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<SEC-DOCUMENT>0000950131-02-001061.txt : 20020415
<SEC-HEADER>0000950131-02-001061.hdr.sgml : 20020415
ACCESSION NUMBER:		0000950131-02-001061
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		16
FILED AS OF DATE:		20020325

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
		CENTRAL INDEX KEY:			0001090116
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-59770
		FILM NUMBER:		02583714

	BUSINESS ADDRESS:	
		STREET 1:		JOHN NUVEEN & CO INC
		STREET 2:		333 WEST WACKER DRIVE
		CITY:			CHICAGO
		STATE:			IL
		ZIP:			60606
		BUSINESS PHONE:		3129177794

	MAIL ADDRESS:	
		STREET 1:		JOHN NUVEEN & CO INC
		STREET 2:		333 WEST WACKER DRIVE
		CITY:			CHICAGO
		STATE:			IL
		ZIP:			60606

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
		CENTRAL INDEX KEY:			0001090116
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-09475
		FILM NUMBER:		02583715

	BUSINESS ADDRESS:	
		STREET 1:		JOHN NUVEEN & CO INC
		STREET 2:		333 WEST WACKER DRIVE
		CITY:			CHICAGO
		STATE:			IL
		ZIP:			60606
		BUSINESS PHONE:		3129177794

	MAIL ADDRESS:	
		STREET 1:		JOHN NUVEEN & CO INC
		STREET 2:		333 WEST WACKER DRIVE
		CITY:			CHICAGO
		STATE:			IL
		ZIP:			60606
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>dn2a.txt
<DESCRIPTION>NUVEEN INSURED  DIVIDEND ADVANTAGE MUNICIPAL FUND
<TEXT>
<PAGE>


     As filed with the Securities and Exchange Commission on March 25, 2002

================================================================================

                                                     1933 Act File No. 333-59770

                                                1940 Act File No. 811-09475


                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   Form N-2

                       (Check appropriate box or boxes)


[ ]  REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X]  Pre-Effective Amendment No. 3

[ ]  Post-Effective Amendment No. _

          and

[ ]  REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]  Amendment No. 3


                Nuveen Insured Dividend Advantage Municipal Fund
          Exact Name of Registrant as Specified in Declaration of Trust
                 333 West Wacker Drive, Chicago, Illinois 60606
 Address of Principal Executive Offices (Number, Street, City, State, Zip Code)
                                 (800) 257-8787
               Registrant's Telephone Number, including Area Code

                              Gifford R. Zimmerman
                          Vice President and Secretary
                              333 West Wacker Drive
                             Chicago, Illinois 60606
  Name and Address (Number, Street, City, State, Zip Code) of Agent for Service
                          Copies of Communications to:

    Stacy H. Winick           Thomas S. Harman              Cynthia Cobden
Bell, Boyd & Lloyd LLC   Morgan, Lewis & Bockius LLP  Simpson Thacher & Bartlett
    70 W. Madison St.         1800 M Street, N.W          425 Lexington Ave.
    Chicago, IL 60602       Washington, D.C. 20036       New York, NY 10017

                 Approximate Date of Proposed Public Offering:

 As soon as practicable after the effective date of this Registration Statement

                             --------------------

     If any of the securities being registered on this form are offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, other than securities offered in connection with a dividend reinvestment
plan, check the following box. [ ]

     It is proposed that this filing will become effective (check appropriate
box)

     [X] when declared effective pursuant to section 8(c)

                             --------------------

       CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
===================================================================================================================
                                                                               Proposed Maximum       Amount of
   Title of Securities Being          Amount           Proposed Maximum       Aggregate Offering     Registration
          Registered             Being Registered   Offering Price Per Unit       Price (1)             Fee (2)
- -------------------------------------------------------------------------------------------------------------------
<S>                              <C>                <C>                       <C>                  <C>
Common Shares, $0.01 par value   30,000,000 Shares           $15.00              $450,000,000         $41,400.00
===================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) $5,520.00 of which has previously been paid.

     The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such dates as the Commission, acting pursuant to said Section 8(a),
may determine.

================================================================================

<PAGE>

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.



                SUBJECT TO COMPLETION, DATED            , 2002


PROSPECTUS

                                         Shares


[LOGO] Nuveen Logo
                                Nuveen Insured
                       Dividend Advantage Municipal Fund

                                 Common Shares
                               $15.00 per share

                                 -------------

   Investment Objectives. The Fund is a newly organized, diversified,
closed-end management investment company. The Fund's investment objectives are:
   . to provide current income exempt from regular federal income tax; and
   . to enhance portfolio value relative to the municipal bond market by
     investing in tax-exempt municipal bonds that the Fund's investment adviser
     believes are underrated or undervalued or that represent municipal market
     sectors that are undervalued.

   Portfolio Contents. Under normal circumstances, the Fund will invest at
least 80% of its net assets in a portfolio of municipal bonds that are exempt
from regular federal income taxes and that are covered by insurance
guaranteeing the timely payment of principal and interest thereon. The Fund
also may invest up to 20% of its net assets in uninsured municipal bonds 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, or other municipal bonds that are investment grade quality. Under
normal circumstances, the Fund expects to be fully invested in the tax-exempt
municipal bonds noted above. The Fund cannot assure you that it will achieve
its investment objectives.

   No Prior History. Because the Fund is newly organized, its common shares
have no history of public trading. Shares of closed-end investment companies
frequently trade at a discount from their net asset value. This risk may be
greater for investors expecting to sell their shares in a relatively short
period after completion of the public offering. The common shares have been
approved for listing on the American Stock Exchange, subject to notice of
issuance. The trading or "ticker" symbol of the common shares is expected to be
"NVG."

                                 -------------


   Investing in common shares involves certain risks. See "Risks" beginning on
page 21.


   Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

                                 -------------

<TABLE>
<CAPTION>
                                                         Per Share Total
                                                         --------- -----
       <S>                                               <C>       <C>
       Public Offering Price                              $15.000    $
       Sales Load                                         $ 0.675    $
       Proceeds to the Fund(1)                            $14.325    $
</TABLE>
- --------
(1)Total expenses of issuance and distribution are estimated to be $       .

   The underwriters expect to deliver the common shares to purchasers on or
about            , 2002.

                                 -------------

Salomon Smith Barney                                         Nuveen Investments
<TABLE>
<CAPTION>
          A.G. Edwards & Sons, Inc.             Prudential Securities
                                  UBS Warburg
          <S>                             <C>
          Fahnestock & Co. Inc.                 Gruntal & Co., L.L.C.
          Janney Montgomery Scott LLC          Legg Mason Wood Walker
                                                   Incorporated
          McDonald Investments Inc.                     Raymond James
          RBC Capital Markets              SunTrust Robinson Humphrey
          Wachovia Securities             Wells Fargo Securities, LLC
</TABLE>

            , 2002

<PAGE>


   You should read this Prospectus, which contains important information about
the Fund, before deciding whether to invest and retain it for future reference.
A Statement of Additional Information, dated            , 2002 and as may be
supplemented, containing additional information about the Fund, has been filed
with the Securities and Exchange Commission and is incorporated by reference in
its entirety into this Prospectus. You may request a free copy of the Statement
of Additional Information, the table of contents of which is on page 40 this
Prospectus, by calling (800) 257-8787 or by writing to the Fund, or you may
obtain a copy (and other information regarding the Fund) from the Securities
and Exchange Commission web site (http://www.sec.gov).


   The Fund's common shares do not represent a deposit or obligation of, and
are not guaranteed or endorsed by, any bank or other insured depository
institution, and are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.

   The underwriters named in this Prospectus may purchase up to
additional common shares from the Fund under certain circumstances.



                                      2

<PAGE>

   You should rely only on the information contained or incorporated by
reference in this Prospectus. The Fund has not authorized anyone to provide you
with different information. The Fund is not making an offer of these securities
in any state where the offer is not permitted. You should not assume that the
information contained in this Prospectus is accurate as of any date other than
the date on the front of this Prospectus.

                                 -------------

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                     Page
                                                                     ----
       <S>                                                           <C>
       Prospectus Summary...........................................   4
       Summary of Fund Expenses.....................................  10
       The Fund.....................................................  12
       Use of Proceeds..............................................  12
       The Fund's Investments.......................................  12
       MuniPreferred Shares and Leverage............................  19
       Risks........................................................  21
       How the Fund Manages Risk....................................  24
       Management of the Fund.......................................  25
       Net Asset Value..............................................  27
       Distributions................................................  27
       Dividend Reinvestment Plan...................................  27
       Description of Shares........................................  28
       Certain Provisions in the Declaration of Trust...............  31
       Repurchase of Fund Shares; Conversion to Open-End Fund.......  32
       Tax Matters..................................................  33
       Other Matters................................................  34
       Underwriting.................................................  36
       Custodian and Transfer Agent.................................  39
       Legal Opinions...............................................  39
       Table of Contents for the Statement of Additional Information  40
</TABLE>


                                 -------------

   Until            , 2002 (25 days after the date of this Prospectus), all
dealers that buy, sell or trade the common shares, whether or not participating
in this offering, may be required to deliver a Prospectus. This is in addition
to the dealers' obligation to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.


                                      3

<PAGE>

                              PROSPECTUS SUMMARY

   This is only a summary. You should review the more detailed information
contained elsewhere in this Prospectus and in the Statement of Additional
Information.

The Fund..............   Nuveen Insured Dividend Advantage Municipal Fund (the
                           "Fund") is a newly organized, diversified,
                           closed-end management investment company. See "The
                           Fund."

The Offering..........   The Fund is offering           common shares of
                           beneficial interest at $15.00 per share through a
                           group of underwriters (the "Underwriters") led by
                           Salomon Smith Barney Inc., Nuveen Investments
                           ("Nuveen"), A.G. Edwards & Sons, Inc., Prudential
                           Securities Incorporated, UBS Warburg LLC, Fahnestock
                           & Co. Inc., First Union Securities, Inc., Gruntal &
                           Co., L.L.C., Janney Montgomery Scott LLC, Legg Mason
                           Wood Walker, Incorporated, McDonald Investments
                           Inc., a KeyCorp Company, Raymond James & Associates,
                           Inc., RBC Dain Rauscher, Inc., SunTrust Capital
                           Markets, Inc., and Wells Fargo Securities, LLC. The
                           common shares of beneficial interest are called
                           "Common Shares" in the rest of this Prospectus. You
                           must purchase at least 100 Common Shares. The Fund
                           has given the Underwriters an option to purchase up
                           to         additional Common Shares to cover orders
                           in excess of           Common Shares. See
                           "Underwriting." Nuveen has agreed to pay (i) all
                           organizational expenses and (ii) offering costs
                           (other than sales load) that exceed $0.03 per Common
                           Share.

Investment Objectives.   The Fund's investment objectives are to provide
                           current income exempt from regular federal income
                           tax and enhance portfolio value relative to the
                           municipal bond market by investing in tax-exempt
                           municipal bonds that the Fund's investment adviser
                           believes are underrated or undervalued or that
                           represent municipal market sectors that are
                           undervalued. Under normal circumstances, the Fund
                           will invest at least 80% of its net assets in a
                           portfolio of municipal bonds that are exempt from
                           regular federal income taxes and that are covered by
                           insurance guaranteeing the timely payment of
                           principal and interest thereon. The Fund also may
                           invest up to 20% of its net assets in (i) uninsured
                           municipal bonds that are 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, or (ii)
                           other municipal bonds that are rated, at the time of
                           investment, within the four highest grades (Baa or
                           BBB or better by Moody's Investor Service, Inc.
                           ("Moody's"), Standard & Poor's, a division of The
                           McGraw-Hill Companies ("S&P") or Fitch Ratings
                           ("Fitch")), or bonds that are unrated but judged to
                           be of comparable quality by the Fund's investment
                           adviser. Under normal circumstances, the Fund
                           expects to be fully invested in the tax-

                                      4

<PAGE>

                           exempt municipal bonds noted above.  The Fund cannot
                           assure you that it will attain its investment
                           objectives. See "The Fund's Investments."

Special Considerations   The Fund expects that a substantial portion of its
                           investments will pay interest that is taxable under
                           the federal alternative minimum tax. If you are, or
                           as a result of investment in the Fund would become,
                           subject to the federal alternative minimum tax, the
                           Fund may not be a suitable investment for you. In
                           addition, distributions of ordinary taxable income
                           (including any net short-term capital gain) will be
                           taxable to shareholders as ordinary income, and
                           capital gain dividends will be subject to capital
                           gains taxes. See "Tax Matters."

Proposed Offering of
MuniPreferred(R) Shares  Subject to market conditions, approximately one to
                           three months after completion of this offering, the
                           Fund intends to offer preferred shares of beneficial
                           interest ("MuniPreferred Shares") representing
                           approximately 35% of the Fund's capital after their
                           issuance. The issuance of MuniPreferred Shares will
                           leverage your investment in Common Shares. Leverage
                           involves special risks. There is no assurance that
                           the Fund will issue MuniPreferred Shares or that, if
                           issued, the Fund's leveraging strategy will be
                           successful. See "Risks--Leverage Risk." The money
                           the Fund obtains by selling the MuniPreferred Shares
                           will be invested in long-term municipal bonds, which
                           generally will pay fixed rates of interest over the
                           life of the bond. The MuniPreferred Shares will pay
                           dividends based on shorter-term rates, which will be
                           reset frequently. So long as the rate of return, net
                           of applicable Fund expenses, on the long-term bonds
                           purchased by the Fund exceeds MuniPreferred Share
                           dividend rates as reset periodically, the investment
                           of the proceeds of the MuniPreferred Shares will
                           generate more income than will be needed to pay
                           dividends on the MuniPreferred Shares. If so, the
                           excess will be used to pay higher dividends to
                           holders of Common Shares ("Common Shareholders").
                           However, the Fund cannot assure you that the
                           issuance of MuniPreferred Shares will result in a
                           higher yield on your Common Shares. Once
                           MuniPreferred Shares are issued, the net asset value
                           and market price of the Common Shares and the yield
                           to Common Shareholders will be more volatile. See
                           "MuniPreferred Shares and Leverage" and "Description
                           of Shares--MuniPreferred Shares."

Investment Adviser....   Nuveen Advisory Corp. ("Nuveen Advisory") will be the
                           Fund's investment adviser. Nuveen Advisory will
                           receive an annual fee, payable monthly, in a maximum
                           amount equal to .65% of the Fund's average daily net
                           assets (including assets attributable to any
                           MuniPreferred Shares that may be outstanding), with
                           lower fee levels for assets that exceed $125
                           million. Nuveen Advisory has contractually agreed to
                           reimburse the Fund for fees and expenses in

                                      5

<PAGE>

                           the amount of .30% of average daily net assets of
                           the Fund for the first five full years of the Fund's
                           operations (through March 31, 2007), and for a
                           declining amount for an additional five years
                           (through March 31, 2012). Nuveen Advisory is a
                           wholly owned subsidiary of The John Nuveen Company.
                           See "Management of the Fund."

Distributions.........   Commencing with the Fund's first dividend, the Fund
                           intends to make regular monthly cash distributions
                           to Common Shareholders at a level rate based on the
                           projected performance of the Fund. The Fund's
                           ability to maintain a level Common Share dividend
                           rate will depend on a number of factors, including
                           dividends payable on the MuniPreferred Shares. As
                           portfolio and market conditions change, the rate of
                           dividends on the Common Shares and the Fund's
                           dividend policy could change. Over time, the Fund
                           will distribute all of its net investment income
                           (after it pays accrued dividends on any outstanding
                           MuniPreferred Shares). In addition, at least
                           annually, the Fund intends to distribute net capital
                           gain and taxable ordinary income, if any, to you so
                           long as the net capital gain and taxable ordinary
                           income are not necessary to pay accrued dividends
                           on, or redeem or liquidate, any MuniPreferred
                           Shares. Your initial distribution is expected to be
                           declared approximately 45 days, and paid
                           approximately 60 to 90 days, from the completion of
                           this offering, depending on market conditions. You
                           may elect to automatically reinvest some or all of
                           your distributions in additional Common Shares under
                           the Fund's Dividend Reinvestment Plan. See
                           "Distributions" and "Dividend Reinvestment Plan."

Listing...............   The Common Shares have been approved for listing on
                           the American Stock Exchange, subject to notice of
                           issuance. See "Description of Shares--Common
                           Shares." The trading or "ticker" symbol of the
                           Common Shares is expected to be "NVG."

Custodian.............   JPMorgan Chase Bank will serve as custodian of the
                           Fund's assets. See "Custodian and Transfer Agent."

Market Price of Shares   Shares of closed-end investment companies frequently
                           trade at prices lower than net asset value. Shares
                           of closed-end investment companies like the Fund
                           that invest predominately in investment grade
                           municipal bonds have during some periods traded at
                           prices higher than net asset value and during other
                           periods have traded at prices lower than net asset
                           value. The Fund cannot assure you that Common Shares
                           will trade at a price higher than net asset value in
                           the future. Net asset value will be reduced
                           immediately following the offering by the sales load
                           and the amount of organization and offering expenses
                           paid by the Fund. See "Use of Proceeds." In addition
                           to net asset value, market price may be affected by
                           such factors as dividend levels (which are in turn
                           affected by expenses), call protection, dividend
                           stability, portfolio credit quality and liquidity
                           and market supply and demand. See "MuniPreferred
                           Shares

                                      6

<PAGE>

                           and Leverage," "Risks," "Description of Shares,"
                           "Repurchase of Fund Shares; Conversion to Open-End
                           Fund" and the Statement of Additional Information
                           under "Repurchase of Fund Shares; Conversion to
                           Open-End Fund." The Common Shares are designed
                           primarily for long-term investors, and you should
                           not view the Fund as a vehicle for trading purposes.


Special Risk
Considerations........   No Operating History.  The Fund is a newly organized,
                           diversified, closed-end management investment
                           company with no history of operations.


                         Interest Rate Risk.  Generally, when market interest
                           rates fall, bond prices rise, and vice versa.
                           Interest rate risk is the risk that the municipal
                           bonds in the Fund's portfolio will decline in value
                           because of increases in market interest rates. The
                           prices of longer-term bonds fluctuate more than
                           prices of shorter-term bonds as interest rates
                           change. Conversely, the values of lower-rated and
                           comparable unrated debt securities are less likely
                           than those of investment grade and comparable
                           unrated debt securities to fluctuate inversely with
                           changes in interest rates. Because the Fund will
                           invest primarily in long-term bonds, the Common
                           Share net asset value and market price per share
                           will fluctuate more in response to changes in market
                           interest rates than if the Fund invested primarily
                           in shorter-term bonds. The Fund's use of leverage,
                           as described below, will tend to increase Common
                           Share interest rate risk. See "Risks--Interest Rate
                           Risk."

                         Credit Risk.  Credit risk is the risk that one or more
                           municipal bonds in the Fund's portfolio will decline
                           in price, or fail to pay interest or principal when
                           due, because the issuer of the bond experiences a
                           decline in its financial status. See "Risks--Credit
                           Risk."

                         Leverage Risk.  The use of leverage through the
                           issuance of MuniPreferred Shares creates an
                           opportunity for increased Common Share net income
                           and returns, but also creates special risks for
                           Common Shareholders. There is no assurance that the
                           Fund's leveraging strategy will be successful. It is
                           anticipated that MuniPreferred dividends will be
                           based on shorter-term municipal bond rates of return
                           (which would be redetermined periodically, pursuant
                           to an auction process), and that the Fund will
                           invest the proceeds of the MuniPreferred Shares
                           offering in long-term, typically fixed rate,
                           municipal bonds. So long as the Fund's municipal
                           bond portfolio provides a higher rate of return (net
                           of Fund expenses) than the MuniPreferred dividend
                           rate, as reset periodically, the leverage will cause
                           Common Shareholders to receive a higher current rate
                           of return than if the Fund were not leveraged. If,
                           however, long and/or short-term rates rise, the
                           MuniPreferred dividend rate could exceed the rate of
                           return on long-term bonds held by the Fund that were

                                      7

<PAGE>


                           acquired during periods of generally lower interest
                           rates, reducing return to Common Shareholders. In
                           addition, the Fund will pay (and Common Shareholders
                           will bear) any costs and expenses relating to the
                           issuance and ongoing maintenance of the
                           MuniPreferred Shares (for example, distribution
                           related expenses such as a participation fee paid at
                           what it expects will be an annual rate of 0.25% of
                           MuniPreferred Share liquidation preference to
                           broker-dealers participating in MuniPreferred Share
                           auctions). Leverage creates two major types of risks
                           for Common Shareholders:


                            .   the likelihood of greater volatility of net
                                asset value and market price of Common Shares,
                                because changes in the value of the Fund's bond
                                portfolio (including bonds bought with the
                                proceeds of the MuniPreferred Shares offering)
                                are borne entirely by the Common Shareholders;
                                and

                            .   the possibility either that Common Share income
                                will fall if the MuniPreferred dividend rate
                                rises, or that Common Share income will
                                fluctuate because the MuniPreferred dividend
                                rate varies.

                           See "Risks--Leverage Risk."

                         Municipal Bond Market Risk.  The amount of public
                           information available about the municipal bonds in
                           the Fund's portfolio is generally less than that for
                           corporate equities or bonds, and the investment
                           performance of the Fund may therefore be more
                           dependent on the analytical abilities of Nuveen
                           Advisory than if the Fund were a stock fund or
                           taxable bond fund. The secondary market for
                           municipal bonds also tends to be less well-developed
                           or liquid than many other securities markets, which
                           may adversely affect the Fund's ability to sell its
                           bonds at attractive prices. See "Risks--Municipal
                           Bond Market Risk."


                  MunicipalBond Insurance.  In the event Moody's, S&P or Fitch
                           (or all of them) should downgrade its assessment of
                           the claims-paying ability of a particular insurer,
                           it (or they) could also be expected to downgrade the
                           ratings assigned to municipal bonds insured by such
                           insurer, and municipal bonds insured under Portfolio
                           Insurance (as defined below) issued by such insurer
                           also would be of reduced quality in the portfolio of
                           the Fund. Any such downgrade could have an adverse
                           impact on the net asset value and market price of
                           the Common Shares.



                           In addition, the Fund may be subject to certain
                           restrictions on investments imposed by guidelines of
                           the insurance companies issuing Portfolio Insurance.
                           The Fund does not expect these guidelines to prevent
                           Nuveen Advisory from managing the Fund's portfolio
                           in accordance with the Fund's investment objective
                           and policies.


                                      8

<PAGE>


                         Anti-Takeover Provisions.  The Fund's Declaration of
                           Trust (the "Declaration") includes provisions that
                           could limit the ability of other entities or persons
                           to acquire control of the Fund or convert the Fund
                           to open-end status. The provisions of the
                           Declaration described above could have the effect of
                           depriving the Common Shareholders of opportunities
                           to sell their Common Shares at a premium over the
                           then current market price of the Common Shares. See
                           "Certain Provisions in the Declaration of Trust" and
                           "Risks--Anti-Takeover Provisions."


                                      9

<PAGE>

                           SUMMARY OF FUND EXPENSES

   The following table assumes the issuance of MuniPreferred Shares in an
amount equal to 35% of the Fund's capital (after their issuance), and shows
Fund expenses both as a percentage of net assets attributable to Common Shares
and as a percentage of total net assets.

<TABLE>
<S>                                                        <C>
Shareholder Transaction Expenses
Sales Load Paid by You (as a percentage of offering price)        4.50%
Dividend Reinvestment Plan Fees...........................        None(1)

                                                            Percentage of Net
                                                           Assets Attributable
                                                           to Common Shares(2)
                                                           -------------------
Annual Expenses
Management Fees...........................................         .98%
Other Expenses............................................         .31%

                                                                  ----
Total Annual Expenses.....................................        1.29%
Fee and Expense Reimbursement (Years 1-5).................        (.46%)(3)

                                                                  ----
Total Net Annual Expenses (Years 1-5).....................         .83%(3)

                                                                  ----
</TABLE>
- --------
(1)You will be charged a $2.50 service charge and pay brokerage charges if you
   direct the Plan Agent to sell your Common Shares held in a dividend
   reinvestment account.

(2)Stated as percentages of the Fund's total net assets, and again assuming the
   issuance of MuniPreferred Shares in an amount equal to 35% of the Fund's
   capital (after their issuance), the Fund's expenses would be estimated to be
   as follows:
<TABLE>
<CAPTION>
                                                                      Percentage
                                                                       of Total
                                                                         Net
                                                                        Assets
                                                                      ----------
<S>                                                                   <C>
Annual Expenses
Management Fees......................................................     .64%
Other Expenses.......................................................     .20%

                                                                         ----
Total Annual Expenses................................................     .84%
Fees and Expense Reimbursement (Years 1-5)...........................    (.30%)(3)

                                                                         ----
Total Net Annual Expenses (Years 1-5)................................     .54%(3)

                                                                         ----
</TABLE>

(3)Nuveen Advisory has contractually agreed to reimburse the Fund for fees and
   expenses in the amount of .30% of average daily net assets for the first 5
   full years of the Fund's operations, .25% of average daily net assets in
   year 6, .20% in year 7, .15% in year 8, .10% in year 9 and .05% in year 10.
   Without the reimbursement, "Total Net Annual Expenses" would be estimated to
   be 1.29% of average daily net assets attributable to Common Shares and .84%
   of average daily net assets. Nuveen has agreed to pay (i) all organizational
   expenses and (ii) offering costs (other than sales load) that exceed $0.03
   per Common Share (.20% of offering price).

   The purpose of the table above is to help you understand all fees and
expenses that you, as a Common Shareholder, would bear directly or indirectly.
The expenses shown in the table are based on estimated amounts for the Fund's
first year of operations and assume that the Fund issues approximately
15,000,000 Common Shares. See "Management of the Fund" and "Dividend
Reinvestment Plan."

                                      10

<PAGE>

   The following example illustrates the expenses (including the sales load of
$45) that you would pay on a $1,000 investment in Common Shares, assuming (1)
total net annual expenses of .83% of net assets attributable to Common Shares
in years 1 through 5, increasing to 1.22% in year 10 and (2) a 5% annual
return:(1)

                       1 Year 3 Years 5 Years 10 Years(2)
                       ------ ------- ------- -----------
                        $53     $70     $89      $158

   The example should not be considered a representation of future expenses.
Actual expenses may be higher or lower.
- --------
(1)The example assumes that the estimated Other Expenses set forth in the
   Annual Expenses table are accurate, that fees and expenses increase as
   described in note 2 below and that all dividends and distributions are
   reinvested at net asset value. Actual expenses may be greater or less than
   those assumed. Moreover, the Fund's actual rate of return may be greater or
   less than the hypothetical 5% return shown in the example. The Fund's
   expenses stated as a percentage of the Fund's total net assets and otherwise
   based on the assumptions in the example would be: 1 year $50; 3 years $62;
   5 years $74; and 10 years $120.
(2)Assumes reimbursement of fees and expenses of .25% of average daily net
   assets in year 6, .20% in year 7, .15% in year 8, .10% in year 9 and .05% in
   year 10. Nuveen Advisory has not agreed to reimburse the Fund for any
   portion of its fees and expenses beyond March 31, 2012. See "Management of
   the Fund--Investment Management Agreement."

                                      11

<PAGE>

                                   THE FUND

   The Fund is a newly organized, diversified, closed-end management investment
company registered under the 1940 Act. The Fund was organized as a
Massachusetts business trust on July 12, 1999, pursuant to a Declaration
governed by the laws of the Commonwealth of Massachusetts. As a newly organized
entity, the Fund has no operating history. The Fund's principal office is
located at 333 West Wacker Drive, Chicago, Illinois 60606, and its telephone
number is (800) 257-8787.

                                USE OF PROCEEDS

   The net proceeds of the offering of Common Shares will be approximately
$           ($           if the Underwriters exercise the over-allotment option
in full) after payment of the estimated organization and offering costs. Nuveen
has agreed to pay (i) all organizational expenses and (ii) offering costs
(other than sales load) that exceed $0.03 per Common Share. The Fund will
invest the net proceeds of the offering in accordance with the Fund's
investment objectives and policies as stated below. It is presently anticipated
that the Fund will be able to invest substantially all of the net proceeds in
municipal bonds that meet those investment objectives and policies within three
months after the completion of the offering. Pending such investment, it is
anticipated that the proceeds will be invested in short-term, tax-exempt
securities.

                            THE FUND'S INVESTMENTS

Investment Objectives and Policies

   The Fund's investment objectives are:

  .  to provide current income exempt from regular federal income tax; and

  .  to enhance portfolio value relative to the municipal bond market by
     investing in tax-exempt municipal bonds that Nuveen Advisory believes are
     underrated or undervalued or that represent municipal market sectors that
     are undervalued.

   Underrated municipal bonds are those whose ratings do not, in Nuveen
Advisory's opinion, reflect their true creditworthiness. Undervalued municipal
bonds are bonds that, in Nuveen Advisory's opinion, are worth more than the
value assigned to them in the marketplace. Nuveen Advisory may at times believe
that bonds associated with a particular municipal market sector (for example,
electric utilities), or issued by a particular municipal issuer, are
undervalued. Nuveen Advisory may purchase such a bond for the Fund's portfolio
because it represents a market sector or issuer that Nuveen Advisory considers
undervalued, even if the value of the particular bond appears to be consistent
with the value of similar bonds. Municipal bonds of particular types (e.g.,
hospital bonds, industrial revenue bonds or bonds issued by a particular
municipal issuer) may be undervalued because there is a temporary excess of
supply in that market sector, or because of a general decline in the market
price of municipal bonds of the market sector for reasons that do not apply to
the particular municipal bonds that are considered undervalued. The Fund's
investment in underrated or undervalued municipal bonds will be based on Nuveen
Advisory's belief that their yield is higher than that available on bonds
bearing equivalent levels of interest rate risk, credit risk and other forms of
risk, and that their prices will ultimately rise (relative to the market) to
reflect their true value. The Fund attempts to increase its portfolio value
relative to the municipal bond market by prudent selection of municipal bonds
regardless of the direction the market may move. Any capital appreciation
realized by the Fund will generally result in the distribution of taxable
capital gains to Common Shareholders.

                                      12

<PAGE>

   Under normal market conditions, the Fund will invest at least 80% of its net
assets in a portfolio of municipal bonds that are exempt from regular federal
income taxes and that are covered by insurance guaranteeing the timely payment
of principal and interest thereon. The Fund also may invest up to 20% of its
net assets in (i) uninsured municipal bonds that are 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, or (ii) other
municipal bonds that are rated, at the time of investment, within the four
highest grades (Baa or BBB or better by Moody's, S&P or Fitch) or are unrated
but judged to be of comparable quality by Nuveen Advisory. Under normal market
conditions, the Fund expects to be fully invested (at least 95% of its assets)
in such tax-exempt municipal bonds. The foregoing credit quality policy applies
only at the time a security is purchased, and the Fund is not required to
dispose of a security in the event that a rating agency downgrades its
assessment of the credit characteristics of a particular issue. In determining
whether to retain or sell such a security, Nuveen Advisory may consider such
factors as Nuveen Advisory's assessment of the credit quality of the issuer of
such security, the price at which such security could be sold and the rating,
if any, assigned to such security by other rating agencies. A general
description of Moody's, S&P's and Fitch's ratings of municipal bonds is set
forth in Appendix A to the Statement of Additional Information. The Fund may
also invest in securities of other open- or closed-end investment companies
that invest primarily in municipal bonds of the types in which the Fund may
invest directly. See "--Other Investment Companies."


   Each insured municipal bond that the Fund acquires will be (1) covered by an
insurance policy applicable to a specific security and obtained by the issuer
of the security or a third party at the time of original issuance ("Original
Issue Insurance"), (2) covered by an insurance policy applicable to a specific
security and obtained by the Fund or a third party subsequent to the time of
original issuance ("Secondary Market Insurance"), or (3) covered by a master
municipal insurance policy purchased by the Fund ("Portfolio Insurance"). The
Fund, as a non-fundamental policy that can be changed by the Board of Trustees,
only will buy Portfolio Insurance from insurers whose claims-paying ability
Moody's rates "Aaa" or S&P or Fitch rates "AAA."


   The Fund also may invest up to 20% of its net assets in uninsured municipal
bonds that are entitled to the benefit of an escrow or trust account that
contains securities issued or guaranteed by the U.S. Government or U.S.
Government agencies backed by the full faith and credit of the United States,
and sufficient in amount to ensure the payment of interest and principal on the
original interest payment and maturity dates ("collateralized obligations").
These collateralized obligations generally will not be insured and will
include, but are not limited to, municipal bonds that have been (1) advance
refunded where the proceeds of the refunding have been used to buy U.S.
Government or U.S. Government agency securities that are placed in escrow and
whose interest or maturing principal payments, or both, are sufficient to cover
the remaining scheduled debt service on that municipal bond; or (2) issued
under state or local housing finance programs that use the issuance proceeds to
fund mortgages that are then exchanged for U.S. Government or U.S. Government
agency securities and deposited with a trustee as security for those municipal
bonds. These collaterlized obligations are normally regarded as having the
credit characteristics of the underlying U.S. Government or U.S. Government
agency securities.

   The credit quality of companies that provide insurance on bonds will affect
the value of those bonds. Although the insurance feature reduces certain
financial risks, the premiums for insurance and the higher market price paid
for insured obligations may reduce the Fund's income. Insurance generally will
be obtained from insurers with a claims-paying ability rated Aaa by Moody's or
AAA by S&P or Fitch. The insurance feature does not guarantee the market value
of the insured obligations or the net asset value of the Common Shares.

                                      13

<PAGE>

   Upon Nuveen Advisory's recommendation, during temporary defensive periods
and in order to keep the Fund's cash fully invested, including the period
during which the net proceeds of the offering are being invested, the Fund may
invest up to 100% of its net assets in short-term investments including high
quality, short-term securities that may be either tax-exempt or taxable. The
Fund intends to invest in taxable short-term investments only in the event that
suitable tax-exempt short-term investments are not available at reasonable
prices and yields. Investment in taxable short-term investments would result in
a portion of your dividends being subject to regular federal income taxes. For
more information, see the Statement of Additional Information.

   The Fund cannot change its investment objectives without the approval of the
holders of a "majority of the outstanding" Common Shares and MuniPreferred
Shares voting together as a single class, and of the holders of a "majority of
the outstanding" MuniPreferred Shares voting as a separate class. When used
with respect to particular shares of the Fund, a "majority of the outstanding"
shares means (i) 67% or more of the shares present at a meeting, if the holders
of more than 50% of the shares are present or represented by proxy, or (ii)
more than 50% of the shares, whichever is less. See "Description of
Shares--MuniPreferred Shares--Voting Rights" and the Statement of Additional
Information under "Description of Shares--MuniPreferred Shares--Voting Rights"
for additional information with respect to the voting rights of holders of
MuniPreferred Shares.

   If you are, or as a result of investment in the Fund would become, subject
to the federal alternative minimum tax, the Fund may not be a suitable
investment for you because the Fund expects that a substantial portion of its
investments will pay interest that is taxable under the federal alternative
minimum tax. Special rules apply to corporate holders. In addition, capital
gain dividends will be subject to capital gains taxes. See "Tax Matters."

Municipal Bonds

   Municipal bonds are either general obligation or revenue bonds and typically
are issued to finance public projects (such as roads or public buildings), to
pay general operating expenses, or to refinance outstanding debt. Municipal
bonds may also be issued for private activities, such as housing, medical and
educational facility construction, or for privately owned industrial
development and pollution control projects. General obligation bonds are backed
by the full faith and credit, or taxing authority, of the issuer and may be
repaid from any revenue source; revenue bonds may be repaid only from the
revenues of a specific facility or source. The Fund also may purchase municipal
bonds that represent lease obligations. These carry special risks because the
issuer of the bonds may not be obligated to appropriate money annually to make
payments under the lease. In order to reduce this risk, the Fund will only
purchase municipal bonds representing lease obligations where Nuveen Advisory
believes the issuer has a strong incentive to continue making appropriations
until maturity.

   The municipal bonds in which the Fund will invest are generally issued by
states, municipalities and local authorities and certain possessions and
territories of the United States (such as Puerto Rico or Guam), and pay
interest that, in the opinion of bond counsel to the issuer (or on the basis of
other authority believed by Nuveen Advisory to be reliable), is exempt from
regular federal income taxes, although the interest may be subject to the
federal alternative minimum tax. The Fund may invest in municipal bonds issued
by United States territories (such as Puerto Rico or Guam) that are exempt from
regular federal income taxes.

                                      14

<PAGE>

   The yields on municipal bonds depend on a variety of factors, including
prevailing interest rates and the condition of the general money market and the
municipal bond market, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The market value of municipal bonds
will vary with changes in interest rate levels and as a result of changing
evaluations of the ability of their issuers to meet interest and principal
payments.

   The Fund will primarily invest in municipal bonds with long-term maturities
in order to maintain a weighted average maturity of 15-30 years, but the
weighted average maturity of obligations held by the Fund may be shortened,
depending on market conditions. The Fund generally will select obligations
which may not be redeemed at the option of the issuer for approximately seven
to nine years.

Municipal Bond Insurance

   Each insured municipal bond the Fund acquires will be covered by Original
Issue Insurance, Secondary Market Insurance or Portfolio Insurance. The Fund
expects initially to emphasize investments in municipal bonds insured under
bond-specific insurance policies (i.e.,Original Issue or Secondary Market
Insurance). The Fund may obtain Portfolio Insurance from the insurers described
in Appendix C to the Statement of Additional Information. The Fund, as a
non-fundamental policy that can be changed by the Board of Trustees, will only
obtain policies of Portfolio Insurance issued by insurers whose claims-paying
ability is rated "Aaa" by Moody's or "AAA" by S&P or Fitch. There is no limit
on the percentage of the Fund's assets that may be invested in municipal bonds
insured by any one insurer.


   Municipal bonds covered by Original Issue Insurance or Secondary Market
Insurance are themselves typically assigned a rating of "Aaa" or "AAA", as the
case may be, by virtue of the rating of the "Aaa" or "AAA" claims-paying
ability of the insurer and would generally be assigned a lower rating if the
ratings were based primarily upon the credit characteristics of the issuer
without regard to the insurance feature. By way of contrast, the ratings, if
any, assigned to municipal bonds insured under Portfolio Insurance will be
based primarily upon the credit characteristics of the issuer, without regard
to the insurance feature, and generally will carry a rating that is below "Aaa"
or "AAA." While in the portfolio of the Fund, however, a municipal bond backed
by Portfolio Insurance will effectively be of the same credit quality as a
municipal bond issued by an issuer of comparable credit characteristics that is
backed by Original Issue Insurance or Secondary Market Insurance.



   The Fund's policy of investing in municipal bonds insured by insurers whose
claims-paying ability is rated "Aaa" or "AAA" applies only at the time of
purchase of a security, and the Fund will not be required to dispose of the
securities in the event Moody's, S&P or Fitch, as the case may be, downgrades
its assessment of the claims-paying ability of a particular insurer or the
credit characteristics of a particular issuer. In this connection, it should be
noted that in the event Moody's, S&P or Fitch (or all of them) should downgrade
its assessment of the claims-paying ability of a particular insurer, it (or
they) could also be expected to downgrade the ratings assigned to municipal
bonds insured by such insurer, and municipal bonds insured under Portfolio
Insurance issued by such insurer also would be of reduced quality in the
portfolio of the Fund. Moody's, S&P and Fitch continually assess the
claims-paying ability of insurers and the credit characteristics of issuers,
and there can be no assurance that they will not downgrade their assessments
subsequent to the time the Fund purchases securities.


   The value of municipal bonds covered by Portfolio Insurance that are in
default or in significant risk of default will be determined by separately
establishing a value for the municipal bond and a value for the Portfolio
Insurance.

                                      15

<PAGE>

   Original Issue Insurance. Original Issue Insurance is purchased with respect
to a particular issue of municipal bonds by the issuer thereof or a third party
in conjunction with the original issuance of such municipal bonds. Under this
insurance, the insurer unconditionally guarantees to the holder of the
municipal bond the timely payment of principal and interest on such obligations
when and as these payments become due but not paid by the issuer, except that
in the event of the acceleration of the due date of the principal by reason of
mandatory or optional redemption (other than acceleration by reason of a
mandatory sinking fund payment), default or otherwise, the payments guaranteed
may be made in the amounts and at the times as payment of principal would have
been due had there not been any acceleration. The insurer is responsible for
these payments less any amounts received by the holder from any trustee for the
municipal bond issuer or from any other source. Original Issue Insurance does
not guarantee payment on an accelerated basis, the payment of any redemption
premium (except with respect to certain premium payments in the case of certain
small issue industrial development and pollution control municipal bonds), the
value of the Fund's shares, the market value of municipal bonds, or payments of
any tender purchase price upon the tender of the municipal bonds. Original
Issue Insurance also does not insure against nonpayment of principal or
interest on municipal bonds resulting from the insolvency, negligence or any
other act or omission of the trustee or other paying agent for these bonds.

   Original Issue Insurance remains in effect as long as the municipal bonds it
covers remain outstanding and the insurer remains in business, regardless of
whether the Fund ultimately disposes of these municipal bonds. Consequently,
Original Issue Insurance may be considered to represent an element of market
value with respect to the municipal bonds so insured, but the exact effect, if
any, of this insurance on the market value cannot be estimated.

   Secondary Market Insurance. Subsequent to the time of original issuance of a
municipal bond, the Fund or a third party may, upon the payment of a single
premium, purchase insurance on that security. Secondary Market Insurance
generally provides the same type of coverage as Original Issue Insurance and,
as with Original Issue Insurance, Secondary Market Insurance remains in effect
as long as the municipal bonds it covers remain outstanding and the insurer
remains in business, regardless of whether the Fund ultimately disposes of
these municipal bonds.

   One of the purposes of acquiring Secondary Market Insurance with respect to
a particular municipal bond would be to enable the Fund to enhance the value of
the security. The Fund, for example, might seek to purchase a particular
municipal bond and obtain Secondary Market Insurance, for it if, in Nuveen
Advisory's opinion, the market value of the security, as insured, less the cost
of the Secondary Market Insurance would exceed the current value of the
security without insurance. Similarly, if the Fund owns but wishes to sell a
municipal bond that is then covered by Portfolio Insurance, the Fund might seek
to obtain Secondary Market Insurance for it if, in Nuveen Advisory's opinion,
the net proceeds of the Fund's sale of the security, as insured, less the cost
of the Secondary Market Insurance would exceed the current value of the
security. In determining whether to insure municipal bonds the Fund owns, an
insurer will apply its own standards, which correspond generally to the
standards it has established for determining the insurability of new issues of
municipal bonds. See "--Original Issue Insurance" above.

   Portfolio Insurance. Portfolio Insurance guarantees the payment of principal
and interest on specified eligible municipal bonds purchased by the Fund.
Except as described below, Portfolio Insurance generally provides the same type
of coverage as is provided by Original Issue Insurance or Secondary Market
Insurance. Municipal bonds insured under a Portfolio Insurance policy would

                                      16

<PAGE>

generally not be insured under any other policy. A municipal bond is eligible
for coverage under a policy if it meets certain requirements of the insurer.
Portfolio Insurance is intended to reduce financial risk, but the cost thereof
and compliance with investment restrictions imposed under the policy will
reduce the yield to shareholders of the Fund.

   If a municipal bond is already covered by Original Issue Insurance or
Secondary Market Insurance, then the security is not required to be
additionally insured under any Portfolio Insurance that the Fund may purchase.
All premiums respecting municipal bonds covered by Original Issue Insurance or
Secondary Market Insurance are paid in advance by the issuer or other party
obtaining the insurance.

   Portfolio Insurance policies are effective only as to municipal bonds owned
by and held by the Fund, and do not cover municipal bonds for which the
contract for purchase fails. A "when-issued" municipal obligation will be
covered under a Portfolio Insurance policy upon the settlement date of the
issue of such "when-issued" municipal bond.

   In determining whether to insure municipal bonds held by the Fund, an
insurer will apply its own standards, which correspond generally to the
standards it has established for determining the insurability of new issues of
municipal bonds. See "--Original Issue Insurance" above.

   Each Portfolio Insurance policy will be noncancellable and will remain in
effect so long as the Fund is in existence, the municipal bonds covered by the
policy continue to be held by the Fund, and the Fund pays the premiums for the
policy. Each insurer will generally reserve the right at any time upon 90 days'
written notice to the Fund to refuse to insure any additional bonds purchased
by the Fund after the effective date of such notice. The Fund's Board of
Trustees generally will reserve the right to terminate each policy upon seven
days' written notice to an insurer if it determines that the cost of such
policy is not reasonable in relation to the value of the insurance to the Fund.

   Each Portfolio Insurance policy will terminate as to any municipal bond that
has been redeemed from or sold by the Fund on the date of redemption or the
settlement date of sale, and an insurer will not have any liability thereafter
under a policy for any municipal bond, except that if the redemption date or
settlement date occurs after a record date and before the related payment date
for any municipal bond, the policy will terminate for that municipal bond on
the business day immediately following the payment date. Each policy will
terminate as to all municipal bonds covered thereby on the date on which the
last of the covered municipal bonds mature, are redeemed or are sold by the
Fund.

   One or more Portfolio Insurance policies may provide the Fund, pursuant to
an irrevocable commitment of the insurer, with the option to exercise the right
to obtain permanent insurance ("Permanent Insurance") for a municipal bond that
is sold by the Fund. The Fund would exercise the right to obtain Permanent
Insurance upon payment of a single, predetermined insurance premium payable
from the sale proceeds of the municipal bond. The Fund expects to exercise the
right to obtain Permanent Insurance for a municipal bond only if, in Nuveen
Advisory's opinion, upon the exercise the net proceeds from the sale of the
municipal bond, as insured, would exceed the proceeds from the sale of the
security without insurance.

   The Permanent Insurance premium for each municipal bond is determined based
upon the insurability of each security as of the date of purchase and will not
be increased or decreased for any change in the security's creditworthiness
unless the security is in default as to payment of principal or interest, or
both. If such event occurs, the Permanent Insurance premium will be subject to
an increase predetermined at the date of the Fund's purchase.

                                      17

<PAGE>

   The Fund generally intends to retain any insured bonds covered by Portfolio
Insurance that are in default or in significant risk of default and to place a
value on the insurance, which ordinarily will be the difference between the
market value of the defaulted bond and the market value of similar bonds of
minimum investment grade (that is, rated "Baa" or "BBB") that are not in
default. In certain circumstances, however, Nuveen Advisory may determine that
an alternative value for the insurance, such as the difference between the
market value of the defaulted bond and either its par value or the market value
of similar bonds that are not in default or in significant risk of default, is
more appropriate. Except as described above for bonds covered by Portfolio
Insurance that are in default or subject to significant risk of default, the
Fund will not place any value on the Portfolio Insurance in valuing the
municipal bonds it holds.

   Because each Portfolio Insurance policy will terminate for municipal bonds
sold by the Fund on the date of sale, in which event the insurer will be liable
only for those payments of principal and interest that are then due and owing
(unless Permanent Insurance is obtained by the Fund), the provision for this
insurance will not enhance the marketability of the Fund's bonds, whether or
not the bonds are in default or in significant risk of default. On the other
hand, because Original Issue Insurance and Secondary Market Insurance generally
will remain in effect as long as the municipal bonds they cover are
outstanding, these insurance policies may enhance the marketability of these
bonds even when they are in default or in significant risk of default, but the
exact effect, if any, on marketability, cannot be estimated. Accordingly, the
Fund may determine to retain or, alternatively, to sell municipal bonds covered
by Original Issue Insurance or Secondary Market Insurance that are in default
or in significant risk of default.

   Premiums for a Portfolio Insurance policy are paid monthly, and are adjusted
for purchases and sales of municipal bonds covered by the policy during the
month. The yield on the Fund is reduced to the extent of the insurance premiums
it pays. Depending upon the characteristics of the municipal bonds held by the
Fund, the annual premium rate for policies of Portfolio Insurance is estimated
to range from 12 to 18 basis points of the value of the municipal bonds covered
under the policy.

When-Issued and Delayed Delivery Transactions

   The Fund may buy and sell municipal bonds on a when-issued or delayed
delivery basis, making payment or taking delivery at a later date, normally
within 15 to 45 days of the trade date. This type of transaction may involve an
element of risk because no interest accrues on the bonds prior to settlement
and, because bonds are subject to market fluctuations, the value of the bonds
at time of delivery may be less (or more) than cost. A separate account of the
Fund will be established with its custodian consisting of cash, cash
equivalents, or liquid securities having a market value at all times at least
equal to the amount of the commitment.

Other Investment Companies

   The Fund may invest up to 10% of its net assets in securities of other open-
or closed-end investment companies that invest primarily in municipal bonds of
the types in which the Fund may invest directly. The Fund generally expects to
invest in other investment companies either during periods when it has large
amounts of uninvested cash, such as the period shortly after the Fund receives
the proceeds of the offering of its Common Shares or MuniPreferred Shares, or
during periods when

                                      18

<PAGE>

there is a shortage of attractive, high-yielding municipal bonds available in
the market. As a stockholder in an investment company, the Fund will bear its
ratable share of that investment company's expenses, and would remain subject
to payment of the Fund's advisory and administrative fees with respect to
assets so invested. Common Shareholders would therefore be subject to
duplicative expenses to the extent the Fund invests in other investment
companies. Nuveen Advisory will take expenses into account when evaluating the
investment merits of an investment in the investment company relative to
available municipal bond investments. In addition, the securities of other
investment companies may also be leveraged and will therefore be subject to the
same leverage risks described herein. As described in the section entitled
"Risks," the net asset value and market value of leveraged shares will be more
volatile and the yield to shareholders will tend to fluctuate more than the
yield generated by unleveraged shares.

                       MUNIPREFERRED SHARES AND LEVERAGE

   Subject to market conditions, approximately one to three months after the
completion of the offering of the Common Shares, the Fund intends to offer
MuniPreferred Shares representing approximately 35% of the Fund's capital
immediately after the issuance of the MuniPreferred Shares. The MuniPreferred
Shares will have complete priority upon distribution of assets over the Common
Shares. The issuance of MuniPreferred Shares will leverage the Common Shares.
Leverage involves special risks. There is no assurance that the Fund's
leveraging strategy will be successful. Although the timing and other terms of
the offering of the MuniPreferred Shares will be determined by the Fund's Board
of Trustees, the Fund expects to invest the proceeds of the MuniPreferred
Shares offering in long-term municipal bonds. The MuniPreferred Shares will pay
dividends based on shorter-term rates (which would be redetermined periodically
by an auction process). So long as the Fund's portfolio is invested in
securities that provide a higher rate of return than the dividend rate of the
MuniPreferred Shares (after taking expenses into consideration), the leverage
will cause you to receive a higher current rate of return than if the Fund were
not leveraged.

   Changes in the value of the Fund's bond portfolio (including bonds bought
with the proceeds of the MuniPreferred Shares offering) will be borne entirely
by the Common Shareholders. If there is a net decrease (or increase) in the
value of the Fund's investment portfolio, the leverage will decrease (or
increase) the net asset value per Common Share to a greater extent than if the
Fund were not leveraged. During periods in which the Fund is using leverage,
the fees paid to Nuveen Advisory for advisory services will be higher than if
the Fund did not use leverage because the fees paid will be calculated on the
basis of the Fund's total net assets, including the proceeds from the issuance
of MuniPreferred Shares.

   For tax purposes, the Fund is currently required to allocate net capital
gain and other taxable income, if any, between the Common Shares and
MuniPreferred Shares in proportion to total dividends paid to each class for
the year in which the net capital gain or other taxable income is realized. If
net capital gain or other taxable income is allocated to MuniPreferred Shares
(instead of solely tax-exempt income), the Fund will likely have to pay higher
total dividends to MuniPreferred Shareholders or make special payments to
MuniPreferred Shareholders to compensate them for the increased tax liability.
This would reduce the total amount of dividends paid to the Common
Shareholders, but would increase the portion of the dividend that is
tax-exempt. On an after-tax basis, Common Shareholders may still be better off
than if they had been allocated all of the Fund's net capital gain or other
taxable income (resulting in a higher amount of total dividends), but received
a lower amount of tax-exempt income. If

                                      19

<PAGE>

the increase in dividend payments or the special payments to MuniPreferred
Shareholders are not entirely offset by a reduction in the tax liability of,
and an increase in the tax-exempt dividends received by, the Common
Shareholders, the advantage of the Fund's leveraged structure to Common
Shareholders will be reduced.

   Under the 1940 Act, the Fund is not permitted to issue preferred shares
unless immediately after such issuance the value of the Fund's total net assets
is at least 200% of the liquidation value of the outstanding preferred shares
(i.e., such liquidation value may not exceed 50% of the Fund's total net
assets). In addition, the Fund is not permitted to declare any cash dividend or
other distribution on its Common Shares unless, at the time of such
declaration, the value of the Fund's total net assets is at least 200% of such
liquidation value. If MuniPreferred Shares are issued, the Fund intends, to the
extent possible, to purchase or redeem MuniPreferred Shares from time to time
to the extent necessary in order to maintain coverage of any MuniPreferred
Shares of at least 200%. If the Fund has MuniPreferred Shares outstanding, two
of the Fund's trustees will be elected by the holders of MuniPreferred Shares,
voting separately as a class. The remaining trustees of the Fund will be
elected by holders of Common Shares and MuniPreferred Shares voting together as
a single class. In the event the Fund failed to pay dividends on MuniPreferred
Shares for two years, MuniPreferred Shareholders would be entitled to elect a
majority of the trustees of the Fund.

   The Fund may be subject to certain restrictions imposed by guidelines of one
or more rating agencies which may issue ratings for MuniPreferred Shares issued
by the Fund. These guidelines may impose asset coverage or portfolio
composition requirements that are more stringent than those imposed on the Fund
by the 1940 Act. It is not anticipated that these covenants or guidelines will
impede Nuveen Advisory from managing the Fund's portfolio in accordance with
the Fund's investment objectives and policies.

   The Fund may also borrow money for repurchase of its shares or as a
temporary measure for extraordinary or emergency purposes, including the
payment of dividends and the settlement of securities transactions which
otherwise might require untimely dispositions of Fund securities.


   Assuming that the MuniPreferred Shares will represent in the aggregate
approximately 35% of the Fund's capital and pay dividends at an annual average
rate of 2.15%, the incremental income generated by the Fund's portfolio (net of
estimated expenses) must exceed .75% in order to cover such dividend payments
and other expenses specifically related to the MuniPreferred Shares. It is
anticipated that there will be a 5.35% yield on the Fund's investment
portfolio, net of expenses. Of course, these numbers are merely estimates, used
for illustration. Actual MuniPreferred Share dividend rates will vary
frequently and may be significantly higher or lower than the rate estimated
above.



   The following table is furnished in response to requirements of the
Securities and Exchange Commission. It is designed to illustrate the effect of
leverage on Common Share total return, assuming investment portfolio total
returns (comprised of income and changes in the value of bonds held in the
Fund's portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment
portfolio returns are hypothetical figures and are not necessarily indicative
of the investment portfolio returns expected to be experienced by the Fund. The
table further reflects the issuance of MuniPreferred Shares representing 35% of
the Fund's total capital and the Fund's currently projected annual
MuniPreferred Share dividend rate of 2.15%. See "Risks" and "MuniPreferred
Shares and Leverage."


                                      20

<PAGE>

<TABLE>
<S>                            <C>      <C>     <C>     <C>   <C>
Assumed Portfolio Total Return (10.00)% (5.00)%  0.00 % 5.00% 10.00%
Common Share Total Return..... (16.54)% (8.85)% (1.16)% 6.53% 14.23%
</TABLE>

   Common Share total return is composed of two elements--the Common Share
dividends paid by the Fund (the amount of which is largely determined by the
net investment income of the Fund after paying dividends on MuniPreferred
Shares) and gains or losses on the value of the securities the Fund owns. As
required by Securities and Exchange Commission rules, the table assumes that
the Fund is more likely to suffer capital losses than to enjoy capital
appreciation. For example, to assume a total return of 0%, the Fund must assume
that the tax-exempt interest it receives on its municipal bond investments is
entirely offset by losses in the value of those bonds.

   Unless and until MuniPreferred Shares are issued, the Common Shares will not
be leveraged and this section will not apply.

                                     RISKS

   The net asset value of the Common Shares will fluctuate with and be affected
by, among other things, interest rate risk, credit risk, reinvestment risk and
leverage risk, and an investment in Common Shares will be subject to market
discount risk, inflation risk and municipal bond market risk, each of which is
more fully described below.

   Newly Organized. The Fund is a newly organized, diversified, closed-end
management investment company and has no operating history.

   Market Discount Risk. Shares of closed-end management investment companies
frequently trade at a discount from their net asset value.

   Interest Rate Risk. Interest rate risk is the risk that bonds (and the
Fund's net assets) will decline in value because of changes in interest rates.
Generally, municipal bonds will decrease in value when interest rates rise and
increase in value when interest rates decline. This means that the net asset
value of the Common Shares will fluctuate with interest rate changes and the
corresponding changes in the value of the Fund's municipal bond holdings. The
value of the longer-term bonds in which the Fund generally invests fluctuates
more in response to changes in interest rates than does the value of
shorter-term bonds. Conversely, the values of lower-rated and comparable
unrated debt securities are less likely than those of investment grade and
comparable unrated debt securities to fluctuate inversely with changes in
interest rates. Because the Fund will invest primarily in long-term bonds, the
Common Share net asset value and market price per share will fluctuate more in
response to changes in market interest rates than if the Fund invested
primarily in shorter-term bonds. The Fund's use of leverage, as described
below, will tend to increase Common Share interest rate risk.

   Credit Risk. Credit risk is the risk that one or more municipal bonds in the
Fund's portfolio will decline in price, or fail to pay interest or principal
when due, because the issuer of the bond experiences a decline in its financial
status. In general, lower rated municipal bonds carry a greater degree of risk
that the issuer will lose its ability to make interest and principal payments,
which could have a negative impact on the Fund's net asset value or dividends.
Securities rated in the fourth highest category are considered investment grade
but they also may have some speculative characteristics.


                                      21

<PAGE>

   Municipal Bond Market Risk. Investing in the municipal bond market involves
certain risks. The amount of public information available about the municipal
bonds in the Fund's portfolio is generally less than that for corporate
equities or bonds, and the investment performance of the Fund may therefore be
more dependent on the analytical abilities of Nuveen Advisory than if the Fund
were a stock fund or taxable bond fund. The secondary market for municipal
bonds also tends to be less well-developed or liquid than many other securities
markets, which may adversely affect the Fund's ability to sell its bonds at
attractive prices or at prices approximating those at which the Fund currently
values them.

   The ability of municipal issuers to make timely payments of interest and
principal may be diminished during general economic downturns and as
governmental cost burdens are reallocated among federal, state and local
governments. In addition, laws enacted in the future by Congress or state
legislatures or referenda could extend the time for payment of principal and/or
interest, or impose other constraints on enforcement of such obligations, or on
the ability of municipalities to levy taxes. Issuers of municipal securities
might seek protection under the bankruptcy laws. In the event of bankruptcy of
such an issuer, the Fund could experience delays in collecting principal and
interest and the Fund may not, in all circumstances, be able to collect all
principal and interest to which it is entitled. To enforce its rights in the
event of a default in the payment of interest or repayment of principal, or
both, the Fund may take possession of and manage the assets securing the
issuer's obligations on such securities, which may increase the Fund's
operating expenses. Any income derived from the Fund's ownership or operation
of such assets may not be tax-exempt.


   Municipal Bond Insurance. In the event Moody's, S&P or Fitch (or all of
them) should downgrade its assessment of the claims-paying ability of a
particular insurer, it (or they) could also be expected to downgrade the
ratings assigned to municipal bonds insured by such insurer, and municipal
bonds insured under Portfolio Insurance issued by such insurer also would be of
reduced quality in the portfolio of the Fund. Any such downgrade could have an
adverse impact on the net asset value and market price of the Common Shares.


   In addition, the Fund may be subject to certain restrictions on investments
imposed by guidelines of the insurance companies issuing portfolio insurance.
The Fund does not expect these guidelines to prevent Nuveen Advisory from
managing the Fund's portfolio in accordance with the Fund's investment
objectives and policies.


   Reinvestment Risk. Reinvestment risk is the risk that income from the Fund's
bond portfolio will decline if and when the Fund invests the proceeds from
matured, traded or called bonds at market interest rates that are below the
portfolio's current earnings rate. A decline in income could affect the Common
Shares' market price or their overall returns.

   Leverage Risk. Leverage risk is the risk associated with the issuance of the
MuniPreferred Shares to leverage the Common Shares. There can be no assurance
that the Fund's leveraging strategy will be successful. Once the MuniPreferred
Shares are issued, the net asset value and market value of Common Shares will
be more volatile, and the yield to Common Shareholders will tend to fluctuate
with changes in the shorter-term dividend rates on the MuniPreferred Shares.
Long-term municipal bond rates of return are typically, although not always,
higher than shorter-term municipal bond rates of return. If the dividend rate
on the MuniPreferred Shares approaches the net rate of return on the Fund's
investment portfolio, the benefit of leverage to Common Shareholders would be
reduced. If the dividend rate on the MuniPreferred Shares exceeds the net rate
of return on the Fund's portfolio, the leverage will result in a

                                      22

<PAGE>


lower rate of return to Common Shareholders than if the Fund were not
leveraged. Because the long-term bonds included in the Fund's portfolio will
typically pay fixed rates of interest while the dividend rate on the
MuniPreferred Shares will be adjusted periodically, this could occur even when
both long-term and short-term municipal rates rise. In addition, the Fund will
pay (and Common Shareholders will bear) any costs and expenses relating to the
issuance and ongoing maintenance of the MuniPreferred Shares (for example,
distribution related expenses such as a participation fee paid at what it
expects will be an annual rate of 0.25% of MuniPreferred Share liquidation
preference to broker-dealers participating in MuniPreferred Share auctions).
Accordingly, the Fund cannot assure you that the issuance of MuniPreferred
Shares will result in a higher yield or return to Common Shareholders.


   Similarly, any decline in the net asset value of the Fund's investments will
be borne entirely by Common Shareholders. Therefore, if the market value of the
Fund's portfolio declines, the leverage will result in a greater decrease in
net asset value to Common Shareholders than if the Fund were not leveraged.
Such greater net asset value decrease will also tend to cause a greater decline
in the market price for the Common Shares. The Fund might be in danger of
failing to maintain the required 200% asset coverage or of losing its expected
AAA/Aaa ratings on the MuniPreferred Shares or, in an extreme case, the Fund's
current investment income might not be sufficient to meet the dividend
requirements on the MuniPreferred Shares. In order to counteract such an event,
the Fund might need to liquidate investments in order to fund a redemption of
some or all of the MuniPreferred Shares. Liquidation at times of low municipal
bond prices may result in capital loss and may reduce returns to Common
Shareholders.

   While the Fund may from time to time consider reducing leverage in response
to actual or anticipated changes in interest rates in an effort to mitigate the
increased volatility of current income and net asset value associated with
leverage, there can be no assurance that the Fund will actually reduce leverage
in the future or that any reduction, if undertaken, will benefit the Common
Shareholders. Changes in the future direction of interest rates are very
difficult to predict accurately. If the Fund were to reduce leverage based on a
prediction about future changes to interest rates, and that prediction turned
out to be incorrect, the reduction in leverage would likely operate to reduce
the income and/or total returns to Common Shareholders relative to the
circumstance where the Fund had not reduced leverage. The Fund may decide that
this risk outweighs the likelihood of achieving the desired reduction to
volatility in income and share price if the prediction were to turn out to be
correct, and determine not to reduce leverage as described above.

   The Fund may invest in the securities of other investment companies. Such
securities may also be leveraged and will therefore be subject to the leverage
risks described above. Such additional leverage may in certain market
conditions serve to reduce the net asset value of the Fund's Common Shares and
the returns to Common Shareholders.

   Inflation Risk. Inflation risk is the risk that the value of assets or
income from investment will be worth less in the future as inflation decreases
the value of money. As inflation increases, the real value of the Common Shares
and distributions can decline. In addition, during any periods of rising
inflation, MuniPreferred Share dividend rates would likely increase, which
would tend to further reduce returns to Common Shareholders.

   Anti-Takover Provisions. The Fund's Declaration includes provisions that
could limit the ability of other entities or persons to acquire control of the
Fund or convert the Fund to open-end status. These provisions could have the
effect of depriving the Common Shareholders of opportunities to sell their
Common Shares at a premium over the then current market price of the Common
Shares.

                                      23

<PAGE>

                           HOW THE FUND MANAGES RISK

Investment Limitations

   The Fund has adopted certain investment limitations designed to limit
investment risk and maintain portfolio diversification. These limitations are
fundamental and may not be changed without the approval of the holders of a
"majority of the outstanding" Common Shares and, if issued, MuniPreferred
Shares voting together as a single class, and the approval of the holders of a
"majority of the outstanding" MuniPreferred Shares voting as a separate class.
When used with respect to particular shares of the Fund, a "majority of the
outstanding" shares means (i) 67% or more of the shares present at a meeting,
if the holders of more than 50% of the shares are present or represented by
proxy, or (ii) more than 50% of the shares, whichever is less. Among other
restrictions, the Fund may not invest more than 25% of total Fund assets in
securities of issuers in any one industry, except that this limitation does not
apply to municipal bonds backed by the assets and revenues of governments or
political subdivisions of governments.

   The Fund may become subject to guidelines which are more limiting than the
investment restriction set forth above in order to obtain and maintain ratings
from Moody's or S&P on the MuniPreferred Shares that it intends to issue. The
Fund does not anticipate that such guidelines would have a material adverse
effect on the Fund's Common Shareholders or the Fund's ability to achieve its
investment objectives. See "Investment Objectives" in the Statement of
Additional Information for information about these guidelines and a complete
list of the fundamental and non-fundamental investment policies of the Fund.

   The Fund seeks to reduce credit risk by buying bonds that are either covered
by insurance or backed by an escrow or trust account, each with the purpose of
ensuring timely payment of principal and interest. However, these municipal
bonds remain subject to market risk.

Limited Issuance of MuniPreferred Shares

   Under the 1940 Act, the Fund could issue MuniPreferred Shares having a total
liquidation value (original purchase price of the shares being liquidated plus
any accrued and unpaid dividends) of up to one-half of the value of the total
net assets of the Fund. If the total liquidation value of the MuniPreferred
Shares was ever more than one-half of the value of the Fund's total net assets,
the Fund would not be able to declare dividends on the Common Shares until the
liquidation value, as a percentage of the Fund's assets, was reduced. The Fund
intends to issue MuniPreferred Shares representing about 35% of the Fund's
total capital immediately after the time of issuance. This higher than required
margin of net asset value provides a cushion against later fluctuations in the
value of the Fund's portfolio and will subject Common Shareholders to less
income and net asset value volatility than if the Fund were more leveraged. The
Fund intends to purchase or redeem MuniPreferred Shares, if necessary, to keep
the liquidation value of the MuniPreferred Shares below one-half of the value
of the Fund's total net assets.

Management of Investment Portfolio and Capital Structure to Limit Leverage Risk

   The Fund may take certain actions if short-term interest rates increase or
market conditions otherwise change (or the Fund anticipates such an increase or
change) and the Fund's leverage begins (or is expected) to adversely affect
Common Shareholders. In order to attempt to offset such a negative

                                      24

<PAGE>

impact of leverage on Common Shareholders, the Fund may shorten the average
maturity of its investment portfolio (by investing in short-term, high quality
securities) or may extend the maturity of outstanding MuniPreferred Shares. The
Fund may also attempt to reduce the leverage by redeeming or otherwise
purchasing MuniPreferred Shares. As explained above under "Risks--Leverage
Risk," the success of any such attempt to limit leverage risk depends on Nuveen
Advisory's ability to accurately predict interest rate or other market changes.
Because of the difficulty of making such predictions, the Fund may never
attempt to manage its capital structure in the manner described above.

   If market conditions suggest that additional leverage would be beneficial,
the Fund may sell previously unissued MuniPreferred Shares or MuniPreferred
Shares that the Fund previously issued but later repurchased.

   Currently, the Fund may not invest in inverse floating rate securities,
which are securities that pay interest at rates that vary inversely with
changes in prevailing short-term tax-exempt interest rates and which represent
a leveraged investment in an underlying municipal bond. This restriction is a
non-fundamental policy of the Fund that may be changed by vote of the Fund's
Board of Trustees.

Hedging Strategies

   The Fund may use various investment strategies designed to limit the risk of
bond price fluctuations and to preserve capital. These hedging strategies
include using financial futures contracts, options on financial futures or
options based on either an index of long-term municipal securities or on
taxable debt securities whose prices, in the opinion of Nuveen Advisory,
correlate with the prices of the Fund's investments. Successful implementation
of most hedging strategies would generate taxable income, and the Fund has no
present intention to use these strategies.

                            MANAGEMENT OF THE FUND

Trustees and Officers

   The Board of Trustees is responsible for the management of the Fund,
including supervision of the duties performed by Nuveen Advisory. There are
seven trustees of the Fund, one of whom is an "interested person" (as defined
in the 1940 Act) and six of whom are not "interested persons." The names and
business addresses of the trustees and officers of the Fund and their principal
occupations and other affiliations during the past five years are set forth
under "Management of the Fund" in the Statement of Additional Information.

Investment Adviser

   Nuveen Advisory, 333 West Wacker Drive, Chicago, Illinois 60606, serves as
the investment adviser to the Fund. In this capacity, Nuveen Advisory is
responsible for the selection and on-going monitoring of the municipal bonds in
the Fund's investment portfolio, managing the Fund's business affairs and
providing certain clerical, bookkeeping and administrative services. Nuveen
Advisory serves as investment adviser to investment portfolios with more than
$40 billion in assets under management. See the Statement of Additional
Information under "Investment Adviser."

   Nuveen Advisory is responsible for execution of specific investment
strategies and day-to-day investment operations. Nuveen Advisory manages the
Fund using a team of analysts and portfolio managers that focus on a specific
group of funds. Steven J. Krupa is the portfolio manager of the Fund and will
provide daily oversight for, and execution of, the Fund's investment
activities. Mr. Krupa has

                                      25

<PAGE>

been a portfolio manager and Vice President for Nuveen Advisory since 1990. He
currently manages investments for 9 Nuveen-sponsored investment companies.

   Nuveen Advisory is a wholly owned subsidiary of The John Nuveen Company, 333
West Wacker Drive, Chicago, Illinois 60606. Founded in 1898, The John Nuveen
Company and its affiliates have over $76 billion of net assets under management
or surveillance. The John Nuveen Company is a majority-owned subsidiary of The
St. Paul Companies, Inc., a publicly-traded company which is principally
engaged in providing property-liability insurance through subsidiaries.

Investment Management Agreement

   Pursuant to an investment management agreement between Nuveen Advisory and
the Fund, the Fund has agreed to pay for the services and facilities provided
by Nuveen Advisory an annual management fee, payable on a monthly basis,
according to the following schedule:

<TABLE>
<CAPTION>
                                                                    Management
        Average Daily Net Assets(1)                                    Fee
        ---------------------------                                 ----------
<S>                                                                 <C>
        Up to $125 million.........................................   .6500%
        $125 million to $250 million...............................   .6375%
        $250 million to $500 million...............................   .6250%
        $500 million to $1 billion.................................   .6125%
        $1 billion to $2 billion...................................   .6000%
        $2 billion and over........................................   .5750%
</TABLE>

- --------
(1)Including net assets attributable to MuniPreferred Shares.

