NUVEEN Exchange-Traded Funds
MAY 31, 1998
ANNUAL REPORT
DEPENDABLE, TAX-FREE INCOME TO HELP YOU KEEP MORE OF WHAT YOU EARN.
NIM
Select Maturities
Photo of: Couple in boat.
<PAGE>
Highlights
As of May 31, 1998
CONTENTS
1 Dear Shareholder
4 Portfolio Manager's Comments
5 Performance Overview
6 Report of Independent Auditors
7 Portfolio of Investments
11 Statement of Net Assets
12 Statement of Operations
13 Statement of Changes in Net Assets
14 Notes to Financial Statements
17 Financial Highlights
20 Building Better Portfolios
21 Fund Information
================================================================================
Credit Quality Performance Highlights
Nuveen Select Maturities Municipal Fund (NIM)
o Taxable-equivalent yield of 7.68% for investors
in the 31% federal income tax bracket
o One-year total return on share price of 12.60%
o One-year taxable equivalent total return on
share price of 15.23% for investors in the 31%
federal income tax bracket
PIE CHART:
AAA/Pre-refunded 39%
AA 22%
A 15%
BBB/NR 24%
================================================================================
A New Benefit for Nuveen Exchange-Traded Fund Shareholders
The benefits of your Nuveen Exchange-Traded Fund just got better. Now investors
with at least $50,000 in Nuveen holdings - including Exchange-Traded Funds - are
eligible for a reduction in the sales charge on purchases of Class A shares of
any Nuveen Mutual Fund.
This program is available for any of Nuveen's collection of Premier AdviserSM
equity and municipal bond investments. Now you can diversify your portfolio with
the quality investments you count on from Nuveen and the benefit of reduced
rates.
For more information, contact your financial adviser and ask for a prospectus.
Or call Nuveen Investor Services at (800) 257-8787. Please read it carefully
before you invest.
<PAGE>
PHOTO OF: TIMOTHY R. SCHWERTFEGER
CHAIRMAN OF THE BOARD
SIDEBAR TEXT: Wealth takes a lifetime to build. Once achieved, it should be
preserved.
Graphic of: Bond Buyer 40 chart
Dear Shareholder
I'm pleased to share with you this performance report for the Nuveen Select
Maturities Municipal Fund. Over the past 12 months, the fund continued to
perform well and meet its objectives of providing you with attractive tax-free
income and strong after-tax total returns.
THE ECONOMY IN REVIEW
Fixed-income investments enjoyed bullish performance over the past year, as
declining interest rates and low inflation spurred a bond market rally. The
equity markets also exhibited continued strength despite recent volatility
sparked by Asia's financial problems and their possible effects on U.S.
corporate earnings. Although interest rates have trended slightly upward in
recent months, a year-to-date comparison shows that today's rates are
significantly lower than they were one year ago. As shown in the accompanying
chart, between the end of May 1997 and May 1998, the yield on the Bond Buyer 40,
an unmanaged index of long-term municipal bonds, fell from 5.74% to 5.22%.
Much of the decline in interest rates resulted from expectations that the
financial problems of Asia would restrain the prices of imported goods and
reduce foreign demand for U.S. products and services, thereby keeping inflation
at moderate levels. These inflation expectations were largely fulfilled, as the
Consumer Price Index rose only 1.5% for the 12 months ended May 1998, remaining
at one of its lowest levels in years. The Asian situation also provided
additional strength to the bond market rally, as many investors made a "flight
to quality" by moving assets into high-quality U.S. bonds in the face of the
uncertainty in that region.
In coming months, we will continue to watch closely several key factors that are
likely to affect the future of the economy, including the demand for goods and
services, the availability of qualified employees, the strength of the dollar,
and indications from the Federal Reserve. With many investors still waiting for
the full impact of Asia's difficulties to show up in U.S. economic statistics,
the potential long-term effect of this crisis on American markets continues to
cause concern. We expect that the development of these factors will continue to
influence the tone of the fixed-income markets during the remainder of the year.
MUNICIPAL MARKET REVIEW
As interest rates continued to decline over the past year, bond prices rose.
This price appreciation for the bonds in the portfolio contributed to the fund's
total return for the year.
Another major factor in bond performance over the last 12 months was the
continued strength of the U.S. economy, which helped boost the credit quality of
many municipal bonds. With the improvements in the funda mental financial health
of many munic ipalities and revenue projects financed by bonds, major credit
rating agencies upgraded the credit quality of thousands of issuers over the
past year, while downgrading relatively few. These boosts in credit quality also
contributed to the fund's performance as upgraded bonds increased in value.
The combination of low interest rates and a strong economy set new issuance on a
record pace and stimulated a dramatic increase in the refinancing of existing
bonds as issuers sought to lower their interest costs. The first quarter of 1998
saw $68 billion of new municipal issuance, up 70% from the same period in 1997.
