Financial Highlights
The Funds' fiscal year end is March 31st. The following
data is for a common share outstanding for each fiscal year end unless otherwise noted:
| |
|
|
|
|
Less Distributions to |
|
|
|
| |
|
Investment Operations |
Common Shareholders |
|
Common Share |
| |
Beginning |
Net |
Net |
|
|
From |
|
|
|
| |
Common |
Investment |
Realized/ |
|
|
Accumulated |
|
|
Ending |
| |
Share |
Income (NII) |
Unrealized |
|
From |
Net Realized |
|
Ending |
Share |
| |
NAV |
(Loss) |
Gain (Loss) |
Total |
NII |
Gains |
Total |
NAV |
Price |
| NIM |
|
|
|
|
|
|
|
|
|
| 2023(d) |
$10.26 |
$0.13 |
$(0.65) |
$(0.52) |
$(0.13) |
$— |
$(0.13) |
$9.61 |
$8.86 |
| 2022 |
10.77 |
0.27 |
(0.51) |
(0.24) |
(0.27) |
— |
(0.27) |
10.26 |
9.58 |
| 2021 |
10.44 |
0.29 |
0.41 |
0.70 |
(0.32) |
(0.05) |
(0.37) |
10.77 |
10.68 |
| 2020 |
10.56 |
0.31 |
(0.11) |
0.20 |
(0.32) |
— |
(0.32) |
10.44 |
9.77 |
| 2019 |
10.34 |
0.33 |
0.21 |
0.54 |
(0.32) |
— |
(0.32) |
10.56 |
9.96 |
| 2018 |
10.28 |
0.33 |
0.04 |
0.37 |
(0.31) |
— |
(0.31) |
10.34 |
9.69 |
| NXP |
|
|
|
|
|
|
|
|
|
| 2023(d) |
15.13 |
0.22 |
(1.25) |
(1.03) |
(0.27) |
— |
(0.27) |
13.83 |
13.04 |
| 2022 |
16.34 |
0.43 |
(1.09) |
(0.66) |
(0.55) |
— |
(0.55) |
15.13 |
14.43 |
| 2021 |
15.77 |
0.59 |
0.53 |
1.12 |
(0.55) |
— |
(0.55) |
16.34 |
17.39 |
| 2020 |
15.51 |
0.58 |
0.23 |
0.81 |
(0.55) |
— |
(0.55) |
15.77 |
14.97 |
| 2019 |
15.12 |
0.57 |
0.37 |
0.94 |
(0.55) |
— |
(0.55) |
15.51 |
14.64 |
| 2018 |
15.00 |
0.56 |
0.11 |
0.67 |
(0.55) |
— |
(0.55) |
15.12 |
14.02 |
| (a) | | Total Return Based on Common Share NAV is the combination of changes in common share NAV,
reinvested dividend income at NAV and reinvested capital gains distributions at NAV, 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 NAV. 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 NAV), and therefore
may be different from the price used in the calculation. Total returns are not annualized. |
Total Return Based on Common Share Price 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.
58
| |
|
|
Common Share Supplemental Data/ |
|
|
| |
|
|
Ratios Applicable to Common Shares |
|
|
| Common Share |
|
Ratios to Average |
|
|
| Total Returns |
|
Net Assets |
|
|
| |
Based |
Ending |
|
|
Net |
|
| Based |
on |
Net |
|
|
Investment |
Portfolio |
| on |
|
Share |
Assets |
|
|
Income |
Turnover |
| NAV(a) |
Price(a) |
(000) |
Expenses(b) |
|
(Loss) |
Rate(c) |
| (5.10)% |
(6.21)% |
$119,580 |
0.57%(e) |
|
2.68%(e) |
14% |
| (2.31) |
(7.98) |
127,668 |
0.56 |
|
2.54 |
|
13 |
| 6.73 |
13.22 |
134,048 |
0.56 |
|
2.69 |
|
12 |
| 1.83 |
1.14 |
129,879 |
0.56 |
|
2.88 |
|
13 |
| 5.28 |
6.16 |
131,462 |
0.57 |
|
3.18 |
|
16 |
| 3.65 |
0.67 |
128,633 |
0.58 |
|
3.20 |
|
18 |
| (6.86) |
(7.84) |
647,282 |
0.26 (e) |
|
2.94 (e) |
|
14 |
| (4.24) |
(14.16) |
708,249 |
0.29 |
|
3.26 |
|
13 |
| 7.16 |
20.16 |
271,091 |
0.26 |
|
3.64 |
|
10 |
| 5.19 |
5.89 |
261,438 |
0.26 |
|
3.60 |
|
10 |
| 6.34 |
8.51 |
256,937 |
0.26 |
|
3.77 |
|
17 |
| 4.52 |
3.83 |
250,551 |
0.27 |
|
3.66 |
|
19 |
| (b) | | The expense ratios reflect, among other things, the interest expense and other costs related
to borrowings (as described in Note 8 – Borrowing Arrangements) and/or the interest expense deemed to have been paid by the Fund
in the floating rate certificates issued by the special purpose trusts for the self-deposited inverse floaters held by the Fund (as described
in Note 4 – Portfolio Securities and Investments in Derivatives), where applicable, as follows: |
| |
Ratios of Interest Expense to |
| |
Average Net Assets Applicable |
| |
to Common Shares |
| |
NIM |
NXP |
| 2023(d) |
—(e),(f)% |
—(e),(f)% |
| 2022 |
— |
— |
| 2021 |
— |
— |
| 2020 |
— |
— |
| 2019 |
— |
— |
| 2018 |
— |
— |
| (c) | | Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales
(as disclosed in Note 4 - Portfolio Securities and Investments in Derivatives) divided by the average long-term market value during the
period. |
| (d) | | Unaudited. For the six months ended September 30, 2022. |
See accompanying notes to financial statements.
59
Notes to Financial Statements
(Unaudited)
1. General Information
Fund Information
The funds covered in this report and their corresponding New York
Stock Exchange (“NYSE”) symbols are as follows (each a “Fund” and collectively, the “Funds”):
• Nuveen Select Maturities Municipal Fund (NIM)
• Nuveen Select Tax-Free Income Portfolio (NXP)
The Funds are registered under the Investment Company Act of 1940
(the “1940 Act”), as amended, as diversified closed-end management investment companies. NIM and NXP were organized as Massachusetts
business trusts on July 23, 1992 and January 29, 1992, respectively.
Current Fiscal Period
The end of the reporting period for the Funds is September 30,
2022, and the period covered by these Notes to Financial Statements is the six months ended September 30, 2022 (the “current fiscal
period”).
Investment Adviser and Sub-Adviser
The Fund’s investment adviser is Nuveen Fund Advisors, LLC
(the “Adviser”), a subsidiary of Nuveen, LLC (“Nuveen”). Nuveen is the investment management arm of Teachers Insurance
and Annuity Association of America (TIAA). The Adviser has overall responsibility for management of the Funds, oversees the management
of the Funds’ portfolios, manages the Funds’ business affairs and provides certain clerical, bookkeeping and other administrative
services, and, if necessary, asset allocation decisions. The Adviser has entered into sub-advisory agreements with Nuveen Asset Management,
LLC (the “Sub-Adviser”), a subsidiary of the Adviser, under which the Sub-Adviser manages the investment portfolio of the
Funds.
Fund Reorganization
Effective prior to the opening of business on December 6, 2021,
Nuveen Select Tax-Free Income Portfolio 2 (NXQ) and Nuveen Select Tax-Free Income Portfolio 3 (NXR) (the “Target Funds”) were
reorganized into NXP (the “Acquiring Fund”) (the “Reorganization”).
For accounting and performance reporting purposes, the Acquiring
Fund is the survivor.
Upon the closing of the Reorganization, the Target Funds transferred
their assets to the Acquiring Fund in exchange for common shares of the Acquiring Fund and the assumption by the Acquiring Fund of the
liabilities of the Target Funds. The Target Funds were then liquidated, dissolved and terminated in accordance with their Declaration
of Trust. Shareholders of the Target Funds became shareholders of the Acquiring Fund. Holders of common shares of the Target Funds received
newly issued common shares of the Acquiring Fund, the aggregate net asset value (“NAV”) of which was equal to the aggregate
NAV of the common shares of the Target Funds held immediately prior to the Reorganization (including for this purpose fractional Acquiring
Fund shares to which shareholders were entitled).
Developments Regarding the Funds’ Control Share By-Law
On October 5, 2020, the Funds and certain other closed-end funds
in the Nuveen fund complex amended their by-laws. Among other things, the amended by-laws included provisions pursuant to which, in summary,
a shareholder who obtains beneficial ownership of common shares in a Control Share Acquisition (as defined in the by-laws) shall have
the same voting rights as other common shareholders only to the extent authorized by the other disinterested shareholders (the “Control
Share By-Law”). On January 14, 2021, a shareholder of certain Nuveen closed-end funds filed a civil complaint in the U.S. District
Court for the Southern District of New York (the “District Court”) against certain Nuveen funds and their trustees, seeking
a declaration that such funds’ Control Share By-Laws violate the 1940 Act, rescission of such fund’s Control Share By-Laws
and a permanent injunction against such funds applying the Control Share By-Laws. On February 18, 2022, the District Court granted judgment
in favor of the plaintiff’s claim for rescission of such funds’ Control Share By-Laws and the plaintiff’s declaratory
judgment claim, and declared that such funds’ Control Share By-Laws violate Section 18(i) of the 1940 Act. Following review of the
judgment of the District Court, on February 22, 2022, the Board of Trustees (the “Board”) amended the Funds’ by-laws
to provide that the Funds’ Control Share By-Law shall be of no force and effect for so long as the judgment of the District Court
is effective and that if the judgment of the District Court is reversed, overturned, vacated, stayed, or otherwise nullified, the Funds’
Control Share By-Law will be automatically reinstated and apply to any beneficial owner of common shares acquired in a Control Share Acquisition,
regardless of whether such Control Share Acquisition occurs before or after such reinstatement, for the duration of the stay or upon issuance
of the mandate reversing, overturning, vacating or otherwise nullifying the judgment of the District Court. On February 25, 2022, the
Board and the Funds appealed the District Court’s decision to the U.S. Court of Appeals for the Second Circuit.
