Principal Risks
Commodities risk:
The Fund may invest in instruments providing
exposure to commodities. Commodities markets historically have been extremely volatile, and the performance of securities and other instruments that provide an exposure to those markets therefore also may be highly volatile. Commodity prices are
affected by factors such as the cost of producing commodities, changes in consumer demand for commodities, the hedging
10
Section
2
How We Manage Your Money
and trading strategies of producers and consumers of commodities, speculative trading in commodities by commodity pools and other market participants, disruptions in commodity supply, drought,
floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments. Suspensions or disruptions of market trading in the commodities markets and related futures markets may adversely affect the
value of securities providing an exposure to the commodities markets.
Credit risk:
The Fund is subject to the risk that an
issuer of a debt security held by the Fund, or to which the Fund has exposure, may be unable or unwilling to make required dividend, interest and principal payments and the related risk that the value of a debt security may decline because of
concerns about the issuers ability or willingness to make such payments. Debt securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. The credit rating of a debt security may be lowered if the
issuer suffers adverse changes in its financial condition, which can lead to greater volatility in the price of the security and in shares of the Fund, and can also affect the bonds liquidity and make it more difficult for the Fund to sell.
When the Fund purchases unrated securities, it will depend on the sub-advisers analysis of credit risk without the assessment of an independent rating organization, such as Moodys or Standard & Poors.
Currency risk:
Changes in currency exchange rates will affect the value of non-U.S. securities, the value of dividends and interest earned
from such securities, gains and losses realized on the sale of such securities, and derivative transactions tied to such securities, hence will affect the net asset value of the Fund. A strong U.S. dollar relative to these other currencies will
adversely affect the value of a Fund that invests in such non-U.S. securities.
Derivatives risk:
The use of derivatives presents
risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. Derivatives can be highly volatile, illiquid and difficult to value, and there is the risk that changes in the value of a
derivative held by the Fund will not correlate with the asset, index or rate underlying the derivative contract.
The use of derivatives
can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the contracts. A derivative transaction also involves the risk that a loss may be sustained
as a result of the failure of the counterparty to the contract to make required payments. These risks are heightened when the management team uses derivatives to enhance the Funds return or as a substitute for a position or security, rather
than solely to hedge (or offset) the risk of a position or security held by the Fund.
In addition, when the Fund engages in certain
derivative transactions, it is effectively leveraging its investments, which could result in exaggerated changes in the net asset value of the Funds shares and can result in losses that exceed the amount originally invested. The success of the
Funds derivatives strategies will depend on the sub-advisers ability to assess and predict the impact of market or economic developments on the underlying asset, index or rate and the derivative itself, without the benefit of observing
the performance of the derivative under all possible market conditions.
The Fund may also enter into OTC transactions in
derivatives. Transactions in the OTC markets generally are conducted on a principal-to-principal basis. The terms and conditions of these instruments generally are not standardized and tend to be more specialized or complex, and the instruments may
be
Section
2
How We Manage Your Money
11
harder to value. In general, there is less governmental regulation and supervision of transactions in the OTC markets than of transactions entered into on organized exchanges. In addition,
certain derivative instruments and markets may not be liquid, which means the Fund may not be able to close out a derivatives transaction in a cost-efficient manner.
Short positions in derivatives may involve greater risks than long positions, as the risk of loss on short positions is theoretically unlimited (unlike a long position, in which the risk of loss may be limited to
the notional amount of the investment).
Swap agreements may involve fees, commissions or other costs that may reduce the Funds
gains from a swap agreement or may cause the Fund to lose money.
Futures contracts are subject to the risk that an exchange may impose
price fluctuation limits, which may make it difficult or impossible for the Fund to close out a position when desired.
Equity
security risk:
Equity securities may decline significantly in price over short or extended periods of time. Price changes may occur in the market as a whole, or they may occur in only a particular company, industry, or sector of the market. In
addition, the types of securities in which the Fund invests, such as value stocks, growth stocks, large-capitalization stocks, mid-capitalization stocks, small-capitalization stocks and/or micro-capitalization stocks, may underperform the market as
a whole.
ETF risk:
The Fund may invest in ETFs. Like any fund, an ETF is subject to the risks of the underlying securities that
it holds. In addition, investments in ETFs present certain risks that do not apply to investments in traditional mutual funds. For index-based ETFs, while such ETFs seek to achieve the same returns as a particular market index, the performance of an
ETF may diverge from the performance of such index (commonly known as tracking error). ETFs are subject to fees and expenses (like management fees and operating expenses) and the Fund will indirectly bear its proportionate share of any such fees and
expenses paid by the ETFs in which it invests. Moreover, ETF shares may trade at a premium or discount to their net asset value. As ETFs trade on an exchange, they are subject to the risks of any exchange-traded instrument, including: (i) an
active trading market for its shares may not develop or be maintained, (ii) trading of its shares may be halted by the exchange, and (iii) its shares may be delisted from the exchange.
Frequent trading risk:
Frequent trading of the portfolio securities may produce capital gains, which are taxable to shareholders when
distributed. Frequent trading may also increase the amount of commissions or mark-ups to broker-dealers that the Fund pays when it buys and sells securities, which may detract from the Funds performance.
High yield securities risk:
The Fund may invest in securities that are rated below-investment grade, which are commonly referred to as
high yield securities or junk bonds. High yield securities usually offer higher yields than investment grade securities, but also involve more risk. High yield securities may be more susceptible to real or perceived adverse
economic conditions than investment grade securities, and they generally have more volatile prices and carry more risk to principal. In addition, liquidity risk is greater for high yield securities than for investment grade securities.
Interest rate risk:
Debt securities held by the Fund will fluctuate in value with changes in interest rates. In general, debt securities
will increase in value
12
Section
2
How We Manage Your Money
when interest rates fall and decrease in value when interest rates rise. The Fund may be subject to a greater risk of rising interest rates than would normally be the case due to the current
period of historically low rates. Longer-term debt securities are generally more sensitive to interest rate changes. Rising interest rates also may lengthen the duration of debt securities with call features, since exercise of the call becomes less
likely as interest rates rise, which in turn will make the securities more sensitive to changes in interest rates and result in even steeper price declines in the event of further interest rate increases.
Non-U.S./emerging markets risk:
Non-U.S. issuers or U.S. issuers with significant non-U.S. operations may be subject to risks in addition to
or different than those of issuers that are located in or principally operated in the United States due to political, social and economic developments abroad, different regulatory environments and laws, potential seizure by the government of company
assets, higher taxation, withholding taxes on dividends and interest and limitations on the use or transfer of portfolio assets.
To the
extent the Fund invests in depositary receipts, the Fund will be subject to many of the same risks as when investing directly in non-U.S. securities. The holder of an unsponsored depositary receipt may have limited voting rights and may not receive
as much information about the issuer of the underlying securities as would the holder of a sponsored depositary receipt.
Other
non-U.S. investment risks include the following:
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Enforcing legal rights may be difficult, costly and slow in non-U.S. countries, and there may be special problems enforcing claims against
non-U.S.
governments.
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Non-U.S. companies may not be subject to accounting standards or governmental supervision comparable to U.S. companies, and there may be less public information
about their operations.
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Non-U.S. markets may be less liquid and more volatile than U.S. markets.
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The U.S. and non-U.S. markets often rise and fall at different times or by different amounts due to economic or other developments particular to a given country
or region. This phenomenon would tend to lower the overall price volatility of a portfolio that included both U.S. and non-U.S. securities. Sometimes, however, global trends will cause the U.S. and non-U.S. markets to move in the same direction,
reducing or eliminating the risk reduction benefit of international investing.
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Non-U.S. securities traded on foreign exchanges, particularly in emerging markets countries, may be subject to further risks due to the inexperience of local
investment professionals and financial institutions, the possibility of permanent or temporary termination of trading, and greater spreads between bid and asked prices for securities. In addition, non-U.S. exchanges and investment professionals are
subject to less governmental regulation, and commissions may be higher than in the United States. Also, there may be delays in the settlement of non-U.S. exchange transactions.
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The Funds income from non-U.S. issuers may be subject to non-U.S. withholding taxes. In some countries, the Fund also may be subject to taxes on trading
profits and, on certain securities transactions, transfer or stamp duties tax. To the extent non-U.S. income taxes are paid by the Fund, U.S. shareholders may be entitled to a credit or deduction for U.S. tax purposes.
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Section 2
How We Manage Your Money
13
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Some countries, particularly in emerging markets, restrict to varying degrees foreign investment in their securities markets. In some circumstances, these
restrictions may limit or preclude investment in certain countries or may increase the cost of investing in securities of particular companies.
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Emerging markets generally do not have the level of market efficiency and strict standards in accounting and securities regulation to be on par with advanced
economies. Investments in emerging markets come with much greater risk due to political instability, domestic infrastructure problems and currency volatility.
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Other investment companies risk:
When the Fund invests in other investment companies, Fund shareholders bear both their proportionate share
of Fund expenses and, indirectly, the expenses of the other investment companies. Furthermore, the Fund is exposed to the risks to which the other investment companies may be subject.
Smaller company risk:
Stocks of small-cap companies involve substantial risk. These companies may lack the management expertise, financial
resources, product diversification, and competitive strengths of larger companies. Prices of small-cap stocks may be subject to more abrupt or erratic movements than stock prices of larger, more established companies or the market averages in
general. In addition, the frequency and volume of their trading may be less than is typical of larger companies, making them subject to wider price fluctuations. In some cases, there could be difficulties in selling the stocks of small-cap companies
at the desired time and price. Stocks at the bottom end of the capitalization range of small-cap companies sometimes are referred to as micro-cap stocks. These stocks may be subject to extreme price volatility, as well as limited
liquidity and limited research. While mid-cap stocks may be slightly less volatile than small-cap stocks, they still involve similar risks.
Other Risks
Small fund risk:
The Fund currently has less assets than larger
funds, and like other relatively small funds, large inflows and outflows may impact the Funds market exposure for limited periods of time, causing the Funds performance to vary from that of the Funds model portfolio. This impact
may be positive or negative, depending on the direction of market movement during the period affected. The Fund has policies in place which seek to reduce the impact of these flows where Nuveen Fund Advisors has prior knowledge of them.
14
Section
2
How We Manage Your Money
Section 3
How You Can Buy and Sell
Shares
The Fund offers multiple classes of shares, each with a different combination of sales charges, fees, eligibility
requirements and other features. Your financial advisor can help you determine which class is best for you. For further details, please see the statement of additional information. Because the prospectus and the statement of additional information
are available free of charge on Nuveens website at www.nuveen.com, we do not disclose the following share class information separately on the website.
Class A Shares
You can purchase Class A shares at the offering price, which is the net asset value per share plus an up-front sales charge. You may qualify for a reduced sales charge, or the sales charge may be waived, as
described in How to Reduce Your Sales Charge. Class A shares are also subject to an annual service fee of 0.25% of the Funds average daily net assets, which compensates your financial advisor or other financial intermediary
for providing ongoing service to you. Nuveen Securities, LLC (the
Distributor
), a subsidiary of Nuveen Investments and the distributor of the Fund, retains the up-front sales charge and the service fee on accounts with no
financial intermediary of record. The up-front Class A sales charges for the Fund are as follows:
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Amount of Purchase
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Sales Charge as
% of Public
Offering Price
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Sales Charge as %
of Net
Amount
Invested
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Maximum
Financial Intermediary
Commission as % of
Public
Offering Price
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Less than $50,000
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5.75
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%
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6.10
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%
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5.00
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%
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$50,000 but less than $100,000
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4.50
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4.71
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4.00
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$100,000 but less than $250,000
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3.75
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3.90
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3.25
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$250,000 but less than $500,000
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2.75
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2.83
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2.50
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$500,000 but less than $1,000,000
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2.00
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2.04
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1.75
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$1,000,000 and over*
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1.00
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*
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You can purchase $1 million or more of Class A shares at net asset value without an up-front sales charge. The Distributor pays financial intermediaries of record at a rate
of 1.00% of the first $2.5 million, plus 0.75% of the next $2.5 million, plus 0.50% of the amount over $5 million, which includes an advance of the first years service fee. Unless you are eligible for a waiver, you may be assessed a contingent
deferred sales charge (
CDSC
) of 1.00% if you redeem any of your shares within 12 months of purchase. See How to Sell SharesContingent Deferred Sales Charge below for more information.
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Class C Shares
You
can purchase Class C shares at the offering price, which is the net asset value per share without any up-front sales charge. Class C shares are subject to annual distribution and service fees of 1.00% of the Funds average daily net
assets. The annual 0.25% service fee compensates your financial advisor or other financial intermediary for providing ongoing service to you. The annual 0.75% distribution fee compensates the Distributor for paying your financial advisor or other
financial intermediary an ongoing sales commission as well as an advance of the first years service and distribution fees. The Distributor retains the service and distribution fees on accounts with no financial intermediary of record. If you
redeem your shares within 12 months of purchase, you will normally pay a 1.00% CDSC, which is calculated on the
Section 3
How You Can Buy and Sell
Shares
15
lower of your purchase price or redemption proceeds. You do not pay a CDSC on any Class C shares you purchase by reinvesting dividends.
The Fund has established a limit to the amount of Class C shares that may be purchased by an individual investor. See the statement of
additional information for more information.
Class I Shares
You can purchase Class I shares at the offering price, which is the net asset value per share without any up-front sales charge. As
Class I shares are not subject to sales charges or ongoing service or distribution fees, they have lower ongoing expenses than the other classes.
Class I shares are available for purchase by clients of financial intermediaries who charge such clients an ongoing fee for advisory, investment, consulting or related services. Such clients may include
individuals, corporations, endowments and foundations. The minimum initial investment for such clients is $100,000, but this minimum will be lowered to $250 for clients of financial intermediaries that have accounts holding Class I shares with
an aggregate value of at least $100,000. The Distributor may also lower the minimum to $250 for clients of financial intermediaries anticipated to reach this Class I share holdings level.
Class I shares are also available for purchase by family offices and their clients. A family office is a company that provides certain
financial and other services to a high net worth family or families. The minimum initial investment for family offices and their clients is $100,000, but this minimum will be lowered to $250 for clients of family offices that have accounts holding
Class I shares with an aggregate value of at least $100,000. The Distributor may also lower the minimum to $250 for clients of family offices anticipated to reach this Class I share holdings level.
Class I shares are also available for purchase, with no minimum initial investment, by the following categories of investors:
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Certain employer-sponsored retirement plans.
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Certain bank or broker-affiliated trust departments.
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Advisory accounts of Nuveen Fund Advisors and its affiliates.
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Current and former trustees/directors of any Nuveen Fund, and their immediate family members (as defined in the statement of additional information).
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Officers, directors and former directors of Nuveen Investments and its affiliates, and their immediate family members.
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Full-time and retired employees of Nuveen Investments and its affiliates, and their immediate family members.
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Certain financial intermediary personnel, and their immediate family members.
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Certain other institutional investors described in the statement of additional information.
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Please refer to the statement of additional information for more information about Class A, Class C and Class I shares, including
more detailed program descriptions and eligibility requirements. Additional information is also available from your financial advisor, who can also help you prepare any necessary application forms.
16
Section
3
How You Can Buy and Sell Shares
The Fund offers a number of ways to reduce or eliminate the up-front sales charge on Class A shares. See
What Share Classes We Offer (above) for a discussion of eligibility requirements for purchasing Class I shares.
Class A Sales Charge Reductions
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Rights of Accumulation.
In calculating the appropriate sales charge on a purchase of Class A shares of the Fund, you may be able to add the amount of
your purchase to the value, based on the current net asset value per share, of all of your prior purchases of any Nuveen Mutual Fund.
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Letter of Intent.
Subject to certain requirements, you may purchase Class A shares of the Fund at the sales charge rate applicable to the total
amount of the purchases you intend to make over a 13-month period.
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For purposes of calculating the appropriate sales
charge as described under
Rights of Accumulation
and
Letter of Intent
above, you may include purchases by (i) you, (ii) your spouse or domestic partner and children under the age of 21 years, and (iii) a corporation,
partnership or sole proprietorship that is 100% owned by any of the persons in (i) or (ii). In addition, a trustee or other fiduciary can count all shares purchased for a single trust, estate or other single fiduciary account that has multiple
accounts (including one or more employee benefit plans of the same employer).
Class A Sales Charge Waivers
Class A shares of the Fund may be purchased at net asset value without a sales charge as follows:
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Purchases of $1,000,000 or more (although such purchases may be subject to a CDSC in certain circumstances, see How to Sell
SharesContingent Deferred Sales Charge below).
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Monies representing reinvestment of Nuveen Mutual Fund distributions.
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Certain employer-sponsored retirement plans.
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Employees of Nuveen Investments and its affiliates.
Purchases by full-time and retired employees of Nuveen Investments and its affiliates and such
employees immediate family members (as defined in the statement of additional information).
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Current and former trustees/directors of the Nuveen Funds.
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Financial intermediary personnel.
Purchases by any person who, for at least the last 90 days, has been an officer, director, or employee of any financial
intermediary or any such persons immediate family member.
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Certain trust departments.
Purchases by bank or broker-affiliated trust departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, advisory, custodial or similar capacity.
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Additional categories of investors.
Purchases made (i) by investors purchasing on a periodic fee, asset-based fee or no transaction fee basis through
a broker-dealer sponsored mutual fund purchase program; (ii) by clients of investment advisers, financial planners or other financial intermediaries that charge periodic or asset-based fees for their services; and (iii) through a financial
intermediary that has entered into an agreement with the Distributor to offer the Funds shares to self-directed investment brokerage accounts and that may or may not charge a transaction fee to its customers.
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Section 3
How You Can Buy and Sell Shares
17
In order to obtain a sales charge reduction or waiver, it may be necessary at the time of purchase
for you to inform the Fund or your financial advisor of the existence of other accounts in which there are holdings eligible to be aggregated for such purposes. You may need to provide the Fund or your financial advisor information or records, such
as account statements, in order to verify your eligibility for a sales charge reduction or waiver. This may include account statements of family members and information regarding Nuveen Mutual Fund shares held in accounts with other financial
advisors. You or your financial advisor must notify the Distributor at the time of each purchase if you are eligible for any of these programs. The Fund may modify or discontinue these programs at any time.
Fund shares may be purchased on any business day, which is any day the New York Stock Exchange (the
NYSE
) is open for business. Generally, the NYSE is closed on weekends and national holidays. The share price you pay depends on when the Distributor receives your order and on the share class you are purchasing. Orders received
before the close of trading on a business day (normally, 4:00 p.m. New York time) will receive that days closing share price; otherwise, you will receive the next business days price.
You may purchase Fund shares (1) through a financial advisor or (2) directly from the Fund.
Through a Financial Advisor
You may buy shares through your financial advisor, who can handle all the details for you, including opening a new account. Financial advisors can
also help you review your financial needs and formulate long-term investment goals and objectives. In addition, financial advisors generally can help you develop a customized financial plan, select investments and monitor and review your portfolio
on an ongoing basis to help assure your investments continue to meet your needs as circumstances change. Financial advisors (including brokers or agents) are paid for providing ongoing investment advice and services, either from Fund sales charges
and fees or by charging you a separate fee in lieu of a sales charge.
Financial advisors or other dealer firms may charge their
customers a processing or service fee in connection with the purchase or redemption of Fund shares. The amount and applicability of such a fee is determined and disclosed to customers by each individual dealer. Processing or service fees typically
are fixed, nominal dollar amounts and are in addition to the sales and other charges described in this prospectus and the statement of additional information. Your dealer will provide you with specific information about any processing or service
fees you will be charged. Shares you purchase through your financial advisor or other intermediary will normally be held with that firm. For more information, please contact your financial advisor.
Directly from the Fund
Eligible investors may purchase shares directly from the Fund.
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By wire.
You can purchase shares by making a wire transfer from your bank. Before making an initial investment by wire, you must submit a new account form
to the Fund. After receiving your form, a service representative will contact you with your account number and wiring
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18
Section
3
How You Can Buy and Sell Shares
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instructions. Your order will be priced at the next closing share price based on the share class of the Fund, calculated after the Funds custodian receives your payment by wire. Wired funds
must be received prior to 4:00 p.m. New York time to be eligible for same day pricing. Neither the Fund nor the transfer agent is responsible for the consequences of delays resulting from the banking or Federal Reserve wire system, or from
incomplete wiring instructions. Before making any additional purchases by wire, you should call Nuveen Investor Services at (800) 257-8787. You cannot purchase shares by wire on days when federally chartered banks are closed.
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By mail.
You may open an account directly with the Fund and buy shares by completing an application and mailing it along with your check to: Nuveen
Investor Services, P.O. Box 8530, Boston, Massachusetts
02266-8530.
Applications may be obtained at www.nuveen.com or by calling (800) 257-8787. No third party checks will be accepted.
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The Fund does not consider the U.S. Postal Service or other independent delivery services to be its agents.
Therefore, deposit in the mail or with such services, or receipt at the post office box above, of purchase orders or redemption requests does not constitute receipt by the transfer agent of the Fund.
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On-line.
Existing shareholders with direct accounts may process certain account transactions on-line. You may purchase additional shares or exchange
shares between existing, identically registered direct accounts. You can also look up your account balance, history and dividend information, as well as order duplicate account statements and tax forms from the Funds website. To access your
account, click the Individual Investors link on www.nuveen.com and then choose Account Access under the Resources tab. The system will walk you through the log-in process. To purchase shares on-line, you must have
established Fund Direct privileges on your account prior to the requested transaction. See Special ServicesFund Direct below.
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By telephone.
Existing shareholders with direct accounts may also process account transactions via the Funds automated information line. Simply call
(800) 257-8787, press 1 for mutual funds and the voice menu will walk you through the process. To purchase shares by telephone, you must have established Fund Direct privileges on your account prior to the requested transaction. See
Special ServicesFund Direct below.
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To help make your investing with us easy and efficient, we offer you the following services at no extra cost.
Your financial advisor can help you complete the forms for these services, or you can call Nuveen Investor Services at (800) 257-8787 for copies of the necessary forms.
Systematic Investing
Once you have opened an account satisfying the applicable investment
minimum, systematic investing allows you to make regular additional investments through automatic deductions from your bank account, directly from your paycheck or from exchanging shares from another mutual fund account. The minimum automatic
deduction is $100 per month. There is no charge to participate in the Funds systematic investment plan. You can stop the deductions at any time by notifying the Fund in writing.
Section 3
How
You Can Buy and Sell Shares
19
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From your bank account.
You can make systematic investments of $100 or more per month by authorizing the Fund to draw pre-authorized checks on your bank
account.
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From your paycheck.
With your employers consent, you can make systematic investments each pay period (collectively meeting the monthly minimum of
$100) by authorizing your employer to deduct monies from your paycheck.
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Systematic exchanging.
You can make systematic investments by authorizing the Distributor to exchange shares from one Nuveen Mutual Fund account into
another identically registered Nuveen Mutual Fund account of the same share class.
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Systematic Withdrawal
If the value of your Fund account is at least $10,000, you may request to have $50 or more withdrawn automatically from your
account. You may elect to receive payments monthly, quarterly, semi-annually or annually, and may choose to receive a check, have the monies transferred directly into your bank account (see Fund Direct below), paid to a third party or
sent payable to you at an address other than your address of record. You must complete the appropriate section of the account application or Account Update Form to participate in the Funds systematic withdrawal plan.
You should not establish systematic withdrawals if you intend to make concurrent purchases of Class A or Class C shares because you may
unnecessarily pay a sales charge or CDSC on these purchases.
Exchanging Shares
You may exchange Fund shares into an identically registered account for the same class of another Nuveen Mutual Fund available in your state. Your
exchange must meet the minimum purchase requirements of the fund into which you are exchanging. You may also, under certain limited circumstances, exchange between certain classes of shares of the same fund, subject to the payment of any applicable
CDSC. Please consult the statement of additional information for details.
The Fund reserves the right to revise or suspend the exchange
privilege, limit the amount or number of exchanges, or reject any exchange. Shareholders will be provided with at least 60 days notice of any material revision to or termination of the exchange privilege.
Because an exchange between funds is treated for tax purposes as a purchase and sale, any gain may be subject to tax. An exchange between classes
of shares of the same fund may not be considered a taxable event. You should consult your tax advisor about the tax consequences of exchanging your shares.
Fund
Direct
SM
The Fund Direct Program allows you to link your Fund account to your bank account, transfer money electronically between these accounts and perform
a variety of account transactions, including purchasing shares by telephone and investing through a systematic investment plan. You may also have dividends, distributions, redemption payments or systematic withdrawal plan payments sent directly to
your bank account.
Reinstatement Privilege
If you redeem Fund shares, you may reinvest all or part of your redemption proceeds up to one year later without incurring any additional charges. You
20
Section
3
How You Can Buy and Sell Shares
may only reinvest into the same share class you redeemed. If you paid a CDSC, any shares purchased pursuant to the reinstatement privilege will not be subject to a CDSC. You may use this
reinstatement privilege only once for any redemption.
You may sell (redeem) your shares on any business day, which is any day the NYSE is open for business. You will
receive the share price next determined after the Fund has received your properly completed redemption request. Your redemption request must be received before the close of trading on the NYSE (normally, 4:00 p.m. New York time) for you to
receive that days price. The Fund will normally mail your check the next business day after a redemption request is received, but in no event more than seven days after your request is received. If you are selling shares purchased recently
with a check, your redemption proceeds will not be mailed until your check has cleared, which may take up to ten business days from your purchase date.
You may sell your shares (1) through a financial advisor or (2) directly to the Fund.
Through a Financial Advisor
You may sell your shares through your financial advisor, who can prepare the necessary documentation. Your financial advisor may charge for this
service.
Directly to the Fund
|
|
|
By mail.
You can sell your shares at any time by sending a written request to the Fund, c/o Nuveen Investor Services, P.O. Box 8530, Boston, Massachusetts
02266-8530. Your request must include the following information:
|
|
|
|
Your name and account number;
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|
|
The dollar or share amount you wish to redeem;
|
|
|
|
The signature of each owner exactly as it appears on the account;
|
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|
The name of the person to whom you want your redemption proceeds paid (if other than to the shareholder of record);
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The address where you want your redemption proceeds sent (if other than the address of record);
|
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|
Any certificates you have for the shares; and
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Any required signature guarantees.
|
After you have established your account, signatures on a written request must be guaranteed if:
|
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|
You would like redemption proceeds payable or sent to any person, address or bank account other than that on record;
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|
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|
You have changed the address on the Funds records within the last 30 days;
|
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|
Your redemption request is in excess of $50,000; or
|
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|
You are requesting a change in ownership on your account.
|
Non-financial
transactions, including establishing or modifying certain services such as changing bank information on an account, will require a
Section 3
How You Can Buy and Sell Shares
21
An Important Note About Telephone Transactions
Although Nuveen Investor Services has certain safeguards and procedures to confirm the identity of callers, it will not be liable for losses
resulting from following telephone instructions it reasonably believes to be genuine. Also, you should verify your trade confirmations immediately upon receipt.
signature guarantee or signature verification from a Medallion Signature Guarantee Program member or other acceptable form of authentication from a financial institution source. In addition to
the situations described above, the Fund reserves the right to require a signature guarantee, or another acceptable form of signature verification, in other instances based on the circumstances of a particular situation.
A signature guarantee assures that a signature is genuine and protects shareholders from unauthorized account transfers. Banks, savings and loan
associations, trust companies, credit unions, broker-dealers and member firms of a national securities exchange may guarantee signatures. Call your financial intermediary to determine if it has this capability. A notary public is not an acceptable
signature guarantor. Proceeds from a written redemption request will be sent to you by check unless another form of payment is requested.
|
|
|
On-line.
You may redeem shares or exchange shares between existing, identically registered accounts
on-line.
To access your account, click the Individual Investors link on www.nuveen.com and then choose Account Access under the Resources tab. The system will walk you through the
log-in
process.
On-line
redemptions are not available for shares owned in certificate form and, with respect to redemptions where the proceeds are payable by check, may
not exceed $50,000. Checks will only be issued to you as the shareholder of record and mailed to your address of record. If you have established Fund Direct privileges, you may have redemption proceeds transferred electronically to your bank
account.
|
|
|
|
By telephone.
If your account is held with the Fund and not in your brokerage account, and you have authorized telephone redemption privileges, call
(800) 257-8787
to redeem your shares, press 1 for mutual funds and the voice menu will walk you through the process. Telephone redemptions are not available for shares owned in certificate form and, with
respect to redemptions where the proceeds are payable by check, may not exceed $50,000. Checks will only be issued to you as the shareholder of record and mailed to your address of record, normally the next business day after the redemption request
is received. If you have established Fund Direct privileges, you may have redemption proceeds transferred electronically to your bank account. In this case, the redemption proceeds will be transferred to your bank on the next business day after the
redemption request is received. You should contact your bank for further information concerning the timing of the credit of the redemption proceeds in your bank account.
|
Contingent Deferred Sales Charge
If you redeem Class A or Class C shares that are subject to a CDSC, you may be assessed a CDSC upon redemption. When you redeem Class A or Class C shares subject to a CDSC, the Fund will first
redeem any shares that are not subject to a CDSC, and then redeem the shares you have owned for the longest period of time, unless you ask the Fund to redeem your shares in a different order. No CDSC is imposed on shares you buy through the
reinvestment of dividends and capital gains. The CDSC holding period is calculated on a monthly basis and begins on the first day of the month in which the purchase was made. When you redeem shares subject to a CDSC, the CDSC is calculated on the
lower of your purchase price or redemption proceeds, deducted from your redemption proceeds, and paid to the
22
Section
3
How You Can Buy and Sell Shares
Distributor. The CDSC may be waived under certain special circumstances as described in the statement of additional information.
Accounts with Low Balances
The Fund reserves the right to liquidate or assess a low balance fee on any account held directly with the Fund that has a balance that has fallen
below the account balance minimum of $1,000 for any reason, including market fluctuations.
If the Fund elects to exercise the right
to assess a low balance fee, then annually the Fund will assess a $15 low balance account fee on certain accounts with balances under the account balance minimum that are IRAs, Coverdell Education Savings Accounts or accounts established pursuant to
the UTMA or UGMA. At the same time, other accounts with balances under the account balance minimum will be liquidated, with proceeds being mailed to the address of record. Prior to the assessment of any low balance fee or liquidation of low balance
accounts, affected shareholders will receive a communication notifying them of the pending action, thereby providing time for shareholders to bring their accounts up to the account balance minimum prior to any fee assessment or account liquidation.
You will not be assessed a CDSC if your account is liquidated.
Redemptions
In-Kind
The Fund generally pays redemption proceeds in cash. However, if the Fund determines that it would be detrimental to its remaining
shareholders to make payment of a redemption order wholly in cash, the Fund may pay a portion of your redemption proceeds in securities or other Fund assets. Although it is unlikely that your shares would be redeemed
in-kind,
you would probably have to pay brokerage costs to sell the securities or other assets distributed to you, as well as taxes on any capital gains from that sale.
Section 3
How You Can Buy and Sell Shares
23
Section 4
General Information
To help you understand the tax implications of investing in the Fund, this section includes important details about how the
Fund makes distributions to shareholders. We discuss some other Fund policies as well. Please consult the statement of additional information and your tax advisor for more information about taxes.
Dividends from net investment income, if any, are normally declared and paid annually. Any capital gains are
normally distributed at least once each year.
Payment and Reinvestment Options
The Fund automatically reinvests your dividends in additional Fund shares unless you request otherwise. You may request to have your dividends paid
to you by check, sent via electronic funds transfer through Automated Clearing House network or reinvested in shares of another Nuveen Mutual Fund. For further information, contact your financial advisor or call Nuveen Investor Services at
(800) 257-8787.
If you request that your distributions be paid by check but those distributions cannot be delivered because of an incorrect mailing address, or if a distribution check remains uncashed for six
months, the undelivered or uncashed distributions and all future distributions will be reinvested in Fund shares at the current net asset value.
Non-U.S.