   In addition to the fee of Nuveen Advisory, the Fund pays all other costs and
expenses of its operations, including compensation of its trustees (other than
those affiliated with Nuveen Advisory), custodian, transfer agency and dividend
disbursing expenses, legal fees, expenses of independent auditors, expenses of
repurchasing shares, expenses of issuing any MuniPreferred Shares, expenses of
preparing, printing and distributing shareholder reports, notices, proxy
statements and reports to governmental agencies, and taxes, if any.

   For the first ten years of the Fund's operation, Nuveen Advisory has
contractually agreed to reimburse the Fund for fees and expenses in the
amounts, and for the time periods, set forth below:

<TABLE>
<CAPTION>
                          Percentage                   Percentage
                          Reimbursed                   Reimbursed
                       (as a percentage             (as a percentage
           Year Ending of average daily Year Ending of average daily
            March 31    net assets)(1)   March 31    net assets)(1)
            --------   ----------------  --------   ----------------
           <S>         <C>              <C>         <C>
             2002/(2)/      0.30%       2008.......      0.25%
              2003....      0.30%       2009.......      0.20%
              2004....      0.30%       2010.......      0.15%
              2005....      0.30%       2011.......      0.10%
              2006....      0.30%       2012.......      0.05%
              2007....      0.30%
</TABLE>
- --------
(1)Including net assets attributable to MuniPreferred Shares.
(2)From the commencement of operations.

   Nuveen Advisory has not agreed to reimburse the Fund for any portion of its
fees and expenses beyond March 31, 2012.

                                      26

<PAGE>

                                NET ASSET VALUE

   The Fund's net asset value per share is determined as of the close of
regular session trading (normally 4:00 p.m. eastern time) on each day the New
York Stock Exchange is open for business. Net asset value is calculated by
taking the fair value of the Fund's total assets, including interest or
dividends accrued but not yet collected, less all liabilities, and dividing by
the total number of shares outstanding. The result, rounded to the nearest
cent, is the net asset value per share.

   In determining net asset value, expenses are accrued and applied daily and
securities and other assets for which market quotations are available are
valued at market value. The prices of municipal bonds are provided by a pricing
service and based on the mean between the bid and asked price. When price
quotes are not readily available (which is usually the case for municipal
bonds), the pricing service establishes a fair market value based on prices of
comparable municipal bonds. All valuations are subject to review by the Fund's
Board of Trustees or its delegate, Nuveen Advisory.

                                 DISTRIBUTIONS

   Commencing with the first dividend, the Fund intends to make regular monthly
cash distributions to Common Shareholders at a rate that reflects the past and
projected performance of the Fund. Distributions can only be made from net
investment income after paying any accrued dividends to MuniPreferred
Shareholders. The Fund's ability to maintain a level dividend rate will depend
on a number of factors, including dividends payable on the MuniPreferred
Shares. The net income of the Fund consists of all interest income accrued on
portfolio assets less all expenses of the Fund. Expenses of the Fund are
accrued each day. Over time, all the net investment income of the Fund will be
distributed. At least annually, the Fund also intends to distribute net capital
gain and ordinary taxable income, if any, after paying any accrued dividends or
making any liquidation payments to MuniPreferred Shareholders. Initial
distributions to Common Shareholders are expected to be declared approximately
45 days, and paid approximately 60 to 90 days, from the completion of this
offering, depending on market conditions. Although it does not now intend to do
so, the Board of Trustees may change the Fund's dividend policy and the amount
or timing of the distributions, based on a number of factors, including the
amount of the Fund's undistributed net investment income and historical and
projected investment income and the amount of the expenses and dividend rates
on the outstanding MuniPreferred Shares.

   To permit the Fund to maintain a more stable monthly distribution, the Fund
will initially distribute less than the entire amount of net investment income
earned in a particular period. The undistributed net investment income would be
available to supplement future distributions. As a result, the distributions
paid by the Fund for any particular monthly period may be more or less than the
amount of net investment income actually earned by the Fund during the period.
Undistributed net investment income will be added to the Fund's net asset value
and, correspondingly, distributions from undistributed net investment income
will be deducted from the Fund's net asset value.

                          DIVIDEND REINVESTMENT PLAN

   You may elect to have all dividends, including any capital gain dividends,
on your Common Shares automatically reinvested by JPMorgan Chase Bank, as agent
for the Common Shareholders (the "Plan Agent"), in additional Common Shares
under the Dividend Reinvestment Plan (the "Plan"). You may elect to participate
in the Plan by completing the Dividend Reinvestment Plan Application Form. If
you do not participate, you will receive all distributions in cash paid by
check mailed directly to you by JPMorgan Chase Bank as dividend paying agent.

                                      27

<PAGE>

   If you decide to participate in the Plan, the number of Common Shares you
will receive will be determined as follows:

      (1) If Common Shares are trading at or above net asset value at the time
   of valuation, the Fund will issue new shares at the then current market
   price; or

      (2) If Common Shares are trading below net asset value at the time of
   valuation, the Plan Agent will receive the dividend or distribution in cash
   and will purchase Common Shares in the open market, on the American Stock
   Exchange or elsewhere, for the participants' accounts. It is possible that
   the market price for the Common Shares may increase before the Plan Agent
   has completed its purchases. Therefore, the average purchase price per share
   paid by the Plan Agent may exceed the market price at the time of valuation,
   resulting in the purchase of fewer shares than if the dividend or
   distribution had been paid in Common Shares issued by the Fund. The Plan
   Agent will use all dividends and distributions received in cash to purchase
   Common Shares in the open market within 30 days of the dividend payment
   date. Interest will not be paid on any uninvested cash payments.

   You may withdraw from the Plan at any time by giving written notice to the
Plan Agent. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan and you will
receive a cash payment for any fraction of a share in your account. If you
wish, the Plan Agent will sell your shares and send you the proceeds, minus
brokerage commissions and a $2.50 service fee.

   The Plan Agent maintains all shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. Any proxy you receive will include all
Common Shares you have received under the Plan.

   There is no brokerage charge for reinvestment of your dividends or
distributions in Common Shares. However, all participants will pay a pro rata
share of brokerage commissions incurred by the Plan Agent when it makes open
market purchases.

   Automatically reinvesting dividends and distributions does not mean that you
do not have to pay income taxes due upon receiving dividends and distributions.

   The Fund reserves the right to amend or terminate the Plan if in the
judgment of the Board of Trustees the change is warranted. There is no direct
service charge to participants in the Plan; however, the Fund reserves the
right to amend the Plan to include a service charge payable by the
participants. Additional information about the Plan may be obtained from
JPMorgan Chase Bank, P.O. Box 660086, Dallas, Texas 75266-0086, (800) 257-8787.

                             DESCRIPTION OF SHARES

Common Shares


   The Declaration authorizes the issuance of an unlimited number of Common
Shares. The Common Shares being offered have a par value of $0.01 per share
and, subject to the rights of holders of MuniPreferred Shares, have equal
rights to the payment of dividends and the distribution of assets upon
liquidation. The Common Shares being offered will, when issued, be fully paid
and, subject to matters discussed in "Certain Provisions in the Declaration of
Trust," non-assessable, and will have no pre-emptive or conversion rights or
rights to cumulative voting. Whenever MuniPreferred Shares are outstanding,
Common Shareholders will not be entitled to receive any distributions from the
Fund


                                      28

<PAGE>

unless all accrued dividends on MuniPreferred Shares have been paid, and unless
asset coverage (as defined in the 1940 Act) with respect to MuniPreferred
Shares would be at least 200% after giving effect to the distributions. See
"--MuniPreferred Shares" below.

   The Common Shares have been approved for listing on the American Stock
Exchange, subject to notice of issuance. The Fund intends to hold annual
meetings of shareholders so long as the Common Shares are listed on a national
securities exchange and such meetings are required as a condition to such
listing.

   The Fund's net asset value per share generally increases when interest rates
decline, and decreases when interest rates rise, and these changes are likely
to be greater because the Fund intends to have a leveraged capital structure.
Net asset value will be reduced immediately following the offering by the
amount of the sales load and organization and offering expenses paid by the
Fund. Nuveen has agreed to pay (i) all organizational expenses and (ii)
offering costs (other than sales load) that exceed $0.03 per Common Share. See
"Use of Proceeds."

   Unlike open-end funds, closed-end funds like the Fund do not continuously
offer shares and do not provide daily redemptions. Rather, if a shareholder
determines to buy additional Common Shares or sell shares already held, the
shareholder may conveniently do so by trading on the exchange through a broker
or otherwise. Shares of closed-end investment companies may frequently trade on
an exchange at prices lower than net asset value. Shares of closed-end
investment companies like the Fund that invest predominately in investment
grade municipal bonds have during some periods traded at prices higher than net
asset value and during other periods have traded at prices lower than net asset
value. Because the market value of the Common Shares may be influenced by such
factors as dividend levels (which are in turn affected by expenses), call
protection, dividend stability, portfolio credit quality, net asset value,
relative demand for and supply of such shares in the market, general market and
economic conditions, and other factors beyond the control of the Fund, the Fund
cannot assure you that Common Shares will trade at a price equal to or higher
than net asset value in the future. The Common Shares are designed primarily
for long-term investors, and investors in the Common Shares should not view the
Fund as a vehicle for trading purposes. See "MuniPreferred Shares and Leverage"
and the Statement of Additional Information under "Repurchase of Fund Shares;
Conversion to Open-End Fund."

MuniPreferred Shares

   The Declaration authorizes the issuance of an unlimited number of
MuniPreferred Shares, in one or more classes or series, with rights as
determined by the Board of Trustees, by action of the Board of Trustees without
the approval of the Common Shareholders.

   The Fund's Board of Trustees has indicated its intention to authorize an
offering of MuniPreferred Shares (representing approximately 35% of the Fund's
capital immediately after the time the MuniPreferred Shares are issued)
approximately one to three months after completion of the offering of Common
Shares. Any such decision is subject to market conditions and to the Board's
continuing belief that leveraging the Fund's capital structure through the
issuance of MuniPreferred Shares is likely to achieve the benefits to the
Common Shareholders described in this Prospectus. Although the terms of the
MuniPreferred Shares will be determined by the Board of Trustees (subject to
applicable law and the Fund's Declaration) if and when it authorizes a
MuniPreferred Shares offering, the Board has determined that the MuniPreferred
Shares, at least initially, would likely pay cumulative dividends at rates
determined over relatively shorter-term periods (such as 7 days), by providing
for the periodic redetermination of the dividend rate through an auction or
remarketing procedure. The Board of Trustees has indicated that the preference
on distribution, liquidation preference, voting rights and redemption
provisions of the MuniPreferred Shares will likely be as stated below.

                                      29

<PAGE>

   Limited Issuance of MuniPreferred Shares. Under the 1940 Act, the Fund could
issue MuniPreferred Shares with an aggregate liquidation value of up to
one-half of the value of the Fund's total net assets, measured immediately
after issuance of the MuniPreferred Shares. "Liquidation value" means the
original purchase price of the shares being liquidated plus any accrued and
unpaid dividends. In addition, the Fund is not permitted to declare any cash
dividend or other distribution on its Common Shares unless the liquidation
value of the MuniPreferred Shares is less than one-half of the value of the
Fund's total net assets (determined after deducting the amount of such dividend
or distribution) immediately after the distribution. If the Fund sells all the
Common Shares and MuniPreferred Shares discussed in this Prospectus, the
liquidation value of the MuniPreferred Shares is expected to be approximately
35% of the value of the Fund's total net assets. The Fund intends to purchase
or redeem MuniPreferred Shares, if necessary, to keep that fraction below
one-half.

   Distribution Preference. The MuniPreferred Shares have complete priority
over the Common Shares as to distribution of assets.

   Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Fund, holders of
MuniPreferred Shares will be entitled to receive a preferential liquidating
distribution (expected to equal the original purchase price per share plus
accumulated and unpaid dividends thereon, whether or not earned or declared)
before any distribution of assets is made to holders of Common Shares.

   Voting Rights. MuniPreferred Shares are required to be voting shares and to
have equal voting rights with Common Shares. Except as otherwise indicated in
this Prospectus or the Statement of Additional Information and except as
otherwise required by applicable law, holders of MuniPreferred Shares will vote
together with Common Shareholders as a single class.

   Holders of MuniPreferred Shares, voting as a separate class, will be
entitled to elect two of the Fund's trustees (following the establishment of
the Fund by an initial trustee, the Declaration provides for a total of no less
than two and no more than 12 trustees). The remaining trustees will be elected
by Common Shareholders and holders of MuniPreferred Shares, voting together as
a single class. In the unlikely event that two full years of accrued dividends
are unpaid on the MuniPreferred Shares, the holders of all outstanding
MuniPreferred Shares, voting as a separate class, will be entitled to elect a
majority of the Fund's trustees until all dividends in arrears have been paid
or declared and set apart for payment. In order for the Fund to take certain
actions or enter into certain transactions, a separate class vote of holders of
MuniPreferred Shares will be required, in addition to the single class vote of
the holders of MuniPreferred Shares and Common Shares. See the Statement of
Additional Information under "Description of Shares--MuniPreferred
Shares--Voting Rights."

   Redemption, Purchase and Sale of MuniPreferred Shares. The terms of the
MuniPreferred Shares may provide that they are redeemable at certain times, in
whole or in part, at the original purchase price per share plus accumulated
dividends. The terms may also state that the Fund may tender for or purchase
MuniPreferred Shares and resell any shares so tendered. Any redemption or
purchase of MuniPreferred Shares by the Fund will reduce the leverage
applicable to Common Shares, while any resale of shares by the Fund will
increase such leverage. See "MuniPreferred Shares and Leverage."

   The discussion above describes the Board of Trustees' present intention with
respect to a possible offering of MuniPreferred Shares. If the Board of
Trustees determines to authorize such an offering, the terms of the
MuniPreferred Shares may be the same as, or different from, the terms described
above, subject to applicable law and the Fund's Declaration.

                                      30

<PAGE>

                CERTAIN PROVISIONS IN THE DECLARATION OF TRUST

   Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund. However, the
Declaration contains an express disclaimer of shareholder liability for debts
or obligations of the Fund and requires that notice of such limited liability
be given in each agreement, obligation or instrument entered into or executed
by the Fund or the trustees. The Declaration further provides for
indemnification out of the assets and property of the Fund for all loss and
expense of any shareholder held personally liable for the obligations of the
Fund. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund would be
unable to meet its obligations. The Fund believes that the likelihood of such
circumstances is remote.

   The Declaration includes provisions that could limit the ability of other
entities or persons to acquire control of the Fund or to convert the Fund to
open-end status. Specifically, the Declaration requires a vote by holders of at
least two-thirds of the Common Shares and MuniPreferred Shares, voting together
as a single class, except as described below, to authorize (1) a conversion of
the Fund from a closed-end to an open-end investment company, (2) a merger or
consolidation of the Fund, or a series or class of the Fund, with any
corporation, association, trust or other organization or a reorganization or
recapitalization of the Fund, or a series or class of the Fund, (3) a sale,
lease or transfer of all or substantially all of the Fund's assets (other than
in the regular course of the Fund's investment activities), (4) in certain
circumstances, a termination of the Fund, or a series or class of the Fund, or
(5) a removal of trustees by shareholders, and then only for cause, unless,
with respect to (1) through (4), such transaction has already been authorized
by the affirmative vote of two-thirds of the total number of trustees fixed in
accordance with the Declaration or the By-laws, in which case the affirmative
vote of the holders of at least a majority of the Fund's Common Shares and
MuniPreferred Shares outstanding at the time, voting together as a single
class, is required, provided, however, that where only a particular class or
series is affected (or, in the case of removing a trustee, when the trustee has
been elected by only one class), only the required vote by the applicable class
or series will be required. Approval of shareholders is not required, however,
for any transaction, whether deemed a merger, consolidation, reorganization or
otherwise whereby the Fund issues Shares in connection with the acquisition of
assets (including those subject to liabilities) from any other investment
company or similar entity. None of the foregoing provisions may be amended
except by the vote of at least two-thirds of the Common Shares and
MuniPreferred Shares, voting together as a single class. In the case of the
conversion of the Fund to an open-end investment company, or in the case of any
of the foregoing transactions constituting a plan of reorganization which
adversely affects the holders of MuniPreferred Shares, the action in question
will also require the affirmative vote of the holders of at least two-thirds of
the Fund's MuniPreferred Shares outstanding at the time, voting as a separate
class, or, if such action has been authorized by the affirmative vote of
two-thirds of the total number of trustees fixed in accordance with the
Declaration or the By-laws, the affirmative vote of the holders of at least a
majority of the Fund's MuniPreferred Shares outstanding at the time, voting as
a separate class. The votes required to approve the conversion of the Fund from
a closed-end to an open-end investment company or to approve transactions
constituting a plan of reorganization which adversely affects the holders of
MuniPreferred Shares are higher than those required by the 1940 Act. The Board
of Trustees believes that the provisions of the Declaration relating to such
higher votes are in the best interest of the Fund and its shareholders. See the
Statement of Additional Information under "Certain Provisions in the
Declaration of Trust."


                                      31

<PAGE>

   The provisions of the Declaration described above could have the effect of
depriving the Common Shareholders of opportunities to sell their Common Shares
at a premium over the then current market price of the Common Shares by
discouraging a third party from seeking to obtain control of the Fund in a
tender offer or similar transaction. The overall effect of these provisions is
to render more difficult the accomplishment of a merger or the assumption of
control by a third party. They provide, however, the advantage of potentially
requiring persons seeking control of the Fund to negotiate with its management
regarding the price to be paid and facilitating the continuity of the Fund's
investment objectives and policies. The Board of Trustees of the Fund has
considered the foregoing anti-takeover provisions and concluded that they are
in the best interests of the Fund and its Common Shareholders.

   Reference should be made to the Declaration on file with the Securities and
Exchange Commission for the full text of these provisions.

            REPURCHASE OF FUND SHARES; CONVERSION TO OPEN-END FUND

   The Fund is a closed-end investment company and as such its shareholders
will not have the right to cause the Fund to redeem their shares. Instead, the
Common Shares will trade in the open market at a price that will be a function
of several factors, including dividend levels (which are in turn affected by
expenses), net asset value, call protection, dividend stability, portfolio
credit quality, relative demand for and supply of such shares in the market,
general market and economic conditions and other factors. Because shares of
closed-end investment companies may frequently trade at prices lower than net
asset value, the Fund's Board of Trustees has currently determined that, at
least annually, it will consider action that might be taken to reduce or
eliminate any material discount from net asset value in respect of Common
Shares, which may include the repurchase of such shares in the open market or
in private transactions, the making of a tender offer for such shares at net
asset value, or the conversion of the Fund to an open-end investment company.
The Fund cannot assure you that its Board of Trustees will decide to take any
of these actions, or that share repurchases or tender offers will actually
reduce market discount.

   If the Fund converted to an open-end investment company, it would be
required to redeem all MuniPreferred Shares then outstanding (requiring in turn
that it liquidate a portion of its investment portfolio), and the Common Shares
would no longer be listed on the American Stock Exchange. In contrast to a
closed-end investment company, shareholders of an open-end investment company
may require the company to redeem their shares at any time (except in certain
circumstances as authorized by or under the 1940 Act) at their net asset value,
less any redemption charge that is in effect at the time of redemption. See the
Statement of Additional Information under "Certain Provisions in the
Declaration of Trust" for a discussion of the voting requirements applicable to
the conversion of the Fund to an open-end investment company.

   Before deciding whether to take any action if the Common Shares trade below
net asset value, the Board would consider all relevant factors, including the
extent and duration of the discount, the liquidity of the Fund's portfolio, the
impact of any action that might be taken on the Fund or its shareholders, and
market considerations. Based on these considerations, even if the Fund's shares
should trade at a discount, the Board of Trustees may determine that, in the
interest of the Fund and its shareholders, no action should be taken. See the
Statement of Additional Information under "Repurchase of Fund Shares;
Conversion to Open-End Fund" for a further discussion of possible action to
reduce or eliminate such discount to net asset value.

                                      32

<PAGE>

                                  TAX MATTERS

Federal Income Tax Matters

   The following discussion of federal income tax matters is based on the
advice of Bell, Boyd & Lloyd LLC, special counsel to the Fund.

   The discussions below and in the Statement of Additional Information provide
general tax information related to an investment in the Common Shares. Because
tax laws are complex and often change, you should consult your tax advisor
about the tax consequences of an investment in the Fund.

   The Fund intends to elect to be treated and to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and intends to distribute substantially all of its net
income and gains to its shareholders. Therefore, it is not expected that the
Fund will be subject to any federal income tax. The Fund primarily invests in
municipal bonds issued by states, municipalities and local authorities and
certain possessions and territories of the United States (such as Puerto Rico
or Guam) or in municipal bonds whose income is otherwise exempt from regular
federal income taxes. Thus, substantially all of the Fund's dividends to you
will qualify as "exempt-interest dividends." A shareholder treats an
exempt-interest dividend as interest on state and local bonds exempt from
regular federal income tax. Some or all of an exempt-interest dividend,
however, may be subject to federal alternative minimum tax imposed on the
shareholder. Different federal alternative minimum tax rules apply to
individuals and to corporations.

   Although the Fund does not seek to realize taxable income or capital gains,
the Fund may realize and distribute taxable income or capital gains from time
to time as a result of the Fund's normal investment activities. The Fund will
distribute at least annually any ordinary taxable income or net capital gain.
Distributions of net short-term capital gain are taxable as ordinary income.
Distributions of net capital gain (the excess of net long-term capital gain
over net short-term capital loss) are taxable as long-term capital gains
regardless of how long you have owned your investment. The Fund will allocate
distributions to shareholders that are treated as tax-exempt interest and as
long-term capital gain and ordinary income, if any, among the Common Shares and
MuniPreferred Shares in proportion to total dividends paid to each class for
the year. As long as the Fund qualifies as a regulated investment company,
distributions paid by the Fund generally will not be eligible for the dividends
received deduction allowed to corporations.

   Each year, you will receive a year-end statement that describes the tax
status of dividends paid to you during the preceding year, including the source
of investment income by state and the portion of income that is subject to the
federal alternative minimum tax. You will receive this statement from the firm
where you purchased your Common Shares if you hold your investment in street
name; the Fund will send you this statement if you hold your shares in
registered form.

   The tax status of your dividends is not affected by whether you reinvest
your dividends or receive them in cash.

   In order to avoid corporate taxation of its earnings and to pay tax-free
dividends, the Fund must meet certain Internal Revenue Service ("I.R.S.")
requirements that govern the Fund's sources of income, diversification of
assets and distribution of earnings to shareholders. The Fund intends to meet
these requirements. If the Fund failed to do so, the Fund would be required to
pay corporate taxes on its

                                      33

<PAGE>

earnings and all your distributions would be taxable as ordinary income to the
extent of the Fund's earnings and profits. In particular, in order for the Fund
to pay exempt-interest dividends, at least 50% of the value of the Fund's total
assets must consist of tax-exempt obligations at the close of each quarter of
its taxable year. The Fund intends to meet this requirement. If the Fund failed
to do so, it would not be able to pay exempt-interest dividends and your
distributions attributable to interest received by the Fund from any source
would be taxable as ordinary income.

   The sale or other disposition of Common Shares will result in capital gain
or loss to you if you hold such Common Shares as capital assets. Present law
taxes both long-term and short-term capital gains of corporations at the rates
applicable to ordinary income. For non-corporate taxpayers, however, long-term
capital gains are eligible for reduced rates of taxation.

   The Fund may be required to withhold a percentage of certain of your
dividends if you have not provided the Fund with your correct taxpayer
identification number (normally your Social Security number) and certain
certifications, or if you are otherwise subject to backup withholding. The
backup withholding percentage will be 30% in 2002 and 2003, 29% in 2004 and
2005, and 28% thereafter until 2011, when the percentage will revert to 31%
unless amended by Congress. If you receive Social Security benefits, you should
be aware that exempt-interest dividends are taken into account in calculating
the amount of these benefits that may be subject to federal income tax. If you
borrow money to buy Fund shares, you may not deduct the interest on that loan.
Under I.R.S. rules, Fund shares may be treated as having been bought with
borrowed money even if the purchase of the Fund shares cannot be traced
directly to borrowed money.

   If you are subject to the federal alternative minimum tax, a portion of your
regular monthly dividends may be taxable.

   The exemption from federal income tax for tax-exempt dividends does not
necessarily result in exemption for such dividends under the income or other
tax laws of any state or local taxing authority. You are advised to consult
with your tax adviser about state and local tax matters. Please refer to the
Statement of Additional Information for more detailed information.

                                 OTHER MATTERS

   A lawsuit brought in June 1996 (Green et al. v. Nuveen Advisory Corp., et
al.) by certain individual common shareholders of six leveraged closed-end
funds sponsored by Nuveen is currently pending in the Seventh Circuit Court of
Appeals. The plaintiffs alleged that the leveraged closed-end funds engaged in
certain practices that violated various provisions of the 1940 Act and common
law. The plaintiffs also alleged, among other things, breaches of fiduciary
duty by the funds' directors and Nuveen Advisory and various misrepresentations
and omissions in prospectuses and shareholder reports relating to the use of
leverage through the issuance and periodic auctioning of preferred stock and
the basis of the calculation and payment of management fees to Nuveen Advisory
and Nuveen. Plaintiffs also filed a motion to certify defendant and plaintiff
classes. The defendants filed motions to dismiss the entire lawsuit asserting
that the claims are without merit and to oppose certification of any classes.
On March 30, 1999, the court entered a memorandum opinion and order (1)
granting the defendants' motion to dismiss all of plaintiffs' counts against
the defendants other than Nuveen Advisory, (2) granting Nuveen Advisory's
motion to dismiss all of plaintiffs' counts against it other than breach of
fiduciary duty under Section 36(b) of the 1940 Act, and (3) denying the
plaintiffs' motion to certify a plaintiff class and a

                                      34

<PAGE>

defendant class. No appeal was made by plaintiffs of this decision, and the
remaining Section 36(b) count against Nuveen Advisory is discussed below.

   As to alleged damages, plaintiffs have claimed as damages the portion of all
advisory compensation received by Nuveen Advisory from the funds during the
period from June 21, 1995 to the present that is equal to the proportion of
each of such fund's preferred stock to its total assets. The preferred stock
constitutes approximately one third of the funds' assets so the amount claimed
would equal approximately one third of management fees received by Nuveen
Advisory for managing the funds during this period, or more than $60 million.
Nuveen Advisory believes that it has no liability and the plaintiffs have
suffered no damages and filed a motion for summary judgment as to both
liability and damages. Plaintiffs filed a partial motion for summary judgment
as to liability only. In a memorandum opinion and order dated September 6,
2001, the court granted Nuveen Advisory's motion for summary judgment and
denied plaintiffs' motion for partial summary judgment, thereby terminating the
litigation before the court. Plaintiffs appealed this decision on October 8,
2001.

   While the Fund cannot assure you that the litigation will be decided in
Nuveen Advisory's favor upon appeal, Nuveen Advisory believes a decision, if
any, against it would have no material adverse effect on the Fund, its Common
Shares, or the ability of Nuveen Advisory to perform its duties under the
investment management agreement.

                                      35

<PAGE>

                                 UNDERWRITING

   Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, each Underwriter named below has severally agreed to
purchase, and the Fund has agreed to sell to such Underwriter, the number of
Common Shares set forth opposite the name of such Underwriter.

<TABLE>
<CAPTION>
                                                                      Number of
Underwriters                                                           Shares
- ------------                                                          ----------
<S>                                                                   <C>
Salomon Smith Barney Inc.............................................
Nuveen Investments...................................................
A.G. Edwards & Sons, Inc.............................................
Prudential Securities Incorporated...................................
UBS Warburg LLC......................................................
Fahnestock & Co. Inc.................................................
First Union Securities, Inc..........................................
Gruntal & Co., L.L.C.................................................
Janney Montgomery Scott LLC..........................................
Legg Mason Wood Walker, Incorporated.................................
McDonald Investments Inc., a KeyCorp Company.........................
Raymond James & Associates, Inc......................................
RBC Dain Rauscher, Inc...............................................
SunTrust Capital Markets, Inc........................................
Wells Fargo Securities, LLC..........................................
                                                                      ----------
   Total.............................................................

                                                                      ==========
</TABLE>

   The underwriting agreement provides that the obligations of the several
Underwriters to purchase the Common Shares included in this offering are
subject to approval of certain legal matters by counsel and to certain other
conditions. The Underwriters are obligated to purchase all the Common Shares
(other than those covered by the over-allotment option described below) if they
purchase any of the Common Shares. The representatives have advised the Fund
that the Underwriters do not intend to confirm any sales to any accounts over
which they exercise discretionary authority.

   The Underwriters, for whom Salomon Smith Barney Inc., Nuveen Investments,
A.G. Edwards & Sons, Inc., Prudential Securities Incorporated, UBS Warburg LLC,
Fahnestock & Co. Inc., First Union Securities, Inc., Gruntal & Co., L.L.C.,
Janney Montgomery Scott LLC, Legg Mason Wood Walker, Incorporated, McDonald
Investments Inc., a KeyCorp Company, Raymond James & Associates, Inc., RBC Dain
Rauscher, Inc., SunTrust Capital Markets, Inc., and Wells Fargo Securities, LLC
are acting as representatives, propose to offer some of the Common Shares
directly to the public at the public offering price set forth on the cover page
of this Prospectus and some of the Common Shares to certain dealers at the
public offering price less a concession not in excess of $0.45 per Common
Share. The sales load the Fund will pay of $0.675 per share is equal to 4.5% of
the initial offering price. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $0.10 per Common Share on sales to
certain other dealers. Certain dealers acting in the capacity of
sub-underwriters may receive additional compensation for acting in such a
capacity. If all of the Common Shares are not sold at the initial offering
price, the representatives may change the public offering price and other
selling terms. Investors must pay for any Common Shares purchased on or
before             , 2002. In connection with this offering, Nuveen may perform
clearing services without charge for brokers and dealers for whom it regularly
provides clearing services that are participating in the offering as members of
the selling group.

                                      36

<PAGE>

   The Fund has granted to the Underwriters an option, exercisable for 45 days
from the date of this Prospectus, to purchase up to         additional Common
Shares at the public offering price less the sales load. The Underwriters may
exercise such option solely for the purpose of covering over-allotments, if
any, in connection with this offering. To the extent such option is exercised,
each Underwriter will be obligated, subject to certain conditions, to purchase
a number of additional Common Shares approximately proportionate to such
Underwriter's initial purchase commitment.

   The Fund and Nuveen Advisory have agreed that, for a period of 180 days from
the date of this Prospectus, they will not, without the prior written consent
of Salomon Smith Barney Inc., on behalf of the Underwriters, dispose of or
hedge any Common Shares or any securities convertible into or exchangeable for
Common Shares. Salomon Smith Barney Inc. in its sole discretion may release any
of the securities subject to these agreements at any time without notice.

   Prior to the offering, there has been no public market for the Common
Shares. Consequently, the initial public offering price for the Common Shares
was determined by negotiation among the Fund, Nuveen Advisory and the
representatives. There can be no assurance, however, that the price at which
the Common Shares will sell in the public market after this offering will not
be lower than the price at which they are sold by the Underwriters or that an
active trading market in the Common Shares will develop and continue after this
offering. The Common Shares have been approved for listing on the American
Stock Exchange, subject to official notice of issuance.

   The Fund and Nuveen Advisory have each agreed to indemnify the several
Underwriters or contribute to losses arising out of certain liabilities,
including liabilities under the Securities Act of 1933, as amended.

   Nuveen has agreed to pay (i) all organizational expenses and (ii) offering
costs (other than sales load) that exceed $0.03 per share.

   In addition, the Fund has agreed to reimburse the Underwriters for certain
expenses incurred by the Underwriters in the offering.

   In connection with the requirements for listing the Fund's Common Shares on
the American Stock Exchange, the Underwriters have undertaken to sell lots of
100 or more Common Shares to a minimum of 400 beneficial owners in the United
States. The minimum investment requirement is 100 Common Shares.

   Certain Underwriters may make a market in the Common Shares after trading in
the Common Shares has commenced on the American Stock Exchange. No Underwriter
is, however, obligated to conduct market-making activities and any such
activities may be discontinued at any time without notice, at the sole
discretion of the Underwriter. No assurance can be given as to the liquidity
of, or the trading market for, the Common Shares as a result of any
market-making activities undertaken by any Underwriter. This Prospectus is to
be used by any Underwriter in connection with the offering and, during the
period in which a prospectus must be delivered, with offers and sales of the
Common Shares in market-making transactions in the over-the-counter market at
negotiated prices related to prevailing market prices at the time of the sale.

   The Underwriters have advised the Fund that, pursuant to Regulation M under
the Securities Exchange Act of 1934, as amended, certain persons participating
in the offering may engage in

                                      37

<PAGE>

transactions, including stabilizing bids, covering transactions or the
imposition of penalty bids, which may have the effect of stabilizing or
maintaining the market price of the Common Shares on the American Stock
Exchange at a level above that which might otherwise prevail in the open
market. A "stabilizing bid" is a bid for or the purchase of the Common Shares
on behalf of an Underwriter for the purpose of fixing or maintaining the price
of the Common Shares. A "covering transaction" is a bid for or purchase of the
Common Shares on behalf of an Underwriter to reduce a short position incurred
by the Underwriters in connection with the offering.  A "penalty bid" is a
contractual arrangement whereby if, during a specified period after the
issuance of the Common Shares, the Underwriters purchase Common Shares in the
open market for the account of the underwriting syndicate and the Common Shares
purchased can be traced to a particular Underwriter or member of the selling
group, the underwriting syndicate may require the Underwriter or selling group
member in question to purchase the Common Shares in question at the cost price
to the syndicate or may recover from (or decline to pay to) the Underwriter or
selling group member in question any or all compensation (including, with
respect to a representative, the applicable syndicate management fee)
applicable to the Common Shares in question. As a result, an Underwriter or
selling group member and, in turn, brokers may lose the fees that they
otherwise would have earned from a sale of the Common Shares if their customer
resells the Common Shares while the penalty bid is in effect. The Underwriters
are not required to engage in any of these activities, and any such activities,
if commenced, may be discontinued at any time.

   The underwriting agreement provides that it may be terminated in the
absolute discretion of the representatives without liability on the part of any
Underwriter to the Fund or Nuveen Advisory if, prior to delivery of and payment
for the Common Shares, (i) trading in the Common Shares or securities generally
on the New York Stock Exchange, American Stock Exchange, Nasdaq National Market
or the Nasdaq Stock Market shall have been suspended or materially limited,
(ii) additional material governmental restrictions not in force on the date of
the underwriting agreement have been imposed upon trading in securities
generally or a general moratorium on commercial banking activities in New York
shall have been declared by either federal or state authorities or (iii) any
outbreak or material escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, occurs, the effect of which is such as to make it, in the judgment
of the representatives, impracticable or inadvisable to commence or continue
the offering of the Common Shares at the offering price to the public set forth
on the cover page of the Prospectus or to enforce contracts for the resale of
the Common Shares by the Underwriters.

   The Fund anticipates that from time to time the representatives of the
Underwriters and certain other Underwriters may act as brokers or dealers in
connection with the execution of the Fund's portfolio transactions after they
have ceased to be Underwriters and, subject to certain restrictions, may act as
brokers while they are Underwriters.


   Prior to the public offering of Common Shares, Nuveen Advisory purchased
Common Shares from the Fund in an amount satisfying the net worth requirements
of Section 14(a) of the 1940 Act.


   Nuveen, 333 West Wacker Drive, Chicago, Illinois, 60606, one of the
representatives of the Underwriters, is the parent company of Nuveen Advisory.

   The principal business address of Salomon Smith Barney Inc. is 388 Greenwich
Street, New York, New York 10013.

                                      38

<PAGE>

   First Union Securities, Inc., a subsidiary of Wachovia Corporation, conducts
its investment banking, institutional, and capital markets businesses under the
trade name of Wachovia Securities. Any references to "Wachovia Securities" in
this prospectus, however, do not include Wachovia Securities, Inc., a separate
broker-dealer subsidiary of Wachovia Corporation and sister affiliate of First
Union Securities, Inc., which may or may not be participating as a separate
selling dealer in the distribution of the securities.

                         CUSTODIAN AND TRANSFER AGENT

   The custodian of the assets of the Fund is JPMorgan Chase Bank,
P.O. Box 660086, Dallas, Texas 75266-0086. The Custodian performs custodial,
fund accounting and portfolio accounting services. The Fund's transfer,
shareholder services and dividend paying agent is also JPMorgan Chase Bank.

                                LEGAL OPINIONS

   Certain legal matters in connection with the Common Shares will be passed
upon for the Fund by Bell, Boyd & Lloyd LLC, Chicago, Illinois, and for the
Underwriters by Simpson Thacher & Bartlett, New York, New York. Bell, Boyd &
Lloyd LLC and Simpson Thacher & Bartlett may rely as to certain matters of
Massachusetts law on the opinion of Bingham Dana LLP, Boston, Massachusetts.

                                      39

<PAGE>

                           TABLE OF CONTENTS FOR THE
                      STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
                                                                       Page
                                                                       ----
     <S>                                                               <C>
     Use of Proceeds..................................................   3
     Investment Objectives............................................   5
     Investment Policies and Techniques...............................  10
     Other Investment Policies and Techniques.........................  18
     Management of the Fund...........................................  21
     Investment Adviser...............................................  27
     Portfolio Transactions...........................................  28
     Distributions....................................................  29
     Description of Shares............................................  30
     Certain Provisions in the Declaration of Trust...................  33
     Repurchase of Fund Shares; Conversion to Open-End Fund...........  34
     Tax Matters......................................................  37
     Performance Related and Comparative Information..................  40
     Experts..........................................................  41
     Custodian........................................................  41
     Additional Information...........................................  41
     Report of Independent Auditors...................................  43
     Financial Statements.............................................  44
     Appendices
        Appendix A--Ratings of Investments............................ A-1
        Appendix B--Taxable Equivalent Yield Tables................... B-1
        Appendix C--Description of Insurers........................... C-1
        Appendix D--Hedging Strategies and Risks...................... D-1
        Appendix E--Performance Related and Comparative Information... E-1
</TABLE>

                                      40

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------


                                         Shares


               Nuveen Insured Dividend Advantage Municipal Fund

                                 Common Shares

                                   --------

                                  PROSPECTUS

                                          , 2002

                                   --------

                             Salomon Smith Barney
                              Nuveen Investments
                           A.G. Edwards & Sons, Inc.
                             Prudential Securities
                                  UBS Warburg
                             Fahnestock & Co. Inc.
                             Gruntal & Co., L.L.C.
                          Janney Montgomery Scott LLC
                            Legg Mason Wood Walker
                                 Incorporated
                           McDonald Investments Inc.
                                 Raymond James
                              RBC Capital Markets
                          SunTrust Robinson Humphrey
                              Wachovia Securities
                          Wells Fargo Securities, LLC


- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>


     The information in this Statement of Additional Information is not complete
and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
Statement of Additional Information is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.



                 SUBJECT TO COMPLETION, DATED            , 2002

                Nuveen Insured Dividend Advantage Municipal Fund

                      STATEMENT OF ADDITIONAL INFORMATION



     Nuveen Insured Dividend Advantage Municipal Fund (the "Fund") is a newly
organized, diversified closed-end management investment company.

     This Statement of Additional Information relating to common shares of the
Fund ("Common Shares") does not constitute a prospectus, but should be read in
conjunction with the Fund's Prospectus relating thereto dated ___________, 2002
(the "Prospectus"). This Statement of Additional Information does not include
all information that a prospective investor should consider before purchasing
Common Shares, and investors should obtain and read the Fund's Prospectus prior
to purchasing such shares. A copy of the Fund's Prospectus may be obtained
without charge by calling (800) 257-8787. You may also obtain a copy of the
Fund's Prospectus on the Securities and Exchange Commission's web site
(http://www.sec.gov). Capitalized terms used but not defined in this Statement
of Additional Information have the meanings ascribed to them in the Prospectus.

                                       1

<PAGE>


                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                  Page
                                                                --------
<S>                                                             <C>
Use of Proceeds                                                        3
Investment Objectives                                                  5
Investment Policies and Techniques                                    10
Other Investment Policies and Techniques                              18
Management of the Fund                                                21
Investment Adviser                                                    27
Portfolio Transactions                                                28
Distributions                                                         29
Description of Shares                                                 30
Certain Provisions in the Declaration of Trust                        33
Repurchase of Fund Shares; Conversion to Open-End Fund                34
Tax Matters                                                           37
Performance Related and Comparative Information                       40
Experts                                                               41
Custodian                                                             41
Additional Information                                                41
Report of Independent Auditors                                        43
Financial Statements                                                  44
Ratings of Investments (Appendix A)                                  A-1
Taxable Equivalent Yield Tables (Appendix B)                         B-1
Description of Insurers (Appendix C)                                 C-1
Hedging Strategies and Risks (Appendix D)                            D-1
Performance Related and Comparative Information (Appendix E)         E-1
</TABLE>


This Statement of Additional Information is dated ___________, 2002

                                       2

<PAGE>


                                USE OF PROCEEDS

     The net proceeds of the offering of Common Shares of the Fund will be
approximately: $__________ ($__________ if the Underwriters exercise the
over-allotment option in full) after payment of organization and offering costs.

                                       3



<PAGE>


        For the Fund, Nuveen Advisory has agreed to pay (i) all organizational
expenses and (ii) offering costs (other than sales load) that exceed $0.03 per
Common Share.

     Pending investment in municipal bonds that meet the Fund's investment
objectives and policies, the net proceeds of the offering will be invested in
high quality, short-term tax-exempt money market securities or in high quality
municipal bonds with relatively low volatility (such as pre-refunded and
intermediate-term bonds), to the extent such securities are available. If
necessary to invest fully the net proceeds of the offering immediately, the Fund
may also purchase, as temporary investments, short-term taxable investments of
the type described under "Investment Policies and Techniques--Investment in
Municipal Bonds--Portfolio Investments," the income on which is subject to
regular federal income tax and securities of other open or closed-end investment
companies that invest primarily in municipal bonds of the type in which the Fund
may invest directly.

                                       4

<PAGE>

                             INVESTMENT OBJECTIVES


The Fund's investment objective is to provide current income exempt from regular
federal income tax, and to enhance portfolio value relative to the municipal
bond market by investing in tax-exempt municipal bonds that the Fund's
investment adviser believes are underrated or undervalued or that represent
municipal market sectors that are undervalued.


                                       5

<PAGE>

     The Fund's investment in underrated or undervalued municipal bonds will be
based on Nuveen Advisory's belief that their yield is higher than that available
on bonds bearing equivalent levels of interest rate risk, credit risk and other
forms of risk, and that their prices will ultimately rise (relative to the
market) to reflect their true value. The Fund attempts to increase its
portfolio value relative to the municipal bond market by prudent selection of
municipal bonds regardless of the direction the market may move. Any capital
appreciation realized by the Fund will

                                       6

<PAGE>

generally result in the distribution of taxable capital gains to holders of
Common Shares. The Fund's investment objectives are fundamental policies of the
Fund.


     Under normal circumstances, the Fund seeks to achieve its investment
objectives by investing at least 80% of its net assets in a portfolio of
tax-exempt municipal bonds that are covered by insurance guaranteeing the timely
payment of principal and interest thereon. The Fund will notify shareholders at
least 60 days prior to any change in this 80% policy. The Fund also may invest
up to 20% of its net assets in (i) uninsured municipal bonds that are 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,
or (ii) other municipal bonds that are rated, at the time of investment, within
the four highest grades (Baa or BBB or better by Moody's, S&P or Fitch), or are
unrated but judged to be of comparable quality by Nuveen Advisory.


     The Fund has not established any limit on the percentage of its portfolio
that may be invested in municipal bonds subject to the alternative minimum tax
provisions of federal tax law, and the Fund expects that a substantial portion
of the income it produces will be includable in alternative minimum taxable
income. Common Shares therefore would not ordinarily be a suitable investment
for investors who are subject to the federal alternative minimum tax or who
would become subject to such tax by purchasing Common Shares. The suitability of
an investment in Common Shares will depend upon a comparison of the after-tax
yield likely to be provided from the Fund with that from comparable tax-exempt
investments not subject to the alternative minimum tax, and from comparable
fully taxable investments, in light of each such investor's tax position.
Special considerations apply to corporate investors. See "Tax Matters."

Investment Restrictions

     Except as described below, the Fund, as a fundamental policy, may not,
without the approval of the holders of a majority of the outstanding Common
Shares and, if issued, MuniPreferred Shares (as hereinafter defined) voting
together as a single class, and of the holders of a majority of the outstanding
MuniPreferred Shares voting as a separate class:


          (1) Under normal circumstances, invest less than 80% of the Fund's net
     assets (plus any borrowings for investment purposes) in investments the
     income from which is exempt from regular federal income tax;


          (2) Issue senior securities, as defined in the Investment Company Act
     of 1940, other than MuniPreferred Shares, except to the extent permitted
     under the Investment Company Act of 1940 and except as otherwise described
     in the Prospectus;

          (3) Borrow money, except from banks for temporary or emergency
     purposes or for repurchase of its shares, and then only in an amount not
     exceeding one-third of the value of the Fund's total assets (including the
     amount borrowed) less the Fund's liabilities (other than borrowings);

          (4) Act as underwriter of another issuer's securities, except to the
     extent that the Fund may be deemed to be an underwriter within the meaning
     of the Securities Act of 1933 in connection with the purchase and sale of
     portfolio securities;

          (5) Invest more than 25% of its total assets in securities of issuers
     in any one industry; provided, however, that such limitation shall not
     apply to municipal bonds other than those municipal bonds backed only by
     the assets and revenues of non-governmental users;

                                       7

<PAGE>


          (6) Purchase or sell real estate, but this shall not prevent the Fund
     from investing in municipal bonds secured by real estate or interests
     therein or foreclosing upon and selling such security;

          (7) Purchase or sell physical commodities unless acquired as a result
     of ownership of securities or other instruments (but this shall not prevent
     the Fund from purchasing or selling options, futures contracts, derivative
     instruments or from investing in securities or other instruments backed by
     physical commodities);

          (8) Make loans, other than by entering into repurchase agreements and
     through the purchase of municipal bonds or short-term investments in
     accordance with its investment objectives, policies and limitations; and

          (9) Invest more than 5% of its total assets in securities of any one
     issuer, except that this limitation shall not apply to bonds issued by the
     United States Government, its agencies and instrumentalities or to the
     investment of 25% of its total assets.


     For purposes of the foregoing and "Description of Shares--MuniPreferred
Shares--Voting Rights" below, "majority of the outstanding," when used with
respect to particular shares of the Fund, means (i) 67% or more of the shares
present at a meeting, if the holders of more than 50% of the shares are present
or represented by proxy, or (ii) more than 50% of the shares, whichever is
less.

     For the purpose of applying the limitation set forth in subparagraph (9)
above, an issuer shall be deemed the sole issuer of a security when its assets
and revenues are separate from other governmental entities and its securities
are backed only by its assets and revenues. Similarly, in the case of a non-
governmental issuer, such as an industrial corporation or a privately owned or
operated hospital, if the security is backed only by the assets and revenues of
the non-governmental issuer, then such non-governmental issuer would be deemed
to be the sole issuer. Where a security is also backed by the enforceable
obligation of a superior or unrelated governmental or other entity (other than a
bond insurer), it shall also be included in the computation of securities owned
that are issued by such governmental or other entity. Where a security is
guaranteed by a governmental entity or some other facility, such as a bank
guarantee or letter of credit, such a guarantee or letter of credit would be
considered a separate security and would be treated as an issue of such
government, other entity or bank. When a municipal bond is insured by bond
insurance, it shall not be considered a security that is issued or guaranteed by
the insurer; instead, the issuer of such municipal bond will be determined in
accordance with the principles set forth above. The foregoing restrictions do
not limit the percentage of the Fund's assets that may be invested in municipal
bonds insured by any given insurer.

     Under the Investment Company Act of 1940, the Fund may invest only up to
10% of its total assets in the aggregate in shares of other investment companies
and only up to 5% of its total assets in any one investment company, provided
the investment does not represent more than 3% of the voting stock of the
acquired investment company at the time such shares are purchased. As a
stockholder in any investment company, the Fund will bear its ratable share
of

                                       8

<PAGE>

that investment company's expenses, and would remain subject to payment of the
Fund's management, advisory and administrative fees with respect to assets so
invested. Holders of Common Shares would therefore be subject to duplicative
expenses to the extent the Fund invests in other investment companies. In
addition, the securities of other investment companies may also be leveraged and
will therefore be subject to the same leverage risks described herein. As
described in the Prospectus in the section entitled "Risks", the net asset value
and market value of leveraged shares will be more volatile and the yield to
shareholders will tend to fluctuate more than the yield generated by unleveraged
shares.

     In addition to the foregoing fundamental investment policies, the Fund is
also subject to the following non-fundamental restrictions and policies, which
may be changed by the Board of Trustees. The Fund may not:

          (1) Sell securities short, unless the Fund owns or has the right to
     obtain securities equivalent in kind and amount to the securities sold at
     no added cost, and provided that transactions in options, futures
     contracts, options on futures contracts, or other derivative instruments
     are not deemed to constitute selling securities short.

          (2) Purchase securities of open-end or closed-end investment companies
     except in compliance with the Investment Company Act of 1940 or any
     exemptive relief obtained thereunder.

          (3) Enter into futures contracts or related options or forward
     contracts, if more than 30% of the Fund's net assets would be represented
     by futures contracts or more than 5% of the Fund's net assets would be
     committed to initial margin deposits and premiums on futures contracts and
     related options.

          (4) Purchase securities when borrowings exceed 5% of its total assets
     if and so long as MuniPreferred Shares are outstanding.

          (5) Purchase securities of companies for the purpose of exercising
     control.

          (6) Invest in inverse floating rate securities (which are securities
     that pay interest at rates that vary inversely with changes in prevailing
     short-term tax-exempt interest rates and which represent a leveraged
     investment in an underlying municipal bond).

     The restrictions and other limitations set forth above will apply only at
the time of purchase of securities and will not be considered violated unless an
excess or deficiency occurs or exists immediately after and as a result of an
acquisition of securities.

     The Fund intends to apply for ratings for its preferred shares (called
"MuniPreferred Shares" herein) from Moody's and/or S&P. In order to obtain and
maintain the required ratings, the Fund may be required to comply with
investment quality, diversification and other guidelines established by Moody's
or S&P. Such guidelines will likely be more restrictive than the restrictions
set forth above. The Fund does not anticipate that such guidelines would have a
material

                                       9

<PAGE>

adverse effect on its Common Shareholders or its ability to achieve its
investment objectives. The Fund presently anticipates that any MuniPreferred
Shares that it intends to issue would be initially given the highest ratings by
Moody's ("Aaa") or by S&P ("AAA"), but no assurance can be given that such
ratings will be obtained. No minimum rating is required for the issuance of
MuniPreferred Shares by the Fund. Moody's and S&P receive fees in connection
with their ratings issuances.

                      INVESTMENT POLICIES AND TECHNIQUES

     The following information supplements the discussion of the Fund's
investment objectives, policies, and techniques that are described in the Fund's
Prospectus.

Investment in Municipal Bonds

     Portfolio Investments


     The Fund will invest its net assets in a portfolio of municipal bonds that
are exempt from regular federal income tax.

     Under normal circumstances, and except for the temporary investments
described below, the Fund expects to be fully invested (at least 95% of its
                    assets) in such tax-exempt municipal bonds described herein.

     Under normal circumstances, the Fund will invest at least 80% of its net
assets (plus any borrowings for investment purposes) in a portfolio of municipal
bonds that are exempt from regular federal income taxes and that are covered by
insurance guaranteeing the timely payment of principal and interest thereon. The
Fund also may invest up to 20% of its net assets in (i) uninsured municipal
bonds that are 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, or (ii) other municipal bonds that are rated, at the
time of investment, within the four highest grades (Baa or BBB or better by
Moody's, S&P or Fitch), or bonds that are unrated but judged to be of comparable
quality by Nuveen Advisory.


                                      10

<PAGE>

     A general description of Moody's, S&P's and Fitch's ratings of municipal
bonds is set forth in Appendix A hereto. The ratings of Moody's, S&P and Fitch
represent their opinions as to the quality of the municipal bonds they rate. It
should be emphasized, however, that ratings are general and are not absolute
standards of quality. Consequently, municipal bonds with the same maturity,
coupon and rating may have different yields while obligations of the same
maturity and coupon with different ratings may have the same yield.


     Except to the extent that the Fund buys temporary investments as described
herein, the Fund will invest at least 80% of its net assets (plus any borrowings
for investment purposes) in tax-exempt municipal bonds that are covered by
insurance guaranteeing the timely payment of principal and interest on the
bonds. The Fund also may invest up to 20% of its net assets in (i) uninsured
municipal bonds that are 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, or (ii) other municipal bonds that are rated,
at the time of investment, within the four highest grades (Baa or BBB or better
by Moody's, S&P or Fitch), or are unrated but judged to be of comparable quality
by Nuveen Advisory.


     Each insured municipal bond that the Fund holds will either be (1) covered
by an insurance policy applicable to a specific security and obtained by the
issuer of the security or a third party at the time of original issuance
("Original Issue Insurance"), (2) covered by an insurance policy applicable to a
specific security and obtained by the Fund and/or a third party subsequent to
the time of original issuance ("Secondary Market Insurance"), or (3) covered by
a master municipal insurance policy purchased by the Fund ("Portfolio
Insurance"). The Fund, as a non-fundamental policy that can be changed by the
Board of Trustees, will only buy Portfolio Insurance from insurers whose
claims-paying ability Moody's rates "Aaa" or S&P or Fitch rates "AAA."


     Information about the various municipal bond insurers with whom the Fund
intends to maintain specific insurance policies for particular municipal bonds
or policies of Portfolio Insurance is set forth in Appendix C hereto.


     The Fund also may invest up to 20% of its net assets in uninsured municipal
bonds that are entitled to the benefit of an escrow or trust account that
contains securities issued or guaranteed by the U.S. Government or U.S.
Government agencies, backed by the full faith and credit of the United States,
and sufficient in amount to ensure the payment of interest and principal on the
original interest payment and maturity dates ("collateralized obligations").
These collateralized obligations generally will not be insured and will include,
but are not limited to municipal bonds that have been (1) advance refunded where
the proceeds of the refunding have been used to buy U.S. Government or U.S.
Government agency securities that are placed in escrow and whose interest or
maturing principal payments, or both, are sufficient to cover the remaining
scheduled debt service on that municipal bond; or (2) issued under state or
local housing finance programs that use the issuance proceeds to fund mortgages
that are then exchanged for U.S. Government or U.S. Government agency securities
and deposited with a trustee as security for those municipal bonds. These
collateralized obligations are normally regarded as having the credit
characteristics of the underlying U.S. Government or U.S. Government agency
securities.


                                      11

<PAGE>

     The Fund will primarily invest in municipal bonds with long-term maturities
in order to maintain a weighted average maturity of 15-30 years, but the average
weighted maturity of obligations held by the Fund may be shortened, depending on
market conditions. As a result, the Fund's portfolio at any given time may
include both long-term and intermediate-term municipal bonds. Moreover, during
temporary defensive periods (e.g., times when, in Nuveen Advisory's opinion,
temporary imbalances of supply and demand or other temporary dislocations in the
tax-exempt bond market adversely affect the price at which long-term or
intermediate-term municipal bonds are available), and in order to keep the
Fund's cash fully invested, including the period during which the net proceeds
of the offering are being invested, the Fund may invest any percentage of its
net assets in short-term investments including high quality, short-term
securities that may be either tax-exempt or taxable and up to 10% of its net
assets in securities of other open or closed-end investment companies that
invest primarily in municipal bonds of the type in which the Fund may invest
directly. The Fund intends to invest in taxable short-term investments only in
the event that suitable tax-exempt short-term investments are not available at
reasonable prices and yields. Tax-exempt short-term investments include various
obligations issued by state and local governmental issuers, such as tax-exempt
notes (bond anticipation notes, tax anticipation notes and revenue anticipation
notes or other such municipal bonds maturing in three years or less from the
date of issuance) and municipal commercial paper. The Fund will invest only in
taxable short-term investments which are U.S. Government securities or
securities rated within the highest grade by Moody's, S&P or Fitch, and which
mature within one year from the date of purchase or carry a variable or floating
rate of interest. See Appendix A for a general description of Moody's, S&P's and
Fitch's ratings of securities in such categories. Taxable short-term investments
of the Fund may include certificates of deposit issued by U.S. banks with assets
of at least $1 billion, or commercial paper or corporate notes, bonds or
debentures with a remaining maturity of one year or less, or repurchase
agreements. See "Other Investment Policies and Techniques--Repurchase
Agreements." To the extent the Fund invests

                                      12

<PAGE>

in taxable investments, the Fund will not at such times be in a position to
achieve its investment objective of tax-exempt income.

     The foregoing policies as to ratings of portfolio investments will apply
only at the time of the purchase of a security, and the Fund will not be
required to dispose of securities in the event Moody's, S&P or Fitch downgrades
its assessment of the credit characteristics of a particular issuer.

     Nuveen Advisory seeks to enhance portfolio value relative to the municipal
bond market by investing in tax-exempt municipal bonds that it believes are
underrated or undervalued or that represent municipal market sectors that are
undervalued. Underrated municipal bonds are those whose ratings do not, in
Nuveen Advisory's opinion, reflect their true creditworthiness. Undervalued
municipal bonds are bonds that, in Nuveen Advisory's opinion, are worth more
than the value assigned to them in the marketplace. Nuveen Advisory may at times
believe that bonds associated with a particular municipal market sector (for
example, electric utilities), or issued by a particular municipal issuer, are
undervalued. Nuveen Advisory may purchase such a bond for the Fund's portfolio
because it represents a market sector or issuer that Nuveen Advisory considers
undervalued, even if the value of the particular bond is consistent with the
value of similar bonds. Municipal bonds of particular types or purposes (e.g.,
hospital bonds, industrial revenue bonds or bonds issued by a particular
municipal issuer) may be undervalued because there is a temporary excess of
supply in that market sector, or because of a general decline in the market
price of municipal bonds of the market sector for reasons that do not apply to
the particular municipal bonds that are considered undervalued. The Fund's
investment in underrated or undervalued municipal bonds will be based on Nuveen
Advisory's belief that their yield is higher than that available on bonds
bearing equivalent levels of interest rate risk, credit risk and other forms of
risk, and that their prices will ultimately rise (relative to the market) to
reflect their true value.

     The Fund has not established any limit on the percentage of its portfolio
investments that may be invested in municipal bonds subject to the federal
alternative minimum tax provisions of federal tax law, and the Fund expects that
a substantial portion of the current income it produces will be includable in
alternative minimum taxable income. Special considerations apply to corporate
investors. See "Tax Matters."

     Also included within the general category of municipal bonds described in
the Fund's Prospectus are participations in lease obligations or installment
purchase contract obligations (hereinafter collectively called "Municipal Lease
Obligations") of municipal authorities or entities. Although a Municipal Lease
Obligation does not constitute a general obligation of the municipality for
which the municipality's taxing power is pledged, a Municipal Lease Obligation
is ordinarily backed by the municipality's covenant to budget for, appropriate
and make the payments due under the Municipal Lease Obligation. However, certain
Municipal Lease Obligations contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment purchase
payments in future years unless money is appropriated for such purpose on a
yearly basis. In the case of a "non-appropriation" lease, the Fund's ability to
recover under the lease in the event of non-appropriation or default will be
limited solely to the repossession of the leased property, without recourse to
the general credit of the lessee, and disposition or releasing of the property
might prove difficult. In order to reduce this risk, the Fund will only

                                      13

<PAGE>

purchase Municipal Lease Obligations where Nuveen Advisory believes the issuer
has a strong incentive to continue making appropriations until maturity.

     Upon Nuveen Advisory's recommendation, during temporary defensive periods
and in order to keep the Fund's cash fully invested, including the period during
which the net proceeds of the offering are being invested, the Fund may invest
up to 100% of its net assets in short-term investments including high quality,
short-term securities that may be either tax-exempt or taxable. To the extent
the Fund invests in taxable short-term investments, the Fund will not at such
times be in a position to achieve that portion of its investment objective of
seeking current income exempt from regular federal income tax. For further
information, see, "Short-Term Investments" below.

     Obligations of issuers of municipal bonds are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Bankruptcy Reform Act of 1978. In addition, the
obligations of such issuers may become subject to the laws enacted in the future
by Congress, state legislatures or referenda extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations or upon municipalities to levy taxes. There is also the
possibility that, as a result of legislation or other conditions, the power or
ability of any issuer to pay, when due, the principal of and interest on its
municipal bonds may be materially affected.

     The Fund also may invest up to 10% of its net assets in securities of other
open or closed-end investment companies that invest primarily in municipal bonds
of the type in which the Fund may invest directly. The Fund will generally
select obligations which may not be redeemed at the option of the issuer for
approximately seven to nine years.

Additional Information on Municipal Bond Insurance

     Original Issue Insurance. If interest or principal on a municipal bond is
due, but the issuer fails to pay it, the insurer will make payments in the
amount due to the fiscal agent no later than one business day after the insurer
has been notified of the issuer's nonpayment. The fiscal agent will pay the
amount due to the Fund after the fiscal agent receives evidence of the Fund's
right to receive payment of the principal and/or interest, and evidence that all
of the rights of payment due shall thereupon vest in the insurer. When the
insurer pays the Fund the payment due from the issuer, the insurer will succeed
to the Fund's rights to that payment.

     Portfolio Insurance. Each portfolio insurance policy will be noncancellable
and will remain in effect so long as the Fund is in existence, the Fund
continues to own the municipal bonds covered by the policy, and the Fund pays
the premiums for the policy. Each insurer generally will reserve the right at
any time upon 90 days' written notice to the Fund to refuse to insure any
additional bonds the Fund buys after the effective date of the notice. The
Fund's Board of Trustees will generally reserve the right to terminate each
policy upon seven day's written notice to an insurer if it determines that the
cost of the policy is not reasonable in relation to the value of the insurance
to the Fund.

                                      14

<PAGE>

Short-Term Investments

     Short-Term Taxable Fixed Income Securities

     For temporary defensive purposes or to keep cash on hand fully invested,
the Fund may invest up to 100% of its net assets in cash equivalents and short-
term taxable fixed-income securities, although the Fund intends to invest in
taxable short-term investments only in the event that suitable tax-exempt short-
term investments are not available at reasonable prices and yields. Short-term
taxable fixed income investments are defined to include, without limitation, the
following:

          (1)  U.S. government securities, including bills, notes and bonds
     differing as to maturity and rates of interest that are either issued or
     guaranteed by the U.S. Treasury or by U.S. government agencies or
     instrumentalities. U.S. government agency securities include securities
     issued by (a) the Federal Housing Administration, Farmers Home
     Administration, Export-Import Bank of the United States, Small Business
     Administration, and the Government National Mortgage Association, whose
     securities are supported by the full faith and credit of the United States;
     (b) the Federal Home Loan Banks, Federal Intermediate Credit Banks, and the
     Tennessee Valley Authority, whose securities are supported by the right of
     the agency to borrow from the U.S. Treasury; (c) the Federal National
     Mortgage Association, whose securities are supported by the discretionary
     authority of the U.S. government to purchase certain obligations of the
     agency or instrumentality; and (d) the Student Loan Marketing Association,
     whose securities are supported only by its credit. While the U.S.
     government provides financial support to such U.S. government-sponsored
     agencies or instrumentalities, no assurance can be given that it always
     will do so since it is not so obligated by law. The U.S. government, its
     agencies, and instrumentalities do not guarantee the market value of their
     securities. Consequently, the value of such securities may fluctuate.

          (2)  Certificates of Deposit issued against funds deposited in a bank
     or a savings and loan association. Such certificates are for a definite
     period of time, earn a specified rate of return, and are normally
     negotiable. The issuer of a certificate of deposit agrees to pay the amount
     deposited plus interest to the bearer of the certificate on the date
     specified thereon. Under current FDIC regulations, the maximum insurance
     payable as to any one certificate of deposit is $100,000; therefore,
     certificates of deposit purchased by the Fund may not be fully insured.

          (3)  Repurchase agreements, which involve purchases of debt
     securities. At the time the Fund purchases securities pursuant to a
     repurchase agreement, it simultaneously agrees to resell and redeliver such
     securities to the seller, who also simultaneously agrees to buy back the
     securities at a fixed price and time. This assures a predetermined yield
     for the Fund during its holding period, since the resale price is always
     greater than the purchase price and reflects an agreed-upon market rate.
     Such actions afford an opportunity for the Fund to invest

                                      15

<PAGE>


     temporarily available cash. The Fund may enter into repurchase agreements
     only with respect to obligations of the U.S. government, its agencies or
     instrumentalities; certificates of deposit; or bankers' acceptances in
     which the Fund may invest. Repurchase agreements may be considered loans to
     the seller, collateralized by the underlying securities. The risk to the
     Fund is limited to the ability of the seller to pay the agreed-upon sum on
     the repurchase date; in the event of default, the repurchase agreement
     provides that the Fund is entitled to sell the underlying collateral. If
     the seller defaults under a repurchase agreement when the value of the
     underlying collateral is less than the repurchase price, the Fund could
     incur a loss of both principal and interest. The investment adviser
     monitors the value of the collateral at the time the action is entered into
     and at all times during the term of the repurchase agreement. The
     investment adviser does so in an effort to determine that the value of the
     collateral always equals or exceeds the agreed-upon repurchase price to be
     paid to the Fund. If the seller were to be subject to a federal bankruptcy
     proceeding, the ability of the Fund to liquidate the collateral could be
     delayed or impaired because of certain provisions of the bankruptcy laws.

          (4) Commercial paper, which consists of short-term unsecured
     promissory notes, including variable rate master demand notes issued by
     corporations to finance their current operations. Master demand notes are
     direct lending arrangements between the Fund and a corporation. There is no
     secondary market for such notes. However, they are redeemable by the Fund
     at any time. Nuveen Advisory will consider the financial condition of the
     corporation (e.g., earning power, cash flow, and other liquidity measures)
     and will continuously monitor the corporation's ability to meet all of its
     financial obligations, because the Fund's liquidity might be impaired if
     the corporation were unable to pay principal and interest on demand.
     Investments in commercial paper will be limited to commercial paper rated
     in the highest categories by a major rating agency and which mature within
     one year of the date of purchase or carry a variable or floating rate of
     interest.

     Short-Term Tax-Exempt Fixed Income Securities

     Short-term tax-exempt fixed-income securities are securities that are
exempt from regular federal income tax and mature within three years or less
from the date of issuance. Short-term tax-exempt fixed income securities are
defined to include, without limitation, the following:

     Bond Anticipation Notes ("BANs") are usually general obligations of state
and local governmental issuers which are sold to obtain interim financing for
projects that will eventually be funded through the sale of long-term debt
obligations or bonds. The ability of an issuer to meet its obligations on its
BANs is primarily dependent on the issuer's access to the long-term municipal
bond market and the likelihood that the proceeds of such bond sales will be used
to pay the principal and interest on the BANs.

                                      16

<PAGE>

     Tax Anticipation Notes ("TANs") are issued by state and local governments
to finance the current operations of such governments. Repayment is generally to
be derived from specific future tax revenues. TANs are usually general
obligations of the issuer. A weakness in an issuer's capacity to raise taxes due
to, among other things, a decline in its tax base or a rise in delinquencies,
could adversely affect the issuer's ability to meet its obligations on
outstanding TANs.

     Revenue Anticipation Notes ("RANs") are issued by governments or
governmental bodies with the expectation that future revenues from a designated
source will be used to repay the notes. In general, they also constitute general
obligations of the issuer. A decline in the receipt of projected revenues, such
as anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal and
interest on RANs.

     Construction Loan Notes are issued to provide construction financing for
specific projects. Frequently, these notes are redeemed with funds obtained from
the Federal Housing Administration.

     Bank Notes are notes issued by local government bodies and agencies, such
as those described above to commercial banks as evidence of borrowings.  The
purposes for which the notes are issued are varied but they are frequently
issued to meet short-term working capital or capital-project needs. These notes
may have risks similar to the risks associated with TANs and RANs.

     Tax-Exempt Commercial Paper ("Municipal Paper") represents very short-term
unsecured, negotiable promissory notes issued by states, municipalities and
their agencies. Payment of principal and interest on issues of municipal paper
may be made from various sources, to the extent the funds are available
therefrom. Maturities of municipal paper generally will be shorter than the
maturities of TANs, BANs or RANs. There is a limited secondary market for issues
of Municipal Paper.

     Certain municipal bonds may carry variable or floating rates of interest
whereby the rate of interest is not fixed but varies with changes in specified
market rates or indices, such as a bank prime rate or a tax-exempt money market
index.

     While the various types of notes described above as a group represent the
major portion of the short-term tax-exempt note market, other types of notes are
available in the marketplace and the Fund may invest in such other types of
notes to the extent permitted under its investment objectives, policies and
limitations. Such notes may be issued for different purposes and may be secured
differently from those mentioned above.

Hedging Strategies

     The Fund may periodically engage in hedging transactions. Hedging is a
term used for various methods of seeking to preserve portfolio capital value by
offsetting price changes in one investment through making another investment
whose price should tend to move in the opposite direction. It may be desirable
and possible in various market environments to partially hedge the portfolio
against fluctuations in market value due to interest rate fluctuations by
investment in

                                      17

<PAGE>

financial futures and index futures as well as related put and call options on
such instruments. Both parties entering into an index or financial futures
contract are required to post an initial deposit of 1% to 5% of the total
contract price. Typically, option holders enter into offsetting closing
transactions to enable settlement in cash rather than take delivery of the
position in the future of the underlying security. The Fund will only sell
covered futures contracts, which means that the Fund segregates assets equal to
the amount of the obligations.

     These transactions present certain risks. In particular, the imperfect
correlation between price movements in the futures contract and price movements
in the securities being hedged creates the possibility that losses on the hedge
by a Fund may be greater than gains in the value of the securities in the Fund's
portfolio. In addition, futures and options markets may not be liquid in all
circumstances. As a result, in volatile markets, the Fund may not be able to
close out the transaction without incurring losses substantially greater than
the initial deposit. Finally, the potential deposit requirements in futures
contracts create an ongoing greater potential financial risk than do options
transactions, where the exposure is limited to the cost of the initial premium.
Losses due to hedging transactions will reduce yield. Net gains, if any, from
hedging and other portfolio transactions will be distributed as taxable
distributions to shareholders. The Fund will not make any investment (whether an
initial premium or deposit or a subsequent deposit) other than as necessary to
close a prior investment if, immediately after such investment, the sum of the
amount of its premiums and deposits would exceed 5% of the Fund's net assets.
The Fund will invest in these instruments only in markets believed by Nuveen
Advisory to be active and sufficiently liquid. Successful implementation of most
hedging strategies would generate taxable income, and the Fund has no present
intention to use these strategies. For further information regarding these
investment strategies and risks presented thereby, see Appendix D to this
Statement of Additional Information.



