1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 Rule 14a-11(c) or Rule 14a-12
NUVEEN INSURED CALIFORNIA SELECT TAX-FREE INCOME PORTFOLIO
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(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):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
[ ] 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:
--------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
--------------------------------------------------------------------------------
(3) Filing party:
--------------------------------------------------------------------------------
(4) Date filed:
--------------------------------------------------------------------------------
2
* JUNE 2001 *
IMPORTANT NOTICE
TO NUVEEN SELECT PORTFOLIO SHAREHOLDERS
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. Closed-end investment companies listed on the New York Stock Exchange such
as your Fund are required to hold annual meetings to approve the election of
Trustees and to ratify the selection of independent public accountants. In
addition, such companies are required to obtain shareholder approval for certain
changes to their organizational documents and changes to their investment
policies. Your Fund is seeking shareholder approval on the following items:
- To elect seven (7) trustees to serve for each Fund until the next annual
meeting.
- Ratification of the selection of Ernst & Young LLP as independent public
accountants for each Fund.
- For each Fund, an amendment to the Declaration of Trust.
- For the Insured Funds, an amendment to a fundamental investment policy.
Please refer to the proxy statement for a detailed explanation of the proposed
items.
Q. HOW WILL THE PROPOSALS AFFECT ME AS A FUND SHAREHOLDER?
A. The investment manager for your Funds is seeking to maintain competitive
dividend rates. If the amendments to the Declarations of Trust are approved, the
Funds' investment manager will have greater ability to invest in higher
yielding, longer-term investment grade municipal obligations. The amendments
will accomplish this by eliminating the 2017 termination date for each Fund and
permit it to operate indefinitely.
In addition, the adviser wants to amend a fundamental policy concerning
insurance for the California and New York Insured Funds. By allowing the adviser
to invest in uninsured investment grade quality bonds as well as insured bonds,
the adviser expects this will improve the Funds' potential to achieve a higher
yield while retaining strong overall credit quality. Changes to the investment
policy regarding insurance may be viewed as increasing the risk profile of the
Fund because the Fund's assets will be invested in lower rated, uninsured bonds.
3
Q. HOW DO THE TRUSTEES OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the trustees of your Fund unanimously recommend
that you vote "FOR" each of the items proposed.
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 to these items will help save on the costs
of any further solicitations for a shareholder vote. 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 or Nuveen at (800)
257-8787 weekdays from 7:00 a.m. to 7:00 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 them in the enclosed postage-paid envelope. In addition, you may
vote by telephone by calling the toll free number on the proxy card or by
computer over the Internet (www.proxyvote.com) and using the control number on
the proxy card.
Q. WILL ANYONE CONTACT ME?
A. You may receive a call to verify that you received your proxy materials and
to answer any questions you may have about the proposals.
4
NOTICE OF ANNUAL MEETINGS 333 West Wacker Drive
OF SHAREHOLDERS - AUGUST 1, 2001 Chicago, Illinois
60606
(800) 257-8787
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 2
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 3
NUVEEN INSURED CALIFORNIA SELECT TAX-FREE INCOME PORTFOLIO
NUVEEN INSURED NEW YORK SELECT TAX-FREE INCOME PORTFOLIO
June 28, 2001
TO THE SHAREHOLDERS OF THE ABOVE FUNDS:
Notice is hereby given that the Annual Meeting of Shareholders of each of Nuveen
Select Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio 2,
Nuveen Select Tax-Free Income Portfolio 3, Nuveen Insured California Select
Tax-Free Income Portfolio ("Insured California") and Nuveen Insured New York
Select Tax-Free Income Portfolio ("Insured New York"), each a Massachusetts
business trust (each, a "Fund" and, collectively, the "Funds"), will be held in
the sixth floor auditorium of The Northern Trust Company, 50 South LaSalle
Street, Chicago, Illinois, on Wednesday, August 1, 2001, at 10:30 a.m., Chicago
time, for the following purposes:
1. For each Fund, to elect seven (7) trustees to serve for each Fund until
the next Annual Meeting and until their successors shall have been duly elected
and qualified.
2. For each Fund, to ratify the selection of Ernst & Young LLP as
independent auditors for the fiscal year ending March 31, 2002.
3. For each Fund, to approve an amendment to the Declaration of Trust.
4. For the Insured California and Insured New York Funds, to approve an
amendment to a fundamental investment policy.
5. To transact such other business as may properly come before the Annual
Meeting.
Shareholders of record of each Fund at the close of business on June 5, 2001 are
entitled to notice of and to vote at that Fund's Annual 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, ENTER THE CONTROL NUMBER FOUND ON YOUR PROXY
CARD, AND FOLLOW THE RECORDED INSTRUCTIONS, USING YOUR PROXY CARD AS A GUIDE. TO
VOTE OVER THE INTERNET, GO TO WWW.PROXYVOTE.COM, ENTER THE CONTROL NUMBER FOUND
ON YOUR PROXY CARD, AND FOLLOW THE INSTRUCTIONS, USING YOUR PROXY CARD AS A
GUIDE.
Gifford R. Zimmerman
Vice President and Secretary
5
JOINT PROXY STATEMENT
JUNE 28, 2001 333 West Wacker
Drive
Chicago, Illinois
60606
(800) 257-8787
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO (NXP)
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 2 (NXQ)
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 3 (NXR)
NUVEEN INSURED CALIFORNIA SELECT TAX-FREE INCOME PORTFOLIO (NXC)
NUVEEN INSURED 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 Trustees of each of 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 Insured California Select Tax-Free Income Portfolio ("Insured
California") and Nuveen Insured New York Select Tax-Free Income Portfolio
("Insured New York") (each a "Fund" and collectively the "Funds") of proxies to
be voted at the Annual Meeting of Shareholders of each Fund to be held on August
1, 2001 (for each Fund, an "Annual Meeting" and, collectively, the "Annual
Meetings"), and at any and all adjournments thereof.
On the matters coming before each Fund's Annual Meeting as to which a choice has
been specified by the shareholders of that Fund on the proxy, the shares will be
voted accordingly. If no choice is so specified, the shares of each Fund will be
voted FOR the election of the seven nominees for trustee, as listed in this
Joint Proxy Statement; FOR ratification of the selection of Ernst & Young LLP as
each Fund's independent auditors; FOR the approval of an amendment to the
Declaration of Trust; and for the Insured California and Insured New York Funds
only, FOR the approval of an amendment to a fundamental investment policy.
Shareholders of any Fund 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 that
Annual Meeting and voting in person.
Because the same matters are being considered and voted on by the shareholders,
the Board of Trustees of each Fund has determined that the use of this Joint
Proxy Statement for each Fund's Annual Meeting is in the best interest of each
Fund and its shareholders. Shareholders of each Fund will vote separately on
each proposal relating to their Fund, and a vote on a proposal by the
shareholders of one Fund will not affect the vote on the proposal by the
shareholders of another Fund.
