bedford 57 Executive Vice Executive Vice President of John Nuveen & Co.
333 West Wacker Drive President Incorporated, Nuveen Advisory Corp., Nuveen Asset
Chicago, IL 60606 Management, Inc. (since January 1997) and Nuveen
Institutional Advisory Corp. (since January 1997);
prior thereto, Chairman and CEO of Flagship
Resources Inc. and Flagship Financial Inc. and the
Flagship funds.

Alan G. Berkshire 36 Vice President Vice President of The John Nuveen Company and John
333 West Wacker Drive and Assistant Nuveen & Co. Incorporated (Since September 1997); Prior
Chicago, IL 60606 Secretary thereto, Partner of the law firm of Kirkland & Ellis.

Lorna C. Ferguson 52 Vice President Vice President of John Nuveen & Co. Incorporated;
333 West Wacker Drive Vice President (since January 1998) of Nuveen
Chicago, IL 60606 Advisory Corp. and Nuveen Institutional Advisory
Corp.

Steven D. Foy 43 Vice President Vice President and Assistant Controller of The John
333 West Wacker Drive Nuveen Company; Vice President of John Nuveen & Co.
Chicago, Illinois 60606 Incorporated.

Larry W. Martin 46 Vice President Vice President, Assistant Secretary and Assistant
333 West Wacker Drive and Assistant General Counsel of John Nuveen & Co. Incorporated;
Chicago, IL 60606 Secretary Vice President (since May 1993) and Assistant
Secretary of Nuveen Advisory Corp; Vice President and
Assistant Secretary (since January 1997) of Nuveen
Asset Management, Inc. Vice President (since May
1993) and Assistant Secretary of Nuveen Institutional
Advisory Corp.; Assistant Secretary of The John Nuveen
Company (since February 1993).

Edward F. Neild, IV 32 Vice President Vice President of Nuveen Advisory Corp. (since
333 West Wacker Drive September 1996), Nuveen Asset Management, Inc. (since
Chicago, IL 60606 January 1997) and Nuveen Institutional Advisory Corp.
(since May 1997); prior thereto, Assistant
Vice President of Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.; Chartered Financial
Analyst.

O. Walter Renfftlen 58 Vice President Vice President and Controller of The John Nuveen
333 West Wacker Drive and Controller Company, John Nuveen & Co. Incorporated, Nuveen
Chicago, IL 60606 Advisory Corp., Nuveen Asset Management, Inc.
(since January 1997) and Nuveen Institutional Advisory
Corp.

Stuart W. Rogers 41 Vice President Vice President of John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606

H. William Stabenow 63 Vice President Vice President and Treasurer of The John Nuveen
333 West Wacker Drive and Treasurer Company, John Nuveen & Co. Incorporated, Nuveen
Chicago, IL 60606 Advisory Corp., Nuveen Asset Management, Inc. (since
January 1997) and Nuveen Institutional Advisory
Corp.

Gifford R. Zimmerman 41 Vice President Vice President, Assistant Secretary and Associate
333 West Wacker Drive and Assistant General Counsel (since September 1997), previously
Chicago, IL 60606 Secretary Assistant General Counsel, of John Nuveen & Co.
Incorporated; Vice President and Assistant
Secretary of Nuveen Advisory Corp., Nuveen Asset
Management, Inc. (since January 1997) and Nuveen
Institutional Advisory Corp.
</TABLE>

Anthony T. Dean, Thomas E. Leafstrand and Timothy R. Schwertfeger serve as
members of the Executive Committee of the Board of Trustees. The Executive
Committee, which meets between regular meetings of the Board of Trustees, is
authorized to exercise all of the powers of the Board of Trustees.

B-20
<PAGE>

The trustees of the Trust are also trustees of nine other open-end and closed-
end funds advised by NIAC. Mr. Dean and Mr. Schwertfeger are also directors or
trustees, as the case may be, of 94 open-end funds and closed-end funds advised
by Nuveen Advisory Corp.

The following table sets forth estimated compensation to be paid by the Trust to
each of the trustees who are not designated "interested persons" during the
Trust's first full fiscal year and the total compensation that the Nuveen Funds
paid or accrued to such trustees during fiscal year 1998. The Trust has no
retirement or pension plans. The officers and trustees affiliated with Nuveen
serve without any compensation from the Trust.

<TABLE>
<CAPTION>
Total**
Compensation
Estimated* From Trust
Aggregate and Fund
Compensation Complex
from the Paid to
Name of Trustee Trust Trustees
<S> <C> <C>
James E. Bacon $1,309 $ 29,000

William L. Kissick $1,309 $ 28,000

Thomas E. Leafstrand $1,460 $ 30,600

Sheila W. Wellington $1,309 $ 28,000
------ --------
TOTAL $5,387 $115,600
====== ========
</TABLE>

- -------------
*The Trust only recently commenced operations on May 1, 1998 and has not yet
completed its first full fiscal year. The estimated compensation to be paid by
the Trust to the independent trustees for the current fiscal year is a pro rata
portion of the total compensation to be paid by the Trust and Fund Complex to
the independent trustees based upon the estimated relative net asset value of
the Trust as compared to the Fund Complex.

**Based on the compensation paid to the independent trustees for the calendar
year ended December 31, 1997 for services to nine open-end and closed-end funds
advised by NIAC.

Each trustee who is not affiliated with NIAC or the portfolio managers receives
a $20,000 annual retainer for serving as a director or trustee of all funds for
which NIAC serves as investment adviser or manager and a $1,000 fee per day plus
expenses for attendance at all meetings held on a day on which a regularly
scheduled Board meeting is held, a $500 fee per day plus expenses for attendance
in person or a $500 fee per day plus expenses for attendance by telephone at a
meeting held on a day on which no regular Board meeting is held, and a $100 fee
per day plus expenses for attendance in person or by telephone at a meeting of
the Executive Committee held solely to declare dividends. The annual retainer,
fees, and expenses are allocated among the funds for which NIAC serves as
investment adviser or manager on the basis of relative net asset sizes. The
Trust requires no employees other than its officers, all of whom are compensated
by NIAC. As of the date of this Statement of Additional Information, the
trustees and officers of the Trust as a group owned less than 1% of the
outstanding shares of each of the Portfolios, and all of the Trust's outstanding
shares were owned by the John Nuveen Company, which has provided the seed
capital required under the Investment Company Act of 1940.

TRUST MANAGER, PRINCIPAL UNDERWRITER, AND PORTFOLIO MANAGERS

Trust Manager
NIAC acts as the manager of the Trust, with responsibility for the overall
management of each Portfolio. Its address is 333 West Wacker Drive, Chicago,
Illinois 60606. NIAC, a wholly owned subsidiary of Nuveen, currently manages
other investment companies. Nuveen is the principal underwriter and distributor
for shares of the Trust and acts as agent of the Trust in the sale of its
shares. The offering of shares is continuous, although Nuveen and the Trust
reserve the right to cease the offer of shares at any time. Nuveen provides
distribution services at no charge to the Trust.

Nuveen and its affiliates have sponsored or underwritten more than $60 billion
of investment company securities. Over 1,000,000 individuals have invested to
date in Nuveen investment products. Founded in 1898, Nuveen is a subsidiary of
The John Nuveen Company which, in turn, is approximately 78% owned by The St.
Paul Companies, Inc. ("St. Paul"). St. Paul is located in St. Paul, Minnesota,
and is principally engaged in providing property-liability insurance through
subsidiaries.

B-21
<PAGE>

Portfolio Managers

NIAC manages the Strategic Income Portfolio's investment portfolio. NIAC
provides continuous advice and recommendations concerning the Portfolio's
investments and is responsible for selecting the broker-dealers who execute the
portfolio transactions.

Institutional Capital

For the Balanced Portfolio, the Growth and Income Portfolio, and the European
Value Portfolio, NIAC has entered into a Sub-Advisory Agreement with
Institutional Capital under which Institutional Capital, subject to NIAC's
supervision, manages each Portfolio's investment portfolio. Institutional
Capital was founded in 1970 and is located at 225 West Wacker Drive, Suite 2400,
Chicago, IL 60606. Institutional Capital is compensated by NIAC for its
investment advisory services to the Portfolios.

With regard to Portfolio assets subject to the Sub-Advisory Agreement,
Institutional Capital provides continuous advice and recommendations concerning
the Portfolio's investments and is responsible for selecting the broker-dealers
who execute the portfolio transactions. Institutional Capital also serves as
investment adviser to other registered investment companies and to pension and
profit-sharing plans, and other institutional and private investors. As of March
31, 1998 Institutional Capital had approximately $10 billion under management.

Rittenhouse

For the Blue Chip Growth Portfolio, NIAC has entered into a Sub-Advisory
Agreement with Rittenhouse under which Rittenhouse, subject to NIAC's
supervision, manages each Portfolio's investment portfolios. Rittenhouse is an
institutional investment management firm incorporated in 1983 and based in
Radnor, Pennsylvania. Rittenhouse is compensated by NIAC for its investment
advisory services to the Portfolios.

With regard to the Portfolio assets subject to the Sub-Advisory Agreement,
Rittenhouse provides continuous advice and recommendations concerning the
Portfolios' investments and is responsible for selecting the broker-dealers who
execute the portfolio transactions. Rittenhouse also serves as investment
adviser to pension and profit-sharing plans and other institutional and private
investors. As of March 31, 1998, Rittenhouse had approximately $10 billion
under management.

For the International Equity Portfolio, NIAC has entered into a Sub-Advisory
Agreement with __________ under which __________, subject to NIAC's supervision,
manages the Portfolio's investment portfolio.

PORTFOLIO TRANSACTIONS

Each portfolio manager is responsible for decisions to buy and sell securities
for the Portfolio or Portfolios that it manages and for the placement of such
Portfolios' securities business, the negotiation of the commissions to be paid
on brokered transactions, the prices for principal trades in securities, and the
allocation of portfolio brokerage and principal business. It is the policy of
each Portfolio manager to seek the best execution at the best security price
available with respect to each transaction and with respect to brokered
transactions, in light of the overall quality of brokerage and research services
provided to the respective adviser and its advisees. The best price to a
Portfolio means the best net price without regard to the mix between purchase or
sale price and commission, if any. Purchases may be made from underwriters,
dealers, and, on occasion, issuers. Commissions will be paid on the Portfolios'
futures and options transactions, if any. The purchase price of portfolio
securities purchased from an underwriter or dealer may include underwriting
commissions and dealer spreads. The Portfolios may pay mark-ups on principal
transactions. In selecting broker-dealers and in negotiating commissions, each
Portfolio manager considers the firm's reliability, the quality of its execution
services on a continuing basis and its financial condition. Brokerage will not
be allocated based on the sale of a Portfolio's shares.

Section 28(e) of the Securities Exchange Act of 1934 permits an investment
adviser, under certain circumstances, to cause an account to pay a broker or
dealer who supplies brokerage and research services a commission for effecting a
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting the

B-22
<PAGE>

transaction. Brokerage and research services include (a) furnishing advice as to
the value of securities, the advisability of investing, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; (b) furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and the performance
of accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement, and custody).

In selecting brokers, each portfolio manager considers investment and market
information and other research, such as economic, securities and performance
measurement research provided by such brokers and the quality and reliability of
brokerage services, including execution capability, performance, and financial
responsibility. Accordingly, the commissions charged by any such broker may be
greater than the amount another firm might charge if a portfolio manager
determines in good faith that the amount of such commissions is reasonable in
relation to the value of the research information and brokerage services
provided by such broker to the portfolio manager or the Portfolio or Portfolios
that the portfolio manager manages. The portfolio managers believe that the
research information received in this manner provides the Portfolios with
benefits by supplementing the research otherwise available to the Portfolios.
The Management Agreement and the Sub-Advisory Agreements each provide that such
higher commissions will not be paid by the Portfolios unless the applicable
adviser determines in good faith that the amount is reasonable in relation to
the services provided. The investment advisory fees paid by the Portfolios to
NIAC under the Management Agreement or the subadvisory fees paid by NIAC to the
portfolio managers under each Sub-Advisory Agreement are not reduced as a result
of receipt by the portfolio managers of research services.

Each portfolio manager places portfolio transactions for other advisory accounts
that it manages. Research services furnished by firms through which the
Portfolios effect their securities transactions may be used by the portfolio
managers in servicing all of their accounts; not all of such services may be
used by the portfolio managers in connection with the Portfolios. The portfolio
managers believe it is not possible to measure separately the benefits from
research services to each of the accounts (including the Portfolios) managed by
them. Because the volume and nature of the trading activities of the accounts
are not uniform, the amount of commissions in excess of those charged by another
broker paid by each account for brokerage and research services will vary.
However, the portfolio managers believe such costs to the Portfolios will not be
disproportionate to the benefits received by the Portfolios on a continuing
basis. The portfolio managers seek to allocate portfolio transactions equitably
whenever concurrent decisions are made to purchase or sell securities by the
Portfolios and another advisory account. In some cases, this procedure could
have an adverse effect on the price or the amount of securities available to the
Portfolios. In making such allocations between the Portfolio and other advisory
accounts, the main factors the portfolio managers consider are each Portfolio's
or account's respective investment objective, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment, and the size of investment commitments generally held.

Under the Investment Company Act of 1940, a Portfolio may not purchase portfolio
securities from any underwriting syndicate of which Nuveen is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of a security purchased
by the Portfolio, the amount of securities that may be purchased in any one
issue, and the assets of the Portfolio that may be invested in a particular
issue. In addition, purchases of securities made pursuant to the terms of the
Rule must be approved at least quarterly by the Board of Trustees, including a
majority of the trustees who are not interested persons of the Trust.

NET ASSET VALUE

As stated in the Prospectus, each Portfolio's net asset value per share is
determined as of the close of trading (normally 4:00 p.m. eastern time) on each
day the New York Stock Exchange (the "Exchange") is open for business. The
Exchange is not open for trading on New Year's Day, Dr. Martin Luther King,
Jr.'s Birthday, Washington's Birthday, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day. The net asset value per
share of a Portfolio will be computed by dividing the value of the Portfolio's
assets, less its liabilities, by the number of shares the Portfolio has
outstanding.

B-23
<PAGE>

TAX MATTERS

As described in the Prospectus, each of the Portfolios will be treated as a
separate entity, and intends to qualify under, Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") for tax treatment as a regulated
investment company. In order to qualify as a regulated investment company, a
Portfolio must satisfy certain requirements relating to the source of its
income, diversification of its assets, and distributions of its income to the
Separate Account shareholders. First, the Portfolio must derive at least 90% of
its annual gross income (including tax-exempt interest) from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock or securities, foreign currencies, or other income
(including but not limited to gains from options and futures) derived with
respect to its business of investing in such stock or securities (the "90% gross
income test"). Second, the Portfolio must diversify its holdings so that, at
the close of each quarter of its taxable year, (i) at least 50% of the value of
its total assets is comprised of cash, cash items, United States Government
securities, securities of other regulated investment companies, and other
securities limited in respect of any one issuer to an amount not greater in
value than 5% of the value of the Portfolio's total assets and to not more than
10% of the outstanding voting securities of such issuer; and (ii) not more than
25% of the value of the Portfolio's total assets is invested in the securities
of any one issuer (other than United States Government securities and securities
of other regulated investment companies) or two or more issuers controlled by a
Portfolio and engaged in the same, similar, or related trades or businesses.

