-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IVGuSJvOphOkOBzeZGKRHOhed5t5fqJTyI5+zEUpLQGnYPiF82JrQvC/HSCZ/p/K JDp3mfq1OlTS7vW+Px+mEw== 0000891804-99-001314.txt : 19990630 0000891804-99-001314.hdr.sgml : 19990630 ACCESSION NUMBER: 0000891804-99-001314 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990430 FILED AS OF DATE: 19990629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUVEEN MUNICIPAL INCOME FUND INC CENTRAL INDEX KEY: 0000830271 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05488 FILM NUMBER: 99654249 BUSINESS ADDRESS: STREET 1: 333 W WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129178200 N-30D 1 NUVEEN MUNICIPAL INCOME FUND INC(NMI) NUVEEN Exchange-Traded Funds April 30, 1999 Semiannual Report Dependable, tax-free income to help you keep more of what you earn. NUV Municipal Value NMI Municipal Income Photo of: People talking on deck. Highlights As of April 30, 1999 Credit Quality ================================================================================ Pie Chart: AAA/U.S. Guaranteed 46% AA 22% A 14% BBB/NR 18% Nuveen Municipal Value Fund, Inc. (NUV) o HHHH Four-Star Morningstar Rating(TM) * o Taxable-equivalent yield of 7.62% ** o Outperformed the total return of its Lipper Peer Group *** Pie Chart: AAA/U.S. Guaranteed 17% AA 9% A 8% BBB/NR 66% Nuveen Municipal Income Fund, Inc. (NMI) o HHHH Four-Star Morningstar Rating(TM) * o Taxable-equivalent yield of 8.33% ** o Outperformed the total return of its Lipper Peer Group *** * Morningstar proprietary ratings reflect historical risk-adjusted performance as of April 30, 1999. The ratings are subject to change every month. Past performance is no guarantee of future results. Morningstar ratings are calculated from the fund's three-, five-, and 10-year average annual returns (if applicable) in excess of 90-day T-bill returns. NMI received 5 stars, 5 stars, 3 stars for the three-, five-, and 10 year periods, respectively. NUVreceived 4 stars, 4 stars, 3 stars for the three-, five, and 10-year periods, respectively. The top 10% of the funds in a broad asset class receive 5 stars, the next 22.5% receive 4 stars and the next 35% receive 3 stars. The funds were rated among 193 funds for the three-year period, 191 funds for the five-year period, and 25 funds for the 10-year period. ** For investors in the 31% federal income tax bracket. See your Fund's Performance Overview for more information. *** The Lipper Peer Group return represents the average annualized returns of the funds in the appropriate Lipper Municipal Debt category. The return assumes reinvestment of dividends and does not reflect any applicable sales charge. Contents 1 Dear Shareholder 3 NUV's Portfolio Manager's Comments 5 NUV's Performance Overview 6 NMI's Portfolio Manager's Comments 8 NMI's Performance Overview 9 Portfolio of Investments 20 Statement of Net Assets 20 Statement of Operations 21 Statement of Changes in Net Assets 22 Notes to Financial Statements 26 Financial Highlights 28 Building Better Portfolios 29 Fund Information Photo of: Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board Dear Shareholder I'm pleased to inform you that over the past six months, the Nuveen Exchange-Traded Funds covered in this report continued to meet their primary objectives of providing you with dependable tax-free income and attractive levels of after-tax total returns. The combination of these two components demonstrates once again that Nuveen's municipal bond funds can serve as excellent investment options for income-oriented investors. The Year in Review The past six to 12 months saw the U.S. economy continue its pattern of non-inflationary growth, accompanied by low interest rates and unemployment levels that remain among the lowest in three decades. Much of the current economic growth is propelled by consumer demand, which has helped the U.S. resist the downward pull of weaker overseas markets. All indications point to a confident American consumer who is comfortable with the current state of the economy, especially the performance of the housing, stock, and job markets. This confidence is reflected in the most recent Consumer Confidence Index report issued by the Conference Board, which showed a record-setting seventh consecutive month of gains in May. On the global front, the turmoil of the past two years appears to be fading somewhat, as international financial markets have begun to recover. Inflation in the U.S. continued to operate at benign levels, with an increase of 2.2% for the 12 months ended April 30, 1999. Despite a spike in consumer prices in April, which was propelled by rising energy costs (which have subsequently declined), the general backdrop of inflation indicators continued to be mild, with the employment cost index, average hourly earnings, and import and producer price trends all remaining favorable. As Federal Reserve Chairman Alan Greenspan recently stated, one of the key factors in achieving today's peaceful coexistence of economic growth and low inflation has been increased productivity. Improvements in productivity, spurred by technological advances, have been responsible for offsetting wage and other inflationary pressures that we would normally expect to see as part of a growing economy. On the interest rate front, last fall saw the Federal Reserve ease short-term rates for the first time in almost three years. Between the end of September and mid-November 1998, three successive cuts brought the federal funds rate to 4.75%, averting a potential domestic credit crunch and restoring some stability to global markets. Following the success of these preemptive moves, the Federal Reserve indicated that fighting inflation continued to be a top priority by remaining in a proactive mode and responding to April's increased consumer prices with a shift to a tightening bias. By doing this, the Fed signaled its continued support of the market without changing interest rates or fundamentally altering the economy. In the months ahead, we will continue to watch for indications from the Fed and other factors that affect the economy's future, including wage and employment statistics, reports on productivity growth, capital equipment spending, and the progress of international economic recovery. We believe these key components will influence the outlook for fixed-income markets well into the new millennium. Municipal Bonds: An Attractive Investment Option As interest rates declined over the past year, our municipal bond funds continued to provide bright spots among the various invest ment options, generally offering attractive, stable income in a market that places a high premium on yield. In 1998, municipal bonds represented a reasonably insulated haven in an otherwise turbulent market, with lower volatility relative to Treasury bonds and other fixed-income investments. In fact, for the first four months of 1999, municipals continued to outperform Treasuries. The high ratio of tax-exempt municipal yields to Treasury yields sheltered municipal bonds from the price decline that occurred in the Treasury market during the first four months of the year. While the interest rate on 30-year Treasury bonds rose from 5.10% at the end of December to 5.66% as of April 30, 1999, the yield on the Bond Buyer Revenue Bond Index, an unman aged index of long-term municipal revenue bonds, gained just three basis points - from 5.26% to 5.29%. Given the inverse relationship between interest rates and bond prices, Treasury bond prices fell as rates rose over this period. Though municipal bond prices did decrease, the decline was not as dramatic as the drop in Treasuries. The differential in performance reflects the fact that Treasuries had become relatively expensive as the result of safe-haven buying during the international economic crises of the past year. Chart of: The Bond Buyer Revenue Bond Index As the financial turmoil subsided in the first quarter of 1999, however, foreign investors returned to investing in their own countries rather than in U.S. dollar-denominated securities. The combination of an increase in interest rates and a decline in demand caused U.S. Treasuries to drop in price. At the end of April 1999, the ratio between long-term municipal yields and 30-year Treasury yields stood at 94%, compared with the historical average of 86% for the period of 1986-1999. For investors, this meant that quality long-term municipal bonds offered yields comparable to those of long Treasury bonds - even before the tax advantages of municipal bonds were taken into account. On an after-tax basis in today's market, municipal bonds continue to present an exceptionally attractive investment option relative to Treasuries. During 1998, lower interest rates and the strong economy combined to generate high levels of new municipal issuance and a signifi cant increase in the refinancing of existing bonds. Municipal issuance in 1998 reached $284 billion, up 29% over 1997. In terms of total municipal issuance, 1998 ranked as the second largest year on record, next to 1993's $292 billion. In the first four months of 1999, however, as the market settled into a more stable interest rate environment, refunding activity dropped off dramatically. As a result, municipal supply in 1999 has declined by approximately 25% from the levels of a year ago. This, in turn, has enhanced the attractive ness of the municipal bonds that were brought to market, as demand - especially from individual investors - remained relatively strong. The Value of Nuveen Expertise The solid track record of a proven investment manager is one key to taking advantage of the attractive values currently available in the municipal market. The near-record level of municipal issuance in 1998, for example, highlighted the value of Nuveen's in-depth knowledge of the municipal market, as our portfolio management teams carefully analyzed each issue to select those securities best suited to help the funds achieve their investment objectives. With the outlook for tighter supply and continued demand in 1999, Nuveen's established market position ensures that we will have exceptional access to the bond offerings that have the potential to add value for our shareholders. As a further enhancement to our management capabilities, Nuveen has assembled a strong group of investment managers - experts in their particular areas of the market - to provide investors with the advantage of their experience and insights. In addition to Nuveen Advisory Services for tax-free investing, you and your financial adviser can rely on Institutional Capital Corporation for value-oriented equity investing and Rittenhouse Financial Services, Inc. for growth-oriented equity investing. We encourage you to talk with your financial adviser about Nuveen's expanding array of investments and the ways that Nuveen funds can help you establish a diversified portfolio designed to build and sustain long-term finan cial security. For more information on our funds, contact your adviser for a prospectus, or call Nuveen at (800) 621-7227. Please read it carefully before you invest or send money. Thank you for the confidence you have placed in Nuveen. We are committed to maintaining the trust you have shown in us, and we look forward to meeting your investment needs well into the next century. /s/ Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board June 15, 1999 Nuveen Municipal Value Fund, Inc. (NUV) Portfolio Manager's Comments Portfolio manager Tom Spalding discusses the municipal market, recent fund performance, and key investment strategies for the Nuveen Municipal Value Fund, Inc. Tom has 23 years of investment experience at Nuveen and has managed NUV since its inception in June 1987. What factors have influenced the municipal market during the past 12 months? Over the past 12 months, the U.S. economy continued to enjoy strong non-inflationary growth, low interest rates, and low unemployment. With tax revenues rising along with the growth in personal income, the national govern ment is generating a budget surplus, putting an end to 28 straight years of federal budget deficits (1970-97). In this environment, long-term municipal bonds continued to outperform 30-year Treasury bonds, with yields that rivaled and even surpassed those offered by Treasuries. Over the past year, this municipal-to-Treasury ratio ranged as high as 104%, offering investors in quality long-term municipal bonds yields comparable to those of Treasury bonds, even before the tax advantage of municipals was taken into account. This high ratio also provides a cushion for municipal bond prices if interest rates rise. The other major story in the municipal market over the past year was 1998's impressive supply of new issuance. In the fourth quarter of 1998, investors saw $25-30 billion in new bonds brought to market each month. Demand for municipal bonds also remained high, due to cash flow from non-traditional investors as well as from traditional buyers like mutual funds, exchange-traded funds, and insurance companies. In the first four months of 1999, however, a higher interest rate environment than we experienced in 1998 prompted fewer refundings and a 25% drop-off in new issue volume from 1998 levels. During this period, the continued demand from individual investors compensated for lower demand from insurance companies, which currently have fewer assets to invest due to heavy insurance premium price competition and mounting claims from a series of devastating spring storms in the Midwest and South. For the remainder of 1999, the municipal market will be heavily influenced by the direction of interest