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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER 1-11123
THE JOHN NUVEEN COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3817266
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 WEST WACKER DRIVE 60606
CHICAGO, ILLINOIS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
312-917-7700
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
CLASS A COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
(Title of Class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.____
The aggregate market value of the outstanding Common Stock held by
non-affiliates of the Registrant on March 18, 1999 was $201,225,268.
The number of shares of the Registrant's Common Stock outstanding at March
18, 1999, was 31,299,536 consisting of 6,857,798 shares of Class A Common Stock,
$.01 par value, and 24,441,738 shares of Class B Common Stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1998 are incorporated by reference into Parts II and IV of
this report. Portions of Registrant's Proxy Statement relating to the annual
meeting of stockholders to be held May 6, 1999 are incorporated by reference
into Parts I and III of this report.
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PART I
ITEM 1. BUSINESS
GENERAL
The John Nuveen Company's (the Company) principal businesses are asset
management and related research; development, marketing and distribution of
investment products and services; and municipal and corporate investment banking
services. The Company distributes its investment products, including mutual
funds (open-end funds), exchange-traded funds (closed-end funds), defined
portfolios (unit trusts), and individually managed accounts through registered
representatives associated with unaffiliated firms including broker-dealers,
commercial banks, affiliates of insurance providers, financial planners,
accountants, consultants, and investment advisers.
The Company's operations are organized around five subsidiaries including
John Nuveen & Co. Incorporated (Nuveen & Co.), a registered broker and dealer in
securities under the Securities Exchange Act of 1934, and four investment
advisory subsidiaries registered under the Investment Advisers Act of 1940.
These include Nuveen Advisory Corp. (NAC), Nuveen Institutional Advisory Corp.
(NIAC), Nuveen Asset Management Inc. (NAM) and Rittenhouse Financial Services,
Inc. (Rittenhouse). Nuveen & Co. provides investment product distribution and
related services for the Company's managed funds and defined portfolios, and
houses the Company's investment banking activities. NAC and NIAC provide
investment management for and administer the business affairs of the Nuveen
managed funds. NAM and Rittenhouse provide investment management services for
individual and institutional investors and Rittenhouse also acts as sub-adviser
and portfolio manager for a mutual fund managed by NIAC.
The Company is headquartered in Chicago, has offices in New York City, NY;
Irvine, CA; Radnor, PA and has sales representatives located nationally. The
Company is the successor to a business formed in 1898 by Mr. John Nuveen which
served as an underwriter and trader of municipal bonds. This core business was
augmented in 1961 when the Company developed and introduced its first municipal
defined portfolio, which is a fixed portfolio of municipal securities selected
and purchased by the Company and deposited in a trust. The Company introduced
its first municipal mutual fund in 1976, its first municipal money market fund
in 1981, and its first municipal exchange-traded fund in 1987. The Company began
providing individual managed account services to investors in early 1995 and
sponsored its first equity mutual fund in 1996. The Company expanded its defined
portfolio product line in mid-1997 to include portfolios with underlying assets
comprised of equity and taxable fixed-income securities.
On January 2, 1997, the Company completed the acquisition of Flagship
Resources Inc. (Flagship) and its wholly owned subsidiaries, Flagship Financial
Inc., a registered investment adviser under the Investment Advisers Act of 1940,
and Flagship Funds Inc., a registered broker-dealer under the Securities
Exchange Act of 1934. At December 31, 1996, Flagship managed over $4.2 billion
in predominantly municipal mutual funds and approximately $400 million in
managed accounts for individual investors. Upon the completion of the
acquisition, Flagship Financial Inc. became a wholly owned subsidiary of the
Company and changed its name to Nuveen Asset Management Inc. NAM now is
primarily responsible for providing private investment management services to
individual and institutional managed accounts with portfolios invested
exclusively in municipal securities and balanced portfolios of equity and
municipal securities. Flagship Funds Inc. was combined into Nuveen & Co., the
Company's broker-dealer subsidiary.
On August 31, 1997, the Company completed the acquisition of Rittenhouse,
which specializes in managing individual equity and balanced portfolios
primarily for high net worth individuals. Rittenhouse managed approximately $9.1
billion in predominately equity assets at the acquisition date. It is maintained
as a wholly-owned subsidiary of the Company.
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The Company was incorporated in the State of Delaware on March 23, 1992, as
a wholly-owned subsidiary of The St. Paul Companies, Inc. (St. Paul). Nuveen &
Co., the predecessor of the Company, had been a wholly-owned subsidiary of St.
Paul since 1974. During 1992, St. Paul sold a portion of its ownership interest
in the Company in a public offering. As of the date of this report, St. Paul
owned approximately 78% of the outstanding voting securities of the Company.
The following series of tables, including Net Assets Under Management,
Gross Sales of Investment Products, Net Flows, and Investment Advisory Fees,
provide data which should be helpful in understanding the Company's investment
products and should be referred to while reading the separate product
discussions which follow the tables.
NET ASSETS UNDER MANAGEMENT
The following table shows net assets managed by the Company at December 31
for each of the past three years. Defined portfolio assets under surveillance
are not included in net assets under management since the portfolios are not
actively managed and do not generate ongoing advisory fees.
NET ASSETS UNDER MANAGEMENT
(IN MILLIONS)
DECEMBER 31,
---------------------------
1998 1997 1996
------- ------- -------
Managed Funds:
Mutual Funds -- Municipal(1).............................. $10,385 $ 9,753 $ 5,434
Mutual Funds -- Equity and Income......................... 1,498 1,132 496
Exchange-Traded Funds..................................... 26,223 26,117 25,434
Money Market Funds........................................ 824 970 1,004
Managed Accounts(2)......................................... 16,337 11,622 823
------- ------- -------
Total............................................. $55,267 $49,594 $33,191
======= ======= =======
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(1) Includes $4.2 billion in mutual funds acquired from Flagship on January 2,
1997.
(2) Includes $9.1 billion in managed accounts acquired from Rittenhouse on
August 31, 1997.
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GROSS SALES OF INVESTMENT PRODUCTS
The following table summarizes gross sales for the Company for the past
three years, including managed funds, managed accounts, and defined portfolios:
GROSS SALES OF INVESTMENT PRODUCTS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997 1996
---------- ---------- ----------
Mutual Funds:
Municipal(1).................................. $1,005,800 $ 600,240 $ 154,159
Equity and Income(2).......................... 547,430 350,377 494,533
---------- ---------- ----------
Total................................. 1,553,230 950,617 648,692
Exchange-Traded Funds........................... -- 125,000 --
Managed Accounts:
Municipal..................................... 878,768 488,349 134,573
Equity and Balanced(3)........................ 4,513,960 704,555 --
---------- ---------- ----------
Total................................. 5,392,728 1,192,904 134,573
---------- ---------- ----------
Total Managed Fund and Account
Sales............................... 6,945,958 2,268,521 783,265
Defined Portfolios (par value):
Primary -- Municipal.......................... 399,596 555,743 812,813
Primary -- Equity and Taxable Fixed-Income.... 315,960 82,352 --
Secondary..................................... 93,408 118,944 150,326
---------- ---------- ----------
Total................................. 808,964 757,039 963,139
---------- ---------- ----------
Total Sales........................... $7,754,922 $3,025,560 $1,746,404
========== ========== ==========
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(1) The 1997 and 1998 periods include sales of funds acquired from Flagship on
January 2, 1997.
