Nuveen Exchange-Traded Funds
Providing tax-free income to help you live your dreams.
NUVEEN SELECT MATURITIES MUNICIPAL FUND
ANNUAL REPORT/MAY 31, 1995
Photographic image of man seated at breakfast table with wife standing behind
him.
<PAGE>
CONTENTS
3 Dear shareholder
5 Answering your questions
8 Fund performance
8 Amendment to dividend reinvestment plan
9 Commonly used terms
11 Report to independent auditors
12 Portfolio of investments
17 Statement of net assets
18 Statement of operations
19 Statement of changes in net assets
20 Notes to financial statements
26 Financial highlights
<PAGE>
Dear shareholder
"Over time, municipal bonds have proven to be a valuable, dependable, and
consistent component of successful investment programs."
Photographic image of Richard J. Franke, Chairman of Nuveen.
Over the past 12 months, investors have endured somewhat of a roller-coaster
ride in the municipal bond market. First, we saw the conclusion of one of the
worst periods in recent bond market history, and then, in early 1995, we
experienced a welcome rebound in the bond markets.
Throughout this turbulent time, we have kept our sights focused on
successfully meeting the objectives of your Fund: providing you with a source
of stable current income, credit quality, and enhanced share price relative to
the market as a whole.
As of May 31, 1995, the Fund's current yield on share price was 5.82%,
providing investors in the 36% federal income tax bracket with a
taxable-equivalent yield of 9.09%. This taxable yield would be difficult to
achieve on investments of comparable quality in today's market.
The income that your Fund produces reminds us of the important role that
municipal bonds play as part of a successful investment strategy structured to
provide diversification and long-term performance. Although, as we saw in
1994, transient fluctuations in interest rates, the markets, and the economy
in general can cause us to pause, review, and reconsider our investment
strategies, it is performance over the long-term that is the true measure of
an investment--and, over time, municipal bonds have proven to be a valuable,
dependable, and consistent component of successful investment programs.
At Nuveen, we believe that the best approach to tax-free investing is to
focus on quality and income dependability. By this standard, in a difficult
market cycle, your Fund continued to meet its objectives, providing an
attractive level of tax-free income while holding its portfolio value right in
line with the market as a whole.
As we noted in your semiannual report, the municipal market's supply and
demand fundamentals continue to be sound. To put this statement in
perspective, in 1994 the supply of new municipal bonds declined by
approximately 40% from 1993, a trend expected to continue in 1995. At the same
time, demand for tax-free bonds, which has been subdued over the last 12
months as a result of the market's extraordinary volatility, seems to be
resuming its long-term upward trend as investors recognize the exceptional
yields tax-free bonds offer at current price levels.
This combination of lower supply, which may be reduced further by the high
volume of bond calls expected this year, and the likelihood of rising demand
should help support municipal bond prices in the long term.
In closing, I'd like to take this opportunity to assure you that your choice
of Nuveen as your fund manager is a wise one. We appreciate your continued
confidence and look forward to helping you reach your tax-free investment
objectives in the future.
Sincerely,
Richard J. Franke
Chairman of the Board
July 15, 1995
<PAGE>
Answering your questions
Tom Spalding, head of Nuveen's portfolio management team, offered these
insights into recent developments in the municipal marketplace and the outlook
for your Nuveen fund.
What do you see happening to dividends over the next few months?
Over the past year, even with the uneven markets, the monthly dividend paid by
the Nuveen Select Maturities Municipal Fund has remained stable. This is
mainly due to two factors: our dividend policy and our emphasis on credit
quality.
At Nuveen, we set our core dividend rates at levels that we consider
sustainable over time, factoring in such influences as current interest rates,
the expected number of bond calls, and reinvestment rates. Though changes in
dividend rates can be expected in response to interest rate movements, current
dividends have been set conservatively, taking rates and current market
dynamics into account.
Our emphasis on credit quality also promotes dividend stability. Although
the prices of even the highest quality bonds are affected by interest rate
shifts, over time quality tends to be rewarded with greater stability in price
and dividend rate.
Photographic image of Tom Spalding, Portfolio Manager at Nuveen.
Tom Spalding, head of Nuveen's portfolio management team, answers investors'
questions on developments in the municipal market
What impact have interest rates had on the portfolio? Where are these rates
trending over the next year?
Over the past 15 months, all bond investors, including holders of
exchange-traded municipal bond funds, have felt the effect of rising interest
rates on the value of their fixed income portfolios.
