<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NUVEEN MULTISTATE TAX-FREE TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
nuveen logo
November 6, 1996
DEAR NUVEEN SHAREHOLDER:
As recently announced, The John Nuveen Company plans to acquire Flagship
Resources Inc., a highly regarded sponsor of municipal mutual funds. The
purchase of Flagship will help Nuveen serve a broader set of investors' needs,
providing a range of investment products and services for conservative investors
and the financial advisers who serve them.
A special meeting of shareholders will be held Thursday, December 12, 1996, at
10:00 a.m., Chicago Time, in the 31st floor conference room of John Nuveen & Co.
Incorporated, 333 W. Wacker Drive, Chicago, Illinois. At this meeting, you will
be asked to vote on proposals to make certain changes to how your fund is
organized and managed, facilitating the integration of the Nuveen and Flagship
mutual fund families.
THE BOARD OF YOUR FUND HAS UNANIMOUSLY AGREED THAT THESE PROPOSALS ARE IN THE
BEST INTERESTS OF SHAREHOLDERS AND URGES YOU TO VOTE IN FAVOR OF THE PROPOSALS.
THE INTEGRATION OF NUVEEN AND FLAGSHIP SHOULD LEAD TO THE FOLLOWING BENEFITS:
- Lower operating costs from expanded distribution.
- Access to a wider range of investment products.
- Greater choices in the method for purchasing shares.
The enclosed proxy statement describes the proposals relating to your fund in
greater detail.
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.
We appreciate your continued support and confidence in Nuveen and our family of
investments.
Very truly yours,
Timothy R. Schwertfeger
Timothy R. Schwertfeger
Chairman of the Board
<PAGE> 3
<TABLE>
<S> <C>
NOTICE OF SPECIAL MEETING 333 West Wacker Drive
OF SHAREHOLDERS - Chicago, Illinois
DECEMBER 12, 1996 60606
800-621-7227
</TABLE>
NUVEEN MULTISTATE TAX-FREE TRUST
NUVEEN MARYLAND TAX-FREE VALUE FUND
NUVEEN MUNICIPAL BOND FUND
NUVEEN MUNICIPAL BOND FUND
NUVEEN TAX-FREE BOND FUND, INC.
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
NUVEEN INSURED TAX-FREE BOND FUND, INC.
NUVEEN INSURED MUNICIPAL BOND FUND
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND
TO THE SHAREHOLDERS:
Notice is hereby given that a Special Meeting of Shareholders of each of the
above-referenced funds will be held in the 31st floor conference room of John
Nuveen & Co. Incorporated, 333 West Wacker Drive, in Chicago, on Thursday,
December 12, 1996 at 10:00 a.m., Central Time, for the following purposes:
1. To elect eight (8) Board Members to the Board of each Company.
2. To approve a change in the Fund's classification from "diversified" to
"non-diversified" [For Maryland, Massachusetts and Massachusetts Insured only].
3. To approve proposed changes to the Fund's fundamental investment policies.
[For each Fund except California Money Fund].
a) AMT Bonds
b) Investment Grade Quality Ratings (Except for California Insured)
c) Illiquid Securities
d) Unseasoned Issuers
e) Average Maturity
f) Temporary Investments
g) Single Bank Limits
h) Diversification Limit (Municipal Bond Fund only)
i) Borrowing (Municipal Bond Fund only)
j) Futures and Options (Municipal Bond Fund only)
4. To approve an Agreement and Plan of Reorganization and the transactions
contemplated thereby, the net effect of which would be to reorganize the Fund
into a new series of a newly created investment company [For each Fund except
California Money Fund]. [For each of Massachusetts, Insured Municipal Bond Fund,
Massachusetts Insured, New York Insured, California and California Insured, a
vote in favor of the Agreement will be considered a vote in favor of an
amendment to the articles of incorporation of the Company required to effect the
reorganization contemplated by the Agreement, including for California and
California Insured, an amendment to the Corporate charter to permit the
reorganization to be approved by the affirmative vote of a majority, rather than
two-thirds, of the outstanding shares of each such Fund.]
5. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on October 18, 1996 are entitled
to notice of and to vote at the meeting.
James J. Wesolowski
Secretary
<PAGE> 4
<TABLE>
<S> <C>
JOINT PROXY STATEMENT 333 West Wacker Drive
NOVEMBER 6, 1996 Chicago, Illinois
60606
800-621-7227
</TABLE>
NUVEEN MULTISTATE TAX-FREE TRUST
NUVEEN MARYLAND TAX-FREE VALUE FUND
NUVEEN MUNICIPAL BOND FUND
NUVEEN MUNICIPAL BOND FUND
NUVEEN TAX-FREE BOND FUND, INC.
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
NUVEEN INSURED TAX-FREE BOND FUND, INC.
NUVEEN INSURED MUNICIPAL BOND FUND
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND
NUVEEN CALIFORNIA TAX-FREE FUND, INC.
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
NUVEEN CALIFORNIA TAX-FREE MONEY MARKET FUND
GENERAL INFORMATION
This Joint Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors or Board of Trustees, as the case may be (each
a "Board" and each director or trustee a "Board Member") of each of Nuveen
Multistate Tax-Free Trust ("Multistate Trust," a "Trust" or a "Company"), a
Massachusetts business trust, on behalf of its series designated Nuveen Maryland
Tax-Free Value Fund ("Maryland" or a "Fund"); Nuveen Municipal Bond Fund
("Municipal Bond Trust," a "Trust" or a "Company"), a Massachusetts business
trust, on behalf of its series designated Nuveen Municipal Bond Fund ("Municipal
Bond Fund" or a "Fund"); Nuveen Tax-Free Bond Fund, Inc. ("Tax-Free Bond Fund,"
a "Corporation" or a "Company"), a Minnesota corporation, on behalf of its
series designated Nuveen Massachusetts Tax-Free Value Fund ("Massachusetts" or a
"Fund"); Nuveen Insured Tax-Free Bond Fund, Inc. ("Insured Tax-Free Bond Fund,"
a "Corporation" or a "Company"), a Minnesota corporation, on behalf of its
series Nuveen Insured Municipal Bond Fund ("Insured Municipal Bond Fund" or a
"Fund"), Nuveen Massachusetts Insured Tax-Free Value Fund ("Massachusetts
Insured" or a "Fund") and Nuveen New York Insured Tax-Free Value Fund ("Insured
New York" or a "Fund"); and Nuveen California Tax-Free Fund, Inc. ("California
Tax-Free Fund," a "Corporation" or a "Company"), a Maryland corporation, on
behalf of its series designated Nuveen California Tax-Free Value Fund
("California" or a "Fund"), Nuveen California Insured Tax-Free Value Fund
("California Insured" or a "Fund") and Nuveen California Tax-Free Money Market
Fund ("California Money Fund" or a "Fund") to be voted at special meetings of
shareholders of the Funds, to be held on Thursday, December 12, 1996, and at any
and all adjournments thereof. This proxy statement was first mailed to
shareholders on or about November 6, 1996.
The meetings are being called to consider a restructuring of the Funds. The
restructuring is contemplated, in part, because of an Agreement and Plan of
Merger dated as of July 16, 1996, pursuant to which The John Nuveen Company will
acquire Flagship Resources Inc. and its subsidiaries, Flagship Financial Inc.
("Flagship") and Flagship Funds Inc. (the "Acquisition" or the "Flagship
Acquisition"). In anticipation of the Acquisition, a number of proposals are
being submitted to shareholders of the Funds (and other mutual funds in the
Flagship and Nuveen families), the net effect of which is to assimilate the
Flagship and Nuveen mutual funds into the Nuveen family of mutual funds. These
proposals are sometimes collectively referred to herein as the "Fund
Restructuring." In order to effect the Fund Restructuring, the Board of each
Fund is seeking shareholder approval of the following:
1. To elect eight (8) Board Members to the Board of each Company.
2. To approve a change in the Fund's classification from "diversified" to
"non-diversified" [For Maryland, Massachusetts and Massachusetts Insured only].
3. To approve proposed changes to the Fund's fundamental investment policies.
[For each Fund except California Money Fund].
a) AMT Bonds
b) Investment Grade Quality Ratings (Except for California Insured)
c) Illiquid Securities
d) Unseasoned Issuers
e) Average Maturity
f) Temporary Investments
g) Single Bank Limits
h) Diversification Limit (Municipal Bond Fund only)
i) Borrowing (Municipal Bond Fund only)
j) Futures and Options (Municipal Bond Fund only)
1
<PAGE> 5
4. To approve an Agreement and Plan of Reorganization and the transactions
contemplated thereby, the net effect of which would be to reorganize each Fund
into a new series of a newly created investment company [For each Fund except
California Money Fund].
The following table indicates which Fund's shareholders are solicited to vote
with respect to each item:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
INSURED
MUNICIPAL MUNICIPAL NEW CALIFORNIA
BOND BOND MASSACHUSETTS YORK CALIFORNIA MONEY
ITEM MARYLAND FUND MASSACHUSETTS FUND INSURED INSURED CALIFORNIA INSURED FUND
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1) Election of X X X X X X X X X
Board
Members
- ----------------------------------------------------------------------------------------------------------------
2) X X X
"Diversified"
to "Non-
Diversified"
- ----------------------------------------------------------------------------------------------------------------
3) a)AMT Bonds X X X X X X X X
- ----------------------------------------------------------------------------------------------------------------
3) b) X X X X X X X
Investment
Grade
Quality
Ratings
- ----------------------------------------------------------------------------------------------------------------
3) c) Illiquid X X X X X X X X
Securities
- ----------------------------------------------------------------------------------------------------------------
3) d) X X X X X X X X
Unseasoned
Issuers
- ----------------------------------------------------------------------------------------------------------------
3) e) Average X X X X X X X X
Maturity
- ----------------------------------------------------------------------------------------------------------------
3) f) X X X X X X X X
Temporary
Investments
- ----------------------------------------------------------------------------------------------------------------
3) g) Single X X X X X X X X
Bank
Limits
- ----------------------------------------------------------------------------------------------------------------
3) h) X
Diversification
Limit
- ----------------------------------------------------------------------------------------------------------------
3) i) X
Borrowing
- ----------------------------------------------------------------------------------------------------------------
3) j) Futures X
and
Options
- ----------------------------------------------------------------------------------------------------------------
X X X X X X X X
4) Reorganization
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The transactions contemplated by the Fund Restructuring were presented to the
Board of each Company for consideration. The Board of each Company concluded
unanimously that each of the items comprising the Fund Restructuring is in the
best interests of the Company, the respective Funds and the shareholders of the
respective Funds.
2
<PAGE> 6
The Board of each Company has fixed the close of business on October 18, 1996 as
the record date (the "Record Date") for determining holders of the Funds' shares
entitled to notice of and to vote at the meetings. Each shareholder will be
entitled to one vote for each share held. At the close of business on the Record
Date, California Money Fund had 184,612,898 shares outstanding and, for the
other Funds, the following shares were outstanding:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
FUND CLASS A CLASS C CLASS R
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maryland 990,957 197,389 4,319,155
Municipal Bond Fund 6,836,543 419,963 308,023,834
Massachusetts 619,204 81,944 7,515,830
Insured Municipal Bond Fund 5,773,231 486,335 68,593,029
Massachusetts Insured 654,628 89,763 5,571,227
New York Insured 3,103,841 246,859 31,292,422
California 1,721,102 74,523 20,287,659
California Insured 2,303,025 102,529 18,630,525
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Shares of each Fund entitled to vote at a meeting that are represented by
properly executed proxies will, unless such proxies have been revoked, be voted
in accordance with the shareholders' instructions indicated on such proxies. If
no contrary instructions are received, all such shares will be voted FOR the
election of the persons who have been nominated as Board Members and FOR Items
2, 3 and 4.
A quorum of shareholders of each Company is required to take action at its
meeting. A majority of the shares entitled to vote at the meeting, represented
in person or by proxy, will constitute a quorum of shareholders. Certain other
series of Tax-Free Bond Fund and Multistate Trust will participate at the
meeting; shareholders of those series are receiving separate proxy materials.
Votes cast by proxy or in person at each meeting will be tabulated by the
inspector of election appointed for the meeting. The inspector of election will
determine whether or not a quorum is present at that meeting. The inspector of
election will treat abstentions and "broker non-votes" (i.e., shares held by
brokers or nominees, typically in "street name," as to which (i) instructions
have not been received from the beneficial owners or persons entitled to vote
and (ii) the broker or nominee does not have discretionary voting power on a
particular matter) as present for purposes of determining a quorum.
For purposes of determining the approval of the matters submitted to
shareholders for a vote, abstentions and broker non-votes will (i) in the case
of each Trust and California Tax-Free Fund, have no effect on the election of
board members, (ii) in the case of Tax-Free Bond Fund and Insured Tax-Free Bond
Fund, have the same effect as a vote against the election of board members and
(iii) have the same effect as a vote against Items 2, 3 and 4.
The details of each item to be voted upon by shareholders and the vote required
for approval of each item are set forth under the description of each item
below. Shareholders of a Fund who execute proxies may revoke them at any time
before they are voted by filing with such 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.
If, by the time scheduled for a meeting, a quorum of shareholders of a Company
is not present or if a quorum is present but sufficient votes in favor of any of
the items are not received, the persons named as proxies may propose one or more
adjournments of the meeting to permit further soliciting of proxies from
shareholders of the Company. Any such adjournment will require the affirmative
vote of a majority of the shares of the Company (or Fund) present (in person or
by proxy) at the session of the meeting to be adjourned. The persons named as
proxies will vote in favor of any such adjournment if they determine that such
adjournment and additional solicitation are reasonable and in the interest of
the shareholders.
ITEM 1. ELECTION OF BOARD OF MEMBERS
In order to conform the board memberships of the Nuveen family of mutual funds
after the Acquisition, the eight (8) persons shown below have been nominated to
each Company's Board. The nominees include the Company's current four
disinterested Board Members, the Company's current two interested Board Members
and two additional disinterested nominees (both of whom serve as disinterested
members of the boards of mutual funds managed by Flagship).
The nominees, if elected, will take office upon the consummation of the Flagship
Acquisition and their election and qualification is contingent upon consummation
of the Acquisition. The term of each person elected as a Board Member will be
from the date of the consummation of the Acquisition until the next meeting held
for the purpose of electing Board Members and until his or her successor is
elected and qualified. If the Acquisition is not consummated, the current Board
Members of each Company will continue to serve as that Company's Board.
All of the nominees have consented to serve as Board Members. However, if any
nominee is not available for election at the time of the meeting, the proxies
may be voted for such other person(s) as shall be determined by the persons
acting under the proxies in their discretion.