Other Matters
The outbreak of the novel coronavirus (“COVID-19”)
and subsequent global pandemic began significantly impacting the U.S. and global financial markets and economies during the calendar quarter
ended March 31, 2020. The worldwide spread of COVID-19 has created significant uncertainty in the global economy. The duration and extent
of COVID-19 over the long-term cannot be reasonably estimated at this time. The ultimate impact of COVID-19 and the extent to which COVID-19
impacts the Funds’ normal course of business, results of operations, investments, and cash flows will depend on future developments,
which are highly uncertain and difficult to predict. Management continues to monitor and evaluate this situation.
60
2. Significant Accounting Policies
The accompanying financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require the use of
estimates made by management and the evaluation of subsequent events. Actual results may differ from those estimates. Each Fund is an
investment company and follows accounting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification 946, Financial Services — Investment Companies. The NAV for financial reporting purposes may differ from the NAV for
processing security and shareholder transactions. The NAV for financial reporting purposes includes security and shareholder transactions
through the date of the report. Total return is computed based on the NAV used for processing security and shareholder transactions. The
following is a summary of the significant accounting policies consistently followed by the Funds.
Compensation
The Funds pay no compensation directly to those of its trustees
or to its officers, all of whom receive remuneration for their services to each Fund from the Adviser or its affiliates. The Board 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.
Custodian Fee Credit
As an alternative to overnight investments, each Fund has an arrangement
with its custodian bank, State Street Bank and Trust Company, (the “Custodian”) whereby certain custodian fees and expenses
are reduced by net credits earned on each Fund’s cash on deposit with the bank. Credits for cash balances may be offset by charges
for any days on which a Fund overdraws its account at the Custodian. The amount of custodian fee credit earned by a Fund is recognized
on the Statement of Operations as a component of “Custodian expenses, net.” During the current reporting period, the custodian
fee credit earned by each Fund was as follows:
| |
|
Gross |
| |
Custodian Fee |
| Fund |
|
Credits |
| NIM |
$ |
221 |
| NXP |
|
5,662 |
Distributions to Common Shareholders
Distributions to common shareholders are recorded on the
ex-dividend date. The amount, character and timing of distributions are determined in accordance with federal income tax regulations,
which may differ from U.S. GAAP.
Indemnifications
Under the Funds' organizational documents, their officers
and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in
the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds'
maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that
have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expects the risk of
loss to be remote.
Investments and Investment Income
Securities transactions are accounted for as of the trade date
for financial reporting purposes. Realized gains and losses on securities transactions are based upon the specific identification method.
Investment income is comprised of interest income, which is recorded on an accrual basis and includes accretion of discounts and amortization
of premiums for financial reporting purposes. Investment income also reflects payment-in-kind (“PIK”) interest and paydown
gains and losses, if any. PIK interest represents income received in the form of securities in lieu of cash. Investment income also reflects
dividend income, which is recorded on the ex-dividend date.
Netting Agreements
In the ordinary course of business, the Funds may enter into transactions
subject to enforceable International Swaps and Derivatives Association, Inc. (ISDA) master agreements or other similar arrangements (“netting
agreements”). Generally, the right to offset in netting agreements allows each Fund to offset certain securities and derivatives
with a specific counterparty, when applicable, as well as any collateral received or delivered to that counterparty based on the terms
of the agreements. Generally, each Fund manages its cash collateral and securities collateral on a counterparty basis.
The Funds’ investments subject to netting agreements as
of the end of the reporting period, if any, are further described in Note 4 - Portfolio Securities and Investments in Derivatives.
61
Notes
to Financial Statements (Unaudited) (continued)
New Accounting Pronouncements and Rule Issuances
Reference Rate Reform
In March 2020, FASB issued Accounting Standards Update ("ASU")
2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The main objective of the
new guidance is to provide relief to companies that will be impacted by the expected change in benchmark interest rates, when participating
banks will no longer be required to submit London Interbank Offered Rate (LIBOR) quotes by the UK Financial Conduct Authority (FCA). The
new guidance allows companies to, provided the only change to existing contracts are a change to an approved benchmark interest rate,
account for modifications as a continuance of the existing contract without additional analysis. For new and existing contracts, the Funds
may elect to apply the amendments as of March 12, 2020 through December 31, 2022. Management has not yet elected to apply the amendments,
is continuously evaluating the potential effect a discontinuation of LIBOR could have on the Funds’ investments and has currently
determined that it is unlikely the ASU’s adoption will have a significant impact on the Funds’ financial statements and various
filings.
New Rules to Modernize Fund Valuation Framework Take Effect
A new rule adopted by the Securities and Exchange Commission (the
"SEC") governing fund valuation practices, Rule 2a-5 under the 1940 Act, has established requirements for determining fair value
in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations,
subject to board oversight and certain other conditions. Rule 2a-5 also defines when market quotations are "readily available"
for purposes of Section 29(a)(41) of the 1940 Act, which requires a fund to fair value a security when market quotations are not readily
available. Separately, new SEC Rule 31a-4 under the 1940 Act sets forth the recordkeeping requirements associated with fair value determinations.
The Funds adopted a valuation policy conforming to the new rules, effective September 1, 2022, and there was no material impact to the
Funds.
FASB issues ASU 2022-03-Fair Value Measurement (Topic 820),
Fair Value Measurement of Equity Securities to Contractual Sale Restrictions ("ASU 2022-03")
In June 2022, the FASB issued ASU 2022-03 to clarify the guidance
in Topic 820, Fair Value Measurement ("Topic 820"). The amendments in ASU 2022-03 affect all entities that have investments
in equity securities measured at fair value that are subject to a contractual sale restriction. ASU 2022-03 (1) clarifies the guidance
in Topic 820, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of equity
security, (2) amends a related illustrative example, and (3) introduces new disclosure requirements for equity securities subject to contractual
sale restrictions that are measured at fair value in accordance with Topic 820. For public business entities, the amendments in ASU 2022-03
are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities,
the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early
adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. Management
is currently assessing the impact of these provisions on the Funds' financial statements.
3. Investment Valuation and Fair Value Measurements
The Funds’ investments in securities are recorded at their
estimated fair value utilizing valuation methods approved by the Adviser, subject to oversight of the Board. Fair value is defined
as the price that would be received 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. U.S. GAAP establishes the three-tier hierarchy which 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 management’s
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, credit spreads, etc.).
Level 3 – Prices are determined using significant unobservable
inputs (including management’s assumptions in determining the fair value of investments).
A description of the valuation techniques applied to the Funds’
major classifications of assets and liabilities measured at fair value follows:
Equity securities and exchange-traded funds listed or traded on
a national market or exchange are valued based on their last reported sales price or official closing price of such market
or exchange on the valuation date. Foreign equity securities and registered investment companies that trade on a foreign exchange are
valued at the last reported sales price or official closing price on the principal exchange where traded, and converted to U.S. dollars
at the prevailing rates of exchange on the valuation date. For events affecting the value of foreign securities between
the time when the exchange on which they are traded closes and the time when the Funds' net assets are calculated, such securities will
be valued at fair value in accordance with procedures adoped by the Adviser, subject to the oversight of the Board. To the extent
these securities are actively traded and no valuation adjustments are applied, they are generally classified as Level 1. When valuation
adjustments are applied to the most recent last sales price or official closing price, these securities are generally classified
as Level 2.
Prices of fixed-income securities are generally provided by pricing
services approved by the Adviser, which is subject to reiew by the Adviser and oversight of the Board. Pricing services establish
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,
62
evaluations 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, pricing services may consider information about a security, its issuer
or market activity provided by the Adviser. These securities are generally classified as Level 2.
For any portfolio security or derivative for which market quotations
are not readily available or for which the Adviser deems the valuations derived using the valuation procedures described above not to
reflect fair value, the Adviser will determine a fair value in good faith using alternative procedures approved by the Adviser, subject
to the oversight of the Board. As a general principle, the fair value of a security is 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. To the extent the inputs
are observable and timely, the values would be classified as Level 2; otherwise they would be classified as Level 3.
The following table summarizes the market value of the Funds’
investments as of the end of the reporting period, based on the inputs used to value them:
| NIM |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| Long-Term Investments*: |
|
|
|
|
|
|
|
|
| Municipal Bonds |
$ |
– |
$ |
112,183,117 |
$– |
$112,183,117 |
| Common Stocks |
|
– |
|
4,954,663** |
– |
|
4,954,663 |
| Asset-Backed and Mortgage-Backed Securities |
|
– |
|
255,510 |
– |
|
255,510 |
| Total |
$ |
– |
$ |
117,393,290 |
$–
|
$117,393,290 |
| |
| NXP |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| Long-Term
Investments*: |
|
|
|
|
|
|
|
|
| Municipal
Bonds |
$
|
–
|
$
|
634,263,168
|
$–
|
$634,263,168 |
| Common
Stocks |
|
–
|
|
7,276,244**
|
–
|
|
7,276,244 |
| Total |
$
|
–
|
$
|
641,539,412
|
$–
|
$641,539,412 |
* Refer to the Fund's Portfolio of Investments for state and/or
industry classifications.
** Refer to the Fund’s Portfolio of Investments for securities
classified as Level 2.
4. Portfolio Securities and Investments in Derivatives
Portfolio Securities
Inverse Floating Rate Securities
Each Fund is authorized to invest in inverse floating rate securities.
