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 PREFERRED AND CONVERTIBLE INCOME FUND (JPC)
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(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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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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IMPORTANT NOTICE
TO FUND SHAREHOLDERS
MARCH 7, 2007
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 DID THE FUNDS SEND ME THIS PROXY?
A. The Funds are asking you to vote on the election of Board members as well
as two other proposals that are the result of recent changes to each Fund's
investment policies authorized by each Fund's Board of Trustees.
Q. WHAT INVESTMENT POLICY CHANGES DID THE BOARD OF TRUSTEES AUTHORIZE?
A. During 2006, the Board of Trustees' of each of the Nuveen Preferred and
Convertible Income Fund (JPC) and the Nuveen Preferred and Convertible
Income Fund 2 (JQC) authorized a series of changes to the Funds' investment
and distribution policies. These changes were designed to enhance each
Fund's ability to meet its investment objectives by providing for increased
portfolio management flexibility, greater diversification of the Funds'
investment portfolios and increased capital appreciation potential over
time through direct exposure to equity securities.
Q. WHAT ARE THE TWO INVESTMENT-RELATED PROPOSALS I AM BEING ASKED TO VOTE ON?
A. The first proposal seeks your approval of an amended sub-advisory fee
schedule for one of the Funds' sub-advisers, Symphony Asset Management LLC
("Symphony"). Symphony originally managed the portion of each Fund's assets
allocated to high yield debt. As a result of the Funds' investment policy
changes, Symphony now is authorized to diversify its income-oriented
investments across high yield, senior loan and convertible securities, and
also to manage the portion of each Fund's assets allocated to domestic and
international equities. Because of the higher level of investment
management services associated with these changes, each Funds' Board of
Trustees authorized, subject to your approval, an increase in the
sub-advisory fees paid to Symphony. If approved, the increase in fees paid
to Symphony will not increase overall management fees paid by the Funds.
The second proposal seeks your approval of Tradewinds NWQ Global Investors,
LLC ("Tradewinds") as an additional sub-adviser to the Funds. As a result
of the Funds' investment policy changes, each Fund is authorized to
diversify its equity-oriented investments across domestic as well as
international equities. Each Fund's Board of Trustees selected Tradewinds,
subject to your approval, as a sub-adviser to manage a portion of each
Fund's assets allocated to equity-oriented investments. As with the
approval of the revised Symphony sub-advisory agreement, the addition of
Tradewinds as a sub-adviser, if approved, will not increase overall
management fees paid by the Fund.
Q. WHY DID EACH FUND'S BOARD OF TRUSTEES SELECT TRADEWINDS AS A SUB-ADVISER TO
MANAGE A PORTION OF EACH FUND'S DIRECT EQUITY INVESTMENTS?
A. Tradewinds specializes in global and international equity investing and
managed approximately $32 billion for institutional and private clients
worldwide as of December 31, 2006. Tradewinds has built an impressive track
record of consistent performance by searching the world's developed and
emerging markets for companies whose securities are undervalued and possess
the following characteristics: attractive absolute valuation, strong and/or
improving franchise quality and favorable downside protection. Each Fund's
Board of Trustees believes Tradewinds' value-oriented investment approach,
disciplined process and performance record offered the Funds an attractive
opportunity to further enhance returns and diversify risk. Tradewinds is a
subsidiary of Nuveen Investments, Inc.
Q. WILL THESE PROPOSALS RAISE FUND OPERATING EXPENSES?
A. No. NAM pays sub-advisory fees out of the management fee it receives from
the Funds. Since the management fee paid by each Fund to NAM will not
change, fund operating expenses will not increase if you approve the
increase in Symphony's sub-advisory fees and the addition of Tradewinds as
a sub-adviser.
Q. HOW WILL THE PORTFOLIO MANAGERS' GREATER INVESTMENT FLEXIBILITY AND THE
PROPOSED ADDITION OF TRADEWINDS AS A SUB-ADVISOR AFFECT THE ALLOCATION OF
EACH FUND'S INVESTMENT PORTFOLIO?
A. The Funds will continue to maintain a strategic 70%/30% mix of
income-oriented and equity-oriented securities. Effective May 1, 2007,
however, the Funds will no longer be required to maintain at least 80% of
their respective assets in a combination of preferred and convertible
securities, as well as a minimum investment level of 50% and 20%,
respectively, in each of these asset types. As a result, the Funds'
exposure to convertible securities is expected to shift from a static to a
more variable level of exposure and decline over time. Eventually the
Funds' investments in convertible securities will be those comprising a
component of either the Funds' multi-strategy income sleeve or the portion
of the Funds' equity-oriented securities managed by Tradewinds, subject to
shareholder approval. Symphony, a wholly-owned subsidiary of Nuveen, is
responsible for managing the Funds' multi-strategy income sleeve, which
consists of a diversified mix of high yield debt, convertible securities
and senior loans. In connection with the change in the Funds' exposure to
convertible securities, the Board of each Fund has determined that Froley,
Revy Investment Co., Inc., each Fund's sub-adviser investing Fund assets
allocated to it in convertible securities, will no longer serve as a
sub-adviser to such Fund, effective as early as May 1, 2007, but not later
than June 30, 2007. NAM in consultation with each of the Funds'
sub-advisers over time will determine how best to allocate portfolio assets
among the Fund's sub-advisers, consistent with the Fund's investment
objectives and strategic asset mix.
Q. WILL THE FUNDS' GREATER INVESTMENT FLEXIBILITY BE REFLECTED IN ANY OTHER
WAY?
A. Yes. Upon implementation of all changes to the Funds' investment policies,
the Funds also will change their names to the Nuveen Multi-Strategy Income
and Growth Fund (JPC) and the Nuveen Multi-Strategy Income and Growth Fund
2 (JQC).
Q. WHEN WILL THE TWO INVESTMENT-RELATED PROPOSALS TAKE EFFECT?
A. If approved, the amended sub-advisory fee schedule for Symphony and the
appointment of Tradewinds as a sub-adviser will take effect on or about
April 11, 2007.
Q. WHAT HAPPENS IF SHAREHOLDERS DO NOT APPROVE THESE PROPOSALS?
A. If shareholders do not approve Symphony's amended sub-advisory fee, their
existing sub-advisory fee schedule would remain in effect. If shareholders
do not approve the appointment of Tradewinds as a sub-adviser for a portion
of each Fund's equity-oriented investments, NAM currently anticipates that
each Fund's equity-oriented investments would be managed solely by
Symphony.
Q. HOW DO THE BOARD MEMBERS SUGGEST THAT I VOTE IN CONNECTION WITH THE
AMENDED SYMPHONY SUB-ADVISORY AGREEMENT, THE TRADEWINDS SUB-ADVISORY
AGREEMENT AND THE ELECTION OF TRUSTEES?
A. After careful consideration, the Board of your Fund unanimously recommends
that you vote "FOR" the approval of the Amended Symphony Sub-Advisory
Agreement, "FOR" the approval of the Tradewinds Sub-Advisory Agreement and
"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.
NOTICE OF ANNUAL MEETING 333 West Wacker Drive
OF SHAREHOLDERS Chicago, Illinois 60606
APRIL 11, 2007 (800) 257-8787
MARCH 7, 2007
NUVEEN PREFERRED AND CONVERTIBLE INCOME FUND (JPC)
NUVEEN PREFERRED AND CONVERTIBLE INCOME FUND 2 (JQC)
TO THE SHAREHOLDERS OF THE ABOVE FUNDS:
Notice is hereby given that an Annual Meeting of Shareholders (the "Meeting") of
Nuveen Preferred and Convertible Income Fund ("Preferred Convertible") and
Nuveen Preferred and Convertible Income Fund 2 ("Preferred Convertible 2"), each
a Massachusetts business trust (individually, a "Fund" and collectively, the
"Funds"), will be held in the 34th floor conference room of Nuveen Investments,
333 West Wacker Drive, Chicago, Illinois 60606, on Wednesday, April 11, 2007, at
10:30 a.m., Central 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 an amendment to the fee schedule of the investment sub-advisory
agreement between Nuveen Asset Management ("NAM"), each Fund's investment
adviser, and Symphony Asset Management LLC, a sub-adviser for each Fund.
2. To approve a new investment sub-advisory agreement between NAM and Tradewinds
NWQ Global Investors, LLC.
3. To elect ten (10) members to the Board of Trustees (each a "Board" and each
Trustee a "Board Member") of each Fund as outlined below:
i) eight (8) Board Members to be elected by the holders of Common Shares
and FundPreferred(TM) Shares, voting together as a single class; and
ii) two (2) Board Members to be elected by the holders of FundPreferred
Shares only, voting separately as a single class.
4. To transact such other business as may properly come before the Meeting.
Shareholders of record at the close of business on January 12, 2007 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
JOINT PROXY STATEMENT 333 West Wacker Drive
Chicago, Illinois 60606
(800) 257-8787
MARCH 7, 2007
NUVEEN PREFERRED AND CONVERTIBLE INCOME FUND (JPC)
NUVEEN PREFERRED AND CONVERTIBLE INCOME FUND 2 (JQC)
GENERAL INFORMATION
This Joint Proxy Statement is furnished in connection with the solicitation by
the Board of Trustees (each a "Board" and collectively, the "Boards," and each
Trustee, a "Board Member" and collectively, the "Board Members") of Nuveen
Preferred and Convertible Income Fund ("Preferred Convertible") and Nuveen
Preferred and Convertible Income Fund 2 ("Preferred Convertible 2"), each a
Massachusetts business trust (each, a "Fund" and collectively, the "Funds"), of
proxies to be voted at an Annual Meeting of Shareholders to be held in the 34th
floor conference room of Nuveen Investments, 333 West Wacker Drive, Chicago,
Illinois 60606, on Wednesday, April 11, 2007, at 10:30 a.m., Central time (for
each Fund, a "Meeting" and collectively, the "Meetings") and at any and all
adjournments thereof.
This Joint Proxy Statement is first being mailed to shareholders on or about
March 7, 2007.
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.
Proxies are being solicited from shareholders of each Fund with respect to the
following matters:
1. To approve an amendment to the fee schedule of the investment sub-advisory
agreement between Nuveen Asset Management ("NAM" or the "Adviser"), each
Fund's investment adviser, and Symphony Asset Management LLC ("Symphony"), a
sub-adviser for each Fund (the "Amended Symphony Sub-Advisory Agreement").
2. To approve a new investment sub-advisory agreement between NAM and Tradewinds
NWQ Global Investors, LLC ("Tradewinds") (the "Tradewinds Sub-Advisory
Agreement").
3. To elect ten (10) members to the Board of each Fund as outlined below:
i) eight (8) Board Members to be elected by the holders of Common Shares
and FundPreferred(TM) Shares, voting together as a single class; and
ii) two (2) Board Members to be elected by the holders of FundPreferred
Shares only, voting separately as a single class.
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 the
approval of the Amended Symphony Sub-Advisory Agreement, FOR the approval of the
Tradewinds Sub-Advisory Agreement and
1
FOR the election of the nominees 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.
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
FundPreferred Shares of each Fund 33 1/3% of the FundPreferred Shares entitled
to vote and represented in person or by proxy will constitute a quorum. Votes
cast in person or by proxy 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 each Fund, the "vote of a majority of the outstanding voting securities" of
the Fund will be required for the approval of the Amended Symphony Sub-Advisory
Agreement and for the approval of the Tradewinds Sub-Advisory Agreement. The
"vote of a majority of the outstanding voting securities" is defined in the
Investment Company Act of 1940, as amended, (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. For each Fund, 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 Fund. For
purposes of determining the approval of the Amended Symphony Sub-Advisory
Agreement and the Tradewinds Sub-Advisory Agreement, abstentions and broker
non-votes will have the effect of a vote against the Amended Symphony
Sub-Advisory Agreement and the Tradewinds Sub-Advisory Agreement. For purposes
of determining the approval of the proposal to elect nominees for each Fund,
abstentions and broker non-votes will have no effect on the election of Board
Members.
FundPreferred 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 FundPreferred shareholders as a class who have voted on the proposal or
in the same proportion as the votes cast by all FundPreferred shareholders of
the Fund who have voted on that item. Rule 452 permits proportionate voting of
FundPreferred Shares with respect to a particular item if, among other things,
(i) a minimum of 30% of the FundPreferred Shares or shares of a series of
FundPreferred Shares outstanding has been voted by the holders of such shares
with respect to such item and (ii) less than 10% of the FundPreferred Shares or
shares of a series of FundPreferred 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.
2
Those persons who were shareholders of record at the close of business on
January 12, 2007 will be entitled to one vote for each share held. As of January
12, 2007, the shares of the Funds were issued and outstanding as follows:
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FUNDPREFERRED
FUND TICKER SYMBOL* COMMON SHARES SHARES
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Preferred Convertible JPC 99,714,627.93 4,720 Series M
4,720 Series T
4,720 Series W
4,720 Series TH
4,720 Series F
4,720 Series F2
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Preferred Convertible 2 JQC 140,495,799.98 3,860 Series M
3,860 Series M2
3,860 Series T
3,860 Series T2
3,860 Series W
3,860 Series W2
3,860 Series TH
3,860 Series TH2
3,860 Series F
3,860 Series F2
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* The Common Shares of the Funds are listed on the New York Stock Exchange.
INTRODUCTION
During 2006, the Boards of Preferred Convertible and Preferred Convertible 2
authorized a series of changes to the Funds' investment and distribution
policies. These changes were designed to enhance the Funds' ability to meet
their investment objectives by providing for increased portfolio management
flexibility, greater diversification of the Funds' investment portfolios and
increased capital appreciation potential over time through direct exposure to
equity securities.
As of December 31, 2006, each Fund had allocated approximately 50%, 30%, 10% and
10% of its investment portfolio to distinct sleeves comprised, respectively, of
preferred securities, convertible securities, other debt securities
("multi-strategy income") and equity securities. Spectrum Asset Management, Inc.
serves as a Fund sub-adviser and manages the Funds' preferred securities sleeve.
