-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O9a6ozWnvsVbguxsM9bYumLPApBeZBHDDiVQA2PxGnR11Gjq1uWfvtGsb/lNeWCs p4Ac1MmE6CT/arM+Z3tK9Q== 0000891804-08-001687.txt : 20080606 0000891804-08-001687.hdr.sgml : 20080606 20080606140508 ACCESSION NUMBER: 0000891804-08-001687 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20080606 DATE AS OF CHANGE: 20080606 EFFECTIVENESS DATE: 20080606 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUVEEN SELECT TAX FREE INCOME PORTFOLIO 2 CENTRAL INDEX KEY: 0000885733 IRS NUMBER: 363818584 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06622 FILM NUMBER: 08885195 BUSINESS ADDRESS: STREET 1: 333 W WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3129178200 N-CSR 1 file001.txt NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6622 --------------------- Nuveen Select Tax-Free Income Portfolio 2 - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Kevin J. McCarthy Nuveen Investments 333 West Wacker Drive Chicago, IL 60606 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (312) 917-7700 ------------------- Date of fiscal year end: March 31 ------------------ Date of reporting period: March 31, 2008 ------------------ Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT March 31, 2008 Nuveen Investments MUNICIPAL CLOSED-END FUNDS Photo of: Small child NUVEEN SELECT TAX-FREE INCOME PORTFOLIO NXP NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 2 NXQ NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 3 NXR NUVEEN CALIFORNIA SELECT TAX-FREE INCOME PORTFOLIO NXC NUVEEN NEW YORK SELECT TAX-FREE INCOME PORTFOLIO NXN IT'S NOT WHAT YOU EARN, IT'S WHAT YOU KEEP.(R) Logo: NUVEEN Investments Photo of: Man working on computer LIFE IS COMPLEX. NUVEEN MAKES THINGS E-simple. ---------------------------------------------------------------------------- It only takes a minute to sign up for e-Reports. Once enrolled, you'll receive an e-mail as soon as your Nuveen Investments Fund information is ready--no more waiting for delivery by regular mail. Just click on the link within the e-mail to see the report and save it on your computer if you wish. FREE E-REPORTS RIGHT TO YOUR E-MAIL! www.investordelivery.com If you receive your Nuveen Fund dividends and statements from your financial advisor or brokerage account. OR www.nuveen.com/accountaccess If you receive your Nuveen Fund dividends and statements directly from Nuveen. Logo: NUVEEN Investments Chairman's LETTER TO SHAREHOLDERS Photo of: Timothy R. Schwertfeger Timothy R. Schwertfeger Chairman of the Board Once again, I am pleased to report that over the twelve-month period covered by this report your Fund continued to provide you with attractive monthly tax-free income. For more details about the management strategy and performance of your Fund, please read the Portfolio Managers' Comments, the Dividend and Share Price Information, and the Performance Overview sections of this report. With the recent volatility in the stock market, many have begun to wonder which way the market is headed, and whether they need to adjust their holdings of investments. No one knows what the future will bring, which is why we think a well-balanced portfolio that is structured and carefully monitored with the help of an investment professional is an important component in achieving your long-term financial goals. A well-diversified portfolio may actually help to reduce your overall investment risk, and we believe that investments like your Nuveen Investments Fund can be important building blocks in a portfolio crafted to perform well through a variety of market conditions. We also are pleased to be able to offer you a choice concerning how you receive your shareholder reports and other Fund information. As an alternative to mailed copies, you can sign up to receive future Fund reports and other Fund information by e-mail and the internet. The inside front cover of this report contains information on how you can sign up. We are grateful that you have chosen us as a partner as you pursue your financial goals and we look forward to continuing to earn your trust in the months and years ahead. At Nuveen Investments, our mission continues to be to assist you and your financial advisor by offering investment services and products that can help you to secure your financial objectives. Sincerely, /s/ Timothy R. Schwertfeger TIMOTHY R. SCHWERTFEGER CHAIRMAN OF THE BOARD May 15, 2008 Portfolio Managers' COMMENTS Nuveen Investments Municipal Closed-End Funds NXP, NXQ, NXR, NXC, NXN Portfolio managers Tom Spalding, Scott Romans, and Cathryn Steeves examine economic and municipal market conditions at the national and state levels, key investment strategies, and the annual performance of the Nuveen Select Portfolios. With 33 years of investment experience, Tom has managed the three national Portfolios since 1999. Scott, who joined Nuveen in 2000, has managed NXC since 2003, while Cathryn, who has been with Nuveen since 1996, assumed portfolio management responsibility for NXN in 2006. WHAT FACTORS AFFECTED THE U.S. ECONOMY AND MUNICIPAL MARKET DURING THE TWELVE-MONTH REPORTING PERIOD ENDED MARCH 31, 2008? During this reporting period, developments in the financial sector, especially in the credit markets, led to increased volatility, tightening liquidity and a flight to quality. These trends began to take shape during the summer of 2007. The changes became particularly evident in August 2007, when market concerns about defaults on sub- prime mortgages resulted in a liquidity crisis across all fixed income asset classes. In September 2007, the Federal Reserve (Fed) responded to credit market volatility by launching a series of interest rate cuts that lowered the Fed Funds rate by 300 basis points--from 5.25% to 2.25%--in seven months, including reductions of 125 basis points in January 2008 alone. (On April 30, 2008, following the close of this reporting period, the Fed reduced this target rate by another 25 basis points, to 2.00%.) The Fed's actions also were a response to increased signs of weakness in the U.S. economy, as evidenced by the slowing growth of the U.S. gross domestic product (GDP), a closely watched measure of economic growth. While the GDP expanded at 3.8% in the second quarter and 4.9% in the third quarter of 2007, this measure dropped sharply to 0.6% in the fourth quarter (all GDP numbers annualized). In the first quarter of 2008, GDP growth remained at an annual rate of 0.6%, restrained by a 27% decline in residential investment and the weakest consumer spending since 2001. Driven largely by increased energy, agricultural, and commodities prices, the Consumer Price Index (CPI) registered a 4.0% year-over-year gain as of March 2008, while the increase in this inflation gauge for the first three months of 2008 was an annualized 3.1%. The core CPI (which excludes food and energy prices) rose 2.4% between April 2007 and March 2008, remaining above the Fed's unofficial target of 2.0% or lower. In the labor markets, January 2008 marked the first decline in new jobs created since 2003, breaking the longest string of employment growth (52 months) in U.S. history. The national unemployment rate for March 2008 was 5.1%, up from 4.4% in March 2007. Discussions of specific investments are for illustrative purposes only and are not intended as recommendations of individual investments. The views expressed in this commentary represent those of the portfolio managers as of the date of this report and are subject to change at any time, based on market conditions and other factors. The Funds disclaim any obligation to advise shareholders of such changes. 4 In the municipal bond market, factors related to the sub-prime mortgage crisis had an indirect, but important, influence on performance. General concerns about the credit markets as well as more specific concerns about municipal bond insurers with exposure to sub-prime mortgages caused some investors to curtail purchases. Because some investors were avoiding exposure to such insurers, hedge funds and other non-traditional buyers of municipal bonds were forced to sell holdings of long-maturity bonds into a market already experiencing lack of liquidity. Combined with the Fed rate cuts, this selling produced a sharp steepening of the municipal yield curve, as longer-term interest rates rose and short-term interest rates declined. Between April 1, 2007, and March 31, 2008, the yield on the Bond Buyer 25 Revenue Bond Index, a widely followed measure of longer-term municipal market rates, rose 76 basis points to 5.24%, its highest level since July 2006. By comparison, the yield on the benchmark 10-year U.S. Treasury note dropped more than 120 basis points to end the reporting period at 3.43%. In this environment, bonds with shorter maturities generally outperformed longer maturity bonds and higher quality bonds tended to outperform lower quality credits. Over the twelve months ended March 2008, municipal bond issuance nationwide totaled $451.1 billion, an increase of 2% from the previous twelve months. During the first three months of 2008, municipal issuance was off sharply from the record pace seen in 2007, as $80.3 billion in new securities came to market, down 25% from the same period in 2007. In the first quarter of 2008, insured bonds comprised 27% of new supply, compared with 51% during the first quarter of 2007. Despite disruptions in the markets, new municipal issuance continued to be met with good demand by institutional and retail buyers as well as non-traditional buyers returning to the market at the end of this period. HOW WERE ECONOMIC AND MARKET CONDITIONS IN CALIFORNIA AND NEW YORK DURING THIS PERIOD? California's economy continued to be relatively diverse, with international trade, technology, tourism, finance, and defense serving as key drivers. Given strong global demand for technology products, the long-term economic outlook for the state remained positive. However, California was among the states hardest hit by the sub-prime mortgage crisis, and the resultant weakness in housing and financial services impacted consumer spending and retail sales, slowing the state's economy significantly. As of March 2008, California's unemployment rate was 6.2%, up from 5.0% in March 2007, the highest level since July 2004. The state's budget continued to be structurally unbalanced, and the economic slowdown, housing market declines, deterioration in household wealth, and the associated impact on tax revenues aggravated this situation. A recent shortfall in the fiscal 2008 budget was addressed through further cuts and the issuance of the final $3.2 billion of economic recovery bonds. As of March 2008, Moody's, Standard & Poor's (S&P), and Fitch maintained their ratings on California's general obligation (GO) debt at A1, A+, and A+, respectively. Both Moody's and S&P maintained stable outlooks for the state. 5 For the twelve months ended March 31, 2008, municipal issuance in California totaled $71.1 billion, a increase of 13% from the previous twelve months. During the first three months of 2008, supply of new issuance in the state was down 39% from January-March 2007 levels, to $12.8 billion. California continued to rank as the largest state issuer in the nation for both time periods. In New York, the economy continued to be led by financial services, education and health, professional and business services, retail trade and government. Although the heavy concentration of financial jobs in the state has declined since the early 1990s, New York's economy remained highly dependent on the financial services sector. Fallout from the sub-prime mortgage crisis led to layoffs in financial services and a slower hiring outlook for the financial industry in New York City, while the upstate area continued to experience losses in the manufacturing sector. In March 2008, unemployment in New York was 4.8%, up from 4.4% in March 2007. New York's state budget remained extremely sensitive to fluctuations in the financial services industry, with most of the state's general fund receipts generated by personal income taxes, which continued to be heavily dependent on high-income Wall Street employment and capital gains. As of March 2008, New York State general obligation bonds were rated Aa3 by Moody's, AA by S&P, and AA- by Fitch. Both Moody's and S&P maintained stable outlooks for the state. For the twelve months ended March 31, 2008, municipal issuance in New York totaled $38 billion, an increase of 8% from the previous twelve months. The first three months of 2008 saw a larger increase in state supply, with $9.6 billion in new issuance, up 28% from the first quarter of 2007. This relatively robust issuance was easily absorbed by healthy retail demand. For both periods, New York ranked third in the nation, following California and Texas, in terms of municipal issuance. WHAT KEY STRATEGIES WERE USED TO MANAGE THE NUVEEN SELECT PORTFOLIOS DURING THIS REPORTING PERIOD? During this period, the municipal market was characterized by volatility, lack of liquidity and a steepening yield curve. As the market moved from rally to slump and back again, we sought to capitalize on this environment by tailoring our investment strategies appropriately. Overall, the Portfolios were well structured going into this period relative to their benchmarks and strategic guidelines. This enabled us to focus on finding opportunities rather than on restructuring. When interest rates were low, we 6 continued to invest conservatively by purchasing defensive, high credit quality bonds that we believed would hold their value well when interest rates eventually rose. When disruptions in the financial markets triggered a backup in interest rates and the market discounted lower-quality and higher-yielding bonds, we took a more opportunistic approach to investing. This often meant selling the Portfolios' higher-rated defensive positions at attractive prices and buying lower-rated bonds at attractive levels relative to their credit quality or taking positions in higher-yielding bonds to capture the yield advantage of the increase in rates. In NXC and NXN, we took advantage of health care opportunities to add uninsured, lower-rated credits when the market discounted lower-quality and higher-yielding bonds. This marked the first time in a while that we found bonds of this type at attractive levels relative to their credit quality. California, in particular, saw a great deal of this type of issuance due to seismic retrofit requirements for hospitals and other medical facilities. In NXN, we also purchased a small position in auction rate bonds at attractive yields. Auction rate bonds are short-term securities whose interest payments are adjusted periodically through an auction process, which typically also serves as a means for buying and selling. In addition to selling higher-rated defensive positions when yields rose, we selectively sold holdings with shorter durations(1) at attractive prices. In NXC and NXN, we took advantage of strong bids to sell some sub-5% coupon bonds that were attractive to the retail market. We also found some opportunities, particularly in the national Portfolios, to sell holdings that were purchased when yields were lower and replace them with similar, newer credits that yielded comparatively more. This process enabled us to maintain the Portfolios' current portfolio characteristics while strengthening their future income streams. We also continued to emphasize a disciplined approach to duration management. As part of our duration strategies, we used inverse floating rate securities,(2) a type of derivative financial instrument, in all the Portfolios. Inverse floaters typically provide the dual benefit of bringing the Portfolios' durations closer to our strategic target and enhancing their income-generation capabilities. NXN also used forward interest rate swaps, another type of derivative financial instrument. The goal of this strategy was to help us manage the net asset value (NAV) volatility of this Portfolio without having a negative impact on NXN's income stream or common share dividends over the short term. (1) Duration is a measure of a bond's price sensitivity as interest rates change, with longer duration bonds displaying more sensitivity to these changes than bonds with shorter durations. (2) An inverse floating rate security is a financial instrument designed to pay long-term tax-exempt interest at a rate that varies inversely with a short-term tax-exempt interest rate index. For Nuveen Funds, the index typically used is the Securities Industry and Financial Markets (SIFM) Municipal Swap Index (previously referred to as the Bond Market Association Index or BMA). Inverse floaters, including those inverse floating rate securities in which the Portfolios invested during the reporting period, are further defined within the Notes to Financial Statements and Glossary of Terms Used in This Report sections of this shareholder report. 7 HOW DID THE PORTFOLIOS PERFORM? Individual results for the Nuveen Select Portfolios, as well as relevant index and peer group information, are presented in the accompanying table. Total Returns on Common Share Net Asset Value* For periods ended 3/31/08 National Portfolios 1-Year 5-Year 10-Year NXP 1.83% 4.42% 4.76% NXQ -0.24% 4.10% 4.42% NXR 1.42% 4.42% 4.60% Lehman Brothers Municipal Bond Index(3) 1.90% 3.92% 4.99% Lipper General and Insured Unleveraged Municipal Debt Funds Average(4) -1.34% 4.35% 4.45% California Portfolio NXC 0.05% 4.19% 4.45% Lehman Brothers CA Tax-Exempt Bond Index(3) 0.93% 4.05% 4.99% Lipper CA Municipal Debt Funds Average(4) -3.95% 4.67% 4.96% New York Portfolio NXN 0.94% 3.86% 4.37% Lehman Brothers NY Tax-Exempt Bond Index(3) 2.55% 3.94% 5.03% Lipper NY Municipal Debt Funds Average(4) -3.44% 4.60% 4.91% For the twelve months ended March 31, 2008, the total returns on NAV for NXP, NXQ and NXR trailed the return on the Lehman Brothers Municipal Bond Index, to varying degrees, and NXC and NXN lagged the returns on the Lehman Brothers Tax-Exempt Bond Indexes for California and New York, respectively. At the same time, all five of these Portfolios outperformed the average returns for their respective Lipper peer groups. *Annualized. Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. For additional information, see the individual Performance Overview for your Portfolio in this report. (3) The Lehman Brothers Municipal Bond Index is an unleveraged, unmanaged national index containing a broad range of investment-grade municipal bonds. The Lehman Brothers Tax-Exempt Bond Indexes for California and New York are also unleveraged and unmanaged and comprise a broad range of municipal bonds issued in California and New York, respectively. Results for the Lehman indexes do not reflect any expenses. (4) Each of the Lipper Municipal Debt Funds Averages shown are calculated using the returns of all closed-end funds in their respective categories for each period as follows: Lipper General and Insured Unleveraged Municipal Debt Funds Average, 1 year, 8 funds; 5 years, 7 funds; and 10 years, 7 funds; Lipper California Municipal Debt Funds Average, 1 year, 24 funds; 5 years, 24 funds; and 10 years, 12 funds; and Lipper New York Municipal Debt Funds Average, 1 year, 17 funds; 5 years, 16 funds; and 10 years, 6 funds. Portfolio and Lipper returns assume reinvestment of dividends. 8 Key factors that influenced the Portfolios' returns included duration and yield curve positioning, credit exposure and sector allocations, use of derivatives and holdings of bonds backed by certain municipal bond insurers. Bonds in the Lehman Brothers Municipal Bond Index with maturities of eight years or less, especially those maturing in two to six years, benefited the most from changes in the interest rate environment. As a result, these shorter maturity bonds generally outperformed credits with longer maturities. Bonds having the longest maturities (22 years and longer) posted the worst returns. While the Portfolios generally were underexposed to the outperforming shorter end of the yield curve, they also were relatively underweighted in poorly performing longer-maturity bonds. Among the national Portfolios, NXP had the shortest duration, while NXC's duration was the longest. As mentioned earlier, NXN used forward interest rate swaps to synthetically extend its duration and move the Portfolio closer to our strategic duration target. Despite the fact that longer duration instruments generally performed poorly, the use of forward interest rate swaps had a positive impact on NXN's return performance. This was due to the fact that the interest rate swaps provided exposure to taxable markets during a period when, in contrast to historical trends, the Treasury market and the municipal market moved in the opposite directions. As municipal market performance lagged the significant gains made by Treasuries, the interest rate swaps performed very well. However, the inverse floaters used by all the Funds had a negative impact on performance. This resulted from the fact that the inverse floaters effectively increased the Portfolios' exposure to longer maturity bonds during a period when shorter maturities were in favor in the market. At the same time, the inverse floaters also benefited the Portfolios by helping to support their income streams. Overall, bonds with higher credit quality outperformed lower quality credits and the performances of these Portfolios generally benefited from their substantial holdings of bonds rated AAA. The underperformance of the lower quality sector was largely the result of risk-averse investors' flight to quality as disruptions in the financial and housing markets deepened. As of March 31, 2008, the national Portfolios' holdings of bonds rated BBB or lower and non-rated bonds ranged from 7% to 13% of their portfolios, which was slightly higher than the weighting of these bonds in the Lehman Brothers Municipal Bond Index. The Portfolios' relatively small proportion of sub-investment grade and non-rated bonds helped to limit the negative impact of these holdings. NXC and NXP held 13% of their portfolios in lower-rated credit quality sectors, while NXN's allocation to these bonds was 7%. In general, bonds that carried any credit risk, regardless of sector, tended to perform poorly. Revenue bonds as a whole, and especially the industrial development and health care sectors that had ranked among the top performers in the Lehman Brothers Municipal Bond Index over the past few years, underperformed the general municipal market. In addition, the housing sector also performed poorly. NXQ's performance was also impacted by a negative credit event involving its holdings of Ambac-insured bonds issued for the Las Vegas monorail project. The four-year-old 9 project, which has been struggling to build ridership and turn a profit, was penalized by the market for dipping into its debt service reserve fund to cover scheduled bond principal and interest payments. Sectors of the market that generally contributed positively to the Portfolios' performances included water and sewer, special tax, resource recovery, and electric utilities. Pre-refunded bonds(5) performed exceptionally well, due primarily to their shorter effective maturities and higher credit quality. Among these Portfolios, NXP had the heaviest weighting of pre-refunded bonds, while NXN was underweighted in this segment of the market. Another factor that had a modest impact on the performance of these Portfolios was their exposure to bonds insured by certain municipal insurers. These insurers include XL Capital Assurance (XLCA), Financial Guaranty Insurance Company (FGIC), ACA Financial Guaranty Corporation (ACA) and Ambac Assurance Corporation. As concern increased about the balance sheets of municipal bond insurers, prices on bonds insured by these companies declined, detracting from the Portfolios' performance. On the whole, the holdings of these Portfolios continued to be well diversified not only between insured and uninsured bonds, but also within the insured bond category. RECENT DEVELOPMENTS REGARDING BOND INSURANCE COMPANIES The portfolios of investments reflect the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. During March 2008, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers. It is important to note that municipal bonds historically have had a very low rate of default. (5) Advance refundings, also known as pre-refundings or refinancings, occur when an issuer sells new bonds and uses the proceeds to fund principal and interest payments of older existing bonds. This process often results in lower borrowing costs for bond issuers. 10 Dividend and Share Price INFORMATION Effective March 2008, the dividends of NXQ and NXC were increased, while the dividends of NXP, NXR, and NXN remained stable throughout the twelve-month reporting period ended March 31, 2008. Due to capital gains generated by normal portfolio activity, common shareholders of the following Portfolios received capital gains distributions at the end of December 2007 as follows: Long-Term Capital Gains (per share) NXC $0.0107 NXN $0.0121 All of these Portfolios seek to pay stable dividends at rates that reflect each Portfolio's past results and projected future performance. During certain periods, each Portfolio may pay dividends at a rate that may be more or less than the amount of net investment income actually earned by the Portfolio during the period. If a Portfolio has cumulatively earned more than it has paid in dividends, it holds the excess in reserve as undistributed net investment income (UNII) as part of the Portfolio's NAV. Conversely, if a Portfolio has cumulatively paid dividends in excess of its earnings, the excess constitutes negative UNII that is likewise reflected in the Portfolio's NAV. Each Portfolio will, over time, pay all of its net investment income as dividends to shareholders. As of March 31, 2008, NXP, NXQ, and NXC had positive UNII balances for both tax purposes and financial statement purposes, while NXR and NXN had positive UNII balances for tax purposes and negative UNII balances for financial statement purposes. As of March 31, 2008, the share prices of the Select Portfolios were trading at discounts to their NAVs as shown in the accompanying chart: 3/31/08 12-Month Average Premium/Discount Discount NXP -0.42% -2.27% NXQ -1.01% -5.11% NXR -1.65% -5.55% NXC -0.07% -2.94% NXN 0.00% -4.55% 11 NXP Performance OVERVIEW Nuveen Select Tax-Free Income Portfolio as of March 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 59% AA 13% A 15% BBB 12% BB or Lower 1% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Share Apr 0.057 May 0.057 Jun 0.057 Jul 0.057 Aug 0.057 Sep 0.057 Oct 0.057 Nov 0.057 Dec 0.057 Jan 0.057 Feb 0.057 Mar 0.057 Line Chart: Share Price Performance -- Weekly Closing Price 4/01/07 14.85 14.82 14.76 14.74 14.76 14.74 14.73 14.74 14.6 14.47 14.15 13.83 13.91 14.1 14.01 13.82 13.61 13.93 13.95 13.92 14.04 14 14.11 14.46 14.31 14.04 13.98 14.07 14.25 13.99 13.84 13.9 13.86 13.63 13.57 13.9 14.21 14.15 13.7 14.07 14.39 14.55 14.19 14.332 14.68 14.604 14.2 14.498 13.75 14.32 13.95 14.1 14.2 3/31/08 14.24 FUND SNAPSHOT - ------------------------------------ Share Price 14.24 - ------------------------------------ Net Asset Value 14.30 - ------------------------------------ Premium/(Discount) to NAV -0.42% - ------------------------------------ Market Yield 4.80% - ------------------------------------ Taxable-Equivalent Yield(2) 6.67% - ------------------------------------ Net Assets ($000) $234,494 - ------------------------------------ Average Effective Maturity on Securities (Years) 11.52 - ------------------------------------ Modified Duration 5.26 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 3/19/92) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 0.61% 1.83% - ------------------------------------ 5-Year 5.53% 4.42% - ------------------------------------ 10-Year 4.74% 4.76% - ------------------------------------ STATES (as a % of total investments) - ------------------------------------ Illinois 14.4% - ------------------------------------ Colorado 11.7% - ------------------------------------ Texas 9.4% - ------------------------------------ Indiana 9.1% - ------------------------------------ Washington 8.1% - ------------------------------------ South Carolina 8.0% - ------------------------------------ Nevada 6.2% - ------------------------------------ California 4.9% - ------------------------------------ Florida 4.6% - ------------------------------------ New Jersey 3.1% - ------------------------------------ New Mexico 2.1% - ------------------------------------ Oklahoma 2.1% - ------------------------------------ Alaska 2.0% - ------------------------------------ Other 14.3% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ U.S. Guaranteed 31.8% - ------------------------------------ Health Care 17.6% - ------------------------------------ Transportation 12.1% - ------------------------------------ Tax Obligation/Limited 9.9% - ------------------------------------ Tax Obligation/General 8.6% - ------------------------------------ Utilities 8.6% - ------------------------------------ Other 11.4% - ------------------------------------ (1) The percentages shown in the foregoing chart reflect the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. As explained earlier in the Portfolio Managers' Comments section of this report, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers, and thereby reduce the percentage of the ratings shown in the foregoing chart. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 12 NXQ Performance OVERVIEW Nuveen Select Tax-Free Income Portfolio 2 as of March 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 57% AA 19% A 14% BBB 9% BB or Lower 1% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Share Apr 0.053 May 0.053 Jun 0.053 Jul 0.053 Aug 0.053 Sep 0.053 Oct 0.053 Nov 0.053 Dec 0.053 Jan 0.053 Feb 0.053 Mar 0.0555 Line Chart: Price Performance -- Weekly Closing Price 4/01/07 14.12 14.16 14.03 14.03 14.27 14.18 14.08 14.1099 14.01 14.09 13.93 13.66 13.64 13.64 13.78 13.6601 13.63 13.41 13.57 13.308 13.34 13.55 13.54 13.85 13.62 13.41 13.59 13.4501 13.46 13.35 13.25 13.4 12.99 12.9699 12.96 13.4 13.14 12.98 12.87 13.27 13.39 13.75 13.3 13.7399 13.86 13.7 13.58 13.7 13.19 13.72 13.7 13.75 13.72 3/31/08 13.79 FUND SNAPSHOT - ------------------------------------ Share Price 13.79 - ------------------------------------ Net Asset Value 13.93 - ------------------------------------ Premium/(Discount) to NAV -1.01% - ------------------------------------ Market Yield 4.83% - ------------------------------------ Taxable-Equivalent Yield(2) 6.71% - ------------------------------------ Net Assets ($000) $245,244 - ------------------------------------ Average Effective Maturity on Securities (Years) 15.10 - ------------------------------------ Modified Duration 7.23 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 5/21/92) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 2.69% -0.24% - ------------------------------------ 5-Year 5.68% 4.10% - ------------------------------------ 10-Year 4.69% 4.42% - ------------------------------------ STATES (as a % of total investments) - ------------------------------------ Illinois 13.4% - ------------------------------------ Texas 11.9% - ------------------------------------ Colorado 9.9% - ------------------------------------ California 6.7% - ------------------------------------ Nevada 6.4% - ------------------------------------ South Carolina 4.9% - ------------------------------------ New York 4.7% - ------------------------------------ Indiana 3.5% - ------------------------------------ Massachusetts 3.3% - ------------------------------------ New Mexico 2.9% - ------------------------------------ Washington 2.9% - ------------------------------------ Pennsylvania 2.8% - ------------------------------------ Iowa 2.8% - ------------------------------------ Rhode Island 2.3% - ------------------------------------ Florida 2.3% - ------------------------------------ Michigan 2.3% - ------------------------------------ Louisiana 2.2% - ------------------------------------ Other 14.8% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ U.S. Guaranteed 23.8% - ------------------------------------ Health Care 18.6% - ------------------------------------ Transportation 14.9% - ------------------------------------ Tax Obligation/Limited 10.5% - ------------------------------------ Utilities 8.5% - ------------------------------------ Tax Obligation/General 5.2% - ------------------------------------ Consumer Staples 4.9% - ------------------------------------ Other 13.6% - ------------------------------------ (1) The percentages shown in the foregoing chart reflect the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. As explained earlier in the Portfolio Managers' Comments section of this report, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers, and thereby reduce the percentage of the ratings shown in the foregoing chart. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 13 NXR Performance OVERVIEW Nuveen Select Tax-Free Income Portfolio 3 as of March 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 53% AA 25% A 14% BBB 7% BB or Lower 1% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Share Apr 0.0535 May 0.0535 Jun 0.0535 Jul 0.0535 Aug 0.0535 Sep 0.0535 Oct 0.0535 Nov 0.0535 Dec 0.0535 Jan 0.0535 Feb 0.0535 Mar 0.0535 Line Chart: Share Price Performance -- Weekly Closing Price 4/01/07 13.95 14.06 13.98 13.84 13.88 13.96 13.87 13.85 13.85 13.89 13.53 13.33 13.33 13.4 13.63 13.34 13.25 13.31 13.3 13.17 13.07 13.15 13.35 13.56 13.46 13.33 13.31 13.44 13.2799 13.14 12.69 12.96 12.92 12.82 12.78 12.99 13.06 12.92 12.92 13.15 13.3 13.66 13.25 13.56 13.71 13.78 13.56 13.716 13.43 13.77 13.6 13.59 13.57 3/31/08 13.75 FUND SNAPSHOT - ------------------------------------ Share Price 13.75 - ------------------------------------ Net Asset Value 13.98 - ------------------------------------ Premium/(Discount) to NAV -1.65% - ------------------------------------ Market Yield 4.67% - ------------------------------------ Taxable-Equivalent Yield(2) 6.49% - ------------------------------------ Net Assets ($000) $181,288 - ------------------------------------ Average Effective Maturity on Securities (Years) 13.24 - ------------------------------------ Modified Duration 6.43 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 7/24/92) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 2.91% 1.42% - ------------------------------------ 5-Year 6.31% 4.42% - ------------------------------------ 10-Year 4.77% 4.60% - ------------------------------------ STATES (as a % of total investments) - ------------------------------------ Illinois 18.4% - ------------------------------------ Texas 10.3% - ------------------------------------ California 7.4% - ------------------------------------ Colorado 6.7% - ------------------------------------ Indiana 6.4% - ------------------------------------ Iowa 5.8% - ------------------------------------ Florida 5.6% - ------------------------------------ South Carolina 4.9% - ------------------------------------ Nevada 4.5% - ------------------------------------ North Carolina 4.3% - ------------------------------------ New York 3.7% - ------------------------------------ Michigan 3.4% - ------------------------------------ New Mexico 2.7% - ------------------------------------ Pennsylvania 2.5% - ------------------------------------ Other 13.4% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ U.S. Guaranteed 24.5% - ------------------------------------ Health Care 19.0% - ------------------------------------ Utilities 17.5% - ------------------------------------ Tax Obligation/Limited 11.6% - ------------------------------------ Transportation 8.4% - ------------------------------------ Tax Obligation/General 5.4% - ------------------------------------ Education and Civic Organizations 5.0% - ------------------------------------ Other 8.6% - ------------------------------------ (1) The percentages shown in the foregoing chart reflect the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. As explained earlier in the Portfolio Managers' Comments section of this report, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers, and thereby reduce the percentage of the ratings shown in the foregoing chart. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a income tax rate of 28%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. 14 NXC Performance OVERVIEW Nuveen California Select Tax-Free Income Portfolio as of March 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 62% AA 7% A 18% BBB 11% N/R 2% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Share(3) Apr 0.053 May 0.053 Jun 0.053 Jul 0.053 Aug 0.053 Sep 0.053 Oct 0.053 Nov 0.053 Dec 0.053 Jan 0.053 Feb 0.053 Mar 0.0555 Line Chart: Share Price Performance -- Weekly Closing Price 4/01/07 14.28 14.44 14.3199 14.16 14.45 14.65 14.5 14.77 14.2 14.19 14.25 14.2501 13.99 14.23 13.96 13.97 13.69 13.74 14 13.81 13.45 13.95 13.85 14.29 14.03 13.96 13.91 13.8 13.94 13.8 13.8701 14.45 14 13.73 13.62 13.89 14.04 14.15 13.44 13.39 14 14.16 13.9801 14.09 14.22 14.18 13.95 13.84 13.96 13.85 13.86 13.96 14.1 3/31/08 14.0776 FUND SNAPSHOT - ------------------------------------ Share Price 14.08 - ------------------------------------ Net Asset Value 14.09 - ------------------------------------ Premium/(Discount) to NAV -0.07% - ------------------------------------ Market Yield 4.73% - ------------------------------------ Taxable-Equivalent Yield(2) 7.24% - ------------------------------------ Net Assets ($000) $88,224 - ------------------------------------ Average Effective Maturity on Securities (Years) 14.87 - ------------------------------------ Modified Duration 7.38 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 6/19/92) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 3.68% 0.05% - ------------------------------------ 5-Year 5.88% 4.19% - ------------------------------------ 10-Year 4.56% 4.45% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/General 21.9% - ------------------------------------ Tax Obligation/Limited 19.1% - ------------------------------------ U.S. Guaranteed 14.8% - ------------------------------------ Health Care 13.4% - ------------------------------------ Education and Civic Organizations 10.4% - ------------------------------------ Transportation 5.3% - ------------------------------------ Consumer Staples 4.7% - ------------------------------------ Other 10.4% - ------------------------------------ (1) The percentages shown in the foregoing chart reflect the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. As explained earlier in the Portfolio Managers' Comments section of this report, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers, and thereby reduce the percentage of the ratings shown in the foregoing chart. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 34.7%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders a capital gains distribution in December 2007 of $0.0107 per share. 15 NXN Performance OVERVIEW Nuveen New York Select Tax-Free Income Portfolio as of March 31, 2008 Pie Chart: Credit Quality (as a % of total investments)(1) AAA/U.S. Guaranteed 62% AA 22% A 9% BBB 5% BB or Lower 1% N/R 1% Bar Chart: 2007-2008 Monthly Tax-Free Dividends Per Share (3) Apr 0.051 May 0.051 Jun 0.051 Jul 0.051 Aug 0.051 Sep 0.051 Oct 0.051 Nov 0.051 Dec 0.051 Jan 0.051 Feb 0.051 Mar 0.051 Line Chart: Share Price Performance -- Weekly Closing Price 4/01/07 14.2 14.11 14.07 13.77 13.96 13.8 14 13.97 14 13.92 13.9 13.22 13.37 13.34 13.45 13.3 13.33 13.36 13.3 13.22 13.05 13.47 13.46 13.42 13.38 13.23 13.2 13.1 13.3 13.09 13.15 13.15 13 12.88 12.88 13.2 13.11 12.97 12.8 12.97 13.4 13.64 13.64 13.67 13.88 13.655 13.37 13.63 13.4 13.78 13.27 13.56 13.7 3/31/08 13.79 FUND SNAPSHOT - ------------------------------------ Share Price 13.79 - ------------------------------------ Net Asset Value 13.79 - ------------------------------------ Premium/(Discount) to NAV 0.00% - ------------------------------------ Market Yield 4.44% - ------------------------------------ Taxable-Equivalent Yield(2) 6.62% - ------------------------------------ Net Assets ($000) $53,908 - ------------------------------------ Average Effective Maturity on Securities (Years) 16.25 - ------------------------------------ Modified Duration 6.17 - ------------------------------------ AVERAGE ANNUAL TOTAL RETURN (Inception 6/19/92) - ------------------------------------ ON SHARE PRICE ON NAV - ------------------------------------ 1-Year 2.06% 0.94% - ------------------------------------ 5-Year 5.47% 3.86% - ------------------------------------ 10-Year 4.55% 4.37% - ------------------------------------ INDUSTRIES (as a % of total investments) - ------------------------------------ Tax Obligation/Limited 17.0% - ------------------------------------ Health Care 13.7% - ------------------------------------ Water and Sewer 12.1% - ------------------------------------ Long-Term Care 11.8% - ------------------------------------ Education and Civic Organizations 11.5% - ------------------------------------ Tax Obligation/General 8.3% - ------------------------------------ Housing/Single Family 8.1% - ------------------------------------ U.S. Guaranteed 6.2% - ------------------------------------ Other 11.3% - ------------------------------------ (1) The percentages shown in the foregoing chart reflect the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. As explained earlier in the Portfolio Managers' Comments section of this report, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers, and thereby reduce the percentage of the ratings shown in the foregoing chart. (2) Taxable-Equivalent Yield represents the yield that must be earned on a fully taxable investment in order to equal the yield of the Fund on an after-tax basis. It is based on a combined federal and state income tax rate of 32.9%. When comparing this Fund to investments that generate qualified dividend income, the Taxable-Equivalent Yield is lower. (3) The Fund paid shareholders a capital gains distribution in December 2007 of $0.0121 per share. 16 NXP NXQ NXR Shareholder MEETING REPORT The special meeting of shareholders was held in the offices of Nuveen Investments on October 12, 2007; the meetings for California Select Tax-Free (NXC) and New York Select Tax-Free (NXN) were subsequently adjourned to October 22, 2007; New York Select Tax-Free (NXN) was also adjourned to November 8, 2007 and November 12, 2007.
SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 (NXP) (NXQ) (NXR) - ------------------------------------------------------------------------------------------------------------------------------------ TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT: For 8,276,032 8,827,134 6,562,608 Against 271,723 657,289 288,356 Abstain 341,888 391,327 175,193 Broker Non-Votes 2,618,234 3,043,850 2,381,128 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,507,877 12,919,600 9,407,285 ==================================================================================================================================== TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR: For 11,175,774 12,242,590 9,175,084 Against 84,746 373,053 131,336 Abstain 248,357 303,957 100,865 - ------------------------------------------------------------------------------------------------------------------------------------ Total 11,508,877 12,919,600 9,407,285 ====================================================================================================================================
17 NXC NXN Shareholder MEETING REPORT (continued)
CALIFORNIA NEW YORK SELECT SELECT TAX-FREE TAX-FREE (NXC) (NXN) - ------------------------------------------------------------------------------------------------------------------------------------ TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT: For 3,180,711 1,960,633 Against 101,660 156,631 Abstain 146,703 81,318 Broker Non-Votes 1,280,121 847,875 - ------------------------------------------------------------------------------------------------------------------------------------ Total 4,709,195 3,046,457 ==================================================================================================================================== TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR: For 4,591,209 2,961,633 Against 18,164 35,372 Abstain 99,822 49,452 - ------------------------------------------------------------------------------------------------------------------------------------ Total 4,709,195 3,046,457 ====================================================================================================================================
18 Report of INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO THE BOARD OF TRUSTEES AND SHAREHOLDERS NUVEEN SELECT TAX-FREE INCOME PORTFOLIO NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 2 NUVEEN SELECT TAX-FREE INCOME PORTFOLIO 3 NUVEEN CALIFORNIA SELECT TAX-FREE INCOME PORTFOLIO NUVEEN NEW YORK SELECT TAX-FREE INCOME PORTFOLIO We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Nuveen Select Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio 2, Nuveen Select Tax-Free Income Portfolio 3, Nuveen California Select Tax-Free Income Portfolio, and Nuveen New York Select Tax-Free Income Portfolio, as of March 31, 2008, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2008, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Nuveen Select Tax-Free Income Portfolio, Nuveen Select Tax-Free Income Portfolio 2, Nuveen Select Tax-Free Income Portfolio 3, Nuveen California Select Tax-Free Income Portfolio, and Nuveen New York Select Tax-Free Income Portfolio at March 31, 2008, the results of their operations for the year then ended, changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Chicago, Illinois May 20, 2008 19 NXP Nuveen Select Tax-Free Income Portfolio Portfolio of INVESTMENTS March 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ MUNICIPAL BONDS - 98.3% ALASKA - 2.0% $ 2,475 Alaska Municipal Bond Bank Authority, General Obligation Bonds, 12/13 at 100.00 AAA $ 2,768,164 Series 2003E, 5.250%, 12/01/23 (Pre-refunded 12/01/13) - MBIA Insured 2,500 Northern Tobacco Securitization Corporation, Alaska, Tobacco 6/14 at 100.00 Baa3 1,950,200 Settlement Asset-Backed Bonds, Series 2006A, 5.000%, 6/01/46 - ------------------------------------------------------------------------------------------------------------------------------------ 4,975 Total Alaska 4,718,364 - ------------------------------------------------------------------------------------------------------------------------------------ ARKANSAS - 0.3% 5,915 Arkansas Development Finance Authority, Tobacco Settlement No Opt. Call AAA 645,504 Revenue Bonds, Arkansas Cancer Research Center Project, Series 2006, 0.000%, 7/01/46 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 4.8% 2,000 Alameda Corridor Transportation Authority, California, 10/17 at 100.00 AAA 1,616,560 Subordinate Lien Revenue Bonds, Series 2004A, 0.000%, 10/01/25 - AMBAC Insured 3,325 California Department of Water Resources, Power Supply 5/12 at 101.00 Aa3 3,701,058 Revenue Bonds, Series 2002A, 6.000%, 5/01/14 3,000 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 3,480,060 Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.750%, 6/01/39 (Pre-refunded 6/01/13) 1,130 Los Angeles Department of Water and Power, California, 7/11 at 100.00 AA 1,131,752 Waterworks Revenue Refunding Bonds, Series 2001A, 5.125%, 7/01/41 - FGIC Insured 365 Los Angeles, California, Parking System Revenue Bonds, 5/09 at 101.00 AAA 366,482 Series 1999A, 5.250%, 5/01/29 - AMBAC Insured 750 Tobacco Securitization Authority of Northern California, 6/15 at 100.00 BBB 648,030 Tobacco Settlement Asset-Backed Bonds, Series 2005A-1, 5.500%, 6/01/45 1,150 Woodside Elementary School District, San Mateo County, No Opt. Call AAA 324,783 California, General Obligation Bonds, Series 2007, 0.000%, 10/01/30 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 11,720 Total California 11,268,725 - ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 11.5% 1,700 Colorado Health Facilities Authority, Revenue Bonds, 3/12 at 100.00 AA (4) 1,797,223 Catholic Health Initiatives, Series 2002A, 5.500%, 3/01/22 (ETM) 690 Colorado Health Facilities Authority, Revenue Bonds, Catholic 3/12 at 100.00 AA (4) 756,702 Health Initiatives, Series 2002A, 5.500%, 3/01/22 (Pre-refunded 3/01/12) 390 Colorado Water Resources and Power Development Authority, 11/10 at 100.00 Baa3 406,887 Small Water Resources Revenue Bonds, Series 2000A, 5.800%, 11/01/20 - FGIC Insured 9,535 Denver City and County, Colorado, Airport System Revenue Bonds, No Opt. Call A+ 10,667,948 Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax) 5,000 Denver City and County, Colorado, Airport System Revenue 11/11 at 100.00 A+ 5,128,350 Refunding Bonds, Series 2001A, 5.625%, 11/15/17 - FGIC Insured (Alternative Minimum Tax) 3,000 Denver Convention Center Hotel Authority, Colorado, Senior 12/13 at 100.00 A3 (4) 3,269,100 Revenue Bonds, Convention Center Hotel, Series 2003A, 5.000%, 12/01/23 (Pre-refunded 12/01/13) - XLCA Insured 5,000 E-470 Public Highway Authority, Colorado, Senior Revenue 9/10 at 31.42 AAA 1,472,950 Bonds, Series 2000B, 0.000%, 9/01/28 (Pre-refunded 9/01/10) - MBIA Insured 20 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COLORADO (continued) $ 3,160 Northwest Parkway Public Highway Authority, Colorado, 6/11 at 102.00 AAA $ 3,454,891 Revenue Bonds, Senior Series 2001A, 5.500%, 6/15/20 (Pre-refunded 6/15/11) - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 28,475 Total Colorado 26,954,051 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 0.5% 1,000 District of Columbia, Hospital Revenue Refunding Bonds, 5/08 at 101.00 AAA 1,011,810 Medlantic Healthcare Group, Series 1996A, 5.750%, 8/15/16 - MBIA Insured (ETM) 60 District of Columbia, Revenue Bonds, Catholic University of 10/09 at 101.00 AAA 60,998 America, Series 1999, 5.625%, 10/01/29 - AMBAC Insured 205 District of Columbia, Revenue Bonds, Catholic University of 10/09 at 101.00 Aaa 218,091 America, Series 1999, 5.625%, 10/01/29 (Pre-refunded 10/01/09) - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 1,265 Total District of Columbia 1,290,899 - ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 4.5% 10,000 JEA St. John's River Power Park System, Florida, Revenue 10/11 at 100.00 Aa2 10,584,699 Refunding Bonds, Issue 2, Series 2002-17, 5.000%, 10/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ HAWAII - 0.6% 1,330 Hawaii, Certificates of Participation, Kapolei State Office 11/08 at 101.00 AAA 1,358,701 Building, Series 1998A, 5.000%, 5/01/17 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 14.2% 1,965 Board of Trustees of Southern Illinois University, Housing and No Opt. Call AAA 1,095,350 Auxiliary Facilities System Revenue Bonds, Series 1999A, 0.000%, 4/01/20 - MBIA Insured Chicago Heights, Illinois, General Obligation Corporate Purpose Bonds, Series 1993: 3,820 5.650%, 12/01/15 - FGIC Insured 12/08 at 100.00 Baa3 3,895,330 2,600 5.650%, 12/01/17 - FGIC Insured 12/08 at 100.00 Baa3 2,651,454 195 DuPage County Community School District 200, Wheaton, 11/13 at 100.00 Aaa 207,735 Illinois, General Obligation Bonds, Series 2003B, 5.250%, 11/01/20 - FSA Insured 805 DuPage County Community School District 200, Wheaton, 11/13 at 100.00 Aaa 899,121 Illinois, General Obligation Bonds, Series 2003B, 5.250%, 11/01/20 (Pre-refunded 11/01/13) - FSA Insured 1,000 Illinois Educational Facilities Authority, Revenue Bonds, 5/08 at 101.00 N/R 972,360 Midwestern University, Series 1998B, 5.500%, 5/15/18 - ACA Insured 600 Illinois Educational Facilities Authority, Student Housing 5/12 at 101.00 Aaa 675,516 Revenue Bonds, Educational Advancement Foundation Fund, University Center Project, Series 2002, 6.000%, 5/01/22 (Pre-refunded 5/01/12) 4,000 Illinois Finance Authority, Revenue Bonds, Northwestern 8/14 at 100.00 AA+ (4) 4,532,040 Memorial Hospital, Series 2004A, 5.500%, 8/15/43 (Pre-refunded 8/15/14) 705 Illinois Finance Authority, Revenue Bonds, University of Chicago, 7/17 at 100.00 Aa1 619,187 Series 2007, Trust 73TP, 10.203%, 7/01/46 (IF) 1,320 Illinois Health Facilities Authority, Revenue Bonds, Decatur 10/11 at 100.00 A 1,368,484 Memorial Hospital, Series 2001,5.600%, 10/01/16 2,700 Illinois Health Facilities Authority, Revenue Bonds, Lake Forest 7/12 at 100.00 A- 2,852,199 Hospital, Series 2002A, 6.000%, 7/01/17 2,275 Illinois Health Facilities Authority, Revenue Refunding Bonds, 1/13 at 100.00 A2 2,435,342 Elmhurst Memorial Healthcare, Series 2002, 6.250%, 1/01/17 60 Illinois Health Facilities Authority, Revenue Refunding Bonds, No Opt. Call Baa3 (4) 60,346 Evangelical Hospitals Corporation, Series 1992B, 6.500%, 4/15/09 (ETM) 3,125 Metropolitan Pier and Exposition Authority, Illinois, Revenue No Opt. Call A1 2,075,563 Bonds, McCormick Place Expansion Project, Series 1992A, 0.000%, 6/15/17 - FGIC Insured 810 Metropolitan Pier and Exposition Authority, Illinois, Revenue Bonds, No Opt. Call AAA 241,226 McCormick Place Expansion Project, Series 2002A, 0.000%, 6/15/30 - MBIA Insured 21 NXP Nuveen Select Tax-Free Income Portfolio (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS (continued) $ 5,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue 6/12 at 101.00 AAA $ 5,154,300 Refunding Bonds, McCormick Place Expansion Project, Series 2002B, 5.000%, 6/15/21 - MBIA Insured 1,300 Schaumburg, Illinois, General Obligation Bonds, Series 2004B, 12/14 at 100.00 AA+ 1,313,741 5.250%, 12/01/34 - FGIC Insured Yorkville, Illinois, General Obligation Debt Certificates, Series 2003: 1,000 5.000%, 12/15/19 (Pre-refunded 12/15/11) - RAAI Insured 12/11 at 100.00 AA (4) 1,083,300 1,000 5.000%, 12/15/20 (Pre-refunded 12/15/11) - RAAI Insured 12/11 at 100.00 AA (4) 1,083,300 - ------------------------------------------------------------------------------------------------------------------------------------ 34,280 Total Illinois 33,215,894 - ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 8.9% 5,000 Duneland School Building Corporation, Indiana, First Mortgage 2/09 at 101.00 AAA 5,090,650 Refunding Bonds, Series 1999, 5.125%, 2/01/18 - MBIA Insured 1,000 Franklin Community Multi-School Building Corporation, 7/14 at 100.00 A (4) 1,105,650 Marion County, Indiana, First Mortgage Revenue Bonds, Series 2004, 5.000%, 7/15/22 (Pre-refunded 7/15/14) - FGIC Insured 2,000 Indiana Health Facility Financing Authority, Hospital Revenue No Opt. Call AAA 2,295,760 Refunding Bonds, Columbus Regional Hospital, Series 1993, 7.000%, 8/15/15 - FSA Insured 1,000 Indiana Health Facility Financing Authority, Revenue Bonds, 3/17 at 100.00 BBB- 865,650 Community Foundation of Northwest Indiana, Series 2007, 5.500%, 3/01/37 9,855 Indianapolis Local Public Improvement Bond Bank, Indiana, 7/12 at 100.00 AAA 10,739,781 Waterworks Project, Series 2002A, 5.125%, 7/01/21 (Pre-refunded 7/01/12) - MBIA Insured 750 West Clark 2000 School Building Corporation, Clark County, 1/15 at 100.00 AAA 771,675 Indiana, First Mortgage Bonds, Series 2005, 5.000%, 7/15/22 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 19,605 Total Indiana 20,869,166 - ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 0.4% 1,000 Iowa Tobacco Settlement Authority, Asset Backed Settlement 6/15 at 100.00 BBB 850,800 Revenue Bonds, Series 2005C, 5.375%, 6/01/38 - ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 0.5% 500 Lawrence, Kansas, Hospital Revenue Bonds, Lawrence Memorial 7/16 at 100.00 A3 450,460 Hospital, Series 2006, 4.875%, 7/01/36 750 Wamego, Kansas, Pollution Control Revenue Bonds, Kansas Gas 6/14 at 100.00 AAA 754,253 and Electric Company, Series 2004, 5.300%, 6/01/31 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 1,250 Total Kansas 1,204,713 - ------------------------------------------------------------------------------------------------------------------------------------ KENTUCKY - 0.5% 1,100 Jefferson County, Kentucky, Health System Revenue Bonds, 10/08 at 101.00 AAA 1,117,919 Alliant Health System Inc., Series 1998, 5.125%, 10/01/18 - MBIA Insured (ETM) - ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA - 0.4% 1,000 Tobacco Settlement Financing Corporation, Louisiana, Tobacco 5/11 at 101.00 BBB 931,970 Settlement Asset-Backed Bonds, Series 2001B, 5.875%, 5/15/39 - ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 0.8% 20 Massachusetts Health and Educational Facilities Authority, 7/11 at 101.00 AA 21,960 Revenue Bonds, Partners HealthCare System Inc., Series 2001C, 6.000%, 7/01/17 480 Massachusetts Health and Educational Facilities Authority, 7/11 at 101.00 AA (4) 534,538 Revenue Bonds, Partners HealthCare System Inc., Series 2001C, 6.000%, 7/01/17 (Pre-refunded 7/01/11) 1,055 Massachusetts Turnpike Authority, Metropolitan Highway 7/08 at 101.00 AAA 1,040,663 System Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37 - MBIA Insured 410 Massachusetts Turnpike Authority, Metropolitan Highway 1/09 at 101.00 AAA 404,264 System Revenue Bonds, Subordinate Series 1999A, 5.000%, 1/01/39 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 1,965 Total Massachusetts 2,001,425 - ------------------------------------------------------------------------------------------------------------------------------------ 22 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 1.6% $ 1,000 Michigan State Hospital Finance Authority, Hospital Revenue 8/08 at 101.00 BB- $ 939,550 Bonds, Detroit Medical Center Obligated Group, Series 1998A, 5.125%, 8/15/18 2,900 Michigan State Hospital Finance Authority, Hospital Revenue 12/12 at 100.00 AA 2,915,805 Refunding Bonds, Trinity Health Credit Group, Series 2002C, 5.375%, 12/01/30 - ------------------------------------------------------------------------------------------------------------------------------------ 3,900 Total Michigan 3,855,355 - ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA - 0.1% 255 Minnesota Housing Finance Agency, Single Family Mortgage 7/08 at 101.00 AA+ 257,739 Revenue Bonds, Series 1995A, 5.200%, 1/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ MISSISSIPPI - 1.6% 3,600 Calhoun County, Mississippi, Solid Waste Disposal Revenue 4/08 at 102.00 BBB 3,679,920 Bonds, Weyerhauser Company Project, Series 1992, 6.875%, 4/01/16 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ MISSOURI - 0.6% 5,000 Kansas City Municipal Assistance Corporation, Missouri, No Opt. Call AAA 1,472,350 Leasehold Revenue Bonds, Series 2004B-1, 0.000%, 4/15/30 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 6.1% 2,500 Clark County, Nevada, Motor Vehicle Fuel Tax Highway 7/13 at 100.00 AAA 2,542,500 Improvement Revenue Bonds, Series 2003, 5.000%, 7/01/23 - AMBAC Insured Director of Nevada State Department of Business and Industry, Revenue Bonds, Las Vegas Monorail Project, First Tier, Series 2000: 2,360 0.000%, 1/01/21 - AMBAC Insured No Opt. Call AAA 1,006,705 3,500 0.000%, 1/01/22 - AMBAC Insured No Opt. Call AAA 1,396,500 6,025 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AAA 4,916,159 1,515 Reno, Nevada, Capital Improvement Revenue Bonds, 6/12 at 100.00 A3 1,536,983 Series 2002, 5.500%, 6/01/21 - FGIC Insured 2,555 Reno, Nevada, Capital Improvement Revenue Bonds, 6/12 at 100.00 A3 (4) 2,812,595 Series 2002, 5.500%, 6/01/21 (Pre-refunded 6/01/12) - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 18,455 Total Nevada 14,211,442 - ------------------------------------------------------------------------------------------------------------------------------------ NEW HAMPSHIRE - 0.2% 400 New Hampshire Housing Finance Authority, Single Family 5/11 at 100.00 Aa2 409,256 Mortgage Acquisition Bonds, Series 2001A, 5.600%, 7/01/21 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 3.0% 2,500 New Jersey Health Care Facilities Financing Authority, Revenue 7/13 at 100.00 Ba2 2,252,275 Bonds, Somerset Medical Center, Series 2003, 5.500%, 7/01/23 Tobacco Settlement Financing Corporation, New Jersey, Tobacco Settlement Asset-Backed Bonds, Series 2002: 1,580 5.750%, 6/01/32 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 1,717,018 1,000 6.000%, 6/01/37 (Pre-refunded 6/01/12) 6/12 at 100.00 AAA 1,123,640 2,500 Tobacco Settlement Financing Corporation, New Jersey, Tobacco 6/17 at 100.00 BBB 2,003,350 Settlement Asset-Backed Bonds, Series 2007-1A, 5.000%, 6/01/41 - ------------------------------------------------------------------------------------------------------------------------------------ 7,580 Total New Jersey 7,096,283 - ------------------------------------------------------------------------------------------------------------------------------------ NEW MEXICO - 2.1% 1,000 New Mexico Mortgage Finance Authority, Multifamily Housing 9/17 at 100.00 AAA 912,850 Revenue Bonds, St Anthony, Series 2007A, 5.250%, 9/01/42 (Alternative Minimum Tax) 4,000 University of New Mexico, FHA-Insured Mortgage Hospital 7/14 at 100.00 AAA 3,959,880 Revenue Bonds, Series 2004, 4.625%, 7/01/25 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,000 Total New Mexico 4,872,730 - ------------------------------------------------------------------------------------------------------------------------------------ 23 NXP Nuveen Select Tax-Free Income Portfolio (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 1.3% $ 1,000 Dormitory Authority of the State of New York, FHA-Insured 2/14 at 100.00 AAA $ 1,015,670 Mortgage Revenue Bonds, Kaleida Health, Series 2004, 5.050%, 2/15/25 1,215 Dormitory Authority of the State of New York, Revenue Bonds, 7/10 at 101.00 Baa1 1,269,092 Mount Sinai NYU Health Obligated Group, Series 2000A, 6.500%, 7/01/17 385 Dormitory Authority of the State of New York, Revenue Bonds, 7/10 at 101.00 Baa1 (4) 422,603 Mount Sinai NYU Health Obligated Group, Series 2000A, 6.500%, 7/01/17 (Pre-refunded 7/01/10) Long Island Power Authority, New York, Electric System General Revenue Bonds, Series 1998A: 145 5.125%, 12/01/22 (Pre-refunded 6/01/08) - FSA Insured 6/08 at 101.00 AAA 147,268 305 5.125%, 12/01/22 (Pre-refunded 6/01/08) - FSA Insured 6/08 at 101.00 AAA 309,770 - ------------------------------------------------------------------------------------------------------------------------------------ 3,050 Total New York 3,164,403 - ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 1.4% 500 Appalachian State University, North Carolina, Utilities System 5/08 at 102.00 AAA 511,960 Revenue Refunding Bonds, Series 1998, 5.000%, 5/15/24 (Pre-refunded 5/15/08) - MBIA Insured 2,195 North Carolina Eastern Municipal Power Agency, Power System 5/08 at 100.00 Baa1 2,194,802 Revenue Refunding Bonds, Series 1993B, 5.500%, 1/01/21 500 Raleigh Durham Airport Authority, North Carolina, Airport 5/11 at 101.00 Aa3 517,405 Revenue Bonds, Series 2001A, 5.250%, 11/01/17 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 3,195 Total North Carolina 3,224,167 - ------------------------------------------------------------------------------------------------------------------------------------ OHIO - 0.1% 300 Lebanon, Ohio, Electric System Mortgage Revenue Bonds, 12/10 at 101.00 AAA 326,346 Series 2001, 5.500%, 12/01/17 (Pre-refunded 12/01/10) - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA - 2.1% 1,000 Norman Regional Hospital Authority, Oklahoma, Hospital 9/16 at 100.00 BBB 883,100 Revenue Bonds, Series 2005, 5.375%, 9/01/36 4,000 Oklahoma Development Finance Authority, Revenue Bonds, 2/14 at 100.00 AA- 3,978,120 St. John Health System, Series 2004, 5.000%, 2/15/24 - ------------------------------------------------------------------------------------------------------------------------------------ 5,000 Total Oklahoma 4,861,220 - ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 0.8% 500 Pennsylvania Higher Educational Facilities Authority, Revenue 7/13 at 100.00 BBB+ 498,335 Bonds, Widener University, Series 2003, 5.250%, 7/15/24 700 Pennsylvania Turnpike Commission, Turnpike Revenue Bonds, 12/14 at 100.00 AAA 717,990 Series 2004A, 5.500%, 12/01/31 - AMBAC Insured 520 Pennsylvania, General Obligation Bonds, Second Series 2001, 9/11 at 101.00 AAA 563,727 5.000%, 9/15/20 (Pre-refunded 9/15/11) - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 1,720 Total Pennsylvania 1,780,052 - ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA - 7.9% 1,000 Dorchester County School District 2, South Carolina, Installment 12/14 at 100.00 A 1,010,570 Purchase Revenue Bonds, GROWTH, Series 2004, 5.250%, 12/01/20 10,000 Greenville County School District, South Carolina, Installment 12/12 at 101.00 AA- (4) 11,412,998 Purchase Revenue Bonds, Series 2002, 5.875%, 12/01/19 (Pre-refunded 12/01/12) 1,500 Lexington County Health Service District, South Carolina, 11/13 at 100.00 A+ (4) 1,721,235 Hospital Revenue Refunding and Improvement Bonds, Series 2003, 6.000%, 11/01/18 (Pre-refunded 11/01/13) 520 South Carolina JOBS Economic Development Authority, Economic 11/12 at 100.00 A- (4) 580,819 Development Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.625%, 11/15/30 (Pre-refunded 11/15/12) 1,980 South Carolina JOBS Economic Development Authority, Economic 11/12 at 100.00 A- 1,992,256 Development Revenue Bonds, Bon Secours Health System Inc., Series 2002B, 5.625%, 11/15/30 24 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA (continued) $ 1,720 Tobacco Settlement Revenue Management Authority, 5/11 at 101.00 BBB $ 1,726,072 South Carolina, Tobacco Settlement Asset-Backed Bonds, Series 2001B, 6.000%, 5/15/22 - ------------------------------------------------------------------------------------------------------------------------------------ 16,720 Total South Carolina 18,443,950 - ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 9.2% 5,000 Brazos River Harbor Navigation District, Brazoria County, Texas, 5/12 at 101.00 A- 5,037,600 Environmental Facilities Revenue Bonds, Dow Chemical Company Project, Series 2002A-6, 6.250%, 5/15/33 (Mandatory put 5/15/17) (Alternative Minimum Tax) 1,000 Dallas Area Rapid Transit, Texas, Senior Lien Sales Tax Revenue 12/11 at 100.00 AAA 1,081,740 Bonds, Series 2001, 5.000%, 12/01/31 (Pre-refunded 12/01/11) - AMBAC Insured 6,150 Dallas Independent School District, Dallas County, Texas, General 2/12 at 100.00 AAA 6,430,809 Obligation Refunding Bonds, Series 2002, 5.250%, 2/15/20 360 Dallas-Fort Worth International Airport Public Facility Corporation, 1/09 at 100.00 AAA 365,296 Texas, Airport Hotel Revenue Bonds, Series 2001, 5.500%, 1/15/20 - FSA Insured 2,300 Harris County Health Facilities Development Corporation, Texas, 11/13 at 100.00 AAA 2,260,118 Thermal Utility Revenue Bonds, TECO Project, Series 2003, 5.000%, 11/15/30 - MBIA Insured 3,470 Harris County-Houston Sports Authority, Texas, Senior Lien 11/30 at 61.17 AAA 504,122 Revenue Refunding Bonds, Series 2001A, 0.000%, 11/15/38 - MBIA Insured 45 Irving Independent School District, Dallas County, Texas, General 2/12 at 100.00 AAA 43,919 Obligation Refunding Bonds, Series 2002A, 5.000%, 2/15/31 3,455 Irving Independent School District, Dallas County, Texas, General 2/12 at 100.00 AAA 3,725,388 Obligation Refunding Bonds, Series 2002A, 5.000%, 2/15/31 (Pre-refunded 2/15/12) 465 San Antonio, Texas, Water System Revenue Refunding Bonds, 5/12 at 100.00 AAA 521,377 Series 1992, 6.000%, 5/15/16 (Pre-refunded 5/15/12) - MBIA Insured 1,750 Texas, General Obligation Bonds, Water Financial Assistance 8/13 at 100.00 Aa1 1,652,403 Program, Series 2003A, 5.125%, 8/01/42 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 23,995 Total Texas 21,622,772 - ------------------------------------------------------------------------------------------------------------------------------------ UTAH - 0.3% 775 Utah State Building Ownership Authority, Lease Revenue Bonds, 11/11 at 100.00 AA+ 806,612 State Facilities Master Lease Program, Series 2001B, 5.250%, 5/15/24 - ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 7.9% 250 Energy Northwest, Washington, Electric Revenue Refunding 7/12 at 100.00 AAA 270,343 Bonds, Columbia Generating Station - Nuclear Project 2, Series 2002C, 5.500%, 7/01/17 - MBIA Insured 4,750 Snohomish County Public Utility District 1, Washington, No Opt. Call AAA 5,128,528 Generation System Revenue Bonds, Series 1989, 6.750%, 1/01/12 (ETM) 9,750 Washington State Healthcare Facilities Authority, Revenue 10/11 at 100.00 AAA 10,086,277 Bonds, Sisters of Providence Health System, Series 2001A, 5.125%, 10/01/17 - MBIA Insured 2,345 Washington State Tobacco Settlement Authority, Tobacco 6/13 at 100.00 BBB 2,381,629 Settlement Asset-Backed Revenue Bonds, Series 2002, 6.500%, 6/01/26 2,115 Washington State, Motor Vehicle Fuel Tax General Obligation No Opt. Call AAA 728,998 Bonds, Series 2003F, 0.000%, 12/01/27 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 19,210 Total Washington 18,595,775 - ------------------------------------------------------------------------------------------------------------------------------------ WEST VIRGINIA - 0.5% 1,075 Marshall County, West Virginia, Special Obligation Refunding No Opt. Call AAA 1,133,115 Bonds, Series 1992, 6.500%, 5/15/10 (ETM) - ------------------------------------------------------------------------------------------------------------------------------------ 25 NXP Nuveen Select Tax-Free Income Portfolio (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 1.6% $ 215 Badger Tobacco Asset Securitization Corporation, Wisconsin, 6/12 at 100.00 BBB $ 215,800 Tobacco Settlement Asset-Backed Bonds, Series 2002, 6.125%, 6/01/27 1,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/13 at 100.00 A- 1,001,310 Bonds, Wheaton Franciscan Services Inc., Series 2003A, 5.500%, 8/15/17 2,500 Wisconsin, General Obligation Refunding Bonds, Series 2003-3, 11/13 at 100.00 AA- 2,525,350 5.000%, 11/01/26 - ------------------------------------------------------------------------------------------------------------------------------------ 3,715 Total Wisconsin 3,742,460 - ------------------------------------------------------------------------------------------------------------------------------------ $ 246,825 Total Municipal Bonds (cost $223,402,676) 230,568,777 =============----------------------------------------------------------------------------------------------------------------------- SHARES DESCRIPTION (1) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 0.0% AIRLINES - 0.0% 789 UAL Corporation, (5) $ 16,987 - ------------------------------------------------------------------------------------------------------------------------------------ Total Common Stocks (cost $0) 16,987 -------------------------------------------------------------------------------------------------------------------- Total Investments (cost $223,402,676) - 98.3% 230,585,764 -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.7% 3,907,830 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $ 234,493,594 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments reflects the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. During March 2008, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) On December 9, 2002, UAL Corporation ("UAL"), the holding company of United Air Lines, Inc. ("United") filed for federal bankruptcy protection. The Adviser determined that it was likely that United would not remain current on their interest payment obligations with respect to the bonds previously held and thus the Fund had stopped accruing interest on its UAL bonds. On February 1, 2006, UAL emerged from federal bankruptcy with the acceptance of its reorganization plan by the bankruptcy court. Under the settlement agreement established to meet UAL's unsecured bond obligations, the bondholders, including the Fund, received three distributions of UAL common stock over the subsequent months, and the bankruptcy court dismissed all unsecured claims of bondholders, including those of the Fund. On May 5, 2006, the Fund liquidated such UAL common stock holdings. On September 29, 2006 and May 30, 2007, the Fund received additional distributions of 1,901 and 617 shares, respectively, of UAL common stock as a result of its earlier ownership of the UAL bonds. The Fund liquidated the 1,901 shares of such UAL common stock holdings on November 15, 2006. The Fund received an additional distribution of 172 UAL common stock shares on November 14, 2007. The remaining 789 shares of UAL common stock were still held by the Fund at March 31, 2008. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. See accompanying notes to financial statements. 