Income Tax Considerations
Investment income
that the Fund receives from its
non-U.S.
investments may be subject to
non-U.S.
income taxes, which generally will reduce Fund distributions. However, the United States
has entered into tax treaties with many
non-U.S.
countries that may entitle you to certain tax benefits.
Taxes and Tax Reporting
The Fund will make distributions that may be taxed as ordinary
income (which may be taxable at different rates, depending on the sources of the distributions) or capital gains (which may be taxable at different rates, depending on the length of time the Fund holds its assets). Distributions from the Funds
long-term capital gains are generally taxable as capital gains, while distributions from short-term capital gains and net investment income are generally taxable as ordinary income. However, certain ordinary income distributions received from the
Fund that are determined to be qualified dividend income may be taxed at tax rates equal to those applicable to
long-term
capital gains. The tax you pay on a given capital gains distribution depends generally
on how long the Fund has held the portfolio securities it sold and not on how long you have owned your Fund shares. Distributions generally do not qualify for a dividends received deduction if you are a corporate shareholder.
Early in each year, you will receive a statement detailing the amount and nature of all income and capital gains that you were paid during the
prior year. If you hold your investment at the firm where you purchased your Fund shares, you will receive the statement from that firm. If you hold your shares directly with the Fund, the Distributor will send you the statement. The tax
24
Section
4
General Information
status of your distributions is the same whether you reinvest them or elect to receive them in cash. The sale of shares in your account may produce a gain or loss, and is a taxable event. For tax
purposes, an exchange of shares between funds is generally the same as a sale.
Please note that if you do not furnish the Fund
with your correct Social Security number or employer identification number, you fail to provide certain certifications to the Fund, you fail to certify whether you are a U.S. citizen or a U.S. resident alien, or the Internal Revenue Service notifies
the Fund to withhold, federal law requires the Fund to withhold federal income tax from your distributions and redemption proceeds at the applicable withholding rate.
Buying or Selling Shares Close to a Record Date
Buying Fund shares shortly before the record
date for a taxable dividend or capital gain distribution is commonly known as buying the dividend. The entire distribution may be taxable to you even though a portion of the distribution effectively represents a return of your purchase
price.
Non-U.S.
Tax Credits
A regulated investment company with more than 50% of the value of its assets in stock or other securities of
non-U.S.
corporations at the close of a taxable year may, for such taxable year, elect to pass the regulated investment companys
non-U.S.
tax credits through to
its investors.
Cost Basis Method
You may elect a cost basis method to apply to all existing and future accounts you may establish. The cost basis method you select will determine the order in which shares are redeemed and how your cost basis
information is calculated and subsequently reported to you and to the Internal Revenue Service. Please consult your tax advisor to determine which cost basis method best suits your specific situation. If you hold your account directly with the Fund,
please contact Nuveen Investor Services at
(800) 257-8787
for instructions on how to make your election. If you hold your account with a financial intermediary, please contact that financial intermediary
for instructions on how to make your election. If you hold your account directly with the Fund and do not elect a cost basis method, your account will default to the average cost basis method. For a definition of average cost basis
method, please see the glossary. Financial intermediaries choose their own default method.
The Distributor serves as the selling agent and distributor of the Funds shares. In this capacity, the
Distributor manages the offering of the Funds shares and is responsible for all sales and promotional activities. In order to reimburse the Distributor for its costs in connection with these activities, including compensation paid to financial
intermediaries, the Fund has adopted a distribution and service plan under
Rule 12b-1
under the Investment Company Act of 1940, as amended. See How You Can Buy and Sell SharesWhat Share
Classes We Offer for a description of the distribution and service fees paid under this plan.
Section 4
General Information
25
Under the plan, the Distributor receives a distribution fee for Class C shares primarily for
providing compensation to financial intermediaries, including the Distributor, in connection with the distribution of shares. The Distributor receives a service fee for Class A and Class C shares to compensate financial intermediaries,
including the Distributor, for providing ongoing account services to shareholders. These services may include establishing and maintaining shareholder accounts, answering shareholder inquiries and providing other personal services to shareholders.
These fees also compensate the Distributor for other expenses, including printing and distributing prospectuses to persons other than shareholders, and preparing, printing, and distributing advertising materials, sales literature and reports to
shareholders used in connection with the sale of shares. Because these fees are paid out of the Funds assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of
sales charges.
Long-term
holders of Class C shares may pay more in distribution and service fees and CDSCs than the economic equivalent of the maximum
front-end
sales charge permitted under the Financial Industry Regulatory Authority Conduct Rules.
Other Payments to Financial Intermediaries
In addition to the sales commissions and certain payments from distribution and service fees to financial intermediaries as
previously described, the Distributor may from time to time make additional payments, out of its own resources, to certain financial intermediaries that sell shares of Nuveen Mutual Funds in order to promote the sales and retention of Fund shares by
those firms and their customers. The amounts of these payments vary by financial intermediary and, with respect to a given firm, are typically calculated by reference to the amount of the firms recent gross sales of Nuveen Mutual Fund shares
and/or total assets of Nuveen Mutual Funds held by the firms customers. The level of payments that the Distributor is willing to provide to a particular financial intermediary may be affected by, among other factors, the firms total
assets held in and recent net investments into Nuveen Mutual Funds, the firms level of participation in Nuveen Mutual Fund sales and marketing programs, the firms compensation program for its registered representatives who sell Fund
shares and provide services to Fund shareholders, and the asset class of the Nuveen Mutual Funds for which these payments are provided. The statement of additional information contains additional information about these payments, including the names
of the firms to which payments are made. The Distributor may also make payments to financial intermediaries in connection with sales meetings, due diligence meetings, prospecting seminars and other meetings at which the Distributor promotes its
products and services.
In connection with the availability of Nuveen Mutual Funds within selected mutual fund
no-transaction
fee institutional platforms and
fee-based
wrap programs (together,
Platform Programs
) at certain financial intermediaries, the Distributor
also makes payments out of its own assets to those firms as compensation for certain recordkeeping, shareholder communications and other account administration services provided to Nuveen Mutual Fund shareholders who own their Fund shares in these
Platform Programs. These payments are in addition to the service fee and any applicable omnibus
sub-accounting
fees paid to these firms with respect to these services by the Nuveen Mutual Funds out of Fund
assets.
26
Section
4
General Information
The amounts of payments to a financial intermediary could be significant, and may create an incentive
for the intermediary or its representatives to recommend or offer shares of the Fund to you. The intermediary may elevate the prominence or profile of the Fund within the intermediarys organization by, for example, placing the Fund on a list
of preferred or recommended funds and/or granting the Distributor and/or its affiliates preferential or enhanced opportunities to promote the Fund in various ways within the intermediarys organization.
The price you pay for your shares or the amount you receive upon redemption of your shares is based on the
Funds net asset value per share, which is determined as of the close of trading (normally 4:00 p.m. New York time) on each day the NYSE is open for business. The Funds latest net asset value per share is available on the Funds
website at www.nuveen.com. Net asset value is calculated for each class of the Fund by taking the value of the classs total assets, including interest or dividends accrued but not yet collected, less all liabilities, and dividing by the total
number of shares outstanding. The result, rounded to the nearest cent, is the net asset value per share.
In determining net asset
value, portfolio instruments generally are valued using prices provided by independent pricing services or obtained from other sources, such as
broker-dealer
quotations.
Exchange-traded
instruments generally are valued at the last reported sales price or official closing price on an exchange, if available. Independent pricing services typically value
non-exchange-traded
instruments utilizing a range of
market-based
inputs and assumptions, including readily available market quotations
obtained from
broker-dealers
making markets in such instruments, cash flows, and transactions for comparable instruments. In pricing certain instruments, the pricing services may consider information about an
instruments issuer or market activity provided by the Funds investment adviser or
sub-adviser.
Non-U.S.
securities and currency are valued in U.S. dollars
based on
non-U.S.
currency exchange rate quotations supplied by an independent quotation service.
For
non-U.S.
traded securities whose principal local markets close before the close of the NYSE, the Fund may adjust the local closing price based upon such factors as
developments in
non-U.S.
markets, the performance of U.S. securities markets and the performance of instruments trading in U.S. markets that represent
non-U.S.
securities. The Fund may rely on an independent fair valuation service in making any such fair value determinations. If the Fund holds portfolio instruments that are primarily listed on
non-U.S.
exchanges, the
value of such instruments may change on days when shareholders will not be able to purchase or redeem the Funds shares.
If a
price cannot be obtained from a pricing service or other pre-approved source, or if, in the judgment of Nuveen Fund Advisors, a price is unreliable, a portfolio instrument will be valued at its fair value as determined in good faith by the Board of
Trustees or persons acting at their direction. Nuveen Fund Advisors may determine that a price is unreliable in various circumstances. For example, a price may be deemed unreliable if it has not changed for an identified period of time, or has
changed from the previous
Section
4
General Information
27
days price by more than a threshold amount, and recent transactions and/or broker dealer price quotations differ materially from the price in question.
The Board of Trustees has adopted valuation procedures for the Funds and has delegated the day-to-day responsibility for fair value determinations
to Nuveen Fund Advisors Valuation Committee. All fair value determinations made by the Valuation Committee are subject to review and ratification by the Board of Trustees. As a general principle, the fair value of a portfolio instrument is the
amount that an owner might reasonably expect to receive upon the instruments current sale. A range of factors and analysis may be considered when determining fair value, including relevant market data, interest rates, credit considerations
and/or issuer specific news. However, fair valuation involves subjective judgments and it is possible that the fair value determined for a portfolio instrument may be materially different from the value that could be realized upon the sale of that
instrument.
The Fund is intended for
long-term
investment and should not be used for
excessive trading. Excessive trading in the Funds shares can disrupt portfolio management, lead to higher operating costs, and cause other operating inefficiencies for the Fund. However, the Fund is also mindful that shareholders may have
valid reasons for periodically purchasing and redeeming Fund shares.
Accordingly, the Fund has adopted a Frequent Trading Policy that
seeks to balance the Funds need to prevent excessive trading in Fund shares while offering investors the flexibility in managing their financial affairs to make periodic purchases and redemptions of Fund shares.
The Funds Frequent Trading Policy generally limits an investor to two round trip trades in a
60-day
period. A round trip is the purchase and subsequent redemption of Fund shares, including by exchange. Each side of a round trip may be comprised of either a single transaction or a series of
closely-spaced
transactions.
The Fund primarily receives share purchase and redemption orders
through
third-party
financial intermediaries, some of whom rely on the use of omnibus accounts. An omnibus account typically includes multiple investors and provides the Fund only with a net purchase or
redemption amount on any given day where multiple purchases, redemptions and exchanges of shares occur in the account. The identity of individual purchasers, redeemers and exchangers whose orders are aggregated in omnibus accounts, and the size of
their orders, will generally not be known by the Fund. Despite the Funds efforts to detect and prevent frequent trading, the Fund may be unable to identify frequent trading because the netting effect in omnibus accounts often makes it more
difficult to identify frequent traders. The Distributor has entered into agreements with financial intermediaries that maintain omnibus accounts with the Funds transfer agent. Under the terms of these agreements, the financial intermediaries
undertake to cooperate with the Distributor in monitoring purchase, exchange and redemption orders by their customers in order to detect and prevent frequent trading in the Fund through such accounts. Technical limitations in operational systems at
such intermediaries or at the Distributor may also limit the Funds ability to detect and prevent frequent trading. In addition, the Fund may permit
28
Section
4
General Information
certain financial intermediaries, including
broker-dealer
and retirement plan administrators, among others, to enforce their own internal policies and
procedures concerning frequent trading. Such policies may differ from the Funds Frequent Trading Policy and may be approved for use in instances where the Fund reasonably believes that the intermediarys policies and procedures
effectively discourage inappropriate trading activity. Shareholders holding their accounts with such intermediaries may wish to contact the intermediary for information regarding its frequent trading policy. Although the Fund does not knowingly
permit frequent trading, it cannot guarantee that it will be able to identify and restrict all frequent trading activity.
The Fund
reserves the right in its sole discretion to waive unintentional or minor violations (including transactions below certain dollar thresholds) if it determines that doing so would not harm the interests of Fund shareholders. In addition, certain
categories of redemptions may be excluded from the application of the Frequent Trading Policy, as described in more detail in the statement of additional information. These include, among others, redemptions pursuant to systematic withdrawal plans,
redemptions in connection with the total disability or death of the investor, involuntary redemptions by operation of law, redemptions in payment of account or plan fees, and certain redemptions by retirement plans, including redemptions in
connection with qualifying loans or hardship withdrawals, termination of plan participation, return of excess contributions, and required minimum distributions. The Fund may also modify or suspend the Frequent Trading Policy without notice during
periods of market stress or other unusual circumstances.
The Fund reserves the right to impose restrictions on purchases or exchanges
that are more restrictive than those stated above if it determines, in its sole discretion, that a transaction or a series of transactions involves market timing or excessive trading that may be detrimental to Fund shareholders. The Fund also
reserves the right to reject any purchase order, including exchange purchases, for any reason. For example, the Fund may refuse purchase orders if the Fund would be unable to invest the proceeds from the purchase order in accordance with the
Funds investment policies and/or objective, or if the Fund would be adversely affected by the size of the transaction, the frequency of trading in the account or various other factors. For more information about the Funds Frequent
Trading Policy and its enforcement, see Purchase and Redemption of Fund SharesFrequent Trading Policy in the statement of additional information.
The custodian of the assets of the Fund is U.S. Bank National Association (
U.S. Bank
),
1555 North RiverCenter Drive, Suite 302, Milwaukee, WI 53202. The Funds transfer, shareholder services and dividend paying agent, Boston Financial Data Services, Inc. (
BFDS
), 2000 Crown Colony Drive, Quincy, MA 02169,
performs bookkeeping, data processing and administrative services for the maintenance of shareholder accounts. U.S. Bank and BFDS maintain certain books and records of the Fund at their respective locations.
Section 4
General Information
29
Section 5
Financial Highlights
The financial highlights table is intended to help you understand a Funds financial performance for the life of the Fund.
Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all dividends and
distributions).
The information for the most recent fiscal period has been audited by PricewaterhouseCoopers LLP, whose report,
along with the Funds financial statements, are included in the annual report, which is available upon request.
Nuveen Global Tactical
Opportunities Plus Fund
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Class
(Commencement
Date)
|
|
|
|
|
Investment Operations
|
|
|
Less Distributions
|
|
|
|
|
|
|
|
|
Ratios/Supplemental Data
|
|
Year Ended
October 31,
|
|
Beginning
Net Asset
Value
|
|
|
Net
Investment
Income
(Loss)(a)
|
|
|
Net
Realized/
Unrealized
Gain (Loss)
|
|
|
Total
|
|
|
From
Net
Investment
Income
|
|
|
From
Accumulated
Net
Realized
Gains
|
|
|
Total
|
|
|
Ending
Net
Asset
Value
|
|
|
Total
Return(b)
|
|
|
Ending
Net
Assets
(000)
|
|
|
Ratios of
Expenses
to Average
Net
Assets(c)(e)
|
|
|
Ratios of
Net
Investment
Income
(Loss)
to
Average
Net
Assets(c)
|
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Portfolio
Turnover
Rate(f)
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Class A (9/13)
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2013(d)
|
|
$
|
20.00
|
|
|
$
|
(.01
|
)
|
|
$
|
.01
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
20.00
|
|
|
|
|
%
|
|
$
|
25
|
|
|
|
1.32
|
%**
|
|
|
(.45
|
)%**
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class C (9/13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
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|
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|
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|
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|
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|
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|
|
|
|
|
|
2013(d)
|
|
|
20.00
|
|
|
|
(.02
|
)
|
|
|
.01
|
|
|
|
(.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19.99
|
|
|
|
(.05
|
)
|
|
|
25
|
|
|
|
2.07
|
**
|
|
|
(1.18
|
)**
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class I (9/13)
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013(d)
|
|
|
20.00
|
|
|
|
|
*
|
|
|
.01
|
|
|
|
.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.01
|
|
|
|
.05
|
|
|
|
2,951
|
|
|
|
1.07
|
**
|
|
|
(.18
|
)**
|
|
|
10
|
|
(a)
|
Per share Net Investment Income (Loss) is calculated using the average daily shares method.
|
(b)
|
Total Return is the combination of changes in net asset value without any sales charge, reinvested dividend income at net asset value and reinvested capital gains distributions
at net asset value, if any. Total Return is not annualized.
|
(c)
|
After fee waiver and/or expense reimbursement from the Adviser, where applicable.
|
(d)
|
For the period September 26, 2013 (commencement of operations) through October 31, 2013.
|
(e)
|
In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the exchange-traded funds in which the
Fund invests. These exchange-traded fund fees and expenses are not reflected in the expense ratios. Because the exchange-traded funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of
fees and expenses incurred indirectly by the Fund will vary.
|
(f)
|
Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales (as disclosed in Note 5 Investment Transactions, in the most recent shareholder
report) divided by the average long-term market value during the period.
|
*
|
Rounds to less than $.01 per share.
|
30
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (
SAI
) is not a prospectus. This SAI relates to, and should be read in conjunction with,
the Prospectus dated February 28, 2014 for Nuveen Global Tactical Opportunities Plus Fund (the
Fund
), a series of Nuveen Investment Trust. A Prospectus may be obtained without charge from certain securities representatives, banks
and other financial institutions that have entered into sales agreements with Nuveen Securities, LLC (the
Distributor
), or from the Fund, by written request to Nuveen Global Tactical Opportunities Plus Fund, c/o Nuveen Investor
Services, P.O. Box 8530, Boston, Massachusetts 02266-8530, or by calling (800) 257-8787.
The audited financial statements for the
Funds most recent fiscal year appear in the Funds Annual Report dated October 31, 2013, which is incorporated herein by reference and is available without charge by calling (800) 257-8787.
TABLE OF CONTENTS
S-2
GENERAL INFORMATION
The Fund is a diversified series of Nuveen Investment Trust (the
Trust
), an open-end management investment company organized as a Massachusetts business trust on May 6, 1996. Each series of
the Trust represents shares of beneficial interest in a separate portfolio of securities and other assets, with its own objective and policies. Currently, 18 series of the Trust are authorized and outstanding. The Funds investment adviser is
Nuveen Fund Advisors, LLC (
Nuveen Fund Advisors
or the
Adviser
). The Funds sub-adviser is Nuveen Asset Management, LLC (
Nuveen Asset Management
or the
Sub-Adviser
).
Certain matters under the Investment Company Act of 1940, as amended (the
1940 Act
), which must be submitted to a
vote of the holders of the outstanding voting securities of a series, shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding voting shares of each series affected by such matter.
INVESTMENT RESTRICTIONS
The investment objective and certain investment policies of the Fund are described in the Prospectus for the Fund. The Fund, as a fundamental policy, may not, without the approval of the holders of a majority of
the Funds outstanding voting shares:
(1) Concentrate its investments in a particular industry, as the term
concentrate is used in the 1940 Act.
(2) Borrow money, except as permitted under the 1940 Act, as
interpreted or modified from time to time by any regulatory authority having jurisdiction.
(3) Issue senior securities,
except as permitted under the 1940 Act, as interpreted or modified from time to time by any regulatory authority having jurisdiction.
(4) Act as an underwriter of another issuers securities, except to the extent that the Fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in connection with the purchase
and sale of portfolio securities.
(5) Make loans, except as permitted under the 1940 Act, as interpreted or modified
from time to time by any regulatory authority having jurisdiction.
(6) Purchase or sell physical commodities, except as
permitted under the 1940 Act, as interpreted or modified from time to time by any regulatory authority having jurisdiction, or unless acquired as a result of ownership of securities or other instruments; but this restriction shall not prevent the
Fund from purchasing or selling options, futures contracts, swaps, or other derivative instruments, or from investing in securities or other instruments backed by physical commodities.
(7) Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments; but this restriction
shall not prevent the Fund from purchasing or selling securities or other instruments backed by real estate or interests therein or of issuers engaged in real estate activities.
(8) Make any investment inconsistent with the Funds classification as a diversified company under the 1940 Act.
With respect to the limitation in number (1) above, the 1940 Act does not define what constitutes concentration in an industry. The
Securities and Exchange Commission staff has taken the position that investment of 25% or more of a funds total assets in one or more issuers conducting their principal activities in the same industry or group of industries constitutes
concentration. It is possible that interpretations of concentration could change. The limitation in number (1) will be interpreted to refer to concentration as that term may be interpreted from time to time. The limitation also will be interpreted
to permit investment without limit in the following: securities of the U.S. government and its agencies or instrumentalities; securities of state, territory, possession or municipal governments
S-3
and their authorities, agencies, instrumentalities or political subdivisions; securities of foreign governments; and repurchase agreements collateralized by any such obligations. Accordingly,
issuers of the foregoing securities will not be considered to be members of any industry. This limitation also does not place a limit on investment in issuers domiciled in a single jurisdiction or country.
For purposes of applying the limitation set forth in number (1) above, to the extent that the income from a municipal bond is derived from a
specific project, the securities will be deemed to be from the industry of that project and subject to the concentration limitation.
Where a security is guaranteed by a governmental entity or some other facility, such as a bank guarantee or letter of credit, such a guarantee or
letter of credit would be considered a separate security and would be treated as an issue of such government, other entity or bank.
Except with respect to the limitation in number (2) above, the foregoing restrictions and limitations, as well as the Funds policies as to
ratings of portfolio investments, will apply only at the time of purchase of securities, and the percentage limitations will not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of an
acquisition of securities, unless otherwise indicated.
For purposes of applying the limitations set forth in numbers (2)and (3)
above, under the 1940 Act as currently in effect, the Fund is not permitted to issue senior securities, except that the Fund may borrow from any bank if immediately after such borrowing the value of the Funds total assets is at least 300% of
the principal amount of all of the Funds borrowings (i.e., the principal amount of the borrowings may not exceed 33 1/3% of the Funds total assets). In the event that such asset coverage shall at any time fall below 300% the Fund shall,
within three calendar days thereafter (not including Sundays and holidays), reduce the amount of its borrowings to an extent that the asset coverage of such borrowing shall be at least 300%.
For purposes of applying the limitation set forth in number (5) above, there are no limitations with respect to unsecured loans made by the Fund to
an unaffiliated party. However, if the Fund loans its portfolio securities, the obligation on the part of the Fund to return collateral upon termination of the loan could be deemed to involve the issuance of a senior security within the meaning of
Section 18(f) of the 1940 Act. In order to avoid violation of Section 18(f), the Fund may not make a loan of portfolio securities if, as a result, more than one-third of its total asset value (at market value computed at the time of making a loan)
would be on loan.
With respect to the limitation in number (8) above, the Fund is currently classified as a diversified fund under the
1940 Act. This means that the Fund may not purchase securities of an issuer (other than (i) securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, (ii) repurchase agreements fully collateralized by U.S. government
securities, or (iii) securities issued by other investment companies) if, with respect to 75% of its total assets, (i) more than 5% of the Funds total assets would be invested in securities of that issuer, or (ii) the Fund would hold more than
10% of the outstanding voting securities of that issuer. With respect to the remaining 25% of total assets, the Fund can invest more than 5% of its assets in one issuer.
The foregoing fundamental investment policies cannot be changed without approval by holders of a majority of the Funds outstanding voting shares. As defined in the 1940 Act, this means the vote of
(i) 67% or more of the Funds shares present at a meeting, if the holders of more than 50% of the Funds shares are present or represented by proxy, or (ii) more than 50% of the Funds shares, whichever is less.
In addition to the foregoing fundamental investment policies, the Fund is also subject to the following non-fundamental restrictions and policies,
which may be changed by the Board of Trustees. The Fund may not:
(1) Invest in illiquid securities if, as a result of
such investment, more than 15% of the Funds net assets would be invested in illiquid securities.
(2) Acquire any
securities of registered open-end investment companies or registered unit investment trusts in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1) of the 1940 Act.
S-4
For purposes of number (1) above, illiquid securities will have the same meaning as
it does under the 1940 Act.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of the Funds investment objective, principal investment strategies, policies and
techniques that appears in the Prospectus for the Fund. Additional information concerning principal investment strategies and other investment strategies that may be used by the Fund, is set forth below in alphabetical order. Additional information
concerning the Funds investment restrictions is set forth above under Investment Restrictions.
If a percentage
limitation on investments by the Fund stated in this SAI or the Prospectus is adhered to at the time of an investment, a later increase or decrease in percentage resulting from changes in asset value will not be deemed to violate the limitation
except in the case of the limitations on borrowing. To the extent the Fund is limited to investing in securities with specified ratings or of a certain credit quality, the Fund is not required to sell a security if its rating is reduced or its
credit quality declines after purchase, but may consider doing so. Descriptions of the rating categories of Standard & Poors Ratings Services, a division of The
McGraw-Hill
Companies, Inc.
(
Standard & Poors
), Fitch, Inc. (
Fitch
) and Moodys Investors Service, Inc. (
Moodys
) are contained in Appendix A.
References in this section to the Adviser also apply, to the extent applicable, to the
Sub-Adviser
of the
Fund.
Asset Coverage Requirements
To the extent required by Securities and Exchange Commission (
SEC
) guidelines, the Fund will only engage in transactions that expose it to an obligation to another party if it owns either
(a) an offsetting position for the same type of financial asset or (b) cash or liquid securities, designated on the Funds books or held in a segregated account with a value sufficient at all times to cover its potential obligations
not covered as provided in (a). Examples of transactions governed by these asset coverage requirements include, for example, short sales, options, futures contracts and options on futures contracts, forward currency contracts, swaps, and
when-issued
and delayed delivery transactions. Assets used as offsetting positions, designated on the Funds books, or held in a segregated account cannot be sold while the positions requiring cover are open
unless replaced with other appropriate assets. As a result, the commitment of a large portion of assets to be used as offsetting positions or to be designated or segregated in such a manner could impede portfolio management or the ability to meet
redemption requests or other current obligations.
In the case of futures contracts or forward contracts that are not contractually
required to cash settle, the Fund must set aside liquid assets equal to such contracts full notional value (generally, the total numerical value of the asset underlying a future or forward contract at the time of valuation) while the positions
are open. With respect to futures contracts or forward contracts that are contractually required to cash settle, however, the Fund is permitted to set aside liquid assets in an amount equal to the Funds daily mark-to-market net obligation
(i.e., the Funds daily net liability) under the contracts, if any, rather than such contracts full notional value. By setting aside assets equal to only its net obligations under cash-settled futures and forward contracts, the Fund may
employ leverage to a greater extent than if the Fund were required to segregate assets equal to the full notional value of such contracts.
Commodity-Linked Securities
The Fund may invest in commodity-linked exchange-traded funds (
ETFs
) and
derivative securities, which are designed to provide investment exposure to commodities without direct investment in physical commodities or commodities futures contracts. Commodities to which the Fund may gain exposure include assets such as oil,
gas, industrial and precious metals, livestock, and agricultural or meat products, or other items that have tangible properties. The Fund may invest in securities that give it exposure to various commodities and commodity sectors. The value of
commodity-linked securities held by the Fund may be affected by a variety of factors, including, but
S-5
not limited to, overall market movements and other factors affecting the value of particular industries or commodities, such as weather, disease, embargoes, acts of war or terrorism, or political
and regulatory developments.
The prices of commodity-linked securities may move in different directions than investments in traditional
equity and debt securities. For example, during periods of rising inflation, debt securities have historically tended to decline in value due to the general increase in prevailing interest rates. Conversely, during those same periods of rising
inflation, the prices of certain commodities, such as oil and metals, have historically tended to increase. Of course, there cannot be any guarantee that these investments will perform in that manner in the future, and at certain times the price
movements of commodity-linked securities have been parallel to those of debt and equity securities. Commodities have historically tended to increase and decrease in value during different parts of the business cycle than financial assets.
Nevertheless, at various times, commodities prices may move in tandem with the prices of financial assets and thus may not provide overall portfolio diversification benefits.
Derivatives
The Fund may use derivative instruments as described
below. Generally, a derivative is a financial contract the value of which depends upon, or is derived from, the value of an underlying asset, reference rate or index. Derivatives generally take the form of contracts under which the parties agree to
payments between them based upon the performance of a wide variety of underlying references, such as stocks, bonds, loans, commodities, interest rates, currency exchange rates, and various domestic and foreign indices.
The Fund may use derivatives for a variety of reasons, including as a substitute for investing directly in securities, as part of a hedging strategy
(that is, for the purpose of reducing risk to the Fund), or for other purposes related to the management of the Fund. Derivatives permit the Fund to increase or decrease the level of risk, or change the character of the risk, to which its portfolio
is exposed in much the same way as the Fund can increase or decrease the level of risk, or change the character of the risk, of its portfolio by making investments in specific securities. However, derivatives may entail investment exposures that are
greater than their cost would suggest. As a result, a small investment in derivatives could have a large impact on the Funds performance.
While transactions in some derivatives may be effected on established exchanges, many other derivatives are privately negotiated and entered into in the over-the-counter market with a single counterparty. When
exchange-traded derivatives are purchased and sold, a clearing agency associated with the exchange stands between each buyer and seller and effectively guarantees performance of each contract, either on a limited basis through a guaranty fund or to
the full extent of the clearing agencys balance sheet. Transactions in over-the-counter derivatives not subject to a clearing requirement have no such protection. Each party to an uncleared over-the-counter derivative bears the risk that its
direct counterparty will default. In addition, over-the-counter derivatives are generally less liquid than exchange-traded derivatives because they often can only be closed out with the other party to the transaction.
The use of derivative instruments is subject to applicable regulations of the SEC, the CFTC, various state regulatory authorities and, with respect
to exchange-traded derivatives, the several exchanges upon which they are traded. As discussed above under Asset Coverage Requirements, in order to engage in certain transactions in derivatives, the Fund may be required to hold
offsetting positions or to hold cash or liquid securities in a segregated account or designated on the Funds books. In addition, the Funds ability to use derivative instruments may be limited by tax considerations.
The particular derivative instruments the Fund can use are described below. The Funds portfolio managers may decide not to employ some or all
of these instruments, and there is no assurance that any derivatives strategy used by the Fund will succeed. The Fund may employ new derivative instruments and strategies when they are developed, if those investment methods are consistent with the
Funds investment objective and are permissible under applicable regulations governing the Fund.
S-6
Options Transactions
The Fund may purchase put and call options on specific securities (including groups or baskets of specific securities), interest rates, stock indices, bond indices and/or foreign currencies. In
addition, the Fund may write put and call options on such financial instruments.
Options on Securities.
The Fund may purchase put
and call options on securities. A put option on a security gives the purchaser of the option the right (but not the obligation) to sell, and the writer of the option the obligation to buy, the underlying security at a stated price (the
exercise price) at any time before the option expires. A call option on a security gives the purchaser the right (but not the obligation) to buy, and the writer the obligation to sell, the underlying security at the exercise price at any
time before the option expires. The purchase price for a put or call option is the premium paid by the purchaser for the right to sell or buy.
The Fund may purchase put options to hedge against a decline in the value of its portfolio. By using put options in this way, the Fund would reduce any profit it might otherwise have realized in the underlying
security by the amount of the premium paid for the put option and by transaction costs. In similar fashion, the Fund may purchase call options to protect against an increase in the price of securities that the Fund anticipates purchasing in the
future, a practice sometimes referred to as anticipatory hedging. The premium paid for the call option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise of the option, and, unless the price of
the underlying security rises sufficiently, the option may expire unexercised.
Options on Interest Rates and Indices.
The Fund
may purchase put and call options on interest rates and on stock and bond indices. An option on interest rates or on an index gives the holder the right to receive, upon exercise of the option, an amount of cash if the closing value of the
underlying interest rate or index is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. This amount of cash is equal to the difference between the exercise-settlement value of the interest rate
option or the closing price of the index and the exercise price of the option expressed in dollars times a specified multiple (the multiplier). The writer of the option is obligated, for the premium received, to make delivery of this
amount. Settlements for interest rate and index options are always in cash.
Options on Currencies.