The flood of new issues continued with May's long-awaited sale of the first
segment of Long Island (New York) Power Authority's $7 billion offering, the
largest issuance in municipal bond history. This level of issuance highlights
the value of Nuveen's expertise in the municipal market, as our portfolio
management team worked diligently to sift through the available issues to select
those undervalued securities that would help the fund achieve its investment
objectives.
DIVERSIFICATION: THE KEY TO A BETTER PORTFOLIO
In view of current market conditions, we believe that investors will find
diversification to be an increasingly important investment strategy in the
months ahead. An appropriately diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can help
cushion your portfolio against volatility and enhance your return potential.
Many investors select Nuveen's municipal bond funds because their emphasis on
dependable tax-free income and attractive after-tax returns makes them ideal for
building and sustaining long-term financial security. These funds also work well
with other Nuveen investments to create the foundation of a diversified,
well-balanced portfolio. In fact, recent studies by Nuveen Research have found
that portfolios combining municipal bonds and stocks generated higher after-tax
returns with lower levels of risk than similar portfolios combining stocks and
Treasury or corporate bonds.
We encourage you to talk to your financial adviser about Nuveen's range of
equity and balanced funds, including the Nuveen European Value Fund. This new
equity mutual fund offers a portfolio of quality European company stocks for
investors seeking long-term growth potential and international diversification.
The fund is just one of an ever-expanding range of Nuveen products and services
designed to help investors achieve diversification while building a
tax-efficient, risk-sensitive investment portfolio. If you'd like to learn more
about the Nuveen European Value Fund or any of our other investments, contact
your financial adviser or call Nuveen Investor Services at (800) 257-8787 for a
prospectus. Please read the information carefully before you invest.
When seeking quality investment solutions that withstand the test of time, we
hope that you continue to think of Nuveen. Today, more than ever, you can count
on Nuveen for a wide range of investments that can help you build a
well-balanced portfolio designed to achieve your financial goals. We thank you
for your continued confidence in us and our family of investments.
Sincerely,
TIMOTHY R. SCHWERTFEGER
Chairman of the Board
July 15, 1998
Sidebar text: "Another major factor in bond performance over the last 12 months
was the continued strength of the U.S. economy, which helped boost the credit
quality of many municipal bonds."
Sidebar text: "Today, more than ever, you can count on Nuveen for a wide range
of investments that can help you build a well-balanced portfolio designed to
achieve your financial goals."
<PAGE>
Nuveen Select Maturities Municipal Fund
Portfolio Manager's Comments
TED NEILD MANAGING DIRECTOR OF NUVEEN'S PORTFOLIO MANAGEMENT TEAM AND PORTFOLIO
MANAGER OF THE SELECT MATURITIES FUND TALKS ABOUT THE MUNICIPAL BOND MARKET AND
OFFERS INSIGHTS INTO FACTORS THAT AFFECTED THE PERFORMANCE OF THE FUND OVER THE
PAST YEAR.
MUNICIPAL MARKET UPDATE
As Tim discussed in his letter to shareholders, the past year brought a bull
market in fixed-income investments, including municipal bonds. Bond prices rose
as interest rates continued to trend downward and inflation remained at its
lowest level in years. Although municipal bonds have performed well, their rally
lagged that of the tax able fixed-income markets due to the dramatic increase in
municipal supply stimulated by the low rate environment. New issuance of
municipal bonds is on pace for a record-breaking year, while refunding volume is
up 50% over last year.
The continued strength of the U.S. economy also played a major role in municipal
market performance by boost ing the credit quality of many municipal issuers.
While fundamental credit strength improved, the yield spread between higher-
and lower-rated bonds remained tight as the issuance of insured municipal bonds
continued to increase, resulting in reduced supplies of lower-rated bonds.
FUND PERFORMANCE
In reviewing the performance of this fund, it is important to look at
both components of total return: price appreciation and income. Understanding
the factors that influence these components can help us measure how well the
fund is meeting its objectives of providing investors with the highest possible
level of tax-free income consistent with capital preservation as well as
enhanced portfolio value relative to the market.
Price Appreciation
Over the past 12 months, shareholders in the Nuveen Select Maturities
Fund continued to enjoy tax-free dividends generated by a portfolio of quality
intermediate-term municipal bonds. For the year ended May 31, 1998, the total
return on net asset value for the fund was 7.85%, equivalent to a taxable return
of 10.26% for investors in the 31% federal income tax bracket. Given the fund's
intermediate-term investment focus, it maintains a lower duration than most
longer-term funds, which contributes to its net asset value stability. Duration
measures a fund's price volatility, or reaction to interest rate movements. The
fund's shorter duration makes it more defensive and provides the advantage of
lower volatility.
Income
The declining interest rate environment of the past year played a role
in reducing the income level of this fund, as higher-yielding bonds called or
sold from the portfolio were replaced with bonds paying today's lower interest
rates. Despite the dividend adjustment necessitated by the change in the level
of income earned by the portfolio, the fund continues to provide a very
competitive current market yield of 5.30%, which translates to 7.68% on a
taxable-equivalent basis for investors in the 31% federal income tax bracket.