An inverse floating rate security is created by depositing a municipal bond (referred to as an “Underlying Bond”), typically
with a fixed interest rate, into a special purpose tender option bond (“TOB”) trust (referred to as the “TOB Trust”)
created by or at the direction of one or more Funds. In turn, the TOB Trust issues (a) floating rate certificates (referred to as “Floaters”),
in face amounts equal to some fraction of the Underlying Bond’s par amount or market value, and (b) an inverse floating rate certificate
(referred to as an “Inverse Floater”) that represents all remaining or residual interest in the TOB Trust. Floaters typically
pay short-term tax-exempt interest rates to third parties who are also provided a right to tender their certificate and receive its par
value, which may be paid from the proceeds of a remarketing of the Floaters, by a loan to the TOB Trust from a third party liquidity provider
(“Liquidity Provider”), or by the sale of assets from the TOB Trust. The Inverse Floater is issued to a long term investor,
such as one or more of the Funds. The income received by the Inverse Floater holder varies inversely with the short-term rate paid to
holders of the Floaters, and in most circumstances the Inverse Floater holder bears substantially all of the Underlying Bond’s downside
investment risk and also benefits disproportionately from any potential appreciation of the Underlying Bond’s value. The value of
an Inverse Floater will be more volatile than that of the Underlying Bond because the interest rate is dependent on not only the fixed
coupon rate of the Underlying Bond but also on the short-term interest paid on the Floaters, and because the Inverse Floater essentially
bears the risk of loss (and possible gain) of the greater face value of the Underlying Bond.
The Inverse Floater held by a Fund gives the Fund the right to
(a) cause the holders of the Floaters to tender their certificates at par (or slightly more than par in certain circumstances), and (b)
have the trustee of the TOB Trust (the “Trustee”) transfer the Underlying Bond held by the TOB Trust to the Fund, thereby
collapsing the TOB Trust.
The Fund may acquire an Inverse Floater in a transaction where
it (a) transfers an Underlying Bond that it owns to a TOB Trust created by a third party or (b) transfers an Underlying Bond that it owns,
or that it has purchased in a secondary market transaction for the purpose of creating an Inverse Floater, to a TOB Trust created at its
direction, and in return receives the Inverse Floater of the TOB Trust (referred to as a “self-deposited Inverse Floater”).
A Fund may also purchase an Inverse Floater in a secondary market transaction from a third party creator of the TOB Trust without first
owning the Underlying Bond (referred to as an “externally-deposited Inverse Floater”).
63
Notes
to Financial Statements (Unaudited) (continued)
An investment in a self-deposited Inverse Floater is accounted
for as a “financing” transaction (i.e., a secured borrowing). For a self-deposited Inverse Floater, the Underlying Bond deposited
into the TOB Trust is identified in the Fund’s Portfolio of Investments as “(UB) – Underlying bond of an inverse floating
rate trust reflected as a financing transaction,” with the Fund recognizing as liabilities, labeled “Floating rate obligations”
on the Statement of Assets and Liabilities, (a) the liquidation value of Floaters issued by the TOB Trust, and (b) the amount of any borrowings
by the TOB Trust from a Liquidity Provider to enable the TOB Trust to purchase outstanding Floaters in lieu of a remarketing. In addition,
the Fund recognizes in “Investment Income” the entire earnings of the Underlying Bond, and recognizes (a) the interest paid
to the holders of the Floaters or on the TOB Trust’s borrowings, and (b) other expenses related to remarketing, administration,
trustee, liquidity and other services to a TOB Trust, as a component of “Interest expense” on the Statement of Operations.
Earnings due from the Underlying Bond and interest due to the holders of the Floaters as of the end of the reporting period are recognized
as components of “Receivable for interest” and “Payable for interest” on the Statement of Assets and Liabilities,
respectively.
In contrast, an investment in an externally-deposited Inverse
Floater is accounted for as a purchase of the Inverse Floater and is identified in the Fund’s Portfolio of Investments as “(IF)
– Inverse floating rate investment.” For an externally-deposited Inverse Floater, a Fund’s Statement of Assets and Liabilities
recognizes the Inverse Floater and not the Underlying Bond as an asset, and the Fund does not recognize the Floaters, or any related borrowings
from a Liquidity Provider, as a liability. Additionally, the Fund reflects in “Investment Income” only the net amount of earnings
on the Inverse Floater (net of the interest paid to the holders of the Floaters or the Liquidity Provider as lender, and the expenses
of the Trust), and does not show the amount of that interest paid or the expenses of the TOB Trust as described above as interest expense
on the Statement of Operations.
Fees paid upon the creation of a TOB Trust for self-deposited
Inverse Floaters and externally-deposited Inverse Floaters are recognized as part of the cost basis of the Inverse Floater and are capitalized
over the term of the TOB Trust.
During the current fiscal period, the Funds did not have any transactions
in self-deposited Inverse Floaters and/or externally-deposited Inverse Floaters.
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.
Investment Transactions
Long-term purchases and sales (including maturities) during the
current fiscal period were as follows:
| |
|
Sales and |
| Fund |
Purchases |
Maturities |
| NIM |
$17,465,558 |
$18,412,693 |
| NXP |
95,081,034 |
96,120,146 |
The Funds may purchase securities on a when-issued or delayed-delivery
basis. Securities purchased on a when-issued or delayed-delivery basis may have extended settlement periods; interest income is not accrued
until settlement date. Any securities so purchased are subject to market fluctuation during this period. The Funds have earmarked securities
in their portfolios with a current value at least equal to the amount of the when-issued/ delayed delivery purchase commitments. If a
Fund has outstanding when-issued/delayed-delivery purchases commitments as of the end of the reporting period, such amounts are recognized
on the Statement of Assets and Liabilities.
Investments in Derivatives
In addition to the inverse floating rate securities in which each
Fund may invest, which are considered portfolio securities for financial reporting purposes, each Fund is authorized to invest in
certain other derivative instruments such as futures, options and swap contracts. Each 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 Funds record derivative instruments at fair value,
with changes in fair value recognized on the Statement of Operations, where applicable. Even though the Funds' investments in derivatives
may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes.
Although the Funds are authorized to invest in derivative instruments
and may do so in the future, they did not make any such investments during the current fiscal period.
Market and Counterparty Credit Risk
In the normal course of business each 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 each Fund to counterparty credit risk, consist
principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of each 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.
64
Each 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 each Fund with a value approximately equal to the amount of any unrealized
gain above a pre-determined threshold. Reciprocally, when each Fund has an unrealized loss, the Funds have instructed the custodian to
pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined
threshold. Collateral pledges are monitored and subsequently adjusted if and when the valuations fluctuate, either up or down, by at least
the predetermined threshold amount.
5. Fund Shares
Common Share Transactions
Transactions in common shares for the Funds during the Funds’
current and prior fiscal period, where applicable, were as follows:
| |
|
NIM |
|
NXP |
|
| |
Six Months |
|
|
Six Months |
|
| |
Ended |
|
Year Ended |
Ended |
Year Ended |
| |
9/30/22 |
|
3/31/22 |
9/30/22 |
3/31/22 |
| Common Shares: |
|
|
|
|
|
| Issued in the Reorganization |
— |
|
— |
— |
30,196,588 |
| Issued to shareholders due to reinvestment of distributions |
— |
|
1,234 |
— |
12,844 |
6. Income Tax Information
Each Fund is a separate taxpayer for federal income tax purposes.
Each Fund intends to distribute substantially all of its net investment income and net capital gains to shareholders and 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.
Each Fund intends to satisfy conditions that will enable interest
from municipal securities, which is exempt from regular federal income tax, to retain such tax-exempt status when distributed to shareholders
of the Funds. Net realized capital gains and ordinary income distributions paid by the Funds is subject to federal taxation.
Each Fund files income tax returns in U.S. federal and applicable
state and local jurisdictions. A Fund's federal income tax returns are generally subject to examination for a period of three fiscal years
after being filed. State and local tax returns may be subject to examination for an additional period of time depending on the jurisdiction.
Management has analyzed the Fund's tax positions taken for all open tax years and has concluded that no provision for income tax is required
in the Fund's financial statements.
As of the end of the reporting period, the aggregate cost and
the net unrealized appreciation/(depreciation) of all investments for federal income tax purposes were as follows:
| |
|
|
|
Net |
| |
|
|
Gross |
Unrealized |
| |
|
Gross Unrealized |
Unrealized |
Appreciation |
| Fund |
Tax Cost |
Appreciation |
(Depreciation) |
(Depreciation) |
| NIM |
$121,535,626 |
$4,509,252 |
$(8,651,588) |
$(4,142,336) |
| NXP |
635,626,424 |
33,714,402 |
(27,801,414) |
5,912,988 |
For purposes of this disclosure, tax cost generally includes the
cost of portfolio investments as well as up-front fees or premiums exchanged on derivatives and any amounts unrealized for income statement
reporting but realized income and/or capital gains for tax reporting, if applicable.
As of prior fiscal period end, the components of accumulated earnings
on a tax basis were as follows:
| |
Undistributed |
Undistributed |
Undistributed |
Unrealized |
|
|
Other |
|
| |
Tax-Exempt |
Ordinary |
Long-Term |
Appreciation |
Capital Loss |
Late-Year Loss |
Book-to-Tax |
|
| Fund |
Income1 |
Income |
Capital Gains |
(Depreciation) |
Carryforwards |
Deferrals |
Differences |
Total |
| NIM |
$192,677 |
$1,530 |
$— |
$3,764,963 |
$(10,896) |
$— |
$(261,379) |
$3,686,895 |
| NXP |
4,020,387 |
— |
— |
61,721,706 |
(10,875,037) |
— |
(2,129,360) |
52,737,696 |
1 Undistributed tax-exempt income (on a tax basis) has not been
reduced for the dividend declared on March 1, 2022, and paid on April 1, 2022.
65
Notes
to Financial Statements (Unaudited) (continued)
As of prior fiscal period end, the Funds had capital loss carryforwards, which will not expire:
| Fund |
Short-Term |
Long-Term |
Total |
| NIM |
$— |
$10,896 |
$10,896 |
| NXP1 |
2,209,019 |
8,666,018 |
10,875,037 |
1 A portion of NXP’s capital loss carryforward is subject
to an annual limitation under the Internal Revenue Code and related regulations.
