LOGO: NUVEEN
NUVEEN Investment
ANNUAL REPORT May 31, 2000
Exchange-Traded Funds
Dependable, tax-free income to help
you keep more of what you earn.
SELECT MATURITIES
NIM
Photo of: WATER
Photo of: CHESS PLAYERS
INVEST WELL.
LOOK AHEAD.
LEAVE YOUR MARK.sm
<PAGE>
Credit Quality
HIGHLIGHTS As of May 31, 2000
NUVEEN SELECT MATURITIES
MUNICIPAL FUND (NIM)
Pie Chart:
AAA/U.S. Guaranteed 40%
AA 19%
A 17%
BBB/NR 24%
CONTENTS
1 Dear Shareholder
3 Portfolio Managers'
Comments
6 NIM Performance
Overview
7 Shareholder
Meeting Report
8 Report of
Independent
Auditors
9 Portfolio of
Investments
13 Statement of
Net Assets
13 Statement of
Operations
14 Statement
of Changes
in Net Assets
15 Notes to Financial
Statements
18 Financial Highlights
20 Build Your Wealth
Automatically
21 Fund Information
<PAGE>
Dear
SHAREHOLDER
Photo of: Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
sidebar:
"BUILDING AND SUSTAINING WEALTH REQUIRES SOUND, ONGOING ADVICE."
The primary objective of your Nuveen Municipal Exchange-Traded Fund is to
provide dependable, attractive tax-free dividends. I am very happy to report
that your Fund continued to achieve this goal during the period covered by this
report. For more specifics on this performance, I encourage you to read the
Portfolio Manager's Comments and Performance Overview pages for your Fund that
follow this letter.
We believe that your Nuveen Exchange-Traded Fund, as an income-oriented
investment, is well positioned to be a core element of your long-term investment
program. With the help of your financial advisor, all of us at Nuveen
Investments are dedicated to providing the services, products, perspectives, and
solutions that you need to help you meet your personal and family goals.
NEW WAYS TO THINK ABOUT WEALTH
Over the past few years, much attention has been directed toward the ways
investors are accumulating wealth. At Nuveen, we believe it is equally important
for investors to focus on preserving that wealth, on the responsibilities that
accompany wealth, and on the legacies we will leave for future generations.
This long-term perspective is key to understanding our portfolio management
strategies, our insistence on quality, and our determination to provide
investments that can withstand the test of time. It is a philosophy that we
think is well encapsulated in our brand theme: Invest Well. Look Ahead. Leave
Your Mark.
INVEST WELL
Building and sustaining the wealth that can result in lasting legacies requires
a well-developed plan, sound ongoing advice, and the discipline to remain
focused on long-term results. With today's abundance of investment products and
offers, it also increasingly requires an experienced and trusted advisor who can
guide you through the opportunities and the pitfalls. With so much potentially
at stake, Nuveen Investments is dedicated to delivering quality products like
your Nuveen Fund through the financial advisors who assist you in making wise
investment choices and help you manage your most important financial assets.
<PAGE>
sidebar:
"WE BELIEVE YOUR NUVEEN EXCHANGE- TRADED FUND IS WELL POSITIONED TO BE A CORE
ELEMENT OF YOUR LONG-TERM INVESTMENT PROGRAM."
LOOK AHEAD
We urge all our investors to look ahead, not only toward their own goals and
futures, but those of future generations as well. We now stand on the threshold
of a new century, anticipating a time of change, discovery, and potential that
may one day make the year 2000 seem as archaic as the year 1900. While we cannot
know all that the future will bring, we do know that a well-diversified, care
fully monitored investment program that combines elements of growth, income, and
capital preservation forms a solid foundation that can help us meet whatever
opportunities and challenges the new century has to offer.
LEAVE YOUR MARK
With the enormous wealth creation of the past decade and the considerable
intergenerational transfer of wealth that is expected to occur over the next 20
years, investors today have a significant opportunity to shape the financial
future for themselves and their families. These opportunities may include
establishing trusts, endowments, or legacies that can directly affect our
families and communities for generations to come. We at Nuveen Investments are
committed to facilitating and raising the level of dialogue between investors
and their financial advisors in ways that help meet goals that extend far beyond
the boundaries of a single life span.
Since 1898, the name Nuveen has been synonymous with quality investments,
careful research and prudent management. Today, more than ever, the investments
and services we offer through financial advisors are designed to be well suited
to those who recognize and embrace the need for building and managing wealth. We
encourage you to speak with your financial advisor about how you can enhance
your investment program in ways that can help you Invest Well, Look Ahead, and
Leave Your Mark.
Sincerely,
/s/Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
July 17, 2000
<PAGE>
Nuveen Select Maturities Municipal Fund (NIM)
Portfolio Manager's
COMMENTS
Portfolio manager Ted Neild reviews the national economy, its impact on the
municipal market and Fund performance, and the key strategies used to manage 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 U.S. ECONOMY OVER THE PAST YEAR?
The U.S. economy is now in its tenth year of uninterrupted expansion, the
longest continuous economic expansion in the nation's history. Over the past 12
months, the rapid pace of this expansion has been of immense concern to the
Federal Reserve, which watched carefully for any signs that the booming economy
was about to trigger a resurgence of inflation. The shift in financial market
sentiment to worries about runaway growth and inflationary pressures was a
marked contrast to the concerns about slower growth and deflation that followed
the global financial crisis of 1998. The primary catalysts behind this shift
were robust consumer spending and tight labor markets, compounded by rising
commodity prices, the quick recovery of the global economy following the 1998
events, and the accelerating effect of excess cash intended to ensure liquidity
during the transition to the year 2000.