KEY STRATEGIES
Over the past year, we focused on optimizing returns through the
purchase of non-callable bonds with maturities in the range of 13-15 years. We
felt that these bonds offered good values and provided the most attractive
investment choices for generating competitive income and contributing to total
returns. Also, buying non-callable bonds strengthened the already excellent call
protection of this fund. In addition, we found good value and competitive yields
with intermediate-term securities in the housing sector. In a market
characterized by low yields and tight credit spreads, our portfolios are not
often compensated for assuming additional interest rate or credit risk, and we
continue to carefully evaluate every risk to ensure that it enhances
performance. Our focus remains on selecting undervalued securities that provide
attractive income and the opportunity for price appreciation. The
research-intensive bond selection process at which Nuveen excels helps us
identify those issues that support the fund's objectives.
OUTLOOK FOR THE FUTURE
Looking ahead, we expect the U.S. economy to remain in its current
growth mode, although progress should come at a more modest pace. The Asian
financial crisis will continue to impact U.S. growth, and we expect to see a
slowdown in corporate earnings, a strengthening dollar, especially versus Asian
currencies, and the continuation of benign inflation despite tight labor
markets. This should create less impetus for the Federal Reserve, which
currently remains in a neutral position, to tighten interest rates in the second
half of 1998. We view the economic slowdown and the current direction of the
dollar as positive indicators for the fixed-income markets, including municipal
bonds, and much of our outlook is contingent upon the further development of
these factors. Overall, we expect the market for intermediate bonds to run
parallel with the long-term market.
Given the current environment of low interest rates and tight credit
spreads, our primary focus in the months ahead will be on preserving shareholder
capital. We plan to achieve this by upgrading credit quality and taking on
additional risk only when competitive yields or strong price appreciation
potential compensate the fund for doing so.
<PAGE>
Nuveen Select Maturities Municipal Fund
Performance Overview
As of May 31, 1998
NIM
PORTFOLIO STATISTICS
==================================================
Inception Date 9/92
- --------------------------------------------------
Share Price 11 7/16
- --------------------------------------------------
Net Asset Value Per Share $11.95
- --------------------------------------------------
Current Market Yield 5.30%
- --------------------------------------------------
Taxable-Equivalent Yield(1) 7.68%
- --------------------------------------------------
Fund Net Assets ($000) $147,842
- --------------------------------------------------
Average Weighted Maturity (Years) 10.89
- --------------------------------------------------
Average Weighted Duration (Years) 6.18
- --------------------------------------------------
ANNUALIZED TOTAL RETURN
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 12.60% 7.85%
- --------------------------------------------------
3-Year 7.05% 6.52%
- --------------------------------------------------
5-Year 5.27% 6.36%
- --------------------------------------------------
Since Inception 4.92% 6.73%
- --------------------------------------------------
TAXABLE-EQUIVALENT TOTAL RETURN(1)
==================================================
ON SHARE PRICE ON NAV
- --------------------------------------------------
1-Year 15.23% 10.26%
- --------------------------------------------------
3-Year 9.72% 9.03%
- --------------------------------------------------
5-Year 7.92% 8.90%
- --------------------------------------------------
Since Inception 7.46% 9.20%
- --------------------------------------------------
TOP 5 SECTORS
==================================================
Utilities 24%
- --------------------------------------------------
Housing (Multifamily) 15%
- --------------------------------------------------
U.S. Guaranteed 12%
- --------------------------------------------------
Health Care 12%
- --------------------------------------------------
Tax Obligation (General) 9%
- --------------------------------------------------
1 A taxable equivalent represents the yield or return on a taxable investment
necessary to equal that of the Nuveen fund on an after-tax basis.
Taxable-equivalent yield is based on current market yield and a federal income
tax rate of 31%. Taxable-equivalent total return is based on the annualized
total return and a federal income tax rate of 31%.
2 The fund also paid shareholders taxable distributions in December of $0.0376
per share.