(2) Sales of Equity and Income Mutual Funds in 1996 are exclusively those of the
Nuveen Growth and Income Stock Fund sold through a special offering to
current Nuveen and Flagship fund shareholders and to current Nuveen defined
portfolio holders.
(3) The 1998 period and the last four months of 1997 include sales of
Rittenhouse accounts.
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NET FLOWS OF INVESTMENT PRODUCTS
The following table summarizes net flows (equal to sales, reinvestments and
exchanges less redemptions) of the Company's managed funds and accounts for the
past three years:
NET FLOWS
MANAGED FUNDS AND ACCOUNTS
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- --------
Mutual Funds:
Municipal(1)..................................... $ 581,893 $ 13,991 $ 64,251
Equity and Income(2)............................. 458,126 340,789 489,417
---------- ---------- --------
Total.................................... 1,040,019 354,780 553,668
Managed Accounts:
Municipal........................................ 666,443 361,524 134,573
Equity and Balanced(3)........................... 3,151,304 359,803 --
---------- ---------- --------
Total.................................... 3,817,747 721,327 134,573
---------- ---------- --------
Total.................................... $4,857,766 $1,076,107 $688,241
========== ========== ========
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(1) The 1997 and 1998 periods include sales of funds acquired from Flagship on
January 2, 1997.
(2) Sales of Equity and Income Mutual Funds in 1996 are exclusively those of the
Nuveen Growth and Income Stock Fund sold through a special offering to
current Nuveen and Flagship fund shareholders and to current Nuveen defined
portfolio holders.
(3) The 1998 period and the last four months of 1997 include sales of
Rittenhouse accounts.
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INVESTMENT ADVISORY FEES
Advisory fees earned from assets managed by the Company for each of the
past three years are shown in the following table. Defined portfolios sold by
the Company do not produce ongoing advisory fees.
INVESTMENT ADVISORY FEES
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------
Mutual fund advisory fees(1)................................ $ 56,919 $ 51,562 $ 26,124
Less: reimbursed expenses................................... (5,068) (5,753) (629)
-------- -------- --------
Net advisory fees................................. 51,851 45,809 25,495
Exchange-traded fund advisory fees.......................... 159,638 156,392 155,172
Money market fund advisory fees............................. 3,804 4,317 4,925
Less: reimbursed expenses................................. (373) (516) (495)
-------- -------- --------
Net advisory fees................................. 3,431 3,801 4,430
Managed account advisory fees(2)............................ 57,939 15,633 748
-------- -------- --------
Total............................................. $272,859 $221,635 $185,845
======== ======== ========
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(1) The 1997 and 1998 periods include advisory fee income earned on assets
acquired from Flagship on January 2, 1997.
(2) The 1998 period and the last four months of 1997 include advisory fee income
earned on assets managed by Rittenhouse.
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MANAGED FUNDS
Overview
As of December 31, 1998, the Company offered 38 equity and income and
municipal mutual funds. These funds are actively managed and continuously offer
to sell and redeem their shares at prices based on the daily net asset values of
their portfolios. The investment objectives and asset mixes of the mutual funds
vary; however, most are managed with a view towards tax efficient results for
the investor.
The Company offers 31 national and state-specific municipal mutual funds
that invest substantially all of their assets in diversified portfolios of
intermediate-term or long-term municipal bonds rated within the four highest
investment grades.
The seven remaining mutual funds invest exclusively in U.S. equities,
European equities, or taxable fixed-income securities, or in a portfolio
combining equity, taxable fixed-income and/or municipal securities. During 1998,
the Company introduced and marketed two new equity and income funds, the Nuveen
Rittenhouse Growth Fund, which invests in a portfolio of equity securities of
U.S.-based large capitalization companies, and the Nuveen European Value Fund,
which invests in American Depository Receipts of established, well-known
European companies that are undervalued relative to their worldwide competitors.
The Company sponsors 57 exchange-traded funds that are actively managed and
invest exclusively in municipal securities. These funds do not continually offer
to sell and redeem their shares. Rather, daily liquidity is provided by the
ability to trade the shares of these funds on the New York and American Stock
Exchanges, at a price that may be above or below the share's net asset value.
The exchange-traded funds include insured and uninsured national and
single-state funds. Most of the exchange-traded funds have a "leveraged" capital
structure; these funds issue preferred stock that pays dividends at rates based
on short-term tax-free interest rates, while the capital raised by the sale of
the preferred stock is invested by the funds in longer-term municipal
securities. To the extent that the dividend rate on the preferred stock of the
exchange-traded fund increases (e.g., in the event of a rise in short-term
interest rates), the income to pay for dividends for common shareholders will be
reduced. If the preferred stock dividend rate were to exceed the rate of return
on the investment portfolio for an extended period, holders of common stock
would realize a lower rate of dividend return than if the fund were not
leveraged. If this condition persists, the exchange-traded funds' Board of
Directors may consider redeeming the outstanding preferred stock. In addition,
the Board may consider converting a fund from its exchange-traded status into an
open-end fund if the fund persistently trades on the stock exchange at deep
discounts to its net asset value per share. The Company considers either of
these actions extremely unlikely; however, if adopted, either may negatively
affect total assets under management.
While most of the exchange-traded funds have perpetual lives, five funds
(referred to as portfolios) representing approximately $880 million in assets
have a finite life and provide for a liquidating distribution of assets to
investors upon reaching a fixed termination date, beginning in the year 2017.
The relative attractiveness of the Company's mutual funds and
exchange-traded funds to investors depends upon many factors, including current
and expected market conditions, the performance histories of the funds, their
current yields and the availability of viable alternatives. Mutual fund
investors may redeem their shares at any time without prior notice.
Exchange-traded fund shares are not redeemable through the Company; rather,
liquidity is provided by other investors through the stock exchanges without
affecting the funds' assets.
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The assets under management of both the mutual funds and exchange-traded
funds are affected by changes in the market values of these assets. Changing
market conditions may cause positive or negative shifts in valuation, and
subsequently in the advisory fees earned from these assets.
