NUVEEN Exchange-Traded Funds
NOVEMBER 30, 1999
SEMIANNUAL REPORT
DEPENDABLE, TAX-FREE INCOME TO HELP YOU KEEP MORE OF WHAT YOU EARN.
NIM
Select Maturities
Photo of: couple in a canoe.
<PAGE>
Highlights
As of November 30, 1999
Credit Quality Performance Highlights
Nuveen Select Maturities Municipal Fund (NIM)
o HHHH Four-star overall MorningstarTM
Rating * (ranked among 193 closed-end
municipal bond funds)
o Outperformed the one-year total return of
the Lehman Brothers 7-Year Municipal Bond
Index (NIM's one-year total return on
NAV was 0.68% versus the Lehman Brothers
total return of 0.47%) **
o Taxable-equivalent yield on share price of
9.01% ***
Past performance is not predictive of
future results
Pie Chart:
AAA/U.S. Guaranteed 34%
AA 21%
A 16%
BBB/NR 29%
Contents
1 Dear Shareholder
4 Portfolio Manager's Comments
6 Performance Overview
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 Build Your Wealth Automatically
21 Fund Information
* Morningstar proprietary ratings reflect historical risk-adjusted
performance as of November 30, 1999. The ratings are subject to change
every month. Past performance is no guarantee of future results.
Morningstar ratings are calculated from the 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 4 stars
for the three-and five-year periods. The top 10% of the funds in a broad
asset class receive 5 stars, the next 22.5% receive 4 stars, and the next
35% receive 3 stars. The fund was rated among 193 closed-end municipal bond
funds for the three- and five-year periods, respectively.
** The Lehman Brothers 7-Year Municipal Bond Index is an unleveraged index
covering a broad range of investment-grade municipal bonds. The return for
the index does not reflect any expenses.
*** For investors in the 31% federal income tax bracket. See your fund's
Performance Overview in this report for more information.
<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 am pleased to report to you on the performance of your Nuveen Exchange-Traded
Fund. Providing a stable, attractive tax-free dividend is the Fund's main
objective, and over the past six months, your Fund continued to achieve this
goal. During the period covered by this report, we have seen some shifts in the
U.S. investment climate and the fixed-income environment in which your Nuveen
Exchange-Traded Fund operates. I appreciate the opportunity to review the
current investment environment with you, as does the portfolio manager of your
Fund, who discusses fund performance later in this report.
A CHALLENGING INVESTMENT ENVIRONMENT
The U.S. economy enjoyed its ninth consecutive year of continuous expansion,
characterized by surprisingly robust growth, benign inflation, and unemployment
levels that remained among the lowest in three decades. However, concerns about
the persistent pace of economic expansion continued to test the new paradigm,
which holds that the improvements in productivity achieved through technology
enable us to have both economic growth and low inflation at the same time. As
investors watched and reacted to each announcement concerning economic
statistics, volatility increased, especially in the equity markets, and the
spectre of inflation seemed to lurk behind every report. Especially worrisome to
the Federal Reserve was the possibility that tight labor markets would
eventually have an inflationary effect on wages and, consequently, on consumer
prices.
In an effort to pre-empt this threat of inflation, the Fed moved to raise
interest rates by a quarter-point on three separate occasions between June and
November 1999. This brought the federal funds rate, which represents the amount
banks charge one another on overnight loans and serves as a standard for
short-term market rates, from 4.75% to 5.50%. These increases offset the three
rate cuts enacted by the Fed a year earlier. At its November meeting, the Fed
announced that it would shift to a neutral stance following the latest interest
rate increase, giving the markets some respite during the Y2K transition.
However, the Fed's indication that it would continue to closely watch the pace
of economic growth for any signs of inflationary pressure left the door open for
additional tightenings. In January 2000, the annual rotation among members of
the Fed's Open Market Committee, the body that ultimately decides interest rate
policy, will put several members considered more "hawkish" on inflation-
fighting into voting slots. This could tilt policy toward further rate increases
in the new year.
<PAGE>
MUNICIPAL BOND PERFORMANCE
Over the past fiscal year, our exchange-traded municipal bond funds continued to
offer attractive, stable income in a market that places a high premium on yield.
At the end of November 1999, long-term municipal yields, represented by the Bond
Buyer 20, were 98% of 30-year Treasury yields, compared with the historical
average of 86% for the period 1986-1999. For investors, this meant that quality
long-term municipal bonds offered yields comparable to those of long-term
Treasury bonds - even before the tax advantages of municipals were taken into
account. Of course, Treasuries are backed by the full faith and credit of the
U.S. government. Even so, on an after-tax basis, municipal bonds continued to
present an exceptionally attractive investment option relative to Treasuries.
During 1999, we saw the supply of municipal bonds drop off from the near-record
levels of 1998. This was largely due to the increase in interest rates, which
deterred municipal governments from issuing new debt and removed much of the
incentive to refund existing bonds. Municipal supply has declined by
approximately 20% from the levels of a year ago. This, in turn, has tended to
enhance the attractiveness of the municipal bonds that were brought to market.
We anticipate that demand from individual investors will strengthen as investors
increasingly look at rebalancing their portfolios. With the outlook for tighter
supply and continued demand in the months ahead, Nuveen's established market
position as the leading sponsor of exchange-traded municipal bond funds should
enable us to have excellent access to bond offerings that have the potential to
add value for our shareholders.
A BALANCED PORTFOLIO: ENHANCED GROWTH WITH REDUCED RISK
If you are like most investors today, your goals for investing probably include
capturing high after-tax total returns while moderating risk. To demonstrate the
role that municipal bonds can play in achieving this goal, Nuveen tracked a
balanced portfolio consisting of equities and municipal bonds and compared its
hypothetical investment performance - based on appropriate market indexes and
tax rates - with that of a balanced portfolio composed of equities and taxable
bonds.
Our research showed that, over the past 20 years, the pairing of equities with
municipal bonds provided both superior after-tax total returns and lower levels
of risk than the combination of equities and taxable bonds for investors in high
tax brackets. Incorporating even a 20% allocation of municipal bonds into an
all-equity portfolio cut risk substantially, with only a small reduction in
after-tax total return. Purchasing shares of a Nuveen Exchange-Traded Municipal
Bond Fund provides an easy way to incorporate the benefits of municipal bonds
into a balanced portfolio. It is important to
Sidebar text: "Purchasing shares of a Nuveen Exchange-Traded Municipal Bond Fund
provides an easy way to incorporate the benefits of municipal bonds into a
balanced portfolio."