A quorum of shareholders is required to take action at each Fund's Annual
Meeting. A majority of the shares entitled to vote at each Annual Meeting,
represented in person or by proxy, will constitute a quorum of shareholders at
that Annual Meeting. Votes cast by proxy or in person at each Annual Meeting
will be tabulated by the inspectors of election appointed for that Annual
Meeting. The inspectors of election will determine whether or not a quorum is
present at each Annual 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
1
6
or persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting powers on a particular matter) as present for purposes of
determining a quorum.
For purposes of determining the approval of the matters submitted to the
shareholders for a vote, abstentions and broker non-votes will have no effect in
the election of trustees (the seven nominees receiving the largest number of
votes will be elected) and will be treated as shares voted against ratification
of the selection of independent auditors and the proposals to amend each Fund's
Declaration of Trust and to amend a fundamental policy of the Insured California
and Insured New York Funds. The details of all proposals to be voted on by the
shareholders of each Fund and the vote required for approval of each proposal
are set forth under the description of each proposal below.
Those persons who were shareholders of record at the close of business on June
5, 2001 will be entitled to one vote for each share held. As of June 5, 2001,
shares of the Funds were issued and outstanding as follows:
--------------------------------------------------
FUND NYSE TICKER SYMBOL SHARES
--------------------------------------------------
Select Portfolio NXP 16,378,105
Select Portfolio
2 NXQ 17,607,068
Select Portfolio
3 NXR 12,964,124
Insured
California NXC 6,259,022
Insured New York NXN 3,907,069
This Proxy Statement is first being mailed to shareholders of the Funds on or
about June 28, 2001.
1. ELECTION OF TRUSTEES OF EACH FUND
At each Fund's Annual Meeting, seven (7) trustees are to be elected to serve
until the next Annual Meeting and until their successors shall have been duly
elected and qualified. The affirmative vote of a plurality of the shares present
and entitled to vote will be required to elect the trustees of each Fund.
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
trustee of each Fund if elected; however, should any nominee become unable or
unwilling to accept nomination or election, the proxies for each Fund will be
voted for one or more substitute nominees designated by that Fund's present
Board of Trustees.
Other than Mr. Schwertfeger, none of the trustees have ever been a director or
an employee of Nuveen Investments ("Nuveen") or any affiliate.
The table below shows each nominee's date of birth, principal occupation and
other business affiliations and the number of shares of the Funds which each
nominee beneficially owned as of April 30, 2001. Messrs. Bacon, Kissick and
Leafstrand have been trustees of the Funds since each Fund was organized in
1992. Ms. Wellington and Mr. Schwertfeger were elected as trustees in 1994 and
1996, respectively. Mr. Evans was elected as trustee in 1999. Mr. Bennett was
appointed a trustee in January 2001. The nominees for election to the Board are
the same for each Fund.
2
7
THE BOARD OF TRUSTEES OF EACH FUND UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE NOMINEES NAMED BELOW.
NOMINEES FOR TRUSTEE OF EACH FUND
--------------------------------------------------------------------------------
FULL SHARES
BENEFICIALLY OWNED AS
OF
APRIL 30, 2001
---------------------
NAME, BIRTHDATE AND PRINCIPAL OCCUPATIONS OF THE ALL NUVEEN
NOMINEES AS OF APRIL 30, 2001(1) FUNDS(2) FUNDS(3)
--------------------------------------------------------------------------------
James E. Bacon (2/27/31) 1,000 5,721
Business consultant and Treasurer, Cathedral of St. John
the Devine (New York City); formerly (1992-1999),
Director of Lone Star Industries, Inc.; previously,
Director and Executive Vice President of U.S. Trust
Corporation and Trustee of United States Trust Company of
New York.
William E. Bennett (10/16/46) 0 3,000
Private Investor; previously President and C.E.O. Draper
& Kramer, Inc. (September 1995 - August 1998).
Jack B. Evans (10/22/48) 0 9,488
President, The Hall-Perrine Foundation (a private
philanthropic corporation); Director, Alliant Energy;
Director and Vice Chairman United Fire & Casualty
Company; previously, President and Chief Operating
Officer, SCI Financial Group, Inc. (a regional financial
services firm).
William L. Kissick (7/29/32) 3,500 5,245
Professor, School of Medicine and the Wharton School of
Management and former Chairman, Leonard Davis Institute
of Health Economics, University of Pennsylvania.
Thomas E. Leafstrand (11/11/31) 3,552 16,859
Retired; previously, Vice President in charge of
Municipal Underwriting, Trading, and Dealer Sales at The
Northern Trust Company.
*Timothy R. Schwertfeger (3/28/49) 0 347,225
Chairman (since May 1999), President and Trustee (since
July 1996) of the Funds advised by Nuveen Institutional
Advisory Corp. and the funds advised by Nuveen Senior
Loan Asset Management Inc.; Chairman (since July 1996)
and Director of The John Nuveen Company, Nuveen
Investments, Nuveen Advisory Corp., Nuveen Institutional
Advisory Corp. and the Funds advised by Nuveen Advisory
Corp.; previously, Executive Vice President of The John
Nuveen Company, Nuveen Investments, Nuveen Advisory Corp.
and Nuveen Institutional Advisory Corp.; Chairman and
Director (since January 1997) of Nuveen Asset Management,
Inc.; Chairman and Director of Rittenhouse Financial
Services, Inc. (since March 1999); Chief Executive
Officer and Director of Nuveen Senior Loan Asset
Management Inc. (since September 1999).
Sheila W. Wellington (2/24/32) 4,000 17,781
President, Catalyst (a not-for-profit organization
focusing on women's leadership development in business
and the professions).
--------------------------------------------------------------------------------
3
8
* "Interested person" as defined in the Investment Company Act of 1940, as
amended, by reason of being an officer or director of the Fund's investment
adviser, Nuveen Institutional Advisory Corp.
(1) The trustees are also trustees of 9 open-end funds advised by Nuveen
Institutional Advisory Corp. ("NIAC") and two funds managed by Nuveen Senior
Loan Asset Management Inc. ("NSLAM"). In addition, Mr. Schwertfeger is a
director of 66 closed-end funds and 35 open-end funds advised by Nuveen Advisory
Corp. ("NAC").
(2) The shares in this column include the following:
------------------------------------------------------------------------------
SELECT SELECT SELECT
PORTFOLIO PORTFOLIO 2 PORTFOLIO 3
------------------------------------------------------------------------------
James E. Bacon -- 1,000 --
William L. Kissick 1,500 1,000 1,000
Thomas E. Leafstrand 3,150 100 302
Sheila W. Wellington 1,000 1,000 2,000
------------------------------------------------------------------------------
(3) The number shown reflects the aggregate number of common shares beneficially
owned by the nominee in the Funds, the other funds advised by NIAC, the funds
advised by NAC (excluding the NAC money market funds) and the funds advised by
NSLAM. For each trustee, the amount reflected includes share equivalents of
certain Nuveen funds in which the trustee is deemed to be invested pursuant to
the Deferred Compensation Plan for Independent Trustees, as more fully described
under "Compensation." For Mr. Schwertfeger, the amount reflected also includes
shares held in Nuveen's 401(k)/Profit Sharing Plan.
