SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [_]
Registration No. 333-03715
Pre-Effective Amendment No. [_]
---
[X]
Post-Effective Amendment No. 13
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
Registration No. 811-07619
[X]
Amendment No. 15
----------------
|
NUVEEN INVESTMENT TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)
333 West Wacker Drive, Chicago, 60606
Illinois (Zip Code)
(Address of Principal Executive
Offices)
Registrant's Telephone Number, Including Area Code: (312) 917-7700
Copies to:
Gifford R. Zimmerman--Vice President Eric F. Fess
and Chapman and Cutler
Secretary 111 W. Monroe
333 West Wacker Drive Chicago, Illinois 60603
Chicago, Illinois 60606
|
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[_]immediately upon filing pursuant to [X]on (October 20, 1998) pursuant
paragraph (b) to paragraph (a)(1)
[_]on (date) pursuant to paragraph (b) [_]75 days after filing pursuant to
paragraph (a)(2)
[_]60 days after filing pursuant to [_]on (date) pursuant to paragraph
paragraph (a)(1) (a)(2) of Rule 485.
|
If appropriate, check the following box:
[_]This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
CONTENTS
OF
POST-EFFECTIVE AMENDMENT NO. 13
This Post-Effective Amendment to the Registration Statement comprises the fol- lowing papers and contents:
The Facing Sheet
Part A--Prospectus for the Nuveen Balanced Stock and Bond
Fund and the Nuveen Balanced Municipal and Stock Fund; Pro- spectus for the Nuveen Growth and Income Stock Fund (the "Funds").
Part B--Statement of Additional Information for the Funds;
--copy of Annual Reports to Shareholders (the Financial Statements from which are incorporated by reference into the Statement of Additional Information)
Part C--Other Information
Signatures
Index to Exhibits
Exhibits
The Prospectus and Statement of Additional Information for the Nuveen Euro- pean Value Fund are not affected by and therefore not included in this Post-Ef- fective Amendment No. 13.
NUVEEN INVESTMENT TRUST
CROSS REFERENCE SHEET
PART A--PROSPECTUS FOR NUVEEN BALANCED STOCK AND BOND FUND AND NUVEEN BALANCED
MUNICIPAL AND STOCK FUND
ITEM IN PART A
OF FORM N-1A PROSPECTUS LOCATION
-------------- -------------------
1 Front and Back Cover Pages Front and Back Cover Pages
2 Risk/Return Summary: The Funds: Nuveen Balanced Stock and Bond
Investments, Risks, and Fund, Nuveen Balanced Municipal and Stock
Performance Fund
3 Risk/Return Summary: Fee The Funds: Nuveen Balanced Stock and Bond
Table Fund, Nuveen Balanced Municipal and Stock
Fund
4 Investment Objectives, The Funds: Nuveen Balanced Stock and Bond
Principal Investment Fund, Nuveen Balanced Municipal and Stock
Strategies, and Related Fund; What Securities We Invest In; How We
Risks Select Investments; What the Risks Are, How
We Manage Risk
5 Management's Discussion of Not Applicable
Fund Performance
6 Management, Organization and Who Manages the Funds; Management Fees; How
Capital Structure to Sell Shares
7 Shareholder Information How to Choose a Share Class; How to Reduce
Your Sales Charge; How to Buy Shares; How
to Sell Shares; Distributions and Taxes;
Net Asset Value
8 Distribution Arrangements How to Choose a Share Class; How to Reduce
Your Sales Charge; How to Buy Shares; How
to Sell Shares; Distribution and Service
Plans;
9 Financial Highlights Financial Highlights
|
NUVEEN INVESTMENT TRUST
CROSS REFERENCE SHEET
PART A--PROSPECTUS FOR NUVEEN GROWTH AND INCOME STOCK FUND
ITEM IN PART A
OF FORM N-1A PROSPECTUS LOCATION
-------------- -------------------
1 Front and Back Cover Pages Front and Back Cover Pages
2 Risk/Return Summary: The Fund: Growth and Income Stock Fund
Investments, Risks, and
Performance
3 Risk/Return Summary: Fee The Fund: Nuveen Growth and Income Stock
Table Fund
4 Investment Objectives, The Fund: Growth and Income Stock Fund;
Principal Investment What Securities We Invest In; How We Select
Strategies, and Related Investments; What the Risks Are, How We
Risks Manage Risk
5 Management's Discussion of Not Applicable
Fund Performance
6 Management, Organization and Who Manages the Fund; Management Fees; How
Capital Structure to Sell Shares
7 Shareholder Information How to Choose a Share Class; How to Reduce
Your Sales Charge; How to Buy Shares; How
to Sell Shares; Distributions and Taxes;
Net Asset Value
8 Distribution Arrangements How to Choose a Share Class; How to Reduce
Your Sales Charge; How to Buy Shares; How
to Sell Shares; Distribution and Service
Plan;
9 Financial Highlights Financial Highlights
|
PART B--STATEMENT OF ADDITIONAL INFORMATION
ITEM IN PART B LOCATION IN STATEMENT
OF FORM N-1A OF ADDITIONAL INFORMATION
-------------- -------------------------
10 Cover Page and Table of Cover Page
Contents
11 Fund History General Information; General Trust
Information
12 Description of the Fund and Investment Policies and Restrictions;
Its Investment Risks Investment Policies and Techniques; See
"What the Risks Are" in the Prospectus
13 Management of the Fund Management
14 Control Persons and Management
Principal Holders of
Securities
15 Investment Advisory and Fund Manager and Portfolio Manager;
Other Services Distribution and Service Plans; Independent
Public Accountants and Custodian
16 Brokerage Allocation and Portfolio Transactions
Other Practices
17 Capital Stock and Other Tax Matters; Additional Information on the
Securities Purchase and Redemption of Fund Shares and
Shareholder Programs; See "Organization of
the Fund," Cover Page, "How to Choose a
Share Class" and "How to Sell Shares" in
the Prospectus
18 Purchase, Redemption and Additional Information on the Purchase and
Pricing of Securities Redemption of Fund Shares and Shareholder
Programs; Distribution and Service Plans;
Net Asset Value
19 Taxation of the Fund Tax Matters
20 Underwriters Additional Information on the Purchase and
Redemption of Fund Shares and Shareholder
Programs; See "Who Manages the Fund" in the
Prospectus
21 Calculation of Performance Performance Information
Data
22 Financial Statements Incorporated by Reference to Annual Reports
to Shareholders
|
NUVEEN
Growth and
Income Funds
October , 1998
Prospectus
A value-driven strategy
for building capital and
moderating risk
[PHOTO APPEARS HERE]
Growth and
Income Stock Fund
NOT FDIC- May lose value
INSURED No bank guarantee
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Table of Contents
Section 1 The Fund
This section provides you with an overview of the fund including
investment objectives, portfolio holdings, and historical performance
information.
Introduction 1 ............................................................................... Growth and Income Stock Fund 2 ............................................................................... Section 2 How We Manage Your Money This section gives you a detailed discussion of our investment and risk management strategies. Who Manages the Fund 4 ............................................................................... Management Fees 4 ............................................................................... What Securities We Invest In 5 ............................................................................... How We Select Investments 5 ............................................................................... How the Portfolio Manager Has Performed 6 ............................................................................... What the Risks Are 7 ............................................................................... How We Manage Risk 7 ............................................................................... Section 3 How You Can Buy and Sell Shares This section provides the information you need to move money into or out of your account. How to Choose a Share Class 10 ............................................................................... How to Reduce Your Sales Charge 12 ............................................................................... How to Buy Shares 12 ............................................................................... Systematic Investing 13 ............................................................................... Systematic Withdrawal 14 ............................................................................... Special Services 14 ............................................................................... How to Sell Shares 15 ............................................................................... Section 4 General Information This section summarizes the fund's distribution policies and other general fund information. Distributions and Taxes 17 ............................................................................... Distribution and Service Plan 18 ............................................................................... Net Asset Value 19 ............................................................................... Fund Service Providers 19 ............................................................................... Section 5 Financial Highlights This section provides the fund's financial performance since inception. Growth and Income Stock Fund 20 ............................................................................... |
We have used the icons
below throughout this
prospectus to make it
easy for you to find the
type of information
you need.
Investment Strategy
Risks
Fees, Charges
and Expenses
Shareholder
Instructions
Performance and
Current Portfolio
Information
October , 1998
Section 1 The Fund
Nuveen Growth and Income Stock Fund
Prospectus
This prospectus is intended to provide important information to help you evaluate whether the fund may be right for you. Please read it carefully before investing and keep it for future reference.
Capital Growth with a Measure of Protection
Individuals who plan to rely on their investments for financial security are often concerned about maintaining a comfortable standard of living. For these investors, a growth and income mutual fund is often an appropriate investment. Growth and income funds generally invest in stocks of established, well-known companies that offer attractive long-term growth potential but also pay regular dividend income.
For those investors seeking long-term growth potential and a measure of protection, the Nuveen Growth and Income Stock Fund offers a balance of long- term growth, current income and capital preservation potential. The fund focuses on stocks of established well-known companies and seeks to protect capital in uncertain markets through time-tested risk management strategies.
A 100-Year Tradition of Quality Investments
Since our founding in 1898, John Nuveen & Co. Incorporated 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.
To learn more about how Nuveen Mutual Funds can help you achieve your financial goals, talk with your financial adviser or call us at (800) 257-8787 for more information.
Section 1 The Funds 1
Nuveen Growth and Income Stock Fund
Fund Overview
Investment Objective
The fund seeks to provide over time a superior total return from a diversified portfolio consisting primarily of equity securities of domestic companies with market capitalization of at least $500 million.
How the Fund Pursues Its Objective
The fund purchases primarily stocks of established, well-known domestic companies. We concentrate on stocks we believe are selling for less than their intrinsic worth, trying to identify those with a catalyst--for example, a management change or an improved industry outlook -- that will unlock the stock's unrecognized value. We generally buy only 40 to 50 stocks, which we believe have 15% to 25% price appreciation potential over the next 18 months.
The fund may invest up to 35% of its assets in cash equivalents in order to reduce volatility and preserve capital.
What are the Risks of Investing in the Fund?
The principal risk of investing in the fund is market risk. Market risk is the risk that a particular stock, or stocks in general, may fall in value. The fund's investments in foreign stock present additional risk including currency risk. As with any investment, loss of money is a risk of investing.
Is this Fund Right for You?
This fund may be an appropriate investment if you are seeking:
. long-term growth potential from a value-driven strategy;
. to moderate the risks associated with stock investing;
. to focus on established, well-known companies;
. to meet long-term financial goals.
You should not invest in this fund if you are:
. unwilling to accept share price fluctuation, including the possibility of sharp price declines;
. investing to meet short-term financial goals.
How the Fund Has Performed
Nuveen has selected Institutional Capital Corporation to manage the fund's portfolio. The chart and table below illustrate annual fund, peer group and market benchmark returns for the periods ending December 31, 1997. This information is intended to give you some indication of the risks of an investment in the fund by comparing the fund's performance with broad measures of market performance.
Total Returns/1/
[BAR CHART APPEARS HERE.]
Class A Annual Returns
1997 27.5%
From its inception on August 7, 1996 through December 31, 1997, the fund's highest and lowest quarterly returns were 15.54% and -1.90%, respectively, for the quarters ending 6/30/97 and 12/31/97. The bar chart and highest/lowest quarterly returns do not reflect sales charges, which would reduce returns, while the average annual return table does. See "How the Portfolio Manager has Performed" for additional performance information. The fund's and the portfolio manager's past performance are not necessarily an indication of how the fund will perform in the future.
Average Annual Total
Returns for the
Periods Ending
December 31, 1997
Class 1 Year Inception
Class A (Offer) 20.78% 26.87%
..........................................
Class A (NAV) 27.48% 32.11%
..........................................
Class B 22.45% 28.36%
..........................................
Class C 26.36% 31.03%
..........................................
Class R 27.83% 32.43%
..........................................
Lipper Peer Group/2/ 26.88% 30.67%
..........................................
S&P 500/2/ 33.36% 37.31%
..........................................
|
2 Section 1 The Funds
Shareholder Transaction Expenses/3/
Paid Directly From Your Investment Share Class A B C R/4/ --------------------------------------------------------------- Maximum Sales Charge Imposed on Purchases 5.25%/5/ None None None --------------------------------------------------------------- Maximum Sales Charge Imposed on Reinvested Dividends None None None None --------------------------------------------------------------- Exchange Fees None None None None --------------------------------------------------------------- Deferred Sales Charge/6/ None/5/ 5%/7/ 1%/8/ None --------------------------------------------------------------- |
Annual Fund Operating Expenses/9/ Paid From Fund Assets Share Class A B C R ------------------------------------------------------------------- Management Fees .83% .83% .83% .83% ------------------------------------------------------------------- 12b-1 Distribution and Service Fees .25% 1.00% 1.00% --% ------------------------------------------------------------------- Other Expenses .28% .28% .28% .28% ------------------------------------------------------------------- Total Annual Fund Operating Expenses-Gross+ 1.36% 2.11% 2.11% 1.11% ------------------------------------------------------------------- +After Expense Reimbursements ------------------------------------------------------------------- Reimbursements (.16%) (.16%) (.16%) (.16%) ------------------------------------------------------------------- Total Annual Fund Operating Expenses-Net 1.20% 1.95% 1.95% .95% ------------------------------------------------------------------- |
The following example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. It assumes you invest $10,000 in the fund for the time period indicated and then either redeem or do not redeem your shares at the end of a period. The example assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Your actual returns and costs may be higher or lower.
Redemption No Redemption
Share Class A B C R A B C R
-----------------------------------------------------------------------------
1 Year $ 656 $ 608 $ 214 $ 113 $ 656 $ 214 $ 214 $ 113
-----------------------------------------------------------------------------
3 Years $ 933 $ 975 $ 661 $ 353 $ 933 $ 661 $ 661 $ 353
-----------------------------------------------------------------------------
5 Years $1,231 $1,246 $1,134 $ 612 $1,231 $1,134 $1,134 $ 612
-----------------------------------------------------------------------------
10 Years $2,074 $2,250 $2,441 $1,352 $2,074 $2,250 $2,441 $1,352
-----------------------------------------------------------------------------
|
Portfolio Allocation/10/ Actual Target ------------------------------------------- Stocks 92% 90% ------------------------------------------- Cash Equivalents 8% 10% ------------------------------------------- |
Stock Portfolio Statistics
Beta .77 ------------------------------------------- Average Market Capitalization $31 billion ------------------------------------------- Average P/E 17.6 ------------------------------------------- |
Top 10 Stock Holdings/10/
------------------------------------------- News Corp. Ltd. ADR 4.7% ------------------------------------------- NationsBank Corp 4.0% ------------------------------------------- Hoechst AG ADR 3.9% ------------------------------------------- American Home Products Corp. 3.7% ------------------------------------------- Citicorp 3.6% ------------------------------------------- Philips Electronics N.V. 3.5% ------------------------------------------- Burlington Northern Santa Fe 3.2% ------------------------------------------- Seagram Co. Ltd. 3.1% ------------------------------------------- U.S.A. Waste Services Inc. 3.0% ------------------------------------------- General Motors Corporation 3.0% ------------------------------------------- |
1. The year-to-date return as of 6/30/98 was 14.21%.
2. Peer Group returns reflect the performance of the Lipper Growth and Income Fund Index, an index that represents the average annualized returns of the 30 largest funds in the Lipper Growth and Income Fund Category. Returns assume reinvestment of dividends and do not reflect any applicable sales charges. The S&P 500 returns assume reinvestment of dividends, but do not include any brokerage commissions, sales charges or other fees.
3. As a percent of offering price unless otherwise noted. Authorized Dealers and other firms may charge additional fees for shareholder transactions or for advisory services. Please see their materials for details.
4. Class R shares may be purchased only under limited circumstances, or by specified classes of investors. See "How You Can Buy and Sell Shares."
5. Reduced Class A sales charges apply to purchases of $50,000 or more. Certain Class A purchases at net asset value of $1 million or more may bear a contingent deferred sales charge (CDSC) if redeemed within 18 months of purchase. See "How You Can Buy and Sell Shares."
6. As a percentage of lesser of purchase price or redemption proceeds.
7. Class B shares redeemed within six years of purchase bear a CDSC of 5% during the first year, 4% during the second and third years, 3% during the fourth, 2% during the fifth and 1% during the sixth year.
8. Class C shares redeemed within one year of purchase bear a 1% CDSC.
9. Long-term holders of Class B and Class C shares may pay more in Rule 12b-1 fees and CDSCs than the economic equivalent of the maximum front-end sales charge permitted under the National Association of Securities Dealers Conduct Rules. The investment adviser has agreed to waive fees and reimburse expenses through July 31, 1999 in order to prevent Total Annual Fund Operating Expenses (excluding any distribution or service fees and extraordinary expenses) from exceeding 1.05% of the average daily net asset value of any class of fund shares, which is higher than the expense reimbursement limit in place during fiscal year ended 6/30/98.
10. Holdings will vary.
Section 1 The Funds 3
Section 2 How We Manage Your Money
To help you understand the fund better, this section includes a detailed discussion of our investment and risk management strategies. For a more complete discussion of these matters, please consult the Statement of Additional Information.
Nuveen Institutional Advisory Corp. (NIAC), 333 West Wacker Drive, Chicago, IL 60606, has overall responsibility for management of the fund. NIAC oversees the management of the fund's portfolio, manages the fund's business affairs and provides certain clerical, bookkeeping and other administrative services. NIAC is a wholly owned subsidiary of John Nuveen & Co. Incorporated (Nuveen), which is the sponsor and principal underwriter of the fund's shares and has sponsored or underwritten more than $60 billion of investment company securities. Nuveen and its affiliates have more than $35 billion in assets under management.
NIAC has selected Institutional Capital Corporation, 225 West Wacker Drive, Chicago, IL 60606, as subadviser to manage the investment portfolio of the fund. Institutional Capital is an institutional investment management firm with over 28 years of experience and approximately $12 billion in assets under management. Institutional Capital's investment management strategy and operating policies are set through a team approach, with all its investment professionals contributing. Institutional Capital currently maintains a staff of 11 investment professionals. Mr. Robert H. Lyon, president, owns shares representing 51% of its voting rights. In addition, The John Nuveen Company owns preferred shares of Institutional Capital, which are convertible after several years into a 20% common stock interest.
For providing these services, NIAC is paid an annual fund management fee according to the following schedule:
Average Daily Fund Net Asset Value Fee For the first $125 million .8500 of 1% ------------------------------------------------------------------------------- For the next $125 million .8375 of 1% ------------------------------------------------------------------------------- For the next $250 million .8250 of 1% ------------------------------------------------------------------------------- For the next $500 million .8125 of 1% ------------------------------------------------------------------------------- For the next $1 billion .8000 of 1% ------------------------------------------------------------------------------- For assets over $2 billion .7750 of 1% ------------------------------------------------------------------------------- |
For the most recent fiscal year, the fund paid to NIAC, after expense reimbursements, management fees of .67% of average net assets.
4 Section 2 How We Manage Your Money
Out of the fund management fee, NIAC pays a portfolio management fee to Institutional Capital Corporation. The fund pays for its own operating expenses such as custodial, transfer agent, accounting and legal fees; brokerage commissions; distribution and service fees; organizational expenses; and extraordinary expenses.
Equity Securities
Eligible equity securities include common stocks; preferred stocks; warrants to purchase common stocks or preferred stocks; securities convertible into common or preferred stocks, such as convertible bonds and debentures; dollar- denominated securities of foreign companies (limited to 25% of net assets) and other securities with equity characteristics. Any convertible bonds and debentures must be rated investment grade (one of the four highest ratings by Moody's Investors Service, Standard & Poor's, Duff & Phelps or Fitch Investors Service) when purchased.
Short-Term Investments
The fund may invest in short-term investments including U.S. government securities, quality commercial paper or similar fixed-income securities with remaining maturities of one year or less. For more information on short-term investments, see the Statement of Additional Information.
Delayed Delivery Transactions
The fund may buy or sell securities on a when-issued or delayed-delivery basis, paying for or taking delivery of the securities at a later date, normally within 15 to 45 days of the trade. Such transactions involve an element of risk because the value of the security to be purchased may decline before the settlement date.
The fund's investment objective may not be changed without shareholder approval. The above investment policies may be changed by the Board of Trustees without shareholder approval unless otherwise noted in this prospectus or the Statement of Additional Information.
We adhere to disciplined, value-driven investment strategies whose aim is to provide consistent, attractive performance over time with moderated risk. We emphasize quality securities carefully chosen through in-depth research and follow those securities closely over time to assess whether they continue to meet our purchase rationale.
Institutional Capital selects stocks from a universe of approximately 450 large and midsize companies with at least $500 million in market capitalization. Proprietary quantitative valuation models determine which of these stocks currently appear to be selling for less than their intrinsic worth. Based on a qualitative assessment of each company's prospects, we then look for a catalyst that we believe will unlock the stock's unrecognized value. A catalyst may be as simple as a management change or as complex as a fundamentally improved industry outlook. We generally
Section 2 How We Manage Your Money
buy only 40 to 50 stocks, which we believe have a 15% to 25% price appreciation potential over the next 18 months.
Portfolio Turnover
The fund buys and sells portfolio securities in the normal course of its
investment activities. The proportion of the fund's investment portfolio that is
sold and replaced with new securities during a year is known as the fund's
portfolio turnover rate. The fund anticipates that it may engage in active
trading in equity securities. The fund anticipates that its annual portfolio
turnover rate will generally be between 100% and 200%. A turnover rate of 100%
would occur, for example, if the fund sold and replaced securities valued at
100% of its net assets within one year. Active trading would result in the
payment by the fund of increased brokerage costs and could result in the payment
by shareholders of increased taxes on realized investment gains.
How the Portfolio Manager Has Performed
The chart and table below illustrate the historical performance of the portfolio manager's investment strategy for the fund. Of course, past performance is no indication of future results, and the chart and table represent performance of managed accounts and not actual fund performance.
Growth of a $10,000 Investment 6/73-6/98
[MOUNTAIN CHART APPEARS HERE]
Lipper Consumer
Portfolio Manager Growth and Income Price
Composite S&P 500 Index Index
1973 9,475 10,000 10,000 10,000
1978 14,541 11,400 13,749 14,751
1983 31,681 26,148 33,353 22,516
1988 66,640 51,655 62,645 26,696
1993 130,912 100,393 112,796 32,670
1998 354,884 283,534 268,862 36,877
Portfolio Manager Composite $354,884
S&P 500 $283,534
Lipper Growth and Income Index $268,862
CPI $36,877
Portfolio Manager Composite Returns
Average Annual Total Returns
..................................................
1-Year 5-Year 10-Year 20-Year 25-Year
------------------------------------------------------------------------------
On Offer 16.03% 20.76% 17.57% 17.00% 15.35%
..............................................................................
On NAV 22.46% 22.07% 18.20% 17.32% 15.60%
..............................................................................
|
The chart and table above present the performance of Institutional Capital's Discretionary Equity Composite, which represents all its individually managed accounts (totalling $4.8 billion) that have substantially the same investment objectives and policies as the fund. These accounts are not subject to all of the same investment restrictions,
6 Section 2 How We Manage Your Money
investment inflows and outflows, and distribution requirements as the fund, which may affect fund performance. We assumed that an investor paid a maximum Class A sales charge of 5.25% and deducted from the Composite's gross-of-fee returns the Class A gross operating expenses of 1.36% for the fund's most recent fiscal year. The chart would be different for a Class B, C or R investment because of their different sales charges and operating expenses. The Lipper Growth and Income Index represents the average annualized returns of the 30 largest funds in the Lipper Growth and Income Fund Category. Index returns assume reinvestment of all dividends but do not include any brokerage commissions, sales charges or other fees. This chart does not represent past or future performance of the fund.
What the Risks Are
Risk is inherent in all investing. Investing in a mutual fund -- even the most conservative -- involves risk, including the risk that you may receive little or no return on your investment or even that you may lose part or all of your investment. Therefore, before investing you should consider carefully the following risks that you assume when you invest in this fund. Because of these and other risks, you should consider an investment in this fund to be a long- term investment.
Market risk: the risk that a particular stock, an industry, or stocks in general may fall in value.
Inflation risk: the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the fund's assets can decline as can the value of the fund's distributions.
Foreign investment risk: Securities issued by foreign companies or governments (which are limited to 25% of net assets) present risks beyond those of securities of U.S. issuers. Such risks include political or economic instability, changes in foreign currency exchange rates, and less publicly available information. Prices of foreign securities also may be more volatile and they may be less liquid than U.S. stocks.
How We Manage Risk
We use time-tested risk management strategies designed to help protect your capital during periods of market uncertainty or weakness: broad portfolio diversification, a rigorous sell discipline and defined portfolio allocation ranges. While we use these strategies to control or reduce risk, there is no assurance that we will succeed.
Portfolio Allocation Target and Ranges
The fund follows a disciplined asset allocation methodology that keeps your
portfolio mix within a defined range over time as market conditions change. The
fund has established the following allocation target and operating ranges for
each asset class:
Target Range
Stocks 90% 65-100%
...................................................
Cash Equivalents 10% 0-35%
...................................................
|
Section 2 How We Manage Your Money 7
The fund's Board of Trustees may change the target investment mix and operating ranges for each asset class without shareholder approval.
Investment Limitations
The fund has adopted certain investment limitations (based on total assets) that
cannot be changed without shareholder approval and are designed to limit your
investment risk and maintain portfolio diversification. The fund may not have
more than:
. 5% in securities in any one issuer, or 10% of the voting securities of that issuer (except for U.S. government securities or for 25% of the fund's total assets);
. 25% in any one industry (except U.S. government securities). For example, as of June 30, 1998, the fund was invested in the following industries: (shown as a percentage of the fund's stock holdings):
Financial 15% ........................................................................... Health Care 13% ........................................................................... Consumer Services 12% ........................................................................... Consumer Staples 10% ........................................................................... Capital Equipment/Technology 9% ........................................................................... Basic Industries 9% ........................................................................... Transportation 8% ........................................................................... Capital Spending 8% ........................................................................... Energy 7% ........................................................................... Other 9% ........................................................................... |
Please see the Statement of Additional Information for a more detailed discussion of investment limitations.
Hedging and Other Defensive Investment Strategies The fund may invest up to 100% of its assets in cash equivalents and short-term investments as a temporary defensive measure in response to adverse market conditions, or to keep cash on hand fully invested. During these periods, the proportion of the fund's assets invested in an asset category may fall outside its allowable range, and the fund may not achieve its investment objective.
We may also use various investment strategies designed to hedge against changes in the values of securities the fund owns or expects to purchase or to hedge against interest rate changes. These hedging strategies include using financial futures contracts, options on financial futures, or stock index options. The ability of the fund to benefit from options and futures is largely dependent on our ability to use such strategies successfully. The fund could lose money on futures transactions or an option can expire worthless.
The fund's investment approach may also provide a measure of protection in adverse markets. The fund focuses primarily on stocks of established, well-known companies which generally have been better positioned to weather adverse markets than smaller, less established companies. The fund purchases stocks with low valuations, measured by their relative price-to-earnings ratio. The prices of these types of stocks have often fallen
8 Section 2 How We Manage Your Money
less than more fully valued stocks during market downturns. The fund also frequently invests a small portion of its portfolio in cash equivalents which can provide a measure of added stability during adverse market conditions.
Portfolio Manager Performance in Down Markets
Over the past 25 years, there have been six periods in which the S&P 500 declined by more than 10%. In five out of six of these periods, Institutional Capital's investment strategies provided superior capital protection when compared with the overall market and the Lipper Growth and Income Fund peer group. In the most recent period, however, these strategies have not provided superior relative protection. Performance is represented by fund Class A returns on net asset value for the most recent period and by Institutional Capital's Discretionary Equity Composite for prior periods. Of course, past performance does not guarantee future results, and the Composite performance does not represent actual fund results. Please see the discussion under "How the Portfolio Manager Has Performed" for a detailed discussion of portfolio manager composite returns and the index returns to which they are compared.
Portfolio Manager Down-Market Performance
Growth and Income Fund Investment Strategy
[BAR CHART APPEARS HERE.]
Portfolio Manager
Discretionary Lipper G&I
Equity Composite Fund Index S&P 500
1Q73-3Q74 -21.83% -38.64% -42.64%
1Q77-1Q78 -1.67% -6.78% -11.76%
2Q81-2Q82 0.91% -9.35% -13.47%
4Q87 -10.10% -19.86% -22.63%
3Q90 -7.82% -13.45% -13.78%
3Q98 -18.60% -15.17% -13.30%
|
9 Section 2 How We Manage Your Money
Section 3 How You Can Buy and Sell Shares
You can choose from four classes of fund shares, each with a different combination of sales charges, fees, eligibility requirements and other features. Your financial adviser can help you determine which class is best for you. We offer a number of features for your convenience. Please see the Statement of Additional Information for further details.
How to Choose a Share Class
In deciding whether to purchase Class A, Class B, Class C or Class R shares, you should consider:
. the amount of your purchase;
. any current holdings of fund shares;
. how long you expect to hold the shares;
. the amount of any up-front sales charge;
. whether a contingent deferred sales charge (CDSC) would apply upon redemption;
. the amount of any distribution or service fees that you may incur while you own the shares;
. whether you will be reinvesting income or capital gain distributions in additional shares;
. whether you qualify for a sales charge waiver or reduction.
For a summary of the charges and expenses for each class, please see "What are the Costs of Investing?".
Class A Shares
You can buy Class A shares at the offering price, which is the net asset value per share plus an up-front sales charge. You may qualify for a reduced sales charge, or the sales charge may be waived, as described in "How to Reduce Your Sales Charge." Class A shares are also subject to an annual service fee of .25% which compensates your financial adviser for providing ongoing service to you. The up-front Class A sales charge is as follows:
10 Section 3 How You Can Buy and Sell Shares
Authorized Dealer
Sales Charge as % of Sales Charge as % of Commission as % of
Amount of Purchase Public Offering Price Net Amount Invested Public Offering Price
--------------------------------------------------------------------------------------------------------------------
Less than $50,000 5.25% 5.54% 5.00%
....................................................................................................................
$50,000 but less than $100,000 4.25% 4.44% 4.00%
....................................................................................................................
$100,000 but less than $250,000 3.50% 3.63% 3.25%
....................................................................................................................
$250,000 but less than $500,000 2.75% 2.83% 2.50%
....................................................................................................................
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
....................................................................................................................
$1,000,000 and over -- -- 1.00%*
....................................................................................................................
|
*You can buy $1 million or more of Class A shares at net asset value without an up-front sales charge ($500,000 for purchases through eligible employer- sponsored qualified contribution retirement plans). Nuveen pays Authorized Dealers of record on these share purchases a sales commission of 1.00% of the first $2.5 million, plus .50% of the next $2.5 million, plus .25% of the amount over $5.0 million. If you redeem your shares within 18 months of purchase, you may have to pay a CDSC of 1% of either your purchase price or your redemption proceeds, whichever is lower. You do not have to pay this CDSC if your financial adviser has made arrangements with Nuveen and agrees to waive the commission.
Class B Shares
You can buy Class B shares at the net asset value per share without any up-front sales charge so that the full amount of your purchase is invested in the fund. However, you will pay annual distribution and service fees of 1% of average daily assets. The annual .25% service fee compensates your financial adviser for providing ongoing service to you. The annual .75% distribution fee compensates Nuveen for paying your financial adviser a 4.00% up-front sales commission, which includes an advance of the first year's service fee. If you sell your shares within six years of purchase, you will have to pay a CDSC based on either your purchase price or what you sell your shares for, whichever amount is lower, according to the following schedule. You do not pay a CDSC on any Class B shares you purchase by reinvesting dividends.
Years Since Purchase 0-1 1-2 2-3 3-4 4-5 5-6 ................................................................................ CDSC 5% 4% 4% 3% 2% 1% ................................................................................ |
Class B shares automatically convert to Class A shares eight years after you buy them so that the distribution fees you pay over the life of your investment are limited. You will continue to pay an annual service fee on any converted Class B shares.
Class C Shares
You can buy Class C shares at the net asset value per share without any up-front sales charge so that the full amount of your purchase is invested in the fund. However, you will pay annual distribution and service fees of 1%. The annual .25% service fee compensates your financial adviser for providing ongoing service to you. The annual .75% distribution fee reimburses Nuveen for paying your financial adviser an ongoing sales commission. Nuveen advances the first year's service and distribution fees. If you sell your shares within 12 months of purchase, you may have to pay a 1% CDSC based on either your purchase price or what you sell your shares for, whichever amount is lower.
Section 3 How You Can Buy and Sell Shares 11
Class R Shares
Under limited circumstances, you may purchase Class R Shares at the net asset value on the day of purchase. In order to qualify, you must be eligible under one of the programs described in "How to Reduce Your Sales Charge" (below) or meet certain other purchase size criteria. Class R Shares are not subject to sales charges or ongoing service or distribution fees. Class R shares have lower ongoing expenses than the other classes.
How to Reduce Your Sales Charge
We offer a number of ways to reduce or eliminate the up-front sales charge on Class A shares or to qualify to purchase Class R shares.
Class A Sales Charge Class A Sales Charge
Reductions Waivers Class R Eligibility
. Rights of accumulation . Nuveen Defined Portfolio . Certain employees and
reinvestment directors of Nuveen or
. Letter of intent . Purchases using employees of authorized
redemptions from dealers
unrelated funds . Bank trust departments
. Group purchase . Retirement plans
. Certain employees and
directors of Nuveen or
employees of authorized
dealers
. Bank trust departments
|
In addition, Class A shares at net asset value and Class R shares may be purchased through registered investment advisers, certified financial planners and registered broker-dealers who charge asset-based or comprehensive "wrap" fees for their services. Please refer to the Statement of Additional Information for detailed program descriptions and eligibility requirements. Additional information is available from your financial adviser or by calling (800) 257- 8787. Your financial adviser can also help you prepare any necessary application forms. You or your financial adviser must notify Nuveen at the time of each purchase if you are eligible for any of these programs. The fund may modify or discontinue these programs at any time.
How to Buy Shares
You may open an account with $3,000 per share class ($1,000 for a Traditional/Roth IRA account; $500 for an Education IRA account; and $500 for accounts opened through certain fee based programs) and make additional investments at any time with as little as $50. There is no minimum if you are reinvesting Nuveen Defined Portfolio distributions. The share price you pay will depend on when Nuveen receives your order. Orders received before the close of trading on a business day will receive that day's closing share price, otherwise you will receive the next business day's price. A business day is any day the New York Stock Exchange is open for business and normally ends at 4 p.m. New York time.
12 Section 3 How You Can Buy and Sell Shares
Through a Financial Adviser
You may buy shares through your financial adviser, who can handle all the details for you, including opening a new account. Financial advisers can also help you review your financial needs and formulate long-term investment goals and objectives. In addition, financial advisers generally can help you develop a customized financial plan, select investments and monitor and review your portfolio on an ongoing basis to help assure your investments continue to meet your needs as circumstances change. Financial advisers are paid either from fund sales charges and fees or by charging you a separate fee in lieu of a sales charge for ongoing investment advice and services. If you do not have a financial adviser, call (800) 257-8787 and Nuveen can refer you to one in your area.
By Mail
You may open an account and buy shares by mail by completing the enclosed application and mailing it along with your check to: Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186.
Systematic Investing
Once you have established a fund account, systematic investing allows you to make regular investments through automatic deductions from your bank account (simply complete the appropriate section of the account application form) or directly from your paycheck. To invest directly from your paycheck, contact your financial adviser or call Nuveen at (800) 257-8787. Systematic investing may also make you eligible for reduced sales charges.
One of the benefits of systematic investing is dollar cost averaging. Because you regularly invest a fixed amount of money over a period of years regardless of the share price, you buy more shares when the price is low and fewer shares when the price is high. As a result, the average share price you pay should be less than the average share price of fund shares over the same period. To be effective, dollar cost averaging requires that you invest over a long period of time and does not assure that you will profit.
Systematic Investment Plan
You can make regular investments of $50 or more per month by authorizing us to draw preauthorized checks on your bank account. You can stop the withdrawals at any time. There is no charge for this plan.
Payroll Direct Deposit Plan
You can, with your employer's consent, make regular investments of $25 or more per pay period (meeting the monthly minimum of $50) by authorizing your employer to deduct this amount automatically from your paycheck. You can stop the deductions at any time. There is no charge for this plan.
Section 3 How You Can Buy and Sell Shares 13
Systematic Withdrawal
If the value of your fund account is at least $10,000, you may request to have $50 or more withdrawn automatically from your account. You may elect to receive payments monthly, quarterly, semi-annually or annually, and may choose to receive a check, have the monies transferred directly into your bank account (see "Special Services--Fund Direct" below), paid to a third party or sent payable to you at an address other than your address of record. You must complete the appropriate section of the account application or Account Update Form to participate in the fund's systematic withdrawal plan.
You should not establish systematic withdrawals if you intend to make concurrent purchases of Class A, B or C shares because you may unnecessarily pay a sales charge or CDSC on these purchases.
Special Services
To help make your investing with us easy and efficient, we offer you the following services at no extra cost.
Exchanging Shares
You may exchange fund shares into an identically registered account at any time for the same class of another Nuveen mutual fund available in your state. Your exchange must meet the minimum purchase requirements of the fund into which you are exchanging. Because an exchange is treated for tax purposes as a concurrent sale and purchase and any gain may be subject to tax, you should consult your tax adviser about the tax consequences of any contemplated exchange.
The exchange privilege is not intended to allow you to use the fund for short- term trading. Because excessive exchanges may interfere with portfolio management, raise fund operating expenses or otherwise have an adverse effect on other shareholders, each fund reserves the right to revise or suspend the exchange privilege, limit the amount or number of exchanges, or reject any exchange.
Reinstatement Privilege
If you redeem fund shares, you may reinvest all or part of your redemption proceeds up to one year later without incurring any additional charges. You may only reinvest into the same share class you redeemed. If you paid a CDSC, we will refund your CDSC and reinstate your holding period. You may use this reinstatement privilege only once for any redemption.
Fund Direct
You may link your fund account to your bank account and transfer money electronically between these accounts and perform a variety of account transactions, including buying shares by telephone and investing through a Systematic Investment Plan. You may also have dividends, distributions, redemption payments or Systematic Withdrawal Plan payments sent directly to your bank account.
Your financial adviser can help you complete the forms for these services, or you can call Nuveen at (800) 257-8787 for copies of the necessary forms.
14 Section 3 How You Can Buy and Sell Shares
An Important Note About
Involuntary Redemption
From time to time, the fund
may establish minimum
account size requirements. The
fund reserves the right to
liquidate your account upon
30 days' written notice if the
value of your account falls
below an established
minimum. The fund presently
has set a minimum balance
of $100 unless you have an
active Nuveen Defined Portfolio
reinvestment account. You will
not be assessed a CDSC on an
involuntary redemption.
How to Sell Shares
You may use one of the following ways to sell (redeem) your shares on any day the New York Stock Exchange is open. You will receive the share price next determined after Nuveen has received your properly completed redemption request. Your redemption request must be received before the close of trading for you to receive that day's price. While the fund does not charge a redemption fee, you may be assessed a CDSC, if applicable. When you redeem Class A, Class B, or Class C shares subject to a CDSC, the fund will first redeem any shares that are not subject to a CDSC or that represent an increase in the value of your fund account due to capital appreciation, and then redeem the shares you have owned for the longest period of time, unless you ask the fund to redeem your shares in a different order. No CDSC is imposed on shares you buy through the reinvestment of dividends and capital gains. The holding period is calculated on a monthly basis and begins on the first day of the month in which you buy shares. When you redeem shares subject to a CDSC, the CDSC is calculated on the lower of your purchase price or redemption proceeds, deducted from your redemption proceeds, and paid to Nuveen. The CDSC may be waived under certain special circumstances as described in the Statement of Additional Information.
Through Your Financial Adviser
You may sell your shares through your financial adviser who can prepare the
necessary documentation. Your financial adviser may charge for this.
By Telephone
If you have authorized telephone redemption privileges, you can redeem your
shares by telephone. You may not redeem by telephone shares held in certificate
form. Checks will be issued only to the shareholder of record and mailed to the
address of record. If you have established electronic funds transfer privileges,
you may have redemption proceeds transferred electronically to your bank
account. We will normally mail your check the next business day. Nuveen and
Chase Global Funds Services Company, the fund's transfer agent, will be liable
for losses resulting from unauthorized telephone redemptions only if they do not
follow reasonable procedures designed to verify the identity of the caller. You
should immediately verify your trade confirmations when you receive them.
By Mail
You can sell your shares at any time by sending a written request to the fund,
c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY
10274-5186. Your request must include the following information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person to whom you want your redemption proceeds paid (if other than to the shareholder of record);
Section 3 How You Can Buy and Sell Shares 15
. The address where you want your redemption proceeds sent (if other than the address of record);
. Any certificates you have for the shares; and
. Any required signature guarantees.
We will normally mail your check the next business day, but in no event more than seven days after we receive your request. If you purchased your shares by check, your redemption proceeds will not be mailed until your check is cleared. Guaranteed signatures are required if you are redeeming more than $50,000, you want the check payable to someone other than the shareholder of record or you want the check sent to another address (or the address of record has been changed within the last 60 days). Signature guarantees must be obtained from a bank, brokerage firm or other financial intermediary that is a member of an approved Medallion Guarantee Program or that is otherwise approved by the fund. A notary public cannot provide a signature guarantee.
16 Section 3 How You Can Buy and Sell Shares
Section 4 General Information
To help you understand the tax implications of investing in the fund, this section includes important details about how the fund makes distributions to shareholders. We discuss some other fund policies, as well.
Distributions and Taxes
The fund pays dividends quarterly and any capital gains once a year in December.
Payment and Reinvestment Options
The fund automatically reinvests your dividends in additional fund shares unless
you request otherwise. You may request to have your dividends paid to you by
check, deposited directly into your bank account, paid to a third party, sent to
an address other than your address of record or reinvested in shares of another
Nuveen mutual fund. For further information, contact your financial adviser or
call Nuveen at (800) 257-8787.
Taxes and Tax Reporting
The fund intends to make distributions that may be taxed as ordinary income or
capital gains (which may be taxable at different rates depending on the length
of time the fund holds its assets). Dividends from the fund's long-term capital
gains are taxable as capital gains, while dividends from short-term capital
gains and net investment income are generally taxable as ordinary income. The
tax you pay on a given capital gains distribution depends generally on how long
the fund has held the portfolio securities it sold. It does not depend on how
long you have owned your fund shares. Taxable dividends do not qualify for a
dividends received deduction if you are a corporate shareholder.
Early in each year, you will receive a statement detailing the amount and nature of all dividends and capital gains that you were paid during the prior year. You will receive this statement from the firm where you purchased your fund shares if you hold your investment in street name. Nuveen will send you this statement if you hold your shares in registered form. The tax status of your dividends from the fund is not affected by whether you reinvest your dividends or receive them in cash. The sale of shares in your account may produce a gain or loss, and is a taxable event. For tax purposes, an exchange is the same as a sale.
Tax laws are subject to change, so we urge you to consult your tax adviser about your particular tax situation and how it might be affected by current tax law. Please note that if you do not furnish us with your correct Social Security number or employer identification number, federal law requires us to withhold federal income tax from your distributions and redemption proceeds at a rate of 31%.
Section 4 General Information 17
Buying or Selling Shares Close to a Record Date Buying fund shares shortly before the record date for a taxable dividend is commonly known as "buying the dividend." The entire dividend may be taxable to you even though a portion of the dividend effectively represents a return of your purchase price.
Distribution and Service Plans
John Nuveen & Co. Incorporated serves as the selling agent and distributor of the fund's shares. In this capacity, Nuveen manages the offering of the fund's shares and is responsible for all sales and promotional activities. In order to reimburse Nuveen for its costs in connection with these activities, including compensation paid to authorized dealers, the fund has adopted a distribution and service plan under Rule 12b-1 under the Investment Company Act of 1940. (See "How to Choose a Share Class" for a description of the distribution and service fees paid under this plan.)
Nuveen receives the distribution fee for Class B and Class C shares primarily for providing compensation to Authorized Dealers, including Nuveen, in connection with the distribution of shares. Nuveen uses the service fee for Class A, Class B, and Class C shares to compensate Authorized Dealers, including Nuveen, for providing account services to shareholders. These services may include establishing and maintaining shareholder accounts, answering shareholder inquiries, and providing other personal services to shareholders. These fees also compensate Nuveen for other expenses, including printing and distributing prospectuses to persons other than shareholders, the expenses of preparing, printing, and distributing advertising and sales literature and reports to shareholders used in connection with the sale of shares. Because these fees are paid out of the fund's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
18 Section 4 General Information
Net Asset Value
The price you pay for your shares is based on the fund's net asset value per share which is determined as of the close of trading (normally 4:00 p.m. eastern time) on each day the New York Stock Exchange is open for business. Net asset value is calculated for each class by taking the fair value of the class' total assets, including interest or dividends accrued but not yet collected, less all liabilities, and dividing by the total number of shares outstanding. The result, rounded to the nearest cent, is the net asset value per share. All valuations are subject to review by the fund's Board of Trustees or its delegate.
In determining net asset value, expenses are accrued and applied daily and securities and other assets for which market quotations are available are valued at market value. Common stocks and other equity securities are valued at the last sales price that day. Common stocks and other equity securities not listed on a national securities exchange or Nasdaq are valued at the most recent bid prices. The prices of [fixed-income securities] are provided by a pricing service and based on the mean between the bid and asked price. When price quotes are not readily available, the pricing service establishes fair market value based on prices of comparable securities.
Fund Service Providers
The custodian of the assets of the fund is The Chase Manhattan Bank, 4 New York Plaza, New York, NY 10004-2413. Chase also provides certain accounting services to the fund. The fund's transfer, shareholder services and dividend paying agent, Chase Global Funds Services Company, P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186, performs bookkeeping, data processing and administrative services for the maintenance of shareholder accounts.
NIAC and Chase Global Funds Services Company each rely on computer systems to manage the fund's investments, process shareholder transactions and provide shareholder account maintenance. Because of the way computers historically have stored dates, some of these systems currently may not be able to correctly process activity occurring in the year 2000. NIAC is working with the fund's service providers to adapt their systems to address this "Year 2000" issue. NIAC and the fund expect, but there can be no absolute assurance, that the necessary work will be completed on a timely basis.
Section 4 General Information 19
Section 5 Financial Highlights
The following table is intended to help you better understand the fund's recent past performance. The table is excerpted from the fund's latest financial statements audited by Arthur Andersen LLP. You may obtain the complete statements along with the auditor's report by requesting from Nuveen a free copy of the fund's latest annual shareholder report.
20 Section 5 Financial Highlights
Growth and Income Stock Fund
Selected data for a share outstanding throughout each period is as follows:
Investment Operations Less Distributions
---------------------------------------- -----------------------------
Class
(Inception
Date)
Net
Realized Ratio of
and Ending Ending Expenses
Year Beginning Net Unrealized Net Net Net to Average
Ending Net Asset Investment Investment Investment Capital Asset Total Assets Net
June 30, Value Income(a) Gain (Loss) Total Income Gains Total Value Return(b) (000) Assets(a)
--------------------------------------------------------------------------------------------------------------------------------
Class A (8/96)
1998 $24.01 $.26 $4.55 $4.81 $(.25) $(2.07) $(2.32) $26.50 26.59% $790,063 1.20%
1997(c)** 17.96 .30 6.18 6.48 (.20) (.23) (.43) 24.01 36.30 616,209 1.20*
Class B (8/96)
1998 24.00 .10 4.51 4.61 (.07) (2.07) (2.14) 26.47 20.70 71,909 1.95
1997(c)** 17.97 .21 6.13 6.34 (.08) (.23) (.31) 24.00 35.37 10,664 1.95*
Class C (8/96)
1998 23.98 .10 4.49 4.59 (.07) (2.07) (2.14) 26.43 20.63 21,426 1.95
1997(c)** 17.97 .21 6.11 6.32 (.08) (.23) (.31) 23.98 35.26 3,630 1.95*
Class R (8/96)
1998 24.02 .32 4.56 4.88 (.31) (2.07) (2.38) 26.52 21.91 18,335 .95
1997(c)** 17.96 .30 6.24 6.54 (.25) (.23) (.48) 24.02 36.65 15,647 .95*
--------------------------------------------------------------------------------------------------------------------------------
|
Ratios/Supplemental Data
------------------------------------
Ratio of Net
Investment
Income
Year to Average Portfolio
Ending Net Turnover
June 30, Assets(a) Rate
--------------------------------------------------------
Class A (8/96)
1998 1.04% 232%
1997(c)** 1.53* 110
Class B (8/96)
1998 .38 232
1997(c)** 1.03* 110
Class C (8/96)
1998 .39 232
1997(c)** 1.04* 110
Class R (8/96)
1998 1.26 232
1997(c)** 1.56* 110
--------------------------------------------------------
|
* Annualized.
** All per share amounts reflect a December 18, 1996, stock split of 1.113830, 1.112700, 1.112700 and 1.113806 shares, respectfully, for each share of Class A, B, C and R.
(a) After waiver of certain management fees or reimbursement of expenses by Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge and are not annualized.
(c) From commencement of class operations as noted.
Section 5 Financial Highlights 21
Nuveen Mutual Funds
Nuveen offers a variety of mutual funds designed to help you reach your financial goals. The funds below are grouped by investment objectives.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Tax-Free Income
National Municipal Bond Funds
Long-term
Insured Long-term
Intermediate-term
Limited-term
State Municipal Bond Funds
Arizona Louisiana North Carolina California/1/ Maryland Ohio Colorado Massachusetts/1/ Pennsylvania Connecticut Michigan Tennessee Florida Missouri Virginia Georgia New Jersey Wisconsin Kansas New Mexico Kentucky/2/ New York/1/ Taxable Income Income Fund |
Several additional sources of information are available to you. The Statement of Additional Information (SAI), incorporated by reference into this prospectus, contains detailed information on the fund's policies and operation. Shareholder reports contain management's discussion of market conditions, investment strategies and performance results as of the fund's latest semi-annual or annual fiscal year end. Call Nuveen at (800) 257-8787 to request a free copy of any of these materials or for other fund information.
You may also obtain this and other fund information directly from the Securities and Exchange Commission (SEC). The SEC may charge a copying fee for this information. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington D.C. Call the SEC at (800) SEC-0330 for room hours and operation. You may also request fund information by writing to the SEC's Public Reference Section, Washington D.C. 20549. The fund's Investment Company file number is 811-07619.
1. Long-term and insured long-term portfolios.
2. Long-term and limited-term portfolios.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
NUVEEN
Balanced Funds
October , 1998
Prospectus
Two value-driven strategies for building capital and moderating risk
Balanced Stock and [PHOTO APPEARS HERE]
Bond Fund
Balanced Municipal
and Stock Fund
NOT FDIC- May lose value
INSURED No bank guarantee
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Table of Contents
Section 1 The Funds
This section provides you with an overview of the funds including investment
objectives, portfolio holdings, and historical performance information.
Introduction 1 ............................................................................... Balanced Stock and Bond Fund 2 ............................................................................... Balanced Municipal and Stock Fund 4 ............................................................................... Section 2 How We Manage Your Money This section gives you a detailed discussion of our investment and risk management strategies. Who Manages the Funds 6 ............................................................................... Management Fees 7 ............................................................................... What Securities We Invest In 7 ............................................................................... How We Select Investments 9 ............................................................................... How the Balanced Stock and Bond Fund's Strategy has Performed 10 ............................................................................... What the Risks Are 11 ............................................................................... How We Manage Risk 12 ............................................................................... Section 3 How You Can Buy and Sell Shares This section provides the information you need to move money into or out of your account. How to Choose a Share Class 14 ............................................................................... How to Reduce Your Sales Charge 16 ............................................................................... How to Buy Shares 16 ............................................................................... Systematic Investing 17 ............................................................................... Systematic Withdrawal 18 ............................................................................... Special Services 18 ............................................................................... How to Sell Shares 19 ............................................................................... Section 4 General Information This section summarizes the funds' distribution policies and other general fund information. Distributions and Taxes 21 ............................................................................... Distribution and Service Plans 22 ............................................................................... Net Asset Value 23 ............................................................................... Fund Service Providers 23 ............................................................................... Section 5 Financial Highlights This section provides the funds' financial performance since inception. Balanced Stock and Bond Fund 25 ............................................................................... Balanced Municipal and Stock Fund 26 ............................................................................... |
We have used the icons
below throughout this
prospectus to make it
easy for you to find the
type of information
you need.
Investment Strategy
Risks
Fees, Charges
and Expenses
Shareholder
Instructions
Performance and
Current Portfolio
Information
October , 1998
Section 1 The Funds
Nuveen Balanced Stock and Bond Fund Nuveen Balanced Municipal and Stock Fund
Prospectus
This prospectus is intended to provide important information to help you evaluate whether one of the Nuveen Balanced Mutual Funds listed above may be right for you. Please read it carefully before investing and keep it for future reference.
Building Capital While Moderating Risk
Individuals who plan to rely on their investments for financial security are often concerned about maintaining a comfortable standard of living. For these investors, a balanced mutual fund is often an appropriate investment. Balanced funds generally invest in stocks, that offer attractive long-term growth potential and pay regular dividend income, and in bonds. By investing in bonds, these funds can provide additional current income and may also reduce overall portfolio volatility and stabilize returns during unfavorable markets. As a result, balanced mutual funds can offer investors the balance of long-term growth, current income and capital preservation potential they are seeking to help them maintain their lifestyle over time.
For those who seek suitable balanced funds for their portfolios, Nuveen offers the Nuveen Balanced Stock and Bond Fund and the Nuveen Balanced Municipal and Stock Fund, each with a different balance of long-term growth, current income and capital preservation potential.
A 100-Year Tradition of Quality Investments
Since our founding in 1898, John Nuveen & Co. Incorporated 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.
To learn more about how Nuveen Mutual Funds can help you achieve your financial goals, talk with your financial adviser or call us at (800) 257-8787 for more information.
Section 1 The Funds 1
Nuveen Balanced Stock and Bond Fund
Investment Objective
The fund seeks to provide over time an attractive total return from a diversified portfolio of equity securities, taxable fixed-income securities and cash equivalents by emphasizing capital appreciation in favorable markets and capital preservation in adverse markets.
How the Fund Pursues Its Objective
The fund purchases a diversified portfolio of stocks primarily of established, well-known domestic companies. We concentrate on stocks we believe are selling for less than their intrinsic worth, trying to identify those with a catalyst-- for example, a management change or an improved industry outlook--that will unlock the stock's unrecognized value. We generally buy only 40 to 50 stocks, which we believe have 15% to 25% price appreciation potential over the next 18 months.
We seek reduced risk, capital preservation potential and current income by balancing our stock investments with bonds. The bonds we purchase are primarily U.S. Treasury bonds with maturities from one to 15 years, but from time to time we may also purchase investment-grade corporate bonds if market conditions warrant.
What are the Risks of Investing in the Fund?
An investment in the fund is subject to market risk, interest rate risk and credit risk. Market risk is the risk that a particular stock, or stocks in general, may fall in value. Interest rate risk is the risk that interest rates will rise, causing bond prices to fall. Credit risk is the risk that a bond issuer will default or be unable to pay principal and interest; lower rated bonds generally carry greater credit risk. The fund's investments in foreign stock present additional risk including currency risk. As with any investment, loss of money is a risk of investing.
Is this Fund Right for You?
This fund may be appropriate for you if you are seeking:
. long-term growth potential from a value-driven strategy;
. a substantial measure of downside protection;
. the convenience of a balanced portfolio in a single investment;
. to focus on established, well-known companies;
. to pursue long-term financial goals.
You should not invest in this fund if you are:
. unwilling to accept share price fluctuation;
. investing to meet short-term financial goals.
Nuveen has selected Institutional Capital Corporation to manage the fund's portfolio. The chart and table below illustrate annual fund, peer group and market benchmark returns for the periods ending December 31, 1997. This information is intended to give you some indication of the risks of an investment in the fund by comparing the fund's performance with broad measures of market performance.
[BAR CHART APPEARS HERE]
Class A Annual Returns
1997 17.4%
From its inception on August 7, 1996 through December 31, 1997, the fund's highest and lowest quarterly returns were 8.58% and .16%, respectively, for the quarters ending 6/30/97 and 12/31/97. The bar chart and highest/lowest quarterly returns do not reflect sales charges, which would reduce returns, while the average annual return table does. See "How the Balanced Stock and Bond Strategy has Performed" for additional performance information. The fund's and the portfolio manager's past performance are not necessarily an indication of how the fund will perform in the future.
Average Annual Total Returns for
the Periods Ending December 31, 1997
------------------------------------
Class 1 Year Inception
================================================================================
Class A (Offer) 11.23% 17.10%
--------------------------------------------------------------------------------
Class A (NAV) 17.39% 21.94%
--------------------------------------------------------------------------------
Class B 12.58% 18.24%
--------------------------------------------------------------------------------
Class C 16.59% 21.07%
--------------------------------------------------------------------------------
Class R 17.72% 22.29%
--------------------------------------------------------------------------------
Lipper Peer Group/2/ 20.30% 22.97%
--------------------------------------------------------------------------------
S&P 500/2/ 33.36% 37.31%
--------------------------------------------------------------------------------
LB Int. Treasury Index/2/ 7.69% 8.61%
--------------------------------------------------------------------------------
Balanced Index/2/ 22.76% 16.63%
--------------------------------------------------------------------------------
|
2 Section 1 The Funds
-------------------------------------------------------------------------------- Shareholder Transaction Expenses/3/ -------------------------------------------------------------------------------- Paid Directly From Your Investment Share Class A B C R/4/ -------------------------------------------------------------------------------- Maximum Sales Charge Imposed on Purchases 5.25%/5/ None None None -------------------------------------------------------------------------------- Maximum Sales Charge Imposed on Reinvested Dividends None None None None -------------------------------------------------------------------------------- Exchange Fees None None None None -------------------------------------------------------------------------------- Deferred Sales Charge/6/ None/5/ 5%/7/ 1%/8/ None -------------------------------------------------------------------------------- Annual Fund Operating Expenses/9/ Paid From Fund Assets Share Class A B C R -------------------------------------------------------------------------------- Management Fees .75% .75% .75% .75% -------------------------------------------------------------------------------- 12b-1 Distribution and Service Fees .25% 1.00% 1.00% --% -------------------------------------------------------------------------------- Other Expenses .48% .49% .49% .48% -------------------------------------------------------------------------------- Total Annual Fund Operating Expenses--Gross+ 1.48% 2.24% 2.24% 1.23% -------------------------------------------------------------------------------- +After Expense Reimbursements -------------------------------------------------------------------------------- Reimbursements (.38%) (.39%) (.39%) (.38%) -------------------------------------------------------------------------------- Total Annual Fund Operating Expenses--Net 1.10% 1.85% 1.85% .85% -------------------------------------------------------------------------------- |
The following example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. It assumes you invest $10,000 in the fund for the time period indicated and then either redeem or do not redeem your shares at the end of a period. The example assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Your actual returns and costs may be higher or lower.
Redemption No Redemption
Share Class A B C R A B C R
--------------------------------------------------------------------------------
1 Year....... $ 668 $ 620 $ 227 $ 125 $ 668 $ 227 $ 227 $ 125
--------------------------------------------------------------------------------
3 Years...... $ 968 $1,013 $ 700 $ 390 $ 968 $ 700 $ 700 $ 390
--------------------------------------------------------------------------------
5 Years...... $1,291 $1,311 $1,200 $ 676 $1,291 $1,200 $1,200 $ 676
--------------------------------------------------------------------------------
10 Years..... $2,201 $2,383 $2,575 $1,489 $2,201 $2,383 $2,575 $1,489
--------------------------------------------------------------------------------
|
Portfolio Allocation Actual Target Stocks 58% 55% ------------------------------------------------------------ Taxable Bonds 40% 40% ------------------------------------------------------------ Cash Equivalents 2% 5% ------------------------------------------------------------ Portfolio Statistics Average Market Capitalization (Stocks) $31 billion ------------------------------------------------------------ Average P/E (Stocks) 17.6 ------------------------------------------------------------ Weighted Average Duration (Bonds) 5.2 years ------------------------------------------------------------ Weighted Average Maturity (Bonds) 6.9 years ------------------------------------------------------------ Top 5 Stock Holdings/10/ News Corp. Ltd. ADR 4.9% ------------------------------------------------------------ American Home Products 3.9% ------------------------------------------------------------ NationsBank Corporation 3.5% ------------------------------------------------------------ Hoechst AG ADR 3.7% ------------------------------------------------------------ Philips Electronics N.V. 3.5% ------------------------------------------------------------ Credit Quality (Bonds) U.S. Treasury Bonds 100% ------------------------------------------------------------ |
1. The year-to-date return as of 6/30/98 was 4.46%.
2. Peer Group returns reflect the performance of the Lipper Balanced Fund Index, an index that represents the average annualized returns of the 30 largest funds in the Lipper Balanced Category. Returns assume reinvestment of dividends and do not reflect any applicable sales charges. The table also reflects the performance of the Standard & Poor's 500 Index, Lehman Brothers Intermediate Treasury Index and a Balanced Index. The S&P 500 returns assume reinvestment of dividends, but do not include any brokerage commissions, sales charges, or other fees. The Balanced Index is comprised of a 60% weighting in the S&P 500 Index and 40% in the Lehman Brothers Intermediate Treasury Index.
3. As a percent of offering price unless otherwise noted. Authorized Dealers and other firms may charge additional fees for shareholder transactions or for advisory services. Please see their materials for details.
4. Class R shares may be purchased only under limited circumstances, or by specified classes of investors. See "How You Can Buy and Sell Shares."
5. Reduced Class A sales charges apply to purchases of $50,000 or more. Certain Class A purchases at net asset value of $1 million or more may bear a contingent deferred sales charge (CDSC) if redeemed within 18 months of purchase. See "How You Can Buy and Sell Shares."
6. As a percentage of lesser of purchase price or redemption proceeds.
7. Class B shares redeemed within six years of purchase bear a CDSC of 5% during the first year, 4% during the second and third years, 3% during the fourth, 2% during the fifth and 1% during the sixth year.
8. Class C shares redeemed within one year of purchase bear a 1% CDSC.
9. Long-term holders of Class B and Class C shares may pay more in Rule 12b-1 fees and CDSCs than the economic equivalent of the maximum front-end sales charge permitted under the National Association of Securities Dealers Conduct Rules. The investment advisor has agreed to waive fees and reimburse expenses through July 31, 1999 in order to prevent Total Annual Fund Operating Expenses (excluding any distribution or service fees and extraordinary expenses) from exceeding .95% of the average daily net asset value of any class of fund shares, which is higher than the expense reimbursement limit in place during fiscal year ended 6/30/98.
10. As a percentage of the fund's stock holdings. Holdings will vary.
Section 1 The Funds 3
Nuveen Balanced Municipal and Stock Fund
Fund Overview
Investment Objective
The investment objective of the fund is to provide over time an attractive after-tax total return through a combination of federally tax-exempt income and capital appreciation with capital preservation in adverse markets.
How the Fund Pursues Its Objective
The fund invests the majority of its assets in investment-grade quality municipal bonds. We concentrate on municipal bonds with favorable characteristics we believe are not yet recognized by the market, trying to identify those higher-yielding and undervalued bonds with intermediate characteristics that we believe offer the best balance of current tax-free income and capital preservation potential.
We invest the balance of fund assets primarily in established, well-known domestic companies. We concentrate on stocks we believe are selling for less than their intrinsic worth, trying to identify those with a catalyst--for example, a management change or an improved industry outlook--that will unlock the stock's unrecognized value. We generally buy only 40 to 50 stocks, which we believe have 15% to 25% price appreciation potential over the next 18 months.
What are the Risks of Investing in the Fund?
An investment in the fund is subject to market risk, interest rate risk and credit risk. Market risk is the risk that a particular stock, or stocks in general, may fall in value. Interest rate risk is the risk that interest rates will rise, causing bond prices to fall. Credit risk is the risk that a bond issuer will default or otherwise be unable to pay principal and interest; lower rated bonds generally carry greater credit risk. The fund's investment in foreign stock present additional risk including currency risk. As with any investment, loss of money is a risk of investing.
Is this Fund Right for You?
This fund may be appropriate for you if you are seeking:
. long-term growth potential from a value-driven strategy;
. a substantial measure of downside protection;
. the convenience of a balanced portfolio in a single investment;
. to focus on established, well-known companies;
. to pursue long-term financial goals.
You should not invest in this fund if you are:
. unwilling to accept share price fluctuation;
. investing to meet short-term financial goals.
How the Fund Has Performed
Nuveen Institutional Advisory Corp. manages the municipal investments of the fund and has selected Institutional Capital Corporation to manage the fund's equity portfolio. The chart and table below illustrate annual fund, peer group, and market benchmark returns for the periods ending December 31, 1997. This information is intended to give you some indication of the risks of an investment in the fund by comparing the fund's performance with broad measures of market performance.
Total Returns/1/
[BAR CHART APEARS HERE]
Class A Annual Returns
1997 16.3%
From its inception on August 7, 1996 through December 31, 1997, the fund's highest and lowest quarterly returns were 7.74% and .68%, respectively, for the quarters ending 6/30/97 and 12/31/97. The bar chart and highest/lowest quarterly returns do not reflect sales charges, which would reduce returns, while the average annual return table does. The fund's past performance is not necessarily an indication of how the fund will perform in the future.
Average Annual Total
Returns for the
Periods Ending
December 31, 1997
---------------------
Class 1 Year Inception
---------------------------------------------------------
Class A (Offer)................... 10.22% 14.11%
.........................................................
Class A (NAV)..................... 16.31% 18.81%
.........................................................
Class B........................... 11.53% 15.13%
.........................................................
Class C........................... 15.48% 17.94%
.........................................................
Class R........................... 16.68% 19.10%
.........................................................
Lipper Peer Group/2/.............. 20.30% 22.97%
.........................................................
S&P 500/2/........................ 33.36% 37.31%
.........................................................
LB 10-Year Muni Index/2/.......... 9.24% 9.96%
.........................................................
Balanced Index/2/................. 18.59% 20.45%
.........................................................
|
4 Section 1 The Funds
What are the Costs of Investing?
Shareholder Transaction Expenses/3/ Paid Directly From Your Investment Share Class A B C R/4/ Maximum Sales Charge Imposed on Purchases 5.25%/5/ None None None Maximum Sales Charge Imposed on Reinvested Dividends None None None None Exchange Fees None None None None Deferred Sales Charge/6/ None/5/ 5%/7/ 1%/8/ None Annual Fund Operating Expenses/9/ Paid From Fund Assets Share Class A B C R Management Fees .75% .75% .75% .75% 12b-1 Distribution and Service Fees .25% 1.00% 1.00% --% Other Expense .36% .35% .36% .36% Total Annual Fund Operating Expenses--Gross+ 1.36% 2.10% 2.11% 1.11% +After Expense Reimbursements Reimbursements (.26%) (.25%) (.26%) (.26%) Total Annual Fund Operating Expenses-Net 1.10% 1.85% 1.85% .85% |
The following example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. It assumes you invest $10,000 in the fund for the time period indicated and then either redeem or do not redeem your shares at the end of a period. The example assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Your actual returns and costs may be higher or lower.