The Company also has five municipal money market funds. These funds seek to
maintain a stable net asset value of $1.00 per share. In the past some money
market fund managers, including the Company, have voluntarily, and at their own
expense, taken action to protect the value of fund assets when portfolio bond
credit or related financial guarantees have deteriorated. These actions may
include purchasing securities from the fund portfolio at par and arranging for
supplemental credit and liquidity enhancements in order to preserve the value of
the fund's investment. Although the Company is under no obligation to do so,
circumstances may arise in the future in which the Company may decide to take
similar action; such action could involve substantial expense to the Company.
Advisory Fees
NAC and NIAC provide investment management services to the funds and
portfolios pursuant to investment management agreements, and receive fees based
on each fund's average daily net assets or on a combination of the average daily
net assets and gross interest income. Institutional Capital Corporation (ICAP)
performs portfolio management services on behalf of four of the equity and
income mutual funds pursuant to a sub-advisory agreement with NIAC. Rittenhouse,
a wholly-owned subsidiary of the Company, performs portfolio management services
for one of the equity and income mutual funds pursuant to a sub-advisory
agreement with NIAC.
The Company's advisory fee schedules currently provide for maximum annual
fees ranging from .45% to .55% in the case of the municipal mutual funds and
.50% to .95% in the case of the equity and income mutual funds. Maximum fees in
the case of the exchange-traded funds currently range from .50% to .65%, except
with respect to the five finite life portfolios. The investment management
agreements for these portfolios provide for annual advisory fees ranging from
.25% to .30%. Advisory fees for the money market funds range from .40% to .50%
of net asset value annually. In each case, the management fee schedules provide
for reductions in the fee rate at increased asset levels.
The Company pays ICAP a portfolio advisory fee for sub-advisory services.
This fee is based on the aggregate amount of average daily net assets in the
four funds they sub-advise at a maximum fee of .35% for the assets invested in
equity securities and a maximum fee of .20% for the assets invested in taxable
fixed-income securities. The Company pays ICAP an additional .13% for the assets
they manage in the Nuveen European Value Fund. These rates decline when
specified asset levels are reached.
Investment Management Agreements
Each managed fund has entered into an investment management agreement with
NAC or with NIAC (each, an Adviser). Although the specific terms of each
agreement vary, the basic terms are similar. Pursuant to the agreements, the
Adviser provides overall management services to each of the funds, subject to
the supervision of each fund's board of directors and in accordance with each
fund's investment objectives and policies. The investment management agreements
are approved by fund shareholders and their continuance must be approved
annually by the directors of the respective funds, including a majority of the
directors who are not "interested persons" of the Adviser, as defined in the
Investment Company Act. Amendments to such agreements typically must be approved
by fund shareholders. Each agreement may be terminated without penalty by either
party upon 60 days written notice, and terminates automatically upon its
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assignment (as defined in the Investment Company Act and the Investment Advisers
Act). Such an "assignment" will take place in the event of a change in control
of the Adviser. Under the Investment Company Act, a change in control of the
Adviser would be deemed to occur in the event of certain changes in the
ownership of the Company's voting stock. The termination of the investment
management agreements for any reason, could have a material adverse effect on
the Company's business and results of operations.
Each fund bears all expenses associated with its operations, including the
costs associated with the issuance and redemption of securities, where
applicable. The fund does not bear compensation expenses of directors and
officers of the fund who are employed by the Company. Some investment management
agreements provide that, to the extent certain enumerated expenses exceed a
specified percentage of a fund's or a portfolio's average net assets for a given
year, the Adviser will absorb such excess through a reduction in the management
fee and, if necessary, pay such expenses so that the year-to-date net expense
will not exceed the specified percentage. In addition, the Company may
voluntarily waive all or a portion of its advisory fee to a fund, and/or
reimburse expenses, for competitive reasons. During 1998, the expense ratios
specified under these arrangements ranged from .45% for certain of the money
market funds, to .75% for certain of the municipal mutual funds, to .975% for
municipal mutual funds whose portfolio bonds are insured by a third party
insurer. Expense limits on the equity and income mutual funds sponsored by the
Company range from .80% to 1.30% of the funds' average net assets. Reimbursed
expenses for mutual funds and money market funds, including voluntary waivers,
totaled $5.4 million during the year ended December 31, 1998. Although the
Company expects to continue voluntary waivers in order to keep their products
competitive, it does not expect that such amounts will have a material effect on
the results of its operations.
Portfolio Management and Research
Each Adviser is responsible for the execution of the investment policy of
the various funds it advises. Investment decisions for each fund are made by the
portfolio manager responsible for such fund. The Company has traditionally had a
very low turnover rate for its portfolio managers. The majority of the Company's
portfolio managers, as well as those employed by the sub-advisers, have devoted
most of their professional careers to the analysis, selection and surveillance
of the types of securities held in the funds they manage.
MANAGED ACCOUNTS
The Company, through its wholly-owned subsidiaries Rittenhouse and NAM,
also provides private account investment management services for individuals and
institutional accounts. The Company refers to these products as managed
accounts. At December 31, 1998, 89% of these assets under management were
managed by Rittenhouse.
Rittenhouse follows a growth stock strategy that centers on identifying
blue chip companies that are financially strong, are global leaders and have
demonstrated consistent and predictable growth in earnings and dividends. NAM
concentrates on the research, selection, and management of municipal bond
portfolios. Rittenhouse and NAM manage accounts on both a discretionary and
non-discretionary basis.
Working through independent, third-party financial advisers or other
intermediaries, Rittenhouse and NAM provide investment advisory services to
individuals, trusts, estates, charitable organizations, corporations, pension
and profit sharing plans, banks, thrifts and investment companies. These
advisers usually are
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compensated directly by their investors for services rendered and not from
Rittenhouse or the investment proceeds. Services provided by Rittenhouse and NAM
to each of the individual accounts are governed by management contracts, which
may be customized to suit a particular account. The Company generally receives
fees based on the value of the assets managed on a particular date such as the
last calendar day of a quarter.
DEFINED PORTFOLIOS
Overview
The Company is a major sponsor of defined portfolios. Each defined
portfolio consists of a fixed portfolio of securities selected and purchased by
the Company and deposited in a trust. The trustee of the portfolio is not
affiliated with the Company. Units of undivided beneficial interest in the
portfolio are sold to investors at a price equal to the per unit market price of
the securities deposited in the trust plus a sales charge. Defined portfolios
are not actively managed after the initial deposit. However, certain equity and
taxable fixed-income portfolios may add securities in proportionate amounts of
the same securities already held in order to accommodate additional inflows. New
securities are not added to municipal defined portfolios after the date of
deposit, and may be exchanged or substituted only under extremely limited
circumstances. Securities from the portfolios can only be sold pursuant to the
Company's monitoring program or for the purpose of raising cash to pay for units
that have been redeemed. The proceeds of any security sales must be distributed
to unit holders.