At Nuveen, we don't attempt to forecast directions in interest rates or the
economy as a whole, taking the viewpoint that we cannot control these, but we
can control the factors that directly impact bond fund performance: credit
quality, relative value, and diversification.
Why are there differences between the net asset value of my fund and the share
price? What does that difference mean to me?
The net asset value (NAV) per share of your fund represents the total sum of
the assets and liabilities of the fund, while the share price reflects supply
and demand. The NAV is strictly a mathematical calculation, while the share
price is more theoretical, reflecting general consensus as to the direction of
interest rates, inflation forecasts, and the relative strength or weakness of
the bond market, among other factors.
You may also hear someone refer to the fact that your fund is trading at a
"premium" or a "discount." This simply means that the share price is higher
(premium) or lower (discount) than the NAV. For example, if the NAV of your
fund is $14.50 and the share price is $15.00, your fund is said to be trading
at a premium.
When the market is pessimistic about municipal bonds, as it was at the end
of 1994, the shares can trade at sizable discounts to their NAVs. The fact
that the growth of the NAV for most of our funds is currently outpacing the
rate of change in the share price means that the market is lagging in
recognizing the value currently offered by municipal bonds.
<PAGE>
What is the outlook for municipal bonds in 1995?
At Nuveen, we recommend viewing your investment as part of a long-term
strategy. The benefits of taking the long view are two-fold: First, market
timing is rarely successful. That is the attempt to buy when the market is at
its lowest point and to sell at its peak. Statistics show that, over time, the
rewards of investing tend to go to those who set and maintain clear investment
objectives and strategies, rather than to those who change their approach with
every change in the markets.
Second, you must also consider your long-term needs for diversification and
dependable income, the reasons you chose Nuveen's exchange-traded municipal
funds in the first place. While the markets may fluctuate, your investment
needs are more constant. As one of the last remaining tax shelters, Nuveen's
exchange-traded funds continue to provide the risk/reward balance and the
steady source of
tax-free income that form the nucleus of a prudent investment program.
<PAGE>
<TABLE>
NUVEEN SELECT MATURITIES MUNICIPAL FUND
NIM
In line with the Fund's objective of providing attractive, dependable tax-free
income, shareholders enjoyed 12 months of steady dividends, plus a capital
gains distribution in December.
<CAPTION>
12 MONTH DIVIDEND HISTORY
Date Monthly Dividends Supplemental Dividends Capital Gains
<S> <C> <C> <C>
6/94 $0.0540
7/94 $0.0540
8/94 $0.0540
9/94 $0.0540
10/94 $0.0540
11/94 $0.0540
12/94 $0.0540 $0.0222
1/95 $0.0540
2/95 $0.0540
3/95 $0.0540
4/94 $0.0540
5/95 $0.0540
<CAPTION>
FUND HIGHLIGHTS 5/31/95
<S> <C>
Yield 5.82%
Taxable-equivalent yield 9.09%
Annual total return on NAV 9.51%
Taxable-equivalent total return 12.80%
Share price $11.125
NAV $11.73
The dividend history used in this chart constitutes past performance and does
not necessarily predict the future dividends of the Fund.
</TABLE>
Amendment to Dividend Reinvestment Plan
Effective November 1, 1995, your Fund's Dividend Reinvestment Plan will be
amended in order to enhance the ability of the Plan Agent to obtain the best
execution when making open-market purchases of Fund shares in connection with
the Plan. As of the effective date, the Plan Agent, United States Trust
Company of New York, may make Plan purchases in advance of the payment date of
the applicable Fund distribution, provided that settlement for such purchases
shall occur no earlier than the payment date for such distribution.
<PAGE>
Commonly used terms
Yield
An exchange-traded fund's annualized monthly dividend on a given date (in the
case of this report, May 31, 1995) divided by its closing price per share on
that date.
Taxable equivalent yield
The return an investor subject to a given federal and state income tax rate
would need to obtain from a fully taxable investment to equal the fund's
stated annualized yield on share price. In this report, this tax rate is
assumed to be 36% for shareholders, based on incomes of $117,950-$256,500 for
investors filing singly, $143,600-$256,500 for those filing jointly.
Net Asset Value (NAV)
The market value of all securities and other assets held by an exchange-traded
fund, minus any liabilities. The NAV per share is the fund's net assets,
divided by its total number of common shares outstanding.
Total return on NAV
The percentage change in a fund's NAV per common share for a given period,
assuming reinvestment of all dividends and capital gains distributions, if
any.