rates and inflation. If interest rates remain stable or increase, we expect to see lower refinancing volume and a continuation of the tighter supply scenario of the past four months. Demand should remain strong, as individual investors look to diversify their portfolios by reallocating profits from the equity market and new discretionary cash flows into fixed-income investments. These reallocation efforts will be expanded if the volatility in equities continues. Even with lower supply and high demand, Nuveen's position in the municipal market ensures that we will have access to the best offerings in the marketplace. How did the Nuveen Municipal Value Fund, Inc. (NUV) perform over the past 12 months? For the 12 months ended April 30, 1999, NUV produced a total return on net asset value (NAV) of 6.40%, providing a taxable-equivalent total return of 8.74% for shareholders in the 31% federal income tax bracket. The total return out performed the 5.96% average return for the Fund's Lipper peer group(1), while slightly trailing the annual return of 6.95% for the Lehman Brothers Municipal Bond Index(2). Over the past year, the yield on the Bond Buyer Revenue Bond Index, an unmanaged index of long-term municipal revenue bonds, fell only 23 basis points, an indication of a relatively stable interest rate climate. In this environment, the Fund's duration (the measure of a bond fund's price volatility in response to interest rate changes) played a smaller, though still significant role in determining its return relative to the market, as measured by the Lehman index. As of April 30, 1999, NUV had an average effective duration of 6.17 years, compared with a duration of 7.21 for the index. The Fund's shorter duration translated to a slightly lower total return in comparison with the index, but it also provided the advantage of lower volatility. How were the Fund's dividend and share price affected? The lower interest rate environment of the past six months led to an increased number of bond calls, as issuers sought to reduce debt financing costs. In addition, declining rates meant that proceeds from prepaid or matured bonds had to be reinvested in issues paying relatively lower current rates. Both of these situations contributed to a reduction in the income level of NUV and necessitated a dividend cut in November 1998. Even with this single dividend adjustment, the Fund continued to provide attractive market yields. As of April 30, 1999, the market yield was 5.26%, equivalent to a taxable yield of 7.62% for investors in the 31% federal income tax bracket. As interest rates declined, active demand for exchange-traded funds such as NUV resulted in solid share price performance. The fund's NAV also rose over this period, reflecting gains in the overall bond market. As a result of these factors, NUV saw its discount (share price below NAV) narrow by more than 150 basis points over the past year. 4/30/98 4/30/99 - -------------------------------------------------------------------------------- Share Price ($) 9.50 9.6875 - -------------------------------------------------------------------------------- NAV ($) 10.16 10.19 - -------------------------------------------------------------------------------- Discount to NAV(3) -6.50% -4.93% - -------------------------------------------------------------------------------- 1-Yr ended 4/30/99 Taxable Equivalent(4) - -------------------------------------------------------------------------------- Total Return on Share Price 8.48% 10.99% - -------------------------------------------------------------------------------- For additional information, see the individual Performance Overview for NUV in this report. What key strategies were used to manage NUV during the past 12 months? The main focus of our management strategies for the Fund over the past 12 months was on supporting the dividend at the highest level, consistent with capital preservation. Given the low level of yields in the current market, the majority of our portfolio changes were tactical, rather than strategic, in nature. We continued to look to the various elements of the portfolio-call protection, liquidity, underlying credit, coupon, maturity-for opportunities to generate incremental income and upgrade the portfolio. Nuveen's excellent research and surveillance capabilities helped us accurately evaluate the securities in our portfolio and take advantage of opportunities as they arose. A recent research trip to Georgia provides an illustration of the way Nuveen's research and surveillance help us make the investment decisions that have the potential to add value for the shareholders of NUV. In 1996, our initial research led us to make a $24 million investment in bonds issued by the Coffee County Hospital Authority for the Coffee Regional Medical Center in Douglas, Georgia. These non-rated bonds, which carry a yield of 6.75%, were used to finance the building of a new 88-bed hospital, the only acute care facility serving two rural counties. The new medical center replaced an outdated hospital that could not be brought into compliance cost-effectively. Following the center's opening in late 1998, we visited the facility in January. Our visit validated our initial research and confirmed our impression that this facility could serve as a prototype for any hospital smaller than 100 beds. Despite Medicaid cutbacks and the need to serve a low income/elderly population, the hospital benefits from excellent community support, a good balance sheet, strong demand for services, and an administration focused on physician recruitment and cost containment. This is just one example of the value of using our own research-rather than relying on outside sourcesto find suitable investments for the Fund. From a sector perspective, we believe the Fund is currently well balanced. The 13% concentration of U.S. guaranteed (escrowed) bonds provides high yields, low volatility, and excellent credit quality, while the 28% allocation to utilities supplies diversification. Over the past year, we found value primarily in bonds issued by Illinois, California, and New York. Overall, the credit quality of the Fund remained high. At the end of April 1999, NUV had 68% of its portfolio invested in bonds rated AAA and AA. The 18% allocation to BBB and non-rated bonds, which represents a large number of Denver Airport System revenue bonds, provided an extra boost for the Fund's yield. In the area of call protection, NUV, which was brought to market in 1987 as the first Nuveen Exchange-Traded Fund, has largely completed the normal part of the market cycle in which bond calls are most likely to occur. The Fund is fairly well protected over the next four years, although a total of 18% of the portfolio is subject to calls in 2001 and 2002. What is Nuveen's outlook for the Fund's future? Looking ahead for NUV, our focus will remain on supporting the income stream and NAV of this fund. Currently, we are seeing some opportunities in the general obligation, revenue, and dedicated tax sectors that we believe can benefit shareholders through investments that will achieve our objective of adding income. We also plan to look at positioning the Fund's duration so that the Fund is better protected against interest rate volatility. Investing in bonds found on the long end of the yield curve should also allow us to boost the potential for both income and total return. These strategies demonstrate the value that can be added by an active bond manager such as Nuveen. As an experienced investment manager knowledgeable about the unique aspects of the municipal market, we are in the marketplace every day, monitoring market dynamics, looking for opportunities, and capitalizing on them to the benefit of shareholders. In our opinion, municipal bonds are currently one of the most compelling values in the investment marketplace. Over the past 12 months, the value of these quality investments has been enhanced by excellent municipalto-Treasury ratios as well as a market environment characterized by low interest rates and benign inflation. With continued volatility in the equity markets and investors' increasing awareness of the need for asset allocation rebalancing, the demand for municipal bond funds is expected to grow. We believe that investors who take advantage of current opportunities in the municipal market should be rewarded with healthy returns and attractive yields in the months ahead. 1 The Lipper Peer Group return represents the average annualized return of funds in the Lipper General and Insured Unleveraged Municipal Debt category. The return assumes reinvestment of dividends and does not reflect any applicable sales charges. 2 NUV, an unleveraged fund, is compared with the Lehman Brothers Municipal Bond Index, an unleveraged index comprising a broad range of investment-grade municipal bonds. The return for the Lehman index does not reflect any initial or ongoing expenses. 3 A fund's discount represents the percentage difference between the fund's share price and its NAV. 4 Based on the 31% federal income tax rate. Nuveen Municipal Value Fund, Inc. Performance Overview As of April 30, 1999 NUV Portfolio Statistics ======================================================== Inception Date 6/87 - -------------------------------------------------------- Share Price $9 11/16 - -------------------------------------------------------- Net Asset Value $10.19 - -------------------------------------------------------- Market Yield 5.26% - -------------------------------------------------------- Taxable-Equivalent Yield (Federal Only)(1) 7.62% - -------------------------------------------------------- Fund Net Assets ($000) $1,985,805 - -------------------------------------------------------- Effective Maturity (Years) 18.56 - -------------------------------------------------------- Average Effective Duration 6.17 - -------------------------------------------------------- Annualized Total Return ======================================================== On Share Price On NAV - -------------------------------------------------------- 1-Year 8.48% 6.40% - -------------------------------------------------------- 5-Year 5.97% 6.96% - -------------------------------------------------------- 10-Year 6.81% 7.30% - -------------------------------------------------------- Taxable-Equivalent Total Return(2) ======================================================== On Share Price On NAV - -------------------------------------------------------- 1-Year 10.99% 8.74% - -------------------------------------------------------- 5-Year 8.78% 9.67% - -------------------------------------------------------- 10-Year 9.74% 10.25% - -------------------------------------------------------- Top Five Sectors (as a % of total investments) ======================================================== Utilities 28% - -------------------------------------------------------- U.S. Guaranteed 13% - -------------------------------------------------------- Transportation 12% - -------------------------------------------------------- Healthcare 11% - -------------------------------------------------------- Tax Obligation/Limited 9% - -------------------------------------------------------- 1 Taxable-equivalent yield represents the yield on a taxable investment necessary to equal the yield of the Nuveen fund on an after-tax basis. The federal only rate is based on the current market yield and a federal income tax rate of 31%. 2 Taxable-equivalent total return is based on the annualized total return and a federal income tax rate of 31%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. 