                    OTHER INVESTMENT POLICIES AND TECHNIQUES

Illiquid Securities

     The Fund may invest in illiquid securities (i.e., securities that are not
readily marketable), including, but not limited to, restricted securities
(securities the disposition of which is restricted under the federal securities
laws), securities that may only be resold pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"); and repurchase
agreements with maturities in excess of seven days.


                                       18

<PAGE>

     Restricted securities may be sold only in privately negotiated transactions
or in a public offering with respect to which a registration statement is in
effect under the Securities Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the Fund
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than that which prevailed when it decided to
sell. Illiquid securities will be priced at a fair value as determined in good
faith by the Board of Trustees or its delegate.

Portfolio Trading and Turnover Rate

     Portfolio trading may be undertaken to accomplish the investment objectives
of the Fund in relation to actual and anticipated movements in interest rates.
In addition, a security may be sold and another of comparable quality purchased
at approximately the same time to take advantage of what Nuveen Advisory
believes to be a temporary price disparity between the two securities. Temporary
price disparities between two comparable securities may result from supply and
demand imbalances where, for example, a temporary oversupply of certain bonds
may cause a temporarily low price for such bonds, as compared with other bonds
of like quality and characteristics. The Fund may also engage to a limited
extent in short-term trading consistent with its investment objectives.
Securities may be sold in anticipation of a market decline (a rise in interest
rates) or purchased in anticipation of a market rise (a decline in interest
rates) and later sold, but the Fund will not engage in trading solely to
recognize a gain.

     Subject to the foregoing, the Fund will attempt to achieve its investment
objectives by prudent selection of municipal bonds with a view to holding them
for investment. While there can be no assurance thereof, the Fund anticipates
that its annual portfolio turnover rate will generally not exceed 100%. However,
the rate of turnover will not be a limiting factor when the Fund deems it
desirable to sell or purchase securities. Therefore, depending upon market
conditions, the annual portfolio turnover rate of the Fund may exceed 100% in
particular years.

Other Investment Companies

     The Fund may invest in securities of other open or closed-end investment
companies that invest primarily in municipal bonds of the types in which the
Fund may invest directly. The Fund generally expects to invest in other
investment companies either during periods when it has large amounts of
uninvested cash, such as the period shortly after the Fund receives the proceeds
of the offering of its Common Shares or MuniPreferred Shares, or during periods
when there is a shortage of attractive, high-yielding municipal bonds available
in the market. As a stockholder in an investment company, the Fund will bear its
ratable share of that investment company's expenses and would remain subject to
payment of the Fund's management, advisory and administrative fees with respect
to assets so invested. Common Shareholders would therefore be subject to
duplicative expenses to the extent the Fund invests in other investment
companies. Nuveen Advisory will take expenses into account when evaluating the
investment merits of an investment in the investment company relative to
available municipal bond investments. In addition, the securities of other
investment companies may also be leveraged and will therefore be subject to the
same leverage risks described herein. As described in the Fund's Prospectus in
the section entitled "Risks," the net asset value and market value of leveraged
shares will be more

                                       19

<PAGE>

volatile and the yield to shareholders will tend to fluctuate more than the
yield generated by unleveraged shares.

When-Issued and Delayed Delivery Transactions

     The Fund may buy and sell municipal bonds on a when-issued or delayed
delivery basis, making payment or taking delivery at a later date, normally
within 15-45 days of the trade date. On such transactions the payment obligation
and the interest rate are fixed at the time the buyer enters into the
commitment. Beginning on the date the Fund enters into a commitment to purchase
securities on a when-issued or delayed delivery basis, the Fund is required
under rules of the Securities and Exchange Commission to maintain in a separate
account liquid assets, consisting of cash, cash equivalents or liquid securities
having a market value at all times of at least equal to the amount of the
commitment. Income generated by any such assets which provide taxable income for
federal income tax purposes is includable in the taxable income of the Fund. The
Fund may enter into contracts to purchase municipal bonds on a forward basis
(i.e., where settlement will occur more than 60 days from the date of the
transaction) only to the extent that the Fund specifically collateralizes such
obligations with a security that is expected to be called or mature within sixty
days before or after the settlement date of the forward transaction. The
commitment to purchase securities on a when-issued, delayed delivery or forward
basis may involve an element of risk because no interest accrues on the bonds
prior to settlement and at the time of delivery the market value may be less
than cost.

Repurchase Agreements

     As temporary investments, the Fund may invest in repurchase agreements. A
repurchase agreement is a contractual agreement whereby the seller of securities
(U.S. Government securities or municipal bonds) agrees to repurchase the same
security at a specified price on a future date agreed upon by the parties. The
agreed-upon repurchase price determines the yield during the Fund's holding
period. Repurchase agreements are considered to be loans collateralized by the
underlying security that is the subject of the repurchase contract. Income
generated from transactions in repurchase agreements will be taxable. See "Tax
Matters" for information relating to the allocation of taxable income between
Common Shares and MuniPreferred Shares, if any. The Fund will only enter into
repurchase agreements with registered securities dealers or domestic banks that,
in the opinion of Nuveen Advisory, present minimal credit risk. The risk to the
Fund is limited to the ability of the issuer to pay the agreed-upon repurchase
price on the delivery date; however, although the value of the underlying
collateral at the time the transaction is entered into always equals or exceeds
the agreed-upon repurchase price, if the value of the collateral declines there
is a risk of loss of both principal and interest. In the event of default, the
collateral may be sold but the Fund might incur a loss if the value of the
collateral declines, and might incur disposition costs or experience delays in
connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization upon the collateral by the Fund may be delayed or limited. Nuveen
Advisory will monitor the value of the collateral at the time the transaction is
entered into and at all times subsequent during the term of the repurchase
agreement in an effort to determine that such value always equals or exceeds the
agreed-upon repurchase price. In the event the value of the collateral declines
below the repurchase price, Nuveen Advisory will

                                       20

<PAGE>

demand additional collateral from the issuer to increase the value of the
collateral to at least that of the repurchase price, including interest.

Zero Coupon Bonds


     The Fund may invest in zero coupon bonds. A zero coupon bond is a bond
that does not pay interest for its entire life. The market prices of zero coupon
bonds are affected to a greater extent by changes in prevailing levels of
interest rates and thereby tend to be more volatile in price than securities
that pay interest periodically. In addition, because the Fund accrues income
with respect to these securities prior to the receipt of such interest, it may
have to dispose of portfolio securities under disadvantageous circumstances in
order to obtain cash needed to pay income dividends in amounts necessary to
avoid unfavorable tax consequences.

                            MANAGEMENT OF THE FUND

Trustees and Officers

     The management of the Fund, including general supervision of the duties
performed for the Fund under the Management Agreement, is the responsibility of
the Board of Trustees of the Fund. The number of trustees of the Fund is
currently set at seven, one of whom is an "interested person" (as the term is
defined in the Investment Company Act of 1940) and six of whom are not
interested persons. None of the trustees who are not interested persons of the
Fund has ever been a director or employee of, or consultant to, Nuveen or its
affiliates. The names and business addresses of the trustees and officers of the
Fund, their principal occupations and other affiliations during the past five
years, the number of portfolios each oversees and other directorships they have
held are set forth below.

<TABLE>
<CAPTION>

Name, Birthdate            Positions and                       Principal Occupations                   Number of
- ---------------            -------------                       ---------------------                   ---------
 and Address               Offices with                           Including Other                      Portfolios
 -----------               ------------                           ---------------                      ----------
                           the Fund and                            Directorships                        in Fund
                           ------------                            -------------                        -------
                            Year First                         During Past Five Years               Complex Overseen
                            ----------                         ----------------------               ----------------
                            Elected or                                                                 by Trustee
                            ---------                                                                  ----------
<S>                       <C>                         <C>                                          <C>
Trustee who is an interested person of the Fund:

Timothy R. Schwertfeger*  Chairman of the             Chairman and Director (since July 1996) of          121
3/28/49                    Board, President           The John Nuveen Company, Nuveen Investments,
333 West Wacker Drive      and Trustee                Nuveen Advisory Corp. and Nuveen
Chicago, IL 60606         1994                        Institutional Advisory Corp.; prior thereto,
                                                      Executive Vice President and Director of The
                                                      John Nuveen Company and Nuveen Investments;
                                                      Director (since 1992) and Chairman (since 1996)
                                                      of Nuveen Advisory Corp. and Nuveen
                                                      Institutional Advisory Corp.; Chairman and
                                                      Director (since January 1997) of Nuveen Asset
                                                      Management, Inc.; Director (since 1996) of
                                                      Institutional Capital Corporation; Chairman
                                                      and Director (since 1999) of Rittenhouse
                                                      Financial Services Inc.; Chief Executive
                                                      Officer (since September 1999) of Nuveen
                                                      Senior Loan Asset Management Inc.
</TABLE>

*Mr. Schwertfeger is an "interested person" of the Fund, as defined in the
Investment Company Act of 1940 because he is an officer and director of Nuveen
Advisory.

                                       21

<PAGE>


<TABLE>
<CAPTION>

Name, Birthdate            Positions and                       Principal Occupations                   Number of
- ---------------            -------------                       ---------------------                   ---------
 and Address               Offices with                           Including Other                      Portfolios
 -----------               ------------                           ---------------                      ----------
                           the Fund and                            Directorships                        in Fund
                           ------------                            -------------                        -------
                            Year First                         During Past Five Years               Complex Overseen
                            ----------                         ----------------------               ----------------
                            Elected or                                                                 by Trustee
                            ----------                                                                 ----------
                            Appointed
                            ---------

Trustees who are not interested persons of the Fund:

<S>                       <C>                         <C>                                           <C>
Robert P. Bremner         Trustee                     Private Investor and Management Consultant.           104
8/22/40                    1997
3725 Huntington
Street, N.W.
Washington, D.C. 20015

Lawrence H. Brown         Trustee                     Retired (August 1989) as Senior Vice President        104
7/29/34                    1993                       of The Northern Trust Company.
201 Michigan Avenue
Highwood, IL 60040

Anne E. Impellizzeri      Trustee                     Executive Director (since 1998) of Manitoga           104
1/26/33                    1994                       (Center for Russel Wright's Design with Nature);
3 West 29th Street                                    formerly, President and Chief Executive
New York, NY 10001                                    Officer of Blanton-Peale Institutes of Religion
                                                      and Health (since December 1990); prior thereto,
                                                      Vice President, Metropolitan Life Insurance Co.

Peter R. Sawers           Trustee                     Adjunct Professor of Business and Economics,          104
4/3/33                    1991                        University of Dubuque, Iowa; formerly (1991-2000)
22 The Landmark                                       Adjunct Professor, Lake Forest Graduate School of
Northfield, IL 60093                                  Management, Lake Forest, Illinois; prior thereto,
                                                      Executive Director, Towers Perrin Australia, a
                                                      management consulting firm; Chartered Financial
                                                      Analyst; Certified Management Consultant.

William J. Schneider      Trustee                     Senior Partner and Chief Operating Officer,           104
9/24/44                    1997                       Miller-Valentine Group, Vice President,
4000 Miller-Valentine Ct.                             Miller-Valentine Realty, a development and
P. O. Box 744                                         contract company; Chair, Miami Valley Hospital;
Dayton, OH 45401                                      Vice Chair, Miami Valley Economic Development
                                                      Coalition; formerly, Member, Community Advisory
                                                      Board, National City Bank, Dayton, Ohio and
                                                      Business Advisory Council, Cleveland Federal
                                                      Reserve Bank.

Judith M. Stockdale       Trustee                     Executive Director, Gaylord and Dorothy Donnelley     104
12/29/47                   1997                       Foundation (since 1994); prior thereto, Executive
35 E. Wacker Drive                                    Director, Great Lakes Protection Fund (from 1990
Suite 2600                                            to 1994).
Chicago, IL 60601

</TABLE>
                                      22

<PAGE>

<TABLE>
<CAPTION>

Name, Birthdate            Positions and                       Principal Occupations                   Number of
- ---------------            -------------                       ---------------------                   ---------
 and Address               Offices with                           Including Other                      Portfolios
 -----------               ------------                           ---------------                      ----------
                           the Fund and                            Directorships                        in Fund
                           ------------                            -------------                        -------
                            Year First                         During Past Five Years               Complex Overseen
                            ----------                         ----------------------               ----------------
                            Elected or                                                                 by Officer
                            ----------                                                                 ----------
                            Appointed
                            ---------
Officers of the Fund:
<S>                       <C>                         <C>                                           <C>
Michael T. Atkinson       Vice President              Vice President (since January 2002),                 119
2/3/66                    2002                        formerly, Assistant Vice President
333 W. Wacker Drive                                   (since 2000), previously, associate
Chicago, IL   60606                                   of Nuveen Investments.

Paul L. Brennan           Vice President              Vice President (since January 2002),                 119
11/10/66                  2002                        formerly, Assistant Vice President
333 W. Wacker Drive                                   (since 1997), of Nuveen Advisory Corp.;
Chicago, IL   60606                                   prior thereto, portfolio manager of
                                                      Flagship Financial Inc.

Peter H. D'Arrigo         Vice President and          Vice President of Nuveen Investments                 121
11/28/67                   Treasurer                  (since January 1999), prior thereto,
333 W. Wacker Drive       1999                        Assistant Vice President (from January
Chicago, IL   60606                                   1997); formerly, Associate of Nuveen
                                                      Investments; Vice President and
                                                      Treasurer (since September 1999) of
                                                      Nuveen Senior Loan Asset Management
                                                      Inc.; Chartered Financial Analyst.

Michael S. Davern         Vice President              Vice President of Nuveen Advisory                    119
6/26/57                   1997                        Corp. (since January 1997); prior
333 W. Wacker Drive                                   thereto, Vice President and Portfolio
Chicago, IL   60606                                   Manager of Flagship Financial.

Susan M. DeSanto          Vice President              Vice President of Nuveen Advisory Corp.              121
9/8/54                    2001                        (since August 2001); previously, Vice
333 W. Wacker Drive                                   President of Van Kampen Investment
Chicago, IL   60606                                   Advisory Corp. (since 1998); prior thereto,
                                                      Assistant Vice President of Van Kampen
                                                      Investment Advisory Corp. (since 1994).

Jessica R. Droeger        Vice President              Vice President (since January 2002),                 121
9/24/64                   2002                        formerly Assistant Vice President and
333 W. Wacker Drive                                   Assistant General Counsel (since May 1998)
Chicago, IL   60606                                   of Nuveen Investments; Assistant Vice
                                                      President and Assistant Secretary (since
                                                      1998) of Nuveen Advisory Corp. and Nuveen
                                                      Institutional Advisory Corp.; prior thereto,
                                                      Associate at the law firm D'Ancona Partners LLC

Lorna C. Ferguson         Vice President              Vice President of Nuveen Investments;                121
10/24/45                  1998                        Vice President (since January 1998) of
333 W. Wacker Drive                                   Nuveen Advisory Corp. and Nuveen
Chicago, IL   60606                                   Institutional Advisory Corp.

William M. Fitzgerald     Vice President              Vice President of Nuveen Advisory                    119
3/2/64                    1995                        Corp. (since December 1995);
333 W. Wacker Drive                                   Assistant Vice President of Nuveen
Chicago, IL   60606                                   Advisory Corp. (from September 1992
                                                      to December 1995); prior thereto,
                                                      Assistant Portfolio Manager of Nuveen
                                                      Advisory Corp.; Chartered Financial
                                                      Analyst.

Stephen D. Foy            Vice President and          Vice President of Nuveen Investments                 121
5/31/54                    Controller                 and (since May 1998) The John Nuveen
333 W. Wacker Drive       1998                        Company; Vice President (since
Chicago, IL   60606                                   September 1999) of Nuveen Senior Loan
                                                      Management Inc.; Certified Public
                                                      Accountant.

</TABLE>

                                       23

<PAGE>

<TABLE>
<CAPTION>

Name, Birthdate            Positions and                       Principal Occupations                   Number of
- ---------------            -------------                       ---------------------                   ---------
 and Address               Offices with                           Including Other                      Portfolios
 -----------               ------------                           ---------------                      ----------
                           the Fund and                            Directorships                        in Fund
                           ------------                            -------------                        -------
                            Year First                         During Past Five Years               Complex Overseen
                            ----------                         ----------------------               ----------------
                            Elected or                                                                 by Officer
                            ----------                                                                 ----------
                            Appointed
                            ---------
<S>                       <C>                         <C>                                          <C>
J. Thomas Futrell         Vice President              Vice President of Nuveen Advisory                    119
7/5/55                    1992                        Corp.; Chartered Financial Analyst.
333 W. Wacker Drive
Chicago, IL 60606

Richard A. Huber          Vice President              Vice President of Nuveen Institutional               119
3/26/63                       1997                    Advisory Corp. (since March 1998) and
333 W. Wacker Drive                                   Nuveen Advisory Corp. (since January
Chicago, IL 60606                                     1997); prior thereto, Vice President
                                                      and Portfolio Manager of Flagship
                                                      Financial, Inc.

Steven J. Krupa           Vice President              Vice President of Nuveen Advisory Corp.              119
8/21/57                       1990
333 W. Wacker Drive
Chicago, IL 60606

David J. Lamb             Vice President              Vice President (since March 2000) of Nuveen          121
3/22/63                       2000                    Investments, previously Assistant Vice
333 W. Wacker Drive                                   President (since January 1999); prior thereto,
Chicago, IL 60606                                     Associate of Nuveen Investments; Certified
                                                      Public Accountant.

Larry W. Martin           Vice President and          Vice President, Assistant Secretary                  121
7/27/51                    Assistant Secretary        and Assistant General Counsel of
333 W. Wacker Drive           1988                    Nuveen Investments; Vice President and
Chicago, IL 60606                                     Assistant Secretary of Nuveen Advisory
                                                      Corp. and Nuveen Institutional Advisory
                                                      Corp.; Assistant Secretary of the John
                                                      Nuveen Company and (since January 1997)
                                                      Nuveen Asset Management, Inc.; Vice
                                                      President and Assistant Secretary
                                                      (since September 1999) of Nuveen Senior
                                                      Loan Asset Management Inc.

Edward F. Neild, IV       Vice President              Vice President (since September 1996),               119
7/7/65                        1996                    previously Assistant Vice President
333 W. Wacker Drive                                   (since December 1993) of Nuveen
Chicago, IL 60606                                     Advisory Corp., Portfolio Manager
                                                      prior thereto; Vice President (since
                                                      September 1996), previously Assistant
                                                      Vice President (since May 1995), of
                                                      Nuveen Institutional Advisory Corp.,
                                                      Portfolio Manager prior thereto;
                                                      Chartered Financial Analyst.

Thomas J. O'Shaughnessy   Vice President              Vice President (since January 2002),                 119
9/4/60                        2002                    formerly, Assistant Vice President
333 W. Wacker Drive                                   (since 1998), of Nuveen Advisory Corp.;
Chicago, IL 60606                                     prior thereto, portfolio manager.
</TABLE>

                                       24

<PAGE>


<TABLE>
<CAPTION>
 Name, Birthdate          Positions and          Principal Occupations                           Number of
 ---------------          -------------          ---------------------                           ---------
   and Address            Offices with              Including Other                              Portfolios
   -----------            ------------              ---------------                              ----------
                          the Fund and               Directorships                                in Fund
                          ------------               -------------                                -------
                           Year First            During Past Five Years                      Complex Overseen
                           ----------            ----------------------                      ----------------
                           Elected or                                                            by Officer
                           ----------                                                            ----------
                           Appointed
                           ---------
<S>                       <C>                    <C>                                         <C>
Thomas C. Spalding, Jr.   Vice President         Vice President of Nuveen Advisory                  119
7/31/51                       1982               Corp. and Nuveen Institutional
333 W. Wacker Drive                              Advisory Corp.; Chartered Financial
Chicago, IL 60606                                Analyst.

Gifford R. Zimmerman      Vice President and     Vice President, Assistant Secretary                121
9/9/56                     Secretary             and Associate General Counsel, formerly
333 W. Wacker Drive           1988               Assistant General Counsel, of Nuveen
Chicago, IL 60606                                Investments; Vice President and
                                                 Assistant Secretary of Nuveen Advisory
                                                 Corp. and Nuveen Institutional Advisory
                                                 Corp.; Vice President and Assistant
                                                 Secretary of The John Nuveen Company
                                                 (since May 1994); Vice President and
                                                 Assistant Secretary (since September
                                                 1999) of Nuveen Senior Loan Asset
                                                 Management Inc.; Chartered Financial
                                                 Analyst.
</TABLE>

     The Board of Trustees has four standing committees: the executive
committee, the audit committee, the nominating and governance committee and the
dividend and valuation committee.

     Peter R. Sawers and Timothy R.Schwertfeger, Chair, serve as members of the
executive committee of the Board of Trustees of the Fund. The executive
committee, which meets between regular meetings of the Board of Trustees, is
authorized to exercise all of the powers of the Board of Trustees.

     The audit committee monitors the accounting and reporting policies and
practices of the Funds, the quality and integrity of the financial statements of
the Funds, compliance by the Funds with legal and regulatory requirements and
the independence and performance of the external and internal auditors. The
members of the audit committee are William J. Schneider, Chair, Robert P.
Bremner, Lawrence H. Brown, Anne E.Impellizzeri, Peter R. Sawers and Judith M.
Stockdale.

     The nominating and governance committee is responsible for Board selection
and tenure; selection and review of committees; and Board education and
operations. In addition, the committee monitors performance of legal counsel and
other service providers; periodically reviews and makes recommendations about
any appropriate changes to trustee compensation; and has the resources and
authority to discharge its responsibilities--including retaining special counsel
and other experts or consultants at the expense of the Fund. In the event of a
vacancy on the Board, the nominating and governance committee receives
suggestions from various sources as to suitable candidates. Suggestions should
be sent in writing to Lorna Ferguson, Vice President for Board Relations, Nuveen
Investments, 333 West Wacker Drive, Chicago, IL 60606. The nominating and
governance committee sets appropriate standards and requirements for nominations
for new trustees and reserves the right to interview all candidates and to make
the final selection of any new trustees. The members of the nominating and
governance committee are Anne E. Impellizzeri, Chair, Robert P. Bremner,
Lawrence H. Brown, Peter R. Sawers, William J. Schneider and Judith M.
Stockdale.

     The dividend and valuation committee is authorized to declare distributions
on the Fund's shares including, but not limited to regular and special
dividends, capital gains and ordinary income distributions. The committee also
oversees the Fund's Pricing Procedures including, but not limited to, the review
and approval of fair value pricing determinations made by Nuveen's Valuation
Group. The members of the dividend and valuation committee are Timothy R.
Schwertfeger, Chair, and Lawrence H. Brown.

     The trustees of the Fund are also directors or trustees, as the case may
be, of 30 Nuveen open-end funds and 74 Nuveen closed-end funds advised by Nuveen
Advisory Corp. Mr. Schwertfeger is a director or trustee, as the case may be, of
15 Nuveen open-end and closed-end funds advised by Nuveen Institutional Advisory
Corp. and two funds advised by Nuveen Senior Loan Asset Management Inc. None of
the independent trustees nor any of their immediate family members has ever been
a director, officer, or employee of, or a consultant to, Nuveen Advisory, Nuveen
or their affiliates.


                                       25

<PAGE>


     The Common Shareholders of the Fund will elect trustees at the next annual
meeting of Common Shareholders, unless any MuniPreferred Shares are outstanding
at that time, in which event holders of MuniPreferred Shares, voting as a
separate class, will elect two trustees and the remaining trustees shall be
elected by Common Shareholders and holders of MuniPreferred Shares, voting
together as a single class. Holders of MuniPreferred Shares will be entitled to
elect a majority of the Fund's trustees under certain circumstances. See
"Description of Shares - MuniPreferred Shares - Voting Rights."


     The following table sets forth the dollar range of equity securities
beneficially owned by each trustee as of December 31, 2001:


<TABLE>
<CAPTION>

                                                        Aggregate Dollar Range
                                                        of Equity Securities
                                                           in All Registered
                                                         Investment Companies
                             Dollar Range of Equity       Overseen by Trustee
                             Securities in the              in Family of
       Name of Trustee              Fund                Investment Companies
    ---------------------    --------------------       ---------------------
<S>                          <C>                        <C>
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Robert P. Bremner                   $0                      over $100,000
- ----------------------------------------------------------------------------
Lawrence H. Brown                   $0                      over $100,000
- ----------------------------------------------------------------------------
Anne E. Impellizzeri                $0                      over $100,000
- ----------------------------------------------------------------------------
Peter R. Sawers                     $0                      over $100,000
- ----------------------------------------------------------------------------
William J. Schneider                $0                      over $100,000
- ----------------------------------------------------------------------------
Timothy R. Schwertfeger             $0                      over $100,000
- ----------------------------------------------------------------------------
Judith M. Stockdale                 $0                      over $100,000
- ----------------------------------------------------------------------------
</TABLE>



     No trustee who is not an interested person of the Fund owns beneficially or
of record, any security of Nuveen Advisory, Nuveen or any person (other than a
registered investment company) directly or indirectly controlling, controlled by
or under common control with Nuveen Advisory or Nuveen.

     The following table sets forth estimated compensation to be paid by the
Fund projected during the Fund's first full fiscal year after commencement of
operation. The Fund does not have a retirement or pension plan. The officers and
trustees affiliated with Nuveen serve without any compensation from the Fund.
The Fund has a deferred compensation plan (the "Plan") that permits any trustee
who is not an "interested person" of the Fund to elect to defer receipt of all
or a portion of his or her compensation as a trustee. The deferred compensation
of a participating trustee is credited to a book reserve account of the Trust
when the compensation would otherwise have been paid to the trustee. The value
of the trustee's deferral account at any time is equal to the value that the
account would have had if contributions to the account had been invested and
reinvested in shares of one or more of the eligible Nuveen funds. At the time
for commencing distributions from a trustee's deferral account, the trustee may
elect to receive distributions in a lump sum or over a period of five years. The
Fund will not be liable for any other fund's obligations to make distributions
under the Plan.

<TABLE>
<CAPTION>
                                                                            Amount of Total
                                  Aggregate         Total Compensation     Compensation that
                                 Compensation          from Fund and             Has Been
       Name of Trustee            From Fund*           Fund Complex**            Deferred
    ---------------------    --------------------   --------------------    ------------------
<S>                          <C>                    <C>                     <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Robert P. Bremner                   $1,332                $72,500               $ 8,280
- ----------------------------------------------------------------------------------------------
Lawrence H. Brown                   $1,368                $78,500               $     0
- ----------------------------------------------------------------------------------------------
Anne E. Impellizzeri                $1,332                $72,500               $55,200
- ----------------------------------------------------------------------------------------------
Peter R. Sawers                     $1,332                $73,000               $54,788
- ----------------------------------------------------------------------------------------------
William J. Schneider                $1,332                $72,500               $55,200
- ----------------------------------------------------------------------------------------------
Judith M. Stockdale                 $1,332                $72,500               $13,800
- ----------------------------------------------------------------------------------------------
</TABLE>

                                      26

<PAGE>

- --------------------

     *  Based on the estimated compensation to be earned by the independent
trustees for the period from inception through the end of the Fund's first full
fiscal year for services to the Fund.

     **Based on the compensation paid to the trustees for the one year period
ending 12/31/01 for services to the open-end and closed-end funds advised by
Nuveen Advisory.

     On February 20, 2001, the Board of Trustees approved the Investment
Management Agreement between the Fund and Nuveen Advisory Corp. In approving
this agreement, the trustees considered, among other things, the nature and
quality of services to be provided by Nuveen Advisory, the profitability to
Nuveen Advisory of its relationship with the Fund, fall-out benefits from that
relationship, economies of scale and comparative fees and expense ratios.

     The Fund has no employees. Its officers are compensated by Nuveen Advisory
or The John Nuveen Company.



                              INVESTMENT ADVISER

     Nuveen Advisory acts as investment adviser to the Fund, with
responsibility for the overall management of the Fund. Its address is 333 West
Wacker Drive, Chicago, Illinois 60606. Nuveen Advisory is also responsible for
managing the Fund's business affairs and providing day-to-day administrative
services to the Fund. For additional information regarding the management
services performed by Nuveen Advisory, see "Management of the Fund" in the
Fund's Prospectus.

     Nuveen Advisory is a wholly owned subsidiary of The John Nuveen Company.
Over 1,300,000 individuals have invested to date in The John Nuveen Company's
funds and trusts. Founded in 1898, The John Nuveen Company brings over a century
of expertise to the municipal bond market. According to data from CDA
Wiesenberger, The John Nuveen Company is the leading sponsor of exchange-traded
municipal bond funds as measured by number of funds (79) and fund assets under
management ($31 billion) as of December 31, 2001. Overall, The John Nuveen
Company and its affiliates have over $76 billion in assets under management or
surveillance. The John Nuveen Company is approximately 77% owned by The St. Paul
Companies, Inc. ("St. Paul"). St. Paul is a publicly-traded company

                                      27

<PAGE>


located in St. Paul, Minnesota, and is principally engaged in providing
property-liability insurance through subsidiaries.


     Pursuant to an investment management agreement between Nuveen Advisory and
the Fund, the Fund has agreed to pay for the services and facilities provided by
Nuveen Advisory an annual management fee, payable on a monthly basis, according
to the following schedule:

<TABLE>
<CAPTION>
Average Daily Net Assets(1)                                     Management Fee
- -----------------------------                                 ------------------
<S>                                                           <C>
Up to $125 million                                                  .6500%
$125 million to $250 million                                        .6375%
$250 million to $500 million                                        .6250%
$500 million to $1 billion                                          .6125%
$1 billion to $2 billion                                            .6000%
$2 billion and over                                                 .5750%
</TABLE>

(1) Including net assets attributable to MuniPreferred Shares.

     All fees and expenses are accrued daily and deducted before payment of
dividends to investors. The investment management agreement has been approved by
a majority of the disinterested trustees of the Fund and the sole shareholder of
the Fund.

     For the first ten years of the Fund's operation, Nuveen Advisory has
contractually agreed to reimburse the Fund for fees and expenses in the amounts,
and for the time periods, set forth below:

<TABLE>
<CAPTION>

                         Percentage                             Percentage
                         Reimbursed                             Reimbursed
      Year Ending    (as a percentage of    Year Ending    (as a percentage of
        March 31     daily net assets)(1)     March 31     daily net assets)(1)
      ------------   --------------------   -----------    --------------------
<S>                       <C>               <C>              <C>
         2002(2)             .30%               2008              .25%
         2003                .30%               2009              .20%
         2004                .30%               2010              .15%
         2005                .30%               2011              .10%
         2006                .30%               2012              .05%
         2007                .30%
</TABLE>
- -----------------------

     (1) Including net assets attributable to MuniPreferred Shares.
     (2) From the commencement of operations.


     Reducing Fund expenses in this manner will tend to increase the amount of
income available for the Common Shareholders. Nuveen Advisory has not agreed to
reimburse the Fund for any portion of its fees and expenses beyond
March 31, 2012.

     The Fund, Nuveen Advisory, Nuveen, Salomon Smith Barney Inc., and other
related entities have adopted codes of ethics which essentially prohibit certain
of their personnel, including the Nuveen fund portfolio manager, from engaging
in personal investments which compete or interfere with, or attempt to take
advantage of a client's, including the Fund's, anticipated or actual portfolio
transactions, and are designed to assure that the interests of clients,
including Fund shareholders, are placed before the interests of personnel in
connection with personal investment transactions. Text-only versions of the
codes of ethics can be viewed online or downloaded from the EDGAR Database on
the SEC's internet web site at www.sec.gov. You may also review and copy those
documents by visiting the SEC's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at 202-942-8090. In addition, copies of the codes of ethics may
be obtained, after mailing the appropriate duplicating fee, by writing to the
SEC's Public Reference Section, 450 5th Street, N.W., Washington, DC 20549-0102
or by e-mail request at publicinfo@sec.gov.


                            PORTFOLIO TRANSACTIONS

     Nuveen Advisory is responsible for decisions to buy and sell securities for
the Fund and for the placement of the Fund's securities business, the
negotiation of the prices to be paid for principal trades and the allocation of
its transactions among various dealer firms. Portfolio securities will normally
be purchased directly from an underwriter or in the over-the-counter market from
the principal dealers in such securities, unless it appears that a better price
or

                                      28

<PAGE>


execution may be obtained through other means.  Portfolio securities will not
be purchased from Nuveen or its affiliates except in compliance with the 1940
Act.

     The Fund expects that substantially all portfolio transactions will be
effected on a principal (as opposed to an agency) basis and, accordingly, does
not expect to pay any brokerage commissions. Purchases from underwriters will
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers will include the spread between the bid and asked price.
On occasion, the Fund may clear portfolio transactions through Nuveen. It is the
policy of Nuveen Advisory to seek the best execution under the circumstances of
each trade. Nuveen Advisory evaluates price as the primary consideration, with
the financial condition, reputation and responsiveness of the dealer considered
secondary in determining best execution. Given the best execution obtainable, it
will be Nuveen Advisory's practice to select dealers which, in addition, furnish
research information (primarily credit analyses of issuers and general economic
reports) and statistical and other services to Nuveen Advisory. It is not
possible to place a dollar value on information and statistical and other
services received from dealers. Since it is only supplementary to Nuveen
Advisory's own research efforts, the receipt of research information is not
expected to reduce significantly Nuveen Advisory's expenses. While Nuveen
Advisory will be primarily responsible for the placement of the business of the
Fund, the policies and practices of Nuveen Advisory in this regard must be
consistent with the foregoing and will, at all times, be subject to review by
the Board of Trustees of the Fund.

     Nuveen Advisory may manage other investment accounts and investment
companies for other clients which have investment objectives similar to those of
the Fund. Subject to applicable laws and regulations, Nuveen Advisory seeks to
allocate portfolio transactions equitably whenever concurrent decisions are made
to purchase or sell securities by the Fund and another advisory account. In
making such allocations the main factors to be considered will be the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment and the size of
investment commitments generally held. While this procedure could have a
detrimental effect on the price or amount of the securities available to the
Fund from time to time, it is the opinion of the Board of Trustees that the
benefits available from Nuveen Advisory's organization will outweigh any
disadvantage that may arise from exposure to simultaneous transactions.

     Under the 1940 Act, the Fund may not purchase portfolio securities from any
underwriting syndicate of which Nuveen is a member except under certain limited
conditions set forth in Rule 10f-3. The rule sets forth requirements relating
to, among other things, the terms of an issue of municipal bonds purchased by
the Fund, the amount of municipal bonds which may be purchased in any one issue
and the assets of the Fund that may be invested in a particular issue. In
addition, purchases of securities made pursuant to the terms of the Rule must be
approved at least quarterly by the Board of Trustees of the Fund, including a
majority of the members thereof who are not interested persons of the Fund.

                                 DISTRIBUTIONS

     As described in the Fund's Prospectus, initial distributions to Common
Shareholders are expected to be declared approximately 45 days, and paid
approximately 60 to 90 days, from the completion of the offering of the Common
Shares, depending on market conditions. To permit the Fund to maintain a

                                      29

<PAGE>

more stable monthly distribution, the Fund will initially (prior to its first
distribution), and may from time to time thereafter, distribute less than the
entire amount of net investment income earned in a particular period. Such
undistributed net investment income would be available to supplement future
distributions, including distributions which might otherwise have been reduced
by a decrease in the Fund's monthly net income due to fluctuations in investment
income or expenses, or due to an increase in the dividend rate on the Fund's
outstanding MuniPreferred Shares. As a result, the distributions paid by the
Fund for any particular period may be more or less than the amount of net
investment income actually earned by the Fund during such period. Undistributed
net investment income will be added to the Fund's net asset value and,
correspondingly, distributions from undistributed net investment income will be
deducted from the Fund's net asset value.

     For tax purposes, the Fund is currently required to allocate net capital
gain and other taxable income, if any, between Common Shares and MuniPreferred
Shares in proportion to total dividends paid to each class for the year in
which such net capital gain or other taxable income is realized. For information
relating to the impact of the issuance of MuniPreferred Shares on the
distributions made by a Fund to Common Shareholders, see the Fund's Prospectus
under "MuniPreferred Shares and Leverage."

     While any MuniPreferred Shares are outstanding, the Fund may not declare
any cash dividend or other distribution on its Common Shares unless at the time
of such declaration (1) all accumulated dividends on the MuniPreferred Shares
have been paid and (2) the net asset value of the Fund's portfolio (determined
after deducting the amount of such dividend or other distribution) is at least
200% of the liquidation value of any outstanding MuniPreferred Shares. This
latter limitation on the Fund's ability to make distributions on its Common
Shares could under certain circumstances impair the ability of the Fund to
maintain its qualification for taxation as a regulated investment company. See
"Tax Matters."

                             DESCRIPTION OF SHARES

Common Shares


     The Fund's Declaration of Trust (the "Declaration") authorizes the issuance
of an unlimited number of Common Shares. The Common Shares being offered have a
par value of $0.01 per share and, subject to the rights of holders of
MuniPreferred Shares, have equal rights as to the payment of dividends and the
distribution of assets upon liquidation of the Fund. The Common Shares being
ofered will, when issued, be fully paid and, subject to matters discussed in
"Certain Provisions in the Declaration of Trust," non-assessable, and will have
no pre-emptive or conversion rights or rights to cumulative voting. At any time
when the Fund's MuniPreferred Shares are outstanding, Common Shareholders will
not be entitled to receive any distributions from the Fund unless all accrued
dividends on MuniPreferred Shares have been paid, and unless asset coverage (as
defined in the 1940 Act) with respect to MuniPreferred Shares would be at least
200% after giving effect to such distributions. See "MuniPreferred Shares"
below.

     The Common Shares have been approved for listing on the American Stock
Exchange, subject to notice of issuance. The Fund intends to hold annual
meetings of shareholders so long as the Common Shares are listed on a national
securities exchange and such meetings are required as a condition to such
listing.

                                      30

<PAGE>


     Shares of closed-end investment companies may frequently trade at prices
lower than net asset value. Shares of closed-end investment companies like the
Fund that invest predominately in municipal bonds covered by insurance have
during some periods traded at prices higher than net asset value and during
other periods have traded at prices lower than net asset value. There can be no
assurance that Common Shares or shares of other municipal funds will trade at a
price higher than net asset value in the future. Net asset value will be reduced
immediately following the offering after payment of the sales load and
organization and offering expenses. Net asset value generally increases when
interest rates decline, and decreases when interest rates rise, and these
changes are likely to be greater in the case of a fund having a leveraged
capital structure. Whether investors will realize gains or losses upon the sale
of Common Shares will not depend upon a Fund's net asset value but will depend
entirely upon whether the market price of the Common Shares at the time of sale
is above or below the original purchase price for the shares. Since the market
price of the Fund's Common Shares will be determined by factors beyond the
control of the Fund, the Fund cannot predict whether the Common Shares will
trade at, below, or above net asset value or at, below or above the initial
public offering price. Accordingly, the Common Shares are designed primarily for
long-term investors, and investors in the Common Shares should not view the Fund
as a vehicle for trading purposes. See "Repurchase of Fund Shares; Conversion to
Open-End Fund" and the Fund's Prospectus under "MuniPreferred Shares and
Leverage" and "The Fund's Investments--Municipal Bonds."


MuniPreferred Shares

     The Declaration authorizes the issuance of an unlimited number of
MuniPreferred Shares in one or more classes or series, with rights as determined
by the Board of Trustees of the Fund, by action of the Board of Trustees without
the approval of the Common Shareholders.

     The Fund's Board of Trustees has indicated its intention to authorize an
offering of MuniPreferred Shares (representing approximately 35% of the Fund's
capital immediately after the time the MuniPreferred Shares are issued) within
approximately one to three months after completion of the offering of Common
Shares, subject to market conditions and to the Board's continuing belief that
leveraging the Fund's capital structure through the issuance of MuniPreferred
Shares is likely to achieve the benefits to the Common Shareholders described in
this Statement of Additional Information. Although the terms of the
MuniPreferred Shares, including their dividend rate, voting rights, liquidation
preference and redemption provisions, will be determined by the Board of
Trustees (subject to applicable law and the Fund's Declaration) if and when it
authorizes a MuniPreferred Shares offering, the Board has stated that the
initial series of MuniPreferred Shares would likely pay cumulative dividends at
relatively shorter-term periods (such as 7 days); by providing for the periodic
redetermination of the dividend rate through an auction or remarketing
procedure. The Board of Trustees of the Fund has indicated that the liquidation
preference, preference on distribution, voting rights and redemption provisions
of the MuniPreferred Shares will likely be as stated below.


     Limited Issuance of MuniPreferred Shares.  Under the 1940 Act, the Fund
could issue MuniPreferred Shares with an aggregate liquidation value of up to
one-half of the value of the Fund's total net assets, measured immediately after
issuance of the MuniPreferred Shares. "Liquidation value" means the original
purchase price of the shares being liquidated plus any accrued and unpaid
dividends. In addition, the Fund is not permitted to declare any cash dividend
or other distribution on its Common Shares unless the liquidation value of the
MuniPreferred Shares is less than one-half of the value of the Fund's total net
assets (determined after deducting the amount of such dividend or distribution)
immediately after the distribution. If the Fund sells all the Common Shares and
MuniPreferred Shares discussed in this Prospectus, the liquidation value of the
MuniPreferred Shares is expected to be approximately 35% of the value of the
Fund's total net assets. The Fund intends to purchase or redeem MuniPreferred
Shares, if necessary, to keep that fraction below one-half.


     Distribution Preference.  The MuniPreferred Shares have complete priority
over the Common Shares as to distribution of assets.

                                      31

<PAGE>


     Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Fund, holders of
MuniPreferred Shares will be entitled to receive a preferential liquidating
distribution (expected to equal the original purchase price per share plus
accumulated and unpaid dividends thereon, whether or not earned or declared)
before any distribution of assets is made to holders of Common Shares. After
payment of the full amount of the liquidating distribution to which they are
entitled, holders of MuniPreferred Shares will not be entitled to any further
participation in any distribution of assets by the Fund. A consolidation or
merger of the Fund with or into any Massachusetts business trust or corporation
or a sale of all or substantially all of the assets of the Fund shall not be
deemed to be a liquidation, dissolution or winding up of the Fund.

     Voting Rights. In connection with any issuance of MuniPreferred Shares, the
Fund must comply with Section 18(i) of the 1940 Act which requires, among other
things, that MuniPreferred Shares be voting shares and have equal voting rights
with Common Shares. Except as otherwise indicated in this Statement of
Additional Information and except as otherwise required by applicable law,
holders of MuniPreferred Shares will vote together with Common Shareholders as a
single class.


     In connection with the election of the Fund's trustees, holders of
MuniPreferred Shares, voting as a separate class, will be entitled to elect two
of the Fund's trustees, and the remaining trustees shall be elected by Common
Shareholders and holders of MuniPreferred Shares, voting together as a single
class. In addition, if at any time dividends on the Fund's outstanding
MuniPreferred Shares shall be unpaid in an amount equal to two full years'
dividends thereon, the holders of all outstanding MuniPreferred Shares, voting
as a separate class, will be entitled to elect a majority of the Fund's trustees
until all dividends in arrears have been paid or declared and set apart for
payment.

     The affirmative vote of the holders of a majority of the Fund's outstanding
MuniPreferred Shares of any class or series, as the case may be, voting as a
separate class, will be required to, among other things, (1) take certain
actions which would affect the preferences, rights, or powers of such class or
series or (2) authorize or issue any class or series ranking prior to the
MuniPreferred Shares. Except as may otherwise be required by law, (1) the
affirmative vote of the holders of at least two-thirds of the Fund's
MuniPreferred Shares outstanding at the time, voting as a separate class, will
be required to approve any conversion of the Fund from a closed-end to an
open-end investment company and (2) the affirmative vote of the holders of at
least two-thirds of the outstanding MuniPreferred Shares, voting as a separate
class, shall be required to approve any plan of reorganization (as such term is
used in the 1940 Act) adversely affecting such shares, provided however, that
such separate class vote shall be a majority vote if the action in question has
previously been approved, adopted or authorized by the affirmative vote of
two-thirds of the total number of Trustees fixed in accordance with the
Declaration or the By-laws. The affirmative vote of the holders of a majority of
the outstanding MuniPreferred Shares, voting as a separate class, shall be
required to approve any action not described in the preceding sentence requiring
a vote of security holders under Section 13(a) of the 1940 Act including, among
other things, changes in a Fund's investment objectives or changes in the
investment restrictions described as fundamental policies under "Investment
Objectives and Policies--Investment Restrictions." The class or series vote of
holders of MuniPreferred Shares described

                                      32

<PAGE>

above shall in each case be in addition to any separate vote of the
requisite percentage of Common Shares and MuniPreferred Shares necessary to
authorize the action in question.

     The foregoing voting provisions will not apply with respect to the Fund's
MuniPreferred Shares if, at or prior to the time when a vote is required, such
shares shall have been (1) redeemed or (2) called for redemption and sufficient
funds shall have been deposited in trust to effect such redemption.

     Redemption, Purchase and Sale of MuniPreferred Shares by the Fund. The
terms of the MuniPreferred Shares may provide that they are redeemable at
certain times, in whole or in part, at the original purchase price per share
plus accumulated dividends, that the Fund may tender for or purchase
MuniPreferred Shares and that the Fund may subsequently resell any shares so
tendered for or purchased. Any redemption or purchase of MuniPreferred Shares by
the Fund will reduce the leverage applicable to Common Shares, while any resale
of shares by the Fund will increase such leverage.

     The discussion above describes the Fund's Board of Trustees' present
intention with respect to a possible offering of MuniPreferred Shares.  If the
Board of Trustees determines to authorize such an offering, the terms of the
MuniPreferred Shares may be the same as, or different from, the terms described
above, subject to applicable law and the Fund's Declaration.

                 CERTAIN PROVISIONS IN THE DECLARATION OF TRUST

     Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Fund. However, the
Declaration contains an express disclaimer of shareholder liability for debts or
obligations of the Fund and requires that notice of such limited liability be
given in each agreement, obligation or instrument entered into or executed by
the Fund or the trustees. The Declaration further provides for indemnification
out of the assets and property of the Fund for all loss and expense of any
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund would be unable to meet
its obligations. The Fund believes that the likelihood of such circumstances is
remote.


     The Declaration includes provisions that could limit the ability of other
entities or persons to acquire control of the Fund or to convert the Fund to
open-end status. Specifically, the Declaration requires a vote by holders of at
least two-thirds of the Common Shares and MuniPreferred Shares, voting together
as a single class, except as described below, to authorize (1) a conversion of
the Fund from a closed-end to an open-end investment company, (2) a merger or
consolidation of the Fund, or a series or class of the Fund, with any
corporation, association, trust or other organization or a reorganization or
recapitalization of the Fund, or a series or class of the Fund, (3) a sale,
lease or transfer of all or substantially all of the Fund's assets (other than
in the regular course of the Fund's investment activities), (4) in certain
circumstances, a termination of the Fund, or a series or class of the Fund or
(5) removal of trustees, and then only for cause, unless, with respect to (1)
through (4), such transaction has already been authorized by the affirmative
vote of two-thirds of the total number of trustees fixed in accordance with the
Declaration or the By-laws, in which case the affirmative vote of the holders of
at least a majority of the Fund's Common Shares and MuniPreferred Shares


                                       33

<PAGE>


outstanding at the time, voting together as a single class, is required,
provided, however, that where only a particular class or series is affected (or,
in the case of removing a trustee, when the trustee has been elected by only one
class), only the required vote by the applicable class or series will be
required. Approval of shareholders is not required, however, for any
transaction, whether deemed a merger, consolidation, reorganization or otherwise
whereby the Fund issues shares in connection with the acquisition of assets
(including those subject to liabilities) from any other investment company or
similar entity. None of the foregoing provisions may be amended except by the
vote of at least two-thirds of the Common Shares and MuniPreferred Shares,
voting together as a single class. In the case of the conversion of the Fund to
an open-end investment company, or in the case of any of the foregoing
transactions constituting a plan of reorganization which adversely affects the
holders of MuniPreferred Shares, the action in question will also require the
affirmative vote of the holders of at least two-thirds of the Fund's
MuniPreferred Shares outstanding at the time, voting as a separate class, or, if
such action has been authorized by the affirmative vote of two-thirds of the
total number of trustees fixed in accordance with the Declaration or the By-
laws, the affirmative vote of the holders of at least a majority of the Fund's
MuniPreferred Shares outstanding at the time, voting as a separate class. The
votes required to approve the conversion of the Fund from a closed-end to an
open-end investment company or to approve transactions constituting a plan of
reorganization which adversely affects the holders of MuniPreferred Shares are
higher than those required by the 1940 Act. The Board of Trustees believes that
the provisions of the Declaration relating to such higher votes are in the best
interest of the Fund and its shareholders.


     The provisions of the Declaration described above could have the effect of
depriving the Common Shareholders of opportunities to sell their Common Shares
at a premium over market value by discouraging a third party from seeking to
obtain control of the Fund in a tender offer or similar transaction. The overall
effect of these provisions is to render more difficult the accomplishment of a
merger or the assumption of control by a third party. They provide, however, the
advantage of potentially requiring persons seeking control of a Fund to
negotiate with its management regarding the price to be paid and facilitating
the continuity of the Fund's investment objectives and policies. The Board of
Trustees of the Fund has considered the foregoing anti-takeover provisions and
concluded that they are in the best interests of the Fund and its Common
Shareholders.

     Reference should be made to the Declaration on file with the Securities and
Exchange Commission for the full text of these provisions.

     The Declaration provides that the obligations of the Fund are not binding
upon the trustees of the Fund individually, but only upon the assets and
property of the Fund, and that the trustees shall not be liable for errors of
judgment or mistakes of fact or law. Nothing in the Declaration, however,
protects a trustee against any liability to which he 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 office.

             REPURCHASE OF FUND SHARES; CONVERSION TO OPEN-END FUND

     The Fund is a closed-end investment company and as such its shareholders
will not have the right to cause the Fund to redeem their shares.  Instead, the
Fund's Common Shares will trade in the open market at a price that will be a
function of several factors, including dividend levels (which are in turn
affected by expenses), net asset value, call protection, price, dividend
stability, relative demand for and supply of such shares in the market, general
market and economic

                                       34

<PAGE>


conditions and other factors. Because shares of a closed-end investment company
may frequently trade at prices lower than net asset value, the Fund's Board of
Trustees has currently determined that, at least annually, it will consider
action that might be taken to reduce or eliminate any material discount from net
asset value in respect of Common Shares, which may include the repurchase of
such shares in the open market or in private transactions, the making of a
tender offer for such shares at net asset value, or the conversion of the Fund
to an open-end investment company. There can be no assurance, however, that the
Board of Trustees will decide to take any of these actions, or that share
repurchases or tender offers, if undertaken, will reduce market discount.

     Notwithstanding the foregoing, at any time when the Fund's MuniPreferred
Shares are outstanding, the Fund may not purchase, redeem or otherwise acquire
any of its Common Shares unless (1) all accrued MuniPreferred Shares dividends
have been paid and (2) at the time of such purchase, redemption or acquisition,
the net asset value of the Fund's portfolio (determined after deducting the
acquisition price of the Common Shares) is at least 200% of the liquidation
value of the outstanding MuniPreferred Shares (expected to equal the original
purchase price per share plus any accrued and unpaid dividends thereon). The
staff of the Securities and Exchange Commission currently requires that any
tender offer made by a closed-end investment company for its shares must be at a
price equal to the net asset value of such shares on the close of business on
the last day of the tender offer. Any service fees incurred in connection with
any tender offer made by the Fund will be borne by the Fund and will not reduce
the stated consideration to be paid to tendering shareholders.

     Subject to its investment limitations, the Fund may borrow to finance the
repurchase of shares or to make a tender offer.  Interest on any borrowings to
finance share repurchase transactions or the accumulation of cash by the Fund in
anticipation of share repurchases or tenders will reduce the Fund's net income.
Any share repurchase, tender offer or borrowing that might be approved by the
Board of Trustees would have to comply with the Securities Exchange Act of 1934,
as amended, and the 1940 Act and the rules and regulations thereunder.

     Although the decision to take action in response to a discount from net
asset value will be made by the Board of the Fund at the time it considers such
issue, it is the Board's present policy, which may be changed by the Board, not
to authorize repurchases of Common Shares or a tender offer for such shares if
(1) such transactions, if consummated, would (a) result in the delisting of the
Common Shares from the American Stock Exchange, or (b) impair the Fund's status
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code") (which would make the Fund a taxable entity, causing the
Fund's income to be taxed at the corporate level in addition to the taxation of
shareholders who receive dividends from the Fund) or as a registered closed-end
investment company under the 1940 Act; (2) the Fund would not be able to
liquidate portfolio securities in an orderly manner and consistent with the
Fund's investment objectives and policies in order to repurchase shares; or (3)
there is, in the Board's judgment, any (a) material legal action or proceeding
instituted or threatened challenging such transactions or otherwise materially
adversely affecting the Fund, (b) general suspension of or limitation on prices
for trading securities on the American Stock Exchange, (c) declaration of a
banking moratorium by Federal or state authorities or any suspension of payment
by United States or state banks in which the Fund invests, (d) material
limitation affecting the Fund or the issuers of its portfolio securities by
Federal or state authorities on the extension of credit by lending institutions
or on the exchange of


                                       35

<PAGE>


foreign currency, (e) commencement of war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, or (f) other event or condition which would have a material adverse
effect (including any adverse tax effect) on the Fund or its shareholders if
shares were repurchased. The Board of Trustees of the Fund may in the future
modify these conditions in light of experience.



     Conversion to an open-end company would require the approval of the holders
of at least two-thirds of the Fund's Common Shares and MuniPreferred Shares
outstanding at the time, voting together as a single class, and of the holders
of at least two-thirds of the Fund's MuniPreferred Shares outstanding at the
time, voting as a separate class, provided however, that such separate class
vote shall be a majority vote if the action in question has previously been
approved, adopted or authorized by the affirmative vote of two-thirds of the
total number of trustees fixed in accordance with the Declaration or By-laws.
See the Prospectus under "Certain Provisions in the Declaration of Trust" for a
discussion of voting requirements applicable to conversion of the Fund to an
open-end company. If the Fund converted to an open-end company, it would be
required to redeem all MuniPreferred Shares then outstanding, and the Fund's
Common Shares would no longer be listed on the American Stock Exchange.
Shareholders of an open-end investment company may require the company to redeem
their shares on any business day (except in certain circumstances as authorized
by or under the 1940 Act) at their net asset value, less such redemption charge,
if any, as might be in effect at the time of redemption. In order to avoid
maintaining large cash positions or liquidating favorable investments to meet
redemptions, open-end companies typically engage in a continuous offering of
their shares. Open-end companies are thus subject to periodic asset in-flows and
out-flows that can complicate portfolio management. The Board of Trustees of the
Fund may at any time propose conversion of the Fund to an open-end company
depending upon their judgment as to the advisability of such action in light of
circumstances then prevailing.



     The repurchase by the Fund of its shares at prices below net asset value
will result in an increase in the net asset value of those shares that remain
outstanding. However, there can be no assurance that share repurchases or
tenders at or below net asset value will result in the Fund's shares trading at
a price equal to their net asset value. Nevertheless, the fact that the Fund's
shares may be the subject of repurchase or tender offers at net asset value from
time to time, or that the Fund may be converted to an open-end company, may
reduce any spread between market price and net asset value that might otherwise
exist.

     In addition, a purchase by the Fund of its Common Shares will decrease the
Fund's total assets which would likely have the effect of increasing the Fund's
expense ratio.  Any purchase by the Fund of its Common Shares at a time when
MuniPreferred Shares are outstanding will increase the leverage applicable to
the outstanding Common Shares then remaining.  See the Fund's Prospectus under
"Risks--Concentration Risk" and "Risks--Leverage Risk."

     Before deciding whether to take any action if the Fund's Common Shares
trade below net asset value, the Board of the Fund would consider all relevant
factors, including the extent and duration of the discount, the liquidity of the
Fund's portfolio, the impact of any action that might be taken on the Fund or
its shareholders and market considerations. Based on these considerations, even
if the Fund's shares should trade at a discount, the Board of Trustees may
determine that, in the interest of the Fund and its shareholders, no action
should be taken.

                                       36

<PAGE>

                                  TAX MATTERS

Federal Income Tax Matters

     The following discussion of federal income tax matters is based upon the
advice of Bell, Boyd & Lloyd LLC, special counsel to the Fund.

     The Fund intends to qualify under Subchapter M of the Code, for tax
treatment as a regulated investment company and to satisfy certain conditions
which will enable interest from municipal obligations, which is exempt from
regular federal income taxes in the hands of the Fund, to qualify as "exempt-
interest dividends" when distributed to the Fund's shareholders. In order to
qualify for tax treatment as a regulated investment company, the Fund must
satisfy certain requirements relating to the source of its income,
diversification of its assets, and distributions of its income to shareholders.
First, the Fund must derive at least 90% of its annual gross income (including
tax-exempt interest) from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock or
securities or foreign currencies, or other income (including but not limited to
gains from options, futures and forward contracts) derived with respect to its
business of investing in such stock, securities or currencies (the "90% gross
income test"). Second, the Fund must diversify its holdings so that, at the
close of each quarter of its taxable year, (i) at least 50% of the value of its
total assets is comprised of cash, cash items, United States Government
securities, securities of other regulated investment companies and other
securities limited in respect of any one issuer to an amount not greater in
value than 5% of the value of the Fund's total assets and to not more than 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of its total assets is invested in the securities of any one issuer
(other than United States Government securities and securities of other
regulated investment companies) or two or more issuers controlled by the Fund
and engaged in the same, similar or related trades or businesses.


     As a regulated investment company, the Fund will not be subject to federal
income tax in any taxable year with respect to "net investment income" (i.e.,
its "investment company taxable income," as that term is defined in the Code,
determined without reference to the deduction for dividends paid) and "net
capital gain" (i.e., the excess of the Fund's net long-term capital gain over
its net short-term capital loss), provided that it distributes at least 90% of
the sum of (i) its investment company taxable income (which includes dividends,
taxable interest, taxable original issue discount and market discount income,
income from securities lending, net short-term capital gain in excess of net
long-term capital loss, and any other taxable income other than net capital gain
and is reduced by deductible expenses) and (ii) its net tax-exempt interest (the
excess of its gross tax-exempt interest income over certain disallowed
deductions). The Fund may retain for investment its net capital gain. However,
if the Fund retains any net capital gain or any investment company taxable
income, it will be subject to tax at regular corporate rates on the amount
retained. If the Fund retains any net capital gain, it may designate the
retained amount as undistributed capital gains in a notice to its shareholders
who, if subject to federal income tax on long-term capital gains, (i) will be
required to include in income for federal income tax purposes, as long-term
capital gain, their share of such undistributed amount, and (ii) will be
entitled to credit their proportionate shares of the tax paid by the Fund on
such undistributed amount against their federal income tax liabilities, if any,
and to claim refunds to the extent the credit exceeds such liabilities. For
federal income tax purposes, the tax basis of shares owned by a shareholder of
the Fund will be increased by an amount equal under current law to the
difference between the amount of undistributed capital gains included in the
shareholder's gross income and the tax deemed paid by the shareholder under
clause (ii) of the preceding sentence. The


                                      37

<PAGE>


Fund intends to distribute at least annually to its shareholders all or
substantially all of its net tax-exempt interest and any investment company
taxable income and net capital gain.


     Treasury regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain, to elect (unless it
has made a taxable year election for excise tax purposes) to treat all or part
of any net capital loss, any net long-term capital loss or any net foreign
currency loss incurred after October 31 as if it had been incurred in the
succeeding year.

     The Fund intends to qualify to pay "exempt-interest dividends" by
satisfying the requirement that at the close of each quarter of the Fund's
taxable year at least 50% of the value of its total assets consist of tax-exempt
municipal obligations. Distributions from the Fund will constitute exempt-
interest dividends to the extent of its tax-exempt interest income (net of
expenses and amortized bond premium). Exempt-interest dividends distributed to
Common Shareholders are excluded from gross income for federal income tax
purposes, although they are required to be reported on the Common Shareholders'
federal income tax returns. Gain from the sale or redemption of Common Shares,
however, will be taxable to the Common Shareholders as capital gain (provided
such Common Shares were held as capital assets) even though the increase in
value of such Common Shares is attributable to tax-exempt interest income. In
addition, gain realized by the Fund from the disposition of a tax-exempt
municipal obligation that was purchased at a price less than the principal
amount of the bond will be taxable to the Fund's shareholders as ordinary income
to the extent of accrued market discount. Under the Code, interest on
indebtedness incurred or continued to purchase or carry Common Shares, which
interest is deemed to relate to exempt-interest dividends, will not be
deductible by Common Shareholders for federal income tax purposes. Moreover,
while exempt-interest dividends are excluded from gross income for federal
income tax purposes, they may be subject to alternative minimum tax ("AMT") and
may have other collateral tax consequences. Taxpayers that may be subject to the
AMT should consult their advisers before investing in Common Shares.

     Distributions by the Fund of net interest received from certain taxable
temporary investments (such as certificates of deposit, commercial paper and
obligations of the U.S. Government, its agencies and instrumentalities) and net
short-term capital gain realized by the Fund, if any, will be taxable to Common
Shareholders as ordinary income whether received in cash or additional shares.
Any net long-term capital gain realized by the Fund and distributed to Common
Shareholders in cash or additional shares will be taxable to Common Shareholders
as long-term capital gain regardless of the length of time investors have owned
shares of the Fund. Taxable distributions will not be eligible for the dividends
received deduction allowed to corporations. Distributions by the Fund to Common
Shareholders that do not constitute ordinary income dividends, capital gain
dividends or exempt-interest dividends will be treated as a return of capital to
the extent of (and in reduction of) the Common Shareholder's tax basis in his or
her shares. Any excess will be treated as gain from the sale of his or her
shares, as discussed below.

     The Internal Revenue Service's position in a published revenue ruling
indicates that the Fund is required to designate distributions paid with respect
to its Common Shares and its MuniPreferred Shares as consisting of a portion of
each type of income distributed by the Fund. The portion of each type of income
deemed received by the holders of each class of shares will be equal to the
portion of total Fund dividends received by such class. Thus, the Fund will
designate dividends paid as exempt-interest dividends in a manner that allocates
such dividends between the holders of the Common Shares and the holders of
MuniPreferred Shares, in proportion to the total dividends paid to each such
class during or with respect to the taxable year, or otherwise as required by
applicable law. Capital gain dividends and ordinary income dividends will
similarly be allocated between the two classes.

     If the Fund engages in hedging transactions involving financial futures and
options, these transactions will be subject to special tax rules, the effect of
which may be to accelerate income to the Fund, defer the Fund's losses, cause
adjustments in the holding periods of the Fund's securities, convert long-term
capital gains into short-term capital gains and convert short-term capital
losses into long-term capital losses.  These rules could therefore affect the
amount, timing and character of distributions to Common Shareholders.


     Prior to purchasing shares in the Fund, an investor should carefully
consider the impact of dividends or distributions which are expected to be or
have been declared, but not paid. Any dividend or distribution declared shortly
after a purchase of such shares prior to the record date will have the effect of
reducing the per share net asset value by the per share amount of the dividend
or distribution.

     Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received by
the shareholders) on December 31.

     The sale or exchange of Common Shares normally will result in capital gain
or loss to the Common Shareholders who hold their Common Shares as capital
assets. However, any loss on the sale or exchange of a Common Share that has
been held for six months or less will be disallowed to the extent of any
distribution of exempt-interest dividends received with respect to such Common
Share. Generally, a Common Shareholder's gain or loss will be long-term gain or
loss if the shares have been held for more than one year. If a shareholder sells
or otherwise disposes of Common Shares before holding them for more than six
months, however, any loss on the sale or other disposition of such Common Shares
shall be treated as a long-term capital loss to the extent of any capital gain
dividends received by the Common Shareholder (or amounts credited to the Common
Shareholder as an undistributed capital gain) with respect to such Common
Shares. Present law taxes both long- and short-term capital gains of
corporations at the rates applicable to ordinary income. For non-corporate
taxpayers, however, net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) with respect to securities is taxed at a
maximum rate of 20%, while short-term capital gain and other ordinary income is
taxed at a maximum

                                      38

<PAGE>


rate of 38.6% in 2002 and 2003, 37.6% in 2004 and 2005, and 35% thereafter until
2011, when the maximum rate on ordinary income will revert to 39.6% unless
amended by Congress. The maximum long-term capital gain rate is 18% for capital
assets that are held for more than five years and whose holding periods begin
after December 31, 2000. Because of the limitations on itemized deductions and
the deduction for personal exemptions applicable to higher income taxpayers, the
effective tax rate may be higher in certain circumstances.


     All or a portion of a sales charge paid in purchasing Common Shares cannot
be taken into account for purposes of determining gain or loss on the redemption
or exchange of such shares within 90 days after their purchase to the extent
shares of the Fund or another fund are subsequently acquired without payment of
a sales charge pursuant to a reinvestment right. Any disregarded portion of such
charge will result in an increase in the Common Shareholder's tax basis in the
shares subsequently acquired. In addition, no loss will be allowed on the
redemption or exchange of Common Shares if the Common Shareholder purchases
other shares of the Fund (whether through reinvestment of distributions or
otherwise) or the Common Shareholder acquires or enters into a contract or
option to acquire securities that are substantially identical to shares of the
Fund within a period of 61 days beginning 30 days before and ending 30 days
after such redemption or exchange. If disallowed, the loss will be reflected in
an adjustment to the basis of the shares acquired.

     In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its taxable ordinary income for such year, at least 98% of its capital gain net
income (the excess of its realized capital gains over its realized capital
losses, generally computed on the basis of the one-year period ending on October
31 of such year) and 100% of any taxable ordinary income and any excess of
realized capital gains over realized capital losses for the prior year that was
not distributed during such year and on which the Fund paid no federal income
tax. For purposes of the excise tax, a regulated investment company may reduce
its capital gain net income (but not below its net capital gain) by the amount
of any net ordinary loss for the calendar year. The Fund intends to make timely
distributions in compliance with these requirements and consequently it is
anticipated that it generally will not be required to pay the excise tax.

     If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year, and distributions to
its Common Shareholders would be taxable to Common Shareholders as ordinary
dividend income for federal income tax purposes to the extent of the Fund's
earnings and profits.

     The Fund is required in certain circumstances to withhold a percentage of
taxable dividends and certain other payments paid to non-corporate holders of
shares who have not furnished to the Fund their correct taxpayer identification
numbers (in the case of individuals, their Social Security number) and certain
certifications, or who are otherwise subject to backup withholding. The backup
withholding percentage will be 30% in 2002 and 2003, 29% in 2004 and 2005, and
28% thereafter until 2011, when the percentage will revert to 31% unless amended
by Congress. Backup withholding is not an additional tax and any amounts
withheld may be credited against the shareholder's federal income tax liability.

     The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
taxation of the Fund and its Common Shareholders.  For complete provisions,
reference should be made to the pertinent Code sections and Treasury
Regulations.  The Code and Treasury Regulations are subject to change by
legislative or administrative action, and any such change may be retroactive
with respect to Fund transactions.  Common Shareholders are advised to consult
their own tax

                                      39

<PAGE>


advisors for more detailed information concerning the federal taxation of the
Fund and the income tax consequences to its Common Shareholders.

                 PERFORMANCE RELATED AND COMPARATIVE INFORMATION


     The Fund may be a suitable investment for a shareholder who is thinking of
adding bond investments to his portfolio to balance the appreciated stocks that
the shareholder is holding. Because the Fund expects that a substantial portion
of its investments will pay interest that is taxable under the federal
alternative minimum tax, the Fund may not be a suitable investment for
shareholders that are subject to the federal alternative minimum tax.

     The Fund may quote certain performance-related information and may compare
certain aspects of its portfolio and structure to other substantially similar
closed-end funds as categorized by Lipper, Inc. ("Lipper"), Morningstar Inc. or
other independent services. Comparison of the Fund to an alternative investment
should be made with consideration of differences in features and expected
performance. The Fund may obtain data from sources or reporting services, such
as Bloomberg Financial ("Bloomberg") and Lipper, that the Fund believes to be
generally accurate.

     Past performance is not indicative of future results.  At the time Common
Shareholders sell their shares, they may be worth more or less than their
original investment.

     See Appendix B for taxable equivalent yield information and Appendix E for
additional performance related and comparative information.


                                      40

<PAGE>


                                    EXPERTS


     The Financial Statements of the Fund as of March 7, 2002, appearing in
this Statement of Additional Information have been audited by Ernst & Young LLP,
233 South Wacker Drive, Chicago, Illinois 60606, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and is included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing. Ernst & Young LLP provides accounting and auditing
services to the Fund.



                                    CUSTODIAN

     The custodian of the assets of the Fund is JPMorgan Chase Bank, P.O. Box
660086, Dallas, Texas 75266-0086. The custodian performs custodial, fund
accounting and portfolio accounting services.


                            ADDITIONAL INFORMATION

     A Registration Statement on Form N-2, including amendments thereto,
relating to the shares of the Fund offered hereby, has been filed by the Fund
with the Securities and Exchange Commission (the "Commission"), Washington, D.C.
The Fund's Prospectus and this Statement of Additional Information do not
contain all of the information set forth in the Registration Statement,
including any exhibits and schedules thereto. For further information with
respect to the Fund and the shares offered hereby, reference is made to the
Fund's Registration Statement. Statements contained in the Fund's Prospectus and
this Statement of Additional Information as to the contents of any contract or
other document referred to are not

                                      41

<PAGE>


necessarily complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. Copies of
the Registration Statement may be inspected without charge at the Commission's
principal office in Washington, D.C., and copies of all or any part thereof may
be obtained from the Commission upon the payment of certain fees prescribed by
the Commission.

                                      42

<PAGE>


                        REPORT OF INDEPENDENT AUDITORS

The Board of Trustees and Shareholder
Nuveen Insured Dividend Advantage Municipal Fund


We have audited the accompanying statement of net assets of Nuveen Insured
Dividend Advantage Municipal Fund (the "Fund") as of March 7, 2002 and the
related statement of operations for the period from July 12, 1999 (date of
organization) through March 7, 2002. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Fund at March 7, 2002, and
results of its operations for the period from July 12, 1999 (date of
organization) through March 7, 2002, in conformity with accounting principles
generally accepted in the United States.


