UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
| Investment Company Act file number | 811-21242 |
Nuveen Quality Preferred Income Fund 3
(Exact name of registrant as specified in charter)
Nuveen Investments
333 West Wacker Drive, Chicago, IL 60606
(Address of principal executive offices) (Zip code)
Kevin J. McCarthy
Nuveen Investments
333 West Wacker Drive, Chicago, IL 60606
(Name and address of agent for service)
Registrant’s telephone number, including area code: (312) 917-7700
Date of fiscal year end: July 31
Date of reporting period: January 31, 2016
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policy making roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss.3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
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| Closed-End Funds |
| Nuveen Investments | ||
| Closed-End Funds |
| Semi-Annual Report January 31, 2016
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| JTP | ||||||
| Nuveen Quality Preferred Income Fund | ||||||
| JPS | ||||||
| Nuveen Quality Preferred Income Fund 2 | ||||||
| JHP | ||||||
| Nuveen Quality Preferred Income Fund 3 | ||||||
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| Nuveen Investments | 3 |
to Shareholders
Dear Shareholders,
For better or for worse, the financial markets spent most of the past year waiting for the U.S. Federal Reserve (Fed) to end its accommodative monetary policy. The policy has propped up stock and bond markets since the Great Recession, but the question remains: how will markets behave without its influence? This uncertainty was a considerable source of volatility for stock and bond prices for much of 2015, despite the Fed carefully conveying its intention to raise rates slowly and only when the economy shows evidence of readiness.
As was widely expected, the long-awaited Fed rate hike materialized in mid-December. While the move was interpreted as a vote of confidence on the U.S. economy’s underlying strength, the Fed emphasized that future rate increases will be gradual and guided by its ongoing assessment of financial conditions. Headwinds including rising borrowing costs, softer commodity prices, low inflation, a strong U.S. dollar and a stagnant global economy could necessitate keeping monetary conditions accommodative for longer. Meanwhile, policy makers in Europe and Japan are deploying their available tools to try to bolster their economies’ fragile growth, while Chinese authorities have stepped up efforts to manage China’s slowdown.
Although the new year began with a more pessimistic tone to investor sentiment and elevated volatility in the markets, we caution investors from making long-term decisions based on short-term news. In times like these, you can look to a professional investment manager with the experience and discipline to maintain the proper perspective on short-term events. And if the daily headlines do concern you, I encourage you to reach out to your financial advisor. Your financial advisor can help you evaluate your investment strategies in light of current events, your time horizon and risk tolerance.
On behalf of the other members of the Nuveen Fund Board, we look forward to continuing to earn your trust in the months and years ahead.
Sincerely,
William J. Schneider
Chairman of the Board
March 23, 2016
| 4 | Nuveen Investments |
Comments
Nuveen Quality Preferred Income Fund (JTP)
Nuveen Quality Preferred Income Fund 2 (JPS)
Nuveen Quality Preferred Income Fund 3 (JHP)
The Funds are sub-advised by a team of specialists at Spectrum Asset Management, a wholly owned subsidiary of Principal Global Investors, LLC. Mark Lieb and Phil Jacoby lead the team. Here Mark and Phil discuss their management strategy and the performance of the Funds for the six-month reporting period ended January 31, 2016.
During October, 2015, the Board of Trustees for the Nuveen closed-end funds approved a plan to merge Nuveen Quality Preferred Income Fund (JTP) and Nuveen Quality Preferred Income Fund 3 (JHP) into the acquiring fund, Nuveen Quality Preferred Income Fund 2 (JPS). On March 22, 2016 (subsequent to the close of this reporting period), shareholder approval was completed. The reorganization will become effective before the opening of business on May 9, 2016. See Notes to Financial Statements, Notes 1 – General Information and Significant Accounting Policies, Fund Reorganizations for further information.
Additionally, the Board approved changes to the Funds’ non-fundamental policies related to the minimum allocation to investment grade securities and the Fund’s secondary Blended Index. These changes were made to better align the Funds’ strategies with the evolution in the preferred securities market since the Funds’ launch in 2002. The minimum allocation to investment grade securities for each Fund was reduced from 80% to 65%. Once the merger is complete, the acquiring Fund’s minimum allocation to investment grade securities will decrease from 65% to 50% and the existing 45% limit on dollar denominated preferred securities of non-US issuers will be eliminated. The current Blended Index consists of 55% BofA/Merrill Lynch Preferred Stock Fixed Rate Index and 45% Barclays Tier 1 Capital Securities Index. The proposed Benchmark Index will consist of 40% BofA/Merrill Lynch Contingent Capital Index (COCO) and 60% BofA/Merrill Lynch All Capital Securities Index (I0CS).
What key strategies were used to manage the Funds during the six-month reporting period ended January 31, 2016?
The investment objective of each Fund is to seek high current income consistent with capital preservation with a secondary objective to enhance portfolio value relative to the broad market for preferred securities. Under normal market conditions, the Funds seek to invest at least 80% of their net assets in preferred securities and up to 20% of their net assets in debt securities, including convertible debt and convertible preferred securities.
Our broad strategy is shifting away from the predominance of fixed-for-life callable securities that are most common to the $25 par types (traded on the NYSE) and into more $1,000 par (traded over the counter) intermediate duration fixed-to-floating and fixed-to-variable securities. We anticipate this shift may provide greater income as we move into
Certain statements in this report are forward-looking statements. Discussions of specific investments are for illustration only and are not intended as recommendations of individual investments. The forward-looking statements and other views expressed herein are those of the portfolio managers as of the date of this report. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements and the views expressed herein are subject to change at any time, due to numerous market and other factors. The Funds disclaim any obligation to update publicly or revise any forward-looking statements or views expressed herein.
Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor’s (S&P), Moody’s Investors Service, Inc. (Moody’s) or Fitch, Inc. (Fitch). Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.
Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.
| Nuveen Investments | 5 |
Portfolio Managers’ Comments (continued)
more below investment grade names that yield more than the average book yield. In addition, we anticipate that the variable coupon resets over time may help to preserve capital if interest rates turn materially higher. This tactic may foster an allowance for more portfolio leverage while helping to offset valuation risk inherent in the risk-free rates structure. Increased income with less overall capital risk from the rates structure is the combined objective of this portfolio rebalancing.
How did the Funds perform during the six-month reporting period ended January 31, 2016?
The tables in the Performance Overview and Holding Summaries section of this report provide total return performance for each Fund for the six-month, one-year, five-year and ten-year periods ended January 31, 2016. For the six-month reporting period ended January 31, 2016 all three Funds’ common shares at net asset value (NAV) underperformed the Barclays U.S. Aggregate Bond Index and the Blended Benchmark.
The credit markets behaved reasonably well considering the corrections in the broader global markets. There were periods of credit spread volatility during the late summer and again in January 2016. Much of the concern was more macro based, as it related to declining commodity prices brought about by China’s material slowdown and a surplus of oil supplies that have collapsed energy prices. The transmission effects, the process through which monetary policy decisions affect the economy in general and the price level in particular, are permeating the valuation of banking shares around the globe as banks seek to further augment their capital bases. The banking sector, though significantly better capitalized now than before the most recent recession, is an easy target for macro trades (i.e., selling) because of bank earning’s very close relationship to gross domestic product (GDP) growth.
Interest rate increases by the Federal Reserve (Fed) became a non-event as we moved into 2016. The yield on the U.S. Treasury 2-year note, a good barometer of future rate moves by the Fed, found a low of 0.56% during the late summer as it became doubtful that the Fed would cut rates. As markets settled into accepting a more hawkish view from the Fed that rates should go up before year-end, the 2-year note quickly rose to 1.06% by the end of December. Recent disruptions in financial markets have guided the 2-year note yield back down to 0.78%. The overall duration impact of the interest rate gyrations has been muted by widening credit spreads.
Regulation has had a generally positive impact on the preferred asset class from a product perspective as more issuance has been required by banks and insurance entities. From a fundamental perspective, having more capital (a requirement of regulatory change) is a credit positive. In January, valuations were being repriced aggressively by the market (yields were sold higher) because slow growth and negative interest rate policies from central banks is expected to require more immediate cost cutting and balance sheet reductions in the absence of more robust global economic activity.
Factors that benefited the Fund’s performance were a generally modest band of variability in long term interest rates and strong performance in $25 par securities. During the reporting period, the long term U.S. Treasury rates stayed within a range of 2.70% and 3.10%, but finished the reporting period at 2.75%. This supported risk taking on the back-end of the yield curve and helped the $25 par market stand out as the best performing sector.
Our decision to reduce $25 par securities during this reporting period constrained performance as allocations to this sector went down by about 9% in favor of capital securities which underperformed. The rally in the retail sector, nonetheless, helped to provide for wider income margins on the securities that were purchased.
Several individual positions positively contributed to performance. General Electric Capital Corporation 5% preferred stock performed well. The company was involved in a tough exchange battle with shareholders which was resolved favorably for the company. The Royal Bank of Canada preferred stock also positively contributed to performance. The stock was tendered after its completed merger with the U.S. regional bank, City National Corporation.
Several individual positions detracted from performance. Catlin Insurance Company Limited 7.24% and Lincoln National Corporation 6.05% detracted from performance. These two issues are likely to switch to floating rate payers and somewhat narrow spreads to 3 month LIBOR rather than being called. The expected lower cash flows have reduced the net present cash flow of the bonds, which is reflected by the lower bond prices.
| 6 | Nuveen Investments |
Leverage
IMPACT OF THE FUNDS’ LEVERAGE STRATEGIES ON PERFORMANCE
One important factor impacting the returns of the Funds relative to their benchmarks was the Funds’ use of leverage through the use of bank borrowings. The Funds use leverage because our research has shown that, over time, leveraging provides opportunities for additional income and total return for common shareholders. However, use of leverage also can expose common shareholders to additional volatility. For example, as the prices of securities held by a Fund decline, the negative impact of these valuation changes on common share NAV and common shareholder total return is magnified by the use of leverage. Conversely, leverage may enhance common share returns during periods when the prices of securities held by a Fund generally are rising. The Funds’ use of leverage had a positive impact on performance during this reporting period.
The Funds also continued to use swap contracts to partially fix the interest cost of leverage, which as mentioned previously, is through bank borrowings. During this reporting period, these swap contracts detracted from overall Fund performance.
As of January 31, 2016, the Funds’ percentages of leverage are shown in the accompanying table.
| JTP | JPS | JHP | ||||||||||
Effective Leverage* | 29.12 | % | 29.11 | % | 28.92 | % | ||||||
Regulatory Leverage* | 29.12 | % | 29.11 | % | 28.92 | % | ||||||
| * | Effective Leverage is a Fund’s effective economic leverage, and includes both regulatory leverage and the leverage effects of certain derivative and other investments in a Fund’s portfolio that increase the Fund’s investment exposure. Regulatory leverage consists of preferred shares issued or borrowings of a Fund. Both of these are part of a Fund’s capital structure. Regulatory leverage is subject to asset coverage limits set forth in the Investment Company Act of 1940. |
THE FUNDS’ REGULATORY LEVERAGE
Bank Borrowings
The Funds employ regulatory leverage through the use of bank borrowings. As of January 31, 2016, the Funds’ outstanding bank borrowings are as shown in the accompanying table.
| JTP | JPS | JHP | ||||||||||
Bank Borrowings | $ | 235,000,000 | $ | 465,800,000 | $ | 89,000,000 | ||||||
Refer to Notes to Financial Statements, Note 8 – Borrowing Arrangements for further details.
| Nuveen Investments | 7 |
Information
COMMON SHARE DISTRIBUTION INFORMATION
The following information regarding the Funds’ distributions is current as of January 31, 2016. Each Fund’s distribution levels may vary over time based on each Fund’s investment activity and portfolio investment value changes.
During the current reporting period, each Fund’s distributions to common shareholders were as shown in the accompanying table.
| Per Common Share Amounts | ||||||||||||
| Ex-Dividend Date | JTP | JPS | JHP | |||||||||
August 2015 | $ | 0.0550 | $ | 0.0580 | $ | 0.0560 | ||||||
September | 0.0550 | 0.0580 | 0.0560 | |||||||||
October | 0.0550 | 0.0580 | 0.0560 | |||||||||
November | 0.0550 | 0.0580 | 0.0560 | |||||||||
December | 0.0550 | 0.0580 | 0.0560 | |||||||||
January 2016 | 0.0550 | 0.0580 | 0.0560 | |||||||||
Ordinary Income Distribution* | $ | — | $ | — | $ | 0.0275 | ||||||
Current Distribution Rate** | 7.87 | % | 7.72 | % | 7.87 | % | ||||||
| * | Distribution paid in December 2015. |
| ** | Current distribution rate is based on the Fund’s current annualized monthly distribution divided by the Fund’s current market price. The Fund’s monthly distributions to its shareholders may be comprised of ordinary income, net realized capital gains and, if at the end of the fiscal year the Fund’s cumulative net ordinary income and net realized gains are less than the amount of the Fund’s distributions, a return of capital for tax purposes. |
Each Fund in this report seeks to pay regular monthly dividends out of its net investment income at a rate that reflects its past and projected net income performance. To permit each Fund to maintain a more stable monthly dividend, the Fund may pay dividends at a rate that may be more or less than the amount of net income actually earned by the Fund during the period. If a Fund has cumulatively earned more than it has paid in dividends, it will hold the excess in reserve as undistributed net investment income (UNII) as part of the Fund’s net asset value. Conversely, if a Fund has cumulatively paid in dividends more than it has earned, the excess will constitute a negative UNII that will likewise be reflected in the Fund’s net asset value. Each Fund will, over time, pay all its net investment income as dividends to shareholders.
As of January 31, 2016, the Funds had positive UNII balances, based upon our best estimate, for tax purposes. JTP and JPS had positive UNII balances while JHP had a negative UNII balance for financial reporting purposes.
All monthly dividends paid by each Fund during the current reporting period, were paid from net investment income. If a portion of the Fund’s monthly distributions was sourced from or comprised of elements other than net investment income, including capital gains and/or a return of capital, shareholders would have received a notice to that effect. For financial reporting purposes, the composition and per share amounts of each Fund’s dividends for the reporting period are presented in this report’s Statement of Changes in Net Assets and Financial Highlights, respectively. For income tax purposes, distribution information for each Fund as of its most recent tax year end is presented in Note 6 – Income Tax Information within the Notes to Financial Statements of this report.
| 8 | Nuveen Investments |
COMMON SHARE REPURCHASES
During August 2015, the Funds’ Board of Trustees reauthorized an open-market share repurchase program, allowing each Fund to repurchase an aggregate of up to approximately 10% of its outstanding shares.
As of January 31, 2016, and since the inception of the Funds’ repurchase programs, the Funds have cumulatively repurchased and retired their outstanding common shares as shown in the accompanying table.
| JTP | JPS | JHP | ||||||||||
Common shares cumulatively repurchased and retired | 5,000 | 0 | 60,000 | |||||||||
Common shares authorized for repurchase | 6,465,000 | 12,040,000 | 2,365,000 | |||||||||
During the current reporting period, the Funds did not repurchased any of their outstanding common shares.
OTHER COMMON SHARE INFORMATION
As of January 31, 2016, and during the current reporting period, the Funds’ common share prices were trading at a premium/(discount) to their common share NAVs as shown in the accompanying table.
| JTP | JPS | JHP | ||||||||||
Common share NAV | $8.85 | $9.42 | $9.24 | |||||||||
Common share price | $8.39 | $9.02 | $8.54 | |||||||||
Premium/(Discount) to NAV | (5.20 | )% | (4.25 | )% | (7.58 | )% | ||||||
6-month average premium/(discount) to NAV | (9.14 | )% | (5.63 | )% | (10.71 | )% | ||||||
| Nuveen Investments | 9 |
Considerations
Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation.
Nuveen Quality Preferred Income Fund (JTP)
Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure, and therefore are subject to greater credit risk. Debt or fixed income securities such as those held by the Fund, are subject to market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. Leverage increases return volatility and magnifies the Fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. These and other risks such as concentration and foreign securities risk are described in more detail on the Fund’s web page at www.nuveen.com/JTP.
Nuveen Quality Preferred Income Fund 2 (JPS)
Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure, and therefore are subject to greater credit risk. Debt or fixed income securities such as those held by the Fund, are subject to market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. Leverage increases return volatility and magnifies the Fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. These and other risks such as concentration and foreign securities risk are described in more detail on the Fund’s web page at www.nuveen.com/JPS.
Nuveen Quality Preferred Income Fund 3 (JHP)
Investing in closed-end funds involves risk; principal loss is possible. There is no guarantee the Fund’s investment objectives will be achieved. Closed-end fund shares may frequently trade at a discount or premium to their net asset value. Preferred securities are subordinated to bonds and other debt instruments in a company’s capital structure, and therefore are subject to greater credit risk. Debt or fixed income securities such as those held by the Fund, are subject to market risk, credit risk, interest rate risk, derivatives risk, liquidity risk, and income risk. As interest rates rise, bond prices fall. Leverage increases return volatility and magnifies the Fund’s potential return and its risks; there is no guarantee a fund’s leverage strategy will be successful. These and other risks such as concentration and foreign securities risk are described in more detail on the Fund’s web page at www.nuveen.com/JHP.
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| Nuveen Investments | 11 |
JTP
Nuveen Quality Preferred Income Fund
Performance Overview and Holding Summaries as of January 31, 2016
Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.
Average Annual Total Returns as of January 31, 2016
| Cumulative | Average Annual | |||||||||||||||
| 6-Month | 1-Year | 5-Year | 10-Year | |||||||||||||
| JTP at Common Share NAV | 0.55% | 2.95% | 9.28% | 3.62% | ||||||||||||
| JTP at Common Share Price | 7.81% | 5.87% | 10.75% | 4.44% | ||||||||||||
| Barclays U.S. Aggregate Bond Index | 1.33% | (0.16)% | 3.51% | 4.66% | ||||||||||||
| Blended Benchmark (Comparative Index) | 2.47% | 3.95% | 7.39% | 4.77% | ||||||||||||
Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses, and assume reinvestment of distributions. Comparative index return information is provided for the Fund’s shares at NAV only. Indexes are not available for direct investment.
Common Share Price Performance — Weekly Closing Price
| 12 | Nuveen Investments |
This data relates to the securities held in the Fund’s portfolio of investments as of the end of the reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.
Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor’s, Moody’s Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.
Fund Allocation
(% of net assets)
| Convertible Preferred Securities | 1.3% | |||
| $25 Par (or similar) Retail Preferred | 37.4% | |||
| Corporate Bonds | 8.4% | |||
| $1,000 Par (or similar) Institutional Preferred | 91.4% | |||
| Investment Companies | 1.2% | |||
| Repurchase Agreements | 1.2% | |||
| Other Assets Less Liabilities | 0.2% | |||
Net Assets Plus Borrowings | 141.1% | |||
| Borrowings | (41.1)% | |||
Net Assets | 100% |
Portfolio Composition
(% of total investments)1
Bank | 39.5% | |||
Insurance | 27.1% | |||
Real Estate Investment Trust | 6.3% | |||
Capital Market | 5.1% | |||
Industrial Conglomerates | 4.0% | |||
Other | 16.3% | |||
Investment Companies | 0.8% | |||
Repurchase Agreements | 0.9% | |||
Total | 100% |
Country Allocation
(% of total investments)1
| United States | 59.7% | |||
| United Kingdom | 14.1% | |||
| France | 6.5% | |||
| Netherlands | 5.3% | |||
| Japan | 2.9% | |||
| Other | 11.5% | |||
Total | 100% |
Top Five Issuers
(% of total investments)1
| General Electric Corporation | 4.0% | |||
| PNC Financial Services | 3.5% | |||
| JPMorgan Chase & Company | 3.1% | |||
| HSBC Capital Funding LP | 3.0% | |||
| Bank of America Corporation | 3.0% |
Credit Quality
(% of total long-term fixed-income investments)
| AA | 4.1% | |||
| A | 7.3% | |||
| BBB | 62.5% | |||
| BB or Lower | 26.1% | |||
Total | 100% |
| 1 | Excluding investments in derivatives. |
| Nuveen Investments | 13 |
JPS
Nuveen Quality Preferred Income Fund 2
Performance Overview and Holding Summaries as of January 31, 2016
Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.
Average Annual Total Returns as of January 31, 2016
| Cumulative | Average Annual | |||||||||||||||
| 6-month | 1-Year | 5-Year | 10-Year | |||||||||||||
| JPS at Common Share NAV | 0.18% | 2.08% | 9.20% | 4.01% | ||||||||||||
| JPS at Common Share Price | 3.20% | 4.05% | 10.68% | 4.47% | ||||||||||||
| Barclays U.S. Aggregate Bond Index | 1.33% | (0.16)% | 3.51% | 4.66% | ||||||||||||
| Blended Benchmark (Comparative Index) | 2.47% | 3.95% | 7.39% | 4.77% | ||||||||||||
Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses, and assume reinvestment of distributions. Comparative index return information is provided for the Fund’s shares at NAV only. Indexes are not available for direct investment.
Common Share Price Performance — Weekly Closing Price
| 14 | Nuveen Investments |
This data relates to the securities held in the Fund’s portfolio of investments as of the end of the reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.
Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor’s, Moody’s Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.
Fund Allocation
(% of net assets)
| Convertible Preferred Securities | 0.4% | |||
| $25 Par (or similar) Retail Preferred | 37.7% | |||
| Corporate Bonds | 7.3% | |||
| $1,000 Par (or similar) Institutional Preferred | 93.9% | |||
| Investment Companies | 1.3% | |||
| Repurchase Agreements | 0.8% | |||
| Other Assets Less Liabilities | (0.3)% | |||
Net Assets Plus Borrowings | 141.1% | |||
| Borrowings | (41.1)% | |||
Net Assets | 100% |
Portfolio Composition
(% of total investments)1
Bank | 36.1% | |||
Insurance | 30.0% | |||
Capital Market | 7.0% | |||
Real Estate Investment Trust | 6.7% | |||
Construction & Engineering | 3.7% | |||
Other | 15.0% | |||
Investment Companies | 0.9% | |||
Repurchase Agreements | 0.6% | |||
Total | 100% |
Country Allocation
(% of total investments)1
| United States | 60.3% | |||
| United Kingdom | 11.7% | |||
| Netherlands | 6.9% | |||
| France | 6.8% | |||
| Switzerland | 3.6% | |||
| Other | 10.7% | |||
Total | 100% |
Top Five Issuers
(% of total investments)1
| PNC Financial Services | 3.4% | |||
| General Electric Corporation | 3.1% | |||
| Centaur Funding Corporation | 2.7% | |||
| Credit Agricole SA | 2.7% | |||
| Aegon N.V | 2.6% |
Credit Quality
(% of total long-term fixed-income investments)
| AA | 3.1% | |||
| A | 7.7% | |||
| BBB | 65.0% | |||
| BB or Lower | 24.2% | |||
Total | 100% |
| 1 | Excluding investments in derivatives. |
| Nuveen Investments | 15 |
JHP
Nuveen Quality Preferred Income Fund 3
Performance Overview and Holding Summaries as of January 31, 2016
Refer to the Glossary of Terms Used in this Report for further definition of the terms used within this section.
Average Annual Total Returns as of January 31, 2016
| Cumulative | Average Annual | |||||||||||||||
| 6-Month | 1-Year | 5-Year | 10-Year | |||||||||||||
| JHP at Common Share NAV | 0.77% | 3.15% | 9.55% | 3.97% | ||||||||||||
| JHP at Common Share Price | 6.63% | 6.31% | 9.97% | 4.14% | ||||||||||||
| Barclays U.S. Aggregate Bond Index | 1.33% | (0.16)% | 3.51% | 4.66% | ||||||||||||
| Blended Benchmark (Comparative Index) | 2.47% | 3.95% | 7.39% | 4.77% | ||||||||||||
Past performance is not predictive of future results. Current performance may be higher or lower than the data shown. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares. Returns at NAV are net of Fund expenses, and assume reinvestment of distributions. Comparative index return information is provided for the Fund’s shares at NAV only. Indexes are not available for direct investment.
Common Share Price Performance — Weekly Closing Price
| 16 | Nuveen Investments |
This data relates to the securities held in the Fund’s portfolio of investments as of the end of the reporting period. It should not be construed as a measure of performance for the Fund itself. Holdings are subject to change.
Ratings shown are the highest rating given by one of the following national rating agencies: Standard & Poor’s, Moody’s Investors Service, Inc. or Fitch, Inc. Credit ratings are subject to change. AAA, AA, A and BBB are investment grade ratings; BB, B, CCC, CC, C and D are below investment grade ratings. Certain bonds backed by U.S. Government or agency securities are regarded as having an implied rating equal to the rating of such securities. Holdings designated N/R are not rated by these national rating agencies.