No trustee nominee beneficially owned any shares of the Insured California Fund
or shares of the Insured New York Fund. The above persons have sole voting power
and sole investment power as to the shares listed above, with the exception of
Mr. Schwertfeger and Ms. Wellington's shares being held jointly with their
respective spouses.
COMPENSATION
The trustees affiliated with Nuveen or NIAC serve without any compensation from
the Funds. Trustees who are not affiliated with Nuveen or NIAC ("Independent
Trustees") receive a $35,000 annual retainer for serving as a trustee for all
funds managed by NIAC, $1,000 fee per day plus expenses for attendance in person
at all meetings (other than a meeting of the dividend and valuation committee
held solely to declare a dividend), $500 for attendance by telephone of such
meetings and $200 for attendance in person or by telephone at a meeting of the
dividend and valuation committee. The annual retainer, fees and expenses are
allocated among the Funds on the basis of relative net asset sizes.
The Board of Trustees of certain Nuveen Funds (the "Participating Funds") have
adopted a Deferred Compensation Plan for Independent Trustees (the "Plan").
Under the Plan, the Independent Trustees of the Participating Funds may defer
receipt of all, or a portion of, their compensation for services to the
Participating Funds. Any deferred amount is treated as though an equivalent
dollar amount had been invested in shares of one or more eligible Funds selected
by the participant trustee.
Each of the Funds is a Participating Fund and each Independent Trustee has
elected to defer all or a portion of their compensation. Total deferred fees for
the Funds for fiscal year 2001 (including the return from the assumed investment
in the eligible Nuveen Funds) payable are shown in the Deferred Fees table
below.
4
9
The table below shows, for each trustee who is not affiliated with Nuveen or
NIAC, the aggregate compensation (1) paid by each Fund for its fiscal year ended
March 31, 2001 and (2) the total compensation paid by the funds advised by NIAC
and the funds advised by Nuveen Senior Loan Asset Management ("NSLAM") during
the calendar year 2000.
COMPENSATION TABLE
----------------------------------------------------------------------------------------------
TOTAL
COMPENSATION
NUVEEN FUNDS
PAID TO
NAME OF TRUSTEE AGGREGATE COMPENSATION FROM EACH OF THE FUNDS(1) TRUSTEES(2)
--------------------- --------------------------------------------------------- ------------
SELECT SELECT SELECT INSURED INSURED
PORTFOLIO PORTFOLIO 2 PORTFOLIO 3 CALIFORNIA NEW YORK
---------------------------------------------------------
James E. Bacon $3,971 $4,228 $3,026 $1,489 $912 $45,500
William E. Bennett(3) -- -- -- -- -- --
Jack B. Evans 3,928 4,182 2,994 1,473 902 45,500
William L. Kissick 3,934 4,188 2,998 1,475 904 45,500
Thomas E. Leafstrand 3,908 4,159 2,982 1,476 911 47,100
Sheila W. Wellington 3,658 3,893 2,787 1,372 840 45,500
----------------------------------------------------------------------------------------------
(1) Includes deferred fees. Pursuant to the Plan, deferred amounts are treated
as though an equivalent dollar amount has been invested in shares of one of
more eligible Nuveen Funds.
(2) Includes compensation for service on the Board of the Funds, the open-end
funds advised by NIAC, and the funds advised by NSLAM.
(3) Mr. Bennett, who was appointed to the Board on January 31, 2001, did not
receive any compensation in the timeframe reflected in the table.
DEFERRED FEES
-------------------------------------------------------------
SELECT SELECT SELECT INSURED INSURED
NAME OF TRUSTEE PORTFOLIO PORTFOLIO 2 PORTFOLIO 3 CALIFORNIA NEW YORK
----------------------------- -------------------------------------------------------------
James E. Bacon $ 1,722 $ 1,833 $ 1,312 $ 646 $ 396
Jack B. Evans 1,829 1,947 1,394 686 420
William L. Kissick 1,490 1,586 1,135 559 342
Thomas E. Leafstrand 1,744 1,856 1,331 659 407
Sheila W. Wellington 3,658 3,893 2,787 1,372 840
----------------------------------------------------------------------------------------------
The John Nuveen Company ("JNC") maintains charitable contributions programs to
encourage the active support and involvement of individuals in the civic
activities of their community. These programs include a matching contributions
program and a direct contributions program.
The Independent Trustees of the Funds are eligible to participate in the
charitable contributions program of JNC. Under the matching program, JNC will
match the personal
5
10
contributions of an Independent Trustee to Section 501(c)(3) organizations up to
an aggregate maximum amount of $10,000 during any calendar year. Under its
direct (non-matching) program, JNC makes contributions to qualifying Section
501(c)(3) organizations, as approved by the corporate contributions committee of
JNC. The Independent Trustees are also eligible to submit proposals to the
committee requesting that contributions be made under this program to Section
501(c)(3) organizations identified by the Independent Trustees, in an aggregate
amount not to exceed $5,000 during any calendar year. Any contribution made by
JNC under the direct program is made solely at the discretion of the corporate
contributions committee.
William L. Kissick and Timothy R. Schwertfeger serve as the current members of
the executive committee of each Fund's Board of Trustees. Each Fund's executive
committee, which meets between regular meetings of the Board of Trustees, is
authorized to exercise all of the powers of the Board of Trustees. The
respective executive committees of the Funds held no meetings during the fiscal
year ended March 31, 2001.
William E. Bennett, Thomas E. Leafstrand and Timothy R. Schwertfeger are the
current members of the dividend and valuation committee for each Fund. The
dividend and valuation committee is authorized to declare distributions on the
Funds' shares including, but not limited to, regular and special dividends,
capital gains and ordinary income distributions. The dividend and valuation
committee of each Fund held twelve meetings during the period from April 1, 2000
through the Funds' fiscal year end of March 31, 2001.
Each Fund's Board of Trustees has an audit committee currently composed of James
E. Bacon, William E. Bennett, Jack B. Evans, William L. Kissick and Thomas E.
Leafstrand, trustees of the Funds who are not "interested persons" of the Funds
and who are "independent" as that term is defined in Section 303.01(B)(2)(a) and
(3) of the New York Stock Exchange's listing standards. Each Fund's audit
committee reviews the work and any recommendations of that Fund's independent
auditors. Based on such review, it is authorized to make recommendations to the
Board of Trustees. The audit committee has adopted a written charter. A copy of
the written charter is attached as Appendix A to this proxy statement. The
respective audit committees of the Funds held three meetings during the fiscal
year ended March 31, 2001.
Nomination of those trustees who are not "interested persons" of a Fund is
committed to a nominating and governance committee composed of the trustees who
are not "interested persons" of that Fund. Members of each Fund's nominating and
governance committee are James E. Bacon, William E. Bennett, Jack B. Evans,
William L. Kissick, Thomas E. Leafstrand and Sheila W. Wellington. Each Fund's
nominating and governance committee identifies and recommends individuals to be
nominated for election as non-interested trustees as well as reviewing matters
relating to the composition, duties, recruitment, independence and tenure of
Trustees; the selection and review of Committee assignments; and Trustee
education, Board meetings and Board performance. The respective nominating and
governance committees of the Funds held three meetings during the fiscal year
ended March 31, 2001. No policy or procedure has been established as to the
recommendation of trustee nominees by shareholders.