3
<PAGE> 7
The following table shows each nominee who is standing for election and such
nominee's age, principal occupation or employment during the past five years and
other board memberships, the year in which the nominee was first elected or
appointed to the Board of each Company and the nominee's shareholdings in each
Fund, all as of August 31, 1996.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
SHARES
BENEFICIALLY OWNED
YEAR FIRST BECAME AS OF
NAME, AGE AND FIVE-YEAR BUSINESS EXPERIENCE A BOARD MEMBER AUGUST 31, 1996(1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Robert P. Bremner (56) Nominee None
Private investor and management consultant
William J. Schneider (52) Nominee None
Senior partner, Miller-Valentine Partners, Vice
President, Miller-Valentine Realty, Inc.
Lawrence H. Brown (61) 1993--All 1,259--Municipal Bond Fund
Board Member of each Company; Retired in August 1989
as Senior Vice President of The Northern Trust
Company
*Anthony T. Dean (51) 1996--All 1,845--Municipal Bond Fund
Board Member and President of each Company (since
July 1996); Director and (since July 1996) President
of The John Nuveen Company, John Nuveen & Co.
Incorporated, Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp.; prior thereto,
Executive Vice President of The John Nuveen Company,
John Nuveen & Co. Incorporated, Nuveen Advisory
Corp. and Nuveen Institutional Advisory Corp.
Anne E. Impellizzeri (63) 1994--All None
Board Member of each Company; President and Chief
Executive Officer of Blanton-Peale Institute (since
December 1990); prior thereto, Vice President of New
York City Partnership (from 1987 to 1990) and Vice
President of Metropolitan Life Insurance Company
(from 1980 to 1987)
Margaret K. Rosenheim (69) 1982--Municipal Bond Trust 4,381--Municipal Bond Fund(2)
Board Member of each Company; Helen Ross Professor 1985--California Tax-Free
of Social Welfare Policy, School of Social Service Fund
Administration, University of Chicago 1986--Tax-Free Bond Fund,
Insured Tax-Free Bond Fund
1991--Multistate Trust
Peter R. Sawers (63) 1991--All 2,960--Municipal Bond Fund
Board Member of each Company; Adjunct Professor of
Business and Economics, University of Dubuque, Iowa;
Adjunct Professor, Lake Forest Graduate School of
Management, Lake Forest, Illinois (since January
1992); prior thereto, Executive Director, Towers
Perrin Australia (management consultant); Chartered
Financial Analyst; Certified Management Consultant
*Timothy R. Schwertfeger (47) 1994--All 67,154--Municipal Bond(3)
Chairman (since July 1996) and Board Member (since Fund
July 1994) of each Company; Chairman (since July
1996) and Director of The John Nuveen Company, John
Nuveen & Co. Incorporated, Nuveen Advisory Corp. and
Nuveen Institutional Advisory Corp.; prior thereto
Executive Vice President of The John Nuveen Company,
John Nuveen & Co. Incorporated, Nuveen Advisory
Corp. and Nuveen Institutional Advisory Corp.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Board Members who are or would be "interested persons" as defined in the
Investment Company Act of 1940 (the "1940 Act").
(1) All shares shown are Class R shares, and in each case, are less than 1% of
the outstanding.
(2) Includes 3,888 shares held jointly with M. Rosenheim's spouse.
(3) All shares shown are held jointly with T. Schwertfeger's spouse.
L. Brown, A. Dean, A. Impellizzeri, M. Rosenheim, P. Sawers and T. Schwertfeger
serve as board members of 60 registered investment companies advised by Nuveen
Advisory. In addition, A. Dean and T. Schwertfeger serve as board members of six
registered investment companies advised by Nuveen Institutional Advisory Corp.
R. Bremner and W. Schneider serve as board members of two registered investment
companies advised by Flagship.
A. Dean, M. Rosenheim and T. Schwertfeger currently serve as members of the
executive committee of each Company's Board. The executive committee, which
meets between regular meetings of the Board, is authorized to exercise all of
the
4
<PAGE> 8
powers of the Board. The executive committee of each Company (except Multistate
Trust) held twelve meetings for the fiscal year ended February 29, 1996. The
executive committee of Multistate Trust held twelve meetings for the fiscal year
ended January 31, 1996. All the executive committee meetings for each Company
were held for the sole purpose of declaring dividends.
Each Board has an audit committee composed of L. Brown, A. Impellizzeri, M.
Rosenheim and P. Sawers, disinterested Board Members of the Company. The audit
committee reviews the work and any recommendation of the Company's independent
public auditors. Based on such review, it is authorized to make recommendations
to the Board. The audit committee of each Company (except Multistate Trust) held
two meetings for the fiscal year ended February 29, 1996. The audit committee of
Multistate Trust held three meetings for the fiscal year ended January 31, 1996.
Nomination of Board Members of each Company is the responsibility of a
nominating committee composed of the disinterested Board Members. It identifies
and recommends individuals to be nominated for election as Board Members. The
nominating committee, of each Company (except Multistate Trust) held one meeting
for the fiscal year ended February 29, 1996. The nominating committee of
Multistate Trust held one meeting for the fiscal year ended January 31, 1996. No
policy or procedure has been established as to the recommendation of nominees by
shareholders.
The Board of each Company (except Multistate Trust and Municipal Bond Trust)
held six meetings for the fiscal year ended February 29, 1996. The Board of
Municipal Bond Trust held seven meetings for the fiscal year ended February 29,
1996. The Board of Multistate Trust held five meetings for the fiscal year ended
January 31, 1996. During the fiscal year, each Board Member attended 75% or more
of the respective Company's Board meetings and the committee meetings (if a
member thereof).
The interested Board Members serve without any compensation from each Company.
The disinterested Board Members receive a $45,000 annual retainer for serving as
a board member of all funds sponsored by John Nuveen & Co. Incorporated
("Nuveen") and managed by Nuveen Advisory Corp. ("Nuveen Advisory") and a $1,000
fee per day plus expenses for attendance at all meetings held on a day on which
a regularly scheduled Board meeting is held, a $1,000 fee per day plus expenses
for attendance in person or a $500 fee per day plus expenses for attendance by
telephone at a meeting held on a day on which no regular Board meeting is held,
and a $250 fee per day plus expenses for attendance in person or by telephone at
a meeting of the executive committee. The annual retainer, fees and expenses are
allocated among the funds managed by Nuveen Advisory on the basis of relative
net asset sizes. Each Company has adopted a Directors' Deferred Compensation
Plan pursuant to which a Board Member may elect to have all or a portion of the
Board Member's fee deferred. Board Members may defer fees for any calendar year
by the execution of a Participation Agreement prior to the beginning of the
calendar year during which the Board Member wishes to begin deferral.
The table below shows, for each disinterested Board Member, the aggregate
compensation paid or accrued by each Company (except Multistate Trust) for the
fiscal year ended February 29, 1996 and for Multistate Trust for the fiscal year
ended January 31, 1996 and the total compensation that all Nuveen Funds paid to
each Board Member during the calendar year 1995.
AGGREGATE COMPENSATION FROM COMPANIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TOTAL COMPENSATION
INSURED CALIFORNIA FROM FUND
MULTISTATE MUNICIPAL TAX-FREE TAX-FREE TAX-FREE COMPLEX PAID TO
BOARD MEMBER TRUST BOND TRUST BOND FUND BOND FUND FUND BOARD MEMBERS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence H. Brown $1,873 4,936 1,255 2,590 1,551 $55,500
Anne E. Impellizzeri 1,873 4,936 1,255 2,590 1,551 $63,000
Margaret K. Rosenheim(1) 1,971 6,072 1,378 3,130 1,894 $62,322(1)
Peter R. Sawers 1,873 4,936 1,255 2,590 1,557 $55,500
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes interest accrued on deferred compensation from prior years of $290
for Municipal Bond Trust, $161 for Tax-Free Bond Fund, $178 for Insured Tax-Free
Bond Fund, $189 for California Tax-Free Fund and $1,572 for Fund Complex.
OFFICERS. Information about the executive officers of each Company as of August
31, 1996, with their ages and term of office indicated, is set forth below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES WITH
NAME, AGE AND PRINCIPAL OCCUPATIONS FUND
- -------------------------------------------------------------------------------------------------------
<S> <C>
William M. Fitzgerald (32) Vice President (since 1996)
Vice President of Nuveen Advisory Corp. (since December 1995); prior
thereto, Assistant Vice President (from September 1992 to December
1995) and Assistant Portfolio Manager (from June 1988 to September
1992) of Nuveen Advisory Corp., Chartered Financial Analyst.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES WITH
NAME, AGE AND PRINCIPAL OCCUPATIONS FUND
- -------------------------------------------------------------------------------------------------------
<S> <C>
Kathleen M. Flanagan (49) Vice President (since 1994)
Vice President of John Nuveen & Co. Incorporated and (since 1996) Vice
President of Nuveen Advisory Corp. and Nuveen Institutional Advisory
Corp.
J. Thomas Futrell (41) Vice President (since 1991)
Vice President of Nuveen Advisory Corp.; Chartered Financial Analyst.
Steven J. Krupa (38) Vice President (since 1990)
Vice President of Nuveen Advisory Corp.
Anna R. Kucinskis (50) Vice President (since 1991)
Vice President of John Nuveen & Co. Incorporated.
Larry W. Martin (45) Vice President (since 1993)
Vice President (since September 1992), Assistant Secretary and and Assistant Secretary
Assistant General Counsel of John Nuveen & Co. Incorporated; Vice (since 1987)
President (since May 1993) and Assistant Secretary of Nuveen Advisory
Corp.; Vice President (since May 1993) and Assistant Secretary (since
January 1992) of Nuveen Institutional Advisory Corp.; Assistant
Secretary (since February 1993) of The John Nuveen Company; Director of
Nuveen Duff & Phelps Investment Advisors (since January 1995).
O. Walter Renfftlen (57) Vice President and Controller
Vice President and Controller of The John Nuveen Company (since March (since each Company's
1992), John Nuveen & Co. Incorporated, Nuveen Advisory Corp. and Nuveen organization)
Institutional Advisory Corp.
Thomas C. Spalding, Jr. (45) Vice President (since 1982)
Vice President of Nuveen Advisory Corp. and Nuveen Institutional
Advisory Corp.; Chartered Financial Analyst.
H. William Stabenow (62) Vice President & Treasurer
Vice President and Treasurer of The John Nuveen Company (since March (since 1988)
1992), John Nuveen & Co. Incorporated, Nuveen Advisory Corp. and Nuveen
Institutional Advisory Corp. (since January 1992).
James J. Wesolowski (46) Vice President & Secretary
Vice President, General Counsel and Secretary of The John Nuveen (since 1988)
Company (since March 1992), John Nuveen & Co. Incorporated, Nuveen
Advisory Corp. and Nuveen Institutional Corp.
Gifford R. Zimmerman (39) Vice President (since 1993) &
Vice President (since September 1992); Assistant Secretary and Assistant Secretary (since
Assistant General Counsel of John Nuveen & Co. Incorporated; Vice 1988)
President (since May 1993) and Assistant Secretary of Nuveen Advisory
Corp.; Vice President (since May 1993) and Assistant Secretary (since
January 1992) of Nuveen Institutional Advisory Corp.; Assistant
Secretary of The John Nuveen Company (since May 1994).
- -------------------------------------------------------------------------------------------------------
</TABLE>
It is anticipated that, after completion of the Acquisition, each restructured
Board will elect new officers who are expected to include persons affiliated
with Nuveen and Flagship.
As of August 31, 1996, the Board Members and executive officers of each Company
as a group beneficially owned the following shares: 126,599 Class R shares (less
than 1%) of Municipal Bond Fund and 2,171 Class R shares (less than 1%) of
Insured Municipal Bond Fund. As of July 31, 1996, no person is known to the
Companies to own beneficially more than five percent of any class of any shares
of the Fund, except as set forth on Annex B.
VOTES REQUIRED
On Proposal 1, all the series of each Company will vote in the aggregate,
including, for Multistate Trust and Tax-Free Bond Fund, other series to which
this Joint Proxy Statement does not relate. In the case of each Trust, election
of Board Members requires an affirmative vote of a plurality of the shares of
the Trust present and entitled to vote at the meeting. In the case of California
Tax-Free Fund, election of Board Members requires an affirmative vote of a
majority of the votes cast. In the case of Tax-Free Bond Fund and Insured
Tax-Free Bond Fund, election of Board Members requires an affirmative vote of a
majority of the shares of the Corporation present and entitled to vote at the
meeting.
ITEM 2. CHANGE FROM "DIVERSIFIED" TO "NON-DIVERSIFIED" [FOR MARYLAND,
MASSACHUSETTS AND MASSACHUSETTS INSURED ONLY]
The 1940 Act divides management investment companies into two types:
"diversified" and "non-diversified." A "diversified company" is a management
company which meets the following requirements: At least 75% of the value of its
total assets is represented by cash and cash items (including receivables),
Government securities, securities of other investment companies, and other
securities for the purposes of this calculation limited in respect of any one
issuer to an amount not greater in value than 5% of the value of the total
assets of such management company and to not more than 10% of the
6
<PAGE> 10
outstanding voting securities of such issuer. A "non-diversified company" is any
management company other than a diversified company. The three applicable Funds
are currently "diversified."
The Board of each of the applicable Companies believes that the requirements
under the 1940 Act for diversified funds may, at times, hinder these Funds'
ability to invest in attractive securities that are suitable for them,
particularly given their size and their investment focus in states that may have
a limited number of quality municipal issuers. Accordingly, each Board
recommends that shareholders of each affected Fund vote to change such Fund from
a "diversified" to a "non-diversified" fund. In connection with and as part of
this change, the Board also recommends that shareholders of each such Fund
eliminate the Fund's fundamental investment policy with respect to investing
more than a specified percentage of its assets in the securities of any one
issuer. That policy is as follows:
"The Fund may not invest more than 5% of its total assets in
securities of any one issuer, except that this limitation shall not
apply to securities of the United States government, its agencies and
instrumentalities or to the investment of 25% of the Fund's assets."
Being "non-diversified," each Fund would be able to invest its assets in the
securities of an issuer, subject only to the diversification requirements of
Subchapter M of the Internal Revenue Code. This would allow the Fund, as to 50%
of its total assets, to invest more than 5%, but not have more than 25%, in the
securities of an individual issuer. Since the Fund would be able to invest a
relatively higher percentage of its assets in the obligations of a limited
number of issuers, it may be more susceptible to any single economic, political
or regulatory occurrence than it currently is as a diversified fund.
VOTES REQUIRED
Approval of this change for a Fund requires the affirmative vote of a "majority
of the outstanding voting securities" of the Fund. The term "majority of the
outstanding voting securities" as defined in the 1940 Act means: the affirmative
vote of the lesser of (1) 67% of the voting securities of the Fund present at
the meeting if more than 50% of the outstanding shares of the Fund are present
in person or by proxy or (2) more than 50% of the outstanding shares of the
Fund.