The Company created and introduced its first municipal bond defined
portfolio in 1961, and now sponsors nationally diversified and single-state
portfolios, uninsured portfolios, portfolios whose bonds are insured by a third
party, and portfolios of varying average maturities. At December 31, 1998, the
Company had 3,126 municipal trusts outstanding with an aggregate market value of
$10.3 billion.
In May of 1997, the Company expanded its defined portfolio product line to
include equity and taxable fixed-income defined portfolios. The Company
presently offers portfolios that invest in equities, corporate debt and treasury
securities. The equity trusts currently include portfolios based on segments of
the Dow Jones Industrial Average, on models developed in cooperation with
Standard & Poor's, and in concentrations of equities from companies in various
industry sectors. The corporate debt trusts invest in a portfolio consisting
primarily of investment grade corporate debt obligations and zero coupon U.S.
Treasury Obligations. The treasury trusts invest in a laddered portfolio of
short and intermediate-term U.S. Treasury Obligations. At December 31, 1998, the
Company had approximately 51 equity and taxable fixed-income trusts outstanding
with a market value of $416 million.
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Defined Portfolio Revenues
The following table shows the Company's defined portfolio revenues during
each of the last three years:
DEFINED PORTFOLIO REVENUES
(IN THOUSANDS)
YEAR ENDED DECEMBER 31
-------------------------
1998 1997 1996
------ ------ -------
Distribution Revenues:
Primary -- Municipal..................................... $5,073 $7,192 $10,740
Primary -- Equity and Taxable Fixed-Income............... 1,682 496 --
Secondary................................................ 1,294 1,701 2,010
------ ------ -------
Total............................................ $8,049 $9,389 $12,750
====== ====== =======
Units of the Company's defined portfolios are sold to the public through
financial advisers. For these sales, the Company earns a sales charge based on
the public offering price of the units sold. The Company's defined portfolio
revenues include the sales charge, less an applicable concession to dealers for
the placement of defined portfolio units. For certain equity trusts, the Company
receives a deferred sales charge over a period of months following the initial
sale date.
The Company realizes profits or incurs losses when the market price of
securities deposited in a trust exceeds or is less than the original cost of the
securities. After the date of deposit, the Company is the holder of all units of
the particular trust series and will realize profit or incur loss depending on
whether the public offering price increases or decreases before the units are
sold. The Company attempts to manage its exposure to interest rate fluctuations
on the securities held for deposit and on defined portfolio inventory by, among
other practices, coordinating inventory levels to the rate of sale of various
types of trusts and hedging through the use of futures contracts.
The Company maintains a secondary market for defined portfolios it
sponsors. For transactions in the secondary market, the Company earns a sales
charge less a concession reallowed to dealers. The Company, like any other
unitholder, can also tender units it holds to the defined portfolio trustee for
redemption at their redemption value.
MARKETING AND DISTRIBUTION OF INVESTMENT PRODUCTS
Distribution
The Company markets its investment products through registered
representatives associated with unaffiliated national and regional
broker-dealers, commercial banks and thrifts, broker-dealer affiliates of
insurance agencies and independent insurance dealers, financial planners,
accountants, and tax consultants (retail distribution firms). The Company's
distribution strategy is to maximize the liquidity and distribution potential of
its investment products by maintaining strong relationships with a broad array
of registered representatives. The Company has well-established relationships
with registered representatives in retail distribution firms throughout the
country. These registered representatives participate to varying degrees in the
Company's marketing programs, depending upon: their interests in distributing
investments provided by
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the Company; their perception of the relative attractiveness of the managed
funds, managed accounts and defined portfolios; the profiles of their customers
and their clients' needs; and the conditions prevalent in financial markets.
Registered representatives may reduce or eliminate their involvement in
marketing the Company's products at any time, or may elect to emphasize the
investment products of competing sponsors, or the proprietary products of their
own firm. Registered representatives may receive compensation incentives to sell
their firm's investment products or may choose to recommend to their customers
investment products sponsored by firms other than the Company. This decision may
be based on such considerations as investment performance, types and amount of
distribution compensation, sales assistance and administrative service payments
and level and quality of customer service. In addition, registered
representatives ability to distribute the Company's mutual funds is subject to
the continuation of a selling agreement between their firm and the Company. Such
agreement does not obligate the retail distribution firm to sell any specific
amount of funds and is terminable by either party upon 60 days notice. One
retail distribution firm's redeemable assets accounted for 11% of the Company's
consolidated revenues in 1998.
All of the Company's mutual funds have adopted a Flexible Sales Charge
Program which provides investors with alternative ways of purchasing fund shares
based upon their individual needs and preferences. Class A shares may be
purchased at a price equal to the fund's net asset value plus an up-front sales
charge ranging from 2.5% of the public offering price for limited-term municipal
funds to 5.75% for equity and income funds. At the maximum sales charge level,
approximately 90% to 95% of the sales charge is typically reallowed as
concessions to retail distribution firms. From time to time, the Company may
reallow all of the sales charge to retail distribution firms or waive the sales
charge and advance a sales commission to such firms in connection with marketing
programs or special promotions. Additionally, purchases of Class A shares which
equal or exceed $1 million may be made without an up-front sales charge, but are
subject to a Contingent Deferred Sales Charge (CDSC) ranging from .75% to 1% for
shares redeemed within 18 months. In order to compensate retail distribution
firms for Class A share sales which are $1 million or greater, the Company
advances a sales commission ranging from .50% to 1% at the time of sale. Class A
shares are also subject to an annual Rule 12b-1 service fee of between .20% and
.25% of assets, which is used to compensate securities dealers for providing
ongoing financial advice and other services to investors. Class B shares may be
purchased at a price equal to the fund's net asset value without an up-front
sales charge. Class B shares are subject to an annual Rule 12b-1 distribution
fee to compensate the Company for costs incurred in connection with the sale of
such shares, an annual Rule 12b-1 service fee for the ongoing services of
securities dealers and a CDSC, ranging from 5% to 1%, for shares redeemed within
a period of 6 years. The Company compensates retail distribution firms for sales
of Class B shares at the time of sale at the rate of 4% of the amount of Class B
shares sold, which represents a sales commission plus an advance of the first
year's annual Rule 12b-1 service fee. Class B shares convert to Class A shares
after they are held for eight years. Class C shares may be purchased without an
up-front sales charge at a price equal to the fund's net asset value. However,
these shares are subject to an annual Rule 12b-1 distribution fee designed to
compensate securities dealers over time for the sale of the fund shares, an
annual Rule 12b-1 service fee used to compensate securities dealers for
providing continuing financial advice and other services and a 1% CDSC for
shares redeemed within 12 months of purchase. In addition, the Company advances
a 1% sales commission to retail distribution firms at the time of sale and in
return, receives the first year's Rule 12b-1 distribution fee and Rule 12b-1
service fee. Class R shares are available for purchase at a price equal to the
fund's net asset value with no ongoing fees or CDSCs. These shares are available
primarily to clients of fee-based advisers, wrap programs and others under
certain limited circumstances.
