UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14A-11(c) or Section 240.14a-12
NUVEEN MUNICIPAL HIGH INCOME OPPORTUNITY FUND (NMZ)
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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IMPORTANT NOTICE
TO FUND SHAREHOLDERS
JUNE 22, 2005
Although we recommend that you read the complete Proxy Statement, for your
convenience, we have provided a brief overview of the issues to be voted on.
Q. WHY AM I RECEIVING THIS PROXY STATEMENT?
A. Pursuant to an investment management agreement between your Fund and Nuveen
Asset Management ("NAM"), NAM has served as your Fund's investment adviser
and has been responsible for the overall investment strategy of your Fund.
NAM is a wholly-owned subsidiary of Nuveen Investments, Inc. ("Nuveen").
Nuveen is a publicly traded company and, until recently, was a
majority-owned subsidiary of The St. Paul Travelers Companies, Inc. ("St.
Paul Travelers").
As part of St. Paul Travelers' previously announced three-part program to
sell its entire equity interest in Nuveen (the "Sale"), St. Paul Travelers
sold 39.3 million shares of Nuveen through a secondary public offering on
April 12, 2005. Nuveen also repurchased $600 million of its shares from St.
Paul Travelers. The repurchase of these shares is being completed through
two steps -- a $200 million repurchase that closed on April 12, 2005, and a
$400 million forward purchase (plus interest) that will settle later this
year. Finally, St. Paul Travelers also entered into an agreement with two
other parties to sell approximately 12 million common shares of Nuveen for
settlement later this year. After completion of the Sale, Nuveen will
emerge as a fully independent public company.
Upon completion of the Sale, the investment management agreement between
your Fund and NAM may be terminated. In order for NAM to continue to serve
as investment adviser after the completion of the Sale, the shareholders of
your Fund must approve a new investment management agreement. The enclosed
Proxy Statement gives you additional information on the proposed new
investment management agreement, as well as certain other matters. The
Board of Directors/Trustees of each Fund (the "Board," and each Director or
Trustee, a "Board Member"), including those Board Members who are not
affiliated with NAM, unanimously recommend that you vote FOR the approval
of the new investment management agreement for your Fund.
In addition, closed-end investment companies listed on a stock exchange,
such as your Fund, are required to hold annual meetings to approve the
election of Board Members. Your Fund is seeking shareholder approval to
elect Board Members to serve on your Fund's Board. The Board Members of
your Fund unanimously recommend that you vote FOR the nominees for the
Board.
Please refer to the Proxy Statement for a detailed explanation of the items
you are being asked to vote on.
Q. WHY IS A VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT AGREEMENT REQUIRED?
A. The completion of the Sale could be deemed to be an "assignment," as that
term is defined in the Investment Company Act of 1940 ("1940 Act"), of the
investment
management agreement between each Fund and NAM. As required by the 1940
Act, under its terms, each investment management agreement would
automatically terminate in the event of its assignment. As a result,
shareholder approval of a new investment management agreement will permit
NAM to continue to serve your Fund.
Q. WHAT WILL HAPPEN IF SHAREHOLDERS DO NOT APPROVE THE NEW INVESTMENT
MANAGEMENT AGREEMENT?
A. If the new investment management agreement is not approved, your Fund's
Board will take such actions as it deems to be in the best interests of
your Fund. This is discussed in more detail in the Proxy Statement.
Q. HOW WILL THE SALE AFFECT ME AS A FUND SHAREHOLDER?
A. Your investment in your Fund will not change as a result of the Sale. You
will still own the same shares in the Fund, and the value of your
investment will not change as a result of the Sale. The new investment
management agreement, if approved by shareholders, will still be with NAM
and the terms of the new investment management agreement are substantially
identical to the terms of the original investment management agreement. In
addition, the portfolio managers of your Fund will not change as a result
of the new investment management agreement.
Q. WILL THE INVESTMENT MANAGEMENT FEE RATES BE THE SAME UPON THE APPROVAL OF
THE NEW INVESTMENT MANAGEMENT AGREEMENT?
A. Yes, the investment management fee rates will remain the same.
Q. HOW DO THE BOARD MEMBERS SUGGEST THAT I VOTE IN CONNECTION WITH THE NEW
INVESTMENT MANAGEMENT AGREEMENT?
A. After careful consideration, the Board of your Fund unanimously recommends
that you vote "FOR" the approval of the new investment management
agreement.
Q. HOW DO THE BOARD MEMBERS SUGGEST THAT I VOTE IN CONNECTION WITH THE
ELECTION OF BOARD MEMBERS?
A. After careful consideration, the Board of your Fund unanimously recommends
that you vote "FOR" the nominees for the Board.
Q. WILL MY VOTE MAKE A DIFFERENCE?
A. Your vote is needed to ensure that the proposals can be acted upon.
Additionally, your immediate response will help save on the costs of any
future solicitations for these shareholder votes. We encourage all
shareholders to participate in the governance of their Fund.
Q. WHO DO I CALL IF I HAVE QUESTIONS?
A. If you need any assistance, or have any questions regarding the proposals
or how to vote your shares, please call your financial advisor.
Alternatively, you may call Nuveen at (800) 257-8787 weekdays from 8:00
a.m. to 6:00 p.m. Central time.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by completing and signing the enclosed proxy card,
and mailing it in the enclosed postage-paid envelope. Alternatively, you
may vote by telephone by calling the toll-free number on the proxy card or
by computer by going to the Internet address provided on the proxy card and
following the instructions, using your proxy card as a guide.
Q. WILL ANYONE CONTACT ME?
A. You may receive a call to verify that you received your proxy materials, to
answer any questions you may have about the proposals and to encourage you
to vote.
<Table>
NOTICE OF ANNUAL MEETING 333 West Wacker Drive
OF SHAREHOLDERS Chicago, Illinois
JULY 26, 2005 60606
(800) 257-8787
</Table>
JUNE 22, 2005
NUVEEN MUNICIPAL VALUE FUND, INC. (NUV)
NUVEEN MUNICIPAL INCOME FUND, INC. (NMI)
NUVEEN PREMIUM INCOME MUNICIPAL FUND, INC. (NPI)
NUVEEN PERFORMANCE PLUS MUNICIPAL FUND, INC. (NPP)
NUVEEN MUNICIPAL ADVANTAGE FUND, INC. (NMA)
NUVEEN MUNICIPAL MARKET OPPORTUNITY FUND, INC. (NMO)
NUVEEN INVESTMENT QUALITY MUNICIPAL FUND, INC. (NQM)
NUVEEN INSURED QUALITY MUNICIPAL FUND, INC. (NQI)
NUVEEN SELECT QUALITY MUNICIPAL FUND, INC. (NQS)
NUVEEN QUALITY INCOME MUNICIPAL FUND, INC. (NQU)
NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND, INC. (NIO)
NUVEEN PREMIER MUNICIPAL INCOME FUND, INC. (NPF)
NUVEEN PREMIER INSURED MUNICIPAL INCOME FUND, INC. (NIF)
NUVEEN PREMIUM INCOME MUNICIPAL FUND 2, INC. (NPM)
NUVEEN PREMIUM INCOME MUNICIPAL FUND 4, INC. (NPT)
NUVEEN INSURED PREMIUM INCOME MUNICIPAL FUND 2 (NPX)
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND (NAD)
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 2 (NXZ)
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 3 (NZF)
NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND (NVG)
NUVEEN INSURED TAX-FREE ADVANTAGE MUNICIPAL FUND (NEA)
NUVEEN MUNICIPAL HIGH INCOME OPPORTUNITY FUND (NMZ)
NUVEEN SELECT MATURITIES MUNICIPAL FUND (NIM)
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO (NXP)
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 2 (NXQ)
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 3 (NXR)
NUVEEN CALIFORNIA SELECT TAX-FREE INCOME PORTFOLIO (NXC)
NUVEEN NEW YORK SELECT TAX-FREE INCOME PORTFOLIO (NXN)
TO THE SHAREHOLDERS OF THE ABOVE FUNDS:
Notice is hereby given that the Annual Meeting of Shareholders (the "Meeting")
of Nuveen Municipal Value Fund, Inc. ("Municipal Value"), Nuveen Municipal
Income Fund, Inc. ("Municipal Income"), Nuveen Premium Income Municipal Fund,
Inc., Nuveen Performance Plus Municipal Fund, Inc., Nuveen Municipal Advantage
Fund, Inc., Nuveen Municipal Market Opportunity Fund, Inc., Nuveen Investment
Quality Municipal Fund, Inc., Nuveen Insured Quality Municipal Fund, Inc.,
Nuveen Select Quality Municipal Fund, Inc., Nuveen Quality Income Municipal
Fund, Inc., Nuveen Insured Municipal Opportunity Fund, Inc., Nuveen
Premier Municipal Income Fund, Inc., Nuveen Premier Insured Municipal Income
Fund, Inc., Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Premium Income
Municipal Fund 4, Inc., each a Minnesota corporation, and Nuveen Insured Premium
Income Municipal Fund 2, Nuveen Dividend Advantage Municipal Fund, Nuveen
Dividend Advantage Municipal Fund 2, Nuveen Dividend Advantage Municipal Fund 3,
Nuveen Insured Dividend Advantage Municipal Fund, Nuveen Insured Tax-Free
Advantage Municipal Fund, Nuveen Municipal High Income Opportunity Fund, Nuveen
Select Maturities Municipal Fund ("Select Maturities"), Nuveen Select Tax-Free
Income Portfolio ("Select Portfolio"), Nuveen Select Tax-Free Income Portfolio 2
("Select Portfolio 2"), Nuveen Select Tax-Free Income Portfolio 3 ("Select
Portfolio 3"), Nuveen California Select Tax-Free Income Portfolio ("California
Portfolio") and Nuveen New York Select Tax-Free Income Portfolio ("New York
Portfolio"), each a Massachusetts business trust, (individually, a "Fund" and
collectively, the "Funds") will be held (along with the meeting of shareholders
of several other Nuveen funds) in the Assembly Room of The Northern Trust
Company, 50 South LaSalle Street, Chicago, Illinois 60675, on Tuesday, July 26,
2005, at 10:30 a.m., Chicago time, for the following purposes and to transact
such other business, if any, as may properly come before the Meeting:
MATTERS TO BE VOTED ON BY SHAREHOLDERS:
1. To approve a new investment management agreement between each Fund and Nuveen
Asset Management ("NAM"), each Fund's investment adviser.
2. To elect Directors or Trustees to the Board of Directors/Trustees (each a
"Board" and each Director or Trustee a "Board Member") of each Fund as
outlined below:
a. For each Fund, except Municipal Value, Municipal Income, Select
Maturities, Select Portfolio, Select Portfolio 2, Select Portfolio 3,
California Portfolio and New York Portfolio to elect nine (9) Board
Members to serve until the next annual meeting and until their
successors shall have been duly elected and qualified.
i. seven (7) Board Members to be elected by the holders of Common
Shares and Municipal Auction Rate Cumulative Preferred Shares
("Preferred Shares"), voting together as a single class; and
ii. two (2) Board Members to be elected by the holders of Preferred
Shares only, voting separately as a single class.
b. For Municipal Value and Municipal Income, to elect three (3) Board
Members for multiple year terms or until their successors shall have
been duly elected and qualified.
c. For Select Portfolio, Select Portfolio 2, Select Portfolio 3, California
Portfolio, New York Portfolio and Select Maturities, to elect nine (9)
Board Members to serve until the next annual meeting and until their
successors shall have been duly elected and qualified.
3. To transact such other business as may properly come before the Meeting.
Shareholders of record at the close of business on May 31, 2005 are entitled to
notice of and to vote at the Meeting.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IN ORDER TO AVOID
DELAY AND ADDITIONAL EXPENSE, AND TO ASSURE THAT YOUR SHARES ARE REPRESENTED,
PLEASE VOTE AS PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. YOU MAY VOTE BY MAIL, TELEPHONE OR OVER THE INTERNET. TO
VOTE BY MAIL, PLEASE MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. TO VOTE BY TELEPHONE, PLEASE
CALL THE TOLL-FREE NUMBER LOCATED ON YOUR PROXY CARD AND FOLLOW THE RECORDED
INSTRUCTIONS, USING YOUR PROXY CARD AS A GUIDE. TO VOTE OVER THE INTERNET, GO TO
THE INTERNET ADDRESS PROVIDED ON YOUR PROXY CARD AND FOLLOW THE INSTRUCTIONS,
USING YOUR PROXY CARD AS A GUIDE.
Jessica R. Droeger
Vice President and Secretary
<Table>
JOINT PROXY STATEMENT 333 West Wacker Drive
Chicago, Illinois
60606
(800) 257-8787
</Table>
JUNE 22, 2005
NUVEEN MUNICIPAL VALUE FUND, INC. (NUV)
NUVEEN MUNICIPAL INCOME FUND, INC. (NMI)
NUVEEN PREMIUM INCOME MUNICIPAL FUND, INC. (NPI)
NUVEEN PERFORMANCE PLUS MUNICIPAL FUND, INC. (NPP)
NUVEEN MUNICIPAL ADVANTAGE FUND, INC. (NMA)
NUVEEN MUNICIPAL MARKET OPPORTUNITY FUND, INC. (NMO)
NUVEEN INVESTMENT QUALITY MUNICIPAL FUND, INC. (NQM)
NUVEEN INSURED QUALITY MUNICIPAL FUND, INC. (NQI)
NUVEEN SELECT QUALITY MUNICIPAL FUND, INC. (NQS)
NUVEEN QUALITY INCOME MUNICIPAL FUND, INC. (NQU)
NUVEEN INSURED MUNICIPAL OPPORTUNITY FUND, INC. (NIO)
NUVEEN PREMIER MUNICIPAL INCOME FUND, INC. (NPF)
NUVEEN PREMIER INSURED MUNICIPAL INCOME FUND, INC. (NIF)
NUVEEN PREMIUM INCOME MUNICIPAL FUND 2, INC. (NPM)
NUVEEN PREMIUM INCOME MUNICIPAL FUND 4, INC. (NPT)
NUVEEN INSURED PREMIUM INCOME MUNICIPAL FUND 2 (NPX)
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND (NAD)
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 2 (NXZ)
NUVEEN DIVIDEND ADVANTAGE MUNICIPAL FUND 3 (NZF)
NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND (NVG)
NUVEEN INSURED TAX-FREE ADVANTAGE MUNICIPAL FUND (NEA)
NUVEEN MUNICIPAL HIGH INCOME OPPORTUNITY FUND (NMZ)
NUVEEN SELECT MATURITIES MUNICIPAL FUND (NIM)
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO (NXP)
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 2 (NXQ)
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 3 (NXR)
NUVEEN CALIFORNIA SELECT TAX-FREE INCOME PORTFOLIO (NXC)
NUVEEN NEW YORK SELECT TAX-FREE INCOME PORTFOLIO (NXN)
GENERAL INFORMATION
This Joint Proxy Statement is furnished in connection with the solicitation by
the Board of Directors or Trustees (each a "Board" and collectively, the
"Boards," and each Director or Trustee, a "Board Member" and collectively, the
"Board Members") of Nuveen Municipal
1
Value Fund, Inc. ("Municipal Value"), Nuveen Municipal Income Fund, Inc.
("Municipal Income"), Nuveen Premium Income Municipal Fund, Inc. ("Premium
Income"), Nuveen Performance Plus Municipal Fund, Inc. ("Performance Plus"),
Nuveen Municipal Advantage Fund, Inc. ("Municipal Advantage"), Nuveen Municipal
Market Opportunity Fund, Inc. ("Municipal Market Opportunity"), Nuveen
Investment Quality Municipal Fund, Inc. ("Investment Quality"), Nuveen Insured
Quality Municipal Fund, Inc. ("Insured Quality"), Nuveen Select Quality
Municipal Fund, Inc. ("Select Quality"), Nuveen Quality Income Municipal Fund,
Inc. ("Quality Income"), Nuveen Insured Municipal Opportunity Fund, Inc.
("Insured Municipal Opportunity"), Nuveen Premier Municipal Income Fund, Inc.
("Premier Municipal"), Nuveen Premier Insured Municipal Income Fund, Inc.
("Premier Insured"), Nuveen Premium Income Municipal Fund 2, Inc. ("Premium
Income 2") Nuveen Premium Income Municipal Fund 4, Inc. ("Premium Income 4"),
each a Minnesota corporation (collectively, the "Minnesota Corporations"), and
Nuveen Insured Premium Income Municipal Fund 2 ("Insured Premium Income 2"),
Nuveen Dividend Advantage Municipal Fund ("Dividend Advantage"), Nuveen Dividend
Advantage Municipal Fund 2 ("Dividend Advantage 2"), Nuveen Dividend Advantage
Municipal Fund 3 ("Dividend Advantage 3"), Nuveen Insured Dividend Advantage
Municipal Fund ("Insured Dividend Advantage"), Nuveen Insured Tax-Free Advantage
Municipal Fund ("Insured Tax-Free Advantage"), Nuveen Municipal High Income
Opportunity Fund ("Municipal High Income"), Nuveen Select Maturities Municipal
Fund ("Select Maturities"), Nuveen Select Tax-Free Income Portfolio ("Select
Portfolio"), Nuveen Select Tax-Free Income Portfolio 2 ("Select Portfolio 2"),
Nuveen Select Tax-Free Income Portfolio 3 ("Select Portfolio 3"), Nuveen
California Select Tax-Free Income Portfolio ("California Portfolio") and Nuveen
New York Select Tax-Free Income Portfolio ("New York Portfolio"), each a
Massachusetts business trust (collectively, the "Massachusetts Business Trusts")
(the Massachusetts Business Trusts and Minnesota Corporations are each, a "Fund"
and collectively, the "Funds"), of proxies to be voted at the Annual Meeting of
Shareholders to be held (along with the meeting of shareholders of several other
Nuveen funds) in the Assembly Room of The Northern Trust Company, 50 South
LaSalle Street, Chicago, Illinois 60675, on Tuesday, July 26, 2005, at 10:30
a.m., Chicago time, (for each Fund, a "Meeting" and collectively, the
"Meetings"), and at any and all adjournments thereof.
On the matters coming before each Meeting as to which a choice has been
specified by shareholders on the proxy, the shares will be voted accordingly. If
a proxy is returned and no choice is specified, the shares will be voted FOR
approval of the new investment management agreement and FOR the election of the
nominees as listed in this Joint Proxy Statement. Shareholders who execute
proxies may revoke them at any time before they are voted by filing with that
Fund a written notice of revocation, by delivering a duly executed proxy bearing
a later date or by attending the Meeting and voting in person.
This Joint Proxy Statement is first being mailed to shareholders on or about
June 22, 2005.
The Board of each Fund has determined that the use of this Joint Proxy Statement
for each Meeting is in the best interest of each Fund and its shareholders in
light of the similar matters being considered and voted on by the shareholders.
2
The following table indicates which shareholders are solicited with respect to
each matter:
<Table>
<Caption>
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MATTER COMMON SHARES PREFERRED SHARES(1)
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1. To approve a new investment management X X
agreement for the Fund
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2a(i). Election of seven (7) Board Members by X X
all shareholders (except Municipal Value,
Municipal Income, Select Maturities,
Select Portfolio, Select Portfolio 2,
Select Portfolio 3, California Portfolio
and New York Portfolio)
2a(ii). Election of two (2) Board Members by X
Preferred Shares only (except Municipal
Value, Municipal Income, Select
Maturities, Select Portfolio, Select
Portfolio 2, Select Portfolio 3,
California Portfolio and New York
Portfolio)
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2b. Election of three (3) Board Members for X N/A
Municipal Value and Municipal Income by
all shareholders
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2c. Election of nine (9) Board Members for X N/A
Select Maturities, Select Portfolio,
Select Portfolio 2, Select Portfolio 3,
California Portfolio and New York
Portfolio by all shareholders
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</Table>
(1) Municipal Auction Rate Cumulative Preferred Shares ("MuniPreferred") are
referred to as "Preferred Shares."
A quorum of shareholders is required to take action at each Meeting. A majority
of the shares entitled to vote at each Meeting, represented in person or by
proxy, will constitute a quorum of shareholders at that Meeting, except that for
the election of the two Board Member nominees to be elected by holders of
Preferred Shares of each Fund (except Municipal Value, Municipal Income, Select
Maturities, Select Portfolio, Select Portfolio 2, Select Portfolio 3, California
Portfolio and New York Portfolio), 33 1/3% of the Preferred Shares entitled to
vote and represented in person or by proxy will constitute a quorum. Votes cast
by proxy or in person at each Meeting will be tabulated by the inspectors of
election appointed for that Meeting. The inspectors of election will determine
whether or not a quorum is present at the Meeting. The inspectors of election
will treat abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees, typically in "street name," as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power on a particular
matter) as present for purposes of determining a quorum.
For purposes of determining the approval of the new investment management
agreement, abstentions and broker non-votes will be treated as shares voted
against the proposal. For purposes of determining the approval of the proposal
to elect nominees for each of the Massachusetts Business Trusts, abstentions and
broker non-votes will have no effect on the election of Board Members. For
purposes of determining the approval of the proposal to elect nominees for each
of the Minnesota Corporations, abstentions and broker non-votes will have the
effect of a vote against the election of Board Members. The details of the
proposals to be voted on by the shareholders of each Fund and the vote required
for approval of the proposals are set forth under the description of the
proposals below.