                                       /s/ ERNST & YOUNG LLP

Chicago, Illinois
March 8, 2002


                                      43

<PAGE>


                NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
                              FINANCIAL STATEMENTS

                Nuveen Insured Dividend Advantage Municipal Fund
                            Statement of Net Assets
                                 March 7, 2002

<TABLE>
<S>                                                                       <C>
Assets:
    Cash................................................................. $100,275
    Offering costs.......................................................  450,000
    Receivable from Adviser..............................................   11,500
                                                                          --------
       Total assets......................................................  561,775
                                                                          --------

Liabilities:
    Accrued offering costs...............................................  450,000
    Payable to Adviser for organization costs............................   11,500
                                                                          --------
       Total liabilities.................................................  461,500
                                                                          --------

Net Assets............................................................... $100,275
                                                                          ========

Net asset value per Common Share outstanding ($100,275 divided
    by 7,000 Common Shares outstanding).................................. $ 14.325
                                                                          ========
Net Assets Represent:
    Cumulative Preferred Shares, $25,000 liquidation value; unlimited
       number of shares authorized, no shares outstanding................ $      -
    Common Shares, $.01 par value; unlimited number of shares
       authorized, 7,000 shares outstanding..............................       70
    Paid-in surplus......................................................  100,205
                                                                          --------
                                                                          $100,275
                                                                          ========
</TABLE>

                                      44

<PAGE>



                Nuveen Insured Dividend Advantage Municipal Fund
                            Statement of Operations
    Period from July 12, 1999 (date of organization) through March 7, 2002

<TABLE>
<S>                                                                   <C>
Investment income.................................................... $      -
                                                                      --------

Expenses:
   Organization costs................................................   11,500
   Expense reimbursement.............................................  (11,500)
                                                                      --------
      Total expenses.................................................        -
                                                                      --------
Net investment income................................................ $      -
                                                                      ========
</TABLE>

Note 1: Organization

The Fund was organized as a Massachusetts business trust on July 12, 1999, and
has been inactive since that date except for matters relating to its
organization and registration as a diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended, and the
Securities Act of 1933, as amended, and the sale of 7,000 Common Shares to
Nuveen Advisory Corp., the Fund's investment adviser (the "Adviser"), a wholly
owned subsidiary of The John Nuveen Company.

Nuveen Investments, also a wholly owned subsidiary of The John Nuveen Company,
has agreed to reimburse all organization expenses (approximately $11,500) and
pay all offering costs (other than the sales load) that exceed $.03 per Common
Share.

The Fund is authorized by its Declaration of Trust to issue Preferred Shares
("MuniPreferred Shares") having a liquidation value of $25,000 per share in one
or more classes or series, with dividend, liquidation preference and other
rights as determined by the Fund's Board of Trustees without approval of the
Common Shareholders.

Note 2: Accounting Policies

The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the use of
management estimates. Actual results may differ from those estimates.

The Fund's share of offering costs will be recorded as a reduction of the
proceeds from the sale of Common Shares upon the commencement of Fund
operations. The offering costs reflected above assume the sale of 15,000,000
Common Shares.

Note 3: Investment Management Agreement

Pursuant to an investment management agreement between the Adviser and the Fund,
the Fund, upon commencement of Fund operations, has agreed to pay a management
fee, payable on a monthly basis, at an annual rate ranging from 0.6500% of the
first $125 million of the average daily net assets (including net assets
attributable to MuniPreferred Shares) to 0.5750% of the average daily net assets
(including net assets attributable to MuniPreferred Shares) in excess of $2
billion.

                                       45

<PAGE>


In addition to the reimbursement and waiver of organization and offering costs
discussed in Note 1, the Adviser has contractually agreed to reimburse the Fund
for fees and expenses during the first 10 years of operations. These reductions
range from 0.3000% of the average daily net assets (including net assets
attributable to MuniPreferred Shares) during the first year of operations,
declining to 0.0500% of the average daily net assets (including net assets
attributable to MuniPreferred Shares) during the tenth year. The Adviser has not
agreed to reimburse the Fund for any portion of its fees and expenses beyond
March 31, 2012.

Note 4: Income Taxes

The Fund intends to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its tax-
exempt net investment income, in addition to any significant amounts of net
realized capital gains and/or market discount realized from investment
transactions.

                                      46

<PAGE>

                                   APPENDIX A

Ratings of Investments


Standard & Poor's Corporation--A brief description of the applicable Standard &
Poor's Corporation ("Standard & Poor's" or "S&P") rating symbols and their
meanings (as published by S&P) follows:


A Standard & Poor's issue credit rating is a current opinion of the
creditworthiness of an obligor with respect to a specific financial obligation,
a specific class of financial obligations, or a specific financial program. It
takes into consideration the creditworthiness of guarantors, insurers, or other
forms of credit enhancement on the obligation. The issue credit rating is not a
recommendation to purchase, sell, or hold a financial obligation, inasmuch as it
does not comment as to market price or suitability for a particular investor.

Issue credit ratings are based on current information furnished by the obligors
or obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any credit rating
and may, on occasion, rely on unaudited financial information. Credit ratings
may be changed, suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or based on other circumstances.


Issue credit ratings can be either long-term or short-term. Short-term ratings
are generally assigned to those obligations considered short-term in the
relevant market. In the U.S., for example, that means obligations with an
original maturity of no more than 365 days - including commercial paper.
Short-term ratings are also used to indicate the creditworthiness of an obligor
with respect to put features on long-term obligations. The result is a dual
rating, in which the short-term ratings address the put feature, in addition to
the usual long-term rating. Medium-term notes are assigned long-term ratings.


Long-term Issue Credit Ratings

Issue credit ratings are based in varying degrees, on the following
considerations:

      1.  Likelihood of payment - capacity and willingness of the obligor
          to meet its financial commitment on an obligation in accordance
          with the terms of the obligation;
      2.  Nature of and provisions of the obligation; and
      3.  Protection afforded by, and relative position of, the obligation
          in the event of bankruptcy, reorganization, or other arrangement
          under the laws of bankruptcy and other laws affecting creditors'
          rights.

The issue ratings definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority in
bankruptcy, as noted above.

AAA
An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial

                                    A-1






<PAGE>

     commitment on the obligation is extremely strong.

     AA

     An obligation rated `AA' differs from the highest-rated obligations only in
     small degree. The obligor's capacity to meet its financial commitment on
     the obligation is very strong.

     A

     An obligation rated `A' is somewhat more susceptible to the adverse effects
     of changes in circumstances and economic conditions than obligations in
     higher-rated categories. However, the obligor's capacity to meet its
     financial commitment on the obligation is still strong.

     BBB

     An obligation rated `BBB' exhibits adequate protection parameters. However,
     adverse economic conditions or changing circumstances are more likely to
     lead to a weakened capacity of the obligor to meet its financial commitment
     on the obligation.

     BB, B, CCC, CC, And C

     Obligations rated `BB', `B', `CCC', `CC', and `C' are regarded as having
     significant speculative characteristics. `BB' indicates the least degree of
     speculation and `C' the highest. While such obligations will likely have
     some quality and protective characteristics, these may be outweighed by
     large uncertainties or major exposures to adverse conditions.

     BB

     An obligation rated `BB' is less vulnerable to nonpayment than other
     speculative issues. However, it faces major ongoing uncertainties or
     exposure to adverse business, financial, or economic conditions, which
     could lead to the obligor's inadequate capacity to meet its financial
     commitment on the obligation.

     B

     An obligation rated `B' is more vulnerable to nonpayment than obligations
     rated `BB', but the obligor currently has the capacity to meet its
     financial commitment on the obligation. Adverse business, financial, or
     economic conditions will likely impair the obligor's capacity or
     willingness to meet its financial commitment on the obligation.

     CCC

     An obligation rated `CCC' is currently vulnerable to nonpayment and is
     dependent upon favorable business, financial, and economic conditions for
     the obligor to meet its financial commitment on the obligation. In the
     event of adverse business, financial, or economic conditions, the obligor
     is not likely to have the capacity to meet its financial commitment on the
     obligation.

     CC

     An obligation rated `CC' is currently highly vulnerable to nonpayment.



                                 A-2


<PAGE>


C

The `C' rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D

An obligation rated `D' is in payment default. The `D' rating category is
used when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The `D' rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.

Plus (+) or minus (-)  The ratings from `AA' to `CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

c    The `c' subscript is used to provide additional information to investors
     that the bank may terminate its obligation to purchase tendered bonds if
     the long-term credit rating of the issuer is below an investment-grade
     level and/or the issuer's bonds are deemed taxable.

p    The letter `p' indicates that the rating is provisional. A provisional
     rating assumes the successful completion of the project financed by the
     debt being rated and indicates that payment of debt service requirements is
     largely or entirely dependent upon the successful, timely completion of the
     project. This rating, however, while addressing credit quality subsequent
     to completion of the project, makes no comment on the likelihood of or the
     risk of default upon failure of such completion. The investor should
     exercise his own judgment with respect to such likelihood and risk.

*    Continuance of the ratings is contingent upon Standard & Poor's receipt of
     an executed copy of the escrow agreement or closing documentation
     confirming investments and cash flows.

r    The `r' highlights derivative, hybrid, and certain other obligations that
     Standard & Poor's believes may experience high volatility or high
     variability in expected returns as a result of noncredit risks. Examples of
     such obligations are securities with principal or interest return indexed
     to equities, commodities, or currencies; certain swaps and options; and
     interest-only and principal-only mortgage securities. The absence of an `r'
     symbol should not be taken as an indication that an obligation will exhibit
     no volatility or variability in total return.

N.R. Not rated.

Debt obligations of issuers outside the United States and its territories are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.

Bond Investment Quality Standards Under present commercial bank regulations
issued by the Comptroller of the Currency, bonds rated in the top four
categories (`AAA', `AA', `A', `BBB', commonly known as investment-grade ratings)
generally are regarded as eligible for bank investment. Also, the laws of
various states governing legal investments impose certain rating or other
standards for obligations eligible for investment by savings banks, trust
companies, insurance companies, and fiduciaries in general.

Short-Term Issue Credit Ratings

Notes

A Standard & Poor's note ratings reflects the liquidity factors and market
access risks unique to notes. Notes due in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment:

     .  Amortization schedule -- the larger the final maturity relative to other
        maturities, the more likely it will be treated as a note; and

     .  Source of payment -- the more dependent the issue is on the market for
        its refinancing, the more likely it will be treated as a note.

Note rating symbols are as follows:

SP-1 Strong capacity to pay principal and interest. An issue determined to
     possess a very strong capacity to pay debt service is given a plus (+)
     designation.

SP-2 Satisfactory capacity to pay principal and interest, with some
     vulnerability to adverse financial and economic changes over the term of
     the notes.

SP-3 Speculative capacity to pay principal and interest.

                                      A-3

<PAGE>

A note rating is not a recommendation to purchase, sell, or hold a security
inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
S&P by the issuer or obtained by S&P from other sources it considers reliable.
S&P does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended, or withdrawn as a result of changes in or unavailability of such
information or based on other circumstances.

Commercial Paper

An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.

Ratings are graded into several categories, ranging from `A-1' for the highest
quality obligations to `D' for the lowest. These categories are as follows:

A-1  A short-term obligation rated `A-1' is rated in the highest category by
     Standard & Poor's. The obligor's capacity to meet its financial commitment
     on the obligation is strong. Within this category, certain obligations are
     designated with a plus sign (+). This indicates that the obligor's capacity
     to meet its financial commitment on these obligations is extremely strong.

A-2  A short-term obligation rated `A-2' is somewhat more susceptible to the
     adverse effects of changes in circumstances and economic conditions than
     obligations in higher rating categories. However, the obligor's capacity to
     meet its financial commitment on the obligation is satisfactory.

A-3  A short-term obligation rated `A-3' exhibits adequate protection
     parameters. However, adverse economic conditions or changing circumstances
     are more likely to lead to a weakened capacity of the obligor to meet its
     financial commitment on the obligation.

B    A short-term obligation rated `B' is regarded as having significant
     speculative characteristics. The obligor currently has the capacity to meet
     its financial commitment on the obligation; however, it faces major ongoing
     uncertainties which could lead to the obligor's inadequate capacity to meet
     its financial commitment on the obligation.

C    A short-term obligation rated `C' is currently vulnerable to nonpayment and
     is dependent upon favorable business, financial, and economic conditions
     for the obligor to meet its financial commitment on the obligation.

D    A short-term obligation rated `D' is in payment default. The `D' rating
     category is used when payments on an obligation are not made on the date
     due even if the applicable grace period has not expired, unless Standard &
     Poor's believes that such payments will be made during such grace period.
     The `D' rating also will be used upon the filing of a bankruptcy petition
     or the taking of a similar action if payments on an obligation are
     jeopardized.

A commercial rating is not a recommendation to purchase, sell, or hold a
security inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
S&P by the issuer or obtained by S&P from other sources it considers reliable.
S&P does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended, or withdrawn as a result of changes in or unavailability of such
information or based on other circumstances.

                                      A-4

<PAGE>

Moody's Investors Service, Inc.--A brief description of the applicable Moody's
Investors Service, Inc. ("Moody's") rating symbols and their meanings (as
published by Moody's) follows:

Municipal Bonds

Aaa  Bonds which are rated `Aaa' are judged to be of the best quality. They
     carry the smallest degree of investment risk and are generally referred to
     as "gilt edged." Interest payments are protected by a large or by an
     exceptionally stable margin and principal is secure. While the various
     protective elements are likely to change, such changes as can be visualized
     are most unlikely to impair the fundamentally strong position of such
     issues.

Aa   Bonds which are rated `Aa' are judged to be of high quality by all
     standards. Together with the `Aaa' group they comprise what are generally
     known as high grade bonds. They are rated lower than the best bonds because
     margins of protection may not be as large as in `Aaa' securities or
     fluctuation of protective elements may be of greater amplitude or there may
     be other elements present which make the long-term risks appear somewhat
     larger than in `Aaa' securities.

A    Bonds which are rated `A' possess many favorable investment attributes and
     are to be considered as upper medium grade obligations. Factors giving
     security to principal and interest are considered adequate, but elements
     may be present which suggest a susceptibility to impairment sometime in the
     future.

Baa  Bonds which are rated `Baa' are considered as medium grade obligations,
     i.e., they are neither highly protected nor poorly secured. Interest
     payments and principal security appear adequate for the present but certain
     protective elements may be lacking or may be characteristically unreliable
     over any great length of time. Such bonds lack outstanding investment
     characteristics and in fact have speculative characteristics as well.

Ba   Bonds which are rated `Ba' are judged to have speculative elements; their
     future cannot be considered as well assured. Often the protection of
     interest and principal payments may be very moderate and thereby not well
     safeguarded during both good and bad times over the future.  Uncertainty of
     position characterizes bonds in this class.

B    Bonds which are rated `B' generally lack characteristics of the desirable
     investment. Assurance of interest and principal payments or of maintenance
     of other terms of the contract over any long period of time may be small.

Caa  Bonds which are rated `Caa' are of poor standing. Such issues may be in
     default or there may be present elements of danger with respect to
     principal or interest.

Ca   Bonds which are rated `Ca' represent obligations which are speculative in a
     high degree. Such issues are often in default or have other marked
     shortcomings.

C    Bonds which are rated `C' are the lowest rated class of bonds, and issues
     so rated can be regarded as having extremely poor prospects of ever
     attaining any real investment standing.

                                      A-5

<PAGE>


Issues that are secured by escrowed funds held in trust, reinvested in direct,
non-callable U.S. government obligations or non-callable obligations
unconditionally guaranteed by the U.S. Government or Resolution Funding
Corporation are identified with a # (hatchmark) symbol, e.g., #Aaa.

Con. (...):  Bonds for which the security depends upon the completion of some
             act or the fulfillment of some condition are rated conditionally.
             These are bonds secured by (a) earnings of projects under
             construction, (b) earnings of projects unseasoned in operation
             experience, (c) rentals which begin when facilities are completed,
             or (d) payments to which some other limiting condition attaches.
             The parenthetical rating denotes probable credit stature upon
             completion of construction or elimination of the basis of the
             condition.

Note:        Moody's applies numerical modifiers 1, 2 and 3 in each generic
             rating classification from Aa through Caa. The modifier 1 indicates
             that the obligation ranks in the higher end of its generic rating
             category; the modifier 2 indicates a mid-range ranking; and the
             modifier 3 indicates a ranking in the lower end of that generic
             rating category.

Short-Term Loans

MIG 1/VMIG 1  This designation denotes superior credit quality. Excellent
              protection is afforded by established cash flows, highly reliable
              liquidity support, or demonstrated broad-based access to the
              market for refinancing.

MIG 2/VMIG 2  This designation denotes strong credit quality. Margins of
              protection are ample, although not as large as in the preceding
              group.

MIG 3/VMIG 3  This designation denotes acceptable credit quality. Liquidity and
              cash-flow protection may be narrow, and market access for
              refinancing is likely to be less well-established.

SG            This designation denotes speculative-grade credit quality. Debt
              instruments in this category may lack sufficient margins of
              protection.

Commercial Paper

Issuers rated Prime-1 (or related supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will normally be evidenced by the following characteristics:

     --  Leading market positions in well-established industries.

     --  High rates of return on funds employed.

     --  Conservative capitalization structures with moderate reliance on debt
         and ample asset protection.

     --  Broad margins in earnings coverage of fixed financial charges and high
         internal cash generation.

                                      A-6

<PAGE>

     --   Well-established access to a range of financial markets and assured
          sources of alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Issuers rated Prime-3 (or related supporting institutions) have an acceptable
ability for repayment of senior short-term debt obligations. The effect of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.

Issuers rated Not Prime do not fall within any of the Prime rating categories.

     Fitch Ratings--A brief description of the applicable Fitch Ratings
("Fitch") ratings symbols and meanings (as published by Fitch) follows:

Long-Term Credit Ratings

Investment Grade

AAA  Highest credit quality. `AAA' ratings denote the lowest expectation of
     credit risk. They are assigned only in case of exceptionally strong
     capacity for timely payment of financial commitments. This capacity is
     highly unlikely to be adversely affected by foreseeable events.

AA   Very high credit quality. `AA' ratings denote a very low expectation of
     credit risk. They indicate very strong capacity for timely payment of
     financial commitments. This capacity is not significantly vulnerable to
     foreseeable events.

A    High credit quality. `A' ratings denote a low expectation of credit risk.
     The capacity for timely payment of financial commitments is considered
     strong. This capacity may, nevertheless, be more vulnerable to changes in
     circumstances or in economic conditions than is the case for higher
     ratings.

BBB  Good credit quality. `BBB' ratings indicate that there is currently a low
     expectation of credit risk. The capacity for timely payment of financial
     commitments is considered adequate, but adverse changes in circumstances
     and in economic conditions are more likely to impair this capacity. This
     is the lowest investment-grade category.

Speculative Grade

BB   Speculative. `BB' ratings indicate that there is a possibility of credit
     risk developing, particularly as the result of adverse economic change over
     time; however, business or

                                      A-7

<PAGE>


     financial alternatives may be available to allow financial commitments to
     be met. Securities rated in this category are not investment grade.

B    Highly speculative. `B' ratings indicate that significant credit risk is
     present, but a limited margin of safety remains. Financial commitments are
     currently being met; however, capacity for continued payment is contingent
     upon a sustained, favorable business and economic environment.

CCC, CC, C High default risk. Default is a real possibility. Capacity for
     meeting financial commitments is solely reliant upon sustained, favorable
     business or economic developments. A `CC' rating indicates that default of
     some kind appears probable. `C' ratings signal imminent default.

DDD, DD, and D Default. The ratings of obligations in this category are based on
     their prospects for achieving partial or full recovery in a reorganization
     or liquidation of the obligor. While expected recovery values are highly
     speculative and cannot be estimated with any precision, the following serve
     as general guidelines. `DDD' obligations have the highest potential for
     recovery, around 90%-100% of outstanding amounts and accrued interest. `DD'
     indicates potential recoveries in the range of 50%-90%, and `D' the lowest
     recovery potential, i.e., below 50%. Entities rated in this category have
     defaulted on some or all of their obligations. Entities rated `DDD' have
     the highest prospect for resumption of performance or continued operation
     with or without a formal reorganization process. Entities rated `DD' and
     `D' are generally undergoing a formal reorganization or liquidation
     process; those rated `DD' are likely to satisfy a higher portion of their
     outstanding obligations, while entities rated `D' have a poor prospect for
     repaying all obligations.

Short-Term Credit Ratings

A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and thus
places greater emphasis on the liquidity necessary to meet financial commitments
in a timely manner.

F1   Highest credit quality. Indicates the strongest capacity for timely payment
     of financial commitments; may have an added "+" to denote any exceptionally
     strong credit feature.

F2   Good credit quality. A satisfactory capacity for timely payment of
     financial commitments, but the margin of safety is not as great as in the
     case of the higher ratings.

F3   Fair credit quality. The capacity for timely payment of financial
     commitments is adequate; however, near-term adverse changes could result in
     a reduction to non-investment grade.

B    Speculative. Minimal capacity for timely payment of financial commitments,
     plus vulnerability to near-term adverse changes in financial and economic
     conditions.

                                      A-8

<PAGE>

C    High default risk. Default is a real possibility. Capacity for meeting
     financial commitments is solely reliant upon a sustained, favorable
     business and economic environment.

D    Default. Denotes actual or imminent payment default.

Notes:

"+" or "-" may be appended to a rating to denote relative status within major
rating categories. Such suffixes are not added to the `AAA' long-term rating
category, to categories below `CCC', or to short-term ratings other than `F1'.


`NR' indicates that Fitch does not rate the issuer or issue in question.

`Withdrawn': A rating is withdrawn when Fitch deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.


Rating Watch: Ratings are placed on Rating Watch to notify investors that there
is a reasonable probability of a rating change and the likely direction of such
change. These are designated as "Positive", indicating a potential upgrade,
"Negative", for a potential downgrade, or "Evolving", if ratings may be raised,
lowered or maintained. Rating Watch is typically resolved over a relatively
short period.

A Rating Outlook indicates the direction a rating is likely to move over a one
to two year period. Outlooks may be positive, stable, or negative. A positive or
negative Rating Outlook does not imply a rating change is inevitable. Similarly,
companies whose outlooks are `stable' could be downgraded before an outlook
moves to positive or negative if circumstances warrant such an action.
Occasionally, Fitch may be unable to identify the fundamental trend. In these
cases, the Rating Outlook may be described as evolving.

                                      A-9

<PAGE>

                                  APPENDIX B

                        TAXABLE EQUIVALENT YIELD TABLES


     The taxable equivalent yield is the current yield you would need to earn on
a taxable investment in order to equal a stated tax-free yield on a municipal
investment. To assist you to more easily compare municipal investments like
the Fund with taxable alternative investments, the table below presents the
taxable equivalent yields for a range of hypothetical tax-free yields assuming
the stated marginal Federal tax rates for 2002 listed below:


Taxable Equivalent of Tax-Free Yields

Tax Free Yields


<TABLE>
Tax Rate       4.00%        4.50%       5.00%       5.50%      6.00%      6.50%
- -------------------------------------------------------------------------------
<S>            <C>          <C>         <C>         <C>        <C>       <C>
  10.00%       4.44%        5.00%       5.56%       6.11%      6.67%      7.22%
  15.00%       4.71%        5.29%       5.88%       6.47%      7.06%      7.65%
  27.00%       5.48%        6.16%       6.85%       7.53%      8.22%      8.90%
  30.00%       5.71%        6.43%       7.14%       7.86%      8.57%      9.29%
  35.00%       6.15%        6.92%       7.69%       8.46%      9.23%     10.00%
  38.60%       6.51%        7.33%       8.14%       8.96%      9.77%     10.59%
</TABLE>



                                      B-1


<PAGE>

                                  APPENDIX C

                            DESCRIPTION OF INSURERS

     Set forth below is information about the various municipal bond insurers
with whom the Fund intends to maintain specific insurance policies for
particular municipal bonds or policies of portfolio insurance. The information
in this Appendix is based on information supplied by the insurers, and the Fund
cannot verify its accuracy and completeness.

AMBAC ASSURANCE CORPORATION ("AMBAC ASSURANCE")


Payment Pursuant to Financial Guaranty Insurance Policy

Ambac Assurance has made a commitment to issue a financial guaranty insurance
policy (the "Financial Guaranty Insurance Policy") relating to the bonds
effective as of the date of issuance of the bonds. Under the terms of the
Financial Guaranty Insurance Policy, Ambac Assurance will pay to The Bank of New
York, in New York, New York or any successor thereto (the "Insurance Trustee")
that portion of the principal of and interest on the bonds which shall become
Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor (as
such terms are defined in the Financial Guaranty Insurance Policy). Ambac
Assurance will make such payments to the Insurance Trustee on the later of the
date on which such principal and interest becomes Due for Payment or within one
business day following the date on which Ambac Assurance shall have received
notice of Nonpayment from the Trustee/Paying Agent. The insurance will
extend for the term of the bonds and, once issued, cannot be canceled by Ambac
Assurance.

     The Financial Guaranty Insurance Policy will insure payment only on stated
maturity dates and on mandatory sinking fund installment dates, in the case of
principal, and on stated dates for payment, in the case of interest. If the
bonds become subject to mandatory redemption and insufficient funds are
available for redemption of all outstanding bonds, Ambac Assurance will remain
obligated to pay principal of and interest on outstanding bonds on the
originally scheduled interest and principal payment dates including mandatory
sinking fund redemption dates. In the event of any acceleration of the principal
of the bonds, the insured payments will be made at such times and in such
amounts as would have been made had there not been an acceleration.

     In the event the Bond Registrar has notice that any payment of principal of
or interest on a bond which has become Due for Payment and which is made to a
Holder by or on behalf of the Obligor has been deemed a preferential transfer
and theretofore recovered from its registered owner pursuant to the United
States Bankruptcy Code in accordance with a final, nonappealable order of a
court of competent jurisdiction, such registered owner will be entitled to
payment from Ambac Assurance to the extent of such recovery if sufficient funds
are not otherwise available.

     The Financial Guaranty Insurance Policy does not insure any risk other than
Nonpayment, as defined in the Policy. Specifically, the Financial Guaranty
Insurance Policy does not cover:

          1. payment on acceleration, as a result of a call for redemption
     (other than mandatory sinking fund redemption) or as a result of any other
     advancement of maturity.

          2. payment of any redemption, prepayment or acceleration premium.

          3. nonpayment of principal or interest caused by the insolvency or
     negligence of any Trustee or Paying Agent, if any.

     If it becomes necessary to call upon the Financial Guaranty Insurance
Policy, payment of principal requires surrender of bonds to the Insurance
Trustee together with an appropriate instrument of assignment so as to permit
ownership of such bonds to be registered in the name of Ambac Assurance to the
extent of the payment under the Financial Guaranty Insurance Policy. Payment of
interest pursuant to the Financial Guaranty Insurance Policy requires proof of
Holder entitlement to interest payments and an appropriate assignment of the
Holder's right to payment to Ambac Assurance.

     Upon payment of the insurance benefits, Ambac Assurance will become the
owner of the bond, appurtenant coupon, if any, or right to payment of principal
or interest on such bond and will be fully subrogated to the surrendering
Holder's rights to payment.

Ambac Assurance

     Ambac Assurance Corporation ("Ambac Assurance") is a Wisconsin-domiciled
stock insurance corporation regulated by the Office of the Commissioner of
Insurance of the State of Wisconsin and licensed to do business in 50 states,
the District of Columbia, the Territory of Guam and the Commonwealth of Puerto
Rico, with admitted assets of approximately $4,988,000,000 (unaudited) and
statutory capital of approximately $2,693,000,000 (unaudited) as of September
30, 2001. Statutory capital consists of Ambac Assurance's policyholders' surplus
and statutory contingency reserve. Standard & Poor's Credit Markets Services, a
division of The McGraw-Hill Companies, Moody's Investors Service and Fitch, Inc.
have each assigned a triple-A financial strength rating to Ambac Assurance.
Ambac Assurance has obtained a ruling from the Internal Revenue Service to the
effect that the insuring of an obligation to Ambac Assurance will not affect the
treatment for federal income tax purposes of interest on such obligation and
that insurance proceeds representing maturing interest paid by Ambac Assurance
under policy provisions substantially identical to those contained in its
municipal bond insurance policy shall be treated for federal income tax purposes
in the same manner as if such payments were made by the issuer of the bonds.


     Ambac Assurance makes no representation regarding the bonds or the
advisability of investing in the bonds and makes no representation regarding,
nor has it participated in the preparation of, the Prospectus and Statement of
Additional Information, other than the information supplied by Ambac Assurance
and presented under this heading "Ambac Assurance Corporation."


Available Information

     The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the
"Company"), is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the public reference section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. In addition, the aforementioned material may also be inspected at the
offices of the New York Stock Exchange, Inc. (the "NYSE") at 20 Broad Street,
New York, New York 10005. The Company's Common Stock is listed on the NYSE.

     Copies of Ambac Assurance's financial statements prepared in accordance
with statutory accounting standards are available from Ambac Assurance. The
address of Ambac Assurance's administrative offices and its telephone number are
One State Street Plaza, 19th Floor, New York, New York 10004 and (212) 668-0340.

Incorporation of Certain Documents by Reference

     The following documents filed by the Company with the Commission (File
No. 1-10777) are incorporated by reference in this Statement of Additional
Information:

     1)   The Company's Current Report on Form 8-K dated January 24, 2001 and
          filed on January 24, 2001;

     2)   The Company's Current Report on Form 8-K dated March 19, 2001 and
          filed on March 19, 2001;

     3)   The Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 2000 and filed on March 28, 2001;

     4)   The Company's Quarterly Report on Form 10-Q for the fiscal quarterly
          period ended March 31, 2001 and filed on May 15, 2001;

     5)   The Company's Current Report on Form 8-K dated July 18, 2001 and filed
          on July 23, 2001;

     6)   The Company's Quarterly Report on Form 10-Q for the fiscal quarterly
          period ended June 30, 2001 and filed on August 10, 2001;

     7)   The Company's Current Report on Form 8-K dated and filed on
          September 17, 2001;

     8)   The Company's Current Report on Form 8-K dated and filed on
          September 19, 2001;

     9)   The Company's Current Report on Form 8-K dated and filed on
          October 22, 2001; and

    10)   The Company's Quarterly Report on Form 10-Q for the fiscal quarterly
          period ended September 30, 2001 and filed on November 14, 2001.

     All documents subsequently filed by the Company pursuant to the
requirements of the Exchange Act after the date of this Statement of Additional
Information will be available for inspection in the same manner as described
above in "Available Information".


FINANCIAL SECURITY ASSURANCE INC. ("FINANCIAL SECURITY")


Bond Insurance Policy
- ---------------------

     Concurrently with the issuance of the bonds, Financial Security Assurance
Inc. ("Financial Security") will issue its Municipal Bond Insurance Policy for
the bonds (the "Policy"). The Policy guarantees the scheduled payment of
principal of and interest on the bonds when due.

     The Policy is not covered by any insurance security or guaranty fund
established under New York, California, Connecticut or Florida insurance law.

Financial Security Assurance Inc.
- ---------------------------------

     Financial Security is a New York domiciled insurance company and a wholly
owned subsidiary of Financial Security Assurance Holdings Ltd. ("Holdings").
Holdings is an indirect subsidiary of Dexia, S.A., a publicly held Belgian
corporation. Dexia, S.A., through its bank subsidiaries, is primarily engaged in
the business of public finance in France, Belgium and other European countries.
No shareholder of Holdings or Financial Security is liable for the obligations
of Financial Security.


     At December 31, 2001, Financial Security's total policyholders' surplus and
contingency reserves were approximately $1,593,569,000 and its total unearned
premium reserve was approximately $810,898,000 in accordance with statutory
accounting principles. At December 31, 2001, Financial Security's total
shareholders' equity was approximately $1,698,672,000 and its total net unearned
premium reserve was approximately $669,534,000 in accordance with generally
accepted accounting principles.

     The financial statements included as exhibits to the annual and quarterly
reports filed by Holdings with the Securities and Exchange Commission are hereby
incorporated herein by reference. Also incorporated herein by reference are any
such financial statements so filed from the date of this Statement of Additional
Information until the termination of the offering of the bonds. Copies of
materials incorporated by reference will be provided upon request to Financial
Security Assurance Inc.: 350 Park Avenue, New York, New York 10022, Attention:
Communications Department (telephone (212) 826-0100).

     The policy does not protect investors against changes in market value of
the bonds, which market value may be impaired as a result of changes in
prevailing interest rates, changes in applicable ratings or other causes.
Financial Security makes no representation regarding the bonds or the
advisability of investing in the bonds. Financial Security makes no
representation regarding the Prospectus or Statement of Additional Information,
nor has it participated in the preparation thereof, except that Financial
Security has provided to the Fund the information presented under this caption
for inclusion in the Statement of Additional Information.


                                      C-1

<PAGE>


MBIA INSURANCE CORPORATION ("MBIA")

The MBIA Insurance Corporation Insurance Policy

     The following information has been furnished by MBIA Insurance Corporation
("MBIA") for use in this Statement of Additional Information.

     MBIA's policy unconditionally and irrevocably guarantees the full and
complete payment required to be made by or on behalf of the Issuer to the Paying
Agent or its successor of an amount equal to (i) the principal of (either at the
stated maturity or by an advancement of maturity pursuant to a mandatory sinking
fund payment) and interest on, the bonds as such payments shall become due but
shall not be so paid (except that in the event of any acceleration of the due
date of such principal by reason of mandatory or optional redemption or
acceleration resulting from default or otherwise, other than any advancement of
maturity pursuant to a mandatory sinking fund payment, the payments guaranteed
by MBIA's policy shall be made in such amounts and at such times as such
payments of principal would have been due had there not been any such
acceleration); and (ii) the reimbursement of any such payment which is
subsequently recovered from any owner of the bonds pursuant to a final judgment
by a court of competent jurisdiction that such payment constitutes an avoidable
preference to such owner within the meaning of any applicable bankruptcy law
(a "Preference").

     MBIA's policy does not insure against loss of any prepayment premium which
may at any time be payable with respect to any bonds. MBIA's policy does not,
under any circumstance, insure against loss relating to: (i) optional or
mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any
payments to be made on an accelerated basis; (iii) payments on the purchase
price of bonds upon tender by an owner thereof; or (iv) any Preference relating
to (i) through (iii) above. MBIA's policy also does not insure against
nonpayment of principal of or interest on the bonds resulting from the
insolvency, negligence or any other act or omission of the Paying Agent or any
other paying agent for the bonds.

     Upon receipt of telephonic or telegraphic notice, such notice subsequently
confirmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail, by MBIA from the Paying Agent or any
owner of a bond the payment of an insured amount for which is then due, that
such required payment has not been made, MBIA on the due date of such payment or
within one business day after receipt of notice of such nonpayment, whichever is
later, will make a deposit of funds, in an account with State Street Bank and
Trust Company, N.A., in New York, New York, or its successor, sufficient for the
payment of any such insured amounts which are then due. Upon presentment and
surrender of such bonds or presentment of such other proof of ownership of the
bonds, together with any appropriate instruments of assignment to evidence the
assignment of the insured amounts due to the bonds as are paid by MBIA, and
appropriate instruments to effect the appointment of MBIA as agent for such
owners of the bonds in any legal proceeding related to payment of insured
amounts on the bonds, such instruments being in a form satisfactory to State
Street Bank and Trust Company, N.A., State Street Bank and Trust Company, N.A.
shall disburse to such owners or the Paying Agent payment of the insured amounts
due on such bonds, less any amount held by the Paying Agent for the payment of
such insured amounts and legally available therefor.

MBIA

     MBIA Insurance Corporation ("MBIA") is the principal operating subsidiary
of MBIA Inc., a New York Stock Exchange listed company (the "Company"). The
Company is not obligated to pay the debts of or claims against MBIA. MBIA is
domiciled in the State of New York and licensed to do business in and subject to
regulation under the laws of all 50 states, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands,
the Virgin Islands of the United States and the Territory of Guam. MBIA has
three branches, one in the Republic of France, one in the Republic of Singapore
and one in the Kingdom of Spain. New York has laws prescribing minimum capital
requirements, limiting classes and concentrations of investments and requiring
the approval of policy rates and forms. State laws also regulate the amount of
both the aggregate and individual risks that may be insured, the payment of
dividends by MBIA, changes in control and transactions among affiliates.
Additionally, MBIA is required to maintain contingency reserves on its
liabilities in certain amounts and for certain periods of time.

     MBIA does not accept any responsibility for the accuracy or completeness of
this Prospectus or Statement of Additional Information or any information or
disclosure contained herein, or omitted herefrom, other than with respect to the
accuracy of the information regarding the policy and MBIA set forth under the
heading "MBIA Insurance Corporation". Additionally, MBIA makes no representation
regarding the bonds or the advisability of investing in the bonds.

     The Financial Guarantee Insurance Policies are not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.

MBIA Information

     The following documents filed by the Company with the Securities and
Exchange Commission (the "SEC") are incorporated herein by reference:

(1)  The Company's Annual Report on Form 10-K for the year ended December 31,
     2000;

(2)  The Company's Quarterly Report on Form 10-Q for the quarter ended September
     30, 2001; and

(3)  The report on Form 8-K filed by the Company on January 30, 2001.

     Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act of 1934, as amended, after the date of this Statement
of Additional Information and prior to the termination of the offering of the
securities offered hereby shall be deemed to be incorporated by reference in
this Statement of Additional Information and to be a part hereof. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein, or contained in this Statement of Additional Information, shall be
deemed to be modified or superseded for purposes of this Statement of Additional
Information to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Statement of Additional Information.

     The Company files annual, quarterly and special reports, information
statements and other information with the SEC under File No. 1-9583. Copies of
the SEC filings (including (1) the Company's Annual Report on Form 10-K for the
year ended December 31, 2000, (2) the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001, and (3) the report on Form 8-K filed
by the Company on January 30, 2001) are available (i) over the Internet at the
SEC's web site at http://www.sec.gov; (ii) at the SEC's public reference room in
Washington D.C.; (iii) over the Internet at the Company's web site at
http://www.mbia.com; and (iv) at no cost, upon request to MBIA Insurance
Corporation, 113 King Street, Armonk, New York 10504. The telephone number of
MBIA is (914) 273-4545.

     As of December 31, 2000, MBIA had admitted assets of $7.6 billion
(audited), total liabilities of $5.2 billion (audited), and total capital and
surplus of $2.4 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulaltory
authorities. As of September 30, 2001, MBIA had admitted assets of $8.4 billion
(unaudited), total liabilities of $6.0 billion (unaudited), and total capital
and surplus of $2.4 billion (unaudited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities.

Financial Strength Ratings of MBIA

     Moody's Investors Service, Inc. rates the financial strength of MBIA "Aaa."

     Standard & Poor's, a division of The McGraw-Hill Companies, Inc. rates the
financial strength of MBIA "AAA."

     Fitch Ratings. rates the financial strength of MBIA "AAA."

     Each rating of MBIA should be evaluated independently. The ratings reflect
the respective rating agency's current assessment of the creditworthiness of
MBIA and its ability to pay claims on its policies of insurance. Any further
explanation as to the significance of the above ratings may be obtained only
from the applicable rating agency.

     The above ratings are not recommendations to buy, sell or hold the bonds,
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of any of the above ratings
may have an adverse effect on the market price of the bonds. MBIA does not
guaranty the market price of the bonds nor does it guaranty that the ratings on
the bonds will not be revised or withdrawn.


                                      C-2


<PAGE>

FINANCIAL GUARANTY INSURANCE COMPANY ("FINANCIAL GUARANTY")

     The Portfolio Insurance Policy is non-cancellable except for failure to pay
the premium. The premium rate for each purchase of a security covered by the
Portfolio Insurance Policy is fixed for the life of the Insured Bond. The
insurance premiums are payable monthly by the Fund and are adjusted for
purchases, sales and payments prior to maturity of Insured Bonds during the

                                      C-3

<PAGE>

month. In the event of a sale of any Insured Bond by the Fund or payment thereof
prior to maturity, the Portfolio Insurance policy terminates as to such Insured.
Under the provisions of the Portfolio Insurance Policy, Financial Guaranty
unconditionally and irrevocably agrees to pay to State Street Bank and Trust
Company, or its successor, as its agent (the "Fiscal Agent"), that portion of
the principal of and interest on the Insured Bonds which shall become due for
payment but shall be unpaid by reason of nonpayment by the issuer of the Insured
Bonds. The term "due for payment" means, when referring to the principal of an
Insured Bond, its stated maturity date or the date on which it shall have been
called for mandatory sinking fund redemption and does not refer to any earlier
date on which payment is due by reason of call for redemption (other than by
mandatory sinking fund redemption), acceleration or other advancement of
maturity and means, when referring to interest on an Insured Bond, the stated
date for payment of interest. In addition, the Portfolio Insurance Policy covers
nonpayment by the issuer that results from any payment of principal or interest
made by such issuer on the Insured Bond to the Fund which has been recovered
from the Fund or its shareholders pursuant to the United States Bankruptcy Code
by a trustee in bankruptcy in accordance with a final, nonappealable order of a
court having competent jurisdiction.

     Financial Guaranty will make such payments to the Fiscal Agent on the date
such principal or interest becomes due for payment or on the business day next
following the day on which Financial Guaranty shall have received notice of
nonpayment, whichever is later. The Fiscal Agent will disburse the Trustee the
face amount of principal and interest which is then due for payment but is
unpaid by reason of nonpayment by the issuer, but only upon receipt by the
Fiscal Agent of (i) evidence of the Trustee's right to receive payment of the
principal or interest due for payment and (ii) evidence, including any
appropriate instruments of assignment, that all of the rights to payment of such
principal or interest due for payment thereupon shall vest in Financial
Guaranty. Upon such disbursement, Financial Guaranty shall become the owner of
the Insured Bond, appurtenant coupon or right to payment of principal or
interest on such Insured Bond and shall be fully subrogated to all of the
Trustee's rights thereunder, including the right to payment, thereof.

     In determining whether to insure municipal securities held in the Fund,
Financial Guaranty will apply its own standards which are not necessarily the
same as the criteria used in regard to the selection of securities by the Fund.

     Certain of the municipal securities under the Portfolio Insurance Policy
may also be insured under an insurance policy obtained by the issuer of such
municipal securities. The premium for any insurance policy or policies obtained
by an issuer or Insured Bonds has been paid in advance by such issuer and any
such policy or policies are non-cancellable and will continue in force so long
as the Insured Bonds so insured are outstanding. Financial Guaranty has also
agreed, if requested by the Funds on or before the fifth day preceding the 1st
day of any month, to insure to maturity Insured Bonds sold by the Trustee during
the month immediately following such request of the Funds. The premium for any
such insurance to maturity provided by Financial Guaranty is paid by the Fund
and any such insurance is non-cancellable and will continue in force so long as
the Bonds so insured are outstanding.


     Financial Guaranty is a wholly-owned subsidiary of FGIC Corporation (the
"Corporation"), a Delaware holding company. The Corporation is a subsidiary of
General


                                      C-4

<PAGE>


Electric Capital Corporation ("GE Capital"). Neither the Corporation nor GE
Capital is obligated to pay the debts of or the claims against Financial
Guaranty. Financial Guaranty is a monoline financial guaranty insurer domiciled
in the State of New York and subject to regulation by the State of New York
Insurance Department. As of September 30, 2001, the total capital and surplus of
Financial Guaranty was $1.033 billion. Financial Guaranty prepares financial
statements on the basis of both statutory accounting principles and generally
accepted accounting principles. Copies of such financial statements may be
obtained by writing to Financial Guaranty at 125 Park Avenue, New York, New York
10017, Attention: Communications Department (telephone number: (212) 312-3000)
or to the New York State Insurance Department at 25 Beaver Street, New York, New
York 10004-2319, Attention: Financial Condition Property/Casualty Bureau
(telephone number: (212) 480-5187).


     The policies of insurance obtained by the Fund from Financial Guaranty and
the negotiations in respect thereof represent the only relationship between
Financial Guaranty and the Fund. Otherwise neither Financial Guaranty nor its
parent, FGIC Corporation, or any affiliate thereof has any significant
relationship, direct or indirect, with the Fund or the Board of Directors of the
Fund.

RATINGS

     The above municipal bond insurers have insurance claims-paying ability
ratings of AAA from S&P and Aaa from Moody's. Financial Guaranty also has an
insurance claims-paying ability rating of AAA from Fitch. An S&P insurance
claims-paying ability rating is an assessment of an operating insurance
company's financial capacity to meet obligations under an insurance policy in
accordance with its terms. An insurer with an insurance claims-paying ability
rating of AAA has the highest rating assigned by S&P. Capacity to honor
insurance contracts is adjudged by S&P to be extremely strong and highly likely
to remain so over a long period of time. A Moody's insurance claims-paying
ability rating is an opinion of the ability of an insurance company to repay
punctually senior policyholder obligations and claims. An insurer with an
insurance claims-paying ability rating of Aaa is adjudged by Moody's to be of
the best quality. In the opinion of Moody's, the policy obligations of an
insurance company with an insurance claims-paying ability rating of Aaa carry
the smallest degree of credit risk and, while the financial strength of these
companies is likely to change, such changes as can be visualized are most
unlikely to impair the company's fundamentally strong position.

     An insurance claims-paying ability rating by S&P or Moody's does not
constitute an opinion on any specific contract in that such an opinion can only
be rendered upon the review of the specific insurance contract. Furthermore, an
insurance claims-paying ability rating does not take into account deductibles,
surrender or cancellation penalties or the timeliness of payment, nor does it
address the ability of a company to meet nonpolicy obligations (i.e., debt
contracts).

     The assignment of ratings by S&P or Moody's to debt issues that are fully
or partially supported by insurance policies, contracts or guarantees is a
separate process from the determination of claims-paying ability ratings. The
likelihood of a timely flow of funds from the insurer to the trustee for the
bondholders is a key element in the rating determination for such debt issues.

     S&P's and Moody's ratings are not recommendations to buy, sell or hold the
municipal bonds insured by policies issued by AMBAC Assurance, Financial
Security, MBIA or Financial Guaranty and such ratings may be subject to revision
or withdrawal at any time by the rating

                                      C-5

<PAGE>

agencies. Any downward revision or withdrawal of either or both ratings may have
an adverse effect on the market price of the municipal bonds insured by policies
issued by AMBAC Assurance, Financial Security, MBIA or Financial Guaranty.

     S&P's ratings of AMBAC Assurance, Financial Security, MBIA and Financial
Guaranty should be evaluated independent of Moody's ratings. Any further
explanation as to the significance of the ratings may be obtained only from the
applicable rating agency. See Appendix A for more information about ratings by
Moody's and S&P.

                                      C-6

<PAGE>

                                   APPENDIX D

                          HEDGING STRATEGIES AND RISKS

     Set forth below is additional information regarding the various defensive
hedging techniques.

Futures and Index Transactions

 Financial Futures

     A financial future is an agreement between two parties to buy and sell a
security for a set price on a future date.  They have been designed by boards of
trade which have been designated "contracts markets" by the Commodity Futures
Trading Commission ("CFTC").

     The purchase of financial futures is for the purpose of hedging the Fund's
existing or anticipated holdings of long-term debt securities.  When the Fund
purchases a financial future, it deposits in cash or securities an "initial
margin" of between 1% and 5% of the contract amount.  Thereafter, the Fund's
account is either credited or debited on a daily basis in correlation with the
fluctuation in price of the underlying future or other requirements imposed by
the exchange in order to maintain an orderly market.  The Fund must make
additional payments to cover debits to its account and has the right to withdraw
credits in excess of the liquidity, the Fund may close out its position at any
time prior to expiration of the financial future by taking an opposite position.
At closing a final determination of debits and credits is made, additional cash
is paid by or to the Fund to settle the final determination and the Fund
realizes a loss or gain depending on whether on a net basis it made or received
such payments.

     The sale of financial futures is for the purpose of hedging the Fund's
existing or anticipated holdings of long-term debt securities.  For example, if
the Fund owns long-term bonds and interest rates were expected to increase, it
might sell financial futures.  If interest rates did increase, the value of
long-term bonds in the Fund's portfolio would decline, but the value of the
Fund's financial futures would be expected to increase at approximately the same
rate thereby keeping the net asset value of the Fund from declining as much as
it otherwise would have.

     Among the risks associated with the use of financial futures by the Fund as
a hedging device, perhaps the most significant is the imperfect correlation
between movements in the price of the financial futures and movements in the
price of the debt securities which are the subject of the hedge.

     Thus, if the price of the financial future moves less or more than the
price of the securities which are the subject of the hedge, the hedge will not
be fully effective.  To compensate for this imperfect correlation, the Fund may
enter into financial futures in a greater dollar amount than the dollar amount
of the securities being hedged if the historical volatility of the prices of
such securities has been greater than the historical volatility of the financial
futures.  Conversely, the Fund may enter into fewer financial futures if the
historical volatility of the price of the securities being hedged is less than
the historical volatility of the financial futures.

                                      D-1

<PAGE>

     The market prices of financial futures may also be affected by factors
other than interest rates. One of these factors is the possibility that rapid
changes in the volume of closing transactions, whether due to volatile markets
or movements by speculators, would temporarily distort the normal relationship
between the markets in the financial future and the chosen debt securities. In
these circumstances as well as in periods of rapid and large price movements.
The Fund might find it difficult or impossible to close out a particular
transaction.

 Options on Financial Futures

     The Fund may also purchase put or call options on financial futures which
are traded on a U.S. Exchange or board of trade and enter into closing
transactions with respect to such options to terminate an existing position.
Currently, options can be purchased with respect to financial futures on U.S.
Treasury Bonds on The Chicago Board of Trade. The purchase of put options on
financial futures is analogous to the purchase of put options by the Fund on its
portfolio securities to hedge against the risk of rising interest rates. As with
options on debt securities, the holder of an option may terminate his position
by selling an option of the Fund. There is no guarantee that such closing
transactions can be effected.

Index Contracts

 Index Futures

     A tax-exempt bond index which assigns relative values to the tax-exempt
bonds included in the index is traded on the Chicago Board of Trade. The index
fluctuates with changes in the market values of all tax-exempt bonds included
rather than a single bond. An index future is a bilateral agreement pursuant to
which two parties agree to take or make delivery of an amount of cash-rather
than any security-equal to a specified dollar amount times the difference
between the index value at the close of the last trading day of the contract and
the price at which the index future was originally written. Thus, an index
future is similar to traditional financial futures except that settlement is
made in cash.

 Index Options

     The Fund may also purchase put or call options on U.S. Government or tax-
exempt bond index futures and enter into closing transactions with respect to
such options to terminate an existing position.  Options on index futures are
similar to options on debt instruments except that an option on an index future
gives the purchaser the right, in return for the premium paid, to assume a
position in an index contract rather than an underlying security at a specified
exercise price at any time during the period of the option.  Upon exercise of
the option, the delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the accumulated
balance of the writer's futures margin account which represents the amount by
which the market price of the index futures contract, at exercise, is less than
the exercise price of the option on the index future.

     Bond index futures and options transactions would be subject to risks
similar to transactions in financial futures and options thereon as described
above.  No series will enter into transactions in index or financial futures or
related options unless and until, in the Adviser's opinion, the market for such
instruments has developed sufficiently.

                                      D-2

<PAGE>


                                  APPENDIX E

                PERFORMANCE RELATED AND COMPARATIVE INFORMATION

     The Fund may be a suitable investment for a shareholder that is thinking of
adding bond investments to his portfolio to balance the appreciated stocks that
the shareholder is holding. Municipal bonds can provide tax-free income (exempt
from regular federal income taxes). Because the Fund expects that a substantial
portion of its investments will pay interest that is taxable under the federal
alternative minimum tax, the Fund may not be a suitable investment for
shareholders that are subject to the federal alternative minimum tax.


     The Fund may quote certain performance-related information and may compare
certain aspects of its portfolio and structure to other substantially similar
closed-end funds as categorized by Lipper, Inc. ("Lipper"), Morningstar or other
independent services. Comparison of the Fund to an alternative investment should
be made with consideration of differences in features and expected performance.
The Fund may obtain data from sources or reporting services, such as Bloomberg
Financial ("Bloomberg") and Lipper, that the Fund believes to be generally
accurate. According to CDA Wiesenberger, The John Nuveen Company is the leading
sponsor of municipal closed-end exchange-traded bond funds measured by the
number of funds (79) and fund assets under management ($31 billion) as of
December 31, 2001.



                                      E-1


<PAGE>

     Past performance is not indicative of future results. At the time Common
Shareholders sell their shares, they may be worth more or less than their
original investment.


Features of Municipal Closed-End ETFs


<TABLE>
<S>                                                   <C>
Monthly Dividends
Enhanced income potential through leverage*
Automatic dividend reinvestment*
Exchange listing
Widespread price visibility
Convenient intra-day trading*
Professional management
Low minimum investment
</TABLE>

*As outlined elsewhere in this SAI, share prices will fluctuate. Systematic
reinvestment does not ensure a profit, nor does it protect you against a loss in
a declining market.

According to the Investment Company Institute, open-end municipal bond funds
experienced positive cash inflows that totaled more than $11.6 billion in 2001.
By contrast, these funds exhibited net outflows of $14.770 during calendar year
2000. [Source: Investment Company Institute, Trends in Mutual Fund Investing,
December 2000 and December 2001]

As further evidence of investor demand for municipal exchange-traded closed-end
funds, Nuveen and other sponsors have successfully offered about $5 billion of
new municipal fund common stock during 2001, while no new closed-end municipal
funds were offered in 2000.

[GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
Numbers in Billions:
                                                                                        U.S. HOUSEHOLD HOLDINGS OF BONDS
            U.S. HOUSEHOLD HOLDINGS OF BONDS             HOUSEHOLD FINANCIAL ASSETS         % HOUSEHOLD FINANCIAL ASSETS
<S>         <C>                                          <C>                            <C>
1955:1                                 112.8                                  947.4                                 11.9
1955:2                                 114.7                                  976.1                                 11.8
1955:3                                 117.1                                 1004.2                                 11.7
1955:4                                 118.5                                 1018.9                                 11.6
1956:1                                 122.0                                 1052.0                                 11.6
1956:2                                 123.4                                 1050.9                                 11.7
1956:3                                 125.5                                 1058.2                                 11.9
1956:4                                 126.0                                 1087.8                                 11.6
1957:1                                 129.1                                 1085.2                                 11.9
1957:2                                 130.0                                 1111.7                                 11.7
1957:3                                 132.4                                 1095.4                                 12.1
1957:4                                 133.2                                 1099.0                                 12.1
1958:1                                 134.6                                 1132.8                                 11.9
1958:2                                 133.8                                 1155.0                                 11.6
1958:3                                 132.8                                 1201.8                                 11.1
1958:4                                 134.2                                 1230.0                                 10.9
1959:1                                 137.4                                 1251.6                                 11.0
1959:2                                 138.6                                 1273.6                                 10.9
1959:3                                 141.9                                 1279.5                                 11.1
1959:4                                 144.7                                 1309.8                                 11.1
1960:1                                 151.7                                 1301.4                                 11.7
1960:2                                 153.1                                 1318.4                                 11.6
1960:3                                 153.3                                 1302.9                                 11.8
1960:4                                 153.1                                 1359.4                                 11.3
1961:1                                 153.6                                 1416.2                                 10.8
1961:2                                 154.4                                 1427.4                                 10.8
1961:3                                 156.0                                 1454.3                                 10.7
1961:4                                 157.5                                 1503.9                                 10.5
1962:1                                 159.2                                 1508.5                                 10.6
1962:2                                 159.5                                 1407.3                                 11.3
1962:3                                 161.7                                 1444.2                                 11.2
1962:4                                 161.1                                 1546.8                                 10.4
1963:1                                 158.9                                 1583.6                                 10.0
1963:2                                 159.7                                 1618.6                                  9.9
1963:3                                 161.0                                 1652.4                                  9.7
1963:4                                 162.9                                 1644.8                                  9.9
1964:1                                 165.3                                 1689.0                                  9.8
1964:2                                 167.0                                 1725.3                                  9.7
1964:3                                 168.2                                 1764.3                                  9.5
1964:4                                 169.6                                 1798.4                                  9.4
1965:1                                 172.6                                 1832.5                                  9.4
1965:2                                 173.1                                 1826.3                                  9.5
1965:3                                 174.7                                 1899.6                                  9.2
1965:4                                 174.5                                 1965.3                                  8.9
1966:1                                 182.5                                 1966.7                                  9.3
1966:2                                 185.7                                 1966.2                                  9.4
1966:3                                 192.9                                 1924.2                                 10.0
1966:4                                 196.5                                 1989.2                                  9.9
1967:1                                 196.4                                 2087.8                                  9.4
1967:2                                 192.0                                 2113.8                                  9.1
1967:3                                 196.0                                 2183.8                                  9.0
1967:4                                 201.3                                 2240.1                                  9.0
1968:1                                 207.1                                 2213.3                                  9.4
1968:2                                 209.2                                 2338.8                                  8.9
1968:3                                 212.2                                 2379.9                                  8.9
1968:4                                 211.7                                 2506.4                                  8.4
1969:1                                 193.4                                 2490.9                                  7.8
1969:2                                 193.1                                 2471.3                                  7.8
1969:3                                 211.6                                 2474.6                                  8.6
1969:4                                 222.9                                 2472.4                                  9.0
1970:1                                 233.6                                 2475.1                                  9.4
1970:2                                 229.2                                 2353.3                                  9.7
1970:3                                 225.4                                 2472.8                                  9.1
1970:4                                 222.5                                 2567.0                                  8.7
1971:1                                 216.2                                 2694.5                                  8.0
1971:2                                 211.8                                 2724.4                                  7.8
1971:3                                 215.0                                 2762.9                                  7.8
1971:4                                 210.0                                 2859.4                                  7.3
1972:1                                 210.9                                 2971.9                                  7.1
1972:2                                 208.3                                 3009.0                                  6.9
1972:3                                 207.4                                 3072.0                                  6.8
1972:4                                 205.6                                 3274.5                                  6.3
1973:1                                 208.7                                 3261.3                                  6.4
1973:2                                 211.6                                 3237.6                                  6.5
1973:3                                 222.0                                 3382.5                                  6.6
1973:4                                 227.5                                 3282.2                                  6.9
1974:1                                 237.0                                 3338.2                                  7.1
1974:2                                 240.3                                 3297.3                                  7.3
1974:3                                 260.3                                 3200.3                                  8.1
1974:4                                 269.4                                 3251.8                                  8.3
1975:1                                 269.3                                 3456.1                                  7.8
1975:2                                 265.3                                 3643.5                                  7.3
1975:3                                 275.9                                 3619.2                                  7.6
1975:4                                 285.5                                 3712.9                                  7.7
1976:1                                 283.5                                 3887.6                                  7.3
1976:2                                 287.6                                 3997.2                                  7.2
1976:3                                 289.5                                 4092.7                                  7.1
1976:4                                 287.3                                 4205.9                                  6.8
1977:1                                 296.3                                 4253.4                                  7.0
1977:2                                 297.1                                 4354.4                                  6.8
1977:3                                 301.2                                 4415.5                                  6.8
1977:4                                 300.9                                 4471.5                                  6.7
1978:1                                 309.4                                 4546.2                                  6.8
1978:2                                 318.8                                 4732.2                                  6.7
1978:3                                 326.3                                 4927.4                                  6.6
1978:4                                 341.4                                 5007.4                                  6.8
1979:1                                 358.3                                 5204.8                                  6.9
1979:2                                 372.0                                 5357.5                                  6.9
1979:3                                 381.7                                 5579.8                                  6.8
1979:4                                 413.1                                 5746.4                                  7.2
1980:1                                 430.0                                 5767.2                                  7.5
1980:2                                 419.1                                 6019.5                                  7.0
1980:3                                 426.4                                 6309.1                                  6.8
1980:4                                 439.6                                 6607.2                                  6.7
1981:1                                 440.8                                 6721.1                                  6.6
1981:2                                 440.7                                 6815.6                                  6.5
1981:3                                 453.1                                 6779.1                                  6.7
1981:4                                 461.2                                 7029.7                                  6.6
1982:1                                 484.9                                 7046.9                                  6.9
1982:2                                 509.8                                 7132.4                                  7.1
1982:3                                 529.4                                 7356.0                                  7.2
1982:4                                 527.1                                 7640.9                                  6.9
1983:1                                 540.7                                 7921.5                                  6.8
1983:2                                 568.4                                 8248.0                                  6.9
1983:3                                 604.9                                 8365.4                                  7.2
1983:4                                 619.2                                 8429.2                                  7.3
1984:1                                 637.4                                 8435.3                                  7.6
1984:2                                 700.2                                 8512.1                                  8.2
1984:3                                 740.4                                 8794.9                                  8.4
1984:4                                 737.0                                 8994.3                                  8.2
1985:1                                 815.9                                 9316.6                                  8.8
1985:2                                 833.9                                 9566.4                                  8.7
1985:3                                 866.9                                 9593.3                                  9.0
1985:4                                 955.9                                10159.4                                  9.4
1986:1                                 958.9                                10595.6                                  9.1
1986:2                                 988.8                                10856.0                                  9.1
1986:3                                1025.5                                10775.9                                  9.5
1986:4                                1073.5                                11254.0                                  9.5
1987:1                                1129.0                                11904.2                                  9.5
1987:2                                1190.9                                12106.7                                  9.8
1987:3                                1244.2                                12457.0                                 10.0
1987:4                                1264.8                                11937.2                                 10.6
1988:1                                1277.6                                12293.6                                 10.4
1988:2                                1329.1                                12589.2                                 10.6
1988:3                                1400.8                                12749.4                                 11.0
1988:4                                1478.6                                13122.3                                 11.3
1989:1                                1525.6                                13438.6                                 11.4
1989:2                                1532.0                                13803.2                                 11.1
1989:3                                1564.7                                14258.9                                 11.0
1989:4                                1582.4                                14515.4                                 10.9
1990:1                                1617.3                                14513.9                                 11.1
1990:2                                1661.6                                14783.9                                 11.2
1990:3                                1731.6                                14389.6                                 12.0
1990:4                                1837.8                                14929.5                                 12.3
1991:1                                1848.9                                15511.2                                 11.9
1991:2                                1898.5                                15530.0                                 12.2
1991:3                                1934.6                                15838.6                                 12.2
1991:4                                1975.7                                16427.7                                 12.0
1992:1                                1993.2                                16420.0                                 12.1
1992:2                                2022.8                                16412.9                                 12.3
1992:3                                2058.7                                16623.7                                 12.4
1992:4                                2105.8                                17235.8                                 12.2
1993:1                                2158.7                                17570.4                                 12.3
1993:2                                2161.9                                17732.3                                 12.2
1993:3                                2134.5                                18059.8                                 11.8
1993:4                                2203.8                                18417.4                                 12.0
1994:1                                2276.7                                18362.9                                 12.4
1994:2                                2349.3                                18472.9                                 12.7
1994:3                                2394.6                                18880.8                                 12.7
1994:4                                2477.7                                19102.6                                 13.0
1995:1                                2456.2                                19680.2                                 12.5
1995:2                                2414.5                                20325.3                                 11.9
1995:3                                2485.0                                21072.8                                 11.8
1995:4                                2465.1                                21741.9                                 11.3
1996:1                                2493.7                                22399.4                                 11.1
1996:2                                2604.4                                22942.6                                 11.4
1996:3                                2650.1                                23306.2                                 11.4
1996:4                                2678.9                                24107.2                                 11.1
1997:1                                2658.3                                24261.9                                 11.0
1997:2                                2655.3                                25981.9                                 10.2
1997:3                                2663.5                                27004.6                                  9.9
1997:4                                2706.0                                27488.4                                  9.8
1998:1                                2740.8                                29279.9                                  9.4
1998:2                                2849.3                                29660.2                                  9.6
1998:3                                2859.8                                28129.0                                 10.2
1998:4                                2759.9                                30537.4                                  9.0
1999:1                                2850.1                                31245.3                                  9.1
1999:2                                2908.2                                32361.0                                  9.0
1999:3                                2970.5                                31682.6                                  9.4
1999:4                                3081.4                                35175.3                                  8.8
2000:1                                3010.3                                35967.7                                  8.4
2000:2                                3019.7                                35081.0                                  8.6
2000:3                                2986.2                                34975.3                                  8.5
2000:4                                2980.6                                33351.6                                  8.9
2001:1                                2905.7                                31628.1                                  9.2
2001:2                                2740.0                                32203.6                                  8.5
2001:3                                2726.8                                30403.0                                  9.0

                  Household Financial Assets                          30.4 trillion
                         Fixed-Income Assets                           2.7 trillion
                Value of 1% shift into bonds                            304 billion

                          [GRAPH APPEARS HERE]

1994                                  2276.7                                18362.9                                 12.4
1994                                  2349.3                                18472.9                                 12.7
1994                                  2394.6                                18880.8                                 12.7
1994                                  2477.7                                19102.6                                 13.0
1995                                  2456.2                                19680.2                                 12.5
1995                                  2414.5                                20325.3                                 11.9
1995                                  2485.0                                21072.8                                 11.8
1995                                  2465.1                                21741.9                                 11.3
1996                                  2493.7                                22399.4                                 11.1
1996                                  2604.4                                22942.6                                 11.4
1996                                  2650.1                                23306.2                                 11.4
1996                                  2678.9                                24107.2                                 11.1
1997                                  2658.3                                24261.9                                 11.0
1997                                  2655.3                                25981.9                                 10.2
1997                                  2663.5                                27004.6                                  9.9
1997                                  2706.0                                27488.4                                  9.8
1998                                  2740.8                                29279.9                                  9.4
1998                                  2849.3                                29660.2                                  9.6
1998                                  2859.8                                28129.0                                 10.2
1998                                  2759.9                                30537.4                                  9.0
1999                                  2850.1                                31245.3                                  9.1
1999                                  2908.2                                32361.0                                  9.0
1999                                  2970.5                                31682.6                                  9.4
1999                                  3081.4                                35175.3                                  8.8
2000                                  3010.3                                35967.7                                  8.4
2000                                  3019.7                                35081.0                                  8.6
2000                                  2986.2                                34975.3                                  8.5
2000                                  2980.6                                33351.6                                  8.9
2001                                  2905.7                                31628.1                                  9.2
2001                                  2740.0                                32203.6                                  8.5
</TABLE>

According to data from the Federal Reserve, the overall percentage of bonds held
in individual investors' portfolios has decreased over the past seven years.
[Source: Federal Reserve Flow of Funds, Q3 2001]. This chart compares the
aggregate amount of all fixed-income securities held by households with the
total value of all household investments for the specific quarterly time periods
shown. The quarter-to-quarter values and trends depicted here are not
necessarily representative of other time periods. No representation is made, nor
should any inference be drawn, to any standard, correct or historical average
amount of household fixed-income investment.

Municipal Bond/Equity Portfolios May
Provide Attractive Returns and Reduced Risk

Nuveen research shows that, over the past 20 years, a portfolio of 20% municipal
bonds and 80% stocks produced 99% of the annual after-tax return of an all-
equity portfolio, with measurably less risk.

These conclusions are based on research done by Nuveen Investments using the
following portfolio assumptions: Municipal bonds are represented by the Lehman
Brothers Long Municipal Index. Treasury Bonds are represented by Lehman Brothers
Long Treasury Index. Equities are the S&P 500 stocks as tracked by the Ibbotson
Associates Large Company Stock Index. It is not possible to invest directly in
any of these indexes. Hypothetical portfolios using varying percentages of
municipal bonds and equities, in each case totaling 100%, were constructed, and
the investment results and volatility determined for every year from 1982
through 2001.

All investment income generated by the portfolio was considered to be reinvested
annually, along with the after-tax proceeds of an arbitrarily assumed 20%
annualized turnover rate. The allocation between the two assets was allowed to
fluctuate within a 5% band around its target before rebalancing. No provision
was made for investment fees or commissions. Investment income was taxed at the
historically appropriate rate for an individual with $100,000 in taxable income
in year 2001 dollars. Net capital gains taxes, if any, were deducted at the rate
appropriate for the period. At the end of 2001, the portfolios were fully
liquidated to recognize the existing tax liability.

This study was based on historical data gathered from sources Nuveen Investments
considers to be reliable and consistent. The results produced by this study in
no way should be considered representative of the past performance of any actual
investment product or predictive of future investment expectations and
performance for the municipal market or any actual investment products.

20 Yr. Horizon Data Tables
1-Balanced Portfolios with Large Cap Equities

After-Tax Returns

[GRAPH APPEARS HERE]

 Bond           Long Municipals         Long Treasuries         Long Corporates
Portion        Risk       Return       Risk       Return       Risk       Return
   0%         15.29%      11.94%      15.29%      11.94%      15.29%      11.94%
   5%         14.65%      11.94%      14.67%      11.82%      14.67%      11.81%
  10%         14.03%      11.89%      14.06%      11.66%      14.06%      11.65%
  15%         13.42%      11.85%      13.48%      11.50%      13.47%      11.49%
  20%         12.81%      11.79%      12.91%      11.33%      12.88%      11.31%
  25%         12.22%      11.74%      12.37%      11.16%      12.31%      11.14%
  30%         11.64%      11.67%      11.85%      10.98%      11.74%      10.96%
  35%         11.08%      11.61%      11.36%      10.79%      11.20%      10.77%
  40%         10.55%      11.54%      10.90%      10.60%      10.68%      10.58%
  45%         10.04%      11.46%      10.49%      10.40%      10.18%      10.39%
  50%          9.56%      11.38%      10.12%      10.20%       9.72%      10.19%
  55%          9.12%      11.30%       9.80%      10.00%       9.29%       9.99%
  60%          8.72%      11.21%       9.53%       9.79%       8.89%       9.79%
  65%          8.37%      11.12%       9.33%       9.58%       8.54%       9.58%
  70%          8.07%      11.03%       9.19%       9.37%       8.24%       9.38%
  75%          7.83%      10.94%       9.11%       9.15%       8.00%       9.17%
  80%          7.65%      10.84%       9.10%       8.94%       7.81%       8.96%
  85%          7.54%      10.74%       9.16%       8.72%       7.68%       8.75%
  90%          7.50%      10.64%       9.28%       8.50%       7.62%       8.54%
  95%          7.53%      10.54%       9.46%       8.28%       7.63%       8.34%
 100%          7.63%      10.43%       9.70%       8.05%       7.70%       8.11%


     Market price is affected by many factors, including market interest rates,
income tax rates, the common shares' net asset value and dividend stability, the
portfolio's duration, call protection and credit quality, analyst
recommendations, and other market factors. Any of these factors individually or
collectively may, at any given time, be as or more important to market price
than annualized dividend rates. A positive correlation does not necessarily mean
that higher dividends cause or result in higher market prices, and you should
not assume that any particular level of dividends will result in any particular
market price. In addition, the positive correlation between dividends and market
price of this group of funds does not necessarily mean that every fund in the
group exhibits a positive correlation between dividend and market price, and it
is possible that the Fund may not exhibit such a correlation. There can be no
assurance that the correlation suggested by the above data will continue in the
future.