Symphony Asset Management LLC serves as a Fund sub-adviser and manages the
multi-strategy income sleeve--comprised of a diversified mix of high yield debt,
senior loans and convertible securities--as well as the equity sleeve. Froley,
Revy Investment Co., Inc. ("Froley Revy") currently serves as a Fund
sub-adviser, investing the Funds' assets allocated to it in convertible
securities, but, as discussed below, will no longer continue to do so effective
as early as May 1, 2007, but not later than June 30, 2007.
The Funds will continue to maintain a strategic 70%/30% mix of income-oriented
and equity-oriented securities. Effective May 1, 2007, however, the Funds will
no longer be required to
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maintain at least 80% of their respective assets in a combination of preferred
and convertible securities, as well as a minimum investment level of 50% and
20%, respectively, in each of these asset types. As a result, the Funds'
exposure to convertible securities is expected to shift from a static to a more
variable level of exposure and decline over time. Eventually the Funds'
investments in convertible securities will be those comprising a component of
either the Funds' multi-strategy income sleeve or the portion of the Funds'
equity-oriented securities managed by Tradewinds, subject to shareholder
approval. Symphony, a wholly-owned subsidiary of Nuveen, is responsible for
managing the Funds' multi-strategy income sleeve, which consists of a
diversified mix of high yield debt, convertible securities and senior loans. In
connection with the change in the Funds' exposure to convertible securities, the
Board of each Fund has determined that Froley Revy will no longer serve as a
sub-adviser to such Fund effective as early as May 1, 2007, but not later than
June 30, 2007. NAM in consultation with each of the Funds' sub-advisers over
time will determine how best to allocate portfolio assets among the Fund's
sub-advisers, consistent with the Fund's investment objectives and strategic
asset mix. Upon implementation of all changes to the Funds' investment policies,
the Funds will change their names to Nuveen Multi-Strategy Income and Growth
Fund and Nuveen Multi-Strategy Income and Growth Fund 2 to better reflect their
investment approach.
In order to implement the investment policy changes approved by the Board during
2006, each Board selected Tradewinds, subject to your approval, as a sub-adviser
to manage a portion of each Fund's assets allocated to equity-oriented
investments. The Boards believe Tradewinds' value-oriented investment approach,
disciplined process and performance record offered the Funds an attractive
opportunity to further enhance returns and diversify risk. Further, because of
the higher level of investment management services provided by Symphony
associated with the investment policy changes, the Boards authorized, subject to
your approval, an increase in the sub-advisory fees paid to Symphony. Because
the sub-advisory fees accrued by Symphony and Tradewinds will be paid by NAM
from the management fee that it receives from the Funds, the management fee paid
by shareholders for each Fund will not change if Symphony's fee is increased and
Tradewinds is added as a sub-adviser.
The 1940 Act requires that the Amended Symphony Sub-Advisory Agreement and the
Tradewinds Sub-Advisory Agreement be approved by each Fund's shareholders in
order to become effective. At the November 2006 meeting of each Fund's Board,
and for the reasons discussed below (see "Board Considerations in Approving the
Amended Symphony Sub-Advisory Agreement and the Tradewinds Sub-Advisory
Agreement"), each Board, including a majority of the Board Members who are not
parties to the Amended Symphony Sub-Advisory Agreement or the Tradewinds
Sub-Advisory Agreement and who are not "interested persons" of the Funds or the
Adviser as defined in the 1940 Act (the "Independent Board Members"),
unanimously approved the Amended Symphony Sub-Advisory Agreement and the
Tradewinds Sub-Advisory Agreement and unanimously recommended their approval by
shareholders. If approved by shareholders, the Amended Symphony Sub-Advisory
Agreement and the Tradewinds Sub-Advisory Agreement will take effect on or about
April 11, 2007. If shareholders do not approve the Amended Symphony Sub-Advisory
Agreement, the existing sub-advisory fee schedule for Symphony would remain in
effect. If shareholders do not approve the Tradewinds Sub-Advisory Agreement,
NAM currently anticipates that each Fund's equity-oriented investments would be
managed solely by Symphony. The form of the
4
Amended Symphony Sub-Advisory Agreement is attached hereto as Appendix B and the
form of the Tradewinds Sub-Advisory Agreement is attached hereto as Appendix D.
1. APPROVAL OF THE AMENDED SYMPHONY SUB-ADVISORY AGREEMENT
INFORMATION ABOUT SYMPHONY
Symphony manages the Funds' multi-strategy income sleeve, consisting of a
diversified mix of high yield debt, convertible securities and senior loans, as
well as the portion of the Funds' assets currently invested directly in equity
securities. Symphony specializes in the management of market neutral equity and
debt strategies and senior loan and other debt portfolios. Symphony, a
registered investment adviser, commenced operations in 1994. Symphony is an
indirect wholly-owned subsidiary of Nuveen Investments, Inc. ("Nuveen"), the
Adviser's parent company. As of December 31, 2006, Symphony managed over $7
billion in assets. The principal occupation of the officers and directors of
Symphony is shown in Appendix C. The business address of Symphony and each
officer and director of Symphony is 555 California Street, San Francisco,
California 94104.
THE AMENDED SYMPHONY SUB-ADVISORY AGREEMENT
Below is a description of the terms of the Amended Symphony Sub-Advisory
Agreement. The only material change to be incorporated into the Amended Symphony
Sub-Advisory Agreement is the change to the fee schedule by which NAM pays
Symphony for its services, otherwise the Amended Symphony Sub-Advisory Agreement
is identical to the sub-advisory agreement under which Symphony currently serves
(the "Current Symphony Sub-Advisory Agreement"). The date of the Current
Symphony Sub-Advisory Agreement and the date it was last approved by
shareholders and approved for continuance by the Board are provided in Appendix
A. If approved by shareholders of a Fund, the Amended Symphony Sub-Advisory
Agreement will expire on August 1, 2007, unless continued. The Amended Symphony
Sub-Advisory Agreement will continue in effect from year to year thereafter if
such continuance is approved for each Fund at least annually in the manner
required by the 1940 Act and the rules and regulations thereunder. The form of
the Amended Symphony Sub-Advisory Agreement is attached hereto as Appendix B.
Advisory Services. The advisory services to be provided by Symphony to each
Fund under the Amended Symphony Sub-Advisory Agreement will be identical to
those advisory services currently provided by Symphony to each Fund, except that
the types of investments have been expanded. Symphony furnishes an investment
program, makes investment decisions for and places all orders for the purchase
and sale of securities for the portion of each Fund's investment portfolio
allocated by NAM to Symphony, all on behalf of the Fund and subject to
supervision of the Fund's Board and NAM. Symphony monitors each Fund's
investments and complies with the provisions of each Fund's Declaration of Trust
and By-Laws and the stated investment objectives, policies and restrictions of
each Fund.
Fees. For its sub-advisory services, NAM pays Symphony a portfolio management
fee out of the investment management fee it receives from each Fund. The rate of
the portfolio management fees payable by NAM to Symphony is being changed under
the Amended Symphony Sub-Advisory Agreement. Under the Current Symphony
Sub-Advisory Agreement,
5
NAM pays Symphony a percentage of its net management fee attributable to the
assets managed by Symphony, at the rates listed below:
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PERCENTAGE OF NAM'S
AVERAGE DAILY MANAGED ASSETS OF THE FUND NET MANAGEMENT FEE
-------------------------------------------------------------
$0-$125 million......................... 50.0%
$125 million to $150 million............ 47.5%
$150 million to $175 million............ 45.0%
$175 million to $200 million............ 42.5%
$200 million and over................... 40.0%
-------------------------------------------------------------
If the Amended Symphony Sub-Advisory Agreement is approved by shareholders, NAM
will pay to Symphony a percentage of its net management fee attributable to
various assets managed by Symphony in the multi-strategy income sleeve and the
equity sleeve of the Fund, at the rates listed below:
------------------------------------------------------------------------
PERCENTAGE OF NAM'S
NET MANAGEMENT FEE
------------------------------
AVERAGE DAILY MANAGED ASSETS OF THE FUND MULTI-STRATEGY INCOME EQUITY
------------------------------------------------------------------------
$0-$125 million......................... 52.5% 55.0%
$125 million to $150 million............ 50.0% 52.5%
$150 million to $175 million............ 47.5% 50.0%
$175 million to $200 million............ 45.0% 47.5%
$200 million and over................... 42.5% 45.0%
------------------------------------------------------------------------
During the fiscal year ended December 31, 2006, NAM paid Symphony $1,542,274 in
sub-advisory fees. If the Amended Symphony Sub-Advisory Agreement had been in
effect during that period, NAM would have paid Symphony approximately $1,737,160
in sub-advisory fees. The amount of sub-advisory fees that NAM would have paid
Symphony under the Amended Symphony Sub-Advisory Agreement would have been
approximately 12.6% higher than the amount of sub-advisory fees actually paid by
NAM. The higher level of sub-advisory fees reflects a combination of increasing
assets under management by Symphony over the course of 2006 as well as the
pro-forma impact of the proposed sub-advisory fee schedule. Based on December
31, 2006 assets managed by Symphony, the impact of the proposed fee increase
alone is estimated to be $155,691 (approximately 7.4%) for calendar year 2007.
Sub-advisory fees are payable from the management fees received from the Funds
by NAM; the proposed increase in sub-advisory fees therefore will not increase
the fees or overall level of expenses you pay as a Fund shareholder.
Brokerage. Symphony selects the brokers or dealers that execute the purchases
and sales of portfolio securities selected by Symphony for the Funds, subject to
its obligation to obtain best execution under the circumstances, which may take
account of the overall quality of brokerage and research services provided to
Symphony.
Payment of Expenses. Symphony will pay all expenses it incurs in connection
with its activities under the Amended Symphony Sub-Advisory Agreement other than
the cost of
6
securities (including brokerage commissions and other related expenses)
purchased for the Funds.
Limitation on Liability. Symphony will not be liable for, and NAM will not take
any action against Symphony to hold Symphony liable for, any error of judgment
or mistake of law or for any loss suffered by a Fund in connection with the
performance of Symphony's duties under the Amended Symphony Sub-Advisory
Agreement, except for a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of Symphony in the performance of its duties under
the Agreement, or by reason of its reckless disregard of its obligations and
duties under the Agreement.
Termination. The Amended Symphony Sub-Advisory Agreement will automatically
terminate in the event of an assignment and may be terminated at any time
without the payment of any penalty by NAM on sixty (60) days' written notice to
Symphony. The Amended Symphony Sub-Advisory Agreement may also be terminated by
a Fund with respect to that Fund by action of the Fund's Board or by a vote of a
majority of the outstanding voting securities of that Fund, accompanied by 60
days' written notice.
The Amended Symphony Sub-Advisory Agreement for each Fund will also be
terminable with respect to that Fund at any time without the payment of any
penalty, by NAM, the Board or by vote of a majority of the outstanding voting
securities of that Fund in the event that it is established by a court of
competent jurisdiction that Symphony or any of its officers or directors has
taken any action that results in a breach of the representations of Symphony set
forth in the Amended Symphony Sub-Advisory Agreement.
THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE
FOR APPROVAL OF THE AMENDED SYMPHONY SUB-ADVISORY AGREEMENT.
2. APPROVAL OF THE TRADEWINDS SUB-ADVISORY AGREEMENT
INFORMATION ABOUT TRADEWINDS
It is proposed that Tradewinds will manage a portion of each Fund's assets
allocated to equity investments. Tradewinds specializes in global and
international equity investing. Most of Tradewinds' personnel were affiliated
with NWQ Investment Management Company, LLC ("NWQ") until March 2006, when NWQ
reorganized into two distinct entities: NWQ and Tradewinds. Tradewinds is
organized as a member-managed limited liability company, with Nuveen as its sole
managing member. As of December 31, 2006, Tradewinds managed over $31.9 billion
in assets. The principal occupation of the officers and directors of Tradewinds
is shown in Appendix E. The business address of Tradewinds and each officer and
director of Tradewinds is 2049 Century Park East, 16th Floor, Los Angeles,
California 90067.
THE TRADEWINDS SUB-ADVISORY AGREEMENT
Below is a description of the terms of the Tradewinds Sub-Advisory Agreement.
The Tradewinds Sub-Advisory Agreement is a new agreement and has not previously
been approved by shareholders of the Funds. If approved by shareholders of a
Fund, the Tradewinds Sub-Advisory Agreement will expire on August 1, 2008,
unless continued. The Tradewinds Sub-Advisory Agreement will continue in effect
from year to year thereafter if
7
such continuance is approved for the Fund at least annually in the manner
required by the 1940 Act and the rules and regulations thereunder.
Advisory Services. Tradewinds will furnish an investment program in respect of,
will make investment decisions for and will place all orders for the purchase
and sale of securities for the portion of each Fund's investment portfolio
allocated by NAM to Tradewinds, all on behalf of the Fund and subject to
supervision of the Fund's Board and NAM. Tradewinds will monitor each Fund's
investments and will comply with the provisions of each Fund's Declaration of
Trust and By-Laws and the stated investment objectives, policies and
restrictions of each Fund.
Fees. For its sub-advisory services, NAM will pay Tradewinds a portfolio
management fee out of the investment management fee it receives from each Fund.
Under the Tradewinds Sub-Advisory Agreement, NAM will pay Tradewinds a
percentage of its net management fee attributable to the assets managed by
Tradewinds, at the rates listed below:
-------------------------------------------------------------
PERCENTAGE OF NAM'S
AVERAGE DAILY MANAGED ASSETS OF THE FUND NET MANAGEMENT FEE
-------------------------------------------------------------
$0-$200 million......................... 55.0%
$200 million to $300 million............ 52.5%
$300 million and over................... 50.0%
-------------------------------------------------------------
Brokerage. Tradewinds will select the brokers or dealers that execute the
purchases and sales of portfolio securities selected by Tradewinds for the
Funds, subject to its obligation to obtain best execution under the
circumstances, which may take account of the overall quality of brokerage and
research services provided to Tradewinds.
