California Residents Optimistic on the Outlook for 2004.

Business Editors

IRVINE, Calif.--(BUSINESS WIRE)--Dec. 16, 2003

New Study by Nuveen Investments Shows Both Confidence and Concern

About the State's Municipal Bonds; Most Investors Confident in

Schwarzenegger's Ability to Mend the State's Budget Problems

In the wake of the recall election, more than two-thirds of California residents believe the state's economy will be better 12 months from now. Further, while 63% indicate they are confident in new Governor Schwarzenegger's ability to fix the state's budget problems and 41% believe his election will have a positive effect on California municipal bonds, more than 85% say they do not plan to buy California municipal bonds in the coming year.

These sentiments were expressed by high-net-worth Californians in a survey sponsored by Nuveen Investments. More than 680 California residents with investable assets of $100,000 or more were questioned by independent research company Synovate between November 20 and 26, 2003. The survey has a margin of error of plus or minus 3%.

Optimism About the Economy and the Stock Market

When asked whether they expected California's economy would be better or worse 12 months from now, 71% of respondents said it would be better. Only 8% felt it would be worse. In contrast, 62% felt the national economy would be better, while 13% thought it would be worse. According to David Blair, Nuveen's senior California analyst, "The California economy has benefited in the past from growth in the national economy, so signs of an economic expansion are likely to positively affect the confidence levels of Californians."

Investors in the survey showed more confidence in the performance of stocks than of bonds for the coming year, with 60% expecting the stock market to be higher in twelve months. Only 28% expect the principal values of their current bond investments to be higher.

Concern About the Budget and Municipal Bonds

Nearly 18% of those surveyed currently own California municipal bonds or bond funds. Of those, only a small number anticipate increasing or decreasing their holdings in the next 12 months. The vast majority - amounting to 71% - say they do not anticipate changing their allocation to California municipal bonds.

When asked to what extent they agree or disagree that the state has a major budget problem, 86% agreed completely and 12% agreed somewhat. Of those who agreed that the state has a major budget problem, 44% said that the state's budget problem had eroded their confidence in California municipal bonds. However, a majority of all respondents remain confident in California municipal bonds.

"Despite three years of budget deficits and several credit downgrades, a substantial percentage of survey participants remain confident in California municipal bonds. This seems to reflect a general view that, although the state clearly needs to make progress in closing the structural budget gap in order to retain the confidence of investors, there is a low default risk for these bonds," Blair added.

Optimism About the New Administration

Looking ahead, 63% of those who agreed that the state had a major budget problem were confident in Arnold Schwarzenegger's ability to fix California's budget problems. In addition, 41% of all respondents felt Schwarzenegger's election would have a positive effect on California municipal bonds. Only 11% felt his election would have a negative effect on the bonds.

Says Blair, "California investors seem to be giving Governor Schwarzenegger the benefit of the doubt, although many also recognize that the state's problems will take time to resolve." Blair noted that in the comments supplied by many survey participants, investors expressed that Schwarzenegger has a major task ahead of him, and that he will need the cooperation of a partisan legislature to make any progress.

The results of this survey are not intended to describe or promote the sale of any particular fund or service, and should not be distributed in connection with the promotion of any Nuveen fund or service. In addition, the results of the survey do not in any way represent the opinions of Nuveen, and should not be interpreted as investment advice or as being in any way indicative of the projected future performance of any investment.

Nuveen Investments provides high-quality investment services that contribute to the building of well-diversified, core investment portfolios. The Company serves financial advisors and their high-net-worth clients, as well as a growing number of institutional clients. Nuveen Investments today markets its capabilities under four distinct brands: Nuveen, a leader in tax-free investments; NWQ, a leader in value-style equities; Rittenhouse, a leader in growth-style equities; and Symphony, a leading institutional manager of market-neutral alternative investment portfolios. In total, the Company now manages approximately $90 billion in assets. An affiliate of The St. Paul Companies (NYSE:SPC), Nuveen Investments is listed on The New York Stock Exchange and trades under the symbol "JNC."