The Fund may purchase put and
call options on foreign currencies. A foreign currency option provides the option buyer with the right to buy or sell a stated amount of foreign currency at the exercise price at a specified date or during the option period. A call option gives its
owner the right, but not the obligation, to buy the currency, while a put option gives its owner the right, but not the obligation, to sell the currency. The option seller (writer) is obligated to fulfill the terms of the option sold if it is
exercised. However, either seller or buyer may close its position during the option period in the secondary market for such options at any time prior to expiration.
A foreign currency call option rises in value if the underlying currency appreciates. Conversely, a foreign currency put option rises in value if the underlying currency depreciates. While purchasing a foreign
currency option may protect the Fund against an adverse movement in the value of a foreign currency, it would limit the gain which might result from a favorable movement in the value of the currency. For example, if the Fund were holding securities
denominated in an appreciating foreign currency and had purchased a foreign currency put to hedge against a decline in the value of the currency, it would not have to exercise its put. In such an event, however, the amount of the Funds gain
would be offset in part by the premium paid for the option. Similarly, if the Fund entered into a contract to purchase a security denominated in a foreign currency and purchased a foreign currency call to hedge against a rise in the value of the
currency between the date of purchase and the settlement date, the Fund would not need to exercise its call if the currency instead depreciated in value. In such a case, the Fund could acquire the amount of foreign currency needed for settlement in
the spot market at a lower price than the exercise price of the option.
Writing Options.
The Fund may write (sell) put and call
options. These transactions would be undertaken principally to produce additional income. The Fund receives a premium from writing options which it retains whether or not the option is exercised. The Fund may write straddles consisting of a
combination of a call and a put written on the same underlying instrument.
S-7
The Fund will write a call on a security only if (a) the Fund owns the security underlying
the call, (b) the Fund has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, cash or other liquid assets in such amount are segregated), or (c) the
Fund holds a call on the same security where the exercise price of the call is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written, provided the difference is
maintained by the Fund in segregated liquid assets.
The Fund will write a call option on an index only if (a) the Fund segregates
liquid assets in an amount equal to the contract value of the index, or (b) the Fund holds a call on the index as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call
written, or (ii) greater than the exercise price of the call written, provided the difference is maintained by the Fund in segregated liquid assets. The Fund will write a put option on a security or index only if (a) the Fund segregates
liquid assets equal to the exercise price or (b) the Fund holds a put on the same security or index as the put written where the exercise price of the put held is (i) equal to or greater than the exercise price of the put written, or
(ii) less than the exercise price of the put written, provided the difference is maintained by the Fund in segregated liquid assets. When the Fund writes a straddle, sufficient assets will be segregated to meet the Funds immediate
obligations. The Fund may segregate the same liquid assets for both the call and put options in a straddle where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such cases,
the Fund will also segregate liquid assets equivalent to the amount, if any, by which the put is in the money.
Expiration
or Exercise of Options.
If an option written by the Fund expires unexercised, the Fund realizes a capital gain equal to the premium received at the time the option was written. If an option purchased by the Fund expires unexercised, the Fund
realizes a capital loss equal to the premium paid. Prior to the earlier of exercise or expiration, an exchange traded option may be closed out by an offsetting purchase or sale of an option of the same series (type, exchange, underlying security, or
index, exercise price, and expiration). There can be no assurance, however, that a closing purchase or sale transaction can be effected when the Fund desires.
The Fund may sell put or call options it has previously purchased, which could result in a net gain or loss depending on whether the amount realized on the sale is more or less than the premium and other
transaction costs paid on the put or call option which is sold. Prior to exercise or expiration, an option may be closed out by an offsetting purchase or sale of an option of the same series. The Fund will realize a capital gain from a closing
purchase transaction if the cost of the closing option is less than the premium received from writing the option, or, if it is more, the Fund will realize a capital loss. If the premium received from a closing sale transaction is more than the
premium paid to purchase the option, the Fund will realize a capital gain or, if it is less, the Fund will realize a capital loss. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates,
the current market price of the underlying security or index in relation to the exercise price of the option, the volatility of the underlying security or index, and the time remaining until the expiration date.
Futures
The Fund may engage in futures
transactions. The Fund may buy and sell futures contracts that relate to (1) interest rates, (2) debt securities, (3) bond indices, (4) foreign currencies, (5) stock indices, and (6) individual stocks. The Fund may only
enter into futures contracts which are standardized and traded on a U.S. or foreign exchange, board of trade or similar entity, or quoted on an automated quotation system.
A futures contract is an agreement between two parties to buy and sell a security, index or interest rate (each a
financial instrument
) for a set price on a future date. Certain futures
contracts, such as futures contracts relating to individual securities, call for making or taking delivery of the underlying financial instrument. However, these contracts generally are closed out before delivery by entering into an offsetting
purchase or sale of a matching futures contract. Other futures contracts, such as futures contracts on indices, do not call for making or taking delivery of the underlying financial instrument, but rather are agreements pursuant to which two parties
agree to take or make delivery of an amount of cash equal to the difference between the value of the financial instrument at
S-8
the close of the last trading day of the contract and the price at which the contract was originally written. These contracts also may be settled by entering into an offsetting futures contract.
Unlike when the Fund purchases or sells a security, no price is paid or received by the Fund upon the purchase or sale of a futures
contract. Initially, the Fund will be required to deposit with its futures broker (also known as a futures commission merchant (
FCM
)) an amount of cash or securities equal to a specified percentage of the contract amount. This
amount is known as initial margin. The margin deposit is intended to ensure completion of the contract. Minimum initial margin requirements are established by the futures exchanges and may be revised. In addition, FCMs may establish margin deposit
requirements that are higher than the exchange minimums. Cash held as margin is generally invested by the FCM in high-quality instruments permitted under CFTC regulations, with returns retained by the FCM and interest paid to the Fund on the cash at
an agreed-upon rate. The Fund will also receive any interest paid from coupon-bearing securities, such as Treasury securities, held in margin accounts. Subsequent payments to and from the FCM, called variation margin, will be made on a daily basis
as the price of the underlying financial instrument fluctuates, making the futures contract more or less valuable, a process known as marking the contract to market. Changes in variation margin are recorded by the Fund as unrealized gains or losses.
At any time prior to expiration of the futures contract, the Fund may elect to close the position by taking an opposite position that will operate to terminate its position in the futures contract. A final determination of variation margin is then
made, additional cash is required to be paid by or released to the Fund, and the Fund realizes a gain or loss. In the event of the bankruptcy or insolvency of an FCM that holds margin on behalf of the Fund, the Fund may be entitled to the return of
margin owed to it only in proportion to the amount received by the FCMs other customers, potentially resulting in losses to the Fund. Futures transactions also involve brokerage costs.
Most U.S. futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary either up or down from the previous days settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of futures
contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders
to substantial losses.
Commodity Futures Contracts.
The Fund may invest in commodity futures contracts. Commodity futures
contracts are generally based upon commodities within the six principal commodity groups: energy, industrial metals, agriculture, precious metals, foods and fibers, and livestock. The price of a commodity futures contract will reflect the storage
costs of purchasing the physical commodity. These storage costs include the time value of money invested in the physical commodity plus the actual costs of storing the commodity less any benefits from ownership of the physical commodity that are not
obtained by the holder of a futures contract (this is sometimes referred to as the convenience yield). To the extent that these storage costs change for an underlying commodity while the Fund is invested in futures contracts on that
commodity, the value of the futures contract may change proportionately.
The commodities which underlie commodity futures contracts are
subject to economic and non-economic variables, such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political and regulatory developments. These factors may have a larger impact on commodity prices
and commodity-linked instruments, including futures contracts, than on traditional securities. Certain commodities are also subject to limited pricing flexibility because of supply and demand factors. Others are subject to broad price fluctuations
as a result of the volatility of the prices for certain raw materials and the instability of supplies of other materials. These additional variables may create additional investment risks which subject the Funds investments to greater
volatility than investments in traditional securities.
VIX Futures.
The Fund may buy and sell futures contracts that track the
level of the Chicago Board Options Exchange (
CBOE
) Volatility Index (
VIX
). The CBOE Volatility Index is based upon the prices of options on the S&P 500 Index that are listed on the CBOE, and is designed to
reflect
S-9
investors projection of future (30-day) stock market volatility. The value of VIX futures is dependent on the movements in the expected volatility of stock prices; it is not dependent on
the direction of stock prices. Thus, VIX futures provide a way for the Fund to seek to either hedge certain of its portfolio positions or to profit by correctly forecasting the future volatility in the stock market.
Options on Futures
The Fund may also
purchase or write put and call options on futures contracts and enter into closing transactions with respect to such options to terminate an existing position. A futures option gives the holder the right, in return for the premium paid, to assume a
long position (call) or short position (put) in a futures contract at a specified exercise price prior to the expiration of the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is
assigned the opposite short position. In the case of a put option, the opposite is true. Prior to exercise or expiration, a futures option may be closed out by an offsetting purchase or sale of a futures option of the same series.
The Fund may use options on futures contracts in connection with hedging strategies. The writing of a call option or the purchasing of a put option
on a futures contract constitutes a partial hedge against declining prices of the securities which are deliverable upon exercise of the futures contract. If the futures price at expiration of a written call option is below the exercise price, the
Fund will retain the full amount of the option premium which provides a partial hedge against any decline that may have occurred in the Funds holdings of securities. If the futures price when the option is exercised is above the exercise
price, however, the Fund will incur a loss, which may be offset, in whole or in part, by the increase in the value of the securities held by the Fund that were being hedged. Writing a put option or purchasing a call option on a futures contract
serves as a partial hedge against an increase in the value of the securities the Fund intends to acquire.
As with investments in futures
contracts, the Fund is required to deposit and maintain margin with respect to put and call options on futures contracts written by it.
Forward
Currency Contracts and other Foreign Currency Transactions
The Fund may enter into forward currency contracts. A forward currency
contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are
traded directly between currency traders (usually large commercial banks) and their customers. Unlike futures contracts, which are standardized contracts, forward contracts can be specifically drawn to meet the needs of the parties that enter into
them. The parties to a forward currency contract may agree to offset or terminate the contract before its maturity, or may hold the contract to maturity and complete the contemplated exchange. Because forward contracts are not traded on an exchange,
the Fund is subject to the credit and performance risk of the counterparties to such contracts.
The following summarizes the principal
currency management strategies involving forward contracts that may be used by the Fund. The Fund also may use currency futures contracts and options thereon, put and call options on foreign currencies and currency swaps for the same purposes.
Transaction Hedges.
When the Fund enters into a contract for the purchase or sale of a security denominated in a foreign
currency, or when it anticipates receiving dividend payments in a foreign currency, the Fund might wish to lock in the U.S. dollar price of the security or the U.S. dollar equivalent of the dividend payments. To do so, the Fund could enter into a
forward contract for the purchase or sale of the amount of foreign currency involved in the underlying transaction at a fixed amount of U.S. dollars per unit of the foreign currency. This is known as a transaction hedge. A transaction
hedge will protect the Fund against a loss from an adverse change in the currency exchange rate during the period between the date on which the security is purchased or sold or on which the payment is declared, and the date on which the payment is
made or received. Forward contracts to purchase or sell a foreign currency may also be used by the Fund in anticipation of future purchases or sales of securities denominated in a foreign currency, even if the specific investments have not yet been
selected by the Sub-Adviser. This strategy is sometimes referred to as anticipatory hedging.
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Position Hedges.
The Fund could also use forward contracts to lock in the U.S. dollar value
of portfolio positions. This is known as a position hedge. When the Fund believes that a foreign currency might suffer a substantial decline against the U.S. dollar, it could enter into a forward contract to sell an amount of that
foreign currency approximating the value of some or all of the Funds portfolio securities denominated in that foreign currency. When the Fund believes that the U.S. dollar might suffer a substantial decline against a foreign currency, it could
enter into a forward contract to buy that foreign currency for a fixed dollar amount. Alternatively, the Fund could enter into a forward contract to sell a different foreign currency for a fixed U.S. dollar amount if the Funds portfolio
manager believes that the U.S. dollar value of that foreign currency will fall whenever there is a decline in the U.S. dollar value of the currency in which portfolio securities of the Fund are denominated. This is referred to as a cross
hedge.
Shifting Currency Exposure.
The Fund may also enter into forward contracts to shift its investment exposure from one
currency into another. This may include shifting exposure from U.S. dollars to foreign currency or from one foreign currency to another foreign currency. This strategy tends to limit exposure to the currency sold, and increase exposure to the
currency that is purchased, much as if the Fund had sold a security denominated in one currency and purchased an equivalent security denominated in another currency.
Swap Transactions
The Fund may enter into interest rate, currency, total return, and credit
default swap agreements. The Fund may also enter into options on the foregoing types of swap agreements (
swap options
).
The Fund may enter into swap transactions for any purpose consistent with its investment objectives and strategies, such as for the purpose of
attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, as a duration management technique, to protect against an increase in
the price of securities the Fund anticipates purchasing at a later date, to reduce risk arising from the ownership of a particular instrument, or to gain exposure to certain securities, reference rates, sectors or markets.
Swap agreements are two party contracts entered into primarily by institutional investors for a specified period of time. In a standard swap
transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on a particular predetermined asset, reference rate or index. The gross returns to be exchanged or swapped between the parties are
generally calculated with respect to a notional amount, e.g., the return on or increase in value of a particular dollar amount invested at a particular interest rate or in a basket of securities representing a particular index. The notional amount
of the swap agreement generally is only used as a basis upon which to calculate the obligations that the parties to the swap agreement have agreed to exchange. The Funds current obligations under a net swap agreement will be accrued daily
(offset against any amounts owed to the Fund) and the Fund will segregate assets determined to be liquid by the Sub-Adviser for any accrued but unpaid net amounts owed to a swap counterparty. See Asset Coverage Requirements above.
Interest Rate Swaps.
Interest rate swaps are financial instruments that involve the exchange of one type of interest rate for
another type of interest rate cash flow on specified dates in the future. Some of the different types of interest rate swaps are fixed-for floating rate swaps, termed basis swaps and index amortizing swaps.
Fixed-for floating rate swaps involve the exchange of fixed interest rate cash flows for floating rate cash flows. Termed basis swaps entail cash flows to both parties based on floating interest rates, where the interest rate indices are different.
Index amortizing swaps are typically fixed-for floating swaps where the notional amount changes if certain conditions are met. Like a traditional investment in a debt security, the Fund could lose money by investing in an interest rate swap if
interest rates change adversely.
Currency Swaps.
A currency swap is an agreement between two parties in which one party agrees to
make interest rate payments in one currency and the other promises to make interest rate payments in another currency. The Fund may enter into a currency swap when it has one currency and desires a different currency. Typically the interest rates
that determine the currency swap payments are fixed, although occasionally one or both parties may pay a floating rate of interest. Unlike an interest rate swap, however, the principal amounts are exchanged at the beginning of the contract
S-11
and returned at the end of the contract. Changes in non-U.S. exchange rates and changes in interest rates may negatively affect currency swaps.
Total Return Swaps.
In a total return swap, one party agrees to pay the other the total return of a defined underlying asset
during a specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. A total return swap may be applied to any underlying asset but is most commonly used with equity
indices, single stocks, bonds and defined baskets of loans and mortgages. The Fund might enter into a total return swap involving an underlying index or basket of securities to create exposure to a potentially widely-diversified range of securities
in a single trade. An index total return swap can be used by the portfolio managers to assume risk, without the complications of buying the component securities from what may not always be the most liquid of markets.
Credit Default Swaps.
A credit default swap is a bilateral contract that enables an investor to buy or sell protection against a
defined-issuer credit event. The Fund may enter into credit default swap agreements either as a buyer or a seller. The Fund may buy protection to attempt to mitigate the risk of default or credit quality deterioration in one or more of its
individual holdings or in a segment of the fixed income securities market to which it has exposure, or to take a short position in individual bonds or market segments which it does not own. The Fund may sell protection in an attempt to
gain exposure to the credit quality characteristics of particular bonds or market segments without investing directly in those bonds or market segments.
As the buyer of protection in a credit default swap, the Fund will pay a premium (by means of an upfront payment or a periodic stream of payments over the term of the agreement) in return for the right to deliver a
referenced bond or group of bonds to the protection seller and receive the full notional or par value (or other agreed upon value) upon a default (or similar event) by the issuer(s) of the underlying referenced obligation(s). If no default occurs,
the protection seller would keep the stream of payments and would have no further obligation to the Fund. Thus, the cost to the Fund would be the premium paid with respect to the agreement. If a credit event occurs, however, the Fund may elect to
receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity that may have little or no value. The Fund bears the risk that the protection seller may fail to satisfy its payment
obligations.
If the Fund is a seller of protection in a credit default swap and no credit event occurs, the Fund would generally receive
an up-front payment or a periodic stream of payments over the term of the swap. If a credit event occurs, however, generally the Fund would have to pay the buyer the full notional value of the swap in exchange for an equal face amount of deliverable
obligations of the reference entity that may have little or no value. As the protection seller, the Fund effectively adds economic leverage to its portfolio because, in addition to being subject to investment exposure on its total net assets, the
Fund is subject to investment exposure on the notional amount of the swap. Thus, the Fund bears the same risk as it would by buying the reference obligations directly, plus the additional risks related to obtaining investment exposure through a
derivative instrument discussed below under Risks and Special Considerations Concerning Derivatives.
Swap Options.
A
swap option is a contract that gives a counterparty the right (but not the obligation), in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement at some
designated future time on specified terms. A cash-settled option on a swap gives the purchaser the right, in return for the premium paid, to receive an amount of cash equal to the value of the underlying swap as of the exercise date. The Fund may
write (sell) and purchase put and call swap options. Depending on the terms of the particular option agreement, the Fund generally will incur a greater degree of risk when it writes a swap option than when it purchases a swap option. When the Fund
purchases a swap option, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when the Fund writes a swap option, upon exercise of the option the Fund will become obligated
according to the terms of the underlying agreement.
Caps, Collars and Floors
The Fund may enter into interest rate caps, floors and collars. Caps and floors have an effect similar to buying or writing options. In a typical
cap or floor agreement, one party agrees to make
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payments only under specified circumstances, usually in return for payment of a fee by the other party. For example, the buyer of an interest rate cap obtains the right to receive payments to the
extent that a specified interest rate exceeds an agreed-upon level. The seller of an interest rate floor is obligated to make payments to the extent that a specified interest rate falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Regulation of the Fund as a Commodity Pool
The Fund is subject to regulation as a commodity pool under the Commodity Exchange Act (CEA), and the Adviser has registered with
the CFTC and the National Futures Association (NFA) as a commodity pool operator.
The Sub-Advisers investment
decisions may need to be modified, and commodity contract positions held by the Fund may have to be liquidated at disadvantageous times or prices, to avoid exceeding position limits established by the CFTC, potentially subjecting the Fund to
substantial losses.
The regulation of commodity transactions in the United States is a rapidly changing area of law and is subject to
ongoing modification by government, self-regulatory and judicial action. The effect of any future regulatory change on the Fund is impossible to predict, but could be substantial and adverse to the Fund.
Federal Income Tax Treatment of Futures Contracts and Options
The Funds transactions in futures contracts and options will be subject to special provisions of the Internal Revenue Code of 1986, as amended (the
Code
), that, among other things, may
affect the character of gains and losses realized by the Fund (i.e., may affect whether gains or losses are ordinary or capital, or short-term or long-term), may accelerate recognition of income to the Fund and may defer Fund losses. These rules
could, therefore, affect the character, amount and timing of distributions to shareholders. These provisions also (a) will require the Fund to mark-to-market certain types of the positions in its portfolio (i.e., treat them as if they were
closed out) and (b) may cause the Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the 90% distribution requirement for qualifying to be taxed as a regulated investment company and
the distribution requirement for avoiding excise taxes.
Risks and Special Considerations Concerning Derivatives
The use of derivative instruments involves certain general risks and considerations as described below. The specific risks pertaining to certain
types of derivative instruments are described below:
(1)
Market Risk.
Market risk is the risk that the value of
the underlying assets may go up or down. Adverse movements in the value of an underlying asset can expose the Fund to losses. The successful use of derivative instruments depends upon a variety of factors, particularly the portfolio managers
ability to predict movements in the relevant markets, which may require different skills than predicting changes in the prices of individual securities. There can be no assurance that any particular strategy adopted will succeed.
(2)
Counterparty Risk.
Counterparty risk is the risk that a loss may be sustained as a result of the failure of a
counterparty to comply with the terms of a derivative instrument. The counterparty risk for exchange-traded derivatives is generally less than for OTC derivatives, since generally a clearing agency, which is the issuer or counterparty to each
exchange-traded instrument, provides a guarantee of performance. For many OTC instruments, there is no similar clearing agency guarantee. In all transactions, the Fund will bear the risk that the counterparty will default, and this could result in a
loss of the expected benefit of the derivative transactions and possibly other losses to the Fund. The Fund will enter into derivatives transactions only with counterparties that its portfolio manager reasonably believes are capable of performing
under the contract.
(3)
Correlation Risk.
Correlation risk is the risk that there might be an imperfect
correlation, or even no correlation, between price movements of a derivative instrument and price movements of investments being hedged. When a derivative transaction is used to completely hedge another position, changes in the market value of the
combined position (the derivative instrument plus the position being hedged) result from an imperfect correlation between the price movements of the
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two instruments. With a perfect hedge, the value of the combined position remains unchanged with any change in the price of the underlying asset. With an imperfect hedge, the value of the
derivative instrument and its hedge are not perfectly correlated. For example, if the value of a derivative instrument used in a short hedge (such as writing a call option, buying a put option or selling a futures contract) increased by less than
the decline in value of the hedged investments, the hedge would not be perfectly correlated. This might occur due to factors unrelated to the value of the investments being hedged, such as speculative or other pressures on the markets in which these
instruments are traded. The effectiveness of hedges using instruments on indices will depend, in part, on the degree of correlation between price movements in the index and the price movements in the investments being hedged.
(4)
Liquidity Risk.
Liquidity risk is the risk that a derivative instrument cannot be sold, closed out or replaced quickly at
or very close to its fundamental value. Generally, exchange contracts are very liquid because the exchange clearinghouse is the counterparty of every contract. OTC transactions are less liquid than exchange-traded derivatives since they often can
only be closed out with the other party to the transaction. The Fund might be required by applicable regulatory requirements to maintain assets as cover, maintain segregated accounts, and/or make margin payments when it takes positions
in derivative instruments involving obligations to third parties (i.e., instruments other than purchase options). If the Fund is unable to close out its positions in such instruments, it might be required to continue to maintain such assets or
accounts or make such payments until the position expires, matures or is closed out. These requirements might impair the Funds ability to sell a security or make an investment at a time when it would otherwise be favorable to do so, or require
that the Fund sell a portfolio security at a disadvantageous time. The Funds ability to sell or close out a position in an instrument prior to expiration or maturity depends upon the existence of a liquid secondary market or, in the absence of
such a market, the ability and willingness of the counterparty to enter into a transaction closing out the position. There is no assurance that any derivatives position can be sold or closed out at a time and price that is favorable to the Fund.
(5)
Legal Risk.
Legal risk is the risk of loss caused by the unenforceability of a partys obligations under
the derivative. While a party seeking price certainty agrees to surrender the potential upside in exchange for downside protection, the party taking the risk is looking for a positive payoff. Despite this voluntary assumption of risk, a counterparty
that has lost money in a derivative transaction may try to avoid payment by exploiting various legal uncertainties about certain derivative products.
(6)
Systemic or Interconnection Risk.
Systemic or interconnection risk is the risk that a disruption in the financial markets will cause difficulties for all market participants. In other words,
a disruption in one market will spill over into other markets, perhaps creating a chain reaction. Much of the OTC derivatives market takes place among the OTC dealers themselves, thus creating a large interconnected web of financial obligations.
This interconnectedness raises the possibility that a default by one large dealer could create losses for other dealers and destabilize the entire market for OTC derivative instruments.
(7)
Leverage Risk.
Leverage risk is the risk that the Fund may be more volatile than if it had not been leveraged due to
leverages tendency to exaggerate the effect of any increase or decrease in the value of the Funds portfolio securities. The use of leverage may also cause the Fund to liquidate portfolio positions when it may not be advantageous to do so
to satisfy its obligations or to meet segregation requirements.
(8)
Regulatory Risk.
The Dodd-Frank Act Wall
Street Reform and Consumer Protection Act (the
Dodd-Frank Act
) has initiated a dramatic revision of the U.S. financial regulatory framework and covers a broad range of topics, including (among many others) a reorganization of
federal financial regulators; a process intended to improve financial systemic stability and the resolution of potentially insolvent financial firms; and new rules for derivatives trading. Instruments in which the Fund may invest, or the issuers of
such instruments, may be affected by the new legislation and regulation in ways that are unforeseeable. Many of the implementing regulations have not yet been finalized. Accordingly, the ultimate impact of the Dodd-Frank Act, including on the
derivative instruments in which the Fund may invest, is not yet certain.
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Equity Securities
The Fund may invest in or have exposure to equity securities, which include common stocks, preferred securities, warrants to purchase common stock
or preferred stocks, convertible securities, interests in real estate investment trusts, and other securities with equity characteristics.
Common
Stocks
Common stocks represent units of ownership in a company. Common stocks usually carry voting rights and earn dividends. Unlike
preferred securities, dividends on common stocks are not prescribed in advance but are declared at the discretion of a companys board.
While investing in stocks allows shareholders to participate in the benefits of owning a company, such shareholders must accept the risks of ownership. Unlike bondholders, who have preference to a companys
earnings and cash flow, common stockholders are entitled only to the residual amount after a company meets its other obligations. For this reason, the value of a companys stock will usually react more strongly to actual or perceived changes in
the companys financial condition or prospects than its debt obligations. Stockholders of a company that fares poorly can lose money.
Stock markets tend to move in cycles with short or extended periods of rising and falling stock prices. The value of a companys stock may fall
because of:
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Factors that directly relate to that company, such as decisions made by its management or lower demand for the companys products or services;
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Factors affecting an entire industry, such as increases in production costs; and
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Changes in financial market conditions that are relatively unrelated to the company or its industry, such as changes in interest rates, currency exchange rates
or inflation rates.
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An investment in common stocks of issuers with small or medium market capitalizations generally
involves greater risk and price volatility than an investment in common stocks of larger, more established companies. This increased risk may be due to the greater business risks of their small or medium size, limited markets and financial
resources, narrow product lines and frequent lack of management depth. The securities of small and medium capitalization companies are often traded in the
over-the-counter
market, and might not be traded in volumes typical of securities traded on a national securities exchange. Thus, the securities of small and medium
capitalization companies are likely to be less liquid and subject to more abrupt or erratic market movements than securities of larger, more established companies.
Preferred Securities
Like common stock, preferred securities are also units of ownership in a
company, but preferred securities normally have preference over common stock in the payment of dividends and the liquidation of the company. In all other respects, however, preferred securities are subordinated to the liabilities of the issuer.
Unlike common stocks, preferred securities are generally not entitled to vote on corporate matters. Types of preferred securities include
adjustable-rate
preferred securities, fixed dividend preferred
securities, perpetual preferred securities and sinking fund preferred securities. Generally, the market value of preferred securities with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit
risk.
Because preferred securities are generally junior to most other forms of debt securities and other obligations of the issuer,
deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred security than in a more senior debt security with similar stated yield characteristics.
Warrants
Investing in warrants is purely speculative in that they have no voting rights, pay
no dividends, and have no rights with respect to the assets of the corporation issuing them. Warrants are issued by the issuer of a security and provide their holder the option to purchase that security upon the warrants exercise at a specific
price for a specific period of time. They do not represent ownership of the securities but only the right to buy them. The prices of warrants do not necessarily parallel the prices of the underlying securities.
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Convertible Securities
Convertible securities are hybrid securities that combine the investment characteristics of bonds and common stocks. Convertible securities typically consist of debt securities or preferred securities that may be
converted within a specified period of time (typically for the entire life of the security) into a certain amount of common stock or other equity security of the same or a different issuer at a predetermined price. They also include debt securities
with warrants or common stock attached and derivatives combining the features of debt securities and equity securities. Convertible securities entitle the holder to receive interest paid or accrued on debt, or dividends paid or accrued on preferred
securities, until the security matures or is redeemed, converted or exchanged.
The market value of a convertible security generally is a
function of its investment value and its conversion value. A securitys investment value represents the value of the security without its conversion feature (
i.e.
, a comparable non-convertible
fixed-income security). The investment value is determined by, among other things, reference to its credit quality and the current value of its yield to maturity or probable call date. At any given time, investment value is dependent upon such
factors as the general level of interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer and the seniority of the security in the issuers capital structure. A securitys conversion
value is determined by multiplying the number of shares the holder is entitled to receive upon conversion or exchange by the current price of the underlying security. If the conversion value of a convertible security is significantly below its
investment value, the convertible security will trade like nonconvertible debt or a preferred security in the sense that its market value will not be influenced greatly by fluctuations in the market price of the underlying security into which it can
be converted. Instead, the convertible securitys price will tend to move in the opposite direction from interest rates. Conversely, if the conversion value of a convertible security is significantly above its investment value, the market value
of the convertible security will be more heavily influenced by fluctuations in the market price of the underlying stock. In that case, the convertible securitys price may be as volatile as that of the common stock. Because both interest rate
and market movements can influence its value, a convertible security is not generally as sensitive to interest rates as a similar fixed-income security, nor is it generally as sensitive to changes in share price as its underlying stock.
The Funds investments in convertible securities, particularly securities that are convertible into securities of an issuer other than the
issuer of the convertible security, may be illiquid. The Funds investments in convertible securities may at times include securities that have a mandatory conversion feature, pursuant to which the securities convert automatically into common
stock or other equity securities (of the same or a different issuer) at a specified date and a specified conversion ratio, or that are convertible at the option of the issuer. For issues where the conversion of the security is not at the option of
the holder, the Fund may be required to convert the security into the underlying common stock even at times when the value of the underlying common stock or other equity security has declined substantially.
In addition, some convertible securities are rated below investment-grade or are not rated, and therefore may be considered speculative investments.
The credit rating of a companys convertible securities is generally lower than that of its conventional debt securities. Convertible securities are normally considered junior securitiesthat is, the company usually must pay
interest on its conventional corporate debt before it can make payments on its convertible securities. Some convertible securities are particularly sensitive to interest rate changes when their predetermined conversion price is much higher than the
issuing companys common stock.
Real Estate Investment Trusts
Real estate investment trusts (
REITs
) are publicly traded corporations or trusts that specialize in acquiring, holding, and managing residential, commercial or industrial real estate. A REIT is
not taxed at the entity level on income distributed to its shareholders or unitholders if it distributes to shareholders or unitholders at least 90% of its taxable income for each taxable year and complies with regulatory requirements relating to
its organization, ownership, assets and income. REITs generally can be classified as Equity REITs, Mortgage REITs and Hybrid REITs. An Equity REIT invests the majority of its assets directly in real property and derives its income primarily from
rents and from capital gains on real estate appreciation which are realized through property sales. A Mortgage REIT
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invests the majority of its assets in real estate mortgage loans and services its income primarily from interest payments. A Hybrid REIT combines the characteristics of an Equity REIT and a
Mortgage REIT.
Investment in REITs would subject the Fund to risks associated with the real estate industry. The real estate industry
has been subject to substantial fluctuations and declines on a local, regional and national basis in the past and may continue to be in the future. Real property values and income from real property may decline due to general and local economic
conditions, overbuilding and increased competition, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, regulatory limitations on rents, changes in neighborhoods and in demographics, increases
in market interest rates, or other factors. Factors such as these may adversely affect companies which own and operate real estate directly, companies which lend to such companies, and companies which service the real estate industry.