7. Management Fees and Other Transactions with Affiliates
Management Fees
Each Fund’s management fee compensates the Adviser for the
overall investment advisory and administrative services and general office facilities. The Sub-Adviser is compensated for its services
to the Funds from the management fees paid to the Adviser.
Each Fund’s management fee consists of two components –
a fund-level fee, based only on the amount of assets within each individual Fund, and a complex-level fee, based on the aggregate amount
of all eligible fund assets managed by the Adviser. This pricing structure enables each Fund’s shareholders to benefit from growth
in the assets within their respective Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.
| |
NIM |
| Average Daily Net Assets* |
Fund-Level Fee Rate |
| For the first $125 million |
0.3000% |
| For the next $125 million |
0.2875 |
| For the next $250 million |
0.2750 |
| For the next $500 million |
0.2625 |
| For the next $1 billion |
0.2500 |
| For the next $3 billion |
0.2250 |
| For managed assets over $5 billion |
0.2125 |
| |
| The annual fund-level fee, payable monthly, for NXP is calculated according to the following schedule: |
|
| |
NXP |
| Average Daily Net Assets* |
Fund-Level Fee Rate |
| For the first $125 million |
0.5000% |
| For the next $125 million |
0.0375 |
| For the next $250 million |
0.0250 |
| For the next $500 million |
0.0125 |
The annual complex-level fee, payable monthly, for each Fund is
calculated by multiplying the current complex-wide fee rate, determined according to the following schedule by the Fund’s daily
managed assets:
| |
|
| Complex-Level Eligible Asset Breakpoint Level* |
Effective Complex-Level Fee Rate at Breakpoint Level |
| $55 billion |
0.2000% |
| $56 billion |
0.1996 |
| $57 billion |
0.1989 |
| $60 billion |
0.1961 |
| $63 billion |
0.1931 |
| $66 billion |
0.1900 |
| $71 billion |
0.1851 |
| $76 billion |
0.1806 |
| $80 billion |
0.1773 |
| $91 billion |
0.1691 |
| $125 billion |
0.1599 |
| $200 billion |
0.1505 |
| $250 billion |
0.1469 |
| $300 billion |
0.1445 |
| * | | For the 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 |
66
all Nuveen open-end and closed-end funds that constitute ‘’eligible
assets.” Eligible assets do not include assets attributable to investments in other Nuveen funds or assets in excess of a determined
amount (originally $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, but do not include certain assets of certain Nuveen funds that were reorganized
into funds advised by an affiliate of the Adviser during the 2019 calendar year. As of September 30, 2022, the complex-level fee for each
Fund was as follows:
| Fund |
Complex-Level Fee |
| NIM |
0.1587% |
| NXP |
0.1587% |
Other Transactions with Affiliates
Each Fund is permitted to purchase or sell securities from or
to certain other funds or accounts managed by the Sub-Adviser (“Affiliated Entity”) under specified conditions outlined in
procedures adopted by the Board ("cross-trade'). These procedures have been designed to ensure that any cross-trade of securities
by the Fund from or to an Affiliated Entity by virtue of having a common investment adviser (or affiliated investment adviser), common
officer and/or common trustee complies with Rule 17a-7 under the 1940 Act. These transactions are effected at the current market price
(as provided by an independent pricing service) without incurring broker commissions.
During the current fiscal period, the following Funds engaged in cross-trades pursuant to these procedures as follows:
| |
|
|
Realized |
| Fund |
Purchases |
Sales |
Gain (Loss) |
| NIM |
$— |
$— |
$— |
| NXP |
20,671,216 |
12,645,938 |
(1,460,041) |
8. Borrowing Arrangements
Committed Line of Credit
The Funds, along with certain other funds managed by the Adviser
(“Participating Funds”), have established a 364-day, $2.700 billion standby credit facility with a group of lenders, under
which the Participating Funds may borrow for temporary purposes (other than on-going leveraging for investment purposes). Each Participating
Fund is allocated a designated proportion of the facility’s capacity (and its associated costs, as described below) based upon a
multi-factor assessment of the likelihood and frequency of its need to draw on the facility, the size of the Fund and its anticipated
draws, and the potential importance of such draws to the operations and well-being of the Fund, relative to those of the other Funds.
A Fund may effect draws on the facility in excess of its designated capacity if and to the extent that other Participating Funds have
undrawn capacity. The credit facility expires in June 2023 unless extended or renewed.
The credit facility has the following terms: 0.15% per annum on
unused commitment amounts and a drawn interest rate equal to the higher of (a) OBFR (Overnight Bank Funding Rate) plus 1.20% per annum
or (b) the Fed Funds Effective Rate plus 1.20% per annum on amounts borrowed. The Participating Funds also incurred a 0.05% upfront fee
on the increased commitments from select lenders. Interest expense incurred by the Participating Funds, when applicable, is recognized
as a component of “Interest expense” on the Statement of Operations. Participating Funds paid administration, legal and arrangement
fees, which are recognized as a component of “Interest expense” on the Statement of Operations, and along with commitment
fees, have been allocated among such Participating Funds based upon the relative proportions of the facility’s aggregate capacity
reserved for them and other factors deemed relevant by the Adviser and the Board of each Participating Fund.
During the current fiscal period, the following Fund utilized
this facility. The Fund’s maximum outstanding balance during the utilization period was as follows:
| |
Maximum |
| |
Outstanding |
| Fund |
Balance |
| NIM |
$— |
| NXP |
2,000,000 |
During the Fund’s utilization period(s) during the current
fiscal period, the average daily balance outstanding and average annual interest rate on the Borrowings were as follows:
| |
Utilization |
Average |
|
| |
Period (Days |
Daily Balance |
Average Annual |
| Fund |
Outstanding) |
Outstanding |
Interest Rate |
| NIM |
— |
$— |
—% |
67
Notes
to Financial Statements (Unaudited) (continued)
| |
Utilization |
Average |
|
| |
Period (Days |
Daily Balance |
Average Annual |
| Fund |
Outstanding) |
Outstanding |
Interest Rate |
| NXP |
3 |
$1,700,000 |
3.28% |
Borrowings outstanding as of the end of the reporting period,
if any, are recognized as “Borrowings” on the Statement of Assets and Liabilities, where applicable.
Inter-Fund Borrowing and Lending
The SEC has granted an exemptive order permitting registered open-end
and closed-end Nuveen funds to participate in an inter-fund lending facility whereby the Nuveen funds may directly lend to and borrow
money from each other for temporary purposes (e.g., to satisfy redemption requests or when a sale of securities “fails,” resulting
in an unanticipated cash shortfall) (the “Inter-Fund Program”). The closed-end Nuveen funds, including the Funds covered by
this shareholder report, will participate only as lenders, and not as borrowers, in the Inter-Fund Program because such closed-end funds
rarely, if ever, need to borrow cash to meet redemptions. The Inter-Fund Program is subject to a number of conditions, including, among
other things, the requirements that (1) no fund may borrow or lend money through the Inter-Fund Program unless it receives a more favorable
interest rate than is typically available from a bank or other financial institution for a comparable transaction; (2) no fund may borrow
on an unsecured basis through the Inter-Fund Program unless the fund’s outstanding borrowings from all sources immediately after
the inter-fund borrowing total 10% or less of its total assets; provided that if the borrowing fund has a secured borrowing outstanding
from any other lender, including but not limited to another fund, the inter-fund loan must be secured on at least an equal priority basis
with at least an equivalent percentage of collateral to loan value; (3) if a fund’s total outstanding borrowings immediately after
an inter-fund borrowing would be greater than 10% of its total assets, the fund may borrow through the inter-fund loan on a secured basis
only; (4) no fund may lend money if the loan would cause its aggregate outstanding loans through the Inter-Fund Program to exceed 15%
of its net assets at the time of the loan; (5) a fund’s inter-fund loans to any one fund shall not exceed 5% of the lending fund’s
net assets; (6) the duration of inter-fund loans will be limited to the time required to receive payment for securities sold, but in no
event more than seven days; and (7) each inter-fund loan may be called on one business day’s notice by a lending fund and may be
repaid on any day by a borrowing fund. In addition, a Nuveen fund may participate in the Inter-Fund Program only if and to the extent
that such participation is consistent with the fund’s investment objective and investment policies. The Board is responsible for
overseeing the Inter-Fund Program.
The limitations detailed above and the other conditions of the
SEC exemptive order permitting the Inter-Fund Program are designed to minimize the risks associated with Inter-Fund Program for both the
lending fund and the borrowing fund. However, no borrowing or lending activity is without risk. When a fund borrows money from another
fund, there is a risk that the loan could be called on one day’s notice or not renewed, in which case the fund may have to borrow
from a bank at a higher rate or take other actions to payoff such loan if an inter-fund loan is not available from another fund. Any delay
in repayment to a lending fund could result in a lost investment opportunity or additional borrowing costs.
During the current reporting period, none of the Funds covered
by this shareholder report have entered into any inter-fund loan activity.
68
Risk
Considerations
(Unaudited)
Risk Considerations
Fund shares are not guaranteed or endorsed by any bank or other
insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation.
Nuveen Select Maturities Municipal Fund (NIM)
Investing in closed-end funds involves risk; principal loss is
possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at
a discount or premium to their net asset value. Debt or fixed income securities such as those held by the Fund, are subject to market
risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. These
and other risk considerations such as tax risk are described in more detail on the Fund’s web page at www.nuveen.com/NIM.
Nuveen Select Tax-Free Income Portfolio (NXP)
Investing in closed-end funds involves risk; principal loss is
possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund common shares may frequently
trade at a discount or premium to their net asset value. Debt or fixed income securities such as those held by the Fund, are subject to
market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall.
These and other risk considerations such as tax risk are described in more detail on the Fund’s web page at www.nuveen.com/NXP.