ITEM 3. PROPOSED CHANGES IN FUNDAMENTAL INVESTMENT POLICIES [FOR EACH FUND
EXCEPT CALIFORNIA MONEY FUND]
The Board of each of the Companies has proposed that a number of fundamental
investment policies of each applicable Fund be amended. The primary purpose of
these proposals is to revise the Funds' fundamental investment policies to
conform them to those that are expected to become standard for all the municipal
bond funds managed or to be managed by Nuveen Advisory (including the Flagship
Funds) and to provide Nuveen Advisory with additional flexibility in managing
the Funds' assets. Nuveen Advisory believes that increased standardization will
help to promote operational efficiencies in part by making it easier for the
contemplated assimilation of the Flagship and Nuveen mutual funds into combined
prospectuses. In addition, standardization will facilitate the monitoring of
compliance with the fundamental investment policies of the Funds.
Although the proposed changes are designed to standardize the Funds' fundamental
investment policies across the Nuveen complex, shareholders may vote separately
on each item. Below is a summary of each of the proposed changes. The actual
policies for each Fund, as they are proposed to be changed, are set forth in
Annex C.
A. AMT BONDS. Each Fund has a fundamental investment policy that it may invest
up to 20% of its net assets in Municipal Obligations that pay interest subject
to the federal alternative minimum tax ("AMT Bonds"). Under the proposal, the
20% limitation on AMT Bonds would be eliminated. This would allow each Fund to
invest an unlimited amount in AMT Bonds, the interest on which is a specific tax
preference item for purposes of computing the alternative minimum tax on
corporations and individuals. If your tax liability is determined under the
alternative minimum tax, you will be taxed on your share of the Fund's
exempt-interest dividends that were paid from income earned on AMT Bonds. In
addition, the alternative minimum taxable income for corporations is increased
by 75% of the difference between an alternative measure of income ("adjusted
current earnings") and the amount otherwise determined to be alternative minimum
taxable income. Interest on all Municipal Obligations and therefore all
distributions by the Fund that would otherwise be tax exempt is included in
calculating a corporation's adjusted current earnings. Nuveen Advisory and the
Boards believe that there are possible attractive investment opportunities from
AMT Bonds and that the Funds should not be limited in quantity to their purchase
of such securities.
B. INVESTMENT GRADE QUALITY RATINGS (EXCEPT FOR CALIFORNIA INSURED). Each of
the Funds has differing fundamental policies setting forth the quality
parameters requirements for the Fund's assets.
Maryland is limited to: Municipal Obligations rated investment grade or better
by Moody's or S&P; unrated Municipal Obligations of investment grade quality in
the opinion of Nuveen Advisory, limited to no more than 20% of the Fund's
assets; and "temporary investments".
7
<PAGE> 11
Municipal Bond Fund is limited to: Municipal Obligations rated investment grade
or better by Moody's or S&P; unrated Municipal Obligations of investment grade
quality in the opinion of Nuveen Advisory, limited to no more than 10% of the
Fund's assets; and "temporary investments".
Massachusetts and California are each limited to: Municipal Obligations rated
investment grade or better by Moody's or S&P; unrated Municipal Obligations of
investment grade quality in the opinion of Nuveen Advisory, with no fixed
percentage limitations on these unrated Municipal Obligations; and temporary
investments.
In addition to the requirement that they invest substantially all (at least 80%)
of their assets in insured Municipal Obligations, each of Insured Municipal Bond
Fund, Insured Massachusetts and Insured New York are limited to: Municipal
Obligations rated investment grade or better by Moody's or S&P; and unrated
Municipal Obligations of investment grade quality in the opinion of Nuveen
Advisory, with no fixed percentage limitations on those unrated Municipal
Obligations.
Under the proposal, Fitch Investments Service, Inc. ("Fitch") would be added to
each Fund's policies for purposes of determining investment grade quality
Municipal Obligations, and for Maryland and Municipal Bond Fund, the percentage
limits on the amount of unrated investment grade quality Municipal Obligations
that could be purchased would be eliminated. This would allow each Fund to rely
on ratings from Fitch for purposes of determining whether a Municipal Obligation
is investment grade quality, and, in the case of Maryland and Municipal Bond
Fund, increase the permitted amount of unrated investment grade quality
Municipal Obligations. Fitch is a nationally recognized statistical rating
organization, with a particular emphasis on rating Municipal Obligations. As a
consequence of the proposal, the Funds could invest an unlimited amount in
Fitch-only investment grade securities and, in the case of Maryland and
Municipal Bond Fund, may invest an unlimited amount in unrated Municipal
Obligations that Nuveen Advisory believes are investment grade quality.
C. ILLIQUID SECURITIES. Each Fund's (except for Municipal Bond Fund's) current
fundamental investment policy on purchasing "illiquid" securities is as follows:
"The Fund may not invest more than 10% of its total assets in repurchase
agreements maturing in more than seven days, "illiquid" securities (such as
non-negotiable CDs) and securities without readily available market
quotations."
Municipal Bond Fund's fundamental investment policy on purchasing "illiquid"
securities is as follows:
"The Fund may not invest more than 10% of its total assets in securities
that the Fund is restricted from selling to the public without registration
under the Securities Act of 1933."
Under the proposal, the fundamental limitation on illiquid securities would be
eliminated, and it would be replaced with the following non-fundamental policy,
which could be changed without a vote of the shareholders:
"The Fund may not invest more than 15% of its net assets in "illiquid"
securities."
This would conform each Fund's policy on illiquid securities to the current
position of the Securities and Exchange Commission ("SEC"). In particular,
current SEC guidelines provide that the usual limit on aggregate holdings by an
open-end investment company of illiquid assets is 15% of its net assets. This
limit stems from the SEC's concern that if a mutual fund holds a material
percentage of its assets in securities or other assets for which there is no
established market, there may be a question concerning the ability of the fund
to make payment within seven days of the date its shares are rendered for
redemption. In addition, by making each Fund's policy non-fundamental, the Fund
would be allowed to make future changes without shareholder approval. The Boards
believe that this would enable the Funds to respond more quickly to legal,
regulatory and market developments. Any changes to a Fund's illiquid securities
limitations would, however, remain subject to applicable regulatory
requirements.
D. UNSEASONED ISSUERS. Each Fund has a fundamental investment policy that it
will not invest more than 5% of its total assets in securities of unseasoned
issuers which, together with their predecessors, have been in operation for less
than three years. Under the proposal, this restriction would be eliminated. The
original purpose of this policy was to comply with state laws intended to limit
the risks associated with investing in companies that have no proven long-term
track record in business and whose prospects are uncertain.
The Funds believe that this restriction no longer is, or soon will no longer be,
required by applicable state law. Moreover, Nuveen Advisory believes that this
restriction was not intended to apply to municipal issuers (or other
governmental issuers), but rather was intended to apply only to securities of
non-governmental issuers such as common stock of operating companies.
Accordingly, the restriction is proposed to be eliminated; however, to the
extent any applicable state law would still require this or any similar
restriction, the Funds intend to comply with such state law.
E. AVERAGE MATURITY. Each Fund has a fundamental investment policy that it
intends to emphasize investments in Municipal Obligations with long-term
maturities in order to maintain an average portfolio maturity of 20-30 years,
but that the average portfolio maturity may be shortened from time to time in
order to help limit the Fund's exposure to market risk. Under the proposal, the
target maturity range would be changed from 20-30 years to 15-30 years, and the
Fund's policy regarding maturities would be designated as non-fundamental.
Although the Funds have no current intention to do so, the non-fundamental
policy could be changed in response to regulatory, market, legal or other
developments without further approval by shareholders.
8
<PAGE> 12
F. TEMPORARY INVESTMENTS. Each Fund has a fundamental investment policy that it
will not invest in securities other than "Municipal Obligations" and "temporary
investments," as those terms are defined in its prospectus. The prospectus
defines temporary investments to include taxable temporary investments that are
rated within the "highest" grade by Moody's or S&P. Under the proposal, Fitch
would be added to each Fund's policies for purposes determining the quality
level of taxable temporary investments and the category of taxable temporary
investments would be expanded to include those that are rated within the two
highest grades (as opposed to the "highest" grade) by Moody's, S&P or Fitch.
G. SINGLE BANK LIMITS. Each Fund has a fundamental investment policy that it
will not hold securities of a single bank, including securities backed by a
letter of credit of such bank, if such holdings would exceed 10% of the total
assets of the Fund. Under the proposal, this fundamental investment policy would
be eliminated, and each Fund would be limited in its bank holdings solely by its
policies with respect to diversification.
H. DIVERSIFICATION LIMIT (MUNICIPAL BOND FUND ONLY). Municipal Bond Fund has a
fundamental investment policy regarding diversification that prohibits the Fund
from investing more than 5% of its total assets in securities of any one issuer,
except that this limitation does not apply to securities of the United States
Government, its agencies and instrumentalities. Under the proposal, this policy
would be revised to add a 25% "basket" (i.e., this limitation would also not
apply to the investment of 25% of the investments).
Some states at one time prohibited a fund from registering shares for sale if
the fund intended to invest more than 5% of total assets in a single issuer. The
Fund's current fundamental policy was adopted to address these state
regulations. Because the state regulations regarding these limitations have been
eliminated, shareholder approval is sought to provide the Fund a limited ability
to invest a higher proportion of its assets in securities issued by a single
issuer.
Under the proposal, the Fund would be required to invest 75% of its total assets
so that no more than 5% of its total assets would be invested in any one issuer.
As to the remaining 25% of total assets, there would be no fundamental
investment limitation on the amount of assets the Fund could invest in a single
issuer's securities. This would permit the Fund for example, to invest 25% of
its total assets in securities of one issuer or to invest 10% of the total
assets in the securities of one issuer and 15% in securities of another issuer.
The other Nuveen funds and the "diversified" Flagship funds all have this
limited ability to concentrate their investments; the "non-diversified" funds
have a greater ability to concentrate their investments, as described in Item 2
above.
The primary purpose of the proposal is to give the Fund greater investment
flexibility by permitting it to acquire larger positions in the securities of
individual issuers, and to bring this Fund's policies in line with those of the
other "diversified" funds in the Nuveen Flagship fund family. Nuveen Advisory
believes that this increased flexibility may provide opportunities to enhance
the Fund's performance consistent with the Fund's stated investment objective.
At the same time, investing a larger percentage of the Fund's assets in a single
issuer's securities increases the Fund's exposure to credit and other risks
associated with that issuer's financial conditions and business operations
including risk of default on debt securities. Nuveen Advisory will only invest
more than 5% of the Fund's total assets in an issuer's securities when it
believes the securities' potential return justifies accepting the risks
involved.
I. BORROWING (MUNICIPAL BOND FUND ONLY). Municipal Bond Fund has a fundamental
investment policy that it will not borrow money, except for temporary or
emergency purposes and not for investment purposes and then only in an amount
not exceeding 5% of the value of the Fund's assets at the time of borrowing.
Under the proposal, this borrowing limit would be increased to 10% generally and
to one-third (33 1/3%) in order to meet redemption requests which might
otherwise require the untimely disposition of securities.
While this proposal increases the ability of the Fund to borrow, it still limits
borrowings to temporary or emergency purposes. In addition, under the proposal,
while any such borrowings exceed 5% of the Fund's total assets, no additional
purchases of investment securities could be made by the Fund. If, due to market
fluctuations or other reasons, the value of the Fund's assets falls below 300%
of its borrowings, the Fund would reduce its borrowings within 3 business days.
To do this, the Fund may have to sell a portion of its investments at a time
when it may be disadvantageous to do so. Finally, as a matter of clarification,
the proposal excludes permitted borrowings from the definition of "senior
securities" under the Fund's fundamental investment policy that prohibits the
issuance of senior securities as defined in the 1940 Act.
J. FUTURES AND OPTIONS (MUNICIPAL BOND FUND ONLY). Municipal Bond Fund has
fundamental investment policies that may prohibit the Fund from entering into
futures and options transactions for hedging purposes. Specifically, the
policies prohibit the Fund from (1) purchasing or selling commodities or
commodity contracts, (2) writing or purchasing puts, calls, straddles, spreads
or any combinations thereof, and (3) issuing senior securities as defined in the
1940 Act. Under the proposal, each of these policies would be amended to exclude
from the general prohibitions transactions involving futures and/or options as
they will be set forth in the Fund's Prospectus and Statement of Additional
Information (and as set forth in Annex D). The Fund would be permitted to engage
in certain futures and options transactions for hedging purposes only.
Although the Fund does not currently intend to enter into futures and options
transactions, the Board believes that the Fund's current policies prohibiting
these instruments unnecessarily restricts the Fund from taking advantage of
potential risk management techniques that may be desirable at a later time.
9
<PAGE> 13
The Board has determined that the ability to invest in these instruments would
provide this Fund with additional means for seeking to hedge the value of its
portfolio, i.e., attempting to reduce the overall level of investment risk that
normally would be expected to be associated with the Fund's portfolio and to
attempt to protect itself against market movements that might adversely affect
the value of the Fund's securities or the price of securities that the Fund is
considering purchasing. The other funds in the Nuveen and the Flagship fund
families already have the ability to use futures and options for hedging
purposes. The Board believes that the Fund would benefit from having the
flexibility to purchase and sell futures and options, in addition to its other
investments, in the same manner as the other Nuveen funds, and that the Fund's
investments in these instruments would be consistent with the Fund's investment
objective and policies. There can be no assurance, however, that the use of
these instruments by the Fund will assist it in achieving its investment
objective. A summary of the potential uses and risks of futures and options, and
the strategies that may be employed by the Fund with respect to these
instruments if this proposal is approved by shareholders, is set forth in Annex
D attached hereto, including the following risks: investment in futures
contracts and options involves the risk of imperfect correlation between
movements in the price of the futures contract and options and the price of the
security being hedged; because of low initial margin deposits made upon the
opening of a futures position, futures transactions involve substantial
leverage. As a result, relatively small movements in the price of the futures
contract can result in substantial unrealized gains or losses; there can be no
assurance, however, that a liquid secondary market will exist for any particular
futures contract at any specific time. Thus, it may not be possible to close a
futures position; and the successful use of transactions in futures also depends
on the ability of Nuveen Advisory to forecast the direction and extent of
interest rate movements within a given time frame.
VOTES REQUIRED
Approval of each of the proposed changes in fundamental investment policies for
a Fund requires the affirmative vote of a "majority of the outstanding voting
securities" of the Fund. The term "majority of the outstanding voting
securities" as defined in the 1940 Act means: the affirmative vote of the lesser
of (1) 67% of the voting securities of the Fund present at the meeting if more
than 50% of the outstanding shares of the Fund are present in person or by proxy
or (2) more than 50% of the outstanding shares of the Fund.