Fund Allocation
(% of net assets)
| $25 Par (or similar) Retail Preferred | 35.6% | |||
| Corporate Bonds | 8.6% | |||
| $1,000 Par (or similar) Institutional Preferred | 92.8% | |||
| Investment Companies | 1.3% | |||
| Repurchase Agreements | 4.4% | |||
| Other Assets Less Liabilities | (2.0)% | |||
Net Assets Plus Borrowings | 140.7% | |||
| Borrowings | (40.7)% | |||
Net Assets | 100% |
Portfolio Composition
(% of total investments)1
Bank | 37.1% | |||
Insurance | 26.5% | |||
Capital Market | 8.0% | |||
Real Estate Investment Trust | 6.7% | |||
Wireless Telecommunication Services | 3.8% | |||
Other | 13.9% | |||
Investment Companies | 0.9% | |||
Repurchase Agreements | 3.1% | |||
Total | 100% |
Country Allocation
(% of total investments)1
| United States | 59.7% | |||
| United Kingdom | 15.4% | |||
| France | 6.5% | |||
| Netherlands | 5.5% | |||
| Switzerland | 4.5% | |||
| Other | 8.4% | |||
Total | 100% |
Top Five Issuers
(% of total investments)1
| First Union Capital Trust | 3.7% | |||
| General Electric Company | 3.3% | |||
| Barclays PLC | 3.1% | |||
| Centaur Funding Corporation | 2.8% | |||
| Societe Generale | 2.8% |
Credit Quality
(% of total long-term fixed-income investments)
| AA | 3.4% | |||
| A | 5.2% | |||
| BBB | 60.6% | |||
| BB or Lower | 30.8% | |||
Total | 100% |
| 1 | Excluding investments in derivatives. |
| Nuveen Investments | 17 |
Meeting Report
The annual meeting of shareholders was held in the offices of Nuveen Investments on January 19, 2016 for JTP, JPS and JHP; at this meeting the shareholders were asked to vote to approve an Agreement and Plan of Reorganization, to approve Issuance of Additional Shares and to elect Board Members.
| JTP | JPS | JHP | ||||||||||
| Common Shares | Common Shares | Common Shares | ||||||||||
To approve an Agreement and Plan of Reorganization | ||||||||||||
For | 19,456,556 | — | 6,537,207 | |||||||||
Against | 2,776,572 | — | 1,765,039 | |||||||||
Abstain | 678,448 | — | 171,098 | |||||||||
Broker Non-Votes | 35,281,561 | — | 12,431,349 | |||||||||
Total | 58,193,137 | — | 20,904,693 | |||||||||
To approve the issuance of additional common shares in | ||||||||||||
For | — | 34,180,070 | — | |||||||||
Against | — | 3,715,596 | — | |||||||||
Abstain | — | 1,392,925 | — | |||||||||
Total | — | 39,288,591 | — | |||||||||
Approval of the Board Members was reached as follows: | ||||||||||||
William C. Hunter | ||||||||||||
For | 55,952,214 | 105,739,373 | 20,263,708 | |||||||||
Withhold | 2,240,923 | 3,883,734 | 640,985 | |||||||||
Total | 58,193,137 | 109,623,107 | 20,904,693 | |||||||||
Judith M. Stockdale | ||||||||||||
For | 55,944,726 | 105,551,662 | 20,254,609 | |||||||||
Withhold | 2,248,411 | 4,071,445 | 650,084 | |||||||||
Total | 58,193,137 | 109,623,107 | 20,904,693 | |||||||||
Carole E. Stone | ||||||||||||
For | 55,964,345 | 105,666,335 | 20,262,799 | |||||||||
Withhold | 2,228,792 | 3,956,772 | 641,894 | |||||||||
Total | 58,193,137 | 109,623,107 | 20,904,693 | |||||||||
| 18 | Nuveen Investments |
JTP
Nuveen Quality Preferred Income Fund | ||
| January 31, 2016 (Unaudited) | ||
| Shares | Description (1) | Coupon | Ratings (2) | Value | ||||||||||||||
LONG-TERM INVESTMENTS – 139.7% (99.1% of TOTAL INVESTMENTS) |
| |||||||||||||||||
CONVERTIBLE PREFERRED SECURITIES – 1.3% (0.9% of Total Investments) |
| |||||||||||||||||
| Banks – 1.3% | ||||||||||||||||||
| 6,332 | Wells Fargo & Company | 7.500% | BBB | $ | 7,421,104 | |||||||||||||
Total Convertible Preferred Securities (cost $7,537,319) | 7,421,104 | |||||||||||||||||
| Shares | Description (1) | Coupon | Ratings (2) | Value | ||||||||||||||
$25 PAR (OR SIMILAR) RETAIL PREFERRED – 37.4% (26.6% of Total Investments) |
| |||||||||||||||||
| Banks – 9.1% | ||||||||||||||||||
| 32,500 | AgriBank FCB, (5) | 6.875% | BBB+ | $ | 3,497,813 | |||||||||||||
| 185,000 | Citigroup Inc. | 6.875% | BB+ | 5,081,950 | ||||||||||||||
| 37,500 | Cobank Agricultural Credit Bank, 144A, (5) | 6.250% | BBB+ | 3,878,906 | ||||||||||||||
| 3,000 | Cobank Agricultural Credit Bank, (5) | 6.200% | BBB+ | 302,063 | ||||||||||||||
| 26,000 | Fifth Third Bancorp. | 6.625% | Baa3 | 729,300 | ||||||||||||||
| 55,057 | First Naigara Finance Group | 8.625% | BB– | 1,497,550 | ||||||||||||||
| 2,303 | FirstMerit Corporation | 5.875% | Baa2 | 58,059 | ||||||||||||||
| 18,400 | HSBC Holdings PLC | 8.000% | Baa1 | 479,504 | ||||||||||||||
| 6,900 | HSBC Holdings PLC | 6.200% | Baa1 | 176,295 | ||||||||||||||
| 498,114 | ING Groep N.V., (3) | 7.200% | Baa3 | 12,985,832 | ||||||||||||||
| 741,100 | PNC Financial Services | 6.125% | Baa2 | 20,661,868 | ||||||||||||||
| 104,608 | TCF Financial Corporation | 7.500% | BB– | 2,845,338 | ||||||||||||||
Total Banks | 52,194,478 | |||||||||||||||||
| Capital Markets – 2.5% | ||||||||||||||||||
| 27,678 | Charles Schwab Corporation | 6.000% | BBB | 724,333 | ||||||||||||||
| 513,146 | Deutsche Bank Capital Funding Trust II | 6.550% | BB+ | 12,946,674 | ||||||||||||||
| 27,442 | State Street Corporation | 5.900% | Baa1 | 738,190 | ||||||||||||||
| 833 | State Street Corporation | 5.250% | Baa1 | 21,475 | ||||||||||||||
Total Capital Markets | 14,430,672 | |||||||||||||||||
| Diversified Telecommunication Services – 3.2% | ||||||||||||||||||
| 143,506 | Qwest Corporation | 7.500% | BBB– | 3,715,370 | ||||||||||||||
| 103,081 | Qwest Corporation | 7.375% | BBB– | 2,641,966 | ||||||||||||||
| 100,803 | Qwest Corporation | 7.000% | BBB– | 2,612,814 | ||||||||||||||
| 67,900 | Qwest Corporation | 7.000% | BBB– | 1,764,721 | ||||||||||||||
| 77,156 | Qwest Corporation | 6.875% | BBB– | 1,988,310 | ||||||||||||||
| 52,000 | Qwest Corporation | 6.625% | Baa3 | 1,289,080 | ||||||||||||||
| 90,502 | Qwest Corporation | 6.125% | BBB– | 2,239,925 | ||||||||||||||
| 82,683 | Verizon Communications Inc. | 5.900% | A– | 2,192,753 | ||||||||||||||
Total Diversified Telecommunication Services | 18,444,939 | |||||||||||||||||
| Electric Utilities – 1.6% | ||||||||||||||||||
| 144,185 | Alabama Power Company, (5) | 6.450% | A3 | 3,865,960 | ||||||||||||||
| 12,752 | Entergy Arkansas Inc. | 5.750% | A– | 323,773 | ||||||||||||||
| 3,681 | Entergy Louisiana LLC | 5.250% | A2 | 95,080 | ||||||||||||||
| 16,749 | Entergy Mississippi Inc. | 6.000% | A– | 438,154 | ||||||||||||||
| 90,504 | Integrys Energy Group Inc., (5) | 6.000% | Baa1 | 2,355,937 | ||||||||||||||
| 53,967 | Interstate Power and Light Company | 5.100% | BBB | 1,389,650 | ||||||||||||||
| 33,039 | NextEra Energy Inc. | 5.000% | BBB | 818,376 | ||||||||||||||
Total Electric Utilities | 9,286,930 | |||||||||||||||||
| Food Products – 0.7% | ||||||||||||||||||
| 28,100 | Dairy Farmers of America Inc., 144A, (3), (5) | 7.875% | Baa3 | 2,990,017 | ||||||||||||||
| 10,000 | Dairy Farmers of America Inc., 144A, (5) | 7.875% | Baa3 | 1,019,063 | ||||||||||||||
Total Food Products | 4,009,080 | |||||||||||||||||
| Nuveen Investments | 19 |
| JTP | Nuveen Quality Preferred Income Fund | |||
| Portfolio of Investments (continued) | January 31, 2016 (Unaudited) |
| Shares | Description (1) | Coupon | Ratings (2) | Value | ||||||||||||||
| Insurance – 10.6% | ||||||||||||||||||
| 728,813 | Aegon N.V | 6.375% | Baa1 | $ | 18,650,325 | |||||||||||||
| 107,020 | Aflac Inc., (3) | 5.500% | Baa1 | 2,747,203 | ||||||||||||||
| 147,000 | Allstate Corporation | 5.100% | Baa1 | 3,720,570 | ||||||||||||||
| 50,309 | American Financial Group | 6.250% | Baa2 | 1,318,096 | ||||||||||||||
| 70,304 | Arch Capital Group Limited | 6.750% | BBB+ | 1,827,904 | ||||||||||||||
| 10,965 | Aspen Insurance Holdings Limited | 7.250% | BBB– | 288,818 | ||||||||||||||
| 156,458 | Aspen Insurance Holdings Limited | 5.950% | BBB– | 4,047,568 | ||||||||||||||
| 226,594 | Axis Capital Holdings Limited | 6.875% | BBB | 5,929,965 | ||||||||||||||
| 132,864 | Axis Capital Holdings Limited | 5.500% | BBB | 3,337,544 | ||||||||||||||
| 231,787 | Delphi Financial Group, Inc., (3), (5) | 7.376% | BB+ | 5,729,497 | ||||||||||||||
| 125,430 | Hartford Financial Services Group Inc. | 7.875% | BBB– | 3,850,700 | ||||||||||||||
| 166,360 | Prudential PLC | 6.750% | A– | 4,355,305 | ||||||||||||||
| 104,100 | Reinsurance Group of America Inc. | 6.200% | BBB | 2,977,260 | ||||||||||||||
| 53,895 | Torchmark Corporation | 5.875% | BBB+ | 1,405,582 | ||||||||||||||
| 23,008 | W.R. Berkley Corporation | 5.625% | BBB– | 580,952 | ||||||||||||||
Total Insurance | 60,767,289 | |||||||||||||||||
| Machinery – 1.0% | ||||||||||||||||||
| 201,038 | Stanley, Black, and Decker Inc. | 5.750% | BBB+ | 5,166,677 | ||||||||||||||
| Media – 0.2% | ||||||||||||||||||
| 44,976 | Comcast Corporation | 5.000% | A– | 1,163,529 | ||||||||||||||
| Multi-Utilities – 0.5% | ||||||||||||||||||
| 117,386 | DTE Energy Company | 6.500% | Baa1 | 3,070,818 | ||||||||||||||
| Real Estate Investment Trust – 6.6% | ||||||||||||||||||
| 150,000 | DDR Corporation | 6.250% | Baa3 | 3,790,500 | ||||||||||||||
| 26,952 | Digital Realty Trust Inc. | 7.375% | Baa3 | 721,505 | ||||||||||||||
| 4,552 | Digital Realty Trust Inc. | 6.625% | Baa3 | 118,989 | ||||||||||||||
| 31,476 | Digital Realty Trust Inc. | 5.875% | Baa3 | 782,493 | ||||||||||||||
| 180,474 | Hospitality Properties Trust | 7.125% | Baa3 | 4,685,105 | ||||||||||||||
| 79,960 | Kimco Realty Corporation, | 5.625% | Baa2 | 2,009,395 | ||||||||||||||
| 42,336 | National Retail Properties Inc., (3) | 6.625% | Baa2 | 1,104,123 | ||||||||||||||
| 97,311 | PS Business Parks, Inc. | 6.450% | BBB | 2,515,489 | ||||||||||||||
| 175,061 | PS Business Parks, Inc. | 6.000% | BBB | 4,455,302 | ||||||||||||||
| 716 | Public Storage, Inc. | 6.350% | A3 | 18,337 | ||||||||||||||
| 60,087 | Public Storage, Inc. | 5.750% | A3 | 1,534,020 | ||||||||||||||
| 265,626 | Realty Income Corporation | 6.625% | Baa2 | 6,991,276 | ||||||||||||||
| 126,400 | Regency Centers Corporation | 6.625% | Baa2 | 3,297,776 | ||||||||||||||
| 70,210 | Senior Housing Properties Trust | 5.625% | BBB– | 1,750,335 | ||||||||||||||
| 59,282 | Ventas Realty LP | 5.450% | BBB+ | 1,572,159 | ||||||||||||||
| 82,255 | Wells Fargo & Company | 5.850% | BBB | 2,126,292 | ||||||||||||||
| 19,843 | Welltower Inc. | 6.500% | Baa3 | 521,474 | ||||||||||||||
Total Real Estate Investment Trust | 37,994,570 | |||||||||||||||||
| U.S. Agency – 1.2% | ||||||||||||||||||
| 65,000 | Farm Credit Bank of Texas, 144A, (3), (5) | 6.750% | Baa1 | 6,934,688 | ||||||||||||||
| Wireless Telecommunication Services – 0.2% | ||||||||||||||||||
| 18,300 | Telephone and Data Systems Inc. | 7.000% | BB+ | 460,977 | ||||||||||||||
| 28,000 | Telephone and Data Systems Inc. | 6.875% | BB+ | 713,160 | ||||||||||||||
Total Wireless Telecommunication Services | 1,174,137 | |||||||||||||||||
Total $25 Par (or similar) Retail Preferred (cost $204,334,981) |
| 214,637,807 | ||||||||||||||||
| 20 | Nuveen Investments |
| Principal Amount (000) | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
CORPORATE BONDS – 8.4% (5.8% of Total Investments) |
| |||||||||||||||||||
| Banks – 5.5% | ||||||||||||||||||||
| $ | 1,200 | Nordea Bank AB, 144A | 5.500% | 9/23/49 | BBB | $ | 1,152,000 | |||||||||||||
| 2,500 | Barclays Bank PLC | 7.625% | 11/21/22 | BBB– | 2,793,883 | |||||||||||||||
| 4,500 | Barclays Bank PLC | 7.750% | 4/10/23 | BBB– | 4,770,000 | |||||||||||||||
| 2,000 | ING Groep N.V | 6.500% | 12/29/49 | Ba1 | 1,937,500 | |||||||||||||||
| 19,000 | JPMorgan Chase & Company | 6.750% | 1/29/49 | BBB– | 20,567,500 | |||||||||||||||
| 29,200 | Total Banks | 31,220,883 | ||||||||||||||||||
| Capital Markets – 0.1% | ||||||||||||||||||||
| 300 | Macquarie Bank Limited, Reg S | 10.250% | 6/20/57 | BB+ | 321,738 | |||||||||||||||
| Construction & Engineering – 0.3% | ||||||||||||||||||||
| 1,600 | Hutchison Whampoa International 12 Limited, 144A | 6.000% | 11/07/62 | BBB | 1,666,400 | |||||||||||||||
| Insurance – 2.5% | ||||||||||||||||||||
| 1,900 | AIG Life Holdings Inc., (3) | 7.570% | 12/01/45 | BBB | 2,479,500 | |||||||||||||||
| 5,000 | AIG Life Holdings Inc., (3) | 8.125% | 3/15/46 | BBB | 6,600,000 | |||||||||||||||
| 900 | AXA Reg S | 5.500% | 10/15/97 | A3 | 907,650 | |||||||||||||||
| 1,100 | Liberty Mutual Group Inc., 144A | 7.697% | 10/15/97 | BBB+ | 1,418,010 | |||||||||||||||
| 1,700 | Mitsui Sumitomo Insurance Company Limited, 144A, (3) | 7.000% | 3/15/72 | A– | 1,971,150 | |||||||||||||||
| 1,000 | WEC Energy Group, Inc. | 6.250% | 5/15/67 | Baa1 | 720,000 | |||||||||||||||
| 11,600 | Total Insurance | 14,096,310 | ||||||||||||||||||
| $ | 42,700 | Total Corporate Bonds (cost $45,692,008) | 47,305,331 | |||||||||||||||||
| Principal Amount (000)/ Shares | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
$1,000 PAR (OR SIMILAR) INSTITUTIONAL PREFERRED – 91.4% (65.0% of Total Investments) |
| |||||||||||||||||||
| Banks – 39.8% | ||||||||||||||||||||
| 5,400 | Banco Bilbao Vizcaya Argentaria S.A Reg S | 9.000% | N/A (6) | BB | $ | 5,647,828 | ||||||||||||||
| 9,000 | Banco Santander SA Reg S | 6.375% | N/A (6) | Ba1 | 8,309,952 | |||||||||||||||
| 500 | Bank of America Corporation | 6.500% | N/A (6) | BB+ | 521,400 | |||||||||||||||
| 23,850 | Bank of America Corporation | 8.000% | N/A (6) | BB+ | 24,080,868 | |||||||||||||||
| 200 | Bank One Capital III | 8.750% | 9/01/30 | Baa2 | 295,552 | |||||||||||||||
| 400 | Barclays Bank PLC, 144A | 6.860% | N/A (6) | BBB– | 460,080 | |||||||||||||||
| 10,330 | Barclays PLC | 7.434% | N/A (6) | BB+ | 10,049,561 | |||||||||||||||
| 11,500 | Barclays PLC | 8.250% | N/A (6) | BB+ | 12,045,112 | |||||||||||||||
| 7,200 | Citigroup Inc., (4) | 6.250% | N/A (6) | BB+ | 7,242,696 | |||||||||||||||
| 2,750 | Citigroup Inc. | 5.950% | N/A (6) | BB+ | 2,681,250 | |||||||||||||||
| 4,000 | Citigroup Inc. | 8.400% | N/A (6) | BB+ | 4,385,000 | |||||||||||||||
| 4,500 | Citizens Financial Group Inc., 144A | 5.500% | N/A (6) | BB+ | 4,348,125 | |||||||||||||||
| 11,700 | Credit Agricole SA, 144A | 8.125% | N/A (6) | BB+ | 11,692,980 | |||||||||||||||
| 3,548 | Credit Agricole SA, 144A | 7.875% | N/A (6) | BB+ | 3,454,326 | |||||||||||||||
| 5,400 | Credit Agricole, S.A, Reg S | 7.875% | N/A (6) | BB+ | 5,257,429 | |||||||||||||||
| 985 | First Chicago NBD Institutional Capital I | 0.790% | 2/01/27 | Baa2 | 842,175 | |||||||||||||||
| 16,350 | HSBC Capital Funding LP, Debt, 144A | 10.176% | N/A (6) | Baa1 | 24,320,625 | |||||||||||||||
| 3,200 | JPMorgan Chase & Company | 6.000% | N/A (6) | BBB– | 3,194,000 | |||||||||||||||
| 1,300 | JPMorgan Chase & Company | 5.150% | N/A (6) | BBB– | 1,238,380 | |||||||||||||||
| 4,300 | JPMorgan Chase Capital XXIII, (3) | 1.364% | 5/15/77 | Baa2 | 3,171,250 | |||||||||||||||
| 2,000 | KeyCorp Capital III | 7.750% | 7/15/29 | Baa2 | 2,435,270 | |||||||||||||||
| 12,518 | Lloyd’s Banking Group PLC | 7.500% | N/A (6) | BB+ | 12,956,130 | |||||||||||||||
| 2,900 | Lloyd’s Banking Group PLC, 144A | 6.657% | N/A (6) | Ba1 | 3,233,500 | |||||||||||||||
| 2,300 | Lloyd’s Banking Group PLC, 144A | 6.413% | N/A (6) | Ba1 | 2,535,750 | |||||||||||||||
| 1,800 | M&T Bank Corporation | 6.375% | N/A (6) | Baa1 | 1,838,813 | |||||||||||||||
| 14,000 | M&T Bank Corporation | 6.875% | N/A (6) | Baa2 | 14,122,500 | |||||||||||||||
| 5,700 | Nordea Bank AB, 144A | 6.125% | N/A (6) | BBB | 5,416,824 | |||||||||||||||
| 7,100 | PNC Financial Services Inc. | 6.750% | N/A (6) | Baa2 | 7,623,625 | |||||||||||||||
| 4,300 | Royal Bank of Scotland Group PLC | 7.648% | N/A (6) | BB | 5,310,500 | |||||||||||||||
| 4,000 | Royal Bank of Scotland Group PLC | 8.000% | N/A (6) | BB– | 4,105,000 | |||||||||||||||
| 8,900 | Royal Bank of Scotland Group PLC | 7.500% | N/A (6) | BB– | 9,033,500 | |||||||||||||||
| Nuveen Investments | 21 |
| JTP | Nuveen Quality Preferred Income Fund | |||
| Portfolio of Investments (continued) | January 31, 2016 (Unaudited) |
| Principal Amount (000)/ Shares | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
| Banks (continued) | ||||||||||||||||||||
| 15,500 | Societe Generale, 144A | 8.000% | N/A (6) | BB+ | $ | 15,306,250 | ||||||||||||||
| 2,000 | Societe Generale, 144A | 7.875% | N/A (6) | BB+ | 1,927,500 | |||||||||||||||
| 450 | Societe Generale, 144A | 1.363% | N/A (6) | BB+ | 414,000 | |||||||||||||||
| 2,700 | Societe Generale, Reg S | 7.875% | N/A (6) | BB+ | 2,602,125 | |||||||||||||||
| 5,050 | Standard Chartered PLC, 144A | 7.014% | N/A (6) | Baa2 | 5,353,000 | |||||||||||||||
Total Banks | 227,452,876 | |||||||||||||||||||
| Capital Markets – 4.6% | ||||||||||||||||||||
| 3,100 | Bank of New York Mellon Corporation | 4.950% | N/A (6) | Baa1 | 3,058,460 | |||||||||||||||
| 5,600 | Charles Schwab Corporation | 7.000% | N/A (6) | BBB | 6,370,000 | |||||||||||||||
| 7,500 | Credit Suisse Group AG, 144A | 7.500% | N/A (6) | BB+ | 7,699,350 | |||||||||||||||
| 2,500 | Goldman Sachs Group Inc. | 5.700% | N/A (6) | Ba1 | 2,465,625 | |||||||||||||||
| 150 | Morgan Stanley | 5.550% | N/A (6) | Ba1 | 148,406 | |||||||||||||||
| 5,178 | UBS Group AG Reg S | 7.125% | N/A (6) | BB+ | 5,339,031 | |||||||||||||||
| 1,500 | UBS Group AG, Reg S | 6.875% | N/A (6) | BB+ | 1,470,000 | |||||||||||||||
Total Capital Markets | 26,550,872 | |||||||||||||||||||
| Diversified Financial Services – 3.7% | ||||||||||||||||||||
| 10,875 | BNP Paribas, 144A | 7.375% | N/A (6) | BBB– | 10,671,094 | |||||||||||||||
| 7,893 | Rabobank Nederland, 144A | 11.000% | N/A (6) | Baa2 | 9,591,574 | |||||||||||||||
| 1,100 | Voya Financial Inc. | 5.650% | 5/15/53 | Baa3 | 1,067,000 | |||||||||||||||
Total Diversified Financial Services | 21,329,668 | |||||||||||||||||||
| Electric Utilities – 2.2% | ||||||||||||||||||||
| 5,200 | Electricite de France, 144A | 5.250% | N/A (6) | Baa1 | 4,660,500 | |||||||||||||||
| 1,000 | FPL Group Capital Inc. | 6.350% | 10/01/66 | BBB | 682,500 | |||||||||||||||
| 2,400 | FPL Group Capital Inc. | 6.650% | 6/15/67 | BBB | 1,797,600 | |||||||||||||||
| 7,000 | PPL Capital Funding Inc. | 6.700% | 3/30/67 | BBB | 5,390,000 | |||||||||||||||
Total Electric Utilities | 12,530,600 | |||||||||||||||||||
| Industrial Conglomerates – 5.6% | ||||||||||||||||||||
| 31,356 | General Electric Company | 5.000% | N/A (6) | AA– | 32,218,287 | |||||||||||||||
| Insurance – 25.2% | ||||||||||||||||||||
| 698 | Ace Capital Trust II, (3) | 9.700% | 4/01/30 | BBB+ | 991,509 | |||||||||||||||
| 2,600 | AIG Life Holdings Inc. | 8.500% | 7/01/30 | BBB | 3,406,000 | |||||||||||||||
| 1,700 | Allstate Corporation, (3) | 5.750% | 8/15/53 | Baa1 | 1,731,875 | |||||||||||||||
| 3,600 | American International Group, Inc. | 8.175% | 5/15/58 | BBB | 4,684,500 | |||||||||||||||
| 600 | AON Corporation | 8.205% | 1/1/27 | BBB | 749,250 | |||||||||||||||
| 4,000 | AXA SA, (3) | 8.600% | 12/15/30 | A3 | 5,351,400 | |||||||||||||||
| 4,880 | AXA SA, 144A | 6.380% | N/A (6) | Baa1 | 5,197,200 | |||||||||||||||
| 9,895 | Catlin Insurance Company Limited, 144A | 7.249% | N/A (6) | BBB+ | 7,718,100 | |||||||||||||||
| 1,700 | Chubb Corporation, (3) | 6.375% | 4/15/37 | BBB+ | 1,592,050 | |||||||||||||||
| 3,250 | Dai-Ichi Life Insurance Company Ltd, 144A | 7.250% | N/A (6) | A– | 3,770,000 | |||||||||||||||
| 1,300 | Dai-Ichi Life Insurance Company Ltd, 144A | 5.100% | N/A (6) | A– | 1,365,000 | |||||||||||||||
| 5,500 | Great West Life & Annuity Capital I, 144A, (3) | 6.625% | 11/15/34 | A– | 6,220,968 | |||||||||||||||
| 3,800 | Great West Life & Annuity Insurance Capital LP II, 144A, (3) | 7.153% | 5/16/46 | A– | 3,800,000 | |||||||||||||||
| 6,700 | Liberty Mutual Group, 144A | 7.000% | 3/15/37 | Baa3 | 6,231,000 | |||||||||||||||
| 7,060 | Liberty Mutual Group, 144A, (3) | 7.800% | 3/15/37 | Baa3 | 8,048,400 | |||||||||||||||
| 2,500 | Lincoln National Corporation | 6.050% | 4/20/67 | BBB | 1,817,188 | |||||||||||||||
| 6,300 | MetLife Capital Trust IV, 144A, (3) | 7.875% | 12/15/37 | BBB | 7,560,000 | |||||||||||||||
| 600 | MetLife Capital Trust X, 144A | 9.250% | 4/08/38 | BBB | 804,000 | |||||||||||||||
| 1,000 | MetLife Inc. | 10.750% | 8/01/39 | BBB | 1,535,500 | |||||||||||||||
| 12,650 | National Financial Services Inc. | 6.750% | 5/15/37 | Baa2 | 12,650,000 | |||||||||||||||
| 2,225 | Oil Insurance Limited, 144A | 3.585% | N/A (6) | Baa1 | 1,958,000 | |||||||||||||||
| 15,760 | Prudential Financial Inc. | 5.625% | 6/15/43 | BBB+ | 15,937,300 | |||||||||||||||
| 15,075 | QBE Cap Funding III Limited, 144A | 7.250% | 5/24/41 | BBB | 16,582,500 | |||||||||||||||
| 7,000 | Sompo Japan Insurance, 144A | 5.325% | 3/28/73 | A– | 7,341,250 | |||||||||||||||
| 22 | Nuveen Investments |
| Principal Amount (000)/ Shares | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
| Insurance (continued) | ||||||||||||||||||||
| 2,500 | Sumitomo Life Insurance Company, 144A | 4.000% | 9/20/73 | A3 | $ | 2,806,250 | ||||||||||||||
| 9,200 | XLIT Limited | 3.687% | N/A (6) | BBB– | 7,250,750 | |||||||||||||||
| 6,970 | ZFS Finance USA Trust V, 144A | 6.500% | 5/09/37 | A | 7,008,335 | |||||||||||||||
Total Insurance | 144,108,325 | |||||||||||||||||||
| Machinery – 0.3% | ||||||||||||||||||||
| 1,500 | Stanley Black & Decker Inc. | 5.750% | 12/15/53 | BBB+ | 1,563,000 | |||||||||||||||
| Multi-Utilities – 0.6% | ||||||||||||||||||||
| 2,300 | Dominion Resources Inc. | 7.500% | 6/30/66 | BBB– | 1,923,375 | |||||||||||||||
| 2,000 | Dominion Resources Inc. | 2.913% | 9/30/66 | BBB– | 1,382,328 | |||||||||||||||
Total Multi-Utilities | 3,305,703 | |||||||||||||||||||
| Oil, Gas & Consumable Fuels – 1.2% | ||||||||||||||||||||
| 6,876 | Enterprise Products Operating LP, (4) | 7.034% | 1/15/68 | Baa2 | 6,876,000 | |||||||||||||||
| Real Estate Investment Trust – 2.2% | ||||||||||||||||||||
| 3,800 | CoreStates Capital Trust III, Series 144A | 0.929% | 2/15/27 | A1 | 3,247,100 | |||||||||||||||
| 950 | Sovereign Capital Trusts | 7.908% | 6/13/36 | Ba1 | 964,300 | |||||||||||||||
| 8,025 | Wells Fargo & Company | 7.980% | N/A (6) | BBB | 8,386,125 | |||||||||||||||
Total Real Estate Investment Trust | 12,597,525 | |||||||||||||||||||
| Road & Rail – 2.1% | ||||||||||||||||||||
| 10,900 | Burlington Northern Santa Fe Funding Trust I | 6.613% | 12/15/55 | BBB | 11,772,000 | |||||||||||||||
| U.S. Agency – 0.7% | ||||||||||||||||||||
| 3,400 | Farm Credit Bank of Texas, 144A, (3) | 10.000% | N/A (6) | Baa1 | 4,247,875 | |||||||||||||||
| Wireless Telecommunication Services – 3.2% | ||||||||||||||||||||
| 15,250 | Centaur Funding Corporation, Series B, 144A | 9.080% | 4/21/20 | BBB– | 18,361,953 | |||||||||||||||
Total $1,000 Par (or similar) Institutional Preferred (cost $503,439,545) |
| 522,914,684 | ||||||||||||||||||
| Shares | Description (1), (7) | Value | ||||||||||||||||||
| INVESTMENT COMPANIES – 1.2% (0.8% of Total Investments) | ||||||||||||||||||||
| 252,950 | Blackrock Credit Allocation Income Trust IV | $ | 3,098,638 | |||||||||||||||||
| 198,566 | John Hancock Preferred Income Fund III | 3,582,130 | ||||||||||||||||||
Total Investment Companies (cost $9,446,348) | 6,680,768 | |||||||||||||||||||
Total Long-Term Investments (cost $770,450,201) | 798,959,694 | |||||||||||||||||||
| Principal Amount (000) | Description (1) | Coupon | Maturinty | Value | ||||||||||||||||
SHORT-TERM INVESTMENTS – 1.2% (0.9% of Total Investments) |
| |||||||||||||||||||
| REPURCHASE AGREEMENTS – 1.2% (0.9% of Total Investments) | ||||||||||||||||||||
| $ | 6,898 | Repurchase Agreement with Fixed Income Clearing Corporation, | 0.030% | 2/01/16 | $ | 6,897,626 | ||||||||||||||
Total Short-Term Investments (cost $6,897,626) | 6,897,626 | |||||||||||||||||||
Total Investments (cost $777,347,827) – 140.9% | 805,857,320 | |||||||||||||||||||
Borrowings – (41.1)% (8), (9) | (235,000,000 | ) | ||||||||||||||||||
Other Assets Less Liabilities – 0.2% (10) | 1,257,862 | |||||||||||||||||||
Net Assets Applicable to Common Shares – 100% | $ | 572,115,182 | ||||||||||||||||||
| Nuveen Investments | 23 |
| JTP | Nuveen Quality Preferred Income Fund | |||
| Portfolio of Investments (continued) | January 31, 2016 (Unaudited) |
Investments in Derivatives as of January 31, 2016
Interest Rate Swaps outstanding:
| Counterparty | Notional Amount | Fund Pay/Receive Floating Rate | Floating Rate Index | Fixed Rate (Annualized) | Fixed Rate Payment Frequency | Effective Date (11) | Optional Termination Date | Termination Date | Value | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||||||||||
JPMorgan Chase Bank, N.A. | $ | 67,587,000 | Receive | 1-Month USD-LIBOR-ICE | 1.462 | % | Monthly | 6/01/16 | 12/01/18 | 12/01/20 | $ | (1,655,213 | ) | $ | (2,002,036 | ) | ||||||||||||||||||||||||
JPMorgan Chase Bank, N.A. | 67,587,000 | Receive | 1-Month USD-LIBOR-ICE | 1.842 | Monthly | 6/01/16 | 12/01/20 | 12/01/22 | (2,888,005 | ) | (3,363,082 | ) | ||||||||||||||||||||||||||||
| $ | 135,174,000 | $ | (4,543,218 | ) | $ | (5,365,118 | ) | |||||||||||||||||||||||||||||||||
For Fund portfolio compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications into sectors for reporting ease.