1997-1998 Monthly Tax-Free Dividends Per Share(2)
Bar Chart:
June 97 0.0515
July 97 0.0515
August 97 0.0515
September 97 0.0515
October 97 0.0515
November 97 0.0515
December 97 0.0515
January 98 0.0505
February 98 0.0505
March 98 0.0505
April 98 0.0505
May 98 0.0505
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD 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, 1998, 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 Funds'
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, 1998, 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, 1998, 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 7, 1998
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
NUVEEN SELECT MATURITIES MUNICIPAL FUND (NIM)
May 31, 1998
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARIZONA - 1.8%
$ 2,470,000 Arizona Educational Loan Marketing Corporation, Educational Loan Revenue Bonds, 9/02 at 101 Aa $ 2,653,669
6.375%, 9/01/05 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 2.1%
2,010,000 Arkansas Development Finance Authority, Single Family Mortgage Revenue Bonds,
1995 Series B (Mortgage-Backed Securities Program), 6.200%, 1/01/21 7/05 at 102 AAA 2,094,440
(Alternative Minimum Tax)
910,000 Arkansas Student Loan Authority, Student Loan Revenue Bonds, Series 1992A-2 6/01 at 102 A 970,934
(Subordinate), 6.750%, 6/01/06 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
COLORADO - 6.0%
City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1991A:
1,460,000 8.750%, 11/15/23 (Pre-refunded to 11/15/01) (Alternative Minimum Tax) 11/01 at 102 Aaa 1,704,141
4,040,000 8.750%, 11/15/23 (Alternative Minimum Tax) 11/01 at 102 Baa1 4,617,356
1,155,357 El Paso County, Colorado, Single Family Mortgage Revenue Tax-Exempt No Opt. Call Aaa 1,274,578
Refunding Bonds, Series 1992A Class A-2, 8.750%, 6/01/11
1,000,000 Summit County, Colorado, Sports Facilities Refunding Revenue Bonds No Opt. Call A- 1,211,940
(Keystone Resorts Management, Inc. Project), Series 1990, 7.750%, 9/01/06
- ------------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.1%
2,000,000 State of Florida, Faith and Credit, State Board of Education, Public Education No Opt. Call AAA 2,038,980
Capital Outlay Bonds, Series 1986-C, 7.100%, 6/01/07
3,500,000 Hillsborough County Industrial Development Authority, Pollution Control 5/02 at 103 AA 4,043,235
Revenue Refunding Bonds (Tampa Electric Company Project) Series 1992, 8.000%, 5/01/22
- ------------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 8.7%
810,000 Urban Residential Finance Authority, Of The City Of Atlanta, Revenue Bonds, No Opt. Call N/R 850,217
(Landrum Arms Project), Series 1994, 6.750%, 7/01/04
5,755,000 Development Authority of Burke County, Georgia, Pollution Control Revenue Bonds, 1/03 at 103 AAA 6,813,517
(Oglethorpe Power Corporation Vogtle Project) Series 1992, 8.000%, 1/01/15
(Pre-refunded to 1/01/03)
1,800,000 State of Georgia, General Obligation Bonds, 1994-D, 6.700%, 8/01/09 No Opt. Call AAA 2,156,346
2,540,000 Municipal Electric Authority of Georgia, General Power Revenue Bonds, No Opt. Call AAA 3,081,782
1992B Series, 7.500%, 1/01/07
- ------------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 8.8%
1,300,000 General Obligation Lease Certificates, 1992 Series A (Board of Education of the No Opt. Call AAA 1,455,935
City of Chicago), Illinois, 6.125%, 1/01/07
1,000,000 Chicago School Reform Board of Trustees of the Board of Education of the City of No Opt. Call AAA 1,154,230
Chicago, Illinois, Unlimited Tax General Obligation Bonds, Series 1996, 6.250%, 12/01/11
2,585,000 Chicago Metropolitan Housing Development Corporation, (Chicago, Illinois), 7/03 at 100 AAA 2,635,071
Housing Development Revenue Refunding Bonds, (FHA-Insured Mortgage Loan-Section 8
Assisted Project) Series 1993B, 5.700%, 1/01/13
515,000 City of Danville, Vermilion County, Illinois, Single Family Mortgage Revenue 11/03 at 102 A1 549,855
Refunding Bonds, Series 1993, 7.300%, 11/01/10
3,880,000 Illinois Development Finance Authority, Child Care Facility Revenue Bonds, 9/02 at 102 N/R 4,146,323
Series 1992 (Illinois Facilities Fund Project), 7.400%, 9/01/04
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (continued)
$ 2,305,000 Illinois Housing Development Authority, Section 8 Elderly Housing Revenue Bonds 11/02 at 102 A $ 2,445,444
(Skyline Towers Apartments), Series 1992B, 6.625%, 11/01/07
575,000 City of Rock Island, Illinois, Residential Mortgage Revenue Refunding Bonds, 9/02 at 102 Aa 615,463
Series 1992, 7.700%, 9/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
INDIANA - 9.5%
City of Beech Grove, Indiana, Economic Development Multifamily
Housing Mortgage Revenue Bonds, Series 1997A (FHA Insured
Mortgage Loan - McGregor Woods Apartments Project):
170,000 5.000%, 6/01/02 (Alternative Minimum Tax) No Opt. Call N/R 170,000
375,000 5.000%, 6/01/07 (Alternative Minimum Tax) No Opt. Call N/R 375,000
500,000 5.000%, 6/01/12 (Alternative Minimum Tax) No Opt. Call N/R 500,000
685,000 5.000%, 6/01/17 (Alternative Minimum Tax) No Opt. Call N/R 685,000
6,770,000 6/01/37 (Alternative Minimum Tax) No Opt. Call N/R 6,770,000
2,000,000 Hospital Authority of Elkhart County, Indiana, Hospital Revenue Bonds, 7/02 at 102 A1 2,210,160
Series 1992, (Elkhart General Hospital, Inc.), 7.000%, 7/01/08
1,000,000 The Indianapolis Local Public Improvement Bond Bank, Series 1992 D Bonds, No Opt. Call AA 1,143,930
6.600%, 2/01/07