All of this prompted the Federal Reserve to embark on a tightening path. In June
1999, the Fed began a series of six short-term interest rate increases that
eventually raised the federal funds rate by 1.75% to 6.50%, the highest level in
almost a decade. As the Fed acted and then signaled its willingness to continue
tightening, investor uncertainty grew, the equity markets became increasingly
volatile, and bond prices declined as market yields pushed higher. The shift in
the economic land scape has been complicated by the rapidly shrinking supply of
long-term Treasuries, as the U.S. Government accelerated its program to buy back
Treasury debt. This has created some severe dislocations within and between
Treasuries and other bond markets. The Fed's rate hikes left the Treasury yield
curve inverted, with the yield on a two-year note about 60 basis points higher
than that of a 30-year bond as of the end of May.
While many of the growth trends and the relatively benign inflation that have
been the hallmarks of the decade-long expansion remain in place, we have
recently seen some indications that the Fed's tightening strategy may be having
the desired effect of slowing the economy. Investors continue to hope that the
Fed's actions will result in a "soft landing" - a cooling that keeps the economy
growing while inflation stays in check.
HOW HAVE THESE EVENTS IMPACTED THE MUNICIPAL MARKET?
The cumulative effect was negative for the fixed-income markets in general,
including municipal bonds. Once the Fed began its series of interest rate hikes,
the rise in municipal yields accelerated. Over the 12 months ending May 2000,
long-term municipal yields rose almost 75 basis points, compared with a gain of
about 20 points in 30-year Treasury yields. The Treasury market was affected
during the period by the announcement that the U.S. Treasury would be buying
back a substantial amount of U.S. Government debt and reduce additional new
issuance of certain maturities. The possibility of decreased supply helped
support Treasury bond prices. Municipals were unaffected by this repurchase
policy and therefore were subject to the full effect of market forces. As a
result, by the end of May 2000, long-term municipal yields were 103% of 30-year
Treasury yields, compared with the historical average of 86% for the period
1986-1999.
<PAGE>
During the first five months of 2000, new municipal issuance declined 24% from
the level of the same period in 1999. This continued the trend begun late last
year, as the rising interest rate environment deterred municipalities from
issuing new bonds or refinancing old debt. In addition, robust tax revenue
collections have enabled many state and local governments to use more
pay-as-you-go financings rather than bond issuance to fund projects. Overall,
the decline in supply helped to offset some of the negative impact that higher
interest rates and equity market activity had on the demand for municipal bonds
and, ultimately, on bond prices.
According to the most recent data released by the Federal Reserve Board, demand
for municipal bonds on the part of individual investors continued to grow in
1999, maintaining a trend seen over the past four years. While total U.S.
municipal debt grew by 5% in 1999, holdings by individual investors rose by 11%.
As of January 2000, individual investors directly held about 34% of the
outstanding municipal debt in the U.S. This provided some support for a
municipal market experiencing a decline in demand from institutional investors.
Reduced buying by mutual and money market funds, which at year end combined to
account for 29% of municipal debt holdings, reflected the lower demand for bond
funds. Property and casualty insurance companies were the fourth largest group
of municipal bond holders with 14%.
The economic prosperity of the past decade has benefited all sectors of the
municipal bond market, resulting in upgrades in debt ratings. In 1999, upgrades
by Standard & Poor's outnumbered downgrades by a ratio of almost 4 to 1. In
fact, the fourth quarter of 1999 marked the 17th consecutive quarter in which
upgrades exceeded downgrades. The tax-backed sector, which includes general
obligation bonds issued by states, local munici palities, and school and special
purpose districts, fared particularly well in 1999, with upgrades outnumbering
downgrades 30 to 1.
WAS NIM'S DIVIDEND AFFECTED BY THIS ENVIRONMENT?
The events of the past year provided some opportunities to trade for higher
yielding bonds and generate additional income within the portfolio. As a result,
the Fund was able to increase its dividend in March 2000. As of May 31, 2000,
NIM had provided shareholders with 29 consecutive months of steady or increasing
dividends. Currently, the portfolio enjoys good call protection, which should
help us retain higher yielding bonds within the portfolio for years to come.
OVERALL, HOW DID NIM PERFORM OVER THE PAST YEAR?
For the 12 months ended May 31, 2000, NIM produced a total return on net asset
value (NAV) as shown in the accompanying table. For comparison purposes, the
annual returns for the Lehman Brothers Municipal Bond Index1 and Lipper Peer
Group2 are also presented.
LEHMAN
TOTAL LIPPER
MARKET YIELD TOTAL RETURN ON NAV RETURN1 AVERAGE2
-------------------------------------------------------------------------------
1 YEAR 1 YEAR 1 YEAR
TAXABLE- ENDED TAXABLE- ENDED ENDED
5/31/00 EQUIVALENT3 5/31/00 EQUIVALENT3 5/31/00 5/31/00
-------------------------------------------------------------------------------
NIM 6.18% 8.96% 0.43% 2.86% -0.24% -1.34%
-------------------------------------------------------------------------------
Past performance is not predictive of future results.
For additional information, see the Performance Overview for NIM in this report.
Since NIM is a fund with intermediate-term character istics, it's best to
compare its performance with other intermediate-term investments. As the chart
shows, NIM produced a slightly better total return on net asset value over the
year ended May 31, 2000, than the unmanaged Lehman Brothers Municipal Bond
7-Year Index. We believe this advantage is primarily due to some of the steps
we've taken over the past year to enhance portfolio income and increase the
Fund's dividend.