Payment of Expenses. Tradewinds will pay all expenses it incurs in connection
with its activities under the Tradewinds Sub-Advisory Agreement other than the
cost of securities (including brokerage commissions and other related expenses)
purchased for the Funds.
Limitation on Liability. Tradewinds will not be liable for, and NAM will not
take any action against Tradewinds to hold Tradewinds liable for, any error of
judgment or mistake of law or for any loss suffered by a Fund in connection with
the performance of Tradewinds' duties under the Tradewinds Sub-Advisory
Agreement, except for a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of Tradewinds in the performance of its duties
under the Agreement, or by reason of its reckless disregard of its obligations
and duties under the Agreement.
Termination. The Tradewinds Sub-Advisory Agreement will automatically terminate
in the event of an assignment and may be terminated at any time without the
payment of any penalty by NAM on sixty (60) days' written notice to Tradewinds.
The Tradewinds Sub-Advisory Agreement may also be terminated by a Fund with
respect to that Fund by action of the Fund's Board or by a vote of a majority of
the outstanding voting securities of that Fund, accompanied by 60 days' written
notice.
The Tradewinds Sub-Advisory Agreement for each Fund will also be terminable with
respect to that Fund at any time without the payment of any penalty, by NAM, the
Board or by vote of a majority of the outstanding voting securities of that Fund
in the event that it is established by a court of competent jurisdiction that
Tradewinds or any of its officers or
8
directors has taken any action that results in a breach of the representations
of Tradewinds set forth in the Agreement.
THE BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE
FOR APPROVAL OF THE TRADEWINDS SUB-ADVISORY AGREEMENT.
BOARD CONSIDERATIONS IN APPROVING THE AMENDED SYMPHONY SUB-ADVISORY AGREEMENT
AND THE TRADEWINDS SUB-ADVISORY AGREEMENT
The Board is responsible for overseeing the performance of the investment
adviser to the Funds and determining whether to approve the advisory
arrangements, including sub-advisory arrangements. At a meeting held on November
14, 2006 (the "November Meeting"), the Board of the Funds, including the
Independent Board Members, unanimously approved on behalf of each Fund the
Tradewinds Sub-Advisory Agreement between NAM and Tradewinds and the Amended
Symphony Sub-Advisory Agreement between NAM and Symphony (collectively the
"Sub-Advisory Agreements"). Tradewinds and Symphony are each a "Sub-Adviser."
THE APPROVAL PROCESS
During the course of the fall of 2006, the Board received a wide variety of
materials relating to proposed investment policy changes for the Funds as well
as the proposed managers for the assets allocated pursuant to these revised
policies. In this regard, NAM recommended Symphony and Tradewinds. To assist the
Board in its evaluation of the sub-advisory contract with the respective
Sub-Adviser at the November Meeting or at prior meetings, the Independent Board
Members received extensive materials which outlined, among other things:
- the nature, extent and quality of services to be provided by the Sub-Adviser;
- the organization and business operations of the Sub-Adviser;
- hypothetical performance of the Fund's modified investment strategies as well
as certain hypothetical (where applicable) and actual performance of the
respective Sub-Adviser;
- the profitability of Nuveen (which included its wholly-owned affiliated
sub-advisers such as Symphony and Tradewinds);
- the sub-advisory fee schedule for each Sub-Adviser as well as a description of
the fees received by the Sub-Adviser from other funds and/or clients; and
- the soft dollar practices of the Sub-Adviser, if any.
At the November Meeting, Symphony 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 under the Investment Company Act of 1940,
as amended and the general principals of state law in reviewing and approving
advisory contracts, 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 contracts. It is with this
9
background that the Board Members considered the Amended Symphony Sub-Advisory
Agreement and the Tradewinds Sub-Advisory Agreement. The Independent Board
Members, in consultation with independent counsel, reviewed the factors set out
in judicial decisions and SEC directives relating to the approval 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
the Sub-Adviser; (b) performance information of the Fund and the Sub-Adviser (as
described below); (c) the profitability of Nuveen and its affiliates; and (d)
whether fee levels reflect economies of scale for the benefit of Fund investors.
A. NATURE, EXTENT AND QUALITY OF SERVICES
In reviewing the Sub-Advisers, the Board Members considered the nature, extent
and quality of the respective Sub-Adviser's services. As Symphony already serves
as a sub-adviser to the Funds and Tradewinds serves as sub-adviser to other
Nuveen funds overseen by the Board Members, the Board has a good understanding
of each Sub-Adviser's organization, operations and personnel. In this regard,
the Board Members are familiar with and have evaluated the professional
experience, qualifications and credentials of the Fund Adviser's personnel. At
the November Meeting or at prior meetings, the Board Members have reviewed
materials outlining, among other things, the Sub-Adviser's organization and
business; the types of services that the respective Sub-Adviser will provide to
the Funds under the revised investment mandates; the experience of the
Sub-Adviser with respect to the investment strategies; and hypothetical as well
as actual performance of the Sub-Adviser with respect to its investment
strategies (as described in further detail below). The Board Members noted that
NAM recommended the Sub-Advisers and considered the basis for such
recommendation. At prior meetings, the Board has also reviewed an evaluation
from NAM of each Sub-Adviser which outlined, among other things, the
Sub-Adviser's organizational history, client base, product mix, investment team
and any changes thereto, investment process, and performance (as applicable).
Given the Board Members' experience with the Funds (including any other Nuveen
funds advised by the Sub-Adviser) and each Sub-Adviser, the Board Members
recognized and considered the quality of their investment processes in making
portfolio management decisions.
In addition to advisory services, the Independent Board Members considered the
quality of any administrative or non-advisory services provided. With respect to
each Sub-Adviser, the Independent Board Members noted that each respective
Sub-Advisory Agreement was essentially an agreement for portfolio management
services only and the Sub-Adviser was not expected to supply other significant
administrative services to the Funds.
Based on their review, the Board Members found that, overall, the nature, extent
and quality of services expected to be provided to the Funds under the
Tradewinds Sub-Advisory Agreement and Amended Symphony Sub-Advisory Agreement,
as applicable, were satisfactory.
B. THE INVESTMENT PERFORMANCE OF THE FUND AND SUB-ADVISERS
The Board Members recognized that the changes to the investment mandates are
seeking, in part, to enhance portfolio returns thus limiting some of the
usefulness of reviewing the
10
Fund's past performance record. Accordingly, the Board Members have reviewed
hypothetical model performance of the investment strategies as well as
hypothetical and more recent actual performance of the respective Sub-Adviser
with respect to its investment strategies. The Board Members are also familiar
with the performance records of the respective Sub-Adviser with respect to other
funds it advises.
C. FEES, EXPENSES AND PROFITABILITY
1. FEES AND EXPENSES
In evaluating the advisory fees, the Board recognized that the overall advisory
fee paid by the Funds will not change as a result of the addition of Tradewinds
as a Sub-Adviser and the increased fee for Symphony. Rather, NAM will pay the
sub-advisory fees out of the management fees it receives from the Funds. With
respect to the overall advisory fees and expenses of the Fund, the Board Members
have previously reviewed, among other things, the respective Fund's advisory
fees (net and gross management fees) and total expense ratios (before and after
expense reimbursements and/or waivers) in absolute terms as well as comparisons
to the gross management fees (before waivers), net management fees (after
waivers) and total expense ratios (before and after waivers) of comparable
funds. With respect to the sub-advisory fees, the Board Members reviewed the
proposed sub-advisory fee for Tradewinds, the revised sub-advisory fee schedule
for Symphony and the fees received by each from other funds they advise. At
prior meetings, the Board Members have also reviewed the pricing schedule that
the Sub-Adviser (or its predecessor) charges for similar investment management
services for other client accounts or fund sponsors.
Based on their review of the fee and service information provided, the Board
Members determined that the proposed sub-advisory fees for the respective
Sub-Adviser was acceptable.
2. PROFITABILITY
In conjunction with its review of fees at prior meetings, the Board Members have
considered the profitability of Nuveen for advisory activities (which
incorporated Nuveen's wholly-owned affiliated sub-advisers including Tradewinds
and Symphony). As noted, the overall advisory fees paid by the Funds will not
change as a result of the proposed changes to the Funds' sub-advisory
arrangements. At prior meetings, the Board Members have reviewed data comparing
Nuveen's profitability with other fund sponsors prepared by three independent
third party service providers as well as comparisons of the revenues, expenses
and profits margins of various unaffiliated management firms with similar
amounts of assets under management prepared by Nuveen. In considering
profitability, the Board Members have recognized the inherent limitations in
determining profitability as well as the difficulties in comparing the
profitability of other unaffiliated advisers. Based on their review, the Board
Members recognized that the advisory fees paid to NAM are not changing, however,
the Sub-Advisers are wholly-owned subsidiaries of Nuveen and therefore Nuveen
may retain more of its management fees through its affiliated Sub-Advisors. See
also "Other Considerations" below.
In evaluating the reasonableness of the compensation, the Board Members also
considered any other revenues paid to the Sub-Adviser and its affiliates
(including NAM) as well as any
11
indirect benefits (such as soft dollar arrangements, if any) they expect to
receive that are directly attributable to their management of the Funds, if any.
See Section E below for additional information.
D. ECONOMIES OF SCALE AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF SCALE
With respect to economies of scale, the Board Members have recognized the
potential benefits resulting from the costs of a fund being spread over a larger
asset base. To help ensure the shareholders share in these benefits, the Board
Members have previously reviewed and considered the breakpoints in the Fund's
advisory fee schedules that reduce advisory fees depending on the Fund's size.
In addition to advisory fee breakpoints, the Board had also approved a
complex-wide fee arrangement that was introduced on August 1, 2004. Pursuant to
the complex-wide fee arrangement, the fees of the funds in the Nuveen complex,
including the Funds, are reduced as the assets in the fund complex reach certain
levels. As noted, each Fund's overall advisory fee schedule including the
breakpoints applicable to the fees paid by the Fund will not change as a result
of the proposed changes to the Funds' sub-advisory arrangements. The Board
Members had concluded that such breakpoint schedule and complex-wide fee
arrangement continues to be 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 the Sub-Adviser or its affiliates may receive as a result of its
relationship with each Fund. In this regard, the Board Members recognized
revenues received by affiliates of NAM and the Sub-Advisers for serving as agent
at Nuveen's preferred trading desk.
In addition to the above, the Board Members considered whether the Sub-Adviser
received any benefits from soft dollar arrangements. The Board Members
recognized that Tradewinds may engage in soft dollar arrangements and that such
Sub-Adviser may benefit from its soft dollar arrangements pursuant to which it
receives research from brokers that execute the respective Fund's portfolio
transactions. The Board Members noted that such Sub-Adviser's profitability may
be lower if it was required to pay for this research with hard dollars. With
respect to Symphony, Symphony currently does not enter into soft dollar
arrangements; however, it has adopted a soft dollar policy in the event it does
so in the future.
F. OTHER CONSIDERATIONS
In addition to the above, the Board Members recognized that the modifications in
the Funds' investment strategies would result in changes to the Funds' portfolio
management. As noted above, the Board Members considered the Sub-Advisers'
experience in light of the Funds' new investment mandates. However, the Board
Members recognized that the Sub-Advisers are affiliated with Nuveen and will be
managing assets that were formerly managed by a sub-adviser unaffiliated with
Nuveen. As Nuveen pays the Sub-Advisers out of the management fee it receives
from the Funds, the Board Members considered the benefit to
12
Nuveen that it will be retaining more of the management fees through its
affiliated Sub-Advisers when the Board evaluated the sub-advisory arrangements
and fee structures.
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 Tradewinds
Sub-Advisory Agreement and Symphony's Amended Sub-Advisory Agreement were fair
and reasonable, that the respective Sub-Adviser's fees are reasonable in light
of the services provided to each Fund, and that the Board Members recommend that
shareholders approve such Sub-Advisory Agreements.
3. ELECTION OF BOARD MEMBERS
GENERAL
At the Meeting, Common and FundPreferred shareholders of both Funds are being
asked to consider and vote upon the election of eight (8) Board Members and
FundPreferred shareholders of both Funds are being asked to consider and vote
upon the election of two (2) Board Members. In February 2006, the By-Laws of
each Fund were amended to provide for the division of the Board into classes.
Pursuant to the amended By-Laws, the Board Members of each Fund classified
themselves by resolution dated November 14, 2006 into three classes, Class I,
Class II and Class III, to be elected at the Meeting by the holders of the
outstanding Common Shares and FundPreferred Shares, voting together as a single
class. If elected, Class I Board Members will serve until the third succeeding
annual meeting subsequent to their election; Class II Board Members will serve
until the first succeeding annual meeting subsequent to their election; and
Class III Board Members will serve until the second succeeding annual meeting
subsequent to their election. At each subsequent annual meeting, the Board
Members chosen to succeed those whose terms are expiring shall be identified as
being of the same class as the Board Members whom they succeed and shall be
elected for a term expiring at the time of the third succeeding annual meeting
subsequent to their election or thereafter in each case when their respective
successors are duly elected and qualified. For each Fund, under normal
circumstances, holders of FundPreferred Shares will continue to be entitled to
elect two (2) Board Members. The Board Members elected by holders of Preferred
Shares will be elected to serve until the next annual meeting or until their
successors shall have been duly elected and qualified.
FOR EACH FUND:
(i) eight (8) Board Members are to be elected by holders of Common
Shares and FundPreferred Shares, voting together as a single class.
Board Members Brown, Stockdale and Stone have been designated as
Class I Board Members, and as nominees for Board Members for a term
expiring at the annual meeting of shareholders in 2010 or until
their successors have been duly elected and qualified. Board Members
Hunter, Kundert and Sunshine have been designated as Class II Board
Members, and as nominees for Board Members for a term expiring at
the annual meeting of shareholders in 2008 or until their successors
have been duly elected and qualified. Board Members Bremner and
Evans have been designated as Class III Board Members, and as
nominees for Board
13
Members for a term expiring at the annual meeting of shareholders in
2009 or until their successors have been duly elected and qualified.
