Selected data for a share outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Operations
|
|
Less Distributions
|
|
|
|
|
|
|
Beginning
Net Asset
Value
|
|
Net
Investment
Income
(Loss)(a)
|
|
Net
Realized/
Unrealized
Gain (Loss)
|
|
Total
|
|
From Net
Investment
Income
|
|
From
Accum-
ulated
Net
Realized
Gains
|
|
Total
|
|
Offering
Costs
|
|
|
Year Ended 7/31:
|
|
|
|
2013
|
(d)
|
|
$
|
19.10
|
|
|
$
|
.03
|
|
|
$
|
(.18
|
)
|
|
$
|
(.15
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
|
Nuveen Investments
20
|
|
|
|
|
|
|
|
|
Ratios/Supplemental Data
|
|
|
|
|
|
|
|
|
Total Returns
|
|
|
|
Ratios to Average Net Assets
|
|
|
|
|
|
|
Ending
Net
Asset
Value
|
|
Ending
Market
Value
|
|
Based on
Net Asset
Value(b)
|
|
Based on
Market
Value(b)
|
|
Ending Net
Assets (000)
|
|
Expenses
|
|
Net
Investment
Income (Loss)
|
|
Portfolio
Turnover
Rate(c)
|
|
|
Year Ended 7/31:
|
|
|
|
2013
|
(d)
|
|
$
|
18.91
|
|
|
$
|
19.80
|
|
|
|
(.99
|
)%
|
|
|
(1.00
|
)%
|
|
$
|
66,297
|
|
|
|
1.40
|
%*
|
|
|
1.93
|
%*
|
|
|
3
|
%
|
|
(a) Per share Net Investment Income (Loss) is calculated using the average daily shares method.
(b) Total Return Based 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 Based 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.
(c) Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales (as disclosed in Note 5—Investment Transactions) divided by the average long-term market value during the period.
(d) For the period June 25, 2013 (commencement of operations) through July 31, 2013.
* Annualized.
See accompanying notes to financial statements.
Nuveen Investments
21
Notes to
FINANCIAL STATEMENTS
1. General Information and Significant Accounting Policies
General Information
Nuveen Flexible Investment Income Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end registered investment company. The Fund's shares are listed on the New York Stock Exchange and trade under the ticker symbol "JPW." The Fund was organized as a Massachusetts business trust on March 28, 2013.
The Fund's investment adviser is Nuveen Fund Advisors, LLC (the "Adviser"), a wholly-owned subsidiary of Nuveen Investments, Inc. ("Nuveen"). The Adviser is responsible for the Fund's overall investment strategy and asset allocation decisions. The Adviser has entered into a sub-advisory agreement with NWQ Investment Management Company, LLC (the "Sub-Adviser"), an affiliate of Nuveen, under which the Sub-Adviser manages the investment portfolio of the Fund.
The Fund's investment objectives are to provide high current income and, secondarily, capital appreciation. Under normal circumstances, the Fund will invest at least 80% of its Managed Assets (as defined in Note 7—Management Fees and Other Transactions with Affiliates) in income producing securities issued by companies located anywhere in the world. The Fund will invest in income producing securities across the capital structure—in any type of debt, preferred or equity securities offered by a particular company, or debt securities issued by a government. The Fund will invest 100% of its Managed Assets in U.S. dollar-denominated securities, and may invest up to 50% of its Managed Assets in securities of non-U.S. companies. The Fund may invest up to 40% of its Managed Assets in equity securities (other than preferred securities). At least 25% of the aggregate market value of the Fund's investments in debt and preferred securities that are of a type customarily rated by a credit rating agency will be rated investment grade, or if unrated, will be judged to be of comparable quality by the Sub-Adviser. The Fund will invest at least 25% of its Managed Assets in securities issued by financial services companies. The Fund may invest up to 15% of its Managed Assets in securities and other instruments that, at the time of purchase, are illiquid. The Fund may opportunistically write (sell) covered call options on the Fund's portfolio of equity securities for the purpose of enhancing the Fund's risk-adjusted total return over time. The Fund anticipates using leverage to help achieve its investment objectives. The Fund may utilize leverage in the form of borrowings from a financial institution or the issuance of preferred shares or other senior securities, such as commercial paper or notes.
Prior to its commencement of operations on June 25, 2013, the Fund had no operations other than those related to organizational matters, the initial contribution of $100,275 by the Adviser for 5,250 shares of the Fund and the recording of the Fund's organizational expenses ($11,000) and its reimbursement by the Adviser.
Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP").
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and losses from investment transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes. 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 Fund has instructed the custodian to earmark securities in the Fund's portfolio with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments. As of July 31, 2013, the Fund had outstanding when-issued/delayed delivery purchase commitments of $170,000.
Investment Income
Dividend income is recorded on the ex-dividend date or, for foreign securities, when information is available. Interest income, which reflects the amortization of premiums and includes accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Interest income also reflects paydown gains and losses, if any.
Professional Fees
Professional fees presented on the Statement of Operations consist of legal fees incurred in the normal course of operations, audit fees, tax consulting fees and, in some cases, workout expenditures. Workout expenditures are incurred in an attempt to protect or enhance an investment or to pursue other claims or legal actions on behalf of Fund shareholders. Should the Fund receive a refund of workout expenditures paid in a prior reporting period, such amounts will be recognized as "Legal fee refund" on the Statement of Operations.
Nuveen Investments
22
Dividends and Distributions to Shareholders
Distributions to shareholders 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. GAAP.
The Fund makes monthly cash distributions to shareholders of a stated dollar amount per share. Commencing with the first distribution, the Fund intends to declare and pay regular monthly cash distributions to shareholders at a level rate (stated in terms of a fixed dividend rate per share) that reflects past and projected performance of the Fund.
The Fund's regular monthly distributions are currently being sourced entirely from net investment income. The Fund's current portfolio is predominantly invested in income producing securities the income from which is expected to be the source of distributions. For periods when the Fund is sourcing its monthly distributions solely from net investment income, the Fund will seek to distribute substantially all of its net investment income over time. There are no assurances given to how long the Fund will source distributions entirely from net investment income.
Market conditions may change, causing the portfolio management team at some future time to focus the mix of portfolio investments less to income-oriented securities. This may cause the regular monthly distributions to be sourced from something other than net investment income. The Fund has adopted a managed distribution policy permitting it to source its regular monthly distributions from not only net investment income, but also from realized capital gains and/or return of capital. If a managed distribution policy is employed, the Fund will seek to establish a relatively stable common share distribution rate that roughly corresponds to the projected total return from its investment strategy over an extended period of time. Actual common share returns will differ from projected long-term returns, and the difference between actual returns and total distributions will be reflected in an increasing (returns exceed distributions) or a decreasing (distributions exceed returns) Fund net asset value. If the Fund changes to a managed distribution, a press release will be issued describing such change and this change will also be described in subsequent shareholder reports. Additionally, any distribution payment that is sourced from something other than net investment income, there will be a notice issued quantifying the sources of such distribution.
Indemnifications
Under the Fund's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, in the normal course of business, the Fund enters into contracts that provide general indemnifications to other parties. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
Organizational and Offering Costs
The Adviser has agreed to reimburse the Fund's organizational expenses (approximately $11,000) and to pay all offering costs (other than the sales load) that exceed $.04 per share. The Fund's share of offering costs ($140,000) was recorded as a reduction of proceeds from the sales of shares.
Netting Agreements
In the ordinary course of business, the Fund has entered into transactions subject to enforceable netting agreements or other similar arrangements ("netting agreements"). Generally, the right to offset in netting agreements allows the Fund to offset any exposure to a specific counterparty with any collateral received or delivered to that counterparty based on the terms of the agreements. Generally, the Fund manages its cash collateral and securities collateral on a counterparty basis. As of July 31, 2013, the Fund was not invested in any portfolio securities or derivatives that could be netted subject to the netting agreements.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP 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. Investment Valuation and Fair Value Measurements
Investment Valuation
Common stocks and other equity-type securities are valued at the last sales price on the securities exchange on which such securities are primarily traded and are generally classified as Level 1 for fair value measurement purposes. Securities primarily traded on the NASDAQ National Market ("NASDAQ") are valued, except as indicated below, at the NASDAQ Official Closing Price and are generally classified as Level 1. However, securities traded on a securities exchange or NASDAQ for which there were no transactions on a given day or securities not listed on a securities exchange or NASDAQ are valued at the quoted bid price and are generally classified as Level 2.
Prices of fixed-income securities are provided by a pricing service approved by the Fund's Board of Trustees. These securities are generally classified as Level 2. The pricing service establishes a security's fair value using methods that may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations
Nuveen Investments
23
Notes to
FINANCIAL STATEMENTS
(continued)
of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor's credit characteristics considered relevant. In pricing certain securities, particularly less liquid and lower quality securities, the pricing service may consider information about a security, its issuer or market activity provided by the Adviser. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs.