Taxable equivalent total return
The total return an investor subject to a given income tax rate would need to
obtain from a fully taxable investment to equal the Fund's stated total return
on NAV.
The Fund intends to repurchase shares of its own common stock in the future at
such times and in such amounts as are deemed advisable. No shares were
repurchased during the 12 months ended May 31, 1995. Any future repurchases
will be reported to shareholders in the next annual or semiannual report.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Boards of Trustees and Shareholders
Nuveen Select Maturities Municipal Fund
We have audited the accompanying statement of net assets, including the
portfolio of investments, of Nuveen Select Maturities Municipal Fund as of May
31, 1995, and the related statements of operations, changes in net assets and
the financial highlights for the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of May 31, 1995, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Nuveen Select Maturities Municipal Fund at May 31, 1995, and the results of
its operations, changes in its net assets and financial highlights for the
periods indicated therein in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Chicago, Illinois
July 12, 1995
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN SELECT MATURITIES MUNICIPAL FUND (NIM)
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
ALASKA - 1.1%
$ 1,500,000 Alaska State Housing Finance Corporation,
5.900%, 12/01/04 No Opt. Call Aa $ 1,533,915
ARIZONA - 4.5%
2,470,000 Arizona Educational Loan Marketing Corporation,
Alternative Minimum Tax, 6.375%, 9/01/05 9/02 at 101 Aa 2,646,309
3,830,000 Maricopa County School District No. 4 (Mesa
Unified), General Obligation, 5.550%, 7/01/04 7/95 at 102 Aaa 3,906,868
ARKANSAS - 1.1%
1,500,000 Arkansas Student Loan Authority, Alternative
Minimum Tax, 6.750%, 6/01/06 6/01 at 102 A 1,582,335
COLORADO - 5.8%
5,500,000 City and County of Denver Airport System,
Alternative Minimum Tax, 8.750%, 11/15/23 11/01 at 102 Baa 6,301,240
1,961,850 El Paso County, Single Family Mortgage (FNMA),
8.750%, 6/01/11 No Opt. Call Aaa 2,159,075
DISTRICT OF COLUMBIA - 3.9%
5,400,000 District of Columbia General Obligation,
6.000%, 6/01/07 No Opt. Call Aaa 5,620,428
FLORIDA - 4.4%
2,000,000 Florida State Board of Education, 7.100%, 6/01/07 No Opt. Call Aaa 2,213,400
3,500,000 Hillsborough County Industrial Development
Authority, Pollution Control (Tampa Electric),
8.000%, 5/01/22 5/02 at 103 Aa2 4,159,225
GEORGIA - 9.6%
1,800,000 Georgia General Obligation, 6.700%, 8/01/09 No Opt. Call Aaa 2,064,222
2,540,000 Georgia Municipal Electric Authority,
7.500%, 1/01/07 No Opt. Call Aaa 2,973,172
1,000,000 Atlanta Airport Facilities, 6.300%, 1/01/07 7/95 at 101 A 1,005,720
1,000,000 Atlanta Urban Residential Finance Authority
(Landrum Arms Project), 6.750%, 7/01/04 No Opt. Call N/R 1,049,720
5,755,000 Burke County Development Authority, Pollution
Control (Oglethorpe Power Corporation),
8.000%, 1/01/15 1/03 at 103 Aaa 6,782,958
ILLINOIS - 13.6%
5,000,000 Illinois Development Finance Authority (Child Care
Facility), 7.400%, 9/01/04 9/02 at 102 N/R 5,192,300
2,000,000 Illinois Health Facilities Authority (Fairview
Obligated Group), 8.250%, 10/01/99 10/95 at 103 N/R 2,058,000