(ii) two (2) Board Members are to be elected by holders of FundPreferred
Shares, voting together as a single class. Board Members Schneider
and Schwertfeger are nominees for election by holders of
FundPreferred Shares for a term expiring at the next annual meeting
or until their successors have been duly elected and qualified.
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 in the table
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, Mr. Brown is expected
to retire from his position as a Board Member on June 30, 2007. 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.
Except for Ms. Stone, all of the Board Member nominees were last elected to each
Fund's Board at the 2006 annual meeting of shareholders. In December, 2006, Ms.
Stone was appointed to each Fund's Board effective January 1, 2007. Ms. Stone is
presented in this Joint Proxy Statement as a nominee for election by
shareholders and was recommended to the nominating and governance committee of
each Fund's Board by a third party search firm who received Ms. Stone's name
from an Independent Board Member (as defined below).
Other than Mr. Schwertfeger, all Board Member nominees are not "interested
persons," as defined in the 1940 Act, of the Funds or the Adviser and have never
been an employee or director of Nuveen or any affiliate. Accordingly, such Board
Members are deemed "Independent Board Members."
14
EACH BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE
NOMINEES NAMED BELOW.
BOARD NOMINEES/BOARD MEMBERS
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF OFFICE COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH PRINCIPAL OVERSEEN HELD BY
NAME, ADDRESS HELD WITH OF TIME OCCUPATION(S) BY BOARD BOARD
AND BIRTH DATE FUND SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
-------------------------------------------------------------------------------------------------------
Nominees who are not
interested persons of
the Fund
Robert P. Bremner Board Term: Class III Private Investor 172 N/A
c/o Nuveen Member; Board Member until and Management
Investments, Inc. Lead 2009 Consultant.
333 West Wacker Drive Independent Length of Service:
Chicago, IL 60606 Director Since 1996; Lead
(8/22/40) Independent
Director Since
2005
Lawrence H. Brown Board Term: Class I Retired (1989) as 172 See
c/o Nuveen Member Board Member until Senior Vice Principal
Investments, Inc. 2010 President of The Occupation
333 West Wacker Drive Length of Service: Northern Trust Description
Chicago, IL 60606 Since 1993 Company; Director,
(7/29/34) Community Advisory
Board for Highland
Park and Highwood,
United Way of the
North Shore (since
2002); Director,
Michael Rolfe
Pancreatic Cancer
Foundation.
15
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF OFFICE COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH PRINCIPAL OVERSEEN HELD BY
NAME, ADDRESS HELD WITH OF TIME OCCUPATION(S) BY BOARD BOARD
AND BIRTH DATE FUND SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
-------------------------------------------------------------------------------------------------------
Jack B. Evans Board Term: Class III President, The 172 See
c/o Nuveen Member Board Member until Hall-Perrine Principal
Investments, Inc. 2009 Foundation, a Occupation
333 West Wacker Drive Length of Service: private Description
Chicago, IL 60606 Since 1999 philanthropic
(10/22/48) corporation (since
1996); Director and
Vice Chairman,
United Fire Group,
a publicly held
company; Adjunct
Faculty Member,
University of Iowa;
Director, Gazette
Companies; Life
Trustee of Coe
College and Iowa
College Foundation;
formerly, Director,
Alliant Energy;
formerly, Director,
Federal Reserve
Bank of Chicago;
formerly, President
and Chief Operating
Officer, SCI
Financial Group,
Inc., a regional
financial services
firm.
16
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF OFFICE COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH PRINCIPAL OVERSEEN HELD BY
NAME, ADDRESS HELD WITH OF TIME OCCUPATION(S) BY BOARD BOARD
AND BIRTH DATE FUND SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
-------------------------------------------------------------------------------------------------------
William C. Hunter c/o Board Term: Class II Dean, Tippie 172 See
Nuveen Investments, Member Board Member until College of Principal
Inc. 2008 Business, Occupation
333 West Wacker Drive Length of Service: University of Iowa Description
Chicago, IL 60606 Since 2004 (since July 2006);
(3/6/48) Director, Credit
Research Center at
Georgetown
University;
Director (since
2004) of Xerox
Corporation, a
publicly held
company; formerly,
(2003-2006), Dean
and Distinguished
Professor of
Finance, School of
Business at the
University of
Connecticut;
formerly, Senior
Vice President and
Director of
Research at the
Federal Reserve
Bank of Chicago
(1995-2003);
formerly, Director,
SS&C Technologies,
Inc. (May
2005-October 2005).
17
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF OFFICE COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH PRINCIPAL OVERSEEN HELD BY
NAME, ADDRESS HELD WITH OF TIME OCCUPATION(S) BY BOARD BOARD
AND BIRTH DATE FUND SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
-------------------------------------------------------------------------------------------------------
David J. Kundert c/o Board Term: Class II Director, 170 See
Nuveen Investments, Member Board Member until Northwestern Mutual Principal
Inc. 2008 Wealth Management Occupation
333 West Wacker Drive Length of Service: Company; Retired Description
Chicago, IL 60606 Since 2005 (2004) as Chairman,
(10/28/42) JPMorgan Fleming
Asset Management,
President and CEO,
Banc One Investment
Advisors
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;
member of the
Wisconsin Bar
Association; member
of Board of
Directors, Friends
of Boerner
Botanical Gardens;
member of Board of
Directors,
Milwaukee Repertory
Theater.
18
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF OFFICE COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH PRINCIPAL OVERSEEN HELD BY
NAME, ADDRESS HELD WITH OF TIME OCCUPATION(S) BY BOARD BOARD
AND BIRTH DATE FUND SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
-------------------------------------------------------------------------------------------------------
William J. Schneider Board Term: Annual Chairman, Miller- 172 See
c/o Nuveen Member Length of Service: Valentine Partners Principal
Investments, Inc. Since 1996 Ltd., a real estate Occupation
333 West Wacker Drive investment company; Description
Chicago, IL 60606 formerly, Senior
(9/24/44) Partner and Chief
Operating Officer
(retired 2004) of
Miller-Valentine
Group; formerly,
Vice President,
Miller-Valentine
Realty; 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; Vice
President of the
Dayton Philharmonic
Orchestra
Association; Board
Member, Regional
Leaders Forum which
promotes
cooperation on
economic
development issues;
formerly, Director,
Dayton Development
Coalition;
formerly, Member,
Community Advisory
Board, National
City Bank, Dayton,
Ohio and Business
Advisory Council,
Cleveland Federal
Reserve Bank.
19
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF OFFICE COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH PRINCIPAL OVERSEEN HELD BY
NAME, ADDRESS HELD WITH OF TIME OCCUPATION(S) BY BOARD BOARD
AND BIRTH DATE FUND SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
-------------------------------------------------------------------------------------------------------
Judith M. Stockdale Board Term: Class I Executive Director, 172 N/A
c/o Nuveen Member Board Member until Gaylord and Dorothy
Investments, Inc. 2010 Donnelley
333 West Wacker Drive Length of Service: Foundation (since
Chicago, IL 60606 Since 1997 1994); prior
(12/29/47) thereto, Executive
Director, Great
Lakes Protection
Fund (from 1990 to
1994).
Carole E. Stone c/o Board Term: Class I Director, Chicago 172 See
Nuveen Investments, Member Board Member until Board Options Principal
Inc. 2010 Exchange (since Occupation
333 West Wacker Drive Length of Service: 2006); Chair New Description
Chicago, IL 60606 Since 2007 York Racing
(6/28/47) Association
Oversight Board
(since 2005);
Commissioner, NYSE
Commission on
Public Authority
Reform (since
2005); formerly
Director, New York
State Division of
the Budget
(2000-2004), Chair,
Public Authorities
Control Board
(2000-2004) and
Director, Local
Government
Assistance
Corporation (2000-
2004).
20
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF OFFICE COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH PRINCIPAL OVERSEEN HELD BY
NAME, ADDRESS HELD WITH OF TIME OCCUPATION(S) BY BOARD BOARD
AND BIRTH DATE FUND SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
-------------------------------------------------------------------------------------------------------
Eugene S. Sunshine Board Term: Class II Senior Vice 172 See
c/o Nuveen Member Board Member until President for Principal
Investments, Inc. 2008 Business and Occupation
333 West Wacker Drive Length of Service: Finance (since Description
Chicago, IL 60606 Since 2005 1997), Northwestern
(1/22/50) University;
Director (since
2003), Chicago
Board Options
Exchange; 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;
Director (since
2006), Pathways, a
provider of therapy
and related
information for
physically disabled
infants and young
children; formerly,
Director
(2003-2006),
National Mentor
Holdings, a
privately-held,
national provider
of home and
community-based
services.
21
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF OFFICE COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH PRINCIPAL OVERSEEN HELD BY
NAME, ADDRESS HELD WITH OF TIME OCCUPATION(S) BY BOARD BOARD
AND BIRTH DATE FUND SERVED(1) DURING PAST 5 YEARS MEMBER MEMBER
-------------------------------------------------------------------------------------------------------
Timothy R. Chairman of Term: Annual Chairman and 172 See
Schwertfeger(2) the Board Length of Service: Director (since Principal
333 West Wacker Drive and Board Since 1996 1996) of Nuveen Occupation
Chicago, IL 60606 Member Investments, Inc. Description
(3/28/49) and Nuveen
Investments, LLC;
Chairman and
Director (since
1997) of Nuveen
Asset Management;
Chairman and
Director (since
1999) of
Rittenhouse Asset
Management, Inc.;
Chairman of Nuveen
Investments
Advisers, Inc.
(since 2002); Chief
Executive Officer,
NWQ Holdings, LLC;
formerly, Director
(1996-2006) of
Institutional
Capital
Corporation;
formerly, Director
(1992-2004) and
Chairman (1996-
2004) of Nuveen
Advisory Corp. and
Nuveen
Institutional
Advisory Corp.(3)
-------------------------------------------------------------------------------------------------------
(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.
22
BENEFICIAL OWNERSHIP
The following table lists 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, 2006. The Boards strongly
encourage Board Members to own shares in the Nuveen funds they oversee. The goal
is for each Board Member to own Nuveen fund shares equal in value to at least
year's compensation as a Board Member. New Board Members have a period of three
years in which to reach this level. The goal is very strongly recommended but
not mandatory. Deferral of Board Member compensation is one mechanism for
investing in the Nuveen Funds.
DOLLAR RANGE OF EQUITY SECURITIES
---------------------------------------------------------------------------------------
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN BY BOARD
PREFERRED PREFERRED MEMBER NOMINEES IN FAMILY OF
BOARD MEMBER NOMINEES CONVERTIBLE CONVERTIBLE 2 INVESTMENT COMPANIES(1)
---------------------------------------------------------------------------------------
Robert P. Bremner..... $50,001-$100,000 $0 Over $100,000
Lawrence H. Brown..... $10,001-$50,000 $0 Over $100,000
Jack B. Evans......... $10,001-$50,000 $0 Over $100,000
William C. Hunter..... $0 $0 Over $100,000
David J. Kundert...... $0 $0 Over $100,000
William J.
Schneider........... $10,001-$50,000 $0 Over $100,000
Timothy R.
Schwertfeger........ $1-$10,000 $0 Over $100,000
Judith M. Stockdale... $0 $1-$10,000 Over $100,000
Carole E. Stone(2).... $0 $0 None
Eugene S. Sunshine.... $50,001-$100,000 $0 Over $100,000
---------------------------------------------------------------------------------------
(1) The amounts reflect the aggregate dollar range of equity securities and the
number of shares beneficially owned by the Board Member in the Funds and in
all Nuveen funds overseen by the Board Member.
(2) In December, 2006, Ms. Stone was appointed to each Fund's Board, effective
January 1, 2007. Ms. Stone did not own shares of Nuveen Funds prior to her
being appointed as a Board Member.
23
The following table sets 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, 2006. The information as to beneficial ownership is based on
statements furnished by each Board Member and officer.
FUND SHARES OWNED BY BOARD MEMBERS AND OFFICERS(1)
---------------------------------------------------------------------------------------
BOARD MEMBER NOMINEES PREFERRED CONVERTIBLE PREFERRED CONVERTIBLE 2
---------------------------------------------------------------------------------------
Robert P. Bremner(2)................. 3,500 0
Lawrence H. Brown.................... 1,000 0
Jack B. Evans........................ 2,000 0
William C. Hunter.................... 0 0
David J. Kundert..................... 0 0
William J. Schneider................. 1,000 0
Timothy R. Schwertfeger.............. 279 0
Judith M. Stockdale.................. 0 435
Carole E. Stone(3)................... 0 0
Eugene S. Sunshine(4)................ 4,050 0
ALL BOARD MEMBERS AND OFFICERS AS A
GROUP.............................. 12,829 435
---------------------------------------------------------------------------------------
(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.
(2) The shares of Preferred Convertible listed for Mr. Bremner are owned by his
spouse. Mr. Bremner disclaims beneficial ownership of these shares.
(3) In December, 2006, Ms. Stone was appointed to each Fund's Board, effective
January 1, 2007. Ms. Stone did not own shares of Nuveen Funds prior to her
being appointed as a Board Member.
(4) The shares of Preferred Convertible listed for Mr. Sunshine are held in a
trust for which Mr. Sunshine serves as trustee. Mr. Sunshine disclaims
beneficial ownership of these shares.
On December 31, 2006, Board Members and executive officers as a group
beneficially owned approximately 1,500,000 shares of all funds managed by the
Adviser (includes deferred units and shares held by the executive officers in
Nuveen's 401(k)/profit sharing plan). Each Board Member's individual beneficial
shareholdings of each Fund constitute less than 1% of the outstanding shares of
each Fund. As of January 12, 2007, the Board Members and executive officers as a
group beneficially owned less than 1% of the outstanding shares of each Fund. As
of January 12, 2007, no shareholder beneficially owned more than 5% of any class
of shares of any Fund.
