NUVEEN Exchange-Traded Funds
November 30, 1998
Semiannual Report
Dependable, tax-free income to help you keep more of what you earn.
NIM
Select Maturities
Photo of: Couple Canoeing
<PAGE>
Highlights
As of November 30, 1998
Credit Quality Performance Highlights
================================================================================
Nuveen Select Maturities Municipal Fund (NIM)
o Competitive taxable equivalent yield of
7.28% for investors in the 31% federal
income tax bracket
o One-year taxable equivalent total return
on share price of 15.13% for investors in
the 31% federal income tax bracket
o Graphic: 4 stars
Four-star Morningstar Rating(TM)*
Pie Chart:
AAA/U.S.Guaranteed 39%
AA 25%
A 14%
BBB/NR 22%
Contents
1 Dear Shareholder
3 Portfolio Manager's Comments
5 Performance Overview
6 Portfolio of Investments
10 Statement of Net Assets
11 Statement of Operations
12 Statement of Changes in Net Assets
13 Notes to Financial Statements
17 Financial Highlights
20 Building Better Portfolios
21 Fund Information
* Overall rating within the municipal bond category for the period ended
November 30, 1998. Morningstar proprietary ratings reflect historical
risk-adjusted performance. The ratings are subject to change every month. Past
performance is no guarantee of future results. Morningstar ratings are
calculated from a fund's three-, five- and 10-year average annual returns (if
applicable) in excess of 90-day Treasury bill returns with appropriate fee
adjustments, and a risk factor that reflects fund performance below 90-day
T-bill returns. NIM received 3 stars for the three-year period and 4 stars for
the five-year period, respectively. The top 10% of the funds in an investment
class receive 5 stars, and the next 22.5% receive 4 stars. The funds were
rated among 195 funds for the three-year period, 191 funds for the five-year
period, and 21 funds for the 10-year period.
<PAGE>
Photo of: Timothy R. Schwertfeger
Chairman of the Board
Sidebar text: Wealth takes a lifetime to build. Once achieved, it should
be preserved.
Dear Shareholder
I'm pleased to report that over the past 12 months, the Nuveen Select Maturities
Municipal Fund has continued to perform well, meeting its primary objective of
providing you with attractive levels of tax-free income and after-tax total
returns. The strong market in fixed-income securities, bolstered by investor
demand for quality investments, benefited this fund and led to an increase in
share price. Attractive tax-free income, enhanced by strong share price
performance, illustrates once again that Nuveen's munici pal bond funds can
provide an excellent investment option for income-oriented investors.
The Year in Review
Over the past year, the markets endured bouts of volatility, as the Asian
financial crisis spilled over into emerging markets and affected economies
around the globe. Investors responded by seeking a haven from the uncertainty in
more conservative investments, such as municipal bond funds. To avert a
potential domestic credit crunch and bring some stability to global markets, the
Federal Reserve moved to ease short-term interest rates for the first time in
almost three years. Between the end of September and mid-November, three
successive cuts brought the federal funds rate to 4.75%. As interest rates
continued to trend downward, the competitive yields offered by our
exchange-traded funds stimulated additional investor interest and demand, which
led to improved share prices overall.
In this environment, the market for exchange-traded municipal bond funds has
been exceptionally strong. This fund continued to represent a bright spot among
fixed-income investments, offering attractive income in a market that places a
high premium on yield. In addition, the fund has generally maintained a good
level of call protection, resulting in a relatively stable income stream.
In the coming months, we will continue to watch several key factors affecting
the future of the economy, including corporate earnings reports, wage and
employment statistics, U.S. consumer confidence levels, the continuing impact of
foreign financial turmoil, and any further interest rate indications from the
Federal Reserve. These factors will influence the outlook for fixed-income
markets well into 1999.
Municipal Bonds: A Compelling Value
Over the past year, rising bond prices drove yields on 30-year Treasuries to
historic lows. With yields on the long Treasury bond pushing below 5% at times,
the yield on the Bond Buyer 40, an unmanaged index of long-term municipal bonds,
fell just 26 basis points - from 5.36% to 5.10% - compared with the 99-point
drop in Treasury yields over the past 12 months. As of November 30, 1998, the
ratio of long-term municipal yields to Treasury yields stood at more than
100.8%, compared with the more typical range of 86-87%. Over the past few
months, this ratio has been as high as 104%. For investors, this means that
quality long-term municipal bonds currently offer about the same yield as
Treasury bonds with comparable maturities - even before the tax advantages of
municipal bonds are taken into account. On an after-tax basis in today's market,
municipal bonds present an exceptionally attractive investment option relative
to Treasuries.