The Fund is also subject to risks associated with direct investments in REITs. Equity REITs will be affected by changes in the values of and income
from the properties they own, while Mortgage REITs may be affected by the credit quality of the mortgage loans they hold. In addition, REITs are dependent on specialized management skills and on their ability to generate cash flow for operating
purposes and to make distributions to shareholders or unitholders. REITs may have limited diversification and are subject to risks associated with obtaining financing for real property, as well as to the risk of
self-liquidation.
REITs also can be adversely affected by their failure to qualify for
tax-free
pass-through
treatment of their
income under the Code or their failure to maintain an exemption from registration under the 1940 Act. By investing in REITs indirectly through the Fund, a shareholder bears not only a proportionate share of the expenses of the Fund, but also may
indirectly bear similar expenses of some of the REITs in which it invests.
Exchange-Traded Funds
The Fund may invest in ETFs. ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents
a portfolio of securities designed to track a particular market index. The Fund could purchase an ETF to gain exposure to all or a portion of the U.S. market, a foreign market, a region, a commodity, a currency, or to any other index that an
ETF tracks. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although lack of liquidity in an ETF could result in it being more volatile and ETFs have management fees that
increase their costs. An ETF may fail to accurately track the returns of the market segment or index that it is designed to track, and the price of an ETFs shares may fluctuate. In addition, because they, unlike traditional mutual funds, are
traded on an exchange, ETFs are subject to the following risks: (i) the performance of the ETF may not replicate the performance of the underlying index that it is designed to track; (ii) the market price of the ETFs shares may trade
at a premium or discount to the ETFs net asset value; (iii) an active trading market for an ETF may not develop or be maintained; and (iv) there is no assurance that the requirements of the exchange necessary to maintain the listing
of the ETF will continue to be met or remain unchanged. Trading in an ETF may be halted if the trading in one or more of the ETFs underlying securities is halted, which could result in the ETF being more volatile. In the event substantial
market or other disruptions affecting ETFs should occur in the future, the liquidity and value of the Funds shares could also be substantially and adversely affected.
An investment companys investments in other investment companies are typically subject to statutory limitations prescribed by the 1940 Act.
Many ETFs, however, have obtained exemptive relief from the SEC to permit unaffiliated funds (such as the Fund) to invest in their shares beyond these statutory limits, subject to certain conditions and pursuant to contractual arrangements between
the ETFs and the investing funds. The Fund may rely on these exemptive orders in investing in ETFs.
Exchange-Traded Notes
The Fund may invest in exchange-traded notes (
ETNs
). ETNs are a type of senior, unsecured, unsubordinated
debt security issued by financial institutions that combines both aspects of bonds and ETFs. An ETNs returns are based on the performance of a market index minus fees and expenses. Similar to ETFs, ETNs are listed on an exchange and traded in
the secondary market. However, unlike an ETF, an ETN can be held until the ETNs maturity, at which time the issuer will pay a return linked to the performance of the market index to which the ETN is linked minus certain fees.
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Unlike regular bonds, ETNs do not make periodic interest payments and principal is not protected. ETNs
are subject to credit risk and the value of an ETN may drop due to a downgrade in the issuers credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may also be influenced by time to
maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuers credit rating, and economic, legal, political, or geographic events that
affect the referenced underlying asset. When the Fund invests in ETNs it will bear its proportionate share of any fees and expenses borne by the ETN. The Funds decision to sell its ETN holdings may be limited by the availability of a secondary
market. In addition, although an ETN may be listed on an exchange, the issuer may not be required to maintain the listing and there can be no assurance that a secondary market will exist for an ETN.
ETNs are also subject to tax risk. No assurance can be given that the Internal Revenue Service (
IRS
) will accept, or a court will
uphold, how the Funds characterize and treat ETNs for tax purposes. Further, the IRS and Congress have considered proposals that would change the timing and character of income and gains from ETNs.
An ETN that is tied to a specific market benchmark or strategy may not be able to replicate and maintain exactly the composition and relative
weighting of securities, commodities or other components in the applicable market benchmark or strategy. Some ETNs that use leverage can, at times, be relatively illiquid and, thus, they may be difficult to purchase or sell at a fair price.
Leveraged ETNs are subject to the same risk as other instruments that use leverage in any form.
The market value of ETN shares may
differ from their market benchmark or strategy. This difference in price may be due to the fact that the supply and demand in the market for ETN shares at any point in time is not always identical to the supply and demand in the market for the
securities, commodities or other components underlying the market benchmark or strategy that the ETN seeks to track. As a result, there may be times when an ETN share trades at a premium or discount to its market benchmark or strategy.
Fixed Income Securities
The Fund may invest in or have exposure to the fixed income securities described below. These securities are subject to (i) interest rate risk (the risk that increases in market interest rates will cause
declines in the value of debt securities held by the Fund); (ii) credit risk (the risk that the issuers of debt securities held by the Fund default in making required payments); and (iii) call or prepayment risk (the risk that a borrower
may exercise the right to prepay a debt obligation before its stated maturity, requiring the Fund to reinvest the prepayment at a lower interest rate).
U.S. Government Securities
The Fund may invest in U.S. Treasury obligations. The U.S.
government securities in which the Fund may invest are either issued or guaranteed by the U.S. government, its agencies or instrumentalities. U.S. Treasury obligations include separately traded interest and principal component parts of such
obligations, known as Separately Traded Registered Interest and Principal Securities (
STRIPS
), which are transferable through the Federal book-entry system. STRIPS are sold as zero coupon securities, which means that they are sold
at a substantial discount and redeemed at face value at their maturity date without interim cash payments of interest or principal. This discount is accreted over the life of the security, and such accretion will constitute the income earned on the
security for both accounting and tax purposes. Because of these features, such securities may be subject to greater interest rate volatility than interest paying U.S. Treasury obligations.
Corporate Debt Securities
The Fund may
invest in or have exposure to corporate debt securities. Corporate debt securities are fully taxable debt obligations issued by corporations. These securities fund capital improvements, expansions, debt refinancing or acquisitions that require more
capital than would ordinarily be available from a single lender. Investors in corporate debt securities lend money to the issuing corporation in exchange for interest payments and repayment of the principal at a set maturity date. Rates on corporate
debt securities are set according to prevailing interest rates at the time of the issue, the credit rating of the issuer, the length of the maturity and other terms of the security, such as
S-18
a call feature. Corporate debt securities are subject to the risk of an issuers inability to meet principal and interest payments on the obligations and may also be subject to price
volatility due to such factors as market interest rates, market perception of the creditworthiness of the issuer and general market liquidity. In addition, corporate restructurings, such as mergers, leveraged buyouts, takeovers or similar corporate
transactions are often financed by an increase in a corporate issuers debt securities. As a result of the added debt burden, the credit quality and market value of an issuers existing debt securities may decline significantly. Except as
described below under Debt Obligations Rated Less Than Investment Grade, investments in nonconvertible corporate debt securities will be limited to
investment-grade
securities, defined as
securities which are rated at the time of purchase by two of Moodys, Standard & Poors and Fitch not less than Baa, BBB and BBB (or the equivalent
short-term
ratings), respectively, unless
only one of those rating agencies provides a rating, in which case that rating must be at least Baa or BBB, or which are of comparable quality in the judgment of a
Sub-Adviser.
Debt Obligations Rated Less Than Investment Grade
The Fund may invest in or have exposure to both investment grade and
non-investment
grade debt obligations. Debt obligations rated less than investment grade are
sometimes referred to as high yield securities or junk bonds. To be consistent with the ratings methodology used by Barclays, a debt obligation is considered to be rated investment grade if two of Moodys,
Standard & Poors and Fitch rate the security
investment-grade
(i.e., at least Baa, BBB and BBB, respectively). If ratings are provided by only two of those rating agencies, the more conservative
rating is used to determine whether the security is
investment-grade.
If only one of those rating agencies provides a rating, that rating is used. The Fund may invest in non-investment grade debt obligations
rated at least B by two of Standard & Poors, Moodys and Fitch, unless only one of those rating agencies rates the security, in which case that rating must be at least B, or in unrated securities determined to be of comparable
quality.
The equity securities in which the Fund may invest include corporate debt obligations which are convertible
into common stock (see Equity SecuritiesConvertible Securities above). The Fund may invest in convertible securities without regard to their ratings, and therefore may hold convertible securities that are rated less than investment
grade.
Yields on
non-investment
grade debt obligations will fluctuate over time. The prices
of such obligations have been found to be less sensitive to interest rate changes than higher rated obligations, but more sensitive to adverse economic changes or individual corporate developments. Also, during an economic downturn or period of
rising interest rates, highly leveraged issuers may experience financial stress which could adversely affect their ability to service principal and interest payment obligations, to meet projected business goals, and to obtain additional financing.
In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices of
non-investment
grade debt obligations. If the issuer of a security held by the
Fund defaulted, the Fund might incur additional expenses to seek recovery.
In addition, the secondary trading market for
non-investment
grade debt obligations may be less developed than the market for investment grade obligations. This may make it more difficult for the Fund to value and dispose of such obligations. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of
non-investment
grade obligations, especially in a thin secondary trading market.
Certain risks also are associated with the use of credit ratings as a method for evaluating
non-investment
grade debt obligations. For example, credit ratings evaluate the safety of principal and interest payments, not the market value risk of such obligations. In addition, credit rating agencies may not timely change credit ratings to reflect current
events. Thus, the success of the Funds use of
non-investment
grade debt obligations may be more dependent on the
Sub-Advisers
own credit analysis than is the
case with investment grade obligations.
Variable, Floating, and Fixed Rate Debt Obligations
The debt obligations in which the Fund invests or has exposure to may have variable, floating, or fixed interest rates. Variable rate securities
provide for periodic adjustments in the interest rate.
S-19
Floating rate securities are generally offered at an initial interest rate which is at or above prevailing market rates. The interest rate paid on floating rate securities is then reset
periodically (commonly every 90 days) to an increment over some predetermined interest rate index. Commonly utilized indices include the three-month Treasury bill rate, the 180-day Treasury bill rate, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a bank, the commercial paper rates, or the longer-term rates on U.S. Treasury securities. Variable and floating rate securities are relatively long-term instruments that often carry demand features permitting
the holder to demand payment of principal at any time or at specified intervals prior to maturity plus accrued interest. In order to most effectively use these securities, the Sub-Adviser must correctly assess probable movements in interest rates.
If the Sub-Adviser incorrectly forecasts such movements, the Fund could be adversely affected by use of variable and floating rate securities.
Fixed rate securities pay a fixed rate of interest and tend to exhibit more price volatility during times of rising or falling interest rates than securities with variable or floating rates of interest. The value
of fixed rate securities will tend to fall when interest rates rise and rise when interest rates fall. The value of variable or floating rate securities, on the other hand, fluctuates much less in response to market interest rate movements than the
value of fixed rate securities. This is because variable and floating rate securities behave like short-term instruments in that the rate of interest they pay is subject to periodic adjustments according to a specified formula, usually with
reference to some interest rate index or market interest rate. Fixed rate securities with short-term characteristics are not subject to the same price volatility as fixed rate securities without such characteristics. Therefore, they behave more like
variable or floating rate securities with respect to price volatility.
Inflation Protected Securities
The Fund may invest in inflation protected securities. Inflation protected securities are fixed income securities designed to provide protection
against the negative effects of inflation. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the inflation accruals as part of
a semiannual coupon.
Inflation protected securities issued by the U.S. Treasury have maturities of five, ten, twenty or thirty years,
although it is possible that securities with other maturities will be issued in the future. The U.S. Treasury securities pay interest on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted principal amount. For example, if the
Fund purchased an inflation protected bond with a par value of $1,000 and a 3% real rate of return coupon (payable 1.5% semi-annually), and inflation over the first six months was 1%, the mid-year par value of the bond would be $1,010 and the first
semi-annual interest payment would be $15.15 ($1,010 times 1.5%). If inflation during the second half of the year resulted in the whole years inflation equaling 3%, the end-of-year par value of the bond would be $1,030 and the second
semi-annual interest payment would be $15.45 ($1,030 times 1.5%).
If the periodic adjustment rate measuring inflation falls, the
principal value of U.S. Treasury inflation protected securities will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original
bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation protected bonds, even during a period of deflation. However, the current market value of the bonds is not guaranteed, and will fluctuate.
Other inflation-protected securities that accrue inflation into their principal value may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less
than the original principal.
The value of inflation-protected securities is expected to change in response to changes in real interest
rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading
to an increase in value of inflation protected securities. In contrast, if nominal interest rates increased at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-protected securities.
S-20
The periodic adjustment of U.S. inflation protected bonds is tied to the Consumer Price Index for
Urban Consumers (
CPI-U
), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy.
Inflation protected securities issued by a foreign government are generally adjusted to reflect a comparable inflation index, calculated by that government. There can be no assurance that the CPI-U or any foreign inflation index will accurately
measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will be correlated to the rate of inflation in the United States. If the market perceives
that the adjustment mechanism of an inflation-protected security does not accurately adjust for inflation, the value of the security could be adversely affected.
While inflation protected securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. The calculation of the inflation index ratio
for inflation protected securities issued by the U.S. Treasury incorporates an approximate three-month lag, which may have an effect on the trading price of the securities, particularly during periods of significant, rapid changes in the inflation
index. To the extent that inflation has increased during the three months prior to an interest payment, that interest payment will not be protected from the inflation increase. Further, to the extent that inflation has increased during the final
three months of a securitys maturity, the final value of the security will not be protected against that increase, which will negatively impact the value of the security. If interest rates rise due to reasons other than inflation (for example,
due to changes in currency exchange rates), investors in inflation-protected securities may not be protected to the extent that the increase is not reflected in the bonds inflation measure.
Any increase in the principal amount of an inflation-protected security will be considered taxable income to the Fund, even though the Fund does not
receive its principal until maturity.
Sovereign Debt Obligations
The Fund may invest in instruments that give it exposure to sovereign debt obligations and may invest in foreign government obligations that have an investment grade rating from at least one rating agency.
Investments in sovereign debt obligations involve special risks which are not present in corporate debt securities. The foreign issuer of the sovereign debt or the foreign governmental authorities that control the repayment of the debt may be unable
or unwilling to repay principal or interest when due, and there may be limited recourse in the event of a default. During periods of economic uncertainty, the market prices of sovereign debt, and the net asset value of the Fund, to the extent it
invests in or has exposure to such securities, may be more volatile than prices of U.S. debt issuers. In the past, certain foreign countries have encountered difficulties in servicing their debt obligations, withheld payments of principal and
interest and declared moratoria on the payment of principal and interest on their sovereign debt.
A sovereign debtors
willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the availability of sufficient foreign exchange, the
relative size of the debt service burden, the sovereign debtors policy toward principal international lenders and local political constraints. Sovereign debtors may also be dependent on expected disbursements from foreign governments,
multilateral agencies and other entities to reduce principal and interest arrearages on their debt. The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance or repay principal or interest when
due may result in the cancellation of third party commitments to lend funds to the sovereign debtor, which may further impair such debtors ability or willingness to service its debts.
Foreign Securities
General.
The Fund invests in or has
exposure to foreign securities. The Funds investments in foreign securities may include investments in securities which are purchased and sold in foreign currencies. Foreign securities may include debt securities of governmental and corporate
issuers, preferred stock, common stock, and convertible securities of corporate issuers, rights and warrants to buy common stocks, depositary receipts evidencing ownership of shares of a foreign issuer, and exchange traded funds and other investment
companies that provide exposure to foreign issuers.
S-21
Investment in foreign securities is subject to special investment risks that differ in some respects
from those related to investments in securities of U.S. domestic issuers. These risks include political, social or economic instability in the country of the issuer, the difficulty of predicting international trade patterns, the possibility of the
imposition of exchange controls, expropriation, limits on removal of currency or other assets, nationalization of assets, foreign withholding and income taxation, and foreign trading practices (including higher trading commissions, custodial charges
and delayed settlements). Foreign securities also may be subject to greater fluctuations in price than securities issued by U.S. corporations. The principal markets on which these securities trade may have less volume and liquidity, and may be more
volatile, than securities markets in the United States.
In addition, there may be less publicly available information about a foreign
company than about a U.S. domiciled company. Foreign companies generally are not subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. domestic companies. There is also generally less
government regulation of securities exchanges, brokers and listed companies abroad than in the United States. Confiscatory taxation or diplomatic developments could also affect investment in those countries. In addition, foreign branches of U.S.
banks, foreign banks and foreign issuers may be subject to less stringent reserve requirements and to different accounting, auditing, reporting, and record keeping standards than those applicable to domestic branches of U.S. banks and U.S. domestic
issuers.
Emerging Markets.
The Fund may invest in or have exposure to securities issued by governmental and corporate issuers
that are located in emerging market countries. Investments in securities of issuers in emerging market countries may be subject to potentially higher risks than investments in developed countries. These risks include (i) less social, political
and economic stability; (ii) the small current size of the markets for such securities and the currently low or nonexistent volume of trading, which may result in a lack of liquidity and in greater price volatility; (iii) certain national
policies which may restrict the Funds investment opportunities, including restrictions on investment in issuers or industries deemed sensitive to national interests; (iv) foreign taxation; (v) the absence of developed structures
governing private or foreign investment or allowing for judicial redress for injury to private property; (vi) the limited development and recent emergence, in certain countries, of a capital market structure or
market-oriented
economy; and (vii) the possibility that recent favorable economic developments in certain countries may be slowed or reversed by unanticipated political or social events in such countries.
Certain countries, which do not have market economies, are characterized by an absence of developed legal structures governing
private and foreign investments and private property. Certain countries require governmental approval prior to investments by foreign persons, or limit the amount of investment by foreign persons in a particular company, or limit the investment of
foreign persons to only a specific class of securities of a company that may have less advantageous terms than securities of the company available for purchase by nationals.
Authoritarian governments in certain countries may require that a governmental or
quasi-governmental
authority act as custodian of the Funds assets invested in such
country. To the extent such governmental or
quasi-governmental
authorities do not satisfy the requirements of the 1940 Act to act as foreign custodians of the Funds cash and securities, the
Funds investment in such countries may be limited or may be required to be effected through intermediaries. The risk of loss through governmental confiscation may be increased in such countries.
Depositary Receipts.
The Funds investments in foreign securities may include investment in depositary receipts, including American
Depositary Receipts (
ADRs
), European Depositary Receipts (
EDRs
), and Global Depositary Receipts (
GDRs
). U.S.
dollar-denominated
ADRs, which are traded
in the United States on exchanges or
over-the-counter,
are issued by domestic banks. ADRs represent the right to receive securities of foreign issuers deposited in a
domestic bank or a correspondent bank. ADRs do not eliminate all the risk inherent in investing in the securities of foreign issuers. However, by investing in ADRs rather than directly in foreign issuers stock, the Fund can avoid currency
risks during the settlement period for either purchases or sales. In general, there is a large, liquid market in the United States for many ADRs. The information available for ADRs is subject to the accounting, auditing and financial reporting
standards of the domestic market or exchange on which they are traded, which standards are more uniform and more exacting than those to which many
S-22
foreign issuers may be subject. The Fund may also invest in EDRs, GDRs, and in other similar instruments representing securities of foreign companies. EDRs and GDRs are securities that are
typically issued by foreign banks or foreign trust companies, although U.S. banks or U.S. trust companies may issue them. EDRs and GDRs are structured similarly to the arrangements of ADRs. EDRs, in bearer form, are designed for use in
European securities markets and are not necessarily denominated in the currency of the underlying security.
Certain depositary receipts,
typically those denominated as unsponsored, require the holders thereof to bear most of the costs of the facilities while issuers of sponsored facilities normally pay more of the costs thereof. The depository of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the issuer of the deposited securities or to pass through the voting rights to facility holders in respect to the deposited securities, whereas the depository of a sponsored
facility typically distributes shareholder communications and passes through voting rights.
Foreign Securities Exchanges.
Fixed
commissions on foreign securities exchanges are generally higher than negotiated commissions on U.S. exchanges. Foreign markets also have different clearance and settlement procedures, and in some markets there have been times when settlements
have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could result in temporary periods when a portion of the assets of the Fund is uninvested. In addition,
settlement problems could cause the Fund to miss attractive investment opportunities or to incur losses due to an inability to sell or deliver securities in a timely fashion. In the event of a default by an issuer of foreign securities, it may be
more difficult for the Fund to obtain or to enforce a judgment against the issuer.
Other Investment Companies
The Fund may invest in other investment companies, such as mutual funds,
closed-end
funds, and ETFs. Under the 1940 Act, the Funds investment in such securities, subject to certain exceptions, currently is limited to 3% of the total voting stock of any one investment company; 5% of the Funds total assets with respect to
any one investment company; and 10% of the Funds total assets in the aggregate. As described in the Funds Prospectus, the Fund intends to rely on exemptive orders in order to invest in unaffiliated ETFs beyond the foregoing statutory
limitations. The Funds investments in other investment companies may include money market mutual funds. Investments in money market funds are not subject to the percentage limitations set forth above.
If the Fund invests in other investment companies, Fund shareholders will bear not only their proportionate share of the Funds expenses, but
also, indirectly, the similar expenses of the underlying investment companies. Shareholders would also be exposed to the risks associated not only with the Fund, but also with the portfolio investments of the underlying investment companies. Shares
of certain
closed-end
funds may at times be acquired only at market prices representing premiums to their net asset values. Shares acquired at a premium to their net asset value may be more likely to
subsequently decline in price, resulting in a loss to the Fund and its shareholders.
Royalty Trusts
The Fund may invest in
publicly-traded
royalty trusts. Royalty trusts are
income-oriented
equity investments that indirectly, through the ownership of trust units, provide investors (called
unit holders
) with exposure to energy sector assets such as coal, oil and
natural gas. Royalty trusts are structured similarly to REITs. A royalty trust generally acquires an interest in natural resource companies or chemical companies and distributes the income it receives to the investors of the royalty trust. A
sustained decline in demand for crude oil, natural gas and refined petroleum products could adversely affect income and royalty trust revenues and cash flows. Factors that could lead to a decrease in market demand include a recession or other
adverse economic conditions, an increase in the market price of the underlying commodity, higher taxes or other regulatory actions that increase costs, or a shift in consumer demand for such products. A rising interest rate environment could
adversely impact the performance of royalty trusts. Rising interest rates could limit the capital appreciation of royalty trusts because of the increased availability of alternative investments at more competitive yields.
S-23
Short-Term
Temporary Investments
In an attempt to respond to adverse market, economic, political or other conditions, the Fund, may temporarily invest without limit in a variety of
short-term
instruments such as commercial paper and variable amount master demand notes;
U.S. dollar-denominated
time and savings deposits (including certificates of
deposit); bankers acceptances; obligations of the U.S. government or its agencies or instrumentalities; repurchase agreements collateralized by eligible investments of the Fund; securities of other mutual funds that invest primarily in
debt obligations with remaining maturities of 13 months or less (which investments also are subject to an advisory fee); and other similar
high-quality
short-term
U.S. dollar-denominated
obligations. During such periods, the Fund may not be able to achieve its investment objective.
The Fund may also invest in Eurodollar certificates of deposit issued by foreign branches of U.S. or foreign banks; Eurodollar time deposits, which are
U.S. dollar-denominated
deposits in foreign branches of U.S. or foreign banks; and Yankee certificates of deposit, which are
U.S. dollar-denominated
certificates of deposit issued by U.S. branches of foreign banks and held in the United States. In each instance, this Fund may only invest in bank instruments issued by an institution which has capital, surplus and undivided profits of more
than $100 million or the deposits of which are insured by the Bank Insurance Fund or the Savings Association Insurance Fund.
S-24
MANAGEMENT
The management of the Trust, including general supervision of the duties performed for the Fund by the Adviser under the Investment Management Agreement, is the responsibility of the Board of Trustees. The number
of trustees of the Trust is ten, none of whom is an
interested person
(as the term interested person is defined in the 1940 Act) (referred to herein as
independent trustees
). None of the independent
trustees has ever been a trustee, director or employee of, or consultant to, the Adviser or its affiliates. The names, business addresses and years of birth of the trustees and officers of the Fund, their principal occupations and other affiliations
during the past five years, the number of portfolios each oversees and other directorships they hold are set forth below. The trustees of the Trust are directors or trustees, as the case may be, of 106 Nuveen-sponsored
open-end
funds (the
Nuveen Mutual Funds
) and 100 Nuveen-sponsored closed-end funds (collectively with the Nuveen Mutual Funds, the
Nuveen Funds
).
|
|
|
|
|
|
|
|
|
|
|
Name, Business
Address and Year of Birth
|
|
Position(s)
Held with
Trust
|
|
Term of Office
and Length of
Time Served with
Trust
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen by
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
|
Independent Trustees:
|
|
|
|
|
|
|
Robert P. Bremner
333 West Wacker Drive
Chicago, IL 60606
1940
|
|
Trustee
|
|
TermIndefinite* Length of
Service
Since 1996
|
|
Private Investor and Management Consultant; Treasurer and Director, Humanities Council of Washington, D.C.; Board Member, Independent Directors Council affiliated with the Investment Company
Institute.
|
|
206
|
|
None
|
|
|
|
|
|
|
Jack B. Evans
333 West Wacker Drive
Chicago, IL 60606
1948
|
|
Trustee
|
|
TermIndefinite* Length of Service
Since 1999
|
|
President, The Hall-Perrine Foundation, a private philanthropic corporation (since 1996); Director, Source Media Group; Life Trustee of Coe College and the Iowa College Foundation; formerly,
Director, Federal Reserve Bank of Chicago; formerly, President and Chief Operating Officer, SCI Financial Group, Inc., a regional financial services firm; formerly, Member and President Pro Tem of the Board of Regents for the State of Iowa
University System.
|
|
206
|
|
Director and Chairman, United Fire Group, a publicly held company; formerly, Director, Alliant Energy.
|
S-25
|
|
|
|
|
|
|
|
|
|
|
Name, Business
Address and Year of Birth
|
|
Position(s)
Held with
Trust
|
|
Term of Office
and Length of
Time Served with
Trust
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen by
Trustee
|
|
Other
Directorships
Held
by
Trustee
During Past
Five Years
|
|
|
|
|
|
|
William C. Hunter
333 West Wacker
Drive
Chicago, IL 60606
1948
|
|
Trustee
|
|
TermIndefinite* Length of
Service
Since 2004
|
|
Dean Emeritus (since June 30, 2012), formerly, Dean (2006-2012), Tippie College of Business, University of Iowa; Director (since 2005) and President (since July 2012), Beta Gamma Sigma,
Inc., The International Honor Society; Director of Wellmark, Inc. (since 2009); formerly, Director
(1997-2007),
Credit Research Center at Georgetown University; formerly, Dean and Distinguished Professor of
Finance, School of Business at the University of Connecticut (2003-2006); previously, Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago (1995-2003).
|
|
206
|
|
Director (since 2004) of Xerox
Corporation.
|
|
|
|
|
|
|
David J. Kundert
333 West Wacker Drive
Chicago, IL 60606
1942
|
|
Trustee
|
|
TermIndefinite*
Length of
Service
Since 2005
|
|
Formerly, Director, Northwestern Mutual Wealth Management Company (2006-2013); retired (since 2004) as Chairman, JPMorgan Fleming Asset Management, President and CEO, Banc One Investment
Advisors Corporation, and President, One Group Mutual Funds; prior thereto, Executive Vice President, Bank One Corporation and Chairman and CEO, Banc One Investment Management Group; Regent Emeritus, Member of Investment Committee, Luther College;
Member of the Wisconsin Bar Association; Member of Board of Directors, Friends of Boerner Botanical Gardens; Member of Board of Directors and Chair of Investment Committee, Greater Milwaukee Foundation; Member of the Board of Directors (Milwaukee),
College Possible.
|
|
206
|
|
None
|
S-26
|
|
|
|
|
|
|
|
|
|
|
Name, Business
Address and Year of Birth
|
|
Position(s)
Held with
Trust
|
|
Term of Office
and Length of
Time Served with
Trust
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen by
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
|
|
|
|
|
|
John K. Nelson
333 West Wacker Drive
Chicago, IL 60606
1962
|
|
Trustee
|
|
TermIndefinite* Length of ServiceSince 2013
|
|
Senior external advisor to the financial services practice of Deloitte Consulting LLP (since 2012); Member of Board of Directors of Core12 LLC (since 2008), a private firm which develops
branding, marketing and communications strategies for clients; Director of The Curran Center for Catholic American Studies (since 2009) and The Presidents Council, Fordham University (since 2010); former Chairman of the Board of Trustees of
Marian University (2010-2014 as trustee, 2011-2014 as Chairman); formerly, Chief Executive Officer of ABN AMRO N.V. North America, and Global Head of its Financial Markets Division (2007-2008); prior senior positions held at ABN AMRO include
Corporate Executive Vice President and Head of Global Markets the Americas (2006-2007), CEO of Wholesale Banking North America and Global Head of Foreign Exchange and Futures Markets (2001-2006), and Regional Commercial Treasurer and
Senior Vice President Trading North America (1996-2001); formerly, Trustee at St. Edmund Preparatory School in New York City.
|
|
206
|
|
None
|
S-27
|
|
|
|
|
|
|
|
|
|
|
Name, Business
Address and Year of Birth
|
|
Position(s)
Held with
Trust
|
|
Term of Office
and Length of
Time Served with
Trust
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen by
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
|
|
|
|
|
|
William J. Schneider
333 West Wacker
Drive
Chicago, IL 60606
1944
|
|
Chairman of the Board and Trustee
|
|
TermIndefinite* Length of Service
Since 1996
|
|
Chairman of
Miller-Valentine
Partners, a real estate investment company; Board Member of Med-America Health System, of Tech Town, Inc., a
not-for-profit community development company, and of WDPR Public Radio station; formerly, Senior Partner and Chief Operating Officer (retired, 2004) of
Miller-Valentine
Group; formerly, Director, Dayton
Development Coalition; formerly, Board Member, Business Advisory Council, Cleveland Federal Reserve Bank and University of Dayton Business School Advisory Council.
|
|
206
|
|
None
|
|
|
|
|
|
|
Judith M. Stockdale
333 West Wacker
Drive
Chicago, IL 60606
1947
|
|
Trustee
|
|
TermIndefinite* Length of Service
Since 1997
|
|
Formerly, Executive Director (1994-2012), Gaylord and Dorothy Donnelley Foundation; prior thereto, Executive Director, Great Lakes Protection Fund (1990-1994).
|
|
206
|
|
None
|
|
|
|
|
|
|
Carole E. Stone
333 West Wacker Drive Chicago, IL
60606
1947
|
|
Trustee
|
|
TermIndefinite*
Length of
Service
Since 2007
|
|
Director, Chicago Board Options Exchange, Inc. (since 2006); Director, C2 Options Exchange, Incorporated (since 2009); formerly, Commissioner,
New York State Commission on Public Authority
Reform (2005-2010); formerly, Chair, New York Racing Association Oversight Board
(2005-2007).
|
|
206
|
|
Director, CBOE Holdings, Inc. (since 2010).
|
S-28
|
|
|
|
|
|
|
|
|
|
|
Name, Business
Address and Year of Birth
|
|
Position(s)
Held with
Trust
|
|
Term of Office
and Length of
Time Served with
Trust
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in Fund
Complex
Overseen by
Trustee
|
|
Other
Directorships
Held by
Trustee
During Past
Five Years
|
|
|
|
|
|
|
Virginia L. Stringer
333 West Wacker
Drive
Chicago, IL 60606
1944
|
|
Trustee
|
|
TermIndefinite* Length of Service
Since 2011
|
|
Board Member, Mutual Fund Directors Forum; former Member, Governing Board, Investment Company Institutes Independent Directors Council; Governance consultant and
non-profit
board member; former Owner and President, Strategic Management Resources, Inc., a management consulting firm; previously, held several executive positions in general management, marketing and human
resources at IBM and The Pillsbury Company.
|
|
206
|
|
Previously, Independent Director (1987-2010) and Chair (1997-2010), First American Fund Complex.