Repurchase agreements are valued at contract amount plus accrued interest, which approximates market value. These securities are generally classified as Level 2.
Certain securities may not be able to be priced by the pre-established pricing methods as described above. Such securities may be valued by the Fund's Board of Trustees or its designee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; debt securities that have gone into default and for which there is no current market quotation; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of the Fund's net asset value (as may be the case in non-U.S. markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, is not deemed to reflect the security's fair value. As a general principle, the fair value of a security would appear to be the amount that the owner might reasonably expect to receive for it in a current sale. A variety of factors may be considered in determining the fair value of such securities, which may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor's credit characteristics considered relevant. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs. Regardless of the method employed to value a particular security, all valuations are subject to review by the Fund's Board of Trustees or its designee.
Fair Value Measurements
Fair value is defined as the price that the Fund would receive upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The following is a summary of the three-tiered hierarchy of valuation input levels.
Level 1 — Inputs are unadjusted and prices are determined using quoted prices in active markets for identical securities.
Level 2 — Prices are determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3 — Prices are determined using significant unobservable inputs (including management's assumptions in determining the fair value of investments).
The inputs or methodologies used for valuing securities are not an indication of the risks associated with investing in those securities. The following is a summary of the Fund's fair value measurements as of the end of the reporting period:
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
Long-Term Investments*:
|
|
|
Common Stock
|
|
$
|
5,684,636
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,684,636
|
|
|
|
Convertible Preferred Securities
|
|
|
654,432
|
|
|
|
—
|
|
|
|
—
|
|
|
|
654,432
|
|
|
|
$25 Par (or similar) Retail Structures
|
|
|
53,567,496
|
|
|
|
679,967
|
|
|
|
—
|
|
|
|
54,247,463
|
|
|
|
Corporate Bonds
|
|
|
—
|
|
|
|
2,719,250
|
|
|
|
—
|
|
|
|
2,719,250
|
|
|
|
$1,000 Par (or similar) Institutional Structures
|
|
|
1,300,963
|
|
|
|
638,625
|
|
|
|
—
|
|
|
|
1,939,588
|
|
|
|
Short-Term Investments:
|
|
|
Repurchase Agreements
|
|
|
—
|
|
|
|
1,778,233
|
|
|
|
—
|
|
|
|
1,778,233
|
|
|
|
Total
|
|
$
|
61,207,527
|
|
|
$
|
5,816,075
|
|
|
$
|
—
|
|
|
$
|
67,023,602
|
|
|
* Refer to the Fund's Portfolio of Investments for industry classifications and breakdown of $25 Par (or similar) Retail Structures and $1,000 Par (or similar) Institutional Structures classified as Level 2.
The Nuveen funds' Board of Directors/Trustees is responsible for the valuation process and has delegated the oversight of the daily valuation process to the Adviser's Valuation Committee. The Valuation Committee, pursuant to the valuation policies and procedures adopted by the Board of
Nuveen Investments
24
Directors/Trustees, is responsible for making fair value determinations, evaluating the effectiveness of the funds' pricing policies and reporting to the Board of Directors/Trustees. The Valuation Committee is aided in its efforts by the Adviser's dedicated Securities Valuation Team, which is responsible for administering the daily valuation process and applying fair value methodologies as approved by the Valuation Committee. When determining the reliability of independent pricing services for investments owned by the funds, the Valuation Committee, among other things, conducts due diligence reviews of the pricing services and monitors the quality of security prices received through various testing reports conducted by the Securities Valuation Team.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making a fair value determination, based on the facts and circumstances specific to the portfolio instrument. Fair value determinations generally will be derived as follows, using public or private market information:
(i) If available, fair value determinations shall be derived by extrapolating from recent transactions or quoted prices for identical or comparable securities.
(ii) If such information is not available, an analytical valuation methodology may be used based on other available information including, but not limited to: analyst appraisals, research reports, corporate action information, issuer financial statements and shelf registration statements. Such analytical valuation methodologies may include, but are not limited to: multiple of earnings, discount from market value of a similar freely-traded security, discounted cash flow analysis, book value or a multiple thereof, risk premium/yield analysis, yield to maturity and/or fundamental investment analysis.
The purchase price of a portfolio instrument will be used to fair value the instrument only if no other valuation methodology is available or deemed appropriate, and it is determined that the purchase price fairly reflects the instrument's current value.
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Directors/Trustees, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such testing and fair valuation occurrences are reported to the Board of Directors/Trustees.
3. Portfolio Securities and Investments in Derivatives
Portfolio Securities
Repurchase Agreements
In connection with transactions in repurchase agreements, it is the Fund's policy that its custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times. If the counterparty defaults, and the fair value of the collateral declines, realization of the collateral may be delayed or limited.
Zero Coupon Securities
The 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. 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. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically.
Investments in Derivatives
The Fund is authorized to invest in certain derivative instruments, such as futures, options and swap contracts. The Fund limits its investments in futures, options on futures and swap contracts to the extent necessary for the Adviser to claim the exclusion from registration by the Commodity Futures Trading Commission as a commodity pool operator with respect to the Fund. The Fund records derivative instruments at fair value, with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Fund's investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes. The Fund did not invest in derivatives during the period June 25, 2013 (commencement of operations) through July 31, 2013.
Market and Counterparty Credit Risk
In the normal course of business the Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose the Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of the Fund's exposure to counterparty credit risk in respect to these financial assets approximates their carrying value as recorded on the Statement of Assets and Liabilities.
The Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of the counterparties. Additionally, counterparties may be required to pledge collateral daily (based on the daily valuation of the financial asset) on behalf of the Fund with a value approximately equal to the amount of any unrealized
Nuveen Investments
25
Notes to
FINANCIAL STATEMENTS
(continued)
gain above a pre-determined threshold. Reciprocally, when the Fund has an unrealized loss, the Fund has instructed the custodian to pledge assets of the Fund 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 valuations fluctuate, either up or down, by at least the pre-determined threshold amount.
4. Fund Shares
Transactions in Fund shares were as follows:
|
|
|
For the period 6/25/13
(commencement of operations)
through 7/31/13
|
|
|
Shares sold
|
|
|
3,500,000
|
*
|
|
* Excludes 5,250 shares owned by the Adviser.
5. Investment Transactions
Purchases and sales (including maturities but excluding short-term investments) for the period June 25, 2013 (commencement of operations) through July 31, 2013, aggregated $67,385,377 and $1,507,692, respectively.
6. Income Tax Information
The Fund intends to distribute substantially all of its investment company taxable income 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.
For all open tax years and all major taxing jurisdictions, management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. 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). Furthermore, management of the Fund is 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.
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 recognition of premium amortization, timing differences in the recognition of income and timing differences in recognizing certain gains and losses on investment transactions. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts as listed below. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the net asset value of the Fund.
As of July 31, 2013, the cost and unrealized appreciation (depreciation) of investments, as determined on a federal income tax basis, were as follows:
|
Cost of investments
|
|
$
|
67,651,683
|
|
|
|
Gross unrealized:
|
|
|
Appreciation
|
|
$
|
233,519
|
|
|
|
Depreciation
|
|
|
(861,600
|
)
|
|
|
Net unrealized appreciation (depreciation) of investments
|
|
$
|
(628,081
|
)
|
|
The tax components of undistributed net ordinary income and net long-term capital gains at July 31, 2013, the Fund's tax year end, were as follows:
|
Undistributed net ordinary income
1
|
|
$
|
114,911
|
|
|
|
Undistributed net long-term capital gains
|
|
|
—
|
|
|
1
Net ordinary income consists of net taxable income derived from dividends, interest, and net short-term capital gains, if any.
During the period June 25, 2013 (commencement of operations) through July 31, 2013, the Fund's tax year end, the Fund made no distributions to its shareholders.
During the period June 25, 2013 (commencement of operations) through July 31, 2013, the Fund's tax year end, there were no capital losses generated.
7. Management Fees and Other Transactions with Affiliates
The Fund's management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. The Sub-Adviser is compensated for its services to the Fund from the management fees paid to the Adviser.
The Fund's management fee consists of two components—a fund-level fee, based only on the amount of assets within the Fund, and a complex-level fee, based on the aggregate amount of all eligible fund assets managed by the Adviser. This pricing structure enables Fund shareholders to benefit from growth in the assets within the Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.