The steep decline in Treasury yields during the past year was due to several
factors, including the strong interest in these investments by international
investors. As the financial turmoil in Asia spread to economies worldwide and
the dollar strengthened against foreign currencies, the demand for U.S.
dollar-denominated Treasury securities increased. Compounding this situation was
the shortage of Treasury issues brought about by the federal budget surplus,
which reversed the multi-billion dollar deficits of the past few years and
reduced the federal government's need to issue bonds. In the municipal market,
where foreign demand was limited by an inability of foreign investors to benefit
from the tax advantages of municipals, low interest rates and a strong economy
combined to generate high levels of new issuance and a dramatic increase in the
refinancing of existing bonds. The first 11 months of 1998 saw over $255 billion
of municipal issuance, up 28.4% over the same period in 1997. In terms of total
municipal issuance, this put 1998 on pace to be the second largest year on
record.
In addition, the continued strength of the U.S. economy produced improvements in
the fundamental financial health of many municipalities and boosted the over all
credit quality of municipal bonds. In the third quarter of 1998, issues upgraded
by the two major rating agencies outnumbered downgrades by a margin of 7 to 2.
Nuveen Expertise Is Key
The key to taking advantage of the exceptional values currently available in the
municipal market is the ability of a proven investment manager. At Nuveen, we
recognize the value of time-tested expertise. The high level of recent municipal
issuance, for example, highlighted the value of Nuveen's in-depth knowledge
of the municipal market, as our portfolio management teams carefully analyzed
the flood of issues to select those securities best suited to help the funds
achieve their investment objectives.
As a further enhancement to our management capabilities, Nuveen has assembled a
strong core of Premier Advisers(SM), a group of managers who are experts in
their particular areas of the market, to provide time-tested experience and
insights. In addition to Nuveen Investment Advisory Services, our Premier
Adviser for tax-free investing, you can rely on other Premier Advisers to share
their expertise in the equity market, including Institutional Capital
Corporation for equity value investing and Rittenhouse Financial Services, Inc.
for equity growth investing. For more information about the funds managed by
these Premier Advisers, including charges and expenses, contact your financial
adviser for a prospectus, or call Nuveen at (800) 621-7227. Please read the
prospectus carefully before you invest or send money.
We encourage you to talk with your financial adviser about the ways Nuveen's
expanding selection of investments can assist you in establishing a diversified
portfolio designed to help you build and sustain long-term financial security.
Over the past 100 years, Nuveen has evolved from a company that dealt with only
municipal bonds into a nationally respected firm that handles a variety of
investment options. I look forward to continuing this exciting journey. We are
grateful for the confidence you have placed in us, and we intend to continue
earning your trust in the years ahead.
Sincerely,
Timothy R. Schwertfeger
Chairman of the Board
January 15, 1999
Sidebar text: "The key to taking advantage of the exceptional values currently
available in the municipal market is the expertise of a proven investment
manager."
<PAGE>
Nuveen Select Maturities Municipal Fund (NIM)
Portfolio Manager's Comments
Ted Neild, Managing Director of Nuveen's portfolio management team and portfolio
manager of the Select Maturities Fund, discusses the municipal market, fund
performance, and key investment strategies for the fund. Ted, a 10-year veteran
of Nuveen, has managed the Select Maturities fund since its inception in
September 1992.
What factors have influenced the municipal market over the past year?
In recent months, we have seen an acceleration of trends that has been apparent
in the fixed-income markets over the past year: declining interest rates and the
increased ratio of municipal to Treasury yields. The primary cause in both cases
was heightened concern about the condition of the global financial system.
While the U.S. economy continued to exhibit growth, the impact of the financial
turmoil in Southeast Asia, Russia, and other emerging markets was felt in the
U.S. equity market.
A desire to cushion this impact and avert a domestic credit crunch prompted the
Federal Reserve to ease short-term interest rates in late September, the first
rate cut in almost three years. In response to concerns that the initial
quarter-point cut might not be sufficient, the Fed reduced rates again in
October and November, bringing the federal funds rate to 4.75%. The Fed
indicated that this accommodative stance was intended to sustain U.S. economic
growth going forward, while also adding some stability to global markets.
How have these factors affected the issuance of municipal bonds?
In response to an environment of low interest rates and continued economic
growth, municipal bond issuance over the past year has been among the heaviest
in years. Total issuance for the first 11 months of 1998 was over $255 billion,
which was up 28.4% over the same period in 1997. In terms of total issuance,
this puts 1998 on pace to be the second largest year on record behind only
1993's totals.
Among the most notable new bonds issued were the $7 billion Long Island Power
Authority (LIPA) offerings. The first installment of $3.5 billion represented
the largest single issue in the history of the municipal market. Increased
municipal supply has been met with increasing investor demand, due to volatility
in the equity markets and the attractiveness of munici pals relative to other
fixed-income investments.
How did the fund perform over the past year?