The Portfolios serve as investment vehicles for the variable contracts of
insurance companies. The Separate Accounts must satisfy the quarterly
diversification requirements of Section 817(h) of the Code and the Treasury
regulations thereunder, which apply to funds that serve solely as the funding
vehicles for separate accounts. Typically, for a Portfolio to meet these
investment diversification requirements, Treasury regulations require that no
more than 55% of the total value of the assets of such Portfolio may be
represented by any one investment, no more than 70% by two investments, no more
than 80% by three investments, and no more than 90% by four investments. For
purposes of these regulations, all securities of the same issuer are generally
treated as a single investment. With respect to U.S. Government securities
(including any security that is issued, guaranteed, or insured by the United
States or an instrumentality of the United States), each governmental agency or
instrumentality is treated as a separate issuer. Compliance with the
regulations is tested on the last day of each calendar year quarter. If
Portfolio investments are not adequately diversified under Code Section 817(h),
the earnings of all Contracts invested, in whole or in part, in the Portfolios
will be currently taxable to the Contract owners. There is a 30-day period
after the end of each calendar-year quarter in which to cure any noncompliance.

As a regulated investment company, a Portfolio will not be subject to federal
income tax in any taxable year for which it distributes at least 90% of its
"investment company taxable income" (which includes dividends, taxable interest,
income from securities lending, net short-term capital gain in excess of long-
term capital loss, and any other taxable income other than "net capital gain"
(as defined below) and which is reduced by deductible expenses). A Portfolio may
retain for investment its net capital gain (which consists of the excess of its
net long-term capital gain over its net short-term capital loss). However, if
the Portfolio retains any net capital gain or any investment company taxable
income, it will be subject to federal income tax at regular corporate rates on
the amount retained. Each Portfolio intends to distribute at least annually all
or substantially all of its investment company taxable income and net capital
gain, if any.

Treasury regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain, to elect (unless it has
made a taxable-year election for excise tax purposes as discussed below) to
treat all or part of any net capital loss, any net long-term capital loss, or
any net foreign currency loss incurred after October 31 as if they had been
incurred in the succeeding year.

If any of the Portfolios engage in hedging transactions involving financial
futures and options, these transactions will be subject to special tax rules,
the effect of which may be to accelerate income to a Portfolio, defer a
Portfolio's losses, cause adjustments in the holding periods of a Portfolio's
securities, convert long-term capital gains into short-term capital gains, or
convert short-term capital losses into long-term capital losses.

Dividends paid by a Portfolio from ordinary income, and distributions of a
Portfolio's net realized short-term capital gains, are treated as ordinary
income in the hands of a Separate Account shareholder. Under the Code, any
distributions

B-24
<PAGE>

designated as being made from net capital gains will be treated as long-term
capital gains in the hands of a Separate Account shareholder, regardless of the
holding period of such Separate Account. Any loss on the sale of Portfolio
shares held for less than six months will be treated as a long-term capital loss
for federal tax purposes to the extent a Separate Account receives net capital
gain distributions on such shares.

In order to avoid a 4% federal excise tax, each Portfolio must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of the excess of its
realized capital gains over its realized capital losses (generally computed on
the basis of the one-year period ending on October 31 of such year), and 100% of
any taxable ordinary income and the excess of realized capital gains over
realized capital losses for the prior year that was not distributed during such
year and on which such Portfolio paid no federal income tax. For purposes of the
excise tax, a regulated investment company may reduce its capital gain net
income (but not below its net capital gain) by the amount of any net ordinary
loss for the calendar year. Each Portfolio intends to make timely distributions
in compliance with these requirements and consequently it is anticipated that
they generally will not be required to pay the excise tax.

If in any year a Portfolio should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Portfolio would incur a regular
corporate federal income tax upon its income for that year, and distributions to
its shareholders would be taxable to shareholders as ordinary dividend income
for federal income tax purposes to the extent of the Portfolio's available
earnings and profits.

Foreign exchange gains and losses realized by the Portfolios in connection with
certain transactions are subject to Section 988 of the Code, which generally
causes gains and losses to be treated as ordinary income and losses. Such gains
and losses may affect the amount, timing, and character of distributions to
shareholders. For example, if the Portfolio sold a foreign stock or bond and
part of the gain or loss on the sale was attributable to an increase or decrease
in the value of a foreign currency, the currency gain or loss may be treated as
ordinary income or loss.

The European Value Portfolio and the International Equity Portfolio each may
qualify for and make an election permitted under the "pass-through" provisions
of Section 853 of the Code, which allow a regulated investment company to have
its foreign tax credit taken by its shareholders (the Separate Accounts) instead
of on its own tax return. To be eligible for this credit, more than 50% of the
value of the Portfolio's total assets at the close of its taxable year must
consist of stock or other securities in foreign corporations, and the Portfolio
must have distributed at least 90% of its taxable income.

If the U.S. government were to impose any restrictions, through taxation or
other means, on foreign investments by U.S. investors such as those to be made
through the Portfolios, the Board of Trustees will promptly review the
Portfolios' policies to determine whether significant changes in their
investments are appropriate.

Contract owners should refer to the Prospectus for the Separate Accounts and
Contracts for information regarding the federal income tax treatment of
distributions made by the Portfolios to the Separate Accounts and the
circumstances under which distributions may be made from the Separate Accounts
to Contract owners.

The Trust may be subject to state or local taxes in certain states where it is
deemed to be doing business. Further, the state tax treatment of the Trust and
of the insurance companies, with respect to investments made by their Separate
Accounts in the Portfolios, may differ from federal tax treatment. Appropriate
tax advisers should be consulted with respect to questions arising under
federal, state, and local tax law.

The foregoing is a general and abbreviated summary of the provisions of the Code
and Treasury Regulations presently in effect as they directly govern the federal
income taxation of the Portfolios. For complete provisions, reference should be
made to the pertinent Code sections and Treasury Regulations. The Code and
Treasury Regulations are subject to change by legislative or administrative
action, and any such change may be retroactive with respect to Portfolio
transactions. Potential purchasers of Portfolio shares should consult their own
tax advisers for more detailed information concerning the federal taxation of
the Portfolios with specific reference to their own tax situation.

B-25
<PAGE>

PERFORMANCE INFORMATION

The historical investment performance of the Portfolios may be shown in the form
of "average annual total return" and "cumulative total return." The average
annual total return quotation is computed in accordance with a standardized
method prescribed by SEC rules. The average annual total return for a specific
period is found by taking a hypothetical $1,000 investment ("initial
investment") in Portfolio shares on the first day of the period, reducing the
amount to reflect the maximum sales charge, and computing the "redeemable value"
of that investment at the end of the period. The redeemable value is then
divided by the initial investment, and this quotient is taken to the Nth root (N
representing the number of years in the period), and 1 is subtracted from the
result, which is then expressed as a percentage. The calculation assumes that
all income and capital gains distributions have been reinvested in Portfolio
shares at net asset value on the reinvestment dates during the period.

Calculation of cumulative total return is not subject to a prescribed formula.
Cumulative total return for a specific period is calculated by first taking a
hypothetical initial investment in Portfolio shares on the first day of the
period, deducting (in some cases) the maximum sales charge, and computing the
"redeemable value" of that investment at the end of the period. The cumulative
total return percentage is then determined by subtracting the initial investment
from the redeemable value and dividing the remainder by the initial investment
and expressing the result as a percentage. The calculation assumes that all
income and capital gains distributions by a Portfolio have been reinvested at
net asset value on the reinvestment dates during the period. Cumulative total
return may also be shown as the increased dollar value of the hypothetical
investment over the period. Cumulative total return calculations that do not
include the effect of the sales charge would be reduced if such charge were
included.

From time to time, each Portfolio may compare its risk-adjusted performance with
other investments that may provide different levels of risk and return. For
example, a Portfolio may compare its risk level, as measured by the variability
of its periodic returns, or its risk-adjusted total return, with those of other
funds or groups of funds. Risk-adjusted total return would be calculated by
adjusting each investment's total return to account for the risk level of the
investment.

The risk level for a Portfolio, and any of the other investments used for
comparison, would be evaluated by measuring the variability of the investment's
return, as indicated by the standard deviation of the investment's monthly
returns over a specified measurement period (e.g., two years). An investment
with a higher standard deviation of monthly returns would indicate that a
Portfolio had greater price variability, and therefore greater risk, than an
investment with a lower standard deviation.

The risk-adjusted total return for shares of a Portfolio and for other
investments over a specified period would be evaluated by dividing (a) the
remainder of the investment's annualized two-year total return minus the
annualized total return of an investment in Treasury bill securities
(essentially a risk-free return) over that period, by (b) the standard deviation
of the investment's monthly returns for the period. This ratio is sometimes
referred to as the "Sharpe measure" of return. An investment with a higher
Sharpe measure would be regarded as producing a higher return for the amount of
risk assumed during the measurement period than an investment with a lower
Sharpe measure.

Returns and net asset value of the Portfolios will fluctuate. Factors affecting
the performance of the Portfolios include general market conditions, operating
expenses, and investment management. Any additional fees charged by a securities
representative or other financial services firm would reduce returns described
in this section. Shares of the Portfolios are redeemable at net asset value,
which may be more or less than original cost.

In advertising and sales literature, a Portfolio may also compare its
performance with that of (1) the Consumer Price Index and (2) equity mutual
funds or mutual fund indexes as reported by Lipper Analytical Services, Inc.
("Lipper"), Morningstar, Inc. ("Morningstar"), Wiesenberger Investment Companies
Service ("Wiesenberger") and CDA Investment Technologies, Inc. ("CDA") or
similar independent services which monitor the performance of mutual funds, or
other industry or financial publications such as Barron's, Changing Times,
Forbes and Money Magazine. Performance comparisons by these indexes, services,
or publications may rank mutual funds over different periods of time by means of
aggregate, average, year-by-year, or other types of total return and performance
figures. Any given performance

B-26
<PAGE>

quotation or performance comparison should not be considered as representative
of the performance of the Portfolios for any future period.

There are differences and similarities between the investments that the
Portfolios may purchase and the investments measured by the indexes and
reporting services that are described herein. The Consumer Price Index is
generally considered to be a measure of inflation. Lipper, Morningstar,
Wiesenberger and CDA are widely recognized mutual fund reporting services whose
performance calculations are based upon changes in net asset value with all
dividends reinvested and which do not include the effect of any sales charges.

The discussion of performance information for the Portfolios presented below
does not take into account the fees and charges that a Contract owner may incur
at the Separate Account level or at the Contract level. Therefore, Contract
owners should note that any performance figures computed in accordance with the
procedures described above must be further reduced by the fees and charges
incurred at the Separate Account and Contract levels. Performance for the
Portfolios will not be advertised or included in sales literature unless
accompanied by comparable information for a Separate Account to which the
Portfolio offers its shares.

The information shown below reflects the past performance achieved by the
portfolio managers in managing common trust funds, mutual funds, separate
accounts, and/or institutional private accounts and does not reflect the past
performance of the Portfolios, which have no operating history of their own.
Past performance is not predictive of future results.

Balanced Portfolio

The table below presents annual investment returns for the Institutional Capital
Balanced Composite for the one-, five-, and ten-year periods ended on December
31, 1997. The Institutional Capital Balanced Composite represents the composite
performance of the ___ managed accounts totaling approximately $700 million as
of December 31, 1997 and one registered management investment company with
assets totaling approximately $_____ as of December 31, 1997 for which
Institutional Capital Corporation serves as investment adviser and that have
substantially the same investment objectives and policies as the Portfolio.

Annual Total Returns (as of 12/31/97)
- ---------------------------------------------------------------------------------------------------------------------
1-Year 5-Year 10-Year
<S> <C> <C> <C>
Institutional Capital Balanced Composite 18.65% 14.67% 14.59%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Growth and Income Portfolio

The table below presents annual investment returns for the Institutional Capital
Discretionary Equity Composite for the one-, five-, and ten-year periods ended
on December 31, 1997. The Institutional Capital Discretionary Equity Composite
represents the composite performance of the ____ managed accounts totaling
approximately $4.1 billion as of December 31, 1997 and ___ registered management
investment companies with assets totaling approximately $______ December 31,
1997 for which Institutional Capital Corporation serves as investment adviser
and that have substantially the same investment objectives and policies as the
Portfolio.

Annual Total Returns (as of 12/31/97)
- ---------------------------------------------------------------------------------------------------------------------
1-Year 5-Year 10-Year
<S> <C> <C> <C>
Institutional Capital Discretionary
Equity Composite 28.39% 20.74% 17.92%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

B-27
<PAGE>

Blue Chip Growth Portfolio

The table below presents the annual investment returns for the Rittenhouse
Blended Equity Composite for the one-, five-, and ten-year periods ended on
December 31, 1997. The Rittenhouse Blended Equity Composite represents the
composite performance of the ____ managed accounts totaling $2.9 billion as of
December 31, 1997 for which Rittenhouse Financial Services, Inc. serves as
investment adviser and that have substantially the same investment objectives
and policies as the Portfolio.

Annual Total Returns (as of 12/31/97)
- ---------------------------------------------------------------------------------------------------------------------
1-Year 5-Year 10-Year
<S> <C> <C> <C>
Rittenhouse Blended Equity Composite 36.78% 18.04% 17.57%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

European Value Portfolio

The table below presents the annual investment returns for a single separate
account funded and managed by Institutional Capital from January 1, 1997 to
December 31, 1997 that pursued substantially the same investment objective,
policies, and strategies, and employed the same management style, as that of the
European Value Portfolio. As of December 31, 1997, the separate account totaled
approximately $2.5 million. Also presented below is the performance of a
registered investment company managed by Institutional Capital, which commenced
operations on December 31, 1997, that pursues substantially the same investment
objective, policies, and strategies, and employs the same management style, as
that of the European Value Portfolio. As of _______, 1998, this investment
company had assets totaling approximately $__________ million.
<TABLE>
<CAPTION>

Institutional Capital Institutional Capital
Time Period Euro Account Euro Fund MSCI Europe Index
<S> <C> <C> <C>
1/1/97-12/31/97 29.85% N/A 24.20%

1/1/98- N/A
</TABLE>

B-28
<PAGE>

International Equity Portfolio

The table below presents annual investment returns for the _____________
Composite for the [one-, five-, and ten-year] periods ended on December 31,
1997. The _____________Composite represents the composite performance of the
___ managed accounts totaling $____________ as of December 31, 1997 for which
_________________ serves as investment adviser and that have substantially the
same investment objectives and polices as the Portfolio.

Annual Total Returns (as of 12/31/97)
- ---------------------------------------------------------------------------------------------------------------------
1-Year 5-Year 10-Year
<S> <C> <C> <C>
_________ Composite _____% _____% ______%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

INDEPENDENT PUBLIC ACCOUNTANTS, ADMINISTRATOR, AND CUSTODIAN

___________________, independent public accountants, have been selected as
auditors for the Trust. In addition to audit services, _________________ will
provide consultation and assistance on accounting, internal control, tax and
related matters.

Pursuant to an agreement between the Trust and The Minnesota Mutual Life
Insurance Company, Minnesota Mutual provides administrative services to the
Trust for a fee of .10% of the average daily net assets annually. Such
administrative services include coordinating matters related to the separate
accounts, maintaining books and records of the separate accounts, and preparing
any necessary documents for filing with the Securities and Exchange Commission
and other federal and state regulatory authorities as may be required.

The custodian of the assets of the Portfolios is The Chase Manhattan Bank, 770
Broadway, New York, New York 10003. The custodian performs custodial, fund
accounting and portfolio accounting services.