2,100,000 The Indianapolis Local Public Improvement Bond Bank, Transportation 7/03 at 102 Aa 2,263,275
Revenue Bonds, Series 1992, 6.000%, 7/01/10
- ------------------------------------------------------------------------------------------------------------------------------------
MAINE - 0.7%
935,000 Maine Educational Loan Marketing Corporation, Student Loan Revenue 5/02 at 101 A 993,288
Refunding Bonds, Series 1992, Student Loan Revenue Refunding Bonds, Subordinate
Series 1992A-2, 6.600%, 5/01/05 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 1.4%
2,000,000 Anne Arundel County, Maryland, Multifamily Housing Revenue Bonds, No Opt. Call BBB+ 2,117,960
(Woodside Apartments Project) Series 1994, 7.450%, 12/01/24 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN - 3.1%
4,000,000 Greater Detroit Resource Recovery Authority, Michigan, Resource Revenue No Opt. Call AAA 4,528,000
Refunding Bonds, Series 1996-A, 6.250%, 12/13/07
- ------------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 7.4%
5,500,000 Energy America (Nebraska) Natural Gas Revenue Note (Metropolitan
Utility District Project) Series 1997B, 5.700%, 7/01/08 No Opt. Call N/R 5,483,170
Nebraska Public Gas Agency, Gas Supply System Revenue Bonds, 1995 Series A:
400,000 5.250%, 4/01/02 No Opt. Call Baa1 412,436
1,250,000 5.300%, 4/01/03 No Opt. Call Baa1 1,296,825
1,000,000 5.400%, 4/01/04 No Opt. Call Baa1 1,046,740
2,400,000 Airport Authority of the City of Omaha (Nebraska), Airport Facilities Revenue 1/02 at 102 A1 2,747,544
Refunding Bonds, Series 1991, 8.375%, 1/01/14
- ------------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 8.2%
3,000,000 New York City Housing Development Corporation, Multi-Family Housing 5/03 at 102 AA 3,086,130
Revenue Bonds, 1993 Series A, 5.700%, 11/01/13
3,800,000 New York City Industrial Development Agency, Amended and Restated 11/04 at 102 AAA 4,085,646
Industrial Development Revenue Bonds, (1991 Japan Airlines Company, Ltd.
Project), 6.000%, 11/01/15 (Alternative Minimum Tax)
2,000,000 New York State Medical Care, Facilities Finance Agency, FHA-Insured 2/06 at 102 AA+ 2,161,040
Mortgage Project Revenue Bonds, 1995 Series C, 6.100%, 8/15/15
2,130,000 City of Niagara Falls, Niagara County, New York, Water Treatment Plant No Opt. Call AAA 2,771,620
(Serial) Bonds, 1994, 8.500%, 11/01/07 (Alternative Minimum Tax)
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OHIO - 8.1%
$ 2,000,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, Hospital 11/02 at 102 A3 $ 2,169,400
Facilities Revenue Bonds, Series 1992, (Summa Health System Project),
6.250%, 11/15/07
1,000,000 City of Dayton, Ohio, Special Facilities Revenue Refunding Bonds, No Opt. Call BBB 1,087,880
1993 Series F (Emery Air Freight Corporation and Emery Worldwide Airlines,
Inc. Guarantors) (Non-AMT), 6.050%, 10/01/09
4,500,000 County Of Hamilton, Ohio, Hospital Facilities Revenue Refunding Bonds, No Opt. Call A 4,958,775
Series 1992A, (Bethesda Hospital, Inc.), 6.250%, 1/01/06
2,430,000 Ohio Water Development Authority, Revenue Bonds, USA Waste Services, Series 1992, 3/02 at 102 N/R 2,635,481
7.750%, 9/01/07 (Alternative Minimum Tax)
1,000,000 City of Oxford, Ohio, Water Supply System Mortgage Revenue, Series 1992 12/02 at 102 AAA 1,081,190
Refunding Bonds, 6.000%, 12/01/14
- ------------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 1.5%
1,840,000 Pennsylvania Higher Educational Facilities Authority, College and University No Opt. Call Aaa 2,206,031
Revenue Bonds, 9th Series, 7.625%, 7/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 2.1%
3,000,000 Rhode Island Housing and Mortgage, Finance Corporation, Homeownership 4/02 at 102 AA+ 3,102,240
Opportunity Bonds, Series 7, 6.500%, 4/01/25 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
TEXAS - 7.7%
1,640,000 City of Austin, Texas, Water, Sewer and Electric Refunding Revenue Bonds, No Opt. Call A2 1,925,196
Series 1982, 14.000%, 11/15/01
590,000 Austin-Travis County MHMR Center Revenue Bonds, (Mental Health and Mental 3/05 at 102 AAA 655,118
Retardation Center Facilities Acquisition Program), Series 1995-A, 6.500%, 3/01/15
1,000,000 City of Galveston Property Finance Authority, Inc., Single Family Mortga 9/01 at 103 A 1,082,590
Revenue Bonds, Series 1991A, 8.500%, 9/01/11
1,115,000 Texas Community MHMR Centers Revenue Bonds, (Mental Health and Mental Retardation 3/05 at 102 AAA 1,238,063
Center Facilities Acquisition Program), Series 1995 A-E, 6.500%, 3/01/15
3,135,000 Ratama Development Corporation, Special Facilities Revenue Bonds, (Ratama No Opt. Call AAA 4,396,430
Park Racetrack Project) Series 1993, 8.750%, 12/15/11
1,100,000 Travis County Health Facilities Development Corporation, Hospital Revenue Bonds, 11/03 at 102 Aa 1,183,160
(Daughters of Charity National Health System - Daughters of Charity Health Services of Austin),
Series 1993B, 5.900%, 11/15/07
805,000 Tri-County MHMR Services Revenue Bonds, (Mental Health and Mental Retardation 3/05 at 102 AAA 893,848
Center Facilities Acquisition Program), Series 1995-E, 6.500%, 3/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 1.5%
2,000,000 Hampton Redevelopment and Housing Authority Multifamily Housing Revenue 7/02 at 104 Baa2 2,162,980
Refunding Bonds, Series 1994, (Chase Hampton II Apartments), 7.000%, 7/01/24
- ------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 11.0%