2,755,000 Illinois Housing Development Authority (Skyline
Towers), 6.625%, 11/01/07 11/02 at 102 A 2,895,505
<PAGE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 1,300,000 Chicago Board of Education, General Obligation,
Lease Certificates, 6.125%, 1/01/07 No Opt. Call Aaa $ 1,387,230
2,845,000 Chicago Metropolitan Housing Development
Corporation, FHA-Insured Projects,
5.700%, 1/01/13 7/03 at 100 Aaa 2,789,153
3,000,000 Chicago Tax Increment (Stockyards Industrial
Redevelopment), 9.250%, 1/01/12 No Opt. Call N/R 3,180,000
880,000 Danville Single Family Mortgage, 7.300%, 11/01/10 11/03 at 102 A 956,226
1,175,000 Rock Island Residential Mortgage, 7.700%, 9/01/08 9/02 at 102 A 1,265,134
INDIANA - 5.6%
1,540,000 Indiana University Parking System, 6.000%, 11/15/06 No Opt. Call Aaa 1,631,630
Indianapolis Local Public Improvement Bond Bank:
1,000,000 6.400%, 2/01/05 No Opt. Call A+ 1,062,060
1,000,000 6.600%, 2/01/07 No Opt. Call A+ 1,072,300
2,100,000 6.000%, 7/01/10 7/03 at 102 AA- 2,183,601
2,000,000 Elkhart County Hospital Authority (Elkhart General
Hospital), 7.000%, 7/01/08 7/02 at 102 A1 2,147,040
LOUISIANA - 1.5%
2,000,000 Louisiana Public Facilities Authority, Student Loan,
Alternative Minimum Tax, 6.750%, 9/01/06 9/02 at 102 Aa 2,118,400
MAINE - 1.4%
2,000,000 Maine Educational Loan Marketing Corporation,
Alternative Minimum Tax, 6.600%, 5/01/05 5/02 at 101 A 2,099,940
MARYLAND - 5.4%
6,000,000 Maryland General Obligation, 4.600%, 7/15/06 7/03 at 101 Aaa 5,742,480
2,000,000 Anne Arundel County, Multi-Family Housing
(Woodside Project), Alternative Minimum Tax,
7.450%, 12/01/24 (Mandatory put 12/01/03) 7/03 at 101 BBB+ 2,109,240
MASSACHUSETTS - 1.2%
1,760,000 Massachusetts Municipal Wholesale Electric
Company, 4.700%, 7/01/06 No Opt. Call Aaa 1,680,782
MICHIGAN - 2.2%
1,000,000 Kent Hospital Finance Authority (Butterworth
Hospital), 5.100%, 1/15/07 No Opt. Call A1 975,130
2,000,000 Lansing Tax Increment Finance Authority,
6.200%, 10/01/04 No Opt. Call AA+ 2,157,740
NEBRASKA - 1.9%
2,400,000 Omaha Airport Authority, 8.375%, 1/01/14 1/02 at 102 A- 2,824,800
<PAGE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
NEW MEXICO - 0.5%
$ 680,000 New Mexico Educational Assistance Foundation, Student
Loan, Alternative Minimum Tax, 6.850%, 12/01/05 12/02 at 101 A $ 708,002
NEW YORK - 4.5%
4,000,000 New York City Housing Development Corporation,
Multi-Family Housing, 5.700%, 11/01/13 5/03 at 102 AA 3,875,720
2,130,000 Niagara Falls Water Treatment System, Alternative
Minimum Tax, 8.500%, 11/01/07 No Opt. Call Aaa 2,714,898
NORTH DAKOTA - 0.7%
990,000 Mercer County Pollution Control (Basin Electric
Power Cooperative), 7.700%, 1/01/19 1/96 at 103 A2 1,036,144
OHIO - 5.4%
2,000,000 Akron, Bath, Copley Joint Township Hospital District
(Summa Health System), 6.250%, 11/15/07 11/02 at 102 A 2,078,000
4,500,000 Hamilton County Hospital Facilities (Bethesda
Hospital), 6.250%, 1/01/06 No Opt. Call A1 4,665,420
1,000,000 Oxford Water Supply System Mortgage,
6.000%, 12/01/14 12/02 at 102 Aaa 1,032,130
PENNSYLVANIA - 4.6%
1,965,000 Pennsylvania Higher Educational Facilities Authority,
7.625%, 7/01/15 No Opt. Call Aaa 2,443,792
3,800,000 Allegheny County (Greater Pittsburgh International
Airport), Alternative Minimum Tax, 8.000%, 1/01/03 1/98 at 102 Aaa 4,176,200
RHODE ISLAND - 2.9%