The respective Board of Trustees of each Fund held four regular board meetings
and one special board meeting during the fiscal year ended March 31, 2001.
During the last fiscal year, each Board member attended 75% or more of each
Fund's Board meetings and
6
11
committee meetings (if a member thereof) except for Mr. Bennett who joined the
Board on January 31, 2001.
Each Fund has the same executive officers. The following table sets forth
information with respect to each executive officer of the Funds, other than Mr.
Schwertfeger who is a trustee and included in the table relating to the nominees
for the Board. Officers of the Funds receive no compensation from the Funds. The
term of office of all officers will expire in July 2001. The Board will consider
the election of officers at the Board meeting to be held after the Annual
Meetings, to serve until July 2002 and as set forth in each Fund's by-laws.
----------------------------------------------------------------------------------
NAME, BIRTHDATE AND PRINCIPAL OCCUPATIONS
OF EXECUTIVE OFFICERS AS OF APRIL 30, 2001 POSITIONS AND OFFICES WITH FUNDS
----------------------------------------------------------------------------------
Alan G. Berkshire (12/28/60) Vice President and Assistant
Senior Vice President (since May 1999), Secretary (since May 1998)
General Counsel (since September 1997) and
Secretary (since May 1998) of The John Nuveen
Company, Nuveen Investments, Nuveen Advisory
Corp. and Nuveen Institutional Advisory Corp.
and Nuveen Asset Management, Inc.; Senior Vice
President and Secretary (since September 1999)
of Nuveen Senior Loan Asset Management Inc.;
prior to September 1997, Partner in the law
firm of Kirkland & Ellis.
Peter H. D'Arrigo (11/28/67) Vice President and Treasurer
Vice President of Nuveen Investments (since (since January 1999)
January 1999); prior thereto, Assistant Vice
President (January 1997 - January 1999);
formerly, Associate of John Nuveen & Co.
Incorporated; Vice President and Treasurer of
Nuveen Senior Loan Asset Management Inc.
(since September 1999); Chartered Financial
Analyst.
Michael S. Davern (6/26/57) Vice President (since July 1999)
Vice President of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp. (since
January 1997); prior thereto, Vice President
of Flagship Financial Inc. (September
1991 - January 1997).
Lorna C. Ferguson (10/24/45) Vice President (since February
Vice President of Nuveen Investments and 1998)
(since January 1998) Vice President of Nuveen
Advisory Corp. and Nuveen Institutional
Advisory Corp.
William M. Fitzgerald (3/2/64) Vice President (since July 1999)
Vice President of Nuveen Advisory Corp. (since
December 1995); prior thereto, Assistant Vice
President of Nuveen Advisory Corp. (September
1992 - December 1995); Chartered Financial
Analyst.
Stephen D. Foy (5/31/54) Vice President and Controller
Vice President of Nuveen Investments and (since May 1998)
(since May 1998) The John Nuveen Company;
Certified Public Accountant.
J. Thomas Futrell (7/5/55) Vice President (since July 1999)
Vice President of Nuveen Advisory Corp;
Chartered Financial Analyst.
7
12
----------------------------------------------------------------------------------
NAME, BIRTHDATE AND PRINCIPAL OCCUPATIONS
OF EXECUTIVE OFFICERS AS OF APRIL 30, 2001 POSITIONS AND OFFICES WITH FUNDS
----------------------------------------------------------------------------------
Richard A. Huber (3/26/63) Vice President (since July 1999)
Vice President of Nuveen Institutional
Advisory Corp. (since March 1998) and Nuveen
Advisory Corp. (since January 1997); prior
thereto, Vice President and Portfolio Manager
of Flagship Financial Inc.
Steven J. Krupa (8/21/57) Vice President (since July 1999)
Vice President of Nuveen Advisory Corp.
David J. Lamb (3/22/63) Vice President (since July 2000)
Vice President of Nuveen Investments (since
March 2000): prior thereto, Assistant Vice
President (January 1999 - March 2000),
formerly, Associate of Nuveen Investments;
Certified Public Accountant.
Larry W. Martin (7/27/51) Vice President (since August
Vice President, Assistant Secretary and 1994) and Assistant Secretary
Assistant General Counsel of Nuveen (since organization)
Investments; Vice President and Assistant
Secretary of Nuveen Advisory Corp., Nuveen
Institutional Advisory Corp. and Nuveen Senior
Loan Asset Management Inc. (since September
1999); Assistant Secretary of The John Nuveen
Company; Assistant Secretary of Nuveen Asset
Management (since January 1997).
Edward F. Neild IV (7/7/65) Vice President (since July 1998)
Vice President of Nuveen Investments (since
July 2000); formerly, Vice President of Nuveen
Advisory Corp. (September 1996 - August 2000);
prior thereto, Assistant Vice President
(December 1993 - September 1996); formerly,
Vice President of Nuveen Institutional
Advisory Corp. (September 1996 - August 2000);
prior thereto, Assistant Vice President (May
1995 - September 1996) and portfolio manager;
Chartered Financial Analyst.
Stephen S. Peterson (9/20/57) Vice President (since July 1999)
Vice President (since September 1997);
Assistant Vice President (September
1996 - September 1997) and Portfolio Manager
prior thereto, of Nuveen Advisory Corp.;
Chartered Financial Analyst.
Thomas C. Spalding, Jr. (7/31/51) Vice President (since July 1999)
Vice President of Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.; Chartered
Financial Analyst.
Gifford R. Zimmerman, (9/9/56) Vice President (since August
Vice President, Assistant Secretary and 1994) and Secretary (since May
Associate General Counsel of Nuveen 1998)
Investments; Vice President, General Counsel
and Assistant Secretary of Nuveen Advisory
Corp. and Nuveen Institutional Advisory Corp.;
Vice President and Assistant Secretary of
Nuveen Senior Loan Asset Management Inc.
(since September 1999); Assistant Secretary of
The John Nuveen Company; Chartered Financial
Analyst.
----------------------------------------------------------------------------------
On April 30, 2001, trustees and executive officers of the Funds as a group
beneficially owned 525,204 common shares of all of the Nuveen Funds managed by
NIAC, NAC, and NSLAM
8
13
(including share equivalents of certain Nuveen Funds in which the trustee is
deemed to be invested in connection with the deferral of compensation by
trustees pursuant to the Plan and shares held by the executive officers in
Nuveen's 401(k)/Profit Sharing Plan, but excluding shares of the NAC money
market funds). As of April 30, 2001, the trustees and executive officers of the
Funds as a group owned less than 1% of the outstanding shares of each Fund. As
of June 5, 2001, no shareholder owned more than 5% of any class of shares of any
Fund.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the Investment Company Act of 1940, as amended (the "1940
Act"), and Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), require each Fund's officers and trustees, investment adviser,
affiliated persons of the investment adviser and persons who own more than ten
percent of a registered class of the Funds' 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
(the "SEC") and the New York Stock Exchange. These persons and entities are
required by SEC regulation to furnish each Fund with copies of all Section 16(a)
forms they file. Based on a review of these forms, each Fund believes that the
Fund's officers and trustees, investment adviser and affiliated persons of the
investment adviser have complied with all applicable Section 16(a) filing
requirements during the fiscal year ending March 31, 2001.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Trustees of each Fund is responsible for
assisting the Board in monitoring (1) the quality and integrity of each Fund's
financial statements, (2) each Fund's compliance with regulatory requirements,
and (3) the independence and performance of each Fund's independent and internal
auditors. Among other responsibilities, the Committee reviews, in its oversight
capacity, each Fund's annual financial statements with both management and the
independent auditors and the Committee meets periodically with the independent
and internal auditors to consider their evaluation of each Fund's financial and
internal controls. The Committee also recommends to the Board of Trustees,
subject to shareholder ratification, the selection of each Fund's independent
auditors. The Committee is currently composed of five non-employee trustees and
operates under a written charter adopted and approved by the Board of Trustees.