| (1) | All percentages shown in the Portfolio of Investments are based on net assets applicable to common shares unless otherwise noted. |
| (2) | Ratings: Using the highest of Standard & Poor’s Group (”Standard & Poor’s”), Moody’s Investors Service, Inc. (”Moody’s”) or Fitch, Inc. (”Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (3) | Investment, or a portion of investment, is hypothecated as described in the Notes to Financial Statements, Note 8 – Borrowings Arrangements, Rehypothecation. The total value of investments hypothecated as of the end of the reporting period was $85,469,015. |
| (4) | Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in derivatives. |
| (5) | For fair value measurement disclosure purposes, investment classified as Level 2. See Notes to Financial Statements, Note 2 – Investment Valuation and Fair Value Measurements for more information. |
| (6) | Perpetual security. Maturity date is not applicable. |
| (7) | A copy of the most recent financial statements for these investment companies can be obtained directly from the Securities and Exchange Commission on its website at http://www.sec.gov. |
| (8) | Borrowings as a percentage of Total Investments is 29.2%. |
| (9) | The Fund may pledge up to 100% of its eligible investments (excluding any investments separately pledged as collateral for specific investments in derivatives, when applicable) in the Portfolio of Investments as collateral for borrowings. As of the end of the reporting period, investments with a value of $469,142,433 have been pledged as collateral for borrowings. |
| (10) | Other assets less liabilities includes the unrealized appreciation (depreciation) of certain over-the-counter derivatives as presented on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) of exchange-cleared and exchange-traded derivatives is recognized as part of the cash collateral at brokers and/or the receivable or payable for variation margin as presented on the Statement of Assets and Liabilities, when applicable. |
| (11) | Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each contract. |
| 144A | Investment is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These investments may only be resold in transactions exempt from registration, which are normally those transactions with qualified institutional buyers. |
| Reg S | Regulation S allows U.S. companies to sell securities to persons or entities located outside of the United States without registering those securities with the Securities and Exchange Commission. Specifically, Regulation S provides a safe harbor from the registration requirements of the Securities Act for the offers and sales of securities by both foreign and domestic issuers that are made outside the United States. |
| USD-LIBOR-ICE | United States Dollar – London Inter-Bank Offered Rate Intercontinental Exchange |
See accompanying notes to financial statements.
| 24 | Nuveen Investments |
JPS
Nuveen Quality Preferred Income Fund 2 | ||
Portfolio of Investments | January 31, 2016 (Unaudited) | |
| Shares | Description (1) | Coupon | Ratings (2) | Value | ||||||||||||||
LONG-TERM INVESTMENTS – 140.6% (99.4% of Total Investments) |
| |||||||||||||||||
CONVERTIBLE PREFERRED SECURITIES – 0.4% (0.3% of Total Investments) | ||||||||||||||||||
| Banks – 0.4% | ||||||||||||||||||
| 4,300 | Wells Fargo & Company | 7.500% | BBB | $ | 5,039,600 | |||||||||||||
Total Convertible Preferred Securities (cost $5,004,125) | 5,039,600 | |||||||||||||||||
| Shares | Description (1) | Coupon | Ratings (2) | Value | ||||||||||||||
$25 PAR (OR SIMILAR) RETAIL PREFERRED – 37.7% (26.7% of Total Investments) | ||||||||||||||||||
| Banks – 9.5% | ||||||||||||||||||
| 60,500 | AgriBank FCB, (4) | 6.875% | BBB+ | $ | 6,511,313 | |||||||||||||
| 13,035 | Bank of America Corporation | 6.500% | BB+ | 339,561 | ||||||||||||||
| 101,310 | Barclays Bank PLC | 8.125% | BB+ | 2,666,479 | ||||||||||||||
| 391,660 | Citigroup Inc. | 6.875% | BB+ | 10,758,900 | ||||||||||||||
| 50,000 | Cobank Agricultural Credit Bank, (4) | 6.200% | BBB+ | 5,034,375 | ||||||||||||||
| 60,000 | Fifth Third Bancorp. | 6.625% | Baa3 | 1,683,000 | ||||||||||||||
| 104,602 | First Naigara Finance Group | 8.625% | BB– | 2,845,174 | ||||||||||||||
| 194,610 | HSBC Holdings PLC | 8.000% | Baa1 | 5,071,537 | ||||||||||||||
| 6,000 | HSBC Holdings PLC | 6.200% | Baa1 | 153,300 | ||||||||||||||
| 34,578 | HSBC USA Inc. | 6.500% | BBB+ | 895,570 | ||||||||||||||
| 762,594 | ING Groep N.V. | 7.200% | Baa3 | 19,880,826 | ||||||||||||||
| 711,114 | ING Groep N.V. | 7.050% | Baa3 | 18,524,520 | ||||||||||||||
| 5,272 | JP Morgan Chase & Company | 6.100% | BBB– | 135,227 | ||||||||||||||
| 1,213,900 | PNC Financial Services | 6.125% | Baa2 | 33,843,532 | ||||||||||||||
Total Banks | 108,343,314 | |||||||||||||||||
| Capital Markets – 3.9% | ||||||||||||||||||
| 52,744 | Affiliated Managers Group Inc. | 6.375% | BBB+ | 1,366,070 | ||||||||||||||
| 50,869 | Charles Schwab Corporation | 6.000% | BBB | 1,331,242 | ||||||||||||||
| 1,254,146 | Deutsche Bank Capital Funding Trust II | 6.550% | BB+ | 31,642,104 | ||||||||||||||
| 329,239 | Goldman Sachs Group, Inc. | 5.500% | Ba1 | 8,221,098 | ||||||||||||||
| 790 | Morgan Stanley | 7.125% | Ba1 | 22,460 | ||||||||||||||
| 37,600 | State Street Corporation | 5.900% | Baa1 | 1,011,440 | ||||||||||||||
| 3,373 | State Street Corporation | 5.250% | Baa1 | 86,956 | ||||||||||||||
Total Capital Markets | 43,681,370 | |||||||||||||||||
| Diversified Telecommunication Services – 3.1% | ||||||||||||||||||
| 184,004 | Qwest Corporation | 7.500% | BBB– | 4,763,864 | ||||||||||||||
| 129,290 | Qwest Corporation | 7.375% | BBB– | 3,313,703 | ||||||||||||||
| 381,205 | Qwest Corporation | 7.000% | BBB– | 9,880,834 | ||||||||||||||
| 74,400 | Qwest Corporation, (3) | 7.000% | BBB– | 1,933,656 | ||||||||||||||
| 216,000 | Qwest Corporation | 6.875% | BBB– | 5,566,320 | ||||||||||||||
| 97,600 | Qwest Corporation, (3) | 6.625% | Baa3 | 2,419,504 | ||||||||||||||
| 189,701 | Qwest Corporation | 6.125% | BBB– | 4,695,100 | ||||||||||||||
| 109,505 | Verizon Communications Inc. | 5.900% | A– | 2,904,073 | ||||||||||||||
Total Diversified Telecommunication Services | 35,477,054 | |||||||||||||||||
| Electric Utilities – 1.9% | ||||||||||||||||||
| 283,142 | Alabama Power Company, (4) | 6.450% | A3 | 7,591,745 | ||||||||||||||
| 76,214 | Entergy Arkansas Inc. | 4.750% | A– | 1,880,199 | ||||||||||||||
| 50,244 | Entergy Louisiana LLC | 5.875% | A2 | 1,272,178 | ||||||||||||||
| 4,808 | Entergy Louisiana LLC | 5.250% | A2 | 124,191 | ||||||||||||||
| 12,338 | Entergy Mississippi Inc. | 6.000% | A– | 322,762 | ||||||||||||||
| 10,000 | Gulf Power Company, (4) | 5.600% | Baa1 | 1,015,916 | ||||||||||||||
| 150,833 | Integrys Energy Group Inc., (4) | 6.000% | Baa1 | 3,926,379 | ||||||||||||||
| 103,413 | Interstate Power and Light Company | 5.100% | BBB | 2,662,885 | ||||||||||||||
| Nuveen Investments | 25 |
| JPS | Nuveen Quality Preferred Income Fund 2 | |||
| Portfolio of Investments (continued) | January 31, 2016 (Unaudited) |
| Shares | Description (1) | Coupon | Ratings (2) | Value | ||||||||||||||
| Electric Utilities (continued) | ||||||||||||||||||
| 42,873 | NextEra Energy Inc. | 5.700% | BBB | $ | 1,100,550 | |||||||||||||
| 74,988 | NextEra Energy Inc. | 5.625% | BBB | 1,935,440 | ||||||||||||||
Total Electric Utilities | 21,832,245 | |||||||||||||||||
Food Products – 0.7% | ||||||||||||||||||
| 53,400 | Dairy Farmers of America Inc., 144A, (4) | 7.875% | Baa3 | 5,682,096 | ||||||||||||||
| 19,000 | Dairy Farmers of America Inc., 144A, (4) | 7.875% | Baa3 | 1,936,220 | ||||||||||||||
Total Food Products | 7,618,316 | |||||||||||||||||
| Insurance – 10.9% | ||||||||||||||||||
| 1,632,816 | Aegon N.V. | 6.375% | Baa1 | 41,783,760 | ||||||||||||||
| 190,549 | Aflac Inc. | 5.500% | Baa1 | 4,891,393 | ||||||||||||||
| 55,714 | Allstate Corporation | 6.625% | BBB– | 1,530,464 | ||||||||||||||
| 393,000 | Allstate Corporation | 5.100% | Baa1 | 9,946,830 | ||||||||||||||
| 143,984 | American Financial Group | 6.250% | Baa2 | 3,772,380 | ||||||||||||||
| 298,657 | Arch Capital Group Limited | 6.750% | BBB+ | 7,765,082 | ||||||||||||||
| 74,981 | Aspen Insurance Holdings Limited | 7.250% | BBB– | 1,975,000 | ||||||||||||||
| 210,600 | Aspen Insurance Holdings Limited | 5.950% | BBB– | 5,448,222 | ||||||||||||||
| 496,236 | Axis Capital Holdings Limited | 6.875% | BBB | 12,986,496 | ||||||||||||||
| 188,986 | Axis Capital Holdings Limited | 5.500% | BBB | 4,747,328 | ||||||||||||||
| 409,482 | Delphi Financial Group, Inc., (4) | 7.376% | BB+ | 10,121,904 | ||||||||||||||
| 317,875 | Prudential PLC | 6.750% | A– | 8,321,968 | ||||||||||||||
| 280,000 | Reinsurance Group of America Inc. | 6.200% | BBB | 8,008,000 | ||||||||||||||
| 2,771 | RenaissanceRe Holdings Limited | 5.375% | BBB+ | 69,552 | ||||||||||||||
| 89,317 | Torchmark Corporation | 5.875% | BBB+ | 2,329,387 | ||||||||||||||
Total Insurance | 123,697,766 | |||||||||||||||||
| Machinery – 0.8% | ||||||||||||||||||
| 344,353 | Stanley, Black, and Decker Inc. | 5.750% | BBB+ | 8,849,872 | ||||||||||||||
| Real Estate Investment Trust – 5.3% | ||||||||||||||||||
| 90,357 | DDR Corporation | 6.250% | Baa3 | 2,283,320 | ||||||||||||||
| 98,467 | Digital Realty Trust Inc. | 7.375% | Baa3 | 2,635,962 | ||||||||||||||
| 13,325 | Digital Realty Trust Inc. | 7.000% | Baa3 | 341,786 | ||||||||||||||
| 3,000 | Digital Realty Trust Inc. | 6.350% | Baa3 | 75,330 | ||||||||||||||
| 38,341 | Digital Realty Trust Inc. | 5.875% | Baa3 | 953,157 | ||||||||||||||
| 319,773 | Hospitality Properties Trust | 7.125% | Baa3 | 8,301,307 | ||||||||||||||
| 217,684 | Kimco Realty Corporation, | 5.625% | Baa2 | 5,470,399 | ||||||||||||||
| 90,626 | National Retail Properties Inc. | 6.625% | Baa2 | 2,363,526 | ||||||||||||||
| 82,301 | Prologis Inc., (4) | 8.540% | BBB– | 5,128,380 | ||||||||||||||
| 135,389 | PS Business Parks, Inc. | 6.450% | BBB | 3,499,806 | ||||||||||||||
| 316,174 | PS Business Parks, Inc. | 6.000% | BBB | 8,046,628 | ||||||||||||||
| 3,400 | Public Storage, Inc. | 6.500% | A3 | 86,292 | ||||||||||||||
| 165,013 | Public Storage, Inc., (3) | 6.375% | A3 | 4,473,502 | ||||||||||||||
| 77,335 | Public Storage, Inc. | 5.750% | A3 | 1,974,363 | ||||||||||||||
| 169,411 | Realty Income Corporation | 6.625% | Baa2 | 4,458,898 | ||||||||||||||
| 146,268 | Regency Centers Corporation | 6.625% | Baa2 | 3,816,132 | ||||||||||||||
| 79,442 | Ventas Realty LP | 5.450% | BBB+ | 2,106,802 | ||||||||||||||
| 167,030 | Wells Fargo & Company, (3) | 5.850% | BBB | 4,317,726 | ||||||||||||||
| 3,203 | Welltower Inc. | 6.500% | Baa3 | 84,175 | ||||||||||||||
Total Real Estate Investment Trust | 60,417,491 | |||||||||||||||||
| U.S. Agency – 1.4% | ||||||||||||||||||
| 144,000 | Farm Credit Bank of Texas, 144A, (4) | 6.750% | Baa1 | 15,363,000 | ||||||||||||||
| Wireless Telecommunication Services – 0.2% | ||||||||||||||||||
| 2,150 | Telephone and Data Systems Inc. | 7.000% | BB+ | 54,159 | ||||||||||||||
| 81,428 | Telephone and Data Systems Inc. | 6.875% | BB+ | 2,073,970 | ||||||||||||||
Total Wireless Telecommunication Services | 2,128,129 | |||||||||||||||||
Total $25 Par (or similar) Retail Preferred (cost $404,953,028) | 427,408,557 | |||||||||||||||||
| 26 | Nuveen Investments |
| Principal Amount (000) | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
CORPORATE BONDS – 7.3% (5.2% of Total Investments) | ||||||||||||||||||||
| Banks – 5.5% | ||||||||||||||||||||
| $ | 4,500 | Barclays Bank PLC | 7.625% | 11/21/22 | BBB– | $ | 5,028,989 | |||||||||||||
| 8,800 | Barclays Bank PLC | 7.750% | 4/10/23 | BBB– | 9,328,000 | |||||||||||||||
| 1,000 | Den Norske Bank | 0.688% | 2/18/35 | Baa2 | 605,000 | |||||||||||||||
| 1,000 | Den Norske Bank | 0.482% | 2/24/37 | Baa2 | 605,000 | |||||||||||||||
| 700 | ING Groep N.V. | 6.500% | 12/29/49 | Ba1 | 678,125 | |||||||||||||||
| 2,900 | Integrys Holding, Inc. | 6.110% | 12/01/66 | Baa1 | 2,117,000 | |||||||||||||||
| 29,000 | JPMorgan Chase & Company | 6.750% | 1/29/49 | BBB– | 31,392,500 | |||||||||||||||
| 7,600 | Nordea Bank AB, 144A | 5.500% | 9/23/49 | BBB | 7,296,000 | |||||||||||||||
| 5,000 | Societe Generale, Reg S | 8.250% | 12/31/49 | BB+ | 5,214,570 | |||||||||||||||
| 60.500 | Total Banks | 62,265,184 | ||||||||||||||||||
Capital Markets – 0.2% | ||||||||||||||||||||
| 1,700 | Macquarie Bank Limited, Reg S | 10.250% | 6/20/57 | BB+ | 1,823,180 | |||||||||||||||
| Construction & Engineering – 0.2% | ||||||||||||||||||||
| 1,800 | Hutchison Whampoa International 12 Limited, 144A | 6.000% | 11/07/62 | BBB | 1,874,700 | |||||||||||||||
| Insurance – 1.2% | ||||||||||||||||||||
| 2,800 | AIG Life Holdings Inc. 144A | 7.570% | 12/01/45 | BBB | 3,654,000 | |||||||||||||||
| 2,300 | Liberty Mutual Group Inc., 144A | 7.697% | 10/15/97 | BBB+ | 2,964,932 | |||||||||||||||
| 6,300 | Mitsui Sumitomo Insurance Company Limited, 144A, (5) | 7.000% | 3/15/72 | A– | 7,304,850 | |||||||||||||||
| 11,400 | Total Insurance | 13,923,782 | ||||||||||||||||||
| Multi-Utilities – 0.1% | ||||||||||||||||||||
| 2,000 | WEC Energy Group, Inc. | 6.250% | 5/15/67 | Baa1 | 1,440,000 | |||||||||||||||
| Wireless Telecommunication Services – 0.1% | ||||||||||||||||||||
| 1,600 | Koninklijke KPN NV, 144A | 7.000% | 3/28/73 | BB | 1,634,000 | |||||||||||||||
| $ | 79,000 | Total Corporate Bonds (cost $81,909,092) | 82,960,846 | |||||||||||||||||
| Principal Amount (000)/ Shares | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
$1,000 PAR (OR SIMILAR) INSTITUTIONAL PREFERRED – 93.9% (66.3% of Total Investments) |
| |||||||||||||||||||
| Banks – 35.5% | ||||||||||||||||||||
| 10,400 | Banco Bilbao Vizcaya Argentaria S.A, Reg S | 9.000% | N/A (6) | BB | $ | 10,877,298 | ||||||||||||||
| 2,000 | Banco Santander SA, Reg S | 6.375% | N/A (6) | Ba1 | 1,846,656 | |||||||||||||||
| 10,800 | Bank of America Corporation | 6.500% | N/A (6) | BB+ | 11,262,240 | |||||||||||||||
| 16,480 | Bank of America Corporation, (3) | 8.125% | N/A (6) | BB+ | 16,716,982 | |||||||||||||||
| 2,394 | Bank of America Corporation, (3) | 8.000% | N/A (6) | BB+ | 2,417,174 | |||||||||||||||
| 3,400 | Bank One Capital III | 8.750% | 9/01/30 | Baa2 | 5,024,377 | |||||||||||||||
| 1,600 | Barclays Bank PLC, 144A | 6.860% | N/A (6) | BBB– | 1,840,320 | |||||||||||||||
| 19,875 | Barclays PLC | 7.434% | N/A (6) | BB+ | 19,335,434 | |||||||||||||||
| 15,200 | Barclays PLC | 8.250% | N/A (6) | BB+ | 15,920,495 | |||||||||||||||
| 1,200 | Chase Capital Trust II, Series B | 0.725% | 2/01/27 | Baa2 | 1,026,000 | |||||||||||||||
| 20,000 | Chase Capital Trust III, Series C, (5) | 0.777% | 3/01/27 | Baa2 | 17,100,000 | |||||||||||||||
| 5,500 | Citigroup Inc. | 5.950% | N/A (6) | BB+ | 5,362,500 | |||||||||||||||
| 13,000 | Citigroup Inc. | 6.250% | N/A (6) | BB+ | 13,077,090 | |||||||||||||||
| 6,000 | Citigroup Inc. | 8.400% | N/A (6) | BB+ | 6,577,500 | |||||||||||||||
| 5,500 | Citizens Financial Group Inc., 144A | 5.500% | N/A (6) | BB+ | 5,314,375 | |||||||||||||||