B-29
<PAGE>

FINANCIAL STATEMENTS

Nuveen Tax-Deferred Investment Trust

[To be filed by pre-effective amendment.]
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

[To be filed by pre-effective amendment.]
<PAGE>

APPENDIX A--RATINGS OF INVESTMENTS

Standard & Poor's Ratings Group--A brief description of the applicable Standard
& Poor's Ratings Group ("S&P") rating symbols and their meanings (as published
by S&P) follows:

Long Term Debt

An S&P corporate or municipal debt rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers, or
lessees.

The debt rating is not a recommendation to purchase, sell, or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.

The ratings are based on current information furnished by the issuer or obtained
by S&P from other sources it considers reliable. S&P does not perform an audit
in connection with any rating and may, on occasion, rely on unaudited financial
information. The ratings may be changed, suspended, or withdrawn as a result of
changes in, or unavailability of, such information, or based on other
circumstances.

The ratings are based, in varying degrees, on the following considerations:

1. Likelihood of default--capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with
the terms of the obligation;

2. Nature of and provisions of the obligation;

3. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.

Investment Grade

AAA Debt rated 'AAA' has the highest rating assigned by
S&P. Capacity to pay interest and repay principal is
extremely strong.

AA Debt rated 'AA' has a very strong capacity to pay
interest and repay principal, and differs from the
highest-rated issues only in small degree.

A Debt rated 'A' has a strong capacity to pay interest
and repay principal although it is somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in
higher-rated categories.

BBB Debt rated 'BBB' is regarded as having an adequate
capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for
debt in this category than in higher-rated
categories.

Speculative Grade Rating Debt rated 'BB,' 'B,' 'CCC,' 'CC' and 'C' is regarded
as having predominantly speculative characteristics,
with respect to capacity to pay interest and repay
principal. 'BB' indicates the least degree of
speculation and 'C' the highest. While such debt will
likely have some quality and protective
characteristics these are outweighed by major
uncertainties or major exposures to adverse
conditions.

<PAGE>

BB Debt rated 'BB' has less near-term vulnerability to
default than other speculative issues. However, it
faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions
which could lead to inadequate capacity to meet
timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied
'BBB-' rating.

B Debt rated 'B' has a greater vulnerability to default
but currently has the capacity to meet interest
payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay
principal.

The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an
actual or implied 'BB' or 'BB-' rating.

CCC Debt rated 'CCC' has a currently identifiable
vulnerability to default and is dependent upon
favorable business, financial, and economic
conditions to meet timely payment of interest and
repayment of principal. In the event of adverse
business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and
repay principal.

The 'CCC' rating category is also used for debt
subordinated to senior debt that is assigned an
actual or implied 'B' or 'B-' rating.

CC The rating 'CC' typically is applied to debt
subordinated to senior debt that is assigned an
actual or implied 'CCC' debt rating.

C The rating 'C' typically is applied to debt
subordinated to senior debt which is assigned an
actual or implied 'CCC-' debt rating. The 'C' rating
may be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments
are continued.

CI The rating 'CI' is reserved for income bonds on which
no interest is being paid.

D Debt rated 'D' is in payment default. The 'D' rating
category is used when interest payments or principal
payments are not made on the date due even if the
applicable grace period has not expired, unless S&P
believes that such payments will be made during such
grace period. The 'D' rating also will be used upon
the filing of a bankruptcy petition if debt service
payments are jeopardized.

Plus (+) or Minus (-): The ratings from 'AA' to 'CCC'
may be modified by the addition of a plus or minus
sign to show relative standing within the major
rating categories.

Provisional Ratings: The letter "p" indicates that
the rating is provisional. A provisional rating
assumes the successful completion of the project
financed by the debt being rated and indicates that
payment of debt service requirements is largely or
entirely dependent upon the successful and timely
completion of the project. This rating, however,
while addressing credit quality subsequent to
completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure
of, such completion. The investor should exercise
judgment with respect to such likelihood and risk.

A-2
<PAGE>

L The letter 'L' indicates that the rating pertains to
the principal amount of those bonds to the extent
that the underlying deposit collateral is federally
insured by the Federal Savings & Loan Insurance Corp.
or the Federal Deposit Insurance Corp.* and interest
is adequately collateralized. In the case of
certificates of deposit, the letter 'L' indicates
that the deposit, combined with other deposits being
held in the same right and capacity, will be honored
for principal and accrued pre-default interest up to
the federal insurance limits within 30 days after
closing of the insured institution or, in the event
that the deposit is assumed by a successor insured
institution, upon maturity.

NR Indicates no rating has been requested, that there is
insufficient information on which to base a rating,
or that S&P does not rate a particular type of
obligation as a matter of policy.

Commercial Paper

An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.

Ratings are graded into several categories, ranging from "A-1" for the highest
quality obligations to "D" for the lowest. These categories are as follows:

A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.

A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1."

A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.

B Issues rated "B" are regarded as having only speculative capacity for
timely payment.

C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.

A commercial rating is not a recommendation to purchase, sell, or hold a
security inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
S&P by the issuer or obtained by S&P from other sources it considers reliable.
S&P does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended, or withdrawn as a result of changes in or unavailability of such
information or based on other circumstances.

Moody's Investors Service, Inc.--A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's") rating symbols and their meanings (as
published by Moody's) follows:

A-3
<PAGE>

Long Term Debt

Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.

A Bonds which are rated A possess may favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in
the future.

Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

Ba Bonds which are rated Ba are judged to have speculative elements; their
future can not be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.

Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default, or there may be present elements of danger with respect to
principal or interest.

Ca Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Bonds for which the security depends upon the completion of some act or
the fulfillment of some condition are rated conditionally. These are bonds
secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature
upon completion of construction or elimination of basis of condition.

Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.

A-4
<PAGE>

Commercial Paper

Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of senior short-term promissory obligations. Prime-1
repayment capacity will often be evidenced by many of the following
characteristics:

__Leading market positions in well-established industries.

__High rates of return on funds employed.

__Conservative capitalization structure with moderate reliance on debt and ample
asset protection.

__Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

__Well-established access to a range of financial markets and assured sources of
alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of senior short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Issuers rated Prime-3 (or related supporting institutions) have an acceptable
capacity for repayment of senior short-term promissory obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.

Issuers rated Not Prime do not fall within any of the Prime rating categories.

Duff & Phelps, Inc., A brief description of the applicable Duff & Phelps, Inc.
("D&P") ratings symbols and their meanings (as published by D&P) follows:

Long Term Debt

These ratings represent a summary opinion of the issuer's long-term fundamental
quality. Rating determination is based on qualitative and quantitative factors
which may vary according to the basic economic and financial characteristics of
each industry and each issuer. Important considerations are vulnerability to
economic cycles as well as risks related to such factors as competition,
government action, regulation, technological obsolescence, demand shifts, cost
structure, and management depth and expertise. The projected viability of the
obligor at the trough of the cycle is a critical determination.

Each rating also takes into account the legal form of the security, (e.g., first
mortgage bonds, subordinated debt, preferred stock, etc.). The extent of rating
dispersion among the various classes of securities is determined by several
factors including relative weightings of the different security classes in the
capital structure, the overall credit strength of the issuer, and the nature of
covenant protection.

The Credit Rating Committee formally reviews all ratings once per quarter (more
frequently, if necessary). Ratings of 'BBB-' and higher fall within the
definition of investment grade securities, as defined by bank and insurance
supervisory authorities. Structured finance issues, including real estate,
asset-backed and mortgage-backed financings, use this same rating scale. Duff &
Phelps Credit Rating claims paying ability ratings of insurance companies use
the same scale with minor modification in the definitions. Thus, an investor can
compare the credit quality of investment alternatives across industries and
structural types. A "Cash Flow Rating" (as noted for specific ratings) addresses
the likelihood that aggregate principal and interest will equal or exceed the
rated amount under appropriate stress conditions.

A-5
<PAGE>

Rating Scale Definition
<S> <C>
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.

AA+

AA- High credit quality. Protection factors are strong. Risk is
modest, but may vary slightly from time to time because of
economic conditions.

A+

A- Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic
stress.

BBB+

BBB

BBB- Below average protection factors but still considered sufficient
for prudent investment. Considerable variability in risk during
economic cycles.

BB+

BB- Below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes.
Overall quality may move up or down frequently within this
category.

B+

B- Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate
widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower rating
grade.

CCC Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends.

Protection factors are narrow, and risk can be substantial with
unfavorable economic/industry conditions and/or with unfavorable
company developments.

DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

DP Preferred stock with dividend arrearages.
</TABLE>

A-6
<PAGE>

Short-Term Debt Ratings

Duff & Phelps' short-term ratings are consistent with the rating criteria used
by money market participants. The ratings apply to all obligations with
maturities of under one year, including commercial paper, the uninsured portion
of certificates of deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit, and current maturities of long-term
debt. Asset-backed commercial paper is also rated according to this scale.

Emphasis is placed on liquidity which is defined as not only cash from
operations but also access to alternative sources of funds including trade
credit, bank lines, and the capital markets. An important consideration is the
level of an obligor's reliance on short-term funds on an ongoing basis.

The distinguishing feature of Duff & Phelps Credit Ratings' short-term ratings
is the refinement of the traditional '1' category. The majority of short-term
debt issuers carry the highest rating, yet quality differences exist within that
tier. As a consequence, Duff & Phelps Credit Rating has incorporated gradations
of '1+' (one plus) and '1-' (one minus) to assist investors in recognizing those
differences.

These ratings are recognized by the SEC for broker-dealer requirements,
specifically capital computation guidelines. These ratings meet Department of
Labor ERISA guidelines governing pension and profit-sharing investments. State
regulators also recognize the ratings of Duff & Phelps Credit Rating for
insurance company investment portfolios.
<TABLE>
<CAPTION>

Rating Definition
Scale:
<S> <C>
D-1+ High Grade

Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.

D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.

D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.

D-2 Good Grade

Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.

D-3 Satisfactory Grade

Satisfactory liquidity and other protection factors qualify issue as
to investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.

D-4 Non-Investment Grade

Speculative investment characteristics. Liquidity is not sufficient
to insure against disruption in debt service. Operating factors and
market access may be subject to a high degree of variation.

D-5 Default

Issuer failed to meet scheduled principal and/or interest payments.
</TABLE>
A-7
<PAGE>

Fitch Investors Service, Inc. -- A brief description of the applicable Fitch
Investors Service, Inc. ("Fitch") ratings symbols and meanings (as published by
Fitch) follows:

Long Term Debt

Fitch investment grade bond ratings provide a guide to investors in determining
the credit risk associated with a particular security. The ratings represent
Fitch's assessment of the issuer's ability to meet the obligations of a specific
debt issue or class of debt in a timely manner.

The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.

Fitch ratings do not reflect any credit enhancement that may be provided by
insurance policies or financial guaranties unless otherwise indicated.

Bonds that have the same rating are of similar but not necessarily identical
credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

Fitch ratings are not recommendations to buy, sell, or hold any security.
Ratings do not comment on the adequacy of market price, the suitability of any
security for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.

Fitch ratings are based on information obtained from issuers, other obligors,
underwriters, their experts, and other sources Fitch believes to be reliable.
Fitch does not audit or verify the truth or accuracy of such information.
Ratings may be changed, suspended, or withdrawn as a result of changes in, or
the unavailability of, information or for other reasons.

AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated 'AAA'. Because bonds rated in
the 'AAA' and 'AA' categories are not significantly vulnerable to
foreseeable future developments, short-term debt of the issuers is
generally rated 'F-1+'.

A Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds and, therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than
for bonds with higher ratings.

Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The
ratings ('BB' to 'C') represent Fitch's assessment of the likelihood of
timely payment of principal and interest in accordance with the terms of
obligation for bond issues not in default. For defaulted bonds, the
rating ('DDD' to 'D') is an assessment of the ultimate recovery value
through reorganization or liquidation.

A-8
<PAGE>

The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and
prospective financial condition and operating performance of the issuer
and any guarantor, as well as the economic and political environment that
might affect the issuer's future financial strength.

Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories can not fully
reflect the differences in the degrees of credit risk.

BB Bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service
requirements.

B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited
margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.

CCC Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

DDD, Bonds are in default on interest and/or principal payments. Such bonds
DD are extremely speculative and should be valued on the basis of their
and D ultimate recovery value in liquidation or reorganization of the obligor.
'DDD' represents the highest potential for recovery of these bonds, and
'D' represents the lowest potential for recovery.

Short-Term Ratings

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.

F-1+ Exceptionally Strong Credit Quality Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1 Very Strong Credit Quality Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated 'F-1+'.

F-2 Good Credit Quality Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not
as great as for issues assigned 'F-1+' and 'F-1' ratings.

F-3 Fair Credit Quality Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate;
however, near-term adverse changes could cause these securities to be
rated below investment grade.

A-9
<PAGE>

F-S Weak Credit Quality Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic
conditions.

D Default Issues assigned this rating are in actual or imminent payment
default.

LOC The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.

A-10
<PAGE>

Item 24. Financial Statements and Exhibits.
---------------------------------

(a) Financial Statements:

The following financial statements are filed as part of this Registration
Statement.

Included in Part A--Prospectus:

Not applicable.

Included in Part B--Statement of Additional Information:

To be filed by Post-Effective Amendment.

(b) Exhibits:

(1) (a) Declaration of Trust
(1) (b) Establishment and Designation of Series of Shares of Beneficial
Interest
(2) By-Laws
(3) Not Applicable
(4) Not Applicable
(5) To be filed by Pre-Effective Amendment
(6) To be filed by Pre-Effective Amendment
(7) Not Applicable
(8) To be filed by Pre-Effective Amendment
(9) To be filed by Pre-Effective Amendment
(10) To be filed by Pre-Effective Amendment
(11) To be filed by Pre-Effective Amendment
(12) Not Applicable
(13) To be filed by Pre-Effective Amendment
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable

(27) Financial Data Schedule--To be filed by Pre-Effective Amendment

C-1
<PAGE>

Item 25. Persons Controlled by or under Common Control with Registrant.
-------------------------------------------------------------

As of the date of this registration statement, Registrant has no shares
outstanding.

To be updated by Pre-Effective Amendment.

Item 26. Number of Holders of Securities.
-------------------------------

As of the date of this registration statement, the number of record holders
of the Nuveen Tax-Deferred Investment Trust was as follows:

Title of Class Number of Record Holders
- -------------- ------------------------

Strategic Income Portfolio 0
Balanced Portfolio 0
Growth and Income Portfolio 0
Blue Chip Growth Portfolio 0
European Value Portfolio 0
International Equity Portfolio 0

To be updated by Pre-Effective Amendment.

Item 27. Indemnification.
---------------

Section 4 of Article XII of Registrant's Declaration of Trust provides as
follows:

Subject to the exceptions and limitations contained in this Section 4, every
person who is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors, trustees,
officers, employees or agents of another organization in which the Trust has an
interest as a shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person"), shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been such a Trustee, director, officer, employee or agent and against amounts
paid or incurred by him in settlement thereof.

No indemnification shall be provided hereunder to a Covered Person:

(a) against any liability to the Trust or its Shareholders by reason of a final
adjudication by the court or other body before which the proceeding was brought
that he engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office;

(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust; or

(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a payment by
a Covered Person, unless there has been either a determination that such Covered
Person did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or a
reasonable determination, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that he did not engage in such conduct:

C-2
<PAGE>

(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or

(ii) by written opinion of independent legal counsel.

The rights of indemnification herein provided may be insured against by policies
maintained by the Trust, shall be severable, shall not affect any other rights
to which any Covered Person may now or hereafter be entitled, shall continue as
to a person who has ceased to be such a Covered Person and shall inure to the
benefit of the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which Trust
personnel other than Covered Persons may be entitled by contract or otherwise
under law.