26 NXQ Nuveen Select Tax-Free Income Portfolio 2 Portfolio of INVESTMENTS March 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ MUNICIPAL BONDS - 98.5% ARIZONA - 0.7% $ 2,000 Salt Verde Financial Corporation, Arizona, Senior Gas Revenue No Opt. Call AA- $ 1,709,520 Bonds, Series 2007, 5.000%, 12/01/37 - ------------------------------------------------------------------------------------------------------------------------------------ ARKANSAS - 1.7% 1,000 Fort Smith, Arkansas, Water and Sewer Revenue Refunding 10/11 at 100.00 AAA 1,034,840 and Construction Bonds, Series 2002A, 5.000%, 10/01/19 - FSA Insured 1,205 Sebastian County Health Facilities Board, Arkansas, Hospital 11/11 at 101.00 Baa3 1,176,381 Revenue Improvement Bonds, Sparks Regional Medical Center, Series 2001A, 5.250%, 11/01/21 2,000 University of Arkansas, Fayetteville, Various Facilities Revenue 12/12 at 100.00 Aa3 1,960,960 Bonds, Series 2002, 5.000%, 12/01/32 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 4,205 Total Arkansas 4,172,181 - ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 6.6% 1,000 Alameda Corridor Transportation Authority, California, Subordinate 10/17 at 100.00 AAA 808,280 Lien Revenue Bonds, Series 2004A, 0.000%, 10/01/25 - AMBAC Insured 3,325 California Department of Water Resources, Power Supply 5/12 at 101.00 Aa3 3,701,058 Revenue Bonds, Series 2002A, 6.000%, 5/01/14 500 California State Public Works Board, Lease Revenue Refunding 12/08 at 101.00 A 508,595 Bonds, Community Colleges Projects, Series 1998A, 5.250%, 12/01/16 2,000 California State Public Works Board, Lease Revenue Refunding No Opt. Call Aa2 2,184,780 Bonds, Various University of California Projects, Series 1993A, 5.500%, 6/01/14 60 California, General Obligation Bonds, Series 1997, 10/08 at 100.00 AAA 60,630 5.000%, 10/01/18 - AMBAC Insured 2,500 California, General Obligation Bonds, Series 2005, 5.000%, 3/01/31 3/16 at 100.00 A+ 2,476,325 1,000 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 809,190 Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1, 5.125%, 6/01/47 3,200 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 3,712,064 Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.750%, 6/01/39 (Pre-refunded 6/01/13) 1,195 Palmdale Elementary School District, Los Angeles County, No Opt. Call AAA 396,501 California, General Obligation Bonds, Series 2003, 0.000%, 8/01/28 - FSA Insured 1,750 Tobacco Securitization Authority of Northern California, 6/15 at 100.00 BBB 1,512,070 Tobacco Settlement Asset-Backed Bonds, Series 2005A-1, 5.500%, 6/01/45 - ------------------------------------------------------------------------------------------------------------------------------------ 16,530 Total California 16,169,493 - ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 9.8% 1,700 Colorado Health Facilities Authority, Revenue Bonds, Catholic 3/12 at 100.00 AA (4) 1,797,223 Health Initiatives, Series 2002A, 5.500%, 3/01/22 (ETM) 1,300 Colorado Health Facilities Authority, Revenue Bonds, Catholic 3/12 at 100.00 AA (4) 1,425,671 Health Initiatives, Series 2002A, 5.500%, 3/01/22 (Pre-refunded 3/01/12) 2,825 Denver City and County, Colorado, Airport System Revenue No Opt. Call A+ 3,160,667 Bonds, Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax) 5,000 Denver City and County, Colorado, Airport System Revenue 11/11 at 100.00 A+ 5,128,350 Refunding Bonds, Series 2001A, 5.625%, 11/15/17 - FGIC Insured (Alternative Minimum Tax) 27 NXQ Nuveen Select Tax-Free Income Portfolio 2 (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COLORADO (continued) $ 1,555 Denver City and County, Colorado, Airport System Revenue 11/11 at 100.00 A+ $ 1,624,742 Refunding Bonds, Series 2001, 5.500%, 11/15/16 - FGIC Insured 3,000 Denver Convention Center Hotel Authority, Colorado, Senior 12/13 at 100.00 A3 (4) 3,269,100 Revenue Bonds, Convention Center Hotel, Series 2003A, 5.000%, 12/01/23 (Pre-refunded 12/01/13) - XLCA Insured 2,000 Denver Convention Center Hotel Authority, Colorado, Senior 11/16 at 100.00 A- 1,759,600 Revenue Bonds, Convention Center Hotel, Series 2006, 4.750%, 12/01/35 - XLCA Insured E-470 Public Highway Authority, Colorado, Senior Revenue Bonds, Series 2000B: 5,100 0.000%, 9/01/24 - MBIA Insured No Opt. Call AAA 2,010,930 4,000 0.000%, 9/01/33 - MBIA Insured No Opt. Call AAA 879,320 5,000 E-470 Public Highway Authority, Colorado, Senior Revenue 9/10 at 31.42 AAA 1,472,950 Bonds, Series 2000B, 0.000%, 9/01/28 (Pre-refunded 9/01/10) - MBIA Insured 250 Northwest Parkway Public Highway Authority, Colorado, Revenue 6/11 at 102.00 AAA 271,435 Bonds, Senior Series 2001A, 5.250%, 6/15/41 (Pre-refunded 6/15/11) - FSA Insured 1,100 University of Colorado Hospital Authority, Revenue Bonds, 11/11 at 100.00 Baa1 (4) 1,205,952 Series 2001A, 5.600%, 11/15/31 (Pre-refunded 11/15/11) - ------------------------------------------------------------------------------------------------------------------------------------ 32,830 Total Colorado 24,005,940 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 0.4% 500 District of Columbia, Hospital Revenue Refunding Bonds, 5/08 at 101.00 AAA 505,905 Medlantic Healthcare Group, Series 1996A, 5.750%, 8/15/16 - MBIA Insured (ETM) 500 Washington Convention Center Authority, District of Columbia, 10/08 at 101.00 AAA 512,160 Senior Lien Dedicated Tax Revenue Bonds, Series 1998, 5.000%, 10/01/21 (Pre-refunded 10/01/08) - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 1,000 Total District of Columbia 1,018,065 - ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 2.3% 1,000 Hillsborough County Industrial Development Authority, Florida, 10/16 at 100.00 A3 933,070 Hospital Revenue Bonds, Tampa General Hospital, Series 2006, 5.250%, 10/01/41 1,500 Jacksonville, Florida, Guaranteed Entitlement Revenue Refunding 10/12 at 100.00 A+ 1,528,710 and Improvement Bonds, Series 2002, 5.000%, 10/01/21 - FGIC Insured 2,500 JEA, Florida, Electric System Revenue Bonds, Series 2006-3A, 4/15 at 100.00 AAA 2,475,525 5.000%, 10/01/41 - FSA Insured 625 Miami-Dade County Expressway Authority, Florida, Toll System 7/11 at 101.00 A3 625,538 Revenue Refunding Bonds, Series 2001, 5.125%, 7/01/29 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,625 Total Florida 5,562,843 - ------------------------------------------------------------------------------------------------------------------------------------ HAWAII - 0.5% 1,100 Hawaii, Certificates of Participation, Kapolei State Office 11/08 at 101.00 AAA 1,123,738 Building, Series 1998A, 5.000%, 5/01/17 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 13.2% 630 Chicago Metropolitan Housing Development Corporation, 7/08 at 100.00 AA 631,084 Illinois, FHA-Insured Section 8 Assisted Housing Development Revenue Refunding Bonds, Series 1992, 6.800%, 7/01/17 590 Chicago, Illinois, Motor Fuel Tax Revenue Bonds, Series 2003A, 7/13 at 100.00 AAA 589,121 5.000%, 1/01/33 - AMBAC Insured 1,665 Chicago, Illinois, Third Lien General Airport Revenue Bonds, 1/16 at 100.00 A1 1,592,023 O'Hare International Airport, Series 2005A, 5.000%, 1/01/33 - FGIC Insured 250 Illinois Development Finance Authority, Economic Development 8/08 at 100.00 Baa2 (4) 252,803 Revenue Bonds, Latin School of Chicago, Series 1998, 5.200%, 8/01/11 (Pre-refunded 8/01/08) 600 Illinois Educational Facilities Authority, Student Housing 5/12 at 101.00 Aaa 675,516 Revenue Bonds, Educational Advancement Foundation Fund, University Center Project, Series 2002, 6.000%, 5/01/22 (Pre-refunded 5/01/12) 705 Illinois Finance Authority, Revenue Bonds, University of Chicago, 7/17 at 100.00 Aa1 619,187 Series 2007, Trust 73TP, 10.203%, 7/01/46 (IF) 28 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS (continued) $ 2,185 Illinois Finance Authority, Revenue Bonds, YMCA of Southwest 9/15 at 100.00 AA $ 2,009,676 Illinois, Series 2005, 5.000%, 9/01/31 - RAAI Insured 2,255 Illinois Health Facilities Authority, Revenue Bonds, Lake Forest 7/12 at 100.00 A- 2,363,714 Hospital, Series 2002A, 6.250%, 7/01/22 1,055 Illinois Health Facilities Authority, Revenue Bonds, Loyola 7/11 at 100.00 Baa2 (4) 1,164,404 University Health System, Series 2001A, 6.125%, 7/01/31 (Pre-refunded 7/01/11) 1,000 Illinois Housing Development Authority, Housing Finance Bonds, 1/15 at 100.00 A+ 910,300 Series 2005E, 4.750%, 7/01/30 - FGIC Insured 5,700 Illinois, Sales Tax Revenue Bonds, First Series 2002, 6/13 at 100.00 AAA 5,853,443 5.000%, 6/15/22 45 Metropolitan Pier and Exposition Authority, Illinois, Revenue 6/08 at 100.00 A1 45,071 Bonds, McCormick Place Expansion Project, Series 1992A, 6.500%, 6/15/22 7,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue 6/12 at 101.00 AAA 7,216,019 Refunding Bonds, McCormick Place Expansion Project, Series 2002B, 5.000%, 6/15/21 - MBIA Insured 5,045 Sauk Village, Illinois, General Obligation Alternate Revenue 12/12 at 100.00 AA 4,979,163 Source Bonds, Tax Increment, Series 2002A, 5.000%, 6/01/22 - RAAI Insured Sauk Village, Illinois, General Obligation Alternate Revenue Source Bonds, Tax Increment, Series 2002B: 1,060 0.000%, 12/01/17 - RAAI Insured No Opt. Call AA 646,006 1,135 0.000%, 12/01/18 - RAAI Insured No Opt. Call AA 647,620 1,100 Schaumburg, Illinois, General Obligation Bonds, Series 2004B, 12/14 at 100.00 AA+ 1,111,627 5.250%, 12/01/34 - FGIC Insured 1,000 Yorkville, Illinois, General Obligation Debt Certificates, 12/11 at 100.00 AA (4) 1,083,300 Series 2003, 5.000%, 12/15/21 (Pre-refunded 12/15/11) - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ 33,020 Total Illinois 32,390,077 - ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 3.4% 1,000 Franklin Community Multi-School Building Corporation, 7/14 at 100.00 A (4) 1,105,650 Marion County, Indiana, First Mortgage Revenue Bonds, Series 2004, 5.000%, 7/15/22 (Pre-refunded 7/15/14) - FGIC Insured 1,000 Indiana Health Facility Financing Authority, Revenue Bonds, 3/17 at 100.00 BBB- 865,650 Community Foundation of Northwest Indiana, Series 2007, 5.500%, 3/01/37 935 Indiana Housing Finance Authority, Single Family Mortgage 7/11 at 100.00 Aaa 950,512 Revenue Bonds, Series 2002C-2, 5.250%, 7/01/23 (Alternative Minimum Tax) 4,380 Indiana Municipal Power Agency, Power Supply System 1/12 at 100.00 AAA 4,469,396 Revenue Bonds, Series 2002A, 5.125%, 1/01/21 - AMBAC Insured 355 St. Joseph County Hospital Authority, Indiana, Revenue Bonds, 8/08 at 101.00 AAA 328,258 Memorial Health System, Series 1998A, 4.625%, 8/15/28 - MBIA Insured 750 West Clark 2000 School Building Corporation, Clark County, 1/15 at 100.00 AAA 771,675 Indiana, First Mortgage Bonds, Series 2005, 5.000%, 7/15/22 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 8,420 Total Indiana 8,491,141 - ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 2.7% 1,000 Iowa Tobacco Settlement Authority, Asset Backed Settlement 6/15 at 100.00 BBB 850,800 Revenue Bonds, Series 2005C, 5.375%, 6/01/38 1,000 Iowa Tobacco Settlement Authority, Tobacco Asset-Backed 6/17 at 100.00 BBB 901,280 Revenue Bonds, Series 2005B, 5.600%, 6/01/34 Iowa Tobacco Settlement Authority, Tobacco Settlement Asset-Backed Revenue Bonds, Series 2001B: 1,000 5.300%, 6/01/25 (Pre-refunded 6/01/11) 6/11 at 101.00 AAA 1,068,230 3,500 5.600%, 6/01/35 (Pre-refunded 6/01/11) 6/11 at 101.00 AAA 3,826,025 - ------------------------------------------------------------------------------------------------------------------------------------ 6,500 Total Iowa 6,646,335 - ------------------------------------------------------------------------------------------------------------------------------------ 29 NXQ Nuveen Select Tax-Free Income Portfolio 2 (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 0.7% $ 795 Lawrence, Kansas, Hospital Revenue Bonds, Lawrence 7/16 at 100.00 A3 $ 716,231 Memorial Hospital, Series 2006, 4.875%, 7/01/36 1,000 Salina, Kansas, Hospital Revenue Bonds, Salina Regional 4/13 at 100.00 A1 896,070 Medical Center, Series 2006, 4.500%, 10/01/26 - ------------------------------------------------------------------------------------------------------------------------------------ 1,795 Total Kansas 1,612,301 - ------------------------------------------------------------------------------------------------------------------------------------ LOUISIANA - 2.2% 2,125 Louisiana Public Facilities Authority, Revenue Bonds, 7/14 at 100.00 AAA 2,157,598 Baton Rouge General Hospital, Series 2004, 5.250%, 7/01/24 - MBIA Insured 3,000 Louisiana Public Facilities Authority, Revenue Bonds, Tulane 7/12 at 100.00 AAA 3,250,590 University, Series 2002A, 5.125%, 7/01/27 (Pre-refunded 7/01/12) - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,125 Total Louisiana 5,408,188 - ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 3.2% 3,000 Massachusetts Health and Educational Facilities Authority, 10/11 at 101.00 BBB+ 3,080,160 Revenue Bonds, Berkshire Health System, Series 2001E, 6.250%, 10/01/31 2,565 Massachusetts Turnpike Authority, Metropolitan Highway 7/08 at 101.00 AAA 2,530,142 System Revenue Bonds, Senior Series 1997A, 5.000%, 1/01/37 - MBIA Insured 1,270 Massachusetts Water Resources Authority, General Revenue No Opt. Call AAA 1,381,201 Bonds, Series 1993C, 5.250%, 12/01/15 - MBIA Insured (ETM) 820 Massachusetts Water Resources Authority, General Revenue No Opt. Call AAA 885,936 Bonds, Series 1993C, 5.250%, 12/01/15 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 7,655 Total Massachusetts 7,877,439 - ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 2.3% 545 Detroit, Michigan, General Obligation Bonds, Series 2003A, 4/13 at 100.00 A- 559,443 5.250%, 4/01/19 - XLCA Insured 2,900 Michigan State Hospital Finance Authority, Hospital Revenue 12/12 at 100.00 AA 2,915,805 Refunding Bonds, Trinity Health Credit Group, Series 2002C, 5.375%, 12/01/30 2,000 Plymouth-Canton Community School District, Wayne and 5/09 at 100.00 AA- (4) 2,065,720 Washtenaw Counties, Michigan, Unlimited Tax General Obligation School Building and Site Bonds, Series 1999, 4.750%, 5/01/18 (Pre-refunded 5/01/09) - ------------------------------------------------------------------------------------------------------------------------------------ 5,445 Total Michigan 5,540,968 - ------------------------------------------------------------------------------------------------------------------------------------ MINNESOTA - 0.5% 1,500 Minnesota Housing Finance Agency, Residential Housing 7/16 at 100.00 AA+ 1,311,990 Finance Bonds, Series 2007-I, 4.850%, 7/01/38 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 6.3% 1,500 Clark County, Nevada, General Obligation Bank Bonds, Southern 6/11 at 100.00 AA+ (4) 1,622,385 Nevada Water Authority Loan, Series 2001, 5.300%, 6/01/19 (Pre-refunded 6/01/11) - FGIC Insured Director of Nevada State Department of Business and Industry, Revenue Bonds, Las Vegas Monorail Project, First Tier, Series 2000: 4,595 0.000%, 1/01/22 - AMBAC Insured No Opt. Call AAA 1,833,405 13,250 5.375%, 1/01/40 - AMBAC Insured 1/10 at 100.00 AAA 10,811,466 1,100 Nevada, General Obligation Refunding Bonds, Municipal Bond 5/08 at 100.00 AAA 1,104,411 Bank Projects 65 and R-6, Series 1998, 5.000%, 5/15/22 (Pre-refunded 5/15/08) - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 20,445 Total Nevada 15,371,667 - ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 1.8% 2,500 New Jersey Health Care Facilities Financing Authority, 7/13 at 100.00 Ba2 2,252,275 Revenue Bonds, Somerset Medical Center, Series 2003, 5.500%, 7/01/23 30 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY (continued) Tobacco Settlement Financing Corporation, New Jersey, Tobacco Settlement Asset-Backed Bonds, Series 2003: $ 1,000 6.375%, 6/01/32 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA $ 1,123,040 1,010 6.250%, 6/01/43 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 1,167,540 - ------------------------------------------------------------------------------------------------------------------------------------ 4,510 Total New Jersey 4,542,855 - ------------------------------------------------------------------------------------------------------------------------------------ NEW MEXICO - 2.9% 1,000 New Mexico Mortgage Finance Authority, Multifamily Housing 9/17 at 100.00 AAA 912,850 Revenue Bonds, St Anthony, Series 2007A, 5.250%, 9/01/42 (Alternative Minimum Tax) University of New Mexico, FHA-Insured Mortgage Hospital Revenue Bonds, Series 2004: 555 4.625%, 1/01/25 - FSA Insured 7/14 at 100.00 AAA 549,539 660 4.625%, 7/01/25 - FSA Insured 7/14 at 100.00 AAA 653,380 2,000 4.750%, 7/01/27 - FSA Insured 7/14 at 100.00 AAA 1,982,420 3,000 4.750%, 1/01/28 - FSA Insured 7/14 at 100.00 AAA 2,958,180 - ------------------------------------------------------------------------------------------------------------------------------------ 7,215 Total New Mexico 7,056,369 - ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 4.6% 2,045 Dormitory Authority of the State of New York, Revenue Bonds, 7/10 at 101.00 Baa1 2,136,043 Mount Sinai NYU Health Obligated Group, Series 2000A, 6.500%, 7/01/17 655 Dormitory Authority of the State of New York, Revenue Bonds, 7/10 at 101.00 Baa1 (4) 718,974 Mount Sinai NYU Health Obligated Group, Series 2000A, 6.500%, 7/01/17 (Pre-refunded 7/01/10) 2,000 New York City Municipal Water Finance Authority, New York, 12/14 at 100.00 AAA 2,004,380 Water and Sewerage System Revenue Bonds, Fiscal Series 2005B, 5.000%, 6/15/36 - FSA Insured (UB) 1,700 New York Dormitory Authority, FHA Insured Mortgage Hospital 8/16 at 100.00 AAA 1,547,646 Revenue Bonds, Kaleida Health, Series 2006, 4.700%, 2/15/35 (UB) 3,000 New York State Tobacco Settlement Financing Corporation, 6/11 at 100.00 AA- 3,128,790 Tobacco Settlement Asset-Backed and State Contingency Contract-Backed Bonds, Series 2003B-1C, 5.500%, 6/01/16 1,680 Triborough Bridge and Tunnel Authority, New York, Convention No Opt. Call AA- 1,770,149 Center Bonds, Series 1990E, 7.250%, 1/01/10 - ------------------------------------------------------------------------------------------------------------------------------------ 11,080 Total New York 11,305,982 - ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 0.6% 1,155 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 AA- 1,115,303 Healthcare System Revenue Bonds, Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31 345 Charlotte-Mecklenburg Hospital Authority, North Carolina, 1/11 at 101.00 Aa3 (4) 369,136 Healthcare System Revenue Bonds, Carolinas Healthcare System, Series 2001A, 5.000%, 1/15/31 (Pre-refunded 1/15/11) - ------------------------------------------------------------------------------------------------------------------------------------ 1,500 Total North Carolina 1,484,439 - ------------------------------------------------------------------------------------------------------------------------------------ OHIO - 0.8% Buckeye Tobacco Settlement Financing Authority, Ohio, Tobacco Settlement Asset-Backed Revenue Bonds, Senior Lien, Series 2007A-2: 55 5.125%, 6/01/24 6/17 at 100.00 BBB 51,463 530 5.875%, 6/01/30 6/17 at 100.00 BBB 493,674 525 5.750%, 6/01/34 6/17 at 100.00 BBB 468,500 1,180 5.875%, 6/01/47 6/17 at 100.00 BBB 1,044,253 - ------------------------------------------------------------------------------------------------------------------------------------ 2,290 Total Ohio 2,057,890 - ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA - 1.5% 1,000 Norman Regional Hospital Authority, Oklahoma, Hospital 9/16 at 100.00 BBB 883,100 Revenue Bonds, Series 2005, 5.375%, 9/01/36 3,000 Oklahoma Development Finance Authority, Revenue Bonds, 2/17 at 100.00 AA- 2,814,150 Saint John Health System, Series 2007, 5.000%, 2/15/42 - ------------------------------------------------------------------------------------------------------------------------------------ 4,000 Total Oklahoma 3,697,250 - ------------------------------------------------------------------------------------------------------------------------------------ 31 NXQ Nuveen Select Tax-Free Income Portfolio 2 (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 2.7% $ 1,020 Carlisle Area School District, Cumberland County, Pennsylvania, 9/09 at 100.00 A1 (4) $ 1,064,707 General Obligation Bonds, Series 2004A, 5.000%, 9/01/20 (Pre-refunded 9/01/09) - FGIC Insured Dauphin County General Authority, Pennsylvania, Health System Revenue Bonds, Pinnacle Health System Project, Series 1999: 455 5.125%, 8/15/17 (Pre-refunded 2/15/09) - MBIA Insured 2/09 at 101.00 AAA 472,868 545 5.125%, 8/15/17 (Pre-refunded 2/15/09) - MBIA Insured 2/09 at 101.00 AAA 566,402 1,000 Philadelphia Authority for Industrial Development, Pennsylvania, 7/11 at 101.00 A+ 1,025,770 Airport Revenue Bonds, Philadelphia Airport System Project, Series 2001A, 5.500%, 7/01/17 - FGIC Insured (Alternative Minimum Tax) 3,250 Philadelphia School District, Pennsylvania, General Obligation 2/12 at 100.00 AAA 3,560,765 Bonds, Series 2002A, 5.500%, 2/01/31 (Pre-refunded 2/01/12) - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 6,270 Total Pennsylvania 6,690,512 - ------------------------------------------------------------------------------------------------------------------------------------ PUERTO RICO - 1.3% 3,000 Puerto Rico Housing Finance Authority, Capital Fund Program 12/13 at 100.00 AA 3,087,870 Revenue Bonds, Series 2003, 5.000%, 12/01/20 - ------------------------------------------------------------------------------------------------------------------------------------ RHODE ISLAND - 2.3% 5,835 Rhode Island Tobacco Settlement Financing Corporation, 6/12 at 100.00 BBB 5,611,985 Tobacco Settlement Asset-Backed Bonds, Series 2002A, 6.250%, 6/01/42 - ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA - 4.9% 700 Dorchester County School District 2, South Carolina, 12/14 at 100.00 A 707,399 Installment Purchase Revenue Bonds, GROWTH, Series 2004, 5.250%, 12/01/20 620 Florence, South Carolina, Water and Sewerage Revenue Bonds, 3/10 at 101.00 AAA 648,067 Series 2000, 5.750%, 3/01/20 - AMBAC Insured 4,000 Greenville County School District, South Carolina, Installment 12/12 at 101.00 AA- (4) 4,565,200 Purchase Revenue Bonds, Series 2002, 5.875%, 12/01/19 (Pre-refunded 12/01/12) 2,500 Lexington County Health Service District, South Carolina, 11/13 at 100.00 A+ (4) 2,868,725 Hospital Revenue Refunding and Improvement Bonds, Series 2003, 6.000%, 11/01/18 (Pre-refunded 11/01/13) 2,435 Medical University Hospital Authority, South Carolina, 8/14 at 100.00 AAA 2,517,352 FHA-Insured Mortgage Revenue Bonds, Series 2004A, 5.250%, 2/15/21 - MBIA Insured 170 Piedmont Municipal Power Agency, South Carolina, Electric 1/10 at 100.00 AAA 162,785 Revenue Refunding Bonds, Series 1998A, 4.750%, 1/01/25 - MBIA Insured 475 The College of Charleston, Charleston South Carolina, Academic 4/14 at 100.00 A2 458,299 and Administrative Revenue Bonds, Series 2004B, 5.125%, 4/01/30 - XLCA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 10,900 Total South Carolina 11,927,827 - ------------------------------------------------------------------------------------------------------------------------------------ SOUTH DAKOTA - 0.4% 1,000 South Dakota Health and Educational Facilities Authority, 11/14 at 100.00 AA- 961,190 Revenue Bonds, Sioux Valley Hospitals, Series 2004A, 5.250%, 11/01/34 - ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 11.7% 4,000 Brazos River Harbor Navigation District, Brazoria County, 5/12 at 101.00 A- 4,030,080 Texas, Environmental Facilities Revenue Bonds, Dow Chemical Company Project, Series 2002A-6, 6.250%, 5/15/33 (Mandatory put 5/15/17) (Alternative Minimum Tax) 1,500 Central Texas Regional Mobility Authority, Travis and Williamson 1/15 at 100.00 A3 1,359,195 Counties, Toll Road Revenue Bonds, Series 2005, 5.000%, 1/01/45 - FGIC Insured 1,000 Dallas Area Rapid Transit, Texas, Senior Lien Sales Tax Revenue 12/11 at 100.00 AAA 1,081,740 Bonds, Series 2001, 5.000%, 12/01/31 (Pre-refunded 12/01/11) - AMBAC Insured 2,500 Harris County Health Facilities Development Corporation, Texas, No Opt. Call AAA 2,752,650 Hospital Revenue Bonds, Texas Children's Hospital, Series 1995, 5.500%, 10/01/16 - MBIA Insured (ETM) 32 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TEXAS (continued) $ 3,000 Harris County Health Facilities Development Corporation, Texas, 11/13 at 100.00 AAA $ 2,947,980 Thermal Utility Revenue Bonds, TECO Project, Series 2003, 5.000%, 11/15/30 - MBIA Insured 6,610 Harris County-Houston Sports Authority, Texas, Junior Lien 11/31 at 53.78 AAA 777,006 Revenue Bonds, Series 2001H, 0.000%, 11/15/41 - MBIA Insured 2,000 Houston, Texas, Subordinate Lien Airport System Revenue Bonds, 7/12 at 100.00 AAA 2,063,840 Series 2002A, 5.625%, 7/01/20 - FSA Insured (Alternative Minimum Tax) 3,125 Katy Independent School District, Harris, Fort Bend and Waller 2/12 at 100.00 AAA 3,369,563 Counties, Texas, General Obligation Bonds, Series 2002A, 5.000%, 2/15/32 (Pre-refunded 2/15/12) 1,400 Kerrville Health Facilities Development Corporation, Texas, No Opt. Call BBB- 1,248,618 Revenue Bonds, Sid Peterson Memorial Hospital Project, Series 2005, 5.375%, 8/15/35 220 Killeen Independent School District, Bell County, Texas, General 5/08 at 100.00 AAA 220,414 Obligation Bonds, Series 1998, 5.000%, 2/15/14 90 Lewisville Independent School District, Denton County, Texas, 8/11 at 100.00 AAA 91,336 General Obligation Bonds, Series 2004, 5.000%, 8/15/23 910 Lewisville Independent School District, Denton County, Texas, 8/11 at 100.00 AAA 979,597 General Obligation Bonds, Series 2004, 5.000%, 8/15/23 (Pre-refunded 8/15/11) 4,750 Sam Rayburn Municipal Power Agency, Texas, Power Supply 10/12 at 100.00 AA 4,949,405 System Revenue Refunding Bonds, Series 2002A, 5.500%, 10/01/17 - RAAI Insured 1,000 San Antonio, Texas, Water System Revenue Bonds, Series 2005, 5/15 at 100.00 AAA 952,980 4.750%, 5/15/37 - MBIA Insured 500 Texas Water Development Board, Senior Lien State Revolving 7/10 at 100.00 AAA 529,800 Fund Revenue Bonds, Series 2000A, 5.625%, 7/15/13 1,560 Texas, General Obligation Bonds, Water Financial Assistance 8/13 at 100.00 Aa1 1,472,999 Program, Series 2003A, 5.125%, 8/01/42 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 34,165 Total Texas 28,827,203 - ------------------------------------------------------------------------------------------------------------------------------------ UTAH - 0.6% 1,435 Salt Lake City and Sandy Metropolitan Water District, Utah, 7/14 at 100.00 Aaa 1,479,930 Water Revenue Bonds, Series 2004, 5.000%, 7/01/21 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ VERMONT - 1.2% 2,895 Vermont Housing Finance Agency, Multifamily Housing Bonds, 2/09 at 100.00 AAA 2,933,214 Series 1999C, 5.800%, 8/15/16 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ VIRGINIA - 0.3% 510 Metropolitan District of Columbia Airports Authority, Virginia, 10/08 at 101.00 AAA 466,584 Airport System Revenue Bonds, Series 1998B, 5.000%, 10/01/28 - MBIA Insured (Alternative Minimum Tax) 250 Norfolk, Virginia, Water Revenue Bonds, Series 1995, 5/08 at 100.00 AAA 250,623 5.750%, 11/01/13 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 760 Total Virginia 717,207 - ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 2.8% 6,715 Washington State Healthcare Facilities Authority, Revenue 10/11 at 100.00 AAA 6,946,599 Bonds, Sisters of Providence Health System, Series 2001A, 5.125%, 10/01/17 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 33 NXQ Nuveen Select Tax-Free Income Portfolio 2 (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 1.6% $ 1,000 Wisconsin Health and Educational Facilities Authority, Revenue 8/13 at 100.00 A- $ 987,500 Bonds, Wheaton Franciscan Services Inc., Series 2003A, 5.500%, 8/15/18 2,790 Wisconsin Housing and Economic Development Authority, 3/12 at 100.00 AA 2,859,526 Home Ownership Revenue Bonds, Series 2002G, 4.850%, 9/01/17 - ------------------------------------------------------------------------------------------------------------------------------------ 3,790 Total Wisconsin 3,847,026 - ------------------------------------------------------------------------------------------------------------------------------------ $ 260,555 Total Municipal Bonds (cost $240,924,193) 241,587,234 =============----------------------------------------------------------------------------------------------------------------------- SHARES DESCRIPTION (1) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 0.0% AIRLINES - 0.0% 757 UAL Corporation, (5) $ 16,298 - ------------------------------------------------------------------------------------------------------------------------------------ Total Common Stocks (cost $0) 16,298 -------------------------------------------------------------------------------------------------------------------- Total Investments (cost $240,924,193) - 98.5% 241,603,532 -------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (1.0)% (2,470,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 2.5% 6,110,743 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $ 245,244,275 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments reflects the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. During March 2008, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) On December 9, 2002, UAL Corporation ("UAL"), the holding company of United Air Lines, Inc. ("United") filed for federal bankruptcy protection. The Adviser determined that it was likely that United would not remain current on their interest payment obligations with respect to the bonds previously held and thus the Fund had stopped accruing interest on its UAL bonds. On February 1, 2006, UAL emerged from federal bankruptcy with the acceptance of its reorganization plan by the bankruptcy court. Under the settlement agreement established to meet UAL's unsecured bond obligations, the bondholders, including the Fund, received three distributions of UAL common stock over the subsequent months, and the bankruptcy court dismissed all unsecured claims of bondholders, including those of the Fund. On May 5, 2006, the Fund liquidated such UAL common stock holdings. On September 29, 2006 and May 30, 2007, the Fund received additional distributions of 1,825 and 592 shares, respectively, of UAL common stock as a result of its earlier ownership of the UAL bonds. The Fund liquidated 1,825 shares of such UAL common stock holdings on November 15, 2006. The Fund received an additional distribution of 165 UAL common stock shares on November 14, 2007. The remaining 757 shares of UAL common stock were still held by the Fund at March 31, 2008. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 34 NXR Nuveen Select Tax-Free Income Portfolio 3 Portfolio of INVESTMENTS March 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ MUNICIPAL BONDS - 99.1% ALABAMA - 0.3% $ 500 Marshall County Healthcare Authority, Alabama, Revenue Bonds, 1/12 at 101.00 A- $ 524,540 Series 2002A, 6.250%, 1/01/22 - ------------------------------------------------------------------------------------------------------------------------------------ CALIFORNIA - 7.3% 2,105 Azusa Unified School District, Los Angeles County, California, 7/12 at 100.00 AAA 2,235,973 General Obligation Bonds, Series 2002, 5.375%, 7/01/21 - FSA Insured 1,000 California County Tobacco Securitization Agency, Tobacco 12/18 at 100.00 Baa3 697,780 Settlement Asset-Backed Bonds, Los Angeles County Securitization Corporation, Series 2006A, 0.000%, 6/01/36 (Mandatory put 6/01/23) 3,350 California Department of Water Resources, Power Supply 5/12 at 101.00 Aa3 3,728,885 Revenue Bonds, Series 2002A, 6.000%, 5/01/14 2,595 California Health Facilities Financing Authority, Revenue Bonds, 4/16 at 100.00 A+ 2,406,240 Kaiser Permanante System, Series 2006, 5.000%, 4/01/37 445 Golden State Tobacco Securitization Corporation, California, 6/17 at 100.00 BBB 396,535 Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-1, 4.500%, 6/01/27 3,000 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 3,480,060 Tobacco Settlement Asset-Backed Bonds, Series 2003A-1, 6.750%, 6/01/39 (Pre-refunded 6/01/13) 250 Santa Ana Unified School District, Orange County, California, 8/10 at 101.00 A+ 258,295 General Obligation Bonds, Series 2000, 5.700%, 8/01/29 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 12,745 Total California 13,203,768 - ------------------------------------------------------------------------------------------------------------------------------------ COLORADO - 6.7% 1,540 Arkansas River Power Authority, Colorado, Power Revenue 10/16 at 100.00 A- 1,459,304 Bonds, Series 2006, 5.250%, 10/01/40 - XLCA Insured 400 Colorado Department of Transportation, Certificates of 6/14 at 100.00 AAA 397,080 Participation, Series 2004, 5.000%, 6/15/34 - MBIA Insured 2,265 Colorado Health Facilities Authority, Revenue Bonds, Catholic 3/12 at 100.00 AA (4) 2,394,535 Health Initiatives, Series 2002A, 5.500%, 3/01/22 (ETM) 1,735 Colorado Health Facilities Authority, Revenue Bonds, Catholic 3/12 at 100.00 AA (4) 1,902,722 Health Initiatives, Series 2002A, 5.500%, 3/01/22 (Pre-refunded 3/01/12) 2,395 Denver City and County, Colorado, Airport System Revenue No Opt. Call A+ 2,679,574 Bonds, Series 1991D, 7.750%, 11/15/13 (Alternative Minimum Tax) 3,000 Denver Convention Center Hotel Authority, Colorado, Senior 12/13 at 100.00 A3 (4) 3,269,100 Revenue Bonds, Convention Center Hotel, Series 2003A, 5.000%, 12/01/24 (Pre-refunded 12/01/13) - XLCA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 11,335 Total Colorado 12,102,315 - ------------------------------------------------------------------------------------------------------------------------------------ CONNECTICUT - 0.1% 250 Connecticut Health and Educational Facilities Authority, 7/08 at 100.00 AAA 251,248 Revenue Bonds, Bridgeport Hospital Issue, Series 1992A, 6.625%, 7/01/18 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA - 0.1% 15 District of Columbia, General Obligation Bonds, Series 1993E, 5/08 at 100.00 AAA 15,043 6.000%, 6/01/13 - MBIA Insured (ETM) 35 NXR Nuveen Select Tax-Free Income Portfolio 3 (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ DISTRICT OF COLUMBIA (continued) $ 235 District of Columbia, General Obligation Refunding Bonds, No Opt. Call AAA $ 254,244 Series 1994A-1, 6.500%, 6/01/10 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 250 Total District of Columbia 269,287 - ------------------------------------------------------------------------------------------------------------------------------------ FLORIDA - 5.6% 1,000 Hillsborough County Industrial Development Authority, Florida, 10/16 at 100.00 A3 933,070 Hospital Revenue Bonds, Tampa General Hospital, Series 2006, 5.250%, 10/01/41 5,020 JEA St. John's River Power Park System, Florida, Revenue 10/11 at 100.00 Aa2 5,183,250 Refunding Bonds, Issue 2, Series 2002-17, 5.000%, 10/01/18 4,000 JEA, Florida, Subordinate Lien Electric System Revenue Bonds, 5/08 at 100.00 Aa3 3,981,200 Series 2002D, 4.625%, 10/01/22 - ------------------------------------------------------------------------------------------------------------------------------------ 10,020 Total Florida 10,097,520 - ------------------------------------------------------------------------------------------------------------------------------------ GEORGIA - 0.3% 545 Atlanta, Georgia, Airport Facilities Revenue Bonds, Series 1990, No Opt. Call AAA 504,523 0.000%, 1/01/10 - MBIA 0.000%, 1/01/10 - MBIA Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ ILLINOIS - 18.2% 125 Chicago Metropolitan Housing Development Corporation, Illinois, 7/08 at 100.00 AA 129,506 FHA-Insured Section 8 Assisted Housing Development Revenue Refunding Bonds, Series 1992, 6.850%, 7/01/22 1,930 Illinois Development Finance Authority, Revenue Bonds, 5/11 at 101.00 AAA 2,127,999 Midwestern University, Series 2001B, 5.750%, 5/15/16 (Pre-refunded 5/15/11) 705 Illinois Finance Authority, Revenue Bonds, University of Chicago, 7/17 at 100.00 Aa1 619,187 Series 2007, Trust 73TP, 10.203%, 7/01/46 (IF) 2,185 Illinois Finance Authority, Revenue Bonds, YMCA of Southwest 9/15 at 100.00 AA 2,009,676 Illinois, Series 2005, 5.000%, 9/01/31 - RAAI Insured 4,450 Illinois Health Facilities Authority, Remarketed Revenue Bonds, 8/11 at 103.00 Aa1 4,680,332 University of Chicago Project, Series 1985A, 5.500%, 8/01/20 1,500 Illinois Health Facilities Authority, Revenue Bonds, Evangelical No Opt. Call Baa3 (4) 1,745,730 Hospitals Corporation, Series 1992C, 6.250%, 4/15/22 (ETM) 2,225 Illinois Health Facilities Authority, Revenue Refunding Bonds, 1/13 at 100.00 A2 2,381,818 Elmhurst Memorial Healthcare, Series 2002, 6.250%, 1/01/17 2,500 Illinois Housing Development Authority, Homeowner Mortgage 2/16 at 100.00 AA 2,348,500 Revenue Bonds, Series 2006C2, 5.050%, 8/01/27 (Alternative Minimum Tax) 5,700 Illinois, Sales Tax Revenue Bonds, First Series 2002, 6/13 at 100.00 AAA 5,853,444 5.000%, 6/15/22 2,000 Illinois, Sales Tax Revenue Bonds, Series 1997X, 5.600%, 6/15/17 6/08 at 100.50 AAA 2,025,060 1,000 Kankakee & Will Counties Community Unit School District 5, No Opt. Call AAA 458,990 Illinois, General Obligation Bonds, Series 2006, 0.000%, 5/01/23 - FSA Insured 6,000 Metropolitan Pier and Exposition Authority, Illinois, Revenue 6/12 at 101.00 AAA 6,185,157 Refunding Bonds, McCormick Place Expansion Project, Series 2002B, 5.000%, 6/15/21 - MBIA Insured 1,300 Schaumburg, Illinois, General Obligation Bonds, Series 2004B, 12/14 at 100.00 AA+ 1,313,741 5.250%, 12/01/34 - FGIC Insured 1,000 Yorkville, Illinois, General Obligation Debt Certificates, 12/11 at 100.00 AA (4) 1,083,300 Series 2003, 5.000%, 12/15/22 (Pre-refunded 12/15/11) - RAAI Insured - ------------------------------------------------------------------------------------------------------------------------------------ 32,620 Total Illinois 32,962,440 - ------------------------------------------------------------------------------------------------------------------------------------ INDIANA - 6.4% 1,000 Franklin Community Multi-School Building Corporation, 7/14 at 100.00 A (4) 1,105,650 Marion County, Indiana, First Mortgage Revenue Bonds, Series 2004, 5.000%, 7/15/22 (Pre-refunded 7/15/14) - FGIC Insured 3,500 Indiana Health Facility Financing Authority, Hospital Revenue 9/11 at 100.00 BBB+ 3,233,125 Bonds, Methodist Hospitals Inc., Series 2001, 5.375%, 9/15/22 2,500 Indiana Health Facility Financing Authority, Hospital Revenue No Opt. Call AAA 2,869,700 Refunding Bonds, Columbus Regional Hospital, Series 1993, 7.000%, 8/15/15 - FSA Insured 36 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ INDIANA (continued) $ 2,000 Indianapolis Local Public Improvement Bond Bank, Indiana, 7/12 at 100.00 AAA $ 2,189,500 Waterworks Project, Series 2002A, 5.250%, 7/01/33 (Pre-refunded 7/01/12) - MBIA Insured 2,295 Shelbyville Central Renovation School Building Corporation, 7/15 at 100.00 AAA 2,166,710 Indiana, First Mortgage Bonds, Series 2005, 4.375%, 7/15/25 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 11,295 Total Indiana 11,564,685 - ------------------------------------------------------------------------------------------------------------------------------------ IOWA - 5.7% 2,745 Iowa Finance Authority, Health Facility Revenue Bonds, 7/16 at 100.00 BBB- 2,502,342 Care Initiatives Project, Series 2006A, 5.000%, 7/01/20 750 Iowa Tobacco Settlement Authority, Tobacco Asset-Backed 6/17 at 100.00 BBB 675,960 Revenue Bonds, Series 2005B, 5.600%, 6/01/34 Iowa Tobacco Settlement Authority, Tobacco Settlement Asset-Backed Revenue Bonds, Series 2001B: 3,850 5.300%, 6/01/25 (Pre-refunded 6/01/11) 6/11 at 101.00 AAA 4,112,686 2,850 5.600%, 6/01/35 (Pre-refunded 6/01/11) 6/11 at 101.00 AAA 3,115,478 - ------------------------------------------------------------------------------------------------------------------------------------ 10,195 Total Iowa 10,406,466 - ------------------------------------------------------------------------------------------------------------------------------------ KANSAS - 1.1% Lawrence, Kansas, Hospital Revenue Bonds, Lawrence Memorial Hospital, Series 2006: 1,425 5.125%, 7/01/26 7/16 at 100.00 A3 1,411,562 700 4.875%, 7/01/36 7/16 at 100.00 A3 630,644 - ------------------------------------------------------------------------------------------------------------------------------------ 2,125 Total Kansas 2,042,206 - ------------------------------------------------------------------------------------------------------------------------------------ MAINE - 0.7% 125 Maine Health and Higher Educational Facilities Authority, 7/09 at 101.00 AAA 129,783 Revenue Bonds, Series 1999B, 6.000%, 7/01/19 - MBIA Insured 1,075 Maine Health and Higher Educational Facilities Authority, 7/09 at 101.00 AAA 1,142,220 Revenue Bonds, Series 1999B, 6.000%, 7/01/19 (Pre-refunded 7/01/09) - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 1,200 Total Maine 1,272,003 - ------------------------------------------------------------------------------------------------------------------------------------ MASSACHUSETTS - 0.8% 1,000 Massachusetts Development Finance Agency, Resource 12/08 at 102.00 BBB 986,200 Recovery Revenue Bonds, Ogden Haverhill Associates, Series 1998B, 5.200%, 12/01/13 (Alternative Minimum Tax) 15 Massachusetts Health and Educational Facilities Authority, 7/11 at 101.00 AA 16,470 Revenue Bonds, Partners HealthCare System Inc., Series 2001C, 6.000%, 7/01/17 485 Massachusetts Health and Educational Facilities Authority, 7/11 at 101.00 AA (4) 540,106 Revenue Bonds, Partners HealthCare System Inc., Series 2001C, 6.000%, 7/01/17 (Pre-refunded 7/01/11) - ------------------------------------------------------------------------------------------------------------------------------------ 1,500 Total Massachusetts 1,542,776 - ------------------------------------------------------------------------------------------------------------------------------------ MICHIGAN - 3.4% 1,500 Detroit, Michigan, Sewer Disposal System Revenue Bonds, 7/16 at 100.00 A2 1,375,125 Second Lien, Series 2006B, 4.625%, 7/01/34 - FGIC Insured 2,900 Michigan State Hospital Finance Authority, Hospital Revenue 12/12 at 100.00 AA 2,915,805 Refunding Bonds, Trinity Health Credit Group, Series 2002C, 5.375%, 12/01/30 235 Michigan State Hospital Finance Authority, Revenue Refunding 8/08 at 100.00 BB- 235,092 Bonds, Detroit Medical Center Obligated Group, Series 1993A, 6.500%, 8/15/18 1,600 Plymouth-Canton Community School District, Wayne and 5/09 at 100.00 AA- (4) 1,652,576 Washtenaw Counties, Michigan, Unlimited Tax General Obligation School Building and Site Bonds, Series 1999, 4.750%, 5/01/18 (Pre-refunded 5/01/09) - ------------------------------------------------------------------------------------------------------------------------------------ 6,235 Total Michigan 6,178,598 - ------------------------------------------------------------------------------------------------------------------------------------ MISSISSIPPI - 0.4% 725 Mississippi Hospital Equipment and Facilities Authority, 9/14 at 100.00 AA 714,596 Revenue Bonds, Baptist Memorial Healthcare, Series 2004B-1, 5.000%, 9/01/24 - ------------------------------------------------------------------------------------------------------------------------------------ 37 NXR Nuveen Select Tax-Free Income Portfolio 3 (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ NEBRASKA - 1.9% $ 3,500 Nebraska Public Power District, General Revenue Bonds, 1/13 at 100.00 AAA $ 3,470,285 Series 2002B, 5.000%, 1/01/33 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ NEVADA - 4.5% 4,095 Director of Nevada State Department of Business and Industry, 1/10 at 100.00 AAA 3,341,356 Revenue Bonds, Las Vegas Monorail Project, First Tier, Series 2000, 5.375%, 1/01/40 - AMBAC Insured 1,680 Reno, Nevada, Capital Improvement Revenue Bonds, 6/12 at 100.00 A3 1,700,412 Series 2002, 5.500%, 6/01/22 - FGIC Insured 2,830 Reno, Nevada, Capital Improvement Revenue Bonds, 6/12 at 100.00 A3 (4) 3,115,321 Series 2002, 5.500%, 6/01/22 (Pre-refunded 6/01/12) - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 8,605 Total Nevada 8,157,089 - ------------------------------------------------------------------------------------------------------------------------------------ NEW HAMPSHIRE - 0.3% 500 New Hampshire Housing Finance Authority, Single Family 5/11 at 100.00 Aa2 511,570 Mortgage Acquisition Bonds, Series 2001A, 5.600%, 7/01/21 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ NEW JERSEY - 1.5% Tobacco Settlement Financing Corporation, New Jersey, Tobacco Settlement Asset-Backed Bonds, Series 2003: 1,000 6.750%, 6/01/39 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 1,179,770 1,355 6.250%, 6/01/43 (Pre-refunded 6/01/13) 6/13 at 100.00 AAA 1,566,353 - ------------------------------------------------------------------------------------------------------------------------------------ 2,355 Total New Jersey 2,746,123 - ------------------------------------------------------------------------------------------------------------------------------------ NEW MEXICO - 2.7% 1,000 New Mexico Mortgage Finance Authority, Multifamily Housing 9/17 at 100.00 AAA 912,850 Revenue Bonds, St Anthony, Series 2007A, 5.250%, 9/01/42 (Alternative Minimum Tax) 4,000 University of New Mexico, FHA-Insured Mortgage Hospital 7/14 at 100.00 AAA 3,960,640 Revenue Bonds, Series 2004, 4.625%, 1/01/25 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 5,000 Total New Mexico 4,873,490 - ------------------------------------------------------------------------------------------------------------------------------------ NEW YORK - 3.7% 1,180 Dormitory Authority of the State of New York, Second General No Opt. Call A1 1,248,629 Resolution Consolidated Revenue Bonds, City University System, Series 1990C, 7.500%, 7/01/10 2,335 Long Island Power Authority, New York, Electric System General 9/11 at 100.00 AAA 2,548,045 Revenue Bonds, Series 2001A, 5.375%, 9/01/21 (Pre-refunded 9/01/11) 35 New York City, New York, General Obligation Bonds, 5/08 at 100.00 AA 35,101 Series 1991B, 7.000%, 2/01/18 1,000 New York Dormitory Authority, New York, FHA Insured Mortgage 8/16 at 100.00 AAA 910,380 Hospital Revenue Bonds, Kaleida Health, Series 2006, 4.700%, 2/15/35 (UB) 1,850 New York State Tobacco Settlement Financing Corporation, 6/10 at 100.00 AA- 1,913,159 Tobacco Settlement Asset-Backed and State Contingency Contract-Backed Bonds, Series 2003B-1C, 5.500%, 6/01/15 - ------------------------------------------------------------------------------------------------------------------------------------ 6,400 Total New York 6,655,314 - ------------------------------------------------------------------------------------------------------------------------------------ NORTH CAROLINA - 4.3% 5,000 North Carolina Municipal Power Agency 1, Catawba Electric 1/13 at 100.00 AAA 5,237,850 Revenue Bonds, Series 2003A, 5.250%, 1/01/18 - MBIA Insured 2,345 Piedmont Triad Airport Authority, North Carolina, Airport Revenue 7/11 at 101.00 AAA 2,510,299 Bonds, Series 2001A, 5.250%, 7/01/16 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 7,345 Total North Carolina 7,748,149 - ------------------------------------------------------------------------------------------------------------------------------------ OKLAHOMA - 1.6% 3,000 Oklahoma Development Finance Authority, Revenue Bonds, 2/14 at 100.00 AA- 2,983,590 St. John Health System, Series 2004, 5.000%, 2/15/24 - ------------------------------------------------------------------------------------------------------------------------------------ 38 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ PENNSYLVANIA - 2.5% $ 2,435 Dauphin County Industrial Development Authority, Pennsylvania, No Opt. Call A- $ 2,927,552 Water Development Revenue Refunding Bonds, Dauphin Consolidated Water Supply Company, Series 1992B, 6.700%, 6/01/17 500 Pennsylvania Higher Educational Facilities Authority, Revenue 7/13 at 100.00 BBB+ 498,335 Bonds, Widener University, Series 2003, 5.250%, 7/15/24 1,000 Philadelphia Authority for Industrial Development, Pennsylvania, 7/11 at 101.00 A+ 1,025,770 Airport Revenue Bonds, Philadelphia Airport System Project, Series 2001A, 5.500%, 7/01/17 - FGIC Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 3,935 Total Pennsylvania 4,451,657 - ------------------------------------------------------------------------------------------------------------------------------------ SOUTH CAROLINA - 4.9% 1,500 Lexington County Health Service District, South Carolina, 11/13 at 100.00 A+ (4) 1,721,235 Hospital Revenue Refunding and Improvement Bonds, Series 2003, 6.000%, 11/01/18 (Pre-refunded 11/01/13) 1,500 Medical University Hospital Authority, South Carolina, 8/14 at 100.00 AAA 1,561,140 FHA-Insured Mortgage Revenue Bonds, Series 2004A, 5.250%, 8/15/20 - MBIA Insured 520 South Carolina JOBS Economic Development Authority, 11/12 at 100.00 A- (4) 580,819 Economic Development Revenue Bonds, Bon Secours Health System Inc., Series 2002A, 5.625%, 11/15/30 (Pre-refunded 11/15/12) 1,980 South Carolina JOBS Economic Development Authority, 11/12 at 100.00 A- 1,992,256 Economic Development Revenue Bonds, Bon Secours Health System Inc., Series 2002B, 5.625%, 11/15/30 3,010 Tobacco Settlement Revenue Management Authority, 5/11 at 101.00 BBB 3,008,044 South Carolina, Tobacco Settlement Asset-Backed Bonds, Series 2001B, 6.375%, 5/15/28 - ------------------------------------------------------------------------------------------------------------------------------------ 8,510 Total South Carolina 8,863,494 - ------------------------------------------------------------------------------------------------------------------------------------ SOUTH DAKOTA - 1.1% 1,010 South Dakota Health and Educational Facilities Authority, 7/12 at 101.00 AAA 1,015,282 Revenue Bonds, Avera Health, Series 2002, 5.125%, 7/01/27 - AMBAC Insured 1,000 South Dakota Health and Educational Facilities Authority, 11/14 at 100.00 AA- 961,190 Revenue Bonds, Sioux Valley Hospitals, Series 2004A, 5.250%, 11/01/34 - ------------------------------------------------------------------------------------------------------------------------------------ 2,010 Total South Dakota 1,976,472 - ------------------------------------------------------------------------------------------------------------------------------------ TENNESSEE - 1.1% 2,000 Knox County Health, Educational and Housing Facilities 4/12 at 101.00 Ba2 2,055,700 Board, Tennessee, Hospital Revenue Bonds, Baptist Health System of East Tennessee Inc., Series 2002, 6.375%, 4/15/22 - ------------------------------------------------------------------------------------------------------------------------------------ TEXAS - 10.2% 1,500 Central Texas Regional Mobility Authority, Travis and Williamson 1/15 at 100.00 A3 1,359,195 Counties, Toll Road Revenue Bonds, Series 2005, 5.000%, 1/01/45 - FGIC Insured 2,500 Harris County Health Facilities Development Corporation, 11/13 at 100.00 AAA 2,456,650 Texas, Thermal Utility Revenue Bonds, TECO Project, Series 2003, 5.000%, 11/15/30 - MBIA Insured 4,005 Harris County-Houston Sports Authority, Texas, Senior Lien 11/30 at 61.17 AAA 581,846 Revenue Refunding Bonds, Series 2001A, 0.000%, 11/15/38 - MBIA Insured 3,000 Houston, Texas, Subordinate Lien Airport System Revenue Bonds, 7/12 at 100.00 AAA 3,186,720 Series 2002B, 5.500%, 7/01/18 - FSA Insured 3,125 Katy Independent School District, Harris, Fort Bend and Waller 2/12 at 100.00 AAA 3,369,563 Counties, Texas, General Obligation Bonds, Series 2002A, 5.000%, 2/15/32 (Pre-refunded 2/15/12) 400 Killeen Independent School District, Bell County, Texas, 5/08 at 100.00 AAA 400,752 General Obligation Bonds, Series 1998, 5.000%, 2/15/14 4,750 Sam Rayburn Municipal Power Agency, Texas, Power Supply 10/12 at 100.00 AA 4,949,405 System Revenue Refunding Bonds, Series 2002A, 5.500%, 10/01/17 - RAAI Insured 1,750 Texas, General Obligation Bonds, Water Financial Assistance 8/13 at 100.00 Aa1 1,652,403 Program, Series 2003A, 5.125%, 8/01/42 (Alternative Minimum Tax) 500 Victoria, Texas, General Obligation Bonds, Series 2001, 8/11 at 100.00 AA- 506,620 5.000%, 8/15/23 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 21,530 Total Texas 18,463,154 - ------------------------------------------------------------------------------------------------------------------------------------ 39 NXR Nuveen Select Tax-Free Income Portfolio 3 (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WASHINGTON - 0.3% $ 510 Port of Seattle, Washington, Revenue Bonds, Series 2001A, 10/11 at 100.00 Aa2 $ 503,819 5.000%, 4/01/31 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ WISCONSIN - 1.4% 2,500 Wisconsin, General Obligation Refunding Bonds, 11/13 at 100.00 AA- 2,525,350 Series 2003-3, 5.000%, 11/01/26 - ------------------------------------------------------------------------------------------------------------------------------------ $ 179,240 Total Municipal Bonds (cost $176,488,763) 179,622,227 =============----------------------------------------------------------------------------------------------------------------------- SHARES DESCRIPTION (1) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 0.0% AIRLINES - 0.0% 220 UAL Corporation, (5) $ 4,737 - ------------------------------------------------------------------------------------------------------------------------------------ Total Common Stocks (cost $0) 4,737 -------------------------------------------------------------------------------------------------------------------- Total Investments (cost $176,488,763) - 99.1% 179,626,964 -------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (0.4)% (665,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.3% 2,325,656 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $ 181,287,620 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments reflects the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. During March 2008, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. (5) On December 9, 2002, UAL Corporation ("UAL"), the holding company of United Air Lines, Inc. ("United") filed for federal bankruptcy protection. The Adviser determined that it was likely that United would not remain current on their interest payment obligations with respect to the bonds previously held and thus the Fund had stopped accruing interest on its UAL bonds. On February 1, 2006, UAL emerged from federal bankruptcy with the acceptance of its reorganization plan by the bankruptcy court. Under the settlement agreement established to meet UAL's unsecured bond obligations, the bondholders, including the Fund, received three distributions of UAL common stock over the subsequent months, and the bankruptcy court dismissed all unsecured claims of bondholders, including those of the Fund. On May 5, 2006, the Fund liquidated such UAL common stock holdings. On September 29, 2006 and May 30, 2007, the Fund received additional distributions of 532 and 172 shares, respectively, of UAL common stock as a result of its earlier ownership of the UAL bonds. The Fund liquidated 532 shares of such UAL common stock holdings on November 15, 2006. The Fund received an additional distribution of 48 shares on November 14, 2007. The remaining 220 shares of UAL common stock were still held by the Fund at March 31, 2008. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 40 NXC Nuveen California Select Tax-Free Income Portfolio Portfolio of INVESTMENTS March 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 4.8% $ 220 California County Tobacco Securitization Agency, Tobacco 6/15 at 100.00 BBB $ 202,332 Settlement Asset-Backed Bonds, Sonoma County Tobacco Securitization Corporation, Series 2005, 4.250%, 6/01/21 1,505 California County Tobacco Securitization Agency, Tobacco 6/12 at 100.00 BBB 1,465,223 Settlement Asset-Backed Revenue Bonds, Fresno County Tobacco Funding Corporation, Series 2002, 5.625%, 6/01/23 4,045 Golden State Tobacco Securitization Corporation, California, 6/22 at 100.00 BBB 2,549,119 Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2007A-2, 0.000%, 6/01/37 - ------------------------------------------------------------------------------------------------------------------------------------ 5,770 Total Consumer Staples 4,216,674 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 10.5% 1,000 California Educational Facilities Authority, Revenue Bonds, 12/09 at 101.00 AAA 1,017,990 Stanford University, Series 1999P, 5.000%, 12/01/23 45 California Educational Facilities Authority, Revenue Bonds, 10/15 at 100.00 A3 42,621 University of Redlands, Series 2005A, 5.000%, 10/01/35 1,000 California Educational Facilities Authority, Revenue Bonds, 10/12 at 100.00 A2 1,025,100 University of San Diego, Series 2002A, 5.500%, 10/01/32 California Educational Facilities Authority, Revenue Bonds, University of the Pacific, Series 2006: 35 5.000%, 11/01/21 11/15 at 100.00 A2 35,510 45 5.000%, 11/01/25 11/15 at 100.00 A2 44,634 3,000 California Infrastructure Economic Development Bank, 10/11 at 101.00 A- 3,112,320 Revenue Bonds, J. David Gladstone Institutes, Series 2001, 5.500%, 10/01/19 2,000 California State Public Works Board, Lease Revenue Bonds, 10/12 at 100.00 AAA 2,048,500 University of California, UCLA Replacement Hospital Project, Series 2002A, 5.000%, 10/01/22 - FSA Insured 1,000 Long Beach Bond Financing Authority, California, Lease Revenue 11/11 at 101.00 AAA 1,002,780 Refunding Bonds, Long Beach Aquarium of the South Pacific, Series 2001, 5.250%, 11/01/30 - AMBAC Insured 1,000 University of California, General Revenue Bonds, Series 2006J, 5/15 at 101.00 AAA 916,440 4.500%, 5/15/35 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 9,125 Total Education and Civic Organizations 9,245,895 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 13.5% 445 California Health Facilities Financing Authority, Revenue Bonds, 11/15 at 100.00 A2 417,900 Cedars-Sinai Medical Center, Series 2005, 5.000%, 11/15/34 110 California Health Facilities Financing Authority, Revenue Bonds, 4/16 at 100.00 A+ 101,999 Kaiser Permanante System, Series 2006, 5.000%, 4/01/37 2,550 California Health Facilities Financing Authority, Revenue Bonds, 11/16 at 100.00 AA- 2,463,274 Sutter Health, Series 2007A, 5.250%, 11/15/46 (UB) 2,000 California Infrastructure Economic Development Bank, 8/11 at 102.00 A+ 2,014,040 Revenue Bonds, Kaiser Hospital Assistance LLC, Series 2001A, 5.550%, 8/01/31 1,500 California Statewide Community Development Authority, 6/13 at 100.00 AAA 1,595,505 Hospital Revenue Bonds, Monterey Peninsula Hospital, Series 2003B, 5.250%, 6/01/18 - FSA Insured 41 NXC Nuveen California Select Tax-Free Income Portfolio (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE (continued) $ 1,500 California Statewide Community Development Authority, 11/09 at 102.00 A+ $ 1,501,620 Insured Mortgage Hospital Revenue Bonds, Mission Community Hospital, Series 2001, 5.375%, 11/01/26 1,515 California Statewide Community Development Authority, 3/16 at 100.00 A+ 1,394,906 Revenue Bonds, Kaiser Permanante System, Series 2006, 5.000%, 3/01/41 545 California Statewide Community Development Authority, 8/16 at 100.00 A+ 532,421 Revenue Bonds, Kaiser Permanente System, Series 2001C, 5.250%, 8/01/31 1,880 California Statewide Community Development Authority, 6/08 at 100.50 AAA 1,902,767 Revenue Bonds, Los Angeles Orthopaedic Hospital Foundation, Series 2000, 5.500%, 6/01/17 - AMBAC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 12,045 Total Health Care 11,924,432 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 0.8% 750 California Statewide Community Development Authority, 8/12 at 100.00 N/R 701,558 Student Housing Revenue Bonds, EAH - Irvine East Campus Apartments, LLC Project, Series 2002A, 5.500%, 8/01/22 - ACA Insured - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 0.1% 135 California Housing Finance Agency, Home Mortgage Revenue 2/16 at 100.00 Aa2 140,315 Bonds, Series 2006H, 5.750%, 8/01/30 - FGIC Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIALS - 1.8% 1,250 California Pollution Control Financing Authority, Solid Waste No Opt. Call BBB+ 1,186,713 Disposal Revenue Bonds, Republic Services Inc., Series 2002C, 5.250%, 6/01/23 (Mandatory put 12/01/17) (Alternative Minimum Tax) 500 California Pollution Control Financing Authority, Solid Waste 1/16 at 102.00 BBB 438,030 Disposal Revenue Bonds, Waste Management Inc., Series 2002A, 5.000%, 1/01/22 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,750 Total Industrials 1,624,743 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 2.8% 1,500 ABAG Finance Authority for Non-Profit Corporations, California, 11/12 at 100.00 A+ 1,510,305 Insured Senior Living Revenue Bonds, Odd Fellows Home of California, Series 2003A, 5.200%, 11/15/22 1,000 California Statewide Communities Development Authority, 12/17 at 100.00 Baa1 937,670 Revenue Bonds, Inland Regional Center Project, Series 2007, 5.250%, 12/01/27 - ------------------------------------------------------------------------------------------------------------------------------------ 2,500 Total Long-Term Care 2,447,975 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 22.1% 500 California, General Obligation Bonds, Series 2003, 11/13 at 100.00 AA 523,920 5.250%, 11/01/19 - RAAI Insured California, General Obligation Bonds, Series 2004: 750 5.000%, 2/01/23 2/14 at 100.00 A+ 757,883 800 5.125%, 4/01/25 4/14 at 100.00 A+ 807,608 1,000 Fremont Unified School District, Alameda County, California, 8/12 at 101.00 Aa3 1,022,220 General Obligation Bonds, Series 2002A, 5.000%, 8/01/21 - FGIC Insured Golden West Schools Financing Authority, California, General Obligation Revenue Refunding Bonds, School District Program, Series 1999A: 4,650 0.000%, 8/01/16 - MBIA Insured No Opt. Call AAA 3,225,984 1,750 0.000%, 2/01/17 - MBIA Insured No Opt. Call AAA 1,171,940 2,375 0.000%, 8/01/17 - MBIA Insured No Opt. Call AAA 1,554,081 2,345 0.000%, 2/01/18 - MBIA Insured No Opt. Call AAA 1,476,529 Mountain View-Los Altos Union High School District, Santa Clara County, California, General Obligation Capital Appreciation Bonds, Series 1995C: 1,015 0.000%, 5/01/17 - MBIA Insured No Opt. Call AAA 671,940 1,080 0.000%, 5/01/18 - MBIA Insured No Opt. Call AAA 672,073 100 Roseville Joint Union High School District, Placer County, 8/15 at 100.00 AA- 100,971 California, General Obligation