1,255,000 Public Utility District No. 1, of Douglas County, Washington, Wells 9/00 at 102 A+ 1,366,206
Hydroelectric Revenue Bonds, Series of 1990, 7.700%, 9/01/08 (Alternative Minimum Tax)
Washington Health Care Facilities Authority, Revenue Bonds,
Series 1996 (Yakima Valley Memorial Hospital Association, Yakima):
1,880,000 6.000%, 12/01/09 No Opt. Call AAA 2,097,065
1,500,000 6.000%, 12/01/10 No Opt. Call AAA 1,682,820
Washington Public Power Supply System, Nuclear Project No. 1 Refunding Revenue Bonds,
Series 1993A:
2,500,000 7.000%, 7/01/07 No Opt. Call Aa1 2,926,275
3,000,000 7.000%, 7/01/08 No Opt. Call Aa1 3,539,880
7,000,000 Washington Public Power Supply System, Nuclear Project No. 3 Refunding No Opt. Call Aa1 4,795,910
Revenue Bonds, Series 1990B, 0.000%, 7/01/06
<PAGE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT DESCRIPTION PROVISIONS* RATINGS** VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WASHINGTON D.C. - 4.8%
$ 1,000,000 District of Columbia (Washington, D.C.) General Obligation Refunding Bonds, No Opt. Call AAA $ 1,111,500
Series 1994A, 6.000%, 6/01/11
5,400,000 District of Columbia (Washington, D.C.), General Obligation Refunding Bonds, No Opt. Call AAA 5,925,150
Series 1993A, 6.000%, 6/01/07
- ------------------------------------------------------------------------------------------------------------------------------------
$ 134,315,357 Total Investments - (cost $136,266,149) - 98.5% 145,584,408
=============
Other Assets Less Liabilities - 1.5% 2,257,689
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 147,842,097
====================================================================================================================
* 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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS
May 31, 1998
<CAPTION>
<S> <C>
ASSETS
Investments in municipal securities, at market value (note 1) $145,584,408
Cash 294,304
Receivables:
Interest 2,617,874
Investments sold 80,000
Other assets 17,231
- ----------------------------------------------------------------------------------------------------------------------
Total assets 148,593,817
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Accrued expenses:
Management fees (note 6) 62,197
Other 64,802
Dividends payable 624,721
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 751,720
- ----------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $147,842,097
======================================================================================================================
Shares outstanding 12,370,635
======================================================================================================================
Netasset value per share outstanding (net assets divided by shares outstanding) $ 11.95
======================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
Year Ended May 31, 1998
<CAPTION>
<S> <C>
INVESTMENT INCOME (NOTE 1) $ 8,581,584
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees (note 6) 734,111
Shareholders' servicing agent fees and expenses 18,870
Custodian's fees and expenses 50,353
Trustees' fees and expenses (note 6) 2,324
Professional fees 18,189
Shareholders' reports - printing and mailing expenses 88,324
Stock exchange listing fees 24,170
Investor relations expense 11,227
Other expenses 8,660
- ----------------------------------------------------------------------------------------------------------------------
Total expenses 956,228
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 7,625,356
- ----------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENTS
Net realized gain from investment transactions (notes 1 and 4) 549,105
Net change in unrealized appreciation or depreciation of investments 2,941,305
- ----------------------------------------------------------------------------------------------------------------------
Net gain from investments 3,490,410
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $11,115,766
======================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
YEAR ENDED YEAR ENDED
5/31/98 5/31/97
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 7,625,356 $ 7,720,297
Net realized gain from investment transactions (notes 1 and 4) 549,105 259,465
Net change in unrealized appreciation or depreciation of investments 2,941,305 1,851,855
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 11,115,766 9,831,617
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1)
From undistributed net investment income (7,591,325) (8,022,356)
From accumulated net realized gains from investment transactions (457,013) (398,327)
- -------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (8,048,338) (8,420,683)
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets 3,067,428 1,410,934
Net assets at beginning of year 144,774,669 143,363,735
- -------------------------------------------------------------------------------------------------------------------
Net assets at end of year $147,842,097 $144,774,669
===================================================================================================================
Balance of undistributed net investment income at end of year $ 80,212 $ 46,181
===================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
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 with respect to 80%
of its total assets that, in the opinion of 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 twelve years or less.