| 19,105 | Credit Agricole SA, 144A | 7.875% | N/A (6) | BB+ | 18,600,590 | |||||||||||||||
| 23,900 | Credit Agricole SA, 144A | 8.125% | N/A (6) | BB+ | 23,885,660 | |||||||||||||||
| 1,000 | Credit Agricole, S.A, 144A | 6.625% | N/A (6) | BB+ | 940,914 | |||||||||||||||
| 1,000 | Credit Agricole, S.A, Reg S | 7.875% | N/A (6) | BB+ | 973,598 | |||||||||||||||
| 9,500 | HSBC Bank PLC | 1.125% | 6/19/35 | A3 | 5,608,401 | |||||||||||||||
| 5,500 | HSBC Bank PLC | 0.975% | 12/11/36 | A3 | 3,249,125 | |||||||||||||||
| 10,850 | HSBC Capital Funding LP, Debt, 144A | 10.176% | N/A (6) | Baa1 | 16,139,375 | |||||||||||||||
| 5,000 | HSBC Holdings PLC | 6.375% | N/A (6) | BBB | 4,818,050 | |||||||||||||||
| Nuveen Investments | 27 |
| JPS | Nuveen Quality Preferred Income Fund 2 | |||
| Portfolio of Investments (continued) | January 31, 2016 (Unaudited) |
| Principal Amount (000)/ Shares | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
| Banks (continued) | ||||||||||||||||||||
| 7,800 | JPMorgan Chase & Company | 6.000% | N/A (6) | BBB– | $ | 7,785,375 | ||||||||||||||
| 1,400 | JPMorgan Chase & Company | 5.150% | N/A (6) | BBB– | 1,333,640 | |||||||||||||||
| 2,800 | JP Morgan Chase Capital XXIII | 1.364% | 5/15/47 | Baa2 | 2,065,000 | |||||||||||||||
| 6,000 | KeyCorp Capital III | 7.750% | 7/15/29 | Baa2 | 7,305,810 | |||||||||||||||
| 16,047 | Lloyd’s Banking Group PLC | 7.500% | N/A (6) | BB+ | 16,608,645 | |||||||||||||||
| 6,350 | Lloyd’s Banking Group PLC, 144A | 6.657% | N/A (6) | Ba1 | 7,080,250 | |||||||||||||||
| 6,200 | M&T Bank Corporation | 6.375% | N/A (6) | Baa1 | 6,333,688 | |||||||||||||||
| 26,000 | M&T Bank Corporation | 6.875% | N/A (6) | Baa2 | 26,227,500 | |||||||||||||||
| 11,945 | Nordea Bank AB, 144A | 6.125% | N/A (6) | BBB | 11,351,572 | |||||||||||||||
| 20,000 | PNC Financial Services Inc. | 6.750% | N/A (6) | Baa2 | 21,475,000 | |||||||||||||||
| 3,400 | Royal Bank of Scotland Group PLC | 7.648% | N/A (6) | BB | 4,199,000 | |||||||||||||||
| 12,500 | Royal Bank of Scotland Group PLC | 8.000% | N/A (6) | BB– | 12,828,125 | |||||||||||||||
| 21,128 | Royal Bank of Scotland Group PLC | 7.500% | N/A (6) | BB– | 21,444,920 | |||||||||||||||
| 2,000 | Societe Generale, 144A | 7.875% | N/A (6) | BB+ | 1,927,500 | |||||||||||||||
| 37,200 | Societe Generale, 144A | 8.000% | N/A (6) | BB+ | 36,734,998 | |||||||||||||||
| 800 | Societe Generale, 144A | 1.363% | N/A (6) | BB+ | 736,000 | |||||||||||||||
| 2,000 | Societe Generale, Reg S | 7.875% | N/A (6) | BB+ | 1,927,500 | |||||||||||||||
| 6,450 | Standard Chartered PLC, 144A | 7.014% | N/A (6) | Baa2 | 6,837,000 | |||||||||||||||
Total Banks | 402,115,677 | |||||||||||||||||||
| Capital Markets – 5.9% | ||||||||||||||||||||
| 9,000 | Bank of New York Mellon Corporation | 4.950% | N/A (6) | Baa1 | 8,879,400 | |||||||||||||||
| 11,000 | Charles Schwab Corporation | 7.000% | N/A (6) | BBB | 12,512,500 | |||||||||||||||
| 14,600 | Credit Suisse Group AG, 144A | 7.500% | N/A (6) | BB+ | 14,988,068 | |||||||||||||||
| 1,200 | Credit Suisse Group AG, 144A | 6.250% | N/A (6) | BB+ | 1,171,399 | |||||||||||||||
| 750 | Goldman Sachs Group Inc. | 5.700% | N/A (6) | Ba1 | 739,688 | |||||||||||||||
| 4,000 | Morgan Stanley | 5.550% | N/A (6) | Ba1 | 3,957,500 | |||||||||||||||
| 12,975 | UBS Group AG, Reg S | 7.125% | N/A (6) | BB+ | 13,378,510 | |||||||||||||||
| 11,400 | UBS Group AG, Reg S | 6.875% | N/A (6) | BB+ | 11,172,000 | |||||||||||||||
Total Capital Markets | 66,799,065 | |||||||||||||||||||
| Diversified Financial Services – 5.2% | ||||||||||||||||||||
| 24,410 | BNP Paribas, 144A | 7.375% | N/A (6) | BBB– | 23,952,313 | |||||||||||||||
| 2,861 | Countrywide Capital Trust III, Series B, (5) | 8.050% | 6/15/27 | BBB– | 3,556,698 | |||||||||||||||
| 23,730 | Rabobank Nederland, 144A | 11.000% | N/A (6) | Baa2 | 28,836,696 | |||||||||||||||
| 2,300 | Voya Financial Inc. | 5.650% | 5/15/53 | Baa3 | 2,231,000 | |||||||||||||||
Total Diversified Financial Services | 58,576,707 | |||||||||||||||||||
| Electric Utilities – 1.7% | ||||||||||||||||||||
| 5,900 | Electricite de France, 144A | 5.250% | N/A (6) | Baa1 | 5,287,875 | |||||||||||||||
| 5,000 | FPL Group Capital Inc. | 6.650% | 6/15/67 | BBB | 3,745,000 | |||||||||||||||
| 13,782 | PPL Capital Funding Inc., (5) | 6.700% | 3/30/67 | BBB | 10,612,140 | |||||||||||||||
Total Electric Utilities | 19,645,015 | |||||||||||||||||||
| Industrial Conglomerates – 4.3% | ||||||||||||||||||||
| 47,613 | General Electric Company | 5.000% | N/A (6) | AA– | 48,922,355 | |||||||||||||||
| Insurance – 30.2% | ||||||||||||||||||||
| 800 | Ace Capital Trust II | 9.700% | 4/01/30 | BBB+ | 1,136,400 | |||||||||||||||
| 6,400 | AIG Life Holdings Inc. | 8.500% | 7/01/30 | BBB | 8,384,000 | |||||||||||||||
| 2,000 | Allstate Corporation | 5.750% | 8/15/53 | Baa1 | 2,037,500 | |||||||||||||||
| 1,200 | Allstate Corporation | 6.500% | 5/15/57 | Baa1 | 1,302,600 | |||||||||||||||
| 6,805 | American International Group, Inc., (5) | 8.175% | 5/15/58 | BBB | 8,855,006 | |||||||||||||||
| 625 | AON Corporation | 8.205% | 1/01/27 | BBB | 780,469 | |||||||||||||||
| 11,350 | AXA SA, (5) | 8.600% | 12/15/30 | A3 | 15,184,598 | |||||||||||||||
| 9,450 | AXA SA, 144A | 6.380% | N/A (6) | Baa1 | 10,064,250 | |||||||||||||||
| 19,659 | Catlin Insurance Company Limited, 144A | 7.249% | N/A (6) | BBB+ | 15,334,020 | |||||||||||||||
| 4,400 | Chubb Corporation | 6.375% | 4/15/37 | BBB+ | 4,120,600 | |||||||||||||||
| 6,500 | Dai-Ichi Life Insurance Company Ltd, 144A | 7.250% | N/A (6) | A– | 7,540,000 | |||||||||||||||
| 2,500 | Dai-Ichi Life Insurance Company Ltd, 144A | 5.100% | N/A (6) | A– | 2,625,000 | |||||||||||||||
| 1,200 | Everest Reinsurance Holdings, Inc. | 6.600% | 5/15/37 | BBB | 1,061,880 | |||||||||||||||
| 28 | Nuveen Investments |
| Principal Amount (000)/ Shares | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
| Insurance (continued) | ||||||||||||||||||||
| 16,150 | Glen Meadows Pass Through Trust, 144A | 6.505% | 2/12/67 | BBB– | $ | 12,435,500 | ||||||||||||||
| 2,600 | Great West Life & Annuity Capital I, 144A | 6.625% | 11/15/34 | A– | 2,940,821 | |||||||||||||||
| 6,600 | Great West Life & Annuity Insurance Capital LP II, 144A | 7.153% | 5/16/46 | A– | 6,600,000 | |||||||||||||||
| 2,488 | Hartford Financial Services Group Inc. | 8.125% | 6/15/38 | BBB– | 2,680,820 | |||||||||||||||
| 13,669 | Liberty Mutual Group, 144A | 7.000% | 3/15/37 | Baa3 | 12,712,170 | |||||||||||||||
| 10,481 | Liberty Mutual Group, 144A, (5) | 7.800% | 3/15/37 | Baa3 | 11,948,340 | |||||||||||||||
| 4,390 | Lincoln National Corporation | 6.050% | 4/20/67 | BBB | 3,190,981 | |||||||||||||||
| 2,700 | Lincoln National Corporation | 7.000% | 5/17/66 | BBB | 2,011,500 | |||||||||||||||
| 16,600 | MetLife Capital Trust IV, 144A, (5) | 7.875% | 12/15/37 | BBB | 19,920,000 | |||||||||||||||
| 31,100 | MetLife Capital Trust X, 144A, (5) | 9.250% | 4/08/38 | BBB | 41,674,000 | |||||||||||||||
| 2,000 | MetLife Inc. | 10.750% | 8/01/39 | BBB | 3,071,000 | |||||||||||||||
| 23,754 | National Financial Services Inc., (5) | 6.750% | 5/15/37 | Baa2 | 23,754,000 | |||||||||||||||
| 4,200 | Oil Insurance Limited, 144A | 3.585% | N/A (6) | Baa1 | 3,696,000 | |||||||||||||||
| 3,750 | Provident Financing Trust I | 7.405% | 3/15/38 | Baa3 | 4,240,684 | |||||||||||||||
| 6,225 | Prudential Financial Inc. | 5.875% | 9/15/42 | BBB+ | 6,528,469 | |||||||||||||||
| 1,135 | Prudential Financial Inc. | 8.875% | 6/15/38 | BBB+ | 1,275,456 | |||||||||||||||
| 21,550 | Prudential Financial Inc., (5) | 5.625% | 6/15/43 | BBB+ | 21,792,438 | |||||||||||||||
| 29,870 | QBE Cap Funding III Limited, 144A, (5) | 7.250% | 5/24/41 | BBB | 32,857,000 | |||||||||||||||
| 17,500 | Sompo Japan Insurance, 144A | 5.325% | 3/28/73 | A– | 18,353,125 | |||||||||||||||
| 5,000 | Sumitomo Life Insurance Company, 144A | 4.000% | 9/20/73 | A3 | 5,612,500 | |||||||||||||||
| 5,405 | XL Capital Ltd | 6.500% | N/A (6) | BBB | 3,921,328 | |||||||||||||||
| 6,000 | XLIT Limited | 3.687% | N/A (6) | BBB– | 4,728,750 | |||||||||||||||
| 18,257 | ZFS Finance USA Trust V, I44A, (3) | 6.500% | 5/09/37 | A | 18,357,414 | |||||||||||||||
Total Insurance | 342,728,619 | |||||||||||||||||||
| Machinery – 0.3% | ||||||||||||||||||||
| 3,450 | Stanley Black & Decker Inc., (5) | 5.750% | 12/15/53 | BBB+ | 3,594,900 | |||||||||||||||
| Multi-Utilities – 0.5% | ||||||||||||||||||||
| 6,400 | Dominion Resources Inc. | 7.500% | 6/30/66 | BBB– | 5,352,000 | |||||||||||||||
| Oil, Gas & Consumable Fuels – 1.1% | ||||||||||||||||||||
| 12,400 | Enterprise Products Operating LP | 7.034% | 1/15/68 | Baa2 | 12,400,000 | |||||||||||||||
| Real Estate Investment Trust – 4.1% | ||||||||||||||||||||
| 17,095 | First Union Capital Trust II, Series A | 7.950% | 11/15/29 | Baa1 | 22,979,766 | |||||||||||||||
| 2,772 | Sovereign Capital Trusts | 7.908% | 6/13/36 | Ba1 | 2,813,727 | |||||||||||||||
| 20,000 | Wells Fargo & Company, (3) | 7.980% | N/A (6) | BBB | 20,900,000 | |||||||||||||||
Total Real Estate Investment Trust | 46,693,493 | |||||||||||||||||||
| Road & Rail – 1.1% | ||||||||||||||||||||
| 11,400 | Burlington Northern Santa Fe Funding Trust I | 6.613% | 12/15/55 | BBB | 12,312,000 | |||||||||||||||
| U.S. Agency – 0.2% | ||||||||||||||||||||
| 1,700 | Farm Credit Bank of Texas, 144A | 10.000% | N/A (6) | Baa1 | 2,123,938 | |||||||||||||||
| Wireless Telecommunication Services – 3.8% | ||||||||||||||||||||
| 36,228 | Centaur Funding Corporation, Series B | 9.080% | 4/21/20 | BBB– | 43,620,776 | |||||||||||||||
Total $1,000 Par (or similar) Institutional Preferred (cost $1,027,295,016) |
| 1,064,884,545 | ||||||||||||||||||
| Shares | Description (1), (7) | Value | ||||||||||||||||||
| INVESTMENT COMPANIES – 1.3% (0.9% of Total Investments) | ||||||||||||||||||||
| 599,835 | Blackrock Credit Allocation Income Trust IV | $ | 7,347,979 | |||||||||||||||||
| 395,914 | John Hancock Preferred Income Fund III | 7,142,289 | ||||||||||||||||||
Total Investment Companies (cost $21,285,098) | 14,490,268 | |||||||||||||||||||
Total Long-Term Investments (cost $1,540,446,359) | 1,594,783,816 | |||||||||||||||||||
| Nuveen Investments | 29 |
| JPS | Nuveen Quality Preferred Income Fund 2 | |||
| Portfolio of Investments (continued) | January 31, 2016 (Unaudited) |
| Principal Amount (000) | Description (1) | Coupon | Maturity | Value | ||||||||||||||
| SHORT-TERM INVESTMENTS – 0.8% (0.6% of Total Investments) | ||||||||||||||||||
REPURCHASE AGREEMENTS – 0.8% (0.6% of Total Investments) | ||||||||||||||||||
| $ | 8,859 | Repurchase Agreement with Fixed Income Clearing Corporation, dated 1/29/16, repurchase price $8,859,287, | 0.030% | 2/01/16 | $ | 8,859,287 | ||||||||||||
Total Short-Term Investments (cost $8,859,287) | 8,859,287 | |||||||||||||||||
Total Investments (cost $1,549,305,646) – 141.4% | 1,603,643,103 | |||||||||||||||||
Borrowings – (41.1)% (8), (9) | (465,800,000 | ) | ||||||||||||||||
Other Assets Less Liabilities – (0.3)% (10) | (3,348,788 | ) | ||||||||||||||||
Net Assets Applicable to Common Shares – 100% | $ | 1,134,494,315 | ||||||||||||||||
Investments in Derivatives as of January 31, 2016
Interest Rate Swaps outstanding:
| Counterparty | Notional Amount | Fund Pay/Receive Floating Rate | Floating Rate Index | Fixed Rate (Annualized) | Fixed Rate Payment Frequency | Effective Date (11) | Optional Termination Date | Termination Date | Value | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||||||||||
JPMorgan Chase Bank, N.A. | $ | 134,344,000 | Receive | 1-Month USD-LIBOR-ICE | 1.462 | % | Monthly | 6/01/16 | 12/01/18 | 12/01/20 | $ | (3,290,100 | ) | $ | (3,979,486 | ) | ||||||||||||||||||||||||
JPMorgan Chase Bank, N.A. | 134,344,000 | Receive | 1-Month USD-LIBOR-ICE | 1.842 | Monthly | 6/01/16 | 12/01/20 | 12/01/22 | (5,740,543 | ) | (6,684,864 | ) | ||||||||||||||||||||||||||||
| $ | 268,688,000 | $ | (9,030,643 | ) | $ | (10,664,350 | ) | |||||||||||||||||||||||||||||||||
For Fund portfolio compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications into sectors for reporting ease.
| (1) | All percentages shown in the Portfolio of Investments are based on net assets applicable to common shares unless otherwise noted. |
| (2) | Ratings: Using the highest of Standard & Poor’s Group (”Standard & Poor’s”), Moody’s Investors Service, Inc. (”Moody’s”) or Fitch, Inc. (”Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (3) | Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in derivatives. |
| (4) | For fair value measurement disclosure purposes, investment classified as Level 2. See Notes to Financial Statements, Note 2 – Investment Valuation and Fair Value Measurements for more information. |
| (5) | Investment, or a portion of investment, is hypothecated as described in the Notes to Financial Statements, Note 8 – Borrowings Arrangements, Rehypothecation. The total value of investments hypothecated as of the end of the reporting period was $194,909,554. |
| (6) | Perpetual security. Maturity date is not applicable. |
| (7) | A copy of the most recent financial statements for these investment companies can be obtained directly from the Securities and Exchange Commission on its website at http://www.sec.gov. |
| (8) | Borrowings as a percentage of Total Investments is 29.0%. |
| (9) | The Fund may pledge up to 100% of its eligible investments (excluding any investments separately pledged as collateral for specific investments in derivatives, when applicable) in the Portfolio of Investments as collateral for borrowings. As of the end of the reporting period, investments with a value of $944,302,016 have been pledged as collateral for borrowings. |
| (10) | Other assets less liabilities includes the unrealized appreciation (depreciation) of certain over-the-counter derivatives as presented on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) of exchange-cleared and exchange-traded derivatives is recognized as part of the cash collateral at brokers and/or the receivable or payable for variation margin as presented on the Statement of Assets and Liabilities, when applicable. |
| (11) | Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each contract. |
| 144A | Investment is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These investments may only be resold in transactions exempt from registration, which are normally those transactions with qualified institutional buyers. |
| Reg S | Regulation S allows U.S. companies to sell securities to persons or entities located outside of the United States without registering those securities with the Securities and Exchange Commission. Specifically, Regulation S provides a safe harbor from the registration requirements of the Securities Act for the offers and sales of securities by both foreign and domestic issuers that are made outside the United States. |
| USD-LIBOR-ICE | United States Dollar – London Inter-Bank Offered Rate Intercontinental Exchange |
See accompanying notes to financial statements.