Bonds, Series 2006B, 5.000%, 8/01/27 - FGIC Insured 42 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL (continued) $ 3,220 Sacramento City Unified School District, Sacramento County, 7/15 at 100.00 Aaa $ 3,262,729 California, General Obligation Bonds, Series 2005, 5.000%, 7/01/27 - MBIA Insured 1,500 San Diego Unified School District, San Diego County, 7/13 at 101.00 AAA 1,655,550 California, General Obligation Bonds, Series 2003E, 5.250%, 7/01/24 - FSA Insured 2,565 Sunnyvale School District, Santa Clara County, California, 9/15 at 100.00 AAA 2,617,454 General Obligation Bonds, Series 2005A, 5.000%, 9/01/26 - FSA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 23,650 Total Tax Obligation/General 19,520,882 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 19.3% 1,000 Bell Community Redevelopment Agency, California, Tax 10/13 at 100.00 AA 1,004,920 Allocation Bonds, Bell Project Area, Series 2003, 5.625%, 10/01/33 - RAAI Insured 3,500 California State Public Works Board, Lease Revenue Bonds, No Opt. Call AAA 4,088,875 Department of Corrections, Calipatria State Prison, Series 1991A, 6.500%, 9/01/17 - MBIA Insured 1,000 California State Public Works Board, Lease Revenue Bonds, 6/14 at 100.00 A 1,049,420 Department of Mental Health, Coalinga State Hospital, Series 2004A, 5.500%, 6/01/23 660 California, Economic Recovery Revenue Bonds, 7/14 at 100.00 AA+ 714,338 Series 2004A, 5.000%, 7/01/15 120 Capistrano Unified School District, Orange County, California, 9/15 at 100.00 A3 119,862 Special Tax Bonds, Community Facilities District, Series 2005, 5.000%, 9/01/24 - FGIC Insured 360 Chino Redevelopment Agency, California, Merged Chino 9/16 at 101.00 AAA 347,443 Redevelopment Project Area Tax Allocation Bonds, Series 2006, 5.000%, 9/01/38 - AMBAC Insured 1,000 Fontana Public Financing Authority, California, Tax Allocation 10/15 at 100.00 AAA 994,410 Revenue Bonds, North Fontana Redevelopment Project, Series 2005A, 5.000%, 10/01/32 - AMBAC Insured 1,050 Golden State Tobacco Securitization Corporation, California, 6/15 at 100.00 AAA 843,927 Enhanced Asset Backed Settlement Revenue Bonds, Series 2005A, Residual Series 1500, 9.910%, 6/01/45 - AMBAC Insured (IF) Irvine, California, Unified School District, Community Facilities District Special Tax Bonds, Series 2006A: 60 5.000%, 9/01/26 9/16 at 100.00 N/R 54,200 135 5.125%, 9/01/36 9/16 at 100.00 N/R 119,727 215 Los Angeles Community Redevelopment Agency, California, 9/15 at 100.00 Aaa 209,814 Lease Revenue Bonds, Manchester Social Services Project, Series 2005, 5.000%, 9/01/37 - AMBAC Insured 1,300 Orange County, California, Special Tax Bonds, Community 8/12 at 101.00 N/R 1,248,195 Facilities District 03-1 of Ladera Ranch, Series 2004A, 5.625%, 8/15/34 105 Rialto Redevelopment Agency, California, Tax Allocation Bonds, 9/15 at 100.00 A- 101,796 Merged Project Area, Series 2005A, 5.000%, 9/01/35 - XLCA Insured 130 Roseville, California, Certificates of Participation, 8/13 at 100.00 AAA 130,837 Public Facilities, Series 2003A, 5.000%, 8/01/25 - AMBAC Insured 605 Sacramento City Financing Authority, California, Lease Revenue No Opt. Call AAA 652,027 Refunding Bonds, Series 1993A, 5.400%, 11/01/20 - MBIA Insured 3,000 San Mateo County Transit District, California, Sales Tax Revenue 6/15 at 100.00 AAA 3,124,410 Bonds, Series 2005A, 5.000%, 6/01/21 - MBIA Insured 225 San Mateo Union High School District, San Mateo County, 12/17 at 100.00 AAA 220,201 California, Certificates of Participation, Phase 1, Series 2007A, 5.000%, 12/15/30 - AMBAC Insured 1,000 Santa Clara County Board of Education, California, Certificates 4/12 at 101.00 AAA 1,005,270 of Participation, Series 2002, 5.000%, 4/01/25 - MBIA Insured 1,000 Travis Unified School District, Solano County, California, 9/16 at 100.00 A3 985,760 Certificates of Participation, Series 2006, 5.000%, 9/01/26 - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 16,465 Total Tax Obligation/Limited 17,015,432 - ------------------------------------------------------------------------------------------------------------------------------------ 43 NXC Nuveen California Select Tax-Free Income Portfolio (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 5.3% $ 1,150 Foothill/Eastern Transportation Corridor Agency, California, 1/10 at 100.00 BBB- $ 966,966 Toll Road Revenue Bonds, Series 1995A, 5.000%, 1/01/35 3,500 Los Angeles Harbors Department, California, Revenue Refunding 8/11 at 100.00 AAA 3,736,110 Bonds, Series 2001B, 5.500%, 8/01/17 - AMBAC Insured (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 4,650 Total Transportation 4,703,076 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 14.9% (4) 400 Beverly Hills Unified School District, Los Angeles County, 8/12 at 100.00 AA (4) 435,712 California, General Obligation Bonds, Series 2002A, 5.000%, 8/01/26 (Pre-refunded 8/01/12) California Department of Water Resources, Power Supply Revenue Bonds, Series 2002A: 1,750 5.750%, 5/01/17 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 1,964,340 2,000 5.125%, 5/01/19 (Pre-refunded 5/01/12) 5/12 at 101.00 Aaa 2,197,020 2,600 California Educational Facilities Authority, Revenue Bonds, 11/11 at 100.00 A2 (4) 2,831,894 University of the Pacific, Series 2002, 5.250%, 11/01/21 (Pre-refunded 11/01/11) 800 California, General Obligation Bonds, Series 2004, 2/14 at 100.00 AAA 889,056 5.125%, 2/01/27 (Pre-refunded 2/01/14) 1,400 Golden State Tobacco Securitization Corporation, California, 6/13 at 100.00 AAA 1,541,652 Enhanced Tobacco Settlement Asset-Backed Bonds, Series 2003B, 5.500%, 6/01/33 (Pre-refunded 6/01/13) 2,000 North Orange County Community College District, California, 8/12 at 101.00 AAA 2,189,420 General Obligation Bonds, Series 2002A, 5.000%, 8/01/22 (Pre-refunded 8/01/12) - MBIA Insured 1,000 Port of Oakland, California, Revenue Bonds, Series 2002M, 11/12 at 100.00 A+ (4) 1,104,580 5.250%, 11/01/20 (Pre-refunded 11/01/12) - FGIC Insured - ------------------------------------------------------------------------------------------------------------------------------------ 11,950 Total U.S. Guaranteed 13,153,674 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 2.4% 645 Long Beach Bond Finance Authority, California, Natural No Opt. Call A1 580,848 Gas Purchase Revenue Bonds, Series 2007A, 5.500%, 11/15/37 200 Los Angeles Department of Water and Power, California, 7/13 at 100.00 AAA 206,266 Power System Revenue Bonds, Series 2003A-2, 5.000%, 7/01/21 - MBIA Insured 215 Merced Irrigation District, California, Electric System Revenue 9/15 at 100.00 A- 211,109 Bonds, Series 2005, 5.125%, 9/01/31 - XLCA Insured 1,010 Turlock Irrigation District, California, Revenue Refunding No Opt. Call Aaa 1,080,235 Bonds, Series 1992A, 6.250%, 1/01/12 - MBIA Insured - ------------------------------------------------------------------------------------------------------------------------------------ 2,070 Total Utilities 2,078,458 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 2.5% 150 Healdsburg Public Financing Authority, California, Wastewater 4/16 at 100.00 AAA 148,218 Revenue Bonds, Series 2006, 5.000%, 4/01/36 - MBIA Insured 250 Sacramento County Sanitation District Financing Authority, 6/16 at 100.00 AA 250,150 California, Revenue Bonds, Series 2006, 5.000%, 12/01/31 - FGIC Insured 44 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER (continued) $ 825 South Feather Water and Power Agency, California, Water 4/13 at 100.00 BBB $ 829,480 Revenue Certificates of Participation, Solar Photovoltaic Project, Series 2003, 5.375%, 4/01/24 1,000 Woodbridge Irrigation District, California, Certificates of 7/13 at 100.00 BBB+ 963,590 Participation, Water Systems Project, Series 2003, 5.625%, 7/01/43 - ------------------------------------------------------------------------------------------------------------------------------------ 2,225 Total Water and Sewer 2,191,438 - ------------------------------------------------------------------------------------------------------------------------------------ $ 93,085 Total Investments (cost $87,914,933) - 100.8% 88,964,552 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (1.9)% (1,700,000) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 1.1% 959,387 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $ 88,223,939 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments reflects the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. During March 2008, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers. (4) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. N/R Not rated. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 45 NXN Nuveen New York Select Tax-Free Income Portfolio Portfolio of INVESTMENTS March 31, 2008
PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER DISCRETIONARY - 0.2% $ 100 New York City Industrial Development Agency, New York, 9/15 at 100.00 Baa3 $ 85,305 Liberty Revenue Bonds, IAC/InterActiveCorp, Series 2005, 5.000%, 9/01/35 - ------------------------------------------------------------------------------------------------------------------------------------ CONSUMER STAPLES - 1.7% TSASC Inc., New York, Tobacco Asset-Backed Bonds, Series 2006: 460 4.750%, 6/01/22 6/16 at 100.00 BBB 432,796 540 5.000%, 6/01/26 6/16 at 100.00 BBB 501,336 - ------------------------------------------------------------------------------------------------------------------------------------ 1,000 Total Consumer Staples 934,132 - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS - 11.6% 100 Albany Industrial Development Agency, New York, Revenue Bonds, 7/17 at 100.00 BBB 89,205 Albany Law School, Series 2007A, 5.000%, 7/01/31 50 Albany Industrial Development Agency, New York, Revenue Bonds, 4/17 at 100.00 N/R 40,405 Brighter Choice Charter Schools, Series 2007A, 5.000%, 4/01/37 1,700 Amherst Industrial Development Agency, New York, Revenue 8/12 at 101.00 AAA 1,733,337 Bonds, UBF Faculty/Student Housing Corporation, University of Buffalo Creekside Project, Series 2002A, 5.000%, 8/01/22 - AMBAC Insured 30 Cattaraugus County Industrial Development Agency, New York, 5/16 at 100.00 BBB- 28,022 Revenue Bonds, St. Bonaventure University, Series 2006, 5.000%, 5/01/23 430 Dormitory Authority of the State of New York, General Revenue 7/17 at 100.00 AA 398,541 Bonds, Manhattan College, Series 2007A, 5.000%, 7/01/41 - RAAI Insured 785 Dormitory Authority of the State of New York, Insured Revenue 7/12 at 100.00 A- 792,112 Bonds, Iona College, Series 2002, 5.000%, 7/01/22 - XLCA Insured 50 Dormitory Authority of the State of New York, Lease Revenue 7/15 at 100.00 AAA 50,329 Bonds, State University Dormitory Facilities, Series 2004A, 5.000%, 7/01/29 - MBIA Insured 315 Dormitory Authority of the State of New York, Second General No Opt. Call A1 332,618 Resolution Consolidated Revenue Bonds, City University System, Series 1990C, 7.500%, 7/01/10 - FGIC Insured 430 Dutchess County Industrial Development Agency, New York, 8/17 at 100.00 A3 382,111 Civic Facility Revenue Bonds, Bard College Project, Series 2007-A2, 4.500%, 8/01/36 100 Hempstead Town Industrial Development Agency, New York, 10/15 at 100.00 A- 97,563 Revenue Bonds, Adelphi University, Civic Facility Project, Series 2005, 5.000%, 10/01/35 650 New York City Industrial Development Agency, New York, 4/08 at 100.00 AAA 527,326 Civic Facility Revenue Bonds, Horace Mann School, Series 2002, 4.644%, 7/01/41 - MBIA Insured (4) 100 New York City Industrial Development Agency, New York, 10/14 at 100.00 A- 94,532 Civic Facility Revenue Bonds, St. Francis College, Series 2004, 5.000%, 10/01/34 500 New York City Industrial Development Agency, New York, 2/11 at 100.00 A- 507,105 Civic Facility Revenue Bonds, YMCA of Greater New York, Series 2002, 5.250%, 8/01/21 430 New York City Industrial Development Agency, New York, 1/17 at 100.00 AAA 402,897 PILOT Revenue Bonds, Queens Baseball Stadium Project, Series 2006, 4.750%, 1/01/42 - AMBAC Insured 590 New York City Industrial Development Authority, New York, 9/16 at 100.00 A3 524,894 PILOT Revenue Bonds, Yankee Stadium Project, Series 2006, 4.500%, 3/01/39 - FGIC Insured 200 Puerto Rico Industrial, Tourist, Educational, Medical and 2/09 at 101.00 BBB- 198,204 Environmental Control Facilities Financing Authority, Higher Education Revenue Bonds, Ana G. Mendez University System, Series 1999, 5.375%, 2/01/19 46 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ EDUCATION AND CIVIC ORGANIZATIONS (continued) $ 65 Seneca County Industrial Development Authority, New York, 10/17 at 100.00 BBB $ 60,744 Revenue Bonds, New York Chiropractic College, Series 2007, 5.000%, 10/01/27 - ------------------------------------------------------------------------------------------------------------------------------------ 6,525 Total Education and Civic Organizations 6,259,945 - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIALS - 0.9% 435 Liberty Development Corporation, New York, Goldman Sachs No Opt. Call AA- 456,606 Headquarters Revenue Bonds Series 2007, 5.500%, 10/01/37 - ------------------------------------------------------------------------------------------------------------------------------------ HEALTH CARE - 13.9% 450 Dormitory Authority of the State of New York, FHA-Insured 2/15 at 100.00 A3 445,892 Mortgage Revenue Bonds, Montefiore Hospital, Series 2004, 5.000%, 8/01/29 - FGIC Insured Dormitory Authority of the State of New York, Revenue Bonds, Lenox Hill Hospital Obligated Group, Series 2001: 110 5.375%, 7/01/20 7/11 at 101.00 Ba2 107,389 100 5.500%, 7/01/30 7/11 at 101.00 Ba2 93,393 950 Dormitory Authority of the State of New York, Revenue Bonds, 7/16 at 100.00 AA 944,329 Memorial Sloan Kettering Cancer Center, Series 2006-1, 5.000%, 7/01/35 670 Dormitory Authority of the State of New York, Revenue Bonds, 7/13 at 100.00 AAA 687,199 Memorial Sloan-Kettering Cancer Center, Series 2003-1, 5.000%, 7/01/21 - MBIA Insured 405 Dormitory Authority of the State of New York, Revenue Bonds, 8/14 at 100.00 AAA 444,982 New York and Presbyterian Hospital, Series 2004A, 5.250%, 8/15/15 - FSA Insured 1,680 Dormitory Authority of the State of New York, Revenue Bonds, 7/11 at 101.00 AAA 1,794,660 Winthrop South Nassau University Health System Obligated Group, Series 2001A, 5.250%, 7/01/17 - AMBAC Insured 1,195 Dormitory Authority of the State of New York, Revenue Bonds, 7/11 at 101.00 AAA 1,276,559 Winthrop South Nassau University Health System Obligated Group, Series 2001B, 5.250%, 7/01/17 - AMBAC Insured 500 Dormitory Authority of the State of New York, Revenue Bonds, 7/13 at 100.00 Baa1 486,260 Winthrop-South Nassau University Hospital Association, Series 2003A, 5.500%, 7/01/32 Madison County Industrial Development Agency, New York, Civic Facility Revenue Bonds, Oneida Health System, Series 2007A: 100 5.250%, 2/01/27 No Opt. Call BBB- 92,233 90 5.500%, 2/01/32 No Opt. Call BBB- 82,831 750 New York City Health and Hospitals Corporation, New York, 2/13 at 100.00 AAA 779,310 Health System Revenue Bonds, Series 2003A, 5.250%, 2/15/21 - AMBAC Insured 250 New York City Industrial Development Agency, New York, 7/12 at 101.00 B2 242,905 Civic Facility Revenue Bonds, Staten Island University Hospital, Series 2002C, 6.450%, 7/01/32 - ------------------------------------------------------------------------------------------------------------------------------------ 7,250 Total Health Care 7,477,942 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/MULTIFAMILY - 3.1% 1,000 New Hartford-Sunset Woods Funding Corporation, New York, 8/12 at 101.00 AAA 1,040,670 FHA-Insured Mortgage Revenue Bonds, Sunset Woods Apartments II Project, Series 2002, 5.350%, 2/01/20 250 New York City Housing Development Corporation, New York, 5/14 at 100.00 AA 250,763 Multifamily Housing Revenue Bonds, Series 2004A, 5.250%, 11/01/30 160 New York City Housing Development Corporation, New York, 11/15 at 100.00 AA 146,662 Multifamily Housing Revenue Bonds, Series 2005F-1, 4.750%, 11/01/35 275 New York State Housing Finance Agency, Affordable Housing 11/17 at 100.00 Aa2 254,554 Revenue, Series 2007A, 5.250%, 11/01/38 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,685 Total Housing/Multifamily 1,692,649 - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY - 8.2% 2,000 New York State Mortgage Agency, Homeowner Mortgage 10/11 at 100.00 Aa1 2,011,340 Revenue Bonds, Series 101, 5.000%, 10/01/18 (Alternative Minimum Tax) 47 NXN Nuveen New York Select Tax-Free Income Portfolio (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ HOUSING/SINGLE FAMILY (continued) $ 2,500 New York State Mortgage Agency, Mortgage Revenue Bonds, 4/11 at 100.00 Aaa $ 2,402,649 Thirty-First Series A, 5.300%, 10/01/31 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 4,500 Total Housing/Single Family 4,413,989 - ------------------------------------------------------------------------------------------------------------------------------------ LONG-TERM CARE - 12.0% 1,980 Dormitory Authority of the State of New York, FHA-Insured 8/11 at 101.00 AAA 1,976,931 Nursing Home Mortgage Revenue Bonds, Norwegian Christian Home and Health Center, Series 2001, 5.200%, 8/01/36 - MBIA Insured 100 Dormitory Authority of the State of New York, Non-State 11/16 at 100.00 Aa3 100,203 Supported Debt, Ozanam Hall of Queens Nursing Home Revenue Bonds, Series 2006, 5.000%, 11/01/31 50 Dormitory Authority of the State of New York, Revenue Bonds, 7/15 at 100.00 N/R 39,597 Providence Rest, Series 2005, 5.000%, 7/01/35 - ACA Insured 2,000 East Rochester Housing Authority, New York, FHA-Insured 8/12 at 101.00 AAA 2,085,579 Mortgage Revenue Refunding Bonds, Jewish Home of Rochester, Series 2002, 4.625%, 2/15/17 1,000 East Rochester Housing Authority, New York, Revenue Bonds, 12/12 at 103.00 AAA 1,037,370 GNMA/FHA-Secured Revenue Bonds, St. Mary's Residence Project, Series 2002A, 5.375%, 12/20/22 980 New York City Industrial Development Agency, New York, 11/12 at 101.00 AA+ 935,390 GNMA Collateralized Mortgage Revenue Bonds, Eger Harbor House Inc., Series 2002A, 4.950%, 11/20/32 25 Suffolk County Industrial Development Agency, New York, 7/16 at 100.00 N/R 23,880 Civic Facility Revenue Bonds, Special Needs Facilities Pooled Program, Series 2008-B1, 5.500%, 7/01/18 275 Yonkers Industrial Development Agency, New York, Civic Facilities 7/16 at 101.00 N/R 262,675 Revenue Bonds, Special Needs Facilities Pooled Program Bonds, Series 2008-C1, 5.500%, 7/01/18 - ------------------------------------------------------------------------------------------------------------------------------------ 6,410 Total Long-Term Care 6,461,625 - ------------------------------------------------------------------------------------------------------------------------------------ MATERIALS - 0.2% 90 Jefferson County Industrial Development Agency, New York, 12/13 at 100.00 BBB 81,536 Solid Waste Disposal Revenue Bonds, International Paper Company Project, Series 2003A, 5.200%, 12/01/20 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/GENERAL - 8.4% Clarkstown, Rickland County, New York, Various Purposes Serial Bonds, Series 1992: 505 5.600%, 6/15/10 - AMBAC Insured No Opt. Call AAA 539,800 525 5.600%, 6/15/11 - AMBAC Insured No Opt. Call AAA 572,712 525 5.600%, 6/15/12 - AMBAC Insured No Opt. Call AAA 585,412 15 Hudson Yards Infrastructure Corporation, New York, Revenue 2/17 at 100.00 AAA 13,561 Bonds, Series 2006A, 4.500%, 2/15/47 - MBIA Insured (UB) 300 New York City, New York, General Obligation Bonds, 8/14 at 100.00 Aaa 326,613 Fiscal Series 2004C, 5.250%, 8/15/16 200 New York City, New York, General Obligation Bonds, 3/15 at 100.00 AA 210,862 Fiscal Series 2005J, 5.000%, 3/01/19 - FGIC Insured 1,000 New York City, New York, General Obligation Bonds, 6/16 at 100.00 AA 1,010,620 Fiscal Series 2006J-1, 5.000%, 6/01/25 1,260 New York City, New York, General Obligation Bonds, 12/17 at 100.00 AA 1,287,380 Series D, 5.125%, 12/01/25 - ------------------------------------------------------------------------------------------------------------------------------------ 4,330 Total Tax Obligation/General 4,546,960 - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED - 17.2% 600 Battery Park City Authority, New York, Senior Revenue Bonds, 11/13 at 100.00 AAA 613,158 Series 2003A, 5.000%, 11/01/23 500 Erie County Industrial Development Agency, New York, 5/14 at 100.00 AAA 536,270 School Facility Revenue Bonds, Buffalo City School District, Series 2004, 5.750%, 5/01/26 - FSA Insured 500 Metropolitan Transportation Authority, New York, State 7/12 at 100.00 AAA 530,720 Service Contract Refunding Bonds, Series 2002A, 5.500%, 1/01/20 - MBIA Insured 95 Nassau County Interim Finance Authority, New York, 5/08 at 100.00 AAA 95,101 Sales Tax Secured Revenue Bonds, Series 2001A-2, 5.125%, 11/15/21 - AMBAC Insured 48 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ TAX OBLIGATION/LIMITED (continued) New York City Sales Tax Asset Receivable Corporation, New York, Dedicated Revenue Bonds, Local Government Assistance Corporation, Series 2004A: $ 250 5.000%, 10/15/25 - MBIA Insured 10/14 at 100.00 AAA $ 255,445 200 5.000%, 10/15/26 - MBIA Insured 10/14 at 100.00 AAA 203,566 1,225 5.000%, 10/15/29 - AMBAC Insured 10/14 at 100.00 AAA 1,234,482 600 New York City Transitional Finance Authority, New York, 1/17 at 100.00 AA- 603,348 Building Aid Revenue Bonds, Fiscal Series 2007S-2, 5.000%, 1/15/28 - FGIC Insured 670 New York City Transitional Finance Authority, New York, 2/13 at 100.00 AAA 687,085 Future Tax Secured Bonds, Fiscal Series 2003E, 5.000%, 2/01/23 550 New York City Transitional Finance Authority, New York, 11/17 at 100.00 AAA 560,890 Future Tax Secured Bonds, Fiscal Series 2007C-1, 5.000%, 11/01/27 775 New York State Environmental Facilities Corporation, 12/17 at 100.00 AAA 795,336 State Personal Income Tax Revenue Bonds, Series 2008A, 5.000%, 12/15/26 (UB) 250 New York State Thruway Authority, Highway and Bridge Trust 4/14 at 100.00 AAA 260,605 Fund Bonds, Second Generation, Series 2004, 5.000%, 4/01/21 - MBIA Insured 570 New York State Thruway Authority, Highway and Bridge No Opt. Call AAA 639,745 Trust Fund Bonds, Second Generation, Series 2005B, 5.500%, 4/01/20 - AMBAC Insured (UB) 425 New York State Thruway Authority, Highway and Bridge Trust 10/17 at 100.00 AA 432,722 Fund Bonds, Series 2007, 5.000%, 4/01/27 New York State Tobacco Settlement Financing Corporation, Tobacco Settlement Asset-Backed and State Contingency Contract-Backed Bonds, Series 2003A-1: 1,000 5.250%, 6/01/20 - AMBAC Insured 6/13 at 100.00 AAA 1,029,060 250 5.250%, 6/01/21 - AMBAC Insured 6/13 at 100.00 AAA 256,225 500 New York State Tobacco Settlement Financing Corporation, 6/13 at 100.00 AA- 517,755 Tobacco Settlement Asset-Backed and State Contingency Contract-Backed Bonds, Series 2003B-1C, 5.500%, 6/01/21 30 Triborough Bridge and Tunnel Authority, New York, Convention No Opt. Call AA- 31,610 Center Bonds, Series 1990E, 7.250%, 1/01/10 - ------------------------------------------------------------------------------------------------------------------------------------ 8,990 Total Tax Obligation/Limited 9,283,123 - ------------------------------------------------------------------------------------------------------------------------------------ TRANSPORTATION - 2.0% 180 Albany Parking Authority, New York, Revenue Bonds, 7/11 at 101.00 BBB+ 183,168 Series 2001A, 5.625%, 7/15/25 500 Metropolitan Transportation Authority, New York, Transportation No Opt. Call A 535,875 Revenue Bonds, Series 2003A, 5.000%, 11/15/15 - FGIC Insured 100 New York State Thruway Authority, General Revenue Bonds, 7/15 at 100.00 AAA 100,657 Series 2005G, 5.000%, 1/01/30 - FSA Insured 105 Port Authority of New York and New Jersey, Consolidated 6/15 at 101.00 AA- 105,223 Revenue Bonds, One Hundred Fortieth Series 2005, 5.000%, 12/01/31 - XLCA Insured 160 Port Authority of New York and New Jersey, One Hundred and 8/17 at 100.00 AAA 165,274 Forty Eighth Consolidated Revenue Bonds, RITES Trust 1516, 10.129%, 8/15/32 - FSA Insured (IF) - ------------------------------------------------------------------------------------------------------------------------------------ 1,045 Total Transportation 1,090,197 - ------------------------------------------------------------------------------------------------------------------------------------ U.S. GUARANTEED - 6.3% (5) 220 Albany Parking Authority, New York, Revenue Bonds, 7/11 at 101.00 N/R (5) 243,168 Series 2001A, 5.625%, 7/15/25 (Pre-refunded 7/15/11) 1,165 Dormitory Authority of the State of New York, Judicial Facilities No Opt. Call AAA 1,363,108 Lease Revenue Bonds, Suffolk County Issue, Series 1986, 7.375%, 7/01/16 (ETM) 250 Dormitory Authority of the State of New York, Revenue Bonds, 5/13 at 100.00 Aaa 278,355 North Shore Long Island Jewish Group, Series 2003, 5.375%, 5/01/23 (Pre-refunded 5/01/13) 415 Suffolk County Water Authority, New York, Water Revenue No Opt. Call AAA 450,068 Bonds, Series 1986V, 6.750%, 6/01/12 (ETM) 1,005 TSASC Inc., New York, Tobacco Asset-Backed Bonds, 7/12 at 100.00 AAA 1,079,792 Series 2002-1, 5.500%, 7/15/24 (Pre-refunded 7/15/12) - ------------------------------------------------------------------------------------------------------------------------------------ 3,055 Total U.S. Guaranteed 3,414,491 - ------------------------------------------------------------------------------------------------------------------------------------ 49 NXN Nuveen New York Select Tax-Free Income Portfolio (continued) Portfolio of INVESTMENTS March 31, 2008 PRINCIPAL OPTIONAL CALL AMOUNT (000) DESCRIPTION (1) PROVISIONS (2) RATINGS (3) VALUE - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES - 3.4% Long Island Power Authority, New York, Electric System General Revenue Bonds, Series 2006A: $ 570 5.000%, 12/01/23 - FGIC Insured 6/16 at 100.00 A- $ 578,362 430 5.000%, 12/01/25 - FGIC Insured 6/16 at 100.00 A- 432,262 500 New York State Energy Research and Development Authority, 3/11 at 100.00 AAA 503,840 Pollution Control Revenue Bonds, New York State Electric and Gas Corporation, Series 2005A, 4.100%, 3/15/15 - MBIA Insured 250 Niagara County Industrial Development Agency, New York, 11/11 at 101.00 Baa2 247,325 Solid Waste Disposal Facility Revenue Bonds, American Ref-Fuel Company of Niagara LP, Series 2001A, 5.450%, 11/15/26 (Mandatory put 11/15/12) (Alternative Minimum Tax) 60 Westchester County Industrial Development Agency, 7/08 at 100.00 BBB 60,245 Westchester County, New York, Resource Recovery Revenue Bonds, RESCO Company, Series 1996, 5.500%, 7/01/09 (Alternative Minimum Tax) - ------------------------------------------------------------------------------------------------------------------------------------ 1,810 Total Utilities 1,822,034 - ------------------------------------------------------------------------------------------------------------------------------------ WATER AND SEWER - 12.3% 2,500 New York City Municipal Water Finance Authority, New York, 6/11 at 101.00 AA+ 2,509,647 Water and Sewerage System Revenue Bonds, Fiscal Series 2001C, 5.125%, 6/15/33 New York State Environmental Facilities Corporation, State Clean Water and Drinking Water Revolving Funds Revenue Bonds, New York City Municipal Water Finance Authority Loan, Series 2002B: 2,000 5.250%, 6/15/19 6/12 at 100.00 AAA 2,109,639 2,000 5.000%, 6/15/27 6/12 at 100.00 AAA 2,020,999 - ------------------------------------------------------------------------------------------------------------------------------------ 6,500 Total Water and Sewer 6,640,285 - ------------------------------------------------------------------------------------------------------------------------------------ $ 53,725 Total Investments (cost $54,323,046) - 101.4% 54,660,819 =============----------------------------------------------------------------------------------------------------------------------- Floating Rate Obligations - (1.9)% (1,017,500) -------------------------------------------------------------------------------------------------------------------- Other Assets Less Liabilities - 0.5% 264,917 -------------------------------------------------------------------------------------------------------------------- Net Assets - 100% $ 53,908,236 ====================================================================================================================
(1) All percentages shown in the Portfolio of Investments are based on net assets. (2) Optional Call Provisions (not covered by the report of independent registered public accounting firm): Dates (month and year) and prices of the earliest optional call or redemption. There may be other call provisions at varying prices at later dates. Certain mortgage-backed securities may be subject to periodic principal paydowns. (3) Ratings (not covered by the report of independent registered public accounting firm): Using the higher of Standard & Poor's Group ("Standard & Poor's") or Moody's Investor Service, Inc. ("Moody's") rating. Ratings below BBB by Standard & Poor's or Baa by Moody's are considered to be below investment grade. The Portfolio of Investments reflects the ratings on certain bonds insured by AMBAC, FGIC, MBIA and XLCA as of March 31, 2008. During March 2008, at least one rating agency reduced the rating for AMBAC-insured bonds to AA and at least one rating agency further reduced the ratings for FGIC-insured and XLCA-insured bonds. Subsequent to March 31, 2008, at least one rating agency reduced the rating for MBIA-insured bonds to AA. As of March 31, 2008, one or more rating agencies have placed each of these insurers on "negative credit watch", which may presage one or more rating reductions for such insurer or insurers in the future. If one or more insurers' ratings are reduced by these rating agencies, it would likely reduce the effective rating of many of the bonds insured by that insurer or insurers. (4) Investment valued at fair value using methods determined in good faith by, or at the discretion of, the Board of Trustees. (5) Backed by an escrow or trust containing sufficient U.S. Government or U.S. Government agency securities which ensure the timely payment of principal and interest. Such investments are normally considered to be equivalent to AAA rated securities. N/R Not rated. (ETM) Escrowed to maturity. (IF) Inverse floating rate investment. (UB) Underlying bond of an inverse floating rate trust reflected as a financing transaction pursuant to the provisions of SFAS No. 140. See accompanying notes to financial statements. 50 Statement of ASSETS & LIABILITIES March 31, 2008