The Fund is registered under the Investment Company Act of 1940 as a closed-end,
diversified management investment company.
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
The prices of municipal bonds in the Fund's investment portfolio are provided by
a pricing service approved by the Fund's Board of Trustees. When price quotes
are not readily available (which is usually the case for municipal securities),
the pricing service establishes fair market value based on yields or prices of
municipal bonds of comparable quality, type of issue, coupon, maturity and
rating, indications of value from securities dealers and general market
conditions. Temporary investments in securities that have variable rate and
demand features qualifying them as short-term securities are valued at amortized
cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. 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
the amount of the when-issued and delayed delivery purchase commitments. At May
31, 1998, there were no such outstanding purchase commitments in the Fund.
Investment 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 and to distribute all of its
tax-exempt net investment income, in addition to any significant amounts of net
realized capital gains and/or market discount realized from investment
transactions. The Fund currently considers significant net realized capital
gains and/or market discount 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
monthly tax-exempt income dividends paid during the fiscal year ended May 31,
1998, have been designated Exempt Interest Dividends. Net realized capital gain
and market discount distributions are subject to federal taxation.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared as a dividend monthly and payment
is made or reinvestment is credited to shareholder accounts on the first
business day after month-end. Net realized capital gains and/or market discount
from investment transactions, if any, are distributed to shareholders not less
frequently than annually. Furthermore, capital gains are distributed only to the
extent they exceed available capital loss carryforwards.
Distributions to shareholders of tax-exempt net investment income, net realized
capital gains and/or market discount are recorded on the ex-dividend date. The
amount and timing of distributions are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. Accordingly, temporary over-distributions as a result of these
differences may occur and will be classified as either distributions in excess
of net investment income, distributions in excess of net realized gains and/or
distributions in excess of net ordinary taxable income from investment
transactions, where applicable.
<PAGE>
Derivative Financial Instruments
The Fund may invest in transactions in certain derivative financial instruments
including futures, forward, swap, 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, it did not
make any such investments during the fiscal year ended May 31, 1998.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
2. FUND SHARES
There were no share transactions during the fiscal years ended May 31, 1998 or
May 31, 1997.
3. DISTRIBUTIONS TO SHAREHOLDERS
The Fund declared a dividend distribution of $.0505 per share from its
tax-exempt net investment income which was paid on July 1, 1998, to shareholders
of record on June 15, 1998.
4. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in municipal
securities for the fiscal year ended May 31, 1998, aggregated $19,061,758 and
$18,372,530, respectively. Purchases and sales (including maturities) of
temporary municipal investments for the fiscal year ended May 31, 1998,
aggregated $6,000,000 and $7,200,000, respectively.
At May 31, 1998, the identified cost of investments owned for federal income tax
purposes was the same as the cost for financial reporting purposes.
5. UNREALIZED APPRECIATION (DEPRECIATION)
At May 31, 1998, net unrealized appreciation of investments aggregated
$9,318,259, of which $9,464,354 related to appreciated securities and $146,095
related to depreciated securities.
6. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Fund's investment management agreement with the Adviser, the Fund pays
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:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSET VALUE MANAGEMENT FEE
- --------------------------------------------------------------------------------------------------
<S> <C>
For the first $125 million .5000 of 1%
For the next $125 million .4875 of 1
For the next $250 million .4750 of 1
For the next $500 million .4625 of 1
For the next $1 billion .4500 of 1
For net assets over $2 billion .4375 of 1
- --------------------------------------------------------------------------------------------------
</TABLE>
The fee compensates the Adviser for overall investment advisory and
administrative services and general office facilities. The Fund pays no
compensation directly to those of its 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>
7. COMPOSITION OF NET ASSETS
<CAPTION>
At May 31, 1998, net assets consisted of:
<S> <C>
Common shares, $.01 par value per share $ 123,706
Paid-in surplus 138,037,220
Balance of undistributed net investment income 80,212
Accumulated net realized gain from investment transactions 282,700
Net unrealized appreciation of investments 9,318,259
- ---------------------------------------------------------------------------------------------------------
Net assets $147,842,097
=========================================================================================================
</TABLE>
<PAGE>
<TABLE>
8. INVESTMENT COMPOSITION
At May 31, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<CAPTION>
<S> <C>
Education and Civic Organizations 3%
Health Care 12
Housing/Multifamily 15
Housing/Single Family 6
Tax Obligation/General 9
Tax Obligation/Limited 6
Transportation 9
U.S. Guaranteed 12
Utilities 24
Other 4
- --------------------------------------------------------------------------------------------------------
100%
========================================================================================================
</TABLE>
In addition, 35% of the long-term and intermediate-term investments owned by the
Fund are either covered 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, both 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.