| 30 | Nuveen Investments |
JHP
Nuveen Quality Preferred Income Fund 3 | ||
Portfolio of Investments | January 31, 2016 (Unaudited) |
| Shares | Description (1) | Coupon | Ratings (2) | Value | ||||||||||||||
LONG-TERM INVESTMENTS – 138.3% (96.9% of Total Investments) |
| |||||||||||||||||
$25 PAR (OR SIMILAR) RETAIL PREFERRED – 35.6% (25.0% of Total Investments) | ||||||||||||||||||
| Banks – 7.3% | ||||||||||||||||||
| 12,300 | AgriBank FCB, (3) | 6.875% | BBB+ | $ | 1,323,788 | |||||||||||||
| 13,391 | Citigroup Inc., (4) | 7.125% | BB+ | 365,173 | ||||||||||||||
| 68,453 | Citigroup Inc. | 6.875% | BB+ | 1,880,404 | ||||||||||||||
| 25,000 | HSBC Holdings PLC | 8.000% | Baa1 | 651,500 | ||||||||||||||
| 15,816 | HSBC USA Inc. | 6.500% | BBB+ | 409,634 | ||||||||||||||
| 210,980 | ING Groep N.V. | 7.050% | Baa3 | 5,496,029 | ||||||||||||||
| 211,700 | PNC Financial Services | 6.125% | Baa2 | 5,902,196 | ||||||||||||||
Total Banks | 16,028,724 | |||||||||||||||||
| Capital Markets – 3.5% | ||||||||||||||||||
| 6,130 | Charles Schwab Corporation | 6.000% | BBB | 160,422 | ||||||||||||||
| 237,252 | Deutsche Bank Capital Funding Trust II | 6.550% | BB+ | 5,985,868 | ||||||||||||||
| 42,000 | Goldman Sachs Group, Inc. | 5.500% | Ba1 | 1,048,740 | ||||||||||||||
| 4,000 | Morgan Stanley | 7.125% | Ba1 | 113,720 | ||||||||||||||
| 9,600 | State Street Corporation | 5.900% | Baa1 | 258,240 | ||||||||||||||
| 194 | State Street Corporation | 5.250% | Baa1 | 5,001 | ||||||||||||||
Total Capital Markets | 7,571,991 | |||||||||||||||||
| Diversified Telecommunication Services – 3.2% | ||||||||||||||||||
| 26,409 | Qwest Corporation | 7.500% | BBB– | 683,729 | ||||||||||||||
| 85,069 | Qwest Corporation | 7.375% | BBB– | 2,180,318 | ||||||||||||||
| 72,881 | Qwest Corporation | 7.000% | BBB– | 1,889,076 | ||||||||||||||
| 19,554 | Qwest Corporation | 7.000% | BBB– | 508,208 | ||||||||||||||
| 22,600 | Qwest Corporation, (4) | 6.875% | BBB– | 582,402 | ||||||||||||||
| 10,000 | Qwest Corporation | 6.625% | Baa3 | 247,900 | ||||||||||||||
| 9,900 | Qwest Corporation | 6.125% | BBB– | 245,025 | ||||||||||||||
| 25,859 | Verizon Communications Inc. | 5.900% | A– | 685,781 | ||||||||||||||
Total Diversified Telecommunication Services | 7,022,439 | |||||||||||||||||
| Electric Utilities – 1.9% | ||||||||||||||||||
| 35,000 | Alabama Power Company, (3) | 6.450% | A3 | 938,438 | ||||||||||||||
| 1,330 | Entergy Arkansas Inc. | 5.750% | A– | 33,769 | ||||||||||||||
| 1,611 | Entergy Louisiana LLC | 5.250% | A2 | 41,612 | ||||||||||||||
| 5,000 | Entergy Mississippi Inc. | 6.000% | A– | 130,800 | ||||||||||||||
| 16,971 | Interstate Power and Light Company | 5.100% | BBB | 437,003 | ||||||||||||||
| 11,864 | NextEra Energy Inc. | 5.700% | BBB | 304,549 | ||||||||||||||
| 90,160 | NextEra Energy Inc. | 5.625% | BBB | 2,327,030 | ||||||||||||||
Total Electric Utilities | 4,213,201 | |||||||||||||||||
| Food Products – 0.7% | ||||||||||||||||||
| 10,400 | Dairy Farmers of America Inc., 144A, (3) | 7.875% | Baa3 | 1,106,626 | ||||||||||||||
| 3,500 | Dairy Farmers of America Inc., 144A, (3) | 7.875% | Baa3 | 356,672 | ||||||||||||||
Total Food Products | 1,463,298 | |||||||||||||||||
| Insurance – 12.1% | ||||||||||||||||||
| 306,300 | Aegon N.V. | 6.375% | Baa1 | 7,838,217 | ||||||||||||||
| 40,300 | Aflac Inc. | 5.500% | Baa1 | 1,034,501 | ||||||||||||||
| 71,000 | Allstate Corporation | 5.100% | Baa1 | 1,797,010 | ||||||||||||||
| 42,869 | American Financial Group | 6.250% | Baa2 | 1,123,168 | ||||||||||||||
| 26,700 | Arch Capital Group Limited | 6.750% | BBB+ | 694,200 | ||||||||||||||
| 11,500 | Aspen Insurance Holdings Limited | 7.250% | BBB– | 302,910 | ||||||||||||||
| 51,683 | Aspen Insurance Holdings Limited | 5.950% | BBB– | 1,337,039 | ||||||||||||||
| 42,194 | Axis Capital Holdings Limited | 6.875% | BBB | 1,104,217 | ||||||||||||||
| 61,228 | Axis Capital Holdings Limited | 5.500% | BBB | 1,538,047 | ||||||||||||||
| Nuveen Investments | 31 |
| JHP | Nuveen Quality Preferred Income Fund 3 | |||
| Portfolio of Investments (continued) | January 31, 2016 (Unaudited) |
| Shares | Description (1) | Coupon | Ratings (2) | Value | ||||||||||||||||
Insurance (continued) | ||||||||||||||||||||
| 90,100 | Delphi Financial Group, Inc., (3) | 7.376% | BB+ | $ | 2,227,164 | |||||||||||||||
| 84,800 | Hartford Financial Services Group Inc. | 7.875% | BBB– | 2,603,360 | ||||||||||||||||
| 63,344 | Prudential PLC | 6.750% | A– | 1,658,346 | ||||||||||||||||
| 32,000 | Reinsurance Group of America Inc. | 6.200% | BBB | 915,200 | ||||||||||||||||
| 71,639 | RenaissanceRe Holdings Limited | 5.375% | BBB+ | 1,798,139 | ||||||||||||||||
| 23,487 | Torchmark Corporation | 5.875% | BBB+ | 612,540 | ||||||||||||||||
Total Insurance | 26,584,058 | |||||||||||||||||||
| Machinery – 0.8% | ||||||||||||||||||||
| 66,519 | Stanley, Black, and Decker Inc., (4) | 5.750% | BBB+ | 1,709,538 | ||||||||||||||||
| Real Estate Investment Trust – 3.7% | ||||||||||||||||||||
| 50,000 | DDR Corporation | 6.250% | Baa3 | 1,263,500 | ||||||||||||||||
| 26,875 | Digital Realty Trust Inc. | 7.375% | Baa3 | 719,444 | ||||||||||||||||
| 51,864 | Hospitality Properties Trust | 7.125% | Baa3 | 1,346,389 | ||||||||||||||||
| 16,976 | Kimco Realty Corporation, | 5.625% | Baa2 | 426,607 | ||||||||||||||||
| 49,396 | PS Business Parks, Inc. | 6.000% | BBB | 1,257,128 | ||||||||||||||||
| 117,100 | Realty Income Corporation | 6.625% | Baa2 | 3,082,072 | ||||||||||||||||
| 4,422 | Ventas Realty LP | 5.450% | BBB+ | 117,272 | ||||||||||||||||
Total Real Estate Investment Trust | 8,212,412 | |||||||||||||||||||
| U.S. Agency – 1.0% | ||||||||||||||||||||
| 20,000 | Farm Credit Bank of Texas, 144A, (3) | 6.750% | Baa1 | 2,133,750 | ||||||||||||||||
| Wireless Telecommunication Services – 1.4% | ||||||||||||||||||||
| 70,400 | Telephone and Data Systems Inc. | 7.000% | BB+ | 1,773,376 | ||||||||||||||||
| 31,000 | Telephone and Data Systems Inc. | 6.875% | BB+ | 789,570 | ||||||||||||||||
| 765 | United States Cellular Corporation | 7.250% | Ba1 | 19,430 | ||||||||||||||||
| 5,644 | United States Cellular Corporation | 7.250% | Ba1 | 141,326 | ||||||||||||||||
| 10,591 | United States Cellular Corporation | 6.950% | Ba1 | 267,423 | ||||||||||||||||
Total Wireless Telecommunication Services | 2,991,125 | |||||||||||||||||||
Total $25 Par (or similar) Retail Preferred (cost $73,991,363) |
| 77,930,536 | ||||||||||||||||||
| Principal Amount (000) | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
CORPORATE BONDS – 8.6% (6.0% of Total Investments) |
| |||||||||||||||||||
| Banks – 5.9% | ||||||||||||||||||||
| $ | 3,100 | Barclays Bank PLC | 7.750% | 4/10/23 | BBB– | $ | 3,286,000 | |||||||||||||
| 250 | Den Norske Bank | 0.688% | 11/29/49 | Baa2 | 151,250 | |||||||||||||||
| 250 | Den Norske Bank | 0.482% | 8/29/49 | Baa2 | 151,250 | |||||||||||||||
| 1,300 | ING Group N.V. | 6.500% | 12/29/49 | Ba1 | 1,259,375 | |||||||||||||||
| 2,000 | JPMorgan Chase & Company | 5.300% | 12/29/49 | BBB– | 1,982,500 | |||||||||||||||
| 5,000 | JPMorgan Chase & Company | 6.750% | 1/29/49 | BBB– | 5,412,500 | |||||||||||||||
| 600 | Nordea Bank AB, 144A | 5.500% | 9/23/49 | BBB | 576,000 | |||||||||||||||
| 12,500 | Total Banks | 12,818,875 | ||||||||||||||||||
| Capital Markets – 0.4% | ||||||||||||||||||||
| 910 | Macquarie Bank Limited, Reg S | 10.250% | 6/20/57 | BB+ | 975,937 | |||||||||||||||
| Construction & Engineering – 0.3% | ||||||||||||||||||||
| 600 | Hutchison Whampoa International 12 Limited, 144A | 6.000% | 11/07/62 | BBB | 624,900 | |||||||||||||||
| Insurance – 2.0% | ||||||||||||||||||||
| 700 | AIG Life Holdings Inc., 144A | 7.570% | 12/01/45 | BBB | 913,500 | |||||||||||||||
| 2,750 | Liberty Mutual Group Inc., 144A | 7.697% | 10/15/97 | BBB+ | 3,545,029 | |||||||||||||||
| 3,450 | Total Insurance | 4,458,529 | ||||||||||||||||||
| $ | 17,460 | Total Corporate Bonds (cost $18,159,760) | 18,878,241 | |||||||||||||||||
| 32 | Nuveen Investments |
| Principal Amount (000)/ Shares | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
$1,000 PAR (OR SIMILAR) INSTITUTIONAL PREFERRED – 92.8% (65.0% of Total Investments) |
| |||||||||||||||||||
| Banks – 39.8% | ||||||||||||||||||||
| 1,800 | Banco Bilbao Vizcaya Argentaria S.A, Reg S | 9.000% | N/A (5) | BB | $ | 1,882,609 | ||||||||||||||
| 8,150 | Bank of America Corporation, (4) | 8.000% | N/A (5) | BB+ | 8,228,892 | |||||||||||||||
| 5,060 | Barclays PLC | 7.434% | N/A (5) | BB+ | 4,922,631 | |||||||||||||||
| 4,600 | Barclays PLC | 8.250% | N/A (5) | BB+ | 4,818,045 | |||||||||||||||
| 2,400 | Chase Capital Trust II, Series B | 0.725% | 2/01/27 | Baa2 | 2,052,000 | |||||||||||||||
| 4,100 | Citigroup Inc. | 6.250% | N/A (5) | BB+ | 4,124,312 | |||||||||||||||
| 1,000 | Citigroup Inc. | 5.950% | N/A (5) | BB+ | 975,000 | |||||||||||||||
| 1,000 | Citizens Financial Group Inc., 144A | 5.500% | N/A (5) | BB+ | 966,250 | |||||||||||||||
| 1,000 | Credit Agricole SA, 144A | 7.875% | N/A (5) | BB+ | 973,598 | |||||||||||||||
| 6,800 | Credit Agricole SA, 144A | 8.125% | N/A (5) | BB+ | 6,795,920 | |||||||||||||||
| 2,600 | Credit Agricole, S.A, Reg S | 7.875% | N/A (5) | BB+ | 2,531,355 | |||||||||||||||
| 3,000 | First Chicago NBD Institutional Capital I | 0.790% | 2/01/27 | Baa2 | 2,565,000 | |||||||||||||||
| 500 | HSBC Bank PLC | 1.125% | N/A (5) | A3 | 295,179 | |||||||||||||||
| 1,500 | HSBC Bank PLC | 0.975% | N/A (5) | A3 | 886,125 | |||||||||||||||
| 2,800 | HSBC Capital Funding LP, Debt, 144A | 10.176% | N/A (5) | Baa1 | 4,165,000 | |||||||||||||||
| 800 | JPMorgan Chase & Company | 5.150% | N/A (5) | BBB– | 762,080 | |||||||||||||||
| 1,800 | JPMorgan Chase Capital XXIII | 1.364% | 5/15/47 | Baa2 | 1,327,500 | |||||||||||||||
| 6,425 | Lloyd’s Banking Group PLC | 7.500% | N/A (5) | BB+ | 6,649,875 | |||||||||||||||
| 600 | Lloyd’s Banking Group PLC, 144A | 6.657% | N/A (5) | Ba1 | 669,000 | |||||||||||||||
| 2,500 | Lloyd’s Banking Group PLC, 144A | 6.413% | N/A (5) | Ba1 | 2,756,250 | |||||||||||||||
| 1,100 | M&T Bank Corporation | 6.375% | N/A (5) | Baa1 | 1,123,719 | |||||||||||||||
| 4,500 | M&T Bank Corporation | 6.875% | N/A (5) | Baa2 | 4,539,375 | |||||||||||||||
| 695 | Nordea Bank AB, 144A | 6.125% | N/A (5) | BBB | 660,472 | |||||||||||||||
| 2,000 | PNC Financial Services Inc. | 6.750% | N/A (5) | Baa2 | 2,147,500 | |||||||||||||||
| 1,875 | Royal Bank of Scotland Group PLC | 8.000% | N/A (5) | BB– | 1,924,219 | |||||||||||||||
| 4,075 | Royal Bank of Scotland Group PLC | 7.500% | N/A (5) | BB– | 4,136,125 | |||||||||||||||
| 7,200 | Societe Generale, 144A | 8.000% | N/A (5) | BB+ | 7,110,000 | |||||||||||||||
| 500 | Societe Generale, 144A | 7.875% | N/A (5) | BB+ | 481,875 | |||||||||||||||
| 1,200 | Societe Generale, 144A | 1.363% | N/A (5) | BB+ | 1,104,000 | |||||||||||||||
| 300 | Societe Generale, Reg S | 7.875% | N/A (5) | BB+ | 289,125 | |||||||||||||||
| 4,800 | Standard Chartered PLC, 144A | 7.014% | N/A (5) | Baa2 | 5,088,000 | |||||||||||||||
Total Banks | 86,951,031 | |||||||||||||||||||
| Capital Markets – 7.5% | ||||||||||||||||||||
| 2,100 | Charles Schwab Corporation | 7.000% | N/A (5) | BBB | 2,388,750 | |||||||||||||||
| 2,200 | Credit Suisse Group AG, 144A | 7.500% | N/A (5) | BB+ | 2,258,476 | |||||||||||||||
| 250 | Goldman Sachs Group Inc. | 5.700% | N/A (5) | Ba1 | 246,562 | |||||||||||||||
| 2,000 | Morgan Stanley | 5.550% | N/A (5) | Ba1 | 1,978,750 | |||||||||||||||
| 4,100 | UBS Group AG, Reg S | 7.125% | N/A (5) | BB+ | 4,227,506 | |||||||||||||||
| 5,500 | UBS Group AG, Reg S | 6.875% | N/A (5) | BB+ | 5,390,000 | |||||||||||||||
Total Capital Markets | 16,490,044 | |||||||||||||||||||
| Diversified Financial Services – 2.7% | ||||||||||||||||||||
| 2,700 | BNP Paribas, 144A | 7.375% | N/A (5) | BBB– | 2,649,375 | |||||||||||||||
| 2,200 | Rabobank Nederland, 144A | 11.000% | N/A (5) | Baa2 | 2,673,440 | |||||||||||||||
| 500 | Voya Financial Inc. | 5.650% | 5/15/53 | Baa3 | 485,000 | |||||||||||||||
Total Diversified Financial Services | 5,807,815 | |||||||||||||||||||
| Electric Utilities – 1.1% | ||||||||||||||||||||
| 450 | FPL Group Capital Inc. | 6.650% | 6/15/67 | BBB | 337,050 | |||||||||||||||
| 2,700 | PPL Capital Funding Inc. | 6.700% | 3/30/67 | BBB | 2,079,000 | |||||||||||||||
Total Electric Utilities | 2,416,050 | |||||||||||||||||||
| Industrial Conglomerates – 4.6% | ||||||||||||||||||||
| 9,918 | General Electric Company | 5.000% | N/A (5) | AA– | 10,190,745 | |||||||||||||||
| Nuveen Investments | 33 |
| JHP | Nuveen Quality Preferred Income Fund 3 | |||
| Portfolio of Investments (continued) | January 31, 2016 (Unaudited) |
| Principal Amount (000)/ Shares | Description (1) | Coupon | Maturity | Ratings (2) | Value | |||||||||||||||
| Insurance – 23.7% | ||||||||||||||||||||
| 2,100 | Ace Capital Trust II | 9.700% | 4/01/30 | BBB+ | $ | 2,983,050 | ||||||||||||||
| 800 | AIG Life Holdings Inc. | 8.500% | 7/01/30 | BBB | 1,048,000 | |||||||||||||||
| 700 | Allstate Corporation | 5.750% | 8/15/53 | Baa1 | 713,125 | |||||||||||||||
| 3,200 | American International Group, Inc., (6) | 8.175% | 5/15/58 | BBB | 4,164,000 | |||||||||||||||
| 1,200 | AXA SA | 8.600% | 12/15/30 | A3 | 1,605,420 | |||||||||||||||
| 3,489 | AXA SA, 144A | 6.380% | N/A (5) | Baa1 | 3,715,785 | |||||||||||||||
| 3,300 | Catlin Insurance Company Limited, 144A | 7.249% | N/A (5) | BBB+ | 2,574,000 | |||||||||||||||
| 1,250 | Dai-Ichi Life Insurance Company Ltd, 144A | 7.250% | N/A (5) | A- | 1,450,000 | |||||||||||||||
| 400 | Dai-Ichi Life Insurance Company Ltd, 144A | 5.100% | N/A (5) | A- | 420,000 | |||||||||||||||
| 1,850 | Great West Life & Annuity Insurance Capital LP II, 144A | 7.153% | 5/16/46 | A- | 1,850,000 | |||||||||||||||
| 800 | Liberty Mutual Group, 144A | 7.800% | 3/15/37 | Baa3 | 912,000 | |||||||||||||||
| 577 | Lincoln National Corporation | 7.000% | 5/17/66 | BBB | 429,865 | |||||||||||||||
| 2,500 | Lincoln National Corporation | 6.050% | 4/20/67 | BBB | 1,817,188 | |||||||||||||||
| 3,200 | MetLife Capital Trust IV, 144A | 7.875% | 12/15/37 | BBB | 3,840,000 | |||||||||||||||
| 5,500 | National Financial Services Inc., (6) | 6.750% | 5/15/37 | Baa2 | 5,500,000 | |||||||||||||||
| 818 | Oil Insurance Limited, 144A | 3.585% | N/A (5) | Baa1 | 719,840 | |||||||||||||||
| 4,100 | Prudential Financial Inc. | 5.625% | 6/15/43 | BBB+ | 4,146,125 | |||||||||||||||
| 305 | Prudential Financial Inc. | 8.875% | 6/15/38 | BBB+ | 342,744 | |||||||||||||||
| 2,300 | Prudential PLC, Reg S | 7.750% | N/A (5) | A- | 2,337,288 | |||||||||||||||
| 5,800 | QBE Cap Funding III Limited, 144A | 7.250% | 5/24/41 | BBB | 6,380,000 | |||||||||||||||
| 1,000 | Sumitomo Life Insurance Company, 144A | 4.000% | 9/20/73 | A3 | 1,122,500 | |||||||||||||||
| 2,000 | XLIT Limited | 3.687% | N/A (5) | BBB- | 1,576,250 | |||||||||||||||
| 2,154 | ZFS Finance USA Trust V, 144A, (4) | 6.500% | 5/09/37 | A | 2,165,847 | |||||||||||||||
Total Insurance | 51,813,027 | |||||||||||||||||||
| Machinery – 0.5% | ||||||||||||||||||||
| 1,050 | Stanley Black & Decker Inc. | 5.750% | 12/15/53 | BBB+ | 1,094,100 | |||||||||||||||
| Multi-Utilities – 0.5% | ||||||||||||||||||||
| 500 | Dominion Resources Inc. | 7.500% | 6/30/66 | BBB– | 418,125 | |||||||||||||||
| 900 | Dominion Resources Inc. | 2.913% | 9/30/66 | BBB– | 622,048 | |||||||||||||||
Total Multi-Utilities | 1,040,173 | |||||||||||||||||||
| Oil, Gas & Consumable Fuels – 0.9% | ||||||||||||||||||||
| 1,900 | Enterprise Products Operating LP | 7.034% | 1/15/68 | Baa2 | 1,900,000 | |||||||||||||||
| Real Estate Investment Trust – 5.9% | ||||||||||||||||||||
| 1,500 | Wells Fargo & Company | 7.980% | N/A (5) | BBB | 1,567,500 | |||||||||||||||
| 8,485 | First Union Capital Trust II, Series A, (6) | 7.950% | 11/15/29 | Baa1 | 11,405,867 | |||||||||||||||
Total Rest Estate Investment Trust | 12,973,367 | |||||||||||||||||||
| Road & Rail – 1.6% | ||||||||||||||||||||
| 3,185 | Burlington Northern Santa Fe Funding Trust I | 6.613% | 12/15/55 | BBB | 3,439,800 | |||||||||||||||
| Wireless Telecommunication Services – 4.0% | ||||||||||||||||||||
| 7,260 | Centaur Funding Corporation, Series B, I44A | 9.080% | 4/21/20 | BBB– | 8,741,494 | |||||||||||||||
Total $1,000 Par (or similar) Institutional Preferred (cost $195,834,049) |
| 202,857,646 | ||||||||||||||||||
| Shares | Description (1), (7) | Value | ||||||||||||||||||
| INVESTMENT COMPANIES – 1.3% (0.9% of Total Investments) | ||||||||||||||||||||
| 113,786 | Blackrock Credit Allocation Income Trust IV | $ | 1,393,879 | |||||||||||||||||
| 75,864 | John Hancock Preferred Income Fund III | 1,368,586 | ||||||||||||||||||
Total Investment Companies (cost $4,039,915) | 2,762,465 | |||||||||||||||||||
Total Long-Term Investments (cost $292,025,087) | 302,428,888 | |||||||||||||||||||
| 34 | Nuveen Investments |
| Principal Amount (000) | Description (1) | Coupon | Maturity | Value | ||||||||||||||
SHORT-TERM INVESTMENTS – 4.4% (3.1% of Total Investments) | ||||||||||||||||||
| REPURCHASE AGREEMENTS – 4.4% (3.1% of Total Investments) | ||||||||||||||||||
| $ | 9,648 | Repurchase Agreement with Fixed Income Clearing Corporation, dated 1/29/16, repurchase price $9,647,843 collateralized by $7,050,000 U.S. Treasury Bonds, 4.750%, due 2/15/37, value $9,843,351 | 0.030% | 2/01/16 | $ | 9,647,843 | ||||||||||||
Total Short-Term Investments (cost $9,647,843) | 9,647,843 | |||||||||||||||||
Total Investments (cost $301,672,930) – 142.7% | 312,076,731 | |||||||||||||||||
Borrowings – (40.7)% (8), (9) | (89,000,000 | ) | ||||||||||||||||
Other Assets Less Liabilities – (2.0)% (10) | (4,347,277 | ) | ||||||||||||||||
Net Assets Applicable to Common Shares – 100% | $ | 218,729,454 | ||||||||||||||||
Investments in Derivatives as of January 31, 2016
Interest Rate Swaps outstanding:
| Counterparty | Notional Amount | Fund Pay/Receive Floating Rate | Floating Rate Index | Fixed Rate (Annualized) | Fixed Rate Payment Frequency | Effective Date (11) | Optional Termination Date | Termination Date | Value | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||||||||||
JPMorgan Chase Bank, N.A. | $ | 25,638,000 | Receive | 1-Month USD-LIBOR-ICE | 1.462 | % | Monthly | 6/01/16 | 12/01/18 | 12/01/20 | $ | (627,878 | ) | $ | (759,439 | ) | ||||||||||||||||||||||||
JPMorgan Chase Bank, N.A. | 25,638,000 | Receive | 1-Month USD-LIBOR-ICE | 1.842 | Monthly | 6/01/16 | 12/01/20 | 12/01/22 | (1,095,516 | ) | (1,275,729 | ) | ||||||||||||||||||||||||||||
| $ | 51,276,000 | $ | (1,723,394 | ) | $ | (2,035,168 | ) | |||||||||||||||||||||||||||||||||
For Fund portfolio compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications into sectors for reporting ease.
| (1) | All percentages shown in the Portfolio of Investments are based on net assets applicable to common shares unless otherwise noted. |
| (2) | Ratings: Using the highest of Standard & Poor’s Group (“Standard & Poor’s”), Moody’s Investors Service, Inc. (“Moody’s”) or Fitch, Inc. (“Fitch”) rating. Ratings below BBB by Standard & Poor’s, Baa by Moody’s or BBB by Fitch are considered to be below investment grade. Holdings designated N/R are not rated by any of these national rating agencies. |
| (3) | For fair value measurement disclosure purposes, investment classified as Level 2. See Notes to Financial Statements, Note 2 – Investment Valuation and Fair Value Measurements for more information. |
| (4) | Investment, or portion of investment, has been pledged to collateralize the net payment obligations for investments in derivatives. |
| (5) | Perpetual security. Maturity date is not applicable. |
| (6) | Investment, or a portion of investment, is hypothecated as described in the Notes to Financial Statements, Note 8 – Borrowings Arrangements, Rehypothecation. The total value of investments hypothecated as of the end of the reporting period was $15,037,311. |
| (7) | A copy of the most recent financial statements for these investment companies can be obtained directly from the Securities and Exchange Commission on its website at http://www.sec.gov. |
| (8) | Borrowings as a percentage of Total Investments is 28.5%. |
| (9) | The Fund may pledge up to 100% of its eligible investments (excluding any investments separately pledged as collateral for specific investments in derivatives, when applicable) in the Portfolio of Investments as collateral for borrowings. As of the end of the reporting period, investments with a value of $178,185,302 have been pledged as collateral for borrowings. |
| (10) | Other assets less liabilities includes the unrealized appreciation (depreciation) of certain over-the-counter derivatives as presented on the Statement of Assets and Liabilities. The unrealized appreciation (depreciation) of exchange-cleared and exchange-traded derivatives is recognized as part of the cash collateral at brokers and/or the receivable or payable for variation margin as presented on the Statement of Assets and Liabilities, when applicable. |
| (11) | Effective date represents the date on which both the Fund and counterparty commence interest payment accruals on each contract. |
| 144A | Investment is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These investments may only be resold in transactions exempt from registration, which are normally those transactions with qualified institutional buyers. |
| Reg S | Regulation S allows U.S. companies to sell securities to persons or entities located outside of the United States without registering those securities with the Securities and Exchange Commission. Specifically, Regulation S provides a safe harbor from the registration requirements of the Securities Act for the offers and sales of securities by both foreign and domestic issuers that are made outside the United States. |
| USD-LIBOR-ICE | United States Dollar – London Inter-Bank Offered Rate Intercontinental Exchange |
See accompanying notes to financial statements.
| Nuveen Investments | 35 |
Assets and Liabilities | January 31, 2016 (Unaudited) | |||||
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Assets | ||||||||||||
Long-term investments, at value (cost $770,450,201, $1,540,446,359 and $292,025,087, respectively) | $ | 798,959,694 | $ | 1,594,783,816 | $ | 302,428,888 | ||||||
Short-term investments, at value (cost approximates value) | 6,897,626 | 8,859,287 | 9,647,843 | |||||||||
Cash | 10,950 | — | — | |||||||||
Interest rate swaps premiums paid | 821,900 | 1,633,707 | 311,774 | |||||||||
Receivable for: | ||||||||||||
Dividends | 543,048 | 967,871 | 183,495 | |||||||||
Interest | 8,343,424 | 16,768,663 | 3,186,310 | |||||||||
Investments sold | 13,117,960 | 28,890,623 | 8,465,494 | |||||||||
Reclaims | — | 360,122 | 97,132 | |||||||||
Other assets | 137,700 | 265,743 | 49,907 | |||||||||
Total assets | 828,832,302 | 1,652,529,832 | 324,370,843 | |||||||||
Liabilities | ||||||||||||
Borrowings | 235,000,000 | 465,800,000 | 89,000,000 | |||||||||
Unrealized depreciation on interest rate swaps | 5,365,118 | 10,664,350 | 2,035,168 | |||||||||
Payable for: | ||||||||||||
Dividends | 3,522,744 | 6,886,542 | 1,306,370 | |||||||||
Investments purchased | 11,358,966 | 31,894,860 | 12,706,585 | |||||||||
Accrued expenses: | ||||||||||||
Interest on borrowings | 33,263 | 65,931 | 12,597 | |||||||||
Management fees | 587,727 | 1,139,872 | 226,428 | |||||||||
Reorganization | 550,000 | 1,030,000 | 230,000 | |||||||||
Trustees fees | 132,433 | 255,793 | 47,511 | |||||||||
Other | 166,869 | 298,169 | 76,730 | |||||||||
Total liabilities | 256,717,120 | 518,035,517 | 105,641,389 | |||||||||
Net assets applicable to common shares | $ | 572,115,182 | $ | 1,134,494,315 | $ | 218,729,454 | ||||||
Common shares outstanding | 64,658,447 | 120,393,013 | 23,670,657 | |||||||||
Net asset value (“NAV”) per common share outstanding | $ | 8.85 | $ | 9.42 | $ | 9.24 | ||||||
Net assets applicable to common shares consist of: | ||||||||||||
Common shares, $.01 par value per share | $ | 646,584 | $ | 1,203,930 | $ | 236,707 | ||||||
Paid-in surplus | 882,086,237 | 1,688,471,831 | 328,997,051 | |||||||||
Undistributed (Over-distribution of) net investment income | 2,992,675 | 8,526,030 | (1,161,730 | ) | ||||||||
Accumulated net realized gain (loss) | (336,754,689 | ) | (607,380,583 | ) | (117,711,207 | ) | ||||||
Net unrealized appreciation (depreciation) | 23,144,375 | 43,673,107 | 8,368,633 | |||||||||
Net assets applicable to common shares | $ | 572,115,182 | $ | 1,134,494,315 | $ | 218,729,454 | ||||||
Authorized shares: | ||||||||||||
Common | Unlimited | Unlimited | Unlimited | |||||||||
Preferred | Unlimited | Unlimited | Unlimited | |||||||||
See accompanying notes to financial statements.
| 36 | Nuveen Investments |
Operations | Six Months Ended January 31, 2016 (Unaudited) | |||||
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Investment Income | ||||||||||||
Dividends | $ | 9,930,149 | $ | 18,895,338 | $ | 3,513,544 | ||||||
Interest | 15,539,782 | 31,872,313 | 5,994,215 | |||||||||
Other | 179,187 | 355,173 | 68,233 | |||||||||
Total investment income | 25,649,118 | 51,122,824 | 9,575,992 | |||||||||
Expenses | ||||||||||||
Management fees | 3,510,266 | 6,815,036 | 1,354,186 | |||||||||
Interest expense on borrowings | 1,339,014 | 2,654,097 | 507,116 | |||||||||
Custodian fees | 49,630 | 85,206 | 28,326 | |||||||||
Trustees fees | 10,606 | 21,244 | 1,076 | |||||||||
Professional fees | 36,920 | 59,961 | 22,476 | |||||||||
Shareholder reporting expenses | 76,897 | 147,447 | 30,377 | |||||||||
Shareholder servicing agent fees | 1,783 | 2,417 | 615 | |||||||||
Stock exchange listing fees | 10,357 | 19,284 | 4,004 | |||||||||
Investor relations expenses | 35,733 | 69,533 | 14,254 | |||||||||
Reorganization expenses | 550,000 | 1,030,000 | 230,000 | |||||||||
Other | 13,625 | 20,518 | 9,285 | |||||||||
Total expenses | 5,634,831 | 10,924,743 | 2,201,715 | |||||||||
Net investment income (loss) | 20,014,287 | 40,198,081 | 7,374,277 | |||||||||
Realized and Unrealized Gain (Loss) | ||||||||||||
Net realized gain (loss) from investments | 7,036,570 | 14,676,045 | 4,990,736 | |||||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||||||
Investments | (20,092,355 | ) | (45,527,157 | ) | (9,342,053 | ) | ||||||
Swaps | (3,629,628 | ) | (7,214,682 | ) | (1,376,839 | ) | ||||||
Net realized and unrealized gain (loss) | (16,685,413 | ) | (38,065,794 | ) | (5,728,156 | ) | ||||||
Net increase (decrease) in net assets applicable to common shares from operations | $ | 3,328,874 | $ | 2,132,287 | $ | 1,646,121 | ||||||
See accompanying notes to financial statements.