The objective of the Nuveen Select Maturities Municipal Fund (NIM) is to invest
in bonds with intermediate maturities that will provide the highest possible
yields and total returns consistent with the lower risk profile of an inter
mediate fund. For the 12 month period ended November 30, 1998, NIM produced a
total return on net asset value of 6.48%, providing a taxable-equivalent return
of 8.83% for investors in the 31% federal income tax bracket. The fund's success
in focusing on the dual objectives of risk-adjusted performance and low
volatility was recognized with a four-star rating from Morningstar*. In
contrast, the fund's lower risk profile relative to the Lehman Brothers 7-Year
Municipal Bond Index** caused the fund's total annual return to trail the
index's return of 7.30% for the period. Also contributing to the fund's
performance was our decision to maintain the fund's above market yields by
holding bonds purchased during prior periods of higher interest rates. In the
current low interest rate environ ment, if we had sold these bonds in an attempt
to capture slightly higher total returns, we would have had to replace the bonds
with issues offering lower yields, which would have negatively impacted the
monthly dividend. Selling these bonds would also have led to the recognition of
capital gains and the payment of taxable distributions, which would have thereby
reduced the fund's after-tax total return.
How were the fund's dividend and share price affected?
In January of 1998, bonds calls occurred within the portfolio, which contributed
to a reduction in the income level of NIM's portfolio. This reduction, in turn,
necessitated a dividend cut for the fund. As bonds were called from the
portfolio, proceeds had to be reinvested in bonds paying relatively lower
current interest rates compared to when the fund was originally brought to
market. Despite the dividend adjustment, NIM continued to provide a com petitive
current market yield of 5.02%, equivalent to a taxable yield of 7.28% for
investors in the 31% federal income tax bracket, as of November 30, 1998.
<PAGE>
As Tim mentioned in his letter to shareholders, share price performance among
the Nuveen Exchange-Traded Funds has been strong over the past 12 months. As
interest rates fell, active demand for exchange-traded funds increased share
prices. At the same time, strong bond market performance benefited NIM's net
asset value (NAV), narrowing the spread between the fund's share price and its
NAV by more than 5%, eliminating the discount of a year ago. As of November 30,
1998, NIM was trading at a premium of 0.19% above its NAV and reported a
one-year total return on its closing share price of 12.65%.
What were the key strategies used to manage the fund over the past year?
Over the past year, our focus has been on replacing the bonds that were called
out of the portfolio with issues that extended the fund's duration, thereby
maximizing its participation in market gains. We looked for issuers, states, and
sectors of the market that provided the best values. Heavy supply of new issues
in the electric utilities and healthcare sectors led to attractive buying
opportunities at inexpensive prices, and Nuveen research helped us determine
which hospitals and utilities are likely to prosper in the new competitive
environment. As of November 30, 1998, these two sectors comprised 37% of the
portfolio. We also found value in the single-family housing sector. Although we
have traditionally bought shorter-maturity sinking fund bonds in the housing
sector, these bonds have become harder to find in recent months, resulting in
tight credit spreads. Basically, a tight credit spread occurs when the
difference in yield between AAA and BBB rated securities is minimal. Due to the
narrow credit spread, we focused on longer, noncallable bonds with attractive
yields.
Overall, the credit quality of the fund is high - 64% of NIM is invested in
bonds rated AAA and AA, while also providing excellent balance with a 22%
allocation of BBB rated and non-rated bonds. Given the fact that NIM invests
only in intermediate maturities and cannot purchase other segments of the bond
universe, the fund's risk-adjusted return and four-star Morningstar rating are
even more impressive.
What is Nuveen's outlook for the future?
Looking ahead for NIM, we plan to reinvest the proceeds from called bonds into
attractive yielding securities with maturities as long as 15 years. Given the
fund's maturity, 11.58 years, as of November 30, 1998, an analysis of one-year
horizon returns has helped us determine that the 12- to 15-year range of the
municipal yield curve currently offers the best opportunities to enhance both
income and total return. The one-year horizon return estimates the future total
return of a bond based on its current capital return and yield. Simply holding a
bond in the right part of the yield curve can help the bond appreciate in price,
even if interest rates do not change. This is an area where Nuveen's exper tise
- - as an experienced investment manager knowl edgeable about the unique aspects
of the municipal market - can result in added value for our investors.
The current market environment - influenced by declining interest rates, benign
inflation, and strong municipal supply - has helped to position municipal bonds
as one of the most compelling values in today's marketplace. We expect that the
excellent municipal-to-Treasury ratio, combined with continued volatility in the
equity markets and investors' increasing awareness of the need for asset
allocation rebalancing, will result in growing demand for municipal bond funds.
We believe that investors who take advantage of current opportuni ties in the
municipal market should be rewarded with healthy returns and attractive yields
in the months ahead, as the market recognizes the value of these quality
investments.
* Overall rating within the municipal bond category for the one-year period
ended November 30, 1998. Morningstar proprietary ratings reflect historical
risk-adjusted performance. The ratings are subject to change every month. Past
performance is no guarantee of future results. Morningstar ratings are
calculated from a fund's three-, five- and 10-year average annual returns (if
applicable) in excess of 90-day Treasury bill returns with appropriate fee
adjust ments, and a risk factor that reflects fund performance below 90-day
T-bill returns. NIM received 3 stars for the three-year and 4 stars for the
five-year period, respectively. The top 10% of the funds in an invest ment
class receive 5 stars, the next 22.5% receive 4 stars, and the next 35%
receive 3 stars. The funds were rated among 195 funds for the three-year
period, 191 funds for the five-year period, and 21 funds for the 10-year
period.