Common shares of the exchange-traded funds are initially sold to the public
in offerings that are underwritten by a syndication group. During the year ended
December 31, 1998, no such offerings were made.
11
13
Shares of the money market funds are sold to the public without sales
charges. However, each money market fund (except the Nuveen Tax-Exempt Money
Market Fund, which is marketed primarily to institutions) pays a Rule 12b-1 fee
to distributors of the fund's shares to compensate for costs associated with the
administrative services they perform.
The markets for mutual funds and money market funds are highly competitive,
with many participating sponsors. Based upon the information available, the
Company believes that it had less than a 5% share of the market with respect to
net sales of mutual funds and money market funds in each of the last three
years.
Sales of managed accounts do not impact the Company's distribution revenue
since there are no transaction-based revenues associated with these products.
The typical sales charge for defined portfolios ranges from 1.75% to 4.9%
of the public offering price (1.78% to 5.15% of the net amount invested), with
reduced sales charges at various sales breakpoints. At the maximum sales charge
level, the dealer concession ranges from 1.0% to 3.5% of the amount invested.
The sales charges for defined portfolios in the secondary market are established
based on the number of years remaining to maturity for each bond in the defined
portfolio.
The market for the sale of defined portfolios is relatively concentrated,
with only a few sponsors accounting for a majority of total sales. Based upon
the information available, the Company believes it has been one of the market
share leaders in municipal defined portfolio sales in each of the last three
years. The Company entered the equity and taxable fixed-income defined portfolio
market in 1997 and believes that its sales of these products accounted for less
than a 5% share of this market in 1997 and 1998 based on the information
available.
Relations With Distributors
The Company employs approximately 125 wholesalers and sales assistants who
work closely with individual registered representatives to help them develop
their businesses. The Company's wholesalers regularly visit the firms who
distribute the Company's products to provide product information, explain new
products and discuss ideas in response to particular investor concerns.
Advertising and Promotion
The Company provides individual registered representatives with daily
prices, weekly, monthly and quarterly sales bulletins, monthly product
statistical and performance updates, product education programs, product
training seminars, and promotional programs coordinated with its advertising
campaigns. In addition, the Company regularly coordinates its marketing and
promotional efforts with individual registered representatives. The Company also
augments its marketing efforts through magazine and newspaper advertising,
targeted direct mail and telemarketing sales programs and sponsorship of certain
sports and civic activities. For the year ended December 31, 1998, the Company
expended $19.4 million on advertising, product promotion and relationship
building efforts.
12
14
INVESTMENT BANKING
Nuveen & Co. underwrites and distributes municipal and corporate bonds,
trades bonds in the secondary market and serves as remarketing agent for
variable rate bonds. The majority of its underwritings are for government and
not-for-profit entities and substantially all of its sales are to institutional
investors including casualty insurance companies, managed municipal bond funds,
sponsors of defined portfolios (including the Company), bank portfolios, trust
departments and other dealers. The constituent departments of Investment Banking
responsible for these activities include Municipal Finance, Corporate Finance,
Trading and Commitments, and Institutional Sales. Both Corporate and Municipal
Finance furnish underwriting and strategic financial advisory services to health
care corporations. In addition, Investment Banking may, on occasion, act as
financial adviser and/or broker to municipal or other not-for-profit issuers
with respect to transactions in interest rate swaps, forward transactions or
other investment agreements.
The principal sources of revenue of Investment Banking include underwriting
revenues and management fees derived from negotiated and competitive bond
underwritings, financial advisory fees, remarketing agent fees, and profits from
other principal transactions including secondary market trading and furnishing
investment securities to investment banking clients incidental to their bond
financing transactions.
The following table shows net underwriting revenues, financial advisory
fees and remarketing fees for each of the last three years:
INVESTMENT BANKING REVENUES
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
---------------------------
1998 1997 1996
------- ------- -------
Net Underwriting Revenues................................ $ 7,704 $ 7,229 $ 5,154
Merger and Acquisition and Other Financial Advisory
Fees................................................... 3,378 4,206 4,318
Remarketing Fees......................................... 1,885 1,974 1,626
------- ------- -------
Total.......................................... $12,967 $13,409 $11,098
======= ======= =======
The Company is remarketing agent with respect to approximately 100 issues
of Variable Rate Demand Obligations (VRDOs) representing an aggregate principal
value in excess of $1.7 billion. VRDOs are municipal bonds issued with a longer
term (typically 20-30 year) maturity, having variable rates of interest and
options granted to the holders to put the obligations to the issuers on seven
days notice and receive payments of the full principal amounts. These
obligations to pay are secured by letters of credit typically issued by
commercial banks. Periodically the remarketing agents, pursuant to agreements
with the issuers, reset the interest rates at a level that the remarketing
agents anticipate will permit them, as agents, to remarket at par any VRDOs
which have been put back to them. Although remarketing agents, including the
Company, generally are only obligated to use their best efforts in locating
purchasers for the VRDOs, they frequently purchase VRDOs for resale to other
buyers within a few days. During the period that the Company holds any VRDOs, it
has, like any holder, the unconditional right secured by the letter of credit to
put the obligation to the issuer and receive payment of the full principal
amount. During temporary periods of imbalance between supply and demand for
VRDOs, the Company may hold substantial amounts of such obligations for resale.
The Company has come to expect such imbalances at year-end and, to a lesser
extent, at each calendar quarter-end.
13
15
INVENTORY POSITIONS
The Company regularly purchases and holds for resale municipal securities
and defined portfolio units. Inventory positions are recorded at market value
and unrealized gains and losses are reported in the Company's operating results.
The level of inventory maintained by the Company will fluctuate daily and is
dependent upon the need to maintain municipal inventory for future defined
portfolios, and the need to maintain defined portfolio inventory to support
ongoing sales.