| Nuveen Investments | 37 |
Changes in Net Assets | (Unaudited) | |||||
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | |||||||||||||||
Six Months | Year Ended 7/31/15 | Six Months | Year Ended 7/31/15 | |||||||||||||
Operations | ||||||||||||||||
Net investment income (loss) | $ | 20,014,287 | $ | 41,357,108 | $ | 40,198,081 | $ | 82,458,770 | ||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments | 7,036,570 | 4,656,299 | 14,676,045 | 2,886,183 | ||||||||||||
Swaps | — | (1,138,627 | ) | — | (2,270,269 | ) | ||||||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||||||||||
Investments | (20,092,355 | ) | (5,190,317 | ) | (45,527,157 | ) | (10,869,655 | ) | ||||||||
Swaps | (3,629,628 | ) | (3,871,275 | ) | (7,214,682 | ) | (7,688,673 | ) | ||||||||
Net increase (decrease) in net assets applicable to common shares from operations | 3,328,874 | 35,813,188 | 2,132,287 | 64,516,356 | ||||||||||||
Distribution to Common Shareholders | ||||||||||||||||
From net investment income | (21,337,288 | ) | (47,621,727 | ) | (41,896,768 | ) | (87,983,215 | ) | ||||||||
Decrease in net assets applicable to common shares from distributions to common shareholders | (21,337,288 | ) | (47,621,727 | ) | (41,896,768 | ) | (87,983,215 | ) | ||||||||
Capital Share Transactions | ||||||||||||||||
Cost of common shares repurchased and retired | — | (39,800 | ) | — | — | |||||||||||
Net increase (decrease) in net assets applicable to common shares from capital share transactions | — | (39,800 | ) | — | — | |||||||||||
Net increase (decrease) in net assets applicable to common shares | (18,008,414 | ) | (11,848,339 | ) | (39,764,481 | ) | (23,466,859 | ) | ||||||||
Net assets applicable to common shares at the beginning of period | 590,123,596 | 601,971,935 | 1,174,258,796 | 1,197,725,655 | ||||||||||||
Net assets applicable to common shares at the end of period | $ | 572,115,182 | $ | 590,123,596 | $ | 1,134,494,315 | $ | 1,174,258,796 | ||||||||
Undistributed (Over-distribution of) net investment income at the end of period | $ | 2,992,675 | $ | 4,315,676 | $ | 8,526,030 | $ | 10,224,717 | ||||||||
See accompanying notes to financial statements.
| 38 | Nuveen Investments |
| Quality Preferred Income 3 (JHP) | ||||||||
Six Months | Year Ended 7/31/15 | |||||||
Operations | ||||||||
Net investment income (loss) | $ | 7,374,277 | $ | 15,274,859 | ||||
Net realized gain (loss) from: | ||||||||
Investments | 4,990,736 | 1,323,244 | ||||||
Swaps | — | (433,027 | ) | |||||
Change in net unrealized appreciation (depreciation) of: | ||||||||
Investments | (9,342,053 | ) | (513,153 | ) | ||||
Swaps | (1,376,839 | ) | (1,467,500 | ) | ||||
Net increase (decrease) in net assets applicable to common shares from | 1,646,121 | 14,184,423 | ||||||
Distribution to Common Shareholders | ||||||||
From net investment income | (8,604,284 | ) | (16,970,196 | ) | ||||
Decrease in net assets applicable to common shares from distributions to | (8,604,284 | ) | (16,970,196 | ) | ||||
Capital Share Transactions | ||||||||
Cost of common shares repurchased and retired | — | (334,909 | ) | |||||
Net increase (decrease) in net assets applicable to common shares from | — | (334,909 | ) | |||||
Net increase (decrease) in net assets applicable to common shares | (6,958,163 | ) | (3,120,682 | ) | ||||
Net assets applicable to common shares at the beginning of period | 225,687,617 | 228,808,299 | ||||||
Net assets applicable to common shares at the end of period | $ | 218,729,454 | $ | 225,687,617 | ||||
Undistributed (Over-distribution of) net investment income at the | $ | (1,161,730 | ) | $ | 68,277 | |||
See accompanying notes to financial statements.
| Nuveen Investments | 39 |
Cash Flows | Six Months Ended January 31, 2016 (Unaudited) | |||||
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net Increase (Decrease) in Net Assets Applicable to Common Shares from Operations | $ | 3,328,874 | $ | 2,132,287 | $ | 1,646,121 | ||||||
Adjustments to reconcile the net increase (decrease) in net assets applicable to common shares from operations to net cash provided by (used in) operating activities: | ||||||||||||
Purchases of investments | (152,401,291 | ) | (302,151,687 | ) | (62,090,426 | ) | ||||||
Proceeds from sales and maturities of investments | 156,105,860 | 300,871,290 | 66,955,343 | |||||||||
Proceeds from (Purchases of) short-term investments, net | 7,100,415 | 7,183,090 | (5,713,276 | ) | ||||||||
Proceeds from litigation settlement | 2,278 | 820 | — | |||||||||
Premiums received (paid) for interest rate swaps | (821,900 | ) | (1,633,707 | ) | (311,774 | ) | ||||||
Amortization (Accretion) of premiums and discounts, net | 46,132 | 34,364 | 30,147 | |||||||||
(Increase) Decrease in: | ||||||||||||
Receivable for dividends | 163,297 | 212,258 | 43,982 | |||||||||
Receivable for interest | (2,698,997 | ) | (3,451,987 | ) | (1,067,349 | ) | ||||||
Receivable for investments sold | (13,117,960 | ) | (28,890,623 | ) | (8,465,494 | ) | ||||||
Receivable for reclaims | — | (245,057 | ) | (97,132 | ) | |||||||
Other assets | 8,330 | 14,559 | 5,925 | |||||||||
(Increase) Decrease in: | ||||||||||||
Payable for investments purchased | 2,431,821 | 28,645,228 | 11,706,781 | |||||||||
Accrued interest on borrowings | 19,730 | 39,106 | 7,472 | |||||||||
Accrued management fees | (9,701 | ) | (21,257 | ) | (3,734 | ) | ||||||
Accrued Reorganization fees | 550,000 | 1,030,000 | 230,000 | |||||||||
Accrued Trustees fees | (3,148 | ) | (5,596 | ) | (4,188 | ) | ||||||
Accrued other expenses | 25,728 | 55,878 | 5,435 | |||||||||
Net realized gain (loss) from investments | (7,036,570 | ) | (14,676,045 | ) | (4,990,736 | ) | ||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||||||
Investments | 20,092,355 | 45,527,157 | 9,342,053 | |||||||||
Swaps | 3,629,628 | 7,214,682 | 1,376,839 | |||||||||
Net cash provided by (used in) operating activities | 17,414,881 | 41,884,760 | 8,605,989 | |||||||||
Cash Flows from Financing Activities: | ||||||||||||
Cash distributions paid to common shareholders | (21,332,056 | ) | (41,884,760 | ) | (8,605,989 | ) | ||||||
Net cash provided by (used in) financing activities | (21,332,056 | ) | (41,884,760 | ) | (8,605,989 | ) | ||||||
Net Increase (Decrease) in Cash | (3,917,175 | ) | — | — | ||||||||
Cash at the beginning of period | 3,928,125 | — | — | |||||||||
Cash at the end of period | $ | 10,950 | $ | — | $ | — | ||||||
| Supplemental Disclosure of Cash Flow Information | Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | |||||||||
Cash paid for interest on borrowings (excluding borrowing costs) | $ | 1,319,284 | $ | 2,614,991 | $ | 499,644 | ||||||
See accompanying notes to financial statements.
| 40 | Nuveen Investments |
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| Nuveen Investments | 41 |
Highlights (Unaudited)
Selected data for a common share outstanding throughout each period:
| Investment Operations | Less Distributions to Common Shareholders | Common Share | ||||||||||||||||||||||||||||||||||||||||||
| Beginning Common Share NAV | Net Investment Income (Loss)(a) | Net Realized/ Unrealized Gain (Loss) | Total | From Net Investment Income | From Accumulated Net Realized Gains | Return of Capital | Total | Discount Per Share Repurchased and Retired | Ending NAV | Ending Share Price | ||||||||||||||||||||||||||||||||||
Quality Preferred Income (JTP) |
| |||||||||||||||||||||||||||||||||||||||||||
Year Ended 7/31: |
| |||||||||||||||||||||||||||||||||||||||||||
2016(h) | $ | 9.13 | $ | 0.31 | $ | (0.26 | ) | $ | 0.05 | $ | (0.33 | ) | $ | — | $ | — | $ | (0.33 | ) | $ | — | $ | 8.85 | $ | 8.39 | |||||||||||||||||||
2015 | 9.31 | 0.64 | (0.08 | ) | 0.56 | (0.74 | ) | — | — | (0.74 | ) | — | * | 9.13 | 8.10 | |||||||||||||||||||||||||||||
2014 | 8.90 | 0.65 | 0.42 | 1.07 | (0.66 | ) | — | — | (0.66 | ) | — | 9.31 | 8.35 | |||||||||||||||||||||||||||||||
2013 | 8.62 | 0.65 | 0.23 | 0.88 | (0.60 | ) | — | — | (0.60 | ) | — | 8.90 | 7.98 | |||||||||||||||||||||||||||||||
2012 | 8.25 | 0.66 | 0.31 | 0.97 | (0.60 | ) | — | — | (0.60 | ) | — | 8.62 | 8.70 | |||||||||||||||||||||||||||||||
2011(f) | 8.07 | 0.35 | 0.18 | 0.53 | (0.35 | ) | — | — | (0.35 | ) | — | 8.25 | 7.54 | |||||||||||||||||||||||||||||||
Year Ended 12/31: |
| |||||||||||||||||||||||||||||||||||||||||||
2010 | 7.06 | 0.65 | 0.94 | 1.59 | (0.58 | ) | — | — | (0.58 | ) | — | 8.07 | 7.40 | |||||||||||||||||||||||||||||||
Quality Preferred Income 2 (JPS) |
| |||||||||||||||||||||||||||||||||||||||||||
Year Ended 7/31: |
| |||||||||||||||||||||||||||||||||||||||||||
2016(h) | 9.75 | 0.33 | (0.31 | ) | 0.02 | (0.35 | ) | — | — | (0.35 | ) | — | 9.42 | 9.02 | ||||||||||||||||||||||||||||||
2015 | 9.95 | 0.68 | (0.15 | ) | 0.53 | (0.73 | ) | — | — | (0.73 | ) | — | 9.75 | 9.08 | ||||||||||||||||||||||||||||||
2014 | 9.45 | 0.69 | 0.47 | 1.16 | (0.66 | ) | — | — | (0.66 | ) | — | 9.95 | 8.92 | |||||||||||||||||||||||||||||||
2013 | 9.12 | 0.69 | 0.30 | 0.99 | (0.66 | ) | — | — | (0.66 | ) | — | 9.45 | 8.47 | |||||||||||||||||||||||||||||||
2012 | 8.77 | 0.69 | 0.32 | 1.01 | (0.66 | ) | — | — | (0.66 | ) | — | 9.12 | 9.34 | |||||||||||||||||||||||||||||||
2011(f) | 8.64 | 0.37 | 0.15 | 0.52 | (0.39 | ) | — | — | (0.39 | ) | — | 8.77 | 8.07 | |||||||||||||||||||||||||||||||
Year Ended 12/31: |
| |||||||||||||||||||||||||||||||||||||||||||
2010 | 7.67 | 0.69 | 0.93 | 1.62 | (0.65 | ) | — | — | (0.65 | ) | — | 8.64 | 7.90 | |||||||||||||||||||||||||||||||
| (a) | Per share Net Investment Income (Loss) is calculated using the average daily shares method. |
| (b) | Total Return Based on Common Share NAV is the combination of changes in common share NAV, reinvested dividend income at NAV and reinvested capital gains distributions at NAV, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending NAV. The actual reinvest price for the last dividend declared in the period may often be based on the Fund’s market price (and not its NAV), and therefore may be different from the price used in the calculation. Total returns are not annualized. |
Total Return Based on Common Share Price is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized.
| (c) | After expense reimbursement from the Adviser, where applicable. As of June 30, 2010 and September 30, 2010, the Adviser is no longer reimbursing Quality Preferred Income (JTP) and Quality Preferred Income 2 (JPS), respectively, for any fees or expenses. |
| 42 | Nuveen Investments |
| Common Share Supplemental Data/ Ratios Applicable to Common Shares | ||||||||||||||||||||||||||||||
| Common Share Total Returns | Ratios to Average Net Assets Before Reimbursement(d) | Ratios to Average Net Assets After Reimbursement(c)(d) | ||||||||||||||||||||||||||||
| Based on NAV(b) | Based on Share Price(b) | Ending Net Assets (000) | Expenses | Net Investment Income (Loss) | Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate(g) | |||||||||||||||||||||||
| 0.55 | % | 7.81 | % | $ | 572,115 | 1.83 | %** | 6.94 | %** | N/A | N/A | 19 | % | |||||||||||||||||
| 6.17 | 5.95 | 590,124 | 1.69 | 6.92 | 1.69 | (e) | 6.92 | (e) | 9 | |||||||||||||||||||||
| 12.65 | 13.63 | 601,972 | 1.72 | 7.32 | N/A | N/A | 16 | |||||||||||||||||||||||
| 10.32 | (1.78 | ) | 575,200 | 1.75 | 7.22 | N/A | N/A | 34 | ||||||||||||||||||||||
| 12.51 | 24.30 | 556,997 | 1.83 | 8.17 | N/A | N/A | 21 | |||||||||||||||||||||||
| 6.74 | 6.62 | 533,062 | 1.61 | ** | 7.17 | ** | N/A | N/A | 9 | |||||||||||||||||||||
| 23.09 | 21.94 | 521,347 | 1.65 | 8.37 | 1.60 | % | 8.42 | % | 20 | |||||||||||||||||||||
| 0.18 | 3.20 | 1,134,494 | 1.79 | ** | 7.00 | ** | N/A | N/A | 19 | |||||||||||||||||||||
| 5.47 | 10.35 | 1,174,259 | 1.64 | 6.92 | 1.64 | (e) | 6.92 | (e) | 8 | |||||||||||||||||||||
| 12.83 | 13.76 | 1,197,726 | 1.69 | 7.32 | N/A | N/A | 16 | |||||||||||||||||||||||
| 10.98 | (2.63 | ) | 1,137,303 | 1.71 | 7.23 | N/A | N/A | 32 | ||||||||||||||||||||||
| 12.32 | 25.17 | 1,097,385 | 1.80 | 8.13 | N/A | N/A | 19 | |||||||||||||||||||||||
| 5.99 | 7.02 | 1,055,468 | 1.58 | ** | 7.21 | ** | N/A | N/A | 7 | |||||||||||||||||||||
| 21.99 | 18.31 | 1,039,917 | 1.59 | 8.29 | 1.51 | 8.37 | 25 | |||||||||||||||||||||||
| (d) • | Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to borrowings, where applicable, as described in Note 8 – Borrowing Arrangements. |
| • | Each ratio includes the effect of all interest expense paid and other costs related to borrowings, as follows: |
| Ratios of Borrowings Interest Expense to Average Net Assets Applicable to Common Shares | ||||
Quality Preferred Income (JTP) |
| |||
Year Ended 7/31: |
| |||
2016(h) | 0.46 | %** | ||
2015 | 0.41 | |||
2014 | 0.43 | |||
2013 | 0.47 | |||
2012 | 0.54 | |||
2011(f) | 0.38 | ** | ||
Year Ended 12/31: |
| |||
2010 | 0.41 | |||
| Ratios of Borrowings Interest Expense to Average Net Assets Applicable to Common Shares | ||||
Quality Preferred Income 2 (JPS) |
| |||
Year Ended 7/31: |
| |||
2016(h) | 0.46 | %** | ||
2015 | 0.40 | |||
2014 | 0.43 | |||
2013 | 0.47 | |||
2012 | 0.55 | |||
2011(f) | 0.37 | ** | ||
Year Ended 12/31: |
| |||
2010 | 0.39 | |||
| (e) | During the fiscal year ended July 31, 2015, the Adviser voluntarily reimbursed the Fund for certain expenses incurred in connection with its common share equity shelf program. As a result, the Expenses and Net Investment Income (Loss) Ratios to Average Net Assets reflect this voluntary expense reimbursement from Adviser. |
| (f) | For the seven months ended July 31, 2011. |
| (g) | Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales (as disclosed in Note 5 – Investment Transactions) divided by the average long-term market value during the period. |
| (h) | For the six months ended January 31, 2016. |
| N/A | The Fund no longer has a contractual reimbursement agreement with the Adviser. |
| * | Rounds to less than $0.01 per share. |
| ** | Annualized. |
See accompanying notes to financial statements.
| Nuveen Investments | 43 |
Financial Highlights (Unaudited) (continued)
Selected data for a common share outstanding throughout each period:
| Investment Operations | Less Distributions to Common Shareholders | Common Share | ||||||||||||||||||||||||||||||||||||||||||
| Beginning Common Share NAV | Net Investment Income (Loss)(a) | Net Realized/ Unrealized Gain (Loss) | Total | From Net Investment Income | From Accumulated Net Realized Gains | Return of Capital | Total | Discount per Share Repurchased and Retired | Ending NAV | Ending Share Price | ||||||||||||||||||||||||||||||||||
Quality Preferred Income 3 (JHP) |
| |||||||||||||||||||||||||||||||||||||||||||
Year Ended 7/31: |
| |||||||||||||||||||||||||||||||||||||||||||
2016(h) | $ | 9.53 | $ | 0.31 | $ | (0.24 | ) | $ | 0.07 | $ | (0.36 | ) | $ | — | $ | — | $ | (0.36 | ) | $ | — | $ | 9.24 | $ | 8.54 | |||||||||||||||||||
2015 | 9.65 | 0.65 | (0.05 | ) | 0.60 | (0.72 | ) | — | — | (0.72 | ) | — | * | 9.53 | 8.36 | |||||||||||||||||||||||||||||
2014 | 9.18 | 0.67 | 0.47 | 1.14 | (0.67 | ) | — | — | (0.67 | ) | — | * | 9.65 | 8.43 | ||||||||||||||||||||||||||||||
2013 | 8.80 | 0.67 | 0.33 | 1.00 | (0.62 | ) | — | — | (0.62 | ) | — | 9.18 | 8.23 | |||||||||||||||||||||||||||||||
2012 | 8.48 | 0.66 | 0.28 | 0.94 | (0.62 | ) | — | — | (0.62 | ) | — | 8.80 | 8.85 | |||||||||||||||||||||||||||||||
2011(f) | 8.37 | 0.36 | 0.11 | 0.47 | (0.36 | ) | — | — | (0.36 | ) | — | 8.48 | 7.70 | |||||||||||||||||||||||||||||||
Year Ended 12/31: |
| |||||||||||||||||||||||||||||||||||||||||||
2010 | 7.45 | 0.65 | 0.89 | 1.54 | (0.62 | ) | — | — | (0.62 | ) | — | 8.37 | 7.74 | |||||||||||||||||||||||||||||||
| (a) | Per share Net Investment Income (Loss) is calculated using the average daily shares method. |
| (b) | Total Return Based on Common Share NAV is the combination of changes in common share NAV, reinvested dividend income at NAV and reinvested capital gains distributions at NAV, if any. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending NAV. The actual reinvest price for the last dividend declared in the period may often be based on the Fund’s market price (and not its NAV), and therefore may be different from the price used in the calculation. Total returns are not annualized. |
Total Return Based on Common Share Price is the combination of changes in the market price per share and the effect of reinvested dividend income and reinvested capital gains distributions, if any, at the average price paid per share at the time of reinvestment. The last dividend declared in the period, which is typically paid on the first business day of the following month, is assumed to be reinvested at the ending market price. The actual reinvestment for the last dividend declared in the period may take place over several days, and in some instances may not be based on the market price, so the actual reinvestment price may be different from the price used in the calculation. Total returns are not annualized.
| (c) | After expense reimbursement from the Adviser, where applicable. As of December 31, 2010, the Adviser is no longer reimbursing Quality Preferred Income 3 (JHP), for any fees or expenses. |
| 44 | Nuveen Investments |
| Common Share Supplemental Data/ Ratios Applicable to Common Shares | ||||||||||||||||||||||||||||||
| Common Share Total Returns | Ratios to Average Net Assets Before Reimbursement(d) | Ratios to Average Net Assets After Reimbursement(c)(d) | ||||||||||||||||||||||||||||
| Based on NAV(b) | Based on Share Price(b) | Ending Net Assets (000) | Expenses | Net Investment Income (Loss) | Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate(g) | |||||||||||||||||||||||
| 0.77 | % | 6.63 | % | $ | 218,729 | 1.87 | %** | 6.69 | %** | N/A | N/A | 21 | % | |||||||||||||||||
| 6.37 | 7.82 | 225,688 | 1.75 | 6.70 | 1.74 | (e) | 6.71 | (e) | 10 | |||||||||||||||||||||
| 12.97 | 11.09 | 228,808 | 1.76 | 7.24 | N/A | N/A | 18 | |||||||||||||||||||||||
| 11.53 | (0.30 | ) | 217,817 | 1.77 | 7.17 | N/A | N/A | 28 | ||||||||||||||||||||||
| 11.91 | 24.04 | 208,729 | 1.84 | 8.04 | N/A | N/A | 23 | |||||||||||||||||||||||
| 5.69 | 4.08 | 201,139 | 1.65 | ** | 7.19 | ** | N/A | N/A | 8 | |||||||||||||||||||||
| 21.49 | 20.66 | 198,513 | 1.65 | 8.05 | 1.54 | 8.16 | 24 | |||||||||||||||||||||||
| (d) • | Net Investment Income (Loss) ratios reflect income earned and expenses incurred on assets attributable to borrowings, where applicable, as described in Note 8 – Borrowing Arrangements. |
| • | Each ratio includes the effect of all interest expense paid and other costs related to borrowings, as follows: |
Ratios of Borrowings Interest Expense to to Common Shares | ||||
Quality Preferred Income 3 (JHP) |
| |||
Year Ended 7/31: | ||||
2016(h) | 0.45 | %** | ||
2015 | 0.40 | |||
2014 | 0.43 | |||
2013 | 0.47 | |||
2012 | 0.54 | |||
2011(f) | 0.37 | ** | ||
Year Ended 12/31: |
| |||
2010 | 0.38 | |||
| (e) | During the fiscal year ended July 31, 2015, the Adviser voluntarily reimbursed the Fund for certain expenses incurred in connection with its common share equity shelf program. As a result, the Expenses and Net Investment Income (Loss) Ratios to Average Net Assets reflect this voluntary expense reimbursement from Adviser. |
| (f) | For the seven months ended July 31, 2011. |
| (g) | Portfolio Turnover Rate is calculated based on the lesser of long-term purchases or sales (as disclosed in Note 5 – Investment Transactions) divided by the average long-term market value during the period. |
| (h) | For the six months ended January 31, 2016. |
| N/A | The Fund no longer has a contractual reimbursement agreement with the Adviser. |
| * | Rounds to less than $0.01 per share. |
| ** | Annualized. |
See accompanying notes to financial statements.
| Nuveen Investments | 45 |
Financial Highlights (Unaudited) (continued)
| Borrowings at End of Period | ||||||||
| Aggregate Amount Outstanding (000) | Asset Coverage Per $1,000 | |||||||
Quality Preferred Income (JTP) |
| |||||||
Year Ended 7/31: |
| |||||||
2016(b) | $ | 235,000 | $ | 3,435 | ||||
2015 | 235,000 | 3,511 | ||||||
2014 | 234,000 | 3,573 | ||||||
2013 | 234,000 | 3,458 | ||||||
2012 | 217,000 | 3,567 | ||||||
2011(a) | 154,875 | 4,442 | ||||||
Year Ended 12/31: |
| |||||||
2010 | 154,875 | 4,366 | ||||||
Quality Preferred Income 2 (JPS) |
| |||||||
Year Ended 7/31: |
| |||||||
2016(b) | 465,800 | 3,436 | ||||||
2015 | 465,800 | 3,521 | ||||||
2014 | 464,000 | 3,581 | ||||||
2013 | 464,000 | 3,451 | ||||||
2012 | 427,000 | 3,570 | ||||||
2011(a) | 308,800 | 4,418 | ||||||
Year Ended 12/31: |
| |||||||
2010 | 300,000 | 4,466 | ||||||
Quality Preferred Income 3 (JHP) |
| |||||||
Year Ended 7/31: |
| |||||||
2016(b) | 89,000 | 3,458 | ||||||
2015 | 89,000 | 3,536 | ||||||
2014 | 89,000 | 3,571 | ||||||
2013 | 89,000 | 3,447 | ||||||
2012 | 81,000 | 3,577 | ||||||
2011(a) | 58,900 | 4,415 | ||||||
Year Ended 12/31: |
| |||||||
2010 | 55,000 | 4,609 | ||||||
| (a) | For the seven months ended July 31, 2011. |
| (b) | For the six months ended January 31, 2016. |
| 46 | Nuveen Investments |
See accompanying notes to financial statements.
Financial Statements (Unaudited)
1. General Information and Significant Accounting Policies
General Information
Fund Information
The funds covered in this report and their corresponding New York Stock Exchange (“NYSE”) symbols are as follows (each a “Fund” and collectively, the “Funds”):
| • | Nuveen Quality Preferred Income Fund (JTP) (“Quality Preferred Income (JTP)”) |
| • | Nuveen Quality Preferred Income Fund 2 (JPS) (“Quality Preferred Income 2 (JPS)”) |
| • | Nuveen Quality Preferred Income Fund 3 (JHP) (“Quality Preferred Income 3 (JHP)”) |
The Funds are registered under the Investment Company Act of 1940, as amended, as diversified, closed-end management investment companies. Quality Preferred Income (JTP), Quality Preferred Income 2 (JPS) and Quality Preferred Income 3 (JHP) were organized as Massachusetts business trusts on April 24, 2002, June 24, 2002 and October 17, 2002, respectively.