3 The Fund also paid shareholders capital gains distributions in December of $0.0932 per share. Bar Chart: 1998-1999 Monthly Tax-Free Dividends Per Share(3) 5/98 0.0435 6/98 0.0435 7/98 0.0435 8/98 0.0435 9/98 0.0435 10/98 0.0435 11/98 0.0425 12/98 0.0425 1/99 0.0425 2/99 0.0425 3/99 0.0425 4/99 0.0425 Line Chart: Share Price Performance 5/8/98 9.5 9.438 9.5 9.563 9.625 9.688 9.563 9.563 9.5 9.625 9.5 9.5 9.5 9.5 9.5 9.5 9.563 9.625 9.625 9.625 9.625 9.813 9.875 9.938 10 9.94 10 9.81 9.88 9.88 9.94 10.06 9.88 9.81 9.69 9.81 9.81 9.94 9.75 9.88 9.88 9.81 9.75 9.81 9.81 9.75 9.69 9.69 4/30/99 9.69 Weekly Closing Price Past performance is not predictive of future results. Nuveen Municipal Income Fund, Inc. (NMI) Portfolio Manager's Comments Portfolio manager Steve Peterson discusses the municipal market, fund performance, and the outlook for the Nuveen Municipal Income Fund, Inc. Steve, who joined Nuveen in 1988, manages a range of Nuveen national and state municipal bond funds. He assumed portfolio management responsibility for NMI in July 1998. What factors have influenced the municipal market during the past 12 months? Over the past 12 months, the U.S. economy continued to enjoy strong non-inflationary growth, low interest rates, and low unemployment. With tax revenues rising along with the growth in personal income, the national government is generating a budget surplus, putting an end to 28 straight years of federal budget deficits (1970-97). In this environment, long-term municipal bonds continued to outperform 30-year Treasury bonds, with yields that rivaled and even surpassed those offered by Treasuries. Over the past year, this municipal-to-Treasury ratio ranged as high as 104%, offering investors in quality long-term municipal bonds yields comparable to those of Treasury bonds, even before the tax advantage of municipals was taken into account. The other major story in the municipal market over the past year was 1998's impressive supply of new issuance. In the fourth quarter of 1998, investors saw $25-30 billion in new bonds brought to market each month. Demand for municipal bonds also remained high, due to cash flow from non-traditional investors as well as from the traditional buyers of mutual and exchange-traded funds, such as individual investors and insurance companies. In the first four months of 1999, however, the lower interest rate environment we have experienced since mid-November 1998 prompted fewer refundings and a 25% drop-off in new issue volume from 1998 levels. During this period, the continued demand from individual investors compensated for lower demand from insurance companies, which currently have fewer assets to invest due to heavy insurance premium price competition and mounting claims from a series of devastating spring storms in the Midwest and South. For the remainder of 1999, the municipal market will be heavily influenced by the direction of interest rates and inflation. If interest rates remain stable or increase, we expect to see lower refinancing volume and a continuation of the tighter supply scenario of the past four months. Demand should remain strong, as individual investors look to diversify their portfolios by reallocating profits from the equity market into fixed-income invest ments. These reallocation efforts will be expanded if the volatility in equities continues. Even with lower supply and high demand, Nuveen's position in the municipal market ensures that we will have access to the best offerings in the marketplace. How did the Nuveen Municipal Income Fund, Inc. (NMI) perform over the past 12 months? For the 12 months ended April 30, 1999, NMI produced a total return on net asset value (NAV) of 6.41%, providing a taxable-equivalent total return of 9.10% for shareholders in the 31% federal income tax bracket. The total return outperformed the 5.96% average return for the Fund's Lipper peer group(1), while slightly trailing the annual return of 6.95% for the Lehman Brothers Municipal Bond Index(2). Over the past year, the yield on the Bond Buyer Revenue Bond Index, an unmanaged index of long-term municipal revenue bonds, fell only 23 basis points, an indication of a relatively stable interest rate climate. In this environ ment, the Fund's duration (the measure of a bond fund's price volatility in response to interest rate changes) played a smaller, though still significant role in determining its return relative to the market, as measured by the Lehman index. As of April 30, 1999, NMI had an average effective duration of 5.58 years, compared with a duration of 7.21 for the index. The Fund's shorter duration translated to a slightly lower total return in comparison to the index, but it also provided the advantage of lower volatility. How were the Fund's dividend and share price affected? The lower interest rate environment of the past six months led to an increased number of bond calls, as issuers sought to reduce debt financing costs. NMI, which was assembled in 1988, has been undergoing the normal part of the market cycle in which bond calls are likely to occur. Over the past two years, the Fund has seen approximately 25% of its portfolio called away. Proceeds from called bonds then had to be reinvested in issues paying the relatively lower rates offered by the current market. This situation contributed to a reduction in the income level of NMI and necessitated a dividend cut in July 1998. Even with this single dividend adjustment, the Fund continued to provide attractive market yields. As of April 30, 1999, the market yield was 5.75%, equivalent to a taxable yield of 8.33% for investors in the 31% federal income tax bracket. Over the past year, a dividend adjustment contributed to a decline in share price for NMI. At the same time, the Fund's NAV did not keep pace with gains in the overall bond market. As a result of these factors, NMI saw its premium (share price over NAV) narrow over the past year. At the end of April 1999, NMI was trading at a premium of 0.25% above its NAV. For additional information, see the individual Performance Overview for NMI in this report. What key strategies were used to manage NMI during the past 12 months? The focus of our management strategies for the Fund over the past 12 months was on strong security selection, with the goal of adding above-market levels of income to offset some of the effects of ongoing bond calls. Several individual bond purchases helped us achieve that goal. One of these purchases involved a New York project finance issue, Canfibre, which recycles wood to produce a fire-resistant plywood product. An industrial development bond we purchased was Steel Dynamics in Indiana, a well-managed company that is adding a second plant in the eastern part of the state. We were able to take advantage of the turmoil in steel prices to buy these lower-rated issues at attractive prices. A Chicago tax increment issue also helped us capture additional yield for the Fund. To support the Fund's dividend, NMI also has the flexibility to invest in a higher percentage of lower-rated securities, which generally offer a yield advantage over their more highly rated counterparts. At the end of April 1999, NMI had 66% of its portfolio invested in BBB and non-rated bonds. In the area of call protection, we are currently managing through a period in which bond calls have affected approximately 25% of NMI's portfolio, as mentioned earlier. This phase is expected to continue until the year 2001, after which the Fund will again offer good levels of call protection. What is Nuveen's outlook for the Fund's future? Looking ahead for NMI, our focus will remain on supporting the income stream of this fund at the highest level consistent with capital preservation. As part of our strategies for achieving this goal, we will continue to search for interesting high-yield investments that will benefit the shareholders of NMI. We also plan to look at positioning the Fund's duration so that the fund is better protected against interest rate volatility. Investing in bonds found on the long end of the yield curve should also allow us to boost the potential for both income and total return. These strategies demonstrate the value that can be added by an active bond manager such as Nuveen. As an experienced investment manager knowledgeable about the unique aspects of the municipal market, we are in the marketplace every day, monitoring market dynamics, looking for opportunities, and capitalizing on them to the benefit of shareholders. In our opinion, municipal bonds are currently one of the most compelling values in the investment marketplace. Over the past 12 months, the value of these quality investments has been enhanced by excellent municipal-to-Treasury ratios as well as a market environment characterized by low interest rates and benign inflation. With continued volatility in the equity markets and investors' increasing awareness of the need for asset allocation rebalancing, the demand for municipal bond funds is expected to grow. We believe that investors who take advantage of current opportunities in the municipal market should be rewarded with healthy returns and attractive yields in the months ahead. 1 The Lipper Peer Group return represents the average annualized return of funds in the Lipper General and Insured Unleveraged Municipal Debt category. The return assumes reinvestment of dividends and does not reflect any applicable sales charges. 2 NMI, an unleveraged fund, is compared with the Lehman Brothers Municipal Bond Index, an unleveraged index comprising a broad range of investment-grade municipal bonds. The return for the Lehman index does not reflect any initial or ongoing expenses. Nuveen Municipal Income Fund, Inc. Performance Overview As of April 30, 1999 NMI Portfolio Statistics ======================================================= Inception Date 4/88 - ------------------------------------------------------- Share Price $12 - ------------------------------------------------------- Net Asset Value $11.97 - ------------------------------------------------------- Market Yield 5.75% - ------------------------------------------------------- Taxable-Equivalent Yield (Federal Only))(1) 8.33% - ------------------------------------------------------- Fund Net Assets ($000) $95,169 - ------------------------------------------------------- Effective Maturity (Years) 18.10 - ------------------------------------------------------- Average Effective Duration 5.58 - ------------------------------------------------------- Annualized Total Return ======================================================= On Share Price On NAV - ------------------------------------------------------- 1-Year 3.75% 6.41% - ------------------------------------------------------- 5-Year 6.31% 7.03% - ------------------------------------------------------- 10-Year 7.11% 7.44% - ------------------------------------------------------- Taxable-Equivalent Total Return(2) ======================================================= On Share Price On NAV - ------------------------------------------------------- 1-Year 6.37% 9.10% - ------------------------------------------------------- 5-Year 9.23% 9.98% - ------------------------------------------------------- 10-Year 10.14% 10.56% - ------------------------------------------------------- Top Five Sectors (as a % of total investments) ======================================================= Utilities 17% - ------------------------------------------------------- Long-Term Care 13% - ------------------------------------------------------- U.S. Guaranteed 11% - ------------------------------------------------------- Basic Materials 10% - ------------------------------------------------------- Transportation 9% - ------------------------------------------------------- 1 Taxable-equivalent yield represents the yield on a taxable investment necessary to equal the yield of the Nuveen fund on an after-tax basis. The federal only rate is based on the current market yield and a federal income tax rate of 31%. 2 Taxable-equivalent total return is based on the annualized total return and a federal income tax rate of 31%. It represents the return on a taxable investment necessary to equal the return of the Nuveen fund on an after-tax basis. 3 The Fund also paid shareholders capital gains distributions in December of $0.0748 per share. Bar Chart: 1998-1999 Monthly Tax-Free Dividends Per Share(3) 5/98 0.0605 6/98 0.0605 7/98 0.0575 8/98 0.0575 9/98 0.0575 10/98 0.0575 11/98 0.0575 12/98 0.0575 1/99 0.0575 2/99 0.0575 3/99 0.0575 4/99 0.0575 Line Chart: Share Price Performance 5/8/98 12.313 12.25 12.25 12.313 12.313 12.313 12.438 12.375 12.25 12.25 12.188 12.188 12.125 11.875 11.813 12.188 12.313 12.25 12.313 12.188 12.125 12.375 12.313 12.563 12.38 12.44 12.5 12.75 12.81 12.81 12.69 12.56 12.5 12.38 12.31 12.38 12.06 12.13 12.25 12.38 12.19 12.19 12.25 12.13 12.19 12.31 12.06 12 4/30/99 12 Weekly Closing Price Past performance is not predictive of future results. Portfolio of Investments Nuveen Municipal Value Fund, Inc. (NUV) April 30,1999 (Unaudited)
Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Alabama - 1.3% $ 3,460,000 Alabama Housing Finance Authority, Single Family Mortgage Revenue 4/08 at 102 Aaa $3,512,488 Bonds (Collateralized Home Mortgage Revenue Bond Program), 1998 Series A-2, 5.450%, 10/01/28 (Alternative Minimum Tax) 4,000,000 The Water Works and Sewer Board of the City of Birmingham 1/04 at 102 Aa3 4,332,880 (Alabama), Water and Sewer Revenue Bonds, Series 1994, 5.500%, 1/01/20 4,000,000 The Medical Clinic Board of the City of Jasper (Alabama), 7/02 at 102 A3 4,187,280 Hospital Revenue Bonds, Series 1993 (Walker Regional Medical Center, Inc. Project), 6.375%, 7/01/18 12,000,000 Jefferson County, Alabama, Sewer Revenue Capital 2/09 at 101 AAA 12,813,840 Improvement Warrants, Series 1999-A, 5.750%, 2/01/38 - ------------------------------------------------------------------------------------------------------------------------------------ Arizona - 0.8% 3,735,000 Hospital District No. One, Maricopa County, Arizona, General 6/06 at 101 A 3,950,771 Obligation Bonds, Series 1996, 6.000%, 6/01/21 5,485,000 The Industrial Development Authority of the County of Maricopa 6/08 at 101 1/2 Aaa 5,484,781 (Arizona), Single Family Mortgage Revenue Refunding Bonds (Mortgage-Backed Securities Program), Series 1998B, 4.600%, 6/01/22 (Alternative Minimum Tax) 5,400,000 Yuma Regional Medical Center on Behalf of Hospital District No. 1, 8/02 at 101 1/2 N/R*** 6,175,980 Yuma County, Arizona, Hospital Revenue Improvement and Refunding Bonds (Yuma Regional Medical Center Project), Series 1992, 8.000%, 8/01/17 (Pre-refunded to 8/01/02) - ------------------------------------------------------------------------------------------------------------------------------------ Arkansas - 0.4% 1,500,000 Arkansas Development Finance Authority, Wastewater System 6/06 at 101 AA 1,615,080 Revolving Loan Fund Revenue Bonds, 1996 Series A, 5.850%, 12/01/19 3,900,000 City of Conway, Arkansas, Sales and Use Tax Capital Improvement 12/06 at 101 AAA 3,998,826 Bonds, Series 1997A, 5.350%, 12/01/17 2,750,000 Jefferson County, Arkansas, Pollution Control Revenue Refunding 12/02 at 102 BBB- 2,760,313 Bonds (Entergy Arkansas, Inc. Project), Series 1997, 5.600%, 10/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ California - 6.0% 13,120,000 State of California, Veterans General Obligation Bonds, Series BH, 12/08 at 101 AAA 13,349,206 5.200%, 12/01/11 (Alternative Minimum Tax) 9,000,000 State of California, Department of Water Resources, Central 6/03 at 