Redemption No Redemption
Share Class A B C R A B C R
1 Year $ 656 $ 607 $ 214 $ 113 $ 656 $ 213 $ 214 $ 113
3 Years $ 933 $ 972 $ 661 $ 353 $ 933 $ 658 $ 661 $ 353
5 Years $1,231 $1,241 $1,134 $ 612 $1,231 $1,129 $1,134 $ 612
10 Years $2,074 $2,242 $2,441 $1,352 $2,074 $2,242 $2,441 $1,352
|
How the Fund Is Invested (as of 6/30/98)
Portfolio Allocation Actual Target Municipal Bonds 56% 60% Stocks 41% 35% Cash Equivalents 3% 5% |
Portfolio Statistics Average Market Capitalization (Stocks) $31 billion Average P/E (Stocks) 17.6 Weighted Average Duration (Bonds) 6.7 years Weighted Average Maturity (Bonds) 11.2 years Top 5 Stock Holdings/10/ News Corp. Ltd. ADR 5.0% NationsBank Corporation 3.9% Hoechst AG ADR 3.9% American Home Products Corp. 3.9% Philips Electronics N.V. 3.7% Credit Quality (Bonds)/11/ AAA 40% AA 4% A 9% BBB 47% |
1. The year-to-date return as of 6/30/98 was 8.10%.
2. Peer Group returns reflect the performance of the Lipper Balanced Fund Index, an index that represents the average annualized returns of the 30 largest funds in the Lipper Balanced Category. Returns assume reinvestment of dividends and do not reflect any applicable sales charges.
The table also reflects the performance of the Standard & Poor's 500 Index, a Balanced Index and Lehman Brothers 10-Year Municipal Bond Index. The S&P 500 returns assume reinvestment of dividends, but do not include any brokerage commissions, sales charges or other fees. The Balanced Index is comprised of a 40% weighting in the S&P 500 Index and 60% in the Lehman Brothers 10-Year Municipal Bond Index.
3. As a percent of offering price unless otherwise noted. Authorized Dealers and other firms may charge additional fees for shareholder transactions or for advisory services. Please see their materials for details.
4. Class R shares may be purchased only under limited circumstances, or by specified classes of investors. See "How You Can Buy and Sell Shares."
5. Reduced Class A sales charges apply to purchases of $50,000 or more. Certain Class A purchases at net asset value of $1 million or more may bear a contingent deferred sales charge (CDSC) if redeemed within 18 months of purchase. See "How You Can Buy and Sell Shares."
6. As a percentage of lesser of purchase price or redemption proceeds.
7. Class B shares redeemed within six years of purchase bear a CDSC of 5% during the first year, 4% during the second and third years, 3% during the fourth, 2% during the fifth and 1% during the sixth year.
8. Class C shares redeemed within one year of purchase bear a 1% CDSC.
9. Long-term holders of Class B and Class C shares may pay more in Rule 12b-1 fees and CDSCs than the economic equivalent of the maximum front-end sales charge permitted under the National Association of Securities Dealers Conduct Rules. The investment adviser has agreed to waive fees and reimburse expenses through July 31, 1999 in order to prevent Total Annual Fund Operating Expenses (excluding any distribution or service fees and extraordinary expenses) from exceeding .95% of the average daily net asset value of any class of fund shares.
10. As a percentage of the fund's stock holdings. Holdings will vary.
11. As a percentage of the fund's bond holdings. Holdings will vary.
Section 1 The Funds
Section 2 How We Manage Your Money
To help you understand the funds better, this section includes a detailed discussion of our investment and risk management strategies. For a more complete discussion of these matters, please consult the Statement of Additional Information.
Who Manages the Funds
Nuveen Institutional Advisory Corp. (NIAC), 333 West Wacker Drive, Chicago, IL 60606, has overall responsibility for management of the funds. NIAC oversees the management of the funds' portfolios, manages the funds' business affairs and provides certain clerical, bookkeeping and other administrative services. NIAC is a wholly owned subsidiary of John Nuveen & Co. Incorporated (Nuveen), which is the sponsor and principal underwriter of the fund's shares and has sponsored or underwritten more than $60 billion of investment company securities. Nuveen and its affiliates have more than $35 billion in assets under management.
NIAC has selected Institutional Capital Corporation, 225 West Wacker Drive, Chicago, IL 60606, as subadviser to manage the investment portfolios of the Balanced Stock and Bond Fund, and the equity investments of the Balanced Municipal and Stock Fund. Institutional Capital is an institutional investment management firm with over 28 years of experience and approximately $12 billion in assets under management. Institutional Capital's investment management strategy and operating policies are set through a team approach, with all its investment professionals contributing. Institutional Capital currently maintains a staff of 11 investment professionals. Mr. Robert H. Lyon, president, owns shares representing 51% of its voting rights. In addition, The John Nuveen Company owns preferred shares of Institutional Capital, which are convertible after several years into a 20% common stock interest.
NIAC manages the municipal investments of the Balanced Municipal and Stock Fund. Overall investment management strategy and operating policies for the fund's municipal investments are set by NIAC's Investment Policy Committee. This committee is comprised of the principal executive officers and portfolio managers of NIAC and meets regularly to review economic conditions, the outlook for the financial markets in general and the status of the municipal markets in particular. Daniel S. Solender has responsibility for the day-to-day management of the fund's municipal investments. Mr. Solender has been an assistant vice president of NIAC since September 1997 and manager of the fund's municipal investments since the fund's inception. Mr. Solender is also an assistant vice president and previously was an assistant portfolio manager of Nuveen Advisory Corp., another investment subsidiary of Nuveen. Mr. Solender currently manages investments for 19 Nuveen-sponsored investment companies.
6 Section 2 How We Manage Your Money
Management Fees
For providing these services, NIAC is paid an annual fund management fee
according to the following schedule:
Average Daily Balanced Stock Balanced Municipal Net Asset Value and Bond Fund and Stock Fund For the first $125 million .7500 of 1%... .7500 of 1% .......................................................................... For the next $125 million .7375 of 1%... .7375 of 1% .......................................................................... For the next $250 million .7250 of 1%... .7250 of 1% .......................................................................... For the next $500 million .7125 of 1%... .7125 of 1% .......................................................................... For the next $1 billion .7000 of 1%... .7000 of 1% .......................................................................... For assets over $2 billion .6750 of 1%... .6750 of 1% .......................................................................... |
For the most recent fiscal year, the funds paid after expense reimbursements the following management fees to NIAC, as a percentage of average net assets:
Balanced Stock and Bond Fund .37% .......................................................................... Balanced Municipal and Stock Fund .50% ..........................................................................
Out of the fund management fee, NIAC pays a portfolio management fee to Institutional Capital Corporation. Each fund pays for its own operating expenses such as custodial, transfer agent, accounting and legal fees; brokerage commissions; distribution and service fees; organizational expenses; and extraordinary expenses.
What Securities We Invest In
Equity Securities
Both the Balanced Stock and Bond Fund and Balanced Municipal and Stock Fund invest in equity securities. Eligible equity securities include common stocks; preferred stocks; warrants to purchase common stocks or preferred stocks; securities convertible into common or preferred stocks, such as convertible bonds and debentures; dollar-denominated securities of foreign companies (limited to 25% of net assets) and other securities with equity characteristics. Any convertible bonds and debentures must be rated investment grade (one of the four highest ratings by Moody's Investors Service, Standard & Poor's, Duff & Phelps or Fitch Investors Service) when purchased.
Taxable Bonds
The Balanced Stock and Bond Fund invests the fixed income portion of its portfolio in taxable bonds. Eligible taxable bonds are U.S. Treasury and other investment-grade bonds with maturities of one to 15 years. We focus on U.S. Treasury securities but may purchase other bonds from time to time if market conditions warrant. Investment-grade securities are those rated in the four highest categories by Moody's Investors Service, Standard & Poor's, Duff & Phelps, or Fitch Investors Service when purchased.
Municipal Obligations
The Balanced Municipal and Stock Fund invests the fixed income portion of its portfolio in municipal bonds. States, local governments and municipalities issue municipal bonds to raise money for various public
Section 2 How We Manage Your Money 7
purposes such as building public facilities, refinancing outstanding obligations and financing general operating expenses. Municipal bonds pay income that is exempt from regular federal income tax but may be subject to the federal alternative minimum tax. A municipality may issue general obligation bonds which are secured by its taxing power, or it may issue revenue bonds that are payable from the revenues of a particular project or a special excise tax.
The Balanced Municipal and Stock Fund may purchase municipal bonds that represent lease obligations. These carry special risks because the issuer of the bonds may not be obligated to appropriate money annually to make payments under the lease. In order to reduce this risk, the fund will only purchase these bonds where the issuer has a strong incentive to continue making appropriations until maturity.
The Balanced Municipal and Stock Fund will purchase only quality municipal bonds that are either rated investment grade (AAA/Aaa to BBB/Baa) by independent rating agencies at the time of purchase or are non-rated but judged to be investment grade by the fund's investment adviser. We will not invest more than 20% of the fund's municipal investments in this type of unrated municipal obligation. These policies can only be changed by shareholder vote.
The Balanced Municipal and Stock Fund will invest at least 80% of its municipal assets in investment-grade quality municipal bonds with effective remaining maturities of no more than 15 years. This policy will not limit the stated or nominal maturities of the municipal bonds in which the fund invests. The effective remaining maturity of a municipal bond may be shorter than its stated maturity for a variety of reasons, including the bond's call features, its stated or expected payment schedule or other terms or conditions that may cause the bond to have the risk of price fluctuations of an otherwise comparable but shorter-term bond.
Short-Term Investments
The funds may invest in short-term investments including U.S. government securities, quality commercial paper or similar fixed-income securities with remaining maturities of one year or less. The Balanced Municipal and Stock Fund intends to invest in taxable short-term investments only in the event that suitable tax-exempt short-term investments are not available at reasonable prices and yields. For more information on short-term investments, see the Statement of Additional Information.
Delayed Delivery Transactions
The funds may buy or sell securities on a when-issued or delayed-delivery basis, paying for or taking delivery of the securities at a later date, normally within 15 to 45 days of the trade. Such transactions involve an element of risk because the value of the security to be purchased may decline before the settlement date.
Each fund's investment objective may not be changed without shareholder approval. The above investment policies may be changed by the Board of Trustees without shareholder approval unless otherwise noted in this prospectus or the Statement of Additional Information.
8 Section 2 How We Manage Your Money
How We Select Investments
We adhere to disciplined, value-driven investment strategies whose aim is to provide consistent, attractive performance over time with moderated risk. We emphasize quality securities carefully chosen through in-depth research and follow those securities closely over time to assess whether they continue to meet our purchase rationale.
Equity Securities
Institutional Capital selects stocks from a universe of approximately 450 large and midsize companies with at least $500 million in market capitalization. Proprietary quantitative valuation models determine which of these stocks currently appear to be selling for less than their intrinsic worth. Based on a qualitative assessment of each company's prospects, we then look for a catalyst that we believe will unlock the stock's unrecognized value. A catalyst may be as simple as a management change or as complex as a fundamentally improved industry outlook. We generally buy only 40 to 50 stocks, which we believe have a 15% to 25% price appreciation potential over the next 18 months for the equity portion of each fund's investment portfolio.
Taxable Fixed-Income Securities
Institutional Capital selects taxable fixed-income securities for the Balanced Stock and Bond Fund based on its general outlook for the fixed-income markets as well as a detailed analysis of expected yield curve changes. We use proprietary quantitative models and qualitative assessment of top-down economic and market factors to develop an outlook on interest rates. We then analyze the current shape of the yield curve as well as expected changes under different scenarios. We select the specific mix of maturities that offer the best balance of current income and capital preservation potential in light of current and expected market conditions.
Municipal Obligations for the Balanced Municipal and Stock Fund
NIAC selects municipal obligations for the Balanced Municipal and Stock Fund based upon its assessment of a bond's relative value in terms of current yield, price, credit quality and future prospects. NIAC is supported by Nuveen's award- winning team of specialized research analysts who review municipal securities available for purchase, monitor the continued creditworthiness of the fund's municipal investments, and analyze economic, political and demographic trends affecting the municipal markets. We utilize these resources to identify municipal obligations with favorable characteristics we believe are not yet recognized by the market. We then select those higher-yielding and undervalued municipal obligations that we believe represent the most attractive values.
Portfolio Turnover
A fund buys and sells portfolio securities in the normal course of its investment activities. The proportion of the fund's investment portfolio that is sold and replaced with new securities during a year is known as the fund's portfolio turnover rate. The funds anticipate that they may engage in active trading in equity securities. The funds anticipate that their annual equity portfolio turnover rate will generally be between 100% and 200%.
Section 2 How We Manage Your Money 9
The Balanced Municipal and Stock Fund expects annual municipal portfolio turnover to be significantly less than 75%. The Balanced Stock and Bond Fund anticipates that its annual bond portfolio turnover rate will generally not exceed 75%. A turnover rate of 100% would occur, for example, if the fund sold and replaced securities valued at 100% of its net assets within one year. Active trading would result in the payment by the fund of increased brokerage costs and could result in the payment by shareholders of increased taxes on realized investment gains.
The chart and table below illustrate the historical performance of the portfolio manager's investment strategy for the Nuveen Balanced Stock and Bond Fund. Of course, past performance is no indication of future results, and the chart and table represent performance of managed accounts and not actual fund performance.
Growth of a $10,000 Investment 6/78-6/98
[MOUNTAIN CHART APPEARS HERE]
S&P 500 PORTFOLIO LIPPER
DAILY MANAGER BALANCED
REINVESTED COMPOSITE INDEX CPI
---------- --------- -------- -------
06/78 $ 10,867 $ 9,925 $ 10,668 $10,000
1978 $ 10,331 $ 9,955 $ 10,157 $10,390
1983 $ 18,764 $ 17,498 $ 18,554 $14,973
1988 $ 40,193 $ 37,793 $ 37,483 $17,699
1993 $ 83,963 $ 72,351 $ 67,888 $21,763
1997 $158,432 $118,205 $105,133 $24,326
06/98 $248,706 $153,717 $138,560 $25,000
|
Average Annual Total Returns
------------------------------------
1-Year 5-Year 10-Year 20-Year
==========================================================
On Offer............ 10.54% 13.57% 13.58% 14.64%
----------------------------------------------------------
On NAV.............. 16.66% 14.81% 14.20% 14.95%
----------------------------------------------------------
|
The chart and table above present the performance of Institutional Capital's Balanced Composite, which represents all its individually managed accounts (totalling $784 million) that have substantially the same investment objectives and policies as the fund. These accounts are not subject to all of the same investment restrictions, investment inflows and outflows, and distribution requirements as the fund, which may affect fund performance. We assumed that an investor paid a maximum Class A sales charge of 5.25% and we deducted from the Composite's gross-of-fee returns the Class A gross operating expenses of 1.48% for the fund's most recent fiscal year. This chart would be different for a Class B, C or R investment because of their different sales charges and operating expenses. The Lipper Balanced Fund Index represents the average annualized returns of the 30 largest funds in the Lipper Balanced Category. Index returns assume reinvestment of all dividends but do not include any brokerage commissions, sales charges or other fees. This chart does not represent past or future performance of the fund.
10 Section 2 How We Manage Your Money
Risk is inherent in all investing. Investing in a mutual fund -- even the most conservative -- involves risk, including the risk that you may receive little or no return on your investment or even that you may lose part or all of your investment. Therefore, before investing you should consider carefully the following risks that you assume when you invest in these funds. Because of these and other risks, you should consider an investment in any of these funds to be a long-term investment.
Market risk: the risk that a particular stock, an industry, or stocks in general may fall in value.
Interest rate risk: the risk that the value of the fund's portfolio will decline because of rising market interest rates (bond prices move in the opposite direction of interest rates). The longer the average maturity (duration) of a fund's portfolio, the greater its interest rate risk.
Income risk: the risk that the income from the fund's portfolio will decline because of falling market interest rates. This can result when the fund invests the proceeds from new share sales, or from matured or called bonds, at market interest rates that are below the portfolio's current earnings rate.
Credit risk: the risk that an issuer of a bond is unable to meet its obligation to make interest and principal payments due to changing financial or market conditions. Generally, lower rated bonds provide higher current income but are considered to carry greater credit risk than higher rated bonds. Year 2000 issues may affect the ability of issuers to meet their payment obligations to their bond holders, and may adversely affect their credit ratings.
Inflation risk: the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the funds' assets can decline as can the value of the funds' distributions.
Correlation risk: Although the prices of equity and fixed-income securities often rise and fall at different times so that a fall in the price of one is offset by a rise in the price of the other, in a down market the prices of these securities can also fall in tandem.
Foreign investment risk: Securities issued by foreign companies or governments (which are limited to 25% of net assets) present risks beyond those of securities of U.S. issuers. Such risks include political or economic instability, changes in foreign currency exchange rates, and less publicly available information. Prices of foreign securities also may be more volatile and they may be less liquid than U.S. stocks.
Section 2 How We Manage Your Money 11
We use time-tested risk management strategies designed to help protect your capital during periods of market uncertainty or weakness: broad portfolio diversification, a rigorous sell discipline and defined portfolio allocation ranges. The funds also invest in quality bonds whose steady income and relative price stability can help reduce volatility and stabilize returns in down markets. While we use these strategies to control or reduce risk, there is no assurance that we will succeed.
Portfolio Allocation Targets and Ranges
Each fund follows a disciplined asset allocation methodology that keeps your portfolio mix within a defined range over time as market conditions change. The funds have established the following allocation targets and operating ranges for each asset class:
Balanced Stock and Bond Fund Balanced Municipal and Stock Fund
Target Range Target Range
Stocks 55% 40-70% 35% 30-50%
.....................................................................................
Bonds 40% 25-55% 60% 50-70%
.....................................................................................
Cash Equivalents 5% 0-20% 5% 0-10%
.....................................................................................
|
A fund's Board of Trustees may change the target investment mix and operating ranges for each asset class without shareholder approval. The Balanced Municipal and Stock Fund will not set the minimum allowable allocation for municipal bonds below 50%.
Investment Limitations
The funds have adopted certain investment limitations (based on total assets) that cannot be changed without shareholder approval and are designed to limit your investment risk and maintain portfolio diversification. Each fund may not have more than:
. 5% in securities in any one issuer, or 10% of the voting securities of that issuer (except for U.S. government securities or for 25% of the funds' total assets);
. 25% in any one industry (except U.S. government securities and, in the case of the Balanced Municipal and Stock Fund, municipal securities backed by governmental users). For example, as of June 30, 1998, the funds were invested in the following industries (shown as a percentage of the funds' stock holdings):
Balanced Stock and Balanced Municipal Bond Fund and Stock Fund Financial 14% Financial 14% --------------------------------- --------------------------------- Health Care 14% Health Care 13% --------------------------------- --------------------------------- Consumer Services 12% Consumer Services 12% --------------------------------- --------------------------------- Basic Industries 10% Consumer Staples 10% --------------------------------- --------------------------------- Capital Equipment/Technology 9% Capital Equipment/Technology 10% --------------------------------- --------------------------------- Consumer Staples 9% Basic Industries 10% --------------------------------- --------------------------------- Transportation 8% Capital Spending 8% --------------------------------- --------------------------------- Capital Spending 8% Transportation 8% --------------------------------- --------------------------------- Energy 7% Energy 6% --------------------------------- --------------------------------- Retail 4% Retail 4% --------------------------------- --------------------------------- Other 5% Other 5% --------------------------------- --------------------------------- |
12 Section 2 How We Manage Your Money
Please see the Statement of Additional Information for a more detailed discussion of investment limitations.
Hedging and Other Defensive Investment Strategies Each fund may invest up to 100% of its assets in cash equivalents and short-term investments as a temporary defensive measure in response to adverse market conditions, or to keep cash on hand fully invested. During these periods, the proportion of a fund's assets invested in an asset category may fall outside its allowable range, and the fund may not achieve its investment objective.
We may also use various investment strategies designed to hedge against changes in the values of securities a fund owns or expects to purchase or to hedge against interest rate changes. These hedging strategies include using financial futures contracts, options on financial futures, or stock index options. The ability of a fund to benefit from options and futures is largely dependent on our ability to use such strategies successfully. A fund could lose money on futures transactions or an option can expire worthless.
The fund's approach to equity investing may also provide a measure of protection in adverse markets. The fund focuses on stocks of primarily established, well- known companies which generally have been better positioned to weather adverse markets than smaller, less established companies. The fund purchases stocks with low valuations, measured by their relative price-to-earnings ratio. The prices of these types of stocks have often fallen less than more fully valued stocks during market downturns. The fund's allocation to bonds and cash equivalents can also provide a measure of added stability during adverse market conditions.
Portfolio Manager Performance in Down Markets Over the past 20 years, there have been four periods in which the S&P 500 declined by more than 10%. Portfolio Manager performance is represented by fund Class A returns on net asset value for the most recent period and by Institutional Capital's Balanced Composite for prior periods. Of course, past performance does not guarantee future results, and Composite performance does not represent actual fund results. Please see the discussion under "How the Balanced Stock and Bond Fund's Strategy Has Performed" for a detailed discussion of portfolio manager composite returns and the index returns to which they are compared.
Portfolio Manager Down-Market Performance
[BAR CHART APPEARS HERE]
Balanced Stock and Bond Fund Investment Strategy
Portfolio Manager Lipper Balanced
Balanced Composite Fund Index S&P 500
------------------ ---------- -------
2Q81-2Q82 3.26% -0.67% -13.47%
4Q87 -9.42% -13.26% -22.63%
3Q90 -6.90% -8.09% -13.78%
3Q98 -10.91% -8.24% -13.30%
|
Section 2 How We Manage Your Money 13
Section 3 How You Can Buy and Sell Shares
You can choose from four classes of fund shares, each with a different combination of sales charges, fees, eligibility requirements and other features. Your financial adviser can help you determine which class is best for you. We offer a number of features for your convenience. Please see the Statement of Additional Information for further details.
How to Choose a Share Class
In deciding whether to purchase Class A, Class B, Class C or Class R shares, you should consider:
. the amount of your purchase;
. any current holdings of fund shares;
. how long you expect to hold the shares;
. the amount of any up-front sales charge;
. whether a contingent deferred sales charge (CDSC) would apply upon redemption;
. the amount of any distribution or service fees that you may incur while you own the shares;
. whether you will be reinvesting income or capital gain distributions in additional shares;
. whether you qualify for a sales charge waiver or reduction.
For a summary of the charges and expenses for each class, please see "What are the Costs of Investing?".
Class A Shares
You can buy Class A shares at the offering price, which is the net asset value per share plus an up-front sales charge. You may qualify for a reduced sales charge, or the sales charge may be waived, as described in "How to Reduce Your Sales Charge." Class A shares are also subject to an annual service fee of .25% which compensates your financial adviser for providing ongoing service to you. The up-front Class A sales charge is as follows:
14 Section 3 How You Can Buy and Sell Shares
Authorized Dealer
Sales Charge as % of Sales Charge as % of Commission as % of
Amount of Purchase Public Offering Price Net Amount Invested Public Offering Price
Less than $50,000.................. 5.25% 5.54% 5.00%
........................................................................................................
$50,000 but less than $100,000..... 4.25% 4.44% 4.00%
........................................................................................................
$100,000 but less than $250,000.... 3.50% 3.63% 3.25%
........................................................................................................
$250,000 but less than $500,000.... 2.75% 2.83% 2.50%
........................................................................................................
$500,000 but less than $1,000,000.. 2.00% 2.04% 1.75%
........................................................................................................
$1,000,000 and over................ -- -- 1.00%*
........................................................................................................
|
*You can buy $1 million or more of Class A shares at net asset value without an up-front sales charge ($500,000 for purchases through eligible employer- sponsored qualified contribution retirement plans). Nuveen pays Authorized Dealers of record on these share purchases a sales commission of 1.00% of the first $2.5 million, plus .50% of the next $2.5 million, plus .25% of the amount over $5.0 million. If you redeem your shares within 18 months of purchase, you may have to pay a CDSC of 1% of either your purchase price or your redemption proceeds, whichever is lower. You do not have to pay this CDSC if your financial adviser has made arrangements with Nuveen and agrees to waive the commission.
Class B Shares
You can buy Class B shares at the net asset value per share without any up-front
sales charge so that the full amount of your purchase is invested in the fund.
However, you will pay annual distribution and service fees of 1% of average
daily assets. The annual .25% service fee compensates your financial adviser for
providing ongoing service to you. The annual .75% distribution fee compensates
Nuveen for paying your financial adviser a 4.00% up-front sales commission,
which includes an advance of the first year's service fee. If you sell your
shares within six years of purchase, you will have to pay a CDSC based on either
your purchase price or what you sell your shares for, whichever amount is lower,
according to the following schedule. You do not pay a CDSC on any Class B shares
you purchase by reinvesting dividends.
Years Since Purchase 0-1 1-2 2-3 3-4 4-5 5-6 CDSC 5% 4% 4% 3% 2% 1% |
Class B shares automatically convert to Class A shares eight years after you buy them so that the distribution fees you pay over the life of your investment are limited. You will continue to pay an annual service fee on any converted Class B shares.
Class C Shares
You can buy Class C shares at the net asset value per share without any up-front
sales charge so that the full amount of your purchase is invested in the fund.
However, you will pay annual distribution and service fees of 1%. The annual
.25% service fee compensates your financial adviser for providing ongoing
service to you. The annual .75% distribution fee reimburses Nuveen for paying
your financial adviser an ongoing sales commission. Nuveen advances the first
year's service and distribution fees. If you sell your shares within 12 months
of purchase, you may have to pay a 1% CDSC based on either your purchase price
or what you sell your shares for, whichever amount is lower.
Section 3 How You Can Buy and Sell Shares 15
Class R Shares
Under limited circumstances, you may purchase Class R Shares at the net asset
value on the day of purchase. In order to qualify, you must be eligible under
one of the programs described in "How to Reduce Your Sales Charge" (below) or
meet certain other purchase size criteria. Class R Shares are not subject to
sales charges or ongoing service or distribution fees. Class R shares have lower
ongoing expenses than the other classes.
How to Reduce Your Sales Charge
We offer a number of ways to reduce or eliminate the up-front sales charge on
Class A shares or to qualify to purchase Class R shares.
Class A Sales Charge
Reductions
. Rights of accumulation
. Letter of intent
. Group purchase
Class A Sales Charge
Waivers
. Nuveen Defined Portfolio
reinvestment
. Purchases using
redemptions from
unrelated funds
. Retirement plans
. Certain employees and
directors of Nuveen or
employees of authorized
dealers
. Bank trust departments
Class R Eligibility
. Certain employees and
directors of Nuveen or
employees of authorized
dealers
. Bank trust departments
In addition, Class A shares at net asset value and Class R shares may be purchased through registered investment advisers, certified financial planners and registered broker-dealers who charge asset-based or comprehensive "wrap" fees for their services. Please refer to the Statement of Additional Information for detailed program descriptions and eligibility requirements. Additional information is available from your financial adviser or by calling (800) 257- 8787. Your financial adviser can also help you prepare any necessary application forms. You or your financial adviser must notify Nuveen at the time of each purchase if you are eligible for any of these programs. The funds may modify or discontinue these programs at any time.
How to Buy Shares
You may open an account with $3,000 per fund share class ($1,000 for a
Traditional/Roth IRA account; $500 for an Education IRA account; and $500 for
accounts opened through certain fee based programs) and make additional
investments at any time with as little as $50. There is no minimum if you are
reinvesting Nuveen Defined Portfolio distributions. The share price you pay will
depend on when Nuveen receives your order. Orders received before the close of
trading on a business day will receive that day's closing share price, otherwise
you will receive the next business day's price. A business day is any day the
New York Stock Exchange is open for business and normally ends at 4 p.m. New
York time.
16 Section 3 How You Can Buy and Sell Shares
Through a Financial Adviser
You may buy shares through your financial adviser, who can handle all the
details for you, including opening a new account. Financial advisers can also
help you review your financial needs and formulate long-term investment goals
and objectives. In addition, financial advisers generally can help you develop a
customized financial plan, select investments and monitor and review your
portfolio on an ongoing basis to help assure your investments continue to meet
your needs as circumstances change. Financial advisers are paid either from fund
sales charges and fees or by charging you a separate fee in lieu of a sales
charge for ongoing investment advice and services. If you do not have a
financial adviser, call (800) 257-8787 and Nuveen can refer you to one in your
area.
By Mail
You may open an account and buy shares by mail by completing the enclosed
application and mailing it along with your check to: Nuveen Investor Services,
P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186.
Systematic Investing
Once you have established a fund account, systematic investing allows you to
make regular investments through automatic deductions from your bank account
(simply complete the appropriate section of the account application form) or
directly from your paycheck. To invest directly from your paycheck, contact your
financial adviser or call Nuveen at (800) 257-8787. Systematic investing may
also make you eligible for reduced sales charges.
One of the benefits of systematic investing is dollar cost averaging. Because you regularly invest a fixed amount of money over a period of years regardless of the share price, you buy more shares when the price is low and fewer shares when the price is high. As a result, the average share price you pay should be less than the average share price of fund shares over the same period. To be effective, dollar cost averaging requires that you invest over a long period of time and does not assure that you will profit.
Systematic Investment Plan
You can make regular investments of $50 or more per month by authorizing us to
draw preauthorized checks on your bank account. You can stop the withdrawals at
any time. There is no charge for this plan.
Payroll Direct Deposit Plan
You can, with your employer's consent, make regular investments of $25 or more
per pay period (meeting the monthly minimum of $50) by authorizing your employer
to deduct this amount automatically from your paycheck. You can stop the
deductions at any time. There is no charge for this plan.
Section 3 How You Can Buy and Sell Shares 17
Systematic Withdrawal
If the value of your fund account is at least $10,000, you may request to have
$50 or more withdrawn automatically from your account. You may elect to receive
payments monthly, quarterly, semi-annually or annually, and may choose to
receive a check, have the monies transferred directly into your bank account
(see "Special Services--Fund Direct" below), paid to a third party or sent
payable to you at an address other than your address of record. You must
complete the appropriate section of the account application or Account Update
Form to participate in a fund's systematic withdrawal plan.
You should not establish systematic withdrawals if you intend to make concurrent purchases of Class A, B or C shares because you may unnecessarily pay a sales charge or CDSC on these purchases.
Special Services
To help make your investing with us easy and efficient, we offer you the
following services at no extra cost.
Exchanging Shares
You may exchange fund shares into an identically registered account at any time
for the same class of another Nuveen mutual fund available in your state. Your
exchange must meet the minimum purchase requirements of the fund into which you
are exchanging. Because an exchange is treated for tax purposes as a concurrent
sale and purchase and any gain may be subject to tax, you should consult your
tax adviser about the tax consequences of any contemplated exchange.
The exchange privilege is not intended to allow you to use a fund for short-term trading. Because excessive exchanges may interfere with portfolio management, raise fund operating expenses or otherwise have an adverse effect on other shareholders, each fund reserves the right to revise or suspend the exchange privilege, limit the amount or number of exchanges, or reject any exchange.
Reinstatement Privilege
If you redeem fund shares, you may reinvest all or part of your redemption
proceeds up to one year later without incurring any additional charges. You may
only reinvest into the same share class you redeemed. If you paid a CDSC, we
will refund your CDSC and reinstate your holding period. You may use this
reinstatement privilege only once for any redemption.
Fund Direct
You may link your fund account to your bank account and transfer money
electronically between these accounts and perform a variety of account
transactions, including buying shares by telephone and investing through a
Systematic Investment Plan. You may also have dividends, distributions,
redemption payments or Systematic Withdrawal Plan payments sent directly to your
bank account.
Your financial adviser can help you complete the forms for these services, or you can call Nuveen at (800) 257-8787 for copies of the necessary forms.
18 Section 3 How You Can Buy and Sell Shares
An Important Note
About Involuntary Redemption
From time to time, the funds
may establish minimum
account size requirements. The
funds reserve the right to
liquidate your account upon
30 days' written notice if the
value of your account falls
below an established
minimum. The funds presently
have set a minimum balance
of $100 unless you have an
active Nuveen Defined Portfolio
reinvestment account. You will
not be assessed a CDSC on an
involuntary redemption.
How to Sell Shares
You may use one of the following ways to sell (redeem) your shares on any day
the New York Stock Exchange is open. You will receive the share price next
determined after Nuveen has received your properly completed redemption request.
Your redemption request must be received before the close of trading for you to
receive that day's price. While the funds do not charge a redemption fee, you
may be assessed a CDSC, if applicable. When you redeem Class A, Class B, or
Class C shares subject to a CDSC, the fund will first redeem any shares that are
not subject to a CDSC or that represent an increase in the value of your fund
account due to capital appreciation, and then redeem the shares you have owned
for the longest period of time, unless you ask the fund to redeem your shares in
a different order. No CDSC is imposed on shares you buy through the reinvestment
of dividends and capital gains. The holding period is calculated on a monthly
basis and begins on the first day of the month in which you buy shares. When you
redeem shares subject to a CDSC, the CDSC is calculated on the lower of your
purchase price or redemption proceeds, deducted from your redemption proceeds,
and paid to Nuveen. The CDSC may be waived under certain special circumstances
as described in the Statement of Additional Information.
Through Your Financial Adviser
You may sell your shares through your financial adviser who can prepare the
necessary documentation. Your financial adviser may charge for this.
By Telephone
If you have authorized telephone redemption privileges, you can redeem your
shares by telephone. You may not redeem by telephone shares held in certificate
form. Checks will be issued only to the shareholder of record and mailed to the
address of record. If you have established electronic funds transfer privileges,
you may have redemption proceeds transferred electronically to your bank
account. We will normally mail your check the next business day. Nuveen and
Chase Global Funds Services Company, the Funds' transfer agent, will be liable
for losses resulting from unauthorized telephone redemptions only if they do not
follow reasonable procedures designed to verify the identity of the caller. You
should immediately verify your trade confirmations when you receive them.
By Mail
You can sell your shares at any time by sending a written request to the
appropriate fund, c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green
Station, New York, NY 10274-5186. Your request must include the following
information:
. The fund's name;
. Your name and account number;
. The dollar or share amount you wish to redeem;
. The signature of each owner exactly as it appears on the account;
. The name of the person to whom you want your redemption proceeds paid (if other than to the shareholder of record);
Section 3 How You Can Buy and Sell Shares 19
. The address where you want your redemption proceeds sent (if other than the address of record);
. Any certificates you have for the shares; and
. Any required signature guarantees.
We will normally mail your check the next business day, but in no event more than seven days after we receive your request. If you purchased your shares by check, your redemption proceeds will not be mailed until your check is cleared. Guaranteed signatures are required if you are redeeming more than $50,000, you want the check payable to someone other than the shareholder of record or you want the check sent to another address (or the address of record has been changed within the last 60 days). Signature guarantees must be obtained from a bank, brokerage firm or other financial intermediary that is a member of an approved Medallion Guarantee Program or that is otherwise approved by a fund. A notary public cannot provide a signature guarantee.
20 Section 3 How You Can Buy and Sell Shares
Section 4 General Information
To help you understand the tax implications of investing in the funds, this section includes important details about how the funds make distributions to shareholders. We discuss some other fund policies, as well.
Payment and Reinvestment Options The funds automatically reinvest your dividends in additional fund shares unless you request otherwise. You may request to have your dividends paid to you by check, deposited directly into your bank account, paid to a third party, sent to an address other than your address of record or reinvested in shares of another Nuveen mutual fund. For further information, contact your financial adviser or call Nuveen at (800) 257-8787.
Taxes and Tax Reporting
The funds intend to make distributions that may be taxed as ordinary
income or capital gains (which may be taxable at different rates
depending on the length of time the fund holds its assets). Dividends
from a fund's long-term capital gains are taxable as capital gains,
while dividends from short-term capital gains and net investment
income are generally taxable as ordinary income. Because the Balanced
Municipal and Stock Fund invests in municipal bonds, certain
dividends you receive will be exempt from regular federal income tax.
All or a portion of these dividends, however, may be subject to state
and local taxes or to the federal alternative minimum tax (AMT). The
tax you pay on a given capital gains distribution depends generally
on how long the fund has held the portfolio securities it sold. It
does not depend on how long you have owned your fund shares. Taxable
dividends do not qualify for a dividends received deduction if you
are a corporate shareholder.
Early in each year, you will receive a statement detailing the amount and nature of all dividends and capital gains, including any percentage of your fund dividends attributable to municipal obligations, that you were paid during the prior year. You will receive this statement from the firm where you purchased your fund shares if you hold your investment in street name. Nuveen will send you this statement if you hold your shares in registered form. The tax status of your dividends from any of these funds is not affected by whether you reinvest your dividends or receive them in cash. The sale of shares in your account may produce a gain or loss, and is a taxable event. For tax purposes, an exchange is the same as a sale.
Tax laws are subject to change, so we urge you to consult your tax adviser about your particular tax situation and how it might be affected by current tax law. Please note that if you do not furnish us with your correct Social Security number or employer identification number, federal law requires us to withhold federal income tax from your distributions and redemption proceeds at a rate of 31%.
Section 4 General Information 21
Buying or Selling Shares Close to a Record Date Buying fund shares shortly before the record date for a taxable dividend is commonly known as "buying the dividend." The entire dividend may be taxable to you even though a portion of the dividend effectively represents a return of your purchase price. Similarly, if you sell or exchange fund shares shortly before the record date for a tax-exempt dividend, a portion of the price you receive may be treated as a taxable capital gain even though it reflects tax-free income earned but not yet distributed by the fund.
Distribution Schedule
=================================================================================================
Tax-Free Dividends Taxable Dividends Capital Gains
=================================================================================================
Balanced Stock and Bond Fund None Quarterly December
-------------------------------------------------------------------------------------------------
Balanced Municipal and Stock Fund Monthly December December
-------------------------------------------------------------------------------------------------
|
John Nuveen & Co. Incorporated serves as the selling agent and distributor of the funds' shares. In this capacity, Nuveen manages the offering of the funds' shares and is responsible for all sales and promotional activities. In order to reimburse Nuveen for its costs in connection with these activities, including compensation paid to authorized dealers, each fund has adopted a distribution and service plan under Rule 12b-1 under the Investment Company Act of 1940. (See "How to Choose a Share Class" for a description of the distribution and service fees paid under this plan.)
Nuveen receives the distribution fee for Class B and Class C shares primarily for providing compensation to Authorized Dealers, including Nuveen, in connection with the distribution of shares. Nuveen uses the service fee for Class A, Class B, and Class C shares to compensate Authorized Dealers, including Nuveen, for providing account services to shareholders. These services may include establishing and maintaining shareholder accounts, answering shareholder inquiries, and providing other personal services to shareholders. These fees also compensate Nuveen for other expenses, including printing and distributing prospectuses to persons other than shareholders, the expenses of preparing, printing, and distributing advertising and sales literature and reports to shareholders used in connection with the sale of shares. Because these fees are paid out of the fund's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
22 Section 4 General Information
The price you pay for your shares is based on the fund's net asset value per share which is determined as of the close of trading (normally 4:00 p.m. eastern time) on each day the New York Stock Exchange is open for business. Net asset value is calculated for each class by taking the fair value of the class' total assets, including interest or dividends accrued but not yet collected, less all liabilities, and dividing by the total number of shares outstanding. The result, rounded to the nearest cent, is the net asset value per share. All valuations are subject to review by the funds' Board of Trustees or its delegate.
In determining net asset value, expenses are accrued and applied daily and securities and other assets for which market quotations are available are valued at market value. Common stocks and other equity securities are valued at the last sales price that day. Common stocks and other equity securities not listed on a national securities exchange or Nasdaq are valued at the most recent bid prices. The prices of fixed-income securities are provided by a pricing service and based on the mean between the bid and asked price. When price quotes are not readily available (which is usually the case for municipal bonds), the pricing service establishes fair market value based on prices of comparable securities.
The custodian of the assets of the funds is The Chase Manhattan Bank, 4 New York Plaza, New York, NY 10004-2413. Chase also provides certain accounting services to the funds. The funds' transfer, shareholder services and dividend paying agent, Chase Global Funds Services Company,P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186, performs bookkeeping, data processing and administrative services for the maintenance of shareholder accounts.
NIAC and Chase Global Funds Services Company each rely on computer systems to manage the funds' investments, process shareholder transactions and provide shareholder account maintenance. Because of the way computers historically have stored dates, some of these systems currently may not be able to correctly process activity occurring in the year 2000. NIAC is working with the funds' service providers to adapt their systems to address this "Year 2000" issue. NIAC and the funds expect, but there can be no absolute assurance, that the necessary work will be completed on a timely basis.
Section 4 General Information 23
Section 5 Financial Highlights
The following tables are intended to help you better understand each fund's recent past performance. The tables are excerpted from each fund's latest financial statements audited by Arthur Andersen LLP. You may obtain the complete statements along with the auditor's report by requesting from Nuveen a free copy of the fund's latest annual shareholder report.
24 Section 5 Financial Highlights
Balanced Stock and Bond Fund
Selected data for a share outstanding throughout each period is as follows:
Investment Operations Less Distributions
-------------------------------------- -----------------------------------
Class
(Inception
Date)
Net
Realized
and Ending
Year Beginning Net Unrealized Net Net
Ending Net Asset Investment Investment Investment Capital Asset
June 30, Value Income(a) Gain (Loss) Total Income Gains Total Value
----------------------------------------------------------------------------------------------------------------------------
Class A (8/96)
1998 $23.84 $.77 $3.11 $3.88 $(.76) $(.57) $(1.33) $26.39
1997(c) 20.00 .70 3.66 4.36 (.42) (.10) (.52) 23.84
Class B (8/96)
1998 23.84 .59 3.10 3.69 (.57) (.57) (1.14) 26.39
1997(c) 20.00 .46 3.75 4.21 (.27) (.10) (.37) 23.84
Class C (8/96)
1998 23.84 .59 3.10 3.69 (.57) (.57) (1.14) 26.39
1997(c) 20.00 .53 3.68 4.21 (.27) (.10) (.37) 23.84
Class R (8/96)
1998 23.84 .83 3.11 3.94 (.82) (.57) (1.39) 26.39
1997(c) 20.00 .61 3.80 4.41 (.47) (.10) (.57) 23.84
----------------------------------------------------------------------------------------------------------------------------
|
Ratios/Supplemental Data
-------------------------
Class
(Inception
Date)
Ratio of Net
Ratio of Investment
Ending Expenses Income
Year Net to Average to Average Portfolio
Ending Total Assets Net Net Turnovers
June 30, Return(b) (000) Assets(a) Assets(a) Rate
--------------------------------------------------------------------------------------------------
Class A (8/96)
1998 16.71% $69,614 1.10% 3.06% 155%
1997(c) 22.04 56,686 1.10* 3.39* 52
Class B (8/96)
1998 15.86 10,356 1.85 2.32 155
1997(c) 21.26 646 1.85* 2.23* 52
Class C (8/96)
1998 15.86 4,142 1.85 2.31 155
1997(c) 21.26 980 1.85* 2.53* 52
Class R (8/96)
1998 16.99 3,413 .85 3.32 155
1997(c) 22.31 6,052 .85* 3.12* 52
--------------------------------------------------------------------------------------------------
|
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses, if applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value without any sales charge and are not annualized.
(c) From commencement of class operations as noted.
Section 5 Financial Highlights 25
Balanced Municipal and Stock Fund
Selected data for a share outstanding throughout each period is as follows:
Investment Operations Less Distributions
-------------------------------------- -----------------------------------
Class
(Inception
Date)
Net
Realized
and Ending
Year Beginning Net Unrealized Net Net
Ending Net Asset Investment Investment Investment Capital Asset
June 30, Value Income(a) Gain (Loss) Total Income Gains Total Value
----------------------------------------------------------------------------------------------------------------------------
Class A (8/96)
1998 $23.11 $.67 $2.66 $3.33 $(.61) $(.37) $ (.98) $25.46
1997(c) 20.00 .56 3.02 3.58 (.42) (.05) (.47) 23.11
Class B (8/96)
1998 23.11 .49 2.67 3.16 (.37) (.37) (.74) 25.53
1997(c) 20.00 .40 3.04 3.44 (.28) (.05) (.33) 23.11
Class C (8/96)
1998 23.10 .49 2.66 3.15 (.37) (.37) (.74) 25.51
1997(c) 20.00 .40 3.03 3.43 (.28) (.05) (.33) 23.10
Class R (8/96)
1998 23.11 .72 2.66 3.38 (.73) (.37) (1.10) 25.39
1997(c) 20.00 .61 3.03 3.64 (.48) (.05) (.53) 23.11
|
Ratios/Supplemental Data
-------------------------
Class
(Inception
Date)
Ratio of Net
Ratio of Investment
Ending Expenses Income
Year Net to Average to Average Portfolio
Ending Total Assets Net Net Turnovers
June 30, Return(b) (000) Assets(a) Assets(a) Rate
--------------------------------------------------------------------------------------------------
Class A (8/96)
1998 14.71% $117,005 1.10% 2.73% 87%
1997(c) 18.05 79,952 1.10* 2.79* 32
Class B (8/96)
1998 13.91 32,384 2.11 1.96 87
1997(c) 17.32 2,051 1.85* 1.99* 32
Class C (8/96)
1998 13.87 14,908 1.85 1.97 87
1997(c) 17.27 1,559 1.85* 1.97* 32
Class R (8/96)
1998 14.94 1,353 .85 2.99 87
1997(c) 18.38 6,963 .85* 3.16* 32
---------------------------------------------------------------------------------------------------------------------------
|
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses, if
applicable, by Nuveen Advisory.
(b) Total returns are calculated on net asset value without any sales charge
and are not annualized.
(c) From commencement of class operations as noted.
26 Section 5 Financial Highlights
Nuveen Mutual Funds
Nuveen offers a variety of mutual funds designed to help you reach your financial goals. The funds below are grouped by investment objectives.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Dividend and Growth Fund
Tax-Free Income
National Municipal Bond Funds
Long-term
Insured Long-term
Intermediate-term
Limited-term
State Municipal Bond Funds
Arizona Louisiana North Carolina California/1/ Maryland Ohio Colorado Massachusetts/1/ Pennsylvania Connecticut Michigan Tennessee Florida Missouri Virginia Georgia New Jersey Wisconsin Kansas New Mexico Kentucky/2/ New York/1/ Taxable Income Income Fund |
Several additional sources of information are available to you. The Statement of Additional Information (SAI), incorporated by reference into this prospectus, contains detailed information on the funds' policies and operation. Shareholder reports contain management's discussion of market conditions, investment strategies and performance results as of the funds' latest semi-annual or annual fiscal year end. Call Nuveen at (800) 257-8787 to request a free copy of any of these materials or for other fund information.
You may also obtain this and other fund information directly from the Securities and Exchange Commission (SEC). The SEC may charge a copying fee for this information. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington D.C. Call the SEC at (800) SEC-0330 for room hours and operation. You may also request fund information by writing to the SEC's Public Reference Section, Washington D.C. 20549. The funds' Investment Company file number is 811-07619.
1. Long-term and insured long-term portfolios.
2. Long-term and limited-term portfolios.
NUVEEN
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com
Statement of Additional Information
, 1998
Nuveen Investment Trust
333 West Wacker Drive
Chicago, Illinois 60606
NUVEEN GROWTH AND INCOME STOCK FUND
NUVEEN BALANCED STOCK AND BOND FUND
NUVEEN BALANCED MUNICIPAL AND STOCK FUND
This Statement of Additional Information is not a prospectus. A prospectus may be obtained without charge from certain securities representatives, banks and other financial institutions that have entered into sales agreements with John Nuveen & Co. Incorporated, or from a Fund, by written request to the Fund c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186, or by calling 800-257-8787. This Statement of Additional Informa- tion relates to, and should be read in conjunction with, as to each Fund the Prospectus for that Fund. The Prospectuses for the Funds are dated , 1998.
Table of Contents Page ------------------------------------------------------------------------------ General Information B-2 ------------------------------------------------------------------------------ Investment Policies and Restrictions B-2 ------------------------------------------------------------------------------ Investment Policies and Techniques B-5 ------------------------------------------------------------------------------ Management B-22 ------------------------------------------------------------------------------ Fund Manager and Portfolio Manager B-28 ------------------------------------------------------------------------------ Portfolio Transactions B-30 ------------------------------------------------------------------------------ Net Asset Value B-31 ------------------------------------------------------------------------------ Tax Matters B-32 ------------------------------------------------------------------------------ Performance Information B-39 ------------------------------------------------------------------------------ Additional Information on the Purchase and Redemption of Fund Shares and Shareholder Programs B-46 ------------------------------------------------------------------------------ Distribution and Service Plans B-63 ------------------------------------------------------------------------------ Independent Public Accountants and Custodian B-65 ------------------------------------------------------------------------------ Financial Statements B-65 ------------------------------------------------------------------------------ General Trust Information B-65 ------------------------------------------------------------------------------ Appendix A--Ratings of Investments A-1 ------------------------------------------------------------------------------ |
The audited financial statements for each Fund's most recent fiscal year appear in the Funds' Annual Reports. The Annual Reports accompany this Statement of Additional Information.
GENERAL INFORMATION
Nuveen Growth and Income Stock Fund ("Growth/Income Fund"), Nuveen Balanced Stock and Bond Fund ("Stock/Bond Fund") and Nuveen Balanced Municipal and Stock Fund ("Muni/Stock Fund") (individually a "Fund" and collectively the "Funds") are series of the Nuveen Investment Trust (the "Trust"), an open-end diversi- fied management series investment company organized as a Massachusetts business trust on May 6, 1996. Each series of the Trust represents shares of beneficial interest in a separate portfolio of securities and other assets, with its own objectives and policies. Currently, four series of the Trust are authorized and outstanding.
Certain matters under the Investment Company Act of 1940 which must be submit- ted to a vote of the holders of the outstanding voting securities of a series company shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding voting securities of each se- ries affected by such matter.
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT RESTRICTIONS
The investment objective and certain fundamental investment policies of each
Fund are described in the Prospectus for that Fund. A Fund, as a fundamental
policy, may not, without the approval of the holders of a majority of the
shares of the Fund:
(1) With respect to 75% of its total assets, purchase the securities of any is- suer (except securities issued or guaranteed by the United States government or any agency or instrumentality thereof) if, as a result, (i) more than 5% of the Fund's total assets would be invested in securities of that issuer, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that is- suer.
(2) Borrow money, except that the Fund may (i) borrow money from banks for tem- porary or emergency purposes (but not for leverage or the purchase of invest- ments) and (ii) engage in other transactions permissible under the Investment Company Act of 1940 that may involve a borrowing (such as, investing in When- Issued Securities or certain futures and options), provided that the combina- tion of (i) and (ii) shall not exceed 33 1/3% of the value of the Fund's total assets (including the amount borrowed), less the Fund's liabilities (other than borrowings).
(3) Act as an underwriter of another issuer's securities, except to the extent that the Fund may be deemed to be an underwriter within the meaning of the Se- curities Act of 1933 in connection with the purchase and sale of portfolio se- curities.
(4) Make loans to other persons, except through (i) the purchase of debt secu- rities permissible under the Fund's investment policies, (ii) repurchase agree- ments, or (iii) the lending of portfolio securities, provided that no such loan of portfolio securities may be made by the Fund if, as a result, the aggregate of such loans would exceed 33 1/3% of the value of the Fund's total assets.
(5) Purchase or sell physical commodities unless acquired as a result of own- ership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options, futures contracts, or other derivative in- struments, or from investing in securities or other instruments backed by physical commodities).
(6) Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prohibit the Fund from purchasing or selling securities or other instruments backed by real estate or of issuers engaged in real estate activities).
(7) Issue senior securities, except as permitted under the Investment Company Act of 1940.
(8) Purchase the securities of any issuer if, as a result, 25% or more of the Fund's total assets would be invested in the securities of issuers whose prin- cipal business activities are in the same industry (except that this restric- tion shall not be applicable to securities issued or guaranteed by the U.S. government or any agency or instrumentality thereof and, in the case of the Muni/Stock Fund to Municipal Obligations, other than those Municipal Obliga- tions backed only by the assets and revenues of non-governmental users).
If a percentage restriction is adhered to at the time of investment, a later increase in percentage resulting from a change in market value of the invest- ment or the total assets will not constitute a violation of that restriction.
For the purpose of applying the limitation set forth in restriction (1) above to Municipal Obligations an issuer shall be deemed the sole issuer of a secu- rity when its assets and revenues are separate from other governmental enti- ties and its securities are backed only by its assets and revenues. Similarly, in the case of a non-governmental user, such as an industrial corporation or a privately owned or operated hospital, if the security is backed only by the assets and revenues of the non-governmental user, then such non-governmental user would be deemed to be the sole issuer. Where a security is also backed by the enforceable obligation of a superior or unrelated governmental or other entity (other than a bond insurer), it shall also be included in the computa- tion of securities owned that are issued by such governmental or other entity. Where a security is guaranteed by a governmental entity or some other facili- ty, such as a bank guarantee or letter of credit, such a guarantee or letter of credit would be considered a separate security and would be treated as an issue of such government, other entity or bank. When a Municipal Obligation is insured by bond insurance, it shall not be considered a security that is is- sued or guaranteed by the insurer; instead, the issuer of such Municipal Obli- gation will be determined in accordance with the principles set forth above. The foregoing restrictions do not limit the percentage of the assets of the Muni/Stock Fund that may be invested in Municipal Obligations insured by any given insurer.
The foregoing fundamental investment policies, together with the investment objective of each of the Growth/Income Fund, the Stock/Bond Fund and the Muni/Stock Fund, and certain other policies specifically identified in the prospectus, cannot be changed without approval by holders of a "majority of the Fund's outstanding voting shares." As defined in the Investment Company Act of 1940, this means the vote of (i) 67% or more of the Fund's shares pres- ent at a meeting, if the holders of more than 50% of the Fund's shares are present or represented by proxy, or (ii) more than 50% of the Fund's shares, whichever is less.
In addition to the foregoing fundamental investment policies, each Fund is also subject to the following non-fundamental restrictions and policies, which may be changed by the Board of Trustees. A Fund may not:
(1) Sell securities short, unless the Fund owns or has the right to obtain se- curities equivalent in kind and amount to the securities sold short at no added cost, and provided that transactions in options, futures contracts, options on futures contracts, or other derivative instruments are not deemed to constitute selling securities short.
(2) Purchase securities on margin, except that the Fund may obtain such short- term credits as are necessary for the clearance of transactions; and provided that margin deposits in connection with futures contracts, options on futures contracts, or other derivative instruments shall not constitute purchasing se- curities on margin.
(3) Pledge, mortgage or hypothecate any assets owned by the Fund except as may be necessary in connection with permissible borrowings or investments and then such pledging, mortgaging, or hypothecating may not exceed 33 1/3% of the Fund's total assets at the time of the borrowing or investment.
(4) Purchase the securities of any issuer (other than securities issued or guaranteed by domestic or foreign governments or political subdivisions there- of) if, as a result, more than 5% of its net assets would be invested in the securities of issuers that, including predecessors or unconditional guarantors, have a record of less than three years of continuous operation. This policy does not apply to securities of pooled investment vehicles or mortgage or as- set-backed securities.
(5) Purchase securities of open-end or closed-end investment companies except in compliance with the Investment Company Act of 1940 and applicable state law.
(6) Enter into futures contracts or related options if more than 30% of the Fund's net assets would be represented by futures contracts or more than 5% of the Fund's net assets would be committed to initial margin deposits and premi- ums on futures contracts and related options.
(7) Invest in direct interests in oil, gas or other mineral exploration pro- grams or leases; however, the Fund may invest in the securities of issuers that engage in these activities.
(8) Purchase securities when borrowings exceed 5% of its total assets. If due to market fluctuations or other reasons, the value of the Fund's assets falls below 300% of its borrowings, the Fund will reduce its borrowings within 3 business days. To do this, the Fund may have to sell a portion of its invest- ments at a time when it may be disadvantageous to do so.
(9) Each Fund may not invest in illiquid securities if, as a result of such in- vestment, more than 15% of the Fund's net assets would be invested in illiquid securities.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of the Funds' investment objectives, policies, and techniques that are described in the Prospectus for each Fund.
INVESTMENT IN MUNICIPAL OBLIGATIONS
Portfolio Investments
Except to the extent the Muni/Stock Fund invests in temporary investments as described below, all of the Muni/Stock Fund's investments in Municipal Obliga- tions will be comprised of tax-exempt Municipal Obligations that are either (1) rated, at the time of purchase, within the four highest grades (Baa or BBB or better) by Moody's Investors Service, Inc. ("Moody's") or by Standard & Poor's Ratings Group ("S&P") or (2) unrated but which, in the opinion of the NIAC, have credit characteristics equivalent to, and will be of comparable quality to, Municipal Obligations so rated; provided, however, that not more than 20% of the Muni/Stock Fund's investments in Municipal Obligations, may be in such unrated bonds. The foregoing policies are fundamental policies of the Muni/Stock Fund. Municipal Securities rated Baa or BBB are considered "invest- ment grade" securities; Municipal Securities rated Baa are considered medium grade obligations which lack outstanding investment characteristics and in fact have speculative characteristics as well, while Municipal Securities rated BBB are regarded as having an adequate capacity to pay principal and interest. Mu- nicipal Securities rated AAA in which the Fund may invest may have been so rated on the basis of the existence of insurance guaranteeing the timely pay- ment, when due, of all principal and interest. A general description of Moody's and S&P's ratings is set forth in Appendix A hereto. The ratings of Moody's and S&P represent their opinions as to the quality of the Municipal Securities they rate. It should be emphasized, however, that ratings are general and are not absolute standards of quality. Consequently, Municipal Securities with the same maturity, coupon and rating may have different yields while obligations of the same maturity and coupon with different ratings may have the same yield.
The foregoing policies as to rating of investments in securities will apply only at the time of the purchase of a security, and the Fund will not be re- quired to dispose of securities in the event Moody's or S&P downgrades its as- sessment of the credit characteristics of a particular issuer.
The municipal portfolio manager of the Muni/Stock Fund pursues a value oriented approach for selecting municipal securities by seeking to identify underrated or undervalued Municipal Obligations. Underrated Municipal Obligations are those whose ratings do not, in Nuveen Institutional Advisory Corp.'s ("NIAC") opinion, reflect their true value. Such Municipal Obligations may be underrated because of the time that has elapsed since their rating was assigned or re- viewed, or because of positive factors that may not have been fully taken into account by rating agencies, or for other similar reasons. Municipal Obligations that are undervalued or that represent undervalued municipal market sectors are Municipal Obligations that, in NIAC's opinion, are worth more than the value assigned to them in the marketplace. Municipal Obligations of particular types or purposes (e.g., hospital bonds, industrial revenue bonds or bonds issued by a particular municipal issuer) may be undervalued because there is a temporary excess of supply in that market sector, or because of a general decline in the market price of Municipal
Obligations of the market sector for reasons that do not apply to the particu- lar Municipal Obligations that are considered undervalued. The Muni/Stock Fund's investment in underrated or undervalued Municipal Obligations will be based on NIAC's belief that their prices should ultimately reflect their true value.
The Muni/Stock Fund has not established any limit on the percentage of its portfolio of investments that may be invested in Municipal Obligations subject to the alternative minimum tax provisions of Federal tax law. Consequently, a substantial portion of the current income produced by the Fund may be includable in alternative minimum taxable income. Special considerations apply to corporate investors. See "Tax Matters."
Also included within the general category of Municipal Obligations described in the Muni/Stock Fund Prospectus are participations in lease obligations or installment purchase contract obligations (hereinafter collectively called "Municipal Lease Obligations") of municipal authorities or entities. Although a Municipal Lease Obligation does not constitute a general obligation of the municipality for which the municipality's taxing power is pledged, a Municipal Lease Obligation is ordinarily backed by the municipality's covenant to budget for, appropriate and make the payments due under the Municipal Lease Obliga- tion. However, certain Municipal Lease Obligations contain "non-appropriation" clauses which provide that the municipality has no obligation to make lease or installment purchase payments in future years unless money is appropriated for such purpose on a yearly basis. In the case of a "non-appropriation" lease, the Fund's ability to recover under the lease in the event of non-appropria- tion or default will be limited solely to the repossession of the leased prop- erty, without recourse to the general credit of the lessee, and disposition or releasing of the property might prove difficult. The Muni/Stock Fund will seek to minimize these risks by not investing more than 20% of the assets allocated to investments in Municipal Obligations in Municipal Lease Obligations that contain "non-appropriation" clauses, and by only investing in those "non-ap- propriation" Municipal Lease Obligations where (1) the nature of the leased equipment or property is such that its ownership or use is essential to a gov- ernmental function of the municipality, (2) appropriate covenants will be ob- tained from the municipal obligor prohibiting the substitution or purchase of similar equipment if lease payments are not appropriated, (3) the lease obli- gor has maintained good market acceptability in the past, and (4) the invest- ment is of a size that will be attractive to institutional investors.
During temporary defensive periods (e.g., times when, in NIAC's opinion, the ability of a Fund to meet its long-term investment objectives and preserve the asset value of a Fund may be adversely affected by significant adverse market, economic, political, or other circumstances), and in order to keep cash on hand fully invested, a Fund may invest any percentage of its assets in tempo- rary investments. Temporary investments may be either tax-exempt or taxable. To the extent the Muni/Stock Fund invests in taxable temporary investments, the Fund will not at such times be in a position to achieve that portion of its investment objective of seeking income exempt from federal income tax. For further information, see "Short-Term Investments" below.
Obligations of issuers of Municipal Securities are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Bankruptcy Reform Act of 1978. In addition, the obliga- tions of such issuers may become subject to the laws enacted in the future by
Congress, state legislatures or referenda extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations or upon municipalities to levy taxes. There is also the possibility that, as a result of legislation or other conditions, the power or ability of any issuer to pay, when due, the principal of and interest on its Municipal Obligations may be materially affected.
CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Short-Term Taxable Fixed Income Securities
The Growth/Income Fund may invest up to 35% of its total assets, and for tempo- rary defensive purposes or to keep cash on hand fully invested up to 100% of its total assets, in cash equivalents and short-term taxable fixed income secu- rities from issuers having a long-term rating of at least A or higher by S&P, Moody's or Fitch, or A- or higher by Duff & Phelps, Inc. ("D&P") and having a maturity of one year or less. The Stock/Bond Fund may invest up to 20% of its total assets, and for temporary defensive purposes or to keep cash on hand fully invested up to 100% of its total assets, in cash equivalents and short- term taxable fixed income securities from issuers having a long-term rating of at least A or higher by S&P, Moody's or Fitch, or A- or higher by D&P and hav- ing a maturity of one year or less. The Muni/Stock Fund may invest up to 10% of its total assets, and for temporary defensive purposes or to keep cash on hand fully invested up to 100% of its total assets in cash equivalents and short- term taxable fixed income securities, although the Fund intends to invest in taxable temporary investments only in the event that suitable tax-exempt tempo- rary investments are not available at reasonable prices and yields. Short-term taxable fixed income securities are defined to include, without limitation, the following:
(1) Each Fund may invest in U.S. government securities, including bills, notes
and bonds differing as to maturity and rates of interest, which are either is-
sued or guaranteed by the U.S. Treasury or by U.S. government agencies or in-
strumentalities. U.S. government agency securities include securities issued by
(a) the Federal Housing Administration, Farmers Home Administration, Export-Im-
port Bank of the United States, Small Business Administration, and the Govern-
ment National Mortgage Association, whose securities are supported by the full
faith and credit of the United States; (b) the Federal Home Loan Banks, Federal
Intermediate Credit Banks, and the Tennessee Valley Authority, whose securities
are supported by the right of the agency to borrow from the U.S. Treasury; (c)
the Federal National Mortgage Association, whose securities are supported by
the discretionary authority of the U.S. government to purchase certain obliga-
tions of the agency or instrumentality; and (d) the Student Loan Marketing As-
sociation, whose securities are supported only by its credit. While the U.S.
government provides financial support to such U.S. government-sponsored agen-
cies or instrumentalities, no assurance can be given that it always will do so
since it is not so obligated by law. The U.S. government, its agencies, and in-
strumentalities do not guarantee the market value of their securities, and con-
sequently, the value of such securities may fluctuate. The Muni/Stock Fund may
only invest in government securities with maturities of less than one year or
that have a variable or floating rate of interest.
(2) Each Fund may invest in certificates of deposit issued against funds depos- ited in a bank or savings and loan association. Such certificates are for a definite period of time, earn a specified rate of return, and
are normally negotiable. If such certificates of deposit are non-negotiable, they will be considered illiquid securities and be subject to the Fund's 15% restriction on investments in illiquid securities. Pursuant to the certificate of deposit, the issuer agrees to pay the amount deposited plus interest to the bearer of the certificate on the date specified thereon. Under current FDIC regulations, the maximum insurance payable as to any one certificate of deposit is $100,000; therefore, certificates of deposit purchased by the Fund may not be fully insured. The Muni/Stock Fund may only invest in certificates of de- posit issued by U.S. banks with at least $1 billion in assets.
(3) The Growth/Income Fund and the Stock/Bond Fund may invest in bankers' ac- ceptances which are short-term credit instruments used to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then "accepted" by a bank that, in effect, uncondi- tionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an asset or it may be sold in the secondary market at the going rate of interest for a spe- cific maturity.
(4) Each Fund may invest in repurchase agreements which involve purchases of debt securities. In such an action, at the time the Fund purchases the securi- ty, it simultaneously agrees to resell and redeliver the security to the sell- er, who also simultaneously agrees to buy back the security at a fixed price and time. This assures a predetermined yield for a Fund during its holding pe- riod since the resale price is always greater than the purchase price and re- flects an agreed-upon market rate. Such actions afford an opportunity for the Fund to invest temporarily available cash. A Fund may enter into repurchase agreements only with respect to obligations of the U.S. government, its agen- cies or instrumentalities; certificates of deposit; or bankers acceptances in which the Fund may invest. Repurchase agreements may be considered loans to the seller, collateralized by the underlying securities. The risk to a Fund is lim- ited to the ability of the seller to pay the agreed-upon sum on the repurchase date; in the event of default, the repurchase agreement provides that the af- fected Fund is entitled to sell the underlying collateral. If the value of the collateral declines after the agreement is entered into, however, and if the seller defaults under a repurchase agreement when the value of the underlying collateral is less than the repurchase price, the Fund could incur a loss of both principal and interest. The portfolio manager monitors the value of the collateral at the time the action is entered into and at all times during the term of the repurchase agreement. The portfolio manager does so in an effort to determine that the value of the collateral always equals or exceeds the agreed- upon repurchase price to be paid to a Fund. If the seller were to be subject to a federal bankruptcy proceeding, the ability of a Fund to liquidate the collat- eral could be delayed or impaired because of certain provisions of the bank- ruptcy laws.
(5) The Growth/Income Fund may invest in bank time deposits, which are monies kept on deposit with banks or savings and loan associations for a stated period of time at a fixed rate of interest. There may be penalties for the early with- drawal of such time deposits, in which case the yields of these investments will be reduced.