The end of the reporting period for the Funds is January 31, 2016, and the period covered by these Notes to Financial Statements is the six months ended January 31, 2016 (the “current fiscal period”).
Investment Adviser
The Funds’ investment adviser is Nuveen Fund Advisors, LLC (the “Adviser”), a wholly-owned subsidiary of Nuveen Investments, Inc. (“Nuveen”). The Adviser is responsible for each Fund’s overall investment strategy and asset allocation decisions. The Adviser has entered into sub-advisory agreements with Spectrum Asset Management, Inc. (“Spectrum”), under which Spectrum manages the investment portfolios of the Funds. The Adviser is responsible for overseeing the Funds’ investments in swap contracts.
Investment Objectives and Principal Investment Strategies
Each Fund’s investment objective is high current income consistent with capital preservation. Each Fund’s secondary investment objective is to enhance portfolio value. Each Fund invests at least 80% of its managed assets in preferred securities and up to 20% of its managed assets in debt securities, including convertible debt securities and convertible preferred securities. Each Fund may invest up to 45% of its managed assets in U.S. dollar denominated securities of non-U.S. issuers. Each Fund invests at least 65% (80% for the period August 1, 2015 through October 18, 2015) of its managed assets in securities that, at the time of investment, are investment grade quality (BBB/Baa or better), which may include up to 10% in securities that are rated investment grade by at least one nationally recognized statistical rating organization.
Fund Reorganizations
During October 2015, the Nuveen funds’ Board of Trustees approved a plan to reorganize Quality Preferred Income (JTP) and Quality Preferred Income 3 (JHP) (the “Target Funds”) into Quality Preferred Income 2 (JPS) (the “Acquiring Fund”) (the “Reorganizations”).
Once the Reorganizations are complete, the Acquiring Fund’s minimum allocation to investment grade securities will decrease from 65% to 50% and the existing 45% limit on dollar denominated preferred securities of non-US issuers will be eliminated.
The Reorganizations are subject to customary conditions, including shareholder approval at annual shareholder meetings.
Upon the closing of the Reorganizations, the Target Funds will transfer their assets to the Acquiring Fund in exchange for common shares of the Acquiring Fund and the assumption by the Acquiring Fund of the liabilities of the Target Funds. The Target Funds will then be liquidated, dissolved and terminated in accordance with their Declaration of Trust. Shareholders of the Target Funds will become shareholders of the Acquiring Fund. Holders of common shares of the Target Funds will receive newly issued common shares of the Acquiring Fund, the aggregate net asset value (“NAV”) of which is equal to the aggregate NAV of the common shares of the Target Funds held immediately prior to the Reorganizations (including for this purpose fractional Acquiring Fund shares to which shareholders would be entitled).
Significant Accounting Policies
Each Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 “Financial Services – Investment Companies.” The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
| Nuveen Investments | 47 |
Notes to Financial Statements (Unaudited) (continued)
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and losses from investment transactions are determined on the specific identification method, which is the same basis used for federal income tax purposes. Investments purchased on a when-issued/delayed delivery basis may have extended settlement periods. Any investments so purchased are subject to market fluctuation during this period. The Funds have earmarked securities in their portfolios with a current value at least equal to the amount of the when-issued/delayed delivery purchase commitments.
As of the end of the reporting period, the Funds did not have any outstanding when-issued/delayed delivery purchase commitments.
Investment Income
Dividend income is recorded on the ex-dividend date or, for foreign securities, when information is available. Interest income, which reflects the amortization of premiums and accretion of discounts for financial reporting purposes, is recorded on an accrual basis. Interest income also reflects paydown gains and losses, if any. Other income is comprised of fees earned in connection with the rehypothecation of pledged collateral as further described in Note 8 – Borrowing Agreements.
Professional Fees
Professional fees presented on the Statement of Operations consist of legal fees incurred in the normal course of operations, audit fees, tax consulting fees and, in some cases, workout expenditures. Workout expenditures are incurred in an attempt to protect or enhance an investment or to pursue other claims or legal actions on behalf of Fund shareholders. If a refund is received for workout expenditures paid in a prior reporting period, such amounts will be recognized as “Legal fee refund” on the Statement of Operations.
Dividends and Distributions to Common Shareholders
Dividends to common shareholders are declared monthly. Net realized capital gains from investment transactions, if any, are declared and distributed to shareholders at least annually. Furthermore, capital gains are distributed only to the extent they exceed available capital loss carryforwards.
Distributions to common shareholders are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.
Indemnifications
Under the Funds’ organizational documents, their officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts that provide general indemnifications to other parties. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
Netting Agreements
In the ordinary course of business, the Funds may enter into transactions subject to enforceable master repurchase agreements, International Swaps and Derivative Association, Inc. (“ISDA”) master agreements or other similar arrangements (“netting agreements”). Generally, the right to offset in netting agreements allows each Fund to offset certain securities and derivatives with a specific counterparty as well as any collateral received or delivered to that counterparty based on the terms of the agreements. Generally, each Fund manages its cash collateral and securities collateral on a counterparty basis.
The Funds’ investments subject to netting agreements as of the end of the reporting period, if any, are further described in Note 3 – Portfolio Securities and Investments in Derivatives.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets applicable to common shares from operations during the reporting period. Actual results may differ from those estimates.
2. Investment Valuation and Fair Value Measurements
The fair value input levels as described below are for fair value measurement purposes.
Fair value is defined as the price that would be received upon selling an investment or transferring a liability in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. A three-tier hierarchy is used to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability. Observable inputs are based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would
| 48 | Nuveen Investments |
use in pricing the asset or liability. Unobservable inputs are based on the best information available in the circumstances. The following is a summary of the three-tiered hierarchy of valuation input levels.
| Level 1 – | Inputs are unadjusted and prices are determined using quoted prices in active markets for identical securities. | |
| Level 2 – | Prices are determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). | |
| Level 3 – | Prices are determined using significant unobservable inputs (including management’s assumptions in determining the fair value of investments). |
Common stocks and other equity-type securities are valued at the last sales price on the securities exchange on which such securities are primarily traded and are generally classified as Level 1. Securities primarily traded on the NASDAQ National Market (“NASDAQ”) are valued at the NASDAQ Official Closing Price and are generally classified as Level 1. However, securities traded on a securities exchange or NASDAQ for which there were no transactions on a given day or securities not listed on a securities exchange or NASDAQ are valued at the quoted bid price and are generally classified as Level 2.
Prices of fixed-income securities are provided by a pricing service approved by the Funds’ Board of Trustees (the “Board”). The pricing service establishes a security’s fair value using methods that may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor’s credit characteristics considered relevant. These securities are generally classified as Level 2. In pricing certain securities, particularly less liquid and lower quality securities, the pricing service may consider information about a security, its issuer or market activity, provided by the Adviser. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs.
Prices of swap contracts are also provided by a pricing service approved by the Board using the same methods as described above, and are generally classified as Level 2.
Investments in investment companies are valued at their respective NAV on the valuation date and are generally classified as Level 1.
Repurchase agreements are valued at contract amount plus accrued interest, which approximates market value. These securities are generally classified as Level 2.
Investments initially valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from pricing services. As a result, the NAV of the Funds’ shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed and an investor is not able to purchase, redeem or exchange shares. If significant market events occur between the time of determination of the closing price of a foreign security on an exchange and the time that the Funds’ NAV is determined, or if under the Funds’ procedures, the closing price of a foreign security is not deemed to be reliable, the security would be valued at fair value as determined in accordance with procedures established in good faith by the Board. These securities are generally classified as Level 2 or Level 3 depending on the priority of the significant inputs.
Certain securities may not be able to be priced by the pre-established pricing methods as described above. Such securities may be valued by the Board and/or its appointee at fair value. These securities generally include, but are not limited to, restricted securities (securities which may not be publicly sold without registration under the Securities Act of 1933, as amended) for which a pricing service is unable to provide a market price; securities whose trading has been formally suspended; debt securities that have gone into default and for which there is no current market quotation; a security whose market price is not available from a pre-established pricing source; a security with respect to which an event has occurred that is likely to materially affect the value of the security after the market has closed but before the calculation of a Fund’s NAV (as may be the case in non-U.S. markets on which the security is primarily traded) or make it difficult or impossible to obtain a reliable market quotation; and a security whose price, as provided by the pricing service, is not deemed to reflect the security’s fair value. As a general principle, the fair value of a security would appear to be the amount that the owner might reasonably expect to receive for it in a current sale. A variety of factors may be considered in determining the fair value of such securities, which may include consideration of the following: yields or prices of investments of comparable quality, type of issue, coupon, maturity and rating, market quotes or indications of value from security dealers, evaluations of anticipated cash flows or collateral, general market conditions and other information and analysis, including the obligor’s credit characteristics considered relevant. These securities are generally classified as Level 2 or as Level 3 depending on the priority of the significant inputs. Regardless of the method employed to value a particular security, all valuations are subject to review by the Board and/or its appointee.
| Nuveen Investments | 49 |
Notes to Financial Statements (Unaudited) (continued)
The inputs or methodologies used for valuing securities are not an indication of the risks associated with investing in those securities. The following is a summary of each Fund’s fair value measurements as of the end of the reporting period:
| Quality Preferred Income (JTP) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Long-Term Investments*: | ||||||||||||||||
Convertible Preferred Securities | $ | 7,421,104 | $ | — | $ | — | $ | 7,421,104 | ||||||||
$25 Par (or similar) Retail Preferred | 184,063,863 | 30,573,944 | ** | — | 214,637,807 | |||||||||||
Corporate Bonds | — | 47,305,331 | — | 47,305,331 | ||||||||||||
$1,000 Par (or similar) Institutional Preferred | — | 522,914,684 | — | 522,914,684 | ||||||||||||
Investment Companies | 6,680,768 | — | — | 6,680,768 | ||||||||||||
Short-Term Investments: | ||||||||||||||||
Repurchase Agreements | — | 6,897,626 | — | 6,897,626 | ||||||||||||
Investments in Derivatives: | ||||||||||||||||
Interest Rate Swaps*** | — | (5,365,118 | ) | — | (5,365,118 | ) | ||||||||||
Total | $ | 198,165,735 | $ | 602,326,467 | $ | — | $ | 800,492,202 | ||||||||
| Quality Preferred Income 2 (JPS) | ||||||||||||||||
Long-Term Investments*: | ||||||||||||||||
Convertible Preferred Securities | $ | 5,039,600 | $ | — | $ | — | $ | 5,039,600 | ||||||||
$25 Par (or similar) Retail Preferred | 365,097,229 | 62,311,328 | ** | — | 427,408,557 | |||||||||||
Corporate Bonds | — | 82,960,846 | — | 82,960,846 | ||||||||||||
$1,000 Par (or similar) Institutional Preferred | — | 1,064,884,545 | — | 1,064,884,545 | ||||||||||||
Investment Companies | 14,490,268 | — | — | 14,490,268 | ||||||||||||
Short-Term Investments: | ||||||||||||||||
Repurchase Agreements | — | 8,859,287 | — | 8,859,287 | ||||||||||||
Investments in Derivatives: | ||||||||||||||||
Interest Rate Swaps*** | — | (10,664,350 | ) | — | (10,664,350 | ) | ||||||||||
Total | $ | 384,627,097 | $ | 1,208,351,656 | $ | — | $ | 1,592,978,753 | ||||||||
| Quality Preferred Income 3 (JHP) | ||||||||||||||||
Long-Term Investments*: | ||||||||||||||||
$25 Par (or similar) Retail Preferred | $ | 69,844,098 | $ | 8,086,438 | ** | $ | — | $ | 77,930,536 | |||||||
Corporate Bonds | — | 18,878,241 | — | 18,878,241 | ||||||||||||
$1,000 Par (or similar) Institutional Preferred | — | 202,857,646 | — | 202,857,646 | ||||||||||||
Investment Companies | 2,762,465 | — | — | 2,762,465 | ||||||||||||
Short-Term Investments: | ||||||||||||||||
Repurchase Agreements | — | 9,647,843 | — | 9,647,843 | ||||||||||||
Investments in Derivatives: | ||||||||||||||||
Interest Rate Swaps*** | — | (2,035,168 | ) | — | (2,035,168 | ) | ||||||||||
Total | $ | 72,606,563 | $ | 237,435,000 | $ | — | $ | 310,041,563 | ||||||||
| * | Refer to the Fund’s Portfolio of Investments for industry classifications. |
| ** | Refer to the Fund’s Portfolio of Investments for securities classified as Level 2. |
| *** | Represents net unrealized appreciation (depreciation) as reported in the Fund’s Portfolio of Investments. |
The Board is responsible for the valuation process and has appointed the oversight of the daily valuation process to the Adviser’s Valuation Committee. The Valuation Committee, pursuant to the valuation policies and procedures adopted by the Board, is responsible for making fair value determinations, evaluating the effectiveness of the Funds’ pricing policies and reporting to the Board. The Valuation Committee is aided in its efforts by the Adviser’s dedicated Securities Valuation Team, which is responsible for administering the daily valuation process and applying fair value methodologies as approved by the Valuation Committee. When determining the reliability of independent pricing services for investments owned by the Funds, the Valuation Committee, among other things, conducts due diligence reviews of the pricing services and monitors the quality of security prices received through various testing reports conducted by the Securities Valuation Team.
The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making a fair value determination, based on the facts and circumstances specific to the portfolio instrument. Fair value determinations generally will be derived as follows, using public or private market information:
| (i) | If available, fair value determinations shall be derived by extrapolating from recent transactions or quoted prices for identical or comparable securities. |
| 50 | Nuveen Investments |
| (ii) | If such information is not available, an analytical valuation methodology may be used based on other available information including, but not limited to: analyst appraisals, research reports, corporate action information, issuer financial statements and shelf registration statements. Such analytical valuation methodologies may include, but are not limited to: multiple of earnings, discount from market value of a similar freely-traded security, discounted cash flow analysis, book value or a multiple thereof, risk premium/yield analysis, yield to maturity and/or fundamental investment analysis. |
The purchase price of a portfolio instrument will be used to fair value the instrument only if no other valuation methodology is available or deemed appropriate, and it is determined that the purchase price fairly reflects the instrument’s current value.
For each portfolio security that has been fair valued pursuant to the policies adopted by the Board, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such testing and fair valuation occurrences are reported to the Board.
3. Portfolio Securities and Investments in Derivatives
Portfolio Securities
Foreign Currency Transactions
To the extent that a Fund may invest in securities and/or contracts that are denominated in a currency other than U.S. dollars, the Fund will be subject to currency risk, which is the risk that an increase in the U.S. dollar relative to the foreign currency will reduce returns or portfolio value. Generally, when the U.S. dollar rises in value against a foreign currency, a Fund’s investments denominated in that currency will lose value because its currency is worth fewer U.S. dollars; the opposite effect occurs if the U.S. dollar falls in relative value. Investments and other assets and liabilities denominated in foreign currencies are converted into U.S. dollars on a spot (i.e. cash) basis at the spot rate prevailing in the foreign currency exchange market at the time of valuation. Purchases and sales of investments and income denominated in foreign currencies are translated into U.S. dollars on the respective dates of such transactions.
As of the end of the reporting period, the Funds’ investments in non-U.S. securities were as follows:
| Quality Preferred Income (JTP) | Value | % of Total Investments | ||||||
Country: | ||||||||
United Kingdom | $ | 114,043,969 | 14.1 | % | ||||
France | 52,136,204 | 6.5 | ||||||
Netherlands | 43,165,230 | 5.3 | ||||||
Japan | 22,983,147 | 2.9 | ||||||
Other | 92,602,648 | 11.5 | ||||||
Total non-U.S. securities | $ | 324,931,198 | 40.3 | % | ||||
| Quality Preferred Income 2 (JPS) | ||||||||
Country: | ||||||||
United Kingdom | $ | 188,023,377 | 11.7 | % | ||||
Netherlands | 111,337,928 | 6.9 | ||||||
France | 108,695,367 | 6.8 | ||||||
Switzerland | 57,895,991 | 3.6 | ||||||
Other | 170,911,913 | 10.7 | ||||||
Total non-U.S. securities | $ | 636,864,576 | 39.7 | % | ||||
| Quality Preferred Income 3 (JHP) | ||||||||
Country: | ||||||||
United Kingdom | $ | 48,193,466 | 15.4 | % | ||||
France | 20,146,453 | 6.5 | ||||||
Netherlands | 17,267,061 | 5.5 | ||||||
Switzerland | 14,041,829 | 4.5 | ||||||
Other | 26,178,041 | 8.4 | ||||||
Total non-U.S. securities | $ | 125,826,850 | 40.3 | % | ||||
The books and records of the Funds are maintained in U.S. dollars. Foreign currencies, assets and liabilities are translated into U.S. dollars at 4:00 p.m. Eastern Time. Investment transactions, income and expenses are translated on the respective dates of such transactions. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date of the transactions, foreign currency transactions and the difference between the amounts of interest and dividends recorded on the books of a Fund and the amounts actually received.
| Nuveen Investments | 51 |
Notes to Financial Statements (Unaudited) (continued)
The realized gains and losses resulting from changes in foreign currency exchange rates and changes in foreign exchange rates associated with (i) foreign currency (ii) investments (iii) investments in derivatives and (iv) other assets and liabilities are recognized as a component of “Net realized gain (loss) from investments” on the Statement of Operations, when applicable.
The unrealized gains and losses resulting from changes in foreign currency exchange rates and changes in foreign exchange rates associated with (i) investments and (ii) other assets and liabilities are recognized as a component of “Change in net unrealized appreciation (depreciation) of investments” on the Statement of Operations, when applicable. The unrealized gains and losses resulting from changes in foreign exchange rates associated with investments in derivatives are recognized as a component of the respective derivative’s related “Change in net unrealized appreciation (depreciation)” on the Statement of Operations, when applicable.
Repurchase Agreements
In connection with transactions in repurchase agreements, it is each Fund’s policy that its custodian take possession of the underlying collateral securities, the fair value of which exceeds the principal amount of the repurchase transaction, including accrued interest, at all times. If the counterparty defaults, and the fair value of the collateral declines, realization of the collateral may be delayed or limited.
The following table presents the repurchase agreements for the Funds that are subject to netting agreements as of the end of the reporting period, and the collateral delivered related to those repurchase agreements.
| Fund | Counterparty | Short-Term Investments, at Value | Collateral Pledged (From) Counterparty* | Net Exposure | ||||||||||
| Quality Preferred Income (JTP) | Fixed Income Clearing Corporation | $ | 6,897,626 | $ | (6,897,626 | ) | $ | — | ||||||
| Quality Preferred Income 2 (JPS) | Fixed Income Clearing Corporation | 8,859,287 | (8,859,287 | ) | — | |||||||||
| Quality Preferred Income 3 (JHP) | Fixed Income Clearing Corporation | 9,647,843 | (9,647,843 | ) | — | |||||||||
| * | As of the end of the reporting period, the value of the collateral pledged from the counterparty exceeded the value of the repurchase agreements. Refer to the Fund’s Portfolio of Investments for details on the repurchase agreements. |
Zero Coupon Securities
A zero coupon security does not pay a regular interest coupon to its holders during the life of the security. Income to the holder of the security comes from accretion of the difference between the original purchase price of the security at issuance and the par value of the security at maturity and is effectively paid at maturity. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically.
Investment in Derivatives
Each Fund is authorized to invest in certain derivative instruments, such as futures, options and swap contracts. Each Fund limits its investments in futures, options on futures and swap contracts to the extent necessary for the Adviser to claim the exclusion from registration by the Commodity Futures Trading Commission as a commodity pool operator with respect to the Fund. The Funds record derivative instruments at fair value, with changes in fair value recognized on the Statement of Operations, when applicable. Even though the Funds’ investments in derivatives may represent economic hedges, they are not considered to be hedge transactions for financial reporting purposes.
Interest Rate Swap Contracts
Interest rate swap contracts involve a Fund’s agreement with the counterparty to pay or receive a fixed rate payment in exchange for the counterparty receiving or paying a variable rate payment. Forward interest rate swap contracts involve a Fund’s agreement with a counterparty to pay, in the future, a fixed or variable rate payment in exchange for the counterparty paying the Fund a variable or fixed rate payment, the accruals for which would begin at a specified date in the future (the “effective date”).
The amount of the payment obligation for an interest rate swap is based on the notional amount and termination date of the contract. Interest rate swap contracts do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to the swap counterparty on such transactions is limited to the net amount of interest payments that the Fund is to receive.
Interest rate swap contracts are valued daily. Upon entering into an interest rate swap contract (and beginning on the effective date for a forward interest rate swap contract), a Fund accrues the fixed rate payment expected to be paid or received and the variable rate payment expected to be received or paid on the interest rate swap contracts on a daily basis, and recognizes the daily change in the fair value of the Fund’s contractual rights and obligations under the contracts. For an over-the-counter (“OTC”) swap that is not cleared through a clearing house (“OTC Uncleared”), the net amount recorded on these transactions, for each counterparty, is recognized on the Statement of Assets and Liabilities as a component of “Unrealized appreciation or depreciation on interest rate swaps (, net).”
| 52 | Nuveen Investments |
Upon the execution of an OTC swap cleared through a clearing house (“OTC Cleared”), a Fund is obligated to deposit cash or eligible securities, also known as “initial margin,” into an account at its clearing broker equal to a specified percentage of the contract amount. Cash deposited by a Fund to cover initial margin requirements on open swap contracts, if any, is recognized as a component of “Cash collateral at brokers” on the Statement of Assets and Liabilities. Investments in OTC Cleared swaps obligate a Fund and the clearing broker to settle monies on a daily basis representing changes in the prior day’s “mark-to-market” of the swap contract. If a Fund has unrealized appreciation, the clearing broker will credit the Fund’s account with an amount equal to the appreciation. Conversely, if the Fund has unrealized depreciation, the clearing broker will debit the Fund’s account with an amount equal to the depreciation. These daily cash settlements are also known as “variation margin.” Variation margin for OTC Cleared swaps is recognized as a receivable and/or payable for “Variation margin on swap contracts” on the Statement of Assets and Liabilities. Upon the execution of an OTC Uncleared swap, neither the Fund nor the counterparty is required to deposit initial margin as the trades are recorded bilaterally between both parties to the swap contract, and the terms of the variation margin are subject to a predetermined threshold negotiated by the Fund and the counterparty. Variation margin for OTC Uncleared swaps is recognized as a component of “Unrealized appreciation or depreciation on interest rate swaps (, net)” as described in the preceding paragraph.
The net amount of periodic payments settled in cash are recognized as a component of “Net realized gain (loss) from swaps” on the Statement of Operations, in addition to the net realized gain or loss recorded upon the termination of the swap contract. For tax purposes, payments expected to be received or paid on the swap contacts are treated as ordinary income or expense, respectively. Changes in the value of the swap contracts during the fiscal period are recognized as a component of “Change in net unrealized appreciation (depreciation) of swaps.” In certain instances, payments are made or received upon entering into the swap contract to compensate for differences between the stated terms of the swap agreements and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). Payments received or made at the beginning of the measurement period, if any, are recognized as “Interest rate swaps premiums paid and/or received” on the Statement of Assets and Liabilities.
During the current fiscal period, the Funds used cancellable interest rate swaps in which the Funds received payments based upon floating (one-month) LIBOR rate, and paid a fixed rate of interest. After a non-callable period, the swap counterparty owns the right on future monthly dates to terminate the swap at par. The purpose of the cancellable interest rate swaps is to convert some portion of each Fund’s floating rate leverage (bank borrowings) to fixed rate through at least the cancellation dates of the swap, or, if not called by the swap counterparty, to the maturity date of the swap.
The average notional amount of interest rate swap contracts outstanding during the current fiscal period was as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||
Average notional amount of interest rate swap contracts outstanding* | $135,174,000 | $268,688,000 | $51,276,000 |
| * | The average notional amount is calculated based on the outstanding notional at the beginning of the fiscal period and at the end of each fiscal quarter within the current fiscal period. |
The following table presents the fair value of all interest rate swap contracts held by the Funds as of the end of the reporting period, the location of these instruments on the Statement of Assets and Liabilities and the primary underlying risk exposure.
Location on the Statement of Assets and Liabilities | ||||||||||||||||
| Underlying Risk Exposure | Derivative Instrument | Asset Derivatives | (Liability) Derivatives | |||||||||||||
| Location | Value | Location | Value | |||||||||||||
| Quality Preferred Income (JTP) | ||||||||||||||||
| Interest rate | Swaps | — | $ | — | Unrealized depreciation on interest rate swaps** | $ | (5,365,118 | ) | ||||||||
| Quality Preferred Income 2 (JPS) | ||||||||||||||||
| Interest rate | Swaps | — | $ | — | Unrealized depreciation on interest rate swaps** | $ | (10,664,350 | ) | ||||||||
| Quality Preferred Income 3 (JHP) | ||||||||||||||||
| Interest rate | Swaps | — | $ | — | Unrealized depreciation on interest rate swaps** | $ | (2,035,168 | ) | ||||||||
| ** | Some swap contracts require a counterparty to pay or receive a premium, which is disclosed on the Statement of Assets and Liabilities and is not reflected in the cumulative unrealized appreciation (depreciation) presented above. |
| Nuveen Investments | 53 |
Notes to Financial Statements (Unaudited) (continued)
The following table presents the swap contracts subject to netting agreements and the collateral delivered related to those swap contracts as of the end of the reporting period.
| Fund | Counterparty | Gross Unrealized Appreciation on Interest Rate Swaps*** | Gross Unrealized (Depreciation) on Interest Rate Swaps*** | Amounts Netted on Statement of Assets and Liabilities | Net Unrealized Appreciation (Depreciation) on Interest Rate Swaps | Collateral Pledged to (from) Counterparty | Net Exposure | |||||||||||||||||||
| Quality Preferred Income (JTP) | JPMorgan Chase Bank, N.A. | $ | — | $ | (5,365,118 | ) | $ | — | $ | (5,365,118 | ) | $ | 3,235,407 | $ | (2,129,711 | ) | ||||||||||
| Quality Preferred Income 2 (JPS) | JPMorgan Chase Bank, N.A. | $ | — | $ | (10,664,350 | ) | $ | — | $ | (10,664,350 | ) | $ | 8,475,555 | $ | (2,188,795 | ) | ||||||||||
| Quality Preferred Income 3 (JHP) | JPMorgan Chase Bank, N.A. | $ | — | $ | (2,035,168 | ) | $ | — | $ | (2,035,168 | ) | $ | 1,398,456 | $ | (636,712 | ) | ||||||||||
| *** | Represents gross unrealized appreciation (depreciation) for the counterparty as reported in the Fund’s Portfolio of Investments. |
The following table presents the amount of net realized gain (loss) and change in net unrealized appreciation (depreciation) recognized on swap contracts on the Statement of Operations during the current fiscal period, and the primary underlying risk exposure.
| Fund | Underlying Risk Exposure | Derivative Instrument | Net Realized Gain (Loss) from Swaps | Change in Net Unrealized Appreciation (Depreciation) of Swaps | ||||||||
| Quality Preferred Income Fund (JTP) | Interest rate | Swaps | $ | — | $ | (3,629,628 | ) | |||||
| Quality Preferred Income Fund 2 (JPS) | Interest rate | Swaps | — | (7,214,682 | ) | |||||||
| Quality Preferred Income Fund 3 (JHP) | Interest rate | Swaps | — | (1,376,839 | ) | |||||||
Market and Counterparty Credit Risk
In the normal course of business each Fund may invest in financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to the transaction to perform (counterparty credit risk). The potential loss could exceed the value of the financial assets recorded on the financial statements. Financial assets, which potentially expose each Fund to counterparty credit risk, consist principally of cash due from counterparties on forward, option and swap transactions, when applicable. The extent of each Fund’s exposure to counterparty credit risk in respect to these financial assets approximates their carrying value as recorded on the Statement of Assets and Liabilities.