<PAGE>
note, however, that the past results mentioned in our example relate to bond
indexes and not to any particular product. In addition, they do not necessarily
predict future performance.
NUVEEN FUNDS: AN ANSWER TO YOUR INVESTMENT NEEDS
In light of the recent shifts in the investment environment, your financial
adviser can serve as a valuable resource in helping you determine if adjustments
are needed in your current asset allocation plan and suggesting investments that
can add diversification to your portfolio. By investing in other Nuveen funds,
you can bring balance to your portfolio and gain exposure to the different types
of investments that can enhance your potential for success. Your adviser can
also establish a reinvestment plan designed to purchase additional shares of
your Nuveen Exchange-Traded Fund. For more information on Nuveen's expanding
array of funds, contact your financial adviser for a prospectus detailing all
charges and expenses, or call Nuveen at (800) 621-7227. Please read the
prospectus carefully before you invest or send money.
WELCOME TO THE NEW MILLENNIUM
During 1999, Nuveen committed significant resources - both financial and
personal - to ensuring that the transition to the year 2000 caused no
disruptions for our shareholders. Our preparations included advance testing of
all critical operating systems and careful review of each municipal issuer Y2K
compliance, with special attention to the largest and more volatile holdings in
our Funds' portfolios. We were assisted in our efforts by securities industry
oversight organizations, including the Securities Industry Association, the
Municipal Securities Rulemaking Board and the Securities and Exchange
Commission, as well as rating agencies and insurance companies. As a result, we
were fully prepared for the transition, from an operational as well as an
investment perspective. As expected, the Y2K transition was a non-event for our
company and our shareholders as well as throughout the general economy. The
diligence of the financial industry as a whole in dealing with the Y2K
transition should prove to have ongoing benefits for investors.
Since 1898, Nuveen has been synonymous with investments that stand the test of
time. As we enter the new millennium, we remain committed to maintaining that
reputation and finding the best ways to serve your evolving investment needs.
Thank you for your continued confidence.
Sincerely,
/s/ TIMOTHY R. SCHWERTFEGER
TIMOTHY R. SCHWERTFEGER
Chairman of the Board
January 18, 2000
<PAGE>
Nuveen Select Maturities Municipal Fund
Portfolio Manager's Comments
Portfolio manager Ted Neild, who also serves as managing director of Nuveen's
portfolio management team, discusses the municipal market environment and the
performance of the Nuveen Select Maturities Municipal Fund (NIM). Ted, who has
more than 11 years of experience as an investment professional at Nuveen, has
managed NIM since its inception in 1992.
WHAT FACTORS AFFECTED THE NATIONAL ECONOMY DURING THE 12 MONTHS ENDED NOVEMBER
30, 1999?
Over the past year, the U.S. economy continued to forge ahead with few signs of
slowing. Among the statistics showing surprising strength in recent months was
gross domestic product (GDP) growth, which rose at an annualized rate of 5.7% in
the third quarter of 1999, almost twice the 3% rate the Federal Reserve finds
comfortable. The growth in GDP was fueled by rising inventories, an improved
trade balance, and strong consumer spending, which continues to serve as the
main engine powering the U.S. economic expansion. Commodity prices, particularly
oil and gold, and raw material prices also continued to rise. For the most part,
however, these increases did not translate into higher consumer prices. Through
the end of November 1999, the Consumer Price Index showed inflation maintaining
a low profile, with an annualized increase of 2.6%. Labor markets continued to
rank among the tightest in 30 years, as the national unemployment average
remained at 4.1% in November 1999, down from 4.4% in November 1998.
Concerned about the potential for an overheated economy, the Federal Reserve
raised short-term interest rates three times during 1999. The third increase,
which became effective November 16, was prompted largely by worries that the
imbalance in the labor markets, as reflected in the low unemployment rate, would
lead to wage and, ultimately, price inflation. Following the third rate hike,
the Fed announced that it would move to a neutral stance, largely to avoid
exacerbating concerns about potential market disruptions during the transition
to the year 2000.
The Fed's move toward higher interest rates during 1999 was prompted by the
belief that these rate increases would have an impact on the stock market,
causing consumer confidence to fall and consumer spending to slow, thereby
pre-empting any reemergence of inflation. While increased productivity helped
inflation remain benign, consumer confidence went on to hit a 31-year high, and
the slowing of the economy has yet to happen. As a result, market watchers
expect that the Fed could enact additional interest rate increases as early as
February 2000. Despite the evidence of the Fed's continued vigilance on the
inflation front, the cumulative effect of 1999's economic events was negative
for the fixed-income markets, including municipal bonds.
HOW DID THESE EVENTS IMPACT MUNICIPAL BOND SUPPLY AND DEMAND IN THE MUNICIPAL
MARKET?
For the first 11 months of 1999, new municipal bond supply across the nation
fell just over 20% from the levels recorded during the same period in 1998. Some
of this decline can be attributed to the rise in interest rates, which
discouraged municipalities from issuing long-term debt at higher interest costs.
In addition, the refunding activity involving older debt typically declines in a
rising interest rate environment. Among the states, California and New York
remained the most active issuers in the nation. To avoid any potential problems
as 1999 turned to 2000, some municipal bond issuers accelerated new bond
issuance, while others decided to delay issues until 2000. Issuance should
gradually return to a more normal level following January, with issuance in 2000
expected to be on par with that of 1999.
Over recent months, institutional demand for municipal paper has been weakened
by several events outside the municipal market that limited the cash flow
available for bond purchases. Insurance companies, which have historically been
major institutional buyers of municipal bonds, were hard hit by claims from
natural disasters and further hampered by price cutting on insurance premiums in
the property casualty sector, which hurt earnings. At the same time, fund
redemptions limited the demand from mutual fund companies, which have also been
major institutional buyers. In addition, an accelerated corporate bond issuance
calendar, timed to avoid any problems with Y2K, resulted in heavy corporate bond
supply, which vied with municipal bonds for institutional investor attention.