COMPENSATION
Prior to January 1, 2007, for all Nuveen funds, Independent Board Members
received a $90,000 annual retainer plus (a) a fee of $2,500 per day for
attendance in person or by telephone at a regularly scheduled meeting of the
Board; (b) a fee of $2,000 per meeting for attendance in person where such
in-person attendance is required and $1,000 per meeting 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 $1,500 per meeting for
attendance in person or by telephone at an audit committee meeting; (d) a fee of
$1,500 per meeting for attendance in person at a compliance, risk management and
regulatory oversight committee meeting where in-person attendance is required
and $1,000 per meeting for attendance by telephone or in person where in-person
attendance is not required; (e) a fee of $1,000 per meeting for attendance in
person or by telephone for a meeting of the dividend
24
committee; and (f) a fee of $500 per meeting for attendance in person at all
other committee meetings (including shareholder meetings) on a day on which no
regularly scheduled board meeting is held in which in-person attendance is
required and $250 per meeting for attendance by telephone or in person at such
committee meetings (excluding shareholder meetings) where in-person attendance
is not required and $100 per meeting when the executive committee acts as
pricing committee for IPOs, plus, in each case, expenses incurred in attending
such meetings. In addition to the payments described above, the Lead Independent
Director received $20,000, the chairpersons of the audit committee and the
compliance, risk management and regulatory oversight committee received $7,500
and the chairperson of the nominating and governance committee received $5,000
as additional retainers to the annual retainer paid to such individuals.
Independent Board Members also received a fee of $2,000 per day for site visits
on days on which no regularly scheduled board meeting is held to entities that
provide services to the Nuveen funds. When ad hoc committees are organized, the
nominating and governance committee will at the time of formation determine
compensation to be paid to the members of such committee, however, in general
such fees were $1,000 per meeting for attendance in person at any ad hoc
committee meeting where in-person attendance is required and $500 per meeting
for attendance by telephone or in person at such meetings where in-person
attendance is not required. The annual retainer, fees and expenses were
allocated among the funds managed by the Adviser, on the basis of relative net
asset sizes. The Board Member affiliated with Nuveen and the Adviser served
without any compensation from the Funds.
Effective January 1, 2007, for all Nuveen funds, Independent Board Members
receive a $95,000 annual retainer plus (a) a fee of $3,000 per day for
attendance in person or by telephone at a regularly scheduled meeting of the
Board; (b) a fee of $2,000 per meeting for attendance in person or by telephone
where in-person attendance is required and $1,500 per meeting 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 $1,500 per meeting for
attendance in person or by telephone at an audit committee meeting; (d) a fee of
$1,500 per meeting for attendance in person or by telephone at a regularly
scheduled compliance, risk management and regulatory oversight committee meeting
(d) a fee of $1,500 per meeting for attendance in person at a non-regularly
scheduled compliance, risk management and regulatory oversight committee meeting
where in-person attendance is required and $1,000 per meeting for attendance by
telephone or in person where in-person attendance is not required, except that
the chairperson of the compliance, risk management and regulatory oversight
committee may at any time designate a non-regularly scheduled meeting of the
committee as an in-person meeting for the purposes of fees to be paid; (e) a fee
of $1,000 per meeting for attendance in person or by telephone for a meeting of
the dividend committee; and (f) a fee of $500 per meeting for attendance in
person at all other committee meetings (including shareholder meetings) on a day
on which no regularly scheduled board meeting is held in which in-person
attendance is required and $250 per meeting for attendance by telephone or in
person at such committee meetings (excluding shareholder meetings) where
in-person attendance is not required and $100 per meeting when the executive
committee acts as pricing committee for IPOs, plus, in each case, expenses
incurred in attending such meetings. In addition to the payments described
above, the Lead Independent Director receives $25,000, the chairpersons of the
audit committee and the compliance, risk management and regulatory oversight
committee receive $7,500 and the chairperson of the nominating and governance
committee receives $5,000 as additional
25
retainers to the annual retainer paid to such individuals. Independent Board
Members also receive a fee of $2,000 per day for site visits to entities that
provide services to the Nuveen funds on days on which no regularly scheduled
board meeting is held. When ad hoc committees are organized, the nominating and
governance committee will at the time of formation determine compensation to be
paid to the members of such committee, however, in general such fees will be
$1,000 per meeting for attendance in person at any ad hoc committee meeting
where in-person attendance is required and $500 per meeting for attendance by
telephone or in person at such meetings where in-person attendance is not
required. 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. The Funds are Participating Funds under the Deferred Compensation
Plan.
The table below shows, for each Independent Board Member, the aggregate
compensation paid by each Fund to each Board Member for its last fiscal year.
Mr. Schwertfeger, a Board Member who is an interested person of the Funds, does
not receive any compensation from the Funds.
AGGREGATE COMPENSATION FROM THE FUNDS(2)(3)
------------------------------------------------------------------------------------------------
TOTAL COMPENSATION FROM
NUVEEN FUNDS PAID TO
BOARD MEMBER NOMINEES PREFERRED CONVERTIBLE PREFERRED CONVERTIBLE 2 BOARD MEMBERS
------------------------------------------------------------------------------------------------
Robert P. Bremner.... $6,018 $8,391 $177,099
Lawrence H. Brown.... 5,719 7,976 165,329
Jack B. Evans........ 6,164 8,597 180,111
William C. Hunter.... 5,240 7,306 146,018
David J. Kundert..... 5,167 7,204 144,759
William J.
Schneider.......... 5,700 7,948 171,879
Judith M.
Stockdale.......... 5,245 7,314 148,510
Carole E. Stone(1)... 0 0 0
Eugene S. Sunshine... 5,245 7,314 159,130
------------------------------------------------------------------------------------------------
(1) In December, 2006, Ms. Stone was appointed to each Fund's Board, effective
January 1, 2007.
(2) Aggregate compensation numbers are based on the compensation schedule in
effect prior to January 1, 2007.
26
(3) 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:
DEFERRED FEES
--------------------------------------------------------------------------------------
BOARD MEMBER NOMINEES PREFERRED CONVERTIBLE PREFERRED CONVERTIBLE 2
--------------------------------------------------------------------------------------
Robert P. Brenner.................... $ 942 $1,314
Lawrence H. Brown.................... - -
Jack B. Evans........................ 1,596 2,226
William C. Hunter.................... 5,240 7,306
David J. Kundert..................... 5,167 7,204
William J. Schneider................. 5,700 7,948
Judith M. Stockdale.................. 3,384 4,719
Carole E. Stone(1)................... 0 0
Eugene S. Sunshine................... 5,082 7,089
--------------------------------------------------------------------------------------
Nuveen maintains a charitable matching contributions program to encourage the
active support and involvement of individuals in the civic activities of their
community. Until December 31, 2006, the Independent Board Members of the funds
managed by the Adviser were eligible to participate in the matching
contributions program of Nuveen. Under the matching contributions program,
Nuveen matched 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.
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 executive committee of each Fund held no meetings during its last
fiscal year.
Lawrence H. Brown, Jack B. Evans, Judith M. Stockdale 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 dividend committee of each Fund
held three meetings during its last fiscal year.
Lawrence H. Brown, William C. Hunter, William J. Schneider, Chair, Judith M.
Stockdale and Carole E. Stone 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
27
the other Board committees. The compliance, risk management and regulatory
oversight committee of each Fund held four meetings during its last fiscal year.
Each Fund's Board has an audit committee, in accordance with Section 3(a)(58)(A)
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), that is
composed of Independent Board Members who are also "independent" as that term is
defined in the listing standards pertaining to closed-end funds of the New York
Stock Exchange. Robert P. Bremner, Lawrence H. Brown, Jack B. Evans, Chair,
David J. Kundert, 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,
procedures 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 registered public accounting firm's qualifications, performance
and independence. The audit committee reviews the work and any recommendations
of the Funds' independent registered public accounting firm. Based on such
review, it is authorized to make recommendations to the Board. The audit
committee is also responsible for the oversight of the Pricing Procedures of the
Funds and the internal Valuation Group. The Boards have adopted a written Audit
Committee Charter that conforms to the listing standards of the New York Stock
Exchange. A copy of the Audit Committee Charter is attached to the proxy
statement as Appendix F. The audit committee of each Fund held four meetings
during its last fiscal year.
Each Fund has a nominating and governance committee that is composed entirely of
Independent Board Members who are also "independent" as defined by New York
Stock Exchange 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, Carole E. Stone 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 of
each Fund, a copy of which is available on the Funds' website at
www.nuveen.com/etf/products/fundGovernance.aspx. The nominating and governance
committee of each Fund held four meetings during its last fiscal year.
The nominating and governance committee looks to many sources for
recommendations of qualified candidates, 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
28
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 an
Independent Board Member 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 candidates when the candidate 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 Independent Board Members of each Fund have appointed Robert P. Bremner as
their Lead Independent Director . The role of the Lead Independent Director is
one of coordination and assuring the appropriate, effective and efficient
functioning of the Board and the Board processes. Specific responsibilities may
include organizing and leading Independent Board Member sessions, facilitating
and ensuring an appropriate level of communication among the Independent Board
Members, leading the assessment of the Board's effectiveness, and working with
the Adviser's staff and outside counsel on board meeting agendas, board material
and workshops for Independent Board Members to ensure that the priorities of the
Independent Board Members are addressed.
29
The Board of each Fund held four regular quarterly meetings and five special
meetings during the last fiscal year. 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.
THE OFFICERS
The following table sets forth information as of December 31, 2006 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.
-----------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) SERVED BY
AND BIRTHDATE FUND SERVED(1) DURING PAST 5 YEARS OFFICER
-----------------------------------------------------------------------------------------
Gifford R. Zimmerman Chief Term: Annual Managing Director (since 172
333 West Wacker Drive Administrative Length of 2002), Assistant
Chicago, IL 60606 Officer Service: Secretary and Associate
(9/9/56) Since 1988 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.
and Symphony Asset
Management LLC (since
2003); Assistant
Secretary, Santa Barbara
Asset Management LLC
(since 2006);
previously, Managing
Director (from
2002-2004), General
Counsel and Assistant
30
-----------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) SERVED BY
AND BIRTHDATE FUND SERVED(1) DURING PAST 5 YEARS OFFICER
-----------------------------------------------------------------------------------------
Secretary of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.;(2)
Chartered Financial
Analyst.
Julia L. Antonatos Vice President Term: Annual Managing Director (since 172
333 West Wacker Drive Length of 2005), formerly, Vice
Chicago, IL 60606 Service: President, formerly,
(9/22/63) Since 2004 Assistant Vice President
of Nuveen Investments,
LLC; Chartered Financial
Analyst.
Michael T. Atkinson Vice President Term: Annual Vice President (since 172
333 West Wacker Drive and Assistant Length of 2002), formerly
Chicago, IL 60606 Secretary Service: Assistant Vice
(2/3/66) Since 2002 President, formerly,
Associate of Nuveen
Investments, LLC.
Peter H. D'Arrigo Vice President Term: Annual Vice President and 172
333 West Wacker Drive and Treasurer Length of Treasurer (since 1999)
Chicago, IL 60606 Service: of Nuveen Investments,
(11/28/67) Since 1999 LLC and 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
(since 2003) of Nuveen
Rittenhouse Asset
Management, Inc. and
Symphony Asset
Management LLC;
Treasurer (since 2006),
Santa Barbara Asset
Management LLC;
formerly, Vice President
and Treasurer (from 1999
to 2004) of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.(2);
Chartered Financial
Analyst.
31
-----------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) SERVED BY
AND BIRTHDATE FUND SERVED(1) DURING PAST 5 YEARS OFFICER
-----------------------------------------------------------------------------------------
John N. Desmond Vice President Term: Annual Vice President, Director 172
333 West Wacker Drive Length of of Investment
Chicago, IL 60606 Service: Operations, Nuveen
(8/24/61) Since 2005 Investments, LLC (since
2005); formerly,
Director, Business
Manager, Deutsche Asset
Management (2003-2004);
formerly, Director,
Business Development and
Transformation, Deutsche
Trust Bank Japan
(2002-2003); formerly,
Senior Vice President,
Head of Investment
Operations and Systems,
Scudder Investments
Japan, (2000-2002);
formerly, Senior Vice
President, Head of Plan
Administration and
Participant Services,
Scudder Investments
(1995-2002).
Jessica R. Droeger Vice President Term: Annual Vice President (since 172
333 West Wacker Drive and Secretary Length of 2002) and Assistant
Chicago, IL 60606 Service: General Counsel (since
(9/24/64) Since 1998 1998), formerly,
Assistant Vice President
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.(2)
Lorna C. Ferguson Vice President Term: Annual Managing Director (since 172
333 West Wacker Drive Length of 2004), formerly, Vice
Chicago, IL 60606 Service: President of Nuveen
(10/24/45) Since 1998 Investments, LLC;
Managing Director of
Nuveen Asset Management;
formerly, Managing
Director (2004),
formerly, Vice President
of Nuveen Advisory Corp.
and Nuveen Institutional
Advisory Corp.(2)
32
-----------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) SERVED BY
AND BIRTHDATE FUND SERVED(1) DURING PAST 5 YEARS OFFICER
-----------------------------------------------------------------------------------------
William M. Fitzgerald Vice President Term: Annual Managing Director of 172
333 West Wacker Drive Length of Nuveen Asset Management
Chicago, IL 60606 Service: (since 2001); Vice
(3/2/64) Since 1995 President of Nuveen
Investments Advisers
Inc. (since 2002);
formerly, Managing
Director (from 2001 to
2004), formerly, Vice
President of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.(2);
Chartered Financial
Analyst.