WHAT ABOUT NIM'S SHARE PRICE PERFORMANCE?
Over the past 12 months, the uncertain economic environment, coupled with
investors' focus on equity market performance, tended to dampen interest in most
fixed-income products. The lack of demand put pressure on the prices of many
municipal bond investments, including NIM. As shown in the chart on NIM's
Performance Overview page, the Fund's share price gradually declined over the
past year. This share price decline was greater than the decline in NIM's NAV.
As
1 NIM's performance is compared with that of the Lehman Brothers Municipal
Bond 7-Year Index, an unleveraged index comprising a broad range of
investment-grade municipal bonds with maturities ranging between six and
eight years. Results for the Lehman index do not reflect any expenses.
2 NIM's total return is compared with the average annualized return of the 16
funds in the Lipper General and Insured Unleveraged Municipal Debt Funds
category. Most of these Funds in the Lipper category hold longer-term
bonds, which generally will make them more sensitive to interest rate
movements. Both Fund and Lipper returns assume reinvestment of dividends.
3 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 market yield on the
indicated date and a federal income tax rate of 31%, while the
taxable-equivalent total return is based on the annualized total return as
of the indicated date and the 31% federal income tax rate.
<PAGE>
a result, NIM saw its discount (share price below NAV) widen over the past year.
With the market price of this Fund now lower than the actual value of the bonds
in its portfolio, shareholders may want to consider taking advantage of this
opportunity to add to their holdings of NIM.
WHAT KEY STRATEGIES WERE USED TO MANAGE NIM DURING THE 12 MONTHS ENDED MAY 31,
2000?
The past 12 months represented a challenging period for all fixed-income
investments. In NIM, our primary focus was on meeting the Fund's objective of
investing in bonds with intermediate maturities that have the potential to
provide the highest possible yields and total returns, while trying to minimize
the Fund's exposure to interest rate and yield curve changes. We also took
advantage of opportunities presented by the market to improve the Fund's
structure, provide additional diversifi cation, strengthen the Fund's long-term
dividend-paying capabilities, and enhance tax efficiency by offsetting potential
capital gains with capital losses.
We continued to watch the market for buying opportunities, especially in
healthcare and utilities issues along the intermediate part of the yield curve,
where trading can be less efficient. At the end of May 2000, these two sectors
together accounted for 33% of the Fund's investments. Both sectors have been
under considerable pressure from deregulation, which resulted in bonds from a
number of strong issuers coming into the market at what we believed to be very
attractive prices relative to their underlying value. Nuveen's experienced
Research team provided an advantage in this area, helping us identify attractive
situations and supplying the background we needed to understand issuers. We also
took advantage of some opportunities in the multi-family housing sector,
particularly in the non-rated and lower-rated segments of this market. Many
federally sponsored housing programs are currently undergoing changes, and we
believe this is creating opportunities that the market has not yet recognized.
Another strategy we employed over the past year involved the purchase of
"cushion" bonds - these generally are higher coupon bonds trading at prices
above their face value but usually subject to calls in the near future. By
balancing these higher-coupon bonds with current coupon bonds offering better
call protection, we were able to enhance the Fund's total return on NAV. As the
Fed's interest rate tightening precipitated changes in the yield curve, we also
took advantage of the opportunity to move to some bonds with maturities of 18 to
20 years without changing the intermediate characteristics of the Fund as a
whole.
As of May 31, 2000, NIM offered good credit quality, with 59% of its assets
invested in bonds rated AAA/U.S. guaranteed or AA. This was balanced by a 24%
allocation of BBB/non-rated bonds that generally provided higher yields,
especially as credit spreads widened in recent months.
WHAT IS YOUR OUTLOOK FOR NIM?
With its intermediate-term, defensive structure, NIM may be an ideal choice for
the investor looking for lower volatility in a fixed-income investment. We
believe the intermediate part of the yield curve will continue to be a less
efficient portion of the market, which should provide us with additional
opportunities to find value. NIM currently offers excellent levels of call
protection, with only about 8% of its portfolio subject to bond calls between
now and the end of 2001.
Overall, we plan to focus on the same strategies that we have emphasized over
the past year, including improving fund structure and strengthening
dividend-payment capabilities. We expect the market to continue to work its way
through a period of uncertainty that may last beyond the fall elections. In
these types of markets, opportunities often arise, and we are prepared to take
advantage of developing situations. We believe NIM is well positioned to provide
attractive income and a measure of portfolio diversification that can be a
valuable benefit to investors now and in the years ahead.