Nuveen Investments
26
The annual fund-level fee, payable monthly, is calculated according to the following schedule:
|
Average Daily Managed Assets*
|
|
Fund-Level Fee Rate
|
|
|
For the first $500 million
|
|
|
.7000
|
%
|
|
|
For the next $500 million
|
|
|
.6750
|
|
|
|
For the next $500 million
|
|
|
.6500
|
|
|
|
For the next $500 million
|
|
|
.6250
|
|
|
|
For managed assets over $2 billion
|
|
|
.6000
|
|
|
The annual complex-level fee, payable monthly, is calculated according to the following schedule:
|
Complex-Level Managed Asset Breakpoint Level*
|
|
Fund-Level Fee Rate
|
|
|
$
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
|
|
|
* For the fund-level and complex-level fees, managed assets include closed-end fund assets managed by the Adviser that are attributable to certain types of leverage. For these purposes, leverage includes the funds' use of preferred stock and borrowings and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust's issuance of floating rate securities, subject to an agreement by the Adviser as to certain funds to limit the amount of such assets for determining managed assets in certain circumstances. The complex-level fee is calculated based upon the aggregate daily managed assets of all Nuveen Funds that constitute "eligible assets." Eligible assets do not include assets attributable to investments in other Nuveen Funds and assets in excess of $2 billion added to the Nuveen Fund complex in connection with the Adviser's assumption of the management of the former First American Funds effective January 1, 2011. As of July 31, 2013, the complex-level fee rate for the Fund was .1683%.
The Fund pays 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 Fund 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.
8. Subsequent Events
Borrowing Arrangements
During August 2013, the Fund entered into a $35 million (maximum commitment amount) committed secured 180-day continuous rolling borrowing facility ("Borrowings") with the Bank of Nova Scotia as a means of financial leverage.
In order to maintain these Borrowings, the Fund must meet certain collateral, asset coverage and other requirements. Borrowings outstanding are fully secured by securities held in the Fund's portfolio of investments. Interest will be charged on the Borrowings at a rate equal to the 1-month LIBOR (London Inter-bank Offered Rate) plus .70% per annum on the amount borrowed. In addition to the interest expense, the Fund will pay a commitment fee equal to .15% per annum on the undrawn balance.
Borrowings outstanding will be recognized as "Borrowings" on the Statement of Assets and Liabilities. Interest expense and commitment fees will be recognized as a component of "Interest expense on borrowings" on the Statement of Operations.
Sales of Shares
During August 2013, the Fund sold an additional 200,000 shares for net proceeds totaling 3,812,000. The Fund's share of offering costs ($8,000) was recorded as a reduction of proceeds from the sales of shares.
Nuveen Investments
27
Annual Investment Management
Agreement Approval Process
(Unaudited)
The Board of Trustees (the
"Board"
and each Trustee, a
"Board Member"
) of the Fund, including the Board Members who are not parties to the Fund's advisory or sub-advisory agreement or "interested persons" of any such parties (the
"Independent Board Members"
) is responsible for approving advisory arrangements and, at a meeting held on April 17-18, 2013 (the
"Meeting"
), was asked to approve the advisory arrangements for the Fund. At the Meeting, the Board Members, including the Independent Board Members, considered and approved the investment management agreement (the
"Investment Management Agreement"
) between the Fund and Nuveen Fund Advisors, LLC (the
"Adviser"
), and the investment sub-advisory agreement (the
"Sub-Advisory Agreement"
) between the Adviser and NWQ Investment Management Company, LLC (the
"Sub-Adviser"
), on behalf of the Fund. The Sub-Adviser and the Adviser are each hereafter a
"Fund Adviser."
The Investment Management Agreement and the Sub-Advisory Agreement are each hereafter an
"Advisory Agreement."
To assist the Board in its evaluation of an Advisory Agreement with a Fund Adviser at the Meeting, the Independent Board Members had received, in adequate time in advance of the Meeting or at prior meetings, materials which outlined, among other things:
• the nature, extent and quality of services expected to be provided by the Fund Adviser;
• the organization of the Fund Adviser, including the responsibilities of various departments and key personnel;
• the expertise and background of the Fund Adviser with respect to the Fund's investment strategy;
• certain performance-related information (as described below);
• the profitability of Nuveen Investments, Inc. (
"Nuveen"
);
• the proposed management fees of the Fund Adviser, including comparisons of such fees with the management fees of comparable funds;
• the expected expenses of the Fund, including comparisons of the Fund's expected expense ratio with the expense ratios of comparable funds; and
• the soft dollar practices of the Fund Adviser, if any.
At the Meeting, the Adviser made a presentation to and responded to questions from the Board of the Fund. During the Meeting, the Independent Board Members also met privately with their legal counsel to review the Board's duties under the Investment Company Act of 1940 (the
"1940 Act"
), the general principles of state law in reviewing and approving advisory contracts, the standards used by courts in determining whether investment company boards of directors have fulfilled their duties, factors to be considered in voting on advisory contracts and an adviser's fiduciary duty with respect to advisory agreements and compensation. It is with this background that the Independent Board Members considered the Advisory Agreements. As outlined in more detail below, the Independent Board Members considered all factors they believed relevant with respect to the Fund, including the following: (a) the nature, extent and quality of the services to be provided by the Fund Advisers; (b) investment performance, as described below; (c) the advisory fees and costs of the services to be provided to the Fund and the profitability of the Fund Advisers; (d) the extent of any anticipated economies of scale; (e) any benefits expected to be derived by the Fund Advisers from their relationships with the Fund; and (f) other factors. Each Board Member may have accorded different weight to the various factors in reaching his or her conclusions with respect to the Fund's Advisory Agreements.
Nuveen Investments
28
A. Nature, Extent and Quality of Services
The Independent Board Members considered the nature, extent and quality of the respective Fund Adviser's services, including advisory services and administrative services. As the Adviser and the Sub-Adviser already serve as adviser and sub-adviser, respectively, to other Nuveen funds overseen by the Board Members, the Board has a good understanding of each such Fund Adviser's organization, operations and personnel. As the Independent Board Members meet regularly throughout the year to oversee the Nuveen funds, including funds currently advised by the Fund Advisers, the Independent Board Members have relied upon their knowledge from their meetings and any other interactions throughout the year of the respective Fund Adviser and its services in evaluating the Advisory Agreements.
At the Meeting and at prior meetings, the Independent Board Members reviewed materials outlining, among other things, the respective Fund Adviser's organization and business; the types of services that such Fund Adviser or its affiliates provide to the Nuveen funds and are expected to provide to the Fund; and the experience of the respective Fund Adviser with applicable investment strategies. Further, the Independent Board Members have evaluated the background and experience of the applicable investment personnel.
In addition to advisory services, the Independent Board Members have considered the quality and extent of administrative and other non-investment advisory services to be provided. In this regard, the Adviser is expected to provide the Fund with such administrative and other services (exclusive of, and in addition to, any such services provided by others for the Fund) and officers and other personnel as are necessary for the operations of the Fund. In addition to investment management services, the Adviser and its affiliates will provide the Fund with a wide range of services, including, among other things, product management, investment services (such as oversight of investment policies and procedures, risk management, and pricing), fund administration, oversight of service providers, shareholder services and communications, administration of Board relations, regulatory and portfolio compliance and legal support, managing leverage, and promoting an orderly secondary market for common shares. The Independent Board Members also recognized that the Adviser would oversee the Sub-Adviser. In addition, the Independent Board Members have also noted the additional services that the Adviser or its affiliates provide to closed-end funds, including in particular Nuveen's continued commitment to supporting the secondary market for the common shares of its closed-end funds through a comprehensive secondary market communication program designed to raise investor and analyst awareness and understanding of closed-end funds. These efforts include, among other things, sponsoring and participating in conferences; communicating with closed-end fund analysts covering the Nuveen funds; providing marketing and product updates for the closed-end funds; and maintaining and enhancing a closed-end fund website.
In evaluating the services of the Sub-Adviser, the Independent Board Members noted that the Sub-Adviser was generally expected to supply portfolio investment management services to the Fund. In addition, the Board Members recognized the Sub-Adviser's experience and investment process.
Based on their review, the Independent Board Members found that, overall, the nature, extent and quality of services expected to be provided to the Fund under each Advisory Agreement were satisfactory.
B. Investment Performance
The Fund was new and therefore did not have its own performance history. However, the Independent Board Members are familiar with the performance records of other Nuveen funds advised by the Adviser and sub-advised by the Sub-Adviser. The Independent Board Members recognized that the Fund was expected to use a strategy similar to that of the Nuveen NWQ Flexible Income Fund (the
"Flexible Income Open-End Fund"
), an open-end fund in the Nuveen fund family that was launched in December 2009. In that regard, the Independent Board Members reviewed certain performance information relating to the Flexible Income Open-End Fund, including annualized returns for the year-to-date period
Nuveen Investments
29
Annual Investment Management Agreement
Approval Process (Unaudited) (continued)
as of April 4, 2013 and for the one-month, three-month, one-year, three-year and since inception periods as of March 31, 2013. They also reviewed calendar year returns for the Flexible Income Open-End Fund for 2010 through 2012.
C. Fees, Expenses and Profitability
1. Fees and Expenses
In evaluating the management fees and expenses that the Fund was expected to bear, the Independent Board Members considered, among other things, the Fund's proposed management and sub-advisory fee structure, the rationale for its proposed fee levels, and its expected expense ratio in absolute terms as well as compared with the fees and expense ratios of comparable funds.