69
Additional Fund Information
(Unaudited)
| Board of Trustees |
|
|
|
|
|
| Jack B. Evans |
William C. Hunter |
Amy B.R. Lancellotta |
Joanne T. Medero |
Albin F. Moschner |
John K. Nelson |
| Judith M. Stockdale |
Carole E. Stone |
Matthew Thornton III |
Terence J. Toth |
Margaret L. Wolff |
Robert L. Young |
| Investment Adviser |
Custodian |
Legal Counsel |
Independent Registered |
Transfer Agent and |
| Nuveen Fund Advisors, LLC |
State Street Bank |
Chapman and Cutler LLP |
Public Accounting Firm |
Shareholder Services |
| 333 West Wacker Drive |
& Trust Company |
Chicago, IL 60603 |
KPMG LLP |
Computershare Trust |
| Chicago, IL 60606 |
One Lincoln Street |
|
200 East Randolph Street |
Company, N.A |
| |
Boston, MA 02111 |
|
Chicago, IL 60601 |
150 Royall Street |
| |
|
|
|
Canton, MA 02021 |
| |
|
|
|
(800) 257-8787 |
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 as an exhibit to its report on Form N-PORT. You may obtain this information on the SEC’s website at http://www.sec.gov.
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 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 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 (CEO) 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. Each Fund has filed with the SEC the certification of its CEO and Chief Financial Officer required by Section
302 of the Sarbanes-Oxley Act.
Common Share Repurchases Each Fund intends to repurchase,
through its open-market share repurchase program, shares of its own common stock at such times and in such amounts as is deemed advisable.
During the period covered by this report, each Fund repurchased shares of its common stock as shown in the accompanying table. Any future
repurchases will be reported to shareholders in the next annual or semi-annual report.
| |
NIM |
NXP |
| Common shares repurchased |
0 |
0 |
FINRA BrokerCheck: The Financial Industry Regulatory Authority
(FINRA) provides information regarding the disciplinary history of FINRA member firms and associated investment professionals. This information
as well as an investor brochure describing FINRA BrokerCheck is available to the public by calling the FINRA BrokerCheck Hotline number
at (800) 289-9999 or by visiting www.FINRA.org.
70
Glossary of Terms Used in this Report
(Unaudited)
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 offer price and reinvested
dividends and capital gains distributions, if any) over the time period being considered.
Net Asset Value (NAV) Per Share: A fund’s Net Assets
is equal to its total assets (securities, cash, accrued earnings and receivables) less its total liabilities. NAV per share is equal
to the fund’s Net Assets divided by its number of shares outstanding.
Pre-Refunded Bond/Pre-Refunding: Pre-Refunded Bond/Pre-Refunding,
also known as advanced refundings or refinancings, is a procedure used by state and local governments to refinance municipal bonds to
lower interest expenses. The issuer sells new bonds with a lower yield and uses the proceeds to buy U.S. Treasury securities, the interest
from which is used to make payments on the higher-yielding bonds. Because of this collateral, pre-refunding generally raises a bond’s
credit rating and thus its value.
S&P Municipal Bond Intermediate Index: An index containing
bonds in the S&P Municipal Bond Index that mature between 3 and 15 years. Index returns assume reinvestment of distributions, but
do not reflect any applicable sales charges or management fees.
S&P Municipal Bond Index: An index designed to measure
the performance of the tax-exempt U.S. municipal bond market. Index returns assume reinvestment of distributions, but do not reflect
any applicable sales charges or management fees.
Tax Obligation/General Bonds: Bonds backed by the general
revenues of an issuer, including taxes, where the issuer has the ability to increase taxes by an unlimited amount to pay the bonds back.
Tax Obligation/Limited Bonds: Bonds backed by the general
revenues of an issuer, including taxes, where the issuer doesn’t have the ability to increase taxes by an unlimited amount to pay
the bonds back.
71
Annual Investment Management Agreement Approval Process
(Unaudited)
At a meeting held on May 23-25, 2022 (the “May Meeting”),
the Boards of Trustees (collectively, the “Board” and each Trustee, a “Board Member”) of the Funds, which are
comprised entirely of Board Members who are not “interested persons” (as defined under the Investment Company Act of 1940
(the “1940 Act”)) (the “Independent Board Members”), approved, for their respective Fund, the renewal of the management
agreement (each, an “Investment Management Agreement”) with Nuveen Fund Advisors, LLC (the “Adviser”) pursuant
to which the Adviser serves as investment adviser to such Fund and the sub-advisory agreement (each, a “Sub-Advisory Agreement”)
with Nuveen Asset Management, LLC (the “Sub-Adviser”) pursuant to which the Sub-Adviser serves as the sub-adviser to such
Fund for an additional one-year term. As the Board is comprised of all Independent Board Members, the references to the Board and the
Independent Board Members are interchangeable.
Following up to an initial two-year period, the Board considers
the renewal of each Investment Management Agreement and Sub-Advisory Agreement on behalf of the applicable Fund on an annual basis. The
Investment Management Agreements and Sub-Advisory Agreements are collectively referred to as the “Advisory Agreements,” and
the Adviser and the Sub-Adviser are collectively, the “Fund Advisers” and each, a “Fund Adviser.” The Board has
established various standing committees composed of various Independent Board Members that are assigned specific responsibilities to enhance
the effectiveness of the Board’s oversight and decision making. Throughout the year, the Board and its committees meet regularly
and, at these meetings, receive regular and/or special reports that cover an extensive array of topics and information that are relevant
to the Board’s annual consideration of the renewal of the advisory agreements for the Nuveen funds. Such information may address,
among other things, fund performance and risk information; the Adviser’s strategic plans; product initiatives for various funds;
the review of the funds and investment teams; compliance, regulatory and risk management matters; the trading practices of the various
sub-advisers to the Nuveen funds; management of distributions; valuation of securities; fund expenses; securities lending; liquidity management;
overall market and regulatory developments; and with respect to closed-end funds, capital management initiatives, institutional ownership,
management of leverage financing and the secondary market trading of the closed-end funds and any actions to address discounts. The Board
also seeks to meet periodically with the Nuveen funds’ sub-advisers and/or portfolio teams, when feasible. The Board further meets,
among other things, to specifically consider the annual renewal of the advisory agreements for the Nuveen funds.
In connection with its annual consideration of the advisory agreements
for the Nuveen funds, the Board, through its independent legal counsel, requested and received extensive materials and information prepared
specifically for its review of such advisory agreements by the Adviser and by Broadridge Financial Solutions, Inc. (“Broadridge”),
an independent provider of investment company data. The materials cover a wide range of topics including, but not limited to, a description
of the nature, extent and quality of services provided by the Fund Advisers; a review of product actions taken during 2021 (such as mergers,
liquidations, fund launches, changes to investment teams, and changes to investment policies); a review of each sub-adviser to the Nuveen
funds and/or the applicable investment teams; an analysis of fund performance in absolute terms and as compared to the performance of
certain peer funds and benchmarks with a focus on any performance outliers; an analysis of the fees and expense ratios of the Nuveen funds
in absolute terms and as compared to those of certain peer funds with a focus on any expense outliers; a review of management fee schedules;
a description of portfolio manager compensation; an overview of the secondary market trading of shares of the Nuveen closed-end funds
(including, among other things, an analysis of secondary market performance and commentary regarding the leverage management, share repurchase
and shelf offering programs of Nuveen closed-end funds); a review of the performance of various service providers; a description of various
initiatives Nuveen had undertaken or continued in 2021 and 2022 for the benefit of particular fund(s) and/or the complex; a description
of the profitability or financial data of Nuveen and the sub-advisers to the Nuveen funds; and a description of indirect benefits received
by the Adviser and the sub-advisers as a result of their relationships with the Nuveen funds. The information prepared specifically for
the annual review supplemented the information provided to the Board and its committees and the evaluations of the Nuveen funds by the
Board and its committees during the year. The Board’s review of the advisory agreements for the Nuveen funds is based on all the
information provided to the Board and its committees throughout the year as well as the information prepared specifically with respect
to the annual review of such advisory agreements.
In continuing its practice, the Board met prior to the May Meeting
to begin its considerations of the renewal of the Advisory Agreements. Accordingly, on April 13-14, 2022 (the “April Meeting”),
the Board met to review and discuss, in part, the performance of the Nuveen funds and the Adviser’s evaluation of each sub-adviser
to the Nuveen funds and/or its investment teams. At the April Meeting, the Board Members asked questions and requested additional information
that was provided for the May Meeting.
The Independent Board Members considered the review of the advisory
agreements for the Nuveen funds to be an ongoing process and employed the accumulated information, knowledge and experience the Board
Members had gained during their tenure on the boards governing the Nuveen funds and working with the Adviser and sub-advisers in their
review of the advisory agreements. The contractual arrangements are a result of multiple years of review, negotiation and information
provided in connection with the boards’ annual review of the Nuveen funds’ advisory arrangements and oversight of the Nuveen
funds.
The Independent Board Members were advised by independent legal
counsel during the annual review process as well as throughout the year, including meeting in executive sessions with such counsel at
which no representatives from the Adviser or the Sub-Adviser were present. In connection with their annual review, the Independent Board
Members also received a memorandum from independent legal counsel outlining their fiduciary duties and legal standards in reviewing the
Advisory Agreements, including guidance from court cases evaluating advisory fees.
The Board’s decision to renew the Advisory Agreements was
not based on a single identified factor, but rather the decision reflected the comprehensive consideration of all the information provided
to the Board and its committees throughout the year as well as the materials prepared specifically in connection with the renewal process.
Each Board Member may have attributed different levels of importance to the various factors and information considered in connection with
the approval process and may place different emphasis on the relevant information year to year in light of, among other things, changing
market and economic conditions. A summary of the principal factors and information, but not all the factors, the Board considered in deciding
to renew the Advisory Agreements is set forth below.