<PAGE>
NIM
Nuveen Select Maturities Municipal Fund
Performance
OVERVIEW As of May 31, 2000
PORTFOLIO STATISTICS
==================================================
Inception Date 9/92
--------------------------------------------------
Share Price $10 3/16
--------------------------------------------------
Net Asset Value $11.16
--------------------------------------------------
Market Yield 6.18%
--------------------------------------------------
Taxable-Equivalent Yield
(Federal Income Tax Rate)1 8.96%
--------------------------------------------------
Fund Net Assets ($000) $138,149
--------------------------------------------------
Average Effective Maturity (Years) 11.61
--------------------------------------------------
Average Duration 5.63
==================================================
ANNUALIZED TOTAL RETURN
==================================================
ON SHARE PRICE ON NAV
==================================================
1-Year -5.48% 0.43%
--------------------------------------------------
5-Year 4.38% 4.90%
--------------------------------------------------
Since Inception 3.75% 5.62%
--------------------------------------------------
TAXABLE-EQUIVALENT TOTAL RETURN2
==================================================
ON SHARE PRICE ON NAV
==================================================
1-Year -2.99% 2.86%
--------------------------------------------------
5-Year 6.97% 7.36%
--------------------------------------------------
Since Inception 6.27% 8.07%
==================================================
TOP FIVE SECTORS (AS A % OF TOTAL INVESTMENTS)
==================================================
Utilities 21%
--------------------------------------------------
U.S. Guaranteed 13%
--------------------------------------------------
Healthcare 12%
--------------------------------------------------
Transportation 10%
--------------------------------------------------
Housing/Single Family 10%
==================================================
Bar Chart:
1999-2000 MONTHLY TAX-FREE DIVIDENDS PER SHARE(3)
6/99 0.0515
7/99 0.0515
8/99 0.0515
9/99 0.0515
10/99 0.0515
11/99 0.0515
12/99 0.0515
1/00 0.0515
2/00 0.0515
3/00 0.0525
4/00 0.0525
5/00 0.0525
Line Chart:
SHARE PRICE PERFORMANCE
6/4/99 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
9.94
9.38
9.81
9.5
10.06
9.75
9.81
10
10.06
9.88
9.88
10.13
10.31
10.25
10.31
10.38
10.63
10.56
10.31
10.31
10.38
10.19
10.19
10.13
10.25
5/31/00 10.1875
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. It
is calculated using 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 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 a capital gains distribution in December
1999 of $.1030 per share.
<PAGE>
Shareholder
MEETING REPORT
The Shareholder Meeting was held November 18, 1999 in Chicago at Nuveen's
headquarters.
NIM
--------------------------------------------------------------------------------
APPROVAL OF THE TRUSTEES WAS REACHED AS FOLLOWS:
Common
Shares
================================================================================
Robert P. Bremner
For 10,992,844
Withhold 99,870
--------------------------------------------------------------------------------
Total 11,092,714
================================================================================
Lawrence H. Brown
For 11,019,385
Withhold 73,329
--------------------------------------------------------------------------------
Total 11,092,714
================================================================================
Anne E. Impellizzeri
For 11,020,785
Withhold 71,929
--------------------------------------------------------------------------------
Total 11,092,714
================================================================================
Peter R. Sawers
For 11,020,785
Withhold 71,929
--------------------------------------------------------------------------------
Total 11,092,714
================================================================================
William J. Schneider
For 11,024,785
Withhold 67,929
--------------------------------------------------------------------------------
Total 11,092,714
================================================================================
Timothy R. Schwertfeger
For 11,026,882
Withhold 65,832
--------------------------------------------------------------------------------
Total 11,092,714
================================================================================
Judith M. Stockdale
For 11,020,785
Withhold 71,929
--------------------------------------------------------------------------------
Total 11,092,714
================================================================================
RATIFICATION OF AUDITORS WAS REACHED AS FOLLOWS:
For 11,001,170
Against 40,968
Abstain 50,576
--------------------------------------------------------------------------------
Total 11,092,714
================================================================================
<PAGE>
Report of
INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
NUVEEN SELECT MATURITIES MUNICIPAL FUND
We have audited the accompanying statement of net assets, including the
portfolio of investments, of Nuveen Select Maturities Municipal Fund as of May
31, 2000, and the related statement of operations, statement of changes in net
assets and the financial highlights for the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of May
31, 2000, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Nuveen
Select Maturities Municipal Fund at May 31, 2000, and the results of its
operations, changes in its net assets and financial highlights for the periods
indicated therein in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
July 20, 2000
<PAGE>
Nuveen Select Maturities Municipal Fund (NIM)
Portfolio of
INVESTMENTS May 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARIZONA - 6.4%
$ 2,470 Arizona Educational Loan Marketing Corporation, Educational Loan 9/02 at 101 Aa2 $2,531,775
Revenue Bonds, 6.375%, 9/01/05 (Alternative Minimum Tax)
4,925 The Industrial Development Authority of the City of Phoenix, 4/08 at 101 1/2 AAA 5,194,989
Statewide Single Family Mortgage Revenue Bonds, 1998 Series C,