ITEM 4. PROPOSED REORGANIZATION [FOR EACH FUND EXCEPT CALIFORNIA MONEY FUND]
The Board of each Company unanimously approved an Agreement and Plan of
Reorganization (the "Reorganization Agreement") for each Fund (except California
Money Fund) in the form attached hereto as Annex A. The Reorganization Agreement
provides for the reorganization (the "Reorganization") of each Fund into a new
series of a newly created Massachusetts business trust.
The purpose of the Reorganization is to assimilate the Fund into the Nuveen
family of mutual funds in a structure that provides for a uniform set of charter
documents, shareholder purchase options and shareholder account privileges.
Nuveen Advisory believes that increased standardization of documents and
operational policies will help to promote operational efficiencies, to allocate
work flows and to allow for future change, which should benefit the Funds. The
Board considered all material issues associated with the Reorganization and
determined that the Reorganization is in the best interests of shareholders. The
table below shows the structure of the Funds before and after the
Reorganizations which includes the following Reorganizations: Nuveen Maryland
Tax-Free Value Fund to Nuveen Maryland Municipal Bond Fund; Nuveen Municipal
Bond Fund to Nuveen Municipal Bond Fund; Nuveen Massachusetts Tax-Free Value
Fund to Nuveen Massachusetts Municipal Bond Fund; Nuveen Insured Municipal Bond
Fund to Nuveen Insured Municipal Bond Fund; Nuveen Massachusetts Insured
Tax-Free Value Fund to Nuveen Massachusetts Insured Municipal Bond Fund; Nuveen
New York Insured Tax-Free Value Fund to Nuveen New York Insured Municipal Bond
Fund; Nuveen California Tax-Free Value Fund to
10
<PAGE> 14
Nuveen California Municipal Bond Fund; and Nuveen California Insured Tax-Free
Value Fund to Nuveen California Insured Municipal Bond Fund.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
BEFORE AFTER
- ------------------------------------------------------------------------------------------------------
<S> <C>
NUVEEN MULTISTATE TAX-FREE TRUST NUVEEN FLAGSHIP MUNICIPAL TRUST
Nuveen Arizona Tax-Free Value Fund* Nuveen Flagship All-American Municipal Bond Fund
Nuveen Florida Tax-Free Value Fund* Nuveen Insured Municipal Bond Fund
Nuveen Maryland Tax-Free Value Fund Nuveen Flagship Intermediate Municipal Bond Fund
Nuveen Michigan Tax-Free Value Fund* Nuveen Flagship Limited Term Municipal Bond Fund
Nuveen New Jersey Tax-Free Value Fund* Nuveen Municipal Bond Fund
Nuveen Pennsylvania Tax-Free Value Fund* NUVEEN FLAGSHIP MULTISTATE TRUST I
Nuveen Virginia Tax-Free Value Fund* Nuveen Flagship Arizona Municipal Bond Fund
NUVEEN MUNICIPAL BOND FUND Nuveen Flagship Colorado Municipal Bond Fund
Nuveen Municipal Bond Fund Nuveen Flagship Florida Intermediate Municipal
NUVEEN TAX-FREE BOND FUND, INC. Bond Fund
Nuveen Massachusetts Tax-Free Value Fund Nuveen Flagship Florida Municipal Bond Fund
Nuveen New York Tax-Free Value Fund* Nuveen Maryland Municipal Bond Fund
Nuveen Ohio Tax-Free Value Fund* Nuveen Flagship New Mexico Municipal Bond Fund
NUVEEN INSURED TAX-FREE BOND FUND, INC. Nuveen Flagship Pennsylvania Municipal Bond Fund
Nuveen Insured Municipal Bond Fund Nuveen Flagship Virginia Municipal Bond Fund
Nuveen Massachusetts Insured Tax-Free Value Fund NUVEEN FLAGSHIP MULTISTATE TRUST II
Nuveen New York Insured Tax-Free Value Fund Nuveen California Insured Municipal Bond Fund
NUVEEN CALIFORNIA TAX-FREE FUND, INC. Nuveen California Municipal Bond Fund
Nuveen California Tax-Free Value Fund Nuveen Flagship Connecticut Municipal Bond Fund
Nuveen California Insured Tax-Free Value Fund Nuveen Massachusetts Insured Municipal Bond Fund
Nuveen California Tax-Free Money Market Fund** Nuveen Massachusetts Municipal Bond Fund
Nuveen Flagship New Jersey Intermediate Municipal
Bond Fund
Nuveen Flagship New Jersey Municipal Bond Fund
Nuveen New York Insured Municipal Bond Fund
Nuveen Flagship New York Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST III
Nuveen Flagship Alabama Municipal Bond Fund
Nuveen Flagship Georgia Municipal Bond Fund
Nuveen Flagship Louisiana Municipal Bond Fund
Nuveen Flagship North Carolina Municipal Bond
Fund
Nuveen Flagship South Carolina Municipal Bond
Fund
Nuveen Flagship Tennessee Municipal Bond Fund
NUVEEN FLAGSHIP MULTISTATE TRUST IV
Nuveen Flagship Kansas Municipal Bond Fund
Nuveen Flagship Kentucky Limited Term Municipal
Bond Fund
Nuveen Flagship Kentucky Municipal Bond Fund
Nuveen Flagship Michigan Municipal Bond Fund
Nuveen Flagship Missouri Municipal Bond Fund
Nuveen Flagship Ohio Municipal Bond Fund
Nuveen Flagship Wisconsin Municipal Bond Fund
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Series to which this Joint Proxy Statement does not relate.
** The California Money Fund will not participate in the Reorganization, and
will remain a series of the Nuveen California Tax-Free Fund, Inc.
Each Reorganization contemplates that (i) the Fund will transfer all its assets
to a series ("New Fund") of a newly created Massachusetts business trust (the
"New Trust") in exchange for shares of the same class of the New Fund and the
assumption by New Fund of certain of the liabilities of the Fund; (ii)
distribution by the Fund to each shareholder of the Fund of a number of New Fund
shares of the same class (including any fractional shares) equal in value and
number to such shareholder's Fund shares; and (iii) the subsequent termination
of the Fund and cancellation of the outstanding shares of the Fund.
If shareholders of a Fund do not approve the Reorganization, the Fund will
continue in business as a series of its respective Company.
PROCEDURES FOR REORGANIZATION. In connection with the Reorganization, after the
close of business on the date of effectiveness of the Reorganization (the
"Effective Date") but prior to its completion, one share of each class of the
New Fund will be issued to the Fund. The Fund, as the sole shareholder of each
class of the New Fund, will then take the following actions:
(1) approve a proposed new investment advisory agreement on behalf of the
respective class of the New Fund on the same terms as the existing
agreement;
11
<PAGE> 15
(2) approve a proposed new Rule 12b-1 Plan on behalf of the respective
class of the New Fund, which is described in greater detail below;
(3) ratify the selection of Arthur Andersen LLP as auditors for the New
Fund; and
(4) ratify the election as board members of the New Trust the same persons
who are nominated as Board Members in Item 1 (if such persons are
approved by shareholders).
Thereafter, on the Effective Date, the Fund will transfer all its assets to the
New Fund in exchange for shares of New Fund and the assumption by New Fund of
all the liabilities of the Fund, the Fund will distribute to each shareholder of
the Fund shares of the same class of the New Fund in a number equal to the
number of shares (including any fractional share) of the Fund then owned by such
shareholder and having the same net asset value per share as the net asset value
of the shares of that class of the Fund on the Effective Date, the shares of
that class of the Fund owned by the shareholder will be cancelled and the Fund
will then terminate. A shareholder of the Fund will therefore acquire the same
pro rata interest in the New Fund as of the effective time of the Reorganization
as the shareholder had in the Fund immediately prior to the Reorganization. The
New Fund will then operate in the same manner and with the same investment
objectives and policies of the Fund, giving effect to the results of the
shareholder votes on the other items, including the change of fundamental
investment policies.
For each of Massachusetts, Insured Municipal Bond Fund, Massachusetts Insured
and New York Insured, the cancellation of shares and other corporate actions
will be accomplished under the Reorganization Agreement by amending the articles
of incorporation of the Company. For each of California and California Insured,
the Board has approved separate amendments to the Company's articles of
incorporation ("charter") in the form attached hereto as Annex E, which would
add a new provision allowing certain corporate actions by each of California or
California Insured, respectively, such as approval of the Reorganization into a
series of a Massachusetts business trust and the related termination of each
such Fund, to be authorized by a majority vote of the shares of each such Fund
outstanding rather than by a vote of two-thirds of such shares otherwise
required by Maryland law.
Confirmations of the shares of the New Fund received in the Reorganization in
exchange for shares of the Fund will not be issued to shareholders because the
number and value of shares held by a shareholder will not be changed by the
Reorganization.
It will not be necessary for a shareholder holding certificates of a Fund to
exchange those certificates for new certificates representing shares of the New
Fund following consummation of the Reorganization. Certificates for shares of a
Fund issued prior to the Reorganization will represent shares of the same class
of the New Fund after the Reorganization.
If approved by shareholders of the Fund, it is expected that the Reorganization
will be made effective on January 31, 1997, but it may be effective at a
different time.
PROPOSED NEW RULE 12B-1 PLAN. Rule 12b-1 under the 1940 Act (the "Rule")
provides among other things, that an open-end investment company (mutual fund)
may bear expenses of distributing its shares only pursuant to a plan (a "Rule
12b-1 Plan") adopted in accordance with the Rule. John Nuveen & Co.
Incorporated, acting as principal underwriter and distributor for each Company,
distributes the Funds' Class A Shares, Class C Shares and Class R Shares. The
Class A Shares and the Class C Shares are currently subject to a Rule 12b-1
Plan. The Class R Shares are not currently subject to a Rule 12b-1 Plan.
As part of the Fund Restructuring, each Board approved a proposed new Rule 12b-1
Plan for Class A and Class C Shares. The proposed Rule 12b-1 Plan for the New
Fund will be substantively the same for Class A and Class C shares as the
existing plan with the exception that for both the Class A Shares and the Class
C Shares the fees will be reduced and for the current Class C Shares the
operation of the conversion feature will be modified. Specifically, under the
current Rule 12b-1 Plan, the service fee is .25% for both Class A and Class C
Shares; under the new Rule 12b-1 plan, the service fee will be .20%. In
addition, Class C Shares currently have a .75% distribution fee; under the new
Rule 12b-1 plan the distribution fee will be .55% for Class C Shares.
12
<PAGE> 16
The table below shows the fees paid by each Fund to John Nuveen & Co.
Incorporated for its Class C Shares, in the case of each Fund except Maryland,
for the fiscal year ended February 29, 1996, and in the case of Maryland, for
the fiscal year ended January 31, 1996 and the fees that would have been paid
(pro forma) had the new Rule 12b-1 plan had been in effect during the same
periods.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
------------------------------------------ ------------------------------------------
CLASS A SHARES CLASS C SHARES
FUND AGGREGATE DOLLAR AMOUNT PERCENTAGE AGGREGATE DOLLAR AMOUNT PERCENTAGE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Maryland
Current $10,477 .25% $11,541 1.00%
Pro Forma 8,382 .20 8,656 .75
Municipal Bond Fund
Current 36,112 .25 7,054 1.00
Pro Forma 28,890 .20 5,291 .75
Massachusetts
Current 6,732 .25 2,609 1.00
Pro Forma 5,386 .20 1,957 .75
Insured Municipal Bond
Fund
Current 82,071 .25 44,298 1.00
Pro Forma 65,657 .20 33,224 .75
Massachusetts Insured
Current 8,932 .25 5,438 1.00
Pro Forma 7,146 .20 4,079 .75
New York Insured
Current 42,326 .25 8,893 1.00
Pro Forma 33,861 .20 6,670 .75
California
Current 19,006 .25 4,155 1.00
Pro Forma 15,205 .20 3,116 .75
California Insured
Current 25,512 .25 6,916 1.00
Pro Forma 20,410 .20 5,187 .75
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Class C Shares currently convert automatically to Class A Shares six years after
purchase. All such conversions are done at net asset value without the
imposition of any sales load, fee, or other charge, so that the value of each
shareholder's account immediately before conversion will be the same as the
value of the account immediately after conversion. Class C Shares acquired
through reinvestment of distributions convert into Class A Shares based on the
date of the initial purchase to which such shares relate. The automatic
conversion of Class C Shares to Class A Shares six years after purchase was
designed to ensure that holders of Class C Shares would pay over the six-year
period a distribution fee that is approximately the economic equivalent of the
one-time, up-front sales charge paid by holders of Class A Shares on purchases
of up to $50,000. Class C Shares that are converted to Class A Shares are no
longer subject to an annual distribution fee, but remain subject to an annual
service fee which is identical in amount for both Class C Shares and Class A
Shares.
Under the proposed Rule 12b-1 Plan, Class C shareholders who purchased their
shares prior to the Effective Date of the Reorganization will still retain the
option to convert their shares to Class A Shares at the end of their six-year
holding period on the same basis as described above, ALTHOUGH THE CONVERSION
WILL NO LONGER OCCUR AUTOMATICALLY. SHAREHOLDERS WILL NEED TO EXERCISE THIS
CONVERSION FEATURE BY SUBMITTING A REQUEST FOR CONVERSION TO THE FUND OR ITS
TRANSFER AGENT AFTER THE SIX YEARS HAVE ELAPSED. Under the proposed Rule 12b-1
Plan, Class C shareholders who purchase their shares after the Reorganization
will not have a conversion feature.
CERTAIN PROVISIONS IN THE NEW TRUST'S DECLARATION OF TRUST. Under Massachusetts
law, shareholders of a New Fund could, under certain circumstances, be held
personally liable for the obligations of that Fund. However, the New Trust's
Declaration contains an express disclaimer of shareholder liability for acts or
obligations of a New Fund and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or executed by the New
Trust or the trustees. The New Trust's Declaration further provides for
indemnification out of the assets and property of the New Trust for all loss and
expense of any shareholder held personally liable for the obligations of the New
Trust. Thus, the risk of a shareholder incurring a loss due to shareholder
liability is limited to circumstances in which the New Trust would be unable to
meet its obligations. The New Trust believes that the likelihood of such
circumstances is extremely remote.
13
<PAGE> 17
The New Trust's Declaration provides that the obligations of the New Trust are
not binding upon the trustees individually, but only upon the assets and
property of the New Trust, and that the trustees shall not be liable for errors
of judgment or mistakes of fact or law. Nothing in the New Trust's Declaration,
however, protects a trustee against any liability to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
CERTAIN COMPARATIVE INFORMATION ABOUT THE NEW TRUSTS AND THE COMPANIES. Each New
Trust and each Trust are organized as business trusts under the laws of the
Commonwealth of Massachusetts. Tax-Free Bond Fund and Insured Tax-Free Bond Fund
are organized as corporations under the laws of the State of Minnesota.