SELECT SELECT SELECT CALIFORNIA NEW YORK TAX-FREE TAX-FREE 2 TAX-FREE 3 SELECT TAX-FREE SELECT TAX-FREE (NXP) (NXQ) (NXR) (NXC) (NXN) - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS Investments, at value (cost $223,402,676, $240,924,193, $176,488,763, $87,914,933 and $54,323,046, respectively) $230,585,764 $241,603,532 $179,626,964 $88,964,552 $54,660,819 Cash 336,654 -- 300,763 110,436 -- Receivables: Interest 3,686,466 3,751,241 2,745,668 1,195,494 789,933 Investments sold 825,000 3,761,000 -- -- -- Other assets 69,488 73,298 54,904 30,837 21,867 - ------------------------------------------------------------------------------------------------------------------------------------ Total assets 235,503,372 249,189,071 182,728,299 90,301,319 55,472,619 - ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES Cash overdraft -- 397,011 -- -- 316,625 Floating rate obligations -- 2,470,000 665,000 1,700,000 1,017,500 Accrued expenses: Management fees 45,828 58,179 43,347 21,386 13,097 Other 127,872 132,989 94,115 44,894 34,188 Common share dividends payable 836,078 886,617 638,217 311,100 182,973 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 1,009,778 3,944,796 1,440,679 2,077,380 1,564,383 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets $234,493,594 $245,244,275 $181,287,620 $88,223,939 $53,908,236 ==================================================================================================================================== Shares outstanding 16,394,661 17,607,068 12,964,124 6,259,969 3,909,050 ==================================================================================================================================== Net asset value per share outstanding $ 14.30 $ 13.93 $ 13.98 $ 14.09 $ 13.79 ==================================================================================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------------------------------------------------ Shares, $.01 par value per share $ 163,947 $ 176,071 $ 129,641 $ 62,600 $ 39,091 Paid-in surplus 227,877,262 245,689,700 178,371,732 87,162,597 53,633,470 Undistributed (Over-distribution of) net investment income 614,501 364,500 (269,392) 34,049 (61,907) Accumulated net realized gain (loss) from investments (1,345,204) (1,665,335) (82,562) (84,926) (40,191) Net unrealized appreciation (depreciation) of investments 7,183,088 679,339 3,138,201 1,049,619 337,773 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets $234,493,594 $245,244,275 $181,287,620 $88,223,939 53,908,236 ==================================================================================================================================== Authorized shares Unlimited Unlimited Unlimited Unlimited Unlimited ====================================================================================================================================
See accompanying notes to financial statements. 51 Statement of OPERATIONS Year Ended March 31, 2008
SELECT SELECT SELECT CALIFORNIA NEW YORK TAX-FREE TAX-FREE 2 TAX-FREE 3 SELECT TAX-FREE SELECT TAX-FREE (NXP) (NXQ) (NXR) (NXC) (NXN) - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME $12,238,893 $ 12,584,653 $ 8,979,020 $ 4,491,835 $ 2,651,121 - ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES Management fees 543,406 701,477 516,876 257,061 156,567 Shareholders' servicing agent fees and expenses 27,630 25,618 21,124 7,506 6,080 Interest expense on floating rate obligations -- 99,652 23,485 55,185 16,365 Custodian's fees and expenses 60,326 55,312 39,582 24,476 29,435 Trustees' fees and expenses 5,300 5,767 4,312 2,054 1,312 Professional fees 20,005 21,287 17,511 12,707 10,824 Shareholders' reports - printing and mailing expenses 48,069 48,511 35,566 17,220 13,462 Stock exchange listing fees 9,565 9,551 9,551 9,551 9,551 Investor relations expense 28,792 29,834 21,581 10,117 6,521 Other expenses 8,196 8,916 7,259 5,332 4,559 - ------------------------------------------------------------------------------------------------------------------------------------ Total expenses before custodian fee credit 751,289 1,005,925 696,847 401,209 254,676 Custodian fee credit (21,931) (40,202) (23,584) (10,429) (10,175) - ------------------------------------------------------------------------------------------------------------------------------------ Net expenses 729,358 965,723 673,263 390,780 244,501 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 11,509,535 11,618,930 8,305,757 4,101,055 2,406,620 - ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) from: Investments 147,459 (288,340) (48,471) (84,927) (82,020) Forward swaps -- -- -- -- 41,813 Change in net unrealized appreciation (depreciation) of investments (7,207,078) (11,881,693) (5,615,646) (3,947,262) (1,858,128) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) (7,059,619) (12,170,033) (5,664,117) (4,032,189) (1,898,335) - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations $ 4,449,916 $ (551,103) $ 2,641,640 $ 68,866 $ 508,285 ====================================================================================================================================
See accompanying notes to financial statements. 52 Statement of CHANGES in NET ASSETS
SELECT TAX-FREE (NXP) SELECT TAX-FREE 2 (NXQ) SELECT TAX-FREE 3 (NXR) ------------------------------ ----------------------------- ----------------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/08 3/31/07 3/31/08 3/31/07 3/31/08 3/31/07 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 11,509,535 $ 11,474,716 $ 11,618,930 $ 11,534,253 $ 8,305,757 $ 8,287,859 Net realized gain (loss) from: Investments 147,459 101,116 (288,340) 50,177 (48,471) 406,807 Forward swaps -- -- -- -- -- -- Change in net unrealized appreciation (depreciation) of investments (7,207,078) 1,235,561 (11,881,693) 2,445,717 (5,615,646) 1,364,381 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations 4,449,916 12,811,393 (551,103) 14,030,147 2,641,640 10,059,047 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income (11,213,242) (11,203,086) (11,242,116) (11,198,098) (8,322,967) (8,322,970) From accumulated net realized gains -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets from distributions to shareholders (11,213,242) (11,203,086) (11,242,116) (11,198,098) (8,322,967) (8,322,970 - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from shares issued to shareholders due to reinvestment of distributions 182,700 60,273 -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions 182,700 60,273 -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets (6,580,626) 1,668,580 (11,793,219) 2,832,049 (5,681,327) 1,736,077 Net assets at the beginning of year 241,074,220 239,405,640 257,037,494 254,205,445 186,968,947 185,232,870 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets at the end of year $234,493,594 $241,074,220 $245,244,275 $257,037,494 $181,287,620 $186,968,947 ==================================================================================================================================== Undistributed (Over-distribution of) net investment income at the end of year $ 614,501 $ 318,396 $ 364,500 $ (7,095) $ (269,392) $ (252,182) ====================================================================================================================================
See accompanying notes to financial statements. 53 Statement of CHANGES in NET ASSETS (continued)
CALIFORNIA SELECT TAX-FREE (NXC) NEW YORK SELECT TAX-FREE (NXN) -------------------------------- ------------------------------ YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/08 3/31/07 3/31/08 3/31/07 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income $ 4,101,055 $ 4,021,145 $ 2,406,620 $ 2,393,813 Net realized gain (loss) from: Investments (84,927) 166,092 (82,020) 50,741 Forward swaps -- -- 41,813 -- Change in net unrealized appreciation (depreciation) of investments (3,947,262) 957,522 (1,858,128) 444,355 - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations 68,866 5,144,759 508,285 2,888,909 - ------------------------------------------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income (3,995,905) (3,979,498) (2,391,875) (2,391,832) From accumulated net realized gains (66,966) (140,158) (47,290) (142,259) - ------------------------------------------------------------------------------------------------------------------------------------ Decrease in net assets from distributions to shareholders (4,062,871) (4,119,656) (2,439,165) (2,534,091) - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net proceeds from shares issued to shareholders due to reinvestment of distributions 40,911 -- 11,240 -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions 40,911 -- 11,240 -- - ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets (3,953,094) 1,025,103 (1,919,640) 354,818 Net assets at the beginning of year 92,177,033 91,151,930 55,827,876 55,473,058 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets at the end of year $88,223,939 $92,177,033 $53,908,236 $55,827,876 - ------------------------------------------------------------------------------------------------------------------------------------ Undistributed (Over-distribution of) net investment income at the end of year $ 34,049 $ (70,984) $ (61,907) $ (76,409) ====================================================================================================================================
See accompanying notes to financial statements. 54 Notes to FINANCIAL STATEMENTS 1. GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES The funds covered in this report and their corresponding New York Stock Exchange symbols are Nuveen Select Tax-Free Income Portfolio (NXP), Nuveen Select Tax-Free Income Portfolio 2 (NXQ), Nuveen Select Tax-Free Income Portfolio 3 (NXR), Nuveen California Select Tax-Free Income Portfolio (NXC) and Nuveen New York Select Tax-Free Income Portfolio (NXN) (collectively, the "Funds"). The Funds are registered under the Investment Company Act of 1940, as amended, as closed-end, diversified management investment companies. Each Fund seeks to provide stable dividends consistent with the preservation of capital, exempt from regular federal and designated state income taxes, where applicable, by investing primarily in a diversified portfolio of municipal obligations. The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles. Investment Valuation The prices of municipal bonds in each Fund's investment portfolio are provided by a pricing service approved by the Fund's Board of Trustees. When market price quotes are not readily available (which is usually the case for municipal securities), the pricing service may establish fair value based on yields or prices of municipal bonds of comparable quality, type of issue, coupon, maturity and rating, indications of value from securities dealers, evaluations of anticipated cash flows or collateral and general market conditions. Prices of forward swap contracts are also provided by an independent pricing service approved by each Fund's Board of Trustees. If the pricing service is unable to supply a price for a municipal bond or forward swap contract, each Fund may use market quotes provided by major broker/dealers in such investments. If it is determined that the market price for an investment or derivative instrument is unavailable or inappropriate, the Board of Trustees of the Funds, or its designee, may establish fair value in accordance with procedures established in good faith by the Board of Trustees. Temporary investments in securities that have variable rate and demand features qualifying them as short-term investments are valued at amortized cost, which approximates market value. Investment Transactions Investment transactions are recorded on a trade date basis. Realized gains and losses from transactions are determined on the specific identification method. Investments purchased on a when-issued/delayed delivery basis may have extended settlement periods. Any investments so purchased are subject to market fluctuation during this period. The Funds have instructed the custodian to segregate assets with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments. At March 31, 2008, there were no such outstanding purchase commitments in any of the Funds. Investment Income Interest income, which includes the amortization of premiums and accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Interest income also includes paydown gains and losses, if any. Dividend income, if any, is recorded on the ex-dividend date. Income Taxes Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all of its net investment income and net capital gains to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required. Furthermore, each Fund intends to satisfy conditions which will enable interest from municipal securities, which is exempt from regular federal and designated state income taxes, to retain such tax-exempt status when distributed to shareholders of the Funds. Net realized capital gains and ordinary income distributions paid by the Funds are subject to federal taxation. 55 Notes to FINANCIAL STATEMENTS (continued) Effective September 30, 2007, the Funds adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the affirmative evaluation of tax positions taken or expected to be taken in the course of preparing the Funds' tax returns to determine whether it is "more-likely-than-not" (i.e., a greater than 50-percent likelihood) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold may result in a tax benefit or expense in the current year. Implementation of FIN 48 required management of the Funds to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). The Funds have no examinations in progress. For all open tax years and all major taxing jurisdictions through the end of the reporting period, management of the Funds has reviewed all tax positions taken or expected to be taken in the preparation of the Funds' tax returns and concluded the adoption of FIN 48 resulted in no impact to the Funds' net assets or results of operations as of and during the fiscal year ended March 31, 2008. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Dividends and Distributions to Shareholders Dividends from tax-exempt net investment income are declared monthly. Net realized capital gains and/or market discount from investment transactions, if any, are declared and distributed to shareholders not less frequently than annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards. Distributions to shareholders of tax-exempt net investment income, net realized capital gains and/or market discount, if any, are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Inverse Floating Rate Securities Each Fund may invest in inverse floating rate securities. An inverse floating rate security is created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust created by a broker-dealer. In turn, this trust (a) issues floating rate certificates, in face amounts equal to some fraction of the deposited bond's par amount or market value, that typically pay short-term tax-exempt interest rates to third parties, and (b) issues to a long-term investor (such as one of the Funds) an inverse floating rate certificate (sometimes referred to as an "inverse floater") that represents all remaining or residual interest in the trust. The income received by the inverse floater holder varies inversely with the short-term rate paid to the floating rate certificates' holders, and in most circumstances the inverse floater holder bears substantially all of the underlying bond's downside investment risk and also benefits disproportionately from any potential appreciation of the underlying bond's value. The price of an inverse floating rate security will be more volatile than that of the underlying bond because the interest rate is dependent on not only the fixed coupon rate of the underlying bond but also on the short-term interest paid on the floating rate certificates, and because the inverse floating rate security essentially bears the risk of loss of the greater face value of the underlying bond. A Fund may purchase an inverse floating rate security in a secondary market transaction without first owning the underlying bond (referred to as an "externally-deposited inverse floater"), or instead by first selling a fixed-rate bond to a broker-dealer for deposit into the special purpose trust and receiving in turn the residual interest in the trust (referred to as a "self-deposited inverse floater"). A Fund may also enter into shortfall and forbearance agreements (sometimes referred to as a "recourse trust" or "credit recovery swap") with a broker-dealer by which a Fund agrees to reimburse the broker-dealer, in certain circumstances, for the difference between the liquidation value of the fixed-rate bond held by the trust and the liquidation value of the floating rate 56 certificates, as well as any shortfalls in interest cash flows. The inverse floater held by a Fund gives the Fund the right (a) to cause the holders of the floating rate certificates to tender their notes at par, and (b) to have the broker transfer the fixed-rate bond held by the trust to the Fund, thereby collapsing the trust. An investment in an externally-deposited inverse floater is identified in the Portfolio of Investments as an "Inverse floating rate investment". An investment in a self-deposited inverse floater, recourse trust or credit recovery swap is accounted for as a financing transaction in accordance with Statement of Financial Accounting Standards (SFAS) No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities". In such instances, a fixed-rate bond deposited into a special purpose trust is identified in the Portfolio of Investments as an "Underlying bond of an inverse floating rate trust", with the Fund accounting for the short-term floating rate certificates issued by the trust as "Floating rate obligations" on the Statement of Assets and Liabilities. In addition, the Fund reflects in Investment Income the entire earnings of the underlying bond and accounts for the related interest paid to the holders of the short-term floating rate certificates as "Interest expense on floating rate obligations" in the Statement of Operations. During the fiscal year ended March 31, 2008, each Fund invested in externally deposited inverse floaters and/or self-deposited inverse floaters. The average floating rate obligations outstanding and average annual interest rate and fees related to self-deposited inverse floaters during the fiscal year ended March 31, 2008, were as follows:
CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE (NXQ) (NXR) (NXC) (NXN) - ------------------------------------------------------------------------------------------------- Average floating rate obligations $2,859,344 $665,000 $1,584,557 $454,939 Average annual interest rate and fees 3.49% 3.53% 3.48% 3.60% =================================================================================================
Forward Swap Transactions Each Fund is authorized to invest in forward interest rate swap transactions. Each Fund's use of forward interest rate swap transactions is intended to help the Fund manage its overall interest rate sensitivity, either shorter or longer, generally to more closely align the Fund's interest rate sensitivity with that of the broader municipal market. Forward interest rate swap transactions involve each Fund's agreement with a counterparty to pay, in the future, a fixed or variable rate payment in exchange for the counterparty paying the Fund a variable or fixed rate payment, the accruals for which would begin at a specified date in the future (the "effective date"). The amount of the payment obligation is based on the notional amount of the forward swap contract and the termination date of the swap (which is akin to a bond's maturity). The value of the Fund's swap commitment would increase or decrease based primarily on the extent to which long-term interest rates for bonds having a maturity of the swap's termination date increases or decreases. The Funds may terminate a swap contract prior to the effective date, at which point a realized gain or loss is recognized. When a forward swap is terminated, it ordinarily does not involve the delivery of securities or other underlying assets or principal, but rather is settled in cash on a net basis. Each Fund intends, but is not obligated, to terminate its forward swaps before the effective date. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the credit risk associated with a counterparty failing to honor its commitment to pay any realized gain to the Fund upon termination. To reduce such credit risk, all counterparties are required to pledge collateral daily (based on the daily valuation of each swap) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when any of the Funds have an unrealized loss on a swap contract, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate, either up or down, by at least the predetermined threshold amount. New York Select Tax-Free (NXN) was the only Fund to invest in forward interest rate swap transactions during the fiscal year ended March 31, 2008. Zero Coupon Securities Each Fund is authorized to invest in zero coupon securities. A zero coupon security does not pay a regular interest coupon to its holders during the life of the security. Tax-exempt income to the holder of the security comes from accretion of the difference between the original purchase price of the security at issuance and the par value of the security at maturity and is effectively paid at maturity. Such securities are included in the Portfolios of Investments with a 0.000% coupon rate in their description. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically. Custodian Fee Credit Each Fund has an arrangement with the custodian bank whereby certain custodian fees and expenses are reduced by net credits earned on each Fund's cash on deposit with the bank. Such deposit arrangements are an alternative to overnight investments. Credits for cash balances may be offset by charges for any days on which a Fund overdraws its account at the custodian bank. 57 Notes to FINANCIAL STATEMENTS (continued) Indemnifications Under the Funds' organizational documents, their Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results may differ from those estimates. 2. FUND SHARES Transactions in shares were as follows:
SELECT SELECT SELECT TAX-FREE (NXP) TAX-FREE 2 (NXQ) TAX-FREE 3 (NXR) ------------------------ ----------------------- ----------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/08 3/31/07 3/31/08 3/31/07 3/31/08 3/31/07 - ----------------------------------------------------------------------------------------------------------------- Shares issued to shareholders due to reinvestment of distributions 12,459 4,106 -- -- -- -- ================================================================================================================= CALIFORNIA SELECT NEW YORK SELECT TAX-FREE (NXC) TAX-FREE (NXN) ----------------------- ----------------------- YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 3/31/08 3/31/07 3/31/08 3/31/07 - ----------------------------------------------------------------------------------------------------------------- Shares issued to shareholders due to reinvestment of distributions 2,899 -- 827 -- =================================================================================================================
3. INVESTMENT TRANSACTIONS Purchases and sales (including maturities but excluding short-term investments and derivative transactions) during the fiscal year ended March 31, 2008, were as follows:
CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE (NXP) (NXQ) (NXR) (NXC) (NXN) - ------------------------------------------------------------------------------------------------------------------ Purchases $8,453,938 $17,602,128 $3,901,081 $8,029,347 $11,262,428 Sales and maturities 8,715,879 18,211,690 3,237,355 7,123,991 11,066,360 ==================================================================================================================
4. INCOME TAX INFORMATION The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to timing differences in recognizing taxable market discount, timing differences in recognizing certain gains and losses on investment transactions and the treatment of investments in inverse floating rate transactions subject to SFAS No. 140. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts on the Statement of Assets and Liabilities presented in the annual report, based on their federal tax basis treatment; temporary differences do not require reclassification. Temporary and permanent differences do not impact the net asset values of the Funds. 58 At March 31, 2008, the cost of investments was as follows:
CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE (NXP) (NXQ) (NXR) (NXC) (NXN) - ---------------------------------------------------------------------------------------------------------------------- Cost of investments $222,916,515 $238,350,732 $175,764,223 $86,262,056 $53,295,526 ======================================================================================================================
Gross unrealized appreciation and gross unrealized depreciation of investments at March 31, 2008, were as follows:
CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE (NXP) (NXQ) (NXR) (NXC) (NXN) - ---------------------------------------------------------------------------------------------------------------------- Gross unrealized: Appreciation $11,700,055 $ 7,456,503 $ 6,648,770 $ 3,006,599 $1,183,594 Depreciation (4,030,806) (6,673,272) (3,451,477) (2,004,111) (839,292) - ---------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments $ 7,669,249 $ 783,231 $ 3,197,293 $ 1,002,488 $ 344,302 ======================================================================================================================
The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains at March 31, 2008, the Funds' tax year end, were as follows:
CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE (NXP) (NXQ) (NXR) (NXC) (NXN) - ---------------------------------------------------------------------------------------------------------------------- Undistributed net tax-exempt income* $1,061,243 $1,211,279 $364,661 $378,533 $130,930 Undistributed net ordinary income** 1,594 1,512 439 -- -- Undistributed net long-term capital gains -- -- -- -- -- ======================================================================================================================
* Undistributed net tax-exempt income (on a tax basis) has not been reduced for the dividend declared on March 3, 2008, paid on April 1, 2008. ** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. The tax character of distributions paid during the Funds' tax years ended March 31, 2008 and March 31, 2007, was designated for purposes of the dividends paid deduction as follows:
CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE 2008 (NXP) (NXQ) (NXR) (NXC) (NXN) - ---------------------------------------------------------------------------------------------------------------------- Distributions from net tax-exempt income*** $11,212,532 $11,198,099 $8,322,967 $3,980,219 $2,392,058 Distributions from net ordinary income** -- -- -- -- -- Distributions from net long-term capital gains**** -- -- -- 66,849 47,064 ======================================================================================================================
CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE 2007 (NXP) (NXQ) (NXR) (NXC) (NXN) - ---------------------------------------------------------------------------------------------------------------------- Distributions from net tax-exempt income $11,202,851 $11,198,098 $8,322,970 $3,979,498 $2,391,832 Distributions from net ordinary income** -- -- -- -- -- Distributions from net long-term capital gains -- -- -- 140,158 142,259 ======================================================================================================================
** Net ordinary income consists of taxable market discount income and net short-term capital gains, if any. *** The Funds hereby designate these amounts paid during the fiscal year ended March 31, 2008, as Exempt Interest Dividends. **** The Funds designated as a long-term capital gain dividend, pursuant to the Internal Revenue Code Section 852(b)(3), the amount necessary to reduce earnings and profits of the Funds related to net capital gain to zero for the tax year ended March 31, 2008. 59 Notes to FINANCIAL STATEMENTS (continued) At March 31, 2008, the Funds' tax year end, the Funds had unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as follows:
CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE (NXP) (NXQ) (NXR) (NXC) (NXN) - ----------------------------------------------------------------------------------------------------------------- Expiration: March 31, 2015 $1,345,204 $1,369,835 $18,217 $ -- $ -- March 31, 2016 -- 7,597 54,760 34,855 40,191 - ----------------------------------------------------------------------------------------------------------------- Total $1,345,204 $1,377,432 $72,977 $34,855 $40,191 =================================================================================================================
The Funds have elected to defer net realized losses from investments incurred from November 1, 2007 through March 31, 2008, the Funds' tax year end, ("post-October losses") in accordance with federal income tax regulations. Post-October losses are treated as having arisen on the first day of the following fiscal year: SELECT SELECT TAX-FREE 2 TAX-FREE 3 (NXQ) (NXR) - -------------------------------------------------------------------------------- $262,895 $9,584 ================================================================================ 5. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES Each Fund's management fee is separated into two components - a complex-level component, based on the aggregate amount of all fund assets managed by Nuveen Asset Management (the "Adviser"), a wholly owned subsidiary of Nuveen Investments, Inc. ("Nuveen"), and a specific fund-level component, based only on the amount of assets within each individual Fund. This pricing structure enables Nuveen fund shareholders to benefit from growth in the assets within each individual fund as well as from growth in the amount of complex-wide assets managed by the Adviser. The annual fund-level fee, payable monthly, for each Fund is based upon the average daily net assets of each Fund as follows:
SELECT TAX-FREE 2 (NXQ) SELECT TAX-FREE 3 (NXR) CALIFORNIA SELECT TAX-FREE (NXC) SELECT TAX-FREE (NXP) NEW YORK SELECT TAX-FREE (NXN) AVERAGE DAILY NET ASSETS FUND-LEVEL FEE RATE FUND-LEVEL FEE RATE - ------------------------------------------------------------------------------------------------------------------ For the first $125 million .0500% .1000% For the next $125 million .0375 .0875 For the next $250 million .0250 .0750 For the next $500 million .0125 .0625 ==================================================================================================================