Each Fund helps manage counterparty credit risk by entering into agreements only with counterparties the Adviser believes have the financial resources to honor their obligations and by having the Adviser monitor the financial stability of the counterparties. Additionally, counterparties may be required to pledge collateral daily (based on the daily valuation of the financial asset) on behalf of each Fund with a value approximately equal to the amount of any unrealized gain above a pre-determined threshold. Reciprocally, when each Fund has an unrealized loss, the Funds have instructed the custodian to pledge assets of the Funds as collateral with a value approximately equal to the amount of the unrealized loss above a pre-determined threshold. Collateral pledges are monitored and subsequently adjusted if and when the valuations fluctuate, either up or down, by at least the pre-determined threshold amount.
4. Fund Shares
Common Share Transactions
Transactions in common shares during the Funds’ current and prior fiscal period were as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||||||||||||||
Six Months Ended | Year Ended | Six Months Ended | Year Ended | Six Months Ended | Year Ended | |||||||||||||||||||
Common shares repurchased and retired | — | (5,000 | ) | — | — | — | (40,000 | ) | ||||||||||||||||
Weighted average: | ||||||||||||||||||||||||
Price per common share repurchased and retired | $ | — | $ | 7.94 | $ | — | $ | — | $ | — | $ | 8.35 | ||||||||||||
Discount per common share repurchased and retired | — | % | 13.98 | % | — | % | — | % | — | % | 12.95 | % | ||||||||||||
5. Investment Transactions
Long-term purchases and sales (including maturities but excluding derivative transactions) during the current fiscal period were as follows:
Quality Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Purchases | $ | 152,401,291 | $ | 302,151,687 | $ | 62,090,426 | ||||||
Sales and maturities | 156,105,860 | 300,871,290 | 66,955,343 | |||||||||
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6. Income Tax Information
Each Fund is a separate taxpayer for federal income tax purposes. Each Fund intends to distribute substantially all of its net investment company taxable income to shareholders and to otherwise comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required.
For all open tax years and all major taxing jurisdictions, management of the Funds has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last four tax year ends and the interim tax period since then). Furthermore, management of the Funds is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
The following information is presented on an income tax basis. Differences between amounts for financial statement and federal income tax purposes are primarily due to recognition of premium amortization, timing differences in the recognition of income and timing differences in recognizing certain gains and losses on investment transactions. To the extent that differences arise that are permanent in nature, such amounts are reclassified within the capital accounts as detailed below. Temporary differences do not require reclassification. Temporary and permanent differences do not impact the NAVs of the Funds.
As of January 31, 2016, the cost and unrealized appreciation (depreciation) of investments (excluding investments in derivatives), as determined on a federal income tax basis, were as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Cost of investments | $ | 783,045,498 | $ | 1,561,936,619 | $ | 303,680,910 | ||||||
Gross unrealized: | ||||||||||||
Appreciation | $ | 43,287,396 | $ | 85,482,912 | $ | 15,367,177 | ||||||
Depreciation | (20,475,574 | ) | (43,776,428 | ) | (6,971,356 | ) | ||||||
Net unrealized appreciation (depreciation) of investments | $ | 22,811,822 | $ | 41,706,484 | $ | 8,395,821 | ||||||
Permanent differences, primarily due to federal taxes paid, treatment of notional principal contracts, bond premium amortization adjustments, complex securities character adjustments and investments in passive foreign investment companies, resulted in reclassifications among the Funds’ components of common share net assets as of July 31, 2015, the Funds’ last tax year end, as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Paid-in-surplus | $ | (46,180 | ) | $ | (131,578 | ) | $ | (50,088 | ) | |||
Undistributed (Over-distribution of) net investment income | 4,881,238 | 11,637,122 | 1,230,723 | |||||||||
Accumulated net realized gain (loss) | (4,835,058 | ) | (11,505,544 | ) | (1,180,635 | ) | ||||||
The tax components of undistributed net ordinary income and net long-term capital gains as of July 31, 2015, the Funds’ last tax year end, were as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality \(JHP) | ||||||||||
Undistributed net ordinary income1 | $ | 8,250,470 | $ | 16,984,928 | $ | 2,050,872 | ||||||
Undistributed net long-term capital gains | — | — | — | |||||||||
1 Net ordinary income consists of net taxable income derived from dividends, interest and net short-term capital gains, if any. Undistributed net ordinary income (on a tax basis) has not been reduced for the dividend declared on July 1, 2015, paid on August 3, 2015. |
| |||||||||||
The tax character of distributions paid during the Funds’ last tax year ended July 31, 2015, was designated for purposes of the dividends paid deduction as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Distributions from net ordinary income2 | $ | 47,428,011 | $ | 87,622,036 | $ | 16,877,593 | ||||||
Distributions from net long-term capital gains | — | — | — | |||||||||
2 Net ordinary income consists of net taxable income derived from dividends, interest and net short-term capital gains, if any. |
| |||||||||||
| Nuveen Investments | 55 |
Notes to Financial Statements (Unaudited) (continued)
As of July 31, 2015, the Funds’ last tax year end, the Funds had unused capital loss carryforwards available for federal income tax purposes to be applied against future capital gains, if any. If not applied, the carryforwards will expire as shown in the following table. The losses not subject to expiration will be utilized first by a Fund.
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Expiration: | ||||||||||||
July 31,2017 | $ | 170,727,594 | $ | 277,312,489 | $ | 74,350,645 | ||||||
July 31,2018 | 164,307,763 | 317,825,546 | 47,045,512 | |||||||||
July 31,2019 | 3,371,042 | 10,696,373 | 15,796 | |||||||||
Not subject to expiration | — | — | — | |||||||||
Total | $ | 338,406,399 | $ | 605,834,408 | $ | 121,411,953 | ||||||
During the Funds’ last tax year ended July 31, 2015, the Funds utilized capital loss carryforwards as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Utilized capital loss carryforwards | $ | 2,246,925 | $ | 653,484 | $ | 326,886 | ||||||
The Funds have elected to defer late-year losses in accordance with federal income tax rules. These losses are treated as having arisen on the first day of the current fiscal year. The following Funds have elected to defer losses as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | |||||||
Post-October capital losses3 | $ | 101,223 | $ | 3,486,430 | ||||
Late-year ordinary losses4 | — | — | ||||||
| 3 | Capital losses incurred from November 1, 2014 through July 31, 2015, the Funds’ last tax year end. |
| 4 | Ordinary losses incurred from January 1, 2015 through July 31, 2015, and/or specified losses incurred from November 1, 2014 through July 31, 2015. |
7. Management Fees and Other Transactions with Affiliates
Each Fund’s management fee compensates the Adviser for overall investment advisory and administrative services and general office facilities. Spectrum is compensated for its services to the Funds from the management fees paid to the Adviser. Spectrum also receives compensation on certain portfolio transactions for providing brokerage services to the Funds. During the current fiscal period, Quality Preferred Income (JTP), Quality Preferred Income 2 (JPS) and Quality Preferred Income 3 (JHP) paid Spectrum commissions of $87,085, $135,001 and $33,485, respectively.
Each Fund’s management fee consists of two components – a fund-level fee, based only on the amount of assets within each individual Fund, and a complex-level fee, based on the aggregate amount of all eligible fund assets managed by the Adviser. This pricing structure enables each Fund’s shareholders to benefit from growth in the assets within their respective Fund as well as from growth in the amount of complex-wide assets managed by the Adviser.
The annual Fund-level fee, payable monthly, for each Fund is calculated according to the following schedule:
| Average Daily Managed Assets* | Fund-Level Fee | |||
For the first $500 million | 0.7000 | % | ||
For the next $500 million | 0.6750 | |||
For the next $500 million | 0.6500 | |||
For the next $500 million | 0.6250 | |||
For managed assets over $2 billion | 0.6000 | |||
| 56 | Nuveen Investments |
The annual complex-level fee, payable monthly, for each Fund is calculated according to the following schedule:
| Complex-Level Managed 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 | |||
| * | For the fund-level and complex-level fees, managed assets include closed-end fund assets managed by the Adviser that are attributable to certain types of leverage. For these purposes, leverage includes the funds’ use of preferred stock and borrowings and certain investments in the residual interest certificates (also called inverse floating rate securities) in tender option bond (TOB) trusts, including the portion of assets held by a TOB trust that has been effectively financed by the trust’s issuance of floating rate securities, subject to an agreement by the Adviser as to certain funds to limit the amount of such assets for determining managed assets in certain circumstances. The complex-level fee is calculated based upon the aggregate daily managed assets of all Nuveen funds that constitute “eligible assets.” Eligible assets do not include assets attributable to investments in other Nuveen funds and assets in excess of $2 billion added to the Nuveen fund complex in connection with the Adviser’s assumption of the management of the former First American Funds effective January 1, 2011. As of January 31, 2016, the complex-level fee rate for the Funds was 0.1643%. |
The Funds pay no compensation directly to those of its trustees who are affiliated with the Adviser or to its officers, all of whom receive remuneration for their services to the Funds from the Adviser or its affiliates. The Board has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from certain Nuveen-advised funds. Under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of select Nuveen-advised funds.
8. Borrowing Arrangements
Borrowings
Each Fund has entered into a committed financing agreement (“Borrowings”) with BNP Paribas Prime Brokerage, Inc. (“BNP”) which permit the Funds to borrow on a secured basis as a means of leverage. Each Fund’s maximum commitment amount under these Borrowings is as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Maximum commitment amount | $ | 235,000,000 | $ | 465,800,000 | $ | 89,000,000 | ||||||
During December 2015, Quality Preferred Income 2 (JPS) amended its Borrowings with BNP and decreased its maximum commitment amount from $467 million to $465.8 million.
As of the end of the reporting period, each Fund’s outstanding balance on its Borrowings was as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Outstanding borrowings | $ | 235,000,000 | $ | 465,800,000 | $ | 89,000,000 | ||||||
Interest is charged on these Borrowings for each Fund at the 1-Month LIBOR (London Inter-Bank Offered Rate) plus 0.85% per annum on the amounts borrowed and 0.50% per annum on the undrawn balance if the undrawn portion of the Borrowings on that day is more than 20% of the maximum commitment amount.
| Nuveen Investments | 57 |
Notes to Financial Statements (Unaudited) (continued)
During the current fiscal period, the average daily balance outstanding and average annual interest rate on each Fund’s Borrowings were as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Average daily balance outstanding | $ | 235,000,000 | $ | 465,800,000 | $ | 89,000,000 | ||||||
Average annual interest rate | 1.11 | % | 1.11 | % | 1.11 | % | ||||||
In order to maintain these Borrowings, the Funds must meet certain collateral, asset coverage and other requirements. Borrowings outstanding are fully secured by securities held in each Fund’s portfolio of investments (“Pledged Collateral”).
Borrowings outstanding are recognized as “Borrowings” on the Statement of Assets and Liabilities. Interest expense incurred on each Fund’s borrowed amount and undrawn balance are recognized as a component of “Interest expense on borrowings” on the Statement of Operations.
Rehypothecation
The Funds have entered into a Rehypothecation Side Letter (“Side Letter”) with BNP, allowing BNP to re-register the Pledged Collateral in its own name or in a name other than the Funds’ to pledge, repledge, hypothecate, rehyphothecate, sell, lend or otherwise transfer or use the Pledged Collateral (the “Hypothecated Securities”) with all rights of ownership as described in the Side Letter. Subject to certain conditions, the total value of the outstanding Hypothecated Securities shall not exceed the lesser of (i) 98% of the outstanding balance on the Borrowings to which the Pledged Collateral relates and (ii) 33 1⁄3% of the Funds’ total assets. The Funds may designate any Pledged Collateral as ineligible for rehypothecation. The Funds may also recall Hypothecated Securities on demand.
The Funds also have the right to apply and set-off an amount equal to one-hundred percent (100%) of the then-current fair market value of such Pledged Collateral against the current Borrowings under the Side Letter in the event that BNP fails to timely return the Pledged Collateral and in certain other circumstances. In such circumstances, however, the Funds may not be able to obtain replacement financing required to purchase replacement securities and, consequently, the Funds’ income generating potential may decrease. Even if each Fund is able to obtain replacement financing, it might not be able to purchase replacement securities at favorable prices.
The Funds will receive a fee in connection with the Hypothecated Securities (“Rehypothecation Fees”) in addition to any principal, interest, dividends and other distributions paid on the Hypothecated Securities.
As of the end of the reporting period, each Fund had Hypothecated Securities as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Hypothecated Securities | $ | 85,469,015 | $ | 194,909,554 | $ | 15,037,311 | ||||||
The Funds earn Rehypothecation Fees, which are recognized as “Other income” on the Statement of Operations. During the current fiscal period, the Rehypothecation Fees earned by each Fund are as follows:
| Quality Preferred Income (JTP) | Quality Preferred Income 2 (JPS) | Quality Preferred Income 3 (JHP) | ||||||||||
Rehypothecation Fees | $ | 179,187 | $ | 355,173 | $ | 68,233 | ||||||
9. Subsequent Events
Borrowings
Subsequent to the current fiscal period, interest will be charged on these Borrowings at 1-Month LIBOR plus 0.75% per annum on the amount borrowed.
Fund Reorganizations
On March 22, 2016, the Reorganizations were approved by shareholders. Subject to the satisfaction of certain customary closing conditions, the Reorganizations are expected to close prior to the opening of the NYSE on May 9, 2016.
| 58 | Nuveen Investments |
Fund Information
| Board of Trustees | ||||||||||
| William Adams IV* | Jack B. Evans | William C. Hunter | David J. Kundert | John K. Nelson | William J. Schneider | |||||
| Thomas S. Schreier, Jr.* | Judith M. Stockdale | Carole E. Stone | Terence J. Toth | Margaret L. Wolff** |
| * | Interested Board Member. |
| ** | Effective February 15, 2016. |
Fund Manager Nuveen Fund Advisors, LLC 333 West Wacker Drive Chicago, IL 60606 | Custodian State Street Bank Boston, MA 02111 | Legal Counsel Chapman and Cutler LLP Chicago, IL 60603 | Independent Registered KPMG LLP Chicago, IL 60601 | Transfer Agent and State Street Bank Nuveen Funds P.O. Box 43071 Providence, Rl 02940-3071 (800) 257-8787 | ||||
Quarterly Form N-Q Portfolio of Investments Information
Each Fund is required to file its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. You may obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov or in person at the SEC’s Public Reference Room in Washington, D.C. Call the SEC toll-free at (800) SEC-0330 for room hours and operation.
Nuveen Funds’ Proxy Voting Information
You may obtain (i) information regarding how each fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30, without charge, upon request, by calling Nuveen Investments toll-free at (800) 257-8787 or on Nuveen’s website at www.nuveen.com and (ii) a description of the policies and procedures that each fund used to determine how to vote proxies relating to portfolio securities without charge, upon request, by calling Nuveen Investments toll free at (800) 257-8787. You may also obtain this information directly from the SEC. Visit the SEC on-line at http://www.sec.gov.
CEO Certification Disclosure
Each Fund’s Chief Executive Officer (CEO) has submitted to the New York Stock Exchange (NYSE) the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. Each Fund has filed with the SEC the certification of its CEO and Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act.
Common Share Repurchases
Each Fund intends to repurchase, through its open market share repurchase program, shares of its own common stock at such times and in such amounts as is deemed advisable. During the period covered by this report, each Fund repurchased shares of its common stock, as shown in the accompanying table. Any future repurchases will be reported to shareholders in the next annual or semi-annual report.
| JTP | JPS | JHP | ||||||||||
Common shares repurchased | — | — | — | |||||||||
FINRA BrokerCheck
The Financial Industry Regulatory Authority (FINRA) provides information regarding the disciplinary history of FINRA member firms and associated investment professionals. This information as well as an investor brochure describing FlNRA BrokerCheck is available to the public by calling the FINRA BrokerCheck Hotline number at (800) 289-9999 or by visiting www.FINRA.org.
| Nuveen Investments | 59 |
Used in this Report
| n | Average Annual Total Return: This is a commonly used method to express an investment’s performance over a particular usually multi-year time period. It expresses the return that would have been necessary each year to equal the investment’s actual cumulative performance (including change in NAV or market price and reinvested dividends and capital gains distributions, if any) over the time period being considered. |
| n | Barclays U.S. Aggregate Bond Index: An unmanaged index that includes all investment-grade, publicly issued, fixed-rate, dollar denominated, nonconvertible debt issues and commercial mortgage-backed securities with maturities of at least one year and outstanding par values of $150 million or more. Index returns assume reinvestment of distributions, but do not include the effects of any applicable sales charges or management fees. |
| n | Blended Benchmark (Old Comparative Index): A blended return consisting of: 1) 55% of the BofA/Merrill Lynch Preferred Stock Fixed Rate Index, an unmanaged index that tracks the performance of fixed rate U.S. dollar denominated preferred securities issued in the U.S. domestic market; and 2) 45% of the Barclays Tier 1 Capital Securities Index, an unmanaged index that includes securities that can generally be viewed as hybrid fixed-income securities that either receive regulatory capital treatment or a degree of “equity credit” from a rating agency. Index returns do not include the effects of any sales charges or management fees. |
| n | Blended Benchmark (New Comparative Index): A blended return consisting of: 1) 40% of the BofA/Merrill Lynch Contingent Capital Index (COCO), which tracks the performance of all contingent capital debt publicly issued in the major domestic and Eurobond markets, including investment grade and sub-investment-grade issues; and 2) 60% of the BofA/Merrill Lynch U.S. All Capital Securities Index (IOCS), a subset of the BofA/Merrill Lynch U.S. Corporate Index including all fixed-to-floating rate, perpetual callable and capital securities, which better represents the full breadth of the preferred and hybrid securities market, including investment grade and below investment grade exchange traded $25 par preferreds and investment grade and below investment grade rated $1,000 par capital securities. Index returns do not include the effects of any sales charges or management fees. |
| n | Effective Leverage: Effective leverage is a fund’s effective economic leverage, and includes both regulatory leverage (see below) and the leverage effects of certain derivative investments in the fund’s portfolio. |
| n | Gross Domestic Product (GDP): The total market value of all final goods and services produced in a country/region in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. |
| n | Leverage: Leverage is created whenever a fund has investment exposure (both reward and/or risk) equivalent to more than 100% of the investment capital. |
| n | Net Asset Value (NAV) Per Share: A fund’s Net Assets is equal to its total assets (securities, cash, accrued earnings and receivables) less its total liabilities. NAV per share is equal to the fund’s Net Assets divided by its number of shares outstanding. |
| n | Regulatory Leverage: Regulatory leverage consists of preferred shares issued by or borrowings of a fund. Both of these are part of a fund’s capital structure. Regulatory leverage is subject to asset coverage limits set forth in the Investment Company Act of 1940. |
| 60 | Nuveen Investments |
Easily and Conveniently
Nuveen makes reinvesting easy. A phone call is all it takes to set up your reinvestment account.
Nuveen Closed-End Funds Automatic Reinvestment Plan
Your Nuveen Closed-End Fund allows you to conveniently reinvest distributions in additional Fund shares.
By choosing to reinvest, you’ll be able to invest money regularly and automatically, and watch your investment grow through the power of compounding. Just like distributions in cash, there may be times when income or capital gains taxes may be payable on distributions that are reinvested.
It is important to note that an automatic reinvestment plan does not ensure a profit, nor does it protect you against loss in a declining market.
Easy and convenient
To make recordkeeping easy and convenient, each month you’ll receive a statement showing your total distributions, the date of investment, the shares acquired and the price per share, and the total number of shares you own.
How shares are purchased
The shares you acquire by reinvesting will either be purchased on the open market or newly issued by the Fund. If the shares are trading at or above net asset value at the time of valuation, the Fund will issue new shares at the greater of the net asset value or 95% of the then-current market price. If the shares are trading at less than net asset value, shares for your account will be purchased on the open market. If the Plan Agent begins purchasing Fund shares on the open market while shares are trading below net asset value, but the Fund’s shares subsequently trade at or above their net asset value before the Plan Agent is able to complete its purchases, the Plan Agent may cease open-market purchases and may invest the uninvested portion of the distribution in newly-issued Fund shares at a price equal to the greater of the shares’ net asset value or 95% of the shares’ market value on the last business day immediately prior to the purchase date. Distributions received to purchase shares in the open market will normally be invested shortly after the distribution payment date. No interest will be paid on distributions awaiting reinvestment. Because the market price of the shares may increase before purchases are completed, the average purchase price per share may exceed the market price at the time of valuation, resulting in the acquisition of fewer shares than if the distribution had been paid in shares issued by the Fund. A pro rata portion of any applicable brokerage commissions on open market purchases will be paid by Plan participants. These commissions usually will be lower than those charged on individual transactions.
Flexible
You may change your distribution option or withdraw from the Plan at any time, should your needs or situation change.
You can reinvest whether your shares are registered in your name, or in the name of a brokerage firm, bank, or other nominee. Ask your investment advisor if his or her firm will participate on your behalf. Participants whose shares are registered in the name of one firm may not be able to transfer the shares to another firm and continue to participate in the Plan.
The Fund reserves the right to amend or terminate the Plan at any time. Although the Fund reserves the right to amend the Plan to include a service charge payable by the participants, there is no direct service charge to participants in the Plan at this time.
Call today to start reinvesting distributions
For more information on the Nuveen Automatic Reinvestment Plan or to enroll in or withdraw from the Plan, speak with your financial advisor or call us at (800) 257-8787.
| Nuveen Investments | 61 |
Notes
| 62 | Nuveen Investments |
Notes
| Nuveen Investments | 63 |
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| Serving Investors for Generations | ||||||||||||||
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| Since 1898, financial advisors and their clients have relied on Nuveen Investments to provide dependable investment solutions through continued adherence to proven, long-term investing principles. Today, we offer a range of high quality equity and fixed-income solutions designed to be integral components of a well-diversified core portfolio. | ||||||||||||||
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Focused on meeting investor needs.
Nuveen Investments provides high-quality investment services designed to help secure the long-term goals of institutional and individual investors as well as the consultants and financial advisors who serve them. Nuveen Investments markets a wide range of specialized investment solutions which provide investors access to capabilities of its high-quality boutique investment affiliates – Nuveen Asset Management, Symphony Asset Management, NWQ Investment Management Company, Santa Barbara Asset Management, Tradewinds Global Investors, Winslow Capital Management and Gresham Investment Management. In total, Nuveen Investments managed approximately $225 billion as of December 31, 2015. | ||||||||||||||
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Find out how we can help you.
To learn more about how the products and services of Nuveen Investments may be able to help you meet your financial goals, talk to your financial advisor, or call us at (800) 257-8787. Please read the information provided carefully before you invest. Investors should consider the investment objective and policies, risk considerations, charges and expenses of any investment carefully. Where applicable, be sure to obtain a prospectus, which contains this and other relevant information. To obtain a prospectus, please contact your securities representative or Nuveen Investments, 333 W. Wacker Dr., Chicago, IL 60606. Please read the prospectus carefully before you invest or send money.
Learn more about Nuveen Funds at: www.nuveen.com/cef | ||||||||||||||
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Distributed by Nuveen Securities, LLC | 333 West Wacker Drive | Chicago, IL 60606 | www.nuveen.com/cef
ESA-B-0116D 14648-INV-B-03/17
Item 2. Code of Ethics.
Not applicable to this filing.
Item 3. Audit Committee Financial Expert.
Not applicable to this filing.
Item 4. Principal Accountant Fees and Services.
Not applicable to this filing.
Item 5. Audit Committee of Listed Registrants.
Not applicable to this filing.
Item 6. Schedule of Investments.
(a) See Portfolio of Investments in Item 1.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to this filing.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to this filing.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board implemented after the registrant last provided disclosure in response to this item.
Item 11. Controls and Procedures.
| (a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
| (b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. Exhibits.
File the exhibits listed below as part of this Form.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Not applicable to this filing.
(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: See EX-99.CERT attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2 (b) under the 1940 Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an Exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registration specifically incorporates it by reference: See EX-99.906 CERT attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Nuveen Quality Preferred Income Fund 3
| By (Signature and Title) | /s/ Kevin J. McCarthy | |||
| Kevin J. McCarthy | ||||
| Vice President and Secretary |
Date: April 7, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title) | /s/ Gifford R. Zimmerman | |||
| Gifford R. Zimmerman | ||||
| Chief Administrative Officer | ||||
| (principal executive officer) |
Date: April 7, 2016
| By (Signature and Title) | /s/ Stephen D. Foy | |||
| Stephen D. Foy | ||||
| Vice President and Controller | ||||
| (principal financial officer) |
Date: April 7, 2016