6.650%, 10/01/29 (Alternative Minimum Tax)
1,185 The Industrial Development Authority of the City of Winslow, Hospital No Opt. Call N/R 1,085,650
Revenue Bonds (Winslow Memorial Hospital Project), Series 1998,
5.750%, 6/01/08
-----------------------------------------------------------------------------------------------------------------------------------
ARKANSAS - 0.6%
770 Arkansas Student Loan Authority, Student Loan Revenue Bonds, 6/01 at 102 A 788,927
Series 1992A-2 (Subordinate),
6.750%, 6/01/06 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
COLORADO - 5.5%
City and County of Denver, Airport System Revenue Bonds, Series 1991A:
1,460 8.750%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 102 Aaa 1,565,310
4,040 8.750%, 11/15/23 (Alternative Minimum Tax) 11/01 at 102 A 4,288,945
639 El Paso County, Single Family Mortgage Revenue Tax-Exempt No Opt. Call Aaa 664,652
Refunding Bonds, Series 1992A, Class A-2, 8.750%, 6/01/11
1,000 Summit County, Sports Facilities Refunding Revenue Bonds No Opt. Call BBB+ 1,103,630
(Keystone Resorts Management, Inc. Project), Series 1990,
7.750%, 9/01/06
-----------------------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA - 3.8%
5,005 District of Columbia (Washington, D.C.), General Obligation No Opt. Call AAA 5,182,527
Refunding Bonds, Series 1993A, 6.000%, 6/01/07
-----------------------------------------------------------------------------------------------------------------------------------
FLORIDA - 4.2%
2,000 State of Florida, Faith and Credit, State Board of Education, 6/00 at 100 AAA 2,027,820
Public Education Capital Outlay Bonds, Series 1986-C,
7.100%, 6/01/07
3,500 Hillsborough County Industrial Development Authority, Pollution 5/02 at 103 AA 3,795,365
Control Revenue Refunding Bonds (Tampa Electric Company Project),
Series 1992, 8.000%, 5/01/22
-----------------------------------------------------------------------------------------------------------------------------------
GEORGIA - 7.1%
630 Urban Residential Finance Authority of the City of Atlanta, Revenue No Opt. Call N/R 647,029
Bond (Landrum Arms Project), Series 1994, 6.750%, 7/01/04
5,755 Development Authority of Burke County, Pollution Control Revenue 1/03 at 103 AAA 6,316,458
Bonds (Oglethorpe Power Corporation - Vogtle Project), Series
1992, 8.000%, 1/01/15 (Pre-refunded to 1/01/03)
2,540 Municipal Electric Authority of Georgia, General Power Revenue No Opt. Call AAA 2,826,131
Bonds, 1992B Series, 7.500%, 1/01/07
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS - 14.0%
2,395 Chicago Metropolitan Housing Development Corporation, Housing 7/03 at 100 AAA 2,340,274
Development Revenue Refunding Bonds (FHA-Insured Mortgage
Loan - Section 8 Assisted Project), Series 1993B,
5.700%, 1/01/13
315 City of Danville, Vermilion County, Single Family Mortgage Revenue 11/03 at 102 A1 321,313
Refunding Bonds, Series 1993, 7.300%, 11/01/10
3,000 Illinois Development Finance Authority, Solid Waste Disposal No Opt. Call BBB 2,525,580
Revenue Bonds (Waste Management, Inc. Project), Series 1997,
5.050%, 1/01/10 (Alternative Minimum Tax)
5,000 Illinois Development Finance Authority, Revenue Bonds (Greek 4/11 at 105 Aaa 5,485,950
American Nursing Home Project), Series 2000A, 7.600%, 4/20/40
<PAGE>
Nuveen Select Maturities Municipal Fund (NIM) (continued)
Portfolio of INVESTMENTS May 31, 2000
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
ILLINOIS (continued)
$ 2,955 Illinois Development Finance Authority, Child Care Facility Revenue 9/02 at 102 N/R $3,023,408
Bonds, Series 1992 (Illinois Facilities Fund Project),
7.400%, 9/01/04
4,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, 8/09 at 101 A- 3,405,840
Series 1999 (Silver Cross Hospital and Medical Centers),
5.250%, 8/15/15
1,955 Illinois Housing Development Authority, Section 8 Elderly Housing 11/02 at 102 A 1,991,070
Revenue Bonds (Skyline Towers Apartments), Series 1992B,
6.625%, 11/01/07
375 City of Rock Island, Residential Mortgage Revenue Refunding Bonds, 9/02 at 102 Aa 385,455
Series 1992, 7.700%, 9/01/08
-----------------------------------------------------------------------------------------------------------------------------------
INDIANA - 6.2%
Hospital Authority of Elkhart County, Hospital Revenue Bonds,
Series 1992 (Elkhart General Hospital, Inc.):
1,590 7.000%, 7/01/08 (Pre-refunded to 2/01/02) 2/02 at 102 A1*** 1,679,644
410 7.000%, 7/01/08 7/02 at 102 A1 429,910
1,000 The Indianapolis Local Public Improvement Bond Bank, Series 1992 D, No Opt. Call AA 1,063,870
6.600%, 2/01/07
3,435 City of Indianapolis, Multifamily Housing First Mortgage 5/09 at 102 A3 3,173,150
(Keystone at Fall Creek Apartments), 6.400%, 5/01/19
(Alternative Minimum Tax)
2,100 The Indianapolis Local Public Improvement Bond Bank, Transportation 7/03 at 102 Aa2 2,154,306
Revenue Bonds, Series 1992, 6.000%, 7/01/10
-----------------------------------------------------------------------------------------------------------------------------------
MARYLAND - 1.5%
2,000 Anne Arundel County, Multifamily Housing Revenue Bonds No Opt. Call BBB 2,086,500
(Woodside Apartments Project), Series 1994, 7.450%, 12/01/24
(Alternative Minimum Tax) (Mandatory put 12/01/03)
-----------------------------------------------------------------------------------------------------------------------------------
MISSISSIPPI - 0.9%
1,230 Mississippi Home Corporation, Single Family Mortgage Revenue 6/09 at 102 Aaa 1,179,668
Bonds, Series 1999A, 5.250%, 12/01/30 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
NEBRASKA - 5.6%
5,500 Energy America, Natural Gas Revenue Note (Metropolitan No Opt. Call N/R 5,231,600
Utility District Project), Series 1997B, 5.700%, 7/01/08
2,400 Airport Authority of the City of Omaha, Airport Facilities 1/02 at 102 A1 2,549,592
Revenue Refunding Bonds, Series 1991, 8.375%, 1/01/14
-----------------------------------------------------------------------------------------------------------------------------------
NEW YORK - 9.6%
5,000 Erie County Industrial Development Agency, Solid Waste Disposal 12/10 at 103 N/R 5,214,300
Facility Revenue Bonds (1998 CanFibre of Lackawanna Project),