101 1/2 AA 9,501,840 Valley Project, Water System Revenue Bonds, Series L, 5.750%, 12/01/19 16,500,000 State of California, Department of Water Resources, Central 12/03 at 101 AA 15,622,695 Valley Project, Water System Revenue Bonds, Series M, 4.750%, 12/01/24 17,155,000 State Public Works Board of the State of California, Lease 6/03 at 102 Aa3 17,740,329 Revenue Refunding Bonds (The Regents of the University of California), 1993 Series A (Various University of California Projects), 5.500%, 6/01/21 2,500,000 California Statewide Communities Development Authority, 4/03 at 102 A+ 2,757,500 Series A, Certificates of Participation, Pacific Homes, 6.000%, 4/01/17 6,530,000 California Statewide Communities Development Authority, 7/03 at 102 AA 6,657,596 Certificates of Participation, St. Joseph Health System Obligated Group, 5.500%, 7/01/14 3,000,000 Community Facilities District No. 98-2 of the Capistrano 9/09 at 102 N/R 2,997,600 Unified School District, Ladera, California, Series 1999 Special Tax Bonds, 5.750%, 9/01/29 Foothil/Eastern Transportation Corridor Agency (California), Toll Road Revenue Bonds, Series 1995A: 30,000,000 0.000%, 1/01/22 No Opt. Call BBB- 8,962,500 10,000,000 6.000%, 1/01/34 1/05 at 102 BBB- 10,744,100 30,470,000 Los Angeles County Public Works Financing Authority, 12/03 at 102 AAA 30,528,502 Lease Revenue Bonds (Multiple Capital Facilities Project IV), 4.750%, 12/01/13 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Colorado - 9.8% $ 12,515,000 Colorado Health Facilities Authority, Revenue Bonds, Series 1994 5/04 at 102 AA $12,709,608 (Sisters of Charity Health CareSystems, Inc.), 5.250%, 5/15/14 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1992B: 3,680,000 7.000%, 11/15/03 (Alternative Minimum Tax) 11/02 at 102 BBB+ 4,043,400 2,125,000 7.250%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Aaa 2,407,880 8,290,000 7.250%, 11/15/23 (Alternative Minimum Tax) 11/02 at 102 BBB+ 9,108,472 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1992C: 655,000 6.750%, 11/15/13 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Aaa 731,890 5,045,000 6.750%, 11/15/13 (Alternative Minimum Tax) 11/02 at 102 BBB+ 5,449,659 7,515,000 6.750%, 11/15/22 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Aaa 8,397,186 29,870,000 6.750%, 11/15/22 (Alternative Minimum Tax) 11/02 at 102 BBB+ 32,235,405 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1990A: 790,000 8.250%, 11/15/12 (Alternative Minimum Tax) (Pre-refunded to 11/15/00) 11/00 at 102 Aaa 861,053 8,360,000 8.250%, 11/15/12 (Alternative Minimum Tax) 11/00 at 102 BBB+ 8,973,206 2,705,000 8.500%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/00) 11/00 at 102 Aaa 2,958,269 29,090,000 8.500%, 11/15/23 (Alternative Minimum Tax) 11/00 at 102 BBB+ 31,339,821 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1991A: 3,475,000 8.750%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 102 Aaa 3,964,593 9,635,000 8.750%, 11/15/23 (Alternative Minimum Tax) 11/01 at 102 BBB+ 10,751,504 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1991D: 1,820,000 7.750%, 11/15/21 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 102 Aaa 2,032,958 6,930,000 7.750%, 11/15/21 (Alternative Minimum Tax) 11/01 at 102 BBB+ 7,559,868 10,275,000 7.000%, 11/15/25 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 100 Aaa 11,109,536 39,745,000 7.000%, 11/15/25 (Alternative Minimum Tax) 11/01 at 100 BBB+ 42,041,466 - ------------------------------------------------------------------------------------------------------------------------------------ Connecticut - 0.9% 8,825,000 Connecticut Housing Finance Authority, Housing Mortgage Finance 5/05 at 102 AA 9,485,287 Program Bonds, 1995 Series E, Subseries E-2, 6.500%, 5/15/20 (Alternative Minimum Tax) 7,850,000 Connecticut Housing Finance Authority, Housing Mortgage 5/06 at 102 AA 8,328,929 Finance Program Bonds, 1996 Series D, Subseries D-2, 6.200%, 11/15/27 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Florida - 0.5% 5,000,000 Orlando (Florida), Utilities Commission, Water and Electric 10/02 at 100 Aa2 5,124,000 Subordinated Revenue Bonds, Series 1992A, 5.500%, 10/01/27 5,500,000 Orlando (Florida), Utilities Commission, Water and Electric 10/03 at 102 Aa2 5,536,960 Subordinated Revenue Refunding Bonds, Series 1993A, 5.250%, 10/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ Georgia - 1.7% Coffee County Hospital Authority (Georgia), Revenue Anticipation Certificates (Coffee Regional Medical Center, Inc. Project), Series 1997A: 2,700,000 6.250%, 12/01/06 No Opt. Call N/R 2,830,194 21,100,000 6.750%, 12/01/26 12/06 at 102 N/R 22,132,845 8,000,000 George L. Smith II World Congress Center Authority, 7/10 at 101 AAA 8,011,920 Refunding Revenue Bonds (Domed Stadium Project), Series 2000, 5.500%, 7/01/20 (Alternative Minimum Tax) (DD, settling on 4/04/00) - ------------------------------------------------------------------------------------------------------------------------------------ Illinois - 11.4% 5,000,000 City of Chicago, General Obligation Bonds, Project Series A of 1992, 1/02 at 102 AAA 5,397,650 6.250%, 1/01/12 (Pre-refunded to 1/01/02) City of Chicago, General Obligation Bonds, Project and Refunding Series 1998: 10,700,000 5.250%, 1/01/20 7/08 at 102 AAA 10,703,638 12,550,000 5.250%, 1/01/28 7/08 at 102 AAA 12,554,267 2,000,000 Chicago School Reform Board of Trustees of the Board of Education 12/07 at 102 AAA 2,000,700 of the City of Chicago, Illinois, Unlimited Tax General Obligation Bonds (Dedicated Tax Revenues), Series 1997A, 5.250%, 12/01/22 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Illinois (continued) Chicago School Reform Board of Trustees of the Board of Education of the City of Chicago, Illinois, Unlimited Tax General Obligation Bonds (Dedicated Tax Revenues), Series 1998A: $ 15,000,000 0.000%, 12/01/24 No Opt. Call AAA $3,886,200 47,500,000 0.000%, 12/01/28 No Opt. Call AAA 9,855,300 1,125,000 Metropolitan Water Reclamation District of Greater Chicago, No Opt. Call AA 1,367,190 General Obligation Capital Improvement Bonds, Series of June 1991, 7.000%, 1/01/11 17,500,000 Public Building Commission of Chicago (Illinois), Building 12/03 at 102 AAA 19,254,375 Revenue Bonds, Series A of 1993 (Board of Education of the City of Chicago), 5.750%, 12/01/18 (Pre-refunded to 12/01/03) 9,300,000 City of Chicago, Illinois, Tax Increment Allocation Bonds 1/01 at 102 N/R*** 9,971,088 (Stockyards Industrial Commercial Redevelopment Project), Series 1991, 9.000%, 1/01/11 (Pre-refunded to 1/01/01) 5,655,000 Illinois Development Finance Authority, Industrial 6/02 at 102 N/R 5,939,729 Development Revenue Bonds, Series 1992 (Plano Molding Company Project), 7.750%, 6/01/12 (Alternative Minimum Tax) 3,000,000 Illinois Development Finance Authority, Pollution Control No Opt. Call BBB 3,087,870 Revenue Refunding Bonds, Series 1994 (Commonwealth Edison Company Project), 5.850%, 1/15/14 10,350,000 Illinois Development Finance Authority, Local Government 7/08 at 100 Aaa 10,357,555 Program Revenue Bonds, Series 1998 (St. Charles Community Unit School District Number 303 Project), 5.100%, 1/01/17 7,485,000 Illinois Development Finance Authority (The Presbyterian Home 9/06 at 102 AA- 8,271,823 Lake Forest Place Project), Revenue Bonds, Series 1996 B, 6.400%, 9/01/31 14,000,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, 10/03 at 102 A- 14,003,080 Series 1993 (Illinois Masonic Medical Center), 5.500%, 10/01/19 7,000,000 Illinois Health Facilities Authority, Revenue Bonds, 11/03 at 102 AAA 7,038,150 Series 1993 (Swedish American Hospital), 5.375%, 11/15/23 18,015,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1993 11/03 at 102 AAA 17,819,898 (Rush - Presbyterian St. Luke's Medical Center Obligated Group), 5.250%, 11/15/20 Illinois Health Facilities Authority, Revenue and Revenue Refunding Bonds, Series 1990C (Hinsdale Hospital): 8,735,000 9.500%, 11/15/19 (Pre-refunded to 11/15/00) 11/00 at 102 AAA 9,683,534 1,225,000 9.500%, 11/15/19 11/00 at 102 AAA 1,364,001 Illinois Health Facilities Authority, Revenue Bonds, Series 1992 (South Suburban Hospital): 1,150,000 7.000%, 2/15/18 (Pre-refunded to 2/15/02) 2/02 at 102 A*** 1,267,703 4,350,000 7.000%, 2/15/18 No Opt. Call A*** 5,266,632 8,000,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1997 8/07 at 101 AAA 7,909,280 (Sherman Health Systems), 5.250%, 8/01/22 30,415,000 State of Illinois, Build Illinois Bonds (Sales Tax Revenue 6/02 at 101 AAA 31,389,192 Refunding Bonds), Series Q, 5.500%, 6/15/20 13,775,000 Metropolitan Pier and Exposition Authority (Illinois), Dedicated 6/07 at 101 AAA 14,159,047 State Tax Revenue Bonds, Series 1997, 5.125%, 6/01/13 11,650,000 Regional Transportation Authority, Cook, DuPage, Kane, Lake, 6/04 at 102 AAA 12,873,483 McHenry and Will Counties (Illinois), General Obligation Bonds, Series 1994A, 6.250%, 6/01/24 1,980,000 Tri-City Regional Port District (Illinois), Port and Terminal Facilities No Opt. Call N/R 2,018,452 Revenue Bonds (1998 Refunding and Dock #2 Enhancement Project), Series 1998B, 5.875%, 7/01/08 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Indiana - 2.3% 10,000,000 Indiana Health Facility Financing Authority, Hospital Revenue Bonds, 11/07 at 102 AAA 10,087,900 Series 1997A (Sisters of St. Francis Health Services, Inc. Project), 5.375%, 11/01/27 17,105,000 Indiana Health Facility Financing Authority, Hospital Revenue Bonds 2/07 at 102 AA 18,353,494 (Clarian Health Partners, Inc.), Series 1996A, 6.000%, 2/15/21 4,500,000 Indianapolis Airport Authority, Special Facilities Revenue Bonds, 7/04 at 102 BBB 5,020,830 Series 1994 (Federal Express Corporation Project), 7.100%, 1/15/17 (Alternative Minimum Tax) 9,155,000 City of South Bend, Indiana, Multifamily Housing Revenue 12/03 at 100 N/R 9,174,958 Refunding Bonds (The Pointe at St. Joseph Project), Issue of 1994, Series A, 7.500%, 12/15/18 500,000 City of South Bend, Indiana, Multifamily Housing Revenue 12/03 at 100 N/R 501,465 Refunding Bonds (The Pointe at St. Joseph Project), Issue of 1994, Series B, 7.750%, 12/15/18 (Alternative Minimum Tax) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Indiana (continued) $ 3,168,570 City of South Bend, Indiana, Multifamily Housing Revenue 12/03 at 100 N/R $2,079,089 Refunding Bonds (The Pointe at St. Joseph Project), Issue of 1994, Series C, 3.850%, 12/15/18 - ------------------------------------------------------------------------------------------------------------------------------------ Iowa - 0.4% 31,925,000 Iowa Housing Finance Authority, Single Family Housing Bonds, No Opt. Call AAA 4,547,078 1984 Issue A, 0.000%, 9/01/16 4,380,000 Iowa Finance Authority, Hospital Facilities Revenue Bonds, 7/08 at 102 AAA 4,302,167 Series 1998 A (Iowa Health System), 5.125%, 1/01/28 - ------------------------------------------------------------------------------------------------------------------------------------ Kansas - 0.4% 6,650,000 City of Newton, Kansas, Hospital Revenue Bonds (Newton 11/04 at 102 N/R*** 7,917,291 Healthcare Corporation), Series 1994A, 7.750%, 11/15/24 (Pre-refunded to 11/15/04) - ------------------------------------------------------------------------------------------------------------------------------------ Kentucky - 1.2% 12,500,000 County of Carroll, Kentucky, Collateralized Pollution Control 9/02 at 102 Aa2 14,001,375 Revenue Bonds (Kentucky Utilities Company Project), 1992 Series A, 7.450%, 9/15/16 9,000,000 Greater Kentucky Housing Assistance Corporation, Mortgage 1/03 at 100 AAA 9,224,370 Revenue Refunding Bonds, Series 1997A (FHA-Insured Mortgage Loans - Section 8 Assisted Projects), 6.100%, 1/01/24 - ------------------------------------------------------------------------------------------------------------------------------------ Louisiana - 1.3% 21,315,000 Louisiana Public Facilities Authority, Hospital Revenue No Opt. Call AAA 26,133,469 Refunding Bonds (Southern Baptist Hospitals, Inc. Project), Series 1986, 8.000%, 5/15/12 - ------------------------------------------------------------------------------------------------------------------------------------ Maine - 2.1% 14,365,000 Maine State Housing Authority, Mortgage Purchase Bonds, 2/04 at 102 AA 14,589,812 1994 Series A, 5.550%, 11/15/14 24,775,000 Maine State Housing Authority, Mortgage Purchase Bonds, 5/05 at 102 AA 26,407,177 1995 Series A-2, 6.650%, 11/15/25 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Maryland - 0.6% 10,900,000 Community Development Administration of Maryland, 3/07 at 101 1/2 Aa2 11,366,193 Department of Housing and Community Development, Residential Revenue Bonds, Series 1997B, 5.875%, 9/01/25 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Massachusetts - 5.5% 1.350,000 Massachusetts Municipal Wholesale Electric Company, No Opt. Call BBB+ 1,575,207 Power Supply System Revenue Bonds, 1987 Series A, 8.750%, 7/01/18 5,000,000 Massachusetts Industrial Finance Agency, Resource Recovery 7/01 at 103 N/R 5,525,850 Revenue Bonds (SEMASS Project), Series 1991A, 9.000%, 7/01/15 16,400,000 Massachusetts Turnpike Authority, Metropolitan Highway System 1/07 at 102 AAA 15,664,132 Revenue Bonds, 1997 Series C (Senior), 5.000%, 1/01/37 10,000,000 Massachusetts Turnpike Authority, Metropolitan Highway System 1/07 at 102 AAA 9,835,300 Revenue Bonds, 1997 Series B, 5.125%, 1/01/37 Massachusetts Turnpike Authority, Metropolitan Highway System Revenue Bonds, 1999 Series A (Subordinated): 5,000,000 4.750%, 1/01/34 1/09 at 101 AAA 4,621,150 10,000,000 5.000%, 1/01/39 1/09 at 101 AAA 9,544,000 24,510,000 Massachusetts Water Resources Authority, General Revenue Bonds, 4/00 at 100 AAA 25,124,956 1990 Series