**The Lehman Brothers 7-Year Municipal Bond Index is an unleveraged index
comprising a broad range of investment-grade municipal bonds with an average
maturity of seven years; results for the index do not reflect any initial or
ongoing expenses.
<PAGE>
Nuveen Select Maturities Municipal Fund
Performance Overview
As of November 30, 1998
NIM
Portfolio Statistics
==================================================
Inception Date 9/92
- --------------------------------------------------
Share Price $12 1/16
- --------------------------------------------------
Net Asset Value Per Share $12.04
- --------------------------------------------------
Current Market Yield 5.02%
- --------------------------------------------------
Taxable-Equivalent Yield (Federal Only)(1) 7.28%
- --------------------------------------------------
Fund Net Assets ($000) $148,907
- --------------------------------------------------
Effective Maturity (Years) 11.58
- --------------------------------------------------
Modified Duration (Years) 5.93
- --------------------------------------------------
Annualized Total Return
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 12.65% 6.48%
- --------------------------------------------------
3-Year 6.92% 6.05%
- --------------------------------------------------
5-Year 5.94% 6.15%
- --------------------------------------------------
Since Inception 5.85% 6.73%
- --------------------------------------------------
Taxable-Equivalent Total Return(2)
==================================================
On Share Price On NAV
- --------------------------------------------------
1-Year 15.13% 8.83%
- --------------------------------------------------
3-Year 9.48% 8.48%
- --------------------------------------------------
5-Year 8.57% 8.67%
- --------------------------------------------------
Since Inception 8.37% 9.18%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
==================================================
Utilities 20%
- --------------------------------------------------
Health Care 17%
- --------------------------------------------------
Housing (Multifamily) 12%
- --------------------------------------------------
U.S. Guaranteed 12%
- --------------------------------------------------
Housing (Single Family) 9%
- --------------------------------------------------
Bar Chart:
1997-1998 Monthly Tax-Free Dividends Per Share(3)
12/97 0.0515
1/98 0.0505
2/98 0.0505
3/98 0.0505
4/98 0.0505
5/98 0.0505
6/98 0.0505
7/98 0.0505
8/98 0.0505
9/98 0.0505
10/98 0.0505
11/98 0.0505
Line Chart:
Share Price Performance
12/5/97 11.375
11.5
11.563
11.625
11.625
11.813
11.813
11.875
11.813
11.688
11.563
11.625
11.563
11.563
11.625
11.5
11.438
11.563
11.5
11.375
11.25
11.375
11.313
11.313
11.438
11.563
11.5
11.438
11.5
11.563
11.813
11.75
11.625
11.813
11.75
11.625
11.5
11.625
11.438
11.313
11.563
11.5
11.75
11.688
11.875
11.81
11.88
12
12.13
12.13
11/30/98 12.0625
Weekly Closing Price
Past performance is not predictive of future results.
1 Taxable-equivalent yield represents the yield on a taxable investment
necessary to equal the yield of the Nuveen fund on an after-tax basis. The
federal only rate is based on the current market yield and a federal income
tax rate of 31%. The rate shown for federal and state highlights the added
value of owning shares that are also exempt from state income taxes. It is
based on a combined federal and state income tax rate of 31%.
2 Taxable-equivalent total return is based on the annualized total return and a
combined federal and state income tax rate of 31%. It represents the return on
a taxable investment necessary to equal the return of the Nuveen fund on an
after-tax basis.
3 The Fund also paid shareholders taxable distributions in December of $0.0376
per share.