3
Preferred Shares held in "street name" as to which voting instructions have not
been received from the beneficial owners or persons entitled to vote as of one
business day before the Meeting, or, if adjourned, one business day before the
day to which the Meeting is adjourned, and that would otherwise be treated as
"broker non-votes" may, pursuant to Rule 452 of the New York Stock Exchange, be
voted by the broker on the proposal in the same proportion as the votes cast by
all Preferred shareholders as a class who have voted on the proposal or in the
same proportion as the votes cast by all Preferred shareholders of the Fund who
have voted on that item. Rule 452 permits proportionate voting of Preferred
Shares with respect to a particular item if, among other things, (i) a minimum
of 30% of the Preferred Shares or shares of a series of Preferred Shares
outstanding has been voted by the holders of such shares with respect to such
item and (ii) less than 10% of the Preferred Shares or shares of a series of
Preferred Shares outstanding has been voted by the holders of such shares
against such item. For the purpose of meeting the 30% test, abstentions will be
treated as shares "voted" and for the purpose of meeting the 10% test,
abstentions will not be treated as shares "voted" against the item.
Those persons who were shareholders of record at the close of business on May
31, 2005 will be entitled to one vote for each share held. As of May 31, 2005,
the shares of the Funds were issued and outstanding as follows:
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------
FUND TICKER SYMBOL* COMMON SHARES PREFERRED SHARES
- ----------------------------------------------------------------------------------------------
Municipal Value NUV 194,959,520 N/A
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Municipal Income NMI 8,113,876 N/A
- ----------------------------------------------------------------------------------------------
Premium Income NPI 63,785,430 Series M 3,800
Series M2 2,000
Series T 3,800
Series W 3,800
Series TH 3,800
Series F 3,800
- ----------------------------------------------------------------------------------------------
Performance Plus NPP 59,914,073 Series M 4,000
Series T 4,000
Series W 4,000
Series TH 3,160
Series F 4,000
- ----------------------------------------------------------------------------------------------
Municipal Advantage NMA 43,025,594 Series M 3,000
Series T 3,000
Series W 3,000
Series TH 2,320
Series F 3,000
- ----------------------------------------------------------------------------------------------
Municipal Market NMO 45,540,872 Series M 4,000
Opportunity Series T 4,000
Series W 3,200
Series F 4,000
- ----------------------------------------------------------------------------------------------
Investment Quality NQM 35,748,959 Series M 2,500
Series T 2,500
Series W 2,500
Series TH 2,040
Series F 2,500
- ----------------------------------------------------------------------------------------------
</Table>
4
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------
FUND TICKER SYMBOL* COMMON SHARES PREFERRED SHARES
- ----------------------------------------------------------------------------------------------
Insured Quality NQI 38,224,900 Series M 2,600
Series T 2,600
Series W 2,600
Series TH 2,320
Series F 2,600
- ----------------------------------------------------------------------------------------------
Select Quality NQS 33,887,474 Series M 2,000
Series T 2,000
Series W 2,800
Series TH 1,560
Series F 2,800
- ----------------------------------------------------------------------------------------------
Quality Income NQU 54,204,488 Series M 3,000
Series T 3,000
Series W 3,000
Series W2 2,080
Series TH 4,000
Series F 3,000
- ----------------------------------------------------------------------------------------------
Insured Municipal NIO 81,138,036 Series M 4,000
Opportunity Series T 4,000
Series W 4,000
Series W2 3,200
Series TH1 4,000
Series TH2 4,000
Series F 4,000
- ----------------------------------------------------------------------------------------------
Premier Municipal NPF 20,091,018 Series M 1,000
Series T 2,800
Series TH 2,800
- ----------------------------------------------------------------------------------------------
Premier Insured NIF 19,419,608 Series W 840
Series TH 2,800
Series F 2,800
- ----------------------------------------------------------------------------------------------
Premium Income 2 NPM 41,093,661 Series M 2,000
Series T 3,000
Series W 2,000
Series TH 3,000
Series F 2,000
Series F2 1,880
- ----------------------------------------------------------------------------------------------
Premium Income 4 NPT 43,236,703 Series M 2,200
Series T 2,000
Series T2 1,328
Series W 1,680
Series W2 520
Series TH 2,680
Series F 1,800
Series F2 1,328
- ----------------------------------------------------------------------------------------------
Insured Premium NPX 37,353,512 Series M 2,080
Income 2 Series T 2,200
Series W 2,080
Series TH 2,200
Series F 2,196
- ----------------------------------------------------------------------------------------------
</Table>
5
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------
FUND TICKER SYMBOL* COMMON SHARES PREFERRED SHARES
- ----------------------------------------------------------------------------------------------
Dividend Advantage NAD 39,267,491 Series M 4,000
Series T 4,000
Series TH 3,800
- ----------------------------------------------------------------------------------------------
Dividend Advantage 2 NXZ 29,282,000 Series M 3,000
Series T 3,000
Series F 3,000
- ----------------------------------------------------------------------------------------------
Dividend Advantage 3 NZF 40,310,119 Series F 4,160
Series TH 4,160
Series F 4,160
- ----------------------------------------------------------------------------------------------
Insured Dividend NVG 29,807,822 Series M 3,160
Advantage Series T 3,080
Series TH 3,080
- ----------------------------------------------------------------------------------------------
Insured Tax-Free NEA 18,515,282 Series T 2,880
Advantage Series W 2,880
- ----------------------------------------------------------------------------------------------
Municipal High Income NMZ 23,227,199 Series M 3,000
Series T 1,600
Series W 1,600
- ----------------------------------------------------------------------------------------------
Select Maturities NIM 12,394,977 N/A
- ----------------------------------------------------------------------------------------------
Select Portfolio NXP 16,378,096 N/A
- ----------------------------------------------------------------------------------------------
Select Portfolio 2 NXQ 17,607,068 N/A
- ----------------------------------------------------------------------------------------------
Select Portfolio 3 NXR 12,964,124 N/A
- ----------------------------------------------------------------------------------------------
California Portfolio NXC 6,257,070 N/A
- ----------------------------------------------------------------------------------------------
New York Portfolio NXN 3,908,223 N/A
- ----------------------------------------------------------------------------------------------
</Table>
* The Common Shares of all of the Funds are listed on the New York Stock
Exchange, except NXZ, NZF, NVG, NEA and NMZ, which are listed on the American
Stock Exchange.
1. APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENTS
BACKGROUND
Under an investment management agreement between Nuveen Asset Management ("NAM"
or the "Adviser") and each Fund (each, an "Original Investment Management
Agreement" and collectively, the "Original Investment Management Agreements"),
NAM has served as each Fund's investment adviser and has been responsible for
each Fund's overall investment strategy and its implementation. The date of each
Fund's Original Investment Management Agreement and the date on which it was
last approved by shareholders and approved for continuance by the Board is
provided in Appendix A. NAM is a wholly-owned subsidiary of Nuveen Investments,
Inc. ("Nuveen"). Nuveen is a publicly traded company and, until recently, was a
majority-owned subsidiary of The St. Paul Travelers Companies, Inc. ("St. Paul
Travelers"), 385 Washington Street, St. Paul, Minnesota 55102. St. Paul
Travelers is a publicly-traded company that is principally engaged in providing
property-liability insurance through subsidiaries.
On March 25, 2005, Nuveen and St. Paul Travelers announced that St. Paul
Travelers planned to implement a three-part program to sell its equity interest
in Nuveen (the "Sale"). As part of St. Paul Travelers' previously announced
three-part divestiture program, St. Paul Travelers
6
sold 39.3 million shares of Nuveen's approximately 94 million outstanding common
shares through a secondary public offering on April 12, 2005. Nuveen also
repurchased $600 million of its common shares from St. Paul Travelers at a price
of $32.98 per share, or approximately 18.2 million shares. The repurchase of
these shares is being completed through two steps--a $200 million repurchase
that closed on April 12, 2005, and a $400 million forward purchase (plus
interest) that will settle later this year. St. Paul Travelers also entered into
an agreement with two other parties to sell approximately 12 million common
shares of Nuveen for settlement later this year. Upon the closing of the
secondary offering and the initial repurchase by Nuveen as well as the closing
for the forward sale transactions later this year, Nuveen will emerge as a fully
independent public company.
Each Original Investment Management Agreement, as required by Section 15 of the
Investment Company Act of 1940, as amended (the "1940 Act"), provides for its
automatic termination in the event of its "assignment" (as defined in the 1940
Act). Any change in control of the Adviser is deemed to be an assignment. The
consummation of the Sale may be deemed a change in control of the Adviser and
therefore cause the automatic termination of each Original Investment Management
Agreement, as required by the 1940 Act.
In anticipation of the Sale, each Board met in person at a joint meeting of each
Fund's Board on May 10-12, 2005 for purposes of, among other things, considering
whether it would be in the best interests of each Fund and its shareholders to
approve a new investment management agreement between the Fund and NAM (each, a
"New Investment Management Agreement" and collectively, the "New Investment
Management Agreements").
The 1940 Act requires that each New Investment Management Agreement be approved
by the Fund's shareholders in order for it to become effective. At the Board
meeting, and for the reasons discussed below (see "Board Considerations" below),
each Board, including a majority of the Board Members who are not parties to the
Original Investment Management Agreements or New Investment Management
Agreements or who are not "interested persons" of the Funds or the Adviser as
defined in the 1940 Act (the "Independent Board Members"), unanimously approved
the New Investment Management Agreement and unanimously recommended its approval
by shareholders in order to assure continuity of investment advisory services to
the Fund after the Sale. In the event shareholders of a Fund do not approve the
New Investment Management Agreement, the Board will take such action as it deems
to be in the best interests of the Fund and its shareholders. The form of the
New Investment Management Agreement is attached hereto as Appendix B.
COMPARISON OF ORIGINAL INVESTMENT MANAGEMENT AGREEMENT AND NEW INVESTMENT
MANAGEMENT AGREEMENT
The terms of each New Investment Management Agreement, including fees payable to
the Adviser by the Fund thereunder, are substantially identical to those of the
Original Investment Management Agreement, except for the date of effectiveness.
There is no change in the fee rate payable by each Fund to the Adviser. If
approved by shareholders of a Fund, the New Investment Management Agreement for
the Fund will expire on August 1, 2006, unless continued. Each New Investment
Management Agreement will continue in effect from year to year thereafter if
such continuance is approved for the Fund at least annually in the manner
required by the 1940 Act and the rules and regulations thereunder. Below is a
7
comparison of certain terms of the Original Investment Management Agreement to
the terms of the New Investment Management Agreement.
INVESTMENT MANAGEMENT SERVICES. The investment management services to be
provided by the Adviser to each Fund under the New Investment Management
Agreements will be identical to those services currently provided by the Adviser
to each Fund under the Original Investment Management Agreements. Both the
Original Investment Management Agreements and New Investment Management
Agreements provide that the Adviser shall manage the investment and reinvestment
of the Fund's assets in accordance with the Fund's investment objective and
policies and limitations and administer the Fund's affairs to the extent
requested by and subject to the supervision of the Fund's Board. In addition,
the investment management services will be provided by the same Adviser
personnel under the New Investment Management Agreements as under the Original
Investment Management Agreements. The Adviser does not anticipate that the Sale
will have any adverse effect on the performance of its obligations under the New
Investment Management Agreements.
FEES. Under each Original Investment Management Agreement and New Investment
Management Agreement, the Fund pays to the Adviser an investment management fee
that consists of two components--a fund-level component, based only on the
amount of assets within each individual Fund, and a complex-level component,
based on the aggregate managed assets (which includes assets attributable to all
types of leverage used in leveraged funds) of all Nuveen-branded closed-end and
open-end registered investment companies organized in the United States. The
investment management fee paid by each Fund equals the sum of the fund-level
component and complex-level component.
The fee schedules for the fund-level component and complex-level component to be
paid to the Adviser under the New Investment Management Agreements are identical
to the fund-level component and complex-level component paid to the Adviser
under the Original Investment Management Agreements. The annual fund-level
component for each Fund under the Original Investment Management Agreements and
the New Investment Management Agreements, the fees paid by each Fund to the
Adviser during each Fund's last fiscal year and the Fund's net assets as of May
1, 2005 are set forth in Appendix C to this Proxy Statement. The fee schedule
for the complex-level component is the same for each Fund under both the
Original Investment Management Agreements and New Investment Management
Agreements and is also set forth in Appendix C.
PAYMENT OF EXPENSES. Under each Original Investment Management Agreement and
each New Investment Management Agreement, the Adviser shall furnish office
facilities and equipment and clerical, bookkeeping and administrative services
(other than such services, if any, provided by the Fund's transfer agent) for
the Fund.
LIMITATION ON LIABILITY. The Original Investment Management Agreements and New
Investment Management Agreements provide that the Adviser will not be liable for
any loss sustained by reason of the purchase, sale or retention of any security,
whether or not such purchase, sale or retention shall have been based upon the
investigation and research made by any other individual, firm or corporation, if
such recommendation shall have been selected with due care and in good faith,
except loss resulting from willful misfeasance, bad faith or gross negligence on
the part of the Adviser in the performance of its obligations and duties, or by
reason of its reckless disregard of its obligations and duties under the
Agreement.
8
CONTINUANCE. The Original Investment Management Agreement of each Fund
originally was in effect for an initial term and could be continued thereafter
for successive one-year periods if such continuance was specifically approved at
least annually in the manner required by the 1940 Act. If the shareholders of a
Fund approve the New Investment Management Agreement for that Fund, the New
Investment Management Agreement will expire on August 1, 2006, unless continued.
The New Investment Management Agreement may be continued for successive one-year
periods if approved at least annually in the manner required by the 1940 Act.
TERMINATION. The Original Investment Management Agreement and New Investment
Management Agreement for each Fund provide that the Agreement may be terminated
at any time without the payment of any penalty by the Fund or Adviser on sixty
(60) days' written notice to the other party. A Fund may effect termination by
action of the Board or by vote of a majority of the outstanding voting
securities of the Fund, accompanied by appropriate notice.
BOARD CONSIDERATIONS
At a meeting held on May 10-12, 2005, the Board of each Fund, including the
Independent Board Members, unanimously approved the New Investment Management
Agreement between each Fund and NAM.
To assist the Board in its evaluation of an advisory contract with NAM, the
Independent Board Members received a report in adequate time in advance of their
meeting which outlined, among other things, the services provided by NAM; the
organization of NAM, including the responsibilities of various departments and
key personnel; the Fund's past performance as well as the Fund's performance
compared to funds of similar investment objectives compiled by an independent
third party (a "Peer Group"); the profitability of NAM and certain industry
profitability analyses for advisers to unaffiliated investment companies; the
expenses of NAM in providing the various services; the advisory fees of NAM,
including comparisons of such fees with the management fees of comparable funds
in its Peer Group as well as comparisons of NAM's management fees with the fees
NAM assesses to other types of investment products or accounts, if any; the soft
dollar practices of NAM; and the expenses of each Fund, including comparisons of
the Fund's expense ratios (after any fee waivers) with the expense ratios of its
Peer Group. This information supplements that received by the Board throughout
the year regarding Fund performance, expense ratios, portfolio composition,
trade execution and sales activity.
In addition to the foregoing materials, independent legal counsel to the
Independent Board Members provided, in advance of the meeting, a legal
memorandum outlining, among other things, the duties of the Board Members under
the 1940 Act as well as the general principles of relevant state law in
reviewing and approving advisory contracts; the requirements of the 1940 Act in
such matters; an adviser's fiduciary duty with respect to advisory agreements
and compensation; the standards used by courts in determining whether investment
company boards of directors have fulfilled their duties and factors to be
considered by the board in voting on advisory agreements.
At the Board meeting, NAM made a presentation to and responded to questions from
the Board. After the presentations and after reviewing the written materials,
the Independent Board Members met privately with their legal counsel to review
the Board's duties in
9
reviewing advisory contracts and consider the renewal of the advisory contract.
It is with this background that the Board Members considered each New Investment
Management Agreement with NAM. The Independent Board Members, in consultation
with independent counsel, reviewed the factors set out in judicial decisions and
Securities and Exchange Commission directives relating to the renewal of
advisory contracts. As outlined in more detail below, the Board Members
considered all factors they believed relevant with respect to each Fund,
including the following: (a) the nature, extent and quality of the services to
be provided by NAM; (b) the investment performance of the Fund and NAM; (c) the
costs of the services to be provided and profits to be realized by NAM and its
affiliates from the relationship with the Fund; (d) the extent to which
economies of scale would be realized as the Fund grows; and (e) whether fee
levels reflect these economies of scale for the benefit of Fund investors.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In evaluating the nature, extent and quality of NAM's services, the Board
Members reviewed information concerning the types of services that NAM or its
affiliates provide and are expected to provide to the Nuveen Funds; narrative
and statistical information concerning the Fund's performance record and how
such performance compares to the Fund's Peer Group; information describing NAM's
organization and its various departments, the experience and responsibilities of
key personnel, and available resources. In the discussion of key personnel, the
Board Members received materials regarding the changes or additions in personnel
of NAM. The Board Members further noted the willingness of the personnel of NAM
to engage in open, candid discussions with the Board. The Board Members further
considered the quality of NAM's investment process in making portfolio
management decisions, including any refinements or improvements to the portfolio
management processes, enhancements to technology and systems that are available
to portfolio managers, and any additions of new personnel which may strengthen
or expand the research and investment capabilities of NAM. In their review of
the advisory contracts for the fixed income funds, the Board Members also noted
that Nuveen won the Lipper Award for Best Fund Family: Fixed Income-Large Asset
Class for 2004. Given the Board Members' experience with the Funds, other Nuveen
funds and NAM, the Board Members noted that they were familiar with and continue
to have a good understanding of the organization, operations and personnel of
NAM.
In addition to advisory services, the Independent Board Members considered the
quality of the administrative or non-advisory services provided. In this regard,
NAM provides the Fund with such administrative and other services (exclusive of,
and in addition to, any such services provided by others for the Funds) and
officers and other personnel as are necessary for the operations of the
respective Fund. In addition to investment management services, NAM and its
affiliates provide each Fund with a wide range of services, including: preparing
shareholder reports; providing daily accounting; providing quarterly financial
statements; overseeing and coordinating the activities of other service
providers; administering and organizing Board meetings and preparing the Board
materials for such meetings; providing legal support (such as helping to prepare
registration statements, amendments thereto and proxy statements and responding
to regulatory inquiries); and performing other Fund administrative tasks
necessary for the operation of the respective Fund (such as tax reporting and
fulfilling regulatory filing requirements). In addition, in evaluating the
administrative services, the Board Members considered, in particular, NAM's
policies and procedures for assuring compliance with applicable laws and
regulations in light of the new Securities and
10
Exchange Commission regulations governing compliance. The Board Members noted
NAM's focus on compliance and its compliance systems. In their review, the Board
Members considered, among other things, the additions of experienced personnel
to NAM's compliance group and modifications and other enhancements to NAM's
computer systems. In addition to the foregoing, the Board Members also noted
that NAM outsources certain services that cannot be replicated without
significant costs or at the same level of expertise. Such outsourcing has been a
beneficial and efficient use of resources by keeping expenses low while
obtaining quality services.
In addition to the above, while the Board Members reviewed the variety of
additional services that NAM or its affiliates must provide to closed-end funds,
such as the Funds, the Independent Board Members determined that Nuveen's
commitment to supporting the secondary market for the common shares of its
closed-end funds is particularly noteworthy. In this regard, the Board Members
noted Nuveen's efforts to sponsor numerous forums for analysts and specialists
regarding the various Nuveen closed-end funds, its creation of a new senior
position dedicated to providing secondary market support services and enhancing
communications with investors and analysts, and its advertising and media
relations efforts designed to raise investor and analyst awareness of the
closed-end funds.
With respect to services provided to municipal funds, including the Funds, the
Board Members also noted, among other things, the enhancements NAM implemented
to its municipal portfolio management processes (e.g., the increased use of
benchmarks to guide and assess the performance of its portfolio managers); the
implementation of a risk management program; and the various initiatives being
undertaken to enhance or modify NAM's computer systems as necessary to support
the innovations of the municipal investment team (such as, the ability to assess
certain historical data in order to create customized benchmarks, perform
attribution analysis and facilitate the use of derivatives as hedging
instruments). With respect to certain of the Funds with a less seasoned
portfolio, the Board Members also noted the hedging program implemented for such
Funds and the team responsible for developing, implementing and monitoring the
hedging procedures. The hedging program was designed to help maintain the
applicable Fund's duration with certain benchmarks.
Based on their review, the Board Members concluded that, overall, they were
satisfied with the nature, extent and quality of services provided (and expected
to be provided) to the Funds under the Investment Management Agreements.
B. THE INVESTMENT PERFORMANCE OF THE FUND AND ADVISER
As previously noted, the Board received a myriad of performance information
regarding each Fund and its Peer Group. Among other things, the Board received
materials reflecting a Fund's historic performance and the Fund's performance
compared to its Peer Group. In evaluating the performance information, in
certain limited instances, the Board Members noted that the closest Peer Group
for a Fund still would not adequately reflect such Fund's investment objectives
and strategies, thereby limiting the usefulness of the comparisons of such
Fund's performance with that of the Peer Group.
As noted above, the performance data included, among other things, the Fund's
performance relative to its peers. More specifically, a Fund's one-, three- and
five-year total returns (as applicable) for the periods ending December 31, 2004
were evaluated relative to the
11
unaffiliated funds in its respective Peer Group (including the returns of
individual peers as well as the Peer Group average) as well as additional
performance information with respect to all funds in the Peer Group. Based on
their review, the Board Members determined that the respective Fund's absolute
and relative investment performance over time had been satisfactory.