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A. Nature, Extent and Quality of Services
In evaluating the renewal of the Advisory Agreements, the Independent
Board Members received and considered information regarding the nature, extent and quality of the applicable Fund Adviser’s services
provided to the respective Fund with particular focus on the services and enhancements to such services provided during the last year.
The Independent Board Members considered the Investment Management Agreements and the Sub-Advisory Agreements separately in the course
of their review. With this approach, they considered the respective roles of the Adviser and the Sub-Adviser in providing services to
the Funds.
The Board recognized that the Nuveen funds operate in a highly
regulated industry and, therefore, the Adviser has provided a wide array of management, oversight and administrative services to manage
and operate the funds, and the scope and complexity of these services have expanded over time as a result of, among other things, regulatory,
market and other developments. The Board accordingly considered the Adviser’s dedication of extensive resources, time, people and
capital employed to support and manage the Nuveen funds as well as the Adviser’s continued program of developing improvements and
innovations for the benefit of the funds and shareholders and to meet the ever increasing regulatory requirements applicable to the funds.
In this regard, the Board received and reviewed information regarding, among other things, the Adviser’s investment oversight responsibilities,
regulatory and compliance services, administrative duties and other services. The Board considered the Adviser’s investment oversight
team’s extensive services in overseeing the various sub-advisers to the Nuveen funds; evaluating fund performance; and preparing
reports to the Board addressing, among other things, fund performance, market conditions, investment team matters, product developments
and management proposals. The Board further recognized the range of services the various teams of the Adviser provided including, but
not limited to, overseeing operational and risk management; managing liquidity; overseeing the daily valuation process; and managing distributions
in seeking to deliver long-term fund earnings to shareholders consistent with the respective Nuveen fund’s product design and positioning.
The Board also considered the structure of investment personnel compensation of each Fund Adviser and whether the structure provides appropriate
incentives to attract and maintain qualified personnel and to act in the best interests of the respective Nuveen fund.
The Board further recognized that the Adviser’s compliance
and regulatory functions were integral to the investment management of the Nuveen funds. The Board recognized such services included,
but were not limited to, managing compliance policies; monitoring compliance with applicable policies, law and regulations; devising internal
compliance programs and a framework to review and assess compliance programs; overseeing sub-adviser compliance testing; preparing compliance
training materials; and responding to regulatory requests. The Board further considered information regarding the Adviser’s business
continuity and disaster recovery plans as well as information regarding its information security program, including presentations of such
program provided at a site visit in 2022, to help identify and manage information security risks.
In addition to the above functions, the Board considered that
the Adviser also provides, among other things, fund administration services (such as preparing fund tax returns and other tax compliance
services; preparing regulatory filings; interacting with the Nuveen funds’ independent public accountants and overseeing other service
providers; and managing fund budgets and expenses); product management services (such as evaluating and enhancing products and strategies);
legal services (such as helping to prepare and file registration statements and proxy statements; overseeing fund activities and providing
legal interpretations regarding such activities; maintaining regulatory registrations and negotiating agreements with other fund service
providers; and monitoring changes in regulatory requirements and commenting on rule proposals impacting investment companies); oversight
of shareholder services and transfer agency functions (such as overseeing transfer agent service providers which include registered shareholder
customer service and transaction processing; overseeing proxy solicitation and tabulation services; and overseeing the production and
distribution of financial reports by service providers); and with respect to the Nuveen closed-end funds, managing leverage, monitoring
asset coverage and seeking to promote an orderly secondary market.
The Board also considered the quality of support services and
communications the Adviser provided the Board, including, in part, organizing and administrating Board meetings and supporting Board committees;
preparing regular and ad hoc reports on fund performance, market conditions and investment team matters; providing due diligence reports
addressing product development and management proposals; and coordinating site visits of the Board and presentations by investment teams
and senior management.
In addition to the services provided, the Board considered the
financial resources of the Adviser and its affiliates and their willingness to make investments in the technology, personnel and infrastructure
to support the Nuveen funds, including maintaining a seed capital budget to support new or existing funds and/or facilitate changes for
a respective fund. Further, the Board noted the benefits to shareholders of investing in a fund that is a part of a large fund complex
with a variety of investment disciplines, capabilities, expertise and resources available to navigate and support the Nuveen funds including
during stressed times. The Board recognized the overall reputation and capabilities of the Adviser and its affiliates, the Adviser’s
continuing commitment to provide high quality services, its willingness to implement operational or organizational changes in seeking,
among other things, to enhance efficiencies and services to the Nuveen funds and its responsiveness to the Board’s questions and/or
concerns raised throughout the year and during the annual review of advisory agreements. The Board also considered the significant risks
borne by the Adviser and its affiliates in connection with their services to the Nuveen funds, including entrepreneurial risks in sponsoring
new funds and ongoing risks with managing the funds such as investment, operational, reputational, regulatory, compliance and litigation
risks.
In evaluating services, the Board reviewed various highlights
of the initiatives the Adviser and its affiliates have undertaken or continued in 2021 and 2022 to benefit the Nuveen complex and/or particular
Nuveen funds and meet the requirements of an increasingly complex regulatory environment including, but not limited to:
| • | | Centralization of Functions – ongoing initiatives to centralize investment leadership
and create a more cohesive market approach and centralized shared support model (including through the consolidation of certain affiliated
sub-advisers) in seeking to operate more effectively and enhance the research capabilities and services to the Nuveen funds; |
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Investment Management Agreement Approval Process (Unaudited)
(continued)
| • | | Fund Improvements and Product Management Initiatives – continuing to proactively manage
the Nuveen fund complex as a whole and at the individual fund level with an aim to continually improve product platforms and investment
strategies to better serve shareholders through, among other things, rationalizing the product line and gaining efficiencies through
mergers, repositionings and liquidations; launching new funds; reviewing and updating investment policies and benchmarks; soft closing
certain funds; modifying the conversion periods on certain share classes; and evaluating and adjusting portfolio management teams as
appropriate for various funds; |
| • | | Capital Initiatives – continuing to invest capital to support new Nuveen funds with
initial capital as well as to support existing funds; |
| • | | Compliance Program Initiatives – continuing efforts to mitigate compliance risk with
a focus on environmental, social and governance (“ESG”) controls and processes, increase operating efficiencies, implement
enhancements to strengthen ongoing execution of key compliance program elements, support international business growth and facilitate
integration of Nuveen’s operating model; |
| • | | Investment Oversight – preparing reports to the Board addressing, among other things,
fund performance; market conditions; investment team matters; product developments; changes to mandates, policies and benchmarks; and
other management proposals as well as preparing and coordinating investment presentations to the Board; |
| • | | Risk Management and Valuation Services - continuing to oversee and manage risk including,
among other things, conducting ongoing calculations and monitoring of risk measures across the Nuveen funds, instituting investment risk
controls, providing risk reporting throughout Nuveen, participating in internal oversight committees, dedicating the resources and time
to develop the processes necessary to help address fund compliance with the new derivatives rule and continuing to implement an operational
risk framework that seeks to provide greater transparency of operational risk matters across the complex as well as provide multiple
other risk programs that seek to provide a more disciplined and consistent approach to identifying and mitigating Nuveen’s operational
risks. Further, the securities valuation team continues, among other things, to oversee the daily valuation process of the portfolio
securities of the funds, maintain the valuation policies and procedures, facilitate valuation committee meetings, manage relationships
with pricing vendors, prepare relevant valuation reports and design methods to simplify and enhance valuation workflow within the organization
and implement processes and procedures to help address compliance with the new valuation rule applicable to the funds; |
| • | | Regulatory Matters – continuing efforts to monitor regulatory trends and advocate on
behalf of Nuveen and/or the Nuveen funds, to implement and comply with new or revised rules and mandates and to respond to regulatory
inquiries and exams; |
| • | | Government Relations – continuing efforts of various Nuveen teams and Nuveen’s
affiliates to develop policy positions on a broad range of issues that may impact the Nuveen funds, advocate and communicate these positions
to lawmakers and other regulatory authorities and work with trade associations to ensure these positions are represented; |
| • | | Business Continuity, Disaster Recovery and Information Security – continuing efforts
of Nuveen to periodically test and update business continuity and disaster recovery plans and, together with its affiliates, to maintain
an information security program that seeks to identify and manage information security risks, and provide reports to the Board, at least
annually, addressing, among other things, management’s security risk assessment, cyber risk profile, potential impact of new or
revised laws and regulations, incident tracking and other relevant information technology risk-related reports; |
| • | | Distribution Management Services – continuing to manage the distributions among the
varying types of Nuveen funds within the Nuveen complex to be consistent with the respective fund’s product design and positioning
in striving to deliver those earnings to shareholders in a relatively consistent manner over time as well as assisting in the development
of new products or the restructuring of existing funds; and |
| • | | with respect specifically to closed-end funds, such continuing services also included: |
• • Leverage Management Services – continuing
to actively manage the various forms of leverage utilized across the complex, including through committing resources and focusing on sourcing/structure
development and bank provider management;
• • Capital Management, Market Intelligence and Secondary
Market Services – ongoing capital management efforts which may include at times shelf offerings, tender offers, capital return programs
and share repurchases as well as providing market data analysis to help understand closed-end fund ownership cycles and their impact on
secondary market trading as well as to improve proxy solicitation efforts; and
• • Closed-end Fund Investor Relations Program –
maintaining the closed-end fund investor relations program which, among other things, raises awareness, provides educational materials
and cultivates advocacy for closed-end funds and the Nuveen closed-end fund product line.
The Board further considered the division of responsibilities
between the Adviser and the Sub-Adviser and recognized that the Sub-Adviser and its investment personnel generally are responsible for
the management of each Fund’s portfolio under the oversight of the Adviser and the Board. The Board considered an analysis of the
Sub-Adviser provided by the Adviser which included, among other things, the assets under management of the applicable investment team
and changes thereto, a summary of the applicable investment team and changes thereto, the investment process and philosophy of the applicable
investment team, the performance of the Nuveen funds sub-advised by the Sub-Adviser over various periods of time and a summary of any
significant policy and/or other changes to the Nuveen funds sub-advised by the Sub-Adviser. The Board further considered at the May Meeting
or prior meetings evaluations of the Sub-Adviser’s compliance programs and trade execution. The Board noted that the Adviser recommended
the renewal of the Sub-Advisory Agreements.