The Independent Board Members reviewed, among other things, comparative fee and expense structure data for the Lipper Income & Preferred Stock Funds category (including certain Nuveen preferred closed-end funds). In addition, the Independent Board Members noted that the Fund may utilize leverage, including borrowings from a financial institution and the issuance of preferred shares of beneficial interest (
"Preferred Shares"
) or other senior securities. Further, the Independent Board Members recognized that assets attributable to the Fund's use of leverage would be included in the amount of assets upon which the advisory fee is calculated. In this regard, the Independent Board Members noted that the advisory fee is based on a percentage of average daily "Managed Assets."
"Managed Assets"
generally means the total assets of the Fund, including assets attributable to the principal amount of any borrowings and any Preferred Shares or other senior securities issued by the Fund that may be outstanding, minus the sum of its accrued liabilities (other than Fund liabilities incurred for the express purpose of creating leverage). The Board Members recognized that because a decision to employ leverage would have the effect, all other things being equal, of increasing Managed Assets, and, therefore, the Fund Advisers' respective fees, the Fund Advisers may have a conflict of interest in determining whether to use or increase leverage. Notwithstanding the foregoing, the Independent Board Members considered that the Adviser would seek to manage that potential conflict by only leveraging the Fund (or increasing such leverage) when it determines that such action is consistent with the Fund's investment objectives, and by periodically reviewing the Fund's performance and use of leverage with the Board.
In addition, the Independent Board Members considered the fund-level breakpoint schedules and the complex-wide breakpoint schedule (described in further detail below). Based on their review of the fee and expense information provided, the Independent Board Members determined that the Fund's management fees were reasonable in light of the nature, extent and quality of services to be provided to the Fund.
2. Comparisons with the Fees of Other Clients
Due to their experience with other Nuveen funds, the Board Members were familiar with the nature of services and range of fees offered by the Adviser or its affiliate to other clients. Such other clients include separately managed accounts (both retail and institutional accounts), collective trusts, foreign investment funds offered by Nuveen, and funds that are not offered by Nuveen but are sub-advised by one of Nuveen's investment management teams. In evaluating the comparisons of fees, the Independent Board Members have noted, at the Meeting or at prior meetings, that the fee rates charged to a fund (such as the Fund) and charged to other clients vary, among other things, because of the different services involved and the additional regulatory and compliance requirements associated with registered investment companies, such as the Fund. Accordingly, the Independent Board Members have considered the differences in the product types, including, but not limited to, the services to be provided, the structure and operations, product distribution and costs thereof, portfolio investment policies, investor profiles, account sizes and regulatory requirements. The Independent Board Members have noted, in particular, that the range of services as described above to be provided to a fund (such as the Fund) is much more extensive than that provided to separately managed accounts. Given the inherent differences in the various products, particularly the extensive
Nuveen Investments
30
services to be provided to the Fund, the Independent Board Members believe such facts justify the different levels of fees.
In considering the fees of the Sub-Adviser, the Independent Board Members are familiar with the pricing schedule or fees that the Sub-Adviser charges for similar investment management services for other Nuveen funds, funds of other sponsors (if any), and other clients (such as retail and/or institutional managed accounts).
3. Profitability of Fund Advisers
In conjunction with their review of fees at prior meetings, the Independent Board Members have considered the profitability of Nuveen for its advisory activities and its financial condition. At the Meeting or prior meetings, the Independent Board Members reviewed the revenues and expenses of Nuveen's advisory activities, the allocation methodology used in preparing the profitability data and an analysis of the key drivers behind the changes in revenues and expenses that impacted profitability. They also reviewed certain Nuveen business and financial information dated January 15, 2013, certain Nuveen financial information included in a report dated March 20, 2013, and Nuveen's 2012 consolidated financial statements. The Independent Board Members have also considered, at the Meeting or at prior meetings, Nuveen's revenues for advisory activities, expenses, and profit margin compared to that of various unaffiliated management firms with comparable assets under management (based on asset size and asset composition).
In reviewing profitability, the Independent Board Members have recognized the Adviser's continued investment in its business to enhance its services, including capital improvements to investment technology, updated compliance systems, and additional personnel in compliance, risk management, and product development. In addition, in evaluating profitability, the Independent Board Members have also recognized the subjective nature of determining profitability which may be affected by numerous factors, including the allocation of expenses. Further, the Independent Board Members have recognized the difficulties in making comparisons as the profitability of other advisers generally is not publicly available and the profitability information that is available for certain advisers or management firms may not be representative of the industry and may be affected by, among other things, the adviser's particular business mix, capital costs, types of funds managed and expense allocations. Notwithstanding the foregoing, the Independent Board Members have reviewed Nuveen's methodology and assumptions for allocating expenses across product lines to determine profitability. In reviewing profitability, the Independent Board Members have recognized Nuveen's investment in its fund business. Based on their review, the Independent Board Members concluded that the Adviser's level of profitability for its advisory activities was reasonable in light of the services to be provided.
With respect to the Sub-Adviser, which is affiliated with Nuveen, the Independent Board Members have previously reviewed its revenues, expenses and profitability margins (pre- and post-tax) for its advisory activities and the methodology used for allocating expenses among the internal sub-advisers. Based on their review, the Independent Board Members were satisfied that the Sub-Adviser's level of profitability was reasonable in light of the services to be provided to the Fund.
In evaluating the reasonableness of the compensation, the Independent Board Members also considered any other amounts expected to be paid to a Fund Adviser by the Fund as well as any indirect benefits (such as soft dollar arrangements, if any) the respective Fund Adviser and its affiliates are expected to receive that are directly attributable to the management of the Fund, if any. See Section E below for additional information on indirect benefits a Fund Adviser may receive as a result of its relationship with the Fund. Based on their review of the overall fee arrangements of the Fund, the Independent Board Members determined that the advisory fees and expected expenses of the Fund were reasonable.
Nuveen Investments
31
Annual Investment Management Agreement
Approval Process (Unaudited) (continued)
D. Economies of Scale and Whether Fee Levels Reflect These Economies of Scale
With respect to economies of scale, the Independent Board Members have recognized the potential benefits resulting from the costs of a fund being spread over a larger asset base, although economies of scale are difficult to measure and predict with precision, particularly on a fund-by-fund basis. The Independent Board Members therefore considered whether the Fund could be expected to benefit from any economies of scale. One method to help ensure that the shareholders share in these benefits is to include breakpoints in the advisory fee schedule. Generally, management fees for funds in the Nuveen complex are comprised of a fund-level component and a complex-level component. Accordingly, the Independent Board Members received and reviewed the schedule of proposed advisory and sub-advisory fees for the Fund, including fund-level breakpoints thereto. In this regard, however, given that the Fund is a closed-end fund, the Independent Board Members recognized that although closed-end funds (such as the Fund) may from time to time make additional share offerings, the growth of their assets will occur primarily through the appreciation of such funds' investment portfolios.
In addition to fund-level advisory fee breakpoints, the Board also considered the Fund's complex-wide fee arrangement. Pursuant to the complex-wide fee arrangement, the fees of the funds in the Nuveen complex, including the Fund, are generally reduced as the assets in the fund complex reach certain levels. In evaluating the complex-wide fee arrangement, the Independent Board Members have considered that the complex-wide fee arrangement seeks to provide the benefits of economies of scale to fund shareholders when total fund complex assets increase, even if assets of a particular fund are unchanged or have decreased. The approach reflects the notion that some of Nuveen's costs are attributable to services provided to all its funds in the complex and therefore all funds benefit if these costs are spread over a larger asset base.
Based on their review, the Independent Board Members concluded that the breakpoint schedules and complex-wide fee arrangement were acceptable and reflect economies of scale to be shared with the Fund's shareholders when assets under management increase.
E. Indirect Benefits
In evaluating fees, the Independent Board Members also considered information previously received regarding potential "fall out" or ancillary benefits that a Fund Adviser or its affiliates may receive as a result of its relationship with the Fund. In this regard, the Independent Board Members considered any revenues expected to be received by affiliates of the Adviser for serving as co-manager in an initial public offering of new closed-end funds.
In addition to the above, the Independent Board Members considered whether the Fund Advisers will receive any benefits from soft dollar arrangements whereby a portion of the commissions paid by the Fund for brokerage may be used to acquire research that may be useful to a Fund Adviser in managing the assets of the Fund and other clients. The Independent Board Members recognized that the Adviser has the authority to pay a higher commission in return for brokerage and research services if it determines in good faith that the commission paid is reasonable in relation to the value of the brokerage and research services provided and may benefit from such soft dollar arrangements. In addition, the Independent Board Members considered that the Sub-Adviser may benefit from its soft dollar arrangements pursuant to which it receives research from brokers that execute the Fund's portfolio transactions. Similarly, the Board recognized that the research received pursuant to soft dollar arrangements by a Fund Adviser may also benefit the Fund and shareholders to the extent the research enhances the ability of the Fund Adviser to manage the Fund. The Independent Board Members noted that the Fund Advisers' profitability may be somewhat lower if they did not receive the research services pursuant to the soft dollar arrangements and had to acquire such services directly.