C. FEES, EXPENSES AND PROFITABILITY
FEES AND EXPENSES. In evaluating the management fees and expenses that a Fund is
expected to bear, the Board Members considered the Fund's current management fee
structure and the Fund's expected expense ratios in absolute terms as well as
compared with the fees and expense ratios of the unaffiliated funds in its Peer
Group. The Board Members reviewed the financial information of NAM, including
its respective revenues, expenses and profitability. In reviewing fees, the
Board Members, among other things, reviewed comparisons of the Fund's gross
management fees (fees after fund-level and complex-wide level breakpoints but
before reimbursement and fee waivers), net management fees (after breakpoints
and reimbursements and fee waivers) and total expense ratios (before and after
waivers) with those of the unaffiliated funds in the Peer Group and peer
averages. In this regard, the Board Members noted that the relative ranking of
the Nuveen Funds on fees and expenses was aided by the significant level of fee
reductions provided by the fund-level and complex-wide breakpoint schedules, and
the fee waivers and reimbursements provided by Nuveen for certain Funds launched
since 1999. The complex-wide breakpoint schedule was instituted in 2004 and is
described in further detail below in Section D entitled "Economies of Scale and
Whether Fee Levels reflect these Economics of Scale." In their review of the fee
and expense information provided, including, in particular, the expense ratios
of the unaffiliated funds in its respective Peer Group, the Board Members
determined that each Fund's net total expense ratio was within an acceptable
range compared to such peers.
COMPARISONS WITH THE FEES OF OTHER CLIENTS. The Board Members further compared
the fees of NAM to the fees NAM assessed for other types of clients investing in
municipal funds (such as municipal managed accounts). With respect to such
separately managed accounts, the advisory fees for such accounts are generally
lower than those charged to the comparable Funds. The Board Members noted,
however, the additional services that are provided and the costs incurred by
Nuveen in managing and operating registered investment companies, such as the
Funds, compared to individually managed separate accounts. For instance, as
described above, NAM and its affiliates provide numerous services to the Funds
including, but not limited to, preparing shareholder reports; providing daily
accounting; preparing quarterly financial statements; overseeing and
coordinating the activities of other service providers; administering and
organizing Board meetings and preparing the Board materials for such meetings;
providing legal support; and administering all other aspects of the Fund's
operations. Further, the Board Members noted the increased compliance
requirements for funds in light of new Securities and Exchange Commission
regulations and other legislation. These services are generally not required to
the same extent, if at all, for separate accounts. In addition to the
differences in services, the Board Members also considered, among other things,
the differences in product distribution, investment policies, investor profiles
and account sizes. Accordingly, the Board Members believe that the nature and
number of services provided to operate a Fund merit the higher fees than those
to separate managed accounts.
12
PROFITABILITY OF NAM. In conjunction with its review of fees, the Board Members
also considered NAM's profitability. The Board Members reviewed NAM's revenues,
expenses and profitability margins (on both a pre-tax and after-tax basis). In
reviewing profitability, the Board Members recognized that one of the most
difficult issues in determining profitability is establishing a method of
allocating expenses. Accordingly, the Board Members reviewed NAM's assumptions
and methodology of allocating expenses. In this regard, the methods of
allocation used appeared reasonable but the Board noted the inherent limitations
in allocating costs among various advisory products. The Board Members also
recognized that individual fund or product line profitability of other advisers
is generally not publicly available.
Further, profitability may be affected by numerous factors including the types
of funds managed, expense allocations, business mix, etc. and therefore
comparability of profitability is somewhat limited. Nevertheless, to the extent
available, the Board Members considered NAM's profit margin compared to the
profitability of various publicly-traded investment management companies and/or
investment management companies that publicly disclose some or all of their
financial results compiled by three independent third-party service providers.
The Board Members also reviewed the revenues, expenses and profit margins of
various unaffiliated advisory firms with similar amounts of assets under
management for the last year prepared by NAM. Based on their review, the Board
Members were satisfied that NAM's level of profitability from its relationship
with each Fund was reasonable in light of the services provided.
In evaluating the reasonableness of the compensation, the Board Members also
considered any other revenues paid to NAM as well as any indirect benefits (such
as soft dollar arrangements, if any) NAM and its affiliates are expected to
receive that are directly attributable to their management of the Funds, if any.
See Section E below for additional information. Based on their review of the
overall fee arrangements of the applicable Fund, the Board Members determined
that the advisory fees and expenses of the respective Fund were reasonable.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF
SCALE
In reviewing the compensation, the Board Members have long understood the
benefits of economies of scale as the assets of a fund grows and have sought to
ensure that shareholders share in these benefits. One method for shareholders to
share in economies of scale is to include breakpoints in the advisory fee
schedules that reduce fees as fund assets grow. Accordingly, the Board Members
received and reviewed the schedules of advisory fees for each Fund, including
fund-level breakpoints thereto. In addition, after lengthy negotiations with
management, the Board in May, 2004 approved a complex-wide fee arrangement
pursuant to which fees of the funds in the Nuveen complex, including the Funds,
are reduced as the assets in the fund complex reach certain levels. The
complex-wide fee arrangement was introduced on August 1, 2004 and the Board
Members reviewed data regarding the reductions of fees for the Funds for the
period of August 1, 2004 to December 31, 2004. In evaluating the complex-wide
fee arrangement, the Board Members considered, among other things, the historic
and expected fee savings to shareholders as assets grow, the amount of fee
reductions at various asset levels, and that the arrangement would extend to all
funds in the Nuveen complex. The Board Members also considered the impact, if
any, the complex-wide fee arrangement may have on the level of services
provided. Based on their review, the Board Members concluded
13
that the breakpoint schedule and complex-wide fee arrangement currently were
acceptable and desirable in providing benefits from economies of scale to
shareholders.
E. INDIRECT BENEFITS
In evaluating fees, the Board Members also considered any indirect benefits or
profits NAM or its affiliates may receive as a result of its relationship with
each Fund. In this regard, the Board Members considered any benefits from soft
dollar arrangements. The Board Members noted that although NAM manages a large
amount of assets, it has very little, if any, brokerage to allocate. This is due
to the fact that NAM typically manages the portfolios of the municipal funds in
the Nuveen complex and municipal bonds generally trade on a principal basis.
Accordingly, NAM does not currently have any soft dollar arrangements and does
not pay excess brokerage commissions (or spreads on principal transactions) in
order to receive research services. In addition to soft dollar arrangements, the
Board Members also considered any other revenues, if any, received by NAM or its
affiliates. In this regard, the Board Members considered revenues received by
Nuveen for serving as agent for broker-dealers at its preferred trading desk and
for acting as co-manager in the initial public offering of new closed-end
exchange-traded funds.
F. OTHER CONSIDERATIONS
Nuveen, until recently, was a majority-owned subsidiary of St. Paul Travelers.
As noted, St. Paul Travelers earlier this year announced its intention to divest
its equity stake in Nuveen. Nuveen is the parent of NAM. Pursuant to a series of
transactions, St. Paul Travelers has begun to reduce its interest in Nuveen
which will ultimately result in a change of control of Nuveen and therefore NAM.
As mandated by the 1940 Act, such a change in control would result in an
assignment of the original Investment Management Agreement with NAM and the
automatic termination of such agreement. Accordingly, the Board also considered
the approval of a New Investment Management Agreement with each Fund in light
of, and which would take effect upon, the anticipated change of control. More
specifically, the Board considered for each Fund a New Investment Management
Agreement on substantially identical terms to the existing Investment Management
Agreement, to take effect after the change of control has occurred and the
contract has been approved by Fund shareholders. In its review, the Board
considered whether the various transactions necessary to divest St. Paul
Travelers' interest will have an impact on the various factors they considered
in approving NAM, such as the scope and quality of services to be provided
following the change of control. In reviewing the St. Paul Travelers
transactions, the Board considered, among other things, the impact, if any, on
the operations and organizational structure of NAM; the possible benefits and
costs of the transactions to the respective Fund; the potential implications of
any arrangements used by Nuveen to finance certain of the transactions; the
ability of NAM to perform its duties after the transactions; whether a fee
structure or expense ratio would change; any changes to the current practices of
the Fund; any changes to the terms of the advisory agreement; and any
anticipated changes to the operations of NAM. Based on its review, the Board
determined that St. Paul Travelers' divestiture would not affect the nature and
quality of services provided by NAM, the terms of the Investment Management
Agreement, including the fees thereunder, and would not materially affect the
organization or operations of NAM. Accordingly, the Board determined
14
that their analysis of the various factors regarding their approval of NAM would
continue to apply after the change of control.
G. APPROVAL
The Board Members did not identify any single factor discussed previously as
all-important or controlling. The Board Members, including a majority of
Independent Board Members, concluded that the terms of the Investment Management
Agreements were fair and reasonable, that the respective NAM's fees are
reasonable in light of the services provided to each Fund, that the renewal of
the NAM Investment Management Agreements should be approved and that the new,
post-change of control NAM Investment Management Agreements be approved and
recommended to shareholders.
INFORMATION ABOUT THE ADVISER
NAM, a registered investment adviser, is a wholly-owned subsidiary of Nuveen.
Founded in 1898, Nuveen and its affiliates had approximately $119 billion in
assets under management as of March 31, 2005. Nuveen is a publicly traded
company and is listed on the New York Stock Exchange and trades under the symbol
"JNC."
The principal occupation of the officers and directors of NAM who serve as
officers or Board Members of the Funds appears below under the headings "Board
Nominees/Board Members" and "The Officers." Such information for the remaining
officers and directors of NAM is shown in Appendix D. The business address of
NAM, Nuveen and each principal executive officer and director of NAM is 333 West
Wacker Drive, Chicago, Illinois 60606.
Board Member Schwertfeger sold 270,950 shares of Class A Stock of Nuveen on the
New York Stock Exchange since November 1, 2003. Mr. Schwertfeger received
$7,805,751 in exchange for his shares of Nuveen sold.
SHAREHOLDER APPROVAL
To become effective with respect to a particular Fund, the New Investment
Management Agreement must be approved by a vote of a majority of the outstanding
voting securities of the Fund, with the Common and Preferred shareholders voting
together as a single class. The "vote of a majority of the outstanding voting
securities" is defined in the 1940 Act as the lesser of the vote of (i) 67% or
more of the shares of the Fund entitled to vote thereon present at the meeting
if the holders of more than 50% of such outstanding shares are present in person
or represented by proxy; or (ii) more than 50% of such outstanding shares of the
Fund entitled to vote thereon. Each New Investment Management Agreement was
approved by the Board of the respective Fund after consideration of all factors
which it determined to be relevant to its deliberations, including those
discussed above. The Board of each Fund also determined to submit the Fund's New
Investment Management Agreement for consideration by the shareholders of the
Fund.
THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE
FOR APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT.
15
2. ELECTION OF BOARD MEMBERS
At each Fund's Meeting, Board Members are to be elected to serve until the next
annual meeting or until their successors shall have been duly elected and
qualified. Under the terms of each Fund's organizational documents (except
Municipal Value, Municipal Income, Select Portfolio, Select Portfolio 2, Select
Portfolio 3, California Portfolio, Select Maturities and New York Portfolio),
under normal circumstances, holders of Preferred Shares are entitled to elect
two (2) Board Members, and the remaining Board Members are to be elected by
holders of Common Shares and Preferred Shares, voting together as a single
class. Pursuant to the organizational documents of Municipal Value and Municipal
Income, the Board is divided into three classes, with each class being elected
to serve a term of three years. For Municipal Value and Municipal Income, three
(3) Board Members are nominated to be elected at this meeting to serve for
multiple year terms. Pursuant to the organizational documents of Select
Maturities, Select Portfolio, Select Portfolio 2, Select Portfolio 3, California
Portfolio and New York Portfolio, all Board Members are to be elected by holders
of Common Shares.
A. FOR EACH FUND EXCEPT MUNICIPAL VALUE, MUNICIPAL INCOME, SELECT MATURITIES,
SELECT PORTFOLIO, SELECT PORTFOLIO 2, SELECT PORTFOLIO 3, CALIFORNIA PORTFOLIO
AND NEW YORK PORTFOLIO:
(i) seven (7) Board Members are to be elected by holders of Common Shares
and Preferred Shares, voting together as a single class. Board Members
Bremner, Brown, Evans, Hunter, Kundert, Stockdale and Sunshine are
nominees for election by all shareholders.
(ii) holders of Preferred Shares, each series voting together as a single
class, are entitled to elect two (2) of the Board Members. Board
Members Schneider and Schwertfeger are nominees for election by
holders of Preferred Shares.
B. FOR MUNICIPAL VALUE AND MUNICIPAL INCOME: The Board of Municipal Value and
Municipal Income has designated Board Members Hunter, Kundert and Sunshine as
Class II and Class I Board Members, respectively, and as nominees for Board
Members for a term expiring at the annual meeting of shareholders in 2008, and
until their successors have been duly elected and qualified. The remaining Board
Members Bremner, Brown, Evans, Schneider, Schwertfeger and Stockdale are current
and continuing Board Members. The Boards of Municipal Value and Municipal Income
have designated Board Members Bremner, Evans, Schneider and Stockdale as
continuing Class III and II Board Members, respectively, for terms that expire
in 2006 and Board Members Brown and Schwertfeger as continuing Class I and Class
III Board Members, respectively, for terms that expire in 2007.
C. FOR SELECT MATURITIES, SELECT PORTFOLIO, SELECT PORTFOLIO 2, SELECT PORTFOLIO
3, CALIFORNIA PORTFOLIO AND NEW YORK PORTFOLIO: Board Members Bremner, Brown,
Evans, Hunter, Kundert, Schneider, Schwertfeger, Stockdale and Sunshine are
nominees for election by all shareholders.
For each Minnesota Corporation, the affirmative vote of a majority of the shares
present and entitled to vote at the Meeting will be required to elect the Board
Members of that Minnesota Corporation. For each Massachusetts Business Trust,
the affirmative vote of a plurality of the shares present and entitled to vote
at the Meeting will be required to elect the Board Members of that Massachusetts
Business Trust.
16
It is the intention of the persons named in the enclosed proxy to vote the
shares represented thereby for the election of the nominees listed below unless
the proxy is marked otherwise. Each of the nominees has agreed to serve as a
Board Member of each Fund if elected. However, should any nominee become unable
or unwilling to accept nomination for election, the proxies will be voted for
substitute nominees, if any, designated by that Fund's present Board.
All of the Board Member nominees, except Board Members Kundert and Sunshine,
were last elected to each Fund's Board at the 2004 annual meeting of
shareholders held on August 3, 2004. In November 2004, Messrs. Kundert and
Sunshine were appointed to the each Fund's Board effective February 23, 2005.
Messrs. Kundert and Sunshine are presented in this Joint Proxy Statement as
nominees for election by shareholders and were nominated by the nominating and
governance committee of each Fund's Board.
Other than Mr. Schwertfeger, none of the Board Member nominees has ever been a
director or an employee of Nuveen, the parent company of NAM, or any affiliate.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE
NOMINEES NAMED BELOW.
BOARD NOMINEES/BOARD MEMBERS
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN OTHER
FUND COMPLEX DIRECTORSHIPS
POSITION(S) TERM OF OFFICE OVERSEEN BY HELD BY
NAME, ADDRESS HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) BOARD BOARD
AND BIRTH DATE FUND TIME SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
- ------------------------------------------------------------------------------------------------------------
Nominees who are not
interested persons of
the Fund
Robert P. Bremner Board Term: Annual Private Investor and 155 N/A
c/o Nuveen Member Length of Management Consultant.
Investments, Inc. Service: Since
333 West Wacker Drive 1996
Chicago, IL 60606
(8/22/40)
Lawrence H. Brown Board Term: Annual Retired (1989) as Senior 155 See Principal
c/o Nuveen Member Length of Vice President of The Occupation
Investments, Inc. Service: Since Northern Trust Company; Description
333 West Wacker Drive 1993 Director, Community
Chicago, IL 60606 Advisory Board for
(7/29/34) Highland Park and
Highwood, United Way of
the North Shore (since
2002).
</Table>
17
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN OTHER
FUND COMPLEX DIRECTORSHIPS
POSITION(S) TERM OF OFFICE OVERSEEN BY HELD BY
NAME, ADDRESS HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) BOARD BOARD
AND BIRTH DATE FUND TIME SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
- ------------------------------------------------------------------------------------------------------------
Jack B. Evans Board Term: Annual President, The 155 See Principal
c/o Nuveen Member Length of Hall-Perrine Foundation, Occupation
Investments, Inc. Service: Since a private philanthropic Description
333 West Wacker Drive 1999 corporation (since 1996);
Chicago, IL 60606 Director and Vice
(10/22/48) Chairman, United Fire
Group, a publicly held
company; Adjunct Faculty
Member, University of
Iowa; Director, Gazette
Companies; Life Trustee
of Coe College; Director,
Iowa College Foundation;
formerly, Director,
Alliant Energy; formerly,
Director, Federal Reserve
Bank of Chicago;
previously, President and
Chief Operating Officer,
SCI Financial Group,
Inc., a regional
financial services firm.
William C. Hunter Board Term: Annual Dean and Distinguished 155 See Principal
c/o Nuveen Member Length of Professor of Finance, Occupation
Investments, Inc. Service: Since School of Business at the Description
333 West Wacker Drive 2004 University of
Chicago, IL 60606 Connecticut; previously,
(3/6/48) Senior Vice President and
Director of Research at
the Federal Reserve Bank
of Chicago
(1995 -- 2003); Director,
Credit Research Center at
Georgetown University;
Director (since 2004) of
Xerox Corporation, a
publicly held company.
David J. Kundert Board Term: Annual Retired (2004) as 153 See Principal
c/o Nuveen Member Length of Chairman, JPMorgan Occupation
Investments, Inc. Service: Since Fleming Asset Management, Description
333 West Wacker Drive 2005 President and CEO, Banc
Chicago, IL 60606 One Investment Advisors
(10/28/42) Corporation, and
President, One Group
Mutual Funds; prior
thereto, Executive Vice
President, Bank One
Corporation and Chairman
and CEO, Banc One
Investment Management
Group; Board of Regents,
Luther College; currently
a member of the American
and Wisconsin Bar
Associations.
</Table>
18
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN OTHER
FUND COMPLEX DIRECTORSHIPS
POSITION(S) TERM OF OFFICE OVERSEEN BY HELD BY
NAME, ADDRESS HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) BOARD BOARD
AND BIRTH DATE FUND TIME SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
- ------------------------------------------------------------------------------------------------------------
William J. Schneider Board Term: Annual Chairman, formerly, 155 See Principal
c/o Nuveen Member Length of Senior Partner and Chief Occupation
Investments, Inc. Service: Since Operating Officer Description
333 West Wacker Drive 1996 (retired December 2004),
Chicago, IL 60606 Miller-Valentine Partners
(9/24/44) Ltd., a real estate
investment company;
formerly, Vice President,
Miller-Valentine Realty,
a construction company;
Director, Chair of the
Finance Committee and
Member of the Audit
Committee of Premier
Health Partners, the
not-for-profit parent
company of Miami Valley
Hospital; President of
the Dayton Philharmonic
Orchestra Association,
Board Member, Regional
Leaders Forum which
promotes cooperation on
economic development
issues; Director and
Immediate Past Chair,
Dayton Development
Coalition; formerly,
Member, Community
Advisory Board, National
City Bank, Dayton, Ohio;
and Business Advisory
Council, Cleveland
Federal Reserve Bank.
Judith M. Stockdale Board Term: Annual Executive Director, 155 N/A
c/o Nuveen Member Length of Gaylord and Dorothy
Investments, Inc. Service: Since Donnelley Foundation
333 West Wacker Drive 1997 (since 1994); prior
Chicago, IL 60606 thereto, Executive
(12/29/47) Director, Great Lakes
Protection Fund (from
1990 to 1994).
</Table>
19
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN OTHER
FUND COMPLEX DIRECTORSHIPS
POSITION(S) TERM OF OFFICE OVERSEEN BY HELD BY
NAME, ADDRESS HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) BOARD BOARD
AND BIRTH DATE FUND TIME SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
- ------------------------------------------------------------------------------------------------------------
Eugene S. Sunshine Board Term: Annual Senior Vice President for 155 See Principal
c/o Nuveen Member Length of Business and Finance Occupation
Investments, Inc. Service: Since (since 1997), Description
333 West Wacker Drive 2005 Northwestern University;
Chicago, IL 60606 Director (since 2003),
(1/22/50) Chicago Board of Options
Exchange; Director (since
2003), National Mentor
Holdings, a privately-
held, national provider
of home and
community-based services;
Chairman (since 1997),
Board of Directors,
Rubicon, an insurance
company owned by
Northwestern University;
Director (since 1997),
Evanston Chamber of
Commerce and Evanston
Inventure, a business
development organization.
</Table>
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN OTHER
FUND COMPLEX DIRECTORSHIPS
POSITION(S) TERM OF OFFICE OVERSEEN BY HELD BY
NAME, ADDRESS HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) BOARD BOARD
AND BIRTH DATE FUND TIME SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
- ------------------------------------------------------------------------------------------------------------
Nominee who is an
interested person of
the Fund
Timothy R. Chairman of Term: Annual Chairman and Director 155 See Principal
Schwertfeger(2) the Board Length of (since 1996) of Nuveen Occupation
333 West Wacker Drive and Board Service: Since Investments, Inc. and Description
Chicago, IL 60606 Member 1996 Nuveen Investments, LLC;
(3/28/49) Chairman and Director
(since 1997) of Nuveen
Asset Management;
Director (since 1996) of
Institutional Capital
Corporation; Chairman and
Director (since 1999) of
Rittenhouse Asset
Management, Inc.;
Chairman of Nuveen
Investments Advisers,
Inc. (since 2002);
Director (from 1992 to
2004) and Chairman (from
1996 to 2004) of Nuveen
Advisory Corp. and Nuveen
Institutional Advisory
Corp.(3)
</Table>
- --------------------------------------------------------------------------------
(1) Length of Service indicates the year in which the individual became a Board
Member of a fund in the Nuveen fund complex.