Expenses of preparation and presentation of a defense to any claim, action, suit
or proceeding subject to a claim for indemnification under this Section 4 shall
be advanced by the Trust prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:

(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any
such advances; or

(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the
matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.

As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an
Interested Person of the Trust (including anyone, as such Disinterested Trustee,
who has been exempted from being an Interested Person by any rule, regulation or
order of the Commission), and (y) against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending.

As used in this Section 4, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the word
"liability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.

The trustees and officers of the Registrant are covered by Investment Trust
Errors and Omission policies in the aggregate amount of $20,000,000 (with a
maximum deductible of $500,000) against liability and expenses of claims of
wrongful acts arising out of their position with the Registrant, except for
matters which involved willful acts, bad faith, gross negligence and willful
disregard of duty (i.e., where the insured did not act in good faith for a
purpose he or she reasonably believed to be in the best interest of Registrant
or where he or she shall have had reasonable cause to believe this conduct was
unlawful).

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to the officers, trustees or controlling persons of the
Registrant pursuant to the Declaration of Trust of the Registrant or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event

C-3
<PAGE>

that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by an officer or trustee
or controlling person of the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by an officer or trustee
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such officer, trustee or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

Item 28. Business and Other Connections of Investment Adviser.
----------------------------------------------------

(a) Nuveen Institutional Advisory Corp. ("NIAC") manages the Registrant, and
serves as investment adviser or manager to other open-end and closed-end
management investment companies and to separately managed accounts. The
principal business address for all of these investment companies is 333 West
Wacker Drive, Chicago, Illinois 60606.

A description of other business, profession, vocation or employment of a
substantial nature in which the directors and officers of NIAC who serve as
officers or Trustees of the Registrant has engaged during the last two years for
his or her account or in the capacity of director, officer, employee, partner or
trustee, appears under "Management" in the Statement of Additional Information.
Such information for the remaining senior officers of NIAC appears below:
<TABLE>
<CAPTION>
OTHER BUSINESS, PROFESSION,
NAME AND POSITION WITH VOCATION, OR EMPLOYMENT
NIAC DURING PAST 2 YEARS
- --------------------------------------------------------------------------------
<S> <C>
John P. Amboian Executive Vice President and
Executive Vice President Secretary of The John Nuveen
Company; Executive Vice President
of John Nuveen & Co. Incorporated,
Nuveen Advisory Corp. and Nuveen
Asset Management, Inc. and
Executive Vice President and
Director of Rittenhouse Financial
Services, Inc.

Jerome S. Contro Vice President of Nuveen Asset
Vice President Management, Inc.

Clifton L. Fenton Vice President of John Nuveen & Co.
Vice President Incorporated

Kathleen M. Flanagan Vice President of John Nuveen & Co.
Vice President Incorporated; Vice President (since
June 1996) of Nuveen Advisory Corp.

Thomas C. Spaulding Vice President of Nuveen Advisory
Vice President Corp.

Ronald E. Toupin, Jr. Vice President of Nuveen Asset
Vice President Management, Inc.
</TABLE>

(b) Institutional Capital Corporation (Institutional Capital) acts as sub-
investment adviser to the Registrant and as investment adviser to the ICAP
Funds, Inc. and to separately managed accounts, and as sub-investment adviser to
the Growth and Income, Core Value, and European Value Portfolios.

The following is a listing of any other business, profession, vocation, or
employment of a substantial nature in which each director and officer of
Institutional Capital is or has been, at any time during the past two fiscal
years, engaged for his or her own account or in the capacity of director,
officer, employee, partner, or trustee. The principal business address for each
person is 225 W. Wacker Drive, Chicago, IL 60606.

NAME AND POSITION(S) OTHER BUSINESS, PROFESSION, VOCATION, OR
WITH INSTITUTIONAL CAPITAL EMPLOYMENT DURING PAST 2 YEARS
- --------------------------------------------------------------------------------
<S> <C>
Robert H. Lyon President and a Director of the ICAP
President, Chief Investment Funds, Inc. (since its inception in
Officer and Director December 1994).

Pamela H. Conroy Vice President, Treasurer, and a
Senior Vice President Director of ICAP Funds, Inc.
and Director (since its inception in December 1994).

Donald D. Niemann Vice President and Secretary of ICAP
Executive Vice President Funds, Inc. (since its inception in
and Director December 1994) and a Director (since
July 1995).

Gary S. Maurer Director of ICAP Funds, Inc. (since its
Executive Vice President inception in December 1994).
and Director

Barbara C. Schanmier None
Senior Vice President and
Director
</TABLE>
(c) Rittenhouse Financial Services, Inc. (Rittenhouse) acts as sub-investment
adviser to the Registrant and serves as investment adviser to separately managed
accounts. The following is a listing of any other business, profession,
vocation, or employment of a substantial nature in which each director and
officer of Rittenhouse is or has been, at any time during the past two fiscal
years, engaged for his or her own account or in the capacity of director,
officer, employee, partner, or trustee. The principal business address for each
person is Two Radnor Corporate Center, Suite 400, Radnor, PA 19087, except
Messrs. Dean and Amboian's address is 333 W. Wacker Drive, Chicago, IL 60606:

C-4
<PAGE>

NAME AND POSITION(S) OTHER BUSINESS, PROFESSION, VOCATION, OR
WITH RITTENHOUSE EMPLOYMENT DURING PAST 2 YEARS
- -------------------------------------------------------------------------------
<S> <C>
John P. Amboian Executive Vice President of Nuveen
Director Institutional Advisory Corp.

George W. Connell, Sr. CEO of Rittenhouse Trust Company
Chief Investment Officer

William L. Conrad None
Vice President

Anthony T. Dean President (since July 1996) and Director,
Director formerly Executive Vice President, of The
John Nuveen Company and John Nuveen & Co.
Incorporated; Director and President
(since July 1996), formerly Executive
Vice President (from May 1994 to July
1996) of Nuveen Institutional Advisory
Corp. and Nuveen Advisory Corp.

Richard D. Hughes Vice President of Nuveen Asset Management
President and Incorporated
Director

Michael H. Lewers None
Vice President

Marion R. Metzbower None
Chief Compliance Officer

Cynthia A. Stains None
Chief Financial Officer

John P. Waterman Director of Modern Group, LTD.
Vice President
</TABLE>

Item 29. Principal Underwriters.
----------------------

(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal
underwriter to the following open-end management type investment companies:
Nuveen Flagship Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen
Flagship Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen
Flagship Municipal Trust, Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free
Money Market Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-
Free Reserves, Inc., Flagship Admiral Funds Inc., Nuveen Investment Trust,
Nuveen Investment Trust II, and the Registrant. Nuveen also acts as depositor
and principal underwriter of the Nuveen Tax-Free Unit Trust and the Nuveen Unit
Trust, registered unit investment trusts. Nuveen has also served or is serving
as co-managing underwriter to the following closed-end management type
investment companies: Nuveen Municipal Value Fund, Inc., Nuveen California
Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen
Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund, Inc., Nuveen
Performance Plus Municipal Fund, Inc., Nuveen California Performance Plus
Municipal Fund, Inc., Nuveen New York Performance Plus Municipal Fund, Inc.,
Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund,
Inc., Nuveen California Municipal Market Opportunity Fund, Inc., Nuveen
Investment Quality Municipal Fund, Inc., Nuveen California Investment Quality
Municipal Fund, Inc., Nuveen New York Investment Quality Municipal Fund, Inc.,
Nuveen Insured Quality Municipal Fund, Inc., Nuveen Florida Investment Quality
Municipal Fund, Nuveen New Jersey Investment Quality Municipal Fund, Inc.,
Nuveen Pennsylvania Investment Quality Municipal Fund, Nuveen Select Quality
Municipal Fund, Inc., Nuveen California Select Quality Municipal Fund, Inc.,
Nuveen New York Select Quality Municipal Fund, Inc., Nuveen Quality Income
Municipal Fund, Inc., Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen
Florida Quality Income Municipal Fund, Nuveen Michigan Quality Income Municipal
Fund, Inc., Nuveen Ohio Quality Income Municipal Fund, Inc., Nuveen Texas
Quality Income Municipal Fund, Nuveen California Quality Income Municipal Fund,
Inc., Nuveen New York Quality Income Municipal Fund, Inc., Nuveen Premier
Municipal Income Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc.,
Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Insured California Premium
Income Municipal Fund, Inc., Nuveen Insured New York Premium Income Municipal
Fund, Inc., Nuveen Select Maturities Municipal Fund, Nuveen Arizona Premium
Income Municipal Fund, Inc., Nuveen Insured Florida Premium Income Municipal
Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey
Premium Income Municipal Fund, Inc., Nuveen Premium Income Municipal Fund 4,
Inc., Nuveen Insured California Premium Income Municipal Fund 2, Inc., Nuveen
Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland Premium Income
Municipal Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen
Virginia Premium Income Municipal Fund, Nuveen Washington Premium Income
Municipal Fund, Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia
Premium Income Municipal Fund, Nuveen Missouri Premium Income Municipal Fund,
Nuveen North Carolina Premium Income Municipal Fund, Nuveen California Premium
Income Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2, Nuveen
Select Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio 2,
Nuveen Insured California Select Tax-Free Income Portfolio, Nuveen Insured New
York Select Tax-Free Income Portfolio and Nuveen Select Tax-Free Income
Portfolio 3.

<TABLE>
<CAPTION>
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ---------------------------------------------------------------------------------
<S> <C> <C>
Anthony T. Dean President, Chief Operating Chairman and Trustee
333 West Wacker Drive Officer and Director
Chicago, IL 60606

Timothy R. Schwertfeger Chairman of the Board, President and Trustee
333 West Wacker Drive Chief Executive Officer,
Chicago, IL 60606 and Director

John P. Amboian Executive Vice President None
333 West Wacker Drive
Chicago, IL 60606

Bruce P. Bedford Executive Vice President Executive Vice President
333 West Wacker Drive
Chicago, IL 60606

William Adams IV Vice President None
333 West Wacker Drive
Chicago, IL 60606

Richard P. Davis Vice President None
One South Main Street
Dayton, OH 45402

Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606

Kathleen M. Flanagan Vice President None
333 West Wacker Drive
Chicago, IL 60606

Stephen D. Foy Vice President None
333 West Wacker Drive
Chicago, IL 60606

Robert D. Freeland Vice President None
333 West Wacker Drive
Chicago, IL 60606

Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606

Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606

Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606

Larry W. Martin Vice President and Vice President and
333 West Wacker Drive Assistant Secretary Assistant Secretary
Chicago, IL 60606

Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606

O. Walter Renfftlen Vice President Vice President and
333 West Wacker Drive and Controller Controller
Chicago, IL 60606

Stuart W. Rogers Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606

Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606

H. William Stabenow Vice President Vice President and
333 West Wacker Drive and Treasurer Treasurer
Chicago, IL 60606

Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606

Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Assistant Secretary
Chicago, IL 60606

Item 30. Location of Accounts and Records.
--------------------------------

Nuveen Institutional Advisory Corp., 333 West Wacker Drive, Chicago, Illinois
60606, maintains the Declaration of Trust, By-Laws, minutes of trustees and
shareholder meetings and contracts of the Registrant and all advisory material
of the investment adviser.

The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004-2413,
maintains all general and subsidiary ledgers, journals, trial balances, records
of all portfolio purchases and sales, all the required records in its capacity
as transfer, dividend paying, and shareholder service agent for the Registrant,
and all other required records not maintained by Nuveen Institutional Advisory
Corp.

Item 31. Management Services.
-------------------

Not applicable.

Item 32. Undertakings.
------------

(a) Not applicable.

(b) Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of Registrant's 1933 Act registration statement.

C-5
<PAGE>

(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders upon
request and without charge.

C-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly authorized
in the City of Chicago, and State of Illinois on the 13th day of March, 1998.

NUVEEN TAX-DEFERRED INVESTMENT TRUST

By: /s/ Gifford R. Zimmerman
------------------------------------
Gifford R. Zimmerman, Vice President

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.

Signature Title Date
- --------- ----- ----

/s/ O. Walter Renfftlen Controller (Principal March 13, 1998
- ----------------------- Financial and Accounting
O. Walter Renfftlen Officer)

Timothy R. Schwertfeger President and Trustee )
)
)By: Gifford R. Zimmerman
) ---------------------
Anthony T. Dean Chairman and Trustee ) Attorney-in-Fact
(Principal Executive )
Officer) )
)

Original powers of attorney authorizing, among others, Gifford R. Zimmerman to
execute this registration statement, and amendments thereto, for each of Messrs.
Schwertfeger and Dean have been executed and filed with the Securities and
Exchange Commission and are incorporated herein by reference.
<PAGE>

Exhibit Index
-------------

Exhibit
Number Title
- ------- -----

(1)(a) Declaration of Trust Filed Herewith

(1)(b) Establishment and Designation of Series of Filed Herewith
Shares of Beneficial Interest

(2) Bylaws Filed Herewith

(3) Voting Trust Agreements Not Applicable

(4) Specimen Securities To Be Filed by
Pre-Effective
Amendment

(5) Advisory Contracts To Be Filed by
Pre-Effective
Amendment

(6) Underwriting Contracts To Be Filed by
Pre-Effective
Amendment

(7) Bonus, Profit Sharing or Pension Contracts Not Applicable

(8) Custody Agreement between Registrant and To Be Filed by
The Chase Manhattan Bank Pre-Effective
Amendment

(9) Administrative Services Agreement To Be Filed by
Pre-Effective
Amendment

(10) Opinion and Consent of Counsel To Be Filed by
Pre-Effective
Amendment

(11) Auditor's Consent To Be Filed by
Pre-Effective
Amendment

(12) Financial Statements Not Applicable

(13) Subscription Agreement To Be Filed by
Pre-Effective
Amendment

(14) Model Retirement Plan Not Applicable

(15) 12b-1 Plan Not Applicable

(16) Schedule for Computation of Performance Not Applicable
Calculations

(27) Financial Data Schedule To Be Filed by
Pre-Effective
Amendment

<PAGE>

DECLARATION OF TRUST
OF
NUVEEN TAX-DEFERRED INVESTMENT TRUST

DECLARATION OF TRUST made as of this 20th day of January, 1998 by
the Trustees hereunder.

WHEREAS, the Trustees desire to establish a trust fund for the
purposes of carrying on the business of a management investment company; and

WHEREAS, in furtherance of such purpose, the Trustees and any
successor Trustees elected in accordance with Article V hereof are acquiring and
may hereafter acquire assets and properties which they will hold and manage as
trustees of a Massachusetts business trust with transferable shares in
accordance with the provisions hereinafter set forth;

NOW, THEREFORE, the Trustees and any successor Trustees elected or
appointed in accordance with Article V hereof hereby declare that they will hold
all cash, securities and other assets and properties, which they may from time
to time acquire in any manner as Trustees hereunder, IN TRUST, and that they
will manage and dispose of the same upon the following terms and conditions for
the benefit of the holders from time to time of shares of beneficial interest in
this Trust as hereinafter set forth.

ARTICLE I

NAME AND DEFINITIONS

Section 1. Name. This Trust shall be known as the "Nuveen
Tax-Deferred Investment Trust" and the Trustees shall conduct the business of
the Trust under that name or any other name as they may from time to time
determine.

Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:

(a) The "Trust" refers to the Massachusetts voluntary
association established by this Declaration of Trust, as amended from
time to time;

(b) "Trustee" or "Trustees" refers to each signatory to this
Declaration of Trust so long as such signatory shall continue in
office in accordance with the terms hereof, and all other individuals
who at the time in question have been duly elected or appointed and
qualified in accordance with Article V hereof and are then in office;
<PAGE>

-2-

(c) "Shares" mean the shares of beneficial interest described in
Article IV hereof and include fractions of Shares as well as whole
Shares;

(d) "Shareholder" means a record owner of Shares;

(e) The "1940 Act" refers to the Investment Company Act of 1940
(and any successor statute) and the Rules and Regulations thereunder,
all as amended from time to time;

(f) The terms "Commission," "Interested Person," "Principal
Underwriter" and "vote of a majority of the outstanding voting
securities" shall have the meanings given them in the 1940 Act;

(g) "Declaration of Trust" or "Declaration" shall mean this
Declaration of Trust as amended or restated from time to time; and

(h) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time.

ARTICLE II

NATURE AND PURPOSE OF TRUST

The Trust is a voluntary association with transferable shares
(commonly known as a business trust) of the type referred to in Chapter 182 of
the General Laws of the Commonwealth of Massachusetts. The Trust is not intended
to be, shall not be deemed to be, and shall not be treated as, a general or a
limited partnership, joint venture, corporation or joint stock company, nor
shall the Trustees or Shareholders or any of them for any purpose be deemed to
be, or be treated in any way whatsoever as though they were, liable or
responsible hereunder as partners or joint venturers. The purpose of the Trust
is to engage in, operate and carry on the business of an open-end management
investment company and to do any and all acts or things as are necessary,
convenient, appropriate, incidental or customary in connection therewith.

The Trust set forth in this instrument shall be deemed made in the
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a business trust, and without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust. No provision of this Declaration shall be
effective to require a waiver of compliance with any provision of the Securities
Act of 1933, as amended, or the 1940 Act, or of any valid rule, regulation or
order of the Commission thereunder.
<PAGE>

-3-

ARTICLE III

REGISTERED AGENT; PRINCIPAL PLACE OF BUSINESS

The name of the registered agent of the Trust is Corporation Service
Company at 84 State Street, Boston, Massachusetts. The principal place of
business of the Trust is 333 West Wacker Drive, Chicago, Illinois 60606. The
Trustees may, without the approval of Shareholders, change the registered agent
of the Trust and the principal place of business of the Trust.

ARTICLE IV

BENEFICIAL INTEREST

Section 1. Shares of Beneficial Interest. The beneficial interest in
the Trust shall be divided into such transferable Shares of beneficial interest,
of such series or classes, and of such designations and par values (if any) and
with such rights, preferences, privileges and restrictions as shall be
determined by the Trustees in their sole discretion, without Shareholder
approval, from time to time and shall initially consist of one class of
transferable shares, par value $.01 per share. The number of Shares is unlimited
and each Share shall be fully paid and nonassessable. The Trustees shall have
full power and authority, in their sole discretion and without obtaining any
prior authorization or vote of the Shareholders of the Trust or of the
Shareholders of any series or class of Shares, to create and establish (and to
change in any manner) Shares or any series or classes thereof with such
preferences, voting powers, rights and privileges as the Trustees may from time
to time determine; to divide or combine the Shares or the Shares of any series
or classes thereof into a greater or lesser number; to classify or reclassify
any issued Shares into one or more series or classes of Shares; to abolish any
one or more series or classes of Shares; and to take such other action with
respect to the Shares as the Trustees may deem desirable. Except as may be
specifically set forth in Section 2 of this Article IV or in an instrument
establishing and designating classes or series of Shares, the Shares shall have
the powers, preferences, rights, qualifications, limitations and restrictions
described below:

(i) In the event of the termination of the Trust the holders of
the Shares shall be entitled to receive pro rata the net distributable
assets of the Trust.

(ii) Each holder of Shares shall be entitled to one vote for each
Share held on each matter submitted to a vote of Shareholders, and the
holders of outstanding Shares shall vote together as a single class.

(iii) Dividends or other distributions to Shareholders, when, as
and if declared or made by the Trustees, shall be shared equally by
the holders of Shares on a share for share basis, such dividends or
other distributions or any portion
<PAGE>

-4-

thereof to be paid in cash or to be reinvested in full and fractional
Shares of the Trust as the Trustees shall direct.

(iv) Any Shares purchased, redeemed or otherwise reacquired by
the Trust shall be retired automatically and such retired Shares shall
have the status of authorized but unissued Shares.

(v) Shares may be issued from time to time, without the vote of
the Shareholders (or, if the Trustees in their sole discretion deem
advisable, with a vote of Shareholders), either for cash or for such
other consideration (which may be in any one or more instances a
certain specified consideration or certain specified considerations)
and on such terms as the Trustees, from time to time, may deem
advisable, and the Trust may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection
with the assumption of liabilities).

(vi) The Trust may issue Shares in fractional denominations to
the same extent as its whole Shares, and Shares in fractional
denominations shall be Shares having proportionately to the respective
fractions represented thereby all the rights of whole Shares,
including, without limitation, the right to vote, the right to receive
dividends and distributions and the right to participate upon
termination of the Trust. The Trustees may from time to time, without
the vote of Shareholders, divide or combine Shares into a greater or
lesser number without thereby changing their proportionate beneficial
interest in the Trust.

Section 2. Establishment of Series and Classes of Shares.

(a) Series. The Trustees, in their sole discretion, without obtaining
any prior authorization or vote of the Shareholders of the Trust or of the
Shareholders of any series or class of Shares, from time to time may authorize
the division of Shares into two or more series, the number and relative rights,
privileges and preferences of which shall be established and designated by the
Trustees, in their discretion, upon and subject to the following provisions:

(i) All Shares shall be identical except that there may be such
variations as shall be fixed and determined by the Trustees between different
series as to purchase price, right of redemption, and the price, terms and
manner of redemption, and special and relative rights as to dividends and on
liquidation.

(ii) The number of authorized Shares and the number of Shares of
each series that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any series into one or more series that may be established and designated from
time to time. The Trustees may hold as treasury shares (of the same or some
other series), reissue for such consideration
<PAGE>

-5-

and on such terms as they may determine, or cancel any Shares of any series
reacquired by the Trust at their discretion from time to time.

(iii) The power of the Trustees to invest and reinvest the assets
of the Trust allocated or belonging to any particular series shall be governed
by Section 1, Article VI hereof unless otherwise provided in the instrument of
the Trustees establishing such series which is hereinafter described.

(iv) Each Share of a series shall represent a beneficial interest
in the net assets allocated or belonging to such series only, and such interest
shall not extend to the assets of the Trust generally. Dividends and
distributions on Shares of a particular series may be paid with such frequency
as the Trustees may determine, which may be monthly or otherwise, pursuant to a
standing vote or votes adopted only once or with such frequency as the Trustees
may determine, to the Shareholders of that series only, from such of the income
and capital gains, accrued or realized, from the assets belonging to that
series. All dividends and distributions on Shares of a particular series shall
be distributed pro rata to the Shareholders of that series in proportion to the
number of Shares of that series held by such Shareholders at the date and time
of record established for the payment of such dividends or distributions. Shares
of any particular series of the Trust may be redeemed solely out of the assets
of the Trust allocated or belonging to that series. Upon liquidation or
termination of a series of the Trust, Shareholders of such series shall be
entitled to receive a pro rata share of the net assets of such series only.

(v) Notwithstanding any provision hereof to the contrary, on any
matter submitted to a vote of the Shareholders of the Trust, all Shares then
entitled to vote shall be voted by individual series, except that (i) when
required by the 1940 Act to be voted in the aggregate, Shares shall not be voted
by individual series, (ii) when the Trustees have determined that the matter
affects only the interests of Shareholders of one or more series, only
Shareholders of such series shall be entitled to vote thereon, and (iii) all
series shall vote together on the election of Trustees.

(vi) The establishment and designation of any series of Shares
shall be effective upon the execution by a majority of the Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of such series or as otherwise provided in such
instrument.

(b) Classes. Notwithstanding anything in this Declaration to the
contrary, the Trustees may, in their discretion, without obtaining any prior
authorization or vote of the Shareholders of the Trust or of the Shareholders of
any series or class of Shares, from time to time authorize the division of
Shares of the Trust or any series thereof into Shares of one or more classes
upon the execution by a majority of the Trustees of an instrument setting forth
such establishment and designation and the relative rights and preferences of
such class or classes. All Shares of a class shall be identical with each other
and with the Shares of each other class of the same series except for such
variations between classes as may be approved by the Board of Trustees and set
forth in such instrument of
<PAGE>

-6-

establishment and designation and be permitted under the 1940 Act or pursuant to
any exemptive order issued by the Commission.

Section 3. Ownership of Shares. The ownership and transfer of Shares
shall be recorded on the books of the Trust or its transfer or similar agent. No
certificates certifying the ownership of Shares shall be issued except as the
Trustees may otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the issuance of Share certificates,
transfer of Shares and similar matters. The record books of the Trust, as kept
by the Trust or any transfer or similar agent of the Trust, shall be conclusive
as to who are the holders of Shares and as to the number of Shares held from
time to time by each Shareholder.

Section 4. No Preemptive Rights, Etc. The holders of Shares shall
not, as such holders, have any right to acquire, purchase or subscribe for any
Shares or securities of the Trust which it may hereafter issue or sell, other
than such right, if any, as the Trustees in their discretion may determine. The
holders of Shares shall have no appraisal rights with respect to their Shares
and, except as otherwise determined by resolution of the Trustees in their sole
discretion, shall have no exchange or conversion rights with respect to their
Shares.

Section 5. Assets and Liabilities of Series. In the event that the
Trust, pursuant to Section 2(a) of this Article IV, shall authorize the division
of Shares into two or more series, the following provisions shall apply:

(a) All consideration received by the Trust for the issue or sale of
Shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of the Trust. Such
consideration, assets, income, earnings, profits and proceeds, including any
proceeds derived from the sale, exchange or liquidation of such assets and any
funds or payments derived from any reinvestment of such proceeds, in whatever
form the same may be, together with any General Items (as hereinafter defined)
allocated to that series as provided in the following sentence, are herein
referred to as "Assets belonging to" that series. In the event that there are
any assets, income, earnings, profits or proceeds thereof, funds or payments
which are not readily identifiable as belonging to any particular series
(collectively "General Items"), the Trustees shall allocate such General Items
to and among any one or more of the series created from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable; and any General Items allocated to a particular series shall belong
to that series. Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all series for all purposes.
<PAGE>

-7-

(b) The assets belonging to a particular series shall be charged with
the liabilities of the Trust in respect of that series and with all expenses,
costs, charges and reserves attributable to that series and shall be so recorded
upon the books of the Trust. Liabilities, expenses, costs, charges and reserves
charged to a particular series, together with any General Items (as hereinafter
defined) allocated to that series as provided in the following sentence, are
herein referred to as "liabilities belonging to" that series. In the event
there are any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular series
(collectively "General Items"), the Trustees shall allocate and charge such
General Items to and among any one or more of the series created from time to
time in such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable; and any General Items so allocated and charges to a
particular series shall belong to that series. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all series for
all purposes.

Section 6. Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms of this
Declaration of Trust and to have become a party thereto. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the same nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the Trust or the
Trustees, but only to the rights of said decedent under this Trust. Ownership
of Shares shall not entitle the Shareholder to any title in or to the whole or
any part of the Trust property or right to call for a partition or division of
the same or for an accounting. Neither the Trustees, nor any officer, employee
or agent of the Trust shall have any power to bind any Shareholder personally or
to call upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay by way of subscription for any Shares or otherwise.

ARTICLE V

THE TRUSTEES

Section 1. Management of the Trust. The business and affairs of the
Trust shall be managed by the Trustees, and they shall have all powers necessary
and desirable to carry out that responsibility.

Section 2. Qualification and Number. Each Trustee shall be a natural
person. A Trustee need not be a Shareholder, a citizen of the United States, or
a resident of the Commonwealth of Massachusetts. By the vote or consent of a
majority of the Trustees then in office, the Trustees may fix the number of
Trustees at a number not less than two (2) nor more than twelve (12) and may
fill the vacancies created by any such increase in the number of Trustees.
Except as determined from time to time by resolution of the
<PAGE>

-8-

Trustees, no decrease in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his term, but the
number of Trustees may be decreased in conjunction with the removal of a Trustee
pursuant to Section 4 of Article V.

Section 3. Term and Election. Each Trustee shall hold office until
the next meeting of Shareholders called for the purpose of considering the
election or re-election of such Trustee or of a successor to such Trustee, and
until his successor is elected and qualified, and any Trustee who is appointed
by the Trustees in the interim to fill a vacancy as provided hereunder shall
have the same remaining term as that of his predecessor, if any, or such term as
the Trustees may determine. Any vacancy resulting from a newly created
Trusteeship or the death, resignation, retirement, removal, or incapacity of a
Trustee may be filled by the affirmative vote or consent of a majority of the
Trustees then in office.

Section 4. Resignation and Removal. Any Trustee may resign his trust
or retire as a Trustee (without need for prior or subsequent accounting except
in the event of removal) by an instrument in writing signed by him and delivered
or mailed to the Chairman, if any, the President or the Secretary, and such
resignation or retirement shall be effective upon such delivery, or at a later
date according to the terms of the instrument. Any Trustee who has become
incapacitated by illness or injury as determined by a majority of the other
Trustees, may be retired by written instrument signed by a majority of the other
Trustees. Except as aforesaid, any Trustee may be removed from office only for
"Cause" (as hereinafter defined) and only (i) by action of at least sixty-six
and two-thirds percent (66-2/3%) of the outstanding Shares, or (ii) by written
instrument, signed by at least sixty-six and two-thirds percent (66-2/3%) of the
remaining Trustees, specifying the date when such removal shall become
effective. "Cause" shall require willful misconduct, dishonesty, fraud or a
felony conviction.

Section 5. Vacancies. The death, declination, resignation,
retirement, removal, or incapacity, of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency created pursuant
to the terms of this Declaration of Trust. Whenever a vacancy in the number of
Trustees shall occur, until such vacancy is filled as provided herein, or the
number of Trustees as fixed is reduced, the Trustees in office, regardless of
their number, shall have all the powers granted to the Trustees, and during the
period during which any such vacancy shall occur, only the Trustees then in
office shall be counted for the purposes of the existence of a quorum or any
action to be taken by such Trustees.

Section 6. Ownership of Assets of the Trust. The assets of the Trust
shall be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or any successor
Trustees. All of the assets of the Trust shall at all times be considered as
automatically vested in the Trustees as shall be from time to time in office.
Upon the resignation, retirement, removal, incapacity or death of a Trustee,
such Trustee shall automatically cease to have any right, title or
<PAGE>

-9-

interest in any of the Trust property, and the right, title and interest of such
Trustee in the Trust property shall vest automatically in the remaining
Trustees. Such vesting and cessation of title shall be effective without the
execution or delivery of any conveyancing or other instruments. No Shareholder
shall be deemed to have a severable ownership in any individual asset of the
Trust or any right of partition or possession thereof.

Section 7. Voting Requirements. In addition to the voting
requirements imposed by law or by any other provision of this Declaration of
Trust, the provisions set forth in this Article V may not be amended, altered or
repealed in any respect, nor may any provision inconsistent with this Article V
be adopted, without the affirmative vote of the holders of at least sixty-six
and two-thirds percent (66-2/3%) of the outstanding Shares. In the event the
holders of the outstanding shares of any series or class are required by law or
any other provision of this Declaration of Trust to approve such an action by a
class vote of such holders, such action must be approved by the holders of at
least sixty-six and two-thirds percent (66 2/3%) of the outstanding Shares of
such series or class or such lower percentage as may be required by law or any
other provision of this Declaration of Trust.