1,040,000 Rhode Island Clean Water Protection Finance Agency,
7.700%, 10/01/03 No Opt. Call Aaa 1,224,694
3,000,000 Rhode Island Housing and Mortgage Finance
Corporation, Alternative Minimum Tax,
6.500%, 4/01/25 4/02 at 102 AA+ 3,086,250
TEXAS - 6.2%
640,000 Austin-Travis County Mental Health Centers,
6.500%, 3/01/15 3/05 at 102 Aaa 656,307
1,580,000 Galveston Property Finance Authority, Single Family
Mortgage, 8.500%, 9/01/11 9/01 at 103 A 1,743,293
2,800,000 Grapevine Industrial Development Corporation
(American Airlines, Inc.), 9.250%, 12/01/12 12/95 at 102 Baa3 2,920,512
1,215,000 Gulf Coast Center Mental Health and Mental
Retardation Center, 6.500%, 3/01/15 3/05 at 102 Aaa 1,245,958
<PAGE>
<CAPTION>
PRINCIPAL OPT. CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
<S> <C> <C> <C> <C>
TEXAS (CONTINUED)
$ 1,500,000 Travis County Health Facilities Development
Corporation (Daughters of Charity Health System),
5.900%, 11/15/07 11/03 at 102 Aa $ 1,543,410
880,000 Tri-County Mental Health and Retardation Center,
6.500%, 3/01/15 3/05 at 102 Aaa 902,422
VIRGINIA - 1.5%
2,000,000 Hampton Redevelopment and Housing Authority
(Chase Hampton II Apartments), 7.000%, 7/01/24
(Mandatory put 7/01/04) 7/02 at 104 N/R 2,168,040
WASHINGTON - 8.6%
Washington Public Power Supply System, Nuclear
Project No. 1:
2,500,000 7.000%, 7/01/07 No Opt. Call AA 2,785,525
3,000,000 7.000%, 7/01/08 No Opt. Call AA 3,332,520
7,000,000 Washington Public Power Supply System, Nuclear
Project No. 3, 0.000%, 7/01/06 No Opt. Call AA 3,746,540
1,255,000 Douglas County Public Utility District No. 1 (Wells
Hydroelectric), Alternative Minimum Tax,
7.700%, 9/01/08 9/00 at 102 A+ 1,389,047
1,000,000 King County School District No. 414, General
Obligation, 9.000%, 12/01/00 No Opt. Call AA 1,204,669
$135,986,850 Total Investments - (cost $135,680,768) - 98.1% 142,206,771
============
TEMPORARY INVESTMENTS IN SHORT-TERM
MUNICIPAL SECURITIES - 0.5%
$ 200,000 Henrico County Industrial Development Health
Facility Revenue Series 1994 (The Hermitage at
Cedarfield), Variable Rate Demand Bonds,
4.450%, 5/01/24t VMIG-1 200,000
500,000 Hillsborough County Industrial Development
Authority (Tampa Electric Company), Variable
Rate Demand Bonds, 4.100%, 9/01/25t Aa-2 500,000
$ 700,000 Total Temporary Investments - 0.5% 700,000
============
Other Assets Less Liabilities - 1.4% 2,080,033
Net Assets - 100% $144,986,804
============
<PAGE>
<CAPTION>
NUMBER MARKET MARKET
STANDARD & POOR'S MOODY'S OF ISSUES VALUE PERCENT
<S> <C> <C> <C> <C> <C>
SUMMARY OF AAA Aaa 20 $ 53,347,799 37%
RATINGS** AA+, AA, AA- Aa1, Aa, Aa2, Aa3 13 34,373,824 24%
PORTFOLIO OF A+ A1 6 11,310,997 8%
INVESTMENTS A, A- A, A2, A3 11 18,195,099 13%
(INCLUDING BBB+, BBB, BBB- Baa1, Baa, Baa2, Baa3 3 11,330,992 8%
TEMPORARY Non-rated Non-rated 5 13,648,060 10%
INVESTMENTS):
TOTAL 58 $142,206,771 100%
<FN>
* Optional Call Provisions (not covered by the report of independent
auditors): Dates (month and year) and prices of the earliest optional call or
redemption. There may be other call provisions at varying prices at later
dates.
** Ratings (not covered by the report of independent auditors): Using the
higher of Standard & Poor's or Moody's rating.
N/R - Investment is not rated.
t The security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security.