(2) "Interested person" as defined in the 1940 Act, by reason of being an
officer and director of each Fund's adviser.
(3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were merged
into Nuveen Asset Management, effective January 1, 2005.
20
BENEFICIAL OWNERSHIP
The following tables list the dollar range of equity securities beneficially
owned by each Board Member nominee in each Fund and in all Nuveen funds overseen
by the Board Member nominee as of December 31, 2004. (Messrs. Kundert and
Sunshine were not yet Board Members as of that date).
<Table>
<Caption>
DOLLAR RANGE OF EQUITY SECURITIES
- ----------------------------------------------------------------------------------------------------------------------
MUNICIPAL
MUNICIPAL MUNICIPAL PREMIUM PERFORMANCE MUNICIPAL MARKET INVESTMENT
BOARD MEMBER NOMINEES VALUE INCOME INCOME PLUS ADVANTAGE OPPORTUNITY QUALITY
- ----------------------------------------------------------------------------------------------------------------------
Robert P. Bremner............. $0 $0 $0 $0 $0 $0 $0
Lawrence H. Brown............. 0-10,000 0 10,001- 0 0 0 0
50,000
Jack B. Evans................. 0 0 0 0 0 0 0
William C. Hunter............. 0 0 0 0 0 0 0
David J. Kundert.............. 0 0 0 0 0 0 0
William J. Schneider.......... 0 0 0 0 0 0 0
Timothy R. Schwertfeger....... over 0 over over over over 0
100,000 100,000 100,000 100,000 100,000
Judith M. Stockdale........... 0 0 0 0 0 10,001- 0
50,000
Eugene S. Sunshine............ 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
DOLLAR RANGE OF EQUITY SECURITIES
- -------------------------------------------------------------------------------------------------------------------
INSURED
INSURED SELECT QUALITY MUNICIPAL PREMIER PREMIER PREMIUM
BOARD MEMBER NOMINEES QUALITY QUALITY INCOME OPPORTUNITY MUNICIPAL INSURED INCOME 2
- -------------------------------------------------------------------------------------------------------------------
Robert P. Bremner............. $0 $0 $0 $0 $0 $0 $0
Lawrence H. Brown............. 0 0 10,001- 10,001- 0 0 0
50,000 50,000
Jack B. Evans................. 0 0 0 0 0 0 0
William C. Hunter............. 0 0 0 0 0 0 0
David J. Kundert.............. 0 0 0 0 0 0 0
William J. Schneider.......... 0 0 0 0 0 0 0
Timothy R. Schwertfeger....... 0 50,001- over over 0 0 over
100,000 100,000 100,000 100,000
Judith M. Stockdale........... 0 0 0 0 10,001- 0 10,001-
50,000 50,000
Eugene S. Sunshine............ 0 0 0 0 0 0 0
- -------------------------------------------------------------------------------------------------------------------
</Table>
21
<Table>
<Caption>
DOLLAR RANGE OF EQUITY SECURITIES
- ---------------------------------------------------------------------------------------------------------------------------------
INSURED INSURED INSURED MUNICIPAL
BOARD MEMBER PREMIUM PREMIUM DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE HIGH
NOMINEES INCOME 4 INCOME 2 ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE INCOME
- ---------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner............. $0 $0 $0 $0 $0 $0 $0 $0
Lawrence H. Brown............. 0 0 10,001- 0 0 0 0 0
50,000
Jack B. Evans................. 0 0 0 0 0 0 0 0
William C. Hunter............. 0 0 0 0 0 0 0 0
David J. Kundert.............. 0 0 0 0 0 0 0 0
William J. Schneider.......... over 0 0 0 0 0 0 10,001-
$100,000 50,000
Timothy R. Schwertfeger....... 0 0 0 over 0 0 0 0
100,000
Judith M. Stockdale........... 0 $0 10,001- 0 0 0 0 0
50,000
Eugene S. Sunshine............ 0 0 0 0- 0 0 0 0
10,000
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
DOLLAR RANGE OF EQUITY SECURITIES
- --------------------------------------------------------------------------------------------------------------------------------
AGGREGATE DOLLAR
RANGE OF EQUITY
SECURITIES IN ALL
REGISTERED
INVESTMENT
COMPANIES OVERSEEN
BY BOARD MEMBER
NOMINEES IN FAMILY
SELECT SELECT SELECT SELECT CALIFORNIA NEW YORK OF INVESTMENT
BOARD MEMBER NOMINEES MATURITIES PORTFOLIO PORTFOLIO 2 PORTFOLIO 3 PORTFOLIO PORTFOLIO COMPANIES
- --------------------------------------------------------------------------------------------------------------------------------
Robert P. Bremner............. $0 $0 $0 $0 $0 $0 over
$100,000
Lawrence H. Brown............. 10,001- 0 0 0 0 0 over
50,000 100,000
Jack B. Evans................. 0 0 0 0 0 0 over
100,000
William C. Hunter............. 0 0 0 0 0 0 50,001-
100,000
David J. Kundert.............. 0 0 0 0 0 0 0
William J. Schneider.......... 0 0 0 0 0 0 over
100,000
Timothy R. Schwertfeger....... 0 0 0 0 0 0 over
100,000
Judith M. Stockdale........... 0 0 0 0 0 0 over
100,000
Eugene S. Sunshine............ 0 0 0 0 0 0 50,001-
100,000
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
22
The following tables set forth, for each Board Member and for the Board Members
and officers as a group, the amount of shares beneficially owned in each Fund as
of December 31, 2004. The information as to beneficial ownership is based on
statements furnished by each Board Member and officer.
<Table>
<Caption>
FUND SHARES OWNED BY BOARD MEMBERS AND OFFICERS(1)
- ----------------------------------------------------------------------------------------------------------------------
MUNICIPAL
MUNICIPAL MUNICIPAL PREMIUM PERFORMANCE MUNICIPAL MARKET INVESTMENT
BOARD MEMBER NOMINEES VALUE INCOME INCOME PLUS ADVANTAGE OPPORTUNITY QUALITY
- ----------------------------------------------------------------------------------------------------------------------
Robert P. Bremner............. 0 0 0 0 0 0 0
Lawrence H. Brown............. 1,000 0 1,000 0 0 0 0
Jack B. Evans................. 0 0 0 0 0 0 0
William C. Hunter............. 0 0 0 0 0 0 0
David J. Kundert.............. 0 0 0 0 0 0 0
William J. Schneider.......... 0 0 0 0 0 0 0
Timothy R. Schwertfeger....... 25,085 0 69,122 14,000 6,594 21,000 0
Judith M. Stockdale........... 0 0 0 0 0 733 0
Eugene S. Sunshine............ 0 0 0 0 0 0 0
ALL BOARD MEMBERS AND OFFICERS
AS A GROUP.................. 31,166 0 71,122 18,000 8,594 22,733 1,000
- ----------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
FUND SHARES OWNED BY BOARD MEMBERS AND OFFICERS(1)
- -------------------------------------------------------------------------------------------------------------------
INSURED
INSURED SELECT QUALITY MUNICIPAL PREMIER PREMIER PREMIUM
BOARD MEMBER NOMINEES QUALITY QUALITY INCOME OPPORTUNITY MUNICIPAL INSURED INCOME 2
- -------------------------------------------------------------------------------------------------------------------
Robert P. Bremner............. 0 0 0 0 0 0 0
Lawrence H. Brown............. 0 0 889 824 0 0 0
Jack B. Evans................. 0 0 0 0 0 0 0
William C. Hunter............. 0 0 0 0 0 0 0
David J. Kundert.............. 0 0 0 0 0 0 0
William J. Schneider.......... 0 0 0 0 0 0 0
Timothy R. Schwertfeger....... 0 5,000 22,300 30,000 0 0 25,000
Judith M. Stockdale........... 0 0 0 0 865 0 720
Eugene S. Sunshine............ 0 0 0 0 0 0 0
ALL BOARD MEMBERS AND
OFFICERS AS A GROUP......... 0 7,230 23,189 33,824 865 0 28,158
- -------------------------------------------------------------------------------------------------------------------
</Table>
23
<Table>
<Caption>
FUND SHARES OWNED BY BOARD MEMBERS AND OFFICERS(1)
- ---------------------------------------------------------------------------------------------------------------------
INSURED INSURED INSURED
PREMIUM PREMIUM DIVIDEND DIVIDEND DIVIDEND DIVIDEND TAX-FREE
BOARD MEMBER NOMINEES INCOME 4 INCOME 2 ADVANTAGE ADVANTAGE 2 ADVANTAGE 3 ADVANTAGE ADVANTAGE
- ---------------------------------------------------------------------------------------------------------------------
Robert P. Bremner............. 0 0 0 0 0 0 0
Lawrence H. Brown............. 0 0 1,000 0 0 0 0
Jack B. Evans................. 0 0 0 0 0 0 0
William C. Hunter............. 0 0 0 0 0 0 0
David J. Kundert.............. 0 0 0 0 0 0 0
William J. Schneider.......... 11,230 0 0 0 0 0 0
Timothy R. Schwertfeger....... 0 0 0 25,000 0 0 0
Judith M. Stockdale........... 0 0 762 0 0 0 0
Eugene S. Sunshine............ 0 0 0 460 0 0 0
ALL BOARD MEMBERS AND OFFICERS
AS A GROUP.................. 11,430 0 3,762 26,460 0 0 0
- ---------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
FUND SHARES OWNED BY BOARD MEMBERS AND OFFICERS(1)
- -----------------------------------------------------------------------------------------------------------------------
MUNICIPAL
HIGH SELECT SELECT SELECT SELECT CALIFORNIA NEW YORK
BOARD MEMBER NOMINEES INCOME MATURITIES PORTFOLIO PORTFOLIO 2 PORTFOLIO 3 PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------
Robert P. Bremner............. 0 0 0 0 0 0 0
Lawrence H. Brown............. 0 1,116 0 0 0 0 0
Jack B. Evans................. 0 0 0 0 0 0 0
William C. Hunter............. 0 0 0 0 0 0 0
David J. Kundert.............. 0 0 0 0 0 0 0
William J. Schneider.......... 660 0 0 0 0 0 0
Timothy R. Schwertfeger....... 0 0 0 0 0 0 0
Judith M. Stockdale........... 0 0 0 0 0 0 0
Eugene S. Sunshine............ 0 0 0 0 0 0 0
ALL BOARD MEMBERS AND OFFICERS
AS A GROUP.................. 660 1,116 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
</Table>
(1) The numbers include share equivalents of certain Nuveen funds in which the
Board Member is deemed to be invested pursuant to the Deferred Compensation
Plan for Independent Board Members as more fully described below.
On December 31, 2004, Board Members and executive officers as a group
beneficially owned 1,196,807 shares of all funds managed by the Adviser
(includes deferred units described below and shares held by executive officers
in Nuveen's 401(k)/profit sharing plan). Each Board Member's individual
beneficial shareholdings of each Fund constituted less than 1% of the
outstanding shares of each class of shares for each Fund. As of May 31, 2005,
the Board Members and executive officers as a group beneficially owned less than
1% of the outstanding Shares of each Fund. As of May 31, 2005, no shareholder
beneficially owned more than 5% of any class of shares of any Fund.
COMPENSATION
For all Nuveen funds, Independent Board Members receive an $85,000 annual
retainer plus (a) a fee of $2,000 per day for attendance in person or by
telephone at a regularly scheduled
24
meeting of the Board; (b) a fee of $1,000 per day for attendance in person where
such in-person attendance is required and $500 per day for attendance by
telephone or in person where in-person attendance is not required at a special,
non-regularly scheduled board meeting; (c) a fee of $1,000 per day for
attendance in person at an audit committee or compliance, risk management and
regulatory oversight committee meeting where in-person attendance is required
and $500 per day for compliance, risk management and regulatory oversight
committee attendance by telephone or in person where in-person attendance is not
required and $750 per day for audit committee attendance by telephone or in
person where in-person attendance is not required; (d) a fee of $500 per day for
attendance in person or by telephone for a meeting of the dividend committee;
and (e) a fee of $500 per day for attendance in person at all other committee
meetings (including ad hoc committee meetings and shareholder meetings) on a day
on which no regularly scheduled board meeting is held in which in-person
attendance is required and $250 per day for attendance by telephone or in person
at such meetings where in-person attendance is not required, plus, in each case,
expenses incurred in attending such meetings. In addition to the payments
described above, the chairperson of each committee of the Board (except the
dividend committee and executive committee) receives $5,000 as an addition to
the annual retainer paid to such individuals. When ad hoc committees are
organized, the Board may provide for additional compensation to be paid to the
members of such committees. The annual retainer, fees and expenses are allocated
among the funds managed by the Adviser, on the basis of relative net asset sizes
although fund management may, in its discretion, establish a minimum amount to
be allocated to each fund. The Board Member affiliated with Nuveen and the
Adviser serves without any compensation from the Funds.
The boards of certain Nuveen funds (the "Participating Funds") established a
Deferred Compensation Plan for Independent Board Members ("Deferred Compensation
Plan"). Under the Deferred Compensation Plan, Independent Board Members of the
Participating Funds may defer receipt of all, or a portion, of the compensation
they earn for their services to the Participating Funds, in lieu of receiving
current payments of such compensation. Any deferred amount is treated as though
an equivalent dollar amount had been invested in shares of one or more eligible
Nuveen funds. Each Independent Board Member, other than Mr. Brown, has elected
to defer at least a portion of his or her fees. Each of the Funds except
Municipal Income and Select Maturities are Participating Funds under the
Deferred Compensation Plan.
The table below shows, for each Board Member who is not affiliated with Nuveen
or the Adviser, the aggregate compensation (i) paid by each Fund to each Board
Member for its last fiscal year and (ii) paid (including deferred fees) for
service on the boards of the Nuveen open-end and closed-end funds managed by the
Adviser for the calendar year ended 2004. Mr. Schwertfeger, a Board Member who
is an interested person of the Funds, does not receive any compensation from the
Funds or any Nuveen funds.
25
<Table>
<Caption>
AGGREGATE COMPENSATION FROM THE FUNDS(2)
- ---------------------------------------------------------------------------------------------------------------------------------
ROBERT P. LAWRENCE H. JACK B. WILLIAM C. DAVID J. WILLIAM J. JUDITH M. EUGENE S.
FUND BREMNER BROWN EVANS HUNTER KUNDERT(1) SCHNEIDER STOCKDALE SUNSHINE(1)
- ---------------------------------------------------------------------------------------------------------------------------------
Municipal Value $ 3,539 $ 3,401 $ 3,521 $ 2,149 N/A $ 3,423 $ 3,210 N/A
Municipal Income 156 150 155 94 N/A 154 141 N/A
Premium Income 2,704 2,599 2,690 1,641 N/A 2,615 2,452 N/A
Performance Plus 2,582 2,481 2,569 1,567 N/A 2,497 2,342 N/A
Municipal Advantage 1,893 1,819 1,883 1,150 N/A 1,831 1,717 N/A
Municipal Market Opportunity 1,963 1,887 1,953 1,192 N/A 1,899 1,781 N/A
Investment Quality 1,580 1,519 1,572 959 N/A 1,528 1,433 N/A
Insured Quality 1,674 1,609 1,665 1,016 N/A 1,619 1,519 N/A
Select Quality 1,466 1,409 1,458 890 N/A 1,418 1,330 N/A
Quality Income 2,332 2,241 2,320 1,417 N/A 2,255 2,115 N/A
Insured Municipal
Opportunity 3,592 3,453 3,574 2,179 N/A 3,475 3,259 N/A
Premier Municipal 861 827 856 522 N/A 832 780 N/A
Premier Insured 853 819 848 517 N/A 825 773 N/A
Premium Income 2 1,776 1,707 1,767 1,078 N/A 1,718 1,611 N/A
Premium Income 4 1,666 1,601 1,657 1,012 N/A 1,611 1,511 N/A
Insured Premium Income 2 1,464 1,407 1,456 888 N/A 1,416 1,328 N/A
Dividend Advantage 1,639 1,575 1,631 996 N/A 1,585 1,486 N/A
Dividend Advantage 2 1,227 1,179 1,220 745 N/A 1,187 1,113 N/A
Dividend Advantage 3 1,674 1,609 1,666 1,017 N/A 1,619 1,518 N/A
Insured Dividend Advantage 1,271 1,222 1,265 772 N/A 1,229 1,153 N/A
Insured Tax-Free Advantage 759 730 755 460 N/A 735 689 N/A
Municipal High Income 911 1,269 1,299 533 N/A 799 729 N/A
Select Maturities 256 231 255 187 N/A 252 204 N/A
Select Portfolio 490 437 489 374 N/A 472 394 N/A
Select Portfolio 2 515 459 514 393 N/A 496 414 N/A
Select Portfolio 3 375 334 374 286 N/A 361 302 N/A
California Portfolio 185 165 185 141 N/A 178 149 N/A
New York Portfolio 114 102 114 87 N/A 110 92 N/A
TOTAL COMPENSATION FROM
NUVEEN FUNDS PAID TO BOARD
MEMBERS $114,167 $ 112,250 $116,125 $ 65,875 N/A $ 111,667 $100,700 N/A
</Table>
- --------------------------------------------------------------------------------
(1) In November 2004, Messrs. Kundert and Sunshine were appointed to each Fund's
Board, effective February 23, 2005.
(2) Includes deferred fees. Pursuant to a deferred compensation agreement with
certain of the Funds, deferred amounts are treated as though an equivalent
dollar amount has been invested in shares of one or more eligible Nuveen
funds. Total deferred fees for the Funds (including the return from the
assumed investment in the eligible Nuveen funds) payable are:
26
<Table>
<Caption>
DEFERRED FEES
- -------------------------------------------------------------------------------------------------------------
ROBERT P. LAWRENCE H. JACK B. WILLIAM C. DAVID J. WILLIAM J. TIMOTHY R.
FUND BREMNER BROWN EVANS HUNTER KUNDERT(1) SCHNEIDER SCHWERTFEGER
- -------------------------------------------------------------------------------------------------------------
Municipal Value $ 539 $ -- $ 889 $ 2,149 N/A $ 3,423 $ --
Premium Income 412 -- 679 1,641 N/A 2,615 --
Performance Plus 393 -- 648 1,567 N/A 2,497 --
Municipal Advantage 288 -- 475 1,150 N/A 1,831 --
Municipal Market
Opportunity 299 -- 493 1,192 N/A 1,899 --
Investment Quality 241 -- 397 959 N/A 1,528 --
Insured Quality 255 -- 420 1,016 N/A 1,619 --
Select Quality 223 -- 368 890 N/A 1,418 --
Quality Income 355 -- 586 1,417 N/A 2,255 --
Insured Municipal
Opportunity 547 -- 902 2,179 N/A 3,475 --
Premier Municipal 131 -- 216 522 N/A 832 --
Premier Insured 130 -- 214 517 N/A 825 --
Premium Income 2 270 -- 446 1,078 N/A 1,718 --
Premium Income 4 254 -- 418 1,012 N/A 1,611 --
Insured Premium
Income 2 223 -- 368 888 N/A 1,416 --
Dividend Advantage 250 -- 412 996 N/A 1,585 --
Dividend Advantage 2 187 -- 308 745 N/A 1,187 --
Dividend Advantage 3 255 -- 420 1,017 N/A 1,619 --
Insured Dividend
Advantage 194 -- 319 772 N/A 1,229 --
Insured Tax-Free
Advantage 116 -- 191 460 N/A 735 --
Municipal High Income 34 -- 58 189 N/A 206 --
Select Portfolio 78 -- 128 374 N/A 472 --
Select Portfolio 2 82 -- 134 393 N/A 496 --
Select Portfolio 3 60 -- 98 286 N/A 361 --
California Portfolio 29 -- 48 141 N/A 178 --
New York Portfolio 18 -- 30 87 N/A 110 --
<Caption>
DEFERRED FEES
- --------------------- -----------------------
JUDITH M. EUGENE S.
FUND STOCKDALE SUNSHINE(1)
- --------------------- -----------------------
Municipal Value $ 933 N/A
Premium Income 712 N/A
Performance Plus 680 N/A
Municipal Advantage 499 N/A
Municipal Market
Opportunity 517 N/A
Investment Quality 416 N/A
Insured Quality 441 N/A
Select Quality 386 N/A
Quality Income 614 N/A
Insured Municipal
Opportunity 947 N/A
Premier Municipal 227 N/A
Premier Insured 225 N/A
Premium Income 2 468 N/A
Premium Income 4 439 N/A
Insured Premium
Income 2 386 N/A
Dividend Advantage 432 N/A
Dividend Advantage 2 323 N/A
Dividend Advantage 3 441 N/A
Insured Dividend
Advantage 335 N/A
Insured Tax-Free
Advantage 200 N/A
Municipal High Income 57 N/A
Select Portfolio 123 N/A
Select Portfolio 2 130 N/A
Select Portfolio 3 95 N/A
California Portfolio 47 N/A
New York Portfolio 29 N/A
</Table>
Nuveen maintains a charitable matching contributions program to encourage the
active support and involvement of individuals in the civic activities of their
community. The Independent Board Members of the funds managed by the Adviser are
eligible to participate in the matching contributions program of Nuveen. Under
the matching contributions program, Nuveen will match the personal contributions
of a Board Member to Section 501(c)(3) organizations up to an aggregate maximum
amount of $10,000 during any calendar year.