Based on its review, the Board determined, in the exercise of
its reasonable business judgment, that it was satisfied with the nature, extent and quality of services provided to the respective Funds
under each applicable Advisory Agreement.
74
B. The Investment Performance of the Funds and Fund Advisers
In evaluating the quality of the services provided by the Fund
Advisers, the Board also received and considered a variety of investment performance data of the Nuveen funds they advise. In evaluating
performance, the Board recognized that performance data may differ significantly depending on the ending date selected, particularly during
periods of market volatility, and therefore considered the broader perspective of performance over a variety of time periods that may
include full market cycles. In this regard, the Board reviewed, among other things, Fund performance over the quarter, one-, three- and
five-year periods ending December 31, 2021 and March 31, 2022. The performance data prepared for the annual review of the advisory
agreements for the Nuveen funds supplemented the fund performance data that the Board received throughout the year at its meetings representing
differing time periods. In its review, the Board took into account the discussions with representatives of the Adviser; the Adviser’s
analysis regarding fund performance that occurred at these Board meetings with particular focus on funds that were considered performance
outliers (both overperformance and underperformance); the factors contributing to the performance; and any recommendations or steps taken
to address performance concerns. Regardless of the time period reviewed by the Board, the Board recognized that shareholders may evaluate
performance based on their own holding periods which may differ from the periods reviewed by the Board and lead to differing results.
In its review, the Board reviewed both absolute and relative fund
performance during the annual review over the various time periods. With respect to the latter, the Board considered fund performance
in comparison to the performance of peer funds (the “Performance Peer Group”) and recognized and/or customized benchmarks
(i.e., generally benchmarks derived from multiple recognized benchmarks). For Nuveen funds that had changes in portfolio managers or other
significant changes to their investment strategies or policies since March 2019, the Board reviewed certain tracking performance data
comparing the performance of such funds before and after such changes. In considering performance data, the Board is aware of certain
inherent limitations with such data, including that differences between the objective(s), strategies and other characteristics of the
Nuveen funds compared to the respective Performance Peer Group and/or benchmark(s); differences in the composition of the Performance
Peer Group over time; and differences in the types and/or levels of any leverage and related costs with that of the Performance Peer Group
would all necessarily contribute to differences in performance results and limit the value of the comparative information. Further, the
Board recognized the inherent limitations in comparing the performance of an actively managed fund to a benchmark index due to the fund’s
pursuit of an investment strategy that does not directly follow the index. To assist the Board in its review of the comparability of the
relative performance, the Adviser has ranked the relevancy of the peer group to the Funds as low, medium or high.
The Board also evaluated performance in light of various relevant
factors which may include, among other things, general market conditions, issuer-specific information, asset class information, leverage
and fund cash flows. In relation to general market conditions, the Board had recognized the recent periods in 2022 of general market volatility
and underperformance. In their review from year to year, the Board Members consider and may place different emphasis on the relevant information
in light of changing circumstances in market and economic conditions. Further, the Board recognized that the market and economic conditions
may significantly impact a fund’s performance, particularly over shorter periods, and such performance may be more reflective of
such economic or market events and not necessarily reflective of management skill. Accordingly, depending on the facts and circumstances
including any differences between the respective Nuveen fund and its benchmark and/or Performance Peer Group, the Board may be satisfied
with a fund’s performance notwithstanding that its performance may be below that of its benchmark or peer group for certain periods.
However, with respect to any Nuveen funds for which the Board has identified performance issues, the Board monitors such funds closely
until performance improves, discusses with the Adviser the reasons for such results, considers whether any steps are necessary or appropriate
to address such issues, and reviews the results of any steps undertaken.
The secondary market trading of shares of the Nuveen closed-end
funds also continues to be a priority for the Board given its importance to shareholders, and therefore the Board and/or its Closed-end
Fund committee reviews certain performance data reflecting, among other things, the premiums and discounts at which the shares of the
closed-end funds have traded over specified periods throughout the year. In its review, the Board considers, among other things, changes
to investment mandates and guidelines, distribution policies, leverage levels and types; share repurchases and similar capital market
actions; and effective communications programs to build greater awareness and deepen understanding of closed-end funds.
The Board’s determinations with respect to each Fund are
summarized below.
For Nuveen Select Maturities Municipal Fund (the “Select
Maturities Fund”), the Board noted that although the Fund ranked in the fourth quartile of its Performance Peer Group for the three-
and five-year periods ended December 31, 2021, the Fund ranked in the third quartile for the one-year period ended December 31,
2021 and outperformed its benchmark for the one-, three- and five-year periods ended December 31, 2021. Further, the Fund ranked
in the first quartile of its Performance Peer Group for the one-year period and third quartile for the three- and five-year periods ended
March 31, 2022 and outperformed its benchmark for the one-, three- and five-year periods ended March 31, 2022. In its review,
the Board noted that the Performance Peer Group was classified as low for relevancy. Based on its review, the Board was generally satisfied
with the Fund’s overall performance.
For Nuveen Select Tax-Free Income Portfolio (the “Select
Tax-Free Income Fund”), the Board noted that although the Fund ranked in the fourth quartile of its Performance Peer Group for the
one-year period ended December 31, 2021, the Fund ranked in the first quartile of its Performance Peer Group for the three- and five-year
periods ended December 31, 2021 and outperformed its benchmark for the one-, three- and five-year periods ended December 31,
2021. Although the Fund’s performance was below the performance of its benchmark for the one-year period ended March 31, 2022,
the Fund outperformed its benchmark for the three- and five-year periods ended March 31, 2022 and ranked in the third quartile of
its Performance Peer Group for the one-year period and first quartile for the three- and five-year periods ended March 31, 2022.
In its review, the Board noted that the Performance Peer Group was classified as low for relevancy.
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(continued)
Based on its review, the Board was generally satisfied with the
Fund’s overall performance.
C. Fees, Expenses and Profitability
1. Fees and Expenses
As part of its annual review, the Board considered the contractual
management fee and net management fee (the management fee after taking into consideration fee waivers and/or expense reimbursements,
if any) paid by a Nuveen fund to the Adviser in light of the nature, extent and quality of the services provided. The Board also considered
the total operating expense ratio of a fund before and after any fee waivers and/or expense reimbursements. More specifically, the Independent
Board Members reviewed, among other things, each fund’s gross and net management fee rates (i.e., before and after expense reimbursements
and/or fee waivers, if any) and net total expense ratio in relation to those of a comparable universe of funds (the “Peer Universe”)
established by Broadridge (subject to certain exceptions). The Independent Board Members reviewed the methodology Broadridge employed
to establish its Peer Universe and recognized that differences between the applicable fund and its respective Peer Universe as well as
changes to the composition of the Peer Universe from year to year may limit some of the value of the comparative data. The Independent
Board Members take these limitations and differences into account when reviewing comparative peer data. The Independent Board Members
also considered a fund’s operating expense ratio as it more directly reflected the shareholder’s costs in investing in the
respective fund.
In their review, the Independent Board Members considered, in
particular, each fund with a net expense ratio (excluding investment-related costs of leverage) of six basis points or higher compared
to that of its peer average (each, an “Expense Outlier Fund”), including the Select Maturities Fund, and an analysis as to
the factors contributing to each such fund’s higher relative net expense ratio. In addition, although the Board reviewed a fund’s
total net expenses both including and excluding investment-related expenses (i.e., leverage costs) for certain of the closed-end funds,
the Board recognized that leverage expenses will vary across funds and in comparison to peers because of differences in the forms and
terms of leverage employed by the respective fund. Accordingly, in reviewing the comparative data between a fund and its peers, the Board
generally considered the fund’s net expense ratio and fees (excluding leverage costs and leveraged assets) to be higher if they
were over 10 basis points higher, slightly higher if they were 6 to 10 basis points higher, in line if they were within approximately
5 basis points higher than the peer average and below if they were below the peer average of the Peer Universe. The Independent Board
Members also considered, in relevant part, a fund’s net management fee and net total expense ratio in light of its performance history.
In their review of the fee arrangements for the Nuveen funds,
the Independent Board Members considered the management fee schedules, including the complex-wide and fund-level breakpoint schedules,
as applicable. The Board noted that across the Nuveen fund complex, the complex-wide fee breakpoints reduced fees by approximately $72.5
million and fund-level breakpoints reduced fees by approximately $89.1 million in 2021.
With respect to the Sub-Adviser, the Board also considered, among
other things, the sub-advisory fee schedule paid to the Sub-Adviser in light of the sub-advisory services provided to the respective Fund
and comparative data of the fees the Sub-Adviser charges to other clients, if any. In its review, the Board recognized that the compensation
paid to the Sub-Adviser is the responsibility of the Adviser, not the Funds.
The Independent Board Members noted that (a) the Select Tax-Free
Income Fund had a net management fee and a net expense ratio that were below the respective peer average; and (b) the Select Maturities
Fund had a net management fee and a net expense ratio that were higher than the respective peer average. The Independent Board Members
noted that the Select Maturities Fund’s net expense ratio was higher than the average of the Peer Universe primarily due to the
odd composition of the Peer Universe which contained only one other fund, which was another Nuveen fund.
Based on its review of the information provided, the Board determined
that each Fund’s management fees (as applicable) to a Fund Adviser were reasonable in light of the nature, extent and quality of
services provided to the Fund.