A, 6.000%, 4/01/20 (Pre-refunded to 4/01/00) 36,580,000 Massachusetts Water Resources Authority, General Revenue 11/02 at 102 A1 37,760,802 Refunding Bonds, 1992 Series B, 5.500%, 11/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ Michigan - 5.3% 3,790,000 City of Adrian (Michigan), Hospital Finance Authority, Hospital 7/00 at 102 N/R 3,984,427 Revenue Bonds (Emma L. Bixby Medical Center), Series 1989A, 8.500%, 7/01/09 6,000,000 The Economic Development Corporation of the City of Dearborn 8/04 at 102 AAA 5,972,160 (Michigan), Hospital Revenue Refunding Bonds (Oakwood Obligated Group), Series 1994A, 5.250%, 8/15/21 10,000,000 City of Detroit, Local Development Finance Authority, Tax 5/09 at 101 N/R 9,696,200 Increment Bonds, Series 1998A, 5.500%, 5/01/21 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Michigan (continued) $ 5,000,000 City of Detroit, Michigan, Sewage Disposal System Revenue Refunding 7/05 at 101 AAA $5,145,150 Bonds, Series 1995-B, 5.250%, 7/01/15 County of Grand Traverse (Michigan), Hospital Finance Authority, Hospital Revenue Refunding Bonds (Munson Healthcare Obligated Group), Series 1992A: 2,700,000 6.250%, 7/01/12 (Pre-refunded to 7/01/02) 7/02 at 102 AAA 2,954,178 1,300,000 6.250%, 7/01/12 7/02 at 102 AAA 1,406,873 7,000,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds 8/01 at 102 Aaa 7,721,350 (The Detroit Medical Center Obligated Group), Series 1991A, 7.500%, 8/15/11 (Pre-refunded to 8/15/01) 18,755,000 Michigan State Hospital Finance Authority, Hospital Revenue Bonds 8/08 at 101 BBB 17,014,911 (The Detroit Medical Center Obligated Group), Series 1998A, 5.250%, 8/15/28 5,820,000 Michigan State Housing Development Authority, Rental Housing 4/03 at 102 AAA 6,096,101 Revenue Bonds, 1993 Series A, 5.875%, 10/01/17 15,750,000 Michigan State Housing Development Authority, Rental Housing 6/05 at 102 AAA 16,801,628 Revenue Bonds, 1995 Series B, 6.150%, 10/01/15 25,000,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue 9/05 at 102 AAA 28,153,500 Bonds (Detroit Edison Company Pollution Control Bonds Project), Collateralized Series 1995AA, 6.400%, 9/01/25 - ------------------------------------------------------------------------------------------------------------------------------------ Minnesota - 0.4% 7,350,000 Minnesota Housing Finance Agency, Rental Housing Bonds, 2/05 at 102 AAA 7,726,761 1995 Series D, 5.900%, 8/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ Mississippi - 0.7% 13,000,000 Mississippi Hospital Equipment and Facilities Authority, Revenue 5/03 at 102 AAA 13,519,870 Refunding and Improvement Bonds (North Mississippi Health Services), 1993 Series 1, 5.750%, 5/15/16 - ------------------------------------------------------------------------------------------------------------------------------------ Nebraska - 0.2% 4,695,000 Consumers Public Power District, Nebraska, Nuclear Facility Revenue 7/99 at 100 A+ 4,700,446 Bonds, 1968 Series, 5.100%, 1/01/03 - ------------------------------------------------------------------------------------------------------------------------------------ New Hampshire - 1.5% 5,070,000 The Industrial Development Authority of the State of 12/99 at 103 BBB- 5,304,792 New Hampshire, Pollution Control Revenue Bonds (The United Illuminating Company Project-1989 Series A), 8.000%, 12/01/14 (Alternative Minimum Tax) 24,625,000 Business Finance Authority of the State of New Hampshire, Pollution 10/03 at 102 BBB- 24,839,484 Control Refunding Revenue Bonds (The United Illuminating Company Project-1993 Series A), 5.875%, 10/01/33 - ------------------------------------------------------------------------------------------------------------------------------------ New York - 9.6% 5,360,000 Village of East Rochester (New York), Housing Authority, 8/07 at 102 AAA 5,635,718 FHA - Insured Mortgage Revenue Bonds (St. John's Meadows Project), Series 1997A, 5.600%, 8/01/17 1,250,000 Metropolitan Transportation Authority (New York), Commuter 7/00 at 102 AAA 1,332,738 Facilities 1987 Service Contract Bonds, Series 3, 7.500%, 7/01/16 (Pre-refunded to 7/01/00) 5,000,000 The City of New York, General Obligation Bonds, Fiscal 1994 8/03 at 101 1/2 A- 5,281,950 Series D, 5.750%, 8/15/10 9,000,000 The City of New York, General Obligation Bonds, Fiscal 1996 2/06 at 101 1/2 A- 9,593,460 Series G, 5.750%, 2/01/14 10,000,000 The City of New York, General Obligation Bonds, Fiscal 1997 8/06 at 101 1/2 A- 10,874,900 Series E, 6.000%, 8/01/16 23,395,000 The City of New York, General Obligation Bonds, Fiscal 1998 8/07 at 101 A- 24,961,295 Series D, 5.500%, 8/01/10 The City of New York, General Obligation Bonds, Fiscal 1997 Series G: 390,000 6.000%, 10/15/26 (Pre-refunded to 10/15/07) 10/07 at 101 A-*** 442,131 39,610,000 6.000%, 10/15/26 10/07 at 101 A- 43,247,782 15,000,000 New York City (New York), Municipal Water Finance Authority, 6/06 at 101 AAA 16,121,850 Water and Sewer System Revenue Bonds, Fiscal 1996 Series B, 5.750%, 6/15/26 8,750,000 New York City (New York), Municipal Water Finance Authority, 6/01 at 101 Aaa 9,403,625 Water and Sewer System Revenue Bonds, Fiscal 1992 Series A, 6.750%, 6/15/17 (Pre-refunded to 6/15/01) 15,000,000 New York Local Government Assistance Corporation, Series 1991A Bonds, 4/01 at 102 AAA 16,242,150 7.000%, 4/01/16 (Pre-refunded to 4/01/01) 9,735,000 New York State Medical Care Facilities Finance Agency, St. Luke's - 8/03 at 102 AAA 10,180,279 Roosevelt Hospital Center, FHA - Insured Mortgage Revenue Bonds, 1993 Series A, 5.600%, 8/15/13 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ New York (continued) $ 26,105,000 Power Authority of the State of New York, Revenue Bonds, 2/08 at 101 AA- $25,992,749 Series 1998 C, 5.000%, 2/15/18 10,000,000 New York State Thruway Authority, Local Highway and 4/08 at 101 AAA 10,382,900 Bridge Service Contract Bonds, Series 1998A-2, 5.250%, 4/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ North Carolina - 3.0% 6,100,000 City of Charlotte, North Carolina, Refunding Certificates 12/03 at 102 AAA 6,165,636 of Participation (Convention Facility Project), Series 1993C, 5.250%, 12/01/20 11,865,000 North Carolina Eastern Municipal Power Agency, 9/03 at 102 1/2 Baa 112,196,034 Power System Revenue Bonds, Series 1985-G, 5.750%, 12/01/16 11,610,000 North Carolina Eastern Municipal Power Agency, 1/03 at 102 Baa1 11,980,940 Power System Revenue Bonds, Series 1993-D, 5.875%, 1/01/14 4,300,000 North Carolina Eastern Municipal Power Agency, 1/07 at 102 AAA 4,631,788 Power System Revenue Bonds, Refunding Series 1996 A, 5.700%, 1/01/13 13,850,000 North Carolina Municipal Power Agency Number 1, 1/03 at 100 A- 14,135,172 Catawba Electric Revenue Bonds, Series 1992, 5.750%, 1/01/15 10,015,000 North Carolina Municipal Power Agency Number 1, 7/99 at 100 A- 10,035,831 Catawba Electric Revenue Bonds, Series 1985B, 6.000%, 1/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ Oklahoma - 0.7% 10,030,000 The Comanche County Hospital Authority, Lawton, Oklahoma, 1/00 at 102 AAA 10,602,613 Certificates of Participation, Series 1990, 9.000%, 7/01/21 (Pre-refunded to 1/01/00) 2,350,000 Midwest City Memorial Hospital Authority (Midwest City, Oklahoma), 4/02 at 102 BBB+*** 2,622,436 Hospital Revenue Bonds, Series 1992, 7.375%, 4/01/22 (Pre-refunded to 4/01/02) - ------------------------------------------------------------------------------------------------------------------------------------ Pennsylvania - 4.0% 5,955,000 Pennsylvania Convention Center Authority, Refunding Revenue Bonds, 9/04 at 102 BBB 6,616,243 1994 Series A, 6.750%, 9/01/19 11,175,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 10/03 at 102 AA+ 11,404,758 Revenue Bonds, Series 1993-36, 5.450%, 10/01/14 9,000,000 Pennsylvania Housing Finance Agency, Single Family Mortgage 4/06 at 102 AA+ 9,587,970 Revenue Bonds, Series 1996-51, 6.375%, 4/01/28 (Alternative Minimum Tax) 18,850,000 Pennsylvania Intergovernmental Cooperation Authority, 6/03 at 100 AAA 18,382,143 Special Tax Revenue Refunding Bonds (City of Philadelphia Funding Program), Series of 1993A, 5.000%, 6/15/22 32,000,000 City of Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, 6/03 at 102 AAA 33,494,080 Series 1993, 5.500%, 6/15/14 - ------------------------------------------------------------------------------------------------------------------------------------ Rhode Island - 0.8% 6,250,000 Rhode Island Health and Educational Building Corporation, Hospital 5/07 at 102 AAA 6,174,250 Financing Revenue Bonds, Lifespan Obligated Group Issue, Series 1996, 5.250%, 5/15/26 10,000,000 State of Rhode Island and Providence Plantations, Lease 10/07 at 101 AAA 10,289,000 Participation Certificates (Howard Center Improvements), 1997 Series, 5.375%, 10/01/16 - ------------------------------------------------------------------------------------------------------------------------------------ South Carolina - 0.6% 13,000,000 Piedmont Municipal Power Agency, Electric Revenue Bonds, 7/99 at 100 Baa2 12,035,140 1986 Refunding Series, 5.000%, 1/01/25 - ------------------------------------------------------------------------------------------------------------------------------------ South Dakota - 0.3% 6,000,000 South Dakota Housing Development Authority, Homeownership 5/07 at 102 AAA 6,235,320 Mortgage Bonds, 1997 Series F, 5.800%, 5/01/28 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Tennessee - 0.2% 3,625,000 Municipal Energy Acquisition Corporation (Tennessee), No Opt. Call AAA 3,558,989 Gas Revenue Bonds, Series 1999, 4.125%, 3/01/08 - ------------------------------------------------------------------------------------------------------------------------------------ Texas - 6.1% 11,990,000 Alliance Airport Authority, Inc., Special Facilities Revenue Bonds, 12/00 at 102 Baa2 12,792,850 Series 1990 (American Airlines, Inc. Project), 7.500%, 12/01/29 (Alternative Minimum Tax) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Texas (continued) $ 12,525,000 City of Austin, Texas, Combined Utility Systems Revenue Bonds, 5/01 at 100 AAA $13,607,912 Series 1986A, 8.000%, 11/15/16 (Pre-refunded to 5/15/01) 24,265,000 City of Austin, Texas, Combined Utility Systems Revenue Refunding No Opt. Call AAA 37,927,408 Bonds, Series 1992A, 12.500%, 11/15/07 4,030,000 Corpus Christi (Texas), Housing Finance Corporation, 7/01 at 103 AAA 4,375,008 Single Family Mortgage Senior Revenue Refunding Bonds, Series 1991A, 7.700%, 7/01/11 10,000,000 Harris County, Texas, Toll Road Unlimited Tax and Subordinate Lien 8/01 at 102 AA 10,815,500 Revenue Refunding Bonds, Series 1991, 6.750%, 8/01/14 3,470,000 Irving Independent School District, Unlimited Tax School No Opt. Call AAA 1,983,452 Building Bonds, Series 1997, 0.000%, 2/15/11 5,685,000 Irving Independent School District, Unlimited Tax Refunding Bonds, No Opt. Call AAA 3,443,518 Series 1997 A, 0.000%, 2/15/10 10,000,000 Matagorda County Navigation District Number One (Texas), 7/99 at 102 AAA 10,263,400 Collateralized Revenue Refunding Bonds (Houston Lighting and Power Company Project), Series1989C, 7.125%, 7/01/19 14,625,000 Matagorda County Navigation District Number One (Texas), 10/00 at 102 AAA 15,276,105 Collateralized Revenue Refunding Bonds (Houston Lighting and Power Company Project), Series1995, 5.800%, 10/15/15 4,000,000 Industrial Development Corporation of the Port of 4/08 at 102 BBB- 3,948,520 Corpus Christi (Texas), Revenue Refunding Bonds (Valero Refining and Marketing Company Project), 5.400%, 4/01/18 3,445,000 The Southeast Texas Housing Finance Corporation, Single No Opt. Call AA- 704,985 Family Mortgage Revenue Bonds, 1983 Series A, 0.000%, 11/01/14 5,750,000 Weslaco Health Facilities Development Corporation, 1/04 at 102 AAA 5,790,078 Hospital Revenue Bonds (Knapp Medical Center Project), Series 1994, 5.375%, 6/01/23 - ------------------------------------------------------------------------------------------------------------------------------------ Utah - 5.1% 10,670,000 Intermountain Power Agency, Power Supply Revenue 7/03 at 102 A+ 10,716,628 Refunding Bonds, 1993 Series B, 5.250%, 7/01/17 3,510,000 Intermountain Power Agency, Power Supply Revenue No Opt. Call A+ 3,653,559 Refunding Bonds, 1993 Series C, 5.250%, 7/01/14 4,250,000 Intermountain Power Agency, Power Supply Revenue Refunding Bonds, 7/99 at 100 A+*** 4,268,998 1989 Series A, 6.000%, 7/01/23 (Pre-refunded to 7/01/99) 5,000,000 Intermountain Power Agency, Power Supply Revenue Refunding Bonds, 7/99 at 100 A+*** 5,022,350 1989 Series B, 6.000%, 7/01/23 (Pre-refunded to 7/01/99) Intermountain Power Agency, Power Supply Revenue Refunding Bonds, 1993 Series A: 21,735,000 5.500%, 7/01/20 7/03 at 102 A+ 22,217,517 47,180,000 5.000%, 7/01/23 7/03 at 100 A+ 45,291,385 10,000,000 Intermountain Power Agency, Power Revenue Refunding Bonds, 7/06 at 102 A+ 9,642,300 1996 Series D, 5.000%, 7/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ Washington - 10.7% 640,000 Washington Public Power Supply System, Nuclear Project No. 1, No Opt. Call AAA 716,224 Revenue Bonds, 14.375%, 7/01/01 9,450,000 Washington Public Power Supply System, Nuclear Project No. 1, 7/03 at 102 AAA 9,843,026 Refunding Revenue Bonds, Series 1993A, 5.700%, 7/01/17 Washington Public Power Supply System, Nuclear Project No. 1, Refunding Revenue Bonds, Series 1993C: 27,000,000 5.400%, 7/01/12 7/03 at 102 Aa1 27,939,870 2,870,000 5.375%, 7/01/15 7/03 at 102 Aa1 2,933,197 11,390,000 Washington Public Power Supply System, Nuclear Project No. 2, 7/03 at 102 Aa1 12,147,891 Refunding Revenue Bonds, Series 1993A, 5.750%, 7/01/12 17,500,000 Washington Public Power Supply System, Nuclear Project No. 2, 7/04 at 102 Aa1 18,237,800 Refunding