On the other hand, demand from individual investors was a bright spot for
municipal bonds during most of 1999, as investors actively worked to rebalance
their portfolios by redirecting assets from equity investments into the
fixed-income market. In 1998, individual investors held more than 30% of
outstanding municipal debt, making them the largest owner class. Municipal bond
sales to retail investors in 1999 were on track to beat 1998's record levels.
GIVEN THAT NIM'S PRIMARY OBJECTIVE IS TO PROVIDE STABLE, ATTRACTIVE TAX-EXEMPT
INCOME CONSISTENT WITH THE LOWER RISK PROFILE OF AN INTERMEDIATE FUND, WHAT
FACTORS AFFECTED THE FUND'S DIVIDEND?
During the past year, good call protection helped to support NIM's dividend and
shield the income of this fund from erosion. In addition, our dividend
management strategies enabled us to increase the Fund's dividend in February
1999. As of November 30, 1999, NIM had provided shareholders with 23 consecutive
months of steady or increasing dividends. At the end of November, the market
yield on the Fund was a competitive 6.22%, equivalent to a taxable yield1 of
9.01% for investors in the 31% federal income tax bracket.
OVERALL, HOW DID NIM PERFORM OVER THE PAST 12 MONTHS?
For the 12 months ended November 30, 1999, NIM produced a total return on net
asset value (NAV) of 0.68%, providing a taxable-equivalent total return1 of
3.04% for shareholders in the 31% federal income tax bracket. The Fund's total
return compares favorably with the 0.47% annual total return posted by the
Lehman Brothers 7-Year Municipal Bond Index2 and the -2.64% average annual total
return for the Fund's Lipper Peer Group3 as of November 30, 1999. In recognition
of this risk-adjusted performance, NIM was awarded a Morningstar4 rating of four
stars, representing the Fund's overall rating among 193 closed-end municipal
bond funds, as of November 30, 1999.
1 The taxable-equivalent yield/total return represents the yield/total return
that must be earned on a taxable investment in order to equal the yield/total
return of the Nuveen fund on an after-tax basis. The taxable-equivalent yield
is based on the fund's current market yield and a federal income tax rate of
31%, while the taxable-equivalent total return is based on the annualized
total return and a federal income tax rate of 31%.
2 NIM is compared with the Lehman Brothers 7-Year Municipal Bond Index, 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 expenses.
3 The total return for NIM is compared with the average annualized return of the
21 funds in the Lipper General and Insured Unleveraged Municipal Debt Funds
category. Fund and Lipper returns assume reinvestment of dividends.
4 Morningstar proprietary ratings reflect historical risk-adjusted performance
as of November 30, 1999. The ratings are subject to change every month. Past
performance is no guarantee of future results. Morningstar ratings are
calculated from the fund's three-, five-, and ten-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 4 stars for the three- and five-year periods. The
top 10% of the funds in a broad asset class receive 5 stars, the next 22.5%
receive 4 stars, and the next 35% receive 3 stars. The fund was rated among
193 closed-end municipal bond funds for the three- and five-year periods,
respectively.
<PAGE>
The performance of NIM's total return on NAV relative to its Lehman benchmark
can be attributed largely to strong security selection that exploited
opportunities in the short end of the yield curve. The Fund's total return
performance was also enhanced by the shortening of its duration over the past 12
months, which helped minimize some of the decline in the Fund's net asset value.
As of November 30, 1999, NIM's average duration was 5.74, down from 5.93 at the
end of November 1998. By comparison, the duration of the Lehman Index was 5.40,
as of November 30, 1999. As an intermediate fund, NIM is designed to perform in
markets such as the one we experienced in 1999 by mitigating the volatility of
strong market moves. One of the ways we measure a bond fund's price volatility,
or reaction to interest rate movements, is through its duration.
The shorter the duration, the less sensitive the fund's NAV is to changes in
interest rates. During a period of falling interest rates, a short duration can
limit the ability of a fund's NAV to participate in market gains. However, when
interest rates rise, as they did over the past 12 months, a short duration can
make the fund's NAV less vulnerable to price declines. For the 12 months
beginning December 1998 and ending November 1999, the yield on the Bond Buyer
Revenue Bond Index5 rose from 5.25% to 6.14%. This meant that funds with
relatively short durations, like NIM, were more likely to compare favorably, if
not outperform the market, as represented by the unleveraged Lehman Brothers
7-Year Municipal Bond Index.
WHAT ABOUT THE FUND'S SHARE PRICE PERFORMANCE?
In 1999, rising interest rates, inflation worries, and constant speculation
about the Federal Reserve's next interest rate move created a negative
environment in the fixed-income markets. In addition, concerns about the impact
of the transition to the year 2000 precipitated an early start to tax-swap
season, as investors attempted to offset profits in the equity markets by
selling fixed-income investments at a loss. The liquidity concerns engendered by
Y2K also prompted some investors to opt for money market funds and other
short-term vehicles as the best place to park cash over the year end.
All of these factors negatively impacted the market demand for exchange-traded
funds such as NIM. This resulted in a decline in the Fund's share price. Since
the prevailing interest rate environment in November 1999 was higher than that
of a year earlier, the Fund's NAV also declined, as bond prices fell while
interest rates rose. As a result of these factors, NIM saw its slight premium
(share price above NAV) move to a substantial discount (share price below NAV)
over the past 12 months.
Premium/Discount6 Total Return on Share Price
----------------- ---------------------------
1-Year Ended Taxable-
11/30/98 11/30/99 11/30/99 Equivalent1
-------- -------- ------------ -----------
NIM 0.19% -13.29% -12.60% -10.24%
-------- -------- ------------ -----------
Past performance is not predictive of future results.
For additional information on NIM, see its Performance Overview in this report.
WHAT KEY STRATEGIES WERE USED TO MANAGE NIM DURING THE PAST 12 MONTHS?
In addition to attempting to provide a stable, tax-free dividend over the past
year, NIM was also managed with the objective of trying to provide shareholders
with the highest possible yields and total returns consistent with the lower
risk profile of an intermediate fund. Overall, our goal was to try and obtain
the most yield for the shortest commitment of the Fund's capital.