The market value of the Company's inventory at December 31 for each of the
last three years and the average daily inventory balances outstanding during
each year are set forth below:
INVENTORY
(IN THOUSANDS)
AVERAGE DAILY INVENTORY,
INVENTORY, AT MARKET VALUE AT PAR VALUE
ON DECEMBER 31, FOR YEAR ENDED DECEMBER 31,
--------------------------- ---------------------------
1998 1997 1996 1998 1997 1996
------- ------- ------- ------- ------- -------
Defined Portfolios......................... $37,447 $31,926 $39,206 $27,127 $35,253 $43,121
======= ======= ======= ======= ======= =======
Municipal Securities Held for:
Deposit in Defined Portfolios............ $ 210 $ 30 $ -- $ 2,691 $ 2,776 $ 4,597
Resale................................... 2,420 542 4,553 4,491 2,086 3,202
------- ------- ------- ------- ------- -------
Total Municipal Securities........ $ 2,630 $ 572 $ 4,553 $ 7,182 $ 4,862 $ 7,799
======= ======= ======= ======= ======= =======
EMPLOYEES
At December 31, 1998, the Company had 610 full-time employees. Employees
are compensated with a combination of salary, cash bonus and fringe benefits. In
addition, the Company has sought to retain its key and senior employees through
competitive compensation arrangements which include equity based incentive
awards.
COMPETITION
The Company is subject to substantial competition in all aspects of its
business. The registered representatives that distribute the Company's
investment products also distribute numerous competing products, often including
products sponsored by the retail distribution firms where they are employed.
There are relatively few barriers to entry for new investment management firms.
Investment products are sold to the public by broker-dealers, banks, insurance
companies and others, and many competing investment product sponsors offer a
broader array of investment products. Many of these institutions have
substantially greater resources than the Company. The Company competes with
other providers of products primarily on the basis of the range of products
offered, the investment performance of such products, quality of service, fees
charged, the level and type of broker compensation, the manner in which such
14
16
products are marketed and distributed, and the services provided to registered
representatives and investors. In recent years, competition among securities
firms has adversely affected the profitability associated with the underwriting
of municipal securities.
REGULATION
Nuveen & Co. is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is subject to regulation by the Securities and Exchange
Commission (the Commission), the National Association of Securities Dealers, the
Municipal Securities Rulemaking Board and other federal and state agencies and
self-regulatory organizations. Nuveen & Co. is subject to the Commission's
Uniform Net Capital Rule, designed to enforce minimum standards regarding the
general financial condition and liquidity of a broker-dealer. Under certain
circumstances, this rule may limit the ability of the Company to make
withdrawals of capital and receive dividends from Nuveen & Co. Nuveen & Co.'s
regulatory net capital has consistently exceeded such minimum net capital
requirements. At December 31, 1998, Nuveen & Co. had aggregate net capital, as
defined, of approximately $27.8 million, which exceeded the regulatory minimum
by approximately $24.0 million. The securities industry is one of the most
highly regulated in the United States, and failure to comply with related laws
and regulations can result in the revocation of broker-dealer licenses, the
imposition of censures or fines, and the suspension or expulsion of a firm
and/or its employees from the securities business.
Each Adviser is registered with the Commission under the Investment
Advisers Act. Each fund and defined portfolio is registered with the Commission
under the Investment Company Act. Each national fund is qualified for sale (or
not required to be so qualified) in all states in the United States and the
District of Columbia. Each single-state fund is qualified for sale (or not
required to be so qualified) in the state for which it is named and other
designated states. Virtually all aspects of the Company's investment management
business are subject to various federal and state laws and regulations. These
laws and regulations are primarily intended to benefit the investment product
holder and generally grant supervisory agencies and bodies broad administrative
powers, including the power to limit or restrict the Company from carrying on
its investment management business in the event that it fails to comply with
such laws and regulations. In such event, the possible sanctions which may be
imposed include the suspension of individual employees, limitations on the
Company's engaging in the investment management business for specified periods
of time, the revocation of the Advisers' registrations as investment advisers or
other censures and fines.
The Company's officers, directors, and employees may, from time to time,
own securities which are also held by one or more of the funds. The Company's
internal policies with respect to individual investments require prior clearance
of all transactions in municipal securities, exchange-traded fund securities and
securities of the Company. The Company also requires employees to report all
securities transactions, and restrict certain transactions so as to avoid the
possibility of conflicts of interest. Additionally, employees of Rittenhouse are
subject to their own internal policies with respect to the pre-clearance of the
purchase or sale of securities held in investor accounts.
ITEM 2. PROPERTIES
The Company conducts its principal operations through leased offices
located at its Chicago headquarters and in other United States cities. The
Company leases approximately 230,000 square feet of office space across the
country. Management believes that the Company's facilities are adequate to serve
its currently anticipated business needs.
15
17
ITEM 3. LEGAL PROCEEDINGS
As previously reported most recently in the Form 10-Q for the quarter
ending September 30, 1998, a lawsuit brought in June, 1996 by certain
shareholders is currently pending in federal district court for the Northern
District of Illinois against Nuveen & Co., NAC, six Nuveen investment companies
and two of the funds' former directors seeking unspecified damages, an
injunction and other relief. The suit also seeks certification of a defendant
class consisting of all Nuveen-managed leveraged funds. The complaint is filed
on behalf of a purported class of present and former shareholders of all Nuveen
leveraged investment companies, including the funds, which allegedly engaged in
certain practices which plaintiffs allege violated various provisions of the
Investment Company Act of 1940 and common law. Plaintiffs allege among other
things, breaches of fiduciary duty and various misrepresentations and omissions
in disclosures in connection with the use and maintenance of leverage through
the issuance and periodic auctioning of preferred stock and the payment of
management and brokerage fees to NAC and Nuveen & Co. Plaintiffs filed a motion
for class certification on August 10, 1998. Defendants are opposing
certification of either a plaintiff or defendant class. The defendants are
vigorously contesting this action and have filed motions, which are pending, to
dismiss the entire action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the quarter
ended December 31, 1998.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of the executive officers and other key
officers of the Company as of December 31, 1998 are set forth below. Executive
officers and other key officers of the Company serve at the discretion of the
Board of Directors. Unless otherwise indicated in the following descriptions,
each of the following executive officers and other key officers have held his
current position with the Company or its predecessor for more than the past five
years.
EXECUTIVE OFFICERS AGE PRINCIPAL POSITION
------------------ --- ------------------
Timothy R. Schwertfeger................... 49 Chairman, Chief Executive Officer and Director
Anthony T. Dean........................... 53 President, Chief Operating Officer and Director
John P. Amboian........................... 37 Executive Vice President, Chief Financial Officer
and Secretary
Bruce P. Bedford.......................... 58 Executive Vice President
Richard D. Hughes......................... 42 President of Rittenhouse Financial Services, Inc.
and Nuveen Asset Management Inc.
OTHER KEY OFFICERS
------------------
Alan G. Berkshire......................... 38 Vice President and General Counsel
Margaret E. Wilson........................ 43 Vice President and Controller
All executive officers and other key officers of the Company are elected
for a one-year term. There are no family relationships between any of the
Registrant's executive officers, key officers and directors, and there are no
arrangements or understandings between any of these executive officers and/or
key officers and any other persons pursuant to which the executive officer or
key officer was selected.