Each Committee member is independent as defined by New York Stock Exchange
listing standards. A copy of the Audit Committee Charter is attached to the
proxy statement as Appendix A.
The Committee, in discharging its duties, has met with and held discussions with
management and each Fund's independent and internal auditors. 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 No. 61 (Communications with
Audit Committees). The Fund's independent auditors provided to the Committee the
written disclosure required by Independent Standards Board Standard No. 1
(Independent Discussions with Audit Committees), and the Committee discussed
with representatives of the independent auditor their firm's independence. As
provided in the Audit Committee Charter, it is not the Committee's
responsibility to
9
14
determine, and the considerations and discussions referenced above do not
ensure, that the Company'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 of Trustees include the audited financial statements in each Fund's Annual
Report.
James E. Bacon
William R. Bennett
Jack B. Evans
William L. Kissick
Thomas E. Leafstrand
AUDIT AND RELATED FEES
AUDIT FEES. The aggregate fees billed by Ernst & Young LLP for professional
services for the audit of each Fund's financial statements for fiscal 2001 were
as follows:
-----------------------------------------------------------------------------
FINANCIAL INFORMATION
AUDIT SYSTEMS DESIGN AND ALL OTHER
FUND FEES IMPLEMENTATION FEES FEES
-----------------------------------------------------------------------------
Select Portfolio $11,516 $0 $0
Select Portfolio 2 11,521 0 0
Select Portfolio 3 11,498 0 0
Insured California 11,468 0 0
Insured New York 11,457 0 0
-----------------------------------------------------------------------------
2. SELECTION OF INDEPENDENT AUDITORS
The members of each Fund's Board of Trustees who are not "interested persons" of
that Fund have unanimously selected Ernst & Young LLP, independent public
accountants, as independent auditors, to audit the books and records of that
Fund for the fiscal year ending March 31, 2002. Ernst & Young LLP has served
each Fund in this capacity since that Fund was organized and has no direct or
indirect financial interest in that Fund except as auditors and independent
accountants. The selection of Ernst & Young LLP as independent auditors of each
Fund is being submitted to the shareholders for ratification, which requires the
affirmative vote of a majority of the shares of each Fund present and entitled
to vote on the matter. A representative of Ernst & Young LLP is expected to be
present at the Annual Meeting and will be available to respond to any
appropriate questions raised at the Annual Meeting and to make a statement if he
or she wishes.
THE BOARD OF TRUSTEES OF EACH FUND UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS.
10
15
3. APPROVAL OF AN AMENDMENT TO THE DECLARATION OF TRUST OF EACH FUND
BACKGROUND INFORMATION ON THE FUNDS
Select Portfolio, Select Portfolio 2 and Select Portfolio 3 (the "Select
Funds").
The investment objective of each select Fund is to provide stable dividends
exempt from regular federal income tax, consistent with preservation of capital.
Each Select Fund seeks to achieve its investment objective by investing
substantially all of its assets in a diversified portfolio of long-term
investment grade quality municipal obligations which are judged by Nuveen
Institutional Advisory Corp. (the "Adviser" or "NIAC") to represent the best
long-term values among those municipal obligations that satisfy the Fund's
credit quality standards. Each Select Fund will only purchase municipal
obligations rated within the four highest grades (BBB or Baa or better as rated
by Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's"), respectively), except that up to 20% of each Fund's assets may be
invested in unrated municipal obligations which, in the judgement of NIAC, are
of comparable quality to those so rated. Each Select Fund may also invest up to
20% of its net assets in municipal obligations that pay interest subject to the
U.S. federal alternative minimum tax. In addition, in order to keep cash on hand
fully invested, each Select Fund may invest in high quality short-term
tax-exempt and taxable temporary investments.
Insured California and Insured New York (the "Insured Funds")
The investment objective of each Insured Fund is to provide stable dividends
exempt from regular federal income tax, as well as California personal income
tax for the Insured California Fund and New York State and New York City
personal income tax for the Insured New York Fund, consistent with preservation
of capital. Each Insured Fund seeks to achieve its investment objective by
investing substantially all of its assets in a diversified portfolio of
long-term state investment grade quality municipal obligations which are either
covered by insurance guaranteeing the timely payment of principal and interest
thereon or backed by an escrow or trust account containing sufficient U.S.
Government or U.S. Government Agency securities to ensure timely payment of
principal and interest and which are judged by NIAC to represent the best
long-term values among those state municipal obligations that satisfy each
Fund's credit quality standards. Municipal obligations backed by an escrow or
trust will not constitute more than 20% of an Insured Fund's net assets. Each
Insured Fund may also invest up to 20% of its net assets in municipal
obligations that pay interest subject to the U.S. federal alternative minimum
tax. In addition, in order to keep cash on hand fully invested, each Insured
Fund may invest in high quality short-term tax-exempt and taxable temporary
investments.
PROPOSED AMENDMENTS TO THE DECLARATIONS OF TRUST OF THE FUNDS
Although organized as closed-end investment companies which generally continue
to operate indefinitely, each of the Funds was organized in 1992 to terminate
approximately 20-25 years after the date of its offering of shares. More
specifically, under each Fund's Declaration of
11
16
Trust, the respective Funds are scheduled to terminate on the dates specified on
the table below if not terminated sooner in accordance with certain provisions.
-----------------------------------
FUND TERMINATION DATE
-----------------------------------
Select Portfolio March 31, 2017
Select Portfolio
2 June 30, 2017
Select Portfolio
3 July 31, 2017
Insured
California June 30, 2017
Insured New York June 30, 2017
In addition, the Funds were originally organized to be passively managed. NIAC
initially assembled relatively fixed investment portfolios that emphasized
municipal obligations that had maturities of approximately 18 to 28 years and
that had an average maturity of approximately 20-25 years. The bonds in each
Fund's portfolio were selected so that they, on average, would not be redeemed
at the option of the issuer thereof for approximately 7 to 8 years from the date
of purchase by the applicable Fund.
Further, under each Fund's current non-fundamental investment policies, NIAC is
subject to limitations concerning the manner in which the portfolio of the
respective Fund can be adjusted, including a limitation that NIAC will adjust
the Fund's portfolio by purchasing municipal obligations that have, at the time
of purchase, a maturity which approximates the expected termination date of the
Fund.