As of November 30, 1999, NIM had allocated 38% of its assets to two sectors:
healthcare and utilities. These sectors represent dynamic and volatile areas of
the market that have been beset with concerns about deregulation and
profitability. This has created credit and rating pressures for certain
organizations and caused some investors to avoid the sectors entirely. Since
one of Nuveen's strategies is to try to discover value in sectors and bonds that
have been overlooked by the rest of the market, these two sectors have been
areas where Nuveen research and our prudent investment approach have enabled us
to find and exploit opportunities that can benefit our shareholders. These
benefits included higher yields for assuming the incremental risk associated
with these sectors as well as enhanced returns through insightful security
selection. We continue to watch these sectors for attractive lower-rated issues
with good future return prospects.
We also continued to use strategies designed to exploit yield curve
opportunities, including one called "the yield curve roll," which involves
positioning investments at optimal spots along the yield curve. This strategy
takes advantage of the fact that the yield curve in the municipal market has a
persistent upward slope.
Overall, NIM offers excellent credit quality, with 55% of the Fund's assets
invested in bonds rated AAA/U.S. guaranteed and AA at the end of November 1999.
The Fund also had a substantial allocation (29%) of BBB and non-rated
investment-grade bonds. These lower-rated bonds generally provided enhanced
levels of yield and helped to support the dividend, especially as credit spreads
(or the difference in yield between higher credit quality securities and those
of lower credit quality) widened in recent months. Shareholders can be assured
that the creditworthiness of all issuers is subjected to Nuveen's stringent
review process before bonds are purchased for the Fund's portfolio.
In the area of bond calls, NIM currently provides excellent levels of call
protection, with only 6% of its portfolio subject to calls over the next two
years. This should provide additional protection and stability for the Fund's
dividend over this period.
WHAT IS NUVEEN'S OUTLOOK FOR NIM?
In the months ahead, security selection within the housing, healthcare, and
utilities sectors and yield curve positioning will continue to be our dominant
strategies. We expect continued volatility in the healthcare and utilities
sectors, where our Nuveen Research capabilities will help us explore and select
the best opportunities. We also expect to continue finding attractive offerings
in the single family housing sector. Currently, we are concentrating many of our
investments in the 13- to 15-year range of the yield curve, which we believe
offers the best value.
The ability to implement strategies such as these demonstrates the value that
can be added by an active bond manager such as Nuveen. As an experienced
investment manager knowledgeable about the unique aspects of the municipal
market, we are in the marketplace every day, monitoring market dynamics, looking
for opportunities, and seeking to capitalize on them to the benefit of
shareholders.
1 The taxable-equivalent total return represents the total return that must be
earned on a taxable investment in order to equal the total return of the
Nuveen fund on an after-tax basis. The taxable-equivalent total return is
based on the annualized total return and a federal income tax rate of 31%.
5 The Bond Buyer Revenue Bond Index is an unmanaged index of long-term municipal
revenue bonds.
6 A fund's premium/discount represents the percentage difference between the
fund's share price and its net asset value (NAV).
<PAGE>
Nuveen Select Maturities Municipal Fund
Performance Overview
As of November 30, 1999
NIM
Portfolio Statistics
Inception Date 9/92
- --------------------------------------------------
Share Price $9 15/16
- --------------------------------------------------
Net Asset Value $11.46
- --------------------------------------------------
Market Yield 6.22%
- --------------------------------------------------
Taxable-Equivalent Yield
(Federal Tax Rate)1 9.01%
- --------------------------------------------------
Fund Net Assets ($000) $141,880
- --------------------------------------------------
Effective Maturity (Years) 11.85
- --------------------------------------------------
Duration 5.74
- --------------------------------------------------
Annualized Total Return
On Share Price On NAV
- --------------------------------------------------
1-Year -12.60% 0.68%
- --------------------------------------------------
5-Year 5.91% 7.04%
- --------------------------------------------------
Since Inception 3.07% 5.87%
- --------------------------------------------------
Taxable-Equivalent Total Return2
On Share Price On NAV
- --------------------------------------------------
1-Year -10.24% 3.04%
- --------------------------------------------------
5-Year 8.51% 9.52%
- --------------------------------------------------
Since Inception 5.57% 8.31%
- --------------------------------------------------
Top Five Sectors (as a % of total investments)
Utilities 24%
- --------------------------------------------------
Healthcare 14%
- --------------------------------------------------
U.S. Guaranteed 12%
- --------------------------------------------------
Housing/Single Family 11%
- --------------------------------------------------
Transportation 10%
- --------------------------------------------------
Bar Chart:
1998-1999 Monthly Tax-Free Dividends Per Share3
12/98 0.0505
1/99 0.0505
2/99 0.0515
3/99 0.0515
4/99 0.0515
5/99 0.0515
6/99 0.0515
7/99 0.0515
8/99 0.0515
9/99 0.0515
10/99 0.0515
11/99 0.0515
Line Chart:
Share Price Performance
12/1/98 12.13
11.94
12
12
11.75
11.5
11.44
11.5
11.75
11.88
11.81
11.81
11.63
11.63
11.56
11.69
11.63
11.5
11.63
11.69
11.94
11.69
11.5
11.56
11.56
11.5
11.5
11.38
11.38
11.44
11.5
11.38
11.25
10.94
10.75
10.75
10.69
10.63
10.31
10.19
10.38
10.44
10.13
10
10.31
10
10.13
10.06
10.13
11/30/99 9.9375
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
rate is based on the current market yield and a federal income tax rate of
31%.
2 Taxable-equivalent total return is based on the annualized total return and a
federal income tax rate of 31%. It represents the total return on a taxable
investment necessary to equal the total return of the Nuveen fund on an
after-tax basis.
3 The Fund also paid shareholders capital gains and net ordinary income
distributions in December 1998 of $0.0461 per share.