ARTICLE VI

POWERS OF TRUSTEES

Section 1. Powers. The Trustees in all instances shall have full,
absolute and exclusive power, control and authority over the Trust assets and
the business and affairs of the Trust to the same extent as if the Trustees were
the sole and absolute owners thereof in their own right. The Trustees shall
have full power and authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust. The enumeration of
any specific power herein shall not be construed as limiting the aforesaid
powers. In construing the provisions of this Declaration of Trust, there shall
be a presumption in favor of the grant of power and authority to the Trustees.
Subject to any applicable limitation in this Declaration, the Trustees shall
have power and authority:

(a) To invest and reinvest in, to buy or otherwise acquire,
to hold, for investment or otherwise, to sell or otherwise dispose of,
to lend or to pledge, to trade in or deal in securities or interests
of all kinds, however evidenced, or obligations of all kinds, however
evidenced, or rights, warrants, or contracts to acquire such
securities, interests, or obligations, of any private or public
company, corporation, association, general or limited partnership,
trust or other enterprise or organization foreign or domestic, or
issued or guaranteed by any national or state government, foreign or
domestic, or their agencies, instrumentalities or subdivisions
(including but not limited to, bonds, debentures, bills, time notes
and all other evidences or indebtedness); negotiable or non-negotiable
instruments; any and all options and futures contracts, derivatives or
structured securities;
<PAGE>

-10-

government securities and money market instruments (including but not
limited to, bank certificates of deposit, finance paper, commercial
paper, bankers acceptances, and all kinds of repurchase agreements)
and, without limitation, all other kinds and types of financial
instruments;

(b) To adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business of the Trust and to
amend and repeal them to the extent that they do not reserve that
right to the Shareholders;

(d) To set record dates for any purpose;

(e) To delegate such authority as they consider desirable to
any officers of the Trust and to any investment adviser, investment
subadviser, transfer agent, custodian, underwriter or other
independent contractor or agent;

(f) Subject to Article IX, Section 1 hereof, to merge, or
consolidate the Trust with any other corporation, association, trust
or other organization; or to sell, convey, transfer, or lease all or
substantially all of the assets of the Trust;

(g) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and
to execute and deliver proxies or powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities or
property as the Trustees shall deem proper;

(h) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities;

(i) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form;
or either in their or the Trust's name or in the name of a custodian
or a nominee or nominees;

(j) To issue, sell, repurchase, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer and otherwise deal in
Shares and in any options, warrants or other rights to purchase Shares
or any other interests in the Trust other than Shares;

(k) To set apart, from time to time, out of any funds of the
Trust a reserve or reserves for any proper purpose, and to abolish any
such reserve;

(l) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer,
any security or property of
<PAGE>

-11-

which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or issuer,
and to pay calls or subscriptions with respect to any security held in
the Trust;

(m) To compromise, arbitrate, or otherwise adjust claims in
favor of or against the Trust or any matter in controversy including,
but not limited to, claims for taxes;

(n) To make distributions to Shareholders;

(o) To borrow money and to pledge, mortgage, or hypothecate
the assets of the Trust;

(p) To establish, from time to time, a minimum total
investment for Shareholders, and to require the redemption of the
Shares of any Shareholders whose investment is less than such minimum
upon such terms as shall be established by the Trustees;

(q) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any security to,
any such committee, depositary or trustee, and to delegate to them
such power and authority with relation to any security (whether or not
so deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees
shall deem proper;

(r) To purchase and pay for out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of
the business of the Trust, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, investment subadvisers or managers, principal
underwriters, or independent contractors of the Trust individually
against all claims and liabilities of every nature arising by reason
of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
person as Shareholder, Trustee, officer, employee, agent, investment
adviser, subadviser or manager, principal underwriter, or independent
contractor, whether or not any such action may be determined to
constitute negligence, and whether or not the Trust would have the
power to indemnify such person against such liability; and

(s) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings, thrift
and other retirement, incentive and benefit plans,
<PAGE>

-12-

trusts and provisions, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and
agents of the Trust.

Any determination made by or pursuant to the direction of the Trustees
in good faith and consistent with the provisions of this Declaration of Trust
shall be final and conclusive and shall be binding upon the Trust and every
holder at any time of Shares, including, but not limited to the following
matters: the amount of the assets, obligations, liabilities and expenses of the
Trust; the amount of the net income of the Trust from dividends, capital gains,
interest or other sources for any period and the amount of assets at any time
legally available for the payment of dividends or distributions; the amount,
purpose, time of creation, increase or decrease, alteration or cancellation of
any reserves or charges and the propriety thereof (whether or not any obligation
or liability for which such reserves or charges were created shall have been
paid or discharged); the market value, or any quoted price to be applied in
determining the market value, of any security or other asset owned or held by
the Trust; the fair value of any security for which quoted prices are not
readily available, or of any other asset owned or held by the Trust; the number
of Shares of the Trust issued or issuable; the net asset value per Share; any
matter relating to the acquisition, holding and depositing of securities and
other assets by the Trust; any question as to whether any transaction
constitutes a purchase of securities on margin, a short sale of securities, a
borrowing, or an underwriting of the sale of, or participation in any
underwriting or selling group in connection with the public distribution of, any
securities, and any matter relating to the issue, sale, redemption, repurchase,
and/or other acquisition or disposition of Shares of the Trust. No provision of
this Declaration of Trust shall be effective to protect or purport to protect
any Trustee or officer of the Trust against any liability to the Trust or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

Section 2. Manner of Acting, By-Laws. The By-Laws shall make
provision from time to time for the manner in which the Trustees may take
action, including, without limitation, at meetings within or without
Massachusetts, including meetings held by means of a conference telephone or
other communications equipment, or by written consents, the quorum and notice,
if any, that shall be required for any meeting or other action, and the
delegation of some or all of the power and authority of the Trustees to any one
or more committees which they may appoint from their own number, and terminate,
from time to time.
<PAGE>

-13-

ARTICLE VII

EXPENSES OF THE TRUST

The Trustees shall have the power to reimburse themselves from the
Trust property for their expenses and disbursements, to pay reasonable
compensation to themselves from the Trust property, and to incur and pay out of
the Trust property any other expenses which in the opinion of the Trustees are
necessary or incidental to carry out any of the purposes of this Declaration of
Trust, or to exercise any of the powers of the Trustees hereunder.

ARTICLE VIII

INVESTMENT ADVISER, UNDERWRITER
AND TRANSFER AGENT

Section 1. Investment Adviser. The Trust may enter into written
contracts with one or more persons (which term shall include any firm,
corporation, trust or association), to act as investment adviser or investment
subadviser to the Trust, and as such to perform such functions as the Trustees
may deem reasonable and proper, including, without limitation, investment
advisory, management, research, valuation of assets, clerical and administrative
functions, under such terms and conditions, and for such compensation, as the
Trustees may in their discretion deem advisable.

Upon the termination of any contract with Nuveen Institutional
Advisory Corp., or any corporation affiliated with John Nuveen & Co.
Incorporated, acting as investment adviser or manager, the Trustees are hereby
required to promptly change the name of the Trust to a name which does not
include "Nuveen" or any approximation or abbreviation thereof.

Section 2. Underwriter; Transfer Agent. The Trust may enter into a
written contract or contracts with an underwriter or underwriters or distributor
or distributors whereby the Trust may either agree to sell Shares to the other
party or parties to the contract or appoint such other party or parties its
sales agent or agents for such Shares and with such other provisions as the
Trustees may deem reasonable and proper, and the Trustees may in their
discretion from time to time enter into transfer agency and/or shareholder
service contract(s), in each case with such terms and conditions, and providing
for such compensation, as the Trustees may in their discretion deem advisable.

Section 3. Parties to Contract. Any contract of the character
described in Sections 1 and 2 of this Article VIII or in Article X hereof may be
entered into with any corporation, firm, partnership, trust or association,
including, without limitation, the investment adviser, any investment subadviser
or an affiliate of the investment adviser or investment subadviser, although one
or more of the Trustees or officers of the Trust may
<PAGE>

-14-

be an officer, director, trustee, shareholder, or member of such other party to
the contract, or otherwise interested in such contract and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VIII, Article X, or the By-
Laws. The same person (including a firm, corporation, partnership, trust or
association) may be the other party to contracts entered into pursuant to
Sections 1 and 2 above or Article X, and any individual may be financially
interested or otherwise affiliated with persons who are parties to any or all of
the contracts mentioned in this Section 3.

ARTICLE IX

SHAREHOLDERS' VOTING POWERS AND MEETINGS

Section 1. Voting Powers. The Shareholders shall have power to vote
only: (a) for the election or removal of Trustees as provided in Article V, (b)
with respect to any investment advisory or management contract to the extent
required by the 1940 Act, (c) with respect to any termination of the Trust or a
series thereof to the extent and as provided in this Article IX, Section 1, (d)
with respect to any amendment of this Declaration of Trust to the extent and as
provided in Article XIII, Section 4, (e) with respect to a merger or
consolidation of the Trust or any series thereof with any corporation,
association, trust or other organization or a reorganization or recapitalization
of the Trust or series thereof, or a sale, lease or transfer of all or
substantially all of the assets of the Trust or any series thereof (other than
in the regular course of the Trust's investment activities) to the extent and as
provided in this Article IX, Section 1, (f) to the same extent as the
shareholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, and (g) with
respect to such additional matters relating to the Trust as may be required by
law, the 1940 Act, this Declaration of Trust, the By-Laws of the Trust, or any
registration of the Trust with the Commission or any State, or as the Trustees
may consider necessary or desirable.

An affirmative vote of the holders of at least sixty-six and two-
thirds percent (66-2/3%) of the outstanding Shares of the Trust (or, in the
event of any action set forth below affecting only one or more series or classes
of the Trust, an affirmative vote of the holders of at least sixty-six and two-
thirds percent of the outstanding Shares of such affected series or class) shall
be required to approve, adopt or authorize (i) a merger or consolidation of the
Trust or a series of the Trust with any corporation, association, trust or other
organization or a reorganization or recapitalization of the Trust or a series of
the Trust, (ii) a sale, lease or transfer of all or substantially all of the
assets of the Trust or series of the Trust (other than in the regular course of
the Trust's investment activities), or (iii) a termination of the Trust or a
series of the Trust (other than a termination by the
<PAGE>

-15-

Trustees as provided for in Section 1 of Article XIII hereof), unless in any
case such action is recommended by the Trustees, in which case the affirmative
vote of a majority of the outstanding voting securities of the Trust or the
affected series or class shall be required. Nothing contained herein shall be
construed as requiring approval of Shareholders for any transaction, whether
deemed a merger, consolidation, reorganization or otherwise whereby the Trust
issues Shares in connection with the acquisition of assets (including those
subject to liabilities) from any other investment company or similar entity).

Section 2. Meetings. Meetings of the Shareholders of the Trust or any
one or more series thereof may be called and held from time to time for the
purpose of taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by the Trustees
to be necessary or desirable. Meetings of the Shareholders shall be held at such
place within the United States as shall be fixed by the Trustees, and stated in
the notice of the meeting. Meetings of the Shareholders may be called by the
Trustees and shall be called by the Trustees upon the written request of
Shareholders owning at least one-tenth of the outstanding Shares entitled to
vote. Shareholders shall be entitled to at least ten days' written notice of any
meeting, except where the meeting is an adjourned meeting and the date, time and
place of the meeting were announced at the time of the adjournment.

Section 3. Quorum and Action. (a) The Trustees shall set in the By-
Laws the quorum required for the transaction of business by the Shareholders at
a meeting, which quorum shall in no event be less than thirty percent (30%) of
the Shares entitled to vote at such meeting. If a quorum is present when a duly
called or held meeting is convened, the Shareholders present may continue to
transact business until adjournment, even though the withdrawal of a number of
Shareholders originally present leaves less than the proportion or number
otherwise required for a quorum.

(b) The Shareholders shall take action by the affirmative vote of the
holders of a majority, except in the case of the election of Trustees which
shall only require a plurality, of the Shares present in person or by proxy and
entitled to vote at a meeting of Shareholders at which a quorum is present,
except as may be otherwise required by any provision of this Declaration of
Trust or the By-Laws.

Section 4. Voting. Each whole Share shall be entitled to one vote as
to any matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote, except that Shares held in the
treasury of the Trust shall not be voted. In the event that there is more than
one series of the Shares, Shares shall be voted by individual series on any
matter submitted to a vote of the Shareholders of the Trust except as provided
in Sections 2(a)(v) and 2(b) of Article IV. There shall be no cumulative voting
in the election of Trustees or on any other matter submitted to a vote of the
Shareholders. Shares may be voted in person or by proxy. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required or
<PAGE>

-16-

permitted by law, this Declaration of Trust or the By-Laws of the Trust to be
taken by Shareholders.

Section 5. Action by Written Consent in Lieu of Meeting of
Shareholders. Any action required or permitted to be taken at a meeting of the
Shareholders may be taken without a meeting by written action signed by all of
the Shareholders entitled to vote on that action. The written action is
effective when it has been signed by all of those Shareholders, unless a
different effective time is provided in the written action.

ARTICLE X

CUSTODIAN

All securities and cash of the Trust shall be held by one or more
custodians and subcustodians, each meeting the requirements for a custodian
contained in the 1940 Act, or shall otherwise be held in accordance with the
1940 Act.

ARTICLE XI

DISTRIBUTIONS AND REDEMPTIONS

Section 1. Distributions. The Trustees may in their sole discretion
from time to time declare and pay, or may prescribe and set forth in a duly
adopted vote or votes of the Trustees, the bases and time for the declaration
and payment of, such dividends and distributions to Shareholders as they may
deem necessary or desirable, after providing for actual and accrued expenses and
liabilities (including such reserves as the Trustees may establish) determined
in accordance with good accounting practices.

Section 2. Redemption of Shares. All shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. The Trust shall redeem the Shares of the Trust or any series or
class thereof at the price determined as hereinafter set forth, upon the
appropriately verified application of the record holder thereof (or upon such
other form of request as the Trustees may determine) at such office or agency as
may be designated from time to time for that purpose by the Trustees. The
Trustees may from time to time specify additional conditions, not inconsistent
with the 1940 Act, regarding the redemption of Shares in the Trust's then
effective prospectus under the Securities Act of 1933.

Section 3. Redemption Price. Shares shall be redeemed at their net
asset value (less any applicable redemption fee or sales charge) determined as
set forth in Section 7 of this Article XI as of such time as the Trustees shall
have theretofore prescribed by resolution. In the absence of such resolution,
the redemption price of Shares deposited
<PAGE>

-17-

shall be the net asset value of such Shares next determined as set forth in such
Section hereof after receipt of such application.

Section 4. Payment. Payment of the redemption price of Shares of the
Trust or any series or class thereof shall be made in cash or in property or
partly in cash and partly in property to the Shareholder at such time and in the
manner, not inconsistent with the 1940 Act or other applicable laws, as may be
specified from time to time in the Trust's then effective prospectus under the
Securities Act of 1933.

Section 5. Redemption of Shareholder's Interest. The Trustees, in
their sole discretion, may cause the Trust to redeem all of the Shares of the
Trust or one or more series of the Trust held by any Shareholder if the value of
such Shares held by such Shareholder is less than the minimum amount established
from time to time by the Trustees.