2. Comparisons with the Fees of Other Clients
In determining the appropriateness of fees, the Board also considered
information regarding the fee rates the respective Fund Advisers charged to certain other types of clients and the type of services provided
to these other clients. With respect to the Adviser and/or the Sub-Adviser, such other clients may include retail and institutional managed
accounts, exchange-traded funds (“ETFs”) sub-advised by the Sub-Adviser that are offered by another fund complex, municipal
managed accounts offered by an unaffiliated adviser and private limited partnerships offered by Nuveen. With respect to the Sub-Adviser,
the Board reviewed, among other things, the fee range and average fee of municipal retail advisory accounts and municipal institutional
accounts as well as the sub-advisory fee the Sub-Adviser received for serving as sub-adviser to certain ETFs offered outside the Nuveen
family.
76
In considering the fee data of other clients, the Board recognized,
among other things, that differences in the amount, type and level of services provided to the Nuveen funds relative to other types of
clients as well as any differences in portfolio investment policies, the types of assets managed and related complexities in managing
such assets, the entrepreneurial and other risks associated with a particular strategy, investor profiles, account sizes and regulatory
requirements will contribute to the variations in the fee schedules. The Board recognized the breadth of services the Adviser had provided
to the Nuveen funds compared to these other types of clients as the funds operate in a highly regulated industry with increasing regulatory
requirements as well as the increased entrepreneurial, legal and regulatory risks that the Adviser incurs in sponsoring and managing the
funds. In general, higher fee levels reflect higher levels of service provided by the Adviser, increased investment management complexity,
greater product management requirements, and higher levels of business risk or some combination of these factors. The Board further considered
that the Sub-Adviser’s fee is essentially for portfolio management services and therefore more comparable to the fees it receives
for retail wrap accounts and other external sub-advisory mandates. The Board concluded the varying levels of fees were justified given,
among other things, the inherent differences in the products and the level of services provided to the Nuveen funds versus other clients,
the differing regulatory requirements and legal liabilities and the entrepreneurial, legal and regulatory risks incurred in sponsoring
and advising a registered investment company.
3. Profitability of Fund Advisers
In their review, the Independent Board Members considered information
regarding Nuveen’s level of profitability for its advisory services to the Nuveen funds for the calendar years 2021 and 2020. The
Board reviewed, among other things, the net margins (pre-tax) for Nuveen Investments, Inc. (“Nuveen Investments”), the gross
and net revenue margins (pre- and post-tax and excluding distribution) and the revenues, expenses and net income (pre- and post-tax and
before distribution expenses) of Nuveen Investments from the Nuveen funds only; and comparative profitability data comparing the operating
margins of Nuveen Investments compared to the adjusted operating margins of certain peers that had publicly available data and with the
most comparable assets under management (based on asset size and asset composition) for each of the last two calendar years. The Board
also reviewed the revenues, expenses and operating margin (pre- and post-tax) the Adviser derived from its ETF product line for the 2021
and 2020 calendar years.
In reviewing the profitability data, the Independent Board Members
recognized the subjective nature of calculating profitability as the information is not audited and is dependent on cost allocation methodologies
to allocate corporate-wide overhead/shared service expenses, TIAA (defined below) corporate-wide overhead expenses and partially fund
related expenses to the Nuveen complex and its affiliates and to further allocate such expenses between the Nuveen fund and non-fund businesses.
The Independent Board Members reviewed a description of the cost allocation methodologies employed to develop the financial information,
a summary of the history of changes to the methodology over the years from 2010 to 2021, and the net revenue margins derived from the
Nuveen funds (pre-tax and including and excluding distribution) and total company margins from Nuveen Investments compared to the firm-wide
adjusted operating margins of the peers for each calendar year from 2012 to 2021.
The Board had also appointed four Independent Board Members to
serve as the Board’s liaisons, with the assistance of independent counsel, to review the development of the profitability data and
to report to the full Board. In its evaluation, the Board, however, recognized that other reasonable and valid allocation methodologies
could be employed and could lead to significantly different results. The Independent Board Members also reviewed a summary of the key
drivers that affected Nuveen’s revenues and expenses impacting profitability in 2021 versus 2020.
In reviewing the comparative peer data noted above, the Board
considered that the operating margins of Nuveen Investments compared favorably to the peer group range of operating margins; however,
the Independent Board Members also recognized the limitations of the comparative data given that peer data is not generally public and
the calculation of profitability is subjective and affected by numerous factors (such as types of funds a peer manages, its business mix,
its cost of capital, the numerous assumptions underlying the methodology used to allocate expenses and other factors) that can have a
significant impact on the results.
Aside from Nuveen’s profitability, the Board recognized
that the Adviser is a subsidiary of Nuveen, LLC, the investment management arm of Teachers Insurance and Annuity Association of America
(“TIAA”). Accordingly, the Board also reviewed a balance sheet for TIAA reflecting its assets, liabilities and capital and
contingency reserves for the 2021 and 2020 calendar years to consider the financial strength of TIAA. The Board recognized the benefit
of an investment adviser and its parent with significant resources, particularly during periods of market volatility. The Board also noted
the reinvestments Nuveen, its parent and/or other affiliates made into its business through, among other things, the investment of seed
capital in certain Nuveen funds and continued investments in enhancements to technological capabilities.
In addition to Nuveen, the Independent Board Members considered
the profitability of the Sub-Adviser from its relationships with the Nuveen funds. In this regard, the Independent Board Members reviewed,
among other things, the Sub-Adviser’s revenues, expenses and net revenue margins (pre- and post-tax) for its advisory activities
to the respective funds for the calendar years ended December 31, 2021 and December 31, 2020. The Independent Board Members also reviewed
a profitability analysis reflecting the revenues, expenses and revenue margin (pre- and post-tax) by asset type for the Sub-Adviser for
the calendar years ending December 31, 2021 and December 31, 2020 and the pre- and post-tax revenue margins from 2021 and 2020.
In evaluating the reasonableness of the compensation, the Independent
Board Members also considered any other ancillary benefits derived by the respective Fund Adviser from its relationship with the Nuveen
funds as discussed in further detail below.
Based on a consideration of all the information provided, the
Board noted that Nuveen’s and the Sub-Adviser’s level of profitability was acceptable and not unreasonable in light of the
services provided.
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(continued)
D. Economies of Scale and Whether Fee Levels Reflect These Economies
of Scale
The Board considered whether there have been economies of scale
with respect to the management of the Nuveen funds and whether these economies of scale have been appropriately shared with the funds.
The Board recognized that although economies of scale are difficult to measure and certain expenses may not decline with a rise in assets,
there are several methods to help share the benefits of economies of scale, including breakpoints in the management fee schedule, fee
waivers and/or expense limitations, the pricing of Nuveen funds at scale at inception and investments in Nuveen’s business which
can enhance the services provided to the funds for the fees paid. The Board noted that Nuveen generally has employed these various methods,
and the Board considered the extent to which the Nuveen funds will benefit from economies of scale as their assets grow. In this regard,
the Board recognized that the management fee of the Adviser is generally comprised of a fund-level component and a complex-level component
each with its own breakpoint schedule, subject to certain exceptions. The Board reviewed the fund-level and complex-level fee schedules.
The Board considered that the fund-level breakpoint schedules are designed to share economies of scale with shareholders if the particular
fund grows, and the complex-level breakpoint schedule is designed to deliver the benefits of economies of scale to shareholders when the
eligible assets in the complex pass certain thresholds even if the assets of a particular fund are unchanged or have declined. Further,
with respect to the Nuveen closed-end funds, the Independent Board Members noted that, although such funds may from time to time make
additional share offerings, the growth of their assets would occur primarily through the appreciation of such funds’ investment
portfolios. As noted above, the Independent Board Members also recognized the continued reinvestment in Nuveen’s business.
Based on its review, the Board concluded that the current fee
arrangements together with the reinvestment in Nuveen’s business appropriately shared any economies of scale with shareholders.
E. Indirect Benefits
The Independent Board Members received and considered information
regarding other benefits the respective Fund Adviser or its affiliates may receive as a result of their relationship with the Nuveen funds.
The Board considered the compensation that an affiliate of the Adviser received for serving as co-manager in the initial public offerings
of new closed-end funds and for serving as an underwriter on shelf offerings of existing closed-end funds.
In addition, the Independent Board Members also noted that various
sub-advisers (including the Sub-Adviser) may engage in soft dollar transactions pursuant to which they may receive the benefit of research
products and other services provided by broker-dealers executing portfolio transactions on behalf of the applicable Nuveen funds. However,
the Board noted that any benefits for the Sub-Adviser when transacting in fixed-income securities may be more limited as such securities
generally trade on a principal basis and therefore do not generate brokerage commissions.
Based on its review, the Board concluded that any indirect benefits
received by a Fund Adviser as a result of its relationship with the Funds were reasonable and within acceptable parameters.
F. Other Considerations
The Board Members did not identify any single factor discussed
previously as all-important or controlling. The Board Members, including the Independent Board Members, concluded that the terms of each
Advisory Agreement were reasonable, that the respective Fund Adviser’s fees were reasonable in light of the services provided to
each Fund and that the Advisory Agreements be renewed.
78
Notes
79
Nuveen:
Serving Investors for Generations
Since 1898, financial advisors and their clients have relied on Nuveen
to provide dependable investment solutions through continued adherence to proven, long-term investing principles. Today, we offer a range
of high quality solutions designed to be integral components of a well-diversified core portfolio.
Focused on meeting investor needs.
Nuveen is the investment manager of TIAA. We have grown into one of the
world’s premier global asset managers, with specialist knowledge across all major asset classes and particular strength in solutions
that provide income for investors and that draw on our expertise in alternatives and responsible investing. Nuveen is driven not only
by the independent investment processes across the firm, but also the insights, risk management, analytics and other tools and resources
that a truly world-class platform provides. As a global asset manager, our mission is to work in partnership with our clients to create
solutions which help them secure their financial future.
Find out how we can help you.
To learn more about how the products and services of Nuveen 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, 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/closed-end-funds
Nuveen Securities, LLC, member FINRA and SIPC 333 West Wacker
Drive Chicago, IL 60606 www.nuveen.com
ESA-A-0922D 2557722-INV-B-11/23