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<TABLE>
<CAPTION>
Portfolio of Investments
Nuveen Select Maturities Municipal Fund (NIM)
November 30, 1998
(Unaudited)
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arizona - 5.5%
$ 2,470,000 Arizona Educational Loan Marketing Corporation, Educational Loan Revenue
Bonds, 6.375%, 9/01/05 (Alternative Minimum Tax) 9/02 at 101 Aa $ 2,660,956
5,000,000 The Industrial Development Authority of the City of Phoenix, Arizona,
Statewide Single Family Mortgage Revenue Bonds, 1998 Series C,
6.650%, 10/01/29 (Alternative Minimum Tax) 4/08 at 101 1/2 AAA 5,576,050
- ------------------------------------------------------------------------------------------------------------------------------------
Arkansas - 1.8%
1,730,000 Arkansas Development Finance Authority, Single Family Mortgage Revenue
Bonds, 1995 Series B (Mortgage-Backed Securities Program),
6.200%, 1/01/21 (Alternative Minimum Tax) 7/05 at 102 AAA 1,819,995
835,000 Arkansas Student Loan Authority, Student Loan Revenue Bonds, Series 1992A-2
(Subordinate), 6.750%, 6/01/06 (Alternative Minimum Tax) 6/01 at 102 A 885,626
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 5.7%
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 1,691,775
4,040,000 8.750%, 11/15/23 (Alternative Minimum Tax) 11/01 at 102 BBB+ 4,578,330
948,244 El Paso County, Colorado, Single Family Mortgage Revenue Tax-Exempt
Refunding Bonds, Series 1992A, Class A-2, 8.750%, 6/01/11 No Opt. Call Aaa 1,059,520
1,000,000 Summit County, Colorado, Sports Facilities Refunding Revenue Bonds
(Keystone Resorts Management, Inc. Project), Series 1990, 7.750%, 9/01/06 No Opt. Call A- 1,205,170
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District of Columbia - 4.8%
1,000,000 District of Columbia (Washington D.C.), General Obligation Refunding
Bonds, Series A-1, 6.000%, 6/01/11 No Opt. Call AAA 1,132,199
5,400,000 District of Columbia (Washington, D.C.), General Obligation Refunding
Bonds, Series 1993A, 6.000%, 6/01/07 No Opt. Call AAA 6,042,896
- ------------------------------------------------------------------------------------------------------------------------------------
Florida - 4.1%
2,000,000 State of Florida, Faith and Credit, State Board of Education, Public
Education Capital Outlay Bonds, Series 1986-C, 7.100%, 6/01/07 No Opt. Call AAA 2,053,180
3,500,000 Hillsborough County Industrial Development Authority, Pollution Control
Revenue Refunding Bonds (Tampa Electric Company Project), Series 1992,
8.000%, 5/01/22 5/02 at 103 AA 4,030,530
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 8.6%
725,000 Urban Residential Finance Authority of the City of Atlanta, Revenue Bonds
(Landrum Arms Project), Series 1994, 6.750%, 7/01/04 No Opt. Call N/R 765,187
5,755,000 Development Authority of Burke County, Georgia, Pollution Control
Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1992,
8.000%, 1/01/15 (Pre-refunded to 1/01/03) 1/03 at 103 AAA 6,805,978
1,800,000 State of Georgia, General Obligation Bonds, 1994-D, 6.700%, 8/01/09 No Opt. Call AAA 2,181,042
2,540,000 Municipal Electric Authority of Georgia, General Power Revenue Bonds,
1992B Series, 7.500%, 1/01/07 No Opt. Call AAA 3,100,756
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 8.2%
1,300,000 General Obligation Lease Certificates, 1992 Series A (Board of Education
of the City of Chicago), 6.125%, 1/01/07 No Opt. Call AAA 1,469,065
1,000,000 Chicago School Reform Board of Trustees of the Board of Education of
the City of Chicago, Illinois, Unlimited Tax General Obligation Bonds,
Series 1996, 6.250%, 12/01/11 No Opt. Call AAA 1,171,390
2,540,000 Chicago Metropolitan Housing Development Corporation (Chicago, Illinois),
Housing Development Revenue Refunding Bonds (FHA-Insured Mortgage Loan
Section 8 Assisted Project), Series 1993B, 5.700%, 1/01/13 7/03 at 100 AAA 2,608,809
465,000 City of Danville, Vermilion County, Illinois, Single Family Mortgage
Revenue Refunding Bonds, Series 1993, 7.300%, 11/01/10 11/03 at 102 A1 498,596
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois (continued)
$ 3,450,000 Illinois Development Finance Authority, Child Care Facility Revenue Bonds,
Series 1992 (Illinois Facilities Fund Project), 7.400%, 9/01/04 9/02 at 102 N/R $ 3,682,254
2,135,000 Illinois Housing Development Authority, Section 8 Elderly Housing Revenue
Bonds (Skyline Towers Apartments), Series 1992B, 6.625%, 11/01/07 11/02 at 102 A 2,271,725
505,000 City of Rock Island, Illinois, Residential Mortgage Revenue Refunding Bonds,
Series 1992, 7.700%, 9/01/08 9/02 at 102 Aa 541,188
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 3.8%
2,000,000 Hospital Authority of Elkhart County, Indiana, Hospital Revenue Bonds,
Series 1992 (Elkhart General Hospital, Inc.), 7.000%, 7/01/08 7/02 at 102 A1 2,221,840
1,000,000 The Indianapolis Local Public Improvement Bond Bank, Series 1992 D Bonds,
6.600%, 2/01/07 No Opt. Call AA 1,156,590
2,100,000 The Indianapolis Local Public Improvement Bond Bank, Transportation
Revenue Bonds, Series 1992, 6.000%, 7/01/10 7/03 at 102 Aa 2,304,687
- ------------------------------------------------------------------------------------------------------------------------------------
Kentucky - 3.4%
5,000,000 County of Boone, Kentucky, Mortgage Revenue Bonds, Series 1998A (Normandy
Green Apartments Project), 5.200%, 6/20/38 (Alternative Minimum Tax) No Opt. Call N/R 5,006,500
- ------------------------------------------------------------------------------------------------------------------------------------