|
|
|
|
|
|
|
Terence J. Toth
333 West Wacker Drive
Chicago, IL 60606
1959
|
|
Trustee
|
|
TermIndefinite*
Length of
Service
Since 2008
|
|
Managing Partner, Promus Capital (since 2008); Director, Fulcrum IT Service LLC (since 2010), Quality Control Corporation (since 2012) and LogicMark LLC (since 2012); formerly, Director,
Legal & General Investment Management America, Inc. (2008-2013); formerly, CEO and President, Northern Trust Global Investments
(2004-2007);
Executive Vice President, Quantitative Management &
Securities Lending (2000-2004); prior thereto, various positions with Northern Trust Company (since 1994); Member, Chicago Fellowship Board (since 2005), Catalyst Schools of Chicago Board (since 2008) and Mather Foundation Board (since 2012) and a
member of its investment committee; formerly, Member, Northern Trust Mutual Funds Board
(2005-2007),
Northern Trust Global Investments Board (2004-2007), Northern Trust Japan Board (2004-2007), Northern Trust
Securities Inc. Board (2003-2007) and Northern Trust Hong Kong Board (1997-2004).
|
|
206
|
|
None
|
*
|
|
Each trustee serves an indefinite term until his or her successor is elected.
|
S-29
|
|
|
|
|
|
|
|
|
Name, Business
Address and Year of Birth
|
|
Position(s) Held
with Trust
|
|
Term of
Office and
Length of
Time Served
with Trust
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in
Fund
Complex
Overseen by
Officer
|
|
|
Officers of the Trust:
|
|
|
|
|
|
|
|
Gifford R. Zimmerman
333 West Wacker
Drive
Chicago, IL 60606
1956
|
|
Chief Administrative Officer
|
|
TermUntil August 2014 Length of ServiceSince 1996
|
|
Managing Director (since 2002) and Assistant Secretary of Nuveen Securities, LLC; Managing Director (since 2002), Assistant Secretary (since 1997) and
Co-General
Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel of Nuveen Asset Management, LLC (since 2011); Managing Director (since 2004)
and Assistant Secretary (since 1994) of Nuveen Investments, Inc.; Vice President and Assistant Secretary of NWQ Investment Management Company, LLC (since 2002); Vice President and Assistant Secretary of Nuveen Investments Advisers Inc. (since 2002);
Managing Director, Associate General Counsel and Assistant Secretary of Symphony Asset Management LLC (since 2003); Vice President and Assistant Secretary of Santa Barbara Asset Management, LLC (since 2006) and Winslow Capital Management, LLC (since
2010); Vice President and Assistant Secretary (since 2013), formerly, Chief Administrative Officer and Chief Compliance Officer (2006-2013) of Nuveen Commodities Asset Management, LLC; Chartered Financial Analyst.
|
|
206
|
|
|
|
|
|
Margo L. Cook
333 West Wacker Drive
Chicago, IL 60606
1964
|
|
Vice President
|
|
TermUntil August 2014 Length of ServiceSince 2009
|
|
Executive Vice President (since 2008) of Nuveen Investments, Inc., Nuveen Fund Advisors, LLC (since 2011) and Nuveen Securities, LLC (since 2013); Managing DirectorInvestment Services
of Nuveen Commodities Asset Management, LLC (since August 2011); previously, Head of Institutional Asset Management
(2007-2008)
of Bear Stearns Asset Management; Head of Institutional Asset Management
(1986-2007)
of Bank of NY Mellon; Chartered Financial Analyst.
|
|
206
|
|
|
|
|
|
Lorna C. Ferguson
333 West Wacker Drive
Chicago, IL 60606
1945
|
|
Vice President
|
|
TermUntil August 2014 Length of ServiceSince 1998
|
|
Managing Director of Nuveen Investments Holdings, Inc.
|
|
206
|
|
|
|
|
|
Stephen D. Foy
333 West Wacker Drive
Chicago, IL 60606
1954
|
|
Vice President and Controller
|
|
TermUntil August 2014 Length of ServiceSince 1998
|
|
Senior Vice President (since 2013), formerly, Vice President of Nuveen Fund Advisors, LLC; Chief Financial Officer (since 2010) of Nuveen Commodities Asset Management, LLC; Senior Vice
President (2010-2011), formerly, Vice President (2005-2010) and Funds Controller of Nuveen Securities, LLC; Certified Public Accountant.
|
|
206
|
S-30
|
|
|
|
|
|
|
|
|
Name, Business
Address and Year of Birth
|
|
Position(s) Held
with Trust
|
|
Term of
Office and
Length of
Time Served
with Trust
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in
Fund
Complex
Overseen by
Officer
|
|
|
|
|
|
Scott S. Grace
333 West Wacker Drive
Chicago, IL 60606
1970
|
|
Vice President and Treasurer
|
|
TermUntil August 2014 Length of ServiceSince 2009
|
|
Managing Director and Treasurer (since 2009) of Nuveen Investments Advisers Inc., Nuveen Investments Holdings, Inc., Nuveen Fund Advisors, LLC, Nuveen Securities, LLC and (since 2011) Nuveen
Asset Management, LLC; Vice President and Treasurer of NWQ Investment Management Company, LLC, Tradewinds Global Investors, LLC, Symphony Asset Management LLC and Winslow Capital Management, LLC; Vice President of Santa Barbara Asset Management,
LLC; formerly, Treasurer
(2006-2009),
Senior Vice President
(2008-2009),
previously, Vice President
(2006-2008)
of Janus Capital
Group, Inc.; formerly, Senior Associate in Morgan Stanleys Global Financial Services Group
(2000-2003);
Chartered Accountant.
|
|
206
|
|
|
|
|
|
Walter M. Kelly
333 West Wacker Drive
Chicago, IL 60606
1970
|
|
Vice President and Chief Compliance Officer
|
|
TermUntil August 2014 Length of ServiceSince 2003
|
|
Senior Vice President (since 2008) of Nuveen Investments Holdings, Inc.
|
|
206
|
|
|
|
|
|
Tina M. Lazar
333 West Wacker Drive
Chicago, IL 60606
1961
|
|
Vice President
|
|
TermUntil August 2014 Length of ServiceSince 2002
|
|
Senior Vice President of Nuveen Investments Holdings, Inc.
|
|
206
|
|
|
|
|
|
Kevin J. McCarthy
333 West Wacker Drive
Chicago, IL 60606
1966
|
|
Vice President and Secretary
|
|
TermUntil August 2014 Length of ServiceSince 2007
|
|
Managing Director and Assistant Secretary (since 2008) of Nuveen Securities, LLC and Nuveen Investments, Inc.; Managing Director (since 2008), Assistant Secretary (since 2007) and
Co-General
Counsel (since 2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; Managing Director (since 2008) and
Assistant Secretary of Nuveen Investments Holdings, Inc. and Nuveen Investments Advisers Inc.; Vice President (since 2007) and Assistant Secretary of NWQ Investment Management Company, LLC, NWQ Holdings, LLC, Symphony Asset Management LLC, Santa
Barbara Asset Management, LLC and Winslow Capital Management, LLC (since 2010); Vice President (since 2010) and Assistant Secretary of Nuveen Commodities Asset Management, LLC.
|
|
206
|
S-31
|
|
|
|
|
|
|
|
|
Name, Business
Address and Year of Birth
|
|
Position(s) Held
with Trust
|
|
Term of
Office and
Length of
Time Served
with Trust
|
|
Principal Occupation(s)
During Past Five Years
|
|
Number of
Portfolios
in
Fund
Complex
Overseen by
Officer
|
|
|
|
|
|
Kathleen L. Prudhomme
901 Marquette
Avenue
Minneapolis, MN 55402
1953
|
|
Vice President and Assistant Secretary
|
|
TermUntil August 2014 Length of ServiceSince 2011
|
|
Managing Director and Assistant Secretary of Nuveen Securities, LLC (since 2011); Managing Director, Assistant Secretary and
Co-General
Counsel (since
2011) of Nuveen Fund Advisors, LLC; Managing Director, Assistant Secretary and Associate General Counsel (since 2011) of Nuveen Asset Management, LLC; formerly, Deputy General Counsel, FAF Advisors, Inc.
(2004-2010).
|
|
206
|
|
|
|
|
|
Joel T. Slager
333 West Wacker Drive
Chicago, IL 60606
1978
|
|
Vice President and Assistant Secretary
|
|
TermUntil August 2014 Length of Service Since August 2013
|
|
Fund Tax Director for Nuveen Funds (since May, 2013); previously, Vice President of Morgan Stanley Investment Management, Inc., Assistant Treasurer of the Morgan Stanley Funds (from 2010 to
2013); Tax Director at PricewaterhouseCoopers LLP (from 2008 to 2010).
|
|
206
|
|
|
|
|
|
Jeffery M. Wilson
333 West Wacker Drive
Chicago, IL 60606
1956
|
|
Vice President
|
|
TermUntil August 2014 Length of ServiceSince 2011
|
|
Senior Vice President of Nuveen Securities, LLC (since 2011); formerly, Senior Vice President of FAF Advisors, Inc.
(2000-2010).
|
|
106
|
Board Leadership Structure and Risk Oversight
The Board of Directors or the Board of Trustees (as the case may be, each is referred to hereafter as the
Board
or
Board
of Trustees
and the directors or trustees of the Nuveen Funds, as applicable, are each referred to herein as
trustees
) oversees the operations and management of the Nuveen Funds, including the duties performed for the
Nuveen Funds by the Adviser. The Board has adopted a unitary board structure. A unitary board consists of one group of directors who serve on the board of the funds in the Nuveen Fund complex. All of the independent trustees/directors serve on the
Board of every fund in the Nuveen Fund complex; however, certain interested trustees serve only on the Boards of certain funds within the Nuveen Fund complex. In adopting a unitary board structure, the trustees seek to provide effective governance
through establishing a board, the overall composition of which will, as a body, possess the appropriate skills, independence and experience to oversee the Nuveen Funds business. With this overall framework in mind, when the Board, through its
Nominating and Governance Committee discussed below, seeks nominees for the Board, the trustees consider, not only the candidates particular background, skills and experience, among other things, but also whether such background, skills and
experience enhance the Boards diversity and at the same time complement the Board given its current composition and the mix of skills and experiences of the incumbent trustees. The Nominating and Governance Committee believes that the Board
generally benefits from diversity of background, experience and views among its members, and considers this a factor in evaluating the composition of the Board, but has not adopted any specific policy on diversity or any particular definition of
diversity.
The Board believes the unitary board structure enhances good and effective governance, particularly given the nature of the
structure of the investment company complex. Funds in the same complex generally are served by the same service providers and personnel and are governed by the same regulatory scheme which raises common issues that must be addressed by the directors
across the fund complex (such as compliance, valuation, liquidity, brokerage, trade allocation or risk management). The Board believes it is more efficient to have a single board review and oversee common policies and procedures which increases the
Boards knowledge and expertise with respect to the many aspects of fund operations that are
complex-wide
in nature. The unitary structure also enhances the Boards influence and oversight over the
investment adviser and other service providers.
S-32
In an effort to enhance the independence of the Board, the Board also has a Chairman that is an
independent trustee. The Board recognizes that a chairman can perform an important role in setting the agenda for the Board, establishing the boardroom culture, establishing a point person on behalf of the Board for fund management, and reinforcing
the Boards focus on the
long-term
interests of shareholders. The Board recognizes that a chairman may be able to better perform these functions without any conflicts of interests arising from a position
with fund management. Accordingly, the trustees have elected William J. Schneider to serve as the independent Chairman of the Board. Specific responsibilities of the Chairman include: (i) presiding at all meetings of the Board and of the
shareholders; (ii) seeing that all orders and resolutions of the trustees are carried into effect; and (iii) maintaining records of and, whenever necessary, certifying all proceedings of the trustees and the shareholders.
Although the Board has direct responsibility over various matters (such as advisory contracts, underwriting contracts and fund performance), the
Board also exercises certain of its oversight responsibilities through several committees that it has established and which report back to the full Board. The Board believes that a committee structure is an effective means to permit trustees to
focus on particular operations or issues affecting the Nuveen Funds, including risk oversight. More specifically, with respect to risk oversight, the Board has delegated matters relating to valuation and compliance to certain committees (as
summarized below) as well as certain aspects of investment risk. In addition, the Board believes that the periodic rotation of trustees among the different committees allows the trustees to gain additional and different perspectives of a Nuveen
Funds operations. The Board has established six standing committees: the Executive Committee, the Dividend Committee, the Audit Committee, the Compliance, Risk Management and Regulatory Oversight Committee, the Nominating and Governance
Committee and the
Open-End
Funds Committee. The Board may also from time to time create ad hoc committees to focus on particular issues as the need arises. The membership and functions of the standing
committees are summarized below.
The Executive Committee, which meets between regular meetings of the Board, is authorized to
exercise all of the powers of the Board. The members of the Executive Committee are William J. Schneider, Chair, and Judith M. Stockdale. During the fiscal year ended October 31, 2013, the Executive Committee did not meet.
The Audit Committee assists the Board in the oversight and monitoring of the accounting and reporting policies, processes and practices of the
Nuveen Funds, and the audits of the financial statements of the Nuveen Funds; the quality and integrity of the financial statements of the Nuveen Funds; the Nuveen Funds compliance with legal and regulatory requirements relating to the Nuveen
Funds financial statements; the independent auditors qualifications, performance and independence; and the pricing procedures of the Nuveen Funds and the Advisers internal valuation group. It is the responsibility of the Audit
Committee to select, evaluate and replace any independent auditors (subject only to Board and, if applicable, shareholder ratification) and to determine their compensation. The Audit Committee is also responsible for, among other things, overseeing
the valuation of securities comprising the Nuveen Funds portfolios. Subject to the Boards general supervision of such actions, the Audit Committee addresses any valuation issues, oversees the Nuveen Funds pricing procedures and
actions taken by the Advisers internal valuation group which provides regular reports to the committee, reviews any issues relating to the valuation of the Nuveen Funds securities brought to its attention and considers the risks to the
Nuveen Funds in assessing the possible resolutions to these matters. The Audit Committee may also consider any financial risk exposures for the Nuveen Funds in conjunction with performing its functions.
To fulfill its oversight duties, the Audit Committee receives annual and
semi-annual
reports and has regular
meetings with the external auditors for the Nuveen Funds and the Advisers internal audit group. The Audit Committee also may review in a general manner the processes the Board or other Board committees have in place with respect to risk
assessment and risk management as well as compliance with legal and regulatory matters relating to the Nuveen Funds financial statements. The committee operates under a written charter adopted and approved by the Board. Members of the Audit
Committee shall be independent (as set forth in the charter) and free of any relationship that, in the opinion of the trustees, would interfere with their exercise of independent judgment as an Audit Committee member. The members of the Audit
Committee are Robert P. Bremner, Jack B. Evans,
S-33
Chair, David J. Kundert, Carole E. Stone and Terence J. Toth, each of whom is an independent trustee of the Nuveen Funds. During the fiscal year ended October 31, 2013, the Audit
Committee met four times.
The Nominating and Governance Committee is responsible for seeking, identifying and recommending to the
Board qualified candidates for election or appointment to the Board. In addition, the Nominating and Governance Committee oversees matters of corporate governance, including the evaluation of Board performance and processes, the assignment and
rotation of committee members, and the establishment of corporate governance guidelines and procedures, to the extent necessary or desirable, and matters related thereto. Although the unitary and committee structure has been developed over the years
and the Nominating and Governance Committee believes the structure has provided efficient and effective governance, the committee recognizes that as demands on the Board evolve over time (such as through an increase in the number of funds overseen
or an increase in the complexity of the issues raised), the committee must continue to evaluate the Board and committee structures and their processes and modify the foregoing as may be necessary or appropriate to continue to provide effective
governance. Accordingly, the Nominating and Governance Committee has a separate meeting each year to, among other things, review the Board and committee structures, their performance and functions, and recommend any modifications thereto or
alternative structures or processes that would enhance the Boards governance of the Nuveen Funds.
In addition, the Nominating
and Governance Committee, among other things, makes recommendations concerning the continuing education of trustees; monitors performance of legal counsel and other service providers; establishes and monitors a process by which security holders are
able to communicate in writing with members of the Board; and periodically reviews and makes recommendations about any appropriate changes to trustee compensation. In the event of a vacancy on the Board, the Nominating and Governance Committee
receives suggestions from various sources, including shareholders, as to suitable candidates. Suggestions should be sent in writing to Lorna Ferguson, Manager of Fund Board Relations, Nuveen Investments, Inc. (
Nuveen Investments
),
333 West Wacker Drive, Chicago, IL 60606. The Nominating and Governance Committee sets appropriate standards and requirements for nominations for new trustees and reserves the right to interview any and all candidates and to make the final
selection of any new trustees. In considering a candidates qualifications, each candidate must meet certain basic requirements, including relevant skills and experience, time availability (including the time requirements for due diligence site
visits to
sub-advisers
and service providers) and, if qualifying as an independent trustee candidate, independence from the Adviser, the
Sub-Adviser,
the Distributor and
other service providers, including any affiliates of these entities. These skill and experience requirements may vary depending on the current composition of the Board, since the goal is to ensure an appropriate range of skills, diversity and
experience, in the aggregate. Accordingly, the particular factors considered and weight given to these factors will depend on the composition of the Board and the skills and backgrounds of the incumbent trustees at the time of consideration of the
nominees. All candidates, however, must meet high expectations of personal integrity, independence, governance experience and professional competence. All candidates must be willing to be critical within the Board and with management and yet
maintain a collegial and collaborative manner toward other Board members. The committee operates under a written charter adopted and approved by the Board. This committee is composed of the independent trustees of the Nuveen Funds. Accordingly, the
members of the Nominating and Governance Committee are Robert P. Bremner, Jack B. Evans, William C. Hunter, David J. Kundert, John K. Nelson, William J. Schneider, Chair, Judith M. Stockdale, Carole E. Stone,
Virginia L. Stringer and Terence J. Toth. During the fiscal year ended October 31, 2013, the Nominating and Governance Committee met six times.
The Dividend Committee is authorized to declare distributions on the Nuveen Funds shares, including, but not limited to, regular and special dividends, capital gains and ordinary income distributions. The
members of the Dividend Committee are Jack B. Evans, Chair, William C. Hunter, Judith M. Stockdale and Terence J. Toth. During the fiscal year ended October 31, 2013, the Dividend Committee met four times.
S-34
The Compliance, Risk Management and Regulatory Oversight Committee (the
Compliance
Committee
) is responsible for the oversight of compliance issues, risk management and other regulatory matters affecting the Nuveen Funds that are not otherwise the jurisdiction of the other committees. The Board has adopted and
periodically reviews policies and procedures designed to address the Nuveen Funds compliance and risk matters. As part of its duties, the Compliance Committee reviews the policies and procedures relating to compliance matters and recommends
modifications thereto as necessary or appropriate to the full Board; develops new policies and procedures as new regulatory matters affecting the Nuveen Funds arise from time to time; evaluates or considers any comments or reports from examinations
from regulatory authorities and responses thereto; and performs any special reviews, investigations or other oversight responsibilities relating to risk management, compliance and/or regulatory matters as requested by the Board.
In addition, the Compliance Committee is responsible for risk oversight, including, but not limited to, the oversight of risks related to
investments and operations. Such risks include, among other things, exposures to particular issuers, market sectors, or types of securities; risks related to product structure elements, such as leverage; and techniques that may be used to address
those risks, such as hedging and swaps. In assessing issues brought to the committees attention or in reviewing a particular policy, procedure, investment technique or strategy, the Compliance Committee evaluates the risks to the Nuveen Funds
in adopting a particular approach compared to the anticipated benefits to the Nuveen Funds and their shareholders. In fulfilling its obligations, the Compliance Committee meets on a quarterly basis, and at least once a year in person. The Compliance
Committee receives written and oral reports from the Nuveen Funds Chief Compliance Officer (
CCO
) and meets privately with the CCO at each of its quarterly meetings. The CCO also provides an annual report to the full Board
regarding the operations of the Nuveen Funds and other service providers compliance programs as well as any recommendations for modifications thereto. The Compliance Committee also receives reports from the Advisers investment
services group regarding various investment risks. Notwithstanding the foregoing, the full Board also participates in discussions with management regarding certain matters relating to investment risk, such as the use of leverage and hedging. The
investment services group therefore also reports to the full Board at its quarterly meetings regarding, among other things, fund performance and the various drivers of such performance. Accordingly, the Board directly and/or in conjunction with the
Compliance Committee oversees matters relating to investment risks. Matters not addressed at the committee level are addressed directly by the full Board. The committee operates under a written charter adopted and approved by the Board. The members
of the Compliance Committee are William C. Hunter, John K. Nelson, Judith M. Stockdale, Chair, and Virginia L. Stringer. During the fiscal year ended October 31, 2013, the Compliance Committee met five times.
The
Open-End
Funds Committee is responsible for assisting the Board in the oversight and monitoring of the
Nuveen Funds that are registered as
open-end
management investment companies (
Open-End
Funds
). The committee may review and evaluate matters related
to the formation and the initial presentation to the Board of any new
Open-End
Fund and may review and evaluate any matters relating to any existing
Open-End
Fund. The
committee operates under a written charter adopted and approved by the Board. The members of the
Open-End
Funds Committee are Robert P. Bremner, David J. Kundert, William J. Schneider,
Judith M. Stockdale, Virginia L. Stringer and Terence J. Toth, Chair. During the fiscal year ended October 31, 2013, the
Open-End
Funds Committee met four times.
Board Diversification and Trustee Qualifications
In determining that a particular trustee was qualified to serve on the Board, the Board has considered each trustees background, skills, experience and other attributes in light of the composition of the
Board with no particular factor controlling. The Board believes that trustees need to have the ability to critically review, evaluate, question and discuss information provided to them, and to interact effectively with Fund management, service
providers and counsel, in order to exercise effective business judgment in the performance of their duties, and the Board believes each trustee satisfies this standard. An effective trustee may achieve this ability through his or her educational
background; business, professional training or practice; public service or academic positions; experience from service as a board member or executive of investment funds, public companies or significant private or
not-for-profit
entities or other organizations; and/or other life experiences.
S-35
Accordingly, set forth below is a summary of the experiences, qualifications, attributes, and skills that led to the conclusion, as of the date of this document, that each trustee should continue
to serve in that capacity. References to the experiences, qualifications, attributes and skills of trustees are pursuant to requirements of the SEC, do not constitute holding out of the Board or any trustee as having any special expertise or
experience and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.
Robert P. Bremner
Mr. Bremner is a private investor and management consultant in Washington, D.C. His biography of William McChesney Martin, Jr.,
a former chairman of the Federal Reserve Board, was published by Yale University Press in November 2004. From 1994 to 1997, he was a Senior Vice President at Samuels International Associates, an international consulting firm specializing in
governmental policies, where he served in a
part-time
capacity. Previously, Mr. Bremner was a partner in the LBK Investors Partnership and was chairman and majority stockholder with ITC Investors Inc.,
both private investment firms. He currently serves on the Board and as Treasurer of the Humanities Council of Washington D.C. and is a Board Member of the Independent Directors Council affiliated with the Investment Company Institute. From 1984 to
1996, Mr. Bremner was an independent Trustee of the Flagship Funds, a group of municipal
open-end
funds. He began his career at the World Bank in Washington D.C. He graduated with a Bachelor of Science
degree from Yale University and received his MBA from Harvard University.
Jack B. Evans
President of the
Hall-Perrine
Foundation, a private philanthropic corporation, since 1996, Mr. Evans
was formerly President and Chief Operating Officer of the SCI Financial Group, Inc., a regional financial services firm headquartered in Cedar Rapids, Iowa. Formerly, he was a member of the Board of the Federal Reserve Bank of Chicago, a Director of
Alliant Energy and Member and President Pro Tem of the Board of Regents for the State of Iowa University System. Mr. Evans is Chairman of the Board of United Fire Group, sits on the Board of Source Media Group and is a Life Trustee of Coe
College. He has a Bachelor of Arts degree from Coe College and an MBA from the University of Iowa.
William C. Hunter
Mr. Hunter became Dean Emeritus of the Henry B. Tippie College of Business at the University of Iowa on June 30, 2012. He was
appointed Dean of the Henry B. Tippie College of Business at the University of Iowa on July 1, 2006. He had been Dean and Distinguished Professor of Finance at the University of Connecticut School of Business since June 2003. From
1995 to 2003, he was the Senior Vice President and Director of Research at the Federal Reserve Bank of Chicago. While there he served as the Banks Chief Economist and was an Associate Economist on the Federal Reserve Systems Federal Open
Market Committee (FOMC). In addition to serving as a Vice President in charge of financial markets and basic research at the Federal Reserve Bank in Atlanta, he held faculty positions at Emory University, Atlanta University, the University of
Georgia and Northwestern University. A past Director of the Credit Research Center at Georgetown University, SS&C Technologies, Inc. (2005) and past President of the Financial Management Association International, he has consulted with
numerous foreign central banks and official agencies in Western Europe, Central and Eastern Europe, Asia, Central America and South America. From 1990 to 1995, he was a U.S. Treasury Advisor to Central and Eastern Europe. He has been a Director of
the Xerox Corporation since 2004 and Wellmark, Inc. since 2009. He is a Director and President of Beta Gamma Sigma, Inc., The International Business Honor Society.
David J. Kundert
Mr. Kundert retired in 2004 as Chairman of JPMorgan Fleming Asset
Management, and as President and CEO of Banc One Investment Advisors Corporation, and as President of One Group Mutual Funds. Prior to the merger between Bank One Corporation and JPMorgan Chase and Co., he was Executive Vice President, Bank One
Corporation and, since 1995, the Chairman and CEO, Banc One Investment Management Group. From 1988 to 1992, he was President and CEO of Bank One Wisconsin Trust Company. Mr. Kundert recently retired as a Director of the Northwestern Mutual
S-36
Wealth Management Company (2006-2013). He started his career as an attorney for Northwestern Mutual Life Insurance Company. Mr. Kundert has served on the Board of Governors of the Investment
Company Institute and he is currently a member of the Wisconsin Bar Association. He is on the Board of the Greater Milwaukee Foundation and chairs its Investment Committee. He is a Regent Emeritus and a Member of the Investment Committee of Luther
College. He is also a Member of the Board of Directors (Milwaukee), College Possible. He received his Bachelor of Arts degree from Luther College, and his Juris Doctor from Valparaiso University.
John K. Nelson
Mr. Nelson is currently a
senior external advisor to the financial services practice of Deloitte Consulting LLP. He currently is on the Board of Directors of Core12 LLC, a private firm which develops branding, marketing, and communications strategies for clients. Mr. Nelson
has served in several senior executive positions with ABN AMRO Holdings N.V. and its affiliated entities and predecessors, including LaSalle Bank Corporation from 1996 to 2008. From 2007 to 2008, Mr. Nelson was Chief Executive Officer of ABN AMRO
N.V. North America, and Global Head of its Financial Markets Division. He was a member of the Foreign Exchange Committee of the Federal Reserve Bank of the United States, and during his tenure with ABN AMRO, served as the banks representative
on various committees of the Bank of Canada, European Central Bank, and the Bank of England. At Fordham University, he currently serves as a director of The Curran Center for Catholic American Studies, and The Presidents Council. He formerly
served as the Chairman of The Board of Trustees of Marian University (2011-2014). He is also a member of The Economic Club of Chicago and The Hyde Park Angels, and was formerly a Trustee at St. Edmund Preparatory School in New York City. Mr. Nelson
graduated and received his MBA from Fordham University.
William J. Schneider
Mr. Schneider, the Nuveen Funds Independent Chairman, is currently Chairman, formerly Senior Partner and Chief Operating Officer
(retired, 2004) of
Miller-Valentine
Partners, a real estate investment company. He is an owner in several other Miller-Valentine Group entities. He is currently a member of the boards of WDPR Public radio
station, of Med-America Health System and of Tech Town, Inc., a not-for-profit Dayton community development corporation. He was formerly a Director and Past Chair of the Dayton Development Coalition. He was formerly a member of the Community
Advisory Board of the National City Bank in Dayton as well as a former member of the Business Advisory Council of the Cleveland Federal Reserve Bank. Mr. Schneider was also a member of the Business Advisory Council for the University of Dayton
College of Business. He also served as Chair of the Miami Valley Hospital and as Chair of the Finance Committee of its parent holding company. Mr. Schneider was an independent Trustee of the Flagship Funds, a group of municipal open-end funds.
Mr. Schneider has a Bachelor of Science in Community Planning from the University of Cincinnati and a Masters of Public Administration from the University of Dayton.
Judith M. Stockdale
Ms. Stockdale retired in 2012 as Executive Director of the Gaylord
and Dorothy Donnelley Foundation, a private foundation working in land conservation and artistic vitality in the Chicago region and the Low country of South Carolina. Her previous positions include Executive Director of the Great Lakes Protection
Fund, Executive Director of Openlands, and Senior Staff Associate at the Chicago Community Trust. She has served on the Boards of the Land Trust Alliance, the National Zoological Park, the Governors Science Advisory Council (Illinois), the
Nancy Ryerson Ranney Leadership Grants Program, Friends of Ryerson Woods and the Donors Forum. Ms. Stockdale, a native of the United Kingdom, has a Bachelor of Science degree in geography from the University of Durham (UK) and a Master of
Forest Science degree from Yale University.
Carole E. Stone
Ms. Stone retired from the New York State Division of the Budget in 2004, having served as its Director for nearly five years and as Deputy Director from 1995 through 1999. Ms. Stone is currently on
the Board of Directors of the Chicago Board Options Exchange, CBOE Holdings, Inc. and C2 Options Exchange, Incorporated. She has also served as the Chair of the New York Racing Association Oversight Board, as a Commissioner on the New York
State Commission on Public Authority Reform and as a member of the Boards of Directors of several New York State public authorities. Ms. Stone has a Bachelor of Arts from Skidmore College in Business Administration.
S-37
Virginia L. Stringer
Ms. Stringer served as the independent chair of the Board of the First American Fund Complex from 1997 to 2010, having joined such Board in 1987. Ms. Stringer serves on the board of the Mutual Fund
Directors Forum. She is a recipient of the Outstanding Corporate Director award from
Twin Cities Business Monthly
and the Minnesota Chapter of the National Association of Corporate Directors. Ms. Stringer is the past board chair of the
Oak Leaf Trust, director emeritus and former Chair of the Saint Paul Riverfront Corporation and also served as President of the Minneapolis Clubs Governing Board. She is a director and former board chair of the Minnesota Opera and a Life
Trustee and former board member of the Voyageur Outward Bound School. She also served as a trustee of Outward Bound USA. She was appointed by the Governor of Minnesota to the Board on Judicial Standards and also served on a Minnesota Supreme Court
Judicial Advisory Committee to reform the states judicial disciplinary process. She is a member of the International Womens Forum and attended the London Business School as an International Business Fellow. Ms. Stringer also served
as board chair of the Human Resource Planning Society, the Minnesota Womens Campaign Fund and the Minnesota Womens Economic Roundtable. Ms. Stringer is the retired founder of Strategic Management Resources, a consulting practice
focused on corporate governance, strategy and leadership. She has twenty five years of corporate experience having held executive positions in general management, marketing and human resources with IBM and the Pillsbury Company.
Terence J. Toth
Mr. Toth is a Managing
Partner, Promus Capital (since 2008). From 2008 to 2013, he was a Director, Legal & General Investment Management America, Inc. From 2004 to 2007, he was Chief Executive Officer and President of Northern Trust Global Investments, and
Executive Vice President of Quantitative Management & Securities Lending from 2000 to 2004. He also formerly served on the Board of the Northern Trust Mutual Funds. He joined Northern Trust in 1994 after serving as Managing Director and
Head of Global Securities Lending at Bankers Trust (1986 to 1994) and Head of Government Trading and Cash Collateral Investment at Northern Trust from 1982 to 1986. He currently serves on the Board of Chicago Fellowship, Fulcrum IT Service LLC
(since 2010), Quality Control Corporation (since 2012) and LogicMark LLC (since 2012), and is Chairman of the Board of Catalyst Schools of Chicago. He is on the Mather Foundation Board (since 2012) and is a member of its investment committee.