(6) Each Fund may invest in commercial paper, which are short-term unsecured promissory notes, including variable rate master demand notes issued by corpo- rations to finance their current operations. Master demand notes are direct lending arrangements between the Fund and a corporation. There is no
secondary market for the notes. However, they are redeemable by the Fund at any time. The portfolio manager will consider the financial condition of the corpo- ration (e.g., earning power, cash flow, and other liquidity ratios) and will continuously monitor the corporation's ability to meet all of its financial ob- ligations, because the Fund's liquidity might be impaired if the corporation were unable to pay principal and interest on demand. The Growth/Income Fund and the Stock/Bond Fund may only invest in commercial paper rated A-1 or better by S&P, Prime-1 or higher by Moody's, Duff 2 or higher by D&P or Fitch 2 or higher by Fitch. The Muni/Stock Fund may only invest in commercial paper, corporate notes, corporate bonds or corporate debentures that are rated within the high- est grade by Moody's or S&P and which mature within one year of the date of purchase or carry a variable or floating rate of interest.
Short-Term Tax-Exempt Fixed Income Securities
The Muni/Stock Fund may invest up to 10% of its total assets and during certain temporary periods, in order to keep cash on hand fully invested or as a defen- sive measure in response to prevailing market conditions, up to 100% of its to- tal assets as "temporary investments" in cash equivalent and short-term fixed income securities that are either taxable or tax-exempt. The short-term taxable fixed income securities are described above. Short-term tax-exempt fixed income securities are securities that are exempt from regular federal income tax and mature within three years or less from the date of issuance. Short-term tax-ex- empt fixed income securities are defined to include, without limitation, the following:
Bond Anticipation Notes (BANs) are usually general obligations of state and lo- cal governmental issuers which are sold to obtain interim financing for pro- jects that will eventually be funded through the sale of long-term debt obliga- tions or bonds. The ability of an issuer to meet its obligations on its BANs is primarily dependent on the issuer's access to the long-term municipal bond mar- ket and the likelihood that the proceeds of such bond sales will be used to pay the principal and interest on the BANs.
Tax Anticipation Notes (TANs) are issued by state and local governments to fi- nance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. Tax anticipation notes are usually general obligations of the issuer. A weakness in an issuer's capacity to raise taxes due to, among other things, a decline in its tax base or a rise in delin- quencies, could adversely affect the issuer's ability to meet its obligations on outstanding TANs.
Revenue Anticipation Notes (RANs) are issued by governments or governmental bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general, they also constitute general obliga- tions of the issuer. A decline in the receipt of projected revenues, such as anticipated revenues from another level of government, could adversely affect an issuer's ability to meet its obligations on outstanding RANs. In addition, the possibility that the revenues would, when received, be used to meet other obligations could affect the ability of the issuer to pay the principal and in- terest on RANs.
Construction Loan Notes are issued to provide construction financing for spe- cific projects. Frequently, these notes are redeemed with funds obtained from the Federal Housing Administration.
Bank Notes are notes issued by local government bodies and agencies as those described above to commercial banks as evidence of borrowings. The purposes for which the notes are issued are varied but they are frequently issued to meet short-term working capital or capital-project needs. These notes may have risks similar to the risks associated with TANs and RANs.
Tax-Exempt Commercial Paper (Municipal Paper) represents very short-term unsecured, negotiable promissory notes, issued by states, municipalities and their agencies. Payment of principal and interest on issues of municipal paper may be made from various sources, to the extent the funds are available there- from. Maturities of municipal paper generally will be shorter than the maturi- ties of TANs, BANs or RANs. There is a limited secondary market for issues of municipal paper.
Certain Municipal Obligations may carry variable or floating rates of interest whereby the rate of interest is not fixed but varies with changes in specified market rates or indices, such as a bank prime rate or a tax-exempt money mar- ket index.
While the various types of notes described above as a group represent the ma- jor portion of the tax-exempt note market, other types of notes are occasion- ally available in the marketplace and the Muni/Stock Fund may invest in such other types of notes to the extent permitted under its investment objective, policies and limitations. Such notes may be issued for different purposes and may be secured differently from those mentioned above.
EQUITY SECURITIES
Under normal market conditions, the Funds will invest the assets allocated to equity investments primarily in equity securities of domestic companies with market capitalizations of at least $500 million ("Equity Securities"). Equity Securities include, but are not limited to, common stocks, preferred stocks, warrants to purchase common stocks or preferred stocks, securities convertible into common or preferred stocks, such as convertible bonds and debentures, and other securities with equity characteristics. The Growth/Income Fund, under normal market conditions, will invest at least 65% of its total assets in Eq- uity Securities which do not include warrants or rights to purchase common stock. Through its investment strategy the Growth/Income Fund seeks to provide higher returns over time than the S&P 500 with an equal or lower level of risk.
Convertible bonds and debentures must be rated Baa or higher by Moody's or BBB or higher by S&P, D&P or Fitch. Bonds rated Baa or BBB, although considered investment grade, have speculative characteristics and may be subject to greater fluctuations in value than higher-rated bonds.
In addition, the Funds may invest in dollar-denominated equity securities of foreign issuers, including American Depository Receipts ("ADRs") as described in "Foreign Securities" below.
HEDGING STRATEGIES
General Description of Hedging Strategies
Each Fund may engage in hedging activities. NIAC or Institutional Capital Cor- poration ("ICAP") may cause a Fund to utilize a variety of financial instru- ments, including options, futures contracts (sometimes referred to as "futures"), forward contracts and options on futures contracts to attempt to hedge the Fund's holdings.
Hedging or derivative instruments on securities generally are used to hedge against price movements in one or more particular securities positions that the Fund owns or intends to acquire. Such instruments may also be used to "lock-in" realized but unrecognized gains in the value of portfolio securities. Hedging instruments on stock indices, in contrast, generally are used to hedge against price movements in broad equity market sectors in which the Fund has invested or expects to invest. Hedging strategies, if successful, can reduce the risk of loss by wholly and partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce the opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments. A Fund may also use deriv- ative instruments to manage the risks of its assets. Risk management strategies include, but are not limited to, facilitating the sale of Fund securities, man- aging the effective maturity or duration of debt obligations that the Fund holds, establishing a position in the derivatives markets as a substitute for buying or selling certain securities or creating or altering exposure to cer- tain asset classes, such as debt and foreign securities. The use of derivative instruments may provide a less expensive, more expedient, or more specifically focused way for a Portfolio to invest than would "traditional" securities (i.e., stocks or bonds). The use of hedging instruments is subject to applica- ble regulations of the Securities and Exchange Commission (the "SEC"), the sev- eral options and futures exchanges upon which they are traded, the Commodity Futures Trading Commission (the "CFTC") and various state regulatory authori- ties. In addition, the Fund's ability to use hedging instruments will be lim- ited by tax considerations.
General Limitations on Futures and Options Transactions The Trust has filed a notice of eligibility for exclusion from the definition of the term "commodity pool operator" with the CFTC and the National Futures Association, which regulate trading in the futures markets. Pursuant to Section 4.5 of the regulations under the Commodity Exchange Act (the "CEA"), the notice of eligibility for a Fund includes the representation that the Fund will use futures contracts and related options solely for bona fide hedging purposes within the meaning of CFTC regulations. A Fund will not enter into futures and options transactions if the sum of the initial margin deposits and premiums paid for unexpired options exceeds 5% of a Fund's total assets. In addition, a Fund will not enter into futures contracts and options transactions if more than 30% of its net assets would be committed to such instruments.
The foregoing limitations are not fundamental policies of a Fund and may be changed without shareholder approval as regulatory agencies permit. Various ex- changes and regulatory authorities have undertaken reviews of options and futures trading in light of market volatility. Among the possible actions that have been presented are proposals to adopt new or more stringent daily price fluctuation limits for futures and options transactions and proposals to in- crease the margin requirements for various types of futures transactions.
Asset Coverage for Futures and Options Positions Each Fund will comply with the regulatory requirements of the SEC and the CFTC with respect to coverage of options and futures positions by registered invest- ment companies and, if the guidelines so require, will set aside cash, U.S. government securities, high grade liquid debt securities and/or other liquid assets permitted by the SEC and CFTC in a segregated custodial account in the amount prescribed. Securities held in a segregated account cannot be sold while the futures or options position is outstanding, unless replaced with other per- missible assets, and will be marked-to-market daily.
Stock Index Options
Each Fund may (i) purchase stock index options for any purpose, (ii) sell stock
index options in order to close out existing positions, and/or (iii) write cov-
ered options on stock indexes for hedging purposes. Stock index options are put
options and call options on various stock indexes. In most respects, they are
identical to listed options on common stocks. The primary difference between
stock options and index options occurs when index options are exercised. In the
case of stock options, the underlying security, common stock, is delivered.
However, upon the exercise of an index option, settlement does not occur by de-
livery of the securities comprising the index. The option holder who exercises
the index option receives an amount of cash if the closing level of the stock
index upon which the option is based is greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. This amount
of cash is equal to the difference between the closing price of the stock index
and the exercise price of the option expressed in dollars times a specified
multiple.
A stock index fluctuates with changes in the market values of the stock in- cluded in the index. For example, some stock index options are based on a broad market index, such as the Standard & Poor's 500 or the Value Line Composite In- dex or a narrower market index, such as the Standard & Poor's 100. Indexes may also be based on an industry or market segment, such as the AMEX Oil and Gas Index or the Computer and Business Equipment Index. Options on stock indexes are currently traded on the following exchanges: the Chicago Board of Options Exchange, the New York Stock Exchange, the American Stock Exchange, the Pacific Stock Exchange, and the Philadelphia Stock Exchange.
A Fund's use of stock index options is subject to certain risks. Successful use by the Funds of options on stock indexes will be subject to the ability of ICAP to correctly predict movements in the directions of the stock market. This re- quires different skills and techniques than predicting changes in the prices of individual securities. In addition, a Fund's ability to effectively hedge all or a portion of the securities in its portfolio, in anticipation of or during a market decline through transactions in put options on stock indexes, depends on the degree to which price movements in the underlying index correlate with the price movements of the securities held by a Fund. Inasmuch as a Fund's securi- ties will not duplicate the components of an index, the correlation will not be perfect. Consequently, each Fund will bear the risk that the prices of its se- curities being hedged will not move in the same amount as the prices of its put options on the stock indexes. It is also possible that there may be a negative correlation between the index and a Fund's securities which would result in a loss on both such securities and the options on stock indexes acquired by the Fund.
The hours of trading for options may not conform to the hours during which the underlying securities are traded. To the extent that the options markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets that cannot be reflected in the options markets. The purchase of options is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The purchase of stock index options involves the risk that the premium and transaction costs paid by a Fund in purchasing an option will be lost as a result of unanticipated movements in prices of the securities comprising the stock index on which the option is based. Options transactions may result in significantly higher transaction costs and portfolio turnover for the Fund.
Certain Considerations Regarding Options There is no assurance that a liquid secondary market on an options exchange will exist for any particular option, or at any particular time, and for some options no secondary market on an exchange or elsewhere may exist. If a Fund is unable to close out a call option on securities that it has written before the option is exercised, the Fund may be required to purchase the optioned securi- ties in order to satisfy its obligation under the option to deliver such secu- rities. If a Fund is unable to effect a closing sale transaction with respect to options on securities that it has purchased, it would have to exercise the option in order to realize any profit and would incur transaction costs upon the purchase and sale of the underlying securities.
The writing and purchasing of options is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Imperfect correlation between the options and securities markets may detract from the effectiveness of attempted hedging. Options transactions may result in significantly higher transaction costs and portfolio turnover for the Funds.
Federal Income Tax Treatment of Options
Certain option transactions have special federal income tax results for the
Funds. Expiration of a call option written by a Fund will result in short-term
capital gain. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the security covering the call option and, in determining
such gain or loss, the option premium will be included in the proceeds of the
sale.
If a Fund writes options, or purchases puts that are subject to the loss defer- ral rules of Section 1092 of the Internal Revenue Code of 1986, as amended (the "Code"), any losses on such options transactions, to the extent they do not ex- ceed the unrecognized gains on the securities covering the options, may be sub- ject to deferral until the securities covering the options have been sold.
In the case of transactions involving "nonequity options," as defined in Code
Section 1256, the Funds will treat any gain or loss arising from the lapse,
closing out or exercise of such positions as 60% long-term and 40% short-term
capital gain or loss as required by Section 1256 of the Code. In addition, such
positions must be marked-to-market as of the last business day of the year, and
gain or loss must be recognized for federal income tax purposes in accordance
with the 60%/40% rule discussed above even though the position has not been
terminated. A "nonequity option" includes an option with respect to any group
of stocks or a stock index if there is in effect a designation by the CFTC of a
contract market for a contract based on such group of stocks or indexes. For
example, options involving stock indexes such as the S&P 500 Index would be
"nonequity options" within the meaning of Code Section 1256.
Futures Contracts
Each Fund may enter into futures contracts (hereinafter referred to as
"Futures" or "Futures Contracts"), including index Futures as a hedge against
movements in the equity markets, in order to establish more definitely the ef-
fective return on securities held or intended to be acquired by the Funds or
for other purposes permissible under the CEA. Each Fund's hedging may include
sales of Futures as an offset against the effect of expected declines in stock
prices and purchases of Futures as an offset against the effect of expected in-
creases in stock prices. The Funds will not enter into Futures Contracts which
are
prohibited under the CEA and will, to the extent required by regulatory author- ities, enter only into Futures Contracts that are traded on national futures exchanges and are standardized as to maturity date and underlying financial in- strument. The principal interest rate Futures exchanges in the United States are the Board of Trade of the City of Chicago and the Chicago Mercantile Ex- change. Futures exchanges and trading are regulated under the CEA by the CFTC.
An interest rate futures contract provides for the future sale by one party and purchase by another party of a specified amount of a specific financial instru- ment (e.g., a debt security) or currency for a specified price at a designated date, time and place. An index Futures Contract is an agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index Futures Contract was orig- inally written. Transaction costs are incurred when a Futures Contract is bought or sold and margin deposits must be maintained. A Futures Contract may be satisfied by delivery or purchase, as the case may be, of the instrument or by payment of the change in the cash value of the index. More commonly, Futures Contracts are closed out prior to delivery by entering into an offsetting transaction in a matching Futures Contract. Although the value of an index might be a function of the value of certain specified securities, no physical delivery of those securities is made. If the offsetting purchase price is less than the original sale price, a gain will be realized; if it is more, a loss will be realized. Conversely, if the offsetting sale price is more than the original purchase price, a gain will be realized; if it is less, a loss will be realized. The transaction costs must also be included in these calculations. There can be no assurance, however, that the Funds will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If the Funds are not able to enter into an offsetting transac- tion, the Funds will continue to be required to maintain the margin deposits on the Futures Contract.
Margin is the amount of funds that must be deposited by each Fund with its cus- todian in a segregated account in the name of the futures commission merchant in order to initiate Futures trading and to maintain the Fund's open positions in Futures Contracts. A margin deposit is intended to ensure the Fund's perfor- mance of the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract. Futures Contracts are customarily purchased and sold on margins that may range upward from less than 5% of the value of the Futures Contract being traded.
If the price of an open Futures Contract changes (by increase in the case of a sale or by decrease in the case of a purchase) so that the loss on the Futures Contract reaches a point at which the margin on deposit does not satisfy margin requirements, the broker will require an increase in the margin. However, if the value of a position increases because of favorable price changes in the Futures Contract so that the margin deposit exceeds the required margin, the broker will pay the excess to the Fund. In computing daily net asset value, each Fund will mark to market the current value of its open Futures Contracts. The Funds expect to earn interest income on their margin deposits.
Because of the low margin deposits required, Futures trading involves an ex- tremely high degree of leverage. As a result, a relatively small price movement in a Futures Contract may result in immediate
and substantial loss, as well as gain, to the investor. For example, if at the time of purchase, 10% of the value of the Futures Contract is deposited as mar- gin, a subsequent 10% decrease in the value of the Futures Contract would re- sult in a total loss of the margin deposit, before any deduction for the trans- action costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit, if the Futures Contract were closed out. Thus, a purchase or sale of a Futures Contract may result in losses in excess of the amount initially invested in the Futures Contract. How- ever, a Fund would presumably have sustained comparable losses if, instead of the Futures Contract, it had invested in the underlying financial instrument and sold it after the decline.
Most United States Futures exchanges limit the amount of fluctuation permitted in Futures Contract prices during a single trading day. The day limit estab- lishes the maximum amount that the price of a Futures Contract may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of Futures Contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of unfavorable positions. Futures Contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of Futures positions and sub- jecting some Futures traders to substantial losses.
There can be no assurance that a liquid market will exist at a time when the Funds seek to close out a Futures position. The Funds would continue to be re- quired to meet margin requirements until the position is closed, possibly re- sulting in a decline in the Funds' net asset value. In addition, many of the contracts discussed above are relatively new instruments without a significant trading history. As a result, there can be no assurance that an active second- ary market will develop or continue to exist.
A public market exists in Futures Contracts covering a number of indexes, in- cluding, but not limited to, the Standard & Poor's 500 Index, the Standard & Poor's 100 Index, the NASDAQ 100 Index, the Value Line Composite Index and the New York Stock Exchange Composite Index.
Options on Futures
Each Fund may also purchase or write put and call options on Futures Contracts
and enter into closing transactions with respect to such options to terminate
an existing position. A futures option gives the holder the right, in return of
the premium paid, to assume a long position (call) or short position (put) in a
Futures Contract at a specified exercise price prior to the expiration of the
option. Upon exercise of a call option, the holder acquires a long position in
the Futures Contract and the writer is assigned the opposite short position. In
the case of a put option, the opposite is true. Prior to exercise or expira-
tion, a futures option may be closed out by an offsetting purchase or sale of a
futures option of the same series.
The Funds may use options on Futures Contracts in connection with hedging strategies. Generally, these strategies would be applied under the same market and market sector conditions in which the Funds use put and call options on se- curities or indexes. The purchase of put options on Futures Contracts is analo- gous to the purchase of puts on securities or indexes so as to hedge the Funds' securities holdings against the risk of declining market prices. The writing of a call option or the purchasing of a put option on a Futures Contract consti- tutes a partial hedge against declining prices of the securities which
are deliverable upon exercise of the Futures Contract. If the futures price at expiration of a written call option is below the exercise price, the Fund will retain the full amount of the option premium which provides a partial hedge against any decline that may have occurred in the Fund's holdings of securi- ties. If the futures price when the option is exercised is above the exercise price, however, the Fund will incur a loss, which may be offset, in whole or in part, by the increase in the value of the securities held by the Fund that were being hedged. Writing a put option or purchasing a call option on a Futures Contract serves as a partial hedge against an increase in the value of the se- curities the Fund intends to acquire.
As with investments in Futures Contracts, each Fund is required to deposit and maintain margin with respect to put and call options on Futures Contracts writ- ten by it. Such margin deposits will vary depending on the nature of the under- lying Futures Contract (and the related initial margin requirements), the cur- rent market value of the option, and other futures positions held by the Fund. The Funds will set aside in a segregated account at the Funds' custodian liquid assets, such as cash, U.S. government securities or other high grade liquid debt obligations equal in value to the amount due on the underlying obligation. Such segregated assets will be marked-to-market daily, and additional assets will be placed in the segregated account whenever the total value of the segre- gated account falls below the amount due on the underlying obligation.
The risks associated with the use of options on Futures Contracts include the risk that a Fund may close out its position as a writer of an option only if a liquid secondary market exists for such options, which cannot be assured. The Funds' successful use of options on Futures Contracts depends on ICAP's ability to correctly predict the movement in prices of Futures Contracts and the under- lying instruments, which may prove to be incorrect. In addition, there may be imperfect correlation between the instruments being hedged and the Futures Con- tract subject to the option. For additional information, see "Futures Con- tracts." Certain characteristics of the futures market might increase the risk that movements in the prices of futures contracts or options on futures con- tracts might not correlate perfectly with movements in the prices of the in- vestments being hedged. For example, all participants in the futures and op- tions on futures contracts markets are subject to daily variation margin calls and might be compelled to liquidate futures or options on futures contracts po- sitions whose prices are moving unfavorably to avoid being subject to further calls. These liquidations could increase the price volatility of the instru- ments and distort the normal price relationship between the futures or options and the investments being hedged. Also, because of initial margin deposit re- quirements in markets, there might be increased participation by speculators in the futures markets. This participation also might cause temporary price dis- tortions. In addition, activities of large traders in both the futures and se- curities markets involving arbitrage, "program trading," and other investment strategies might result in temporary price distortions.
Federal Income Tax Treatment of Futures Contracts For federal income tax purposes, each Fund is required to recognize as income for each taxable year its net unrealized gains and losses on Futures Contracts as of the end of the year, as well as gains and losses actually realized during the year. Except for transactions in Futures Contracts that are classified as part of a "mixed straddle" under Code Section 1256, any gain or loss recognized with respect to a Futures Contract is considered to be 60% long-term capital gain or loss and 40% short-term capital gain or loss, without regard to the holding period of the Futures Contract. In the case of a Futures transaction not classified as a "mixed straddle," the recognition of losses may be required to be deferred to a later taxable year.
Sales of Futures Contracts that are intended to hedge against a change in the value of securities held by a Fund may affect the holding period of such secu- rities and, consequently, the nature of the gain or loss on such securities upon disposition.
The Funds will distribute to shareholders annually any net capital gains which have been recognized for federal income tax purposes (including unrealized gains at the end of the Funds' fiscal year) on Futures transactions. Such dis- tributions will be combined with distributions of capital gains realized on the Funds' other investments and shareholders will be advised of the nature of the payments.
Risks and Special Considerations Concerning Derivatives
The use of derivative instruments involves certain general risks and considera- tions as described below. The specific risks pertaining to certain types of de- rivative instruments are described in the sections that follow.
(1) Market Risk. Market risk is the risk that the value of the underlying as- sets may go up or down. Adverse movements in the value of an underlying asset can expose the Fund to losses. Market risk is the primary risk associated with derivative transactions. Derivative instruments may include elements of lever- age and, accordingly, fluctuations in the value of the derivative instrument in relation to the underlying asset may be magnified. The successful use of deriv- ative instruments depends upon a variety of factors, particularly the portfolio manager's ability to predict movements of the securities, currencies, and com- modities markets, which may require different skills than predicting changes in the prices of individual securities. There can be no assurance that any partic- ular strategy adopted will succeed. A decision to engage in a derivative trans- action will reflect the portfolio manager's judgment that the derivative trans- action will provide value to the Fund and its shareholders and is consistent with the Fund's objectives, investment limitations, and operating policies. In making such a judgment, the portfolio manager will analyze the benefits and risks of the derivative transactions and weigh them in the context of the Fund's overall investments and investment objective.
(2) Credit Risk. Credit risk is the risk that a loss may be sustained as a re- sult of the failure of a counterpart to comply with the terms of a derivative instrument. The counterparty risk for exchange-traded derivatives is generally less than for privately-negotiated or OTC derivatives, since generally a clear- ing agency, which is the issuer or counterparty to each exchange-traded instru- ment, provides a guarantee of performance. For privately-negotiated instru- ments, there is no similar clearing agency guarantee. In all transactions, the Fund will bear the risk that the counterparty will default, and this could re- sult in a loss of the expected benefit of the derivative transactions and pos- sibly other losses to the Fund. The Fund will enter into transactions in deriv- ative instruments only within counterparties that their respective portfolio manager reasonably believes are capable of performing under the contract.
(3) Correlation Risk. Correlation risk is the risk that there might be an im- perfect correlation, or even no correlation, between price movements of a de- rivative instrument and price movements of investments being hedged. When a de- rivative transaction is used to completely hedge another position, changes in the market value of the combined position (the derivative instrument plus the position being hedged) result from an imperfect correlation between the price movements of the two instruments. With a perfect hedge, the value of the com- bined position remains unchanged with any change in the price of
the underlying asset. With an imperfect hedge, the value of the derivative in- strument and its hedge are not perfectly correlated. For example, if the value of a derivative instrument used in a short hedge (such as writing a call op- tion, buying a put option or selling a futures contract) increased by less than the decline in value of the hedged investments, the hedge would not be perfectly correlated. This might occur due to factors unrelated to the value of the investments being hedged, such as speculative or other pressures on the markets in which these instruments are traded. The effectiveness of hedges us- ing instruments on indices will depend, in part, on the degree of correlation between price movements in the index and the price movements in the invest- ments being hedged.
(4) Liquidity Risk. Liquidity risk is the risk that a derivative instrument cannot be sold, closed out, or replaced quickly at or very close to its funda- mental value. Generally, exchange contracts are very liquid because the ex- change clearinghouse is the counterparty of every contract. OTC transactions are less liquid than exchange-traded derivatives since they often can only be closed out with the other party to the transaction. The Fund might be required by applicable regulatory requirements to maintain assets as "cover," maintain segregated accounts, and/or make margin payments when it takes positions in derivative instruments involving obligations to third parties (i.e., instru- ments other than purchase options). If the Fund is unable to close out its po- sitions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expires, matures, or is closed out. These requirements might impair a Fund's ability to sell a security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvanta- geous time. The Fund's ability to sell or close out a position in an instru- ment prior to expiration or maturity depends upon the existence of a liquid secondary market or, in the absence of such a market, the ability and willing- ness of the counterparty to enter into a transaction closing out the position. Due to liquidity risk, there is no assurance that any derivatives position can be sold or closed out at a time and price that is favorable to a Fund.
(5) Legal Risk. Legal risk is the risk of loss caused by the unenforceability of a party's obligations under the derivative. While a party seeking price certainty agrees to surrender the potential upside in exchange for downside protection, the party taking the risk is looking for a positive payoff. De- spite this voluntary assumption of risk, a counterparty that has lost money in a derivative transaction may try to avoid payment by exploiting various legal uncertainties about certain derivative products.
(6) Systemic or "Interconnection" Risk. Systemic or interconnection risk is the risk that a disruption in the financial markets will cause difficulties for all market participants. In other words, a disruption in one market will spill over into other markets, perhaps creating a chain reaction. Much of the OTC derivatives market takes place among the OTC dealers themselves, thus cre- ating a large interconnected web of financial obligations. This interconnectedness raises the possibility that a default by one large dealer could create losses for other dealers and destabilize the entire market for OTC derivative instruments.
OTHER INVESTMENT POLICIES AND TECHNIQUES
Illiquid Securities
Each Fund may invest in illiquid securities (i.e., securities that are not
readily marketable). For purposes of this restriction, illiquid securities in-
clude, but are not limited to, restricted securities (securities the disposi-
tion of which is restricted under the federal securities laws), securities
that may only be resold pursuant to Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), but that are deemed to be illiquid;
and repurchase agreements with maturities in excess of seven days. However,
the Fund will not acquire illiquid securities if, as a result, such securities
would comprise more than 15% of the value of the Fund's net assets. The Board
of Trustees or its delegate has the ultimate authority to determine, to the
extent permissible under the federal securities laws, which securities are
liquid or illiquid for purposes of this 15% limitation. The Board of Trustees
has delegated to ICAP the day-to-day determination of the illiquidity of any
equity or taxable fixed-income security and to NIAC as to any municipal secu-
rity, although it has retained oversight and ultimate responsibility for such
determinations. Although no definitive liquidity criteria are used, the Board
of Trustees has directed ICAP and NIAC to look to such factors as (i) the na-
ture of the market for a security (including the institutional private resale
market; the frequency of trades and quotes for the security; the number of
dealers willing to purchase or sell the security; and the amount of time nor-
mally needed to dispose of the security, the method of soliciting offers and
the mechanics of transfer), (ii) the terms of certain securities or other in-
struments allowing for the disposition to a third party or the issuer thereof
(e.g., certain repurchase obligations and demand instruments), and (iii) other
permissible relevant factors.
Restricted securities may be sold only in privately negotiated transactions or in a public offering with respect to which a registration statement is in ef- fect under the Securities Act. Where registration is required, the Fund may be obligated to pay all or part of the registration expenses and a considerable period may elapse between the time of the decision to sell and the time the Fund may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, the Fund might obtain a less favorable price than that which pre- vailed when it decided to sell. Illiquid securities will be priced at fair value as determined in good faith by the Board of Trustees or its delegate. If, through the appreciation of illiquid securities or the depreciation of liquid securities, the Fund should be in a position where more than 15% of the value of its net assets are invested in illiquid securities, including re- stricted securities which are not readily marketable, the affected Fund will take such steps as is deemed advisable, if any, to protect liquidity.
Short Sales Against the Box
When ICAP believes that the price of a particular security held by a Fund may decline, it may make "short sales against the box" to hedge the unrealized gain on such security. Selling short against the box involves selling a secu- rity which a Fund owns for delivery at a specified date in the future. The Funds will limit their transactions in short sales against the box to 5% of their net assets. In addition, a Fund will limit its transactions such that the value of the securities of any issuer in which it is short will not exceed the lesser of 2% of the value of the Fund's net assets or 2% of the securities of any class of the issuer. If, for example, a Fund bought 100 shares of ABC at $40 per share in January and the price appreciates to $50 in March, the Fund might "sell short" the 100 shares at $50 for delivery the following July. Thereafter, if the price of the stock declines to $45, it will realize the full $1,000 gain rather
than the $500 gain it would have received had it sold the stock in the market. On the other hand, if the price appreciates to $55 per share, the Fund would be required to sell at $50 and thus receive a $1,000 gain rather than the $1,500 gain it would have received had it sold the stock in the market. A Fund may also be required to pay a premium for short sales which would partially offset any gain.
Warrants
Each Fund may invest in warrants if, after giving effect thereto, not more than
5% of its net assets will be invested in warrants other than warrants acquired
in units or attached to other securities. Of such 5%, not more than 2% of its
assets at the time of purchase may be invested in warrants that are not listed
on the New York Stock Exchange or the American Stock Exchange. Investing in
warrants is purely speculative in that they have no voting rights, pay no divi-
dends, and have no rights with respect to the assets of the corporation issuing
them. Warrants basically are options to purchase equity securities at a spe-
cific price for a specific period of time. They do not represent ownership of
the securities but only the right to buy them. Warrants are issued by the is-
suer of the security, which may be purchased on their exercise. The prices of
warrants do not necessarily parallel the prices of the underlying securities.
When-Issued Securities
Each Fund may from time to time purchase securities on a "when-issued" or other delayed-delivery basis. The price of securities purchased on a when-issued ba- sis is fixed at the time the commitment to purchase is made, but delivery and payment for the securities take place at a later date. Normally, the settlement date occurs within 45 days of the purchase. During the period between the pur- chase and settlement, no payment is made by a Fund to the issuer and no inter- est is accrued on debt securities or dividend income is earned on equity secu- rities. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addi- tion to the risk of decline in value of the Fund's other assets. While when-is- sued securities may be sold prior to the settlement date, the Funds intend to purchase such securities with the purpose of actually acquiring them. At the time a Fund makes the commitment to purchase a security on a when-issued basis, it will record the transaction and reflect the value of the security in deter- mining its net asset value. The Funds do not believe that net asset value will be adversely affected by purchases of securities on a when-issued basis.
Each Fund will maintain cash, U.S. government securities and high grade liquid debt securities equal in value to commitments for when-issued securities. Such segregated securities either will mature or, if necessary, be sold on or before the settlement date. When the time comes to pay for when-issued securities, each Fund will meet its obligations from then available cash flow, sale of the securities held in the separate account (described above) sale of other securi- ties or, although it would not normally expect to do so, from the sale of the when-issued securities themselves (which may have a market value greater or less than each Fund's payment obligation).
Unseasoned Companies
Each Fund may not invest more than 5% of its net assets in unseasoned issuers. While smaller companies generally have potential for rapid growth, they often involve higher risks because they lack the management experience, financial re- sources, product diversification, and competitive strengths of larger
corporations. Also, in many instances, the securities of smaller companies are traded only over-the-counter or on regional securities exchanges, and the fre- quency and volume of their trading is substantially less than is typical of larger companies. Therefore, the securities of smaller companies may be subject to wider price fluctuations. When making large sales, the Fund may have to sell portfolio holdings of small companies at discounts from quoted prices or may have to make a series of smaller sales over an extended period of time due to the trading volume in smaller company securities.
Foreign Securities
Each Fund may invest up to 25% of its net assets in foreign securities denomi- nated in U.S. dollars. Investments in securities of foreign issuers involve risks in addition to the usual risks inherent in domestic investments, includ- ing currency risks. The value of a foreign security in U.S. dollars tends to decrease when the value of the U.S. dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the U.S. dollar falls against such currency.
Foreign securities are affected by the fact that in many countries there is less publicly available information about issuers than is available in the re- ports and ratings published about companies in the U.S. and companies may not be subject to uniform accounting, auditing and financial reporting standards. Other risks inherent in foreign investments include expropriation; confiscatory taxation; withholding taxes on dividends and interest; less extensive regula- tion of foreign brokers, securities markets and issuers; diplomatic develop- ments; and political or social instability. Foreign economies may differ favor- ably or unfavorably from the U.S. economy in various respects, and many foreign securities are less liquid and their prices tend to be more volatile than com- parable U.S. securities. From time to time, foreign securities may be difficult to liquidate rapidly without adverse price effects.
Foreign securities include American Depository Receipts ("ADRs"). ADRs are re- ceipts typically issued by a U.S. bank or trust company evidencing ownership of the underlying foreign security and denominated in U.S. dollars. ADRs do not eliminate all the risk inherent in investing in foreign issuers, such as changes in foreign currency exchange rates. However, by investing in ADRs rather than directly in foreign issuers' stock, the Fund avoids currency risks during the settlement period. Some ADRs may not be sponsored by the issuer.
Lending of Portfolio Securities
Each Fund may lend its portfolio securities, up to 33 1/3% of its total assets,
to broker-dealers or institutional investors. The loans will be secured contin-
uously by collateral at least equal to the value of the securities lent by
"marking to market" daily. A Fund will continue to receive the equivalent of
the interest or dividends paid by the issuer of the securities lent and will
retain the right to call, upon notice, the lent securities. A Fund may also re-
ceive interest on the investment of the collateral or a fee from the borrower
as compensation for the loan. As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. However, loans will be made only
to firms deemed by the portfolio manager to be of good standing.
Portfolio Turnover
Under normal market conditions, the Muni/Stock Fund expect annual bond portfo- lio turnover to be significantly less than 75% and the Stock/Bond Fund antici- pates that its annual bond portfolio turnover
rate will generally not exceed 75%. However, the rate of municipal turnover will not be a limiting factor if it is desirable for the Muni/Stock Fund to sell or purchase Municipal Obligations.
Each Fund anticipates that its annual equity portfolio turnover rate will be between 100% and 150% under normal market conditions, and will generally not exceed 200%. A turnover rate of 100% would occur, for example, if a Fund sold and replaced securities valued at 100% of its net assets within one year. In the event a Fund were to have a turnover rate of 100% or more in any year, it would result in the payment by the Fund of increased brokerage costs and could result in the payment by shareholders of increased taxes on realized investment gains. In addition to the foregoing, the Muni/Stock Fund may be required to purchase or sell Municipal Obligations and Equity Securities pursuant to a re- quired reallocation of assets and the anticipated portfolio turnover rates set forth above are made without regard to such a reallocation of assets.
The portfolio turnover rates for the Growth/Income Fund, Stock/Bond Fund and Muni/Stock Fund for the fiscal year ended June 30, 1998 were %, % and %, respectively.
MANAGEMENT
The management of the Trust, including general supervision of the duties per- formed for the Fund under the Management Agreement, is the responsibility of its Board of Trustees. The number of trustees of the Trust is currently set at seven, three of whom are "interested persons" (as the term "interested persons" is defined in the Investment Company Act of 1940) and four of whom are "disin- terested persons." The names and business addresses of the trustees and offi- cers of the Trust and their principal occupations and other affiliations during the past five years are set forth below, with those trustees who are "inter- ested persons" of the Trust indicated by an asterisk.
-------------------------------------------------------------------------------
POSITION AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH TRUST DURING PAST FIVE YEARS
-------------------------------------------------------------------------------
Anthony T. Dean* 53 Chairman and Trustee President (since July 1996)
333 West Wacker Drive and Director, formerly
Chicago, IL 60606 Executive Vice President,
of The John Nuveen Company
(from March 1992 to July
1996) and of John Nuveen &
Co. Incorporated; Director
and President (since July
1996), formerly Executive
Vice President (from May
1994 to July 1996) of
Nuveen Institutional
Advisory Corp. and Nuveen
Advisory Corp.
-------------------------------------------------------------------------------
Timothy R. Schwertfeger* 49 President and Trustee Chairman (since July 1996)
333 West Wacker Drive and Director, formerly
Chicago, IL 60606 Executive Vice President,
of The John Nuveen Company
(from March 1992 to July
1996) and of John Nuveen &
Co. Incorporated; Director
and Chairman (since July
1996), formerly Executive
Vice President (from May
1994 to July 1996) of
Nuveen Institutional
Advisory Corp and Nuveen
Advisory Corp.
|
---------------------------------------------------------------------------------
POSITION AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH TRUST DURING PAST FIVE YEARS
---------------------------------------------------------------------------------
Robert H. Lyon* 48 Trustee President and a Director
225 West Wacker Drive of the ICAP Funds Inc.
Chicago, IL 60606 (since its inception in
December 1994);
President, Chief
Investment Officer, and
a Director of ICAP.
---------------------------------------------------------------------------------
James E. Bacon 67 Trustee Business consultant;
114 W. 47th St. retired.
New York, NY 10036
---------------------------------------------------------------------------------
William L. Kissick 66 Trustee Professor, School of
University of Pennsylvania Medicine and the Wharton
224 NEB/2L School of Management and
Philadelphia, PA 19104 Chairman, Leonard Davis
Institute of Health
Economics, University of
Pennsylvania.
---------------------------------------------------------------------------------
Thomas E. Leafstrand 66 Trustee Retired, previously Vice
412 W. Franklin President in charge of
Wheaton, IL 60187 Municipal Underwriting
and Dealer Sales at The
Northern Trust Company.
---------------------------------------------------------------------------------
Sheila W. Wellington 66 Trustee President (since 1993)
250 Park Avenue of Catalyst (a not-for-
New York, NY 10003 profit organization
focusing on women's
leadership development
in business and the
professions).
---------------------------------------------------------------------------------
Bruce P. Bedford 58 Executive Vice President Executive Vice President
333 West Wacker Drive of John Nuveen & Co.
Chicago, IL 60606 Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp. (since
January 1997); prior
thereto, Chairman and
CEO of Flagship
Resources Inc. and
Flagship Financial Inc.
and the Flagship funds.
---------------------------------------------------------------------------------
Kathleen M. Flanagan 51 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated; Vice
President (since June
1996) of Nuveen Advisory
Corp. and Nuveen
Institutional Advisory
Corp.
---------------------------------------------------------------------------------
Anna R. Kucinskis 51 Vice President Vice President of John
333 West Wacker Drive Nuveen & Co.
Chicago, IL 60606 Incorporated.
---------------------------------------------------------------------------------
Larry W. Martin 47 Vice President and Vice President,
333 West Wacker Drive Assistant Secretary Assistant Secretary and
Chicago, IL 60606 Assistant General
Counsel of John Nuveen &
Co. Incorporated; Vice
President and Assistant
Secretary of Nuveen
Advisory Corp; Vice
President and Assistant
Secretary of Nuveen
Institutional Advisory
Corp.; Assistant
Secretary of The John
Nuveen Company.
---------------------------------------------------------------------------------
O. Walter Renfftlen 59 Vice President and Vice President and
333 West Wacker Drive Controller Controller of The John
Chicago, IL 60606 Nuveen Company, John
Nuveen & Co.
Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.
---------------------------------------------------------------------------------
Ronald E. Toupin, Jr. 40 Vice President Vice President of Nuveen
333 West Wacker Drive Institutional Advisory
Chicago, IL 60606 Corp.
|
-------------------------------------------------------------------------------
POSITION AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH TRUST DURING PAST FIVE YEARS
-------------------------------------------------------------------------------
H. William Stabenow 64 Vice President and Vice President and Treasurer of
333 West Wacker Drive Treasurer The John Nuveen Company, John
Chicago, IL 60606 Nuveen & Co. Incorporated,
Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.
-------------------------------------------------------------------------------
Gifford R. Zimmerman 42 Vice President and Vice President, Assistant
333 West Wacker Drive Assistant Secretary Secretary and Associate General
Chicago, IL 60606 Counsel, previously Assistant
General Counsel of John Nuveen &
Co. Incorporated; Vice President
and Assistant Secretary of
Nuveen Advisory Corp.; Vice
President and Assistant
Secretary of Nuveen
Institutional Advisory Corp.
|
Anthony T. Dean, Thomas E. Leafstrand and Timothy R. Schwertfeger serve as mem- bers of the Executive Committee of the Board of Trustees. The Executive Commit- tee, which meets between regular meetings of the Board of Trustees, is autho- rized to exercise all of the powers of the Board of Trustees.
Mr. Dean and Mr. Schwertfeger are also directors or trustees, as the case may be, of [95] Nuveen open-end funds and closed-end funds advised by Nuveen Advi- sory Corp.
The other trustees of the Trust (other than Mr. Lyon) are also trustees of
[five] closed-end funds advised by NIAC. Mr. Lyon is also a director of ICAP
and ICAP Funds, Inc.
The following table sets forth compensation paid by the Trust to each of the trustees who are not designated "interested persons" for the one year period from July 1, 1997 to June 30, 1998 and the total compensation that the Nuveen Funds paid to such trustees during that one year period. The Trust has no re- tirement or pension plans. The officers and trustees affiliated with Nuveen serve without any compensation from the Trust.
TOTAL
COMPENSATION
FROM TRUST
AGGREGATE AND FUND
COMPENSATION COMPLEX
FROM THE PAID TO
NAME OF TRUSTEE TRUST* TRUSTEES**
---------------------------------------------- ------------ ------------
James E. Bacon................................ $ -- $ --
William L. Kissick............................ $ -- $ --
Thomas E. Leafstrand.......................... $ -- $ --
Sheila W. Wellington.......................... $ -- $ --
---------- -----------
Total....................................... -- --
========== ===========
|
*Based on the compensation paid to the independent trustees for the one year period, July 1, 1997 through June 30, 1998 for services to the Trust.
**Based on the compensation paid to the independent trustees for the one year
period, July 1, 1997 through June 30, 1998 for services to the Trust and
[five] closed-end funds advised by NIAC.
Each trustee who is not affiliated with NIAC or ICAP receives a $20,000 annual retainer for serving as a director or trustee of all funds for which NIAC serves as investment adviser or manager and a $1,000 fee per day plus expenses for attendance at all meetings held on a day on which a regularly scheduled Board meeting is held, a $500 fee per day plus expenses for attendance in per- son or a $500 fee per day plus expenses for attendance by telephone at a meet- ing held on a day on which no regular Board meeting is held and a $100 fee per day plus expenses for attendance in person or by telephone at a meeting of the Executive Committee held solely to declare dividends. The annual retainer, fees and expenses are allocated among the funds for which NIAC serves as investment adviser or manager on the basis of relative net asset sizes. The Trust requires no employees other than its officers, all of whom are compensated by NIAC or Nuveen.
As of September 21, 1998, the officers and directors of each Fund, in the ag- gregate, own less than 1% of the shares of the Fund.
The following table sets forth the percentage ownership of each person, who, as of September 21, 1998, owns of record, or is known by Registrant to own of rec- ord or beneficially 5% or more of any class of a Fund's shares.
PERCENTAGE
OF RECORD
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
---------------------- ------------------------- ----------
Nuveen Growth and Income Stock
Fund Richard J. Franke 15.18
Class R Shares............... 400 N. Michigan Ave. Ste. 300
Chicago, IL 60611-4130
American Express Trust Co. 32.02
UA Jul 01 89
FBD Amer Exp. Trust Ret. Ser. Pl.
c/o Nancy Jendro
PO Box 534
Minneapolis, MN 55440-0534
Donald E. Sveen TR 5.62
UA Jun 08 95
Donald E. Sveen 1995 Trust
25W461 Plamondon Road
Wheaton, Il 60187-7364
Class A Shares............... Merrill Lynch, Pierce, Fenner & Smith 21.18
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
Class B Shares............... Merrill Lynch, Pierce, Fenner & Smith 30.07
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
|
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
---------------------- ------------------------- ------------
Class C Shares............. Merrill Lynch, Pierce, Fenner & Smith 54.21
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
Nuveen Balanced Stock and
Bond Fund Northern Trust Co. Trust 78.02
Class R Shares............. John Nuveen Scholarship Plan
c/o Diane Day
P.O. Box 92956
Chicago, IL 60675-2956
American Express Trust Co. 7.14
Amer Exp. Trust Ret. Ser. Pl.
c/o Nancy Jendro
P.O. Box 534
Minneapolis, MN 55440-0534
Class A Shares............. Merrill Lynch, Pierce, Fenner & Smith 22.29
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
Class B Shares............. Merrill Lynch, Pierce, Fenner & Smith 41.89
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
Joseph Schiano 6.40
104 E. Hollybanks Lane
Beach Haven, NJ 08008-2911
Class C Shares............. Merrill Lynch, Pierce, Fenner & Smith 68.93
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville, FL 32246-6484
Nuveen Balanced Municipal 11.56
and Stock Fund Katherine Angers & B. Ronald Angers
Class R Shares............. Arthur Angers & Leonard Angers
JT TEN WROS
113 Gullott Dr.
Schenectady, NY 12306-4317
|
PERCENTAGE
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OF OWNERSHIP
---------------------- ------------------------- ------------
Karen M. Bergan 11.81
2109 Northwestern Ave.
Ames, IA 50010-4524
Merrill Lynch, Pierce, Fenner & Smith 13.63
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl. 3
Jacksonville, FL 32246-6484
George A. Paulik, Jr. 7.90
Janice L. Paulik
JT Wros
409 Bonnie Brae Rd
Hinsdale, IL 60521-2815
Leonard Pearl 12.60
and Joan D. Pearl
JT Wros
707 Mix Ave. Apt. 24
Hamden, CT 06514-2208
Geraldine P. Warren 16.04
22 Sherwood Ln.
Colts Neck, NJ 07722-1128
Class A Shares.............. Merrill Lynch, Pierce, Fenner & Smith 26.44
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville, FL 32246-6484
Class B Shares.............. Merrill Lynch, Pierce, Fenner & Smith 40.19
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville, FL 32246-6484
Class C Shares.............. Merrill Lynch, Pierce, Fenner & Smith 49.13
For the benefit of its customers
Attn: Fund Administration
4800 Deer Lake Dr. E Fl 3
Jacksonville, FL 32246-6484
|
FUND MANAGER AND PORTFOLIO MANAGER
Fund Manager
NIAC acts as the manager of each Fund, with responsibility for the overall man-
agement of each Fund. Its address is 333 West Wacker Drive, Chicago, Illinois
60606. For the Growth/Income Fund and the Stock/Bond Fund, NIAC has entered
into a Sub-Advisory Agreement with ICAP under which ICAP, subject to NIAC's su-
pervision, manages the Fund's investment portfolio. For the Muni/Stock Fund and
the California Muni/Stock Fund, NIAC has entered into a Sub-Advisory Agreement
with ICAP under which ICAP, subject to NIAC's supervision, manages the Fund's
equity investments. NIAC is also responsible for managing the Fund's business
affairs and providing day-to-day administrative services to the Fund. For addi-
tional information regarding the management services performed by NIAC and
ICAP, see "Who Manages the Funds" in the Prospectus.
NIAC is a wholly-owned subsidiary of Nuveen, which is also the principal under- writer of the Fund's shares. Nuveen is sponsor of the Nuveen Tax-Free Unit Trust and Nuveen Unit Trust, registered unit investment trusts, is the princi- pal underwriter for the Nuveen Mutual Funds, and has served as co-managing un- derwriter for the shares of the Nuveen Exchange-Traded Funds. Over 1,000,000 individuals have invested to date in Nuveen's funds and trusts. Founded in 1898, Nuveen is a subsidiary of The John Nuveen Company which, in turn, is ap- proximately 78% owned by The St. Paul Companies, Inc. ("St. Paul"). St. Paul is located in St. Paul, Minnesota, and is principally engaged in providing proper- ty-liability insurance through subsidiaries.
For the fund management services and facilities furnished by NIAC, each of the Funds has agreed to pay an annual management fee at rates set forth in the Pro- spectus under "Management Fees." In addition, NIAC agreed to waive all or a portion of its management fee or reimburse certain expenses of the Fund for the years ended July 31, 1997 and July 31, 1998 in order to prevent total operating expenses (excluding distribution or service fees, and extraordinary expenses) from exceeding .85% (.95% for the Growth/Income Fund) of the average daily net asset value of any class of shares of the Fund. Accordingly, for the period from inception (August 7, 1996) through the fiscal year ended June 30, 1997, the Growth/Income Fund, Stock/Bond Fund, and Muni/Stock Fund paid management fees net of expense reimbursements of $2,202,100, $0, and $10,679, respective- ly. In addition, for the period July 1, 1997 through the fiscal year ended June 30, 1998, the Growth/Income Fund, Stock/Bond Fund and Muni/Stock Fund paid man- agement fees net of expense reimbursements of $ , $ and $ , re- spectively. During these same periods, NIAC waived fees and reimbursed expenses of $283,295 and $ , $125,664 and $ , and $131,924 and $ to the Growth/Income Fund, Stock/Bond Fund, and Muni/Stock Fund, respectively.
Sub-Adviser
ICAP was founded in 1970 and is located at 225 West Wacker Drive, Suite 2400, Chicago, IL 60606. Under the Sub-Advisory Agreement for each Fund, ICAP is com- pensated by NIAC for its investment advisory services with respect to all or a portion of each Fund's assets. Under a Sub-Advisory Agreement with NIAC, ICAP manages the investment portfolios of the Growth/Income Fund and the Stock/Bond Fund, and the equity portion of the Muni/Stock Fund's investment portfolio.
Out of the fund management fee, NIAC pays ICAP a portfolio management fee based on the average daily market value of all the Nuveen-sponsored investment products for which it serves as the portfolio manager. NIAC pays Institutional Capital separate portfolio management fees for the equity and fixed-income portions of the funds' assets, if applicable, according to the following schedule:
ASSETS OF ALL THE NUVEEN- SPONSORED INVESTMENT PRODUCTS MANAGED BY EQUITY PORTFOLIO FIXED-INCOME PORTFOLIO INSTITUTIONAL CAPITAL MANAGEMENT FEE MANAGEMENT FEE ------------------------------ ---------------- ---------------------- For the first $500 million..... .35% of 1% .20% of 1% For the next $500 million...... .30% of 1% .15% of 1% For assets over $1 billion..... .25% of 1% .12% of 1% |
The equity and fixed-income portfolio management fees are each paid on a spec- ified proportion of fund net assets. The specified proportions for the equity portfolio management fees are currently 100%, 55% and 35%, respectively, for the Growth and Income Stock Fund, Balanced Stock and Bond Fund and Balanced Municipal and Stock Fund. The specified proportion for the fixed-income port- folio management fee is currently 45% for the Balanced Stock and Bond Fund.
ICAP's investment management strategy and operating policies are set through a team approach, with all ICAP investment professionals contributing. ICAP cur- rently maintains a staff of 12 investment professionals. Each of the invest- ment officers and other professionals of ICAP has developed an expertise in at least one functional investment area, including equity research, strategy, fixed income analysis, quantitative research, technical research and trading. A key element in the decision-making process is a formal investment committee meeting generally held each business day and attended by all professionals. These meetings also provide for the ongoing review of ICAP's investment posi- tions. Pertinent information from outside sources is shared and incorporated into the investment outlook. The investment strategy, asset sectors, and indi- vidual security holdings are reviewed to verify their continued appropriate- ness. Investment recommendations are presented to the committee for decisions.
With regard to Fund assets subject to the Sub-Advisory Agreement, ICAP pro- vides continuous advice and recommendations concerning the Fund's investments, and is responsible for selecting the broker/ dealers who execute the portfolio transactions. ICAP also serves as investment adviser to the ICAP Funds, Inc. and to pension and profit-sharing plans, and other institutional and private investors. ICAP has approximately $12 billion under management. Mr. Robert H. Lyon, President of ICAP, owns shares representing 51% of the voting rights of ICAP. For the period from July 31 to the fiscal year ended June 30, 1998, NIAC paid ICAP for its services to the Growth/Income Fund, Stock/Bond Fund, and Muni/Stock Fund, $ , $ , and $ , respectively.
As of the close of the fiscal year ended June 30, 1998, Growth/Income Fund held $ of the securities of Morgan Stanley, Dean Witter, Discover & Co., a regular broker or dealer (as defined in Rule 10b-1 under the Investment Company Act) of the Fund.
PORTFOLIO TRANSACTIONS
NIAC (with respect to transactions in Municipal Obligations) and ICAP (with respect to other transactions) are responsible for decisions to buy and sell securities for the Funds and for the placement of the Funds' securities busi- ness, the negotiation of the commissions to be paid on brokered transactions, the prices for principal trades in securities, and the allocation of portfolio brokerage and principal business. It is the policy of both NIAC and ICAP to seek the best execution at the best security price available with respect to each transaction, and with respect to brokered transactions, in light of the overall quality of brokerage and research services provided to the respective adviser and its advisees. The best price to the Funds means the best net price without regard to the mix between purchase or sale price and commission, if any. Purchases may be made from underwriters, dealers, and, on occasion, the issuers. Commissions will be paid on the Funds' futures and options transac- tions, if any. The purchase price of portfolio securities purchased from an underwriter or dealer may include underwriting commissions and dealer spreads. The Funds may pay mark-ups on principal transactions. In selecting broker- dealers and in negotiating commissions, the portfolio manager considers, among other things, the firm's reliability, the quality of its execution services on a continuing basis and its financial condition. Brokerage will not be allo- cated based on the sale of a Fund's shares. NIAC expects that all transactions in Municipal Obligations will be effected on a principal (as opposed to an agency) basis and, accordingly, does not expect to pay any brokerage commis- sions on such transactions.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)") permits an investment adviser, under certain circumstances, to cause an account to pay a broker or dealer who supplies brokerage and research services a commission for effecting a transaction in excess of the amount of commission another bro- ker or dealer would have charged for effecting the transaction. Brokerage and research services include (a) furnishing advice as to the value of securities, the advisability of investing, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; (b) fur- nishing analyses and reports concerning issuers, industries, securities, eco- nomic factors and trends, portfolio strategy, and the performance of accounts; and (c) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement, and custody).
In light of the above, in selecting brokers, ICAP considers investment and market information and other research, such as economic, securities and per- formance measurement research, provided by such brokers, and the quality and reliability of brokerage services, including execution capability, perfor- mance, and financial responsibility. Accordingly, the commissions charged by any such broker may be greater than the amount another firm might charge if ICAP determines in good faith that the amount of such commissions is reason- able in relation to the value of the research information and brokerage serv- ices provided by such broker to ICAP or the Funds. ICAP believes that the re- search information received in this manner provides the Funds with benefits by supplementing the research otherwise available to the Funds. The Management Agreement and the Sub-Advisory Agreement provide that such higher commissions will not be paid by the Funds unless the applicable adviser determines in good faith that the amount is reasonable in relation to the services provided. The investment advisory fees paid by the Funds to NIAC under the Management Agree- ment or the subadvisory fees paid by NIAC to ICAP under the Sub-Advisory Agreement are not reduced as a result of receipt by either NIAC or ICAP of re- search services.
NIAC and ICAP each place portfolio transactions for other advisory accounts managed by them. Research services furnished by firms through which the Funds effect their securities transactions may be used by NIAC and/or ICAP in servic- ing all of its accounts; not all of such services may be used by NIAC and/or ICAP in connection with the Funds. NIAC and ICAP believe it is not possible to measure separately the benefits from research services to each of the accounts (including the Funds) managed by them. Because the volume and nature of the trading activities of the accounts are not uniform, the amount of commissions in excess of those charged by another broker paid by each account for brokerage and research services will vary. However, NIAC and ICAP believe such costs to the Funds will not be disproportionate to the benefits received by the Funds on a continuing basis. NIAC and ICAP seek to allocate portfolio transactions equi- tably whenever concurrent decisions are made to purchase or sell securities by the Funds and another advisory account. In some cases, this procedure could have an adverse effect on the price or the amount of securities available to the Funds. In making such allocations between the Fund and other advisory ac- counts, the main factors considered by NIAC and ICAP are the respective invest- ment objectives, the relative size of portfolio holdings of the same or compa- rable securities, the availability of cash for investment and the size of in- vestment commitments generally held.
For the period from inception (August 7, 1996) through the fiscal year ended June 30, 1997, the Growth/Income Fund, Stock/Bond Fund, and the Muni/Stock Fund paid $724,507.90, $17,862.76, and $19,613.70, respectively, in brokerage com- missions. In addition for the period from July 1, 1997 through the fiscal year ended June 30, 1998, the Growth/Income Fund, Stock/Bond Fund, and the Muni/Stock Fund paid $ , $ and $ , respectively, in brokerage commissions. During the fiscal years ended June 30, 1997 and June 30, 1998, the Growth/Income Fund, Stock/Bond Fund and Muni/Stock Fund paid to bro- kers as commissions in return for research services $403,560.66 and $ , $4,866.36 and $ , and $5,302.30 and $ , respec- tively, and the aggregate amount of those transactions per Fund on which such commissions were paid was, $1,906,101,422 and $ , $80,997,256 and $ and $97,311,621 and $ , respectively.
Under the Investment Company Act of 1940, a Fund may not purchase portfolio se- curities from any underwriting syndicate of which Nuveen is a member except un- der certain limited conditions set forth in Rule 10f-3. The Rule sets forth re- quirements relating to, among other things, the terms of a security purchased by the Fund, the amount of securities that may be purchased in any one issue and the assets of the Fund that may be invested in a particular issue. In addi- tion, purchases of securities made pursuant to the terms of the Rule must be approved at least quarterly by the Board of Trustees, including a majority of the trustees who are not interested persons of the Trust.
NET ASSET VALUE
Each Fund's net asset value per share is determined separately for each class of those Fund's shares as of the close of trading (normally 4:00 p.m. eastern time) on each day the New York Stock Exchange (the "Exchange") is open for business. The Exchange is not open for trading on New Year's Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset value per share of a class of shares of a Fund will be computed by dividing
the value of the Fund's assets attributable to the class, less the liabilities attributable to the class, by the number of shares of the class outstanding. A Fund's net asset value may not be calculated on days during which the Fund re- ceives no orders to purchase shares and no shares are tendered for redemption. Net asset value is calculated by taking the fair value of a Fund's total as- sets, including interest or dividends accrued but not yet collected, less all liabilities, and dividing by the total number of shares outstanding. The re- sult, rounded to the nearest cent, is the net asset value per share. In deter- mining net asset value, expenses are accrued and applied daily and securities and other assets for which market quotations are available are valued at market value. Common stocks and other equity-type securities are valued at the last sales price on the national securities exchange or Nasdaq on which such securi- ties are primarily traded; however, securities traded on a national securities exchange or Nasdaq for which there were no transactions on a given day or secu- rities not listed on a national securities exchange or Nasdaq are valued at the most recent bid prices. Fixed-income securities are valued by a pricing service that values portfolio securities at the mean between the quoted bid and asked prices or the yield equivalent when quotations are readily available. Securi- ties for which quotations are not readily available (which are expected to con- stitute a majority of the fixed-income securities held by a Fund) are valued at fair value as determined by the pricing service using methods that include con- sideration of the following: yields or prices of bonds of comparable quality, type of issue, coupon, maturity and rating; indications as to value from secu- rities dealers; and general market conditions. The pricing service may employ electronic data processing techniques and/or a matrix system to determine valu- ations. Debt securities having remaining maturities of 60 days or less when purchased are valued by the amortized cost method when the Board of Trustees determines that the fair market value of such securities is their amortized cost. Under this method of valuation, a security is initially valued at its ac- quisition cost, and thereafter amortization of any discount or premium is as- sumed each day, regardless of the impact of fluctuating interest rates on the market value of the security. Regardless of the method employed to value a par- ticular security, all valuations are subject to review by a Fund's Board of Trustees or its delegate who may determine the appropriate value of a security whenever the value as calculated is significantly different from the previous day's calculated value.
TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the advice
of Chapman and Cutler, counsel to the Trust.
As described in the Prospectuses, each of the Funds intends to qualify under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") for tax treatment as a regulated investment company. In order to qualify as a regu- lated investment company, a Fund (i) must elect to be treated as a regulated investment company and (ii) for each taxable year thereafter must satisfy cer- tain requirements relating to the source of its income, diversification of its assets, and distributions of its income to shareholders. First, the Fund must derive at least 90% of its annual gross income (including tax-exempt interest) from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock or securities, foreign currencies or other income (including but not limited to gains from options, futures, or for- ward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "90% gross income test"). Second, the Fund must diversify its holdings so that, at the close of each quarter of its tax- able year, (i) at least 50% of the value of its total assets is comprised of cash, cash items, United States Government securities, securities of other reg- ulated investment companies and other securities limited in respect of any one issuer to an amount not greater in value than 5% of the value of the Fund's to- tal assets and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Fund's total assets is invested in the securities of any one issuer (other than United States Gov- ernment securities and securities of other regulated investment companies) or two or more issuers controlled by a Fund and engaged in the same, similar or related trades or businesses.
As a regulated investment company, a Fund will not be subject to federal income tax in any taxable year for which it distributes at least 90% of the sum of (i) its "investment company taxable income" (without regard to its net capital gain, i.e., the excess of its net long-term capital gain over its short-term capital loss) and (ii) its net tax-exempt interest (the excess of its gross tax-exempt interest income over certain disallowed deductions). In addition, to the extent the Fund timely distributes to shareholders at least 98% of its tax- able income (including any net capital gain), it will not be subject to the 4% excise tax on certain undistributed income of "regulated investment companies." The Fund intends to make timely distributions in compliance with these require- ments and consequently it is anticipated that they generally will not be re- quired to pay the excise tax. A Fund may retain for investment its net capital gain. However, if the Fund retains any net capital gain or any investment com- pany taxable income, it will be subject to federal income tax at regular corpo- rate rates on the amount retained. If the Fund retains any net capital gain, such Fund may designate the retained amount as undistributed capital gains in a notice to its shareholders who, if subject to federal income tax on long-term capital gains, (i) will be required to include in income for federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (ii) will be entitled to credit their proportionate shares of the tax paid by such Fund against their federal income tax liabilities if any, and to claim refunds to the extent the credit exceeds such liabilities. For federal income tax purposes, the tax basis of shares owned by a shareholder of the Fund will be increased by an amount equal under current law to 65% of the amount of un- distributed net capital gains included in the shareholder's gross income. Each Fund intends to distribute at least annually to its shareholders all or sub- stantially all of its investment company taxable income, net tax-exempt inter- est and net capital gain.
Treasury regulations permit a regulated investment company, in determining its investment company taxable income and net capital gain, to elect (unless it has made a taxable year election for excise tax purposes as discussed below) to treat all or part of any net capital loss, any net long-term capital loss or any net foreign currency loss incurred after October 31 as if they had been in- curred in the succeeding year.
If any of the Funds engage in hedging transactions involving financial futures and options, these transactions will be subject to special tax rules, the ef- fect of which may be to accelerate income to a Fund, defer a Fund's losses, cause adjustments in the holding periods of a Fund's securities, convert long- term capital gains into short-term capital gains and convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character of distributions to shareholders.
Prior to purchasing shares in one of the Funds, the impact of dividends or distributions which are expected to be or have been declared, but not paid, should be carefully considered. Any dividend or distribution declared shortly after a purchase of such shares prior to the record date will have the effect of reducing the per share net asset value by the per share amount of the divi- dend or distribution and will be subject to federal income tax to the extent it is a distribution of ordinary income or capital gain.
In any taxable year of a Fund, distributions from the Fund, other than distri- butions which are designated as capital gains dividends (or exempt interest dividends, in the case of Muni/Stock Fund and the California Muni/Stock Fund), will to the extent of the earnings and profits on such Fund, constitute divi- dends for Federal income tax purposes which are taxable as ordinary income to shareholders. To the extent that distributions to a shareholder in any year exceed the Fund's current and accumulated earnings and profits, they will be treated as a return of capital and will reduce the shareholder's basis in his or her shares and, to the extent that they exceed his or her basis, will be treated as gain from the sale of such shares as discussed below. It should be noted that certain legislative proposals have been made which could affect the calculation of basis for shareholders holding securities that are substan- tially identical to the Fund's securities. Distributions of the Fund's net capital gain which are properly designated as capital gain dividends by the Fund will be taxable to the shareholders as long-term capital gain, regardless of the length of time the shares have been held by a shareholder. Distribu- tions will be taxed in the manner described (i.e., as ordinary income, long- term capital gain, return of capital or exempt-interest dividends) even if re- invested in additional shares of a Fund.
Although dividends generally will be treated as distributed when paid, divi- dends declared in October, November or December, payable to shareholders of record on a specified date in one of those months and paid during the follow- ing January, will be treated as having been distributed by each Fund (and re- ceived by the shareholders) on December 31 of the year such dividends are de- clared.
The redemption or exchange of the shares of a Fund normally will result in capital gain or loss to the shareholders. Generally, a shareholder's gain or loss will be long-term gain or loss if the shares have been held for more than one year. Present law taxes both long- and short-term capital gains of corpo- rations at the rates applicable to ordinary income. The Internal Revenue Serv- ice Restructuring and Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers other than corporations, net capital gain (which is defined as net long-term capital gain over net short-term capital loss for the taxable year) realized from property (with certain exclusions) is subject to a maximum marginal stated tax rate of 20% (10% in the case of certain taxpayers in the lowest tax bracket). Capital gain or loss is long-term if the holding period for the asset is more than one year, and is short-term if the holding period for the asset is one year or less. The date on which a share is acquired (i.e., the "trade date") is excluded for purposes of determining the holding period of the share. The legislation is generally effective retroactively for amounts properly taken into account on or after January 1, 1998. Capital gains realized from assets held for one year or less are taxed at the same rates as ordinary income. The date on which a share is acquired (i.e., the "trade date") is excluded for purposes of determining the holding period of the share. It should be noted that legislative proposals are introduced from time to time that affect tax rates and could affect relative differences at which ordinary income and capital gains are taxed.
In addition, please note that capital gains may be recharacterized as ordinary income in the case of certain financial transactions that are considered "con- version transactions" effective for transactions en-
tered into after April 30, 1993. Shareholders and prospective investors should consult with their tax advisers regarding the potential effect of this provi- sion on their investment in shares of a Fund.
Under the Code, certain miscellaneous itemized deductions, such as investment expenses, tax return preparation fees and employee business expenses, will be deductible by individuals only to the extent they exceed 2% of adjusted gross income. Miscellaneous itemized deductions subject to this limitation under present law do not include expenses incurred by the Fund as long as the shares of the Fund are held by or for 500 or more persons at all times during the taxable year or another exception is met. In the event the shares of the Fund are held by fewer than 500 persons, additional taxable income may be realized by the individual (and other non-corporate) shareholders in excess of the dis- tributions received from the Fund.