The rate disclosed is that currently in effect. This rate changes periodically
based on market conditions or a specified market index.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS
<CAPTION>
<S> <C>
ASSETS
Investments in municipal securities, at market
value (note 1) $142,206,771
Temporary investments in short-term municipal
securities, at amortized cost (note 1) 700,000
Cash 62,589
Interest receivable 2,780,447
Other assets 45,015
------------
Total assets 145,794,822
------------
LIABILITIES
Accrued expenses:
Management fees (note 6) 60,638
Other 79,662
Dividends payable 667,718
------------
Total liabilities 808,018
------------
Net assets (note 7) $144,986,804
============
Shares outstanding 12,365,146
============
Net asset value per share outstanding (net assets
divided by shares outstanding) $ 11.73
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
Year ended May 31, 1995
<CAPTION>
<S> <C>
INVESTMENT INCOME
Interest income (note 1) $ 8,761,048
-----------
Expenses:
Management fees (note 6) 694,702
Shareholders' servicing agent fees and expenses 29,520
Custodian's fees and expenses 46,806
Trustees' fees and expenses (note 6) 1,980
Professional fees 24,630
Shareholders' reports--printing and mailing expenses 52,796
Stock exchange listing fees 21,448
Investor relations expense 8,110
Other expenses 19,045
-----------
Total expenses 899,037
-----------
Net investment income 7,862,011
-----------
REALIZED AND UNREALIZED GAIN
FROM INVESTMENTS
Net realized gain from investment transactions (note 3) 204,387
Net change in unrealized appreciation or depreciation
of investments 4,606,003
-----------
Net gain from investments 4,810,390
-----------
Net increase in net assets from operations $12,672,401
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Year ended Year ended
5/31/95 5/31/94
<S> <C> <C>
OPERATIONS
Net investment income $ 7,862,011 $ 7,190,413
Net realized gain (loss) from investment transactions 204,387 (5,399)
Net change in unrealized appreciation or depreciation
of investments 4,606,003 (3,735,342)
------------ ------------
Net increase in net assets from operations 12,672,401 3,449,672
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (note 1)
From undistributed net investment income (8,012,616) (7,241,707)
From accumulated net realized gains from
investment transactions (198,988) (429,220)
In excess of accumulated net realized gains from
investment transactions (75,518) --
------------ ------------
Decrease in net assets from distributions
to shareholders (8,287,122) (7,670,927)
------------ ------------
CAPITAL SHARE TRANSACTIONS (note 2)
Common shares:
Net proceeds from shares issued in acquisition of
Nuveen Select Maturities Municipal Fund 2 (note 1) -- 52,468,819
Net proceeds from Common shares issued to
shareholders due to reinvestment of distributions
from net investment income and from net realized
gains from investment transactions -- 755,235
------------ ------------
Net increase in net assets derived from capital
share transactions -- 53,224,054
------------ ------------
Net increase in net assets 4,385,279 49,002,799
Net assets at beginning of year 140,601,525 91,598,726
------------ ------------
Net assets at end of year $144,986,804 $140,601,525
============ ============
Balance of undistributed net investment income
at end of year $ 440,587 $ 500,223
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
At May 31, 1995, the Fund covered in this report and its corresponding New
York Stock Exchange symbol is Nuveen Select Maturities Municipal Fund (NIM).
The Fund has invested in a diversified, investment-grade quality
portfolio of municipal obligations with intermediate characteristics having an
initial average effective maturity of approximately ten years. In assembling
and managing its portfolio, the Fund has purchased municipal obligations
having remaining effective maturities of no more than fifteen years, that in
the opinion if the Fund's investment adviser, represent the best value in
terms of the balance between yield and capital preservation currently
available from the intermediate sector of the municipal market. The Fund's
investment adviser, Nuveen Advisory Corp. (the "Adviser"), a wholly owned
subsidiary of The John Nuveen Company, will actively monitor the effective
maturities of the Fund's investments in response to prevailing market
conditions, and will adjust its portfolio consistent with its investment
policy of maintaining an average effective remaining maturity for the Fund's
portfolio of between eight and twelve years.
The Fund is registered under the Investment Company Act of 1940 as a
closed-end, diversified management investment company.
On July 28, 1993, the Fund acquired all of the net assets of Nuveen
Select Maturities Municipal Fund 2 (NIR) pursuant to a plan of reorganization
approved by NIR shareholders on July 28, 1993. The acquisition was
accomplished by a tax-free exchange of 4,485,257 shares of the Fund (valued at
$52,468,819) for the 4,490,556 shares of NIR outstanding on July 28, 1993.
NIR's net assets at that date of $52,468,819 included $2,543,919 of unrealized
appreciation which was combined with that of the Fund. The combined net assets
of the Fund immediately after the acquisition was $143,967,923.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements in accordance with
generally accepted accounting principles.
Securities Valuation
Portfolio securities for which market quotations are readily available are
valued at the mean between the quoted bid and asked prices or the yield
equivalent. Portfolio securities for which market quotations are not readily
available are valued at fair value by consistent application of methods
determined in good faith by the Trustees. Temporary investments in securities
that have variable rate and demand features qualifying them as short-term
securities are traded and valued at amortized cost.