Mr. Toth graduated with a Bachelor of Science degree from the University of Illinois, and received his MBA from New York University. In 2005, he graduated from the CEO Perspectives Program at Northwestern University.
Board Compensation
The following table shows, for each independent trustee, (1) the aggregate compensation paid by the Fund for the fiscal period ended October 31, 2013, (2) the amount of total compensation paid by the Fund
that has been deferred, and (3) the total compensation paid to each trustee by the Nuveen Funds during the fiscal year ended October 31, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Trustee
|
|
Aggregate
Compensation
From
Fund
1
|
|
|
Amount of Total
Compensation that
Has Been Deferred
2
|
|
|
Total Compensation
From Nuveen Funds
Paid to Trustee
3
|
|
Robert P. Bremner
|
|
$
|
|
|
|
$
|
|
|
|
$
|
337,207
|
|
Jack B. Evans
|
|
|
|
|
|
|
|
|
|
|
287,396
|
|
William C. Hunter
|
|
|
|
|
|
|
|
|
|
|
251,250
|
|
David J. Kundert
|
|
|
|
|
|
|
|
|
|
|
299,276
|
|
John K.
Nelson
4
|
|
|
|
|
|
|
|
|
|
|
17,667
|
|
William J. Schneider
|
|
|
|
|
|
|
|
|
|
|
326,718
|
|
Judith M. Stockdale
|
|
|
|
|
|
|
|
|
|
|
282,633
|
|
Carole E. Stone
|
|
|
|
|
|
|
|
|
|
|
288,260
|
|
Virginia L. Stringer
|
|
|
|
|
|
|
|
|
|
|
256,750
|
|
Terence J. Toth
|
|
|
|
|
|
|
|
|
|
|
303,451
|
|
1
|
|
The compensation paid, including deferred amounts, to the independent trustees for the fiscal period ended October 31, 2013 for services to the Fund.
|
S-38
2
|
|
Pursuant to a deferred compensation agreement with the Fund, deferred amounts are treated as though an equivalent dollar amount has been invested in shares of
one or more eligible Nuveen Funds. The amounts provided are the total deferred fees (including the return from the assumed investment in the eligible Nuveen Funds) payable from the Fund.
|
3
|
|
Based on the compensation paid (including any amounts deferred) to the trustees for the
one-year
period ended October 31,
2013 for services to the Nuveen Funds.
|
4
|
|
Mr. Nelson was appointed to the Board of Trustees of the Nuveen Funds effective September 1, 2013.
|
Effective January 1, 2012, independent trustees received a $130,000 annual retainer, which was increased to $140,000 as of January 1,
2013, plus they received (a) a fee of $4,500 per day for attendance in person or by telephone at regularly scheduled meetings of the Board; (b) a fee of $3,000 per meeting for attendance in person or by telephone at special,
non-regularly
scheduled Board meetings where
in-person
attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings where
in-person
attendance is not required; (c) a fee of $2,500 per meeting for attendance in person or by telephone at Audit Committee meetings where
in-person
attendance is
required and $2,000 per meeting for attendance by telephone or in person at such meetings where
in-person
attendance is not required; (d) a fee of $2,500 per meeting for attendance in person or by
telephone at Compliance, Risk Management and Regulatory Oversight Committee meetings where
in-person
attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings
where
in-person
attendance is not required; (e) a fee of $1,000 per meeting for attendance in person or by telephone at Dividend Committee meetings; (f) a fee of $500 per meeting for attendance in
person or by telephone at all other committee meetings ($1,000 for shareholder meetings) where
in-person
attendance is required and $250 per meeting for attendance by telephone or in person at such committee
meetings (excluding shareholder meetings) where
in-person
attendance is not required, and $100 per meeting when the Executive Committee acts as pricing committee for IPOs, plus, in each case, expenses incurred
in attending such meetings, provided that no fees are received for meetings held on days on which regularly scheduled Board meetings are held; and (g) a fee of $2,500 per meeting for attendance in person or by telephone at
Open-End
Funds Committee meetings where
in-person
attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings where
in-person
attendance is not required; provided that no fees are received for meetings held on days on which regularly scheduled Board meetings are held. In addition to the payments described above, the Chairman of
the Board receives $75,000, the chairpersons of the Audit Committee, the Dividend Committee, the Compliance, Risk Management and Regulatory Oversight Committee and the
Open-End
Funds Committee receive $12,500
each and the chairperson of the Nominating and Governance Committee receives $5,000 as additional retainers. Independent trustees also receive a fee of $3,000 per day for site visits to entities that provide services to the Nuveen Funds on days on
which no Board meeting is held. When ad hoc committees are organized, the Nominating and Governance Committee will at the time of formation determine compensation to be paid to the members of such committee; however, in general, such fees will be
$1,000 per meeting for attendance in person or by telephone at ad hoc committee meetings where
in-person
attendance is required and $500 per meeting for attendance by telephone or in person at such meetings
where
in-person
attendance is not required. The annual retainer, fees and expenses are allocated among the Nuveen Funds on the basis of relative net assets, although management may, in its discretion,
establish a minimum amount to be allocated to each fund.
Effective January 1, 2014, independent trustees receive a $150,000 annual
retainer, plus they receive (a) a fee of $5,000 per day for attendance in person or by telephone at regularly scheduled meetings of the Board; (b) a fee of $3,000 per meeting for attendance in person or by telephone at special,
non-regularly
scheduled Board meetings where
in-person
attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings where
in-person
attendance is not required; (c) a fee of $2,500 per meeting for attendance in person or by telephone at Audit Committee meetings where
in-person
attendance is
required and $2,000 per meeting for attendance by telephone or in person at such meetings where
in-person
attendance is not required; (d) a fee of $2,500 per meeting for attendance in person or by
telephone at Compliance, Risk Management and
S-39
Regulatory Oversight Committee meetings where
in-person
attendance is required and $2,000 per meeting for attendance by telephone or in person at such
meetings where
in-person
attendance is not required; (e) a fee of $1,000 per meeting for attendance in person or by telephone at Dividend Committee meetings; (f) a fee of $500 per meeting for
attendance in person or by telephone at all other committee meetings ($1,000 for shareholder meetings) where
in-person
attendance is required and $250 per meeting for attendance by telephone or in person at
such committee meetings (excluding shareholder meetings) where
in-person
attendance is not required, and $100 per meeting when the Executive Committee acts as pricing committee for IPOs, plus, in each case,
expenses incurred in attending such meetings, provided that no fees are received for meetings held on days on which regularly scheduled Board meetings are held; and (g) a fee of $2,500 per meeting for attendance in person or by telephone at
Open-End
Funds Committee meetings where
in-person
attendance is required and $2,000 per meeting for attendance by telephone or in person at such meetings where
in-person
attendance is not required; provided that no fees are received for meetings held on days on which regularly scheduled Board meetings are held. In addition to the payments described above, the Chairman of
the Board receives $75,000, the chairpersons of the Audit Committee, the Dividend Committee, the Compliance, Risk Management and Regulatory Oversight Committee and the
Open-End
Funds Committee receive $12,500
each and the chairperson of the Nominating and Governance Committee receives $5,000 as additional retainers. Independent trustees also receive a fee of $3,000 per day for site visits to entities that provide services to the Nuveen Funds on days on
which no Board meeting is held. When ad hoc committees are organized, the Nominating and Governance Committee will at the time of formation determine compensation to be paid to the members of such committee; however, in general, such fees will be
$1,000 per meeting for attendance in person or by telephone at ad hoc committee meetings where
in-person
attendance is required and $500 per meeting for attendance by telephone or in person at such meetings
where
in-person
attendance is not required. The annual retainer, fees and expenses are allocated among the Nuveen Funds on the basis of relative net assets, although management may, in its discretion,
establish a minimum amount to be allocated to each fund.
The Trust does not have a retirement or pension plan. The Trust has a
deferred compensation plan (the
Deferred Compensation Plan
) that permits any independent trustee to elect to defer receipt of all or a portion of his or her compensation as an independent trustee. The deferred compensation of a
participating trustee is credited to a book reserve account of the Trust when the compensation would otherwise have been paid to the trustee. The value of the trustees deferral account at any time is equal to the value that the account would
have had if contributions to the account had been invested and reinvested in shares of one or more of the eligible Nuveen Funds. At the time for commencing distributions from a trustees deferral account, the independent trustee may elect to
receive distributions in a lump sum or over a period of five years. The Trust will not be liable for any other funds obligations to make distributions under the Deferred Compensation Plan.
The Fund has no employees. The officers of the Trust serve without any compensation from the Fund.
Share Ownership
The information in the table below discloses the dollar ranges of (i) each trustees beneficial ownership in the Fund, and (ii) each
trustees aggregate beneficial ownership in all funds within the Nuveen Funds complex, including in each case the value of fund shares elected by the trustee in the trustees deferred compensation plan, based on the value of fund shares as
of December 31, 2013:
|
|
|
|
|
|
|
|
|
Name of Trustee
|
|
Dollar Range
of Equity
Securities in
the Fund
|
|
|
Aggregate Dollar Range of
Equity Securities in All
Registered
Investment
Companies Overseen by
Trustee in Family of
Investment Companies
|
|
Robert P. Bremner
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
Jack B. Evans
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
William C. Hunter
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
David J. Kundert
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
S-40
|
|
|
|
|
|
|
|
|
Name of Trustee
|
|
Dollar Range
of Equity
Securities in
the Fund
|
|
|
Aggregate Dollar Range of
Equity Securities in All
Registered
Investment
Companies Overseen by
Trustee in Family of
Investment Companies
|
|
John K.
Nelson
1
|
|
$
|
0
|
|
|
|
$0
|
|
William J. Schneider
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
Judith M. Stockdale
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
Carole E.
Stone
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
Virginia L.
Stringer
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
Terence J. Toth
|
|
$
|
0
|
|
|
Over $
|
100,000
|
|
1
|
|
Mr. Nelson was appointed to the Board of Trustees of the Nuveen Funds effective September 1, 2013.
|
As of February 3, 2014, the officers and trustees of the Trust, in the aggregate, owned less than 1% of the shares of the Fund.
As of February 3, 2014, none of the independent trustees or their immediate family members owned, beneficially, or of record, any securities in
(i) an investment adviser or principal underwriter of the Fund or (ii) a person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with an investment adviser or principal
underwriter of the Fund.
Sales Loads
Trustees of the Fund and certain other Fund affiliates may purchase the Funds Class I shares. See the Funds Prospectus for details.
SERVICE PROVIDERS
Investment Adviser
Nuveen Fund Advisors, located at 333 West Wacker Drive, Chicago, Illinois 60606, serves as the investment adviser of the Fund, with responsibility
for the overall management of the Fund. The Adviser is also responsible for managing the Funds business affairs and providing
day-to-day
administrative services to
the Fund. The Adviser has selected its affiliate, Nuveen Asset Management, located at 333 West Wacker Drive, Chicago, Illinois 60606, to serve as
sub-adviser
to manage the investment portfolio of the Fund. For
additional information regarding the management services performed by the Adviser and the
Sub-Adviser,
see Who Manages the Fund in the Prospectus.
The Adviser is an affiliate of the Distributor, which is located at 333 West Wacker Drive, Chicago, Illinois 60606. The Distributor is the principal
underwriter for the Nuveen Mutual Funds, and has served as
co-managing
underwriter for the shares of the Nuveen
Closed-End
Funds. The Adviser and the Distributor are
subsidiaries of Nuveen Investments.
On November 13, 2007, Nuveen Investments was acquired by investors led by Madison Dearborn
Partners, LLC, which is a private equity investment firm based in Chicago, Illinois.
For the management services and facilities
furnished by the Adviser, the Fund has agreed to pay an annual management fee at a rate set forth in the Prospectus under Who Manages the Fund.
In addition, the Adviser has agreed to waive all or a portion of its management fee or reimburse certain expenses of the Fund. The Prospectus includes current fee waivers and expense reimbursements for the Fund.
The Funds management fee is divided into two componentsa
complex-level
fee based on
the aggregate amount of all eligible Nuveen Fund assets and a specific
fund-level
fee based only on the amount of assets within the Fund. This pricing structure enables Fund shareholders to benefit from growth
in the assets within the Fund as well as from growth in the amount of
complex-wide
assets managed by the Adviser. Under no circumstances will this pricing structure result in the Fund paying
S-41
management fees at a rate higher than would otherwise have been applicable had the
complex-wide
management fee structure not been implemented.
The Fund has agreed to pay an annual
fund-level
management fee, payable monthly, based upon the average
daily net assets of the Fund as set forth in the Prospectus.
The annual complex-level management fee for the Fund, payable monthly,
which is additive to the fund-level fee, is based on the aggregate amount of total eligible assets managed for all Nuveen Funds as stated in the table below:
|
|
|
|
|
Complex-Level
Asset
Breakpoint Level*
|
|
Effective 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
|
%
|
*
|
|
The
complex-level
fee is calculated based upon the aggregate daily eligible assets of all Nuveen Funds. Except as described
below, eligible assets include the net assets of all
Nuveen-branded
closed-end
and
open-end
registered investment companies
organized in the United States. 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 Nuveen
Fund Advisors assumption of the management of the former First American Funds effective January 1, 2011. Eligible assets include
closed-end
fund assets managed by the Adviser that are attributable
to financial leverage. For these purposes, financial leverage includes the
closed-end
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 trusts 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 eligible assets in certain circumstances. As of December 31, 2013, the
complex-level
fee rate was 0.1686%.
|
The following table sets forth the management fees (net of fee waivers and expense reimbursements) paid by the Fund and
the fees waived and expenses reimbursed by the Adviser for the specified period.
|
|
|
|
|
|
|
Amount of Management Fees
(Net of Fee Waivers and Expense
Reimbursements
by the Adviser)
|
|
|
Amount of Fees Waived
and Expenses Reimbursed by the Adviser
|
|
9/26/13-
10/31/13
|
|
|
9/26/13-
10/31/13
|
|
$
|
|
|
|
$
|
16,212
|
|
In addition to the Advisers management fee, the Fund also pays a portion of the Trusts general
administrative expenses allocated in proportion to the net assets of the Fund. All fees and expenses are accrued daily and deducted before payment of dividends to investors.
S-42
Sub-Adviser
The Adviser has selected its affiliate, Nuveen Asset Management, to serve as
sub-adviser
to manage the
investment portfolio of the Fund. Nuveen Asset Management is responsible for selecting the Funds investment strategies. The Adviser pays Nuveen Asset Management a portfolio management fee out of the advisory fee paid to the Adviser for its
services to the Fund.
Portfolio Managers
David R. Cline, Walter A. French, David A. Friar, Keith B. Hembre and Derek B. Bloom have primary responsibility for the
day-to-day
implementation of the investment strategies of the Fund.
Compensation
Portfolio manager compensation consists primarily of base pay, an annual cash bonus and
long-term
incentive payments.
Base pay.
Base pay is determined based upon an analysis of the portfolio managers general performance, experience, and market levels of
base pay for such position.
Annual cash bonus.
The Funds portfolio managers are eligible for an annual cash bonus based on
investment performance, qualitative evaluation and financial performance of Nuveen Asset Management.
A portion of each portfolio
managers annual cash bonus is based on the Funds pre-tax investment performance, generally measured over the past one, three or
five-year
periods unless the portfolio managers tenure is
shorter. Investment performance for the Fund generally is determined by evaluating the Funds performance relative to its benchmark(s) and/or Lipper industry peer group.
A portion of the cash bonus is based on a qualitative evaluation made by each portfolio managers supervisor taking into consideration a number
of factors, including the portfolio managers team collaboration, expense management, support of personnel responsible for asset growth, and his or her compliance with Nuveen Asset Managements policies and procedures.
The final factor influencing a portfolio managers cash bonus is the financial performance of Nuveen Asset Management based on its operating
earnings.
Long-term
incentive compensation.
Certain key employees of Nuveen Investments
and its affiliates, including certain portfolio managers, have received equity interests in the parent company of Nuveen Investments. In addition, certain key employees of Nuveen Asset Management, including certain portfolio managers, have received
profits interests in Nuveen Asset Management which entitle their holders to participate in the firms growth over time.
There are
generally no differences between the methods used to determine compensation with respect to the Fund and the Other Accounts shown in the table below.
Other Accounts Managed
In addition to
the Fund, as of October 31, 2013, the portfolio managers were also primarily responsible for the
day-to-day
portfolio management of the following accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Manager
|
|
Type of Account Managed
|
|
Number of
Accounts
|
|
|
Assets
|
|
|
Number of
Accounts
with
Performance-
Based Fees
|
|
|
Assets of
Accounts
with
Performance-
Based Fees
|
|
David R. Cline
|
|
Registered Investment Companies
Other Pooled
Investment Vehicles
Other Accounts
|
|
|
5
0
0
|
|
|
|
$923.5 million
0
0
|
|
|
|
0
0
0
|
|
|
|
0
0
0
|
|
Walter A. French
|
|
Registered Investment Companies
Other Pooled
Investment Vehicles
Other Accounts
|
|
|
5
0
18
|
|
|
|
$2.2 billion
0
$576.0 million
|
|
|
|
0
0
0
|
|
|
|
0
0
0
|
|
S-43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Manager
|
|
Type of Account Managed
|
|
Number of
Accounts
|
|
|
Assets
|
|
|
Number of
Accounts
with
Performance-
Based Fees
|
|
|
Assets of
Accounts
with
Performance-
Based Fees
|
|
David A. Friar
|
|
Registered Investment Companies
Other Pooled
Investment Vehicles
Other Accounts
|
|
|
10
0
22
|
|
|
|
$3.7 billion
0
$599.0 million
|
|
|
|
0
0
0
|
|
|
|
0
0
0
|
|
Keith B. Hembre
|
|
Registered Investment Companies
Other Pooled
Investment Vehicles
Other Accounts
|
|
|
7
0
4
|
|
|
|
$2.2 billion
0
$22.9 million
|
|
|
|
0
0
0
|
|
|
|
0
0
0
|
|
Derek B. Bloom
|
|
Registered Investment Companies
Other Pooled
Investment Vehicles
Other Accounts
|
|
|
5
0
3
|
|
|
|
$652.4 million
0
$1.1 million
|
|
|
|
0
0
0
|
|
|
|
0
0
0
|
|
Conflicts of Interest
Actual or apparent conflicts of interest may arise when a portfolio manager has
day-to-day
management responsibilities with respect to
more than one account. More specifically, portfolio managers who manage multiple accounts are presented a number of potential conflicts, including, among others, those discussed below.
The management of multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. Nuveen
Asset Management seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most accounts managed by a portfolio manager in a particular
investment strategy are managed using the same investment models.
If a portfolio manager identifies a limited investment opportunity
which may be suitable for more than one account, an account may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible accounts. To deal with these situations, Nuveen Asset
Management has adopted procedures for allocating limited opportunities across multiple accounts.
With respect to many of its
clients accounts, Nuveen Asset Management determines which broker to use to execute transaction orders, consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts, Nuveen Asset
Management may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, Nuveen Asset Management may place separate,
non-simultaneous,
transactions for the Fund and other accounts which may temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the Fund or the
other accounts.
Some clients are subject to different regulations. As a consequence of this difference in regulatory requirements, some
clients may not be permitted to engage in all the investment techniques or transactions or to engage in these transactions to the same extent as the other accounts managed by the portfolio manager. Finally, the appearance of a conflict of interest
may arise where Nuveen Asset Management has an incentive, such as a
performance-based
management fee, which relates to the management of some accounts, with respect to which a portfolio manager has
day-to-day
management responsibilities.
Nuveen Asset
Management has adopted certain compliance procedures which are designed to address these types of conflicts common among investment managers. However, there is no guarantee that such procedures will detect each and every situation in which a
conflict arises.
S-44
Beneficial Ownership of Securities
The following table indicates as of October 31, 2013 the value, within the indicated range, of shares beneficially owned by the portfolio managers in the Fund. For purposes of this table, the following letters
indicate the range listed next to each letter:
|
|
|
|
|
|
|
A
|
|
|
-
|
|
|
$0
|
B
|
|
|
-
|
|
|
$1 - $10,000
|
C
|
|
|
-
|
|
|
$10,001 - $50,000
|
D
|
|
|
-
|
|
|
$50,001 - $100,000
|
E
|
|
|
-
|
|
|
$100,001 - $500,000
|
F
|
|
|
-
|
|
|
$500,001 - $1,000,000
|
G
|
|
|
-
|
|
|
More than $1 million
|
|
|
|
|
|
Name of Portfolio Manager
|
|
Dollar Range of Equity
Securities
Beneficially
Owned in Fund Managed
|
|
David R. Cline
|
|
|
A
|
|
Walter A. French
|
|
|
A
|
|
David A. Friar
|
|
|
A
|
|
Keith B. Hembre
|
|
|
A
|
|
Derek B. Bloom
|
|
|
A
|
|
Transfer Agent
The Funds transfer, shareholder services, and dividend paying agent is Boston Financial Data Services, Inc. (
BFDS
), 2000 Crown Colony Drive, Quincy, MA 02169.
Custodian
U.S. Bank National Association (
U.S. Bank
), 1555 North RiverCenter Drive, Suite 302, Milwaukee, WI 53202, acts as the custodian
for the Fund (the
Custodian
). U.S. Bank is a subsidiary of U.S. Bancorp. The Custodian takes no part in determining the investment policies of the Fund or in deciding which securities are purchased or sold by the Fund. All of the
instruments representing the investments of the Fund and all cash are held by the Custodian. The Custodian delivers securities against payment upon sale and pays for securities against delivery upon purchase. The Custodian also remits Fund assets in
payment of Fund expenses, pursuant to instructions of the Trusts officers or resolutions of the Board of Trustees.
As
compensation for its services as custodian to the Fund, the Custodian is paid a monthly fee calculated on an annual basis equal to 0.005% of the Funds average daily net assets. In addition, the Custodian is reimbursed for its
out-of-pocket
expenses incurred while providing services to the Fund. The Custodian continues to serve so long as its appointment is approved at least annually by the Board of
Trustees including a majority of the trustees who are not interested persons of the Trust, as that term is defined in the 1940 Act.
Distributor
Nuveen Securities, LLC, 333 West Wacker Drive, Chicago, Illinois 60606, serves as the distributor for the
Funds shares pursuant to a best efforts arrangement as provided by a Distribution Agreement dated August 1, 1998 (the
Distribution Agreement
). Pursuant to the Distribution Agreement, the Fund appointed the
Distributor to be its agent for the distribution of the Funds shares on a continuous offering basis.
Independent
Registered Public Accounting Firm
PricewaterhouseCoopers LLP (
PwC
), One North Wacker Drive, Chicago, Illinois
60606, independent registered public accounting firm, has been selected as auditors for the Fund. In addition to audit services, PwC provides assistance on accounting, tax and related matters.
S-45
CODES OF ETHICS
The Fund, the Adviser, the Sub-Adviser and the Distributor have adopted codes of ethics pursuant to Rule
17j-1
under the 1940 Act and with respect to the Adviser and the
Sub-Adviser,
Rule 204A-1
under the Investment Advisers Acts of 1940, as amended, addressing personal securities transactions and other conduct by investment personnel and
access persons who may have access to information about the Funds securities transactions. The codes are intended to address potential conflicts of interest that can arise in connection with personal trading activities of such persons. Persons
subject to the codes are generally permitted to engage in personal securities transactions, including investing in securities eligible for investment by the Fund, subject to certain prohibitions, which may include prohibitions on investing in
certain types of securities,
pre-clearance
requirements, blackout periods, annual and quarterly reporting of personal securities holdings and limitations on personal trading of initial public offerings.
Violations of the codes are subject to review by the Board of Trustees and could result in severe penalties.
PROXY VOTING
POLICIES
The Fund has adopted a proxy voting policy that seeks to ensure that proxies for securities held by the Fund are voted
consistently and solely in the best economic interests of the Fund.
A member of the Funds management team is responsible for
oversight of the Funds proxy voting process. With regard to equity securities, Nuveen Asset Management has engaged the services of Institutional Shareholder Services Inc. (
ISS
) to make recommendations on the voting of
proxies relating to securities held by the Fund and managed by Nuveen Asset Management. ISS provides voting recommendations based upon established guidelines and practices. Nuveen Asset Management reviews and frequently follows ISS recommendations.
However, on selected issues, Nuveen Asset Management may not vote in accordance with the ISS recommendations when it believes that specific ISS recommendations are not in the best economic interest of the Fund. If Nuveen Asset Management manages the
assets of a company or its pension plan and any of Nuveen Asset Managements clients hold any securities of that company, Nuveen Asset Management will vote proxies relating to such companys securities in accordance with the ISS
recommendations to avoid any conflict of interest. Where a material conflict of interest has been identified by Nuveen Asset Management and ISS does not offer a recommendation on the matter, Nuveen Asset Management shall disclose the conflict and
Nuveen Asset Managements Proxy Voting Committee shall determine the manner in which to vote and notify the Funds Board of Trustees or its designated committee.
Although Nuveen Asset Management has affiliates that provide investment advisory, broker-dealer, insurance or other financial services, Nuveen Asset Management does not receive
non-public
information about the business arrangements of such affiliates (except with regard to major distribution partners of its investment products) or the directors, officers and employees of such
affiliates. Therefore, Nuveen Asset Management is unable to consider such information when determining whether there are material conflicts of interests.
Nuveen Asset Management has adopted the ISS Proxy Voting Guidelines. While these guidelines are not intended to be
all-inclusive,
they do provide guidance on the
Sub-Advisers
general voting policies.
Information regarding how the Fund voted proxies relating
to portfolio securities during the most recent period ended June 30 will be available without charge by calling
(800) 257-8787
or by accessing the SECs website at http://www.sec.gov.
PORTFOLIO TRANSACTIONS
Decisions with respect to which securities are to be bought or sold, the total amount of securities to be bought or sold, the
broker-dealer
with or through which the
securities transactions are to be effected and the commission rates applicable to the trades are made by Nuveen Asset Management.
S-46
In selecting a
broker-dealer
to execute securities
transactions, Nuveen Asset Management considers the full range and quality of a
broker-dealers
services including, among other things: the value, nature and quality of any brokerage and research products
and services; execution capability; commission rate; financial responsibility (including willingness to commit capital); the likelihood of price improvement; the speed of execution and likelihood of execution for limit orders; the ability to
minimize market impact; the maintenance of the confidentiality of orders; and responsiveness of the
broker-dealer.
The determinative factor is not the lowest possible commission cost but whether the
transaction represents the best qualitative execution for the Fund. Subject to the satisfaction of its obligation to seek best execution, another factor considered by Nuveen Asset Management in selecting a
broker-dealer
may include the
broker-dealers
access to initial public offerings.
For certain transactions, Nuveen Asset Management may cause the Fund to pay a
broker-dealer
a commission higher than that which another
broker-dealer
might have charged for effecting the same transaction (a practice commonly referred to as paying up). Nuveen Asset Management may cause the Fund to pay up in recognition of the value
of the brokerage and research products and services provided by the
broker-dealer.
The
broker-dealer
may directly provide such products or services to the Fund or
purchase them from a third party for the Fund. In such cases, Nuveen Asset Management is in effect paying for the brokerage and research products and services with client commissions
so-called
soft dollars. Nuveen Asset Management will only cause the Fund to pay up if Nuveen Asset Management, subject to its overall duty to seek best execution, determine in good faith that the amount of such commission is reasonable in relation
to the value of the brokerage and research products and services provided by such
broker-dealer,
viewed in terms of either that particular transaction or the overall responsibilities of Nuveen Asset Management
with respect to the managing of its accounts.
The types of research products and services Nuveen Asset Management receives include
economic analysis and forecasts, financial market analysis and forecasts, industry and company specific analysis, performance monitoring, interest rate forecasts, arbitrage relative valuation analysis of various debt securities, analysis of
U.S. Treasury securities,
research-dedicated
computer software and related consulting services and other services that assist in the investment decision making process. Research products and services are
received primarily in the form of written reports,
computer-generated
services, telephone contacts and personal meetings with security analysts. Research services may also be provided in the form of meetings
arranged by
broker-dealers
with corporate management teams and spokespersons, as well as industry spokespersons.
The brokerage and research products and services Nuveen Asset Management receives from
broker-dealers
supplement Nuveen Asset Managements own normal research
activities. As a practical matter, Nuveen Asset Management could not, on its own, generate all of the research that
broker-dealers
provide without materially increasing expenses. The brokerage and research
products and services Nuveen Asset Management receives from
broker-dealers
may be put to a variety of uses and may be provided as part of a product that bundles research and brokerage products with other
products into one package as further described below. Nuveen Asset Management reduces its expenses through its use of soft dollars.
As a
general matter, the brokerage and research products and services Nuveen Asset Management receives from
broker-dealers
are used to service all of Nuveen Asset Managements accounts, including the Fund.
However, any particular brokerage and research product or service may not be used to service each and every account, and may not benefit the particular accounts that generated the brokerage commissions. For example, equity commissions are used for
brokerage and research products and services utilized in managing fixed income accounts.
Nuveen Asset Management receives brokerage or
research products or services that it also use for business purposes unrelated to brokerage or research. For example, certain brokerage services are provided as a part of a product that bundles many separate and distinct brokerage, execution,
investment management, custodial and recordkeeping services into one package. Market data services are a specific example of mixed use services that Nuveen Asset Management might acquire because certain employees of Nuveen Asset Management may use
such services for marketing or administrative purposes while others use them for research purposes. The acquisition of mixed use products and services causes a conflict of interest for Nuveen Asset Management, in that, clients pay
S-47
up for this type of brokerage or research product or service while the product or service also directly benefits Nuveen Asset Management. For this reason, and in accordance with general SEC
guidance, Nuveen Asset Management makes a good faith effort to determine what percentage of the product or service is used for
non-brokerage
or research purposes and pay cash (hard dollars) for
such percentage of the total cost. To ensure that its practices are consistent with its fiduciary responsibilities to its clients and to address this conflict, Nuveen Asset Management makes all determinations with regard to whether mixed use items
may be acquired and, if so, what the appropriate allocations are between soft dollar and hard dollar payments for such products and services. These determinations themselves represent a conflict of interest as Nuveen Asset Management has a financial
incentive to allocate a greater proportion of the cost of mixed use products to soft dollars.
Many of the Funds portfolio
transactions involve payment of a brokerage commission by the Fund. In some cases, transactions are with dealers or issuers who act as principal for their own accounts and not as brokers. Transactions effected on a principal basis, other than
certain transactions effected on a
so-called
riskless principal basis, are made without the payment of brokerage commissions but at net prices which usually include a spread or markup. In effecting
transactions in
over-the-counter
securities, the Fund typically deal with market makers unless it appears that better price and execution are available elsewhere.
It is expected that the Fund will purchase most foreign equity securities in the
over-the-counter
markets or stock exchanges located in the countries in which the respective principal offices of the issuers of the various securities are located if that is the best available market. The
commission paid in connection with foreign stock transactions may be higher than negotiated commissions on U.S. transactions. There generally is less governmental supervision and regulation of foreign stock exchanges than in the United States.
Foreign securities settlements may in some instances be subject to delays and related administrative uncertainties.
Foreign equity
securities may be held in the form of depositary receipts or securities convertible into foreign equity securities. Depositary receipts may be listed on stock exchanges or traded in the
over-the-counter
markets in the United States or overseas. The foreign and domestic debt securities and money market instruments in which the Fund may invest are
generally traded in the
over-the-counter
markets.
The
Fund does not effect any brokerage transactions in their portfolio securities with any broker or dealer affiliated directly or indirectly with the Adviser, Nuveen Asset Management or Distributor unless such transactions, including the frequency
thereof, the receipt of commission payable in connection therewith, and the selection of the affiliated broker or dealer effecting such transactions are not unfair or unreasonable to the shareholders of the Fund, as determined by the Board of
Trustees. Any transactions with an affiliated broker or dealer must be on terms that are both at least as favorable to the Fund as the Fund can obtain elsewhere and at least as favorable as such affiliated broker or dealer normally gives to others.