8.875%, 12/01/13 (Alternative Minimum Tax)
3,575 New York City Industrial Development Agency, Amended and Restated 11/04 at 102 Aaa 3,631,163
Industrial Development Revenue Bonds (1991 Japan Airlines Company,
Ltd. Project), 6.000%, 11/01/15 (Alternative Minimum Tax)
1,985 New York State Medical Care Facilities Finance Agency, FHA-Insured 2/06 at 102 AA+ 2,020,015
Mortgage Project Revenue Bonds, 1995 Series C, 6.100%, 8/15/15
2,130 City of Niagara Falls, Niagara County, Water Treatment Plant, No Opt. Call AAA 2,517,575
Serial Bonds of 1994, 8.500%, 11/01/07 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
OHIO - 8.0%
2,000 Akron, Bath and Copley Joint Township Hospital District, Hospital 11/02 at 102 Baa1 1,973,060
Facilities Revenue Bonds, Series 1992 (Summa Health System Project),
6.250%, 11/15/07
1,000 City of Dayton, Special Facilities Revenue Refunding Bonds, No Opt. Call BBB 995,120
1993 Series F (Emery Air Freight Corporation and Emery Worldwide
Airlines, Inc. Guarantors), 6.050%, 10/01/09
4,500 County of Hamilton, Hospital Facilities Revenue Refunding Bonds, No Opt. Call A 4,626,630
Series 1992A (Bethesda Hospital, Inc.), 6.250%, 1/01/06
2,370 Ohio Water Development Authority, Revenue Bonds, USA Waste Services, 3/02 at 102 N/R 2,417,210
7.750%, Series 1992, 9/01/07 (Alternative Minimum Tax)
1,000 City of Oxford, Water Supply System Mortgage Revenue, Series 1992 12/02 at 102 AAA 1,019,890
Refunding Bonds, 6.000%, 12/01/14
<PAGE>
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
-----------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA - 2.8%
$ 1,740 Pennsylvania Higher Educational Facilities Authority, College and No Opt. Call Aaa $1,946,729
University Revenue Bonds, 9th Series, 7.625%, 7/01/15
2,000 Urban Redevelopment Authority of Pittsburgh, Mortgage Revenue 4/09 at 100 AAA 1,971,460
Bonds, 4/01/21 1999 Series C, 5.150%, (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
RHODE ISLAND - 1.8%
2,430 Rhode Island Housing and Mortgage Finance Corporation, Homeowner- 4/02 at 102 AA+ 2,452,769
ship Opportunity Bonds, Series 7,
6.500%, 4/01/25 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA - 0.8%
1,125 Piedmont Municipal Power Agency, Electric Revenue Bonds, No Opt. Call AAA 1,111,376
1993 Refunding Series, 5.500%, 1/01/13
-----------------------------------------------------------------------------------------------------------------------------------
TEXAS - 7.9%
2,000 Alliance Airport Authority, Inc., Special Facilities Revenue Bonds, No Opt. Call Baa1 2,093,320
Series 1991 (American Airlines, Inc. Project), 7.000%, 12/01/11
(Alternative Minimum Tax)
City of Austin, Water, Sewer and Electric Refunding Revenue Bonds,
Series 1982:
110 14.000%, 11/15/01 No Opt. Call A*** 119,222
655 14.000%, 11/15/01 No Opt. Call A 708,959
550 Austin - Travis County Center, Revenue Bonds (Mental Health and 3/05 at 101 AAA 573,656
Mental Retardation Center Facilities Acquisition Program),
Series 1995-A, 6.500%, 3/01/15
630 City of Galveston Property Finance Authority, Inc., Single Family 9/01 at 103 A3 677,420
Mortgage Revenue Bonds, Series 1991A, 8.500%, 9/01/11
960 Texas Community Mental Health and Mental Retardation Centers, 3/05 at 101 AAA 1,001,290
Revenue Bonds (Mental Health and Mental Retardation Center
Facilities Acquisition Program), Series 1995A-E, 6.500%, 3/01/15
3,135 Retama Development Corporation, Special Facilities Revenue Bonds 12/11 at 100 AAA 4,030,293
(Retama Park Racetrack Project), Series 1993, 8.750%, 12/15/11
(Pre-refunded to 12/15/11)
900 Travis County Health Facilities Development Corporation, Hospital 11/03 at 102 Aaa 925,902
Revenue Bonds (Daughters of Charity National Health System -
Daughters of Charity Health Services of Austin), Series 1993B,
5.900%, 11/15/07
745 Tri-County Mental Health and Mental Retardation Services, 3/05 at 101 AAA 777,042
Revenue Bonds (Mental Health and Mental Retardation Center
Facilities Acquisition Program), Series 1995-E, 6.500%, 3/01/15
-----------------------------------------------------------------------------------------------------------------------------------
UTAH - 1.4%
2,055 City of Bountiful, Davis County, Hospital Revenue Refunding Bonds No Opt. Call N/R 1,896,333
(South Davis Community Hospital Project), Series 1998,
6.000%, 12/15/10
-----------------------------------------------------------------------------------------------------------------------------------
VIRGINIA - 1.5%
2,000 Hampton Redevelopment and Housing Authority, Multifamily Housing 7/02 at 104 Baa2 2,085,280
Revenue Refunding Bonds, Series 1994 (Chase Hampton II Apartments),
7.000%, 7/01/24 (Mandatory put 7/01/04)
-----------------------------------------------------------------------------------------------------------------------------------
WASHINGTON - 8.1%
1,255 Public Utility District No. 1 of Douglas County, Wells Hydro- 9/00 at 102 AA- 1,287,128
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:
1,500 7.000%, 7/01/07 No Opt. Call Aa1 1,626,330
3,000 7.000%, 7/01/08 No Opt. Call Aa1 3,266,820
<PAGE>
Nuveen Select Maturities Municipal Fund (NIM) (continued)
Portfolio of INVESTMENTS May 31, 2000
PRINCIPAL OPTIONAL CALL MARKET
AMOUNT (000) DESCRIPTION PROVISIONS* RATINGS** VALUE
------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON (continued)
$ 7,000 Washington Public Power Supply System, Nuclear Project No. 3 No Opt. Call Aa1 $4,987,640
Refunding Revenue Bonds, Series 1990B,
0.000%, 7/01/06
------------------------------------------------------------------------------------------------------------------------------------
$ 132,929 Total Investments (cost $135,066,946) - 97.7% 135,000,270
================--------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 2.3% 3,148,278
--------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $ 138,148,548
====================================================================================================================
* Optional Call Provisions (not covered by the report of independent
auditors): Dates (month and year) and prices of the earliest optional call
or redemption. There may be other call provisions at varying prices at
later dates.