<PAGE>
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery
basis may be settled a month or more after the transaction date. The
securities so purchased are subject to market fluctuation during this period.
The Fund has instructed the custodian to segregate assets in a separate
account with a current value at least equal to its purchase commitments. At
May 31, 1995, there were no such purchase commitments in the Fund.
Interest Income
Interest income is determined on the basis of interest accrued, adjusted for
amortization of premiums and accretion of discounts on long-term debt
securities when required for federal income tax purposes.
Federal Income Taxes
The Fund intends to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies by distributing all of its net
investment income, in addition to any significant amounts of net realized
gains from investments, to shareholders. The Fund currently considers
significant net realized gains as amounts in excess of $.001 per share.
Furthermore, the Fund intends to satisfy conditions which will enable interest
from municipal securities, which is exempt from regular federal income tax, to
retain such tax-exempt status when distributed to shareholders of the Fund.
All income dividends paid during the fiscal year ended May 31, 1995, have been
designated Exempt Interest Dividends.
Dividends and Distributions to Shareholders
Net investment income is declared as a dividend monthly and payment is made or
reinvestment is credited to shareholder accounts after month-end. Net realized
gains from securities transactions are distributed to shareholders not less
frequently than annually only to the extent they exceed available capital loss
carryovers.
Distributions to shareholders of net investment income and net realized
capital gains are recorded on the ex-dividend date. The amount and timing of
such distributions are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
Accordingly, temporary over-distributions as a result of these differences may
result and will be classified as either distributions in excess of net
investment income or distributions in excess of accumulated net realized
gains, if applicable.
Derivative Financial Instruments
In October 1994, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 119 Disclosure about
Derivative Financial Instruments and Fair Value of Financial Instruments which
prescribes disclosure requirements for transactions in certain derivative
financial instruments including futures, forward, swap, and option contracts,
and other financial instruments with similar characteristics. Although the
Fund is authorized to invest in such financial instruments, and may do so in
the future, the Fund did not make any such investments during the fiscal year
ended May 31, 1995, other than occasional purchases of high quality synthetic
money market securities which were held temporarily pending the re-investment
in long-term portfolio securities.
<PAGE>
<TABLE>
2. FUND SHARES
Transactions in shares were as follows:
<CAPTION>
Year ended Year ended
5/31/95 5/31/94
<S> <C> <C>
Shares issued in acquisition of NIR (see note 1) -- 4,485,257
Shares issued to shareholders due to reinvestment of
distributions from net investment income and from
net realized gains from investment transactions -- 58,154
------ ---------
Net increase -- 4,543,411
====== =========
3. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities and temporary municipal investments during the fiscal year ended
May 31, 1995, were as follows:
<CAPTION>
<S> <C>
PURCHASES
Investments in municipal securities $54,485,626
Temporary municipal investments 19,300,000
SALES AND MATURITIES
Investments in municipal securities 52,027,113
Temporary municipal investments 21,600,000
==========
At May 31, 1995, the identified cost of investments owned for federal income
tax purposes was the same as the cost for financial reporting purposes.
</TABLE>
<PAGE>
<TABLE>
4. DISTRIBUTIONS TO SHAREHOLDERS
On June 1, 1995, the Fund declared a dividend distribution of $.0540 per share
from its ordinary income which was paid July 3, 1995, to shareholders of
record on June 15, 1995.
5. UNREALIZED APPRECIATION (DEPRECIATION)
Gross unrealized appreciation and gross unrealized depreciation of investments
at May 31, 1995, were as follows:
<CAPTION>
<S> <C>
Gross unrealized:
Appreciation $6,539,335
Depreciation (13,332)
----------
Net unrealized appreciation $6,526,003
==========
6. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Fund's investment management agreement with the Adviser, the Fund
pays to the Adviser an annual management fee, payable monthly, at the rates
set forth below, which are based upon the average daily net asset value of the
Fund:
<CAPTION>
Average daily net asset value Management fee
<S> <C>
For the first $125,000,000 .5 of 1%
For the next $125,000,000 .4875 of 1
For the next $250,000,000 .475 of 1
For the next $500,000,000 .4625 of 1
For the next $1,000,000,000 .45 of 1
For net assets over $2,000,000,000 .4375 of 1
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Fund pays no
compensation directly to those Trustees who are affiliated with the Adviser or
to their officers, all of whom receive remuneration for their services to the
Fund from the Adviser.