COMMITTEES
The Board of each Fund has five standing committees: the executive committee,
the audit committee, the nominating and governance committee, the dividend
committee and the compliance, risk management and regulatory oversight
committee.
27
Robert P. Bremner, Judith M. Stockdale and Timothy R. Schwertfeger, Chair, serve
as members of the executive committee of each Fund. The executive committee,
which meets between regular meetings of the Board, is authorized to exercise all
of the powers of the Board; provided that the scope of the powers of the
executive committee, unless otherwise specifically authorized by the full Board,
is limited to: (i) emergency matters where assembly of the full Board is
impracticable (in which case management will take all reasonable steps to
quickly notify each individual Board Member of the actions taken by the
executive committee) and (ii) matters of an administrative or ministerial
nature. The number of executive committee meetings of each Fund held during its
last fiscal year is attached to the proxy statement as Appendix E.
Lawrence H. Brown, Jack B. Evans and Timothy R. Schwertfeger, Chair, are current
members of the dividend committee of each Fund. The dividend committee is
authorized to declare distributions on the Fund's shares including, but not
limited to, regular and special dividends, capital gains and ordinary income
distributions. The number of dividend committee meetings of each Fund held
during its last fiscal year is attached to the proxy statement as Appendix E.
Lawrence H. Brown, William C. Hunter, David J. Kundert, William J. Schneider,
Chair, and Judith M. Stockdale are current members of the compliance, risk
management and regulatory oversight committee of each Fund. The compliance, risk
management and regulatory oversight committee is responsible for the oversight
of compliance issues, risk management, and other regulatory matters affecting
the Funds which are not otherwise the jurisdiction of the other Board
committees. As part of its duties regarding compliance matters, the committee
was responsible during 2004 for the oversight of the Pricing Procedures of the
Funds and the internal Valuation Group. The number of compliance, risk
management and regulatory oversight committee meetings of each Fund held during
its last fiscal year is attached to the proxy statement as Appendix E.
Each Fund's Board has an audit committee, established in accordance with Section
3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
composed of Independent Board Members who are "independent" as that term is
defined in the listing standards pertaining to closed-end funds of the New York
Stock Exchange and American Stock Exchange, as applicable. Robert P. Bremner,
Lawrence H. Brown, Jack B. Evans, Chair, William J. Schneider and Eugene S.
Sunshine are current members of the audit committee of each Fund. The audit
committee is responsible for the oversight and monitoring of (1) the accounting
and reporting policies, processes and practices and the audit of the financial
statements of the Funds, (2) the quality and integrity of the financial
statements of the Funds, and (3) the independent auditors' qualifications,
performance and independence. The audit committee reviews the work and any
recommendations of the Funds' independent auditors. Based on such review, it is
authorized to make recommendations to the Board. Commencing in 2005, the audit
committee is responsible for the oversight of the Pricing Procedures of the
Funds and the internal Valuation Group. The Boards adopted an Audit Committee
Charter that conforms to the listing standards of the New York Stock Exchange
and American Stock Exchange. A copy of the Audit Committee Charter is attached
to the proxy statement as Appendix F. The number of audit committee meetings of
each Fund held during its last full fiscal year is attached to the proxy
statement as Appendix E.
Each Fund has a nominating and governance committee composed entirely of Board
Members who are not "interested persons" (as that term is defined in the 1940
Act) of the Funds and who are "independent" as defined by New York Stock
Exchange or American Stock Exchange
28
listing standards, as applicable. Robert P. Bremner, Chair, Lawrence H. Brown,
Jack B. Evans, William C. Hunter, David J. Kundert, William J. Schneider, Judith
M. Stockdale and Eugene S. Sunshine are current members of the nominating and
governance committee of each Fund. The purpose of the nominating and governance
committee is to seek, identify and recommend to the Board qualified candidates
for election or appointment to each Fund's Board. In addition, the committee
oversees matters of corporate governance, including the evaluation of Board
performance and processes, and assignment and rotation of committee members, and
the establishment of corporate governance guidelines and procedures, to the
extent necessary or desirable. The committee operates under a written charter
adopted and approved by the Boards, a copy of which is attached to the proxy
statement as Appendix G. The nominating and governance committee charter is also
available on the Funds' website at
http://www.nuveen.com/mf/products/fundGovernance.aspx. The number of nominating
and governance committee meetings of each Fund held during its last full fiscal
year is attached to the proxy statement as Appendix E.
The nominating and governance committee looks to many sources for
recommendations of qualified Board members, including current Board Members,
employees of the Adviser, current shareholders of the Funds, third party sources
and any other persons or entities that may be deemed necessary or desirable by
the committee. Shareholders of the Funds who wish to nominate a candidate to
their Fund's Board should mail information to the attention of Lorna Ferguson,
Manager of Fund Board Relations, Nuveen Investments, 333 West Wacker Drive,
Chicago, Illinois 60606. This information must include evidence of Fund
ownership of the person or entity recommending the candidate, a full listing of
the proposed candidate's education, experience, current employment, date of
birth, names and addresses of at least three professional references,
information as to whether the candidate is an "interested person" (as such term
is defined in the 1940 Act) in relation to the Fund and such other information
that would be helpful to the nominating and governance committee in evaluating
the candidate. All satisfactorily completed information regarding candidates
will be forwarded to the chairman of the nominating and governance committee and
the outside counsel to the Independent Board Members. Recommendations for
candidates to the Board will be evaluated in light of whether the number of
Board members is expected to change and whether the Board expects any vacancies.
All nominations from Fund shareholders will be acknowledged, although there may
be times when the committee is not actively recruiting new Board members. In
those circumstances nominations will be kept on file until active recruitment is
under way.
The nominating and governance committee sets appropriate standards and
requirements for nominations to the Board. In considering a candidate's
qualifications, each candidate must meet certain basic requirements, including
relevant skills and experience, time availability and, if qualifying as a
non-"interested person" candidate, independence from the Adviser or other
service providers. These experience requirements may vary depending on the
current composition of the Board, since the goal is to ensure an appropriate
range of skills and experience, in the aggregate. All candidates must meet high
expectations of personal integrity, governance experience and professional
competence that are assessed on the basis of personal interviews,
recommendations, or direct knowledge by committee members. The committee may use
any process it deems appropriate for the purpose of evaluating candidates, which
process may include, without limitation, personal interviews, background checks,
written submissions by the candidates and third party references. There is no
difference in the manner in which the nominating and governance committee
evaluates
29
nominees when the nominee is submitted by a shareholder. The nominating and
governance committee reserves the right to make the final selection regarding
the nomination of any prospective Board member.
The number of regular quarterly meetings held by the Board of each Fund and the
number of special meetings held by the Board of each Fund during its last fiscal
year is attached to the proxy statement as Appendix E. During the last fiscal
year, each Board Member attended 75% or more of each Fund's Board meetings and
the committee meetings (if a member thereof) held during the period for which
such Board Member was a Board Member. The policy of the Board relating to
attendance by Board Members at annual meetings of the Funds and the number of
Board Members who attended the last annual meeting of shareholders of each Fund
is posted on the Funds' website at
www.nuveen.com/etf/products/fundGovernance.aspx.
30
THE OFFICERS
The following table sets forth information as of May 1, 2005 with respect to
each officer of the Funds other than Mr. Schwertfeger (who is a Board Member and
is included in the table relating to nominees for the Board). Officers receive
no compensation from the Funds. The officers are elected by the Board on an
annual basis to serve until successors are elected and qualified.
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------
NUMBER OF
POSITION(S) TERM OF OFFICE AND PORTFOLIOS IN
NAME, ADDRESS AND HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S) FUND COMPLEX
BIRTHDATE FUND SERVED* DURING PAST 5 YEARS SERVED BY OFFICER
- -------------------------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief Term: Annual Managing Director 155
333 West Wacker Drive Administrative Length of Service: (since 2002), Assistant
Chicago, IL 60606 Officer Since 1988 Secretary and Associate
(9/9/56) General Counsel,
formerly, Vice
President of Nuveen
Investments, LLC;
Managing Director
(since 2002), Assistant
Secretary and Associate
General Counsel,
formerly, Vice
President of Nuveen
Asset Management;
Managing Director
(since 2004) and
Assistant Secretary
(since 1994) of Nuveen
Investments, Inc.;
Assistant Secretary of
NWQ Investment
Management Company, LLC
(since 2002); Vice
President and Assistant
Secretary of Nuveen
Investments Advisers
Inc. (since 2002);
Managing Director,
Associate General
Counsel and Assistant
Secretary of
Rittenhouse Asset
Management, Inc. (since
2003); previously,
Managing Director (from
2002 to 2004), General
Counsel and Assistant
Secretary, formerly,
Vice President of
Nuveen Advisory Corp.
and Nuveen
Institutional Advisory
Corp.; ** Chartered
Financial Analyst.
</Table>
31
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------
NUMBER OF
POSITION(S) TERM OF OFFICE AND PORTFOLIOS IN
NAME, ADDRESS AND HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S) FUND COMPLEX
BIRTHDATE FUND SERVED* DURING PAST 5 YEARS SERVED BY OFFICER
- -------------------------------------------------------------------------------------------------------
Julia L. Antonatos Vice President Term: Annual Managing Director 155
333 West Wacker Drive Length of Service: (since 2005),
Chicago, IL 60606 Since 2004 previously, Vice
(9/22/63) President (since 2002),
formerly, Assistant
Vice President (since
1999) of Nuveen
Investments, LLC;
Chartered Financial
Analyst.
Michael T. Atkinson Vice President Term: Annual Vice President (since 155
333 West Wacker Drive and Assistant Length of Service: 2002), formerly,
Chicago, IL 60606 Secretary Since 2002 Assistant Vice
(2/3/66) President (from 2000),
previously, Associate
of Nuveen Investments,
LLC.
Peter H. D'Arrigo Vice President Term: Annual Vice President of 155
333 West Wacker Drive and Treasurer Length of Service: Nuveen Investments, LLC
Chicago, IL 60606 Since 1999 (since 1999); prior
(11/28/67) thereto, Assistant Vice
President (from 1997);
Vice President and
Treasurer (since 1999)
of Nuveen Investments,
Inc.; Vice President
and Treasurer of Nuveen
Asset Management (since
2002) and of Nuveen
Investments Advisers
Inc. (since 2002);
Assistant Treasurer of
NWQ Investments
Management Company,
LLC. (since 2002); Vice
President and Treasurer
of Nuveen Rittenhouse
Asset Management, Inc.
(since 2003); Vice
President and Treasurer
(from 1999 to 2004) of
Nuveen Advisory Corp.
and Nuveen
Institutional Advisory
Corp.; ** Chartered
Financial Analyst.
</Table>
32
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------
NUMBER OF
POSITION(S) TERM OF OFFICE AND PORTFOLIOS IN
NAME, ADDRESS AND HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S) FUND COMPLEX
BIRTHDATE FUND SERVED* DURING PAST 5 YEARS SERVED BY OFFICER
- -------------------------------------------------------------------------------------------------------
Jessica R. Droeger Vice President Term: Annual Vice President (since 155
333 West Wacker Drive and Secretary Length of Service: 2002) and Assistant
Chicago, IL 60606 Since 1998 General Counsel (since
(9/24/64) 1998), formerly
Assistant Vice
President (from 1998)
of Nuveen Investments,
LLC; Vice President and
Assistant Secretary
(since 2005) of Nuveen
Asset Management; Vice
President (from 2002 to
2004) and Assistant
Secretary (from 1998 to
2004), of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.**
Lorna C. Ferguson Vice President Term: Annual Managing Director 155
333 West Wacker Drive Length of Service: (since 2004),
Chicago, IL 60606 Since 1998 previously, Vice
(10/24/45) President of Nuveen
Investments, LLC;
Managing Director of
Nuveen Asset
Management; previously,
Managing Director
(2004), formerly, Vice
President of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.**
William M. Fitzgerald Vice President Term: Annual Managing Director of 155
333 West Wacker Drive Length of Service: Nuveen Asset Management
Chicago, IL 60606 Since 1995 (since 2001); Vice
(3/2/64) President of Nuveen
Investments Advisers
Inc. (since 2002);
Managing Director (from
2001 to 2004),
formerly, Vice
President of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.;**
Chartered Financial
Analyst.
Stephen D. Foy Vice President Term: Annual Vice President (since 155
333 West Wacker Drive and Controller Length of Service: 1993) and Funds
Chicago, IL 60606 Since 1993 Controller (since 1998)
(5/31/54) of Nuveen Investments,
LLC; Vice President
(since 1998) and
formerly, Funds
Controller of Nuveen
Investments, Inc.;
Certified Public
Accountant.
</Table>
33
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------
NUMBER OF
POSITION(S) TERM OF OFFICE AND PORTFOLIOS IN
NAME, ADDRESS AND HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S) FUND COMPLEX
BIRTHDATE FUND SERVED* DURING PAST 5 YEARS SERVED BY OFFICER
- -------------------------------------------------------------------------------------------------------
James D. Grassi Vice President Term: Annual Vice President and 155
333 West Wacker Drive and Chief Length of Service: Deputy Director of
Chicago, IL 60606 Compliance Since 2004 Compliance (since 2004)
(4/13/56) Officer of Nuveen Investments,
LLC, Nuveen Investments
Advisers Inc., Nuveen
Asset Management and
Rittenhouse Asset
Management, Inc.;
previously, Vice
President and Deputy
Director of Compliance
(2004) of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.;**
formerly, Senior
Attorney (1994 to
2004), The Northern
Trust Company.
David J. Lamb Vice President Term: Annual Vice President of 155
333 West Wacker Drive Length of Service: Nuveen Investments, LLC
Chicago, IL 60606 Since 2000 (since 2000); prior
(3/22/63) thereto, Assistant Vice
President (from 1999);
Certified Public
Accountant.
Tina M. Lazar Vice President Term: Annual Vice President of 155
333 West Wacker Drive Length of Service: Nuveen Investments, LLC
Chicago, IL 60606 Since 2002 (since 1999); prior
(8/27/61) thereto, Assistant Vice
President (since 1993)
of Nuveen Investments,
LLC.
</Table>
34
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------
NUMBER OF
POSITION(S) TERM OF OFFICE AND PORTFOLIOS IN
NAME, ADDRESS AND HELD WITH LENGTH OF TIME PRINCIPAL OCCUPATION(S) FUND COMPLEX
BIRTHDATE FUND SERVED* DURING PAST 5 YEARS SERVED BY OFFICER
- -------------------------------------------------------------------------------------------------------
Larry W. Martin Vice President Term: Annual Vice President, 155
333 West Wacker Drive and Assistant Length of Service: Assistant Secretary and
Chicago, IL 60606 Secretary Since 1988 Assistant General
(7/27/51) Counsel of Nuveen
Investments, LLC; Vice
President, Assistant
General Counsel and
Assistant Secretary of
Nuveen Investments,
Inc.; Vice President
(since 2005) and
Assistant Secretary
(since 1997) of Nuveen
Asset Management; Vice
President (since 2000),
Assistant Secretary and
Assistant General
Counsel (since 1998) of
Rittenhouse Asset
Management, Inc.; Vice
President and Assistant
Secretary of Nuveen
Investments Advisers
Inc. (since 2002);
Assistant Secretary of
NWQ Investment
Management Company,
LLC. (since 2002);
previously, Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.**
</Table>
- --------------------------------------------------------------------------------
* Length of Service indicates the year the individual became an officer of a
fund in the Nuveen fund complex.
** Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were organized
into Nuveen Asset Management, effective January 1, 2005.
APPOINTMENT OF INDEPENDENT AUDITORS
Each Board has appointed Ernst & Young LLP, independent registered public
accounting firm, as independent auditors to audit the books and records of each
Fund for its fiscal year. A representative of Ernst & Young LLP will be present
at the Meetings to make a statement, if such representative so desires, and to
respond to shareholders' questions. Ernst & Young LLP has informed each Fund
that it has no direct or indirect material financial interest in each Fund,
Nuveen, the Adviser or any other investment company sponsored by Nuveen.
35
AUDIT COMMITTEE REPORT
The audit committee of the Board is responsible for the oversight and monitoring
of (1) the accounting and reporting policies, processes and practices, and the
audit of the financial statements, of each Fund, (2) the quality and integrity
of the financial statements of the Funds, and (3) the independent auditors'
qualifications, performance and independence. In its oversight capacity, the
committee reviews each Fund's annual financial statements with both management
and the independent auditors and the committee meets periodically with the
independent auditors to consider their evaluation of each Fund's financial and
internal controls. The committee also selects, retains, evaluates and may
replace each Fund's independent auditors. The committee is currently composed of
five Board Members and operates under a written charter adopted and approved by
the Board, a copy of which is attached as Appendix H. Each committee member
meets the independence and experience requirements applicable to the Funds of
the New York Stock Exchange, the American Stock Exchange, Section 10A of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations of the Securities and Exchange Commission.
The committee, in discharging its duties, has met with and held discussions with
management and each Fund's independent auditors. The committee has also reviewed
and discussed the audited financial statements with management. Management has
represented to the independent auditors that each Fund's financial statements
were prepared in accordance with generally accepted accounting principles. The
committee has also discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards ("SAS") No. 61,
(Communication with Audit Committees), as amended by SAS No. 90 (Audit Committee
Communications). Each Fund's independent auditors provided to the committee the
written disclosure required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the committee discussed
with representatives of the independent auditors their firm's independence. As
provided in the Audit Committee Charter, it is not the committee's
responsibility to determine, and the considerations and discussions referenced
above do not ensure, that each Fund's financial statements are complete and
accurate and presented in accordance with generally accepted accounting
principles.
Based on the committee's review and discussions with management and the
independent auditors, the representations of management and the report of the
independent auditors to the committee, the committee has recommended that the
Board include the audited financial statements in each Fund's Annual Report.
At the time the recommendation was made, the members of the committee were:
Robert P. Bremner
Lawrence H. Brown
Jack B. Evans
William J. Schneider
For Select Maturities, Select Portfolio, Select Portfolio 2, Select Portfolio 3,
California Portfolio and New York Portfolio, Eugene S. Sunshine was also a
member of the audit committee at the time of the recommendation.
36
AUDIT AND RELATED FEES. The following table provides the aggregate fees billed
by Ernst & Young LLP during each Fund's last two fiscal years (i) to each Fund
for services provided to the Fund and (ii) to the Adviser and certain entities
controlling, controlled by, or under common control with the Adviser that
provide ongoing services to each Fund ("Adviser Entities") for engagements
directly related to the operations and financial reporting of each Fund.