Revenue Bonds, Series 1994A, 5.375%, 7/01/10 2,000,000 Washington Public Power Supply System, Nuclear Project No. 3, 1/00 at 102 AAA 2,090,680 Refunding Revenue Bonds, Series 1989B, 7.250%, 7/01/15 (Pre-refunded to 1/01/00) 20,975,000 Washington Public Power Supply System, Nuclear Project No. 3, 7/01 at 102 Aaa 22,622,796 Refunding Revenue Bonds, Series 1991A, 6.500%, 7/01/18 (Pre-refunded to 7/01/01) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Washington (continued) Washington Public Power Supply System, Nuclear Project No. 3, Refunding Revenue Bonds, Series 1993B: $ 11,510,000 5.625%, 7/01/12 7/03 at 102 Aa1 $12,032,899 9,000,000 5.600%, 7/01/17 7/03 at 102 AAA 9,305,640 Washington Public Power Supply System, Nuclear Project No. 3, Refunding Revenue Bonds, Series 1993C: 81,000,000 5.400%, 7/01/12 7/03 at 102 Aa1 83,819,609 11,850,000 5.375%, 7/01/15 7/03 at 102 Aa1 12,110,936 - ------------------------------------------------------------------------------------------------------------------------------------ West Virginia - 0.4% 7,180,000 West Virginia Housing Development Fund, Housing Finance Bonds, 11/06 at 102 AAA 7,655,243 Series 1997-A, 6.050%, 5/01/27 - ------------------------------------------------------------------------------------------------------------------------------------ Wisconsin - 2.6% 20,385,000 The Wisconsin Public Power Incorporated System, Power Supply 7/03 at 102 AAA 20,290,820 System Revenue Bonds, Series 1993 A, 5.250%, 7/01/21 10,815,000 Wisconsin Housing and Economic Development Authority, 3/04 at 102 AA 11,500,129 Homeownership Revenue Bonds, 1994 Series B, 6.750%, 9/01/25 (Alternative Minimum Tax) 17,020,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/03 at 102 AAA 17,330,614 Bonds (Sisters of the Sorrowful Mother - Ministry), Series 1993D, 5.500%, 8/15/19 1,750,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/03 at 102 AAA 1,829,974 Bonds (Sisters of the Sorrowful Mother - Ministry), Series 1993C, 5.400%, 8/15/13 - ------------------------------------------------------------------------------------------------------------------------------------ $ 1,977,428,570 Total Investments - (cost $1,818,999,922) - 98.8% 1,961,646,440 =============== Other Assets Less Liabilities - 1.2% 24,158,191 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $1,985,804,631 ==================================================================================================================== * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. (DD) Security purchased on a delayed delivery basis (note 1). See accompanying notes to financial statements.
Portfolio of Investments Nuveen Municipal Income Fund, Inc. (NMI) April 30, 1999 (Unaudited)
Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ California - 4.5% $ 3,000,000 California Pollution Control Financing Authority, Solid Waste 7/07 at 102 N/R $3,090,060 Disposal Revenue Bonds (CanFibre of Riverside Project), Tax - Exempt Series 1997A, 9.000%, 7/01/19 (Alternative Minimum Tax) 1,150,000 Foothill/Eastern Transportation Corridor Agency (California), 1/05 at 102 BBB- 1,235,572 Toll Road Revenue Bonds, Series 1995A, 6.000%, 1/01/34 - ------------------------------------------------------------------------------------------------------------------------------------ Colorado - 5.1% City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1992B: 410,000 7.250%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/02) 11/02 at 102 Aaa 464,579 1,590,000 7.250%, 11/15/23 (Alternative Minimum Tax) 11/02 at 102 BBB+ 1,746,981 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1990A: 110,000 8.500%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/00) 11/00 at 102 Aaa 120,299 1,195,000 8.500%, 11/15/23 (Alternative Minimum Tax) 11/00 at 102 BBB+ 1,287,421 City and County of Denver, Colorado, Airport System Revenue Bonds, Series 1991A: 285,000 8.750%, 11/15/23 (Alternative Minimum Tax) (Pre-refunded to 11/15/01) 11/01 at 102 Aaa 325,154 780,000 8.750%, 11/15/23 (Alternative Minimum Tax) 11/01 at 102 BBB+ 870,386 - ------------------------------------------------------------------------------------------------------------------------------------ Connecticut - 6.3% 1,480,000 Capitol Region Education Council (Connecticut), Revenue Bonds, 10/05 at 102 BBB 1,627,822 6.750%, 10/15/15 3,000,000 State of Connecticut, Health and Educational Facilities Authority, 7/06 at 102 BBB- 3,232,740 Revenue Bonds, University of New Haven Issue, Series D, 6.700%, 7/01/26 1,000,000 Housing Authority of the City of Willimantic, Multifamily Housing 10/05 at 105 AAA 1,146,510 Revenue Bonds, Series 1995A (GNMA Collateralized Mortgage Loan - Village Heights Apartments Project), 8.000%, 10/20/30 - ------------------------------------------------------------------------------------------------------------------------------------ District of Columbia - 0.9% 865,000 District of Columbia Housing Finance Agency, Collateralized Single 6/99 at 101 AAA 881,245 Family Mortgage Revenue Bonds, Series 1988A, 8.375%, 6/01/19 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Florida - 2.6% 1,750,000 Dade County (Florida), Industrial Development Authority, Industrial 6/05 at 102 N/R 1,917,668 Development Revenue Bonds, Series 1995 (Miami Cerebral Palsy Residential Services, Inc. Project), 8.000%, 6/01/22 55,000 Florida Housing Finance Agency, GNMA Collateralized Home Ownership 6/99 at 103 Aaa 56,702 Mortgage Revenue Bonds, 1988 Series G1 Bonds, 8.300%, 6/01/20 (Alternative Minimum Tax) 490,000 Gateway Centre Development District, Pinellas County, Florida, 7/99 at 103 N/R 506,493 Special Assessment Revenue Bonds, Series 1988, 9.125%, 1/01/09 - ------------------------------------------------------------------------------------------------------------------------------------ Illinois - 12.2% 4,470,000 City of Chicago Tax Increment Allocation Bonds (Irving/Cicero 1/09 at 100 N/R 4,527,261 Redevelopment Project), Series 1998, 7.000%, 1/01/14 1,300,000 Illinois Health Facilities Authority, Revenue Bonds, Series 1993 9/03 at 102 A- 1,432,704 (Northern Illinois Medical Center Project), McHenry, Illinois, 6.000%, 9/01/19 2,000,000 Illinois Health Facilities Authority, Revenue Refunding Bonds, 10/03 at 102 A- 2,000,440 Series 1993 (Illinois Masonic Medical Center), 5.500%, 10/01/19 Illinois Health Facilities Authority, Revenue and Revenue Refunding Bonds, Series 1990C (Hinsdale Hospital): 1,010,000 9.500%, 11/15/19 (Pre-refunded to 11/15/00) 11/00 at 102 AAA 1,119,676 500,000 9.500%, 11/15/19 11/00 at 102 AAA 556,735 2,000,000 Joliet Regional Port District Airport Facilities, Revenue Bonds, 7/07 at 103 N/R 2,107,320 Lewis University Airport, Series 1997A, 7.250%, 7/01/18 (Alternative Minimum Tax) Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ Indiana - 9.6% $ 9,000,000 Whitley County, Indiana, Solid Waste and Sewage Disposal Revenue 11/10 at 102 N/R $9,115,200 Bonds (Steel Dynamics Inc., Project), Series 1998, 7.250%, 11/01/18 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Louisiana - 3.7% Louisiana Public Facilities Authority, Extended Care Facilities Revenue Bonds (Comm-Care Corporation Project), Series 1994: 625,000 11.000%, 2/01/04 No Opt. Call BBB 734,694 2,000,000 11.000%, 2/01/14 No Opt. Call BBB 2,808,960 - ------------------------------------------------------------------------------------------------------------------------------------ Maryland - 2.3% 2,000,000 Anne Arundel County, Maryland, Multifamily Housing Revenue Bonds No Opt. Call BBB 2,179,700 (Twin Coves Apartments Project), Series 1994, 7.450%, 12/01/24 (Alternative Minimum Tax) (Mandatory put 12/01/03) - ------------------------------------------------------------------------------------------------------------------------------------ Massachusetts - 5.0% 3,000,000 Massachusetts Industrial Finance Agency, Resource Recovery 7/01 at 103 N/R 3,315,510 Revenue Bonds (SEMASS Project), Series 1991A, 9.000%, 7/01/15 1,380,000 Massachusetts Industrial Finance Agency, Revenue Bonds, 7/07 at 102 BBB- 1,421,566 Dana Hall School Issue, Series 1997, 5.900%, 7/01/27 - ------------------------------------------------------------------------------------------------------------------------------------ Michigan - 1.6% 1,500,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds No Opt. Call BBB+ 1,503,645 (United Waste Systems, Inc. Project), Series 1995 Remarketing (Waste Management, Inc), 5.200%, 4/01/10 - ------------------------------------------------------------------------------------------------------------------------------------ Minnesota - 3.3% 3,000,000 Minnesota Housing Finance Agency, Single Family Mortgage Bonds, 1/07 at 102 AA+ 3,161,430 1995 Series M, 5.875%, 1/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ Mississippi - 4.8% 4,500,000 Mississippi Business Finance Corporation, Pollution Control Revenue 10/03 at 102 BBB- 4,522,410 Refunding Bonds (System Energy Resources, Inc. Project), Series 1998, 5.875%, 4/01/22 - ------------------------------------------------------------------------------------------------------------------------------------ Montana - 1.7% 1,500,000 Montana Health Facility Authority, Health Care Revenue Bonds, 6/06 at 102 BBB- 1,579,635 Series 1996 (Community Medical Center, Inc.), 6.375%, 6/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ New Hampshire - 1.1% 1,000,000 New Hampshire Higher Educational and Health Facilities Authority, 1/07 at 102 BBB- 1,047,660 Revenue Bonds, Series 1997 (New Hampshire College), 6.375%, 1/01/27 - ------------------------------------------------------------------------------------------------------------------------------------ New Mexico - 2.6% 2,360,000 City of Belen, New Mexico, Nursing Home Refunding Revenue Bonds 10/99 at 102 N/R 2,446,400 (Belen Health Care Limited Project), 10.250%, 10/01/13 - ------------------------------------------------------------------------------------------------------------------------------------ New York - 16.5% 400,000 Village of East Rochester (New York), Housing Authority, FHA - 8/08 at 102 AA 402,908 Insured Mortgage Revenue Bonds (Linden Knoll Inc. Project), Series 1998, 5.250%, 8/01/17 5,000,000 Erie County (New York), Industrial Development Agency, Solid Waste 12/10 at 103 N/R 5,051,900 Disposal Facility Revenue Bonds (1998 CanFibre of Lackawanna Project), 8.875%, 12/01/13 (Alternative Minimum Tax) The City of New York (New York), General Obligation Bonds, Fiscal 1996 Series F: 500,000 5.750%, 2/01/15 2/06 at 101 1/2 A- 533,870 1,400,000 5.750%, 2/01/19 2/06 at 101 1/2 A- 1,480,668 1,000,000 The City of New York (New York), General Obligation Bonds, 2/06 at 101 1/2 A- 1,065,940 Fiscal 1996 Series G, 5.750%, 2/01/14 1,250,000 The City of New York (New York), General Obligation Bonds, 11/06 at 101 1/2 A- 1,358,925 Fiscal 1997 Series D, Tax Exempt Bonds, 5.875%, 11/01/11 Principal Optional Call Market Amount Description Provisions* Ratings** Value - ------------------------------------------------------------------------------------------------------------------------------------ New York (continued) $ 2,500,000 New York State Medical Care Facilities Finance Agency, Hospital 2/05 at 102 AAA $2,898,950 Medical Center Secured Hospital Revenue Bonds, Series 1995-A, 6.800%, 8/15/12 (Pre-refunded to 2/15/05) 2,735,000 UFA Development Corporation, Utica, New York, FHA-Insured 1/07 at 102 Aa2 2,974,477 Mortgage Revenue Bonds, Series 1997A (Loretto-Utica Project), 6.125%, 7/01/35 - ------------------------------------------------------------------------------------------------------------------------------------ Ohio - 1.2% 1,000,000 County of Franklin, Ohio, Hospital Facilities Mortgage Revenue Bonds, No Opt. Call AAA 1,101,610 1991 Series A (Ohio Presbyterian Retirement Services), 8.750%, 7/01/21 - ------------------------------------------------------------------------------------------------------------------------------------ Oklahoma - 5.0% 3,585,000 The Comanche County Hospital Authority, Lawton, Oklahoma, Hospital 7/99 at 102 AAA 3,684,627 Revenue Bonds, Series 1989, 8.050%, 7/01/16 (Pre-refunded to 7/01/99) 1,045,000 Oklahoma County Industrial Authority, Revenue Bonds, Oklahoma Blood 7/99 at 100 N/R 1,049,640 Institute Project, Series 1988, 9.000%, 7/01/03 - ------------------------------------------------------------------------------------------------------------------------------------ Oregon - 2.2% 2,000,000 State of Oregon, Housing and Community Services Department, Mortgage 7/07 at 101 1/2 Aa2 2,057,500 Revenue Bonds (Single Family Mortgage Program), 1997 Series H, 5.650%, 7/01/28 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ Pennsylvania - 1.2% 1,000,000 Pennsylvania Convention Center Authority, Refunding Revenue Bonds, 9/04 at 102 BBB 1,111,040 1994 Series A, 6.750%, 9/01/19 - ------------------------------------------------------------------------------------------------------------------------------------ Texas - 2.8% 1,055,000 Alliance Airport Authority, Inc., Special Facilities Revenue Bonds, 12/00 at 102 Baa2 1,125,643 Series 1990 (American Airlines, Inc. Project), 7.500%, 12/01/29 (Alternative Minimum Tax) 825,000 Hidalgo County Housing Finance Corporation (Florida), Single 4/04 at 102 Aaa 878,518 Family Mortgage Revenue Bonds (GNMA and FNMA Collateralized), Series 1994A, 7.000%, 10/01/27 (Alternative Minimum Tax) West Independent School District (McLennan and Hill Counties, Texas), Unlimited Tax School Building and Refunding Bonds, Series 1998: 1,000,000 0.000%, 8/15/25 8/13 at 51 27/32 AAA 243,920 1,000,000 0.000%, 8/15/26 8/13 at 49 3/32 AAA 230,089 1,000,000 0.000%, 8/15/27 8/13 at 46 15/32 AAA 217,769 - ------------------------------------------------------------------------------------------------------------------------------------ Washington - 1.5% 1,240,000 Housing Authority of the City of Bellingham, Washington, 11/04 at 100 A1*** 1,422,056 Housing Revenue Bonds (Cascade Meadows Project), Series 1994, 7.100%, 11/01/23 (Pre-refunded to 11/01/04) - ------------------------------------------------------------------------------------------------------------------------------------ $ 89,840,000 Total Investments - (cost $87,537,152) - 97.7% 92,980,628 ============= Other Assets Less Liabilities - 2.3% 2,187,942 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $95,168,570 ==================================================================================================================== * Optional Call Provisions: Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. ** Ratings: Using the higher of Standard & Poor's or Moody's rating. *** Securities are backed by an escrow or trust containing sufficient U.S. government or U.S. government agency securities which ensures the timely payment of principal and interest. Securities are normally considered to be equivalent to AAA rated securities. N/R Investment is not rated. See accompanying notes to financial statements.