Stephen D. Foy Vice President Term: Annual Vice President (since 172
333 West Wacker Drive and Controller Length of 1993) and Funds
Chicago, IL 60606 Service: Controller (since 1998)
(5/31/54) Since 1993 of Nuveen Investments,
LLC; Vice President
(since 1998), formerly,
Funds Controller of
Nuveen Investments,
Inc.; Certified Public
Accountant.
Walter M. Kelly Chief Term: Annual Assistant Vice President 172
333 West Wacker Drive Compliance Length of and Assistant General
Chicago, IL 60606 Officer and Service: Counsel (since 2003) of
(2/24/70) Vice President Since 2003 Nuveen Investments, LLC;
formerly, Assistant Vice
President and Assistant
Secretary of the Nuveen
Funds (2003-2006);
previously, Associate
(2001-2003) at the law
firm of Vedder, Price,
Kaufman & Kammholz, P.C.
David J. Lamb Vice President Term: Annual Vice President of Nuveen 172
333 West Wacker Drive Length of Investments, LLC (since
Chicago, IL 60606 Service: 2000); Certified Public
(3/22/63) Since 2000 Accountant.
Tina M. Lazar Vice President Term: Annual Vice President of Nuveen 172
333 West Wacker Drive Length of Investments, LLC (since
Chicago, IL 60606 Service: 1999).
(8/27/61) Since 2002
33
-----------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS
OFFICE AND IN FUND
POSITION(S) LENGTH OF COMPLEX
NAME, ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) SERVED BY
AND BIRTHDATE FUND SERVED(1) DURING PAST 5 YEARS OFFICER
-----------------------------------------------------------------------------------------
Larry W. Martin Vice President Term: Annual Vice President, 172
333 West Wacker Drive and Assistant Length of Assistant Secretary and
Chicago, IL 60606 Secretary Service: Assistant General
(7/27/51) Since 1988 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) and
Symphony Asset
Management LLC (since
2003); formerly, Vice
President and Assistant
Secretary of Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.(2)
----------------------------------------------------------------------------------------
(1) Length of Service indicates the year the individual became an officer of a
fund in the Nuveen fund complex.
(2) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were
reorganized into Nuveen Asset Management, effective January 1, 2005.
AUDIT COMMITTEE REPORT
The audit committee of each 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 each Fund, and (3) the
independent registered public accounting firm's qualifications, performance and
independence. In its oversight capacity, the committee reviews each Fund's
annual financial statements with both management and the independent registered
public accounting firm and the committee meets periodically with the independent
registered public accounting firm 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 registered public accounting firm. The
committee is currently composed of five Independent
34
Board Members and operates under a written charter adopted and approved by the
Board, a copy of which is attached as Appendix F. Each committee member meets
the independence and experience requirements, applicable to the Funds of the New
York Stock Exchange, Section 10A of the 1934 Act and the rules and regulations
of the Securities and Exchange Commission (the "SEC").
The committee, in discharging its duties, has met with and held discussions with
management and each Fund's independent registered public accounting firm. The
committee has also reviewed and discussed the audited financial statements with
management. Management has represented to the independent registered public
accounting firm that each Fund's financial statements were prepared in
accordance with generally accepted accounting principles. The committee has also
discussed with the independent registered public accounting firm 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 registered public accounting firm
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 registered
public accounting firm 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 registered public accounting firm, the representations of management
and the report of the independent registered public accounting firm to the
committee, the committee has recommended that each Board include the audited
financial statements in each Fund's Annual Report.
The members of the committee are:
Robert P. Bremner
Lawrence H. Brown
Jack B. Evans
David J. Kundert
Eugene S. Sunshine
William J. Schneider
35
AUDIT AND RELATED FEES. The following tables provide the aggregate fees billed
during each Fund's last two fiscal years by each Fund's independent registered
public accounting firm for engagements directly related to the operations and
financial reporting of each Fund including those relating (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").
------------------------------------------------------------------------------------------------------------------------------
AUDIT FEES(1) AUDIT RELATED FEES(2) TAX FEES(3)
----------------- --------------------------------- -----------------------------------
ADVISER AND
ADVISER ADVISER AND
FUND FUND ENTITIES FUND ADVISER 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
2005 2006 2005 2006 2005 2006 2005 2006 2005 2006
-------------------------------------------------------------------------------------------
Preferred Convertible............ $19,502 $20,731 $ 0 $ 0 $ 0 $ 0 $4,731 $800 $4,950 $5,400
Preferred Convertible 2.......... $23,698 $25,269 $ 0 $ 0 $ 0 $ 0 $4,307 $800 $4,950 $5,400
------------------------------------------------------------------------------------------------------------------------------
--------------------------------- ---------------------------------
ALL OTHER FEES(4)
---------------------------------
ADVISER
AND ADVISER
FUND ENTITIES
--------------- ---------------
FISCAL FISCAL FISCAL FISCAL
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
2005 2006 2005 2006
---------------------------------
Preferred Convertible............ $3,750 $3,950 $ 0 $ 0
Preferred Convertible 2.......... $3,750 $3,950 $ 0 $ 0
--------------------------------------------------------------------
(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. The amounts reported for each Fund
under the column heading "Tax Fees--Adviser and Adviser Entities" represents
amounts billed to the Adviser, by each Fund's independent registered public
accounting firm, exclusively for the preparation of the Fund's tax return,
the cost of which is borne by the Adviser. In the aggregate, for all Nuveen
funds, these fees amounted to $428,700 in 2006 and $404,075 in 2005.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees," "Audit Related Fees" and "Tax Fees."
NON-AUDIT FEES. The following tables provide the aggregate non-audit fees billed
by each Fund's independent registered public accounting firm for services
rendered to each Fund, the Adviser and the Adviser Entities during each Fund's
last two fiscal years.
-------------------------------------------------------------------------------------------------------------------------
TOTAL NON-AUDIT FEES
BILLED TO ADVISER AND
ADVISER ENTITIES
(ENGAGEMENTS RELATED TOTAL NON-AUDIT FEES
DIRECTLY TO THE OPERATIONS BILLED TO ADVISER AND
TOTAL NON-AUDIT FEES AND FINANCIAL REPORTING ADVISER ENTITIES (ALL OTHER
FUND BILLED TO FUND OF FUND)(1) ENGAGEMENTS)
--------------------------------- ------------------------- --------------------------- ----------------------------
FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED 2005 ENDED 2006 ENDED 2005 ENDED 2006 ENDED 2005 ENDED 2006
-------------------------------------------------------------------------------------------------------------------------
Preferred Convertible............ $ 8,481 $ 4,750 $ 4,950 $ 5,400 $ 0 $ 0
Preferred Convertible 2.......... $ 8,057 $ 4,750 $ 4,950 $ 5,400 $ 0 $ 0
-------------------------------------------------------------------------------------------------------------------------
--------------------------------- -------------------------
FUND TOTAL
--------------------------------- -------------------------
FISCAL YEAR FISCAL YEAR
ENDED 2005 ENDED 2006
--------------------------------- -------------------------
Preferred Convertible............ $13,431 $ 10,150
Preferred Convertible 2.......... $13,007 $ 10,150
------------------------------------------------------------
(1) "Total Non-Audit Fees Billed to Adviser and Adviser Entities" for both
fiscal year ends represent "Tax Fees" billed to the Adviser in their
respective amounts from the previous table.
36
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. Generally, the audit
committee must approve each Fund's independent registered public accounting
firm'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 registered
public accounting firm 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 each Fund's independent registered public accounting firm
entered into on or after May 6, 2003, the audit committee approved in advance
all audit services and non-audit services that the independent registered public
accounting firm 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 each Fund's independent registered public accounting
firm 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 BOARD OF EACH FUND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE
FOR APPROVAL OF THE ELECTION OF THE NOMINEES.
ADDITIONAL INFORMATION
APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Each Board has appointed Ernst & Young LLP as independent registered public
accounting firm to audit the books and records of each Fund for its fiscal year.
A representative of Ernst & Young LLP will be present at the Annual 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.
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 (the "SEC") and the New York Stock
Exchange. These persons and entities are required by SEC 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. To the knowledge of management of the Funds, no
shareholder of a Fund owns more than 10% of a registered class of a Fund's
equity securities.
37
INFORMATION ABOUT THE ADVISER
NAM, located at 333 West Wacker Drive, Chicago, Illinois 60606, serves as
investment adviser and manager for each Fund. The Adviser is a wholly owned
subsidiary of Nuveen, 333 West Wacker Drive, Chicago, Illinois 60606. Founded in
1898, Nuveen and its affiliates had over $162 billion of assets under management
as of December 31, 2006. Nuveen is a publicly-traded company and is listed on
the New York Stock Exchange and trades under the symbol "JNC."
INFORMATION ABOUT THE FUNDS' SUB-ADVISER FROLEY REVY
Subsequent to the Board's approval of the changes described earlier to the
Funds' investment and distribution policies, Merrill Lynch on January 29, 2007
announced that it had entered into a definitive agreement to purchase First
Republic Bank, the parent of Froley Revy, the Funds' sub-adviser who invests the
Funds' assets allocated to it in convertible securities. This transaction, if
completed, would constitute an effective Change of Control as defined under the
Investment Company Act of 1940. However, in connection with the change in the
Funds' exposure to convertible securities (as described on page 4 of this Joint
Proxy Statement), the Board of each Fund has determined that Froley Revy will no
longer serve as a sub-adviser to such Fund, effective no later than June 30,
2007, which is expected to be prior to the effective date of such Change of
Control.
SHAREHOLDER PROPOSALS
To be considered for presentation at the annual meeting of shareholders of the
Funds to be held in 2008, 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 November 7, 2007. 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,
pursuant to each Fund's By-Laws, submit such written notice to the Fund not
later than January 21, 2008, or prior to January 6, 2008. 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 by each Fund. Solicitation may be made by
letter or telephone by officers or employees of Nuveen or the Adviser, or by
dealers and their representatives. The Funds have engaged D.F. King & Co., Inc.,
to assist in the solicitation of proxies at an estimated cost of $2,000 per Fund
plus reasonable expenses.
38
LAST FISCAL YEAR
The last fiscal year end for each Fund was December 31, 2006.
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 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
March 7, 2007
39
APPENDIX A
DATES RELATING TO THE AMENDED SYMPHONY SUB-ADVISORY AGREEMENT
DATE SYMPHONY DATE SYMPHONY SUB-
SUB-ADVISORY ADVISORY AGREEMENT
DATE OF SYMPHONY AGREEMENT WAS WAS LAST APPROVED
SUB-ADVISORY LAST APPROVED BY FOR CONTINUANCE BY
FUND AGREEMENT SHAREHOLDERS BOARD
---------------------------------------------------------------------------------------
Preferred Convertible July 28, 2005 July 26, 2005** May 23, 2006
Preferred Convertible 2 July 28, 2005 July 26, 2005** May 23, 2006
---------------------------------------------------------------------------------------
** The Symphony Sub-Advisory Agreement for each Fund was approved by
shareholders at a special meeting held July 26, 2005 relating to a change in
control of NAM.
A-1
APPENDIX B
FORM OF AMENDED INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this day of 2007, by and between Nuveen
Asset Management, a Delaware corporation and a registered investment adviser
("Manager"), and Symphony Asset Management LLC, a California limited liability
company and a federally registered investment adviser ("Sub-Adviser").
WHEREAS, Manager serves as the investment manager for (the "Fund"), a
closed-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act") pursuant to an Investment Management
Agreement between Manager and the Fund (as such agreement may be modified from
time to time, the "Management Agreement"); and
WHEREAS, Manager desires to retain Sub-Adviser as its agent to furnish
investment advisory services for a certain designated portion of the Fund's
investment portfolio, upon the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Appointment. Manager hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Fund for the period and on the
terms set forth in this Agreement. Sub-Adviser accepts such appointment
and agrees to furnish the services herein set forth for the
compensation herein provided.
2. Services to be Performed. Subject always to the supervision of Fund's
Board of Trustees and the Manager, Sub-Adviser will furnish an
investment program in respect of, make investment decisions for, and
place all orders for the purchase and sale of securities for the
portion of the Fund's investment portfolio allocated by Manager to
Sub-Adviser, all on behalf of the Fund and as described in the
investment policy section of the Fund's initial registration statement
on Form N-2 as declared effective by the Securities and Exchange
Commission, as such policies described therein may subsequently be
changed by the Fund's Board of Trustees and publicly described. In the
performance of its duties, Sub-Adviser will satisfy its fiduciary
duties to the Fund, will monitor the Fund's investments in securities
selected for the Fund by the Sub-Adviser hereunder, and will comply
with the provisions of the Fund's Declaration of Trust and By-laws, as
amended from time to time, and the stated investment objectives,
policies and restrictions of the Fund. Manager will provide Sub-Adviser
with current copies of the Fund's Declaration of Trust, By-laws,
prospectus and any amendments thereto, and any objectives, policies or
limitations not appearing therein as they may be relevant to
Sub-Adviser's performance under this Agreement. Sub-Adviser and Manager
will each make its officers and employees available to the other from
time to time at reasonable times to review investment policies of the
Fund and to consult with each other regarding the investment affairs of
the Fund. Sub-Adviser will report to the Board of Trustees and to
Manager with respect to the implementation of such program.
B-1
The Sub-Adviser will vote all proxies solicited by or with respect to the
issuers of securities which assets of the Fund's investment portfolio
allocated by Manager to Sub-Adviser are invested, consistent with its
proxy voting guidelines and based upon the best interests of the Fund.
The Sub-Adviser will maintain appropriate records detailing its voting of
proxies on behalf of the Fund and upon reasonable request will provide a
report setting forth the proposals voted on and how the Fund's shares
were voted, including the name of the corresponding issuers.