All or a portion of a sales load paid in purchasing shares of a Fund cannot be taken into account for purposes of determining gain or loss on the redemption or exchange of such shares within 90 days after their purchase to the extent shares of a Fund or another fund are subsequently acquired without payment of a sales load or with the payment of a reduced sales load pursuant to the rein- vestment or exchange privilege. Any disregarded portion of such load will re- sult in an increase in the shareholder's tax basis in the shares subsequently acquired. Moreover, losses recognized by a shareholder on the redemption or exchange of shares of a Fund held for six months or less are disallowed to the extent of any distribution of exempt-interest dividends received with respect to such shares and, if not disallowed, such losses are treated as long-term capital losses to the extent of any distributions of long-term capital gains made with respect to such shares. In addition, no loss will be allowed on the redemption or exchange of shares of a Fund if the shareholder purchases other shares of such Fund (whether through reinvestment of distributions or other- wise) or the shareholder acquires or enters into a contract or option to ac- quire securities that are substantially identical to shares of a Fund within a period of 61 days beginning 30 days before and ending 30 days after such re- demption or exchange. If disallowed, the loss will be reflected in an adjust- ment to the basis of the shares acquired.
If in any year a Fund should fail to qualify under Subchapter M for tax treat- ment as a regulated investment company, the Fund would incur a regular corpo- rate federal income tax upon its income for that year (other than interest in- come from Municipal Obligations and California Municipal Obligations), and distributions to its shareholders would be taxable to shareholders as ordinary dividend income for federal income tax purposes to the extent of the Fund's available earnings and profits.
The Funds are required in certain circumstances to withhold 31% of taxable dividends and certain other payments paid to non-corporate holders of shares who have not furnished to the Funds their correct taxpayer identification num- ber (in the case of individuals, their social security number) and certain certifications, or who are otherwise subject to backup withholding.
Shareholders who are non-resident aliens are subject to U.S. withholding taxes on ordinary income dividends at a rate of 30% or such lower rate as prescribed by an applicable tax treaty.
A corporate shareholder may be entitled to a 70% dividends received deduction with respect to any portion of such shareholder's ordinary income dividends which are attributable to dividends received by
a Fund on certain Equity Securities (other than corporate shareholders, such
as "S" corporations, which are not eligible for the deduction because of their
special characteristics and other than for purposes of special taxes such as
the accumulated earnings tax and the personal holding corporation tax). A Fund
will designate the portion of any taxable dividend which is eligible for this
deduction. However, a corporate shareholder should be aware that Sections 246
and 246A of the Code impose additional limitations on the eligibility of divi-
dends for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Shares of a Fund) must generally be held
at least 46 days (as determined under, and during the period specified in,
Section 246(c) of the Code). Regulations have been issued which address spe-
cial rules that must be considered in determining whether the 46 day holding
requirement is met. Moreover, the allowable percentage of the deduction will
generally be reduced from 70% if a corporate shareholder owns Shares of the
Fund the financing of which is directly attributable to indebtedness incurred
by such corporation. It should be noted that various legislative proposals
that would affect the dividends received deduction have been introduced. To
the extent dividends received by a Fund are attributable to foreign corpora-
tions, a corporate shareholder will not be entitled to the dividends received
deduction with respect to its share of such foreign dividends since the divi-
dends received deduction is generally available only with respect to dividends
paid by domestic corporations. It should be noted that payments to a Fund of
dividends on Equity Securities that are attributable to foreign corporations
may be subject to foreign withholding taxes. Corporate shareholders should
consult with their tax advisers with respect to the limitations on, and possi-
ble modifications to, the dividends received deduction.
Nuveen Balanced Municipal and Stock Fund Tax Matters
In addition to the matters discussed above, the Muni/Stock Fund intends to
qualify to pay "exempt-interest" dividends as defined under the Code. Under
the Code, at the close of each quarter of its taxable year, if at least 50% of
the value of the Fund's total assets consists of obligations described in Code
Section 103(a)) ("Municipal Securities"), the Fund shall be qualified to pay
exempt-interest dividends to its Shareholders. Exempt-interest dividends are
dividends or any part thereof (other than a capital gain dividend) paid by the
Fund which are attributable to interest on Municipal Securities (net of ex-
penses and any bond premium amortization with respect to Municipal Securities)
to the extent such interest is excludible from gross income under Section 103
of the Code and are so designated by the Fund. Exempt-interest dividends will
be excluded from gross income of the owners of the shares for federal income
tax purposes, except in the case of certain substantial users as described be-
low. Such exempt-interest dividends may be taken into account in determining
the federal alternative minimum tax, as described below. Insurance proceeds
received by the Muni/Stock Fund under any insurance policies in respect of
scheduled interest payments on defaulted Municipal Securities, as described
herein, may be taken into account in determining the amount of exempt-interest
dividends provided that, at the time such policies are purchased, the amounts
paid for such policies are reasonable, customary and consistent with the rea-
sonable expectation that the respective issuer of the Municipal Securities,
rather than the insurer, will pay debt service on the Municipal Securities; in
the case of non-appropriation by a political subdivision, however, there can
be no assurance that payments made by the insurer representing interest on
such "non-appropriation" Municipal Lease Obligations may be taken into account
in determining the amount of exempt-interest dividends. If the Fund purchases
a Municipal Security at a market discount, any gain realized by the Fund upon
sale or redemption of the Municipal Security will be treated as taxable inter-
est income to the extent such gain does not exceed the market discount, and
any gain
realized in excess of the market discount generally will be treated as capital gain. The Fund will be required by the Code to allocate their respective ex- penses proportionately between their tax-exempt income and taxable income (ex- cluding net realized long-term capital gains). Distributions to shareholders by the Fund of net income received, if any, from taxable dividends, market discount on Municipal Securities treated as interest and net short-term capi- tal gains, if any, realized by the Fund will be taxable to shareholders as or- dinary income. Distributions of net realized long-term capital gains, if any, are taxable as long-term capital gains, as discussed above.
In general, market discount is the amount (if any) by which the stated redemp- tion price at maturity exceeds the Fund's purchase price (except to the extent that such difference, if any, is attributable to original issue discount not yet accrued), subject to a statutory de minimis rule. Accretion of market dis- count is taxable as ordinary income. Market discount that accretes while the Fund holds a Municipal Security would be recognized as ordinary income by the Fund when principal payments are received on the Municipal Security, upon sale or at redemption (including early redemption) or at the Fund's election, as such market discount accrues. Market discount income recognized by the Fund will result in taxable dividends to the shareholders.
For purposes of computing the alternative minimum tax for individuals and cor- porations and the Superfund tax for corporations, interest on certain private activity bonds (which includes most industrial and housing bonds) issued on or after August 8, 1986 is included as a preference item. The Fund will annually supply their shareholders with a report indicating the percentage of the Fund's income attributable to Municipal Securities that is treated as a tax preference item for purposes of the federal alternative minimum tax. Moreover, for corporations, the alternative minimum taxable income is increased by 75% of the difference between an alternative measure of income ("adjusted current earnings") and the amount otherwise determined to be the alternative minimum taxable income. Interest on all Municipal Securities, and therefore all exempt-interest dividends received from the Fund, are included in calculating adjusted current earnings. Under current Code provisions, the Superfund Tax does not apply to tax years beginning on or after January 1, 1996. Legislative proposals have been made that would extend the Superfund Tax.
Individuals whose "modified income" exceeds a base amount will be subject to federal income tax on up to one-half of their social security benefits. Modi- fied income currently includes adjusted gross income, one-half of social secu- rity benefits and tax-exempt interest, including exempt-interest dividends from the Funds. In addition, individuals whose modified income exceeds certain base amounts are required to include in gross income up to 85% of their social security benefits.
The interest on private activity bonds in most instances is not federally tax- exempt to a person who is a "substantial user" of a facility financed by such bonds or a "related person" of such "substantial user." As a result, the Funds may not be an appropriate investment for shareholders who are considered ei- ther a "substantial user" or a "related person" within the meaning of the Code. In general, a "substantial user" of a facility includes a "non-exempt person who regularly uses a part of such facility in his trade or business." "Related persons" are in general defined to include persons among whom there exists a relationship, either by family or business, which would result in a disallowance of losses in transactions among them under various provisions of the Code (or if they are members of the same controlled group
of corporations under the Code), including a partnership and each of its part- ners (and their spouses and minor children), an S corporation and each of its shareholders (and their spouses and minor children) and various combinations of these relationships. The foregoing is not a complete statement of all of the provisions of the Code relating to the definitions of "substantial user" and "related person." For additional information, investors should consult their tax advisers before investing in the Fund.
The Code provides that interest on indebtedness incurred or continued to pur- chase or carry shares of a fund that distributes exempt-interest dividends is not deductible for Federal income tax purposes. Under rules used by the IRS for determining when borrowed funds are considered used for the purpose of purchas- ing or carrying particular assets, the purchase or ownership of shares may be considered to have been made with borrowed funds even though such funds are not directly traceable to the purchase or ownership of shares.
The foregoing is a general and abbreviated summary of the provisions of the Code and Treasury Regulations presently in effect as they directly govern the federal income taxation of the Funds and their shareholders and relates only to the federal income tax status of the Fund and to tax treatment of distributions by the Fund to United States shareholders. For complete provisions, reference should be made to the pertinent Code sections and Treasury Regulations. The Code and Treasury Regulations are subject to change by legislative or adminis- trative action, and any such change may be retroactive with respect to Fund transactions. Shareholders are advised to consult their own tax advisers for more detailed information concerning the federal taxation of the Funds and the income tax consequences to their shareholders, as well as with respect to for- eign, state and local tax consequences of ownership of Fund shares.
NUVEEN BALANCED MUNICIPAL AND STOCK FUND DISTRIBUTIONS
The Muni/Stock Fund will pay monthly tax-exempt income dividends to sharehold- ers at a level rate that reflects the past and projected net tax-exempt income of the Fund and that results, over time, in the distribution of substantially all of the Fund's net tax-exempt income. To maintain a more stable monthly dis- tribution, the Fund may from time to time distribute less than the entire amount of net tax-exempt income earned in a particular period. This undistrib- uted net tax-exempt income would be available to supplement future distribu- tions, which might otherwise have been reduced by a decrease in the Fund's monthly net income due to fluctuations in investment income or expenses. As a result, the tax-exempt income distributions paid by the Fund for any particular monthly period may be more or less than the amount of net tax-exempt income ac- tually earned by the Fund during such period. Undistributed net tax-exempt in- come is included in the Fund's net asset value and, correspondingly, distribu- tions from previously undistributed net tax-exempt income are deducted from the Fund's net asset value. It is not expected that this dividend policy will im- pact the management of the Fund's portfolio.
PERFORMANCE INFORMATION
Each Fund may quote its yield, distribution rate, beta, average annual total return or cumulative total return in reports to shareholders, sales literature and advertisements each of which will be calculated separately for each class of shares.
In accordance with a standardized method prescribed by rules of the Securities and Exchange Commission ("SEC"), yield is computed by dividing the net invest- ment income per share earned during the specified one month or 30-day period by the maximum offering price per share on the last day of the period, according to the following formula:
Yield=2[(a-b +1)/6/ -1]
In the above formula, a = dividends and interest earned during the period; b = expenses accrued for the period (net of reimbursements); c = the average daily number of shares outstanding during the period that were entitled to receive dividends; and d = the maximum offering price per share on the last day of the period. In the case of Class A shares, the maximum offering price includes the current maximum front-end sales charge of 5.25%.
In computing yield, the Funds follow certain standardized accounting practices specified by SEC rules. These practices are not necessarily consistent with those that the Funds use to prepare their annual and interim financial state- ments in conformity with generally accepted accounting principles. Thus, yield may not equal the income paid to shareholders or the income reported in a Fund's financial statements.
YIELD (AS OF JUNE 30)
----------------------------------------------
CLASS A CLASS B CLASS C CLASS R
---------- ---------- ---------- ----------
1997 1998 1997 1998 1997 1998 1997 1998
---- ---- ---- ---- ---- ---- ---- ----
Growth and Income Stock
Fund.................... 0.87% % 0.18% % 0.18% % 1.16% %
Balanced Stock and Bond
Fund.................... 2.94% % 2.31% % 2.35% % 3.36% %
Balanced Municipal and
Stock Fund.............. 2.66% % 2.00% % 1.99% % 3.06% %
|
The Funds may from time to time in their advertising and sales materials report a quotation of their current distribution rate. The distribution rate repre- sents a measure of dividends distributed for a specified period. Distribution rate is computed by taking the most recent dividend per share, multiplying it as needed to annualize it, and dividing by the appropriate price per share (e.g., net asset value for purchases to be made without a load such as rein- vestments from Nuveen UITs, or the maximum public offering price). The distri- bution rate differs from yield and total return and therefore is not intended to be a complete measure of performance. Distribution rate may sometimes differ from yield because a Fund may be paying out more than it is earning and because it may not include the effect of amortization of bond premiums to the extent such premiums arise after the bonds were purchased.
The distribution rates as of the period quoted, based on the maximum public of- fering price then in effect for the Funds, and assuming the imposition of the maximum sales charge for Class A Shares of 5.25%, were as follows:
DISTRIBUTION RATES (AS OF JUNE 30)
-----------------------------------------------
CLASS A CLASS B CLASS C CLASS R
----------- ----------- ----------- -----------
1997 1998 1997 1998 1997 1998 1997 1998
----- ----- ----- ----- ----- ----- ----- -----
Growth and Income Stock
Fund.................... 1.82% % 1.22% % 1.22% % 2.15% %
Balanced Stock and Bond
Fund.................... 1.98% % 1.37% % 1.37% % 2.33% %
Balanced Municipal and
Stock Fund.............. 2.24% % 1.66% % 1.66% % 2.60% %
|
A Fund may from time to time in its advertising and sales literature quote its beta. Beta is a standardized measure of a security's risk (variability of re- turns) relative to the overall market, i.e. the proportion of the variation in the security's returns that can be explained by the variation in the return of the overall market. For example, a security with a beta of 0.85 is expected to have returns that are 85% as variable as overall market returns. Conversely, a security with a beta of 1.25 is expected to have returns that are 125% as varaible as overall market returns. The beta of the overall market is by defi- nition 1.00.
The formula for beta is given by:
Beta = S A * B / C where A = (Xi - X), i=1,..., N B = (Yi - Y), i=1,..., N |
C = S (Xi - X)/2/, i=1,..., N
Xi = Security Return in period i
Yi = Market Return in period i
X = Average of all observations Xi
Y = Average of all observations Yi
N = Number of observations in the measurement period
The beta for the Growth/Income Fund on June 30, 1997 and 1998 was 0.89 and , respectively. The beta equals the weighted average of the betas for each stock in the Fund's investment portfolio. The beta for each stock in the Fund's portfolio was calculated based on weekly returns for the [one]-year periods ended June 30, 1997 and June 30, 1998 and using the S&P 500 Index as the market benchmark.
All total return figures assume the reinvestment of all dividends and measure the net investment income generated by, and the effect of any realized and unrealized appreciation or depreciation of, the underlying investments in a Fund over a specified period of time. Average annual total return figures are annualized and therefore represent the average annual percentage change over the specified period. Cumulative total return figures are not annualized and represent the aggregate percentage or dollar value change over a stated period of time. Average annual total return and cumulative total return are based upon the historical results of a Fund and are not necessarily representative of the future performance of a Fund.
The average annual total return quotation is computed in accordance with a standardized method prescribed by SEC rules. The average annual total return for a specific period is found by taking a hypothetical $1,000 investment ("initial investment") in Fund shares on the first day of the period, reducing the amount to reflect the maximum sales charge, and computing the "redeemable value" of that investment at the end of the period. The redeemable value is then divided by the initial investment, and this quotient is taken to the Nth root (N representing the number of years in the period) and 1 is subtracted from the result, which is then expressed as a percentage. The calculation as- sumes that all income and capital gains distributions have been reinvested in Fund shares at net asset value on the reinvestment dates during the period.
Calculation of cumulative total return is not subject to a prescribed formula. Cumulative total return for a specific period is calculated by first taking a hypothetical initial investment in Fund shares on the first day of the period, deducting (in some cases) the maximum sales charge, and computing the "redeem- able value" of that investment at the end of the period. The cumulative total return percentage is then determined by subtracting the initial investment from the redeemable value and dividing the remainder by the initial investment and expressing the result as a percentage. The calculation assumes that all income and capital gains distributions by a Fund have been reinvested at net asset value on the reinvestment dates during the period. Cumulative total re- turn may also be shown as the increased dollar value of the hypothetical in- vestment over the period. Cumulative total return calculations that do not in- clude the effect of the sales charge would be reduced if such charge were in- cluded. Average annual and cumulative total returns may also be presented in advertising and sales literature without the inclusion of sales charges.
From time to time, each Fund may compare its risk-adjusted performance with other investments that may provide different levels of risk and return. For example, a Fund may compare its risk level, as measured by the variability of its periodic returns, or its RISK-ADJUSTED TOTAL RETURN, with those of other funds or groups of funds. Risk-adjusted total return would be calculated by adjusting each investment's total return to account for the risk level of the investment.
The risk level for a class of shares of a Fund, and any of the other invest- ments used for comparison, would be evaluated by measuring the variability of the investment's return, as indicated by the standard deviation of the invest- ment's monthly returns over a specified measurement period (e.g., two years). An investment with a higher standard deviation of monthly returns would indi- cate that a fund had greater price variability, and therefore greater risk, than an investment with a lower standard deviation.
THE RISK-ADJUSTED TOTAL RETURN for a class of shares of a Fund and for other investments over a specified period would be evaluated by dividing (a) the re- mainder of the investment's annualized two-year total return, minus the annualized total return of an investment in Treasury bill securities (essen- tially a risk-free return) over that period, by (b) the standard deviation of the investment's monthly returns for the period. This ratio is sometimes re- ferred to as the "Sharpe measure" of return. An investment with a higher Sharpe measure would be regarded as producing a higher return for the amount of risk assumed during the measurement period than an investment with a lower Sharpe measure.
Class A Shares of each Fund are sold at net asset value plus a current maximum sales charge of 5.25% of the offering price. This current maximum sales charge will typically be used for purposes of calculating performance figures. Returns and net asset value of each class of shares of the Funds will fluctuate. Fac- tors affecting the performance of the Funds include general market conditions, operating expenses and investment management. Any additional fees charged by a securities representative or other financial services firm would reduce returns described in this section. Shares of the Funds are redeemable at net asset val- ue, which may be more or less than original cost.
In reports or other communications to shareholders or in advertising and sales literature, a Fund may also compare its performance or the performance of its portfolio manager with that of, or reflect the performance of: (1) the Consumer Price Index; (2) equity mutual funds or mutual fund indexes as reported by Lipper Analytical Services, Inc. ("Lipper"), Morningstar, Inc. ("Morningstar"), Wiesenberger Investment Companies Service ("Wiesenberger") and CDA Investment Technologies, Inc. ("CDA") or similar independent services which monitor the performance of mutual funds, or other industry or financial publications such as Barron's, Changing Times, Forbes and Money Magazine; and/or (3) the S&P 500 Index or other unmanaged indices reported by Lehman Brothers. Performance com- parisons by these indexes, services or publications may rank mutual funds over different periods of time by means of aggregate, average, year-by-year, or other types of total return and performance figures. Any given performance quo- tation or performance comparison should not be considered as representative of the performance of the Funds for any future period.
There are differences and similarities between the investments which the Funds may purchase and the investments measured by the indexes and reporting services which are described herein. The Consumer Price Index is generally considered to be a measure of inflation. Lipper, Morningstar, Wiesenberger and CDA are widely recognized mutual fund reporting services whose performance calculations are based upon changes in net asset value with all dividends reinvested and which do not include the effect of any sales charges.
Each Fund may also from time to time in its advertising and sales literature compare its current yield or total return with the yield or total return on taxable investments such as corporate or U.S. Government bonds, bank certifi- cates of deposit (CDs) or money market funds or indices that represent these types of investments. U.S. Government bonds are long-term investments backed by the full faith and credit of the U.S. Government. Bank CDs are generally short- term, FDIC-insured investments, which pay fixed principal and interest but are subject to fluctuating rollover rates. Money market funds are short-term in- vestments with stable net asset values, fluctuating yields and special features enhancing liquidity.
Nuveen Growth and Income Stock Fund
The Fund commenced operations on August 7, 1996. The table below represents the
investment returns for the specified periods on the Fund's Class A, Class B,
Class C and Class R shares. The total return figures for Class A shares are
shown both with and without the effect of the maximum sales charge. The total
return figures for the Class B and Class C shares include the effect of the ap-
plicable Contingent Deferred Sales Charge ("CDSC").
NUVEEN GROWTH AND INCOME STOCK
FUND
----------------------------
CUMULATIVE
--------------------
8/7/96
6/30/97- (INCEPTION)
6/30/98 -6/30/98
-------- -----------
Class ANAV % %
Class APOP % %
Class B+ % %
Class C++ % %
Class R % %
|
The table below presents annual investment returns for the ICAP Discretionary
Equity Composite between December 31, 1987 and December 31, 1997 and the return
for the first half of 1998. The ICAP Discretionary Equity Composite represents
the composite performance of the 40 managed accounts totalling approximately
[$2.4] billion for which ICAP serves as investment adviser and that have the
same investment objectives and policies as the Fund.
1/1/98- ANNUAL TOTAL RETURNS FOR THE YEAR ENDING DECEMBER 31,
6/30/98 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
----------------------------------------------------------------------------------------------------
ICAP Discretionary
Equity Composite
(Gross)................ 26.44 38.16 1.95 16.58 7.38 33.63 1.47 33.54 9.37 29.08
ICAP Discretionary
Equity Composite (Net). 25.01 36.63 0.74 15.24 6.12 32.15 0.26 32.05 8.09 27.63
S&P 500................. 22.96 37.43 1.31 9.99 7.67 30.55 (3.17) 31.49 16.81 5.23
Lipper Growth and Income
Index.................. 20.69 31.17 (0.41) 14.62 9.64 27.75 (5.99) 23.74 18.35 2.63
|
Nuveen Balanced Stock and Bond Fund
The Fund commenced operations on August 7, 1996. The table below represents the
investment returns for the specified periods on the Fund's Class A, Class B,
Class C and Class R shares. The total return figures for Class A shares are
shown both with and without the effect of the maximum sales charge. The total
return figures for the Class B and Class C shares include the effect of the ap-
plicable CDSC.
NUVEEN BALANCED STOCK AND BOND FUND
---------------------------------------------------------------------------
CUMULATIVE
--------------------
8/7/96
6/30/97- (INCEPTION)
6/30/98 -6/30/98
-------- -----------
Class ANAV........................................... %
Class APOP........................................... % %
Class B+............................................. % %
Class C++............................................ % %
Class R.............................................. % %
|
The table below presents annual investment returns for the ICAP Balanced Com- posite between December 31, 1987 and December 31, 1997 and the return for the first half of 1998. The ICAP Balanced Composite represents the composite per- formance of the eight managed accounts totalling approximately $[370] million for which ICAP serves as investment adviser and that have the same investment objectives and policies as the Fund.
1/1/98- ANNUAL TOTAL RETURNS FOR THE YEAR ENDING DECEMBER 31,
6/30/98 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
-----------------------------------------------------------------------------------------------------
ICAP Balanced Composite
(Gross)................ 17.52 29.09 0.21 13.81 7.34 31.04 2.69 31.14 8.57 27.52
ICAP Balanced Composite
(Net).................. 16.29 27.76 (0.89) 12.61 6.18 29.70 1.57 29.80 7.40 26.20
Balanced Fund Index..... 12.32 24.40 (0.30) 9.07 7.33 21.51 3.99 21.09 10.95 5.74
Lipper Balanced Index... 13.01 24.88 (2.04) 11.94 7.47 25.84 0.65 19.70 11.18 4.15
|
The gross performance results of the ICAP Discretionary Equity Composite and the ICAP Balanced Composite reflect the investment performance of the respec- tive composites before deduction of any investment advisory fees or other ex- penses. The net performance results of the ICAP Discretionary Equity Composite and the ICAP Balanced Composite reflect the deduction of the annual operating expenses for the most recent fiscal year (without waivers or reimbursements) for Class A shares of the Growth/Income Fund and the Stock/Bond Fund, respec- tively, as summarized in the Summary of Fund Expenses section of the Prospectus and may be compared to the performance of the indices referenced below. The performance information above of the ICAP Discretionary Equity Composite and ICAP Balanced Composite should not be interpreted as indicative of future per- formance of a fund. Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") is a widely recognized, unmanaged index of common stock prices. S&P 500 returns assume reinvestment of all dividends paid by the stocks included in the index, but do not include brokerage commissions or other fees an investor would incur by investing in the portfolio of stocks comprising the index. The Lipper Growth and Income Index represents the composite returns of
the 30 largest funds comprising the Lipper Growth and Income Objective and as- sumes reinvestment of all fund dividends and distributions. The Balanced Fund Index represents the investment performance of an unmanaged index comprised 55% of the S&P 500 and 45% of the Lehman Brothers Intermediate Treasury Index (the "Lehman Index"). The Lehman Index is an unmanaged index of all public obliga- tions of the U.S. Treasury, U.S. Government agencies, quasi-federal corpora- tions and corporate debt guaranteed by the U.S. Government with maturities be- tween one and ten years and an outstanding par value of at least $100 million. The Lipper Balanced Index represents the composite returns of the 30 largest funds comprising the Lipper Balanced Objective and assumes reinvestment of all fund dividends and distributions.
Nuveen Balanced Municipal and Stock Fund The Fund commenced investment operations on August 7, 1996. The table below represents the investment returns for the periods specified on the Fund's Class A, Class B, Class C and Class R shares. The total return figures for Class A shares are shown both with and without the effect of the maximum sales charge. The total return figures for the Class B and Class C shares include the effect of the applicable CDSC.
NUVEEN BALANCED
MUNICIPAL AND STOCK FUND
---------------------------------
CUMULATIVE
--------------------
8/7/96
6/30/97- (INCEPTION)
6/30/98 -6/30/98
-------- -----------
Class ANAV % %
Class APOP % %
Class B+ % %
Class C++ % %
Class R % %
|
Total returns reflect past performance and are not predictive of future re- sults.
After-tax Performance of Balanced Portfolios
Nuveen has examined the historical after-tax performance of various balanced portfolios, combining stocks with either municipal bonds, corporate bonds, or Treasury bonds. The after-tax risk return trade-offs for various allocations were derived by tracking the performance of hypothetical portfolios over the 1978-1997 period. All investment income produced by the portfolio is reinvest- ed, along with the after-tax proceeds from an assumed 20% annualized turnover rate. The allocations between the two assets were allowed to roam within a 5% band around their target before rebalancing. Taxes were computed on the portfo- lio level (realized losses offset gains) and at historical tax rates assuming each year's tax rate applicable to a single investor who earned $100,000 in 1997 dollars. All portfolios were liquidated at
period end and the existing tax liability was paid. The asset class returns were represented by the following indices:
Municipal Bonds--
Lehman Brothers Long Municipal Index (Prior to 1980 municipals were based on a synthetic index created by Nuveen based on the Bond Buyer 20 Index and other market data pub- lished by The Bond Buyer, using Lehman's methodology.)
Treasury Bonds--
Lehman Brothers Long Treasury Index
Corporate Bonds--
Lehman Brothers Long Corporate Index
S&P 500 Stocks--
Ibbotson Associates Large Company Stock Index
The average annual after-tax returns for these various balanced portfolios for the 1978-1997 period were as follows:
EQUITY MUNICIPAL CORPORATE TREASURY
PORTION MIXES MIXES MIXES
------------------------------------------------------------------------------------
100% 12.51% 12.51% 12.51%
80 11.77 11.30 11.29
60 11.02 10.07 10.06
40 10.27 8.73 8.69
20 9.33 7.39 7.34
0 8.42 5.95 5.91
|
Over the 1978-1997 time period, balanced portfolios combining municipals and equities provided superior after-tax returns and lower levels of risk (measured by variability of periodic returns) than Treasury and corporate blends having similar maturities, under the assumptions described above. The differences be- tween these asset classes is discussed under "Performance Information" in this Statement of Additional Information.
The addition of 20% municipals to an otherwise all-equity portfolio would have sacrificed only 74 basis points in annual after-tax return, while reducing risk by a seventh. Conversely, in comparison to an all-municipal bond portfolio, a balanced portfolio of 60% municipals and 40% equities offered 185 basis points in additional annual-tax return with virtually no more risk.
ADDITIONAL INFORMATION ON THE PURCHASE AND
REDEMPTION OF FUND SHARES AND SHAREHOLDER PROGRAMS
As described in the Prospectuses, the Funds provide you with alternative ways of purchasing Fund shares based upon your individual investment needs and pref- erences.
Each class of shares of a Fund represents an interest in the same portfolio of investments. Each class of shares is identical in all respects except that each class bears its own class expenses, including distribution and administration expenses, and each class has exclusive voting rights with respect to any dis- tribution or service plan applicable to its shares. As a result of the differ- ences in the expenses borne by each class of shares, net income per share, div- idends per share and net asset value per share will vary among a
Fund's classes of shares. There are no conversion, preemptive or other sub- scription rights, except that Class B shares automatically convert into Class A shares as described below.
Shareholders of each class will share expenses proportionately for services that are received equally by all shareholders. A particular class of shares will bear only those expenses that are directly attributable to that class, where the type or amount of services received by a class varies from one class to another. For example, class-specific expenses generally will include distri- bution and service fees.
The expenses to be borne by specific classes of shares may include (i) trans- fer agency fees attributable to a specific class of shares, (ii) printing and postage expenses related to preparing and distributing materials such as share- holder reports, prospectuses and proxy statements to current shareholders of a specific class of shares, (iii) Securities and Exchange Commission ("SEC") and state securities registration fees incurred by a specific class of shares, (iv) the expense of administrative personnel and services required to support the shareholders of a specific class of shares, (v) litigation or other legal ex- penses relating to a specific class of shares, (vi) directors' fees or expenses incurred as a result of issues relating to a specific class of shares, (vii) accounting expenses relating to a specific class of shares and (viii) any addi- tional incremental expenses subsequently identified and determined to be prop- erly allocated to one or more classes of shares.
INITIAL AND SUBSEQUENT PURCHASES OF SHARES
You may buy Fund shares through Authorized Dealers or by calling or directing
your financial adviser to call Nuveen toll-free at 800-257-8787. You may pay
for your purchase by Federal Reserve draft or by check made payable to "[Your
Fund], Class [A], [B], [C], [R]," delivered to the financial adviser through
whom the investment is to be made for forwarding to Nuveen Investor Services.
When making your initial investment, you must also furnish the information nec-
essary to establish your Fund account by completing and enclosing with your
payment the application form attached to the Prospectus (the "Application
Form"). After your initial investment, you may make subsequent purchases at any
time by forwarding to your financial adviser or Nuveen Investor Services a
check, in the amount of your purchase, made payable to "[Your Fund], Class [A],
[B], [C], [R]," and indicating on the check your account number. All payments
need to be in U.S. dollars and should be sent directly to Nuveen Investor Serv-
ices at P.O. Box 5186, Bowling Green Station, New York, NY 10004-5186. A check
drawn on a foreign bank or payable other than to the order of your Fund gener-
ally will not be acceptable. You may also wire Federal Funds directly to Nuveen
Investor Services, but you may be charged a fee
for this. For instructions on how to make Fund purchases by wire transfer, call
Nuveen toll-free at
800-257-8787.
Purchase Price
The price at which you purchase a class of Fund shares is based on the next
calculation of the net asset value for that share class after the order is
placed. The net asset value per share of each share class is determined as of
the close of trading (normally 4:00 p.m. Eastern Time) on each day the New York
Stock Exchange is open for business. See "Net Asset Value," for a description
of how net asset value is calculated.
Minimum Investment Requirements
The minimum initial investment is $3,000 per fund share class ($1,000 for a Traditional/Roth IRA Account; $500 for an Education IRA Account), and $500 for accounts opened through fee-based programs for which the program sponsor has established a single master account with the fund's transfer agent and performs all sub-accounting services related to that account. Additional purchases may be in amounts of $50 or more. These minimums may be changed at any time by a Fund. There are exceptions to these minimums for shareholders who qualify under reinvestment programs.
SYSTEMATIC INVESTMENT PROGRAMS
Each Fund offers you several opportunities to capture the benefits of "dollar cost averaging" through systematic investment programs. In a regularly followed dollar cost averaging program, you would purchase more shares when Fund share prices are lower and fewer shares when Fund share prices are higher, so that the average price paid for Fund shares is less than the average price of the Fund shares over the same time period. Dollar cost averaging does not assure profits or protect against losses in a steadily declining market. Since dollar cost averaging involves continuous investment regardless of fluctuating price levels, you should consider your financial ability to continue investing in de- clining as well as rising markets before deciding to invest in this way. Each Fund offers two different types of systematic investment programs:
SYSTEMATIC INVESTMENT PLAN
Once you have established a Fund account, you may make regular investments in an amount of $50 or more each month by authorizing Nuveen Investor Services to draw preauthorized checks on your bank account. There is no obligation to con- tinue payments and you may terminate your participation at any time at your discretion. No charge in addition to the applicable sales charge is made in connection with this Plan, and there is no cost to your Fund. To obtain an ap- plication form for the Systematic Investment Plan, check the applicable box on the Application Form or call Nuveen toll-free at 800-257-8787.
PAYROLL DIRECT DEPOSIT PLAN
Once you have established a Fund account, you may, with your employer's con- sent, make regular investments in Fund shares of $25 or more per pay period (meeting the monthly minimum of $50) by authorizing your employer to deduct this amount automatically from your paycheck. There is no obligation to con- tinue payments and you may terminate your participation at any time at your discretion. No charge in addition to the applicable sales charge is made for this Plan, and there is no cost to your Fund. To obtain an application form for the Payroll Direct Deposit Plan, check the applicable box on the Application Form or call Nuveen toll-free at 800-257-8787.
CLASS A SHARES
You may purchase Class A Shares at a public offering price equal to the appli- cable net asset value per share plus an up-front sales charge imposed at the time of purchase as set forth in the Prospectus. You may qualify for a reduced sales charge, or the sales charge may be waived in its entirety, as described below. Class A Shares are also subject to an annual service fee of .25%. See "Distribution and Service Plans." Set forth below is an example of the method of computing the offering price of the Class A shares of each of the Funds. The example assumes a purchase on June 30, 1998 of Class A shares from a Fund ag- gregating less than $50,000 subject to the schedule of sales charges set forth in the Prospectus at a price based upon the net asset value of the Class A shares.
GROWTH/INCOME STOCK/BOND MUNI/STOCK
FUND FUND FUND
------------- ----------- -----------
Net Asset Value per share......... $ $ $
Per Share Sales Charge--5.25% of
public offering price (5.54% of
net asset value per share)....... $ $ $
Per Share Offering Price to the
Public........................... $ $ $
Shares Outstanding (as of June 30,
1998)............................
|
Each Fund receives the entire net asset value of all Class A Shares that are sold. Nuveen retains the full applicable sales charge from which it pays the uniform reallowances shown in the Prospectus to Authorized Dealers.
Certain commercial banks may make Class A Shares of the Funds available to their customers on an agency basis. Pursuant to the agreements between Nuveen and these banks, some or all of the sales charge paid by a bank customer in connection with a purchase of Class A Shares may be retained by or paid to the bank. Certain banks and other financial institutions may be required to regis- ter as securities dealers in certain states.
REDUCTION OR ELIMINATION OF UP-FRONT SALES CHARGE ON CLASS A SHARES AND CLASS R SHARE PURCHASE AVAILABILITY
Rights of Accumulation
You may qualify for a reduced sales charge on a purchase of Class A Shares of any Fund if the amount of your purchase, when added to the value that day of all of your prior purchases of shares of any Fund or of another Nuveen Mutual Fund or Nuveen exchange-traded fund, or units of a Nuveen Defined Portfolio, on which an up-front sales charge or ongoing distribution fee is imposed, or is normally imposed, falls within the amounts stated in the Class A sales charges and commissions table in "How to Choose a Share Class" in the Prospectus. You or your financial adviser must notify Nuveen or the Fund's transfer agent of any cumulative discount whenever you plan to purchase Class A Shares of a Fund that you wish to qualify for a reduced sales charge.
Letter of Intent
You may qualify for a reduced sales charge on a purchase of Class A Shares of any Fund if you plan to purchase Class A Shares of Nuveen Mutual Funds over the next 13 months and the total amount of your purchases would, if purchased at one time, qualify you for one of the reduced sales charges shown in the Class A sales charges and commissions table in "How to Choose a Share Class" in the Prospectus. In order to take advantage of this option, you must com- plete the applicable section of the Application Form or sign and deliver ei- ther to an Authorized Dealer or to the Fund's transfer agent a written Letter of Intent in a form acceptable to Nuveen. A Letter of Intent states that you intend, but are not obligated, to purchase over the next 13 months a stated total amount of Class A shares that would qualify you for a reduced sales charge shown above. You may count shares of a Nuveen Mutual Fund that you al- ready own on which you paid an up-front sales charge or an ongoing distribu- tion fee and any Class B and Class C Shares of a Nuveen Mutual Fund that you purchase over the next 13 months towards completion of your investment pro- gram, but you will receive a reduced sales charge only on new Class A Shares you purchase with a sales charge over the 13 months. You cannot count towards completion of your investment program Class A Shares that you purchase without a sales charge through investment of distributions from a Nuveen Mutual Fund or a Nuveen Defined Portfolio, or otherwise.
By establishing a Letter of Intent, you agree that your first purchase of Class A Shares of a Fund following execution of the Letter of Intent will be at least 5% of the total amount of your intended purchases. You further agree that shares representing 5% of the total amount of your intended purchases will be held in escrow pending completion of these purchases. All dividends and capital gains distributions on Class A Shares held in escrow will be cred- ited to your account. If total purchases, less redemptions, prior to the expi- ration of the 13 month period equal or exceed the amount specified in your Letter of Intent, the Class A Shares held in escrow will be transferred to your account. If the total purchases, less redemptions, exceed the amount specified in your Letter of Intent and thereby qualify for a lower sales charge than the sales charge specified in your Letter of Intent, you will re- ceive this lower sales charge retroactively, and the difference between it and the higher sales charge paid will be used to purchase additional Class A Shares on your behalf. If the total purchases, less redemptions, are less than the amount specified, you must pay Nuveen an amount equal to the difference between the amounts paid for these purchases and the amounts which would have been paid if the higher sales charge had been applied. If you do not pay the additional amount within 20 days after written request by Nuveen or your fi- nancial adviser, Nuveen will redeem an appropriate number of your escrowed Class A Shares to meet the required payment. By establishing a Letter of In- tent, you irrevocably appoint Nuveen as attorney to give instructions to re- deem any or all of your escrowed shares, with full power of substitution in the premises.
You or your financial adviser must notify Nuveen or the Fund's transfer agent whenever you make a purchase of Fund shares that you wish to be covered under the Letter of Intent option.
Reinvestment of Nuveen Defined Portfolio Distributions
You may purchase Class A Shares without an up-front sales charge by reinvest- ment of distributions from any of the various defined portfolios sponsored by Nuveen. There is no initial or subsequent minimum investment requirement for such reinvestment purchases.
Group Purchase Programs
If you are a member of a qualified group, you may purchase Class A Shares of
any Fund or of another Nuveen Mutual Fund at the reduced sales charge applica-
ble to the group's purchases taken as a whole. A "qualified group" is one which
has previously been in existence, has a purpose other than investment, has ten
or more participating members, has agreed to include Fund sales publications in
mailings to members and has agreed to comply with certain administrative re-
quirements relating to its group purchases.
Under any group purchase program, the minimum initial investment in Class A Shares of any particular Fund or portfolio for each participant in the program is $3,000 and the minimum monthly investment in Class A Shares of any particu- lar Fund or portfolio by each participant is $50. No certificate will be issued for any participant's account. All dividends and other distributions by a Fund will be reinvested in additional Class A Shares of the same Fund. No partici- pant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself and each partici- pant must fill out application materials, which the group administrator may ob- tain from the group's financial adviser, by calling Nuveen toll-free at 800- 257-8787.
Reinvestment of Redemption Proceeds from Unaffiliated Funds You may also purchase Class A Shares at net asset value without a sales charge if the purchase takes place through an Authorized Dealer and represents the re- investment of the proceeds of the redemption of shares of one or more regis- tered investment companies not affiliated with Nuveen. You must provide appro- priate documentation that the redemption occurred not more than one year prior to the reinvestment of the proceeds in Class A Shares, and that you either paid an up-front sales charge or were subject to a contingent deferred sales charge in respect of the redemption of such shares of such other investment company.
Elimination of Sales Charge on Class A Shares Class A Shares of a Fund may be purchased at net asset value without a sales charge by the following categories of investors:
. investors purchasing $1,000,000 or more;
. officers, trustees and former trustees of the Nuveen and Flagship Funds;
. bona fide, full-time and retired employees of Nuveen or ICAP, any parent company of Nuveen, and subsidiaries thereof, or their immediate family members;
. any person who, for at least 90 days, has been an officer, director or bona fide employee of any Authorized Dealer, or their immediate family members;
. officers and directors of bank holding companies that make Fund shares available directly or through subsidiaries or bank affiliates or their immediate family members;
. bank or broker-affiliated trust departments investing funds over which they exercise exclusive discretionary investment authority and that are held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transac- tion fee basis through a broker-dealer sponsored mutual fund purchase program;
. clients of investment advisers, financial planners or other financial intermediaries that charge periodic or asset-based fees for their serv- ices; and
. with respect to the Growth/Income and the Stock/Bond Fund, any eligible employer-sponsored qualified defined contribution retirement plan. Eli- gible plans are those with at least 25 employees and which either (a) make an initial purchase of one or more Nuveen mutual funds aggregating $500,000 or more; or (b) execute a Letter of Intent to purchase in the aggregate $500,000 or more of fund shares. Nuveen will pay Authorized Dealers a sales commission on such purchases equal to 1% of the first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of any amount purchased over $5.0 million.
For investors that purchased Class A Shares at net asset value because they purchased such shares through an eligible employer-sponsored qualified defined contribution plan or because the purchase amount equaled or exceeded $1 mil- lion and the Authorized Dealer did not waive the sales commission, a contin- gent deferred sales charge of 1.00% will be assessed on redemptions within 18 months of purchase.
Any Class A Shares purchased pursuant to a special sales charge waiver must be acquired for investment purposes and on the condition that they will not be transferred or resold except through redemption by the Funds. You or your fi- nancial adviser must notify Nuveen or the Fund's transfer agent whenever you make a purchase of Class A Shares of any Fund that you wish to be covered un- der these special sales charge waivers.
Class A Shares of any Fund may be issued at net asset value without a sales charge in connection with the acquisition by a Fund of another investment com- pany. All purchases under the special sales charge waivers will be subject to minimum purchase requirements as established by the Funds.
In determining the amount of your purchases of Class A Shares of any Fund that may qualify for a reduced sales charge, the following purchases may be com- bined: (1) all purchases by a trustee or other fiduciary for a single trust, estate or fiduciary account; (2) all purchases by individuals and their imme- diate family members (i.e., their spouses, parents, children, grandparents, grandchildren, parents-in-law, sons-and daughters-in-law, siblings, a sib- ling's spouse, and a spouse's siblings); or (3) all purchases made through a group purchase program as described above.
Class R Share Purchase Eligibility
Class R Shares are available for purchases of $2.5 million or more and for purchases using dividends and capital gains distributions on Class R Shares. Class R Shares also are available for the following catego -
ries of investors and pension, profit-sharing, 401(k), IRA or other similar plans maintained by or for the benefit of such persons:
. officers, trustees and former trustees of the Trust or any Nuveen-spon- sored registered investment company and their immediate family members or trustees/directors of any fund, sponsored by Nuveen, any parent com- pany of Nuveen and subsidiaries thereof and their immediate family mem- bers;
. bona fide, full-time and retired employees of Nuveen or ICAP, any parent company of Nuveen, and subsidiaries thereof, or their immediate family members;
. any person who, for at least 90 days, has been an officer, director or bona fide employee of any Authorized Dealer, or their immediate family members;
. officers and directors of bank holding companies that make Fund shares available directly or through subsidiaries or bank affiliates, or their immediate family members;
. bank or broker-affiliated trust departments investing funds over which they exercise exclusive discretionary investment authority and that are held in a fiduciary, agency, advisory, custodial or similar capacity;
. investors purchasing on a periodic fee, asset-based fee or no transac- tion fee basis through a broker-dealer sponsored mutual fund purchase program;
. clients of investment advisers, financial planners or other financial intermediaries that charge periodic or asset-based fees for their serv- ices;
. any shares purchased by investors falling within any of the first four categories listed above must be acquired for investment purposes and on the condition that they will not be transferred or resold except through redemption by a Fund.
In addition, purchasers of Nuveen Defined Portfolios may reinvest their distri- butions from such defined portfolios in Class R Shares, if, before September 6, 1994, such purchasers had elected to reinvest distributions in Nuveen Fund shares (before June 13, 1995 for Nuveen Municipal Bond Fund shares). Sharehold- ers may exchange their Class R Shares of any Nuveen Fund into Class R Shares of any other Nuveen Fund. You may also exchange Class R Shares of the Fund for Class A Shares without a sales charge if the current net asset value of your Class R Shares is at least $3,000 (or you already own Class A Shares).
The reduced sales charge programs may be modified or discontinued by the Funds at any time. To encourage their participation, the Fund waives the sales charge on Class A Shares and offers Class R Shares to trustees and officers of the Trust and other affiliated persons of the Trust and Nuveen as noted above.
If you are eligible to purchase either Class R Shares or Class A Shares without a sales charge at net asset value, you should be aware of the differences be- tween these two classes of shares. Class A Shares are subject to an annual service fee to compensate Authorized Dealers for providing you with ongoing ac- count services. Class R Shares are not subject to a distribution or service fee and, consequently, holders
of Class R Shares may not receive the sale types or levels of services from Au- thorized Dealers. In choosing between Class A Shares and Class R Shares, you should weigh the benefits of the services to be provided by Authorized Dealers against the annual service fee imposed upon the Class A Shares.
For more information about the purchase of Class A Shares or reduced sales charge program, or to obtain the required application forms, call Nuveen toll- free at (800) 257-8787.
CLASS B SHARES
You may purchase Class B Shares at a public offering price equal to the appli- cable net asset value per share without any up-front sales charge. Since Class B Shares are sold without an initial sales charge, the full amount of your pur- chase payment will be invested in Class B Shares. Class B Shares are subject to an annual distribution fee to compensate Nuveen for its costs in connection with the sale of Class B shares, and are also subject to an annual service fee to compensate Authorized Dealers for providing you with ongoing financial ad- vice and other account services.
You may be subject to a CDSC if you redeem your Class B shares prior to the end of the sixth year after purchase. See "Reduction or Elimination of Contingent Deferred Sales Charge" below. Nuveen compensates Authorized Dealers for sales of Class B Shares at the time of sale at the rate of 4.00% of the amount of Class B Shares purchased, which represents a sales commission of 3.75% plus an advance on the first year's annual service fee of .25%.
Class B Shares acquired through the reinvestment of dividends are not subject to a CDSC. Any CDSC will be imposed on the lower of the redeemed shares' cost or net asset value at the time of redemption.
Class B Shares will automatically convert to Class A Shares eight years after purchase. The purpose of the conversion is to limit the distribution fees you pay over the life of your investment. All conversions will be done at net asset value without the imposition of any sales load, fee, or other charge, so that the value of each shareholder's account immediately before conversion will be the same as the value of the account immediately after conversion. Class B Shares acquired through reinvestment of distributions will convert into Class A Shares based on the date of the initial purchase to which such shares relate. For this purpose, Class B Shares acquired through reinvestment of distributions will be attributed to particular purchases of Class B Shares in accordance with such procedures as the Board of Trustees may determine from time to time. Class B Shares that are converted to Class A Shares will remain subject to an annual service fee that is identical in amount for both Class B Shares and Class A Shares. Since net asset value per share of the Class B Shares and the Class A Shares may differ at the time of conversion, a shareholder may receive more or fewer Class A Shares than the number of Class B Shares converted. Any conver- sion of Class B Shares into Class A Shares will be subject to the continuing availability of an opinion of counsel or a private letter ruling from the In- ternal Revenue Service to the effect that the conversion of shares would not constitute a taxable event under federal income tax law. Conversion of Class B Shares into Class A Shares might be suspended if such an opinion or ruling were no longer available.
CLASS C SHARES
You may purchase Class C Shares at a public offering price equal to the appli- cable net asset value per share without any up-front sales charge. Class C Shares are subject to an annual distribution fee of .75% to compensate Nuveen for its costs in connection with the sale of Class C Shares. Class C Shares are also subject to an annual service fee of .25% to compensate Authorized Dealers for providing you with on-going financial advice and other account services. Nuveen compensates Authorized Dealers for sales of Class C Shares at the time of the sale at a rate of 1% of the amount of Class C Shares purchased, which represents a sales commission of .75% plus an advance on the first year's an- nual service fee of .25%. See "Distribution and Service Plans."
Redemptions of Class C Shares within 12 months of purchase may be subject to a CDSC of 1% of the lower of the purchase price or redemption proceeds. Because Class C Shares do not convert to Class A Shares and continue to pay an annual distribution fee indefinitely, Class C Shares should normally not be purchased by an investor who expects to hold shares for significantly longer than eight years.
REDUCTION OR ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
Class A Shares are normally redeemed at net asset value, without any CDSC. How- ever, in the case of Class A Shares purchased at net asset value because the purchase amount equaled or exceeded $1 million or pursuant to an eligible em- ployer-sponsored defined contribution plan described above, where the Autho- rized Dealer did not waive the sales commission, a CDSC of 1% is imposed on any redemption within 18 months of purchase. In the case of Class B Shares redeemed within six years of purchase, a CDSC is imposed, beginning at 5% for redemp- tions within the first year, declining to 4% for redemptions within years two and three, and declining by 1% each year thereafter until disappearing after the sixth year. Class C Shares are redeemed at net asset value, without any CDSC, except that a CDSC of 1% is imposed upon redemption of Class C Shares that are redeemed within 12 months of purchase.
In determining whether a CDSC is payable, a Fund will first redeem shares not subject to any charge, or that represent an increase in the value of a Fund ac- count due to capital appreciation, and then will redeem shares held for the longest period, unless the shareholder specifies another order. No CDSC is charged on shares purchased as a result of automatic reinvestment of dividends or capital gains paid. In addition, no CDSC will be charged on exchanges of shares into another Nuveen Mutual Fund or Nuveen money market fund. You may not exchange Class B Shares for shares of a Nuveen money market fund. The holding period is calculated on a monthly basis and begins the first day of the month in which the order for investment is received. The CDSC is calculated based on the lower of the redeemed shares' cost or net asset value at the time of the redemption and is deducted from the redemption proceeds. Nuveen receives the amount of any CDSC shareholders pay. If Class A or Class C shares subject to a CDSC are exchanged for shares of a Nuveen money market fund, the CDSC would be imposed on the subsequent redemption of those money market fund shares, and the period during which the shareholder holds the money market fund shares would be counted in determining the remaining duration of the CDSC. The Fund may elect not to so count the period during which the shareholder held the money market fund
shares, in which event the amount of any applicable CDSC would be reduced in accordance with applicable SEC rules by the amount of any 12b-1 plan payments to which those money market funds shares may be subject.
The CDSC may be waived or reduced under the following circumstances: (i) in the event of total disability (as evidenced by a determination by the federal Social Security Administration) of the shareholder (including a registered joint owner) occurring after the purchase of the shares being redeemed; (ii) in the event of the death of the shareholder (including a registered joint owner); (iii) for redemptions made pursuant to a systematic withdrawal plan, up to 12% annually of the original investment amount; (iv) involuntary redemp- tions caused by operation of law; (v) redemptions in connection with a payment of account or plan fees; (vi) redemptions in connection with the exercise of a reinstatement privilege whereby the proceeds of a redemption of a Fund's shares subject to a sales charge are reinvested in shares of certain Funds within a specified number of days; and (vii) redemptions in connection with the exercise of a Fund's right to redeem all shares in an account that does not maintain a certain minimum balance or that the applicable board has deter- mined may have material adverse consequences to the shareholders of such Funds.
In addition, the CDSC will be waived in connection with the following redemp- tions of shares held by an employer-sponsored qualified defined contribution retirement plan: (i) partial or complete redemptions in connection with a dis- tribution without penalty under Section 72(t) of the Internal Revenue Code ("Code") from a retirement plan: (a) upon attaining age 59 1/2, (b) as part of a series of substantially equal periodic payments, or (c) upon separation from service and attaining age 55; (ii) partial or complete redemptions in connec- tion with a qualifying loan or hardship withdrawal; (iii) complete redemptions in connection with termination of employment, plan termination or transfer to another employer's plan or IRA; and (iv) redemptions resulting from the return of an excess contribution. The CDSC will also be waived in connection with the following redemptions of shares held in an IRA account: (i) for redemptions made pursuant to an IRA systematic withdrawal based on the shareholder's life expectancy including, but not limited to, substantially equal periodic pay- ments described in Code Section 72(t)(A)(iv) prior to age 59; and (ii) for re- demptions to satisfy required minimum distributions after age 70 from an IRA account (with the maximum amount subject to this waiver being based only upon the shareholder's Nuveen IRA accounts).
SHAREHOLDER PROGRAMS
Exchange Privilege
You may exchange shares of a class of any of the Funds for shares of the same class of any other Nuveen Mutual Fund with reciprocal exchange privileges, at net asset value without a sales charge, by sending a written request to the Fund, c/o Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, NY 10274-5186. Similarly, Class A, Class B, Class C and Class R Shares of other Nuveen Mutual Funds may be exchanged for the same class of shares of a Fund at net asset value without a sales charge. Exchanges of shares from any Nuveen money market fund will be made into Class A Shares, Class B Shares, Class C Shares or Class R Shares (if eligible) of a Fund at the public offer- ing price. If, however, a sales charge has previously been paid on the invest- ment represented by the exchanged shares (i.e., the
shares to be exchanged were originally issued in exchange for shares on which a sales charge was paid), the exchange of shares from a Nuveen money market fund will be made into shares of a Fund at net asset value. All shares may be ex- changed for shares of any Nuveen money market fund.
If you exchange shares subject to a CDSC, no CDSC will be charged at the time of the exchange. However, if you subsequently redeem the shares acquired through the exchange, the redemption may be subject to a CDSC, depending on when you purchased your original shares and the CDSC schedule of the fund from which you exchanged your shares.
The shares to be purchased must be offered in your state of residence and you must have held the shares you are exchanging for at least 15 days. The total value of exchanged shares must at least equal the minimum investment require- ment of the Nuveen Mutual Fund being purchased. For federal income tax purpos- es, any exchange constitutes a sale and purchase of shares and may result in capital gain or loss. Before making any exchange, you should obtain the Pro- spectus for the Nuveen Mutual Fund you are purchasing and read it carefully. If the registration of the account for the Fund you are purchasing is not exactly the same as that of the fund account from which the exchange is made, written instructions from all holders of the account from which the exchange is being made must be received, with signatures guaranteed by a member of an approved Medallion Guarantee Program or in such other manner as may be acceptable to the Fund. Your may also exchange shares by telephone if you authorize telephone ex- changes by checking the applicable box on the Application Form or by calling Nuveen toll-free at 800-257-8787 to obtain an authorization form. The exchange privilege may be modified or discontinued by a Fund at any time.
The exchange privilege is not intended to permit a Fund to be used as a vehicle for short-term trading. Excessive exchange activity may interfere with portfo- lio management, raise expenses, and otherwise have an adverse effect on all shareholders. In order to limit excessive exchange activity and in other cir- cumstances where Fund management believes doing so would be in the best inter- est of the Fund, each Fund reserves the right to revise or terminate the ex- change privilege, or limit the amount or number of exchanges or reject any ex- change. Shareholders would be notified of any such action to the extent re- quired by law.
Reinstatement Privilege
If you redeemed Class A, Class B or Class C Shares of a Fund or any other
Nuveen Mutual Fund that were subject to a sales charge or a CDSC, you have up
to one year to reinvest all or part of the full amount of the redemption in the
same class of shares of the Fund at net asset value. This reinstatement privi-
lege can be exercised only once for any redemption, and reinvestment will be
made at the net asset value next calculated after reinstatement of the appro-
priate class of Fund shares. If you reinstate shares that were subject to a
CDSC, your holding period as of the redemption date also will be reinstated for
purposes of calculating a CDSC. The federal income tax consequences of any cap-
ital gain realized on a redemption will not be affected by reinstatement, but a
capital loss may be disallowed in whole or in part depending on the timing, the
amount of the reinvestment and the fund from which the redemption occurred.
Fund Direct
You can use Fund Direct to link your fund account to your account at a bank or other financial institution. Fund Direct enables you to transfer money elec- tronically between these accounts and perform a variety of account transac- tions. These include purchasing shares by telephone, investing through a Sys- tematic Investment Plan, and sending dividends, distributions, redemption pay- ments or Systematic Withdrawal Plan payments directly to your bank account. Please refer to the Application Form for details, or call Nuveen Investor Serv- ices at 800-257-8787 for more information.
Fund Direct privileges may be requested via an application you obtain by call- ing 800-257-8787. Fund Direct privileges will apply to each shareholder listed in the registration on your account as well as to your Authorized Dealer repre- sentative of record unless and until Nuveen Investor Services receives written instructions terminating or changing those privileges. After you establish Fund Direct for your account, any change of bank account information must be made by signature-guaranteed instructions to Nuveen Investor Services signed by all shareholders who own the account.
Purchases may be made by telephone only after your account has been estab- lished. To purchase shares in amounts up to $250,000 through a telephone repre- sentative, call Nuveen Investor Services at 800-257-8787. The purchase payment will be debited from your bank account.
REDEMPTION
You may redeem shares by sending a written request for redemption directly to your Fund, c/o, Nuveen Investor Services, P.O. Box 5186, Bowling Green Station, New York, New York 10274-5186 accompanied by duly endorsed certificates, if is- sued. Requests for redemption and share certificates, if issued, must be signed by each shareholder and, if the redemption proceeds exceed $50,000 or are pay- able other than to the shareholder of record at the address of record (which address may not have changed in the preceding 60 days), the signature must be guaranteed by a member of an approved Medallion Guarantee Program or in such other manner as may be acceptable to the Fund. You will receive payment based on the net asset value per share next determined after receipt by the Fund of a properly executed redemption request in proper form. A check for the redemption proceeds will be mailed to you within seven days after receipt of your redemp- tion request. For accounts registered in the name of a broker-dealer, payment will be forwarded within three business days. However, if any shares to be re- deemed were purchased by check within 15 days prior to the date the redemption request is received, the Fund will not mail the redemption proceeds until the check received for the purchase of shares has cleared, which may take up to 15 days.
Telephone and Electronic Redemptions
If you have authorized telephone redemption and your account address has not changed within the last 60 days, you can redeem shares that are held in non- certificate form by calling Nuveen Investor Services at 800-257-8787. While you or anyone authorized by you may make telephone redemption requests, redemption checks will be issued only in the name of the shareholder of record and will be mailed to the address of record. If your telephone request is received prior to 4:00 p.m. eastern time, the redemption check will normally be mailed the next business day. For requests received after 4:00 p.m. eastern
time, the redemption will be effected at 4:00 p.m. eastern time the following business day and the check will normally be mailed on the second business day after the request.
If you have authorized electronic fund redemption or established Fund Direct privileges, you can take advantage of the following expedited redemption pro- cedures to redeem shares held in non-certificate form that are worth at least $1,000. You may make electronic fund redemption requests through a phone rep- resentative or Fund Direct redemption requests by calling Nuveen Investor Services at 800-257-8787. If a redemption request is received by 4:00 p.m. eastern time, the redemption will be made as of 4:00 p.m. that day. If the re- demption request is received after 4:00 p.m. eastern time, the redemption will be made as of 4:00 p.m. the following business day. Proceeds of electronic fund redemptions will normally be wired on the second business day following the redemption, but may be delayed one additional business day if the Federal Reserve Bank of Boston or the Federal Reserve Bank of New York is closed on the day redemption proceeds would ordinarily be wired. The Fund reserves the right to charge a fee for electronic fund redemption. Proceeds of redemptions through Fund Direct will normally be wired to your Fund Direct bank account on the second or third business day after the redemption.
Before you may redeem shares electronically by phone or through Fund Direct, you need to complete the telephone redemption authorization section of the Ap- plication Form or the Fund Direct application form and return it to Nuveen In- vestor Services. If you did not authorize telephone redemption when you opened your account, you may obtain a telephone redemption authorization form by writing your Fund or by calling Nuveen Investor Services toll-free at 800-257- 8787. Proceeds from electronic share redemptions will be transferred by Fed- eral Reserve wire only to the commercial bank account specified by the share- holder on the Application Form. You need to send a written request to Nuveen Investor Services in order to establish multiple accounts, or to change the account or accounts designated to receive redemption proceeds. These requests must be signed by each account owner with signatures guaranteed by a member of an approved Medallion Guarantee Program or in such other manner as may be ac- ceptable to a Fund. Further documentation may be required from corporations, executors, trustees or personal representatives.
For the convenience of shareholders, each Fund has authorized Nuveen as its agent to accept orders from financial advisers by wire or telephone for the redemption of Fund shares. The redemption price is the first net asset value of the appropriate share class determined following receipt of an order placed by the financial adviser. Each Fund makes payment for the redeemed shares to the securities representatives who placed the order promptly upon presentation of required documents with signatures guaranteed as described above. Neither the Fund nor Nuveen charges any redemption fees other than any CDSC as de- scribed above. However, your financial adviser may charge you for serving as agent in the redemption of shares.
Each Fund reserves the right to refuse telephone redemptions and, at its op- tion, may limit the timing, amount or frequency of these redemptions. Tele- phone redemption procedures may be modified or terminated at any time, on 30 days' notice, by a Fund. A Fund, Chase Global and Nuveen will not be liable for following telephone instructions reasonably believed to be genuine. Each Fund employs procedures reasonably designed to confirm that telephone instruc- tions are genuine. These procedures include recording all telephone instruc- tions and requiring up to three forms of identification prior to acting upon a
caller's instructions. If a Fund does not follow reasonable procedures for pro- tecting shareholders against loss on telephone transactions, it may be liable for any losses due to unauthorized or fraudulent telephone instructions.
Systematic Withdrawal Plan.
If you own Fund shares currently worth at least $10,000, you may establish a Systematic Withdrawal Plan by completing an application form for the Plan. You may obtain an application form by checking the applicable box on the Applica- tion Form or by calling Nuveen toll-free at 800-257-8787.
The Plan permits you to request periodic withdrawals on a monthly, quarterly, semi-annual or annual basis in an amount of $50 or more. Depending upon the size of the withdrawals requested under the Plan and fluctuations in the net asset value of Fund shares, these withdrawals may reduce or even exhaust your account.
The purchase of Class A Shares, other than through reinvestment, while you are participating in the Systematic Withdrawal Plan with respect to Class A Shares will usually be disadvantageous because you will be paying a sales charge on any Class A Shares you purchase at the same time you are redeeming shares. Sim- ilarly, use of the Systematic Withdrawal Plan for Class B Shares held for less than six years or Class C Shares held for less than 12 months may be disadvan- tageous because the newly-purchased Class B or Class C Shares will be subject to the CDSC.
Suspension of Right of Redemption
A Fund may suspend the right of redemption of Fund shares or delay payment more
than seven days (a) during any period when the New York Stock Exchange is
closed (other than customary weekend and holiday closings), (b) when trading in
the markets the Fund normally utilizes is restricted, or an emergency exists as
determined by the Securities and Exchange Commission so that trading of the
Fund's investments or determination of its net asset value is not reasonably
practicable, or (c) for any other periods that the Securities and Exchange Com-
mission by order may permit for protection of Fund shareholders.
Involuntary Redemption
A Fund may, from time to time, establish a minimum total investment for Fund shareholders, and each Fund reserves the right to redeem your shares if your investment is less than the minimum after giving you at least 30 days' notice. If any minimum total investment is established, and if your account is below the minimum, you will be allowed 30 days following the notice in which to pur- chase sufficient shares to meet the minimum. So long as a Fund continues to of- fer shares at net asset value to holders of Nuveen Defined Portfolios who are investing their Nuveen Defined Portfolios distributions, no minimum total in- vestment will be established for those investors.
GENERAL MATTERS
The Funds may encourage registered representatives and their firms to help ap- portion their assets among bonds, stocks and cash, and may seek to participate in programs that recommend a portion of their assets be invested in equity se- curities, equity and debt securities, or equity and municipal securities.
Upon notice to all Authorized Dealers, Nuveen may reallow to Authorized Dealers electing to participate up to the full applicable Class A Share up-front sales charge during periods and for transactions specified in the notice. The reallowances made during these periods may be based upon attainment of minimum sales levels.
In addition to the types of compensation to dealers to promote sales of fund shares that are described in the prospectus, Nuveen may from time to time make additional reallowances only to certain authorized dealers who sell or are ex- pected to sell certain minimum amounts of shares of the Nuveen Mutual Funds and Nuveen Defined Portfolios during specified time periods. Promotional support may include providing sales literature to and holding informational or educa- tional programs for the benefit of such Authorized Dealers' representatives, seminars for the public, and advertising and sales campaigns. Nuveen may reim- burse a participating Authorized Dealer for up to one-half of specified media costs incurred in the placement of advertisements which jointly feature the Au- thorized Dealer and Nuveen Funds and Nuveen Defined Portfolios.
Such reimbursement will be based on the number of its financial advisers who have sold Nuveen Fund shares and Nuveen Defined Portfolios units during the prior calendar year according to an established schedule. Any such support or reimbursement would be provided by Nuveen out of its own assets, and not out of the assets of the Funds, and will not change the price an investor pays for shares or the amount that a Fund will receive from such a sale. The staff of the Securities and Exchange Commission takes the position that dealers who re- ceive 90% or more of the applicable sales charge may be deemed underwriters un- der the Securities Act of 1933, as amended.
To help advisers and investors better understand and most efficiently use the Funds to reach their investment goals, the Funds may advertise and create spe- cific investment programs and systems. For example, this may include informa- tion on how to use the Funds to accumulate assets for future education needs or periodic payments such as insurance premiums. The Funds may produce software, electronic information sites, or additional sales literature to promote the ad- vantages of using the Funds to meet these and other specific investor needs.
The Funds have authorized one or more brokers to accept on their behalf pur- chase and redemption orders. Such brokers are authorized to designate other in- termediaries to accept purchase and redemption orders on the Fund's behalf. The Funds will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker's authorized designee accepts the order. Customer orders received by such broker (or their designee) will be priced at the Funds' net asset value next computed after they are accepted by an authorized broker (or their designee). Orders accepted by an authorized bro- ker (or their designee) before the close of regular trading on the New York Stock Exchange will receive that day's share price; orders accepted after the close of trading will receive the next business day's share price.
Exchanges of shares of a Fund for shares of a Nuveen money market fund may be made on days when both funds calculate a net asset value and make shares avail- able for public purchase. Shares of the Nuveen money market funds may be pur- chased on days on which the Federal Reserve Bank of Boston is normally open for business. In addition to the holidays observed by the Fund, the Nuveen money
market funds observe and will not make fund shares available for purchase on the following holidays: Martin Luther King's Birthday, Columbus Day and Veter- ans Day.
In addition, you may exchange Class R Shares of any Fund for Class A Shares of the same Fund without a sales charge if the current net asset value of those Class R Shares is at least $3,000 or you already own Class A Shares of that Fund.
Shares will be registered in the name of the investor or the investor's finan- cial adviser. A change in registration or transfer of shares held in the name of a financial adviser may only be made by an order in good form from the fi- nancial adviser acting on the investor's behalf. Share certificates will only be issued upon written request to the Funds' transfer agent. No share certifi- cates will be issued for fractional shares.