Statement of Net Assets April 30, 1999 (Unaudited)
Municipal Value Municipal Income - ------------------------------------------------------------------------------------------------------------------------------------ Assets Investments in municipal securities, at market value (note 1) $1,961,646,440 $92,980,628 Cash 4,498,682 646,372 Receivables: Interest 36,949,176 2,107,382 Investments sold 462,313 -- Other assets 358,948 15,125 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 2,003,915,559 95,749,507 - ------------------------------------------------------------------------------------------------------------------------------------ Liabilities Payable for investments purchased 7,669,520 -- Accrued expenses: Management fees (note 6) 897,752 50,853 Other 1,257,883 72,811 Dividends payable 8,285,773 457,273 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 18,110,928 580,937 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets (note 7) $1,985,804,631 $95,168,570 ==================================================================================================================================== Shares outstanding 194,959,522 7,953,909 ==================================================================================================================================== Net asset value per share outstanding (net assets divided by shares outstanding) $ 10.19 $ 11.97 ====================================================================================================================================
Statement of Operations Six Months Ended April 30, 1999 (Unaudited) Municipal Value Municipal Income - ------------------------------------------------------------------------------------------------------------------------------------ Investment Income (note 1) $56,390,493 $3,195,108 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses Management fees (note 6) 5,438,980 307,098 Shareholders' servicing agent fees and expenses 315,478 16,580 Custodian's fees and expenses 109,358 18,627 Directors' fees and expenses (note 6) 9,537 449 Professional fees 10,795 7,973 Shareholders' reports - printing and mailing expenses 261,065 16,556 Stock exchange listing fees 81,055 8,114 Investor relations expense 95,226 4,949 Other expenses 37,188 3,267 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses 6,358,682 383,613 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 50,031,811 2,811,495 - ------------------------------------------------------------------------------------------------------------------------------------ Realized and Unrealized Gain (Loss) from Investments Net realized gain from investment transactions (notes 1 and 4) 2,973,732 324,419 Net change in unrealized appreciation or depreciation of investments (21,597,499) (849,906 - ------------------------------------------------------------------------------------------------------------------------------------ Net gain (loss) from investments (18,623,767) (525,487 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets from operations $31,408,044 $2,286,008 ====================================================================================================================================
Statement of Changes in Net Assets (Unaudited)
Municipal Value Municipal Income - ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended 4/30/99 10/31/98 4/30/99 10/31/98 - ------------------------------------------------------------------------------------------------------------------------------------ Operations Net investment income $ 50,031,811 $ 103,916,174 $ 2,811,495 $ 5,617,256 Net realized gain from investment transactions (notes 1 and 4) 2,973,732 18,170,510 324,419 592,492 Net change in unrealized appreciation or depreciation of investments (21,597,499) 24,774,889 (849,906) 274,398 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase in net assets from operations 31,408,044 146,861,573 2,286,008 6,484,146 - ------------------------------------------------------------------------------------------------------------------------------------ Distributions to Shareholders (note 1) From undistributed net investment income (49,714,702) (104,108,366) (2,739,036) (5,630,333) From accumulated net realized gains from investment transactions (18,170,228) (25,851,632) (592,941) (249,880) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets from distributions to shareholders (67,884,930) (129,959,998) (3,331,977) (5,880,213) - ------------------------------------------------------------------------------------------------------------------------------------ Capital Share Transactions (note 2) Net proceeds from shares issued to shareholders due to reinvestment of distributions -- -- 458,859 869,202 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets (36,476,886) 16,901,575 (587,110) 1,473,135 Net assets at beginning of period 2,022,281,517 2,005,379,942 95,755,680 94,282,545 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets at end of period $1,985,804,631 $2,022,281,517 $95,168,570 $95,755,680 ==================================================================================================================================== Balance of undistributed net investment income at end of period $ 537,097 $ 219,988 $ 196,720 $ 124,261 ====================================================================================================================================
Notes to Financial Statements (Unaudited) 1. General Information and Significant Accounting Policies The National Funds (the "Funds") covered in this report and their corresponding New York Stock Exchange symbols are Nuveen Municipal Value Fund, Inc.(NUV) and Nuveen Municipal Income Fund, Inc. (NMI). Each Fund invests primarily in a diversified portfolio of municipal obligations issued by state and local government authorities. The Funds are registered under the Investment Company Act of 1940 as closed-end, diversified management investment companies. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with generally accepted accounting principles. Securities Valuation The prices of municipal bonds in each Fund's investment portfolio are provided by a pricing service approved by the Fund's Board of Directors. When price quotes are not readily available (which is usually the case for municipal securities), the pricing service establishes fair market value based on yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, indications of value from securities dealers and general market conditions. Temporary investments in securities that have variable rate and demand features qualifying them as short-term securities are valued at amortized cost, which approximates market value. Securities Transactions Securities transactions are recorded on a trade date basis. Realized gains and losses from such transactions are determined on the specific identification method. Securities purchased or sold on a when-issued or delayed delivery basis may have extended settlement periods. The securities so purchased are subject to market fluctuation during this period. The Funds have 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 April 30, 1999, Municipal Value had an outstanding delayed delivery purchase commitment of $7,669,520. There were no such outstanding purchase commitments in Municipal Income. Investment Income Interest income is determined on the basis of interest accrued, adjusted for amortization of premiums and accretion of discounts on long-term debt securities when required for federal income tax purposes. Federal Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its tax-exempt net investment income, in addition to any significant amounts of net realized capital gains and/or market discount realized from investment transactions. The Funds currently consider significant net realized capital gains and/or market discount as amounts in excess of $.001 per share. Furthermore, each Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal income tax, to retain such tax-exempt status when distributed to shareholders of the Funds. Net realized capital gain and market discount distributions are subject to federal taxation. Dividends and Distributions to Shareholders Tax-exempt net investment income is declared monthly as a dividend and payment is made or reinvestment is credited to shareholder accounts on the first business day after month-end. Net realized capital gains and/or market discount from investment transactions, if any, are distributed to shareholders not less frequently than annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to shareholders of tax-exempt net investment income, net realized capital gains and/or market discount are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. Accordingly, temporary over-distributions as a result of these differences may occur and will be classified as either distributions in excess of net investment income, distributions in excess of net realized gains and/or distributions in excess of net ordinary taxable income from investment transactions, where applicable. Derivative Financial Instruments The Funds may invest in transactions in certain derivative financial instruments including futures, forward, swap and option contracts, and other financial instruments with similar characteristics. Although the Funds are authorized to invest in such financial instruments, and may do so in the future, they did not make any such investments during the six months ended April 30, 1999. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results may differ from those estimates. 2. Fund Shares Transactions in shares were as follows:
Municipal Value Municipal Income - ---------------------------------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended 4/30/99 10/31/98 4/30/99 10/31/98 - ---------------------------------------------------------------------------------------------------------- Shares issued to shareholders due to reinvestment of distributions -- -- 37,088 70,712 - ----------------------------------------------------------------------------------------------------------
3. Distributions to Shareholders The Funds declared dividend distributions from their tax-exempt net investment income which were paid on June 1, 1999, to shareholders of record on May 15, 1999, as follows: Municipal Municipal Value Income - ---------------------------------------------------------------------- Dividend per share $.0425 $.0575 - ---------------------------------------------------------------------- 4. Securities Transactions Purchases and sales (including maturities) of investments in long-term municipal securities and temporary municipal securities for the six months ended April 30, 1999, were as follows: Municipal Municipal Value Income - ----------------------------------------------------------------------------- Purchases: Long-term municipal securities $ 89,362,366 $ 25,894,052 Temporary municipal securities 62,310,000 10,500,000 Sales and Maturities: Long-term municipal securities 104,555,528 20,268,773 Temporary municipal securities 62,310,000 16,900,000 - ----------------------------------------------------------------------------- At April 30, 1999, the identified cost of investments owned for federal income tax purposes was the same as the cost for financial reporting purposes for each Fund. 5. Unrealized Appreciation (Depreciation) Gross unrealized appreciation and gross unrealized depreciation of investments at April 30, 1999, were as follows: Municipal Municipal Value Income - -------------------------------------------------------------------------------- Gross unrealized: appreciation $147,831,138 $5,459,118 depreciation (5,184,620) (15,642) - -------------------------------------------------------------------------------- Net unrealized appreciation $142,646,518 $5,443,476 - -------------------------------------------------------------------------------- 6. Management Fees and Other Transactions with Affiliates Under the Funds' investment management agreements with Nuveen Advisory Corp. (the "Adviser"), a wholly owned subsidiary of The John Nuveen Company, each Fund pays to the Adviser an annual management fee, payable monthly, at the rates set forth below, which are based upon the average daily net asset value of each Fund as follows: Average Daily Net Asset Value Municipal Value - -------------------------------------------------------------------------------- For the first $500 million .3500 of 1% For the next $500 million .3250 of 1 For net assets over $1 billion .3000 of 1 - -------------------------------------------------------------------------------- Average Daily Net Asset Value Municipal Income - -------------------------------------------------------------------------------- For the first $125 million .6500 of 1% For the next $125 million .6375 of 1 For the next $250 million .6250 of 1 For the next $500 million .6125 of 1 For the next $1 billion .6000 of 1 For net assets over $2 billion .5875 of 1 - -------------------------------------------------------------------------------- In addition, Municipal Value pays an annual management fee, payable monthly, based on gross interest income as follows: Gross Interest Income Municipal Value - -------------------------------------------------------------------------------- For the first $50 million 4.125% For the next $50 million 4.000 For gross income over $100 million 3.875 - -------------------------------------------------------------------------------- The fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Funds pay no compensation directly to those of its Directors who are affiliated with the Adviser or to their officers, all of whom receive remuneration for their services to the Funds from the Adviser. 7. Composition of Net Assets At April 30, 1999, net assets consisted of:
Municipal Municipal Value Income - --------------------------------------------------------------------------------------------------------- Shares, $.01 par value per share $ 1,949,595 $ 79,539 Paid-in surplus 1,837,715,649 89,125,391 Balance of undistributed net investment income 537,097 196,720 Accumulated net realized gain from investment transactions 2,955,772 323,444 Net unrealized appreciation of investments 142,646,518 5,443,476 - --------------------------------------------------------------------------------------------------------- Net assets $1,985,804,631 $95,168,570 - --------------------------------------------------------------------------------------------------------- Authorized Common Shares 350,000,000 200,000,000 - ----------------------------------------------------------------------------------------------------------
8. Investment Composition At April 30, 1999, the revenue sources by municipal purpose, expressed as a percent of long-term investments, were as follows: Municipal Municipal Value Income - --------------------------------------------------------------------- Basic Materials --% 10% Education and Civic Organizations 1 6 Health Care 11 7 Housing/Multifamily 4 4 Housing/Single Family 6 8 Long-Term Care 1 13 Tax Obligation/General 8 6 Tax Obligation/Limited 9 8 Transportation 12 9 U.S. Guaranteed 13 11 Utilities 28 17 Water and Sewer 7 -- Other -- 1 - -------------------------------------------------------------------- 100% 100% - -------------------------------------------------------------------- Certain long-term and intermediate-term investments owned by the Funds are either covered by insurance issued by several private insurers or are backed by an escrow or trust containing U.S. government or U.S. government agency securities, both of which ensure the timely payment of principal and interest in the event of default (42% for Municipal Value and 13% for Municipal Income). Such insurance or escrow, however, does not guarantee the market value of the municipal securities or the value of the Funds' shares. For additional information regarding each investment security, refer to the Portfolio of Investments of each Fund. Financial Highlights (Unaudited) Selected data for a share outstanding throughout each period is as follows:
Investment Operations Net Realized/ Beginning Net Unrealized Net Asset Investment Investment Value Income Gain (Loss) Total Municipal Value Year Ended 10/31: 1999 (a) $10.37 $.26 $ (.09) $ .17 1998 10.29 .53 .21 .74 1997 10.18 .58 .22 .80 1996 10.29 .61 (.03) .58 1995 9.87 .64 .46 1.10 1994 10.89 .65 (.94)** (.29) Municipal Income Year Ended 10/31: 1999 (a) 12.10 .35 (.06) .29 1998 12.02 .71 .11 .82 1997 11.96 .76 .11 .87 1996 11.97 .77 (.02) .75 1995 11.54 .77 .44 1.21 1994 12.49 .78 (.91) (.13)
Less Distributions
Net Ending Investment Capital Net Asset Ending Income Gains Total Value Market Value Municipal Value Year Ended 10/31: 1999 (a) $(.26) $(.09) $(.35) $10.19 $ 9.6875 1998 (.53) (.13) (.66) 10.37 9.9375 1997 (.58) (.11) (.69) 10.29 9.6250 1996 (.61) (.08) (.69) 10.18 9.3750 1995 (.65) (.03) (.68) 10.29 9.7500 1994 (.67) (.06) (.73) 9.87 9.3750 Municipal Income Year Ended 10/31: 1999 (a) (.35) (.07) (.42) 11.97 12.0000 1998 (.71) (.03) (.74) 12.10 12.4375 1997 (.76) (.05) (.81) 12.02 12.5625 1996 (.76) -- (.76) 11.96 12.0000 1995 (.78) -- (.78) 11.97 11.3750 1994 (.82) -- (.82) 11.54 10.8750
Total Returns Ratios/Supplemental Data Ratio of Net Ratio of Investment Ending Expenses to Income to Portfolio Based on Based on Net Net Assets Average Average Turnover Market Value+ Asset Value+ (000) Net Assets Net Assets Rate Municipal Value Year Ended 10/31: 1999 (a) .97% 1.65% $1,985,805 .64%* 5.04%* 5% 1998 10.55 7.49 2,022,282 .65 5.18 19 1997 10.39 8.18 2,005,380 .68 5.71 19 1996 3.10 5.84 1,984,627 .69 5.98 18 1995 11.50 11.51 2,006,450 .70 6.35 13 1994 (12.59) (2.81) 1,919,011 .70 6.31 7 Municipal Income Year Ended 10/31: 1999 (a) (.18) 2.44 95,169 .81* 5.95* 22 1998 5.21 7.06 95,756 .82 5.91 23 1997 11.96 7.60 94,283 .83 6.39 9 1996 12.42 6.49 93,249 .80 6.49 10 1995 11.95 10.86 92,850 .84 6.53 15 1994 (14.77) (1.08) 88,999 .85 6.45 26 * Annualized. ** Includes $(.18) effect of the Fund's Rights Offering of shares at a price below NAV and costs associated with the offering. + Total Return on Market Value is the combination of reinvested dividend income, reinvested capital gains distributions, if any, and changes in stock price per share. Total Return on Net Asset Value is the combination of reinvested dividend income, reinvested capital gains distributions, if any, and changes in net asset value per share. Total returns are not annualized. (a) For the six months ended April 30, 1999.
Building a Better Portfolio Can Make You a Successful Investor Nuveen Family of Mutual Funds Nuveen offers a variety of funds designed to help you reach your financial goals. Growth Nuveen Rittenhouse Growth Fund Growth and Income European Value Fund Growth and Income Stock Fund Balanced Stock and Bond Fund Balanced Municipal and Stock Fund Dividend and Growth Fund Income Income Fund Tax-Free Income National Funds Long-Term Insured Intermediate-Term Limited-Term State Funds Arizona California Colorado Connecticut Florida Georgia Kansas Kentucky Louisiana Maryland Massachusetts Michigan Missouri New Jersey New Mexico New York North Carolina Ohio Pennsylvania Tennessee Virginia Wisconsin Successful investors know that a well-diversified portfolio - one that balances different types of investments, levels of risk and tax management - can be the foundation for building and sustaining wealth. That's why Nuveen offers you and your financial adviser a wide range of quality investments that can help you build a better portfolio in the pursuit of your financial goals Exchange-Traded Funds Nuveen Exchange-Traded Funds offer investors actively managed portfolios of investment-grade quality municipal bonds. The fund shares are listed and traded on the New York and American stock exchanges. Exchange-traded funds provide the investment convenience, price visibility and liquidity of common stocks. MuniPreferred(R) Nuveen MuniPreferred offers investors a AAA rated investment with an attractive tax-free yield for the cash reserves portion of an investment portfolio. MuniPreferred shares are backed 2-to-1 by the long-term portfolios of Nuveen dual-class exchange-traded funds and are available for national as well as a wide variety of state-specific portfolios. Mutual Funds Nuveen offers a family of equity, balanced and municipal bond funds featuring Premier AdvisersSM including Institutional Capital Corporation, Rittenhouse Financial Services, and Nuveen Advisory Corp. Each brings a specialized expertise in a particular investment style or asset class, time-tested investment strategies and a focus on consistent, long-term performance. With Nuveen's Premier Adviser funds, you have all the advantages of a family of funds plus the benefits of specialized investment expertise. Private Asset Management Rittenhouse Financial Services and Nuveen Asset Management offer comprehensive, customized investment management solutions to investors with assets of $250,000 or more to invest. A range of actively managed growth, balanced and municipal income-oriented portfolios are available, all based upon a disciplined investment philosophy. Defined Portfolios Nuveen Defined Portfolios are fixed portfolios of quality securities that are a convenient, attractive alternative to purchasing individual securities. They provide low-cost diversification to reduce risk, while also offering experienced, professional security selection and surveillance. In addition, Nuveen Defined Portfolios provide daily liquidity at that day's net asset value for quick access to your assets. Fund Information Board of Directors Robert P. Bremner Lawrence H. Brown Anne E. Impellizzeri Peter R. Sawers William J. Schneider Timothy R. Schwertfeger Judith M. Stockdale Fund Manager Nuveen Advisory Corp. 333 West Wacker Drive Chicago, IL 60606 Custodian, Transfer Agent and Shareholder Services The Chase Manhattan Bank 4 New York Plaza New York, NY 10004-2413 (800) 257-8787 Legal Counsel Morgan, Lewis & Bockius LLP Washington, D.C. Independent Auditors Ernst & Young LLP Chicago, IL Year 2000 The concern that computer systems may have problems processing date-related information in the year 2000 and beyond has challenged businesses and organizations to thoroughly review all aspects of their operations. We have undertaken just such an approach at Nuveen in preparation for the millennium. Over the last 10 years, we have updated or replaced our trading, fund management, and pricing systems at Nuveen - systems that directly affect our investors and their financial advisers - to address Year 2000 concerns. We continue to work closely with our transfer agent, custodian, firms through whom we buy and sell portfolio securities, and other service partners to monitor the Year 2000 readiness of their systems, while addressing other remaining systems issues. In addition, the Funds hold securities of issuers whose business operations leave them susceptible to Year 2000 concerns. We seek to evaluate an issuer's Year 2000 readiness as part of our initial and ongoing research of these issuers. This is only one of the many factors considered in determining whether to buy, sell, or continue holding a particular security. We anticipate that all significant components of our Year 2000 review, repair, and testing program will be complete by mid-1999. This includes appropriate industry-wide testing of critical systems and receipt of satisfactory assurances from critical service providers, vendors, and issuers regarding their Year 2000 readiness. We are also making Year 2000 contingency plans to guide recovery efforts in the event that, despite our remediation attempts, Year 2000 issues adversely affect the Funds. Although we cannot give complete assurance at this time that the steps we take will be sufficient to prevent any problems that would impact the Nuveen Exchange-Traded Funds, we can assure you that we will take all reasonable steps to prevent disruption of the services provided by your Fund. Each fund intends to repurchase shares of its own common or preferred stock in the future at such times and in such amounts as is deemed advisable. No shares were repurchased during the six-month period ended April 30, 1999. Any future repurchases will be reported to shareholders in the next annual or semiannual report. Serving Investors for Generations Photo of: John Nuveen, Sr. Since our founding in 1898, John Nuveen & Co. has been synonymous with investments that withstand the test of time. Today we offer a broad range of quality investments designed for individuals seeking to build and sustain wealth. In fact, more than 1.3 million investors have trusted Nuveen to help them pursue their financial goals. The cornerstone of Nuveen's investment philosophy is a commitment to disciplined long-term investment strategies focused on providing consistent, attractive performance over time - with moderated risk. We emphasize quality securities carefully chosen through in-depth research, and we follow those securities closely over time to ensure that they continue to meet our exacting standards. Whether your focus is long-term growth, dependable current income or sustaining accumulated wealth, Nuveen offers a wide variety of investments and services to help meet your unique circumstances and financial planning needs. Our equity, balanced, and tax-free income funds, along with our defined portfolios and private asset management, can help you build a better, well-diversified portfolio. Talk with your financial adviser to learn more about how Nuveen investment products and services can help you. Or call us at (800) 257-8787 for more information, including a prospectus where applicable. Please read that information carefully before investing. NUVEEN helping investors sustain the wealth of a lifetime(tm). John Nuveen & Co. Incorporated 333 West Wacker Drive Chicago, IL 60606-1286 www.nuveen.com FSA-1-4-99 -----END PRIVACY-ENHANCED MESSAGE-----