The annual complex-level fee, payable monthly, which is additive to the fund-level fee, for all Nuveen sponsored funds in the U.S., is based on the aggregate amount of total fund assets managed as stated in the tables below. As of March 31, 2008, the complex-level fee rate was .1870%. 60 Effective August 20, 2007, the complex-level fee schedule is as follows: COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL - -------------------------------------------------------------------------------- $55 billion .2000% $56 billion .1996 $57 billion .1989 $60 billion .1961 $63 billion .1931 $66 billion .1900 $71 billion .1851 $76 billion .1806 $80 billion .1773 $91 billion .1691 $125 billion .1599 $200 billion .1505 $250 billion .1469 $300 billion .1445 ================================================================================ Prior to August 20, 2007, the complex-level fee schedule was as follows: COMPLEX-LEVEL ASSET BREAKPOINT LEVEL (1) EFFECTIVE RATE AT BREAKPOINT LEVEL - -------------------------------------------------------------------------------- $55 billion .2000% $56 billion .1996 $57 billion .1989 $60 billion .1961 $63 billion .1931 $66 billion .1900 $71 billion .1851 $76 billion .1806 $80 billion .1773 $91 billion .1698 $125 billion .1617 $200 billion .1536 $250 billion .1509 $300 billion .1490 ================================================================================ (1) The complex-level fee component of the management fee for the funds is calculated based upon the aggregate Managed Assets ("Managed Assets" means the average daily net assets of each fund including assets attributable to preferred stock issued by or borrowings by the Nuveen funds) of Nuveen-sponsored funds in the U.S. The management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Funds pay no compensation directly to those of its Trustees who are affiliated with the Adviser or to its Officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board of Trustees has adopted a deferred compensation plan for independent Trustees that enables Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen advised funds. Agreement and Plan of Merger On June 20, 2007, Nuveen Investments announced that it had entered into a definitive Agreement and Plan of Merger ("Merger Agreement") with Windy City Investments, Inc. ("Windy City"), a corporation formed by investors led by Madison Dearborn Partners, LLC ("Madison Dearborn"), pursuant to which Windy City would acquire Nuveen Investments. Madison Dearborn is a private equity investment firm based in Chicago, Illinois. The merger was consummated on November 13, 2007. The consummation of the merger was deemed to be an "assignment" (as that term is defined in the Investment Company Act of 1940) of the investment management agreement between each Fund and the Adviser, and resulted in the automatic termination of each Fund's agreement. The Board of Trustees of each Fund considered and approved a new investment management agreement 61 Notes to FINANCIAL STATEMENTS (continued) with the Adviser on the same terms as the previous agreements. Each new ongoing agreement, was approved by the shareholders of each Fund and took effect on November 13, 2007. The investors led by Madison Dearborn includes an affiliate of Merrill Lynch. As a result, Merrill Lynch is an indirect "affiliated person" (as that term is defined in the Investment Company Act of 1940) of each Fund. Certain conflicts of interest may arise as a result of such indirect affiliation. For example, the Funds are generally prohibited from entering into principal transactions with Merrill Lynch and its affiliates. The Adviser does not believe that any such prohibitions or limitations as a result of Merrill Lynch's affiliation will significantly impact the ability of the Funds to pursue their investment objectives and policies. 6. NEW ACCOUNTING PRONOUNCEMENTS Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157 In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of this standard relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. As of March 31, 2008, management does not believe the adoption of SFAS No. 157 will impact the financial statement amounts; however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements included within the Statement of Operations for the period. Financial Accounting Standards Board Statement of Financial Accounting Standards No. 161 In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities." This standard is intended to enhance financial statement disclosures for derivative instruments and hedging activities and enable investors to understand: a) how and why a fund uses derivative instruments, b) how derivative instruments and related hedge items are accounted for, and c) how derivative instruments and related hedge items affect a fund's financial position, results of operations and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. As of March 31, 2008, management does not believe the adoption of SFAS No. 161 will impact the financial statement amounts; however, additional footnote disclosures may be required about the use of derivative instruments and hedging items. 7. SUBSEQUENT EVENTS Distributions to Shareholders The Funds declared dividend distributions from their tax-exempt net investment income which were paid on May 1, 2008, to shareholders of record on April 15, 2008, as follows: CALIFORNIA NEW YORK SELECT SELECT SELECT SELECT SELECT TAX-FREE TAX-FREE 2 TAX-FREE 3 TAX-FREE TAX-FREE (NXP) (NXQ) (NXR) (NXC) (NXN) - -------------------------------------------------------------------------------- Dividend per share $.0570 $.0555 $.0535 $.0555 $.0510 ================================================================================ 62 Financial HIGHLIGHTS 63 Financial HIGHLIGHTS Selected data for a share outstanding throughout each period:
Investment Operations Less Distributions ----------------------------------- ------------------------------ Net Beginning Net Realized/ Net Net Asset Investment Unrealized Investment Capital Value Income Gain (Loss) Total Income Gains Total =========================================================================================================== SELECT TAX-FREE (NXP) - ----------------------------------------------------------------------------------------------------------- Year Ended 3/31: 2008 $14.72 $.70 $(.44) $ .26 $(.68) $ -- $(.68) 2007 14.62 .70 .08 .78 (.68) -- (.68) 2006 14.62 .70 (.02) .68 (.68) -- (.68) 2005 14.85 .70 (.12) .58 (.71) (.10) (.81) 2004 14.82 .73 .15 .88 (.76) (.09) (.85) SELECT TAX-FREE 2 (NXQ) - ----------------------------------------------------------------------------------------------------------- Year Ended 3/31: 2008 14.60 .66 (.69) (.03) (.64) -- (.64) 2007 14.44 .66 .14 .80 (.64) -- (.64) 2006 14.38 .66 .06 .72 (.65) (.01) (.66) 2005 14.56 .67 (.13) .54 (.68) (.04) (.72) 2004 14.45 .70 .19 .89 (.72) (.06) (.78) =========================================================================================================== Total Returns --------------------- Ending Based on Net Ending Based on Net Asset Market Market Asset Value Value Value* Value* ======================================================================== SELECT TAX-FREE (NXP) - ------------------------------------------------------------------------ Year Ended 3/31: 2008 $14.30 $14.24 .61% 1.83% 2007 14.72 14.85 9.59 5.48 2006 14.62 14.21 10.41 4.74 2005 14.62 13.50 .17 4.00 2004 14.85 14.30 7.34 6.13 SELECT TAX-FREE 2 (NXQ) - ------------------------------------------------------------------------ Year Ended 3/31: 2008 13.93 13.79 2.69 (.24) 2007 14.60 14.07 10.21 5.62 2006 14.44 13.37 7.39 5.12 2005 14.38 13.08 .11 3.82 2004 14.56 13.80 8.35 6.31 ======================================================================== Ratios/Supplemental Data -------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Ratios to Average Net Assets Before Credit After Credit** -------------------------------------- -------------------------------------- Ending Net Expenses Expenses Net Expenses Expenses Net Portfolio Assets Including Excluding Investment Including Excluding Investment Turnover (000) Interest(a) Interest(a) Income Interest(a) Interest(a) Income Rate ==================================================================================================================================== SELECT TAX-FREE (NXP) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 3/31: 2008 $234,494 .32% .32% 4.83% .31% .31% 4.83% 4% 2007 241,074 .31 .31 4.77 .30 .30 4.78 2 2006 239,406 .32 .32 4.72 .31 .31 4.73 4 2005 239,460 .33 .33 4.76 .32 .32 4.77 11 2004 243,165 .34 .34 4.90 .33 .33 4.91 16 SELECT TAX-FREE 2 (NXQ) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 3/31: 2008 245,244 .40 .36 4.58 .38 .34 4.60 7 2007 257,037 .37 .36 4.50 .36 .35 4.51 3 2006 254,205 .36 .36 4.51 .35 .35 4.52 11 2005 253,158 .37 .37 4.68 .36 .36 4.69 13 2004 256,373 .39 .39 4.86 .38 .38 4.86 10 ====================================================================================================================================
Floating Rate Obligations at End of Period -------------------------- Aggregate Amount Asset Outstanding Coverage (000) Per $1,000 ====================================================== SELECT TAX-FREE (NXP) - ------------------------------------------------------ Year Ended 3/31: 2008 $ -- $ -- 2007 -- -- 2006 -- -- 2005 -- -- 2004 -- -- SELECT TAX-FREE 2 (NXQ) - ------------------------------------------------------ Year Ended 3/31: 2008 2,470 100,289 2007 1,135 227,465 2006 -- -- 2005 -- -- 2004 -- -- ====================================================== * Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized. Total Return on Net Asset Value is the combination of changes in net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending net asset value. The actual reinvest price for the last dividend declared in the period may often be based on the Fund's market price (and not its net asset value), and therefore may be different from the price used in the calculation. Total returns are not annualized. ** After custodian fee credit, where applicable. (a) Interest expense arises from the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Inverse Floating Rate Securities. See accompanying notes to financial statements. 64-65 spread Financial HIGHLIGHTS (continued) Selected data for a share outstanding throughout each period:
Investment Operations Less Distributions ----------------------------------- ------------------------------ Net Beginning Net Realized/ Net Net Asset Investment Unrealized Investment Capital Value Income Gain (Loss) Total Income Gains Total =========================================================================================================== SELECT TAX-FREE 3 (NXR) - ----------------------------------------------------------------------------------------------------------- Year Ended 3/31: 2008 $14.42 $.64 $(.44) $.20 $(.64) $ -- $(.64) 2007 14.29 .64 .13 .77 (.64) -- (.64) 2006 14.22 .65 .06 .71 (.64) -- (.64) 2005 14.37 .66 (.11) .55 (.67) (.03) (.70) 2004 14.28 .69 .16 .85 (.69) (.07) (.76) CALIFORNIA SELECT TAX-FREE (NXC) - ----------------------------------------------------------------------------------------------------------- Year Ended 3/31: 2008 14.73 .66 (.65) .01 (.64) (.01) (.65) 2007 14.57 .64 .18 .82 (.64) (.02) (.66) 2006 14.54 .65 .09 .74 (.65) (.06) (.71) 2005 14.68 .66 (.09) .57 (.66) (.05) (.71) 2004 14.54 .68 .19 .87 (.68) (.05) (.73) =========================================================================================================== Total Returns --------------------- Ending Based on Net Ending Based on Net Asset Market Market Asset Value Value Value* Value* ======================================================================== SELECT TAX-FREE 3 (NXR) - ------------------------------------------------------------------------ Year Ended 3/31: 2008 $13.98 $13.75 2.91% 1.42% 2007 14.42 14.01 9.15 5.51 2006 14.29 13.45 10.12 5.10 2005 14.22 12.82 (.17) 4.01 2004 14.37 13.56 9.96 6.13 CALIFORNIA SELECT TAX-FREE (NXC) - ------------------------------------------------------------------------ Year Ended 3/31: 2008 14.09 14.08 3.68 .05 2007 14.73 14.22 9.89 5.72 2006 14.57 13.56 6.52 5.17 2005 14.54 13.40 .50 3.99 2004 14.68 14.06 9.14 6.16 ======================================================================== Ratios/Supplemental Data -------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Ratios to Average Net Assets Before Credit After Credit** -------------------------------------- -------------------------------------- Ending Net Expenses Expenses Net Expenses Expenses Net Portfolio Assets Including Excluding Investment Including Excluding Investment Turnover (000) Interest(a) Interest(a) Income Interest(a) Interest(a) Income Rate ==================================================================================================================================== SELECT TAX-FREE 3 (NXR) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 3/31: 2008 $181,288 .38% .36% 4.49% .36% .35% 4.50% 2% 2007 186,969 .38 .37 4.43 .36 .35 4.45 9 2006 185,233 .37 .37 4.51 .35 .35 4.52 6 2005 184,379 .38 .38 4.66 .37 .37 4.67 16 2004 186,358 .38 .38 4.84 .38 .38 4.85 6 CALIFORNIA SELECT TAX-FREE (NXC) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended 3/31: 2008 88,224 .44 .38 4.52 .43 .37 4.53 8 2007 92,177 .40 .39 4.37 .39 .38 4.38 16 2006 91,152 .38 .38 4.42 .37 .37 4.43 8 2005 90,949 .39 .39 4.55 .39 .39 4.56 13 2004 91,864 .40 .40 4.64 .39 .39 4.65 30 ====================================================================================================================================
Floating Rate Obligations at End of Period -------------------------- Aggregate Amount Asset Outstanding Coverage (000) Per $1,000 ====================================================== SELECT TAX-FREE 3 (NXR) - ------------------------------------------------------ Year Ended 3/31: 2008 $665 $273,613 2007 665 282,156 2006 -- -- 2005 -- -- 2004 -- -- CALIFORNIA SELECT TAX-FREE (NXC) - ------------------------------------------------------ Year Ended 3/31: 2008 1,700 52,896 2007 758 122,606 2006 -- -- 2005 -- -- 2004 -- -- ====================================================== * Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized. Total Return on Net Asset Value is the combination of changes in net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending net asset value. The actual reinvest price for the last dividend declared in the period may often be based on the Fund's market price (and not its net asset value), and therefore may be different from the price used in the calculation. Total returns are not annualized. ** After custodian fee credit, where applicable. (a) Interest expense arises from the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Inverse Floating Rate Securities. See accompanying notes to financial statements. 66-67 spread Financial HIGHLIGHTS (continued) Selected data for a share outstanding throughout each period:
Investment Operations Less Distributions ----------------------------------- ------------------------------ Net Beginning Net Realized/ Net Net Asset Investment Unrealized Investment Capital Value Income Gain (Loss) Total Income Gains Total =========================================================================================================== NEW YORK SELECT TAX-FREE (NXN) - ----------------------------------------------------------------------------------------------------------- Year Ended 3/31: 2008 $14.28 $.62 $(.49) $.13 $(.61) $(.01) $(.62) 2007 14.19 .61 .13 .74 (.61) (.04) (.65) 2006 14.28 .62 (.02) .60 (.62) (.07) (.69) 2005 14.57 .64 (.21) .43 (.66) (.06) (.72) 2004 14.51 .68 .14 .82 (.68) (.08) (.76) =========================================================================================================== Total Returns --------------------- Ending Based on Net Ending Based on Net Asset Market Market Asset Value Value Value* Value* ================================================================== NEW YORK SELECT TAX-FREE (NXN) - ------------------------------------------------------------------ Year Ended 3/31: 2008 $13.79 $13.79 2.06% .94% 2007 14.28 14.15 11.15 5.30 2006 14.19 13.35 2.84 4.19 2005 14.28 13.65 .05 3.10 2004 14.57 14.40 11.81 5.84 ================================================================== Ratios/Supplemental Data -------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Ratios to Average Net Assets Before Credit After Credit** -------------------------------------- -------------------------------------- Ending Net Expenses Expenses Net Expenses Expenses Net Portfolio Assets Including Excluding Investment Including Excluding Investment Turnover (000) Interest(a) Interest(a) Income Interest(a) Interest(a) Income Rate ============================================================================================================================ NEW YORK SELECT TAX-FREE (NXN) - ---------------------------------------------------------------------------------------------------------------------------- Year Ended 3/31: 2008 $53,908 .46% .43% 4.35% .44% .41% 4.37% 20% 2007 55,828 .46 .42 4.29 .45 .41 4.30 6 2006 55,473 .41 .41 4.28 .40 .40 4.29 13 2005 55,817 .41 .41 4.48 .41 .41 4.48 13 2004 56,958 .43 .43 4.65 .42 .42 4.65 16 ============================================================================================================================
Floating Rate Obligations at End of Period -------------------------- Aggregate Amount Asset Outstanding Coverage (000) Per $1,000 ====================================================== NEW YORK SELECT TAX-FREE (NXN) - ------------------------------------------------------ Year Ended 3/31: 2008 $1,018 $53,981 2007 1,710 33,648 2006 -- -- 2005 -- -- 2004 -- -- ====================================================== * Total Return on Market Value is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized. Total Return on Net Asset Value is the combination of changes in net asset value, reinvested dividend income at net asset value and reinvested capital gains distributions at net asset value, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending net asset value. The actual reinvest price for the last dividend declared in the period may often be based on the Fund's market price (and not its net asset value), and therefore may be different from the price used in the calculation. Total returns are not annualized. ** After custodian fee credit, where applicable. (a) Interest expense arises from the application of SFAS No. 140 to certain inverse floating rate transactions entered into by the Fund as more fully described in Footnote 1 - Inverse Floating Rate Securities. See accompanying notes to financial statements. 68-69 spread Board Members & Officers The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board Members of the Funds. The number of board members of the Fund is currently set at eight. None of the board members who are not "interested" persons of the Funds has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the board members and officers of the Funds, their principal occupations and other affiliations during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below.
NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) & ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER AND TERM(2) OVERSEEN BY DIRECTORSHIPS BOARD MEMBER DURING PAST 5 YEARS BOARD MEMBER WHO IS AN INTERESTED PERSON OF THE FUNDS: [] TIMOTHY R. SCHWERTFEGER(1) Former director (1994-November 12, 2007), 3/28/49 Chairman of 1994 Chairman (1996-June 30, 2007), Non-Executive 333 W. Wacker Drive the Board CLASS I 184 Chairman (July 1, 2007-November 12, 2007) Chicago, IL 60606 and Board Member and Chief Executive Officer (1996-June 30, 2007) of Nuveen Investments, Inc., Nuveen Asset Management and certain other subsidiaries of Nuveen Investments, Inc.; formerly, Director (1992-2006) of Institutional Capital Corporation. BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS: [] ROBERT P. BREMNER Private Investor and Management Consultant. 8/22/40 Lead 1997 333 W. Wacker Drive Independent CLASS III 184 Chicago, IL 60606 Board member [] JACK B. EVANS President, The Hall-Perrine Foundation, a 10/22/48 1999 private philanthropic corporation (since 333 W. Wacker Drive Board member CLASS III 184 1996); Director and Vice Chairman, United Chicago, IL 60606 Fire Group, a publicly held company; Member of the Board of Regents for the State of Iowa University System; Director, Gazette Companies; Life Trustee of Coe College and Iowa College Foundation; Member of the Advisory Council of the Department of Finance in the Tippie College of Business, University of Iowa; formerly, Director, Alliant Energy; formerly, Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm. [] WILLIAM C. HUNTER Dean, Tippie College of Business, University 3/6/48 2004 of Iowa (since July 2006); formerly, Dean 333 W. Wacker Drive Board member CLASS II 184 and Distinguished Professor of Finance, Chicago, IL 60606 School of Business at the University of Connecticut (2003-2006); previously, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003); Director (since 1997), Credit Research Center at Georgetown University; Director (since 2004) of Xerox Corporation; Director (since 2005), Beta Gamma Sigma International Honor Society; Director, SS&C Technologies, Inc. (May 2005-October 2005). 70 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) & ADDRESS APPOINTED IN FUND COMPLEX INCLUDING OTHER AND TERM(2) OVERSEEN BY DIRECTORSHIPS BOARD MEMBER DURING PAST 5 YEARS BOARD MEMBERS WHO ARE NOT INTERESTED PERSONS OF THE FUNDS: [] DAVID J. KUNDERT Director, Northwestern Mutual Wealth 10/28/42 2005 Management Company; Retired (since 2004) as 333 W. Wacker Drive Board member CLASS II 182 Chairman, JPMorgan Fleming Asset Management, Chicago, IL 60606 President and CEO, Banc One Investment Advisors Corporation, and President, One Group Mutual Funds; prior thereto, Executive Vice President, Banc One Corporation and Chairman and CEO, Banc One Investment Management Group; Member, Board of Regents, Luther College; member of the Wisconsin Bar Association; member of Board of Directors, Friends of Boerner Botanical Gardens; member of Investment Committee, Greater Milwaukee Foundation. [] WILLIAM J. SCHNEIDER Chairman, formerly, Senior Partner and Chief 9/24/44 1997 Operating Officer (retired, 2004) of 333 W. Wacker Drive Board member CLASS III 184 Miller-Valentine Partners Ltd., a real Chicago, IL 60606 estate investment company; Director, Dayton Development Coalition; formerly, member, Business Advisory Council, Cleveland Federal Reserve Bank. [] JUDITH M. STOCKDALE Executive Director, Gaylord and Dorothy 12/29/47 1997 Donnelley Foundation (since 1994); prior 333 W. Wacker Drive Board member CLASS I 184 thereto, Executive Director, Great Lakes Chicago, IL 60606 Protection Fund (from 1990 to 1994). [] CAROLE E. STONE Director, Chicago Board Options Exchange 6/28/47 2007 (since 2006); Chair New York Racing 333 West Wacker Drive Board member CLASS I 184 Association Oversight Board (since 2005); Chicago, IL 60606 Commissioner, New York State Commission on Public Authority Reform (since 2005); formerly Director, New York State Division of the Budget (2000-2004), Chair, Public Authorities Control Board (2000-2004) and Director, Local Government Assistance Corporation (2000-2004). OFFICERS OF THE FUND: [] GIFFORD R. ZIMMERMAN Managing Director (since 2002), Assistant 9/9/56 Chief Secretary and Associate General Counsel, 333 W. Wacker Drive Administrative 1988 184 formerly, Vice President and Assistant Chicago, IL 60606 Officer General Counsel, of Nuveen Investments, LLC; Managing Director (since 2002), Associate General Counsel and Assistant Secretary, of Nuveen Asset Management; Vice President and Assistant Secretary of NWQ Investment Management Company, LLC. (since 2002), Nuveen Investments Advisers Inc. (since 2002), Symphony Asset Management LLC, and NWQ Investment Management Company, LLC (since 2003), Tradewinds Global Investors, LLC, and Santa Barbara Asset Management, LLC (since 2006); Nuveen HydePark Group LLC and Richards & Tierney, Inc. (since 2007); Managing Director, Associate General Counsel and Assistant Secretary of Rittenhouse Asset Management, Inc. (since 2003); Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; formerly, Managing Director (2002-2004), General Counsel (1998-2004) and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Chartered Financial Analyst. [] WILLIAM ADAMS IV Executive Vice President, U.S. Structured 6/9/55 Products of Nuveen Investments, LLC, (since 333 West Wacker Drive Vice President 2007 120 1999), prior thereto, Managing Director of Chicago, IL 60606 Structured Investments. 71 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS OVERSEEN BY OFFICER OFFICERS OF THE FUND: [] CEDRIC H. ANTOSIEWICZ Managing Director, (since 2004) previously, 1/11/62 Vice President (1993-2004) of Nuveen 333 W. Wacker Drive Vice President 2007 120 Investments, LLC. Chicago, IL 60606 [] MICHAEL T. ATKINSON Vice President (since 2002) of Nuveen 2/3/66 Vice President Investments, LLC. 333 W. Wacker Drive and Assistant 2000 184 Chicago, IL 60606 Secretary [] PETER H. D'ARRIGO Vice President and Treasurer of Nuveen 11/28/67 Investments, LLC and Nuveen Investments, 333 W. Wacker Drive Vice President 1999 184 Inc.; Vice President and Treasurer of Nuveen Chicago, IL 60606 Asset Management (since 2002), Nuveen Investments Advisers Inc. (since 2002); NWQ Investment Management Company, LLC. (since 2002); Rittenhouse Asset Management, Inc. (since 2003), Tradewinds NWQ Global Investors, LLC (since 2006), Santa Barbara Asset Management, LLC (since 2006) and Nuveen HydePark Group, LLC and Richards &Tierney, Inc. (since 2007); Treasurer of Symphony Asset Management LLC (since 2003); formerly, Vice President and Treasurer (1999-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3), Chartered Financial Analyst. [] LORNA C. FERGUSON Managing Director (since 2004), formerly, 10/24/45 Vice President of Nuveen Investments, LLC, 333 W. Wacker Drive Vice President 1998 184 Managing Director (2004) formerly, Vice Chicago, IL 60606 President (1998-2004) of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3); Managing Director (since 2005) of Nuveen Asset Management. [] STEPHEN D. FOY Vice President (since 1993) and Funds 5/31/54 Vice President Controller (since 1998) of Nuveen 333 W. Wacker Drive and Controller 1998 184 Investments, LLC; formerly, Vice President Chicago, IL 60606 and Funds Controller (1998-2004) of Nuveen Investments, Inc.; Certified Public Accountant. [] WALTER M. KELLY Senior Vice President (since 2008), Vice 2/24/70 Chief Compliance President (2006-2008) formerly, Assistant 333 West Wacker Drive Officer and 2003 184 Vice President and Assistant General Counsel Chicago, IL 60606 Vice President (2003-2006) of Nuveen Investments, LLC; Vice President (since 2006) and Assistant Secretary (since 2008) of Nuveen Asset Management. [] DAVID J. LAMB Vice President (since 2000) of Nuveen 3/22/63 Investments, LLC; Certified Public 333 W. Wacker Drive Vice President 2000 184 Accountant. Chicago, IL 60606 [] TINA M. LAZAR Vice President of Nuveen Investments, LLC 8/27/61 (since 1999). 333 W. Wacker Drive Vice President 2002 184 Chicago, IL 60606 72 NAME, POSITION(S) HELD YEAR FIRST NUMBER PRINCIPAL BIRTHDATE WITH THE FUNDS ELECTED OR OF PORTFOLIOS OCCUPATION(S) AND ADDRESS APPOINTED(4) IN FUND COMPLEX DURING PAST 5 YEARS OVERSEEN BY OFFICER OFFICERS OF THE FUND: [] LARRY W. MARTIN Vice President, Assistant Secretary and 7/27/51 Vice President Assistant General Counsel of Nuveen 333 W. Wacker Drive and Assistant 1988 184 Investments, LLC; Vice President (since Chicago, IL 60606 Secretary 2005) and Assistant Secretary of Nuveen Investments, Inc.; Vice President (since 2005) and Assistant Secretary (since 1997) of Nuveen Asset Management; Vice President (since 2000), Assistant Secretary and Assistant General Counsel (since 1998) of Rittenhouse Asset Management, Inc.; Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002); NWQ Investment Management Company, LLC (since 2002), Symphony Asset Management LLC (since 2003), Tradewinds Global Investors, LLC, Santa Barbara Asset Management LLC (since 2006) and of Nuveen HydePark Group, LLC and Richards &Tierney, Inc. (since 2007); formerly, Vice President and Assistant Secretary of Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp.(3) [] KEVIN J. MCCARTHY Managing Director (since 2008), formerly, 3/26/66 Vice President Vice President (2007-2008), Nuveen 333 W. Wacker Drive and Secretary 2007 184 Investments, LLC; Vice President, and Chicago, IL 60606 Assistant Secretary, Nuveen Asset Management, Rittenhouse Asset Management, Inc., Nuveen Investment Advisers Inc., Nuveen Investment Institutional Services Group LLC, NWQ Investment Management Company, LLC, Tradewinds Global Investors LLC, NWQHoldings, LLC, Symphony Asset Management LLC, Santa Barbara Asset Management LLC, Nuveen HydePark Group, LLC and Richards &Tierney, Inc. (since 2007); Managing Director (since 2008), formerly, Vice President (2007-2008) and Assistant General Counsel, Nuveen Investments, Inc. prior thereto, Partner, Bell, Boyd & Lloyd LLP (1997-2007). [] JOHN V. MILLER Managing Director (since 2007), formerly, 4/10/67 Vice President (2002-2007) of Nuveen 333 W. Wacker Drive Vice President 2007 184 Investments, LLC; Chartered Financial Chicago, IL 60606 Analyst. [] JAMES F. RUANE Vice President, Nuveen Investments since 7/3/62 Vice President 2007; prior thereto, Partner, Deloitte & 333 W. Wacker Drive and Assistant 2007 184 Touche USA LLP (since 2005), formerly, Chicago, IL 60606 Secretary senior tax manager (since 2002); Certified Public Accountant. [] MARK L. WINGET Vice President, Nuveen Investments, LLC 12/21/68 Vice President (since 2008); Vice President and Assistant 333 W. Wacker Drive and Assistant 2008 184 Secretary, Nuveen Asset Management, Chicago, IL 60606 Secretary Rittenhouse Asset Management, Inc., Nuveen Investment Advisers Inc., Nuveen Investment Institutional Services Group LLC, NWQ Investment Management Company, LLC, Tradewinds Global Investors, LLC, NWQ Holdings, LLC, Symphony Asset Management LLC, Santa Barbara Asset Management, LLC, Nuveen HydePark Group, LLC and Richards & Tierney, Inc. (since 2008); Vice President and Assistant General Counsel, Nuveen Investments Inc. (since 2008); prior thereto, Counsel, Vedder Price P.C. (1997-2007).