Sub-Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund, and
is directed to use its commercially reasonable efforts to obtain best
execution, which includes most favorable net results and execution of the
Fund's orders, taking into account all appropriate factors, including
price, dealer spread or commission, size and difficulty of the
transaction and research or other services provided. It is understood
that the Sub-Adviser will not be deemed to have acted unlawfully, or to
have breached a fiduciary duty to the Fund, or be in breach of any
obligation owing to the Fund under this Agreement, or otherwise, solely
by reason of its having caused the Fund to pay a member of a securities
exchange, a broker or a dealer a commission for effecting a securities
transaction for the Fund in excess of the amount of commission another
member of an exchange, broker or dealer would have charged if the
Sub-Adviser determined in good faith that the commission paid was
reasonable in relation to the brokerage or research services provided by
such member, broker or dealer, viewed in terms of that particular
transaction or the Sub-Adviser's overall responsibilities with respect to
its accounts, including the Fund, as to which it exercises investment
discretion. In addition, if in the judgment of the Sub-Adviser, the Fund
would be benefited by supplemental services, the Sub-Adviser is
authorized to pay spreads or commissions to brokers or dealers furnishing
such services in excess of spreads or commissions that another broker or
dealer may charge for the same transaction, provided that the Sub-Adviser
determined in good faith that the commission or spread paid was
reasonable in relation to the services provided. The Sub-Adviser will
properly communicate to the officers and trustees of the Fund such
information relating to transactions for the Fund as they may reasonably
request. In no instance will portfolio securities be purchased from or
sold to the Manager, Sub-Adviser or any affiliated person of either the
Fund, Manager, or Sub-Adviser, except as may be permitted under the 1940
Act;
Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such services
as it uses in providing services to fiduciary accounts for which it
has investment responsibilities;
(b) will conform to all applicable Rules and Regulations of the
Securities and Exchange Commission in all material respects and in
addition will conduct its activities under this Agreement in
accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities;
(c) will report regularly to Manager and to the Board of Trustees of the
Fund and will make appropriate persons available for the purpose of
reviewing with representatives of Manager and the Board of Trustees
on a regular basis at
B-2
reasonable times the management of the Fund, including, without
limitation, review of the general investment strategies of the Fund
with respect to the portion of the Fund's portfolio allocated to the
Sub-Adviser, the performance of the Fund's investment portfolio
allocated to the Sub-Adviser in relation to standard industry
indices and general conditions affecting the marketplace and will
provide various other reports from time to time as reasonably
requested by Manager;
(d) will monitor the pricing of portfolio securities, and events
relating to the issuers of those securities and the markets in
which the securities trade in the ordinary course of managing the
portfolio securities of the Fund, and will notify Manager promptly
of any issuer-specific or market events or other situations that
occur (particularly those that may occur after the close of a
foreign market in which the securities may primarily trade but
before the time at which the Fund's securities are priced on a
given day) that may materially impact the pricing of one or more
securities in Sub-Adviser's portion of the portfolio. In addition,
Sub-Adviser will assist Manager in evaluating the impact that such
an event may have on the net asset value of the Fund and in
determining a recommended fair value of the affected security or
securities; and
(e) will prepare such books and records with respect to the Fund's
securities transactions for the portion of the Fund's investment
portfolio allocated to the Sub-Adviser as requested by the Manager
and will furnish Manager and Fund's Board of Trustees such periodic
and special reports as the Board or Manager may reasonably request.
3. Expenses. During the term of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund.
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Manager will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a portfolio
management fee equal to the portion specified below of the investment
management fee payable by the Fund to the Manager, pursuant to the
Management Agreement, with respect to the Sub-Adviser's allocation of
Fund net assets (including net assets attributable to Fund Preferred
Shares and the principal amount of any borrowings), as the net amount
of such fee is reduced by the obligation of Manager to reimburse
certain fees and expenses to the Fund pursuant to an Expense
Reimbursement Agreement
B-3
of even date herewith by and between the Fund and the Manager, as such
agreement may be modified from time to time:
------------------------------------------------------------------------
PERCENTAGE OF NET MANAGEMENT FEE
--------------------------------
DAILY NET ASSETS MULTI-STRATEGY INCOME EQUITY
------------------------------------------------------------------------
Up to $125 million 52.5% 55.0%
$125 million to $150 million 50.0% 52.5%
$150 million to $175 million 47.5% 50.0%
$175 million to $200 million 45.0% 47.5%
$200 million and over 42.5% 45.0%
The portfolio management fee shall accrue on each calendar day, and shall
be payable monthly on the first business day of the next succeeding
calendar month. The daily fee accrual shall be computed by multiplying the
fraction of one divided by the number of days in the calendar year by the
applicable annual rate of fee, and multiplying this product by the net
assets of the Fund allocated to the Sub-Advisor, determined in the manner
established by the Fund's Board of Trustees, as of the close of business on
the last preceding business day on which the Fund's net asset value was
determined.
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 is in effect during the month and year,
respectively.
Manager shall not agree to amend the financial terms of the Expense
Reimbursement Agreement or the Management Agreement to the detriment of the
Sub-Adviser by operation of this Section 4 without the express written
consent of the Sub-Adviser.
5. Services to Others. Manager understands, and has advised Fund's Board
of Trustees, that Sub-Adviser now acts, or may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as
investment adviser or sub-investment adviser to one or more other
investment companies that are not a series of the Fund, provided that
whenever the Fund and one or more other investment advisory clients of
Sub-Adviser have available funds for investment, investments suitable
and appropriate for each will be allocated in a manner believed by
Sub-Adviser to be equitable to each. Manager recognizes, and has
advised Fund's Board of Trustees, that in some cases this procedure may
adversely affect the size of the position that the Fund may obtain in a
particular security. It is further agreed that, on occasions when the
Sub-Adviser deems the purchase or sale of a security to be in the best
interests of the Fund as well as other accounts, it may, to the extent
permitted by applicable law, but will not be obligated to, aggregate
the securities to be so sold or purchased for the Fund with those to be
sold or purchased for other accounts in order to obtain favorable
execution and lower brokerage commissions. In addition, Manager
understands, and has advised Fund's Board of Trustees, that the persons
employed by Sub-Adviser to assist in Sub-Adviser's duties under this
Agreement will not devote their full such efforts and service to the
Fund. It is also agreed that the Sub-Adviser may use any supplemental
research obtained for the benefit of the Fund in providing investment
advice to its other investment advisory accounts or for managing its
own accounts.
B-4
6. Limitation of Liability. The Sub-Adviser shall not be liable for, and
Manager will not take any action against the Sub-Adviser to hold
Sub-Adviser liable for, any error of judgment or mistake of law or for
any loss suffered by the Fund (including, without limitation, by reason
of the purchase, sale or retention of any security) in connection with
the performance of the Sub-Adviser's duties under this Agreement,
except for a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Sub-Adviser in the performance of
its duties under this Agreement, or by reason of its reckless disregard
of its obligations and duties under this Agreement.
7. Term; Termination; Amendment. This Agreement shall become effective
with respect to the Fund on the same date as the Management Agreement
between the Fund and the Manager becomes effective, provided that it
has been approved by a vote of a majority of the outstanding voting
securities of the Fund in accordance with the requirements of the 1940
Act, and shall remain in full force until August 1, 2007 unless sooner
terminated as hereinafter provided. This Agreement shall continue in
force from year to year thereafter with respect to the Fund, but only
as long as such continuance is specifically approved for the Fund at
least annually in the manner required by the 1940 Act and the rules and
regulations thereunder; provided, however, that if the continuation of
this Agreement is not approved for the Fund, the Sub-Adviser may
continue to serve in such capacity for the Fund in the manner and to
the extent permitted by the 1940 Act and the rules and regulations
thereunder.
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 Manager on no less than sixty (60) days' written notice
to the Sub-Adviser. This Agreement may also be terminated by the Fund
with respect to the Fund by action of the Board of Trustees or by a
vote of a majority of the outstanding voting securities of such Fund on
no less than sixty (60) days' written notice to the Sub-Adviser by the
Fund.
This Agreement may be terminated with respect to the Fund at any time
without the payment of any penalty by the Manager, the Board of
Trustees 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 Sub-Adviser or any officer or
director of the Sub-Adviser has taken any action that results in a
breach of the covenants of the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act
and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the
compensation described in Section 4 earned prior to such termination.
This Agreement shall automatically terminate in the event the
Management Agreement between the Manager and the Fund is terminated,
assigned or not renewed.
B-5
8. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party
If to the Manager: If to the Sub-Adviser:
Nuveen Asset Management Symphony Asset Management LLC
333 West Wacker Drive 555 California Street, Suite
Chicago, Illinois 60606 2975
Attention: John P. Amboian San Francisco, California
94104
Attention: Neil Rudolph
With a copy to:
Nuveen Investments
333 West Wacker Drive
Chicago, Illinois 60606
Attention: General Counsel
or such address as such party may designate for the receipt of such
notice.
9. Limitations on Liability. All parties hereto are expressly put on
notice of the Fund's Agreement and Declaration of Trust and all
amendments thereto, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts, and the limitation of shareholder
and trustee liability contained therein. The obligations of the Fund
entered in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually but only in such
capacities and are not binding upon any of the Trustees, officers, or
shareholders of the Fund individually but are binding upon only the
assets and property of the Fund, and persons dealing with the Fund must
look solely to the assets of the Fund and those assets belonging to the
subject Fund, for the enforcement of any claims.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby. This Agreement will be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors.
11. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 9 hereof which shall
be construed in accordance with the laws of Massachusetts) the laws of
the State of Illinois.
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.
SYMPHONY ASSET MANAGEMENT LLC,
NUVEEN ASSET MANAGEMENT, a California limited liability
a Delaware corporation company
By: By:
------------------------------- -------------------------------
Title: Managing Director Title:
-------------------------------
B-6
APPENDIX C
OFFICERS AND DIRECTORS OF SYMPHONY
NAME PRINCIPAL OCCUPATION
---------------------------------------------------------------------
Jeffrey L. Skelton President and Chief Executive
Officer, Symphony Asset
Management LLC
Neil L. Rudolph Chief Operating Officer; Chief
Financial Officer; and Vice
President, Symphony Asset
Management LLC
Michael J. Henman Vice President, Symphony Asset
Management LLC
Praveen K. Gottipalli Vice President, Symphony Asset
Management LLC
Gunther M. Stein Vice President, Symphony Asset
Management LLC
---------------------------------------------------------------------
C-1
APPENDIX D
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this day of 2007, by and between Nuveen
Asset Management, a Delaware corporation and a registered investment adviser
("Manager"), and Tradewinds NWQ Global Investors LLC, a Delaware limited
liability company and a federally registered investment adviser ("Sub-Adviser").
WHEREAS, Manager serves as the investment manager for (the "Fund"), a
closed-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act") pursuant to an Investment Management
Agreement between Manager and the Fund (as such agreement may be modified from
time to time, the "Management Agreement"); and
WHEREAS, Manager desires to retain Sub-Adviser as its agent to furnish
investment advisory services for a certain designated portion of the Fund's
investment portfolio, upon the terms and conditions hereafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Appointment. Manager hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Fund for the period and on the
terms set forth in this Agreement. Sub-Adviser accepts such appointment
and agrees to furnish the services herein set forth for the
compensation herein provided.
2. Services to be Performed. Subject always to the supervision of Fund's
Board of Trustees and the Manager, Sub-Adviser will furnish an
investment program in respect of, make investment decisions for, and
place all orders for the purchase and sale of securities for the
portion of the Fund's investment portfolio allocated by Manager to
Sub-Adviser, all on behalf of the Fund and as described in the
investment policy section of the Fund's initial registration statement
on Form N-2 as declared effective by the Securities and Exchange
Commission, as such policies described therein may subsequently be
changed by the Fund's Board of Trustees and publicly described. In the
performance of its duties, Sub-Adviser will satisfy its fiduciary
duties to the Fund, will monitor the Fund's investments in securities
selected for the Fund by the Sub-Adviser hereunder, and will comply
with the provisions of the Fund's Declaration of Trust and By-laws, as
amended from time to time, and the stated investment objectives,
policies and restrictions of the Fund. Manager will provide Sub-Adviser
with current copies of the Fund's Declaration of Trust, By-laws,
prospectus and any amendments thereto, and any objectives, policies or
limitations not appearing therein as they may be relevant to
Sub-Adviser's performance under this Agreement. Sub-Adviser and Manager
will each make its officers and employees available to the other from
time to time at reasonable times to review investment policies of the
Fund and to consult with each other regarding the investment affairs of
the Fund. Sub-Adviser will report to the Board of Trustees and to
Manager with respect to the implementation of such program.
D-1
The Sub-Adviser will vote all proxies solicited by or with respect to the
issuers of securities which assets of the Fund's investment portfolio
allocated by Manager to Sub-Adviser are invested, consistent with its
proxy voting guidelines and based upon the best interests of the Fund. The
Sub-Adviser will maintain appropriate records detailing its voting of
proxies on behalf of the Fund and upon reasonable request will provide a
report setting forth the proposals voted on and how the Fund's shares were
voted, including the name of the corresponding issuers.