California Tax-Free Fund is organized as a corporation under the laws of
Maryland. The provisions of the Declaration of Trust of each New Trust are
substantially similar to the provisions of the Declaration of Trust of each
Trust; except that the Declarations provide, for the New Trust, that 30% of the
outstanding shares constitutes a quorum at shareholders meetings, whereas for
each Trust (except the Municipal Bond Trust), that a majority of the outstanding
shares is necessary for a quorum at shareholders meetings. The provisions of the
Declaration of Trust of each New Trust are substantially similar to the
provisions of the Articles of Incorporation of each Company; except the
Declaration of the New Trust provides for removal of trustees for cause only by
vote of 66 2/3% of the remaining trustees or shareholders, whereas a majority of
shareholders of the Corporation can remove a director with or without cause;
under the New Trust, 30% of the outstanding shares constitutes a quorum at
shareholders meetings, whereas a majority of the outstanding shares of the
Corporation is necessary for a quorum at shareholders meetings; under the New
Trust, the Trust (or a series) can be terminated (i) by the trustees, upon
notice to the shareholders, (ii) by a majority vote of shareholders when
recommended by the trustees, or (iii) by 66 2/3% of the shareholders, whereas
the Tax-Free Bond Fund and the Insured Tax-Free Bond Fund (or a series thereof)
may be terminated by action of a majority of the affected shareholders and
whereas the California Tax-Free Fund may be dissolved by 66 2/3% of the
shareholders; under the Declaration of the New Trust, trustees may be elected by
a plurality of votes cast when a quorum is present, whereas directors of the
Tax-Free Bond Fund and the Insured Tax-Free Bond Fund may only be elected by the
vote of a majority of a quorum and whereas directors of the California Tax-Free
Fund may only be elected by a majority of the votes cast when a quorum is
present; the Declaration of the New Trust (other than the Article regarding
Trustees which can only be amended by a 66 2/3% vote of shareholders) can be
amended by vote of a majority of trustees and a majority of the shareholders,
whereas an amendment to the Articles of the Tax-Free Bond Fund and the Insured
Tax-Free Bond Fund would require a 66 2/3% vote of the shareholders if the
amendment would change material rights (such as preferences) with respect to
shares, distributions or liquidation rights and whereas an amendment to the
Articles of the California Tax-Free Fund would require a majority of the shares
outstanding of the affected Fund(s).
FEDERAL INCOME TAX CONSEQUENCES. It is anticipated that the transactions
contemplated by the Reorganization will be tax-free for federal income tax
purposes. Each Fund has received an opinion of Vedder, Price, Kaufman &
Kammholz, that under the Internal Revenue Code of 1986 the reorganization of the
Fund into the New Fund pursuant to the Reorganization will not give rise to the
recognition of income, deductions, gain or loss for federal income tax purposes
to the Fund, the Company, or the shareholders of the Fund. A shareholder's
adjusted basis for tax purposes in shares of the New Fund after the
Reorganization will be the same as his adjusted basis for tax purposes in the
shares of the Fund immediately before the Reorganization. The holding period of
the shares of the New Fund received by the shareholders of the Fund will include
the holding period of shares of the Fund exchanged therefor, provided that at
the time of the exchange the shares of the Fund were held as capital assets.
VOTES REQUIRED
Approval of the Reorganization for each of Massachusetts, Insured Municipal Bond
Fund, Massachusetts Insured and New York Insured requires the affirmative vote
of a majority of the shares of each class outstanding of the Fund, and approval
of the Reorganization will also be deemed approval of the amendment to the
articles of incorporation of the Company.
Approval of the Reorganization for each of Maryland and Municipal Bond Fund
requires the affirmative vote of a "majority of the outstanding voting
securities" of the Fund. The term "majority of the outstanding voting
securities" as defined in the 1940 Act means: the affirmative vote of the lesser
of (1) 67% of the voting securities of the Fund present at the meeting if more
than 50% of the outstanding shares of the Fund are present in person or by proxy
or (2) more than 50% of the outstanding shares of the Fund.
Approval of the Reorganization for each of California and California Insured,
which first includes a charter amendment to lower the necessary vote, requires
approval by the affirmative vote of a majority of the shares outstanding of the
Fund. If a majority of the outstanding shares of a Fund are voted in favor this
Item 4, appropriate Articles of Amendment (incorporating the pertinent charter
amendment set forth in Annex E hereto) will immediately be filed with the State
of Maryland while the meeting is in progress so that the amendment would be
effective with respect to the Fund approving it before that time at the
shareholders' meeting when the Reorganization will be considered and voted upon.
Thus, approving this Item 4 will allow approval of the Reorganization by a
majority, rather than two-thirds, of the outstanding shares of the Fund.
Each Reorganization is contingent upon the shareholders of the applicable
Company electing those persons who are nominated as Board Members in Item 1.
14
<PAGE> 18
OTHER INFORMATION
NUVEEN ADVISORY
Nuveen Advisory is a wholly-owned subsidiary of Nuveen, located at 333 West
Wacker Drive, Chicago, Illinois 60606, the oldest and largest investment banking
firm specializing in the underwriting and distribution of tax-exempt securities.
Nuveen, which maintains the largest research department of all investment
banking firms devoted exclusively to municipal securities, has issued over $30
billion of tax-exempt unit trusts since 1961 and currently sponsors 81
management investment company portfolios (including the Funds) with
approximately $32 billion in tax-exempt securities under management. Over
1,000,000 individuals have invested to date in Nuveen's tax-exempt funds and
trusts. Founded in 1898, Nuveen is a majority-owned subsidiary of The John
Nuveen Company, which, in turn, is approximately 78% owned by The St. Paul
Companies, Inc., 385 Washington Street, St. Paul, Minnesota 55102, a management
company of St. Paul, Minnesota, principally engaged in providing
property-liability insurance through subsidiaries.
The names, addresses and principal occupations of the principal executive
officers and the directors of Nuveen Advisory are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NAME AND ADDRESS PRINCIPAL OCCUPATION
- -------------------------------------------------------------------------------------------------------
<S> <C>
Timothy R. Schwertfeger Chairman of the Board and Director, The John
Chairman of the Board and Director (Principal Nuveen Company and John Nuveen & Co. Incorporated
Executive Officer)
333 West Wacker Drive
Chicago, Illinois 60606
Anthony T. Dean President and Director, The John Nuveen Company
President and Director and
333 West Wacker Drive John Nuveen & Co. Incorporated
Chicago, Illinois 60606
John P. Amboian Executive Vice President, The John Nuveen Company
Executive Vice President and
333 West Wacker Drive John Nuveen & Co. Incorporated
Chicago, Illinois 60606
- -------------------------------------------------------------------------------------------------------
</TABLE>
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by the Funds, including any additional solicitation made
by letter, telephone or telegraph. In addition to solicitation by mail, certain
officers and representatives of each Company, officers and employees of Nuveen
and certain financial services firms and their representatives, who will receive
no extra compensation for their services, may solicit proxies by telephone,
telegram or personally. In addition, the Funds have engaged D.F. King & Co.,
Inc. and Tritech Services to assist in the solicitation of proxies at a total
estimated cost of $172,500. A COPY OF EACH FUND'S ANNUAL REPORT AND ANY MORE
RECENT SEMI-ANNUAL REPORT ARE AVAILABLE WITHOUT CHARGE UPON REQUEST BY WRITING
TO THE FUND AT 333 WEST WACKER DRIVE, CHICAGO, ILLINOIS 60606 OR BY CALLING
1-800-257-8787.
PROPOSALS OF SHAREHOLDERS
The Companies are not required to hold annual shareholder meetings, but each
will hold special meetings as required or deemed desirable. Since the Companies
do not hold regular meetings of shareholders, the anticipated date of the next
special shareholder meeting cannot be provided. Any shareholder proposal that
may properly be included in the proxy solicitation material for a special
shareholder meeting must be received by the applicable Company no later than
four months prior to the date this Joint Proxy Statement is mailed to
shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Boards are not aware of any matters that will be presented for action at the
meetings other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote matters in accordance with their
best judgment.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of each Board,
James J. Wesolowski
Secretary
15
<PAGE> 19
ANNEX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
[Name of Company] (the "Company"), a [Massachusetts business trust, Minnesota
corporation, Maryland corporation], on behalf of its series of shares designated
(the "Fund") and [Name of New Trust] (the "New Trust"), a
Massachusetts business trust, on behalf of its series of shares designated
(the "New Fund"), agree upon the following plan of
reorganization:
1. [Prior to the closing provided for in section 4, below, the Company and the
New Trust will execute and file articles of transfer with respect to the
transactions contemplated hereby with the Department of Assessments and Taxation
of the State of Maryland.] The Fund shall transfer to the New Fund all of the
assets of the Fund (including the share(s) of the New Fund owned by the Fund,
which shall be cancelled), in exchange for which the New Fund shall
simultaneously assume all of the liabilities of the Fund, and shall issue to the
Fund a number of New Fund shares equal in number and net asset value of each
class to the number and net asset value of shares of the same class (including
fractional shares) of the Fund then outstanding. The Fund then will distribute
to each registered shareholder of the Fund shares of the New Fund in a number
and net asset value of each class equal to the number and net asset value of
shares (including any fractional share) of the Fund of the same class then owned
by the shareholder, in exchange for and cancellation of the shareholder's shares
of the Fund.
2. The distribution to the shareholders of the Fund shall be accomplished by
establishing an account on the share records of the New Fund in the name of each
registered shareholder of the Fund, and crediting that account with a number of
shares of each class of the New Fund equal to the number of shares (including
any fractional share) of the Fund of the same class owned of record by the
shareholder at the time of the distribution. Outstanding certificates
representing shares of the Fund shall thereafter represent an equal number of
shares of the same class of the New Fund.
3. Promptly thereafter, the Fund shall be terminated.
4. The transaction in section 1 above shall occur on January 31, 1997 at
p.m., Chicago time, at the offices of the New Trust, or at such other date, time
or place as may be agreed upon by the parties.
5. This agreement may be amended at any time, and may be terminated at any time
before the completion of the transaction in section 1, regardless of whether or
not this agreement and plan of reorganization has been approved by the
shareholders of the Fund, by agreement of the Company and the New Trust,
provided that no amendment shall have a material adverse effect upon the
interests of shareholders of the Fund. In any case, this agreement and plan of
reorganization may be terminated by either the Company or the New Trust, if the
transaction in section 1 has not occurred by the close of business on June 30,
1997.
6. [For Companies organized as Massachusetts business trusts only: A copy of the
Company's Declaration of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts, and notice is hereby give that this instrument is
executed on behalf of the trustees of the Company as the trustees of the Company
and not individually and that the obligations under this instrument are not
binding upon any of the trustees, officers or shareholders of the Company
individually, but binding only upon the assets and property of the Fund.]
7. A copy of the New Trust's Declaration of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Trustees of the New Trust as the
Trustees of the New Trust and not individually and that the obligations under
this instrument are not binding upon any of the Trustees, officers or
shareholders of the New Trust individually, but binding only upon the assets and
property of the New Fund.
8. At any time after the completion of the transaction in section 1, the Company
acting through its officers, or if then dissolved through its last officers,
shall execute and deliver to the New Trust, such additional instruments of
transfer or other written assurances as the New Trust may reasonably request in
order to vest in the New Trust, acting for the New Fund, title to the assets
transferred by the Fund under this agreement.
9. This agreement shall be construed in accordance with applicable federal law
and the laws of the State of Illinois, except as to the provisions of section[s
6 and] 7 hereof, which shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
[10. The distribution of shares of the New Fund to the Fund's shareholders and
the cancellation of the Fund's shares will be effected pursuant to an amendment
to the articles of incorporation of the Company in accordance with the Minnesota
Business Corporation Act/Maryland General Corporation Law].
Dated October 15, 1996
[Name of Company]
By:
--------------------------------------
Anthony T. Dean
President
[Name of New Trust]
By:
--------------------------------------
Anthony T. Dean
President
A-1
<PAGE> 20
ANNEX B
HOLDERS OF MORE THAN 5% OF ANY CLASS OF THE FUND'S SHARES
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- ---------------------------- --------------------------------------------------- -------------
<S> <C> <C>
Maryland
Class A................... NFSC FEBO # A1F-375349 17.27%
Imelda J. Hall
4610 Col. Fenwick Place
Upper Marlboro, MD 20772
Merrill Lynch Pierce Fenner & Smith Inc. 97E83 7.07%
Attn: Book Entry Dept.
4800 Deer Lake Dr. E. Fl. 3
Jacksonville, FL 32246-6484
Maryland
Class C................... NFSC FEBO # A1F-405744 43.15%
Russell L. Jackson
Carthelia L. Jackson
2950 Huntington Creek Road
Huntingtown, MD 20639
Catherine Small & Robert N. Small 6.13%
JT Ten Wros Not TC
1039 Bay Front Ave.
North Beach, MD 20714-9751
Maryland
Class R................... Merrill Lynch Pierce Fenner & Smith Inc. 979D5 6.14%
Attn: Book Entry Dept.
4800 Deer Lake Dr. E. Fl. 3
Jacksonville, FL 32246-6484
Municipal Bond Fund
Class C................... Oppenheimer & Co., Inc. 8.43%
FBO 020-38275-14
P.O. Box 3484
Church Street Station
New York, NY 10008-8484
Kentucky Fried Chicken 6.81%
of Connellsville
107 S. Connellsville St.
Connellsville, PA 15425
Bill W. Hickey & 20.81%
Erin E. Hickey JT Ten Wros
20 Bowen St.
Longmont, CO 80501-5862
Dain Bosworth Inc. FBO 5.59%
William L. Topp
Elise S. Topp
Ten Com
2201 3rd Ave. #2704
Seattle, WA 98121
Massachusetts
Class A................... NFSC FEBO # OC8-412740 5.55%
Barbara Polverari
PO Box 30
W. Springfield, MA 01090
</TABLE>
B-1
<PAGE> 21
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- ---------------------------- --------------------------------------------------- -------------
<S> <C> <C>
Smith Barney Inc. 6.61%
00148920601
388 Greenwich Street
New York, New York 10013
Montgomery Securities 6.12%
752-08220-11
Attn: Mutual Funds -- 4th Floor
600 Montgomery Street
San Francisco, CA 94111
Massachusetts
Class C................... Hudson L. Matson 18.33%
39 Griggs Rd.
Sutton, MA 01590-1015
Anthony Macolini 6.83%
17 Mossdale Rd.
Jamaica Plain, MA 02130-3022
Charles G. Allen, Jr. Tr 6.28%
UA MAR 05 54
UW Flora A. Generess
FBO Charles G. Allen, Jr., et al
221 James St. #65
Barre, MA 01005-8805
Swastika Sengupta 10.44%
23 Loumar Dr. # 2
Pittsfield, MA 01201-5932
Insured Municipal Bond Fund
Class C................... Treasa A. Silva & 5.11%
Don O. Silva, Jr.