For more information on the procedure for purchasing shares of a Fund and on the special purchase programs available thereunder, see "How to Buy Shares" and "Systematic Investing" in the Prospectus.
If you choose to invest in a Fund, an account will be opened and maintained for you by Chase Global, the Funds' shareholder services agent. Share certifi- cates will be issued to you only upon written request to Nuveen Investor Serv- ices, and no certificates will be issued for fractional shares. Each Fund re- serves the right to reject any purchase order and to waive or increase minimum investment requirements. A change in registration or transfer of shares held in the name of your financial adviser's firm can only be made by an order in good form from the financial adviser acting on your behalf.
Authorized Dealers are encouraged to open single master accounts. However, some Authorized Dealers may wish to use Chase Global's sub-accounting system to minimize their internal recordkeeping requirements. An Authorized Dealer or other investor requesting shareholder servicing or accounting other than the master account or sub-accounting service offered by Chase Global will be re- quired to enter into a separate agreement with another agent for these serv- ices for a fee that will depend upon the level of services to be provided.
The Shares are offered continuously. However, subject to the rules and regula- tions of the Securities and Exchange Commission, each Fund reserves the right to suspend the continuous offering of it shares at any time, but no suspension shall affect your right of redemption.
Nuveen serves as the principal underwriter of the shares of the Funds pursuant to a "best efforts" arrangement as provided by a distribution agreement with the Trust ("Distribution Agreement"). Pursuant to the Distribution Agreement, the Trust appointed Nuveen to be its agent for the distribution of the Funds' shares on a continuous offering basis. Nuveen sells shares to or through bro- kers, dealers, banks or other qualified financial intermediaries (collectively referred to as "Dealers"), or others, in a manner consistent with the then ef- fective registration statement of the Trust. Pursuant to the Distribution Agreement, Nuveen, at its own expense, finances certain activities incident to the sale and distribution of the Funds' shares, including printing and dis- tributing of prospectuses and statements of additional information to other than existing shareholders, the printing and distributing of sales literature, advertising and payment of compensation and giving of concessions to dealers. Nuveen receives for its
services the excess, if any, of the sales price of a Fund's shares less the net asset value of those shares, and reallows a majority or all of such amounts to the Dealers who sold the shares; Nuveen may act as such a Dealer. Nuveen also receives compensation pursuant to a distribution plan adopted by the Trust pur- suant to Rule 12b-1 and described herein under "Distribution and Service Plans." Nuveen receives any CDSCs imposed on redemptions of Shares, but any amounts as to which a reinstatement privilege is not exercised are set off against and reduce amounts otherwise payable to Nuveen pursuant to the distri- bution plan.
The following table sets forth the aggregate amount of underwriting commissions with respect to the sale of Fund shares, the amount thereof retained by Nuveen and the compensation on redemptions and repurchases received by Nuveen for each of the Funds for the fiscal year ended June 30, 1998. All figures are to the nearest thousand.
AMOUNT OF
COMPENSATION
AMOUNT ON
AMOUNT OF RETAINED REDEMPTIONS
UNDERWRITING BY AND
COMMISSIONS NUVEEN REPURCHASES
------------ -------- ------------
Nuveen Growth and Income Stock Fund.......... $ $ $
Nuveen Balanced Stock and Bond Fund.......... $ $ $
Nuveen Balanced Municipal and Stock Fund..... $ $ $
|
DISTRIBUTION AND SERVICE PLANS
Each Fund has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the In- vestment Company Act of 1940, which provides that Class B Shares and Class C Shares will be subject to an annual distribution fee, and that Class A Shares, Class B Shares and Class C Shares will all be subject to an annual service fee. Class R Shares will not be subject to either distribution or service fees.
The distribution fee applicable to Class B Shares and Class C Shares under each Fund's Plan will be payable to reimburse Nuveen for services and expenses in- curred in connection with the distribution of Class B and Class C Shares, re- spectively. These expenses include payments to Authorized Dealers, including Nuveen, who are brokers of record with respect to the Class B and Class C Shares, as well as, without limitation, expenses of printing and distributing prospectuses to persons other than shareholders of the Fund, expenses of pre- paring, printing and distributing advertising and sales literature and reports to shareholders used in connection with the sale of Class B and Class C Shares, certain other expenses associated with the distribution of Class B and Class C Shares, and any distribution-related expenses that may be authorized from time to time by the Board of Trustees.
The service fee applicable to Class A Shares, Class B Shares and Class C Shares under each Fund's Plan will be payable to Authorized Dealers in connection with the provision of ongoing account services to shareholders. These services may include establishing and maintaining shareholder accounts, answering share- holder inquiries and providing other personal services to shareholders.
Each Fund may spend up to .25 of 1% per year of the average daily net assets of Class A Shares as a service fee under the Plan as applicable to Class A Shares. Each Fund may spend up to .75 of 1% per year of the average daily net assets of each of the Class B Shares and Class C Shares as a distribution fee which con- stitutes an asset-based sales charge whose purpose is the same as an up-front sales charge and up to .25 of 1% per year of the average daily net assets of each of the Class B Shares and Class C Shares as a service fee under the Plan as applicable to such classes.
During the last fiscal year ended June 30, 1998, the Growth/ Income Fund, the Stock/Bond Fund and the Muni/Stock Fund paid 12b-1 fees pursuant to their re- spective 12b-1 Plan in the amounts set forth in the table below. For this peri- od, all of the 12b-1 service fees on Class A Shares were paid out as compensa- tion to Authorized Dealers for providing services to shareholders relating to their investments. All 12b-1 distribution and service fees on Class B and Class C Shares were retained by the Distributor as compensation for commissions ad- vanced to Authorized Dealers.
12B-1
FEES
PAID BY
THE FUND
FOR
FISCAL
YEAR
ENDED
JUNE 30,
1998
--------
Nuveen Growth and Income Stock Fund
Class A............................................................. $
Class B............................................................. $
Class C............................................................. $
--------
Total............................................................. $
Nuveen Balanced Stock and Bond Fund
Class A............................................................. $
Class B............................................................. $
Class C............................................................. $
--------
Total............................................................. $
Nuveen Balanced Municipal and Stock Fund
Class A............................................................. $
Class B............................................................. $
Class C............................................................. $
--------
Total............................................................. $
|
Under each Fund's Plan, the Fund will report quarterly to the Board of Trustees for its review all amounts expended per class of shares under the Plan. The Plan may be terminated at any time with respect to any class of shares, without the payment of any penalty, by a vote of a majority of the Trustees who are not "interested persons" and who have no direct or indirect financial interest in the Plan or by vote of a majority of the outstanding voting securities of such class. The Plan may be renewed from year to year if approved by a vote of the Board of Trustees and a vote of the non-interested Trustees who have no direct or indirect financial interest in the Plan cast in person at a meeting called for the purpose of voting on the Plan. The Plan may be continued only if the trustees who vote to approve such continuance conclude, in the exercise of rea- sonable business judgment and in light of their
fiduciary duties under applicable law, that there is a reasonable likelihood that the Plan will benefit the Fund and its shareholders. The Plan may not be amended to increase materially the cost which a class of shares may bear under the Plan without the approval of the shareholders of the affected class, and any other material amendments of the Plan must be approved by the non-inter- ested trustees by a vote cast in person at a meeting called for the purpose of considering such amendments. During the continuance of the Plan, the selection and nomination of the non-interested trustees of the Trust will be committed to the discretion of the non-interested trustees then in office.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Arthur Andersen LLP, independent public accountants, 33 West Monroe Street, Chicago, Illinois 60603 have been selected as auditors for the Trust. In addi- tion to audit services, Arthur Andersen LLP will provide consultation and as- sistance on accounting, internal control, tax and related matters. The finan- cial statements included in this Statement of Additional Information have been audited by Arthur Andersen LLP as indicated in their report with respect there- to, and are included in reliance upon the authority of said firm as experts in giving said report.
The custodian of the assets of the Funds is The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004. The custodian performs custodial, fund accounting and portfolio accounting services.
FINANCIAL STATEMENTS
The audited financial statements for each Fund's most recent fiscal year appear in the Funds' Annual Reports and are incorporated herein by reference. The An- nual Reports accompany this Statement of Additional Information.
GENERAL TRUST INFORMATION
Each Fund is a series of the Trust. The Trust is an open-end diversified man- agement investment company under the Investment Company Act of 1940. The Trust was organized as a Massachusetts business trust on May 6, 1996. The Board of Trustees of the Trust is authorized to issue an unlimited number of shares in one or more series or "Funds," which may be divided into classes of shares. Currently, there are three series authorized and outstanding, each of which is divided into four classes of shares designated as Class A Shares, Class B Shares, Class C Shares and Class R Shares. Each class of shares represents an interest in the same portfolio of investments of the Fund. Each class of shares has equal rights as to voting, redemption, dividends and liquidation, except that each bears different class expenses, including different distribution and service fees, and each has exclusive voting rights with respect to any distri- bution or service plan applicable to its shares. There are no conversion, pre- emptive or other subscription rights, except that Class B Shares automatically convert into Class A Shares, as described herein. The Board of Trustees of the Trust has the right to establish additional series and classes of shares in the future, to change those series or classes and to determine the preferences, voting powers, rights and privileges thereof.
The Trust is not required and does not intend to hold annual meetings of share- holders. Shareholders owning more than 10% of the outstanding shares of a Fund have the right to call a special meeting to remove Trustees or for any other purpose.
Under Massachusetts law applicable to Massachusetts business trusts, sharehold- ers of such a trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the Declaration of Trust of the Trust contains an express disclaimer of shareholder liability for acts or obligations of the Trust and requires that notice of this disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the Trustees. The Funds' Declaration of Trust further provides for indemnifica- tion out of the assets and property of the Trust for all losses and expenses of any shareholder held personally liable for the obligations of the Trust. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance ex- isted and the Trust or Fund itself was unable to meet its obligations. The Trust believes the likelihood of the occurrence of these circumstances is re- mote.
APPENDIX A--RATINGS OF INVESTMENTS
STANDARD & POOR'S RATINGS GROUP--A brief description of the applicable Standard & Poor's Ratings Group ("S&P") rating symbols and their meanings (as published by S&P) follows:
LONG TERM DEBT
An S&P corporate or municipal debt rating is a current assessment of the cred- itworthiness of an obligor with respect to a specific obligation. This assess- ment may take into consideration obligors such as guarantors, insurers, or lessees.
The debt rating is not a recommendation to purchase, sell, or hold a security, inasmuch as it does not comment as to market price or suitability for a partic- ular investor.
The ratings are based on current information furnished by the issuer or ob- tained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any rating and may, on occasion, rely on unaudited fi- nancial information. The ratings may be changed, suspended, or withdrawn as a result of changes in, or unavailability of, such information, or based on other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default--capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.
INVESTMENT GRADE
AAA Debt rated "AAA' has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA
Debt rated "AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small de-
gree.
A
Debt rated "A' has a strong capacity to pay interest and repay princi-
pal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher
rated categories.
BBB
Debt rated "BBB' is regarded as having an adequate capacity to pay in-
terest and repay principal. Whereas it normally exhibits adequate pro-
tection parameters, adverse economic conditions or changing circum-
stances are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated
categories.
|
SPECULATIVE GRADE RATING
Debt rated "BB', "B', "CCC', "CC' and "C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. "BB' indicates the least degree of speculation and "C' the highest.
While such debt will likely have some quality and protective characteristics
these are outweighed by major uncertainties or major exposures to adverse con-
ditions.
BB Debt rated "BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and princi-
pal payments. The "BB' rating category is also used for debt subordi-
nated to senior debt that is assigned an actual or implied "BBB-' rat-
ing.
B Debt rated "B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal.
The "B' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "BB' or "BB-' rating.
CCC Debt rated "CCC' has a currently identifiable vulnerability to de-
fault, and is dependent upon favorable business, financial, and eco-
nomic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal.
The "CCC' rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied "B' or "B-' rating.
CC The rating "CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC' debt rating.
C The rating "C' typically is applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-' debt rating. The
"C' rating may be used to cover a situation where a bankruptcy peti-
tion has been filed, but debt service payments are continued.
CI The rating "CI' is reserved for income bonds on which no interest is
being paid.
D Debt rated "D' is in payment default. The "D' rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
"D' rating also will be used upon the filing of a bankruptcy petition
if debt service payments are jeopardized.
|
PLUS (+) OR MINUS (-): The ratings from "AA' to "CCC' may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
PROVISIONAL RATINGS: The letter "p" indicates that the rating is provisional. A provisional rating assumes the successful completion of the project financed by the debt being rated and indicates that payment of debt service requirements is largely or entirely dependent upon the successful and timely completion of the project. This rating, however, while addressing credit quality subsequent to comple-
tion of the project, makes no comment on the likelihood of, or the risk of de- fault upon failure of, such completion. The investor should exercise judgment with respect to such likelihood and risk.
L The letter "L' indicates that the rating pertains to the principal amount of those bonds to the extent that the underlying deposit col- lateral is federally insured by the Federal Savings & Loan Insurance Corp. or the Federal Deposit Insurance Corp.* and interest is ade- quately collateralized. In the case of certificates of deposit the letter "L' indicates that the deposit, combined with other deposits being held in the same right and capacity will be honored for princi- pal and accrued pre-default interest up to the federal insurance lim- its within 30 days after closing of the insured institution or, in the event that the deposit is assumed by a successor insured institution, upon maturity.
NR Indicates no rating has been requested, that there is insufficient in- formation on which to base a rating, or that S&P does not rate a par- ticular type of obligation as a matter of policy.
MUNICIPAL NOTES
An S&P note rating reflects the liquidity concerns and market access risks unique to notes. Notes due in 3 years or less will likely receive a note rat- ing. Notes maturing beyond 3 years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment:
--Amortization schedule (the larger the final maturity relative to other maturities, the more likely it will be treated as a note).
--Source of payment (the more dependent the issue is on the market for its refinancing, the more likely it will be treated as a note).
NOTE RATING SYMBOLS ARE AS FOLLOWS:
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest with some vulnera- bility to adverse financial and economic changes over the term of the notes.
SP-3
Speculative capacity to pay principal and interest.
A note rating is not a recommendation to purchase, sell, or hold a security in- asmuch as it does not comment as to market price or suitability for a particu- lar investor. The ratings are based on current information furnished to S&P by the issuer or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended, or withdrawn as a result of changes in or unavailability of such information or based on other circumstances.
*Continuance of the rating is contingent upon S&P's receipt of an executed copy of the escrow agreement or closing documentation confirming investments and cash flow.
COMMERCIAL PAPER
An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded into several categories, ranging from "A-1" for the highest quality obligations to "D" for the lowest. These categories are as follows:
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is satis-
factory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the
higher designations.
B Issues rated "B" are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
|
A commercial rating is not a recommendation to purchase, sell, or hold a secu- rity inasmuch as it does not comment as to market price or suitability for a particular investor. The ratings are based on current information furnished to S&P by the issuer or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any rating and may, on occa- sion, rely on unaudited financial information. The ratings may be changed, sus- pended, or withdrawn as a result of changes in or unavailability of such infor- mation or based on other circumstances.
MOODY'S INVESTORS SERVICE, INC.--A brief description of the applicable Moody's Investors Service, Inc. ("Moody's") rating symbols and their meanings (as pub- lished by Moody's) follows:
LONG TERM DEBT
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally re-
ferred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all stan-
dards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated
A-4
|
lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa securi-
ties.
A Bonds which are rated A possess may favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Moody's bond rating symbols may contain numerical modifiers of a ge-
neric rating classification. The modifier 1 indicates that the bond
ranks at the high end of its category; the modifier 2 indicates a mid-
range ranking, and the modifier 3 indicates that the issue ranks in
the lower end of its generic rating category.
Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristi-
cally unrealiable over any great length of time. Such bonds lack out-
standing investment characteristics and in fact have speculative char-
acteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protec-
tion of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desir-
able investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and is-
sues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
|
Con( . . . )
Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operation experience, (c) rentals
which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes
probable credit stature upon completion of construction or elimination
of basis of condition.
NOTE: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes possess the strongest investment attributes are designated by the sym- bols Aa1, A1, Baa1, Ba1, and B1.
MUNICIPAL SHORT-TERM LOANS
MIG 1/VMIG 1 This designation denotes best quality. There is present
strong protection by established cash flows, superior liquid-
ity support or demonstrated broadbased access to the market
for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins or protection
are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security ele-
ments are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well-established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection com-
monly regarded as required of an investment security is pres-
ent and although not distinctly or predominantly speculative,
there is specific risk.
|
COMMERCIAL PAPER
Issuers rated PRIME-1 (or related supporting institutions) have a superior ca- pacity for repayment of senior short-term promissory obligations. Prime-1 re- payment capacity will often be evidenced by many of the following characteris- tics:
--Leading market positions in well-established industries.
--High rates of return on funds employed.
--Conservative capitalization structure with moderate reliance on debt and ample asset protection.
--Broad margins in earnings coverage of fixed financial charges and high internal cash generation.
--Well-established access to a range of financial markets and assured sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong capac- ity for repayment of senior short-term promissory obligations. This will nor- mally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated PRIME-3 (or related supporting institutions) have an acceptable capacity for repayment of senior short-term promissory obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial lever- age. Adequate alternate liquidity is maintained.
Issuers rated NOT PRIME do not fall within any of the Prime rating categories.
DUFF & PHELPS, INC.--A brief description of the applicable Duff & Phelps, Inc. ("D&P") ratings symbols and their meanings (as published by D&P) follows:
LONG TERM DEBT
These ratings represent a summary opinion of the issuer's long-term fundamental quality. Rating determination is based on qualitative and quantitative factors which may vary according to the basic economic and financial characteristics of each industry and each issuer. Important considerations are vulnerability to economic cycles as well as risks related to such factors as competition, gov- ernment action, regulation, technological obsolescence, demand shifts, cost structure, and management depth and expertise. The projected viability of the obligor at the trough of the cycle is a critical determination.
Each rating also takes into account the legal form of the security, (e.g., first mortgage bonds, subordinated debt, preferred stock, etc.). The extent of rating dispersion among the various classes of securities is determined by sev- eral factors including relative weightings of the different security classes in the capital structure, the overall credit strength of the issuer, and the na- ture of covenant protection.
The Credit Rating Committee formally reviews all ratings once per quarter (more frequently, if necessary). Ratings of "BBB-' and higher fall within the defi- nition of investment grade securities, as defined by bank and insurance super- visory authorities. Structured finance issues, including real estate, asset- backed and mortgage-backed financings, use this same rating scale. Duff & Phelps Credit Rating claims paying ability ratings of insurance companies use the same scale with minor modification in the definitions. Thus, an investor can compare the credit quality of investment alternatives across industries and structural types. A "Cash Flow Rating" (as noted for specific ratings) ad- dresses the likelihood that aggregate principal and interest will equal or ex- ceed the rated amount under appropriate stress conditions.
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
--------------------------------------------------------------------------------
AA+ High credit quality. Protection factors are strong. Risk is mod-
AA est, but may vary slightly from time to time because of economic
AA- conditions.
--------------------------------------------------------------------------------
A+ Protection factors are average but adequate. However, risk factors
A are more variable and greater in periods of economic stress.
A-
--------------------------------------------------------------------------------
BBB+ Below average protection factors but still considered sufficient
BBB for prudent investment. Considerable variability in risk during
BBB- economic cycles.
--------------------------------------------------------------------------------
A-7
|
BB+ Below investment grade but deemed likely to meet obligations when
BB due. Present or prospective financial protection factors fluctuate
BB- according to industry conditions or company fortunes. Overall
quality may move up or down frequently within this category.
-------------------------------------------------------------------------------
B+ Below investment grade and possessing risk that obligations will
B not be met when due. Financial protection factors will fluctuate
B- widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower rating
grade.
-------------------------------------------------------------------------------
CCC Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be substan-
tial with unfavorable economic/industry conditions, and/or with
unfavorable company developments.
-------------------------------------------------------------------------------
DD Defaulted debt obligations. Issuer failed to meet scheduled prin-
cipal and/or interest payments.
DP Preferred stock with dividend arrearages.
|
SHORT-TERM DEBT RATINGS
Duff & Phelps' short-term ratings are consistent with the rating criteria used by money market participants. The ratings apply to all obligations with matu- rities of under one year, including commercial paper, the uninsured portion of certificates of deposit, unsecured bank loans, master notes, bankers accept- ances, irrevocable letters of credit, and current maturities of long-term debt. Asset-backed commercial paper is also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash from opera- tions, but also access to alternative sources of funds including trade credit, bank lines, and the capital markets. An important consideration is the level of an obligor's reliance on short-term funds on an ongoing basis.
The distinguishing feature of Duff & Phelps Credit Ratings' short-term ratings is the refinement of the traditional "1' category. The majority of short-term debt issuers carry the highest rating, yet quality differences exist within that tier. As a consequence, Duff & Phelps Credit Rating has incorporated gra- dations of "1+' (one plus) and "1-' (one minus) to assist investors in recog- nizing those differences.
These ratings are recognized by the SEC for broker-dealer requirements, spe- cifically capital computation guidelines. These ratings meet Department of La- bor ERISA guidelines governing pension and profit sharing investments. State regulators also recognize the ratings of Duff & Phelps Credit Rating for in- surance company investment portfolios.
RATING SCALE:
DEFINITION
HIGH GRADE
D-1+ Highest certainty of timely payment. Short-term liquidity, includ-
ing internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-
free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are ex-
cellent and supported by good fundamental protection factors. Risk
factors are minor.
D-1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.
GOOD GRADE
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
SATISFACTORY GRADE
D-3 Satisfactory liquidity and other protection factors qualify issue
as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
NON-INVESTMENT GRADE
D-4 Speculative investment characteristics. Liquidity is not suffi-
cient to insured against disruption in debt service. Operating
factors and market access may be subject to a high degree of vari-
ation.
DEFAULT
D-5 Issuer failed to meet scheduled principal and/or interest pay-
ments.
|
FITCH INVESTORS SERVICE, INC.--A brief description of the applicable Fitch In- vestors Service, Inc. ("Fitch") ratings symbols and meanings (as published by Fitch) follows:
LONG TERM DEBT
Fitch investment grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings represent Fitch's assessment of the issuer's ability to meet the obligations of a spe- cific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its rela- tionship to other obligations of the issuer, the current and prospective finan- cial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by in- surance policies or financial guaranties unless otherwise indicated.
Bonds that have the same rating are of similar but not necessarily identical credit quality since the rating categories do not fully reflect small differ- ences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell, or hold any security. Rat- ings do not comment on the adequacy of market price, the suitability of any se- curity for a particular investor, or the tax-exempt nature or taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch believes to be reliable. Fitch does not audit or verify the truth or accuracy of such information. Rat- ings may be changed, suspended, or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay inter-
est and repay principal, which is unlikely to be affected by reasona-
bly foreseeable events.
AA Bonds considered to be investment grade and of very high credit quali-
ty. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA'. Because
bonds rated in the "AAA' and "AA' categories are not significantly
vulnerable to foreseeable future developments, short-term debt of the
issuers is generally rated "F-1+'.
A Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is consid-
ered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on
these bonds and, therefore, impair timely payment. The likelihood that
the ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.
|
Fitch speculative grade bond ratings provide a guide to investors in determin- ing the credit risk associated with a particular security. The ratings ("BB' to "C') represent Fitch's assessment of the likelihood of timely payment of prin- cipal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating ("DDD' to "D') is an assessment of the ultimate recovery value through reorganization or liquidation.
The rating takes into consideration special features of the issue, its rela- tionship to other obligations of the issuer, the current and prospective finan- cial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily identical credit quality since the rating categories cannot fully reflect the differ- ences in the degrees of credit risk.
BB Bonds are considered speculative. The obligor's ability to pay inter-
est and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identi-
fied which could assist the obligor in satisfying its debt service re-
quirements.
B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of con-
tinued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and eco-
nomic activity throughout the life of the issue.
CCC Bonds have certain identifiable characteristics which, if not reme-
died, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
|
DDD, Bonds are in default on interest and/or principal payments. Such bonds DD are extremely speculative and should be valued on the basis of their AND Dultimate recovery value in liquidation or reorganization of the obli- gor. "DDD' represents the highest potential for recovery of these bonds, and "D' represents the lowest potential for recovery.
SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on de- mand or have original maturities of generally up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner.
F-1+
EXCEPTIONALLY STRONG CREDIT QUALITY Issues assigned this rating are
regarded as having the strongest degree of assurance for timely pay-
ment.
VERY STRONG CREDIT QUALITY Issues assigned this rating reflect an as- surance of timely payment only slightly less in degree than issues rated "F-1+'.
GOOD CREDIT QUALITY Issues assigned this rating have a satisfactory degree of assurance for timely payment but the margin of safety is not as great as for issues assigned "F-1+' and "F-1' ratings.
FAIR CREDIT QUALITY Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is ade- quate; however, near-term adverse changes could cause these securities to be rated below investment grade.
F-S WEAK CREDIT QUALITY Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic con-
ditions.
D DEFAULT Issues assigned this rating are in actual or imminent payment
default.
LOC The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
|
NUVEEN
Growth and Income
Mutual Funds
June 30, 1998
Annual Report
For investors seeking
superior returns
with moderated risk.
[PHOTO APPEARS HERE]
Growth
and Income
Stock Fund
Highlights
As of June 30, 1998
For Class A shares
Attractive Fund Returns/1/
[BAR CHART APPEARS HERE]
Class A Class A
(NAV) (OFFER)
ONE YEAR 21.59% 15.21% SINCE INCEPTION 8/96 30.55% 26.88% |
[_] Class A (NAV)
[_] Class A (Offer)
With its focus on long-term growth and a measure of downside protection, the fund provided attractive total returns for the one-year period and since its inception.
Portfolio Allocation
[PIE CHART APPEARS HERE]
Stocks 92%
Cash 8%
True to its investment objective, the fund remained almost completely invested in stocks, allowing it to capitalize on stock appreciation opportunities.
Fund Manager's 20-Year Record of Positive Returns/2/
[BAR CHART APPEARS HERE]
78 7.96 79 11.56 80 24.53 81 3.14 82 25.45 83 14.43 84 1.73 85 32.78 86 14.64 87 27.50 88 7.99 89 31.93 90 0.16 91 32.02 92 6.01 93 15.13 94 0.64 95 36.51 96 24.89 97 28.03 |
The fund manager boasts an excellent long-term track record through a variety of market conditions, with positive returns for each of the past 20 years.
Contents
1 Dear Shareholder
3 A Time-Tested Strategy
that Can Add Real Value
4 Report from the
Fund's Equity Adviser
5 Performance Overview
6 Portfolio of Investments
8 Statement of Net Assets
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Notes to Financial Statements
14 Financial Highlights
16 Report of Independent Public Accountants
17 Building Better Portfolios with Nuveen
/1/ Please see the Performance Overview on page five for more information.
/2/ This chart reflects the performance of the Institutional Capital Discretionary Equity Composite, which includes all assets (approximately $4.79 billion as of 6/30/98) that have substantially the same investment objective and policies as the Nuveen Growth and Income Stock Fund. The composite's accounts may experience different investment inflows and outflows than the fund, and are not subject to all of the restrictions of the Investment Company Act of 1940 and the Internal Revenue Code that apply to the fund, which could adversely affect fund performance. Investment returns reflect composite gross-of-fee returns, adjusted for the fund's Class A annual net operating expenses of 1.30%, but not the up-front sales charge. Class B, C, or R investment results would differ due to differing sales charges and operating expenses. This chart does not represent actual fund past performance or predict future fund performance.
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
Dear Shareholder
I am pleased to report that over the past year the Nuveen Growth and Income Stock Fund continued to provide strong returns with moderated risk and price volatility -- as the fund was designed to do.
In addition, as you can see from the information on the facing page, the fund remains well-positioned to take advantage of future market opportunities while employing an investment strategy that historically has limited the impact of severe market downturns.
Current Results Backed by a Proven Record
The solid performance achieved by the Growth and Income Stock Fund portfolio managers inevitably leads to the question: "Can they keep it up?" Since no one can predict the future with certainty, it's important to have confidence in your fund managers' experience, investment approach and the results they've demonstrated through a variety of market conditions over the years.
As Nuveen's Premier Adviser/SM/ for value investing, Institutional Capital Corporation is a highly successful institutional money manager with more than 28 years of experience. Over that time, they've specialized in finding undervalued midsize and large company stocks that are poised for significant growth.
This disciplined, research-oriented approach has paid off for investors, and is still the key investment strategy of the Nuveen Growth and Income Stock Fund. The managers start by looking for stocks whose intrinsic worth is greater than their current market price. Then they look for a catalyst, such as a management change, a new product, or improved industry outlook, that may help trigger a rise in each stock's price. Generally, the fund only purchases stocks that the managers believe have the potential to generate 15% - 25% returns over an 18- month period.
Following this letter, you'll find one example of how this strategy has worked to the advantage of fund investors.
Nuveen's Premier Advisers
Nuveen is dedicated to providing investors access to a team of highly experienced investment managers, each overseeing portfolios within their specific areas of expertise.
"Today, more than
ever, you can
count on Nuveen
for investments
designed to
produce a well-
balanced portfolio
that meets your
individual goals."
In addition to Institutional Capital, Nuveen Premier Advisers now include Rittenhouse Financial Services, our specialist for growth investing, and Nuveen Advisory Corp., our expert in tax-free investing. Each of these managers uses a time-tested, research-driven investment strategy to build portfolios of quality securities.
Diversification Can Help
You Build a Better Portfolio
In light of recent market volatility, we believe that investors will find diversification to be an increasingly important strategy in the months ahead. An appropriately diversified portfolio -- one that balances different types of investments, levels of risk and tax management strategies -- can help cushion your portfolio against volatility and enhance your overall return potential.
Many of you have invested in the Nuveen Growth and Income Stock Fund because of its value investing orientation and the excellent track record of its Premier Adviser. We are pleased to announce that this same disciplined approach is now available in another Nuveen fund managed by Institutional Capital -- the Nuveen European Value Fund.
With its focus on a portfolio of quality, undervalued European companies, this fund can provide an excellent complement to the Growth and Income Stock Fund by offering international diversification and growth potential. I encourage you to talk with your financial adviser about how this new fund, along with the Nuveen Rittenhouse Growth Fund and our wide array of tax-free bond funds, can help round out your portfolio and meet your own particular investment needs.
If you would like additional information on the Nuveen European Value Fund, or any of our other funds, contact your financial adviser for a prospectus. You also may request a prospectus from Nuveen by calling (800) 257-8787. Please read this information carefully and discuss it with your financial adviser before you invest.
When seeking quality investments that withstand the test of time, we hope you will continue to think of Nuveen. Today, more than ever, you can count on Nuveen for investments designed to produce a well-balanced portfolio that meets your individual goals. We thank you for your continued confidence in us, and look forward to reporting to you again soon.
Sincerely,
/S/ Timothy R. Schwertfeger ---------------------------- Timothy R. Schwertfeger Chairman of the Board August 15, 1998 |
A Time-Tested Strategy that Can Add Real Value
Stock Selection Process
Stocks
with Best
Relative
Value
Catalyst
Portfolio
of 40-50
Stocks
Institutional Capital Corporation, Nuveen's Premier Adviser for value investing, selects stocks for the Nuveen Growth and Income Stock Fund from a universe of approximately 450 large and midsize companies, using proprietary quantitative valuation models to determine which of these stocks appear to be undervalued in the current market. Based on a rigorous assessment of each company's prospects, the portfolio manager then looks for a catalyst that could help the market recognize the stock's true value. This catalyst may be as simple as an anticipated dividend change, or as complex as a fundamentally improved industry outlook.
Once selected, stocks in the portfolio are monitored closely and replaced if they reach their target value, their prospects change or they become less attractive than other portfolio candidates.
An example of how this process works to investors' advantage is the recent purchase and sale of Ford Motor Company, the nation's second largest automaker.
First purchased by the Nuveen Growth and Income Stock Fund in February 1997, the catalysts for Ford included a strong management team, significant cost cutting and a corporate restructuring.
Ford was a major holding of the fund until it reached its target price in June and was sold. The fund's position in Ford produced a gain of 159% over the initial purchase price. While illustrative of the investment process generally, this was a particularly rewarding investment by the fund. Not all of the fund's investments have been or will be as successful.
Ford Motor Company:
An Example of a Stock with Identifiable Catalysts
[CHART APPEARS HERE]
8/96 22.25 9/96 20.75 10/96 20.75 11/96 21.75 12/96 21.42 1/97 21.33 2/97 21.83 3/97 20.84 4/97 23.08 5/97 24.91 6/97 25.23 7/97 27.14 8/97 28.56 9/97 29.97 10/97 29.02 11/97 28.56 12/97 32.25 1/98 33.88 2/98 37.56 3/98 43.05 4/98 45.81 5/98 51.88 6/98 59.00 |
Nuveen Growth and Income Stock Fund
Report from the Fund's Premier Adviser
The Institutional Capital portfolio management team talks about the financial markets and factors that affected fund performance.
"In this environment, we will continue to invest in companies undergoing corporate restructurings, both in the U.S. and Europe."
Over the past year, the economy and the financial markets again defied the experts' consensus.
The conventional wisdom was that the Asian crisis and U.S. company profit warnings that started last fall would result in a slow first half of 1998, with a rebound in confidence and securities prices in the second half of this year. Our own concern was whether the Federal Reserve would have to raise short-term interest rates as the moderating influence of Asia diminished and the U.S. economy picked up steam.
The facts have painted a different picture. Stimulated by lower interest rates, strong employment and a significant drop in energy prices, U.S. consumption has remained quite strong -- especially for this late in the economic cycle. Outside the U.S., European companies also began showing strong results. While Asia did slump, its overall impact on the U.S. economy was less severe than feared.
The low inflationary environment and strong economy fueled continued strength in the U.S. equity markets, raising valuations and putting a premium on the quality research needed to find undervalued stocks. Staying with our time-tested, value- oriented strategy, we are pleased that the Class A share total return on net asset value of the Growth and Income Stock Fund was a healthy 21.59% for the year ended June 30, 1998.
Asia Looms Large
Given the lethargy in Japan and reduced growth in China, there will be no quick or easy resolution of Asia's woes anytime soon. The central problem in Asia is that massive amounts of capital are now invested in assets that are providing poor returns. While we believe these problems can be solved, it will take time. Perhaps the only good news is that the deflationary drag from the region should prevent the Fed from raising interest rates and keep the dollar strong for some time.
Unrealistic Valuations in Some Sectors
The U.S. stock market is now characterized by high valuations -- but given the lack of investment alternatives, low interest rates and the strength of the dollar, this is understandable (if not totally justifiable). However, there is a degree of speculation now in the U.S. market, as evidenced particularly in some Internet-related stocks, that makes us uneasy. While we believe the market values of many of these high flyers will be adjusted, we also think that our disciplined, catalyst-driven, value-investing approach will continue to uncover companies that offer good prospects at attractive prices.
Outlook for the Second Half of 1998
Our view for the remainder of the year is that:
. The U.S. economy will slow as a result of high inventories, weaker exports and a downturn in capital goods manufacturing.
. Corporate profits overall will be up modestly, and less than expected.
. The Fed will probably not raise interest rates as a result of the financial situation in Asia and the fragile state of other dollar-linked economies such as Russia.
. The domestic merger and acquisition boom will continue, but the impact on overall market prices will diminish.
. U.S. stock market averages will gain modestly; European markets will see even larger returns.
Our Strategy
In this environment, we will continue to invest in companies undergoing corporate restructurings, both in the U.S. and Europe. This means looking for companies that may have performed poorly in the recent past, but that have attractive, underutilized assets or a newly focused management team. Some portfolio holdings that highlight this strategy include Citicorp, News Corp. and Raytheon, just to name a few.
We believe there may be good news coming from these companies and others like them in the fund's portfolio. We are committed to uncovering additional opportunities in the months ahead.
Nuveen Growth and Income Stock Fund
Performance Overview
As of June 30, 1998
Top Ten Holdings/1/ News Corp. Ltd. Sponsored ADR 4.32% --------------------------------------- NationsBank Corp 3.73% --------------------------------------- Hoechst AG Sponsored ADR 3.56% --------------------------------------- American Home Products Corp. 3.40% --------------------------------------- Citicorp 3.29% --------------------------------------- Philips Electronics N.V. 3.20% --------------------------------------- Burlington Northern Santa Fe 2.97% --------------------------------------- Seagram Co. Ltd. 2.81% --------------------------------------- U.S.A. Waste Services Inc. 2.76% --------------------------------------- General Motors Corporation 2.72% --------------------------------------- |
Industry Diversification
[PIE CHART APPEARS HERE]
Transportation 8% Capital Spending 8% Consumer Staples 10% Capital Equipment/Technology 9% Energy 7% Basic Industries 9% Retail 4% Health Care 13% Consumer Durables 3% Consumer Services 12% Utilities 2% Financial 15% |
Portfolio Allocation
[PIE CHART APPEARS HERE]
Stocks 92% Cash 8% |
Fund Highlights Share Price A B C R ------------------------------------------------------------------------- Inception Date 8/96 8/96 8/96 8/96 ------------------------------------------------------------------------- Net Asset Value $26.50 $26.47 $26.43 $ 26.52 ------------------------------------------------------------------------- Total Net Assets ($000) $901,732 ------------------------------------------------------------------------- Fund Beta 0.77 ------------------------------------------------------------------------- Average Market Capitalization of Stocks in Portfolio $31 billion ------------------------------------------------------------------------- Average P/E of Stocks in Portfolio 17.6 ------------------------------------------------------------------------- Number of Stocks in Portfolio 45 ------------------------------------------------------------------------- |
Annualized Total Return/2/ Share Class A (NAV) A (Offer) B C R ---------------------------------------------------------------------------- Year-to-Date 14.21% 8.23% 13.81% 13.74% 14.38% ---------------------------------------------------------------------------- One-Year 21.59% 15.21% 20.70% 20.63% 21.91% ---------------------------------------------------------------------------- Since Inception 30.55% 26.88% 29.58% 29.49% 30.91% ---------------------------------------------------------------------------- |
Index Comparison/3/
[MOUNTAIN CHART APPEARS HERE]
Nuveen Growth and Income Nuveen Growth and Income
S&P 500 Stock Fund (NAV) Stock Fund (Offer)
Aug-96 10000 10000 9475
Sep-96 10563 10414 9867
Oct-96 10855 10864 10294
Nov-96 11675 11638 11027
Dec-96 11444 11371 10774
Jan-97 12159 11951 11323
Feb-97 12254 12036 11404
Mar-97 11750 11784 11165
Apr-97 12452 12360 11711
May-97 13210 13026 12343
Jun-97 13803 13617 12902
Jul-97 14901 14626 13858
Aug-97 14066 14007 13272
Sep-97 14837 14776 14000
Oct-97 14342 14356 13603
Nov-97 15006 14368 13613
Dec-97 15264 14496 13735
Jan-98 15433 14577 13811
Feb-98 16546 15670 14847
Mar-98 17393 16030 15189
Apr-98 17569 16473 15608
May-98 17266 16479 15614
Jun-98 17968 16557 15688
|
S&P 500 $17,968 Nuveen Growth and Income Stock Fund (NAV) $16,557 Nuveen Growth and Income Stock Fund (Offer) $15,688 |
Past performance is not predictive of future results.
1 The companies listed above represent their respective percentages as of 6/30/98. Over time, the fund's holdings and their percentages will vary as the prices of the stocks vary.
2 Returns reflect differences in sales charges and expenses among the share classes. Class A shares have a 5.25% maximum sales charge. Class B shares have a CDSC that begins at 5% for redemptions during the first year after purchase and declines periodically to 0% over the following six years, which is not reflected in the return figures. Class B shares convert to Class A shares after eight years. Class C shares have a 1% CDSC for redemptions within one year, which is not reflected in the return figures.
3 The Index Comparison shows the change in value of a $10,000 investment in the Class A shares of the Nuveen fund compared with the Standard and Poor's 500 Index, which does not reflect any initial or ongoing expenses. The Nuveen fund return depicted in the chart reflects the initial maximum sales charge applicable to Class A shares (5.25%) and all ongoing fund expenses.
Portfolio of Investments Nuveen Growth and Income Stock Fund June 30, 1998
Market
Shares Description Value
--------------------------------------------------------------------------------
COMMON STOCKS - 87.2%
Basic Industries - 8.7%
179,850 Akzo Nobel N.V. Sponsored ADR $19,940,868
285,600 E.I. du Pont de Nemours and Company Ltd. 21,312,900
346,885 IMC Global Inc. 10,449,910
298,250 Reynolds Metals Company 16,683,359
353,150 UPM-Kymmene Oyj Corporation Sponsored ADR 9,719,429
--------------------------------------------------------------------------------
Capital Equipment/Technology - 8.3%
439,300 First Data Corporation 14,634,181
201,050 International Business Machines Corporation 23,083,053
254,600 NCR Corporation # 8,274,500
337,500 Royal Philips Electronics N.V. 28,687,500
--------------------------------------------------------------------------------
Capital Spending - 7.3%
222,400 B.F. Goodrich Company 11,036,600
276,700 Case Corporation 13,350,775
166,000 Northrop Grumman Corporation 17,118,750
416,500 Raytheon Company - Class A 24,000,812
--------------------------------------------------------------------------------
Consumer Durables - 2.7%
364,150 General Motors Corporation 24,329,772
--------------------------------------------------------------------------------
Consumer Services - 7.0%
612,900 Dun & Bradstreet Corporation 22,141,013
762,900 Host Marriot Corporation # 13,589,156
58,800 Starwood Hotels & Resorts 2,840,775
500,100 U.S.A. Waste Services Inc. # 24,692,438
--------------------------------------------------------------------------------
Consumer Staples - 9.0%
406,400 Fort James Corporation 18,084,800
375,200 Hasbro, Inc. 14,750,050
592,600 Philip Morris Companies Inc. 23,333,625
615,900 Seagram Company Ltd. 25,213,406
--------------------------------------------------------------------------------
Energy - 5.9%
307,010 Elf Aquitaine SA Sponsored ADR 21,797,710
245,000 Schlumberger Limited 16,736,563
419,350 Unocal Corporation 14,991,763
--------------------------------------------------------------------------------
Financials - 13.4%
163,150 Bankers Trust Corporation 18,935,597
295,000 CIGNA Corporation 20,355,000
197,350 Citicorp 29,454,487
|
Shares Description Market Value
-------------------------------------------------------------------------------------------------------------------------------
Financials (continued)
374,100 Household International, Inc. $ 18,611,475
436,450 NationsBank Corporation 33,388,425
-------------------------------------------------------------------------------------------------------------------------------
Health Care - 12.4%
588,300 American Home Products Corporation 30,444,525
334,750 Baxter International Inc. 18,013,734
642,000 Hoechst AG Sponsored ADR 31,859,250
303,500 Humana Inc. # 9,465,406
137,200 St. Jude Medical, Inc. # 5,050,675
528,500 Tenet Healthcare Corporation # 16,515,625
-------------------------------------------------------------------------------------------------------------------------------
Retail - 3.5%
88,300 Circuit City Stores 4,139,063
163,400 Consolidated Stores Corporation # 5,923,250
400,550 Federated Department Stores, Inc. # 21,554,597
-------------------------------------------------------------------------------------------------------------------------------
Transportation - 7.1%
193,150 AMR Corporation # 16,079,738
270,650 Burlington Northern Santa Fe Corporation 26,574,447
753,600 Canadian Pacific Limited 21,383,400
-------------------------------------------------------------------------------------------------------------------------------
Utilities - 1.9%
139,150 AT&T Corp. 7,948,944
209,600 Bell Atlantic Corporation 9,563,000
-------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks - (cost $686,234,947) 786,054,346
-----------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 4.3%
1,369,050 News Corporation Limited Sponsored ADR 38,675,663
-------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stocks - (cost $25,272,089) 38,675,663
-----------------------------------------------------------------------------------------------------------
Principal Amount Description Market Value
-------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 7.9%
$40,000,000 Walt Disney Company, Commercial Paper, effective yield of 5.67%, 7/13/98 39,927,467
16,300,000 Pitney Bowes, Inc., Commercial Paper, effective yield of 6.17%, 7/01/98 16,300,000
15,000,000 Proctor & Gamble Company, Commercial Paper, effective yield of 5.73%, 7/07/98 14,986,375
-------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments - (cost $71,213,842) 71,213,842
-----------------------------------------------------------------------------------------------------------
Total Investments - (cost $782,720,878) - 99.4% 895,943,851
-----------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.6% 5,788,486
-----------------------------------------------------------------------------------------------------------
Net Assets - 100% $901,732,337
===========================================================================================================
|
# Non-income producing.
See accompanying notes to financial statements.
Statement of Net Assets
June 30, 1998
------------------------------------------------------------------------------------------------------------------------- Assets Investment securities, at market value (cost $782,720,878) (note 1) $895,943,851 Cash 47,717 Receivables: Dividends 1,625,876 Investments sold 7,289,137 Shares sold 1,329,488 Deferred organization costs (note 1) 115,576 Other assets 34,292 ------------------------------------------------------------------------------------------------------------------------- Total assets 906,385,937 ------------------------------------------------------------------------------------------------------------------------- Liabilities Payables: Investments purchased 756,736 Shares redeemed 760,153 Accrued expenses: Management fees (note 4) 448,070 12b-1 distribution and service fees (notes 1 and 4) 232,770 Other 121,508 Dividends payable 2,334,363 ------------------------------------------------------------------------------------------------------------------------- Total liabilities 4,653,600 ------------------------------------------------------------------------------------------------------------------------- Net assets (note 5) $901,732,337 ========================================================================================================================= Class A Shares (note 1) Net assets $790,062,734 Shares outstanding 29,809,495 Net asset value and redemption price per share $ 26.50 Offering price per share (net asset value per share plus maximum sales charge of 5.25% of offering price) $ 27.97 ========================================================================================================================= Class B Shares (note 1) Net assets $ 71,909,231 Shares outstanding 2,716,821 Net asset value, offering and redemption price per share $ 26.47 ========================================================================================================================= Class C Shares (note 1) Net assets $ 21,425,577 Shares outstanding 810,673 Net asset value, offering and redemption price per share $ 26.43 ========================================================================================================================= Class R Shares (note 1) Net assets $ 18,334,795 Shares outstanding 691,328 Net asset value, offering and redemption price per share $ 26.52 ========================================================================================================================= |
See accompanying notes to financial statements.
Statement of Operations
Year Ended June 30, 1998
---------------------------------------------------------------------------------------------------------- Investment Income (note 1) Dividends $ 13,045,258 Interest 4,486,808 ---------------------------------------------------------------------------------------------------------- Total investment income 17,532,066 ---------------------------------------------------------------------------------------------------------- Expenses Management fees (note 4) 6,459,095 12b-1 service fees -- Class A (notes 1 and 4) 1,775,281 12b-1 distribution and service fees -- Class B (notes 1 and 4) 428,635 12b-1 distribution and service fees -- Class C (notes 1 and 4) 119,199 Shareholders' servicing agent fees and expenses 1,345,702 Custodian's fees and expenses 88,438 Trustees' fees and expenses (note 4) 86,210 Professional fees 34,636 Shareholders' reports -- printing and mailing expenses 437,303 Federal and state registration fees 145,929 Amortization of deferred organization costs (note 1) 36,000 Other expenses 43,752 ---------------------------------------------------------------------------------------------------------- Total expenses before expense reimbursement 11,000,180 Expense reimbursement (note 4) (1,252,775) ---------------------------------------------------------------------------------------------------------- Net expenses 9,747,405 ---------------------------------------------------------------------------------------------------------- Net investment income 7,784,661 ---------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain from Investments Net realized gain from investment transactions (notes 1 and 3) 110,057,991 Net change in unrealized appreciation or depreciation of investments 33,508,467 ---------------------------------------------------------------------------------------------------------- Net gain from investments 143,566,458 ---------------------------------------------------------------------------------------------------------- Net increase in net assets from operations $151,351,119 ========================================================================================================== |
See accompanying notes to financial statements.
Statement of Changes in Net Assets
For the Period
Year Ended 8/07/96 to
6/30/98 6/30/97
--------------------------------------------------------------------------------------------------
Operations
Net investment income $ 7,784,661 $ 4,552,258
Net realized gain from investment transactions
(notes 1 and 3) 110,057,991 23,971,540
Net change in unrealized appreciation or depreciation
of investments 33,508,467 79,714,507
--------------------------------------------------------------------------------------------------
Net increase in net assets from operations 151,351,119 108,238,305
--------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (7,296,320) (4,326,777)
Class B (174,471) (33,641)
Class C (50,306) (11,701)
Class R (207,438) (131,681)
From accumulated net realized gains from investment transactions:
Class A (55,954,562) (96)
Class B (3,039,218) (96)
Class C (762,373) (96)
Class R (1,266,493) (57,187)
--------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (68,751,181) (4,561,275)
--------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 171,997,447 560,742,869
Net proceeds from shares issued to shareholders due to
reinvestment of distributions 55,521,813 1,085,746
--------------------------------------------------------------------------------------------------
227,519,260 561,828,615
--------------------------------------------------------------------------------------------------
Cost of shares redeemed (54,536,779) (19,389,087)
--------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 172,982,481 542,439,528
--------------------------------------------------------------------------------------------------
Net increase in net assets 255,582,419 646,116,558
Net assets at the beginning of period 646,149,918 33,360
--------------------------------------------------------------------------------------------------
Net assets at the end of period $901,732,337 $646,149,918
==================================================================================================
Balance of undistributed net investment income at end of period $ 104,584 $ 48,458
==================================================================================================
|
See accompanying notes to financial statements.
Notes to Financial Statements
1. General Information and Significant Accounting Policies The Nuveen Growth and Income Stock Fund (the "Fund") is a series of the Nuveen Investment Trust (the "Trust") which was organized as a Massachusetts business trust in 1996. The Trust (and each series within the Trust) is an open-end diversified management investment company registered under the Investment Company Act of 1940. Prior to commencement of operations on August 7, 1996, the Trust had no operations other than those related to organizational matters and the initial capital contribution of $100,080 (of which $33,360 was allocated to the Fund) by Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, for the issuance of shares on July 29, 1996.
The Fund invests primarily in a diversified portfolio of large- and mid-cap equities of domestic companies as a source of capital growth. In addition to investments in equity securities, the Fund may invest in cash equivalents and short-term fixed income investments in order to preserve capital or to enhance returns or as a temporary defensive measure.
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
Common stocks and other equity-type securities are valued at the last sales price on the national securities exchange or Nasdaq on which such securities are primarily traded; however, securities traded on a national securities exchange or Nasdaq for which there are no transactions on a given day or securities not listed on a national securities exchange or Nasdaq are valued at the most recent bid prices. Debt securities are valued by a pricing service that utilizes electronic data processing techniques to determine values when such values are believed to more accurately reflect the fair market value of such securities; otherwise, actual sale or bid prices are used. Any securities or other assets for which market quotations are not readily available are valued at fair value as determined in good faith by the Board of Trustees. Debt securities having remaining maturities of 60 days or less when purchased are valued by the amortized cost method when the Board of Trustees determines that the fair market value of such securities is their amortized cost.
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. Any 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 June 30, 1998, the Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is determined on the basis of interest accrued, adjusted for accretion of discounts.
Dividends and Distributions to Shareholders
Net investment income is declared and distributed to shareholders quarterly. Net realized capital gains from investment transactions, if any, are declared and 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 net investment income and net realized capital gains 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 and/or distributions in excess of net realized gains from investment transactions, where applicable.
Federal Income Taxes
The Fund intends to distribute all taxable income and capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal tax provision is required.
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales charge and incur an annual 12b-1 service fee. Class A Share purchases of $1 million or more are sold at net asset value without an up-front sales charge but may be subject to a 1% contingent deferred sales charge ("CDSC") if redeemed within 18 months of purchase. Class B Shares are sold without a sales charge but incur annual 12b-1 distribution and service fees. An investor purchasing Class B Shares agrees to pay a CDSC of up to 5% depending upon the length of time the shares are held by the investor (CDSC is reduced to 0% at the end of six years). Class B Shares convert to Class A Shares eight years after purchase. Class C Shares are sold without a sales charge but incur annual 12b-1 distribution and service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1% if Class C Shares are redeemed within one year of purchase. Class R Shares are not subject to any sales charge or 12b-1 distribution or service fees. Class R Shares are available for purchases of over $1 million and in other limited circumstances.
Derivative Financial Instruments
The Fund may invest in options and futures contracts, which are sometimes referred to as derivative transactions. 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 June 30, 1998.
Notes to Financial Statements (continued)
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
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.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning August 7, 1996 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption will be reduced by the pro-rata share of
the unamortized organization costs as of the date of redemption.
2. Fund Shares
Transactions in Fund shares were as follows:
For the Period
Year Ended 6/30/98 8/07/96 to 6/30/97
-----------------------------------------------------------------------------------------------------------
Shares Amount Shares* Amount
-----------------------------------------------------------------------------------------------------------
Shares sold:
Class A 3,567,835 $ 89,573,723 26,506,586 $534,047,616
Class B 2,261,218 56,728,012 451,781 10,154,679
Class C 697,568 17,510,818 156,621 3,451,741
Class R 325,380 8,184,894 655,095 13,088,833
Shares issued to shareholders
due to reinvestment of distributions:
Class A 2,217,304 50,837,734 51,079 1,069,544
Class B 119,470 2,714,481 38 787
Class C 30,815 699,886 10 201
Class R 55,208 1,269,712 726 15,214
-----------------------------------------------------------------------------------------------------------
9,274,798 227,519,260 27,821,936 561,828,615
-----------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (1,640,986) (41,459,146) (892,740) (18,980,846)
Class B (108,267) (2,735,040) (7,836) (182,828)
Class C (69,070) (1,753,632) (5,688) (119,188)
Class R (340,624) (8,588,961) (4,874) (106,225)
-----------------------------------------------------------------------------------------------------------
(2,158,947) (54,536,779) (911,138) (19,389,087)
-----------------------------------------------------------------------------------------------------------
Net increase 7,115,851 $172,982,481 26,910,798 $542,439,528
===========================================================================================================
|
*Shares sold reflect a December 18, 1996, stock split of 1.113830, 1.112700, 1.112700 and 1.113806 shares, respectively, for each share of Class A, B, C and R.
3. Securities Transactions
Purchases and sales (including maturities) of investment securities, U.S. government obligations and short-term investments for the fiscal year ended June 30, 1998, were as follows:
------------------------------------------------------------------------ Purchases: Investment securities $1,024,986,003 U.S. government obligations 704,324,784 Short-term investments 4,976,323,220 Sales: Investment securities 921,033,949 U.S. government obligations 704,500,000 Short-term investments 4,976,419,482 ======================================================================== |
At June 30, 1998, the identified cost of investments owned for federal income tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation aggregated $113,222,973 of which $127,474,765 related to appreciated securities and $14,251,792 related to depreciated securities.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays an annual management fee, payable monthly, which is based upon the average daily net asset value of the Fund as follows:
Average Daily Net Asset Value Management Fee -------------------------------------------------------------------------------- For the first $125 million .8500 of 1% For the next $125 million .8375 of 1 For the next $250 million .8250 of 1 For the next $500 million .8125 of 1 For the next $1 billion .8000 of 1 For net assets over $2 billion .7750 of 1 ================================================================================ |
The Adviser has agreed to waive fees and reimburse expenses through July 31, 1998, in order to prevent total operating expenses (excluding any 12b-1 distribution or service fees and extraordinary expenses) from exceeding .95% of the average daily net asset value of any class of Fund shares. Effective August 1, 1998, the Adviser has agreed to waive fees and reimburse expenses through July 31, 1999, in order to prevent total operating expenses (excluding any 12b-1 distribution or service fees and extraordinary expenses) from exceeding 1.05% of the average daily net asset value of any class of Fund shares.
The management fee compensates the Adviser for overall investment advisory and administrative services, and general office facilities. The Adviser has entered into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"), of which The John Nuveen Company holds a minority interest, under which ICAP manages the Fund's investment portfolio. ICAP is compensated for its services from the management fee paid to the Adviser. The Fund pays no compensation directly to those of its Trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Fund from the Adviser.
During the fiscal year ended June 30, 1998, John Nuveen & Co. Incorporated (the "Distributor"), a wholly owned subsidiary of The John Nuveen Company, collected sales charges on purchases of Class A Shares of approximately $4,488,700 of which approximately $4,303,400 were paid out as concessions to authorized dealers. The Distributor also received 12b-1 service fees on Class A Shares, substantially all of which were paid to compensate authorized dealers for providing services to shareholders relating to their investments.
During the fiscal year ended June 30, 1998, the Distributor compensated authorized dealers directly with approximately $2,460,900 in commission advances at the time of purchase. To compensate for commissions advanced to authorized dealers, all 12b-1 service fees collected on Class B Shares during the first year following a purchase, all 12b-1 distribution fees on Class B Shares, and all 12b-1 service and distribution fees on Class C Shares during the first year following a purchase are retained by the Distributor. During the fiscal year ended June 30, 1998, the Distributor retained approximately $536,000 of such 12b-1 fees. The remaining 12b-1 fees charged to the Fund were paid to compensate authorized dealers for providing services to shareholders relating to their investments. The Distributor also collected and retained approximately $521,600 of CDSC on share redemptions during the fiscal year ended June 30, 1998.
5. Composition of Net Assets
At June 30, 1998, the Fund had an unlimited number of $.01 par value per share common stock authorized. Net assets consisted of:
----------------------------------------------------------------------------------------------- Capital paid-in $715,439,066 Balance of undistributed net investment income 104,584 Accumulated net realized gain from investment transactions 72,965,714 Net unrealized appreciation of investments 113,222,973 ----------------------------------------------------------------------------------------------- Net assets $901,732,337 =============================================================================================== |
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
Investment Operations Less Distributions
----------------------------------------- -----------------------------
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
June 30, Value Income (a) Gain (Loss) Total Income Gain Total Value Return (b)
------------------------------------------------------------------------------------------------------------------------
Class A (8/96)
1998 $24.01 $.26 $4.55 $4.81 $(.25) $(2.07) $(2.32) $26.50 21.59%
1997 (c)** 17.96 .30 6.18 6.48 (.20) (.23) (.43) 24.01 36.30
Class B (8/96)
1998 24.00 .10 4.51 4.61 (.07) (2.07) (2.14) 26.47 20.70
1997 (c)** 17.97 .21 6.13 6.34 (.08) (.23) (.31) 24.00 35.37
Class C (8/96)
1998 23.98 .10 4.49 4.59 (.07) (2.07) (2.14) 26.43 20.63
1997 (c)** 17.97 .21 6.11 6.32 (.08) (.23) (.31) 23.98 35.26
Class R (8/96)
1998 24.02 .32 4.56 4.88 (.31) (2.07) (2.38) 26.52 21.91
1997 (c)** 17.96 .30 6.24 6.54 (.25) (.23) (.48) 24.02 36.65
========================================================================================================================
|
Class (Inception Date)
Ratios/Supplemental Data
----------------------------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Year Ended Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
June 30, Assets (000) ment ment ment (a) ment (a) Rate
----------------------------------------------------------------------------------------------------
Class A (8/96)
1998 $790,063 1.36% .88% 1.20% 1.04% 232%
1997 (c)** 616,209 1.28* 1.45* 1.20* 1.53* 110
Class B (8/96)
1998 71,909 2.11 .22 1.95 .38 232
1997 (c)** 10,664 2.03* .95* 1.95* 1.03* 110
Class C (8/96)
1998 21,426 2.11 .23 1.95 .39 232
1997 (c)** 3,630 2.03* .96* 1.95* 1.04* 110
Class R (8/96)
1998 18,335 1.11 1.10 .95 1.26 232
1997 (c)** 15,647 1.47* 1.04* .95* 1.56* 110
====================================================================================================
|
* Annualized.
** All per share amounts reflect a December 18, 1996, stock split of 1.113830, 1.112700, 1.112700 and 1.113806 shares, respectively, for each share of Class A, B, C and R.
(a) After waiver of certain management fees or reimbursement of expenses by Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge and are not annualized.
(c) From commencement of class operations as noted.
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of Nuveen Growth and Income Stock Fund
We have audited the accompanying statement of net assets, including the portfolio of investments, of Nuveen Growth and Income Stock Fund (one of the portfolios constituting the Nuveen Investment Trust (a Massachusetts business trust)), as of June 30, 1998, and the related statement of operations, the statements of changes in net assets and the financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1998, by correspondence with the custodian and brokers. As to securities purchased but not received, we requested confirmation from brokers and, when replies were not received, we carried out alternative auditing procedures. 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 net assets of the Nuveen Growth and Income Stock Fund as of June 30, 1998, the results of its operations, the changes in its net assets and its financial highlights for the periods indicated thereon in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 17, 1998
Building a Better Portfolio
Can Make You a Successful Investor
Successful investors know that a well-diversified portfolio -- one that balances different types of investments, levels of risk and tax management -- can be the foundation for building and sustaining wealth. That's why Nuveen offers you and your financial adviser a wide range of quality investments that can help you build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring Premier Advisers/SM/ including Institutional Capital Corporation, Rittenhouse Financial Services, and Nuveen Advisory Corp. Each brings a specialized expertise in a particular investment style or asset class, time-tested investment strategies and a focus on consistent, long-term performance. With Nuveen's Premier Adviser funds, you have all the advantages of a family of funds plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive, customized investment management solutions to investors with assets of $250,000 or more to invest. A range of actively managed growth, balanced and municipal income-oriented portfolios are available, all based upon a disciplined investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a convenient, attractive alternative to purchasing individual securities. They provide low-cost diversification to reduce risk, experienced, professional security selection and surveillance and daily liquidity at that day's net asset value for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of investment-grade quality municipal bonds. The fund shares are listed and traded on the New York and American stock exchanges. Exchange-traded funds provide the investment convenience, price visibility and liquidity of common stocks.
MuniPreferred/R/
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive tax-free yield for the cash reserves portion of an investment portfolio. MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen dual-class exchange-traded funds and are available for national as well as a wide variety of state-specific portfolios.
Nuveen Family
of Mutual Funds
Nuveen offers a variety
of funds designed to
help you reach your
financial goals.
Growth
Nuveen Rittenhouse
Growth Fund
Growth and
Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with investments that withstand the test of time. Today we offer a broad range of quality investments designed for individuals seeking to build and sustain wealth. In fact, more than 1.3 million investors have trusted Nuveen to help them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined long-term investment strategies focused on providing consistent, attractive performance over time -- with moderated risk. We emphasize quality securities carefully chosen through in-depth research, and we follow those securities closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining accumulated wealth, Nuveen offers a wide variety of investments and services to help meet your unique circumstances and financial planning needs. Our equity, balanced, and tax-free income funds, along with our defined portfolios and private asset management, can help you build a better, well-diversified portfolio.
Talk with your financial adviser to learn more about how Nuveen investment products and services can help you. Or call us at (800) 257-8787 for more information, including a prospectus where applicable. Please read that information carefully before investing.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime.
John Nuveen & Co, Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com EAN-GI-6-98
NUVEEN
MUTUAL FUNDS
June 30, 1998
Annual Report
For investors seeking
attractive after-tax returns
through tax-free income and
long-term growth of capital.
[PHOTO APPEARS HERE]
Balanced
Municipal
and
Stock Fund
Highlights
As of June 30, 1998
For Class A shares
Attractive Fund Returns/1/
[BAR CHART APPEARS HERE]
One Year Since Inception--8/96
-------- ---------------------
Class A (NAV) 14.71% 17.36%
Class A (Offer) 8.69% 14.06%
|
With its focus on tax-free income and long-term growth, the fund provided attractive total returns for the one-year period and since its inception.
Portfolio Application
[PIE CHART APPEARS HERE]
Municipal Bonds 56% Stocks 41% Cash 3% |
True to its investment objectives, the fund invested in municipal bonds to provide tax-free income and stocks for long-term growth.
Steady Dividends Despite Declining Interest Rates
Dividend History
[BAR CHART APPEARS HERE] .0455 July 1997 .0455 August 1997 .0455 September 1997 .0455 October 1997 .0455 November 1997 .0455 December 1997 .0455 January 1998 .0455 February 1998 .0455 March 1998 .0455 April 1998 .0455 May 1998 .0455 June 1998 |
Bond Buyer 40
[LINE CHART APPEARS HERE]
5.69 July 1997 5.40 August 1997 5.55 September 1997 5.47 October 1997 5.40 November 1997 5.36 December 1997 5.26 January 1998 5.19 February 1998 5.24 March 1998 5.27 April 1998 5.39 May 1998 5.22 June 1998 |
Despite the declining interest rate environment, the fund provided a steady monthly dividend to shareholders.
/1/ Please see the Performance Overview on page five for more information.
Contents
1 Dear Shareholder
3 Report from Your Fund Managers
5 Performance Overview
6 Portfolio of Investments
12 Statement of Net Assets
13 Statement of Operations
13 Statement of Changes in Net Assets
14 Notes to Financial Statements
18 Financial Highlights
20 Report of Independent
Public Accountants
21 Building Better Portfolios
|
Dear Shareholder
[PHOTO OF Timothy R. Schwertfeger appears here]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
I am pleased to report that over the past year the Nuveen Balanced Municipal and Stock Fund continued to provide current tax-free income and long-term growth potential to offset inflation as the fund was designed to do.
In addition, as you can see from the information on the facing page, the fund remains well-positioned to continue providing attractive tax-free income even in today's lower interest rate environment.
Current Results Backed by a Proven Record
The solid performance achieved by the Balanced Municipal and Stock Fund managers inevitably leads to the question: "Can they keep it up?" Since no one can predict the future with certainty, it's important to have confidence in your fund managers' experience, investment approach and the results they've demonstrated through a variety of market conditions over the years.
The Nuveen Balanced Municipal and Stock Fund is managed by a team of Premier Advisers(SM), each an expert in their particular investment category. As Nuveen's Premier Adviser for value investing, Institutional Capital Corporation is a highly successful institutional money manager with more than 28 years of experience. Over that time, they've specialized in finding undervalued midsize and large company stocks that are poised for significant growth.
Institutional Capital's expertise is matched by the other Premier Adviser managing the Municipal and Stock Fund, Nuveen Institutional Advisory Corp. One of the largest and most experienced municipal bond asset managers in the country, Nuveen draws upon the systems, market knowledge and investing skills the firm has developed through its 100 years of day-to-day participation in this complex market.
The result of this combination is a disciplined, research-oriented approach that has paid off for investors, and remains the key investment strategy of the Nuveen Balanced Municipal and Stock Fund. On the equity side, the managers start by looking for well-established but undervalued stocks. The portfolio managers then look for a catalyst, such as a management change, a new product, or improved industry outlook, that may help trigger a rise in the stock's price. Generally, the fund only purchases stocks that the managers believe have the potential to generate 15-25% returns over an 18-month period.
For the municipal bond portion of the portfolio, Nuveen Institutional Advisory looks for intermediate-term, investment-quality bonds whose prices, features or prospects make them appear undervalued relative to their peers. By maintaining a relatively constant mix of municipal bonds providing steady,
"Today, more than ever, you can count on Nuveen for investments designed to produce a well-balanced portfolio that meets your individual goals."
dependable tax-free income and common stocks offering growth potential, the fund can help investors meet both of these important needs.