The Board of Trustees of each Fund has determined that it is in the best
interest of shareholders to eliminate the provisions in each Fund's Declaration
of Trust that require the termination of each Fund on the dates set forth above.
The Board believes that eliminating the termination dates will increase NIAC's
ability to achieve each Fund's investment objective by allowing NIAC greater
investment flexibility to purchase municipal bonds with maturity dates that are
not tied to a Fund's termination date. In addition, the Board of Trustees
believes that if the termination dates are not eliminated, the Funds may become
less attractive to investors as they approach termination, which may have a
negative impact on the price at which a Fund's shares trade on the New York
Stock Exchange.
If the Declarations of Trust of the Funds are not amended to eliminate the
termination dates, the average maturities of the municipal obligations included
in the Funds are expected to shorten as termination approaches and the
obligations eligible to be purchased by the Funds will have shorter maturities
as time passes. However, if the amendments are approved, NIAC will be able to
remain invested in and purchase longer-term municipal obligations for each Fund.
The Funds will continue to emphasize municipal obligations with maturities of
approximately 18 to 28 years and an average maturity of approximately 20-25
years for the Funds.
Under normal market conditions, shorter-term municipal obligations generally pay
lower interest rates than longer-term obligations, and accordingly, a fund's
ability to hold more longer-term obligations increases such fund's ability to
earn higher yields. However, shorter-term securities are also generally subject
to less interest rate risk than longer-term securities. Interest rate risk is
the risk that bonds in a fund will decline in value because of a rise in
interest rates. Generally, bonds will increase in value when interest rates
decline and decrease in value when interest rates rise. Typically, bonds with
longer periods before maturing are more sensitive to interest rate changes and
subject to more risk. Accordingly, if
12
17
the Funds' Declarations of Trust are amended, the Funds will be able to purchase
longer-term municipal bonds and the Funds will be exposed to additional interest
rate risk which may have an adverse effect upon your investment in your Fund.
Also, the increased investment flexibility available to NIAC will allow the
Funds to be more actively managed and may increase the Fund's portfolio
turnover. A higher portfolio turnover rate may result in your Fund paying
increased transaction costs and could result in shareholders paying increased
taxes on realized investment gains.
Nevertheless, considering all relevant factors, the Board of Trustees of each
Fund proposes that shareholders approve an amendment to each Fund's Declaration
of Trust to eliminate the termination date for the Fund permitting the Fund to
operate indefinitely.
CONSIDERATIONS OF THE BOARD OF TRUSTEES
At a regular meeting of the Board of Trustees of each Fund held on June 2, 2001,
NIAC, the investment adviser to the Funds, recommended, and the Board approved,
the elimination of the termination date for each of the Funds. The Board also
approved the elimination of each Fund's non-fundamental investment policy that
required NIAC to adjust the portfolios of the Funds by purchasing municipal
obligations that have at the time of the purchase a maturity which approximates
the expected termination date of the respective Fund. Non-fundamental investment
policies may be changed by the Board of Trustees without shareholder vote. NIAC
believes that elimination of the termination dates and the above non-fundamental
policy will benefit the Funds by providing NIAC with greater investment
flexibility to pursue its stated investment objectives.
If the termination dates are not eliminated, NIAC believes that it will unduly
impair the Funds' ability to achieve their respective investment objectives.
Because of the termination date, the Fund's current investment policy restricts
the Funds from purchasing securities that at the time of purchase have
maturities beyond the Funds' termination dates. As a Fund approaches
termination, the municipal securities eligible to be purchased for the Funds
will have shorter maturities. Under normal market conditions, these shorter-term
market securities generally pay a lower interest rate than similar securities
with longer maturities. In addition, the Funds would likely hold a greater
portion of their assets in cash and cash equivalents as termination approaches.
As a result of the foregoing, under normal market conditions, the Funds would
likely be required to reduce dividend rates.
It is currently anticipated, however, that if the amendments are approved, NIAC
would continue to emphasize investments in municipal obligations that on
average, may not be redeemed at the option of the issuer thereof for
approximately 7 to 8 years from the date of purchase by the Funds.
The Board of Trustees of each Fund believes it is in the best interests of
shareholders to amend the Declaration of Trust to eliminate the termination
dates and recommends that shareholders approve the amendment. The Board believes
that eliminating the termination dates will provide NIAC with greater investment
flexibility that will enhance its ability to achieve the Funds' investment
objectives. Without the termination dates, the Funds may invest in municipal
obligations with maturities that are not tied to a Fund's termination date.
Further, the Board believes that if the termination dates are not eliminated,
the Funds may become less attractive to investors as they approach termination
which may have a negative
13
18
impact on the price at which shares of the Funds trade on the New York Stock
Exchange. The Board of Trustees also considered the benefits NIAC may realize in
connection with the proposal, including the receipt of investment advisory fees
from the Funds beyond the termination dates. (Although NIAC will have greater
investment flexibility, there is no increase in advisory fee rates proposed.)
AFTER CAREFUL CONSIDERATION OF THE ABOVE FACTORS AND SUCH OTHER INFORMATION AS
THE BOARD DEEMED RELEVANT, THE BOARD OF TRUSTEES OF EACH FUND UNANIMOUSLY
APPROVED THE PROPOSED AMENDMENT TO THE DECLARATION OF TRUST OF EACH SUCH FUND.
SHAREHOLDER APPROVAL
To become effective, the proposed amendments to each respective Declaration of
Trust must be approved by a vote of a majority of the outstanding common shares
of each Fund. The "vote of a majority of the outstanding voting securities" is
defined in the Investment Company Act of 1940 (the "1940 Act") as the lesser of
the vote of (i) 67% or more of the shares of the respective 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. The
proposed amendments were unanimously approved by the Board of Trustees of each
Fund after consideration of all factors which it determined to be relevant to
its deliberations, including those discussed above. The Boards of Trustees also
unanimously determined to submit each amendment for consideration by the
shareholders of the Funds.
THE BOARD OF TRUSTEES OF EACH FUND RECOMMENDS A VOTE "FOR" APPROVAL OF
THE AMENDMENT TO EACH FUND'S DECLARATION OF TRUST.
4. APPROVAL OF AN AMENDMENT TO CHANGE A FUNDAMENTAL INVESTMENT POLICY OF THE
INSURED FUNDS
The Insured California and Insured New York Funds have fundamental policies
requiring all assets to be invested in state municipal bonds that are either
covered by insurance guaranteeing the timely payment of principal and interest
thereon or backed by an escrow or trust account containing sufficient U.S.
Government or U.S. Government agency securities to ensure timely payment of
principal and interest. Currently, each municipal bond held by an Insured Fund
satisfies this fundamental policy and is rated AAA or Aaa by S&P or Moody's,
respectively.
The Board of Trustees of each Insured Fund has determined that, in the best
interest of shareholders, the policy regarding insurance should be amended to
allow the Adviser to invest all of the Insured Funds' assets in uninsured
investment grade municipal obligations and recommends that shareholders of each
Insured Fund approve the amendment to its fundamental investment policies to
eliminate the restriction to invest all of its assets in insured municipal bonds
or bonds backed by an escrow or trust account.