16
18
Descriptions of the business experience for the past five years of Messrs.
Schwertfeger and Amboian appear on page 6 of the Registrant's Proxy Statement
relating to the annual meeting of shareholders to be held on May 6, 1999 (the
"1999 Proxy Statement") and are incorporated herein by reference.
Mr. Dean has been President and Chief Operating Officer of the Company
since 1996; prior thereto Executive Vice President and Director of the Company
since inception; President and Chief Operating Officer since 1996; prior thereto
Executive Vice President and Director of John Nuveen & Co. Incorporated since
1989; prior thereto, Vice President of John Nuveen & Co. Incorporated since
1980; Chairman since July 1996, and prior thereto Director and President of the
Nuveen Funds advised by Nuveen Institutional Advisory Corp. since July 1994;
President and Director of the Nuveen Funds advised by Nuveen Advisory Corp.
since July 1996.
Mr. Bedford has been Executive Vice President of the Company since February
1997; prior thereto Chairman, Chief Executive Officer and Director of Flagship
Resources, Inc., Flagship Funds, Inc., Flagship Financial Inc. and the Flagship
funds from October 1984 until December 1996.
Mr. Hughes has been Vice President of the Company since May 1998. He joined
John Nuveen & Co. Incorporated in September 1997. In May 1998, Mr. Hughes was
elected Vice President, Branch Manager and Principal for John Nuveen & Co.
Incorporated and Chief Operating Officer, President and Director of Nuveen Asset
Management Inc. Mr. Hughes has served as President and Director of Rittenhouse
Financial Services, Inc. since December 1989 and has continued in such position
since the acquisition of Rittenhouse in September 1997.
Mr. Berkshire has been Secretary of the Company since May 1998; Vice
President and General Counsel of the Company since 1997. He joined Nuveen & Co.
in September 1997 as Vice President and General Counsel. Prior thereto he was a
Partner at the law firm of Kirkland & Ellis since October 1992.
Mrs. Wilson has been Vice President and Controller of the Company since May
1998. She joined John Nuveen & Co. Incorporated as Vice President in February
1998. Prior thereto, Mrs. Wilson was Chief Financial Officer at Sara Lee Bakery,
a division of Sara Lee Corporation, from November 1996 until February 1998 and a
Controller with Kraft Foods from September 1991 until November 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At December 31, 1998, there were approximately 4,800 shareholders of record
of the Company's Class A common stock. Other information required by this item
is contained in footnote 12 on page 34 of the Registrant's 1998 Annual Report to
Shareholders (the 1998 Annual Report) and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The "Five Year Financial Summary" section on page 36 of the 1998 Annual
Report is incorporated herein by reference.
17
19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The "Management's Discussion and Analysis of Financial Condition and
Results of Operations" section on pages 11 through 20 of the 1998 Annual Report
is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The "Market Risk" section on page 19 of the 1998 Annual Report is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data on pages 21 through 34 of
the 1998 Annual Report are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The "Nominees for Directors" subsection and the "Nominees for Class B
Directors" subsection in the "Election of Directors" section on pages 5 through
7 of the 1999 Proxy Statement and the "Compliance with section 16(a) of the
Securities Exchange Act of 1934" subsection of the Beneficial Ownership of
Common Stock" section on pages 2 and 4 of the 1999 Proxy Statement, are
incorporated herein by reference. Information regarding the Registrant's
executive officers is included in this Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The "Executive Compensation", "Retirement Plans" and "Employment
Agreements" sections on pages 9 through 14, and the "Compensation of Directors"
subsection in the "Election of Directors" section on page 8 of the Proxy
Statement are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The "Beneficial Ownership of the Company's Stock" section on pages 2
through 4 of the 1999 Proxy Statement is incorporated herein by reference.
18
20
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The "Certain Relationships" section on pages 14 and 15 of the 1999 Proxy
Statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) FILED DOCUMENTS.
The following documents are filed as part of this report:
PAGE
NUMBER
------
1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets -- December 31, 1998 and 1997... *
Consolidated Statements of Income -- Years ended December *
31, 1998, 1997 and 1996.....................................
Consolidated Statements of Changes in Common Stockholders' *
Equity -- December 31, 1998, 1997 and 1996..................
Consolidated Statements of Cash Flows -- Years ended *
December 31, 1998, 1997 and 1996............................
Notes to Consolidated Financial Statements.................. *
2. FINANCIAL STATEMENT SCHEDULES: None
All schedules are omitted because they are not required, are
not applicable or the information is otherwise shown in the
financial statements or notes thereto.
3. EXHIBITS:
See Exhibit Index on pages E-1 through E-5 hereof.
- ---------------
* Incorporated by reference to the 1998 Annual Report, which, except as
specifically incorporated by reference in this Form 10-K, shall not be deemed
to be filed with the Commission.
(b) REPORTS ON FORM 8-K.
None
19
21
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 30, 1999.
THE JOHN NUVEEN COMPANY
By /s/ JOHN P. AMBOIAN
------------------------------------
John P. Amboian
Executive Vice President, Chief
Financial Officer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 30, 1999.
SIGNATURE TITLE
--------- -----
* Chairman, Chief Executive Officer and Director
- ----------------------------------------------------- (Principal Executive Officer)
Timothy R. Schwertfeger
* President, Chief Operating Officer and
- ----------------------------------------------------- Director
Anthony T. Dean
* Director
- -----------------------------------------------------
Willard L. Boyd
* Director
- -----------------------------------------------------
W. John Driscoll
* Director
- -----------------------------------------------------
Duane R. Kullberg
* Director
- -----------------------------------------------------
Douglas W. Leatherdale
* Director
- -----------------------------------------------------
Paul J. Liska
/s/ MARGARET E. WILSON Vice President and Controller
- ----------------------------------------------------- (Principal Accounting Officer)
Margaret E. Wilson
*By /s/ ALAN G. BERKSHIRE
--------------------------------
Alan G. Berkshire
As Attorney-in-Fact for each
of the persons indicated
20
22
EXHIBIT INDEX
to
ANNUAL REPORT ON FORM 10-K
for the
FISCAL YEAR ENDED DECEMBER 31, 1998
Copies of the documents listed below which are identified with an asterisk (*)
have heretofore been filed with the Commission as exhibits to registration
statements or reports filed with the Commission and are incorporated herein by
reference and made a part hereof; the exhibit number and location of each
document so filed and incorporated herein by reference are set forth opposite
each such exhibit. Exhibits not so identified are filed herewith.