Nuveen's Premier Advisers
Nuveen is dedicated to providing investors access to a team of highly experienced investment managers, each overseeing portfolios within their specific areas of expertise. In addition to Institutional Capital and Nuveen Institutional Advisory, Nuveen's Premier Advisers include Rittenhouse Financial Services, our Premier Adviser for growth investing. Each of these managers uses a time-tested, research-driven investment strategy to build portfolios of quality securities.
Diversification Can Help You Build a Better Portfolio
In light of current market conditions, we believe that investors will find diversification to be an increasingly important strategy in the months ahead. An appropriately diversified portfolio -- one that balances different types of investments, levels of risk and tax management strategies -- can help cushion your portfolio against volatility and enhance your overall return potential.
Many of you have invested in the Nuveen Balanced Municipal and Stock Fund because of its value investing orientation and the excellent track record of its Premier Advisers. We are pleased to announce that this same disciplined approach is now available in another Nuveen fund -- the Nuveen European Value Fund.
With portfolio management by Institutional Capital and a focus on a portfolio of quality, undervalued European companies, this fund can provide an excellent complement to the Balanced Municipal and Stock Fund by offering international diversification to reduce risk and increased return potential. I encourage you to talk with your financial adviser about how this new fund, along with the Nuveen Rittenhouse Growth Fund and our wide array of tax-free bond funds, can help round out your portfolio and meet your own particular investment needs.
If you would like additional information on the Nuveen European Value Fund, or any of our other funds, contact your financial adviser for an Investor Guide, including a prospectus containing all charges and expenses. You also may request a prospectus from Nuveen by calling toll-free (800) 257-8787. Please read this information carefully and discuss it with your financial adviser before you invest.
When seeking quality investments that withstand the test of time, we hope you will continue to think of Nuveen. Today, more than ever, you can count on Nuveen for investments designed to produce a well-balanced portfolio that meets your individual goals. We thank you for your continued confidence in us, and look forward to reporting to you again soon.
Sincerely,
/s/ Timothy R. Schwertfeger --------------------------- Timothy R. Schwertfeger Chairman of the Board August 14, 1998 |
Nuveen Balanced Municipal and Stock Fund
Report from Your Fund Managers
The Nuveen Institutional Advisory and Institutional Capital investment management teams talk about the financial markets and factors that affected fund performance.
"The continued market strength put a premium on the quality research needed to find undervalued securities."
Over the past year, the economy and the financial markets again defied the experts' consensus.
The conventional wisdom was that the Asian crisis and U.S. company profit warnings that started last fall would result in a slow first half of 1998, with a rebound in confidence and securities prices in the second half of this year. Our own concern was whether the Federal Reserve would have to raise short-term interest rates as the moderating influence of Asia diminished and the U.S. economy picked up steam.
The facts have painted a different picture. Stimulated by lower interest rates, strong employment and a significant drop in energy prices, U.S. consumption has remained quite strong -- especially for this late in the economic cycle. Outside the U.S., European companies also began showing strong results. While Asia did slump, its overall impact on the U.S. economy was less severe than feared.
With a low inflationary environment, a strong economy and a large supply of newly issued municipal bonds, there were plenty of opportunities to find attractive investments for the fixed-income portion of the fund throughout the year. While the fund is constantly seeking investment-grade credits in the A to BBB range because of their traditionally higher yields, the recent abundance of insured bonds with competitive yields allowed us to invest in a number of AAA- rated bonds. With interest rates falling throughout the year, purchases were concentrated in bonds with maturities of 12-15 years to maximize yield and reap the benefits of the market rally, which added to the fund's total return.
On the equity side, the continued market strength put a premium on the quality research needed to find undervalued securities. Staying with our time-tested, value-oriented strategy, we are pleased that the Class A share total return on net asset value of the Nuveen Balanced Municipal and Stock Fund was a healthy 14.71% for the year ended June 30, 1998.
Asia Looms Large
Given the lethargy in Japan and reduced growth in China, there will be no quick or easy resolution of Asia's woes anytime soon. Perhaps the only good news is that the deflationary drag from the region should prevent the Fed from raising interest rates and keep the dollar strong for some time.
The central problem in Asia is that massive amounts of capital are now invested in assets that are providing poor returns. This means that non-Asian competitors are now faced with weak pricing conditions as Asian companies seek cash flow to stay solvent. Even if Asian trade with the U.S. improves, a strengthening dollar would make it difficult for Asian companies to significantly increase their revenues in the near-term.
While we believe these problems can be solved, it will take time.
"We will continue to invest in companies undergoing corporate restructurings, both in the U.S. and Europe."
Outlook for the Second Half of 1998
Our view for the remainder of the year is that:
. The U.S. economy will slow as a result of high inventories, weaker exports and a downturn in capital goods manufacturing.
. Municipal new issue supply will remain high as issuers take advantage of the opportunity to borrow at low rates.
. Corporate profits overall will be up modestly, and less than expected.
. The Fed will probably not raise interest rates as a result of the financial situation in Asia, and the fragile state of other dollar-linked economies such as Russia.
. The domestic merger and acquisition boom will continue, but the impact on overall market prices will diminish.
. U.S. stock market averages will gain modestly through the remainder of the year; European markets will see even larger returns.
Our Strategy
In this environment, we will continue to focus upon the municipal new issue market, especially smaller issues that can provide attractive yields. With municipal bond yields at levels that are more than 90% of comparable U. S. Treasury bonds, the municipal market remains extremely attractive compared to taxable fixed-income markets.
On the equity side, we will continue to invest in companies undergoing corporate restructurings, both in the U.S. and Europe. This means looking for stocks of companies that may have performed poorly in the recent past, but that have attractive, underutilized assets or a newly focused management team. Some portfolio holdings that highlight this strategy include Citicorp, News Corp. and Raytheon, just to name a few.
We believe there may be more good news coming from these companies and others like them in the fund's portfolio. We are committed to uncovering additional opportunities in the months ahead.
Nuveen Balanced Municipal and Stock Fund
Performance Overview
As of June 30, 1998
Top Five Stock Holdings/1/ News Corp. Ltd. Sponsored ADR 2.08% -------------------------------------------------------------------------------- NationsBank Corporation 1.62% -------------------------------------------------------------------------------- Hoechst AG Sponsored ADR 1.62% -------------------------------------------------------------------------------- American Home Products Corp. 1.60% -------------------------------------------------------------------------------- Philips Electronics N.V. 1.54% -------------------------------------------------------------------------------- |
Stock Diversification [PIE CHART APPEARS HERE] Capital Spending 8% Transportation 8% Consumer Staples 10% Capital Equipment/Technology 10% Energy 6% Basic Industries 10% Retail 4% Consumer Services 12% Consumer Durables 3% Health Care 13% Utilities 2% Financial 14% |
Monthly Tax-Free Dividends (Class A Shares)
[BAR CHART APPEARS HERE]
.0455 July 1997 .0455 August 1997 .0455 September 1997 .0455 October 1997 .0455 November 1997 .0455 December 1997 .0455 January 1998 .0455 February 1998 .0455 March 1998 .0455 April 1998 .0455 May 1998 .0455 June 1998 |
Fund Highlights Share Price A B C R -------------------------------------------------------------------------------- Inception Date 8/96 8/96 8/96 8/96 -------------------------------------------------------------------------------- Net Asset Value $25.46 $25.53 $25.51 $ 25.39 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total Net Assets ($000) $165,650 -------------------------------------------------------------------------------- Fixed Income Average Duration 6.7 Years -------------------------------------------------------------------------------- Average Market Capitalization of Stocks 30.67 -------------------------------------------------------------------------------- Average P/E of Stocks (trailing 12 months) 17.6 -------------------------------------------------------------------------------- Number of Stocks 45 -------------------------------------------------------------------------------- |
Annualized Total Return/2/
A (On NAV) A (On Offer) B C R
Year-to-Date 8.10% 2.42% 7.73% 7.69% 8.21%
--------------------------------------------------------------------------------
One-Year 14.71% 8.69% 13.91% 13.87% 14.94%
--------------------------------------------------------------------------------
Since Inception/2/ 17.36% 14.06% 16.53% 16.49% 17.65%
--------------------------------------------------------------------------------
|
Yield Tax-Exempt Distribution Rate 2.14% 2.03% 1.41% 1.41% 2.39% -------------------------------------------------------------------------------- SEC 30-Day Yield 1.58% 1.50% 0.84% 0.84% 1.83% -------------------------------------------------------------------------------- |
Index Comparison /3/
[LINE CHART APPEARS HERE]
Balanced Index Lehman Brothers Nuveen Balanced Nuveen Balanced
S&P 500 (40% S&P/60% LB 10) 10-Year Municipal Bond Index Municipal & Stock Fund (NAV) Municipal & Stock Fund (Offer)
8/96 10,000 10,000 10,000 10,000 9,475
6/97 13,210 11,606 10,613 11,584 10,976
6/98 17,968 13,908 11,640 13,603 12,889
|
. S&P 500 $17,968 . Balanced Index (40% S&P/60% LB10) $13,908 . Lehman Brothers 10-Year Municipal Bond Index $11,604 . Nuveen Balanced Municipal & Stock Fund (NAV) $13,603 . Nuveen Balanced Municipal & Stock Fund (Offer) $12,889 |
Past performance is not predictive of future results.
1 The companies listed above represent their respective percentages as of 6/30/98. Over time, the fund's holdings and their percentages will vary.
2 Returns reflect differences in sales charges and expenses among the share classes. Class A shares have a 5.25% maximum sales charge. Class B shares have a CDSC that begins at 5% for redemptions during the first year after purchase and declines periodically to 0% over the following six years, which is not reflected in the return figures. Class B shares convert to Class A shares after eight years. Class C shares have a 1% CDSC for redemptions within one year, which is not reflected in the return figures.
Portfolio of Investments
Nuveen Balanced Municipal and Stock Fund
June 30, 1998
Market
Shares Description Value
--------------------------------------------------------------------------------
COMMON STOCKS - 39.3%
Basic Industries - 3.9%
14,950 Akzo Nobel N.V. Sponsored ADR $ 1,657,581
24,250 E.I. du Pont de Nemours and Company Ltd. 1,809,656
28,899 IMC Global Inc. 870,582
24,650 Reynolds Metals Company 1,378,859
29,550 UPM-Kymmene Oyj Corporation Sponsored ADR 813,278
--------------------------------------------------------------------------------
Capital Equipment/Technology - 4.0%
38,200 First Data Corporation 1,272,538
17,650 International Business Machines Corporation 2,026,441
21,750 NCR Corporation # 706,875
29,950 Royal Philips Electronics N.V. 2,545,750
--------------------------------------------------------------------------------
Capital Spending - 3.2%
18,500 B.F. Goodrich Company 918,063
23,950 Case Corporation 1,155,587
12,100 Northrop Grumman Corporation 1,247,813
34,837 Raytheon Company - Class A 2,007,482
--------------------------------------------------------------------------------
Consumer Durables - 1.3%
31,000 General Motors Corporation 2,071,188
--------------------------------------------------------------------------------
Consumer Services - 3.0%
43,350 The Dun & Bradstreet Corporation 1,566,019
67,050 Host Marriot Corp. # 1,194,328
5,000 Starwood Hotels & Resorts 241,563
41,400 U.S.A. Waste Services Inc. # 2,044,125
--------------------------------------------------------------------------------
Consumer Staples - 3.9%
32,800 Fort James Corporation 1,459,600
29,075 Hasbro, Inc. 1,143,011
55,100 Philip Morris Companies Inc. 2,169,563
41,700 Seagram Company Ltd. 1,707,094
--------------------------------------------------------------------------------
Energy - 2.6%
26,390 Elf Aquitaine SA Sponsored ADR 1,873,690
19,450 Schlumberger Limited 1,328,678
31,200 Unocal Corporation 1,115,400
--------------------------------------------------------------------------------
Financials - 6.0%
13,600 Bankers Trust Corporation 1,578,450
23,500 CIGNA Corporation 1,621,500
16,400 Citicorp 2,447,700
|
Market
Shares Description Value
--------------------------------------------------------------------------------
Financials (continued)
32,150 Household International, Inc. $ 1,599,463
34,950 NationsBank Corporation 2,673,675
--------------------------------------------------------------------------------
Health Care - 5.6%
51,100 American Home Products Corporation 2,644,425
27,800 Baxter International Inc. 1,495,988
53,900 Hoechst AG Sponsored ADR 2,674,788
23,800 Humana Inc. # 742,263
11,900 St. Jude Medical, Inc. # 438,069
40,000 Tenet Healthcare Corporation # 1,250,000
--------------------------------------------------------------------------------
Retail - 1.5%
7,600 Circuit City Stores 356,250
14,000 Consolidated Stores Corporation # 507,500
30,600 Federated Department Stores, Inc. # 1,646,663
--------------------------------------------------------------------------------
Transportation - 3.4%
16,600 AMR Corporation # 1,381,950
22,150 Burlington Northern Santa Fe Corporation 2,174,853
71,800 Canadian Pacific Limited 2,037,325
--------------------------------------------------------------------------------
Utilities - 0.9%
11,650 AT&T Corp. 665,506
17,500 Bell Atlantic Corporation 798,438
--------------------------------------------------------------------------------
Total Common Stocks - (cost $58,453,172) 65,059,570
--------------------------------------------------------------------------------
PREFERRED STOCKS - 2.1%
121,700 News Corporation Limited Sponsored ADR 3,438,025
--------------------------------------------------------------------------------
Total Preferred Stocks - (cost $2,305,577) 3,438,025
--------------------------------------------------------------------------------
|
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
--------------------------------------------------------------------------------
MUNICIPAL BONDS - 55.5%
Alabama - 0.3%
$ 455,000 Alabama Water Pollution
Control Authority,
Revolving Fund Loan Bond,
Series 1994, 6.625%, 8/15/08 8/05 at 100 Aaa $ 510,847
--------------------------------------------------------------------------------
California - 3.7%
2,500,000 Escondido Multifamily Housing
Authority, Revenue Refunding
Bonds (Morning View Terrace
Apartments), FNMA, Series
1997B, 5.400%, 1/01/27
(Mandatory put 7/01/07) 7/05 at 101 1/2 AAA 2,619,725
1,525,000 Northern California Power
Agency, Public Power Revenue
Refunding Bonds, Geothermal
Project No. 3, Series A,
5.650%, 7/01/07 No Opt. Call A- 1,621,151
250,000 County of Orange, California,
Refunding Recovery Bonds,
1995 Series A, 6.000%,
6/01/10 No Opt. Call Aaa 281,950
1,495,000 Palmdale Civic Authority,
1997 Revenue Bonds, Series A
(Civic Center Refinancing),
5.375%, 7/01/12 7/07 at 102 Aaa 1,563,262
--------------------------------------------------------------------------------
Colorado - 1.3%
2,000,000 City and County of Denver,
Colorado, Airport System
Revenue Bonds, Series 1996B,
5.625%, 11/15/08
(Alternative Minimum Tax) 11/06 at 102 Aaa 2,159,800
--------------------------------------------------------------------------------
Connecticut - 1.3%
1,075,000 Connecticut Housing Finance
Authority, Housing Mortgage
Revenue Bonds, Series 1996B,
Subordinated Lien, 5.750%,
11/15/08 (Alternative
Minimum Tax) 5/06 at 102 AA 1,133,308
|
Portfolio of Investments (continued)
Nuveen Balanced Municipal and Stock Fund
June 30, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
-----------------------------------------------------------------------------------------------------------
Connecticut (continued)
$1,000,000 State of Connecticut Health and Educational No Opt. Call BBB $1,026,100
Facilities Authority, Hospital for Special Care
Issue, Series B, 5.125%, 7/01/07
-----------------------------------------------------------------------------------------------------------
District of Columbia - 2.7%
500,000 District of Columbia General Obligation Refunding No Opt. Call Aaa 577,185
Bonds, Series A-1, 6.500%, 6/01/10
3,500,000 District of Columbia General Obligation Bonds, No Opt. Call Aaa 3,888,220
Series 1998B, 6.000%, 6/01/11
-----------------------------------------------------------------------------------------------------------
Georgia - 1.8%
2,000,000 Fulton County Development Authority, Special 5/08 at 101 BBB- 1,999,040
Facilities Revenue, Series 1999, Delta Airlines,
Inc. Project, 5.300%, 5/01/13 (Alternative
Minimum Tax)
895,000 Georgia Housing and Finance Authority, Single 6/06 at 102 AA+ 929,225
Family Mortgage Bonds, 1996 Series A, 5.875%,
12/01/19 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------
Idaho - 1.9%
1,500,000 Idaho Housing and Finance Association, Single 1/07 at 102 A1 1,586,430
Family Mortgage Bonds, 1997 Series D,
5.950%, 7/01/09 (Alternative Minimum Tax)
1,535,000 Idaho Housing and Finance Association, Single 7/07 at 101 1/2 A1 1,593,484
Family Mortgage Bonds, 1997 Series F, 5.700%,
7/01/10 (Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------
Illinois - 5.0%
2,160,000 Illinois Health Facilities Authority, Series 7/04 at 102 N/R*** 2,523,053
1985 (St. Elizabeth's Hospital of Chicago,
Inc.), 7.250%, 7/01/15 (Pre-refunded to
7/01/04)
1,500,000 Illinois Health Facilities Authority, Series 11/03 at 102 A1 1,605,690
1993 (OSF Healthcare System),
6.000%, 11/15/10
250,000 Illinois Health Facilities Authority, FHA Insured 2/06 at 102 Aaa 265,428
Mortgage Revenue Bonds, Series 1996 (Sinai
Health System), 5.500%, 2/15/09
1,200,000 Illinois Health Facilities Authority, Series 10/07 at 102 Aaa 1,285,080
1997A (Highland Park Hospital Project),
5.700%, 10/01/10
Community High School District Number
219, Cook County, Illinois (Niles Township),
General Obligation Limited Tax School Bonds,
Series 1998:
1,130,000 0.000%, 12/01/09 No Opt. Call Aaa 660,349
2,360,000 0.000%, 12/01/10 No Opt. Call Aaa 1,306,236
700,000 Kankakee School District No. 111, Kankakee 1/06 at 100 Aaa 725,879
County, Illinois, General Obligation School
Bonds, Series 1996, 5.500%, 1/01/12
-----------------------------------------------------------------------------------------------------------
Kentucky - 1.5%
2,500,000 County of Boone, Kentucky, Mortgage Revenue Bonds, 12/98 at 100 N/R 2,501,025
Series 1998A (Normandy Green Apartments
Project), 5.200%, 6/20/38 (Alternative Minimum
Tax) (Mandatory put 12/20/99) (WI)
-----------------------------------------------------------------------------------------------------------
Louisiana - 1.6%
Sales Tax School Bonds, Refunding Series 1998,
Jefferson Parish School Board, State of
Louisiana:
1,045,000 0.000%, 3/01/08 No Opt. Call AAA 667,483
2,175,000 0.000%, 9/01/08 No Opt. Call AAA 1,357,418
1,000,000 0.000%, 3/01/10 No Opt. Call AAA 573,620
-----------------------------------------------------------------------------------------------------------
Maine - 0.2%
255,000 Town of Winslow, Maine, General Obligation Tax 3/07 at 102 Aaa 278,236
Increment Financing Bonds (Crowe Rope Industries
Project), 1997 Series A, 6.000%, 3/01/11
(Alternative Minimum Tax)
-----------------------------------------------------------------------------------------------------------
Massachusetts - 1.4%
2,000,000 Massachusetts Turnpike Authority, Western 1/99 at 100 Aaa 2,039,940
Turnpike Revenue Bonds, Series 1997A, 5.550%,
1/01/17
250,000 Massachusetts Health and Educational Facilities 7/06 at 102 A-*** 274,985
Authority, Melrose-Wakefield Healthcare Corp.
Issue, Series C, 5.700%, 7/01/08 (Pre-refunded
to 7/01/06)
|
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
----------------------------------------------------------------------------------------------------------------------------
Michigan - 2.5%
Essexville-Hampton Public Schools, County of Bay, State of
Michigan, 1997 School Building and Site Bonds (General
Obligation-Unlimited Tax):
$ 1,000,000 5.400%, 5/01/11 5/07 at 100 Aaa $1,045,580
1,010,000 5.500%, 5/01/12 5/07 at 100 Aaa 1,058,500
2,180,000 Taylor Tax Increment Finance Authority, Tax Increment Refunding 5/08 at 100 Aaa 2,102,545
Bonds, Series 1998, 4.500%, 5/01/11
----------------------------------------------------------------------------------------------------------------------------
Mississippi - 1.1%
Jones County, Mississippi, Hospital Revenue Refunding Bonds
(South Central Regional Medical Center Project), Series 1997:
1,285,000 5.350%, 12/01/10 12/07 at 100 BBB+ 1,307,680
500,000 5.400%, 12/01/11 12/07 at 100 BBB+ 508,355
----------------------------------------------------------------------------------------------------------------------------
Nebraska - 3.6%
6,000,000 Energy America Gas Supply Revenue Bonds, Series 1998A, No Opt. Call N/R 5,981,760
Metropolitan Utilities District Project, 5.700%, 7/01/08
----------------------------------------------------------------------------------------------------------------------------
Nevada - 1.6%
2,250,000 Nevada Housing Division, Single Family Mortgage Bonds, 1997 4/07 at 102 Aa3 2,338,335
Series A-1 Mezzanine Bonds, 6000%, 4/01/15 (Alternative Minimum
Tax)
250,000 Airport Authority of Washoe County, Reno, Nevada, Airport Revenue 7/03 at 102 Aaa 269,950
Refunding Bonds, Series 1993B, 5.875%, 7/01/11
----------------------------------------------------------------------------------------------------------------------------
New Hampshire - 2.3%
500,000 New Hampshire Higher Educational and Health Facilities Authority, 1/07 at 102 BBB- 535,265
Series 1997 (New Hampshire College), 6.200%, 1/01/12
3,000,000 State of New Hampshire, Turnpike System Revenue Bonds, 1992 4/02 at 102 Aaa 3,221,580
Series, 6.000%, 4/01/13
----------------------------------------------------------------------------------------------------------------------------
New York - 9.6%
Dormitory Authority of the State of New York, Revenue Bonds,
City University Issue, Series U:
160,000 6.375%, 7/01/08 (Pre-refunded to 7/01/02) 7/02 at 102 Baa1*** 175,939
115,000 6.375%, 7/01/08 7/02 at 102 Baa1 124,787
1,430,000 Empire State Development Corporation, New York State Urban No Opt. Call Baa1 1,609,565
Development Corporation (Youth Facilities), 6.500%, 4/01/07
2,000,000 New York State Thruway Authority, Local Highway and Bridge 4/06 at 102 Baa1 2,131,340
Service Contract Bonds, Series 1996, 5.625%, 4/01/07
1,700,000 New York State Urban Development Corporation (Cornell Center for 1/03 at 102 Baa1 1,819,187
Theory and Simulation in Science and Engineering Grant),
Series 1993, 5.900%, 1/01/07
285,000 New York State Urban Development Corporation, State Facilities No Opt. Call Baa1 314,178
Revenue Bonds, 1995 Refunding Series, 6.250%, 4/01/06
2,000,000 Certificates of Participation, The State of New York, The City No Opt. Call Baa1 2,180,840
University of New York (John Jay College of Criminal Justice
Project Refunding), 6.000%, 8/15/06
Dutchess County Water and Wastewater Authority, Service Agreement
Revenue Bonds, 1998 Series 1:
420,000 4.850%, 6/01/09 (DD) 6/08 at 101 A 419,702
925,000 4.950%, 6/01/10 (DD) 6/08 at 101 A 925,296
860,000 5.050%, 6/01/11 (DD) 6/08 at 101 A 862,107
500,000 Metropolitan Transportation Authority, Transit Facilities Service No Opt. Call Baa1 538,180
Contract Bonds, Series O, 5.750%, 7/01/07
250,000 The City of New York, General Obligation Bonds, Fiscal 1997, 11/06 at 101 1/2 A3 269,270
Series D, Tax Exempt Bonds, 5.875%, 11/01/11
500,000 The City of New York, General Obligation Bonds, Fiscal 1997, 4/07 at 101 A3 546,065
Series I, 6.000%, 4/15/09
4,000,000 The City of New York, General Obligation Bonds, Fiscal 1998, 8/07 at 101 A3 4,207,400
Series D, 5.500%, 8/01/10
----------------------------------------------------------------------------------------------------------------------------
North Carolina - 1.7%
2,045,000 North Carolina Municipal Power Agency, Number 1, Catawba Electric No Opt. Call Aaa 2,815,495
Revenue Bonds, Series 1980, 10.500%, 1/01/10
|
Portfolio of Investments (continued)
Nuveen Balanced Municipal and Stock Fund
June 30, 1998
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
-------------------------------------------------------------------------------------------------------------------------------
Ohio - 2.5%
$ 2,235,000 Ohio Building Authority,State Facilities, Series 1982-A (Toledo 4/03 at 100 Aaa $ 2,668,411
Government Office Building), 10.125%, 10/01/06 (Pre-refunded to
4/01/03)
1,500,000 Lorain County Health Care Facilities, Revenue Refunding Bonds, 2/08 at 101 BBB 1,514,400
Kendal at Oberlin, Series 1998A, 5.375%, 2/01/12
-------------------------------------------------------------------------------------------------------------------------------
Oklahoma - 0.7%
1,000,000 Oklahoma Industries Authority, Health System Revenue Refunding No Opt. Call Aaa 1,105,270
Bonds (Obligated Group consisting of INTEGRIS Baptist Medical
Center, Inc., INTEGRIS South Oklahoma City Hospital Corporation
and INTEGRIS Rural Health, Inc.), Series 1995D, 6.000%, 8/15/07
-------------------------------------------------------------------------------------------------------------------------------
Pennsylvania - 0.9%
1,435,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 1,485,268
Revenue Bonds, Series 1996-50A, 5.350%, 10/01/08
-------------------------------------------------------------------------------------------------------------------------------
Rhode Island - 1.2%
1,760,000 City of Providence, Rhode Island, General Obligation Bonds, 1997 7/07 at 101 Aaa 1,940,541
Series A, 6.000%, 7/15/09
-------------------------------------------------------------------------------------------------------------------------------
Tennessee - 1.7%
2,700,000 Cookeville Industrial Development Board, Revenue Refunding 10/03 at 102 A 2,839,293
Bonds, Series 1993 (Cookeville General Hospital Project),
5.750%, 10/01/10
-------------------------------------------------------------------------------------------------------------------------------
Texas - 1.1%
225,000 Texas Department of Housing and Community Affairs, Single Family 9/06 at 102 Aaa 237,296
Mortgage Revenue Bonds, 1996 Series E, 5.750%, 3/01/10
195,000 City of Austin, Texas, Water, Sewer and Electric Refunding No Opt. Call A2 227,362
Revenue Bonds, Series 1982, 14.000%, 11/15/01
250,000 City of San Antonio, Texas, Airport System Improvement Revenue 7/06 at 101 Aaa 268,083
Bonds, Series 1996, 5.700%, 7/01/09 (Alternative Minimum Tax)
1,000,000 Tyler Health Facilities Development Corporation, Hospital 7/02 at 100 Baa2 1,013,410
Revenue Bonds (Mother Frances Hospital Regional Health Care
Center Project), Series 1997 A, 5.500%, 7/01/09
-------------------------------------------------------------------------------------------------------------------------------
Utah - 0.4%
200,000 Board of Regents of the State of Utah, Student Loan Revenue 11/05 at 102 Aaa 217,762
Bonds, 1995 Series N, 6.000%, 5/01/08 (Alternative Minimum Tax)
500,000 Tooele County, Hazardous Waste Disposal Revenue Bonds (Laidlaw 8/05 at 102 BBB+ 552,150
Inc/USPCI Clive PJ), Series 1995, 6.750%, 8/01/10 (Alternative
Minimum Tax)
-------------------------------------------------------------------------------------------------------------------------------
Washington - 1.9%
170,000 Washington Public Power Supply System, Nuclear Project No. 2, No Opt. Call Aa1 195,147
Revenue Bonds, Series 1981A, 14.375%, 7/01/01
800,000 Washington Public Power Supply System, Project No. 3, Refunding 7/06 at 102 Aaa 862,663
Revenue Bonds, Series 1996-A, 5.700%, 7/01/09
800,000 Washington State Housing Finance Commission, Single-Family 1/04 at 102 AAA 838,710
Mortgage Revenue Bonds (Mortgage Backed Securities Program),
Series 1995A, 6.650%, 7/01/16 (Alternative Minimum Tax)
1,060,000 Tahoma School District No. 409, King County, Washington, No Opt. Call Aaa 1,199,197
Unlimited Tax General Obligation Improvement and Refunding
Bonds,1997, 6.000%, 12/01/09
-------------------------------------------------------------------------------------------------------------------------------
89,750,000 Total Municipal Investments - (cost $88,789,068) 92,028,013
==============-----------------------------------------------------------------------------------------------------------------
|
Principal Optional Call Market
Amount Description Provisions* Ratings** Value
------------------------------------------------------------------------------------------------------------------------------------
TEMPORARY INVESTMENTS IN SHORT-TERM MUNICIPAL SECURITIES - 2.8%
$4,700,000 Guadalupe-Blanco River Authority (Texas), Pollution Control VMIG-1 $ 4,700,000
Revenue Refunding Bonds (Central Power and Light Company Project),
Series 1995, Variable Rate Demand Bonds, 3.800%, 11/01/15+
============------------------------------------------------------------------------------------------------------------------------
Total Temporary Investments in Short-Term Municipal Securities
(Cost $4,700,000) 4,700,000
------------------------------------------------------------------------------------------------------------------
Total Investments - (cost $154,247,817) - 99.7% 165,225,608
------------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities - 0.3% 424,647
------------------------------------------------------------------------------------------------------------------
Net Assets - 100% $165,650,255
==================================================================================================================
|
* Optional Call Provisions (not covered by the report of independent public accountants): 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 public accountants): 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.
# Non-income producing.
(DD) Security purchased on a delayed delivery basis (note 1).
(WI) Security purchased on a when-issued basis (note 1).
+ The security has a maturity of more than one year, but has variable rate and demand features which qualify it as a short-term security. The rate disclosed is that currently in effect. This rate changes periodically based on market conditions or a specified market index.
See accompanying notes to financial statements.
Statement of Net Assets
June 30, 1998
-------------------------------------------------------------------------------- Assets Investment securities, at market value (cost $154,247,817) (note 1) $165,225,608 Cash 1,450,112 Receivables: Dividends 134,738 Interest 1,483,398 Investments sold 1,004,928 Shares sold 1,654,847 Deferred organization costs (note 1) 117,906 Other assets 3,903 -------------------------------------------------------------------------------- Total assets 171,075,440 -------------------------------------------------------------------------------- Liabilities Payables: Investments purchased 4,850,090 Shares redeemed 215,637 Accrued expenses: Management fees (note 5) 66,150 12b-1 distribution and service fees (notes 1 and 5) 59,676 Other 84,904 Dividends payable 148,728 -------------------------------------------------------------------------------- Total liabilities 5,425,185 -------------------------------------------------------------------------------- Net assets (note 6) $165,650,255 ================================================================================ Class A Shares (note 1) Net assets $117,005,382 Shares outstanding 4,595,899 Net asset value and redemption price per share $ 25.46 Offering price per share (net asset value per share plus maximum sales charge of 5.25% of offering price) $ 26.87 ================================================================================ Class B Shares (note 1) Net assets $ 32,383,611 Shares outstanding 1,268,549 Net asset value, offering and redemption price per share $ 25.53 ================================================================================ Class C Shares (note 1) Net assets $ 14,908,495 Shares outstanding 584,415 Net asset value, offering and redemption price per share $ 25.51 ================================================================================ Class R Shares (note 1) Net assets $ 1,352,767 Shares outstanding 53,270 Net asset value, offering and redemption price per share $ 25.39 ================================================================================ |
12
See accompanying notes to financial statements
Statement of Operations
Year Ended June 30, 1998
--------------------------------------------------------------------------------------------------------------------- Investment Income (note 1) Dividends $ 1,030,764 Interest 3,793,174 --------------------------------------------------------------------------------------------------------------------- Total investment income 4,823,938 --------------------------------------------------------------------------------------------------------------------- Expenses Management fees (note 5) 943,274 12b-1 service fees -- Class A (notes 1 and 5) 245,421 12b-1 distribution and service fees -- Class B (notes 1 and 5) 154,547 12b-1 distribution and service fees -- Class C (notes 1 and 5) 71,825 Shareholders' servicing agent fees and expenses 120,870 Custodian's fees and expenses 84,421 Trustees' fees and expenses (note 5) 13,330 Professional fees 22,033 Shareholders' reports -- printing and mailing expenses 85,865 Federal and state registration fees 83,242 Amortization of deferred organization costs (note 1) 36,000 Other expenses 4,838 --------------------------------------------------------------------------------------------------------------------- Total expenses before expense reimbursement 1,865,666 Expense reimbursement (note 5) (323,541) --------------------------------------------------------------------------------------------------------------------- Net expenses 1,542,125 --------------------------------------------------------------------------------------------------------------------- Net investment income 3,281,813 --------------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain from Investments Net realized gain from investment transactions (notes 1 and 4) 6,299,554 Net change in unrealized appreciation or depreciation of investments 7,014,341 --------------------------------------------------------------------------------------------------------------------- Net gain from investments 13,313,895 --------------------------------------------------------------------------------------------------------------------- Net increase in net assets from operations $ 16,595,708 ===================================================================================================================== |
Statement of Changes in Net Assets
For the Period
Year Ended 8/07/96 to
6/30/98 6/30/97
---------------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 3,281,813 $ 550,380
Net realized gain from investment transactions (notes 1 and 4) 6,299,554 457,166
Net change in unrealized appreciation or depreciation of investments 7,014,341 3,963,451
---------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 16,595,708 4,970,997
---------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (2,448,814) (291,349)
Class B (222,804) (714)
Class C (104,232) (485)
Class R (172,195) (141,518)
From accumulated net realized gains from investment transactions:
Class A (1,444,498) (22)
Class B (193,480) (22)
Class C (90,253) (22)
Class R (120,260) (15,983)
---------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,796,536) (450,115)
---------------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 75,343,559 86,716,680
Net proceeds from shares issued to shareholders due to reinvestment of distributions 3,428,628 105,920
---------------------------------------------------------------------------------------------------------------------
78,772,187 86,822,600
---------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (15,446,129) (851,817)
---------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 63,326,058 85,970,783
---------------------------------------------------------------------------------------------------------------------
Net increase in net assets 75,125,230 90,491,665
Net assets at the beginning of year 90,525,025 33,360
---------------------------------------------------------------------------------------------------------------------
Net assets at the end of year $165,650,255 $90,525,025
=====================================================================================================================
Balance of undistributed net investment income at end of year $ 450,082 $ 116,314
=====================================================================================================================
|
13 See accompanying notes to financial statements.
Notes to Financial Statements
1. General Information and Significant Accounting Policies The Nuveen Balanced Municipal and Stock Fund (the "Fund") is a series of the Nuveen Investment Trust (the "Trust") which was organized as a Massachusetts business trust in 1996. The Trust (and each series within the Trust) is an open- end diversified management investment company registered under the Investment Company Act of 1940. Prior to commencement of operations on August 7, 1996, the Trust had no operations other than those related to organizational matters and the initial capital contribution of $100,080 (of which $33,360 was allocated to the Fund) by Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, for the issuance of shares on July 29, 1996.
The Fund invests in a mix of equities and tax-exempt securities for capital growth, capital preservation and current tax-exempt income. During temporary defensive periods, the Fund may invest any percentage of its assets in temporary investments.
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
Common stocks and other equity-type securities are valued at the last sales price on the national securities exchange or Nasdaq on which such securities are primarily traded; however, securities traded on a national securities exchange or Nasdaq for which there are no transactions on a given day or securities not listed on a national securities exchange or Nasdaq are valued at the most recent bid prices. 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 and/or securities having remaining maturities of 60 days or less when purchased, 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. Any 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 June 30, 1998, the Fund had outstanding when-issued and delayed delivery purchase commitments of $4,722,209.
Investment Income
Dividend income is recorded on the ex-dividend date. 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.
Dividends and Distributions to Shareholders
Tax-exempt net investment income is declared and distributed to shareholders monthly. Net ordinary taxable income and net realized capital gains from investment transactions, if any, are declared and 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 net investment income and net realized capital gains 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 and/or distributions in excess of net realized gains from transactions, where applicable.
Federal Income Taxes
The Fund intends to distribute all of its net investment income and capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal tax provision is required. In addition, the Fund intends to satisfy conditions which will enable interest from Municipal Obligations, which is exempt from regular federal income tax when received by the Fund, to qualify as exempt-interest dividends when distributed to Shareholders of the Fund. All monthly tax-exempt income dividends paid during the fiscal year ended June 30,1998, have been designated Exempt Interest Dividends. Net realized capital gains and ordinary income distributions are subject to federal taxation.
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales
charge and incur an annual 12b-1 service fee. Class A Share purchases of $1
million or more are sold at net asset value without an up-front sales charge but
may be subject to a 1% contingent deferred sales charge ("CDSC") if redeemed
within 18 months of purchase. Class B Shares are sold without a sales charge but
incur annual 12b-1 distribution and service fees. An investor purchasing Class B
Shares agrees to pay a contingent deferred sales charge ("CDSC") of up to 5%
depending upon the length of time the shares are held by the investor (CDSC is
reduced to 0% at the end of six years). Class B Shares convert to Class A Shares
eight years after purchase. Class C Shares are sold without a sales charge but
incur annual 12b-1 distribution and service fees. An investor purchasing Class C
Shares agrees to pay a CDSC of 1% if Class C Shares are redeemed within one year
of purchase. Class R Shares are not subject to any sales charge or 12b-1
distribution or service fees. Class R Shares are available for purchases of over
$1 million and in other limited circumstances.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its
organization and initial registration of shares was deferred and is being
amortized over a 60-month period beginning August 7, 1996 (commencement of
operations). If any of the initial shares of the Fund are redeemed during this
period, the proceeds of the redemption will be reduced by the pro-rata share of
the unamortized organization costs as of the date of redemption.
Derivative Financial Instruments
The Fund may invest in options and futures transactions, which are sometimes
referred to as derivative transactions. 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 June 30, 1998.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of
shares are prorated among the classes based on the relative net assets of each
class. Expenses directly attributable to a class of shares, which presently only
includes 12b-1 distribution and service fees, are recorded to the specific
class.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period.
2. Fund Shares
Transactions in Fund shares were as follows:
Year Ended For the Period
6/30/98 8/07/96 to 6/30/97
----------------------------------------------------
Shares Amount Shares Amount
----------------------------------------------------------------------------------------------------
Shares sold:
Class A 1,308,803 $ 31,922,378 3,490,947 $77,077,576
Class B 1,193,459 29,265,901 89,676 2,064,529
Class C 524,249 12,864,555 67,179 1,548,508
Class R 53,309 1,290,725 300,930 6,026,067
Shares issued to shareholders
due to reinvestment
of distributions:
Class A 125,058 3,001,186 4,721 105,890
Class B 10,810 261,191 -- --
Class C 5,838 140,308 -- --
Class R 1,074 25,943 1 30
----------------------------------------------------------------------------------------------------
3,222,600 78,772,187 3,953,454 86,822,600
----------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (297,703) (7,230,838) (36,344) (818,648)
Class B (24,476) (597,282) (1,337) (30,923)
Class C (13,171) (326,708) (97) (2,246)
Class R (302,461) (7,291,301) -- --
----------------------------------------------------------------------------------------------------
(637,811) (15,446,129) (37,778) (851,817)
----------------------------------------------------------------------------------------------------
Net increase 2,584,789 $ 63,326,058 3,915,676 $85,970,783
====================================================================================================
|
Notes to Financial Statements (continued)
3. Distributions to Shareholders The Fund declared a dividend distribution from its tax-exempt net investment income which was paid on August 3, 1998, to shareholders of record on July 9, 1998, as follows:
------------------------------------------------------------------------------- Dividend per share: Class A $.0435 Class B .0280 Class C .0280 Class R .0485 =============================================================================== |
4. Securities Transactions Purchases and sales (including maturities) of investments in common and preferred stocks, municipal bonds and temporary investments for the fiscal year ended June 30, 1998, were as follows:
------------------------------------------------------------------------------- Purchases: Common and preferred stocks $90,545,656 Municipal bonds 77,914,039 Temporary investments 22,700,000 Sales: Common and preferred stocks 64,982,344 Municipal bonds 43,676,481 Temporary investments 22,600,000 =============================================================================== |
At June 30, 1998, the identified cost of investments owned for federal income tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation aggregated $10,977,791 of which $12,388,795 related to appreciated securities and $1,411,004 related to depreciated securities.
5. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays an annual management fee, payable monthly, which is based upon the average daily net asset value of the Fund as follows:
Average Daily Net Asset Value Management Fee ------------------------------------------------------------------------------- For the first $125 million .7500 of 1% For the next $125 million .7375 of 1 For the next $250 million .7250 of 1 For the next $500 million .7125 of 1 For the next $1 billion .7000 of 1 For net assets over $2 billion .6750 of 1 =============================================================================== |
The Adviser has agreed to waive fees and reimburse expenses through July 31, 1998, in order to prevent total operating expenses (excluding any 12b-1 distribution or service fees and extraordinary expenses) from exceeding .85% of the average daily net asset value of any class of Fund shares. Effective August 1, 1998, the Adviser has agreed to waive fees and reimburse expenses through July 31, 1999, in order to prevent total operating expenses (excluding any 12b-1 distribution or service fees and extraordinary expenses) from exceeding .95% of the average daily net asset value of any class of Fund shares.
The management fee compensates the Adviser for overall investment advisory and administrative services, and general office facilities. The Adviser has entered into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"), of which The John Nuveen Company owns a minority interest, under which ICAP manages the Fund's investment portfolio. ICAP is compensated for its services from the management fee paid to the Adviser. The Fund pays no compensation directly to those of its Trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Fund from the Adviser.
During the fiscal year ended June 30, 1998, John Nuveen & Co. Incorporated (the "Distributor"), a wholly owned subsidiary of The John Nuveen Company, collected sales charges on purchases of Class A Shares of approximately $1,745,700 of which approximately $1,648,800 were paid out as concessions to authorized dealers. The Distributor also received 12b-1 service fees on Class A Shares, substantially all of which were paid to compensate authorized dealers for providing services to shareholders relating to their investments.
During the fiscal year ended June 30, 1998, the Distributor compensated authorized dealers directly with approximately $1,282,200 in commission advances at the time of purchase. To compensate for commissions advanced to authorized dealers, all 12b-1 service fees collected on Class B Shares during the first year following a purchase, all 12b-1 distribution fees on Class B Shares, and all 12b-1 service and distribution fees on Class C Shares during the first year following a purchase are retained by the Distributor. During the fiscal year ended June 30, 1998, the Distributor retained approximately $225,700 in such 12b-1 fees. The remaining 12b-1 fees charged to the Fund were paid to compensate authorized dealers for providing services to shareholders relating to their investments. The Distributor also collected and retained approximately $66,000 of CDSC on share redemptions during the fiscal year ended June 30, 1998.
6. Composition of Net Assets
At June 30, 1998, the Fund had an unlimited number of $.01 par value per share common stock authorized. Net assets consisted of:
--------------------------------------------------------------------------- Capital paid-in $ 149,330,199 Balance of undistributed net investment income 450,082 Accumulated net realized gain from investment transactions 4,892,183 Net unrealized appreciation of investments 10,977,791 --------------------------------------------------------------------------- Net assets $ 165,650,255 =========================================================================== |
7. Investment Composition
The Fund invests in municipal securities which include general obligation, escrowed and revenue bonds. At June 30, 1998, the revenue sources by municipal purpose for these investments, expressed as a percent of total municipal investments, were as follows:
---------------------------------------------------------------------------
Revenue Bonds:
Housing Facilities 17%
Health Care Facilities 13
Lease Rental Facilities 5
Transportation 11
Utilities 9
Educational Facilities 3
Water & Sewer 3
Other 9
General Obligation Bonds 21
Escrowed Bonds 9
---------------------------------------------------------------------------
100%
===========================================================================
|
44% of the long-term and intermediate-term municipal 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, either of which ensure the timely payment of principal and interest in the event of default. Such insurance or escrow, however, does not guarantee the market value of the municipal securities or the value of the Fund's shares. All of the temporary investments in short-term municipal securities have credit enhancements (letters of credit, guarantees or insurance) issued by third party domestic or foreign banks of other institutions.
For additional information regarding each investment security, refer to the Portfolio of Investments of the Fund.
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- ----------------------------
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
June 30, Value Income (a) Gain (Loss) Total Income Gain Total Value Return (b)
-------------------------------------------------------------------------------------------------------------
Class A (8/96)
1998 $23.11 $.67 $2.66 $3.33 $(.61) $(.37) $ (.98) $25.46 14.71%
1997 (c) 20.00 .56 3.02 3.58 (.42) (.05) (.47) 23.11 18.05
Class B (8/96)
1998 23.11 .49 2.67 3.16 (.37) (.37) (.74) 25.53 13.91
1997 (c) 20.00 .40 3.04 3.44 (.28) (.05) (.33) 23.11 17.32
Class C (8/96)
1998 23.10 .49 2.66 3.15 (.37) (.37) (.74) 25.51 13.87
1997 (c) 20.00 .40 3.03 3.43 (.28) (.05) (.33) 23.10 17.27
Class R (8/96)
1998 23.11 .72 2.66 3.38 (.73) (.37) (1.10) 25.39 14.94
1997 (c) 20.00 .61 3.03 3.64 (.48) (.05) (.53) 23.11 18.38
=============================================================================================================
|
Ratios/Supplemental Data
---------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment (a) ment (a) Rate
---------------------------------------------------------------------------------
$117,005 1.36% 2.47% 1.10% 2.73% 87%
79,952 1.58* 2.31* 1.10* 2.79* 32
32,384 2.10 1.71 1.85 1.96 87
2,051 2.22* 1.62* 1.85* 1.99* 32
14,908 2.11 1.71 1.85 1.97 87
1,559 2.29* 1.53* 1.85* 1.97* 32
1,353 1.11 2.73 .85 2.99 87
6,963 2.05* 1.96* .85* 3.16* 32
=================================================================================
|
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses by Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge and are not annualized.
(c) From commencement of class operations as noted.
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of Nuveen Balanced Municipal and Stock Fund:
We have audited the accompanying statement of net assets, including the portfolio of investments, of Nuveen Balanced Municipal and Stock Fund (one of the portfolios constituting the Nuveen Investment Trust (a Massachusetts business trust)), as of June 30, 1998, and the related statement of operations, the statements of changes in net assets and the financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1998, by correspondence with the custodian and brokers. As to securities purchased but not received, we requested confirmation from brokers and, when replies were not received, we carried out alternative auditing procedures. 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 net assets of the Nuveen Balanced Municipal and Stock Fund as of June 30, 1998, and the results of its operations, the changes in its net assets and its financial highlights for the periods indicated thereon in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 17, 1998
Building a Better Portfolio
Can Make You a Successful Investor
Successful investors know that a well-diversified portfolio -- one that balances different types of investments, levels of risk and tax management -- can be the foundation for building and sustaining wealth. That's why Nuveen offers you and your financial adviser a wide range of quality investments that can help you build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring Premier Advisers(SM) including Institutional Capital Corporation, Rittenhouse Financial Services, and Nuveen Advisory Corp. Each brings a specialized expertise in a particular investment style or asset class, time-tested investment strategies and a focus on consistent, long-term performance. With Nuveen's Premier Adviser funds, you have all the advantages of a family of funds plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive, customized investment management solutions to investors with assets of $250,000 or more to invest. A range of actively managed growth, balanced and municipal income-oriented portfolios are available, all based upon a disciplined investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a convenient, attractive alternative to purchasing individual securities. They provide low-cost diversification to reduce risk, experienced, professional security selection and surveillance and daily liquidity at that day's net asset value for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of investment-grade quality municipal bonds. The fund shares are listed and traded on the New York and American stock exchanges. Exchange-traded funds provide the investment convenience, price visibility and liquidity of common stocks.
MuniPreferred(R)
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive tax-free yield for the cash reserves portion of an investment portfolio. MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen dual-class exchange-traded funds and are available for national as well as a wide variety of state-specific portfolios.
Nuveen Family of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and Income
European Value Fund
Growth and Income Stock Fund
Balanced Stock and Bond Fund
Balanced Municipal and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR., APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with investments that withstand the test of time. Today we offer a broad range of quality investments designed for individuals seeking to build and sustain wealth. In fact, more than 1.3 million investors have trusted Nuveen to help them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined long-term investment strategies focused on providing consistent, attractive performance over time -- with moderated risk. We emphasize quality securities carefully chosen through in-depth research, and we follow those securities closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining accumulated wealth, Nuveen offers a wide variety of investments and services to help meet your unique circumstances and financial planning needs. Our equity, balanced, and tax-free income funds, along with our defined portfolios and private asset management, can help you build a better, well-diversified portfolio.
Talk with your financial adviser to learn more about how Nuveen investment products and services can help you. Or call us at (800) 257-8787 for more information, including a prospectus where applicable. Please read that information carefully before investing.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime./TM/
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
NUVEEN
Mutual Funds
June 30, 1998
Annual Report
For investors seeking
long-term growth potential
with a measure of
downside protection.
[PHOTO APPEARS HERE]
Balanced
Stock and
Bond Fund
Highlights
As of June 30, 1998
For Class A shares
Attractive Fund Returns/1/
[BAR CHART APPEARS HERE]
Class A (NAV) Class A (Offer)
One-Year 16.71% 10.58%
Since Inception-8/96 20.52% 17.14%
|
With its focus on long-term growth and a measure of downside protection, the fund provided attractive total returns for the one-year period and since its inception.
Attractive Long-Term Performance/2/
[BAR CHART APPEARS HERE]
Class A (NAV) Class A (Offer)
One-Year 16.68% 10.84%
Five-Year 15.12% 13.88%
Ten-Year 14.51% 13.89%
|
The fund manager boasts an excellent track record of attractive long-term performance.
Portfolio Allocation
[PIE CHART APPEARS HERE]
U.S. Treasury Notes 40% Stocks 58% Cash 2% |
True to its investment objectives,
the fund invested in stocks for
long-term growth and U.S. Treasury
notes for a measure of downside
protection.
Contents
1 Dear Shareholder
3 Report from Your Fund's Adviser
4 Performance Overview
5 Report of Independent Public Accountants
6 Portfolio of Investments
8 Statement of Net Assets
9 Statement of Operations
10 Statement of Changes in Net Assets
11 Notes to Financial Statements
14 Financial Highlights
16 Building Better Portfolios
17 Fund Information
1 Please see the Performance Overview on page four for more information.
2 This chart reflects the performance of the Institutional Capital Balanced Composite, which includes all assets (approximately $738 million as of 6/30/98) that have substantially the same investment objective and policies as the Nuveen Balanced Stock and Bond Fund. The Composite's accounts may experience different investment inflows and outflows than the fund and are not subject to all of the restrictions of the Investment Company Act of 1940 and the Internal Revenue Code that apply to the fund, which could adversely affect fund performance. Investment returns reflect Composite gross-of-fee returns, adjusted for the fund's Class A annual net operating expenses of 1.20%, but not the up-front sales charge. Class B, C, or R investment results would differ due to differing sales charges and operating expenses. This chart does not represent actual fund past performance or predict future fund performance.
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
Wealth takes a lifetime to build. Once achieved, it should be preserved.
I am pleased to report that over the past year the Nuveen Balanced Stock and Bond Fund continued to provide strong returns and attractive growth potential with a measure of downside protection - as the fund was designed to do.
In addition, as you can see from the information on the facing page, the fund remains well-positioned to take advantage of future market opportunities while employing an investment strategy that historically has performed well and has moderated the impact of severe market downturns.
Current Results Backed by a
Proven Record
The solid performance achieved by the Nuveen Balanced Stock and Bond Fund managers inevitably leads to the question: "Can they keep it up?" Since no one can predict the future with certainty, it's important to have confidence in your fund managers' experience, investment approach and the results they've demonstrated through a variety of market conditions over the years.
As Nuveen's Premier Adviser/SM/ for value investing, Institutional Capital Corporation is a highly successful institutional money manager with more than 28 years of experience. For their balanced accounts, they've specialized in combining undervalued midsize and large company stocks that are poised for significant growth with Treasury securities. This strategy allows investors to participate in the growth potential of the stock market while providing stability in periods of uncertainty.
This disciplined, research-oriented approach has paid off for investors, and remains the key investment strategy of the Nuveen Balanced Stock and Bond Fund. On the equity side, the managers start by looking for well-established but undervalued stocks. Then they look for a catalyst, such as a management change, new product, or improved industry outlook, that may help trigger a rise in each stock's price. Generally, the fund only purchases stocks that the managers believe have the potential to generate 15-25% returns over an 18-month period.
These stocks are then combined with intermediate Treasury securities to provide diversification and more consistent performance.
Nuveen's Premier Advisers
Nuveen is dedicated to providing investors access to a team of highly experienced investment managers, each overseeing portfolios within their
"Today, more than ever, you can count on Nuveen for investments designed to produce a well-balanced portfolio that meets your individual goals."
specific areas of expertise. In addition to Institutional Capital, Nuveen Premier Advisers now include Rittenhouse Financial Services, our specialist for growth investing, and Nuveen Advisory Corp., our expert for fixed-income investing. Each of these managers uses a time-tested, research-driven investment strategy to build portfolios of quality securities.
Diversification Can Help You
Build a Better Portfolio
In light of current market conditions, we believe that investors will find diversification to be an increasingly important strategy in the months ahead. An appropriately diversified portfolio - one that balances different types of investments, levels of risk and tax management strategies - can help cushion your portfolio against volatility and enhance your overall return potential.
Many of you have invested in the Nuveen Balanced Stock and Bond Fund because of its value investing orientation and the excellent track record of Institutional Capital. We are pleased to announce that this same disciplined approach is now available in another Nuveen fund - the Nuveen European Value Fund.
With portfolio management by Institutional Capital and a focus on a portfolio of quality, undervalued European companies, this fund can provide an excellent complement to the Balanced Stock and Bond Fund by offering international diversification to reduce risk as well as increased return potential. I encourage you to talk with your financial adviser about how this new fund, along with the Nuveen Rittenhouse Growth Fund and our wide array of tax-free bond funds, can help round out your portfolio and meet your own particular investment needs.
If you would like additional information on the Nuveen European Value Fund, or any of our other funds, contact your financial adviser for an Investor Guide, including a prospectus containing all charges and expenses.
You also may request a prospectus from Nuveen by calling toll-free (800) 257- 8787. Please read this information carefully and discuss it with your financial adviser before you invest.
When seeking quality investments that withstand the test of time, we hope you will continue to think of Nuveen. Today, more than ever, you can count on Nuveen for investments designed to produce a well-balanced portfolio that meets your individual goals. We thank you for your continued confidence in us, and look forward to reporting to you again soon.
Sincerely,
/s/ Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board August 14, 1998 |
Nuveen Balanced Stock and Bond Fund
Report from Your Fund's Adviser
The Institutional Capital investment management team talks about the financial markets and factors that affected fund performance.
"In this environment, we will continue to invest in companies undergoing corporate restructurings, both in the U.S. and Europe."
Over the past year, the economy and the financial markets again defied the experts' consensus.
The conventional wisdom was that the Asian crisis and U.S. company profit warnings that started last fall would result in a slow first half of 1998, with a rebound in confidence and securities prices in the second half of this year. Our own concern was whether the Federal Reserve would have to raise short-term interest rates as the moderating influence of Asia diminished and the U.S. economy picked up steam.
The facts have painted a different picture. Stimulated by lower interest rates, strong employment and a significant drop in energy prices, U.S. consumption has remained quite strong--especially for this late in the economic cycle. Outside the U.S., European companies also began showing strong results. While Asia did slump, its overall impact on the U.S. economy was less severe than feared.
The low inflationary environment and strong economy fueled continued strength in the U.S. equity and fixed-income markets, putting a premium on the quality research needed to find undervalued securities. Staying with our time-tested, value-oriented strategy, we are pleased that the Class A share total return on net asset value of the Nuveen Balanced Stock and Bond Fund was a healthy 16.71% for the year ended June 30, 1998.
Asia Looms Large
Given the lethargy in Japan and reduced growth in China, there will be no quick or easy resolution of Asia's woes anytime soon. Perhaps the only good news is that the deflationary drag from the region should prevent the Fed from raising interest rates and keep the dollar strong for some time.
The central problem in Asia is that massive amounts of capital are now invested in assets that are providing poor returns. This means that non-Asian competitors are now faced with weak pricing conditions as Asian companies seek cash flow to stay solvent. Even if Asian trade with the U.S. improves, a strengthening dollar would make it difficult for Asian companies to significantly increase their revenues in the near-term.
While we believe these problems can be solved, it will take time.
Unrealistic Valuations in Some Sectors
The U.S. stock market is now characterized by high valuations--but given the lack of alternatives, low interest rates and the strength of the dollar, this is understandable (if not totally justifiable). However, there is a degree of speculation now in the U.S. market, as evidenced particularly in some Internet- related stocks, that makes us uneasy. While we believe the market values of many of these high flyers will be adjusted, we also think that our disciplined, catalyst-driven, value-investing approach will continue to uncover companies that offer good prospects at attractive prices.
Outlook for the Second Half of 1998
Our view for the remainder of the year is that:
. The U.S. economy will slow as a result of high inventories, weaker exports and a downturn in capital goods manufacturing.
. Corporate profits overall will be up modestly, and less than expected.
. The Fed will probably not raise interest rates as a result of the financial situation in Asia, and the fragile state of other dollar-linked economies such as Russia.
. The domestic merger and acquisition boom will continue, but the impact on overall market prices will diminish.
. U.S. stock market averages will gain modestly; European markets will see even larger returns.
Our Strategy
In this environment, we will continue to invest in companies undergoing corporate restructurings, both in the U.S. and Europe. This means looking for stocks of companies that may have performed poorly in the recent past, but that have attractive, underutilized assets or a newly focused management team. Some portfolio holdings that highlight this strategy include Citicorp, News Corp. and Raytheon, just to name a few.
We believe there may be more good news coming from these companies and others like them in the fund's portfolio. We are committed to uncovering additional opportunities in the months ahead.
Nuveen Balanced Stock and Bond Fund
Performance Overview
As of June 30, 1998
Top Ten Stock Holdings/1/
News Corp. Ltd. Sponsored ADR 2.83% -------------------------------------------------- NationsBank Corporation 2.26% -------------------------------------------------- American Home Products 2.24% -------------------------------------------------- Hoechst AG Sponsored ADR 2.14% -------------------------------------------------- Philips Electronics N.V. 2.05% -------------------------------------------------- Citicorp 2.01% -------------------------------------------------- Burlington Northern Santa Fe Corporation 1.82% -------------------------------------------------- U.S.A. Waste Services Inc. 1.75% -------------------------------------------------- General Motors Corporation 1.75% -------------------------------------------------- International Business Machines Corporation 1.69% ================================================== |
Stock Diversification
[PIE CHART APPEARS HERE]
Transportation 8%
Consumer Services 12%
Capital Spending 8%
Capital Equipment/Technology 9%
Consumer Staples 9%
Energy 7%
Retail 4%
Basic Industries 10%
Consumer Durables 3%
Health Care 14%
Utilities 2%
Financial 14%
================================
|
Portfolio Allocation
[PIE CHART APPEARS HERE]
U.S. Treasury Notes 40%
Cash 2%
Stocks 58%
================================
|
Fund Highlights Share Price A B C R ================================================================================================ Inception Date 8/96 8/96 8/96 8/96 ------------------------------------------------------------------------------------------------ Net Asset Value $26.39 $26.39 $26.39 $ 26.39 ================================================================================================ ================================================================================================ Total Net Assets ($000) $87,525 ------------------------------------------------------------------------------------------------ Fixed Income Average Duration 5.2 Years ------------------------------------------------------------------------------------------------ Average Market Capitalization of Stocks 30.67 ------------------------------------------------------------------------------------------------ Average P/E of Stocks (trailing 12 months) 17.6 ------------------------------------------------------------------------------------------------ Number of Stocks 45 ================================================================================================ |
Annualized Total Return/2/
A (On NAV) A (On Offer) B C R
================================================================================================
Year-to-Date 10.27% 4.46% 9.86% 9.86% 10.36%
------------------------------------------------------------------------------------------------
One-Year 16.71% 10.58% 15.86% 15.86% 16.99%
------------------------------------------------------------------------------------------------
Since Inception 20.52% 17.14% 19.65% 19.65% 20.82%
================================================================================================
|
Yield Distribution Rate 2.95% 2.80% 2.20% 2.20% 3.20% SEC 30-Day Yield 2.23% 2.11% 1.48% 1.48% 2.48% ================================================================================================ |
Index Comparison/3/
[LINE CHART APPEARS HERE]
Nuveen Balanced Stock Nuveen Balanced Stock Balanced Index Lehman Brothers
and Bond Fund (NAV) and Bond Fund (Offer) (60% S&P/40% LB10) S&P 500 10-Year Treasury Index
8/96 10,000 9,475 10,000 10,000 10,000
6/97 12,310 11,664 12,463 13,803 10,650
6/98 14,364 13,610 15,115 17,968 11,541
|
. S&P 500 $17,968 . Balance Index (60% S&P/40% LB10) $15,115 . Lehman Brothers 10-Year Treasury Index $11,541 . Nuveen Balanced Stock and Bond Fund (NAV) $14,364 . Nuveen Balanced Stock and Bond Fund (Offer) $13,610 |
Past performance is not predictive of future results.
1 The companies listed above represent their respective percentages as of 6/30/98. Over time, the fund's holdings and their percentages will vary.
2 Returns reflect differences in sales charges and expenses among the share classes. Class A shares have a 5.25% maximum sales charge. Class B shares have a CDSC that begins at 5% for redemptions during the first year after purchase and declines periodically to 0% over the following six years, which is not reflected in the return figures. Class B shares convert to Class A shares after eight years. Class C shares have a 1% CDSC for redemptions within one year, which is not reflected in the return figures.
3 The Index Comparison shows the change in value of a $10,000 investment in the Class A shares of the Nuveen fund compared with the Standard and Poor's 500 Index, a Balanced Index and the Lehman Brothers Intermediate Treasury Index. The Balanced Index is comprised of a 60% weighting in the S&P 500 Index and 40% in the Lehman Brothers Intermediate Treasury Index. The indexes do not reflect any initial or ongoing expenses. The Nuveen fund returns depicted in the chart reflect the initial maximum sales charge applicable to Class A shares (5.25%) and all ongoing fund expenses.
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of Nuveen Balanced Stock and Bond Fund:
We have audited the accompanying statement of net assets, including the portfolio of investments, of Nuveen Balanced Stock and Bond Fund (one of the portfolios constituting the Nuveen Investment Trust (a Massachusetts business trust)), as of June 30, 1998, and the related statement of operations, statements of changes in net assets and the financial highlights for the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1998, by correspondence with the custodian and brokers. As to securities purchased but not received, we requested confirmation from brokers and, when replies were not received, we carried out alternative auditing procedures. 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 net assets of the Nuveen Balanced Stock and Bond Fund as of June 30, 1998, and the results of its operations, the changes in its net assets, and its financial highlights for the periods indicated thereon in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 17, 1998
Portfolio of Investments Nuveen Balanced Stock and Bond Fund June 30, 1998
Shares Description Market Value
-------------------------------------------------------------------------------
COMMON STOCKS - 54.3%
Basic Industries - 5.5%
11,100 Akzo Nobel N.V. Sponsored ADR $ 1,230,712
18,200 E.I. du Pont de Nemours and Company Ltd. 1,358,175
21,098 IMC Global Inc. 635,577
18,050 Reynolds Metals Company 1,009,672
21,450 UPM-Kymmene Oyj Corporation Sponsored ADR 590,349
-------------------------------------------------------------------------------
Capital Equipment/Technology - 5.3%
27,600 First Data Corporation 919,425
12,750 International Business Machines Corporation 1,463,859
15,850 NCR Corporation # 515,125
20,850 Royal Philips Electronics N.V. 1,772,250
-------------------------------------------------------------------------------
Capital Spending - 4.5%
13,400 B.F. Goodrich Company 664,975
17,850 Case Corporation 861,262
10,300 Northrop Grumman Corporation 1,062,187
22,907 Raytheon Company - Class A 1,320,015
-------------------------------------------------------------------------------
Consumer Durables - 1.7%
22,600 General Motors Corporation 1,509,963
-------------------------------------------------------------------------------
Consumer Services - 4.3%
31,400 The Dun & Bradstreet Corporation 1,134,325
47,300 Host Marriot Corporation # 842,531
5,100 Starwood Hotels & Resorts 246,394
30,600 U.S.A. Waste Services, Inc. # 1,510,875
-------------------------------------------------------------------------------
Consumer Staples - 5.4%
23,800 Fort James Corporation 1,059,100
27,000 Hasbro, Inc. 1,061,437
37,100 Philip Morris Companies, Inc. 1,460,812
27,700 Seagram Company Ltd. 1,133,969
-------------------------------------------------------------------------------
Energy - 3.7%
19,120 Elf Aquitaine SA Sponsored ADR 1,357,520
14,700 Schlumberger Limited 1,004,194
24,500 Unocal Corporation 875,875
-------------------------------------------------------------------------------
Financials - 8.2%
9,900 Bankers Trust Corporation 1,149,019
17,300 CIGNA Corporation 1,193,700
11,600 Citicorp 1,731,300
|
Shares Description Market Value
-----------------------------------------------------------------------------------------------------
Financials (continued)
23,300 Household International, Inc. $1,159,175
25,500 NationsBank Corporation 1,950,750
-----------------------------------------------------------------------------------------------------
Health Care--7.8%
37,450 American Home Products Corporation 1,938,038
20,500 Baxter International, Inc. 1,103,156
37,200 Hoechst AG Sponsored ADR 1,846,050
17,300 Humana, Inc. # 539,544
9,300 St. Jude Medical, Inc. # 342,356
32,400 Tenet Healthcare Corporation # 1,012,500
-----------------------------------------------------------------------------------------------------
Retail--2.1%
5,500 Circuit City Stores 257,813
10,100 Consolidated Stores Corporation # 366,125
22,900 Federated Department Stores, Inc. # 1,232,306
-----------------------------------------------------------------------------------------------------
Transportation--4.6%
12,550 AMR Corporation # 1,044,788
16,050 Burlington Northern Santa Fe Corporation 1,575,909
49,700 Canadian Pacific Limited 1,410,238
-----------------------------------------------------------------------------------------------------
Utilities--1.2%
8,500 AT&T Corp. 485,563
12,800 Bell Atlantic Corporation 584,000
-----------------------------------------------------------------------------------------------------
Total Common Stocks--(cost $42,102,594) 47,522,908
-----------------------------------------------------------------------------------------
PREFERRED STOCKS--2.8%
86,600 News Corporation Limited Sponsored ADR 2,446,450
-----------------------------------------------------------------------------------------------------
Total Preferred Stocks--(cost $1,609,075) 2,446,450
-----------------------------------------------------------------------------------------
Principal
Amount Description Market Value
-----------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--39.4%
$ 3,735,000 8.500%, 2/15/00 3,904,244
4,530,000 7.500%, 5/15/02 4,834,362
3,885,000 5.750%, 8/15/03 3,926,278
2,890,000 7.875%, 11/15/04 3,245,831
3,780,000 6.500%, 5/15/05 3,990,263
10,910,000 7.000%, 7/15/06 11,919,176
2,295,000 7.250%, 5/15/16 2,689,453
-----------------------------------------------------------------------------------------------------
Total U.S. Treasury Notes--(cost $33,116,328) 34,509,607
--------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--2.2%
1,900,000 Pitney Bowes, Inc., Commercial Paper, effective yield of 6.17%, 7/01/98 1,900,000
-----------------------------------------------------------------------------------------------------
Total Short-Term Investments--(cost $1,900,000) 1,900,000
--------------------------------------------------------------------------------------
Total Investments--(cost $78,727,997)--98.7% 86,378,965
--------------------------------------------------------------------------------------
Other Assets Less Liabilities--1.3% 1,146,273
--------------------------------------------------------------------------------------
Net Assets--100% $87,525,238
--------------------------------------------------------------------------------------
|
# Non-income producing.
See accompanying notes to financial statements.