Maryland - 1.4%
2,000,000 Anne Arundel County, Maryland, Multifamily Housing Revenue Bonds
(Woodside Apartments Project), Series 1994, 7.450%, 12/01/24
(Alternative Minimum Tax) No Opt. Call BBB 2,125,520
- ------------------------------------------------------------------------------------------------------------------------------------
Nebraska - 7.2%
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 5,596,250
Nebraska Public Gas Agency, Gas Supply System Revenue Bonds,
1995 Series A:
1,250,000 5.300%, 4/01/03 No Opt. Call Baa1 1,305,938
1,000,000 5.400%, 4/01/04 No Opt. Call Baa1 1,053,840
2,400,000 Airport Authority of the City of Omaha (Nebraska), Airport Facilities
Revenue Refunding Bonds, Series 1991, 8.375%, 1/01/14 1/02 at 102 A1 2,734,176
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 8.1%
3,000,000 New York City Housing Development Corporation, Multi-Family Housing
Revenue Bonds, 1993 Series A, 5.700%, 11/01/13 5/03 at 102 AA 3,123,990
3,700,000 New York City Industrial Development Agency, Amended and Restated Industrial
Development Revenue Bonds (1991 Japan Airlines Company, Ltd. Project),
6.000%, 11/01/15 (Alternative Minimum Tax) 11/04 at 102 AAA 3,979,165
2,000,000 New York State Medical Care Facilities Finance Agency, FHA-Insured
Mortgage Project Revenue Bonds, 1995 Series C, 6.100%, 8/15/15 2/06 at 102 AA+ 2,178,060
2,130,000 City of Niagara Falls, Niagara County, New York, Water Treatment Plant
(Serial) Bonds, Series 1994, 8.500%, 11/01/07 (Alternative Minimum Tax) No Opt. Call AAA 2,786,828
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 7.9%
2,000,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, Hospital
Facilities Revenue Bonds, Series 1992 (Summa Health System Project),
6.250%, 11/15/07 11/02 at 102 Baa1 2,165,400
1,000,000 City of Dayton, Ohio, Special Facilities Revenue Refunding Bonds,
1993 Series F (Emery Air Freight Corporation and Emery Worldwide
Airlines, Inc. Guarantors) (Non-AMT), 6.050%, 10/01/09 No Opt. Call BBB 1,085,810
4,500,000 County of Hamilton, Ohio, Hospital Facilities Revenue Refunding Bonds,
Series 1992A (Bethesda Hospital, Inc.), 6.250%, 1/01/06 No Opt. Call A 4,998,735
2,280,000 Ohio Water Development Authority, Revenue Bonds, USA Waste Services,
Series 1992, 7.750%, 9/01/07 (Alternative Minimum Tax) 3/02 at 102 N/R 2,459,413
1,000,000 City of Oxford, Ohio, Water Supply System Mortgage Revenue, Series 1992,
Refunding Bonds, 6.000%, 12/01/14 12/02 at 102 AAA 1,090,950
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania - 1.5%
$ 1,790,000 Pennsylvania Higher Educational Facilities Authority, College and
University Revenue Bonds, 9th Series, 7.625%, 7/01/15 No Opt. Call Aaa $ 2,147,033
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 2.1%
3,000,000 Rhode Island Housing and Mortgage Finance Corporation, Homeownership
Opportunity Bonds, Series 7, 6.500%, 4/01/25 (Alternative Minimum Tax) 4/02 at 102 AA+ 3,120,900
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 11.2%
1,435,000 City of Austin, Texas, Water, Sewer and Electric Refunding Revenue
Bonds, Series 1982, 14.000%, 11/15/01 No Opt. Call A2 1,630,002
590,000 Austin - Travis County Mental Health and Mental Retardation Center,
Revenue Bonds (Mental Health and Mental Retardation Center Facilities
Acquisition Program), Series 1995-A, 6.500%, 3/01/15 3/05 at 102 AAA 660,328
880,000 City of Galveston Property Finance Authority, Inc., Single Family
Mortgage Revenue Bonds, Series 1991A, 8.500%, 9/01/11 9/01 at 103 A3 950,532
1,040,000 Texas Community Mental Health and Mental Retardation Center, Revenue Bonds
(Mental Health and Mental Retardation Center Facilities Acquisition
Program), Series 1995A-E, 6.500%, 3/01/15 3/05 at 102 AAA 1,163,968
Lubbock Health Facilities Development Corporation (Texas),
Revenue Bonds (St. Joseph Health System), Series 1998:
1,645,000 5.000%, 7/01/08 (WI) No Opt. Call AA 1,715,571
2,000,000 5.250%, 7/01/12 (WI) 7/08 at 101 AA 2,078,280
2,000,000 5.250%, 7/01/13 (WI) 7/08 at 101 AA 2,069,280
3,135,000 Ratama Development Corporation, Special Facilities Revenue Bonds
(Retama Park Racetrack Project), Series 1993, 8.750%, 12/15/11
(Pre-refunded to 12/15/11) 12/11 at 100 AAA 4,427,028
1,000,000 Travis County Health Facilities Development Corporation, Hospital
Revenue Bonds (Daughters of Charity National Health System - Daughters
of Charity Health Services of Austin), Series 1993B, 5.900%, 11/15/07 11/03 at 102 Aa 1,086,400
805,000 Tri-County Mental Health and Mental Retardation Services, Revenue Bonds
(Mental Health and Mental Retardation Center Facilities Acquisition
Program), Series 1995-E, 6.500%, 3/01/15 3/05 at 102 AAA 900,956
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 1.4%
2,055,000 City of Bountiful, Davis County, Utah, Hospital Revenue Refunding Bonds
(South Davis Community Hospital Project), Series 1998, 6.000%, 12/15/10 No Opt. Call N/R 2,112,622
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia - 1.5%
2,000,000 Hampton Redevelopment and Housing Authority, Multifamily Housing Revenue
Refunding Bonds, Series 1994 (Chase Hampton II Apartments),
7.000%, 7/01/24 7/02 at 104 Baa2 2,170,460
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 11.3%
1,255,000 Public Utility District No. 1 of Douglas County, Washington, Wells
Hydro-Electric Revenue Bonds, Series of 1990, 7.700%, 9/01/08
(Alternative Minimum Tax) 9/00 at 102 A+ 1,353,317
Washington Health Care Facilities Authority, Revenue Bonds,