On Average Nuveen Funds Have Traded At Greater Premiums or Smaller Discounts
than Competing Funds

[Graph Appears Here]

28-Jun-96       0.044572079
 5-Jul-96       0.042336686
12-Jul-96       0.046633142
19-Jul-96       0.046412596
26-Jul-96       0.046913793
 2-Aug-96       0.042839559
 9-Aug-96       0.044755029
16-Aug-96       0.043179598
23-Aug-96       0.043758381
30-Aug-96       0.042936303
 6-Sep-96       0.041913793
13-Sep-96       0.044113506
20-Sep-96       0.043598898
27-Sep-96       0.042846126
 4-Oct-96       0.046550393
11-Oct-96       0.04325735
18-Oct-96       0.04116951
25-Oct-96       0.044694979
 1-Nov-96       0.042641379
 8-Nov-96       0.043968421
15-Nov-96       0.042849728
22-Nov-96       0.040592257
29-Nov-96       0.041107804
 6-Dec-96       0.038137689
13-Dec-96       0.037551361
20-Dec-96       0.034563339
27-Dec-96       0.043577132
 3-Jan-97       0.041022747
10-Jan-97       0.041572293
17-Jan-97       0.041860617
24-Jan-97       0.040527284
31-Jan-97       0.037549788
 7-Feb-97       0.033932486
14-Feb-97       0.033059528
21-Feb-97       0.03422069
28-Feb-97       0.034364912
 7-Mar-97       0.033644283
14-Mar-97       0.03599516
21-Mar-97       0.036175318
27-Mar-97       0.039503811
 4-Apr-97       0.040944707
11-Apr-97       0.041985239
18-Apr-97       0.041149304
25-Apr-97       0.039921718
 2-May-97       0.041944484
 9-May-97       0.042504206
16-May-97       0.039914924
23-May-97       0.04066186
30-May-97       0.041939438
 6-Jun-97       0.042596972
13-Jun-97       0.041836097
20-Jun-97       0.040601538
27-Jun-97       0.040865297
 3-Jul-97       0.044411539
11-Jul-97       0.037568569
18-Jul-97       0.034234
25-Jul-97       0.038522115
 8-Aug-97       0.035379787
15-Aug-97       0.03273153
22-Aug-97       0.04029108
29-Aug-97       0.037233259
 5-Sep-97       0.041429825
12-Sep-97       0.042412528
19-Sep-97       0.042494317
26-Sep-97       0.043137061
 3-Oct-97       0.041079948
10-Oct-97       0.036549511
17-Oct-97       0.037820911
24-Oct-97       0.036572942
31-Oct-97       0.036296244
 7-Nov-97       0.036971035
14-Nov-97       0.037746733
21-Nov-97       0.036235724
28-Nov-97       0.034928058
 5-Dec-97       0.03759602
12-Dec-97       0.03694678
19-Dec-97       0.039660897
26-Dec-97       0.039236665
 2-Jan-98       0.039619687
 9-Jan-98       0.044366773
16-Jan-98       0.038933121
23-Jan-98       0.037478394
30-Jan-98       0.040981632
 6-Feb-98       0.044253503
13-Feb-98       0.048217687
20-Feb-98       0.045418904
27-Feb-98       0.045606483
 6-Mar-98       0.05044092
13-Mar-98       0.053888158
20-Mar-98       0.054673246
27-Mar-98       0.053675439
 3-Apr-98       0.055637624
 9-Apr-98       0.052235894
17-Apr-98       0.054192034
24-Apr-98       0.050518374
 8-May-98       0.049896385
15-May-98       0.051353821
22-May-98       0.051483104
29-May-98       0.045881903
 5-Jun-98       0.055602496
12-Jun-98       0.055573296
19-Jun-98       0.053353468
26-Jun-98       0.050081479
 2-Jul-98       0.050875309
10-Jul-98       0.05453185
17-Jul-98       0.049196788
24-Jul-98       0.048390204
31-Jul-98       0.051474744
 7-Aug-98       0.049411162
14-Aug-98       0.049813964
21-Aug-98       0.05188779
28-Aug-98       0.051906354
 4-Sep-98       0.050087127
11-Sep-98       0.04917935
18-Sep-98       0.046593528
25-Sep-98       0.047709123
 2-Oct-98       0.057751133
 9-Oct-98       0.054570175
16-Oct-98       0.056760965
23-Oct-98       0.048675439
30-Oct-98       0.049666667
 6-Nov-98       0.046473684
20-Nov-98       0.043697368
27-Nov-98       0.042625
 4-Dec-98       0.048682018
11-Dec-98       0.047938596
18-Dec-98       0.045574561
24-Dec-98       0.044484649
 8-Jan-99       0.040269737
15-Jan-99       0.032574561
22-Jan-99       0.032019737
29-Jan-99       0.032486842
 5-Feb-99       0.042296053
12-Feb-99       0.042750239
19-Feb-99       0.043902073
26-Feb-99       0.044498884
 5-Mar-99       0.04725933
19-Mar-99       0.054052316
26-Mar-99       0.053597122
 1-Apr-99       0.058263788
 9-Apr-99       0.049830129
16-Apr-99       0.059694926
23-Apr-99       0.060500788
30-Apr-99       0.059889169
 7-May-99       0.057512974
14-May-99       0.056063872
21-May-99       0.051220927
28-May-99       0.05302889
 4-Jun-99       0.05539521
11-Jun-99       0.057811171
18-Jun-99       0.06445
25-Jun-99       0.067863095
 2-Jul-99       0.068096429
 9-Jul-99       0.071166667
16-Jul-99       0.076167857
23-Jul-99       0.081947619
30-Jul-99       0.082119048
 6-Aug-99       0.077934884
20-Aug-99       0.07645155
27-Aug-99       0.074089922
 3-Sep-99       0.074571839
10-Sep-99       0.076186207
17-Sep-99       0.069099425
24-Sep-99       0.070118571
 1-Oct-99       0.055396667
 8-Oct-99       0.063321841
15-Oct-99       0.060172669
22-Oct-99       0.057560767
29-Oct-99       0.056708398
 5-Nov-99       0.057400231
12-Nov-99       0.052517238
19-Nov-99       0.052458398
26-Nov-99       0.050856895
10-Dec-99       0.029167111
17-Dec-99       0.022930972
23-Dec-99       0.031247988
31-Dec-99       0.030041852
 7-Jan-00       0.034098191
14-Jan-00       0.02985598
21-Jan-00       0.030763375
28-Jan-00       0.036890351
 4-Feb-00       0.043249219
11-Feb-00       0.042941578
18-Feb-00       0.037741596
25-Feb-00       0.037772843
 3-Mar-00       0.031488401
10-Mar-00       0.035108011
17-Mar-00       0.040553742
24-Mar-00       0.046507843
31-Mar-00       0.0504471
 7-Apr-00       0.047919915
14-Apr-00       0.045770233
20-Apr-00       0.041533157
28-Apr-00       0.041838665
 5-May-00       0.046265678
12-May-00       0.042325106
19-May-00       0.046130932
26-May-00       0.04666536
 2-Jun-00       0.047785911
 9-Jun-00       0.049809534
16-Jun-00       0.048623199
23-Jun-00       0.044137394
30-Jun-00       0.040320869
 7-Jul-00       0.045994597
14-Jul-00       0.038319492
21-Jul-00       0.037719386
28-Jul-00       0.042682839
 4-Aug-00       0.044612288
11-Aug-00       0.042435805
18-Aug-00       0.037838661
25-Aug-00       0.040834263
 1-Sep-00       0.043817958
 8-Sep-00       0.042935636
15-Sep-00       0.038175499
22-Sep-00       0.041251663
29-Sep-00       0.040976185
 6-Oct-00       0.04203186
13-Oct-00       0.031649968
20-Oct-00       0.034736966
27-Oct-00       0.044490667
 3-Nov-00       0.052386183
17-Nov-00       0.053132482
24-Nov-00       0.054112744
 1-Dec-00       0.023133662
 8-Dec-00       0.048791139
15-Dec-00       0.051525316
22-Dec-00       0.048712615
29-Dec-00       0.051922656
 5-Jan-01       0.058615104
12-Jan-01       0.056114246
19-Jan-01       0.054739501
26-Jan-01       0.055520134
 2-Feb-01       0.058139048
 9-Feb-01       0.051868149
16-Feb-01       0.051985582
23-Feb-01       0.054773168
 2-Mar-01       0.037264033
 9-Mar-01       0.056907458
16-Mar-01       0.05181887
23-Mar-01       0.046485198
30-Mar-01       0.051052429
 6-Apr-01       0.053114011
12-Apr-01       0.057032542
20-Apr-01       0.057815266
27-Apr-01       0.058606757
 4-May-01       0.073973346
11-May-01       0.047453979
18-May-01       0.072847939
25-May-01       0.068227804
 1-Jun-01       0.071706711
 8-Jun-01       0.071167402
15-Jun-01       0.062091156
22-Jun-01       0.072736735
29-Jun-01       0.060622449
 6-Jul-01       0.075916
13-Jul-01       0.061898
20-Jul-01       0.073488
27-Jul-01       0.072848
 3-Aug-01       0.072396
10-Aug-01       0.071645
17-Aug-01       0.069541
24_Aug-01       0.067018
31-Aug-01       0.056737
 7-Sep-01       0.061211
10-Sep-01       0.0605
21-Sep-01       0.055704
28-Sep-01       0.054845
 5-Oct-01       0.057874
12-Oct-01       0.053677
19-Oct-01       0.053425
26-Oct-01       0.056936
 2-Nov-01       0.055613
 9-Nov-01       0.053192
16-Nov-01       0.051534
23-Nov-01       0.056095
30-Nov-01       0.057148
 7-Dec-01       0.061395
14-Dec-01       0.064372
21-Dec-01       0.057279
28-Dec-01       0.055627
 4-Jan-02       0.051193
11-Jan-02       0.053965
18-Jan-02       0.053611
25-Jan-02       0.039327
 1-Feb-02       0.034753

This chart shows the week-by-week difference between the average premium or
discount for all Nuveen municipal closed-end funds and all non-Nuveen municipal
closed-end funds as reported by Lipper for the five-year period from
September 27, 1996 through February 1, 2002. The weekly averages include all
Nuveen and non-Nuveen funds in existence during that week over the course of
this measurement period. As of February 1, 2002, there were 71 Nuveen funds and
146 non-Nuveen funds included in the Lipper database. Past trading history is no
guarantee of future results, and is no guarantee of how these new Funds may
trade.

                                      E-2

<PAGE>


<TABLE>
<S>                                                  <C>
Nuveen Insured Dividend Advantage Municipal Fund               Common Shares
</TABLE>



                  ------------------------------------------

                      STATEMENT OF ADDITIONAL INFORMATION

                  ------------------------------------------

                                ___________, 2002

<PAGE>


                           PART C - OTHER INFORMATION

Item 24: Financial Statements and Exhibits

     1.  Financial Statements:

     Registrant has not conducted any business as of the date of this filing,
other than in connection with its organization.  Financial Statements indicating
that the Registrant has met the net worth requirements of Section 14(a) of the
1940 Act are filed with this Pre-effective Amendment to the Registration
Statement.

     2.  Exhibits:

a.   Declaration of Trust dated July 12, 1999. Filed on April 27, 2001 as
     Exhibit a to Registrant's Registration Statement on Form N-2
     (File No. 333-59770) and incorporated herein by reference.*

b.   By-Laws of Registrant. Filed on April 27, 2001 as
     Exhibit b to Registrant's Registration Statement on Form N-2
     (File No. 333-59770) and incorporated herein by reference.*

c.   None.

d.   Form of Share Certificate. Filed on February 20, 2002 as Exhibit d to
     Pre-Effective Amendment No. 2 to Registrant's Registration Statement on
     Form N-2 (File No. 333-59770) and incorporated herein by reference.*

e.   Terms and Conditions of the Dividend Reinvestment Plan.

f.   None.

g.   Investment Management Agreement between Registrant and Nuveen Advisory
     Corp. dated February 20, 2002.

h.1  Form of Underwriting Agreement.

h.2  Form of Master Selected Dealer Agreement.

h.3  Form of Master Agreement Among Underwriters.

h.4  Form of Dealer Letter Agreement.

i.   Nuveen Open-End and Closed-End Funds Deferred Compensation Plan for
     Independent Directors and Trustees.

j.   Exchange Traded Fund Custody Agreement between Registrant and JPMorgan
     Chase Bank dated February 19, 2002.

k.1  Shareholder Transfer Agency Agreement between Registrant and JPMorgan
     Chase Bank dated February 19, 2002.

k.2  Expense Reimbursement Agreement between Registrant and Nuveen
     Advisory Corp. dated February 20, 2002.

                                      C-1

<PAGE>


l.1  Opinion and consent of Bell, Boyd & Lloyd LLC. Filed on February 20, 2002
     as Exhibit l.1 to Pre-Effective Amendment No. 2 to Registrant's
     Registration Statement on Form N-2 (File No. 333-59770) and incorporated
     herein by reference.*

l.2  Opinion and consent of Bingham Dana LLP. Filed on February 20, 2002 as
     Exhibit l.2 to Pre-Effective Amendment No. 2 to Registrant's Registration
     Statement on Form N-2 (File No. 333-59770) and incorporated herein by
     reference.*

l.3  Consent of Bell, Boyd & Lloyd LLC.

l.4  Consent of Bingham Dana LLP.

m.   None.

n.   Consent of Ernst & Young LLP.

o.   None.

p.   Subscription Agreement of Nuveen Advisory Corp. dated March 7, 2002.

q.   None.

r.1  Code of Ethics of Nuveen Advisory Corp. Filed on October 24, 2001 as
     Exhibit r to Registrant's Registration Statement on Form N-2
     (File No. 333-59770) and incorporated herein by reference.*

r.2  Code of Ethics of Salomon Smith Barney Inc. Filed on February 20, 2002 as
     Exhibit r.2. to Pre-Effective Amendment No. 2 to Registrant's Registration
     Statement on Form N-2 (File No. 333-59770) and incorporated herein by
     reference.*

s.   Powers of Attorney.
___________________
 * Previously filed.



Item 25: Marketing Arrangements

See Sections 2, 3 and 5(n) of the Underwriting Agreement filed as Exhibit h.1 to
this Registration Statement.

See the Introductory Paragraph of the Form of Master Selected Dealer Agreement
filed as Exhibit h.2 to this Registration Statement.

See Introductory Paragraphs and Sections 1, 3, 5, 6 and 7 of the Form of Master
Agreement Among Underwriters filed as Exhibit h.3 to this Registration
Statement.

See Paragraph e of the Form of Dealer Letter Agreement between Nuveen and the
Underwriters filed as Exhibit h.4 to this Registration Statement.

Item 26: Other Expenses of Issuance and Distribution

<TABLE>
     <S>                                                              <C>
     Securities and Exchange Commission fees                        $ 41,400
     National Association of Securities Dealers, Inc. fees            30,500
     Printing and engraving expenses                                 212,000
     Legal Fees                                                       50,000
     American Stock Exchange listing fees                              5,000
     Accounting expenses                                              65,000
     Blue Sky filing fees and expenses                                 5,000
     Transfer agent fees                                                   0
     Miscellaneous expenses                                            7,500
                                                                    ---------
          Total                                                     $416,400*
                                                                    =========

</TABLE>

                                      C-2

<PAGE>

- ------------

     *Nuveen Advisory has contractually agreed to reimburse the Fund for fees
and expenses in the amount of .30% of average daily net assets for the first 5
full years of the Fund's operations, .25% of average daily net assets in year 6,
 .20% in year 7, .15% in year 8, .10% in year 9 and .05% in year 10. Without the
reimbursement, "Total Net Annual Expenses" would be estimated to be 1.29% of
average daily net assets attributable to Common Shares and .84% of average daily
net assets. Nuveen has agreed to pay (i) all organizational expenses and (ii)
offering costs (other than sales load) that exceed $0.03 per Common Share (.20%
of offering price).


Item 27: Persons Controlled by or under Common Control with Registrant

     Not applicable.

Item 28: Number of Holders of Securities


     At March 24, 2002


<TABLE>
<CAPTION>
                                                           Number of
                  Title of Class                         Record Holders
                  --------------                         --------------
       <S>                                               <C>
       Common Shares, $0.01 par value                            1
</TABLE>

Item 29: Indemnification

     Section 4 of Article XII of the Registrant's Declaration of Trust provides
as follows:

     Subject to the exceptions and limitations contained in this Section 4,
every person who is, or has been, a Trustee, officer, employee or agent of the
Trust, including persons who serve at the request of the Trust as directors,
trustees, officers, employees or agents of another organization in which the
Trust has an interest as a shareholder, creditor or otherwise (hereinafter
referred to as a "Covered Person"), shall be indemnified by the Trust to the
fullest extent permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue of his
being or having been such a Trustee, director, officer, employee or agent and
against amounts paid or incurred by him in settlement thereof.

     No indemnification shall be provided hereunder to a Covered Person:

(a)  against any liability to the Trust or its Shareholders by reason of a final
     adjudication by the court or other body before which the proceeding was
     brought that he engaged in willful misfeasance, bad faith, gross negligence
     or reckless disregard of the duties involved in the conduct of his office;

(b)  with respect to any matter as to which he shall have been finally
     adjudicated not to have acted in good faith in the reasonable belief that
     his action was in the best interests of the Trust; or

                                      C-3

<PAGE>

(c)  in the event of a settlement or other disposition not involving a final
     adjudication (as provided in paragraph (a) or (b)) and resulting in a
     payment by a Covered Person, unless there has been either a determination
     that such Covered Person did not engage in willful misfeasance, bad faith,
     gross negligence or reckless disregard of the duties involved in the
     conduct of his office by the court or other body approving the settlement
     or other disposition or a reasonable determination, based on a review of
     readily available facts (as opposed to a full trial-type inquiry), that he
     did not engage in such conduct:

          (i)  by a vote of a majority of the Disinterested Trustees acting on
          the matter (provided that a majority of the Disinterested Trustees
          then in office act on the matter); or

          (ii)  by written opinion of independent legal counsel.

     The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be such a Covered Person and shall
inure to the benefit of the heirs, executors and administrators of such a
person.  Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Covered Persons may be entitled by contract or
otherwise under law.

     Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Section 4
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he is not entitled to indemnification under this
Section 4, provided that either:

     (a)  such undertaking is secured by a surety bond or some other appropriate
     security or the Trust shall be insured against losses arising out of any
     such advances; or

     (b)  a majority of the Disinterested Trustees acting on the matter
     (provided that a majority of the Disinterested Trustees then in office act
     on the matter) or independent legal counsel in a written opinion shall
     determine, based upon a review of the readily available facts (as opposed
     to a full trial-type inquiry), that there is reason to believe that the
     recipient ultimately will be found entitled to indemnification.

     As used in this Section 4, a "Disinterested Trustee" is one (x) who is not
an Interested Person of the Trust (including anyone, as such Disinterested
Trustee, who has been exempted from being an Interested Person by any rule,
regulation or order of the Commission), and (y) against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending.

                                      C-4

<PAGE>


     As used in this Section 4, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits, proceedings (civil,
criminal, administrative or other, including appeals), actual or threatened; and
the words "liability" and "expenses" shall include without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.

     The trustees and officers of the Registrant are covered by Investment Trust
Errors and Omission policies in the aggregate amount of $50,000,000 (with a
maximum deductible of $500,000) against liability and expenses of claims of
wrongful acts arising out of their position with the Registrant, except for
matters which involve willful acts, bad faith, gross negligence and willful
disregard of duty (i.e., where the insured did not act in good faith for a
purpose he or she reasonably believed to be in the best interest of Registrant
or where he or she had reasonable cause to believe this conduct was unlawful).

     Section 8 of the Underwriting Agreement filed as Exhibit h.1 to this
Registration Statement provides for each of the parties thereto, including the
Registrant and the Underwriters, to indemnify the others, their trustees,
directors, certain of their officers, trustees, directors and persons who
control them against certain liabilities in connection with the offering
described herein, including liabilities under the federal securities laws.

     Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.

Item 30: Business and Other Connections of Investment Adviser

     Nuveen Advisory Corp. serves as investment adviser to the following open-
end management type investment companies: Nuveen Multistate Trust I, Nuveen
Multistate Trust II, Nuveen Multistate Trust III, Nuveen Multistate Trust IV
and Nuveen Municipal Trust. Nuveen Advisory Corp. also serves as investment
adviser to the following closed-end management type investment companies other
than the Registrant: Nuveen Municipal Value Fund, Inc., Nuveen California
Municipal Value Fund, Inc., Nuveen New York Municipal Value Fund, Inc., Nuveen
Municipal Income Fund, Inc., Nuveen Premium Income Municipal Fund, Inc., Nuveen
Performance Plus Municipal Fund, Inc., Nuveen California Performance Plus
Municipal Fund, Inc., Nuveen New York Performance Plus Municipal Fund, Inc.,
Nuveen Municipal Advantage Fund, Inc., Nuveen Municipal Market Opportunity Fund,
Inc., Nuveen California Municipal Market Opportunity Fund, Inc., Nuveen New York
Municipal Market Opportunity Fund, Inc., Nuveen Investment Quality Municipal
Fund, Inc., Nuveen California Investment Quality Municipal Fund, Inc., Nuveen
New York Investment Quality Municipal Fund, Inc., Nuveen Insured Quality
Municipal Fund, Inc., Nuveen Florida Investment Quality Municipal Fund, Nuveen
New Jersey Investment Quality Municipal Fund, Inc., Nuveen Pennsylvania
Investment Quality Municipal Fund, Nuveen Select Quality Municipal Fund, Inc.,
Nuveen California Select Quality Municipal Fund, Inc., Nuveen New York Select
Quality Municipal Fund, Inc., Nuveen Quality Income Municipal Fund, Inc., Nuveen
Insured Municipal Opportunity Fund, Inc., Nuveen Florida Quality Income
Municipal Fund, Nuveen Michigan Quality Income Municipal Fund, Inc., Nuveen Ohio
Quality Income Municipal Fund, Inc., Nuveen Texas Quality Income Municipal Fund,

                                      C-5

<PAGE>

Nuveen California Quality Income Municipal Fund, Inc., Nuveen New York Quality
Income Municipal Fund, Inc., Nuveen Premier Municipal Income Fund, Inc., Nuveen
Premier Insured Municipal Income Fund, Inc., Nuveen Insured California Premium
Income Municipal Fund, Inc., Nuveen Insured New York Premium Income Municipal
Fund, Inc., Nuveen Premium Income Municipal Fund 2, Inc., Nuveen Select
Maturities Municipal Fund, Nuveen Arizona Premium Income Municipal Fund, Inc.,
Nuveen Insured Florida Premium Income Municipal Fund, Nuveen Michigan Premium
Income Municipal Fund, Inc., Nuveen Michigan Premium Income Municipal Fund,
Inc., Nuveen Premium Income Municipal Fund 4, Inc., Nuveen Insured California
Premium Income Municipal Fund 2, Inc., Nuveen Insured New York Premium Income
Municipal Fund 2, Nuveen Michigan Premium Income Municipal Fund 2, Nuveen
Pennsylvania Premium Income Municipal Fund 2, Nuveen Maryland Premium Income
Municipal Fund, Nuveen Massachusetts Premium Income Municipal Fund, Nuveen
Virginia Premium Income Municipal Fund, Nuveen Connecticut Premium Income
Municipal Fund, Nuveen Georgia Premium Income Municipal Fund, Nuveen Missouri
Premium Income Municipal Fund, Nuveen North Carolina Premium Income Municipal
Fund, Nuveen California Premium Income Municipal Fund, Nuveen Insured Premium
Income Municipal Fund 2, Nuveen New York Dividend Advantage Municipal Fund,
Nuveen California Dividend Advantage Municipal Fund, Nuveen Dividend Advantage
Municipal Fund, Nuveen Arizona Dividend Advantage Municipal Fund, Nuveen
Connecticut Dividend Advantage Municipal Fund, Nuveen Maryland Dividend
Advantage Municipal Fund, Nuveen Massachusetts Dividend Advantage Municipal
Fund, Nuveen North Carolina Dividend Advantage Municipal Fund, Nuveen Virginia
Dividend Advantage Municipal Fund, Nuveen Dividend Advantage Municipal Fund 2,
Nuveen California Dividend Advantage Municipal Fund 2, Nuveen New York Dividend
Advantage Municipal Fund 2, Nuveen New Jersey Dividend Advantage Municipal Fund,
Nuveen Ohio Dividend Advantage Municipal Fund, Nuveen Pennsylvania Dividend
Advantage Municipal Fund, Nuveen California Dividend Advantage Municipal Fund 3,
Nuveen Dividend Advantage Municipal Fund 3, Nuveen Georgia Dividend Advantage
Municipal Fund, Nuveen Maryland Dividend Advantage Municipal Fund 2, Nuveen
Michigan Dividend Advantage Municipal Fund, Nuveen Ohio Dividend Advantage
Municipal Fund 2, Nuveen North Carolina Dividend Advantage Municipal Fund 2 and
Nuveen Virginia Dividend Advantage Municipal Fund 2. Nuveen Advisory Corp. has
no other clients or business at the present time. For a description of other
business, profession, vocation or employment of a substantial nature in which
any director or officer of the investment adviser has engaged during the last
two years for his account or in the capacity of director, officer, employee,
partner or trustee, see the descriptions under "Management of the Fund" in Part
A of this Registration Statement.

Item 31: Location of Accounts and Records

     Nuveen Advisory Corp., 333 West Wacker Drive, Chicago, Illinois 60606,
maintains the Declaration of Trust, By-Laws, minutes of trustees and
shareholders meetings and contracts of the Registrant and all advisory material
of the investment adviser.

     JPMorgan Chase Bank, P.O. Box 660086, Dallas, Texas 75266-0086, maintains
all general and subsidiary ledgers, journals, trial balances, records of all
portfolio purchases and sales, and all other required records not maintained by
Nuveen Advisory Corp.

Item 32: Management Services

         Not applicable.

                                      C-6

<PAGE>

Item 33: Undertakings

     1.   Registrant undertakes to suspend the offering of its shares until it
amends its prospectus if (1) subsequent to the effective date of its
Registration Statement, the net asset value declines more than 10 percent from
its net asset value as of the effective date of the Registration Statement, or
(2) the net asset value increases to an amount greater than its net proceeds as
stated in the prospectus.

     2.   Not applicable.

     3.   Not applicable.

     4.   Not applicable.

     5.   The Registrant undertakes that:

          a.  For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of a registration statement in reliance upon Rule 430A and contained in the
     form of prospectus filed by the Registrant under Rule 497(h) under the
     Securities Act of 1933 shall be deemed to be part of the Registration
     Statement as of the time it was declared effective.

          b.  For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of the securities at that
     time shall be deemed to be the initial bona fide offering thereof.

     6.   The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two business days of receipt
of a written or oral request, any Statement of Additional Information.

                                      C-7

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Chicago, and State of Illinois, on the 25th day
of March, 2002.

                                    NUVEEN INSURED DIVIDEND
                                    ADVANTAGE MUNICIPAL FUND

                                    /s/ Gifford R. Zimmerman

                                    ________________________________________
                                    Gifford R. Zimmerman, Vice President and
                                    Secretary

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.


<TABLE>
<CAPTION>

        Signature                         Title                               Date
        ---------                         -----                               ----
<S>                             <C>                               <C>
/s/ Stephen D. Foy              Vice President and Controller             March 25, 2002
- --------------------            (Principal Financial and
    Stephen D. Foy              Accounting Officer)

                                Chairman of the Board and
Timothy R. Schwertfeger*        Trustee (Principal Executive      By: /s/ Gifford R. Zimmerman
                                Officer)                              --------------------------
                                                                          Gifford R. Zimmerman
                                                                          Attorney-In-Fact
                                                                          March 25, 2002

Robert P. Bremner*              Trustee

Lawrence H. Brown*              Trustee

Anne E. Impellizzeri*           Trustee

Peter R. Sawers*                Trustee

William J. Schneider*           Trustee

Judith M. Stockdale*            Trustee
</TABLE>

     *Original powers of attorney authorizing Gifford R. Zimmerman and Larry W.
Martin among others, to execute this Registration Statement, and Amendments
thereto, for each of the trustees of Registrant on whose behalf this
Registration Statement is filed, have been executed and filed as an exhibit.

<PAGE>


                               INDEX TO EXHIBITS

a.   Declaration of Trust dated July 12, 1999.*
b.   By-Laws of Registrant.*
c.   None.

d.   Form of Share Certificate.*
e.   Terms and Conditions of the Dividend Reinvestment Plan.
f.   None.

g.   Investment Management Agreement between Registrant and Nuveen
     Advisory Corp. dated February 20, 2002.
h.1  Form of Underwriting Agreement.
h.2  Form of Master Selected Dealer Agreement.
h.3  Form of Master Agreement Among Underwriters.
h.4  Form of Dealer Letter Agreement.
i.   Nuveen Open-End and Closed-End Funds Deferred Compensation Plan for
     Independent Directors and Trustees.
j.   Exchange Traded Fund Custody Agreement between Registrant and JPMorgan
     Chase Bank dated February 19, 2002.
k.1  Shareholder Transfer Agency Agreement between Registrant and JPMorgan
     Chase Bank dated February 19, 2002.
k.2  Expense Reimbursement Agreement between Registrant and Nuveen
     Advisory Corp. dated February 20, 2002.
l.1  Opinion and consent of Bell, Boyd & Lloyd LLC.*
l.2  Opinion and consent of Bingham Dana LLP.*
l.3  Consent of Bell, Boyd & Lloyd LLC.
l.4  Consent of Bingham Dana LLP.
m.   None.
n.   Consent of Ernst & Young LLP.
o.   None.

p.   Subscription Agreement of Nuveen Advisory Corp. dated March 7, 2002.
q.   None

r.1  Code of Ethics of Nuveen Advisory Corp.*

r.2  Code of Ethics of Salomon Smith Barney Inc.*
s.   Powers of Attorney.
___________________
 * Previously filed.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.E
<SEQUENCE>3
<FILENAME>dex99e.txt
<DESCRIPTION>TERMS AND CONDITIONS
<TEXT>
<PAGE>

                          NUVEEN EXCHANGE-TRADED FUNDS
                   (except Nuveen Municipal Value Fund, Inc.)

             Terms and Conditions of the Dividend Reinvestment Plan
             ------------------------------------------------------

This Dividend Reinvestment Plan for the Nuveen Exchange-Traded Funds advised by
Nuveen Advisory Corp. set forth on Exhibit A attached hereto (each, a "Fund")
provides for reinvestment of Fund distributions, consisting of income dividends,
returns of capital and capital gain distributions paid by the Fund, on behalf of
Fund shareholders electing to participate in the Plan ("Participants") by Chase
Manhattan Bank N.A. ("Chase"), the Plan Agent, in accordance with the following
terms:

1.   Chase will act as Agent for Participants and will open an account for each
Participant under the Dividend Reinvestment Plan in the same name as the
Participant's shares are registered, and will put into effect for each
Participant the distribution reinvestment option of the Plan as of the first
record date for a distribution to shareholders after Chase receives the
Participant's authorization so to do, either in writing duly executed by the
Participant or by telephone notice satisfying such reasonable requirements as
Chase and the Fund may agree. In the case of shareholders who hold shares for
others who are the beneficial owners, Chase will administer the Plan on the
basis of the number of Shares certified from time to time by the record
shareholder as representing the total amount registered in the record
shareholder's name and held for the account of beneficial owners who are
Participants.

2.   Whenever the Fund declares a distribution payable in shares or cash at the
option of the shareholders, each Participant shall take such distribution
entirely in shares and Chase shall automatically receive such shares, including
fractions, for the Participant's account, except in circumstances described in
Paragraph 3 below. Except in such circumstances, the number of additional shares
to be credited to each Participant's account shall be determined by dividing the
dollar amount of the distribution payable on the Participant's shares by the
current market price per share on the payable date for such distribution.

3.   Should the net asset value per Fund share exceed the market price per share
on the day for which trades will settle on the payment date for such
distribution (the "Valuation Date") for a distribution payable in shares or in
cash at the option of the shareholder, or should the Fund declare a distribution
payable only in cash, each Participant shall take such distribution in cash and
Chase shall apply the amount of such distribution to the purchase on the open
market of shares of the Fund for the Participant's account. Such Plan purchases
shall be made as early as the Valuation Date, under the supervision of the
investment adviser. Chase shall complete such Plan purchases no more than 30
days after the Valuation Date, except where temporary curtailment or suspension
of purchases is necessary to comply with applicable provisions of federal
securities law.

<PAGE>

4.   For the purpose of this Plan, the market price of the Fund's shares on a
particular date shall be the last sale price on the Exchange where it is traded
on that date, or if there is no sale on such Exchange on that date, then the
mean between the closing bid and asked quotations for such shares on such
Exchange on such date.

5.   Open-market purchases provided for above may be made on any securities
exchange where the Fund's shares are traded, in the over-the-counter market or
in negotiated transactions and may be on such terms as to price, delivery and
otherwise as Chase shall determine. Participants' funds held uninvested by Chase
will not bear interest, and it is understood that, in any event, Chase shall
have no liability in connection with any inability to purchase shares within 30
days after the Valuation Date as herein provided, or with the timing of any
purchases affected. Chase shall have no responsibility as to the value of the
Fund's shares acquired for Participants' accounts. Chase may commingle all
Participants' amounts to be used for open-market purchases of Fund shares and
the price per share allocable to each Participant in connection with such
purchases shall be the average price (including brokerage commissions and other
related costs) of all Fund shares purchased by Chase as Agent.

6.   Chase may hold each Participant's shares acquired pursuant to this Plan,
together with the shares of other Participants, in non-certificated form in
Chase's name or that of its nominee. Chase will forward to each Participant any
proxy solicitation material and will vote any shares so held only in accordance
with proxies returned to the Fund.

7.   Chase will confirm to each Participant each acquisition made for the
Participant's account as soon as practicable but not later than 60 days after
the date thereof. Chase will deliver to any Participant upon request, without
charge, a certificate or certificates for his full shares. Although a
Participant may from time to time have an undivided fractional interest
(computed to three decimal places) in a share of the Fund, and distributions on
fractional shares will be credited to the Participant's account, no certificates
for a fractional share will be issued. In the event of termination of a
Participant's account under the Plan, Chase will adjust for any such undivided
fractional interest at the market value of the Fund's shares at the time of
termination.

8.   Any stock dividends or split shares distributed by the Fund on full and
fractional shares held by Chase for a Participant will be credited to the
Participant's account. In the event that the Fund makes available to its
shareholders rights to purchase additional shares or other securities, the
shares held for each Participant under the Plan will be added to other shares
held by the Participant in calculating the number of rights to be issued to that
Participant.

9.   Chase's service fee for handling reinvestment of distributions pursuant
hereto will be paid by the Fund. Participants will be charged their pro rata
shares of brokerage commissions on all open market purchases.

                                       2

<PAGE>

10.  Each Participant may terminate his account under the Plan by notifying
Chase of his intent so to do, such notice to be provided either in writing duly
executed by the Participant or by telephone in accordance with such reasonable
requirements as Chase and the Fund may agree. Such termination will be effective
immediately if notice is received by Chase not less than ten days prior to any
distribution record date for the next succeeding distribution; otherwise such
termination will be effective shortly after the investment of such distribution
with respect to all subsequent distributions. The Plan may be terminated by the
Fund or Chase upon at least 90 days prior notice. Upon any termination, Chase
will cause a certificate or certificates for the full shares held for each
Participant under the Plan and cash adjustment for any fraction to be delivered
to the Participant without charge. If any Participant elects in advance of such
termination to have Chase sell part or all of his shares, Chase is authorized to
deduct from the proceeds a $2.50 fee plus the brokerage commissions incurred for
the transaction.

11.  These terms and conditions may be amended or supplemented by Chase or the
Fund at any time or times but, except when necessary or appropriate to comply
with applicable law or the rules or policies of the Securities and Exchange
Commission or any other regulatory authority, only by mailing to each
Participant appropriate written notice at least 90 days prior to the effective
date thereof. The amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, Chase receives notice
of the termination of such Participant's account under the Plan in accordance
with the terms hereof. Any such amendment may include an appointment by Chase in
its place and stead of a successor Agent under these terms and conditions. Upon
any such appointment of any Agent for the purpose of receiving distributions,
the Fund will be authorized to pay to such successor Agent, for each
Participant's account, all dividends and distributions payable on shares of the
Fund held in the Participant's name or under the Plan for retention or
application by such successor Agent as provided in these terms and conditions.

12.  Chase shall at all times act in good faith and agree to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement and to comply with applicable law, but assumes no
responsibility and shall not be liable for loss or damage due to errors unless
such error is caused by its negligence, bad faith or willful misconduct or that
of its employees.

13.  These terms and conditions shall be governed by the laws of the State of
New York.

                                      3

<PAGE>

                                                                       Exhibit A

          Nuveen Municipal Income Fund, Inc.
          Nuveen California Municipal Income Fund, Inc.
          Nuveen New York Municipal Income Fund, Inc.
          Nuveen Premium Income Municipal Fund, Inc.
          Nuveen Performance Plus Municipal Fund, Inc.
          Nuveen Municipal Advantage Fund, Inc.
          Nuveen Municipal Market Opportunity Fund, Inc.
          Nuveen Investment Quality Municipal Fund, Inc.
          Nuveen Insured Quality Municipal Fund, Inc.
          Nuveen Select Quality Municipal Fund, Inc.
          Nuveen Quality Income Municipal Fund, Inc.
          Nuveen Insured Opportunity Municipal Fund, Inc.
          Nuveen Premier Municipal Income Fund, Inc.
          Nuveen Premier Insured Municipal Income Fund, Inc.
          Nuveen Premium Income Municipal Fund 2, Inc.
          Nuveen Premium Income Municipal Fund 4, Inc.
          Nuveen Insured Premium Income Municipal Fund, Inc.
          Nuveen Insured Premium Income Municipal Fund 2
          Nuveen Dividend Advantage Municipal Fund
          Nuveen Dividend Advantage Municipal Fund 2
          Nuveen Dividend Advantage Municipal Fund 3
          Nuveen Insured Dividend Advantage Municipal Fund
          Nuveen Select Maturities Fund
          Nuveen California Municipal Value Fund, Inc.
          Nuveen California Performance Plus Municipal Fund, Inc.
          Nuveen California Municipal Market Opportunity Fund, Inc.
          Nuveen California Investment Quality Municipal Fund, Inc.
          Nuveen California Select Quality Municipal Fund, Inc.
          Nuveen California Quality Income Municipal Fund, Inc.
          Nuveen Insured California Premium Income Municipal Fund, Inc.
          Nuveen Insured California Premium Income Municipal Fund 2, Inc.
          Nuveen Insured California Dividend Advantage Municipal Fund
          Nuveen California Premium Income Municipal Fund
          Nuveen California Dividend Advantage Municipal Fund
          Nuveen California Dividend Advantage Municipal Fund 2
          Nuveen California Dividend Advantage Municipal Fund 3
          Nuveen Florida Investment Quality Municipal Fund
          Nuveen Florida Quality Income Municipal Fund
          Nuveen Insured Florida Premium Income Municipal Fund
          Nuveen New Jersey Investment Quality Municipal Fund, Inc.
          Nuveen New Jersey Premium Income Municipal Fund, Inc.
          Nuveen New Jersey Dividend Advantage Municipal Fund
          Nuveen New Jersey Dividend Advantage Municipal Fund 2
          Nuveen New York Municipal Value Fund, Inc.
          Nuveen New York Performance Plus Municipal Fund, Inc.
          Nuveen New York Investment Quality Municipal Fund, Inc.
          Nuveen New York Select Quality Municipal Fund, Inc.
          Nuveen New York Quality Income Municipal Fund, Inc.
          Nuveen Insured New York Premium Income Municipal Fund, Inc.
          Nuveen Insured New York Dividend Advantage Municipal Fund
          Nuveen New York Dividend Advantage Municipal Fund
          Nuveen New York Dividend Advantage Municipal Fund 2
          Nuveen Pennsylvania Investment Quality Municipal Fund
          Nuveen Pennsylvania Premium Income Municipal Fund 2
          Nuveen Pennsylvania Dividend Advantage Municipal Fund
          Nuveen Pennsylvania Dividend Advantage Municipal Fund 2
          Nuveen Arizona Premium Income Municipal Fund, Inc.
          Nuveen Arizona Dividend Advantage Municipal Fund
          Nuveen Arizona Dividend Advantage Municipal Fund 2
          Nuveen Connecticut Premium Income Municipal Fund

<PAGE>

          Nuveen Connecticut Dividend Advantage Municipal Fund
          Nuveen Connecticut Dividend Advantage Municipal Fund 2
          Nuveen Georgia Premium Income Municipal Fund
          Nuveen Georgia Dividend Advantage Municipal Fund
          Nuveen Maryland Premium Income Municipal Fund
          Nuveen Maryland Dividend Advantage Municipal Fund
          Nuveen Maryland Dividend Advantage Municipal Fund 2
          Nuveen Massachusetts Premium Income Municipal Fund
          Nuveen Massachusetts Dividend Advantage Municipal Fund
          Nuveen Michigan Quality Income Municipal Fund, Inc.
          Nuveen Michigan Premium Income Municipal Fund, Inc.
          Nuveen Michigan Dividend Advantage Municipal Fund
          Nuveen Missouri Premium Income Municipal Fund
          Nuveen North Carolina Premium Income Municipal Fund
          Nuveen North Carolina Dividend Advantage Municipal Fund
          Nuveen North Carolina Dividend Advantage Municipal Fund 2
          Nuveen Ohio Quality Income Municipal Fund, Inc.
          Nuveen Ohio Dividend Advantage Municipal Fund
          Nuveen Ohio Dividend Advantage Municipal Fund 2
          Nuveen Ohio Dividend Advantage Municipal Fund 3
          Nuveen Texas Quality Income Municipal Fund
          Nuveen Virginia Premium Income Municipal Fund
          Nuveen Virginia Dividend Advantage Municipal Fund
          Nuveen Virginia Dividend Advantage Municipal Fund 2

                                       2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.G
<SEQUENCE>4
<FILENAME>dex99g.txt
<DESCRIPTION>INVESTMENT MANAGEMENT AGREEMENT
<TEXT>
<PAGE>


                         INVESTMENT MANAGEMENT AGREEMENT
                         -------------------------------

AGREEMENT made this 20th day of February, 2002, by and between NUVEEN INSURED
DIVIDEND ADVANTAGE MUNICIPAL FUND, a Massachusetts business trust (the "Fund"),
and NUVEEN ADVISORY CORP., a Delaware corporation (the "Adviser").

                               W I T N E S S E T H
                               - - - - - - - - - -

In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:

1. The Fund hereby employs the Adviser to act as the investment adviser for, and
to manage the investment and reinvestment of the assets of the Fund in
accordance with the Fund's investment objective and policies and limitations,
and to administer the Fund's affairs to the extent requested by and subject to
the supervision of the Board of Trustees of the Fund for the period and upon the
terms herein set forth. The investment of the Fund's assets shall be subject to
the Fund's policies, restrictions and limitations with respect to securities
investments as set forth in the Fund's then current registration statement under
the Investment Company Act of l940, and all applicable laws and the regulations
of the Securities and Exchange Commission relating to the management of
registered closed-end, diversified management investment companies.

The Adviser accepts such employment and agrees during such period to render such
services, to furnish office facilities and equipment and clerical, bookkeeping
and administrative services (other than such services, if any, provided by the
Fund's transfer agent) for the Fund, to permit any of its

<PAGE>
                                       2

officers or employees to serve without compensation as trustees or officers of
the Fund if elected to such positions, and to assume the obligations herein set
forth for the compensation herein provided. The Adviser shall, for all purposes
herein provided, be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for nor
represent the Fund in any way, nor otherwise be deemed an agent of the Fund.

2. For the services and facilities described in Section l, the Fund will pay to
the Adviser, at the end of each calendar month, an investment management fee
computed by applying the following annual rate to the average daily net assets
of the Fund:

                  Rate                      Average Daily Net Assets/(1)/
                  ----                      ---------------------------
                  .6500%                    Up to $125 million
                  .6375%                    $125 to $250 million
                  .6250%                    $250 to $500 million
                  .6125%                    $500 million to $1 billion
                  .6000%                    $1 billion to $2 billion
                  .5750%                    $2 billion and over

/(1)/Including net assets attributable to MuniPreferred Shares.

For the month and year in which this Agreement becomes effective, or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement shall have been in effect during the month and year, respectively.
The services of the Adviser to the Fund under this Agreement are not to be
deemed exclusive, and the Adviser shall be free to render similar services or
other services to others so long as its services hereunder are not impaired
thereby.

<PAGE>
                                        3

3. The Adviser shall arrange for officers or employees of the Adviser to serve,
without compensation from the Fund, as trustees, officers or agents of the Fund,
if duly elected or appointed to such positions, and subject to their individual
consent and to any limitations imposed by law.

4. Subject to applicable statutes and regulations, it is understood that
officers, trustees, or agents of the Fund are, or may be, interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Fund otherwise than as trustees, officers or agents.

5. The Adviser shall not be liable for any loss sustained by reason of the
purchase, sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon the investigation and research made by
any other individual, firm or corporation, if such recommendation shall have
been selected with due care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.

6. The Adviser currently manages other investment accounts and funds, including
those with investment objectives similar to the Fund, and reserves the right to
manage other such accounts and funds in the future. Securities considered as
investments for the Fund may also be appropriate for other investment accounts
and funds that may be managed by the Adviser. Subject to applicable laws and
regulations, the Adviser will attempt to allocate equitably portfolio
transactions among the portfolios of its other investment accounts and funds
purchasing securities whenever decisions are

<PAGE>
                                        4

made to purchase or sell securities by the Fund and one or more of such other
accounts or funds simultaneously. In making such allocations, the main factors
to be considered by the Adviser will be the respective investment objectives of
the Fund and such other accounts and funds, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment by the Fund and such other accounts and funds, the size of investment
commitments generally held by the Fund and such accounts and funds, and the
opinions of the persons responsible for recommending investments to the Fund and
such other accounts and funds.

7. This Agreement shall continue in effect until August l, 2003, unless and
until terminated by either party as hereinafter provided, and shall continue in
force from year to year thereafter, but only as long as such continuance is
specifically approved, at least annually, in the manner required by the
Investment Company Act of l940.

     This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without the payment of any penalty
by the Fund or by the Adviser upon sixty (60) days' written notice to the other
party. The Fund may effect termination by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, accompanied
by appropriate notice.

<PAGE>
 5

     This Agreement may be terminated, at any time, without the payment of any
penalty, by the Board of Trustees of the Fund, or by vote of a majority of the
outstanding voting securities of the Fund, in the event that it shall have been
established by a court of competent jurisdiction that the Adviser, or any
officer or director of the Adviser, has taken any action which results in a
breach of the covenants of the Adviser set forth herein.

     Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation, described in Section
2, earned prior to such termination.

8. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.

9. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for receipt of such notice.

<PAGE>
                                        6

10. The Fund's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed on behalf of the Fund
by the Fund's officers as officers and not individually and the obligations
imposed upon the Fund by this Agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.

     IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed on the day and year above written.


                                       NUVEEN INSURED DIVIDEND
                                       ADVANTAGE MUNICIPAL FUND




                                       by: /s/ Gifford R. Zimmerman
                                           ------------------------
                                                 Vice President

Attest:  /s/ Virginia L. O'Neal
         ----------------------
           Assistant Secretary

                                       NUVEEN ADVISORY CORP.



                                       by: /s/ William M. Fitzgerald
                                           -------------------------
                                                 Vice President

Attest:  /s/ Larry Martin
         -------------------
         Assistant Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.H.1
<SEQUENCE>5
<FILENAME>dex99h1.txt
<DESCRIPTION>FORM OF UNDERWRITING AGREEMENT
<TEXT>
<PAGE>


                                _________ Shares



                NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND

                                  Common Stock

                             UNDERWRITING AGREEMENT
                             ----------------------

                                                                  March 25, 2002

Salomon Smith Barney Inc.
Nuveen Investments
A.G. Edwards & Sons, Inc.
Prudential Securities Incorporated
UBS Warburg LLC
Fahnestock & Co. Inc.
First Union Securities, Inc.
Gruntal & Co., L.L.C.
Janney Montgomery Scott LLC
Legg Mason Wood Walker, Incorporated
McDonald Investment Inc., a KeyCorp Company
Raymond James & Associates, Inc.
RBC Dain Rauscher, Inc.
SunTrust Capital Markets, Inc.
Wells Fargo Securities, LLC

As Representatives of the Several Underwriters

c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Dear Sirs:

     The undersigned, Nuveen Insured Dividend Advantage Municipal Fund, a
Massachusetts business trust (the "Fund"), and Nuveen Advisory Corp., a Delaware
corporation (the "Manager"), address you as Underwriters and as the
representatives (the "Representatives") of each of the other persons, firms and
corporations, if any, listed in Schedule I hereto (herein collectively called
"Underwriters"). The Fund proposes to issue and sell an aggregate of _________
shares (the "Firm Shares") of its common shares of beneficial interest, $.01 par
value per share (the "Common Shares"), to the several Underwriters. The Fund
also proposes to sell to the Underwriters, upon the terms and conditions set
forth in Section 2 hereof, up to an additional _______ Common Shares (the
"Additional Shares"). The Firm Shares and Additional Shares are hereinafter
collectively referred to as the "Shares".

<PAGE>

     The Fund and the Manager wish to confirm as follows their agreements with
you and the other several Underwriters on whose behalf you are acting in
connection with the several purchases of the Shares by the Underwriters.

     The Fund is entering into an investment management agreement with the
Manager dated February 20, 2002, an exchange traded fund custody agreement with
JPMorgan Chase Bank dated February 19, 2002 and a shareholder transfer agency
agreement with JPMorgan Chase Bank dated February 19, 2002 and such agreements
are herein referred to as the "Management Agreement", the "Custodian Agreement"
and the "Transfer Agency Agreement", respectively. Collectively, the Management
Agreement, the Custodian Agreement and the Transfer Agency Agreement are herein
referred to as the "Fund Agreements". This Underwriting Agreement is herein
referred to as the "Agreement".

     1.   Registration Statement and Prospectus. The Fund has prepared and filed
          -------------------------------------
with the Securities and Exchange Commission (the "Commission") in accordance
with the provisions of the Securities Act of 1933, as amended (the "1933 Act"),
the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules
and regulations of the Commission under the 1933 Act (the "1933 Act Rules and
Regulations") and the 1940 Act (the "1940 Act Rules and Regulations" and
together with the 1933 Act Rules and Regulations, the "Rules and Regulations") a
registration statement on Form N-2 (File No. 333-59770) under the 1933 Act and
the 1940 Act and may pursuant to the Rules and Regulations prepare and file an
additional registration statement relating to a portion of the Shares pursuant
to Rule 462(b) of the 1933 Act Rules and Regulations (collectively, the
"registration statement"), including a prospectus (including any statement of
additional information) relating to the Shares and a notification of
registration of the Fund as an investment company under the 1940 Act on Form
N-8A (the "1940 Act Notification"). The term "Registration Statement" as used in
this Agreement means the registration statement (including all financial
schedules and exhibits), as amended at the time it becomes effective under the
1933 Act or, if the registration statement became effective under the 1933 Act
prior to the execution of this Agreement, as amended or supplemented, prior to
the execution of this Agreement and includes any information deemed to be
included by Rule 430A under the 1933 Act Rules and Regulations. If it is
contemplated, at the time this Agreement is executed, that a post-effective
amendment to the registration statement will be filed under the 1933 Act and
must be declared effective before the offering of the Shares may commence, the
term "Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. The term "Prospectus" as
used in this Agreement means the prospectus (including the statement of
additional information) in the form included in the Registration Statement or,
if the prospectus (including the statement of additional information) included
in the Registration Statement omits information in reliance on Rule 430A and
such information is included in a prospectus (including the statement of
additional information) filed with the Commission pursuant to Rule 497(h) under
the 1933 Act Rules and Regulations, the term "Prospectus" as used in this
Agreement means the prospectus (including the statement of additional
information) in the form included in the Registration Statement as supplemented
by the addition of the information contained in the prospectus (including the
statement of additional information) filed with the Commission pursuant to Rule
497(h). The term "Prepricing Prospectus" as used in this Agreement means the
prospectus (including the

                                       2

<PAGE>

statement of additional information) subject to completion in the form included
in the registration statement at the time of the initial filing of the
registration statement with the Commission and as such prospectus (including the
statement of additional information) shall have been amended from time to time
prior to the date of the Prospectus, together with any other prospectus
(including any other statement of additional information) relating to the Fund
other than the Prospectus.

     The Fund has furnished the Representatives with copies of such registration
statement, each amendment to such registration statement filed with the
Commission and each Prepricing Prospectus.

     2.   Agreements to Sell and Purchase. The Fund hereby agrees, subject to
          -------------------------------
all the terms and conditions set forth herein, to issue and to sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Fund and the Manager herein contained and subject to all of
the other terms and conditions set forth herein, each Underwriter agrees,
severally and not jointly, to purchase from the Fund at a purchase price per
share of $14.325 per Share (the "purchase price per share"), the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto (or
such number of Firm Shares increased as set forth in Section 10 hereof).

     The Fund also agrees, subject to all the terms and conditions set forth
herein, to issue and to sell to the Underwriters and, upon the basis of the
representations, warranties and agreements of the Fund and the Manager herein
contained and subject to all the terms and conditions set forth herein, the
Underwriters shall have the right to purchase from the Fund, at the purchase
price per share, pursuant to an option (the "over-allotment option") which may
be exercised at any time and from time to time prior to 9:00 P.M., New York City
time, on the 45th day after the date of the Prospectus (or if such 45th day
shall be a Saturday or a Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange (the "NYSE") is open for trading) up
to an aggregate of _______ Additional Shares. Additional Shares may be purchased
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. Upon any exercise of the over-allotment option,
upon the basis of the representations, warranties and agreements of the Fund and
the Manager herein contained and subject to all of the other terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Fund the number of Additional Shares (subject to such
adjustments as you may determine to avoid fractional shares) which bears the
same proportion to the number of Additional Shares to be purchased by the
Underwriters as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I (or such number of Firm Shares increased as set forth
in Section 10 hereof) bears to the aggregate number of Firm Shares.

     3.   Terms of Public Offering. The Fund and the Manager have been advised
          ------------------------
by you that the Underwriters propose to make a public offering of their
respective portions of the Firm Shares as soon after the Registration Statement
and this Agreement have become effective as in your judgment is advisable and
initially to offer the Firm Shares upon the terms set forth in the Prospectus.

                                       3

<PAGE>

     4.   Delivery of Shares and Payments Therefor.
          ----------------------------------------

             (a) Delivery to the Underwriters of and payment to the Fund for the
     Firm Shares shall be made at the office of Salomon Smith Barney Inc., 388
     Greenwich Street, New York, New York 10013 or through the facilities of the
     Depository Trust Company or another mutually agreeable facility, at 9:00
     A.M., New York City time, on March 28, 2002 (the "Closing Date"). The place
     of closing for the Firm Shares and the Closing Date may be varied by
     agreement between you and the Fund.

             (b) Delivery to the Underwriters of and payment to the Fund for any
     Additional Shares to be purchased by the Underwriters shall be made at the
     aforementioned office of Salomon Smith Barney Inc. at such time on such
     date (an "Option Closing Date"), which may be the same as the Closing Date,
     but shall in no event be earlier than the Closing Date nor earlier than two
     nor later than three business days after the giving of the notice
     hereinafter referred to, as shall be specified in a written notice from you
     on behalf of the Underwriters to the Fund of the Underwriters'
     determination to purchase a number, specified in said notice, of Additional
     Shares. The place of closing for any Additional Shares and the Option
     Closing Date for such Additional Shares may be varied by agreement between
     you and the Fund.

             (c) Certificates for the Firm Shares and for any Additional Shares
     shall be registered in such names and in such denominations as you shall
     request prior to 1:00 P.M., New York City time, (i) in respect of the Firm
     Shares, on the second business day preceding the Closing Date and (ii) in
     respect of Additional Shares, on the day of the giving of the written
     notice in respect of such Additional Shares. Such certificates will be made
     available to you in New York City for inspection and packaging not later
     than 9:00 A.M., New York City time, on the business day next preceding the
     Closing Date or any Option Closing Date, as the case may be. The
     certificates evidencing the Firm Shares and any Additional Shares to be
     purchased hereunder shall be delivered to you on the Closing Date or the
     Option Closing Date, as the case may be, against payment of the purchase
     price therefor in same-day funds to the order of the Fund.

     5.   Agreements of the Fund and the Manager. The Fund and the Manager,
          --------------------------------------
jointly and severally, agree with the several Underwriters as follows:

             (a) If, at the time this Agreement is executed and delivered, it is
     necessary for the Registration Statement or a post-effective amendment
     thereto to be declared effective under the 1933 Act before the offering of
     the Firm Shares may commence, the Fund will use its reasonable best efforts
     to cause the Registration Statement or such post-effective amendment to
     become effective under the 1933 Act as soon as possible. If the
     Registration Statement has become effective and the Prospectus contained
     therein omits certain information at the time of effectiveness pursuant to
     Rule 430A of the 1933 Act Rules and Regulations, the Fund will file a
     prospectus including such information pursuant to Rule 497(h) of the 1933
     Act Rules and Regulations, as promptly as practicable, but no later than
     the second business day following the earlier of the date of the
     determination of the offering price of the Shares or the date the
     Prospectus is first

                                        4

<PAGE>

     used after the effective date of the Registration Statement. If the
     Registration Statement has become effective and the Prospectus contained
     therein does not so omit such information, the Fund will file a Prospectus
     pursuant to Rule 497 (c) or (j) of the 1933 Act Rules and Regulations as
     promptly as practicable, but no later than the fifth business day following
     the date of the later of the effective date of the Registration Statement
     or the commencement of the public offering of the Shares after the
     effective date of the Registration Statement. The Fund will advise you
     promptly and, if requested by you, will confirm such advice in writing (i)
     when the Registration Statement or such post-effective amendment has become
     effective, (ii) when the Prospectus has been timely filed pursuant to Rule
     497(c) or Rule 497(h) of the 1933 Act Rules and Regulations or the
     certification permitted pursuant to Rule 497(j) of the 1933 Act Rules and
     Regulations has been timely filed, whichever is applicable.

             (b) The Fund will advise you promptly and, if requested by you,
     will confirm such advice in writing: (i) of any request made by the
     Commission for amendment of or a supplement to the Registration Statement,
     any Prepricing Prospectus or the Prospectus (or any amendment or supplement
     to any of the foregoing) or for additional information, (ii) of the
     issuance by the Commission, the National Association of Securities Dealers,
     Inc. (the "NASD"), any state securities commission, any national securities
     exchange, any arbitrator, any court or any other governmental, regulatory,
     self-regulatory or administrative agency or any official suspending the
     effectiveness of the Registration Statement, prohibiting or suspending the
     use of the Prospectus, any Prepricing Prospectus or any sales material (as
     hereinafter defined), of any notice pursuant to Section 8(e) of the 1940
     Act, of the suspension of qualification of the Shares for offering or sale
     in any jurisdiction, or the initiation or contemplated initiation of any
     proceeding for any such purposes, (iii) of receipt by the Fund, the
     Manager, any affiliate of the Fund or the Manager or any representative or
     attorney of the Fund or the Manager of any other material communication
     from the Commission, the NASD, any state securities commission, any
     national securities exchange, any arbitrator, any court or any other
     governmental, regulatory, self-regulatory or administrative agency or any
     official relating to the Fund (if such communication relating to the Fund
     is received by such person within three years after the date of this
     Agreement), the Registration Statement, the 1940 Act Notification, the
     Prospectus, any Prepricing Prospectus, any sales material (as hereinafter
     defined) (or any amendment or supplement to any of the foregoing), this
     Agreement or any of the Fund Agreements and (iv) within the period of time
     referred to in paragraph (f) below, of any material adverse change in the
     condition (financial or other), business, prospects, properties, net assets
     or results of operations of the Fund or the Manager or of the happening of
     any event which makes any statement of a material fact made in the
     Registration Statement, the Prospectus, any Prepricing Prospectus or any
     sales material (as herein defined) (or any amendment or supplement to any
     of the foregoing) untrue or which requires the making of any additions to
     or changes in the Registration Statement, the Prospectus, any Prepricing
     Prospectus or any sales materials (as herein defined) (or any amendment or
     supplement to any of the foregoing) in order to state a material fact
     required by the 1933 Act, the 1940 Act or the Rules and Regulations to be
     stated therein or necessary in order to make the statements therein (in the
     case of a prospectus, in light

                                        5

<PAGE>

     of the circumstances under which they were made) not misleading or of the
     necessity to amend or supplement the Registration Statement, the
     Prospectus, any Prepricing Prospectus or any sales material (as herein
     defined) (or any amendment or supplement to any of the foregoing) to comply
     with the 1933 Act, the 1940 Act, the Rules and Regulations or any other law
     or order of any court or regulatory body. If at any time the Commission,
     the NASD, any state securities commission, any national securities
     exchange, any arbitrator, any court or any other governmental, regulatory,
     self-regulatory or administrative agency or any official shall issue any
     order suspending the effectiveness of the Registration Statement,
     prohibiting or suspending the use of the Prospectus, any Prepricing
     Prospectus or any sales material (as hereinafter defined) (or any amendment
     or supplement to any of the foregoing) or suspending the qualification of
     the Shares for offering or sale in any jurisdiction, the Fund will use its
     reasonable best efforts to obtain the withdrawal of such order at the
     earliest possible time.

             (c) The Fund will furnish to you, without charge, three signed
     copies of the registration statement and the 1940 Act Notification as
     originally filed with the Commission and of each amendment thereto,
     including financial statements and all exhibits thereto (except any
     post-effective amendment required by Rule 8b-16 of the 1940 Act Rules and
     Regulations which is filed with the Commission after the later of (x) one
     year from the date of this Agreement and (y) the date on which the
     distribution of the Shares is completed) and will also furnish to you,
     without charge, such number of conformed copies of the registration
     statement as originally filed and of each amendment thereto (except any
     post-effective amendment required by Rule 8b-16 of the 1940 Act Rules and
     Regulations which is filed with the Commission after the later of (x) one
     year from the date of this Agreement and (y) the date on which the
     distribution of the Shares is completed), with or without exhibits, as you
     may reasonably request.

             (d) The Fund will not (i) file any amendment to the Registration
     Statement or make any amendment or supplement to the Prospectus, any
     Prepricing Prospectus or any sales material (as hereinafter defined) (or
     any amendment or supplement to any of the foregoing) of which you shall not
     previously have been advised or to which you shall reasonably object within
     a reasonable time after being so advised or (ii) so long as, in the opinion
     of counsel for the Underwriters, a Prospectus is required to be delivered
     in connection with sales by any Underwriter or dealer, file any
     information, documents or reports pursuant to the Securities Exchange Act
     of 1934, as amended (the "1934 Act"), without delivering a copy of such
     information, documents or reports to you, as Representatives of the
     Underwriters, prior to or concurrently with such filing.

             (e) Prior to the execution and delivery of this Agreement, the Fund
     has delivered to you, without charge, in such quantities as you have
     reasonably requested, copies of each form of any Prepricing Prospectus. The
     Fund consents to the use, in accordance with the provisions of the 1933 Act
     and with the securities or Blue Sky laws of the jurisdictions in which the
     Shares are offered by the several Underwriters and by dealers, prior to the
     date of the Prospectus, of each Prepricing Prospectus so furnished by the
     Fund.

                                       6

<PAGE>

             (f) As soon after the execution and delivery of this Agreement as
     possible and thereafter from time to time, for such period as in the
     opinion of counsel for the Underwriters a prospectus is required by the
     1933 Act to be delivered in connection with sales of Shares by any
     Underwriter or dealer, the Fund will expeditiously deliver to each
     Underwriter and each dealer, without charge, as many copies of the
     Prospectus (and of any amendment or supplement thereto) as you may
     reasonably request. The Fund consents to the use of the Prospectus (and of
     any amendments or supplements thereto) in accordance with the provisions of
     the 1933 Act and with the securities or Blue Sky laws of the jurisdictions
     in which the Shares are offered by the several Underwriters and by all
     dealers to whom Shares may be sold, both in connection with the offering or
     sale of the Shares and for such period of time thereafter as the Prospectus
     is required by law to be delivered in connection with sales of Shares by
     any Underwriter or dealer. If during such period of time any event shall
     occur that in the judgment of the Fund or in the opinion of counsel for the
     Underwriters is required to be set forth in the Prospectus (as then amended
     or supplemented) or should be set forth therein in order to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading or if it is necessary to supplement or amend the
     Prospectus to comply with the 1933 Act, the 1940 Act, the Rules and
     Regulations or any other law, rule or regulation, the Fund will forthwith
     prepare and, subject to the provisions of paragraph (d) above, file with
     the Commission an appropriate amendment or supplement thereto and will
     expeditiously furnish to the Underwriters and dealers, without charge, such
     number of copies thereof as they shall reasonably request. In the event
     that the Prospectus is to be amended or supplemented, the Fund, if
     requested by you, will promptly issue a press release announcing or
     disclosing the matters to be covered by the proposed amendment or
     supplement.

             (g) The Fund will cooperate with you and with counsel for the
     Underwriters in connection with the registration or qualification of the
     Shares for offering and sale by the several Underwriters and by dealers
     under the securities or Blue Sky laws of such jurisdictions as you may
     designate and will file such consents to service of process or other
     documents necessary or appropriate in order to effect such registration or
     qualification; provided that in no event shall the Fund be obligated to
     qualify to do business in any jurisdiction where it is not now so qualified
     or to take any action which would subject it to service of process in
     suits, other than those arising out of the offering or sale of the Shares,
     in any jurisdiction where it is not now so subject.

             (h) The Fund will make generally available to its security holders
     an earnings statement, which need not be audited, covering a twelve-month
     period commencing after the effective date of the Registration Statement
     and ending not later than 15 months thereafter, as soon as practicable
     after the end of such period, which earnings statement shall satisfy the
     provisions of Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act
     Rules and Regulations.

             (i) The Fund will comply with the undertaking set forth in
     paragraph 6 of Item 33 of Part C of the Registration Statement.

                                       7

<PAGE>

             (j) During the period of five years hereafter, the Fund will
     furnish to you (i) as soon as available, a copy of each report of the Fund
     mailed to shareholders or filed with the Commission and (ii) from time to
     time such other information concerning the Fund as you may reasonably
     request.

             (k) If this Agreement shall terminate or shall be terminated after
     execution pursuant to any provisions hereof (other than pursuant to the
     second paragraph of Section 10 hereof or by notice given by you terminating
     this Agreement pursuant to Section 10 or Section 11 hereof) or if this
     Agreement shall be terminated by the Underwriters because of any failure or
     refusal on the part of the Fund or the Manager to comply with the terms or
     fulfill any of the conditions of this Agreement, the Fund and the Manager,
     jointly and severally, agree to reimburse the Representatives for all
     out-of-pocket expenses (including fees and expenses of counsel for the
     Underwriters) incurred by you in connection herewith, but the Fund and the
     Manager shall in no event be liable for any internal cost of the
     Underwriters or any loss of anticipated profits or speculative,
     consequential or similar damages for such termination.

             (l) The Fund will direct the investment of the net proceeds of the
     offering of the Shares in such a manner as to comply with the investment
     objectives, policies and restrictions of the Fund as described in the
     Prospectus.

             (m) The Fund will file the requisite copies of the Prospectus with
     the Commission in a timely fashion pursuant to Rule 497(c) or Rule 497(h)
     of the 1933 Act Rules and Regulations, whichever is applicable or, if
     applicable, will file in a timely fashion the certification permitted by
     Rule 497(j) of the 1933 Act Rules and Regulations and will advise you of
     the time and manner of such filing.

             (n) Except as provided in this Agreement or pursuant to any
     dividend reinvestment plan of the Fund in effect on the date hereof, the
     Fund will not sell, contract to sell or otherwise dispose of, any Common
     Shares or any securities convertible into or exercisable or exchangeable
     for Common Shares or grant any options or warrants to purchase Common
     Shares, for a period of 180 days after the date of the Prospectus, without
     the prior written consent of Salomon Smith Barney Inc.

             (o) Except as stated in this Agreement and in the Prospectus,
     neither the Fund nor the Manager has taken, nor will it take, directly or
     indirectly, any action designed to or that might reasonably be expected to
     cause or result in stabilization or manipulation of the price of the Common
     Shares.

             (p) The Fund will use its reasonable best efforts to have the
     Common Shares listed, subject to notice of issuance, on the American Stock
     Exchange (the "AMEX") concurrently with the effectiveness of the
     Registration Statement and to comply with the rules and regulations of such
     exchange.

     6.   Representations and Warranties of the Fund and the Manager. The Fund
          ----------------------------------------------------------
and the Manager, jointly and severally, represent and warrant to each
Underwriter that:

                                       8

<PAGE>

             (a) Each Prepricing Prospectus included as part of the registration
     statement as originally filed or as part of any amendment or supplement
     thereto or filed pursuant to Rule 497 of the 1933 Act Rules and
     Regulations, complied when so filed in all material respects with the
     provisions of the 1933 Act, the 1940 Act and the Rules and Regulations.

             (b) The Registration Statement, in the form in which it became or
     becomes effective and also in such form as it may be when any
     post-effective amendment thereto shall become effective and the Prospectus
     and any amendment or supplement thereto when filed with the Commission
     under Rule 497 of the 1933 Act Rules and Regulations and the 1940 Act
     Notification when originally filed with the Commission and any amendment or
     supplement thereto when filed with the Commission complied or will comply
     in all material respects with the provisions of the 1933 Act, the 1940 Act
     and the Rules and Regulations and did not or will not at any such times
     contain an untrue statement of a material fact or omit to state a material
     fact required to be stated therein or necessary to make the statements
     therein (in the case of a prospectus, in light of the circumstances under
     which they were made) not misleading; except that this representation and
     warranty does not apply to statements in or omissions from the Registration
     Statement or the Prospectus (or any amendment or supplement thereto) made
     in reliance upon and in conformity with information relating to any
     Underwriter furnished to the Fund in writing by or on behalf of any
     Underwriter through you expressly for use therein.

             (c) All the outstanding Common Shares of the Fund have been duly
     authorized and validly issued, are fully paid and, except as described in
     the Registration Statement, nonassessable and are free of any preemptive or
     similar rights; the Shares have been duly authorized and, when issued and
     delivered to the Underwriters against payment therefor in accordance with
     the terms hereof, will be validly issued, fully paid and, except as
     described in the Registration Statement, nonassessable and free of any
     preemptive or similar rights and the capital stock of the Fund conforms to
     the description thereof in the Registration Statement and the Prospectus
     (and any amendment or supplement to either of them).

             (d) The Fund has been duly formed and is validly existing in good
     standing as a business trust under the laws of The Commonwealth of
     Massachusetts, with full power and authority to own, lease and operate its
     properties and to conduct its business as described in the Registration
     Statement and the Prospectus (and any amendment or supplement to either of
     them) and is duly registered and qualified to conduct business and is in
     good standing in each jurisdiction or place where the nature of its
     properties or the conduct of its business requires such registration or
     qualification, except where the failure so to register or to qualify does
     not have a material, adverse effect on the condition (financial or other),
     business, properties, net assets or results of operations of the Fund. The
     Fund has no subsidiaries.

             (e) There are no legal or governmental proceedings pending or, to
     the knowledge of the Fund, threatened, against the Fund or to which the
     Fund or any of its properties is

                                       9

<PAGE>

     subject, that are required to be described in the Registration Statement or
     the Prospectus (or any amendment or supplement to either of them) but are
     not described as required by the 1933 Act, the 1940 Act or the Rules and
     Regulations and there are no agreements, contracts, indentures, leases or
     other instruments that are required to be described in the Registration
     Statement or the Prospectus (or any amendment or supplement to either of
     them) or to be filed as an exhibit to the Registration Statement that are
     not described or filed as required by the 1933 Act, the 1940 Act or the
     Rules and Regulations.