Based on their review, the Independent Board Members concluded that any indirect benefits expected to be received by a Fund Adviser as a result of its relationship with the Fund were reasonable and within acceptable parameters.
Nuveen Investments
32
F. Approval
The Independent Board Members did not identify any single factor discussed previously as all-important or controlling. The Board Members, including a majority of the Independent Board Members, concluded that the terms of the Investment Management Agreement and Sub-Advisory Agreement were fair and reasonable, that the respective Fund Adviser's fees are reasonable in light of the services to be provided to the Fund and that the Investment Management Agreement and Sub-Advisory Agreement should be and were approved on behalf of the Fund.
Nuveen Investments
33
Board Members & Officers*
(Unaudited)
The management of the Funds, including general supervision of the duties performed for the Funds by the Adviser, is the responsibility of the Board of Trustees of the Funds. The number of trustees of the Funds is currently set at twelve. None of the trustees who are not "interested" persons of the Funds (referred to herein as "independent trustees") has ever been a director or employee of, or consultant to, Nuveen or its affiliates. The names and business addresses of the trustees and officers of the 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,
Year of Birth
& Address
|
|
Position(s) Held with
the Funds
|
|
Year First
Elected or
Appointed
and Term
(1)
|
|
Principal Occupation(s)
including other Directorships
During Past 5 Years
|
|
Number of Portfolios
in Fund Complex
Overseen by
Board Member
|
|
|
Independent Board Members:
|
|
|
|
|
|
|
n
WILLIAM J. SCHNEIDER
|
|
|
|
|
|
1944
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Chairman of the Board and Board Member
|
|
1996
Class III
|
|
Chairman of Miller-Valentine Partners Ltd., a real estate investment company; formerly, Senior Partner and Chief Operating Officer (retired 2004) of Miller-Valentine Group; an owner in several other Miller Valentine entities; member, Mid-America Health System; Board Member of Tech Town, Inc., a not-for-profit community development company; Board Member of WDPR Public Radio station; formerly, member, Business Advisory Council, Cleveland Federal Reserve Bank and University of Dayton Business School Advisory Council.
|
|
|
211
|
|
|
|
n
ROBERT P. BREMNER
|
|
|
|
|
|
1940
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
1996
Class III
|
|
Private Investor and Management Consultant; Treasurer and Director, Humanities Council of Washington, D.C.; Board Member, Independent Directors Council affiliated with the Investment Company Institute.
|
|
|
211
|
|
|
|
n
JACK B. EVANS
|
|
|
|
|
|
1948
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
1999
Class III
|
|
President, The Hall-Perrine Foundation, a private philanthropic corporation (since 1996); Chairman, United Fire Group, a publicly held company; formerly, member and President Pro Tem of the Board of Regents for the State of Iowa University System; Director, Source Media Group; Life Trustee of Coe College; 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.
|
|
|
211
|
|
|
Nuveen Investments
34
Name,
Year of Birth
& Address
|
|
Position(s) Held with
the Funds
|
|
Year First
Elected or
Appointed
and Term
(1)
|
|
Principal Occupation(s)
including other Directorships
During Past 5 Years
|
|
Number of Portfolios
in Fund Complex
Overseen by
Board Member
|
|
|
Independent Board Members (continued):
|
|
|
|
|
|
|
n
WILLIAM C. HUNTER
|
|
|
|
|
|
1948
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
2004
Class I
|
|
Dean Emeritus (since June 30, 2012), formerly, Dean, Tippie College of Business, University of Iowa (2006-2012); Director (since 2004) of Xerox Corporation; Director (since 2005), and President (since July 2012) Beta Gamma Sigma, Inc., The International Honor Society; Director of Wellmark, Inc. (since 2009); formerly, Dean and Distinguished Professor of Finance, 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); formerly, Director (1997-2007), Credit Research Center at Georgetown University.
|
|
|
211
|
|
|
|
n
DAVID J. KUNDERT
|
|
|
|
|
|
1942
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
2005
Class II
|
|
Formerly, Director, Northwestern Mutual Wealth Management Company; (2006-2013) retired (since 2004) as Chairman, JPMorgan Fleming Asset Management, 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; Regent Emeritus, Member of Investment Committee, Luther College; member of the Wisconsin Bar Association; member of Board of Directors, Friends of Boerner Botanical Gardens; member of Board of Directors and Chair of Investment Committee, Greater Milwaukee Foundation; member of the Board of Directors (Milwaukee), College Possible.
|
|
|
211
|
|
|
|
n
JOHN K. NELSON
|
|
|
|
|
|
1962
333
West Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
2013
Class II
|
|
Senior external advisor to the financial services practice of Deloitte Consulting LLP (since 2012); Member of Board of Directors of Core12 LLC (since 2008), a private firm which develops branding, marketing and communications strategies for clients; Chairman of the Board of Trustees of Marian University (since 2010 as trustee, 2011 as Chairman); Director of The Curran Center for Catholic American Studies (since 2009) and The President's Council, Fordham University (since 2010); formerly, Chief Executive Officer of ABN AMRO N.V. North America, and Global Head of its Financial Markets Division (2007-2008); prior senior positions held at ABN AMRO include Corporate Executive Vice President and Head of Global Markets—the Americas (2006-2007), CEO of Wholesale Banking—North America and Global Head of Foreign Exchange and Futures Markets (2001-2006), and Regional Commercial Treasurer and Senior Vice President Trading—North America (1996-2001); formerly, Trustee at St. Edmund Preparatory School in New York City.
|
|
|
211
|
|
|
Nuveen Investments
35
Board Members & Officers* (Unaudited) (continued)
Name,
Year of Birth
& Address
|
|
Position(s) Held with
the Funds
|
|
Year First
Elected or
Appointed
and Term
(1)
|
|
Principal Occupation(s)
including other Directorships
During Past 5 Years
|
|
Number of Portfolios
in Fund Complex
Overseen by
Board Member
|
|
|
Independent Board Members (continued):
|
|
|
|
|
|
|
n
JUDITH M. STOCKDALE
|
|
|
|
|
|
1947
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
1997
Class I
|
|
Formerly, Executive Director (1994-2012), Gaylord and Dorothy Donnelley Foundation (since 1994); prior thereto, Executive Director, Great Lakes Protection Fund (1990-1994).
|
|
|
211
|
|
|
|
n
CAROLE E. STONE
|
|
|
|
|
|
1947
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
2007
Class I
|
|
Director, Chicago Board Options Exchange (since 2006), C2 Options Exchange, Incorporated (since 2009) and CBOE Holdings, Inc. (since 2010); formerly, Commissioner, New York State Commission on Public Authority Reform (2005-2010); formerly, Chair, New York Racing Association Oversight Board (2005-2007).
|
|
|
211
|
|
|
|
n
VIRGINIA L. STRINGER
|
|
|
|
|
|
1944
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
2011
Class I
|
|
Board Member, Mutual Fund Directors Forum; former governance consultant and non-profit board member; former Owner and President, Strategic Management Resources, Inc. a management consulting firm; former Member, Governing Board, Investment Company Institute's Independent Directors Council; previously, held several executive positions in general management, marketing and human resources at IBM and The Pillsbury Company; Independent Director, First American Fund Complex (1987-2010) and Chair (1997-2010).
|
|
|
211
|
|
|
|
n
TERENCE J. TOTH
|
|
|
|
|
|
1959
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
2008
Class II
|
|
Managing Partner, Promus Capital (since 2008); Director, Fulcrum IT Service LLC (since 2010), Quality Control Corporation (since 2012) and LogicMark LLC (since 2012); formerly, Director, Legal & General Investment Management America, Inc. (2008-2013); formerly, CEO and President, Northern Trust Global Investments (2004-2007); Executive Vice President, Quantitative Management & Securities Lending (2000-2004); prior thereto, various positions with Northern Trust Company (since 1994); member: Chicago Fellowship Board (since 2005), Catalyst Schools of Chicago Board (since 2008) and Chairman, and Mather Foundation Board (since 2012), and a member of its investment committee; formerly, Member, Northern Trust Mutual Funds Board (2005-2007), Northern Trust Global Investments Board (2004-2007), Northern Trust Japan Board (2004-2007), Northern Trust Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004).
|
|
|
211
|
|
|
Nuveen Investments
36
Name,
Year of Birth
& Address
|
|
Position(s) Held with
the Funds
|
|
Year First
Elected or
Appointed
and Term
(1)
|
|
Principal Occupation(s)
including other Directorships
During Past 5 Years
|
|
Number of Portfolios
in Fund Complex
Overseen by
Board Member
|
|
|
Interested Board Members:
|
|
|
|
|
|
|
n
WILLIAM ADAMS IV
(2)
|
|
|
|
|
|
1955
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
2013
Class II
|
|
Senior Executive Vice President, Global Structured Products (since 2010); Co-President of Nuveen Fund Advisors, LLC (since 2011); President (since 2011), formerly, Managing Director (2010-2011) of Nuveen Commodities Asset Management, LLC; Board Member of the Chicago Symphony Orchestra and of Gilda's Club Chicago; formerly, Executive Vice President, U.S. Structured Products, of Nuveen Investments, Inc. (1999-2010).
|
|
|
135
|
|
|
|
n
THOMAS S. SCHREIER, JR.