Statement of Net Assets June 30, 1998
-------------------------------------------------------------------------------------------------------------------------- Assets Investment securities, at market value (cost $78,727,997) (note 1) $86,378,965 Cash 127,776 Receivables: Dividends and interest 774,334 Investments sold 625,051 Shares sold 359,650 Deferred organization costs (note 1) 118,691 Other assets 3,181 -------------------------------------------------------------------------------------------------------------------------- Total assets 88,387,648 -------------------------------------------------------------------------------------------------------------------------- Liabilities Payables: Investments purchased 61,116 Shares redeemed 61,448 Accrued expenses: Management fees (note 4) 22,288 12b-1 distribution and service fees (notes 1 and 4) 25,898 Other 72,668 Dividends payable 618,992 -------------------------------------------------------------------------------------------------------------------------- Total liabilities 862,410 -------------------------------------------------------------------------------------------------------------------------- Net assets (note 5) $87,525,238 ========================================================================================================================== Class A Shares (note 1) Net assets $69,614,035 Shares outstanding 2,637,989 Net asset value and redemption price per share $ 26.39 Offering price per share (net asset value per share plus maximum sales charge of 5.25% of offering price) $ 27.85 ========================================================================================================================== Class B Shares (note 1) Net assets $10,356,139 Shares outstanding 392,477 Net asset value, offering and redemption price per share $ 26.39 ========================================================================================================================== Class C Shares (note 1) Net assets $ 4,141,789 Shares outstanding 156,924 Net asset value, offering and redemption price per share $ 26.39 ========================================================================================================================== Class R Shares (note 1) Net assets $ 3,413,275 Shares outstanding 129,355 Net asset value, offering and redemption price per share $ 26.39 ========================================================================================================================== |
See accompanying notes to financial statements.
Statement of Operations Year Ended June 30, 1998
------------------------------------------------------------------------------------------ Investment Income (note 1) Dividends $ 815,163 Interest 2,443,369 ------------------------------------------------------------------------------------------ Total investment income 3,258,532 ------------------------------------------------------------------------------------------ Expenses Management fees (note 4) 586,832 12b-1 service fees - Class A (notes 1 and 4) 159,557 12b-1 distribution and service fees - Class B (notes 1 and 4) 61,772 12b-1 distribution and service fees - Class C (notes 1 and 4) 24,924 Shareholders' servicing agent fees and expenses 95,583 Custodian's fees and expenses 64,069 Trustees' fees and expenses (note 4) 9,227 Professional fees 18,174 Shareholders' reports - printing and mailing expenses 71,086 Federal and state registration fees 77,974 Amortization of deferred organization costs (note 1) 36,000 Other expenses 3,124 ------------------------------------------------------------------------------------------ Total expenses before expense reimbursement 1,208,322 Expense reimbursement (note 4) (296,989) ------------------------------------------------------------------------------------------ Net expenses 911,333 ------------------------------------------------------------------------------------------ Net investment income 2,347,199 ------------------------------------------------------------------------------------------ Realized and Unrealized Gain from Investments Net realized gain from investment transactions (notes 1 and 3) 4,988,412 Net change in unrealized appreciation or depreciation of investments 4,596,358 ------------------------------------------------------------------------------------------ Net gain from investments 9,584,770 ------------------------------------------------------------------------------------------ Net increase in net assets from operations $11,931,969 ========================================================================================== |
See accompanying notes to financial statements.
Statement of Changes in Net Assets
Year Ended For the Period
6/30/98 8/07/96 to 6/30/97
-----------------------------------------------------------------------------------------------------------------
Operations
Net investment income $ 2,347,199 $ 461,143
Net realized gain from investment transactions
(notes 1 and 3) 4,988,412 529,537
Net change in unrealized appreciation or depreciation
of investments 4,596,358 3,054,610
-----------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations 11,931,969 4,045,290
-----------------------------------------------------------------------------------------------------------------
Distributions to Shareholders (note 1)
From undistributed net investment income:
Class A (1,955,711) (320,023)
Class B (165,258) (2,239)
Class C (64,225) (3,396)
Class R (175,931) (116,780)
From accumulated net realized gains from investment transactions:
Class A (1,410,980) (43)
Class B (120,791) (43)
Class C (50,758) (43)
Class R (204,679) (25,820)
-----------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (4,148,333) (468,387)
-----------------------------------------------------------------------------------------------------------------
Fund Share Transactions (note 2)
Net proceeds from sale of shares 28,460,346 62,071,093
Net proceeds from shares issued to shareholders
due to reinvestment of distributions 3,182,983 15,990
-----------------------------------------------------------------------------------------------------------------
31,643,329 62,087,083
-----------------------------------------------------------------------------------------------------------------
Cost of shares redeemed (16,266,187) (1,332,886)
-----------------------------------------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions 15,377,142 60,754,197
-----------------------------------------------------------------------------------------------------------------
Net increase in net assets 23,160,778 64,331,100
Net assets at the beginning of period 64,364,460 33,360
-----------------------------------------------------------------------------------------------------------------
Net assets at the end of period $87,525,238 $64,364,460
=================================================================================================================
Balance of undistributed net investment income at end of period $ 4,779 $ 18,705
=================================================================================================================
|
See accompanying notes to financial statements.
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen Balanced Stock and Bond Fund (the "Fund") is a series of the Nuveen Investment Trust (the "Trust") which was organized as a Massachusetts business trust in 1996. The Trust (and each series within the Trust) is an open-end diversified management investment company registered under the Investment Company Act of 1940. Prior to commencement of operations on August 7, 1996, the Trust had no operations other than those relating to organizational matters and the initial capital contribution of $100,080 (of which $33,360 was allocated to the Fund) by Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, for the issuance of shares on July 29, 1996.
The Fund invests in a mix of equities, taxable bonds and cash equivalents for capital growth, capital preservation and current income. During temporary defensive periods, the Fund may invest any percentage of its assets in temporary investments.
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
Common stocks and other equity-type securities are valued at the last sales price on the national securities exchange or Nasdaq on which such securities are primarily traded; however, securities traded on a national securities exchange or Nasdaq for which there are no transactions on a given day or securities not listed on a national securities exchange or Nasdaq are valued at the most recent bid prices. Debt securities are valued by a pricing service that utilizes electronic data processing techniques to determine values when such values are believed to more accurately reflect the fair market value of such securities; otherwise, actual sale or bid prices are used. Any securities or other assets for which market quotations are not readily available are valued at fair value as determined in good faith by the Board of Trustees. Debt securities having remaining maturities of 60 days or less when purchased are valued by the amortized cost method when the Board of Trustees determines that the fair market value of such securities is their amortized cost.
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. Any 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 June 30, 1998, the Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is determined on the basis of interest accrued, adjusted for accretion of discounts.
Dividends and Distributions to Shareholders
Net investment income is declared and distributed to shareholders quarterly. Net realized capital gains from investment transactions, if any, are declared and 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 net investment income and net realized capital gains 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 and/or distributions in excess of net realized gains from investment transactions, where applicable.
Federal Income Taxes
The Fund intends to distribute all taxable income and capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal tax provision is required.
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales charge and incur an annual 12b-1 service fee. Class A Share purchases of $1 million or more are sold at net asset value without an up-front sales charge but may be subject to a 1%
Notes to Financial Statements (continued)
contingent deferred sales charge ("CDSC") if redeemed within 18 months of purchase. Class B Shares are sold without a sales charge but incur annual 12b-1 distribution and service fees. An investor purchasing Class B Shares agrees to pay a CDSC of up to 5% depending upon the length of time the shares are held by the investor (CDSC is reduced to 0% at the end of six years). Class B Shares convert to Class A Shares eight years after purchase. Class C Shares are sold without a sales charge but incur annual 12b-1 distribution and service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1% if Class C Shares are redeemed within one year of purchase. Class R Shares are not subject to any sales charge or 12b-1 distribution or service fees. Class R Shares are available for purchases of over $1 million and in other limited circumstances.
Derivative Financial Instruments
The Fund may invest in options and futures transactions, which are sometimes referred to as derivative transactions. 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 June 30, 1998.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of shares are prorated among the classes based on the relative net assets of each class. Expenses directly attributable to a class of shares, which presently only includes 12b-1 distribution and service fees, are recorded to the specific class.
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.
Deferred Organization Costs
The Fund's share of costs incurred by the Trust in connection with its organization and initial registration of shares was deferred and is being amortized over a 60-month period beginning August 7, 1996 (commencement of operations). If any of the initial shares of the Fund are redeemed during this period, the proceeds of the redemption will be reduced by the pro-rata share of the unamortized organization costs as of the date of redemption.
2. Fund Shares
Transactions in Fund shares were as follows:
For the Period
Year ended 6/30/98 8/07/96 to 6/30/97
---------------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------
Shares sold:
Class A 519,941 $13,025,786 2,433,860 $55,396,538
Class B 372,091 9,257,698 26,837 638,169
Class C 124,310 3,141,845 40,678 949,886
Class R 120,833 3,035,017 253,630 5,086,500
Shares issued to shareholders due to
reinvestment of distributions:
Class A 116,290 2,853,684 723 15,981
Class B 6,908 169,109 -- --
Class C 1,846 45,583 -- --
Class R 4,668 114,607 -- 9
------------------------------------------------------------------------------------------------------------------------
1,266,887 31,643,329 2,755,728 62,087,083
------------------------------------------------------------------------------------------------------------------------
Shares redeemed:
Class A (376,287) (9,460,805) (56,955) (1,324,519)
Class B (13,633) (346,082) (143) (3,405)
Class C (10,327) (264,621) -- (11)
Class R (249,979) (6,194,679) (214) (4,951)
------------------------------------------------------------------------------------------------------------------------
(650,226) (16,266,187) (57,312) (1,332,886)
------------------------------------------------------------------------------------------------------------------------
Net increase 616,661 $ 15,377,142 2,698,416 $60,754,197
========================================================================================================================
|
3. Securities Transactions
Purchases and sales (including maturities) of investment securities, U.S. government obligations and short-term investments for the fiscal year ended June 30, 1998, were as follows:
-------------------------------------------------------------------------------- Purchases: Investment securities $ 67,354,632 U.S. government obligations 64,984,744 Short-term investments 344,203,611 Sales: Investment securities 53,728,744 U.S. government obligations 63,171,554 Short-term investments 347,295,731 ================================================================================ |
At June 30, 1998, the identified cost of investments owned for federal income tax purposes was the same as the cost for financial reporting purposes.
Net unrealized appreciation aggregated $7,650,968 of which $8,654,944 related to appreciated securities and $1,003,976 related to depreciated securities.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with the Adviser, the Fund pays an annual management fee, payable monthly, which is based upon the average daily net asset value of the Fund as follows:
Average Daily Net Asset Value Management Fee -------------------------------------------------------------------------------- For the first $125 million .7500 of 1% For the next $125 million .7375 of 1 For the next $250 million .7250 of 1 For the next $500 million .7125 of 1 For the next $1 billion .7000 of 1 For net assets over $2 billion .6750 of 1 ================================================================================ |
The Adviser has agreed to waive fees and reimburse expenses through July 31, 1998, in order to prevent total operating expenses (excluding any 12b-1 distribution or service fees and extraordinary expenses) from exceeding .85% of the average daily net asset value of any class of Fund shares. Effective August 1, 1998, the Adviser has agreed to waive fees and reimburse expenses through July 31, 1999, in order to prevent total operating expenses (excluding any 12b-1 distribution or service fees and extraordinary expenses) from exceeding .95% of the average daily net asset value of any class of Fund shares.
The management fee compensates the Adviser for overall investment advisory and administrative services, and general office facilities. The Adviser has entered into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"), of which The John Nuveen Company holds a minority interest, under which ICAP manages the Fund's investment portfolio. ICAP is compensated for its services from the management fee paid to the Adviser. The Fund pays no compensation directly to those of its Trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Fund from the Adviser.
During the fiscal year ended June 30, 1998, John Nuveen & Co. Incorporated (the "Distributor") collected sales charges on purchases of Class A Shares of approximately $506,500 of which approximately $479,500 were paid out as concessions to authorized dealers. The Distributor also received 12b-1 service fees on Class A Shares, substantially all of which were paid to compensate authorized dealers for providing services to shareholders relating to their investments.
During the fiscal year ended June 30, 1998, the Distributor compensated authorized dealers directly with approximately $401,100 in commission advances at the time of purchase. To compensate for commissions advanced to authorized dealers, all 12b-1 service fees collected on Class B Shares during the first year following a purchase, all 12b-1 distribution fees on Class B Shares, and all 12b-1 service and distribution fees on Class C Shares during the first year following a purchase are retained by the Distributor. During the fiscal year ended June 30, 1998, the Distributor retained approximately $85,700 in such 12b- 1 fees. The remaining 12b-1 fees charged to the Fund were paid to compensate authorized dealers for providing services to shareholders relating to their investments. The Distributor also collected and retained approximately $67,400 of CDSC on share redemptions during the fiscal year ended June 30, 1998.
5. Composition of Net Assets At June 30, 1998, the Fund had unlimited $.01 par value per share common stock authorized. Net assets consisted of:
-------------------------------------------------------------------------------- Capital paid-in $76,164,699 Balance of undistributed net investment income 4,779 Accumulated net realized gain from investment transactions 3,704,792 Net unrealized appreciation of investments 7,650,968 -------------------------------------------------------------------------------- Net assets $87,525,238 ================================================================================ |
Financial Highlights
Selected data for a share outstanding throughout each period is as follows:
Class (Inception Date) Investment Operations Less Distributions
---------------------------------- ------------------------------
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
June 30, Value Income (a) Gain (Loss) Total Income Gain Total Value Return(b)
-------------------------------------------------------------------------------------------------------------------------------
Class A (8/96)
1998 $23.84 $.77 $3.11 $3.88 $(.76) $(.57) $(1.33) $26.39 16.71%
1997 (c) 20.00 .70 3.66 4.36 (.42) (.10) (.52) 23.84 22.04
Class B (8/96)
1998 23.84 .59 3.10 3.69 (.57) (.57) (1.14) 26.39 15.86
1997 (c) 20.00 .46 3.75 4.21 (.27) (.10) (.37) 23.84 21.26
Class C (8/96)
1998 23.84 .59 3.10 3.69 (.57) (.57) (1.14) 26.39 15.86
1997 (c) 20.00 .53 3.68 4.21 (.27) (.10) (.37) 23.84 21.26
Class R (8/96)
1998 23.84 .83 3.11 3.94 (.82) (.57) (1.39) 26.39 16.99
1997 (c) 20.00 .61 3.80 4.41 (.47) (.10) (.57) 23.84 22.31
===============================================================================================================================
|
Ratios/Supplemental Data
-------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment (a) ment (a) Rate
-------------------------------------------------------------------------------
$69,614 1.48% 2.68% 1.10% 3.06% 155%
56,686 1.71* 2.78* 1.10* 3.39* 52
10,356 2.24 1.93 1.85 2.32 155
646 2.49* 1.59* 1.85* 2.23* 52
4,142 2.24 1.92 1.85 2.31 155
980 2.31* 2.07* 1.85* 2.53* 52
3,413 1.23 2.94 .85 3.32 155
6,052 2.29* 1.68* .85* 3.12* 52
===============================================================================
|
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses by Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge and are not annualized.
(c) From commencement of class operations as noted.
Building a Better Portfolio
Can Make You a Successful Investor
Successful investors know that a well-diversified portfolio - one that balances different types of investments, levels of risk and tax management - can be the foundation for building and sustaining wealth. That's why Nuveen offers you and your financial adviser a wide range of quality investments that can help you build a better portfolio in the pursuit of your financial goals.
Mutual Funds
Nuveen offers a family of equity, balanced and municipal bond funds featuring Premier Advisers/SM/ including Institutional Capital Corporation, Rittenhouse Financial Services, and Nuveen Advisory Corp. Each brings a specialized expertise in a particular investment style or asset class, time-tested investment strategies and a focus on consistent, long-term performance. With Nuveen's Premier Adviser funds, you have all the advantages of a family of funds plus the benefits of specialized investment expertise.
Private Asset Management
Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive, customized investment management solutions to investors with assets of $250,000 or more to invest. A range of actively managed growth, balanced and municipal income-oriented portfolios are available, all based upon a disciplined investment philosophy.
Defined Portfolios
Nuveen Defined Portfolios are fixed portfolios of quality securities that are a convenient, attractive alternative to purchasing individual securities. They provide low-cost diversification to reduce risk, experienced, professional security selection and surveillance and daily liquidity at that day's net asset value for quick access to your assets.
Exchange-Traded Funds
Nuveen Exchange-Traded Funds offer investors actively managed portfolios of investment-grade quality municipal bonds. The fund shares are listed and traded on the New York and American stock exchanges. Exchange-traded funds provide the investment convenience, price visibility and liquidity of common stocks.
MuniPreferred/R/
Nuveen MuniPreferred offers investors a AAA rated investment with an attractive tax-free yield for the cash reserves portion of an investment portfolio. MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen dual-class exchange-traded funds and are available for national as well as a wide variety of state-specific portfolios.
Nuveen Family
of Mutual Funds
Nuveen offers a variety of funds designed to help you reach your financial
goals.
Growth
Nuveen Rittenhouse Growth Fund
Growth and
Income
European Value Fund
Growth and
Income Stock Fund
Balanced Stock
and Bond Fund
Balanced Municipal
and Stock Fund
Tax-Free Income
National Funds
Long-Term
Insured
Intermediate-Term
Limited-Term
State Funds
Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Virginia
Wisconsin
Fund Information
Board of Trustees
James E. Bacon
Anthony T. Dean
William T. Kissick
Thomas E. Leafstrand
Robert H. Lyon
Timothy R. Schwertfeger
Sheila W. Wellington
Fund Manager
Nuveen Institutional Advisory Corp.
333 West Wacker Drive
Chicago, IL 60606
Fund SubAdviser
Institutional Capital Corporation
225 West Wacker Drive
Chicago, Illinois 60606
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 Public Accountants
Arthur Andersen LLP
Chicago, IL
Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR., APPEARS HERE]
Photo of John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with investments that withstand the test of time. Today we offer a broad range of quality investments designed for individuals seeking to build and sustain wealth. In fact, more than 1.3 million investors have trusted Nuveen to help them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined long-term investment strategies focused on providing consistent, attractive performance over time -- with moderated risk. We emphasize quality securities carefully chosen through in-depth research, and we follow those securities closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining accumulated wealth, Nuveen offers a wide variety of investments and services to help meet your unique circumstances and financial planning needs. Our equity, balanced, and tax-free income funds, along with our defined portfolios and private asset management, can help you build a better, well-diversified portfolio.
Talk with your financial adviser to learn more about how Nuveen investment products and services can help you. Or call us at (800) 257-8787 for more information, including a prospectus where applicable. Please read that information carefully before investing.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime./TM/
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
NUVEEN
Growth and Income
Mutual Funds
June 30, 1998
Annual Report
For investors seeking
long-term growth potential and
international diversification.
[PHOTO APPEARS HERE]
European
Value Fund
Dear Shareholder
[PHOTO OF TIMOTHY R. SCHWERTFEGER APPEARS HERE]
Timothy R. Schwertfeger
Chairman of the Board
We are pleased to report to you on the Nuveen European Value Fund for the period since its start of operations at the end of May through its fiscal year end in June.
The fund features the value investing expertise of Institutional Capital Corporation -- Nuveen's Premier Adviser(SM) for value investing. Institutional Capital has developed a unique stock selection process that seeks to identify stocks of established, well-known European companies offering exceptional relative value and attractive growth potential. The portfolio managers analyze stocks from a universe of large and midsize European companies, using proprietary quantitative valuation models to determine which of these stocks appear to be undervalued in today's market. Based on a rigorous assessment of each company's prospects, they then look for a "catalyst" that could be the key to unlocking hidden value and triggering price appreciation. This catalyst may be as simple as an anticipated change in management, or as complex as a fundamentally improved industry out look. Once selected, the stocks are monitored closely and replaced if they reach their target value, their prospects for growth change or they become less attractive relative to other portfolio candidates. This disciplined, research-oriented approach has paid off for investors, and is the key investment strategy of the Nuveen European Value Fund.
The Value Added by
Nuveen's Premier Advisers(SM)
Nuveen has assembled a team of highly experienced investment managers, each overseeing portfolios within their specific areas of expertise. In addition to Institutional Capital, Nuveen Premier Advisers now include Rittenhouse Financial Services, our specialist for growth investing and Nuveen Advisory Corp., our expert in tax-free investing. Each of these managers brings a specialized expertise in a particular investment style or asset class, time-tested investment strategies and a focus on long-term performance.
Diversification: A Key Element
to a Better Portfolio
Given recent volatility in the stock market, we believe that investors will
"Today, more than ever, you can count on Nuveen for investments designed to produce a well-balanced portfolio that meets your individual goals."
find diversification to be an increasingly important strategy in the months ahead. An appropriately diversified portfolio -- one that balances different types of investments, levels of risk and tax management -- can help cushion your portfolio against volatility and enhance your overall return potential.
Many of you have invested in the Nuveen European Value Fund because of its value-investing orientation and the excellent track record of its Premier Adviser. This same disciplined approach is also available in three other Nuveen funds managed by Institutional Capital -- the Nuveen Growth and Income Stock Fund, Nuveen Balanced Stock and Bond Fund, and Nuveen Balanced Municipal and Stock Fund. We encourage you to talk with your financial adviser about how these and other Nuveen funds, including the Nuveen Rittenhouse Growth Fund and a wide array of tax-free municipal bond funds, can help round out your portfolio and meet your particular investment needs.
If you would like additional information on these or any of Nuveen's other funds, contact your financial adviser for a prospectus. You also may request a prospectus from Nuveen by calling (800) 257-8787. Please read the information carefully and discuss it with your financial adviser before you invest.
When seeking quality investments that withstand the test of time, we hope you will continue to think of Nuveen. Today, more than ever, you can count on Nuveen for investments designed to produce a well-balanced portfolio that meets your individual goals. We thank you for your continued confidence in us, and look forward to reporting to you again soon.
Sincerely,
/s/ Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board August 14, 1998 |
Nuveen European Value Fund
Report from the Fund's Adviser
The portfolio management team at Institutional Capital Corporation talks about the European financial markets and provides an outlook for the coming year.
[PICTURES OF FLAGS APPEAR HERE]
Netherlands
France
Germany
United Kingdom
During June, world markets including Europe retreated somewhat after posting returns of more than 20% during the first five months of the year. Although one month is not sufficient time to accurately assess the performance of a long-term investment, preliminary results show that during the one-month period between the fund's inception and its fiscal year-end (May 29 through June 30), its total return was down slightly, with a -0.59% return for the period. Despite a slow first month, we believe that European stocks offer exceptional value. In fact, European stock markets have been among the world's best-performing markets over the past 18 months.
One key reason for the strong longer-term performance is that the economic landscape in Europe is shaping up to be quite favorable for equity investments. Many economists believe that building a common Europe is a necessity, as Europe is now caught between an ultra-competitive U.S. economy with higher productivity, and a more nimble and currency-deflated Asia. With strong management in the United States and low labor costs and excellent productivity in Asia, Europe cannot continue to do business its own way and expect to be competitive. As a result, long-term interest rates have been declining in Europe, which in turn has driven down financing costs for European corporations and has also made equities increasingly attractive relative to fixed-income investments.
Another important reason for the recent growth of the European markets is the anticipation of the European Monetary Union (EMU), which will create a larger, more efficient market. The advent of the EMU will result in an integrated market with one currency, a unified marketplace with a population of approximately 300 million, and an economy comparable in size to that of the U.S. This should result in more efficient manufacturing and distribution, and is already propelling a wave of mergers and acquisitions as firms in Europe seek to have a Pan-European scale.
European companies are also enhancing profitability through restructuring. In our view, individual European companies are becoming much more responsive to shareholders. They are focusing on raising returns, simplifying corporate structures by divesting underperforming assets and businesses that don't fit into a coherent whole. Just as U.S. companies retooled their operations over the last decade to compete more effectively in the global economy, European companies are now following suit. Also, European companies are in the early stages of obtaining the legislative ability to repurchase their stock. Many of these companies have low levels of debt leverage and high amounts of cash, providing the opportunity for significant stock repurchases.
In addition, privatization in European companies is creating new investment opportunities. Beginning in England in the 1980s and continuing across
[PICTURES OF FLAGS APPEAR HERE]
Switzerland
Finland
Italy
Sweden
Europe in the 1990s, there have been a large number of privatizations of formerly government-owned businesses, from telephone to automobile companies. These privatizations are creating new stocks in which the Nuveen European Value Fund is likely to invest, since these large, formerly government-owned businesses represent great opportunities for corporate restructuring.
The growth in self-directed retirement funding in Europe is also leading to a strong demand for equities. Looking out into the years 2005 through 2020, we foresee a large number of Europeans who will be relying on their retirement income. As in the U.S., these people are coming to the conclusion that they need to invest more of their own money now to maintain their current lifestyle in retirement. The European stock market will become a vehicle for Europeans to increase their savings. Mutual funds focused on Europe will become a large part of these retirement savings efforts, which should lead to stronger demand for equities. Between share repurchases and individuals taking on increasing stock market exposure, we anticipate continued growth in the demand for equities.
We believe the fund is currently well-positioned to take advantage of these opportunities. Our focus going forward will be to seek out companies undergoing restructurings that we believe will lead to enhanced shareholder value and attractive returns.
Top Ten Holdings Royal Philips Electronics N.V. 7.6% -------------------------------------------------------------------------------- Elf Aquitaine SA Sponsored ADR 6.9% -------------------------------------------------------------------------------- KLM Royal Dutch Airlines Sponsored ADR 5.5% -------------------------------------------------------------------------------- Vivendi Sponsored ADR 4.8% -------------------------------------------------------------------------------- Tomkins plc Sponsored ADR 4.8% -------------------------------------------------------------------------------- Diageo plc Sponsored ADR 4.8% -------------------------------------------------------------------------------- British Petroleum plc Sponsored ADR 4.7% -------------------------------------------------------------------------------- RWE AG Sponsored ADR 4.6% -------------------------------------------------------------------------------- Novartis AG Sponsored ADR 4.6% -------------------------------------------------------------------------------- National Westminister Bank plc Sponsored ADR 4.5% -------------------------------------------------------------------------------- |
Country Allocation Netherlands 24% -------------------------------------------------------------------------------- France 20% -------------------------------------------------------------------------------- Germany 18% -------------------------------------------------------------------------------- United Kingdom 18% -------------------------------------------------------------------------------- Switzerland 9% -------------------------------------------------------------------------------- Finland 4% -------------------------------------------------------------------------------- Italy 4% -------------------------------------------------------------------------------- Sweden 3% -------------------------------------------------------------------------------- |
Fund Highlights Share Class A B C R -------------------------------------------------------------------------------- Net Asset Value $19.86 $19.87 $19.87 $19.87 -------------------------------------------------------------------------------- Inception Date 5/98 -------------------------------------------------------------------------------- Total Net Assets ($000) $3,718 -------------------------------------------------------------------------------- Average Market Capitalization $33 Billion -------------------------------------------------------------------------------- Average P/E (trailing 12 months) 21 -------------------------------------------------------------------------------- Number of Stocks 22 -------------------------------------------------------------------------------- |
Total Return
A(On NAV) A(On Offer) MSCI-Europe
--------------------------------------------------------------------------------
Inception -0.59% -6.29% 1.12%
--------------------------------------------------------------------------------
|
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of Nuveen European Value Fund
We have audited the accompanying statement of net assets, including the portfolio of investments, of Nuveen European Value Fund (one of the portfolios constituting the Nuveen Investment Trust (a Massachusetts business trust)), as of June 30, 1998, and the related statement of operations, the statement of changes in net assets and the financial highlights for the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.
We conducted our audit 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 securities owned as of June 30, 1998, by correspondence with the custodian and brokers. As to securities purchased but not received, we requested confirmation from brokers and, when replies were not received, we carried out alternative auditing procedures. 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 audit provides 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 net assets of the Nuveen European Value Fund as of June 30, 1998, the results of its operations, the changes in its net assets and its financial highlights for the period then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 17, 1998
Portfolio of Investments
Nuveen European Value Fund
June 30, 1998
Shares Description Market Value
--------------------------------------------------------------------------------
COMMON STOCKS - 83.0%
Basic Industries - 8.8%
1,200 Akzo Nobel N.V. $ 133,200
2,300 Svenska Cellulosa AB Sponsored ADR 59,555
4,900 UPM-Kymmene Oyj Corporation Sponsored ADR 134,858
--------------------------------------------------------------------------------
Capital Equipment/Technology - 6.3%
2,750 Royal Philips Electronics N.V. 233,750
--------------------------------------------------------------------------------
Capital Spending - 7.4%
3,200 SGL Carbon AG Sponsored ADR 124,800
6,500 Tomkins plc Sponsored ADR 148,688
--------------------------------------------------------------------------------
Consumer Services - 7.1%
6,900 Pearson plc Sponsored ADR 126,639
4,850 United News & Media plc Sponsored ADR 136,406
--------------------------------------------------------------------------------
Consumer Staples - 4.0%
3,050 Diageo plc Sponsored ADR 146,972
--------------------------------------------------------------------------------
Energy - 9.6%
1,650 British Petroleum Company plc Sponsored ADR 145,612
3,000 Elf Aquitaine SA Sponsored ADR 213,000
--------------------------------------------------------------------------------
Financials - 14.5%
2,400 Axa Sponsored ADR 136,350
1,550 Bayerische Vereinsbank AG Sponsored ADR 131,383
2,050 ING Groep N.V. Sponsored ADR 134,019
1,300 National Westminster Bank plc Sponsored ADR 139,750
--------------------------------------------------------------------------------
Health Care - 7.3%
2,650 Hoechst AG Sponsored ADR 131,506
1,700 Novartis AG Sponsored ADR 141,441
--------------------------------------------------------------------------------
Retail - 2.4%
1,650 Gucci Group N.V. 87,450
--------------------------------------------------------------------------------
Transportation - 4.6%
4,150 KLM Royal Dutch Airlines Sponsored ADR 169,891
--------------------------------------------------------------------------------
Utilities - 11.0%
2,400 RWE AG Sponsored ADR 142,003
1,650 Telecom Italia SpA Sponsored ADR 121,275
3,500 Vivendi Sponsored ADR 149,470
--------------------------------------------------------------------------------
Total Investments - (cost $3,098,464) - 83.0% 3,088,018
----------------------------------------------------------------------
Other Assets Less Liabilities - 17.0% 630,345
----------------------------------------------------------------------
Net Assets - 100% $ 3,718,363
======================================================================
|
See accompanying notes to financial statements.
Statement of Net Assets
June 30, 1998
------------------------------------------------------------------------------- Assets Investment securities, at market value (cost $3,098,464) (note 1) $3,088,018 Cash 461,582 Receivables: Dividends 7,640 Fund manager 31,882 Shares sold 334,160 Deferred organization costs (note 1) 157,370 Other assets 84 ------------------------------------------------------------------------------- Total assets 4,080,736 ------------------------------------------------------------------------------- Liabilities Payable for investments purchased 165,295 Accrued expenses: 12b-1 distribution and service fees (notes 1 and 4) 60 Other 192,342 Dividends payable 4,676 ------------------------------------------------------------------------------- Total liabilities 362,373 ------------------------------------------------------------------------------- Net assets (note 5) $3,718,363 ================================================================================ Class A Shares (note 1) Net assets $ 101,972 Shares outstanding 5,134 Net asset value and redemption price per share $ 19.86 Offering price per share (net asset value per share plus maximum sales charge of 5.75% of offering price) $ 21.07 ================================================================================ Class B Shares (note 1) Net assets $ 334,765 Shares outstanding 16,844 Net asset value, offering and redemption price per share $ 19.87 ================================================================================ Class C Shares (note 1) Net assets $ 42,021 Shares outstanding 2,115 Net asset value, offering and redemption price per share $ 19.87 ================================================================================ Class R Shares (note 1) Net assets $3,239,605 Shares outstanding 163,073 Net asset value, offering and redemption price per share $ 19.87 ================================================================================ |
See accompanying notes to financial statements.
Statement of Operations
For the Period May 29, 1998 (commencement of operations) through June 30, 1998
------------------------------------------------------------------------------------- Investment Income (note 1) Dividends $ 7,641 ------------------------------------------------------------------------------------- Expenses Management fees (note 4) 2,373 12b-1 service fees - Class A (notes 1 and 4) 6 12b-1 distribution and service fees - Class B (notes 1 and 4) 31 12b-1 distribution and service fees - Class C (notes 1 and 4) 23 Shareholders' servicing agent fees and expenses 2 Custodian's fees and expenses 3,055 Trustees' fees and expenses (note 4) 243 Professional fees 8,158 Shareholders' reports - printing and mailing expenses 20,000 Federal and state registration fees 885 Amortization of deferred organization costs (note 1) 2,630 Other expenses 157 ------------------------------------------------------------------------------------- Total expenses before expense reimbursement 37,563 Expense reimbursement (note 4) (34,256) ------------------------------------------------------------------------------------- Net expenses 3,307 ------------------------------------------------------------------------------------- Net investment income 4,334 ------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) from Investments Net realized gain (loss) from investment transactions (notes 1 and 3) (1,619) Net change in unrealized appreciation or depreciation of investments (10,446) ------------------------------------------------------------------------------------- Net gain (loss) from investments (12,065) ------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations $ (7,731) ===================================================================================== |
Statement of Changes in Net Assets
For the Period May 29, 1998 (commencement of operations) through June 30, 1998
------------------------------------------------------------------------------------- Operations Net investment income $ 4,334 Net realized gain (loss) from investment transactions (notes 1 and 3) (1,619) Net change in unrealized appreciation or depreciation of investments (10,446) ------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations (7,731) ------------------------------------------------------------------------------------- Distributions to Shareholders (note 1) From undistributed net investment income: Class A (106) Class B (179) Class C (22) Class R (4,369) ------------------------------------------------------------------------------------- Decrease in net assets from distributions to shareholders (4,676) ------------------------------------------------------------------------------------- Fund Share Transactions (note 2) Net proceeds from sale of shares 3,730,770 ------------------------------------------------------------------------------------- Net increase in net assets 3,718,363 Net assets at the beginning of period - ------------------------------------------------------------------------------------- Net assets at the end of period $3,718,363 ===================================================================================== Distributions in excess of net investment income at end of period $ (342) ===================================================================================== |
See accompanying notes to financial statements
Notes to Financial Statements
1. General Information and Significant Accounting Policies
The Nuveen European Value Fund (the "Fund") is a series of the Nuveen Investment Trust (the "Trust") which was organized as a Massachusetts business trust in 1996. The Trust (and each series within the Trust) is an open-end diversified management investment company registered under the Investment Company Act of 1940. Prior to commencement of operations on May 29, 1998, the Fund had no operations other than those related to organizational matters.
The Fund invests primarily in a diversified portfolio of stocks of established, well-known European companies with at least $1 billion in market capitalization and seeks to provide over time a superior total return with moderated risk. In addition to investments in equity securities, the Fund may invest in cash equivalents and short-term investments as a temporary defensive measure.
The Fund may invest in a variety of European securities, including American Depository Receipts ("ADRs") and other types of depository receipts; equity securities of European companies that may or may not be publicly traded in the U.S.; Eurodollar convertibles; fixed-income securities of European companies that may or may not be publicly traded in the U.S.; and debt obligations issued or guaranteed by European governments, their agencies, authorities or instrumentalities. All foreign investments involve certain risks in addition to those associated with U.S. investments.
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
Common stocks and other equity securities are valued at the last sales price that day. Securities not listed on a national securities exchange or Nasdaq are valued at the most recent bid prices. When price quotes are not readily available, the pricing service establishes fair market value based on prices of comparable securities.
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. Any 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 its when-issued and delayed delivery purchase commitments. At June 30, 1998, the Fund had no such outstanding purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is determined on the basis of interest accrued, adjusted for accretion of discounts.
Dividends and Distributions to Shareholders
Net investment income is declared and distributed to shareholders quarterly. Net realized capital gains from investment transactions, if any, are declared and 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 net investment income and net realized capital gains 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 and/or distributions in excess of net realized gains from investment transactions, where applicable.
Federal Income Taxes
The Fund intends to distribute all taxable income and capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal tax provision is required.
Flexible Sales Charge Program
The Fund offers Class A, B, C and R Shares. Class A Shares are sold with a sales charge and incur an annual 12b-1 service fee. Class A Share purchases of $1 million or more are sold at net asset value without an up-front sales charge but may be subject to a 1% contingent deferred sales charge ("CDSC") if redeemed within 18 months of purchase. Class B Shares are sold without a sales charge but incur annual 12b-1 distribution and service fees. An investor purchasing Class B Shares agrees to pay a CDSC of up to 5% depending upon the length of time the shares are held by the investor (CDSC is reduced to 0% at the end of six years). Class B Shares convert to Class A Shares eight years after purchase. Class C Shares are sold without a sales charge but incur annual 12b-1 distribution and service fees. An investor purchasing Class C Shares agrees to pay a CDSC of 1% if Class C Shares are redeemed within one year of purchase. Class R Shares are not subject to any sales charge or 12b-1 distribution or service fees. Class R Shares are available for purchase under limited circumstances.
Derivative Financial Instruments
The Fund may invest in options and futures contracts, which are sometimes referred to as derivative transactions. 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 period May 29, 1998 (commencement of operations) through June 30, 1998.
Expense Allocation
Expenses of the Fund that are not directly attributable to a specific class of shares are prorated among the classes based on the relative net assets of each class. Expenses directly attributable to a class of shares, which presently only includes 12b-1 distribution and service fees, are recorded to the specific class.
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.
Organizational Expenses
The Fund's costs incurred in connection with its organization and initial registration of shares was deferred and is being amortized over a 60-month period beginning May 29, 1998 (commencement of operations). If any of the initial shares of the Fund are redeemed during this period, the proceeds of the redemption will be reduced by the pro-rata share of the unamortized organization costs as of the date of redemption.
Foreign Currency Translations
To the extent that the Fund invests in securities that are denominated in a currency other than U.S. dollars, the Fund will be subject to currency risk, which is the risk that an increase in the U.S. dollar relative to the foreign currency will reduce returns or portfolio value. Generally, when the U.S. dollar rises in value against a foreign currency, the Fund's investment in securities denominated in that currency will lose value because its currency is worth fewer U.S. dollars; the opposite effect occurs if U.S. dollars fall in relative value. Investments and other assets and liabilities denominated in foreign currencies are converted into U.S. dollars on a spot (i.e. cash) basis at the spot rate prevailing in the foreign currency exchange market at the time of valuation. Purchases and sales of investments and dividend income denominated in foreign currencies are translated into U.S. dollars on the respective dates of such transactions. The gains or losses on investments resulting from changes in foreign exchange rates are included with net realized and unrealized gain (loss) on investments.
Foreign Currency Transactions
The Fund may engage in foreign currency exchange transactions in connection with its portfolio investments and assets and liabilities denominated in foreign currencies. The Fund may engage in foreign currency forward contracts, options and futures transactions. The Fund will enter into foreign currency transactions for hedging and other permissible risk management purposes only. If the Fund invests in a currency futures or options contract, it must make a margin deposit to secure performance of such contract. With respect to investments in currency futures contracts, the Fund may also be required to make a variation margin deposit because the value of futures contracts fluctuates daily. In addition, the Fund may segregate assets to cover its futures contracts obligations.
The objective of the Fund's foreign currency hedging transactions is to reduce the risk that the U.S. dollar value of the Fund's foreign currency denominated securities and other assets and liabilities will decline in value due to changes in foreign currency exchange rates. All foreign currency forward contracts, options and futures transactions are "marked-to-market" daily at the applicable market rates and any resulting unrealized gains or losses are recorded in the Fund's financial statements. The Fund records realized gains and losses at the time the forward contract is offset by entering into a closing transaction or extinguished by delivery of the currency. The contractual amounts of forward foreign currency exchange contracts does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. As of June 30, 1998, there were no open foreign currency forward contracts, options and futures transactions.
Notes to Financial Statements (continued)
2. Fund Shares
Transactions in Fund shares for the period May 29, 1998 (commencement of operations) through June 30, 1998 were as follows:
Shares Amount
--------------------------------------------------------------------------------
Shares sold:
Class A 5,134 $ 101,463
Class B 16,844 333,000
Class C 2,115 42,015
Class R 163,073 3,254,292
--------------------------------------------------------------------------------
Net increase 187,166 $3,730,770
================================================================================
|
3. Securities Transactions
Purchases and sales of investment securities for the period May 29, 1998 (commencement of operations) through June 30, 1998, were $3,256,646 and $156,563, respectively.
At June 30, 1998, the identified cost of investments owned for federal income tax purposes was the same as the cost for financial reporting purposes.
Net unrealized depreciation for financial reporting and federal income tax purposes aggregated $10,446 of which $55,810 related to appreciated securities and $66,256 related to depreciated securities.
At June 30, 1998, the Fund had an unused capital carryforward of $1,619 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 2006.
4. Management Fee and Other Transactions with Affiliates
Under the Fund's investment management agreement with Nuveen Institutional Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, the Fund pays an annual management fee, payable monthly, which is based upon the average daily net asset value of the Fund as follows:
Average Daily Net Asset Value Management Fee -------------------------------------------------------------------------------- For the first $125 million .9500 of 1% For the next $125 million .9375 of 1 For the next $250 million .9250 of 1 For the next $500 million .9125 of 1 For the next $1 billion .9000 of 1 For net assets over $2 billion .8750 of 1 ================================================================================ |
The Adviser has agreed to waive fees and reimburse expenses through July 31, 1999, in order to prevent total operating expenses (excluding any 12b-1 distribution or service fees and extraordinary expenses) from exceeding 1.30% of the average daily net asset value of any class of Fund shares.
The management fee compensates the Adviser for overall investment advisory and administrative services, and general office facilities. The Adviser has entered into a Sub-Advisory Agreement with Institutional Capital Corporation ("ICAP"), of which The John Nuveen Company holds a minority interest, under which ICAP manages the Fund's investment portfolio. ICAP is compensated for its services from the management fee paid to the Adviser. The Fund pays no compensation directly to those of its Trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Fund from the Adviser.
During the period May 29, 1998 (commencement of operations) through June 30, 1998, the Distributor collected sales charges on purchases of Class A Shares of approximately $1,500 of which approximately $1,300 were paid out as concessions to authorized dealers. The Distributor also received 12b-1 service fees on Class A Shares, substantially all of which were paid to compensate authorized dealers for providing services to shareholders relating to their investments.
During the period May 29, 1998 (commencement of operations) through June 30, 1998, the Distributor compensated authorized dealers directly with approximately $4,200 in commission advances at the time of purchase. To compensate for commissions advanced to authorized dealers, all 12b-1 service fees collected on Class B Shares during the first year following a purchase, all 12b-1 distribution fees on Class B Shares, and all 12b-1 service and distribution fees on Class C Shares during the first year following a purchase are retained by the Distributor. During the period May 29, 1998 (commencement of operations) through June 30, 1998, the Distributor retained approximately $100 in such 12b-1 fees. The remaining 12b-1 fees charged to the Fund were paid to compensate authorized dealers for providing services to shareholders relating to their investments.
5. Composition of Net Assets
At June 30, 1998, the Fund had an unlimited number of $.01 par value per share common stock authorized. Net assets consisted of:
-------------------------------------------------------------------------------- Capital paid-in $3,730,770 Distributions in excess of net investment income (342) Net realized gain (loss) from investment transactions (1,619) Net unrealized appreciation (depreciation) of investments (10,446) -------------------------------------------------------------------------------- Net assets $3,718,363 ================================================================================ |
Financial Highlights
Selected data for a share outstanding throughout the period May 29,1998 (commencement of operations) through June 30, 1998 is as follows:
Class (Inception Date)
Investment Operations Less Distributions
----------------------------- ----------------------------
Net
Beginning Realized/ Ending
Net Net Unrealized Net Net
Year Ended Asset Investment Investment Investment Capital Asset Total
June 30, Value Income (a) Gain (Loss) Total Income Gain Total Value Return (b)
-------------------------------------------------------------------------------------------------------------
Class A (5/98)
1998 (c) $20.00 $.02 $(.14) $(.12) $(.02) $ -- $(.02) $19.86 (.59)%
Class B (5/98)
1998 (c) 20.00 .03 (.15) (.12) (.01) -- (.01) 19.87 (.60)
Class C (5/98)
1998 (c) 20.00 .01 (.13) (.12) (.01) -- (.01) 19.87 (.60)
Class R (5/98)
1998 (c) 20.00 .03 (.13) (.10) (.03) -- (.03) 19.87 (.52)
=============================================================================================================
|
Ratios/Supplemental Data
--------------------------------------------------------------------------------
Ratio Ratio
of Net of Net
Ratio of Investment Ratio of Investment
Expenses Income Expenses Income to
to Average to Average to Average Average
Net Assets Net Assets Net Assets Net Assets
Before Before After After Portfolio
Ending Net Reimburse- Reimburse- Reimburse- Reimburse- Turnover
Assets (000) ment ment ment (a) ment (a) Rate
--------------------------------------------------------------------------------
$ 102 14.82%* (11.94)%* 1.55%* 1.33%* 5%
335 14.56* (10.67)* 2.30* 1.59* 5
42 15.88* (12.98)* 2.30* .60* 5
3,240 15.04* (11.99)* 1.30* 1.75* 5
================================================================================
|
* Annualized.
(a) After waiver of certain management fees or reimbursement of expenses by Nuveen Institutional Advisory Corp.
(b) Total returns are calculated on net asset value without any sales charge and are not annualized.
(c) From commencement of class operations as noted.
Serving Investors for Generations
[PHOTO OF JOHN NUVEEN, SR. APPEARS HERE]
John Nuveen, Sr.
Since our founding in 1898, John Nuveen & Co. has been synonymous with investments that withstand the test of time. Today we offer a broad range of quality investments designed for individuals seeking to build and sustain wealth. In fact, more than 1.3 million investors have trusted Nuveen to help them pursue their financial goals.
The cornerstone of Nuveen's investment philosophy is a commitment to disciplined long-term investment strategies focused on providing consistent, attractive performance over time - with moderated risk. We emphasize quality securities carefully chosen through in-depth research, and we follow those securities closely over time to ensure that they continue to meet our exacting standards.
Whether your focus is long-term growth, dependable current income or sustaining accumulated wealth, Nuveen offers a wide variety of investments and services to help meet your unique circumstances and financial planning needs. Our equity, balanced, and tax-free income funds, along with our defined portfolios and private asset management, can help you build a better, well-diversified portfolio.
Talk with your financial adviser to learn more about how Nuveen investment products and services can help you. Or call us at (800) 257-8787 for more information, including a prospectus where applicable. Please read that information carefully before investing.
1898
NUVEEN 1998
OUR SECOND CENTURY
helping investors sustain the wealth of a lifetime.(TM)
John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, IL 60606-1286
www.nuveen.com
PART C--OTHER INFORMATION
ITEM 23: EXHIBITS:
(a)(1). Declaration of Trust of Registrant.(1)
(a)(2). Certificate for the Establishment and Designation of Series and
Classes for the Nuveen Growth and Income Stock Fund, the Nuveen
Balanced Stock and Bond Fund, and Nuveen Balanced Municipal and
Stock Fund, dated June 20, 1996.(3)
(a)(3). Certificate for the Establishment and Designation of Series for
the Nuveen Balanced California Municipal and Stock Fund, dated
July 23, 1997.(6)
(a)(4). Certificate for the Establishment and Designation of Series for
the Nuveen European Value Fund, dated May 27, 1998.(10)
(b). By-Laws of Registrant.(1)
(c). Specimen certificate of Shares of each Fund.(3)
(d)(1). Management Agreement between Registrant and Nuveen
Institutional Advisory Corp. on behalf of Nuveen Growth and
Income Stock Fund, Nuveen Balanced Stock and Bond Fund, and
Nuveen Balanced Municipal and Stock Fund.(6)
(d)(2). Management Agreement between Registrant and Nuveen
Institutional Advisory Corp. on behalf of Nuveen Balanced
California Municipal and Stock Fund.(6)
(d)(3). Sub-Advisory Agreement between Nuveen Institutional Advisory
Corp. and Institutional Capital Corporation on behalf of Nuveen
Growth and Income Stock Fund, Nuveen Balanced Stock and Bond
Fund, and Nuveen Balanced Municipal and Stock Fund.(6)
(d)(4). Form of Sub-Advisory Agreement between Nuveen Institutional
Advisory Corp. and Institutional Capital Corp. on behalf of
Nuveen Balanced California Municipal and Stock Fund.(6)
(d)(5). Renewal of Investment Management Agreement dated May 18,
1998.(12)
(d)(6). Form of Amended Schedule A to Management Agreement between
Registrant and Nuveen Institutional Advisory Corp.(10)
(d)(7). Form of Amended Schedule A to Sub-Advisory Agreement between
Nuveen Institutional Advisory Corp. and Institutional Capital
Corporation.(10)
(d)(8). Form of Amended Schedule B to Management Agreement between
Registrant and Nuveen Institutional Advisory Corp.(10)
(d)(9). Form of Addendum to Investment Sub-Advisory Agreement between
Nuveen Institutional Advisory Corp. and Institutional Capital
Corporation.(10)
(e)(1). Distribution Agreement between Registrant and John Nuveen & Co.
Incorporated dated August 1, 1998.(12)
(e)(2). Dealer Management Agreement dated October 22, 1996.(4)
(f). Not applicable.
(g). Custodian Agreement between Registrant and Chase Manhattan
Bank.(7)
(h)(1). Form of Subscription Agency Agreement between Registrant and
The Chase Manhattan Bank.(4)
(h)(2). Transfer Agency Agreement between Registrant and Chase Global
Funds Services Company.(12)
(i)(1). Opinion and consent of Chapman and Cutler, dated July 30,
1996.(3)
(i)(2). Opinion and consent of Bingham, Dana & Gould, dated July 30,
1996.(3)
(i)(3). Opinion and consent of Vedder, Price, Kaufman & Kammholz, dated
May 28, 1998.(10)
(i)(4). Opinion and consent of Bingham Dana LLP dated May 28, 1998.(10)
(j). Consent of Independent Public Accountants.(11)
(k). Not applicable.
(l). Subscription Agreement with Nuveen Institutional Advisory
Corp.(7)
|
II-1
(m)(1). Plan of Distribution and Service Pursuant to Rule 12b-1 for the
Class A Shares, Class B Shares and Class C Shares of each
Fund.(3)
(m)(2). Amendment to Plan of Distribution and Service Pursuant to Rule
12b-1.(12)
(n). Financial Data Schedule.(12)
(o). Multi-Class Plan.(4)
(z)(1). Original Powers of Attorney for Messrs. Schwertfeger, Dean,
Leafstrand, Bacon, Kissick, Lyon, and Ms. Wellington, Trustees,
authorizing, among others, Larry W. Martin and Gifford R.
Zimmerman to execute the Registration Statement.(6)
(z)(2). Code of Ethic and Reporting Requirements.(7)
|
(10) Incorporated by reference to the post-effective amendment no. 12 filed on Form N-1A for Registrant.
(11) To be filed by amendment.
(12) Filed herewith.
ITEM 24: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH FUND.
Not applicable.
ITEM 25: INDEMNIFICATION
Section 4 of Article XII of Registrant's Declaration of Trust provides as fol-
lows:
Subject to the exceptions and limitations contained in this Section 4, every person who is, or has been, a Trustee, officer, employee or agent of the Trust, including persons who serve at the request of the Trust as directors, trustees, officers, employees or agents of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered Person"), shall be indemnified by the Trust to the fullest extent per- mitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been such a Trustee, director, officer, employee or agent and against amounts paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a final adjudication by the court or other body before which the proceeding was brought that he engaged in willful misfeasance, bad faith, gross negli- gence or reckless disregard of the duties involved in the conduct of his office;
(b) with respect to any matter as to which he shall have been finally adju- dicated not to have acted in good faith in the reasonable belief that his action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a final adjudication (as provided in paragraph (a) or (b)) and resulting in a pay- ment by a Covered Person, unless there has been either a determination that such Covered Person did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office by the court or other body approving the settlement or other disposition or a reasonable determination, based on a review of readily available facts (as opposed to a full trial-type inquiry), that he did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in of- fice act on the matter); or
(ii) by written opinion of independent legal counsel.
II-2
The rights of indemnification herein provided may be insured against by poli- cies maintained by the Trust, shall be severable, shall not affect any other rights to which any Covered Person may now or hereafter be entitled, shall con- tinue as to a person who has ceased to be such a Covered Person and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which Trust personnel other than Covered Persons may be entitled by contract or oth- erwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section 4
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it
is ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate security or the Trust shall be insured against losses arising out of any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided that a majority of the Disinterested Trustees then in office act on the matter) or independent legal counsel in a written opinion shall determine, based upon a review of the readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the recipient ul- timately will be found entitled to indemnification.
As used in this Section 4, a "Disinterested Trustee" is one (x) who is not an Interested Person of the Trust (including, as such Disinterested Trustee, any- one who has been exempted from being an Interested Person by any rule, regula- tion or order of the Commission), and (y) against whom none of such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or has been pending.
As used in this Section 4, the words "claim," "action," "suit" or "proceeding" shall apply to all claims, actions, suits, proceedings (civil, criminal, admin- istrative or other, including appeals), actual or threatened; and the word "li- ability" and "expenses" shall include without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other lia- bilities.
The trustees and officers of the Registrant are covered by Investment Trust Er- rors and Omission policies in the aggregate amount of $20,000,000 (with a maxi- mum deductible of $500,000) against liability and expenses of claims of wrong- ful acts arising out of their position with the Registrant, except for matters which involved willful acts, bad faith, gross negligence and willful disregard of duty (i.e., where the insured did not act in good faith for a purpose he or she reasonably believed to be in the best interest of Registrant or where he or she shall have had reasonable cause to believe this conduct was unlawful).
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to the officers, trustees or controlling persons of the Registrant pursuant to the Declaration of Trust of the Registrant or otherwise, the Registrant has been advised that in the opinion of the Securities and Ex- change Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indem- nification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by an officer or trustee or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such officer, trustee or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
ITEM 26: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Nuveen Institutional Advisory Corp. ("NIAC") manages the Registrant and
serves as investment adviser or manager to other open-end and closed-end man-
agement investment companies and to separately managed accounts. The principal
business address for all of these investment companies is 333 West Wacker
Drive, Chicago, Illinois 60606.
A description of any other business, profession, vocation or employment of a substantial nature in which the directors and officers of NIAC who serve as of- ficers or Trustees of the Registrant have engaged during the last
II-3
two years for his or her account or in the capacity of director, officer, em- ployee, partner or trustee appears under "Management" in the Statement of Addi- tional Information. Such information for the remaining senior officers of NIAC appears below:
OTHER BUSINESS, PROFESSION, VOCATION OR
NAME AND POSITION WITH NIAC EMPLOYMENT DURING PAST TWO YEARS
--------------------------- ---------------------------------------
John P. Amboian, Executive Vice President..... Executive Vice President and Secretary of The
John Nuveen Company; Executive Vice President of
John Nuveen & Co. Incorporated, Nuveen Advisory
Corp. and Nuveen Asset Management, Inc. and
Executive Vice President and Director of
Rittenhouse Financial Services, Inc.
Bruce P. Bedford, Executive Vice President.... Executive Vice President of John Nuveen & Co.
Incorporated, Nuveen Advisory Corp. (since
January 1997); prior thereto, Chairman and CEO
of Flagship Resources Inc. and Flagship
Financial Inc. and the Flagship funds.
Jerome S. Contro, Vice President.............. Vice President of Nuveen Asset Management, Inc.
Michael S. Davern, Vice President............. Vice President of Nuveen Advisory Corp. (since
January 1997); prior thereto, Vice President and
Portfolio Manager of Flagship Financial
Clifton L. Fenton, Vice President............. Vice President of John Nuveen & Co. Incorporated
Richard A. Huber, Vice President.............. Vice President of Nuveen Advisory Corp. (since
January 1997); prior thereto, Vice President and
Portfolio Manager of Flagship Financial
Thomas C. Spalding, Vice President............ Vice President of Nuveen Advisory Corp.
Margaret E. Wilson, Vice President and Con- Vice President and Controller of The John Nuveen
troller...................................... Company, John Nuveen & Co. Incorporated and
Nuveen Advisory Corp.
|
(b) Institutional Capital Corporation (Institutional Capital) acts as invest- ment adviser to the ICAP Funds, Inc. and as sub-investment adviser to the Reg- istrant. In addition, Institutional Capital serves as investment adviser to separately managed accounts.
A description of any other business, profession, vocation, or employment of a substantial nature in which Robert H. Lyon, President, Chief Investment Officer and a Director of Institutional Capital, is or has been, at any time during the last two fiscal years, engaged for his own account or in the capacity of direc- tor, officer, employee, partner, or trustee appears under "Management" in the Statement of Additional Information. Such information for the remaining senior officers of Institutional Capital appears below. The principal business address for each person is 225 West Wacker Drive, Chicago, Illinois 60606.
OTHER BUSINESS, PROFESSION,
POSITIONS AND OFFICES WITH VOCATION, OR
NAME INSTITUTIONAL CAPITAL EMPLOYMENT DURING PAST TWO YEARS
---- ------------------------------------- ------------------------------------
Pamela H. Conroy........ Senior Vice President and Director Vice President, Treasurer, and a
Director of the ICAP Funds, Inc.
(since its inception in December
1994).
Donald D. Niemann....... Executive Vice President and Director Vice President and Secretary of ICAP
Funds, Inc. (since its inception in
December 1994) and a Director (since
July 1995).
Gary S. Maurer.......... Executive Vice President and Director Director of ICAP Funds, Inc. (since
its inception in December 1994).
Barbara C. Schunmier.... Senior Vice President and Director None.
|
II-4
ITEM 27: PRINCIPAL UNDERWRITERS
(a) John Nuveen & Co. Incorporated ("Nuveen") acts as principal underwriter to
the following open-end management type investment companies: Nuveen Flagship
Multistate Trust I, Nuveen Flagship Multistate Trust II, Nuveen Flagship
Multistate Trust III, Nuveen Flagship Multistate Trust IV, Nuveen Flagship Mu-
nicipal Trust, Nuveen California Tax-Free Fund, Inc., Nuveen Tax-Free Money
Market Fund, Inc., Nuveen Tax-Exempt Money Market Fund, Inc., Nuveen Tax-Free
Reserves, Inc., Flagship Admiral Funds Inc., Nuveen Investment Trust II, and
the Registrant. Nuveen also acts as depositor and principal underwriter of the
Nuveen Tax-Free Unit Trust and the Nuveen Unit Trust, registered unit invest-
ment trusts. Nuveen has also served or is serving as co-managing underwriter
to the following closed-end management type investment companies: Nuveen Mu-
nicipal Value Fund, Inc., Nuveen California Municipal Value Fund, Inc., Nuveen
New York Municipal Value Fund, Inc., Nuveen Municipal Income Fund, Inc.,
Nuveen Premium Income Municipal Fund, Inc., Nuveen Performance Plus Municipal
Fund, Inc., Nuveen California Performance Plus Municipal Fund, Inc., Nuveen
New York Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage
Fund, Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen California
Municipal Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal
Fund, Inc., Nuveen California Investment Quality Municipal Fund, Inc., Nuveen
New York Investment Quality Municipal Fund, Inc., Nuveen Insured Quality Mu-
nicipal Fund, Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen
New Jersey Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania In-
vestment Quality Municipal Fund, Nuveen Select Quality Municipal Fund, Inc.,
Nuveen California Select Quality Municipal Fund, Inc., Nuveen New York Select
Quality Municipal Fund, Inc., Nuveen Quality Income Municipal Fund, Inc.,
Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen Florida Quality Income
Municipal Fund, Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen
Ohio Quality Income Municipal Fund, Inc., Nuveen Texas Quality Income Munici-
pal Fund, Nuveen California Quality Income Municipal Fund, Inc., Nuveen New
York Quality Income Municipal Fund, Inc., Nuveen Premier Municipal Income
Fund, Inc., Nuveen Premier Insured Municipal Income Fund, Inc., Nuveen Premium
Income Municipal Fund 2, Inc., Nuveen Insured California Premium Income Munic-
ipal Fund, Inc., Nuveen Insured New York Premium Income Municipal Fund, Inc.,
Nuveen Select Maturities Municipal Fund, Nuveen Arizona Premium Income Munici-
pal Fund, Inc., Nuveen Insured Florida Premium Income Municipal Fund, Nuveen
Michigan Premium Income Municipal Fund, Inc., Nuveen New Jersey Premium Income
Municipal Fund, Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen In-
sured California Premium Income Municipal Fund 2, Inc., Nuveen Pennsylvania
Premium Income Municipal Fund 2, Nuveen Maryland Premium Income Municipal
Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen Virginia Pre-
mium Income Municipal Fund, Nuveen Washington Premium Income Municipal Fund,
Nuveen Connecticut Premium Income Municipal Fund, Nuveen Georgia Premium In-
come Municipal Fund, Nuveen Missouri Premium Income Municipal Fund, Nuveen
North Carolina Premium Income Municipal Fund, Nuveen California Premium Income
Municipal Fund, Nuveen Insured Premium Income Municipal Fund 2, Nuveen Select
Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio 2, Nuveen
Insured California Select Tax-Free Income Portfolio, Nuveen Insured New York
Select Tax-Free Income Portfolio and Nuveen Select Tax-Free Income Portfolio
3.
(b)
NAME AND PRINCIPAL POSITIONS AND OFFICES WITH POSITIONS AND OFFICES BUSINESS ADDRESS UNDERWRITER WITH REGISTRANT ------------------------------------------------------------------------------- Anthony T. Dean President, Chief Operating Chairman and Trustee 333 West Wacker Drive Officer and Director Chicago, IL 60606 Timothy R. Schwertfeger Chairman of the Board, President and Trustee 333 West Wacker Drive Chief Executive Officer, Chicago, IL 60606 and Director John P. Amboian Executive Vice President None 333 West Wacker Drive Chicago, IL 60606 Bruce P. Bedford Executive Vice President None 333 West Wacker Drive Chicago, IL 60606 William Adams IV Vice President None 333 West Wacker Drive Chicago, IL 60606 |
II-5
POSITIONS AND
NAME AND PRINCIPAL POSITIONS AND OFFICES OFFICES WITH
BUSINESS ADDRESS WITH UNDERWRITER REGISTRANT
----------------------------------------------------------------------------------
Alan G. Berkshire Vice President Vice President and
333 West Wacker Drive and Secretary Assistant Secretary
Chicago, IL 60606
Clifton L. Fenton Vice President None
333 West Wacker Drive
Chicago, IL 60606
Kathleen M. Flanagan Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Stephen D. Foy Vice President Vice President and
333 West Wacker Drive Controller
Chicago, IL 60606
Michael G. Gaffney Vice President None
333 West Wacker Drive
Chicago, IL 60606
Anna R. Kucinskis Vice President Vice President
333 West Wacker Drive
Chicago, IL 60606
Robert B. Kuppenheimer Vice President None
333 West Wacker Drive
Chicago, IL 60606
Larry W. Martin Vice President Vice President
333 West Wacker Drive and Assistant and Assistant
Chicago, IL 60606 Secretary Secretary
Thomas C. Muntz Vice President None
333 West Wacker Drive
Chicago, IL 60606
Stuart W. Rogers Vice President None
333 West Wacker Drive
Chicago, IL 60606
Bradford W. Shaw, Jr. Vice President None
333 West Wacker Drive
Chicago, IL 60606
H. William Stabenow Vice President Vice President and
333 West Wacker Drive and Treasurer Treasurer
Chicago, IL 60606
Paul C. Williams Vice President None
333 West Wacker Drive
Chicago, IL 60606
Margaret E. Wilson Vice President None
333 West Wacker Drive and Corporate
Chicago, IL 60606 Controller
Gifford R. Zimmerman Vice President Vice President and
333 West Wacker Drive and Assistant Secretary Secretary
Chicago, IL 60606
|
(c) Not applicable.
II-6
ITEM 28: LOCATION OF ACCOUNTS AND RECORDS
Nuveen Institutional Advisory Corp., 333 West Wacker Drive, Chicago, Illinois
60606, maintains the Declaration of Trust, By-Laws, minutes of trustees and
shareholder meetings and contracts of the Registrant and all advisory material
of the investment adviser.
The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004-2413, maintains all general and subsidiary ledgers, journals, trial balances, records of all portfolio purchases and sales, and all other required records not main- tained by Nuveen Institutional Advisory Corp., or Chase Global Fund Services Company.
Chase Global Fund Services Company, 73 Tremont Street, Boston, MA 02108, main- tains all the required records in its capacity as transfer, dividend paying, and shareholder service agent for the Registrant.
ITEM 29: MANAGEMENT SERVICES
Not applicable.
ITEM 30: UNDERTAKINGS
(a)Not applicable.
II-7
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940, THE FUND HAS DULY CAUSED THIS POST-EFFECTIVE AMENDMENT NO. 13 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDER- SIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHICAGO, AND STATE OF ILLI- NOIS, ON THE 28TH DAY OF SEPTEMBER, 1998.
NUVEEN INVESTMENT TRUST
/s/ Gifford R. Zimmerman
__________________________________________
Gifford R. Zimmerman
Vice President
|
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST-EFFEC- TIVE AMENDMENT NO. 13 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Stephen D. Foy Vice President and September 28, 1998
________________________________ Controller (Principal
Stephen D. Foy Financial and
Accounting Officer)
Timothy R. Schwertfeger President and Trustee
Robert H. Lyon Trustee
Thomas E. Leafstrand Trustee
James E. Bacon Trustee /s/ Gifford R. Zimmerman
By_________________________
Gifford R. Zimmerman
William L. Kissick Trustee Attorney-in-Fact
Sheila W. Wellington Trustee
Anthony T. Dean Chairman and Trustee
(Principal Executive
Officer)
AN ORIGINAL POWER OF ATTORNEY AUTHORIZING, AMONG OTHERS, LARRY W. MARTIN AND
GIFFORD R. ZIMMERMAN TO EXECUTE THIS REGISTRATION STATEMENT, AND AMENDMENTS
THERETO, FOR EACH OF THE OFFICERS AND TRUSTEES OF REGISTRANT ON WHOSE BEHALF
THIS REGISTRATION STATEMENT IS FILED, HAS BEEN EXECUTED AND FILED WITH THE SE-
CURITIES AND EXCHANGE COMMISSION.
|
EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NUMBER EXHIBIT NUMBERED PAGE
------- ------- -------------
(d)(5) Renewal of Investment Management Agreement dated May
18, 1998.