             (f) The Fund is not in violation of its Declaration of Trust or
     By-Laws or in material violation of any material law, ordinance,
     administrative or governmental rule or regulation applicable to the Fund or
     of any material decree of the Commission, the NASD, any state securities
     commission, any national securities exchange, any arbitrator, any court or
     any other governmental, regulatory, self-regulatory or administrative
     agency or any official having jurisdiction over the Fund or in breach or
     default in any material respect in the performance of any obligation,
     agreement or condition contained in any material bond, debenture, note or
     any other evidence of indebtedness or in any agreement, indenture, lease or
     other instrument to which the Fund is a party or by which it or any of its
     properties may be bound.

             (g) Neither the issuance and sale of the Shares, the execution,
     delivery or performance of this Agreement nor any of the Fund Agreements by
     the Fund, nor the consummation by the Fund of the transactions contemplated
     hereby or thereby (A) requires any consent, approval, authorization or
     other order of or registration or filing which has not yet been obtained or
     made with the Commission, the NASD, any national securities exchange, any
     arbitrator, any court or any other governmental, regulatory,
     self-regulatory or administrative agency or any official (except compliance
     with the securities or Blue Sky laws of various jurisdictions which have
     been or will be effected in accordance with this Agreement and except for
     compliance with the filing requirements of the NASD Division of Corporate
     Finance) or conflicts or will conflict with or constitutes or will
     constitute a breach of the Declaration of Trust or By-Laws of the Fund or
     (B) conflicts or will conflict with or constitutes or will constitute a
     breach of or a default under, any material agreement, indenture, lease or
     other instrument to which the Fund is a party or by which it or any of its
     properties may be bound or materially violates or will materially violate
     any material statute, law, regulation or filing or judgment, injunction,
     order or decree applicable to the Fund or any of its properties or will
     result in the creation or imposition of any material lien, charge or
     encumbrance upon any property or assets of the Fund pursuant to the terms
     of any agreement or instrument to which it is a party or by which it may be
     bound or to which any of the property or assets of the Fund is subject.

             (h) Since the date as of which information is given in the
     Registration Statement and the Prospectus (and any amendment or supplement
     to either of them), except as otherwise stated therein, (A) there has been
     no material, adverse change in the condition (financial or other),
     business, properties, net assets or results of operations of the Fund or
     business prospects (other than as a result of a change in the financial
     markets generally)

                                       10

<PAGE>

     of the Fund, whether or not arising in the ordinary course of business, (B)
     there have been no transactions entered into by the Fund which are material
     to the Fund other than those in the ordinary course of its business as
     described in the Prospectus (and any amendment or supplement thereto) and
     (C) there has been no dividend or distribution of any kind declared, paid
     or made by the Fund on any class of its common stock.

          (i) The accountants, Ernst & Young LLP, who have audited or shall
     audit the Statement of Net Assets included in the Registration Statement
     and the Prospectus (and any amendment or supplement to either of them), are
     an independent public accounting firm as required by the 1933 Act, the 1940
     Act and the Rules and Regulations.

          (j) The financial statements, together with related schedules and
     notes, included in the Registration Statement or the Prospectus (or any
     amendment or supplement to either of them) present fairly the financial
     position of the Fund on the basis stated in the Registration Statement at
     the respective dates or for the respective periods to which they apply;
     such statements and related schedules and notes have been prepared in
     accordance with generally accepted accounting principles consistently
     applied throughout the periods involved except as disclosed therein; and
     the other financial and statistical information and data included in the
     Registration Statement or the Prospectus (or any amendment or supplement
     thereto) are accurately derived from such financial statements and the
     books and records of the Fund.

          (k) The Fund, subject to the Registration Statement having been
     declared effective and the filing of the Prospectus under Rule 497 under
     the Rules and Regulations, has taken all required action under the 1933
     Act, the 1940 Act and the Rules and Regulations to make the public offering
     and consummate the sale of the Shares as contemplated by this Agreement.

          (l) The execution and delivery of and the performance by the Fund of
     its obligations under this Agreement and the Fund Agreements have been duly
     and validly authorized by the Fund and this Agreement and the Fund
     Agreements have been duly executed and delivered by the Fund and constitute
     the valid and legally binding agreements of the Fund, enforceable against
     the Fund in accordance with their terms, except as rights to indemnity and
     contribution hereunder may be limited by federal or state securities laws
     and subject to the qualification that the enforceability of the Fund's
     obligations hereunder and thereunder may be limited by bankruptcy,
     insolvency, reorganization, moratorium and other laws relating to or
     affecting creditors' rights generally and by general equitable principles.

          (m) Except as disclosed in the Registration Statement and the
     Prospectus (and any amendment or supplement to either of them), subsequent
     to the respective dates as of which such information is given in the
     Registration Statement and the Prospectus (and any amendment or supplement
     to either of them), the Fund has not incurred any liability or obligation,
     direct or contingent that is material to the Fund and there has not been
     any change in the capital stock or material increase in the short-term debt
     or long-term debt of the Fund.

                                       11

<PAGE>

          (n) The Fund has not distributed and, prior to the later to occur of
     (i) the Closing Date and (ii) completion of the distribution of the Shares,
     will not distribute to the public in either printed or electronic form any
     offering material in connection with the offering and sale of the Shares
     other than the Registration Statement, the Prepricing Prospectus included
     in Pre-Effective Amendment No. 1 to the Registration Statement, the
     Prospectus and the advertisements/sales literature filed by Nuveen
     Investments with the NASD on February 27, 2002.

          (o) The Fund has such licenses, permits, and authorizations of
     governmental or regulatory authorities ("permits") as are necessary to own
     its property and to conduct its business in the manner described in the
     Prospectus (and any amendment or supplement thereto); the Fund has
     fulfilled and performed all its material obligations with respect to such
     permits and no event has occurred which allows or, after notice or lapse of
     time, would allow, revocation or termination thereof or results in any
     other material impairment of the rights of the Fund under any such permit,
     subject in each case to such qualification as may be set forth in the
     Prospectus (and any amendment or supplement thereto); and, except as
     described in the Prospectus (and any amendment or supplement thereto), none
     of such permits contains any restriction that is materially burdensome to
     the Fund.

          (p) The Fund maintains and will maintain a system of internal
     accounting controls sufficient to provide reasonable assurances that (i)
     transactions are executed in accordance with management's general or
     specific authorization and with the investment policies and restrictions of
     the Fund and the applicable requirements of the 1940 Act, the 1940 Act
     Rules and Regulations and the Internal Revenue Code of 1986, as amended;
     (ii) transactions are recorded as necessary to permit preparation of
     financial statements in conformity with generally accepted accounting
     principles, to calculate net asset value, to maintain accountability for
     assets and to maintain material compliance with the books and records
     requirements under the 1940 Act and the 1940 Act Rules and Regulations;
     (iii) access to assets is permitted only in accordance with management's
     general or specific authorization; and (iv) the recorded account for assets
     is compared with existing assets at reasonable intervals and appropriate
     action is taken with respect to any differences.

          (q) The conduct by the Fund of its business (as described in the
     Prospectus) does not require it to be the owner, possessor or licensee of
     any patents, patent licenses, trademarks, service marks or trade names
     which it does not own, possess or license.

          (r) Except as stated in this Agreement and in the Prospectus (and any
     amendment or supplement thereto), the Fund has not taken and will not take,
     directly or indirectly, any action designed to or which should reasonably
     be expected to cause or result in or which will constitute stabilization or
     manipulation of the price of the Common Shares in violation of federal
     securities laws and the Fund is not aware of any such action taken or to be
     taken by any affiliates of the Fund.

          (s) The Fund is duly registered under the 1940 Act as a closed-end
     management investment company and the 1940 Act Notification has been duly
     filed with the

                                       12

<PAGE>

     Commission and, at the time of filing thereof and at the time of filing any
     amendment or supplement thereto, conformed in all material respects with
     all applicable provisions of the 1940 Act and the Rules and Regulations.
     The Fund has not received any notice from the Commission pursuant to
     Section 8(e) of the 1940 Act with respect to the 1940 Act Notification or
     the Registration Statement (or any amendment or supplement to either of
     them).

          (t) All advertising, sales literature or other promotional material
     (including "prospectus wrappers" and "broker kits"), whether in printed or
     electronic form, authorized in writing by or prepared by the Fund or the
     Manager for use in connection with the offering and sale of the Shares
     (collectively, "sales material") complied and comply in all material
     respects with the applicable requirements of the 1933 Act, the 1933 Act
     Rules and Regulations and the rules and interpretations of the NASD and if
     required to be filed with the NASD under the NASD's conduct rules were so
     filed. No sales material contained or contains an untrue statement of a
     material fact or omitted or omits to state a material fact required to be
     stated therein or necessary to make the statements therein, in light of the
     circumstances under which they were made, not misleading.

          (u) This Agreement and each of the Fund Agreements complies in all
     material respects with all applicable provisions of the 1940 Act, the 1940
     Act Rules and Regulations, the Investment Advisers Act of 1940, as amended
     (the "Advisers Act") and the rules and regulations adopted by the
     Commission under the Advisers Act (the "Advisers Act Rules and
     Regulations").

          (v) No holder of any security of the Fund has any right to require
     registration of Common Shares or any other security of the Fund because of
     the filing of the registration statement or consummation of the
     transactions contemplated by this Agreement.

          (w) The Shares have been duly approved for listing upon notice of
     issuance on the AMEX and the Fund's registration statement on Form 8-A,
     under the 1934 Act, has become effective.

          (x) The Fund intends to direct the investment of the proceeds of the
     offering of the Shares in such a manner as to comply with the requirements
     of Subchapter M of the Internal Revenue Code of 1986, as amended.

     7. Representations and Warranties of the Manager. The Manager represents
        ---------------------------------------------
and warrants to each Underwriter as follows:

          (a) The Manager is a corporation duly organized and validly existing
     in good standing under the laws of the State of Delaware, with full
     corporate power and authority to own, lease and operate its properties and
     to conduct its business as described in the Registration Statement and the
     Prospectus (and any amendment or supplement to either of them) and is duly
     registered and qualified to conduct business and is in good standing in
     each jurisdiction or place where the nature of its properties or conduct of
     its business requires such registration or qualification, except where the
     failure so to register or to

                                       13

<PAGE>

     qualify would not have a material, adverse effect on the condition
     (financial or other), business, properties, net assets or results of
     operations of the Manager.

          (b) The Manager is duly registered as an investment adviser under the
     Advisers Act and is not prohibited by the Advisers Act, the 1940 Act, the
     Advisers Act Rules and Regulations or the 1940 Act Rules and Regulations
     from acting under the Management Agreement for the Fund as contemplated by
     the Registration Statement and the Prospectus (or any amendment or
     supplement thereto).

          (c) The Manager has full power and authority to enter into this
     Agreement and the Management Agreement, the execution and delivery of, and
     the performance by the Manager of its obligations under, this Agreement and
     the Management Agreement have been duly and validly authorized by the
     Manager and this Agreement and the Management Agreement have been duly
     executed and delivered by the Manager and constitute the valid and legally
     binding agreements of the Manager, enforceable against the Manager in
     accordance with their terms, except as rights to indemnity and contribution
     hereunder may be limited by federal or state securities laws and subject to
     the qualification that the enforceability of the Manager's obligations
     hereunder and thereunder may be limited by bankruptcy, insolvency,
     reorganization, moratorium and other laws relating to or affecting
     creditors' rights generally and by general equitable principles.

          (d) The Manager has the financial resources available to it necessary
     for the performance of its services and obligations as contemplated in the
     Registration Statement, the Prospectus (or any amendment or supplement
     thereto) and under this Agreement and the Management Agreement.

          (e) The description of the Manager and its business, and the
     statements attributable to the Manager, in the Registration Statement and
     the Prospectus (and any amendment or supplement thereto) complied and
     comply in all material respects with the provisions of the 1933 Act, the
     1940 Act, the Advisers Act, the Rules and Regulations and the Advisers Act
     Rules and Regulations and did not and will not contain an untrue statement
     of a material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein (in the case of a
     prospectus, in light of the circumstances under which they were made) not
     misleading.

          (f) There are no legal or governmental proceedings pending or, to the
     knowledge of the Manager, threatened against the Manager or to which any of
     its properties is subject, that are required to be described in the
     Registration Statement or the Prospectus (or any amendment or supplement to
     either of them) but are not described as required or that reasonably should
     be expected to result in any material, adverse change in the condition
     (financial or other), business, properties, net assets or results of
     operations of the Manager or that reasonably should be expected to have a
     material, adverse effect on the ability of the Manager to fulfill its
     obligations hereunder or under the Management Agreement.

                                       14

<PAGE>

          (g) Since the date as of which information is given in the
     Registration Statement and the Prospectus (and any amendment or supplement
     to either of them), except as otherwise stated therein, (A) there has been
     no material, adverse change in the condition (financial or other),
     business, properties, net assets or results of operations or business
     prospects of the Manager, whether or not arising from the ordinary course
     of business and (B) there have been no transactions entered into by the
     Manager which are material to the Manager other than those in the ordinary
     course of its business as described in the Prospectus.

          (h) The Manager has such licenses, permits and authorizations of
     governmental or regulatory authorities ("permits") as are necessary to own
     its property and to conduct its business in the manner described in the
     Prospectus; the Manager has fulfilled and performed all its material
     obligations with respect to such permits and no event has occurred which
     allows, or after notice or lapse of time would allow, revocation or
     termination thereof or results in any other material impairment of the
     rights of the Manager under any such permit.

          (i) This Agreement and the Management Agreement comply in all material
     respects with all applicable provisions of the 1940 Act, the 1940 Act Rules
     and Regulations, the Advisers Act and the Advisers Act Rules and
     Regulations.

          (j) Neither the execution, delivery or performance of this Agreement
     or the Management Agreement by the Manager, nor the consummation by the
     Manager of the transactions contemplated hereby or thereby (A) requires any
     consent, approval, authorization or other order of or registration or
     filing with the Commission, the NASD, any state securities commission, any
     national securities exchange, any arbitrator, any court or any other
     governmental, regulatory, self-regulatory or administrative agency or any
     official (except compliance with the securities or Blue Sky laws of various
     jurisdictions which have been or will be effected in accordance with this
     Agreement and except for compliance with the filing requirements of the
     NASD Division of Corporate Finance) or conflicts or will conflict with or
     constitutes or will constitute a breach of or a default under, the
     Certificate of Incorporation or By-Laws of the Manager or (B) conflicts or
     will conflict with or constitutes or will constitute a breach of or a
     default under, any material agreement, indenture, lease or other instrument
     to which the Manager is a party or by which it or any of its properties may
     be bound or materially violates or will materially violate any material
     statute, law, regulation or filing or judgment, injunction, order or decree
     applicable to the Manager or any of its properties or will result in the
     creation or imposition of any material lien, charge or encumbrance upon any
     property or assets of the Manager pursuant to the terms of any agreement or
     instrument to which it is a party or by which it may be bound or to which
     any of the property or assets of the Manager is subject.

          (k) Except as stated in this Agreement and in the Prospectus (and in
     any amendment or supplement thereto), the Manager has not taken and will
     not take, directly or indirectly, any action designed to or which should
     reasonably be expected to cause or

                                       15

<PAGE>

     result in or which will constitute, stabilization or manipulation of the
     price of the Common Shares in violation of federal securities laws and the
     Manager is not aware of any such action taken or to be taken by any
     affiliates of the Manager.

          (l) In the event that the Fund or the Manager makes available any
     promotional materials intended for use only by qualified broker-dealers and
     registered representatives thereof by means of an Internet web site or
     similar electronic means, the Manager will install and maintain
     pre-qualification and password-protection or similar procedures which are
     reasonably designed to effectively prohibit access to such promotional
     materials by persons other than qualified broker-dealers and registered
     representatives thereof.

     8. Indemnification and Contribution.
        --------------------------------

          (a) The Fund and the Manager, jointly and severally, agree to
     indemnify and hold harmless each of you and each other Underwriter and each
     person, if any, who controls any Underwriter within the meaning of Section
     15 of the 1933 Act or Section 20 of the 1934 Act, from and against any and
     all losses, claims, damages, liabilities and expenses, joint or several
     (including reasonable costs of investigation) arising out of or based upon
     any untrue statement or alleged untrue statement of a material fact
     contained in the Registration Statement, the Prospectus, any Prepricing
     Prospectus, any sales material (or any amendment or supplement to any of
     the foregoing) or arising out of or based upon any omission or alleged
     omission to state therein a material fact required to be stated therein or
     necessary to make the statements therein (in the case of a prospectus, in
     light of the circumstances under which they were made) not misleading,
     except insofar as such losses, claims, damages, liabilities or expenses
     arise out of or are based upon any untrue statement or omission or alleged
     untrue statement or omission which has been made therein or omitted
     therefrom in reliance upon and in conformity with the information relating
     to such Underwriters furnished in writing to the Fund by or on behalf of
     any Underwriter through you expressly for use in connection therewith;
     provided, however, that the foregoing indemnity with respect to the
     Registration Statement, the Prospectus or any Prepricing Prospectuses (or
     any amendment or supplement to any of the foregoing) shall not inure to the
     benefit of any Underwriter from whom the person asserting any loss, claim,
     damage, liability or expense purchased Shares, if it is shown that a copy
     of the Prospectus, as then amended or supplemented, which would have cured
     any defect giving rise to such loss, claim, damage, liability or expense
     was not sent or delivered to such person by or on behalf of such
     Underwriter, if required by law to be so delivered, at or prior to the
     confirmation of the sale of such Shares to such person and such Prospectus,
     amendments and supplements had been provided by the Fund to the
     Underwriters in the requisite quantity and on a timely basis to permit
     proper delivery. The foregoing indemnity agreement shall be in addition to
     any liability which the Fund or the Manager may otherwise have.

          (b) If any action, suit or proceeding shall be brought against any
     Underwriter or any person controlling any Underwriter in respect of which
     indemnity may be sought

                                       16

<PAGE>

     against the Fund or the Manager, such Underwriter or such controlling
     person shall promptly notify the Fund or the Manager and the Fund or the
     Manager shall assume the defense thereof, including the employment of
     counsel and the payment of all fees and expenses. Such Underwriter or any
     such controlling person shall have the right to employ separate counsel in
     any such action, suit or proceeding and to participate in the defense
     thereof, but the fees and expenses of such counsel shall be at the expense
     of such Underwriter or controlling person unless (i) the Fund or the
     Manager have agreed in writing to pay such fees and expenses, (ii) the Fund
     and the Manager have failed within a reasonable time to assume the defense
     and employ counsel or (iii) the named parties to any such action, suit or
     proceeding (including any impleaded parties) include both such Underwriter
     or such controlling person and the Fund or the Manager and such Underwriter
     or such controlling person shall have been advised by its counsel that
     representation of such indemnified party and the Fund or the Manager by the
     same counsel would be inappropriate under applicable standards of
     professional conduct (whether or not such representation by the same
     counsel has been proposed) due to actual or potential differing interests
     between them (in which case the Fund and the Manager shall not have the
     right to assume the defense of such action, suit or proceeding on behalf of
     such Underwriter or such controlling person). It is understood, however,
     that the Fund and the Manager shall, in connection with any one such
     action, suit or proceeding or separate but substantially similar or related
     actions, suits or proceedings in the same jurisdiction arising out of the
     same general allegations or circumstances be liable for the reasonable fees
     and expenses of only one separate firm of attorneys (in addition to any
     local counsel if there is any action, suit or proceeding in more than one
     jurisdiction) at any time for all such Underwriters and controlling persons
     not having actual or potential differing interests with you or among
     themselves, which firm shall be designated in writing by Salomon Smith
     Barney Inc. and that, subject to the requirements of 1940 Act Release No.
     11330, all such fees and expenses shall be reimbursed promptly as they are
     incurred. The Fund and the Manager shall not be liable for any settlement
     of any such action, suit or proceeding effected without the written consent
     of the Fund or the Manager, but if settled with such written consent or if
     there be a final judgment for the plaintiff in any such action, suit or
     proceeding, the Fund and the Manager agree to indemnify and hold harmless
     any Underwriter, to the extent provided in the preceding paragraph, and any
     such controlling person from and against any loss, liability, damage or
     expense by reason by such settlement or judgment.

          (c) Each Underwriter agrees, severally and not jointly, to indemnify
     and hold harmless the Fund and the Manager, their trustees, directors, any
     officers of the Fund who sign the Registration Statement and any person who
     controls the Fund or the Manager within the meaning of Section 15 of the
     1933 Act or Section 20 of the 1934 Act, to the same extent as the foregoing
     indemnity from the Fund and the Manager to each Underwriter, but only with
     respect to information relating to such Underwriter furnished in writing by
     or on behalf of such Underwriter through you expressly for use in the
     Registration Statement or the Prospectus (or any amendment or supplement to
     either of them). If any action, suit or proceeding shall be brought against
     the Fund or the Manager, any of their trustees, directors, any such officer
     or any such controlling person, based on

                                       17

<PAGE>

     the Registration Statement or the Prospectus (or any amendment or
     supplement to either of them) and in respect of which indemnity may be
     sought against any Underwriter pursuant to this paragraph (c), such
     Underwriter shall have the rights and duties given to the Fund by paragraph
     (b) above (except that if the Fund or the Manager shall have assumed the
     defense thereof such Underwriter shall not be required to do so, but may
     employ separate counsel therein and participate in the defense thereof, but
     the fees and expenses of such counsel shall be at such Underwriter's
     expense) and the Fund and the Manager, their trustees, directors, any such
     officer and any such controlling person shall have the rights and duties
     given to the Underwriters by paragraph (b) above. The foregoing indemnity
     agreement shall be in addition to any liability which the Underwriters may
     otherwise have.

          (d) If the indemnification provided for in this Section 8 is
     unavailable to an indemnified party under paragraphs (a) or (c) hereof in
     respect of any losses, claims, damages, liabilities or expenses referred to
     therein, then an indemnifying party, in lieu of indemnifying such
     indemnified party, shall contribute to the amount paid or payable by such
     indemnified party as a result of such losses, claims, damages, liabilities
     or expenses (i) in such proportion as is appropriate to reflect the
     relative benefits received by the Fund and the Manager on the one hand
     (treated jointly for this purpose as one person) and the Underwriters on
     the other hand from the offering of the Shares or (ii) if the allocation
     provided by clause (i) above is not permitted by applicable law, in such
     proportion as is appropriate to reflect not only the relative benefits
     referred to in clause (i) above but also the relative fault of the Fund and
     the Manager on the one hand (treated jointly for this purpose as one
     person) and of the Underwriters on the other hand in connection with the
     statements or omissions which resulted in such losses, claims, damages,
     liabilities or expenses, as well as any other relevant equitable
     considerations. The relative benefits received by the Fund and the Manager
     on the one hand (treated jointly for this purpose as one person) and the
     Underwriters on the other hand shall be deemed to be in the same proportion
     as the total net proceeds from the offering (before deducting expenses)
     received by the Fund as set forth in the table on the cover page of the
     Prospectus bear to the total payments received by the Underwriters with
     respect to the Firm Shares as set forth in the table on the cover page of
     the Prospectus. The relative fault of the Fund and the Manager on the one
     hand (treated jointly for this purpose as one person) and of the
     Underwriters on the other hand shall be determined by reference to, among
     other things, whether the untrue or alleged untrue statement of a material
     fact or the omission or alleged omission to state a material fact relates
     to information supplied by the Fund and the Manager on the one hand
     (treated jointly for this purpose as one person) or by the Underwriters on
     the other hand and the parties' relative intent, knowledge, access to
     information and opportunity to correct or prevent such statement or
     omission.

          (e) The Fund, the Manager and the Underwriters agree that it would not
     be just and equitable if contribution pursuant to this Section 8 were
     determined by pro rata allocation (even if the Underwriters were treated as
     one entity for such purpose) or by any other method of allocation that does
     not take account of the equitable considerations referred to in paragraph
     (d) above. The amount paid or payable by an indemnified party as

                                       18

<PAGE>

     a result of the losses, claims, damages, liabilities and expenses referred
     to in paragraph (d) above shall be deemed to include, subject to the
     limitations set forth above, any legal or other expenses reasonably
     incurred by such indemnified party in connection with defending any such
     action, suit or proceeding. Notwithstanding the provisions of this Section
     8, no Underwriter shall be required to contribute any amount in excess of
     the amount by which the total price of the Shares underwritten by it and
     distributed to the public exceeds the amount of any damages which such
     Underwriter has otherwise been required to pay by reason of such untrue or
     alleged untrue statement or omission or alleged omission. No person guilty
     of fraudulent misrepresentation (within the meaning of Section 11(f) of the
     1933 Act) shall be entitled to contribution from any person who was not
     guilty of such fraudulent misrepresentation. The Underwriters' obligations
     to contribute pursuant to this Section 8 are several in proportion to the
     respective number of Firm Shares set forth opposite their names in Schedule
     I (or such numbers of Firm Shares increased as set forth in Section 10
     hereof) and not joint.

          (f) No indemnifying party shall, without the prior written consent of
     the indemnified party, effect any settlement of any pending or threatened
     action, suit or proceeding in respect of which any indemnified party is or
     could have been a party and indemnity could have been sought hereunder by
     such indemnified party, unless such settlement includes an unconditional
     release of such indemnified party from all liability from claimants on
     claims that are the subject matter of such action, suit or proceeding.

          (g) Any losses, claims, damages, liabilities or expenses for which an
     indemnified party is entitled to indemnification or contribution under this
     Section 8 shall be paid by the indemnifying party to the indemnified party
     as such losses, claims, damages, liabilities or expenses are incurred. The
     indemnity and contribution agreements contained in this Section 8 and the
     representations and warranties of the Fund and the Manager set forth in
     this Agreement shall remain operative and in full force and effect,
     regardless of (i) any investigation made by or on behalf of any Underwriter
     or any person controlling any Underwriter, the Fund, the Manager or their
     trustees, directors or officers or any person controlling the Fund or the
     Manager, (ii) acceptance of any Shares and payment therefor hereunder and
     (iii) any termination of this Agreement. A successor to any Underwriter or
     to the Fund, the Manager or their trustees, directors or officers or any
     person controlling any Underwriter, the Fund or the Manager shall be
     entitled to the benefits of the indemnity, contribution and reimbursement
     agreements contained in this Section 8.

     9. Conditions of Underwriters' Obligations. The several obligations of the
        ---------------------------------------
Underwriters to purchase any Shares hereunder are subject to, in the good faith
judgment of the Underwriters, the accuracy of and compliance with the
representations, warranties and agreements of and by the Fund and the Manager
contained herein on and as of the date hereof, the date on which the
Registration Statement becomes or became effective, the date of the Prospectus
(and of any amendment or supplement thereto), the Closing Date and, with respect
to any Additional Shares, any Option Closing Date; to the accuracy and
completeness of all statements made by the Fund,

                                       19

<PAGE>

the Manager or any of their officers in any certificate delivered to the
Representatives or their counsel pursuant to this Agreement and to the following
conditions:

          (a) If, at the time this Agreement is executed and delivered, it is
     necessary for the Registration Statement or a post-effective amendment
     thereto to be declared effective before the offering of the Shares may
     commence, the Registration Statement or such post-effective amendment shall
     have become effective not later than 5:30 p.m., New York City time, on the
     date hereof or at such later date and time as shall be consented to in
     writing by you and all filings, if any, required by Rules 497 and 430A
     under the 1933 Act Rules and Regulations shall have been timely made; no
     order suspending the effectiveness of the Registration Statement shall have
     been issued and no proceeding for that purpose shall have been instituted
     or, to the knowledge of the Fund, the Manager or any Underwriter,
     threatened by the Commission and any request of the Commission for
     additional information (to be included in the Registration Statement or the
     Prospectus or otherwise) shall have been complied with to your
     satisfaction.

          (b) You shall have received on the Closing Date an opinion of Bell,
     Boyd & Lloyd LLC, special counsel for the Fund and Manager, dated the
     Closing Date and addressed to you, as Representatives of the several
     Underwriters, to the effect that:

              (i)   The Fund is a business trust duly established, validly
          existing and in good standing under the laws of The Commonwealth of
          Massachusetts with full power and authority to own, lease and operate
          its properties and to conduct its business as described in the
          Registration Statement and the Prospectus (and any amendment or
          supplement thereto through the date of the opinion) and is duly
          registered and qualified to conduct its business and is in good
          standing in each jurisdiction where the nature of its properties or
          the conduct of its business requires such registration or
          qualification, except where the failure so to register or to qualify
          does not have a material, adverse effect on the condition (financial
          or other), business, properties, net assets or results of operations
          of the Fund;

              (ii)  The authorized and outstanding capital stock of the Fund is
          as set forth in the Registration Statement and Prospectus (or any
          amendment or supplement thereto through the date of the opinion); and
          the description of the authorized capital stock of the Fund contained
          in the Prospectus (or any amendment or supplement thereto through the
          date of the opinion) under the caption "Description of Shares"
          conforms in all material respects as to legal matters to the terms
          thereof contained in the Fund's Declaration of Trust;

              (iii) All of the shares of capital stock of the Fund outstanding
          prior to the issuance of the Shares have been duly authorized and
          validly issued and are fully paid and nonassessable, except that, as
          described in the Prospectus under the heading, "Certain Provisions in
          the Declaration of Trust," shareholders of the Fund may under certain
          circumstances be held personally liable for its obligations;

                                       20

<PAGE>

              (iv)   The Shares have been duly authorized and, when issued and
          delivered to the Underwriters against payment therefor in accordance
          with the terms hereof, will be validly issued, fully paid and
          nonassessable and not subject to any preemptive rights that entitle or
          will entitle any person to acquire any Shares upon the issuance
          thereof by the Fund, except that, as described in the Prospectus under
          the heading, "Certain Provisions in the Declaration of Trust,"
          shareholders of the Fund may under certain circumstances be held
          personally liable for its obligations;

              (v)    The form of certificate for the Shares is in due and proper
          form and complies with the requirements of all applicable laws and the
          AMEX;

              (vi)   The Fund has the power and authority to enter into this
          Agreement and the Fund Agreements and to issue, sell and deliver the
          Shares to the Underwriters as provided herein and this Agreement and
          each of the Fund Agreements have been duly authorized, executed and
          delivered by the Fund and assuming due authorization, execution and
          delivery by the other parties thereto and that the performance of the
          Underwriting Agreement and the Fund Agreements by the other parties
          thereto will not violate law, agreements to which such other parties
          or their properties are subject or orders applicable to such other
          parties, constitute the valid, legal and binding agreements of the
          Fund, enforceable against the Fund in accordance with their terms,
          except as enforcement of rights to indemnity hereunder may be limited
          by Federal or state securities laws or principles of public policy and
          subject to the qualification that the enforceability of the Fund's
          obligations hereunder and thereunder may be limited by bankruptcy,
          insolvency, reorganization, moratorium and other laws relating to or
          affecting creditors' rights generally and by general equitable
          principles, whether enforcement is considered in a proceeding in
          equity or at law;

              (vii)  This Agreement constitutes a valid, legal and binding
          agreement of the Manager, enforceable against the Manager in
          accordance with its terms, except as enforcement of rights to
          indemnity hereunder may be limited by Federal or state securities laws
          or principles of public policy and subject to the qualification that
          the enforceability of the Manager's obligations hereunder may be
          limited by bankruptcy, insolvency, reorganization, moratorium and
          other laws relating to or affecting creditors' rights generally and by
          general equitable principles, whether enforcement is considered in a
          proceeding in equity or at law;

              (viii) The Fund Agreements comply in all material respects with
          all applicable provisions of the 1933 Act, the 1940 Act, the Advisers
          Act, the Rules and Regulations and the Advisers Act Rules and
          Regulations;

              (ix)   The Fund is not in violation of its Declaration of Trust or
          By-Laws or to the best knowledge of such counsel after reasonable
          inquiry, is not in material default in the performance of any material
          obligation, agreement or condition contained in any bond, debenture,
          note or other evidence of

                                       21

<PAGE>

          indebtedness, except as may be disclosed in the Prospectus (and any
          amendment or supplement thereto);

              (x)   No consent, approval, authorization or order of or
          registration or filing with the Commission, the NASD, any state
          securities commission, any national securities exchange, any
          arbitrator, any court or any other governmental body, agency or
          regulatory, self-regulatory or administrative agency or any official
          is required on the part of the Fund (except as have been obtained
          under the 1933 Act and the 1934 Act or such as may be required under
          state securities or Blue Sky laws governing the purchase and
          distribution of the Shares) for the valid issuance and sale of the
          Shares to the Underwriters as contemplated by this Agreement,
          performance of the Fund Agreements or this Agreement by the Fund, the
          consummation by the Fund of the transactions contemplated thereby or
          hereby or the adoption of the Fund's Dividend Reinvestment Plan;

              (xi)  Neither the offer, sale or delivery of the Shares, the
          execution, delivery or performance of this Agreement or the Fund
          Agreements, compliance by the Fund with the provisions hereof or
          thereof, consummation by the Fund of the transactions contemplated
          hereby or thereby nor the adoption of the Fund's Dividend Reinvestment
          Plan violates the Declaration of Trust or By-Laws of the Fund or any
          material agreement, indenture, lease or other instrument to which the
          Fund is a party or by which it or any of its properties is bound that
          is an exhibit to the Registration Statement or that is known to such
          counsel after reasonable inquiry or, to the best of such counsel's
          knowledge after reasonable inquiry, will result in the creation or
          imposition of any material lien, charge or encumbrance upon any
          property or assets of the Fund, nor, to the best of such counsel's
          knowledge after reasonable inquiry, will any such action result in any
          violation of any existing material law, regulation, ruling (assuming
          compliance with all applicable state securities and Blue Sky laws),
          judgment, injunction, order or decree known to such counsel after
          reasonable inquiry, applicable to the Fund or any of its properties,
          except that, in the published opinion of the Commission, the
          indemnification provisions in this Agreement and the Fund Agreements,
          insofar as they relate to indemnification for liabilities arising
          under the 1933 Act, are against public policy as expressed in the 1933
          Act and therefore unenforceable;

              (xii) The Registration Statement and all post-effective
          amendments, if any, have become effective under the 1933 Act and, to
          the best knowledge of such counsel after reasonable inquiry, no order
          suspending the effectiveness of the Registration Statement has been
          issued and no proceedings for that purpose are pending before or
          contemplated by the Commission; and any filing of the Prospectus and
          any amendments or supplements thereto required pursuant to Rule 497 of
          the 1933 Act Rules and Regulations prior to the date of such opinion
          has been made in accordance with Rule 497;

                                       22

<PAGE>

               (xiii)  The Fund is duly registered with the Commission under the
          1940 Act as a closed-end management investment company and all action
          has been taken by the Fund as required by the 1933 Act and the 1940
          Act and the Rules and Regulations in connection with the issuance and
          sale of the Shares to make the public offering and consummate the sale
          of the Shares as contemplated by this Agreement;

               (xiv)   The statements made in the Registration Statement and the
          Prospectus (and any amendment or supplement to either of them through
          the date of the opinion) under the caption "Tax Matters" have been
          reviewed by such counsel and to the extent they describe or summarize
          tax laws, doctrines or practices of the United States, present a fair
          and accurate description or summary thereof as of the date of the
          opinion;

               (xv)    The statements in the Registration Statement and
          Prospectus (and any amendment or supplement to either of them through
          the date of the opinion), insofar as they are descriptions of
          contracts, agreements or other legal documents or refer to statements
          of law or legal conclusions, are accurate and present fairly the
          information required to be shown;

               (xvi)   The Registration Statement and the Prospectus (and any
          amendment or supplement to either of them through the date of the
          opinion) comply as to form in all material respects with the
          requirements of the 1933 Act, the 1940 Act and the Rules and
          Regulations (except that no opinion need be expressed as to the
          financial statements and the notes thereto and the schedules and other
          financial and statistical data included therein as to which such
          counsel need not express any opinion);

               (xvii)  To the best knowledge of such counsel after reasonable
          inquiry, (A) other than as described or contemplated in the Prospectus
          (or any amendment or supplement thereto through the date of the
          opinion), there are no actions, suits or other legal or governmental
          proceedings pending or expressly threatened against the Fund (through
          the date of the opinion) and (B) there are no material agreements,
          contracts, indentures, leases or other instruments that are required
          to be described in the Registration Statement or the Prospectus (or
          any amendment or supplement to either of them through the date of the
          opinion) or to be filed as an exhibit to the Registration Statement
          that are not described or filed as required, as the case may be;

               (xviii) To the best knowledge of such counsel after reasonable
          inquiry, the Fund is not in violation of any law, ordinance,
          administrative or governmental rule or regulation applicable to the
          Fund or of any decree of the Commission, the NASD, any state
          securities commission, any national securities exchange, any
          arbitrator, any court or any other governmental, regulatory,
          self-regulatory or administrative agency or any official having
          jurisdiction over the Fund; and

                                       23

<PAGE>

               (xix) The Shares are duly authorized for listing, subject to
          official notice of issuance, on the American Stock Exchange and the
          Fund's registration statement on Form 8-A under the 1934 Act is
          effective.

          Such counsel shall also state that although counsel has not
     undertaken, except as otherwise indicated in their opinion, to determine
     independently and does not assume any responsibility for, the accuracy or
     completeness of the statements in the Registration Statement, such counsel
     has participated in the preparation of the Registration Statement and the
     Prospectus, including review and discussion of the contents thereof, and
     nothing has come to the attention of such counsel that has caused it to
     believe that the Registration Statement, at the time the Registration
     Statement became effective or the Prospectus, as of its date and as of the
     Closing Date or the Option Closing Date, as the case may be, contained an
     untrue statement of a material fact or omitted to state a material fact
     required to be stated therein or necessary to make the statements therein
     (in the case of a prospectus, in light of the circumstances under which
     they were made) not misleading or that any amendment or supplement to the
     Prospectus, as of the Closing Date or the Option Closing Date, contained an
     untrue statement of a material fact or omitted to state a material fact
     necessary in order to make the statements therein, in light of the
     circumstances under which they were made, not misleading (it being
     understood that such counsel need express no view with respect to the
     financial statements and the notes thereto and the schedules and other
     financial and statistical data included in the Registration Statement or
     the Prospectus).

          In rendering such opinion, such counsel may limit such opinion to
     matters involving the application of the laws of The Commonwealth of
     Massachusetts and the United States. To the extent they deem proper and to
     the extent specified in such opinion, such counsel may rely, as to matters
     involving the application of laws of The Commonwealth of Massachusetts,
     upon the opinion of Bingham Dana LLP or, as to the other matters, other
     counsel of good standing whom they believe to be reliable and who are
     satisfactory to the Representatives; provided that (X) such reliance is
     expressly authorized by the opinion so relied upon and a copy of each such
     opinion is delivered to the Representatives and is, in form and substance,
     satisfactory to them and their counsel and (Y) Bell, Boyd & Lloyd LLC
     states in their opinion that they believe that they and the Underwriters
     are justified in relying thereon.

          (c) You shall have received on the Closing Date an opinion of Gifford
       R. Zimmerman, Vice President, Assistant Secretary and General Counsel for
       the Manager, dated the Closing Date and addressed to you, as
       Representatives of the several Underwriters, to the effect that:

              (i)    The Manager is a corporation duly incorporated and validly
          existing in good standing under the laws of the State of Delaware with
          full corporate power and authority to own, lease and operate its
          properties and to conduct its business as described in the
          Registration Statement and the Prospectus (and any amendment or
          supplement to either of them) and is duly registered and qualified to
          conduct its business and is in good standing in each jurisdiction or

                                       24

<PAGE>

          place where the nature of its properties or the conduct of its
          business requires such registration or qualification, except where the
          failure so to register or to qualify does not have a material, adverse
          effect on the condition (financial or other), business, properties,
          net assets or results of operations of the Manager;

               (ii)   The Manager is duly registered with the Commission under
          the Advisers Act as an investment adviser and is not prohibited by the
          Advisers Act, the 1940 Act or the Rules and Regulations under such
          acts from acting for the Fund under the Management Agreement as
          contemplated by the Prospectus (and any amendment or supplement
          thereto);

               (iii)  The Manager has corporate power and authority to enter
          into this Agreement and the Management Agreement and this Agreement
          and the Management Agreement have been duly authorized, executed and
          delivered by the Manager and the Management Agreement is a valid,
          legal and binding agreement of the Manager, enforceable against the
          Manager in accordance with its terms, except as enforcement of rights
          to indemnity and contribution hereunder may be limited by Federal or
          state securities laws or principles of public policy and subject to
          the qualification that the enforceability of the Manager's obligations
          hereunder and thereunder may be limited by bankruptcy, insolvency,
          reorganization, moratorium and other laws relating to or affecting
          creditors' rights generally and by general equitable principles;

               (iv)   The Management Agreement complies in all material respects
          with all applicable provisions of the Advisers Act, the 1940 Act and
          the Advisers Act Rules and Regulations and the 1940 Act Rules and
          Regulations;

               (v)    Neither the execution and delivery by the Manager of this
          Agreement or the Management Agreement nor the consummation by the
          Manager of the transactions contemplated hereunder or thereunder
          constitutes or will constitute a breach of or a default under the
          Certificate of Incorporation or By-Laws of the Manager or any material
          agreement, indenture, lease or other instrument to which the Manager
          is a party or by which it or any of its properties is bound that is
          known to such counsel after reasonable inquiry, or will result in the
          creation or imposition of any material lien, charge or encumbrance
          upon any property or assets of the Manager, nor will any such action
          result in any violation of any existing material law, regulation,
          ruling (assuming compliance with all applicable state securities and
          Blue Sky laws), judgment, injunction, order or decree known to such
          counsel after reasonable inquiry, applicable to the Fund or any of its
          properties;

               (vi)   The description of the Manager and its business in the
          Prospectus (and any amendment or supplement thereto) complies in all
          material respects with all requirements of the 1933 Act, the 1940 Act
          and the Rules and Regulations;

                                       25

<PAGE>

               (vii)   To the best knowledge of such counsel after reasonable
          inquiry, other than as described or contemplated in the Prospectus
          (and any amendment or supplement thereto), there are no actions, suits
          or other legal or governmental proceedings pending or threatened
          against the Manager or to which the Manager or any of its property is
          subject which are required to be described in the Registration
          Statement or Prospectus (or any amendment or supplement to either of
          them);

               (viii)  The Manager owns, possesses or has obtained and currently
          maintains all governmental licenses, permits, consents, orders,
          approvals and other authorizations as are necessary for the Manager to
          carry on its business as contemplated in the Prospectus (and any
          amendment or supplement thereto); and

               (ix)    No material consent, approval, authorization or order of
          or registration or filing with any court, regulatory body,
          administrative or other governmental body, agency or official is
          required on the part of the Manager for the performance of this
          Agreement or the Management Agreement by the Manager or for the
          consummation by the Manager of the transactions contemplated hereby or
          thereby.

               Such counsel shall also state that although counsel has not
          undertaken, except as otherwise indicated in its opinion, to determine
          independently and does not assume any responsibility for, the accuracy
          or completeness of the statements in the Registration Statement, such
          counsel has participated in the preparation of the Registration
          Statement and the Prospectus, including review and discussion of the
          contents thereof and nothing has come to its attention that has caused
          it to believe that the Registration Statement at the time it became
          effective or the Prospectus, as of its date and as of the Closing Date
          or the Option Closing Date, as the case may be, contained an untrue
          statement of a material fact or omitted to state a material fact
          required to be stated therein or necessary to make the statements
          therein (in the case of a prospectus, in light of the circumstances
          under which they were made) not misleading or that any amendment or
          supplement to the Prospectus, as of the Closing Date or the Option
          Closing Date, contained an untrue statement of a material fact or
          omitted to state a material fact necessary in order to make the
          statements therein, in light of the circumstances under which they
          were made, not misleading (it being understood that such counsel need
          express no opinion with respect to the financial statements and the
          notes thereto and the schedules and other financial and statistical
          data included in the Registration Statement or the Prospectus).

               In rendering such opinion, counsel may limit such opinion to
          matters involving the application of the laws of the State of
          Illinois, the Delaware General Corporation Law statute and the laws of
          the United States and may rely upon an opinion or opinions, each dated
          the Closing Date, of other counsel retained by the Manager as to laws
          of any jurisdiction other than the United States, the State of

                                       26

<PAGE>

          Illinois and the Delaware General Corporation Law statute, provided
          that (X) each such local counsel is acceptable to the Representatives,
          (Y) such reliance is expressly authorized by each opinion so relied
          upon and a copy of each such opinion is delivered to the
          Representatives and is in form and substance satisfactory to them and
          their counsel and (Z) counsel shall state in his view that he believes
          that he and the Underwriters are justified in relying thereon.

          (d)  You shall have received on the Closing Date a comfort letter,
     substantially in the form heretofore approved by you, from Chapman and
     Cutler, special counsel to the Fund, dated the Closing Date and addressed
     to you, as Representatives of the several Underwriters, with respect to the
     information presented in Appendix B to the statement of additional
     information under the heading "Taxable Equivalent Yield Tables."

          (e)  That you shall have received on the Closing Date, an opinion,
     dated the Closing Date, of Simpson Thacher & Bartlett, counsel for the
     Underwriters, dated the Closing Date and addressed to you, as
     Representatives of the several Underwriters, with respect to such matters
     as the Underwriters may require and the Fund, the Manager and their
     respective counsels shall have furnished to such counsel such documents as
     they may request for the purpose of enabling them to pass upon such
     matters.

          (f)  That you shall have received letters addressed to you, as
     Representatives of the several Underwriters, and dated the date hereof and
     the Closing Date from Ernst & Young LLP, independent certified public
     accountants, substantially in the forms heretofore approved by you.

          (g)  (i) No order suspending the effectiveness of the Registration
     Statement or prohibiting or suspending the use of the Prospectus (or any
     amendment or supplement thereto) or any Prepricing Prospectus or any sales
     material shall have been issued and no proceedings for such purpose or for
     the purpose of commencing an enforcement action against the Fund, the
     Manager or, with respect to the transactions contemplated by the Prospectus
     (or any amendment or supplement thereto) and this Agreement, any
     Underwriter, may be pending before or, to the knowledge of the Fund, the
     Manager or any Underwriter or in the reasonable view of counsel to the
     Underwriters, shall be threatened or contemplated by the Commission at or
     prior to the Closing Date and that any request for additional information
     on the part of the Commission (to be included in the Registration
     Statement, the Prospectus or otherwise) be complied with to the
     satisfaction of the Representatives, (ii) there shall not have been any
     change in the capital stock of the Fund nor any material increase in debt
     of the Fund from that set forth in the Prospectus (and any amendment or
     supplement thereto) and the Fund shall not have sustained any material
     liabilities or obligations, direct or contingent, other than those
     reflected in the Prospectus (and any amendment or supplement thereto);
     (iii) since the date of the Prospectus there shall not have been any
     material, adverse change in the condition (financial or other), business,
     prospects, properties, net assets or results of operations of the Fund or
     the Manager; (iv) the Fund and the Manager must not have sustained any
     material loss or interference with its business from any court or from
     legislative or other governmental action, order or decree or from any other
     occurrence not described in the Registration Statement and the Prospectus
     (and any amendment or supplement to either of them); and (v) all of the
     representations and warranties of the Fund and the Manager contained in
     this Agreement shall be true and correct on and as of the date hereof and
     as of the Closing Date as if made on and as of the Closing Date.

                                       27

<PAGE>

          (h)  Subsequent to the effective date of this Agreement, there shall
     not have occurred (i) any change or any development involving a prospective
     change in or affecting the condition (financial or other), business,
     prospects, properties, net assets or results of operations of the Fund or
     the Manager not contemplated by the Prospectus (and any amendment or
     supplement thereto), which in your opinion, as Representatives of the
     several Underwriters, would materially, adversely affect the market for the
     Shares or (ii)any event or development relating to or involving the Fund,
     the Manager or any officer or trustee or director of the Fund or the
     Manager which makes any statement of a material fact made in the Prospectus
     (or any amendment or supplement thereto) untrue or which, in the opinion of
     the Fund and its counsel or the Underwriters and their counsel, requires
     the making of any addition to or change in the Prospectus (or any amendment
     or supplement thereto) in order to state a material fact required by the
     1933 Act, the 1940 Act, the Rules and Regulations or any other law to be
     stated therein or necessary in order to make the statements therein (in the
     case of a prospectus, in light of the circumstances under which they were
     made) not misleading, if amending or supplementing the Prospectus (or any
     amendment or supplement thereto) to reflect such event or development
     would, in your opinion, as Representatives of the several Underwriters,
     materially, adversely affect the market for the Shares.

          (i)  That neither the Fund nor the Manager shall have failed at or
     prior to the Closing Date to have performed or complied with any of the
     agreements herein contained and required to be performed or complied with
     by them at or prior to the Closing Date.

          (j)  That you shall have received on the Closing Date a certificate,
     dated such date, of the president or any vice president and of the
     controller or treasurer of each of the Fund and the Manager certifying that
     (i) the signers have carefully examined the Registration Statement, the
     Prospectus (and any amendments or supplements to either of them) and this
     Agreement, (ii) the representations and warranties of the Fund (with
     respect to the certificates from such Fund officers) and the
     representations of the Manager (with respect to the certificates from such
     officers of the Manager) in this Agreement are true and correct on and as
     of the date of the certificate as if made on such date, (iii) since the
     date of the Prospectus (and any amendment or supplement thereto) there has
     not been any material, adverse change in the condition (financial or
     other), business, prospects (other than as a result of a change in the
     financial markets generally), properties, net assets or results of
     operations of the Fund (with respect to the certificates from such Fund
     officers) or the Manager (with respect to the certificates from such
     officers of the Manager), (iv) to the knowledge of such officers after
     reasonable investigation, no order suspending the effectiveness of the
     Registration Statement or prohibiting the sale of any of the Shares or
     having a material, adverse effect on the Fund (with respect to the
     certificates from such Fund officers) or the Manager (with respect to the
     certificates from such officers of the Manager) has been issued and no
     proceedings for any such purpose are pending before or threatened by the
     Commission or any court or other regulatory body, the NASD, any state
     securities commission, any national securities exchange, any arbitrator,
     any court or any other governmental, regulatory, self-regulatory or
     administrative agency or any official, (v) each of the Fund (with respect
     to certificates

                                       28

<PAGE>

     from such Fund officers) and the Manager (with respect to certificates from
     such officers of the Manager) has performed and complied with all
     agreements that this Agreement requires it to perform by such Closing Date,
     (vi) neither the Fund (with respect to the certificate from such officers
     of the Fund) nor the Manager (with respect to the certificate from such
     officers of the Manager) has sustained any material loss or interference
     with its business from any court or from legislative or other governmental
     action, order or decree or from any other occurrence not described in the
     Registration Statement and the ) Prospectus and any amendment or supplement
     to either of them and (vii) with respect to the certificate from such
     officers of the Fund, there has not been any change in the capital stock of
     the Fund nor any material increase in the debt of the Fund from that set
     forth in the Prospectus (and any amendment or supplement thereto) and the
     Fund has not sustained any material liabilities or obligations, direct or
     contingent, other than those reflected in the Prospectus (and any amendment
     or supplement thereto).

          (k)  That the Fund and the Manager shall have furnished to you such
     further certificates, documents and opinions of counsel as you shall
     reasonably request (including certificates of officers of the Fund and the
     Manager).

          All such opinions, certificates, letters and other documents will be
     in compliance with the provisions hereof only if they are satisfactory in
     form and substance to you and your counsel acting in good faith.

          Any certificate or document signed by any officer of the Fund or the
     Manager and delivered to you, as Representatives of the Underwriters or to
     Underwriters' counsel, shall be deemed a representation and warranty by the
     Fund or the Manager to each Underwriter as to the statements made therein.

          The several obligations of the Underwriters to purchase Additional
     Shares hereunder are subject to (i) the accuracy of and compliance with the
     representations and warranties of the Fund and the Manager contained herein
     on and as of the Option Closing Date as though made on any Option Closing
     Date, (ii) satisfaction on and as of any Option Closing Date of the
     conditions set forth in this Section 9 except that, if any Option Closing
     Date is other than the Closing Date, the certificates, opinions and letters
     referred to in paragraphs (b), (c), (d), (e), (f), (j), (k) and this
     paragraph shall be dated the Option Closing Date in question and the
     opinions and letters called for by paragraphs (b), (c), (d) and (e) shall
     be revised to reflect the sale of Additional Shares and (iii) the absence
     of circumstances on or prior to the Option Closing Date which would permit
     termination of this Agreement pursuant to Section 11 hereof if they existed
     on or prior to the Closing Date.

     10.  Effective Date of Agreement. This Agreement shall become effective:
          ---------------------------
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
Registration Statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the Registration Statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have

                                       29

<PAGE>

become effective, it may be terminated by the Fund by notifying you or by you,
as Representatives of the several Underwriters, by notifying the Fund.

          If any one or more of the Underwriters shall fail or refuse to
purchase Firm Shares which it or they have agreed to purchase hereunder and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate number of the Firm Shares, each non-defaulting Underwriter
shall be obligated, severally, in the proportion which the aggregate number of
Firm Shares set forth opposite its name in Schedule I hereto bears to the
aggregate number of Firm Shares set forth opposite the names of all
non-defaulting Underwriters or in such other proportion as you may specify in
accordance with Section 20 of the Salomon Smith Barney Master Agreement Among
Underwriters, to purchase Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase. If any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares and arrangements satisfactory
to you and the Fund for the purchase of such Firm Shares by one or more
non-defaulting Underwriters or other party or parties approved by you and the
Fund are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Fund. In any such case which does not result in termination of this Agreement,
either you or the Fund shall have the right to postpone the Closing Date, but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any such default
of any such Underwriter under this Agreement. The term "Underwriter" as used in
this Agreement includes, for all purposes of this Agreement, any party not
listed in Schedule I hereto who, with your approval and the approval of the
Fund, purchases Firm Shares which a defaulting Underwriter agreed, but failed or
refused, to purchase.

     Any notice under this Section 10 may be made by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.

     11.  Termination of Agreement. This Agreement shall be subject to
          ------------------------
termination in your absolute discretion, without liability on the part of any
Underwriter to the Fund or the Manager by notice to the Fund or the Manager if
prior to the Closing Date or any Option Closing Date (if different from the
Closing Date and then only as to the Additional Shares), as the case may be, (i)
trading in the Shares or securities generally on the NYSE, AMEX, Nasdaq National
Market or the Nasdaq Stock Market shall have been suspended or materially
limited, (ii) additional material governmental restrictions not in force on the
date of this Agreement have been imposed upon trading in securities generally or
a general moratorium on commercial banking activities in New York shall have
been declared by either Federal or state authorities or (iii) any outbreak or
material escalation of hostilities or other international or domestic calamity,
crisis or change in political, financial or economic conditions, occurs, the
effect of which is such as to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the offering
price to the public set forth on the cover page of the Prospectus or to enforce

                                       30

<PAGE>

contracts for the resale of the Shares by the Underwriters. Notice of such
termination may be given to the Fund or the Manager by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.

     12.  Expenses. The Fund agrees to pay the following costs and expenses and
          --------
all other costs and expenses incident to the performance by the Fund of its
obligations hereunder: (a) the preparation, printing or reproduction, filing
(including, without limitation, the filing fees prescribed by the 1933 Act, the
1940 Act and the Rules and Regulations) and distribution of the Registration
Statement (including exhibits thereto), the Prospectus, each Prepricing
Prospectus and the 1940 Act Notification and all amendments or supplements to
any of them, (b) the printing (or reproduction) and delivery (including postage,
air freight charges and charges for counting and packaging) of such copies of
the Registration Statement, the Prospectus, each Prepricing Prospectus, any
sales material and all amendments or supplements to any of them as may be
reasonably requested for use in connection with the offering and sale of the
Shares, (c) the preparation, printing, authentication, issuance and delivery of
certificates for the Shares, including any stamp taxes and transfer agent and
registrar fees payable in connection with the original issuance and sale of such
Shares, (d) the registrations or qualifications of the Shares for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Underwriters relating to the preparation, printing or
reproduction and delivery of the preliminary and supplemental Blue Sky Memoranda
and such registration and qualification), (e) the fees and expenses of the
Fund's independent accountants, counsel for the Fund and of the transfer agent,
(f) the expenses of delivery to the Underwriters and dealers (including postage,
air freight and the cost of counting and packaging) of copies of the Prospectus,
the Prepricing Prospectus, any sales material and all amendments or supplements
to the Prospectus as may be requested for use in connection with the offering
and sale of the Shares, (g) the printing (or reproduction) and delivery of this
Agreement, any dealer agreements, the preliminary and supplemental Blue Sky
Memoranda and all other company-authorized agreements or other documents printed
(or reproduced) and delivered in connection with the offering of the Shares, (h)
the filing fees and the fees and expenses of counsel for the Underwriters in
connection with any filings required to be made with the NASD and incurred with
respect to the review of the offering of the Shares by the NASD, (i) the
registration of the Shares under the 1934 Act and the listing of the Shares on
the AMEX, and (j) an amount equal to (A) $20,000 plus (B) $.0025 per Share for
each Share in excess of 2,000,000 sold pursuant to this Agreement, payable no
later than 45 days from the date of this Agreement to the Underwriters in
partial reimbursement of their expenses (but not including reimbursement for the
cost of one tombstone advertisement in a newspaper that is one-quarter of a
newspaper page or less in size) in connection with the offering.

     Notwithstanding the foregoing, in the event that the sale of the Firm
Shares is not consummated pursuant to Section 2 hereof, the Manager will pay the
costs and expenses of the Fund set forth above in this Section 12 (a) through
(i), and reimbursements of Underwriter expenses in connection with the offering
shall be made in accordance with Section 5(k) hereof.

     13.  Information Furnished by the Underwriters. The names of the
          -----------------------------------------
underwriters and numbers of Shares listed opposite such names in the first
paragraph under the caption

                                       31

<PAGE>

"Underwriting" in the Prospectus, as well as, under the same caption, the last
sentence of the second paragraph, the first sentence of the tenth paragraph, the
first sentence of the twelfth paragraph, the seventeenth paragraph and the
eighteenth paragraph constitute the only information relating to any Underwriter
furnished to the Fund in writing by or on behalf of the Underwriters through you
as such information is referred to herein, expressly for use in the Prospectus.

     14.  Miscellaneous. Except as otherwise provided in Sections 5, 10 and 11
          -------------
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (a) if to the Fund or the Manager, c/o Nuveen
Investments at 333 West Wacker Drive, Chicago, Illinois 60606, Attention: Alan
G. Berkshire or (b) if to you, as Representatives of the Underwriters, at the
office of Salomon Smith Barney Inc. at 388 Greenwich Street, New York, New York
10013, Attention: Manager, Investment Banking Division.

     This Agreement has been and is made solely for the benefit of the several
Underwriters, the Fund, the Manager, their trustees, directors and officers and
the other controlling persons referred to in Section 8 hereof and their
respective successors and assigns to the extent provided herein and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" or the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Shares in his status as such purchaser.

     A copy of the Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts. This Agreement has been
executed on behalf of the Fund by the vice-president of the Fund in such
capacity and not individually and the obligations of the Fund under this
Agreement are not binding upon such officer, any of the trustees or the
shareholders individually but are binding only upon the assets and property of
the Fund.

     15.  Applicable Law; Counterparts. This Agreement shall be governed by and
          ----------------------------
construed in accordance with the laws of the State of New York.

     This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.

                                       32

<PAGE>

     Please confirm that the foregoing correctly sets forth the agreement among
the Fund and the Manager and the several Underwriters.

                                        Very truly yours,

                                        NUVEEN INSURED DIVIDEND
                                        ADVANTAGE MUNICIPAL FUND

                                        By: ___________________________
                                            Title: Vice President

                                        NUVEEN ADVISORY CORP.



                                        By: _____________________________
                                            Title: Vice President

                                       33

<PAGE>

Confirmed as of the date
first above written on
behalf of themselves and
the other several Underwriters
named in Schedule I hereto.

By:                             SALOMON SMITH BARNEY INC.
                                NUVEEN INVESTMENTS
                                A.G. EDWARDS & SONS, INC.
                                PRUDENTIAL SECURITIES INCORPORATED
                                UBS WARBURG LLC
                                FAHNESTOCK & CO. INC.
                                FIRST UNION SECURITIES, INC.
                                GRUNTAL & CO., L.L.C.
                                JANNEY MONTGOMERY SCOTT LLC
                                LEGG MASON WOOD WALKER, INCORPORATED
                                MCDONALD INVESTMENTS INC., A KEYCORP COMPANY
                                RAYMOND JAMES & ASSOCIATES, INC.
                                RBC DAIN RAUSCHER, INC.
                                SUNTRUST CAPITAL MARKET, INC.
                                WELLS FARGO SECURITIES, LLC


AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS

By:   SALOMON SMITH BARNEY INC.



      By: ___________________________________
          Title:

                                       34

<PAGE>

                                   SCHEDULE I

Name of Underwriters                          Number of Common Shares
- --------------------                          -----------------------






         Total


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.H.2
<SEQUENCE>6
<FILENAME>dex99h2.txt
<DESCRIPTION>FORM OF MASTER SELECTED DEALER AGREEMENT
<TEXT>
<PAGE>


                         NUVEEN EXCHANGE-TRADED FUNDS


                                   --------


                       MASTER SELECTED DEALER AGREEMENT
                       --------------------------------


                                       ________, 2002



Dear Ladies and Gentlemen:

     In connection with public offerings of securities ("Securities") of
registered investment companies sponsored by Nuveen Investments ("Nuveen") which
are underwritten by a group of underwriters ("Underwriters") which are
represented by Nuveen alone or in conjunction with other firms (the
"Representatives"), you (a "Dealer") may be offered from time to time the
opportunity to purchase a portion of such securities, as a principal, at a
discount from the public offering price representing a selling concession or
reallowance granted as consideration for services rendered in the distribution
of such securities, subject to the terms and conditions of this Agreement.

     1.   GENERAL. (a) This Agreement sets forth the general terms, conditions
and representations applicable to any such purchase. These general terms,
conditions and representations may be modified, amended or supplemented in
connection with an offering of Securities by telegram, telex, facsimile
transmission or other written form (electronic or otherwise) of communication of
Nuveen or other Representative of the Underwriters of such offering (any
communication in any such form being herein referred to as a "written
communication") to you in connection with such offering. This Agreement shall
become effective with respect to your participation in an offering of Securities
upon your acceptance of any reservation of any such Securities, as a Dealer.
Such acceptance shall constitute your acceptance of this Agreement as modified,
amended or supplemented by any such written communication.

          (b) As used herein, the term "Agreement" shall mean this Agreement
and, after receipt by you of written notice thereof, any amendment or supplement
hereto, plus any additional or supplementary terms, conditions and
representations contained in the prospectus relating to the offering of
Securities or any other written communication to you from Nuveen or any other
Representative of the Underwriters of any offering of securities. This Agreement
shall

                                       1

<PAGE>

constitute a binding agreement between you and Nuveen, individually, and, in
respect of a public offering of Securities, Nuveen and the other Representatives
of the Underwriters of such offering on whose behalf Nuveen is acting.

          (c)  This Agreement supersedes any prior understanding you have with
Nuveen with respect to the subject matter hereof.

     2.   SALES TO SELECTED DEALERS. For any specific offering, we will advise
you by telegram of the method and terms of offering, the time of the release of
the Securities for sale to the public, the initial offering price, the selling
concession, the portion of the selling concession allowable to certain dealers
(the "reallowance"), the time at which subscription books will be opened, the
amount, if any, of Securities reserved for purchase by Dealers and the period of
reservation. Subscription books may be closed by us at any time in our
discretion without notice, and the right is reserved to reject any subscription
in whole or in part. Notification of allotments against the rejections of
subscriptions will be made as promptly as practicable. In purchasing Securities,
you must rely only on the prospectus, and on no other statements whatsoever,
written or oral.

     3.   OFFERING PROVISIONS. Upon receipt of the telegram or letter referred
to in Section 2 hereof, promptly on the date set forth in such telegram for
release of the Securities for sale to the public, you will reoffer the
Securities purchased by you hereunder, subject to receipt and acceptance of the
Securities by the Underwriters, and upon the other terms, conditions and
representations set forth herein and in the prospectus relating to such
Securities. Securities purchased hereunder are to be offered to the public at
the initial public offering price set forth in the prospectus, except that if a
reallowance is in effect, a reallowance from the public offering price not in
excess of such reallowance may be allowed by you but only to dealers who are
actually engaged in the investment banking or securities business, who execute
the written agreement prescribed by Rule 2740(c) of the Rules of Conduct of the
National Association of Securities Dealers, Inc. ("NASD") and who are members in
good standing of the NASD or are foreign dealers, not eligible for membership in
the NASD, who, in each case, represent to you that they will promptly reoffer
such Securities to the public at the initial public offering price set forth in
the prospectus and will abide by the conditions with respect to foreign brokers
and dealers set forth in the first paragraph of Section 6 hereof.

     If prior to the completion of a distribution of the Securities in an
offering, directly or indirectly in connection with their activities under this
agreement, Nuveen or an Underwriter of the offering purchases on the open market
any Securities purchased by you under this Agreement as part of the offering,
you agree to pay Nuveen or the lead Representative of the Underwriters of the
offering on demand an amount equal to the concession with respect to the
Securities, plus, as applicable, transfer taxes, broker's commission, or
dealer's markups, if any, paid in connection with such transactions.
Alternatively, Nuveen or the Representatives of the Underwriters of the offering
may withhold payment for a period of time of, or determine not to pay, all or
any part of

                                       2

<PAGE>

the concession with respect to the Securities so received. You will advise
Nuveen or any other Representative from time to time at our request, of the
number of Securities purchased by you hereunder remaining unsold and you agree
to sell to us, at our request, for the account of one or more of the
Underwriters, such number of such unsold Securities as we may designate, at the
initial offering price less an amount to be determined by us, not in excess of
the full concession.

     4.   DELIVERY AND PAYMENT. Payment for and delivery of Securities purchased
by you hereunder will be made through the facilities of the Depository Trust
Company, if you are a member, or, if you are not a member, settlement may be
made through a correspondent who is a member pursuant to instructions which you
will send to us prior to such specified date. At the discretion of Nuveen or a
Representative of the Underwriters of the offering, we may require you to pay
the full public offering price for any offering of Securities. If you are called
upon to pay the full public offering price for the Securities purchased by you
the concession will be paid to you, less any amounts charged to your account
pursuant to Section 3 above, after termination of this Agreement.

     5.   TERMINATION. This Agreement shall continue in full force and effect
until terminated by either party by five days' written notice to the other;
provided, that if this Agreement has become effective with respect to any
offering of Securities, this Agreement may not be terminated by you with respect
to such offering. It shall remain in full force and effect as to such offering.
Notwithstanding any distribution and settlement of accounts, you shall be liable
for the proper proportion of any transfer tax or other liability which may be
asserted against the Representatives or any of the Underwriters or Dealers based
upon the claim that the Dealers, or any of them, constitute a partnership, an
association, an unincorporated business or other separate entity.

     6.   POSITION OF SELECTED DEALERS AND UNDERWRITERS. You represent that you
are actually engaged in the investment banking or securities business and are a
member in good standing of the NASD or that you are a foreign dealer, not
eligible for membership in the NASD, which agrees not to offer or sell any
Securities in, or to persons who are nationals or residents of, the United
States of America. In making sales of Securities, if you are such a member, you
agree to comply with all applicable rules of the NASD, including, without
limitation, IM 2110-1 (the NASD's Interpretation with Respect to Free-Riding and
Withholding) and Rules 2740 and 2750 of the NASD's Rules of Conduct, or, if you
are a foreign dealer, you agree to comply with such Interpretation and Rules
2730, 2740 and 2750 of such Rules of Conduct as though you were such a member,
and with Rule 2420 as that Rule applies to a non-member broker or dealer in a
foreign country. You also confirm that you have complied and will comply with
the prospectus delivery requirements of Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended including Rule 15c2-8(b) which requires all
participating dealers to distribute a copy of the preliminary prospectus
relating to the offering of Securities to each person to whom they expect to
confirm a sale of the Securities not less than 48 hours prior to the time they
expect to mail such confirmation. You are not authorized to give any information
or make any representations with

                                       3

<PAGE>

respect to an offering of Securities other than those contained in the
prospectus for the offering, or to act as agent for the issuer, any Underwriter,
Representative or Nuveen.

     Neither Nuveen, individually or as Representative of the Underwriters, nor
any of the Representatives or Underwriters shall be under any liability to you,
except for obligations expressly assumed in this Agreement and any liabilities
under the Securities Act of 1933, as amended. No obligations on the part of
Nuveen will be implied or inferred herefrom. All communications to Nuveen
relating to the subject matter of this Agreement should be addressed to John
Nuveen & Co. Incorporated, 333 W. Wacker Drive, Chicago, Illinois 60606
(Attention: Tom Muntz), and any notices to you shall be deemed to have been duly
given if mailed or telegraphed to you at such address as you shall indicate on
the last page of this Agreement.

     7.   BLUE SKY MATTERS. Neither Nuveen, individually or as a Representative
of the Underwriters, nor any of the Representatives or Underwriters will have
any responsibility with respect to the right of any Dealer to sell Securities in
any jurisdiction, notwithstanding any information we may furnish in that
connection.

     8.   INDEMNIFICATION. You agree to indemnify and hold harmless Nuveen and
each Representative and Underwriter of an offering of Securities and each
person, if any, who controls Nuveen or any such Representative or Underwriter
within the meaning of Section 15 of the Securities Act of 1933, as amended or
Section 20 of the Securities Exchange Act of 1934, as amended, from and against
any and all losses, claims, damages, liabilities and expenses, joint or several
(including reasonable costs of investigation) (any of the foregoing being
hereinafter referred to individually as a "Loss" and collectively, as "Losses")
suffered or incurred by any such indemnified person arising out of or in
connection with such offering for or on account of or arising from or in
connection with (i) any violation of any law, rule or regulation (including any
rule of any self-regulatory organization) or (ii) any breach of any
representation, warranty, covenant or agreement contained in this Agreement. The
foregoing indemnity agreement shall be in addition to any liability which you
may otherwise have.

     9.   PROCEDURES RELATING TO INDEMNIFICATION. (a) An indemnified person
under Section 8 of this Agreement (the "Indemnified Party") shall give written
notice to you of any Loss in respect of which you have a duty to indemnify such
Indemnified Party under Section 8 of this Agreement (a "Claim"), specifying in
reasonable detail the nature of the Loss for which indemnification is sought,
except that any delay or failure so to notify you shall only relieve you of your
obligations hereunder to the extent, if at all, that you are actually prejudiced
by reason of such delay or failure.