** Ratings (not covered by the report of independent auditors): Using the
higher of Standard & Poor's or Moody's rating.
*** 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 May 31, 2000
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Investments in municipal securities, at market value $135,000,270
Cash 1,379,459
Interest receivable 2,524,168
Other assets 16,435
------------------------------------------------------------------------------------------------
Total assets 138,920,332
------------------------------------------------------------------------------------------------
LIABILITIES
Accrued expenses:
Management fees 58,269
Other 63,535
Dividends payable 649,980
------------------------------------------------------------------------------------------------
Total liabilities 771,784
------------------------------------------------------------------------------------------------
Net assets $138,148,548
================================================================================================
Shares outstanding 12,380,786
================================================================================================
Net asset value per share outstanding (net assets divided by shares outstanding) $ 11.16
================================================================================================
Statement of
OPERATIONS Year Ended May 31, 2000
------------------------------------------------------------------------------------------------
INVESTMENT INCOME $8,613,506
------------------------------------------------------------------------------------------------
EXPENSES
Management fees 704,506
Shareholders' servicing agent fees and expenses 15,086
Custodian's fees and expenses 51,929
Trustees' fees and expenses 2,568
Professional fees 12,547
Shareholders' reports - printing and mailing expenses 33,777
Stock exchange listing fees 24,618
Investor relations expense 13,139
Other expenses 10,760
------------------------------------------------------------------------------------------------
Total expenses before custodian fee credit 868,930
Custodian fee credit (12,778)
------------------------------------------------------------------------------------------------
Net expenses 856,152
------------------------------------------------------------------------------------------------
Net investment income 7,757,354
------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
Net realized gain (loss) from investment transactions (170,549)
Change in net unrealized appreciation (depreciation) of investments (7,104,871)
------------------------------------------------------------------------------------------------
Net gain (loss) from investments (7,275,420)
------------------------------------------------------------------------------------------------
Net increase in net assets from operations $ 481,934
================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of
CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
5/31/00 5/31/99
------------------------------------------------------------------------------------------------------------------
OPERATIONS
<S> <C> <C>
Net investment income $ 7,757,354 $ 7,626,693
Net realized gain (loss) from investment transactions (170,549) 1,438,656
Change in net unrealized appreciation (depreciation) of investments (7,104,871) (2,280,064)
------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 481,934 6,785,285
------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From undistributed net investment income (7,688,471) (7,597,460)
From accumulated net realized gains from investment transactions (1,275,221) (521,817)
------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (8,963,692) (8,119,277)
------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from shares issued to shareholders due to
reinvestment of distributions -- 122,201
------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (8,481,758) (1,211,791)
Net assets at the beginning of year 146,630,306 147,842,097
------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $138,148,548 $146,630,306
==================================================================================================================
Balance of undistributed net investment income at the end of year $ 178,328 $ 109,445
==================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to
FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
The Fund covered in this report and its corresponding New York Stock Exchange
symbol is Nuveen Select Maturities Municipal Fund (NIM) (the "Fund").
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
accounting principles generally accepted in the United States.
Securities Valuation
The prices of municipal bonds in the Fund's investment portfolio are provided by
a pricing service approved by the Fund's Board of Trustees. When price quotes
are not readily available (which is usually the case for municipal securities),
the pricing service establishes fair market value based on yields or prices of
municipal bonds of comparable quality, type of issue, coupon, maturity and
rating, indications of value from securities dealers and general market
conditions. Temporary investments in securities that have variable rate and
demand features qualifying them as short-term securities are valued at amortized
cost, which approximates market value.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from such transactions are determined on the specific identification
method. Securities purchased or sold on a when-issued or delayed delivery basis
may have extended settlement periods. The securities so purchased are subject to
market fluctuation during this period. The Fund has instructed the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of the when-issued and delayed delivery purchase commitments. At May
31, 2000, 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. All
monthly tax-exempt income dividends paid during the fiscal year ended May 31,
2000, have been designated Exempt Interest Dividends. Net realized capital gain
and market discount distributions are subject to federal taxation.
<PAGE>
Notes to
FINANCIAL STATEMENTS (continued)
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 accounting principles generally
accepted in the United States. 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 fiscal year ended May 31, 2000.
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 accounting principles
generally accepted in the United States 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 fiscal year ended May 31, 2000.