Section 6. Suspension of Right of Redemption. Notwithstanding the
foregoing, the Trust may postpone payment of the redemption price and may
suspend the right of the holders of Shares to require the Trust to redeem Shares
(a) during any period when the New York Stock Exchange (the "Exchange") is
closed (other than customary weekend and holiday closings), (b) when trading in
the markets the Trust normally utilizes is restricted, or an emergency exists as
determined by the Commission so that disposal of the Trust's investments or
determination of its net asset value is not reasonably practicable, or (c) for
such other periods as the Commission may by order, rule or otherwise permit.

Section 7. Determination of Net Asset Value and Valuation of
Portfolio Assets. The Trustees may in their sole discretion from time to time
prescribe and shall set forth in the By-Laws or in a duly adopted vote or votes
of the Trustees such bases and times for determining the per Share net asset
value of the Shares and the valuation of portfolio assets as they may deem
necessary or desirable.

The Trust may suspend the determination of net asset value during any
period when it may suspend the right of the holders of Shares to require the
Trust to redeem Shares.

ARTICLE XII

LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 1. Limitation of Liability. No personal liability for any
debt or obligation of the Trust shall attach to any Trustee of the Trust.
Without limiting the foregoing, a Trustee shall not be responsible for or liable
in any event for any neglect or wrongdoing of any officer, agent, employee,
investment adviser, subadviser, principal underwriter or custodian of the Trust,
nor shall any Trustee be responsible or liable for the act or
<PAGE>

-18-

omission of any other Trustee. Nothing contained herein shall protect any
Trustee against any liability to which such Trustee would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.

Every note, bond, contract, instrument, certificate, Share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in or with
respect to their or his capacity as Trustees or Trustee and neither such
Trustees or Trustee nor the Shareholders shall be personally liable thereon.

Every note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or by any officers or officer shall give notice
that this Declaration of Trust is on file with the Secretary of State of the
Commonwealth of Massachusetts, shall recite that the same was executed or made
by or on behalf of the Trust by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, and may contain such further recitals
as they or he may deem appropriate, but the omission thereof shall not operate
to bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.

All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Trust for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.

Section 2. Trustees' Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions thereunder
shall be binding upon everyone interested. A Trustee shall be liable only for
his own willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Declaration of Trust and their duties as Trustees
hereunder, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. In discharging their
duties, the Trustees, when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant and (with
respect to the subject matter of the contract involved) any officer, partner or
responsible employee of any other party to any contract entered into hereunder.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is required.
<PAGE>

-19-

Section 3. Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.

Section 4. Indemnification. Subject to the exceptions and
limitations contained in this Section 4, every person who is, or has been, a
Trustee, officer, employee or agent of the Trust, including persons who serve at
the request of the Trust as directors, trustees, officers, employees or agents
of another organization in which the Trust has an interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person"), shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been such a
Trustee, director, officer, employee or agent and against amounts paid or
incurred by him in settlement thereof.

No indemnification shall be provided hereunder to a Covered Person:

(a) against any liability to the Trust or its Shareholders by
reason of a final adjudication by the court or other body before which
the proceeding was brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office;

(b) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interests of the Trust; or

(c) in the event of a settlement or other disposition not
involving a final adjudication (as provided in paragraph (a) or (b))
and resulting in a payment by a Covered Person, unless there has been
either a determination that such Covered Person did not engage in
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office by the court or
other body approving the settlement or other disposition, or a
reasonable determination, based on a review of readily available facts
(as opposed to a full trial-type inquiry), that he did not engage in
such conduct:

(i) by a vote of a majority of the Disinterested
Trustees acting on the matter (provided that a majority of the
Disinterested Trustees then in office act on the matter); or

(ii) by written opinion of independent legal counsel.

-20-

ceased to be such a Covered Person and shall inure to the benefit of the heirs,
executors and administrators of such a person. Nothing contained herein shall
affect any rights to indemnification to which Trust personnel other than Covered
Persons may be entitled by contract or otherwise under law.

Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding subject to a claim for indemnification under this
Section 4 shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to indemnification under
this Section 4, provided that either:

(a) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or

(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or independent legal counsel in a written opinion shall
determine, based upon a review of the readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.

As used in this Section 4, a "Disinterested Trustee" is one (x) who is
not an Interested Person of the Trust (including anyone, as such Disinterested
Trustee, who has been exempted from being an Interested Person by any rule,
regulation or order of the Commission), and (y) against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending.

As used in this Section 4, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits, proceedings (civil,
criminal, administrative or other, including appeals), actual or threatened; and
the words "liability" and "expenses" shall include without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.

Section 5. Shareholders. No personal liability for any debt or
obligation of the Trust shall attach to any Shareholder or former Shareholder of
the Trust. In case any Shareholder or former Shareholder of the Trust shall be
held to be personally liable solely by reason of his being or having been a
Shareholder and not because of his acts or omissions or for some other reason,
the Shareholder or former Shareholder (or his heirs, executors, administrators
or other legal representatives or in the case of a corporation or other entity,
its corporate or other general successor) shall be entitled out of the assets of
the Trust to be held harmless from and indemnified against all loss and expense
arising from such liability; provided, however, there shall be no liability or
obligation of the Trust arising hereunder to reimburse any Shareholder for taxes
paid by reason of such
<PAGE>

-21-

Shareholder's ownership of any Share or for losses suffered by reason of any
changes in value of any Trust assets. The Trust shall, upon request by the
Shareholder or former Shareholder, assume the defense of any claim made against
the Shareholder for any act or obligation of the Trust and satisfy any judgment
thereon.

ARTICLE XIII

MISCELLANEOUS

Section 1. Termination of Trust. Unless terminated as provided
herein, the Trust shall continue without limitation of time. The Trust or any
series of the Trust may be terminated at any time by the Trustees by written
notice to the Shareholders of the Trust, or such Series as the case may be,
without a vote of the Shareholders of the Trust, or of such series, or the Trust
or any series of the Trust may be terminated by the affirmative vote of the
Shareholders in accordance with Section 1 of Article IX hereof.

Upon termination of the Trust or any series thereof, after paying or
otherwise providing for all charges, taxes, expenses and liabilities, whether
due or accrued or anticipated, as may be determined by the Trustees, the Trust
shall, in accordance with such procedures as the Trustees consider appropriate,
reduce the remaining assets of the Trust or of the particular series thereof to
distributable form in cash or other securities, or any combination thereof, and
distribute the proceeds to the holders of the Shares of the Trust or such series
in the manner set forth by resolution of the Trustees.

Section 2. Filing of Copies, References, Headings. The original or
a copy of this instrument and of each amendment hereto shall be kept in the
office of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment shall be filed by the Trustees with the
Secretary of State of the Commonwealth of Massachusetts, as well as any other
governmental office where such filing may from time to time be required,
provided, however, that the failure to so file will not invalidate this
instrument or any properly authorized amendment hereto. Anyone dealing with the
Trust may rely on a certificate by an officer or Trustee of the Trust as to
whether or not any such amendments have been made and as to any matters in
connection with the Trust hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer or Trustee of the Trust to
be a copy of this instrument or of any such amendments. In this instrument or in
any such amendment, references to this instrument, and all expressions like
"herein," "hereof" and "hereunder," shall be deemed to refer to this instrument
as a whole and as amended or affected by any such amendment, and masculine
pronouns shall be deemed to include the feminine and the neuter, as the context
shall require. Headings are placed herein for convenience of reference only, and
in case of any conflict, the text of this instrument, rather than the headings,
shall control. This instrument may be executed in any number of counterparts,
each of which shall be deemed an original.
<PAGE>

-22-

Section 3. Trustees May Resolve Ambiguities. The Trustees may
construe any of the provisions of this Declaration insofar as the same may
appear to be ambiguous or inconsistent with any other provisions hereof, and any
such construction hereof by the Trustees in good faith shall be conclusive as to
the meaning to be given to such provisions.

Section 4. Amendments. Except as otherwise specifically provided in
this Declaration of Trust, this Declaration of Trust may be amended at any time
by an instrument in writing signed by a majority of the then Trustees with the
consent of Shareholders holding more than fifty percent (50%) of Shares entitled
to vote except that an amendment which in the determination of the Trustees
shall affect the holders of one or more series or classes of Shares but not the
holders of all outstanding series or classes shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of each series
and class affected and no vote of Shareholders of a series or class not affected
shall be required. In addition, notwithstanding any other provision to the
contrary contained in this Declaration of Trust, the Trustees may amend this
Declaration of Trust without the vote or consent of Shareholders (i) at any time
if the Trustees deem it necessary in order for the Trust or any series or class
thereby to meet the requirements of applicable Federal or State laws or
regulations, or the requirements of the regulated investment company provisions
of the Internal Revenue Code, (ii) to designate series or classes or exercise
other powers with respect thereto in accordance with Section 1 and 2 or Article
IV hereof, (iii) change the name of the Trust or to supply any omission, cure
any ambiguity or cure, correct or supplement any defective or inconsistent
provision contained herein, or (iv) for any reason at any time before a
registration statement under the Securities Act of 1933, as amended, covering
the initial public offering of Shares has become effective.
<PAGE>

-23-

IN WITNESS WHEREOF, the undersigned, being the sole Trustees of the
Trust, have executed this instrument as of the date first written above.

/s/ Anthony T. Dean /s/ Timothy R. Schwertfeger
___________________________ _____________________________
Anthony T. Dean, Timothy R. Schwertfeger,
as Trustee as Trustee
333 West Wacker Drive 333 West Wacker Drive
Chicago, Illinois 60606 Chicago, Illinois 60606

STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )

Then personally appeared the above-named persons who are known to me
to be Trustees of the Trust whose names and signatures are affixed to the
foregoing Declaration of Trust and who acknowledged the same to be his free act
and deed, before me this 20th day of January, 1998.

Notary Public /s/ Karen L. Healy
______________________________
My Commission Expires: December 30, 1999

<PAGE>

NUVEEN TAX-DEFERRED INVESTMENT TRUST

ESTABLISHMENT AND DESIGNATION OF SERIES OF

SHARES OF BENEFICIAL INTEREST

Pursuant to Section 2 of Article IV of the Declaration of Trust dated
January 20, 1998 (the "Declaration"), of Nuveen Tax-Deferred Investment Trust, a
Massachusetts business trust (the "Trust"), the Trustees of the Trust, this 4th
day of March, 1998, hereby establish and designate seven series of Shares (as
defined in the Declaration) (individually, a "Fund" and collectively the
"Funds") to have the special and relative rights described below.

1. The following Funds are established and designated:

Strategic Income Portfolio
Balanced Portfolio
Growth and Income Portfolio
Blue Chip Growth Portfolio
European Value Portfolio
International Equity Portfolio

2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other property and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933 to the extent pertaining to the offering of
Shares of such Fund. Each Share of each Fund shall be redeemable, shall be
entitled to one vote (or fraction thereof in respect of a fractional share) on
matters on which Shareholders of that Fund may vote in accordance with the
Declaration, shall represent a pro rata beneficial interest in the assets
allocated or belonging to such Fund, and shall be entitled to receive its pro
rata share of the net assets of such Fund upon liquidation of such Fund, all as
provided in Article IV, Sections 2 and 5 of the Declaration. The proceeds of
the sale of Shares of each Fund, together with any income and gain thereon, less
any diminution or expenses thereof, shall irrevocably belong to such Fund,
unless otherwise required by law.

3. Shareholders of each Fund shall vote either separately as a class on
any matter to the extent required by, and any matter shall be deemed to have
been effectively acted upon with respect to such Fund as provided in Rule 18f-2,
as from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rules, and by the Declaration.

4. The assets and liabilities of the Trust shall be allocated among each
Fund and any other series of Shares that may be established from time to time as
set forth in Article IV, Section 5 of the Declaration.
<PAGE>

-2-

5. The designation of each Fund hereby shall not impair the power of the
Trustees from time to time to designate additional series of Shares of the
Trust.

6. Subject to the applicable provisions of the 1940 Act and the
provisions of Article IV, Sections 2 and 5 of the Declaration, the Trustees
shall have the right at any time and from time to time to reallocate assets and
expenses or to change the designation of each Fund now or hereafter created, or
to otherwise change the special relative rights of each Fund designated hereby
without any action or consent of the Shareholders.
<PAGE>

-3-

IN WITNESS WHEREOF, the undersigned, being the sole Trustees of the Trust,
have executed this instrument as of this 10th day of February, 1998.

/s/ Anthony T. Dean /s/ Timothy R. Schwertfeger
- ----------------------------- -----------------------------
Anthony T. Dean, Timothy R. Schwertfeger,
as Trustee as Trustee
333 West Wacker Drive 333 West Wacker Drive
Chicago, Illinois 60606 Chicago, Illinois 60606

STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )

Then personally appeared the above-named persons who are known to me to be
Trustees of the Trust whose names and signatures are affixed to the foregoing
Designation of Series and who acknowledged the same to be his free act and deed,
before me this 10th day of February, 1998.

Notary Public /s/ Karen L. Healy
---------------------------
My Commission Expires: December 30, 1999

<PAGE>

-1-

BY-LAWS
OF
NUVEEN TAX-DEFERRED INVESTMENT TRUST

ARTICLE I

DECLARATION OF TRUST
AND
OFFICES

Section 1.1. Declaration of Trust. These By-Laws shall be subject to
the Declaration of Trust, as from time to time in effect (the "Declaration of
Trust"), of Nuveen Tax-Deferred Investment Trust, the Massachusetts business
trust established by the Declaration of Trust (the "Trust").

Section 1.2. Other Offices. The Trust may have such other offices and
places of business within or without the Commonwealth of Massachusetts as the
Board of Trustees shall determine.

ARTICLE II

SHAREHOLDERS

Section 2.1. Place of Meetings. Meetings of the Shareholders may be
held at such place or places within or without the Commonwealth of Massachusetts
as shall be fixed by the Board of Trustees and stated in the notice of the
meeting.

Section 2.2. Regular Meeting. Regular meetings of the Shareholders
for the election of Trustees and the transaction of such other business as may
properly come before the meeting shall be held on an annual or other less
frequent periodic basis at such date and time as the Board of Trustees by
resolution shall designate, except as otherwise required by applicable law.

Section 2.3. Special Meeting. Special meetings of the Shareholders
for any purpose or purposes may be called by the Chairman of the Board, the
President or two or more Trustees, and must be called at the written request
stating the purpose or purposes of the meeting, of Shareholders entitled to cast
at least 10 percent of all the votes entitled to be cast at the meeting.

Section 2.4. Notice of Meetings. Notice stating the time and place of
the meeting and in the case of a special meeting the purpose or purposes thereof
and by

<PAGE>

-2-

whom called, shall be delivered to each Shareholder not less than ten nor more
than sixty days prior to the meeting, except where the meeting is an adjourned
meeting and the date, time and place of the meeting were announced at the time
of the adjournment.

Section 2.5. Quorum and Action. (a) The holders of thirty percent
(30%) of the voting power of the shares of beneficial interest of the Trust (the
"Shares") entitled to vote at a meeting are a quorum for the transaction of
business. If a quorum is present when a duly called or held meeting is convened,
the Shareholders present may continue to transact business until adjournment,
even though the withdrawal of a number of Shareholders originally present leaves
less than the proportion or number otherwise required for a quorum.

(b) The Shareholders shall take action by the affirmative vote of the
holders of a majority, except in the case of the election of Trustees which
shall only require a plurality, of the voting power of the Shares present and
entitled to vote at a meeting of Shareholders at which a quorum is present,
except as may be otherwise required by the Investment Company Act of 1940, as
amended (the "1940 Act"), or the Declaration of Trust.

Section 2.6. Voting. At each meeting of the Shareholders, every
holder of Shares then entitled to vote may vote in person or by proxy and shall
have one vote for each Share registered in his name.