<PAGE>
<TABLE>
Portfolio of Investments
NUVEEN SELECT MATURITIES MUNICIPAL FUND (NIM)
November 30, 1999
(Unaudited)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arizona - 6.4%
$ 2,470,000 Arizona Educational Loan Marketing Corporation, Educational Loan 9/02 at 101 Aa $ 2,593,574
Revenue Bonds, 6.375%, 9/01/05 (Alternative Minimum Tax)
4,995,000 The Industrial Development Authority of the City of Phoenix, Arizona, 4/08 at 101 1/2 AAA 5,390,454
Statewide Single Family Mortgage Revenue Bonds, 1998 Series C,
6.650%, 10/01/29 (Alternative Minimum Tax)
1,185,000 The Industrial Development Authority of the City of Winslow, No Opt. Call N/R 1,134,045
Arizona, Hospital Revenue Bonds (Winslow Memorial Hospital Project),
Series 1998, 5.750%, 6/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
Arkansas - 1.2%
915,000 Arkansas Development Finance Authority, Single Family Mortgage 7/05 at 102 AAA 913,554
Revenue Bonds, 1995 Series B (Mortgage-Backed Securities Program),
6.200%, 1/01/21 (Alternative Minimum Tax)
770,000 Arkansas Student Loan Authority, Student Loan Revenue Bonds, 6/01 at 102 A 800,215
Series 1992A-2 (Subordinate), 6.750%, 6/01/06
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Colorado - 5.5%
City and County of Denver, Colorado, Airport System Revenue Bonds,
Series 1991A:
1,460,000 8.750%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 102 Aaa 1,606,672
4,040,000 8.750%, 11/15/23 (Alternative Minimum Tax) 11/01 at 102 BBB+ 4,374,391
702,832 El Paso County, Colorado, Single Family Mortgage Revenue Tax-Exempt No Opt. Call Aaa 741,572
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- 1,136,830
(Keystone Resorts Management, Inc. Project), Series 1990,
7.750%, 9/01/06
- ------------------------------------------------------------------------------------------------------------------------------------
District of Columbia - 3.7%
5,005,000 District of Columbia (Washington, D.C.), General Obligation No Opt. Call AAA 5,290,886
Refunding Bonds, Series 1993A, 6.000%, 6/01/07
- ------------------------------------------------------------------------------------------------------------------------------------
Florida - 4.1%
2,000,000 State of Florida, Faith and Credit, State Board of Education, Public No Opt. Call AAA 2,029,100
Education Capital Outlay Bonds, Series 1986-C, 7.100%, 6/01/07
3,500,000 Hillsborough County Industrial Development Authority, Pollution 5/02 at 103 AA 3,842,545
Control Revenue Refunding Bonds (Tampa Electric Company Project),
Series 1992, 8.000%, 5/01/22
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia - 7.1%
630,000 Urban Residential Finance Authority of the City of Atlanta, Revenue No Opt. Call N/R 642,096
Bonds (Landrum Arms Project), Series 1994, 6.750%, 7/01/04
5,755,000 Development Authority of Burke County, Georgia, Pollution Control 1/03 at 103 AAA 6,475,066
Revenue Bonds (Oglethorpe Power Corporation - Vogtle Project),
Series 1992, 8.000%, 1/01/15 (Pre-refunded to 1/01/03)
2,540,000 Municipal Electric Authority of Georgia, General Power Revenue Bonds, No Opt. Call AAA 2,909,138
1992B Series, 7.500%, 1/01/07
- ------------------------------------------------------------------------------------------------------------------------------------
Illinois - 12.0%
1,300,000 General Obligation Lease Certificates, 1992 Series A (Board of No Opt. Call AAA 1,380,730
Education of the City of Chicago, Illinois), 6.125%, 1/01/07
1,000,000 Chicago School Reform Board of Trustees of the Board of Education No Opt. Call AAA 1,084,960
of the City of Chicago, Illinois, Unlimited Tax General Obligation
Bonds, Series 1996, 6.250%, 12/01/11
2,445,000 Chicago Metropolitan Housing Development Corporation (Chicago, 7/03 at 100 AAA 2,429,279
Illinois), Housing Development Refunding Bonds (FHA-Insured
Mortgage Loan - Section 8 Assisted Project), Series 1993B,
5.700%, 1/01/13
<PAGE>
Portfolio of Investments
NUVEEN SELECT MATURITIES MUNICIPAL FUND (NIM) (continued)
November 30, 1999
(Unaudited)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois (continued)
$ 355,000 City of Danville, Vermilion County, Illinois, Single Family Mortgage 11/03 at 102 A1 $ 365,955
Revenue Refunding Bonds, Series 1993, 7.300%, 11/01/10
3,000,000 Illinois Development Finance Authority, Adjustable Rate Solid Waste No Opt. Call BBB 2,554,440
Disposal Revenue Bonds (Waste Management, Inc. Project),
Series 1997, 5.050%, 1/01/10 (Alternative Minimum Tax)
2,955,000 Illinois Development Finance Authority, Child Care Facility Revenue 9/02 at 102 N/R 3,014,041
Bonds, Series 1992 (Illinois Facilities Fund Project),
7.400%, 9/01/04
4,000,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, 8/09 at 101 A- 3,586,400
Series 1999 (Silver Cross Hospital and Medical Centers),
5.250%, 8/15/15
1,955,000 Illinois Housing Development Authority, Section 8 Elderly Housing 11/02 at 102 A 2,010,444
Revenue Bonds (Skyline Towers Apartments), Series 1992B,
6.625%, 11/01/07
400,000 City of Rock Island, Illinois, Residential Mortgage Revenue Refunding 9/02 at 102 Aa 415,384
Bonds, Series 1992, 7.700%, 9/01/08
- ------------------------------------------------------------------------------------------------------------------------------------
Indiana - 6.1%
2,000,000 Hospital Authority of Elkhart County, Indiana, Hospital Revenue 7/02 at 102 A1 2,138,060
Bonds, Series 1992 (Elkhart General Hospital, Inc.), 7.000%, 7/01/08
1,000,000 The Indianapolis Local Public Improvement Bond Bank, No Opt. Call AA 1,086,230
Series 1992D Bonds, 6.600%, 2/01/07
3,435,000 City of Indianapolis, Indiana, Multifamily Housing First Mortgage 5/09 at 102 A3 3,235,049
Revenue Bonds, Series 1999A (Keystone at Fall Creek Apartments),
6.400%, 5/01/19 (Alternative Minimum Tax)
2,100,000 The Indianapolis Local Public Improvement Bond Bank, Transportation 7/03 at 102 Aa2 2,199,057
Revenue Bonds, Series 1992, 6.000%, 7/01/10
- ------------------------------------------------------------------------------------------------------------------------------------
Maryland - 1.5%
2,000,000 Anne Arundel County, Maryland, Multifamily Housing Revenue No Opt. Call BBB 2,111,280
Bonds (Woodside Apartments Project), Series 1994, 7.450%, 12/01/24
(Alternative Minimum Tax) (Mandatory put 12/01/03)
- ------------------------------------------------------------------------------------------------------------------------------------
Mississippi - 0.8%
1,230,000 Mississippi Home Corporation, Single Family Mortgage Revenue Bonds, 6/09 at 102 Aaa 1,194,502