</TABLE>
<PAGE>
<TABLE>
7. Composition of Net Assets
At May 31, 1995, net assets consisted of:
<CAPTION>
<S> <C>
Common shares, $.01 par value per share $ 123,651
Paid-in surplus 137,972,081
Balance of undistributed net investment income 440,587
Accumulated net realized gain (loss) from
investment transactions --
Distributions in excess of accumulated net realized
gains from investment transactions (75,518)
Net unrealized appreciation or depreciation
of investments 6,526,003
-----------
Net assets $144,986,804
============
Authorized shares:
Common Unlimited
============
8. INVESTMENT COMPOSITION
The Fund invests in municipal securities which include general obligation,
escrowed and revenue bonds. At May 31, 1995, the revenue sources by municipal
purpose for these investments, expressed as a percent of total investments,
were as follows:
<CAPTION>
<S> <C>
Revenue Bonds:
Housing Facilities 18%
Electric Utilities 11
Health Care Facilities 11
Pollution Control Facilities 11
Transportation 11
Educational Facilities 6
Lease Rental Facilities 5
Water/Sewer Facilities 2
Other 5
General Obligation Bonds 17
Escrowed Bonds 3
----
100%
====
</TABLE>
<PAGE>
In addition, 31% of the long-term and intermediate-term investments owned by
the Fund are backed by insurance issued by several private insurers or are
backed by an escrow or trust containing U.S. Government or U.S. Government
agency securities, either of which ensure the timely payment of principal and
interest in the event of default. Such insurance or escrow, however, does not
guarantee the market value of the municipal securities or the value of the
Fund's shares.
All of the temporary investments in short-term municipal securities have
credit enhancements (letters of credit, guarantees or insurance) issued by
third party domestic or foreign banks or other institutions.
For additional information regarding each investment security, refer to
the Portfolio of Investments of the Fund.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
selected data for a share outstanding throughout each period is as follows:
<CAPTION>
Operating performance
Net
realized &
Net asset unrealized Dividends
value Net gain (loss) from net Distributions
beginning investment from investment from net
of period income investments income realized gains
<S> <C> <C> <C> <C> <C>
Year ended 5/31,
1995 $11.370 $.643 $ .387 $(.648) $(.022)**
1994 11.710 .616 (.275) (.646) (.035)
9/18/92 to
5/31/93 11.300 .392 .455 (.322) --
<CAPTION>
Total
Per share investment Total
Organization Net asset market return return on
and value end value end on market net asset
offering costs of period of period valuet valuet
<S> <C> <C> <C> <C> <C>
Year ended 5/31,
1995 $ -- $11.730 $11.125 7.67% 9.51%
1994 -- 11.370 11.000 (1.90) 2.86
9/18/92 to
5/31/93 (.115) 11.710 11.875 1.74 6.54
<CAPTION>
Ratios/Supplemental data
Ratio of
net
Net assets Ratio of investment
end of expenses income Portfolio
period (in to average to average turnover
thousands) net assets net assets rate
<S> <C> <C> <C> <C>
Year ended 5/31,
1995 $144,987 .65% 5.64% 38%
1994 140,602 .72 5.26 11
9/18/92 to
5/31/93 91,599 .75* 5.11* 25
<FN>
* Annualized.
** The amount shown reflects a distribution in excess of net realized gains
from investment transactions of $.006 per share.
t Total Investment Return on Market Value is the combination of reinvested
dividend income, reinvested capital gains distributions, if any, and changes
in stock price per share. Total Return on Net Asset Value is the combination
of reinvested dividend income, reinvested capital gains distributions, if any,
and changes in net asset value per share.
</TABLE>
<PAGE>
Our commitment to you
Photographic image of John Nuveen, Sr., founder of Nuveen.
For nearly 100 years, Nuveen has earned its reputation as a tax-free income
specialist by focusing on municipal bonds.
For almost a century, John Nuveen & Co. Incorporated has concentrated its
resources and expertise in one area: municipal bonds. We are one of the oldest
and largest investment banking firms specializing exclusively in municipal
securities, and we strive to be the best.
Our approach to managing our shareholders' investments endures. We maintain
a sharp focus on the needs of prudent investors and their families, offer
investments of quality, and then work to make them better by seeking out
opportunity. We hold to a dedicated belief in the importance of research. And
we sustain a commitment to sound financial management through value investing.
Our hope is that by providing quality investments we may foster opportunity
for our investors. Through careful research, attention to detail, and our
philosophy of managing for long-term value, we strive to provide our
shareholders with the attractive level of income they need to achieve their
personal goals and aspirations.
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606-1286
ETF1-JUL 95