(e)(1) Distribution Agreement between Registrant and John
Nuveen & Co. Incorporated.
(h)(2) Transfer Agency Agreement between Registrant and
Chase Global Funds Services Company.
(m)(2) Amendment to Plan of Distribution and Service
Pursuant to Rule 12b-1.
(n) Financial Data Schedule
|
NUVEEN INVESTMENT TRUST
RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT
This Agreement made this 18th day of May, 1998 by and Nuveen Investment Trust, a Massachusetts business trust (the "Fund"), and Nuveen Institutional Advisory Corp., a Delaware corporation (the "Adviser");
WHEREAS, the parties hereto are the contracting parties under that certain Management Agreement (the "Agreement") pursuant to which the Adviser furnishes investment advisory and management services and certain other services to the Fund; and
WHEREAS, the Board of Trustees, at a meeting called for the purpose of reviewing the Agreement, have approved the Agreement and its continuance until August 1, 1999 in the manner required by the Investment Company Act of 1940.
NOW THEREFORE, in consideration of the mutual covenants contained in the Agreement, the parties hereto do hereby approve the continuance of the Agreement if effect until August 1, 1999 and do ratify and confirm the Agreement in all respects.
NUVEEN INVESTMENT TRUST
By: /s/ Gifford R. Zimmerman
--------------------------------
Vice President
Attest:
/s/ Karen L. Healy
---------------------------------
Assistant Secretary
|
NUVEEN INSTITUTIONAL
ADVISORY CORP.
By: /s/ Edward F. Neild
--------------------------------
Vice President
Attest:
/s/ Larry Martin
---------------------------------
Assistant Secretary
|
AGREEMENT made as of this 1st day of August, 1998 between NUVEEN INVESTMENT TRUST, a business trust organized under the laws of the Commonwealth of Massachusetts (the "Fund"), and JOHN NUVEEN & CO. INCORPORATED, a Delaware corporation (the "Underwriter").
In consideration of the mutual covenants hereinafter contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the distribution of shares of beneficial interest, par value $.01 per share, including such series or classes of shares as may now or hereafter be authorized, (the "Shares") in jurisdictions wherein Shares may legally be offered for sale; provided, however, that the Fund, in its absolute discretion, may: (a) issue or sell Shares directly to holders of Shares of the Fund upon such terms and conditions and for such consideration, if any, as it may determine, whether in connection with the distribution of subscription or purchase rights, the payment or reinvestment of dividends or distributions, or otherwise; and (b) issue or sell Shares at net asset value in connection with a merger or consolidation with, or acquisition of the assets of, other investment companies or similar companies.
2. The Underwriter hereby accepts appointment as agent for the distribution of the Shares and agrees that it will use its best efforts to sell such part of the authorized Shares remaining unissued as from time to time shall be effectively registered under the Securities Act of 1933 ("Securities Act"), at prices determined as hereinafter provide and on terms hereinafter set forth, all subject to applicable Federal and State laws and regulations and to the Declaration of Trust of the Fund.
3. The Fund agrees that it will use its best efforts to keep effectively registered under the Securities Act for sale, as herein contemplated, such Shares as the Underwriter shall reasonably request and as the Securities and Exchange Commission shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund may terminate, suspend, or withdraw the offering of the Shares, or Shares of any other series or class, whenever, in its sole discretion, it deems such action to be desirable.
5. The Underwriter shall sell Shares to, or through, brokers, dealers, banks or other qualified financial intermediaries (hereinafter referred to as "dealers"), or others, in such manner not inconsistent with the provisions hereof and the then effective Registration Statement of the Fund under the Securities Act (and related Prospectus and Statement of Additional Information) as the Underwriter may determine from time to time, provided that no dealer, or other person, shall be appointed nor authorized to act as agent of the Fund without prior consent of the Fund. The Underwriter shall have the right to enter into agreements with brokers, dealers, and banks (referred to herein as "dealers") of its choice for the sale of Shares and fix therein the portion of
the sales charge which may be allocated to such dealers; provided that the Fund shall approve the form of such agreements and shall evidence such approval by filing said form and any amendments thereto as attachments to this Agreement, which shall be filed as an exhibit to the Fund's currently effective registration statement under the Securities Act. Shares sold to dealers shall be for resale by such dealers only at the public offering prices(s) set forth in the Fund's then current Prospectus. The current forms of such agreements are attached hereto as Exhibits 1, 2 and 3.
6. Shares offered for sale, or sold by the Underwriter, shall be so offered or sold at a price per Share determined in accordance with the then current Prospectus relating to the sale of Shares except as departure from such prices shall be permitted by the rules and regulations of the Securities and Exchange Commission. Any public offering price shall be the net asset value per Share plus a sales charge of not more than 5.75% of such public offering price. Shares may be sold at net asset value without a sales charge to such class or classes of investors or in such class or classes of transactions as may be permitted under applicable rules of the Securities and Exchange Commission and as described in the then current Prospectus of the Fund. The net asset value per Share of each series or class shall be calculated in accordance with the Declaration of Trust of the Fund and shall be determined in the manner, and at the time, set forth in the then current Prospectus of the Fund relating to such Shares.
7. The price the Fund shall receive for all Shares purchased from the Fund shall be the net asset value used in determining the public offering price applicable to the sale of such Shares. The excess, if any, of the sales price over the net asset value of Shares sold by the Underwriter as agent shall be retained by the Underwriter as a commission for its services hereunder. Out of such commission, the Underwriter may allow commissions or concessions to dealers in such amounts as the Underwriter shall determine from time to time. Except as may be otherwise determined by the Underwriter and the Fund from time to time, such commissions or concessions shall be uniform to all dealers.
8. The Underwriter shall issue and deliver, or cause to be issued and delivered, on behalf of the Fund such confirmations of sales made by it as agent, pursuant to this Agreement, as may be required. At, or prior to, the time of issuance of Shares, the Underwriter will pay, or cause to be paid, to the Fund the amount due the Fund for the sale of such Shares. Certificates shall be issued, or Shares registered on the transfer books of the Fund, in such names and denominations as the Underwriter may specify.
9. The Fund will execute any and all documents, and furnish any and all information, which may be reasonably necessary in connection with the qualification of the Shares for sale (including the qualification of the Fund as a dealer, where necessary or advisable) in such states as the Underwriter may reasonably request (it being understood that the Fund shall not be required, without its consent, to comply with any requirement which, in its opinion, is unduly burdensome).
10. The Fund will furnish to the Underwriter, from time to time, such information with respect to the Fund and the Shares as the Underwriter may reasonably request for use in connection with the sale of Shares. The Underwriter agrees that it will not use or distribute, nor will it authorize dealers or others to us, distribute or disseminate, in connection with the sale of such Shares, any statements other than those contained in the Fund's current Prospectus and Statement of Additional Information, except such supplemental literature or advertising as shall be lawful under Federal and State securities laws and regulations, and that it will furnish the Fund with copies of all such material.
11. The Underwriter shall order Shares from the Fund only to the extent that it shall have received purchase orders therefor. The Underwriter will not make, nor authorize any dealers or others, to make: (a) any short sale of Shares; or (b) any sale of Shares to any officer or trustee of the Fund, nor to any officer or trustee of the Underwriter, or of any corporation or association furnishing investment advisory, managerial, or supervisory services to the Fund, nor to any such corporation or association, unless such sales are made in accordance with the then current Prospectus relating to the sale of such Shares.
12. In selling Shares for the account of the Fund, the Underwriter will in all respects conform to the requirements of all Federal and State laws and the Rules of Fair Practice of the National Association of Securities Dealers, Inc. relating to such sales, and will indemnify and save harmless the Fund from any damage or expense on account of any wrongful act by the Underwriter or any employee, representative, or agent of the Underwriter. The Underwriter will observe and be bound by all the provisions of the Declaration of Trust of the Fund (and of any fundamental policies adopted by the Fund pursuant to the Investment Company Act of 1940, notice of which shall have been given by the Fund to the Underwriter) which at the time in any way require, limit, restrict, prohibit or otherwise regulate any action on the part of the Underwriter.
13. The Underwriter will require each dealer to conform to the provisions hereof and of the Registration Statement (and related Prospectus) at the time in effect under the Securities Act with respect to the public offering price of the Shares, and neither the Underwriter nor any such dealer shall withhold the placing of purchase orders so as to make a profit thereby.
14. The Fund will pay, or cause to be paid, expenses (including the fees and disbursement of its own counsel) of an registration of Shares under the Securities Act, expenses of qualifying or continuing the qualification of the shares for sale and, in connection therewith, of qualifying or continuing the qualification of the Fund as a dealer or broker under the laws of such states as may be designated by the underwriter under the conditions herein specified, and expenses incident to the issuance of the Shares such as the cost of Shares certificates, issue taxes, and fees of the transfer and shareholder service agent. The Underwriter will pay, or cause to be paid, all expenses (other than expenses which any dealer may bear a pursuant to any agreement with the Underwriter) incident to the sale and distribution of the Shares issued or sold hereunder, including, without limiting the generality of the foregoing, all: (a) expenses of printing and distributing or disseminating any other literature, advertising and selling aids in connection
with such offering of the Shares for sale (except that such expenses need not include expenses incurred by the Fund in connection with the preparation, printing and distribution of any report or other communication to holders of Shares in their capacity as such), and (b) expenses of advertising in connection with such offering. No transfer taxes, if any, which may be payable in connection with the issue or delivery of Shares sold as herein contemplated, or of the certificates for such Shares, shall be borne by the Fund, and the Underwriter will indemnify and hold harmless the Fund against liability for all such transfer taxes.
15. The agreement shall continue in effect until August 1, 1999, unless and until terminated by either party as hereinafter provided, and will continue from year to year thereafter, but only so long as such continuance is specifically approved, at least annually, in the manner required by the Investment Company Act of 1940. Either party hereto may terminate this agreement on any date by giving the other party at least six months' prior written notice of such termination, specifying the date fixed therefor. Without prejudice to any other remedies of the Fund in any such event, the Fund may terminate this agreement at any time immediately upon any failure of fulfillment of any of the obligations of the Underwriter hereunder.
Without prejudice to any other remedies of the Fund in any such event, the Fund may terminate this Agreement at any time immediately upon any failure of fulfillment of any of the obligations of the Underwriter hereunder.
16. This agreement shall automatically terminate in the event of its assignment.
17. Any notice under this agreement shall be in writing, addressed, and delivered or mailed, postage pre-paid, to the other party at such address as such other party may designate for the receipt of such notice.
18. The Declaration of Trust of the Fund on file with the Secretary of State of the Commonwealth of Massachusetts was executed on behalf of the Fund by the initial trustees of the Fund and not individually, and any obligation of the Fund shall be binding only upon the assets of the Fund (or applicable series thereof) and shall not be binding upon any trustee, officer or shareholder of the Fund. Neither the authorization of any action by the trustees or shareholders of the Fund nor the execution of this agreement on behalf of the Fund shall impose any liability upon any Trustee, officer or shareholder of the Fund.
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this agreement to be executed on its behalf as of the day and year first above written.
NUVEEN INVESTMENT TRUST
By /s/ Gifford R. Zimmerman
--------------------------------
Vice President
Attest:
/s/ Karen L. Healy
---------------------------------
Assistant Secretary
|
JOHN NUVEEN & CO. INCORPORATED
By /s/ Alan G. Berkshire
--------------------------------
Vice President
Attest:
/s/ Larry Martin
---------------------------------
Assistant Secretary
|
MUTUAL FUNDS SERVICE AGREEMENT
. Transfer Agency Services
NUVEEN FUNDS
August 24, 1998
MUTUAL FUNDS SERVICE AGREEMENT
Section Page ------- ---- 1. Appointment................................................... 1 2. Representations and Warranties................................ 1 3. Delivery of Documents......................................... 3 4. Services Provided............................................. 3 5. Fees and Expenses............................................. 4 6. Limitation of Liability and Indemnification................... 6 7. Term.......................................................... 8 8. Notices....................................................... 9 9. Waiver........................................................ 9 10. Force Majeure................................................. 9 11. Additional Funds.............................................. 10 12. Amendments.................................................... 10 13. Assignment.................................................... 10 14. Severability.................................................. 10 15. Governing Law................................................. 10 Signatures......................................................... 10 |
MUTUAL FUNDS SERVICE AGREEMENT
Page
----
Schedule A -- Fees and Expenses................................... A-1
Schedule B -- List of Nuveen Funds and Jurisdictions under
which Funds are Organized........................... B-1
Schedule C -- Transfer Agency Services Description................ C-1
|
MUTUAL FUNDS SERVICE AGREEMENT
AGREEMENT made as of August 24, 1998 by and between the Nuveen Funds (each, a "Fund" and collectively the "Funds"), for the Funds listed on Schedule B, and organized under the jurisdictions set forth on Schedule B, and Chase Global Funds Services Company ("Chase"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, each Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, each Fund wishes to contract with Chase to provide certain services with respect to the Fund;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Funds hereby appoint Chase to provide services for the Funds, as described hereinafter, subject to the supervision of the Board of Directors or Trustees of the Funds (the "Board"), for the period and on the terms set forth in this Agreement. Chase accepts such appointment and agrees to furnish the services herein set forth in return for the compensation as provided in Section 5 of and Schedule A to this Agreement.
2. Representations and Warranties.
(a) Chase represents and warrants to the Funds that:
(i) Chase is a corporation, duly organized and existing under the laws of the State of Delaware;
(ii) Chase is duly qualified to carry on its business in the Commonwealth of Massachusetts;
(iii) Chase is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement;
(iv) all requisite corporate proceedings have been taken to authorize Chase to enter into and perform this Agreement;
(v) Chase has, and will continue to have, access to the facilities, personnel and equipment required to fully perform its duties and obligations hereunder;
(vi) no legal or administrative proceedings have been instituted or threatened which would impair Chase's ability to perform its duties and obligations under this Agreement; and
(vii) Chase's entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of Chase or any law or regulation applicable to Chase;
(b) Each Fund represents and warrants to Chase that:
(i) the Fund is a duly organized and existing and in good standing under the laws of the jurisdictions set forth above its name on Schedule B;
(ii) the Fund is empowered under applicable laws and by its Charter Document and By-Laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the Fund to enter into and perform this Agreement;
(iv) the Fund is an investment company properly registered under the 1940 Act;
(v) a registration statement under the Securities Act of 1933, as amended ("1933 Act") and the 1940 Act on Form N-1A has been filed and will be effective and will remain effective during the term of this Agreement, and all necessary filings under the laws of the states will have been made and will be current during the term of this Agreement;
(vi) no legal or administrative proceedings have been instituted or threatened which would impair the Fund's ability to perform its duties and obligations under this Agreement;
(vii) the Fund's registration statement complies in all material respects with the 1933 Act and the 1940 Act (including the rules and regulations thereunder) and none of the Fund's prospectuses and/or statements of additional information contain any untrue statement of material fact or omit to state a material fact necessary to make the statements therein not misleading; and
(viii) the Fund's entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Fund or any law or regulation applicable to it.
3. Delivery of Documents. Each Fund will promptly furnish to Chase such copies, properly certified or authenticated, of contracts, documents and other related information that Chase may request or requires to properly discharge its duties. Such documents may include but are not limited to the following:
(a) Resolutions of the Board authorizing the appointment of Chase to provide certain services to the Fund and approving this Agreement;
(b) The Fund's Charter Document;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940 Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's registration statement including exhibits, as amended, on Form N-1A (the "Registration Statement") under the 1933 Act and the 1940 Act, as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the Fund and its investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors' reports;
(h) The Fund's prospectus(es) and statement(s) of additional information relating to all funds, series, portfolios and classes, as applicable, and all amendments and supplements thereto (such Prospectus(es) and Statement(s) of Additional Information and supplements thereto, as presently in effect and as from time to time hereafter amended and supplemented, herein called the "Prospectuses"); and
(i) Such other agreements as the Fund may enter into from time to time including securities lending agreements, futures and commodities account agreements, brokerage agreements and options agreements.
4. Services Provided.
(a) Chase will provide the following services subject to the control, direction and supervision of the Board and its designated agents and in compliance with the objectives, policies and limitations set forth in the Funds' Registration Statement, Charter Document and By-Laws; applicable laws and regulations; and all resolutions and policies implemented by the Board:
(i) Transfer Agency.
A description of the above service is contained in Schedule C to this Agreement.
(b) Chase will also:
(i) provide office facilities with respect to the provision of the services contemplated herein (which may be in the offices of Chase or a corporate affiliate of Chase);
(ii) provide or otherwise obtain personnel sufficient for provision of the services contemplated herein;
(iii) furnish equipment and other materials, which are necessary or desirable for provision of the services contemplated herein; and
(iv) keep records relating to the services provided hereunder in such form and manner as Chase may deem appropriate or advisable. To the extent required by Section 31 of the 1940 Act and the rules thereunder, Chase agrees that all such records prepared or maintained by Chase relating to the services provided hereunder are the property of the Funds and will be preserved for the periods prescribed under Rule 31a-2 under the 1940 Act, maintained at the Funds' expense, and made available in accordance with such Section and rules.
5. Fees and Expenses.
(a) As compensation for the services rendered to the Funds pursuant to this Agreement the Funds shall pay Chase monthly fees determined as set forth in Schedule A to this Agreement. Such fees are to be billed monthly and shall be due and payable upon receipt of the invoice. Upon any termination of the provision of services under this Agreement before the end of any month, the fee for the part of the month before such termination shall be prorated according to the proportion which such part bears to the full monthly period and shall be payable upon the date of such termination.
(b) For the purpose of determining fees calculated as a function of each Fund's assets, the value of the Fund's assets and net assets shall be computed as required by its currently effective Prospectus, generally accepted accounting principles, and resolutions of the Board.
(c) The Funds may request additional services, additional processing, or special reports, with such specifications, requirements and documentation as may be reasonably required by Chase. If Chase elects to provide such services or arrange for their provision, it shall be entitled to additional fees and expenses at its customary rates and charges.
(d) Chase will bear its own expenses in connection with the performance of the services under this Agreement except as provided herein or as agreed to by the parties. Each Fund agrees to promptly reimburse Chase for any services, equipment or supplies ordered by or for the Fund through Chase and for any other expenses that Chase may incur on the Fund's behalf at the Fund's request or as consented to by the Fund. Such other expenses to be incurred in the operation of the Fund and to be borne by the Funds, include, but are not limited to: taxes; interest; brokerage fees and commissions; salaries and fees of officers, directors, or trustees who are not officers, directors, shareholders or employees of Chase, or the Fund's distributor; SEC and state Blue Sky registration and qualification fees, levies, fines and other charges; postage and mailing costs; costs of share certificates; advisory fees; independent public accountants and custodians; insurance premiums including fidelity bond premiums; legal expenses; consulting fees; customary bank charges and fees; expenses of typesetting and printing of Prospectuses for regulatory purposes and for distribution to current shareholders of the Fund (the Fund's distributor to bear the expense of all other printing, production, and distribution of Prospectuses, and marketing materials); expenses of printing and production costs of shareholders' reports and proxy statements and materials; expenses of proxy solicitation and annual meetings; costs and expenses of Fund stationery and forms; customer service telephone expenses, costs and expenses of telephone and data lines and devices which are specially requested by the Fund; costs associated with corporate or trust, shareholder, and Board meetings; trade association dues and expenses; reprocessing costs to Chase caused by third party errors; and any extraordinary expenses and other customary Fund expenses.
(e) All fees, out-of-pocket expenses, or additional charges of Chase shall be billed on a monthly basis and shall be due and payable upon receipt of the invoice.
(f) Chase will render, after the close of each month in which services have been furnished, a statement reflecting all of the charges for such month. Charges remaining unpaid after thirty (30) days shall bear interest in finance charges equivalent to, in the aggregate, the Prime Rate (as reasonably determined by Chase) plus two percent per year and all costs and expenses of effecting collection of any such sums, including reasonable attorney's fees, shall be paid by the Funds to Chase.
(g) In the event that the Funds are more than sixty (60) days delinquent in payments of monthly billings in connection with this Agreement (with the exception of specific
amounts which may be contested in good faith by the Funds), this Agreement may be terminated upon thirty (30) days' written notice to the Funds by Chase. The Funds must notify Chase in writing of any contested amounts within thirty (30) days of receipt of a billing for such amounts. Disputed amounts are not due and payable while they are being investigated.
6. Limitation of Liability and Indemnification.
(a) Chase shall not be liable for any error of judgment or mistake of law or for any loss or expense suffered by the Funds, in connection with the matters to which this Agreement relates, except for a loss or expense solely caused by or resulting from willful misfeasance, bad faith or negligence on Chase's part in the performance of its duties or from reckless disregard by Chase of its obligations and duties under this Agreement. In no event shall Chase be liable for any indirect, incidental, special or consequential losses or damages of any kind whatsoever, even if Chase has been advised of the likelihood of such loss or damage and regardless of the form of action.
(b) Subject to Section 6(a) above, Chase shall not be responsible for, and the Funds shall indemnify and hold Chase harmless from and against, any and all losses, damages, costs, reasonable attorneys' fees and expenses, payments, expenses and liabilities incurred by Chase, any of its agents, or the Funds' agents in the performance of its/their duties hereunder, including but not limited to those arising out of or attributable to:
(i) any and all actions of Chase or its officers or agents required to be taken pursuant to this Agreement;
(ii) the reasonable reliance on or use by Chase or its officers or agents of information, records, or documents which are received by Chase or its officers or agents and furnished to it or them by or on behalf of the Funds, and which have been prepared or maintained by the Funds or any third party on behalf of the Funds;
(iii) the Funds' refusal or failure to comply with the terms of this Agreement or the Funds' lack of good faith, or actions, or lack thereof, involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of the Funds hereunder;
(v) the taping or other form of recording of telephone conversations or other forms of electronic communications with investors and shareholders, or reasonable reliance by Chase on telephone or other electronic instructions of any person acting on behalf of a
shareholder or shareholder account for which telephone or other electronic services have been authorized;
(vi) the reliance on or the carrying out by Chase or its officers or agents of any proper instructions reasonably believed to be duly authorized, or requests of the Funds or recognition by Chase of any share certificates which are reasonably believed to bear the proper signatures of the officers of the Funds and the proper countersignature of any transfer agent or registrar of the Funds;
(vii) any delays, inaccuracies, errors in or omissions from information or data provided to Chase by data, corporate action, pricing services or securities brokers and dealers;
(viii) the offer or sale of shares by any Fund in violation of any requirement under the Federal securities laws or regulations or the securities laws or regulations of any state, or in violation of any stop order or other determination or ruling by any Federal agency or any state agency with respect to the offer or sale of such shares in such state (1) resulting from activities, actions, or omissions by the Funds or their other service providers and agents, or (2) existing or arising out of activities, actions or omissions by or on behalf of the Fund prior to the effective date of this Agreement;
(ix) any failure of a Fund's registration statement to comply with the 1933 Act and the 1940 Act (including the rules and regulations thereunder) and any other applicable laws, or any untrue statement of a material fact or omission of a material fact necessary to make any statement therein not misleading in a Fund's prospectus;
(x) the actions taken by the Funds, their investment adviser, and their distributor in compliance with applicable securities, tax, commodities and other laws, rules and regulations, or the failure to so comply; and
(xi) all actions, inactions, omissions, or errors caused by third parties to whom Chase or the Funds has assigned any rights and/or delegated any duties under this Agreement at the request of or as required by the Funds, their investment advisers, distributor, administrator or sponsor.
(c) In performing its services hereunder, Chase shall be entitled to reasonably rely on any oral or written instructions, notices or other communications, including electronic transmissions, from the Funds and their custodians, officers and directors, investors, agents and
other service providers and shareholders which Chase reasonably believes to be genuine, valid and authorized, and shall be indemnified by the Funds for any loss or expense caused by such reliance. Chase shall also be entitled to consult with and rely on the advice and opinions of outside legal counsel retained by the Funds, as necessary or appropriate.
(d) Chase shall indemnify and hold the Funds harmless from and against any and all losses, damages, costs, charges, payments, expenses and liability, excluding attorneys' fees and costs, arising out of or attributable to Chase's refusal or failure to comply with the material terms of this Agreement, or Chase's lack of good faith, negligence or willful misconduct.
(e) Subject to the above Sections 6 (a) through 6 (d), any costs or losses incurred by a Fund for the processing of any purchase, redemption, exchange or other share transactions at a price per share other than the price per share applicable to the effective date of the transaction (the foregoing being generally referred to herein as "as of" transactions) will be handled in the following manner:
(i) For each calendar year, if all "as of" transactions for the year, taken in the aggregate, result in a net loss to a Fund ("net loss"), Chase will reimburse the Fund for such net loss, except to the extent that such net loss may be offset by application of a "net benefit" to the Fund carried over from prior calendar years pursuant to sub-paragraph (ii) immediately below.
(ii) For each calendar year, if all "as of" transactions for the year, taken in the aggregate, result in a net benefit to a Fund ("net benefit"), the Fund shall not reimburse Chase for the amount of such net benefit; however, any "net benefit" for any calendar year may be used to offset, in whole or in part, any "net loss" suffered by the Fund in any future calendar year so as to reduce the amount by which Chase shall be required to reimburse the Fund for such "net loss" in such year pursuant to sub-paragraph (i) immediately above.
(iii) Any "net loss" for which Chase reimburses a Fund in any calendar year shall not be carried over into future years so as to offset any "net benefit" in such future years.
7. Term. This Agreement shall become effective on the date first hereinabove written for an initial term of four years. The Agreement may be modified or amended from time to time by mutual agreement between the parties hereto. After the initial term, the Agreement shall continue in effect unless terminated by either party on 6 months' prior written notice. Upon termination of this Agreement, each Fund shall pay to Chase such compensation and any
reasonable out-of-pocket or other reimbursable expenses which may become due or payable under the terms hereof as of the date of termination or after the date that the provision of services ceases, whichever is later. If the Funds terminate the Agreement for any reason during the first year of the initial term, they will reimburse Chase in accordance with Schedule A.
8. Notices. Any notice required or permitted hereunder shall be in writing and shall be deemed effective on the date of personal delivery (by private messenger, courier service or otherwise) or upon confirmed receipt of telex or facsimile, whichever occurs first, or upon receipt if by mail to the parties at the following address (or such other address as a party may specify by notice to the other):
If to the Funds:
John Nuveen & Co., Incorporated
333 West Wacker Drive
Chicago, IL 60606
Attention: Fund Controller
Fax: (312) 917-8049
If to Chase:
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
Attention: Karl O. Hartmann, Esq., General Counsel
Fax: (617) 557-8616
9. Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive such party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver must be in writing signed by the waiving party.
10. Force Majeure. Chase shall not be responsible or liable for any harm, loss or damage suffered by the Funds, their investors, or other third parties or for any failure or delay in performance of Chase's obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond Chase's control. In the event of a force majeure, any resulting harm, loss, damage, failure or delay by Chase will not give the Funds the right to terminate this Agreement.
11. Additional Funds. In the event that John Nuveen & Company Incorporated sponsors additional open-end management companies with respect to which it desires Chase to
provide services under the terms of this Agreement, it shall so notify Chase in writing, and if Chase agrees in writing to provide such services, such Fund or Funds shall be subject to the terms of this Agreement and Schedule C shall be modified accordingly.
12. Amendments. This Agreement may be modified or amended from time to time by mutual written agreement between the parties. No provision of this Agreement may be changed, discharged, or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought.
13. Assignment. Chase may assign and delegate this Agreement and its rights and obligations hereunder without the consent of the other party.
14. Severability. If any provision of this Agreement is invalid or unenforceable, the balance of the Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance it shall nevertheless remain applicable to all other persons and circumstances.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first written above.
NUVEEN FUNDS
By: /s/ Stuart Rogers
-----------------------------
Name: Stuart Rogers
---------------------------
Title: Vice President
--------------------------
|
CHASE GLOBAL FUNDS
SERVICES COMPANY
By: /s/ Donald P. Hearn
-----------------------------
Name: Donald P. Hearn
---------------------------
Title: Chairman and CEO
--------------------------
|
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE A
FEES AND EXPENSES
Transfer Agency Fees
A. $18.50 per municipal fund account per annum $18.25 per equity fund account per annum $29.00 per money market fund account per annum
B. Out-of-pocket expenses, including but not limited to those in Section
5(d), will be computed, billed and payable monthly Customized systems
and technology charges (excluding those projects covered under the
conversion agreement) will be negotiated individually and billed along
with out-of-pocket expenses.
C. If the Funds terminate this Agreement for any reason whatsoever between the date of this Agreement and July 1, 1999, there will be immediately due and owing to Chase by Nuveen a $6 million charge; if between the date of July 1, 1999 and June 30, 2000, a $4 million charge; and if between July 1, 2000 and June 30, 2001, a $2 million charge. In addition, the Funds will reimburse Chase for all costs it incurs in connection with any conversion to another transfer agent.
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE B
Flagship Admiral Funds Inc. (Maryland Corporation)
Flagship Utility Income Fund
Nuveen Investment Trust (Massachusetts Business Trust)
Nuveen Growth and Income Stock Fund
Nuveen Balanced Stock and Bond Fund
Nuveen Balanced Municipal and Stock Fund
Nuveen European Value Fund
Nuveen Investment Trust II (Massachusetts Business Trust)
Nuveen Rittenhouse Growth Fund
Nuveen Flagship Municipal Trust (Massachusetts Business Trust)
Nuveen Municipal Bond Fund
Nuveen Insured Municipal Bond Fund
Nuveen Flagship All-American Municipal Bond Fund
Nuveen Flagship Limited Term Municipal Bond Fund
Nuveen Flagship Intermediate Municipal Bond Fund
Nuveen Flagship Multistate Trust I (Massachusetts Business Trust)
Nuveen Flagship Arizona Municipal Bond Fund
Nuveen Flagship Colorado Municipal Bond Fund
Nuveen Flagship Florida Municipal Bond Fund
Nuveen Flagship Florida Intermediate Municipal Bond Fund
Nuveen Maryland Municipal Bond Fund
Nuveen Flagship New Mexico Municipal Bond Fund
Nuveen Flagship Pennsylvania Municipal Bond Fund
Nuveen Flagship Virginia Municipal Bond Fund
Nuveen Flagship Multistate Trust II (Massachusetts Business Trust)
Nuveen California Municipal Bond Fund Nuveen California Insured Municipal Bond Fund Nuveen Flagship Connecticut Municipal Bond Fund Nuveen Massachusetts Municipal Bond Fund Nuveen Massachusetts Insured Municipal Bond Fund Nuveen Flagship New Jersey Municipal Bond Fund Nuveen Flagship New Jersey Intermediate Municipal Bond Fund Nuveen Flagship New York Municipal Bond Fund Nuveen New York Insured Municipal Bond Fund
Nuveen Flagship Multistate Trust III (Massachusetts Business Trust)
Nuveen Flagship Alabama Municipal Bond Fund Nuveen Flagship Georgia Municipal Bond Fund Nuveen Flagship Louisiana Municipal Bond Fund Nuveen Flagship North Carolina Municipal Bond Fund Nuveen Flagship South Carolina Municipal Bond Fund Nuveen Flagship Tennessee Municipal Bond Fund
Nuveen Flagship Multistate Trust IV (Massachusetts Business Trust)
Nuveen Flagship Kansas Municipal Bond Fund Nuveen Flagship Kentucky Municipal Bond Fund Nuveen Flagship Kentucky Limited Term Municipal Bond Fund Nuveen Flagship Michigan Municipal Bond Fund Nuveen Flagship Missouri Municipal Bond Fund Nuveen Flagship Ohio Municipal Bond Fund Nuveen Flagship Wisconsin Municipal Bond Fund
Nuveen Tax-Exempt Money Market Fund, Inc. (Maryland Corporation)
Nuveen Tax-Free Reserves, Inc. (Maryland Corporation)
Nuveen Tax-Free Money Market Fund, Inc. (Minnesota Corporation)
Nuveen Massachusetts Tax-Free Money Market Fund Nuveen New York Tax-Free Money Market Fund
Nuveen California Tax-Free Fund, Inc. (Maryland Corporation)
Nuveen California Tax-Free Money Market Fund
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE C
DESCRIPTION OF TRANSFER AGENCY SERVICES
The following is a general description of the transfer agency services Chase shall provide to each Fund.
A. Shareholder Recordkeeping. Maintain records showing for each Fund shareholder the following: (i) name, address, appropriate tax certification and tax identifying number; (ii) number of shares of each Fund, portfolio or class; (iii) historical information including, but not limited to, dividends paid, date and price of all transactions including individual purchases and redemptions, based upon appropriate supporting documents; and (iv) any dividend reinvestment order, application, specific address, payment and processing instructions and correspondence relating to the current maintenance of the account.
B. Share Issuance. Record the issuance of shares of each Fund, portfolio or class. Except as specifically agreed in writing between Chase and the Fund, Chase shall have no obligation when countersigning and issuing and/or crediting shares to take cognizance of any other laws relating to the issue and sale of such shares except insofar as policies and procedures of the Stock Transfer Association recognize such laws.
C. Transfer, Purchase, Exchange and Redemption Orders. Process all orders for the transfer, purchase, exchange and redemption of shares of the Fund in accordance with the Fund's current prospectus and customary transfer agency policies and procedures, including electronic transmissions which the Fund acknowledges it has authorized, or in accordance with any instructions of the Fund or its agents which Chase reasonably believes to be authorized.
D. Shareholder Communications. Transmit all communications by the Fund to its shareholders promptly following the delivery by the Fund of the material to be transmitted by mail, telephone, courier service or electronically.
E. Proxy Materials. Assist with the mailing or transmission of proxy materials, tabulating votes, and compiling and certifying voting results. Services may include the provision of inspectors of election at any meeting of shareholders.
F. Share Certificates. If permitted by Fund policies, and if a shareholder of the Fund requests a certificate representing shares, Chase as Transfer Agent, will countersign and mail a share certificate to the investor at his/her address as it appears on the Fund's shareholder records.
G. Returned Checks. In the event that any check or other negotiable instrument for the payment of shares is returned unpaid for any reason, Chase will take such steps, as Chase may, in its discretion, deem appropriate and notify the Fund of such action. However, the Fund remains ultimately liable for any returned checks or negotiable instruments of its shareholders.
H. Shareholder & Broker-Dealer Correspondence. Acknowledge all correspondence from shareholders and broker-dealers relating to share accounts and undertake such other shareholder and broker-dealer correspondence as may from time to time be mutually agreed upon.
I. Tax Reporting. Chase shall issue appropriate shareholder tax forms as required.
J. Dividend Disbursing. Chase will prepare and mail checks, place wire transfers or credit income and capital gain payments to shareholders. The Fund will advise Chase of the declaration of any dividend or distribution and the record and payable date thereof at least five (5) days prior to the record date. Chase will, on or before the payment date of any such dividend or distribution, notify the Fund's Custodian of the estimated amount required to pay any portion of such dividend or distribution payable in cash, and on or before the payment date of such distribution, the Fund will instruct its Custodian to make available to Chase sufficient funds for the cash amount to be paid out. If a shareholder is entitled to receive additional shares by virtue of any such distribution or dividend, appropriate credits will be made to each shareholder's account.
K. Escheatment. Chase shall provide escheatment services only with respect to the escheatment laws of the Commonwealth of Massachusetts, including those which relate to reciprocal agreements with other states.
L. Telephone Services. Chase will provide staff coverage, training and supervision in connection with the Fund's telephone line for shareholder inquiries, and will respond to inquiries concerning shareholder records, transactions processed by Chase, procedures to effect the shareholder records and inquiries of a general nature relative to shareholder services.
M. 12b-1. Chase will calculate and process all 12b-1 payments in accordance with each Fund's current prospectus.
N. Commission Payments. Chase will calculate and process all commission payments in accordance with each Fund's current prospectus.
O. Requests for Information. Chase will provide all required information in a timely fashion in support of regulatory filings.
P. SAS 70. Chase will make available to the Funds' sponsor independent auditor reports in compliance with SAS 70.
Q. Regulatory Changes. Chase will provide assistance with the analysis and implementation of any changes required by regulatory bodies.
Nuveen Investment Trust
Plan of Distribution and Service
Pursuant to Rule 12b-1
As Amended May 16, 1998
Whereas, Nuveen Investment Trust, a Massachusetts business trust (the "Trust"), engages in business as an open-end management investment company and is registered under the Investment Company Act of 1940, as amended (the "Act");
Whereas, the Trust issues shares in several series (each a "Fund");
Whereas, the Trust employs John Nuveen & Co. Incorporated (the "Distributor") as distributor of the shares of each Fund (the "Shares") pursuant to a Distribution Agreement dated as of July 29, 1996;
Whereas, each Fund is authorized to issue Shares in four different classes ("Classes"): Class A, Class B, Class C and Class R.
Whereas, the Trust desires to adopt an amended Plan of Distribution and Service pursuant to Rule 12b-1 under the Act ("Rule 12b-1"), and the Board of Trustees of the Trust has determined that there is a reasonable likelihood that adoption of this amended Plan of Distribution and Service will benefit each Fund and its shareholders;
Whereas, the Trust has adopted a Multiple Class Plan Pursuant to Rule 18f-3 (the "Rule 18f-3 Plan") to enable the various Classes of Shares to be granted different rights and privileges and to bear different expenses, and has an effective registration statement on file with the SEC containing a Prospectus describing such Classes of Shares;
Whereas, as described in the Rule 18f-3 Plan, the purchase of Class A Shares is generally subject to an up-front sales charge, as set forth in the Trust's Prospectuses and Statements of Additional Information, and the purchase of Class B and Class C Shares will not be subject to an up-front sales charge, but in lieu thereof the Class B Shares will be subject to an asset-based distribution fee (and a declining contingent deferred sales charge) and Class C Shares will be subject to an asset-based distribution fee (and a one-year contingent deferred sales charge), as described in the Prospectus for the Shares; and
Whereas, Shares representing an investment in Class B will automatically convert to Class A Shares 8 years after the investment, as described in the Prospectus for the Shares;
NOW, THEREFORE, each Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution and Service (the "Plan") in accordance with Rule 12b-1, on the following terms and conditions:
1. (a) The Fund is authorized to compensate the Distributor for services
performed and expenses incurred by the Distributor in connection with
the distribution of Shares of Class A, Class B and Class C of the
Fund and the servicing of accounts holding such Shares.
(b) The amount of such compensation paid during any one year shall
consist
(i) with respect to Class A Shares of a Service Fee not to exceed
.25% of average daily net assets of the Class A Shares of the
Fund;
(ii) with respect to Class B Shares of a Service Fee not to exceed
.25% of average daily net assets of the Class B Shares of the
Fund, plus a Distribution Fee not to exceed .75% of average
daily net assets of the Class B Shares of the Fund; and
(iii) with respect to Class C Shares of a Service Fee not to exceed
.25% of average daily net assets of the Class C Shares of the
Fund, plus a Distribution Fee not to exceed .75% of average
daily net assets of the Class C Shares of the Fund.
Such compensation shall be calculated and accrued daily and paid
monthly or at such other intervals as the Board of Trustees may
determine.
(c) With respect to Class A Shares, the Distributor shall pay any Service
Fees it receives under the Plan for which a particular underwriter,
dealer, broker, bank or selling entity having a Dealer Agreement in
effect ("Authorized Dealer", which may include the Distributor) is
the dealer of record to such Authorized Dealers to compensate such
organizations for providing services to shareholders relating to
their investment. The Distributor may retain any Service Fees not so
paid.
(d) With respect to the Class B Shares, the Distributor:
(i) shall retain the Distribution Fee to compensate it for costs
associated with the distribution of the Class B Shares,
including the payment of broker commissions to Authorized
Dealers (which may include the Distributor)
-2-
|
who were the dealer of record with respect to the purchase of
those shares; and
(ii) shall pay any Service Fees it receives under the Plan for
which a particular Authorized Dealer is the dealer of record
(which may include the Distributor) to such Authorized Dealers
to compensate such organizations for providing services to
shareholders relating to their investment; provided, however,
that the Distributor shall be entitled to retain, for the
first year after purchase of the Class B Shares, the Service
Fee to the extent that it may have pre-paid the Service Fee
for that period to the Authorized Dealer of record.
The Distributor may retain any Distribution or Service Fees not so
paid.
(e) With respect to the Class C Shares, the Distributor:
(i) shall pay the Distribution Fee it receives under the Plan with
respect to Class C Shares for which a particular Authorized
Dealer is the dealer of record (which may include the
Distributor) to such Authorized Dealers to compensate such
organizations in connection with such share sales; provided,
however, that the Distributor shall be entitled to retain, for
the first year after purchase of the Class C Shares, the
Distribution Fee to the extent that it may have pre-paid the
Distribution Fee for that period to the Authorized Dealer of
record; and
(ii) shall pay any Service Fees it receives under the Plan for
which a particular Authorized Dealer is the dealer of record
(which may include the Distributor) to such Authorized Dealers
to compensate such organizations for providing services to
shareholders relating to their investment; provided, however,
that the Distributor shall be entitled to retain, for the
first year after purchase of the Class B Shares, the Service
Fee to the extent that it may have pre-paid the Service Fee
for that period to the Authorized Dealer of record.
The Distributor may retain any Distribution or Service Fees not so
paid.
(f) Services for which such Authorized Dealers may receive Service Fee
|
payments include any or all of the following: maintaining account records for shareholders who beneficially own Shares; answering inquiries relating to the shareholders' accounts, the policies of the Fund and the performance of their investment; providing assistance and handling
transmission of funds in connection with purchase, redemption and exchange orders for Shares; providing assistance in connection with changing account setups and enrolling in various optional fund services; producing and disseminating shareholder communications or servicing materials; the ordinary or capital expenses, such as equipment, rent, fixtures, salaries, bonuses, reporting and recordkeeping and third party consultancy or similar expenses, relating to any activity for which payment is authorized by the Board; and the financing of any other activity for which payment is authorized by the Board.
(g) Payments of Distribution or Service Fees to any organization as of any quarter-end will not exceed the appropriate amount based on the annual percentages set forth in subparagraphs (b)(i), (ii) and (iii) above, based on average net assets of accounts for which such organization appeared on the records of the Fund and/or its transfer agent as the organization of record during the preceding quarter.
2. This amended Plan shall not take effect until the Plan, together with any related agreement(s), has been approved with respect to the affected Fund and Class thereof by votes of a majority of both (a) the Board of Trustees of the Trust, and (b) those Trustees of the Trust who are not "interested persons" of the Trust (as defined in the Act) and who have no direct or indirect financial interest in the operation of the Plan or any agreement related to it (the "Rule 12b-1 Trustees") cast in person at a meeting (or meetings) called for the purpose of voting on the Plan and such related Agreement(s).
3. This Plan shall remain in effect until August 1, 1998, and shall continue in effect thereafter so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 2.
4. The Distributor shall provide to the Board of Trustees of the Trust and the Board shall review, at least quarterly, a written report of distribution- and service-related activities, Distribution Fees, Service Fees, and the purposes for which such activities were performed and expenses incurred.
5. This Plan may be terminated as to a given Fund or as to a given Class A, Class B or Class C of a Fund at any time by vote of a majority of the Rule 12b-1 Trustees or by vote of a majority (as defined in the Act) of the outstanding voting Shares of the applicable Fund or Class.
6. This Plan may not be amended to increase materially the amount of compensation payable by a Fund with respect to Class A, Class B or Class C Shares under paragraph 1 hereof unless such amendment is approved by a vote of at least a majority (as defined in the Act) of the outstanding voting Shares of that Class of Shares of the respective Fund. No material
amendment to the Plan shall be made unless approved in the manner provided in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of the Trustees who are not interested persons (as defined in the Act) of the Trust shall be committed to the discretion of the Trustees who are not such interested persons.
8. The Trust shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 4 hereof, for a period of not less than six years from the date of the Plan, any such agreement or any such report, as the case may be, the first two years in an easily accessible place.
| ARTICLE 6 |
| This schedule contains Summary Financial Information extracted from the Form N-SAR and the financial statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 011 |
| NAME: NUVEEN GROWTH & INCOME STOCK FUND CLASS A |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 782721 |
| INVESTMENTS AT VALUE | 895944 |
| RECEIVABLES | 10245 |
| ASSETS OTHER | 197 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 906386 |
| PAYABLE FOR SECURITIES | 757 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 3897 |
| TOTAL LIABILITIES | 4654 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 715438 |
| SHARES COMMON STOCK | 29809 |
| SHARES COMMON PRIOR | 25665 |
| ACCUMULATED NII CURRENT | 105 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 72966 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 113223 |
| NET ASSETS | 901732 |
| DIVIDEND INCOME | 13045 |
| INTEREST INCOME | 4487 |
| OTHER INCOME | 0 |
| EXPENSES NET | 9747 |
| NET INVESTMENT INCOME | 7785 |
| REALIZED GAINS CURRENT | 110058 |
| APPREC INCREASE CURRENT | 33508 |
| NET CHANGE FROM OPS | 151351 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 7296 |
| DISTRIBUTIONS OF GAINS | 55955 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 3568 |
| NUMBER OF SHARES REDEEMED | 1641 |
| SHARES REINVESTED | 2217 |
| NET CHANGE IN ASSETS | 255582 |
| ACCUMULATED NII PRIOR | 48 |
| ACCUMULATED GAINS PRIOR | 23930 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 6459 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 11000 |
| AVERAGE NET ASSETS | 710805 |
| PER SHARE NAV BEGIN | 24.01 |
| PER SHARE NII | .26 |
| PER SHARE GAIN APPREC | 4.55 |
| PER SHARE DIVIDEND | (.25) |
| PER SHARE DISTRIBUTIONS | (2.07) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 26.50 |
| EXPENSE RATIO | 1.20 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains Summary Financial Information extracted from the Form N-SAR and the financial statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 012 |
| NAME: NUVEEN GROWTH & INCOME STOCK FUND CLASS B |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 782721 |
| INVESTMENTS AT VALUE | 895944 |
| RECEIVABLES | 10245 |
| ASSETS OTHER | 197 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 906386 |
| PAYABLE FOR SECURITIES | 757 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 3897 |
| TOTAL LIABILITIES | 4654 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 715438 |
| SHARES COMMON STOCK | 2717 |
| SHARES COMMON PRIOR | 444 |
| ACCUMULATED NII CURRENT | 105 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 72966 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 113223 |
| NET ASSETS | 901732 |
| DIVIDEND INCOME | 13045 |
| INTEREST INCOME | 4487 |
| OTHER INCOME | 0 |
| EXPENSES NET | 9747 |
| NET INVESTMENT INCOME | 7785 |
| REALIZED GAINS CURRENT | 110058 |
| APPREC INCREASE CURRENT | 33508 |
| NET CHANGE FROM OPS | 151351 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 174 |
| DISTRIBUTIONS OF GAINS | 3039 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 2261 |
| NUMBER OF SHARES REDEEMED | 108 |
| SHARES REINVESTED | 119 |
| NET CHANGE IN ASSETS | 255582 |
| ACCUMULATED NII PRIOR | 48 |
| ACCUMULATED GAINS PRIOR | 23930 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 6459 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 11000 |
| AVERAGE NET ASSETS | 42877 |
| PER SHARE NAV BEGIN | 24.00 |
| PER SHARE NII | .10 |
| PER SHARE GAIN APPREC | 4.51 |
| PER SHARE DIVIDEND | (.07) |
| PER SHARE DISTRIBUTIONS | (2.07) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 26.47 |
| EXPENSE RATIO | 1.95 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains Summary Financial Information extracted from the Form N-SAR and the financial statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 013 |
| NAME: NUVEEN GROWTH & INCOME STOCK FUND CLASS C |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 782721 |
| INVESTMENTS AT VALUE | 895944 |
| RECEIVABLES | 10245 |
| ASSETS OTHER | 197 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 906386 |
| PAYABLE FOR SECURITIES | 757 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 3897 |
| TOTAL LIABILITIES | 4654 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 715438 |
| SHARES COMMON STOCK | 811 |
| SHARES COMMON PRIOR | 151 |
| ACCUMULATED NII CURRENT | 105 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 72966 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 113223 |
| NET ASSETS | 901732 |
| DIVIDEND INCOME | 13045 |
| INTEREST INCOME | 4487 |
| OTHER INCOME | 0 |
| EXPENSES NET | 9747 |
| NET INVESTMENT INCOME | 7785 |
| REALIZED GAINS CURRENT | 110058 |
| APPREC INCREASE CURRENT | 33508 |
| NET CHANGE FROM OPS | 151351 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 50 |
| DISTRIBUTIONS OF GAINS | 762 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 698 |
| NUMBER OF SHARES REDEEMED | 69 |
| SHARES REINVESTED | 31 |
| NET CHANGE IN ASSETS | 255582 |
| ACCUMULATED NII PRIOR | 48 |
| ACCUMULATED GAINS PRIOR | 23930 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 6459 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 11000 |
| AVERAGE NET ASSETS | 11928 |
| PER SHARE NAV BEGIN | 23.98 |
| PER SHARE NII | .10 |
| PER SHARE GAIN APPREC | 4.49 |
| PER SHARE DIVIDEND | (.07) |
| PER SHARE DISTRIBUTIONS | (2.07) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 26.43 |
| EXPENSE RATIO | 1.95 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains Summary Financial Information extracted from the Form N-SAR and the financial statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 014 |
| NAME: NUVEEN GROWTH & INCOME STOCK FUND CLASS R |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 782721 |
| INVESTMENTS AT VALUE | 895944 |
| RECEIVABLES | 10245 |
| ASSETS OTHER | 197 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 906386 |
| PAYABLE FOR SECURITIES | 757 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 3897 |
| TOTAL LIABILITIES | 4654 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 715438 |
| SHARES COMMON STOCK | 691 |
| SHARES COMMON PRIOR | 651 |
| ACCUMULATED NII CURRENT | 105 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 72966 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 113223 |
| NET ASSETS | 901732 |
| DIVIDEND INCOME | 13045 |
| INTEREST INCOME | 4487 |
| OTHER INCOME | 0 |
| EXPENSES NET | 9747 |
| NET INVESTMENT INCOME | 7785 |
| REALIZED GAINS CURRENT | 110058 |
| APPREC INCREASE CURRENT | 33508 |
| NET CHANGE FROM OPS | 151351 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 207 |
| DISTRIBUTIONS OF GAINS | 1266 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 325 |
| NUMBER OF SHARES REDEEMED | 341 |
| SHARES REINVESTED | 55 |
| NET CHANGE IN ASSETS | 255582 |
| ACCUMULATED NII PRIOR | 48 |
| ACCUMULATED GAINS PRIOR | 23930 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 6459 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 11000 |
| AVERAGE NET ASSETS | 16624 |
| PER SHARE NAV BEGIN | 24.02 |
| PER SHARE NII | .32 |
| PER SHARE GAIN APPREC | 4.56 |
| PER SHARE DIVIDEND | (.31) |
| PER SHARE DISTRIBUTIONS | (2.07) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 26.52 |
| EXPENSE RATIO | .95 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains summary financial Information extracted from the Form N-SAR and the financial statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 031 |
| NAME: NUVEEN BALANCED MUNICIPAL & STOCK FUND CLASS A |
| MULTIPLIER: 1000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 154248 |
| INVESTMENTS AT VALUE | 165226 |
| RECEIVABLES | 4278 |
| ASSETS OTHER | 1571 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 171075 |
| PAYABLE FOR SECURITIES | 4850 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 575 |
| TOTAL LIABILITIES | 5425 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 149330 |
| SHARES COMMON STOCK | 4596 |
| SHARES COMMON PRIOR | 3460 |
| ACCUMULATED NII CURRENT | 450 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 4892 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 10978 |
| NET ASSETS | 165650 |
| DIVIDEND INCOME | 1031 |
| INTEREST INCOME | 3793 |
| OTHER INCOME | 0 |
| EXPENSES NET | 1542 |
| NET INVESTMENT INCOME | 3282 |
| REALIZED GAINS CURRENT | 6300 |
| APPREC INCREASE CURRENT | 7014 |
| NET CHANGE FROM OPS | 16596 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 2449 |
| DISTRIBUTIONS OF GAINS | 1444 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 1309 |
| NUMBER OF SHARES REDEEMED | 298 |
| SHARES REINVESTED | 125 |
| NET CHANGE IN ASSETS | 75125 |
| ACCUMULATED NII PRIOR | 116 |
| ACCUMULATED GAINS PRIOR | 441 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 943 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1866 |
| AVERAGE NET ASSETS | 98193 |
| PER SHARE NAV BEGIN | 23.11 |
| PER SHARE NII | .67 |
| PER SHARE GAIN APPREC | 2.66 |
| PER SHARE DIVIDEND | 0 |
| PER SHARE DISTRIBUTIONS | (.61) |
| RETURNS OF CAPITAL | (.37) |
| PER SHARE NAV END | 25.46 |
| EXPENSE RATIO | 1.10 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains summary financial Information extracted from the Form N-SAR and the financial statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 032 |
| NAME: NUVEEN BALANCED MUNICIPAL & STOCK FUND CLASS B |
| MULTIPLIER: 1000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 154248 |
| INVESTMENTS AT VALUE | 165226 |
| RECEIVABLES | 4278 |
| ASSETS OTHER | 1571 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 171075 |
| PAYABLE FOR SECURITIES | 4850 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 575 |
| TOTAL LIABILITIES | 5425 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 149330 |
| SHARES COMMON STOCK | 1269 |
| SHARES COMMON PRIOR | 89 |
| ACCUMULATED NII CURRENT | 450 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 4892 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 10978 |
| NET ASSETS | 165650 |
| DIVIDEND INCOME | 1031 |
| INTEREST INCOME | 3793 |
| OTHER INCOME | 0 |
| EXPENSES NET | 1542 |
| NET INVESTMENT INCOME | 3282 |
| REALIZED GAINS CURRENT | 6300 |
| APPREC INCREASE CURRENT | 7014 |
| NET CHANGE FROM OPS | 16596 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 223 |
| DISTRIBUTIONS OF GAINS | 193 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 1193 |
| NUMBER OF SHARES REDEEMED | 24 |
| SHARES REINVESTED | 11 |
| NET CHANGE IN ASSETS | 75125 |
| ACCUMULATED NII PRIOR | 116 |
| ACCUMULATED GAINS PRIOR | 441 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 943 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1866 |
| AVERAGE NET ASSETS | 15454 |
| PER SHARE NAV BEGIN | 23.11 |
| PER SHARE NII | .49 |
| PER SHARE GAIN APPREC | 2.67 |
| PER SHARE DIVIDEND | 0 |
| PER SHARE DISTRIBUTIONS | (.37) |
| RETURNS OF CAPITAL | (.37) |
| PER SHARE NAV END | 25.53 |
| EXPENSE RATIO | 1.85 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains summary financial Information extracted from the Form N-SAR and the financial statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 033 |
| NAME: NUVEEN BALANCED MUNICIPAL & STOCK FUND CLASS C |
| MULTIPLIER: 1000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 154248 |
| INVESTMENTS AT VALUE | 165226 |
| RECEIVABLES | 4278 |
| ASSETS OTHER | 1571 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 171075 |
| PAYABLE FOR SECURITIES | 4850 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 575 |
| TOTAL LIABILITIES | 5425 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 149330 |
| SHARES COMMON STOCK | 584 |
| SHARES COMMON PRIOR | 67 |
| ACCUMULATED NII CURRENT | 450 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 4892 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 10978 |
| NET ASSETS | 165650 |
| DIVIDEND INCOME | 1031 |
| INTEREST INCOME | 3793 |
| OTHER INCOME | 0 |
| EXPENSES NET | 1542 |
| NET INVESTMENT INCOME | 3282 |
| REALIZED GAINS CURRENT | 6300 |
| APPREC INCREASE CURRENT | 7014 |
| NET CHANGE FROM OPS | 16596 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 104 |
| DISTRIBUTIONS OF GAINS | 90 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 524 |
| NUMBER OF SHARES REDEEMED | 13 |
| SHARES REINVESTED | 6 |
| NET CHANGE IN ASSETS | 75125 |
| ACCUMULATED NII PRIOR | 116 |
| ACCUMULATED GAINS PRIOR | 441 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 943 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1866 |
| AVERAGE NET ASSETS | 7179 |
| PER SHARE NAV BEGIN | 23.10 |
| PER SHARE NII | .49 |
| PER SHARE GAIN APPREC | 2.66 |
| PER SHARE DIVIDEND | 0 |
| PER SHARE DISTRIBUTIONS | (.37) |
| RETURNS OF CAPITAL | (.37) |
| PER SHARE NAV END | 25.51 |
| EXPENSE RATIO | 1.85 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains summary financial Information extracted from the Form N-SAR and the financial statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 034 |
| NAME: NUVEEN BALANCED MUNICIPAL & STOCK FUND CLASS R |
| MULTIPLIER: 1000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 154248 |
| INVESTMENTS AT VALUE | 165226 |
| RECEIVABLES | 4278 |
| ASSETS OTHER | 1571 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 171075 |
| PAYABLE FOR SECURITIES | 4850 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 575 |
| TOTAL LIABILITIES | 5425 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 149330 |
| SHARES COMMON STOCK | 53 |
| SHARES COMMON PRIOR | 301 |
| ACCUMULATED NII CURRENT | 450 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 4892 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 10978 |
| NET ASSETS | 165650 |
| DIVIDEND INCOME | 1031 |
| INTEREST INCOME | 3793 |
| OTHER INCOME | 0 |
| EXPENSES NET | 1542 |
| NET INVESTMENT INCOME | 3282 |
| REALIZED GAINS CURRENT | 6300 |
| APPREC INCREASE CURRENT | 7014 |
| NET CHANGE FROM OPS | 16596 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 172 |
| DISTRIBUTIONS OF GAINS | 120 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 53 |
| NUMBER OF SHARES REDEEMED | 302 |
| SHARES REINVESTED | 1 |
| NET CHANGE IN ASSETS | 75125 |
| ACCUMULATED NII PRIOR | 116 |
| ACCUMULATED GAINS PRIOR | 441 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 943 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1866 |
| AVERAGE NET ASSETS | 5100 |
| PER SHARE NAV BEGIN | 23.11 |
| PER SHARE NII | .72 |
| PER SHARE GAIN APPREC | 2.66 |
| PER SHARE DIVIDEND | 0 |
| PER SHARE DISTRIBUTIONS | (.73) |
| RETURNS OF CAPITAL | (.37) |
| PER SHARE NAV END | 25.39 |
| EXPENSE RATIO | .85 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains Summary Financial Information extracted from the Form N-SAR and the Financial Statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 021 |
| NAME: NUVEEN BALANCED STOCK AND BOND FUND CLASS A |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 78728 |
| INVESTMENTS AT VALUE | 86379 |
| RECEIVABLES | 1759 |
| ASSETS OTHER | 249 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 88387 |
| PAYABLE FOR SECURITIES | 61 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 801 |
| TOTAL LIABILITIES | 862 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 76164 |
| SHARES COMMON STOCK | 2638 |
| SHARES COMMON PRIOR | 2378 |
| ACCUMULATED NII CURRENT | 5 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 3705 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 7651 |
| NET ASSETS | 87525 |
| DIVIDEND INCOME | 815 |
| INTEREST INCOME | 2443 |
| OTHER INCOME | 0 |
| EXPENSES NET | 911 |
| NET INVESTMENT INCOME | 2347 |
| REALIZED GAINS CURRENT | 4989 |
| APPREC INCREASE CURRENT | 4596 |
| NET CHANGE FROM OPS | 11932 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 1956 |
| DISTRIBUTIONS OF GAINS | 1411 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 520 |
| NUMBER OF SHARES REDEEMED | 376 |
| SHARES REINVESTED | 116 |
| NET CHANGE IN ASSETS | 23161 |
| ACCUMULATED NII PRIOR | 19 |
| ACCUMULATED GAINS PRIOR | 504 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 587 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1208 |
| AVERAGE NET ASSETS | 63837 |
| PER SHARE NAV BEGIN | 23.84 |
| PER SHARE NII | .77 |
| PER SHARE GAIN APPREC | 3.11 |
| PER SHARE DIVIDEND | (.76) |
| PER SHARE DISTRIBUTIONS | (.57) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 26.39 |
| EXPENSE RATIO | 1.10 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains Summary Financial Information extracted from the Form N-SAR and the Financial Statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 022 |
| NAME: NUVEEN BALANCED STOCK AND BOND FUND CLASS B |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 78728 |
| INVESTMENTS AT VALUE | 86379 |
| RECEIVABLES | 1759 |
| ASSETS OTHER | 249 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 88387 |
| PAYABLE FOR SECURITIES | 61 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 801 |
| TOTAL LIABILITIES | 862 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 76164 |
| SHARES COMMON STOCK | 392 |
| SHARES COMMON PRIOR | 27 |
| ACCUMULATED NII CURRENT | 5 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 3705 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 7651 |
| NET ASSETS | 87525 |
| DIVIDEND INCOME | 815 |
| INTEREST INCOME | 2443 |
| OTHER INCOME | 0 |
| EXPENSES NET | 911 |
| NET INVESTMENT INCOME | 2347 |
| REALIZED GAINS CURRENT | 4989 |
| APPREC INCREASE CURRENT | 4596 |
| NET CHANGE FROM OPS | 11932 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 165 |
| DISTRIBUTIONS OF GAINS | 121 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 372 |
| NUMBER OF SHARES REDEEMED | 14 |
| SHARES REINVESTED | 7 |
| NET CHANGE IN ASSETS | 23161 |
| ACCUMULATED NII PRIOR | 19 |
| ACCUMULATED GAINS PRIOR | 504 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 587 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1208 |
| AVERAGE NET ASSETS | 6168 |
| PER SHARE NAV BEGIN | 23.84 |
| PER SHARE NII | .59 |
| PER SHARE GAIN APPREC | 3.10 |
| PER SHARE DIVIDEND | (.57) |
| PER SHARE DISTRIBUTIONS | (.57) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 26.39 |
| EXPENSE RATIO | 1.85 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains Summary Financial Information extracted from the Form N-SAR and the Financial Statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 023 |
| NAME: NUVEEN BALANCED STOCK AND BOND FUND CLASS C |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 78728 |
| INVESTMENTS AT VALUE | 86379 |
| RECEIVABLES | 1759 |
| ASSETS OTHER | 249 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 88387 |
| PAYABLE FOR SECURITIES | 61 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 801 |
| TOTAL LIABILITIES | 862 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 76164 |
| SHARES COMMON STOCK | 157 |
| SHARES COMMON PRIOR | 41 |
| ACCUMULATED NII CURRENT | 5 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 3705 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 7651 |
| NET ASSETS | 87525 |
| DIVIDEND INCOME | 815 |
| INTEREST INCOME | 2443 |
| OTHER INCOME | 0 |
| EXPENSES NET | 911 |
| NET INVESTMENT INCOME | 2347 |
| REALIZED GAINS CURRENT | 4989 |
| APPREC INCREASE CURRENT | 4596 |
| NET CHANGE FROM OPS | 11932 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 64 |
| DISTRIBUTIONS OF GAINS | 51 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 124 |
| NUMBER OF SHARES REDEEMED | 10 |
| SHARES REINVESTED | 2 |
| NET CHANGE IN ASSETS | 23161 |
| ACCUMULATED NII PRIOR | 19 |
| ACCUMULATED GAINS PRIOR | 504 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 587 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1208 |
| AVERAGE NET ASSETS | 2492 |
| PER SHARE NAV BEGIN | 23.84 |
| PER SHARE NII | .59 |
| PER SHARE GAIN APPREC | 3.10 |
| PER SHARE DIVIDEND | (.57) |
| PER SHARE DISTRIBUTIONS | (.57) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 26.39 |
| EXPENSE RATIO | 1.85 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |
| ARTICLE 6 |
| This schedule contains Summary Financial Information extracted from the Form N-SAR and the Financial Statements and is qualified in its entirety by references to such documents. |
| SERIES: |
| NUMBER: 024 |
| NAME: NUVEEN BALANCED STOCK AND BOND FUND CLASS R |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | JUN 30 1998 |
| PERIOD START | JUL 01 1997 |
| PERIOD END | JUN 30 1998 |
| INVESTMENTS AT COST | 78728 |
| INVESTMENTS AT VALUE | 86379 |
| RECEIVABLES | 1759 |
| ASSETS OTHER | 249 |
| OTHER ITEMS ASSETS | 0 |
| TOTAL ASSETS | 88387 |
| PAYABLE FOR SECURITIES | 61 |
| SENIOR LONG TERM DEBT | 0 |
| OTHER ITEMS LIABILITIES | 801 |
| TOTAL LIABILITIES | 862 |
| SENIOR EQUITY | 0 |
| PAID IN CAPITAL COMMON | 76164 |
| SHARES COMMON STOCK | 129 |
| SHARES COMMON PRIOR | 254 |
| ACCUMULATED NII CURRENT | 5 |
| OVERDISTRIBUTION NII | 0 |
| ACCUMULATED NET GAINS | 3705 |
| OVERDISTRIBUTION GAINS | 0 |
| ACCUM APPREC OR DEPREC | 7651 |
| NET ASSETS | 87525 |
| DIVIDEND INCOME | 815 |
| INTEREST INCOME | 2443 |
| OTHER INCOME | 0 |
| EXPENSES NET | 911 |
| NET INVESTMENT INCOME | 2347 |
| REALIZED GAINS CURRENT | 4989 |
| APPREC INCREASE CURRENT | 4596 |
| NET CHANGE FROM OPS | 11932 |
| EQUALIZATION | 0 |
| DISTRIBUTIONS OF INCOME | 176 |
| DISTRIBUTIONS OF GAINS | 205 |
| DISTRIBUTIONS OTHER | 0 |
| NUMBER OF SHARES SOLD | 121 |
| NUMBER OF SHARES REDEEMED | 250 |
| SHARES REINVESTED | 5 |
| NET CHANGE IN ASSETS | 23161 |
| ACCUMULATED NII PRIOR | 19 |
| ACCUMULATED GAINS PRIOR | 504 |
| OVERDISTRIB NII PRIOR | 0 |
| OVERDIST NET GAINS PRIOR | 0 |
| GROSS ADVISORY FEES | 587 |
| INTEREST EXPENSE | 0 |
| GROSS EXPENSE | 1208 |
| AVERAGE NET ASSETS | 5725 |
| PER SHARE NAV BEGIN | 23.84 |
| PER SHARE NII | .83 |
| PER SHARE GAIN APPREC | 3.11 |
| PER SHARE DIVIDEND | (.82) |
| PER SHARE DISTRIBUTIONS | (.57) |
| RETURNS OF CAPITAL | 0 |
| PER SHARE NAV END | 26.39 |
| EXPENSE RATIO | .85 |
| AVG DEBT OUTSTANDING | 0 |
| AVG DEBT PER SHARE | 0 |