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------------
AUDIT FEES(1) AUDIT RELATED FEES(2) TAX FEES(3)
----------------- --------------------------------- ---------------------------------
ADVISER AND ADVISER AND
ADVISER ADVISER
FUND FUND ENTITIES FUND ENTITIES
----------------- --------------- --------------- --------------- ---------------
FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2003 2004 2003 2004 2003 2004 2003 2004 2003 2004
- --------------------------------------------------------------------------------------------------------------------
Municipal Value $41,700 $48,562 $ 0 $ 0 $ 0 $ 0 $ 731 $ 364 $ 0 $ 0
Municipal Income 6,658 7,286 0 0 0 0 367 364 0 0
Premium Income 32,929 38,408 0 0 0 0 641 364 0 0
Performance Plus 31,515 36,891 0 0 0 0 627 364 0 0
Municipal Advantage 24,384 28,493 0 0 0 0 552 364 0 0
Municipal Market
Opportunity 24,892 29,423 0 0 0 0 559 364 0 0
Investment Quality 21,373 24,701 0 0 0 0 520 364 0 0
Insured Quality 22,355 25,809 0 0 0 0 532 364 0 0
Select Quality 19,990 23,287 0 0 0 0 507 364 0 0
Quality Income 28,706 33,833 0 0 0 0 599 364 0 0
Insured Municipal
Opportunity 42,082 49,233 0 0 0 0 739 364 0 0
Premier Municipal 13,984 15,918 0 0 0 0 443 364 0 0
Premier Insured 13,809 15,829 0 0 0 0 442 364 0 0
Premium Income 2 23,415 27,064 0 0 0 0 541 364 0 0
Premium Income 4 22,421 25,686 0 0 0 0 530 364 0 0
Insured Premium Income 2 20,167 23,276 0 0 0 0 508 364 0 0
Dividend Advantage 21,733 25,386 0 0 0 0 525 364 0 0
Dividend Advantage 2 17,534 20,403 0 0 0 0 481 4,131 0 0
Dividend Advantage 3 22,116 25,825 0 0 0 0 528 5,496 0 0
<Caption>
- ------------------------- ---------------------------------
ALL OTHER FEES(4)
---------------------------------
ADVISER AND
ADVISER
FUND ENTITIES
--------------- ---------------
FISCAL FISCAL FISCAL FISCAL
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
2003 2004 2003 2004
- ------------------------- ---------------------------------
Municipal Value $ 0 $ 0 $ 0 $ 0
Municipal Income 0 0 0 0
Premium Income 2,350 2,550 0 0
Performance Plus 2,350 2,550 0 0
Municipal Advantage 2,350 2,550 0 0
Municipal Market
Opportunity 2,350 2,550 0 0
Investment Quality 2,350 2,550 0 0
Insured Quality 2,350 2,550 0 0
Select Quality 2,350 2,550 0 0
Quality Income 2,350 2,550 0 0
Insured Municipal
Opportunity 2,350 2,550 0 0
Premier Municipal 2,350 2,550 0 0
Premier Insured 2,350 2,550 0 0
Premium Income 2 2,350 2,550 0 0
Premium Income 4 2,350 2,550 0 0
Insured Premium Income 2 2,350 2,550 0 0
Dividend Advantage 2,350 2,550 0 0
Dividend Advantage 2 2,350 2,550 0 0
Dividend Advantage 3 2,350 2,550 0 0
</Table>
37
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------------
AUDIT FEES(1) AUDIT RELATED FEES(2) TAX FEES(3)
----------------- --------------------------------- ---------------------------------
ADVISER AND ADVISER AND
ADVISER ADVISER
FUND FUND ENTITIES FUND ENTITIES
----------------- --------------- --------------- --------------- ---------------
FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2003 2004 2003 2004 2003 2004 2003 2004 2003 2004
- --------------------------------------------------------------------------------------------------------------------
Insured Dividend
Advantage $18,130 $20,940 $ 0 $ 0 $ 0 $ 0 $ 487 $4,285 $ 0 $ 0
Insured Tax-Free
Advantage 12,600 14,746 0 0 0 0 66 2,704 0 0
Municipal High Income N/A 16,207 N/A 0 N/A 0 N/A 0 N/A 0
Select Maturities 7,450 8,210 0 0 0 0 355 385 0 0
Select Portfolio 9,605 10,739 0 0 0 0 350 364 0 0
Select Portfolio 2 9,831 11,020 0 0 0 0 350 364 0 0
Select Portfolio 3 8,525 9,485 0 0 0 0 350 364 0 0
California Portfolio 6,747 7,419 0 0 0 0 350 364 0 0
New York Portfolio 6,106 6,652 0 0 0 0 350 364 0 0
<Caption>
- ------------------------- ---------------------------------
ALL OTHER FEES(4)
---------------------------------
ADVISER AND
ADVISER
FUND ENTITIES
--------------- ---------------
FISCAL FISCAL FISCAL FISCAL
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
2003 2004 2003 2004
- ------------------------- ---------------------------------
Insured Dividend
Advantage $2,350 $2,550 $ 0 $ 0
Insured Tax-Free
Advantage 1,500 2,550 0 0
Municipal High Income N/A 0 N/A 0
Select Maturities 0 0 0 0
Select Portfolio 0 0 0 0
Select Portfolio 2 0 0 0 0
Select Portfolio 3 0 0 0 0
California Portfolio 0 0 0 0
New York Portfolio 0 0 0 0
</Table>
- --------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for the
audit of the Fund's annual financial statements and services provided in
connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and related
services reasonably related to the performance of the audit or review of
financial statements and are not reported under "Audit Fees."
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees," "Audit Related Fees" and "Tax Fees."
38
NON-AUDIT FEES. The following table provides the aggregate non-audit fees
billed by Ernst & Young LLP for services rendered to each Fund, the Adviser and
the Adviser Entities during each Fund's last two fiscal years.
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
ADVISER ENTITIES
(ENGAGEMENTS RELATED TOTAL NON-AUDIT FEES
DIRECTLY TO THE BILLED TO ADVISER AND
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL ADVISER ENTITIES
BILLED TO FUND REPORTING OF FUND) (ALL OTHER ENGAGEMENTS) TOTAL
------------------------- ------------------------- ------------------------- -----------
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED 2003 ENDED 2004 ENDED 2003 ENDED 2004 ENDED 2003 ENDED 2004 ENDED 2003
- ------------------------------------------------------------------------------------------------------------------------------
Municipal Value $ 731 $ 364 $ 0 $ 0 $ 0 $ 0 $ 731
Municipal Income 367 364 0 0 0 0 367
Premium Income 641 364 0 0 0 0 641
Performance Plus 627 364 0 0 0 0 627
Municipal Advantage 552 364 0 0 0 0 552
Municipal Market Opportunity 559 364 0 0 0 0 559
Investment Quality 520 364 0 0 0 0 520
Insured Quality 532 364 0 0 0 0 532
Select Quality 507 364 0 0 0 0 507
Quality Income 599 364 0 0 0 0 599
Insured Municipal Opportunity 739 364 0 0 0 0 739
Premier Municipal 443 364 0 0 0 0 443
Premier Insured 442 364 0 0 0 0 442
Premium Income 2 541 364 0 0 0 0 541
Premium Income 4 530 364 0 0 0 0 530
Insured Premium Income 2 508 364 0 0 0 0 508
Dividend Advantage 525 364 0 0 0 0 525
Dividend Advantage 2 481 4,131 0 0 0 0 481
<Caption>
- ----------------------------- -----------
TOTAL
-----------
FISCAL YEAR
ENDED 2004
- -----------------------------
Municipal Value $ 364
Municipal Income 364
Premium Income 364
Performance Plus 364
Municipal Advantage 364
Municipal Market Opportunity 364
Investment Quality 364
Insured Quality 364
Select Quality 364
Quality Income 364
Insured Municipal Opportunity 364
Premier Municipal 364
Premier Insured 364
Premium Income 2 364
Premium Income 4 364
Insured Premium Income 2 364
Dividend Advantage 364
Dividend Advantage 2 4,131
</Table>
39
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
ADVISER ENTITIES
(ENGAGEMENTS RELATED TOTAL NON-AUDIT FEES
DIRECTLY TO THE BILLED TO ADVISER AND
TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL ADVISER ENTITIES
BILLED TO FUND REPORTING OF FUND) (ALL OTHER ENGAGEMENTS) TOTAL
------------------------- ------------------------- ------------------------- -----------
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED 2003 ENDED 2004 ENDED 2003 ENDED 2004 ENDED 2003 ENDED 2004 ENDED 2003
- ------------------------------------------------------------------------------------------------------------------------------
Dividend Advantage 3 $ 528 $ 5,496 $ 0 $ 0 $ 0 $ 0 $ 528
Insured Dividend Advantage 487 4,285 0 0 0 0 487
Insured Tax-Free Advantage 66 2,704 0 0 0 0 66
Municipal High Income N/A 0 N/A 0 N/A 0 N/A
Select Maturities 355 385 0 0 0 0 355
Select Portfolio 350 364 0 0 0 0 350
Select Portfolio 2 350 364 0 0 0 0 350
Select Portfolio 3 350 364 0 0 0 0 350
California Portfolio 350 364 0 0 0 0 350
New York Portfolio 350 364 0 0 0 0 350
- ------------------------------------------------------------------------------------------------------------------------------
<Caption>
- ----------------------------- -----------
TOTAL
-----------
FISCAL YEAR
ENDED 2004
- -----------------------------
Dividend Advantage 3 $ 5,496
Insured Dividend Advantage 4,285
Insured Tax-Free Advantage 2,704
Municipal High Income 0
Select Maturities 385
Select Portfolio 364
Select Portfolio 2 364
Select Portfolio 3 364
California Portfolio 364
New York Portfolio 364
- -----------------------------
</Table>
40
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. Generally, the audit
committee must approve each Fund's independent auditor's engagements (i) with
the Fund for audit or non-audit services and (ii) with the Adviser and Adviser
Entities for non-audit services if the engagement relates directly to the
operations and financial reporting of the Fund. Regarding tax and research
projects conducted by the independent auditors for each Fund and the Adviser and
Adviser Entities (with respect to the operations and financial reporting of each
Fund), such engagements will be (i) pre-approved by the audit committee if they
are expected to be for amounts greater than $10,000; (ii) reported to the audit
committee chairman for his verbal approval prior to engagement if they are
expected to be for amounts under $10,000 but greater than $5,000; and (iii)
reported to the audit committee at the next audit committee meeting if they are
expected to be for an amount under $5,000.
For engagements with Ernst & Young LLP entered into on or after May 6, 2003, the
audit committee approved in advance all audit services and non-audit services
that Ernst & Young LLP provided to each Fund and to the Adviser and Adviser
Entities (with respect to the operations and financial reporting of each Fund).
None of the services rendered by Ernst & Young LLP to each Fund or the Adviser
or Adviser Entities were pre-approved by the audit committee pursuant to the
pre-approval exception under Rule 2.01(c)(7)(i)(C) or Rule 2.01(c)(7)(ii) of
Regulation S-X. The audit committee has considered whether the provision of
non-audit services rendered by Ernst & Young LLP to the Adviser and Adviser
Entities that were not required to be pre-approved by the audit committee is
compatible with maintaining Ernst & Young LLP's independence.
ADDITIONAL INFORMATION
SECTION 16(A) BENEFICIAL INTEREST REPORTING COMPLIANCE
Section 30(h) of the 1940 Act and Section 16(a) of the 1934 Act require Board
Members and officers, the investment adviser, affiliated persons of the
investment adviser and persons who own more than 10% of a registered class of a
Fund's equity securities to file forms reporting their affiliation with that
Fund and reports of ownership and changes in ownership of that Fund's shares
with the Securities and Exchange Commission and the New York Stock Exchange or
American Stock Exchange, as applicable. These persons and entities are required
by the Securities and Exchange Commission regulation to furnish the Funds with
copies of all Section 16(a) forms they file. Based on a review of these forms
furnished to each Fund, each Fund believes that its Board Members and officers,
investment adviser and affiliated persons of the investment adviser have
complied with all applicable Section 16(a) filing requirements during its last
fiscal year, except as follows: Mr. Daniel Solender, a portfolio manager and
officer of NAM, made a late filing on Form 3 with respect to Select Portfolio,
Select Portfolio 2, Select Portfolio 3, California Portfolio and New York
Portfolio; Ms. Cathryn Steeves and Scott Romans, portfolio managers, each made a
late filing on Form 3 with respect to Select Maturities, Select Portfolio,
Select Portfolio 2, Select Portfolio 3, California Portfolio and New York
Portfolio; Board Member Judith Stockdale made a late filing on Form 4 with
respect to Municipal Market Opportunity, Dividend Advantage and Premium Income
2; and Nuveen Advisory Corp. made a late filing on Form 3 with respect to
Dividend Advantage, Dividend Advantage 2, Dividend Advantage 3, Insured Dividend
Advantage, Insured Dividend Advantage, Insured Premium Income 2, Insured
Tax-Free Advantage and Municipal High Income. To the knowledge of management of
the Funds, no
41
shareholder of a Fund owns more than 10% of a registered class of a Fund's
equity securities.
SHAREHOLDER PROPOSALS
To be considered for presentation at the annual meeting of shareholders of the
Funds to be held in 2006, a shareholder proposal submitted pursuant to Rule
14a-8 of the 1934 Act must be received at the offices of that Fund, 333 West
Wacker Drive, Chicago, Illinois 60606, not later than February 22, 2006. A
shareholder wishing to provide notice in the manner prescribed by Rule
14a-4(c)(1) of a proposal submitted outside of the process of Rule 14a-8 must
submit such written notice to the Fund not later than May 8, 2006. Timely
submission of a proposal does not mean that such proposal will be included in a
proxy statement.
SHAREHOLDER COMMUNICATIONS
Shareholders who want to communicate with the Board or any individual Board
Member should write their Fund to the attention of Lorna Ferguson, Manager of
Fund Board Relations, Nuveen Investments, 333 West Wacker Drive, Chicago,
Illinois 60606. The letter should indicate that you are a Fund shareholder. If
the communication is intended for a specific Board Member and so indicates it
will be sent only to that Board Member. If a communication does not indicate a
specific Board Member it will be sent to the chair of the nominating and
governance committee and the outside counsel to the Independent Board Members
for further distribution as deemed appropriate by such persons.
EXPENSES OF PROXY SOLICITATION
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with the
solicitation of proxies will be paid 85% by the Fund and 15% by Nuveen
(allocated among the Funds based on relative net assets). Solicitation may be
made by letter or telephone by officers or employees of Nuveen or the Adviser,
or by dealers and their representatives.
FISCAL YEAR
The last fiscal year end for each Fund (except Select Maturities, Select
Portfolio, Select Portfolio 2, Select Portfolio 3, California Portfolio and New
York Portfolio) was October 31, 2004. The last fiscal year end for Select
Maturities, Select Portfolio, Select Portfolio 2, Select Portfolio 3, California
Portfolio and New York Portfolio was March 31, 2005.
ANNUAL REPORT DELIVERY
Annual reports will be sent to shareholders of record of each Fund following
each Fund's fiscal year end. Each Fund will furnish, without charge, a copy of
its annual report and/or semi-annual report as available upon request. Such
written or oral requests should be
42
directed to such Fund at 333 West Wacker Drive, Chicago, Illinois 60606 or by
calling 1-800-257-8787.
Please note that only one annual report or proxy statement may be delivered to
two or more shareholders of a Fund who share an address, unless the Fund has
received instructions to the contrary. To request a separate copy of an annual
report or proxy statement, or for instructions as to how to request a separate
copy of such documents or as to how to request a single copy if multiple copies
of such documents are received, shareholders should contact the applicable Fund
at the address and phone number set forth above.
GENERAL
Management does not intend to present and does not have reason to believe that
any other items of business will be presented at the Meetings. However, if other
matters are properly presented to the Meetings for a vote, the proxies will be
voted by the persons acting under the proxies upon such matters in accordance
with their judgment of the best interests of the Fund.
A list of shareholders entitled to be present and to vote at each Meeting will
be available at the offices of the Funds, 333 West Wacker Drive, Chicago,
Illinois, for inspection by any shareholder during regular business hours
beginning ten days prior to the date of the Meetings.
Failure of a quorum to be present at any Meeting will necessitate adjournment
and will subject that Fund to additional expense. The persons named in the
enclosed proxy may also move for an adjournment of any Meeting to permit further
solicitation of proxies with respect to any of the proposals if they determine
that adjournment and further solicitation is reasonable and in the best
interests of the shareholders. Under each Fund's By-Laws, an adjournment of a
meeting requires the affirmative vote of a majority of the shares present in
person or represented by proxy at the meeting.
IF YOU CANNOT BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
Jessica R. Droeger
Vice President and Secretary
June 22, 2005
43
APPENDIX A
DATES RELATING TO ORIGINAL INVESTMENT
MANAGEMENT AGREEMENTS(1)
<Table>
<Caption>
- -------------------------------------------------------------------------------------------
DATE ORIGINAL DATE ORIGINAL
INVESTMENT INVESTMENT
DATE OF ORIGINAL MANAGEMENT MANAGEMENT
INVESTMENT AGREEMENT WAS LAST AGREEMENT WAS LAST
MANAGEMENT APPROVED BY APPROVED FOR
FUND AGREEMENT SHAREHOLDERS CONTINUANCE BY BOARD
- -------------------------------------------------------------------------------------------
Municipal Value May 1, 1989 July 28, 1993 May 11, 2005
Municipal Income April 27, 1992 July 28, 1993 May 11, 2005
Premium Income April 27, 1992 July 28, 1993 May 11, 2005
Performance Plus July 28, 1993 July 28, 1993 May 11, 2005
Municipal Advantage July 28, 1993 July 28, 1993 May 11, 2005
Municipal Market
Opportunity July 28, 1993 July 28, 1993 May 11, 2005
Investment Quality July 28, 1993 July 28, 1993 May 11, 2005
Insured Quality July 28, 1993 July 28, 1993 May 11, 2005
Select Quality March 15, 1991 July 28, 1993 May 11, 2005
Quality Income June 19, 1991 July 28, 1993 May 11, 2005
Insured Municipal
Opportunity September 12, 1991 July 28, 1993 May 11, 2005
Premier Municipal December 16, 1991 July 28, 1993 May 11, 2005
Premier Insured December 16, 1991 July 28, 1993 May 11, 2005
Premium Income 2 July 20, 1992 July 28, 1993 May 11, 2005
Premium Income 4 February 16, 1993 July 28, 1993 May 11, 2005
Insured Premium Income 2 July 20, 1993 July 22, 1993 May 11, 2005
Dividend Advantage May 25, 1999 May 25, 1999 May 11, 2005
Dividend Advantage 2 February 20, 2001 March 27, 2001 May 11, 2005
Dividend Advantage 3 August 2, 2001 September 25, 2001 May 11, 2005
Insured Dividend
Advantage February 20, 2002 March 25, 2002 May 11, 2005
Insured Tax-Free
Advantage November 14, 2002 November 19, 2002 May 11, 2005
Municipal High Income November 3, 2003 November 12, 2003 May 11, 2005
Select Maturities September 14, 1992 July 28, 1993 May 11, 2005
Select Portfolio March 10, 1992 July 8, 1993 May 11, 2005
Select Portfolio 2 May 15, 1992 July 8, 1993 May 11, 2005
Select Portfolio 3 July 20, 1992 July 8, 1993 May 11, 2005
California Portfolio June 15, 1992 July 8, 1993 May 11, 2005
New York Portfolio June 15, 1992 July 8, 1993 May 11, 2005
</Table>
- --------------------------------------------------------------------------------
(1) The Original Investment Management Agreements were between the Funds and
Nuveen Advisory Corp. ("NAC") or Nuveen Institutional Advisory Corp.
("NIAC"). Effective January 1, 2005, NAC and NIAC were merged into NAM. As a
result, NAC and NIAC became a part of NAM and ceased to exist separately.
NAM assumed all of NAC and NIAC's obligations under the Original Investment
Management Agreements. Like NAC and NIAC, NAM is a wholly owned subsidiary
of Nuveen. The merger did not constitute a change in control. There was no
change in who manages the Funds or in the Funds' investment objectives or
policies as a result of the merger.
A-1
APPENDIX B
FORM OF INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this [31st] day of [July, 2005], by and between <NAME OF FUND>, a
<TYPE OF ENTITY> (the "Fund"), and NUVEEN ASSET MANAGEMENT, a Delaware
corporation (the "Adviser").
W I T N E S S E T H
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser
for, and to manage the investment and reinvestment of the assets of the
Fund in accordance with the Fund's investment objective and policies
and limitations, and to administer the Fund's affairs to the extent
requested by and subject to the supervision of the <Board of
Trustees/Directors> ("Board") of the Fund for the period and upon the
terms herein set forth. The investment of the Fund's assets shall be
subject to the Fund's policies, restrictions and limitations with
respect to securities investments as set forth in the Fund's then
current registration statement under the Investment Company Act of
1940, and all applicable laws and the regulations of the Securities and
Exchange Commission relating to the management of registered
closed-end, diversified management investment companies.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and
clerical, bookkeeping and administrative services (other than such
services, if any, provided by the Fund's transfer agent) for the Fund,
to permit any of its officers or employees to serve without compensation
as trustees or officers of the Fund if elected to such positions, and to
assume the obligations herein set forth for the compensation herein
provided. The Adviser shall, for all purposes herein provided, be deemed
to be an independent contractor and, unless otherwise expressly provided
or authorized, shall have no authority to act for nor represent the Fund
in any way, nor otherwise be deemed an agent of the Fund.
2. For the services and facilities described in Section l, the Fund will
pay to the Adviser, at the end of each calendar month, an investment
management fee equal to the sum of a Fund-Level Fee and a Complex-Level
Fee.
A. The Fund Level Fee shall be computed by applying the following annual
rate to the average total daily net assets of the Fund:
<Table>
<Caption>
--------------------------------------------------------------------
AVERAGE TOTAL DAILY NET ASSETS RATE
--------------------------------------------------------------------
<SCHEDULE>
--------------------------------------------------------------------
</Table>
B. The Complex-Level Fee shall be calculated by reference to the daily
net assets of the Eligible Funds, as defined below (with such daily
net assets to include, in the case of Eligible Funds whose advisory
fees are calculated by reference to net assets that include net
assets attributable to preferred stock issued by or
B-1
borrowings by the fund, such leveraging net assets) ("Complex-Level
Assets"), pursuant to the following annual fee schedule:
<Table>
<Caption>
-------------------------------------------------------------------
COMPLEX-LEVEL DAILY MANAGED ASSETS(1) RATE
-------------------------------------------------------------------
First $55 billion .2000%
Next $1 billion .1800%
Next $1 billion .1600%
Next $3 billion .1425%
Next $3 billion .1325%
Next $3 billion .1250%
Next $5 billion .1200%
Next $5 billion .1175%
Next $15 billion .1150%
-------------------------------------------------------------------
</Table>
(1) With respect to Complex-Level Assets over $91 billion, the fee
rate or rates that will apply to such assets will be determined
at a later date. The parties agree that, in the unlikely event
that Complex-Wide Assets reach $91 billion prior to the parties
reaching an agreement as to the Complex-Level Fee rate or rates
to be applied to such assets, the Complex-Level Fee rate for
such Complex-Level Assets shall be .1400% until such time as
the parties agree to a different rate or rates.
C. "Eligible Funds", for purposes of this Agreement, shall mean all
Nuveen-branded closed-end and open-end registered investment companies
organized in the United States. Any open-end or closed-end funds that
subsequently become part of the Nuveen complex because either (a)
Nuveen Investments, Inc. or its affiliates acquire the investment
adviser to such funds (or the adviser's parent), or (b) Nuveen
Investments, Inc. or its affiliates acquire the fund's adviser's
rights under the management agreement for such fund, will be evaluated
by both Nuveen management and the Nuveen Funds' Board, on a
case-by-case basis, as to whether or not these acquired funds would be
included in the Nuveen complex of Eligible Funds and, if so, whether
there would be a basis for any adjustments to the complex-level
breakpoints.