Sub-Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Fund, and
is directed to use its commercially reasonable efforts to obtain best
execution, which includes most favorable net results and execution of the
Fund's orders, taking into account all appropriate factors, including
price, dealer spread or commission, size and difficulty of the transaction
and research or other services provided. It is understood that the
Sub-Adviser will not be deemed to have acted unlawfully, or to have
breached a fiduciary duty to the Fund, or be in breach of any obligation
owing to the Fund under this Agreement, or otherwise, solely by reason of
its having caused the Fund to pay a member of a securities exchange, a
broker or a dealer a commission for effecting a securities transaction for
the Fund in excess of the amount of commission another member of an
exchange, broker or dealer would have charged if the Sub-Adviser
determined in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member,
broker or dealer, viewed in terms of that particular transaction or the
Sub-Adviser's overall responsibilities with respect to its accounts,
including the Fund, as to which it exercises investment discretion. In
addition, if in the judgment of the Sub-Adviser, the Fund would be
benefited by supplemental services, the Sub-Adviser is authorized to pay
spreads or commissions to brokers or dealers furnishing such services in
excess of spreads or commissions that another broker or dealer may charge
for the same transaction, provided that the Sub-Adviser determined in good
faith that the commission or spread paid was reasonable in relation to the
services provided. The Sub-Adviser will properly communicate to the
officers and trustees of the Fund such information relating to
transactions for the Fund as they may reasonably request. In no instance
will portfolio securities be purchased from or sold to the Manager,
Sub-Adviser or any affiliated person of either the Fund, Manager, or
Sub-Adviser, except as may be permitted under the 1940 Act;
Sub-Adviser further agrees that it:
(a) will use the same degree of skill and care in providing such
services as it uses in providing services to fiduciary accounts for
which it has investment responsibilities;
(b) will conform to all applicable Rules and Regulations of the
Securities and Exchange Commission in all material respects and in
addition will conduct its activities under this Agreement in
accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities;
(c) will report regularly to Manager and to the Board of Trustees of the
Fund and will make appropriate persons available for the purpose of
reviewing with representatives of Manager and the Board of Trustees
on a regular basis at
D-2
reasonable times the management of the Fund, including, without
limitation, review of the general investment strategies of the Fund
with respect to the portion of the Fund's portfolio allocated to
the Sub-Adviser, the performance of the Fund's investment portfolio
allocated to the Sub-Adviser in relation to standard industry
indices and general conditions affecting the marketplace and will
provide various other reports from time to time as reasonably
requested by Manager;
(d) will monitor the pricing of portfolio securities, and events
relating to the issuers of those securities and the markets in which
the securities trade in the ordinary course of managing the
portfolio securities of the Fund, and will notify Manager promptly
of any issuer-specific or market events or other situations that
occur (particularly those that may occur after the close of a
foreign market in which the securities may primarily trade but
before the time at which the Fund's securities are priced on a given
day) that may materially impact the pricing of one or more
securities in Sub-Adviser's portion of the portfolio. In addition,
Sub-Adviser will assist Manager in evaluating the impact that such
an event may have on the net asset value of the Fund and in
determining a recommended fair value of the affected security or
securities; and
(e) will prepare such books and records with respect to the Fund's
securities transactions for the portion of the Fund's investment
portfolio allocated to the Sub-Adviser as requested by the Manager
and will furnish Manager and Fund's Board of Trustees such periodic
and special reports as the Board or Manager may reasonably request.
3. Expenses. During the term of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund.
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Manager will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a portfolio
management fee equal to the portion specified below of the investment
management fee payable by the Fund to the Manager, pursuant to the
Management Agreement, with respect to the Sub-Adviser's allocation of
Fund net assets (including net assets attributable to FundPreferred
Shares and the principal amount of any borrowings), as the net amount
of such fee is reduced by the obligation of Manager to reimburse
certain fees and expenses to the Fund pursuant to an Expense
Reimbursement Agreement of even date herewith by and between the Fund
and the Manager, as such agreement may be modified from time to time:
--------------------------------------------------------------------------------
PERCENTAGE OF NET
DAILY NET ASSETS MANAGEMENT FEE
--------------------------------------------------------------------------------
Up to $200 million 55.0%
$200 million to $300 million 52.5%
$300 million and over 50.0%
D-3
The portfolio management fee shall accrue on each calendar day, and
shall be payable monthly on the first business day of the next
succeeding calendar month. The daily fee accrual shall be computed by
multiplying the fraction of one divided by the number of days in the
calendar year by the applicable annual rate of fee, and multiplying
this product by the net assets of the Fund allocated to the
Sub-Advisor, determined in the manner established by the Fund's Board
of Trustees, as of the close of business on the last preceding business
day on which the Fund's net asset value was determined.
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 is in effect during the month and
year, respectively.
Manager shall not agree to amend the financial terms of the Expense
Reimbursement Agreement or the Management Agreement to the detriment of
the Sub-Adviser by operation of this Section 4 without the express
written consent of the Sub-Adviser.
5. Services to Others. Manager understands, and has advised Fund's Board
of Trustees, that Sub-Adviser now acts, or may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as
investment adviser or sub-investment adviser to one or more other
investment companies that are not a series of the Fund, provided that
whenever the Fund and one or more other investment advisory clients of
Sub-Adviser have available funds for investment, investments suitable
and appropriate for each will be allocated in a manner believed by
Sub-Adviser to be equitable to each. Manager recognizes, and has
advised Fund's Board of Trustees, that in some cases this procedure may
adversely affect the size of the position that the Fund may obtain in a
particular security. It is further agreed that, on occasions when the
Sub-Adviser deems the purchase or sale of a security to be in the best
interests of the Fund as well as other accounts, it may, to the extent
permitted by applicable law, but will not be obligated to, aggregate
the securities to be so sold or purchased for the Fund with those to be
sold or purchased for other accounts in order to obtain favorable
execution and lower brokerage commissions. In addition, Manager
understands, and has advised Fund's Board of Trustees, that the persons
employed by Sub-Adviser to assist in Sub-Adviser's duties under this
Agreement will not devote their full such efforts and service to the
Fund. It is also agreed that the Sub-Adviser may use any supplemental
research obtained for the benefit of the Fund in providing investment
advice to its other investment advisory accounts or for managing its
own accounts.
6. Limitation of Liability. The Sub-Adviser shall not be liable for, and
Manager will not take any action against the Sub-Adviser to hold
Sub-Adviser liable for, any error of judgment or mistake of law or for
any loss suffered by the Fund (including, without limitation, by reason
of the purchase, sale or retention of any security) in connection with
the performance of the Sub-Adviser's duties under this Agreement,
except for a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Sub-Adviser in the performance of
its duties under this Agreement, or by reason of its reckless disregard
of its obligations and duties under this Agreement.
D-4
7. Term; Termination; Amendment. This Agreement shall become effective
with respect to the Fund on the same date as the Management Agreement
between the Fund and the Manager becomes effective, provided that it has
been approved by a vote of a majority of the outstanding voting
securities of the Fund in accordance with the requirements of the 1940
Act, and shall remain in full force until August 1, 2008 unless sooner
terminated as hereinafter provided. This Agreement shall continue in
force from year to year thereafter with respect to the Fund, but only as
long as such continuance is specifically approved for the Fund at least
annually in the manner required by the 1940 Act and the rules and
regulations thereunder; provided, however, that if the continuation of
this Agreement is not approved for the Fund, the Sub-Adviser may
continue to serve in such capacity for the Fund in the manner and to the
extent permitted by the 1940 Act and the rules and regulations
thereunder.
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 Manager on no less than sixty (60) days' written notice
to the Sub-Adviser. This Agreement may also be terminated by the Fund
with respect to the Fund by action of the Board of Trustees or by a vote
of a majority of the outstanding voting securities of such Fund on no
less than sixty (60) days' written notice to the Sub-Adviser by the
Fund.
This Agreement may be terminated with respect to the Fund at any time
without the payment of any penalty by the Manager, the Board of Trustees
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 Sub-Adviser or any officer or director
of the Sub-Adviser has taken any action that results in a breach of the
covenants of the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the
rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the
compensation described in Section 4 earned prior to such termination.
This Agreement shall automatically terminate in the event the Management
Agreement between the Manager and the Fund is terminated, assigned or
not renewed.
D-5
8. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party
If to the Manager: If to the Sub-Adviser:
Nuveen Asset Management Tradewinds NWQ Global
333 West Wacker Drive Investors
Chicago, Illinois 60606 2049 Century Park East
Attention: John P. Amboian Los Angeles, CA 90067
Attention: Mr. Michael Mendez
With a copy to:
Nuveen Investments
333 West Wacker Drive
Chicago, Illinois 60606
Attention: General Counsel
or such address as such party may designate for the receipt
of such notice.
9. Limitations on Liability. All parties hereto are expressly put on
notice of the Fund's Agreement and Declaration of Trust and all
amendments thereto, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts, and the limitation of shareholder
and trustee liability contained therein. The obligations of the Fund
entered in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually but only in such
capacities and are not binding upon any of the Trustees, officers, or
shareholders of the Fund individually but are binding upon only the
assets and property of the Fund, and persons dealing with the Fund must
look solely to the assets of the Fund and those assets belonging to the
subject Fund, for the enforcement of any claims.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby. This Agreement will be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors.
11. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 9 hereof which shall
be construed in accordance with the laws of Massachusetts) the laws of
the State of Illinois.
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.
NUVEEN ASSET MANAGEMENT, a TRADEWINDS NWQ GLOBAL
Delaware corporation INVESTORS LLC, a Delaware
limited liability company
By: By:
------------------------------- -------------------------------
Title: Managing Director Title:
-------------------------------
D-6
APPENDIX E
OFFICERS AND DIRECTORS OF TRADEWINDS
NAME PRINCIPAL OCCUPATION
---------------------------------------------------------------------
Michael C. Mendez Chief Executive Officer of
Tradewinds NWQ Global Investors,
LLC; President and Director
(since 1999), Managing Director
(1992-1999) of NWQ Investment
Management Company, Inc.
Jon D. Bosse Chief Investment Officer and
Managing Director of Tradewinds
NWQ Global Investors, LLC;
Managing Director, Portfolio
Manager, Director of Research
(1996-2001), of NWQ Investment
Management Company, Inc.;
Chartered Financial Analyst
Edward C. Friedel Senior Managing Director of
Tradewinds NWQ Global Investors,
LLC; Managing Director (since
1992) of NWQ Investment
Management Company, Inc.;
Chartered Financial Analyst
---------------------------------------------------------------------
E-1
APPENDIX F
NUVEEN FUND BOARD
AUDIT COMMITTEE CHARTER
JANUARY 26, 2006
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 provided to analysts and rating agencies. This discussion may
be done generally, consisting of
F-2
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.
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).
F-3
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 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
F-4
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.
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 it 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.
F-5
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.
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.
F-6
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
[NUVEEN INVESTMENTS LOGO]
Nuveen Investments
333 West Wacker Drive
Chicago, IL 60606-1286
(800) 257-8787
www.nuveen.com JPC0407
(NUVEEN LOGO)
NUVEEN INVESTMENTS
Nuveen Investments
333 West Wacker Dr.
Chicago, IL 60606
www.nuveen.com
999 999 999 999 99 [INSERT FUND NAME]
Common Shares
3 EASY WAYS TO VOTE YOUR PROXY
1. Automated Touch Tone Voting: Call toll-free 1-888-221-0697 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.
THIS PROXY IS SOLICITED BY THE BOARD OF THE FUND
FOR AN ANNUAL MEETING OF SHAREHOLDERS, APRIL 11, 2007.
The Annual Meeting of shareholders will be held in the 34th floor conference
room of Nuveen Investments, 333 West Wacker Drive, Chicago, Illinois, on
Wednesday, April 11, 2007 at 10:30 a.m., Central 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 April 11, 2007 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 (888)
221-0697 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.
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 PROPOSALS AND NOMINEES SET FORTH IN
THIS PROXY.
Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
1. To approve an amendment to the FOR AGAINST ABSTAIN
fee schedule of the investment [ ] [ ] [ ]
sub-advisory agreement between
Nuveen Asset Management and
Symphony Asset Management LLC.
2. To approve a new investment FOR AGAINST ABSTAIN
sub-advisory agreement between [ ] [ ] [ ]
Nuveen Asset Management and
Tradewinds NWQ Global Investors,
LLC.
3. Election of Board Members:
Class I: Class II: Class III:
(01) Lawrence H. Brown (04) William C. Hunter (07) Robert P. Bremner FOR NOMINEES WITHHOLD
(02) Judith M. Stockdale (05) David J. Kundert (08) Jack B. Evans listed at left AUTHORITY
(03) Carole E. Stone (06) Eugene S. Sunshine (except as marked to vote for all
to the contrary) nominees listed
[ ] at left
[ ]
(INSTRUCTION: To withhold authority to vote for any
individual nominee(s), write the number(s) of the nominee(s) on
the line provided below.)
-------------------------------------------------------------------
(NUVEEN LOGO)
NUVEEN INVESTMENTS
Nuveen Investments
333 West Wacker Dr.
Chicago, IL 60606
www.nuveen.com
999 999 999 999 99 [INSERT FUND NAME]
FUNDPREFERRED Shares
3 EASY WAYS TO VOTE YOUR PROXY
1. Automated Touch Tone Voting: Call toll-free 1-888-221-0697 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.
THIS PROXY IS SOLICITED BY THE BOARD OF THE FUND
FOR AN ANNUAL MEETING OF SHAREHOLDERS, APRIL 11, 2007.
The Annual Meeting of shareholders will be held in the 34th floor conference
room of Nuveen Investments, 333 West Wacker Drive, Chicago, Illinois, on
Wednesday, April 11, 2007 at 10:30 a.m., Central 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 April 11, 2007 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 (888)
221-0697 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.
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 PROPOSALS AND NOMINEES SET FORTH IN
THIS PROXY.
Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
1. To approve an amendment to the FOR AGAINST ABSTAIN
fee schedule of the investment [ ] [ ] [ ]
sub-advisory agreement between
Nuveen Asset Management and
Symphony Asset Management LLC.
2. To approve a new investment FOR AGAINST ABSTAIN
sub-advisory agreement between [ ] [ ] [ ]
Nuveen Asset Management and
Tradewinds NWQ Global Investors,
LLC.
3. Election of Board Members:
Class I: Class II: Class III:
(01) Lawrence H. Brown (04) William C. Hunter (07) Robert P. Bremner FOR NOMINEES WITHHOLD
(02) Judith M. Stockdale (05) David J. Kundert (08) Jack B. Evans listed at left AUTHORITY
(03) Carole E. Stone (06) Eugene S. Sunshine (except as marked to vote for all
to the contrary) nominees listed
[ ] at left
[ ]
Preferred Shares Only
(09) William J. Schneider
(10) Timothy R. Schwertfeger
(INSTRUCTION: To withhold authority to vote for any
individual nominee(s), write the number(s) of the nominee(s) on
the line provided below.)
-------------------------------------------------------------------