If approved, each Insured Fund will seek to achieve its investment objective by
investing substantially all of its assets in a diversified portfolio of state
long-term investment grade quality municipal obligations which are judged by
NIAC to represent the best long-term values among those municipal obligations
that satisfy the Fund's credit quality standards.
14
19
Each Insured Fund will only purchase municipal obligation rated within the four
highest grades (BBB or Baa or better as rated by S&P or Moody's, respectively),
except that up to 20% of each Fund's assets may be invested in unrated municipal
obligations which, in the judgment of NIAC, are of comparable quality to those
so rated.
In addition, if the amendment is adopted, it is currently anticipated that NIAC
will emphasize investments in municipal obligations that (1) are rated within
the three highest investment grades by Moody's or S&P and (2) on average, may
not be redeemed at the option of the issuer thereof for approximately 7 to 8
years from the date of purchase by the Insured Funds.
The amended investment restrictions would provide the Insured Funds with
investment flexibility that is the same as or similar to that currently
available to the other Nuveen non-insured exchange-traded closed-end funds,
including the Select Funds. Since each of the Insured Funds invests all of its
assets in state municipal obligations, each Insured Fund is susceptible to
political, economic and regulatory factors affecting issues of such state
municipal obligations. If the investment restrictions are amended to eliminate
the insurance requirements for Insured Fund portfolio securities, each Insured
Fund will be subject to increased credit risks. Credit risk is the risk that a
municipal bond issuer will default or be unable to pay principal and interest.
While the Insured Funds will only invest in investment grade bonds and bonds
rated Baa/BBB are regarded as having an adequate capacity to pay interest and
repay principal, insured bonds typically receive the highest ratings given by
the rating agencies and are generally considered to be more likely to pay
interest and repay principal. Baa/BBB bonds normally exhibit adequate protection
parameters, however, adverse economic conditions or changing circumstances over
any great length of time are likely to lead such bonds to a weakened capacity to
pay interest and repay principal as compared to higher-rated bonds.
CONSIDERATIONS OF THE BOARD OF TRUSTEES
At a meeting of the Board of Trustees of each Fund held on June 2, 2001, NIAC
recommended, and the Board approved, the elimination of the fundamental
restriction regarding insurance and adopted a policy to allow NIAC to invest all
of the Insured Funds' assets in uninsured investment grade municipal
obligations. NIAC believes that the change to the fundamental policy will permit
NIAC to purchase higher yielding bonds. NIAC believes that there are
opportunities under current market conditions to add yield to each Insured
Fund's portfolio through investments in uninsured, investment grade bonds and
that the Insured Funds would benefit from such increased flexibility.
If the amendment is not adopted, NIAC believes that the Insured Funds may not
achieve higher income levels which may be critical to mitigating the impact of
calls and providing the potential for better long-term share price performance.
The Board of Trustees of each Insured Fund believes it is in the best interests
of shareholders to amend the fundamental investment policy regarding insurance
and adopt a policy to allow the Insured Funds to invest in an unlimited amount
of investment grade municipal obligations, and recommends that shareholders
approve the amendment. The Board believes that amending the fundamental
investment policy will provide NIAC with greater investment flexibility that
will enhance its ability to achieve the Funds' investment objectives. Further,
the Board believes that if the amendments are not approved, the Funds may become
less attractive to investors which may have a negative impact on the price at
which shares of the
15
20
Funds trade on the New York Stock Exchange. AFTER CAREFUL CONSIDERATION OF THE
ABOVE FACTORS AND SUCH OTHER INFORMATION AS THE BOARD DEEMED RELEVANT, THE BOARD
OF TRUSTEES OF EACH FUND UNANIMOUSLY APPROVED THE PROPOSED AMENDMENT TO THE
FUNDAMENTAL INVESTMENT RESTRICTION OF EACH INSURED FUND.
If the amendments are approved, the names of the Insured Funds will be changed
to remove the word insured.
SHAREHOLDER APPROVAL
To become effective, the proposed amendments to the Insured Funds' fundamental
investment policy must be approved by a vote of a majority of the outstanding
shares of each of Fund. 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 respective 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. The proposed amendments
were unanimously approved by the Board of Trustees of each Fund after
consideration of all factors which it determined to be relevant to its
deliberations, including those discussed above. The Boards of Trustees also
unanimously determined to submit each amendment for consideration by the
shareholders of the Insured Funds.
THE BOARD OF TRUSTEES OF EACH INSURED FUND RECOMMENDS A VOTE "FOR"
APPROVAL OF THE AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
POLICY.
INFORMATION ABOUT THE FUNDS' INVESTMENT ADVISER AND THE INVESTMENT MANAGEMENT
AGREEMENTS
NIAC, located at 333 West Wacker Drive, Chicago, Illinois, serves as investment
adviser and manager for each Fund. The Adviser is a wholly-owned subsidiary of
Nuveen, also located at 333 West Wacker Drive, Chicago, Illinois 60606. Nuveen
is a subsidiary of The John Nuveen Company which in turn is approximately 78%
owned by The St. Paul Companies, Inc., ("St. Paul"). St. Paul is located at 385
Washington Street, St. Paul, Minnesota 55102, and is principally engaged in
providing property-liability insurance through subsidiaries. Nuveen acted as
co-managing underwriter in the initial public offerings of shares of Select
Portfolio, Select Portfolio 2, Select Portfolio 3, Insured California and
Insured New York in 1992.
SHAREHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of Shareholders of any
of the Funds to be held in 2002, 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 March 1, 2002. A
shareholder wishing to provide notice in the manner prescribed by Rule
14a-4(c)(1) of a proposal submitted outside the process of Rule 14a-8 must
submit such written notice not later than May 15, 2002. Timely submission of a
proposal does not mean that such proposal will be included.
16
21
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 by the Funds, pro rata based on the number
of shareholder accounts. Additional solicitation may be made by letter,
telephone or telegraph by officers of any Fund, by officers or employees of
Nuveen or NIAC, or by dealers and their representatives.
ANNUAL REPORT DELIVERY
Annual reports were sent following the Funds' fiscal year to shareholders then
of record. Each of the Funds will furnish, without charge, a copy of its annual
report to its shareholders upon request. Such written or oral requests should be
directed to the Fund at 333 West Wacker Drive, Chicago, Illinois 60606, or by
calling 1-800-257-8787.
GENERAL
Management does not intend to present and does not have reason to believe that
others will present any other items of business at any Fund's Annual Meeting.
However, if other matters are properly presented to an Annual Meeting for a
vote, the proxies will be voted upon such matters in accordance with the
judgment of the persons acting under the proxies.
A list of shareholders entitled to be present and to vote at each Fund's Annual
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 for ten days prior to the date of the meeting.