For additional information regarding each investment security, refer to the
Portfolio of Investments of the Fund.
<PAGE>
Financial Highlights
Financial Highlights Selected data for a share outstanding throughout
each period is as follows:
<TABLE>
<CAPTION>
Investment Operations Less Distributions
------------------------------------- ----------------------------------
Net
Realized/
Beginning Net Unrealized Net
Net Asset Investment Investment Investment Capital
Value Income Gain (Loss) Total Income Gain Total
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended 5/31:
1998 $11.70 $.61 $.29 $ .90 $(.61) $(.04) $(.65)
1997 11.59 .62 .18 .80 (.65) (.04) (.69)
1996 11.73 .64 (.09) .55 (.65) (.04) (.69)
1995 11.37 .64 .39 1.03 (.65) (.02) (.67)
1994 11.71 .62 (.27) .35 (.65) (.04) (.69)
<PAGE>
<CAPTION>
Total Returns
-------------------------
Ending Based on
Net Asset Ending Based on Net Asset
Value Market Value Market Value+ Value+
<S> <C> <C> <C> <C>
Year Ended 5/31:
1998 $11.95 $11.4375 12.60% 7.85%
1997 11.70 10.7500 2.68 6.98
1996 11.59 11.1250 6.14 4.76
1995 11.73 11.1250 7.67 9.51
1994 11.37 11.0000 (1.90) 2.86
<PAGE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------------------------
Ratio of Net
Ratio of Investment
Ending Expenses to Income to Portfolio
Net Assets Average Average Turnover
(000) Net Assets Net Assets Rate
<S> <C> <C> <C> <C>
Year Ended 5/31:
1998 $147,842 .65% 5.17% 13%
1997 144,775 .64 5.35 17
1996 143,364 .63 5.45 25
1995 144,987 .65 5.64 38
1994 140,602 .72 5.26 11
+ Total Return on Market Value is the combination of reinvested
dividend income, reinvested capital gain 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 gain distributions, if any, and
changes in net asset value per share. Total returns are not annualized.
</TABLE>
<PAGE>
Building a Better Portfolio Can Make You a Successful Investor
NUVEEN FAMILY
OF MUTUAL FUNDS
Nuveen offers a variety of funds designed to help you reach your financial
goals.
GROWTH
Nuveen Rittenhouse
Growth Fund
GROWTH AND INCOME
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
TAX-FREE INCOME
NATIONAL FUNDS
Long-Term
Insured
Intermediate-Term
Limited-Term
STATE FUNDS
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of
investment-grade quality municipal bonds. The fund shares are listed and traded
on the New York and American stock exchanges. Exchange-traded funds provide the
investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive
tax-free yield for the cash reserves portion of an investment portfolio.
MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen
dual-class exchange-traded funds and are available for national as well as a
wide variety of state-specific portfolios.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring
Premier AdvisersSM including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diver sification to reduce risk, experienced, professional
security selection and surveillance and daily liquidity at that day's net asset
value for quick access to your assets.
<PAGE>
Fund Information
BOARD OF TRUSTEES
Robert P. Bremner
Lawrence H. Brown
Anthony T. Dean
Anne E. Impellizzeri
Peter R. Sawers
William J. Schneider
Timothy R. Schwertfeger
Judith M. Stockdale
FUND MANAGER
Nuveen Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
CUSTODIAN, TRANSFER AGENT
AND SHAREHOLDER SERVICES
The Chase Manhattan Bank
4 New York Plaza
New York, NY 10004-2413
(800) 257-8787
LEGAL COUNSEL
Morgan, Lewis &
Bockius LLP
Washington, D.C.
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, IL
YEAR 2000
The concern that computer systems may have problems processing date-related
information in the year 2000 and beyond has challenged businesses and
organizations to thoroughly review all aspects of their operations. We have
undertaken just such an approach at Nuveen in preparation for the millennium.
Over the last 10 years, our trading, fund management and pricing systems at
Nuveen - the systems that directly affect our investors and their financial
advisers - have been updated or replaced to address the Year 2000 concerns.
We continue to work closely with our transfer agent, custodian and other service
partners to monitor readiness and address other remaining systems issues. Our
initial testing indicates we are on schedule, and we have targeted year-end 1998
to complete verification of vendor compliance and service partner readiness.
However, we can give no complete assurance at this time that the steps we have
taken will be sufficient to prevent any problems that would impact the Nuveen
Exchange-Traded Funds.
The fund intends to repurchase shares of its own common stock in the future at
such times and in such amounts as is deemed advisable. No shares were
repurchased during the 12-month period ended May 31, 1998. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
<PAGE>
Serving Investors for Generations
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
Photo of: JOHN NUVEEN, SR.
LOGO:
1898 - 1998
NUVEEN
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime.(tm)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
FAN-1.5.98
<PAGE>