(1) Mr. Schwertfeger is an "interested person" of the Funds, as defined in the Investment Company Act of 1940, by reason of being the former Chairman and Chief Executive Officer of Nuveen Investments, Inc. and having previously served in various other capacities with Nuveen Investments, Inc. and its subsidiaries. It is expected that Mr. Schwertfeger will resign from the Board of Trustees by the end of the second quarter of 2008. (2) Board Members serve three year terms. The Board of Trustees is divided into three classes, Class I, Class II, and Class III, with each being elected to serve until the third succeeding annual shareholders' meeting subsequent to its election or thereafter in each case when its respective successors are duly elected or appointed. The first year elected or appointed represents the year in which the board member was first elected or appointed to any fund in the Nuveen Complex. (3) Nuveen Advisory Corp. and Nuveen Institutional Advisory Corp. were reorganized into Nuveen Asset Management, effective January 1, 2005. (4) Officers serve one year terms through July of each year. The year first elected or appointed represents the year in which the Officer was first elected or appointed to any fund in the Nuveen Complex. 73 Reinvest Automatically EASILY and CONVENIENTLY NUVEEN MAKES REINVESTING EASY. A PHONE CALL IS ALL IT TAKES TO SET UP YOUR REINVESTMENT ACCOUNT. NUVEEN CLOSED-END FUNDS DIVIDEND REINVESTMENT PLAN Your Nuveen Closed-End Fund allows you to conveniently reinvest dividends and/or capital gains distributions in additional Fund shares. By choosing to reinvest, you'll be able to invest money regularly and automatically, and watch your investment grow through the power of tax-free compounding. Just like dividends or distributions in cash, there may be times when income or capital gains taxes may be payable on dividends or distributions that are reinvested. It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market. EASY AND CONVENIENT To make recordkeeping easy and convenient, each month you'll receive a statement showing your total dividends and distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own. HOW SHARES ARE PURCHASED The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the greater of the net asset value or 95% of the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. If the Plan Agent begins purchasing Fund shares on the open market while shares are trading below net asset value, but the Fund's shares subsequently trade at or above their net asset value before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the distribution in newly-issued Fund shares at a price equal to the greater of the shares' net asset value or 95% of the shares' market value on the last business day immediately prior to the purchase date. Dividends and distributions received to purchase shares in the open market will normally be invested shortly after the dividend payment date. No interest will be paid on dividends and distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the dividend or distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions. 74 FLEXIBLE You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change. Should you withdraw, you can receive a certificate for all whole shares credited to your reinvestment account and cash payment for fractional shares, or cash payment for all reinvestment account shares, less brokerage commissions and a $2.50 service fee. You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan. The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time. CALL TODAY TO START REINVESTING DIVIDENDS AND/OR DISTRIBUTIONS For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787. 75 NOTES 76 NOTES 77 Glossary of TERMS USED in this REPORT [] AUCTION RATE BOND: An auction rate bond is a security whose interest payments are adjusted periodically through an auction process, which process typically also serves as a means for buying and selling the bond. Auctions that fail to attract enough buyers for all the shares offered for sale are deemed to have "failed", with current holders receiving a formula-based interest rate until the next scheduled auction. [] AVERAGE ANNUAL TOTAL RETURN: This is a commonly used method to express an investment's performance over a particular, usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment's actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered. [] AVERAGE EFFECTIVE MATURITY: The average of the number of years to maturity of the bonds in a Fund's portfolio, computed by weighting each bond's time to maturity (the date the security comes due) by the market value of the security. This figure does not account for the likelihood of prepayments or the exercise of call provisions unless an escrow account has been established to redeem the bond before maturity. The market value weighting for an investment in an inverse floating rate security is the value of the portfolio's residual interest in the inverse floating rate trust, and does not include the value of the floating rate securities issued by the trust. [] DURATION: Duration is a measure of the expected period over which a bond's principal and interest will be paid, and consequently is a measure of the sensitivity of a bond's or bond Fund's value to changes when market interest rates change. Generally, the longer a bond's or Fund's duration, the more the price of the bond or Fund will change as interest rates change. [] INVERSE FLOATERS: Inverse floating rate securities are created by depositing a municipal bond, typically with a fixed interest rate, into a special purpose trust created by a broker-dealer. This trust, in turn, (a) issues floating rate certificates typically paying short-term tax-exempt interest rates to third parties in amounts equal to some fraction of the deposited bond's par amount or market value, and (b) issues an inverse floating rate certificate (sometimes referred to as an "inverse floater") to an investor (such as a Fund) interested in gaining investment exposure to a long-term municipal bond. The income received by the holder of the inverse floater varies inversely with the short-term rate paid to the floating rate certificates' holders, and in most circumstances the holder of the inverse floater bears substantially all of the underlying bond's downside investment risk. The holder of the inverse floater typically also benefits disproportionately from any potential appreciation of the underlying bond's value. Hence, an inverse floater essentially represents an investment in the underlying bond on a leveraged basis. [] MARKET YIELD (ALSO KNOWN AS DIVIDEND YIELD OR CURRENT YIELD): An investment's current annualized dividend divided by its current market price. [] NET ASSET VALUE (NAV): A Fund's common share NAV per share is calculated by subtracting the liabilities of the Fund from its total assets and then dividing the remainder by the number of shares outstanding. Fund NAVs are calculated at the end of each business day. [] TAXABLE-EQUIVALENT YIELD: The yield necessary from a fully taxable investment to equal, on an after-tax basis, the yield of a municipal bond investment. [] ZERO COUPON BOND: A zero coupon bond does not pay a regular interest coupon to its holders during the life of the bond. Tax-exempt income to the holder of the bond comes from accretion of the difference between the original purchase price of the bond at issuance and the par value of the bond at maturity and is effectively paid at maturity. The market prices of zero coupon bonds generally are more volatile than the market prices of bonds that pay interest periodically. 78 Other Useful INFORMATION QUARTERLY PORTFOLIO OF INVESTMENTS AND PROXY VOTING INFORMATION You may obtain (i) each Fund's quarterly portfolio of investments, (ii) information regarding how the Funds voted proxies relating to portfolio securities held during the twelve-month period ended June 30, 2007, and (iii) a description of the policies and procedures that the Funds used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at www.nuveen.com. You may also obtain this and other Fund information directly from the Securities and Exchange Commission ("SEC"). The SEC may charge a copying fee for this information. Visit the SEC on-line at http://www.sec.gov or in person at the SEC's Public Reference Room in Washington, D.C. Call the SEC at (202) 942-8090 for room hours and operation. You may also request Fund information by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC's Public References Section at 100 F Street NE, Washington, D.C. 20549. CEO CERTIFICATION DISCLOSURE Each Fund's Chief Executive Officer has submitted to the New York Stock Exchange the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the SEC the certification of its Chief Executive Officer and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act. BOARD OF DIRECTORS Robert P. Bremner Jack B. Evans William C. Hunter David J. Kundert William J. Schneider Timothy R. Schwertfeger Judith M. Stockdale Carole E. Stone FUND MANAGER Nuveen Asset Management 333 West Wacker Drive Chicago, IL 60606 CUSTODIAN State Street Bank & Trust Company Boston, MA TRANSFER AGENT AND SHAREHOLDER SERVICES State Street Bank & Trust Company Nuveen Funds P.O. Box 43071 Providence, RI 02940-3071 (800) 257-8787 LEGAL COUNSEL Chapman and Cutler LLP Chicago, IL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Chicago, IL Each Fund intends to repurchase shares of its own common stock in the future at such times and in such amounts as is deemed advisable. No common shares were repurchased during the period covered by this report. Any future repurchases will be reported to shareholders in the next annual or semi-annual report. 79 Nuveen Investments: - ------------------- SERVING INVESTORS FOR GENERATIONS Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions. For the past century, Nuveen Investments has adhered to the belief that the best approach to investing is to apply conservative risk-management principles to help minimize volatility. Building on this tradition, we today offer a range of high quality equity and fixed-income solutions that are integral to a well-diversified core portfolio. Our clients have come to appreciate this diversity, as well as our continued adherence to proven, long-term investing principles. WE OFFER MANY DIFFERENT INVESTING SOLUTIONS FOR OUR CLIENTS' DIFFERENT NEEDS. Managing $153 billion in assets, as of March 31, 2008, Nuveen Investments offers access to a number of different asset classes and investing solutions through a variety of products. Nuveen Investments markets its capabilities under six distinct brands: Nuveen, a leader in fixed-income investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in growth-style equities; Symphony, a leading institutional manager of market-neutral alternative investment portfolios; Santa Barbara, a leader in growth equities; and Tradewinds, a leader in global equities. FIND OUT HOW WE CAN HELP YOU REACH YOUR FINANCIAL GOALS. To learn more about the products and services Nuveen Investments offers, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Be sure to obtain a prospectus, where applicable. Investors should consider the investment objective and policies, risk considerations, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information relevant to an investment in the Fund. For a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money. Learn more about Nuveen Funds at: WWW.NUVEEN.COM/ETF SHARE PRICES FUND DETAILS DAILY FINANCIAL NEWS INVESTOR EDUCATION INTERACTIVE PLANNING TOOLS EAN-B-0308D ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments to or waivers from the Code during the period covered by this report. The registrant has posted the code of ethics on its website at www.nuveen.com/etf. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then click on Code of Conduct.) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Directors or Trustees determined that the registrant has at least one "audit committee financial expert" (as defined in Item 3 of Form N-CSR) serving on its Audit Committee. The registrant's audit committee financial expert is Jack B. Evans, Chairman of the Audit Committee, who is "independent" for purposes of Item 3 of Form N-CSR. Mr. Evans was formerly President and Chief Operating Officer of SCI Financial Group, Inc., a full service registered broker-dealer and registered investment adviser ("SCI"). As part of his role as President and Chief Operating Officer, Mr. Evans actively supervised the Chief Financial Officer (the "CFO") and actively supervised the CFO's preparation of financial statements and other filings with various regulatory authorities. In such capacity, Mr. Evans was actively involved in the preparation of SCI's financial statements and the resolution of issues raised in connection therewith. Mr. Evans has also served on the audit committee of various reporting companies. At such companies, Mr. Evans was involved in the oversight of audits, audit plans, and the preparation of financial statements. Mr. Evans also formerly chaired the audit committee of the Federal Reserve Bank of Chicago. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Nuveen Select Tax-Free Income Portfolio 2 The following tables show the amount of fees that Ernst & Young LLP, the Fund's auditor, billed to the Fund during the Fund's last two full fiscal years. For engagements with Ernst & Young LLP the Audit Committee approved in advance all audit services and non-audit services that Ernst & Young LLP provided to the Fund, except for those non-audit services that were subject to the pre-approval exception under Rule 2-01 of Regulation S-X (the "pre-approval exception"). The pre-approval exception for services provided directly to the Fund waives the pre-approval requirement for services other than audit, review or attest services if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid by the Fund to its accountant during the fiscal year in which the services are provided; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the audit is completed. The Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in his absence, any other member of the Audit Committee). SERVICES THAT THE FUND'S AUDITOR BILLED TO THE FUND
AUDIT FEES BILLED AUDIT-RELATED FEES TAX FEES ALL OTHER FEES FISCAL YEAR ENDED TO FUND (1) BILLED TO FUND (2) BILLED TO FUND (3) BILLED TO FUND - ----------------------------------------------------------------------------------------------------------------------------- March 31, 2008 $ 14,860 $ 0 $ 500 $ 0 - ----------------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception - ----------------------------------------------------------------------------------------------------------------------------- March 31, 2007 $ 13,103 $ 0 $ 0 $ 0 - ----------------------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% 0% pursuant to pre-approval exception - -----------------------------------------------------------------------------------------------------------------------------
(1) "Audit Fees" are the aggregate fees billed for professional services for the audit of the Fund's annual financial statements and services provided in connection with statutory and regulatory filings or engagements. (2) "Audit Related Fees" are the aggregate fees billed for assurance and related services reasonably related to the performance of the audit or review of financial statements and are not reported under "Audit Fees". (3) "Tax Fees" are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. SERVICES THAT THE FUND'S AUDITOR BILLED TO THE ADVISER AND AFFILIATED FUND SERVICE PROVIDERS The following tables show the amount of fees billed by Ernst & Young LLP to Nuveen Asset Management ("NAM" or the "Adviser"), and any entity controlling, controlled by or under common control with NAM ("Control Affiliate") that provides ongoing services to the Fund ("Affiliated Fund Service Provider"), for engagements directly related to the Fund's operations and financial reporting, during the Fund's last two full fiscal years. The tables also show the percentage of fees subject to the pre-approval exception. The pre-approval exception for services provided to the Adviser and any Affiliated Fund Service Provider (other than audit, review or attest services) waives the pre-approval requirement if: (A) the aggregate amount of all such services provided constitutes no more than 5% of the total amount of revenues paid to Ernst & Young LLP by the Fund, the Adviser and Affiliated Fund Service Providers during the fiscal year in which the services are provided that would have to be pre-approved by the Audit Committee; (B) the Fund did not recognize the services as non-audit services at the time of the engagement; and (C) the services are promptly brought to the Audit Committee's attention, and the Committee (or its delegate) approves the services before the Fund's audit is completed.
FISCAL YEAR ENDED AUDIT-RELATED FEES TAX FEES BILLED TO ALL OTHER FEES BILLED TO ADVISER AND ADVISER AND BILLED TO ADVISER AFFILIATED FUND AFFILIATED FUND AND AFFILIATED FUND SERVICE PROVIDERS SERVICE PROVIDERS SERVICE PROVIDERS - ------------------------------------------------------------------------------------------------------------- March 31, 2008 $ 0 $ 0 $ 0 - ------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception - ------------------------------------------------------------------------------------------------------------- March 31, 2007 $ 0 $ 0 $ 0 - ------------------------------------------------------------------------------------------------------------- Percentage approved 0% 0% 0% pursuant to pre-approval exception - -------------------------------------------------------------------------------------------------------------
NON-AUDIT SERVICES The following table shows the amount of fees that Ernst & Young LLP billed during the Fund's last two full fiscal years for non-audit services. The Audit Committee is required to pre-approve non-audit services that Ernst & Young LLP provides to the Adviser and any Affiliated Fund Services Provider, if the engagement related directly to the Fund's operations and financial reporting (except for those subject to the de minimis exception described above). The Audit Committee requested and received information from Ernst & Young LLP about any non-audit services that Ernst & Young LLP rendered during the Fund's last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating Ernst & Young LLP's independence.
FISCAL YEAR ENDED TOTAL NON-AUDIT FEES BILLED TO ADVISER AND AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES PROVIDERS (ENGAGEMENTS BILLED TO ADVISER AND RELATED DIRECTLY TO THE AFFILIATED FUND SERVICE TOTAL NON-AUDIT FEES OPERATIONS AND FINANCIAL PROVIDERS (ALL OTHER BILLED TO FUND REPORTING OF THE FUND) ENGAGEMENTS) TOTAL - ---------------------------------------------------------------------------------------------------------------------------- March 31, 2008 $ 500 $ 0 $ 0 $ 500 March 31, 2007 $ 0 $ 0 $ 0 $ 0
"Non-Audit Fees billed to Adviser" for both fiscal year ends represent "Tax Fees" billed to Adviser in their respective amounts from the previous table. Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit Committee must approve (i) all non-audit services to be performed for the Fund by the Fund's independent accountants and (ii) all audit and non-audit services to be performed by the Fund's independent accountants for the Affiliated Fund Service Providers with respect to operations and financial reporting of the Fund. Regarding tax and research projects conducted by the independent accountants for the Fund and Affiliated Fund Service Providers (with respect to operations and financial reports of the Fund) such engagements will be (i) pre-approved by the Audit Committee if they are expected to be for amounts greater than $10,000; (ii) reported to the Audit Committee chairman for his verbal approval prior to engagement if they are expected to be for amounts under $10,000 but greater than $5,000; and (iii) reported to the Audit Committee at the next Audit Committee meeting if they are expected to be for an amount under $5,000. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. The registrant's Board of Directors or Trustees has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78c(a)(58)(A)). The members of the audit committee are Robert P. Bremner, Jack B. Evans, William J. Schneider and David J. Kundert. ITEM 6. SCHEDULE OF INVESTMENTS. See Portfolio of Investments in Item 1. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. The registrant invests its assets primarily in municipal bonds and cash management securities. On rare occasions the registrant may acquire, directly or through a special purpose vehicle, equity securities of a municipal bond issuer whose bonds the registrant already owns when such bonds have deteriorated or are expected shortly to deteriorate significantly in credit quality. The purpose of acquiring equity securities generally will be to acquire control of the municipal bond issuer and to seek to prevent the credit deterioration or facilitate the liquidation or other workout of the distressed issuer's credit problem. In the course of exercising control of a distressed municipal issuer, NAM may pursue the registrant's interests in a variety of ways, which may entail negotiating and executing consents, agreements and other arrangements, and otherwise influencing the management of the issuer. NAM does not consider such activities proxy voting for purposes of Rule 206(4)-6 under the 1940 Act, but nevertheless provides reports to the registrant's Board of Trustees on its control activities on a quarterly basis. In the rare event that a municipal issuer were to issue a proxy or that the registrant were to receive a proxy issued by a cash management security, NAM would either engage an independent third party to determine how the proxy should be voted or vote the proxy with the consent, or based on the instructions, of the registrant's Board of Trustees or its representative. A member of NAM's legal department would oversee the administration of the voting, and ensure that records were maintained in accordance with Rule 206(4)-6, reports were filed with the SEC on Form N-PX, and the results provided to the registrant's Board of Trustees and made available to shareholders as required by applicable rules. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. THE PORTFOLIO MANAGER The following individual has primary responsibility for the day-to-day implementation of the registrant's investment strategies: NAME FUND Thomas Spalding Nuveen Select Tax-Free Income Portfolio 2 Other Accounts Managed. In addition to managing the registrant, the portfolio manager is also primarily responsible for the day-to-day portfolio management of the following accounts: TYPE OF ACCOUNT NUMBER OF PORTFOLIO MANAGER MANAGED ACCOUNTS ASSETS - -------------------------------------------------------------------------------- Thomas Spalding Registered Investment Company 11 $9.213 billion Other Pooled Investment Vehicles 0 $0 Other Accounts 5 $17.8 million * Assets are as of March 31, 2008. None of the assets in these accounts are subject to an advisory fee based on performance. Compensation. Each portfolio manager's compensation consists of three basic elements--base salary, cash bonus and long-term incentive compensation. The compensation strategy is to annually compare overall compensation to the market in order to create a compensation structure that is competitive and consistent with similar financial services companies. As discussed below, several factors are considered in determining each portfolio manager's total compensation. In any year these factors may include, among others, the effectiveness of the investment strategies recommended by the portfolio manager's investment team, the investment performance of the accounts managed by the portfolio manager, and the overall performance of Nuveen Investments, Inc. (the parent company of NAM). Although investment performance is a factor in determining the portfolio manager's compensation, it is not necessarily a decisive factor. The portfolio manager's performance is evaluated in part by comparing manager's performance against a specified investment benchmark. This fund-specific benchmark is a customized subset (limited to bonds in each Fund's specific state and with certain maturity parameters) of the S&P/Investortools Municipal Bond index, an index comprised of bonds held by managed municipal bond fund customers of Standard & Poor's Securities Pricing, Inc. that are priced daily and whose fund holdings aggregate at least $2 million. As of April 30, 2008, the S&P/Investortools Municipal Bond index was comprised of 51,827 securities with an aggregate current market value of $1,027 billion. Base salary. Each portfolio manager is paid a base salary that is set at a level determined by NAM in accordance with its overall compensation strategy discussed above. NAM is not under any current contractual obligation to increase a portfolio manager's base salary. Cash bonus. Each portfolio manager is also eligible to receive an annual cash bonus. The level of this bonus is based upon evaluations and determinations made by each portfolio manager's supervisors, along with reviews submitted by his peers. These reviews and evaluations often take into account a number of factors, including the effectiveness of the investment strategies recommended to the NAM's investment team, the performance of the accounts for which he serves as portfolio manager relative to any benchmarks established for those accounts, his effectiveness in communicating investment performance to stockholders and their representatives, and his contribution to the NAM's investment process and to the execution of investment strategies. The cash bonus component is also impacted by the overall performance of Nuveen Investments, Inc. in achieving its business objectives. Long-term incentive compensation. In connection with the acquisition of Nuveen Investments, Inc., by a group of investors lead by Madison Dearborn Partners in November 2007, certain employees, including portfolio managers, received profit interests in Nuveen's parent. These profit interests entitle the holders to participate in the appreciation in the value of Nuveen beyond the issue date and vest over five to seven years, or earlier in the case of a liquidity event. Material Conflicts of Interest. Each portfolio manager's simultaneous management of the Fund and the other accounts noted above may present actual or apparent conflicts of interest with respect to the allocation and aggregation of securities orders placed on behalf of the Fund and the other account. The Adviser, however, believes that such potential conflicts are mitigated by the fact that the Adviser has adopted several policies that address potential conflicts of interest, including best execution and trade allocation policies that are designed to ensure (1) that portfolio management is seeking the best price for portfolio securities under the circumstances, (2) fair and equitable allocation of investment opportunities among accounts over time and (3) compliance with applicable regulatory requirements. All accounts are to be treated in a non-preferential manner, such that allocations are not based upon account performance, fee structure or preference of the portfolio manager. In addition, the Adviser has adopted a Code of Conduct that sets forth policies regarding conflicts of interest. Beneficial Ownership of Securities. As of the March 31, 2008, the portfolio manager beneficially owned the following dollar range of equity securities issued by the Fund and other Nuveen Funds managed by NAM's municipal investment team.
DOLLAR RANGE OF EQUITY SECURITIES DOLLAR RANGE OF BENEFICIALLY OWNED EQUITY IN THE REMAINDER OF SECURITIES NUVEEN FUNDS MANAGED BENEFICIALLY BY NAM'S MUNICIPAL NAME OF PORTFOLIO MANAGER FUND OWNED IN FUND INVESTMENT TEAM - --------------------------------------------------------------------------------------------------------------- Thomas Spalding Nuveen Select Tax-Free Income Portfolio 2 $0 $500,001-$1,000,000 - ---------------------------------------------------------------------------------------------------------------
PORTFOLIO MANAGER BIO: Thomas Spalding, CFA, is Vice President and Senior Investment Officer of Nuveen Investments. He has direct investment responsibility for the National Long Term funds. He joined Nuveen in 1976 as assistant portfolio manager and has been the portfolio manager of the Nuveen Municipal Value Fund, Nuveen's first closed-end exchange traded fund, since its inception in 1987. Currently, he manages investments for 12 Nuveen-sponsored investment companies. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrants Board implemented after the registrant last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable because the code is posted on registrant's website at www.nuveen.com/etf and there were no amendments during the period covered by this report. (To view the code, click on the Investor Resources drop down menu box, click on Fund Governance and then Code of Conduct.) (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: Ex-99.CERT Attached hereto. (a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable. (b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)); Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed "filed" for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Ex-99.906 CERT attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Nuveen Select Tax-Free Income Portfolio 2 ----------------------------------------------------------- By (Signature and Title)* /s/ Kevin J. McCarthy ---------------------------------------------- Kevin J. McCarthy Vice President and Secretary Date: June 6, 2008 ------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Gifford R. Zimmerman ---------------------------------------------- Gifford R. Zimmerman Chief Administrative Officer (principal executive officer) Date: June 6, 2008 ------------------------------------------------------------------- By (Signature and Title)* /s/ Stephen D. Foy ---------------------------------------------- Stephen D. Foy Vice President and Controller (principal financial officer) Date: June 6, 2008 ------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 file002.txt CERTIFICATIONS CERTIFICATION I, Gifford R. Zimmerman, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Select Tax-Free Income Portfolio 2; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 6, 2008 /s/ Gifford R. Zimmerman ------------------------- -------------------------------- Gifford R. Zimmerman Chief Administrative Officer (principal executive officer) CERTIFICATION I, Stephen D. Foy, certify that: 1. I have reviewed this report on Form N-CSR of Nuveen Select Tax-Free Income Portfolio 2; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 6, 2008 /s/ Stephen D. Foy ------------------------- -------------------------------- Stephen D. Foy Vice President and Controller (principal financial officer) EX-99.906CERT 3 file003.txt CERTIFICATIONS Certification Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002; provided by the Chief Executive Officer and Chief Financial Officer, based on each such officer's knowledge and belief. The undersigned officers of Nuveen Select Tax-Free Income Portfolio 2 (the "Fund"), certify that, to the best of each such officer's knowledge and belief: 1. The Form N-CSR of the Fund for the period ended March 31, 2008 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Date: June 6, 2008 ----------------------- /s/ Gifford R. Zimmerman --------------------------------- Gifford R. Zimmerman Chief Administrative Officer (principal executive officer) /s/ Stephen D. Foy --------------------------------- Stephen D. Foy Vice President, Controller (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----