D. For the month and year in which this Agreement becomes effective, or
terminates, there shall be an appropriate proration on the basis of
the number of days that the Agreement shall have been in effect during
the month and year, respectively. The services of the Adviser to the
Fund under this Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services or other services to
others so long as its services hereunder are not impaired thereby.
3. The Adviser shall arrange for officers or employees of the Adviser to
serve, without compensation from the Fund, as <trustees/directors>,
officers or agents of the Fund, if duly elected or appointed to such
positions, and subject to their individual consent and to any
limitations imposed by law.
4. Subject to applicable statutes and regulations, it is understood that
officers, <trustees/directors>, or agents of the Fund are, or may be,
interested in the Adviser as officers, directors, agents, shareholders
or otherwise, and that the officers,
B-2
directors, shareholders and agents of the Adviser may be interested in
the Fund otherwise than as trustees, officers or agents.
5. The Adviser shall not be liable for any loss sustained by reason of the
purchase, sale or retention of any security, whether or not such
purchase, sale or retention shall have been based upon the
investigation and research made by any other individual, firm or
corporation, if such recommendation shall have been selected with due
care and in good faith, except loss resulting from willful misfeasance,
bad faith, or gross negligence on the part of the Adviser in the
performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
6. The Adviser currently manages other investment accounts and funds,
including those with investment objectives similar to the Fund, and
reserves the right to manage other such accounts and funds in the
future. Securities considered as investments for the Fund may also be
appropriate for other investment accounts and funds that may be managed
by the Adviser. Subject to applicable laws and regulations, the Adviser
will attempt to allocate equitably portfolio transactions among the
portfolios of its other investment accounts and funds purchasing
securities whenever decisions are made to purchase or sell securities
by the Fund and one or more of such other accounts or funds
simultaneously. In making such allocations, the main factors to be
considered by the Adviser will be the respective investment objectives
of the Fund and such other accounts and funds, the relative size of
portfolio holdings of the same or comparable securities, the
availability of cash for investment by the Fund and such other accounts
and funds, the size of investment commitments generally held by the
Fund and such accounts and funds, and the opinions of the persons
responsible for recommending investments to the Fund and such other
accounts and funds.
7. This Agreement shall continue in effect until [August l, 2006], unless
and until terminated by either party as hereinafter provided, and shall
continue in force from year to year thereafter, but only as long as
such continuance is specifically approved, at least annually, in the
manner required by the Investment Company Act of 1940.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without the payment of any
penalty by the Fund or by the Adviser upon no less than sixty (60) days'
written notice to the other party. The Fund may effect termination by
action of the Board or by vote of a majority of the outstanding voting
securities of the Fund, accompanied by appropriate notice.
This Agreement may be terminated, at any time, without the payment of
any penalty, by the Board of the Fund, or by vote of a majority of the
outstanding voting securities of the Fund, in the event that it shall
have been established by a court of competent jurisdiction that the
Adviser, or any officer or director of the Adviser, has taken any action
which results in a breach of the covenants of the Adviser set forth
herein.
B-3
Termination of this Agreement shall not affect the right of the Adviser
to receive payments on any unpaid balance of the compensation, described
in Section 2, earned prior to such termination.
8. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder shall not be
thereby affected.
9. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for receipt of such notice.
10. The Fund's Declaration of Trust is on file with the Secretary of the
<ENTITY'S STATE OF ORGANIZATION>. This Agreement is executed on behalf
of the Fund by the Fund's officers as officers and not individually and
the obligations imposed upon the Fund by this Agreement are not binding
upon any of the Fund's Board, officers or shareholders individually but
are binding only upon the assets and property of the Fund.
11. This Agreement shall be construed in accordance with applicable federal
law and (except as to Section 10 hereof which shall be construed in
accordance with the laws of <ENTITY'S STATE OF ORGANIZATION>) the laws
of the State of Illinois.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed on the day and year above written.
<NAME OF FUND>
by:
-------------------------
Vice President
Attest:
-------------------------
Assistant Secretary
NUVEEN ASSET MANAGEMENT
by:
-------------------------
Managing Director
Attest:
-------------------------
Assistant Secretary
B-4
APPENDIX C
COMPLEX-LEVEL FEE RATES
<Table>
<Caption>
- ----------------------------------------------------------------------
COMPLEX DAILY NET ASSETS FEE RATE
- ----------------------------------------------------------------------
First $55 billion 0.2000%
Next $1 billion 0.1800%
Next $1 billion 0.1600%
Next $3 billion 0.1425%
Next $3 billion 0.1325%
Next $3 billion 0.1250%
Next $5 billion 0.1200%
Next $5 billion 0.1175%
Next $15 billion 0.1150%
- ----------------------------------------------------------------------
</Table>
FUND-LEVEL FEE RATES, AGGREGATE MANAGEMENT FEES
PAID AND NET ASSETS
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------
FEES PAID
TO THE
ADVISER
FUND AVERAGE DAILY NET DURING LAST NET ASSETS
FUND ASSETS FEE RATE(1) FISCAL YEAR(2) AS OF 5/1/05
- --------------------------------------------------------------------------------------------------------
Municipal Value(3) For the first $500 million 0.1500% $10,462,875 $1,993,520,130.42
For the next $500 million 0.1375%
For net assets over $1 billion 0.1250%
- --------------------------------------------------------------------------------------------------------
Municipal Income For the first $125 million 0.4500% $ 555,018 $ 88,482,604.62
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Premium Income For the first $125 million 0.4500% $ 9,099,976 $1,496,746,376.51
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
</Table>
C-1
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------
FEES PAID
TO THE
ADVISER
FUND AVERAGE DAILY NET DURING LAST NET ASSETS
FUND ASSETS FEE RATE(1) FISCAL YEAR(2) AS OF 5/1/05
- --------------------------------------------------------------------------------------------------------
Performance Plus For the first $125 million 0.4500% $ 8,700,777 $1,427,099,128.31
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Municipal Advantage For the first $125 million 0.4500% $ 6,441,514 $1,045,896,483.34
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Municipal Market
Opportunity For the first $125 million 0.4500% $ 6,670,810 $1,082,502,525.63
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Investment Quality For the first $125 million 0.4500% $ 5,398,345 $ 866,276,913.76
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Insured Quality For the first $125 million 0.4500% $ 5,711,518 $ 917,642,891.65
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
</Table>
C-2
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------
FEES PAID
TO THE
ADVISER
FUND AVERAGE DAILY NET DURING LAST NET ASSETS
FUND ASSETS FEE RATE(1) FISCAL YEAR(2) AS OF 5/1/05
- --------------------------------------------------------------------------------------------------------
Select Quality For the first $125 million 0.4500% $ 5,017,364 $ 811,419,400.16
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Quality Income For the first $125 million 0.4500% $ 7,880,764 $1,295,321,371.71
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Insured Municipal
Opportunity For the first $125 million 0.4500% $12,010,312 $1,973,506,203.30
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Premier Municipal For the first $125 million 0.4500% $ 2,987,029 $ 472,717,190.09
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Premier Insured For the first $125 million 0.4500% $ 2,959,435 $ 467,504,044.88
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
</Table>
C-3
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------
FEES PAID
TO THE
ADVISER
FUND AVERAGE DAILY NET DURING LAST NET ASSETS
FUND ASSETS FEE RATE(1) FISCAL YEAR(2) AS OF 5/1/05
- --------------------------------------------------------------------------------------------------------
Premium Income 2 For the first $125 million 0.4500% $ 6,055,655 $ 981,119,555.64
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Premium Income 4 For the first $125 million 0.4500% $ 5,687,089 $ 929,529,463.13
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Insured Premium
Income 2 For the first $125 million 0.4500% $ 5,008,357 $ 804,550,062.41
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For the next $3 billion 0.3875%
For net assets of $5 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Dividend Advantage For the first $125 million 0.4500% $ 3,017,092(3) $ 904,535,709.34
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For net assets of $2 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Dividend Advantage 2 For the first $125 million 0.4500% $ 2,199,564(4) $ 689,515,546.87
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For net assets of $2 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
</Table>
C-4
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------
FEES PAID
TO THE
ADVISER
FUND AVERAGE DAILY NET DURING LAST NET ASSETS
FUND ASSETS FEE RATE(1) FISCAL YEAR(2) AS OF 5/1/05
- --------------------------------------------------------------------------------------------------------
Dividend Advantage 3 For the first $125 million 0.4500% $ 2,963,030(4) $ 938,433,765.75
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For net assets of $2 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Insured Dividend
Advantage For the first $125 million 0.4500% $ 2,275,738(4) $ 699,012,514.72
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For net assets of $2 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Insured Tax-Free
Advantage For the first $125 million 0.4500% $ 1,313,752(5) $ 420,632,184.11
For the next $125 million 0.4375%
For the next $250 million 0.4250%
For the next $500 million 0.4125%
For the next $1 billion 0.4000%
For net assets of $2 billion 0.3750%
and over
- --------------------------------------------------------------------------------------------------------
Municipal High Income For the first $125 million 0.5500% $ 1,766,717(5) $ 509,655,969.46
For the next $125 million 0.5375%
For the next $250 million 0.5250%
For the next $500 million 0.5125%
For the next $1 billion 0.5000%
For net assets of $2 billion 0.4750%
and over
- --------------------------------------------------------------------------------------------------------
Select Maturities For the first $125 million 0.3000% $ 628,515 $ 127,539,884.65
For the next $125 million 0.2875%
For the next $250 million 0.2750%
For the next $500 million 0.2625%
For the next $1 billion 0.2500%
For net assets of $2 billion 0.2375%
and over
- --------------------------------------------------------------------------------------------------------
Select Portfolio For the first $125 million 0.0500% $ 575,022 $ 242,505,778.90
For the next $125 million 0.0375%
For the next $250 million 0.0250%
For the next $500 million 0.0125%
- --------------------------------------------------------------------------------------------------------
</Table>
C-5
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------
FEES PAID
TO THE
ADVISER
FUND AVERAGE DAILY NET DURING LAST NET ASSETS
FUND ASSETS FEE RATE(1) FISCAL YEAR(2) AS OF 5/1/05
- --------------------------------------------------------------------------------------------------------
Select Portfolio 2 For the first $125 million 0.1000% $ 729,898 $ 256,240,976.04
For the next $125 million 0.0875%
For the next $250 million 0.0750%
For the next $500 million 0.0625%
For the next $1 billion 0.0500%
For net assets of $2 billion 0.0375%
and over
- --------------------------------------------------------------------------------------------------------
Select Portfolio 3 For the first $125 million 0.1000% $ 536,276 $ 186,732,951.50
For the next $125 million 0.0875%
For the next $250 million 0.0750%
For the next $500 million 0.0625%
For the next $1 billion 0.0500%
For net assets of $2 billion 0.0375%
and over
- --------------------------------------------------------------------------------------------------------
California Portfolio For the first $125 million 0.1000% $ 268,217 $ 92,416,487.86
For the next $125 million 0.0875%
For the next $250 million 0.0750%
For the next $500 million 0.0625%
For the next $1 billion 0.0500%
For net assets of $2 billion 0.0375%
and over
- --------------------------------------------------------------------------------------------------------
New York Portfolio For the first $125 million 0.1000% $ 165,342 $ 56,550,995.42
For the next $125 million 0.0875%
For the next $250 million 0.0750%
For the next $500 million 0.0625%
For the next $1 billion 0.0500%
For net assets of $2 billion 0.0375%
and over
- --------------------------------------------------------------------------------------------------------
</Table>
(1) The fee rates shown above went into effect on August 1, 2004. Prior to
August 1, 2004, the investment management fee paid by each Fund was
calculated using the above fund-level fee rates plus 0.20% at each
breakpoint asset level. There was no complex-level component of the
investment management fee prior to August 1, 2004.
(2) Prior to January 1, 2005, investment management services were provided to
the Funds by Nuveen Advisory Corp. ("NAC") or Nuveen Institutional Advisory
Corp. ("NIAC"). Effective January 1, 2005, NAC and NIAC were merged into
NAM. As a result, NAC and NIAC became a part of NAM and ceased to exist
separately. Prior to the reorganization, management fees were paid to NAC or
NIAC. Currently and under the New Investment Management Agreements, all
management fees will be paid to NAM. Like NAM, NAC and NIAC were wholly-
owned subsidiaries of Nuveen.
(3) Municipal Value's fund-level fee is computed using the average weekly net
assets of the Fund. In addition, Municipal Value pays an annual management
fee based on gross interest income as follows: 4.125% for the first $50
million of gross interest income, 4.000% for the next $50 million of gross
interest income and 3.875% for gross interest income over $100 million.
(4) Includes mandatory fee waiver of 0.30% for the period November 1, 2003
through July 31, 2004 and 0.25% for the period August 1, 2004 through
October 31, 2004.
(5) Includes mandatory fee waiver of 0.30%.
(6) Includes mandatory fee waiver of 0.32%.
C-6
APPENDIX D
OFFICERS AND DIRECTORS OF NUVEEN ASSET MANAGEMENT ("NAM")
WHO ARE NOT OFFICERS OR BOARD MEMBERS OF THE FUNDS
<Table>
<Caption>
- --------------------------------------------------------------------------------
NAME PRINCIPAL OCCUPATION
- --------------------------------------------------------------------------------
John P. Amboian President and Director of Nuveen Investments, Inc., Nuveen
Asset Management, Nuveen Investments, LLC, Rittenhouse
Asset Management, Inc., Nuveen Investments Advisers Inc.
and Nuveen Investments Holdings, Inc.
Alan Berkshire Senior Vice President, Secretary and General Counsel of
Nuveen Investments, Inc., Nuveen Asset Management, Nuveen
Investments, LLC, Rittenhouse Asset Management, Inc. and
Nuveen Investments Holdings, Inc.; Senior Vice President
and Secretary of Nuveen Investments Advisers Inc.;
Assistant Secretary of NWQ Investment Management Company,
LLC and Secretary of Symphony Asset Management, LLC.
Stuart J. Cohen Vice President, Assistant Secretary and Assistant General
Counsel of Nuveen Asset Management, Nuveen Investments,
LLC, Nuveen Investments Holdings, Inc. and Rittenhouse
Asset Management, Inc.; Vice President of Nuveen
Investments Advisers Inc.
Sherri A. Hlavacek Vice President and Corporate Controller of Nuveen Asset
Management. Nuveen Investments, LLC, Nuveen Investments
Holdings, Inc., Nuveen Investments Advisers Inc. and
Rittenhouse Asset Management, Inc.; Vice President and
Controller of Nuveen Investments, Inc.; Certified Public
Accountant.
Mary E. Keefe Managing Director of Nuveen Investments, Inc.; Managing
Director and Chief Compliance Officer of Nuveen
Investments, LLC, Nuveen Asset Management, Nuveen
Investments Advisers Inc. and Rittenhouse Asset Management,
Inc.; Chief Compliance Officer of Symphony Asset
Management, LLC.
Margaret E. Wilson Senior Vice President, Finance of Nuveen Investments, Inc.,
Nuveen Asset Management, Nuveen Investments, LLC,
Rittenhouse Asset Management, Inc., Nuveen Investments
Advisers Inc. and Nuveen Investments Holdings, Inc.
- --------------------------------------------------------------------------------
</Table>
D-1
APPENDIX E
NUMBER OF COMMITTEE AND BOARD MEETINGS HELD DURING EACH FUND'S LAST FISCAL YEAR
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------
COMPLIANCE NOMINATING
REGULAR SPECIAL RISK AND
BOARD BOARD EXECUTIVE MANAGEMENT GOVERNANCE DIVIDEND AUDIT
FUND MEETING MEETING COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE
- ------------------------------------------------------------------------------------------------------
For each Fund, except 4 9 0 6 5 5 4
Municipal High
Income(1) 4 9 2 6 5 6 2
Select Maturities 4 5 0 4 5 4 4
Select Portfolio 4 5 0 4 5 4 4
Select Portfolio 2 4 5 0 4 5 4 4
Select Portfolio 3 4 5 0 4 5 4 4
California Portfolio 4 5 0 4 5 4 4
New York Portfolio 4 5 0 4 5 4 4
- ------------------------------------------------------------------------------------------------------
</Table>
(1) Municipal High Income's fiscal year consists of November 19, 2003 to October
31, 2004.
E-1
APPENDIX F
NUVEEN MANAGEMENT INVESTMENT COMPANIES
AUDIT COMMITTEES CHARTER
Revised January 18, 2005
I. ORGANIZATION AND MEMBERSHIP
There shall be a committee of each Board of Directors/Trustees (the "Board") of
the Nuveen Management Investment Companies (the "Funds" or, individually, a
"Fund") to be known as the Audit Committee. The Audit Committee shall be
comprised of at least three Directors/ Trustees. Audit Committee members shall
be independent of the Funds and free of any relationship that, in the opinion of
the Directors/Trustees, would interfere with their exercise of independent
judgment as an Audit Committee member. In particular, each member must meet the
independence and experience requirements applicable to the Funds of the New York
Stock Exchange, the American Stock Exchange, Section 10a of the Securities
Exchange Act of 1934 (the "Exchange Act"), and the rules and regulations of the
Securities and Exchange Commission (the "Commission"). Each such member of the
Audit Committee shall have a basic understanding of finance and accounting, be
able to read and understand fundamental financial statements, and be financially
literate, and at least one such member shall have accounting or related
financial management expertise, in each case as determined by the
Directors/Trustees, exercising their business judgment (this person may also
serve as the Audit Committee's "financial expert" as defined by the Commission).
The Board shall appoint the members and the Chairman of the Audit Committee, on
the recommendation of the Nominating and Governance Committee. The Audit
Committee shall meet periodically but in any event no less frequently than on a
semi-annual basis. Except for the Funds, Audit Committee members shall not serve
simultaneously on the audit committees of more than two other public companies.
II. STATEMENT OF POLICY, PURPOSE AND PROCESSES
The Audit Committee shall assist the Board in oversight and monitoring of (1)
the accounting and reporting policies, processes and practices, and the audits
of the financial statements, of the Funds; (2) the quality and integrity of the
financial statements of the Funds; (3) the Funds' compliance with legal and
regulatory requirements, (4) the independent auditors' qualifications,
performance and independence; and (5) oversight of the Pricing Procedures of the
Funds and the Valuation Group. In exercising this oversight, the Audit Committee
can request other committees of the Board to assume responsibility for some of
the monitoring as long as the other committees are composed exclusively of
independent directors.
In doing so, the Audit Committee shall seek to maintain free and open means of
communication among the Directors/Trustees, the independent auditors, the
internal auditors and the management of the Funds. The Audit Committee shall
meet periodically with Fund management, the Funds' internal auditor, and the
Funds' independent auditors, in separate executive sessions. The Audit Committee
shall prepare reports of the Audit Committee as required by the Commission to be
included in the Fund's annual proxy statements or otherwise.
F-1
The Audit Committee shall have the authority and resources in its discretion to
retain special legal, accounting or other consultants to advise the Audit
Committee and to otherwise discharge its responsibilities, including appropriate
funding as determined by the Audit Committee for compensation to independent
auditors engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for a Fund, compensation to
advisers employed by the Audit Committee, and ordinary administrative expenses
of the Audit Committee that are necessary or appropriate in carrying out its
duties, as determined in its discretion. The Audit Committee may request any
officer or employee of Nuveen Investments, Inc. (or its affiliates)
(collectively, "Nuveen") or the Funds' independent auditors or outside counsel
to attend a meeting of the Audit Committee or to meet with any members of, or
consultants to, the Audit Committee. The Funds' independent auditors and
internal auditors shall have unrestricted accessibility at any time to Committee
members.
RESPONSIBILITIES
Fund management has the primary responsibility to establish and maintain systems
for accounting, reporting, disclosure and internal control.
The independent auditors have the primary responsibility to plan and implement
an audit, with proper consideration given to the accounting, reporting and
internal controls. Each independent auditor engaged for the purpose of preparing
or issuing an audit report or performing other audit, review or attest services
for the Funds shall report directly to the Audit Committee. The independent
auditors are ultimately accountable to the Board and the Audit Committee. It is
the ultimate responsibility of the Audit Committee to select, appoint, retain,
evaluate, oversee and replace any independent auditors and to determine their
compensation, subject to ratification of the Board, if required. These Audit
Committee responsibilities may not be delegated to any other Committee or the
Board.
The Audit Committee is responsible for the following:
With respect to Fund financial statements:
1. Reviewing and discussing the annual audited financial statements and
semi-annual financial statements with Fund management and the
independent auditors including major issues regarding accounting and
auditing principles and practices, and the Funds' disclosures in its
periodic reports under "Management's Discussion and Analysis."
2. Requiring the independent auditors to deliver to the Chairman of the
Audit Committee a timely report on any issues relating to the
significant accounting policies, management judgments and accounting
estimates or other matters that would need to be communicated under
Statement on Auditing Standards (SAS) No. 90, Audit Committee
Communications (which amended SAS No. 61, Communication with Audit
Committees), that arise during the auditors' review of the Funds'
financial statements, which information the Chairman shall further
communicate to the other members of the Audit Committee, as deemed
necessary or appropriate in the Chairman's judgment.
3. Discussing with management the Funds' press releases regarding
financial results and dividends, as well as financial information and
earnings guidance
F-2
provided to analysts and rating agencies. This discussion may be done
generally, consisting of discussing the types of information to be
disclosed and the types of presentations to be made. The Chairman of
the Audit Committee shall be authorized to have these discussions
with management on behalf of the Audit Committee.