Failure of a quorum to be present at any Fund's Annual 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 the Annual 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 IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
Gifford R. Zimmerman
Vice President and Secretary
17
22
APPENDIX A
NUVEEN MANAGEMENT INVESTMENT COMPANIES
AUDIT COMMITTEE CHARTER
July, 2000
ORGANIZATION
There shall be a committee of each Board of Directors/Trustees of the Nuveen
Management Investment Companies to be known as the Audit Committee. The Audit
Committee shall be composed of at least three Directors/Trustees. Audit
Committee members shall be independent of the Management Investment Companies
and free of any relationship that, in the opinion of the Directors/Trustees,
would interfere with their exercise of independent judgment as a committee
member. Each such member of the Audit Committee shall have a basic understanding
of finance and accounting and be able to read and understand fundamental
financial statements, 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.
STATEMENT OF POLICY
The Audit Committee shall assist the Board in monitoring (1) the accounting and
reporting policies and practices of the Management Investment Companies
(hereafter referred to as "Funds" or individually "Fund"), (2) the quality and
integrity of the financial statements of the Funds, (3) the compliance by the
Funds with legal and regulatory requirements and (4) the independence and
performance of the external and internal auditors. In doing so, the Audit
Committee shall seek to maintain free and open means of communication among the
Directors, the independent auditors, the internal auditors and the management of
Nuveen.
The Audit Committee shall have the authority in its discretion to retain special
legal, accounting or other consultants to advise the Committee. The Audit
Committee may request any officer or employee of the John Nuveen Company or the
Funds' independent auditors or outside counsel to attend a meeting of the
Committee or to meet with any members of, or consultants to, the 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 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. The independent auditors are ultimately accountable to the
Board and Audit Committee. It is the ultimate responsibility of the Board and
the Audit Committee for selection, evaluation and replacement of the independent
auditors.
18
23
In carrying out its responsibilities the Audit Committee believes its policies
and procedures should remain flexible, in order to react to changing conditions
and requirements applicable to the Funds.
The Audit Committee is responsible for the following:
Fund Financial Statements:
1. Reviewing the annual audited financial statements with Fund management
including major issues regarding accounting and auditing principles
and practices.
2. Requiring the independent auditors to deliver to the Chairman of the
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 SAS 61, that
arise during the auditor's review of the Fund's financial statements,
which information shall be further communicated by the Chairman to the
other members of the Committee, as deemed necessary or appropriate in
the judgment of the Chairman.
With respect to the independent auditors:
3. Receiving periodic reports (including a formal written statement
delineating all relationships between the auditors and the Funds) from
the firms of independent auditors regarding their independence, their
membership in the SEC practice section of the AICPA and their
compliance with all applicable requirements for independence and peer
review, and discussing such reports with the auditors.
4. Reviewing and recommending to the Directors/Trustees the independent
auditors to be selected to audit the annual financial statements of
the Funds.
5. Meeting with the independent auditors and Fund management to review
the scope and fees of the proposed audits for the current year and the
audit procedures to be utilized. At the conclusion of the audit,
reviewing such audit results, including any comments or
recommendations of the independent auditors, any significant changes
required from the originally planned audit programs and any
adjustments to such statements recommended by the auditors.
6. Providing sufficient opportunity at all meetings of the Audit
Committee for the independent auditors to meet with the members of the
Audit Committee without members of Fund management being present.
With respect to any internal auditor:
7. Reviewing the internal audit function as it relates to the Funds
including the proposed programs 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.
19
24
8. 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.
Other responsibilities:
9. Receiving and reviewing periodic or special reports issued on
exposure/controls, irregularities and control failures related to the
Funds.
10. 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 elicit any recommendations
for the improvement of internal control procedures or particular areas
where new or more detailed controls or 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 which might be
deemed illegal or otherwise improper.
11. Reviewing the reports of examinations by regulatory authorities.
12. Reporting to the Directors/Trustees on the results of the activities
of the Committee.
13. Performing any special reviews, investigations or oversight
responsibilities requested by the Directors/Trustees.
14. With respect to the Exchange-Traded Funds, preparing any report
required by the rules of the SEC to be included in a proxy statement
for a fund.
15. Reviewing and reassessing annually the adequacy of this charter and
providing a recommendation to the Board of Directors/Trustees for
approval of any proposed changes deemed necessary or advisable by the
Committee.
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.
20
25
NUVEEN INVESTMENTS LOGO
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com NXP801
26
NUVEEN SELECT TAX-FREE INCOME PORTFOLIO
[NUVEEN LOGO] NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 2
NUVEEN INVESTMENTS NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 3
333 WEST WACKER DRIVE NUVEEN INSURED CALIFORNIA SELECT TAX-FREE INCOME PORTFOLIO
CHICAGO, IL 60606-1286 NUVEEN INSURED NEW YORK SELECT TAX-FREE INCOME PORTFOLIO
ANNUAL MEETING OF SHAREHOLDERS
COMMON SHARES
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR THE ANNUAL MEETING OF
SHAREHOLDERS, AUGUST 1, 2001
The annual meeting of shareholders will be held Wednesday, August 1, 2001, at
10:30 a.m. Central Time, in the sixth floor auditorium of The Northern Trust
Company, 50 South LaSalle Street, Chicago, Illinois. At this meeting, you will
be asked to vote on the proposals described in the attached proxy statement. The
undersigned hereby appoints Timothy R. Schwertfeger, Larry W. Martin 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 August 1, 2001, or any adjournment
or adjournments thereof.
You are encouraged to specify your choices by marking the appropriate boxes. If
you do not mark any boxes, your proxy will be voted "FOR" the proposals. Please
mark, sign, date and return this proxy card promptly using the enclosed envelope
if you are not voting by telephone or over the Internet. To vote by telephone,
please call (800) 690-6903. To vote over the Internet, go to www.proxyvote.com.
In either case you will be asked to enter the control number on the right hand
side of this proxy card.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
[CONTROL NUMBER]
--------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
-------------------------------------------------------------------------------
[FUND NAME]
VOTE ON PROPOSALS
1. ELECTION OF NOMINEES TO THE BOARD
(01) James E. Bacon FOR WITHHOLD FOR ALL
(02) William E. Bennett ALL ALL EXCEPT
(03) Jack B. Evans / / / / / /
(04) William L. Kissick
(05) Thomas E. Leafstrand
(06) Timothy R. Schwertfeger
(07) Sheila W. Wellington
2. RATIFICATION OF THE SELECTION FOR AGAINST ABSTAIN
OF ERNST & YOUNG LLP AS / / / / / /
INDEPENDENT AUDITORS FOR
THE CURRENT FISCAL YEAR
3. FOR APPROVAL OF AN AMENDMENT FOR AGAINST ABSTAIN
TO ITS DECLARATION OF TRUST / / / / / /
4. FOR INSURED FUNDS ONLY, FOR AGAINST ABSTAIN
FOR APPROVAL OF A CHANGE IN A / / / / / /
FUNDAMENTAL INVESTMENT POLICY
To withhold authority to vote for an individual nominee
mark the box "For All Except" and write the nominee's
number on the line below.
---------------------------------
-------------------------------------------------------------------------------
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.proxyvote.com).
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting.
The shares to which this proxy relates will be voted as specified. If no
specification is made, such shares will be voted "FOR" the election of nominees
to the Board and "FOR" the proposal set forth on this proxy.
Please be sure to sign and date this proxy if you are not voting by telephone
or over the Internet.
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.
------------------------------------------ ----------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature [Joint Owners] Date