Section 2.7. Proxy Representation. A Shareholder may cast or
authorize the casting of a vote by filing a written appointment of a proxy with
an officer of the Trust at or before the meeting at which the appointment is to
be effective. The placing of a Shareholder's name on a proxy pursuant to
telephonic or electronically transmitted instructions obtained pursuant to
procedures which are reasonably designed to verify that such instructions have
been authorized by such Shareholder, shall constitute execution of such proxy by
or on behalf of such Shareholder. The appointment of a proxy is valid for eleven
months, unless a longer period is expressly provided in the appointment. No
appointment is irrevocable unless the appointment is coupled with an interest in
the Shares or in the Trust. Any copy, facsimile telecommunication or other
reliable reproduction of a proxy may be substituted for or used in lieu of the
original proxy for any and all purposes for which the original proxy could be
used, provided that such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original proxy.

Section 2.8. Adjourned Meetings. Any meeting of Shareholders may be
adjourned to a designated time and place by the vote of the holders of a
majority of the Shares present and entitled to vote thereat even though less
than a quorum is so present without any further notice except by announcement at
the meeting. An adjourned meeting may reconvene as designed, and when a quorum
is present any business may be transacted which might have been transacted at
the meeting as originally called.

<PAGE>

-3-

ARTICLE III

TRUSTEES

Section 3.1. Qualifications and Number: Vacancies. Each Trustee shall
be a natural person. A Trustee need not be a Shareholder, a citizen of the
United States, or a resident of the Commonwealth of Massachusetts. The number of
Trustees of the Trust, their term and election and the filling of vacancies,
shall be as provided in the Declaration of Trust.

Section 3.2. Powers. The business and affairs of the Trust shall be
managed under the direction of the Board of Trustees. All powers of the Trust
may be exercised by or under the authority of the Board of Trustees, except
those conferred on or reserved to the Shareholders by statute, the Declaration
of Trust or these By-Laws.

Section 3.3. Investment Policies. It shall be the duty of the Board
of Trustees to ensure that the purchase, sale, retention and disposal of
portfolio securities and the other investment practices of the Trust are at all
times consistent with the investment objectives, policies and restrictions with
respect to securities investments and otherwise of the Trust filed from time to
time with the Securities and Exchange Commission and as required by the 1940
Act, unless such duty is delegated to an investment adviser pursuant to a
written contract, as provided in the Declaration of Trust. The Trustees,
however, may delegate the duty of management of the assets of the Trust to an
individual or corporate investment adviser or subadviser to act as investment
adviser or subadviser pursuant to a written contract.

Section 3.4. Meetings. Regular meetings of the Trustees may be held
without notice at such times as the Trustees shall fix. Special meetings of the
Trustees may be called by the Chairman of the Board or the President, and shall
be called at the written request of two or more Trustees. Unless waived by each
Trustee, three days' notice of special meetings shall be given to each Trustee
in person, by mail, by telephone, or by telegram or cable, or by any other means
that reasonably may be expected to provide similar notice. Notice of special
meetings need not state the purpose or purposes thereof. Meetings of the
Trustees may be held at any place within or outside the Commonwealth of
Massachusetts. A conference among Trustees by any means of communication through
which the Trustees may simultaneously hear each other during the conference
constitutes a meeting of the Trustees or of a committee of the Trustees, if the
notice requirements have been met (or waived) and if the number of Trustees
participating in the conference would be sufficient to constitute a quorum at
such meeting. Participation in such meeting by that means constitutes presence
in person at the meeting.

Section 3.5. Quorum and Action. A majority of the Trustees currently
holding office, or in the case of a meeting of a committee of the Trustees, a
majority of the members of such committee, shall constitute a quorum for the
transaction of business at any meeting. If a quorum is present when a duly
called or held meeting is convened, the

<PAGE>

-4-

Trustees present may continue to transact business until adjournment, even
though the withdrawal of a number of Trustees originally present leaves less
than the proportion or number otherwise required for a quorum. At any duly held
meeting at which a quorum is present, the affirmative vote of the majority of
the Trustees present shall be the act of the Trustees or the committee, as the
case may be, on any question, except where the act of a greater number is
required by these By-Laws or by the Declaration of Trust.

Section 3.6. Action by Written Consent in Lieu of Meetings of
Trustees. An action which is required or permitted to be taken at a meeting of
the Trustees or a committee of the Trustees may be taken by written action
signed by the number of Trustees that would be required to take the same action
at a meeting of the Trustees or committee, as the case may be, at which all
Trustees were present. The written action is effective when signed by the
required number of Trustees, unless a different effective time is provided in
the written action. When written action is taken by less than all Trustees, all
Trustees shall be notified immediately of its text and effective date.

Section 3.7. Committees. The Trustees, by resolution adopted by the
affirmative vote of a majority of the Trustees, may designate from their members
an Executive Committee, an Audit Committee and any other committee or
committees, each such committee to consist of two or more Trustees and to have
such powers and authority (to the extent permitted by law) as may be provided in
such resolution. Any such committee may be terminated at any time by the
affirmative vote of a majority of the Trustees.

ARTICLE IV

OFFICERS

Section 4.1. Number and Qualifications. The officers of the Trust
shall include a Chairman of the Board, a President, a Controller, one or more
Vice Presidents (one or more of whom may be designated Executive Vice
President), a Treasurer, and a Secretary. Any two or more offices may be held by
the same person. Unless otherwise determined by the Trustees, each officer shall
be appointed by the Trustees for a term which shall continue until the meeting
of the Trustees following the next regular meeting of Shareholders and until his
successor shall have been duly elected and qualified, or until his death, or
until he shall have resigned or have been removed, as hereinafter provided in
these By-Laws. The Trustees may from time to time elect, or delegate to the
Chairman of the Board or the President, or both, the power to appoint, such
officers (including one or more Assistant Vice Presidents, one or more Assistant
Treasurers and one or more Assistant Secretaries) and such agents as may be
necessary or desirable for the business of the Trust. Such other officers shall
hold office for such terms as may be prescribed by the Trustees or by the
appointing authority.

Section 4.2. Resignations. Any officer of the Trust may resign at
any time by giving written notice of his resignation to the Trustees, the
Chairman of the Board, the President or the Secretary. Any such resignation
shall take effect at the time specified

<PAGE>

-5-

therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt, and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.

Section 4.3. Removal. An officer may be removed at any time, with or
without cause, by a resolution approved by the affirmative vote of a majority of
the Trustees present at a duly convened meeting of the Trustees.

Section 4.4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause, may be filled for the
unexpired portion of the term by the Trustees, or in the manner determined by
the Trustees.

Section 4.5. The Chairman of the Board. The Chairman of the Board
shall be elected from among the Trustees. He shall be the chief executive
officer of the Trust and shall:

(a) have general active management of the business of the Trust;

(b) when present, preside at all meetings of the Trustees and of the
Shareholders;

(d) sign and deliver in the name of the Trust any deeds, mortgages,
bonds, contracts or other instruments pertaining to the business of the
Trust, except in cases in which the authority to sign and deliver is
required by law to be exercised by another person or is expressly delegated
by the Declaration of Trust or By-Laws or by the Trustees to some other
officer or agent of the Trust; and

(e) maintain records of and, whenever necessary, certify all
proceedings of the Trustees and the Shareholders.

The Chairman of the Board shall be authorized to do or cause to be
done all things necessary or appropriate, including preparation, execution and
filing of any documents, to effectuate the registration from time to time of the
Shares of the Trust with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended. He shall perform all duties incident to the
office of Chairman of the Board and such other duties as from time to time may
be assigned to him by the Trustees or by these By-Laws.

Section 4.6. The President. The President shall be the chief
operating officer of the Trust and, subject to the Chairman of the Board, he
shall have general authority over and general management and control of the
business and affairs of the Trust. In general, he shall discharge all duties
incident to the office of the chief operating officer of the Trust and such
other duties as may be prescribed by the Trustees and the Chairman of the Board
from time to time. In the absence of the Chairman of the Board or in the
<PAGE>

-6-

event of his disability, or inability to act or to continue to act, the
President shall perform the duties of the Chairman of the Board and when so
acting shall have all the powers of, and be subject to all the restrictions
upon, the Chairman of the Board.

Section 4.7. Executive Vice-President. In the case of the absence or
inability to act of the President and the Chairman of the Board, any Executive
Vice-President shall perform the duties of the President and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
President. Any Executive Vice-President shall perform all duties incident to
the office of Executive Vice-President and such other duties as from time to
time may be assigned to him by the Trustees, the President or these By-Laws.

Section 4.8. Vice Presidents. Each Vice-President shall perform all
such duties as from time to time may be assigned to him by the Trustees, the
Chairman of the Board or the President.

Section 4.9. Controller. The Controller shall:

(a) keep accurate financial records for the Trust;

(b) render to the Chairman of the Board, the President and the
Trustees, whenever requested, an account of all transactions by and of the
financial condition of the Trust; and

(c) in general, perform all the duties incident to the office of
Controller and such other duties as from time to time may be assigned to
him by the Trustees, the Chairman of the Board or the President.

Section 4.10. Treasurer. The Treasurer shall:

(a) have charge and custody of, and be responsible for, all the funds
and securities of the Trust, except those which the Trust has placed in the
custody of a bank or trust company pursuant to a written agreement
designating such bank or trust company as custodian of the property of the
Trust, as required by Section 6.5 of these By-Laws;

(b) deposit all money, drafts, and checks in the name of and to the
credit of the Trust in the banks and depositories designated by the
Trustees;

(d) disburse corporate funds and issue checks and drafts in the name
of the Trust, as ordered by the Trustees; and
<PAGE>

-7-

(e) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him
by the Trustees, the Chairman of the Board or the President.

Section 4.11. Secretary. The Secretary shall:

(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Trustees, the committees of the
Trustees and the Shareholders;

(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by statute;

(d) see that the books, reports, statements, certificates and other
documents and records required by statute to be kept and filed are properly
kept and filed; and

(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
by the Trustees, the Chairman of the Board or the President.

Section 4.12. Salaries. The salaries of all officers shall be fixed
by the Trustees.

ARTICLE V

Section 5.1. Share Certificates. Each owner of Shares of the Trust
shall be entitled upon request to have a certificate, in such form as shall be
approved by the Trustees, representing the number of whole Shares of the Trust
owned by him. Certificates representing fractional Shares shall not be issued.
The certificates representing whole Shares shall be signed in the name of the
Trust by the Chairman of the Board, the President, an Executive Vice President
or a Vice President and by the Secretary, an Assistant Secretary, the Treasurer
or an Assistant Treasurer (which signatures may be either manual or facsimile,
engraved or printed). In case any officer who shall have signed such certificate
shall have ceased to be such officer before such certificates shall be issued,
they may nevertheless be issued by the Trust with the same effect as if such
officer were still in office at the date of their issuance.

Section 5.2. Books and Records; Inspection. The Trust shall keep at
its principal executive office, or at another place or places within the United
States determined by the Trustees, a share register not more than one year old,
containing the names and addresses of the shareholders and the number of Shares
held by each Shareholder. The Trust shall also keep, at its principal executive
office, or at another place or places within the United
<PAGE>

-8-

States determined by the Trustees, a record of the dates on which certificates
representing Shares were issued.

Section 5.3. Share Transfers. Upon compliance with any provisions
restricting the transferability of Shares that may be set forth in the
Declaration of Trust, these By-Laws, or any resolution or written agreement in
respect thereof, transfers of Shares of the Trust shall be made only on the
books of the Trust by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with an
officer of the Trust, or with a transfer agent or a registrar and on surrender
of any certificate or certificates for such Shares properly endorsed and the
payment of all taxes thereon. Except as may be otherwise provided by law or
these By-Laws, the person in whose name Shares stand on the books of the Trust
shall be deemed the owner thereof for all purposes as regards the Trust;
provided that whenever any transfer of Shares shall be made for collateral
security, and not absolutely, such fact, if known to an officer of the Trust,
shall be so expressed in the entry of transfer.

Section 5.4. Regulations. The Trustees may make such additional
rules and regulations, not inconsistent with these By-Laws, as they may deem
expedient concerning the issue, certification, transfer and registration of
Shares of the Trust. They may appoint, or authorize any officer or officers to
appoint, one or more transfer agents or one or more transfer clerks and one or
more registrars and may require all certificates for Shares to bear the
signature or signatures of any of them.

Section 5.5. Lost, Destroyed or Mutilated Certificates. The holder
of any certificate representing Shares of the Trust shall immediately notify the
Trust of any loss, destruction or mutilation of such certificate, and the Trust
may issue a new certificate in the place of any certificate theretofore issued
by it which the owner thereof shall allege to have been lost or destroyed or
which shall have been mutilated, and the Trustees may, in their discretion,
require such owner or his legal representatives to give to the Trust a bond in
such sum, limited or unlimited, and in such form and with such surety or
sureties as the Trustees in their absolute discretion shall determine, to
indemnify the Trust against any claim that may be made against it on account of
the alleged loss or destruction of any such certificate, or the issuance of a
new certificate. Anything herein to the contrary notwithstanding, the Trustees,
in their absolute discretion, may refuse to issue any such new certificate,
except as otherwise required by law.

Section 5.6. Record Date; Certification of Beneficial Owner. (a) The
Trustees may fix a date not more than ninety days before the date of a meeting
of Shareholders as the date for the determination of the holders of Shares
entitled to notice of and entitled to vote at the meeting or any adjournment
thereof.

(b) The Trustees may fix a date for determining Shareholders entitled
to receive payment of any dividend or distribution or allotment of any rights or
entitled to exercise any rights in respect of any change, conversion or exchange
of Shares.
<PAGE>

-9-

(c) In the absence of such fixed record date, (i) the date for
determination of Shareholders entitled to notice of and entitled to vote at a
meeting of Shareholders shall be the later of the close of business on the day
on which notice of the meeting is mailed or the thirtieth day before the
meeting, and (ii) the date for determining Shareholders entitled to receive
payment of any dividend or distribution or an allotment of any rights or
entitled to exercise any rights in respect of any change, conversion or exchange
of Shares shall be the close of business on the day on which the resolution of
the Trustees is adopted.

(c) A resolution approved by the affirmative vote of a majority of the
Trustees present may establish a procedure whereby a Shareholder may certify in
writing to the Trust that all or a portion of the Shares registered in the name
of the Shareholder are held for the account of one or more beneficial owners.
Upon receipt by the Trust of the writing, the persons specified as beneficial
owners, rather than the actual Shareholders, are deemed the Shareholders for the
purposes specified in the writing.

ARTICLE VI

MISCELLANEOUS

Section 6.1. Fiscal Year. The fiscal year of the Trust shall be as
fixed by the Trustees of the Trust.

Section 6.2. Notice and Waiver of Notice. (a) Any notice of a
meeting required to be given under these By-Laws to Shareholders or Trustees, or
both, may be waived by any such person (i) orally or in writing signed by such
person before, at or after the meeting or (ii) by attendance at the meeting in
person or, in the case of a Shareholder, by proxy.

(b) Except as otherwise specifically provided herein, all notices
required by these By-Laws shall be printed or written, and shall be delivered
either personally, by telecopy, telegraph or cable, or by mail or courier or
delivery service, and, if mailed, shall be deemed to be delivered when deposited
in the United States mail, postage prepaid, addressed to the Shareholder or
Trustee at his address as it appears on the records of the Trust.

ARTICLE VII

AMENDMENTS

Section 7.1. These By-Laws may be amended or repealed, or new By-Laws
may be adopted, by the Trustees at any meeting thereof or by action of the
Trustees by written consent in lieu of a meeting.