JT Ten Wros Not TC
355 E. Clark St.
Grantsville, UT 84029-9357
Norman J. Younker & 11.05%
Mary Katherine Younker
JT Ten Wros Not TC
1029 S. 1200 E.
Salt Lake City, UT 84105-1524
Oregon Waste Technology Inc. 6.17%
PO Box 4008
Brookings, OR 97415-0081
Massachusetts Insured
Class A................... Gerald W. Mahoney & 6.52%
Elaine Mahoney Tr.
UA Aug 18 94
The Bagley Family Rev. Trust
162 Oakland St.
Fall River, MA 02720-6114
NFSC FEBO # OKR-016039 6.07%
Allen Wrightington
Mary Ann Wrightington
93 Micajah Pond
Plymouth, MA 02360
</TABLE>
B-2
<PAGE> 22
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- ---------------------------- --------------------------------------------------- -------------
<S> <C> <C>
Massachusetts Insured
Class C................... Raymond James & Assoc. Inc. 13.57%
for Elite Acct# 50099466
FAO George A. Dauteuil, Sr. &
Pauline T. Dauteuil JTWROS
9 Church St.
Millbury, MA 01527-3134
Daniel M. Flynn & 11.98%
Kathleen F. Flynn
JT Ten Wros Not TC
232 North Rd.
Hampden, MA 01036-9659
Rose E. Frisch 12.26%
3 Hillside Pl.
Cambridge, MA 02140-3617
Magdalene S. Kapuscienski & 5.32%
Gene S. Kapuscienski
JT Ten Wros Not TC
15 D Country Club Lane
Milford, MA 01757
John Sullivan 11.96%
6 Margaret St.
Boston, MA 02113-2523
Ruth Biller 13.32%
51 Oak Rd.
Canton, MA 02021-2625
Insured New York
Class A................... BHC Securities Inc. 17.55%
FAO 84306352
Attn: Mutual Funds
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103
Insured New York
Class C................... Harriette Rosenbloom 5.69%
3777 Independence Ave.
Bronx, NY 10463-1409
Ruth Preston & 5.74%
Sara P. Costello &
Patricia M. Kohl
JT Ten Wros Not TC
2 Middleton Rd.
Greenport, NY 11944-1115
Donaldson Lufkin Jenrette 7.45%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
N De Filippes Corp. 19.27%
310 Madison Ave., Rm. 1012
New York, NY 10017-6009
</TABLE>
B-3
<PAGE> 23
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- ---------------------------- ----------------------------------------------------------- -------------
<S> <C> <C>
19103California
Class A................... J. Andrew Kitzman & 5.96%
Hazel Lloyd Kitzman Cotr
UA Jul 02 82
Kitzman Family Trust
10558 Grandview Dr. # 4063
La Mesa, CA 91941-6905
California
Class C................... NFSC FEBO # OFP-002135 14.68%
Michele Chiapella
103 Northwood Commons
Chico, CA 95926
Paul R. Hoeber 21.73%
611 Bay St., Apt. 4
San Francisco, CA 94133-1619
Thomas K. Larson & 7.64%
Melanie P. Larson Tr.
UA Mar 14, 1996
Larson Fam. Trust
142 Via Novella
Aptos, CA 95003-5841
Charlotte N. Feo TR 7.23%
UA Dec 06 79
Charlotte N Feo Family Trust
530 Galleon Way
Seal Beach, CA 90740-5939
John C. MacGregor-Scott & 7.04%
Ian G. MacGregor-Scott
JT Ten Wros Not TC
720 W. Camino Real Ave. # 520
Arcadia, CA 91007-7839
California
Class R................... Smith Barney Shearson 5.15%
00119601999
388 Greenwich Street
New York, NY 10013
California Insured
Class A................... Smith Barney Shearson Inc. 5.64%
00152919411
388 Greenwich Street
New York, NY 10013
</TABLE>
B-4
<PAGE> 24
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- ---------------------------- ----------------------------------------------------------- -------------
<S> <C> <C>
95631Mildred H. Machtowski TR 11.13%
UA Sep 14 95
Machtowski Family Trust
3145 Rita Ct.
Napa, CA 94558-3317
Janet M. Clarke TR 5.65%
UA Mar 07 95
J. M. Clarke Rev. Intervivos Trust
5 Concord Ct
Novato, CA 94947-2820
Elzie R. Amlin & 6.34%
Annita S. Amlin TR
UA Mar 02 91
Amlin Family Trust
4005 Share Ranch Rd.
Shingle Springs, CA 95682-8020
Richard A. Stilz & 5.58%
Lilyanne Stilz
JT Ten Wros Not TC
20713 Quedo Dr.
Woodland Hills, CA 91364-3422
Prudential Securities FBO 6.24%
Alan R. Josefsberg &
Vickie Josefsberg JT Ten
2700 N. Cahuenga Blvd. East
Unit 1301
Hollywood, CA 90068-2139
BA Investment Services Inc. 8.58%
FBO 406912971
185 Berry St.
3rd Floor #2640
San Francisco, CA 94104
California Money Fund
Institutional............. First Interstate Bank 89.69%
FBO Westcore
Attn: Fund Accounting
Cash Management Desk
26610 Agoura Rd
Calabasas, CA 91302-1954
</TABLE>
B-5
<PAGE> 25
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF FUND AND CLASS NAME AND ADDRESS OF OWNER OWNERSHIP
- ---------------------------- ----------------------------------------------------------- -------------
<S> <C> <C>
California Money Fund
Distribution.............. First Interstate Bank of Tx 28.63%
Attn: Sally Bourdamis
First Interstate Plaza
Investment Operations LL#788
100 W Washington St
Phoenix, AZ 85003-1805
California Money Fund
Service................... Republic Bank California N.A. 79.73%
Attn: Patsy Haynes
445 N Bedford Dr
Beverly Hills, CA 90210-4302
</TABLE>
B-6
<PAGE> 26
ANNEX C
PROPOSED CHANGES IN FUNDAMENTAL POLICIES
(ADDITIONS [UNDERLINED]; DELETIONS <STRICKEN>; * * * INDICATES SKIPS IN TEXT OF
POLICY)
NUVEEN MARYLAND TAX-FREE VALUE FUND
The Fund's investment assets will consist of:
- Municipal Obligations rated investment grade at the time of purchase
(Baa or BBB or better by Moody's Investors Service, Inc. ("Moody's")
[or] Standard and Poor's Corporation ("S&P") <)> [or Fitch Investments
Service, Inc. ("Fitch"));]
- unrated Municipal Obligations of investment grade quality in the opinion
of Nuveen Advisory <limited to no more than 20% of the Fund's net
assets>; and
- temporary investments within the limitations and for the purposes
described below.
Municipal Obligations rated Baa are considered by Moody's to be medium grade
obligations which lack outstanding investment characteristics and in fact have
speculative characteristics as well, <while> Municipal Obligations rated BBB
are regarded by S&P as having an adequate capacity to pay principal and
interest [and Municipal Obligations rated BBB are regarded by Fitch to be
investment grade and of satisfactory credit quality with an adequate
capacity to pay principal and interest]. The Fund may invest <up to 20% of its
net assets> in Municipal Obligations that pay interest subject to the federal
alternative minimum tax ("AMT Bonds"). <The Fund intends to emphasize
investments in Municipal Obligations with long-term maturities in order to
maintain an average portfolio maturity of 20-30 years, but the average maturity
may be shortened from time to time depending on market conditions in order to
help limit the Fund's exposure to market risk. As a result, the Fund's
portfolio at any given time may include both long-term and intermediate-term
Municipal Obligations.>
Under ordinary circumstances, the Fund will invest substantially all (at least
80%) of its net assets in its respective state's Municipal Obligations, and not
more than 20% of its net assets in "temporary investments," described below,
provided that temporary investments subject to regular federal income tax <and
AMT Bonds> may not comprise more than 20% of the Fund's net assets. For
defensive purposes, however, in order to limit the exposure of its portfolio to
market risk from temporary imbalances of supply and demand or other temporary
circumstances affecting the municipal market, the Fund may invest without limit
in temporary investments. The Fund will not be in a position to achieve its
investments objective of tax-exempt income to the extent it invests in taxable
temporary investments.
The foregoing investment policies are fundamental policies of the Fund and may
not be changed without the approval of the holders of a majority of the shares
of the Fund.
[The Fund intends to emphasize investments in Municipal Obligations with
long-term maturities in order to maintain an average portfolio maturity of 15-30
years, but the average maturity may be shortened from time to time depending on
market conditions in order to help limit the Fund's exposure to market risk. As
a result, the Fund's portfolio at any given time may include both long-term and
intermediate-term Municipal Obligations.]
* * * * * * * * * * *
As described above, the Fund under ordinary circumstances may invest up to 20%
of its net assets in "temporary investments," but may invest without limit in
temporary investments during temporary defensive periods. The Fund will seek to
make temporary investments in short-term securities the interest on which is
exempt from regular federal income tax, but may be subject to state income tax
in the Fund's respective state. If suitable federally tax-exempt temporary
investments are not available at reasonable prices and yields, the Fund may make
temporary investments in taxable securities whose interest is subject to both
state and federal income tax. The Fund will invest only in those taxable
temporary investments that are either U.S. Government securities or are rated
within the [two] highest <grade> [grades] by Moody's <or>[,] S&P or [Fitch], and
mature within one year from the date of purchase or carry a variable or floating
rate of interest. See the Statement of Additional Information for further
information about the temporary investments in which the Fund may invest.
* * * * * * * * * * *
The Fund, as a fundamental policy, may not, without the approval of the holders
of a majority of the shares of the Fund:
* * * * * * * * * * *
(12) <Invest more than 5% of its total assets in securities of unseasoned
issuers which, together with their predecessors, have been in
operation for less than three years;>
* * * * * * * * * * *
<(14) Invest more than 10% of its total assets in repurchase agreements
maturing in more than seven days, "illiquid" securities (such as
non-negotiable CDs) and securities without readily available market
quotations;>
C-1
<PAGE> 27
* * * * * * * * * * *
<It is a fundamental policy of the Fund, which cannot be changed without the
approval of the holders of a majority of shares of such Fund, that the Fund will
not hold securities of a single bank, including securities backed by a letter of
credit of such bank, if such holdings would exceed 10% of the total assets of
such Fund.>
* * * * * * * * * * *
NUVEEN MUNICIPAL BOND FUND
The Fund's investment assets will consist of:
- Municipal Obligations rated investment grade at the time of purchase
(Baa or BBB or better by Moody's Investors Service, Inc. ("Moody's") or,
Standard and Poor's Corporation ("S&P")<)> [or Fitch Investments
Service, Inc. ("Fitch"));]
- unrated Municipal Obligations of investment grade quality in the opinion
of Nuveen Advisory, <limited to no more than 10% of the Fund's net
assets;> and
- temporary investments within the limitations and for the purposes
described below.
Municipal Obligations rated Baa are considered by Moody's to be medium grade
obligations which lack outstanding investment characteristics and in fact have
speculative characteristics as well, <while> Municipal Obligations rated BBB are
regarded by S&P as having [an adequate capacity to pay principal and interest
and Municipal Obligations rated BBB are regarded by Fitch to be investment grade
and of satisfactory credit quality with] an adequate capacity to pay principal
and interest. <Although the Fund to date has not done so and has no present
intention of doing so,> The Fund may invest [up to 20% of its net assets] in
Municipal Obligations that pay interest subject to the federal alternative
minimum tax ("AMT Bonds"). <The Fund intends to emphasize investments in
Municipal Obligations with long-term maturities in order to maintain an average
portfolio maturity of 20-30 years, but the average maturity may be shortened
from time to time depending on market conditions in order to help limit the
Fund's exposure to market risk. As a result, the Fund's portfolio at any given
time may include both long-term and intermediate-term Municipal Obligations.>
Under ordinary circumstances, the Fund will invest substantially all (at least
80%) of its net assets in Municipal Obligations, and not more than 20% of its
net assets in "temporary investments," described below, provided that temporary
investments subject to regular federal income tax <and AMT Bonds> may not
comprise more than 20% of the Fund's net assets. For defensive purposes,
however, in order to limit the exposure of its portfolio to market risk from
temporary imbalances of supply and demand or other temporary circumstances
affecting the municipal market, the Fund may invest without limit in temporary
investments. The Fund will not be in a position to achieve its investment
objective of tax-exempt income to the extent it invests in taxable temporary
investments.
The foregoing investment policies are fundamental policies of the Fund and may
not be changed without the approval of the holders of a majority of the shares
of the Fund.
[The Fund intends to emphasize investments in Municipal Obligations with
long-term maturities in order to maintain an average portfolio maturity of 15-30
years, but the average maturity may be shortened from time to time depending on
market conditions in order to help limit the Fund's exposure to market risk. As
a result, the Fund's portfolio at any given time may include both long-term and
intermediate-term Municipal Obligations.]
* * * * * * * * * * *
As described above, the Fund under ordinary circumstances may invest up to 20%
of its net assets in "temporary investments," but may invest without limit in
temporary investments during temporary defensive periods. The Fund will seek to
make temporary investments in short-term securities the interest on which is
exempt from regular federal income tax, but may be subject to state income tax.
If suitable tax-exempt temporary investments are not available at reasonable
prices and yields, the Fund may make temporary investments in taxable
securities. The Fund will invest only in those taxable temporary investments
that are either U.S. Government securities or are rated within the [two] highest
<grade> [grades] by Moody's [or], S&P [or Fitch], and mature within one year
from the date of purchase or carry a variable or floating rate of interest. See
the Statement of Additional Information for further information about the
temporary investments in which the Fund may invest.