3. DISTRIBUTIONS TO SHAREHOLDERS
The Fund declared a dividend distribution of $.0525 per share from its
tax-exempt net investment income which was paid on July 3, 2000, to shareholders
of record on June 15, 2000.
4. SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investments in intermediate-term
municipal securities for the fiscal year ended May 31, 2000, aggregated
$8,939,068 and $9,377,487, respectively. Purchases and sales (including
maturities) of investments in short-term municipal securities for the fiscal
year ended May 31, 2000, aggregated $9,100,000 and $9,100,000, respectively.
At May 31, 2000, the identified cost of investments owned for federal income tax
purposes was $135,245,688.
At May 31, 2000, the Fund had an usued capital loss carryforward of $67,488,
available for federal income tax purposes to be applied against future capital
gains, if any. If not applied, the carryforward will expire in the year 2008.
5. UNREALIZED APPRECIATION (DEPRECIATION)
At May 31, 2000, net unrealized depreciation of investments for federal income
tax purposes aggregated $245,418 of which $2,778,210 related to appreciated
securities and $3,023,628 related to depreciated securities.
<PAGE>
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.
7. COMPOSITION OF NET ASSETS
At May 31, 2000, 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 178,328
Accumulated net realized gain (loss) from investment transactions (246,231)
Net unrealized appreciation (depreciation) of investments (66,676)
--------------------------------------------------------------------------------
Net assets $138,148,548
================================================================================
8. INVESTMENT COMPOSITION
At May 31, 2000, the revenue sources by municipal purpose, expressed as a
percent of intermediate-term investments, were as follows:
--------------------------------------------------------------------------------
Capital Goods 4%
Healthcare 12
Housing/Multifamily 9
Housing/Single Family 10
Long-Term Care 6
Tax Obligation/General 6
Tax Obligation/Limited 5
Transportation 10
U.S. Guaranteed 13
Utilities 21
Other 4
--------------------------------------------------------------------------------
100%
================================================================================
In addition, 29% 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>
Financial
HIGHLIGHTS
Selected data for a Common share outstanding throughout each year:
<TABLE>
<CAPTION>
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ --------------------------------
NET
REALIZED/
BEGINNING NET UNREALIZED NET ENDING ENDING
NET ASSET INVESTMENT INVESTMENT INVESTMENT CAPITAL NET ASSET MARKET
VALUE INCOME GAIN (LOSS) TOTAL INCOME GAINS TOTAL VALUE VALUE
------------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $11.84 $.63 $(.59) $.04 $(.62) $(.10) $(.72) $11.16 $10.1875
1999 11.95 .61 (.07) .54 (.61) (.04) (.65) 11.84 11.5625
1998 11.70 .61 .29 .90 (.61) (.04) (.65) 11.95 11.4375
1997 11.59 .62 .18 .80 (.65) (.04) (.69) 11.70 10.7500
1996 11.73 .64 (.09) .55 (.65) (.04) (.69) 11.59 11.1250
====================================================================================================================================
* After custodian fee credit, where applicable.
+ 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.
<PAGE>
TOTAL RETURNS RATIOS/SUPPLEMENTAL DATA
--------------------------- ----------------------------------------------------------------------------------
BEFORE CREDIT AFTER CREDIT*
------------------------- --------------------------
RATIO OF NET RATIO OF NET
RATIO OF INVESTMENT RATIO OF INVESTMENT
BASED ON ENDING EXPENSES TO INCOME TO EXPENSES TO INCOME TO PORTFOLIO
BASED ON NET ASSET NET ASSETS AVERAGE AVERAGE AVERAGE AVERAGE TURNOVER
MARKET VALUE+ VALUE+ (000) NET ASSETS NET ASSETS NET ASSETS NET ASSETS RATE
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended 5/31:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 (5.48)% .43% $138,149 .61% 5.48% .61% 5.49% 6%
1999 6.87 4.64 146,630 .63 5.14 .62 5.15 31
1998 12.60 7.85 147,842 .65 5.17 .65 5.17 13
1997 2.68 6.98 144,775 .64 5.35 .64 5.35 17
1996 6.14 4.76 143,364 .63 5.45 .63 5.45 25
====================================================================================================================================
</TABLE>
<PAGE>
sidebar:
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.
NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR
REINVESTMENT ACCOUNT.
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 with draw, 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.
<PAGE>
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
The 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 12-month period ended May 31, 2000. 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.
John Nuveen, Sr.
For over a century, generations of Americans have relied on Nuveen Investments
to help them grow and keep the money they've earned. Financial advisors,
investors and their families have associated Nuveen Investments with quality,
expertise and dependability since 1898. That is why financial advisors have
entrusted the assets of more than 1.3 million investors to Nuveen.
With the know-how that comes from a century of experience, Nuveen continues to
build upon its reputation for quality. Now, financial advisors and investors can
count on Nuveen Investments to help them design customized solutions that meet
the far-reaching financial goals unique to family wealth strategies - solutions
that can translate into legacies.
To find out more about how Nuveen Investments' products services can help you
preserve your financial security, and talk with your financial advisor, or call
us at (800) 257-8787 for more information, including a prospectus where
applicable. Please read that information carefully before you invest.
LOGO: NUVEEN
NUVEEN
Investments
Invest well.
Look ahead.
LEAVE YOUR MARK.sm
John Nuveen & Co. Incorporated o 333 West Wacker Drive
Chicago, IL 60606-1286 o www.nuveen.com
FAN-1-5-00
<PAGE>