When two or more clients of Nuveen Asset Management are simultaneously engaged in the purchase or sale of the same security, the prices
and amounts are allocated in a manner considered by Nuveen Asset Management to be equitable to each client. In some cases, this system could have a detrimental effect on the price or volume of the security as far as each client is concerned. In
other cases, however, the ability of the clients to participate in volume transactions may produce better executions for each client.
The following table sets forth the aggregate amount of brokerage commissions paid by the Fund for the specified period:
|
|
|
Aggregate Amount of
Brokerage Commissions
|
|
9/26/13-
10/31/13
|
|
|
$718
|
|
Brokerage commissions paid by the Fund may vary significantly from year to year as a result of changing
asset levels throughout the year, portfolio turnover, varying market conditions, and other factors.
S-48
During the fiscal period ended October 31, 2013, the Fund did not pay commissions to brokers
in return for research services.
The Fund did not acquire during the fiscal period ended October 31, 2013 any securities of its
regular brokers or dealers as defined in Rule 10b-1 under the 1940 Act or of the parents of the brokers or dealers.
Under the 1940
Act, the Fund may not purchase portfolio securities from any underwriting syndicate of which the Distributor is a member except under certain limited conditions set forth in Rule
10f-3.
The Rule sets forth
requirements relating to, among other things, the terms of a security purchased by the Fund, the amount of securities that may be purchased in any one issue and the assets of the Fund that may be invested in a particular issue. In addition,
purchases of securities made pursuant to the terms of the Rule must be approved at least quarterly by the Board of Trustees, including a majority of the independent trustees.
DISCLOSURE OF PORTFOLIO HOLDINGS
The Nuveen Mutual Funds have adopted a
portfolio holdings disclosure policy which governs the dissemination of the Funds portfolio holdings. In accordance with this policy, the Fund may provide portfolio holdings information to third parties no earlier than the time a report is
filed with the SEC that is required to contain such information or one day after the information is posted on the Funds publicly accessible website, www.nuveen.com. A complete list of portfolio holdings information is generally made available
on the Funds website ten business days after the end of the month. Additionally, the Fund publishes on the website a list of its top ten holdings as of the end of each month, approximately two to five business days after the end of the month
for which the information is current. This information will remain available on the website at least until the Fund files with the SEC its Form
N-CSR
or Form
N-Q
for the
period that includes the date as of which the website information is current.
Additionally, the Fund may disclose portfolio holdings
information that has not been included in a filing with the SEC or posted on the Funds website (i.e.,
non-public
portfolio holdings information) only if there is a legitimate business purpose for doing
so and if the recipient is required, either by explicit agreement or by virtue of the recipients duties to the Fund as an agent or service provider, to maintain the confidentiality of the information and to not use the information in an
improper manner (e.g., personal trading). In this connection, the Fund may disclose on an ongoing basis
non-public
portfolio holdings information in the normal course of its investment and administrative
operations to various service providers, including the Adviser and/or
Sub-Adviser,
independent registered public accounting firm, custodian, financial printer (R.R. Donnelley Financial and Financial
Graphic Services), proxy voting service(s) (including ISS, ADP Investor Communication Services, and Glass, Lewis & Co.), and to the legal counsel for the Funds independent trustees (Chapman and Cutler LLP). Also, the Adviser may
transmit to Vestek Systems, Inc. daily
non-public
portfolio holdings information on a
next-day
basis to enable the Adviser to perform portfolio attribution analysis
using Vesteks systems and software programs. Vestek is also provided with
non-public
portfolio holdings information on a monthly basis approximately
2-3
business
days after the end of each month so that Vestek may calculate and provide certain statistical information (but not the
non-public
holdings information itself) to its clients (including retirement plan sponsors
or their consultants). The Adviser and/or
Sub-Adviser
may also provide certain portfolio holdings information to
broker-dealers
from time to time in connection with the
purchase or sale of securities or requests for price quotations or bids on one or more securities. In providing this information, reasonable precautions are taken in an effort to avoid potential misuse of the disclosed information, including
limitations on the scope of the portfolio holdings information disclosed, when appropriate.
Non-public
portfolio holdings information may be provided to other persons if approved by the Funds
Chief Administrative Officer or Secretary upon a determination that there is a legitimate business purpose for doing so, the disclosure is consistent with the interests of the Fund, and the recipient is obligated to maintain the confidentiality of
the information and not misuse it.
S-49
Compliance officers of the Fund and the Adviser and
Sub-Adviser
periodically monitor overall compliance with the policy to ascertain whether portfolio holdings information is disclosed in a manner that is consistent with the Funds policy. Reports are made
to the Funds Board of Trustees on an annual basis.
There is no assurance that the Funds policies on portfolio holdings
information will protect the Fund from the potential misuse of portfolio holdings information by individuals or firms in possession of such information.
The following parties currently receive
non-public
portfolio holdings information regarding one or more of the Nuveen Mutual Funds on an ongoing basis pursuant to the various
arrangements described above:
ADP Investor Communications Services
Altrinsic Global Advisors, LLC
Barclays Capital, Inc.
Barra
Bloomberg
BNP Paribas Prime Brokerage, Inc.
BNP Paribas Securities Corp.
Broadridge Systems
Cantor Fitzgerald & Co.
Chapman and Cutler LLP
Commerz Markets LLC
Credit Agricole Securities (USA) Inc.
Credit Suisse Securities (USA), LLC
Deutsche Bank Securities, Inc.
Dresdner Kleinwort Securities, LLC
Ernst & Young LLP
FactSet Research Systems
Financial Graphic Services
First Clearing, LLC
Forbes
Glass, Lewis & Co.
Goldman Sachs & Co.
HSBC Securities (USA), Inc.
ING Financial Markets, LLC
The Investment Company Institute
ISS
Jefferies & Company, Inc.
J.P. Morgan Clearing Corp.
J.P. Morgan Securities, Inc.
Lazard Asset Management, Inc.
Lipper Inc.
Merrill Lynch, Pierce, Fenner & Smith
Moodys
Morgan Stanley & Co., Inc.
Morningstar, Inc.
MS Securities Services, Inc.
Newedge USA, LLC
Nuveen Asset Management, LLC
Nuveen Fund Advisors, LLC
Pershing, LLC
PricewaterhouseCoopers LLP
Raymond James & Associates, Inc.
RBC Capital Markets Corporation
RBS Securities, Inc.
R.R. Donnelley & Sons Company
S-50
R.R. Donnelley Financial
Scotia Capital (USA), Inc.
SG Ameritas Securities, LLC
Societe Generale, New York Branch
Standard & Poors
State Street Bank & Trust Co.
Strategic Insight
TD Ameritrade Clearing, Inc.
ThomsonReuters LLC
UBS Securities, LLC
U.S. Bancorp Fund Services, LLC
U.S. Bank N.A.
Value Line
Vestek Systems, Inc.
Vickers
Wells Fargo Securities, LLC
Wilshire Associates Incorporated
NET ASSET VALUE
The Funds net asset value is determined as set forth in the Prospectus under General
InformationNet Asset Value.
SHARES OF BENEFICIAL INTEREST
The Board of Trustees of the Trust is authorized to issue an unlimited number of shares in one or more series, which may be divided into classes of
shares. Currently, there are 18 series authorized and outstanding, each of which may be generally divided into different classes of shares designated as Class A shares, Class B shares, Class C shares, Class R3 shares, Class R6 shares and Class
I shares. Each class of shares represents an interest in the same portfolio of investments of the Fund. Each class of shares has equal rights as to voting, redemption, dividends and liquidation, except that each bears different class expenses,
including different distribution and service fees, and each has exclusive voting rights with respect to any distribution or service plan applicable to its shares. There are no conversion, preemptive or other subscription rights, except that Class B
shares (available in only certain series and not available in the Fund) automatically convert into Class A shares. The Board of Trustees of the Trust has the right to establish additional series and classes of shares in the future, to change
those series or classes and to determine the preferences, voting powers, rights and privileges thereof.
The Trust is not required and
does not intend to hold annual meetings of shareholders. Shareholders owning more than 10% of the outstanding shares of the Fund have the right to call a special meeting to remove trustees or for any other purpose.
Under Massachusetts law applicable to Massachusetts business trusts, shareholders of such a trust may, under certain circumstances, be held
personally liable as partners for its obligations. However, the Declaration of Trust of the Trust contains an express disclaimer of shareholder liability for acts or obligations of the Trust and requires that notice of this disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust or the trustees. The Trusts Declaration of Trust further provides for indemnification out of the assets and property of the Trust for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust or
the Fund itself was unable to meet its obligations. The Trust believes the likelihood of the occurrence of these circumstances is remote.
As of February 3, 2014, Nuveen Investments owned 100.00% of the Fund and, accordingly, has controlled the Fund. A party that controls the Fund may be able to significantly influence the outcome of any item
presented to shareholders for approval.
S-51
TAX MATTERS
Federal Income Tax Matters
This section summarizes some of the main
U.S. federal income tax consequences of owning shares of the Fund. This section is current as of the date of this SAI. Tax laws and interpretations change frequently, and this summary does not describe all of the tax consequences to all
taxpayers. For example, this summary generally does not describe your situation if you are a corporation, a
non-U.S. person,
a
broker-dealer
or other investor with
special circumstances, or if you are investing through a
tax-deferred
account, such as an IRA or 401(k) plan. In addition, this section does not describe your state, local or
non-U.S. tax
consequences. This federal income tax summary is based in part on the advice of counsel to the Fund. The Internal Revenue Service could disagree with any conclusions set forth in this
section. In addition, Funds counsel was not asked to review, and has not reached a conclusion with respect to the federal income tax treatment of the assets to be deposited in the Fund. Consequently, this summary may not be sufficient for you
to use for the purpose of avoiding penalties under federal tax law. As with any investment, you should seek advice based on your individual circumstances from your own tax professional.
Fund Status
The Fund intends to qualify as a regulated
investment company under the federal tax laws. If the Fund qualifies as a regulated investment company and distributes its income as required by the tax law, the Fund generally will not pay federal income taxes. If the Fund fails for any
taxable year to qualify as a regulated investment company for federal income tax purposes, the Fund itself will generally be subject to federal income taxation (which will reduce the amount of Fund income available for distribution) and your tax
consequences will be different from those described in this section (for example, all distributions to you will generally be taxed as ordinary income, even if those distributions are derived from capital gains realized by the Fund).
Qualification as a Regulated Investment Company
As a regulated investment company, the Fund generally will not be subject to federal income tax on the portion of its investment company taxable income (as that term is defined in the Code, but without regard to
the deduction for dividends paid) and net capital gain (
i.e.
, the excess of net
long-term
capital gain over net
short-term
capital loss), if any, that it
distributes to shareholders, provided that it distributes at least 90% of its net investment company taxable income and 90% of its net
tax-exempt
interest income for the year (the
Distribution
Requirement
) and satisfies certain other requirements of the Code that are generally described below. The Fund also intends to make such distributions as are necessary to avoid the otherwise applicable 4%
non-deductible
excise tax on certain undistributed earnings.
In addition to satisfying the
Distribution Requirement, the Fund must, among other things, derive in each taxable year at least 90% of its gross income from (1) dividends, interest, certain payments with respect to securities loans, gains from the sale or disposition of
stock, securities or
non-U.S.
currencies and other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock,
securities or currencies, and (2) net income derived from an interest in a qualified publicly traded partnership (as such term is defined in the Code). The Fund must also satisfy an asset diversification test in order to qualify as
a regulated investment company. Under this test, at the close of each quarter of the Funds taxable year, (1) 50% or more of the value of the Funds assets must be represented by cash and cash items (including receivables), United
States government securities, securities of other regulated investment companies, and other securities, with such other securities limited, in respect of any one issuer, to an amount not greater than 5% of the value of the Funds assets and not
greater than 10% of the outstanding voting securities of such issuer and (2) not more than 25% of the value of the Funds assets may be invested in securities of (a) any one issuer (other than U.S. government securities or
securities of other regulated investment companies), or of two or more issuers which the Fund controls and which are engaged in the same, similar or related trades or businesses or (b) in the securities of one or more qualified publicly
traded partnerships (as such term is defined in the Code). There are certain exceptions for failure to qualify if the failure is for reasonable cause or is
de minimis
and certain corrective action is taken and certain tax payments
are made by the Fund.
S-52
Distributions
Fund distributions are generally taxable. After the end of each year, you will receive a tax statement that separates the Funds distributions
into three categories, ordinary income distributions, capital gains dividends and returns of capital. Ordinary income distributions are generally taxed at your ordinary tax rate, however, as further discussed below, certain ordinary income
distributions received from the Fund may be taxed at the capital gains tax rates. Generally, you will treat all capital gains dividends as
long-term
capital gains regardless of how long you have owned your
shares. To determine your actual tax liability for your capital gains dividends, you must calculate your total net capital gain or loss for the tax year after considering all of your other taxable transactions, as described below. In addition, the
Fund may make distributions that represent a return of capital for tax purposes and thus will generally not be taxable to you unless the distribution exceeds your basis in your shares. The tax status of your distributions from the Fund is not
affected by whether you reinvest your distributions in additional shares or receive them in cash. The income from the Fund that you must take into account for federal income tax purposes is not reduced by amounts used to pay a deferred sales fee, if
any. The tax laws may require you to treat distributions made to you in January as if you had received them on December 31 of the previous year. Under the Health Care and Education Reconciliation Act of 2010, income from the
Fund may also be subject to a new 3.8 percent Medicare tax imposed for taxable years beginning after 2012. This tax will generally apply to your net investment income if your adjusted gross income exceeds certain threshold amounts, which
are $250,000 in the case of married couples filing joint returns and $200,000 in the case of single individuals.
Dividends Received Deduction
A corporation that owns shares generally will not be entitled to the dividends received deduction with respect to many dividends received from the Fund, because the dividends received deduction is generally not
available for distributions from regulated investment companies. However, certain ordinary income dividends on shares that are attributable to qualifying dividends received by the Fund from certain corporations may be reported by the Fund as being
eligible for the dividends received deduction.
If You Sell or Redeem Shares
If you sell or redeem your shares, you will generally recognize a taxable gain or loss. To determine the amount of this gain or loss, you must
subtract your tax basis in your shares from the amount you receive in the transaction. Your tax basis in your shares is generally equal to the cost of your shares, generally including sales charges. In some cases, however, you may have to adjust
your tax basis after you purchase your shares.
Taxation of Capital Gains and Losses
If you are an individual, the maximum marginal stated federal tax rate for net capital gains is generally 20% for taxpayers in the 39.6% tax
bracket, 15% for taxpayers in the 25%, 28%, 33% and 35% tax brackets and 0% for taxpayers in the 10% and 15% tax brackets. Capital gains received from assets held for more than one year that are considered unrecaptured section 1250 gain
(which may be the case, for example, with some capital gains attributable to equity interests in real estate investment trusts that constitute interests in entities treated as real estate investment trusts for federal tax purposes) are taxed at a
maximum stated rate of 25%. In the case of capital gains dividends, the determination of which portion of the capital gains dividend, if any, is subject to the 25% tax rate, will be made based on rules prescribed by the United States Treasury.
Capital gains may also be subject to the Medicare tax described above.
Net capital gain equals net
long-term
capital gain minus net
short-term
capital loss for the taxable year. Capital gain or loss is
long-term
if the holding period
for the asset is more than one year and is
short-term
if the holding period for the asset is one year or less. You must exclude the date you purchase your shares to determine your holding period. However, if
you receive a capital gain dividend from the Fund and sell your share at a loss after holding it for six months or less, the loss will be recharacterized as
long-term
capital loss to the extent of the capital
gain dividend received. The
S-53
tax rates for capital gains realized from assets held for one year or less are generally the same as for ordinary income. The Code treats certain capital gains as ordinary income in special
situations.
Taxation of Certain Ordinary Income Dividends
Ordinary income dividends received by an individual shareholder from a regulated investment company such as the Fund are generally taxed at the same
rates that apply to net capital gain (as discussed above), provided certain holding period requirements are satisfied and provided the dividends are attributable to qualifying dividends received by the Fund itself. Distributions with respect to
shares in real estate investment trusts are qualifying dividends only in limited circumstances. The Fund will provide notice to its shareholders of the amount of any distribution which may be taken into account as a dividend which is eligible for
the capital gains tax rates.
In-Kind
Distributions
Under certain circumstances, as described in the Prospectus, you may receive an
in-kind
distribution of Fund
securities when you redeem shares or when the Fund terminates. This distribution will be treated as a sale for federal income tax purposes and you will generally recognize gain or loss, generally based on the value at that time of the securities and
the amount of cash received. The Internal Revenue Service could, however, assert that a loss may not be currently deducted.
Exchanges
If you
exchange shares of the Fund for shares of another Nuveen Mutual Fund, the exchange would generally be considered a sale for federal income tax purposes.
Deductibility of Fund Expenses
Expenses incurred and deducted by the Fund will generally not be treated as income taxable to you. In some cases, however, you may be required to treat your portion of the Fund expenses as income. In these cases
you may be able to take a deduction for these expenses. However, certain miscellaneous itemized deductions, such as investment expenses, may be deducted by individuals only to the extent that all of these deductions exceed 2% of the
individuals adjusted gross income. Some individuals may also be subject to further limitations on the amount of their itemized deductions, depending on their income.
Non-U.S. Tax
Credit
If
the Fund invests in any
non-U.S. securities,
the tax statement that you receive may include an item showing
non-U.S. taxes
the Fund paid to other countries. In
this case, dividends taxed to you will include your share of the taxes the Fund paid to other countries. You may be able to deduct or receive a tax credit for your share of these taxes.
Investments in Certain
Non-U.S. Corporations
If the Fund holds an equity interest in any passive foreign investment companies (
PFICs
), which are generally certain foreign corporations that receive at least 75% of their annual
gross income from passive sources (such as interest, dividends, certain rents and royalties or capital gains) or that hold at least 50% of their assets in investments producing such passive income, the Fund could be subject to U.S. federal
income tax and additional interest charges on gains and certain distributions with respect to those equity interests, even if all the income or gain is timely distributed to its shareholders. The Fund will not be able to pass through to its
shareholders any credit or deduction for such taxes. The Fund may be able to make an election that could ameliorate these adverse tax consequences. In this case, the Fund would recognize as ordinary income any increase in the value of such PFIC
shares, and as ordinary loss any decrease in such value to the extent it did not exceed prior increases included in income. Under this election, the Fund might be required to recognize in a year income in excess of its distributions from PFICs and
its proceeds from dispositions of PFIC stock during that year, and such income would nevertheless be subject to the distribution requirement and would be taken into account for purposes of the 4% excise tax. Dividends paid by PFICs are not treated
as qualified dividend income.
S-54
Non-U.S. Investors
If you are a
non-U.S. investor
(i.e., an investor other than a U.S. citizen or resident or a U.S.
corporation, partnership, estate or trust), you should be aware that, generally, subject to applicable tax treaties, distributions from the Fund will be characterized as dividends for federal income tax purposes (other than dividends which the Fund
properly reports as capital gain dividends) and will be subject to U.S. income taxes, including withholding taxes, subject to certain exceptions described below. However, distributions received by a
non-U.S. investor
from the Fund that are properly reported by the Fund as capital gain dividends may not be subject to U.S. federal income taxes, including withholding taxes, provided that the Fund
makes certain elections and certain other conditions are met. In the case of dividends with respect to taxable years of the Fund beginning prior to 2014, distributions from the Fund that are properly reported by the Fund as an
interest-related
dividend attributable to certain interest income received by the Fund or as a
short-term
capital gain dividend attributable to certain net
short-term
capital gain income received by the Fund may not be subject to U.S. federal income taxes, including withholding taxes when received by certain foreign investors, provided that the Fund makes certain
elections and certain other conditions are met. In addition, distributions in respect of shares after June 30, 2014 may be subject to a U.S. withholding tax of 30% in the case of distributions to (i) certain
non-U.S. financial
institutions that have not entered into an agreement with the U.S. Treasury to collect and disclose certain information and are not resident in a jurisdiction that has entered into
such an agreement with the U.S. Treasury and (ii) certain other
non-U.S. entities
that do not provide certain certifications and information about the entitys U.S. owners.
Dispositions of shares by such persons may be subject to such withholding after December 31, 2016.
Capital Loss
Carry-Forward
When the Fund has a capital loss
carry-forward,
it does not make capital gains distributions until the loss has been offset or expired. As of October 31, 2013, the Fund had capital loss carry-forwards available for federal income tax
purposes, expiring in the year indicated.
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Expiration Year
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Capital Loss Carry-Forwards
(000s omitted)
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*
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$10,799
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**
|
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10,969
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*
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|
Short-term loss not subject to expiration.
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**
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Long-term loss not subject to expiration.
|
The
foregoing relates only to federal income taxation and is a general summary of the federal tax law in effect as of the date of this SAI.
PURCHASE AND REDEMPTION OF FUND SHARES
As described in the Prospectus, the Fund provides you with alternative ways of purchasing
Fund shares based upon your individual investment needs and preferences.
Each class of shares of the Fund represents an interest in the
same portfolio of investments. Each class of shares is identical in all respects except that each class bears its own class expenses, including distribution and administration expenses, and each class has exclusive voting rights with respect to any
distribution or service plan applicable to its shares. As a result of the differences in the expenses borne by each class of shares, net income per share, dividends per share and net asset value per share will vary among the Funds classes of
shares. There are no conversion, preemptive or other subscription rights.
Shareholders of each class will share expenses proportionately
for services that are received equally by all shareholders. A particular class of shares will bear only those expenses that are directly attributable to that class, where the type or amount of services received by a class varies from one class to
another. For example,
class-specific
expenses generally will include distribution and service fees for those classes that pay such fees.
S-55
The expenses to be borne by specific classes of shares may include (i) transfer agency fees
attributable to a specific class of shares, (ii) printing and postage expenses related to preparing and distributing materials such as shareholder reports, prospectuses and proxy statements to current shareholders of a specific class of shares,
(iii) SEC and state securities registration fees incurred by a specific class of shares, (iv) the expense of administrative personnel and services required to support the shareholders of a specific class of shares, (v) litigation or
other legal expenses relating to a specific class of shares, (vi) trustees fees or expenses incurred as a result of issues relating to a specific class of shares, (vii) accounting expenses relating to a specific class of shares and
(viii)
any additional incremental expenses subsequently identified and determined to be properly allocated to one or more classes of shares.
Class A Shares
Class A shares may be purchased at a public offering price equal to the applicable net asset value
per share plus an
up-front
sales charge imposed at the time of purchase as set forth in the Prospectus. Shareholders may qualify for a reduced sales charge, or the sales charge may be waived in its entirety,
as described below. Class A shares are also subject to an annual service fee of 0.25%. See Distribution and Service Plan. Set forth below is an example of the method of computing the offering price of the Class A shares of the
Fund. The example assumes a purchase on October 31, 2013 of Class A shares of the Fund aggregating less than $50,000 subject to the schedule of sales charges set forth in the Prospectus at a price based upon the net asset value of the
Class A shares.
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Net asset value per share
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$
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20.00
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Per share sales charge5.75% of public offering price (6.10% of net asset value per share)
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1.22
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Per share offering price to the public
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$
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21.22
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The Fund receives the entire net asset value of all Class A shares that are sold. The Distributor retains the
full applicable sales charge from which it pays the uniform reallowances shown in the Prospectus to financial intermediaries.
Reduction or Elimination of
Up-Front
Sales Charge on Class A Shares
Rights of Accumulation.
You may qualify for a reduced sales charge on a purchase of Class A shares of the Fund if the amount of your
purchase, when added to the value that day of all of your shares of any Nuveen Mutual Fund, falls within the amounts stated in the Class A Sales Charges and Commissions table in How You Can Buy and Sell Shares in the Prospectus. You
or your financial advisor must notify the Distributor or the Funds transfer agent of any cumulative discount whenever you plan to purchase Class A shares of the Fund that you wish to qualify for a reduced sales charge.
Letter of Intent.
You may qualify for a reduced sales charge on a purchase of Class A shares of the Fund if you plan to purchase
Class A shares of Nuveen Mutual Funds over the next 13 months and the total amount of your purchases would, if purchased at one time, qualify you for one of the reduced sales charges shown in the Class A Sales Charges and Commissions table
in How You Can Buy and Sell Shares in the Prospectus. In order to take advantage of this option, you must complete the applicable section of the Application Form or sign and deliver to your financial advisor or other financial
intermediary or to the Funds transfer agent a written Letter of Intent in a form acceptable to the Distributor. A Letter of Intent states that you intend, but are not obligated, to purchase over the next 13 months a stated total amount of
Class A shares that would qualify you for a reduced sales charge shown above. You may count shares of all Nuveen Mutual Funds that you already own and any Class C and Class I shares of a Nuveen Mutual Fund that you purchase over the
next 13 months towards completion of your investment program, but you will receive a reduced sales charge only on new Class A shares you purchase with a sales charge over the 13 months. You cannot count towards completion of your investment
program Class A shares that you purchase without a sales charge through investment of distributions from a Nuveen Mutual Fund or a Nuveen Defined Portfolio, or otherwise.
By establishing a Letter of Intent, you agree that your first purchase of Class A shares of the Fund following execution of the Letter of Intent will be at least 5% of the total amount of your intended
S-56
purchases. You further agree that shares representing 5% of the total amount of your intended purchases will be held in escrow pending completion of these purchases. All dividends and capital
gains distributions on Class A shares held in escrow will be credited to your account. If total purchases, less redemptions, prior to the expiration of the 13 month period equal or exceed the amount specified in your Letter of Intent, the
Class A shares held in escrow will be transferred to your account. If the total purchases, less redemptions, are less than the amount specified, you must pay the Distributor an amount equal to the difference between the amounts paid for these
purchases and the amounts which would have been paid if the higher sales charge had been applied. If you do not pay the additional amount within 20 days after written request by the Distributor or your financial advisor, the Distributor will redeem
an appropriate number of your escrowed Class A shares to meet the required payment. By establishing a Letter of Intent, you irrevocably appoint the Distributor as attorney to give instructions to redeem any or all of your escrowed shares, with
full power of substitution in the premises.
You or your financial advisor must notify the Distributor or the Funds transfer agent
whenever you make a purchase of Fund shares that you wish to be covered under the Letter of Intent option.
For purposes of determining
whether you qualify for a reduced sales charge as described under
Rights of Accumulation
and
Letter of Intent
, you may include together with your own purchases those made by your spouse or domestic partner and your children under the
age of 21 years, whether these purchases are made through a taxable or
non-taxable
account. You may also include purchases made by a corporation, partnership or sole proprietorship which is 100% owned, either
alone or in combination, by any of the foregoing. In addition, a trustee or other fiduciary can count all shares purchased for a single trust, estate or other single fiduciary account that has multiple accounts (including one or more employee
benefit plans of the same employer).
Elimination of Sales Charge on Class A Shares.
Class A shares of the Fund may be
purchased at net asset value without a sales charge by the following categories of investors:
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investors purchasing $1,000,000 or more;
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current and former trustees/directors of the Nuveen Funds;
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full-time
and retired employees and directors of Nuveen Investments, and subsidiaries thereof, or their immediate family
members (immediate family members are defined as their spouses or domestic partners, parents, children, grandparents, grandchildren,
parents-in-law,
sons-in-law
and
daughters-in-law,
siblings, a siblings spouse and a spouses
siblings);
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any person who, for at least the last 90 days, has been an officer, director or employee of any financial intermediary, or their immediate family members;
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bank or
broker-affiliated
trust departments investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, advisory, custodial or similar capacity;
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investors purchasing on a periodic fee,
asset-based
fee or no transaction fee basis through a
broker-dealer
sponsored mutual fund purchase program;
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clients of investment advisers, financial planners or other financial intermediaries that charge periodic or
asset-based
fees for their services;
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employer-sponsored
retirement plans except SEPs,
SAR-SEPs,
SIMPLE IRAs and KEOGH
plans; and
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investors purchasing through a financial intermediary that has entered into an agreement with the Distributor to offer the Funds shares to
self-directed
investment brokerage accounts and that may or may not charge a transaction fee to its customers.
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You or your financial advisor must notify the Distributor or the Funds transfer agent whenever you make a purchase of Class A shares of the Fund that you wish to be covered under these special sales
charge waivers.
S-57
Class A shares of the Fund may be issued at net asset value without a sales charge in connection
with the acquisition by the Fund of another investment company. All purchases under the special sales charge waivers will be subject to minimum purchase requirements as established by the Fund.
The reduced sales charge programs may be modified or discontinued by the Fund at any time. For more information about the purchase of Class A
shares or the reduced sales charge program, or to obtain the required application forms, call Nuveen Investor Services
toll-free
at
(800) 257-8787.
Class C Shares
You may purchase Class C shares at a public offering price equal to the applicable net asset value per share without any
up-front
sales charge. Class C shares are subject to an annual distribution fee of 0.75% to compensate the Distributor for paying your financial advisor or other financial intermediary an ongoing sales
commission. Class C shares are also subject to an annual service fee of 0.25% to compensate financial intermediaries for providing you with ongoing financial advice and other account services. The Distributor compensates financial
intermediaries for sales of Class C shares at the time of the sale at a rate of 1.00% of the amount of Class C shares purchased, which represents an advance of the first years distribution fee of 0.75% plus an advance on the first
years annual service fee of 0.25%. See Distribution and Service Plan.
Class C share purchase orders equaling or
exceeding $1,000,000 will not be accepted. In addition, purchase orders for a single purchaser that, when added to the value that day of all of such purchasers shares of any class of any Nuveen Mutual Fund, cause the purchasers
cumulative total of shares in Nuveen Mutual Funds to equal or exceed the aforementioned limit will not be accepted. Purchase orders for a single purchaser equal to or exceeding the foregoing limit should be placed only for Class A shares,
unless such purchase has been reviewed and approved as suitable for the client by the appropriate compliance personnel of the financial intermediary, and the Fund receives written confirmation of such approval.
Redemption of Class C shares within 12 months of purchase may be subject to a contingent deferred sales charge (
CDSC
) of
1.00% of the lower of the purchase price or redemption proceeds. Because Class C shares do not convert to Class A shares and continue to pay an annual distribution fee indefinitely, Class C shares should normally not be purchased by
an investor who expects to hold shares for significantly longer than eight years.
Reduction or Elimination of Contingent
Deferred Sales Charge
Class A shares are normally redeemed at net asset value, without any CDSC. However, in the case of
Class A shares purchased at net asset value without a sales charge because the purchase amount exceeded $1 million, a CDSC is imposed on any redemption within 12 months of purchase. Class C shares are redeemed at net asset value, without
any CDSC, except that a CDSC of 1% is imposed upon any redemption within 12 months of purchase (except in cases where a shareholder is eligible for a waiver).
In determining whether a CDSC is payable, the Fund will first redeem shares not subject to any charge and then will redeem shares held for the longest period, unless the shareholder specifies another order. No CDSC
is charged on shares purchased as a result of automatic reinvestment of dividends or capital gains paid. In addition, no CDSC will be charged on exchanges of shares into another Nuveen Mutual Fund. The holding period is calculated on a monthly basis
and begins on the first day of the month in which the purchase was made. The CDSC is assessed on an amount equal to the lower of the then current market value or the cost of the shares being redeemed. Accordingly, no sales charge is imposed on
increases of net asset value above the initial purchase price. The Distributor receives the amount of any CDSC shareholders pay.