* * * * * * * * * * *
The Fund, as a fundamental policy, may not, without the approval of the holders
of a majority of the shares of the Fund:
* * * * * * * * * * *
(2) Invest more than 5% of its total assets in securities of any one
issuer, except that this limitation shall not apply to securities of
the United States Government, its agencies and instrumentalities [or
to the investment of 25% of the Fund's assets;]
(3) Borrow money, except for temporary or emergency purposes and not for
investment purposes and then only in an amount not exceeding <5%>
[(a) 10%] of the value of the Fund's total assets at the time of
borrowing [or (b) one-third of the value of the Fund's total assets,
including the amount borrowed, in order to meet redemption requests]
C-2
<PAGE> 28
which might otherwise require the untimely disposition of securities. While any
such borrowings exceed 5% of such Fund's total assets, no additional purchases
of investment securities will be made by such Fund. If due to market
fluctuations or other reasons, the value of the Fund's assets falls below
300% of its borrowings, the Fund will reduce its borrowings within 3
business days. To do this, the Fund may have to sell a portion of its
investments at a time when it may be disadvantageous to do so;
* * * * * * * * * * *
(5) Issue senior securities as defined in the Investment Company Act of
1940, [except to the extent such issuance might be involved with
respect to borrowings described under item (3) above or with respect
to transactions involving futures contracts or the writing of options
within the limits described in the Prospectus and this Statement of
Additional Information;]
* * * * * * * * * * *
(8) Purchase or sell commodities or commodities contracts or oil, gas or
other mineral exploration or development programs, [except for
transactions involving futures contracts within the limits described
in the Prospectus and this Statement of Additional Information;]
* * * * * * * * * * *
(11) Write or purchase [put or call options,] <puts, calls, straddles,
spreads or any combination thereof> [except to the extent that the
purchase of a stand-by commitment may be considered the purchase
of a put, and except for transactions involving options within the
limits described in the Prospectus and this Statement of Additional
Information;]
<(12) Invest more than 5% of its total assets in securities of unseasoned
issuers which, together with their predecessors, have been in
operation for less than three years;>
<(13) Invest more than 10% of its total assets in securities that the Fund
is restricted from selling to the public without registration under
the Securities Act of 1933; or>
* * * * * * * * * * *
<It is a fundamental policy of the Fund, which cannot be changed without the
approval of the holders of a majority of shares, that the Fund will not hold
securities of a single bank, including securities backed by a letter of credit
of such bank, if such holdings would exceed 10% of the total assets of the
Fund.>
* * * * * * * * * * *
With respect to temporary investments, in addition to the foregoing limitations,
the Fund will not purchase securities (other than securities of the U.S.
Government, its agencies and instrumentalities) if, as a result of such
purchase, more than 25% of the Fund's total assets would be invested in any one
industry[.] <nor enter into a repurchase agreement if, as a result thereof, more
than 10% of its assets would be subject to repurchase agreements maturing in
more than seven days.>
* * * * * * * * * * *
NUVEEN MASSACHUSETTS TAX-FREE VALUE FUND
The Fund's investment assets will consist of:
- Municipal Obligations rated investment grade at the time of purchase
(Baa or BBB or better by Moody's Investors Service, Inc. ("Moody's")
<or>[,] Standard and Poor's Corporation ("S&P")<)> [or Fitch Investments
Service, Inc. ("Fitch"));]
- unrated Municipal Obligations of investment grade quality in the opinion
of Nuveen Advisory; <with no fixed percentage limitations on these
unrated Municipal Obligations;> and
- temporary investments within the limitations and for the purposes
described below.
Municipal Obligations rated Baa are considered by Moody's to be medium grade
obligations which lack outstanding investment characteristics and in fact have
speculative characteristics as well, <while> Municipal Obligations rated BBB are
regarded by S&P as having an adequate capacity to pay principal and interest
[and Municipal Obligations rated BBB are]
C-3
<PAGE> 29
[regarded by Fitch to be investment grade and of satisfactory credit quality
with an adequate capacity to pay principal and interest.] The Fund may invest
<up to 20% of its net assets> in Municipal Obligations that pay interest
subject to the federal alternative minimum tax ("AMT Bonds"). <The Fund
intends to emphasize investments in Municipal Obligations with long-term
maturities in order to maintain an average portfolio maturity of 20-30 years,
but the average maturity may be shortened from time to time depending on
market conditions in order to help limit the Fund's exposure to market risk.
As a result, the Fund's portfolio at any given time may include both long-term
and intermediate-term Municipal Obligations.>
Under ordinary circumstances, the Fund will invest substantially all (at least
80%) of its net assets in its respective state's Municipal Obligations, and not
more than 20% of its net assets in "temporary investments," described below,
provided that temporary investments subject to regular federal income tax <and
AMT Bonds> may not comprise more than 20% of the Fund's net assets. For
defensive purposes, however, in order to limit the exposure of its portfolio
to market risk from temporary imbalances of supply and demand or other temporary
circumstances affecting the municipal market, the Fund may invest without limit
in temporary investments. The Fund will not be in a position to achieve its
investment objective of tax-exempt income to the extent it invests in taxable
temporary investments.
The foregoing investment policies are fundamental policies of the Fund and may
not be changed without the approval of the holders of a majority of the shares
of the Fund.
[The Fund intends to emphasize investments in Municipal Obligations with
long-term maturities in order to maintain an average portfolio maturity of 15-30
years, but the average maturity may be shortened from time to time depending on
market conditions in order to help limit the Fund's exposure to market risk. As
a result, the Fund's portfolio at any given time may include both long-term and
intermediate-term Municipal Obligations.]
* * * * * * * * * * *
As described above, the Fund under ordinary circumstances may invest up to 20%
of its net assets in "temporary investments," but may invest without limit in
temporary investments during temporary defensive periods. The Fund will seek to
make temporary investments in short-term securities the interest on which is
exempt from regular federal income tax, but may be subject to state income tax
in the Fund's respective state. If suitable federally tax-exempt temporary
investments are not available at reasonable prices and yields, the Fund may make
temporary investments in taxable securities whose interest is subject to both
state and federal income tax. The Fund will invest only in those taxable
temporary investments that are either U.S. Government securities or are rated
within the [two] highest <grade> [grades] by Moody's <or>[,] S&P [or Fitch,]
and mature within one year from the date of purchase or carry a variable or
floating rate of interest. See the Statement of Additional Information for
further information about the temporary investments in which the Fund may
invest.
* * * * * * * * * * *
The Fund, as a fundamental policy, may not, without the approval of the holders
of a majority of the shares of the Fund:
* * * * * * * * * * *
(12) <Invest more than 5% of its total assets in securities of unseasoned
issuers which, together with their predecessors, have been in
operation for less than three years;>
* * * * * * * * * * *
<(14) Invest more than 10% of its total assets in repurchase agreements
maturing in more than seven days, "illiquid" securities (such as
non-negotiable CDs) and securities without readily available market
quotations;>
* * * * * * * * * * *
<It is a fundamental policy of the Fund, which cannot be changed without
the approval of the holders of a majority of shares of such Fund, that
the Fund will not hold securities of a single bank, including securities
backed by a letter of credit of such bank, if such holdings would exceed
10% of the total assets of such Fund.>
* * * * * * * * * * *
NUVEEN INSURED MUNICIPAL BOND FUND
NUVEEN MASSACHUSETTS INSURED TAX-FREE VALUE FUND
NUVEEN NEW YORK INSURED TAX-FREE VALUE FUND
Under ordinary circumstances, each Fund will invest (1) substantially all (at
least 80%) of its net assets in Municipal Obligations which are either covered
by insurance guaranteeing the timely payment of principal and interest or backed
by an escrow or trust account containing sufficient U.S. Government or U.S.
Government agency securities to ensure timely
C-4
<PAGE> 30
payment of principal and interest, and (2) not more than 20% of its net assets
in "temporary investments," within the limitations and for the purposes
described below, provided that temporary investments subject to regular federal
income tax <and Municipal Obligations that pay interest subject to the federal
alternative minimum tax ("AMT Bonds")> may not comprise more than 20% of each
Fund's net assets.
Each Fund may only invest in Municipal Obligations rated investment-grade at
the time of purchase (Baa or BBB or better) by Moody's Investors Service,
Inc. ("Moody's") <or>[,] Standard and Poor's Corporation ("S&P") [or Fitch
Investments Service, Inc. ("Fitch")], or in unrated Municipal Obligations of
investment grade quality in the opinion of Nuveen Advisory, <with no fixed
percentage limitations on these unrated securities.> Municipal Obligations
rated Baa are considered by Moody's to be medium grade obligations which lack
outstanding investment characteristics and in fact have speculative
characteristics as well, <while> Municipal Obligations rated BBB are regarded
by S&P as having an adequate capacity to pay principal and interest [and
Municipal Obligations rated BBB are regarded by Fitch to be investment grade
and of satisfactory credit quality with an adequate capacity to pay principal
and interest.] The Funds may invest <up to 20% of their net assets> in
[Municipal Obligations that pay interest subject to the federal alternative
minimum tax ("]AMT Bonds"[)], <although the National Fund to date has not done
so and has no present intention of doing so. All of the Funds intend to
emphasize investments in Municipal Obligations with long-term maturities in
order to maintain an average portfolio maturity of 20-30 years, but the average
maturity may be shortened from time to time depending on market conditions in
order to help limit each Fund's exposure to market risk. As a result, each
Fund's portfolio at any given time may include both long-term and
intermediate-term Municipal Obligations.>
The foregoing investment policies are fundamental policies of each Fund and may
not be changed without the approval of the holders of a majority of the shares
of that Fund.
[All of the Funds intend to emphasize investments in Municipal Obligations with
long-term maturities in order to maintain an average portfolio maturity of 15-30
years, but the average maturity may be shortened from time to time depending on
market conditions in order to help limit each Fund's exposure to market risk. As
a result, each Fund's portfolio at any given time may include both long-term and
intermediate-term Municipal Obligations.]
* * * * * * * * * * *
As described above, each Fund under ordinary circumstances may invest up to 20%
of its net assets in "temporary investments," but may invest without limit in
temporary investments during temporary defensive periods in order to limit the
exposure of its portfolio to market risk from temporary imbalances of supply and
demand or other temporary circumstances affecting the municipal market. Each
Fund will seek to make temporary investments in short-term securities the
interest on which is exempt from regular federal income tax, but may be subject
to state income tax in a Fund's respective state. If suitable federally
tax-exempt temporary investments are not available at reasonable prices and
yields, a Fund may make temporary investments in taxable securities whose
interest is subject to both state and federal income taxes. A Fund will invest
only in those taxable temporary investments that are either U.S. Government
securities or are rated within the [two] highest <grade> [grades] by Moody's
<or>[,] S&P [or Fitch], and mature within one year from the date of purchase or
carry a variable or floating rate of interest. A Fund will not be in a position
to achieve its investment objective of tax-exempt income to the extent it
invests in taxable temporary investments. See the Statement of Additional
Information for further information about the temporary investments in which the
Funds may invest.
* * * * * * * * * * *
Each of the Funds, as a fundamental policy, may not, without the approval of the
holders of a majority of the shares of that Fund:
* * * * * * * * * * *
(12) <Invest more than 5% of its total assets in securities of unseasoned
issuers which, together with their predecessors, have been in
operation for less than three years;>
* * * * * * * * * * *
<(14) Invest more than 10% of its total assets in repurchase agreements
maturing in more than seven days, "illiquid" securities (such as
non-negotiable CDs) and securities without readily available market
quotations;>
* * * * * * * * * * *
<It is a fundamental policy of each Fund, which cannot be changed without the
approval of the holders of a majority of shares of such Fund, that a Fund will
not hold securities of a single bank, including securities backed by a letter of
credit of such bank, if such holdings would exceed 10% of the total assets of
such Fund.>
C-5
<PAGE> 31
* * * * * * * * * * *
NUVEEN CALIFORNIA TAX-FREE VALUE FUND
NUVEEN CALIFORNIA INSURED TAX-FREE VALUE FUND
The California Fund's investment assets will consist of:
- California Municipal Obligations rated investment grade at the time of
purchase (Baa or BBB or better) by Moody's Investors Service, Inc.
("Moody's") <or>[,] Standard and Poor's Corporation ("S&P") [or Fitch
Investments Service, Inc. ("Fitch")];
- unrated California Municipal Obligations of investment grade quality in
the opinion of Nuveen Advisory; <with no fixed percentage limitations on
these unrated Municipal Obligations;> and
- temporary investments, within the limitations and for the purposes
described below.
Municipal Obligations rated Baa are considered by Moody's to be medium grade
obligations which lack outstanding investment characteristics and in fact have
speculative characteristics as well, [while] Municipal Obligations rated BBB
are regarded by S&P as having an adequate capacity to pay principal and
interest [and Municipal Obligations rated BBB are regarded by Fitch to be
investment grade and of satisfactory credit quality with an adequate capacity
to pay principal and interest.] The California Fund may invest <up to 20% of
its net assets> in Municipal Obligations that pay interest subject to the
federal alternative minimum tax ("AMT Bonds"). <The California Fund intends to
emphasize investments in Municipal Obligations with long-term maturities in
order to maintain an average portfolio maturity of 20-30 years, but the average
maturity may be shortened from time to time depending on market conditions in
order to help limit the California Fund's exposure to market risk. As a result,
the California Fund's portfolio at any given time may include both long-term
and intermediate-term Municipal Obligations.>
Under ordinary circumstances, the California Fund will invest substantially all
(at least 80%) of its net assets in California Municipal Obligations, and not
more than 20% of its net assets in "temporary investments," described below,
provided that temporary investments subject to regular federal income tax <and
AMT Bonds> may not comprise more than 20% of the California Fund's net assets.
Under ordinary circumstances, the California Insured Fund will invest (1)
substantially all (at least 80%) of its net assets in California Municipal
Obligations which are either covered by insurance guaranteeing the timely
payment of principal and interest or backed by an escrow or trust account
containing sufficient U.S. Government or U.S. Government agency securities to
ensure timely payment of principal and interest and which meet the investment
criteria of the California Fund, and (2) not more than 20% of its net assets in
"temporary investments," within the limitations and for the purposes described
below, provided that temporary investments subject to regular federal income tax
<and AMT Bonds> may not comprise more than 20% of the California Insured Fund's
net assets. The California Insured Fund will pursue the same investment policies
as the California Fund with respect to AMT Bonds and the average maturity of its
portfolio.
The foregoing investment policies are fundamental policies of each Fund and may
not be changed without the approval of the holders of a majority of the shares
of that Fund.
[The California Fund intends to emphasize investments in Municipal Obligations
with long-term maturities in order to maintain an average portfolio maturity of
15-30 years, but the average maturity may be shortened from time to time
depending on market conditions in order to help limit the California Fund's
exposure to market risk. As a result, the California Fund's portfolio at any
given time may include both long-term and intermediate-term Municipal
Obligations.]
* * * * * * * * * * *
As described above, each Fund under ordinary circumstances may invest up to 20%
of its net assets in "temporary investments," but may invest without limit in
temporary investments during temporary defensive periods in order to limit the
exposure of its portfolio to market risk from temporary imbalances of supply and
demand or other temporary circumstances affecting the municipal market. Each
Fund will seek to make temporary investments in short-term securities the
interest on which is exempt from regular federal income tax, but may be subject
to California state income tax. If suitable federally tax-exempt temporary
investments are not available at reasonable prices and yields, a Fund may make
temporary investments in taxable securities whose interest is subject to both
California state and federal income taxes. A Fund will invest only in those
taxable temporary investments that are either U.S. Government securities or are
rated within the [two] highest <grade> [grades] by Moody's <or>[,] S&P [or
Fitch,] and mature within one year from the date of purchase or carry a
variable or floating rate of interest. A Fund will not be in a position to
achieve its investment objective of tax-exempt income to the extent it invests
in taxable temporary investments. See the Statement of Additional Information
for further information about the temporary investments in which the Funds may
invest.