          (b)  If a Claim results from any action, suit or proceeding brought or
asserted against an Indemnified Party, you shall assume the defense thereof,
including the employment of

                                       4

<PAGE>

counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses. The Indemnified Party shall have the right to employ separate
counsel in such action, suit or proceeding and participate in such defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party unless (i) you have agreed in writing to pay such fees and
expenses, (ii) you have failed within a reasonable time to assume the defense
and employ counsel or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Indemnified Party
and you and such Indemnified Party shall have been advised by its counsel that
representation of such Indemnified Party and you by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation by the same counsel has been proposed) due to actual or
potential differing interests between you and the Indemnified Party (in which
case you shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Indemnified Party). It is understood, however, that
you shall, in connection with any one action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties not having actual or potential differing interests with you
or among themselves, which firm shall be designated in writing by the
Representatives of the offering and that all such fees and expenses shall be
reimbursed promptly as they are incurred. You shall not be liable for any
settlement of any such action, suit or proceeding effected without your written
consent, but if settled with such written consent or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, you agree to
indemnify and hold harmless any Indemnified Party from and against any loss,
liability, damage or expense by reason by such settlement or judgment.

          (c)  With respect to any Claim not within Paragraph (b) of Section 9
hereof, you shall have 20 days from receipt of notice from the Indemnified Party
of such Claim within which to respond thereto. If you do not respond within such
twenty-day period, you shall be deemed to have accepted responsibility to make
payment and shall have no further right to contest the validity of such Claim.
If you notify the Indemnified Party within such twenty-day period that you
reject such Claim in whole or in part, the Indemnified Party shall be free to
pursue such remedies as may be available to the Indemnified Party under
applicable law.

     10.  SURVIVAL. The representations, warranties, covenants and agreements of
the undersigned contained in this Agreement, including, without limitation, the
indemnity agreements contained in Sections 8 and 9 hereof, shall remain
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of any Representative or Underwriter or any person controlling
any Representative or Underwriter, or their directors or officers, (ii)
acceptance of any Shares and payment therefor and (iii) any termination of this
Agreement.

                                       5

<PAGE>

     11.  This Agreement shall be governed by the laws of the State of New York
or the laws of such other state as indicated in a written communication to you
by Nuveen with respect to any particular securities offering.

     Please confirm your agreement to the foregoing by signing in the space
provided below and returning to us the enclosed counterpart of this Agreement.



                                   NUVEEN INVESTMENTS



                                   By:
                                      ------------------------------
                                          Managing Director


Confirmed as of
                -------------.
                [Date]

- -----------------------------


By:
   --------------------------

Title:
       ----------------------


Address:


- -----------------------------


- -----------------------------


- -----------------------------

                                       6


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.H.3
<SEQUENCE>7
<FILENAME>dex99h3.txt
<DESCRIPTION>FORM OF MASTER AGREEMENT AMONG UNDERWRITERS
<TEXT>
<PAGE>


                      MASTER AGREEMENT AMONG UNDERWRITERS
                      -----------------------------------


                                                                   ______, 2002

Salomon Smith Barney Inc.
1345 Avenue of the Americas
New York, N.Y.  10105

Dear Sirs:

          We understand that from time to time you may act as Representative or
as one of the Representatives of the several underwriters of offerings of
securities of various issuers.  This Agreement shall apply to any offering of
securities handled by your Corporate Syndicate Department in which we elect to
act as an underwriter after receipt of an invitation from your Corporate
Syndicate Department which shall identify the issuer, contain information
regarding certain terms of the securities to be offered and specify the amount
of our proposed participation and the names of the other Representatives, if
any, and that our participation as an underwriter in the offering shall be
subject to the provisions of this Agreement.  Your invitation will include
instructions for our acceptance of such invitation.  At or prior to the time of
an offering, you will advise us, to the extent applicable, as to the expected
offering date, the expected closing date, the initial public offering price, the
interest or dividend rate (or the method by which such rate is to be
determined), the conversion price, the underwriting discount, the management
fee, the selling concession and the reallowance, except that if the public
offering price of the securities is to be determined by a formula based upon the
market price of certain securities (such procedure being hereinafter referred to
as "Formula Pricing"), you shall so advise us and shall specify the maximum
underwriting discount, management fee and selling concession.  Such information
may be conveyed by you in one or more communications (such communications
received by us with respect to the offering are hereinafter collectively
referred to as the "Invitation").  If the Underwriting Agreement (as hereinafter
defined) provides for the granting of an option to purchase additional
securities to cover over-allotments, you will notify us, in the Invitation, of
such option.

          This Agreement, as amended or supplemented by the Invitation, shall
become effective with respect to our participation in an offering of securities
if your Corporate Syndicate Department receives our oral or written acceptance
and does not subsequently receive a written communication revoking our
acceptance prior to the time and date specified in the Invitation (our unrevoked
acceptance after expiration of such time and date being hereinafter referred to
as our "Acceptance").  Our Acceptance will constitute our confirmation that,
except as otherwise stated in such Acceptance, each statement included in the
Master Underwriters' Questionnaire set forth as Exhibit A

<PAGE>

                                                                               2


hereto (or otherwise furnished to us) is correct.  The issuer of the securities
in any offering of securities made pursuant to this Agreement is hereinafter
referred to as the "Issuer".  If the Underwriting Agreement does not provide for
an over-allotment option, the securities to be purchased are hereinafter
referred to as the "Securities"; if the Underwriting Agreement provides for an
over-allotment option, the securities the Underwriters (as hereinafter defined)
are initially obligated to purchase pursuant to the Underwriting Agreement are
hereinafter called the "Firm Securities" and any additional securities which may
be purchased upon exercise of the over-allotment option are hereinafter called
the "Additional Securities", with the Firm Securities and all or any part of the
Additional Securities being hereinafter collectively referred to as the
"Securities".  Any underwriters of Securities under this Agreement, including
the Representatives (as hereinafter defined), are hereinafter collectively
referred to as the "Underwriters".  All references herein to "you" or to the
"Representatives" shall mean Smith Barney, Harris Upham & Co. Incorporated and
the other firms, if any, which are named as Representatives in the Invitation.
The Securities to be offered may, but need not, be registered for a delayed or
continuous offering pursuant to Rule 415 under the Securities Act of 1933 (the
"1933 Act").

          The following provisions of this Agreement shall apply separately to
each individual offering of Securities.  This Agreement may be supplemented or
amended by you by written notice to us and, except for supplements or amendments
set forth in an Invitation relating to a particular offering of Securities, any
such supplement or amendment to this Agreement shall be effective with respect
to any offering of Securities to which this Agreement applies after this
Agreement is so amended or supplemented.

          1.  UNDERWRITING AGREEMENT; AUTHORITY OF REPRESENTATIVES.  We
              ----------------------------------------------------
authorize you to execute and deliver an underwriting or purchase agreement and
any amendment or supplement thereto and any associated Terms Agreement or other
similar agreement (collectively, the "Underwriting Agreement") on our behalf
with the Issuer and/or any selling securityholder with respect to the Securities
in such form as you determine.  We will be bound by all terms of the
Underwriting Agreement as executed.  We understand that changes may be made in
those who are to be Underwriters and in the amount of Securities to be purchased
by them, but the amount of Securities to be purchased by us in accordance with
the terms of this Agreement and the Underwriting Agreement, including the amount
of Additional Securities, if any, which we may become obligated to purchase by
reason of the exercise of any over-allotment option provided in the Underwriting
Agreement, shall not be changed without our consent.

          As Representatives of the Underwriters, you are authorized to take
such action as you deem necessary or advisable to carry out this Agreement, the
Underwriting Agreement, and the

<PAGE>

                                                                               3

purchase, sale and distribution of the Securities, and to agree to any waiver or
modification of any provision of the Underwriting Agreement.  To the extent
applicable, you are also authorized to determine (i) the amount of Additional
Securities, if any, to be purchased by the Underwriters pursuant to any over-
allotment option and (ii) with respect to offerings using Formula Pricing, the
initial public offering price and the price at which the Securities are to be
purchased in accordance with the Underwriting Agreement.  It is understood and
agreed that Smith Barney, Harris Upham & Co. Incorporated may act on behalf of
all Representatives.

          It is understood that, if so specified in the Invitation, arrangements
may be made for the sale of Securities by the Issuer pursuant to delayed
delivery contracts (hereinafter referred to as "Delayed Delivery Contracts").
References herein to delayed delivery and Delayed Delivery Contracts apply only
to offerings to which delayed delivery is applicable.  The term "underwriting
obligation", as used in this Agreement with respect to any Underwriter, shall
refer to the amount of Securities, including any Additional Securities (plus
such additional Securities as may be required by the Underwriting Agreement in
the event of a default by one or more of the Underwriters) which such
Underwriter is obligated to purchase pursuant to the provisions of the
Underwriting Agreement, without regard to any reduction in such obligation as a
result of Delayed Delivery Contracts which may be entered into by the Issuer.

          If the Securities consist in whole or in part of debt obligations
maturing serially, the serial Securities being purchased by each Underwriter
pursuant to the Underwriting Agreement will consist, subject to adjustment as
provided in the Underwriting Agreement, of serial Securities of each maturity in
a principal amount which bears the same proportion to the aggregate principal
amount of the serial Securities of such maturity to be purchased by all the
Underwriters as the principal amount of serial Securities set forth opposite
such Underwriter's name in the Underwriting Agreement bears to the aggregate
principal amount of the serial Securities to be purchased by all the
Underwriters.

          2.  REGISTRATION STATEMENT PROSPECTUS; OFFERING CIRCULAR.  In the case
              ----------------------------------------------------
of an Invitation regarding an offer of Securities registered under the 1933 Act
(a "Registered Offering"), you will furnish to us, to the extent made available
to you by the Issuer, copies of any registration statement or registration
statements relating to the Securities which may be filed with the Securities and
Exchange Commission (the "Commission") pursuant to the 1933 Act and of each
amendment thereto (excluding exhibits but including any documents incorporated
by reference therein).  Such registration statement(s) as amended, and the
prospectus(es) relating to the sale of Securities by the Issuer constituting a
part thereof, including all documents incorporated therein by reference, as

<PAGE>

                                                                               4

from time to time amended or supplemented by the filing of documents pursuant to
the Securities Exchange Act of 1934 (the "1934 Act"), the 1933 Act or otherwise,
are referred to herein as the "Registration Statement" and "Prospectus",
respectively; provided, however, that a supplement to the Prospectus filed with
the Commission pursuant to Rule 424 under the 1933 Act with respect to an
offering of Securities (a "Prospectus Supplement") shall be deemed to have
supplemented the Prospectus only with respect to the offering of Securities to
which it relates.

          With respect to Securities for which no Registration Statement is
filed with the Commission, you will furnish to us, to the extent made available
to you by the Issuer, copies of any offering circular or other offering
materials to be used in connection with the offering of the Securities and of
each amendment thereto (the "Offering Circular").

          3.  PUBLIC OFFERING.  The sale of the Securities to the public shall
              ---------------
commence as soon as you deem advisable.  We will not sell any Securities until
they are released by you for that purpose.  When notified by you that the
Securities are released for sale, we will offer to the public in conformity with
the terms of offering set forth in the Prospectus or Offering Circular, such of
the Securities to be purchased by us ("our Securities") as are not reserved for
our account for sale to Selected Dealers and others pursuant to Section 5.
After the initial public offering, the public offering price and the concession
and discount therefrom may be changed by you by notice to the Underwriters, and
we agree to be bound by any such change.

          If, in accordance with the terms of offering set forth in the
Prospectus or Offering Circular, the offering of the Securities is not at a
fixed price but at varying prices set by individual Underwriters based on market
prices or at negotiated prices, the provisions above relating to your right to
change the public offering price and concession and discount to dealers shall
not apply, and other references in this Section and elsewhere in this Agreement
to the public offering price or Selected Dealers' concession shall be deemed to
mean the prices and concessions determined by you from time to time in your
discretion.

          If so directed in the Invitation, we will not sell any Securities to
any account over which we have discretionary authority.  We will also comply
with any other restrictions which may be set forth in the Invitation.

          The initial public advertisement with respect to the Securities shall
appear on such date, and shall include the names of such of the Underwriters, as
you may determine.  Thereafter, any Underwriter may advertise at its own
expense.

          4.  DELAYED DELIVERY ARRANGEMENTS.  We authorize you to act on our
              -----------------------------
behalf in making all arrangements for the solicitation

<PAGE>

                                                                               5

of offers to purchase Securities from the Issuer pursuant to Delayed Delivery
Contracts, and we agree that all such arrangements will be made only through you
(directly or through Underwriters or Selected Dealers).  You may allow to
Selected Dealers in respect of such Securities a commission equal to the
concession allowed to Selected Dealers pursuant to Section 5.

          The obligations of the Underwriters shall be reduced in the aggregate
by the principal amount of Securities covered by Delayed Delivery Contracts made
by the Issuer, the obligation of each Underwriter to be reduced by the principal
amount of such Securities, if any, allocated by you to such Underwriter.  Your
determination of the allocation of Securities covered by Delayed Delivery
Contracts among the several Underwriters shall be final and conclusive, and we
agree to be bound by any notice delivered by you to the Issuer setting forth the
amount of the reduction in our obligation as a result of Delayed Delivery
Contracts.

          Upon receiving payment from the Issuer of the fee for arranging
Delayed Delivery Contracts, you will credit our account with the portion of such
fee applicable to the Securities covered by Delayed Delivery Contracts allocated
to us.  You will charge our account with any commission allocated to Selected
Dealers in respect of Securities covered by Delayed Delivery Contracts allocated
to us.

          5.  OFFERING TO SELECTED DEALERS AND OTHERS; MANAGEMENT OF OFFERING.
              ---------------------------------------------------------------
We authorize you, for our account, to reserve for sale and to sell to dealers
("Selected Dealers"), among whom any of the Underwriters may be included, such
amount of our Securities as you shall determine.  Reservations for sales to
Selected Dealers for our account need not be in proportion to our underwriting
obligation, but sales of Securities reserved for our account for sale to
Selected Dealers shall be made as nearly as practicable in the ratio which the
amount of Securities reserved for our account bears to the aggregate amount of
Securities reserved for the account of all Underwriters, as calculated from day
to day.  The price to Selected Dealers initially shall be in the public offering
price less a concession not in excess of the Selected Dealers concession set
forth in the Invitation. Selected Dealers shall be actually engaged in the
investment banking or securities business and shall be either members in good
standing of the National Association of Securities Dealers, Inc. (the "NASD") or
dealers with their principal place of business located outside the United
States, its territories and its possessions and not registered under the 1934
Act who agree to make no sales within the United States, its territories or its
possessions or to persons who are nationals thereof or residents therein.  Each
Selected Dealer shall agree to comply with the provisions of Section 24 of
Article III of the Rules of Fair Practice of the NASD, and each foreign Selected
Dealer who is not a member of the NASD also shall agree to comply with the
NASD's interpretation with respect to free-riding and withholding, to comply, as
though it were a member of the NASD, with the provisions of Sections 8

<PAGE>

                                                                               6

and 36 of Article III of such Rules of Fair Practice, and to comply with Section
25 of Article III thereof as that Section applies to a non-member foreign
dealer.

          With your consent, the Underwriters may allow, and Selected Dealers
may reallow, a discount on sales to any dealer who meets the above NASD
requirements in an amount not in excess of the amount set forth in the
Invitation.  Upon your request, we will advise you of the identity of any dealer
to whom we allow such a discount and any Underwriter or Selected Dealer from
whom we receive such a discount.

          We also authorize you, for our account, to reserve for sale and to
sell our Securities at the public offering price to others, including
institutions and retail purchasers.  Except for such sales which are designated
by a purchaser to be for the account of a particular Underwriter, such
reservations and sales shall be made as nearly as practicable in proportion to
our underwriting obligation, unless you agree to a smaller proportion at our
request.

          At or before the time the Securities are released for sale, you shall
notify us of the amount of our Securities which have not been reserved for our
account for sale to Selected Dealers and others and which is to be retained by
us for direct sale.

          We will from time to time, upon your request, report to you the amount
of Securities retained by us for direct sale which remains unsold and, upon your
request, deliver to you for our account, or sell to you for the account of one
or more of the Underwriters, such amount of our unsold Securities as you may
designate at the public offering price less an amount determined by you not in
excess of the concession to Selected Dealers.  You may also repurchase
Securities from other Underwriters and Selected Dealers, for the account of one
or more of the Underwriters, at prices determined by you not in excess of the
public offering price less the concession to Selected Dealers.

          You may from time to time deliver to any Underwriter, for carrying
purposes or for sale by such Underwriter, any of the Securities then reserved
for sale to, but not purchased and paid for by, Selected Dealers or others as
above provided, but to the extent that Securities are so delivered for sale by
such Underwriter, the amount of Securities then reserved for the account of such
Underwriter shall be correspondingly reduced.  Securities delivered for carrying
purposes only shall be redelivered to you upon demand.

          The Underwriters and Selected Dealers may, with your consent, purchase
Securities from and sell Securities to each other at the public offering price
less a concession not in excess of the concession to Selected Dealers.

<PAGE>

                                                                               7

          6.  REPURCHASE OF SECURITIES NOT EFFECTIVELY PLACED.  In recognition
              -----------------------------------------------
of the importance of distributing the Securities to bona fide investors, we
agree to repurchase on demand any Securities sold by us, except through you,
which are purchased by you in the open market or otherwise during a period
terminating as provided in Section 16, at a price equal to the cost of such
purchase, including accrued interest, amortization of original issue discount or
dividends, commissions and transfer and other taxes, if any, on redelivery.  The
certificates delivered to us need not be the identical certificates delivered to
you in respect of the Securities purchased.  In lieu of requiring repurchase,
you may, in your discretion, sell such Securities for our account at such
prices, upon such terms and to such persons, including any of the other
Underwriters, as you may determine, charging the amount of any loss and expense,
or crediting the amount of any net profit, resulting from such sale, to our
account, or you may charge our account with an amount determined by you not in
excess of the concession to Selected Dealers.

          7.  STABILIZATION AND OVER-ALLOTMENT.  In order to facilitate the
              --------------------------------
distribution of the Securities, we authorize you, in your discretion, to
purchase and sell Securities, any securities into which the Securities are
convertible or for which the Securities  are exchangeable, and any other
securities of the Issuer or any guarantor of the Securities specified in the
Invitation, in the open market or otherwise, for long or short account, at such
prices as you may determine, and, in arranging for sales to Selected Dealers or
others, to over-allot.  You may liquidate any long position or cover any short
position incurred pursuant to this Section at such prices as you may determine.
You shall make such purchases and sales (including over-allotments) for the
accounts of the Underwriters as nearly as practicable in proportion to their
respective underwriting obligations.  It is understood that, in connection with
any particular offering of Securities to which this Agreement applies, you may
have made purchases of any such securities for stabilizing purposes prior to the
time when we became one of the Underwriters, and we agree that any such
securities so purchased shall be treated as having been purchased for the
respective accounts of the Underwriters pursuant to the foregoing authorization.
At the close of business on any day our net commitment, either for long or short
account, resulting from such purchases or sales (including over-allotments)
shall not exceed 15% (or such other amount as may be specified in the
Invitation) of our underwriting obligation, except that such percentage may be
increased with the approval of a majority in interest of the Underwriters.  We
will take up at cost on demand any Securities or any such other securities so
sold or over-allotted for our account, including accrued interest, amortization
of original issue discount or dividends, and we will pay to you on demand the
amount of any losses or expenses incurred for our account pursuant to this
Section.  In the event of default by any Underwriter in respect of its
obligations under this Section, each non-defaulting Underwriter shall assume its
share of the

<PAGE>

                                                                               8

obligations of such defaulting Underwriter in the proportion that its
underwriting obligation bears to the underwriting obligations of all non-
defaulting Underwriters without relieving such defaulting Underwriter of its
liability hereunder.

          If you effect any stabilizing purchase pursuant to this Section, you
shall promptly notify us of the date and time of the first stabilizing purchase
and the date and time when stabilizing was terminated.  You shall prepare and
maintain such records as are required to be maintained by you as manager
pursuant to Rule 17a-2 under the 1934 Act.

          8.  RULE 10B-6.  We represent and agree that in connection with the
              ----------
offering of Securities we have complied and will comply with the provisions of
Rule 10b-6 under the 1934 Act as they apply to the offering of the Securities.

          9.  PAYMENT AND DELIVERY.  At or before such time, on such dates and
              --------------------
at such places as you may specify in the Invitation, we will deliver to you a
certified or official bank check in such funds as are specified in the
Invitation, payable to the order of Smith Barney, Harris Upham & Co.
Incorporated (unless otherwise specified in the Invitation) in an amount equal
to, as you direct, either (i) the public offering price or prices plus accrued
interest, amortization or original issue discount or dividends, if any, set
forth in the Prospectus or Offering Circular less the concession to Selected
Dealers in respect of the amount of Securities to be purchased by us in
accordance with the terms of this Agreement, or (ii) the amount set forth in the
Invitation with respect to the Securities to be purchased by us.  We authorize
you to make payment for our account of the purchase price for the Securities to
be purchased by us against delivery to you of such Securities (which, in the
case of Securities which are debt obligations, may be in temporary form), and
the difference between such purchase price of the Securities and the amount of
our funds delivered to you therefor shall be credited to our account.

          Delivery to us of Securities retained by us for direct sale shall be
made by you as soon as practicable after your receipt of the Securities.  Upon
termination of the provisions of this Agreement as provided in Section 16, you
shall deliver to us any Securities reserved for our account for sale to Selected
Dealers and others which remain unsold at that time.  If, upon termination of
the provisions of this Agreement specified in Section 16 hereof, an aggregate of
not more than 10% of the Securities remains unsold, you may, in your discretion,
sell such Securities at such prices as you may determine.

          If we are a member of The Depository Trust Company or any other
depository or similar facility, you are authorized to make appropriate
arrangements for payment for and/or delivery through its facilities of the
Securities to be purchased by us, or, if we are not a member, settlement may be
made through a

<PAGE>

                                                                               9

correspondent that is a member pursuant to our timely instructions to you.

          Upon receiving payment for Securities sold for our account to Selected
Dealers and others, you shall remit to us an amount equal to the amount paid by
us to you in respect of such Securities and credit or charge our account with
the difference, if any, between such amount and the price at which such
Securities were sold.

          In the event that the Underwriting Agreement for an offering provides
for the payment of a commission or other compensation to the Underwriters, we
authorize you to receive such commission or other compensation for our account.

          10.  MANAGEMENT COMPENSATION.  As compensation for your services in
               -----------------------
the management of the offering, we will pay you an amount equal to the
management fee specified in the Invitation in respect of the Securities to be
purchased by us pursuant to the Underwriting Agreement, and we authorize you to
charge our account with such amount.  If there is more than one Representative,
such compensation shall be divided among the Representatives in such proportions
as they may determine.

          11.  AUTHORITY TO BORROW.  We authorize you to advance your own funds
               -------------------
for our account, charging current interest rates, or to arrange loans for our
account or the account of the Underwriters, as you may deem necessary or
advisable for the purchase, carrying, sale and distribution of the Securities.
You may execute and deliver any notes or other instruments required in
connection therewith and may hold or pledge as security therefor all or any part
of the Securities which we or such Underwriters have agreed to purchase.  The
obligations of the Underwriters under loans arranged on their behalf shall be
several in proportion to their respective participations in such loans, and not
joint.  Any lender is authorized to accept your instructions as to the
disposition of the proceeds of any such loans.  You shall credit each
Underwriter with the proceeds of any loans made for its account.

          12.  BLUE SKY QUALIFICATION.  You shall inform us, upon request, of
               ----------------------
the states and other jurisdictions of the United States in which it is believed
that the Securities are qualified for sale under, or are exempt from the
requirements of, their respective securities laws, but you assume no
responsibility with respect to our right to sell Securities in any jurisdiction.
You are authorized to file with the Department of State of the State of New York
a Further State Notice with respect to the Securities, if necessary.

          If we propose to offer Securities outside the United States, its
territories or its possessions, we will take, at our own expense, such action,
if any, as may be necessary to comply

<PAGE>

                                                                              10

with the laws of each foreign jurisdiction in which we propose to offer
Securities.

          13.  MEMBERSHIP IN NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.;
               ---------------------------------------------------------------
FOREIGN UNDERWRITERS.  We understand that you are a member in good standing of
- --------------------
the NASD.  We confirm that we are actually engaged in the investment banking or
securities business and are either (i) a member in good standing of the NASD or
(ii) a dealer with its principal place of business located outside the United
States, its territories and its possessions and not registered under the 1934
Act who hereby agrees to make no sales within the United States, its territories
or its possessions or to persons who are nationals thereof or residents therein
(except that we may participate in sales to Selected Dealers and others under
Section 5 of this Agreement).  We hereby agree to comply with Section 24 of
Article III of the Rules of Fair Practice of the NASD, and if we are a foreign
dealer and not a member of the NASD we also hereby agree to comply with the
NASD's interpretation with respect to free-riding and withholding, to comply, as
though we were a member of the NASD, with the provisions of Sections 8 and 36 of
Article III of such Rules of Fair Practice, and to comply with Section 25 of
Article III thereof as that Section applies to a non-member foreign dealer.

          14.  DISTRIBUTION OF PROSPECTUSES; OFFERING CIRCULARS.  We are
               ------------------------------------------------
familiar with Securities Act of 1933 Release No. 4968 and Rule 15c2-8 under the
1934 Act, relating to the distribution of preliminary and final prospectuses,
and we confirm that we will comply therewith, to the extent applicable, in
connection with any sale of Securities.  You shall cause to be made available to
us, to the extent made available to you by the Issuer, such number of copies of
the Prospectus as we may reasonably request for purposes contemplated by the
1933 Act, the 1934 Act and the rules and regulations thereunder.

          If an Invitation states that the offering is subject to the 48-hour
prospectus delivery requirement set forth in Rule 15c2-8(b), our Acceptance of
the Invitation shall be deemed to constitute confirmation that we have delivered
(or we will deliver) a copy of the preliminary prospectus to all persons to whom
we expect to confirm a sale of Securities and that such delivery was effected
(or will be effected) at least 48 hours prior to the mailing of such
confirmations of sale.

          Our Acceptance of an Invitation relating to an offering made pursuant
to an Offering Circular shall constitute our agreement that, if requested by
you, we will furnish a copy of any amendment to a preliminary or final Offering
Circular to each person to whom we shall have furnished a previous preliminary
or final Offering Circular.  Our Acceptance shall constitute our confirmation
that we have delivered and our agreement that we will deliver all preliminary
and final Offering Circulars required for compliance with the applicable federal
and state laws and the applicable rules and regulations of any regulatory

<PAGE>

                                                                              11

body promulgated thereunder governing the use and distribution of offering
circulars by underwriters and, to the extent consistent with such laws, rules
and regulations, our Acceptance shall constitute our confirmation that we have
delivered and our agreement that we will deliver all preliminary and final
Offering Circulars which would be required if the provisions of Rule 15c2-8 (or
any successor provision) under the 1934 Act applied to such offering.

          15.  NET CAPITAL.  The incurrence by us of our obligations hereunder
               -----------
and under the Underwriting Agreement in connection with the offering of the
Securities will not place us in violation of the capital requirements of Rule
15c3-1 under the 1934 Act.

          16.  TERMINATION.  With respect to each offering of Securities to
               -----------
which this Agreement applies, all limitations in this Agreement on the price at
which the Securities may be sold, the period of time referred to in Section 6,
the authority granted by the first sentence of Section 7, and the restrictions
contained in Section 8 shall terminate at the close of business on the 45th day
after the commencement of the offering of such Securities.  You may terminate
nay or all of such provisions at any time prior thereto by notice to the
Underwriters.  All other provisions of this Agreement shall remain operative and
in full force and effect with respect to such offering.

          17.  EXPENSES AND SETTLEMENT.  You may charge our account with any
               -----------------------
transfer taxes on sales of Securities made for our account and with our
proportionate share (based upon our underwriting obligation) of all other
expenses incurred by you under this Agreement or otherwise in connection with
the purchase, carrying, sale or distribution of the Securities.  With respect to
each offering of Securities to which this Agreement applies, the respective
accounts of the Underwriters shall be settled as promptly as practicable after
the termination of all the provisions of this Agreement as provided in Section
16, but you may reserve such amount as you may deem advisable for additional
expenses.  Your determination of the amount to be paid to or by us shall be
conclusive.  You may at any time make partial distributions of credit balances
or call for payment of debit balances.  Any of our funds in your hands may be
held with your general funds without accountability for interest.
Notwithstanding any settlement, we will remain liable for any taxes on transfers
for our account and for our proportionate share (based upon our underwriting
obligation) of all expenses and liabilities which may be incurred by or for the
accounts of the Underwriters with respect to each offering of Securities to
which this Agreement applies.

          18.  INDEMNIFICATION.  With respect to each offering of Securities
               ---------------
pursuant to this Agreement, we will indemnify and hold harmless each other
Underwriter and each person, if any, who controls each other Underwriter within
the meaning of Section 15

<PAGE>

                                                                              12

of the 1933 Act, to the extent that and on the terms upon which we agree to
indemnify and hold harmless the Issuer and other specified persons as set forth
in the Underwriting Agreement.

          19.  CLAIMS AGAINST UNDERWRITERS.  With respect to each offering of
               ---------------------------
Securities to which this Agreement applies, if at any time any person other than
an Underwriter asserts a claim (including any commenced or threatened
investigation or proceeding by any government agency or body) against one or
more of the Underwriters or against you as Representative(s) of the Underwriters
arising out of an alleged untrue statement or omission in the Registration
Statement (or any amendment thereto) or in any preliminary prospectus or the
Prospectus or any amendment or supplement thereto, or in any preliminary or
final Offering Circular, or relating to any transaction contemplated by this
Agreement, we authorize you to make such investigation, to retain such counsel
for the Underwriters and to take such action in the defense of such claim as you
may deem necessary or advisable.  You may settle such claim with the approval of
a majority in interest of the Underwriters.  We will pay our proportionate share
(based upon our underwriting obligation) of all expenses incurred by you
(including the fees and expenses of counsel for the Underwriters) in
investigating and defending against such claim and our proportionate share of
the aggregate liability incurred by all Underwriters in respect of such claim
(after deducting any contribution indemnification obtained pursuant to the
Underwriting Agreement, or otherwise, from persons other than Underwriters),
whether such liability is the result of a judgment against one or more of the
Underwriters or the result of any settlement.  Any Underwriter may retain
separate counsel at its own expense.  A claim against or liability incurred by a
person who controls an Underwriter shall be deemed to have been made against or
incurred by such Underwriter.  In the event of default by any Underwriter in
respect of its obligations under this Section, the non-defaulting Underwriters
shall be obligated to pay the full amount thereof in the proportions that their
respective underwriting obligations bear to the underwriting obligations of all
non-defaulting Underwriters without relieving such defaulting Underwriter of its
liability hereunder.

          20.  DEFAULT BY UNDERWRITERS.  Default by any Underwriter in respect
               -----------------------
of its obligations hereunder or under the Underwriting Agreement shall not
release us from any of our obligations or in any way affect the liability of
such defaulting Underwriter to the other Underwriters for damages resulting from
such default.  If one or more Underwriters default under the Underwriting
Agreement, if provided in the Underwriting Agreement you may (but shall not be
obligated to) arrange for the purchase by others, which may include yourselves
or other non-defaulting Underwriters, of all or a portion of the Securities not
taken up by the defaulting Underwriters.

<PAGE>

                                                                              13

          In the event that such arrangements are made, the respective
underwriting obligations of the non-defaulting Underwriters and the amounts of
the Securities to be purchased by others, if any, shall be taken as the basis
for all rights and obligations hereunder, but this shall not in any way affect
the liability of any defaulting Underwriter to the other Underwriters for
damages resulting from its default, nor shall any such default relieve any other
Underwriter of any of its obligations hereunder or under the Underwriting
Agreement except as herein or therein provided.  In addition, in the event of
default by one or more Underwriters in respect of their obligations under the
Underwriting Agreement to purchase the Securities agreed to be purchased by them
thereunder and, to the extent that arrangements shall not have been made by you
for any person to assume the obligations of such defaulting Underwriter or
Underwriters, we agree, if provided in the Underwriting Agreement, to assume our
proportionate share, based upon our underwriting obligation, of the obligations
of each such defaulting Underwriter (subject to the limitations contained in the
Underwriting Agreement) without relieving such defaulting Underwriter of its
liability therefor.

          In the event of default by one or more Underwriters in respect of
their obligations under this Agreement to take up and pay for any securities
purchased, or to deliver any securities sold or over-allotted, by you for the
respective accounts of the Underwriters, or to bear their proportion of expenses
or liabilities pursuant to this Agreement, and to the extent that arrangements
shall not have been made by you for any persons to assume the obligations of
such defaulting Underwriter or Underwriters, we agree to assume our
proportionate share, based upon our underwriting obligation, of the obligations
of each defaulting Underwriter without relieving any such defaulting Underwriter
of its liability therefor.

          21.  LEGAL RESPONSIBILITY.  As Representative(s) of the Underwriters,
               --------------------
you shall have no liability to us, except for your lack of good faith and for
obligations assumed by you in this Agreement and except that we do not waive any
rights that we may have under the 1933 Act or the 1934 Act or the rules and
regulations thereunder.  No obligations not expressly assumed by you in this
Agreement shall be implied herefrom.

          Nothing herein contained shall constitute the Underwriters an
association, or partners, with you, or with each other, or, except as otherwise
provided herein or in the Underwriting Agreement, render any Underwriter liable
for the obligations of any other Underwriter, and the rights, obligations and
liabilities of the Underwriters are several in accordance with their respective
underwriting obligations, and not joint.

          If the Underwriters are deemed to constitute a partnership for federal
income tax purposes, we elect to be excluded from the application of Subchapter
K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1954, as amended, and

<PAGE>

                                                                              14

agree not to take any position inconsistent with such election, and you, as
Representative(s), are authorized, in your discretion, to execute on behalf of
the Underwriters such evidence of such election as may be required by the
Internal Revenue Service.

          Unless we have promptly notified you in writing otherwise, our name as
it should appear in the Prospectus or Offering Circular and our address are set
forth below.

          22.  NOTICES.  Any notice from you shall be deemed to have been duly
               -------
given if mailed or transmitted to us at our address appearing below.

          23.  GOVERNING LAW.  This Agreement shall be governed by the laws of
               -------------
the State of New York applicable to agreements made and to be performed in said
State.

          Please confirm this Agreement and deliver a copy to us.


                                        Very truly yours,

                                        Name of Firm:



                                        By _________________________________
                                            Authorized Officer or Partner


                                        Address:

                                        ---------------------------------

                                        ---------------------------------

                                        ---------------------------------

Confirmed as of the date
     first above written.

Salomon Smith Barney Inc.


By ______________________________
          Managing Director

<PAGE>


                                                                       EXHIBIT A
                                                                       ---------


                       MASTER UNDERWRITERS' QUESTIONNAIRE
                       ----------------------------------

          In connection with each offering of Securities pursuant to the Salomon
Smith Barney Inc. Master Agreement Among Underwriters, dated July 18, 1985 (the
"Agreement"), each Underwriter confirms the following information, except as
indicated in such Underwriter's Acceptance or other written communication
furnished to Salomon Smith Barney Inc. Defined terms used herein have the same
meaning as defined terms in the Master Agreement Among Underwriters.

          (a) Neither such Underwriter nor any of its directors, officers or
partners have any material (as defined in Regulation C under the 1933 Act)
relationship with the Issuer, its parent (if any), any other seller of the
Securities or any guarantor of the Securities.

          (b)  Except as described or to be described in the Agreement, the
Underwriting Agreement or the Invitation, such Underwriter does not know:  (i)
of any discounts or commissions to be allowed or paid to dealers, including all
cash, securities, contracts, or other consideration to be received by any dealer
in connection with the sale of the Securities, or of any other discounts or
commissions to be allowed or paid to the Underwriters or of any other items that
would be deemed by the NASD to constitute underwriting compensation for purposes
of the NASD's Rules of Fair Practice, (ii) of any intention to over-allot, or
(iii) that the price of any security may be stabilized to facilitate the
offering of the Securities.

          (c) No report or memorandum has been prepared for external use (i.e.,
outside such Underwriter's organization) by such Underwriter in connection with
the proposed offering of Securities and, in the case of a Registered Offering,
where the Registration Statement is on Form S-1, such Underwriter has not
prepared or had prepared for it any engineering, management or similar report or
memorandum relating to the broad aspects of the business, operations or products
of the Issuer, its parent (if any) or any guarantor of the Securities within the
past twelve months.  If any such report or memorandum has been prepared, furnish
to Smith Barney, Harris Upham & Co. Incorporated three copies thereof, together
with a statement as to the distribution of the report or memorandum, identifying
each class of persons to whom the report or memorandum was distributed, the
number of copies distributed to each class and the period of distribution.

          (d)  If the Securities are debt securities to be issued under an
indenture to be qualified under the Trust Indenture Act of 1939, neither such
Underwriter nor any of its directors, officers or partners is an "affiliate", as
that term is defined under the Trust Indenture Act of 1939, of the Trustee for
the

<PAGE>

                                                                               2

Securities as specified in the Invitation, or of its parent (if any); neither
the Trustee nor its parent (if any) nor any of their directors or executive
officers is a director, officer, partner, employee, appointee or representative
of such Underwriter as those terms are defined in the Trust Indenture Act of
1939 or in the relevant instructions to Form T-1; neither such Underwriter nor
any of its directors, partners or executive officers, separately or as a group,
owns beneficially 1% or more of the shares of any class of voting securities of
the Trustee or of its parent (if any); and if such Underwriter is a corporation,
it does not have outstanding nor has it assumed or guaranteed any securities
issued otherwise than in its present corporate name, and neither the Trustee nor
its parent (if any) is a holder of any such securities.

          (e) If the Issuer is a public utility, such Underwriter is not a
"holding company" or a "subsidiary company" or an "affiliate" of a "holding
company" or of a "public utility company", each as defined in the Public Utility
Holding Company Act of 1935.

          (f)  Neither such Underwriter nor any "group" (as that term is defined
in Section 13(d)(3) of the 1934 Act) of which it is a member is the beneficial
owner (determined in accordance with Rule 13d-3 under the 1934 Act) of more than
5% of any class of voting securities of the Issuer, its parent (if any), any
other seller of the Securities or any guarantor of the Securities nor does it
have any knowledge that more than 5% of any class of voting securities of the
Issuer is held or to be held subject to any voting trust or other similar
agreement.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.H.4
<SEQUENCE>8
<FILENAME>dex99h4.txt
<DESCRIPTION>FORM OF DEALER LETTER AGREEMENT
<TEXT>
<PAGE>


                              Nuveen Investments
                             333 West Wacker Drive
                               Chicago, IL 60606


                                ________, 2002

Mr. William G. McCoy
Managing Director, Equity Capital Markets
Salomon Smith Barney Inc.
388 Greenwich Street
New York, NY 10013

Dear Mr. McCoy:

          Reference is made to Nuveen Ohio Dividend Advantage Municipal Fund 3,
Nuveen Insured California Dividend Advantage Municipal Fund, Nuveen Pennsylvania
Dividend Advantage Municipal Fund 2, Nuveen Connecticut Dividend Advantage
Municipal Fund 2, Nuveen New Jersey Dividend Advantage Municipal Fund 2, Nuveen
Arizona Dividend Advantage Municipal Fund 2, Nuveen Insured New York Dividend
Advantage Municipal Fund and Nuveen Insured Dividend Advantage Municipal Fund.
Each such fund currently is making an initial public offering of its common
shares of beneficial interest (the "Shares") through several underwriters. Such
offerings are referred to herein, collectively, as the "Offerings" and,
individually, as an "Offering". You are acting as lead manager and
representative (the "Representative") of the underwriters of each Offering and
we are participating as a manager and underwriter of each Offering.

          We have requested that we be able to offer certain broker-dealers the
opportunity to participate as selling dealers in one or more of the Offerings.
This letter is to confirm our agreement with you as to the terms and conditions
on which we may offer to sell, and sell, Shares to broker-dealers with whom we
regularly transact business (collectively, the "Nuveen Selected Dealers" and,
individually, a "Nuveen Selected Dealer"):

     a.   each Nuveen Selected Dealer to whom we offer to sell, or sell, Shares
shall have entered into a master selected dealer agreement ("Selected Dealer
Agreement") with Nuveen, the form of which is attached hereto as Exhibit A;

     b.   before offering to sell, or selling, Shares to a Nuveen Selected
Dealer, Nuveen will carry out such independent investigations as it deems
necessary to

<PAGE>

determine that such dealer satisfies the criteria set forth in Section 6 of the
Selected Dealer Agreement;

     c.   we will act under and enforce each Selected Dealer Agreement only with
your consent (which shall not be unreasonably withheld) or upon your
instruction;

     d.   we shall not allow to any Nuveen Selected Dealer purchasing Shares in
an Offering a selling concession that is in an amount in excess of the maximum
selling concession set by you for selected dealers for that Offering; and

     e.   we agree upon instruction from you, subject to the other terms of the
Offerings, to pay for and purchase all Shares that we reserve in the Offerings,
whether such Shares are reserved by us for our own account or for the account of
one or more Nuveen Selected Dealers, and we agree to make all purchases of
Shares in accordance with Master Agreement among Underwriters dated July 18,
1985 between the Representatives and Nuveen and the underwriting agreement for
the Offering of such Shares.

          If the foregoing correctly sets forth our understanding regarding the
matters described herein, please so indicate by signing a copy of this letter
where indicated below and returning the signed copy of this letter to us. For
your convenience, a duplicate copy of this letter has been included.


                                    NUVEEN INVESTMENTS


                                    By____________________________
                                      Name:
                                      Title:

                                       2

<PAGE>


Acknowledged and agreed to as of this
__ day of ___, 2001 on behalf of themselves
and, in respect of an Offering, the other
underwriters of the Offering.

by: SALOMON SMITH BARNEY INC.

SALOMON SMITH BARNEY INC.,
as Representative of the Underwriters


By___________________________________
  Name: William McCoy
  Title: Managing Director, Equity Capital Markets

                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.I
<SEQUENCE>9
<FILENAME>dex99i.txt
<DESCRIPTION>NUVEEN OPEN-END AND CLOSED-END FUNDS DEFERRED COMP
<TEXT>
<PAGE>

                     NUVEEN OPEN-END AND CLOSED-END FUNDS

                        DEFERRED COMPENSATION PLAN FOR
                      INDEPENDENT DIRECTORS AND TRUSTEES

                                   PREAMBLE
                                   --------

     The Board of each Participating Fund hereby establishes this Deferred
Compensation Plan for Independent Directors and Trustees.  The purpose of the
Plan is to allow the independent directors and trustees of the Participating
Funds to defer receipt of all, or a portion, of the compensation they earn for
their service to the Participating Funds in lieu of receiving current payments
of such compensation, and to treat any deferred amount as though an equivalent
dollar amount had been invested in shares of one or more Eligible Funds.  Each
Board intends that the Plan shall be maintained at all times on an unfunded
basis for federal income tax purposes under the Internal Revenue Code of 1986,
as amended.  The Plan is not covered by the Employee Retirement Income Security
Act of 1974, as amended.

SECTION 1 DEFINITIONS OF TERMS AND CONSTRUCTION
          -------------------------------------

     1.1  Definitions.  The following terms as used in this Plan shall have the
          -----------
following meanings:

          (a) "Administrator" shall mean Nuveen or such other person or persons
as the Boards may from time to time designate, provided that no Eligible
Participant may serve as Administrator.

          (b) "Beneficiary" shall mean such person or persons designated
pursuant to Section 4.4 hereof to receive benefits after the death of an
Eligible Participant.

          (c) "Board" shall mean the Board of Directors or the Board of Trustees
of the respective Participating Funds.

          (d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.

          (e) "Compensation" shall mean the retainer and fees paid by
Participating Funds to an Eligible Participant for a Deferral Period prior to
reduction for Deferrals made under this Plan.

          (f) "Deferral" shall mean the amount or amounts of an Eligible
Participant's Compensation deferred under the provisions of Section 3 of this
Plan.

          (g) "Deferral Account" shall mean the account maintained to reflect an
Eligible Participant's Deferrals made pursuant to Section 3 herein and any other
credits or debits thereto.

<PAGE>

          (h) "Deferral Election" shall mean the Eligible Participant's election
to defer his or her compensation under Plan Section 3.1(a).

          (i) "Deferral Period" shall mean each calendar quarter during which an
Eligible Participant makes, or is entitled to make, Deferrals under Section 3
hereof.

          (j) "Eligible Fund" means an open-end fund managed by Nuveen and
designated by the Boards as a fund that may be chosen by an Eligible Participant
as a fund in which the Eligible Participant's Deferral Account may be deemed to
be invested.

          (k) "Eligible Participant" shall mean a member of a Board who is not
an "interested person" of a Participating Fund or of Nuveen, as such term is
defined under Section 2(a)(19) of the Investment Company Act of 1940, as amended
("1940 Act").

          (l) "Hardship and Unforeseeable Emergency" shall mean a severe
financial hardship to an Eligible Participant resulting from a sudden and
unexpected illness or accident of the Eligible Participant or a dependent
(within the meaning of Section 152(a) of the Code), of the Eligible Participant,
loss of the Eligible Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances, arising from events beyond the
Eligible Participant's control.  Whether circumstances constitute a Hardship and
Unforeseeable Emergency depends on the facts of each case, as determined by the
Administrator, but in any case does not include a hardship that may be relieved:

              (i)   through reimbursement or compensation by insurance or
              otherwise;

              (ii)  by liquidation of the Eligible Participant's assets to the
              extent that liquidation itself would not cause such a severe
              financial hardship; or

              (iii) by ceasing to defer receipt of any Compensation not yet
              earned.

The term "Hardship and Unforeseeable Emergency" shall have the same meaning as
the term "unforeseeable emergency" as used in regulations issued under Section
457 of the Code, and shall be applied accordingly.  The need to send an Eligible
Participant's child to college and the desire to purchase a home shall not
constitute a Hardship and Unforeseeable Emergency.

          (n) "Net Asset Value" shall mean the per share value of an open-end
fund, as determined as set forth in such fund's registration statement under the
1940 Act, governing instruments and otherwise in accordance with law.

          (o) "Nuveen" shall mean The John Nuveen Company and its affiliates.

          (p) "Participating Fund" shall mean an open-end or closed-end fund
managed by Nuveen, whether existing at the time of adoption of the Plan or
established at a later date, designated by its Board as a fund compensation from
which may be deferred by an Eligible Participant.  Participating Funds shall be
listed on Exhibit A to the Plan, which shall be revised

<PAGE>

from time to time by the Administrator, provided that failure to list a
Participating Fund on Exhibit A shall not affect its status as a Participating
Fund.

          (q) "Plan" shall mean this Deferred Compensation Plan for Independent
Directors and Trustees, as amended from time to time.

          (r) "Separation from Service" shall mean the date on which an Eligible
Participant ceases to be a member of a Board.

          (s) "Valuation Date" shall mean the last business day of each calendar
quarter and any other day upon which Nuveen makes a valuation of the Deferral
Account.

     1.2  Plurals and Gender.  Where appearing in this Plan the singular shall
          ------------------
include the plural and the masculine shall include the feminine, and vice versa,
unless the context clearly indicates a different meaning.

     1.3  Headings.  The headings and subheadings in this Plan are inserted for
          --------
convenience of reference only and are to be ignored in any construction of the
provisions hereof.

     1.4  Separate Agreement.  This Plan shall be construed as a separate
          ------------------
agreement between each Eligible Participant and each of the Participating Funds.

SECTION 2 PERIOD DURING WHICH DEFERRALS ARE PERMITTED
          -------------------------------------------

     2.1  Commencement of Deferrals.  An Eligible Participant may elect, on a
          -------------------------
form provided by, and submitted to, the Administrator, to commence Deferrals
under Section 3 hereof for the period beginning on the first day of the first
quarter beginning on or after the date such form is submitted to the
Administrator.

     2.2  Termination of Deferrals.  An Eligible Participant shall not be
          ------------------------
eligible for Deferral of additional Compensation after the earlier of the
following dates:

          (a) The date he cancels his election pursuant to Section 3.3(b);

          (b)  his Separation from Service; or

          (c) the effective date of the termination of this Plan.

SECTION 3 DEFERRALS
          ---------

     3.1  Deferral Elections.

          (a) Subject to Section 3.1(d), an Eligible Participant participating
in the Plan may elect to defer receipt of all, or a specified dollar amount or
percentage of the Compensation (including fees for attending meetings) earned
per quarter by such Eligible Participant for serving as a member of the Board of
each Participating Fund or as a member of any committee (or subcommittee of such
committee) of the Board of a Participating Fund of which such Eligible

<PAGE>

Participant from time to time may be a member.  Reimbursement of expenses of
attending meetings of the Board, committees of the Board or subcommittees of
such committees may not be deferred.

          (b) Deferrals described in Section 3.1(a) above shall be withheld,
based upon the percentage or dollar amount elected, from each payment of
Compensation which the Eligible Participant would otherwise have been entitled
but for his election in Section 3.1(a) below.  If a dollar amount per quarter is
elected, 100% of each payment of Compensation in each quarter will be deferred
until such amount is reached.

          (c) Each Participating Fund shall establish a book entry account
("Deferral Account") to which will be credited an amount equal to the Eligible
Participant's Deferrals under this Plan.  Any Compensation earned by an Eligible
Participant which he has elected to defer pursuant to the Plan will be credited
to such Eligible Participant's Deferral Account on the date such Compensation
otherwise would have been payable to such Eligible Participant.  The Deferral
Account shall be debited to reflect any distributions from such Account.  Such
debits shall be allocated to the Deferral Account as of the date such
distributions are made.

          (d) Each amount that an Eligible Participant elects to defer shall be
allocated among all Participating Funds for which the Eligible Participant
serves as a director or trustee in the same proportion that the Eligible
Participant's Compensation would have been allocated if it had not been
deferred, and all subsequent earnings credited, and all distributions, losses
and expenses charged, to the Eligible Participant's Deferral Account, shall be
allocated among the Participating Funds in the same manner.  The obligations of
the Participating Funds to pay their respective allocated shares of an Eligible
Participant's Deferral Account shall be several and not joint.

     3.2  Valuation of Deferral Account.
          -----------------------------

          (a)  Each Board shall from time to time designate one or more open-end
funds managed by Nuveen as Eligible Funds.  An Eligible Participant, on his
deferral election form, shall have the right to select from the then-current
list of Eligible Funds one or more, but not more than three, funds in which his
Deferral Account shall be deemed invested as set forth in this Section 3
("Designated Funds").  An Eligible Participant may designate an Eligible Fund
even if he is not a member of the Board of that Eligible Fund.  Except as
provided below, amounts credited to an Eligible Participant's Deferral Account
shall be treated as though such amounts had been invested and reinvested in
shares of the Eligible Participant's Designated Funds, initially calculated as
follows:

          (i)  the product of

               (x)  the amount of such Deferrals and

               (y)  the percentage of such Deferrals to be deemed invested in
                    that Designated Fund, divided by

<PAGE>

          (ii) the Designated Fund's Net Asset Value per share as of the date
               such amount is so credited.

          (b)  As of the last day of each calendar year, by written election
delivered to the Administrator not less than 10 business days prior to the end
of such year, each Eligible Participant may direct that the Designated Funds in
which his or her Deferral Account is deemed invested be changed.  Any election
to change such investment direction shall indicate the dollar amount or
percentage of the balance in such Deferral Account (determined based on the then
current Net Asset Value of each Designated Fund in which the Deferral Account is
deemed invested immediately prior to giving effect to such investment change) to
be invested in each such Designated Fund.  The number of shares of each
Designated Fund to be deemed held in the Eligible Participant's Deferral Account
following such investment change shall be calculated as follows:

          (i)  the product of

               (x)  the balance in such Deferral Account and

               (y)  the percentage of such balance to be deemed invested in that
                    Designated Fund divided by

          (ii) the Designated Fund's Net Asset Value per share as of the last
               day of such calendar year.

          (c)  If a Designated Fund shall pay a stock dividend on, or split,
combine, reclassify or substitute other securities by merger, consolidation or
otherwise for its outstanding shares, the Eligible Participant's Deferral
Account shall be adjusted as though shares of such Designated Fund were actually
held by the Deferral Account in order to preserve rights substantially
proportionate to the rights deemed held immediately prior to such event.

          (d)  On each payment date of dividends or capital gains distributions
declared on shares of any Designated Fund in which an Eligible Participant's
Deferral Account is deemed invested, the Deferral Account will be credited with
book adjustments representing all dividends or capital gains distributions which
would have been realized had such account been invested in shares of such
Designated Fund and such dividend or capital gains distribution had been
received and reinvested.

          (e)  The value of a Deferral Account on any Valuation Date shall be
the sum of (i) the number of shares of each Designated Fund deemed to be held in
the Deferral Account by the preceding paragraphs, multiplied by (ii) the Net
Asset Value per share of such Designated Fund on the Valuation Date.

          (f)  On each date upon which a distribution of less than the entire
balance is to be charged to an Eligible Participant's Deferral Account, the
amount of such distribution shall, unless the Eligible Participant otherwise
specifies in accordance with rules established by the Administrator, be
allocated among all of the Designated Funds in which the Deferral Account is

<PAGE>

deemed to be invested in proportion to the aggregate value of the number of
deemed shares of each such Designated Fund, and the number of deemed shares of
each such Designated Fund shall then be reduced by the portion of the
distribution allocated to such Designated Fund divided by the Net Asset Value
per share of such Designated Fund on the date on which the distribution is
charged.

          (g)   Unless and until each Board otherwise determines, the Eligible
Funds shall include only one or more open-end funds managed by Nuveen.  Open-end
funds that cease to be managed by Nuveen shall automatically cease to be
Eligible Funds, unless one of the Boards otherwise determines with respect to
Eligible Participants that are members of such Board.  Either Board may at any
time remove any open-end fund from the list of Eligible Funds, or may add any
open-end fund (whether or not managed by Nuveen), for Eligible Participants who
are members of that Board.  If an Eligible Fund is removed from the list of
Eligible Funds for any reason then no further deferrals shall be deemed invested
in such Fund and, unless the Board otherwise determines, the Administrator shall
give each Eligible Participant whose Deferral Account is deemed to be invested
in such Eligible Fund a reasonable period to submit a new designation, and any
Eligible Participant who fails to submit a new designation shall be subject to
the provisions of Section 3.2(h)(iii) below.

          (h)   As of each Valuation Date, income, gain and loss equivalents
(determined as if the Deferral Account is invested in the manner set forth under
Section 3.2(a), above) attributable to the period following the next preceding
Valuation Date shall be credited to and/or deducted from the Eligible
Participant's Deferral Account.  Except as provided below, the Eligible
Participant's Deferral Account shall receive a return in accordance with his
investment designations, provided such designations conform to the provisions of
this Section.  If:

          (i)   the Eligible Participant does not furnish the Administrator with
                a written designation,

          (ii)  the written designation from the Eligible Participant is
                unclear, or

          (iii) less than all of the Eligible Participant's Deferral Account is
                covered by such written designation,

then the Eligible Participant's Deferral Account shall receive no return until
such time as the Eligible Participant shall provide the Administrator with
instructions.

          3.3   Manner of Electing Deferral.
                ---------------------------

          (a)   An Eligible Participant shall elect to participate in this Plan
and defer his Compensation by completing, signing and filing with the
Administrator a Notice of Election to Defer Compensation (the "Notice") in the
form attached to this Plan.  The Notice shall include:

          (i)   the amount of Compensation to be deferred;

<PAGE>

          (ii)  the time at which the distribution of such amount will commence,
                which may be:

                (A)  a specified date selected by the Participant not prior to
                     the third anniversary of such election,

                (B)  the first day of the month, quarter or year following the
                     Eligible Participant's Separation from Service, or

                (C)  the earlier of (A) or (B);

                provided that the distribution of an Eligible Participant's
                Deferral Account shall in any event commence no later than the
                fifth anniversary of that Eligible Participant's Separation from
                Service.

          (iii) the manner of distribution of such deferred compensation (i.e.,
                in a lump sum or the number of annual or quarterly
                installments);

          (iv)  the Designated Fund or Designated Funds in which such deferrals
                are to be deemed invested and in what amounts or percentages;
                and

          (v)   any beneficiary designated pursuant to Section 4.4 of this Plan.

          (b)   All Deferral Elections shall remain in effect until the earliest
of:  (i) the date on which the Deferral Election is canceled or modified, (ii)
the date of the Eligible Participant's Separation from Service, or (iii) the
date on which the Eligible Participant begins to receive distributions from his
or her Deferral Account.  An Eligible Participant may modify the amount of his
Deferral Election and/or the Designated Fund(s) specified in the Deferral
Election, on a prospective basis by submitting an amended Notice to the
Administrator.  Such change will be effective as of the first day of the year
following the date such revision is submitted to the Administrator.  An Eligible
Participant may cancel his Deferral Election on a prospective basis by
submitting an amended Notice to the Administrator, which cancellation of the
Deferral Election shall be effective for all Compensation for calendar quarters
beginning or for meetings held after such notice is received, subject to any
delay necessary for administrative processing.  An Eligible Participant who
cancels his Deferral Election may thereafter make a new Deferral Election as of
the first day of any subsequent year pursuant to Section 3.3(a), but all new
deferrals shall be credited to the same Deferral Account, and the time and
manner of distribution of the Deferral Account, the manner in which the Deferral
Election is deemed invested, and the identity of the Eligible Participant's
Beneficiary, shall remain the same unless changed for the entire Deferral
Account as otherwise provided herein.

     3.4  Time of Electing Deferral.  An Eligible Participant's initial Notice
          -------------------------
under Section 3.3(a) shall be filed with the Administrator no later than 10
business days prior to the last business day of the calendar quarter preceding
the quarter for which the Deferral Election is made.  An Eligible Participant's
Notice under Section 3.3(b) modifying the amount of his Deferral Election, or a
Notice under Section 3.3(a) making a Deferral Election after a prior

<PAGE>

Deferral Election has been cancelled, shall be filed with the Administrator no
later than 10 business days prior to the last business day of the year preceding
the year for which the modified or new Deferral Election is effective.

SECTION 4 DISTRIBUTIONS FROM DEFERRAL ACCOUNT
          -----------------------------------

     4.1  Eligible Participant's Election.  An Eligible Participant shall elect
          -------------------------------
at the time of his Deferral Election the time at which his distribution is to
commence, and the form of distribution, which may be either:

          (a) lump sum; or

          (b) annual or quarterly installments over a period of five (5) years,
with each installment being equal to the balance in the Deferral Account
immediately prior to payment of the installment divided by the number of
installments remaining to be paid (including the installment the amount of which
is being determined).

          (c) If an Eligible Participant fails to designate the manner of
distribution to apply to his Deferral Account, such Deferral Account shall be
distributed in a lump sum on the first day of the month following the Eligible
Participant's Separation from Service.

          (d) An Eligible Participant may elect to change his distribution
election with respect to his Deferral Account by filing an amended Notice with
the Administrator not less than six months prior to the earlier of the date on
which distribution was scheduled to begin under the original Notice or the date
on which it is scheduled to begin under the amended Notice. The Eligible
Participant's new distribution election shall be void and the Eligible
Participant's original election shall be reinstated if the date on which
distribution was originally scheduled to begin occurs (by reason of Separation
from Service or otherwise) within six months after the date on which the changed
distribution election was filed with the Administrator.

     4.2  Death Prior to Complete Distribution of Deferral Account.  If an
          --------------------------------------------------------
Eligible Participant dies prior to the commencement of the distribution of the
amounts credited to his Deferral Account, the balance of such Account shall be
distributed to his Beneficiary in a lump sum as soon as practicable after the
Eligible Participant's death.  If an Eligible Participant dies after the
commencement of such distributions, but prior to the complete distribution of
his Deferral Account, the balance of the amounts credited to his Deferral
Account shall be distributed to his Beneficiary over the remaining period during
which such amounts were otherwise distributable to the Eligible Participant
under Section 4.1 hereof.  Notwithstanding the above, the Administrator, in its
sole discretion, may accelerate the distribution of the Deferral Account.

     4.3  Hardship and Unforeseeable Emergency.  An Eligible Participant may
          ------------------------------------
request at any time a withdrawal of part or all of the amount then credited to
his Deferral Account on account of Hardship and Unforeseeable Emergency by
submitting a written request to the Administrator accompanied by evidence that
his financial condition constitutes a Hardship and Unforeseeable Emergency.  The
Administrator shall review the Eligible Participant's request and

<PAGE>

determine the extent, if any, to which such request is justified. Any such
withdrawal shall be limited to an amount reasonably necessary to meet the
Hardship and Unforeseeable Emergency, but not more than the amount of the
Eligible Participant's Deferral Account.

     4.4  Designation of Beneficiary.  For the purposes of Section 4.2 hereof,
          --------------------------
the Eligible Participant's Beneficiary shall be the person or persons so
designated by the Eligible Participant in a written instrument submitted to the
Administrator. Subject to rules established by the Administrator, an Eligible
Participant may designate multiple or alternative Beneficiaries, and may change
his Beneficiary at any time without the consent of any prior Beneficiary;
provided that no change of a Beneficiary shall be effective unless and until
actually received, in proper form, by the Administrator during the Eligible
Participant's life.  The Administrator's determination of the person eligible to
receive the Deferral Account of a deceased Eligible Participant, if made in good
faith, shall be final and binding on all parties.  If an Eligible Participant
fails to properly designate a Beneficiary or if his Beneficiary predeceases him,
his beneficiary shall be his estate.

     4.5  Domestic Relations Orders.  If any judgment, decree or order
          -------------------------
(including approval of a property settlement agreement) which (i) relates to the
provision of child support, alimony payments, or marital property rights to a
spouse, former spouse, child, or other dependent of an Eligible Participant, and
(ii) is made pursuant to a state or foreign domestic relations law (including a
community property law) directs assignment of a portion of an Eligible
Participant's Deferral Account to a spouse, former spouse, child, or other
dependent of an Eligible Participant, such amount may be paid in a lump-sum cash
payment at the request of the person to whom assignment is directed to be made
as soon as administratively possible after the Administrator's receipt of the
signed order, as long as the order (or a written direction to the Administrator
of how to interpret the order, signed by the Eligible Participant and the person
to whom the order directs assignment) clearly specifies the amount of the
Deferral Account assigned and the timing of payment to the person to whom the
assignment is made.

SECTION 5 AMENDMENTS AND TERMINATION
          --------------------------

     5.1  Amendments.  The Boards reserve the right to amend, in whole or in
          ----------
part, and in any manner, any or all of the provisions of this Plan by action of
both Boards, except that no amendment shall reduce the balance in any Eligible
Participant's Deferral Account, or (unless necessary to comply with the 1940 Act
or other applicable law) significantly delay the time at which such balance is
payable without the consent of the Eligible Participant affected.

     5.2  Termination.  Each Board may terminate this Plan at any time by
          -----------
action of the Board and the Eligible Participants' Deferral Accounts shall
become payable as of the Valuation Date next following the effective date of the
termination of this Plan.  If one Board elects to terminate the Plan with
respect to the Eligible Participants who are members of such Board, the Plan
shall remain in effect with respect to Eligible Participants who are members of
the other Board.

<PAGE>

SECTION 6 MISCELLANEOUS
          -------------

     6.1  Rights of Creditors.
          -------------------

          (a) This Plan is unfunded.  Neither an Eligible Participant nor any
other person shall have any interest in any specific asset or assets of a
Participating Fund by reason of any Deferral Account hereunder, nor any rights
to receive distribution of his Deferral Account except and to the extent
expressly provided hereunder.  Except for money market funds complying with rule
2a-7 under the 1940 Act, a Participating Fund shall not be required to purchase,
hold or dispose of any investments pursuant to this Plan.  If in order to cover
its obligations hereunder a Participating Fund purchases any investments, the
same shall continue for all purposes to be a part of the general assets and
property of that Participating Fund subject to the claims of its general
creditors and no person other than the Participating Fund shall by virtue of the
provisions of this Plan have any interest in such assets other than an interest
as a general creditor of the Participating Fund.

          (b) The rights of an Eligible Participant and the Beneficiaries to the
amounts held in the Deferral Account are unsecured and such amounts shall be
subject to the claims of the creditors of a Participating Fund.  With respect to
the payment of amounts held under the Deferral Account, the Eligible Participant
and his Beneficiaries have the status of unsecured creditors of that
Participating Fund.  This Plan is executed on behalf of each Participating Fund
by an officer of that Participating Fund as such and not individually.  Any
obligation of a Participating Fund hereunder shall be an unsecured obligation of
that Participating Fund and not of any other person.

     6.2  Agents.  Each Participating Fund may employ agents and provide for
          ------
such clerical, legal, actuarial, accounting, advisory or other services as it
deems necessary to perform its duties under this Plan.  Each Participating Fund
shall bear the cost of such services and all other expenses it incurs in
connection with the administration of this Plan.

     6.3  Incapacity.  If the Administrator shall receive evidence satisfactory
          ----------
to it that an Eligible Participant or any Beneficiary entitled to receive any
benefit under the Plan is, at the time when such benefit becomes payable, a
minor, or is physically or mentally incompetent to receive such benefit and to
give a valid release therefor, and that another person or an institution is then
maintaining or has custody of the Eligible Participant or Beneficiary and that
no guardian, committee or other representative of the estate of the Eligible
Participant or Beneficiary shall have been duly appointed, a Participating Fund
may make payment of such benefit otherwise payable to the Eligible Participant
or Beneficiary to such other person or institution, including a custodian under
a Uniform Transfers to Minors Act or corresponding legislation (who shall be an
adult, a guardian of the minor or a trust company), and the release of such
other person or institution shall be a valid and complete discharge for the
payment of such benefit.

     6.4  Statement of Deferral Account.  The Administrator will furnish each
          -----------------------------
Eligible Participant with a statement setting forth the value of such Eligible
Participant's Deferral Account as of the end of each calendar year and all
credits to and payments from such Deferral

<PAGE>

Account during such year. Such statements will be furnished no later than 60
days after the end of each calendar year.

     6.5   Governing Law.  This Plan shall be governed by the laws of the State
           -------------
of Illinois.

     6.6   Non-guarantee of Status.  Nothing contained in this Plan shall be
           -----------------------
construed as a contract or guarantee of the right of an Eligible Participant to
be, or remain as, a director or a trustee of a fund, or to receive any, or any
particular rate of, Compensation.

     6.7   Counsel.  Each Board may consult with legal counsel with respect to
           -------
the meaning or construction of this Plan, its obligations or duties hereunder or
with respect to any action or proceeding or any question of law, and it shall be
fully protected with respect to any action taken or omitted by it in good faith
pursuant to the advice of legal counsel.

     6.8   Interests Not Transferable.  An Eligible Participant's and
           --------------------------
Beneficiaries' interests in the Deferral Account may not be anticipated, sold,
encumbered, pledged, mortgaged, charged, transferred, alienated, assigned nor
become subject to execution, garnishment or attachment and any attempt to do so
by any person shall be deemed null and void; no Participating Fund shall
recognize the rights of any party under this Plan except those of the Eligible
Participant or his Beneficiary; provided that this Section 6.8 shall not
preclude a Participating Fund from offsetting any amount payable to an Eligible
Participant hereunder by any amount owed by such Eligible Participant to that
Participating Fund or to Nuveen.

     6.9   Entire Agreement.  This Plan contains the entire understanding
           ----------------
between each Participating Fund and the Eligible Participants with respect to
the payment of non-qualified deferred compensation by a Participating Fund to
the Eligible Participants.

     6.10  Powers of Administrator.  In addition to other powers specifically
           -----------------------
set forth herein, the Administrator shall have all power and authority necessary
or convenient for the administration of this Plan, including without limitation
the authority to:

     (i)   construe and interpret the Plan, and resolve any inconsistency or
           ambiguity with respect to any of its terms;

     (ii)  decide all questions of eligibility and determine the amount, manner
           and time of payment of any benefits hereunder;

     (iii) prescribe rules and procedures to be followed by Eligible
           Participants or Beneficiaries in making any election or taking any
           action provided for herein, which rules and procedures may alter any
           provision of the Plan that is administrative or ministerial in nature
           without the necessity for an amendment;

     (iv)  allocate Deferral Accounts among the Eligible Funds;

     (v)   maintain all the necessary records for the administration of the
           Plan;

<PAGE>

     (vi)  delegate any of it duties or powers under the Plan to any other
           person acting under its supervision; and

     (vii) do all other acts which the Administrator deems necessary or proper
           to accomplish and implement its responsibilities under the Plan.

Any rule or procedure adopted by the Administrator, or any decision, ruling or
determination made by the Administrator, in good faith shall be final, binding
and conclusive on all Participating Funds, Eligible Participants, Beneficiaries
and all persons claiming through them.  The authority of the Administrator may
be exercised by such person as the Chief Executive Officer of the Administrator
may designate or, in the absence of a specific designation, by those officers
and employees of the Administrator whose normal duties include payment of
compensation to independent directors and trustees.

     6.11  Participant Litigation.  In any action or proceeding regarding the
           ----------------------
Plan Eligible Participants or their Beneficiaries or any other persons having or
claiming to have an interest in this Plan shall not be necessary parties and
shall not be entitled to any notice or process.  Any final judgment which is not
appealed or appealable and may be entered in any such action or proceeding shall
be binding and conclusive on the parties hereto and all persons having or
claiming to have any interest in this Plan.  To the extent permitted by law, if
a legal action is begun against either Board, any Participating Fund, the
Administrator, or any of their respective officers, directors, trustees,
employees or agents (an "indemnified party"), by or on behalf of any person and
such action results adversely to such person or if a legal action arises because
of conflicting claims to an Eligible Participant's or other person's benefits,
the costs to the indemnified party of defending the action will be charged to
the amounts, if any, which were involved in the action or were payable to the
Eligible Participant or other person concerned.  To the extent permitted by
applicable law, acceptance of participation in this Plan shall constitute a
release of each of the indemnified parties from any and all liability and
obligation not involving willful misconduct or gross neglect.

     6.12  Successors and Assigns.  This Plan shall be binding upon, and shall
           ----------------------
inure to the benefit of, the Participating Funds and their successors and
assigns and to the Eligible Participants and their heirs, executors,
administrators and personal representatives.

     6.13  Severability.  In the event any one or more provisions of this Plan
           ------------
are held to be invalid or unenforceable, such illegality or unenforceability
shall not affect the validity or enforceability of the other provisions hereof
and such other provisions shall remain in full force and effect unaffected by
such invalidity or unenforceability.

<PAGE>

     IN WITNESS WHEREOF, each Participating Fund has caused this Plan to be
executed by one of its duly authorized officers, this 30th day of October, 1998.


                                By:    /s/ Alan G. Berkshire
                                       ---------------------
                                Name:  Alan G. Berkshire
                                Title: Vice President



         /s/ Karen L. Healy
- -----------------------------------------
                Witness


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.J
<SEQUENCE>10
<FILENAME>dex99j.txt
<DESCRIPTION>EXCHANGE TRADED FUND CUSTODY AGREEMENT
<TEXT>
<PAGE>

                     EXCHANGE TRADED FUND CUSTODY AGREEMENT

         THIS AGREEMENT is made this 19/th/ day of February, 2002 by and between
NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND, a closed-end investment
company organized as a Massachusetts business trust (the "Fund"), and THE
JPMORGAN CHASE BANK, a New York banking corporation ("Chase").