The
CDSC may be waived or reduced under the following circumstances: (i) in the event of total disability (as evidenced by a determination by the federal Social Security Administration) of the shareholder (including a registered joint owner)
occurring after the purchase of the shares being redeemed; (ii) in the event of the death of the shareholder (including a registered joint owner); (iii) for redemptions made pursuant to a systematic withdrawal plan, up to 1% monthly, 3%
quarterly, 6% semiannually or 12% annually of an accounts net asset value depending on the frequency of the plan as designated by the shareholder; (iv) redemptions in connection with a payment of account or plan
S-58
fees; (v) redemptions in connection with the exercise of the Funds right to redeem all shares in an account that does not maintain a certain minimum balance or that the Board of
Trustees has determined may have material adverse consequences to the shareholders of the Fund; (vi) in whole or in part for redemptions of shares by shareholders with accounts in excess of specified breakpoints that correspond to the
breakpoints under which the
up-front
sales charge on Class A shares is reduced pursuant to Rule
22d-1
under the Act; (vii) redemptions of shares purchased
under circumstances or by a category of investors for which Class A shares could be purchased at net asset value without a sales charge; (viii) redemptions of Class A or Class C shares if the proceeds are transferred to an
account managed by the Adviser and the Adviser refunds the advanced service and distribution fees to the Distributor; (ix) redemptions of Class C shares in cases where the Distributor did not advance the first years service and
distribution fees when such shares were purchased; and (x) redemptions of Class A shares where the Distributor did not pay a sales commission when such shares were purchased. If the Fund waives or reduces the CDSC, such waiver or reduction
would be uniformly applied to all Fund shares in the particular category. In waiving or reducing a CDSC, the Fund will comply with the requirements of Rule
22d-1
under the 1940 Act.
In addition, the CDSC will be waived in connection with the following redemptions of shares held by an
employer-sponsored
qualified defined contribution retirement plan: (i) partial or complete redemptions in connection with a distribution without penalty under Section 72(t) of the Code from a retirement
plan: (a) upon attaining age
59
1
/
2
, (b) as part of a series of substantially equal periodic payments, or (c) upon separation from service and attaining age 55; (ii) partial or complete redemptions in connection with a qualifying loan
or hardship withdrawal; (iii) complete redemptions in connection with termination of employment, plan termination or transfer to another employers plan or IRA; and (iv) redemptions resulting from the return of an excess contribution.
The CDSC will also be waived in connection with the following redemptions of shares held in an IRA account: (i) for redemptions made pursuant to an IRA systematic withdrawal based on the shareholders life expectancy including, but not
limited to, substantially equal periodic payments described in Code Section 72(t)(A)(iv) prior to age
59
1
/
2
; and (ii) for redemptions to satisfy required minimum distributions after age 70
1
/
2
from an IRA account (with the maximum amount subject to this waiver being based only upon the shareholders
Nuveen IRA accounts).
Class I Shares
Class I shares are available for purchase by clients of financial intermediaries who charge such clients an ongoing fee for advisory,
investment, consulting or related services. Such clients may include individuals, corporations, endowments and foundations. The minimum initial investment for such clients is $100,000, but this minimum will be lowered to $250 for clients of
financial intermediaries that have accounts holding Class I shares with an aggregate value of at least $100,000. The Distributor may also lower the minimum to $250 for clients of financial intermediaries anticipated to reach this Class I
share holdings level.
Class I shares are also available for purchase by family offices and their clients. A family office is a
company that provides certain financial and other services to a high net worth family or families. The minimum initial investment for family offices and their clients is $100,000, but this minimum will be lowered to $250 for clients of family
offices that have accounts holding Class I shares with an aggregate value of at least $100,000. The Distributor may also lower the minimum to $250 for clients of family offices anticipated to reach this Class I share holdings level.
Class I shares also are available for purchase, with no minimum initial investment, by the following categories of investors:
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employer-sponsored
retirement plans, except SEPs,
SAR-SEPs,
SIMPLE IRAs and KEOGH
plans;
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bank or
broker-affiliated
trust departments investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, advisory, custodial or similar capacity;
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advisory accounts of Nuveen Fund Advisors and its affiliates, including other Nuveen Mutual Funds whose investment policies permit investments in other
investment companies;
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S-59
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any registered investment company that is not affiliated with the Nuveen Funds and which invests in securities of other investment companies;
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any plan organized under section 529 under the Code (i.e., a 529 plan);
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current and former trustees/directors of any Nuveen Fund, and their immediate family members (
immediate family members
are defined as spouses
or domestic partners, parents, children, grandparents, grandchildren,
parents-in-law,
sons-in-law
and
daughters-in-law,
siblings, a siblings spouse and a spouses
siblings);
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officers, directors and former directors of Nuveen Investments and its affiliates, and their immediate family members;
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full-time
and retired employees of Nuveen Investments and its affiliates, and their immediate family members, including
any corporation, partnership, sole proprietorship or other business organization that is wholly owned by one or more of such persons; and
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any person who, for at least the last 90 days, has been an officer, director or employee of any financial intermediary, and their immediate family members.
|
Any shares purchased by investors falling within any of the last four categories listed above must be acquired for
investment purposes and on the condition that they will not be transferred or resold except through redemption by the Fund.
Holders of
Class I shares may purchase additional Class I shares using dividends and capital gains distributions on their shares.
If you
are eligible to purchase either Class I shares or Class A shares without a sales charge at net asset value, you should be aware of the differences between these two classes of shares. Class A shares are subject to an annual service
fee to compensate financial intermediaries for providing you with ongoing account services. Class I shares are not subject to a distribution or service fee and, consequently, holders of Class I shares may not receive the same types or
levels of services from financial intermediaries. In choosing between Class A shares and Class I shares, you should weigh the benefits of the services to be provided by financial intermediaries against the annual service fee imposed upon
the Class A shares.
Shareholder Programs
Exchange Privilege
You may exchange Fund shares into an identically registered account for the
same class of another Nuveen Mutual Fund available in your state. Your exchange must meet the minimum purchase requirements of the fund into which you are exchanging. You may also, under certain limited circumstances, exchange between certain
classes of shares of the same Fund. An exchange between classes of shares of the same Fund may not be considered a taxable event; please consult your own tax advisor for further information.
If you hold your shares directly with the Fund, you may exchange your shares by either sending a written request to the Fund, c/o Nuveen Investor
Services, P.O. Box 8530, Boston, Massachusetts
02266-8530
or by calling Nuveen Investor Services toll free at
(800) 257-8787.
If you exchange shares between different Nuveen Mutual Funds and your shares are subject to a CDSC, no CDSC will be charged at the time of the
exchange. However, if you subsequently redeem the shares acquired through the exchange, the redemption may be subject to a CDSC, depending on when you purchased your original shares and the CDSC schedule of the fund from which you exchanged your
shares. If you exchange between classes of shares of the same Fund and your original shares are subject to a CDSC, the CDSC will be assessed at the time of the exchange.
For federal income tax purposes, an exchange between different Nuveen Mutual Funds constitutes a sale and purchase of shares and may result in capital gain or loss. Before making any exchange, you should obtain the
Prospectus for the Nuveen Mutual Fund you are purchasing and read it carefully. If the registration of the account for the Fund you are purchasing is not exactly the same as that of the fund account from which the exchange is made, written
instructions from all
S-60
holders of the account from which the exchange is being made must be received, with signatures guaranteed by a member of an approved Medallion Signature Guarantee Program or in such other manner
as may be acceptable to the Fund. You may also exchange shares by telephone if you authorize telephone exchanges by checking the applicable box on the Application Form or by calling Nuveen Investor Services
toll-free
at
(800) 257-8787
to obtain an authorization form. The Fund reserves the right to revise or suspend the exchange privilege, limit the amount or number of
exchanges, or reject any exchange. Shareholders will be provided with at least 60 days notice of any material revision to or termination of the exchange privilege.
The exchange privilege is not intended to permit the Fund to be used as a vehicle for
short-term
trading. Excessive exchange activity may interfere with portfolio management,
raise expenses and otherwise have an adverse effect on all shareholders. In order to limit excessive exchange activity and in other circumstances where Fund management believes doing so would be in the best interest of the Fund, the Fund reserves
the right to revise or terminate the exchange privilege, or limit the amount or number of exchanges or reject any exchange. Shareholders would be notified of any such action to the extent required by law. See Frequent Trading Policy
below.
Reinstatement Privilege
If you redeemed Class A or Class C shares of the Fund or any other Nuveen Mutual Fund that were subject to a sales charge or a CDSC, you
have up to one year to reinvest all or part of the full amount of the redemption in the same class of shares of the Fund at net asset value. This reinstatement privilege can be exercised only once for any redemption, and reinvestment will be made at
the net asset value next calculated after reinstatement of the appropriate class of Fund shares. If you reinstate shares that were subject to a CDSC, any shares purchased pursuant to the reinstatement privilege will not be subject to a CDSC. The
federal income tax consequences of any capital gain realized on a redemption will not be affected by reinstatement, but a capital loss may be disallowed in whole or in part depending on the timing, the amount of the reinvestment and the fund from
which the redemption occurred.
Suspension of Right of Redemption
The Fund may suspend the right of redemption of Fund shares or delay payment more than seven days (a) during any period when the New York Stock Exchange (the
NYSE
) is closed (other than
customary weekend and holiday closings), (b) when trading in the markets the Fund normally utilizes is restricted or an emergency exists as determined by the SEC so that trading of the Funds investments or determination of its net asset
value is not reasonably practicable, or (c) for any other periods that the SEC by order may permit for protection of Fund shareholders.
Redemption
In-Kind
The Fund has reserved the right to redeem
in-kind
(that is, to pay redemption requests in cash and portfolio securities, or wholly in portfolio securities). Pursuant to a
notice of election under Rule 18f-1, the Fund voluntarily has committed to pay in cash all requests for redemption by any shareholder, limited as to each shareholder during any
90-day
period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of the
90-day
period.
Frequent Trading Policy
The Funds Frequent Trading Policy is as follows:
Nuveen Mutual Funds are intended as
long-term
investments and not as
short-term
trading vehicles. At the same time, the Fund recognizes the need of investors to periodically make purchases and redemptions of Fund shares when rebalancing their portfolios and as their financial
needs or circumstances change. Nuveen Mutual Funds have adopted the following Frequent Trading Policy that seeks to balance these needs against the potential for higher operating costs, portfolio management disruption and other inefficiencies that
can be caused by excessive trading of Fund shares.
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1. Definition of Round Trip
A Round Trip trade is the purchase and subsequent redemption of Fund shares, including by exchange. Each side of a Round Trip trade may be comprised of either a single transaction or a series of
closely-spaced
transactions.
2. Round Trip Trade Limitations
Nuveen Mutual Funds limit the frequency of Round Trip trades that may be placed in the Fund. Subject to certain exceptions noted below, the Fund
limits an investor to two Round Trips per trailing
60-day
period.
3. Enforcement
Trades placed in violation of the foregoing policies are subject to rejection or cancellation by Nuveen Mutual Funds. Nuveen Mutual Funds may also
bar an investor (and/or the investors financial advisor) who has violated these policies from opening new accounts with the Fund and may restrict the investors existing account(s) to redemptions only. Nuveen Mutual Funds reserve the
right, in their sole discretion, to (a) interpret the terms and application of these policies, (b) waive unintentional or minor violations (including transactions below certain dollar thresholds) if Nuveen Mutual Funds determine that doing
so does not harm the interests of Fund shareholders, and (c) exclude certain classes of redemptions from the application of the trading restrictions set forth above.
Nuveen Mutual Funds reserve the right to impose restrictions on purchases or exchanges that are more restrictive than those stated above if they determine, in their sole discretion, that a proposed transaction or
series of transactions involve market timing or excessive trading that is likely to be detrimental to the Fund. The Fund may also modify or suspend the Frequent Trading Policy without notice during periods of market stress or other unusual
circumstances.
The ability of Nuveen Mutual Funds to implement the Frequent Trading Policy for omnibus accounts at certain financial
intermediaries may be dependent on receiving from those intermediaries sufficient shareholder information to permit monitoring of trade activity and enforcement of the Funds Frequent Trading Policy. In addition, the Fund may rely on a
financial intermediarys policy to restrict market timing and excessive trading if the Fund believes that the policy is reasonably designed to prevent market timing that is detrimental to the Fund. Such policy may be more or less restrictive
than the Funds Policy. The Fund cannot ensure that these financial intermediaries will in all cases apply the Funds policy or their own policies, as the case may be, to accounts under their control.
Exclusions from the Frequent Trading Policy
As stated above, certain redemptions are eligible for exclusion from the Frequent Trading Policy, including: (i) redemptions or exchanges by
shareholders investing through the
fee-based
platforms of certain financial intermediaries (where the intermediary charges an
asset-based
or comprehensive
wrap fee for its services) that are effected by the financial intermediaries in connection with systematic portfolio rebalancing; (ii) when there is a verified trade error correction, which occurs when a dealer firm sends a trade to
correct an earlier trade made in error and then the firm sends an explanation to the Nuveen Mutual Funds confirming that the trade is actually an error correction; (iii) in the event of total disability (as evidenced by a determination by the
federal Social Security Administration) of the shareholder (including a registered joint owner) occurring after the purchase of the shares being redeemed; (iv) in the event of the death of the shareholder (including a registered joint owner);
(v) redemptions made pursuant to a systematic withdrawal plan, up to 1% monthly, 3% quarterly, 6% semiannually or 12% annually of an accounts net asset value depending on the frequency of the plan as designated by the shareholder;
(vi) redemptions of shares that were purchased through a systematic investment program; (vii) involuntary redemptions caused by operation of law; (viii) redemptions in connection with a payment of account or plan fees;
(ix) redemptions or exchanges by any fund of funds advised by the Adviser; and (x) redemptions in connection with the exercise of the Funds right to redeem all shares in an account that does not maintain a certain minimum
balance or that the board has determined may have material adverse consequences to the shareholders of the Fund.
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In addition, the following redemptions of shares by an
employer-sponsored
qualified defined contribution retirement plan are excluded from the Frequent Trading Policy: (i) partial or complete redemptions in connection with a distribution without penalty under
Section 72(t) of the Code from a retirement plan: (a) upon attaining age 59
1
/
2
; (b) as part of a series of substantially equal periodic payments; or (c) upon separation from service and attaining age
55; (ii) partial or complete redemptions in connection with a qualifying loan or hardship withdrawal; (iii) complete redemptions in connection with termination of employment, plan termination, transfer to another employers plan or
IRA or changes in a plans recordkeeper; and (iv) redemptions resulting from the return of an excess contribution. Also, the following redemptions of shares held in an IRA account are excluded from the application of the Frequent Trading
Policy: (i) redemptions made pursuant to an IRA systematic withdrawal based on the shareholders life expectancy including, but not limited to, substantially equal periodic payments described in Code Section 72(t)(A)(iv) prior to age
59
1
/
2
; and (ii) redemptions to satisfy required minimum distributions after age 70
1
/
2
from an IRA account.
Distribution and Service Plan
The Fund has adopted a plan (the
Plan
) pursuant to Rule 12b-1 under the 1940 Act, pursuant to which Class C shares are subject to an annual distribution fee and Class A and Class C shares are subject to an annual service fee. The Fund may spend up to
0.25% per year of the average daily net assets of Class A shares as a service fee under the Plan. The Fund may spend up to 0.75% per year of the average daily net assets of Class C shares as a distribution fee and up to 0.25% per
year of the average daily net assets of Class C shares as a service fee under the Plan. Class I shares are not subject to either distribution or service fees. Distribution and service fees collectively are referred to herein as 12b-1
fees.
The distribution fee applicable to Class C shares under the Funds Plan compensates the Distributor for expenses
incurred in connection with the distribution of Class C shares. These expenses include payments to financial intermediaries, including the Distributor, who are brokers of record with respect to the Class C shares, as well as, without limitation,
expenses of printing and distributing Prospectuses to persons other than shareholders of the Fund, expenses of preparing, printing and distributing advertising and sales literature and reports to shareholders used in connection with the sale of
Class C shares, certain other expenses associated with the distribution of Class C shares, and any other distribution-related expenses that may be authorized from time to time by the Board of Trustees.
The service fee applicable to Class A and Class C shares under the Funds Plan is used to compensate financial intermediaries in
connection with the provision of ongoing account services to shareholders. These services may include establishing and maintaining shareholder accounts, answering shareholder inquiries and providing other personal services to shareholders.
During the fiscal period ended October 31, 2013, the Fund incurred 12b-1 fees pursuant to its Plan in the amounts set forth in the
table below. For this period, substantially all of the
12b-1
service fees on Class A shares were paid out as compensation to financial intermediaries for providing services to shareholders relating to their
investments. To compensate for commissions advanced to financial intermediaries, all 12b-1 fees on Class C shares during the first year following a purchase are retained by the Distributor. After the first year following a purchase, 12b-1 fees on
Class C shares are paid to financial intermediaries.
|
|
|
|
|
|
|
12b-1 Fees
Incurred by
the Fund for
the Fiscal
Period
Ended
October 31, 2013
|
|
Class A*
|
|
$
|
6
|
|
Class C*
|
|
|
25
|
|
*
|
|
For the period September 26, 2013 (commencement of operations) through October 31, 2013.
|
Under the Funds Plan, the Fund will report quarterly to the Board of Trustees for its review all amounts expended per class of shares under
the Plan. The Plan may be terminated at any time with
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respect to any class of shares, without the payment of any penalty, by a vote of a majority of the independent trustees who have no direct or indirect financial interest in the Plan or by vote of
a majority of the outstanding voting securities of such class. The Plan may be renewed from year to year if approved by a vote of the Board of Trustees and a vote of the independent trustees who have no direct or indirect financial interest in the
Plan cast in person at a meeting called for the purpose of voting on the Plan. The Plan may be continued only if the trustees who vote to approve such continuance conclude, in the exercise of reasonable business judgment and in light of their
fiduciary duties under applicable law, that there is a reasonable likelihood that the Plan will benefit the Fund and its shareholders. The Plan may not be amended to increase materially the cost which a class of shares may bear under the Plan
without the approval of the shareholders of the affected class, and any other material amendments of the Plan must be approved by the independent trustees by a vote cast in person at a meeting called for the purpose of considering such amendments.
During the continuance of the Plan, the selection and nomination of the independent trustees of the Trust will be committed to the discretion of the independent trustees then in office. With the exception of the Distributor and its affiliates, no
interested person of the Fund, as that term is defined in the 1940 Act, and no trustee of the Fund has a direct or indirect financial interest in the operation of the Plan or any related agreement.
General Matters
The Fund has authorized one or more brokers to accept on its behalf purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Funds behalf. The Fund will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a brokers authorized designee accepts the
order. Customer orders received by such broker (or their designee) will be priced at the Funds net asset value next computed after they are accepted by an authorized broker (or their designee). Orders accepted by an authorized broker (or their
designee) before the close of regular trading on the NYSE will receive that days share price; orders accepted after the close of trading will receive the next business days share price.
If you choose to invest in the Fund, an account will be opened and maintained for you by BFDS, the Funds shareholder services agent. Shares
will be registered in the name of the investor or the investors financial advisor. A change in registration or transfer of shares held in the name of a financial advisor may only be made by an order in good standing form from the financial
advisor acting on the investors behalf. The Fund reserves the right to reject any purchase order and to waive or increase minimum investment requirements.
The Fund does not issue share certificates.
Distribution Arrangements
The Distributor sells shares to or through brokers, dealers, banks or other qualified financial intermediaries (collectively referred to as
Dealers
), or others, in a manner consistent with the then effective registration statement of the Trust. Pursuant to the Distribution Agreement, the Distributor, at its own expense, finances certain activities incident to the sale
and distribution of the Funds shares, including printing and distributing of prospectuses and statements of additional information to other than existing shareholders, the printing and distributing of sales literature, advertising and payment
of compensation and giving of concessions to Dealers.
The Distributor receives for its services the excess, if any, of the sales
price of the Funds shares less the net asset value of those shares, and reallows a majority or all of such amounts to the Dealers who sold the shares. The Distributor also receives distribution fees pursuant to a distribution plan adopted by
the Trust pursuant to Rule
12b-1
and described herein under Distribution and Service Plan. The Distributor also receives any CDSCs imposed on redemptions of shares. The Distributor may also act as
a Dealer.
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The following table sets forth the aggregate amounts of underwriting commissions with respect to
the sale of Fund shares, the amount thereof retained by the Distributor and the compensation on redemptions and repurchases received by the Distributor for the Fund for the specified period. All figures are expressed in thousands and are to the
nearest thousand.
|
|
|
|
|
|
|
|
|
|
|
Amount of
Underwriting
Commissions
|
|
|
Amount
Retained by
the Distributor
|
|
|
Amount of
Compensation on
Redemptions and
Repurchases
|
|
9/26/13-
10/31/13
|
|
|
9/26/13-
10/31/13
|
|
|
9/26/13-
10/31/13
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
To help financial advisors and investors better understand and more efficiently use the Fund to reach
their investment goals, the Distributor may advertise and create specific investment programs and systems. For example, this may include information on how to use the Fund to accumulate assets for future education needs or periodic payments such as
insurance premiums. The Distributor may produce software, electronic information sites or additional sales literature to promote the advantages of using the Fund to meet these and other specific investor needs. In addition, wholesale representatives
of the Distributor may visit financial advisors on a regular basis to educate them about the Fund and to encourage the sale of Fund shares to their clients. The costs and expenses associated with these efforts may include travel, lodging,
sponsorship at educational seminars and conferences, entertainment and meals to the extent permitted by law. Nuveen wholesalers may receive additional compensation if they meet certain targets for sales of one or more Nuveen Mutual Funds.
Additional Payments to Financial Intermediaries and Other Payments
In addition to the sales charge payments and the distribution, service and transfer agency fees described in the Prospectus and elsewhere in this
SAI, the Adviser and/or the Distributor may make additional payments out of its own assets to selected intermediaries that sell shares of the Nuveen Mutual Funds (such as brokers, dealers, banks, registered investment advisers, retirement plan
administrators and other intermediaries; hereinafter, individually,
Intermediary,
and collectively,
Intermediaries
) under the categories described below for the purposes of promoting the sale of Fund shares,
maintaining share balances and/or for
sub-accounting,
administrative or shareholder processing services.
The amounts of these payments could be significant and may create an incentive for an Intermediary or its representatives to recommend or offer shares of the Nuveen Mutual Funds to its customers. The Intermediary
may elevate the prominence or profile of the Fund within the Intermediarys organization by, for example, placing the Fund on a list of preferred or recommended funds and/or granting the Adviser and/or the Distributor preferential or enhanced
opportunities to promote the Fund in various ways within the Intermediarys organization.
These payments are made pursuant to
negotiated agreements with Intermediaries. The payments do not change the price paid by investors for the purchase of a share or the amount the Fund will receive as proceeds from such sales. Furthermore, these payments are not reflected in the fees
and expenses listed in the fee table section of the Funds Prospectus and described above because they are not paid by the Fund.
The categories of payments described below are not mutually exclusive, and a single Intermediary may receive payments under all categories.
The Adviser and/or the Distributor may also make other additional payments out of its own assets as described under Other
Payments below.
Marketing Support Payments and Program Servicing Payments
The Adviser and/or the Distributor may make payments for marketing support and/or program servicing to selected Intermediaries that are registered
as holders or dealers of record for accounts invested in one or more of the Nuveen Mutual Funds or that make Nuveen Mutual Fund shares available through employee benefit plans or
fee-based
advisory programs to
compensate them for the variety of services they provide.
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Marketing Support Payments.
Services for which an Intermediary receives marketing support
payments may include business planning assistance, advertising, educating the Intermediarys personnel about the Nuveen Mutual Funds in connection with shareholder financial planning needs, placement on the Intermediarys preferred or
recommended fund company list, and access to sales meetings, sales representatives and management representatives of the Intermediary. In addition, Intermediaries may be compensated for enabling representatives of the Adviser and/or the Distributor
to participate in and/or present at conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events and other events sponsored by the Intermediary.
The Adviser and/or the Distributor compensate Intermediaries differently depending upon, among other factors, the number or value of Nuveen Mutual
Funds shares that the Intermediary sells or may sell, the value of the assets invested in the Nuveen Mutual Funds by the Intermediarys customers, redemption rates, ability to attract and retain assets, reputation in the industry and the level
and/or type of marketing assistance and educational activities provided by the Intermediary. Such payments are generally
asset-based
but also may include the payment of a lump sum.
Program Servicing Payments.
Services for which an Intermediary receives program servicing payments typically include recordkeeping,
reporting, or transaction processing, but may also include services rendered in connection with fund/investment selection and monitoring, employee enrollment and education, plan balance rollover or separation, or other similar services. An
Intermediary may perform program services itself or may arrange with a third party to perform program services.
Program servicing
payments typically apply to employee benefit plans, such as retirement plans, or
fee-based
advisory programs but may apply to retail sales and assets in certain situations. The payments are based on such
factors as the type and nature of services or support furnished by the Intermediary and are generally
asset-based.
Marketing Support and Program Servicing Payment Guidelines.
In the case of any one Intermediary, marketing support and program servicing payments are not expected, with certain limited exceptions, to exceed,
in the aggregate, 0.35% of the average net assets of Fund shares attributable to that Intermediary on an annual basis. In connection with the sale of a business by U.S. Bank N.A. to
Great-West
Life & Annuity Insurance Company (
Great-West
), the Adviser and/or the Distributor has a services agreement with GWFS Equities, Inc., an affiliate of
Great-West,
which provides for payments of up to 0.60% of the average net assets of Fund shares attributable to GWFS Equities, Inc. on an annual basis.
Other Payments
From time to time, the Adviser and/or the Distributor, at its expense, may
provide other compensation to Intermediaries that sell or arrange for the sale of shares of the Fund, which may be in addition to marketing support and program servicing payments described above. For example, the Adviser and/or the Distributor may:
(i) compensate Intermediaries for National Securities Clearing Corporation networking system services (e.g., shareholder communication, account statements, trade confirmations, and tax reporting) on an
asset-based
or per account basis; (ii) compensate Intermediaries for providing Fund shareholder trading information; (iii) make
one-time
or periodic payments
to reimburse selected Intermediaries for items such as ticket charges (i.e., fees that an Intermediary charges its representatives for effecting transactions in Fund shares) of up to $25 per purchase or exchange order, operational charges (e.g.,
fees that an Intermediary charges for establishing the Fund on its trading system), and literature printing and/or distribution costs; (iv) at the direction of a retirement plans sponsor, reimburse or pay direct expenses of an employee
benefit plan that would otherwise be payable by the plan; and (v) provide payments to
broker-dealers
to help defray their technology or infrastructure costs.
When not provided for in a marketing support or program servicing agreement, the Adviser and/or the Distributor may pay Intermediaries for enabling
the Adviser and/or the Distributor to participate in and/or present at conferences or seminars, sales or training programs for invited registered representatives and other Intermediary employees, client and investor events and other
Intermediary-sponsored
events, and for travel expenses, including lodging incurred by registered representatives and other employees in connection with prospecting, asset retention and due
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diligence trips. These payments may vary depending upon the nature of the event. The Adviser and/or the Distributor make payments for such events as it deems appropriate, subject to its internal
guidelines and applicable law.
The Adviser and/or the Distributor occasionally sponsors due diligence meetings for registered
representatives during which they receive updates on various Nuveen Mutual Funds and are afforded the opportunity to speak with portfolio managers. Although invitations to these meetings are not conditioned on selling a specific number of shares,
those who have shown an interest in Nuveen Mutual Funds are more likely to be considered. To the extent permitted by their firms policies and procedures, all or a portion of registered representatives expenses in attending these meetings
may be covered by the Adviser and/or the Distributor.
Representatives of the Distributor or its affiliates may receive additional
compensation from the Adviser and/or the Distributor if certain targets are met for sales of one or more Nuveen Mutual Funds. Such compensation may vary by Fund and by Intermediary.
Other compensation may be offered to the extent not prohibited by state laws or any
self-regulatory
agency,
such as FINRA. Investors can ask their Intermediary for information about any payments it receives from the Adviser and/or the Distributor and the services it provides for those payments.
Investors may wish to take Intermediary payment arrangements into account when considering and evaluating any recommendations relating to Fund
shares.
Intermediaries Receiving Additional Payments
The following is a list of Intermediaries receiving one or more of the types of payments discussed above as of February 21, 2014:
ADP
Broker-Dealer,
Inc.
Alliance Fund Distributors
American United Life Insurance Company
Ameriprise Financial Services, Inc.
Ascensus (formerly BISYS Retirement Services, Inc.)
BB&T
Benefit Plans Administrative Services, Inc.
Benefit Trust Company
Cetera
Charles Schwab & Co., Inc.
Chase Investment Services
Citigroup Global Markets Inc.
Commonwealth Equity Services, LLP, DBA Commonwealth Financial Network
CPI Qualified
Plan Consultants, Inc.
Davenport & Co., LLC
Digital Retirement Solutions, Inc.
Dyatech, LLC
Edward Jones
ExpertPlan, Inc.
Fidelity Brokerage Services LLC/National Financial Services LLC
Fidelity
Investments Institutional Operations Company, Inc. (FIIOC)/Fidelity Advisors Retirement
Financial Data Services, Inc.
First Clearing
First Mercantile Trust Company
Genesis Employee Benefits, Inc. DBA Americas
VEBA Solution
Goldman Sachs
Great West Life and Annuity Insurance Co.
GWFS Equities, Inc.
Hartford Life Insurance Company
Hartford Securities Distribution Company, Inc.
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Hewitt Associates LLC
ICMA Retirement Corporation
ING Life Insurance and Annuity Company/ING Institutional Plan Services LLC/ING Financial Advisors, LLC (formerly CitiStreet LLC/CitiStreet Advisors LLC)
J.J.B. Hilliard, W.L. Lyons, Inc.
J.P. Morgan Retirement Plan Services, LLC
Janney Montgomery Scott LLC
LPL Financial Services
Lincoln Retirement Services Company LLC/AMG Service Corp.
Linsco/Private Ledger Corp.
Marshall & Ilsley Trust Company, N.A.
Massachusetts Mutual Life Insurance Company
Mercer HR Outsourcing LLC
Merrill Lynch, Pierce, Fenner & Smith Inc.
Mid Atlantic Capital Corporation
Morgan Keegan
Morgan Stanley & Co., Incorporated/Morgan Stanley Smith Barney LLC
MSCS
Financial Services, LLC
National Financial Services, LLC
Nationwide Financial Services, Inc.
Newport Retirement Services, Inc.
NFP Securities, Inc.
Northwestern Mutual
NYLife Distributors LLC
Oppenheimer & Co.
Pershing LLC
Princeton Retirement Group/GPC Securities, Inc.
Principal Life Insurance Company
Prudential Insurance Company of America (The)
Prudential Investment Management Services, LLC/Prudential Investments LLC
Raymond James & Associates/Raymond James Financial Services, Inc.
RBC Capital Markets, LLC
Reliance Trust Company
Retirement Plan Company, LLC (The)
Robert W. Baird & Co., Inc.
SI Financial Advisors
Savings Institute and Bank
Smith Barney
Southwest Securities, Inc.
Stifel, Nicolaus & Co., Inc.
T. Rowe Price Investment Services, Inc./T. Rowe Price Retirement Plan Services, Inc.
TD Ameritrade, Inc.
TD Ameritrade Trust Company (formerly Fiserv Trust Company/International Clearing Trust Company)
TIAA-CREF
Individual & Institutional Services, LLC
U.S. Bancorp Investments, Inc.
U.S. Bank N.A.
UBS Financial Services, Inc.
Unified Trust Company, N.A.
VALIC Retirement Services Company (formerly AIG
Retirement Services Company)
Vanguard Group, Inc.
Wedbush Morgan Securities
Wells Fargo Advisors, LLC
Wells Fargo Bank, N.A.
Wilmington Trust Company
Wilmington Trust Retirement and Institutional Services Company (formerly AST Capital Trust Company)
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Any additions, modifications or deletions to the list of Intermediaries identified above that have
occurred since February 21, 2014 are not reflected in the list.
FINANCIAL STATEMENTS
The audited financial statements for the Funds most recent fiscal period appear in the Funds Annual Report dated October 31, 2013. The
Funds Annual Report is incorporated by reference into this SAI and is available without charge by calling (800) 257-8787.
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