C-6
<PAGE> 32
* * * * * * * * * * *
Each of the Funds, as a fundamental policy, may not, without the approval of the
holders of a majority of the shares of that Fund:
* * * * * * * * * * *
(12) <Invest more than 5% of its total assets in securities of unseasoned
issuers which, together with their predecessors, have been in
operation for less than three years;>
* * * * * * * * * * *
<(14) Invest more than 10% of its total assets in repurchase agreements
maturing in more than seven days, "illiquid" securities (such as
non-negotiable CDs) and securities without readily available market
quotations;>
* * * * * * * * * * *
<It is a fundamental policy of each Fund, which cannot be changed without the
approval of the holders of a majority of shares of such Fund, that a Fund will
not hold securities of a single bank, including securities backed by a letter of
credit of such bank, if such holdings would exceed 10% of the total assets of
such Fund.>
* * * * * * * * * * *
C-7
<PAGE> 33
ANNEX D
CONSIDERATIONS RELATING TO FINANCIAL FUTURES AND OPTION CONTRACTS
The Fund may purchase and sell financial futures contracts, options on financial
futures or related options for the purpose of hedging its portfolio securities
against declines in the value of such securities, and to hedge against increases
in the cost of securities the Fund intends to purchase. To accomplish such
hedging, the Fund may take an investment position in a futures contract or in an
option which is expected to move in the opposite direction from the position
being hedged. Futures or options utilized for hedging purposes would either be
based on an index of long-term Municipal Obligations (i.e., those with remaining
maturities averaging 15-30 years) or relate to debt securities whose prices are
anticipated by Nuveen Advisory to correlate with the prices of the Municipal
Obligations owned by the Fund. The sale of financial futures or the purchase of
put options on financial futures or on debt securities or indexes is a means of
hedging against the risk that the value of securities owned by the Fund may
decline on account of an increase in interest rates, and the purchase of
financial futures or of call options on financial futures or on debt securities
or indexes is a means of hedging against increases in the cost of the securities
the Fund intends to purchase as a result of a decline in interest rates. Writing
a call option on a futures contract or on debt securities or indexes may serve
as a hedge against a modest decline in prices of Municipal Obligations held in
the Fund's portfolio, and writing a put option on a futures contract or on debt
securities or indexes may serve as a partial hedge against an increase in the
value of Municipal Obligations the Fund intends to acquire. The writing of such
options provides a hedge to the extent of the premium received in the writing
transaction. Regulations of the Commodity Futures Trading Commission ("CFTC")
applicable to the Fund require that transactions in futures and options on
futures be engaged in only for bona-fide hedging purposes, or if the aggregate
initial margin deposits and premiums paid by that Fund do not exceed 5% of the
market value of the Fund's assets. The Fund will not purchase futures unless it
has segregated cash, government securities or high grade liquid debt equal to
the contract price of the futures less any margin on deposit, or unless the long
futures position is covered by the sale of a put option. The Fund will not sell
futures unless the Fund owns the instruments underlying the futures or owns
options on such instruments or owns a portfolio whose market price may be
expected to move in tandem with the market price of the instruments or index
underlying the futures. In addition, the Fund is subject to the tax requirement
that less than 30% of its gross income may be derived from the sale or
disposition of securities held for less than three months. With respect to its
engaging in transactions involving the purchase or writing of put and call
options on debt securities or indexes, the Fund will not purchase such options
if more than 5% of its assets would be invested in the premiums for such
options, and it will only write "covered" or "secured" options, wherein the
securities or cash required to be delivered upon exercise are held by the Fund,
with such cash being maintained in a segregated account. These requirements and
limitations may limit the Fund's ability to engage in hedging transactions.
Description of Financial Futures and Options. A futures contract is a contract
between a seller and a buyer for the sale and purchase of specified property at
a specified future date for a specified price. An option is a contract that
gives the holder of the option the right, but not the obligation, to buy (in the
case of a call option) specified property from, or to sell (in the case of a put
option) specified property to, the writer of the option for a specified price
during a specified period prior to the option's expiration. Financial futures
contracts and options cover specified debt securities (such as U.S. Treasury
securities) or indexes designed to correlate with price movements in certain
categories of debt securities. At least one exchange trades futures contracts on
an index designed to correlate with the long-term municipal bond market.
Financial futures contracts and options on financial futures contracts are
traded on exchanges regulated by the CFTC. Options on certain financial
instruments and financial indexes are traded in securities markets regulated by
the Securities and Exchange Commission. Although futures contracts and options
on specified financial instruments call for settlement by delivery of the
financial instruments covered by the contracts, in most cases positions in these
contracts are closed out in cash by entering into offsetting, liquidating or
closing transactions. Index futures and options are designed for cash settlement
only.
Risks of Futures and Options Transactions. There are risks associated with the
use of futures contracts and options for hedging purposes. Investment in futures
contracts and options involves the risk of imperfect correlation between
movements in the price of the futures contract and options and the price of the
security being hedged. The hedge will not be fully effective where there is
imperfect correlation between the movements in the two financial instruments.
For example, if the price of the futures contract moves more than the price of
the hedged security, a Fund will experience either a loss or gain on the future
which is not completely offset by movements in the price of the hedged
securities. Further, even where perfect correlation between the price movements
does occur, a Fund will sustain a loss at least equal to the commissions on the
financial futures transaction. To compensate for imperfect corrections, the Fund
may purchase or sell futures contracts in a greater dollar amount than the
hedged securities if the volatility of the hedged securities is historically
greater than the volatility of the futures contracts. Conversely, the Fund may
purchase or sell fewer futures contracts if the volatility of the price of the
hedged securities is historically less than that of the futures contracts.
Because of low initial margin deposits made upon the opening of a futures
position, futures transactions involve substantial leverage. As a result,
relatively small movements in the price of the futures contract can result in
substantial unrealized gains or losses. Because the Fund will engage in the
purchase and sale of financial futures contracts solely for hedging purposes,
however, any losses incurred in connection therewith should, if the hedging
strategy is successful, be offset in
D-1
<PAGE> 34
whole or in part by increases in the value of securities held by the Fund or
decreases in the price of securities the Fund intends to acquire.
The Fund expects to liquidate a majority of the financial futures contracts they
enter into through offsetting transactions on the applicable contract market.
There can be no assurance, however, that a liquid secondary market will exist
for any particular futures contract at any specific time. Thus, it may not be
possible to close a futures position. In the event of adverse price movements,
the Fund would continue to be required to make daily cash payments of variation
margin. In such situations, if a Fund has insufficient cash, it may be required
to sell portfolio securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. The inability to close out futures
positions also could have an adverse impact on the Fund's ability to hedge its
portfolio effectively and may expose the Fund to risk of loss. The Fund will
enter into a futures position only if, in the judgment of Nuveen Advisory, there
appears to be an actively traded secondary market for such futures contracts.
The liquidity of a secondary market in a futures contract may be adversely
affected by "daily price fluctuation limits" established by commodity exchanges
which limit the amount of fluctuation in a futures contract price during a
single trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing the
liquidation of open futures positions. Prices have in the past moved the daily
limit on a number of consecutive trading days.
The successful use of transactions in futures also depends on the ability of
Nuveen Advisory to forecast the direction and extent of interest rate movements
within a given time frame. To the extent these prices remain stable during the
period in which a futures contract is held by the Fund or moves in a direction
opposite to that anticipated, the Fund may realize a loss on the hedging
transaction which is not fully or partially offset by an increase in the value
of portfolio securities. As a result, the Fund's total return for such period
may be less than if it had not engaged in the hedging transaction.
The ability of the Fund to engage in transactions in futures contracts may be
limited by the tax requirement that it have less than 30% of its gross income
derived from the sale or other disposition of stock or securities held for less
than three months. Gain from transactions in futures contracts will be taxable
to a Fund's shareholders partially as short-term and partially as long-term
capital gain.
D-2
<PAGE> 35
ANNEX E (TO BE ADDED AS AN ADDITIONAL PARAGRAPH IN ARTICLE SIXTH, PARAGRAPH
(A)(V) OF THE ARTICLES OF INCORPORATION)
For Nuveen California Tax-Free Value Fund
Notwithstanding any provision of law requiring any action to be taken or
authorized by the affirmative vote of the holders of a greater proportion of the
votes of the Nuveen California Tax-Free Value Fund Class common stock shares of
the Corporation (and of the Series of shares comprising such Class) (as used
below in this paragraph, the "California Tax-Free Value Fund Shares"), such
action shall be effective and valid if taken or authorized by the affirmative
vote of a majority of the votes of the California Tax-Free Value Fund Shares
entitled to be cast thereon.
For Nuveen California Insured Tax-Free Value Fund
Notwithstanding any provision of law requiring any action to be taken or
authorized by the affirmative vote of the holders of a greater proportion of the
votes of the Nuveen California Insured Tax-Free Value Fund Class common stock
shares of the Corporation (and of the Series of shares comprising such Class)
(as used below in this paragraph, the "California Insured Tax-Free Value Fund
Shares"), such action shall be effective and valid if taken or authorized by the
affirmative vote of a majority of the votes of the California Insured Tax-Free
Value Fund Shares entitled to be cast thereon.
E-1
<PAGE> 36
NUV-TF
<PAGE> 37
As recently announced, The John Nuveen Company plans to acquire Flagship
Resources Inc., a highly regarded sponsor of municipal bond funds. The purchase
of Flagship will help Nuveen serve a broader set of investors' needs, providing
a range of investment products and services for conservative investors and the
financial advisers who serve them.
A special meeting of shareholders will be held Thursday, December 12, 1996, at
10:00 a.m., Chicago Time, in the 31st floor conference room of John Nuveen &
Co. Incorporated, 333 W. Wacker Drive, Chicago, Illinois. At this meeting, you
will be asked to vote on proposals to make certain changes to how your fund is
organized and managed, facilitating the integration of the Nuveen and Flagship
mutual fund families.
THE BOARD OF YOUR FUND HAS UNANIMOUSLY AGREED THAT THESE PROPOSALS ARE IN THE
BEST INTERESTS OF SHAREHOLDERS AND URGES YOU TO VOTE IN FAVOR OF THE PROPOSALS.
THE INTEGRATION OF NUVEEN AND FLAGSHIP SHOULD LEAD TO THE FOLLOWING BENEFITS:
o Lower operating costs from expanded distribution.
o Access to a wider range of investment products.
o Greater choices in the method for purchasing shares.
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.
---- Please fold at perforation before detaching ----
- --------------------------------------------------------------------------------
PROXY BALLOT
NUVEEN MARYLAND TAX-FREE VALUE FUND
COMMON SHARES
PROXY SOLICITED BY THE BOARD OF TRUSTEES
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1996
The undersigned hereby appoints Anthony T. Dean, Timothy R. Schwertfeger, James
J. Wesolowski and Gifford R. Zimmerman, and each of them, with full power of
substitution, Proxies for the undersigned to represent and vote the common
shares of the undersigned at the Special Meeting of Shareholders of Nuveen
Maryland Tax-Free Value Fund (the "Fund") to be held on December 12, 1996, or
any adjournment or adjournments thereof:
1. Election of Trustees:
NOMINEES: Robert P. Bremner, Lawrence H. Brown, Anthony T. Dean,
Anne E. Impellizzeri, Margaret K. Rosenheim, Peter R. Sawers,
William J. Schneider, Timothy R. Schwertfeger.
2. Approval of a change in the Fund's classification from "diversified" to
"non-diversified".
3. Approval of proposed changes to the Fund's fundamental investment policies.
a) AMT Bonds e) Average Maturity
b) Investment Grade Quality Ratings f) Temporary Investments
c) Illiquid Securities g) Single Bank Limits
d) Unseasoned Issuers
4. Approval of an Agreement and Plan of Reorganization.
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Special Meeting.
- ------------------------------------------------------------------------------
You are encouraged to specify your choices by marking the appropriate boxes ON
THE REVERSE SIDE. If you do not mark any boxes, your Proxy will be voted in
accordance with the Board of Trustees' recommendations. Please sign, date and
return this Proxy card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------
SEE REVERSE SIDE
NUV-MD
<PAGE> 38
<TABLE>
<S><C>
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR ALL NOMINEES AND THE PROPOSALS: Please mark your votes as in this example. /X/
- ----------------------------------------------------------------------------------------------------------------------------------
1. ELECTION OF TRUSTEES: / / FOR / / WITHHOLD authority / / WITHHOLD authority to vote
(SEE REVERSE FOR NOMINEES) all nominees to vote for all nominees for nominees indicated below:
-----------------------------
INSTRUCTIONS:
To grant authority to vote FOR ALL nominees, mark the box on the left above OR do not mark any box above.
To WITHHOLD authority to vote FOR ALL nominees, mark the box in the middle above.
To WITHHOLD authority to vote FOR ANY ONE OR MORE of the nominees, mark the box on the right above AND write each
nominee's name in the space provided.
FOR AGAINST ABSTAIN
2. APPROVAL OF A CHANGE IN THE FUND'S CLASSIFICATION FROM "DIVERSIFIED" TO "NON-DIVERSIFIED". / / / / / /
3. APPROVAL OF PROPOSED CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT POLICIES.
A) AMT BONDS / / / / / /
B) INVESTMENT GRADE QUALITY RATINGS / / / / / /
C) ILLIQUID SECURITIES / / / / / /
D) UNSEASONED ISSUERS / / / / / /
E) AVERAGE MATURITY / / / / / /
F) TEMPORARY INVESTMENTS / / / / / /
G) SINGLE BANK LIMITS / / / / / /
4. APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION. / / / / / /
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE SPECIAL MEETING.
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THE SHARES TO WHICH THIS PROXY RELATES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SUCH SHARES WILL BE VOTED FOR THE
ELECTION OF TRUSTEES AND FOR THE PROPOSALS SET FORTH ON THIS PROXY.
Please be sure to sign and date this Proxy.
- ---------------------------------------------------------------------------
Shareholder sign here ________________________ Date _____________________
Co-owner sign here ________________________ Date _____________________
NOTE: Please sign exactly as your
name appears on this Proxy. If signing
for estates, trusts or corporations,
title or capacity should be stated.
If shares are held jointly, each holder
should sign.
/ / BK NUV-TF NUV-MD
</TABLE>