Series 1999A, 5.250%, 12/01/30 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Nebraska - 6.6%
1,500,000 American Public Energy Agency, Gas Supply Revenue Bonds No Opt. Call AAA 1,475,235
(Nebraska Public Gas Agency - Western A Project), 1999 Series A,
5.250%, 6/01/11
5,500,000 Energy America (Nebraska), Natural Gas Revenue Note (Metropolitan No Opt. Call N/R 5,311,900
Utility District Project), Series 1997B, 5.700%, 7/01/08
2,400,000 Airport Authority of the City of Omaha (Nebraska), Airport Facilities 1/02 at 102 A1 2,602,968
Revenue Refunding Bonds, Series 1991, 8.375%, 1/01/14
- ------------------------------------------------------------------------------------------------------------------------------------
New York - 9.7%
5,000,000 Erie County Industrial Development Agency, Solid Waste Disposal 12/10 at 103 N/R 5,390,850
Facility Revenue Bonds (1998 CanFibre of Lackawanna Project),
8.875%, 12/01/13 (Alternative Minimum Tax)
3,575,000 New York City Industrial Development Agency, Amended and Restated 11/04 at 102 N/R 3,721,253
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+ 2,041,020
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 No Opt. Call AAA 2,587,567
Plant (Serial) Bonds, Series 1994, 8.500%, 11/01/07
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio - 7.7%
2,000,000 Akron, Bath and Copley Joint Township Hospital District, Ohio, 11/02 at 102 Baa1 2,050,340
Hospital 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 996,610
1993 Series F (Emery Air Freight Corporation and Emery Worldwide
Airlines, Inc. Guarantors), 6.050%, 10/01/09
4,500,000 County of Hamilton, Ohio, Hospital Facilities Revenue Refunding No Opt. Call A 4,742,145
Bonds, Series 1992A (Bethesda Hospital, Inc.), 6.250%, 1/01/06
<PAGE>
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ohio (continued)
$ 2,120,000 Ohio Water Development Authority, Revenue Bonds, USA Waste 3/02 at 102 N/R $ 2,147,666
Services, Series 1992, 7.750%, 9/01/07 (Alternative Minimum Tax)
1,000,000 City of Oxford, Ohio, Water Supply System Mortgage Revenue 12/02 at 102 AAA 1,043,560
Refunding Bonds, Series 1992, 6.000%, 12/01/14
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 2.8%
1,740,000 Pennsylvania Higher Educational Facilities Authority, College and No Opt. Call Aaa 1,994,440
University Revenue Bonds, 9th Series, 7.625%, 7/01/15
2,000,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/09 at 100 AAA 1,981,460
Bonds, 1999 Series C, 5.150%, 4/01/21 (Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 2.1%
3,000,000 Rhode Island Housing and Mortgage Finance Corporation, 4/02 at 102 AA+ 3,011,100
Homeownership Opportunity Bonds, Series 7, 6.500%, 4/01/25
(Alternative Minimum Tax)
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina - 0.8%
1,125,000 Piedmont Municipal Power Agency (South Carolina), Electric No Opt. Call AAA 1,125,461
Revenue Bonds, 1993 Refunding Series, 5.500%, 1/01/13
- ------------------------------------------------------------------------------------------------------------------------------------
Texas - 8.1%
2,000,000 Alliance Airport Authority, Inc. (Texas), Special Facilities Revenue No Opt. Call Baa2 2,136,680
Bonds, Series 1991 (American Airlines, Inc. Project),
7.000%, 12/01/11 (Alternative Minimum Tax)
City of Austin, Texas, Water, Sewer and Electric Refunding Revenue
Bonds, Series 1982:
125,000 14.000%, 11/15/01 5/00 at 100 A*** 140,668
875,000 14.000%, 11/15/01 No Opt. Call A 969,220
570,000 Austin-Travis County Mental Health and Mental Retardation Center, 3/05 at 101 AAA 597,930
Revenue Bonds (Mental Health and Mental Retardation Center
Facilities Acquisition Program), Series 1995-A, 6.500%, 3/01/15
700,000 City of Galveston Property Finance Authority, Inc., Single Family 9/01 at 103 A3 735,385
Mortgage Revenue Bonds, Series 1991A, 8.500%, 9/01/11
1,000,000 Texas Community Mental Health and Mental Retardation Centers, 3/05 at 101 AAA 1,049,000
Revenue Bonds (Mental Health and Mental Retardation Center
Facilities Acquisition Program), Series 1995A-E, 6.500%, 3/01/15
3,135,000 Retama Development Corporation, Special Facilities Revenue 12/11 at 100 AAA 4,123,998
Bonds (Retama Park Racetrack Project), Series 1993,
8.750%, 12/15/11 (Pre-refunded to 12/15/11)
900,000 Travis County Health Facilities Development Corporation, Hospital 11/03 at 102 Aa 936,270
Revenue Bonds (Daughters of Charity National Health System -
Daughters of Charity Health Services of Austin), Series 1993B,
5.900%, 11/15/07
775,000 Tri-County Mental Health and Mental Retardation Services, 3/05 at 101 AAA 812,975
Revenue Bonds (Mental Health and Mental Retardation Center
Facilities Acquisition Program), Series 1995-E, 6.500%, 3/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
Utah - 1.4%
2,055,000 City of Bountiful, Davis County, Utah, Hospital Revenue Refunding No Opt. Call N/R 1,933,241
Bonds (South Davis Community Hospital Project), Series 1998,
6.000%, 12/15/10
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia - 1.5%
2,000,000 Hampton Redevelopment and Housing Authority, Multifamily 7/02 at 104 Baa2 2,110,100
Housing Revenue Refunding Bonds, Series 1994
(Chase Hampton II Apartments), 7.000%, 7/01/24
(Mandatory put 7/01/04)
- ------------------------------------------------------------------------------------------------------------------------------------
Washington - 8.8%
1,255,000 Public Utility District No. 1 of Douglas County, Washington, 9/00 at 102 AA- 1,307,170
Wells Hydro-Electric Revenue Bonds, Series of 1990,
7.700%, 9/01/08 (Alternative Minimum Tax)
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 2,788,100
3,000,000 7.000%, 7/01/08 No Opt. Call Aa1 3,360,060
<PAGE>
Portfolio of Investments
NUVEEN SELECT MATURITIES MUNICIPAL FUND (NIM) (continued)
November 30, 1999
(Unaudited)
<CAPTION>
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Washington (continued)
$ 7,000,000 Washington Public Power Supply System, Nuclear Project No. 3 No Opt. Call Aa1 $ 4,979,030
Refunding Revenue Bonds, Series 1990B, 0.000%, 7/01/06
- ------------------------------------------------------------------------------------------------------------------------------------
$ 134,622,832 Total Investments - (cost $136,574,584) - 97.9% 138,889,351
============= --------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.1% 2,991,005
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $141,880,356
====================================================================================================================
* 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.