(2)
|
|
|
|
|
|
1962
333
West Wacker Drive
Chicago, IL 60606
|
|
|
Board Member
|
|
2013
Class III
|
|
Vice Chairman, Wealth Management of Nuveen Investments, Inc. (since 2011); Co-President of Nuveen Fund Advisors, LLC; Chairman of Nuveen Asset Management, LLC (since 2011); Co-Chief Executive Officer of Nuveen Securities, LLC (since 2011); Member of Board of Governors and Chairman's Council of the Investment Company Institute; formerly, Chief Executive Officer (2000-2010) and Chief Investment Officer (2007-2010) of FAF Advisors, Inc.; formerly, President of First American Funds (2001-2010).
|
|
|
135
|
|
|
Name,
Year of Birth
and Address
|
|
Position(s) Held with
the Funds
|
|
Year First
Elected or
Appointed
(3)
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number of Portfolios
in Fund Complex
Overseen by
Officer
|
|
|
O
fficers of the Funds:
|
|
|
|
|
|
|
n
GIFFORD R. ZIMMERMAN
|
|
|
|
|
|
1956
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Chief
Administrative
Officer
|
|
|
1988
|
|
|
Managing Director (since 2002), and Assistant Secretary of Nuveen Securities, LLC; Managing Director (since 2004) and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Managing Director (since 2002), Assistant Secretary (since 1997) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel of Nuveen Asset Management, LLC (since 2011); Managing Director, Associate General Counsel and Assistant Secretary, of Symphony Asset Management LLC (since 2003); Vice President and Assistant Secretary of NWQ Investment Management Company, LLC (since 2002), Nuveen Investments Advisers Inc. (since 2002), Santa Barbara Asset Management, LLC (since 2006), and of Winslow Capital Management, LLC, (since 2010); Vice President and Assistant Secretary (since 2013), formerly, Chief Administrative Officer and Chief Compliance Officer (2006-2013) of Nuveen Commodities Asset Management, LLC; Chartered Financial Analyst.
|
|
|
211
|
|
|
Nuveen Investments
37
Board Members & Officers* (Unaudited) (continued)
Name,
Year of Birth
and Address
|
|
Position(s) Held with
the Funds
|
|
Year First
Elected or
Appointed
(3)
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number of Portfolios
in Fund Complex
Overseen by
Officer
|
|
|
O
fficers of the Funds (continued):
|
|
|
|
|
|
|
n
CEDRIC H. ANTOSIEWICZ
|
|
|
|
|
|
1962
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Vice President
|
|
|
2007
|
|
|
Managing Director of Nuveen Securities, LLC.
|
|
|
103
|
|
|
|
n
MARGO L. COOK
|
|
|
|
|
|
1964
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Vice President
|
|
|
2009
|
|
|
Executive Vice President (since 2008) of Nuveen Investments, Inc. and of Nuveen Fund Advisors, LLC (since 2011); Managing Director-Investment Services of Nuveen Commodities Asset Management, LLC (since August 2011), previously, Head of Institutional Asset Management (2007-2008) of Bear Stearns Asset Management; Head of Institutional Asset Management (1986-2007) of Bank of NY Mellon; Chartered Financial Analyst.
|
|
|
211
|
|
|
|
n
LORNA C. FERGUSON
|
|
|
|
|
|
1945
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Vice President
|
|
|
1998
|
|
|
Managing Director (since 2005) of Nuveen Fund Advisors, LLC and Nuveen Securities, LLC (since 2004).
|
|
|
211
|
|
|
|
n
STEPHEN D. FOY
|
|
|
|
|
|
1954
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Vice President
and Controller
|
|
|
1998
|
|
|
Senior Vice President (2010-2011), formerly, Vice President (2005-2010) and Funds Controller of Nuveen Securities, LLC; Senior Vice President (since 2013), formerly, Vice President of Nuveen Fund Advisors, LLC; Chief Financial Officer of Nuveen Commodities Asset Management, LLC (since 2010); Certified Public Accountant.
|
|
|
211
|
|
|
|
n
SCOTT S. GRACE
|
|
|
|
|
|
1970
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Vice President
and Treasurer
|
|
|
2009
|
|
|
Managing Director, Corporate Finance & Development, Treasurer (since 2009) of Nuveen Securities, LLC; Managing Director and Treasurer (since 2009) of Nuveen Fund Advisors, LLC, Nuveen Investments Advisers, Inc., Nuveen Investments Holdings Inc. and (since 2011) Nuveen Asset Management, LLC; Vice President and Treasurer of NWQ Investment Management Company, LLC, Tradewinds Global Investors, LLC, Symphony Asset Management LLC and Winslow Capital Management, LLC.; Vice President of Santa Barbara Asset Management, LLC; formerly, Treasurer (2006-2009), Senior Vice President (2008-2009), previously, Vice President (2006-2008) of Janus Capital Group, Inc.; formerly, Senior Associate in Morgan Stanley's Global Financial Services Group (2000-2003); Chartered Accountant Designation.
|
|
|
211
|
|
|
|
n
WALTER M. KELLY
|
|
|
|
|
|
1970
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Chief Compliance
Officer and
Vice President
|
|
|
2003
|
|
|
Senior Vice President (since 2008) and Assistant Secretary (since 2003) of Nuveen Fund Advisors, LLC; Senior Vice President (since 2008) of Nuveen Investment Holdings, Inc.; formerly, Senior Vice President (2008-2011) of Nuveen Securities, LLC.
|
|
|
211
|
|
|
Nuveen Investments
38
Name,
Year of Birth
and Address
|
|
Position(s) Held with
the Funds
|
|
Year First
Elected or
Appointed
(3)
|
|
Principal Occupation(s)
During Past 5 Years
|
|
Number of Portfolios
in Fund Complex
Overseen by
Officer
|
|
|
O
fficers of the Funds (continued):
|
|
|
|
|
|
|
n
TINA M. LAZAR
|
|
|
|
|
|
1961
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Vice President
|
|
|
2002
|
|
|
Senior Vice President (since 2010), formerly, Vice President (2005-2010) of Nuveen Fund Advisors, LLC.
|
|
|
211
|
|
|
|
n
KEVIN J. MCCARTHY
|
|
|
|
|
|
1966
333 W. Wacker Drive
Chicago, IL 60606
|
|
|
Vice President
and Secretary
|
|
|
2007
|
|
|
Managing Director and Assistant Secretary (since 2008), Nuveen Securities, LLC; Managing Director (since 2008), Assistant Secretary (since 2007) and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director (since 2008), and Assistant Secretary, Nuveen Investment Holdings, Inc.; Vice President (since 2007) and Assistant Secretary of Nuveen Investments Advisers Inc., NWQ Investment Management Company, LLC, NWQ Holdings, LLC, Symphony Asset Management LLC, Santa Barbara Asset Management, LLC, and of Winslow Capital Management, LLC, (since 2010); Vice President and Secretary (since 2010) of Nuveen Commodities Asset Management, LLC.
|
|
|
211
|
|
|
|
n
KATHLEEN L. PRUDHOMME
|
|
|
|
|
|
1953
901
Marquette Avenue
Minneapolis, MN 55402
|
|
|
Vice President and
Assistant Secretary
|
|
|
2011
|
|
|
Managing Director, Assistant Secretary and Co-General Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director and Assistant Secretary (since 2011) of Nuveen Securities, LLC; formerly, Deputy General Counsel, FAF Advisors, Inc. (2004-2010).
|
|
|
211
|
|
|
|
n
JOEL T. SLAGER
|
|
|
|
|
|
1978
333
West Wacker Drive
Chicago, IL 60606
|
|
|
Vice President and
Assistant Secretary
|
|
|
2013
|
|
|
Fund Tax Director for Nuveen Funds (since May, 2013); previously, Vice President of Morgan Stanley Investment Management, Inc., Assistant Treasurer of the Morgan Stanley Funds (from 2010 to 2013); Tax Director at PricewaterhouseCoopers LLP (from 2008 to 2010).
|
|
|
211
|
|
|
(1) Board Members serve three year terms, except for two board members who are elected by the holders of Preferred Shares. 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.
(2) "Interested person" as defined in the 1940 Act, by reason of his position with Nuveen Investments, Inc. and certain of its subsidiaries, which are affiliates of the Nuveen Funds.