                               W I T N E S S E T H

         WHEREAS, the Fund is registered as a closed-end diversified, management
investment company under the Investment Company act of 1940 (the "1940 Act")

         WHEREAS, the Fund desires to retain Chase to serve as the Fund's
custodian and Chase is willing to act as custodian hereunder.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:

         1.  Appointment. The Fund hereby appoints Chase to act as custodian of
its portfolio securities, cash and other property on the terms set forth in this
Agreement. Chase accepts such appointment and agrees to furnish the services
herein set forth in return for the compensation as provided in Section 23 of
this Agreement.

         2.  Delivery of Documents. The Fund has furnished Chase with copies
properly certified or authenticated of each of the following:

         (a) Resolutions of the Fund's Board of Trustees authorizing the
appointment of Chase as Custodian of the portfolio securities, cash and other
property of the Fund and approving this Agreement;

         (b) Incumbency and signature certificates identifying and containing
the signatures of the Fund's officers and/or the persons authorized to sign
Proper Instructions, as hereinafter defined, on behalf of the Fund;

         (c) The Fund's Declaration of Trust filed with the Commonwealth of
Massachusetts and all amendments thereto (such Declaration of Trust as currently
in effect and as it shall from time to time be amended, is herein called the
"Declaration");

         (d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
currently in effect and as they shall from time to time be amended, are herein
called the "By-Laws"),

         (e) Resolutions of the Fund's Board of Trustees appointing the
investment advisor of the Fund and resolutions of the Fund's Board of Trustees
and the Fund's Shareholders

                                        1

<PAGE>

approving the proposed Investment Advisory Agreement between the Fund and the
advisor (the "Advisory Agreement");

         (f)  The Advisory Agreement;

         (g)  The Fund's Notification of Registration filed pursuant to Section
8(a) of the 1940 Act and the Securities Act of 1933, as amended ("the 1933 Act")
with the SEC; and

         (h)  The Fund's most recent prospectus and statement of additional
information including all amendments and supplements thereto (the "Prospectus").

         Upon request the Fund will furnish Chase with copies of all amendments
of or supplements to the foregoing, if any. The Fund will also furnish Chase
upon request with a copy of the opinion of counsel for the Fund with respect to
the validity of the Shares of the Fund and the status of such Shares under the
1933 Act filed with the SEC, and any other applicable federal law or regulation.

         3.   Definitions.

         (a)  "Authorized Person". As used in this Agreement, the term
"Authorized Person" means the Fund's President, Treasurer and any other person,
whether or not any such person is an officer or employee of the Fund, duly
authorized by the Board of Trustees of the Fund to give Proper Instructions on
behalf of the Fund as set forth in resolutions of the Fund's Board of Trustees.

         (b)  "Book-Entry System". As used in this Agreement, the term
"Book-Entry System" means a book-entry system authorized by the U.S. Department
of Treasury, its successor or successors and its nominee or nominees.

         (c)  "Proper Instructions". Proper Instructions as used herein means a
writing signed or initialed by two or more persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if Chase reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all such oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and Chase are satisfied that such procedures afford adequate safeguards
for the Fund's assets. For purposes of this Section, Proper Instructions shall
include instructions received by Chase pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 9.

                                        2

<PAGE>

         (d) "Property".  The term "Property", as used in this Agreement, means:

               (i)   any and all securities and other property of the Fund
which the Fund may from time to time deposit, or cause to be deposited, with
Chase or which Chase may from time to time hold for the Fund;

               (ii)  all income in respect of any such securities or other
property; and

               (iii) all proceeds of the sales of any of such securities or
other property.

         (e) "Securities Depository". As used in this Agreement, the term
"Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC or its successor or successors and its nominee or
nominees; and shall also mean any other registered clearing agency, its
successor or successors specifically identified in a certified copy of a
resolution of the Fund's Board of Trustees approving deposits by Chase therein.

         4.    Delivery and Registration of the Property. The Fund will deliver
or cause to be delivered to Chase all securities and all moneys owned by it,
including payments of interest, principal and capital distributions and cash
received by it from the issuance of its Shares, at any time during the period of
this Agreement, except for securities and monies to be delivered to any
subcustodian appointed pursuant to Section 7 hereof. Chase will not be
responsible for such securities and such monies until actually received by it.
All securities delivered to Chase or to any such subcustodian (other than in
bearer form) shall be registered in the name of the Fund or in the name of a
nominee of the Fund or in the name of Chase or any nominee of Chase (with or
without indication of fiduciary status) or in the name of any subcustodian or
any nominee of such subcustodian appointed pursuant to Paragraph 7 hereof, or
with a Securities Depository or its nominee pursuant to Section 8 hereof, or
shall be properly endorsed and in form for transfer satisfactory to Chase.

         5.    Voting Rights. With respect to all securities, however
registered, it is understood that the voting and other rights and powers shall
be exercised by the Fund. Chase's only duty shall be to mail for delivery on the
next business day to the Fund any documents received, including proxy statements
and offering circulars, with any proxies for securities registered in a nominee
name executed by such nominee. Where warrants, options, tenders or other
securities have fixed expiration dates, the Fund understands that in order for
Chase to act, Chase must receive the Fund's instructions at its offices in New
York, addressed as Chase may from time to time request, by no later than noon
(NY City time) at least two business days prior to the last scheduled date to
act with respect thereto (or such earlier date or time as Chase may reasonably
notify the Fund). Absent Chase's timely receipt of such instructions, such
instruments will expire without liability to Chase.

                                        3

<PAGE>

         6.    Receipt and Disbursement of Money.

         (a) Chase shall open and maintain a custody account for the Fund,
subject only to draft or order by Chase acting pursuant to the terms of this
Agreement, and shall hold in such account, subject to the provisions hereof, all
cash received by it from or for the Fund other than cash maintained by the Fund
in a bank account established and used in accordance with Rule 17f-3 under the
1940 Act. Funds held by Chase for the Fund may be deposited by Chase to the
Fund's credit at Chase or in such other banks or trust companies as Chase may in
its discretion deem necessary or desirable; provided, however, that every such
bank or trust company shall be qualified to act as a custodian under the 1940
Act, and that each such bank or trust company shall be approved by vote of a
majority of the Board of Trustees of the Fund. Such funds shall be deposited by
Chase in its capacity as Custodian and shall be withdrawable by Chase only in
that capacity.

         (b) Upon receipt of Proper Instructions (which may be continuing
instructions as deemed appropriate by the parties) Chase shall make payments of
cash to, or for the account of, the Fund from such cash only (i) for the
purchase of securities, options, futures contracts or options on futures
contracts for the Fund as provided in Section 13 hereof; (ii) in the case of a
purchase of securities effected through a Book-Entry System or Securities
Depository, in accordance with the conditions set forth in Section 8 hereof;
(iii) in the case of repurchase agreements entered into between the Fund and
Chase, or another bank, or a broker-dealer which is a member of The National
Association of Securities Dealers, Inc. ("NASD"), either (a) against delivery of
the securities either in certificate form or through an entry crediting Chase's
account at the Federal Reserve Bank with such securities or (b) against delivery
of the receipt evidencing purchase by the Fund of securities owned by Chase
along with written evidence of the agreement by Chase to repurchase such
securities from the Fund; (iv) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund; (v) for the payment of dividends
or other distributions on shares declared pursuant to the governing documents of
the Fund, or for the payment of interest, taxes, administration, distribution or
advisory fees or expenses which are to be borne by the Fund under the terms of
this Agreement, any Advisory Agreement, or any administration agreement; (vi)
for payments in connection with the conversion, exchange or surrender of
securities owned or subscribed to by the Fund and held by or to be delivered to
Chase; (vii) to a subcustodian pursuant to Section 7 hereof; (viii) for such
common expenses incurred by the Fund in the ordinary course of its business,
including but not limited to printing and mailing expenses, legal fees,
accountants fees, exchange fees; or (ix) for any other proper purpose, but only
upon receipt of Proper Instructions.

         (c) Chase is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian for the
Fund.

                                        4

<PAGE>

         6A.   Advances by Custodian. The Fund may from time to time purchase
securities for settlement payable in "next day" funds and provide for payment
for such transactions by selling securities for settlement in "same day" funds
settling on the day after settlement of the Fund's purchase transaction. Under
these circumstances the Fund may require the Custodian to advance funds in
amounts not exceeding 20% of the value of the Fund's assets at the time of the
advance for payment of the securities purchase transaction, and the Custodian
shall recover an amount equal to its advance, with interest at the rate it
customarily charges for such transactions, from the proceeds of the securities
sale. In addition to the foregoing, the Custodian may from time to time agree to
advance cash to the Fund, with interest, for the Fund's other proper corporate
purposes. If the Custodian advances cash for any purpose, the Fund shall and
hereby does grant to the Custodian a security interest in Fund securities equal
in value to the amount of the cash advance but in no event shall the value of
securities in which a security interest has been granted exceed 20% of the value
of the Fund's total assets at the time of the pledge; should the Fund fail to
repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to reasonably dispose of any securities in which it has a
security interest to the extent necessary to obtain reimbursement.

         7.    Receipt and Delivery of Securities.

         (a) Except as provided by Section 8 hereof, Chase shall hold and
physically segregate all securities and noncash Property received by it for the
Fund. All such securities and non-cash Property are to be held or disposed of by
Chase for the Fund pursuant to the terms of this Agreement. In the absence of
Proper Instructions, Chase shall have no power or authority to withdraw,
deliver, assign, hypothecate, pledge or otherwise dispose of any such securities
and investments, except in accordance with the express terms provided for in
this Agreement. In no case may any trustee, officer, employee or agent of the
Fund withdraw any securities. In connection with its duties under this Section
7, Chase may, at its own expense, enter into subcustodian agreements with other
banks or trust companies for the receipt of certain securities and cash to be
held by Chase for the account of the Fund pursuant to this Agreement; provided
that each such bank or trust company has an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
twenty million dollars ($20,000,000. Chase will be liable for acts or omissions
of any subcustodian. Chase shall employ sub-custodians upon receipt of Proper
Instructions.

         (b) Promptly after the close of business on each day Chase shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of the Fund during said day. Where securities are transferred to the
account of the Fund established at a Securities Depository or Book Entry System
pursuant to Section 8 hereof, Chase shall also by book-entry or otherwise
identify as belonging to such Fund the quantity of securities in a fungible bulk
of securities registered in the name of Chase (or its nominee)

                                        5

<PAGE>

or shown in Chase's account on the books of a Securities Depository or
Book-Entry System. At least monthly and from time to time, Chase shall furnish
the Fund with a detailed statement of the Property held for the Fund under this
Agreement.

         8.    Use of Securities Depository or Book-Entry System. The Fund shall
deliver to Chase a certified resolution of the Board of Trustees of the Fund
approving, authorizing and instructing Chase on a continuous and ongoing basis
until instructed to the contrary by Proper Instructions actually received by
Chase (i) to deposit in a Securities Depository or Book-Entry System all
securities of the Fund eligible for deposit therein and (ii) to utilize a
Securities Depository or Book-Entry System to the extent possible in connection
with the performance of its duties hereunder, including without limitation
settlements of purchases and sales of securities by the Fund, and deliveries and
returns of securities collateral in connection with borrowings. Without limiting
the generality of such use, it is agreed that the following provisions shall
apply thereto:

         (a) Securities and any cash of the Fund deposited in a Securities
Depository or Book-Entry System will at all times (1) be represented in an
account of Chase in the Securities Depository or Book Entry System (the
"Account") and (2) be segregated from any assets and cash controlled by Chase in
other than a fiduciary or custodian capacity but may be commingled with other
assets held in such capacities. Chase will effect payment for securities and
receive and deliver securities in accordance with accepted industry practices as
set forth in (b) below, unless the Fund has given Chase Proper Instructions to
the contrary. The records of Chase with respect to securities of the Fund
maintained in a Securities Depository or Book Entry System shall identify by
book entry those securities belonging to the Fund.

         (b) Chase shall pay for securities purchased for the account of the
Fund upon (i) receipt of advice from the Securities Depository or Book Entry
System that such securities have been transferred to the Account, and (ii) the
making of an entry on the records of Chase to reflect such payment and transfer
for the account of the Fund. Upon receipt of Proper Instructions, Chase shall
transfer securities sold for the account of the Fund upon (i) receipt of advice
from the Securities Depository or Book Entry System that payment for such
securities has been transferred to the Account, and (ii) the making of an entry
on the records of Chase to reflect such transfer and payment for the account of
the Fund. Copies of all advices from the Securities Depository or Book Entry
System of transfers of securities for the account of the Fund shall identify the
Fund, be maintained for the Fund by Chase and be provided to the Fund at its
request. Upon request, Chase shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form of a written advice or
notice and shall furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in a Securities Depository or Book Entry
System for the account of the Fund.

         (c) Chase shall provide the Fund with any report obtained by Chase on
the Securities Depository or Book Entry System's accounting system, internal
accounting


                                       6

<PAGE>

control and procedures for safeguarding securities deposited in the Securities
Depository or Book Entry System.

         (d) All Books and records maintained by Chase which relate to the Fund
participation in a Securities Depository or Book-Entry System will at all times
during Chase's regular business hours be open to the inspection of the Fund's
duly authorized employees or agents, and the Fund will be furnished with all
information in respect of the services rendered to it as it may require.

         (e) Anything to the contrary in this Agreement notwithstanding, Chase
shall be liable to the Fund for any loss or damage to the Fund resulting from
any negligence, misfeasance or misconduct of Chase or any of its agents or of
any of its or their employees in connection with its or their use of the
Securities Depository or Book Entry Systems or from failure of Chase or any such
agent to enforce effectively such rights as it may have against such Securities
Depository or Book Entry System.

         9. Segregated Account. Chase shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf of the
Fund, into which account or accounts may be transferred cash and/or securities,
including securities maintained in an account by Chase pursuant to Section 8
hereof, (i) in accordance with the provisions of any agreement among the Fund,
Chase and a broker dealer registered under the Securities and Exchange Act of
1934 and a member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Trading Commission or any registered contract market),
or of any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for purposes of
segregating cash or government securities in connection with options purchased,
sold or written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, and (iii) for other proper corporate purposes,
but only, in the case of clause (iii), upon receipt of Proper Instructions.

         10.      Instructions Consistent With The Declaration, etc.

         (a) Unless otherwise provided in this Agreement, Chase shall act only
upon Proper Instructions. Chase may assume that any Proper Instructions received
hereunder are not in any way inconsistent with any provision of the Declaration
or By-Laws or any vote or resolution of the Fund's Board of Trustees or any
committee thereof. Chase shall be entitled to rely upon any Proper Instructions
actually received by Chase pursuant to this Agreement. The Fund agrees that
Chase shall incur no liability for following Proper Instructions given to Chase
regardless of any allegation or claim by the Fund or its Trustee or any third
party that Chase's compliance therewith constituted negligence or was otherwise
wrongful, it being understood nevertheless, that Chase will be responsible



                                       7

<PAGE>

to the extent provided in Section 25 of this Agreement for its execution or
performance of Proper Instructions. In accord with instructions from the Fund,
as required by accepted industry practice or as Chase may elect in effecting the
execution of Fund instructions, advances of cash or other Property made by
Chase, arising from the purchase, sale, redemption, transfer or other
disposition of Property of the Fund, or in connection with the disbursement of
funds to any party, or in payment of fees, expenses, claims or liabilities owed
to Chase by the Fund, or to any other party which has secured judgment in a
court of law against the Fund which creates an overdraft in the accounts or
over-delivery of Property, shall be deemed a loan by Chase to the Fund, payable
on demand, bearing interest at such rate customarily charged by Chase for
similar loans.

         (b) The Fund agrees that test arrangements, authentication methods or
other security devices to be used with respect to instructions which the Fund
may give by telephone, telex, TWX, facsimile transmission, bank wire or other
teleprocess, or through an electronic instruction system, shall be processed in
accordance with terms and conditions for the use of such arrangements, methods
or devices as Chase may put into effect and modify from time to time. The Fund
shall safeguard any test keys, identification codes or other security devices
which Chase makes available to the Fund and agrees that the Fund shall be
responsible for any loss, liability or damage incurred by Chase or by the Fund
as a result of Chase's acting in accordance with instructions from any
unauthorized person using the proper security device, unless such unauthorized
use is a result of Chase's negligence or willful misconduct. Chase may
electronically record, but shall not be obligated to so record, any instructions
given by telephone and any other telephone discussions with respect to the Fund.
In the event that the Fund uses Chase's Asset Management system or any successor
electronic communications or information system, the Fund agrees that Chase is
not responsible for the consequences of the failure of that system to perform
for any reason, beyond the reasonable control of Chase, or the failure of any
communications carrier, utility, or communications network. In the event that
system is inoperable, the Fund agrees that it will accept the communication of
transaction instructions by telephone, facsimile transmission on equipment
compatible to Chase's facsimile receiving equipment or by letter, at no
additional charge to the Fund.

         (c) Chase shall transmit promptly to the Fund all written information
received by Chase's Corporate Actions Department from issuers of the securities
being held for the Fund. With respect to tender or exchange offers, Chase shall
transmit promptly by facsimile to the Fund all written information received by
Chase's Corporate Actions Department from issuers of the securities whose tender
or exchange is sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the Fund shall notify
Chase's Corporate Actions Department at least three business days prior to the
date on which Chase is to take such action or upon the date such notification is
first received by the Fund, if later. If any Property registered in the name of
a nominee of Chase is called for partial redemption by the issuer of such
property, Chase is authorized to allot the called portion to the respective
beneficial holders of the Property in such manner deemed to be fair and
equitable by Chase in its sole discretion.


                                       8

<PAGE>

         11.      Transactions  Not  Requiring  Instructions.  Chase  is
authorized  to  take  the  following  action  without  Proper Instructions:

         (a) Collection of Income and Other Payments.  Chase shall:

                  (i) collect and receive on a timely basis for the account of
the Fund, all income and other payments and distributions, including (without
limitation) stock dividends, rights, warrants and similar items, included or to
be included in the Property of the Fund, and promptly advise the Fund of such
receipt and shall credit such income, as collected, to the Fund. From time to
time, Chase may elect, but shall not be obligated, to credit the account with
interest, dividends or principal payments on payable or contractual settlement
date, in anticipation of receiving same from a payor, central depository, broker
or other agent employed by the Fund or Chase. Any such crediting and posting
shall be at the Fund's sole risk, and Chase shall be authorized to reverse any
such advance posting in the event it does not receive good funds from any such
payor, central depository, broker or agent of the Customer. Chase agrees to
promptly notify the Fund of the reversal of any such advance posting;

                  (ii) endorse and deposit for collection in the name of the
Fund, checks, drafts, or other orders for the payment of money on the same day
as received;

                  (iii) receive and hold for the account of the Fund all
securities received by the Fund as a result of a stock dividend, share split-up
or reorganization, merger, recapitalization, readjustment or other rearrangement
or distribution of rights or similar securities issued with respect to any
portfolio securities of the Fund held by Chase hereunder;

                  (iv) present for payment and collect the amount payable upon
all securities which may mature or be called, redeemed or retired, or otherwise
become payable on the date such securities become payable;

                  (v) take any action which may be necessary and proper in
connection with the collection and receipt of such income and other payments and
the endorsement for collection of checks, drafts and other negotiable
instruments; and

                  (vi) to effect an exchange of the securities where the par
value is changed, and to surrender securities at maturity or upon an earlier
call for redemption, or when securities otherwise become payable, against
payment therefore in accordance with accepted industry practice. If any Property
registered in the name of a nominee of Chase is called for partial redemption by
the issuer of such property, Chase is authorized to allot the called portion to
the respective beneficial holders of the Property in such manner deemed to be
fair and equitable by Chase in its sole discretion.


                                       9

<PAGE>

         (b) Miscellaneous Transactions. Chase is authorized to deliver or cause
to be delivered Property against payment or other consideration or written
receipt therefor for examination by a dealer selling for the account of the Fund
in accordance with street delivery custom.

         12.      Transactions  Requiring  Instructions.  In addition to the
actions  requiring  Proper  Instructions set forth herein, upon receipt of
Proper  Instructions  and not otherwise,  Chase,  directly or through the use
of a Securities  Depository or Book-Entry System, shall:

         (a) Execute and deliver to such persons as may be designated in such
Proper Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;

         (b) Deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
issuer of securities or corporation, or the exercise of any conversion
privilege;

         (c) Deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any issuer of securities or corporation, against receipt of such
certificates of deposit, interim receipts or other instruments or documents, and
cash, if any, as may be issued to it to evidence such delivery;

         (d) Make such transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in said instructions to be for the purpose
of effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;

         (e) Release securities belonging to the Fund to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by the Fund; provided, however, that securities shall be released only upon
payment to Chase of the monies borrowed, or upon receipt of adequate collateral
as agreed upon by the Fund and Chase which may be in the form of cash or
obligations issued by the U.S. government, its agencies or instrumentalities,
except that in cases where additional collateral is required to secure a
borrowing already made, subject to proper prior authorization, further
securities may be released for that purpose; and pay such loan upon re-delivery
to it of the securities pledged or hypothecated therefore and upon surrender of
the note or notes evidencing the loan;

         (f) Deliver securities in accordance with the provisions of any
agreement among the Fund, Chase and a broker-dealer registered under the
Securities Exchange Act of 1934


                                       10

<PAGE>

(the "Exchange Act") and a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange, or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Funds;

         (g) Deliver securities in accordance with the provisions of any
agreement among the Fund, Chase and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in connection with
transactions by the Fund;

         (h) Deliver securities against payment or other consideration or
written receipt therefore for transfer of securities into the name of the Fund
or Chase or a nominee of either, or for exchange or securities for a different
number of bonds, certificates, or other evidence, representing the same
aggregate face amount or number of units bearing the same interest rate,
maturity date and call provisions, if any; provided that, in any such case, the
new securities are to be delivered to Chase;

         (i) Exchange securities in temporary form for securities in definitive
form;

         (j) Surrender, in connection with their exercise, warrants, rights or
similar securities, provided that in each case, the new securities and cash, if
any, are to be delivered to Chase;

         (k) Deliver securities upon receipt of payment in connection with any
repurchase agreement related to such securities entered into by the Fund; and

         (l) Deliver securities pursuant to any other proper corporate purpose,
but only upon receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Board of Trustees or of the Executive Committee signed by
an officer of the Funds and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made.

         13. Purchase of Securities. Promptly after each purchase of securities,
options, futures contracts or options on futures contracts by the investment
advisor, the Fund shall deliver to Chase (as Custodian) Proper Instructions
specifying with respect to each such purchase: (a) the name of the issuer and
the title of the securities, (b) the number of shares of the principal amount
purchased and accrued interest, if any, (c) the dates of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, (f) the name of the person from whom or the broker through whom
the purchase was made and (g) the Fund name. Chase shall upon receipt of

                                       11

<PAGE>

securities purchased by or for the Fund registered in the name of the Fund or in
the name of a nominee of Chase or of the Fund or in proper form for transfer or
upon receipt of evidence of title to options, futures contracts or options on
futures contracts purchased by the Fund, pay out of the moneys held for the
account of the Fund the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Proper Instructions. Except as
specifically stated otherwise in this Agreement, in any and every case where
payment for purchase of securities for the account of the Fund is made by Chase
in advance of receipt of the securities purchased in the absence of specific
written instructions from the Fund to so pay in advance, Chase shall be
absolutely liable to the Fund for such securities to the same extent as if the
securities had been received by Chase.

         14. Sale of Securities. Promptly after each sale of securities by the
Fund at the instruction of the investment advisor, the Fund shall deliver to
Chase (as Custodian) Proper Instructions, specifying with respect to each such
sale; (a) the name of the issuer and the title of the security, (b) the number
of shares or principal amount sold, and accrued interest, if any, (c) the date
of sale, (d) the sale price per unit, (e) the total amount payable to the Fund
upon such sale, (f) the name of the broker through whom or the person to whom
the sale was made and (g) the Fund name. Chase shall deliver the securities upon
receipt of the total amount payable to the Fund upon such sale, provided that
the same conforms to the total amount payable as set forth in such Proper
Instructions. Subject to the foregoing, Chase may accept payment in such form as
shall be satisfactory to it, and may deliver securities and arrange for payment
in accordance with the customs prevailing among dealers in securities.

         15. Not in Use.

         16. Records. Chase shall preserve the books and records relating to the
Fund's securities for the period required by Rule31a-2 of the 1940 Act. The
Fund, or the Fund's authorized representative, shall have access to such books
and records at all times during Chase's normal business hours. Upon reasonable
request of the Fund and at the Fund's expense, copies of any such books and
records shall be provided by Chase to the Fund or the Fund's authorized
representative.

         17. Cooperation with Accountants. Chase shall cooperate with the Fund's
independent certified public accountants and shall take all reasonable action in
the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the expression
of their unqualified opinion, including but not limited to the opinion included
in the Fund's Form N-1A, Form

                                       12

<PAGE>

N-SAR and other reports to the Securities and Exchange Commission and with
respect to any other requirement of such Commission.

         18. Reports to Fund by Independent Public Accountants. Chase shall
provide the Fund, at such times as the Fund may reasonably require, with reports
by independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities Depository or Book Entry System, relating to the services
provided by Chase under this Agreement; such reports, shall be of sufficient
scope and in sufficient detail, as may reasonably be required by the Fund to
provide reasonable assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies, the reports shall
so state.

         19. Confidentiality. Chase agrees on behalf of itself and its employees
to treat confidentially and as the proprietary information of the Fund all
information relative to the Fund's assets held under this Agreement, and not to
use such information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where Chase may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Fund.

         20. Equipment Failures. In the event of equipment failures beyond
Chase's control, Chase shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions but shall not have liability
with respect thereto. Chase shall maintain a disaster recovery program, that
includes back-up systems, reasonably designed to minimize the interruption of
custody service to clients.

         21. Right to Receive Advice.

         (a) Advice of Fund. If Chase shall be in doubt as to any action to be
taken or omitted by it, it may request, and shall receive, from the Fund
clarification or advice.

         (b) Advice of Counsel. If Chase shall be in doubt as to any question of
law involved in any action to be taken or omitted by Chase, it may request
advice at its own cost from counsel of its own choosing (who may be counsel for
the Fund or Chase, at the option of Chase).

         (c) Conflicting Advice. In case of conflict between directions or
advice received by Chase pursuant to sub-paragraph (a) of this paragraph and
advice received by Chase

                                       13

<PAGE>

pursuant to subparagraph (b) of this paragraph, Chase shall be entitled to rely
on and follow the advice received pursuant to the latter provision alone.

         (d) Protection of Chase. Chase shall be protected in any action or
inaction which it takes or omits to take in reliance on any directions or advice
received pursuant to subparagraphs (a) or (b) of this section which Chase, after
receipt of any such directions or advice, in good faith believes to be
consistent with such directions or advice. However, nothing in this paragraph
shall be construed as imposing upon Chase any obligation (i) to seek such
directions or advice, or (ii) to act in accordance with such directions or
advice when received, unless, under the terms of another provision of this
Agreement, the same is a condition to Chase's properly taking or omitting to
take such action. Nothing in this subsection shall excuse Chase when an action
or omission on the part of Chase constitutes willful misfeasance, bad faith,
negligence or reckless disregard by Chase of its duties under this Agreement.

         22.    Not in Use.


         23.    Compensation.  As compensation  for the services  rendered by
Chase during the term of this Agreement, the Fund will pay to Chase, in addition
to reimbursement of its out-of-pocket expenses, monthly fees as outlined in
Exhibit A.


         24.    Indemnification; Limitation of Liability.

                (a) The Fund, as sole owner of the Property, agrees to indemnify
and hold Chase and Chase's directors, officers, agents and employees
(collectively the "Indemnitees") harmless from and against any and all claims,
liabilities, losses, damages, fines, penalties, and expenses, including
out-of-pocket and incidental expenses and legal fees ("Losses") that may be
imposed on, incurred by, or asserted against, the Indemnitees or any of them for
following any instructions or other directions upon which Chase is authorized to
rely pursuant to the terms of this Agreement.

                (b) In addition to and not in limitation of paragraph (a)
immediately above, the Fund also agrees to indemnify and hold the Indemnitees
and each of them harmless from and against any and all Losses that may be
imposed on, incurred by, or asserted against, the Indemnitees or any of them in
connection with or arising out of Chase's performance under this Agreement,
provided the Indemnitees have not acted with negligence or bad faith or engaged
in willful misconduct.

                (c) Chase shall indemnify and hold the Fund harmless from and
against any and all Losses, but excluding attorneys' fees and expenses, arising
out of or attributable to Chase's breach of any material terms of this Agreement
or Chase's bad

                                       14

<PAGE>

faith, negligence or willful misconduct; provided the Fund in respect of such
Losses, has not acted in bad faith or with negligence or engaged in willful
misconduct.

               (d) Anything in this Agreement to the contrary notwithstanding
in no event shall Chase be liable for incidental, indirect, special, or
consequential losses or damages of any kind whatsoever, even if Chase is advised
of the likelihood of any such loss or damage and regardless of the form of
action in which any such loss or damage may be claimed.

         25.   Responsibility of Chase. In the performance of its duties
hereunder, Chase shall be obligated to exercise care and diligence and to act in
good faith to insure the accuracy and completeness of all services performed
under this Agreement. Chase shall be responsible for its own negligent failure
or that of any subcustodian it shall appoint to perform its duties under this
Agreement. Chase shall not be liable for any act or omission which does not
constitute willful misconduct, bad faith, or negligence on the part of Chase or
such subcustodian or reckless disregard of such duties, obligations and
responsibilities. Chase shall not be under any duty or obligation to inquire
into and shall not be liable for or in respect of (a) the validity or invalidity
or authority or lack thereof of any advice, direction, notice or other
instrument which conforms to the applicable requirements of this Agreement, if
any, and which Chase believes to be genuine, (b) the validity of the issue of
any securities purchased or sold by the Fund, the legality of the purchase or
sale thereof or the propriety of the amount paid or received therefor, (c) the
legality of the issue or sale of any Shares of the Fund, or the sufficiency of
the amount to be received therefore, (d) the legality of the redemption of any
Shares of the Fund, or the propriety of the amount to be paid therefor, (e) the
legality of the declaration or payment of any dividend or distribution on
Shares, or (f) delays or errors or loss of data occurring by reason of
circumstances beyond Chase's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, mechanical breakdown
(except as provided in Section 20), flood or catastrophe, acts of God,
insurrection, war, riots, or failure of the mail, transportation, communication
or power supply.

         26.   Collection of Income. Chase shall collect on a timely basis all
income and other payments with respect to registered securities held hereunder
to which the Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer securities if, on the date of payment by the
issuer, such securities are held by Chase or its agent thereof and shall credit
such income, as collected, to the Fund's custodian account. Without limiting the
generality of the foregoing, Chase shall detach and present for payment all
coupons and other income items requiring presentation as and when they become
due and shall collect interest when due on securities held hereunder. Income due
the Fund on securities loaned pursuant to the provisions of Section 9 shall be
the responsibility of the Fund. Chase will have no duty or responsibility in
connection therewith, other than to provide the Fund with such information or
data as may be

                                       15

<PAGE>

necessary to assist the Fund in arranging for the timely delivery
to the Custodian of the income to which the Fund is properly entitled.

         27. Ownership Certificates for Tax Purposes. Chase shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
securities of the Fund held by it and in connection with transfers of
securities.

         28. Effective Period; Termination and Amendment. This Agreement shall
become effective as of its execution, shall continue in full force and effect
until terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty (30) days after the date
of such delivery or mailing.

         Upon termination of the Agreement, the Fund shall pay to Chase such
compensation as may be due as of the date of such termination and shall likewise
reimburse Chase for its costs, expenses and disbursements.

         29. Successor Custodian If a successor custodian shall be appointed by
the Board of Trustees of the Fund, Chase shall, upon termination, deliver to
such successor custodian at the office of the custodian, duly endorsed and in
the form for transfer, all securities then held by it hereunder and shall
transfer to an account of the successor custodian all of the Fund's securities
held in a Securities Depository or Book Entry System.

         If no such successor custodian shall be appointed, Chase shall, in like
manner, upon receipt of a certified copy of a vote of the Board of Trustees of
the Fund, deliver at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.

         In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
Chase on or before the date when such termination shall be come effective, then
Chase shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, doing business in New York, New York, of its
own selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by Chase and all instruments held by
Chase relative thereto and all other property held by it under this Agreement
and to transfer to an account of such successor custodian all of the Fund's
securities held in any Securities Depository or Book Entry System. Thereafter,
such bank or trust company shall be the successor of the Custodian under this
Agreement.

         In the event that securities, funds and other properties remain in the
possession of Chase after the date of termination hereof owing to failure of the
Fund to procure the certified copy of the vote referred to or of the Board of
Trustees to appoint a successor custodian, Chase's sole obligation to the Fund
shall be to safekeep the Fund's assets until

                                       16

<PAGE>

they are transferred as directed by the Fund and Chase shall be entitled to fair
compensation for its services during such period as Chase retains possession of
such securities, funds and other properties and the provisions of this Agreement
relating to Chase's rights shall remain in full force and effect.

         30.    Notices. All notices and other communications (collectively
referred to as "Notice" or "Notices") in this section hereunder shall be in
writing and shall be first sent by telegram, cable, telex, or facsimile sending
device and thereafter by overnight mail for delivery on the next business day.
Notices shall be addressed (a) if to Chase, at Chase's address, 4 New York
Plaza, 3rd floor, New York, New York 10004, attention Mutual Fund Custody,
facsimile number (212) 623-8997; (b) if to the Fund, at the address of the Fund
Attention: Portfolio Manager, facsimile number (312) 917-8211; or (c) if to
neither of the foregoing, at such other address as shall have been notified to
the sender of any such Notice or other communication. Notices sent by overnight
mail shall be deemed to have been given the next business day. Notices sent by
messenger shall be deemed to have been given on the day delivered, and notices
sent by confirming telegram, cable, telex or facsimile sending device shall be
deemed to have been given immediately. All postage, cable, telegram, telex and
facsimile sending device charges arising from the sending of a Notice hereunder
shall be paid by the sender.

         31     Further Actions. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.


         32.    Amendments.  This Agreement or any part hereof may be changed
or waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.


         33.    Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall insure to the benefit of the parties hereto and their respective
successors.

         34.    The Fund's Declaration of Trust is on file with the Secretary
of the Commonwealth of Massachusetts. This agreement is executed on behalf of
the Fund by the Fund's officers and not individually and the obligations
imposed upon the Fund by this Agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.

                                       17

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.

                             THE JPMORGAN CHASE BANK

                             By: /s/ Julie B. Chase VP
                                -----------------------------





                             NUVEEN INSURED DIVIDEND
                             ADVANTAGE MUNICIPAL FUND

                             By:  /s/ Gifford R. Zimmerman
                                -----------------------------
                             Gifford R. Zimmerman
                             Vice President and Secretary

                                       18

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.K.1
<SEQUENCE>11
<FILENAME>dex99k1.txt
<DESCRIPTION>SHAREHOLDER TRANSFER AGENCY AGREEMENT
<TEXT>
<PAGE>

                      SHAREHOLDER TRANSFER AGENCY AGREEMENT

     This Agreement is made this 19th day of February, 2002 by and between The
JPMorgan Chase Bank ("Chase") a banking corporation organized under the laws of
the State of New York having an office at 14201 Dallas Parkway, 11th floor,
Dallas, TX 75240 and Nuveen Insured Dividend Advantage Municipal Fund, a
closed-end investment company organized as a business trust under the laws of
the Commonwealth of Massachusetts (the "Fund").

                                   I SERVICES
                                     --------

          Commencing on the date first herein-above written and in accordance
     with procedures established from time to time by the Fund and Chase, Chase
     shall perform the (i) shareholder account maintenance services, (ii)
     mailing and reporting services, (iii) dividend and distribution payment and
     reinvestment services and (iv) recordkeeping services (collectively, the
     "Standard Services") in connection with the Fund's shares of common shares,
     par value $.01 per share (the "Shares"), as more fully described herein.

          A. Account Maintenance Services. Chase shall perform transfer agent,
     registrar and other shareholder account maintenance services in connection
     with the Shares. Such services are composed of (i) registering Share
     issuance, redemption and transfers on the Fund's records of the holders of
     Shares (the "Shareholders") upon receipt of instructions from, in the case
     of issuance and redemption, the Fund, and in the case of a transfer, the
     transferor and documentation in proper form to effect a transfer of Shares;
     (ii) canceling the certificates/1/ representing such Shares, if any, and if
     so requested, countersigning, registering, issuing and mailing by insured
     first class mail new certificates for the same or a smaller whole number of
     Shares, (iii) issuing replacement certificates in lieu of certificates
     which have been lost, stolen or destroyed upon receipt of a properly
     executed affidavit with respect to such loss, theft or destruction and a
     lost certificate bond in form satisfactory to Chase; (iv) combining
     certificates into larger denominations; (v) maintaining stop transfer
     orders, including placing and removing the same; (vi) processing new
     Shareholder accounts; (vii) posting address changes; and (viii) researching
     and responding to Shareholder inquiries. Shares will be transferred and new
     certificates issued in transfer upon surrender of the old certificates in
     form deemed by Chase to be properly endorsed for transfer accompanied by
     delivery of such documents, certifications and opinions Chase may deem
     necessary to evidence the authority of the person making the transfer and
     payment of any applicable stock transfer tax. Chase reserves the right to
     refuse to transfer Shares until it is satisfied that the endorsement or
     signature on any document is valid and genuine, and for that purpose it
     will require a signature guarantee by a member or participant in the
     Securities Transfer Agents Medallion Program or such other guarantor
     previously approved by Chase. Chase shall not be required to effect any
     transfer unless and until it has received the approvals,
     ---------------------------------------
     /1/ All references to certificates will include book entry services.

<PAGE>

documents, certifications and opinions provided for herein. Chase's sole
responsibility in connection with any redemption of Shares shall be to register
the same on the Fund's records upon receipt of instruction from the Fund.

     B. Mailing. Mailing services provided to the Fund shall consist of (i)
annual preparation of a list of Shareholders owning Shares, (ii) semi-annual
distribution of a report to Shareholders, (iii) mailing proxies, (iv) receiving
and tabulating proxies and mailing Shareholder reports to current Shareholders,
(v) certifying Share vote totals, (vi) assisting with the annual meeting of
Shareholders, if any, and (vii) upon request of the Fund, mailing to each
Shareholder such other information relating to the Fund as the Fund may
reasonably request.

     C. Dividend and Distribution Payment Services.

     (1) Upon the declaration of any dividend or distribution payable either in
Shares or cash, the Fund shall notify Chase in writing setting forth the date of
payment (the "Payment Date") of such dividend or distribution, the record date
as of which Shareholders entitled to payment thereof shall be determined (the
"Record Date"), and the amount payable per Share to Shareholders of record as of
the Record Date. In the case of dividends at regular intervals, such
notification may be a standing notification setting forth the method of
calculating such dividends and the Fund or its agent shall advise Chase of the
amount of such dividend at the appropriate intervals. Chase shall notify the
Fund and the entity then acting as the custodian (which entity may be an
affiliate of Chase) for the portfolio securities and cash of the Fund (the
"Custodian") of the amount of cash required to pay the dividend or distribution
so that the Fund may instruct the custodian to make sufficient funds available
on or before the Payment Date. Upon receipt by Chase or a drawee bank selected
by Chase of such funds from the Custodian, Chase shall prepare and mail to
Shareholders, who are not participants in the Dividend Reinvestment Plan, at
their addresses as they appear on the records maintained by Chase or pursuant to
any written order of a Shareholder on file with Chase, checks representing any
dividend or distributions to which they are entitled, and an accompanying
distribution statement.

     (2) In addition to the forgoing, dividend and distribution payment services
are composed of (i) inserting any enclosure supplied by the Fund with each
dividend or distribution check; (ii) replacing lost dividend checks; (iii)
providing photocopies of canceled checks when requested by Shareholders; (iv)
reconciling paid and outstanding checks; (v) coding as "undeliverable" certain
accounts to suppress mailing of dividend checks to same; (vi) processing and
record keeping of accumulated uncashed dividends; (vii) furnishing requested
dividend and distribution information to Shareholders; and (viii) withholding
from such payments any taxes required to be withheld by Chase under, and
remitting the same in accordance with, applicable provisions of the Internal
Revenue Code.

<PAGE>

     D. Dividend reinvestment Plan Services. Chase will act as agent for
shareholders under the Dividend Reinvestment Plan, a copy of which is attached
hereto as Exhibit D.

     E. Recordkeeping Services.

     (1) Chase shall keep records relating to the Standard Services to be
performed hereunder, in such form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the rules promulgated thereunder, Chase agrees that all such records
prepared or maintained by Chase relating to the service to be performed by Chase
hereunder are the property of the Fund and will be preserved for the periods
prescribed under Rule 31a-2 of said rules and made available in accordance with
such section and rules. Chase shall forthwith upon the Fund's demand surrender
promptly to the Fund and cease to retain in its files those records and
documents created and maintained by Chase pursuant to this Agreement.

     (2) Chase and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.

     (3) In case of any requests or demands for the inspection of the
Shareholder records of the Fund, Chase will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. Chase reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.

                              II SHARE CERTIFICATES
                                 ------------------

     The Fund shall supply Chase with sufficient blank Share certificates. Such
blank Share certificates shall be properly signed, manually or by facsimile
signature, by duly authorized officers of the Fund. Notwithstanding the death,
resignation or removal of any officer of the Fund authorized to sign such share
certificates, Chase may continue to countersign certificates which bear the
manual or facsimile signature of such officer until otherwise directed by the
Fund. Chase shall establish and maintain facilities and procedures reasonably
acceptable to the Fund for the safekeeping of Shares certificates and facsimile
signature imprinting devices, if any, and for the preparation or use and for
keeping account of such certificates and devices. Chase agrees to establish and
maintain facilities and procedures that are reasonably acceptable to the Fund
and Chase for safekeeping of stock certificates, check forms and facsimile
signature imprinting devices, if any, and for the preparation or use, and for
keeping account of, such certificates, forms and devices.


<PAGE>

                              III FEES AND EXPENSES
                                  -----------------

     For the services to be performed by Chase pursuant to this Agreement, the
Fund shall pay to Chase all fees and expenses described herein:

     A. Shareholder Services Fee. The Fund shall pay Chase a service fee (the
"Shareholder Service Fee") in the amount set forth in Exhibit B hereto. The
Shareholder Service Fee is payable quarterly and shall be prorated for any
period less than a full calendar quarter.

     B. Out-of-Pocket Expenses. The Fund agrees to reimburse Chase for any and
all out-of-pocket expenses,

     C. Additional Services. The Fund may request additional processing, special
reports, or other additional services. The Fund shall submit such requests for
additional services in writing together with such specifications as may be
reasonably required by Chase, and Chase shall respond to such requests in the
form of a price quotation. The Fund's written acceptance of the quotation must
be received prior to implementation of such request.

     D. Terms of Payment. All fees, out-of-pocket expenses, or additional
charges of Chase shall be billed on a monthly basis and shall be due and payable
within 15 days after receipt of the invoice. Chase will render, after the close
of each quarter in which services have been furnished, a statement reflecting
all of the charges for such quarter.

     E. Taxes. In addition to any other charges specified hereunder, the Fund
shall pay any sales tax, use tax, transfer tax, excise tax, tariff, duty, or any
other tax or payment in lieu thereof imposed by any governmental authority or
agency as a direct result of the provision by Chase of goods or services
hereunder, except for taxes based on Chase's net income.

                        IV REPRESENTATIONS AND WARRANTIES
                           ------------------------------

     A. Chase. Chase represents and warrants to the Fund that:

     (1) It is a duly organized and existing corporation having the powers of a
trust company under the laws of the State of New York;
     (2) It is empowered under applicable laws and by its charter and by-laws to
enter into and perform this Agreement;
     (3) All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement;
     (4) Its entering into this Agreement shall not cause a material breach or
be in material conflict with any other agreement or obligation of Chase; and


<PAGE>

     (5) It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.

     B. The Fund. The Fund represents and warrants to Chase that:

     (1) It is a business trust duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts;
     (2) It is empowered under applicable laws and by its Declaration of Trust,
its by-laws, and the Resolutions of the Board of Trustees (the "Organization
Documents") to enter into and perform this Agreement;
     (3) All requisite proceedings have been taken to authorize it to enter into
and perform this Agreement;
     (4) Its entering into this Agreement shall not cause a material breach or
be in material conflict with any other agreement or obligation of the Fund; and
     (5) The Fund is validly registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended, and the issuance
of Shares to subscribers at closing will be in compliance with applicable
securities laws or qualify for exemption therefrom.

                        V DOCUMENTS FURNISHED BY THE FUND
                          -------------------------------

     A. Initially Furnished Documents. The Fund has furnished to Chase the
following documents:

     (1) A copy of the Organization Documents of the Fund, attached hereto as
Exhibit A;
     (2) Copies of the Fund's notice of registration on Form N-8A attached
hereto as Exhibit C;
     (3) A certificate signed by an officer of the Fund specifying: the number
of authorized Shares, the number of such authorized Shares issued and currently
outstanding, and the names, Share amounts and other applicable information
required for issuance of Shares to subscribers; and
     (4) An opinion of counsel to the Fund with respect to the validity of the
authorized and outstanding Shares and whether such Shares are fully paid and
non-assessable.

     B. Prospectively Furnished Documents. The Fund shall furnish the following
documents upon request by Chase:

     (1) Copies of all amendments to the Organization Documents of the Fund;
     (2) Copies of all subsequent amendments to the Fund's registration
statement; and
     (3) Such other certificates, documents and opinions as Chase shall deem to
be appropriate or necessary for the proper performance of its duties hereunder.

                               VI INDEMNIFICATION
                                  ---------------

<PAGE>

     A. Fund Indemnification Obligation. Chase shall not be responsible for, and
the Fund shall indemnify and hold Chase harmless from, any and all losses,
damages, costs, charges, reasonable attorneys' fees, payments, expenses and
liability arising out of or attributable to:

     (1) All actions of Chase or its agents or subcontractors required to be
taken pursuant to this Agreement unless such actions are taken in bad faith or
with negligence or willful misconduct;
     (2) The Fund's refusal or failure to comply with the terms of this
Agreement, or the Fund's lack of good faith, negligence or willful misconduct,
or the breach of any representation or warranty of the Fund hereunder;
     (3) The reliance on or use by Chase or its agents or subcontractors of
information, records or documents which are received by Chase or its agents or
subcontractors and furnished to it by or on behalf of the Fund, and which have
been prepared or maintained by the Fund or any other person or firm (other than
Chase or its agents or subcontractors) on behalf of the Fund;
     (4) The reliance on, or the carrying out by Chase or its agents or
subcontractors of, any instructions or requests of the Fund which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Fund; and
     (5) The offer or sale of Shares by the Fund in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state, or in violation of any stop order or other
determination or ruling by any federal agency or any state agency with respect
to the offer or sale of such Shares in such state.

     B. Chase Indemnification Obligation. Chase shall indemnify and hold the
Fund harmless from and against any and all losses, damages, costs, and charges,
but excluding attorneys' fees, payments and expenses, arising out of or
attributable to Chase's material breach of this Agreement, or Chase's bad faith,
negligence or willful misconduct.

     C. Claims. Upon the assertion of a claim for which either Chase or the Fund
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion and shall keep the other party
advised with respect to all developments concerning such claim, but the failure
to give such notice shall not affect rights to indemnification hereunder except
to the extent that the indemnifying party demonstrates actual damage caused by
such failure. The party who may be required to indemnify shall have the option
to participate with the party seeking indemnification in the defense of such
claim but not to control such defense. The party seeking indemnification shall
in no case confess any claim or make any compromise in any case in which the
other party may be required to indemnify it, except with the indemnifying
party's prior written consent, which consent shall not be withheld unreasonably.

     D. Chase's Limitation of Liability. Anything in this agreement to the
contrary notwithstanding, in no event shall Chase be liable for special,
indirect, or consequential losses or damages of any kind whatsoever whether or
not Chase has been advised as to


<PAGE>

the possibility of such losses or damages and regardless of the form of action
in which any such claim for losses or damages may be made.

     E. Force Majeure. In the event either Chase or the Fund is unable to
perform its obligations under the terms of this Agreement because of acts of
God, strikes, interruption of electrical power or other utilities, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable to the other for
any damages resulting from such failure to perform or otherwise from such
causes. Chase shall use all reasonable efforts to minimize the likelihood of all
damage, loss of data, delays and errors resulting from uncontrollable events,
and should such damage, loss of data, delays or errors occur, Chase shall use
its reasonable efforts to mitigate the effects of such occurrence.

                            VII TERM AND TERMINATION
                                --------------------

     A. Notice. This Agreement shall remain in effect until terminated by any
party, without penalty, upon 90 days' prior written notice.

     B. Breach. This Agreement may be terminated by any non-breaching party if a
party is in material breach of this Agreement. In order to so terminate this
Agreement, written notice shall be given to an officer of the party in breach of
the non-breaching party's intention to terminate due to a failure to comply
with, or breach of, a material term or condition of this Agreement. Said written
notice shall specifically state the material term or condition claimed to be
breached and shall provide at least 15 days in which to correct such alleged
breach. If such breach is not corrected in the time period allowed, then any
non-breaching may terminate this Agreement immediately, upon written notice to
the other parties.

     C. Expenses. Should this Agreement be terminated, all out-of-pocket
expenses reasonably incurred by Chase in connection with the movement of records
and materials to its successor or to the Fund shall be borne by the Fund.

                             VIII USE OF CHASE NAME
                                  -----------------

     The Fund shall not use Chase's name in any offering material, Shareholder
report, advertisement or other material relating to the Fund, other than for the
purpose of merely identifying and describing the functions of Chase hereunder,
in a manner not approved by Chase in writing prior to such use; provided,
however, that Chase shall consent to all uses of its name required by the
Securities and Exchange Commission, any state securities commission, or any
federal or state regulatory authority; and provided, further, that in no case
will such approval be unreasonably withheld.

                                  IX ASSIGNMENT
                                     ----------

<PAGE>

     Except as hereunder provided, neither this Agreement nor any rights or
obligations hereunder may be assigned by any party without the written consent
of the other parties. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns.
Chase may, with the Fund's consent, subcontract for the performance hereof with
any subsidiary or other affiliate of Chase, and may, with the Fund's consent,
subcontract for the performance hereof with third parties other than a
subsidiary or affiliate of Chase; provided, however, that Chase shall be as
fully responsible to the Fund for the acts or omissions of any subcontractor as
it is for its own acts and omissions and shall be responsible for its choice of
subcontractor.

                                X CONFIDENTIALITY
                                  ---------------

     The information contained in this Agreement is confidential and proprietary
in nature. By receiving this Agreement, the Fund agrees that none of its
trustees, officers, employees, or agents, without the prior written consent of
Chase, will divulge, furnish or make accessible to any third party, except as
required by law or any regulatory authority or as permitted by the next
sentence, any part of this Agreement or information in connection therewith
which has been or may be made available to it. The Fund agrees that it will
limit access to the Agreement and such information to only those officers or
employees with responsibilities for analyzing the Agreement, to its counsel, to
such independent consultants hired expressly for the purpose of assisting in
such analysis, and to governmental agencies. In addition, the Fund agrees that
any person to whom such information is properly disclosed shall be informed of
the confidential nature of the Agreement and the information relating thereto,
and shall be directed to treat the same appropriately. The terms set forth in
this Article X shall continue without termination.

                                XI. MISCELLANEOUS
                                    -------------

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute the entire Agreement between the parties hereto and supersede

                          [text continued on next page]



<PAGE>

any prior oral or written Agreement with respect to the subject matter hereof.
This Agreement may not be amended or modified in any manner except by written
instrument executed by both parties.

     The Fund's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This agreement is executed on behalf of the Fund
by the Fund's officers as officers and not individually and the obligations
imposed upon the Fund by this agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the date first above
written.

                                       By /s/ Julie B. Chase
                                          ----------------------------------
                                       Name: Julie B. Chase
                                       Title: Vice President

                                       Nuveen Insured Dividend Advantage
                                       Municipal Fund

                                       By /s/ Gifford R. Zimmerman
                                          ----------------------------------
                                       Name: Gifford R. Zimmerman
                                       Title: Vice President and Secretary



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.K.2
<SEQUENCE>12
<FILENAME>dex99k2.txt
<DESCRIPTION>EXPENSE REIMBURSEMENT AGREEMENT
<TEXT>
<PAGE>

                         EXPENSE REIMBURSEMENT AGREEMENT
                         -------------------------------

AGREEMENT made this 20th day of February, 2002, by and between NUVEEN INSURED
DIVIDEND ADVANTAGE MUNICIPAL FUND, a Massachusetts business trust (the "Fund"),
and NUVEEN ADVISORY CORP., a Delaware corporation (the "Adviser").

                               W I T N E S S E T H
                               - - - - - - - - - -

WHEREAS, the Fund and the Adviser have separately entered into an Investment
Management Agreement of even date herewith ( the "Management Agreement");

In consideration of the mutual covenants hereinafter contained, and in
connection with the establishment and commencement of operations of the Fund, it
is hereby agreed by and between the parties hereto as follows:

1. For the period from the commencement of the Fund's operations through March
31, 2002 and for the 12 month periods ending March 31 in each indicated year
during the term of the Management Agreement (including any continuation done in
accordance with Section 15(c) of the Investment Company Act of 1940), the
Adviser agrees to reimburse expenses (including the management fee and other
expenses) in the amounts determined by applying the following annual rates to
the average daily net assets of the Fund:

<PAGE>


<TABLE>
<CAPTION>
                    Percentage Reimbursed (as                         Percentage Reimbursed (as
 Period Ending      a percentage of average        Period Ending       a percentage of average
   March 31          daily net assets)/(1)/          March 31           daily net assets)/(1)/

     <S>                    <C>                        <C>                     <C>
     2002/(2)/              .30%
     2003                   .30%                       2008                    .25%
     2004                   .30%                       2009                    .20%
     2005                   .30%                       2010                    .15%
     2006                   .30%                       2011                    .10%
     2007                   .30%                       2012                    .05%
</TABLE>

/(1)/ Including net assets attributable to MuniPreferred Shares.
/(2)/ From the commencement of operations.

2. To effect the expense reimbursement provided for in this Agreement, the Fund
may offset the appropriate amount of the reimbursement contemplated hereunder
against the management fee payable under the Management Agreement.

3. This Agreement, and the Adviser's obligation to so reimburse expenses
hereunder, shall terminate on the earlier of (a) March 31, 2012 or (b)
termination of the Management Agreement.

4. Except as provided in paragraph 3, above, this Agreement may be terminated
only by the vote of (a) the Board of Trustees of the Fund, including the vote of
the members of the Board who are not "interested persons" within the meaning of
the Investment Company Act of 1940, and (b) a majority of the outstanding voting
securities of the Fund.

5. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder shall not be thereby
affected.

                                       2

<PAGE>

6. The Fund's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed on behalf of the Fund
by the Fund's officers as officers and not individually and the obligations
imposed upon the Fund by this Agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.

     IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed on the day and year above written.


                                       NUVEEN INSURED DIVIDEND
                                       ADVANTAGE MUNICIPAL FUND



                                       by:  /s/Gifford R. Zimmerman
                                            -----------------------
                                                 Vice President

Attest:  /s/Virginia L. O'Neal
         ---------------------
          Assistant Secretary

                                       NUVEEN ADVISORY CORP.



                                       by:  /s/William M. Fitzgerald
                                            ------------------------
                                                 Vice President

Attest:  /s/Larry Martin
         -------------------
         Assistant Secretary


                                        3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.L.3
<SEQUENCE>13
<FILENAME>dex99l3.txt
<DESCRIPTION>OPINION AND CONSENT OF BELL, BOYD & LLOYD
<TEXT>
<PAGE>

                             BELL, BOYD & LLOYD LLC
                           Three First National Plaza
                       70 West Madison Street, Suite 3300
                          Chicago, Illinois 60602-4207
                                 312  372-1121
                               Fax  312  372-2098



                                 March 25, 2002


     As counsel for Nuveen Insured Dividend Advantage Municipal Fund (the
"Registrant"), we consent to the incorporation by reference of our opinion,
filed with pre-effective amendment no. 2 to the Registrant's registration
statement on Form N-2 (File Nos. 333-59770 and 811-09475) on February 20, 2002.

     In giving this consent we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.

                                Very truly yours,

                                /s/ Bell, Boyd & Lloyd LLC

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.L.4
<SEQUENCE>14
<FILENAME>dex99l4.txt
<DESCRIPTION>OPINION AND CONSENT OF BINGHAM DANA LLP
<TEXT>
<PAGE>

                                BINGHAM DANA LLP
                               150 Federal Street
                        Boston, Massachusetts 02110-1726
                                  617 951-8000
                                Fax 617-951-8736


                                 March 25, 2002



     As special Massachusetts counsel for Nuveen Insured Dividend Advantage
Municipal Fund (the "Registrant"), we consent to the incorporation by
reference of our opinion, filed with pre-effective amendment no. 2 to the
Registrant's registration statement on Form N-2 on February 20, 2002.

     In giving this consent we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.

                                       Very truly yours,


                                       /s/  BINGHAM DANA LLP


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.N
<SEQUENCE>15
<FILENAME>dex99n.txt
<DESCRIPTION>CONSENT OF ERNST & YOUNG
<TEXT>
<PAGE>

                        CONSENT OF INDEPENDENT AUDITORS


We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 8, 2002 in the Registration Statement (Form N-2)
and related prospectus and statement of additional information of the Nuveen
Insured Dividend Advantage Municipal Fund filed with the Securities and Exchange
Commission in the Pre-effective Amendment No. 3 to the Registration Statement
under the Securities Act of 1933 (File No. 333-59770) and in this Amendment
No. 3 to the Registration Statement under the Investment Company Act of 1940
(File No. 811-09475).



                                        /s/  ERNST & YOUNG LLP


Chicago, Illinois
March 25, 2002



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.P
<SEQUENCE>16
<FILENAME>dex99p.txt
<DESCRIPTION>SUBSCRIPTION AGREEMENT OF NUVEEN ADVISORY CORP
<TEXT>
<PAGE>

                NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND

                             Subscription Agreement
                             ----------------------

         This Agreement made this March 7, 2002 by and between Nuveen Insured
Dividend Advantage Municipal Fund, a Massachusetts business trust (the "Fund"),
and Nuveen Advisory Corp., a Delaware corporation (the "Subscriber");

                                  WITNESSETH:

         WHEREAS, the Fund has been formed for the purposes of carrying on
business as a closed-end diversified management investment company; and

         WHEREAS, the Subscriber has been selected by the Fund's Board of Trust-
ees to serve as investment adviser to the Fund; and

         WHEREAS, the Subscriber wishes to subscribe for and purchase, and the
Fund wishes to sell to the Subscriber, 7,000 common shares for a purchase price
of $14.325 per share;

         NOW THEREFORE, IT IS AGREED:

         l.  The Subscriber subscribes for and agrees to purchase from the Fund
7,000 common shares for a purchase price of $14.325 per share. Subscriber agrees
to make payment for these shares at such time as demand for payment may be made
by an officer of the Fund.

         2.  The Fund agrees to issue and sell said shares to Subscriber
promptly upon its receipt of the purchase price.

         3.  To induce the Fund to accept its subscription and issue the shares
subscribed for, the Subscriber  represents that it is informed as follows:

             (a) That the shares being subscribed for have not been and will not
         be registered under the Securities Act of l933 ("Securities Act");

             (b) That the shares will be sold by the Fund in reliance on an
         exemption from the  registration  requirements  of the Securities Act;

             (c) That the Fund's reliance upon an exemption from the
         registration requirements of the Securities Act is predicated in part
         on the representations and agreements contained in this Subscription
         Agreement;

<PAGE>
                                       2

            (d) That when issued, the shares will be "restricted securities"
         as defined in paragraph (a)(3) of Rule l44 of the General Rules and
         Regulations under the Securities Act ("Rule l44") and cannot be sold or
         transferred by Subscriber unless they are subsequently registered under
         the Securities Act or unless an exemption from such registration is
         available;

            (e) That there do not appear to be any exemptions from the
         registration provisions of the Securities Act available to the
         Subscriber for resale of the shares. In the future, certain exemptions
         may possibly become available, including an exemption for limited sales
         including an exemption for limited sales in accordance with the
         conditions of Rule l44.

The Subscriber understands that a primary purpose of the information acknow-
ledged in subparagraphs (a) through (e) above is to put it on notice as to
restrictions on the transferability of the shares.

         4. To further induce the Fund to accept its subscription and issue the
shares subscribed for, the Subscriber:

            (a) Represents and warrants that the shares subscribed for are
         being and will be acquired for investment for its own account and not
         on behalf of any other person or persons and not with a view to, or for
         sale in connection with, any public distribution thereof; and

            (b) Agrees that any certificates representing the shares subscribed
         for may bear a legend substantially in the following form:

            The shares represented by this certificate have been acquired for
            investment and have not been registered under the Securities Act of
            l933 or any other federal or state securities law. These shares may
            not be offered for sale, sold or otherwise transferred unless
            registered under said securities laws or unless some exemption from
            registration is available.

         5. This Subscription Agreement and all of its provisions shall be
binding upon the legal representatives, heirs, successors and assigns of the
parties hereto.

<PAGE>

     6. The Fund's Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed on behalf of the Fund
by the Fund's officers as officers and not individually and the obligations
imposed upon the Fund by this Agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.

     IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
parties hereto as of the day and date first above written.

NUVEEN INSURED DIVIDEND
ADVANTAGE MUNICIPAL FUND


By:  /s/ Gifford R. Zimmerman
     ---------------------------

NUVEEN ADVISORY CORP.


By:  /s/ Thomas C. Spalding
     ---------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.S
<SEQUENCE>17
<FILENAME>dex99s.txt
<DESCRIPTION>POWERS OF ATTORNEY
<TEXT>
<PAGE>

               NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN CONNECTICUT DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
          NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
           NUVEEN INSURED NEW YORK DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN FLORIDA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN MASSACHUSETTS DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
              NUVEEN NEW JERSEY DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
                NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN PENNSYLVANIA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organizations, hereby constitutes and appoints ALAN G. BERKSHIRE,
LARRY W. MARTIN and GIFFORD R. ZIMMERMAN, and each of them (with full power to
each of them to act alone) his true and lawful attorney-in-fact and agent, for
him on his behalf and in Registration Statements on Form N-2 under the
Securities Act of l933 and the Investment Company Act of l940, including any
amendment or amendments thereto, with all exhibits, and any and all other
documents required to be filed with any regulatory authority, federal or state,
relating to the registration thereof, or the issuance of shares thereof, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as he might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned trustee of the above-referenced
organizations has hereunto set his hand this 16th day of July, 1999.


                                  /s/ Timothy R. Schwertfeger
                                  ---------------------------
                                  Timothy R. Schwertfeger
STATE OF    ILLINOIS      )
        ----------------
                          )SS
COUNTY OF       COOK      )
          --------------

On this 27th day of July, 1999, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.

"OFFICIAL SEAL"
Virginia L. Corcoran                /s/Virginia L. Corcoran
                                    -----------------------
Notary Public, State of Illinois    Notary Public
My Commission Expires:  10/27/01

<PAGE>

               NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN CONNECTICUT DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
          NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
           NUVEEN INSURED NEW YORK DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN FLORIDA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN MASSACHUSETTS DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
              NUVEEN NEW JERSEY DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
                NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN PENNSYLVANIA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organizations, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ALAN G. BERKSHIRE, LARRY W. MARTIN and GIFFORD R. ZIMMERMAN, and
each of them (with full power to each of them to act alone) her true and lawful
attorney-in-fact and agent, for her on her behalf and in her name, place and
stead, in any and all capacities, to sign and file one or more Registration
Statements on Form N-2 under the Securities Act of l933 and the Investment
Company Act of l940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.

IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set her hand this 27th day of July, 1999.

                                  /s/ Anne E. Impellizzeri
                                  ------------------------
                                  Anne E. Impellizzeri
STATE OF    ILLINOIS      )
        ----------------
                          )SS
COUNTY OF       COOK      )
          --------------

On this 27th day of July, 1999, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.

"OFFICIAL SEAL"
Virginia L. Corcoran                /s/Virginia L. Corcoran
                                    -----------------------
Notary Public, State of Illinois    Notary Public
My Commission Expires:  10/27/01

<PAGE>

               NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN CONNECTICUT DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
          NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
           NUVEEN INSURED NEW YORK DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN FLORIDA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN MASSACHUSETTS DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
              NUVEEN NEW JERSEY DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
                 NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN PENNSYLVANIA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organizations, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ALAN G. BERKSHIRE, LARRY W. MARTIN and GIFFORD R. ZIMMERMAN, and
each of them (with full power to each of them to act alone) his true and lawful
attorney-in-fact and agent, for him on his behalf and in his name, place and
stead, in any and all capacities, to sign and file one or more Registration
Statements on Form N-2 under the Securities Act of l933 and the Investment
Company Act of l940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.

IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 27th day of July, 1999.

                                  /s/ Peter R. Sawers
                                  -------------------
                                  Peter R. Sawers
STATE OF    ILLINOIS      )
        ----------------
                          )SS
COUNTY OF       COOK      )
          --------------

On this 27th day of July, 1999, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.

"OFFICIAL SEAL"
Virginia L. Corcoran                /s/Virginia L. Corcoran
                                    -----------------------
Notary Public, State of Illinois    Notary Public
My Commission Expires:  10/27/01

<PAGE>

               NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN CONNECTICUT DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
          NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
           NUVEEN INSURED NEW YORK DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN FLORIDA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN MASSACHUSETTS DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
              NUVEEN NEW JERSEY DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
                 NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN PENNSYLVANIA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
                                 POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organizations, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ALAN G. BERKSHIRE, LARRY W. MARTIN and GIFFORD R. ZIMMERMAN, and
each of them (with full power to each of them to act alone) his true and lawful
attorney-in-fact and agent, for him on his behalf and in his name, place and
stead, in any and all capacities, to sign and file one or more Registration
Statements on Form N-2 under the Securities Act of l933 and the Investment
Company Act of l940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.

IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 27th day of July, 1999.

                                  /s/ William J. Schneider
                                  ------------------------
                                  William J. Schneider
STATE OF    ILLINOIS      )
        ----------------
                          )SS
COUNTY OF       COOK      )
          --------------

On this 27th day of July, 1999, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.

"OFFICIAL SEAL"
Virginia L. Corcoran                /s/Virginia L. Corcoran
                                    -----------------------
Notary Public, State of Illinois    Notary Public
My Commission Expires:  10/27/01

<PAGE>

               NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN CONNECTICUT DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
          NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
           NUVEEN INSURED NEW YORK DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN FLORIDA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN MASSACHUSETTS DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
              NUVEEN NEW JERSEY DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
                 NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN PENNSYLVANIA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organizations, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ALAN G. BERKSHIRE, LARRY W. MARTIN and GIFFORD R. ZIMMERMAN, and
each of them (with full power to each of them to act alone) her true and lawful
attorney-in-fact and agent, for her on her behalf and in her name, place and
stead, in any and all capacities, to sign and file one or more Registration
Statements on Form N-2 under the Securities Act of l933 and the Investment
Company Act of l940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.

IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set her hand this 27th day of July, 1999.

                                  /s/ Judith M. Stockdale
                                  -----------------------
                                  Judith M. Stockdale

STATE OF    ILLINOIS      )
        ----------------
                          )SS
COUNTY OF       COOK      )
          --------------

On this 27th day of July, 1999, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.

"OFFICIAL SEAL"
Virginia L. Corcoran                /s/Virginia L. Corcoran
                                    -----------------------
Notary Public, State of Illinois    Notary Public
My Commission Expires:  10/27/01

<PAGE>

               NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN CONNECTICUT DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
          NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
           NUVEEN INSURED NEW YORK DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN FLORIDA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN MASSACHUSETTS DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
              NUVEEN NEW JERSEY DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
                NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN PENNSYLVANIA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organizations, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ALAN G. BERKSHIRE, LARRY W. MARTIN and GIFFORD R. ZIMMERMAN, and
each of them (with full power to each of them to act alone) his true and lawful
attorney-in-fact and agent, for him on his behalf and in his name, place and
stead, in any and all capacities, to sign and file one or more Registration
Statements on Form N-2 under the Securities Act of l933 and the Investment
Company Act of l940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.

IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 27th day of July, 1999.

                                  /s/ Robert P. Bremner
                                  ---------------------
                                  Robert P. Bremner
STATE OF    ILLINOIS      )
        ----------------
                          )SS
COUNTY OF       COOK      )
          --------------

On this 27th day of July, 1999, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.

"OFFICIAL SEAL"
Virginia L. Corcoran                /s/Virginia L. Corcoran
                                    -----------------------
Notary Public, State of Illinois    Notary Public
My Commission Expires:  10/27/01

<PAGE>

               NUVEEN ARIZONA DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN CONNECTICUT DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN INSURED DIVIDEND ADVANTAGE MUNICIPAL FUND
          NUVEEN INSURED CALIFORNIA DIVIDEND ADVANTAGE MUNICIPAL FUND
           NUVEEN INSURED NEW YORK DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN FLORIDA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MARYLAND DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN MASSACHUSETTS DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN MICHIGAN DIVIDEND ADVANTAGE MUNICIPAL FUND
              NUVEEN NEW JERSEY DIVIDEND ADVANTAGE MUNICIPAL FUND
            NUVEEN NORTH CAROLINA DIVIDEND ADVANTAGE MUNICIPAL FUND
                 NUVEEN OHIO DIVIDEND ADVANTAGE MUNICIPAL FUND
             NUVEEN PENNSYLVANIA DIVIDEND ADVANTAGE MUNICIPAL FUND
               NUVEEN VIRGINIA DIVIDEND ADVANTAGE MUNICIPAL FUND
                               POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of the above-
referenced organizations, hereby constitutes and appoints TIMOTHY R.
SCHWERTFEGER, ALAN G. BERKSHIRE, LARRY W. MARTIN and GIFFORD R. ZIMMERMAN, and
each of them (with full power to each of them to act alone) his true and lawful
attorney-in-fact and agent, for him on his behalf and in his name, place and
stead, in any and all capacities, to sign and file one or more Registration
Statements on Form N-2 under the Securities Act of l933 and the Investment
Company Act of l940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.

IN WITNESS WHEREOF, the undersigned trustee of the above-referenced organization
has hereunto set his hand this 27th day of July, 1999.

                                  /s/ Lawrence H. Brown
                                  ---------------------
                                  Lawrence H. Brown

STATE OF    ILLINOIS      )
        ----------------
                          )SS
COUNTY OF       COOK      )
          --------------

On this 27th day of July, 1999, personally appeared before me, a Notary Public
in and for said County and State, the person named above who is known to me to
be the person whose name and signature is affixed to the foregoing Power of
Attorney and who acknowledged the same to be his voluntary act and deed for the
intent and purposes therein set forth.

"OFFICIAL SEAL"
Virginia L. Corcoran                /s/Virginia L. Corcoran
                                    -----------------------
Notary Public, State of Illinois    Notary Public
My Commission Expires:  10/27/01

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