*** Securities are backed by an escrow or trust containing
sufficient U.S. government or U.S. government agency
securities which ensures the timely payment of
principal and interest. Securities are normally
considered to be equivalent to AAA rated securities.
N/R Investment is not rated.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Statement of Net Assets
November 30, 1999
(Unaudited)
Assets
Investments in municipal securities, at market value (note 1) $138,889,351
Cash 1,059,605
Receivables:
Interest 2,687,540
Investments sold 10,193
Other assets 6,432
------------
Total assets 142,653,121
------------
Liabilities
Accrued expenses:
Management fees (note 6) 58,022
Other 77,144
Dividends payable 637,599
------------
Total liabilities 772,765
------------
Net assets (note 7) $141,880,356
============
Shares outstanding 12,380,786
============
Net asset value per share outstanding (net assets divided by
shares outstanding) $ 11.46
============
See accompanying notes to financial statements.
<PAGE>
Statement of Operations
Six Months Ended November 30, 1999
(Unaudited)
Investment Income (note 1) $ 4,316,396
-----------
Expenses
Management fees (note 6) 357,486
Shareholders' servicing agent fees and expenses 9,121
Custodian's fees and expenses 39,271
Trustees' fees and expenses (note 6) 712
Professional fees 8,138
Shareholders' reports - printing and mailing expenses 31,241
Stock exchange listing fees 12,173
Investor relations expense 5,728
Other expenses 1,977
-----------
Total expenses before custodian fee credit 465,847
Custodian fee credit (17,652)
-----------
Net expenses 448,195
-----------
Net investment income 3,868,201
-----------
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from investment transactions
(notes 1 and 4) (69,058)
Change in net unrealized appreciation or
depreciation of investments (4,723,428)
-----------
Net gain (loss) from investments (4,792,486)
-----------
Net increase (decrease) in net assets from operations $ (924,285)
===========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Statement of Changes in Net Assets
(Unaudited)
<CAPTION>
Six Months Ended Year Ended
11/30/99 5/31/99
------------- -------------
<S> <C> <C>
Operations
Net investment income $ 3,868,201 $ 7,626,693
Net realized gain (loss) from investment transactions (notes 1 and 4) (69,058) 1,438,656
Change in net unrealized appreciation or depreciation of investments (4,723,428) (2,280,064)
Net increase (decrease) in net assets from operations (924,285) 6,785,285
------------- -------------
Distributions to Shareholders (note 1)
From undistributed net investment income (3,825,665) (7,597,460)
From accumulated net realized gains from investment transactions -- (521,817)
Decrease in net assets from distributions to shareholders (3,825,665) (8,119,277)
------------- -------------
Capital Share Transactions (note 2)
Net proceeds from shares issued to shareholders due to
reinvestment of distributions -- 122,201
------------- -------------
Net increase (decrease) in net assets (4,749,950) (1,211,791)
Net assets at the beginning of period 146,630,306 147,842,097
------------- -------------
Net assets at the end of period $ 141,880,356 $ 146,630,306
============= =============
Balance of undistributed net investment income at the end of period $ 151,981 $ 109,445
============= =============
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").
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, 1999, the Fund had no such outstanding 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 monthly as a dividend 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, 1999.
Custodian Fee Credit
The Fund has an arrangement with the custodian bank whereby the custodian fees
and expenses are reduced by credits earned on the Fund's cash on deposit with
the bank. Such deposit arrangements are an alternative to overnight investments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates.
2. Fund Shares
During the fiscal year ended May 31, 1999, 10,151 shares were issued to
shareholders due to reinvestment of distributions. There were no such
transactions during the six months ended November 30, 1999.
3. Distributions to Shareholders
The Fund declared a dividend distribution of $.0515 per share from its
tax-exempt net investment income which was paid on December 23, 1999, to
shareholders of record on December 15, 1999. At the same time, the Fund also
declared taxable distributions, which include capital gains and/or market
discount, of $.1030 per share.
4. Securities Transactions
Purchases and sales (including maturities) of investments in intermediate-term
municipal securities for the six months ended November 30, 1999, aggregated
$3,168,605 and $2,298,037, respectively.
At November 30, 1999, the identified cost of investments owned for federal
income tax purposes was $136,649,501.
5. Unrealized Appreciation (Depreciation)
At November 30, 1999, net unrealized appreciation of investments for federal
income tax purposes aggregated $2,239,850 of which $4,522,684 related to
appreciated securities and $2,282,834 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 assets of the Fund as follows:
Average Daily Net Assets 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.