(3) Officers serve one year terms through August 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.
* Represents the Fund's Board of Trustees as of September 1, 2013.
Nuveen Investments
39
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 Automatic Reinvestment Plan
Your Nuveen Closed-End Fund allows you to conveniently reinvest 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 compounding. Just like distributions in cash, there may be times when income or capital gains taxes may be payable on 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 quarter you'll receive a statement showing your total 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. Distributions received to purchase shares in the open market will normally be invested shortly after the distribution payment date. No interest will be paid on 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 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.
Flexible
You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change.
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 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.
Nuveen Investments
40
Glossary of Terms
Used in this Report
•
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.
•
BofA/Merrill Lynch Preferred Stock Fixed Rate Index:
An index that tracks the performance of fixed rate U.S. dollar denominated preferred securities issued in the U.S. domestic market. Qualifying securities must be rated investment grade (based on an average of Moody's, S&P, and Fitch) and must have an investment grade rated country of risk (based on an average of Moody's, S&P, and Fitch foreign currency long-term sovereign debt ratings). In addition, qualifying securities must be issued as public securities or through a 144A filing, must be issued in $25, $50, or $100 par/liquidation preference increments, must have a fixed coupon or distribution schedule, and must have a minimum amount outstanding of $100 million. Index returns assume reinvestment of distributions, but do not reflect any applicable sales charges or management fees.
•
Current Distribution Rate:
Current distribution rate is based on the fund's current annualized monthly distribution divided by the fund's current market price. The fund's monthly distributions to shareholders may be comprised of ordinary income, net realized capital gains and, if at the end of the calendar year the fund's cumulative net ordinary income and net realized gains are less than the amount of the fund's distributions, a tax return of capital.
•
Gross Domestic Product (GDP):
The total market value of all final goods and services produced in a country/region in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.
•
Leverage:
Using borrowed money to invest in securities or other assets, seeking to increase the return of an investment or portfolio.
•
Net Asset Value (NAV):
The net market value of all securities held in a portfolio.
•
Net Asset Value (NAV) Per Share:
The market value of one share of a mutual fund or closed-end fund. For a fund, the NAV is calculated daily by taking the Fund's total assets (securities, cash, and accrued earnings), subtracting the fund's liabilities, and dividing by the number of shares outstanding.
•
Regulatory Leverage:
Regulatory leverage consists of preferred shares issued by or borrowings of a fund. Both of these are part of a fund's capital structure. Regulatory leverage and is subject to asset coverage limits set in the Investment Company Act of 1940.
Nuveen Investments
41
Nuveen Investments
42
Additional Fund Information
Board of Trustees*
William Adams IV**
William J. Schneider
|
|
Robert P. Bremner
Thomas S. Schreier, Jr.**
|
|
Jack B. Evans
Judith M. Stockdale
|
|
William C. Hunter
Carole E. Stone
|
|
David J. Kundert
Virginia L. Stringer
|
|
John K. Nelson
Terence J. Toth
|
|
* Represents the Fund's Board of Trustees as of September 1, 2013.
** "Interested person" as defined in the 1940 Act, by reason of his position with Nuveen Investments, Inc. and certain of its subsidiaries, which are affiliates of the Nuveen Funds.
Fund Manager
Nuveen Fund Advisors, LLC
333
West Wacker Drive
Chicago, IL 60606
|
|
Custodian
State Street Bank
& Trust Company
Boston, MA 02111
|
|
Legal Counsel
Chapman and Cutler LLP
Chicago, IL 60603
|
|
Independent Registered
Public Accounting Firm
Ernst & Young LLP
Chicago, IL 60606
|
|
Transfer Agent and
Shareholder Services
State Street Bank
& Trust Company
Nuveen Funds
P.O. Box 43071
Providence, RI 02940-3071
(800
) 257-8787
|
|
Quarterly Form N-Q Portfolio of Investments Information
The Fund is required to file its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. You may obtain this information directly from the SEC. 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 toll-free at (800) SEC -0330 for room hours and operation.
Nuveen Funds' Proxy Voting Information
You may obtain (i) information regarding how each fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen's website at www.nuveen.com and (ii) a description of the policies and procedures that each fund 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. You may also obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov.
CEO Certification Disclosure
The Fund's Chief Executive Officer has submitted to the New York Stock Exchange (NYSE) the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. The 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.
Nuveen Investments
43
Nuveen Investments:
Serving Investors for Generations
Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions through continued adherence to proven, long-term investing principles. Today, we offer a range of high quality equity and fixed-income solutions designed to be integral components of a well-diversified core portfolio.
Focused on meeting investor needs.
Nuveen Investments provides high-quality investment services designed to help secure the long-term goals of institutional and individual investors as well as the consultants and financial advisors who serve them. Nuveen Investments markets a wide range of specialized investment solutions which provide investors access to capabilities of its high-quality boutique investment affiliates—Nuveen Asset Management, Symphony Asset Management, NWQ Investment Management Company, Santa Barbara Asset Management, Tradewinds Global Investors, Winslow Capital Management and Gresham Investment Management. In total, Nuveen Investments managed approximately $216 billion as of June 30, 2013.
Find out how we can help you.
To learn more about how the products and services of Nuveen Investments may be able to help you meet your financial goals, talk to your financial advisor, or call us at
(800) 257-8787
. Please read the information provided carefully before you invest. Investors should consider the investment objective and policies, risk considerations, charges and expenses of any investment carefully. Where applicable, be sure to obtain a prospectus, which contains this and other relevant information. To obtain 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/cef
Distributed by
Nuveen Securities, LLC
333 West Wacker Drive
Chicago, IL 60606
www.nuveen.com/cef
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/CEF/Shareholder/FundGovernance.aspx. (To view the code, click on
Code of Conduct.)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant’s Board of Directors or Trustees (“Board”) 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 Carole E. Stone, who is “independent” for purposes of Item 3 of Form N-CSR.
Ms. Stone served for five years as Director of the New York State Division of the Budget. As part of her role as Director, Ms. Stone was actively involved in overseeing the development of the State’s operating, local assistance and capital budgets, its financial plan and related documents; overseeing the development of the State’s bond-related disclosure documents and certifying that they fairly presented the State’s financial position; reviewing audits of various State and local agencies and programs; and coordinating the State’s system of internal audit and control. Prior to serving as Director, Ms. Stone worked as a budget analyst/examiner with increasing levels of responsibility over a 30 year period, including approximately five years as Deputy Budget Director. Ms. Stone has also served as Chair of the New York State Racing Association Oversight Board, as Chair of the Public Authorities Control Board, as a Commissioner on the New York State Commission on Public Authority Reform and as a member of the Boards of Directors of several New York State public authorities. These positions have involved overseeing operations and finances of certain entities and assessing the adequacy of project/entity financing and financial reporting. Currently, Ms. Stone is on the Board of Directors of CBOE Holdings, Inc., of the Chicago Board Options Exchange, and of C2 Options Exchange. Ms. Stone’s position on the boards of these entities and as a member of both CBOE Holdings’ Audit Committee and its Finance Committee has involved, among other things, the oversight of audits, audit plans and preparation of financial statements.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Nuveen Flexible Investment Income Fund
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 (4)
|
|
|
July 31, 2013
|
|
$
|
12,650
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage approved pursuant to pre-approval exception
|
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31, 2012 (5)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage approved pursuant to pre-approval exception
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 that are not reported under “Audit Fees”. These fees include offerings related to the Fund’s common shares and leverage.
(3) “Tax Fees” are the aggregate fees billed for professional services for tax advice, tax compliance, and tax planning. These fees include: all global withholding tax services; excise and state tax reviews; capital gain, tax equalization and taxable basis calculation performed by the principal accountant.
(4) “All Other Fees” are the aggregate fees billed for products and services other than “Audit Fees”, “Audit-Related Fees” and “Tax Fees”. These fees represent all “Agreed-Upon Procedures” engagements pertaining to the Fund’s use of leverage.
(5) Fund commenced operations on June 25, 2013.
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 Fund Advisors, LLC (formerly Nuveen Fund Advisors, Inc.) (the “Adviser”), and any
entity controlling, controlled by or under common control with the Adviser 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.
|
|
|
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
|
|
|
Fiscal Year Ended
|
|
Service Providers
|
|
Service Providers
|
|
Service Providers
|
|
|
July 31, 2013
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
Percentage approved pursuant to pre-approval exception
|
|
0
|
%
|
0
|
%
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
July 31, 2012 (1)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Percentage approved pursuant to pre-approval exception
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Fund commenced operations on June 25, 2013.
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 pre-approval
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.
|
|
|
|
|
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
|
|
|
|
|
Fiscal Year Ended
|
|
Billed to Fund
|
|
reporting of the Fund)
|
|
engagements)
|
|
Total
|
|
|
July 31, 2013
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
|
July 31, 2012 (1)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“Non-Audit Fees billed to Fund” for both fiscal year ends represent “Tax Fees” and “All Other Fees” billed to Fund in their respective amounts from the previous table.