Series 1996 (Yakima Valley Memorial Hospital Association):
1,880,000 6.000%, 12/01/09 No Opt. Call AAA 2,135,736
1,500,000 6.000%, 12/01/10 No Opt. Call AAA 1,715,160
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 2,953,625
3,000,000 7.000%, 7/01/08 No Opt. Call Aa1 3,567,030
7,000,000 Washington Public Power Supply System, Nuclear Project No. 3
Refunding Revenue Bonds, Series 1990B, 0.000%, 7/01/06 No Opt. Call Aa1 5,050,290
- ------------------------------------------------------------------------------------------------------------------------------------
$ 135,968,244 Total Investments - (cost $138,158,076) - 99.5% 148,214,427
=============
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Temporary Investments in Short-Term Municipal Securities - 1.5%
$ 1,500,000 Illinois Health Facilities Authority, Revenue Refunding Bonds (University
of Chicago Hospitals), Variable Rate Demand Bonds, 3.300%, 8/01/26+ VMIG-1 $ 1,500,000
800,000 University Athletic Association, Inc, (University of Florida Stadium Project),
Series 1990, Variable Rate Demand Bonds, 3.300%, 2/01/20+ VMIG-1 800,000
- ------------------------------------------------------------------------------------------------------------------------------------
$ 2,300,000 Total Temporary Investments - 1.5% 2,300,000
=============
Other Assets Less Liabilities - (1.0)% (1,607,248)
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 148,907,179
====================================================================================================================
* Optional Call Provisions: 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: Using the higher of Standard & Poor's or Moody's rating.
N/R Investment is not rated.
(WI) Security purchased on a when-issued basis (note 1).
+ 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 marked index.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Net Assets
November 30, 1998
(Unaudited)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
<S> <C>
Investments in municipal securities, at market value (note 1) $148,214,427
Temporary investments in short-term municipal securities,
at amortized cost, which approximates market value (note 1) 2,300,000
Receivables:
Interest 2,540,385
Investments sold 2,430,142
Other assets 3,437
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 155,488,391
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Cash overdraft 5,633
Payable for investments purchased 5,828,194
Accrued expenses:
Management fees (note 6) 60,814
Other 61,854
Dividends payable 624,717
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,581,212
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (note 7) $148,907,179
====================================================================================================================================
Shares outstanding 12,370,635
====================================================================================================================================
Netasset value per share outstanding (net assets divided by shares outstanding) $ 12.04
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Operations
Six Months Ended November 30, 1998
(Unaudited)
<CAPTION>
<S> <C>
Investment Income (note 1) $4,245,823
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees (note 6) 370,403
Shareholders' servicing agent fees and expenses 9,481
Custodian's fees and expenses 21,620
Trustees' fees and expenses (note 6) 712
Professional fees 8,138
Shareholders' reports - printing and mailing expenses 32,652
Stock exchange listing fees 12,173
Investor relations expense 5,728
Other expenses 3,643
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 464,550
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 3,781,273
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain from Investments
Net realized gain from investment transactions (notes 1 and 4) 294,017
Net change in unrealized appreciation or depreciation of investments 738,092
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain from investments 1,032,109
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $4,813,382
====================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Statement of Changes in Net Assets
(Unaudited)
<CAPTION>
Six Months Ended Year Ended
11/30/98 5/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income $ 3,781,273 $ 7,625,356
Net realized gain from investment transactions (notes 1 and 4) 294,017 549,105
Net change in unrealized appreciation or depreciation of investments 738,092 2,941,305
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 4,813,382 11,115,766
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income (3,748,300) (7,591,325)
From accumulated net realized gains from investment transactions -- (457,013)
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (3,748,300) (8,048,338)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 1,065,082 3,067,428
Net assets at beginning of period 147,842,097 144,774,669
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $148,907,179 $147,842,097
===================================================================================================================================
Balance of undistributed net investment income at end of period $ 113,185 $ 80,212
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
(Unaudited)
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
November 30, 1998, the Fund had $5,828,194 of when-issued purchase commitments.