4. Discussing with management and the independent auditors (a)
significant financial reporting issues and judgments made in
connection with the preparation and presentation of the Funds'
financial statements, including any significant changes in the Funds'
selection or application of accounting principles and any major
issues as to the adequacy of the Funds' internal controls and any
special audit steps adopted in light of material control
deficiencies; and (b) analyses prepared by Fund management and/or the
independent auditor setting forth significant financial reporting
issues and judgments made in connection with the preparation of the
financial statements, including analyses of the effects of
alternative GAAP methods on the financial statements.
5. Discussing with management and the independent auditors the effect of
regulatory and accounting initiatives on the Funds' financial
statements.
6. Reviewing and discussing reports, both written and oral, from the
independent auditors and/or Fund management regarding (a) all
critical accounting policies and practices to be used; (b) all
alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management, ramifications of the use of such alternative treatments
and disclosures, and the treatment preferred by the independent
auditors; and (c) other material written communications between the
independent auditors and management, such as any management letter or
schedule of unadjusted differences.
7. Discussing with Fund management the Funds' major financial risk
exposures and the steps management has taken to monitor and control
these exposures, including the Funds' risk assessment and risk
management policies and guidelines. In fulfilling its obligations
under this paragraph, the Audit Committee may review in a general
manner the processes other Board committees have in place with
respect to risk assessment and risk management.
8. Reviewing disclosures made to the Audit Committee by the Funds'
principal executive officer and principal financial officer during
their certification process for the Funds' periodic reports about any
significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in the
Funds' internal controls. In fulfilling its obligations under this
paragraph, the Audit Committee may review in a general manner the
processes other Board committees have in place with respect to
deficiencies in internal controls, material weaknesses, or any fraud
associated with internal controls.
F-3
With respect to the independent auditors:
1. Selecting, appointing, retaining or replacing the independent
auditors, subject, if applicable, only to Board and shareholder
ratification; and compensating, evaluating and overseeing the work of
the independent auditor (including the resolution of disagreements
between Fund management and the independent auditor regarding
financial reporting).
2. Meeting with the independent auditors and Fund management to review
the scope, fees, audit plans and staffing for the audit, for the
current year. At the conclusion of the audit, reviewing such audit
results, including the independent auditors' evaluation of the Funds'
financial and internal controls, any comments or recommendations of
the independent auditors, any audit problems or difficulties and
management's response, including any restrictions on the scope of the
independent auditor's activities or on access to requested
information, any significant disagreements with management, any
accounting adjustments noted or proposed by the auditor but not made
by the Fund, any communications between the audit team and the audit
firm's national office regarding auditing or accounting issues
presented by the engagement, any significant changes required from
the originally planned audit programs and any adjustments to the
financial statements recommended by the auditors.
3. Pre-approving all audit services and permitted non-audit services,
and the terms thereof, to be performed for the Funds by their
independent auditors, subject to the de minimis exceptions for
non-audit services described in Section 10a of the Exchange Act that
the Audit Committee approves prior to the completion of the audit, in
accordance with any policies or procedures relating thereto as
adopted by the Board or the Audit Committee. The Chairman of the
Audit Committee shall be authorized to give pre-approvals of such
non-audit services on behalf of the Audit Committee.
4. Obtaining and reviewing a report or reports from the independent
auditors at least annually (including a formal written statement
delineating all relationships between the auditors and the Funds
consistent with Independent Standards Board Standard 1, as may be
amended, restated, modified or replaced) regarding (a) the
independent auditor's internal quality-control procedures; (b) any
material issues raised by the most recent internal quality-control
review, or peer review, of the firm, or by any inquiry or
investigation by governmental or professional authorities within the
preceding five years, respecting one or more independent audits
carried out by the firm; (c) any steps taken to deal with any such
issues; and (d) all relationships between the independent auditor and
the Funds and their affiliates, in order to assist the Audit
committee in assessing the auditor's independence. After reviewing
the foregoing report[s] and the independent auditor's work throughout
the year, the Audit Committee shall be responsible for evaluating the
qualifications, performance and independence of the independent
auditor and their compliance with all applicable requirements for
independence and peer review, and a review and evaluation of the lead
partner, taking into account the opinions of Fund management and the
internal auditors, and discussing such
F-4
reports with the independent auditors. The Audit Committee shall
present its conclusions with respect to the independent auditor to
the Board.
5. Reviewing any reports from the independent auditors mandated by
Section 10A(b) of the Exchange Act regarding any illegal act detected
by the independent auditor (whether or not perceived to have a
material effect on the Funds' financial statements) and obtaining
from the independent auditors any information about illegal acts in
accordance with Section 10A(b).
6. Ensuring the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and the audit partner
responsible for reviewing the audit as required by law, and further
considering the rotation of the independent auditor firm itself.
7. Establishing and recommending to the Board for ratification policies
for the Funds', Fund management or the Fund adviser's hiring of
employees or former employees of the independent auditor who
participated in the audits of the Funds.
8. Taking, or recommending that the Board take, appropriate action to
oversee the independence of the outside auditor.
With respect to any internal auditor:
1. Reviewing the proposed programs of the internal auditor for the
coming year. It is not the obligation or responsibility of the Audit
Committee to confirm the independence of any Nuveen internal auditors
performing services relating to the Funds or to approve any
termination or replacement of the Nuveen Manager of Internal Audit.
2. Receiving a summary of findings from any completed internal audits
pertaining to the Funds and a progress report on the proposed
internal audit plan for the Funds, with explanations for significant
deviations from the original plan.
With respect to pricing and valuation oversight:
1. The Board has responsibilities regarding the pricing of a Fund's
securities under the 1940 Act. The Board has delegated this
responsibility to the Committee to address valuation issues that
arise between Board meetings, subject to the Board's general
supervision of such actions. The Committee is primarily responsible
for the oversight of the Pricing Procedures and actions taken by the
internal Valuation Group ("Valuation Matters"). The Valuation Group
will report on Valuation Matters to the Committee and/or the Board of
Directors/Trustees, as appropriate.
2. Performing all duties assigned to it under the Funds' Pricing
Procedures, as such may be amended from time to time.
3. Periodically reviewing and making recommendations regarding
modifications to the Pricing Procedures as well as consider
recommendations by the Valuation Group regarding the Pricing
Procedures.
F-5
4. Reviewing any issues relating to the valuation of a Fund's securities
brought to the Committee's attention, including suspensions in
pricing, pricing irregularities, price overrides, self-pricing, NAV
errors and corrections thereto, and other pricing matters. In this
regard, the Committee should consider the risks to the Funds in
assessing the possible resolutions of these Valuation Matters.
5. Evaluating, as its deems necessary or appropriate, the performance of
any pricing agent and recommend changes thereto to the full Board.
6. Reviewing any reports or comments from examinations by regulatory
authorities relating to Valuation Matters of the Funds and consider
management's responses to any such comments and, to the extent the
Committee deems necessary or appropriate, propose to management
and/or the full Board the modification of the Fund's policies and
procedures relating to such matters. The Committee, if deemed
necessary or desirable, may also meet with regulators.
7. Meeting with members of management of the Funds, outside counsel, or
others in fulfilling its duties hereunder, including assessing the
continued appropriateness and adequacy of the Pricing Procedures,
eliciting any recommendations for improvements of such procedures or
other Valuation Matters, and assessing the possible resolutions of
issues regarding Valuation Matters brought to its attention.
8. Performing any special review, investigations or oversight
responsibilities relating to Valuation as requested by the Board of
Directors/Trustees.
9. Investigating or initiating an investigation of reports of
improprieties or suspected improprieties in connection with the
Fund's policies and procedures relating to Valuation Matters not
otherwise assigned to another Board committee.
Other responsibilities:
1. Reviewing with counsel to the Funds, counsel to Nuveen, the Fund
adviser's counsel and independent counsel to the Board legal matters
that may have a material impact on the Fund's financial statements or
compliance policies.
2. Receiving and reviewing periodic or special reports issued on
exposure/controls, irregularities and control failures related to the
Funds.
3. Reviewing with the independent auditors, with any internal auditor
and with Fund management, the adequacy and effectiveness of the
accounting and financial controls of the Funds, and eliciting any
recommendations for the improvement of internal control procedures or
particular areas where new or more detailed controls or procedures
are desirable. Particular emphasis should be given to the adequacy of
such internal controls to expose payments, transactions or procedures
that might be deemed illegal or otherwise improper.
4. Reviewing the reports of examinations by regulatory authorities as
they relate to financial statement matters.
F-6
5. Discussing with management and the independent auditor any
correspondence with regulators or governmental agencies that raises
material issues regarding the Funds' financial statements or
accounting policies.
6. Obtaining reports from management with respect to the Funds' policies
and procedures regarding compliance with applicable laws and
regulations.
7. Reporting regularly to the Board on the results of the activities of
the Audit Committee, including any issues that arise with respect to
the quality or integrity of the Funds' financial statements, the
Funds' compliance with legal or regulatory requirements, the
performance and independence of the Funds' independent auditors, or
the performance of the internal audit function.
8. Performing any special reviews, investigations or oversight
responsibilities requested by the Board.
9. Reviewing and reassessing annually the adequacy of this charter and
recommending to the Board approval of any proposed changes deemed
necessary or advisable by the Audit Committee.
10. Undertaking an annual review of the performance of the Audit
Committee.
11. Establishing procedures for the receipt, retention and treatment of
complaints received by the Funds regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission of concerns regarding questionable accounting or
auditing matters by employees of Fund management, the investment
adviser, administrator, principal underwriter, or any other provider
of accounting related services for the Funds, as well as employees of
the Funds.
Although the Audit Committee shall have the authority and responsibilities set
forth in this Charter, it is not the responsibility of the Audit Committee to
plan or conduct audits or to determine that the Funds' financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. That is the responsibility of management and the independent
auditors. Nor is it the duty of the Audit Committee to conduct investigations,
to resolve disagreements, if any, between management and the independent
auditors or to ensure compliance with laws and regulations.
F-7
APPENDIX G
AMENDED AND RESTATED
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
I. NOMINATING AND GOVERNANCE COMMITTEE: MEMBERSHIP AND PURPOSE
The Nominating and Governance Committee shall be composed entirely of
independent directors of the Board with one independent director elected as
chair of the committee. The term "independent director" as used in this Charter
means any director or trustee who is not an "interested person" of the Funds as
such term is defined in the Investment Company Act of 1940, as amended, and any
rules or regulations adopted thereunder (the "1940 Act").
The purpose of the Committee is to seek, identify and recommend to the Board
qualified candidates for election or appointment to the Funds' Board of
Directors, and matters related thereto. In addition, the Committee oversees
matters of corporate governance, including the evaluation of Board performance
and processes, and assignment and rotation of Committee members, the
establishment of corporate governance guidelines and procedures, to the extent
necessary or desirable, and matters related thereto.
II. BOARD: SELECTION AND TENURE
A. The Committee shall periodically review the composition of the Board
of Directors, including its size and mix of skills, experience, and
background.
B. The Committee shall, as part of the recruitment process, and with the
assistance of its counsel, define and clarify the duties and
responsibilities of Board members. In performing this function, the
Committee shall consider, among other things, legal and fiduciary
duties; expectations regarding preparation, attendance, and
participation at meetings; fund ownership; and limitations on
investments.
C. The Committee shall make nominations for director membership on the
Board of Directors, with input from various sources as the committee
deems necessary. The Committee shall evaluate the members of the
current Board of Directors and identify, recruit and evaluate
candidates for Board membership, including evaluation of their
independence from the Funds' investment adviser and other principal
service providers, including any affiliates of such persons, if
applicable. The Committee shall consider the effect of any
relationships beyond those delineated in the 1940 Act and any other
applicable federal securities laws and regulations and rules and
regulations of self-regulatory organizations that might impair their
independence, e.g., business, financial or family relationships with
the Funds' investment adviser and service providers, including any
affiliates of such persons.
D. The Committee shall review on an annual basis questionnaires
completed by all directors regarding their independence.
G-1
E. The Committee shall periodically review and make recommendations with
regard to the tenure of the directors, including term limits and/or
age limits.
F. The Committee shall look to many sources for recommendations of
qualified directors. These sources shall include current directors,
members of the management company, current security holders of the
Funds, third party sources and any other persons or entities as may
be deemed necessary or desirable by the Committee. The Committee may,
but shall not be required to, develop and establish additional
material elements of the foregoing policy in furtherance of the
objectives and elements currently stated therein.
G. The Committee may, but shall not be required to, establish necessary
or desirable minimum qualifications to be possessed by all nominees
and may also establish specific qualities or skills to be possessed
by one or more directors.
III. COMMITTEES: SELECTION AND REVIEW
A. Subject to the approval of the full Board, the Committee shall review
committee assignments at least annually and make nominations for
director membership on all committees. The committee shall also
recommend to the full Board the chair of each committee.
B. The Committee shall periodically review and make recommendations to
the full Board regarding the responsibilities and charters of any
committee (other than the Audit Committee) of the Board, the
continuing need for each committee, the need for additional
committees, and the need or desire to combine or reorganize
committees.
IV. BOARD: EDUCATION AND OPERATIONS
A. The Committee shall periodically review and make recommendations
concerning continuing education for incumbent directors and
appropriate orientation materials and procedures for new directors.
B. The Committee shall periodically review and make recommendations
concerning the organization of Board of Directors meetings, including
the frequency, timing, content, and agendas of the meetings.
C. The Committee shall evaluate the performance of the Board at least
annually, with a view towards enhancing its effectiveness.
D. The Committee shall establish a process by which security holders
will be able to communicate in writing with members of the Board of
Directors via regular mail. The Manager of Fund Board Relations, or
such other person designated by the Committee, shall assist the
Committee in developing and implementing this process. The process
will also provide that the Manager of Fund Board Relations, or such
other person designated by the Committee, will be appointed to
administer the operations of the communications process established
hereunder. Written communications to directors should be
G-2
addressed to the Funds at the address of the principal offices of the
Funds, which currently is 333 West Wacker Drive, Chicago, Illinois
60606. If the communication is intended for a specific director and
so indicated it will be sent only to that director. If a
communication does not indicate a specific director it will be sent
to the Chair of the Committee and the outside counsel to the
independent directors for further distribution as deemed appropriate
by such persons. The Committee is hereby authorized to oversee the
administration, implementation and maintenance of this communications
process and further develop and refine this process as deemed
necessary or desirable by the Committee.
E. The Committee shall establish a policy relating to attendance by
directors at annual meetings of the Funds.
V. OTHER POWERS AND RESPONSIBILITIES
A. The Committee shall monitor the performance of legal counsel, and any
other service providers (other than the independent auditors, which
are monitored by the Audit Committee) that are chosen by the
directors, and shall supervise counsel for the independent directors.
B. The Committee shall periodically review and make recommendations
regarding director compensation to the full Board of Directors.
C. The Committee shall have the resources and authority to discharge its
responsibilities, including authority to retain special counsel and
other experts or consultants at the expense of the appropriate
Fund(s).
D. The Committee shall be authorized to adopt Key Practices to further
develop, clarify and implement its duties and responsibilities as set
forth in this Charter, which Key Practices may be amended and/or
restated from time to time upon the approval of a majority of the
members of the Committee.
G-3
[NUVEEN INVESTMENTS LOGO]
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com NUV0705
[NUVEEN INVESTMENTS LOGO]
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
www.nuveen.com
3 EASY WAYS TO VOTE YOUR PROXY
1. Automated Touch Tone Voting: Call toll-free 1-800-690-6903 and follow the
recorded instructions.
2. On the Internet at www.proxyweb.com, and follow the simple instructions.
3. Sign, Date and Return this proxy card using the enclosed postage-paid
envelope.
**** CONTROL NUMBER: 999 999 999 999 98 ****
[FUND NAME PRINTS HERE]
THIS PROXY IS SOLICITED BY THE BOARD OF THE FUND
FOR AN ANNUAL MEETING OF SHAREHOLDERS, JULY 26, 2005
The Annual Meeting of shareholders will be held in the Assembly Room of The
Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois, on Tuesday,
July 26, 2005, at 10:30 a.m., Chicago time. At this meeting, you will be asked
to vote on the proposals described in the proxy statement attached. The
undersigned hereby appoints Timothy R. Schwertfeger, Jessica R. Droeger and
Gifford R. Zimmerman, and each of them, with full power of substitution, proxies
for the undersigned, to represent and vote the shares of the undersigned at the
Annual Meeting of shareholders to be held on July 26, 2005, or any adjournment
or adjournments thereof.
WHETHER OR NOT YOU PLAN TO JOIN US AT THE MEETING, PLEASE COMPLETE, DATE AND
SIGN YOUR PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE SO THAT YOUR VOTE
WILL BE COUNTED. AS AN ALTERNATIVE, PLEASE CONSIDER VOTING BY TELEPHONE (800)
690-6903 OR OVER THE INTERNET (www.proxyweb.com).
Date:
-----------------------------------
SIGN HERE EXACTLY AS NAME(S) APPEAR(S)
ON LEFT. (Please sign in Box)
----------------------------------------
----------------------------------------
NOTE: PLEASE SIGN YOUR NAME EXACTLY AS
IT APPEARS ON THIS PROXY. IF SHARES ARE
HELD JOINTLY, EACH HOLDER MUST SIGN THE
PROXY, IF YOU ARE SIGNING ON BEHALF OF
AN ESTATE, TRUST OR CORPORATION, PLEASE
STATE YOUR TITLE OR CAPACITY.
PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting.
PROPERLY EXECUTED PROXIES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, SUCH SHARES WILL BE VOTED "FOR" THE PROPOSAL SET FORTH IN THIS PROXY AND
"FOR" THE ELECTION OF NOMINEES TO THE BOARD
FOR AGAINST ABSTAIN
1. Approval of the new investment management [ ] [ ] [ ]
agreement.
2a. Election of Board Members: WITHHOLD
FOR NOMINEES AUTHORITY
listed at left to vote for all
(except as marked nominees listed
to the contrary) at left
[ ] [ ]
(01) Robert P. Bremner (06) William J. Schneider
(02) Lawrence H. Brown (07) Timothy R. Schwertfeger
(03) Jack B. Evans (08) Judith M. Stockdale
(04) William C. Hunter (09) Eugene S. Sunshine
(05) David J. Kundert
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NUMBER(S) OF THE NOMINEE(S) ON THE LINE
PROVIDED BELOW.)
- ---------------------------------------------------------------
PLEASE SIGN ON REVERSE
[NUVEEN INVESTMENTS LOGO]
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606
www.nuveen.com
3 EASY WAYS TO VOTE YOUR PROXY
1. Automated Touch Tone Voting: Call toll-free 1-800-690-6903 and follow the
recorded instructions.
2. On the Internet at www.proxyweb.com, and follow the simple instructions.
3. Sign, Date and Return this proxy card using the enclosed postage-paid
envelope.
**** CONTROL NUMBER: 999 999 999 999 98 ****
[FUND NAME PRINTS HERE]
THIS PROXY IS SOLICITED BY THE BOARD OF THE FUND
FOR AN ANNUAL MEETING OF SHAREHOLDERS, JULY 26, 2005
The Annual Meeting of shareholders will be held in the Assembly Room of The
Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois, on Tuesday,
July 26, 2005, at 10:30 a.m., Chicago time. At this meeting, you will be asked
to vote on the proposals described in the proxy statement attached. The
undersigned hereby appoints Timothy R. Schwertfeger, Jessica R. Droeger and
Gifford R. Zimmerman, and each of them, with full power of substitution, proxies
for the undersigned, to represent and vote the shares of the undersigned at the
Annual Meeting of shareholders to be held on July 26, 2005, or any adjournment
or adjournments thereof.
WHETHER OR NOT YOU PLAN TO JOIN US AT THE MEETING, PLEASE COMPLETE, DATE AND
SIGN YOUR PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE SO THAT YOUR VOTE
WILL BE COUNTED. AS AN ALTERNATIVE, PLEASE CONSIDER VOTING BY TELEPHONE (800)
690-6903 OR OVER THE INTERNET (www.proxyweb.com).
Date:
-----------------------------------
SIGN HERE EXACTLY AS NAME(S) APPEAR(S)
ON LEFT. (Please sign in Box)
----------------------------------------
----------------------------------------
NOTE: PLEASE SIGN YOUR NAME EXACTLY AS
IT APPEARS ON THIS PROXY. IF SHARES ARE
HELD JOINTLY, EACH HOLDER MUST SIGN THE
PROXY, IF YOU ARE SIGNING ON BEHALF OF
AN ESTATE, TRUST OR CORPORATION, PLEASE
STATE YOUR TITLE OR CAPACITY.
PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting.
PROPERLY EXECUTED PROXIES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, SUCH SHARES WILL BE VOTED "FOR" THE PROPOSAL SET FORTH IN THIS PROXY AND
"FOR" THE ELECTION OF NOMINEES TO THE BOARD.
FOR AGAINST ABSTAIN
1. Approval of the new investment management [ ] [ ] [ ]
agreement.
2a. Election of Board Members:
WITHHOLD
FOR NOMINEES AUTHORITY
listed at left to vote for all
(except as marked nominees listed
to the contrary) at left
[ ] [ ]
(01) Robert P. Bremner (05) David J. Kundert
(02) Lawrence H. Brown (06) Judith M. Stockdale
(03) Jack B. Evans (07) Eugene S. Sunshine
(04) William C. Hunter
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NUMBER(S) OF THE NOMINEE(S) ON THE LINE
PROVIDED BELOW.)
- ---------------------------------------------------------------
PLEASE SIGN ON REVERSE SIDE