Page No. of
Exhibit in
Sequential
Exhibit Exhibit No. Numbering
Designation Exhibit and Location System
- ----------- ------- ------------ ------
* 3.1 Restated Certificate of Exhibit 3.1 to Registration
Incorporation of The John Statement on Form S-1 filed
Nuveen Company on April 2, 1992, File
No. 33-46922 (the "S-1
Registration Statement")
* 3.2 Amended and Restated By-Laws Exhibit 3.2 to the Company's
of The John Nuveen Company Form 10-K for year ended
December 31, 1993 filed on
March 29, 1994 (the "1993
Form 10-K")
*+10.1 Nuveen 1992 Special Incentive Exhibit 10.1 to Company's
Plan Form 10-K for the year ended
December 31, 1992 filed on
March 30, 1993 (the "1992
Form 10-K")
*+10.1(a) Nuveen 1996 Equity Incentive Exhibit 4.2 to Company's
Award Plan Form S-8 filed on July 10, 1996
*+10.2(a) Form of Employment Agreement Exhibit 10.2(a) to Company's
with Bruce P. Bedford Form 10-K for the year ended
December 31, 1997 and filed on
March 30, 1998 (the
"1997 Form 10-K")
E-1
23
Page No. of
Exhibit in
Sequential
Exhibit Exhibit No. Numbering
Designation Exhibit and Location System
- ----------- ------- ------------ ------
+10.2(b) Form of Employment Agreement --
with Richard D. Hughes
+10.2(c) Form of Employment Agreement --
with George W. Connell
*+10.3(a) Executive Officer Performance Exhibit 10.3(a) to the
Plan Company's Form 10-K for
the year ended December 31,
1996 filed on March 31, 1997
(the "1996 Form 10-K")
*+10.4 Amended and Restated Profit Exhibit 10.4 to Company's
Sharing Plan 1996 Form 10-K
+10.4(a) Amended and Restated --
Rittenhouse Financial
Services, Inc. 1997 Equity
Incentive Award Plan
*+10.5 Amended and Restated Exhibit 10.5 to 1994
Retirement Plan Form 10-K
*+10.6 Excess Benefit Retirement Plan Exhibit 10.6 to the S-1
Registration Statement
*+10.7 Deferred Bonus Plan Exhibit 10.7 to the S-1
Registration Statement
10.8(c) Lease dated January 22, 1998 --
between Overseas Partners
(333), Inc. and John Nuveen &
Co. Incorporated
**10.9 Investment Management Exhibit 10.9 to Pre-effective
Agreements between Nuveen Amendment No. 1 and Exhibits
Advisory Corp. and each 10.9 to both the 1992 and 1993
Nuveen Fund Forms 10-K
**10.10 Investment Management Exhibit 10.10 to Pre-effective
Agreement between Nuveen Amendment No. 1 and Exhibits 10.10
Institutional Advisory Corp. to both the 1992 and 1993
and each Nuveen Select Forms 10-K
Tax-Free Income Portfolio
E-2
24
Page No. of
Exhibit in
Sequential
Exhibit Exhibit No. Numbering
Designation Exhibit and Location System
- ----------- ------- ------------ ------
**10.10(a) Management Agreement between Exhibit 10.10(a) to the
Nuveen Investment Trust and 1996 Form 10-K
Nuveen Institutional Advisory
Corp.
*10.10(b) Investment Sub-Advisory Exhibit 10.10(b) to the
Agreement between Nuveen 1996 Form 10-K
Institutional Advisory Corp.
and Institutional Capital
Corporation
10.10(b)(i) Addendum to Investment --
Sub-Advisory Agreement
between Nuveen Institutional
Advisory Corp. and
Institutional Capital Corp.
*10.10(c) Management Agreement between Exhibit 10.10(c) to the
Nuveen Investment Trust II 1997 Form 10-K
and Nuveen Institutional
Advisory Corp.
*10.10(d) Investment Sub-Advisory Exhibit 10.10(d) to the
Agreement between Nuveen 1997 Form 10-K
Institutional Advisory Corp.
and Rittenhouse Financial
Services, Inc.
10.10(e) Management Agreement between --
Nuveen Investment Trust III
and Nuveen Institutional
Advisory Corp.
*10.12 Tax Sharing Agreement between Exhibit 10.13 to S-1
The St. Paul Companies, Inc. Registration Statement
and John Nuveen & Co.
Incorporated
*10.13 Registration Rights Agreement Exhibit 10.13 to 1992
between The John Nuveen Form 10-K
Company and The St. Paul
Companies, Inc.
*10.14 Indemnity Agreement between Exhibit 10.14 to 1992
The St. Paul Companies, Inc. Form 10-K
and The John Nuveen Company
*10.15 Credit Agreement between The Exhibit 10.15 to the 1997
John Nuveen Company and The Form 10-K
First National Bank of Chicago
E-3
25
Page No. of
Exhibit in
Sequential
Exhibit Exhibit No. Numbering
Designation Exhibit and Location System
- ----------- ------- ------------ ------
10.16(a) Form of Exchange Traded Fund --
Custody Agreement between The
Chase Manhattan Bank and each
Nuveen Fund
10.16(b) Form of Exchange Traded fund --
Shareholder Transfer Agency
Agreement between The Chase
Manhattan Bank and each
Nuveen Fund
10.16(c) Form of Mutual Fund Service --
Agreement for Fund Accounting
Services between Chase Global
Funds Services Company and each
Nuveen Mutual Fund
10.16(d) Form of Mutual Fund Service --
for Transfer Agency Services
Agreement between Chase Global
Funds Services Company and each
Nuveen Mutual Fund
10.16(e) Mutual Fund Service Agreement --
for Custody Services between
Chase Global Funds Services
and each Nuveen Mutual Fund
10.17 Support Services Agreement --
between Rittenhouse Financial
Services, Inc. and Rittenhouse
Trust Company
10.18 Sublease between Rittenhouse --
Financial Services, Inc. and
Rittenhouse Trust Company
10.19 Trademark License Agreement --
between Rittenhouse Financial
Services Inc., the John Nuveen
Company and Rittenhouse Trust
Company
13 Annual Report to Shareholders --
for the fiscal year ended
December 31, 1998
E-4
26
Page No. of
Exhibit in
Sequential
Exhibit Exhibit No. Numbering
Designation Exhibit and Location System
- ----------- ------- ------------ ------
*21 List of Subsidiaries of The Exhibit 21 to the 1997
John Nuveen Company Form 10-K
23 Consent of Independent Auditor --
24.1 Powers of Attorney --
24.2 Certified Copy of Resolutions --
of Board of Directors
Authorizing Signatures
27 Financial Data Schedule --
[FN]
* Previously filed; incorporated herein by reference.
** Previously filed, other than Form of Renewal of Investment Management
Agreement, which are filed herewith.
+ Management contracts and compensatory plans and arrangements.
E-5