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. Net
realized capital gain and market discount distributions are subject to federal
taxation.
<PAGE>
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.
Derivative Financial Instruments
The Fund may invest in 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, it did not
make any such investments during the six months ended November 30, 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. Actual results may differ
from those estimates.
2. Fund Shares
There were no share transactions during the six months ended November 30, 1998,
or during the fiscal year ended May 31, 1998.
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 December 28, 1998, to
shareholders of record on December 15, 1998. At the same time, the Fund also
declared taxable distributions, which include capital gains and/or market
discount, of $.0461 per share.
4. Securities Transactions
Purchases and sales (including maturities) of investments in municipal
securities for the six months ended November 30, 1998, aggregated $18,919,062
and $17,198,614, respectively. Purchases and sales (including maturities) of
temporary municipal investments for the six months ended November 30, 1998,
aggregated $5,700,000 and $3,400,000, respectively.
At November 30, 1998, the identified cost of investments owned for federal
income tax purposes was the same as the cost for financial reporting purposes.
<PAGE>
5. Unrealized Appreciation (Depreciation)
At November 30, 1998, net unrealized appreciation of investments aggregated
$10,056,351 of which $10,180,424 related to appreciated securities and $124,073
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:
Average Daily Net Asset Value Management Fee
- --------------------------------------------------------------------------------
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
================================================================================
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.
7. Composition of Net Assets
At November 30, 1998, the Fund had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Common shares, $.01 par value per share $ 123,706
Paid-in surplus 138,037,220
Balance of undistributed net investment income 113,185
Accumulated net realized gain from investment transactions 576,717
Net unrealized appreciation of investments 10,056,351
- --------------------------------------------------------------------------------
Net assets $148,907,179
================================================================================
</TABLE>
<PAGE>
8. Investment Composition
At November 30, 1998, the revenue sources by municipal purpose, expressed as a
percent of total investments, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Health Care 17%
Housing/Multifamily 12
Housing/Single Family 9
Tax Obligation/General 9
Tax Obligation/Limited 6
Transportation 8
U.S. Guaranteed 12
Utilities 20
Other 7
- --------------------------------------------------------------------------------
100%
================================================================================
In addition, 32% 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.
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.
</TABLE>
<PAGE>
<TABLE>
Financial Highlights
(Unaudited)
Selected data for a share outstanding throughout each period is as
follows:
<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:
1999(a) $11.95 $.31 $.08 $ .39 $(.30) $ -- $(.30)
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:
1999(a) $12.04 $12.0625 8.20% 3.32%
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:
1999(a) $148,907 .62%* 5.08%* 12%
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.
* Annualized.
(a) For the six months ended November 30, 1998.
</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
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Tennessee
Virginia
Wisconsin
Successful investors know that a well-diversified portfolio - one that balances
different types of investments, levels of risk and tax management - can be the
foundation for building and sustaining wealth. That's why Nuveen offers you and
your financial adviser a wide range of quality investments that can help you
build a better portfolio in the pursuit of your financial goals
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 Advisers(SM) including Institutional Capital Corporation, Rittenhouse
Financial Services, and Nuveen Advisory Corp. Each brings a specialized
expertise in a particular investment style or asset class, time-tested
investment strategies and a focus on consistent, long-term performance. With
Nuveen's Premier Adviser funds, you have all the advantages of a family of funds
plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive,
customized investment management solutions to investors with assets of $250,000
or more to invest. A range of actively managed growth, balanced and municipal
income-oriented portfolios are available, all based upon a disciplined
investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a
convenient, attractive alternative to purchasing individual securities. They
provide low-cost diversification to reduce risk, while also offering
experienced, professional security selection and surveillance. In addition,
Nuveen Defined Portfolios provide daily liquidity at that day's net asset value
for quick access to your assets.
<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 November 30, 1998. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
<PAGE>
Serving Investors for Generations
Photo of: John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with
investments that withstand the test of time. Today we offer a broad range of
quality investments designed for individuals seeking to build and sustain
wealth. In fact, more than 1.3 million investors have trusted Nuveen to help
them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined
long-term investment strategies focused on providing consistent, attractive
performance over time - with moderated risk. We emphasize quality securities
carefully chosen through in-depth research, and we follow those securities
closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining
accumulated wealth, Nuveen offers a wide variety of investments and services to
help meet your unique circumstances and financial planning needs. Our equity,
balanced, and tax-free income funds, along with our defined portfolios and
private asset management, can help you build a better, well-diversified
portfolio.
Talk with your financial adviser to learn more about how Nuveen investment
products and services can help you. Or call us at (800) 257-8787 for more
information, including a prospectus where applicable. Please read that
information carefully before investing.
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-1.11.98
<PAGE>