Less than 50 percent of the hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.
(1) Fund commenced operations on June 25, 2013.
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 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, David J. Kundert, William J. Schneider, Carole E. Stone and Terence J. Toth.
ITEM 6. SCHEDULE OF INVESTMENTS.
(a) See Portfolio of Investments in Item 1.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Nuveen Fund Advisors, LLC, formerly known as Nuveen Fund Advisors, Inc., is the registrant’s investment adviser (also referred to as the “Adviser”). The Adviser is responsible for the on-going monitoring of the Fund’s investment portfolio, managing the Fund’s business affairs and providing certain clerical, bookkeeping and administrative services. The Adviser has engaged NWQ Investment Management Company, LLC (“NWQ” or “Sub-Adviser”) as Sub-Adviser to provide discretionary investment advisory services. As part of these services, the Adviser has delegated to the Sub-Adviser the full responsibility for proxy voting and related duties in accordance with the Sub-Adviser’s policies and procedures. The Adviser periodically monitors the Sub-Adviser’s voting to ensure that it is carrying out its duties. The Sub-Adviser’s proxy voting policies and procedures are attached to this filing as an exhibit and incorporated herein by reference.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Nuveen Fund Advisors, LLC, formerly known as Nuveen Fund Advisors, Inc., is the registrant’s investment adviser (also referred to as the “Adviser”). The Adviser is responsible for the selection and on-going monitoring of the Fund’s investment portfolio, managing the Fund’s business affairs and providing certain clerical, bookkeeping and administrative services. The Adviser has engaged NWQ Investment Management Company, LLC (“NWQ” or “Sub-Adviser”) as Sub-Adviser to provide discretionary investment advisory services. The following section provides information on the portfolio managers at the Sub-Adviser:
Item 8(a)(1).
PORTFOLIO MANAGER BIOGRAPHIES
Michael J. Carne, CFA, Managing Director, Portfolio Manager
Prior to joining NWQ in 2002, Mike managed institutional, private client fixed income and balanced portfolios for over 15 years. During this time, he held assignments as Director of Global Fixed Income at Aetna Capital Management, as Chief Investment Officer of a Phoenix Home Life affiliate, both of which were in Hartford, Connecticut, and was a Principal at Standard Asset Management in Wellesley Massachusetts. Mike graduated from the University of Massachusetts with a B.B.A. degree in Finance and received his M.B.A. from Harvard University. He earned the designation of Chartered Financial Analyst in 1989. He is a member of the Los Angeles Society of Financial Analysts.
Susi Budiman, CFA, Senior Vice President, Portfolio Manager
Prior to joining NWQ in 2006, Susi was Portfolio Manager for China Life Insurance Company, Ltd. in Taiwan. She managed US dollar and Euro denominated fixed income portfolios for insurance funds for six years with responsibility for assets of approximately $1.8 billion. Prior to the fixed income portfolio management position, Susi was a currency exchange sales associate at Fleet National Bank in Singapore covering Asian, Euro, UK and other major currencies. Susi graduated from the University of British Columbia, Canada with a B.Com. in Finance and received her M.B.A. from the University of Southern California. She earned the designations of Financial Risk Manager in 2003, and Fellow, Life Management Institute in 2004. She earned her Chartered Financial Analyst designation from the CFA Institute in 2006 and is a member of the Los Angeles Society of Financial Analysts.
Item 8 (a)(2).
OTHER ACCOUNTS MANAGED — AS OF JULY 31, 2013
|
|
|
Michael Carne
|
|
Susi Budiman
|
|
|
(a) RICs
|
|
|
|
|
|
|
Number of accts
|
|
5
|
|
1
|
|
|
Assets ($000s)
|
|
$
|
883,902,021.31
|
|
$
|
66,422,800.69
|
|
|
|
|
|
|
|
|
|
(b) Other pooled accts
|
|
|
|
|
|
|
Non-performance fee accts
|
|
|
|
|
|
|
Number of accts
|
|
0
|
|
0
|
|
|
Assets ($000s)
|
|
0
|
|
0
|
|
|
(c) Other
|
|
|
|
|
|
|
Non-performance fee accts
|
|
|
|
|
|
|
Number of accts
|
|
4,922
|
|
19
|
|
|
Assets ($000s)
|
|
$
|
1,006,945,998.00
|
|
$
|
441,428,226.69
|
|
|
Performance fee accts
|
|
|
|
|
|
|
Number of accts
|
|
0
|
|
0
|
|
|
Assets ($000s)
|
|
0
|
|
0
|
|
POTENTIAL MATERIAL CONFLICTS OF INTEREST
Actual or perceived conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one account. More specifically, portfolio managers who manage multiple accounts are presented with the following potential conflicts, which are not intended to be an exhaustive list:
·
The management of multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. NWQ seeks to manage such competing interests for the time and attention of the portfolio manager by utilizing investment models for the management of most investment strategies.
·
If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one account, an account may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible accounts. To deal with these situations, NWQ has adopted procedures for allocating limited opportunities across multiple accounts.
·
With respect to many of its clients’ accounts, NWQ determines which broker to use to execute transaction orders, consistent with its duty to seek to obtain best execution of the transaction. However, with respect to certain other accounts, NWQ may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, NWQ may place separate transactions for certain accounts which may temporarily affect the market price of the security or the execution of the transactions, or both, to the detriment of other accounts. NWQ seeks to minimize market impact by using its discretion in releasing orders in a manner which seeks to cause the least possible impact while keeping within the approximate price range of the discretionary block trade.
·
Finally, the appearance of a conflict of interest may arise where NWQ has an incentive, such as a performance-based management fee, which relates to the management of some accounts, with respect to which the portfolio manager has day-to-day management responsibilities. NWQ periodically performs a comparative analysis of the performance between accounts with performance fees and those without performance fees.
NWQ has adopted certain compliance procedures which are designed to address these types of conflicts common among investment managers. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
Item 8(a)(3).
FUND MANAGER COMPENSATION
NWQ offers a highly competitive compensation structure with the purpose of attracting and retaining the most talented investment professionals. These professionals are rewarded through a combination of cash and long-term incentive compensation as determined by the firm’s executive committee. Total cash compensation (TCC) consists of both a base salary and an annual bonus that can be a multiple of the base salary. The firm annually benchmarks TCC to prevailing industry norms with the objective of achieving competitive levels for all contributing professionals.
Available bonus pool compensation is primarily a function of the firm’s overall annual profitability, and in the interest of employee and client interest alliance, NWQ’s bonus pool will be augmented should the firm outperform its benchmarks on a 1, 2 and 3 year basis. Individual bonuses are based primarily on the following:
·
Overall performance of client portfolios
·
Objective review of stock recommendations and the quality of primary research
·
Subjective review of the professional’s contributions to portfolio strategy, teamwork, collaboration and work ethic
To further strengthen our incentive compensation package and to create an even stronger alignment to the long-term success of the firm, NWQ provides a number of other incentive opportunities through long-term employment contracts with senior executives, retention agreements, and an equity incentive plan with non-solicitation and non-compete provisions for participating employees. The equity incentive plan provides meaningful equity to employees which is similar to restricted stock and options and which vests over the next 5 to 7 years. Equity incentive plans allowing key employees of NWQ to participate in the firm’s growth over time have been in place since Nuveen’s acquisition of NWQ.
At NWQ, we believe that we are an employer of choice. Our analysts have a meaningful impact on the portfolio and, therefore, are compensated in a manner similar to portfolio managers at many other firms. Benefits besides compensation include a college tuition program for the children of all full-time employees whereby they are eligible for reimbursement of tuition and other mandatory fees, among others.
Item 8(a)(4).
OWNERSHIP OF JPW SECURITIES AS OF JULY 31, 2013
|
Name of Portfolio
Manager
|
|
None
|
|
$1 -
$10,000
|
|
$10,001
-
$50,000
|
|
$50,001-
$100,000
|
|
$100,001-
$500,000
|
|
$500,001-
$1,000,000
|
|
Over
$1,000,000
|
|
Michael Carne
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
Susi Budiman
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
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 registrant’s 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.
(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/CEF/Shareholder/FundGovernance.aspx and there were no amendments during the period covered by this report. (To view the code, click on 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 Flexible Investment Income Fund
|
By (Signature and Title)
|
/s/ Kevin J. McCarthy
|
|
|
|
Kevin J. McCarthy
|
|
|
|
Vice President and Secretary
|
|
Date: October 4, 2013
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: October 4, 2013
|
By (Signature and Title)
|
/s/ Stephen D. Foy
|
|
|
|
Stephen D. Foy
|
|
|
|
Vice President and Controller
|
|
|
|
(principal financial officer)
|
|
Date: October 4, 2013
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