<PAGE>
Notes to Financial Statements (continued)
(Unaudited)
7. Composition of Net Assets
At November 30, 1999, the Fund had an unlimited number of $.01 par value shares
authorized. Net assets consisted of:
Common shares, $.01 par value per share $ 123,808
Paid-in surplus 138,159,319
Balance of undistributed net investment income 151,981
Accumulated net realized gain from investment transactions 1,130,481
Net unrealized appreciation of investments 2,314,767
------------
Net assets $141,880,356
============
8. Investment Composition
At November 30, 1999, the revenue sources by municipal purpose, expressed as a
percent of intermediate-term investments, were as follows:
Capital Goods 3%
Health Care 14
Housing/Multifamily 9
Housing/Single Family 11
Tax Obligation/General 6
Tax Obligation/Limited 6
Transportation 10
U.S. Guaranteed 12
Utilities 24
Other 5
----
100%
====
In addition, 30% of the 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>
<TABLE>
Financial Highlights
(Unaudited)
Selected data for a share outstanding throughout each period:
<CAPTION>
Investment Operations Less Distributions
------------------------------------ ---------------------------------
Net
Realized/
Beginning Net Unrealized Net
Net Asset Investment Investment Investment Capital
Value Income Gain (Loss) Total Income Gains Total
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended 5/31:
2000 (a) $11.84 $.31 $(.38) $(.07) $(.31) $-- $(.31)
1999 11.95 .61 (.07) .54 (.61) (.04) (.65)
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)
<PAGE>
<CAPTION>
Total Returns
------------------------------
Ending Ending Based on
Net Asset Market Based on Net Asset
Value Value Market Value+ Value+
<S> <C> <C> <C> <C>
Year Ended 5/31:
2000 (a) $11.46 $ 9.9375 (11.51)% (.59)%
1999 11.84 11.5625 6.87 4.64
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
<PAGE>
<CAPTION>
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------
Before Credit After Credit**
----------------------------- ------------------------------
Ratio of Net Ratio of Net
Ratio of Investment Ratio of Investment
Ending Expenses to Income to Expenses to Income to Portfolio
Net Assets Average Average Average Average Turnover
(000) Net Assets Net Assets Net Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Year Ended 5/31:
2000 (a) $141,880 .65%* 5.35%* .62%* 5.38%* 2%
1999 146,630 .63 5.14 .62 5.15 31
1998 147,842 .65 5.17 .65 5.17 13
1997 144,775 .64 5.35 .64 5.35 17
1996 143,364 .63 5.45 .63 5.45 25
1995 144,987 .65 5.64 .65 5.64 38
* Annualized.
** After custodian fee credit, where applicable (note 1).
+ 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.
(a) For the six months ended November 30, 1999.
</TABLE>
<PAGE>
Build Your Wealth Automatically
Nuveen Exchange-Traded Funds Dividend Reinvestment Plan
Your Nuveen Exchange-Traded Fund allows you to conveniently reinvest dividends
and/or capital gains distributions in additional fund shares. If you do not
elect to reinvest distributions, all distributions are paid by check or can be
deposited directly into your bank or brokerage account.
By choosing to reinvest, you'll be able to invest money regularly and
automatically, and watch your investment grow through the power of tax-free
compounding. You'll also potentially benefit from dollar-cost averaging, a
technique of investing at regular intervals, which allows you to build a
high-quality, tax-free portfolio conveniently and cost effectively over time.
Dollar-cost averaging does not ensure a profit, nor does it protect you against
loss in a declining market. Because such a plan involves continuous investment
regardless of fluctuating prices, investors should consider their financial
ability to continue purchases through periods of low price levels.
Easy and convenient
To make recordkeeping easy and convenient, each month you'll receive a statement
showing your total dividends and distributions, the date of investment, the
shares acquired and the price per share, and the total number of shares you own.
Income or capital gains taxes may be payable on dividends or distributions that
are reinvested.
How shares are purchased
The shares you acquire by reinvesting will either be purchased on the open
market or newly issued by the Fund. If the shares are trading at or above net
asset value at the time of valuation, the Fund will issue new shares at the
then-current market price. If the shares are trading at less than net asset
value, shares for your account will be purchased on the open market. Dividends
and distributions received to purchase shares in the open market will normally
be invested shortly after the dividend payment date. No interest will be paid on
dividends and distributions awaiting reinvestment. Because the market price of
shares may increase before purchases are completed, the average purchase price
per share may exceed the market price at the time of valuation, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the fund. A pro rata portion of any applicable brokerage
commissions on open market purchases will be paid by Plan participants. These
commissions usually will be lower than those charged on individual transactions.
Flexibility
You may, of course, change your distribution option or withdraw from the Plan at
any time, should your needs or situation change. Should you withdraw, you can
receive a certificate for all whole shares credited to your reinvestment account
and cash payment for fractional shares, or cash payment for all reinvestment
account shares, less brokerage commissions and a $2.50 service fee.
You can also reinvest if your shares are registered in the name of a brokerage
firm, bank, or other nominee. Just ask your investment adviser if the firm will
participate on your behalf. If not, it's easy to have the shares registered in
your name and to apply for a reinvestment account directly. Participants whose
shares are registered in the name of one firm may not be able to transfer the
shares to another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although
the Fund reserves the right to amend the Plan to include a service charge
payable by the participants, there is no direct service charge to participants
in the Plan at this time.
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in
or withdraw from the Plan, speak with your financial adviser or call us at (800)
257-8787.
Sidebar text: Nuveen offers a number of convenient ways to add to your portfolio
and earn the tax-free income you need to achieve your financial goals.
Sidebar text: Nuveen makes reinvesting easy. A phone call is all it takes to set
up your reinvestment account.
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Fund Information
BOARD OF TRUSTEES
Robert P. Bremner
Lawrence H. Brown
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
FUND POLICIES
The Board of Trustees of your Fund recently modified certain investment policies
of the Fund. The Fund was formerly not permitted to invest more than 5% of its
total assets in Municipal Leases that contain "non-appropriation" clauses. In
addition, your Fund was not permitted to invest more than 10% of its total
assets in Municipal Leases and securities that are unmarketable, illiquid or not
readily marketable. The Municipal Lease market has matured since the Fund's
inception, and non-appropriation leases have become more liquid and widely
accepted. The Nuveen Exchange-Traded Fund Board has eliminated the restrictions
noted above, replacing them with requirements that the Funds limit investments
in non-appropriation Municipal Leases to those that meet one or more of six
criteria that indicate that the issuer will be motivated to continue to
appropriate monies to make the payments under the Municipal Lease.
The Board also eliminated the Fund's policy not to invest more than 5% of its
total assets in unsecured obligations of issuers which, together with their
predecessors, have been in operation for less than three years.
Each fund intends to repurchase shares of its own common or preferred stock in
the future at such times and in such amounts as is deemed advisable. No shares
were repurchased during the 6-month period ended November 30, 1999. Any future
repurchases will be reported to shareholders in the next annual or semiannual
report.
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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.
LOGO: NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
FSA-1-11-99
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